F&C INVESTMENT TRUST PLC Date:27 July 2017
Contact: Paul Niven - Fund Manager
0207 011 4385
F&C Investment Business Limited
FOREIGN & COLONIAL INVESTMENT TRUST PLC
Unaudited Statement of Results
for the half-year ended 30 June 2017
SUMMARY OF UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2017
· Our share price was 586.0 pence representing a total return of 8.7%
· Our net asset value total return was 9.1% which compares with 6.3% from our benchmark, the FTSE All-World Index
· The first interim dividend will be 2.5 pence per share while another above-inflation rise is planned for the 2017 total dividend. This will mark the 47th consecutive annual increase.
Chairman's Statement
Markets and performance
The first half of 2017 saw further upward movement in equity markets with the FTSE All-World index progressing by 6.3%. Our Net Asset Value ('NAV') gained 9.1% in total return terms and so compared favourably to market indices.
Our shareholder returns were 8.7% over the period as our discount widened modestly to 7.7%. We continued our policy of buying back shares though, at 3.2m shares, our level of buybacks was down significantly on last year.
Equities performed strongly over the first half with a number of bellwether market indices, including the S&P 500 and the FTSE 100, hitting new record highs during the period. Corporate earnings surpassed expectations and, with a modest but synchronised upturn underway across the global economy, investor sentiment improved further. In contrast to 2016, growth stocks, particularly technology companies, performed strongly and there was marked rotation away from resources as the oil price declined and optimism over President Trump's pro-growth policies waned.
Within our portfolio we saw particular strength from Emerging Markets, which posted a gain of 18.9%, outperforming the market index. Our European equities strategy also posted strong absolute returns, of 12.7%, broadly in line with market returns. Elsewhere on the portfolio we delivered excess returns over market comparators with strong performance from our growth oriented strategy in US equities helping North American holdings to a 7.0% return. Our global strategies also exceeded benchmark returns with our multi-manager funds and holdings in smaller companies both delivering good relative returns. All strategies delivered good absolute levels of return and most exceeded benchmarks. Private equity posted a relatively modest gain of 2.3% partly reflecting a lag in pricing of these investments. We made a small number of new commitments in this area, reflecting our flexible approach to private equity investments. In recent years we have taken advantage of record low rates of borrowing to restructure our debt maturity profile and, during the first half, our net gearing level dropped modestly to end the period at 6.4%.
Despite improving growth, inflationary pressures generally remained subdued in most economies. Nonetheless, the US Federal Reserve raised interest rates by another 0.5% over the period and a number of other central banks indicated that they were inclined to rein in easy policies which have been in place since the Global Financial Crisis.
Aside from more fundamental factors, politics remained a focus for investors. The honeymoon period for President Trump proved to be short-lived as he struggled to push forward plans for tax and healthcare reform and expectations for fiscal stimulus in the US ebbed. France elected a pro-Euro, reformist President in Emmanuel Macron and rejected the more extreme policies to the relief of many investors. The reduction of near- term political risk, combined with a marked improvement in Eurozone economic and corporate performance led to strength in the Euro and the equity market there. Closer to home, Theresa May's majority was reduced after a poor election campaign and, with growth slowing and inflation rising, the outlook for the UK economy seemed to have darkened as Brexit negotiations got underway.
Contributors to total returns in first half of 2017 | |
% | |
Portfolio return | 8.4 |
Management fees | (0.2) |
Interest and other expenses | (0.2) |
Buybacks | 0.1 |
Change in value of debt | 0.0 |
Gearing/other | 1.0 |
Net asset value total return* | 9.1 |
Increase in discount | (0.4) |
Share price total return | 8.7 |
FTSE All-World Total Return | 6.3 |
*Debt at market value
Source: F&C
Income and Dividends
Our reported income continued to make good progress and net revenue return per share rose 7.6% to 7.24p in the first six months of the year on the equivalent period of 2016. With a large portion of investments held overseas our income was helped by an estimated £3.8m through the fall in sterling year on year. Offsetting this, to some extent, we received less in special dividends, which fell from £4.2m in the first half of 2016, to £2.1m in 2017.
We paid an interim dividend of 2.45p per share in February 2017 and a final dividend of 2.7p in respect of 2016 in May. The first interim dividend of 2.5p for 2017 will be paid on 1 August. It is the intention of the Board to deliver another real rise in dividends for 2017. This will mark the forty-seventh consecutive rise in annual dividends from your Company.
Outlook
Broadening global economic growth and an upturn in corporate earnings along with subdued inflation rates and borrowing costs continue to support equity markets.
It is not just the US where the fundamental picture has brightened. The Eurozone has plenty of spare capacity and has seen increased growth momentum. The corporate sector there, having disappointed consistently in recent years, is producing solid earnings growth and a potential reinvigoration of the EU under the progressive French President Macron and German Chancellor Merkel could yield further gains. In the Emerging Markets, with China continuing to deliver solid growth and Brazil and Russia exiting recession, the premium over developed market growth rates has begun to expand once again.
The UK is something of an outlier amongst major global economies. The picture here appears challenging with a squeeze in real incomes underway and increased political uncertainty.
Importantly for equity investors, corporate earnings are showing increased vigour, and this strength is helping to push global equity markets on to new record highs. The combination of low inflation levels, supported by improving earnings momentum along with a synchronised economic upturn is fuelling optimism on the outlook for corporates. In addition, within equity markets, a growth strategy has returned to favour, with technology stocks leading the way.
Inflation levels remain low and, while central bankers are likely to continue on the path of policy normalisation, rate rises should be modest. Indeed, the absence of inflationary pressures is helping to extend the economic cycle and the environment remains one where corporate earnings should continue to support equity prices. Despite potential challenges we continue to see opportunities in equity markets. Nonetheless, a world of easy monetary policy has inflated valuations across multiple asset classes and so we should not be surprised to see greater headwinds to shorter-term market progress as and when interest rates rise further.
Simon Fraser
Chairman
26 July 2017
Weightings, stock selection and performance in each investment portfolio strategy and underlying geographic exposure versus index as at 30 June 2017 | |||||
Investment portfolio strategy | Our portfolio strategy weighting % | Underlying geographic exposure* % | Benchmark weighting % | Our strategy performance in sterling % | Index performance in sterling % |
UK | 5.7 | 7.8 | 6.1 | 5.2 | 4.7 |
North America | 32.4 | 46.6 | 54.9 | 7.0 | 3.9 |
Europe ex UK | 13.3 | 20.0 | 15.4 | 12.7 | 12.8 |
Japan | 8.3 | 10.1 | 8.4 | 6.7 | 5.2 |
Emerging Markets | 10.8 | 12.9 | 11.0 | 18.9 | 12.7 |
Developed Pacific | - | 2.6 | 4.3 | - | 8.2 |
Global Strategies | 22.1 | - | - | 6.9 | 6.3 |
Private Equity | 7.4 | - | - | 2.3 | - |
Source: F&C
*Represents the geographic exposure of the portfolio, including underlying exposures in private equity and fund holdings
UNAUDITED CONDENSED INCOME STATEMENT
6 months to 30 June 2017 | 6 months to 30 June 2016 | ||||||||
Notes | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | |||
Gains on investments and derivatives | - | 254,320 | 254,320 | - | 205,681 | 205,681 | |||
Exchange gains/(losses) | 69 | 389 | 458 | 867 | (40,045) | (39,178) | |||
3 | Income | 47,821 | - | 47,821 | 44,121 | - | 44,121 | ||
4 | Fees and other expenses | (3,265) | (5,411) | (8,676) | (2,813) | (4,362) | (7,175) | ||
Net return before finance costs and taxation | 44,625 | 249,298 | 293,923 | 42,175 | 161,274 | 203,449 | |||
4 | Interest payable and similar charges | (899) | (2,698) | (3,597) | (760) | (2,281) | (3,041) | ||
Net return on ordinary activities before taxation | 43,726 | 246,600 | 290,326 | 41,415 | 158,993 | 200,408 | |||
5 | Taxation on ordinary activities | (4,282) | (160) | (4,442) | (3,839) | - | (3,839) | ||
6 | Net return attributable to shareholders | 39,444 | 246,440 | 285,884 | 37,576 | 158,993 | 196,569 | ||
6 | Net return per share - basic (pence) | 7.24 | 45.22 | 52.46 | 6.73 | 28.50 | 35.23 | ||
The total column is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
UNAUDITED CONDENSED STATEMENT OF CHANGES IN EQUITY
Capital | Total | |||||
Share | redemption | Capital | Revenue | shareholders' | ||
capital | reserve | reserves | reserve | funds | ||
Notes | Half-year ended 30 June 2017 | £'000s | £'000s | £'000s | £'000s | £'000s |
Balance brought forward 31 December 2016 | 140,455 | 122,307 | 2,867,579 | 83,094 | 3,213,435 | |
Movements during the half-year ended 30 June 2017 | ||||||
7 | Dividends paid/payable | - | - | - | (28,108) | (28,108) |
11 | Shares repurchased by the Company and held in Treasury | - | - | (18,437) | - | (18,437) |
Return attributable to shareholders | - | - | 246,440 | 39,444 | 285,884 | |
Balance carried forward 30 June 2017 | 140,455 | 122,307 | 3,095,582 | 94,430 | 3,452,774 |
Capital | Total | |||||
Share | redemption | Capital | Revenue | shareholders' | ||
capital | reserve | reserves | reserve | funds | ||
Notes | Half-year ended 30 June 2016 | £'000s | £'000s | £'000s | £'000s | £'000s |
Balance brought forward 31 December 2015 Movements during the half-year ended 30 June 2016 | 140,455 | 122,307 | 2,361,073 | 78,329 | 2,702,164 | |
7 | Dividends paid | - | - | - | (40,833) | (40,833) |
Shares repurchased by the Company and held in Treasury | - | - | (27,949) | - | (27,949) | |
Return attributable to shareholders | - | - | 158,993 | 37,576 | 196,569 | |
Balance carried forward 30 June 2016 | 140,455 | 122,307 | 2,492,117 | 75,072 | 2,829,951 | |
Notes | Year ended 31 December 2016 | Share capital £'000s | Capital redemption reserve £'000s | Capital reserves £'000s | Revenue reserve £'000s | Total shareholders' funds £'000s |
Balance brought forward 31 December 2015 | 140,555 | 122,307 | 2,361,073 | 78,329 | 2,702,164 | |
Movements during the year ended 31 December 2016 | ||||||
7 | Dividends paid | - | - | - | (53,628) | (53,628) |
Shares repurchased by the Company and held in Treasury | - | - | (57,613) | - | (57,613) | |
Return attributable to shareholders | - | - | 564,119 | 58,393 | 622,512 | |
Balance carried forward 31 December 2016 | 140,455 | 122,307 | 2,867,579 | 83,094 | 3,213,435 |
UNAUDITED CONDENSED BALANCE SHEET
Notes | 30 June 2017 £'000s | 30 June 2016 £'000s | 31 December 2016 £'000s | |
Fixed assets | ||||
8 | Investments | 3,671,152 | 3,008,695 | 3,432,682 |
Current assets | ||||
Debtors | 14,811 | 55,172 | 6,648 | |
Cash and cash equivalents | 21,513 | 120,888 | 26,463 | |
36,324 | 176,060 | 33,111 | ||
Creditors: amounts falling due within one year | ||||
9 | Loans | - | (42,651) | - |
10 | Other | (9,098) | (68,773) | (4,785) |
(9,098) | (111,424) | (4,785) | ||
Net current assets | 27,226 | 64,636 | 28,326 | |
Total assets less current assets | 3,698,378 | 3,073,331 | 3,461,008 | |
Creditors: amounts falling due after more than one year | ||||
9 | Loans | (245,029) | (242,805) | (246,998) |
9 | Debenture | (575) | (575) | (575) |
(245,604) | (243,380) | (247,573) | ||
Net assets | 3,452,774 | 2,829,951 | 3,213,435 | |
Capital and reserves | ||||
11 | Share capital | 140,455 | 140,455 | 140,455 |
Capital redemption reserve | 122,307 | 122,307 | 122,307 | |
Capital reserves | 3,095,582 | 2,492,117 | 2,867,579 | |
Revenue reserve | 94,430 | 75,072 | 83,094 | |
12 | Total shareholders' funds | 3,452,774 | 2,829,951 | 3,213,435 |
12 | Net asset value per ordinary share - prior charges at nominal value (pence) | 635.47 | 512.25 | 587.92 |
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
6 months to 30 June 2017 | 6 months to 30 June 2016 | Year ended 31 December 2016 | ||
Notes | £'000s | £'000s | £'000s | |
13 | Cash flows from operating activities before dividends received and interest paid | (13,791) | (11,760) | (21,403) |
Dividends received | 45,980 | 41,265 | 69,943 | |
Interest paid | (3,577) | (2,777) | (6,512) | |
Cash flows from operating activities | 28,612 | 26,728 | 42,028 | |
Investing activities | ||||
Purchases of Investments | (617,108) | (526,562) | (1,233,876) | |
Sales of Investments | 631,180 | 653,790 | 1,347,880 | |
Other capital charges and credits | (29) | (20) | (93) | |
Cash flows from investing activities | 14,043 | 127,208 | 113,911 | |
Cash flows before financing activities | 42,655 | 153,936 | 155,939 | |
Financing activities | ||||
Equity dividends paid | (28,108) | (27,851) | (53,628) | |
Repayment of loans | (20,000) | (508,049) | (547,676) | |
Drawdown of loans | 20,000 | 456,100 | 456,100 | |
Cash flow from share buybacks into treasury | (17,989) | (26,263) | (57,407) | |
Cash flows from financing activities | (46,097) | (106,063) | (202,611) | |
Net (decrease)/increase in cash and cash equivalents | (3,442) | 47,873 | (46,672) | |
Cash and cash equivalents at the beginning of the period | 26,463 | 73,605 | 73,605 | |
Effect of movement in foreign exchange | (1,508) | (590) | (470) | |
Cash and cash equivalents at the end of the period | 21,513 | 120,888 | 26,463 | |
Represented by: | ||||
Cash at bank | 3,226 | 38,120 | 10,071 | |
Short term deposits | 18,287 | 82,768 | 16,392 | |
Cash and cash equivalents at the end of the period | 21,513 | 120,888 | 26,463 |
UNAUDITED NOTES ON THE CONDENSED ACCOUNTS
1 Results
The results for the six months to 30 June 2017 and 30 June 2016 constitute non-statutory accounts within the meaning of Section 434 of the Companies Act 2006. The latest published accounts which have been delivered to the Registrar of Companies are for the year ended 31 December 2016; the report of the Auditors thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The condensed financial statements shown for the year ended 31 December 2016 are an extract from those accounts.
2 Accounting policies
These condensed financial statements have been prepared on a going concern basis in accordance with the Companies Act 2006, FRS102, Interim Financial Reporting (FRS104) and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'(SORP).
The accounting policies applied for the condensed set of financial statements are set out in the Company's annual report for the year ended 31 December 2016.
3 Income
6 months to 30 June 2017 £'000s | 6 months to 30 June 2016 £'000s | |
Income comprises: | ||
UK dividends | 6,795 | 7,973 |
Overseas dividends | 40,618 | 35,764 |
Rebate on management fees | 327 | 329 |
Interest on short-term deposits and withholding tax reclaims | 81 | 50 |
Sundry income | - | 5 |
Income | 47,821 | 44,121 |
4 Fees and other expenses and interest payable and similar charges
6 months to 30 June 2017 £'000s | 6 months to 30 June 2016 £'000s | |
Fees and other expenses | 8,676 | 7,175 |
Interest payable and similar charges | 3,597 | 3,041 |
Total | 12,273 | 10,216 |
Fees and other expenses comprise: Allocated to Revenue Account | ||
- Management fees payable directly to the Manager* | 1,795 | 1,400 |
- Other expenses | 1,470 | 1,413 |
3,265 | 2,813 | |
Allocated to Capital Account | ||
- Management fees payable directly to the Manager* | 5,384 | 4,202 |
- Management fees payable directly to Private Equity managers | - | 139 |
- Other expenses | 27 | 21 |
5,411 | 4,362 | |
Interest payable and similar charges comprise: | ||
Allocated to Revenue Account | 899 | 760 |
Allocated to Capital Account | 2,698 | 2,281 |
* Including reimbursement in respect of services provided by sub-managers
The primary related party transaction is with the Manager, F&C Investment Business Limited. The Manager receives remuneration of 0.365% per annum of the market capitalisation of the Company, calculated at each month end date on a pro-rata basis. The fee is adjusted for fees earned by the Manager in respect of investment holdings managed or advised by the Manager. Variable fees payable in respect of third party sub-managers are also reimbursed. The services provided by the Manager remain unchanged from those disclosed within the accounts for the year ended 31 December 2016. The level of variable fees payable in respect of third party sub-managers and private equity managers remain unchanged since the year end.
5 Taxation
The taxation charge of £4,442,000 (30 June 2016: £3,839,000) relates to irrecoverable overseas taxation.
6 Net return per share
Net return per ordinary share attributable to ordinary shareholders reflects the overall performance of the Company in the period. Net revenue recognised in the first six months is not indicative of the total likely to be received in the full accounting year.
6 months to 30 June 2017 pence | 6 months to 30 June 2017 £'000s | 6 months to 30 June 2016 pence | 6 months to 30 June 2016 £'000s | |
Revenue return | 7.24 | 39,444 | 6.73 | 37,576 |
Capital return | 45.22 | 246,440 | 28.50 | 158,993 |
Total return | 52.46 | 285,884 | 35.23 | 196,569 |
Weighted average ordinary shares in issue excluding treasury shares (see Note 11) | 544,952,303 | 557,930,340 |
7 Dividends
Dividends paid and payable on ordinary shares | Register date | Payment date | 6 Months to 30 June 2017 £'000s | 6 Months to 30 June 2016 £'000s | Year ended 31 December 2016 £'000s |
2015 Third interim of 2.30p | 8-Jan-2016 | 1-Feb-2016 | - | 12,857 | 12,748 |
2015 Final of 2.70p | 1-Apr-2016 | 3-May-2016 | - | 14,994 | 14,994 |
2016 First interim of 2.35p | 1-Jul-2016 | 1-Aug-2016 | - | 12,982 | 12,985 |
2016 Second interim of 2.35p | 30-Sep-2016 | 1-Nov-2016 | - | - | 12,901 |
2016 Third interim of 2.45p | 6-Jan-2017 | 1-Feb-2017 | 13,390 | - | - |
2016 Final of 2.70p | 31-Mar-2017 | 2-May-2017 | 14,718 | - | - |
28,108 | 40,833 | 53,628 |
The Directors have declared a first interim dividend in respect of the year ending 31 December 2017 of 2.50p per share, payable on 1 August 2017 to all shareholders on the register at close of business on 7 July 2017. The amount of this dividend will be £13,583,000 based on 543,319,179 shares in issue at 6 July 2017. This amount has not been accrued in the results for the half-year ended 30 June 2017.
8 Investments
Fair value hierarchy
The Company's Investments as disclosed in the balance sheet are valued at fair value.
The fair value as at the reporting date has been estimated using the following fair value hierarchy:
Level 1 includes investments and derivatives listed on any recognised stock exchange or quoted on the AIM market in the UK and quoted open-ended funds.
Level 2 includes investments for which the quoted price has been suspended, forward exchange contracts and other derivative instruments.
Level 3 includes investments in private companies or securities, whether invested in directly or through pooled Private Equity vehicles, for which observable market data is not specifically available.
The analysis of the valuation basis for financial instruments based on the hierarchy is as follows:
As at 30 June 2017 £'000s | As at 30 June 2016 £'000s | As at 31 December 2016 £'000s | |
Level 1 | 3,416,934 | 2,736,375 | 3,166,561 |
Level 3 | 254,218 | 272,320 | 266,121 |
Total valuation of investments | 3,671,152 | 3,008,695 | 3,432,682 |
There were no derivative investments held in the period (half-year ended 30 June 2016 and year ended 31 December 2016: same) and no investments held which are valued in accordance with level 2.
9 Loans and Debenture
30 June 2017 £'000s | 30 June 2016 £'000s | 31 December 2016 £'000s | ||
Loans falling due within one year | - | 42,651 | - | |
Loans falling due after more than one year | 245,029 | 242,805 | 246,998 | |
Debenture falling due after more than one year | 575 | 575 | 575 | |
Comprising: Euro denominated loan, falling due within one year | - | €25m | - | |
Yen denominated loan, falling due within one year | - | ¥3bn | - | |
US dollar denominated loan, falling due after more than one year | $80m | $80m | $80m | |
Yen denominated loan, falling due after more than one year | ¥6.6bn | ¥6.6bn | ¥6.6bn | |
Sterling denominated loan, falling due after more one year | £75m | £75m | £75m | |
Euro denominated loan, falling due after more than one year | €72m | €72m | €72m | |
4.25% perpetual debenture stock | £0.575m | £0.575m | £0.575m | |
10 Other creditors falling due within one year
30 June 2017 £'000s | 30 June 2016 £'000s | 31 December 2016 £'000s | |
Cost of ordinary shares repurchased | 933 | 1,965 | 485 |
Investment creditors | 5,071 | 50,110 | 686 |
Management fee payable to F&C | 1,544 | 2,102 | 1,999 |
Dividend payable | - | 12,982 | - |
Other accrued expenses | 1,550 | 1,614 | 1,615 |
9,098 | 68,773 | 4,785 |
11 Share capital
Equity share capital | Shares held in treasury Number | Shares entitled to dividend Number | Total shares in issue Number | Total shares in issue nominal £'000s | ||
Ordinary shares of 25p each | ||||||
Balance at 31 December 2016 | 15,246,154 | 546,572,862 | 561,819,016 | 140,455 | ||
Shares repurchased by the Company and held in treasury | 3,233,474 | (3,233,474) | - | - | ||
Balance at 30 June 2017 | 18,479,628 | 543,339,388 | 561,819,016 | 140,455 | ||
During the period 3,233,474 ordinary shares were repurchased and held in treasury, at a total cost of £18,437,000. Since 30 June 2017 a further 225,233 ordinary shares have been repurchased and held in treasury at a cost of £1,354,000. Shares held in treasury have no voting rights and no right to dividend distributions and are excluded from the calculations of earnings per share and net asset value per share.
12 Net asset value per ordinary share
30 June 2017 | 30 June 2016 | 31 December 2016 | |
Net asset value per share -pence | 635.47 | 512.25 | 587.92 |
Net assets attributable at end of period - £'000s | 3,452,774 | 2,829,951 | 3,213,435 |
Ordinary shares of 25p in issue at end of period excluding shares held in treasury - number | 543,339,388 | 552,458,517 | 546,572,862 |
Net asset value per share (with the debenture stock and long-term loans at market value) at 30 June 2017 was 634.88p (30 June 2016: 512.27p and 31 December 2016: 587.21p). The market value of debenture stocks at 30 June 2017 was £429,000 (30 June 2016 and 31 December 2016: £429,000). The market value of the long-term loans at 30 June 2017 was £248,382,000 (30 June 2016: £242,805,000 and 31 December 2016: £251,035,000) based on the equivalent benchmark gilts or relevant commercially available current debt.
13 Reconciliation of net return before taxation to cash flows from operating activities
6 months to 30 June 2017 £'000s | 6 months to 30 June 2016 £'000s | Year ended 31 December 2016 £'000s | |
Net return on ordinary activities before taxation | 290,326 | 200,408 | 628,550 |
Adjust for non-cash flow items, dividend income and interest expense: | |||
Gains on investments | (254,320) | (205,681) | (620,118) |
Exchange (gains)/losses | (458) | 39,178 | 40,379 |
Non-operating expense of a capital nature | 27 | 21 | 97 |
Decrease/(increase) in other debtors | 44 | (65) | 10 |
Decrease in creditors | (466) | (6) | (117) |
Dividends receivable | (47,413) | (43,737) | (70,408) |
Interest payable | 3,597 | 3,041 | 6,889 |
Tax on overseas income | (5,128) | (4,919) | (6,685) |
(304,117) | (212,168) | (649,953) | |
Cash flows from operating activities (before dividends received and interest paid) | (13,791) | (11,760) | (21,403) |
14 Going concern
The Company's investment objective, strategy and policy are subject to a process of regular Board monitoring and are designed to ensure that the Company is invested mainly in readily realisable, listed securities and that the level of borrowings is restricted. The Company retains title to all assets held by the Custodian and agreements cover its borrowing facilities. Cash is held with banks approved and regularly reviewed by the Manager and the Board.
The Directors believe that; the Company's objective and policy continue to be relevant to investors; the Company operates within a robust regulatory environment; and the Company has sufficient resources and arrangements to continue operating within its stated policy for the 12 month period commencing from the date of this report. Accordingly, the financial statements have been drawn up on the basis that the Company is a going concern.
15 VAT case
The Company reported, in its annual report and accounts to 31 December 2016, an interest in a case brought against HMRC to recover VAT paid on management fees in the period 1997 to 2000. On 11 April 2017, the Supreme Court issued a judgement in favour of HMRC. As a consequence the Company will not be entitled to any recoveries of VAT paid in the relevant period.
16 Report and accounts
The half-yearly report and accounts will be posted to shareholders and made available on the internet at www.foreignandcolonial.com shortly. Copies may be obtained during normal business hours from the Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY.
Legal Entity Identifier: 213800W6B18ZHTNG7371
By order of the Board
F&C Investment Business Limited, Secretary
Exchange House, Primrose Street, London EC2A 2NY
26 July 2017
Directors' Statement of Principal Risks and Uncertainties
Most of the Company's principal risks and uncertainties are market related and no different from those of other investment trusts investing primarily in listed equities. They are described in more detail under the heading 'Principal risks and future prospects' within the strategic report in the Company's annual report for the year ended 31 December 2016 and have not changed materially since the date of that report.
The risks include: having an inappropriate strategy in relation to investor needs; failure on the part of the Manager to continue operate effectively; unfavourable markets or inappropriate asset allocation, sector and stock selection, currency exposure and use of gearing and derivatives leading to investment underperformance; and errors, fraud and control failures at service providers, or loss of data through cyber-threats or business continuity failure.
Directors' Statement of Responsibilities in Respect of the Half-Yearly Financial Report
In accordance with Chapter 4 of the Disclosure and Transparency Rules, the Directors confirm that to the best of their knowledge:
· the condensed set of financial statements has been prepared in accordance with applicable UK Accounting Standards on a going concern basis and gives a true and fair view of the assets, liabilities, financial position and net return of the Company;
· the half-yearly report includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements;
· the Directors' Statement of Principal Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and
· the half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year.
On behalf of the Board
Simon Fraser
Chairman
26 July 2017
Foreign & Colonial Investment Trust plc published this content on 27 July 2017 and is solely responsible for the information contained herein.
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