Unaudited Statement of Results – Half Year ended 30.06.2021

F&C Investment Trust PLC

Exchange House, Primrose Street, London EC2A 2NY
Telephone +44 (0)20 7628 8000 Facsimile +44 (0)20 7628 8188
fandcit.com
An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY




F&C INVESTMENT TRUST PLC
Unaudited Results for the half-year ended 30 June 2021

Legal Entity Identifier: 213800W6B18ZHTNG7371
Information disclosed in accordance with Disclosure Guidance and Transparency Rule 4.2


26 July 2021

F&C Investment Trust PLC ('FCIT' /the 'Company') today announces its results for the six
months ended 30 June 2021.

• The share price was 846.0 pence representing a total return of 8.3% while also reflecting a
widening of the discount during the period.

• The Net Asset Value (“NAV”) per share was 927.41 pence representing a NAV total return
of 12.3%; ahead of the 11.1% return of its benchmark, the FTSE All-World Index.

• Our private equity exposure, which is a strong differentiator for FCIT, posted a gain of
14.2%; ahead of the returns from listed markets.

• Gearing and adjustments to the fair value of debt added to the strong performance from the
investment portfolio overall. Gearing was 8.8% at the end of the period.

• Making use of our investment trust structure and ability to borrow to enhance returns,
advantage has again been taken of low interest rates to fix £140m of borrowings through
long-term private placement loans in tranches of maturities ranging between 15 to 35 years.
The average rate on structural borrowings is now below 2.4%.

• Over one year’s worth of dividends is held in revenue reserves and the Board is committed
to a further increase in the total dividend this year. The first interim dividend of 3.0 pence for
2021 will be paid on 2 August.

The Chairman, Beatrice Hollond, said:

“Our revenue reserves have enabled us to withstand both the Global Financial Crisis and
recent pandemic-induced restrictions on dividend pay-outs. Increases in our dividend income
can be expected in the years ahead as corporates recover from the pandemic. The Board is
therefore committed to a further rise in our dividend this year, which will be the 51st consecutive
rise in dividends for shareholders.”

Commenting on the markets, Paul Niven, Fund Manager of FCIT, said:

“Growth rates in the global economy and in corporate earnings are likely to exceed many of
the most optimistic forecasts in 2021, as the recovery accelerates following one of the
sharpest downturns in history. Growth momentum is broadening globally and, while there
remain risks, the backdrop should remain favourable. The recovery in earnings growth will
result, with a lag, in an upturn in corporate dividends which should help our revenue account.

Beyond the near term, it seems likely that the balance of risks has shifted in favour of
somewhat higher inflation. This will present challenges but modest rises in inflation, slightly
higher interest rates, but still good rates of growth, present a favourable backdrop for our
portfolio. In addition, while markets have been narrowly focused in terms of geographic,
sectoral and stock leadership, the recovery should deliver more balanced performance.”

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
0207 011 4385

Campbell Hood
campbell.hood@bmogam.com

Tel: +44 (0)20 7011 4243

FTI Consulting
bmo@fticonsulting.com

Tel: +44 (0) 20 3727 1888


About FCIT:
• Founded in 1868 – the oldest collective investment trust
• A diversified portfolio provides exposure to most of the world's stock markets, with
exposure to over 450 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

Chairman’s Statement

Markets and performance
Optimism over vaccine efficacy and the speed of its deployment during the first six months of the
year led to a positive reassessment of the prospects for the global economy and corporate sector.
Disappointing growth in emerging markets, including China, was in sharp contrast to the developed
economies however, where positive sentiment buoyed equity markets. Against that background,
we delivered a Net Asset Value (‘NAV’) total return of 12.3%, which was ahead of the 11.1% return
of our benchmark, the FTSE All World Index. A widening in the Company’s discount from 5.4% to
8.8% however, resulted in a lower share price total return of 8.3%.

The NAV per share closed at 927.41 pence by comparison with 831.78 pence at the end of 2020.
Our underlying investment portfolio delivered a strong return of 10.7%, though this slightly lagged
the market benchmark. A strong feature of our investment trust structure is the ability to use
borrowings to enhance returns and it is pleasing to report that the impact of our gearing and
adjustments to the fair value of our debt were accretive; adding 1.2% and 0.6% respectively.

We had started the year with a gearing level of 8.0% and ended the first half at 8.8% having once
again taken advantage of historically low interest rates to fix an additional £140m of borrowings
through long-term private placement loans. These have maturities ranging between 15 and 35
years and were drawn down in late June. The blended rate of this latest issue of debt is 2.2% and
it takes the average rate on our borrowings below 2.4%.

Our private equity holdings posted strongly positive returns, gaining by 14.2%, exceeding returns
from our listed assets. This exposure offers differentiated investments into unlisted opportunities
and, having continued to make selective commitments, our allocation to this area was 9.3% at 30
June 2021. Our new programme with Pantheon, focusing on leading growth and venture
opportunities globally, is progressing well with over half of the planned $180m commitment now
invested.

Income and Dividends
We paid a third interim dividend of 2.9 pence per share for the year ended 31 December 2020 in
February 2021, and a final dividend of 3.4 pence in May. In helping to fund the full-year dividend
payment of 12.1p, we drew down 2.4 pence per share from our Revenue Reserve.

We envisage increases in our dividend income in the years ahead as companies recover from the
pandemic and have already seen some recovery in our revenue. Indeed, for the first six months of
the year our net revenue return rose by 2.1% to 5.86p in comparison to 5.74p over the same period
last year; despite the detrimental impact of £2.2m from the rise in sterling in the period (half year to
30 June 2020: positive impact of £0.5m). Special dividends were £0.6m; down from £0.7m. While
we expect our income to rise over the year as a whole, there is still significant uncertainty over the
timing and magnitude of recovery in corporate dividend payments and, as in 2020, it is unlikely that
our income will cover the full annual dividend payment to the shareholders. For 2021, we therefore
expect to fund a portion of the annual payment from our Revenue Reserve which holds over one
full year’s worth of annual dividends. This reserve has enabled us to withstand many an economic
downturn, including the Global Financial Crisis, and holds us in very good stead in continuing to
deliver growth in dividends for our shareholders. It is a unique advantage, amongst others, which
investment trust companies hold over open ended funds. The Board is therefore committed to a
further rise in our dividend this year, which will be the 51st consecutive rise in total dividend for
shareholders.


Responsible Investing
Earlier in the year we announced our commitment to transition our portfolio to net zero carbon
emissions by 2050 and recognise the need to deliver on this even earlier, where we can, by way of
stretching but realistic targets. We are currently working with our Manager on a roadmap that will
incorporate shorter term metrics to ensure that, over the medium term, the Company makes
measurable progress towards its objective. As a general rule, we believe that engaging with
companies is best in the first instance rather than simply divesting or excluding investment

opportunities, not least as withdrawal of capital may simply transfer underlying challenges to
investors who are less willing, or able, to engage effectively with companies. Our Manager will
therefore continue to carry out strong engagement with investee companies and hold them to
account for commitments they make and press them on having clear and credible pathways to meet
their interim and longer term targets. Thus far, we have imposed only limited investment exclusions
but will keep this under review in cases where engagement does not produce the outcomes that
meet with our own net zero expectations quickly enough. Shareholders can expect an even greater
focus from us on responsible investment in all aspects of the portfolio as we move forward.

The Board
Sir Roger Bone retired at the conclusion of this year’s AGM. I would like to thank him for the
significant contribution that he made throughout his time on the Board and we wish him well. Roger
was replaced by Rain Newton-Smith and this change continues our planned Board refreshment,
reflecting our continuing focus on maintaining the highest level of skills and knowledge on the
Board.

BMO/Columbia Threadneedle
You may be aware that the Bank of Montreal, the ultimate parent company of your Company’s
Manager, BMO Investment Business Limited, has announced an intention to sell its asset
management business covering Europe, the Middle East and Africa to Ameriprise Financial Inc.,
the parent company of Columbia Threadneedle. Details have not yet been finalised and published
but both companies have confirmed that they expect little change for most clients. The Board
welcomes that assurance of continuity and will, of course, ensure that shareholders are kept
informed as further details become available.

Outlook
Despite ongoing disruption to daily life and to many segments of the economy, a strong recovery is
now underway, with many of the major developed economies expected to recoup lost output by the
end of this year. With hopes for a return to normality growth rates should settle to a more sedate
level next year.

While equity markets and the global economy have recovered quickly from the effects of the global
pandemic, there will be longer lasting implications for investors. Thus far, increasing inflationary
pressures have been largely attributed to bottlenecks, a number of which relate to disruptions in
the global supply chain. The prospect of higher inflation and interest rates present both risks to
equity market valuations and opportunities through a broadening of performance within the market.

As ever, our flexible and diversified approach and our long term perspective leaves us well placed
to continue to deliver growth in both capital and income for shareholders.

Beatrice Hollond
Chairman
26 July 2021

Fund Manager’s Review

We entered the year with optimism that the strong positive momentum in the economy and
corporate earnings would persist. Over the first six months, growth expectations continued to rise
and stock analysts upgraded their earnings outlook at a record pace. This exceptional earnings
momentum, along with the continued supportive policy measures, helped to propel equity markets
to new record highs.

The expectation of a resurgent global economy, driven by global progress on the rollout of
vaccinations and the reopening of developed economies, led to a sharp rise in commodity prices
as investors backed the theme of reflation. Indeed, supply shortages and a sharp increase in
demand drove a greater than 50% rise in the price of oil. Rising commodity prices, combined with
easy monetary policy and rapidly recovering economic activity, stoked inflationary concerns.
Indeed, inflation in the US rose sharply, increasing 5% over the year.

Expectations of a buoyant global economy and rising inflation led to a rise in longer dated interest
rates, though absolute levels remain exceptionally low. Indeed, a key debate relates to the outlook
for inflation. Thus far, rises in inflationary pressures have been largely attributed to supply
pressures, a number of which relate to disruptions in the global supply chain. Policymakers, and
most investors, are assuming that current rises in inflation are likely to be transitory and that pricing
pressures will dissipate in coming quarters. But the extent of monetary largesse and the enthusiasm
with which deficit spending has been embraced by policymakers may have tilted the balance of
risks on a structural basis towards modest rises in inflation, albeit within an environment of
continued low interest rates.

Our investment portfolio delivered a return of 10.7%, slightly behind the market benchmark (11.1%).
In terms of regional exposure, our North American holdings produced the strongest returns over
the period, with a gain of 14.0%. In contrast to recent periods, it was ‘value’ oriented stocks which
outperformed ‘growth’ exposure. Indeed, over the early months of the year cheaper stocks which
are geared towards the economic reopening performed very strongly, while more highly rated
growth stocks delivered more subdued returns. This trend reversed sharply as the period
progressed due to renewed concerns over the transmission of new variants of coronavirus, some
moderation in inflationary concerns and the resultant easing in interest rate expectations.

Early in the year, in anticipation of an ongoing improvement in growth expectations, we reduced
portfolio exposure further to previously highly performing growth stocks in the US. We had started
this move in the second half of 2020 and a sale out of T Rowe Price, our US growth manager,
funded purchases of more lowly rated US value stocks, managed by Barrow Hanley, as well as
increases in our exposure to higher yielding Global Income stocks.

Within our US exposure, energy, financials and industrial stocks delivered some of the strongest
returns in our portfolio. Energy company Hess (64.7%), Goldman Sachs (+43.4%), Wells Fargo
(+49.2%) and Deere (+30.3%) were amongst our top performers. While one of our larger holdings
Amazon (4.5%) lagged over the period, other holdings such as Microsoft (21%) and Facebook
(+25.9%) delivered strong returns, with the latter company joining the ‘$1trn club’ after antitrust
complaints from the US Federal Trade Commission were dismissed.

Within our Global Strategies (11.1% return), our Global Income strategy, which holds exposure to
stocks with attractive yield characteristics, delivered the strongest returns, with a gain of 18.7%.
Indeed, the gain on this component of the portfolio exceeded those of all others, benefiting from
exposure towards cheaper, more cyclical companies which performed well over the period.
Elsewhere, our Sustainable Opportunities strategy (9.3%) slightly lagged the global benchmark
after a strong period last year, while our Small Cap (7.0%) and Quality Income (10.3%) strategies
also slightly lagged global indices.
European equities delivered strong returns in absolute terms (7.0%) but our holdings lagged the
market index return. ASML, the semiconductor manufacturer, was one of our highest performing
holdings, gaining 40.1%. A number of our holdings, however, such as JustEat (-19.0%) and Ubisoft
(-28.2%), had previously performed extremely strongly during lockdown, but a turn to more cyclical
leadership, including strong performance from energy stocks, meant that we trailed benchmark
returns.

Our emerging markets exposure (3.9%) lagged developed market returns over the period as
economies there underperformed expectations. Consumer related stocks, such as Anta Sports
(47.4%) and WalMart Mexico (14.9%) contributed positively, while financials exposure and
materials detracted from returns. Our underweight to the highly performing Taiwanese market
resulted in underperformance, as Taiwanese equities gained 18% driven, in part, by demand for
semi-conductor exposure.


Contributors to total returns in first half of 2021
%
Portfolio return 10.7
Management fees (0.2)
Interest and other expenses (0.1)
Buybacks 0.1
Change in value of debt 0.6
Gearing/other 1.2
Net asset value total return* 12.3
Change in rating (4.0)
Share price total return 8.3
FTSE All-World total return 11.1
*Debt at market value
Source: BMO GAM
Japan (-3.2%) was a disappointing area of performance for our portfolio, losing capital in absolute
terms despite what had appeared to be a relatively supportive external environment. There was a
pull back in many of 2020’s strongest performers, as capital rotated from lockdown winners to value
and more cyclical exposure. Automation leader Keyence (-11.3%) and semi-conductor business
Hoya (-5.1%), two of the strongest performers last year, both detracted from returns while online
fashion business Zozo gained (36.7%), as it accumulated large numbers of new users during
lockdown and continued to capitalise on the shift towards e-commerce.

Our private equity exposure posted a gain of 14.2% during the first half with uplifts in valuation for
a number of our recent commitments, including Inflexion Strategic Partners. Our older holdings,
held in fund of funds and managed by Pantheon and Harbourvest also produced healthy gains,
rising by 18.0%. In addition, our commitment to Schiehallion, an investment trust focused on
unlisted private market opportunities delivered a gain of 25.3% since investment, while Syncona,
the life sciences investment trust, declined in value by 20.3%.

Our NAV return was enhanced by the impact of gearing, with leverage to a rising market helping
returns, while a rise in bond yields also helped due to the repricing of the fair value of our debt. We
started the year with 8.0% gearing and ended the first half at 8.8%.

Current Market Perspective
Growth rates in the global economy and in corporate earnings are likely to exceed many of the most
optimistic forecasts in 2021, as the recovery accelerates following one of the sharpest downturns
in history. Unprecedented stimulus and pent-up demand are driving gains and this combination of
exceptional growth and easy policy have fuelled gains in equity markets. Growth momentum is
broadening globally and, while there remain risks with respect to the future direction of the
pandemic, the backdrop should remain favourable. The recovery in earnings growth will result, with
a lag, in an upturn in corporate dividends which should help our revenue account.

Beyond the near term, however, investors are contemplating the ramifications of monetary and
fiscal largesse and a change in priorities from policymakers. It seems likely that the balance of risks
has shifted in favour of somewhat higher inflation, compared to previously, in the years ahead. This
will present challenges in the form of higher interest rates, but current concerns need to be put into
perspective. Modest rises in inflation, slightly higher interest rates, but still good rates of growth
present a favourable backdrop for our portfolio. In addition, while markets have been narrowly
focused in terms of geographic, sectoral and stock leadership, the recovery should deliver more
balanced performance.

Paul Niven
Fund Manager
26 July 2021

Weightings, stock selection and performance in each investment portfolio strategy
and underlying geographic exposure versus index as at 30 June 2021
Investment
portfolio
strategy

Our portfolio
strategy
weighting
%
Underlying
geographic
exposure*
%
Benchmark
weighting
%
Our strategy
performance in
sterling
%
Index
performance in
sterling
%

North America 40.5 56.8 60.0 14.0 13.7

Europe inc UK 10.0 23.3 16.9 7.0 10.5

Japan 4.7 7.0 6.6 (3.2) 0.5

Emerging
Markets 7.8 10.2 11.4 3.9 7.2

Developed
Pacific - 2.7 5.1 - 8.5

Global
Strategies 27.7 - - 11.1 11.1

Private Equity 9.3 - - 14.2 -
Source: BMO GAM
*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 2021 6 months to 30 June 2020
Notes

Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenu
e
£’000s
Capital
£’000s
Total
£’000s

Gains/(losses) on investments
and derivatives
- 487,96
9
487,969 - (21,955) (21,955)
Exchange (losses)/gains (216) 7,922 7,706 302 (8,717) (8,415)
3 Income 40,396 - 40,396 39,815 - 39,815
4 Fees and other expenses (3,975) (7,206) (11,181) (3,681) (6,214) (9,895)

Net return before finance costs
and taxation
36,205
488,68
5
524,890 36,436 (36,886) (450)
4
Interest payable and similar
charges
(1,221) (3,663) (4,884) (1,201) (3,602) (4,803)

Net return on ordinary
activities before taxation
34,984
485,02
2 520,006
35,235
(40,488) (5,253)
5 Taxation on ordinary activities
(3,630) (138) (3,768) (4,106) - (4,106)
6
Net return attributable to
shareholders
31,354
484,88
4 516,238
31,129
(40,488) (9,359)
6
Net return per share - basic
(pence)

5.86

90.69

96.55

5.74

(7.46)

(1.72)


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 redemptio
n
Capital Revenue shareholder
s’
capital reserve reserves reserve funds
Note
s
Half-year ended 30 June 2021 £’000s £’000s £’000s £’000s £’000s
Balance brought forward
31 December 2020
140,45
5 122,307 4,147,868 100,930 4,511,560
Movements during the half-year
ended 30 June 2021

11 Shares repurchased by the
Company and held in Treasury

-

-

(34,059)

-

(434,059)
7 Dividends paid - - - (33,709) (33,709)
Return attributable to shareholders - - 484,884 31,354 516,238
Balance carried forward
30 June 2021
140,45
5 122,307 4,598,693 98,575 4,960,030


Capital Total
Share redemptio
n
Capital Revenue
shareholders
’
capital reserve reserves reserve funds
Note
s
Half-year ended 30 June 2020 £’000s £’000s £’000s £’000s £’000s
Balance brought forward
31 December 2019
Movements during the half-
year ended 30 June 2020

140,455

122,307

3,735,063

111,224

4,109,049
Shares repurchased by the
Company and held in Treasury

-

-

(4,515)

-

(4,515)
7 Dividends paid - - - (31,461) (31,461)
Return attributable to
shareholders
- - (40,488) 31,129 (9,359)
Balance carried forward
30 June 2020 140,455 122,307 3,690,060 110,892 4,063,714





Note
s



Year ended 31 December 2020

Share
capital
£’000s
Capital
redemptio
n reserve
£’000s

Capital
reserves
£’000s

Revenue
reserve
£’000s
Total
shareholder
s’ funds
£’000s
Balance brought forward
31 December 2019

140,455

122,307

3,735,063

111,224

4,109,049
Movements during the year
ended 31 December 2020
Shares repurchased by the
Company and held in Treasury - - (41,821) - (41,821)
7
Dividends paid - - - (62,774) (62,774)
Return attributable to
shareholders - - 454,626 52,480 507,106
Balance carried forward
31 December 2020 140,455 122,307 4,147,868 100,930 4,511,560

UNAUDITED CONDENSED BALANCE SHEET

Notes

30 June 2021
£’000s

30 June
2020
£’000s
31 December
2020
£’000s
Fixed assets
8 Investments 5,397,368 4,385,856 4,856,368
Current assets
Debtors 55,875 14,614 23,675
14 Cash and cash equivalents 54,903 43,783 46,654
Total current assets 110,778 58,397 70,329
Creditors: amounts falling due within
one year
9, 14 Loans - - (40,000)
10 Other (45,678) (12,339) (8,521)
Total current liabilities (45,678) (12,339) (48,521)
Net current assets 65,100 46,058 21,808
Total assets less current liabilities 5,462,468 4,431,914 4,878,176
Creditors: amounts falling due after
more than one year
9, 14 Loans (501,863) (367,625) (366,041)
9, 14 Debenture (575) (575) (575)
(502,438) (368,200) (366,616)
Net assets 4,960,030 4,063,714 4,511,560

Capital and reserves
11 Share capital 140,455 140,455 140,455
Capital redemption reserve 122,307 122,307 122,307
Capital reserves 4,598,693 3,690,060 4,147,868
Revenue reserve 98,575 110,892 100,930
12 Total shareholders’ funds 4,960,030 4,063,714 4,511,560
12 Net asset value per ordinary share
– prior charges at nominal value
(pence) 931.59 749.93 840.69

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS




Half-year
ended
30 June
2021
Half-year
ended
30 June
2020

Year ended
31
December
2020
Note
s
£’000s £’000s £’000s
13 Cash flows from operating activities
before dividends received and interest
paid (11,756) (17,094) (32,127)
Dividends received 39,477 39,096 70,055
Interest paid (4,843) (4,849) (9,429)
Cash flows from operating activities 22,878 17,153 28,499
Investing activities
Purchases of Investments (1,322,861) (1,562,212) (2,548,873)
Sales of Investments 1,259,446 1,670,481 2,681,183
Other capital charges and credits (26) (43) (76)
Cash flows from investing activities (63,441) 108,226 132,234
Cash flows before financing activities (40,563) 125,379 160,733
Financing activities
Equity dividends paid (33,709) (31,461) (62,774)
14 Repayment of loans (100,000) (75,000) (75,000)
14 Drawdown of loans 200,000 - 40,000
Cash flows from share issues - 1,931 1,931
Cash flows from share buybacks for
treasury shares (31,273) (3,877) (41,401)
Cash flows from financing activities 35,018 (108,407) (137,244)
14 Net (decrease)/increase in cash and cash
equivalents (5,545) 16,972 23,489
Cash and cash equivalents at the beginning
of the period 46,654 28,196 28,196
14 Effect of movement in foreign exchange 13,794 (1,385) (5,031)
Cash and cash equivalents at the end of
the
period 54,903 46,783 46,654



Represented by:

Cash at bank 24,711 17,699 16,177
Short term deposits 30,192 26,084 30,477
Cash and cash equivalents at the end of
the
period 54,903 43,783 46,654

UNAUDITED NOTES ON THE CONDENSED ACCOUNTS
1 Results
The results for the six months to 30 June 2021 and 30 June 2020 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 2020; 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 2020 are an extract from those
accounts.

2 Accounting policies
(a) Basis of preparation
These condensed financial statements have been prepared on a going concern basis in accordance with the
Companies Act 2006, Interim Financial Reporting (FRS 104) and the revised Statement of Recommended
Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (SORP), issued
by the AIC in October 2019.

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 2020.

(b) Use of judgements, estimates and assumptions
The presentation of the financial statements in accordance with accounting standards requires the Board to
make judgements, estimates and assumptions that affect the accounting policies and reported amounts of
assets, liabilities, income and expenses. Estimates and judgements are continually evaluated and are based
on perceived risks, historical experience, expectations of plausible future events and other factors. Actual
results may differ from these estimates.

The area requiring the most significant judgement and estimation in the preparation of the financial
statements is accounting for the value of unquoted investments.

The policy for valuation of unquoted securities is set out in note 8 of the accounts and further information on
Board procedures is contained in the Report of the Audit Committee and note 26(d) of the Report and
Accounts as at 31 December 2020. Material judgements were applied to the valuation of the Company’s
direct investment, Inflexion Strategic Partners. This investment was valued using the earnings method
multipled by a comparable quoted company multiple (where the judgement of which comparable companies
to select and what discounts to apply are subjective). This resulted in an uplift of £14.3m. The fair value of
unquoted (Level 3) investments, as disclosed in note 8, represented 8.3% of total investments at 30 June
2021. Under foreseeable market conditions the collective value of such investments may rise or fall in the
short term by more than 25%, in the opinion of the Directors. A fall of 25% in the value of the unlisted (Level
3) portfolio at the half-year would equate to £111m or 2.2% of net assets and a similar percentage rise should
be construed accordingly.

3 Income




Half-year ended
30 June 2021
£’000s
Half-year ended
30 June 2020
£’000s
Income comprises:
UK dividends 4,135 3,932
Overseas dividends 36,119 35,775
Rebate on management fees - 6
Interest on short-term deposits and
withholding tax reclaims 142 102
Income 40,396 39,815

Included within income is £0.6m (30 June 2020: £0.7m; 31 December 2020: £1.2m) of special dividends
classified as revenue in nature.
The value of special dividends treated as capital in nature is £0.0m (30 June 2020: £0.0m; 31 December
2020: £0.0m).

4 Fees and other expenses and interest payable and similar charges


Half-year ended
30 June 2021
£’000s
Half-year ended
30 June 2020
£’000s
Fees and other expenses 11,181 9,895
Interest payable and similar charges 4,884 4,803
Total 16,065 14,698

Fees and other expenses comprise:
Allocated to Revenue Account

- Management fees payable directly to the Manager* 2,391 2,057
- Other expenses 1,584 1,624
3,975 3,681
Allocated to Capital Account
- Management fees payable directly to the Manager* 7,172 6,172
- Other expenses 34 42
7,206 6,214
Interest payable and similar charges comprise:
Allocated to Revenue Account 1,221 1,201
Allocated to Capital Account 3,663 3,602
* Including reimbursement in respect of services provided by sub-managers

The Manager’s remuneration is based on a fee of 0.35% per annum of the market capitalisation of the
Company up to £3.0 billion, 0.30% between £3.0 and £4.0 billion, and 0.25% above £4.0 billion 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 2020. 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 £3,768,000 (30 June 2020: £4,106,000) 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.

Half-year
ended
30 June
2021
pence
Half-year
ended
30 June
2021
£’000s
Half-year
ended
30 June
2020
pence
Half-year
ended
30 June
2020
£’000s
Revenue return 5.86 31,354 5.74 31,129
Capital return 90.69 484,884 (7.46) (40,488)
Total return 96.55 516,238 (1.72) (9,359)
Weighted average ordinary shares in
issue excluding treasury shares (see
note 11) 534,639,847 542,406,495

7 Dividends



Dividends paid and payable
on ordinary shares




Register date




Payment date
Half-year
ended
30 June
2021
£’000s
Half-year
ended
30 June
2020
£’000s
Year
ended 31
December
2020
£’000s
2019 Third interim of 2.90p 3-Jan-2020 31-Jan-2020 – 15,736 15,736
2019 Final of 2.90p 17-Apr-2020 13-May-2020 – 15,725 15,725
2020 First interim of 2.90p 17-Jul-2020 3-Aug-2020 – – 15,707
2020 Second interim of 2.90p 9-Oct-2020 2-Nov-2020 – – 15,606
2020 Third interim of 2.90p 3-Jan-2021 1-Feb-2021 15,563 – –
2020 Final of 3.40p 16-Apr-2021 13-May-2021 18,146 – –
33,709 31,461 62,774

The Directors have declared a first interim dividend in respect of the year ending 31 December 2021 of
3.00p per share, payable on 2 August 2021 to all shareholders on the register at close of business on 16
July 2021. The amount of this dividend will be £15,967,000 based on 532,237,938 shares in issue at 15
July 2021. This amount has not been accrued in the results for the half-year ended 30 June 2021.

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 2021
£’000s

As at 30 June 2020
£’000s

As at 31 December 2020
£’000s
Level 1 4,951,479 4,041,181 4,481,633
Level 3 445,889 344,675 374,735
Total valuation of
investments 5,397,368 4,385,856

4,856,368

With respect specifically to investments in Private Equity, whether through funds or partnerships, the Directors
rely on the latest available unaudited quarterly valuations of the underlying unlisted investments as supplied
by the investment advisers or managers of those funds or partnerships. The Directors regularly review the
principles applied by the managers to those valuations to ensure they are in compliance with the principal
accounting policies as stated in the year end report and accounts.

No investments held at 30 June 2021, 30 June 2020 or 31 December 2020 were valued in accordance with
level 2.

Derivative instruments
Derivative instruments included forward exchange contracts with a net unrealised capital loss of £1.2m as at
30 June 2021 (30 June 2020: £nil and 31 December 2020: unrealised capital gain of £9.1m).

9 Loans and Debenture


30 June 2021
£’000s


30 June 2020
£’000s

31 December
2020
£’000s
Loans falling due within one year - - 40,000
Loans falling due after more than one year 501,863 367,625 366,041
Debenture falling due after more than one year 575 575 575
Comprising:
Sterling denominated loan, falling due within one year - - £40m
Sterling denominated loan, falling due after more one
year £404m £264m £264m
Euro denominated loan, falling due after more than one
year €114m

€114m €114m
4.25% perpetual debenture stock £0.575m £0.575m £0.575m

In June 2021 the Company issued fixed rate senior unsecured notes in tranches of £50 million, £50 million
and £40 million expiring in June 2036, June 2038 and June 2056 respectively. Interest rates applying to the
notes are commercially competitive and fixed until the expiry dates.

10 Other creditors falling due within one year
30 June 2021
£’000s
30 June 2020
£’000s
31 December
2020
£’000s
Cost of ordinary shares repurchased 3,205 638 420
Investment creditors 37,955 8,454 4,487
Management fee payable to the
Manager
2,173 1,950 2,210
Foreign exchange contracts 1,205 - -
Other accrued expenses 1,140 1,297 1,404
45,678 12,339 8,521


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 2020 25,172,380 536,646,636 561,819,016 140,455
Shares repurchased by the Company and
held in treasury 4,218,385 (4,218,385) - -
Balance at 30 June 2021 29,390,765 532,428,251 561,819,016 140,455

4,218,385 shares were repurchased during the period at a cost of £34,059,000. 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 2021 30 June 2020 31 December 2020

Net asset value per share -pence

931,59

749.93

840.69
Net assets attributable at end of period - £’000s 4,960,030 4,063,714 4,511,560
Ordinary shares of 25p in issue at end of period
excluding shares held in treasury - number 532,428,251 541,879,424

536,646,636

Net asset value per share (with the debenture stock and long-term loans at market value) at 30 June 2021
was 927.41p (30 June 2020: 740.27p and 31 December 2020: 831.78p). The market value of debenture
stocks at 30 June 2021 was £429,000 (30 June 2020 and 31 December 2020: £429,000). The market value
of the long-term loans at 30 June 2021 was £524,243,000 (30 June 2020: £420,090,000 and 31 December
2020: £414,049,000) 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

Half-year
ended
30 June 2021
£’000s
Half-year
ended
30 June 2020
£’000s

Year ended
31 December 2020
£’000s
Net return on ordinary activities before taxation
520,006 (5,253) 514,575
Adjust for non-cash flow items, dividend income and
interest expense:
(Gains)/losses on investments (487,969) 21,955 (475,886)
Exchange (gains)/losses (7,706) 8,415 1,416
Non-operating expense of a capital nature 34 42 70
Decrease/(increase) in other debtors 24 9 (32)
(Decrease)/increase in creditors (341) (219) 139
Dividends receivable (40,254) (39,707) (70,057)
Interest payable 4,884 4,803 9,398
Tax on overseas income and Indian Capital Gains Tax (434) (7,139) (11,750)
(531,762) (11,841) (546,702)
Cash flows from operating activities (before dividends
received and interest paid)

(11,756)

(17,094)

(32,127)


14 Analysis of changes in net debt




Cash
£’000s


Short
term
loans
£’000s

Long
term
loans
£’000s



Debenture
£’000s


Forward
FX
£’000s



Total
£’000s
Opening net debt as at 31
December 2020 46,654

(40,000)

(366,041) (575)

9,061 (350,901)






Cash-flows:





Drawdown of loans - (60,000) (140,000) - - (200,000)
Repayment of bank loans - 100,000 - - - 100,000

Net movement in cash and
cash equivalents

(5,545)

-

-

-

-

(5,545)

Non-cash:
Effect of foreign exchange
movements

13,794

-

4,178

-

(10,266)

7,706

Closing net debt as at 30
June 2021
54,903 - (501,863) (575) (1,205) (448,740)

15 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 policy;
current cash position; the availability of loan finance; compliance with all financial loan and private placement
covenants; and the operational resilience of the Company and its service providers. It is recognised that the
Company is mainly invested in readily realisable, globally listed securities that can be sold, if necessary, to
repay indebtedness.

As part of their assessment, the Directors have given careful consideration to the consequences for the
Company resulting from the continuing uncertainty and disruptive impact on the global economy created by
the COVID-19 pandemic. The primary risk is that of a very substantial decrease in the Net Asset Value of
the Company in the short to medium term to the extent that the most onerous financial loan covenants are
breached. These covenants stipulate that the net assets of the Company must not fall below £750m and that
gearing must not exceed 35% of the adjusted portfolio value*. The Directors took into account the Company’s
resilience in withstanding the impact of the substantial fall in the stockmarkets in March 2020 triggered by
COVID-19, and stress tests carried out in respect of the period from 9 March 2021 to 31 March 2022 that
enabled them to assess the impact of varying degrees of:

• falls in the value of the publicly listed investments;
• widening discount and increased buyback levels;
• illiquidity and early calls on private equity commitments;
• adverse fluctuations in exchange rates; and
• adverse fluctuations in annual revenue.

As previously reported, a reverse stress test was also carried out commencing January 2021 to establish the
extent to which markets and revenue would need to fall and exchange rates move such that the Company
would breach its most onerous financial loan covenants. The Company’s current financial position does not
suggest that any of its private placement and banking covenants are at risk of being breached. As at 21 July
2021, the last practicable date before publication of this report, borrowings amounted to £503 million,
equivalent to 9.9% of the adjusted portfolio value*. The Net Asset Value was £5,019 million. The tests had
indicated that it would take a 71% fall in the values of the public and private equity portfolios alongside a 60%
fall in revenue and adverse exchange rate movements of 20% to breach the covenant relating to the 35%
adjusted portfolio value*. Such an event is therefore highly unlikely not least as the tests were undertaken
without any assumptions of intervention that would mitigate their effect. Under any scenario of prolonged
severe market falls that could threaten the Company’s going concern status, the Board would work with the
Manager in taking mitigating action that could include portfolio restructuring, reduced dividend payments and
the cutting of costs.

The assessment by the Directors also took account of control aspects. The Company operates within a robust
regulatory environment and retains title to all assets held by the Custodian. Cash is held with banks approved
and regularly reviewed by BMO GAM and the Board. The Directors have noted that BMO GAM’s home
working arrangements continue to operate effectively as do those of the Company’s key suppliers without
any impact upon service delivery and operations.

*Adjusted portfolio value – This comprises the Company’s gross assets less the value of all unquoted and
private equity investments

Directors’ Statement of Principal Risks

The Company’s principal risks and uncertainties are described in 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 2020. They include:

• failure to access the targeted market or meet investor needs or expectations, including ESG and
climate change considerations in particular, leading to significant pressure on the share price. The
Board recognises that climate change is one of the defining risks of modern times and has announced
its commitment to transitioning the portfolio to net zero carbon emissions by 2050 at the latest.
Reference to the Company’s responsible investment approach is set out in the Chairman’s
Statement.

• inappropriate asset allocation, sector and stock selection, currency exposure and use of gearing and
derivatives may give rise to under-performance and impact dividend paying capacity. Political risk
factors, including the potential emergence of restrictive government controls, could also impact
performance as could market shocks such as those experienced as a result of Covid-19.

• failure of BMO GAM to continue to operate effectively resulting from inadequate systems or
resources, or through the loss of key staff; and

• Covid-19 and the implementation of working from home and increased sophistication of cyber threats
have heightened risks of loss through errors, fraud or control failures at service providers or loss of
data through business continuity failure.

The Directors continue to review the key risk register for the Company which identifies the risks that the
Company is exposed to, the controls in place and the actions being taken to mitigate them. This is set against
the backdrop of increased risk levels within the global economy since the beginning of 2020 as a result of the
disruptive impact and continuing uncertainty created by the COVID-19 pandemic.

The Board also recognises that Bank of Montreal’s proposed sale of BMO Global Asset Management,
referenced in the Chairman’s Statement, introduces an added level of uncertainty to the risk of failure of the
Manager in continuing to operate effectively. However, the Board considers that this risk has not altered
materially following assurances of little change from the proposed new owner. Otherwise, in the view of the
Board, there have not been any material changes to the fundamental nature of the risks outlined above since
the previous report and these principal risks and uncertainties, as summarised, are as applicable to the
remaining six months of the financial year as they were to the six months under review. The Board has
considered this in relation to going concern, as set out in note 15.

Directors’ Statement of Responsibilities in Respect of the Half-Yearly Financial
Report


In accordance with Chapter 4 of the Disclosure Guidance 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
Beatrice Hollond
Chairman
26 July 2021


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.
BMO Investment Business Limited,
Company Secretary

ENDS
A copy of the half report will shortly be submitted to the National Storage Mechanism and will be available for
inspection at www.fca.org.uk


The half-year report will be posted to shareholders and made available on the internet at www.fandcit.com

shortly. Copies may be obtained during normal business hours from the Company’s Registered Office,
Exchange House, Primrose Street, London EC2A 2NY.

BMO Investment Business Limited