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The Investment Company Plc - Annual Financial Report

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London, October 27

THE INVESTMENT COMPANY PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

The full Annual Report and Accounts for the year ended 30 June 2017 can be found on the Company’s website: http://www.mitongroup.com/tic.

DIRECTORS (all non-executive)

Sir David Thomson Bt. (Chairman)S. J. CockburnP. S. AllenM. H. W. Perrin (Audit Committee Chairman and Senior Independent Director) 

STRATEGIC REPORT

SUMMARY OF RESULTS

FINANCIAL CALENDAR

CHAIRMAN’S STATEMENT

This statement covers the year ending 30 June 2017.

Following the initial market setback on the UK’s decision to leave the EU, the subsequent period was marked with a strong equity recovery. The FTSE All Share Index rose 13.9% over the year. In contrast, the FTSE Actuaries UK Conventional Gilts All Stocks Index fell 3.6% over the year, as the decades of bond yield reductions came to an end. The net asset value (“NAV”) of the Company, which has a portfolio invested in both fixed income and equities, rose 4.4% over the twelve-month period. In addition, three interim dividends of 5p and a fourth interim of 5.7p were declared over the year. Dividends for the year 2017 totalled 20.7p (2015/16: 20.7p). Following the Company’s reorganisation in June 2013, its aim was to pay a premium, and in time grow the dividend to shareholders. It had sought to do this through investing in high-yielding loan stocks issued by quoted companies, which frequently carry a degree of participation in the issuer’s share price growth if they perform strongly. A second aspect of this strategy was that the Company’s return was not expected to be closely correlated with the movements of mainstream markets.

The Company has continued to hold a number of fixed interest stocks, which the Company has held for many years and the Board is well satisfied with the total return on these holdings. However, since June 2013, there have been few convertible loan notes issued that offer attractive risk/reward ratios, therefore the market opportunity for the strategy has not developed as had been expected. Those funds have been invested in smaller company equities where the returns have proved somewhat disappointing.

Overall, the increase in our NAV in the year was only 4.4% compared with gains of 24.8% and 36.5% respectively in the FTSE Smaller Companies and FTSE AIM Indices.

The Board is exploring initiatives to improve the total return to shareholders. The Board is also reviewing the administrative arrangements and has identified changes that can lower the cost of overheads, which includes the change of Secretary, Administrator and Registrar. Further details are included in the Director’s Report. In addition, pursuant to discussion with significant shareholders, the Board will review its composition.

Whilst markets may continue to appreciate from here for some time, the absence of global productivity growth could become a constraint. It may therefore become all the more important to invest across a wider range of opportunities in the coming period. In the meantime, our fixed interest portfolio is expected to generate a steady flow of relatively high income.

At the forthcoming Annual General Meeting there shall be, as with last year, a continuation resolution put to shareholders. The Directors believe the Company is well placed to deliver on its objectives in relation to returns to shareholders. Certain significant shareholders have expressed a strong preference to continue. Accordingly, your Directors recommend that members vote in favour of the continuation resolution.

Sir David ThomsonChairman

27 October 2017 

MANAGER’S REPORT

Market returns in the year to June 2017Market returns have been good over the last three decades. In our view, this has been driven by the extra growth derived from the globalisation of trade, combined with the fall of bond yields as the growth in imported low cost goods has moderated inflationary pressures. Going forward there are indications that globalisation may have peaked, which may lead to a series of changes in market trends. If this is the case, then it will become more important than ever for investment strategies to be less correlated with equity markets in future, along with a greater attention to downside resilience. 

PerformanceFollowing the equity market setback post the UK’s decision to leave the EU, the year between June 2016 and June 2017 was marked with a strong rise in the FTSE All Share Index; this index rose 13.9% over the year.

However, if anything the near absence of world growth has led to an escalation in the valuations of many of the largest growth stocks.

In NASDAQ, the US exchange, the rise in the share prices of Facebook, Apple, Amazon, Netflix and Google (collectively known as the FANGs) has attracted plenty of media comment. Interestingly, there has been a similar trend in the UK, with the best returns coming from many of the largest growth stocks listed on the AIM exchange. These could be linked together in the acronym FHAB – comprising Fevertree, Hutchinson China, ASOS and Boohoo. These four stocks alone added some 9% of the return on the FTSE AIM All Share Index that appreciated 36.5% over the year. Smaller companies generally appreciated, with the FTSE Smaller Companies (excluding Investment Companies) Index up 24.8% over the year.

In contrast, the FTSE Actuaries UK Conventional Gilts All Stocks Index fell 3.6% over the year. UK bond yields have been falling over recent decades as the surge in low cost imports have led to progressively lower interest rates. 

The NAV of the Company, with a portfolio invested in both fixed income securities and equities, rose 4.4% over the twelve-month period. This reflected a period in which several of the equity holdings performed strongly, along with some others that disappointed. 

For example, Bilby, a business that helps install gas fittings for social housing, lost a major contract and then went on to restate its past profitability. The share price of this company fell back 41.8% over the period. Alongside this Coral Products, a manufacturer of injected moulded products, fell back 21.6% over the year because it took some time to pass on the extra costs of its raw materials after the devaluation of Sterling. Subsequent to the end of June both of these companies have announced much improved trading, and therefore we look forward to the recovery of their share prices. The worst performing individual stock was Fairpoint, a business that acquired two legal practices that were automating to improve their efficiency. The share price fell back 91.0% to 9.5 pence before suspension of trading on AIM on 28 June 2017, as the business suffered a sharp rise in their working capital. Subsequent to June 2017, the company has announced that it has appointed administrators. Consequently, it has been decided to write down the carrying market value to £nil for this year end. In contrast, the portfolio also held holdings in Stobart Group, Randall & Quilter, Anglo Pacific and Aviva, all of which performed very strongly in the period.

Despite a reduction in the prices of UK government debt over the year, some of the fixed income holdings have nevertheless appreciated. The Phoenix 7.25% Perpetual Notes rose by 7.5% and the RBS 9% Perpetual Notes rose by 16.1% over the year. Alongside this, a few of the convertible loan stocks issued by quoted companies have shown some early performance. 

PortfolioApproximately half of the portfolio remains invested in a range of preference shares, loan stocks, debentures and notes. Although the largest corporate exposure in the portfolio is to Phoenix Life through a 7.25% perpetual note along with some ordinary shares as well, there are over 40 issuers from different corporates in the portfolio.

Despite a slight pick-up in the issuance of convertible loan notes during the year under review, there have still been too few with sufficiently attractive risk/reward ratios, so the second portion of the portfolio has largely remained invested in ordinary equities – including many smaller quoted companies – that often pay premium dividend yields. Generally smaller quoted companies tend to have greater growth potential, which will be more important if world growth remains tepid.

A number of holdings that were suffering adverse trading conditions were sold over the year. In the case of the Royal Mail and Safestyle, these were sold ahead of their downturn. However, in the case of DX Group and Entu, these were sold after adverse trading statements since the prospect of recovery seemed too distant. In the case of Serpura, a holding purchased through underwriting by a lowly priced fundraising, the CEO was unfortunately involved in an accident, which affected its prospects, therefore we accepted a takeover towards the end of the period. Alongside these, significant profits were taken on Esure given the valuation had moved up to an elevated level.

New holdings were established in Yu, a young and vibrant energy supplier to businesses, Eddie Stobart Logistics, which was relisted after finding operational improvements that helped them increase market share, and K3 Capital, an efficient corporate finance business that helps the very smallest businesses find a new owner. All three are well placed to pay good and growing dividend yields in our view. In addition, a new holding in the Sirius Minerals convertible loan stock was purchased at issue, but was subsequently sold when it moved to a significant premium some months after purchase. 

Finally, the Company continues to hold a FTSE100 Put option that was purchased for the portfolio following the market appreciation ahead of the US election. This covers around one third of the portfolio, with an exercise price of 6000 and the cover extends to March 2018. As with all insurance, the value of this holding has diminished as its term has reduced.

ProspectsThe principal aim of the Company has been to pay a premium yield, and ultimately grow the dividend for shareholders. The Intention was to generate a larger stream of revenue through investing in Loan Stocks issued by quoted companies since they typically pay yields in excess of 6%. In addition, these instruments can also generate an additional return through participating in a degree of the share price rise thereafter. Overall the returns on the Company have not been closely correlated with the movements of mainstream markets.

The absence of world growth remains a headwind going forward. If anything, the fact that productivity has not fully recovered since the Global Financial Crisis, is maybe even more troubling. Both of these factors imply that the market trends that have been with us over recent decades may be at the point of change. However, there will be individual stocks that continue to thrive and prosper in spite of the challenges. As an example, the Trust holds a number of convertible loan notes paying very attractive yields, where the underlying quoted companies continue to have promising prospects.

G. Williams and M. TurnerMiton Asset Management Limited

27 October 2017

TWENTY LARGEST INVESTMENTSAt 30 June 2017

CORPORATE SUMMARY

Investment ObjectiveThe Company’s investment objective is to provide shareholders with an attractive level of dividends coupled with capital growth over the long-term, through investment in a portfolio of equities, preference shares, loan stocks, debentures and convertibles.

Investment PolicyThe Company invests in equity and fixed income securities. It is expected the fixed income securities would include preference shares, loan stocks, debentures, notes, convertibles and related instruments and be issued by UK quoted companies with a wide range of market capitalisations. The conversion rights or equity warrants would normally convert into the underlying equity of the quoted company. The equity portion of the portfolio would principally invest in UK quoted companies, with a wide range of market capitalisations, which are anticipated to pay a growing stream of dividends.

Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company’s direct investments, as described below. The Company will not enter into uncovered short positions.

Risk diversificationPortfolio risk is mitigated by investing in a diversified spread of investments. Investments in any one company shall not, at the time of acquisition, exceed 15% of the value of the Company’s investment portfolio. In the long term, it is expected that the Company’s investments will generally be a portfolio of around 75 or more different securities, most of which will represent individually no more than 5% of the value of the Company’s total investment portfolio, as at the time of acquisition.

The Company will not invest more than 10% of its gross assets, at the time of acquisition, in other listed closed-ended investment funds, whether managed by the Manager or not, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed-ended investment funds.

Unquoted investmentsThe Company may invest in unquoted fixed income securities from time to time subject to prior Board approval.

Investment strategyThe Manager uses a bottom-up investment approach to selecting a diversified portfolio of equity and fixed income securities.

The investment approach can be described as active and universal, as the Company will not seek to replicate any benchmark and will target a significant proportion of issues from smaller quoted companies within an overall diversified portfolio. Potential investments are assessed against the key criteria, including yield, along with an assessment of the prospects of underlying corporate growth prospects, market positions, calibre of management and risk and financial resilience.

Dividend PolicyThe dividend policy has been adjusted to make it more sustainable, taking the dividend in the first year after reorganisation, being the year ended 30 June 2014, which amounted to 20.7p and seeking to gradually grow it going forward. Any growth in the dividend beyond 20.7p will be reflected in the quantum of the fourth interim dividend.

Capital StructureAs at 30 June 2017 and the date of this Annual Report, the Company’s share capital consists of 4,772,049 ordinary shares of 50p each. The Company holds no shares in Treasury. At general meetings of the Company, holders of ordinary shares are entitled to one vote on a show of hands and on a poll, to one vote for every share held.

In addition, there are 1,717,565 fixed rate preference shares of 50p in issue, all of which are held by a wholly owned subsidiary of the Company. The fixed rate preference shares are non-voting, are entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive their nominal value, 50p, on a distribution of assets or winding up. Preference shares are disclosed as equity in accordance with IAS 32.

Total Assets and Net Asset ValueThe Group had total net assets of £17,736,777 and a NAV of 371.68p per ordinary share at 30 June 2017.

Business ModelThe principal activity of the Company is investment in equity securities of quoted UK companies with a wide range of market capitalisations, preference shares and prior charge securities with a view to achieving a high rate of income and capital growth over the medium term. The Company has been granted approval from HM Revenue & Customs (“HMRC”) as an investment trust under s1158/1159 of the Corporation Tax Act 2010 (“s1158/1159”) and will continue to be treated as an investment trust company, subject to there being no serious breaches of the conditions for approval.

The principal conditions that must be met for approval by HMRC as an investment trust for any given accounting period are that the Company’s business should consist of “investing in shares, land or other assets with the aim of spreading investment risk and giving members of the company the benefit of the results” and the Company must distribute a minimum of 85% of all its income as dividend payments. The Company must also not be a close company. The Directors are of the opinion that the Company has conducted its affairs for the year ended 30 June 2017 so as to be able to continue to qualify as an investment trust.

The Company’s status as an investment trust allows it to obtain an exemption from paying taxes on the profits made from the sale of its investments and all other net capital gains. Investment trusts offer a number of advantages for investors, including access to investment opportunities that might not be open to private investors and to professional stock selection skills at lower cost.

The Company owns Abport Limited, an investment dealing company, and New Centurion Trust Limited, an inactive investment company (the “subsidiaries”). The Company and its wholly owned Subsidiaries together compromise a group (the “Group”).

Principal Risks and UncertaintiesThe management of the business and the execution of the Group’s strategy are subject to a number of risks. A robust assessment of the principal risks to the Company has been carried out, including those that would threaten its business model, future performance, solvency and liquidity. A summary of the risk management and internal control processes can be found in the Corporate Governance Statement in the full Annual Report. The key business risks affecting the Group are:

Risk ManagementSpecific policies for managing risks are summarised below and have been applied throughout the period:

1. Market price riskThe Manager monitors the prices of financial instruments held by the Group on a regular basis. In addition, it is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce risks arising from investment decisions and investment valuations. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. Most of the equity investments held by the Group are listed on the London Stock Exchange.

2. Interest rate riskIn addition to the impact of the general investment climate, interest rate movements may specifically affect the fair value of investments in fixed interest securities. The Manager monitors the applicable interest rates and yields associated with the securities.

3. Liquidity riskThe Group’s assets mainly comprise readily realisable quoted securities that can be sold to meet funding commitments if necessary. Short term flexibility is achieved through the use of overdraft facilities. 

Additional Risks and Uncertainties Include:Credit risk: The failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. Normal delivery versus payment practice and review of counterparties and custodians by the Manager mean that this is not a significant risk.

Discount volatility: The Company’s shares may trade at a price which represents a discount to its underlying NAV.

Regulatory risk: The Company operates in an evolving regulatory environment and faces a number of regulatory risks. A breach of s1158/1159 would result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations, including the Companies Act 2006, the UKLA Listing Rules, the UKLA Disclosure Guidance and Transparency Rules, or the Alternative Investment Fund Managers’ Directive, could lead to a detrimental outcome. Breaches of controls by service providers to the Company could also lead to reputational damage or loss. The Board monitors compliance with regulations, with reports from the Manager and the Administrator.

Protection of assets: The Company’s assets are protected by the use of an independent custodian, BNY Mellon. In addition, the Company operates clear internal controls to safeguard all assets.

These and other risks facing the Group are reviewed regularly by the Audit Committee.

Key Performance Indicators (“KPIs”)The Board reviews performance by reference to a number of KPIs and considers that the most relevant KPIs are those that communicate the financial performance and strength of the Company as a whole. The Board and Manager monitor the following KPIs:

ManagementDuring the year, the Company’s investments were managed by Miton.

Details of the ManagerMiton has a team of fund managers researching the full universe of quoted UK stocks. The day-to-day management of the portfolio is carried out by Gervais Williams and Martin Turner, who research all quoted companies, and are particularly known for successfully investing in many of the smaller quoted stocks.

Gervais WilliamsGervais joined Miton in March 2011 and is a Senior Executive director of the Miton Group. He has been an equity portfolio manager since 1985, including 17 years as Head of UK Smaller Companies and Irish Equities at Gartmore. He won the Grant Thornton Investor of the Year Award in 2009 and 2010, and was awarded Fund Manager of the Year 2014 by What Investment? He is also non-executive chairman of the Quoted Companies Alliance.

Martin TurnerMartin joined Miton in May 2011. Martin and Gervais have had a close working relationship since 2004 and their complementary expertise and skills led to a series of successful companies being backed. Martin qualified as a Chartered Accountant with Arthur Andersen, and also has extensive experience at Rothschild, Merrill Lynch and Collins Stewart, where as Head of Small/Mid Cap Equities his role covered their research, sales and trading activities.

Management ArrangementsThe Company appointed Miton Trust Managers Limited (“MTM” or “Manager”) as its Alternative Investment Fund Manager (“AIFM”) under an agreement dated 22 July 2014 (the “Management Agreement”). MTM has been approved as an AIFM by the UK’s Financial Conduct Authority. Miton Asset Management Limited has been appointed by MTM as Investment Manager to the Company pursuant to a delegation agreement.

Under the terms of the Management Agreement, the Manager has discretion to buy, sell, retain, exchange or otherwise deal in investment assets for the account of the Company.

The Manager is entitled to receive from the Company or any member of its subsidiaries in respect of its services provided under the Management Agreement, a management fee payable monthly in arrears calculated at the rate of one-twelfth of 1% per calendar month of the NAV for its services under the Management Agreement, save that its management fee will be reduced by such amount (being not more than the fees payable to the Manager in respect of any year (exclusive of VAT)) so as to seek to ensure that the Ongoing Charges Ratio of the Company does not exceed 2.5% per annum.

The Management Agreement is terminable by either the Manager or the Company giving to the other not less than six months’ written notice, such notice not to expire earlier than the second anniversary of commencement. The Management Agreement may be terminated earlier by the Company with immediate effect on the occurrence of certain events, including the liquidation of the Manager or appointment of a receiver or administrative receiver over the whole or any substantial part of the assets or undertaking of the Manager or a material breach by the Manager of the Management Agreement which is not remedied. The Company may also terminate the Management Agreement should Gervais Williams cease to be an employee of the Manager’s group and, within three months of his departure, is not replaced by a person whom the Company considers to be of equal or satisfactory standing. The Company may also terminate the Management Agreement if a continuation vote is not passed.

Environmental, Human Rights, Employee, Social and Community IssuesThe Board consists entirely of non-executive Directors and no one individual has unfettered powers of decision. Day-to-day management of the business is delegated to the Manager. As an investment trust, the Company has no direct impact on the community or the environment, and as such has no environmental, human rights, social or community policies. In carrying out its investment activities and in relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

Environmental, Social and Governance factors are considered as part of the investment process as misjudgements on these matters can incur additional costs to the portfolio holdings, as well as undermining their equity return through reputational damage. The Manager questions the corporate management on a variety of topics to ensure that company are adhering to best practice. These questions can be wide ranging.

The Board comprises four male Directors. In relation to gender diversity considerations, whilst there are currently no female Directors of the Company, members of the Board are appointed on merit, against an objective criteria set by the Board acting as the Nomination Committee.

The Strategic Report has been approved by the Board of Directors.

On behalf of the Board

Sir David ThomsonChairman

27 October 2017 

EXTRACTS FROM THE DIRECTORS’ REPORT

Going ConcernAt the forthcoming Annual General Meeting, shareholders will be asked to vote on the continuation of the Company as a closed-ended investment company. Should shareholders agree that the Company should continue to operate as an investment company, a similar ordinary resolution will be proposed at every Annual General Meeting thereafter.

The Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements as the assets of the Group consist mainly of securities which are readily realisable. The Directors are of the opinion that the Group has adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion, the Directors have considered the liquidity of the portfolio and the Company’s ability to meet obligations as they fall due for a period of at least 12 months from the date that these financial statements were approved.

Viability StatementThe Directors have assessed the viability of the Company over a two year period, taking account of the Company’s position and the risks as set out in the Strategic Report.

The period assessed balances the long-term aims of the Company, the Board’s view that the success of the Company is best assessed over longer time period and the inherent uncertainty of looking too far ahead. During this period, the Company will put forward an ordinary resolution for the Continuation of the Company, with the vote taking place at the Annual General Meeting to be held on 7 December 2017, and every year thereafter.

As part of its assessment of the viability of the Company, the Board has considered the principal risks and uncertainties and the impact on the Company of a significant fall in the value of its portfolio.

To provide this assessment, the Board has considered the Company’s financial position and its ability to liquidate its portfolio to meet its expenses or other liabilities as they fall due.

In addition to considering the principal risks above and the financial position of the Company as described above, the Board has also considered the following further factors:

Accordingly, the Directors have formed the reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next two years. 

STATEMENT OF DIRECTORS’ RESPONSIBILITIESThe Directors are responsible for preparing this Annual Report and the financial statements in accordance with applicable United Kingdom law and regulations and those International Financial Reporting Standards (“IFRS”) adopted by the European Union and Article 4 of the International Accounting Standards. Company law requires the Directors to prepare financial statements for each financial period which present fairly the financial position of the Group and the financial performance and cash flows of the Group for that period.

In preparing those financial statements, the Directors are required to:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

The financial statements are published on the Company’s website, www.mitongroup.com/tic, which is maintained on behalf of the Company by the Manager. Under the Management Agreement, the Manager has agreed to maintain, host, manage and operate the Company’s website and to ensure that it is accurate and up-to-date and operate in accordance with applicable law. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

We confirm that to the best of our knowledge:

On behalf of the Board

Sir David ThomsonChairman

27 October 2017

NON-STATUTORY ACCOUNTSThe financial information set out below does not constitute the Company’s statutory accounts for the years ended 30 June 2017 or 30 June 2016 but is derived from those accounts. Statutory accounts for the year ended 30 June 2016 have been delivered to the Registrar of Companies and statutory accounts for the year ended 30 June 2017 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor’s report can be found in the Company’s full Annual Report and Accounts at www.mitongroup.com/tic.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 30 June 2017

The total column of this statement is the Consolidated Statement of Comprehensive Income of the Group prepared in accordance with IFRS, The supplementary revenue and capital columns are prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

The notes below form part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 2017

The notes below form part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 2017

The notes below form part of these financial statements.

CONSOLIDATED BALANCE SHEETAs at 30 June 2017

These financial statements were approved by the Board on 27 October 2017 and were signed on its behalf by:

Sir David ThomsonChairman

Company Number: 4205

The notes below form part of these financial statements

COMPANY BALANCE SHEETAs at 30 June 2017

As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own Income Statement. The amount of the Company's return for the financial year dealt with in the financial statements of the Group is a profit after tax of £1,1555,152 (2016: loss after tax of £225,626).

These financial statements were approved by the Board of on 27 October 2017 and were signed on its behalf by:

Sir David ThomsonChairman

Company Number: 4205

The notes below form part of these financial statements

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTSFor the year ended 30 June 2017

The notes below form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTSAt 30 June 2017

1. Accounting Policies

Basis of Preparation

The Company is a public limited company incorporated and registered in England and Wales. The Company has been approved as an investment trust within the meaning of sections 1158/1159 of the Corporation Tax Act 2010.

The Group’s consolidated financial statements for the year ended 30 June 2017, which comprise the audited results of the Company and its wholly owned subsidiaries, Abport Limited and New Centurion Trust Limited (together referred to as the ‘‘Group’’), have been prepared in conformity with IFRS as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and as applied in accordance with the provision of the Companies Act 2006. The annual financial statements have also been prepared in accordance with the AIC Statement of Recommended Practice 2016 (“AIC SORP”), except to any extent where it is not consistent with the requirements of IFRS.

In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature have been prepared alongside the Income Statement.

The financial statements are presented in Sterling, which is the Group’s functional currency as the UK is the primary environment in which it operates.

Going Concern

The financial statements have been prepared on a going concern basis, being a period of at least 12 months from the date that these financial statements were approved, and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Group’s ability to continue as a going concern and are satisfied that the Group has the resources to continue in business for the foreseeable future. Furthermore the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern, having taken into account the liquidity of the Group’s investment portfolio and the Group’s financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

Basis of Consolidation

The subsidiaries are consolidated from the date of their acquisition, being the date on which control is obtained, and will continue to be consolidated until the date that such control ceases. Control comprises being exposed, or having rights, to variable returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them are eliminated.

Segmental Reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. The Group primarily invests in companies listed in the UK.

Accounting Developments

The accounting policies adopted are consistent with those of the previous financial year. The following accounting standards and their amendments were in issue at the period end but will not be in effect until after this financial year.

*Years beginning on or after

The Directors are considering the impact of the standards upon the financial statements. The impact of IRFS 9 in future periods will change the presentation of investments and the related allocation of income within the financial statements of the Group. This should not impact the returns of the Group.

The Directors do not expect that the adoption of other standards listed above will have a material impact on the financial statements of the Group in future periods.

Critical Accounting Judgements and Key Sources of Estimation Uncertainty

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet, the Income Statement and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. These are reviewed on an ongoing basis. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future period if the revision affects both current and future periods.

Investments

The Group’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Group’s Board of Directors.

Investments are measured initially, and at subsequent reporting dates, at fair value, and derecognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time-frame of the relevant market. For listed investments this is deemed to be bid market prices or closing prices for Stock Exchange Electronic Trading Service – quotes and crosses (‘SETSqx’).

Changes in fair value of investments, realised gains and losses on disposal are also recognised in the Income Statement as capital items.

All investments held that have been purchased by the Group since obtaining approval as an investment trust from 1 July 2013 are classified as at “fair value through profit or loss”. Changes in fair value of investments are recognised in the Consolidated Income Statement as a capital item. On disposal, realised gains and losses are also recognised in the Consolidated Income Statement as capital items.

Investments held at 30 June 2017 which were purchased prior to 1 July 2013 are classified as ‘‘assets available for sale”. These investments have not been reclassified as at “fair value through profit or loss” in accordance with IAS 39 Financial Instruments: Recognition and Measurement. Realised gains and losses and movement in impairment provision on investments classified as “assets available for sale” are recognised in the Consolidated Income Statement and allocated to the Capital reserve. Movement in unrealised appreciation on investments classified as “assets available for sale” is recognised in the Revaluation reserve.

Investments held as current assets by the subsidiary undertaking are classified as ‘held for trading’, and are at fair value. rofits or losses on investments held for trading are taken to revenue in the Income Statement.

The holdings of the investment in subsidiaries are stated at cost less diminution in value.

All investments for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy in note 11.

Derivative Financial Instruments

Derivatives, including Index Put options, which are listed investments are classified as financial instruments being assets or liabilities held for trading. They are initially recorded at cost (being the premium paid to purchase the option) and are subsequently valued at fair value at the close of business at the year-end and included in fixed assets or current assets/liabilities depending on their maturity date.

Changes in the fair value of derivative instruments are recognised as they arise in the capital column of the Income Statement.

Foreign Currency

Transactions denominated in foreign currencies are converted to Sterling at the actual exchange rate as at the date of the transaction. Items that are denominated in foreign currencies at the year-end are reported at the rate of exchange at the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is of a capital or revenue nature.

Cash and Cash Equivalents

Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

Trade Receivables, Trade Payables and Short-term Borrowings

Trade receivables, trade payables and short-term borrowings are measured at amortised cost.

Income

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to receive payment is established. Fixed returns on non-equity shares are recognised on a time-apportioned basis.

Dividends from overseas companies are shown gross of any non-recoverable withholding taxes which are described separately in the Income Statement.

Special dividends are taken to revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the dividend on a case-by-case basis.

When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.

Where, before recognition of dividend income is due, there is any reasonable doubt that a return will actually be received, for example as a consequence of the investee company lacking distributable reserves, the recognition of the return is deferred until the doubt is removed.

All other income is accounted for on a time-apportioned accruals basis using the effective interest rate method and is recognised in the Income Statement

Expenses and Finance Costs

All expenses and finance costs are accounted for on an accruals basis.

Taxation

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with the recommendations of the AIC SORP, the allocation method used to calculate the tax relief on expenses charged to capital is the “marginal” basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account.

No taxation liability arises on gains from sales of fixed asset investments by the Group by virtue of its investment trust status. However, the net revenue (excluding UK dividend income) accruing to the Group is liable to corporation tax at the prevailing rates.

Dividends Payable to Shareholders

Dividends to shareholders are recognised as a liability in the period in which they are paid or approved in general meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company after the Balance Sheet date have not been recognised as a liability of the Company at the Balance Sheet date.

Share Capital

Issued share capital consists of Ordinary shares with voting rights and Issued preference shares which are non-voting. The Issued preference shares are entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive their nominal value, 50p, on a distribution of assets or a winding up.

Share Premium

The share premium account represents the accumulated premium paid for shares issued in previous periods above their normal value less issue expenses. This is a reserve forming part of non-distributable reserves. The following items are taken to this reserve:

Costs associated with the issue of equity

Premium on the issue of shares

Capital Redemption Reserve

The reserve represents the shares bought back and cancelled. This reserve is not distributable.

Revaluation Reserve

Movement in unrealised appreciation on investments classified as “assets available for sale” is recognised in the Revaluation reserve and is not distributable.

Capital Reserve

The following are taken to this reserve:

Gains and losses on derivatives;

Gains and losses on the disposal of investments;

Net movement arising from changes in the fair value of investments held and classified as at “fair value through profit or loss”;

Exchange difference of a capital nature; and

Expenses together with the related taxation effect, allocated to this reserve in accordance with the above policies.

Realised gains on investments less expenses, provisions and unrealised gains may be considered by the Board for distribution. This reserve is not distributable.

Revenue Reserves

The revenue reserve represents the surplus accumulated profits and is distributable.

2. Income

3. Investment Management Fee

The management fee payable monthly in arrears by the Company to the Alternative Investment Fund Manager (“AIFM”) Miton Trust Managers Limited is calculated at the rate of one-twelfth of 1% per calendar month of the NAV of the Company. For these purposes, the NAV shall be calculated as at the last business day of each month and is subject to the ongoing charges ratio of the Company not exceeding 2.5% per annum in respect of any completed financial year.

At 30 June 2017 an amount of £7,284 (2016: £7,255) was outstanding and due to the AIFM.

4. Other Expenses

The audit of the Group’s financial statements includes the cost of the audit of Abport Limited of £1,950 (2016: £1,950) and New Centurion Trust Limited £1,950 (2016: £1,950), which are charged to the subsidiaries.

The Directors Remuneration is set out in the Directors Report.

The average number of employees as at 30 June 2017 was one (2016: one) with the aggregate remuneration consisting of:

The Company does not have a provision (2016: £70,485) in respect of future pension payments. There are no pension liabilities due to past employees.

5. Taxation

Factors that may affect future tax charges

The Company has excess management expenses of £1,484,651 (2016: £1,423,322). It is unlikely that the Company will generate sufficient taxable income in the future to use these expenses to reduce future tax charges and therefore no deferred tax asset has been recognised.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust company under HMRC rules. 

6. Return per Ordinary Share

The return on total comprehensive income per ordinary share has been calculated to enable comparison of the returns per share shown in the annual reports of other investment trust companies. A reconciliation is shown below:

*excluding shares held in Treasury

7. Dividends per Ordinary Share

The Directors have declared a first interim dividend in respect of the year ending 30 June 2018 of 5.00p per ordinary share payable on 17 November 2017 to all shareholders on the register at close of business on 27 October 2017. The ex-dividend date was 26 October 2017.

8. Issued Ordinary Share Capital

The ordinary shares entitle the holders to receive all ordinary dividends and all remaining assets on a winding up, after the fixed rate preference shares have been satisfied in full.

The Company does not hold any ordinary shares in Treasury (2016: none).

9. Issued Preference Share Capital

The 1,717,565 fixed rate preference shares of 50p each are non-voting, entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive their nominal value, 50p, on a distribution of assets or a winding up. The whole of the issue is held by New Centurion Trust Limited, a wholly owned subsidiary of the Company.

The Directors do not consider the fair values of the issued preference share capital to be significantly different from the carrying values.

10. Net Asset Value per Ordinary Share

The NAV per ordinary share is calculated as follows:

The underlying investments of the wholly owned subsidiary New Centurion Trust Limited comprise issued preference share capital, as discussed in note 9, in the Company and, being effectively eliminated on consolidation, the valuation thereof does not impact the NAV attributable to ordinary shareholders.

11. Investments

Fair Value Hierarchy

The Group is required to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in measuring the fair value of each asset. The fair value as the amount at which the asset could be sold or the liability transferred in an orderly transaction between market participants, at the measurement date, other than a forced or liquidation sale.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 – valued using quoted prices, unadjusted in active markets for identical assets or liabilities.

Level 2 – valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included in level 1.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data or the asset or liability.

The table below sets out fair value measurements of financial instruments as at 30 June 2017, by the level in the fair value hierarchy into which the fair value measurement is categorised.

The valuation techniques used by the Group are set out in the Accounting Policies in Note 1.

Valuation process for Level 2 investments

The valuations are provided by an independent third party broker. The values are determined using observable inputs including prevailing interest rates, the maturity and redemption dates of the investment. The equity securities of the issuing company of the investments held are or have been publicly listed. The information includes reported results, commentary on current trading and third party research.

Valuation process for Level 3 investments

Investments classified within level 3 have significant unobservable inputs. Level 3 investments can typically include unlisted equity and corporate debt securities. As observable prices are not available for these securities, the Group has used valuation techniques to derive the fair value using recognised valuation methodologies, in accordance with International Private Equity and Venture Capital (“IPEVC”) valuation Guidelines including discounted cash flow modelling where relevant.

The level 3 investments held by the Company currently consist of fixed interest bearing securities and certain equity securities. These are valued by the Manager with valuation confirmations provided to the Board on a regular basis. The equity securities of the issuing company of the Level 3 investments held have been publicly listed and, therefore, detailed public information is available to substantiate the future prospects of the issuing company. The fixed interest bearing securities anticipated future cash returns and cash-flows. This information includes reported results, commentary on current trading, and third party research.

The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

The table below presents the movement in Level 3 investments that were accounted for at fair value for the year ending 30 June 2017.

12. Derivative Contracts

The derivative contracts serve as components of the Company’s investment strategy and are utilised primarily to structure and hedge investments, to enhance performance and reduce risk to the Group (the Company does not designate any derivative as a hedging instrument for hedge accounting purposes). The derivative contracts that the Company may hold from time to time or issue include: index-linked notes, contracts for differences, covered options and other equity-related derivative instruments.

These instruments can involve a high degree of leverage and are very volatile. A relatively small movement in the underlying value of a derivative contract may have a significant impact on the profit and loss and net assets of the Group. The Company’s investment objective sets limits on investments in derivatives with a high risk profile. The Manager is instructed to closely monitor the Company’s exposure under derivative contracts and any use of the derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company’s direct investments. The Company will not enter into uncovered short positions.

As at 30 June 2017, the Group has positions in the following type of derivative:

Options

Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any time within a specified period.

The Company purchases either Put or Call options through regulated exchanges and OTC markets. Options purchased by the Company provide the Company with the opportunity to purchase (Call options) or sell (Put options) the underlying asset at an agreed-upon value either on or before the expiration of the option. The Company is exposed to credit risk on purchased options only to the extent of their carrying value, which is their fair value.

During the year, the Company purchased a FTSE 100 March 2018 6,000 Put option. At the Balance Sheet date, the Put option had a fair value of £63,640 and a notional portfolio exposure of £6,289,000. Unrealised holding losses of £276,213 are detailed in the table below.

13. Investment in Subsidiaries

At 30 June 2017, the Company held interests in the following subsidiary companies:

The registered office for both companies above is:

Beaufort House, 51 New North Road, Exeter, Devon, EX4 4EP 

14. Substantial Share Interests

The Company has notified interests in 3% or more of the voting rights of the following companies:

15. Trade and Other Receivables

The carrying amount of trade receivables approximates to their fair value. Trade and other receivables are not past due at 30 June 2017.

16. Trade and Other Payables

17. Analysis of Financial Assets and Liabilities

Investment Objective and Policy

The Group’s investment objective is to provide shareholders with an attractive level of dividends coupled with capital growth over the long-term. The investing activities in pursuit of its investment objective involve certain inherent risks. The Group’s financial instruments can comprise the following held in accordance with the Company’s investment objectives and policies: 

Shares and debt securities;

Derivative instruments for efficient portfolio management, gearing and investment purposes;

Current asset investments held by its subsidiary;

Cash, liquid resources and short-term debtors and creditors that arise from its operations; and

Conversion rights or equity warrants:

Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company’s direct investments, as described below.

Risks

The risks identified arising from the Group’s financial instruments are market risk (which comprises market price risk and interest rate risk, liquidity risk and credit and counterparty risk). The Group may enter into derivative contracts to manage risk. The Group has held, sold and taken out listed Put options against the FTSE 100 index during the year. The Board reviews and agrees policies for managing each of these risks, which are summarised below.

Market Risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Group’s business. It represents the potential loss the Group might suffer through holding market positions by way of price movements, interest rate movements and exchange rate movements. The Group assesses the exposure to market risk when making each investment decision and these risks are monitored by the Investment Manager on a regular basis and the Board at quarterly meetings with the Manager.

Market price risk

Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant information from the Manager. Investment performance and exposure are reviewed at each Board meeting.

Analysis of Financial Assets and Liabilities

The Group’s exposure to changes in market values was £16,355,034 (2016: £16,411,997).The direct impact of a 5% movement in the value of the portfolio investments and current asset investments amounts to £817,752 (2016: £820,599). An equal change in the opposite direction would have decreased the net assets and net profit available to shareholders by an equal and opposite amount. The analysis is based on closing balances only and is not representative of the year as a whole. The market value of the option may move in a different direction to Securities.

Interest Rate Risk

Interest rate movements may affect the level of income receivable on cash deposits. The Group’s financial assets and liabilities, excluding short-term debtors and creditors, may include investment in fixed interest securities, such as UK corporate debt stock, whose fair value may be affected by movements in interest rates. The majority of the Group’ financial assets and liabilities, however, are non-interest bearing. As a result, the Group’s financial assets and liabilities are not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

The possible effects on the fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions. The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions.

Liquidity Risk

The Group’s assets mainly comprise readily realisable quoted and unquoted securities that can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the ability to liquidate listed securities.

The Group’s liquidity risk is managed by the Investment Manager in accordance with established policies and procedures in place. Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Manager. The Manager monitors the rolling forecasts of the group’s liquidity requirements to ensure it has sufficient cash to meet obligations as they fall due.

The maturity profile pf the Group’s financial liabilities £96,801 (2016: £510,568) are all due in one year or less.

Credit and Counterparty Risk

Credit risk is the risk of financial loss to the Group if the contractual party to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk as at 30 June 2017 was £1,544,449 (2016: £1,092,162). The calculation is based on the Group’s credit risk exposure as at 30 June 2017 and this may not be representative for the whole year.

The Group’s quoted investments are held on its behalf by Bank of New York Mellon acting as the Group’s custodian. Bankruptcy or insolvency of the custodian may cause the Group’s rights with respect to securities held by the custodian to be delayed.

Where the Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Group of default.

Investment transactions are carried out with a number of brokers where creditworthiness is reviewed by the Investment Manager.

Cash is only held at banks that have been identified by the Board as reputable and of high credit quality.

Foreign Currency Risk

Although the Company’s performance is measured in sterling, a proportion of the Company’s assets may be either denominated in other currencies, investments with currency exposure or the trading activities of its investee companies.

Derivatives

The Manager may use derivative instruments in order to ‘hedge’ the market risk of part of the portfolio. The Manager reviews the risks associated with individual investments and, where they believe it appropriate, may use derivatives to mitigate the risk of adverse market (or currency) movements. The Manager discusses regularly the hedging strategy with the Board.

At the year end, there was one derivative contract open (2016: none).

Capital Management Policies

Capital is managed so as to maximise the return to shareholders while maintaining a capital base to allow the Group to operate effectively. Capital is managed on a consolidated basis and to ensure that it will be able to continue as a going concern.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell securities to reduce debt.

The Board, with the assistance of the Manager, monitors and reviews the capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt. The gearing ratios at 30 June 2017 and 2016 were as follows:

18. Transactions with the Manager and Related Parties

The amounts paid to the Manager, together with details of the Management Agreement, are disclosed in note 3. Management fees for the year amounted to £160,723 (2016: £113,705).

As at the year-end, the following amounts were outstanding in respect of management fees: £7,284 (2016: £7,255).

Fees payable to the Group’s Directors are disclosed in the Directors’ Remuneration Report. At the year-end, there were no outstanding fees payable to Directors (2016: £4,000).

There were no other identifiable related parties at the year end.

Expenses outstanding to Directors at the year-end consists of £1,957 (2016: nil). No interest is charged on the balance and consists of reimbursement of expenses incurred.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 151st Annual General Meeting of the Company will be held at the offices of Fiske plc, Salisbury House, London Wall, London EC2M 5QS on Thursday, 7 December 2017 at 12.30pm.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm 

ENDS

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.