Invesco Perp Uk Regulatory News (IPU)

Invesco Perpetual UK Smaller Co's Investment Trust Plc - Annual Financial Report

PR Newswire

London, May 8

Invesco Perpetual UK Smaller Companies Investment Trust plc

Annual Financial Report Announcement

For the year ended 31 January 2018

FINANCIAL HIGHLIGHTS

The Benchmark Index of the Company is the Numis Smaller Companies Index (excluding Investment Companies) with income reinvested

Notes: (1) The term is defined in the Glossary contained in the annual financial report.

(2) Includes the tender offer of 38.26% of the Company’s shares in issue in June 2017.

(3) Source: Thomson Reuters Datastream (‘Datastream’).

CHAIRMAN’S STATEMENT

Performance

I am pleased to report that for the year ended 31 January 2018 the net asset value (NAV) of your Company rose by 23.9%, on a total return basis, an outperformance of 8.8% versus the benchmark index of the Company, the Numis Smaller Companies Index (excluding Investment Companies) with income reinvested, which returned 15.1%. The Company also generated an outperformance of 12.6% against the wider UK stock market (as measured by the FTSE All Share Index) which rose by 11.3% over the same period. The longer term results of the Company have likewise been good, as can be seen by the following graph which shows the five year total return results of the Company versus the benchmark index and the Company’s close peer group average.

Discount and Dividend Yield

Over the past 12 months the underlying share price discount to NAV narrowed slightly from 4.9% to 4.3%. As at the latest practicable date prior to the publication of this report, being 8 May 2018, the discount has narrowed and stands at 3.3%.

The Company’s discount continues to be one of the narrowest within the UK small cap peer group.

The Board continues to monitor the discount level and may seek to limit any volatility through the prudent use of share buybacks.

The Company’s dividend yield continues to outstrip its peers following the Board’s initiative in 2015 to commit to enhancing the Company’s dividend through the use, to a limited extent, of capital reserves.

Results of the Tender Offer, and the Future Commitment of the Board

In accordance with the terms of the tender offer and following shareholder approval at a general meeting held on 8 June 2017, the Company repurchased 20,357,155 shares at a price of 487.05p per share. These shares are held in treasury.

As I mentioned in my Chairman’s statement in the Half-Yearly Financial Report, a majority of the Company’s shareholders chose to retain their investment in the Company and did not participate in the tender offer and the overall take-up of 38.26% was below the 40% maximum level. Therefore shareholders who wished to were able to exit in full, with a few large shareholders taking the opportunity to realise their entire position. The Board believes that this has resulted in a positive rebalancing of the shareholder base in favour of supportive, long-term shareholders and therefore the Company is well positioned for the future.

The Board has committed to putting a further range of options to shareholders at or around the time of the AGM in 2020.

Dividends

The 2015 initiative referred to earlier gave rise to a significant increase in the level of dividend per annum to an initial yield target of 4% (based on the share price prevailing at the time of the announcement in March 2015). The total dividend for the year of 20.80p equates to 4% of the year end share price of 520p, an increase of 21.6% on the previous year’s total dividend.

Quarterly dividends are paid by the Company in September, December, March and June. For the year ended 31 January 2018, three interim dividends of 3.55p each have been paid and the Board has announced a proposed final dividend of 10.15p per share, making a total dividend for the year of 20.80p per share. The final dividend will be payable, subject to shareholder approval, on 8 June 2018 to shareholders on the register on 4 May 2018 and the shares will go ex-dividend on 3 May 2018.

While there has been a fall in total dividend income as a result of the tender offer, revenue per share has increased from 7.37p last year to 8.36p this year. The resulting balance of dividend being paid from capital reserves, has reduced to 1.8% of net assets (2017: 2.1%). This continues to represent only a small proportion of the current year’s returns and the annualised returns over the last ten years.

Board Composition and Succession Planning

After serving on the Board for over 16 years, Garth Milne, will retire as a Director of the Company at the forthcoming AGM. Garth has made a very significant contribution to the Company which has benefited from his knowledge and commitment. The Board would like to record its thanks to him for his services to the Company and shareholders.

During the year, the Nomination Committee carried out a review of the composition and skills of the Board and the Company’s succession plan. Following this, the Board appointed Nurole Limited, an external search consultant, to conduct the search for a new director and as a result, the Board is now pleased to propose the election of Mrs Bridget Guerin as a non-executive director at the forthcoming AGM.

Mrs Guerin has spent 33 years in the investment industry. She has held senior positions at Ivory & Sime and Schroders, where she was responsible for the launch and support of several investment trusts. She was also managing director of Matrix Money Management Limited where she was responsible for a portfolio of VCTs, hedge funds and UCITs funds. Since 2011, Mrs Guerin has been a non executive director on a number of different boards including Charles Stanley plc, a wealth manager, Mobeus Income & Growth VCT plc, Schroder Income Growth Fund plc and three CTA hedge funds managed by Cantab Capital Partners (now part of GAM).

Mrs Guerin brings significant experience and expertise, particularly in the field of sales and marketing to the Board and we recommend that shareholders vote in favour of her election.

General Meetings

This year’s AGM will be held on Thursday, 7 June 2018. The Directors have carefully considered all of the resolutions proposed and believe them to be in the best interests of shareholders and the Company as a whole. Accordingly, the Directors recommend that shareholders vote in favour of each resolution, as will the Directors in respect of their own shareholdings.

Outlook

The year under review saw largely positive market results, despite continued political uncertainty. The Portfolio Manager’s Report that follows discusses these in more detail.

Continued uncertainty around Brexit and the possibility of further interest rate increases are likely to have an impact on markets for some time to come.

Your portfolio managers have a disciplined approach to stock selection which has served shareholders well for many years. They continue with their investment strategy to invest in good quality and well-managed companies. They are mindful of the many potential pitfalls ahead of them in markets that are anything but straightforward and are well aware of the many political distractions on the horizon; your Board continues to be fully supportive of their considered and astute approach to portfolio construction.

Ian Barby

Chairman

8 May 2018

.

BUSINESS REVIEW

Strategy and Business Model

Invesco Perpetual UK Smaller Companies Investment Trust plc is an investment company and its investment objective is set out below. The strategy the Board follows to achieve that objective is to set investment policy and risk guidelines, together with investment limits, and to monitor how they are applied. These are also set out below and have been approved by shareholders.

The Company has contracted the services of Invesco Fund Managers Limited (the ‘Manager’) to manage the portfolio in accordance with the Board’s strategy and under its oversight. The portfolio manager responsible for the day to day management of the portfolio is Jonathan Brown, assisted by Robin West, Deputy Portfolio Manager.

In addition, the Company has contractual arrangements with Link Asset Services Limited (formerly known as Capita Asset Services Limited) to act as registrar and the Bank of New York Mellon (International) Limited (BNYMIL) as depositary and custodian. BNYMIL became the depositary, following novation of the depositary agreement from BNY Mellon Trust & Depositary (UK) Limited, on 1 December 2017. This transfer has no substantive effect on the services received by the Company.

Investment Objective

The Company is an investment trust whose investment objective is to achieve long-term total return for shareholders primarily by investment in a broad cross-section of small to medium sized UK quoted companies.

Investment Policy

The portfolio primarily comprises shares traded on the London Stock Exchange and those traded on AIM. The portfolio manager can also invest in unquoted securities, though these are limited to a maximum of 5% of gross assets at the time of acquisition.

The Manager seeks to outperform its benchmark, the Numis Smaller Companies Index (excluding Investment Companies). As a result, the Manager’s approach can, and often does, result in significant overweight or underweight positions in individual stocks or sectors compared with the benchmark. Sector weightings are ultimately determined by stock selection decisions.

Risk diversification is sought through a broad exposure to the market, where no single investment may exceed 5% of the Company’s gross assets at the time of acquisition. The Company may utilise index futures to hedge risk of no more than 10% and other derivatives (including warrants) of no more than 5%. In addition, the Company will not invest more than 10% in collective investment schemes or investment companies, nor more than 10% in non-UK domiciled companies. All these limits are referenced to gross assets at the time of acquisition.

Borrowings under this invesment policy may be used to raise market exposure up to the lower of 30% of net asset value and £25 million.

Dividend Policy

The Company’s dividend policy is to distribute all available revenue earned by the portfolio in the form of dividends to shareholders. In addition, the Board has approved the use of the Company’s capital reserves to enhance dividend payments. Therefore, the total dividend, paid to shareholders on a quarterly basis, comprises income received from the portfolio, with any balance from capital reserves.

Performance

The Board reviews performance by reference to a number of Key Performance Indicators which include the following:

• the movement in the net asset value (NAV) per share on a total return basis;

• the performance relative to the benchmark index and the peer group;

• the discount;

• dividend per share; and

• the ongoing charges.

The ten year record for the NAV and share price performance compared with the Company’s benchmark index can be found on page 4 in the annual financial report, and the five year discount record is on page 3 in the annual financial report. The ten year record for dividends and ongoing charges is shown on page 4 in the annual financial report. Returns versus volatility are shown on the graph on page 13 in the annual financial report

Results and Dividends

In the year ended 31 January 2018, the net asset value total return was 23.9%, compared with a total return on the benchmark index of 15.1%, an outperformance of 8.8%. The discount at the year end was 4.3% (2017: 4.9%). The Portfolio Manager’s Report shows an analysis of the relative performance in a table.

For the year ended 31 January 2018, three interim dividends of 3.55p per share were paid to shareholders in September and December 2017 and March 2018. A final dividend of 10.15p per share will be proposed to shareholders at the AGM on 7 June 2018 and will be paid on 8 June 2018 to shareholders on the register on 3 May 2018, subject to shareholder approval. This will give total dividends for the year of 20.8p (2017: 17.1p) of which 52% (2017:43%) was generated from revenue in the year. The remainder was funded from capital and represents 1.8% (2017: 2.1%) of the year end net assets.

Financial Position and Borrowings

At 31 January 2018, the Company’s net assets were valued at £179 million (2017: £242 million), comprising a portfolio of equity investments and net current assets, with no borrowings (2017: £nil). The Company has a facility with Bank of New York Mellon under which borrowings are limited to the maximum of the lower of 30% of net assets and £15 million (2017: unchanged). The decrease in net assets arose as a result of the 38.26% tender offer undertaken during the year. More detail on this can be found in the Chairman’s Statement.

Outlook, including the Future of the Company

The main trends and factors likely to affect the future development, performance and position of the Company’s business can be found in the Portfolio Manager’s Report. Details of the principal risks affecting the Company are set out under ‘Principal Risks and Uncertainties’ below.

Principal Risks and Uncertainties

The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. Most of these risks are market related and are similar to those of other investment trusts investing primarily in listed markets.

Market (Economic) Risk

Factors such as fluctuations in stock markets, interest rates and exchange rates are not under the control of the Board or the portfolio manager, but may give rise to high levels of volatility in the share prices of investee companies, as well as affecting the Company’s own share price and the discount to its NAV. To a limited extent, futures can be used to mitigate this risk.

Investment Risk

The Company invests in small and medium-sized companies traded on the London Stock Exchange or on AIM. By their nature these are generally considered riskier than their larger counterparts and their share prices can be more volatile, with lower liquidity. In addition, as smaller companies may not generally have the financial strength, diversity and resources of larger companies, they may find it more difficult to overcome periods of economic slowdown or recession.

The portfolio manager’s approach to investment is one of individual stock selection. Investment risk is mitigated via the stock selection process, together with the slow build-up of holdings rather than the purchase of large positions outright. This allows the portfolio manager to observe more data points from a company before adding to a position. The overall portfolio is well diversified by company and sector. The weighting of an investment in the portfolio tends to be loosely aligned with the market capitalisation of that company. This means that the largest holdings will often be amongst the larger of the smaller companies available.

The portfolio manager is relatively risk averse, looks for lower volatility in the portfolio and seeks to outperform in more challenging markets. The portfolio manager remains cognisant at all times of the potential liquidity of the portfolio.

There can be no guarantee that the Company’s strategy and business model will be successful in achieving its investment objective. The Board monitors the performance of the Company and has guidelines in place to ensure that the portfolio manager adheres to the approved investment policy. The continuation of the Manager’s mandate is reviewed annually.

Shareholders’ Risk

The value of an investment in the Company may go down as well as up and an investor may not get back the amount invested.

On 10 March 2015 the Company announced a new dividend policy, targeting an initial yield of approximately 4% per annum, based on the prevailing share price at that time of 344p per share. Dividends will continue to be funded by distributing 100% of available income each year, with any balance paid from capital reserves.

The Board and the portfolio manager maintain an active dialogue with the aim of ensuring that the market rating of the Company’s shares reflects the underlying net asset value; both share buy back and issuance facilities are in place to help the management of this process.

Borrowings

The Company may borrow money for investment purposes. If the investments fall in value, any borrowings (or gearing) will magnify the extent of any loss. If the borrowing facility could not be renewed, the Company might have to sell investments to repay any borrowings made under it. All borrowing and gearing levels are reviewed at every Board meeting and limits agreed.

Reliance on the Manager and other Third Party Providers

The Company has no employees and the Directors are all non-executive. The Company is therefore reliant upon the performance of third party service providers for its executive function and service provisions. Third party service providers are subject to ongoing monitoring by the Manager and the Company, including review of their cyber security. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company successfully to pursue its investment policy. The Company’s main service providers, of which the Manager is the principal provider, are listed on page 62 in the annual financial report.

The Manager may be exposed to reputational risks. In particular, the Manager may be exposed to the risk that litigation, misconduct, operational failures, negative publicity and press speculation, whether or not it is valid, will harm its reputation. Any damage to the reputation of the Manager could result in potential counterparties and third parties being unwilling to deal with the Manager and by extension the Company, which carries the Manager’s name. This could have an adverse impact on the ability of the Company to pursue its investment policy successfully.

The Audit Committee regularly reviews the performance and internal controls of the Manager, the results of which are reported to the Board. The Manager reviews the performance of all third party providers regularly through formal and informal meetings.

Regulatory Risk

The Company is subject to various laws and regulations by virtue of its status as an investment trust, its listing on the London Stock Exchange and being an Alternative Investment Fund under the Alternative Investment Fund Managers Directive. A loss of investment trust status could lead to the Company being subject to corporation tax on the chargeable capital gains arising on the sale of its investments. Other control failures, either by the Manager or any other of the Company’s service providers, could result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations.

The Manager reviews the level of compliance with tax and other financial regulatory requirements on a daily basis. The Board regularly considers all risks, the measures in place to control them and the possibility of any other risks that could arise. The Manager’s Compliance and Internal Audit Officers produce regular reports for review at the Company’s Audit Committee.

Further details of risks and risk management policies as they relate to the financial assets and liabilities of the Company are detailed in note 17 to the financial statements in the annual financial report.

Viability Statement

In accordance with provision C.2.2 of the UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the ‘Going Concern’ provision. The Company is an investment trust, a collective investment vehicle designed and managed for long term investment. The Company does not have a fixed life. The Board believes that the Company, at its essence, remains evergreen and the commitment to a further range of options being put to shareholders at or around the time of the AGM in 2020 does not distort this view. While the appropriate period over which to assess the Company’s viability may vary from year to year, the long term for the purpose of this viability statement is currently considered by the Board to be at least five years, with the life of the Company not intended to be limited to that or any other period.

The main risks to the Company’s continuation are: poor investment performance over an extended period; or shareholder dissatisfaction through failure to meet the Company’s investment objective; or the investment policy not being appropriate in prevailing market conditions. Accordingly, failure to meet the Company’s investment objective, and contributory market and investment risks, are deemed by the Board to be principal risks of the Company and are given particular consideration when assessing the Company’s long term viability.

The investment objective of the Company had been substantially unchanged for many years. The 2015 amendment to dividend policy gave some additional weight to targeting increased dividend income to shareholders. This change was not expected to, and does not, affect the total return sought or produced by the portfolio manager but was designed to increase significantly returns distributed to shareholders. The Board considers the revised investment objective remains appropriate. This is confirmed by contact with major shareholders and demonstrated by demand for the Company’s shares, as evidenced by the narrower discount to net asset value at which they now trade.

Performance derives from returns for risk taken. The Portfolio Manager’s Report sets out his current investment strategy. The Company’s performance has been very strong for many years and through different market cycles, as shown by the ten year total return performance graph on page 3 in the annual financial report, and by comparison with its peer group’s returns versus volatility over five years, as set out on page 13 in the annual financial report. Whilst past performance may not be indicative of performance in the future, it should be noted that the Company’s current Manager has been in place throughout that ten years, the current portfolio manager has been involved with the Company for over 12 years, and there has been no material change in the Company’s investment objective or policy.

Demand for the Company’s shares and performance are not things that can be forecast, but there are no current indications that either or both of these may decline materially over the next five years so as to affect the Company’s viability.

The Company’s portfolio is readily realisable and is many times the value of its normal level of short term liabilities and annual operating costs with the Company able to meet its obligations as they fall due.

Based on the above analysis, the Directors confirm that they expect the Company will continue to operate and meet its liabilities, as they fall due, during the five years ending January 2023.

Board Diversity

The Board considers diversity, including the balance of skills, knowledge, diversity (including gender) and experience, amongst other factors when reviewing its composition and appointing new directors, but does not consider it appropriate to establish targets or quotas in this regard. At the year end the Board consisted of five directors, one of whom is a woman, thereby constituting 20% female representation. As reported earlier, Bridget Guerin has been appointed to the Board with effect from 8 May 2018.

Social and Environmental Matters

As an investment company with no employees, property or activities outside investment, environmental policy has limited application. The Manager considers various factors when evaluating potential investments. While a company’s policy towards the environment and social responsibility, including with regard to human rights, is considered as part of the overall assessment of risk and suitability for the portfolio, the Manager does not necessarily decide to, or not to, make an investment on environmental and social grounds alone. The Company does not have a human rights policy, although the Manager applies the United Nations Principles for Responsible Investment.

The Company is an investment vehicle and does not provide goods or services in the normal course of it’s business, or have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015.

PORTFOLIO MANAGER’S REPORT

Investment Review

The year under review saw good returns from global stock markets. Investors shrugged off geopolitical worries and a messy UK general election outcome, and pushed the UK and US stock markets on to new all-time highs. Accommodative central bank policies, combined with an improving economic outlook in many developed economies, provided an encouraging outlook for investors. However, towards the end of the period, the realisation that a normalisation in monetary policy was likely to accompany the acceleration in GDP growth, prompted some profit taking in equity markets.

During the year, the UK stock market, as measured by the FTSE All-Share Index, returned +11.3% on a total return basis. This is a solid outcome following the strong performance last year. The improved economic environment overseas, from where UK quoted companies generate much of their revenue, was clearly a benefit, although this was partially offset towards the end of the period by a strengthening in sterling. Unsurprisingly, cyclical sectors such as industrials and technology performed well against this backdrop. UK smaller companies, as measured by the Numis Smaller Companies Index (excl. investment companies), gained 15.1% on a total return basis. Smaller companies are significantly more heavily weighted towards the industrial and technology sectors than the wider market and this partly explains their outperformance.

Portfolio Strategy and Review

Against this background, your Company generated a net asset value total return of +23.9% for the year. Positive contributions came from Support Service, Technology and Healthcare, while the portfolio’s exposure to the Aerospace & Defence sector negatively impacted performance.

At the individual stock level, the best performers included: Keywords Studios (+169%), which provides language translation, testing and art services to the computer games sector, continued to benefit from growth in the global gaming market and an increased trend to outsource non-core activities. Animal pharmaceutical business, Dechra Pharmaceuticals (+69%), which has produced excellent returns for us over many years, had another good year driven by strong organic growth augmented by acquisitions. IT services business FDM (+63%) produced further good performance. Its model of training graduates in an IT specialism before placing them with “blue chip” customers continued to enjoy considerable success both in the UK and USA. Microgen (+106%), saw earnings growth accelerate as its world leading high volume processing software, Aptitude, won a number of high profile customers. Disappointments in the period included RPC Group (–19%), which unsettled the market with its pace of acquisitions. The shares have performed well for the Company over many years, but we exited the position earlier in the year. The weak oil price in the first half of the year and some operational issues were the factors in the underperformance of Amerisur Resources (–40%). The company has a strong balance sheet and profitable production, so we have maintained the holding for now. Defence business Ultra Electronics (–18%) also had a difficult period. The UK Ministry of Defence has reined in discretionary expenditure to cover the increased cost of procuring equipment from the USA, following the currency depreciation in the wake of the Brexit vote. Despite this set-back, we believe the company has good prospects, so we took the opportunity to add to the holding.

Invesco Perpetual UK Smaller Companies Investment Trust plc

Performance attribution for the year ended 31 January 2018

(1) Source: Datastream

Performance attribution analyses the Company’s net asset value performance relative to its benchmark.

Portfolio outperformance measures the relative effect of the Company’s investment portfolio against that of its benchmark.

Net gearing effect measures the impact of borrowings less any cash balances on the Company’s relative performance. This is nil where there is no gearing in a year.

Management fees, performance fee and other expenses reduce the level of assets and therefore result in a negative effect for relative performance. There are no fees or expenses imputed to the benchmark index.

Tender offer measures the effect of ordinary shares bought back at a discount to net asset value through the tender offer on the Company’s relative performance.

Investment Strategy

Our investment strategy remains unchanged. The current portfolio is comprised of around 75 stocks with the sector weightings being determined by where we are finding attractive companies at a given time, rather than by allocating assets according to a “top down” view of the economy. We continue to seek growing businesses, which have the potential to be significantly larger in the medium term. These tend to be companies that either have great products or services, that can enable them to take market share from their competitors, or companies that are exposed to higher growth niches within the UK economy or overseas. We prefer to invest in cash generative businesses that can fund their own expansion, although we are willing to back strong management teams by providing additional capital to invest for growth.

The sustainability of returns and profit margins is vital for the long term success of a company. The assessment of a business’ position within its supply chain and a clear understanding of how work is won and priced, are key to determining whether a company has “pricing power”. It is also important to determine which businesses possess unique capabilities, in the form of intellectual property, specialist know-how or a scale advantage in their chosen market. We conduct around 350 company meetings and site visits a year, and these areas are a particular focus for us on such occasions.

Typically around a third of the portfolio is invested in highly diverse industrials. We continue to favour companies such as RWS, which is a world leader in language translation and intellectual property services. Its reputation for quality is vital in the patent translation market, where significant value is often at stake when intellectual property rights are challenged in the law courts. The company has contracts with most of the world’s major patent filers in the pharmaceutical, technology and engineering sectors.

Around a quarter of the portfolio is invested in consumer goods and consumer services. Whilst consumer spending is currently under pressure from increases in the cost of living, we believe that this situation could ease over the coming months, as inflation wanes and wage settlements increase. The retail sector is currently unloved, and this has encouraged us to add to the sector. One of our new holdings is Superdry, which is enjoying strong growth in the UK and overseas with its own branded casual wear. The company has a strong online presence, which allows it to expand internationally with a smaller store footprint than would have been necessary historically. The brand appears to have longevity and management have successfully broadened its offer into new areas.

Financials, technology and health care each account for around 10% of the portfolio. Within financials, we have added pension administration business, Xafinity, to the portfolio. The company benefits from a high level of recurring revenue and has the opportunity to increase market share by winning business from its larger competitors and by consolidating a number of the smaller players. In Technology, we continue to hold Aveva, which is best known for its engineering design software. The business recently merged with Schneider Electric’s software division, which along with an improvement in some of its end markets, should enable the company to return to a good level of growth. In the Health Care sector we have added to our holding in Consort Medical, which manufactures medical devices. The company has developed a novel auto-injector which is perfectly suited to administering the new generation of “biologic” drugs, which are more viscous than traditional medicines. The product, which is currently being trialled by a major pharmaceutical business, could be a significant driver of growth.

Outlook

The recent bout of increased volatility appears to have been prompted by the fear of interest rates rising more quickly than originally anticipated. While this can be seen as an indication that economies have finally rehabilitated themselves following the financial crisis a decade ago, there is little doubt that unprecedented central bank policies employed over the period have inflated asset prices. The valuation extremes reached in the bond market are the clearest example of this, although the effect of normalising monetary policy will be felt more widely. It should be noted however, that inflation has so far only increased modestly in developed economies. Additionally, the high level of debt at both a personal and government level has made economies much more sensitive to the cost of debt, so it seems unlikely that central banks will raise rates quickly.

The UK economy has slowed since the decision to leave the EU, albeit faring somewhat better, for the time being, than the more gloomy predictions. Much of this is down to increased import costs putting pressure on household budgets and company margins. The uncertainty around the UK’s future trading arrangements has also had a negative impact on corporate investment. This stands in contrast to most other major economies, which have seen accelerating growth over the same period. There are bright spots however. UK export performance has improved, helped by the depreciation of sterling and by increased economic activity in our major trading partners. We remain hopeful that an emerging clarity of a view on our post Brexit trading arrangements will re-invigorate business investment and allow the country to participate in the improved economic conditions seen elsewhere.

Market set-backs inevitably sap investor confidence but can provide interesting opportunities for long term investors. Equity valuations have returned to their long term average and the dividend yield provided by the UK smaller companies sector remains attractive when compared with UK government bonds. As always, our aim is to identify financially strong businesses that can deliver growth independently of the wider economy, and we are hopeful that the current environment will provide us with some interesting investment opportunities.

Jonathan Brown

Portfolio Manager

Robin West

Deputy Portfolio Manager

The Strategic Report was approved by the Board of Directors on 8 May 2018.

Invesco Asset Management Limited

Company Secretary

INVESTMENTS IN ORDER OF VALUATION

AT 31 JANUARY 2018

Ordinary shares unless stated otherwise

AIM: Investments quoted on AIM.

The percentage of the portfolio invested in AIM stocks at the year end was 28.5% (2017: 30.8%).

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

in respect of the preparation of the Annual Financial Report

?The Directors are responsible for preparing the annual financial report in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under the law the Directors have elected to prepare financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

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

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the company will continue in business.

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 Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company 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 the Strategic Report, a Corporate Governance Statement, a Directors’ Remuneration Report and a Directors’ Report that comply with the law and regulations.

The Directors of the Company each confirm to the best of their knowledge, that:

• the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

• this annual financial report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces.

The Directors consider that this annual financial report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

Signed on behalf of the Board of Directors

Ian Barby

Chairman

8 May 2018

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 JANUARY

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards, as adopted by the European Union. The profit after taxation is the total comprehensive income. The supplementary revenue and capital columns are both prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 JANUARY

The accompanying notes are an integral part of these financial statements.

BALANCE SHEET

FOR THE YEAR ENDED 31 JANUARY

These financial statements were approved and authorised for issue by the Board of Directors on 8 May 2018.

Signed on behalf of the Board of Directors

Ian Barby

Chairman

Richard Brooman

Deputy Chairman

The accompanying notes are an integral part of these financial statement.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 JANUARY

The accompanying notes are an integral part of these financial statement.

NOTES TO THE FINANCIAL STATEMENTS

1. Principal Accounting Policies

Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end.

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied during the current year and the preceding year, unless otherwise stated. The financial statements have been prepared on a going concern basis. The disclosure on going concern in the Directors’ Report forms part of the financial statements.

(a) Basis of Preparation

(i) Accounting Standards Applied

The financial statements have been prepared on an historical cost basis, except for the measurement at fair value of investments and derivatives, and in accordance with the applicable International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee as adopted by the European Union. The standards are those endorsed by the European Union and effective as at the date the financial statements were approved by the Board.

Where presentational guidance set out in the Statement of Recommended Practice (SORP) ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’, issued by the Association of Investment Companies as updated in January 2017, is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. The supplementary information which analyses the statement of comprehensive income between items of a revenue and a capital nature is presented in accordance with this.

(ii) Adoption of New and Revised Standards

New and revised standards and interpretations that became effective during the year had no significant impact on the amounts reported in these financial statements but may have an impact on the accounting for future transactions and arrangements.

At the date of authorising these financial statements, the following standards and interpretations, which have not been applied in these financial statements, were in issue (and in some cases had not yet been adopted by the EU).

• IFRS 9: Financial Instruments (2014) (effective 1 January 2018).

• IFRS 15: Revenue from contracts with customers’ issued (effective 1 January 2018).

The Directors do not expect the adoption of the above standards and interpretations (or any other standards and interpretations which are in issue but not effective) will have a material impact on the financial statements of the Company in future periods.

(b) Foreign Currency and Segmental Reporting

(i) Functional and presentation currency

The financial statements are presented in sterling, which is the Company’s functional and presentation currency and the currency in which the Company’s share capital and expenses are denominated, as well as a majority of its assets and liabilities.

(ii) Transactions and balances

Foreign currency assets and liabilities are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currency, are translated into sterling at the rates of exchange ruling on the dates of such transactions, and are taken to revenue or capital depending on whether they are revenue or capital in nature. All are recognised in the statement of comprehensive income.

(iii) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business of investing in equity and debt securities, issued by companies operating and generating revenue mainly in the UK.

(c) Financial Instruments

(i) Recognition of financial assets and financial liabilities

The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual provisions of the instrument. The Company offsets financial assets and financial liabilities if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.

(ii) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Company is recognised as an asset.

(iii) Derecognition of financial liabilities

The Company derecognises financial liabilities when its obligations are discharged, cancelled or expired.

(iv) Trade date accounting

Purchases and sales of financial assets are recognised on trade date, being the date on which the Company commits to purchase or sell the assets.

(v) Classification of financial assets and financial liabilities

Financial assets

The Company’s investments are designated at fair value through profit or loss as the investments are managed and their performance evaluated on a fair value basis in accordance with a documented investment strategy and this is also the basis on which information about the investments is provided internally to the Board.

Financial assets held at fair value through profit or loss are initially recognised at fair value, which is taken to be their cost and are subsequently valued at fair value.

For investments that are actively traded in organised financial markets, fair value is determined by reference to stock exchange quoted bid prices at the balance sheet date.

Financial liabilities

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method.

(d) Derivatives and Hedging

Derivative instruments are valued at fair value in the balance sheet. Derivative instruments may be capital or revenue in nature and, accordingly, changes in their fair value are recognised in revenue or capital in the Statement of Comprehensive Income as appropriate.

Futures contracts may be entered into for hedging purposes and any profits and losses on the closure or revaluation of positions are included in capital.

(e) Cash and Cash Equivalents

Cash and cash equivalents include any cash held at custodian and approved depositories, holdings in Short Term Investments Company (Global Series) plc (STIC), a triple-A rated money market fund and overdrafts.

(f) Income

All dividends are taken into account on the date investments are marked ex-dividend; other income from investments is taken into account on an accruals basis. Deposit interest and underwriting commission receivable are taken into account on an accruals basis. Special dividends representing a return of capital are allocated to capital in the Statement of Comprehensive Income and then taken to capital reserves.

 (g) Expenses and Finance Costs

All expenses and finance costs are accounted for in the Statement of Comprehensive Income on an accruals basis.

The investment management fee and finance costs are allocated 85% to capital and 15% to revenue. This is in accordance with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the portfolio. The performance-related management fee is allocated wholly to capital as it arises from capital returns on the portfolio.

Except for custodian transaction charges and costs in relation to the tender offer, all other expenses are allocated to revenue in the Statement of Comprehensive Income.

(h) Taxation

Tax represents the sum of tax payable, withholding tax suffered and deferred tax. Tax is charged or credited in the statement of comprehensive income. Any tax payable is based on taxable profit for the year, however, as expenses exceed taxable income no corporation tax is due. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.

Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered probable that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the tax rates expected to apply in the period when the liability is settled or the asset realised.

Investment trusts which have approval under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains.

(i) Dividends

Dividends are not accrued in the financial statements, unless there is an obligation to pay the dividends at the balance sheet date. Proposed final dividends are recognised in the financial year in which they are approved by the shareholders.

(j) Consolidation

Consolidated accounts have not been prepared as the subsidiary, whose principal activity is investment dealing, is not material in the context of these financial statements. The one hundred pounds net asset value of the investment in Berry Starquest Limited has been included in the investments in the Company’s balance sheet. Berry Starquest Limited has not traded throughout the year and the preceding year and, as a dormant company, has exemption under 480(1) of the Companies Act 2006 from appointing auditors or obtaining an audit.

2. Income

This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source.

No special dividends have been recognised in capital (2017: £691,000).

Overseas dividends include dividends received on UK listed investments where the investee company is domiciled outside of the UK.

3. Investment Management Fees

This note shows the fees due to the Manager. These are made up of the base management fee calculated and paid monthly and a performance fee calculated and paid annually. Both are based on the value of the assets being managed.

Details of the Investment Management Agreement can be found in the Directors’ Report.

At 31 January 2018, £98,000 (2017: £131,000) was accrued in respect of the base management fee and £2,596,000 (2017: £1,077,000) was accrued for the performance fee. The performance fee payable in any year is capped at 1% of average funds under management, with any excess (subject to a total performance fee cap of 2%) carried forward as performance fee deferred (see note 12).

4. Other Expenses

The other expenses of the Company are presented below; those paid to the Directors and auditor are separately identified.

 (i) The Director's Remuneration Report provides further information.

(ii) Auditor’s remuneration includes expenses but excludes VAT. The VAT is included in other expenses.

(iii) Other expenses include:

• £10,000 (2017: £10,000) of employer’s National Insurance payable on Directors’ remuneration. As at 31 January 2018, the amounts outstanding on Directors’ remuneration and employer’s National Insurance was £10,000 (2017: £10,000); and

• custodian transaction charges of £2,000 (2017: £1,000). These are charged to capital.

5. Finance Costs

Finance costs arise on any borrowing facilities the Company has.

6. Taxation

As an investment trust the Company pays no tax on capital gains and, as the Company invested principally in UK equities, it has little overseas tax. In addition, no deferred tax is required to provide for tax that is expected to arise in the future due to differences in accounting and tax bases.

(c) Factors that may affect future tax changes

The Company has excess management expenses of £36,250,000 (2017: £32,062,000) that are available to offset future taxable revenue. A deferred tax asset of £6,163,000 (2017: £5,451,000) at 17% (2017: 17%) has not been recognised in respect of these expenses, since they are recoverable only to the extent that the Company has sufficient future taxable revenue. The Company has no deferred tax liability at the balance sheet date.

7. Returns per Ordinary Share

Return per share is the amount of gain generated for the financial year divided by the weighted average number of ordinary shares in issue.

Basic total returns per ordinary share is based on the net total profit for the financial year of £44,866,000 (2017: £41,610,000).

Basic revenue returns per ordinary share is based on the net revenue profit for the financial year of £3,573,000 (2017: £3,924,000).

Basic capital returns per ordinary share is based on the net capital profit for the financial year of £41,293,000 (2017: £37,686,000).

All three returns are based on the weighted average number of shares in issue during the year of 42,723,755 (2017: 53,209,084).

8. Dividends on Ordinary Shares

The Company paid four dividends in the year – three interims and a final.

The final dividend shown below is based on shares in issue at the record date or, if the record date has not been reached, on shares in issue on the date the balance sheet is signed. The third interim and final dividends are paid after the balance sheet date.

The Company’s dividend policy was changed in 2015 so that dividends will be paid firstly from any revenue reserves available, and thereafter from capital reserves. The amount payable in respect of the year is shown below:

9. Investments

The portfolio is made up of investments which are listed on a regulated stock exchange or traded on AIM. Gains and losses in the year are either:

• realised, usually arising when investments sold; or

• unrealised, being the difference from cost on those investments still held at the year end.

The transaction costs (excluding the tender pool) included in gains on investments amount to £252,000 (2017: £240,000) on purchases and £96,000 (2017: £93,000) for sales.

† Sale proceeds for 2018 includes £96,365,000, net of transaction costs of £110,000, arising on securities realised in the tender pool. Details of this are included in the Chairman’s Statement and note 13.

10. Other Receivables

Other receivables are amounts which are due to the Company, such as monies due from brokers for investments sold and income which has been earned (accrued) but not yet received.

11. Other Payables

Other payables are amounts which must be paid by the Company, and include any amounts due to brokers for the purchase of investments or amounts owed to suppliers (accruals), such as the Manager and auditor.

12. Non-current Liabilities

Non-current liabilities are amounts payable by the Company more than a year after the balance sheet date.

The basis of the performance fee deferred is given in note 3.

13. Share Capital

Share capital represents the total number of shares in issue, including shares held in treasury.

The Company repurchased 20,357,155 shares on 27 July 2017 at a price of 487.05p pursuant to a tender offer dated 17 May 2017. The circular of that date set out the details of the tender offer including: the calculation of the net asset value of the tender pool; the expected fixed costs (which were paid by the Company); and the 1.5% discount to the net asset value, under the terms of the tender offer, which was borne by the tender pool. On completion of the tender offer, fixed costs totalled £492,000 and the enhancement to the net asset value that arose (being the difference between the 1.5% discount and the fixed costs) was £1,043,000. In addition stamp duty of £496,000 was paid by the tender pool.

No treasury shares were held by the Company prior to those bought back into treasury as part of the tender offer.

14. Reserves

This note explains the different reserves attributable to shareholders. The aggregate of the reserves and share capital (see previous note) make up total shareholders’ funds.

The share premium arises whenever shares are issued at a price above the nominal value and any issue costs. The capital redemption reserve maintains the equity share capital and arises from the nominal value of shares repurchased and cancelled. The share premium and capital redemption reserve are non-distributable.

Capital investment gains and losses are shown in note 9, and form part of the capital reserve. The revenue reserve shows the net revenue retained after payment of dividends. The capital and revenue reserves are distributable by way of dividend.

15. Net Asset Value per Ordinary Share

The Company’s total net assets (total assets less total liabilities) are often termed shareholders’ funds and are converted into net assets value per ordinary share by dividing by the number of shares in issue.

The net asset value per share and the net asset values attributable at the year end were as follows:

Net asset value per ordinary share is based on net assets at the year end and on 32,851,929 (2017: 53,209,084) ordinary shares, being the number of ordinary shares in issue (excluding ordinary shares held in treasury) at the year end.

16. Subsidiary Undertaking

The Company has one dormant subsidiary which has total assets of £100.

During the year and the preceding year, no transactions were undertaken by the subsidiary.

17. Risk Management, Financial Assets and Liabilities

Financial instruments comprise the Company’s investment portfolio and any derivative financial instruments held, as well as any cash, borrowings, other receivables and other payables.

Financial Instruments

The Company’s financial instruments comprise its investment portfolio, cash, overdraft, other receivables and other payables that arise directly from its operations such as sales and purchases awaiting settlement and accrued income. The accounting policies in note 1 include criteria for the recognition and the basis of measurement applied for financial instruments. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised and measured.

Risk Management Policies and Procedures

The Directors have delegated to the Manager the responsibility for the day-to-day investment activities of the Company as more fully described in the Directors’ Report.

As an investment trust the Company invests in equities and other investments for the long-term, so as to meet its investment policy (incorporating the Company's investment objective). In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company’s net assets or a reduction of the profits available for dividends. Those related to financial instruments include market risk, liquidity risk and credit risk. These policies are summarised below and have remained substantially unchanged for the two years under review.

The main risk that the Company faces arising from its financial instruments is market risk – this risk is reviewed in detail below. Since the Company invests mainly in UK equities traded on the London Stock Exchange, liquidity risk and credit risk are not significant. Liquidity risk is minimised as the majority of the Company’s investments comprise a diversified portfolio of readily realisable securities which can be sold to meet funding commitments as necessary. In addition, an overdraft facility provides short-term funding flexibility.

Credit risk encompasses the failure by counterparties to deliver securities which the Company has paid for, or to pay for securities which the Company has delivered, and cash balances. Counterparty risk is minimised by using only approved counterparties. The Company’s ability to operate in the short-term may be adversely affected if the Company’s custodian suffers insolvency or other financial difficulties. The appointment of a depositary has substantially lessened this risk. The Board reviews the custodian’s annual controls report and the Manager’s management of the relationship with the custodian. Cash balances are limited to a maximum of 1.25% of net assets with any one deposit taker, with only approved deposit takers being used, and a maximum of 7.5% of net assets for holdings in the Short-Term Investments Company (Global Series) plc (STIC), a triple-A rated money market fund.

Market Risk

The fair value or future cash flows of a financial instrument may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Company’s Manager assesses the Company’s exposure when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. The Board meets at least quarterly to assess risk and review investment performance. The Company may utilise hedging instruments to manage market risk. Gearing is used to enhance returns, however, this will also increase the Company’s exposure to market risk and volatility.

1. Currency Risk

The exposure to currency risk is considered minor as the Company’s financial instruments are mainly denominated in sterling. At the year end, the Company held no foreign currency investments or cash (2017: investments of £705,000 and cash of £1,038,000, both denominated in euros).

During this and the previous year, the Company did not use forward currency contracts to mitigate currency risk.

2. Interest Rate Risk

Interest rate movements will affect the level of income receivable on cash deposits and the interest payable on variable rate borrowings. When the Company has cash balances, they are held in variable rate bank accounts yielding rates of interest dependent on the base rate of the Custodian, Bank of New York Mellon. Additionally, holdings in STIC are subject to interest rate changes.

The Company has an uncommitted bank overdraft facility up to a maximum of 30% of the net asset value of the Company or £15 million (2017: £15 million), whichever is the lower; the interest rate is charged at 0.85% over Bank of England base rate. The Company uses the facility when required, at levels approved and monitored by the Board.

At the year end, there was no overdraft drawn down (2017: none). Based on the maximum amount that can be drawn down at the year end under the overdraft facility of £15 million (2017: £15 million), the effect of a +/– 1% in the interest rate would result in an increase or decrease to the Company’s statement of comprehensive income of £150,000 (2017: £150,000).

The Company’s portfolio is not directly exposed to interest rate risk.

3. Other Price Risk

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

Management of Other Price Risk

The Directors manage the market price risks inherent in the investment portfolio by meeting regularly to monitor on a formal basis the Manager’s compliance with the Company’s stated objectives and policies and to review investment performance.

The Company’s portfolio is the result of the Manager’s investment process and as a result is not correlated with the Company’s benchmark or the markets in which the Company invests. Therefore the value of the portfolio will not move in line with the market but will move as a result of the performance of the company shares within the portfolio.

If the value of the portfolio fell by 10% at the balance sheet date, the profit after tax for the year would decrease by £17.6 million (2017: £23.5 million). Conversely, if the value of the portfolio rose by 10%, the profit after tax would increase by the same amount.

Fair Values of Financial Assets and Financial Liabilities

The financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments), or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, due to brokers, accruals, cash at bank and overdraft).

Fair Value Hierarchy Disclosures

Except for the one Level 3 investment described below, all of the Company’s investments are in the Level 1 category as set out in IFRS 13, the three levels of which follow:

Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability.

The valuation techniques used by the Company are explained in the accounting policies note. For both these years, the Company held one Level 3 investment, being the dormant subsidiary Berry Starquest Limited. This holding is not material, being £100 of equity.

18. Maturity Analysis of Contractual Liability Cash Flows

The contractual liabilities of the Company are shown in notes 11 and 12 and comprise amounts due to brokers, accruals and performance fee deferred. All are paid under contractual terms. For amounts due to brokers, this will generally be the purchase date of the investment plus two business days; accruals would generally be due within three months; and performance fee deferred will be due after at least one year.

19. Capital Management

The Company’s capital, or equity, is represented by its net assets which are managed to achieve the Company’s investment objective set out above.

The main risks to the Company’s investments are shown in the Strategic Report under the ‘Principal Risks and Uncertainties’ section. These also explain that the Company is able to gear and that gearing will amplify the effect on equity of changes in the value of the portfolio.

The Board can also manage the capital structure directly since it determines dividend payments and has taken the powers, which it is seeking to renew, to buy-back shares, either for cancellation or to be held in treasury, and to issue new shares or sell shares held in treasury.

The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by s1159 Corporation Tax Act 2010 and by the Companies Act 2006, respectively, and with respect to the availability of the overdraft facility and by the terms imposed by the lender. The Board regularly monitors, and has complied with, the externally imposed capital requirements. This is unchanged from the prior year.

Total equity at 31 January 2018, the composition of which is shown on the balance sheet, was £178,571,000 (2017: £241,603,000).

20. Contingent Liabilities

There were no material outstanding contingent liabilities as at 31 January 2018 (2017: nil).

21. Related Party Transactions and Transactions with Manager

A related party is a company or individual who has direct or indirect control or who has significant influence over the Company.

Under International Financial Reporting Standards (IFRS), the Company has identified the Directors as related parties. The Directors’ remuneration and interests have been disclosed in the annual financial report with additional disclosure in note 4. No other related parties have been identified.

Under IFRS, the Manager is not a related party. Details of the Manager's services and fees are disclosed in the Directors’ Report in the annual financial report and in note 3.

22. Post Balance Sheet Events

There are no significant events after the end of the reporting period requiring disclosure.

The Audited Annual Financial Report will be posted to shareholders shortly. Copies may be obtained during normal business hours from the offices of Invesco Perpetual, 6th Floor, 125 London Wall, London, EC2Y 5AS.

A copy of the Annual Financial Report will be available from Invesco Perpetual on the following website: 

www.invescoperpetual.co.uk/ipukscit

The Annual General Meeting (AGM) of the Company will be held at 12.00 noon on 7 June 2018 at 43-45 Portman Square, London, W1H 6LY. A General Meeting will immediate follow the AGM.

By order of the Board

Invesco Asset Management Limited

Company Secretary

8 May 2018