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Fins Growth Inc Tst (FGT)

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Friday 30 January, 2009

Fins Growth Inc Tst

Annual Report and Accounts


30 January 2009

                      London Stock Exchange Announcement

                      Finsbury Growth & Income Trust PLC

             Audited Results for the Year Ended 30 September 2008

The following is an extract from the Company's Annual Report and Accounts for
the year ended 30 September 2008. The Annual Report has been posted to
shareholders. Members of the public may obtain copies from Frostrow Capital
LLP. 25 Southampton Buildings, London WC2A 1AL or from the Company's website
at www.finsburygt.com

The Annual Report is also available for inspection at the Financial Services
Authority's document viewing facility at 25 The North Colonnade, Canary Wharf,
London E14 5HS.

Investment Objective

The Company's investment objective is to achieve capital and income growth and
to provide shareholders with a total return in excess of that of the FTSE
All-Share Index.

Investment Policy

The Company invests in the securities of UK quoted companies. Where possible,
a minimum position size of 1% of the Company's gross assets is held unless the
holding concerned is being built or disposed of.

The investment portfolio is managed by Lindsell Train Limited and will
normally comprise approximately thirty investments. Unless driven by market
movements, FTSE 100 companies, including preference shares issued by such
companies, will normally represent between 50% and 100% of the investment
portfolio; at least 70% of the investment portfolio will normally be invested
in companies within the FTSE 350. The Company does not and will not invest
more than 15% of its gross assets in other listed investment companies
(including listed investment trusts).

Capital Structure

At 30 September 2008 the Company had 50,950,673 shares of 25p each in issue
and 1,846,750 shares were held in treasury (2007: 52,647,423 and treasury
nil). During the year 150,000 new shares were issued and 667,396 shares were
reissued out of treasury; 2,514,146 shares were repurchased to be held in
treasury. Following the year-end and up to 16 December 2008, the latest
practicable date before the printing of this report, 50,000 shares were
reissued out of treasury and 182,000 shares were repurchased to be held in
treasury. As at 16 December 2008, the Company had 50,818,673 shares in issue.

Gearing

As at 30 September 2008 the Company had two committed borrowing facilities,
one of £20 million and one of

£10 million, with ING Bank N.V. and, as at that date, a total of
£13 million was drawn down. These facilities expired on 7 October and 10
October 2008 respectively and were replaced with a committed one year
revolving credit facility of £15 million.

Annual General Meeting

The Annual General Meeting of the Company will be held at The City of London
Club, 19 Old Broad Street, London EC2N 1DS at 12 noon on Friday, 23 January
2009.

Dividends

- first interim dividend - 4.4p per share paid on 6 May 2008 (2007: 4.2p)

- second interim dividend - 5.1p per share paid on 3 November 2008 (2007:
  4.8p)

- Total dividends for the year - 9.5p per share (2007: 9.0p)


Financial Highlights

                                       30 September   30 September
                                           2008
                                                          2007     % Change
 
Share price                               202.0p         307.5p     -34.3
Net asset value per share                 215.5p         315.4p     -31.7
Discount of share price to net asset
value per share
                                           6.3%           2.5%        -
Shareholders' funds                       £109.8m       £166.1m    -33.9
Market capitalisation                     £102.9m       £161.9m    -36.4
                            Dividends
 
                   First interim paid      4.4p           4.2p       +4.8
 
                  Second interim paid      5.1p^          4.8p       +6.3
 
                                Total      9.5p           9.0p       +5.6
 
Share price total return*                 -33.1%         +5.3%        -
Net asset value per share total           -31.4%         +6.9%        -
return*
FTSE All-Share Index (total return)
(company benchmark)
                                          -22.3%         +12.2%       -
Total expense ratio (excluding
performance fee)+
                                           1.0%          +1.1%        -



Five Year Performance Summary
                                       30        30              30           30        30
                                September September       September    September September
                                                    
                                2004           2005            2006         2007      2008
Share price                   199.5p         260.3p          300.3p       307.5p    202.0p
Share price total return*     +37.4%         +37.2%          +19.6%        +5.3%    -33.1%
Net asset value per share    207.5p>        257.8p>          302.6p       315.4p    215.5p
Net asset value per share
total return*                 +26.0%         +31.5%          +21.2%        +6.9%    -31.4%
FTSE All-Share index total
return                        +15.7%         +24.9%          +14.7%       +12.2%    -22.3%
(Discount)/premium of share
price to net asset value per
share                        (3.9)%>          1.0%>          (0.8)%       (2.5)%    (6.3)%
Shareholders' funds           £75.7m        £115.9m         £149.0m      £166.1m   £109.8m
Market capitalisation         £72.8m        £117.0m         £147.9m      £161.9m   £102.9m
Ordinary dividends per share    5.9p           8.0p            8.4p         9.0p      9.5p
Special dividends per share        -              -            2.3p            -         -
Total dividends per share       5.9p           8.0p           10.7p         9.0p      9.5p
 

^Second interim dividend paid on 3 November 2008.

*Source: Fundamental Data. Does not include the second interim
 dividend paid 3 November 2008, ex-dividend date 1 October 2008.

+TER is calculated based on the average net asset value during the
 year ended 30 September.

> Restated due to change in accounting policies.



CHAIRMAN'S STATEMENT -

Performance

I mentioned at the interim stage that the outlook for markets was likely to be
volatile and uncertain. This looks to have been something of an
understatement. The FTSE All- Share Index, the Company's benchmark, fell by
22.3% during the year on a total return basis. I am very disappointed to
report that the Company's net asset value per share fell rather more, by 31.7%
and the share price by 34.3% reflecting a wider discount to the net asset
value per share compared with the previous year. Given the recent market
conditions, that widening was probably unavoidable. The overall performance of
the investment portfolio relative to the benchmark index was not helped by the
level of gearing held in a falling market, together with disappointing
contributions by regional brewers and financials.

Performance in the short term has been difficult but I would like to remind
shareholders that the longer term investment performance generated by the
Company relative to its peers continues to be strong with the Company ranked
second out of its peer group of 16 similar investment trusts over the last
five years (source: Winterflood Securities Limited).

Investment Strategy and Portfolio

Recent stock market turmoil will have caused many boards to reconsider their
investment mandates, but your Company's overall investment strategy under the
stewardship of Lindsell Train deliberately remains largely unchanged when
compared to previous years. The focus of the investment portfolio continues to
be towards investment in durable cash generative business franchises which are
held for the long term. The investment portfolio is concentrated with less
than thirty stocks held and is focussed in banking and financial stocks,
consumer staple stocks and business facing media and software stocks. The
Board has had the benefit of feedback from many of the Company's major
shareholders and after careful review continues to be confident in the
strategy adopted by our investment manager.

Return and Dividend

The Income Statement shows a total loss per share of 91.08p (2007 return:
20.23p) made up of a revenue return of 10.12p (2007:9.44p) and a capital loss
of 101.20p (2007 return: 10.79p).

Your Board has declared two interim dividends totalling 9.5p per share
and the yield of 5.1% is in line with Company's peer group. The total dividend
for the year represents an increase of 5.6% over that paid last year and is in
line with your Board's desire to maintain a progressive dividend policy. The
second interim dividend was paid on 3 November 2008 to shareholders on the
register at the close of business on 3 October 2008. The associated
ex-dividend date was 1 October 2008.

Following the payment of the second interim dividend of £2,598,000 on
3 November 2008, the Company had £2,351,000 of retained distributable reserves
which is equivalent to approximately 4.6p per share. These retained reserves
are available to the Company to facilitate a progressive dividend policy.

Share Capital

The Company continues to use its power to buy back shares as part of its
discount control mechanism with a consequent increase in shareholder value per
share. During the year the Company purchased into treasury a total of
2,514,146 shares at a cost of £6.1m (including expenses). A total of 150,000
new shares were issued and 667,396 shares were reissued out of treasury in
early 2008 and a further 50,000 subsequent to the Company's year end at a
narrower discount to that at which they were bought. As at 30 September 2008,
the Company held 1,846,750 shares in treasury.

The authority to repurchase shares will expire at the Annual General Meeting
on 23 January 2009 and a Special Resolution will be proposed for its renewal.
This will allow the Company to purchase up to 14.99% of its shares in issue
(excluding treasury shares) in the open market and for the purchased shares to
be cancelled or held in treasury.

Borrowings

At 30 September 2008, the Company had two credit facilities with ING Bank N.V.
totalling £30m of which £13m was drawn down. These facilities expired in early
October and were replaced by a single loan facility of £15m which better
reflects our Investment Manager's requirements in current markets.

The Company's Articles of Association (the "Articles")

The Board believes that as a result of various recent legislative
and regulatory developments the Articles should be amended to bring them into
line with current best practice. This will include a provision for the future
use of communications with shareholders both in electronic form and via the
website. A Special Resolution will be proposed at the Annual General Meeting
which will, if approved, ratify the adoption of new Articles.

VAT

The position with regard to the repayment of VAT remains as described in my
statement at the interim stage. We continue to work towards a settlement with
the Company's previous Manager, Close Investments Limited and will report on
developments as they arise.

Outlook

Recent market turbulence has resulted in unprecedented write-downs in
financial assets and losses for many of the world's largest banks leading to
an acute shortage of liquidity within the financial sector. The outlook for
the UK economy in the short-term is poor. Along with other major economies the
UK is now in recession; while the prospect of lower oil and food prices and
further cuts in interest rates may allow a recovery to begin next year it will
take some time to gain momentum. Your Board remains cautious in its outlook
but the investment portfolio is invested in strong cash generative companies
that the Board and the Investment Manager believe should be best positioned to
take advantage of a recovery in markets.

Annual General Meeting

The Annual General Meeting of the Company will be held at The City of London
Club, 19 Old Broad Street, London EC2N 1DS on Friday, 23 January 2009 from 12
noon. I hope as many shareholders as possible will attend. This will provide
an opportunity to hear the latest views of the Company's Investment Manager.

Anthony Townsend
Chairman
16 December 2008



INVESTMENT MANAGER'S REVIEW (Companies held in the investment portfolio are
shown in bold type)

After a year as disappointing and disturbing as that to September 2008, I am
relieved that at least one thing is clear - that is the content of this
report. There are three things that need to be said and said earnestly.

First, I take the opportunity to apologise formally and sincerely to all
shareholders for the loss of value they have endured.

A year ago I remember persuading the then Chairman to delete some cautious
remarks from his annual statement to shareholders, so confident was I that the
massing storm clouds of 2007 would shortly disperse. By mid-October, with the
FTSE All-Share down 40% year-to-date, my determinedly optimistic stance on
markets looks dogmatic and naïve.

At Lindsell Train we were not wholly oblivious to the deteriorating conditions
and took some evasive action for your Company. For instance, over the year
borrowings have been reduced by £11.85m, the holding in the London Stock
Exchange was cut early in the year and, thankfully, we sold the entire
position in Bradford & Bingley at around £2.00 per share. Today, though, I
can't escape feelings of hindsight regret - why not sell more, earlier?

However, in golfing parlance - the ball must be played from where it lies,
like it or not. And we must keep shareholders alert to the risks and
opportunities within the investment portfolio - as we apprehend them - today,
not as it stood at the start of the year.

Discussion of these risks and opportunities is, then, the second objective of
this report. In what follows we refer to holdings and position sizes as at 30
November 2008, not the September period end. This is because events have moved
on decisively since then.

In our opinion, there is one dominant risk in the portfolio - the remaining
exposure to financial companies. The total at the end of November amounts to
24.1% and we think it helpful to disaggregate the holdings into three types.

Bank Ordinary Shares

The amount invested here amounts to 4.9% of net asset value and comprises two
positions, Lloyds TSB, 4.6% and, after two reductions, 0.3% in HBOS ordinary.
After both those reductions we switched the proceeds into Lloyds - a decision
that has proven only relatively successful, because Lloyds has fallen, but the
less of the two.

We made the switch because we have long hoped for an opportunity to invest in
a dominant, strongly-branded retail banking franchise in the UK, believing
that such entities are attractive for long term investors - if they are
prudently managed, as Lloyds has been. Candidly, we are dismayed at the
circumstances that have brought about this opportunity - namely the loss of
HBOS as a viable independent entity. On balance, in full awareness of the
disadvantages attendant, we are supportive of the merger between Lloyds and
HBOS, expecting that investors will come to approve the creation of a group
with number 1 positions in UK current accounts, deposit accounts, mortgages
and savings.

Bank Preference Shares

Three holdings here amount to 7.9% of the net asset value, two HBOS issues, at
7.3% and another 0.6% in NatWest (or, effectively, RBS). These positions were
built up five years ago, and, we must admit, we did not then give any serious
consideration to the possibility that not only might these preference
dividends not be paid, but that the issuing banks could become insolvent. The
recognition of this possibility has been uncomfortable and a salutary reminder
that even boring, apparently low risk assets are never risk-free.

Our understanding of the outlook for these preference shares and their
dividends, as of late October, is as follows. Both HBOS and RBS have confirmed
to us that the ban on the payment of ordinary dividends, on which the Treasury
has insisted for all banks drawing on public funds, does not extend to the
dividends on their existing preference shares. To be clear then, if HBOS and
RBS retain sufficient earnings to afford to pay their existing preference
dividends there is no reason they cannot do so.

We judge, therefore, that it is likely that these dividends will be paid. This
because both RBS and HBOS have been given access to the billions required to
stabilise their balance sheets and, for HBOS, there is the additional security
of its merger with Lloyds. Despite the grumbling, we still think this
transaction will consummate, given it represents a "once in a generation"
opportunity for Lloyds and the Government must be keen to ensure that HBOS
does not follow Bradford & Bingley and Northern Rock into nationalisation.

On current yields of c10.5% net, the risk and reward for the preference shares
are finely balanced. In extremis there could be a catastrophic loss of value.
On the other hand, we think it possible that the instruments could be sought
out by investors and valued more highly, once the parent banks have
recapitalised. Preference shares were originally created for economic
conditions such as those likely to prevail over the next few years - sluggish
GDP growth, volatile ordinary dividends - and their high income returns could
be attractive to income-starved savers.

Financial Market Proxies

We retain four holdings of this type, amounting to 11.3% of net asset value -
the companies are Hargeaves Lansdown, London Stock Exchange, Rathbone and
Schroders.

These have some common characteristics - they are all strong brands in their
respective markets. Three of the four have significant net cash on their
balance sheets - the London Stock Exchange is the exception, which has
moderate debt, but comfortable interest cover (5.6x). This means that none of
them is at any risk of financial embarrassment. Finally, each is a proxy for
the long term health of global equity markets.

We continue to own these "market proxies" because, unfashionably enough, we
are optimistic about equity markets - and not only in the long term. What we
expect is that the transition between the end of the current bear market and a
new bull market will be violent, sudden and compressed into a short period.
The timing of it is also wholly unpredictable. As long term bulls then, we
think it critical to maintain exposure to sound wealth management companies
and the London Stock Exchange, because these give us participation in any
"spike" upwards in markets. Certainly these are among the last stocks we would
sell today, given the extraordinary, all-pervading pessimism.

Consumer Staples

Elsewhere, the Company has maintained its very substantial investments in
"consumer staple" companies. As I write the only share in the investment
portfolio with a gain for calendar year 2008 is A.G. Barr, the IRN-BRU
company, up 6.5%. With 10.1% invested in Barr, 13.6% in Diageo, 11.9%
Unilever, 8.4% Cadbury and a further 12.5% combined in Dr Pepper, Fullers,
Marston and Youngs - the Company has 56.5% of its net assets accounted for by
"booze, chocolate and soap". By and large these have proven defensive
holdings, offering nervous investors durability, predictable cash flows and,
in the medium term, protection against inflation.

In addition, we expect a theme in any new equity bull market to be consumption
growth in Emerging Economies - because it is in those parts that there are
savings pools and relatively healthy banks, which could finance early
recovery. Cadbury, Diageo and, especially, Unilever are well-positioned and
are among the stocks we hope will lead Western markets out of their slump.

The investment portfolio has benefited this year, relatively speaking, from
its holdings in business-facing Media and Software companies, notably Pearson
(7.4% of net assets), Reed (6.1%) and Sage (5.2%). While not exempt from both
capital market and economic pressures, these companies are increasingly
recognised as offering non-cyclical "growth" and, in our opinion, are rare and
undervalued.

Conclusion

Our final message is that it is important for shareholders to know we continue
to take a bullish view of the investment portfolio, however dogmatic or naïve
- to reuse a phrase from earlier in this report - this reads in currently
discouraging circumstances.

The world will muddle through.

The risk of a systemic banking collapse is receding.

Stock markets often go up during recessions.

The Internet and Emerging Markets are still young industrial and investment
themes.

Through 2008 we have been waiting for three conditions to be met, which we
expect to at least spark a rally and perhaps lay the foundations for a new
bull market. As this report is written, two out of the three have triggered
and the last is imminent. The three are - Consolidation in the European
banking industry, Oil below $80 and, in the UK, a positively sloped yield
curve (short term interest rates below long term rates).

It looks likely UK interest rates could decline much further, through into
2009 and this is an important consideration in our thinking about the last
risk and opportunity that shareholders should be aware of - the Company's
gearing. In consultation with your Board, we have maintained borrowings, today
at £13m, for gearing of 13.3%. This debt has exacerbated the fall in net asset
value in 2008, but will enhance the eventual recovery in values, whose timing,
to reiterate, is unpredictable, but likely to be V-shaped and turbo-charged.

In the long run we are confident that the FTSE All-Share Index and, we hope,
your investment portfolio will generate returns in excess of the Company's
cost of borrowing, handsomely so if interest rates are falling (reducing that
interest charge) and this is the other justification for your Company's policy
toward gearing its balance sheet.

Nick Train, Lindsell Train Limited

Investment Manager

16 December 2008



CONTRIBUTION TO NET ASSET VALUE for the year ended 30 September 2008

                                                   Contribution
                                                   for the year
                                                       to30
                                                    September
                                                       2008     Contribution
                                                                per share
Investment                                            £'000     (pence)*
Equities
Dr Pepper Snapple                                           759         1.45
Unilever                                                     71         0.13
Hargreaves Lansdown                                          23         0.04
Halma                                                      (92)       (0.18)
Daily Mailand General Trust                               (159)       (0.30)
Celtic                                                    (206)       (0.39)
Lindsell Train Investment Trust                           (319)       (0.61)
Reed Elsevier                                             (520)       (1.00)
Royal Dutch Shell                                         (745)       (1.43)
Thomson Reuters (formerly Reuters)                      (1,064)       (2.04)
Cadbury (formerly Cadbury Schweppes)                    (1,085)       (2.08)
Barr (A.G.)                                             (1,281)       (2.45)
Rathbone Brothers                                       (1,378)       (2.64)
Diageo                                                  (1,387)       (2.66)
Sage                                                    (1,399)       (2.68)
Pearson                                                 (1,410)       (2.70)
Euromoney Institutional Investor                        (1,411)       (2.70)
Bradford & Bingley                                      (1,458)       (2.79)
Fidessa                                                 (1,640)       (3.14)
Schroders                                               (1,725)       (3.30)
Young & Co's Brewery                                    (1,729)       (3.31)
London Stock Exchange                                   (1,981)       (3.79)
Fuller Smith & Turner                                   (2,189)       (4.19)
Marston's                                               (5,276)      (10.11)
Lloyds TSB                                              (5,445)      (10.43)
HBOS                                                    (7,389)      (14.15)
                                                       (40,435)      (77.45)
Fixed Interest
UK Treasury 2.5% 29/12/49                                    37         0.07
Consolidated 2.5% 05/04/23                                   32         0.06
                                                             69         0.13
Preference Shares (Franked income)
Celtic 6.0% (cum Preference)                                  2         0.00
HBOS 9.75% (non cum preference)                           (648)       (1.24)
NatWest 9.0% (non cum preference)                         (834)       (1.59)
HBOS 9.25% (non cum preference)                         (3,374)       (6.46)
                                                        (4,854)       (9.29)
Unquoted
Frostrow Capital LLP                                         11         0.02
                                                             11         0.02
Total contribution (excluding bank interest and
money market dividend)                                 (45,209)      (86.59)


* Based on the Company's weighted average number of shares in issue for the
year, being 52,206,113.

INVESTMENTS

as at 30 September 2008

                                                                        Fair
                                                                   Value% of       
                             Sector                       £'000  investments

Diageo                       Beverages                   13,786         11.3
Unilever                     Food Producers              11,784          9.7
Barr (A.G.)                  Beverages                    9,078          7.5
Cadbury (formerly Cadbury    Food Producers               8,330          6.9
Schweppes)
Pearson                      Media                        6,968          5.7
Reed Elsevier                Media                        6,156          5.1
Sage                         Software & Computer          5,965          4.9
                             Services
Rathbone Brothers            General Financials           5,945          4.9
Lloyds TSB                   Banks                        5,580          4.6
Marston's                    Travel & Leisure             4,916          4.0
Top 10 Investments                                       78,508         64.6
HBOS 9.25% (non cum
preference)#                 Banks                        4,854          4.0
Schroders                    General Financials           4,831          4.0
Fidessa                      Software & Computer          4,746          3.9
                             Services
Dr Pepper Snapple"           Beverages                    4,043          3.3
Royal Dutch Shell            Oil & Gas Producers          3,547          2.9
Young & Co's Brewery         Travel & Leisure             2,918          2.4
London Stock Exchange        General Financials           2,701          2.2
Fuller Smith & Turner        Travel & Leisure             2,695          2.2
Euromoney Institutional      Media                        2,496          2.1
Investor
Thomson Reuters (formerly    Media                        2,423          2.0
Reuters)
Top 20 Investments                                      113,762         93.6
NatWest 9.0% (non cum
preference)#                 Banks                        1,938          1.6
Lindsell Train Investment    General Financials           1,370          1.1
Trust
HBOS 9.75% (non cum          Banks                        1,149          1.0
preference)#
HBOS                         Banks                          887          0.7
Halma                        Electronic & Electrical        806          0.7
                             Equipment
Celtic                       Travel & Leisure               682          0.6
Daily Mail and General Trust Media                          415          0.3
Hargreaves Lansdown          General Financials             377          0.3
Frostrow Capital LLP†        General Financials             150          0.1
Celtic 6.0% (cum             Travel & Leisure                50            -
preference)#
Total Investments                                       121,586        100.0


All of the above investments are equities listed in the UK, unless otherwise
stated.

# Non-equity - Preference share

"Listed in the United States. The holding arose during the year following the
demerger from Cadbury Schweppes. † Unquoted investment (see Report of the
Directors)

SECTOR ANALYSIS OF INVESTMENT PORTFOLIO

as at 30 September 2008

Comparison of sector weightings with the FTSE All-Share Index

                                                                    Finsbury
                                                                      Growth
                                                         FTSE       & Income
                                Finsbury Growth     All-Share   (Under)/over
                                       & Income         Index         weight

Sector                                        %             %              %

Oil & Gas                                   2.9          17.8         (14.9)
Oil & Gas Producers                         2.9          17.3         (14.4)
Oil Equipment, Services &                     -           0.5          (0.5)
Distribution
Basic Materials                               -           8.8          (8.8)
Chemicals                                     -           0.3          (0.3)
Forestry & Paper                              -           0.1          (0.1)
Industrial Metals                             -           0.1          (0.1)
Mining                                        -           8.3          (8.3)
Industrials                                 0.7           7.1          (6.4)
Construction & Materials                      -           0.2          (0.2)
Aerospace & Defence                           -           2.1          (2.1)
General Industrials                           -           0.7          (0.7)
Electronic & Electrical                     0.7           0.3            0.4
Equipment
Industrial Engineering &                      -           0.8          (0.8)
Transportation
Support Services                              -           3.0          (3.0)
Consumer Goods                             38.7          10.6           28.1
Automobile & Parts                            -           0.1          (0.1)
Beverages                                  22.1           2.7           19.4
Food Producers                             16.6           2.5           14.1
Household Goods                               -           1.7          (1.7)
Personal Goods                                -           0.2          (0.2)
Tobacco                                       -           3.4          (3.4)
Health Care                                   -           8.3          (8.3)
Health Care Equipment &                       -           0.5          (0.5)
Services
Pharmaceuticals & Biotechnology               -           7.8          (7.8)
Consumer Services                          24.4           9.5           14.9
Food & Drug Retailers                         -           3.2          (3.2)
General Retailers                             -           1.3          (1.3)
Media                                      15.2           2.5           12.7
Travel & Leisure                            9.2           2.5            6.7
Telecommunications                            -           6.1          (6.1)
Fixed Line Telecommunications                 -           1.2          (1.2)
Mobile Communications                         -           4.9          (4.9)
Utilities                                     -           5.0          (5.0)
Electricity                                   -           2.1          (2.1)
Gas, Water & Multiutilities                   -           2.9          (2.9)
Financials                                 17.9          25.7          (7.8)
Banks                                       5.3          14.9          (9.6)
Non-life Insurance                            -           0.9          (0.9)
Life Insurance                                -           3.2          (3.2)
Real Estate                                   -           1.9          (1.9)
General Financial                          12.6           2.0           10.6
Equity Investment Instruments                 -           2.8          (2.8)
Technology                                  8.8           1.1            7.7
Software & Computer Services                8.8           0.9            7.9
Technology Hardware & Equipment               -           0.2          (0.2)
Total excluding Preference                 93.4         100.0          (6.6)
Shares
Preference Shares                           6.6             -            6.6
Total including Preference                100.0         100.0              -
Shares



REPORT OF THE DIRECTORS incorporating the Business Review

The Directors present their report and the financial statements for the year
ended 30 September 2008.

Business Review

Financial reporting requirements direct that the Company is required to
provide a Business Review within the Report of the Directors. The Business
Review must contain a review of the Company's business, the principal risks
and uncertainties it faces and an analysis of its performance during the
financial period and the position at the period end. To aid understanding of
these areas the Board is required to include analysis using appropriate Key
Performance Indicators. The Business Review should be read in conjunction with
the Chairman's Statement, the Investment Manager's Review the Contribution to
Net asset Value table and the List of Investments.

Status of the Company

During the year under review the Company has continued to conduct its affairs
so as to qualify as an investment company, as defined under Section 833 of the
Companies Act 2006, and an investment trust within the meaning of Section 842
of the Income and Corporation Taxes Act 1988. HM Revenue & Customs approval of
the Company's status as an investment trust has been received for all years up
to and including the year ended 30 September 2007. This is however subject to
review should there be any enquiry under Corporation Tax Self Assessment. The
Directors are of the opinion that the Company has subsequently directed its
affairs so as to enable it to continue to obtain HM Revenue & Customs approval
as an investment trust.

The close company provisions of the Income and Corporation Taxes Act 1988 do
not apply to the Company.

The Company's shares are eligible for inclusion in the stocks and shares
component of an Individual Savings Account.

Investment Objective, Policy and Strategy

The Company's investment objective is to achieve capital and income growth and
to provide shareholders with a total return in excess of that of the FTSE
All-Share Index.

The Company invests in the securities of UK quoted companies. Where possible,
a minimum position size of 1% of the Company's gross assets is held unless the
holding concerned is being built or disposed of.

The investment portfolio is managed by Lindsell Train Limited (the "Investment
Manager") and will normally comprise approximately thirty investments. Unless
driven by market movements, FTSE 100 companies, including preference shares
issued by such companies, will normally represent between 50% and 100% of the
investment portfolio; at least 70% of the investment portfolio will normally
be invested in companies within the FTSE 350. The Company does not and will
not invest more than 15% of its gross assets in other listed investment
companies (including listed investment trusts).

The Board has set a maximum level of gearing of 25% of its net assets.

The Company has the ability to invest a proportion (up to 25% of
its gross assets) in preference shares, bonds and other debt instruments,
although no more than 10% of any one issue may be held. while seeking
appropriate investment opportunities or to maintain liquidity.

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

In addition, a maximum of 10% of the Company's gross assets can be held in
cash, where the Investment Manager believes market or economic conditions make
equity investment unattractive or

Whilst performance is measured against the FTSE All-Share Index, the Company's
investment portfolio is constructed and managed without reference to a stock
market index, investments being selected only after extensive research by the
Investment Manager. The Investment Manager uses a bottom-up stock picking
approach and looks to invest in a universe of excellent UK listed businesses
that appear undervalued. There is no current intention to change the
investment policy stated above.

Performance and Performance Measurement

While the Board monitors the net asset value as the primary financial
measurement it is aware that share price performance and income return are the
most important factors to the Company's shareholders. Net asset value and
share price performance are of course closely linked and it is the
responsibility of the Investment Manager to seek the best investments and to
manage the investment portfolio in the most beneficial way to achieve the
highest returns for shareholders. The Company's net asset value per share
(measured on a total return basis) fell by 31.4%* during the year ended 30
September 2008. The Company's benchmark, the FTSE All-Share Index (measured on
a total return basis) fell by 22.3% during the same period. The Company's
share price (measured on a total return basis) fell by 33.1%* as the discount
of share price to net asset value per share widened from 2.5% at 30 September
2007 to 6.3% at 30 September 2008.

* Does not include the second interim dividend paid on 3 November 2008,
ex-dividend date 1 October 2008.

As stated previously, the Board recognises that income return is also
important to shareholders. It is the responsibility of the Board to endeavour
that the investment portfolio derives an income return sufficient to maintain
a progressive dividend policy. The Company has paid dividends totalling 9.5p
per share for the year ending 30 September 2008, an increase of 5.6% over the
dividends paid in the previous year.

The Board reviews overall performance on a continuous basis. The
Company's net asset value per share is announced daily via a regulatory news
service and is available online (see page 56 of this annual report for
details).

Results and Dividends

The dividends for the year to 30 September were:


                                                            2008  2007

                                                           £'000 £'000
First Interim paid of 4.4p per share (2007:
4.2p)                                                      2,318 2,183
                                                           
Second Interim paid of 5.1p per share (2007:               2,598 2,527
4.8p)

Total                                                      4,916 4,710


REPORT OF THE DIRECTORS incorporating the Business Review (continued)

Key Performance Indicators ("KPIs")

The Board assesses the Company's performance in meeting its investment
objective against the following key performance indicators:

- Net asset value per share total return

- Share price total return

- Income

- Stock contribution analysis

- Share price premium/(discount) to net asset value per share analysis (see
  page 1)

- Total expense ratio

- Benchmark and peer group performance

- Issue and repurchase of Company's shares

As indicated, the management of the investment portfolio has been
delegated to Lindsell Train Limited and the management of the administration
services has been delegated to Frostrow Capital LLP (the "Manager"). Each
provider is responsible to the Board which is ultimately responsible to the
shareholders for performing against inter alia the above KPIs within the terms
of their respective agreements by utilising the capabilities of the

experienced professionals within each firm.

Principal Risks and their Mitigation

The Company's assets consist principally of listed equities; its
main area of risk is therefore stock market related. The specific key risks
faced by the Company, together with the mitigation approach adopted, are as
follows (further information on the Company's risk management strategy can be
seen in note 17).

Objective and Strategy - The Company and its Investment Objective become
unattractive to investors

The Board regularly reviews the investment mandate and the long-term
investment strategy in relation to market and economic conditions, and the
operation of the Company's peers, thereby monitoring whether the Company
should continue in its present form. Each month the Board receives a Monthly
Review, which monitors the Company's investment performance (both on an
absolute basis and against the benchmark and peer group) and its compliance
with the investment guidelines. The Company's Manager and Investment Manager
regularly present additional reports and presentations to the Board and their
continuity is regularly considered by the Board.

Level of discount/premium - Share price performance lags NAV performance

The Board undertakes a regular review of the level of discount/premium and
consideration is given to ways in which share price performance may be
enhanced, including the effectiveness of marketing. The Board has implemented
a discount control mechanism to establish a maximum level of 5% discount of
share price to net asset value per share. In the event of shares being
re-purchased by the share price discount to net asset value per share to be
greater than 5% on any one day. This was the case

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

Company, such shares may be held in treasury (up to a maximum of 10% of the
issued share capital) for reissue into the market when demand arises.
Shareholders should note that it remains possible for the

as at 30 September 2008 and is due to the fact that the share price continues
to be influenced by overall supply and demand for the Company's shares in the
secondary market. The average month-end share price discount during the year
was 4.2%, a level that has been broadly maintained since the year end.

Market Price Risk

Market price risk arises mainly from uncertainty about future prices of
financial instruments held. It represents the potential loss the Company might
suffer through holding market positions in the face of price movements.

The Board meets on at least a quarterly basis during the year and at each
meeting they consider the asset allocation and concentration of the investment
portfolio in order to minimise the risk associated with particular
instruments. The Investment Manager has responsibility for selecting
investments in accordance with the Company's investment objective and seeks to
ensure that individual stocks meet an acceptable risk-reward profile.

Liquidity Risk

The Company's assets comprise mainly realisable securities, which can be sold
to meet funding requirements where necessary.

Interest Rate Risk

The Company borrows in sterling at floating rates of interest and hence is
exposed to the risk that its cashflow will change due to movements in
prevailing interest rates. The Board imposes borrowing limits to ensure
gearing levels are appropriate to market conditions and reviews these on a
regular basis.

The Company also invests in fixed rate preference shares and fixed
interest investments which are exposed to movements in their fair value
arising from changes in interest rates. These risks are managed alongside
market price risk as described above.

Credit Risk

The Company's principal financial assets are bank balances, debtors and
investments which represent the Company's maximum exposure to credit risk in
relation to financial assets. The credit risk on bank balances is considered
low because the counter-parties are banks with high credit ratings assigned by
international credit agencies. The credit risk in relation to the companies
that comprise the investment portfolio is monitored closely by the Investment
Manager.

Shareholder Profile - Activist shareholders may be attracted onto the
shareholder list, interests may not be consistent with the long-term
objectives of the Company

The Manager provides a shareholder analysis to every Board meeting. The Board,
in conjunction with the Manager and Investment Manager and where appropriate
the Corporate Stockbroker, considers the potential consequences of activist
holdings and any action which may be required to mitigate negative activity.

Portfolio Performance - Investment performance may not be meeting the
investment objective or shareholder requirements

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

The Board regularly reviews investment performance against the benchmark and
against the peer group. The Board also receives reports that show an analysis
of performance compared with other relevant indices. The Investment Manager
provides an explanation of stock selection decisions and an overall rationale
for the make-up of the investment portfolio. The Investment Manager discusses
current and potential investment holdings with the Board on a regular basis in
addition to new initiatives, which may enhance shareholder returns.

Operational and Regulatory - Compliance with s842, Income and Corporation
Taxes Act 1988

A breach of s842 could lead to the Company being subject to capital gains tax
on the sale of its investments, whilst serious breach of other regulatory
rules may lead to suspension from the Stock Exchange or to a qualified Audit
Report. Other control failures, either by the Manager, the Investment Manager
or any other of the Company's service providers, may result in operational
and/or reputational problems, erroneous disclosures or loss of assets through
fraud, as well as breaches of regulations.

The Manager and the Investment Manager review the level of compliance with
s842 and other financial regulatory requirements on a daily basis. All
transactions, income and expenditure forecasts are reported to the Board. The
Board regularly considers all risks, the measures in place to control them and
the possibility of any other risks that could arise. These risks are
formalised in the Company's risk assessment register. The Board ensures that
satisfactory assurances are received from service providers. The Manager's and
the Investment Manager's Compliance Officers produce regular reports for
review by the Company's Audit Committee and are available to attend meetings
in person if required.

Investment Management Key Person Risk

There is a risk that the individual responsible for managing the Company's
investment portfolio may leave his employment or may be prevented from
undertaking his duties.

The Investment Manager has in place an insurance policy covering key
personnel. There is a qualified individual who works with the designated
investment portfolio manager who could take over if necessary.

Fixed Asset Investments

The fair value of the Company's investments, at 30 September 2008 was
£121,586,000 (2007: £189,042,000) showing an unrealised loss since acquisition
of £1,632,000 (2007: profit £53,223,000). Taking these investments at this
valuation, the net assets attributable to each share at 30 September 2008
amounted to 215.5p (2007: 315.4p).

Issue and Repurchase of Shares

At the Annual General Meeting held on 30 January 2008, authority to allot
shares on a non pre-emptive basis was granted for 5,215,503 shares.

The Board continues to believe the use of a discount management policy, to buy
back shares if offered at a discount greater than 5% to net asset value per
share, and the use of the treasury share facility, whereby shares repurchased
by the Company are held in treasury for reissue into the market when

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

demand is present, are in the best interests of the Company and shareholders.
During the year a total of 2,514,146 shares were repurchased by the Company
and held in treasury. From 1 October 2008 to 16 December 2008, the latest
practicable date before the printing of this Annual Report, a further 182,000
shares have been purchased and held as treasury shares.

During the year a total of 150,000 new shares were issued. Also,
667,396 shares were reissued out of treasury at a price representing a
narrower discount to net asset value per share than that at which they had
been bought into treasury. Following the year-end and up until 16 December
2008, a further 50,000 shares were reissued out of treasury also at a price
representing a narrower discount to net asset value per share than that at
which they had been bought into treasury. As at 16 December 2008 a total of
1,978,750 shares are held in treasury.

Prospects

A review of the Company's year and of its performance since the year end can
be found in the Chairman's Statement and in the Investment Manager's Review.
The Board concentrates its attention on the Company's investment performance
and the Investment Manager's investment approach and on factors that may have
an effect on this approach. Marketing reports are given to the Board at each
Board meeting, which include how the Company is being promoted and details of
communications with existing and potential shareholders. The Board is
regularly updated on wider investment trust industry issues and discussions
are held concerning the Company's development and strategy.

Post the year end, the difficult environment has continued and for the period
from the year end to 30 November 2008, the Company's net asset value per share
fell by 7.5% and the share price by 10.7% (both on a total return basis)
compared to a 13.4% fall in the Company's benchmark. The Investment Manager,
however, continues to take a bullish view of the investment portfolio and,
against a background of falling interest rates, it believes that the
investment portfolio will generate a rate of return in excess of the cost of
the Company's borrowings in the long run.

Management

The Company has no employees and most of its day-to-day activities
are delegated to third parties. The Company has appointed Frostrow Capital LLP
as Manager, Administrator and Company Secretary and Lindsell Train Limited as
Investment Manager.

The Board looks to the Investment Manager to deliver investment
performance. The Manager is responsible for providing company secretarial,
administrative, accounting and marketing services. Details of the appointment
of each party are given below.

The Investment Manager continues to manage the investment portfolio in
accordance with the investment objective and policy. The Investment Manager is
an independent investment management company and is able to access, through
in-depth research and analysis, the most profitable investments for the
Company.

Management, Administrative and Secretarial Services Agreement: Management,
Administrative, Secretarial and other services are provided to the Company by
the Manager. The Manager is authorised and regulated by the Financial Services
Authority.

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

At the commencement of the previous financial year, management services were
provided to the Company by Close Investments Limited. The management fee
payable was 0.65% per annum of the Company's market capitalisation and was
shared equally between Close Investments Limited and Lindsell Train Limited.
In addition, a secretarial fee of £50,000 per annum and a generic marketing
fee of £80,000 per annum were payable to Close Investments Limited. Following
a review undertaken by the Board, the Investment Management and Administrative
and Secretarial Services Agreements were terminated on 10 April 2007 and new
agreements were entered into with Frostrow Capital LLP as the new Manager and
also with Lindsell Train Limited as Investment Manager. The new Administrative
and Secretarial Services Agreement was entered into on the following terms:
the Manager received a periodic fee equal to 0.05% per annum of the Company's
market capitalisation plus an annual minimum amount equal to £200,000 which
increased pro rata with any increase in the Company's market capitalisation.
This arrangement remained in place until 30 June 2008. From 1 July 2008 the
Manager receives a periodic fee at a rate of 0.15% per annum of the Company's
market capitalisation plus a fixed fee of £70,000 per annum calculated monthly
and payable monthly in arrears.

The notice period on the Management, Administration and Company Secretarial
Agreement with the Manager is 12 months and may be terminated by either party.

The Manager, under the terms of the Management, Administrative & Secretarial
Services Agreement provides inter alia the following services:

- marketing and shareholder services;

- administrative services to such extent and from such dates as the Board may
  determine;

- advice and guidance in respect of corporate governance requirements;

- performance measurement reports;

- maintaining adequate accounting records in respect of Company dealing,
  investments, transactions, dividends and other income, the income account,
  balance sheet and cash books

- and statements;

- preparation and despatch of the audited annual financial statements, the
  unaudited interim report and the interim management statements; and

- attending to general tax affairs where necessary.

Investment Management Agreement: As stated above, on 10 April 2007 the Company
entered into a new Investment Management Agreement with the Investment
Manager, under which Lindsell Train Limited provide discretionary investment
management services to the Company for a periodic fee equal to 0.45% per annum
of the Company's market capitalisation. The Investment Management Agreement
may be terminated by either party giving notice of not less than 12 months.
The Investment Manager under the terms of the Agreement provides inter alia
the following services:

- seeking out and evaluating investment opportunities;

- recommending the manner by which monies should be invested, disinvested,
  retained or realised;

- advising on how rights conferred by the investments should be exercised;

- analysing the performance of investments made; and

- advising the Company in relation to trends, market movements and other
  matters which may affect the investment policy of the Company.



REPORT OF THE DIRECTORS incorporating the Business Review (continued)

Performance Fee: Dependent on the level of performance achieved, the Manager
and Investment Manager are also entitled to the payment of a performance fee.
The calculation basis of the performance fee is by reference to the annual
increase in the Company's market capitalisation, but only after attainment of
an absolute return hurdle, which is the sum of the increase in the Retail
Price Index in the year, plus a fixed return of 6%. The Investment Manager
receives 85% and the Manager receives 15% of the performance fee. The total
fixed, periodic and performance fees payable in any one year to the Investment
Manager and the Manager are capped at 1.25% of the Company's market
capitalisation. Any outperformance, that would have resulted in a higher fee
being paid had there been no cap, is carried forward into the calculation of
future years' fees. Similarly, in the case of underperformance, any
underperformance has to be made up in future years before a performance fee
becomes payable in those years.

Partnership Interest in Frostrow Capital LLP

The Company acquired a 10% interest in the Manager at a cost of £150,000 on 5
September 2007.Subsequent to the year end, on 30 October 2008, £75,000 of the
amount paid was repaid to the Company by Frostrow Capital LLP. As part of the
acquisition, the Company also agreed to provide the Manager with a £250,000
three year credit facility at the interest rate agreed with ING Bank, the
provider of the Company's committed borrowing facilities, plus 25 basis points
per annum. At the Company's year-end, and up to the date of this Annual
Report, the facility was not utilised by the Manager.

Manager and Investment Manager Evaluation and Re-Appointment

The review of the Manager and the Investment Manager's performance is a
continuous process carried out by the Board with a formal evaluation being
undertaken each year. As part of this process the Board monitors the services
provided by the Manager and the Investment Manager and receives regular
reports and views from the Investment Manager on investment strategy, asset
allocation and stock selection. The Board also receives performance
measurement reports to enable it to determine whether or not the performance
objective set by the Board has been met.

The Board believes the continuing appointment of the Manager and the
Investment Manager, under the terms described above, is in the interests of
shareholders as a whole. In coming to this decision it also took into
consideration the following additional reasons:

- the quality and depth of experience of the management, administrative,
company secretarial and marketing team that the Manager allocates to the
management of the Company; and

- the quality and depth of experience allocated by the Investment Manager to
the management of the investment portfolio and the level of past performance
of the investment portfolio in absolute terms and also by reference to the
benchmark index.

Going Concern

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

The Directors, having made relevant enquiries, are satisfied that it is
appropriate to prepare financial statements on the going concern basis as the
net assets of the Company consist of securities, all of which, with the
exception of the partnership interest in Frostrow Capital LLP, are traded on
recognised stock exchanges.

Creditors' Payment Policy

Terms of payment are negotiated with service providers when agreeing
settlement details for transactions. While the Company does not follow a
formal code, it is the Company's continuing

policy to pay amounts due to creditors as and when they become due. As at 30
September 2008, the Company did not have any trade creditors (2007: nil).

Social, Economic and Environmental Matters

The Company's primary objective is to achieve capital and income growth by
investing in the shares of UK companies. The Board recognises that this should
be done in an environmentally responsible and ethical way. As the majority of
the Company's investments are in blue-chip companies, the Board is of the
opinion that investee companies are likely to have considerable regard both
for the welfare of their employees and on environmental matters in relation to
areas where their operations are located.

Charitable and Political Donations

The Company has not in the past and does not intend in the future to make any
charitable or political donations.

Directors

The Directors of the Company, all of whom served throughout the year, unless
where stated, are shown below. Further information on the Directors can be
found on page 3.

Anthony Townsend

John Allard

Neil Collins (appointed 30 January 2008)

David Hunt

Michael Reeve (retired 30 January 2008) Vanessa Renwick

Giles Warman

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

Directors' Interests

The beneficial interests of the Directors and their families in the Company
were as set out below:

                                                 Number of shares held

                                             30 September 30 September 
                                                    2008*        2007*
Anthony Townsend                                   57,880       57,880
John Allard**                                       9,884        9,147
Neil Collins                                        3,746          Nil
David Hunt                                          6,500        6,500
Vanessa Renwick                                    12,580        7,220
Giles Warman                                       73,000       65,000


* or date of appointment if later

** on 6 October 2008, Mr Allard purchased a further 209 shares as a result of
an automatic re-investment of a dividend.

Other than what is detailed above, there have been no changes to the
Directors' interests in the Company's shares between the end of the year and
the date of this report.

None of the Directors were granted or exercised rights over shares during the
year. None of the Directors has any contract (including service contracts)
with the Company.

Directors' and Officers' Liability Insurance Cover

Directors' and Officers' liability insurance cover was maintained by the Board
during the year ended 30 September 2008. It is intended that this policy will
continue for the year ended 30 September 2009 and subsequent years.

Substantial Share Interests

As at 8 December 2008 the Company was aware of the following substantial
interests in the voting rights of the Company:

                                                          Number of   % of
Fund Manager                Registered Holder                shares shares

Alliance Trust Savings      Alliance Trust Savings        5,978,480  11.76
                            Nominees
Brewin Dolphin              Various Brewin Nominee        5,129,908  10.09
                            Managed Accounts
Rathbone                    Various Rathbone Nominee      4,516,616   8.88
                            Managed Accounts
Rensburg Sheppards          Ferlim Nominees, Rensburg     3,829,742   7.53
Investment Management       Client Nominees
Speirs & Jeffery Fund       Various Speirs & Jeffery      2,390,825   4.70
Management                  Nominee Accounts
Midas Capital Partners      Various Nominee Accounts      2,197,169   4.32
Legal & General Investment  Various Nominee Accounts      2,188,731   4.31
Management
JP Morgan Asset Management  Chase Nominees                1,720,000   3.38



REPORT OF THE DIRECTORS incorporating the Business Review (continued)

Shareholder Analysis

as at 30 September                          2008      2008      2007      2007
 
                                         Number of    % of    Number of   % of
                                           shares    issued   shares s   issued
                                                      share               share
                                                     capital             capital
Nominee Companies*                       45,465,771   89.23    652,643    90.51
Private Individuals                      3,221,564    6.32    3,421,521   6.50
Other Institutions, Investment Funds,                 2.19
Pension Funds and Companies              1,116,218            1,054,970   2.00
Banks and Bank Nominees                  1,147,120    2.26     518,289    0.99
Total shares in issue                    50,950,673   100.0  52,647,423  100.00
 
* Includes Alliance trust Savings And
ISA Clients                              5,620,104    11.03   5,810,058   11.04
 
Auditors

Grant Thornton UK LLP have indicated their willingness to continue to act as
Auditors to the Company and a resolution for their re-appointment will be
proposed at the forthcoming Annual General Meeting.

Audit Information

Pursuant to s234ZA(2) of the Companies Act 1985, each of the Directors
confirms that: (a) so far as they are aware, there is no relevant information
of which the Auditors are unaware; and (b) they have taken all steps they
ought to have taken to make themselves aware of any relevant audit information
and to establish that the Auditors are aware of such information.

Directors' Responsibilities

Company law in the United Kingdom requires the Directors to prepare financial
statements for each financial year. The Directors are responsible for
preparing the financial statements in accordance with applicable law and
regulations. In preparing these financial statements, the Directors have:

- selected suitable accounting policies and applied them consistently;

- made judgements and estimates that are reasonable and prudent;

- followed applicable United Kingdom accounting standards; and

- prepared the financial statements on a going concern basis.

The Directors are responsible for keeping proper accounting records
which 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 1985. 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.

The Directors are responsible for ensuring that the Report of the Directors
and other information included in the Annual Report is prepared in accordance
with company law in the United Kingdom.

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

They are also responsible for ensuring that the Annual Report includes
information required by the Listing Rules of the Financial Services Authority.

The financial statements are published on the Company's website (website
address: www.finsburygt.com) and on the Manager's website (website address:
www.frostrow.com). The maintenance and integrity of these websites, so far as
it relates to the Company, is the responsibility of the Manager. The work
carried out by the Auditors does not involve consideration of the maintenance
and integrity of these websites and accordingly, the Auditors accept no
responsibility for any changes that have occurred to the financial statements
since they were initially presented on these websites. Visitors to the
websites need to be aware that legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may differ from
legislation in their jurisdiction.

The Directors confirm that to the best of their knowledge the financial
statements, within the Annual Report, have been prepared in accordance with
applicable accounting standards, give a true and fair view of the assets,
liabilities, financial position and the loss for the year ended 30 September
2008, and that the Chairman's Statement, Investment Manager's Review and the
Report of the Directors include a fair review of the information required by
4.1.8R to 4.2.11R of the FSA's Disclosure and Transparency Rules.

Beneficial Owners of Shares - Information Rights

Please note that beneficial owners of shares who have been nominated by the
registered holder of those shares to receive information rights under Section
146 of the Companies Act 2006 are required to direct all communications to the
registered holder of their shares rather than to the Company's registrar,
Capita Registrars, or to the Company directly.

Annual General Meeting

Resolutions relating to the following items of special business will be
proposed at the forthcoming Annual General Meeting:

Share Repurchases

At the Annual General Meeting held on 30 January 2008, shareholders approved
the renewal of the authority permitting the Company to repurchase its own
shares.

The Directors wish to renew the authority given by shareholders at the
previous Annual General Meeting. The principal aim of a share buy-back
facility is to enhance shareholder value by acquiring shares at a discount to
net asset value, as and when the Directors consider this to be appropriate.
The purchase of shares, when they are trading at a discount to net asset value
per share, should result in an increase in the net asset value per share for
the remaining shareholders. This authority, if conferred, will only be
exercised if to do so would result in an increase in the net asset value per
share for the remaining shareholders and if it is in the best interests of
shareholders generally. Any purchase of shares will be made within guidelines
established from time to time by the Board. It is proposed to seek shareholder
authority to renew this facility for another year at the Annual General
Meeting.

Under the current Listing Rules, the maximum price that may be paid on the
exercise of this authority must not exceed the higher of (i) 105% of the
average of the middle market quotations for the shares over the five business
days immediately preceding the date of purchase and (ii) the higher of the
last independent trade and the highest current independent bid on the trading
venue where the purchase is carried out. The minimum price which may be paid
is 25p per share. Shares which are purchased under this authority will either
be cancelled or held as treasury shares.

Special Resolution No. 10 in the Notice of Annual General Meeting will renew
the authority to purchase in the market a maximum of 14.99% of shares in issue
on 16 December 2008, being the nearest practicable date prior to the signing
of this Report, (amounting to 7,617,719 shares). Such authority will expire on
the date of the next Annual General Meeting or after a period of 15 months
from the date of passing of the resolution, whichever is earlier. This means
in effect that the authority will have to be renewed at the next Annual
General Meeting or earlier if the authority has been exhausted.

Issue of Shares

Ordinary Resolution No. 7 in the Notice of Annual General Meeting will renew
the authority to allot the unissued share capital up to an aggregate nominal
amount of £1,270,467 (equivalent to 5,081,867 shares, or 10% of the Company's
existing issued share capital on 16 December 2008, being the nearest
practicable date prior to the signing of this Report). Such authority will
expire on the date of the next Annual General Meeting or after a period of 15
months from the date of the passing of the resolution, whichever is earlier.
This means that the authority will have to be renewed at the next Annual
General Meeting.

When shares are to be allotted for cash, Section 89(1) of the Companies Act
1985 (the "Act") provides that existing shareholders have pre-emption rights
and that the new shares must be offered first to such shareholders in
proportion to their existing holding of shares. However, shareholders can, by
special resolution, authorise the Directors to allot shares otherwise than by
a pro rata issue to existing shareholders. Special Resolution No. 8 will, if
passed, give the Directors power to allot for cash equity securities up to 10%
of the Company's existing share capital on 16 December 2008 (reduced by any
treasury shares sold by the Company pursuant to Resolution No. 9, as described
below), as if Section 89(1) of the Act does not apply. This is the same
nominal amount of share capital which the Directors are seeking the authority
to allot pursuant to Resolution No. 7. This authority will also expire on the
date of the next Annual General Meeting or after a period of 15 months,
whichever is earlier. This authority will not be used in connection with a
rights issue by the Company.Under the Companies (Acquisition of Own Shares)
(Treasury Shares) Regulations 2003 (as amended) (the "Treasury Share
Regulations") the Company is permitted to buy back and hold shares in treasury
and then sell them at a later date for cash, rather than cancelling them. The
Treasury Share Regulations require such sale to be on a pre-emptive, pro rata,
basis to existing shareholders unless shareholders agree by special resolution
to disapply such pre-emption rights. Accordingly, in addition to giving the
Directors power to allot unissued share capital on a non

REPORT OF THE DIRECTORS incorporating the Business Review (continued)

pre-emptive basis pursuant to Resolution No. 8, Resolution No. 9, if passed,
will give the Directors authority to sell shares held in treasury on a non
pre-emptive basis. Under the Treasury Share Regulations, the holding of
treasury shares is restricted to 10% of the Company's issued share capital, no
dividends may be paid on any shares held in treasury and no voting rights will
attach to such shares. The benefit of the ability to hold treasury shares is
that such shares may be resold. This should give the Company greater
flexibility in managing its share capital, and improve liquidity in its
shares. It is the intention of the Board that any re-sale of treasury shares
would only take place at a narrower discount to the net asset value per share
than that at which they had been bought into treasury, and in any event at a
discount no greater than 5% to the prevailing net asset value per share, and
this is reflected in the text of Resolution No. 9. It is also the intention of
the Board that sales from treasury would only take place when the Board
believes that to do so would assist in the provision of liquidity to the
market. The number of treasury shares which may be sold pursuant to this
authority is limited to 10% of the Company's existing share capital on 16
December 2008 (reduced by any equity securities allotted for cash on a non-pro
rata basis pursuant to Resolution No. 8, as described above). This authority
will also expire on the date of the next Annual General Meeting or after a
period of 15 months, whichever is earlier.

The Directors intend to use the authority given by Resolutions Nos.7 and 8 to
allot shares and disapply pre-emption rights only in circumstances where this
will be clearly beneficial to shareholders as a whole. The issue proceeds
would be available for investment in line with the Company's investment
policy. No issue of shares will be made which would effectively alter the
control of the Company without the prior approval of shareholders in general
meeting.

Amendment to Articles of Association

It is proposed to make certain changes to the Company's Articles of
Association in order to reflect the provisions of the Companies Act 2006 in so
far as they apply to the Company. Accordingly, Special Resolution No. 11 will
be put to the Annual General Meeting to be held on 23 January 2009. Details of
the changes are set out on pages 47 and 48 of this Annual Report. Shareholders
should be mindful that the 2006 Act is being implemented over a period of
time, with the final stage taking effect in October 2009.

Recommendation

The Board considers that the resolutions relating to the above items of
special business are in the best interests of shareholders as a whole.
Accordingly, the Board unanimously recommends to the shareholders that they
vote in favour of the above resolutions to be proposed at the forthcoming
Annual General Meeting.

By order of the Board - Frostrow Capital LLP Company Secretary 16 December
2008

CORPORATE GOVERNANCE

Compliance

The Board has considered the principles and recommendations of the AIC Code of
Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance
Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by
the AIC Guide, addresses all the principles set out in Section 1 of the
Combined Code, as well as setting out additional principles and
recommendations on issues that are of specific relevance to investment trusts.

The Board considers that reporting against the principles and recommendations
of the AIC Code, and by reference to the AIC Guide (which incorporates the
Combined Code), will provide better information to shareholders.

The Company has complied with the recommendations of the AIC Code
and the relevant provisions of Section 1 of the Combined Code throughout the
year ended 30 September 2008 and up to the date of this report, except with
regard to the composition of its committees and as set out below.

The Combined Code includes provisions relating to:

- The role of the chief executive;

- Executive directors' remuneration; and

- The need for an internal audit function.

For the reasons set out in the AIC Guide, and in the preamble to the AIC Code,
the Board considers these provisions are not relevant to the position of
Finsbury Growth & Income Trust PLC, being an externally managed investment
company. The Company has therefore not reported further in respect of these
provisions.

Internal Audit

As the Company delegates to third parties its day-to-day operations and has no
employees, the Board has determined that there are no requirements for an
internal audit function. The Board reviews annually whether a function
equivalent to an internal audit is needed and it will continue to monitor its
systems of internal controls in order to provide assurance that they operate
as intended.

Board Independence, Composition and Tenure

The Board, chaired by Anthony Townsend, currently consists of six
non-executive Directors. The Directors' biographical details demonstrate a
breadth of investment, commercial and professional experience. Giles Warman
has served in excess of nine years on the Board since his first election.
Nonetheless, the Board considers him to be independent in character and
judgement and does not consider that the criterion of length of service should
necessarily preclude him from being so considered. This position accords with
the recommendation of the AIC Code that a director may be viewed as being
independent notwithstanding service that could be considerably more than nine
years. Accordingly, Mr Warman, who became a Director in 1989, is considered by
the Board to be independent.

CORPORATE GOVERNANCE (continued)


Anthony Townsend, who rejoined the Board in 2005, John Allard and
Vanessa Renwick, who both joined the Board in 2000, David Hunt, appointed a
Director in 2006 and Neil Collins who became a Director in January 2008, are
all also considered by the Board to be independent.

Under the Company's Articles of Association, Neil Collins, having been
appointed by the Board on 30 January 2008 shall stand for first election by
shareholders; John Allard retires by rotation. Both Messrs Collins and Allard
being eligible, they offer themselves for election and re-election
respectively at the Annual General Meeting. Giles Warman, having served on the
Board for more than nine years from the date of his first election, also
retires at the Annual General Meeting and, being eligible, offers himself for
re-election.

The Board has considered the position of Messrs Allard, Collins and Warman,
and believes that it would be in the Company's best interests to propose them
for election and re-election at the forthcoming Annual General Meeting.

None of the Directors has a service contract with the Company. New Directors
are appointed with the expectation that they will serve for a minimum period
of three years. Directors' appointments are reviewed formally every three
years by the Board. Any Director may resign in writing to the Board at any
time. The Company's Articles of

Association provide that one-third of the Directors must retire by rotation
and may offer themselves of re-election at each Annual General Meeting. The
terms of the Directors' appointments also provide that a Director shall retire
and be subject to re-election at the first Annual General Meeting after
appointment and at least every three years thereafter. Directors who have
served more than nine

years on the Board and those who are not deemed to be independent are required
to seek re-election annually. The terms of their appointment are detailed in a
letter sent to them when they join the Board. These letters are available for
inspection at the offices of the Company's Manager and will be available at
the Annual General Meeting. When a new Director is appointed to the Board,
he/she is provided with all relevant information regarding the Company and
his/her duties and responsibilities as a Director. In addition, a new Director
will also spend time with representatives of the Manager and Investment
Manager in order to learn more about their processes and procedures. The Board
also receives regular briefings from, amongst others, the Auditors and the
Company Secretary regarding any proposed developments or changes in laws or
regulations that could affect the Company and/or the Directors.

The Board's Responsibilities

The Board is responsible for efficient and effective leadership of the Company
and has reviewed the schedule of matters reserved for its decision. The Board
meets at least on a quarterly basis and at other times as necessary. The Board
is responsible for all aspects of the Company's affairs, including the setting
of parameters for and the monitoring of the investment strategy, the review of

CORPORATE GOVERNANCE (continued)

investment performance and investment policy. It also has responsibility for
all corporate strategy issues, dividend policy, share buy-back policy,
gearing, share price and discount/premium monitoring and corporate governance
matters. To enable them to discharge their responsibilities, prior to each
meeting the Directors are provided, in a timely manner, with a comprehensive
set of papers giving detailed information on the Company's transactions,
financial position, performance and income forecast. Representatives of the
Manager and Investment Manager attend each Board meeting, enabling the
Directors to seek clarification on specific issues or to probe further on
matters of concern; a full written report is also received from the Investment
Manager at each quarterly meeting. In light of these reports, the Board gives
direction to the Investment Manager with regard to the Company's investment
objectives and guidelines. Within these established guidelines, the Investment
Manager takes decisions as to the purchase and sale of individual investments.

There is an agreed procedure for Directors, in the furtherance of their
duties, to take independent professional advice if necessary at the Company's
expense. The Directors have access to the advice and services of the company
secretary, through its appointed representative, who is responsible to the
board for ensuring that Board procedures are followed.

Performance Evaluation

The Board carries out an annual evaluation of its performance.

Committees of the Board

During the year the Board delegated certain responsibilities and functions to
committees. In line with the AIC Code, the Board has disbanded the Nominations
and Remuneration Committees in favour of

the full Board adopting the responsibilities of such committees under the
Chairmanship of the Chairman, Anthony Townsend. The Audit and Management
Engagement Committees continue in

operation and copies of the full Terms of Reference, which clearly define the
responsibilities of each Committee, can be obtained from the Company
Secretary, will be available at the Annual General Meeting and can be found on
the Company's website on www.finsburygt.com and on the website of the Manager
at www.frostrow.com. The Board acknowledges its departure from the
recommendations of the current edition of the Combined Code in respect of the
Chairman of the Board being a member of various committees. The Board believes
that his extensive knowledge and experience has proven to be of great benefit
when making their deliberations. The Audit Committee is chaired by David Hunt
and the Management Engagement Committee is chaired by the Chairman, Anthony
Townsend.

The table overleaf details the number of Board and Committee meetings attended
by each Director. During the year there were five Board meetings, two Audit
Committee meetings and one meeting of the Management Engagement Committee.

Meeting Attendance

The number of meetings held during the year of the Board and its Committees,
and each Director's attendance level is shown below:

CORPORATE GOVERNANCE (continued)

                                                   Management
 
                                  Audit            Engagement
Type and number of
meetings held in the year to 30   Board Committee  Committee


September 2008                     (5)    (2)(1)

Anthony Townsend                    5         2       1
John Allard                         5         2       1
Neil Collins*                       2         1       1
David Hunt                          5         2       1
Michael Reeve**                     3         1     N/A
Vanessa Renwick                     4         1       1
Giles Warman                        4         2       1


* Joined the Board on 30 January 2008.

** Retired from the Board on 30 January 2008.

Other ad hoc meetings of the Board and Committees are held in connection with
specific events as and when necessary. All of the Directors attended the
Annual General Meeting held on 30 January 2008.

Audit Committee

The Company's Audit Committee meets at least twice per year and all Directors
are members of the Committee. The Audit Committee is responsible for the
review of the Annual Report and the Interim Report, the nature and scope of
the external audit and the findings thereof and the terms of appointment of
the Auditors, including their remuneration and the provision of any non-audit
services by them.

The Audit Committee reviews the need for non-audit services and authorises
such on a case by case basis having given consideration to the cost
effectiveness of the services and the independence and objectivity of the
auditors.

The Audit Committee meets representatives of the Manager and the Investment
Manager and their Compliance Officers who report as to the proper conduct of
business in accordance with the regulatory environment in which both the
Company, the Manager and the Investment Manager operate. The Company's
external Auditors also attend this Committee at its request and report on
their work procedures, the quality and effectiveness of the Company's
accounting records and their findings in relation to the Company's statutory
audit.

Management Engagement Committee

The Management Engagement Committee meets at least once per year and all
Directors are members of the Committee. The Management Engagement Committee is
responsible for the regular review of the terms of the management and
investment management agreements with, and the performance of, the Manager and
Investment Manager and for making recommendations to the Board in respect of
such agreements. The Committee last met in September 2008, at which time it
was agreed that no amendments to the agreements were required. The agreements
shall continue to be reviewed on a periodic basis as necessary.

CORPORATE GOVERNANCE (continued)

Internal Controls

The Combined Code requires the Directors, at least annually, to review the
effectiveness of the Company's system of internal control and to report to
shareholders that they have done so. This encompasses a review of all
controls, which the Board has identified as including business, financial,
operational, compliance and risk management. This accords with the FRC's
Internal Control Guidance for Directors.

The Directors are responsible for the Company's system of internal control
which is designed to safeguard the Company's assets, maintain proper
accounting records and ensure that financial information used within the
business, or published, is reliable. Such a system, however, is designed to
manage rather then eliminate the risks of failure to achieve the Company's
business objectives and can only provide reasonable and not absolute assurance
against material misstatement or loss.

Unlike the boards of most other listed companies, the boards of investment
trust companies obtain the majority of their evidence as to whether internal
controls are operating effectively from third party suppliers to whom
investment management, custody, administration, accounting and secretarial
matters have been delegated. This means that an understanding of the internal
controls for an investment trust company requires Directors to consider
information from a number of independent sources, rather than from a
consolidated single source covering a typical listed company's system of
internal control.

The Directors, through the procedures outlined below, have kept the
effectiveness of the Company's internal controls under review throughout the
period covered by these financial statements and up to the date of their
approval.

The Manager and the Investment Manager have established an internal control
framework to provide reasonable assurance on the effectiveness of the internal
controls operated on behalf of their clients. Their compliance monitoring
programmes assess the effectiveness of and provide the Board with regular
reports on all aspects of internal control (including financial, operational
and compliance control, risk management and relationships with external
service providers including the Company's custodian). Business risks have been
analysed and recorded in a Risk Register, which is reviewed at each meeting of
the Audit Committee and at other times as necessary.

Relations with Shareholders

The Board reviews the shareholder register at each Board meeting. The Company
has regular contact with its institutional shareholders particularly through
the Manager. The Board supports the principle that the Annual General Meeting
be used to communicate with private investors. The full Board attends the
Annual General Meeting under the Chairmanship of the Chairman of the Board.
Details of proxy votes received in respect of each resolution are made
available to shareholders at the meeting and are also published on the
Company's website at www.finsburygt.com. Representatives from the Investment
Manager

CORPORATE GOVERNANCE (continued)

attend the Annual General Meeting and give a presentation on investment
matters to those present.

The Board receives marketing and public relations reports from the Manager to
whom the marketing function has been delegated. The Board reviews and
considers the marketing plans of the Manager on a regular basis.

The Annual and Interim Reports, the Interim Management Statements and a
monthly fact sheet are available to all shareholders. The Board considers the
format of the Annual and Interim Reports so as to ensure they are useful to
all shareholders and others taking an interest in the Company. In accordance
with best practice, the Annual Report, including the Notice of the Annual
General Meeting, is sent to shareholders at least 20 working days before the
Meeting. Separate resolutions are proposed for substantive issues.

Exercise of Voting Powers

The Board has delegated authority to the Investment Manager to vote the shares
held by the Company through its nominee, The Bank of New York (Nominees)
Limited, which accords with current best practice whilst maintaining a primary
focus on financial returns. The Investment Manager may refer to the Board on
any matters of a contentious nature.

Accountability and Audit

The Directors' statement of responsibilities in respect of the financial
statements is set out on page 19. The report of the Company's auditor is set
out on pages 29 and 30. The Board has delegated contractually to external
agencies, including the Manager and the Investment Manager, the management of
the investment portfolio, custodial services (which includes the safeguarding
of the Company's assets), the day to day marketing, accounting administration,
company secretarial requirements and registration services. Each of these
contracts was entered into after full and proper consideration by the Board of
the quality and cost of the services offered, including the control systems in
operation in so far as they relate to the affairs of the Company. The Board
receives and considers regular reports from the Manager and ad hoc reports and
information are supplied to the Board as required.

Nominee Share Code

Where shares are held in a nominee company name, where the beneficial owner of
the shares is unable to vote in person, the Company nevertheless undertakes:

- to provide the nominee company with multiple copies of shareholder
communications, so long as an indication of quantities has been provided in
advance;

- to allow investors holding shares through a nominee company to attend
general meetings, provided the correct authority from the nominee company is
available; and

- that investors in the Alliance Trust Savings Scheme or ISA are automatically
sent shareholder communications, including details of general meetings,
together with a form of direction to facilitate voting and to seek authority
to attend.

Nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company's general meetings.

DIRECTORS' REMUNERATION REPORT

for the year ended 30 September 2008

The Board has prepared this report, in accordance with the requirements of
Schedule 7A to the Companies Act 1985. An ordinary resolution for the approval
of this report will be put to the members at the forthcoming Annual General
Meeting.

The law requires your Company's auditors to audit certain of the disclosures
provided. Where disclosures have been audited, they are indicated as such. The
auditors' opinion is included in their report on page 30.

Policy on Directors' Fees

The Board's policy is that the remuneration of Directors should reflect the
experience of the Board as a whole, be fair and comparable to that of other
investment trusts that are similar in size, have a similar

capital structure (Ordinary shares), and have a similar investment objective.
It is intended that this policy will continue for the year ending 30 September
2009 and subsequent years.

The fees for the Directors are determined within the limits set out in the
Company's Articles of Association, the maximum aggregate amount being
£150,000, and they are not eligible for bonuses, pension benefits, share
options, long-term incentive schemes or other benefits.

Directors' Service Contracts

It is the Board's policy that none of the Directors has a service
contract. The terms of their appointment provide that Directors shall retire
and be subject to election at the first annual general meeting after their
appointment, and at least every three years after that. The terms also provide
that a Director may be removed without notice and that compensation will not
be due on leaving office.

Your Company's Performance

The law requires a line graph be included in the Directors' Remuneration
Report showing total shareholder return for each of the financial years in the
relevant period. The graph set out below compares, on a cumulative basis, the
total return (assuming all dividends are reinvested) to shareholders compared
to the total shareholder return on a notional investment made up of shares of
the same kind and number as those by reference to which the FTSE All-Share
Index (the Company's stated benchmark) is calculated.

The Board, while fulfilling the function of a Remuneration
Committee, reviews the level of remuneration on an annual basis by reference
to the activities of the Company and comparison with other companies of a
similar structure and size.

At a Board meeting held in September 2008, it was agreed that the remuneration
of the Directors should remain unchanged. The last change to the levels of
remuneration was made in October 2005.

Directors' Emoluments for the Year (audited)

DIRECTORS' REMUNERATION REPORT (continued)

The Directors who served in the year received the following emoluments in the
form of fees:

                                                       Fees     Fees
                                                       2008     2007
                                                      £'000    £'000

Anthony Townsend (Chairman of the Board)#              23.8     16.0
John Allard                                            16.0     16.0
Neil Collins^                                          12.6        -
David Hunt*                                            19.0     17.5
Michael Reeve**                                         9.1     27.5
Vanessa Renwick                                        16.0     16.0
Giles Warman                                           16.0     16.0
                                                      112.5    109.0


# Anthony Townsend was appointed Chairman of the Company on 30 January 2008.

^ Neil Collins was appointed a Director of the Company on 30 January 2008.

* Chairman of the Audit Committee.

** Fees in respect of Michael Reeve's services were paid to The Tregeare
Company Ltd. Michael Reeve retired as a Director and Chairman of the Company
on 30 January 2008.

Approval

The Directors' Remuneration Report was approved by the Board of Directors on
16 December 2008 and signed on its behalf by

Anthony Townsend Chairman

Income Statement

incorporating the revenue account for the year ended 30 September 2008

                                                          2008                               2007
 
                          Revenue        Capital         Total   Revenue     Capital        Total
 
                     Notes  £'000          £'000         £'000     £'000       £'000        £'000
 
(Losses)/gains on
investments held at
fair value through
profit or loss
                                -       (51,522)      (51,522)         -       7,401        7,401

Income                   2  6,363              -         6,363     6,253           -        6,253
Investment
management,
management and
performance fees
                         3  (300)          (609)         (909)     (415)       (895)      (1,310)

Other expenses              (434)              -         (434)     (513)           -        (513)
 
Return/(loss) on
ordinary activities
before finance
charges and taxation
                            5,629       (52,131)      (46,502)     5,325       6,506       11,831

Finance charges             (346)          (702)       (1,048)     (470)       (954)      (1,424)
 
Return/(loss) on
ordinary activities
before taxation             5,283       (52,833)      (47,550)     4,855       5,552       10,407
Taxation on ordinary
activities
                                -              -             -         -           -            -
 
Return/(loss) on
ordinary activities
after taxation              5,283       (52,833)      (47,550)     4,855       5,552       10,407

Return/(loss) per        4 10.12p      (101.20)p      (91.08)p     9.44p      10.79p       20.23p
share

The total column of this statement represents the profit and loss
account of the Company.

The revenue and capital columns are supplementary to this and are
prepared under guidance published by the Association of Investment Companies
(AIC).

All items in the above statement derive from continuing operations.

The Company had no recognised gains or losses other than those
declared in the Income Statement.

Reconciliation of Movements in Shareholders' Funds

For the year ended 30 September 2008

                         Called-up   Share              Capital
                             share premium
                           capital account   Special redemption  Capital Revenue
                                             reserve    reserve  reserve reserve     Total

                             £'000   £'000     £'000      £'000    £'000   £'000     £'000    
                                                                                     
At 30 September 2007        13,162  35,482    12,424      3,453   97,023   4,511   166,055
Net (loss)/return from
ordinary activities
                                 -       -         -          - (52,833)   5,283  (47,550)
Second interim dividend
(4.8p per share) for
the year ended 30
September 2007
                                 -       -         -          -        - (2,527)   (2,527)
First interim dividend
(4.4p per share) for
the year ended 30
September 2008
                                 -       -         -          -        - (2,318)   (2,318)
Shares issued net of
issue expenses
                                37     432         -          -        -       -       469
Repurchase of shares
into treasury
                                 -       -         -          -  (6,081)       -   (6,081)

Sale of shares from              -       -         -          -    1,736       -     1,736
treasury
Year ended 30 September
2008
                            13,199  35,914    12,424      3,453   39,845   4,949   109,784
 
                            12,309
 
At 30 September 2006                25,414    12,424      3,453   91,471   3,907   148,978
Net return from                  -
ordinary activities
                                         -         -          -    5,552   4,855    10,407
Second interim dividend
(4.2p per share) for
the year ended 30                                                                  (2,068)
September 2006
                                 -       -         -          -          (2,068)
First interim dividend
(4.2p per share) for
the year ended 30       -
September 2007
                                         -         -          -        - (2,183)   (2,183)
Shares issued net of
issue expenses
                               853  10,068         -          -        -       -    10,921
Year ended 30 September
2007
                            13,162  35,482    12,424      3,453   97,023   4,511   166,055



Balance Sheet

as at 30 September 2008

                                                          2008      2007

                                                         £'000     £'000
 
Fixed assets
Investments held at fair value through profit          121,586   189,042
or loss
 
Current assets
Debtors                                                  1,159     1,753
Cash at bank                                               204       507
                                                         1,363     2,260
Current Liabilities
Creditors                                                (165)     (397)
Bank Loans                                            (13,000)  (24,850)
                                                      (13,165)  (25,247)
Net current liabilities                               (11,802)  (22,987)
Total net assets                                       109,784   166,055
 
Capital and reserves
Called-up share capital                                 13,199    13,162
Share premium account                                   35,914    35,482
Special reserve                                         12,424    12,424
Capital redemption reserve                               3,453     3,453
Capital reserve                                         39,845    97,023
Revenue reserve                                          4,949     4,511
 
Equity shareholders' funds                             109,784   166,055
 
Net asset value per share (note 5)                      215.5p    315.4p



Cash Flow Statement

for the year ended 30 September 2008

                                                          2008      2007

                                                         £'000     £'000
 
Net cash inflow from operating activities                5,548     4,083
 
Net cash outflow from servicing of finance             (1,185)   (1,376)
 
Financial investment
Purchase of investments                                (5,886)  (15,890)
Sale of investments                                     21,791        71
 
Net cash inflow/(outflow) from financial investment     15,905  (15,819)
 
Equity dividends paid                                  (4,845)   (4,251)
 
Net cash inflow/(outflow) before financing              15,423  (17,363)
 
Financing
Shares issued net of issue expenses                        469    10,921
Repurchase of shares into treasury                     (6,081)         -
Sale of shares from treasury                             1,736         -
(Repayment)/drawdown of loans                         (11,850)     4,850
 
Net cash (outflow)/inflow from financing              (15,726)    15,771
 
Decrease in cash                                         (303)   (1,592)
 
Reconciliation of net cash flow to movement in net
debt
Decrease in cash resulting from cashflows                (303)   (1,592)
Decrease/(increase) in debt                             11,850   (4,850)
 
Movement in net debt                                    11,547   (6,442)
Net debt at 1 October 2007                            (24,343)  (17,901)
Net debt at 30 September 2008
 
                                                      (12,796)  (24,343)

Notes

 1) Accounting Policies

The principal accounting policies, all of which have been applied
consistently throughout the year in the preparation of these financial
statements are set out below:

(a) Basis of preparation

The financial statements have been prepared under the historical
cost convention, except for the measurement at fair value of investments and
in accordance with UK Generally Accepted Accounting Practice (GAAP) and the
Statement of Recommended Practice (SORP) for "financial statements of
Investment Trust Companies" issued by the Association of Investment Trust
Companies dated December 2005.

(b) Investments

Investments have been designated by the Board as held at fair value through
profit or loss and accordingly are valued at fair value. Fair value for quoted
investments is deemed to be bid marker prices, or last traded price, depending
on the convention of the exchange on which they are quoted.

Unquoted investments are valued by the Directors using primary valuation
techniques.

Changes in the fair value of investments held at fair value through profit or
loss, and gains and losses on disposal are recognized in the Income Statement
as "gains or losses on investments held at fair value through profit or loss".

All purchases and sales of investments are accounted for on the trade date
basis.

The Company's policy is to expense transaction costs on acquisition and the
capital column of the Income Statement. The total of such expenses, showing
the total amounts included in disposals and additions are disclosed below, as
recommended by the SORP.

Transaction costs on the acquisition and sale of investments totalled £50,000
and £33,000 respectively (2007: £108,000 and £nil) and are included in the
(losses)/gains on investments within the Income Statement.

(c) Dividend Payments

Dividends paid by the Company on its shares are recognised in the
financial statements in the period in which they are paid and are shown in the
Reconciliation of Movements in Shareholders' Funds.

(d) Investment Income

Dividends receivable on equity shares are recognised on the
ex-dividend date.

Fixed returns on non-equity shares are recognised on a time
apportionment basis.

Special dividends: In deciding whether a dividend should be regarded as a
capital or revenue receipt, the Company reviews all relevant information as to
the reasons for and sources of the dividend on a case by case basis.

LLP profit share is recognised in the financial statements when the
entitlement to the income is established.

Notes (continued)

(e) Expenditure and Finance Charges

All the expense and finance costs are accounted for on an accruals
basis. Expenses are charged through the revenue column of the Income Statement
except as follows:

(1) expenses which are incidental to the acquisition or disposal of
an investment are treated as part of the cost or proceeds of that investment
(as explained in 1(b) above);

(2) expenses are taken to capital reserve realised via the capital column of
the Income Statement, where a connection with the maintenance or enhancement
of the value of the investments can be demonstrated. In line with the Board's
expected long term split of returns, in the form of capital gains and income,
from the Company's investment portfolio, 67% of the investment management fee
and finance costs are taken to the capital reserve realised;

(3) performance fees are charged 100% to capital.

(f) Taxation

The payment of taxation is deferred or accelerated because of timing
differences between the treatment of certain items for accounting and taxation
purposes. Full provision for deferred taxation is made under the liability
method, without discounting, on all timing differences that have arisen, but
not reversed by the balance sheet date, unless such provision is not permitted
by Financial Reporting Standard 19.

Any tax relief obtained in respect of management fees, finance
costs and other capital expenses charged or allocated to the capital column of
the Income Statement is reflected in the Capital reserve - realised and a
corresponding amount is charged against the revenue column of the Income
Statement. The tax relief is the amount by which corporation tax payable is
reduced as a result of these capital expenses.

(g) Capital Reserve

 Capital reserve - realised

 The following are taken to this reserve:

(1) Gains and losses on the realisation of investments;

(2) Realised exchange differences of a capital nature;

(3) Expenses, together with the related taxation effect, allocated
    to this reserve in accordance with the above policies; and

Capital reserve - unrealised

The following are taken to this reserve:

(4) Increase and decrease in the valuation of investments held at
    the year end; and

(5) Unrealised exchange differences of a capital nature.

(h) Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash.

Notes (continued)

2. Income

                                            2008  2007
 
                                           £'000 £'000
Income from investments
Franked investment income
- dividends                                6,237 6,074
Unfranked investment income
- Limited Liability Partnership               11     -
profit-share
- fixed interest                              65   145
- money market dividend                       44    25
                                           6,357 6,244
Other income
Bank interest                                  6     9
Total Income                               6,363 6,253



3. Investment Management, Management and Performance Fees

                       Revenue Capital Total Revenue Capital Total
 
                          2008    2008  2008    2007    2007  2007
 
                         £'000   £'000 £'000   £'000   £'000 £'000
Investment management      199     402   601     196     398   594
fee
Management fee              86     176   262     157     320   477
Performance fee              -       -     -       -      44    44
VAT thereon*                15      31    46      62     133   195
Total fees                 300     609   909     415     895 1,310


*With effect from 1 October 2007 no VAT has been charged on Investment
Management fees.

4. Other Expenses

                                Revenue Capital Total Revenue Capital Total
                                   2008    2008  2008    2007    2007  2007
                                  £'000   £'000 £'000   £'000   £'000 £'000
Secretarial services                  -       -     -      44       -    44
Directors' fees                     112       -   112     109       -   109
Fees payable to the Company's
auditors - statutory annual
audit                                20       -    20      18       -    18
Fees payable to the Company's
auditors - all other services         2       -     2       2       -     2
Printing                             24       -    24      32       -    32
ISA, PEP & Savings Scheme costs      60       -    60      48       -    48
Bank and custody fees                18       -    18      25       -    25
Marketing costs                      39       -    39      54       -    54
Legal and professional fees           -       -     -      32       -    32
Other expenses                      159       -   159     149       -   149
Total expenses                      434       -   434     513       -   513


All of the above expenses include VAT where applicable, with the exception of
the fees paid to the Company's auditor, which are shown net of VAT.

Details of the amounts paid to Directors are included in the Directors'
Remuneration Report.



5. Finance Charges

                                            Revenue       Capital         Total    Revenue   Capital     Total
                                               2008          2008          2008       2007      2007      2007  

                                              £'000         £'000         £'000      £'000     £'000     £'000
On bank loans and overdrafts
wholly repayable within five
years                                           346           702         1,048        470       954     1,424


                                            Revenue       Capital         Total    Revenue   Capital     Total
                                               2008          2008          2008       2007      2007      2007  

                                              £'000         £'000         £'000      £'000     £'000     £'000
6. Taxation on Ordinary                                                   
Activities    
                                              
(a) Analysis of charge for the                    -             -             -          -         -         -
year Corporation tax at 28%
(2007: 30%)

                                            Revenue       Capital         Total    Revenue   Capital     Total
                                               2008          2008          2008       2007      2007      2007  

                                              £'000         £'000         £'000      £'000     £'000     £'000

                                                   
(b) Factors affecting tax charge for year
Return/(loss) on ordinary activities before
taxation                                      5,283      (52,833)      (47,550)      4,855     5,552    10,407
Return/(loss) on ordinary activities
multiplied by Corporation tax of 28%#
 
(2007: 30%)                                   1,479      (14,793)      (13,314)      1,457     1,665     3,122
Effects of:
Franked investment income not subject to
corporation tax                             (1,746)             -       (1,746)    (1,822)         -   (1,822)
Excess expenses unutilised                      251             -           251        351         -       351
Amounts charged to capital                        -           367           367          -       555       555
Expenses not deductible for tax purposes         16             -            16         14         -        14
Capital loss/(returns) not subject to tax*        -        14,426        14,426          -   (2,220)   (2,220)
Current tax charge for the year (note 6(a))       -             -             -          -         -         -
 

#Under the Finance Act 2008, the rate of Corporation Tax was lowered to 28%
from 30% on 1 April 2008. *Gains on investments are not subject to corporation
tax within an investment trust company.

(c) Provision for deferred taxation

No provision for deferred taxation has been made in the current or prior year.

The Company has not recognised a deferred tax asset of £8,572,000 (2007:
£8,522,000) arising as a result of excess management expenses and business
charges. The expenses will only be utilised if the Company generates
sufficient taxable profits in the future.

Deferred tax is not provided on unrealised capital gains or losses arising on
investments because the Company meets and intends to continue meeting the
conditions for approval as an investment trust.

7. Dividends

A first interim dividend of 4.4p per share (2007: 4.2p) was paid on 6 May
2008. The register date was 4 April 2008 and the ex-div date was 2 April 2008.
Cost 2008: £2,318,000 (2007: £2,183.000)

A second interim dividend of 5.1p per share (2007: 4.8p) was paid on 3
November 2008. The register date was 3 October 2008 and the ex-div date was 1
October 2008. Cost 2008: £2,598,000 (2007: £2,527.000)

The second interim dividend of 5.1p (2007:4.8p) has not been included as a
liability in these financial statements as it is only recognised in the
financial year in which it is paid.

The total dividend payable in respect of the financial year which forms the
basis of Section 842 of the Income and Corporation Taxes Act 1988 are set out
below:

Revenue available for distribution by way of dividend for the year -
£5,283,000

2008: First interim dividend of 4.4p per share paid on 6 May 2008 -
(£2,318,000)

2008: second interim dividend of 5.1p paid on 3 November 2008 - (£2,598,000)

Undistributed revenue for Section 842 purposes - £367,000

8.Return per Share

The return per share for 2008 is as follows:

Revenue - 10.12p Capital - (101.20)p Total - (91.08)p

The return per share for 2007 is as follows:

Revenue - 9.44p Capital - 10.79p Total - 20.23p

The total return per share is based on the total loss attributable to equity
shareholders of £47,550,000 (2007: profit £10,407,000), and on 52,206,113
(2007: 51,438,470) shares, being the weighted average number of shares in
issue during the year.

Revenue return per share is based on the net revenue on ordinary activities
after taxation of £5,283,000 (2007: profit £4,855,000).

Capital loss per share is based on the net capital loss for the year of
£52,833,000 (2007: profit £5,552,000).

9. Investments

Analysis of investment portfolio movements
                                                            2008    2007

                                                           £'000   £'000

Opening book cost                                        135,819 120,520
Opening unrealised appreciation                           53,223  45,827
Opening valuation                                        189,042 166,347
Movements in the year:
Purchases at cost                                          5,857  15,365
Sales
- proceeds                                              (21,791)    (71)
- realised profit on sales                                 3,333       5
(Decrease)/increase in unrealised appreciation          (54,855)   7,396
Closing valuation                                        121,586 189,042
Closing book cost                                        123,218 135,819
Closing unrealised (depreciation)/appreciation           (1,632)  53,223
Closing valuation                                        121,586 189,042
(Loss)/gains from investments held at fair value
through profit or loss
                                                            2008    2007
                                                           £'000   £'000
Realised gains based on historical cost                    3,333       5
Amounts recognised as unrealised in previous year       (10,760)     (5)
Realised loss based on carrying values at previous
year's balance sheet date                                (7,427)       -
Net movement in unrealised appreciation/(depreciation)  (44,095)   7,401
(Loss)/gains on investments during the year             (51,522)   7,401

10. Debtors

                                                            2008    2007

                                                           £'000   £'000

Prepayments and accrued income                             1,159   1,503
Subordinated loan - Frostrow Capital LLP                       -     250
                                                           1,159   1,753

11. Creditors

Amounts falling due within one year
                                                            2008    2007

                                                           £'000   £'000

Bank loans with ING Bank N.V.*                            13,000  24,850
Amounts due to brokers                                         -      29
Other creditors and accruals                                 165     368
                                                          13,165  25,247
     * Further details on the loan facilities can be
                                   found in note 17.

12. Share Capital
                                                            2008    2007
                                                           £'000   £'000
Authorised:
Shares of 25p                                             25,000  25,000
Allotted, called up and fully paid:
52,797,423# (2007: 52,647,423) shares of 25p each         13,199  13,162


#In the year to 30 September 2008, 150,000 new shares were issued, 667,396
shares were re-issued out of treasury and 2,514,146 shares were repurchased to
be held in treasury. In the period 1 October 2008 to 16 December 2008 a
further 50,000 shares were re-issued out of treasury, and 182,000 have been
repurchased to be held in treasury.

At the year end the Company held 1,978,750 shares in treasury.

13. Capital Reserve

                                         Capital Reserve    Capital
                                                Realised    Reserve
                                                         Unrealised    Total
                                                   £'000      £'000    £'000

At 1 October 2007                                 43,800     53,223   97,023
Transfer on disposal of investments               10,760   (10,760)        -
Net losses on investments                        (7,427)   (44,095) (51,522)
Expenses charged to capital                      (1,311)          -  (1,311)
Repurchase of shares into treasury               (6,081)          -  (6,081)
Sale of shares from treasury                       1,736          -    1,736
At 30 September 2008                              41,477    (1,632)   39,845


The Institute of Chartered Accountants in England and Wales has issued
guidance (TECH 01/08) stating that profits arising out of a change in fair
value of assets, recognised in accordance with Accounting Standards, may be
distributed provided the relevant assets can be readily convertible into cash.
Securities listed on a recognised stock exchange are generally regarded as
being readily convertible into cash. However, under the terms of the Company's
Articles of Association, sums with "Other capital reserves" are available for
distribution only by way of redemption or purchase of any of the Company's own
shares. In addition, in order to maintain investment trust status, the Company
may only distribute by way of dividend accumulated revenue profits.

14. Net Asset Value per Share

Net asset value per share is based on net assets of £109,784,000
(2007: £166,055,000) and on 50,950,673 (excluding treasury shares)
(2007:52,647,423) shares in issue at the year end. As at 30 September 2008 the
Company held 1,846,750 shares in treasury (2007:nil).

15. Contingent Assets/Liabilities

On 5 November 2007, the European Court of Justice ruled that management fees
should be exempt from VAT. HMRC has announced its intention not to appeal
against this case to the UK VAT Tribunal. The Board is currently in the
process of quantifying the potential repayment that should be due. However,
the amount the Company will receive, the period to which it will refer, and
the time scale for receipt are all uncertain and hence the Company has made no
provision in these financial statements for any such receipt.

There were no capital commitments or contingent liabilities at 30 September
2008 (2007: nil).

16. Related Parties

Details of the relationship between the Company, Frostrow Capital LLP and
Lindsell Train Limited are disclosed in the Report of the Directors on pages
16 and 17. During the year ended 30 September 2008, Lindsell Train Limited
received £601,000 in respect of Investment Management fees, of which £42,000
was outstanding at the year end.

The Company has an investment in The Lindsell Train Investment Trust Plc with
a book cost of £1,000,000 and a fair value of £1,370,000 as at 30 September
2008. The Lindsell Train Investment Trust Plc is managed by the Company's
Investment Manager.

17. Risk Management

As an investment trust, the Company invests in equities and other investments
for the long term so as to secure its investment objectives as stated on page
12. In pursuit of its investment objectives, 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 in the revenue profits available for distribution.

The Company's financial instruments comprise equity and fixed interest
investments, cash balances, borrowings and debtors and creditors that arise
directly from its operations.

The principal risks inherent in managing the Company's financial instruments
are market risk, liquidity risk and credit risk. These risks and the
Directors' approach to the management of them are set out in the Report of
Directors on pages 13 to 15.

Market Risk

Market risk comprises three types of risk: market price risk, interest rate
risk and currency risk.

Market price risk

As an investment company, the performance is dependent on the performance of
the underlying companies and securities in which it invests. The market price
of investee companies' shares is subject to their performance, supply and
demand for the shares and investor sentiment regarding the company or the
sector. Consequently market price risk is one of the most significant risks to
which the Company is exposed.

Market price risk arises mainly from uncertainty about future prices of
financial instruments held. It represents the potential loss the Company might
suffer through holding market positions in the face of price movements.

At 30 September 2008, the fair value of the Company's assets exposed to market
price risk was £121,586,000 (2007: £189,042,000) (see page 9). The Board meets
on at least a quarterly basis during the year and at each meeting they
consider the asset allocation and concentration of the Portfolio in order to
minimise the risk associated with particular instruments. The Investment
Manager has the responsibility for selecting investments in accordance with
the Company's investment objective and seeks to ensure that individual stocks
meet an acceptable risk-reward profile.

If the fair value of the Company's investments at the balance sheet date
increased or decreased by 10%, while all other variables remained constant,
the capital return and net assets attributable to shareholders for the year
ended 30 September 2008 would have increased or decreased by £12,159,000 or
23.86p per share (2007: £18,904,000 or 35.91p per share).

No derivatives or hedging instruments are utilised to manage market price
risk.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates.

Interest rate movement may affect:

- the interest payable on the Company's variable rate borrowings

- the level of income receivable from fixed interest securities and cash at
bank and on deposit

- the fair value of investments of fixed rate securities

The Company's main exposure to significant interest rate risk is through its
credit facilities with ING Bank N.V. Borrowings varied throughout the year as
part of the Board's endorsed policy. Borrowings at the year end amounted to
£13,000,000 (2007: £24,850,000).

As at 30 September 2008, the Company's unsecured revolving credit facilities
comprised a £20,000,000

2 year revolving credit facility and a £10,000,000 364 day revolving credit
facility. A total of £13,000,000 was drawn down from the former facility
(2007: £20,000,000) at an interest rate of 6.87785% (LIBOR 6.36125% and a
margin and rate of additional costs of 0.5166%). At the year end the Company
did not utilise the £10,000,000 revolving credit facility (2007: £4,850,000).

If the above level of borrowing was maintained for a year a 1%
increase/decrease in LIBOR would decrease/increase the revenue return by
£43,000 and decrease/increase the capital return by £87,000, and
decrease/increase the net assets by £130,000 (2007: decrease/increase the
revenue return by £82,000 and decrease/increase the capital return by £167,000
and decrease/increase the net assets by £249,000).

17. Risk Management (continued)

The weighted average interest rate on borrowings under the committed revolving
credit facilities provided by ING Bank N.V was 6.34% (2007: 6.09%).

At the year-end, the Company's financial assets and liabilities exposed to
interest rate risk were as follows:

                                                             2008     2007
                                                           Within   Within
                                                         one year one year
                                                   
                                                            £'000    £'000

Exposure to floating interest rates:
Cash at bank                                                  204      507
Creditors: amount falling due within one year
- borrowings on the loan facility                          13,000   24,850
Exposure to fixed interest rates:
Investments held at fair value through profit or            7,991   18,473
loss
Total exposure to interest rates                           21,195   43,830


Currency risk

The financial statements are presented in sterling, which is the functional
currency and presentational currency of the Company. At 30 September 2008, all
of the Company's investments, with the exception of one, Dr Pepper Snapple,
were priced in sterling. This U.S. investment represents only 3.3% of the
investment portfolio.

Credit Risk

Credit risk is the Company's exposure to financial loss from the failure of a
counterparty to deliver securities or cash for acquisition or disposals of
investments which could result in the Company suffering a financial loss.
Credit risk is managed as follows:

- investment transactions are carried out only with brokers whose
creditworthiness is reviewed by the Investment Manager. Transactions are
ordinarily undertaken on a delivery versus payment basis whereby the Company's
custodian bank ensures that the counterparty to any transactions entered into
by the Company has delivered its obligation before any transfer of cash or
securities away from the Company is completed.

Any failing trades in the market are closely monitored by both the Investment
Manager and the Manager of the Company.

Cash is only held at banks and in money market funds that have been identified
by the Board as reputable and of high credit quality. Bank of New York Mellon
has a credit rating of Aaa (Moodys) and AA (S&P).

None of the Company's financial assets or liabilities are secured by
collateral. The Company has not been materially exposed to credit risk
throughout the year.

17. Risk Management (continued)

As at 30 September 2008, the exposure to credit risk was £1,363,000 (2007:
£2,260,000), comprising:

                                                                  2008    2007

                                                                 £'000   £'000
Current assets:
Other receivables (amounts due from brokers, dividends and       1,159   1,753
interest receivable)
Cash at bank                                                       204     507
Total exposure to credit risk                                    1,363   2,260


The exposure to credit risk calculation is based on the Company's credit risk
exposure as at 30 September and may not be representative of the year as a
whole.

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.

Liquidity risk is not significant as the majority of the Company's assets are
investments in quoted equities and other quoted securities that are readily
realisable.

Fair value of financial assets and financial liabilities

Financial assets and financial liabilities are either carried in the balance
sheet at their fair value or at a reasonable approximation of fair value.

Capital management policies and procedure

The Company's capital management objectives are:

- to ensure that it will be able to continue as a going concern; and

- to achieve capital and income growth and to provide shareholders with a
total return in excess of that of the FTSE All-share Index;

through an appropriate balance of equity capital and debt.

The Board, with the assistance of the Investment Manager, regularly monitors
and reviews the broad structure of the Company's capital on an ongoing basis.
These reviews include:

- the level of gearing, set at a maximum of 25% of its net assets, which takes
account of the Company's position and the Investment Manager's views on the
market; and

- the extent to which revenue in excess of that which is required to be
distributed should be retained.

The Company's objectives, policies and processes for managing capital are
unchanged from last year.

The Company is subject to externally imposed capital requirements;

- as a public company, the Company has a minimum share capital of £50,000; and

- in order to be able to pay dividends out of profits available for
distribution, the Company has to be able to meet one of the two capital
restriction tests imposed on investment companies by company law.

These requirements are unchanged since last year and the Company has complied
with them at all times.

18. Reconciliation of Net (Loss)/Return Before Finance Costs and Taxation to
Net Cash Inflow from Operating Activities

                                                                              2008    2007
 
                                                                             £'000   £'000

Total (loss)/return before finance charges and taxation                   (46,502)  11,831
Less:capital (loss)/return before finance charges and taxation              52,131 (6,506)
Net revenue before finance costs and taxation                                5,629   5,325
Decrease/(increase) in accrued income and prepayments                          346   (162)
Decrease/(increase) in debtors                                                 248   (245)
(Decrease)/increase in creditors                                              (66)      60
Investment management, management and performance fees charged to capital    (609)   (895)
Net cash inflow from operating activities                                    5,548   4,083


The Company's cash balances are generally placed on deposit with The Bank of
New York Mellon who also utilise a Dublin domiciled money market fund managed
by Goldman Sachs.

19. Analysis of Changes in Net Debt

                               At 1 October                    At
 
                                       2007 Cashflow 30 September
 
                                                             2008
 
                                      £.000    £'000        £.000
Cash at bank                            507    (303)          204
Debt falling due within1year       (24,850)   11,850     (13,000)
Net debt                           (24,343)   11,547     (12,796)


20. Substantial Interests

The Company holds interests in 3.0% or more of any class of capital in the
following companies:

                                                     % of Issued share capital
                                                        Or Limited Liability  Fair value
Company or Limited Liability Partnership  Shares held   Partnership interest    £'000

Barr (A.G.)                               890,000                4.6            9,078
Young & Co's Brewery                      799,492                4.2            2,918
Lindsell Train Investment Trust*           10,000                5.0            1,370
Frostrow Capital LLP (unquoted)                 -               10.0              150


*Also managed by Lindsell Train Limited who receive an Investment Management
fee of 0.65% per annum of the company's adjusted market capitalisation.

EXPLANATORY NOTES OF PRINCIPAL CHANGES TO THE COMPANY'S ARTICLES OF
ASSOCIATION

Set out below is a summary of the main differences between the current and the
proposed new Articles of Association ("the Articles"). The principal changes
in the new Articles to be adopted at the 2009 AGM relate to electronic
communication with shareholders and shareholder meetings and resolutions,
directors indemnities, transfers of shares and directors conflicts of
interest, reflecting provisions of the Companies Act 2006 ("the 2006 Act")
which came into effect in 2007 and 2008 and the removal of references to a
class of Preference Shares in the Company which no longer exist.

1. Interpretation

Definition of "authenticated" has been inserted to reflect the new term used
under the 2006 Act.

Definitions of "ordinary resolution" and "special resolutions" have been
inserted to reflect the definitions within the 2006 Act.

Amendments have been made to the meaning of "member" to include reference to a
person nominated under the 2006 Act (please see the wording below under
Nomination Rights in relation to this).

Definitions have been updated generally in line with the main body of the New
Articles.

2. Abolition of Extraordinary General Meetings and Extraordinary Resolutions

Throughout the new Articles, references to a requirement for an "extraordinary
general meeting" have been replaced by "general meeting" and all references to
"extraordinary" resolution" have been removed. The terms "extraordinary
general meeting" and "extraordinary resolution" have ceased to be applicable
under the 2006 Act.

3. Notice of and Proceedings at General Meetings

The provisions in the new Articles dealing with the convening of
general meetings, method of notice and the length of notice required to
convene general meetings are in line with the relevant provisions of the 2006
Act and include reference to the rights of nominees (please see the wording
below under Nomination Rights in relation to this).

4. Votes of Members, Proxies and Corporate Representatives

Under the 2006 Act, proxies are entitled to vote on a show of hands as well as
on a poll, and members may appoint a proxy to exercise or all of any of their
rights to attend, speak and vote at meetings. Multiple proxies may be
appointed provided that each proxy is appointed to exercise the rights
attached to a different share or shares. The 2006 Act also provides for
multiple corporate representatives to be appointed and the new Articles
therefore refer to the right to appoint multiple corporate representatives.

5. Security Procedures at General Meetings

The new Articles have been amended so as to clarify the provisions
in relation to security at general meeting. The Board may refuse entry to or
eject from General Meetings persons who fail to comply with security
arrangements made under the Articles.

6. Polls

A new Article has been inserted to clarify that the Company must publish the
results of a poll on its website in accordance with the 2006 Act.

7. Proxies

Articles 84 to 93 have been amended to ensure that the provisions in relation
to multiple proxies are in line with the 2006 Act.

8. Directors' Interests and Conflicts of Interests

The Companies Act 2006 sets out directors' general duties which largely codify
the existing law, but with some changes. Under the Companies Act 2006, from 1
October 2008 a director must avoid a situation where he has, or can have, a
direct or indirect interest that conflicts, or possibly may conflict with the
company's interests. The requirement is very broad and could apply, for
example, if a director becomes a director of another company or a trustee of
another organisation. The Companies Act 2006 allows directors of public
companies to authorise conflicts and potential conflicts where the articles of
association contain a provision to this effect. The Companies Act 2006 also
allows the articles to contain other provisions for dealing with directors'
conflicts of interest to avoid a breach of duty. The New Articles give the
directors authority to approve such situations and to

include other provisions to allow conflicts of interest to be dealt with in a
similar way to the current position.

Contact: Mark Pope at Frostrow Capital LLP, 0203 008 4913

Frostrow Capital LLP, Company Secretary - 30 January 2009

ANNOUNCEMENT ENDS