Half Yearly Report

RNS Number : 4749K

Midas Income & Growth Trust PLC

19 December 2008

 

MIDAS INCOME & GROWTH TRUST PLC

HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 2008

The investment objective of Midas Income & Growth Trust PLC is to seek to achieve an absolute return with low volatility through investment in a multi-asset portfolio with the aim of achieving both income and capital returns.

The following is the unaudited Interim Board Report for the six months ended 31 October 2008.

Interim Board Report

Highlights

• Progressive dividend policy continued with increase of 6.5%

• 2,076,000 shares purchased for cancellation

• Net asset value total return of -31.8%

• Share price total return of -30.2%

Market background and performance

The events of the past six months have been extraordinary by any standards and far more serious than anything experienced in living memory - outside of those old enough to remember the great depression in the United States. The prospect of a complete melt down within the financial system has only been avoided following massive intervention from Governments and Central Banks around the World. The huge levels of support committed to shore up bank balance sheets and to provide liquidity to the financial sectors has, it would appear, put a floor under the worst possible outcome. However, the real economic repercussions of the 'Credit Crunch' are yet to be felt and the depth of recession in the major Western economies, together with slower growth in the rest of the World will continue to offer an uncertain outlook for some time to come. 

Against a background where banks and other highly geared institutions and market participants are deleveraging their balance sheets, markets have been hit with savage markdowns and record levels of volatility. Forced selling has become commonplace across a wide range of assets and low liquidity levels have caused severe stress within financial markets. In many cases this has led to a cessation of normal market operation and an almost complete seizure and inability to transact. This problem has been particularly acute in fixed interest markets. 

The Company's assets have not been immune from the severe headwinds experienced over the period and many parts of the portfolio have come under varying degrees of pressure. The net asset value total return for the period (including dividends) was -31.8%. The share price total return was marginally better with a fall of 30.2%. This outcome is clearly very disappointing and, whilst broadly reflective of equity market returns over the period, bears testimony to the pricing pressure in many of the other assets held by the company. The systemic nature of the recent crisis has left few markets immune and the high level of diversification held within the Company's investment portfolio has proven of little defence in this environment.

On a brighter note the progressive dividend policy established in recent years has been continued with a further 6.5% increase in the two interim dividends announced for the current financial period. 

The importance your Board attaches to controlling the rating of the Company's shares was further emphasised over the period with 2,076,000 shares being bought for cancellation. Further authority to buy in shares has been approved by shareholders and warrant holders at their respective Extraordinary General Meetings and, following the Court's approval received on 26 November 2008, will continue to be actively used to help control the discount on the Company's shares. As in previous years, the making and timing of any buyback remains at the absolute discretion of the Board.

Gearing

The Company's borrowings have remained unchanged over the period at £6.25 million, which has led to an increase in gearing, as assets prices have fallen over the period. Gearing stood at 13% at the end of the period and borrowings are all short term.

The Company remains comfortably within bank covenants and your Board believes that prudent use of the existing banking facilities, which will benefit from falling levels of LIBOR, offer the prospect of enhancing investment returns from current market levels. To this end a further £750,000 was drawn down towards the end of November, taking borrowings to £7 million and gearing to approximately 15%. Given the current volatile markets, and to provide clarity to investors, the Board confirms that gearing will not exceed 25% of net assets at any time.

Exercise of Warrants

No warrants were exercised over the period, leaving 1,934,411 warrants in issue.

Dividends

The first interim dividend of 1.63p was declared on 19 August, which represented an increase of 6.5% over the corresponding payment last year. A second interim dividend of 1.63p was declared on 17 November. Your Board and manager fully appreciate the importance of the quarterly dividends to many of the Company's shareholders and remain committed to following a progressive dividend policy. However, future dividend growth is likely to be lower due to the pressures building, particularly within the equity markets, for cash conservation and commensurately lower dividend distributions by companies.

VAT Update

The Board remains in discussion with the manager and the former manager in order to quantify the amount of VAT paid by the Company since its launch in 1996 and is taking steps to negotiate a settlement of all claims for back VAT. Progress has been made but the timetable for recovery and quantum still remain uncertain at the current time.

Principal Risks and Uncertainties

Investment and Market Risks: Managing a portfolio of shares and debt security investments necessarily involves certain risks, the more important of which are set out below. A significant proportion of the assets of the Company may be invested in debt security investments and overseas equities. Whilst this broader spread of investments is intended to reduce the volatility and risk profile of the Company's portfolio this cannot be assured.

Shares: The market value of the Ordinary shares, as well as being affected by the net asset value, also takes into account their supply and demand. The market value of an Ordinary share can fluctuate and may not always reflect its underlying net asset value. Investment in the Company should be regarded as long term in nature. There can be no guarantee that appreciation in the value of the Company's investments will occur and investors may not get back the full value of their original investment.

Investment Objective: There is no guarantee that the investment policy adopted by the Company will provide the returns sought by the Company.

Borrowings: The Company currently utilises gearing in the form of bank borrowings. Gearing has the effect of exacerbating market falls and market gains.

Currency: A proportion of the Company's portfolio may be invested in assets denominated in currencies other than sterling. This will increase the currency risk that the Company is exposed to as a result in fluctuations in the exchange rate between the denomination of the investments and the sterling denomination of the Company's base currency.

Dividends: The ability of the Company to pay dividends in respect of the Ordinary shares and any future dividend growth will depend on the level of income received from its investments. Accordingly, the amount of dividends paid to Shareholders may fluctuate.

Discount: While the Board intends to implement an active discount management policy, the ability to implement such a policy is dependent on a number of factors including; the ability to buy back shares in the market, the ability to fund share buybacks, the authority to buy back shares being renewed annually and the Board's discretion over the making and timing of any buybacks.

Key Individuals: The Company is substantially dependent on the services of key individuals working for its Manager, namely Simon Edwards and Alan Borrows. The loss of either or both of these individuals could have an adverse effect on the Company's performance.

Taxation and Exchange Controls: Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) or failure to satisfy the conditions of section 842 of the Income and Corporation Taxes Act 1988 could affect the value of the investments held by the Company, affect the Company's ability to provide returns to Shareholders or alter the post tax returns to Shareholders.

Related Parties Transactions

The transactions with related parties that have taken place during the first six months of the current financial year are disclosed in Note 9 to the accounts. The related party transactions are the same as those in place at the Company's year end and are not deemed to have materially affected the financial position or the performance of the Company during the period.

Directors' Responsibility Statement

The Directors are responsible for preparing the half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

• the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement 'Half Yearly Financial Reports';

• the Interim Board Report (constituting the interim management report) includes a fair review of the information required by rule 4.2.7R of the UK Listing Authority Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last annual report that could so do).

Outlook

There is little doubt that the economic outlook is set to remain difficult as the real economy effects of the 'credit crunch' are felt. However, inflation expectations have fallen sharply and monetary policy is likely to remain accommodative with interest rates falling to historic low levels. Government and central bank support for the financial system has been established. Whilst markets are likely to remain nervous, valuations across many assets offer the prospect of attractive returns when more normal market conditions develop.

For Midas Income & Growth Trust PLC

Hubert Reid

Chairman

19 December 2008

  Manager's Review

Market Commentary

Over the past six months financial markets have had to endure one of the most turbulent periods in living memory. The escalation of the markets' downturn reflects the transition from a 'Credit Crisis', where leveraged investors saw their access to credit frozen, to a full blown liquidity crisis, where normally solvent institutions have found it difficult to fund their day to day operations. Inter-bank money markets have dried up and the broader credit markets have ceased to operate. De-leveraging by banks and other highly leveraged institutions has been a major feature of the period, with a wide range of assets being sold to reduce pressures on extended balance sheets.

The economic downturn which first developed in the United States has spread into Europe and Asia as the fallout from the commodity price shock and ongoing credit crisis intensified. One by one the financial 'bubbles' that had inflated over the previous decade have been pricked, with only the perceived safe haven of cash (although even this was questioned as wide scale bank failures became likely) and G7 Sovereign Bonds, offering shelter from the looming financial crisis.

The turmoil in credit markets and significant increase in volatility experienced in equity markets reached ever heightened levels as the period progressed, with markets reaching a crescendo of selling in late October, driven by fears both rational and irrational. To put the extent of market falls into historic context the fall in the UK market is the worst for 300 years - with one notable exception - 1974. In Europe and the United States similar unwelcome records have been set, with institutions that had survived the Wall Street Crash relatively unscathed, coming tumbling down amid the chaos.

The concept that organisations were too big to fail was challenged as Lehman Brothers disappeared and, as the knock on effects of this event became apparent, it became necessary for widespread Government intervention to recapitalise the banking sector to avoid further collapse. In addition to massive injections of liquidity by Central Banks, dramatic cuts in interest rates have been made in an attempt to restore consumer confidence and large parts of the financial services industry have been taken into public ownership. Fiscal support packages have been hastily put together, in a further attempt to stave off the worst effects of the economic slump.

World economic growth forecasts have been slashed and expectations are now for a sharp recession in the West, and for much slower growth in China and India, where previously held hopes of economic decoupling have proven hopelessly premature.

Investment Report

The returns from the Company's portfolio have been extremely disappointing over the first half with the systemic nature of the crisis leaving few markets untouched. We have maintained a relatively defensive stance towards equities over the period, having reduced exposure to the banking sector early in the period. UK equity positions have benefited from holdings in the oil & gas, pharmaceutical and utility sectors, whilst financial sector holdings have been more mixed, with bank and life assurance holdings performing poorly, although general insurance positions have made a positive contribution, helped by the bid for Highway Insurance late in the period.

Overseas equity positions have benefited from currency gains as Sterling has weakened against most major trading partners over the period. In general managers have performed well relative to their market benchmarks but have still been affected by the severe market weakness seen over the period, and in particular in the huge equity market falls experienced in October.

Fixed interest positions have been under considerable pressure as the credit markets have borne the brunt of the deleveraging process. Forced and, in some cases, panic selling combined with dysfunctional markets have led to significant price falls. Corporate Bond yields have risen to levels which now discount default rates on a massive scale, and perhaps well beyond what will eventually prove to be the case. Exposure to fixed interest has been increased over the period, with investment grade corporate bonds offering the prospect of equity type returns from current levels.

Property assets have also been under considerable pressure as investor concerns over investments which rely on leverage have been at heightened levels. However, the real pain within the portfolio holdings, which are exposed to a wide range of international property markets, has been caused by forced selling in the quoted vehicles held. Many of the Company's holdings have seen increases in underlying asset values, only for their share prices to come under repeated selling pressure from financially distressed investors. Whilst this has been a major factor in market falls more generally, it has been particularly prevalent across the property sectors. Several Company holdings are currently trading on discounts of over 70% to last quoted net asset values. We believe this more than discounts the likely slowdown in economic growth and may produce some very substantial returns when the high quality of the underlying property assets is revealed.

Alternative asset holdings have experienced mixed fortunes with the Company's traded life interest position producing solid, positive returns. Hedge Fund exposure has largely avoided the worst of the fallout in this area, although commodity related investments have suffered, particularly since the end of June, when market sentiment turned very negative and commodity prices plummeted. As with many of the Company's property holdings, the underlying performance of both the agricultural commodity and timberland investments has been good, only for the investment vehicles to fall to discounts due to selling pressures from other investors desperate to raise cash. Recent updates from A J Bell Holdings, the Company's only unquoted holding (and now largest investment), have been very positive and there is potential for further value to accrue in this position. Structured Product holdings have been particularly disappointing as the capital protection levels built into products, which are typically at least 40%, have in some cases proven inadequate to withstand the ravages of the current bear market. We remain committed to this area but have reduced weightings and, where appropriate, shifted holdings into the relevant equity components within the portfolio.

Asset Allocation

The asset allocation across the portfolio at 31 October 2008 is shown in the table below.

Asset Class	Portfolio Weight %	Core Allocation %	Allocation Range %
UK Equities	27.6	35	20-50
Overseas Equities	20.1	15	10-20
Total Equities	47.7	50	35-65
Fixed Interest (inc. cash)	20.7	25	15-40
Alternative Assets	20.5	15	10-20
Property	11.1	10	5-15
All figures are expressed as a percentage of gross assets

Outlook

The economic outlook for 2009 looks bleak with Western economies falling into recession, unemployment rising and housing markets remaining under pressure. Growth from the important emerging economies of India and China will continue, although at lower rates than in recent years. The coordinated interest rate cuts around the World, together with supportive fiscal measures are yet to have any real impact. However, the very real fears that a major, and catastrophic, financial meltdown was probable, appears to have been avoided.

Whilst the deleveraging process is likely to continue for some time, a wide range of asset prices now offer considerable value for longer term investors. The Keynesian adage that 'markets can stay irrational longer than you can stay solvent' has already claimed many victims. For those who can remain 'at the table' rewards will be high, although it seems likely that there will be more casualties before more 'normal' market conditions are seen. 

Markets are, after all, discounting mechanisms and a better economic environment in 2010 will begin to be reflected in asset values at some point in 2009. At that time the extreme risk aversion, so prevalent amongst investors at present, will likely be replaced by a renewed interest in financial markets, particularly as cash returns will by then be at historically very low levels. Although markets will remain both volatile and difficult for some time, we are optimistic that a recovery is now a much more distinct possibility as we move into 2009.

Alan Borrows

Midas Capital Partners Ltd

19 December 2008

  Income Statement

		Six months ended 31 October 2008			Six months ended 31 October 2007
		(unaudited)			(unaudited)
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments		-	(21,853)	(21,853)	-	(2,432)	(2,432)
Income	2	1,908	-	1,908	2,194	-	2,194
Investment management fee		(141)	(141)	(282)	(228)	(228)	(456)
Administration expenses		(185)	-	(185)	(177)	-	(177)
Exchange gains		-	-	-	-	3	3
		_______	_______	_______	_______	_______	_______
Net return before finance costs and taxation		1,582	(21,994)	(20,412)	1,789	(2,657)	(868)
Finance costs		(101)	(101)	(202)	(91)	(90)	(181)
		_______	_______	_______	_______	_______	_______
Net return on ordinary activities before taxation		1,481	(22,095)	(20,614)	1,698	(2,747)	(1,049)
Taxation on ordinary activities		-	-	-	-	-	-
		_______	_______	_______	_______	_______	_______
Return on ordinary activities after taxation		1,481	(22,095)	(20,614)	1,698	(2,747)	(1,049)
		_______	_______	_______	_______	_______	_______
Return per share (pence):	3
Basic		3.49	(52.12)	(48.63)	3.67	(5.94)	(2.27)
		_______	_______	_______	_______	_______	_______
Diluted		3.46	(51.67)	(48.21)	3.60	(5.83)	(2.23)
		_______	_______	_______	_______	_______	_______
The total column of this statement represents the profit and loss account of the Company. No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses are recognised in the Income Statement. All revenue and capital items in the above statement derive from continuing operations.

  Income Statement (Cont'd)

		Year ended 30 April 2008
		(audited)
		Revenue	Capital	Total
	Note	£'000	£'000	£'000
Losses on investments		-	(10,266)	(10,266)
Income	2	4,423	-	4,423
Investment management fee		(402)	(403)	(805)
Administration expenses		(348)	-	(348)
Exchange gains		-	2	2
		_______	_______	_______
Net return before finance costs and taxation		3,673	(10,667)	(6,994)
Finance costs		(192)	(198)	(390)
		_______	_______	_______
Net return on ordinary activities before taxation		3,481	(10,865)	(7,384)
Taxation on ordinary activities		-	-	-
		_______	_______	_______
Return on ordinary activities after taxation		3,481	(10,865)	(7,384)
		_______	_______	_______
Return per share (pence):	3
Basic		7.64	(23.84)	(16.20)
		_______	_______	_______
Diluted		7.52	(23.47)	(15.95)
		_______	_______	_______

  Balance Sheet

		As at	As at	As at
		31 October	31 October	30 April
		2008	2007	2008
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss		47,260	82,076	72,569
		_______	_______	_______
Current assets
Debtors and prepayments		764	516	791
Cash and short term deposits		1,341	4,074	756
		_______	_______	_______
		2,105	4,590	1,547
		_______	_______	_______
Creditors: amounts falling due within one year
Bank loan		(6,250)	(6,250)	(6,250)
Other creditors		(160)	(1,191)	(252)
		_______	_______	_______
		(6,410)	(7,441)	(6,502)
		_______	_______	_______
Net current liabilities		(4,305)	(2,851)	(4,955)
		_______	_______	_______
Net assets		42,955	79,225	67,614
		_______	_______	_______
Capital and reserves
Called-up share capital		10,391	11,589	10,910
Share premium account		40,993	40,993	40,993
Special reserve		4,007	10,538	6,641
Warrant reserve		616	616	616
Capital redemption reserve		1,198	-	679
Capital reserve	5	(15,932)	14,281	6,163
Revenue reserve		1,682	1,208	1,612
		_______	_______	_______
Equity shareholders' funds		42,955	79,225	67,614
		_______	_______	_______
Net asset value per Ordinary share (pence):	7
Basic		103.35	170.91	154.94
		_______	_______	_______
Diluted		103.20	168.07	152.60
		_______	_______	_______

  Reconciliation of Movements in Shareholders' Funds

Six months ended 31 October 2008 (unaudited)
			Share			Capital
		Share	premium	Special	Warrant	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	reserve	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2008		10,910	40,993	6,641	616	679	6,163	1,612	67,614
Purchase of Ordinary shares for cancellation		(519)	-	(2,634)	-	519	-	-	(2,634)
Return on ordinary activites after taxation		-	-	-	-	-	(22,095)	1,481	(20,614)
Dividends paid	4	-	-	-	-	-	-	(1,411)	(1,411)
		_____	_______	_______	______	________	______	_______	_______
Balance at 31 October 2008		10,391	40,993	4,007	616	1,198	(15,932)	1,682	42,955
		_____	_______	_______	______	________	______	_______	_______
Six months ended 31 October 2007 (unaudited)
			Share			Capital
		Share	premium	Special	Warrant	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2007		11,564	40,918	10,538	648	-	16,996	792	81,456
Exercise of Warrants		25	75	-	(32)	-	32	-	100
Return on ordinary activities after taxation		-	-	-	-	-	(2,747)	1,698	(1,049)
Dividends paid	4	-	-	-	-	-	-	(1,282)	(1,282)
		_____	_______	_______	______	________	______	_______	_______
Balance at 31 October 2007		11,589	40,993	10,538	616	-	14,281	1,208	79,225
		_____	_______	_______	______	________	______	_______	_______
Year ended 30 April 2008 (audited)
			Share			Capital
		Share	premium	Special	Warrant	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2007		11,564	40,918	10,538	648	-	16,996	792	81,456
Purchase of Ordinary shares for cancellation		(679)	-	(3,897)	-	679	-	-	(3,897)
Exercise of Warrants		25	75	-	(32)	-	32	-	100
Return on ordinary activities after taxation		-	-	-	-	-	(10,865)	3,481	(7,384)
Dividends paid	4	-	-	-	-	-	-	(2,661)	(2,661)
		_____	_______	_______	______	________	______	_______	_______
Balance at 30 April 2008		10,910	40,993	6,641	616	679	6,163	1,612	67,614
		_____	_______	_______	______	________	______	_______	_______

  Cash Flow Statement

	Six months ended	Six months ended	Year  ended
	31 October 2008	31 October 2007	30 April  2008
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net return on ordinary activities before finance costs and taxation	(20,412)	(868)	(6,994)
Adjustments for:
Losses on investments	21,853	2,432	10,266
Exchange movements	-	(3)	(2)
Decrease/(increase) in accrued income	405	93	(203)
(Increase)/decrease in other debtors	(71)	(11)	11
Decrease in creditors	(58)	(778)	(825)
	____________	____________	____________
Net cash inflow from operating activities	1,717	865	2,253
Net cash outflow from servicing of finance	(202)	(181)	(320)
Net cash inflow from financial investment	3,115	955	1,672
Equity dividends paid (note 4)	(1,411)	(1,282)	(2,661)
	____________	____________	____________
Net cash inflow before financing	3,219	357	944
Net cash (outflow)/inflow from financing	(2,634)	2,100	(3,804)
	____________	____________	____________
Increase/ (decrease) in cash	585	2,457	(2,860)
	____________	____________	____________
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash as above	585	2,457	(2,860)
Exchange movements	-	3	2
Drawdown of additional loan	-	(2,000)	-
	____________	____________	____________
Movement in net debt in the period	585	460	(2,858)
Opening net debt	(5,494)	(2,636)	(2,636)
	____________	____________	____________
Closing net debt	(4,909)	(2,176)	(5,494)
	____________	____________	____________
Represented by:
Cash and short term deposits	1,341	4,074	756
Debt falling due within one year	(6,250)	(6,250)	(6,250)
	____________	____________	____________
	(4,909)	(2,176)	(5,494)
	____________	____________	____________

  Notes to the Accounts

1.	Accounting policies
	(a)	Basis of accounting
		The accounts have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on Half-Yearly Reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies' (December 2005). They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
		The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP).
		The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.
	(b)	Dividends payable
		Dividends are recognised in the period in which they are paid.

		Six months ended	Six months  ended	Year  ended
		31 October	31 October	30 April
		2008	2007	2008
2.	Income	£'000	£'000	£'000
	Income from investments
	UK franked income	818	911	1,980
	UK unfranked income	412	488	1,001
	Overseas dividends	628	727	1,328
	Stock dividends	16	-	-
		____________	____________	____________
		1,874	2,126	4,309
		____________	____________	____________
	Other income
	Deposit interest	29	55	90
	Other commission	5	13	24
		____________	____________	____________
		34	68	114
		____________	____________	____________
	Total income	1,908	2,194	4,423
		____________	____________	____________

3.	Return per share
	The basic revenue return per Ordinary share is calculated on net revenue on ordinary activities after taxation for the year of £1,481,000 (31 October 2007 - £1,698,000; 30 April 2008 - £3,481,000) and on 42,393,743 (31 October 2007 - 46,281,259; 30 April 2008 - 45,578,361) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.
	The basic capital return per Ordinary share is calculated on net capital losses for the period of £22,095,000 (31 October 2007 - losses of £2,747,000; 30 April 2008 - losses of £10,865,000) and on 42,393,743 (31 October 2007 - 46,281,259; 30 April 2008 - 45,578,361) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.
	The basic total return per Ordinary share is calculated on the total losses for the period of £20,614,000 (31 October 2007 - losses of £1,049,000; 30 April 2008 - losses of £7,384,000) and on 42,393,743 (31 October 2007 - 46,281,259; 30 April 2008 - 45,578,361) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.
	Diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22'). The adjusted weighted average number of Ordinary shares used in the calculation is 42,763,982 (31 October 2007 - 47,116,298; 30 April 2008 - 46,295,950).

		Six months ended	Six months ended	Year  ended
		31 October 2008	31 October 2007	30 April   2008
4.	Dividends	£'000	£'000	£'000
	Amounts recognised as distributions to equity holders in the period:
	2007 fourth interim dividend - 1.45p	-	488	488
	2007 special dividend - 0.4p (C Shareholders only)	-	86	87
	2008 first interim dividend - 1.53p	-	708	708
	2008 second interim dividend - 1.53p	-	-	699
	2008 third interim dividend - 1.53p	-	-	679
	2008 fourth interim dividend - 1.68p	733	-	-
	2009 first interim dividend - 1.63p	678	-	-
		____________	____________	____________
		1,411	1,282	2,661
		____________	____________	____________
	The Company has declared a second interim dividend in respect of the year ending 30 April 2009 of 1.63p net (2008 - 1.53p) per Ordinary 25p share which was paid on 15 December 2008 to Ordinary Shareholders on the register on 28 November 2008.

		As at	As at	As at
		31 October 2008	31 October 2007	30 April    2008
5.	Analysis of capital reserve	£'000	£'000	£'000
	Realised	6,472	11,841	11,037
	Investment holdings (losses)/gains	(22,404)	2,440	(4,874)
		____________	____________	____________
		(15,932)	14,281	6,163
		____________	____________	____________

6.	Transaction costs During the six months ended 31 October 2008 expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within losses on investments in the Income Statement. The total costs were as follows:
		Six months ended	Six months ended	Year  ended
		31 October 2008	31 October 2007	30 April    2008
		£'000	£'000	£'000
	Purchases	28	31	50
	Sales	14	19	22
		____________	____________	____________
		42	50	72
		____________	____________	____________

		As at	As at	As at
7.	Net asset value per share	31 October 2008	31 October 2007	30 April    2008
	Basic
	Attributable net assets (£'000)	42,955	79,225	67,614
	Number of Ordinary shares in issue	41,563,950	46,354,950	43,639,950
	Net asset value per Ordinary share (p)	103.35	170.91	154.94
	Diluted
	Attributable net assets (£'000)	44,889	81,159	69,548
	Diluted number of Ordinary shares in issue	43,498,361	48,289,361	45,574,361
	Net asset value per Ordinary share (p)	103.20	168.07	152.60
	The diluted net asset values per Ordinary share for the period has been calculated by reference to the total number of Ordinary shares in issue at the period end and on the assumption that those Warrants which are not exercised at the period end, amounting to 1,934,411 (31 October 2007 and 30 April 2008 - 1,934,411) Warrants, were fully exercised on the first day of the financial year at 100p per share, giving a total of 43,498,361 (31 October 2007 - 48,289,361; 30 April 2008 - 45,574,361) Ordinary shares.
8.	Post Balance Sheet events
	Since the period end and following receipt of High Court approval on 26 November 2008, the Share Premium Account has been cancelled and reclassified as Special Reserve to facilitate the repurchase by the Company of its own issued shares.
	Since the period end a further £750,000 has been drawn down on the loan facility with Royal Bank of Scotland, at a rate of 3.9977%, bringing total bank loans to £7,000,000. The remaining £1,000,000 of the loan facility has not been drawn down and remains available for draw down in future for purposes of funding investments consistent with the Company's investment policy.

9.

Related party disclosure

On 7 March 2008 Midas Capital Partners Limited (MCP) and iimia MitonOptimal plc merged to form Midas Capital plc. Intelli Corporate Finance Ltd, also a subsidiary company of Midas Capital plc, acts as Stockbroker and Financial Advisor. The aggregate remuneration paid by the Company to Intelli during the period was £15,000 (six month period to 31 October 2007 - £15,000; year to 30 April 2008 - £30,000) in respect of their services as brokers. Group subsidiaries of Midas Capital plc, on occasions, earn broking commissions on share transactions on behalf of the Company. During the period Midas Capital plc received commission fees totalling £5,000 (six month period to 31 October 2007 - £12,000; year to 30 April 2008 - £17,000).

10.

The financial information in this report does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. The financial information for the year ended 30 April 2008 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified under Section 235 of the Companies Act 1985. These accounts contain no statement under Section 498 of the Companies Act 2006. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.

11.	This Half-Yearly Report was approved by the Board on 19 December 2008.

12.    The Half-Yearly Financial Report is unaudited.

13.    The Half-Yearly Financial Report will be posted to shareholders in January 2009 and will then be available from the Manager's website (www.midascapital.co.uk).

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

Aberdeen Asset Management PLC

Secretaries

19 December 2008

  Independent Review Report to the Members of Midas Income & Growth Trust PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2008 which comprises the Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders' Funds, Cash Flow Statement and the related notes that have been reviewed. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Accounting Standards Board Statement 'Half-Yearly Financial Reports'.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2008 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement 'Half-Yearly Financial Reports' and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

London

19 December 2008

 

END

 

 

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