Annual Financial Report

RNS Number : 9787G

Troy Income & Growth Trust Plc

26 November 2015

 



TROY INCOME & GROWTH TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2015

1. CHAIRMAN'S STATEMENT

The objective of the Company is to provide an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominantly UK equities.

Performance

The performance for the year to 30 September 2015 shows a Net Asset Value ("NAV") total return per share of +11.2% and a share price total return of +11.7%. This compares very favourably with the total return from the FTSE All-Share Index of -2.3%.  The total dividends declared for the year were 2.325p, an increase of 4.5% over the previous year. The Managers' Review which follows gives a more detailed analysis of the performance.

The Board is predominantly focused on longer-term performance and it is useful to record that over the three year period to 30 September 2015 the NAV total return per share was +36.8% and the share price total return was +36.6% compared with the FTSE All-Share Index total return of +23.3%.

Discount Control Mechanism and Costs

Our discount and premium control policy continues to provide excellent liquidity to shareholders. During the year to 30 September 2015, the Company did not have to repurchase any shares (although it stood ready and willing to do so) and issued 19.3 million shares. This increase in the size of the Company helps improve our cost ratio; the ongoing charges represented 1.03% of shareholders' funds during the year.  In October 2012 it was agreed that the management fee would remain at the annual rate of 0.75% on the Company's net assets up to £175 million but would reduce to 0.65% on net assets above that amount.  During the year the Company started to benefit from this tiered fee structure and continued net issuance of shares should result in the ongoing charges continuing to decline in percentage terms.

Economic Background

The last 12 months have borne witness to a more negative period for equity markets and risk assets generally.  During the summer months the UK stock market fell over 10% for the first time since 2011 and some of the wind has finally been taken out of the sails of inflated equity valuation multiples. Volatility, which had remained fairly subdued for four years, saw a spike in the third calendar quarter of 2015 during which period the FTSE All-Share Index fell by 5.6%.  Emerging market growth, and particularly that of China, is moderating to levels where it can no longer compensate for the uninspiring growth of developed economies.  This deterioration in the global economy, together with lower prices in commodities and specifically oil, are putting downwards pressure on inflation in the western world.  In this context the US Federal Reserve has, yet again, postponed a rise in interest rates.  The Bank of England likewise has its hands tied by disinflationary and deflationary fears, rendering a tightening of monetary policy inappropriate for now.  April 2015 saw the UK's first deflationary reading for over half a century at -0.1%.  The portfolio remains invested in companies that are believed can preserve capital and grow income over the long term.  

Gearing

The Company has been ungeared during the year although facilities are in place should opportunities emerge.  The Company maintains a conservative and tactical approach to gearing.

Dividends

We are aware that, as at the year end, the yield on the Company's shares (3.4%) is below that of the FTSE All-Share Index (3.7%), a status that is at odds with our intention to deliver a yield premium.  This is explained by two factors:  Firstly, the strong price performance of the Company's shares (+8.0% capital return) when compared to the decline in the level of the FTSE All-Share Index (-5.6% capital return); and secondly a more modest growth of the Company's dividend (+4.5%) in relation to the estimated growth of the market dividend (+8.5%). The Board believes that, in due course, the Company's yield premium will be re-established as distributions from the wider market come under increasing pressure from a number of high profile dividend cuts.  It is the Board's intention, barring unforeseen circumstances, at least to maintain the quarterly dividend rate of 0.60p per share for the full year to 30 September 2016. 

Board and Management Changes

At the forthcoming Annual General Meeting in January 2016, our longest standing Director, Kevin Hart, will not stand for re-election and will retire from the Board.  Kevin will have served as a Director for almost 13 years. His contribution over that period, which includes some very tough times and difficult decisions, has been excellent and I thank him for this.  The search for a replacement is well advanced and has been helped by the use of a specialist recruitment consultancy firm, Trust Associates.  The Board was pleased to announce in March 2015 that Hugo Ure had been appointed co-manager of the Company with Francis Brooke.  Hugo has been assistant manager since September 2011 and has been involved with the Company's management since Troy Asset Management's appointment in July 2009.

Outlook

In the last year good progress has been made in enlarging the Company's net assets, increasing the dividends paid to shareholders and maintaining a strong record of investment performance.  The investment outlook remains uncertain and as the portfolio is predominantly made up of equities, shareholders should expect to experience some volatility in the event of equity market weakness. However, the defensive characteristics of many of the investments should enable the Manager to take advantage of opportunities arising as a result.

D Warnock

Chairman

25 November 2015

2. MANAGERS' REVIEW

Background

The UK FTSE All-Share Index is down 2.3% over twelve months but this conceals more pronounced fluctuations in market confidence in the interim.  We ended the previous fiscal year midway through a downwards lurch in equity prices as falling demand and rising supply prompted a precipitous decline in the oil price.  The West Texas Intermediate price of oil fell from a peak of $107 in June 2014 to $54 by the end of the calendar year and has since hovered around this level.  16% of the FTSE All-Share Index comprises metals, mining and energy companies and these have been the worst performing sectors in the market, offsetting good performance from other areas. 

China, whose industrial expansion had been responsible for a large part of the move upwards in commodity prices since the turn of the century, is seeing slower growth, the worst in six years according to August's PMI data (a survey of private sector companies).  Capital outflows from China have caused the currency to devalue, and other emerging market countries are seeing the same.  This has led to a relative strengthening of sterling, the dollar and the euro against many of their trading partners.  Cheaper imports and lower commodity prices are creating a dual deflationary headwind for the developed, western world.  This has particularly adverse implications for corporations with overseas sales translated into sterling/dollar/euro at lower rates of exchange.

Against this backdrop the US and UK central banks are attempting a normalisation of monetary policy.  In June the bond markets were pricing in a greater than 50% probability that the US Federal Reserve would raise interest rates in September.  Conviction increased as domestic employment and wage inflation figures improved.  Within three months, the aforementioned headwinds of slower global growth and the threat of deflation had made it increasingly obvious that this would not happen.  The market has, somewhat churlishly, responded with cheer at the prospect of a continuation of near-zero interest rates for at least another few weeks. 

Performance & Investment Strategy

Your Company delivered a NAV total return of +11.2% and a share price total return of +11.7% over the year.  This compares with the FTSE All-Share return of -2.3%.  In its 21-strong peer group, the Company is positioned 4^th over the twelve months.  The full year dividend of 2.325p represents a +4.5% increase on the previous annual dividend.

The Company's outperformance of the stock market during the year reflects our lesser exposure to some of the more cyclical companies in the index which were hurt by lower metals and energy prices.  Encouragingly the positive absolute return came from a broad base of sectors.  Consumer staple stocks contributed most strongly.  The insurance sector also generated impressive returns with the announced takeover of Amlin by Japanese insurer Sumitomo Mitsui contributing to this stock's +64.6% total return over the period.  Property companies also performed well with LondonMetric generating +28.4% over the period.  Provident Financial and WH Smith also stood out with returns of +52.5% and +48.2% respectively.       

Portfolio Changes

In May 2015 we reduced exposure to a couple of our utility companies.  Aware of the sensitivity that this sector has to rising interest rates, and the elevated valuations on which it trades, we took the opportunity to reduce our holdings in Severn Trent and Pennon.

The broad equity market remains acutely priced, even following the summer correction, and so, to date, we have been presented with limited opportunities.  We have, however, continued to add to some of our highest conviction holdings including Royal Mail, Lloyds Banking Group and Sky.  Following the accepted bid for Amlin by Mitsui, we reduced our position in Amlin and reinvested in Hiscox.

We took advantage of the higher volatility and marginally lower prices at the end of the summer to write Diageo put options.  In early September Diageo's shares were trading within a few percent of our 1600p buying target and option premia were elevated following a spike in equity market volatility.  We were able to take advantage of this combination of events opportunistically to receive 41p per share for writing put options on Diageo over 1% of the Company's NAV.  The premium, when annualised, represents a yield in excess of 10% on the underlying cash. 

We would write further options of this nature only where we felt the risk-reward trade-off was attractive and when the strike price of the option matched the price at which our own fundamental analysis dictates we should be investing.

Discount Control Mechanism

As highlighted in the Chairman's Statement the Discount Control Mechanism continues to ensure the Company's shares trade at only a small premium or discount either side of NAV.  The overall enhancement to your Company's NAV by repurchasing shares at a discount and issuing at a premium has been over £680,000 net of costs which equates to over 1.4% of the NAV when Troy became manager of the Company.   The Company's commitment to this process of issuing and buying back shares to meet fluctuations in demand means the Company's shares enjoy much greater liquidity than other closed ended vehicles of a similar size.  The number of shares in issue has more than doubled to 259 million since the discount control mechanism was activated in January 2010 giving a further boost to liquidity and reducing on-going charges from over 1.5% of NAV to 1.03% at the end of September. The chart on page 7 of the Annual Report shows the movement in shares in issue since the activation of the DCM.

Investment Outlook

Last year we wrote of the risks that deflation poses to corporate cash flows, noting that central bankers, well aware of these risks, will do all within their powers to avoid it.  The threat of deflation has since become a reality.  The UK has posted three months of negative inflation so far this year, its first since 1960, whilst the US has veered into deflation for the first time since 2009.  It is therefore unsurprising that the moment for raising interest rates has been delayed for longer than the market was anticipating.  Plus ça change, plus c'est la même chose.

The market has risen following the Federal Reserve's decision not to raise interest rates at its Open Market Committee meeting in September.  Whilst we must take into account the impact that the actions of central bankers have on financial markets, we do not and cannot invest on the basis of anticipated changes in monetary policy.  Such a strategy would be more akin to speculation than investment.  We continue to favour companies that we believe can generate consistent and attractive returns on the capital we invest. 

The rising tide of QE had, until recently, lifted almost all equity valuations indiscriminately, leaving very few opportunities for a valuation-sensitive buyer. The spill-over of pain from emerging markets is starting to test the nerve of western investors.  Following the mid-year correction, the average P/E multiple of the UK market still remains near the highs seen at the beginning of the year.  However, it is important to note that the dispersion of equity market valuations has started to rise again.  When P/E multiples were both elevated and closely bunched we were seeing very few opportunities to invest.  The spread of valuations has now widened.  This should provide us with windows of new opportunity to invest in a handful of high quality companies.  That is what we require to construct a portfolio that we believe will deliver dividend growth and reasonable insulation against any further volatility.

Troy Asset Management Limited

25 November 2015

3. RESULTS & DIVIDENDS

Financial Highlights
	2015	2014
Net asset value total return	+11.2%	+10.1%
Share price total return	+11.7%	+10.0%
FTSE All-Share Index total return	-2.3%	+6.1%
Increase in dividends per share	+4.5%	+4.7%
Dividend yield*	3.4%	3.5%
FTSE All-Share Index yield	3.7%	3.3%
Dividends per share+	2.325p	2.225p
Ongoing Charges++	1.03%	1.05%
* Dividends per share as a percentage of share price at 30 September +Dividends per share reflect the years in which they were earned ++ Excludes non-recurring items of £Nil (2014 - credit £4,500)

	Performance - total return (for the periods to 30 September 2015)
	One Year	Three Years	Five years
Share price	+11.7%	+36.6%	+73.7%
Net asset value per share	+11.2%	+36.8%	+71.6%
FTSE All-Share Index	-2.3%	+23.3%	+38.2%

Distribution of Assets and Liabilities
	Valuation at					Valuation at
	30 September				Appreciation/	30 September
	2014		Purchases	Sales	(depreciation)	2015
	£'000	%	£'000	£'000	£'000	£'000	%
Listed investments
Ordinary shares	150,656	98.2	19,585	(10,911)	12,144	171,474	96.2
	______	_____	________	_______	________	______	_____
Current assets	4,182	2.7				7,212	4.0
Current liabilities	(1,447)	(0.9)				(439)	(0.2)
	______	_____				______	_____
Net assets	153,391	100.0				178,247	100.0
	______	_____				______	_____
Net asset value per share	64.05p					68.87p
	______					______

4.  STRATEGIC & DIRECTORS' REPORT EXTRACTS

Performance and Future Development

A review of the business performance, market background, investment activity and portfolio during the year under review, together with the investment outlook, is provided in the Chairman's Statement and the Manager's Review.

Risk Management

The Directors are responsible for supervising the overall management of the Company, whilst the day-to-day management of the Company's assets has been delegated to the Manager (see Management Arrangements, below). Portfolio exposure has been limited by the guidelines which are detailed within the Investment Strategy section of the annual report.

The principal risks facing the Company relate to the Company's investment activities and these risks include the following:

• performance risk

• market risk

• resource and operational risk.

An explanation of these principal risks and how they are managed is set out below, with disclosures of financial risk set out in note 15 to the financial statements.

The Board can confirm that the principal risks of the Company, including those which would threaten its business model, future performance, solvency or liquidity have been robustly assessed for the year ended 30 September 2015.

• Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objective and monitoring the performance of the Manager. An inappropriate strategy or poor execution of strategy may lead to underperformance against the appropriate benchmark and its peer group. To manage this risk the Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board also receives and reviews regular reports showing an analysis of the Company's performance against the FTSE All-Share Index (total return) and its peer group.

• Market risk - Market risk arises from uncertainty about the future prices of the Company's investments. The Board monitors and maintains an adequate spread of investments in order to minimise the risks or factors specific to a particular investment or sectors, based on the diversification requirements inherent in the Company's investment policy. The guidelines which limit the portfolio exposure are set out in the Investment Strategy on page 15 of the Annual Report.

 •          Resource and operational risk - Like most other investment trusts, the Company has no employees. The Company therefore relies on services provided by third parties and their control systems. These service providers include, in particular, the Alternative Investment Fund Manager ("AIFM") and the Manager, to whom responsibility for the management of the Company has been delegated under an investment management agreement and an investment management delegation agreement (the "Agreements") (further details of which are set out in Management Arrangements, below). The terms of these Agreements cover the necessary duties and conditions expected of the AIFM and Manager. The Board reviews the performance of the AIFM and Manager on a regular basis and their compliance with the Agreements on an annual basis.

Other risks faced by the Company include the following:

• breach of regulatory rules which could lead to the suspension of the Company's London Stock Exchange listing, financial penalties or a qualified audit report.

• breach of Section 1159 of the Corporation Tax Act 2010 which could lead to the Company being subject to tax on capital gains.

The Board have considered the Company's solvency and liquidity risk and full disclosure of this is made in Note 15 and the viability statement below.

Results and Dividends

The financial statements for the year ended 30 September 2015 appear below. Dividends in respect of the year amounted to 2.325p per share (2014 - 2.225p). The fourth interim dividend of 0.6p per share announced on 1 October 2015 (2014 - fourth interim 0.575p) will be accounted for in the financial year ending on 30 September 2016.

Share Capital

At the Annual General Meeting ("AGM") held on 21 January 2015, shareholders approved the renewal of the authority permitting the Company to make market purchases of its own Ordinary shares. This authority (which, unless renewed, will expire at the conclusion of the Company's forthcoming AGM) is limited to Ordinary shares with a maximum aggregate nominal value of £9,273,467 (being equal to approximately 14.99% of the Ordinary shares in issue as at 21 January 2015). It is proposed that this authority will be renewed at the Company's forthcoming AGM. During the year ended 30 September 2015 no Ordinary shares were purchased and 2,569,000 Ordinary shares of 25p each re-issued. The issued share capital at 30 September 2015 consisted of 258,824,045 Ordinary shares of 25p each and there were no Ordinary shares held in treasury. As at the date of this report the issued share capital consisted of 260,424,045 Ordinary shares of 25p each and no shares were held in treasury. Each holder of Ordinary shares, excluding treasury shares, is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary share held.

Management Arrangements

In order to comply with the Alternative Investment Fund Managers Directive ("AIFMD"), the Company appointed Personal Assets Trust Administration Company Ltd ("PATAC"), as its Alternative Investment Fund Manager ("AIFM") with effect from 22 July 2014. The investment management agreement with Troy Asset Management Ltd ("Troy") was terminated on 22 July 2014 and the Company entered into a new AIFMD compliant management agreement with the AIFM. With effect from 22 July 2014, the AIFM delegated the portfolio management activities relating to the Company back to Troy pursuant to a delegation agreement and Troy continues to provide portfolio management services to the Company as before. The delegation agreement between the Company, the AIFM and Troy is on the same commercial terms as the previous investment management agreement between the Company and Troy. These arrangements that have been put in place are fully compliant with the AIFMD.

The AIFM services are provided to the Company by PATAC for £60,000 per annum but Troy have reduced their investment management fee by an equal amount so that there is no overall change to the basis of the management fee incurred by the Company.

The other terms of the AIFM's appointment are similar to those applying to Troy under the investment management delegation agreement detailed below.

Investment Management Delegation Agreement

With effect from 1 August 2009, investment management services have been provided to the Company by Troy. From 1 October 2012 the fee is at an annual rate of 0.75% of the Company's net assets up to £175 million and at an annual rate of 0.65% of the Company's net assets at or above £175 million.

Company Secretary

On 1 July 2010 PATAC was appointed to provide Company Secretarial, accounting and administrative services, for an annual fee of £95,000 payable quarterly in advance. The appointment is terminable on three months' notice. This fee is adjusted annually by the higher of the increase in the Retail Price Index or the Consumer Price index and is currently £109,767 per annum. 

Depositary

The AIFMD requires the AIFM to appoint a depositary for each Authorised Investment Fund it manages and J P Morgan Europe Ltd were appointed depositary for the Company with effect from 22 July 2014. The Depositary's responsibilities include cash monitoring, safe keeping of the Company's financial instruments and monitoring the Company's compliance with investment limits and leverage requirements. The Depositary has delegated the custody function to J.P. Morgan Chase Bank N.A.

Auditor

As intimated in last year's report the Company's audit was put out to tender during the current year, with the appointment being effective for the financial year ending 30 September 2016. Three firms were invited to tender and following a robust tender process led by the Audit Committee Chair, the Board has decided to appoint PricewaterhouseCoopers LLP. The current Auditors, Ernst & Young LLP were first appointed in the year to 30 September 2006. The Audit Partner rotates every five years in accordance with ethical guidance and 2015 is the fifth year of the current partner.

Going Concern

The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. In reaching this view, the Directors reviewed the level of expenditure of the Company against the cash and asset liquidity within the portfolio.

Viability Statement

In accordance with provision C.2.2 of the 2014 UK Corporate Governance Code, the Directors have assessed the viability of the Company over the period to the March 2019.

The Directors have identified the following factors as potential contributors to ongoing viability:

· The principal risks documented in the strategic report as set out above

· The ongoing relevance of the Company's investment objective in the current environment

· The level of current and historic ongoing charges incurred by the Company as disclosed in note 3

· The utilisation quantum of the discount control mechanism

· The level of income generated by the Company

· The liquidity of the Company's portfolio

The Company is fully invested in liquid assets, either in listed securities or cash. The nature of these mean that even in a severe market downturn the Company would be able to convert, in a relatively short period of time, the portfolio into cash sufficient to meet the Company's operating costs which run at approximately 1% of net assets. This includes both fixed and variable costs, the largest single element of which is the variable management fee. In addition the Company currently has no gearing. Based on these facts the Board have concluded that even in exceptionally stressed operating conditions, the Company would easily be able to meets its ongoing operating costs as they fall due.

Based on the foregoing, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to March 2019.

The Directors have determined that the period to March 2019 is an appropriate period over which to provide its viability statement as this is expected to be the latest date at which the Company's next continuation vote, as stated on page 1 of the Annual Report, will be held.

Discount Policy

The Company's discount policy is to ensure that the Ordinary shares trade at close to net asset value through a combination of share buy-backs and the issue of new Ordinary shares at a premium to net asset value where demand exceeds supply.

This discount control mechanism is operated for a fee of £33,000 per annum (excluding VAT) and this has been charged to the share premium account.

The Directors will continue to seek the renewal of the Company's authority to buy back Ordinary shares annually and at other times should this prove necessary. From the authority granted at the January 2015 AGM, the Company, at 30 September 2015, had the remaining authority to buy-back 37,093,871 Ordinary 25p shares. Any buy-back of Ordinary shares will be made subject to the Companies Act 2006 and within guidelines established from time to time by the Board and the making and timing of any buy-backs will be at the absolute discretion of the Board. The Directors will be authorised to cancel any Ordinary shares purchased under such authority or to hold them in treasury. Purchases of Ordinary shares will only be made through the market for cash at prices below the prevailing net asset value of the Ordinary shares. Such purchases will also be made only in accordance with the rules of the UK Listing Authority which provide that the price to be paid must not be less than the nominal value of an Ordinary share nor more than the higher of (a) 5% above the average of the middle market quotations for the Ordinary shares for the five business days before the purchase is made and (b) the higher of the price of the last independent trade and the highest current independent bid relating to an Ordinary share on the trading venue where the purchase is carried out.

It is the intention of the Directors that the share buy-back authority is used to purchase Ordinary shares if the middle market price for a Share is below the net asset value per Ordinary share of the Company (taking into account any rights to which the Ordinary shares are trading "ex"). However, nothing in this discount policy will require the Directors to take any steps that would require the Company to make a tender offer for its shares or to publish a prospectus. Notwithstanding this discount policy, there is no guarantee that the Ordinary shares will trade at close to the net asset value per Ordinary share. Shareholders should note that this discount policy could lead to a reduction in the size of the Company over time.

By Order of the Board

Steven Cowie C.A.
Secretary

25 November 2015

5. STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing this Annual Financial Report, the Annual Report & Accounts and the Directors Remuneration Report, in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year and these have been prepared in accordance with IFRSs as adopted by the EU.

Under Company law, the Directors must not approve the financial statements unless they are satisfied they present fairly the financial position, financial performance and cash flows for that period.

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

-    select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

-    present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

-    provide additional disclosures when compliance with the specific requirements in IFRSs as adopted by the EU is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the company's financial position and performance;

-    make judgements and estimates that are reasonable and prudent; and

-    state whether they have been prepared in accordance with IFRSs as adopted by the EU subject to any material departures disclosed and explained in the Notes to the Financial Statements.

The Directors consider that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company's performance, business model and strategy. In reaching this conclusion the Directors have assumed that the reader of the Annual Report and Accounts would have a reasonable level of knowledge of the investment industry and of investment trusts in particular.

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

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, a Directors' Report, a Corporate Governance Statement and a Directors' Remuneration Report that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement under Disclosure and Transparency Rules

Each of the Directors confirms that to the best of his or her knowledge:

-    the financial statements, prepared in accordance with IFRSs, as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

-    the Strategic Report and the Directors' Report (incorporating the other sections which are referred to in them) include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of Troy Income & Growth Trust plc

J Brown

Chairman of the Audit Committee

25 November 2015

TROY INCOME & GROWTH TRUST PLC

STATEMENT OF COMPREHENSIVE INCOME

		Year ended 30 September 2015			Year ended 30 September 2014
		Revenue	Capital		Revenue	Capital
	Note	return	return	Total	return	return	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Profits on investments held at fair value	9	-	12,144	12,144	-	9,585	9,585
Currency gains/(losses)		-	11	11	-	(4)	(4)
Revenue	2
Income from listed investments		6,996	-	6,996	6,193	-	6,193
Other income		17	-	17	1	-	1
		______	_______	______	______	_______	______
		7,013	12,155	19,168	6,194	9,581	15,775
		______	_______	______	______	_______	______
Expenses
Investment management fees	3	(453)	(842)	(1,295)	(392)	(728)	(1,120)
Other administrative expenses	4	(442)	-	(442)	(403)	-	(403)
Finance costs of borrowing	5	-	-	-	(5)	(10)	(15)
		______	_______	______	______	_______	______
Profit before taxation		6,118	11,313	17,431	5,394	8,843	14,237
Taxation	6	(79)	-	(79)	(86)	-	(86)
		______	_______	______	______	_______	______
Profit for the year		6,039	11,313	17,352	5,308	8,843	14,151
		______	_______	______	______	_______	______
Earnings per Ordinary share (pence)	8	2.42	4.52	6.94	2.25	3.75	6.00
		______	_______	______	______	_______	______

The "Profit for the Year" is also the Total Comprehensive Income for the year as defined in IAS 1 (revised).

The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with IFRS, as adopted by the European Union. The supplementary revenue return and capital return columns are both prepared as explained in the accounting policies. All items in the above statement derive from continuing operations.

No operations were acquired or discontinued during the year.

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment in predominantly UK equities.

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

TROY INCOME & GROWTH TRUST PLC

STATEMENT OF FINANCIAL POSITION

				As at	As at
				30 September	30 September
				2015	2014
	Notes			£'000	£'000
Non-current assets
Ordinary shares				171,474	150,656
				______	______
Investments held at fair value through profit or loss	9			171,474	150,656
				______	______
Current assets
Accrued income and prepayments				582	690
Trade and other receivables				-	737
Cash and cash equivalents				6,630	2,755
				______	______
Total current assets				7,212	4,182
				______	______
Total assets				178,686	154,838
Current liabilities
Trade and other payables				(420)	(1,447)
Traded Option Contracts				(19)	-
				______	______
Total current liabilities				(439)	(1,447)
				______	______
Net assets				178,247	153,391
				______	______
Issued capital and reserves attributable to equity holders
Called-up share capital	10			64,706	60,514
Share premium account	11			7,525	86
Special reserves	12			63,504	61,924
Capital reserve	13			38,499	27,186
Revenue reserve	14			4,013	3,681
				______	______
Equity shareholders'   funds				178,247	153,391
				______	______
Net asset value per Ordinary share (pence)	8			68.87	64.05
				______	______

TROY INCOME & GROWTH TRUST PLC

STATEMENT OF CHANGES IN EQUITY

For year ended 30 September 2015
		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2014	60,514	86	61,924	27,186	3,681	153,391
Total comprehensive income for the year	-	-	-	11,313	6,039	17,352
Equity dividends	-	-	-	-	(5,707)	(5,707)
Costs of cancellation of share premium account	-	-	(4)	-	-	(4)
Discount control costs	-	(33)	-	-	-	(33)
Shares issued from treasury	-	36	1584	-	-	1,620
New shares issued	4,192	7,436	-	-	-	11,628
	______	______	______	______	______	______
Balance at 30 September 2015	64,706	7,525	63,504	38,499	4,013	178,247
	______	______	______	______	______	______
For year ended 30 September 2014
Balance at 30 September 2013	60,514	36,432	58,163	(12,900)	3,569	145,778
Total comprehensive income for the year	-	-	-	8,843	5,308	14,151
Equity dividends	-	-	-	-	(5,196)	(5,196)
Cancellation of share premium account	-	(36,621)	36,621	-	-	-
Transfer to Capital Reserve	-	-	(31,243)	31,243	-	-
Costs of cancellation of share premium account	-	-	(31)	-	-	(31)
Shares bought back into treasury	-	-	(7,002)	-	-	(7,002)
Discount control costs	-	(36)	-	-	-	(36)
New shares issued	-	311	5,416	-	-	5,727
	______	______	______	______	______	______
Balance at 30 September 2014	60,514	86	61,924	27,186	3,681	153,391
	______	______	______	______	______	______

TROY INCOME & GROWTH TRUST PLC

CASH FLOW STATEMENT

	Year ended		Year ended
	30 September 2015		30 September 2014
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Investment income received	7,103		6,198
Deposit interest received	-		1
Administrative expenses paid	(1,696)		(1,537)
	________		________
Cash generated from operations (note 19 (a))		5,407		4,662
Finance costs paid		-		(15)
Taxation		(76)		(94)
		________		________
Net cash inflows from operating activities		5,331		4,553
Cash flows from investing activities
Purchases of investments	(20,628)		(24,582)
Sales of investments	11,656		25,057
	________		________
Net cash (outflow)/inflow from investing activities		(8,972)		475
		________		________
Net cash (outflow)/inflow before financing		(3,641)		5,028
Financing activities
Proceeds of issue of shares	13,248		5,727
Costs of share buy backs	-		(7,002)
Dividends paid	(5,707)		(5,196)
Costs incurred on cancellation of share premium account and on issue of new shares	(36)		(41)
	________		________
Net cash inflow/(outflow) from financing activities		7,505		(6,512)
		________		________
Net increase/(decrease) in cash and short term deposits (note 19(b))		3,864		(1,484)
Cash and cash equivalents at the start of the year		2,755		4,243
Effect of foreign exchange rate changes		11		(4)
		________		________
Cash and cash equivalents at the end of the year		6,630		2,755
		________		________

TROY INCOME & GROWTH TRUST PLC

YEAR ENDED 30 SEPTEMBER 2015

1.	Accounting Policies
	(a)	Basis of accounting
		The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect, and to the extent that they have been adopted by the European Union.
		The financial statements are presented in Sterling which is regarded as the functional currency and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.
		The principal accounting policies adopted are set out below. These policies have been applied consistently throughout the current and prior year.  Where presentational guidance set out in the Statement of Recommended Practice ("SORP") 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009) is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
		In order better to reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. Additionally, the net revenue of the Company is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 1159 of the Corporation Tax Act 2010.
		The following Standards and Interpretations became effective during the year, but had no material impact on the financial results for the period:
		-	Amendments to IAS 24 - Related Party Disclosures - Entities providing key management personnel (effective for annual periods beginning on or after 1 July 2014).
		-	Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014).
		-	Amendments to IFRS 10, IFRS 12 and IAS 27 - investment entity exception (effective for annual periods beginning on or after 1 January 2014).
		At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:
		-	Amendments to IAS 1 - Disclosure Initiative (effective for accounting periods beginning on or after 1 January 2016).
		-	Amendment to IAS 27- Separate Financial Statements (2011) (effective for annual periods beginning on or after 1 January 2016).
		-	Amendments to IAS 34 - Interim Financial Reporting (effective for annual periods beginning on or after 1 January 2016).
		-	Amendment to IFRS 7 - Financial Instruments Disclosure (effective for annual periods beginning on or after 1 January 2016).
		-	IFRS 9 - Financial Instruments - Classification and Measurement (effective for annual periods beginning on or after 1 January 2018).
		-	Amendments to IFRS 10 - Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2016).
		-	Amendments to IFRS 12 - Disclosures of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2016).
		-	IFRS 15 - Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2018).
		The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the financial results in the period of initial application. The Company intends to adopt the standards in the reporting period when they become effective.
	(b)	Investments - Securities held at Fair Value
		Investments are recognised or derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.
		As the Company's business is investing in financial assets with a view to profiting from their total return in the form of interest, dividends or increases in fair value, listed equities and fixed interest securities are designated as fair value through profit or loss on initial recognition. All investments designated upon initial recognition as held at fair value through profit or loss are measured at subsequent reporting dates at their fair value, which is the bid price as at close of business on the Balance Sheet date.
		Gains and losses arising from the changes in fair value are included in net profit or loss for the period as a capital item. Expenses which are incidental to the acquisition and disposal of investments are treated as capital costs.
	(c)	Income
		Dividend income from equity investments including preference shares which have a discretionary dividend is recognised when the shareholders' rights to receive payment has been established, normally the ex-dividend date.
	(d)	Expenses
		All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except those where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. Accordingly the investment management fee and finance costs have been allocated 35% to revenue and 65% to capital.
	(e)	Bank borrowings
		Interest-bearing bank loans and overdrafts are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. After initial recognition, all interest bearing loans and overdrafts are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any arrangement costs and any discount or premium on settlement.
	(f)	Taxation
		The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date.
		The allocation method used to calculate tax relief on expenses presented against capital returns is the 'marginal basis'. Under this basis if taxable income is not capable of being offset entirely by expenses presented in revenue then unutilised expenses arising in capital will be set against income with an amount based on current tax rates charged against income and credited to capital.
		Deferred tax is provided in full on temporary differences which result in an obligation at the Balance Sheet date to pay more tax, or a right to pay less tax, at a future date at rates expected to apply when they crystallise, based on current tax rates and law. Temporary differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
	(g)	Foreign currency
		Transactions denominated in foreign currencies are recorded at the actual exchange rate as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at fair value by using the rate of exchange prevailing at the year end. The currencies to which the Company was exposed were Swiss Francs and US Dollars.
		Any gain or loss arising from a movement in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the income statement as a revenue or capital item depending on the nature of the gain or loss.
	(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 and which are subject to an insignificant risk of changes in value.
	(i)	Use of estimates
		The preparation of financial statements require the Company to make estimates and assumptions that affect items reported in the Balance Sheet and Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial instruments. Although these estimates are based on the Directors' best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates. There were no material accounting estimates in the current period.

		2015	2014
2.	Income	£'000	£'000
	Income from listed investments
	UK dividend income	6,468	5,618
	Income from overseas investments	528	575
		________	________
		6,996	6,193
		________	________
	Other income from investment activity
	Deposit interest	-	1
	Traded option premiums	17	-
		________	________
	Total income	7,013	6,194
		________	________

3.

Investment management fees

On 31 July 2009, Troy Asset Management Limited ("Troy") became the Investment Manager. From 1 October 2012 the investment management fee has been paid at an annual rate of 0.75% of the Company's net assets up to £175 million and at an annual rate of 0.65% of the Company's net assets at or above £175 million. The fee is calculated monthly and paid quarterly. As explained in Section 4 PATAC were appointed to act as the Company's AIFM with effect from 22 July 2014. From the same date the portfolio management activities were delegated to Troy. The commercial terms of the delegation agreement are the same as the previous investment management agreement except that the investment management fee is reduced by the fees incurred for the services of the AIFM. The fee is allocated 35% to revenue and 65% to capital.

		2015			2014
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fees paid to Troy	432	803	1,235	389	721	1,110
	AIFM fee paid to PATAC	21	39	60	3	7	10
		_______	______	______	_______	______	______
	Total Investment management fee	453	842	1,295	392	728	1,120
		_______	______	______	_______	______	______

		2015	2014
4.	Other administrative expenses	£'000	£'000
	Directors' remuneration - fees as Directors	83	75
	Secretarial fees	109	107
	Fees payable to auditor
	- fees payable to the Company's auditor for the audit of the annual accounts {a}	22	22
	- fees payable to the Company's auditor for taxation compliance services	8	8
	Other management expenses {b}	220	191
		_______	_______
		442	403
		_______	_______
	{a} Includes irrecoverable VAT of £3,700 (2014 - £3,700).
	{b} Includes non-recurring items of £nil (2014 - credit £4,500).
	The Company had no employees during the year (2014 - nil). No pension contributions were paid for Directors (2014 - £nil).

		2015			2014
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
5.	Finance costs of borrowings	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts repayable within one year	-	-	-	5	10	15
		______	_____	_____	_____	_____	_____
	Interest on bank overdrafts is at floating rates related to the lenders' UK base rates.

	.
			2015			2014
			Revenue	Capital		Revenue	Capital
			return	return	Total	return	return	Total
6.	Taxation		£'000	£'000	£'000	£'000	£'000	£'000
	Irrecoverable overseas tax		79	-	79	86	-	86
			_______	______	______	_______	______	______
	The following table is a reconciliation of the total taxation charge to the charges or credits which would arise if all ordinary activities were taxed at the standard UK corporation tax rate of 20.5% (2014 - 22%):
			2015			2014
			Revenue	Capital		Revenue	Capital
			return	return	Total	return	return	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	Profit on ordinary activities before taxation		6,118	11,313	17,431	5,394	8,843	14,237
			_______	______	______	_______	______	______
	Taxation of return on ordinary activities at the standard rate of corporation tax		1,254	2,319	3,573	1,187	1,946	3,133
	Effects of:
	UK dividend income not liable to further tax		(1,253)	-	(1,253)	(1,170)	-	(1,170)
	Overseas dividend income not liable to further tax		(108)	-	(108)	(127)	-	(127)
	Capital profits not taxable		-	(2,492)	(2,492)	-	(2,108)	(2,108)
	Movement in unutilised management expenses		107	173	280	110	162	272
	Overseas withholding tax suffered		79	-	79	86	-	86
			_______	______	______	_______	______	______
	Total taxation charge for the year		79	-	79	86	-	86
			_______	______	______	_______	______	______
	At 30 September 2015, the Company had surplus management expenses of £6,062,000 (2014 - £4,717,000) with a tax value of £1,213,000 (2014 - £943,000) to carry forward. No deferred tax asset has been recognised in the current or prior period because it is considered too uncertain that there will be suitable taxable profits from which the future reversal of the deferred tax asset could be deducted.
							2015	2014
7.		Dividends on equity shares					£'000	£'000
		Amounts recognised as distributions to equity shareholders in the year:
		Fourth interim dividend for the year ended 30 September 2013 of 0.55p per share					-	1,331
		Fourth interim dividend for the year ended 30 September 2014 of 0.575p per share					1,380	-
		Three interim dividends for the year ended 30 September 2015 totalling 1.725p (2014 - three interims totalling 1.65p) per share					4,327	3,865
							________	________
							5,707	5,196
							________	________
		The fourth interim dividend of 0.6p per share, declared on 1 October 2015 and paid on 30 October 2015, has not been included as a liability in these financial statements.
		We also set out below the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered.
							2015	2014
							£'000	£'000
		Three interim dividends for the year ended 30 September 2015 totalling 1.725p (2014 - three interim dividends totaling1.65p) per share					4,327	3,865
		Fourth interim dividend for the year ended 30 September 2015 of 0.6p (2014 - fourth interim dividend 0.575p) per share					1,556	1,380
							________	________
							5,883	5,245
							________	________

		2015	2014
8.	Return and net asset value per share	£'000	£'000
	The returns per share are based on the following figures:
	Revenue return	6,039	5,308
	Capital return	11,313	8,843
		________	________
	Total	17,352	14,151
		________	________
	Weighted average number of Ordinary shares	249,946,644	235,820,922
		__________	__________
	The net asset value per share is based on net assets attributable to shareholders of £178,247,000 (2014 - £153,391,000) and on 258,824,045 (2014 - 239,488,445) Ordinary shares in issue at the year end.

		2015	2014
9.	Investments held at fair value through profit or loss	£'000	£'000
	Listed on recognised stock exchanges:
	United Kingdom	154,497	135,111
	Overseas	16,977	15,545
		________	________
		171,474	150,656
		________	________
		2015	2014
		£'000	£'000
	Opening book cost	122,736	117,940
	Opening fair value gains on investments held	27,920	23,299
		________	________
	Opening fair value	150,656	141,239
	Purchases for cash	19,585	25,625
	Sales - proceeds	(10,911)	(25,793)
	Sales - net gains on sales	2,334	4,964
	Movement in fair value during the year	9,810	4,621
		________	________
	Closing fair value	171,474	150,656
		________	________
	Closing book cost	133,743	122,736
	Closing fair value gains on investments held	37,731	27,920
		________	________
	Closing fair value	171,474	150,656
		________	________
	All investments are categorised as held at fair value through profit or loss, and were designated as such upon initial recognition.
	The total transaction costs on purchases was £99,900 (2014 - £105,000) and on sales £16,100 (2014 - £20,000).
		2015	2014
	Gains on investments held at fair value	£'000	£'000
	Net gains on sales	2,334	4,964
	Movement in fair value in investment holdings	9,810	4,621
		________	________
		12,144	9,585
		________	________

		Ordinary shares of 25p each
10.	Called-up share capital	Number	£'000
	Allotted, called up and fully paid
	At 30 September 2015	258,824,045	64,706
	Held in treasury	-	-
		__________	________
		258,824,045	64,706
		__________	________
	Allotted, called up and fully paid
	At 30 September 2014	239,488,445	59,872
	Held in treasury	2,569,000	642
		__________	________
		242,057,445	60,514
		__________	________
	During the year to 30 September 2015 there were no Ordinary shares of 25p each repurchased by the Company.  During the year to 30 September 2014 there were 11,359,000 Ordinary shares of 25p each repurchased by the Company (being 4.7% of the Company's issued share capital), at a total cost (including transaction costs) of £7,002,081 and placed in treasury. During the year to 30 September 2015 the Company re-issued 2,569,000 Ordinary shares of 25p each from treasury for proceeds totalling £1,620,215. During the year to 30 September 2014 the Company re-issued 8,790,000 Ordinary shares of 25p each from treasury for proceeds totalling £5,727,205.
	During the year to 30 September 2015 there were 16,766,600 new Ordinary shares of 25p each issued by the Company for cash proceeds totalling £11,628,000. During the year to 30 September 2014 there were no new Ordinary shares issued by the Company.
	No shares were purchased for cancellation during the year (2014 - nil) and at the year end no shares were held in treasury (2014- 2,569,000). The costs of the operation of the discount control mechanism of £33,000 have been charged against the premium on shares issued.

		2015	2014
11.	Share premium account	£'000	£'000
	At 1 October	86	36,432
	Premium on issue of new shares	7,491	311
	Costs incurred on issue of new shares	(19)	-
	Discount control costs (note 10)	(33)	(36)
	Cancellation of share premium account (note 12)	-	(36,621)
		________	________
	At 30 September	7,525	86
		________	________

12.	Special Reserves	Distributable		Total	Total
		Capital	Special	Special	Special
		Reserve	Reserve	Reserves	Reserves
		2015	2015	2015	2014
		£'000	£'000	£'000	£'000
	At 1 October	5,347	56,577	61,924	58,163
	Cancellation of Share Premium (note 11)	-	-	-	36,621
	Transfer to Capital Reserve (note 13)	-	-	-	(31,243)
	Costs of cancellation of Share Premium	(4)	-	(4)	(31)
	Shares bought back during year into treasury	-	-	-	(7,002)
	Shares issued during the year from treasury	-	1,584	1,584	5,416
		________	________	________	________
	At 30 September	5,343	58,161	63,504	61,924
		________	________	________	________
	On 29 August 2014, following the Special Resolution passed at the Annual General Meeting held on 23 January 2014, the Court of Session in Scotland approved the cancellation of the Share Premium Account and the creation of a Distributable Capital Reserve from the balance of the Share Premium Account. The Special Reserve was created on 1 October 2010 by a similar court process. The purpose of the Distributable Capital Reserve and the Special Reserve are to fund market purchases by the Company of its own shares, to make bonus issues of shares and to make distributions in accordance with the Companies Act.

.

		2015	2014
13.	Capital reserve	£'000	£'000
	At 1 October	(735)	(36,200)
	Net gains on sales of investments during the year	2,334	4,964
	Finance costs of borrowings	-	(10)
	Investment management fee	(842)	(728)
	Currency gains/(losses)	11	(4)
	Transfer from Special Reserve (note 12)	-	31,243
		________	________
	At 30 September	768	(735)
		________	________
	Investment holdings gains
	At 30 September	27,921	23,300
	Investment gains	9,810	4,621
		________	________
		37,731	27,921
		________	________
	Total capital reserve	38,499	27,186
		________	________

				2015	2014
14.	Revenue reserve			£'000	£'000
	At 1 October			3,681	3,569
	Transfer to revenue account net of dividends			332	112
				______	______
	At 30 September			4,013	3,681
				______	______

15.

Risk management, financial assets and liabilities

Risk management

With effect from 17 September 2009, the Company's objective changed to that of providing shareholders with an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominately UK equities.

In pursuit of the Company's objective, the Company's investment policy is to invest in a portfolio of predominately UK equities. Equities are selected for their inclusion within the portfolio solely on the basis of the strength of the investment case with the focus being on long term income growth along with capital preservation.

Asset classes other than equities will be purchased from time to time and will vary as opportunities are identified and will include convertibles, preference shares, fixed income securities and corporate bonds. Such investments will be made when prospective returns appear to be superior to those from equity markets or are considered likely to exceed the Company's borrowing costs. However, non-equity securities will not constitute the majority of the portfolio. The Company may also use derivatives for the purpose of efficient portfolio management (including reducing, transferring or eliminating investment risk in its investments and protection against currency risk), to exploit an investment opportunity and to achieve capital growth. During the year the Company entered into one derivative contract and the open position on this contract at 30 September 2015 was valued at a liability of £19,000 as disclosed in the Balance Sheet. During the prior year no derivatives were utilised.

The management of the portfolio is conducted according to investment guidelines, established by the Board after discussion with the Manager, which specify the limits within which the Manager is authorised to act.

Financial assets and liabilities

The Company's financial assets include investments, cash at bank and short-term debtors. Financial liabilities consist of short-term creditors, bank overdraft and open traded option positions.

The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, foreign currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.

(i)

Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other price risk.

Interest rate risk

The Company is subject to interest rate risk because the value of fixed interest rate securities is linked to underlying bank rates or equivalents, and its short-term borrowings and cash resources carry interest at floating rates. The interest rate profile is managed as part of the overall investment strategy of the Company.

Interest rate movements may affect:

-

the fair value of the investments in fixed interest rate securities;

-

the level of income receivable on cash deposits;

-

interest payable on the Company's variable rate borrowings.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

Interest rate profile

The interest rate risk profile of the portfolio of financial assets at the Balance Sheet date was as follows (there were no interest bearing financial securities and liabilities at the Balance Sheet dates):

Weighted

average

interest

Fixed

Floating

rate

rate

rate

As at 30 September 2015

%

£'000

£'000

Assets

Cash

-

-

6,630

________

______

________

Total assets

-

-

6,630

________

______

________

Weighted

average

interest

Fixed

Floating

rate

rate

rate

As at 30 September 2014

%

£'000

£'000

Assets

Cash

-

-

2,755

________

______

________

Total assets

-

-

2,755

________

______

________

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The cash assets consist of cash deposits on call earning interest at prevailing market rates. Short-term debtors and creditors have been excluded from the above tables.

Maturity profile

The maturity profile of the Company's financial assets and liabilities at the Balance Sheet date was as follows:

Within

Within

3 Months or less

3 Months or less

2015

2014

£'000

£'000

Floating rate

Cash

6,630

2,755

________

________

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Company's profit before tax for the year ended 30 September 2015 and net assets would increase/decrease by £33,000 (2014 - increase/decrease by £14,000).This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances. These figures have been calculated based on cash positions at each year end.

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception.

Foreign currency risk

A proportion of the Company's investment portfolio is invested in overseas securities and the income and capital value can be affected by movements in exchange rates. Exchange gains or losses may arise as a result of the movement in the exchange rate between the date of the transaction denominated in a currency other than sterling and its settlement.

An analysis of the Company's currency exposure is detailed below:

30 September 2015

30 September 2014

Net

Net

Overseas

monetary

Overseas

monetary

investments

assets

investments

assets

£'000

£'000

£'000

£'000

US Dollar

13,741

121

12,598

132

Swiss Franc

3,236

-

2,947

-

_______

_______

_______

_______

Total

16,977

121

15,545

132

_______

_______

_______

_______

Foreign currency sensitivity

There is no sensitivity analysis included as the Company's significant foreign currency financial instruments are in the form of equity investments which have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.

Other price risk

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

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The allocation of assets to specific sectors and the stock selection process both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are all listed on recognised investment exchanges.

Other price sensitivity

If market prices at the Balance Sheet date had been 10% higher or lower on a sterling basis while all other variables remained constant, the return attributable to Ordinary shareholders and equity reserves for the year ended 30 September 2015 would have increased/decreased by £17,147,000 (2014 - increase/decrease of £15,066,000). This is based on the Company's equity portfolio held at each year end.

(ii)

Liquidity risk

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

Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of overdraft facilities. Liabilities at the balance sheet date are payable within three months.

(iii)

Credit risk

This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.

The risk is not significant, and is managed as follows:

-

investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed;

-

the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the Administrator carries out a stock reconciliation to the Custodian's records on a monthly basis to ensure discrepancies are picked up on a timely basis;

-

cash is held only with reputable banks and financial institutions with high quality external credit ratings. None of the Company's financial assets is secured by collateral or other credit enhancements.

Credit risk exposure

In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 30 September was as follows:

2015

2014

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£'000

£'000

£'000

£'000

Non-current assets

Securities at fair value through profit or loss

-

-

-

-

Current assets

Accrued income

582

582

690

690

Other debtors

-

-

737

737

Cash and short term deposits

6,630

6,630

2,755

2,755

________

________

________

________

7,212

7,212

4,182

4,182

________

________

________

________

None of the Company's financial assets is past due or impaired.

Fair value of financial assets and liabilities

The book value of cash at bank included in these financial statements approximates to fair value because of the short-term maturity. The carrying value of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. For all other short-term debtors and creditors, their book values approximate to fair value because of their short-term maturity.

Gearing

The Company has in place arrangements which would enable it to augment finance by obtaining short term credit facilities.

The Company had no outstanding gearing at the year end. The profile of financing costs is managed as part of overall investment strategy. The employment of gearing magnifies the impact on net assets of both positive and negative changes in the value of the Company's portfolio of investments.

16.	Capital management policies and procedures
	The Company's capital management objectives are:
	-	to ensure that the Company will be able to continue as a going concern; and
	-	to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt.
	The Company's capital at 30 September comprised:
				2015	2014
				£'000	£'000
	Equity share capital			64,706	60,514
	Retained earnings and other reserves			113,541	92,877
				________	________
				178,247	153,391
				________	________
	The Board, with the assistance of the Manager and the AIFM, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	-		the planned level of gearing, which takes account of the Manager's views on the market;
	-		the need to buy back equity shares for cancellation or to hold in treasury, which takes account of the difference between the net asset value per share and the share price (i.e. the level of share price discount or premium);
	-		the need for new issues of equity shares; 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 the preceding accounting period.
	The Company had no gearing at the year end (2014 - nil).

17.	Commitments and contingencies
	At 30 September 2015 there were no contingent liabilities in respect of outstanding underwriting commitments or uncalled capital (2014 - £nil).

18.	Financial instruments measured at Fair Value
					2015				2014
		Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Investments	171,474	-	-	171,474	150,656	-	-	150,656
		______	_____	______	______	______	_____	______	______
	Financial liabilities at fair value through profit or loss
	Derivatives	(19)	-	-	(19)	-	-	-	-
		______	_____	______	______	______	_____	______	______
	Level 1 reflects financial instruments quoted in an active market.
	Level 2 reflects financial instruments the fair value of which is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.
	Level 3 reflects financial instruments the fair value of which is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.

19.	Notes to the Cash Flow Statement
	(a)  Reconciliation of operating profit to operating cash flows
				2015	2014
				£'000	£'000
	Profit before taxation			17,431	14,237
	Add interest payable			-	15
	Adjustments for:
	Gains on investments			(12,144)	(9,585)
	Currency (gains)/losses			(11)	4
	Decrease in accrued income and prepayments			89	5
	Increase/(decrease) in trade and other payables			42	(14)
				________	________
				5,407	4,662
				________	________
	(b)  Analysis of  changes in net funds
		30 September	Cash	Exchange	30 September
		2014	Flow	Movements	2015
		£'000	£'000	£'000	£'000
	Cash at bank	2,755	3,864	11	6,630
		________	________	________	________

20.	Related party transactions
	The following are considered to be related parties:
	- The Directors of the Company
	- The Manager
	All material related party transactions, as set out in International Accounting Standard 24, Related Party Disclosures, have been disclosed in the Strategic and Directors Report extracts and in Notes 3 and 4 above.

21.	Alternative Investment Fund Managers Directive (AIFMD)
	In accordance with the AIFMD, information in relation to the Company's leverage and the remuneration of the Company's AIFM, Personal Assets Trust Administration Company Ltd ("PATAC"), is required to be made available to investors. In accordance with the Directive, the AIFM's remuneration policy is available from PATAC on request and the numerical remuneration disclosures in respect of the AIFM's first relevant reporting period (year ending 30 April 2016) will be made available in due course.
	The Company's maximum and actual leverage levels at 30 September 2015 are as follows:
				Gross	Commitment
				Method	Method
	Maximum limit			200%	200%
	Actual			96%	100%

Additional Notes to the Annual Financial Report This Annual Financial Report announcement is not the Company's statutory accounts for the year ended 30 September 2015. The statutory accounts for the year ended 30 September 2015 received an audit report which was unqualified. The statutory accounts for the financial year ended 30 September 2015 were approved by the Directors on 25 November 2015 but will not be filed with the Registrar of Companies until after the company's Annual General Meeting which is to be held at 11.00am on 19 January 2016 at 16 Charlotte Square, Edinburgh, EH2 4DF. The Annual Report will be posted to shareholders in December 2015 and available in due course by download from the Company's webpage (http://tigt.co.uk/secure/documents/annual/TIGTAnnual2015.pdf) 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. Investors may not get back the amount they originally invested. For Troy Income & Growth Trust plc Steven Cowie, C.A., Secretary 25 November 2015 Enquiries: 0131 538 6610

 

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