Half Yearly Report

RNS Number : 4371E

Troy Income & Growth Trust Plc

10 May 2013

 



TROY INCOME & GROWTH TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS TO 31 MARCH 2013

The principal objective of Troy Income & Growth Trust is to provide shareholders with an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominantly UK equities.

Financial Highlights
	31 March 2013	30 September 2012	% Change
Equity shareholders' funds (£'000)	142,061	124,525	+14.1
Net asset value per share	60.29p	55.18p	+9.3
Share price (mid market)	61.25p	56.00p	+9.4
Premium to net asset value	1.6%	1.5%
Total Returns*	Six months ended 31 March 2013	12 months ended 31 March 2013	From change of Manager 44 months ended 31 March 2013
Share price	+10.7%	+17.1%	+94.3%
Net asset value  per share	+10.5%	+16.1%	+75.9%
FTSE All-Share Index	+14.5%	+16.8%	+62.9%
* Total return includes reinvesting the net dividend in the month that the share price goes ex-dividend.

INTERIM BOARD REPORT AS AT 31 MARCH 2013

Background/Performance

While it is encouraging to see some growth in stock markets, the Manager remains cautious, concerned about the fragility of the economic recovery and the potential for earnings growth.

The Manager continues to invest with a focus on long term income growth, while maintaining capital preservation and low volatility in the portfolio.

The returns for the six months were a Net Asset Value (NAV) total return of + 10.5%, and a Share Price total return of + 10.7% (which reflected minimum discount volatility). This compares with the FTSE All-Share index total return of + 14.5% for the period. For the twelve months ended 31 March 2013, the Company's NAV increased by + 16.1% compared with the FTSE All-Share figure of +16.8%.  The Company increased the quarterly dividend paid to investors by 5% to 0.525p.

The Company's focus on quality can lead it to lag behind in particularly ebullient markets and it is for this reason that the Company experienced a relative performance gap over the half year.

Economic Environment

Growth in most parts of the world at present looks insufficient to sustain a strong recovery. The contributing factors, which have been well rehearsed, include some progress in the USA and in China, but Europe still has significant problems and the UK is, at best, flat-lining.

The statement in July by Mario Draghi, the President of the European Central Bank, on the reinforcement of the euro provided a stimulus, but the problems in Cyprus, Italy and elsewhere remain.

The weakness in the banking sector continues to be a restricting influence.

Perversely, anticipated or announced further stimulus through Quantitative Easing is providing a fillip to stock market confidence. This perceived catalyst for growth is now also being adopted by Japan. It seems that the probable inflation consequences are increasingly being seen as acceptable.

The Market/Gearing

The valuation of the UK equity market remains towards the expensive end of the historic range in terms of dividend yield. On a trailing yield of 3.3% and with dividend and earnings growth expected to slow over the next twelve months, the valuation of equities is not compelling.

The subject of tactical gearing is much discussed. The Company's overdraft facility remained undrawn over the period. In a rising market this was a competitive disadvantage. However, the position was consistent with the Manager's assessment of the market. The facility continues to be available for use when conditions are considered to be appropriate.

Liquidity

The Company's discount policy facilitates very effective liquidity in the shares. During the period a further net issuance of 9.9m shares increased the Company's share capital.

This, combined with active trading, means that in the view of Numis Securities, the Company's Corporate Broker, the Company is one of the most liquid in the sector.

Dividends

The current quarterly dividend is 0.525p. As in previous years the Board will consider the final quarterly dividend before the end of the year.

Outlook

Although income growth for the market appears to be slowing, the portfolio is in a strong position to meet our aspiration of distributing increasing dividends, and of producing capital returns less volatile than the market as a whole.

R G Hanna

Chairman

10 May 2013

Principal Risks and Uncertainties

The principal risks facing the Company relate to the Company's investment activities and include market price risk (comprising interest rate risk, foreign currency risk and other price risk), liquidity risk and credit risk. Other risks faced by the Company include breach of regulatory rules which could lead to suspension of the Company's Stock Exchange Listing, financial penalties, or a qualified audit report. Breach of Section 1159 of the Corporation Tax Act 2010 could lead to the Company being subject to tax on capital gains.

An explanation of these principal risks and how they are managed is contained in the Directors' Report within the Annual Report and Accounts for the year ended 30 September 2012.

The Company's principal risks and uncertainties have not changed since the date of the annual report and are not expected to change for the remaining six months of the Company's financial year.

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 interim financial statements contained within the half yearly financial report have been prepared in accordance with International Accounting Standard 34; and,

-    the Interim Board Report includes a fair review of the information required by 4.2.7R (indication of important events during the first six months of the financial year and description of principal risks and uncertainties for the remaining six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the FCA's Disclosure and Transparency Rules.

The half yearly financial report for the six months to 31 March 2013 comprises the Interim Board Report, the Directors' Responsibility Statement and a condensed set of financial statements.

For and on behalf of the Board

R G Hanna

Chairman

10 May 2013

INCOME STATEMENT
		Six months ended 31 March 2013 (unaudited)			Six months ended 31 March 2012 (unaudited)
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value
		-	11,788	11,788	-	5,300	5,300
Currency losses		-	(3)	(3)	-	(21)	(21)
Income	2	2,333	-	2,333	1,512	-	1,512
Investment management
fees		(173)	(321)	(494)	(92)	(170)	(262)
Other administrative
expenses		(207)	-	(207)	(186)	-	(186)
Finance costs of
borrowing		-	-	-	-	-	-
		_______	______	_______	______	_______	______
Profit before taxation		1,953	11,464	13,417	1,234	5,109	6,343
Taxation	3	(41)	-	(41)	(19)	-	(19)
		_______	______	_______	_______	______	_______
Profit for the period		1,912	11,464	13,376	1,215	5,109	6,324
		_______	______	_______	_______	______	_______
Earnings per Ordinary
share (pence)	5	0.82	4.92	5.74	0.89	3.74	4.63
		_______	______	_______	______	_______	______

The "Profit for the period" is also the Total Comprehensive Income for the period as defined in IAS1 (revised). The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with International Financial Reporting Standards ("IFRS"). The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income and losses are attributable to the equity holders of the Company. No operations were acquired or discontinued during the period.

INCOME STATEMENT (CONTINUED)		Year ended 30 September 2012 (audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Gains on investments held at fair value		-	7,765	7,765
Currency losses		-	(8)	(8)
Income	2	3,886	-	3,886
Investment management fees		(217)	(403)	(620)
Other administrative expenses		(364)	-	(364)
Finance costs of borrowing		(5)	(10)	(15)
		______	_______	______
Profit before taxation		3,300	7,344	10,644
Taxation	3	(55)	-	(55)
		______	_______	______
Profit for the period		3,245	7,344	10,589
		______	_______	______
Earnings per Ordinary share (pence)	5	2.16	4.88	7.04
		______	_______	______

BALANCE SHEET
	As at 31 March 2013 (unaudited) £'000	As at 31 March 2012 (unaudited) £'000	As at 30 September 2012 (audited) £'000
Non-current assets
Ordinary shares	135,310	71,392	116,267
Other fixed interest	1,584	2,045	2,173
	______	______	______
Investments held at fair value through profit or loss	136,894	73,437	118,440
	______	______	______
Current assets
Accrued income and prepayments	1,574	1,973	649
Cash and cash equivalents	5,963	1,645	6,596
	______	______	______
Total current assets	7,537	3,618	7,245
	______	______	______
Total assets	144,431	77,055	125,685
Current liabilities
Trade and other payables	(2,370)	(829)	(428)
Dividends payable	-	-	(732)
	______	______	______
Total current liabilities	(2,370)	(829)	(1,160)
	______	______	______
Net assets	142,061	76,226	124,525
	______	______	______
Issued capital and reserves attributable to
equity holders
Called-up share capital	58,904	35,342	56,421
Share premium account	34,115	5,773	30,941
Special reserve	58,163	58,163	58,163
Capital reserve	(11,907)	(25,606)	(23,371)
Revenue reserve	2,786	2,554	2,371
	______	______	______
Equity shareholders' funds	142,061	76,226	124,525
	______	______	______
Net asset value per Ordinary share (pence)	60.29	53.92	55.18
	______	_______	______

STATEMENT OF CHANGES IN EQUITY
Six months ended 31 March 2013 (unaudited)		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2012	56,421	30,941	58,163	(23,371)	2,371	124,525
Total comprehensive income for the period	-	-	-	11,464	1,912	13,376
Equity dividends	-	-	-	-	(1,497)	(1,497)
New shares issued	2,483	3,174	-	-	-	5,657
	______	_______	______	______	_______	______
Balance at 31 March 2013	58,904	34,115	58,163	(11,907)	2,786	142,061
	______	_______	______	______	_______	______
Six months ended 31 March 2012 (unaudited)		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2011	31,610	1,547	58,163	(30,715)	2,622	63,227
Total comprehensive income for the period	-	-	-	5,109	1,215	6,324
Equity dividends	-	-	-	-	(1,283)	(1,283)
New shares issued	3,732	4,226	-	-	-	7,958
	______	_______	______	______	_______	______
Balance at 31 March 2012	35,342	5,773	58,163	(25,606)	2,554	76,226
	______	_______	______	______	_______	______
Year ended 30 September 2012 (audited)		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2011	31,610	1,547	58,163	(30,715)	2,622	63,227
Total comprehensive income for the year	-	-	-	7,344	3,245	10,589
Equity dividends	-	-	-	-	(3,496)	(3,496)
Costs incurred on issue of new shares	-	(558)	-	-	-	(558)
Contribution to costs incurred on issue of new shares	-	254	-	-	-	254
New shares issued	24,811	29,698	-	-	-	54,509
	______	_______	______	______	_______	______
Balance at 30 September 2012	56,421	30,941	58,163	(23,371)	2,371	124,525
	______	_______	______	______	_______	______

CASH FLOW STATEMENT
	Six months ended 31 March 2013 (unaudited) £'000	Six months ended 31 March 2012 (unaudited) £'000			Year ended 30 September 2012 (audited) £'000
Cash flows from operating activities
Investment income received	2,221	1,379			3,621
Deposit interest received	1	1			1
Administrative expenses paid	(649)	(422)			(856)
	______	______			______
Cash generated from operations	1,573	958			2,766
Finance costs paid	-	-			(15)
Taxation	(32)	(8)			(55)
	______	______			______
Net cash inflows from operating activities	1,541	950			2,696
	______	______			______
Cash flows from investing activities
Purchases of investments	(13,501)	(10,743)			(34,517)
Sales of investments	7,902	392			3,021
	______	______			______
Net cash outflow from investing activities	(5,599)	(10,351)			(31,496)
	______	______			______
Net cash outflow before financing	(4,058)	(9,401)			(28,800)
	______	______			______
Financing activities
Proceeds of issue of shares	5,657	6,437			32,576
Dividends paid	(2,229)	(1,283)			(2,764)
Costs incurred on issue of new shares	-	-			(317)
	______	______			______
Net cash inflow from financing activities	3,428	5,154			29,495
	______	______			______
Net (decrease)/increase in cash and short term deposits	(630)	(4,247)			695
Cash and short term deposits at the start of the period	6,596	5,910			5,910
Effect of foreign exchange rate changes	(3)	(18)			(9)
	______	______			______
Cash and short term deposits at the end of the period	5,963	1,645			6,596
	______	_______			______

Distribution of Assets and Liabilities
	Valuation at 30 September 2012					Valuation at 31 March 2013
			Purchases	Sales	Appreciation/ (depreciation)
	£'000	%	£'000	£'000	£'000	£'000	%
Listed investments
Ordinary shares	116,267	93.4	15,433	(8,183)	11,793	135,310	95.3
Other fixed interest	2,173	1.7	-	(585)	(4)	1,584	1.1
	______	_____	______	______	______	______	_____
	118,440	95.1	15,433	(8,768)	11,789	136,894	96.4
	______	_____	______	______	______	______	_____
Current assets	7,245	5.8				7,537	5.3
Current liabilities	(1,160)	(0.9)				(2,370)	(1.7)
	______	_____				______	_____
Net assets	124,525	100.0				142,061	100.0
	______	_____				______	_____
Net asset value per share	55.18p					60.29p
	______					______

NOTES TO THE ACCOUNTS
1.	Accounting policies
	(a)	Basis of accounting
		The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 - 'Interim Financial Reporting', as adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). They have also been prepared using the same accounting policies applied for the year ended 30 September 2012 financial statements.
	(b)	Dividends payable
		Dividends are recognised in the period in which they are paid.

2.	Income	Six months ended 31 March 2013 £'000	Six months ended 31 March 2012 £'000	Year  ended 30 September 2012 £'000
	Income from listed investments
	UK dividend income	2,052	1,383	3,516
	Overseas dividend income	280	128	369
		______	______	______
		2,332	1,511	3,885
		______	______	______
	Other income from investment activity
	Deposit interest	1	1	1
		______	______	______
	Total income	2,333	1,512	3,886
		______	______	______

3.	Taxation
	Following changes in the Finance Bill 2009 dividends and other distributions from foreign companies received on or after 1 July 2009 have largely been exempt from UK corporation tax. However, the Company continues to be subject to irrecoverable US withholding tax of 15% on income received from US portfolio holdings.

4.	The following table shows the revenue for each period less the dividends declared in respect of the financial period to which they relate.
		Six months ended 31 March 2013A £'000	Six months ended 31 March 2012B £'000	Year  ended  30 September 2012C £'000
	Revenue	1,912	1,215	3,245
	Dividends declared	(2,452)	(1,361)	(3,145)
		______	______	______
		(540)	(146)	100
		______	______	______
	A Dividends declared relate to the first two interim dividends (both 0.525p each) declared in respect of the financial year 2012/2013.
	B Dividends declared relate to the first two interim dividends (both 0. 5p each) declared in respect of the financial year 2011/2012.
	C Dividends declared relate to the five interim dividends declared in respect of the financial year 2011/2012 totalling 2.025p.

		Six months ended 31 March 2013	Six months ended 31 March 2012	Year  ended 30 September 2012
5.	Return and net asset value per share	p	p	p
	Revenue return	0.82	0.89	2.16
	Capital return	4.92	3.74	4.88
		______	______	______
	Total return	5.74	4.63	7.04
		______	______	______
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,912	1,215	3,245
	Capital return	11,464	5,109	7,344
		______	______	______
	Total return	13,376	6,324	10,589
		______	______	______
	Weighted average number of Ordinary shares
	in issue	233,223,870	136,440,533	150,380,633
		__________	__________	__________
	The net asset value per share is based on net assets attributable to shareholders of £142,061,000 (31 March 2012 - £76,226,000; 30 September 2012 - £124,525,000) and on 235,614,445 (31 March 2012 - 141,366,419; 30 September 2012 - 225,684,445) Ordinary shares in issue at the period end.

6.

Ordinary share capital

During the six months ended 31 March 2013 there were 9,930,000 new Ordinary shares of 25p each issued by the Company for proceeds totalling £5,657,000. During the six months ended 31 March 2012 there were 14,924,987 new Ordinary shares of 25p each issued for proceeds totalling £7,958,000. During the year to 30 September 2012 there were 99,243,013 new Ordinary shares of 25p each issued by the Company for proceeds totalling £54,545,159. Of the 99,243,013 shares issued, 39,543,885 shares were allotted for non cash consideration of £21,932,912.  All other shares issued during the year to 30 September 2012 were issued for cash.

7.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 March 2013 includes gains of £23,857,000 (31 March 2012 - gains of £11,654,000; 30 September 2012 - gains of £14,356,000) which relate to the revaluation of investments held at the reporting date.

8.	Transaction costs
	During the period expenses were incurred in acquiring or disposing of investments classified as held at fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Consolidated Income Statement. The total costs were as follows:
				Six months ended 31 March 2013 £'000	Six months ended 31 March 2012 £'000		Year  ended 30 September 2012 £'000
	Purchases			82	53		181
	Sales			13	-		3
				______	______		______
				95	53		184
				______	______		______

9.	Publication of non-statutory accounts
	The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 31 March 2013 and 31 March 2012 has not been audited.
	The information for the year ended 30 September 2012 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under Section 498 (2), (3) or (4) of the Companies Act 2006.

10.	This Half-Yearly Financial Report was approved by the Board on 10 May 2013.

.

11.	This Half-Yearly Financial Report will shortly be available for viewing on the Company's web site (www.tigt.co.uk) and will be posted to shareholders in May 2013.

For Troy Income & Growth Trust plc Steven Cowie, C.A., Secretary 10 May 2013 Enquiries: 0131 538 6610

 

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