Half Yearly Report

RNS Number : 0908D

Troy Income & Growth Trust Plc

10 May 2012

 



TROY INCOME & GROWTH TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS TO 31 MARCH 2012

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 2012	30 September 2011	% Change
Equity shareholders' funds (£'000)	76,226	63,227	+20.6
Net asset value per share	53.92p	50.00p	+7.8
Share price (mid market)	54.25p	49.63p	+9.3
Premium /(discount) to net asset value	0.6%	(0.7%)
Total Returns*	Six months ended 31 March 2012	1 year ended 31 March 2012	From change of Manager 32 months ended 31 March 2012
Share price	+11.4%	+10.4%	+65.9%
Net asset value  per share	+10.0%	+8.7%	+51.6%
FTSE All-Share Index	+15.0%	+1.4%	+39.5%
* Total return includes reinvesting the net dividend in the month that the share price goes ex-dividend.

INTERIM BOARD REPORT AS AT 31 MARCH 2012

Performance

I am pleased to report that the Company delivered a net asset value ("NAV") total return of +10.0% over the six months.  The share price total return of +11.4% differed very slightly due to an increase in the premium to net asset value while the FTSE All-Share Index produced a total return of +15.0%. The start of the period under review coincided exactly with the 2011 market low point which was followed by a strong rally over the next six months.  Our investment approach, as shareholders will understand, means that in these conditions of a sharply rising market the portfolio is unlikely to keep up. Over the one year to 31 March 2012 however, the NAV total return of +8.7% compares favourably with that of the FTSE All-Share which returned +1.4%.

Background

The final quarter of 2011 was immensely volatile with an initial October rally being followed by a sharp reversal in November as the Eurozone crisis flared up again prompting ten year bond yields in Spain and Italy to move into the danger zone of over 7%. A decisive move by the ECB to ease funding pressures, by making almost 500bn Euros of three year loans available to banks, was enough to steady market nerves and as a result equities rallied again. The confidence was sustained into early 2012 but soon evaporated as the perception grew that the ECB action was not the fundamental structural change that could resolve the core issue of excessive debt in the European financial system once and for all. As a result we expect further bouts of uncertainty about the stability of the Eurozone in coming months.  

By contrast there were some signs of recovery in the US as economic indicators such as employment and manufacturing numbers were more positive than expected. A succession of strong earnings announcements by companies and the more robust state of the US banking system led to a stronger rally which continued into 2012. However the statement by the Federal Reserve that interest rates will not be raised until 2014 makes it clear that it will be some time before a more normal yield curve reasserts itself.

The UK equity market received further stimulus from the Bank of England with a £75bn extension to the asset purchase programme last October which was then increased by another £50bn in February. This boosted investor confidence and despite further signs of inflation, which we see as an inevitable consequence of the broader QE strategy, markets rallied strongly. To some extent this market rise has been supported by a substantial number of healthy results statements by companies and dividend increases have been broadly ahead of expectations. But the recent growth of earnings and dividends belie the very difficult trading conditions faced by many companies which are relying on continuing efficiency gains to drive profit growth given the weakness of overall economic activity.     

Company changes

This has been a very successful period for equity issuance by the Company. 14.9m new shares were issued increasing the number of shares in issue to 141.37m shares. All of the new shares were issued at a premium to net asset value thereby benefiting existing shareholders.

The Board believes that there is considerable scope to grow the Company and will continue to seek the authority to issue new shares. As announced in the circular dated 17 April 2012, a general meeting is to be held on 15 May seeking renewal of the authority for the Board to issue further new ordinary shares up to an aggregate nominal amount of £25m on a non pre-emptive basis. The growth of the Company has the beneficial effect of lowering the total expense ratio as the impact of fixed costs is progressively diluted.

Gearing

It remains the opinion of the Board that gearing would not be appropriate at the current time given the volatility of markets and the fact that equities are not outstandingly cheap at present. When the correct opportunity arises the Manager will have no hesitation in utilising the existing gearing facility.

Dividends

The Board declared a second interim dividend of 0.5 pence per share (2011: 0.4725 pence) which was paid on 27 April 2012. This second interim dividend represented a 5.8% increase on the corresponding dividend paid in respect of the year to 30 September 2011. As previously announced it is the Board's intention barring unforeseen circumstances that they will at least maintain the quarterly dividend rate of 0.5 pence per share for the full year to 30 September 2012.

Outlook

The prospects for dividend growth in the current year remain good and the portfolio remains concentrated in areas of the market which are better positioned to withstand market volatility. With the prospect of weak economic growth for the foreseeable future this is not the time to increase the economic sensitivity of the portfolio by buying cyclical shares. The current portfolio should be well placed to deliver consistent returns without exposing investors to undue risk.

R G Hanna

Chairman

10 May 2012

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 the 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 2011.

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 FSA's Disclosure and Transparency Rules.

The half yearly financial report for the six months to 31 March 2012 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 2012

INCOME STATEMENT
		Company Six months ended 31 March 2012 (unaudited)			Group Six months ended 31 March 2011 (unaudited)
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value
		-	5,300	5,300	-	3,921	3,921
Currency losses		-	(21)	(21)	-	(7)	(7)
Income	2	1,512	-	1,512	1,337	-	1,337
Investment management
fees		(92)	(170)	(262)	(74)	(137)	(211)
VAT recoverable on investment management fees
		-	-	-	19	19	38
Other administrative
expenses		(186)	-	(186)	(178)	-	(178)
Finance costs of
borrowing		-	-	-	(5)	(10)	(15)
		_______	______	_______	______	_______	______
Profit before taxation		1,234	5,109	6,343	1,099	3,786	4,885
Taxation	3	(19)	-	(19)	(12)	-	(12)
		_______	______	_______	______	_______	______
Profit for the period		1,215	5,109	6,324	1,087	3,786	4,873
		_______	______	_______	______	_______	______
Earnings per Ordinary
share (pence)	5	0.89	3.74	4.63	0.98	3.41	4.39
		_______	______	_______	______	_______	______

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 parent company. There are no minority interests. No operations were acquired or discontinued during the period.

INCOME STATEMENT (CONTINUED)		Group Year ended 30 September 2011 (audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Gains on investments held at fair value		-	2,200	2,200
Currency losses		-	(4)	(4)
Income	2	2,768	-	2,768
Investment management fees		(154)	(285)	(439)
VAT recoverable on investment management fees		19	19	38
Other administrative expenses		(373)	-	(373)
Finance costs of borrowing		(5)	(10)	(15)
		______	_______	______
Profit before taxation		2,255	1,920	4,175
Taxation	3	(35)	-	(35)
		______	_______	______
Profit for the period		2,220	1,920	4,140
		______	_______	______
Earnings per Ordinary share (pence)	5	1.95	1.68	3.63
		______	_______	______

BALANCE SHEET
	Company As at 31 March 2012 (unaudited) £'000	Group           As at 31 March 2011 (unaudited) £'000	Group As at 30 September 2011 (audited) £'000
Non-current assets
Ordinary shares	71,392	53,477	55,107
Convertibles	-	225	217
Other fixed interest	2,045	2,132	1,922
	______	_______	______
Investments held at fair value through profit or loss	73,437	55,834	57,246
	______	_______	______
Current assets
Accrued income and prepayments	1,973	403	337
Cash and cash equivalents	1,645	1,136	5,910
	______	_______	______
Total current assets	3,618	1,539	6,247
	______	_______	______
Total assets	77,055	57,373	63,493
Current liabilities
Trade and other payables	(829)	(649)	(266)
	______	_______	______
Total current liabilities	(829)	(649)	(266)
	______	_______	______
Net assets	76,226	56,724	63,227
	______	_______	______
Issued capital and reserves attributable to
equity holders
Called-up share capital	35,342	30,486	31,610
Share premium account	5,773	45	1,547
Special reserve	58,163	52,484	58,163
Capital reserve	(25,606)	(28,849)	(30,715)
Revenue reserve	2,554	2,558	2,622
	______	_______	______
Equity shareholders' funds	76,226	56,724	63,227
	______	_______	______
Net asset value per Ordinary share (pence)	53.92	51.50	50.00
	______	_______	______

STATEMENT OF CHANGES IN EQUITY
Company 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
	______	_______	______	______	_______	______
Group Six months ended 31 March 2011 (unaudited)		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	30,486	53,204	249	(32,635)	2,503	53,807
Total comprehensive income for the period	-	-	-	3,786	1,087	4,873
Equity dividends	-	-	-	-	(1,032)	(1,032)
Cancellation of share premium	-	(53,204)	53,204	-	-	-
Shares issued from treasury	-	45	1,126	-	-	1,171
Shares bought back into treasury	-	-	(2,095)	-	-	(2,095)
	______	_______	______	______	_______	______
Balance at 31 March 2011	30,486	45	52,484	(28,849)	2,558	56,724
	______	_______	______	______	_______	______
Group Year ended 30 September 2011 (audited)		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	30,486	53,204	249	(32,635)	2,503	53,807
Total comprehensive income for the year	-	-	-	1,920	2,220	4,140
Equity dividends	-	-	-	-	(2,101)	(2,101)
Cancellation of share premium	-	(53,204)	53,204	-	-	-
Release of costs of cancellation of share premium account	-	-	5	-	-	5
Shares issued from treasury	-	435	7,256	-	-	7,691
Shares bought back into treasury	-	-	(2,551)	-	-	(2,551)
New shares issued	1,124	1,112	-	-	-	2,236
	______	_______	______	______	_______	______
Balance at 30 September 2011	31,610	1,547	58,163	(30,715)	2,622	63,227
	______	_______	______	______	_______	______

CASH FLOW STATEMENT
	Company Six months ended 31 March 2012 (unaudited) £'000	Group Six months ended 31 March 2011 (unaudited) £'000			Group Year ended 30 September 2011 (audited) £'000
Cash flows from operating activities
Investment income received	1,379	1,283			2,778
Deposit interest received	1	2			2
Other cash receipts	-	38			38
Administrative expenses paid	(422)	(349)			(770)
	______	_______			______
Cash generated from operations	958	974			2,048
Finance costs paid	-	(15)			(15)
Taxation	(8)	(3)			(35)
	______	_______			______
Net cash inflows from operating activities	950	956			1,998
	______	_______			______
Cash flows from investing activities
Purchases of investments	(10,743)	(2,760)			(9,325)
Sales of investments	392	3,125			6,186
	______	_______			______
Net cash (outflow)/inflow from investing activities	(10,351)	365			(3,139)
	______	_______			______
Net cash (outflow)/inflow before financing	(9,401)	1,321			(1,141)
	______	_______			______
Financing activities
Proceeds of issue of shares	6,437	1,171			9,927
Cost of share buy backs	-	(2,095)			(2,551)
Dividends paid	(1,283)	(1,032)			(2,101)
Costs of cancellation of share premium account	-	-			5
	______	_______			______
Net cash inflow/(outflow) from financing activities	5,154	(1,956)			5,280
	______	_______			______
Net (decrease)/increase in cash and short term deposits	(4,247)	(635)			4,139
Cash and short term deposits at the start of the period	5,910	1,778			1,778
Effect of foreign exchange rate changes	(18)	(7)			(7)
	______	_______			______
Cash and short term deposits at the end of the period	1,645	1,136			5,910
	______	_______			______

Distribution of Assets and Liabilities
	Valuation at 30 September 2011					Valuation at 31 March 2012
			Purchases	Sales	Appreciation
	£'000	%	£'000	£'000	£'000	£'000	%
Listed investments
Ordinary shares	55,107	87.2	11,283	(169)	5,171	71,392	93.6
Convertibles	217	0.3	-	(223)	6	-	-
Other fixed interest	1,922	3.0	-	-	123	2,045	2.7
	______	_____	______	______	______	______	_____
	57,246	90.5	11,283	(392)	5,300	73,437	96.3
	______	_____	______	______	______	______	_____
Current assets	6,247	9.9				3,618	4.8
Current liabilities	(266)	(0.4)				(829)	(1.1)
	______	_____				______	_____
Net assets	63,227	100.0				76,226	100.0
	______	_____				______	_____
Net asset value per share	50.00p					53.92p
	______					______

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) 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 2011 financial statements.
	(b)	Basis of presentation
		The Company's only subsidiary G.I.T. Securities Limited, which did not trade during any period included in the half yearly report, was dissolved with effect from 29 September 2011. As a result there are only Company figures to report for the six months ended 31 March 2012.
	(c)	Dividends payable
		Dividends are recognised in the period in which they are paid.

2.	Income	Company Six months ended 31 March 2012 £'000	Group Six months ended 31 March 2011 £'000	Group Year  ended 30 September 2011 £'000
	Income from listed investments
	UK dividend income	1,383	1,254	2,551
	Overseas dividend income	128	81	215
		______	_______	______
		1,511	1,335	2,766
		______	_______	______
	Other income from investment activity
	Deposit interest	1	-	-
	Interest on recoverable VAT on management fees	-	2	2
		______	_______	______
		1	2	2
		______	_______	______
	Total income	1,512	1,337	2,768
		______	_______	______

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.
		Company Six months ended 31 March 2012A £'000	Group Six months ended 31 March 2011B £'000	Group Year  ended  30 September 2011C £'000
	Revenue	1,215	1,087	2,220
	Dividends declared	(1,361)	(1,049)	(2,230)
		______	_______	______
		(146)	38	(10)
		______	_______	______
	A Dividends declared relate to the first two interim dividends (both 0.5p each) declared in respect of the financial year 2011/2012.
	B Dividends declared relate to the first two interim dividends (both 0.4725p each) declared in respect of the financial year 2010/2011.
	C Dividends declared relate to the four interim dividends declared in respect of the financial year 2010/2011 totalling 1.9175p.

		Company Six months ended 31 March 2012	Group Six months ended 31 March 2011	Group Year  ended 30 September 2011
5.	Return and net asset value per share	p	p	p
	Revenue return	0.89	0.98	1.95
	Capital return	3.74	3.41	1.68
		______	_______	______
	Total return	4.63	4.39	3.63
		______	_______	______
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,215	1,087	2,220
	Capital return	5,109	3,786	1,920
		______	_______	______
	Total return	6,324	4,873	4,140
		______	_______	______
	Weighted average number of Ordinary shares
	in issue	136,440,533	111,102,661	113,953,962
		__________	__________	__________
	The net asset value per share is based on net assets attributable to shareholders of £76,226,000 (31 March 2011 - £56,724,000; 30 September 2011 - £63,227,000) and on 141,366,419 (31 March 2011 - 110,141,432; 30 September 2011 - 126,441,432) Ordinary shares in issue at the period end.

6.

Ordinary share capital

During the six months ended 31 March 2012 there were no Ordinary shares of 25p each repurchased by the Company and placed in treasury. During the six months ended 31 March 2011 there were 4,190,000 Ordinary shares repurchased at a total cost of £2,095,000 and placed in treasury. During the year ended 30 September 2011 there were 5,065,000 Ordinary shares repurchased at a total cost of £2,551,000 and placed in treasury. During the six months ended 31 March 2012 there were no Ordinary shares re-issued from treasury. During the six months ended 31 March 2011 there were 2,383,000 Ordinary shares re-issued from treasury for proceeds totalling £1,171,000. During the year ended 30 September 2011 there were 15,059,335 Ordinary shares re-issued from treasury for proceeds totalling £7,691,000. During the six months ended 31 March 2012 there were 14,924,987 new Ordinary shares of 25p each issued by the Company for proceeds totalling £7,985,000. During the six months ended 31 March 2011 there were no new shares issued. During the year to 30 September 2011 there were 4,498,915 new Ordinary shares of 25p each issued by the Company for proceeds totalling £2,273,000.

7.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 March 2012 includes gains of £11,654,000 (31 March 2011 - gains of £8,765,000; 30 September 2011 - gains of £6,318,000) 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 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:
				Company Six months ended 31 March 2012 £'000	Group Six months ended 31 March 2011 £'000		Group Year  ended 30 September 2011 £'000
	Purchases			53	17		50
	Sales			-	4		9
				______	_______		______
				53	21		59
				______	_______		______

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 2012 and 31 March 2011 has not been audited.
	The information for the year ended 30 September 2011 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 2012

.

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 2012.

For Troy Income & Growth Trust plc Steven Cowie, Secretary 10 May 2012 Enquiries: 0131 538 6610

 

END

 

 

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