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Schroder Inc Growth (BC!)

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Tuesday 15 October, 2002

Schroder Inc Growth

Final Results

Schroder Income Growth Fund PLC
15 October 2002

     15 October 2002

Press Release

                         Unaudited Preliminary Results

The Directors of Schroder Income Growth Fund plc announce the unaudited
preliminary results for the year ended 31 August 2002.

Statement of Total Return
                                            Year ended 31 August 2002                   Year ended 31 August 2001
                                     Revenue         Capital           Total         Revenue        Capital        Total
                                       £'000           £'000           £'000           £'000          £'000        £'000
Realised (losses)/gains on                 -         (7,165)         (7,165)               -          4,698        4,698
Unrealised losses on investments           -         (8,161)         (8,161)               -        (3,614)      (3,614)
Premia paid on purchase of                 -           (300)           (300)               -          (558)        (558)
warrants for cancellation
Investment income - ordinary           4,274               -           4,274           4,482              -        4,482
Special dividends                          -               -               -              89              -           89
Convertible bond interest                146               -             146             146              -          146
Other income                             202               -             202             168              -          168
Investment management fee              (483)           (483)           (966)           (507)          (507)      (1,014)
Performance fee                            -           (123)           (123)               -          (131)        (131)
Administrative expenses                (177)               -           (177)           (186)              -        (186)
Net return before finance costs        3,962        (16,232)        (12,270)           4,192          (112)        4,080
and taxation
Interest payable                         (6)             (6)            (12)               -              -            -
Return on ordinary activities          3,956        (16,238)        (12,282)           4,192          (112)        4,080
before taxation
Tax on ordinary activities                 -               -               -               -              -            -
Return on ordinary activities          3,956        (16,238)        (12,282)           4,192          (112)        4,080
after tax for the year
attributable to equity

Statement of Total Return - continued
                                             Year ended 31 August 2002                   Year ended 31 August 2001
                                       Revenue        Capital           Total        Revenue        Capital        Total
                                         £'000          £'000           £'000          £'000          £'000        £'000
1st interim dividend of 1.25p            (866)              -           (866)          (847)              -        (847)
per share paid 31 January 2002
2nd interim dividend of 1.25p            (875)              -           (875)          (845)              -        (845)
per share paid 30 April 2002
3rd interim dividend of 1.25p            (875)              -           (875)          (845)              -        (845)
per share paid 31 July 2002
4th interim dividend of 2.10 per       (1,469)              -         (1,469)        (1,414)              -      (1,414)
share payable 31 October 2002
Transfer (from)/to reserves              (129)       (16,238)        (16,367)            241          (112)          129
Return per ordinary share                5.67p       (23.29)p        (17.62)p          6.04p        (0.16)p        5.88p
Return per ordinary share -              5.45p       (22.35)p        (16.90)p          5.75p        (0.15)p        5.60p
Dividends for the year per               5.85p              -           5.85p          5.70p              -        5.70p
ordinary share

Summary Balance Sheet                                                      At 31 August 2002           At 31 August 2001
                                                                                       £'000                       £'000
Listed investments at market value                                                   100,647                     121,402

Current assets                                                                         6,418                       1,621

Current liabilities                                                                  (1,873)                     (1,930)

Net Assets                                                                           105,192                     121,093

Net asset value per share (undiluted)                                                150.33p                     174.72p

Net asset value per (diluted)                                                        145.24p                     165.84p

Abridged Cash Flow Statement                                                            Year ended          Year ended

                                                                                    31 August 2002      31 August 2001

                                                                                             £'000               £'000
Net cash inflow from operating activities                                                    3,387               3,878
Net cash outflow from returns on investments and servicing of
finance     -                                                                                 (14)                   -
UK tax recovered/(paid)                                                                         50                (21)
Net cash inflow/(outflow) from investing activities                                          5,429             (2,016)

Equity dividends paid                                                                      (4,030)             (3,879)
Net cash inflow/(outflow) from financing                                                       162             (2,189)
Net cash inflow/(outflow)                                                                    4,984             (4,227)

Analysis of changes in net funds                                   Year ended                             Year ended

                                                               31 August 2002                         31 August 2001

                                                                        £'000                                  £'000
Net cash inflow/(outflow)                                               4,984                                (4,227)
Net funds brought forward                                                 786                                  5,013
Net funds carried forward                                               5,770                                    786

Reconciliation of revenue return before finance costs and taxation to net cash
inflow from operating activities
                                                                                        Year ended          Year ended

                                                                                    31 August 2002      31 August 2001

                                                                                             £'000               £'000
Return before finance costs and taxation                                                     3,962               4,192
Investment management fee charged to capital reserve                                         (483)               (507)
Performance fee charged to capital                                                           (123)               (131)
Movements in accrued income                                                                    145                 169
Movements in debtors                                                                           (7)                   2
Movements in creditors                                                                       (107)                 153
Net cash inflow from operating activities                                                    3,387               3,878

The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 31 August 2002 or 31 August
2001. The financial information for the year ended 31 August 2001 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985. The statutory accounts for the year ended 31 August 2002
will be finalised on the basis of the financial information presented by the
Directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.

This announcement is prepared on the basis of the accounting policies as set out
in the most recently published set of annual financial statements.

This statement was approved by the Board of Directors on 15 October 2002.

Statement by the Chairman, Mr John Hignett:

Results for the year and dividends

The year ended 31 August 2002 was a difficult one for many companies and saw a
number of them cutting their dividends, including some companies that formed
part of our investment portfolio. This led to a reduced revenue return for the
year of 5.67 pence per share compared with a return of 6.04 pence per share for
the prior year, a decrease of 6.1% per cent.

However, bearing in mind the strength of our revenue reserves and the Company's
objective to provide real dividend growth, your Board has continued to increase
overall dividends, declaring four interim payments totalling 5.85 pence per
share. This represents an increase of 2.6 per cent. compared with 5.70 pence per
share paid in the year ended 31 August 2001 and compares favourably with the
rate of inflation, which has seen the Retail Price Index increase by 1.4 per
cent. over the same period.

Investment Performance

Although performance during the year ended 31 August 2002 was disappointing in
absolute terms, the Company significantly out-performed the FTSE All-Share Index
during the year, producing a negative net asset value total return of 10.7 per
cent. compared with the negative total return of 18.7 per cent. produced by the
FTSE All-Share Index.

Share Price Performance

The share price discount to net asset value stood at 8.9 per cent. at the
beginning of the year, but by the end of the year the shares traded at a premium
to net asset value of 1.2 per cent. The shift from a discount to a premium
significantly enhanced the share price return to shareholders and reflected an
improved market rating of the Company and the sector as a whole. The total share
price return for the year, calculated by reference to the movement in the share
price together with dividend payments made by the Company, was a positive return
of 1.2 per cent.

As at 31 August 2002, the average discount figure of the Company's AITC peer
group (UK: Income Growth) was 3.1 per cent.
                                                            As at 31 August 2002         As at 31 August 2001
Diluted net asset value per share                                        145.24p                       165.8p
Middle market share price                                                147.00p                       151.0p
Share price premium/(discount)                                              1.2%                       (8.9%)
Peer group average premium/ (discount)*                                   (3.1%)                       (8.4%)

*Source: Fundamental Data

Gearing Facility

During the year, the Company established a £12m revolving loan facility with ING
Bank. Whilst the facility has not been used to date, it allows flexibility in
borrowing and the Board engages in regular discussions with the Investment
Manager as to the appropriate use of the facility, which will be utilised when
conditions are considered favourable.

Share and Warrant Purchases

No shares were purchased for cancellation during the year as good performance
relative to both peer group companies and the market helped to ensure that the
share price discount continued to narrow, ending the year at a premium to net
asset value.

The share buy back facility is one of a number of tools that may be used to
enhance shareholder value. Shares will only be purchased in appropriate
circumstances. To provide maximum flexibility, a resolution to renew the share
buy back authority is included in the Notice of the Annual General Meeting.

The Directors continued to purchase warrants for cancellation during the year.
The Company purchased 805,000 warrants in the year under review, representing
8.6 per cent. of the total number of warrants in issue at the beginning of the
financial year.

Exercise of warrants

On 31 December 2002, warrantholders will have their sixth and penultimate
opportunity to exercise their subscription rights. Their final opportunity to do
so will be on 31 December 2003. I will be writing separately to warrantholders
in order to remind them of this opportunity and to set out the steps they should
take in order to exercise their subscription rights.

Annual General Meeting

The Company's eighth Annual General Meeting will be held at 3.00 p.m. on Friday
13th December. As in previous years, the meeting will include a presentation by
the Investment Manager on the Company's investment strategy and market


With the average dividend yield on the UK stock market now close to the level of
bank base rates and many well-managed FTSE 100 companies yielding in excess of
4.0%, the domestic market now appears relatively good value by long term
historical standards.

However, as always, there remains uncertainty and risk to market valuations in
the short term. The outlook for growth in the US economy and by implication the
rest of the world, including the UK, is far from clear. Financial markets,
particularly in the US, may not yet have fully discounted what might well turn
out to be a period of much lower economic growth in the foreseeable future than
in the recent past.

The average rate of dividend growth in the UK has fallen sharply over the last
year with many well-known companies having reduced their payouts, some
substantially. An early recovery in corporate dividend growth is not envisaged
in the current economic and financial environment.

Nevertheless, the Board is confident that, given the breadth and quality of its
investment portfolio together with the strength of its revenue reserves, the
Company is well placed to continue to ride out the current storms in financial
markets and, barring unforeseen circumstances, to provide real dividend growth
for shareholders in the year ahead.

John Hignett


The first interim dividend for the year ending 31 August 2003, will be announced
in December 2002 and paid on 31 January 2003.

                                Annual General Meeting:     Wednesday, 13
                                December 2002 at 3 p.m. at 31 Gresham Street,
                                London, EC2V 7QA.

The Annual Report and Accounts will be mailed to shareholders at their
registered addresses in November 2002, and from the date of release copies of
the Annual Report will be made available at the Company's registered office, 31
Gresham Street, London, EC2V 7QA.

Enquiries to the Secretary:     Schroder Investment Management Limited

Christine Daniels     (020 7658 6186)

                      This information is provided by RNS
            The company news service from the London Stock Exchange