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Invesco Inc Grth Tst (IVI)

  Print      Mail a friend       Annual reports

Tuesday 21 December, 2004

Invesco Inc Grth Tst

Correction : Interim Results


The subscriber wishes to advise that the previous Interim Results announcement
released at 12.02 was incorrect. The correct version is as below showing the
amended interim dividend of 2.1p and not 2.0p as previously stated.

                        INVESCO Income Growth Trust plc                        

                     Unaudited Preliminary Announcement of                     
            Interim Results for the six months to 30 September 2004            

Chairman's Statement


During the period under review the UK stock market has continued its recovery,
with companies generally responding well to a challenging economic environment.
The more optimistic forecasts of economic growth have had to be reined in as a
result of rapidly rising oil prices and interest rate increases in both the US
and UK. Despite this, corporate earnings have generally been reported in line
with expectations and balance sheets are the healthiest they have been for some

Against this background your Company has outperformed its benchmark index. The
total return (comprising the movement in NAV plus net dividends reinvested) was
5.9% compared with that of 5.1% for the FTSE All Share Index. The mid- market
share price of the ordinary shares increased from 144p to 149p during the
period, with the discount widening from 11.4% to 12.2%. At the time of writing,
the mid-market share price had increased to 153p and the discount had widened
to 13.7%.

Market Background

Despite instability continuing in the Middle East, equity investors have
continued to devote most of their attention to the prospects for the world
economy. The US economy has continued to grow at above trend for most of the
period under review, although there are now signs that consumer demand is
slowing in response to rising interest rates from the Federal Reserve Bank.
There is also evidence that the Chinese monetary authorities have been
successful in slowing the growth rate of their economy to more sustainable

The UK has continued to see interest rate rises with the base rate currently at
4.75%, up significantly from the October 2003 low. As a result of these rises,
and also cautious comments from the Bank of England's Monetary Committee, there
at last appears to be a cooling in the UK housing market, which seems to be
feeding through to a slowdown in consumer spending.

In terms of the UK stockmarket, the uncertain economic outlook has resulted in
volatile sector performances. When investors believed that growth was likely to
remain at healthy levels, cyclical stocks and recovery situations came into
vogue. However, when a more pessimistic scenario held sway, more defensive
areas of the market outperformed. As a result the list of top performing
sectors during the period includes areas as diverse as Resources and Utilities,
whilst the laggards include both IT and Food Producers.


The Board continues to monitor the Company's level of gearing which, when
prudently used, should enhance the returns to shareholders. As at 30 September
2004, the Company had actual gearing of 120, although this is higher than the
underlying effective level of 109.

The gearing is provided by CULS of £19.3m (hence actual gearing of 120) being
partly offset by cash at bank of £458,000 and a £10m holding in a European
Investment Bank (EIB) short dated bond, so giving an effective level of 109. In
the light of current market conditions, the Board feel that this is an
appropriate level.

At the time of writing the effective level of gearing is unchanged, with the
EIB bond having been replaced by a £5 million holding in a AAA-rated EIB
Floating Rate Note and a £5 million holding in a AAA-rated Network Rail
Floating Rate Note. As attractive stock opportunities materialise these two
holdings can be reduced, thereby increasing the effective gearing level of the

In absolute terms the Company's level of debt is limited to the value of its
CULS, currently £19.3 million, and a £1 million overdraft facility. In normal
market conditions it is envisaged that this would result in the Company's
effective gearing being in the range of 100-120 of NAV. It is important to
stress that prior to a significant change within this range by the Portfolio
Manager, permission is required from the Board.

Fund Management Arrangements

During the summer, the Board was informed that Graham Kitchen, the Company's
lead portfolio manager, would be leaving INVESCO. Following detailed
discussions with INVESCO Asset Management the Board approved the appointment of
Andy Jones as the Company's new lead portfolio manager in September. Andy has
been directly involved with the Company's management since November 1999 and,
as a result no changes to the style or approach to the management of the
Company's portfolio are anticipated.


The Board has declared an increased interim dividend of 2.1p (2003:2.0p) per
share in respect of the six months to 30 September 2004. This dividend is
payable on 31 December 2004 to shareholders registered at the close of business
on 10 December 2004.

The Board currently anticipates that the final ordinary dividend for the year
ending 31 March 2005 will at least be maintained at last year's level (2004:

John J. McLachlan


21 December 2004

Performance Statistics

                               Six months  Six months         
                                    ended       ended % change
                              30September          30         
                                     2004        2003         
Total Return                                                  
Net asset value per ordinary         5.9%      +26.8%         
FTSE All-Share Index                 5.1%      +19.0%         
(includes net dividends                                       
Source: Datastream                                            
Revenue Return                                                
Net revenue after tax (£'000)       1,560       1,512     +3.2
Revenue return per ordinary         2.79p       2.70p     +3.2
Dividends per ordinary share         2.1p        2.0p     +5.0
                                     At30 At 31 March         
                                     2003        2004         
Capital Return                                                
Net asset value per ordinary       170.5p      162.5p     +4.9
share - basic                                                 
Net asset value per ordinary       169.7p      162.5p     +4.4
share -                                                       
Mid-market price per ordinary      149.0p      144.0p     +3.5
Discount per ordinary share         12.2%       11.4%         
Mid-market price of the CULS         106p        104p     +1.9
Actual -including effect of           120         109         
cash and bond holdings                                        
Effective - excluding effect          109         109         
of cash and bond holdings                                     

Statement of Total Return
(Incorporating the Revenue Account)

                                Six months to 30 September 
                                 Revenue   Capital    Total   
                                   £'000     £'000    £'000
Gains on investments -                 -     1,226    1,226
Gains on investments -                 -     3,307    3,307
  UK dividends                     1,835         -    1,835
  Unfranked investment income        278         -      278
  Deposit interest                    35         -       35
Investment management fee -        (219)     (219)    (438)
note 1                                                     
Other expenses                     (159)         -    (159)
Net return before finance                                  
  and taxation                     1,770     4,314    6,084
Interest payable and similar                               
  - note 1                         (210)     (235)    (445)
Return on ordinary activities      1,560     4,079    5,639
before and after tax for the                               
financial period (attributable                             
to equity shareholders)                                    
Dividends in respect of equity                             
  - note 2                       (1,175)         -  (1,175)
Transfer to reserves                 385     4,079    4,464
Return per ordinary share -        2.79p     7.29p   10.08p
note 3                                                     
- Basic                                                    
- Diluted                                                  

The Revenue column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the

Statement of Total Return
(Incorporating the Revenue Account)

                                                   Year ended
                                                     31 March
                           Six months to 30              2004
                           September 2003                    
                                 (Unaudited)        (Audited)
                            Revenue Capital   Total     Total
                              £'000   £'000   £'000     £'000
Gains/(Losses) on                 - (3,317) (3,317)     8,011
investments - realised                                       
Gains/(Losses) on                 -  19,586  19,586    17,336
investmts - unrealised                                       
  UK dividends                1,853       -   1,853     3,776
  Unfranked investment            -       -       -         -
  Deposit interest                3       -       3         3
Investment management fee     (118)   (239)   (357)     (742)
- note 1                                                     
Other expenses                (148)       -   (148)     (298)
Net return before finance                                    
  and taxation                1,590  16,030  17,620    28,086
Interest payable and                                         
similar charges                                              
  - note 1                     (78)   (157)   (235)     (460)
Return on ordinary            1,512  15,873  17,385    27,626
activities before and                                        
after tax for the                                            
financial period                                             
(attributable to equity                                      
Dividends in respect of                                      
equity shares                                                
  - note 2                  (1,119)       - (1,119)   (2,685)
Transfer to reserves            393  15,873  16,266    24,941
Return per ordinary share     2.70p  28.38p  31.08p    49.38p
- note 3                                                     
- Basic                                                      
- Diluted                                                    

Balance Sheet

                             30           31 March          30
                             September               September
                                    2004      2004        2003
                             (Unaudited) (Audited) (Unaudited)
                                   £'000     £'000       £'000
Fixed Assets                                                  
Investments                      114,968   100,464      92,860
Current assets                                                
  Amounts due from brokers             -       156         831
  Prepayments and accrued          1,064     1,020         645
  Cash at bank                       457        11          11
                                   1,521     1,187       1,487
Creditors: amounts falling due within one year                
  Bank overdraft and                   -   (5,575)     (3,425)
short-term loans                                              
  Amounts due to brokers               -   (1,091)           -
  Proposed dividends             (1,175)   (1,566)     (1,119)
  Accruals and deferred            (130)     (117)       (117)
  Interest on loans                (452)      (24)        (83)
                                 (1,757)   (8,373)     (4,744)
Net current liabilities            (236)   (7,186)     (3,257)
Total assets less current        114,788    93,278      89,603
Creditors: amounts falling due after more                     
  than one year                                               
  Bank loan                            -         -       5,000
  4.75% Convertible                                           
Unsecured Loan                                                
  Stock 2009 - note 4             19,356     2,366       2,366
Total net assets                  95,376    90,912      82,237
Capital and reserves                                          
Called-up share capital -         13,984    13,984      13,984
note 4                                                        
Share premium account             23,200    23,200      23,200
Other reserve                                                 
  Capital redemption reserve          50        50          50
  Special reserve share           19,728    19,728      19,728
  Capital reserve - realised      23,083    22,311      20,936
  Capital reserve -               11,862     8,555       1,260
  Revenue reserve                  3,469     3,084       3,079
Equity Shareholders' funds        95,432    90,912      82,237
Net asset value per ordinary      170.5p    162.5p      147.0p
share -note 5                                                 
                                  169.7p    162.5p      147.0p
- Basic                                                       
- Diluted                                                     

Cash Flow Statement

                             Six months    Year to  Six months
                             to                             to
                             30           31 March          30
                             September               September
                                    2004      2004        2003
                             (Unaudited) (Audited) (Unaudited)
                                   £'000     £'000       £'000
Cash flow from operating           1,521     2,809       1,796
Servicing of finance                (55)     (524)       (241)
Capital expenditure and                                       
financial investment                                          
  Purchase of investments       (18,550)  (28,658)    (14,037)
  Sale of investments              7,645    33,766      15,906
Equity dividends paid            (1,566)   (2,629)     (1,510)
Net cash (outflow)/inflow                                     
before management of liquid                                   
resources and financing                                       
Financing                         17,027         -           -
Issue of loan stock              (5,575)   (4,855)     (2.005)
Movement in debt                                              
  Movement in net funds/debt      11,452   (4,855)     (2,005)
Increase/(decrease) in cash          447      (91)        (91)
in the period                                                 
Cash (inflow)/outflow from                                    
  in debt                       (11,452)     4,855       2,005
CULS non-cash movement                37         -           -
Movement in net (debt)/funds    (10,968)     4,764       1,914
in the period                                                 
Net debt at beginning of         (7,930)  (12,694)    (12,694)
Net debt at end of period       (18,898)   (7,930)    (10,780)

Reconciliation of Operating Profit to Operating Cash Flows

                              Six months   Year to  Six months
                                      to                    to
                             30           31 March          30
                             September               September
                                    2004      2004        2003
                             (Unaudited) (Audited) (Unaudited)
                                   £'000     £'000       £'000
Net revenue before finance         1,770     3,236       1,590
costs and tax                                                 
(Increase)/decrease in              (43)        56         431
Decrease in creditors                 13        14          14
Investment management fee          (219)     (497)       (239)
charged to capital                                            
Net cash inflow from               1,521     2,809       1,796
operating activities                                          

Reconciliation of Movement in Shareholders' Funds

                              Six months   Year to  Six months
                                      to                    to
                             30           31 March          30
                             September               September
                                    2004      2004        2003
                             (Unaudited) (Audited) (Unaudited)
                                   £'000     £'000       £'000
Net revenue retained for the         385       398         393
Capital return for the             4,079    24,543      15,873
Net movement in                    4,464    24,941      16,266
Shareholders' funds                                           
Opening Shareholders' funds       90,912    65,971      65,971
Closing Shareholders' funds       95,376    90,912      82,237

Notes to the interim accounts

1. Investment management fees and interest payable on borrowings are allocated
50% to capital and 50% to revenue (previously 67% to capital and 33% to
revenue). Redemption costs in respect of the repayment of debt are allocated
100% to capital.

2. The Directors have declared an interim dividend of 2.1p (30 September 2003:
 2.0p) per ordinary share in respect of the six months ending 30 September 2004
payable on 31 December 2004 to ordinary shareholders registered on 10 December

3. Basic revenue return per ordinary share is based on the net revenue on
ordinary activities after taxation and on 55,935,724 (31 March 2004:
55,935,724; 30 September 2003: 55,935,724) ordinary shares, being the number of
shares in issue during the period.

Basic capital return per ordinary share is based on net capital gains on
ordinary activities after taxation and on 55,935,724 (31 March 2004:
55,935,724; 30 September 2003: 55,935,724) ordinary shares, being the number of
shares in issue during the period.

The diluted revenue return per ordinary share is based on the assumption that
11,653,566 (31 March 2004: 1,451,425; September 2003: 1,451,425) ordinary
shares are issued for CULS and no future interest payments are made. This
produces a weighted average of 67,589,290 (31 March 2004: 57,387,149; 30
September 2003: 57,387,149) ordinary shares. In accordance with the SORP, only
diluted revenues are shown. Where the diluted earnings per ordinary share is
greater then the basic earnings per ordinary share, there is no dilutive

4. On 2 April 2004 £16,629,490 4.75% Convertible Unsecured Loan Stock 2009 of
100p each were issued at 104p per 100p nominal unit of stock. Costs of issue
were £268,000.

5. The net asset value per ordinary share of 25p has been calculated on
55,935,724 (31 March 2004: 55,935,724; 30 September 2003: 55,935,724) ordinary
shares in issue.

The diluted net asset value per ordinary share is based on net assets at the
period end and on the assumption that 18,995,313 (31 March 2004; 2,365,823, 30
September 2003: 2,365,823) being the outstanding CULS are converted into
ordinary shares based on 25p nominal of ordinary shares for every £x of CULS.
For conversion purposes 'x' is equal to 118% of the mid-market closing price of
the previous day's ordinary shares on the date the scheme commenced. The scheme
commenced on 13 September 2002 and 118% of the mid-market closing price at 12
September 2002 was 163p.

6. The financial information for the period to 30 September 2004 has been

prepared on the basis consistent with the accounting policies adopted by the
Company in its statutory accounts for the year ended 31 March 2004.

7. The foregoing financial information at 31 March 2004 is an abridged version
of the Company's full accounts which carry an unqualified Auditors' Report and
which have been filed with the Regsitrar of Companies.

By order of the Board

INVESCO Asset Management Limited


21 December 2004