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Invesco Inc Grth Tst (IVI)

  Print      Mail a friend       Annual reports

Tuesday 06 December, 2005

Invesco Inc Grth Tst

Interim Results

                        INVESCO Income Growth Trust plc                        

                     Unaudited Preliminary Announcement of                     

                                Interim Results                                

                    For thesix months to 30 September 2005                     

Performance Statistics

FTSE All-Share Index(includes net dividends reinvested)+13.6%

                             Six Months ended       Six Months                   
                                 30 September                              
                                                    30 September              
Total Return                                                               
Diluted net asset value per            +11.7%           +5.9%                                                                        
  ordinary share                                         +5.1%
Source: Datastream                                                         
                             At 30 September      At 31 March             %
                                     2005             2005            Change       
Capital Return                                                             
Net asset value per ordinary           215.5p         194.5p*         +10.8
- basic                                                                    
- diluted                              207.3p         189.8p*          +9.2
Mid-market price per                   184.0p          167.0p         +10.2
ordinary share                                                             
Discount per ordinary share             11.2%          12.0%*              
 - diluted                                                                 
Mid-market price of the CULS             115p            114p          +0.9
Actual - excluding effect of              115            117*              
cash and                                                                   
bond holdings                                                              
Effective - including effect                                               
of cash                                                                    
                                          108            108*              
and bond holdings                                                          
Revenue Return                                                             
Net revenue after tax (£                1,854          1,503*         +23.4
Revenue return per ordinary              3.3p           2.7p*         +22.2
Dividends per ordinary share             2.2p            2.1p          +4.8

*Restated for new UK Accounting Standards.

Chairman's Statement


In the period under review, the UK stockmarket continued its recovery from the
lows of 2003, although the economic background has become less certain. Growth
in the UK economy is turning out to be weaker than anticipated earlier this
year, as the combined effects of high oil prices, prior interest rate increases
and a slowing housing market start to be felt. Corporate profits, however,
continue to improve, as do the dividends paid to shareholders.

The Board is pleased to note that the total return for the period (comprising
the movement in NAV plus net dividends reinvested) was 11.7%, however it is
disappointing that your Company has underperformed the benchmark index, which
gained 13.6% during the period under review. The mid-market share price of the
ordinary shares increased from 167p to 184p during the period, and a final
dividend for the year ended 31 March 2005, of 3.7p was paid. The diluted
discount narrowed from 12.0% to 11.2%. As at 2 December 2005, the mid-market
share price was 184p and the diluted discount had increased slightly to 11.5%.


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
2005, the Company had actual gearing of 115, provided by Convertible Unsecured
Loan Stock (`CULS') of £19m , although the underlying effective level was only
108, after taking account of our holdings of the two floating rate notes with
the highest AAA credit rating. At the time of writing, the effective level of
gearing has been increased to 114, with the floating rate notes having been
sold to fund investment in shares.

In absolute terms the Company's level of debt is limited to the value of the
CULS and a £1m 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

New UK Accounting Standards

The interim accounts have been prepared on the basis of UK Generally Accepted
Accounting Principles (GAAP). Several new UK Accounting Standards were issued
at the end of 2004 and are effective for the first time in these interim
accounts. The principal differences resulting are the need to adopt a fair
(bid) valuation for our investment portfolio, the splitting of the CULS into
its equity and debt components and the requirement not to accrue proposed
dividends. There are also some presentational changes. Details of these
changes, including the effect on the net asset value, are shown in notes 1 and

Resignation of Director

Due to a new position Mr Melville Trimble has taken up, he is now considered to
have a conflict of interest with his role as a Director of your Company.
Melville has, with great regret, therefore tendered his resignation. The Board
has accepted Melville's resignation, with effect from 5 December 2005. On
behalf of the Board, I would like to take this opportunity to thank Melville
for his valuable contribution to the management of your Company since he was
appointed in 2001 and to wish him every success in his future endeavours.

Fund Management Arrangements

During the summer the Board was informed that Andy Jones, the Company's lead
portfolio manager, would be leaving INVESCO Perpetual. Following detailed
discussions with INVESCO Perpetual, the Board has approved the appointment of
Ciaran Mallon as the Company's new portfolio manager. Ciaran joined INVESCO
Perpetual in January 2005 to work alongside Andy in managing the Company's
investments. Consequently, no changes to style or approach to the management of
the Company's portfolio are anticipated.

Following the change in fund management arrangements, the Board have taken the
opportunity to simplify the management fee and have included the previously
separate company secretarial and administration fee within the management fee.
This simplified fee came into effect on 1 April 2005 and should result in a
more favourable total expense ratio going forward.


The Board has declared an increased interim dividend of 2.2p (2004: 2.1p) per
share in respect of the six months to 30 September 2005. This dividend is
payable on 30 December 2005 to shareholders registered at the close of business
on 9 December 2005.

The Board currently anticipates that the final ordinary dividend for the year
ending 31 March 2006 will be at least maintained at last year's level (2005:

John McLachlan


6 December 2005

Statement of Total Return

(Incorporating the Revenue Account)

                                      Six Months to 30 September 2005          
                                      Revenue             Capital         Total
                                      £'000                 £'000         £'000
Gains on investments                              -        12,495        12,495
  UK dividends                                2,218             -         2,218
  Unfranked investment income                   253             -           253
  Deposit interest                               17             -            17
Investment management fee - note 4            (269)         (269)         (538)
Other expenses                                (110)             -         (110)
Net return before finance costs                                                
  and taxation                                2,109        12,226        14,335
Interest payable and similar charges          (255)         (255)         (510)
- note 4                                                                       
Return on ordinary activities before                                           
and after                                                                      
   tax for the financial period                                                
   to equity shareholders)                    1,854        11,971        13,825
Transfer to reserves                          1,854        11,971        13,825
Return per ordinary share - note 5                                             
  -- basic                                     3.3p         21.4p         24.7p
  -- diluted                                   3.1p             -             -

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 September 2004        (Audited
                              (Unaudited & Restated)*            & Restated)*
                              Revenue        Capital      Total         Total
                              £'000            £'000      £'000         £'000
Gains on investments                    -      4,538      4,538        15,827
UK dividends                        1,835          -      1,835         4,004
  Unfranked investment income         278          -        278           532
  Deposit interest                     35          -         35            51
Investment management fee -         (219)      (219)      (438)         (914)
note 4                                                                       
Other expenses                      (159)          -      (159)         (323)
Net return before finance                                                    
and taxation                        1,770      4,319      6,089        19,177
Interest payable and similar                                                 
  - note 4                          (267)      (292)      (559)       (1,048)
Return on ordinary activities                                                
before and                                                                   
after tax for the financial                                                  
(attributable to equity             1,503      4,027      5,530        18,129
Transfer to reserves                1,503      4,027      5,530        18,129
Return per ordinary share -                                                  
note 5                                                                       
-- basic                             2.7p       7.2p       9.9p         32.4p
-- diluted                           2.6p          -          -             -

* Restated for new UK Accounting Standards

Balance Sheet

                                30 September     31 March          30
                                2005                 2005        2004
                                                (Audited) (Unaudited)
                                (Unaudited)   & Restated* & Restated)
                                £'000               £'000       £'000
Fixed assets                                                         
Investments                           138,200     126,127     114,792
Current assets                                                       
  Amounts due from brokers                                          -
  Prepayments and accrued                 753       1,068       1,063
  Cash at bank                            268         137         458
                                        1,021       1,205       1,521
Creditors: amounts falling due                                       
one year                                                             
  Accruals and deferred income          (214)       (139)       (130)
  Interest on loans                         -           -       (452)
                                        (214)       (139)       (582)
Net current liabilities                   807       1,066         939
Total assets less current             139,007     127,193     115,731
Creditors: amounts falling due                                       
more than one year                                                   
  4.75% Convertible Unsecured                                        
  Stock 2009 (CULS)                  (18,484)    (18,425)    (18,368)
Total net assets                      120,523     108,768      97,363
Capital and reserves                                                 
Called-up share capital                13,984      13,984      13,984
Equity component of CULS                1,102       1,102       1,102
Share premium account                  23,200      23,200      23,200
Other reserves                                                       
  Capital redemption reserve               50          50          50
  Special reserve                      19,728      19,728      19,728
  Capital reserve - realised           26,684      24,162      23,026
  Capital reserve - unrealised         30,796      21,347      11,686
  Revenue reserve                       4,979       5,195       4,587
Equity Shareholders' funds            120,523     108,768      97,363
Net asset value per ordinary                                         
share -                                                              
note 7                                                               
  -- basic                             215.5p      194.5p      174.1p
  -- diluted                           207.3p      189.8p      172.9p

* Restated for new UK Accounting Standards

Cash Flow Statement

                                     Six Months          Year to  Six Months to
                                     30 September       31 March   30 September
                                     2005                   2005           2004
                                     (Unaudited)       (Audited)     (Unaudited
                                                    & Restated)*   & Restated)*
                                     £'000                 £'000          £'000
Cash flow from operating activities         2,366          3,324          1,521
Servicing of finance                        (452)          (957)           (55)
Capital expenditure and financial                                              
  Purchase of investments                (10,330)       (37,990)       (18,550)
  Sale of investments                      10,617         27,038          7,645
Equity dividends paid                     (2,070)        (2,741)        (1,566)
Net cash inflow/(outflow) before              131       (11,326)       (11,005)
management of liquid resources and                                             
  Issue of CULS                                 -         17,027         17,027
  Movement in debt                              -        (5,575)        (5,575)
Increase in cash in the period                131            126            447
Cash inflow from movement in debt               -       (10,450)       (10,450)
CULS non-cash movement                       (59)          (115)           (58)
Movement in net debt in the period             72       (10,439)       (10,061)
Net debt at beginning of period          (18,288)        (7,849)        (7,849)
Net debt at end of period                (18,216)       (18,288)       (17,910)

Reconciliation of Operating Profit to Operating Cash Flows

                                                         Year to  Six Months to
                                    Six Months to       31 March   30 September
                                    30 September            2005           2004
                                    2005               (Audited)     (Unaudited
                                    (Unaudited)     & Restated)*   & Restated)*
                                    £'000                  £'000          £'000
Net revenue before finance costs            2,109          3,807          1,770
and tax                                                                        
Decrease/(Increase) in debtors                450           (48)           (43)
Increase in creditors                          76             22             13
Investment management fee charged                                              
  to capital                                (269)          (457)          (219)
Net cash inflow from operating              2,366          3,324          1,521

* Restated for new UK Accounting Standards


1. The accounts have been prepared under the historical cost convention
modified to include the revaluation of fixed assets and in accordance with
applicable UK Accounting Standards and with the Statement of Recommended
Practice 'Financial Statements of Investment Trust Companies'.

The same accounting policies used for the year ended 31 March 2005 have been
applied, with the following exceptions:

(a) Investments - Following the introduction of FRS 26 'Financial Instruments:
Recognition and Measurement', listed investments are now valued at fair value
deemed to be bid market prices, with effect from 1 January 2005. Prior to this
the investments were valued at middle market prices. Comparatives have been
restated to reflect this change as detailed in note 2. Where investments are
held at fair value through profit or loss, FRS 26 also requires that the
transaction costs included in gains and losses on investments, should also be
disclosed. The transaction costs included in gains and losses on investments
amount to £90,000 (31 March 2005: £151,000; 30 September 2004: £66,000).

(b) CULS - FRS 26 requires compound financial instruments to be split into
their liability and equity components. At the date of issue the fair value of
the liability component is estimated using the prevailing market interest rate
for similar non-convertible debt and the difference between the proceeds of
issue and this value represent the unchanging value of the equity component.
The liability component is recognised at amortised cost, using the effective
interest method.

(c) Dividends - Following the introduction of FRS 21 'Events After the Balance
Sheet Date', dividends are not accrued in the accounts unless they have been
declared prior to the balance sheet date. Proposed dividends are thus
recognised in the period in which they are declared. As a result, the accounts
for the year ended 31 March 2005 and the period ended 30 September 2004 have
been restated as detailed in note 2.

2. Restatement of Balance Sheets

The following is a reconcilliation of the balances previously reported under
the applicable UK Accounting Standards and with the Statement of Recommended
Practice to balances restated to take account of accounting changes arising
from new UK Accounting Standards in issue as at the date of these accounts.

(a) Year ended 31 March 2005

                                     Previously    Adjustments        Restated
                                     Reported                    31 March 2005
                                     31 March 2005                            
                                     £'000               £'000           £'000
Investments                    (i)         126,332       (205)         126,127
Net current (liabilities)/     (ii)        (1,004)       2,070           1,066
Total assets less current                  125,328       1,865         127,193
Creditors due more than1 year (iii)       (19,319)         894        (18,425)
Net Assets                                 106,009       2,759         108,768
Share capital                               13,984           -          13,984
Equity component of CULS      (iii)              -       1,102           1,102
Share premium                               23,200           -          23,200
Other capital reserves                      65,596       (309)          65,287
Revenue reserves                             3,229       1,966           5,195
                                           106,009       2,759         108,768
Net asset value - basic                     189.5p        5.0p          194.5p
- diluted                                   185.4p        4.4p          189.8p

(b) Period ended at 30 September 2004

                                      reported                        Restated
                                      30 September  Adjustments   30 September
                                      2004                                2004
                                      £'000               £'000          £'000
Investments                     (i)         114,968       (176)        114,792
Net current (liabilities)/      (ii)          (236)       1,175            939
Total assets less current                   114,732         999        115,731
Creditors due more than 1 year (iii)       (19,356)         988       (18,368)
Net Assets                                   95,376       1,987         97,363
Share capital                                13,984           -         13,984
Equity component of CULS       (iii)              -       1,102          1,102
Share premium                                23,200           -         23,200
Other capital reserves                       54,723       (233)         54,490
Revenue reserves                              3,469       1,118          4,587
                                             95,376       1,987         97,363
Net asset value - basic                      170.5p        3.6p         174.1p
- diluted                                    169.7p        3.1p         172.9p

(c) Year ended at 31 March 2004

                                      reported                        Restated
                                      31 March      Adjustments 31 March      
                                      2004                                2004
                                      £'000               £'000 £'000         
Investments                     (i)         100,464       (181)        100,283
Net current (liabilities)/      (ii)        (7,186)       1,566        (5,620)
Total assets less current                    93,278       1,385         94,663
Creditors due more than 1 year              (2,366)          81        (2,285)
Net Assets                                   90,912       1,466         92,378
Share capital                                13,984           -         13,984
Equity component of CULS       (iii)              -         100            100
Share premium                                23,200           -         23,200
Other capital reserves                       50,644       (194)         50,450
Revenue reserves                              3,084       1,560          4,644
                                             90,912       1,466         92,378
Net asset value - basic                      162.5p        2.6p         165.1p
- diluted                                    162.5p        2.6p         165.1p

(i) Investments are all classified as held at fair value being bid price for
all listed investments. Previously they were carried at middle market price.

(ii) Dividends are not recognised until they are declared and approved by
shareholders, accordingly no provision is made for the proposed interim or
final dividend and are added back to revenue reserves for the period.

(iii) CULS are separately recognised between their issue costs debt and equity
components and are recognised on an effective interest basis.

3. Dividends are now recognised in the period they are declared. Therefore,
dividends proposed as at 31 March 2005 (£2,070,000), 30 September 2004 (£
1,175,000) and 31 March 2004 (£1,566,000) are now recognised in the six month
periods ending 30 September 2005, 31 March 2005 and 30 September 2004
respectively. The dividend proposed for the six months ended 30 September 2005
of 2.2p per share, total £1,231,000 which will be recognised in the year end

4. With effect from 1 April 2005, the investment management fee is calculated
and payable monthly in arrears based on the value of the funds under management
before deducting borrowings, of 0.7 per cent. up to £100 million and 0.6 per
cent. thereafter (previously 0.7 per cent. up to £50 million, 0.65 per cent. on
the next £50 million and 0.6 per cent. thereafter). In addition fees for
secretarial services are no longer payable (previously these were paid monthly,
adjusted annually in line with UK Retail Price Index). Investment management
fees and interest payable on borrowings are allocated 50% to capital and 50% to
revenue. Redemption costs in respect of any repayment of debt are allocated
100% to capital.

5. Basic revenue return per ordinary share is based on the net revenue on
ordinary activities after taxation and on 55,935,724 (31 March 2005:
55,935,724; 30 September 2004: 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 2005:
55,935,724; 30 September 2004: 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 net revenue on
ordinary activities after tax and on 67,589,290 (31 March 2005: 67,589,290; 30
September 2004: 67,589,290) ordinary shares, assuming conversion of the CULS,
in issue in the period. In accordance with the SORP, only diluted revenue
returns are shown. Where the diluted earnings per ordinary share is greater
than the basic earnings per ordinary share, there is no dilutive effect.

6. Statement of Changes in Equity Shareholders' Funds:

                Share   Share    Capital Special    Equity  Capital    Capital Revenue   Total
              Capital Premium Redemption Reserve Component Reserve-  Reserve - Reserve   £'000
                £'000   £'000    Reserve   £'000   of CULS Realised Unrealised   £'000        
                                   £'000             £'000    £'000      £'000                
At 31 March                                                                                   
(as            13,984  23,200         50  19,728         -   22,311      8,555   3,084  90,912
  to fair           -       -          -       -         -        -      (181)       -   (181)
Adjustment to       -       -          -       -       100     (13)          -     (6)      81
Add final                                                                                     
dividend for                                                                                  
  2004              -       -          -       -         -        -          -   1,566   1,566
in 2005                                                                                       
At 31 March    13,984  23,200         50  19,728       100   22,298      8,374   4,644  92,378
Equity              -       -          -       -     1,002        -          -       -   1,002
component of                                                                                  
for 2004                                                                                      
paid in 2005        -       -          -       -         -        -          - (1,566) (1,566)
for 2005 paid                                                                                 
in 2005             -       -          -       -         -        -          - (1,175) (1,175)
Net return                                                                                    
  ordinary          -       -          -       -         -    1,864     12,973   3,292  18,129
At 31 March    13,984  23,200         50  19,728     1,102   24,162     21,347   5,195 108,768
for 2005 paid                                                                                 
in current          -       -          -       -         -        -          - (2,070) (2,070)
Net return          -       -          -       -         -    2,522      9,449   1,854  13,825
At 30          13,984  23,200         50  19,728     1,102   26,684     30,796   4,979 120,523

7. The net asset value per ordinary share of 25p has been calculated on
55,935,724 (31 March 2005: 55,935,724; 30 September 2004: 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 2005; 18,995,313, 30
September 2004: 18,995,313) CULS are converted into 11,653,566 ordinary shares
based on one 25p ordinary share for every 163p of CULS.

8. It is the intention of the Directors to conduct the affairs of the Company
so that it satisfies the conditions for approval as an investment trust company
set out in section 842 of the Income and Corporation Taxes Act 1988.

9. Except as detailed in notes 1 and 2, the foregoing information at 31 March
2005 is an abridged version of the Company's full Accounts which carry an
unqualified Auditor's report and did not contain statements under s237(2) and
(3) of the Companies Act 1985 and have been filed with the Registrar of

By order of the Board

INVESCO Asset Management Limited


6 December 2005