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Schroder Inc Growth (BC!)

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Thursday 19 April, 2007

Schroder Inc Growth

Interim Results

Schroder Income Growth Fund PLC
19 April 2007



                        Schroder Income Growth Fund plc

                         Unaudited Interim Results


The Directors of Schroder Income Growth Fund plc announce the unaudited interim
results for the six months ended 28 February 2007.



Income Statement
                                                    Six months ended               Six months ended
                                                    28 February 2007               28 February 2006

                                           RevenueReturn   Capital      Total      Revenue        Capital          Total
                                                           Return      Return      Return          Return         Return
                                 Note              £'000       £'000      £'000         £'000         £'000        £'000

Gains on investments held at                           -       9,215      9,215             -        12,285       12,285
fair value
Income                                             1,901          41      1,942         1,921           900        2,821
Investment management fee          2               (337)       (337)      (674)         (312)         (312)        (624)
Performance fee rebate             3                   -         170        170             -           156          156
Administrative expenses                             (97)           -       (97)         (118)             -        (118)
Net return before finance                          1,467       9,089     10,556         1,491        13,029       14,520
costs and taxation
Interest payable and similar                           -           -          -
charges                                                                                   -             -
                                                                                                                 -
Net return on ordinary                             1,467       9,089     10,556         1,491        13,029       14,520
activities before
 taxation
Taxation on ordinary                                   -           -          -             -             -            -
activities

Net return on ordinary                             1,467       9,089     10,556         1,491        13,029       14,520
activities after
taxation attributable to
equity shareholders


Net return per Ordinary Share      4               2.03p      12.59p     14.62p         2.00p        17.47p       19.47p



All revenue and capital items in the above statement derive from continuing
operations.



The Total Return Column of this statement is the profit and loss account of the
Company.



The notes form an integral part of this unaudited preliminary announcement.



Reconciliation of Movements in Shareholders' Funds


                            Share         Capital       Share       Share    Warrant    Capital    Revenue     Total
                            Capital    Redemption     Premium    Purchase   Exercise   Reserves   Reserve*
                                          Reserve     Account     Reserve    Reserve
                               £'000        £'000       £'000       £'000      £'000      £'000      £'000     £'000
Balance at 31 August 2005      7,481        1,399       7,404      47,333      1,596     79,568      2,794   147,575
Valuation adjustment from          -            -           -           -          -        (6)          -       (6)
mid to bid
Add back accrued dividend          -            -           -           -          -          -      2,057     2,057
Balance at 31 August 2005      7,481        1,399       7,404      47,333      1,596     79,562      4,851   149,626
(restated)
Dividends paid in respect          -            -           -           -          -          -    (2,057)   (2,057)
of 31 August 2005
First interim dividend of          -            -           -           -          -          -    (1,048)   (1,048)
1.40p per ordinary share
paid 31 January 2006
Gains on investments               -            -           -           -          -     12,285          -    12,285
Capitalised dividend               -            -           -           -          -        900          -       900
Other transfer to reserves      (35)           35           -       (686)          -      (156)      1,491       649
Balance at 28 February 2006    7,446        1,434       7,404      46,647      1,596     92,591      3,237   160,355




Balance at 31 August 2005       7,481        1,399       7,404     47,333      1,596     79,568      2,794   147,575
Valuation adjustment from           -            -           -          -          -        (6)          -       (6)
mid to bid
Add back accrued dividend           -            -           -          -          -          -      2,057     2,057
Balance at 31 August 2005       7,481        1,399       7,404     47,333      1,596     79,562      4,851   149,626
(restated)
Dividends paid in respect of        -            -           -          -          -          -    (2,057)   (2,057)
31 August 2005
First interim dividend of           -            -           -          -          -          -    (1,048)   (1,048)
1.40p per ordinary share
paid 31 January 2006
Second interim dividend of          -            -           -          -          -          -    (1.043)   (1,043)
1.40p per ordinary  share
paid 30 April 2006
Third interim dividend of           -            -           -          -          -          -    (1,028)   (1,028)
1.40p per ordinary share
paid 31 July 2006
Gains on investments                -            -           -          -          -     13,208          -    13,208
Capitalised Dividend                -            -           -          -          -      1,857          -     1,857
Other transfer to reserves      (212)          212           -    (4,354)          -      (487)      5,521       680
Balance at 31 August 2006       7,269        1,611       7,404     42,979      1,596     94,140      5,196   160,195
                                    -          -           -            -          -          -    (1,963)   (1,963)

Dividends paid in respect of
31 August 2006
First interim dividend of           -          -           -            -          -          -    (1,075)   (1,075)
1.50p per ordinary share
paid 31 January 2007
Gains on investments                -          -           -            -          -      9,215          -     9,215
Capitalised Dividend                -          -           -            -          -         41          -        41
Other transfer to reserves      (100)        100           -      (2,172)          -      (167)      1,467     (872)
Balance at 28 February 2007     7,169      1,711       7,404       40,807      1,596    103,229      3,625   165,541


*The Revenue Reserve is the distributable reserve.



Balance Sheet



As at                                                               28 February         28 February        31 August
                                                      Note                 2007                2006             2006
                                                                          £'000               £'000            £'000
Fixed assets
Investments held at fair value through profit or                        161,323             156,131          155,214
loss
Current assets
Debtors                                                                     585                 834            2,170
Cash and cash equivalents                                                 4,033               4,551            4,014
                                                                          4,618               5,385            6,184


Current liabilities
Creditors : amounts falling due within one year                           (400)             (1,161)          (1,203)

Net current assets                                                        4,218               4,224            4,981
Net assets                                                              165,541             160,355          160,195

Capital and reserves:
Called up share capital                                                   7,169               7,446            7,269
Capital redemption reserve                                                1,711               1,434            1,611
Share premium account                                                     7,404               7,404            7,404
Share purchase reserve                                                   40,807              46,647           42,979
Warrant exercise reserve                                                  1,596               1,596            1,596
Capital reserves                                                        103,229              92,591           94,140
Revenue reserve                                                           3,625               3,237            5,196

Total equity shareholders' funds                                        165,541             160,355          160,195


Net asset value per ordinary share                      5               230.92p             215.35p          220.39p






The notes form an integral part of this unaudited preliminary announcement.





Abridged Cash Flow Statement


                                                    Six months ended     Six months ended              Year ended
                                                    28 February 2007     28 February 2006          31 August 2006
                                                               £'000                £'000                   £'000

Net cash inflow from operating activities                      2,045                1,400                   6,222
Net cash inflow from investing activities                      3,173                3,416                   3,806
Dividends paid                                               (3,038)              (3,105)                 (5,176)
Net cash inflow before financing                               2,180                1,711                   4,852
Net cash outflow from financing                              (2,161)                (686)                 (4,364)
Net cash inflow                                                   19                1,025                     488



Reconciliation of net cash inflow to movement in net funds


                                                    Six months ended     Six months ended              Year ended
                                                    28 February 2007     28 February 2006          31 August 2006
                                                               £'000                £'000                   £'000
Movement in cash in the year                                      19                1,025                     488
Net funds brought forward                                      4,014                3,526                   3,526
Net funds carried forward                                      4,033                4,551                   4,014



Notes



1. Basis of preparation

The interim financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments and in accordance
with the Companies Act 1985 and Generally Accepted Accounting Principles (UK
GAAP) and the Statement of Recommended Practice 'Financial Statement of
Investment Trust Companies ('SORP') issued in January 2003 and revised in
December 2005. The same accounting policies used for the year ended 31 August
2006 have been applied.



2. Investment management fee

The Investment Manager was entitled to a fee at a rate of 10 per cent. of the
net revenue return for the year after taxation plus 0.375 per cent. on assets up
to and including £75 million, 0.35 per cent. on the next £50 million and 0.325
per cent. on assets in excess of £125 million. These fees are apportioned on a
50:50 basis between the capital and revenue accounts respectively.

For the six months ended 28 February 2007, a total fee of £674,000 including VAT
has been accrued under the terms of the management agreement.



3. Performance fee rebate/charge

With effect from 1 September 2000, an annual performance fee was introduced. The
fee is symmetrical in nature, so that the Manager will be rewarded for
out-performance but penalised for under-performance. The performance fee or
rebate is based on the Company's net asset value total return compared with the
total return on the FTSE All-Share Index over a rolling three-year period and is
subject to a cap of 25 per cent. of the asset-based management fee (plus VAT)
for the year then ended. The performance fee or rebate is calculated and paid
annually. The fee, or rebate, in respect of any period will be calculated as 5
per cent. of the value (based on opening net assets for the relevant period) of
the out-performance or under performance of the Company's net asset value over
the return on the FTSE All-Share Index, with performance measured in terms of
total return.



For the six months ended 28 February 2007, a total rebate of £170,000 including
VAT has been accrued under the terms of the management agreement.



4. Revenue per ordinary share

The basic revenue per ordinary share is based on the net revenue on ordinary
activities after interest payable and taxation of £1,467,000 (28 February 2006:
£1,491,000) and on 72,187,343 (28 February 2006: 74,594,672) ordinary shares,
being the weighted average number of shares in issue in the year.

The basic capital return per ordinary share is based on the net profit on
ordinary activities after interest payable and taxation of £9,089,000 (28
February 2006: £13,029,000) and on 72,187,343 (28 February 2006: 74,594,672)
ordinary shares, being the weighted average number of shares in issue in the
year.

The basic total return per ordinary share is based on the net return on ordinary
activities after interest payable and taxation of £10,556,000 (28 February 2006:
return of £14,520,000 and on 72,187,343 (28 February 2006: 74,594,672) ordinary
shares, being the weighted average number of shares in issue in the year.



5. Net asset value per ordinary share

Net asset value per ordinary share is based on the net assets attributable to
ordinary shares of £165,541,000 (28 February 2006: £160,355,000 and 31 August
2006: £160,195,000) and on 71,687,343 (28 February 2006: 74,462,343 and 31
August 2006: 72,687,343) ordinary shares in issue.



6. Results

The above financial information is unaudited and does not constitute statutory
accounts under Section 240 of the Companies Act 1985 (as amended). Statutory
accounts for the financial year ended 31 August 2006 have been reported on by
the Company's auditors and delivered to the Registrar of Companies. The report
of the auditors was unqualified and did not contain a statement under Section
237(2) or (3) of the Companies Act 1985. The abridged financial statements shown
above for the year ended 31 August 2006 are an extract from those accounts.



This statement was approved by the Board of Directors on 19 April 2007.



Chairman's Statement



Investment Performance

During the six month period ended 28 February 2007, the Company's total return
was 7.7% (source: Fundamental Data), comparing favourably to a total return of
7.4% for the FTSE All-Share Index over the same period.  Net assets per share
increased by 4.8%, reaching 230.9 pence at the period end.



The share price total return for the six months under review was 8.1%. The share
price discount to net asset value narrowed during the period, falling from 7.6%
to 6.5% at 28 February 2007. Since the period end, the discount has widened to
8.0% as at 13 April 2007.



The key underlying contributors to performance during the period are discussed
in the Investment Manager's Review.



Dividends

The Company paid a first interim dividend for the year ended 31 August 2007 of
1.50 pence per ordinary share on 31 January 2007. The Board has since declared
the payment of a second interim dividend for the year of 1.50 pence per ordinary
share, which will be paid on 30 April 2007 to shareholders who were on the
register at the close of business on 10 April 2007. This compares with first and
second interim dividends of 1.40 pence per ordinary share for the previous
financial year.



Share Purchases

The Company has continued its share buy-back programme during the period under
review, purchasing a total of 1,000,000 ordinary shares for cancellation at a
cost of £2,172,502. Your Board will continue the buy-back programme as a way of
managing the volatility of the discount.



Sir Paul Judge

Chairman



19 April 2007




Investment Manager's Review



Market Background

Equity markets continued to make progress, with the FTSE All-Share Index
recording a total return of 7.4% over the reporting period. Conditions continued
to favour equities. Global economic growth has slowed, but this has been
confined primarily to the United States and Japan in contrast to most of Europe
and the emerging markets. Interest rates continued to rise in Europe and the
Bank of England increased rates twice over the reporting period, to 5.25%.



Performance across sectors was broadly spread with Industrials, Consumer
Services, Telecoms and Utilities taking the lead due to greater corporate
activity and the presence of private equity funds. However the Materials sector
suffered from a fall in resource prices caused by a general fear of a global
economic slowdown.



Performance and Portfolio Activity

The Company's performance has been strong in absolute terms and above that of
the market. This was largely due to being overweight Telecom companies and
Utilities, offset partly by conservative stock selection in the strongly-rising
Consumer Services and Industrial sectors. The underweight position in Energy
stocks also made a positive contribution to relative performance.



The heaviest sector exposures remain in the Financials and Consumer sectors.
Most of our changes were to increase exposure towards more defensive areas with
stable earnings and high dividends. The average dividend yield on the fund is
now 3.7%.



Investment Approach

We seek to invest in companies that offer an attractive income combined with a
promising business model. In choosing companies, we emphasise a balance between
their dividend payout and reinvestment as we believe that a disciplined use of
capital should boost their long-term operational results. This process matches
the objectives of the Company.



Outlook

The end of the Company's half year has coincided with increased market
volatility prompted by increased concerns over the US sub-prime mortgage market
and the possible impact on both consumer sentiment and spending. Global equity
markets suffered from a series of weak economic data that raised fears of slower
growth and potentially higher inflation.



Despite the recent volatility in global equity markets, we believe the US
economy will slow but not fall into recession. We also believe that UK equities
can still produce attractive returns supported not only by conditions in the US
but by more domestic influences which include, in particular, ample liquidity in
the hands of corporate managers and private equity funds.



We continue to see plenty of opportunity to invest in soundly-managed,
well-financed and growing companies that offer adequately-covered dividends.
Nevertheless, our more defensive stock selection recognises potentially tougher
economic conditions. We acknowledge the potential headwinds from weaker economic
data and have integrated our expectation into the stock selection process.



Schroder Investment Management Limited



19 April 2007





Interim Report

The Interim Report will be mailed to registered shareholders at their registered
addresses. Copies of the Interim Report will be made available from the date of
release at the Company's registered office, 31 Gresham Street, London, EC2V 7QA.





Enquiries:                                Schroder Investment Management Limited
Louise Richard                                                   (020 7658 6501)



19 April 2007




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