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Schroder Inc Growth (BC!)

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Wednesday 21 November, 2007

Schroder Inc Growth

Final Results

Schroder Income Growth Fund PLC
21 November 2007



                        SCHRODER INCOME GROWTH FUND plc

                Unaudited Results for the year to 31 August 2007



This preliminary announcement of unaudited results was approved by the Board of
Directors on 21 November 2007.



Chairman's Statement



Results for the Year and Dividends



During the year ended 31 August 2007, the Company's revenue return increased to
8.10 pence per share, a rise of 8.9% when compared with the 7.44 pence per share
for the previous year.



The Board has declared total dividends of 8.10 pence per share for the year
ended 31 August 2007, representing an increase of 17.4% over the 6.90 pence per
share declared in respect of the previous year. This significant increase in
total dividends for the year reflects the Board's decision to distribute
essentially all of current year revenue in the light of the strength of the
Company's reserves. The increase in the Retail Price Index for the same period
was 4.1%.



Investment Performance



Whilst the increase in net assets in absolute terms was once again encouraging,
the Company under-performed the FTSE All-Share Index during the year under
review. The Company produced a net asset value total return of 10.0%* compared
with a total return of 11.8%** from the Index. As a result of this
under-performance against the benchmark, the Company is due to receive a
performance fee rebate from the Manager amounting to £172,000 including VAT for
the year ended 31 August 2007.



At 31 August 2007, the Company's share price was trading at a discount to net
asset value of 9.8% compared to 7.6% at the start of the year. The share price
total return for the year was 7.9%*.



An outline of performance during the year may be found in the Investment
Manager's Review.



Electronic Communications and Amendment to the Articles of Association



There have been a number of recent changes to company law and practice
permitting the use of electronic communication as an alternative to traditional
means of communication. The Board is therefore proposing to adopt revised
Articles of Association which, subject to shareholder approval, will allow the
Company, where a shareholder does not object, to send certain Company
information (e.g. notices, proxy forms and accounts) by electronic means or by
placing it on a website rather than by sending it in printed form. However,
should the Board adopt such a policy of communicating electronically with the
Company's shareholders they would be able to elect to continue to receive all
documents in printed form.



Share Purchases and Treasury Shares



During the year ended 31 August 2007, the Board continued to operate its share
buy-back facility and a total of 1,000,000 ordinary shares were purchased for
cancellation, equal to approximately 1.4% of the shares in issue on 1 September
2006. The Board continues to consider share buy-backs as one of a number of
tools that may be used to enhance shareholder value.



VAT on Management Fees



Following a legal action brought against HM Revenue & Customs (HMRC), the
European Court of Justice (ECJ) has ruled that investment management fees paid
to investment managers by investment trust companies should be exempt from VAT,
thereby bringing them into line with unit trusts, open ended investment
companies and similar investment funds.



HMRC has accepted the ECJ's ruling and new UK legislation is expected to be
introduced to exempt UK investment trusts from paying VAT on investment
management fees, thereby allowing the Company to reclaim VAT previously paid to
your Manager. As yet it is too soon to quantify the likely financial impact on
the Company, but the Board will continue to monitor the situation to achieve a
favourable outcome.



Annual General Meeting



The Company's Annual General Meeting will be held at 3.30 p.m. on Wednesday, 19
December 2007. As in previous years, the meeting will include a presentation by
the Investment Manager on the Company's investment strategy and market
prospects.





Sir Paul Judge

Chairman



21 November 2007



* Source: Fundamental Data

** Source: Thomson Datastream





Investment Manager's Review



Market Background



The UK stock market posted strong returns for the year although there were
increased concerns late in the period that deteriorating credit conditions,
triggered by problems in the US sub-prime and housing markets, could threaten
global growth. Most companies nevertheless reported generally solid financial
results during the period. For the year to 31 August 2007, the FTSE All-Share
Index showed a total return of 11.8%*.



The Index growth was led by the telecommunication and basic materials sectors
which both generated very strong returns and the Company benefited from its
relatively large exposure to telecommunication stocks, particularly BT and
Vodafone.  However, because of its policy of investing in higher yielding
securities, it had limited exposure to the basic materials sector, particularly
mining stocks, and this detracted from performance. The Company's holding in
mortgage lender Northern Rock had a negative impact on performance with the bank
being the biggest casualty so far from the downturn in credit markets.
Significant positive contributors to performance included business information
provider Reuters and utility company Centrica.



Investment Approach



The Company follows a transparent and straightforward investment approach. We
focus on companies that offer an attractive income profile and a promising
business model. The emphasis is the balance between current payout and
reinvestment as we believe that a disciplined use of capital should have a
beneficial impact on the operational results in the long term. This in turn
should provide the scope for above inflation growth in dividends.



Outlook



While the overall market has risen strongly over the past year, the period ended
with a marked shift in investor sentiment as well as market leadership. The
evaporation of liquidity in the markets has resulted in banks less willing to
lend even to other banks. This has also threatened to curb
merger-and-acquisition activity and has weighed heavily on bank share prices.



In terms of investment style, 'value' has recently lagged 'growth' in a shift in
market leadership. Value companies are those that tend to have more reliable,
sustainable profit streams and pay above-average dividends. These are some of
the key traits in which we look to invest. Investor concerns should abate as
credit conditions improve and the economy avoids recession. As this
materialises, investors are likely to focus more of their attention on
companies' fundamental attributes rather than being driven purely by
unsustainable growth expectations. Those companies that are able to reward
investors now with dividends and to reinvest cashflow in order to reward
investors in future years with dividend growth and share price appreciation
should begin to be more appreciated by the market. This should also benefit the
returns of the Company.



Schroder Investment Management Limited



21 November 2007



* Source: Thompson Datastream



Income Statement                                                                 (Unaudited)

                                                                            Year to 31 August 2007
                                                                         Revenue       Capital         Total
                                                                           £'000         £'000         £'000

  Gains on investments held at fair value                                      -        10,405        10,405
  Income (Note 2)                                                          6,730           428         7,158
  Investment management fee                                                (693)         (693)       (1,386)
  Performance fee                                                              -           172           172
  Administrative expenses                                                  (198)             -         (198)
                                                                        ________      ________      ________
Net return before finance costs and taxation                               5,839        10,312        16,151
Interest payable and similar charges                                         (7)             -           (7)
                                                                        ________      ________      ________
Net return on ordinary activities before taxation                          5,832        10,312        16,144
Taxation on ordinary activities                                              (4)             -           (4)
                                                                         _______      ________      ________
Net return attributable to equity shareholders                             5,828        10,312        16,140
                                                                          ======        ======         =====

Net return per Ordinary share (pence) (Note 3)                              8.10         14.34         22.44
                                                                           =====        ======        ======




Income Statement (Comparative)

                                                                            Year to 31 August 2006
                                                                         Revenue       Capital         Total
                                                                           £'000         £'000         £'000

  Gains on investments held at fair value                                      -        13,208        13,208
  Income (Note 2)                                                          6,381         1,857         8,238
  Investment management fee                                                (650)         (650)       (1,300)
  Performance fee                                                              -           163           163
  Administrative expenses                                                  (210)             -         (210)
                                                                         _______      ________      ________
Net return before finance costs and taxation                               5,521        14,578        20,099
Interest payable and similar charges                                           -             -             -
                                                                        ________      ________      ________
Net return on ordinary activities before taxation                          5,521        14,578        20,099
Taxation on ordinary activities                                                -             -             -
                                                                         _______      ________      ________
Net return attributable to equity shareholders                             5,521        14,578        20,099
                                                                           =====        ======        ======

Net return per Ordinary share (pence) (Note 3)                              7.44         19.64         27.08
                                                                           =====        ======        ======



The total column shown above for each period represents the Profit and Loss
Account of the Company.

The revenue and capital items derive from continuing activities.

A Statement of Total Recognised Gains and Losses has not been presented as all
gains and losses are recognised in the Income Statement.

No operations were acquired or discontinued during the year.






         Reconciliation of Movements in Shareholders' Funds

         (Unaudited)
         for the year to 31 August 2007

                      Called-up       Capital        Share       Share     Warrant
                          Share    redemption      premium    purchase    exercise
                        capital reserve £'000      account     reserve     reserve       Capital     Revenue
                          £'000                      £'000       £'000       £'000      reserves     reserve
                                                                                           £'000       £'000      Total
                                                                                                                  £'000

At 31 August 2005          7,481        1,399        7,404      47,333       1,596        79,562       4,851    149,626
Net return on                  -            -            -           -           -        14,578       5,521     20,099
ordinary activities
Ordinary dividends             -            -            -           -           -             -     (5,176)    (5,176)
paid
Purchase of shares         (212)          212            -     (4,354)           -             -           -    (4,354)
for cancellation
                          ______       ______       ______      ______      ______        ______      ______      _____
At 31 August 2006          7,269        1,611        7,404      42,979       1,596        94,140       5,196    160,195

Net return on                  -            -            -           -           -        10,312       5,828     16,140
ordinary activities
Ordinary dividends             -            -            -           -           -             -     (5,188)    (5,188)
paid
Purchase of shares         (100)          100            -     (2,172)           -             -           -    (2,172)
for cancellation
                          ______       ______       ______      ______      ______        ______      ______     ______
At 31 August 2007          7,169        1,711        7,404      40,807       1,596       104,452       5,836    168,975




Balance Sheet
                                                                              (Unaudited)           (Audited)
                                                                                       At                  At
                                                                                31 August           31 August
                                                                                     2007                2006
                                                                                    £'000               £'000
Fixed assets
Investments held at fair value through profit or loss                             166,572             155,214
                                                                                  _______             _______
                                                                                  166,572             155,214

Current assets
Debtors                                                                             1,491               2,170
Cash at bank and short-term deposits                                                1,357               4,014
                                                                                  _______             _______
                                                                                    2,848               6,184
Current liabilities

Creditors - amounts falling due within one year                                     (445)             (1,203)
                                                                                  _______             _______
Net current assets                                                                  2,403               4,981
                                                                                  _______             _______
Net Assets                                                                        168,975             160,195
                                                                                   ======              ======

Capital and Reserves
Called-up share capital                                                             7,169               7,269
Capital redemption reserve                                                          1,711               1,611
Share premium account                                                               7,404               7,404
Share purchase reserve                                                             40,807              42,979
Warrant exercise reserve                                                            1,596               1,596
Capital reserves                                                                  104,452              94,140
Revenue reserve                                                                     5,836               5,196
                                                                                  _______             _______
Equity Shareholders' Funds                                                        168,975             160,195
                                                                                   ======              ======

Net asset value per Ordinary share (pence) (Note 4)                                235.71              220.39
                                                                                    =====               =====



Cash Flow Statement                                                       (Unaudited)              (Audited)
                                                                              Year to                Year to
                                                                            31 August              31 August
                                                                                 2007                   2006
                                                                                £'000                  £'000
Operating activities
Dividends and interest received from investments                                6,752                  7,606
Interest received on deposits                                                     240                    244
Investment management fee paid                                                (1,390)                (1,295)
Performance fee received / (paid)                                                 163                  (149)
Administrative expenses paid                                                    (176)                  (184)
                                                                              _______                _______
Net cash inflow from operating activities                                       5,589                  6,222
                                                                              _______                _______

Servicing of Finance
Bank overdraft interest paid                                                      (7)                      -
                                                                              _______                _______
Net cash outflow from servicing of finance                                        (7)                      -
                                                                              _______                _______

Taxation
Overseas tax paid                                                                 (6)                      -
Tax reclaim received                                                                2                      -
                                                                              _______                _______
Total tax paid                                                                    (4)                      -
                                                                              _______                _______

Investment Activities
Acquisition of investments                                                  ( 72,267)               (64,932)
Disposal of investments                                                        71,382                 68,738
                                                                              _______                _______
Net cash (outflow) / inflow from investment activities                          (885)                  3,806
                                                                              _______                _______

Equity dividends paid                                                         (5,188)                (5,176)
                                                                              _______                _______
Net cash (outflow) / inflow before financing                                    (495)                  4,852

                                                                              _______                _______

Financing
Purchase of shares for cancellation                                           (2,162)                (4,364)
                                                                              _______                _______
Net cash (outflow) from financing                                             (2,162)                (4,364)

                                                                              _______                _______

Net Cash (outflow) / inflow                                                   (2,657)                    488
                                                                               ======                 ======




Notes



1. Accounting Policies

The accounts have been prepared under the historical cost convention, modified
to include the revaluation of investments and in accordance with applicable UK
Accounting Standards and with the Statement of Recommended Practice ('SORP') '
Financial Statements of Investment Trust Companies' issued in January 2003 and
revised in December 2005 by the Association of Investment Companies (AIC).



The Company's accounting policies have not varied from those described in the
Report and Accounts for the year ended 31 August 2006.





2. Dividends and Other Income

Dividends and Other Income comprise:
                                                                                     2007                2006
                                                                                    £'000               £'000
Income from investments:
    UK franked dividend income                                                      6,467               6,091
    UK unfranked dividend income                                                       39                   -
    Convertible bond interest                                                           -                  36
                                                                                  _______             _______
                                                                                    6,506               6,127
Interest on deposits                                                                  224                 254
                                                                                  _______             _______
                                                                                    6,730               6,381
                                                                                    =====               =====

Allocated to capital:
UK special dividend income taken to capital                                           428               1,857
                                                                                  _______             _______
                                                                                      428               1,857
                                                                                    =====               =====



3. Return per Ordinary Share

The total return per Ordinary share is calculated on the return attributable to
Ordinary shareholders of £16,140,000 (2006: return of £20,099,000) and
71,935,288 (2006: 74,221,932) Ordinary shares, being the weighted average number
of shares in issue during the year.



The revenue return per Ordinary share is calculated on the return attributable
to Ordinary shareholders of £5,828,000 (2006: £5,521,000) and 71,935,288 (2006:
74,221,932) Ordinary shares, being the weighted average number of shares in
issue during the year.



The capital return per Ordinary share is calculated on the return attributable
to Ordinary shareholders of £10,312,000 (2006: return of £14,578,000) and
71,935,288 (2006: 74,221,932) Ordinary shares, being the weighted average number
of shares in issue during the year.



4. Net Asset Value

The Net Asset Value per Ordinary share is calculated on net assets of
£168,975,000 (2006: £160,195,000) and 71,687,343 (2006: 72,687,343) Ordinary
shares in issue at the year-end.



5. Annual Report and Accounts

The financial information contained in this preliminary announcement of annual
results is unaudited and does not constitute statutory accounts as defined in
Section 240 of the Companies Act 1985.  Full statutory accounts for the year
ended 31 August 2006 included a report from the Company's auditors, in
accordance with Section 235 of the Companies Act 1985, which was unqualified,
did not include a reference to any matters to which the auditors drew attention
by way of emphasis without qualifying the report and did not contain statements
under Section 237 (2) and (3) of the Companies Act 1985, were filed with the
Registrar of Companies.  No statutory accounts in respect of any period after 31
August 2006 have been reported on by the Company's auditors or delivered to the
Registrar of Companies.



The statutory accounts for the year to 31 August 2007 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 Annual General Meeting, which will be held on Wednesday, 19
December 2007 at 3.30 pm at 31 Gresham Street, London, EC2V 7QA.




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







Enquiries: Louise Richard
020 7658 6501
Schroder Investment Management Limited
Secretary



21 November 2007




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