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Fins Growth Inc Tst (FGT)

  Print      Mail a friend       Annual reports

Friday 28 May, 2010

Fins Growth Inc Tst

Half-yearly Report

                      LONDON STOCK EXCHANGE ANNOUNCEMENT                       

                      Finsbury Growth & Income Trust PLC                       

             Unaudited Half Year Results For The Six Months Ended              

                                 31 March 2010                                 

Financial Highlights:                                                         
                                         (Unaudited)    (Audited)     % change
                                       31 March 2010 30 September             
Share price                                   265.8p       231.0p        +15.1
Net asset value per share (inc                281.9p       249.0p        +13.2
Net asset value per share (ex                 277.5p       243.9p        +13.8
Discount of share price to net                                                
asset value                                     4.2%         5.3%          n/a
per share (ex income)                                                         
Shareholders' funds                          £143.3m      £127.7m        +12.2
Market capitalisation                        £135.1m      £118.4m        +14.1
                                    Six months to 31  One year to             
                                          March 2010 30 September             
Share price (total return)#                   +17.1%       +22.9%             
Net asset value per share (total              +15.6%       +24.0%             
FTSE All-Share Index (total return)           +12.2%       +10.8%             
# Source - Morningstar                                                        
Dividends                             Year ending 30   Year ended             
                                      September 2010 30 September             
First interim dividend                4.4p per share     4.4p per             
Second interim dividend             4.4p per share*      5.1p per             

* Second interim dividend is expected to be 4.4p per share for the year ending
30 September 2010 and will be paid on 1 November 2010.

Investment Objective

To achieve capital and income growth and to provide a total return in excess of
that of the FTSE All-Share Index.

Investment Policy

The Company invests principally in the securities of UK listed companies,
although up to a maximum of 20% of the Company's portfolio can be invested in
quoted companies worldwide. Where possible, a minimum position size of 1% of
the Company's gross assets is held unless the holding concerned is being built
or disposed of.

The portfolio is managed by Lindsell Train Limited and comprises approximately
thirty stocks. Unless driven by market movements, FTSE 100 companies, including
preference shares issued by such companies, represent between 50% and 100% of
the portfolio; at least 70% of the portfolio is invested in companies within
the FTSE 350.


Performance is measured against the FTSE All-Share Index (total return).

First Interim Dividend

A first interim dividend of 4.4p per share (2009: 4.4p) was paid on 1 April
2010 to shareholders registered at the close of business on 5 March 2010. The
associated ex-dividend date was 3 March 2010.

Second Interim Dividend

A second interim dividend is expected to be 4.4p per share (2009: 5.1p) and
will be paid on 1 November 2010 for the year to 30 September 2010, to
shareholders registered on the close of business on 1 October 2010. The
associated ex-dividend date will be 29 September 2010.

Capital Structure

At 31 March 2010 the Company had 50,855,811 shares of 25p each in issue
excluding 1,941,612 shares repurchased by the Company and held as treasury
shares (31 March 2009: 50,254,173 (treasury shares: 123,000)). During the six
months under review 2,270,862 shares were repurchased to be held in treasury
and 1,855,000 shares were reissued out of treasury. Since the end of the
half-year a further 186,399 shares have been repurchased and are being held in
treasury. Also, a total of

850,000 shares have been reissued out of treasury. As at 17 May 2010, the
Company had 51,519,412 shares in issue (excluding 1,278,011 shares held in


As at 31 March 2010 the Company had a revolving credit facility of £15 million
provided by Scotiabank Europe PLC. As at this date a total of £14.45 million
had been drawn down.

Chairman's Statement


I am pleased to report that for the six months under review the Company
continued its strong run of performance with a net asset value per share total
return of 15.6% and a share price total return of 17.1%. These results compare
favourably with the Company's benchmark, the FTSE All-Share Index, measured on
a total return basis, which provided a return of 12.2% during the same period.

Investment Policy

As I explained in my last statement, our investment manager, Lindsell Train
Limited, believes that it will be beneficial to shareholders to have the
ability to allocate up to 20% of the investment portfolio into quoted companies
worldwide. A resolution to amend the Company's investment policy was proposed
at the Annual General Meeting held in January of this year and I am delighted
to confirm that the change was approved by shareholders. The Company currently
has three investments listed outside the UK which account for approximately 12%
of the investment portfolio.

Share Capital and Discount Control

The Company has continued to be active in buying back shares for treasury where
they were offered at a discount greater than 5% to the net asset value per
share. A total of 2,270,862 shares were repurchased for treasury during the
half-year in accordance with the Company's stated policy and 1,855,000 shares
were reissued from treasury at a price representing a narrower discount to net
asset value per share than that at which they had been bought into treasury,
i.e. nearly 82 per cent of what was bought in. Following the half-year end a
further 186,399 shares have been repurchased to be held as treasury shares and
a total of 850,000 shares have been reissued out of treasury. As at the date of
this report, a total of 1,278,011 shares remain in treasury.

The Board attaches considerable importance to its discount control mechanism
which, as shareholders can see, we use actively and have done so consistently
over the last five years. The average month-end discount of share price to the
ex-income net asset value per share during the half year was 4.6%, comfortably
within the Company's target of 5% and we believe our ability to meet the
market's demand for liquidity in this way is very beneficial for all investors:
not just those wishing to sell, but those continuing to hold and those wishing
to buy.

Return and Dividend

The Company's income statement shows the following results for the period under
review, for the comparable period last year and for the Company's last full
financial year:

         Six months                 Six months                 Year ended       
          ended 31                   ended 31                      30           
         March 2010                 March 2009                  September       
Revenue Capital      Total Revenue Capital      Total  Revenue Capital     Total
 4.1p      33.7p     37.8p  3.0p     (29.7)p    (26.7)  9.1p      34.0p    43.1p

I mentioned in my statement for the full year to 30 September 2009 that the
Company's income for the current financial year may fall when compared to
income received in prior years and that there may be insufficient income to
maintain the Company's historic rate of dividend. During the period your Board
reviewed the Company's expected income for the current financial year to 30
September 2010 and on 19 February 2010 announced a first interim dividend of
4.4p per share, unchanged from the corresponding first interim dividend for the
previous year. In addition, your Board decided that it would be helpful to
shareholders to receive greater clarity on the Company's dividends for the full
year to 30 September 2010 and so on the same date we announced that the second
interim dividend for the current year was expected to be 4.4p per share, making
a total expected dividend distribution for the full year to 30 September 2010
of 8.8p per share. This compares to 9.5p per share for 2009.

The Board estimates that this new level of distribution is sustainable, but
should the companies in our portfolio become more cautious when deciding their
own dividends, the Company would have to re-evaluate the level of dividend
payments we make to our shareholders, such re-evaluation to reflect the actual
level of income received together with the balance of revenue reserves retained
by the Company from previous years and available for distribution.

It is of course to the Board's sincere regret that the dividend for the full
year to 30 September 2010 will be lower than the prior year by some 7%. The
principal reason behind the fall in the Company's income this year is the
significant reduction in the level of income from our Lloyds preference shares.
I reiterate however that the lower level of dividend for the current financial
year does not alter the Board's long term objective of a progressive dividend
policy. In addition, it is worth highlighting that even at this revised level
of distribution the yield on the Company's shares is approximately 3.3% which
compares to the current FTSE All-Share yield of 3.1%.

The ex-dividend date for the second interim dividend will be 29 September 2010
with an associated record date of 1 October 2010 and payment date of 1 November

Borrowing Facility

Your Company has a fixed term committed secured revolving credit facility of £
15m which is subject to a variable rate of interest. As at 31 March 2010 a
total of £14.45m was drawn down under this facility. Subsequent to the period
end £3.75m was repaid with £10.70m being drawn down at the date of this report.
We believe that the availability of a meaningful gearing facility of this kind
is very desirable for a closed end investment company such as ours.

Alternative Investment Fund Manager (`AIFM') Directive

Our trade association, the Association of Investment Companies continues to
work towards ensuring that the AIFM Directive, the draft legislation being
considered in Europe which will regulate `alternative investment funds'
including investment trusts, is drafted to accommodate the UK investment
company structure, something the initial draft very definitely did not. The
Association appears to be making good progress with this and your Board will
continue to keep shareholders informed of major developments concerning the
Directive as they arise.


Overall, 2009 was an exceptional year in terms of a recovery in the fortunes of
global stock markets, assisted by a range of stimulus measures from central
governments. The UK economy has now edged out of recession and current
estimates indicate modest growth in GDP during 2010 and 2011. The outlook for
inflation, which has increased somewhat in recent months, is for it to fall
back towards the Bank of England's target over the next year and interest
rates, at least in the short term, are expected to remain at their current low
levels. However, the government is going to have a very tough job on its hands
in getting our economy back into balance and there may be considerable shocks
still to come.

Your Board considers that the portfolio is well positioned to take advantage of
an economic upturn and remains strongly supportive of the Investment Manager's
strategy of investing for the long term in well run, cash generative
franchises. We believe that this strategy is the best one to deliver strong
investment returns to shareholders.

Anthony Townsend


Investment Manager's Review

Of course we are pleased that your net asset value continued to make decent
absolute and relative progress over the period.  Mind you, that pleasure is
vitiated by the knowledge that we and other UK investors will never again be
able to invest directly into Cadbury; that company succumbing to Kraft at a
fair, but not exceptional price.


Of interest, we think, is the fact that the portfolio performed competitively,
despite having little or no exposure to the cyclical commodity and "recovery"
sectors, which are current market favourites.  We have found our returns
elsewhere, specifically the gains delivered by what we consider to be true
"growth" companies - those whose earnings have advanced despite the recession,
thus demonstrating secular, or non-cyclical growth.  In particular Technology
and Media shares did well, led by Fidessa, Pearson and Sage.  We hope these
companies and their peers are only at the beginning of a sustained period of
reward, based on superior business performance.  In addition, we must
acknowledge and give thanks for the contribution to our return from A.G. Barr,
the largest holding in your Company now.  The steady growth of its key brands -
IRN-BRU and Rubicon - has attracted new and deserved investor interest.


We also note that the two other major holdings in the portfolio - Diageo and
Unilever - had a relatively quiet last quarter.  Combined this pair account for
22.3% of the Company's net assets as at 31 March 2010, so their performance
really matters!  Thankfully, the business progress for both is satisfactory,
confirmed by their nicely increasing dividends.  The reliability of their
profits and the opportunities both enjoy in the Emerging Markets mean that
these two are likely to generate wonderful returns for your Company over time,
we are sure.

At the Annual General Meeting earlier this year shareholders approved a
resolution to allow us, Lindsell Train Limited (LTL), to invest up to 20% of
your Company's portfolio outside the FTSE All-Share Index, its benchmark -
specifically to invest overseas. We are grateful for this permission and
believe you made the "right" decision. Nonetheless it was not a request we
tabled lightly and we are conscious of the risks that can attend any such
straying away from benchmark. At the very least, for instance, we would
sympathise with the righteous anger of any shareholder who discovered that his
"UK" investment had done poorly because of possible problems with the future
performance of non-UK securities.

Nonetheless, there are three reasons why we asked for the authority - all of
which are of broader interest, because they reveal something of the way the UK
stock market has changed in recent years.

First, we needed shareholders to approbate what was already a fait accompli;
because your Company already has investments in non-UK companies, though made
inadvertently. They came about like this. As cross-border takeovers have become
increasingly common - part of the trend toward "globalisation" - it has become
correspondingly common for UK investors to find themselves inheriting shares
issued by international companies to pay for UK acquisitions. Sometimes these
shares are attractive and it seems irrational to sell them simply because they
are not "British". For instance and most pertinent for the portfolio, the major
holding in Cadbury was about to turn into a mixture of cash and Kraft shares.
While Kraft is, in our opinion, not such a compelling investment as was
Cadbury, it is nevertheless a solid business, now with improved growth
prospects. Should we be required to sell Kraft, simply because it doesn't have
a listing on the London market? Well, thanks to the recent vote, now we don't
have to and can consider it on its merits.

By the way, we expect many more such dilemmas for investors - in other words
lots more takeovers - as regional companies around the world look to fashion
themselves into truly global enterprises.

Second, there is another way in which our request to invest more overseas
reflects a fait accompli. This is the extraordinary extent to which the FTSE
All-Share Index has already become an international Index, almost without
investors knowing. Consider the following. The top ten companies in the
All-Share currently amount to 44% of the value of the whole market. For these
ten the average proportion of their annual sales generated in the UK is 7%. Or
contrariwise, 93% of the business of 44% of the FTSE All-Share's constituents
takes place outside their home market. Indeed, we have seen it estimated that
65% of all the revenues of UK quoted companies arise overseas.

Now, the UK has always been an outward looking economy - and this is a very
good thing - but there is a further twist in this globalisation of the Index, a
twist relating to dividends. Today, 45% by value of all the dividends paid by
UK companies to UK investors are paid in US dollars, not in pounds sterling,
led by the big drug, mining and oil companies. This is perhaps the biggest
shift in the constitution of the UK stock market in my near 30 year career.

This really is a big deal, because it is a widely acknowledged rule that
mismatches between assets and liabilities are best avoided. If you have long
term sterling liabilities, it is prudent to hold sterling assets to pay for
them. Well, many UK investors - perhaps saving for their retirements in a "UK
Equity Income Fund" - are inadvertently, possibly unknowingly, exposed to such
a mismatch and taking a currency bet. Because the dividend flows they receive
from the UK's largest companies are not paid in the currency they will need to
actually pay their pensions.

I don't mean to be alarmist - quite possibly this bet will pay off - sterling
looks pretty good toast in comparison to most other currencies. But all of us
are being forced to consider what is really meant when we say we invest in UK
companies - and, frankly, it means less and less.

The final reason is one specific to LTL's investment approach. We are committed
investors in consumer brands and similar franchises - believing that investing
in great brands, like Burberry, makes sense for the long term. We note, with
some disquiet, that the UK stock market has never been as richly stocked with
world class branded goods companies as some others and that with the loss to
takeover in recent years of such companies as Allied Domecq, Scottish &
Newcastle and now Cadbury there are even fewer of them. For instance, the
consultancy Interbrand produces an annual survey of what, on its analysis, are
the 100 most valuable brands on the planet. The 2009 survey arrived at the
depressing conclusion that the UK is home to only four of these top 100 brands,
compared to 51 in the US or 11 in Germany. At a time when the London stock
market is increasingly dominated by more or less speculative mining and oil
exploration companies, whose profits depend on something as unpredictable as a
commodity price or striking it rich, we think investors should be loathe to
lose access to assets as predictable and durable as Crunchie or Halls cough

What's done is done, but we now, thankfully, have the ability to identify and
invest in Cadbury-type companies outside the UK, hoping to capture similar
benefits for your Company. In fact we have not yet made any such investments
(and when we do we will be sure to broadcast it widely in our regular
communications with you).

Whatever, we hope shareholders will see it as a logical response to the way
that the world and the world's stock markets are changing.

Nick Train, Lindsell Train Limited

Investment Manager


as at 31 March 2010  Sector              FairVal    % of    
Company                                  £'000   Investments
Barr (A.G.)          Beverages            16,839        11.4
Diageo               Beverages            16,276        11.0
Unilever             Food Producers       15,661        10.6
Pearson              Media                12,249         8.3
Fidessa              Software & Computer   8,744         5.9
Sage                 Software & Computer   7,873         5.3
Kraft Foods ^        Food Producers        7,255         4.9
Reed Elsevier        Media                 7,111         4.8
Schroders            General Financials    6,994         4.7
Rathbone Brothers    General Financials    6,460         4.4
Top 10 Investments                       105,462        71.3
Marston's            Travel & Leisure      5,714         3.9
Dr Pepper Snapple ^  Beverages             5,024         3.4
Euromoney            Media                 4,747         3.2
Thomson Reuters ~    Media                 4,721         3.2
Lloyds Banking Group                                        
(non cum preference) Banks                 4,070         2.8
Fuller Smith &       Travel & Leisure      3,906         2.6
Burberry Group       Personal Goods        3,582         2.4
Young & Co's Brewery Travel & Leisure      2,998         2.0
London Stock         General Financials    2,475         1.7
Hargreaves Lansdown  General Financials    2,353         1.6
Top 20 Investments                       145,052        98.1
Lindsell Train       General Financials    1,780         1.2
Investment Trust                                            
Celtic               Travel & Leisure        700         0.5
Frostrow Capital+    General Financials      250         0.2
Celtic 6% (cum       Travel & Leisure         44         0.0
                                         147,826       100.0

All of the above investments are equities listed in the UK, unless otherwise

^ Listed in the United States.

~ Listed in Canada

* Non-equity - Preference Shares

+ Unquoted investment


as at 31 March 2010

The following table compares the Company's portfolio against sector weightings.

                             Finsbury       FTSE           
                             Growth &  All-Share   Finsbury
                               Income      Index     Growth
                                Trust              & Income
Sector                              %          %          %
Oil & Gas                           -       17.9     (17.9)
Basic Materials                     -       12.7     (12.7)
Industrials                         -        7.2      (7.2)
Consumer Goods                   43.7       11.3       32.4
Health Care                         -        7.4      (7.4)
Consumer Services                28.5        9.9       18.6
Telecommunications                  -        5.8      (5.8)
Utilities                           -        3.3      (3.3)
Financials (excluding            13.8       22.9      (9.1)
preference shares)                                         
Technology                       11.2        1.6        9.6
Total excluding                  97.2      100.0      (2.8)
Preference Shares                                          
Preference shares                 2.8                   2.8
Total                           100.0      100.0          -

Income Statement

For the six months ended 31 March 2010

                    (Unaudited)              (Unaudited)              (Audited)       
                  Six months ended        Six months ended            Year ended      
                   31 March 2010            31 March 2009         30 September 2009   
               Revenue Capital  Total Revenue  Capital    Total Revenue Capital  Total
                 £'000   £'000  £'000   £'000    £'000    £'000   £'000   £'000  £'000
on investments                                                                        
held at fair                                                                          
value through        -  17,609 17,609       - (14,571) (14,571)       -  17,942 17,942
profit or loss                                                                        
Exchange             -     (3)    (3)       -        2        2       -       2      2
Income (note     2,570       -  2,570   1,959        -    1,959   5,401       -  5,401
management and   (140)   (285)  (425)   (107)    (217)    (324)   (226)   (460)  (686)
(note 3)                                                                              
Recovery of         11      23     34       -        -        -      50     101    151
VAT on                                                                                
management fee                                                                        
Other expenses   (278)    (87)  (365)   (212)        -    (212)   (410)       -  (410)
on ordinary                                                                           
before finance   2,163  17,257 19,420   1,640 (14,786) (13,146)   4,815  17,585 22,400
charges and                                                                           
Finance           (69)   (140)  (209)   (123)    (250)    (373)   (176)   (359)  (535)
on ordinary                                                                           
activities       2,094  17,117 19,211   1,517 (15,036) (13,519)   4,639  17,226 21,865
Taxation on                                                                           
ordinary          (35)       -   (35)       -        -        -       -       -      -
on ordinary                                                                           
activities       2,059  17,117 19,176   1,517 (15,036) (13,519)   4,639  17,226 21,865
after taxation                                                                        
per share         4.1p   33.7p  37.8p    3.0p  (29.7)p  (26.7)p    9.1p   34.0p  43.1p
(note 4)                                                                              

The "Total" column of this statement represents the Income Statement of the
Company. The "Revenue" and "Capital" columns are supplementary to this and are
prepared under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations. The Company
had no recognised gains or losses other than those declared in the Income

Reconciliation of Movements in Shareholders' Funds

(Unaudited)                                       Capital                        
                        Called   Share Special redemption Capital Revenue        
                            up premium reserve    reserve reserve reserve   Total
Six months ended 31      share account                                           
March 2010             capital   £'000   £'000      £'000   £'000   £'000   £'000
At 30 September 2009    13,199  35,914  12,424      3,453  57,890   4,779 127,659
Net return from              -       -       -          -  17,117   2,059  19,176
ordinary activities                                                              
Second interim                                                                   
dividend (5.1p per                                                               
share) for the year          -       -       -          -       - (2,615) (2,615)
ended 30 September                                                               
Repurchase of shares         -       -       -          - (5,435)       - (5,435)
into treasury                                                                    
Sale of shares from          -     420       -          -   4,132       -   4,552
At 31 March 2010        13,199  36,334  12,424      3,453  73,704   4,223 143,337

Six months ended 31                                                             
March 2009                                                                      
At 30 September 2008    13,199  35,914 12,424    3,453   39,845   4,949  109,784
Net (loss)/ return                                                              
from ordinary                -       -      -        - (15,036)   1,517 (13,519)
Second interim                                                                  
dividend (5.1p per                                                              
share) for the year          -       -      -        -        - (2,598)  (2,598)
ended 30 September                                                              
Repurchase of shares         -       -      -        -  (1,323)       -  (1,323)
into treasury                                                                   
Sale of shares from          -       -      -        -       87       -       87
At 31 March 2009        13,199  35,914 12,424    3,453   23,573   3,868   92,431

Year ended 30                                                                  
September 2009                                                                 
At 30 September 2008     13,199  35,914 12,424    3,453  39,845   4,949 109,784
Net return from               -       -      -        -  17,226   4,639  21,865
ordinary activities                                                            
Second interim                                                                 
dividend (5.1p per                                                             
share) for the year           -       -      -        -       - (2,598) (2,598)
ended 30 September                                                             
First interim dividend                                                         
(4.4p per share) for                                                           
the year ended 30             -       -      -        -       - (2,211) (2,211)
September 2009                                                                 
Repurchase of shares          -       -      -        - (1,856)       - (1,856)
into treasury                                                                  
Sale of shares from           -       -      -        -   2,675       -   2,675
At 30 September 2009     13,199  35,914 12,424    3,453  57,890   4,779 127,659

Balance Sheet

As at 31 March 2010

                              (Unaudited)    (Unaudited)          (Audited)
                            31 March 2010  31 March 2009  30 September 2009
                                    £'000          £'000              £'000
Fixed assets                                                               
Investments designated                                                     
at fair value through             147,826        104,898            138,799
profit or loss                                                             
Current assets                                                             
Debtors                             2,529            623              1,022
Cash at bank                        7,646            293              1,531
                                   10,175            916              2,553
Current liabilities                                                        
Creditors                           (214)          (383)              (193)
Bank loan                        (14,450)       (13,000)           (13,500)
                                 (14,664)       (13,383)           (13,693)
Net current liabilities           (4,489)       (12,467)           (11,140)
Total net assets                  143,337         92,431            127,659
Capital and reserves                                                       
Called-up share capital            13,199         13,199             13,199
Share premium account              36,334         35,914             35,914
Special reserve                    12,424         12,424             12,424
Capital redemption                  3,453          3,453              3,453
Capital reserve                    73,704         23,573             57,890
Revenue reserve                     4,223          3,868              4,779
Equity shareholders'              143,337         92,431            127,659
Net asset value per                                                        
share                              281.9p         183.9p             249.0p
(note 5)                                                                   

Cash Flow Statement

For the six months ended 31 March 2010

                               (Unaudited)      (Unaudited)          (Audited)
                             31 March 2010    31 March 2009  30 September 2009
                                     £'000            £'000              £'000
Net cash inflow from                                                          
operating activities (note             297            2,088              4,573
Servicing of finance                                                          
Loan interest and                                                             
arrangement fees paid                (192)            (284)              (487)
Taxation                              (21)                -                  -
Financial investment                                                          
Purchase of investments            (6,473)          (3,035)            (7,017)
Sale of investments                 15,055            5,152              7,746
Net cash inflow from                                                          
financial investment                 8,582            2,117                729
Equity dividends paid              (2,615)          (2,598)            (4,809)
Net cash inflowbefore                6,051            1,323                  6
Repurchase of shares into          (5,435)          (1,323)            (1,856)
Sale of shares from                  4,552               87              2,675
Drawdown of loans                      950                -                500
Net cash inflow/ (outflow)              67          (1,236)              1,319
from financing                                                                
Increase in cash                     6,118               87              1,325
Reconciliation of net cash                                                    
flow to movement in net                                                       
Increase in cash resulting                                                    
from cashflows                       6,118               87              1,325
Increase in debt                     (950)                -              (500)
Exchange movements                     (3)                2                  2
Movement in net debt                 5,165               89                827
Net debt at start of period       (11,969)         (12,796)           (12,796)
Net debt at end of period/         (6,804)         (12,707)           (11,969)

Notes to the interim accounts

1.  Basis of Preparation                                                       
    The financial statements have been prepared under the historical cost      
    convention except for the measurement of investments which are valued at   
    fair value, and in accordance with applicable accounting standards, the    
    Statement of Recommended Practice `Financial Statements of Investment Trust
    Companies' dated January 2009 and the Accounting Standard Board's Statement
    Half Yearly Reports.                                                       
    The same accounting policies used for the year ended 30 September 2009 have
    been applied.                                                              
2.  Income                                                                     
                                        (Unaudited)     (Unaudited)   (Audited)
                                         Six months      Six months  Year ended
                                              ended           ended          30
                                      31 March 2010   31 March 2009   September
                                              £'000           £'000       £'000
    Franked investment income                 2,293           1,884       5,326
    Limited Liability Partnership                80              70          70
    Overseas dividends                          184               -           -
    Money market dividend                         -               5           5
    Interest from HMRC                           13               -           -
    Total                                     2,570           1,959       5,401
3.  Investment Management and Management Fees                                  
                                         (Unaudited) (Unaudited)      (Audited)
                                          Six months  Six months     Year ended
                                               ended       ended   30 September
                                            31 March    31 March           2009
                                                2010        2009               
                                               £'000       £'000          £'000
    Investment management fee                    277         205            437
    Management fee                               127         103            216
    VAT thereon*                                  21          16             33
    Total                                        425         324            686
    * VAT on management fee.                                                   
4.  Return/(loss) per share                                                    
    The total return per share is based on the total return attributable to    
    equity shareholders of £19,176,000 (six months ended 31 March 2009: loss of
    £13,519,000; year ended 30 September 2009: return of £21,865,000) and on   
    50,760,106 shares (six months ended 31 March 2009: 52,709,699; year ended  
    30 September 2009: 50,737,975), being the weighted average number of shares
    in issue.                                                                  
    The revenue return per share is calculated by dividing the net revenue     
    return of £2,059,000 (six months ended 31 March 2009: return of £1,517,000;
    year ended 30 September 2009: return of £4,639,000) by the weighted average
    number of shares in issue as above.                                        
    The capital return per share is calculated by dividing the net capital     
    return attributable to shareholders of £17,117,000 (six months ended 31    
    March 2009: loss of £15,036,000; year ended 30 September 2009: return of £ 
    17,226,000) by the weighted average number of shares in issue as above.    
5.  Net asset value per share                                                  
    The net asset value per share is based on net assets attributable to shares
    of £143,337,000 (31 March 2009: £92,431,000 and 30 September 2009: £       
    127,659,000) and on 50,855,811 shares in issue (excluding treasury shares) 
    (31 March 2009: 50,254,173 and 30 September 2009: 51,271,673) (excluding   
    treasury shares)                                                           
6.  Transaction costs                                                          
    Purchase transaction costs for the six months ended 31 March 2010 were £   
    47,000 (six months ended 31 March 2009: £19,000; year ended 30 September   
    2009: £36,000).                                                            
    Sales transaction costs for the six months ended 31 March 2010 were £9,000 
    (six months ended 31 March 2009: £9,000; year ended 30 September 2009: £   
7.  Reconciliation of net total return/(loss) before finance costs and taxation
    to net cash inflow from operating activities                               

                                            (Unaudited) (Unaudited)   (Audited)
                                             Six months  Six months  Year ended
                                               ended 31    ended 31          30
                                             March 2010  March 2009   September
                                                  £'000       £'000        2009
Total return/(loss) before finance charges       19,420    (13,146)      22,400
and taxation                                                                   
Capital return/(loss) before finance           (17,260)      14,788    (17,583)
charges and taxation                                                           
Losses/(gains) on exchange movements                  3         (2)         (2)
Net revenue before finance costs and              2,163       1,640       4,815
Decrease in accrued income                          572         541         271
Increase in other debtors                       (2,092)         (5)       (134)
Increase/(decrease) in creditors                      3         129        (20)
Investment management, management and             (262)       (217)       (359)
performance fees charged to capital                                            
Other expenses charged to capital                  (87)           -           -
Net cash inflow from operating activities           297       2,088       4,573

8.  2009 Account                                                               
    The figures and financial information for the year ended 30 September 2009 
    are extracted from the latest published accounts of the Company and do not 
    constitute statutory accounts for the year.                                
    Those accounts have been delivered to the Registrar of Companies and       
    included the Report of the Auditors which was unqualified and did not      
    contain a reference to any matters to which the auditors drew attention by 
    way of emphasis without qualifying the report, and did not contain a       
    statement under section 498 of the Companies Act 2006.                     


Principal Risks and Uncertainties

A review of the half year, including reference to the risks and uncertainties
that existed during the period, and the outlook for the Company can be found in
the Chairman's Statement and in the Investment Manager's Review . The principal
risks faced by the Company fall into ten broad categories: market price risk;
interest rate risk; portfolio performance; operational and regulatory; credit
risk; liquidity; shareholder profile; investment management key person risk;
availability of bank finance; inability to maintain a progressive dividend
policy. Information on each of these areas, with the exception of the
availability of bank finance and the Board's ability to maintain a progressive
dividend policy, is given in the Business Review within the Annual Report and
Accounts for the year ended 30 September 2009. The risk associated with the
availability of bank finance is that the provider may no longer be prepared to
lend to the Company. Copies of the monthly loan covenant compliance
certificates, provided for the lender, are circulated to the Board and both the
Board and the Investment Manager are kept fully informed of any likelihood of
the withdrawal of the loan facility so that repayment can be effected in an
orderly fashion if necessary. With regard to the Company's dividend policy, the
Board regularly reviews the Company's portfolio and also income forecasts
prepared by the Manager; regular reports on the Company's income position are
also made by the Company's Investment Manager at each Board meeting. The
Company also maintains a distributable revenue reserve which can be used help
make up any shortfall in income received by the Company.

In the view of the Board these principal risks and uncertainties are applicable
to the remaining six months of the financial year as they were to the six
months under review.

Related Party Transactions

During the first six months of the current financial year no material
transactions with related parties have taken place which have affected the
financial position or the performance of the Company during the period.

Directors' Responsibilities

The Directors are responsible for preparing the Interim Report in accordance
with applicable law and regulations. The Directors confirm that to the best of
their knowledge the condensed set of financial statements, within the Interim
Report, have been prepared in accordance with applicable accounting standards,
give a true and fair view of the assets, liabilities, financial position and
the return for the half-year ended 31 March 2010 and that the Chairman's
Statement, the Investment Manager's Review and the Interim Management Report
include a fair review of the information required by 4.1.8R to 4.2.11R of the
FSA's Disclosure and Transparency Rules.

The Interim Report has not been reviewed or audited by the Company's auditors.

The Interim Report was approved by the Board on 17 May 2010 and the above
responsibility statement was signed on its behalf by:

Anthony Townsend
Frostrow Capital LLP

Company Secretary
28 May 2010
0203 008 4913

Please note that up to date information on the Company, including daily NAV,
share prices and fact sheets, can be found at

a d v e r t i s e m e n t