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Invesco Inc Grth Tst (IVI)

  Print      Mail a friend       Annual reports

Tuesday 08 June, 2010

Invesco Inc Grth Tst

Final Results

                        Invesco Income Growth Trust plc                        

                     Annual Financial Report Announcement                      

                       for the Year Ended 31 March 2010                        

Financial Information and Performance Statistics

                                        At        At                       
                                        31 March  31 March   %             
                                        2010      2009       change        
Net asset value† per ordinary share:                                       
- per Balance Sheet                     196.1p    138.9p     +41.2         
- after deducting proposed dividends    196.1p    135.8p     +44.4         
Mid-market price per ordinary share     174.0p    122.5p     +42.0         
Discount per ordinary share             10.7%     11.8%                    


Actual gearing - excluding effect of    112       118       
Effective gearing - including effect of 110       116       

                                        Year      Year                     
                                        Ended     Ended                    
                                        31 March  31 March   %             
                                        2010      2009       change        
Total Return                                                               
(includes net dividends reinvested)                                        
Net asset value per ordinary share      +54.5%    -32.7%                   
FTSE All-Share Index                    +52.3%    -29.3%                   

Source: Thomson Datastream

Revenue (including VAT recovery) and Dividends

Net revenue after tax (£'000)           4,703     5,401      -12.9         
Revenue return per ordinary share       8.0p      9.2p       -13.0         


- first interim                         1.85p     1.85p                    
- second interim                        1.85p     1.85p                    
- third interim                         1.85p     1.85p                    
- fourth interim (2009: final)          3.30p     3.10p                    
                                        8.85p     8.65p      +2.3          
Total Expense Ratio                     1.1%      1.1%                     

Chairman's statement

Investment Performance

During the year ended 31 March 2010, the total return (comprising the movement
in the net asset value (`NAV') plus net dividends) from the Company was 54.5%,
compared to a 52.3% return from the FTSE All-Share Index. After a difficult
period for UK equities, the market rally was most welcome.

During the year under review, the mid-market price per share rose by 42% to
174p and the discount to NAV decreased from 11.8% to 10.7%.

The investment manager's report that follows gives a more detailed account of
the year, together with a commentary on the investment and portfolio strategy.


The Board continues to monitor the Company's level of gearing which, when
prudently used, should enhance the returns to shareholders. As at 31 March
2010, the Company had actual gearing of 112 or 12%, provided by a bank
overdraft of £14.3m.

VAT on Management Fees

As reported in the half-yearly financial report, following on from the refunds
of VAT on management fees and interest reported in the Chairman's Statement
contained within the 2009 annual financial report, the Board is pleased to
report that the Company has now received all anticipated VAT refunds.

For the period under review, an additional amount of £115,000 together with
interest of £11,000 has been credited to the Company. These amounts add £
126,000 to the NAV, or 0.22p per share. Of this amount £68,000 is credited to
revenue, which equates to 0.12p per share and is in line with the allocation of
fees on which the payments of VAT were originally made.

Share Buy Backs

The Company's shares traded at both a discount and a premium during the year.
The highest premium was 0.9% and the widest discount was 12.2%. No shares were
repurchased during the year. The discount as at 7 June 2010 was 8.0%.

Revenue and Dividends

For the year ended 31 March 2010, four interim dividends were paid rather than
three interims and a final. The first three interim dividends of 1.85p each
were paid in October and December 2009, and March 2010. The fourth interim
dividend of 3.3p was also paid in March 2010. This last dividend was paid,
exceptionally, in March rather than July. In future, dividend payments revert
to the normal dividend schedule (three interims and a final). The total
dividend paid for the year ended 31 March 2010 was 8.85p (2009: 8.65p), which
represents an increase of 2.3% on the previous year.

The Company has built up significant revenue reserves in preparation for
tougher times such as now. By carefully using these reserves, the Company
should be able to fulfil its dividend growth objectives despite temporary
pressure on the portfolio's income. This coming year, a small proportion of the
reserves are expected to be used to contribute to the dividend payment to
shareholders. This is not sustainable forever and the Board expects, that under
current forecasts, the portfolio income gap will be eliminated over time.

Annual General Meeting (`AGM')

At the AGM there are four items of Special Business to be proposed:-

Share Issuance

1. Your Directors are asking for the usual authority to issue up to an
aggregate nominal amount of £4,879,294 (a third of the Company's issued share
capital as at 8 June 2010) in new ordinary shares. This will allow Directors to
issue shares within the prescribed limits should any favourable opportunities
arise to the advantage of shareholders. This authority will expire at the AGM
in 2011.

2. Your Directors are also asking for the usual authority to issue new ordinary
shares for cash pursuant to a rights issue, or otherwise than in accordance
with a rights issue of up to an aggregate nominal amount of £1,463,788 (10% of
the Company's issued share capital as at 8 June 2010), of new ordinary shares
disapplying pre-emption rights. This will allow shares to be issued to new
shareholders without having to be offered to existing shareholders first, thus
broadening the shareholder base of the Company. This authority will not be
exercised at a price below NAV so that the interests of existing shareholders
are not diluted and will expire at the AGM in 2011.

Share Buy Backs

3. Your Directors are seeking to renew the authority to buy back up to
8,776,874 shares (14.99% of the Company's issued share capital as at 8 June
2010), subject to the restrictions referred to in the notice of the AGM. This
authority will expire at the AGM in 2011. Your Directors are proposing that
shares bought back by the Company either be cancelled or, alternatively, be
held as treasury shares with a view to their resale, if appropriate, or later
cancellation. Any resale of treasury shares will only take place on terms that
are in the best interests of shareholders.

Notice Period for General Meetings

4. The EU Shareholder Rights Directive, which was implemented in October 2009
increased the notice period for general meetings of companies to 21 days unless
certain conditions are met in which case it may be 14 days' notice. A
shareholders' resolution is required to ensure that the Company's general
meetings (other than AGMs) may be held on 14 days' notice. Accordingly, your
Directors are proposing that the period of notice for general meetings of the
Company (other than AGMs) shall be not less than 14 clear days' notice. It is
intended that this flexibility will be used only for non-routine business and
where it is in the interests of shareholders as a whole.

Your Directors have carefully considered all the resolutions proposed in the
Notice of the AGM and, in their opinion, consider them all to be in the best
interests of shareholders as a whole. Your Directors therefore recommend that
shareholders vote in favour of each resolution. The AGM of the Company will be
held at the offices of Invesco Asset Management Limited on 16 July 2010 at
12.00 noon. I do hope that as many shareholders as possible will attend. This
will be an opportunity not only to meet the Directors but also to hear the
views of Ciaran Mallon, who is the Investment Manager at Invesco Perpetual with
the day-to-day responsibility for managing the Company's share portfolio.

John McLachlan


8 June 2010

Investment Manager's Report

Market Review & Portfolio Strategy

I am pleased to report that for the year ended 31 March 2010, the Company's
investment performance was good on both a relative and absolute basis. The net
asset value (`NAV') rose by 54.5%, compared to a 52.3% gain in the benchmark
FTSE All-Share Index (both figures include reinvested income). This is a
remarkable gain in just 12 months, and comes after the market fell 45% from May
2008 to March 2009.

We started the financial year at the bottom of the deepest UK recession in
post-war history and the prognosis for the immediate future of the UK economy
looked bleak. Undoubtedly, the economic outlook improved as the year
progressed, albeit with considerable help in the form of state and central bank
support. The Bank of England's Monetary Policy Committee kept interest rates on
hold at 0.5% throughout the year. Furthermore, the authorities chose to inject
a total of £200bn into the economy as part of its quantitative-easing
programme. These supports have been maintained into 2010, illustrating that the
recovery remains fragile.

One reason for the strong stock market rebound is the rapid recovery in company
profits. During the early stages of the recovery, the market was less concerned
about the quality of the earnings (derived predominantly from aggressive
cost-cutting rather than top-line revenue growth), and more focused on the
improving trend. More recently, as parts of the economy have returned to
growth, the outlook for top-line growth has also improved. Sectors which
benefited most from this market backdrop were those which suffered the sharpest
falls in the downturn, and are seen as the prime beneficiaries of economic
recovery. Industrial, financial, technology and commodity company shares have
all outperformed while companies with stable, predictable earnings lagged the

My optimistic outlook for equity markets this time last year, at a point when
valuations were extremely low and pessimism was high, meant that portfolio
gearing was a relatively high 118 or 18%. Over the course of the year, in
response to higher share price valuations and more optimistic investor
sentiment, gearing fell to around 112 or 12%. This gearing, which weighed on
performance in the prior financial year as markets fell, has assisted in the
portfolio's outperformance as markets have rallied.

Broadly, performance was hindered by having no exposure to the mining sector
which performed particularly strongly as the state-sponsored resilience of the
Chinese economy prompted a surprisingly rapid recovery in commodity prices.
Meanwhile, the portfolio's large exposure to the pharmaceutical,
telecommunications and utilities sectors, which did not fully participate in
the market rally, hindered returns. Positive contributions came from a variety
of other sectors, however, with some very strong individual performances from
companies such as Yell, ITV, Euromoney, GKN, Barclays and Legal & General,
which recovered well from their very depressed levels.

As far as portfolio activity is concerned, I have added a little further
diversification to the portfolio, partly to mitigate some risk, but also to
take advantage of opportunities to invest in good quality businesses at cheap
valuations. Within the general insurance sector, I have bought Admiral Group
and added positions in Amlin, Beazley, Catlin and Hiscox (which are small
individual holdings, but share so many of the same characteristics that I
consider them as one). Other new additions included Drax and retailers
Morrisons, DSG International and N Brown. Drax, which owns Western Europe's
largest coal-fired power station, was bought after a meeting with the
management, when the valuation looked attractive for what is a unique and high
quality asset. The share price has been weak of late because of lower power
prices and due to its usage of coal, which is more expensive than gas. It is
also perceived by the market as a business without a future in a lower carbon
world. However, I believe that the management are highly capable and are
positioning the company well for the future. DSG International (which owns
Currys and PC World) has turned its business around recently, while Morrisons
has considerable scope for organic growth in the UK. N Brown sells clothing to
larger people, often on credit. Market perception of credit-dependent
businesses has meant a weak share price recently but I believe that this is an
over-reaction and ignores how conservatively managed it is and the good growth

In terms of exited positions, life insurance company Just Retirement was taken
over during the year - unfortunately at a price substantially below my
assessment of fair value. This was because the majority shareholder had decided
to sell out, and despite my intense lobbying of the management and advisers. I
chose to sell Prudential as its deal to buy AIG's Asian business does not look
likely to be rewarding for current shareholders in the long term.


Dividends were reduced by some companies in the portfolio, and these have only
partly been offset by good growth in some of the more defensive shares.
Analysts now forecast that overall dividend payments in the stockmarket will
rise this year. If this is the case, the Company's dividend income should also
begin to recover from last year's level. The Company's revenue benefited from
commission for sub-underwriting a number of rights issues. This amounted to £
226,000, or about 4% of total revenue, and this level is unlikely to be
repeated on this scale this year.

As explained in the Chairman's Statement, the Company is likely this coming
year to pay a dividend exceeding its income, and it will be necessary to close
this gap in future. This will be achieved by growing the dividend paid to
shareholders by less than the growth in income produced by the portfolio.


Despite the macroeconomic picture remaining clouded, I remain positive in my
outlook for UK equities. Valuation for the overall market is moderate, with
certain sectors and shares, such as pharmaceuticals, appearing particularly
attractive. The past year demonstrates well that, on occasion, patience and a
commitment to the long term is required to see undervalued shares perform well
- ITV, Yell and GKN were amongst the best performers in the portfolio last
year, but at times looked like they would never recover.

The future is not without risk, however. I have noted in the past my concerns
about the mining sector (there are no mining shares in the portfolio) and
similar patience will be required to demonstrate my growing conviction that we
are seeing an investment bubble being inflated around everything China-related.
If the global economic recovery continues to gain pace, and particularly if
inflation begins to increase, then some retreat from the extreme monetary and
fiscal stimulus currently in place is certain to happen. This may not be in the
next 12 months but, when it does happen, it is likely to cause some disruption
in the stockmarket.

While there are numerous factors that can influence equity markets in the short
term, over a meaningful timeframe fundamentals are the key determinants of
share prices. Therefore my focus remains on companies that are in my view well
managed, with good earnings visibility and strong cash generation. I strongly
believe in investing in companies which display the ability to create
shareholder value over the long term, through a disciplined use of capital. I
see these characteristics in a number of support services, tobacco, travel &
leisure and utility companies, the portfolio's largest overweight sector
positions. Given the current backdrop, the portfolio is well balanced with a
good mix of quality defensive holdings where there is little risk to dividends,
along with some elements of cyclicality positioned to benefit from any
continued economic recovery.

Investments in Order of Valuation

at 31 March 2010

UK listed ordinary shares unless otherwise stated

                                                             Value   % of     
Holding   Company             Activity by sector             £'000   portfolio
  278,341 British American    Tobacco                          6,321       4.9
  211,942 AstraZeneca         Pharmaceutical & Biotechnology   6,225       4.8
  308,808 Imperial Tobacco    Tobacco                          6,204       4.8
  486,851 GlaxoSmithKline     Pharmaceuticals &                6,156       4.8
  953,625 BP                  Oil & Gas                        5,944       4.6
3,300,028 Vodafone            Mobile Telecommunications        5,016       3.9
  270,521 Royal Dutch Shell   Oil & Gas                        4,910       3.8
  685,969 HSBC                Banks                            4,582       3.6
  652,942 National Grid       Gas, Water & Multiutilities      4,185       3.3
  863,439 Tesco               Food & Drug Retailers            3,758       2.9
Top Ten Holdings                                              53,301      41.4
  297,350 Scottish & Southern Electricity                      3,271       2.5
  873,802 Barclays            Banks                            3,148       2.5
2,289,771 BT                  Fixed Line Telecommunications    2,837       2.2
  676,800 Young & Co Brewery  Travel & Leisure                 2,538       2.0
  795,507 Centrica            Gas, Water & Multiutilities      2,336       1.8
  328,692 Land Securities     Real Estate                      2,227       1.7
  203,336 Intercontinental    Travel & Leisure                 2,098       1.6
  486,323 Informa             Media                            1,883       1.5
  885,652 William Hill        Travel & Leisure                 1,870       1.5
2,123,186 Legal & General     Life Insurance                   1,868       1.5
Top Twenty Holdings                                           77,377      60.2
  126,493 Whitbread           Travel & Leisure                 1,862       1.5
  218,068 AMEC                Oil & Gas                        1,741       1.4
  588,781 Balfour Beatty      Construction & Materials         1,719       1.3
  635,257 G4S                 Support Services                 1,658       1.3
  711,331 MITIE               Support Services                 1,626       1.3
  309,368 Compass             Support Services                 1,626       1.3
  726,108 Filtrona            Support Services                 1,584       1.2
1,103,719 GKN                 Automobiles & Parts              1,523       1.2
  271,555 United Utilities    Gas, Water & Multiutilities      1,517       1.2
  389,829 Aviva               Life Insurance                   1,500       1.2
Top Thirty Holdings                                           93,733      73.1
  287,693 Euromoney           Media                            1,496       1.2
  158,256 Croda International Chemicals                        1,480       1.2
  280,228 Pennon              Gas, Water & Multiutilities      1,463       1.1
  276,216 Reed Elsevier       Media                            1,450       1.1
2,288,331 ITV                 Media                            1,390       1.1
  367,448 BAE Systems         Aerospace & Defence              1,364       1.1
  181,000 Bunzl               Support Services                 1,304       1.0
3,123,114 Yell                Media                            1,274       1.0
  105,711 Severn Trent        Gas, Water & Multiutilities      1,262       1.0
  162,044 Capita              Support Services                 1,225       1.0
Top Forty Holdings                                           107,441      83.9

                                                             Value   % of     
Holding   Company             Activity by sector             £'000   portfolio
  140,589 Rensburg Sheppards  General Financial                1,203       0.9
3,393,036 DSG International   General Retailers                1,185       0.9
  158,813 Arriva              Travel & Leisure                 1,163       0.9
  333,655 Nichols             Beverages                        1,151       0.9
   69,606 Wolseley            Support Services                 1,107       0.9
  165,665 Smith & Nephew      Health Care Equipment &          1,088       0.8
1,271,988 HMV                 General Retailers                1,075       0.8
  363,940 Morrison            Food and Drug Retailer           1,068       0.8
   79,873 Admiral             Non-life Insurance               1,054       0.8
  470,139 Brown               General Retailers                1,028       0.8
Top Fifty Holdings                                           118,563      92.4
  271,176 Drax                Electricity                      1,013       0.8
  315,890 International Power Electricity                      1,007       0.8
  379,345 Cobham              Aerospace & Defence                975       0.8
1,164,676 Resolution          Life Insurance                     954       0.7
  679,704 Rentokil Initial    Support Services                   886       0.7
  419,899 Xchanging           Support Services                   813       0.6
  261,450 Mouchel             Support Services                   473       0.4
   56,414 Amlin               Non-life Insurance                 219       0.2
   56,450 Catlin              Non-life Insurance                 203       0.2
  178,642 Beazley             Non-life Insurance                 193       0.2
Top Sixty Holdings                                           125,299      97.8
   56,847 Hiscox              Non-life Insurance                 190       0.1
Total Ordinary Shares                                        125,489      97.9
1,027,000 Friends Provident   Life Insurance                   1,254       1.0
          Fltg Perpetual                                                      
  800,000 Barclays Bank       Banks                            1,038       0.7
          Fltg 14% Perpetual                                                  
  800,000 Aviva Fltg 5.902%   Life Insurance                     624       0.4
Total Fixed Income Securities                                  2,916       2.1
Total Value of Investments                                   128,405     100.0

Related Party Transactions

Invesco Asset Management Limited (`IAML'), a wholly owned subsidiary of Invesco
Limited, acts as Manager, Company Secretary and Administrator to the Company.
There are no other related party transactions.

Principal Risks and Uncertainties

The principal risk factors relating to the Company can be divided into various

Investment Policy

There is no guarantee that the Investment Policy adopted by the Company will
provide the returns sought by the Company.

The Board has established guidelines to ensure that the Investment Policy of
the Company is pursued by the Manager.

Investment Process

Risk management is an integral part of the investment management process. The
Manager effectively controls risk by ensuring that the Company's portfolio is
always appropriately diversified. In-depth and continual analysis of the
fundamentals of all holdings should give the Manager a full understanding of
the financial risks associated with any particular stock.

Market Movements and Portfolio Performance

As at 31 March 2010, all of the Company's investments were traded on the London
Stock Exchange. The principal risk for investors in the Company is of a
significant fall in the markets and/or a prolonged period of decline in the
markets relative to other forms of investment as well as bad performance of
individual portfolio investments.

The prices of these investments are influenced by many factors including
general world (and particularly the UK) economic conditions including interest
rates; inflation; government policies; industry conditions; political and
diplomatic events; tax laws; environmental laws; and by the demand from
investors for income.

The Manager strives to maximise the total return from the stocks in which it
invests, but these securities are influenced by market conditions and the Board
acknowledges the external influences on portfolio performance. While the Board
obviously cannot influence market movements, it is vigilant in monitoring and
taking steps to mitigate the effects of falls in markets should they occur. The
performance of the Manager is carefully monitored by the Board, and the
continuation of the Manager's mandate is reviewed each year.

The Board and the Manager maintain an active dialogue with the aim of ensuring
that the market rating of the Company's shares reflects the underlying NAV and
that share repurchase and issuance facilities help the management of this

Past performance of the Company, and all of the investments managed by the
Manager, are not necessarily indicative of future performance.

For a fuller discussion of the economic and market conditions facing the
Company and the current and future performance of the portfolio of the Company,
please see both the Chairman's Statement and Investment Manager's Report.

Ordinary Shares

The market value of an ordinary share, as well as being affected by its NAV,
also takes into account its dividend yield and prevailing interest rates. As
such, the market value of an ordinary share can fluctuate and may not always
reflect its underlying NAV. The market price of an ordinary share may therefore
trade at a discount to its NAV. As at 31 March 2010, an ordinary share of the
Company traded at a discount of 10.7% (2009: 11.8%).

There can be no guarantee that any appreciation in the value of the Company's
investments will occur and investors may not get back the full value of their
investment. Due to the potential difference between the mid-market price of the
ordinary shares and the prices at which they are sold, there is no guarantee
that their realisable value will reflect their market price.

While it is the intention of the Directors to pay dividends to ordinary
shareholders quarterly, the ability to do so will depend upon the level of
income received from securities and the timing of receipt of such income by the
Company. Accordingly, the amount of quarterly dividends paid to ordinary
shareholders may fluctuate.

Any change in the tax or accounting treatment of dividends or other investment
income received by the Company may also affect the level of dividend paid on
the ordinary shares in future years.


Whilst the use of borrowings by the Company should enhance the total return on
the ordinary shares where the return on the Company's underlying securities is
rising and exceeds the cost of borrowing, it will have the opposite effect
where the underlying return is falling, further reducing the total return on
the ordinary shares.

Regulatory and Tax Related

The Company is subject to various laws and regulations by virtue of its status
as a public limited company registered under the Companies Act 2006, its status
as an investment trust, and its listing on the London Stock Exchange.

A breach of section 842 of the Income and Corporation Taxes Act 1988 (`s842
ICTA') could lead to the Company being subject to capital gains tax on the sale
of its investments. A serious breach of other regulatory rules may lead to
suspension from the London Stock Exchange, a fine or a qualified audit report.
Other control failures, either by the Manager or any other of the Company's
service providers, may result in operational or reputational problems,
erroneous disclosures or loss of assets through fraud, as well as breaches of

The Manager reviews compliance with s842 ICTA and other financial regulatory
requirements on a daily basis. All transactions, income and expenditure are
reported to the Board. The Board regularly considers all perceived risks and
the measures in place to control them. The Board ensures that satisfactory
assurances are received from service providers. The Manager's Compliance and
Internal Audit Officers produce reports regularly for review by the Company's
Audit Committee.

Directors' Responsibility Statement

in respect of the preparation of the Annual Financial Report

The Directors are responsible for preparing the annual financial report in
accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each
financial year. Under the law the Directors have elected to prepare financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice. Under company law, the Directors must not approve the accounts unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and which
enable them to ensure that the financial statements comply with the Companies
Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report, a Directors' Remuneration Report and a Corporate
Governance Statement that comply with that law and those regulations.

In so far as each of the Directors is aware:

• there is no relevant audit information of which the Company's Auditors are
unaware; and

• the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
Auditors are aware of that information.

The Directors of the Company each confirm to the best of their knowledge that:

• the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and

• this annual financial report includes a fair review of the development and
performance of the business and the position of the Company together with a
description of the principal risks and uncertainties that it faces.

Signed on behalf of the Board of Directors

John McLachlan


8 June 2010

Income Statement

for the year ended 31 March

                      2010                      2009                      
                      Revenue  Capital  Total   Revenue  Capital  Total   
                      £'000    £'000    £'000   £'000    £'000    £'000   
Profit/(losses) on                                                        
investments at                                                            
  fair value through                                                      
or loss               -        36,247   36,247  -        (43,378) (43,378)
Income note 2         5,422    -        5,422   5,913    -        5,913   
Investment management (401)    (401)    (802)   (405)    (405)    (810)   
fee note 3                                                                
VAT recoverable on                                                        
  management fees     57       58       115     367      481      848     
note 3                                                                    
Interest on VAT       11       -        11      140      -        140     
Other expenses        (279)    (1)      (280)   (285)    (1)      (286)   
Net return before                                                         
  costs and taxation  4,810    35,903   40,713  5,730    (43,303) (37,573)
Finance costs         (107)    (107)    (214)   (329)    (329)    (658)   
Return on ordinary                                                        
  before and after    4,703    35,796   40,499  5,401    (43,632) (38,231)
Return per ordinary                                                       
 Basic                8.0p     61.2p    69.2p   9.2p     (74.5)p  (65.3)p 

The total column of this statement represents the Company's profit and loss
account. The supplementary revenue and capital columns are presented for
information purposes in accordance with the Statement of Recommended Practice
issued by the Association of Investment Companies. All items in the above
statement derive from continuing operations and the Company has no other gains
or losses and therefore no statement of total recognised gains or losses is
presented. No operations were acquired or discontinued in the year.

Reconciliation of Movements in Shareholders' Funds

for the Year Ended 31 March

                      Share   Share   Capital    Capital  Revenue         
                      Capital Premium Reserve    Reserve  Reserve Total   
                      £'000   £'000   £'000      £'000    £'000   £'000   
FOR THE YEAR ENDED                                                        
31 MARCH 2009                                                             
At 1 April 2008       14,638  40,021  2,310      62,484   5,099   124,552 
Return for the year                                                       
  from income         -       -       -          (43,632) 5,401   (38,231)
Dividends paid note 5 -       -       -          -        (5,006) (5,006) 
FOR THE YEAR ENDED                                                        
31 MARCH 2010                                                             
At 31 March 2009      14,638  40,021  2,310      18,852   5,494   81,315  
Return for the year                                                       
  from income         -       -       -          35,796   4,703   40,499  
Dividends paid note 5 -       -       -          -        (6,997) (6,997) 
At 31 March 2010      14,638  40,021  2,310      54,648   3,200   114,817 

The accompanying notes are an integral part of these statements.

Balance Sheet

as at 31 March

                                2010     2009          
                                £'000    £'000         
Fixed assets                                           
  Investments at fair value     128,405  94,903        
Current assets                                         
  Debtors                       1,034    2,032         
Creditors: amounts falling due  (14,622) (15,620)      
within one year                                        
Net current liabilities         (13,588) (13,588)      
Total assets less current       114,817  81,315        
Capital and reserves                                   
  Called up share capital note  14,638   14,638        
  Share premium                 40,021   40,021        
  Capital redemption reserve    2,310    2,310         
  Capital reserve               54,648   18,852        
  Revenue reserve               3,200    5,494         
Shareholders' funds             114,817  81,315        
Net asset value per ordinary                           
  Basic note 7                  196.1p   138.9p        

Cash Flow Statement

for the year ended 31 March

                                 2010     2009          
                                 £'000    £'000         
Cash flow from operating         5,314    5,314         
Servicing of finance             (214)    (658)         
Net financial investment         2,260    (1,151)       
Equity dividends paid note 5     (6,997)  (5,006)       
Cash inflow/(outflow) before     363      (1,501)       
management of liquid resources                          
and financing                                           
Financing                        -        -             
Increase/(decrease) in cash      363      (1,501)       
Reconciliation of cash flow to                          
movement in net debt                                    
Increase/(decrease) in cash      363      (1,501)       
Change in net debt in the year   363      (1,501)       
Net debt at beginning of year    (14,663) (13,162)      
Net debt at end of year          (14,300) (14,663)      

Notes to the Financial Statements

1. Basis of Preparation

(i) Accounting Standards applied

The financial statements have been prepared in accordance with applicable
United Kingdom Accounting Standards and with the Statement of Recommended
Practice (`SORP`) `Financial Statements of Investment Trust Companies and
Venture Capital Trusts', issued by the Association of Investment Companies in
January 2009.

(ii) Enhanced Disclosure

Following amendments to FRS 29 "Financial Instruments: Disclosures" for
reporting periods beginning on or after 1 January 2009, enhanced disclosures
for financial instruments and liquidity risk comprise a three level hierarchy
for making fair value measurements. This has no effect on either the net assets
or earnings of the Company.

2. Income

                                 2010      2009  
                                 £'000     £'000 
Income from listed investments                   
UK dividends                     4,760     5,642 
UK unfranked investment income   422       81    
Scrip dividend                   -         125   
Overseas income                  14        -     
Other income                                     
Deposit interest                 -         1     
Underwriting commission          226       64    
Total income                     5,422     5,913 

3. Investment management fee

                          2010                    2009           
                  Revenue Capital Total   Revenue Capital Total  
                  £'000   £'000   £'000   £'000   £'000   £'000  
Investment        401     401     802     405     405     810    
management fee                                                   

The Manager, Invesco Asset Management Limited (`IAML') provides investment
management, company secretarial and administrative services to the Company
under an agreement dated 21 July 1999 and subsequently amended on 21 September
2009. At 31 March 2010 £73,000 (2009: £55,000) was owed in respect of
management fees.

An amount of £115,000 (2009: £848,000) has been recognised in these accounts in
respect of VAT recovered on management fees. This has been credited £57,000
(2009: £367,000) to revenue and £58,000 (2009: £481,000) to capital, in the
same proportion as originally charged to the income statement. In addition, £
11,000 (2009: £140,000) of interest thereon has been credited to revenue.

4. Return per ordinary share

The basic revenue, capital and total returns per ordinary share are based on
each return on ordinary shares after tax and on 58,551,530 (2009: 58,551,530)
ordinary shares, being the weighted average number of shares in issue during
the year.

5. Dividends on ordinary shares

Dividends paid and recognised in year:

                                 2010            2009      
                           Pence      £'000 Pence   £'000  
Final paid in respect of   3.10       1,815 3.00    1,757  
previous year                                              
First interim paid         1.85       1,083 1.85    1,083  
Second interim paid        1.85       1,083 1.85    1,083  
Third interim paid         1.85       1,083 1.85    1,083  
Fourth interim paid        3.30       1,933 -       -      
                           11.95      6,997 8.55    5,006  

Dividends payable in respect of the year:

                                 2010             2009      
                           Pence      £'000  Pence   £'000  
First interim paid         1.85       1,083  1.85    1,083  
Second interim paid        1.85       1,083  1.85    1,083  
Third interim paid         1.85       1,083  1.85    1,083  
Fourth interim paid (2009: 3.30       1,933  3.10    1,815  
final proposed)                                             
                           8.85       5,182  8.65    5,064  

As reported in the Chairman's Statement, four interim dividends were paid
during the year

(2009: three interims paid and final proposed).

6. Share capital

                                     2010                     2009         
                           Number           £'000    Number      £'000     
Ordinary shares of 25p     120,000,000      30,000   120,000,000 30,000    
Allotted, called-up and                                                    
fully paid:                                                                
Ordinary shares of 25p     58,551,530       14,638   58,551,530  14,638    

No shares were bought back and cancelled in the year and no shares were held in
treasury at the year end.

7. Net asset value per ordinary share

The net asset value per ordinary share and the net asset values attributable at
the year end were as follows:

                          Net asset     Net assets   Net asset v Net assets  
                          value         attributable alue per    attributable
                          per share                                          
                          2010          2010         2009        2009        
                          p             £'000        p           £'000       
Ordinary shares                                                              
- Basic                   196.1         114,817      138.9       81,315      

Net asset value per ordinary share is based on net assets at the year end and
on 58,551,530 (2009: 58,551,530) ordinary shares, being the number of ordinary
shares in issue at the year end.

This annual financial report announcement is not the Company's statutory
accounts.  The statutory accounts for the year ended 31 March 2009 have been
delivered to the Registrar of Companies. The statutory accounts for the year
ended 31 March 2009 and for the year ended 31 March 2010 received an audit
report which was unqualified and did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying the
report. The statutory accounts for the financial year ended 31 March 2010 have
been approved and audited but have not yet been delivered to the Registrar of

The audited Annual Financial Report will be available to shareholders shortly.
Copies may be obtained during normal business hours from the Company's
Registered Office, 30 Finsbury Square, London, EC2A 1AG or the Company's
website at

The Annual General Meeting will be held on 16 July 2010 at 12 noon at 30
Finsbury Square, London, EC2A 1AG.

By order of the Board

Invesco Asset Management Limited

8 June 2009


Andrew Watkins

Tel - 020 7065 4023

Tim Mitchell

Tel - 020 7065 3182

Karina Bryant

Tel - 020 7065 3644


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