Information  X 
Enter a valid email address

Edinburgh Inv. Trust (EDIN)


Thursday 13 November, 2014

Edinburgh Inv. Trust

Half-yearly Report

                      The Edinburgh Investment Trust plc                       
                         Half-Yearly Financial report                          
                        six months to 30 September 2014                        


The Edinburgh Investment Trust plc (the `Company') is a UK investment trust
listed on the London Stock Exchange, which invests primarily in UK securities.

Investment Objective of the Company

The Company invests primarily in UK securities with the long term objective of

1. an increase of the Net Asset Value per share by more than the growth in the
FTSE All-Share Index; and

2. growth in dividends per share by more than the rate of UK inflation.

Performance Statistics
for the six months to 30 September 2014

Total Return (capital growth with income      % CHANGE                         
Net asset value (NAV) total return(1)                                          
  - debt at par                                   +5.0                         
  - debt at market value                          +4.8                         
Share price total return(1)                       +4.6                         
FTSE All-Share Index total return(1)              +1.2  

                                                    AT           AT            
                                          30 SEPTEMBER     31 MARCH           %
                                                  2014         2014      CHANGE
Capital Return                                                                 
- debt at par                                  643.65p      628.18p        +2.5
- debt at market value                         627.66p      613.25p        +2.3
Share price(1)                                  607.5p       594.0p        +2.3
FTSE All-Share Index(1)                        3533.93      3555.59        -0.6
- debt at par                                     5.6%         5.4%            
- debt at market value                            3.2%         3.1%            
Gearing (at par):                                                              
- gross gearing(2)                               15.9%        16.3%            
- net gearing(3)                                 15.7%        15.7%            

for the six months to 30 september               2014        2013       CHANGE
Revenue Return                                  12.8p       12.1p         +5.8
Revenue return per share                                                      
First interim dividend(4)                        5.0p        5.0p            -
Retail Price Index(1)                            1.1%        1.3%             

Notes: 1. Source: Thomson Reuters Datastream.

2. Gross gearing: borrowings ÷ shareholders' funds.

3. Net gearing: borrowings less cash and investments in money market funds ÷
shareholders' funds.

4. Dividends declared in respect of the financial year.



Dear Shareholder,

The strong UK equity performance of the last two years to 31 March 2014 did not
continue into the current six month reporting period to 30 September 2014. The
FTSE All Share Index at the end of the six month period remained largely
unchanged from its starting position, weighed down by concerns about earnings
growth, the end of quantitative easing in the US and slower growth in China.
However, against this backdrop, and in Mark Barnett's first full period as
portfolio manager, I am pleased to be able to report reassuring investment
performance against benchmark and the peer group. This performance and the
conditions on both the economic and market fronts are detailed below and in the
portfolio manager's report.


The Company produced a net asset value (NAV) total return for the six months to
30 September 2014 of 5.0% (debt at par) and 4.8% (debt at market), which
compares with a total return of 1.2% for the FTSE All-Share Index, the
Company's benchmark. The share price total return (share price with dividends
reinvested) for the period was 4.6%. The portfolio continues to be concentrated
in a relatively small number of sectors and its overweight or underweight
positions in various sectors can be material drivers of the Company's relative
investment performance.

The Company's share price at 30 September 2014 was 607.5p, an increase of 2.3%
from the year end share price of 594.0p. The shares traded at a discount of
5.6% to NAV (debt at par) at 30 September 2014, marginally widening from the
discount at the Company's year end of 5.4%. At 11 November 2014, the latest
practical date to signing this report, the NAV was 663.4p, the share price was
636.0p and the resultant discount was 4.1% (debt at par) and 1.5% (debt at
market value).

Management Fees

As reported to shareholders in the Annual Financial Report, the Company's
management fees were renegotiated in January 2014. With effect from 1 April
2014, the management fee comprises a flat rate fee of 0.55% (previously 0.6%)
per annum of market capitalisation with no performance fee.

Borrowings and Gearing

Following an extensive review, the Company put in place a 364 day £100 million
revolving credit facility with Bank of New York Mellon. This facility was used
to repay the Company's £100 million 11½% debenture which matured on 30 June
2014. From this date until the present time, the portfolio manager has chosen
to draw down £100 million from the new facility. The savings from the decrease
in borrowing costs are substantial, being £2.5 million for the three months
since 30 June and, if interest rates remain around their current levels until
the Company's year end of March 2014, the saving for the year will be circa £
7.5 million.

The Company continues to have a £100 million 7¾% debenture which matures in
2022. Combined with the new credit facility and using current interest rates,
the weighted average cost of £200 million borrowings has reduced significantly
from 9.625% pa to 4.5% pa.

The mixture of fixed debt and floating credit facility gives increased
flexibility to the portfolio manager with respect to the gearing of the
portfolio. Overall, gearing must be within the 25% net assets limit agreed by
shareholders at the AGM and I reiterate the statement made in the 2014 annual
report: that there is no intention at present to increase borrowings to this
limit. At 30 September 2014, the Company's gross gearing had fallen to 15.9%
(NAV with debt at par), a slight decrease from 16.3% at the Company's year end.


The Board declares an unchanged first interim dividend of 5.0 pence per share
which will be paid on 28 November 2014 to shareholders on the register on 21
November 2014. Shares will be quoted ex-dividend on 20 November 2014.

Alternative Investment Fund Managers Directive (AIFMD)

As previously announced on 22 July 2014, the Company has entered into
arrangements necessary to ensure compliance with the AIFMD. The Board has
appointed Invesco Fund Managers Limited (IFML) as the Company's Alternative
Investment Fund Manager and BNY Mellon Trust & Depositary (UK) Limited to act
as the Company's depositary. It is not expected or intended that these new
arrangements will result in any change to the way the Company's assets are


The portfolio manager report discusses a number of global macro-economic and
geopolitical issues which highlight the uncertain nature of, and a challenging
backdrop for financial markets. Additionally, the forthcoming UK general
election and uncertainties around the UK's relationship with Europe, further
complicates the picture. October saw the return of increased volatility in the
financial markets and this may well continue to be a feature of the future for
some time. However it is important to stress, as I have done in previous
Chairman's statements, that the Manager's unchanged investment approach which,
with its emphasis on value driven long term investment growth, should provide
resilience in periods of market weakness whilst still providing the opportunity
for creating growth in shareholder value over the longer term.

125th Anniversary Booklet

Those shareholders who attended the 125th Annual General Meeting in July will
have received a booklet setting out the 125 year history of the Company. A copy
of this booklet will be sent to shareholders with this half-yearly report. I
hope you enjoy reading it, and that the next 125 years are as rewarding for
shareholders as the first 125 years.

Jim Pettigrew


13 November 2014


Market Review

The six month period under review saw the UK equity market, as measured by the
FTSE All-Share Index, rise by 1.2% (total return). In this period the market
moved broadly sideways as the valuation re-rating, which had been in progress
for the previous two years, was halted as a result of concerns over future
profit growth caused by earnings disappointments and the impending end to the
Quantitative Easing (QE) programme in the US. Furthermore, rising geopolitical
risk, the Ebola outbreak and the prospect of UK domestic elections began to
affect the previously stable backdrop for the market. Added to this fears over
China's slowing growth rate and a weakening European economy became more
relevant concerns.

Earnings momentum was persistently negative throughout 2013 and the first half
of 2014, particularly within the FTSE 100. This led to a steady and broadly
based expansion of forward-based valuation multiples, as prices rose much
quicker than earnings. Evidence that some share prices were not supported by a
realistic assessment of underlying prospects came in the three months to 30
September 2014 as a series of high profile profits warnings, most notably in
the food retailing, construction and mining sectors, resulted in some
significant share price falls.

On the positive front, inflation remains subdued and although wage growth
appears weak, the price of non-discretionary items such as petrol and food has
fallen, thereby relieving some of the upward pressure on interest rates.
Government bond yields have been supportive of equities over the period and the
30 year US government bond recently fell below 3%, suggesting that the market
views the longer term outlook for global inflation as subdued. However, falling
inflation and declining bond yields led to fears of global deflation, which in
turn could lead to unwelcome pressure on company balance sheets and profit
margins, hampering global economic recovery.

Portfolio Strategy and Review

The Company's net asset value, including reinvested dividends, rose by 5.0%
(debt at par) and 4.8% (debt at market value) during the period under review,
compared with a rise of 1.2% (total return) by the FTSE All-Share Index.

The Company's outperformance over the six month period reflected some strong
contributions from across the portfolio, but most notably in the Tobacco
sector. The most significant positive contributions came from the holdings in
AstraZeneca, BAE Systems, Altria Group, Reynolds American and Imperial Tobacco.

AstraZeneca continued to grow its drugs pipeline in 2014, with the chief
executive commenting post the company's half year results in July that
`significant progress' had been made and that there was `visible momentum'
across their cardiovascular, diabetes and respiratory franchises, as well as
strong growth in the emerging markets. The attractions of AstraZeneca's
pipeline were highlighted in April when Pfizer made a bid for the company which
was subsequently rebuffed by the AstraZeneca board.

BAE Systems' share price rose amid growing instability in the Middle East and
the ongoing implementation of its £1 billion share repurchase programme, and
following the resolution of the Saudi contract negotiation. Altria Group, the
US tobacco holding company which has a stake in SABMilller, saw its share price
rise strongly, when the latter became the subject of takeover speculation.
Meanwhile, Reynolds American and Imperial Tobacco have seen their share prices
rise following merger and acquisition activity, whereby both companies are
awaiting final US government approval for their planned acquisitions of
Lorillard brands.

Amongst the detractors to performance over the period were Thomas Cook Group,
GlaxoSmithKline and Drax Group. Thomas Cook Group saw its share price decline
sharply when it failed to match last year's sales growth and more latterly in
reaction to fears that the Ebola outbreak would negatively affect bookings.
GlaxoSmithKline was impacted by what it described as intensifying competition
and pricing pressure in the US respiratory market. Finally, the share price of
Drax Group retreated on news that its plea to have a proposed power plant
subsidy reinstated had been rejected by the UK's Court of Appeal.

Amongst the new investments the holding in Game Digital, a retailer of video
games and consoles from shops and online, was a notable performer during the
period, its share price having risen sharply post its stock market flotation in

In terms of portfolio activity, new investments comprised Game Digital and
Friends Life and disposals included Sanofi, Paypoint and Catlin Group.


The outlook for the UK equity market is likely to be more volatile for the
foreseeable future. The key issues which will continue to overshadow the
performance of the equity market remain the interplay between growing investor
pessimism on the global economic outlook and the ability of policymakers to
create the conditions to reinvigorate growth prospects where necessary. The
recent performance of the Eurozone and Chinese economies in particular is
concerning. Weaker than expected growth in these areas, and the deflationary
forces which are exported, will undoubtedly have an impact on other developed
economies such as the US and the UK which have been performing relatively well
in 2014. The overall background for revenue growth is likely to remain subdued
into 2015 and will give rise to further profit warnings which have been a
feature of the recent newsflow in the market.

The influence of the UK and the US central banks in this environment is
becoming weaker as their two main policy levers, interest rates and liquidity,
have been fully exploited for a number of years. Their last remaining option
now is to use speeches and policy guidance to influence the behaviour of
economies and market participants. But this power also has its limitations as
markets grow tired and sceptical of unfulfilled promises. It is certainly the
case that policymakers are keen to change the current policy stance which has
survived largely unchanged since 2008. However, any change in monetary policy,
be it through the tapering of QE or a move in short-term interest rates
provides another headwind for the markets in the near future. Given the recent
economic news it is likely that the anticipated increase in rates in the US and
UK will be deferred until mid 2015 as there is very little sign of inflation
pressure in these economies, despite rapidly falling levels of unemployment.

The political backdrop both domestically and internationally is the final issue
which has taken on more relevance in the recent past but which is likely to
remain an important influence for the next twelve months. The changes in the
political agenda ahead of the UK general election in May 2015 are likely to be
another source of uncertainty for the UK stockmarket.

Moments of market weakness in recent weeks are symptomatic of some of these
concerns. It is true that equities continue to look attractive relative to
other asset classes, but in some cases absolute valuations still look elevated
where share prices do not appropriately anticipate the risk to earnings and
cash-flows. The portfolio strategy is therefore largely unchanged. I put a high
price on the companies in the market which offer visibility of revenues,
profits and cash-flows in this low growth world and which are managed for the
principal purpose of delivering shareholder value in the form of a sustainable
and growing dividend.

Mark Barnett

Portfolio Manager

13 November 2014


Total Returns to 30 September 2014

                          6 MONTHS   1 YEAR  2 YEARS  3 YEARS  5 YEARS 10 YEARS
NAV (debt at par) (%)          5.0     13.0     37.9     61.4    106.6    155.7
NAV (debt at market            4.8     13.9     42.5     68.1    120.5    173.8
value) (%)                                                                     
Share Price (%)                4.6      5.4     27.4     53.7    117.1    205.0
FTSE All-Share Index (%)       1.2      6.1     26.2     47.9     59.2    120.2

Source: Thomson Reuters Datastream.

Principal Risks and Uncertainties

The principal risk factors relating to the Company can be summarised as

• Market Risks - a fall in the stock market as a whole will affect the
performance of the portfolio, as well as the performance of individual
portfolio investments; it also includes interest rate and currency risks;

• Investment Performance Risk - this is the stock specific risk that the stock
selection process may not achieve the Company's published objectives;

• Gearing and Borrowing Risk - in addition to the debenture in issue, the
Company may also borrow money for investment purposes. If the investments fall
in value, the level of gearing will have an adverse impact on performance. If
borrowing facilities could not be renewed, the Company might have to sell
investments to repay any borrowings it has;

• Income/Dividend Risk - investment income may fail to reach the level required
to meet the Company's income objective;

• Share Price Risk - the Company's prospects and NAV may not be fully reflected
in the share price;

• Control System Risk - the Board relies on the effectiveness of the Manager's
control systems which include control activities in fund management operations,
financial controls, meeting regulatory requirements and managing relations with
third parties;

• Reliance on Third Party Providers Risk - the Company has no employees, so is
reliant upon the performance of third party service providers for it to
function, particularly the Manager, custodian and registrar; and

• Other Risks - the Company may be affected by other risks such as business and
strategic risks, and the perceived impact of the designated Investment Manager
ceasing to be involved with the Company.

A detailed explanation of these principal risks and uncertainties can be found
on pages 10 to 13 of the 2014 annual financial report, which is available on
the Manager's website at

In the view of the Board, these principal risks and uncertainties are
substantially unchanged from the previous year end and are as much applicable
to the remaining six months of the financial year, as they were to the six
months under review. The risk associated with failure of the custodian is
mitigated by the appointment, during the period, of a depositary. The
depositary is ultimately responsible for safekeeping of the Company's assets
and is strictly liable for the recovery of these in the event of loss.

As highlighted in the annual financial report, the Manager's style may result
in a concentrated portfolio. In addition, the Manager manages other portfolios
holding many of the same stocks as the Company which reflects the Manager's
high conviction style of investment management. This could potentially increase
liquidity risk under certain scenarios and market conditions.

Going Concern

The financial statements have been prepared on a going concern basis. The
Directors consider this is the appropriate basis as the Company has adequate
resources to continue in operational existence for the foreseeable future being
at least 12 months after the date of approval of these half year financial
statements. In considering this, the Directors took into account the
diversified portfolio of readily realisable securities which can be used to
meet funding commitments, and the ability of the Company to meet all its
liabilities and ongoing expenses from its assets and revenue.­

Related Party Transactions and Transactions with the Manager

Under United Kingdom Generally Accepted Accounting Practice (UK Accounting
Standards and applicable law), the Company has identified the Directors as
related parties. No other related parties or related party transactions have
been identified during the period.

With effect from 22 July 2014, Invesco Fund Managers Limited (IFML), a wholly
owned subsidiary of Invesco Limited and associate company of Invesco Asset
Management Limited (IAML), was appointed as Manager. Prior to 22 July 2014,
IAML carried out these functions and continues to do so under delegated
authority of IFML. Details of the basis of fees payable to the Manager remain
unchanged and are as shown in the 2014 annual financial report which is
available on the Manager's website.


in respect of the preparation of the half-yearly financial report

The Directors are responsible for preparing the half-yearly financial report
using accounting policies consistent with applicable law and UK Accounting

The Directors confirm that to the best of their knowledge:

- the condensed set of financial statements contained within the half-yearly
financial report have been prepared in accordance with the Accounting Standards
Board's Statement `Half-Yearly Financial Reports';

- the interim management report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules;

- the interim management report includes a fair review of the information
required on related party transactions.

Signed on behalf of the Board of Directors.

Jim Pettigrew


13 November 2014


at 30 September 2014

UK listed and ordinary shares unless stated otherwise.

AIM Investments quoted on AIM.

INVESTMENT                SECTOR                              MARKET       % OF
                                                               VALUE  PORTFOLIO
British American Tobacco  Tobacco                             74,481        5.1
Roche - Swiss common      Pharmaceuticals &                   74,113        5.1
stock                     Biotechnology                                        
AstraZeneca               Pharmaceuticals &                   71,963        5.0
Imperial Tobacco          Tobacco                             69,898        4.8
Reynolds American - US    Tobacco                             67,296        4.7
common stock                                                                   
BT Group                  Fixed Line Telecommunications       66,393        4.6
BAE Systems               Aerospace & Defence                 64,366        4.4
GlaxoSmithKline           Pharmaceuticals &                   49,351        3.4
Reckitt Benckiser         Household Goods & Home              47,627        3.3
Altria - US common stock  Tobacco                             41,776        2.9
Ten Top Holdings                                             627,264       43.3
SSE                       Electricity                         40,409        2.8
Rolls-Royce               Aerospace & Defence                 38,767        2.7
BP                        Oil & Gas Producers                 37,764        2.6
Provident Financial       Financial Services                  36,292        2.5
Capita                    Support Services                    33,262        2.3
Reed Elsevier             Media                               32,978        2.3
Legal & General           Life Insurance                      31,979        2.2
Babcock International     Support Services                    30,764        2.1
Novartis - Swiss common   Pharmaceuticals &                   30,165        2.1
stock                     Biotechnology                                        
BTG                       Pharmaceuticals &                   29,497        2.0
Twenty Top Holdings                                          969,141       66.9
Drax                      Electricity                         28,506        2.0
Compass                   Travel & Leisure                    28,427        2.0
Hiscox                    Non-life Insurance                  27,465        1.9
G4S                       Support Services                    26,464        1.8
Smith & Nephew            Healthcare Equipment &              23,992        1.7
London Stock Exchange     Financial Services                  23,677        1.6
GAME Digital              General Retailers                   23,600        1.6
Amlin                     Non-life Insurance                  23,257        1.6
Derwent London            Real Estate Investment Trusts       23,215        1.6
Shaftesbury               Real Estate Investment Trusts       22,555        1.6
Thirty Top Holdings                                        1,220,299       84.3
Centrica                  Gas & Water Multiutilities          22,110        1.5
Thomas Cook               Travel & Leisure                    18,361        1.3
Beazley                   Non-life Insurance                  17,355        1.2
Rentokil Initial          Support Services                    17,067        1.2
Lancashire                Non-life Insurance                  14,707        1.0
NewRiver RetailAIM        Real Estate Investment Trusts       14,583        1.0
KCOM                      Fixed Line Telecommunications       14,064        1.0
Raven Russia - Preference Real Estate Investment &             9,324           
Raven Russia - Ordinary                                        4,100           
                                                              13,424        0.9
Friends Life              Life Insurance                      13,413        0.9
IP Group                  Financial Services                  12,626        0.9
Forty Top Holdings                                         1,378,009       95.2
N Brown                   General Retailers                   11,839        0.8
HomeServe                 Support Services                    11,656        0.8
CLS                       Real Estate Investment &            11,121        0.8
Vectura                   Pharmaceuticals &                    8,131        0.6
Serco                     Support Services                     7,736        0.5
Burford CapitalAIM        Investment Instruments               5,148        0.4
Stobart                   Industrial Transportation            5,143        0.4
Chemring                  Aerospace & Defence                  3,534        0.3
Barclays Bank - Nuclear   Investment Instruments               1,863        0.1
  Notes 28 Feb 2019                                                            
ReddeAIM                  Financial Services                   1,744        0.1
Fifty Top Holdings                                         1,445,924      100.0
Eurovestech - Unquoted    Financial Services                     492          -
Proximagen - Rights       Pharmaceuticals &                      378          -
  12 Sept 2017 - Unquoted                                                      
Total Holdings (52)                                        1,446,794      100.0



                          SIX MONTHS TO 30         SIX MONTHS TO 30           YEAR
                           SEPTEMBER 2014           SEPTEMBER 2013           ENDED
                             (Unaudited)              (Unaudited)         31 March
                         £'000   £'000   £'000   £'000    £'000    £'000     £'000
Gains on investments         -  38,713  38,713       -   41,484   27,646   112,468
Foreign exchange             -    (14)    (14)       -      169      169       154
  UK dividends -        22,478       -  22,478  23,101        -   23,101    40,502
  UK dividends -         1,700       -   1,700   1,092       22    1,114     3,463
  Overseas dividends -   4,420       -   4,420   3,732        -    3,732    10,125
  Overseas dividends -       -       -       -       -        -        -       311
  Scrip dividends          550       -     550     572        -      572       969
  Income from money          2       -       2       3        -       36        11
market funds                                                                      
  Underwriting and           -       -       -       1        -        1         1
other income                                                                      
                        29,150  38,699  67,849  28,501   41,675   70,176   168,004
Operating costs                                                                   
Investment management    (979) (2,284) (3,263) (1,038)  (2,422)  (3,460)   (6,947)
fee - note 2                                                                      
Performance fee - note 2      -       -       -       - (11,688) (11,688)   (4,826)
Other expenses           (434)       -   (434)   (395)      (1)    (396)     (787)
Net return before       27,737  36,415  64,152  27,068   27,632   54,632   155,444
finance costs and                                                                 
Finance costs - note 2 (2,176) (5,076) (7,252) (2,925)  (6,826)  (9,751)  (19,501)
Return on ordinary      25,561  31,339  56,900  24,143   20,738   44,881   135,943
activities before tax                                                             
Tax on ordinary          (502)       -   (502)   (523)        -    (523)   (1,417)
activities - note 3                                                               
Return on ordinary      25,059  31,339  56,398  23,611   20,738   44,349   134,526
activities after tax                                                              
Return per ordinary      12.8p   16.1p   28.9p   12.1p    10.6p    22.7p     69.0p
share - note 4                                                                    

The total column of this statement represents the Company's profit and loss
account, prepared in accordance with UK Accounting Standards. 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 therefore no
statement of recognised gains or losses is presented. No operations were
acquired or discontinued in the period.



                              SHARE   SHARE REDEMPTION   CAPITAL  REVENUE                 
                            CAPITAL PREMIUM    RESERVE   RESERVE  RESERVE     TOTAL
                              £'000   £'000      £'000     £'000    £'000     £'000
For the six months ended 30                                                        
September 2014                                                                     
At 31 MARCH 2014             48,779   6,639     24,676 1,086,473   61,244 1,227,811
Dividends paid - note 5           -       -          -         - (26,341)  (26,341)
Net return on ordinary            -       -          -    31,339   25,059    56,398
At 30 SEPTEMBER 2014         48,779   6,639     24,676 1,117,812   59,962 1,257,868
For the year ended 31 March                                                        
2014 (Audited)                                                                     
At 31 MARCH 2013             48,779   6,639     24,676   997,171   60,481 1,137,746
Dividends paid - note 5           -       -          -         - (44,461)  (44,461)
Net return on ordinary            -       -          -    89,302   45,224   134,526
At 31 MARCH 2014             48,779   6,639     24,676 1,086,473   61,244 1,227,811
For the six months ended 30                                                        
September 2013                                                                     
At 31 MARCH 2013             48,779   6,639     24,676   997,171   60,481 1,137,746
Dividends paid - note 5           -       -          -         - (24,948)  (24,948)
Net return on ordinary            -       -          -    20,738   23,611    44,349
At 30 SEPTEMBER 2013         48,779   6,639     24,676 1,017,909   59,144 1,157,147



Registered number SC1836

                                                      AT           AT        AT
                                            30 SEPTEMBER 30 SEPTEMBER  31 MARCH
                                                    2014         2013      2014
                                             (UNAUDITED)  (UNAUDITED) (AUDITED)
                                                   £'000        £'000     £'000
Fixed assets                                                                   
  Investments at fair value through profit     1,446,794    1,366,062 1,420,220
or loss                                                                        
Current assets                                                                 
  Amounts due from brokers                         1,454            -         -
  Prepayments and accrued income                   4,579        4,770     8,842
  Tax recoverable                                    752          833     1,658
  Cash and cash funds                              3,073        2,067     7,025
                                                   9,858        7,670    17,525
Creditors: amounts falling due within one                                      
  Amounts due to brokers                               -      (3,532)   (3,596)
  Accruals                                         (792)      (3,624)   (3,646)
  Performance fee payable                              -            -   (4,826)
  111/2% Debenture Stock 30 Jun 2014                   -    (100,000) (100,000)
  Bank loan                                    (100,000)            -         -
                                               (100,792)    (107,156) (112,068)
Net current assets/(liabilities)                (90,934)     (99,486)  (94,543)
Total assets less current liabilities          1,355,860    1,266,576 1,325,677
Creditors: amounts falling due after more       (97,992)     (97,741)  (97,866)
than one year                                                                  
  7 3⁄4% Debenture Stock 30 Sep 2022                                            
Provision for performance fee                          -     (11,688)         -
Net assets                                     1,257,868    1,157,147 1,227,811
Capital and reserves                                                           
Share capital                                     48,779       48,779    48,779
Share premium                                      6,639        6,639     6,639
Capital redemption reserve                        24,676       24,676    24,676
Capital reserve                                1,117,812    1,017,909 1,086,473
Revenue reserve                                   59,962       59,144    61,244
Shareholders' funds                            1,257,868    1,157,147 1,227,811
Net asset value per ordinary share                                             
  Basic - note 6                                 643.65p      591.89p   628.18p


                                              SIX MONTHS  SIX MONTHS YEAR ENDED
                                                      TO          TO   31 MARCH
                                            30 SEPTEMBER 30 SEPTEMBER      2014
                                                    2014        2013       
                                             (UNAUDITED) (UNAUDITED)  (AUDITED)
                                                   £'000       £'000      £'000
Net return before finance costs and taxation      64,152      54,632    155,444
Scrip dividends                                    (550)       (572)      (969)
Gains on investments                            (38,713)    (41,484)  (112,468)
Cash inflow from forward currency contracts            -         617        617
Decrease/(increase) in debtors                     5,169       3,190    (1,707)
(Decrease)/increase in creditors and             (4,860)         228    (6,612)
Overseas tax paid                                  (502)       (532)    (1,417)
Net cash inflow from operating activities         24,696      16,079     32,888
Servicing of finance                             (9,946)     (9,625)   (19,250)
Financial investment                                                           
  Purchase of investments                      (120,531)    (58,415)  (407,259)
  Sale of investments                            128,170      78,889    445,020
Net equity dividends paid - note 5              (26,341)    (24,948)   (44,461)
Net cash (outflow)/inflow before management      (3,952)       1,980      6,938
of liquid resources and financing                                              
  Bank loan drawn down                           100,000           -          -
  Repayment of Debenture Stock 30 June 2014    (100,000)           -          -
Net cash inflow/(outflow) from management of       6,800           -    (6,800)
liquid resources                                                               
Increase in cash                                   2,848       1,980        138
  Cashflow from movement in liquid resources     (6,800)           -      6,800
  Debenture stock non-cash movement                (126)       (126)      (251)
Net debt at beginning of period                (190,841)   (197,528)  (197,528)
Net debt at end of period                      (194,919)   (195,674)  (190,841)
Analysis of changes in net debt:                                               
Brought forward:                                                               
  Cash and cash funds                              7,025          87         87
  Debenture stock                              (197,866)   (197,615)  (197,615)
Net debt brought forward                       (190,841)   (197,528)  (197,528)
Movements in the period:                                                       
  Cash (outflow)/inflow from cash and cash       (3,952)       1,980      6,938
  Cash inflow from bank loan drawn down          100,000           -          -
  Cash outflow from repayment of Debenture     (100,000)           -          -
Stock 30 June 2014                                                             
  Debenture stock non-cash movement                (126)       (126)      (251)
Net debt carried forward                       (194,919)   (195,674)  (190,841)



1. Basis of preparation

These condensed financial statements of the Company have been prepared using
the same accounting policies as those adopted in the 2014 annual financial
report, which are consistent with applicable United Kingdom Accounting
Standards, and with the Statement of Recommended Practice `Financial Statements
of Investment Trust Companies and Venture Capital Trusts'. These financial
statements are prepared on a going concern basis.

2. Management fees and finance costs

As reported in the 2014 annual financial report, the management fee
arrangements were amended. From 1 April 2014 the fees changed to a flat fee of
0.55% (previously 0.6%) per annum of market capitalisation with no performance
fee. Investment management fee and finance costs are allocated 30% to revenue
and 70% to capital.

3. Tax

Owing to the Company's status as an investment company no tax liability arises
on capital gains. The tax charge represents withholding tax suffered on
overseas income.

A deferred tax asset is not recognised in respect of surplus management
expenses since the Directors believe that there will be no taxable profits in
the future against which these can be offset.

4. Return per ordinary share

The basic revenue, capital and total returns per share are based on the returns
after tax and the average number of shares in issue during the period as

                                            SIX MONTHS    SIX MONTHS 
                                                    TO            TO   YEAR ENDED
                                           30 SEPTEMBER 30 SEPTEMBER    31 MARCH        
                                                   2014        2013         2014
                                            (UNAUDITED) (UNAUDITED)     (AUDITED)
                                                  £'000       £'000       £'000
Returns after tax:                                                             
Revenue                                          25,059      23,611      45,224
Capital                                          31,339      20,738      89,302
Total return after tax                           56,398      44,349     134,526
Weighted average number of shares in issue  195,116,734 195,116,734 195,116,734
during the period                                                              

5. Dividends

                                SIX MONTHS TO      SIX MONTHS TO   YEAR ENDED  
                                 30 SEPTEMBER      30 SEPTEMBER     31 MARCH      
                                     2014              2013           2014      
                                 (UNAUDITED)        (UNAUDITED)     (AUDITED)  
                                  PENCE     £'000   PENCE   £'000  PENCE  £'000
Dividends paid:                                                                
Third interim                       5.0     9,756     5.0   9,756    5.0  9,756
Final                               8.5    16,585     7.8  15,219    7.8 15,219
First interim                         -         -       -       -    5.0  9,756
Second interim                        -         -       -       -    5.0  9,756
Return of unclaimed                   -         -       -    (27)      -   (26)
dividends from previous                                                        
                                   13.5    26,341    12.8  24,948   22.8 44,461

A first interim dividend of 5p (2013: 5p) for the year ended 31 March 2015,
will be paid on 28 November 2014 to shareholders on the register on 21 November

6. Net asset value (NAV) per ordinary share

(a) Debt at par

The shareholders' funds in the balance sheet are accounted for in accordance
with accounting standards, however, this does not reflect the rights of
shareholders on a return of assets under the Articles of Association. These
rights are reflected in the net assets with debt at par and the corresponding
NAV per share.

                                            30 SEPTEMBER 30 SEPTEMBER  31 MARCH
                                                    2014         2013      2014
                                             (UNAUDITED)  (UNAUDITED) (AUDITED)
                                                   PENCE        PENCE     PENCE
NAV per ordinary share                            644.68       593.05    629.27
Less: unamortised discount and expenses           (1.03)       (1.16)    (1.09)
arising from debenture issue                                                   
NAV - debt at par                                 643.65       591.89    628.18

(b) Debt at market value

                                            30 SEPTEMBER 30 SEPTEMBER  31 MARCH
                                                    2014         2013      2014
                                             (UNAUDITED)  (UNAUDITED) (AUDITED)
                                                   PENCE        PENCE     PENCE
NAV - debt at par                                 643.65       591.89    628.18
Debenture debt at par                              51.25       102.50    102.50
Debenture debt at market value                   (67.24)     (121.07)  (117.43)
NAV - debt at market value                        627.66       573.32    613.25

7. Share capital

                                                     30          30   
                                              SEPTEMBER   SEPTEMBER    31 MARCH
                                                   2014        2013        2014
                                            (UNAUDITED) (UNAUDITED)   (AUDITED)
Allotted, called-up and fully paid                                             
Number of ordinary shares of 25p each       195,116,734 195,116,734 195,116,734

8. It is the intention of the Directors to conduct the affairs of the Company
so that it satisfies the conditions for approval as an investment trust company
within the meaning of section 1158 of the Corporation Tax Act 2010.

9. The financial information contained in this half-yearly financial report,
which has not been audited, does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. The financial information for the
half years ended 30 September 2014 and 2013 has not been audited. The figures
and financial information for the year ended 31 March 2014 are extracted and
abridged from the latest published accounts and do not constitute the statutory
accounts for that year. Those accounts have been delivered to the Register of
Companies and included the Report of the Independent Auditors, which was

By order of the Board
Invesco Asset Management Limited
Company Secretary

13 November 2014



We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2014 which comprises the condensed income statement, condensed
reconciliation of movements in shareholders' funds, condensed balance sheet,
condensed cash flow statement and the related explanatory notes. We have read
the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial

This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules (the `DTR') of the UK's Financial Conduct Authority (the
`UK FCA'). Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.

Directors' Responsibilities

The half-yearly report is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK FCA. As disclosed in note
1, the annual financial statements of the Company are prepared in accordance
with UK Accounting Standards and applicable law (UK Generally Accepted
Accounting Practice). The condensed set of financial statements included in
this half-yearly financial report has been prepared in accordance with the
Statement `Half-Yearly Financial Reports' as issued by the UK Accounting
Standards Board.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our

Scope of Review

We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 `Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.


Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2014 is not prepared, in
all material respects, in accordance with the Statement `Half-Yearly Financial
Reports' as issued by the UK Accounting Standards Board and the DTR of the UK

Catherine Burnet
for and on behalf of KPMG LLP
Chartered Accountants
13 November 2014

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