Troy Income & Growth Trust plc. Half Yearly Report 31 March 2013

Transcription

1 Troy Income & Growth Trust plc Half Yearly Report 31 March 2013

2 Contents Financial Highlights 1 Financial Calendar 1 Interim Board Report 2 Investment Portfolio Ordinary Shares 4 Investment Portfolio Other Investments 5 Portfolio Analysis 6 Income Statement 7 Balance Sheet 8 Statement of Changes in Equity 9 Cash Flow Statement 10 Notes to the Accounts 11 Corporate Information 14 The Company s investment objective is to provide shareholders with an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominantly UK equities.

3 Financial Highlights 31 March September 2012 % change Equity shareholders funds ( 000) 142, , Net asset value per share 60.29p 55.18p +9.3 Share price (mid market) 61.25p 56.00p +9.4 Premium to net asset value 1.6% 1.5% Total Returns* From change of Manager Six months ended 12 months ended 44 months ended 31 March March March 2013 Share price +10.7% +17.1% +94.3% Net asset value per share +10.5% +16.1% +75.9% FTSE All-Share Index +14.5% +16.8% +62.9% * Total return includes reinvesting the net dividend in the month that the share price goes ex-dividend. Financial Calendar May 2013 Announcement of unaudited interim results for the six months ended 31 March 2013 May 2013 Half Yearly Report posted to shareholders 26 July 2013 Third interim dividend 2012/2013 payable to shareholders 25 October 2013 Fourth interim dividend 2012/2013 payable to shareholders Half Yearly Report

4 Interim Board Report Background/Performance While it is encouraging to see some growth in stock markets, the Manager remains cautious, concerned about the fragility of the economic recovery and the potential for earnings growth. The Manager continues to invest with a focus on long term income growth, while maintaining capital preservation and low volatility in the portfolio. The returns for the six months were a Net Asset Value (NAV) total return of +10.5%, and a Share Price total return of +10.7% (which reflected minimum discount volatility). This compares with the FTSE All-Share index total return of +14.5% for the period. For the twelve months ended 31 March 2013, the Company s NAV increased by +16.1% compared with the FTSE All-Share figure of +16.8%. The Company increased the quarterly dividend paid to investors by 5% to 0.525p. The Company s focus on quality can lead it to lag behind in particularly ebullient markets and it is for this reason that the Company experienced a relative performance gap over the half year. Economic Environment Growth in most parts of the world at present looks insufficient to sustain a strong recovery. The contributing factors, which have been well rehearsed, include some progress in the USA and in China, but Europe still has significant problems and the UK is, at best, flat-lining. The statement in July by Mario Draghi, the President of the European Central Bank, on the reinforcement of the euro provided a stimulus, but the problems in Cyprus, Italy and elsewhere remain. The weakness in the banking sector continues to be a restricting influence. Perversely, anticipated or announced further stimulus through Quantitative Easing is providing a fillip to stock market confidence. This perceived catalyst for growth is now also being adopted by Japan. It seems that the probable inflation consequences are increasingly being seen as acceptable. The Market/Gearing The valuation of the UK equity market remains towards the expensive end of the historic range in terms of dividend yield. On a trailing yield of 3.3% and with dividend and earnings growth expected to slow over the next twelve months, the valuation of equities is not compelling. The subject of tactical gearing is much discussed. The Company s overdraft facility remained undrawn over the period. In a rising market this was a competitive disadvantage. However, the position was consistent with the Manager s assessment of the market. The facility continues to be available for use when conditions are considered to be appropriate. Liquidity The Company s discount policy facilitates very effective liquidity in the shares. During the period a further net issuance of 9.9m shares increased the Company s share capital. This, combined with active trading, means that in the view of Numis Securities, the Company s Corporate Broker, the Company is one of the most liquid in the sector. Dividends The current quarterly dividend is 0.525p. As in previous years the Board will consider the final quarterly dividend before the end of the year. Outlook Although income growth for the market appears to be slowing, the portfolio is in a strong position to meet our aspiration of distributing increasing dividends and of producing capital returns less volatile than the market as a whole. R G Hanna Chairman 10 May Troy Income & Growth Trust plc

5 Principal Risks and Uncertainties The principal risks facing the Company relate to the Company s investment activities and include market price risk (comprising interest rate risk, foreign currency risk and other price risk), liquidity risk and credit risk. Other risks faced by the Company include breach of regulatory rules which could lead to suspension of the Company s Stock Exchange Listing, financial penalties, or a qualified audit report. Breach of Section 1159 of the Corporation Tax Act 2010 could lead to the Company being subject to tax on capital gains. An explanation of these principal risks and how they are managed is contained in the Directors Report within the Annual Report and Accounts for the year ended 30 September The Company s principal risks and uncertainties have not changed since the date of the annual report and are not expected to change for the remaining six months of the Company s financial year. Directors' Responsibility Statement The Directors are responsible for preparing the half yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge: the condensed set of interim financial statements contained within the half yearly financial report have been prepared in accordance with International Accounting Standard 34; and, the Interim Board Report includes a fair review of the information required by 4.2.7R (indication of important events during the first six months of the financial year and description of principal risks and uncertainties for the remaining six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the FCA s Disclosure and Transparency Rules. The half yearly financial report for the six months to 31 March 2013 comprises the Interim Board Report, the Directors Responsibility Statement and a condensed set of financial statements. For and on behalf of the Board R G Hanna Chairman 10 May 2013 Half Yearly Report

6 Investment Portfolio Ordinary Shares As at 31 March 2013 Market Total value portfolio '000 % Ordinary Shares British American Tobacco 5, % HSBC Holdings 5, % Royal Dutch Shell 4, % GlaxoSmithKline 4, % Reckitt Benckiser Group 4, % Reynolds American 4, % Centrica 4, % Astrazeneca 4, % Unilever 4, % BP 4, % Ten largest investments 48, % Vodafone 4, % National Grid 4, % Schroders (Non voting) 3, % Experian 3, % Pennon Group 3, % Amlin 3, % Sage Group 3, % Pearson 3, % Jardine Lloyd Thompson 3, % SSE 3, % Twenty largest investments 85, % Provident Financial 3, % Imperial Tobacco 3, % Coca-Cola 3, % Severn Trent 2, % Compass Group 2, % Newmont Mining 2, % Nestle 2, % Microsoft 2, % BG Group 2, % WH Smith 2, % Thirty largest investments 113, % Diageo 2, % Londonmetric Property 1, % Rathbone Brothers 1, % Dairy Crest 1, % Greggs 1, % 3i Infrastructure 1, % Inmarsat 1, % Land Securities Group 1, % Primary Health Properties 1, % Associated British Foods 1, % Paypoint 1, % Altria Group 1, % Standard Chartered 1, % ICAP % Total ordinary shares 135, % 4 Troy Income & Growth Trust plc

7 Investment Portfolio Other Investments As at 31 March 2013 Market Total value portfolio '000 % Preference shares Co-operative Bank 9.25% Non-Cum Pref 1, % Total investments 136, % Half Yearly Report

8 Portfolio Analysis Analysis oflisted Equity Portfolio Oil & Gas Basic Material Industrials Consumer Goods Healthcare Consumer Services Telecommunications Utilities Financials Technology 0% 5% 10% 15% 20% 25% 30% 31/03/13 30/09/12 Distributionof Assets and Liabilities As at 31 March 2013 Valuation at Valuation at 30 September Appreciation/ 31 March 2012 Purchases Sales (depreciation) 2013 '000 % '000 '000 '000 '000 % Listed investments Ordinary shares 116, ,433 (8,183) 11, , Other fixed interest 2, (585) (4) 1, , ,433 (8,768) 11, , Current assets 7, , Current liabilities (1,160) (0.9) (2,370) (1.7) Net assets 124, , Net asset value per share 55.18p 60.29p 6 Troy Income & Growth Trust plc

9 Income Statement Six months ended Six months ended Year ended 31 March March September 2012 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes '000 '000 ' Gains on investments held at fair value 11,788 11,788 5,300 5,300 7,765 7,765 Currency losses (3) (3) (21) (21) (8) (8) Income 2 2,333 2,333 1,512 1,512 3,886 3,886 Investment management fees (173) (321) (494) (92) (170) (262) (217) (403) (620) Other administrative expenses (207) (207) (186) (186) (364) (364) Finance costs of borrowing (5) (10) (15) Profit before taxation 1,953 11,464 13,417 1,234 5,109 6,343 3,300 7,344 10,644 Taxation 3 (41) (41) (19) (19) (55) (55) Profit for the period 1,912 11,464 13,376 1,215 5,109 6,324 3,245 7,344 10,589 Earnings per Ordinary share (pence) The Profit for the period is also the Total Comprehensive Income for the period as defined in IAS1 (revised). The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with International Financial Reporting Standards ( IFRS ). The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income and losses are attributable to the equity holders of the Company. No operations were acquired or discontinued during the period. Half Yearly Report

10 Balance Sheet As at As at As at 31 March 31 March 30 September (unaudited) (unaudited) (audited) ' Non-current assets Ordinary shares 135,310 71, ,267 Other fixed interest 1,584 2,045 2,173 Investments held at fair value through profit or loss 136,894 73, ,440 Current assets Accrued income and prepayments 1,574 1, Cash and cash equivalents 5,963 1,645 6,596 Total current assets 7,537 3,618 7,245 Total assets 144,431 77, ,685 Current liabilities Trade and other payables (2,370) (829) (428) Dividends payable (732) Total current liabilities (2,370) (829) (1,160) Net assets 142,061 76, ,525 Issued capital and reserves attributable to equity holders Called-up share capital 58,904 35,342 56,421 Share premium account 34,115 5,773 30,941 Special reserve 58,163 58,163 58,163 Capital reserve (11,907) (25,606) (23,371) Revenue reserve 2,786 2,554 2,371 Equity shareholders' funds 142,061 76, ,525 Net asset value per Ordinary share (pence) Troy Income & Growth Trust plc

11 StatementofChangesinEquity Six months ended 31 March 2013 (unaudited) Share Share premium Special Capital Revenue capital account reserve reserve reserve Total '000 '000 '000 '000 '000 '000 Balance at 30 September ,421 30,941 58,163 (23,371) 2, ,525 Total comprehensive income for the period 11,464 1,912 13,376 Equity dividends (1,497) (1,497) New shares issued 2,483 3,174 5,657 Balance at31march ,904 34,115 58,163 (11,907) 2, ,061 Six months ended 31March 2012 (unaudited) Share Share premium Special Capital Revenue capital account reserve reserve reserve Total '000 '000 '000 '000 '000 '000 Balance at 30 September ,610 1,547 58,163 (30,715) 2,622 63,227 Total comprehensive income for the period 5,109 1,215 6,324 Equity dividends (1,283) (1,283) New shares issued 3,732 4,226 7,958 Balance at 31 March ,342 5,773 58,163 (25,606) 2,554 76,226 Year ended 30 September 2012 (audited) Share Share premium Special Capital Revenue capital account reserve reserve reserve Total '000 '000 '000 '000 '000 '000 Balance at 30 September ,610 1,547 58,163 (30,715) 2,622 63,227 Total comprehensive income for the year 7,344 3,245 10,589 Equity dividends (3,496) (3,496) Costs incurred on issue of new shares (558) (558) Contribution to costs incurred on issue of new shares New shares issued 24,811 29,698 54,509 Balance at 30 September ,421 30,941 58,163 (23,371) 2, ,525 Half Yearly Report

12 Cash Flow Statement Six months Six months Year ended ended ended 31 March 31 March 30 September (unaudited) (unaudited) (audited) ' Cash flows from operating activities Investment income received 2,221 1,379 3,621 Deposit interest received Administrative expenses paid (649) (422) (856) Cash generated from operations 1, ,766 Finance costs paid (15) Taxation (32) (8) (55) Net cash inflows from operating activities 1, ,696 Cash flows from investing activities Purchases of investments (13,501) (10,743) (34,517) Sales of investments 7, ,021 Net cash outflow from investing activities (5,599) (10,351) (31,496) Net cash outflow before financing (4,058) (9,401) (28,800) Financing activities Proceeds of issue of shares 5,657 6,437 32,576 Dividends paid (2,229) (1,283) (2,764) Costs incurred on issue of new shares (317) Net cash inflow from financing activities 3,428 5,154 29,495 Net (decrease)/increase in cash and short term deposits (630) (4,247) 695 Cash and short term deposits at the start of the period 6,596 5,910 5,910 Effect of foreign exchange rate changes (3) (18) (9) Cash and short term deposits at the end of the period 5,963 1,645 6, Troy Income & Growth Trust plc

13 Notes to the Accounts 1. Accounting policies (a) Basis of accounting The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting, as adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). They have also been prepared using the same accounting policies applied for the year ended 30 September 2012 financial statements. (b) Dividends payable Dividends are recognised in the period in which they are paid. Six months ended Six months ended Year ended 31 March March September Income ' Income from listed investments UK dividend income 2,052 1,383 3,516 Overseas dividend income ,332 1,511 3,885 Other income from investment activity Deposit interest Total income 2,333 1,512 3, Taxation Following changes in the Finance Bill 2009 dividends and other distributions from foreign companies received on or after 1 July 2009 have largely been exempt from UK corporation tax. However, the Company continues to be subject to irrecoverable US withholding tax of 15% on income received from US portfolio holdings. Half Yearly Report

14 Notesto the Accounts (continued) 4. The following table shows the revenue for each period less the dividends declared in respect of the financial period to which they relate. Six months ended Six months ended Year ended 31 March 2013 A 31 March 2012 B 30 September 2012 C ' Revenue 1,912 1,215 3,245 Dividends declared (2,452) (1,361) (3,145) (540) (146) 100 A Dividends declared relate to the first two interim dividends (both 0.525p each) declared in respect of the financial year 2012/2013. B Dividends declared relate to the first two interim dividends (both 0.5p each) declared in respect of the financial year 2011/2012. C Dividends declared relate to the five interim dividends declared in respect of the financial year 2011/2012 totalling 2.025p. Six months ended Six months ended Year ended 31 March March September Return and net asset value per share p p p Revenue return Capital return Total return The figures above are based on the following: ' Revenue return 1,912 1,215 3,245 Capital return 11,464 5,109 7,344 Total return 13,376 6,324 10,589 Weighted average number of Ordinary shares in issue 233,223, ,440, ,380,633 The net asset value per share is based on net assets attributable to shareholders of 142,061,000 (31 March ,226,000; 30 September ,525,000) and on 235,614,445 (31 March ,366,419; 30 September ,684,445) Ordinary shares in issue at the period end. 6. Ordinary share capital During the six months ended 31 March 2013 there were 9,930,000 new Ordinary shares of 25p each issued by the Company for proceeds totalling 5,657,000. During the six months ended 31 March 2012 there were 14,924,987 new Ordinary shares of 25p each issued for proceeds totalling 7,958,000. During the year to 30 September 2012 there were 99,243,013 new Ordinary shares of 25p each issued by the Company for proceeds totalling 54,545,159. Of the 99,243,013 shares issued, 39,543,885 shares were allotted for non cash consideration of 21,932,912. All other shares issued during the year to 30 September 2012 were issued for cash. 12 Troy Income & Growth Trust plc

15 7. Capital reserve The capital reserve reflected in the Balance Sheet at 31 March 2013 includes gains of 23,857,000 (31 March 2012 gains of 11,654,000; 30 September 2012 gains of 14,356,000) which relate to the revaluation of investments held at the reporting date. 8. Transaction costs During the period expenses were incurred in acquiring or disposing of investments classified as held at fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Consolidated Income Statement. The total costs were as follows: Six months ended Six months ended Year ended 31 March March September 2012 ' Purchases Sales Publication of non-statutory accounts The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Sections of the Companies Act The financial information for the six months ended 31 March 2013 and 31 March 2012 has not been audited. The information for the year ended 30 September 2012 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under Section 498 (2), (3) or (4) of the Companies Act This Half Yearly Financial Report was approved by the Board on 10 May Half Yearly Report

16 Corporate Information Directors Ronald G Hanna Jann Brown Kevin Hart David Warnock Manager Troy Asset Management Limited Brookfield House 44 Davies Street London W1K 5JA Secretary and Registered Office Steven Cowie C.A. Personal Assets Trust Administration Company Limited 10 St Colme Street Edinburgh EH3 6AA Registration Number: (Scotland) Registrars and Transfer Office Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone Overseas Helpline Calls cost 8p per minute plus network extras. Lines are open 8.30 am to 5.30 pm Monday to Friday. Website Auditors Ernst & Young LLP Solicitors Dickson Minto W.S. Bankers HSBC Bank Plc Corporate Broker Numis Securities Ltd Company Registration Number (Scotland) 14 Troy Income & Growth Trust plc

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20 Troy Income & Growth Trust plc, 10 St Colme Street, Edinburgh EH3 6AA. Telephone: Website: