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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Invesco Income Growth Trust Plc | LSE:IVI | London | Ordinary Share | GB0003585725 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 278.00 | 274.00 | 282.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
Invesco Income Growth Trust plc
Half-Yearly Financial Report for the Six Months to 30 September 2012
KEY FACTS
Invesco Income Growth Trust plc is an investment trust company listed on the London Stock Exchange. The Company is managed by Invesco Asset Management Limited.
Investment Objective
The Company's investment objective is to provide shareholders with long-term capital growth and real long-term growth in dividends from a portfolio yielding more than the FTSE All-Share Index.
The Company will invest principally in UK equities and equity-related securities of UK companies selected from any market sector. In managing the Company's investment portfolio, the Manager will seek to achieve a total return over the long term in excess of the total return on the FTSE All-Share Index.
Full details of the Company's Investment Policy (incorporating the Company's investment objective) can be found on page 11 of the Company's 2012 annual financial report. . Performance Statistics AT AT 30 SEPTEMBER 31 MARCH % 2012 2012 CHANGE Assets
Net asset value per ordinary share
- per Balance Sheet 230.6p 221.7p +4.0
- after deducting proposed dividends 228.6p 218.4p +4.7
Mid-market price per ordinary share 225.50p 213.75p +5.5
Discount per ordinary share 2.2% 3.6%
Gearing
Gross gearing(1) - excluding the 10.8% 7.4%
effect of cash
Net gearing(2) - including the 8.2% 4.8%
effect of cash Notes:
1. Gross gearing: borrowing ÷ shareholders' funds. 2. Net gearing: borrowing less cash and cash equivalents ÷ shareholders'
funds SIX MONTHS SIX MONTHS ENDED ENDED 30 SEPTEMBER 30 SEPTEMBER % 2012 2011 CHANGE Total Return
(includes net dividends reinvested) Net asset value per ordinary share 4.8% -3.6%
FTSE All-Share Index 1.9% -11.8%
Source: Thomson Reuters Datastream
Revenue and Dividends Net revenue after tax (£'000) 3,303 3,176
+4.0
Revenue return per ordinary share 5.6p 5.4p +3.7 Dividends - first interim 2.00p 1.95p - second interim 2.00p 1.95p . CHAIRMAN'S STATEMENT AND INTERIM MANAGEMENT REPORT Performance I must admit to being relieved that in my first statement as your new Chairman, I am able to report a positive result for the six months to 30 September 2012 with a total return on our net asset value of 4.8%, compared to a total return of only 1.9% by our benchmark, the FTSE All-Share Index. My relief arises from the fact that for most of the period such a positive result looked far from certain, with the FTSE All-Share Index falling about 10% in the first two months, as investors reacted to the ongoing Euro crisis, especially the vote in Greece, and the worsening economic news. However, further supportive measures from Central Banks helped markets gradually to recover, albeit in a way that closely resembled the popular Two-Step country-western dance, with its two steps forward and one step back, to finish the period barely ahead of where it had started. So in the circumstances our performance is a good result and our Manager, who is to be congratulated, will comment in more detail as to how this performance was achieved. However, there has been an increasing recognition amongst many investors that the income part of the total return is much more secure than the capital part, so leading them to invest more in the types of companies that we naturally invest in, which has clearly been to our benefit.
Revenue and Dividends
Our revenue has shown further modest growth from the same period last year as many companies were able to increase their dividend despite the difficult economic background.
The Board is pleased to declare a second interim dividend of 2.0p per share in respect of the year ending 31 March 2013. This dividend will be paid on 31 December 2012 to shareholders registered on 7 December 2012. Together with the first interim dividend, this makes a total of 4.0p for the first half of the current financial year compared with 3.9p last year. This is consistent with the Board's objective of achieving a better balance between the three interim and the final dividend payments and should not be taken as an indication of the level of the full year's total distribution.
Outlook
The aftermath of the US elections and the looming US fiscal cliff, the new Chinese leadership and their approach to the weaker Chinese economy, and the seemingly never ending Eurozone crisis are just some of the reasons why volatility in markets could be a feature for some time to come. We can hope that this volatility at least continues to resemble the Two-Step dance, so ensuring some progress. However, there are still good opportunities for investors like our Company and your Board shares our Manager's confidence that our portfolio should be able to generate attractive long term returns. Hugh Twiss Chairman 16 November 2012 . INVESTMENT MANAGER'S REPORT Portfolio Strategy and Review
Concerns over the Eurozone sovereign debt crisis and the outlook for global growth continued to dominate UK stock market sentiment over the six months. The first two months saw equities fall in the face of a growing realisation of the challenges facing the developed world, especially the Eurozone. The stock market then rallied as European leaders committed themselves to the idea of a single supervisor of Eurozone banks and a mechanism to inject capital into troubled banks directly, the European Central Bank announced a new bond buying plan and the US Federal Reserve announced additional and unlimited quantitative easing. The very end of the period, however, saw equities retreat again as the International Monetary Fund warned that it would cut its forecast for global economic growth and civil unrest in Spain and Greece highlighted the challenges facing governments intent on imposing further austerity. The period as a whole was also noteworthy for the number of profit downgrades from companies, particularly within the industrial cyclical part of the market. The positioning of the Company's portfolio, with a focus on strongly positioned companies able to withstand a challenging economic environment, saw it continue to outperform its benchmark. Relative to the benchmark, the portfolio continued to benefit from its zero weighting in the mining sector. The sector underperformed as company results confirmed the impact that falling commodity prices and rising costs are having on earnings and the viability of future projects in the sector. The portfolio is overweight the pharmaceutical sector, and this too provided a positive impact on performance. The shares of AstraZeneca in particular saw a welcome return to favour coinciding with the announcement of the appointment of a new Chief Executive. Other positive impacts on performance came from a broad selection of holdings. Despite the wettest summer for over 100 years, two clothing retail companies - Next and N. Brown - delivered very strong performances. The retail sector remains tricky, with the seemingly inexorable rise of sales via the internet putting pressure on the traditional high street, and both of these companies demonstrated their ability to see the internet as an opportunity rather than a threat. The holding in Whitbread performed strongly over the period, with Costa Coffee continuing its expansion and Premier Inns taking market share from its competition, benefiting from the strength of its parent company's balance sheet. Nichols, the maker of fruit-based soft drink Vimto, also saw its shares post excellent gains. The company confirmed its ability to provide organic growth both in the UK, as it expands from its northern regional base, and overseas. The portfolio has a significant weighting in the tobacco sector, which underperformed over the period. News that the Australian Government had made progress towards the introduction of plain packaging had largely been expected, but appeared to act as a catalyst for profit taking in the sector.
I remain of the view that the companies held in the sector represent exactly the sort of quality stocks that can deliver attractive profit and dividend growth in a low growth economic environment.
Unfortunately the holding in Barclays had a negative impact on performance over the period. In the aftermath of the 2008 banking crisis, these shares fell heavily, to a level at which I believed they were undervalued. They subsequently showed some recovery, but recent newsflow - including the resignation of the Chief Executive - has confirmed the scale of the challenges still facing the company, while I also believe there are better opportunities for investment elsewhere. The shares have therefore been sold from the portfolio. As to other portfolio activity, I have continued to seek to further improve the quality of the holdings. Consistent with this aim, a new investment was made in Spectris, a company which manufactures productivity-enhancing instrumentation and controls for a range of industries, and whose market positioning and strong track record fit my quality criteria for the portfolio.
Outlook
The stock market's rise in the past year, fuelled by monetary stimulus and central bank policy initiatives, has occurred despite reductions in the forecasts of company earnings for the current financial year and beyond. Equity valuations are therefore no longer as cheap as they were at the beginning of the year. I also expect concerns about the Eurozone debt crisis and the outlook for the global economy to remain a feature of the market, as the developed world continues to grapple with the aftermath of the 2008 banking crisis, and that stock market volatility will remain high. However, within the market as a whole, there is still a subset of stocks that look attractively valued, particularly for investors seeking income. My investment strategy of the past three years remains intact - I am seeking companies with strong fundamentals, with sensible management whose interests are aligned with shareholders and with a low risk balance sheet. The high level of equity market volatility of the past year has left the shares of many of these strongly placed companies looking attractive, and I am confident about the outlook for long-term returns from the portfolio. Ciaran Mallon Investment Manager 16 November 2012 .
Related Parties and Transactions with the Manager
The Company has no related parties.
Invesco Asset Management Limited (`IAML'), a wholly owned subsidiary of Invesco Limited, acts as Manager and Company Secretary to the Company. Details of IAML's services and fee arrangements are given in the latest annual financial report, which is available on the Manager's website at www.invescoperpetual.co.uk/investmenttrusts.
Principal Risks and Uncertainties
The principal risk factors relating to the Company can be summarised as:
* Investment objective - there can be no guarantee that the Company will meet its investment objective;
* Market risk - a fall in the stock market as a whole will affect the performance of the portfolio and individual investments;
* Investment risk - there is a risk of poor performance of individual investments. This is mitigated by diversification and monitoring of investment guidelines;
* Shares - share price is affected by market sentiment, supply and demand for the shares, and dividends declared as well as portfolio performance;
* Gearing - borrowing will amplify the effect on shareholders' funds of portfolio gains and losses;
* Regulatory - whilst compliance with rules and regulations is closely monitored, breaches could affect returns to shareholders; and
* Reliance on Third Party Service Providers - The Company has no employees, other than the Board, so is reliant upon the performance of third party service providers, particularly the Manager, for it to function.
A detailed explanation of these principal risks and uncertainties can be found on pages 13 and 14 of the 2012 annual financial report, which is available on the Manager's website. In the view of the Board these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review. Going Concern This half-yearly financial report has 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. In reaching this conclusion, 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 of its liabilities, including bank overdraft and ongoing expenses from its assets. The Directors also considered the revenue forecasts for the forthcoming year and future dividend payments in concluding that the going concern basis is appropriate.
DIRECTORS' RESPONSIBILITY STATEMENT
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 Standards.
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 Report';
- the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R of the FSA's Disclosure and Transparency rules; and
- the interim management report includes a fair review of the information required on related party transactions.
The half-yearly financial report has not been audited or reviewed by the Company's auditor.
Signed on behalf of the Board of Directors.
Hugh Twiss Chairman 16 November 2012 .
TWENTY FIVE LARGEST HOLDINGS AT 30 SEPTEMBER 2012
Ordinary shares unless stated otherwise
MARKET VALUE % OF COMPANY ACTIVITY BY SECTOR £'000 PORTFOLIO GlaxoSmithKline Pharmaceuticals & 6,579 4.4 Biotechnology British American Tobacco 6,462 4.3 Tobacco Imperial Tobacco Tobacco 6,319 4.2 AstraZeneca Pharmaceuticals & 6,233 4.2 Biotechnology BP Oil & Gas Producers 5,609 3.8 HSBC Banks 5,483 3.7 Vodafone Mobile Telecommunications 4,965 3.3
Royal Dutch Shell `B' Oil & Gas Producers 4,069
2.7 Next General Retailers 3,278 2.2 Centrica Gas, Water & Multiutilities 3,263 2.2
Young & Co.'s Brewery Travel & Leisure 3,197
2.2 Croda International Chemicals 3,161 2.1 BT Fixed Line Telecommunications 3,091 2.1 Legal & General Life Insurance 2,880 1.9 Tesco Food & Drug Retailers 2,867 1.9 Whitbread Travel & Leisure 2,865 1.9 Land Securities Real Estate Investment Trusts 2,808 1.9 Reed Elsevier Media 2,782 1.9 SSE Electricity 2,745 1.8 AMEC Oil Equipment, Services & 2,739 1.8 Distribution
Intercontinental Hotels Travel & Leisure 2,727
1.8 Pearson Media 2,660 1.8 Wood Group Oil Equipment, Services & 2,504 1.7 Distribution Filtrona Support Services 2,484 1.7 Compass Travel and Leisure 2,384 1.6 94,154 63.1 Other investments 54,996 36.9 Total investments 149,150 100.0 . CONDENSED INCOME STATEMENT YEAR TO SIX MONTHS TO SIX MONTHS TO 31 MARCH 30 SEPTEMBER 2012 30 SEPTEMBER 2011 2012 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL £'000 £'000 £'000 £'000 £'000 £'000 £'000 Profits/ - 4,150 4,150 - (7,189) (7,189) 8,408 (losses) on investments at fair value through profit or loss Income UK dividends 3,460 - 3,460 3,396 - 3,396 5,947 UK unfranked 243 - 243 208 - 208 445 investment income Overseas - - - 15 - 15 - dividends Underwriting 30 - 30 - - - - commission Investment (239) (239) (478) (231) (231) (462) (920) management fee - note 2 Other expenses (144) - (144) (161) - (161) (306) Net return 3,350 3,911 7,261 3,227 (7,420) (4,193) 13,574 before finance costs and taxation Finance costs (47) (47) (94) (51) (51) (102) (188) Return on 3,303 3,864 7,167 3,176 (7,471) (4,295) 13,386 ordinary activities before and after tax Return per 5.6p 6.6p 12.2p 5.4p (12.8)p (7.4)p 22.9p ordinary share Basic - note 4
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 period. . CONDENSED BALANCE SHEET Registered number 3141073 AT AT AT 30 SEPTEMBER 30 SEPTEMBER 31 MARCH 2012 2011 2012 £'000 £'000 £'000 Fixed assets Investments at fair value 149,150 126,801 138,703 Current assets Amounts due from brokers - 285 -
Prepayments and accrued income 705 730
916 705 1,015 916
Creditors: amounts falling due
within one year Bank overdraft (14,520) (11,542) (9,623) Amounts due to brokers (149) (557) - Accruals and deferred income (149) (142) (165) (14,818) (12,241) (9,788) Net current liabilities (14,113) (11,226) (8,872) Total assets less current 135,037 115,575 129,831 liabilities Capital and reserves Called up share capital 14,638 14,638 14,638 Share premium 40,021 40,021 40,021 Capital redemption reserve 2,310 2,310 2,310 Capital reserve 72,136 52,925 68,272 Revenue reserve 5,932 5,681 4,590 Shareholders' funds 135,037 115,575 129,831
Net asset value per ordinary
share - note 5 Basic 230.6p 197.4p 221.7p .
CONDENSED CASH FLOW STATEMENT
SIX MONTHS TO SIX MONTHS TO YEAR TO 30 SEPTEMBER 30 SEPTEMBER 31 MARCH 2012 2011 2012 £'000 £'000 £'000 Net return before finance costs 7,261 (4,193) 13,574 and taxation Adjustment for (gains)/losses (4,150) 7,189 (8,408) on investments
Decrease/(increase) in debtors 211 87
(99) (Decrease)/increase in (16) (3) 20 creditors Net cash flow from operating 3,306 3,080 5,087 activities Servicing of finance (94) (102) (188) Net financial investment Purchase of investments (9,787) (12,125) (25,492) Sale of investments 3,639 12,080 28,870 Net equity dividends paid (1,961) (1,897) (5,322) Movement in cash in the period (4,897) 1,036
2,955
Net debt at beginning of period (9,623) (12,578) (12,578) Net debt at end of period (14,520) (11,542) (9,623)
Analysis of changes in net debt
Brought forward: Bank overdraft (9,623) (12,578) (12,578) Net debt brought forward (9,623) (12,578) (12,578) Movements in period: Cash (outflow)/inflow from bank (4,897) 1,036 2,955 Net debt at end of period (14,520) (11,542) (9,623) .
CONDENSED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
CAPITAL SHARE SHARE REDEMPTION CAPITAL REVENUE CAPITAL PREMIUM RESERVE RESERVE RESERVE TOTAL £'000 £'000 £'000 £'00 £'000 £'000
For the six months ended 30 September 2012
At 1 April 2012 14,638 40,021 2,310 68,272 4,590 129,831 Net return on - - - 3,864 3,303 7,167 ordinary activities Dividends paid - - - - - (1,961) (1,961) final 2012 At 30 September 14,638 40,021 2,310 72,136 5,932 135,037 2012
For the six months ended 30 September 2011
At 1 April 2011 14,638 40,021 2,310 60,396 4,402 121,767 Net return on - - - (7,471) 3,176 (4,295) ordinary activities Dividends paid - - - - - (1,933) (1,933) final 2011 Unclaimed - - - - 36 36 dividends recovered At 30 September 14,638 40,021 2,310 52,925 5,681 115,575 2011
For the year ended 31 March 2012
At 1 April 2011 14,638 40,021 2,310 60,396 4,402 121,767 Net return on - - - 7,876 5,510 13,386 ordinary activities Dividends paid - - - - (5,358) (5,358) Unclaimed - - - - 36 36 dividends recovered At 31 March 2012 14,638 40,021 2,310 68,272 4,590 129,831 .
Notes to the Condensed Financial Statements
1. Basis of Preparation
The condensed financial statements have been prepared using the same accounting policies as those adopted in the 2012 annual financial report, have been prepared under the historical cost convention and are consistent with applicable UK Accounting Standards and with the Statement of Recommended Practice `Financial Statements of Investment Trust Companies and Venture Capital Trusts'.
2. Management Fee
The investment management fee is calculated and payable monthly in arrears based on the value of the funds under management before deducting borrowings, of 0.7% up to £100 million, 0.6% on the next £50 million, 0.55% on the next £50 million and if in excess of £200 million the fee will be reviewed. This fee is allocated 50% to capital and 50% to revenue.
3. Tax
Owing to the Company's status as an investment company, no tax liability arises on capital gains. No taxable profits arise as expenses exceed taxable income. 4. Basis of Returns SIX MONTHS TO SIX MONTHS TO YEAR TO 30 SEPTEMBER 30 SEPTEMBER 31 MARCH 2012 2011 2012 £'000 £'000 £'000 Returns after tax: Revenue 3,303 3,176 5,510 Capital 3,864 (7,471) 7,876 Total 7,167 (4,295) 13,386 Weighted average number 58,551,530 58,551,530 58,551,530 of shares in issue during the period
5. Basis of Net Asset Value Per Ordinary Share
AT AT AT 30 SEPTEMBER 30 SEPTEMBER 31 MARCH 2012 2011 2012 Shareholders' funds £135,037,000 £115,575,000 £129,831,000 Ordinary shares in 58,551,530 58,551,530 58,551,530 issue at period end
6. Movements in Share Capital
SIX MONTHS TO SIX MONTHS TO YEAR TO 30 SEPTEMBER 30 SEPTEMBER 31 MARCH 2012 2011 2012 Number of ordinary shares: Brought forward 58,551,530 58,551,530 58,551,530 Shares bought back and - - - cancelled In issue at period end 58,551,530 58,551,530 58,551,530 7. Dividends
The first interim dividend of 2p for the quarter ended 30 June 2012 was paid to shareholders on 31 October 2012. The second interim dividend of 2p for the quarter ending 30 September 2012 will be paid on 31 December 2012.
8. Investment Trust Status
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 1159 of the Corporation Tax Act 2010.
9. Status of Half-Yearly Financial Report
The financial information contained in this half-yearly financial report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the half years ended 30 September 2012 and 30 September 2011 has not been audited. The figures and financial information for the year ended 31 March 2012 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 Registrar of Companies and include the Report of the Independent Auditors, which was unqualified and did not include a statement under section 498 of the Companies Act 2006. By order of the Board
Invesco Asset Management Limited
Company Secretary
16 November 2012
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