Half Yearly Report

RNS Number : 6790V

Midas Income & Growth Trust PLC

17 December 2013

 



To:                    RNS

From:                Midas Income and Growth Trust plc

Date:                17 December 2013

Unaudited results for the six months ended 31 October 2013

·      Net asset value total return of 6.8%

·      Share price total return of 5.2%

·      Annualised volatility* 8.3% compared with 12.8% for the FTSE All-Share Index

·      Quarterly dividend increased by 3.1% to 1.34 pence

·      Share price discount 10.0% (4.3% currently)

Introduction

I am pleased to be writing to the shareholders of a Company with whom I was first involved as a corporate adviser in 2006, when it changed its name from The Taverners Trust to Midas Income & Growth Trust.  I was appointed a Director of the Company in April this year, and this is my first communication with shareholders since I succeeded Hubert Reid as Chairman in September.  I am pleased to report that, since my appointment, your Company has continued the level of strong investment performance allied to low volatility which has marked it since the introduction of the new investment policy in January 2012.

Investment Objective

The Company's investment objective is to outperform 3-month LIBOR plus 3.0 per cent over the longer term, with low volatility and the prospect of income and capital growth, through investment in a multi-asset portfolio.

Investment and Share Price Performance

Your Company's net asset value total return for the six month period was 6.8%, ahead of the benchmark return of 1.7%.  21 months does not yet represent the longer term, but at 31 October 2013 your Company's net asset value total return since the introduction of the new investment policy in January 2012 was 31.1%; the benchmark returned 6.6%, and the FTSE All-Share index 30.6%.  In spite of the degree of outperformance, this was achieved in the context of a volatility level that was substantially lower than that of the market over both the six month period and since January 2012. The emphasis on low volatility is one of the distinguishing features of your Company and the Manager talks about volatility in more detail in his Review.

The discount at which the Company's shares trade to net asset value had ticked up at 31 October 2013 to 10.0%; but, as we have stepped up the marketing of your Company, has resumed tightening and currently stands at 4.3% as I write.

Discount Control

It was clear from some of the questions at the Annual General Meeting ("AGM") that the Board had not made clear its policy on discount control.  I would like to take the opportunity offered by my Interim Statement to revisit what it was prior to the changes in investment policy in January 2012, and to state what it has been since then and continues to be.  The Company used to have a policy of repurchasing shares, in 'normal' market conditions, if the discount exceeded 5%.  Following the approval of the revised investment mandate and the introduction of an annual continuation vote in January 2012, the Board sees the principal discount control mechanism as being the annual continuation vote, with the continuing power to buy back shares a tool to be used in particular circumstances as opposed to being used at a specific discount level.

Dividends and Income

Your Company paid two interim dividends of 1.34 pence per share for the period, an increase of 3.1% on the first two interim dividends paid last year.

The policy regarding dividends is that these be paid as three interim dividends of an equal amount, with a fourth interim dividend giving the total dividend payable for each financial year. In deciding the level of the final interim dividend the Board will take into account current year performance and future year prospects.

Gearing

The Company renewed its short term rolling debt facility of £7 million in June 2013.  The new facility was renewed on better terms than its predecessor and runs until 31 October 2015.  It can be cancelled at any time without cost to the Company.  The Company was 11% geared at the end of October.

Investment Outlook

The longer the equity market run persists, the more pressing the questions as to when, and how, it will end.  Equity markets are certainly no longer cheap; but, encouraging global economic data gives support to the idea of potential increases in earnings, while that same economic data is not so encouraging as to suggest a swift tapering of QE.  Longer term bonds continue to look unattractive in the face of potential rate increases and inflation and, on balance, equities remain the asset of choice.  The portfolio mix and weightings reflect this.

Board Changes

I mentioned above that I succeeded Hubert Reid as Chairman in September after the AGM.  Hubert was a Director of the Company from 1996 and Chairman from 2004, while it was still The Taverners Trust.  His experience and wisdom has stood the Company in good stead over many years, and never more so than in connection with the most recent changes to investment policy in January 2012.  He is missed, and we wish him well.

The Board's Priorities

Your Company's investment strategy of growing income from a low volatility, multi asset portfolio is a distinctive one in the Global Growth and Income Sector and one which your Board considers has broad potential appeal. Your Board is focussed on maintaining and building on the excellent investment performance record achieved since the changes to the Company's investment policy approved by shareholders in January 2012, and on marketing the qualities of your Company more actively, with a view to building demand for your Company's shares. Achieving these objectives will both reduce the discount the shares trade at and improve liquidity in your Company's shares. It is pleasing to see the work put in on this front starting to produce results but the Board recognises that this work needs to continue, and is committed to building on the foundations that have been put in place. This remains the top priority for your Board.

Richard Ramsay

Chairman

16 December 2013

*This measure describes the fluctuations of the share price over time. Whilst volatility is specific to a fund's particular mix of investments, higher volatility is generally considered to equate to higher risk 

Manager's Review

Market Commentary

The positive momentum behind equity markets seen through the second half of 2012 continued into the early part of May. However, this positive trend was thrown sharply into reverse following the announcement by Ben Bernanke, Chairman of the Federal Reserve Board, the central bank could begin to taper its asset purchasing programme. This dented investor confidence, although the potential wind-down of  Quantitative Easing (QE) in the United States would also convey a clear signal that the economy was improving. Negative sentiment at this time was further compounded by talk of banking liquidity issues in China. Worst affected in the ensuing sell-off were the Emerging and Asian markets, with Asia and Latin America experiencing their largest capital outflows for two years. Bond markets also reacted adversely with yields rising as investors became concerned that the support provided by QE may be scaled back, perhaps heralding the turning point in the long term bull market for bonds.

As the period progressed, the uncertainties surrounding the potential detrimental impact of tapering abated and equity markets continued their upward march, particularly in the developed world. Even concerns over the Budget impasse in the United States, which resulted in the closure of many non-essential government departments, failed to do anything other than slow the advance in equity markets. As the period drew to a close, new all-time highs were being hit in many of the major equity markets, although recovery in the Asian and Emerging markets was less pronounced. Economic data, whilst still somewhat patchy, became more supportive of a wider based recovery as the period drew to a close.

Investment Report

Summary

The Company's net asset value total return was 6.8% for the period, which compared favourably with the Benchmark return (Annually LIBOR +3%) of 1.7%. The FTSE-All Share Index total return for the period was 7.9%. This outturn was satisfactory, we believe, given that the portfolio return has been achieved with roughly half the level of the Index and peer group volatility. The discount to net asset value widened a little over the period although it has since reduced significantly as our marketing programme increased.

The returns from the portfolio have been a little more muted than in the previous six month period, which is perhaps not too surprising given the rather more mixed performance across financial markets. The investment strategy remains directed to 'real assets' such as equities and to a lesser extent property, where potential exists to receive income which can grow in real terms i.e. ahead of inflation. The underpinning to future returns provided by good and growing income, to our minds provides a stability which should prove beneficial in what still remains an uncertain economic environment. However, valuations of equities cannot, in some areas, be viewed as cheap and the direct UK equity portfolio has been repositioned to take account of this. Exposure to Asian and Emerging Market equities has been a drag on returns over the period, but we feel is still supported by the long term attractions and secular growth prospects.

We remain concerned about the future prospects for inflation, particularly in the UK, and this has again led to a further reduction in bond exposure. Within the fixed interest positions held, emphasis has been placed on short duration corporate bonds and senior loans, which will be early beneficiaries of a turn in the interest rate cycle. Furthermore, shorter maturity bonds should lessen the detrimental impact of inflation, which could be particularly hurtful to longer dated issues. The withdrawal of QE may also create considerable pressure within bond markets, as we move through 2014.

Elsewhere within the portfolio, we have been attracted to the high and inflation linked dividends targeted within the renewable energy market in the UK, with further investment underpinning a significant increase in revenues in this financial year and even more so in 2014 and beyond.

The pursuit of income and capital growth from a multi asset portfolio has continued to control day to day volatility, which remains a big advantage when the Company's performance is compared against its peers in the Global Growth and Income peer group, where investment is almost completely directed to equities. The control of volatility remains a key objective for your manager.

Portfolio Asset Allocation

The portfolio asset allocation at 31 October 2013 is shown in the table below.

Asset Class	Portfolio Weight	Core Allocation	Allocation Range
	%	%	%
UK Equities	36.7 (33.3)	35	15-60
Overseas Equities	30.4 (30.3)	25	10-40
Total equities	67.1 (63.6)	60	25-85
Fixed Interest (inc Cash)	15.1(19.3)	15	10-40
Alternative Assets	12.8 (11.7)	15	0-25
Property	5.0 (5.4)	10	0-25

All figures are expressed as a percentage of Gross assets.

Figures in brackets are portfolio weightings at 30 April 2013.

UK Equities

UK equity exposure was increased over the period as several new positions were introduced to the portfolio. Funding for these new additions was largely raised from sales of holdings such as GKN, Unilever, Reckitt Benckiser, WS Atkins and SSE where strong price performance had left the companies trading on valuations we considered unattractive. New purchases included Amlin, the insurance and re-insurance specialist; Esure, one of the leading writers of motor insurance (this was bought following a significant share price fall); and Aberdeen Asset Management, again following a setback in the shares which we viewed as offering an excellent entry point into the stock. All three companies offer attractive and growing yields, which should significantly enhance the Company's revenue account going forward, whilst also offering the prospect for better capital growth than the stocks sold.

Other positions reduced over the period included GlaxoSmithKline (following a very strong start to the year), Legal & General, National Express and D S Smith. All of these companies had performed well and were top sliced to protect good profits. Additional investment was committed to Balfour Beatty and Kier Group as we feel that the UK construction industry is lowly valued and should see a much improved order flow over the next three years. The addition to Kier was subsequently sold at much higher levels following a strong run in the shares.

The other major addition to the UK portfolio came with a participation in the flotation of Doric Nimrod 3, an aircraft leasing company, which will buy and then lease four Airbus A380 aircraft to the Emirates airline. The targeted yield on this investment is over 8% and potential overall return over the life of the 12 year leases could reach the mid-teens percentages, dependant on residual values for the aircraft.

Overseas equities

Exposure to Overseas equities remained broadly unchanged from the level at 30 April 2013. Asset allocation remained slanted towards Asia and Emerging markets, which was detrimental to returns over the period. However, the long term growth drivers remain intact, we feel, and it has often paid to take a contrarian view on these markets in the past. To a certain degree the negative asset allocation call was mitigated by decent performance from the underlying managers, despite the difficult market environment.

There were two additions to the portfolio over the period namely the Liontrust Asian Equity Income Fund, which we feel compliments other holdings in the region and offers a distinctive stock driven approach together with a strong emphasis on income generating stocks. Additionally a smaller position in British Empire Securities Trust was added at what we felt was an attractive discount to net asset value for such an experienced management team. Additional investment was committed to Blackrock World Mining, as the discount to NAV we felt was likely to narrow with the investment policy operated by the managers moving towards a more income orientated strategy. We were also attracted to increasing commodities exposure, given how out of favour they had become with investors over the past two years.

Funding for these purchases was provided by the sale of the Company's holding in Ecofin Water & Power, following a prolonged period of disappointing performance. In addition, a degree of profit was taken from the holding in Lindsell Train Japanese Equity Fund, where strong performance (and Yen hedging) had produced a significant uplift in value over a 12 month period.

Fixed Interest

Overall exposure was reduced, as we still struggle to find value in monetary assets with yields low and inflationary prospect certainly not priced in. Against this background activity centred on a further reduction in the duration (date of maturity) of holdings, continuing the policy adopted over the previous periods. Only one significant new position was acquired, namely CVC Credit Partners, a closed end fund providing exposure to Senior Secured Loans in Europe and investing across the capital structure of such loans. Senior Loans are reset with reference to short term (LIBOR) rates and are therefore immune from long term inflationary pressures and offer participation to any increase in interest rates. This purchase was partly funded by the sale of the M&G European Loans Fund, together with reductions in the AXA US Short Duration High Yield Bond Fund and Royal London Sterling Extra Yield Bond Fund. Exposure to preference shares was reduced by way of a partial sale on the RSA Insurance Group 7.375% Pref. and we anticipate selling the residual preference share holdings over the course of the year to improve liquidity and limit duration risk within the portfolio.

Alternative Assets

Alternative Asset positions have been added to over the period with a portfolio of three renewable energy vehicles being acquired. Wind and solar power generation is operating under a favourable regulatory regime at present, which should provide investors with not only high initial yields, but also dividends that can increase in line with RPI inflation. Whilst this favourable treatment may not persist, there appears to be a window of opportunity for early investors.

Elsewhere within the Alternative Asset holdings the position in Acencia Debt Strategies was sold following a period of strong performance, which had also seen the discount to NAV narrow to less attractive levels. Private Equity returns benefitted from further redemptions of the Partners Group Global Opportunities Fund (PGGO), which is still carried at a 20% discount to NAV due to the limited liquidity offered. Redemptions are effectively made at a 5% discount due to a dilution levy made on the Fund.  Proceeds from two further quarterly redemptions were used to add to the quoted Princes Private Equity on around a 25% discount and offering a yield of over 7%.

There have been no changes to the carried value of  A J Bell Holdings over the period, despite the Company announcing interim results in June which highlighted further strong growth in the underlying business. The carried value of this unquoted holding remains at 575p per share, which represents a PE ratio of 11.7x (based on September 2012 earnings) and a dividend yield of 4.1%. We believe this holding to be conservatively valued and with great potential to add further significant upside to returns over future years.

Property

Property exposure reduced slightly with only two transactions of any significance. The long standing holding in the Asian Real Estate Income Fund was sold, as the covered call strategy operated within the fund had disappointed in terms of overall returns, despite a very high distribution yield (over 10%). A new investment was made in GCP Student Living, which owns a brand new purpose build student accommodation building in London, with two others under construction. The London market remains very tight for student accommodation and GCP will offer ultra-modern accommodation, which will command premium pricing. Profit was also taken on part of the Macau Property Opportunities holding, which had experienced a very strong share price move on the back of development success and a strong market environment within the Macau property portfolio.

Outlook

Recent economic data has been encouraging, pointing to a wide based recovery across the global economy. However, threats surrounding potential dislocations to markets, whilst perhaps diminished, cannot be ignored. The gradual withdrawal of asset purchasing programme by the US central bank may give rise to a degree of 'Cold Turkey' as investors are weaned off this support but this is a necessary step in the 'normalisation' of capital markets. 

The multi asset strategy operated by the Company is, we believe, unique within the Investment Trust market. The uncertainties prevalent in financial markets often throw up opportunities to invest across a wide range of assets, giving diversification benefits and an overall reduction in volatility. The aim of your manager is to offer capital and income growth, with the delivery of higher dividends being more certain as income projections are stronger in the second half of the year, and particularly so next year. We feel that the strategy of emphasising income and income growth should be both defensive in market falls, but also provide a strong and reliable foundation for future returns. 

Midas Capital Partners Limited

16 December 2013

Enquiries:

Alan Borrows

Midas Capital Partners                                       Tel:  [phone]

Martin Cassels, Company Secretary

R&H Fund Services Limited                                Tel:  [phone]

Unaudited Income Statement

		Six months ended 31 October 2013 (unaudited)			Six months ended 31 October 2012 (unaudited)
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments	2	-	2,865	2,865	-	1,543	1,543
Income		1,309	-	1,309	1,334	-	1,334
Investment management fee		(115)	(115)	(230)	(93)	(93)	(186)
Administration fee		(235)	-	(235)	(184)	-	(184)
Exchange losses		-	-	-	-	(4)	(4)
Net return before finance costs and taxation		959	2,750	3,709	1,057	1,446	2,503
Finance costs		(31)	(31)	(62)	(38)	(38)	(76)
Net return on ordinary activities before taxation		928	2,719	3,647	1,019	1,408	2,427
Taxation		-	-	-	-	-	-
Return on ordinary activities after taxation		928	2,719	3,647	1,019	1,408	2,427
Return per share (pence):	3	2.32	6.82	9.14	2.55	3.53	6.08

The total column of this statement represents the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.

Audited Income Statement

		Year ended 30 April 2013 (audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Gains on investments	2	-	7,941	7,941
Income		2,780	-	2,780
Investment management fee		(198)	(198)	(396)
Administration fee		(353)	-	(353)
Exchange losses		-	(4)	(4)
Net return before finance costs and taxation		2,229	7,739	9,968
Finance costs		(74)	(74)	(148)
Net return on ordinary activities before taxation		2,155	7,665	9,820
Taxation	3	-	-	-
Return on ordinary activities after taxation		2,155	7,665	9,820
Return per share (pence):	4	5.40	19.21	24.61

The total column of this statement represents the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.

Balance Sheet
		As at 31 October	As at 31 October	As at 30 April
		2013	2012	2013
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss		64,412	54,213	59,894
Current assets
Debtors and prepayments		338	209	520
Cash at short term deposits		583	2,002	2,355
		921	2,211	2,875
Creditors: amounts falling due within one year
Bank loan		(7,000)	(7,000)	(7,000)
Other creditors		(127)	(146)	(136)
		(7,127)	(7,146)	(7,136)
Net current liabilities		(6,206)	(4,935)	(4,261)
Net assets		58,206	49,278	55,633
Capital and reserves
Called-up share capital		9,974	9,974	9,974
Share premium account		1,445	1,445	1,445
Special reserve		41,783	41,783	41,783
Capital redemption reserve		2,099	2,099	2,099
Capital reserve	6	2,337	(6,639)	(382)
Revenue reserve		568	616	714
Equity shareholders' funds		58,206	49,278	55,633
Net asset value per share (pence):	8	145.90	123.52	139.44

Reconciliation of Movements in Shareholders' Funds

Six months ended 31 October 2013 (unaudited)

	Notes	Share capital	Share premium	Special reserve	Capital redemption reserve	Capital reserve	Revenue reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2013		9,974	1,445	41,783	2,099	(382)	714	55,633
Return on ordinary activities after taxation		-	-	-	-	2,719	928	3,647
Dividends paid		-	-	-	-	-	(1,074)	(1,074)
Balance at 31 October 2013		9,974	1,445	41,783	2,099	2,337	568	58,206

Six month ended 31 October 2012 (unaudited)

	Notes	Share capital	Share premium	Special reserve	Capital redemption reserve	Capital reserve	Revenue reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2012		9,974	1,445	41,783	2,099	(8,047)	635	47,889
Return on ordinary activities after taxation		-	-	-	-	1,408	1,019	2,427
Dividends paid		-	-	-	-	-	(1,038)	(1,038)
Balance at 31 October 2012		9,974	1,445	41,783	2,099	(6,639)	616	49,278

Year ended 30 April 2013 (audited)

	Notes	Share capital	Share premium	Special reserve	Capital redemption reserve	Capital reserve	Revenue reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2012		9,974	1,445	41,783	2,099	(8,047)	635	47,889
Return on ordinary activities after taxation		-	-	-	-	7,665	2,155	9,820
Dividends paid		-	-	-	-	-	(2,076)	(2,076)
Balance at 30 April 2013		9,974	1,445	41,783	2,099	(382)	714	55,633

Cash Flow Statement
	Six months ended 31 October 2013 (unaudited)	Six months ended 31 October 2012 (unaudited)	Year ended 30 April 2013 (audited)
	£'000	£'000	£'000
Net return on ordinary activities before finance costs and taxation	3,709	2,503	9,968
Adjustments for: Gains on investments	(2,865)	(1,543)	(7,941)
Exchange losses	-	4	4
Decrease/(increase) in accrued income	179	158	(163)
Decrease/(increase) in other debtors	3	(18)	(10)
Increase in creditors	18	50	17
Net cash inflow from operating activities	1,044	1,154	1,875
Net cash outflow from servicing of finance	(89)	(78)	(126)
Net cash (outflow)/inflow from financial investment	(1,653)	140	858
Equity dividends paid	(1,074)	(1,038)	(2,076)
Net cash (outflow)/inflow before financing	(1,772)	178	531
Net cash inflow from financing	-	-	-
(Decrease)/increase in cash	(1,722)	178	531
Reconciliation of net cash flow to movement in net debt
(Decrease)/Increase in cash as above	(1,722)	178	531
Foreign exchange movements	-	(4)	(4)
Movement in net debt in the period	(1,722)	174	527
Opening net debt	(4,645)	(5,172)	(5,172)
Closing net debt	(6,417)	(4,998)	(4,645)
Represented by:
Cash at bank and in hand	583	2,002	2,355
Debt falling due within one year	(7,000)	(7,000)	(7,000)
	(6,417)	(4,998)	(4,645)

Notes

1.   Accounting policies

Basis of accounting

The accounts have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on half-yearly reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis.

The financial statements and the net asset value per share figures have been prepared in

accordance with UK Generally Accepted Accounting Practice (UK GAAP).

The half yearly financial statements have been prepared using the same accounting policies as the preceding annual accounts.

2.   Income

	Six months ended 31 October 2013 £'000	Six months ended 31 October 2012 £'000	Year ended 30 April 2013 £'000
Income from investments
UK franked income	801	671	1,147
UK unfranked income	173	340	612
Overseas dividends	325	318	1,012
	1,299	1,329	2,771
Other income:
Deposit interest	10	5	9
	10	5	9
Total income	1,309	1,334	2,780

3 Return per share

The revenue return of 2.32 pence (31 October 2012 - 2.55 pence; 30 April 2013 - 5.40 pence) per ordinary share is calculated on net revenue on ordinary activities after taxation for the year of £928,000 (31 October 2012 - £1,019,000; 30 April 2013 - £2,155,000) and on 39,896,361 (31 October 2012 - 39,896,361; 30 April 2013 - 39,896,361) ordinary shares being the weighted average number of ordinary shares in issue during the period.

The capital return of 6.82 pence (31 October 2012 - 3.53 pence; 30 April 2013 - 19.21 pence) per ordinary share is calculated on net capital returns for the period of £2,719,000 (31 October 2012 - £1,408,000; 30 April 2013 - £7,655,000) and on 39,896,361 (31 October 2012 - 39,896,361; 30 April 2013 - 39,896,361) ordinary shares being the weighted average number of ordinary shares in issue during the period.

The total return of 9.14 pence (31 October 2012 - 6.08 pence; 30 April 2013 - 24.61 pence) per ordinary share is calculated on the total return for the period of £3,647,000 (31 October 2012 - £2,427,000; 30 April 2013 - £9,820,000) and on 39,896,361 (31 October 2012 - 39,896,361; 30 April 2013 - 39,896,361) ordinary shares being the weighted average number of ordinary shares in issue during the period.

4 Dividends

Ordinary dividends on equity shares deducted from reserves are analysed below:

	Six months ended 31 October 2013	Six months ended 31 October 2012	Year ended 30 April 2012
	£'000	£'000	£'000
2012 fourth interim dividend - 1.30p	-	519	519
2013 first interim dividend - 1.30p	-	519	519
2013 second interim dividend - 1.30p	-	-	519
2013 third interim dividend - 1.30p	-	-	519
2013 fourth interim dividend - 1.35p	539	-	-
2014 first interim dividend - 1.34p	535	-	-
	1,074	1,038	2,076

The Company has declared a second interim dividend in respect of the year ending 30 April 2014 of 1.34p (2013 - 1.30p) per ordinary share which was paid on 13 December 2013 to ordinary shareholders on the register on 22 November 2013.

5 Analysis of capital reserve

The capital reserve reflected in the Balance Sheet at 31 October 2013 includes gains of

£7,193,000 (31 October 2012 - losses of £1,040,000; 30 April 2013 - gains of £4,880,000) which relate to the revaluation of investments held at the reporting date.

6 Net asset value per share

	Six months ended 31 October 2013	Six months ended 31 October 2012	Year ended 30 April 2012
Net asset value per share	£'000	£'000	£'000
Attributable net assets (£'000)	58,206	49,278	55,633
Number of Ordinary shares in issue	39,896,361	39,896,361	39,896,361
Net asset value per Ordinary share (p)	145.90	123.52	139.44

7 Half-Yearly Financial Report

The results for the six months ended 31 October 2012 and six months ended 31 October 2013, which have not been reviewed by the Company's auditors pursuant to the Auditing Practices Board guidance on "Review of Interim Financial Information", constitute non-statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the year ended 30 April 2013 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 2006.

The report and accounts for the half-year ended 31 October 2013 will be posted to shareholders and made available on the website www.mitongroup.com/index.php/private/fund-pages/investment-trusts/midas-income-and-growth-trust-plc.  Copies may also be obtained from the Company Secretary, R&H Fund Services Limited,15-19 York Place, Edinburgh, EH1 3EB.

Principal Risks and Uncertainties

Investment and Market Risks: Managing a portfolio of shares and debt security investments necessarily involves certain risks, the most important of which are set out in the Annual Report for the year ended 30 April 2013. A significant proportion of the assets of the Company may be invested in debt security investments and overseas equities. Whilst this

broader spread of investments is intended to reduce the volatility and risk profile of the Company's portfolio this cannot be assured.

Shares: The market value of the ordinary shares, as well as being affected by the net asset value, also takes into account their supply and demand. The market value of an ordinary share can fluctuate and may not always reflect its underlying net asset value. Investment in the Company should be regarded as long term in nature. There can be no guarantee that

appreciation in the value of the Company's investments will occur and investors may not get back the full value of their original investment.

Investment Objective: There is no guarantee that the investment policy adopted by the Company will provide the returns sought by the Company.

Borrowings: The Company currently utilises gearing in the form of bank borrowings. Gearing has the effect of magnifying market falls and increasing market gains.

Currency: A proportion of the Company's portfolio may be invested in assets denominated in currencies other than sterling. This will increase the currency risk that the Company is exposed to as a result in fluctuations in the exchange rate between the denomination of the investments and the sterling denomination of the Company's base currency.

Dividends: The ability of the Company to pay dividends in respect of the ordinary shares and any future dividend growth will depend on the level of income received from its investments. Accordingly, the amount of dividends paid to shareholders may fluctuate.

Discount: The principal discount control mechanism is the annual continuation vote with the continuing power to buy back shares; a tool to be used in particular circumstances as opposed to being used at a specific discount level.

Key Individuals: The Company is substantially dependent on the services of key individuals working for its Manager, namely Alan Borrows and Simon Callow. The loss of either or both of these individuals could have an adverse effect on the Company's performance.

Taxation: Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) or failure to satisfy the conditions of Sections 1158 - 1159 of the Corporation Tax Act 2010 (including the requirement for a listing) could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post tax returns to shareholders.

Directors' Responsibility Statement in Respect of the Half-Yearly Report

The Directors are responsible for preparing the Half-Yearly Report.

We confirm that to the best of our knowledge:

• the condensed set of financial statements have been prepared in accordance with the statement "Half-Yearly Financial Reports" issued by the UK Accounting Standards Board and give a true and fair view of the assets, liabilities, financial position and return of the Company;

• the Chairman's Statement includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;

• the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R; and

• the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Richard Ramsay

Chairman

16 December 2013

 

END

 

 

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