Annual Financial Report

RNS Number : 5805S

Troy Income & Growth Trust Plc

22 November 2011

 



TROY INCOME & GROWTH TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2011

1. CHAIRMAN'S STATEMENT

I am pleased to report that the Company has made steady progress on a number of fronts, despite the challenging economic background and volatile market conditions. Over the twelve months to 30 September 2011 the NAV total return was + 7.9%.  The share price total return was +7.8%, reflecting the success of the discount control mechanism, which has been in place since January 2010.  Over the same period the FTSE All-Share Index total return was -4.4%.  The dividends paid in relation to the year to 30 September 2011 totalling 1.9175p per share represent a 6.5% increase on the previous year. The distinctive Troy investment approach has served shareholders well in difficult market conditions and has delivered positive absolute returns, while exposing the portfolio to lower than average volatility.

A cautious approach to gearing has also helped to reduce volatility and although the Company has an overdraft facility in place this will only be drawn down when equity valuations present a compelling opportunity to use leverage. As yet the Manager has not sought to use gearing but this position is reviewed regularly by the Board. At present the level of market volatility is too great.

Economic Background

The past year has seen a considerable contrast between the macro economic background and the experiences of individual companies, particularly those in the more defensive sectors which make up the bulk of the Company's portfolio. The problems of the global financial system, and those countries most weakened in their attempts to shore it up, have grown considerably. The Eurozone in particular has teetered on the brink of crisis as the enormous deficits of Southern Europe threaten to cause the single currency to implode unless Germany agrees to underwrite the vast losses embedded in the system. In contrast many large companies have strong balance sheets and continue to grow revenues, earnings and dividends thanks to exposure to emerging growth markets.  These companies have proved to be more insulated from the macro concerns than the market as a whole.

Performance & Discount Control

Against this background of the Company's NAV total return for the year being +7.9% and the FTSE All-Share Index total return -4.4%, the FTSE 350 Higher Yield Index produced a total return of +2.1%. This shows that this was a period which favoured stocks with above average yields.

It is encouraging that the NAV and share price returns were nearly identical at + 7.9% and +7.8% respectively, indicating that discount volatility was minimal.

Prior to March 2011 the Company was repurchasing many more shares than it was issuing in order to ensure the continued elimination of the discount.  At that date the number of shares in issue had fallen from 121 million to 110 million. I am pleased to say that market demand has led to the reissue of all the shares held in treasury (which peaked at 12.7 million) and then subsequently the issue of 4.5 million new shares in the period to 30 September 2011, so the issued share capital of the Company is now greater than it was when the process began. Shareholders have therefore seen the elimination of the discount and a more liquid market in the Company's shares than considerably larger trusts can offer.

Future

The Board remains of the view that the Troy Income & Growth Trust is an attractive long term savings vehicle. The total expense ratio of 1.3% will reduce as the company grows organically and if suitable opportunities arise, by acquisition. The market would appear to have recognised the Company's clear commitment to its discount control policy and the Company is attracting new investors as a result.

Dividends

One of the Board's objectives is to deliver on a progressive dividend policy.

The fourth interim dividend of 0.5p per share, brought the total dividends for the year to 30 September 2011 to 1.9175p per share, an increase of 6.5% on the total dividends paid for the year to 30 September 2010. The revenue reserve of just under £2m after the fourth quarterly dividend represents approximately 78% of the cost of the annual dividends and should provide comfort to investors. It is the Board's intention, barring unforeseen circumstances, that they will at least maintain the quarterly dividend rate of 0.5p per share for the full year to 30 September 2012.

Conclusion

This has been an encouraging year for investment performance in very difficult market conditions. Increasingly the benefit of reducing the volatility of the share price through our discount control policy is well understood and appreciated. Although the market is likely to remain volatile and the economic environment difficult, our emphasis on low volatility and consistent absolute returns should continue to serve investors well in the future. Unlike many other asset classes, we believe high quality equities still offer a reasonable level of income without exposure to serious overvaluation, whilst income growth also offers some protection from inflation. 

We believe that this formula provides a sound basis for successful long term investment.

R G Hanna

Chairman

22 November 2011

2. MANAGER'S REVIEW

Background

The Company has delivered a strong positive return over the year.  This contrasts markedly with a -4.4% total return from the FTSE All-Share.  However, the weakness of the market return has not entirely surprised us. We believe at Troy that high long term returns from assets can only be expected from a strong starting point and 12 months ago the investment climate was far from ideal.  The outlook paragraph of the 2010 Manager's report, written at that time, cites several causes for concern.  Chief amongst these was the Eurozone and the unfolding Greek sovereign crisis.  Despite a plethora of meetings and summits the intervening 12 months have delivered little progress.  The eventual expansion of the European Financial Stability Fund to an increasingly inadequate level of €440bn has just been ratified by the final member state. Spain and Italy have both been added to the list of countries who have seen their sovereign debt downgraded by the ratings agencies while the Greeks have failed to deliver on their austerity commitments and the market continues to be racked by intermittent fears of new crises in the banking sector.

The possibility of further rounds of quantitative easing also weighed heavily on our minds at that time.   A $600bn second round of extraordinary monetary easing was announced in November 2010 and was met with much less enthusiasm by the market than the initial tranche. Doubts over the efficacy of this policy have only increased nervousness.  Lastly, we also expressed concerns regarding inflation and GDP growth. A combination of loose monetary policy, an increase in the level of VAT and a series of external price shocks has driven inflationary measures to above 5.2%, a level not seen since 2008.  The latest quarterly UK growth figure was a paltry 0.1%.  This is alarmingly low when the level of monetary stimulus that has been implemented is considered.

What we could not have anticipated was the tragic earthquake and tsunami that struck Japan in March of this year.  In addition to the huge human cost, markets fell hard and it is evident that there has been a sizable negative impact on global GDP.

Performance

Despite the poor equity market return your Company delivered a share price total return of +7.8% and a Net Asset Value (NAV) total return of +7.9% over the year, a 12.3% NAV total return outperformance of the FTSE All-Share total return of -4.4%.  This performance has also been delivered with significantly lower volatility than that of the broader market.  The discrepancy between the NAV return and the price return is minimal at 0.1% and this is testament to the robust nature of the discount control mechanism.

Discount Control Mechanism

The additional liquidity created by the implementation of the mechanism has allowed investors, both buyers and sellers, to benefit from a much higher level of liquidity than would have been experienced had the mechanism not been implemented. What is more, buybacks were all conducted at a narrow discount to NAV, and shares issued were all at a small premium.  As a result this process delivered a 12 month net asset value enhancement of £114,000, in excess of three times the cost of implementing the mechanism. The Company remains committed to ensuring that shareholders can sell at or close to their net asset value at all times.

During the course of its reporting year the Company bought back slightly in excess of 5m shares and issued more than 15.1m shares from treasury.  All the shares held in treasury, including all those bought back during the initial period of closing the discount, have now been reissued to the market.  What is more, a further 4.5m new shares have been created using the authority granted at the AGM.  The Company is now growing.

Continued growth of the Company will place downwards pressure on the total expense ratio.  As such we are committed to the continued growth of the Company.

Troy Investment Approach

Troy Asset Management's mandate remains unaltered.   We continue to strive to generate consistent long term investment returns without exposing investors to undue levels of volatility.  One of the pillars of this investment philosophy is that, over the long term, the empirical evidence shows that the lion's share of the total return from the UK equity market has been delivered by dividends and dividend growth and not derived from the revaluation of equities.  As such, it comes as no surprise to us to see that an index of the UK's higher yielding stocks generated a positive return of +2.1% over the year compared to -4.4% for the broader index. The outperformance of the portfolio, even when compared to this higher yielding index, can be attributed to our additional focus on quality and valuation.

Portfolio Changes

The continued uncertainty faced by equity markets has meant that the portfolio retained its stance over the year.  Towards the end of 2010 a new holding in Dairy Crest, the milk distributor and branded dairy manufacturer, was purchased. Following a period of weakness the shares were yielding in excess of 5% and represented strong value on a number of measures.  Since the initial purchase the Dairy Crest Board has announced increases to both the interim and final dividends, combining to deliver 7% dividend growth.

In the spring the decision was made to sell the Company's holding of Lancashire Holdings, the Lloyds insurer.  The stock had returned in excess of 70% since the initial purchase but following a series of natural disasters, including the Christchurch earthquake, and with the US hurricane season approaching, the risks looked to have increased for this specialist catastrophe insurer.  Although no significant hurricane events have yet materialised, our sale of Lancashire Holdings illustrates the focus on reducing risk that has protected the Company from the excessive volatility of the market throughout the year.

At the same time we also made an initial purchase of Reckitt Benckiser, the healthcare and household goods company.  The stock had been significantly de-rated during the preceding months and was bought on a 3.8% yield with expectations that the dividend would continue to grow at a rate significantly in excess of inflation.  In July a 10% increase in the Reckitt Benckiser interim dividend was announced.

A holding in the 3i Infrastructure fund was started.  The Fund is expected to deliver a steadily growing dividend from a diversified base of infrastructure assets.  As further investment opportunities arise the infrastructure fund will become more fully invested and the potential for higher returns will increase.

Finally, new holdings were bought in Jardine Lloyd Thompson, the specialist insurance broker, and Inmarsat, a unique global satellite communications systems owner and operator.  Both companies occupy niches within their industry that allow them to make above average returns and both were trading on attractive valuations.  Our view on JLT's valuation has since been reinforced by an offer from Jardine Matheson to buy a further 10% of the outstanding shares at a price more than 20% above where the Company's holding was purchased.

Investment Outlook

It seems to us that the subtle hand of the market is being increasingly replaced by the clunking fist of government.  Extraordinary monetary policy, huge fiscal pressures and increased regulation are all driving extreme distortions in asset valuations and the mis-pricing of risk.  In these circumstances both uncertainty and volatility remain elevated and as such the Company remains defensively positioned to cope with this environment.  However, our August purchases of Inmarsat and Jardine Lloyd Thompson came following a 15% fall in the FTSE All-Share and were the result of a first brief glimpse of value being offered to investors.  If we see further evidence of more widespread value on offer then both cash, and potentially gearing, could be used to take advantage of this.

Troy Asset Management Limited

22 November 2011

Troy Asset Management is an independent fund management company aiming to generate absolute returns for investors over the long term. It manages approximately £2.9bn of assets including three open-ended investment funds: the Trojan Fund, the Trojan Income Fund and the Trojan Capital Fund; and two investment trusts: Troy Income & Growth Trust plc and Personal Assets Trust plc. Our investors include private individuals, charities, pension funds, trusts and endowments.

3. RESULTS & DIVIDENDS

Financial Highlights
	2011	2010
Net asset value total return	+7.9%	+13.1%
Share price total return	+7.8%	+19.2%
Benchmark total return	-4.4%	+12.5%
Dividend per share	1.9175p	1.80p
Dividend yield*	3.9%	3.8%
FTSE All-Share Index yield	3.7%	3.2%
* Dividend per share/share price at 30 September

Performance (total return)
	Year ended	From Change of Manager 26 months ended
	30 September	30 September
	2011	2011
Share price	+7.8%	+48.9%
Net asset value per share	+7.9%	+37.8%
FTSE All-Share Index	-4.4%	+21.3%

Dividends
	Rate per share	xd date	Record date	Payment date
First interim dividend	0.4725p	5 January 2011	7 January 2011	28 January 2011
Second interim dividend	0.4725p	6 April 2011	8 April 2011	28 April 2011
Third interim dividend	0.4725p	6 July 2011	8 July 2011	29 July 2011
Fourth interim dividend	0.5000p	5 October 2011	7 October 2011	28 October 2011
2010/11	1.9175p
First interim dividend	0.45p	6 January 2010	8 January 2010	29 January 2010
Second interim dividend	0.45p	7 April 2010	9 April 2010	30 April 2010
Third interim dividend	0.45p	7 July 2010	9 July 2010	30 July 2010
Fourth interim dividend	0.45p	6 October 2010	8 October 2010	29 October 2010
2009/10	1.80p

Distribution of Assets and Liabilities
	Valuation at					Valuation at
	30 September				Appreciation/	30 September
	2010		Purchases	Sales	(depreciation)	2011
	£'000	%	£'000	£'000	£'000	£'000	%
Listed investments
Ordinary shares	49,574	92.2	9,325	(6,186)	2,394	55,107	87.2
Convertibles	224	0.4	-	-	(7)	217	0.3
Other fixed interest	2,104	3.9	-	-	(182)	1,922	3.0
	______	_____	________	_______	________	______	_____
	51,902	96.5	9,325	(6,186)	2,205	57,246	90.5
	______	_____	________	_______	________	______	_____
Current assets	2,122	3.9				6,247	9.9
Current liabilities	(217)	(0.4)				(266)	(0.4)
	______	_____				______	_____
Net assets	53,807	100.0				63,227	100.0
	______	_____				______	_____
Net asset value per share	48.06p					50.00p
	______					______

4.  BUSINESS REVIEW

Activities

The Company is an investment trust. Its subsidiary undertaking, G.I.T. Securities Limited, did not trade during the year and was dissolved with effect from 29 September 2011.

Investment Objective and Policy

Following shareholder approval at an extraordinary general meeting held on 17 September 2009, 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.

Results and Dividends

The financial statements for the year ended 30 September 2011 appear below. Dividends declared in respect of the year amounted to 1.9175p per share (2010 - 1.8p). The fourth interim dividend of 0.5p per share announced on 29 September 2011 (2010 - 0.45p) will be accounted for in the financial year ending on 30 September 2012.

Share Capital

At the Annual General Meeting held on 21 January 2011, shareholders approved the renewal of the authority permitting the Company to make market purchases of its own Ordinary shares. This authority (which, unless renewed, will expire at the conclusion of the Company's forthcoming AGM) is limited to Ordinary shares with a maximum aggregate nominal value of £4,210,894 (being equal to approximately 14.99% of the Ordinary shares in issue as at 21 January 2011). It is proposed that this authority will be renewed at the Company's forthcoming AGM. During the year ended 30 September 2011 5,065,000 Ordinary shares with an aggregate nominal value of £1,266,250 were purchased and 15,059,335 Ordinary shares were re-issued. The issued share capital at 30 September 2011 consisted of 126,441,432 Ordinary shares of 25p each and there were no Ordinary shares held in treasury. As at the date of this report the issued share capital consisted of 128,641,432 Ordinary shares of 25p each and no Ordinary shares held in treasury. Each holder of Ordinary shares, excluding treasury shares, is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary share held.

Principal Risks and Uncertainties and Risk Management

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 the principal risks and how they are managed is contained below and in note 17 to the financial statements.

Risk Management

The Directors are responsible for supervising the management of the Company, while the day-to-day management of the Company's assets has been delegated to the Manager. Troy is an independent fund management company aiming to generate absolute returns for investors over the longer term. Troy seeks to preserve and build investors' wealth by constructing conservative portfolios for the long term which demonstrate lower than average volatility.

Portfolio exposure is limited by the investment guidelines drawn up by the Board in conjunction with the Manager.

These, (which may only be varied with the permission of the Board), include:

-    Overseas investments not to exceed 15% of gross assets;

-    UK equity portfolio to comprise between 30 and 50 individual holdings;

-    No more than 6% of gross assets in any one FTSE 100 stock;

-    No more than 3% of gross assets in any one Mid 250 stock;

-    No more than 2% of gross assets in any one small cap stock;

-    No more than 20% of gross assets in any one FTSE Industry Sector.

Analysis of Portfolio

An analysis of the portfolio is given in the Manager's Review and the Distribution of Assets and Liabilities.

Manager

With effect from 1 August 2009, investment management services are provided to the Company by Troy Asset Management Limited and the fee is at an annual rate of 0.75% of the Company's net assets. The key terms of the investment management agreement (including details of the arrangements relating to the termination of the Manager's appointment) are set out in the section entitled "Investment Management Agreement" below.

Investment Management Agreement

Details of the fee charged by Troy in the financial year and how it is calculated are set out in note 3 to the financial statements. The Board believes the fee charged by Troy is competitive by comparison with other investment trusts with a similar investment mandate and is priced appropriately given the level of service provided by the Manager.

The contract between the Company and Troy may be terminated by either party on 6 months' notice. No compensation is payable to the Manager in the event of termination of the contract over and above payment in respect of the required minimum notice.

The contract is also terminable summarily by either party in the event of material breach by the other party; the occurrence of certain events suggesting the insolvency of the other party or relating to the winding up of the other party; the serious misconduct, negligence, wilful default, or fraud of the other party; or the Company being the subject of any reconstruction or amalgamation following a continuation vote having failed to be passed by the Company in general meeting and/or the Company being wound up, liquidated or dissolved. In addition, the Company is entitled to terminate the contract summarily (a) if Francis Brooke ceases to be a full-time executive of Troy, (b) if Troy ceases to have the appropriate FSA authorisation to manage the Company's assets, (c) if Troy or any of its employees or associates is involved in any conduct which is materially prejudicial to the interests of the Company, (d) if Troy undergoes a change of control (other than through a change of control whereby the existing management team of Sebastian Lyon, Francis Brooke and Simon de Zoete increases its aggregate holding in Troy to more than 50 per cent of the voting rights or through a change of control which does not involve a change of control of the Manager's ultimate holding company), (e) if the Company ceases to satisfy the conditions for approval as an investment trust by reason of the Manager's negligence or wilful default or (f) if an FSA audit or investigation gives rise to an adverse finding in relation to any significant aspect of the Manager's business which might be expected to have a materially adverse effect on the Company's business or reputation.

The Board considers the continuing appointment of the Manager to be in the best interests of the shareholders at this time. The Board believes Troy has the skills and experience appropriate to achieving the Company's investment objective.

Company Secretary

On 1 July 2010 Personal Assets Trust Administration Company Ltd ('PATAC') were appointed to provide Company Secretarial, accounting and administrative services, for an annual fee of £95,000 plus VAT payable quarterly in advance. The appointment is terminable on three months notice. These services were previously provided by Aberdeen Asset Managers Ltd for an annual fee of £100,000, plus VAT, chargeable monthly in advance.

Going Concern

The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. In reaching this view, the Directors reviewed the level of expenditure of the Company against the cash and asset liquidity within the portfolio.

Discount Policy

The Company's discount policy was introduced with effect from the conclusion of the AGM held on 14 January 2010. This policy is to ensure that the Ordinary shares trade at close to net asset value through a combination of share buy-backs and the issue of new Ordinary shares at a premium to net asset value where demand exceeds supply.

This discount control mechanism is operated by Troy for a fee (additional to its investment management fee) of £30,000 per annum (excluding VAT) and from 1 October 2010 this has been charged to the share premium account.

The Directors will continue to seek the renewal of the Company's authority to buy back Ordinary shares annually and at other times should this prove necessary. Any buy-back of Ordinary shares will be made subject to the Companies Act 2006 and within guidelines established from time to time by the Board and the making and timing of any buy-backs will be at the absolute discretion of the Board. The Directors will be authorised to cancel any Ordinary shares purchased under such authority or to hold them in treasury. Purchases of Ordinary shares will only be made through the market for cash at prices below the prevailing net asset value of the Ordinary shares (as last published). Such purchases will also only be made in accordance with the rules of the UK Listing Authority which provide that the price to be paid must not be less than the nominal value of an Ordinary share nor more than the higher of (a) 5% above the average of the middle market quotations for the Ordinary shares for the five business days before the purchase is made and (b) the higher of the price of the last independent trade and the highest current independent bid relating to an Ordinary share on the trading venue where the purchase is carried out.

It is the intention of the Directors that the share buy-back authority is used to purchase Ordinary shares if the middle market price for a Share is below the net asset value per Ordinary share most recently published by the Company (taking into account any rights to which the Ordinary shares are trading "ex"). However, nothing in this discount policy will require the Directors to take any steps that would require the Company to make a tender offer for its shares or to publish a prospectus. Notwithstanding this discount policy, there is no guarantee that the Ordinary shares will trade at close to the net asset value per Ordinary share. Shareholders should note that this discount policy could lead to a reduction in the size of the Company over time.

Share Premium Account and Special Capital Reserve

At an Extraordinary General Meeting of the Company held on 5 August 2010, the shareholders approved, subject to the consent of the Court of Session, the cancellation of the share premium account and the creation of a special capital reserve. The Court of Session in Scotland consent was received on 1 October 2010 and the cancellation of the share premium account and the creation of the special capital reserve has been reflected in the year to 30 September 2011. The special capital reserve may only be used for certain restricted purposes including the purchase of the Company's own shares.

By Order of the Board

Steven Cowie C.A.
Secretary

22 November 2011

5. STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Report & Accounts, including the group and parent company financial statements, in accordance with applicable law and regulations. Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under the law they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and have elected to prepare the parent company financial statements on the same basis.

Under Company law, the Directors must not approve the group financial statements unless they are satisfied they present fairly the financial position, financial performance and cash flows of the group for that period.

In preparing each of the group and parent company financial statements, the Directors are required to:

-    select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

-    present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

-    provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the group's financial position and performance;

-    make judgements and estimates that are reasonable and prudent; and

-    state whether they have been prepared in accordance with IFRSs as adopted by the EU subject to any material departures disclosed and explained in the Notes to the Financial Statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's transactions and disclose with reasonable accuracy at any time the financial position of the group and enable them to ensure that its financial statements comply with the Companies Act 2006 and Article 4 of IAS Regulation. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement under Disclosure and Transparency Rules

Each of the Directors confirms that to the best of their knowledge:

-    the group financial statements, prepared in accordance with IFRSs, as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group; and

-    the Directors' Report (incorporating the other sections of this document which are referred to in it) includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties that the group faces.

For and on behalf of Troy Income & Growth Trust plc

I M Boyd

Chairman of the Audit Committee

22 November 2011

TROY INCOME & GROWTH TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

		Year ended 30 September 2011			Year ended 30 September 2010
		Revenue	Capital		Revenue	Capital
	Note	return	return	Total	return	return	Total
Profits on investments held at fair value	10	-	2,200	2,200	-	4,765	4,765
Currency (losses)/gains		-	(4)	(4)	-	2	2
Revenue	2
Income from listed investments		2,766	-	2,766	2,650	-	2,650
Other income		2	-	2	-	-	-
		______	_______	______	______	_______	______
		2,768	2,196	4,964	2,650	4,767	7,417
		______	_______	______	______	_______	______
Expenses
Investment management fees	3	(154)	(285)	(439)	(151)	(151)	(302)
VAT recoverable on investment management fees	3	19	19	38	-	-	-
Other administrative expenses	4	(373)	-	(373)	(357)	-	(357)
Finance costs of borrowing	5	(5)	(10)	(15)	(8)	(8)	(16)
		______	_______	______	______	_______	______
Profit before taxation		2,255	1,920	4,175	2,134	4,608	6,742
Taxation	6	(35)	-	(35)	(30)	-	(30)
		______	_______	______	______	_______	______
Profit for the year		2,220	1,920	4,140	2,104	4,608	6,712
		______	_______	______	______	_______	______
Earnings per Ordinary share (pence)	9	1.95	1.68	3.63	1.80	3.94	5.74
		______	_______	______	______	_______	______

The "Profit for the Year" is also the Groups' Total Comprehensive Income for the year as defined in IAS1 (revised).

The total column of this statement represents the Group's Statement of Comprehensive Income, prepared in accordance with IFRS, as adopted by the European Union. The supplementary revenue return and capital return columns are both prepared as explained in the accounting policies. All items in the above statement derive from continuing operations.

All income and losses are attributable to the equity holders of the parent company. There are no minority interests.

No operations were acquired or discontinued during the year.

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment in predominantly UK equities.

The accompanying notes are an integral part of these financial statements.

TROY INCOME & GROWTH TRUST PLC

BALANCE SHEETS

		Group		Company
		As at	As at	As at	As at
		30 September	30 September	30 September	30 September
		2011	2010	2011	2010
	Notes	£'000	£'000	£'000	£'000
Non-current assets
Ordinary shares		55,107	49,574	55,107	49,574
Convertibles		217	224	217	224
Other fixed interest		1,922	2,104	1,922	2,104
		______	______	______	______
Investments held at fair value through profit or loss	10	57,246	51,902	57,246	51,902
Subsidiary	11	-	-	-	5
		______	______	______	______
		57,246	51,902	57,246	51,907
		______	______	______	______
Current assets
Accrued income and prepayments		337	344	337	344
Cash and cash equivalents		5,910	1,778	5,910	1,778
		______	______	______	______
Total current assets		6,247	2,122	6,247	2,122
		______	______	______	______
Total assets		63,493	54,024	63,493	54,029
Current liabilities
Trade and other payables		(266)	(217)	(266)	(404)
		______	______	______	______
Total current liabilities		(266)	(217)	(266)	(404)
		______	______	______	______
Net assets		63,227	53,807	63,227	53,625
		______	______	______	______
Issued capital and reserves attributable to equity holders of the parent
Called-up share capital	12	31,610	30,486	31,610	30,486
Share premium account	13	1,547	53,204	1,547	53,204
Special reserve	14	58,163	249	58,163	249
Capital reserve	15	(30,715)	(32,635)	(30,715)	(32,635)
Revenue reserve	16	2,622	2,503	2,622	2,321
		______	______	______	______
Equity shareholders'   funds		63,227	53,807	63,227	53,625
		______	______	______	______
Net asset value per Ordinary share (pence)	9	50.00	48.06
		______	______	______	______

TROY INCOME & GROWTH TRUST PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For year ended 30 September 2011
		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	30,486	53,204	249	(32,635)	2,503	53,807
Total comprehensive income for the year	-	-	-	1,920	2,220	4,140
Equity dividends	-	-	-	-	(2,101)	(2,101)
Cancellation of share premium account	-	(53,204)	53,204	-	-	-
Release of costs of cancellation of share premium account	-	-	5	-	-	5
Shares issued from treasury	-	435	7,256	-	-	7,691
Shares bought back into treasury	-	-	(2,551)	-	-	(2,551)
New shares issued	1,124	1,112	-	-	-	2,236
	______	______	______	______	______	______
Balance at 30 September 2011	31,610	1,547	58,163	(30,715)	2,622	63,227
	______	______	______	______	______	______
For year ended 30 September 2010
Balance at 30 September 2009	30,486	53,204	4,658	(37,243)	2,887	53,992
Total comprehensive income for the year	-	-	-	4,608	2,104	6,712
Equity dividends	-	-	-	-	(2,488)	(2,488)
Costs of cancellation of share premium account	-	-	(40)	-	-	(40)
Shares issued from treasury	-	-	213	-	-	213
Shares bought back into treasury	-	-	(4,582)	-	-	(4,582)
	______	______	______	______	______	______
Balance at 30 September 2010	30,486	53,204	249	(32,635)	2,503	53,807
	______	______	______	______	______	______
Company Statement of Changes in Equity
For year ended 30 September 2011
		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	30,486	53,204	249	(32,635)	2,231	53,625
Total comprehensive income for the year	-	-	-	1,920	2,402	4,322
Equity dividends	-	-	-	-	(2,101)	(2,101)
Cancellation of share premium account	-	(53,204)	53,204	-	-	-
Release of costs of cancellation of share premium account	-	-	5	-	-	5
Shares issued from treasury	-	435	7,256	-	-	7,691
Shares bought back into treasury	-	-	(2,551)	-	-	(2,551)
New shares issued	1,124	1,112	-	-	-	2,236
	______	______	______	______	______	______
Balance at 30 September 2011	31,610	1,547	58,163	(30,715)	2,622	63,227
	______	______	______	______	______	______
For year ended 30 September 2010
Balance at 30 September 2009	30,486	53,204	4,658	(37,243)	2,705	53,810
Total comprehensive income for the year	-	-	-	4,608	2,104	6,712
Equity dividends	-	-	-	-	(2,488)	(2,488)
Costs of cancellation of share premium account	-	-	(40)	-	-	(40)
Shares issued from treasury	-	-	213	-	-	213
Shares bought back into treasury	-	-	(4,582)	-	-	(4,582)
	______	______	______	______	______	______
Balance at 30 September 2010	30,486	53,204	249	(32,635)	2,321	53,625
	______	______	______	______	______	______

TROY INCOME & GROWTH TRUST PLC

CONSOLIDATED AND COMPANY CASH FLOW STATEMENT

	Year ended		Year ended
	30 September 2011		30 September 2010
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Investment income received	2,778		2,548
Deposit interest received	2		-
Other cash receipts	38		538
Administrative expenses paid	(770)		(741)
	________		________
Cash generated from operations (note 21 (a))		2,048		2,345
Finance costs paid		(15)		(16)
Taxation		(35)		(261)
		________		________
Net cash inflows from operating activities		1,998		2,068
Cash flows from investing activities
Purchases of investments	(9,325)		(9,427)
Sales of investments	6,186		14,136
	________		________
Net cash (outflow)/inflow from investing activities		(3,139)		4,709
		________		________
Net cash (outflow)/inflow before financing		(1,141)		6,777
Financing activities
Proceeds of issue of shares	9,927		213
Cost of share buy backs	(2,551)		(4,582)
Dividends paid	(2,101)		(2,488)
Release of costs/ (costs) of cancellation of share premium account	5		(40)
	________		________
Net cash inflow/(outflow) from financing activities		5,280		(6,897)
		________		________
Net increase/(decrease) in cash and short term deposits (note 21(b))		4,139		(120)
Cash and cash equivalents at the start of the year		1,778		1,896
Effect of foreign exchange rate changes		(7)		2
		________		________
Cash and cash equivalents at the end of the year		5,910		1,778
		________		________

TROY INCOME & GROWTH TRUST PLC

YEAR ENDED 30 SEPTEMBER 2011

1.	Accounting Policies
	(a)	Basis of accounting
		The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect, and to the extent that they have been adopted by the European Union.
		The financial statements are presented in Sterling which is regarded as the functional currency and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.
		The principal accounting policies adopted are set out below. These policies have been applied consistently throughout the current and prior year apart from the allocation of certain expenses. During the year the Board reviewed the allocation of the investment management fee and finance costs which, until 30 September 2010, were allocated 50% to revenue and 50% to capital. It was felt that these expenses should now be allocated 35% to revenue and 65% to capital to reflect the Board's expectations of future returns.  Where presentational guidance set out in the Statement of Recommended Practice ("SORP") 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009) is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
		In order better to reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under Section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally, the net revenue of the Company is the measure the Directors believe appropriate in assessing the Group's compliance with certain requirements set out in Section 1159 of the Corporation Tax Act 2010.
		At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:
		-	Amendment to IAS 1 - Presentation of Financial Statements - amendments resulting from the May 2010 annual improvements to IFRSs (effective for annual periods beginning on or after 1 January 2011).
		-	Amendment to IAS 24 - Related Party Disclosures - revised definition of related parties (effective for annual periods beginning on or after 1 January 2011).
		-	Amendment to IFRS 7 - Financial Instruments: Disclosures - amendments resulting from the May 2010 annual improvements to IFRSs (effective for annual periods beginning on or after 1 January 2011).
		-	Amendment to IFRS 7 - Financial Instruments: Disclosures - amendments enhancing disclosures about transfers of financial assets (effective for annual periods beginning on or after July 2011).
		-	IFRS 9 - Financial Instruments - Classification and Measurement (effective for annual periods beginning on or after 1 January 2013).
		-	IFRS 12 - Disclosures of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2013).
		-	IFRS 13 - Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013).
		The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Group's financial results in the period of initial application. The Group intends to adopt the standards in the reporting period when they become effective.
	(b)	Consolidation
		The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary) made up to 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The Company has availed itself of the relief from showing an Income Statement for the parent company, granted under Section 408 of the Companies Act 2006.
	(c)	Investments - Securities held at Fair Value
		Investments are recognised or derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.
		As the Group's business is investing in financial assets with a view to profiting from their total return in the form of interest, dividends or increases in fair value, listed equities and fixed interest securities are designated as fair value through profit or loss on initial recognition. All investments designated upon initial recognition as held at fair value through profit or loss are measured at subsequent reporting dates at their fair value, which is the bid price as at close of business on the Balance Sheet date.
		Gains and losses arising from the changes in fair value are included in net profit or loss for the period as a capital item. Expenses which are incidental to the acquisition and disposal of investments are treated as capital costs.
		In respect of the Company, the subsidiary was valued at cost with any amounts owed to or from the subsidiary disclosed in the Balance Sheet.
	(d)	Income
		Dividend income from equity investments including preference shares which have a discretionary dividend is recognised when the shareholders' rights to receive payment has been established, normally the ex-dividend date.
		Interest from debt securities is accounted for using the effective interest rate method. Any write off of the premium or discount on acquisition as a result of using this basis is allocated as a revenue item in the Income Statement. Interest from deposits is dealt with on an accrual basis.
		Underwriting commission is taken to revenue, unless any shares underwritten are required to be taken up, in which case the proportionate commission received is deducted from the cost of the investment.
	(e)	Expenses
		All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except those where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. Accordingly the investment management fee and finance costs have been allocated 50% to revenue and 50% to capital to 30 September 2010. In order to reflect the Directors' expected long-term view of the nature of the investment returns of the Company, these have from 1 October 2010, been allocated 35% to revenue and 65% to capital.
	(f)	Bank borrowings
		Interest-bearing bank loans and overdrafts are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Income Statement using the effective interest rate method.
	(g)	Taxation
		The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date.
		The allocation method used to calculate tax relief on expenses presented against capital returns is the 'marginal basis'. Under this basis if taxable income is not capable of being offset entirely by expenses presented in revenue then unutilised expenses arising in capital will be set against income with an amount based on current tax rates charged against income and credited to capital.
		Deferred tax is provided in full on temporary differences which result in an obligation at the Balance Sheet date to pay more tax, or a right to pay less tax, at a future date at rates expected to apply when they crystallise, based on current tax rates and law. Temporary differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
	(h)	Foreign currency
		Transactions denominated in foreign currencies are recorded at the actual exchange rate as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at fair value by using the rate of exchange prevailing at the year end. The currencies to which the Company was exposed were Swiss Francs and US Dollars.
		Any gain or loss arising from a movement in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve.
	(i)	Cash and cash equivalents
		Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
	(j)	Use of estimates
		The preparation of financial statements require the Group to make estimates and assumptions that affect items reported in the Balance Sheet and Group Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial instruments. Although these estimates are based on the Directors' best knowledge of current facts, circumstances and, to some extent, future events and actions, the Group's actual results may ultimately differ from those estimates. There were no material accounting estimates in the current period.

		2011	2010
2.	Income	£'000	£'000
	Income from listed investments
	UK dividend income	2,551	2,448
	Interest income from investments and overseas interest	215	200
	Underwriting Income	-	2
		________	________
		2,766	2,650
		________	________
	Other income from investment activity
	Interest on recoverable VAT on management fees	2	-
		________	________
		2	-
		________	________
	Total income	2,768	2,650
		________	________

3.	Investment management fees
	On 31 July 2009, Troy Asset Management Limited ("Troy") became the Investment Manager. The investment management fee paid is at an annual rate of 0.75% of the Company's net assets, calculated monthly and paid quarterly. The fee until 30 September 2010 was allocated 50% to revenue and 50% to capital. From 1 October 2010 the fee is allocated 35% to revenue and 65% to capital.

		2011			2010
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	154	285	439	151	151	302
		_______	______	______	_______	______	______
	In the year ended 30 September 2011 the Company recognised a refund of £38,000 plus interest of £2,000, representing the proportion of VAT charged on investment management fees for the period to 30 September 2007 that was recoverable; and this has been allocated to revenue and capital in accordance with the accounting policy of the Company for the periods in which the VAT was charged. Interest on the refund was allocated to revenue.

		2011	2010
4.	Administrative expenses	£'000	£'000
	Directors' remuneration - fees as Directors	60	61
	Secretarial fees - AAM	-	89
	Secretarial fees - PATAC	95	24
	Fees payable to auditor
	- fees payable to the Company's auditor for the audit of the annual accounts	22	21
	- fees payable to the Company's auditor for taxation services	9	5
	Discount management fee (see note 12)	-	24
	Other management expenses {a}	187	133
		_______	_______
		373	357
		_______	_______
	{a} Includes non-recurring expenses of £36,000 (2010 - £nil).
	Following the appointment of Troy, the Company received secretarial services from Aberdeen Asset Managers Limited ("AAM"), which was charged at a rate of £100,000 per annum exclusive of VAT. On 1 July 2010 Personal Assets Trust Administration Company Ltd ('PATAC') were appointed to provide these services at £95,000 per annum exclusive of VAT.
	The Company had no employees during the year (2010 - nil). No pension contributions were paid for Directors (2010 - £nil).

		2011			2010
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
5.	Finance costs and borrowings	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts repayable within one year	5	10	15	8	8	16
		______	_____	_____	_____	_____	_____
	Interest on bank overdrafts is at floating rates related to the lenders' UK base rates.

	.
		2011			2010
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
6.	Taxation	£'000	£'000	£'000	£'000	£'000	£'000
	Irrecoverable overseas tax	35	-	35	30	-	30
		_______	______	______	_______	______	______
	The following table is a reconciliation of the current taxation charge to the charges or credits which would arise if all ordinary activities were taxed at the standard UK effective corporation tax rate of 27% (2010 - 28%):
		2011			2010
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Profit on ordinary activities before taxation	2,255	1,920	4,175	2,134	4,608	6,742
		_______	______	______	_______	______	______
	Taxation of return on ordinary activities at the standard rate of corporation tax	609	518	1,127	598	1,290	1,888
	Effects of:
	UK dividend income not liable to further tax	(689)	-	(689)	(627)	-	(627)
	Overseas dividend income not liable to further tax	(58)	-	(58)	(115)	-	(115)
	Disallowed expenses	2	-	2	3	-	3
	Capital (profits)/losses not taxable	-	(593)	(593)	-	(1,335)	(1,335)
	Movement in unutilised management expenses	136	75	211	141	45	186
	Overseas withholding tax suffered	35	-	35	30	-	30
		_______	______	______	_______	______	______
	Current taxation charge for the year	35	-	35	30	-	30
		_______	______	______	_______	______	______
	At 30 September 2011, the Group had surplus management expenses of £1,435,000 (2010 - £662,000) with a tax value of £373,000 (2010 - £185,000) to carry forward. No deferred tax has been recognised in the current or prior period because it is considered too uncertain that there will be suitable taxable profits from which the future reversal of the deferred tax asset could be deducted.

7.	Profit attributable to Ordinary shareholders of the Company
	The revenue profit attributable to equity holders of the Group for the financial year includes £2,402,000 (2010 - £2,104,000) which has been dealt with in the Company's financial statements.

				2011		2010
8.		Dividends on equity shares		£'000		£'000
		Amounts recognised as distributions to equity shareholders in the year:
		Fourth interim dividend for the year ended 30 September 2009 of 0.75p per share		-		911
		Fourth interim dividend for the year ended 30 September 2010 of 0.45p per share		504		-
		Three interim dividends for the year ended 30 September 2011 totalling 1.4175p (2010 - three interims totalling 1.35p) per share		1,597		1,577
				________		________
				2,101		2,488
				________		________
		The fourth interim dividend of 0.5p per share, declared on 29 September 2011 and paid on 28 October 2011, has not been included as a liability in these financial statements.
		We also set out below the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered.
				2011		2010
				£'000		£'000
		Three interim dividends for the year ended 30 September 2011 totalling 1.4175p (2010 - 1.35p) per share		1,597		1,577
		Fourth interim dividend for the year ended 30 September 2011 of 0.5p (2010 - 0.45p) per share		633		504
				________		________
				2,230		2,081
				________		________
			2011		2010
9.	Return and net asset value per share		£'000		£'000
	The returns per share are based on the following figures:
	Revenue return		2,220		2,104
	Capital return		1,920		4,608
			________		________
	Total		4,140		6,712
			________		________
	Weighted average number of Ordinary shares		113,953,962		116,936,176
			__________		__________
	The net asset value per share is based on net assets attributable to shareholders of £63,227,000 (2010 - £53,807,000) and on 126,441,432 (2010 - 111,948,182) Ordinary shares in issue at the year end.

		Group & Company
		2011	2010
10.	Investments held at fair value through profit or loss	£'000	£'000
	Listed on recognised stock exchanges:
	United Kingdom	52,621	46,770
	Overseas	4,625	5,132
		________	________
		57,246	51,902
		________	________
		Group & Company
		2011	2010
		£'000	£'000
	Opening book cost	46,679	51,419
	Opening fair value gains on investments held	5,223	427
		________	________
	Opening fair value	51,902	51,846
	Purchases	9,325	9,427
	Sales - proceeds	(6,186)	(14,136)
	Sales - net gains/(losses) on sales	1,113	(31)
	Movement in fair value during the year	1,092	4,796
		________	________
	Closing fair value	57,246	51,902
		________	________
	Closing book cost	50,931	46,679
	Closing fair value gains on investments held	6,315	5,223
		________	________
	Closing fair value	57,246	51,902
		________	________
	All investments are categorised as held at fair value through profit or loss, and were designated as such upon initial recognition.
	The total transaction costs on purchases was £50,000 (2010 - £51,000) and on sales £9,000 (2010 - £21,000).
		Group & Company
		2011	2010
	Gains/(losses) on investments held at fair value	£'000	£'000
	Net gains/(losses) on sales	1,113	(31)
	Gains in investment holdings	1,092	4,796
	Capital loss on dissolution of subsidiary	(5)	-
		________	________
		2,200	4,765
		________	________

		2011	2010
11.	Subsidiary	£'000	£'000
	Shares at cost	-	5
		________	________
	The Company owned 100% of the Ordinary share capital of its sole subsidiary, G.I.T. Securities Limited, an investment dealing company registered in Scotland. This Company was dormant and was dissolved with effect from 29 September 2011.

		Ordinary shares of 25p each
12.	Called-up share capital	Number	£'000
	Authorised
	At 30 September 2011 & 30 September 2010	200,000,000	50,000
		__________	________
	Allotted, called up and fully paid
	At 30 September 2011	126,441,432	31,610
	Held in treasury	-	-
		__________	________
		126,441,432	31,610
		__________	________
	Allotted, called up and fully paid
	At 30 September 2010	111,948,182	27,987
	Held in treasury	9,994,335	2,499
		__________	________
		121,942,517	30,486
		__________	________
	During the year to 30 September 2011 there were 5,065,000 Ordinary shares of 25p each repurchased by the Company at a total cost, (including transaction costs), of £2,551,300 and placed in treasury. During the year to 30 September 2010 there were 9,915,350 Ordinary shares of 25p each repurchased by the Company at a total cost, (including transaction costs), of £4,582,436 and placed in treasury. During the year to 30 September 2011 the Company re-issued 15,059,335 Ordinary shares of 25p each from treasury for proceeds totalling £7,691,000. During the year to 30 September 2010 the Company re-issued 450,000 Ordinary shares of 25p each from treasury for proceeds totalling £213,500.
	During the year to 30 September 2011 there were 4,498,915 new Ordinary shares of 25p each issued by the Company for proceeds totalling £2,273,075. During the year ended 30 September 2010 no new shares were issued.
	No shares were purchased for cancellation during the year (2010 - nil). At the year end no shares were held in treasury. At 30 September 2010, 9,994,335 shares were held in treasury, which represented 8.20% of the Company's total issued share capital at 30 September 2010. From 1 October 2010 the costs of the operation of the discount control mechanism of £36,000 (including VAT) have been charged against the premium on shares issued.

		2011	2010
13.	Share premium account	£'000	£'000
	At 1 October	53,204	53,204
	Cancellation of share premium	(53,204)	-
	Premium on shares issued from treasury	435	-
	Premium on issue of new shares	1,148	-
	Discount control costs (note 12)	(36)	-
		________	________
	At 30 September	1,547	53,204
		________	________
	On 1 October 2010, following the special resolution passed at the Extraordinary General Meeting held on 5 August 2010, the Courts of Session in Scotland approved the cancellation of the Share Premium Account and the creation of a Special Capital Reserve from the balance of the Share Premium Account.
	This Special Capital Reserve, together with the balance of the Special Reserve (note 14) will be used to fund market purchases by the Company of its own shares.

		2011	2010
14.	Special reserve	£'000	£'000
	At 1 October	249	4,658
	Cancellation of share premium	53,204	-
	Shares bought back during the year into treasury	(2,551)	(4,582)
	Shares issued during the year from treasury	7,256	213
	Release of costs / (costs) of cancellation of the Share Premium Account (note 13)	5	(40)
		________	________
	At 30 September	58,163	249
		________	________
	The purpose of this reserve is to fund market purchases by the Company of its own Ordinary shares.

.

		Group & Company
		2011	2010
15.	Capital reserve	£'000	£'000
	At 1 October	(37,858)	(37,670)
	Net gains/(losses) on sales of investments during the year	1,113	(31)
	Finance costs of borrowings	(10)	(8)
	Capital loss on dissolution of subsidiary	(5)	-
	Investment management fee	(285)	(151)
	VAT recoverable on investment management fees	19	-
	Currency (losses)/gains	(7)	2
		________	________
	At 30 September	(37,033)	(37,858)
		________	________
	Investment holdings gains
	At 30 September	5,223	427
	Investment gains	1,092	4,796
	Unrealised currency gains	3	-
		________	________
		6,318	5,223
		________	________
	Total capital reserve	(30,715)	(32,635)
		________	________

		Group	Company	Group	Company
		2011	2011	2010	2010
16.	Revenue reserve	£'000	£'000	£'000	£'000
	At 1 October	2,503	2,321	2,887	2,705
	Transfer to revenue account net of dividends	119	301	(384)	(384)
		______	______	______	______
	At 30 September	2,622	2,622	2,503	2,321
		______	______	______	______

17.

Risk management, financial assets and liabilities

Risk management

With effect from 17 September 2009, the Company's objective changed to that of providing shareholders with an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominately UK equities.

In pursuit of the Company's objective, the Company's investment policy is to invest in a portfolio of predominately UK equities. Equities are selected for their inclusion within the portfolio solely on the basis of the strength of the investment case with the focus being on long term income growth along with capital preservation.

Asset classes other than equities will be purchased from time to time and will vary as opportunities are identified and will include convertibles, preference shares, fixed income securities and corporate bonds. Investments will be made when prospective returns appear to be superior to those from equity markets or are considered likely to exceed the Company's borrowing costs. However, non-equity securities will not constitute the majority of the portfolio. The Company may also use derivatives for the purpose of efficient portfolio management (including reducing, transferring or eliminating investment risk in its investments and protection against currency risk), to exploit an investment opportunity and to achieve capital growth.

The management of the portfolio is conducted according to investment guidelines, established by the Board after discussion with the Manager, which specify the limits within which the Manager is authorised to act.

Financial assets and liabilities

The Group's financial assets include investments, cash at bank and short-term debtors. Financial liabilities consist of short-term creditors and bank overdraft.

The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, foreign currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.

(i)

Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other price risk.

Interest rate risk

The Company is subject to interest rate risk because the value of fixed interest rate securities are linked to underlying bank rates or equivalents, and its short-term borrowings and cash resources carry interest at floating rates. The interest rate profile is managed as part of the overall investment strategy of the Company.

Interest rate movements may affect:

-

the fair value of the investments in fixed interest rate securities;

-

the level of income receivable on cash deposits;

-

interest payable on the Company's variable rate borrowings.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

Interest rate profile

The interest rate risk profile of the portfolio of financial assets at the Balance Sheet date was as follows (there were no interest bearing financial liabilities at the Balance Sheet dates):

Weighted

average

interest

Fixed

Floating

rate

rate

rate

As at 30 September 2011

%

£'000

£'000

Assets

UK preference shares

8.80

1,922

-

Cash

-

-

5,910

________

______

________

Total assets

-

1,922

5,910

________

______

________

Weighted

average

interest

Fixed

Floating

rate

rate

rate

As at 30 September 2010

%

£'000

£'000

Assets

UK preference shares

8.04

2,104

-

Cash

-

-

1,778

________

______

________

Total assets

-

2,104

1,778

________

______

________

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The cash assets consist of cash deposits on call earning interest at prevailing market rates. Short-term debtors and creditors have been excluded from the above tables.

Maturity profile

The maturity profile of the Company's financial assets and liabilities at the Balance Sheet date was as follows:

Within

Within

Within

Within

Within

More than

1 year

1-2 years

2-3 years

3-4 years

4-5 years

5 years

At 30 September 2011

£'000

£'000

£'000

£'000

£'000

£'000

Fixed rate

UK preference shares

-

-

-

-

-

1,922

________

_____

______

________

______

________

Floating rate

Cash

5,910

-

-

-

-

-

________

_____

______

________

______

________

Total

5,910

-

-

-

-

1,922

________

_____

______

________

______

________

Within

Within

Within

Within

Within

More than

1 year

1-2 years

2-3 years

3-4 years

4-5 years

5 years

At 30 September 2010

£'000

£'000

£'000

£'000

£'000

£'000

Fixed rate

UK preference shares

-

-

-

-

-

2,104

________

_____

______

________

______

________

Floating rate

Cash

1,778

-

-

-

-

-

________

_____

______

________

______

________

Total

1,778

-

-

-

-

2,104

________

_____

______

________

______

________

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Company's:

-

profit before tax for the year ended 30 September 2011 would increase/decrease by £29,000 (2010 - £9,000) given the Company's exposure to interest rates on its floating rate cash balances. These figures have been calculated based on cash positions at each year end.

-

profit before tax for the year ended 30 September 2011 would decrease by £114,000 (2010 - decrease by £136,000), increase by £130,000 (2010 - increase by £156,000) given the Company's exposure to interest rates on its fixed interest securities.

-

net assets at 30 September 2011 would decrease by £85,000 (2010 - decrease by £127,000), increase by £101,000 (2010 - increase by £147,000) as a result of the combined effect on its floating rate cash balances and its fixed interest securities.

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception.

Foreign currency risk

A proportion of the Company's investment portfolio is invested in overseas securities and the income and capital value can be affected by movements in exchange rates. Exchange gains or losses may arise as a result of the movement in the exchange rate between the date of the transaction denominated in a currency other than sterling and its settlement.

An analysis of the Group's currency exposure is detailed below:

30 September 2011

30 September 2010

Net

Net

Overseas

monetary

Overseas

monetary

investments

assets

investments

assets

£'000

£'000

£'000

£'000

US Dollar

3,492

59

3,001

63

Swiss Franc

1,133

-

1,020

-

_______

_______

_______

_______

Total

4,625

59

4,021

63

_______

_______

_______

_______

Foreign currency sensitivity

There is no sensitivity analysis included, as the Group's significant foreign currency financial instruments are in the form of equity investments, which have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.

Other price risk

Other price risks (i.e. changes in market prices other than those arising from interest rate risk) may affect the value of the quoted investments.

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The allocation of assets to specific sectors and the stock selection process both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are all listed on recognised investment exchanges.

Other price sensitivity

If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders and equity reserves for the year ended 30 September 2011 would have increased/decreased by £5,511,000 (2010 - increase/decrease of £4,957,000). This is based on the Company's equity portfolio held at each year end.

(ii)

Liquidity risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of overdraft facilities.

(iii)

Credit risk

This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.

The risk is not significant, and is managed as follows:

-

investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker;

-

the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the administrator carries out a stock reconciliation to the custodian's records on a monthly basis to ensure discrepancies are picked up on a timely basis.

-

cash is held only with reputable banks and financial institutions with high quality external credit enhancements.

None of the Company's financial assets is secured by collateral or other credit enhancements.

Credit risk exposure

In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 30 September was as follows:

2011

2010

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£'000

£'000

£'000

£'000

Non-current assets

Securities at fair value through profit or loss

217

217

224

224

Current assets

Accrued income

337

337

344

344

Cash and short term deposits

5,910

5,910

1,778

1,778

________

________

________

________

6,464

6,464

2,346

2,346

________

________

________

________

None of the Company's financial assets is past due or impaired.

Fair value of financial assets and liabilities

The book value of cash at bank included in these financial statements approximates to fair value because of the short-term maturity. The carrying value of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. For all other short-term debtors and creditors, their book values approximate to fair value because of their short-term maturity.

Gearing

The Company has in place a multi-currency overdraft facility with HSBC for the lesser of £5 million or 15% of the market value of assets they hold as custodians. This gives the Company the ability to augment finance from time to time with short-term borrowings. The facility is secured against the cash accounts and assets held by the custodian.

The Group had no outstanding gearing at the year end. The profile of financing costs is managed as part of overall investment strategy. The employment of gearing magnifies the impact on net assets of both positive and negative changes in the value of the Group's portfolio of investments.

18.	Capital management policies and procedures
	The Company's capital management objectives are:
	-	to ensure that the Company will be able to continue as a going concern; and
	-	to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt.
	The Company's capital at 30 September comprised:
				2011	2010
				£'000	£'000
	Equity share capital			31,610	30,486
	Retained earnings and other reserves			61,617	23,321
				________	________
				63,227	53,807
				________	________
	The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	-		the planned level of gearing, which takes account of the Manager's views on the market;
	-		the need to buy back equity shares for cancellation or to hold in treasury, which takes account of the difference between the net asset value per share and the share price (i.e. the level of share price discount or premium);
	-		the need for new issues of equity shares; and
	-		the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	The Company had no gearing at the year end (2010 - nil).

19.	Commitments and contingencies
	At 30 September 2011 there were no contingent liabilities in respect of outstanding underwriting commitments or uncalled capital (2010 - £nil).

20.	Financial instruments measured at Fair Value
					2011				2010
		Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
	Investments	57,246	-	-	57,246	51,902	-	-	51,902
	Cash and cash equivalents	5,910	-	-	5,910	1,778	-	-	1,778
		______	_____	______	______	______	_____	______	______
		63,156	-	-	63,156	53,680	-	-	53,680
		______	_____	______	______	______	_____	______	______
	Level 1 reflects financial instruments quoted in an active market.
	Level 2 reflects financial instruments the fair value of which is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.
	Level 3 reflects financial instruments the fair value of which is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.

21.	Notes to the Cash Flow Statement
	(a)  Reconciliation of operating profit to operating cash flows
				2011	2010
				£'000	£'000
	Profit before taxation			4,175	6,742
	Add interest payable			15	16
	Adjustments for:
	Gains on investments			(2,200)	(4,765)
	Currency losses/(gains)			4	(2)
	Decrease in accrued income and prepayments			7	426
	Increase/ (decrease) in trade and other payables			47	(72)
				________	________
				2,048	2,345
				________	________
	(b)  Analysis of  changes in net funds
		30 September	Cash	Exchange	30 September
		2010	Flow	Movements	2011
		£'000	£'000	£'000	£'000
	Cash at bank	1,778	4,139	(7)	5,910
		________	________	________	________

Additional Notes to the Annual Financial Report This Annual Financial Report announcement is not the Company's statutory accounts for the year ended 30 September 2011. The statutory accounts for the year ended 30 September 2011 received an audit report which was unqualified. The statutory accounts for the financial year ended 30 September 2011 were approved by the Directors on 22 November 2011 but will not be filed with the Registrar of Companies until after the company's Annual General Meeting which is to be held at 10.00am on 5 January 2012 at 16 Charlotte Square, Edinburgh, EH2 4DF. The Annual Report will be posted to shareholders in December 2011 and available in due course by download for the Company's webpage (http://tigt.co.uk/secure/documents/annual/TIGTAnnual2011.pdf) Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested. For Troy Income & Growth Trust plc Steven Cowie, C.A., Secretary 22 November 2011 Enquiries: 0131 538 6610

 

END

 

 

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