Final Results

Glasgow Income Trust PLC 27 November 2006 News Release 27 November 2006 Glasgow Income Trust plc Preliminary Results for the year ended 30 September 2006 Glasgow Income Trust's principal objective is to provide shareholders with a high level of income and to obtain growth in both income and capital over the longer term. The Company is managed by Glasgow Investment Managers Limited. 30 September 30 September 2006 2005 (Restated Under IFRS) Total Investments £125.9m £93.3m Shareholders' funds £87.0m £63.4m Market capitalisation £91.4m £65.5m Net asset value (NAV) per share 92.6p 80.4p Ordinary share price 97.25p 83.00p Premium (share price to adjusted NAV)* 7.1% 5.5% Revenue return per share 5.31p 5.24p Dividends per share 5.05p 4.85p Total expense ratio 1.16% 1.43% Total Gearing 44.7% 47.1% Equity Gearing 3.4% 0.8% * IFRS NAV excluding dividend adjustment of 1.81p (2005 - 1.76p) • The Company's total return on net assets for the year to 30 September 2006 was 22.4% and the share price total return was 24.0%. Both were ahead of the Company's benchmark, the FTSE All-Share Index (Total Return) which returned 14.7%. • Dividends declared in respect of the year ended 30 September 2006 were 5.05p, an increase of 4.1% from 2005. • At the year end the share price was 97.25p, producing a yield of 5.2% • At the year end the share price stood at a premium to net asset value per share of 7.1%, reflecting the strength of private investor demand for the Company's shares and the excellent long term performance record. • The Company issued 15,082,488 ordinary shares in the year, the majority through a scheme of reconstruction of the City of Oxford Geared Income Trust, the first time the Company had been chosen as a rollover vehicle for such a scheme • The Directors have recently announced a further share issue through a placing and open offer which has taken the net assets of the Company over £100 million for the first time. The Company is also the chosen rollover vehicle for Gartmore High Income Trust which should result in further expansion of the Company. • The financial statements have been prepared under International Financial Reporting Standards for the first time. The main change is in relation to the treatment of dividends payable by the Company. This change is explained further in the Chairman's statement. For further information please contact: Mike Balfour, Kenneth Harper Glasgow Investment Managers 0141 572 2700 Glasgow Income Trust plc Annual Report 30 September 2006 Chairman's Statement Financial Highlights I am pleased to report continued growth in the Company for the year to 30 September 2006 in each of the net asset value, share price and also dividends payable. The total return on net assets for the period was 22.4% compared to the FTSE All Share Index benchmark total return of 14.7%. The share price total return was also ahead of the benchmark at 24.0% for the year. The Board has declared dividends totalling 5.05p in respect of the financial year to 30 September 2006, an increase of 4.1% from the previous 4.85p. The Board has reviewed income forecasts for the year to 30 September 2007 and, subject to any unforeseen circumstances, hopes to maintain a progressive dividend policy in the forthcoming year. However this should not be taken as a forecast of profits. International Financial Reporting Standards These are the Company's first annual financial statements under International Financial Reporting Standards (IFRS) which came into effect on 1 January 2005. As referred to in the Interim Report, the format of the financial statements shows significant changes from previous reports. The main presentational differences are two-fold. Firstly, the Consolidated Statement of Total Return has been replaced with a Consolidated Income Statement. This continues to follow the three columned approach showing the division between revenue and capital. Secondly, dividends are now shown in a new statement called the Consolidated Statement of Changes in Equity. Under the new IFRS requirements, only dividends which are paid in the financial period are included in the financial statements and shown in the Consolidated Statement of Changes in Equity. As a result a dividend of 5.0p is included in these financial statements, representing the fourth interim dividend of the 2005 financial year of 1.76p and the first three interim dividends of the 2006 financial year totalling 3.24p. The fourth interim dividend of the 2006 financial year which is 1.81p and was paid on 31 October 2006 will be included in the financial statements for the year ended 30 September 2007. The net asset value of the Company at 92.6p is 1.75p higher than it would have been under the old accounting rules. This is predominantly due to the exclusion, as a liability, of the fourth interim dividend of 1.81p. The remaining small differences are represented by the move from mid to bid value for investments and a change in the basis of valuation for the securities held in the dealing subsidiary. It should be noted that for calculating performance figures and regular reporting to the stock market, the Association of Investment Companies has recommended the exclusion of the dividend adjustment outlined above. Share Capital The Company has also grown its asset base through the issue of 15,082,488 new shares in the year. In the interim report I highlighted the Company had issued 14,844,327 shares in the six month period to 31 March 2006. This was achieved through a placing in December 2005 and the reconstruction of the City of Oxford Geared Income Trust ("COGIT") in March 2006 which allowed their shareholders to roll their investment into Glasgow Income Trust. This rollover was the first time the Company had been selected for such a scheme. The Company has continued to issue shares under its blocklisting authority in order to meet smaller scale regular demand from investors. In the six months to 30 September 2006 a total of 238,161 shares were issued at prices ranging from 92.0p to 93.5p. These issues were all at a premium to the underlying net asset value of the Company. Subsequent to the year end the Company has issued further shares through a successful placing and open offer at a 2% premium to net asset value. This took the net assets of the Company over £100 million for the first time. In addition the Company has again been selected as a rollover vehicle, this time for Gartmore High Income Trust. This rollover scheme closes after the publication date of this Annual Report, but it is hoped will result in a further expansion of the Company. This continued increase in the number of shares in issue should improve liquidity in the Company's shares and spread the fixed costs over a larger equity base. This last benefit is underlined by the fact that the total expense ratio of the Company reduced from 1.43% to 1.16% in the year to 30 September 2006. The Company will continue to seek further opportunities to grow in the forthcoming year. Portfolio Profile and Gearing As disclosed in the interim report the Company took out two new tranches of zero coupon finance totalling £10.1 million in the year to maintain the Company's gearing after the various share issues. The distribution of assets shows that 103.4% of net assets were invested in equities at 30 September 2006, a small rise from the 100.8% invested in equities as at 30 September 2005. This was due to the strength of equity prices during the year. Total gearing fell in the year from 147.1% to 144.7% as a result of this strength. The majority of the Company's gearing continues to be invested in investment grade corporate bonds, and not equities. These bonds, together with the other fixed interest securities in the portfolio, make a major contribution to the high level of income paid by the Company while also allowing a full exposure to the UK equity market. Outlook In recent weeks, two trends which hindered equity markets in the middle of the year have eased somewhat. Futures markets are suggesting that US interest rates have peaked and the price of oil has declined by around 25 % potentially reducing inflationary pressures. There are signs that the US economy is slowing but corporate results remain healthy. The debate has moved on to the timing of the Federal Reserve's first reduction in interest rates and that change in direction has already benefited both bond and equity markets. In the UK, there are some signs that economic activity is improving and in the current year, quoted company earnings are expected to grow by 13% with a further 6.5% rise in 2007. Shareholders are also benefiting from dividend growth and the continued return of capital to investors through share buy back schemes and special dividend payments. The ongoing interest in quoted assets from private equity buyers may lead to further corporate activity. The UK equity market looks reasonably valued and should make further progress over the next year. Annual Report The Annual Report will be mailed to shareholders on 27 November 2006. Copies may be obtained from the managers, Glasgow Investment Managers Limited, Sutherland House, 149 St Vincent Street, Glasgow G2 5DR after that date. R.G. Hanna, Chairman 27 November 2006 Glasgow Income Trust plc Consolidated Income Statement for the year ended 30 September 2006 2006 2005 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Gains Gains on investments - 11,127 11,127 - 11,166 11,166 Revenue Dividend Income 3,338 - 3,338 2,323 - 2,323 Interest income from investments 1,621 - 1,621 1,097 - 1,097 Deposit Interest 109 - 109 97 - 97 Traded Options 558 - 558 437 - 437 Other Income - - - 4 - 4 Net gains of dealing subsidiary 193 - 193 93 - 93 ----------------- ------- ------- ------- ------- -------- ------ 5,819 11,127 16,946 4,051 11,166 15,217 ----------------- ------- ------- ------- ------- -------- ------ Expenses Investment management fee (334) (334) (668) (189) (189) (378) Other administrative expenses (257) - (257) (247) - (247) Finance cost of borrowings (38) (38) (76) (17) (17) (34) Zero Coupon Finance Costs - (1,380) (1,380) - (1,908) (1,908) ----------------- ------- ------- ------- ------- -------- ------ (629) (1,752) (2,381) (453) (2,114) (2,567) ----------------- ------- ------- ------- ------- -------- ------ Profit before Tax 5,190 9,375 14,565 3,598 9,052 12,650 Tax Expense (540) 112 (428) (388) 62 (326) ----------------- ------- ------- ------- ------- -------- ------ PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY 4,650 9,487 14,137 3,210 9,114 12,324 ----------------- ------- ------- ------- ------- -------- ------ Earnings per ordinary share (pence) 16.2p 20.1p *The revenue column of this statement is the consolidated profit and loss account of the Group. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The financial information set out above and on the following page does not constitute the Company's statutory accounts for the years ended 30 September 2005 and 2006 but is derived from those accounts. Statutory accounts for 2005 have been delivered to the Registrar of Companies and those for 2006 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. Glasgow Income Trust Consolidated & Company Balance Sheets as at 30 September 2006 Group Company 2006 2005 2006 2005 £000 £000 £000 £000 NON CURRENT ASSETS Ordinary shares 89,955 63,902 89,955 63,902 Convertibles 5,247 5,331 5,247 5,331 Corporate bonds 28,526 24,059 28,526 24,059 Other fixed interest 2,175 - 2,175 - ---------------------- --------- -------- --------- -------- SECURITIES AT FAIR VALUE 125,903 93,292 125,903 93,292 Zero coupon finance derivatives at fair value 12,845 9,020 12,845 9,020 Subsidiary undertaking - - 5 5 ---------------------- --------- -------- --------- -------- 138,748 102,312 138,753 102,317 ---------------------- --------- -------- --------- -------- CURRENT ASSETS Trade and other receivables 1,041 52 1,465 52 Accrued Income and prepayments 1,792 1,319 1,792 1,319 Investments of dealing subsidiary 725 - - - Cash and cash equivalents 102 239 102 239 ---------------------- --------- -------- --------- -------- 3,660 1,610 3,359 1,610 ---------------------- --------- -------- --------- -------- TOTAL ASSETS 142,408 103,922 142,112 103,927 ---------------------- --------- -------- --------- -------- CURRENT LIABILITIES Trade and other payables (1,509) (467) (1,466) (575) Short-term borrowings (400) (1,850) (400) (1,850) ---------------------- --------- -------- --------- -------- (1,909) (2,317) (1,866) (2,425) ---------------------- --------- -------- --------- -------- NON CURRENT LIABILITIES Zero coupon finance derivatives at fair value (53,491) (38,181) (53,491) (38,181) ---------------------- --------- -------- --------- -------- TOTAL LIABILITIES (55,400) (40,498) (55,357) (40,606) ---------------------- --------- -------- --------- -------- NET ASSETS 87,008 63,424 86,755 63,321 ---------------------- --------- -------- --------- -------- ISSUED CAPITAL AND RESERVES ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE PARENT Called up share capital 23,496 19,726 23,496 19,726 Share premium account 32,715 22,886 32,715 22,886 Special reserve 5,000 5,000 5,000 5,000 Retained Earnings Realised capital reserve 9,080 3,981 9,080 3,981 Unrealised capital reserve 13,916 9,528 13,916 9,528 Revenue reserve 2,801 2,303 2,548 2,200 ---------------------- --------- -------- --------- -------- SHAREHOLDERS FUNDS 87,008 63,424 86,755 63,321 ---------------------- --------- -------- --------- -------- ---------------------- --------- -------- --------- -------- Net asset value per ordinary share (pence) 92.6p 80.4p Glasgow Income Trust plc Consolidated & Company Cash Flow Statement for the year ended 30 September 2006 2006 2005 £000 £000 £000 £000 CASH FLOWS FROM OPERATING ACTIVITIES Investment income received 4,634 2,880 Deposit interest received 109 98 Dealing subsidiary receipts 62 543 Other cash received 553 438 Administrative expenses paid (866) (542) Dealing subsidiary payments (594) (327) ---------------------------- ------- -------- -------- -------- CASH GENERATED FROM OPERATIONS 3,898 3,090 Interest Paid (83) (27) Taxation (374) (225) ---------------------------- ------- -------- -------- -------- NET CASH INFLOW FRM OPERATING ACTIVITIES 3,441 2,838 ---------------------------- ------- -------- -------- -------- Purchase of Investments (54,970) (52,414) Sale of Investments 33,287 18,702 Zero Coupon Finance 10,108 9,362 ------- -------- NET CASH(OUTFLOW) FROM INVESTING ACTIVITIES (11,575) (24,350) ---------------------------- ------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of Issues of shares 13,599 21,374 Equity dividends paid (4,152) (2,709) ---------------------------- ------- -------- -------- -------- NET CASH INFLOW FRM FINANCING ACTIVITIES 9,447 18,665 ---------------------------- ------- -------- -------- -------- NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,313 (2,847) Cash & Cash Equivalents at START of period (1,611) 1,236 ---------------------------- ------- -------- -------- -------- Cash & Cash Equivalents at end of period (298) (1,611) ---------------------------- ------- -------- -------- -------- Cash & Cash Equivalents comprise: Cash & Cash Equivalents 102 239 Short Term Borrowings (400) (1,850) -------- -------- (298) (1,611) Consolidated Statement of Changes in Equity For the year ended 30 September 2006 Share Share Special Realised Unrealised Retained Total Capital Premium Reserve Capital Capital Revenue Reserve Reserve Reserve £000 £000 £000 £000 £000 £000 £000 As at 1 October 2004 12,244 8,994 5,000 6,624 (2,229) 1,802 32,435 ---------------- ------- ------- ------ ------- ------- ------ ------- Revenue profit for the year - - - - - 3,210 3,210 Capital profit for the year - - - (2,643) 11,757 - 9,114 Equity dividends - - - - - (2,709) (2,709) Issue of Share Capital 7,482 13,892 - - - - 21,374 ---------------- ------- ------- ------ ------- ------- ------ ------- As at 30 September 2005 19,726 22,886 5,000 3,981 9,528 2,303 63,424 Revenue for the period - - - - - 4,650 4,650 Capital profits - - - 5,099 4,388 - 9,487 Equity dividends - - - - - (4,152) (4,152) Issue of Share Capital 3,770 9,829 - - - - 13,599 ---------------- ------- ------- ------ ------- ------- ------ ------- As at 30 September 2006 23,496 32,715 5,000 9,080 13,916 2,801 87,008 ---------------- ------- ------- ------ ------- ------- ------ ------- This information is provided by RNS The company news service from the London Stock Exchange

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