Interim Results

Midas Income & Growth Trust PLC 20 December 2007 MIDAS INCOME & GROWTH TRUST PLC HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 2007 The investment objective of Midas Income & Growth Trust PLC is to seek to achieve an absolute return with low volatility through investment in a multi-asset portfolio with the aim of achieving both income and capital returns. The following is the unaudited Interim Board Report for the six months ended 31 October 2007. Interim Board Report • Progressive dividend policy continued with increase of 5.5% • Subsequent to period end Company has purchased in the market and cancelled 780,000 of its own shares • Net asset value total return of -1.9% • Share price total return of -12.4% Performance The Company's diluted net asset value total return for the period (including dividends) was -1.9%, which is lower than the benchmark return of 4.0%. The share price fell by 13.2% over the period, which with dividends reinvested, gave a total return of -12.4%. (Source: Bloomberg). It was particularly disappointing that the Trust's shares have moved from a premium to net asset value to a discount. Whilst your Company is not alone in seeing a premium rating disappear during recent market stress, it is painful for shareholders and your Board and manager are committed to maintaining a rating commensurate with the longer term prospects for the Trust. To this end the Company's advisers have been instructed to buy back shares for cancellation post the period end. At the time of writing 780,000 shares had been bought in at discounts of over 5% and therefore these purchases are accretive to the Trust's net asset value. Market and Investment Overview The positive environment for markets continued into the early part of the period, although clouds were gathering as concerns grew about the state of the US housing market and, more specifically, the sub-prime mortgage market. These concerns reached a head in mid July with several banks admitting huge losses in the sub-prime area, coupled with some high profile closures amongst hedge funds involved in this market. Concerns spread quickly to other asset backed markets and created a period of panic, which in turn led to a sharp increase in market volatility. The financial sectors have been particularly volatile together with any sectors linked to an expected slowdown in domestic spending, especially in the United States and United Kingdom. Investor concerns have been further fuelled by the paralysis which gripped credit markets and lack of liquidity, ultimately leading to the near demise of Northern Rock. Whilst the US Federal Reserve Board has moved quickly to lower interest rates, it is clear that economic growth rates have been adversely effected and credit is likely to be both more difficult to obtain and more expensive. The strength in equity markets earlier in the period was used to further reduce equity exposure within the Trust. In particular, exposure to consumer related companies in the UK was reduced, following similar moves earlier in the year. Cash balances were increased ahead of the equity market falls from mid July and into the first two weeks in August. Subsequently some of this cash was committed to a range of structured products, where valuations had become attractive following the spike in volatility. Over the period the Company's holdings in some fixed interest areas, overseas property holdings and structured products came under pressure. Whilst this was disappointing your manager continues to believe that the underlying fundamentals for these investments remain positive. Indeed, some additional investment has been made into selected holdings where valuations look attractive. Several new assets have been introduced to the Company's portfolio over the period, including a commitment to a fund investing in global forestry and a specialist manager concentrating on investment in global technology companies. Futhermore, as mentioned earlier, the Trust's exposure to structured products was extended and overseas property exposure was increased, at the expense of UK commercial property investment, which was reduced. These moves were also funded by a reduction in the Trust's equity exposure, and specifically the consumer related holdings within the UK equity portfolio. Gearing An extra £2 million was drawn down in August from the Trust's new borrowing facility provided by the Royal Bank of Scotland at preferential terms to the previous loan provided by Allied Irish Bank. Total borrowings were £6,250,000 at the end of the period, with a further £1,750,000 available from a total facility of £8 million. Borrowings represented 8% of net assets at the period end, although cash balances stood at £4.1 million. Exercise of Warrants There were 99,700 warrants exercised at 100p at the end of August, which leaves a further 1,934,411 in issue. Dividends On 17 August 2007 a first interim dividend of 1.53p was declared, representing a 5.5% increase over the quarterly dividends paid in the previous financial year. A second interim dividend of 1.53p was declared on 19 November 2007. The income generated from the Company's investment portfolio remains satisfactory, and dividend growth in the equity holdings has been particularly strong. Your Board and manager fully appreciate the importance of the quarterly dividends to many of the Company's shareholders and remain committed to following a progressive dividend policy. Annual General Meeting Due to the large number of shareholders based in the North of England your Board has decided to hold the 2008 AGM at the manager's offices, Martins Building, Water Street, Liverpool at 12.30 on 9 September 2008. We would be delighted if shareholders were to take this opportunity to meet with Board members and investment managers over a post AGM buffet lunch. In 2009 the intention will be to hold the AGM in London. Principal Risks and Uncertainties The principal risks and uncertainties faced by the Company fall into eight broad categories: investment and market; shares, borrowings, currency, dividends, discount and key individuals. Information on each of these areas is given in the Corporate Summary within the Annual Report and Accounts for the year ended 30 April 2007. VAT Update The Association of Investment Companies ('AIC') has announced its success in the case against HM Revenue and Customs ('HMRC') which sought to remove VAT from the payment of investment trust management fees. The European Court of Justice has confirmed that investment trust management fees should be exempt from VAT in the same way as unit trusts and open ended investment companies and HMRC has recently advised that it does not intend to appeal this decision. Accordingly, VAT is now no longer charged by the Manager on management fees and in due course a rebate will be payable to the Company in respect of the VAT paid since 2001. The timing and quantum of this repayment together with the status of pre-2001 VAT payments is still to be determined and the Company will update shareholders in due course. Outlook Recent events have created an uncertain outlook for global growth and financial markets. The liquidity crisis which has gripped credit markets remains unresolved, although Central Banks have acted to ease some of the strains in the system. On a more positive note corporate balance sheets remain strong and markets appear to be already discounting severe problems in financial assets and consumer related companies. However, consumer confidence on both sides of the Atlantic has been shaken, in complete contrast with the strong increases in consumer spending being seen in Asia. The investment horizon may remain clouded for some time and market volatility is likely to remain at elevated levels until there is greater clarity on the outlook. We are confident that there is intrinsic value in the portfolio and it is well-positioned to benefit our shareholders. Directors' Responsibility Statement The Directors are responsible for preparing the half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge - • the interim financial statements have been prepared in accordance with Accounting Standards Board's statement 'Half-Yearly Financial Reports'; and • the Interim Board Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules. For Midas Income & Growth Trust PLC Hubert Reid Chairman 20 December 2007 Manager's Review Market Commentary The turmoil in credit markets and significant increase in volatility experienced in equity markets caused by the very visible melt-down in the US sub-prime mortgage market has, we believe, changed the economic outlook and produced a fundamental reassessment of risk by investors. Whilst the full implications of recent events are still not known, there has been a marked change in sentiment towards the various assets to which the Trust has exposure. The slowdown in US economic growth, inspired by the severe problems being seen in the housing market and commensurate pressure on consumer spending, is likely to spill over, albeit to a lesser degree, to the UK and Europe. The US Federal Reserve Board has been quick to cut interest rates, clearly viewing the immediate threat to the banking system and prospects for a sharp slowdown in the economy as a more pressing issue than concerns about inflation. Policy response in Europe has been more muted with the Bank of England and the European Central Bank, still prioritising the control of inflation. However, interest rate cuts are now firmly back on the agenda in the UK, with the first of what may turn out to be several cuts having been made in early December. Although rate cuts cannot be ruled out in Europe, there is less compelling evidence that the consumer is under pressure to the same degree and economic data is more positive. Meanwhile economic growth in Asia continues apace with domestic demand gathering in strength and extending beyond China and India. However, the decoupling of Asia from events in the United States, which is a favoured argument amongst supporters of the very strong equity market returns seen over the past two years, may prove premature in the face of a severe economic reversal in the United States and the Chinese authorities in particular are struggling to control the pressures caused by the prolonged period of rapid growth in the economy. Credit markets look set to remain under stress for some time, as further problems are likely to emerge following the turmoil caused by events in the US sub-prime mortgage market, together with other asset backed sectors supported by banks and hedge funds over recent years. Parts of these markets remain effectively closed and the full scale of damage to both banks and other investors will not be known until well into 2008. The legacy of these issues will certainly be tighter lending practices and a strong move by banks to restore lending margins to more profitable levels. The restricted supply of finance will have further implications for economic growth in 2008. The outlook for equity markets in 2008 is largely dependant on the pace and effectiveness of policy response from central banks and, whilst equity market valuations look reasonable at the headline level, there has been a significant polarisation between companies considered to be worst effected by a slowdown in consumer spending in developed economies, and those exposed to the stronger environment is emerging economies, particularly in Asia. The problems in the wholesale credit markets have led to a 'flight to safety' with Government bonds being favoured and pushed to ever lower yields. Meanwhile the reassessment of risk associated with corporate bonds has led to investors demanding a higher return over recent months. Investment Report Summary The returns from the portfolio have been mixed over the period with equity positions generally performing better than other assets. In particular holdings in property and structured products areas have been affected by the reassessment of risk by investors and the uplift in volatility. Additionally, certain of the fixed interest assets have seen price falls as investors have sought the comfort of Government bonds, rather than those of corporate issuers. Whilst something of a 'curate's egg' the effect has been to produce a slight fall in the value of the Trust's assets over the period, with an overall return to investors of -1.9%, once dividends are taken into account, being a disappointing outcome. The income being generated within the portfolio remains strong, bolstered by the combination of good dividend increases from equity holdings, together with the further emphasis on structured products offering high running yields. Over the period we have reduced exposure to equities, and especially to the UK market, as the more difficult economic outlook produces a slowdown in profit growth in 2008. Elsewhere in the portfolio exposure to UK commercial property was reduced, whilst investment in the structured product area was increased as rising volatility created an attractive opportunity to achieve double digit returns with a strong element of capital protection. Asset Allocation The asset allocation across the portfolio at 31 October 2007 is shown in the table below. Asset Class Portfolio Weight Core Allocation Allocation Range % % % UK Equities 31.1 35 20-50 Overseas Equities 19.1 15 10-20 Total equities 50.2 50 35-65 Fixed Interest (inc Cash) 20.3 25 15-40 Alternative Assets 19.4 15 10-20 Property 10.1 10 5-15 All figures are expressed as a percentage of Gross assets. UK Equities (31.1%) Exposure to the UK Equity market was reduced by some 5% to 31% of the portfolio over the period. The brunt of this reduction came from companies exposed to a slowdown in the domestic economy, which we see as likely in 2008. To this end we sold Halfords, Enterprise Inns and Hotel Corporation, with a reduction in the size of the holding in William Hill also being made. In addition, the position in Tate & Lyle was sold following a disappointing (and poorly handled) trading statement. The sale, early in the period, of the Trust's holding in Taylor Wimpey, proved timely with the shares subsequently falling by over 50%. However, some of the proceeds from this sale were invested in Persimmon, whose shares performed better, but still experienced a significant reversal. The portfolio benefited from its holding in Scottish & Newcastle, where a bid approach was received from a consortium of Carlsberg and Heineken. Over 50% of this holding was sold following this approach, with the rest being sold after the end of the period. Further positive contributions came from holdings in the Oil majors and the telephony sectors, with Vodafone producing a particularly strong return over the period. In addition the Trust's holding in BHP Billiton performed very well and some profits were taken on this holding. Positions held in the financial sectors were less rewarding although holdings in Standard Chartered and, to a lesser extent, HSBC performed much better than their more domestically orientated competitors. The portfolio did not hold any Northern Rock or indeed any of the other pure mortgage lenders. Late in the period a new position was introduced to the portfolio in the shape of Unilever, further emphasising the portfolio's slant towards larger companies, where we feel that valuations look more attractive and concerns about the likely problems in the UK economy next year are less of an issue. Overseas Equities (19.1%) Exposure to Overseas equity markets increased over the period through a combination of good performance and new investments. The Trust's holding in the Merrill Lynch Commodities Income Fund held pride of place, giving a total return on close to 40% over the period. Virtually all holdings made a positive contribution, although there was some slight disappointment from the holding in Aberdeen Asian Income Fund, where the manager's cautious (and disciplined) approach, failed to capture the strength seen in Asian markets. Two new investments were made over the period with a further exposure to European equities being taken through a Fund run by BNP Paribas offering a covered call strategy, which will enhance income generated, whilst downside protection is also offered through a PUT option; in addition a commitment was made to a specialist manager, namely Polar Capital, investing globally in technology companies, which we feel will benefit from increased spending by corporates needing to replace technology introduced in the late 90's. We also feel that the increased availability of broadband will lead to some significant new applications for technology based companies. Fixed Interest (20.3%) The shift in risk perception caused by the US subprime mortgage problems and continued negative newsflow have triggered a lack of confidence in credit markets globally and reinforced concerns about the asset quality of the banking sector as a whole. This uncertainty led to reduced liquidity in credit markets and a 'flight to safety' amongst bond investors. Against this background yields on government bonds moved sharply lower, whilst corporate issuers saw their bonds eschewed and yields rise. The Trust's existing holding in the M&G Leveraged European Loan Fund was hit following the exit from this market of some fringe hedge funds, who were indiscriminate sellers. Whilst this has hit pricing in the market, importantly there have been few signs of distress within the underlying companies whose debt is held within the M&G loan portfolio. There have been few changes made to the fixed interest portfolio over the period, with a modest investment being made in investment grade, shorter dated corporate bonds, where yields approaching 7% look fairly attractive. Elsewhere, the Trust's holding in the Schroder Strategic Bond Fund was sold, following a period of poor performance. Alternative Assets (9.3%) We continue to maintain a strong weighting towards alternative asset sectors and feel that on a risk adjusted basis returns are set to remain attractive. The Fund has investments across a range of hedge funds, where exposure has been increased slightly and where returns have been positive over the period. In addition exposure to private equity is predominantly held through the unquoted company A J Bell Holdings. The A J Bell business continues to perform well and we remain hopeful of a further significant uplift in the value of this holding in 2008. Exposure to Gold is held through the Trust's position in the Ruffer Baker Steel Fund, which gave a very positive return of 14% over the period. A new holding introduced to the alternative assets area during the period was the Phaunos Timber Fund, which specialises in forestry investment on a global basis. The dynamics of forestry investment are fairly unique, with the main element of returns being achieved through the growth of trees, which is both very dependable and unrelated to the vagaries of financial markets. Structured Products (10.1%) The pricing of structured product holdings has been adversely affected due to the sharp spike in volatility seen over recent months. Whilst this has been detrimental to values on a short term view, the pricing opportunity created has been used to increase holdings. The combination of high levels of capital protection, together with returns which should prove competitive with those available from equity markets, appears very attractive. Several follow on investments were made in existing holdings and new investment was made in products offering potential returns ranging from 10 to 18.6%. Whilst these products are not risk free, we view them as more attractive than direct equity investment on a risk adjusted basis. The increase in structured product investment was largely financed by a further drawdown from the Trust's borrowing facilities provided by the Royal Bank of Scotland. Property (10.1%) The Trust's property holdings have been hurt not only by a reversal of sentiment towards the UK commercial property sector, but also due to concerns surrounding assets where investors have used leverage to enhance returns. Whilst we feel that the negative sentiment towards the UK property sector may be justified, there appears less reason to be negative about the prospects for property elsewhere in Europe and in Japan, where the majority of the Trust's real estate exposure lies. Notice of redemption was served on the Protego UK Property Fund at the end of September for around 50% of the holding, although it would appear that it may take some time to realise the investment. Elsewhere, the Trust's holding in Dolphin Capital was reduced early in the period following a very strong run in the shares. However, as property assets fell sharply later in the period we bought back these at a significant discount to net asset value. In addition a further, top-up investment was made in Summit Germany as the company's shares came under pressure and traded at a large discount to net assets. Outlook We feel that the first half of 2008 is likely to be a difficult period for equity markets and prefer to maintain a neutral stance until the economic outlook is more certain. Whilst we do see pockets of value in the UK and European markets, we also consider that volatility is set to remain high and further stress within the financial system cannot be ruled out. At present we favour exposure to structured products which are attractively priced following the rise in market volatility. The recent returns for the Trust have been disappointing. However, we are convinced that significant value is contained within the portfolio, which bodes well for returns over the medium term. A progressive dividend policy has now been firmly established and we see potential to further enhance distributions in the future. Midas Capital Partners Limited 20 December 2007 Income Statement Six months ended Six months ended 31 October 2007 31 October 2006 (unaudited) (unaudited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on investments - (2,432) (2,432) - 855 855 Income 2,194 - 2,194 1,369 - 1,369 Investment management fee (228) (228) (456) (155) (155) (310) Performance fee - - - - - - Administration expenses (177) - (177) (135) - (135) Exchange gains/(losses) - 3 3 - - - _______ _______ _______ _______ _______ _______ Net return before finance costs and 1,789 (2,657) (868) 1,079 700 1,779 taxation Finance costs (91) (90) (181) (49) (32) (81) _______ _______ _______ _______ _______ _______ Net return on ordinary activities 1,698 (2,747) (1,049) 1,030 668 1,698 before taxation Taxation on ordinary activities - - - - - - _______ _______ _______ _______ _______ _______ Return on ordinary activities after 1,698 (2,747) (1,049) 1,030 668 1,698 taxation _______ _______ _______ _______ _______ _______ Return per Ordinary share (pence): Basic 3.67 (5.94) (2.27) 3.13 2.02 5.15 _______ _______ _______ _______ _______ _______ Diluted n/a n/a n/a 3.03 1.97 5.00 _______ _______ _______ _______ _______ _______ The total column of this statement represents the profit and loss account of the Company. No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses are recognised in the Income Statement. All revenue and capital items in the above statement derive from continuing operations. Income Statement (Cont'd) Year ended 30 April 2007 (audited) Revenue Capital Total £'000 £'000 £'000 Gains on investments - 6,365 6,365 Income 2,892 - 2,892 Investment management fee (342) (342) (684) Performance fee - (450) (450) Administration expenses (307) - (307) Exchange losses - (23) (23) _______ _______ _______ Net return before finance costs and taxation 2,243 5,550 7,793 Finance costs (105) (524) (629) _______ _______ _______ Net return on ordinary activities before taxation 2,138 5,026 7,164 Taxation on ordinary activities - - - _______ _______ _______ Return on ordinary activities after taxation 2,138 5,026 7,164 _______ _______ _______ Return per Ordinary share (pence): Basic 6.40 15.04 21.44 _______ _______ _______ Diluted 6.22 14.62 20.84 _______ _______ _______ Balance Sheet As at As at As at 31 October 31 October 30 April 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assets Investments at fair value through profit or loss 82,076 56,926 84,861 _______ _______ _______ Current assets Debtors and prepayments 516 421 839 Cash and short term deposits 4,074 1,325 1,614 _______ _______ _______ 4,590 1,746 2,453 _______ _______ _______ Creditors: amounts falling due within one year Bank loan (6,250) (3,250) (4,250) Other creditors (1,191) (104) (1,608) _______ _______ _______ (7,441) (3,354) (5,858) _______ _______ _______ Net current liabilities (2,851) (1,608) (3,405) _______ _______ _______ Net assets 79,225 55,318 81,456 _______ _______ _______ Capital and reserves Called-up share capital 11,589 8,408 11,564 Share premium account 40,993 22,850 40,918 Special reserve 10,538 10,538 10,538 Warrant reserve 616 648 648 Capital reserve - realised 11,841 9,320 10,468 Capital reserve - unrealised 2,440 2,895 6,528 Revenue reserve 1,208 659 792 _______ _______ _______ Equity Shareholders' funds 79,225 55,318 81,456 _______ _______ _______ Net asset value per Ordinary share (pence): Basic 170.91 164.47 176.10 _______ _______ _______ Diluted 168.07 160.80 172.90 _______ _______ _______ Reconciliation of Movements in Shareholders' Funds Six months ended 31 October 2007 (unaudited) Share Capital Capital Share premium Special Warrant reserve reserve Revenue capital account reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 30 April 2007 11,564 40,918 10,538 648 10,468 6,528 792 81,456 Exercise of Warrants 25 75 - (32) 32 - - 100 Return on ordinary activities - - - - 1,341 (4,088) 1,698 (1,049) after taxation Dividends paid - - - - - - (1,282) (1,282) _____ _______ ______ ______ ______ _______ ______ _____ Balance at 31 October 2007 11,589 40,993 10,538 616 11,841 2,440 1,208 79,225 _____ _______ ______ ______ ______ _______ ______ _____ Six months ended 31 October 2006 (unaudited) Share Capital Capital Share premium Special Warrant reserve reserve Revenue capital account reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 30 April 2006 8,147 22,067 10,538 980 8,527 2,688 523 53,470 Exercise of Warrants 261 783 - (332) 332 - - 1,044 Return on ordinary activities - - - - 461 207 1,030 1,698 after taxation Dividends paid - - - - - - (894) (894) _____ _______ ______ ______ ______ _______ ______ _____ Balance at 31 October 2006 8,408 22,850 10,538 648 9,320 2,895 659 55,318 _____ _______ ______ ______ ______ _______ ______ _____ Year ended 30 April 2007 (audited) Share Capital Capital Share premium Special Warrant reserve reserve Revenue capital account reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 30 April 2006 8,147 22,067 10,538 980 8,527 2,688 523 53,470 C shares issued 3,156 18,491 - - - - - 21,647 C shares issue expenses - (423) - - 423 - - - Exercise of Warrants 261 783 - (332) 332 - - 1,044 Return on ordinary activities - - - - 1,186 3,840 2,138 7,164 after taxation Dividends paid - - - - - - (1,869) (1,869) _____ _______ ______ ______ ______ _______ ______ _____ Balance at 30 April 2007 11,564 40,918 10,538 648 10,468 6,528 792 81,456 _____ _______ ______ ______ ______ _______ ______ _____ Cash Flow Statement Six months ended Six months ended Year ended 31 October 31 October 2006 30 April 2007 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net return on ordinary activities before finance costs (868) 1,779 7,793 and taxation Adjustments for: Losses/(gains) on investments 2,432 (855) (6,365) Exchange (gains)/losses (3) - 23 Decrease/(increase) in accrued income 93 130 (204) Increase in other debtors (11) (9) (28) (Decrease)/increase in creditors (778) (88) 737 _____________ _____________ _____________ Net cash inflow from operating activities 865 957 1,956 Net cash outflow from servicing of finance (181) (93) (191) Net cash inflow/(outflow) from financial investment 955 (711) (22,549) Equity dividends paid (1,282) (894) (1,869) _____________ _____________ _____________ Net cash inflow/(outflow) before financing 357 (741) (22,653) Net cash inflow from financing 2,100 1,794 22,268 _____________ _____________ _____________ Increase/(decrease) in cash 2,457 1,053 (385) _____________ _____________ _____________ Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash as above 2,457 1,053 (385) Foreign exchange movements 3 - (23) Drawdown of additional loan (2,000) (750) - _____________ _____________ _____________ Movement in net debt in the period 460 303 (408) Opening net debt (2,636) (2,228) (2,228) _____________ _____________ _____________ Closing net debt (2,176) (1,925) (2,636) _____________ _____________ _____________ Represented by: Cash at bank and in hand 4,074 1,325 1,614 Debt falling due within one year (6,250) (3,250) (4,250) _____________ _____________ _____________ (2,176) (1,925) (2,636) _____________ _____________ _____________ Notes to the Accounts 1. Accounting policies The accounts have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on interim reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies'. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP'). The same accounting policies used for the year ended 30 April 2007 have been applied. Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 2007 2006 2007 £'000 £'000 £'000 2. Income Income from investments UK dividend income 1,399 988 2,266 Overseas dividends 727 358 575 _____________ _____________ _____________ 2,126 1,346 2,841 _____________ _____________ _____________ Other income Deposit interest 55 19 43 Other commission 13 4 8 _____________ _____________ _____________ 68 23 51 _____________ _____________ _____________ Total income 2,194 1,369 2,892 _____________ _____________ _____________ Six months ended Six months Year ended ended 31 October 2007 31 October 2006 30 April 2007 3. Return per share p p p Revenue return 3.67 3.13 6.40 Capital return (5.94) 2.02 15.04 _____________ _____________ _____________ Total return (2.27) 5.15 21.44 _____________ _____________ _____________ The figures are based on the following attributable assets: £'000 £'000 £'000 Revenue return 1,698 1,030 2,138 Capital return (2,747) 668 5,026 _____________ _____________ _____________ Total return (1,049) 1,698 7,164 _____________ _____________ _____________ Weighted average number of 46,281,259 32,941,180 33,422,634 Ordinary shares in issue _____________ _____________ _____________ Diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22'). For the six months ended 31 October 2007 this has no dilutive effect. The adjusted weighted average number of Ordinary shares used in the 31 October 2006 and 30 April 2007 calculations was 33,976,763 and 34,377,033 respectively. 4. Dividends Ordinary dividends on equity shares deducted from reserves are analysed below: Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £'000 £'000 £'000 Second interim dividend for 2006 - 1.38p - 220 220 Special C share dividend for 2006 - 0.75p - 201 201 First interim dividend for 2007 - 1.45p - 473 473 Second interim dividend for 2007 - 1.45p - - 488 Third interim dividend for 2007 - 1.45p - - 487 Fourth interim dividend for 2007 - 1.45p 488 - - Special C share dividend for 2007 - 0.40p 86 - - First interim dividend for 2008 - 1.53p 708 - - _____________ _____________ _____________ 1,282 894 1,869 _____________ _____________ _____________ The Company has declared a second interim dividend in respect of the year ending 30 April 2008 of 1.53p net (2007 - 1.45p) per Ordinary 25p share which was paid on 14 December 2007 to Ordinary Shareholders on the register on 30 November 2007. As at As at As at 31 October 31 October 2006 30 April 2007 2007 5. Net asset value per share Basic Attributable net assets (£'000) 79,225 55,318 81,456 Number of Ordinary shares in issue 46,354,950 33,633,125 46,255,250 Net asset value per Ordinary share (p) 170.91 164.47 176.10 Diluted Attributable net assets (£'000) 81,159 57,352 83,490 Number of Ordinary shares if Warrants converted 48,289,361 35,667,236 48,289,361 Net asset value per Ordinary share (p) 168.07 160.80 172.90 6. Transaction costs During the six months ended 31 October 2007 expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within (losses)/ gains on investments in the Income Statement. The total costs were as follows: Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £'000 £'000 £'000 Purchases 31 7 102 Sales 19 8 19 _____________ _____________ _____________ 50 15 121 _____________ _____________ _____________ 7. The financial information in this report comprises non-statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information for the year ended 30 April 2007 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified under Section 235 of the Companies Act 1985. These accounts contain no statement under Section 237 of the Companies Act 1985. 8. The Half-Yearly Financial Report is unaudited. 9. The Half-Yearly Financial Report will shortly be available from the Manager's website (www.midascapital.co.uk) and will be posted to shareholders in January 2008. 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 and may be affected by exchange rate movements. Investors may not get back the amount they originally invested. Midas Income & Growth Trust PLC Aberdeen Asset Management PLC Secretaries 20 December 2007 Independent Review Report to the Members of Midas Income & Growth Trust PLC Introduction We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 which comprises the Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders' Funds, Cash Flow Statement and the related notes that have been reviewed. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors' Responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Accounting Standards Board Statement 'Half-Yearly Financial Reports'. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement ' Half-Yearly Financial Reports' and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Ernst &Young LLP London 20 December 2007 This information is provided by RNS The company news service from the London Stock Exchange

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