Final Results

RNS Number : 7628D

Glasgow Income Trust PLC

08 December 2009

 



GLASGOW INCOME TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2009

1. CHAIRMAN'S STATEMENT

In the year to 30 September 2009 there has been significant change in the Trust and in the economic environment in which we operate - both of which the Board believes are positive for the future.

The last few years have been difficult for the Trust. We have moved from our shares trading consistently at a premium to net asset value, to a large discount. This reflected the wider recessionary background but specifically the underperformance of our portfolios. At the same time our geared structure, through the use of Zero Coupon Finance, became inflexible in difficult times. It had served us well and was sensibly offset by investment mainly in corporate bonds but the dislocation of credit markets caused changes in collateral requirements and uncertainty in the availability of ZCF credit. In addition the economic difficulties forced many companies to cut dividends and our portfolio did not escape the pressure on our dividend paying capacity.

As has been reported separately, the Board decided that a fundamental review of the strategy of the Trust was necessary. This should not only ensure that we identify a sustainable model, but also any new approach and changed mandate had to be acceptable to shareholders.

After extensive discussion with advisers, the Board concluded that the previous paradigm, including the use of structural gearing, was no longer relevant to the investment outlook nor to investors' attitude to geared risk. In essence the Board decided that it should recommend a change from a high income model to an income and growth one. This would entail a reduction in dividend, but with less stress on capital and would involve a change of manager. The recommended proposals for the future of the Company were approved by shareholders on 17 September 2009.

Troy Asset Management was appointed with an initial objective of restructuring the portfolio which I am pleased to report was achieved at no net cost to NAV.

Economic Background

As is well known, most advanced economies were still in the grip of recession during the year. Governments' efforts to stabilise the bank sector have achieved some success although in the UK there has been a shortage of reasonably priced banking lending to finance recovery. The situation appears to be improving with many companies successfully raising money in the stock market.

There is now more optimism around, although it is fragile, and with it a recovery in the market with the FTSE 100 Index currently trading consistently in excess of 5000. There are worries about inflation and speculation on the shape of the upturn. Undoubtedly there are significant difficulties ahead including the implication of high Government debt and the certainty of tax increases.

Against this background the Board believes the new shape of the Trust offers a better investment vehicle for shareholders.

That sentiment seems to be shared, as evidenced by the reduction in discount from 25.4% at the end of March to 3.2% at 30 November 2009.

Performance

The NAV total return for the year was -12.2% compared to the benchmark return of +10.8%. The underperformance all occurred in the first six months and a full explanation of the reasons for this was covered in my interim statement. Since the end of March performance has improved. In addition the ZCF gearing was completely repaid in two tranches in late July and early August.

Troy was appointed to manage the Trust with effect from 1 August and it is pleasing to report that in the short period until the end of November the performance has exceeded the benchmark in share price and NAV total return terms.

Future

As previously reported the Board intends to increase the size of the Trust when market conditions are conducive and subject to the successful passing of the continuation vote, mentioned below. The expansion will bring benefits of broadening the shareholder base, improving the liquidity of the shares and lowering the Trust's total expense ratio.

We have also considered the introduction of a tighter discount control mechanism. The Company's policy will be to ensure that the shares always trade at close to net asset value through a combination of share-buybacks coupled with the issue of new shares at a premium to net asset value where demand exceeds supply. This will be implemented following the AGM.

Continuation Vote

In last years' report and accounts, the Directors committed to proposing a further continuation vote at or prior to the next AGM. We subsequently issued a circular with recommended proposals for the future of the Company, including a fundraising which, as noted above, were approved by shareholders in September.

However the proposed fundraising has not been undertaken to date and, accordingly, a continuation vote will be put to shareholders at this year's AGM.

The Directors unanimously recommend that shareholders vote in favour of the continuation vote.

Change of Name

The Board intends to change the name of the Company to "Troy Income & Growth Trust plc" immediately following the AGM by exercising the powers conferred in the Articles which were adopted at the EGM on 17 September 2009.

Dividend

Dividends totalling 3p per share have been paid for the year ended 30 September 2009. Following the implementation of the new strategy it is the Board's intention, in the absence of unforeseen circumstances, to pay four equal quarterly dividends of 0.45p per share for the year ending 30 September 2010.

Conclusion

There has been a lot of change in the last year. The Trust is now settled into delivering on the new "Income and Growth" model which includes a substantially more conservative attitude to gearing and consequently a lower risk profile. The Board believes that, with some caution on economic factors, the changes introduced provide a strong base for future profitable growth.

R G Hanna

Chairman

8 December 2009

2. MANAGER'S REVIEW

Background

The Company's financial year to 30 September 2009 spanned one of the most volatile periods in stock market history. In the first half equity markets were extremely weak, with the FTSE All Share Index bottoming on 3 March having fallen by 28%, before rallying by 48% by the end of September. This volatility was not confined to equity markets and both corporate and government bond markets experienced wild swings in investor sentiment during the period under review. The main factor to stimulate the recovery in markets was the evident determination by the monetary authorities to use whatever stimulus it could to firstly prevent the global financial system from collapsing and then prevent the global economy from sliding into a depression. The huge expansion of the monetary base, in addition to very low interest rates, has displaced capital from some asset classes, such as gilts and cash, into others, like equities and corporate bonds, where investors can still generate income.

As yet the stimulus has not yet returned the UK economy to growth although other major economies in Europe and US have begun to recover, albeit in a muted fashion. It is likely that the UK economy will return to growth in the current quarter but it is much harder to anticipate the outcome when the Bank of England withdraws the stimulus by ending the period of Quantitative Easing and raising interest rates. As the impact of these extreme measures is highly likely to be inflationary it will be necessary to tighten monetary policy early if inflation is not to take a grip.

One of the most direct impacts on your Company in the past twelve months has been the wave of dividend cuts that investors have suffered. The yield on the FTSE All Share Index fell from 5.5% to 3.5% and so many dividends have been cut that ten large companies now generate 58% of total market income. We do expect the outlook for dividends to improve in 2010 but it will be some time before investors see dividends returning to their pre-crisis levels. With income from all asset classes at depressed levels investors have had to recalibrate the level of income that is sustainable in current market conditions.

Performance

Despite rising by 102% since the market low in early March the steep fall in the Company's share price in the first half of the year produced a total return of -11.6% for the year to 30 September. Over the same period the return of the FTSE All Share Index was +10.8%.

From 1 August to 30 September the share price total return was +15.9% while the FTSE All Share total return was +12.8%. 

Balance Sheet 

Your Company has undergone major structural changes during the year. Following the completion of the strategy review which was flagged in the Interim Report the appointment of Troy Asset Management Ltd as Investment Manager led to an acceleration of the planned reduction in the Company's ZCF exposure and the final tranche was unwound in early August. The corporate bond portfolio was liquidated at the same time and the proceeds, as well as existing cash balances and further funds raised from the sale of selected equities, were used to return the Company to an un-geared position.

Troy Investment Approach

Troy Asset Management was established in 2000 with a clear mandate to generate consistent long term investment returns without exposing investors to high levels of volatility. It is our view that achieving above average returns whilst experiencing below average volatility is a highly desirable objective for investors and this is what we seek to achieve in all of our funds. In order to achieve our objectives we focus heavily on identifying the potential downside of individual investments as well as the possible gains. This will sometimes mean that we forego money-making opportunities but more importantly should result in us avoiding the damaging permanent capital losses that can blight the records of higher risk investment strategies.

Our natural caution leads us to concentrate on higher quality companies which tend to operate in less cyclical industries. By choosing companies which we believe can sustain consistent levels of profitability the Company will be able to generate a reliable stream of dividend growth that can underpin the Company's dividend prospects. A progressive dividend policy will provide protection to investors from the impact of future inflation. 

Portfolio Changes

Since the appointment of Troy the equity portfolio has been materially restructured. Holdings in companies with significant levels of economic sensitivity such as GKN, Tomkins, Persimmon, Premier Farnell and Millennium & Copthorne were sold. A number of holdings in more defensive shares which had been largely left behind by the market rally were purchased. These included Imperial Tobacco, Sage Group, Amlin, Nestle and Coca Cola, all companies which should be able to grow their dividends despite the difficult economic conditions. Many of these companies are on historically low valuations.

The core of the portfolio is represented by Consumer Goods, Energy and Pharmaceutical companies. The only major banks are HSBC and Standard Chartered while other significant individual holdings include Vodafone, Diageo and British American Tobacco. There are now forty-one holdings in the portfolio and shareholders should expect to see low levels of turnover in the portfolio from here on.

Investment Outlook

Although the global rescue strategy launched by central banks and governments has stabilised global financial markets we remain concerned about the inflationary consequences of the huge increase in the monetary base. When the Quantitative Easing process is put into reverse and interest rates are increased the recent recovery across a range of asset prices is likely to come under pressure. We particularly favour high quality, international equities with relatively low levels of economic sensitivity. Such companies are trading at significant discounts to the equity market as a whole and should prove to be both resilient in the face of a market setback and likely to be re-rated in the event of the market making further progress.

Troy Asset Management Limited

8 December 2009

Troy Asset Management is an independent fund management company aiming to generate absolute returns for investors over the long term. It manages approximately £1bn of assets including three open-ended investment funds: the Trojan Fund, the Trojan Income Fund and the Trojan Capital Fund; and two investment trusts: the Personal Assets Trust Plc and the Glasgow Income Trust plc. Our investors include private individuals, charities, pension funds, trusts and endowments.

3. RESULTS & DIVIDENDS

Financial Highlights
		2009		2008
Net asset value total return		- 12.2%		- 36.6%
Share price total return		- 11.6%		- 37.8%
Benchmark total return		+ 10.8%		- 22.3%
Dividend per share		3.00p		5.3005p
Dividend yield		7.1%		10.0%

Performance (total return)
		1 year ended	3 years ended	5 years ended
		30 September 2009	30 September 2009	30 September 2009
Share price		- 11.6%	- 45.6%	- 9.5%
Net asset value per share		- 12.2%	- 40.3%	- 4.6%
FTSE All-Share Index		+ 10.8%	- 3.4%	+ 38.4%

	Rate per share	xd date	Record date	Payment date
First interim dividend	0.75p	7 January 2009	9 January 2009	30 January 2009
Second interim dividend	0.75p	8 April 2009	14 April 2009	30 April 2009
Third interim dividend	0.75p	8 July 2009	10 July 2009	31 July 2009
Fourth interim dividend	0.75p	7 October 2009	9 October 2009	30 October 2009
2008/09	3.00p
First interim dividend	1.138p	9 January 2008	11 January 2008	31 January 2008
Second interim dividend	1.138p	9 April 2008	11 April 2008	30 April 2008
Third interim dividend	1.138p	9 July 2008	11 July 2008	31 July 2008
Fourth interim dividend	1.8865p	8 October 2008	10 October 2008	31 October 2008
2007/08	5.3005p

Distribution of Assets
	Valuation at					Valuation at
	30 September				Appreciation/	30 September
	2008		Purchases	Sales	(depreciation)	2009
	£'000	%	£'000	£'000	£'000	£'000	%
Listed investments
Ordinary shares	71,202	104.6	24,921	(40,341)	(6,149)	49,633	91.9
Convertibles	1,890	2.8	500	(2,105)	(47)	238	0.4
Corporate bonds	29,075	42.7	6,405	(34,077)	(1,403)	-	-
Other fixed interest	9,941	14.6	-	(7,613)	(353)	1,975	3.7
	_______	______	________	_______	________	______	_____
	112,108	164.7	31,826	(84,136)	(7,952)	51,846	96.0
	_______	______	________	_______	________	______	_____
Other non-current assets	21,715	31.9				-	-
Current assets	19,148	28.1				2,666	4.9
Current liabilities	(6,211)	(9.1)				(520)	(0.9)
Non-current liabilities	(78,717)	(115.6)				-	-
	_______	______				______	_____
Net assets	68,043	100.0				53,992	100.0
	_______	______				______	_____
Net asset value per share	56.04p					44.47p
	_______					______

4. BUSINESS REVIEW

Continuation Vote

In the annual report and accounts for the year ended 30 September 2008, the Directors committed to proposing a further continuation vote at or prior to the next AGM. The Directors subsequently issued a circular to shareholders dated 24 August 2009 which set out their proposals for the future of the Company and these proposals, which included a proposed fundraising and a change to the Company's current investment policy, were approved by shareholders at an extraordinary general meeting of the Company which was held on 17 September 2009.

As indicated in the circular, it was not the Board's intention to put a further continuation vote to shareholders at the forthcoming AGM in the event that the proposed fundraising had been undertaken prior to the AGM. However, the proposed fundraising outlined in the circular has not proceeded to date and, accordingly, a continuation vote will be put to shareholders at this year's AGM. If the continuation vote is not passed, the Directors will convene a general meeting to be held within four months after the date of the continuation vote at which a special resolution will be proposed to require the Company to be wound up voluntarily or to approve proposals which provide shareholders with the opportunity to realise their investment. However, in the opinion of the Company's advisers, the continuation vote has a reasonable prospect of succeeding.

The Board and the Company's advisers are continuing to explore options with a view to increasing materially the size of the Company. It continues to be the Board's opinion that it is in the best interests of shareholders to enlarge the size of the Company. The Board believes that a substantial increase in the size of the Company should bring with it a number of benefits, including broadening the investor base, improving the liquidity in and marketability of its shares and lowering the Company's total expense ratio.

Accordingly, the Directors are unanimously recommending that shareholders vote in favour of the continuation vote at this year's AGM. If the continuation vote is passed, the Company's next continuation vote will be held at the Company's first annual general meeting following the financial year ending 30 September 2013.

Activities

The Company is an investment trust. Its subsidiary undertaking, G.I.T. Securities Limited, operates as an investment dealing company. There was no investment dealing activity in the year. 

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 2009 appear on pages 27 to 46. Dividends declared in respect of the year amounted to 3.0p per share (2008 - 5.3005p). The fourth interim dividend of 0.75p per share announced on 4 October 2009 (2008 -1.8865p) will be accounted for in the financial year ending on 30 September 2010. As detailed in note 8, under International Financial Reporting Standards (IFRS) the dividends accounted for in the 2009 results amount to 4.1365p per share (£5,022,000) compared to 5.3005p per share (£6,457,000) accounted for in the year ended 30 September 2008.

Share Capital

At the Annual General Meeting held on 19 December 2008, 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 £4,549,972 (being equal to approximately 14.99% of the Ordinary shares in issue as at 19 December 2008). It is proposed that this authority will be renewed at the Company's forthcoming AGM (see Annual General Meeting below). During the year ended 30 September 2009, no Ordinary shares were purchased. The issued share capital at 30 September 2009 and as at the date of this report consisted of 121,413,532 Ordinary shares of 25p each and 528,985 Ordinary shares held in treasury. Each holder of an Ordinary share, 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. An explanation of these risks and how they are managed is contained below and in note 19 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 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

A comprehensive 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 (and previously Aberdeen) 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 (and previously Aberdeen) 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, subject to an initial minimum term of 12 months following the passing of the continuation resolution which is to be proposed at the forthcoming annual general meeting of the Company (if that resolution is passed). If the continuation resolution is not passed and the Company is either wound up or is the subject of a reconstruction or amalgamation then the contract is terminable without notice or compensation. 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

Company Secretarial, accounting and administrative services are provided by Aberdeen Asset Management PLC for an annual fee of £100,000, plus VAT, chargeable monthly in advance from 1 August 2009. This agreement is for an initial fixed period of six months and then may be terminated by either party on the basis of one month's notice.

Going Concern

The validity of the going concern basis depends on the continuation vote at the AGM being passed by shareholders. The primary purpose of the continuation vote is to determine whether the shareholders are satisfied to continue the operations of the Company. There is no guarantee that shareholders will pass the continuation vote at the AGM.

Other than this consideration, the Directors, having regard to the liquid nature of the Company's portfolio and the un-geared structure, are satisfied that the Company continues to be a going concern. Accordingly, the Directors believe that it is appropriate to prepare the financial statements on a going concern basis.

Discount policy

The Company is introducing a new discount policy with effect from the conclusion of the forthcoming AGM. This policy will be to ensure that the Ordinary shares always trade at close to net asset value through a combination of share buy-backs coupled with the issue of new Ordinary shares at a premium to net asset value where demand exceeds supply. The implementation of the new discount policy will be dependent on the Company's authority to buy back Ordinary shares, and the Directors' authority to issue Ordinary shares on a non pre-emptive basis, being renewed at the forthcoming AGM.

This new discount control mechanism will be operated by Troy for an initial fee (additional to its investment management fee) of £15,000 (excluding VAT) for the first 6 months and £30,000 per annum (excluding VAT) thereafter.

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 will be 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 the implementation of this discount policy could lead to a reduction in the size of the Company over time.

By Order of the Board

Aberdeen Asset Management PLC

Secretaries

8 December 2009

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.

The group and parent company financial statements are required by law and IFRSs, as adopted by the EU, to present fairly the financial position of the group and the parent company and performance of the group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

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

-    select suitable accounting policies and then apply them consistently;

-    make judgements and estimates that are reasonable and prudent;

-    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; and

-    prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

The Directors confirm that the financial statements comply with these requirements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report including 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.

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

-    the group financial statements, prepared in accordance with IFRSs, 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 Glasgow Income Trust plc

I .M. Boyd

Chairman of the Audit Committee

8 December 2009

  GLASGOW INCOME TRUST PLC

CONSOLIDATED INCOME STATEMENT

		Year ended			Year ended
		30 September 2009			30 September 2008
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments held at fair value	10	-	(7,952)	(7,952)	-	(42,684)	(42,684)
Currency losses		-	(18)	(18)	-	-	-
Revenue	2
Income from listed investments		4,007	-	4,007	7,100	-	4,540
Other income		863	14	877	1,243	25	83
		______	_______	______	_______	_______	_______
		4,870	(7,956)	(3,086)	8,343	(42,659)	(34,316)
		______	_______	______	_______	_______	_______
Expenses
Investment management fees	3	(172)	(172)	(344)	(351)	(351)	(702)
VAT recoverable on investment management fees	21	250	216	466	-	-	-
Other administrative expenses	4	(411)	-	(411)	(287)	-	(287)
Finance costs of borrowing	5	(1)	(1)	(2)	(11)	(11)	(22)
Zero coupon finance costs	14	-	(5,061)	(5,061)	-	(4,108)	(4,108)
		______	_______	______	_______	_______	_______
Profit/(loss) before taxation		4,536	(12,974)	(8,438)	7,694	(47,129)	(39,435)
Taxation	6	(579)	(12)	(591)	(904)	105	(799)
		______	_______	______	_______	_______	_______
Profit/(loss) attributable to equity holders of the Company		3,957	(12,986)	(9,029)	6,790	(47,024)	(40,234)
		______	_______	______	_______	_______	_______
Earnings per Ordinary share (pence)	9	3.26	(10.70)	(7.44)	5.58	(38.62)	(33.04)
		______	_______	______	_______	_______	_______
The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The supplementary revenue return and capital 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 business, being investment business.
The accompanying notes are an integral part of these financial statements.

  GLASGOW INCOME TRUST PLC

BALANCE SHEETS

		Group		Company
		As at	As at	As at	As at
		30 September	30 September	30 September	30 September
		2009	2008	2009	2008
	Note	£'000	£'000	£'000	£'000
Non-current assets
Ordinary shares		49,633	71,202	49,633	71,202
Convertibles		238	1,890	238	1,890
Corporate bonds		-	29,075	-	29,075
Other fixed interest		1,975	9,941	1,975	9,941
		______	_______	______	_______
Investments held at fair value through profit or loss	10	51,846	112,108	51,846	112,108
Zero coupon finance derivatives at fair value	14	-	21,715	-	21,715
Subsidiary	11	-	-	5	5
		______	_______	______	_______
		51,846	133,823	51,851	133,828
		______	_______	______	_______
Current assets
Trade and other receivables		-	298	-	298
Accrued income and prepayments		232	1,755	232	1,755
VAT recoverable on investment management fees		466	-	466	-
Interest due on recoverable VAT on investment management fees		72	-	72	-
AAA money market funds		-	6,338	-	6,338
Cash and short term deposits		1,896	10,730	1,896	10,730
Zero coupon finance derivatives at fair value	14	-	27	-	27
		______	_______	______	_______
Total current assets	12	2,666	19,148	2,666	19,148
		______	_______	______	_______
Total assets		54,512	152,971	54,517	152,976
Current liabilities
Corporation tax payable		(223)	(392)	(223)	(435)
Trade and other payables		(297)	(459)	(484)	(640)
Zero coupon finance derivatives at fair value	14	-	(5,360)	-	(5,360)
		______	_______	______	_______
Total current liabilities	13	(520)	(6,211)	(707)	(6,435)
Non-current liabilities		______	_______	______	_______
Zero coupon finance derivatives at fair value	14	-	(78,717)	-	(78,717)
		______	_______	______	_______
Total liabilities		(520)	(84,928)	(707)	(85,152)
		______	_______	______	_______
Net assets		53,992	68,043	53,810	67,824
		______	_______	______	_______
Issued capital and reserves attributable to equity holders of the parent
Called-up share capital	15	30,486	30,486	30,486	30,486
Share premium account	16	53,204	53,204	53,204	53,204
Special reserve	17	4,658	4,658	4,658	4,658
Capital reserve	18	(37,243)	(24,257)	(37,243)	(24,257)
Revenue reserve	18	2,887	3,952	2,705	3,733
		______	_______	______	_______
Equity shareholders' funds		53,992	68,043	53,810	67,824
		______	_______	______	_______
Net asset value per Ordinary share (pence)	9	44.47	56.04
		______	_______	______	_______

GLASGOW INCOME TRUST PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For year ended 30 September 2009
		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2008	30,486	53,204	4,658	(24,257)	3,952	68,043
(Loss)/profit after tax	-	-	-	(12,986)	3,957	(9,029)
Equity dividends	-	-	-	-	(5,022)	(5,022)
	______	______	______	______	______	______
Balance at 30 September 2009	30,486	53,204	4,658	(37,243)	2,887	53,992
	______	______	______	______	______	______
For year ended 30 September 2008
Balance at 30 September 2007	30,486	53,205	5,000	22,767	3,619	115,077
(Loss)/profit after tax	-	-	-	(47,024)	6,790	(40,234)
Equity dividends	-	-	-	-	(6,457)	(6,457)
Share issue expense	-	(1)	-	-	-	(1)
Shares bought back	-	-	(342)	-	-	(342)
	______	______	______	______	______	______
Balance at 30 September 2008	30,486	53,204	4,658	(24,257)	3,952	68,043
	______	______	______	______	______	______
Company Statement of Changes in Equity
Year ended 30 September 2009
		Share
	Share	premium	Special	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2008	30,486	53,204	4,658	(24,257)	3,733	67,824
(Loss)/profit after tax	-	-	-	(12,986)	3,994	(8,992)
Equity dividends	-	-	-	-	(5,022)	(5,022)
	______	______	______	______	______	______
Balance at 30 September 2009	30,486	53,204	4,658	(37,243)	2,705	53,810
	______	______	______	______	______	______
For year ended 30 September 2008
Balance at 30 September 2007	30,486	53,205	5,000	22,767	3,375	114,833
(Loss)/profit after tax	-	-	-	(47,024)	6,815	(40,209)
Equity dividends	-	-	-	-	(6,457)	(6,457)
Share issue expense	-	(1)	-	-	-	(1)
Shares bought back	-	-	(342)	-	-	(342)
	______	______	______	______	______	______
Balance at 30 September 2008	30,486	53,204	4,658	(24,257)	3,733	67,824
	______	______	______	______	______	______

GLASGOW INCOME TRUST PLC

GROUP AND COMPANY CASH FLOW STATEMENT

	Year ended		Year ended
	30 September 2009		30 September 2008
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Investment income received	5,389		7,552
Deposit interest received	334		547
Dealing subsidiary receipts	-		673
Other cash receipts	605		591
Administrative expenses paid	(806)		(1,111)
	________		________
Cash generated from operations		5,522		8,252
Interest paid		(2)		(22)
Taxation		(753)		(625)
		________		________
Net cash inflows from operating activities		4,767		7,605
Cash flows from investing activities
Purchases of investments	(31,937)		(44,163)
Sales of investments	84,434		60,710
Zero coupon finance repaid	(67,396)		-
	________		________
Net cash (outflow)/inflow from investing activities		(14,899)		16,547
		________		________
Net cash (outflow)/inflow before financing		(10,132)		24,152
Financing activities
Proceeds of issue of shares	-		(1)
Cost of share buy backs	-		(342)
Dividends paid	(5,022)		(6,457)
	________		________
Net cash outflow from financing activities		(5,022)		(6,800)
		________		________
Net cash (outflow)/inflow before management of liquid resources		(15,154)		17,352
Management of liquid resources
Purchase of AAA money market funds	(1,141)		(18,843)
Sale of AAA money market funds	7,479		12,505
	________		________
Net cash inflow/(outflow) from management of liquid resources		6,338		(6,338)
		________		________
Net (decrease)/increase in cash and short term deposits		(8,816)		11,014
Cash and cash equivalents at the start of the year		10,730		(284)
Effect of foreign exchange rate changes		(18)		-
		________		________
Cash and short term deposits at the end of the year		1,896		10,730
		________		________

GLASGOW INCOME TRUST PLC

YEAR ENDED 30 SEPTEMBER 2008

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 principal accounting policies adopted are set out below. These policies have been applied consistently throughout the year. 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 and adopted early) 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. The early adoption of the January 2009 SORP had no effect on the financial statements of the Company, other than:
		-	the requirement to separately disclose capital reserves that relate to the revaluation of investments held at the reporting date. These are disclosed in note 10. This new requirement replaces the previous requirement to disclose the value of the capital reserve that was unrealised.
		-	the requirement to present tax reconciliations based on the total column of the Income Statement rather than the revenue column as was previously recommended. The reconciliation is disclosed in note 6.
		In order to better 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 833-834 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 842 of the Income and Corporation Taxes Act 1988.
		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 : comprehensive revision including requiring a statement of comprehensive income (effective for annual periods beginning on or after 1 January 2009).
		-	Amendment to IAS1 - Presentation of Financial Statements : a Revised Presentation relating to disclosure of puttable instruments and obligations arising on liquidation (effective for annual periods beginning on or after 1 January 2009).
		-	Amendment to IAS 7 - Statement of Cash Flows (effective for annual periods beginning on or after 1 January 2010).
		-	Amendment to IAS 23 - Borrowing Costs: Amendment requiring that all borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of the asset (effective for annual periods beginning on or after 1 January 2009).
		-	Amendment to IAS 27 - Consolidated and Separate Financial Statements : consequential amendments arising to IFRS 3 (effective for annual periods beginning on or after 1 July 2009).
		-	Amendment to IAS 29 - Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning on or after 1 January 2009).
		-	Amendment to IAS 32 - Financial Instruments: Presentation (effective for annual periods beginning on or after 1 January 2009).
		-	Amendment to IAS 36 - Impairment of Assets : amendments resulting from May 2008 Annual Improvements to IFRSs (effective for annual periods beginning on or after 1 January 2009)
		-	Amendment to IAS 36 - Impairment of Assets : amendments resulting from April 2009 Annual Improvements to IFRSs (effective for annual periods beginning on or after 1 January 2010).
		-	Amendment to IAS 39 - Financial Instruments : amendments for eligible hedged items (effective for annual periods beginning on or after 1 July 2009).
		-	Amendment to IAS 39 - Financial Instruments : amendments for embedded derivatives when reclassifying financial instruments (effective for annual periods beginning on or after 30 June 2009).
		-	Amendment to IAS 39 - Financial Instruments : amendments resulting from April 2009 Annual Improvements to IFRSs (effective for annual periods beginning on or after 1 January 2010).
		-	Revised IFRS 1 - First-time Adoption of International Financial Reporting Standards (effective for annual periods beginning on or after 1 January 2009).
		-	Revised IFRS 7 - Financial Instruments (effective for annual periods beginning on or after 1 January 2009).
		-	IFRS 8 - Operating Segments (effective for annual periods beginning on or after 1 January 2009).
		-	Revised IFRS 8 - Operating Segments : amendments resulting from April 2009 Annual Improvements to IFRSs (effective for annual periods beginning on or after 1 January 2010).
		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 although there will be revised presentations to the Primary Financial Statements and additional disclosures. Any future business combinations will be affected. 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 entities controlled by the Company (its subsidiaries) 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.
		The Group's investments are defined by IFRS as investments designated as fair value through profit or loss. All investments are designated upon initial recognition as held at fair value and 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.
	(d)	Investments held in dealing subsidiary
		Investments held are shown as current assets at fair value. Gains and losses arising on these investments are dealt with in the revenue column of the Consolidated Income Statement. In respect of the Company the subsidiary is held at cost with any amounts owed to or from the subsidiary included in the relevant Balance Sheet heading.
	(e)	Zero coupon finance
		The Company had in place medium-term funding in the form of zero coupon finance through a series of option transactions on the FTSE 100 Index. All of these were fully repaid during the year. The option contracts were accounted for as separate derivative contracts and therefore were shown on the Balance Sheet at their fair value. Changes in the fair value of the option contracts are charged or credited to capital and presented as a capital item in the Income Statement.
	(f)	Money market funds
		The AAA money market funds are used by the Company to provide additional short term liquidity. As they are not listed on a recognised exchange and due to their short term nature, they are recognised in the financial statements at cost and as a current asset.
	(g)	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 on an effective yield basis. 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.
		Traded option contracts are restricted to writing out of the money options with a view to generating income. Premiums received on traded option contracts are recognised as income evenly over the period from the date they are written to the date when they expire or are exercised or assigned. Gains and losses on the underlying shares acquired or disposed as a result of options exercised are included in the capital account.
		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.
	(h)	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, in order to reflect the Directors' expected long-term view of the nature of the investment returns of the Company.
	(i)	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.
	(j)	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.

		2009	2008
2.	Income	£'000	£'000
	Income from listed investments
	UK dividend income	2,548	4,540
	Interest income from investments and overseas interest	1,371	2,502
	Stock dividend	47	41
	Underwriting income	41	17
		________	________
		4,007	7,100
		________	________
	Other income from investment activity
	Deposit interest	242	451
	AAA money market funds interest	43	145
	Interest on recoverable VAT on management fees	72	-
	Traded option premiums	506	673
	Loss on sale of investments in dealing company	-	(26)
		________	________
		863	1,243
		________	________
	Total income	4,870	8,343
		________	________
	In addition to the above which has been reported as revenue, there is £14,000 (2008 - £25,000) of income reported as capital. The amount received in 2009 was surplus rehypothication fees, whilst the amount received in 2008 was an incentive payment for early instruction on a proposed amendment to the terms of a preference share holding.

3.	Investment management fees
	For the year ended 30 September 2009 investment management services were provided by Aberdeen Asset Managers Limited ('AAM') until 31 July 2009, at which point Troy Asset Management Limited ('Troy') took over as the Investment Manager. The investment management fee paid to both Troy and AAM was at an annual rate of 0.75%, calculated monthly and paid quarterly. The fee is allocated 50% to revenue and 50% to capital.
	Note 21 provides further information on the current status of VAT charged on management fees.

		2009			2008
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee - AAM	139	139	278	351	351	702
	Investment management fee - Troy	33	33	66	-	-	-
		_______	______	______	______	______	______
		172	172	344	351	351	702
		_______	______	______	______	______	______

			2009	2008
4.	Administrative expenses		£'000	£'000
	Directors' remuneration - fees as Directors		62	61
	Secretarial fees		19	-
	Fees payable to auditors (excluding irrecoverable VAT):
	-	fees payable to the Company's auditors for the audit of the annual accounts	17	17
	Marketing contribution		35	75
	Other management expenses{A}		278	134
			_______	______
			411	287
			_______	______
	{A} Includes non-recurring expenses of £112,500 (2008 - £nil).
	Following the appointment of Troy, the Company continues to receive secretarial services from Aberdeen Asset Managers Limited ("AAM"), which is charged at a rate of £100,000 per annum exclusive of VAT. Prior to this period secretarial services had been provided by AAM as part of their role as the investment manager.
	With the exception of the fees payable to the auditors, irrecoverable VAT has been included under the relevant expense line above. Irrecoverable VAT on fees payable to the auditors is included within other management expenses.
	The Company had no employees during the year (2008 - nil). No pension contributions were paid for Directors (2008 - £nil).

		2009			2008
		Revenue	Capital	Total	Revenue	Capital	Total
5.	Finance costs and borrowings	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts repayable within one year	1	1	2	11	11	22
		______	_____	_____	_____	_____	_____
	Interest on short-term bank loans and overdrafts is at floating rates related to LIBOR and UK base rates respectively.

			2009						2008
			Revenue		Capital		Total		Revenue		Capital	Total
6.	Taxation		£'000		£'000		£'000		£'000		£'000	£'000
	Current corporation tax		533		12		545		904		(105)	799
	Prior year adjustment		40		-		40		-		-	-
	Irrecoverable overseas tax		6		-		6		-		-	-
			_______		______		______		______		______	______
			579		12		591		904		(105)	799
			_______		______		______		______		______	______
	Due to the refund of VAT on management fees, previously accounted for in capital, taxable income exceeds expenses in capital. On that basis a current year charge of £12,000, being £43,000 at 28%, is allocated to capital.
	At 30 September 2009, the Group had no surplus management expenses or non-trade debits (2008 - £nil) to carry forward. No deferred tax has been recognised in the current or prior periods.
	The following table is a reconciliation of the current taxation charge/(credit) to the charges or credits which would arise if all ordinary activities were taxed at the standard UK corporation tax rate of 28% (2008 - 29%):
		2009						2008
		Revenue		Capital		Total		Revenue		Capital		Total
		£'000		£'000		£'000		£'000		£'000		£'000
	Profit on ordinary activities before taxation	4,536		(12,974)		(8,438)		7,694		(47,129)		(39,435)
		_______		______		_____		______		_______		_____
	Taxation of return on ordinary activities at the standard rate of corporation tax	1,270		(3,633)		(2,363)		2,231		(13,667)		(11,436)
	Effects of:
	UK dividend income not liable to further tax	(713)		-		(713)		(1,316)		-		(1,316)
	Overseas dividend income not liable to further tax	(11)		-		(11)		-		-		-
	Stock dividend not taxable	(13)		-		(13)		(11)		-		(11)
	Capital losses not taxable	-		3,645		3,645		-		13,562		13,562
	Overseas withholding tax suffered	6		-		6		-		-		-
	Prior year adjustment	40		-		40		-		-		-
		_______		______		_____		______		_______		_____
	Current taxation charge/(credit) for the year	579		12		591		904		(105)		799
		_______		______		_____		______		_______		_____

7.	Profit attributable to Ordinary shareholders of the Company
	The revenue profit attributable to equity holders of the Group for the financial year includes £3,994,000 (2008 - £6,815,000) which has been dealt with in the Company's financial statements.

		2009	2008
8.	Dividends on equity shares	£'000	£'000
	Amounts recognised as distributions to equity holders in the year:
	Fifth interim dividend for the year ended 30 September 2007 of 1.8865p per share	-	2,300
	Fourth interim dividend for the year ended 30 September 2008 of 1.8865p	2,290	-
	Three interim dividends for the year ended 30 September 2009 totalling 2.25p (2008 - three interims totalling 3.414p) per share	2,732	4,157
		________	________
		5,022	6,457
		________	________
	The fourth interim dividend of 0.75p per share, declared on 1 October 2009 and paid on 30 October 2009 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 842 Income and Corporation Taxes Act 1988 are considered.
		2009	2008
		£'000	£'000
	Three interim dividends for the year ended 30 September 2009 totalling 2.25p (2008 - 3.414p) per share	2,732	4,157
	Fourth interim dividend for the year ended 30 September 2009 of 0.75p (2008 - 1.8865p) per share	911	2,290
		________	________
		3,643	6,447
		________	________

		2009	2008
9.	Return and net asset value per share	£'000	£'000
	The returns per share are based on the following figures:
	Revenue return	3,957	6,790
	Capital return	(12,986)	(47,024)
		________	________
	Total	(9,029)	(40,234)
		________	________
	Weighted average number of Ordinary shares	121,413,532	121,767,858
		__________	__________
	The net asset value per share is based on net assets attributable to shareholders of £53,992,000 (2008 - £68,043,000) and on 121,413,532 (2008 - 121,413,532) Ordinary shares in issue at the year end.

			Group & Company
			2009	2008
10.	Non-current assets - Securities at fair value		£'000	£'000
	Listed on recognised stock exchanges:
	United Kingdom		48,281	105,000
	Overseas		3,565	7,108
			________	________
			51,846	112,108
			________	________
			Group & Company
			2009	2008
			£'000	£'000
	Cost at 30 September 2008		135,042	160,041
	Investment holdings (losses)/gains at 30 September 2008		(22,934)	11,374
			________	________
	Fair value at 30 September 2008		112,108	171,415
	Purchases		31,826	44,274
	Capital event		-	41
	Effective yield adjustment		(3)	24
	Sales	- proceeds	(84,136)	(61,023)
		- net losses on sales	(31,310)	(8,315)
	Movement in fair value during the year		23,361	(34,308)
			________	________
	Valuation at 30 September 2009		51,846	112,108
			________	________
	Cost at 30 September 2009		51,419	135,042
	Investment holdings gains/(losses) at 30 September 2009		427	(22,934)
			________	________
	Valuation at 30 September 2009		51,846	112,108
			________	________
	All investments are categorised as held at fair value through profit or loss, with the exception of the subsidiary, and were designated as such upon initial recognition. The subsidiary is held at cost.
	The total transaction costs on purchases was £128,000 (2008 - £192,000) and on sales £57,000 (2008 - £72,000).
			Group & Company
			2009	2008
	Losses on investments held at fair value		£'000	£'000
	Net losses on sales		(31,310)	(8,315)
	Movement in investment holdings gains/(losses)		23,361	(34,308)
	Movement in fair value of traded option contracts		(3)	(61)
			________	________
			(7,952)	(42,684)
			________	________
	The above table includes the following effects of traded option activity:
			Group & Company
			2009	2008
			£'000	£'000
	Call options exercised		(38)	(134)
	Put options assigned		(550)	(132)
			________	________
			(588)	(266)
			________	________

		Company
		2009	2008
11.	Subsidiary	£'000	£'000
	Shares at cost	5	5
		________	________
	The Company owns 100% of the Ordinary share capital of its sole subsidiary, G.I.T. Securities Limited, an investment dealing company registered in Scotland.

		Group		Company
		2009	2008	2009	2008
12.	Current assets	£'000	£'000	£'000	£'000
	Investment sales	-	298	-	298
	Accrued income and prepayments	232	1,755	232	1,755
	VAT recoverable on investment management fees	466	-	466	-
	Interest due on recoverable VAT on investment management fees	72	-	72	-
	Cash and cash equivalents	1,896	17,068	1,896	17,068
	Zero coupon finance derivatives at fair value	-	27	-	27
		________	________	________	________
		2,666	19,148	2,666	19,148
		________	________	________	________

		Group		Company
		2009	2008	2009	2008
13.	Current liabilities	£'000	£'000	£'000	£'000
	Investment purchases	-	111	-	111
	Corporation tax	223	392	223	435
	Other creditors	297	348	484	529
	Zero coupon finance derivatives at fair value	-	5,360	-	5,360
		________	________	________	________
		520	6,211	707	6,435
		________	________	________	________
	Interest on short-term bank loans and overdrafts is at floating rates related to LIBOR and UK base rates respectively.

14.	Zero coupon finance
	The zero coupon finance arrangement comprised a set of separately traded financial instruments (FTSE 100 Index options) each with its own market value. The options ran until 2008, 2010 and 2011. All of these were fully repaid during the year. Set out below is a breakdown of the different options split between put and call options and assets and liabilities as disclosed in the Balance Sheet. The change in the net total market value of the options in each accounting period was treated as an unrealised loss and charged to the capital column of the Consolidated Income Statement.
	As there was no outstanding positions at 30 September 2009 there is no collateral requirement. As at 30 September 2008, the Company had pledged collateral of 148% of the value of this finance, being £5.6 million cash and £87.2 million of securities.
		2009	2008
	Fair value at 30 September 2009	£'000	£'000
	Non-current assets
	Call options expiring in January 2010	-	559
	Call options expiring in April 2011	-	2,318
	Put options expiring in January 2010	-	8,988
	Put options expiring in April 2011	-	9,850
		________	________
		-	21,715
		________	________
	Current assets
	Call option expiring in December 2008	-	24
	Put option expiring in December 2008	-	3
		________	________
		-	27
		________	________
	Non-current liabilities
	Call options expiring in January 2010	-	(8,891)
	Call options expiring in April 2011	-	(12,036)
	Put options expiring in January 2010	-	(30,699)
	Put options expiring in April 2011	-	(27,091)
		________	________
		-	(78,717)
		________	________
	Current liabilities
	Call option expiring in December 2008	-	(3,479)
	Put option expiring in December 2008	-	(1,881)
		________	________
		-	(5,360)
		________	________
	Net zero coupon finance liability - fair value	-	(62,335)
		________	________
	The movements in the fair value of this finance were as follows:
		Group and Company
		2009	2008
		£'000	£'000
	At 30 September 2008	62,335	58,227
	Cost of closure of existing zero coupon finance arrangements	(67,396)	-
	Finance costs charged to capital	5,061	4,108
		________	________
	At 30 September 2009	-	62,335
		________	________

		Ordinary shares of 25p each
15.	Called-up share capital	Number	£'000
	Authorised
	At 30 September 2009 & 30 September 2008	200,000,000	50,000
	Allotted, called up and fully paid
	At 30 September 2009	121,413,532	30,354
	Held in treasury	528,985	132
		121,942,517	30,486
	During the year to 30 September 2009 there were no repurchases of Ordinary shares of 25p each by the Company. During the year to 30 September 2008 there were 528,985 Ordinary shares of 25p each repurchased by the Company at a total cost, including transaction costs of £342,000.
	There were no shares placed in treasury during the year (2008 - 528,985). No shares were purchased for cancellation during the year. At the year end 528,985 (2008 - 528,985) shares were held in treasury, which represents 0.43% (2008 - 0.43%) of the Company's total issued share capital at 30 September 2009.

		2009	2008
16.	Share premium account	£'000	£'000
	At 30 September 2008 and 2007 respectively	53,204	53,205
	Expenses of issue during year	-	(1)
		________	________
	At 30 September 2009 and 2008 respectively	53,204	53,204
		________	________

		2009	2008
17.	Special reserve	£'000	£'000
	At 30 September 2008 and 2007 respectively	4,658	5,000
	Shares bought back during the year into treasury	-	(342)
		________	________
	At 30 September 2009 and 2008 respectively	4,658	4,658
		________	________
	The purpose of this reserve is to fund market purchases by the Company of its own Ordinary shares.

				Group & Company
				2009		2008
18.	Analysis of retained earnings			£'000		£'000
	Capital reserve
	At 30 September 2008/2007 respectively			8,550		17,097
	Net losses on sales of investments during the year			(31,310)		(8,315)
	Finance costs of borrowings (note 5)			(1)		(11)
	Tax (charges)/credit allocated to capital			(12)		105
	Zero coupon finance costs			(14,937)		-
	Incentive payment (see note 2)			-		25
	Surplus rehypothication fees (see note 2)			14		-
	Investment management fee			(172)		(351)
	VAT recoverable on investment management fees			216		-
	Currency losses			(18)		-
				________		________
	At 30 September 2009/2008 respectively			(37,670)		8,550
				________		________
	Investment holdings gains/(losses)
	At 30 September 2008/2007 respectively			(32,807)		5,670
	Fixed asset investment gains/(losses)			23,361		(34,308)
	Zero coupon finance costs			9,876		(4,108)
	Movement in fair value of traded option contracts			(3)		(61)
				________		________
				427		(32,807)
				________		________
	Total capital reserve			(37,243)		(24,257)
				________		________
	The zero coupon finance costs attributed to the capital reserve in the year (£14,937,000) represents the movement from the original cost of the instruments when the positions were taken out compared to their value on the dates when they were repaid or redeemed. The credit of £9,876,000 reflected in investment holdings gains represents the reversal of the holding loss shown at the last year end.
		Group	Company		Group		Company
		2009	2009		2008		2008
	Revenue reserve	£'000	£'000		£'000		£'000
	At 30 September 2008/2007 respectively	3,952	3,733		3,619		3,375
	Transfer to revenue account net of dividends	(1,065)	(1,028)		333		358
		________	________		________		________
	At 30 September 2009/2008 respectively	2,887	2,705		3,952		3,733
		________	________		________		________

19.	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.
	The Company's previous investment objective of providing a high and growing dividend with capital growth was addressed by investing primarily in UK equities to provide growth in capital and income and in fixed income securities to provide a high level of income. Additional revenue was generated from premiums earned by writing out of the money traded options against assets held in the portfolio and writing put options.
	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.
	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 bond yields 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 and liabilities at the Balance Sheet date was as follows:
				Weighted	Weighted
				average	average			Non-
				period for which	interest	Fixed	Floating	interest
				rate is fixed	rate	rate	rate	bearing
		As at 30 September 2009		Years	%	£'000	£'000	£'000
		Assets
		UK preference shares		-	8.95	1,975	-	-
		Cash		-	-	-	1,896	-
				________	________	________	________	______
		Total assets		-	-	1,975	1,896	-
				________	________	________	________	______
		Liabilities
		Zero Coupon Finance		-	-	-	-	-
		Total liabilities		-	-	-	-	-
				Weighted
				average
				period for which	Weighted average			Non
				rate is fixed	interest rate	Fixed rate	Floating rate	interest bearing
		As at 30 September 2008		Years	%	£'000	£'000	£'000
		Assets
		Corporate Bonds		8.99	6.48	29,075	-	-
		UK preference shares		-	8.65	9,941	-	-
		Zero Coupon Finance		-	-	-	-	21,715
		Cash		-	-	-	10,730	-
		AAA money market funds		-	-	-	6,338	-
				________	________	________	________	______
		Total assets		-	-	39,016	17,068	21,715
				________	________	________	________	______
		Liabilities
		Zero Coupon Finance		-	-	-	-	(78,717)
				________	________	________	________	______
		Total liabilities		-	-	-	-	(78,717)
				________	________	________	________	______
		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 (with the exception of loans) have been excluded from the above tables.
		Zero Coupon Finance is measured at fair value and other financial liabilities at amortised cost.

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 2009

£'000

£'000

£'000

£'000

£'000

£'000

Fixed rate

UK preference shares

-

-

-

-

-

1,975

Within

Within

Within

Within

Within

More than

1  year

1-2 years

2-3 years

3-4  years

4-5 years

5  years

Floating rate

£'000

£'000

£'000

£'000

£'000

£'000

Cash

1,896

-

-

-

-

-

_____

_____

_____

_____

_____

_____

Total

1,896

-

-

-

-

1,975

_____

_____

_____

_____

_____

_____

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 2008

£'000

£'000

£'000

£'000

£'000

£'000

Fixed rate

Corporate Bonds

2,501

3,715

1,383

3,439

1,820

16,217

UK preference shares

-

-

-

-

-

9,941

_____

_____

_____

_____

_____

_____

2,501

3,715

1,383

3,439

1,820

26,158

_____

_____

_____

_____

_____

_____

Floating rate

Zero coupon finance

(5,333)

(30,043)

(26,959)

-

-

-

Cash

10,730

-

-

-

-

-

AAA money market funds

6,338

-

-

-

-

-

_____

_____

_____

_____

_____

_____

11,735

(30,043)

(26,959)

-

-

-

_____

_____

_____

_____

_____

_____

Total

14,236

(26,328)

(25,576)

3,439

1,820

26,158

_____

_____

_____

_____

_____

_____

Interest rate sensitivity

The sensitivity analysis below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments 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 100 basis points higher or lower and all other variables were held constant, the Company's:

-

profit before tax for the year ended 30 September 2009 would increase / decrease by £19,000 (2008 - £171,000) 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 2009 would decrease /increase by £24,000 (2008 - decrease /increase by £525,000) given the Company's exposure to interest rates on its fixed interest securities. This is based on a Value at Risk ('VaR') calculated at a 99% confidence level.

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 2009

30 September 2008

Net

Net

Overseas

monetary

Overseas

monetary

investments

assets

investments

assets

£'000

£'000

£'000

£'000

US Dollar

2,368

-

-

-

Swiss Franc

1,197

-

-

-

_______

_______

_______

_______

Total

3,565

-

-

-

_______

_______

_______

_______

Foreign currency sensitivity

There is no sensitivity analysis included, as the Group's 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 2009 would have increased/decreased by £4,963,000 (2008 - increase/decrease of £7,120,000). 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 loan and 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:

-

where the Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default;

-

investments in quoted bonds are made across a variety of industry sectors so as to avoid concentrations of credit risk;

-

transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account so as to minimise the risk to the Company of default;

-

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 Custodian carries out a stock reconciliation to third party administrators' records on a monthly basis to ensure discrepancies are picked up on a timely basis. The administrator's Compliance department carries out periodic reviews of the Custodian;

-

transactions involving derivatives, structured notes and other arrangements wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest are subject to rigorous assessment by the Manager of the credit worthiness of that counterparty. The Company's aggregate exposure to each such counterparty is monitored regularly by the Board;

-

cash and AAA money market funds are 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 2009 was as follows:

2009

2008

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£'000

£'000

£'000

£'000

Non-current assets

Securities at fair value through profit or loss

238

238

30,965

30,965

Zero coupon finance derivatives at fair value

-

-

21,715

21,715

Current assets

Zero coupon finance derivatives at fair value

-

-

27

27

Trade and other receivables

-

-

298

298

Accrued income

232

232

1,755

1,755

Recoverable VAT on management fees and interest thereon

538

538

-

-

AAA money market funds

-

-

6,338

6,338

Cash and short term deposits

1,896

1,896

10,730

10,730

________

________

________

________

2,904

2,904

71,828

71,828

________

________

________

________

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 Group has in place a £3 million revolving credit facility with HSBC running to December 2009. The facility is renewed on an annual basis. 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.

The Company has the ability to augment finance from time to time with short-term borrowings. The only covenant in relation to this borrowing facility is that the Company's net assets must exceed £20million. As at 30 September 2009 the net asset value was £54 million.

20.	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:
			2009	2008
			£'000	£'000
	Equity share capital		30,486	30,486
	Retained earnings and other reserves		23,506	37,557
			________	________
			53,992	68,043
			________	________
	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, 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 bank gearing at the year end (2008 - nil).

21.	Commitments, contingencies and post Balance Sheet events
	At 30 September 2009 there were no contingent liabilities in respect of outstanding underwriting commitments or uncalled capital (2008 - £nil).
	Following the year end the Company has received a refund of £466,000 plus interest of £72,000, representing the proportion of VAT charged on investment management fees for the period 1 January 1990 to 31 December 2007 that was recoverable; this has been recognised in these financial statements and has been allocated to revenue and capital respectively, in accordance with the accounting policy of the Company for the periods in which the VAT was charged.

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 2009. The statutory accounts for the year ended 30 September 2009 received an audit report which was unqualified.

The statutory accounts for the financial year ended 30 September 2009 were approved by the Directors on 8 December 2009 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 14 January 2010 at 40 Princes Street, Edinburgh, EH2 2BY.

The Annual Report will be posted to shareholders in December 2009 and available in due course by download for the Company's webpage (www.glasgowincometrust.co.uk)

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 Glasgow Income Trust plc

Aberdeen Asset Management PLC, Secretaries

8 December 2009

 

END

 

 

FR FSUFSASUSEIE