Interim Results
Glasgow Income Trust PLC
30 May 2006
News Release
30 May 2006
Glasgow Income Trust plc
Interim Results for the six months to 31 March 2006
The principal objective of Glasgow Income Trust plc is to provide shareholders
with a high level of income and to obtain growth in both income and capital over
the longer term.
31 March 2006 30 September
2005
Total assets less current liabilities £115.2m £93.3m
Shareholders' funds £88.3m £63.4m
Net asset value per share 94.2p 80.4p
Share price 95.3p 83.0p
Premium (share price to adjusted net asset
value)^ 2.3% 5.5%
Dividends per share 2.79p 2.79p*
Fourth Interim Dividend (2004/2005) 1.76p 1.76p
First Interim Dividend (2005/2006) 1.03p 1.03p
Second Interim Dividend (2005/2006)** 1.105p 1.03p
* Half year to 31 March 2005.
** The Second Interim dividend is not reflected in these accounts.
^ Based on IFRS NAV excluding dividend adjustment of 1.105p (Sep 2005 - 1.76p)
•Total return on net assets was 22.5%, which compares favourably with a
return of 12.7% on the FTSE All-Share Index, the Company's benchmark.
•During the period, the Company raised £13.7 million through a placing and
a scheme of reconstruction by the City of Oxford Geared Income Trust,
increasing the net assets of the Company to over £88 million
•There was a small reduction in the premium of the share price over Net
Assets at 31 March 2006 compared with 30 September 2005. As a result the
share price total return was 18.7%.
•The premium at which the share price stood to net assets decreased from
5.5% at 30 September 2005 to 2.3% at 31 March 2006
•The company is looking to pay a dividend of no less than 5p per share, an
increase of 3.1% from the previous 4.85p. Based upon the share price of
95.3p at 31 March 2006 this would give a yield on the ordinary shares of
5.2%.
•A second interim dividend of 1.105p was declared on 28 February 2006.
Dividends declared and paid to date total 2.135p, an increase on the
dividends paid last year
International Financial Reporting Standards (IFRS)
The results for the period have been prepared in accordance with IFRS and the
prior period has been restated to reflect these changes in accordance with IFRS
1, First Time Adoption of IFRS. Details of the changes on the transition to IFRS
are included in note 2 to the financial statements.
These preliminary financial statements may require adjustment before their
inclusion in the final IFRS financial statements for the year ended 30 September
2006 because of subsequent revisions or changes to IFRS, or guidance and
consensus on the application or interpretation of IFRS
For further information please contact:
Mike Balfour, Managing Director
Glasgow Investment Managers
0141 572 2700
Glasgow Income Trust plc
Interim Report as at 31 March 2006
Chairman's Statement
Financial Highlights
I am pleased to report that the Company continued to grow in the six months to
31 March 2006. The total return on net assets for the period was 22.5% compared
to the FTSE All Share Index total return of 12.7%. The share price total return
was also ahead of the benchmark at 18.7% for the six month period. The company
also issued a significant number of new shares in the period which mainly
centred around the scheme of reconstruction by the City of Oxford Geared Income
Trust which is explained in more detail below.
As reported in the recent prospectus and subject to any unforeseen
circumstances, the dividend for the year to 30 September 2006 will not be less
than 5.0p per share, an increase of 3.1% from the previous 4.85p. Accordingly
the Board declared a second interim dividend of 1.105p on 28 February 2006
compared to a second interim of 1.03p in 2005.
International Financial Reporting Standards
These are the Company's first financial statements under the new International
Financial Reporting Standards (IFRS), which came into effect on 1 January 2005.
As a consequence of these new accounting rules, the financial statements look
quite different from those contained in previous reports. The Consolidated
Statement of Total Return has been replaced by the Consolidated Income
Statement. However, while the total column is the primary statement combining
elements that are of a revenue and capital nature, a three columned approach is
retained showing the division between revenue and capital as previously. This
enables you to identify the revenue available for distribution. There is however
a significant presentational change in respect of dividends. Previously these
were shown in the revenue column of the Statement of Total Return, but are now
included in a new statement, the Statement of Changes in Equity. There is a
further change to the incorporation of dividends which is discussed in more
detail below under Dividends.
The NAV of the Company of 94.2p at 31 March 2006 is 1.2p higher than it would
have been under the old accounting rules. The major change is the exclusion of
the second interim dividend in respect of 2005/06, expanded upon in the
Dividends section below. The remaining small differences are represented by the
move from mid to bid value for investments, a change in the method for
accounting for income on debt securities and a change in the valuation of the
securities held by the dealing subsidiary. A detailed note on the effects of the
transition to IFRS is contained in note 2 to the financial statements.
Investment Returns
The total return on net assets was 22.5%, considerably ahead of the FTSE
All-Share Index, the Company's benchmark. It should be noted that all net asset
value returns have been calculated excluding the dividend adjustment referred to
above as recommended by the Association of Investment Trust Companies.
There was a reduction in the premium of share price over Net Assets at 31 March
2006 compared with 30 September 2005. As a result the share price total return
was 18.7%.
New Share Issues
In the 2005 Annual Report, I stated that the Board had recently announced
proposals for a further placing and offer for shares. After consultation with
the Company's advisers it was decided to limit this issue to a placing under
share issue authorities granted at the EGM on 30 November 2005. On 15 December
2005 3,811,878 shares were issued at a price of 84.3p, representing a premium of
approximately 3% to the underlying net asset value per share and raising
£3,213,000 before expenses.
On January 10 2006 the Board announced that it was proposing to issue shares in
connection with a scheme of reconstruction of the City of Oxford Geared Income
Trust ("COGIT"). This scheme gave shareholders in COGIT the opportunity to roll
over their investment into Glasgow Income Trust due to the winding up of COGIT.
This is the first time the Company had been selected to be one of the rollover
options for such a scheme and underlines the continued good performance of the
Trust. On 31 March 2006 the Company issued 9,837,587 shares in relation to the
scheme and a further 1,194,862 shares in relation to an open offer which was run
in conjunction with the scheme in order to give existing shareholders the right
to purchase new shares on the same terms as COGIT shareholders. The shares were
issued at 94.9p representing a premium of approximately 2% to the underlying net
asset value raising £10,470,000 before expenses.
Dividends
Actual dividends paid to date for the 2005/06 financial year amount to 2.135p
comprising the first interim dividend of 1.03p and the second interim dividend
of 1.105p. However, under the new IFRS requirements, only dividends which are
paid in the financial period are included in the financial statements and shown
in the Consolidated Statement of Changes in Equity. As a result the total
dividend reflected in these accounts and shown in the financial highlights is
2.79p, comprising the fourth interim dividend from 2005 of 1.76p which was paid
on 31 October 2005 and the first interim dividend of 2006 of 1.03p paid on 31
January 2006.The second interim dividend declared on 28 February 2006 is
excluded as the payment date is post this reporting period end of 31 March 2006.
Portfolio Profile and Gearing
In order to maintain the Company's gearing following the share issue in December
2005, £1.6 million of additional zero coupon finance was raised in December 2005
with a maturity value of £2.0 million repayable in January 2010. This equates to
a financing cost of 5.6% per annum.
Subsequent to 31 March 2006 a further £8.5 million tranche of zero coupon
finance was raised in order to maintain the Company's gearing after the COGIT
scheme of reconstruction share issue. This has a maturity value of £11.3 million
repayable in April 2011 and equates to a financing cost of 5.9% per annum.
The distribution of assets shows that 89.9% of net assets were invested in
equities at 31 March 2006. This compares with 100.8% at 30 September 2005 but it
should be noted that the proceeds from the COGIT share issue were still to be
invested as at 31 March 2006. As at the date of writing this statement equity
gearing was 99.7%.
The majority of the Company's gearing is invested in investment grade corporate
bonds, and not equities. This enhances the Company's ability to pay out a high
level of income, but also allows a full exposure to the UK equity market
Outlook
It is interesting to note that in the calendar year 2005, the UK stock market
appreciated by 18%, reflecting the growth in earnings per share which was around
15%. Share prices increased but the valuation of the equity market therefore
remained broadly the same.
In the first quarter of 2006, the equity market has once again risen strongly,
with an increase of 7.1% in the FTSE All Share index. Corporate earnings are
forecast to grow by 7.7% in 2006. Company results have continued to be positive
and further upgrades to profits forecasts are expected. Merger and acquisition
activity also remains an important feature with both corporate and private
equity buyers involved. There are a number of concerns in the market e.g. oil
prices, interest rates and global imbalances, any of which could cause a market
correction, as has been seen recently. However we remain cautiously optimistic
that further progress can be made.
The Interim Report will be mailed to shareholders on 2 June 2006. Copies may be
obtained from the Managers, Glasgow Investment Managers Limited, Sutherland
House, 149 St Vincent Street, Glasgow G2 5DR after that date.
R G Hanna
(Chairman)
Consolidated Income Statement
for the half year ended 31 March 2006
Half year to 31 March 2006
(unaudited)
Revenue Capital Total
£000 £000 £000
Gains
Gains on investments at fair value - 12,400 12,400
Revenue
Dividend income 1,239 - 1,239
Interest income from investments 748 - 748
Traded Option premiums 218 - 218
Deposit interest 28 - 28
Other revenue - - -
Net gain of dealing subsidiary 222 - 222
--------- -------- --------
2,455 12,400 14,855
--------- -------- --------
Expenses
Investment management fee (150) (150) (300)
Other administrative expenses (119) - (119)
Finance cost of borrowings (31) (31) (62)
Zero Coupon Finance Costs - (483) (483)
--------- -------- --------
(300) (664) (964)
--------- -------- --------
Profit before tax 2,155 11,736 13,891
Tax expense (221) 56 (165)
--------- -------- --------
Profit for the period 1,934 11,792 13,726
--------- -------- --------
Profit attributable to equity holders of the 1,934 11,792 13,726
Company --------- -------- --------
Earnings per ordinary share (pence) 14.6p
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The revenue and capital columns are
supplementary to this and are prepared under guidance published by the
Association of Investment Trust Companies.
All items shown in the above statement derive from continuing operations.
The following table shows the revenue for each year under IFRS less the
dividends declared in respect of the financial year to which they relate. This
table is not part of the Consolidated Income Statement and is unaudited.
Half Year to Half Year to
31 March 2006 31 March 2005
£000 £000
Revenue for the period 1,934 1,124
Dividends for the period (1,727)* (1,036)+
------------- -------------
207 88
------------- -------------
*Relates to first two interim dividends (1.03p and 1.105p respectively) declared
in respect of the financial year 2005/06.
+ Relates to first two interim dividends (each 1.03p) declared in respect of the
financial year 2004/05.
Consolidated Income Statement
(Continued)
Half year to 31 March 2005 Year to 30 September 2005
Restated Restated
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Gains
Gains on investments
at fair value - 4,606 4,606 - 11,160 11,160
Revenue
Dividend income 736 - 736 2,323 - 2,323
Interest income from
investments 431 - 431 1,097 - 1,097
Traded Option premiums 111 - 111 437 - 437
Deposit interest 47 - 47 97 - 97
Other revenue - - - 4 - 4
Net gain of dealing
subsidiary 76 - 76 93 - 93
------- ------- ------- ------- ------- -------
1,401 4,606 6,007 4,051 11,160 15,211
------- ------- ------- ------- ------- -------
Expenses
Investment management
fee (73) (73) (146) (189) (189) (378)
Other administrative
expenses (87) - (87) (247) - (247)
Finance cost of
borrowings - - - (17) (17) (34)
Zero Coupon Finance
Costs - (505) (505) - (1,902) (1,902)
------- ------- ------- ------- ------- -------
(160) (578) (738) (453) (2,108) (2,561)
------- ------- ------- ------- ------- -------
Profit before tax 1,241 4,028 5,269 3,598 9,052 12,650
Tax expense (117) 25 (92) (388) 62 (326)
------- ------- ------- ------- ------- -------
Profit for the period 1,124 4,053 5,177 3,210 9,114 12,324
------- ------- ------- ------- ------- -------
Earnings per ordinary
share (pence) 10.2p 15.6p
Group Balance Sheet
as at 31 March 2006
31 March 2006 30 September 31 March 2005
2005
(unaudited) (unaudited) (unaudited)
£000 £000 £000
Non current assets
Ordinary shares 79,466 63,902 37,351
Convertibles 5,613 5,331 2,348
Corporate Bonds 24,122 24,059 12,280
Other fixed interest 6,005 - -
Zero Coupon Finance Call
Options 8,326 3,556 842
Zero Coupon Finance Put
Options 5,311 5,464 3,625
---------- ---------- ----------
128,843 102,312 56,446
---------- ---------- ----------
Current assets
Trade and other
receivables 1,208 52 6
Accrued income and
prepayments 1,149 1,319 744
Investments of dealing
subsidiary 597 - -
Cash and cash equivalents 3,421 239 1,022
---------- ---------- ----------
6,375 1,610 1,772
---------- ---------- ----------
---------- ---------- ----------
Total Assets 135,218 103,922 58,218
---------- ---------- ----------
Current liabilities
Trade and other payables (725) (467) (265)
Short-term borrowings (1,280) (1,850) -
---------- ---------- ----------
(2,005) (2,317) (265)
---------- ---------- ----------
Non current liabilities
Zero Coupon Finance Call
Options (26,404) (19,880) (8,056)
Zero Coupon Finance Put
Options (18,481) (18,301) (12,542)
---------- ---------- ----------
(44,885) (38,181) (20,598)
---------- ---------- ----------
---------- ---------- ----------
Total Liabilities (46,890) (40,498) (20,863)
---------- ---------- ----------
---------- ---------- ----------
Net assets 88,328 63,424 37,355
---------- ---------- ----------
Issued capital and reserves
attributable to
equity holders of the parent
Called up share capital 23,437 19,726 12,627
Share premium account 32,552 22,886 9,731
Special Reserve 5,000 5,000 5,000
Realised capital reserve 5,626 3,981 4,104
Unrealised capital reserve 19,676 9,528 4,346
Revenue reserve 2,037 2,303 1,547
---------- ---------- ----------
88,328 63,424 37,355
---------- ---------- ----------
Net asset value per
ordinary share (pence) 94.2p 80.4p 74.0p
Note: The financial information contained within this interim report does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the year ended 30 September 2005 has been
extracted from the statutory accounts and restated as disclosed in note 2. Those
accounts have been filed with the Registrar of Companies and contain an
unqualified Auditors' Report and do not contain a statement under sections 237
(2) or (3) of the Companies Act.
Consolidated Cash Flow Statement
for the half year ended 31 March 2006
Half year to Half year to Year to
31 March 31 March 30 September
2006 2005 2005
Restated Restated
(unaudited) (unaudited) (unaudited)
£000 £000 £000
Cash flows from operating
activities
Investment income received 2,222 1,163 2,880
Deposit interest received 25 48 98
Investment management fee paid (274) (147) (329)
Sales less purchases of dealing
subsidiary (375) 198 216
Other cash receipts 279 147 438
Other cash expenses (94) (99) (213)
---------- ---------- ----------
Cash generated from operations 1,783 1,310 3,090
Interest paid (69) - (27)
Taxation (152) (70) (225)
---------- ---------- ----------
Net cash inflows from operating
activities 1,562 1,240 2,838
---------- ---------- ----------
Cash flows from investing
activities
Purchases of investments (17,270) (4,932) (52,414)
Sales of investments 13,706 6,005 18,702
Zero Coupon Finance 1,604 (2,270) 9,362
---------- ---------- ----------
(1,960) (1,197) (24,350)
---------- ---------- ----------
Cash flows from financing
activities
Proceeds of issue of shares 6,351 1,121 21,374
Equity dividends paid (2,201) (1,378) (2,709)
---------- ---------- ----------
4,150 (257) 18,665
---------- ---------- ----------
Net increase /(decrease) in cash
and 3,752 (214) (2,847)
cash equivalents ---------- ---------- ----------
Cash and cash equivalents at start
of period (1,611) 1,236 1,236
---------- ---------- ----------
Cash and cash equivalents at end of
period 2,141 1,022 (1,611)
---------- ---------- ----------
Cash and cash equivalents comprise:
Cash and cash equivalents 3,421 1,022 239
Short-term borrowings (1,280) - (1,850)
---------- ---------- ----------
2,141 1,022 (1,611)
---------- ---------- ----------
Consolidated Statement of Changes in Equity (Unaudited)
Share Share Premium Special Reserve Realised Unrealised Retained Total
Capital Reserve Capital Reserve Revenue Reserve
Capital
£000 £000 £000 £000 £000 £000 £000
As at 1
October
2004 12,244 8,994 5,000 6,624 (2,228) 1,802 32,436
(restated)
Revenue
for - - - - - 1,124 1,124
the period
Capital - - - (2,520) 6,574 - 4,054
profits
Equity
dividends - - - - - (1,379) (1,379)
Issue of
Share 383 737 - - - - 1,120
Capital
------- -------- -------- -------- -------- -------- -------
As at 31
March
2005 12,627 9,731 5,000 4,104 4,346 1,547 37,355
(restated) ------- -------- -------- -------- -------- -------- -------
Revenue
for - - - - - 2,088 2,088
the period
Capital - - - (123) 5,182 - 5,059
profits
Equity
dividends - - - - - (1,332) (1,332)
Issue of
Share 7,099 13,155 - - - - 20,254
Capital
------- -------- -------- -------- -------- -------- -------
As at 30
September
2005 19,726 22,886 5,000 3,981 9,528 2,303 63,424
(restated) ------- -------- -------- -------- -------- -------- -------
Revenue
for - - - - - 1,934 1,934
the period
Capital - - - 1,645 10,148 - 11,793
profits
Equity
dividends - - - - - (2,200) (2,200)
Issue of
Share 3,711 9,666 - - - - 13,377
Capital
------- -------- -------- -------- -------- -------- -------
As at 31
March 23,437 32,552 5,000 5,626 19,676 2,037 88,328
2006 ------- -------- -------- -------- -------- -------- -------
Distribution of Assets
Valuation at Purchases Sales Appreciation/ Valuation at
30 September 2005 (Depreciation) 31 March 2006
Restated (unaudited)
(audited)
£000 % £000 £000 £000 £000 %
Listed
investments
Ordinary 63,902 100.8 14,460 (11,055) 12,159 79,466 89.9
shares
Convertibles 5,331 8.4 - (282) 564 5,613 6.4
Corporate 24,059 37.9 2,810 (2,369) (378) 24,122 27.3
Bonds
Other fixed
interest - - 6,005 - - 6,005 6.8
------- ------ -------- ------- --------- ------- ------
93,292 147.1 23,275 (13,706) 12,345 115,206 130.4
-------- ------- ---------
Other non
current 9,020 14.2 13,637 15.4
assets
Current 1,610 2.2 6,375 7.2
assets
Current
liabilities (2,317) (3.3) (2,005) (2.2)
Non current
liabilities (38,181) (60.2) (44,885) (50.8)
------- ------ ------- ------
Net assets 63,424 100.0 88,328 100.0
------- ------ ------- ------
Net asset 80.4p 94.2p
value
per share
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