Interim Results
Glasgow Income Trust PLC
24 May 2005
News Release
24 May 2005
Glasgow Income Trust plc
Interim Results for the six months to 31 March 2005
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 2005 30 September
2004
Total assets less current liabilities £52.02m £48.51m
Shareholders' funds £36.87m £31.61m
Net asset value per share 73.00p 64.55p
Share price 77.00p 66.00p
Premium (share price to net asset value) 5.5% 2.2%
Dividends per share 2.06p 2.06p*
* Half year to 31 March 2004.
•In April 2005 the Company raised £15.1 million through a placing and open
offer, increasing the net assets of the Company to over £50 million
•Total return on net assets was 17.8%, which compares favourably with a
return of 9.9% on the FTSE All-Share Index, the Company's benchmark.
•The total return to shareholders was higher at 21.3% reflecting strong
demand for the Company's shares
•The premium at which the share price stood to net assets increased from
2.2% at 30 September 2004 to 5.5% at 31 March 2005
•Based upon the share price of 77p at 31 March 2005 the yield on ordinary
shares was 6.3%.
•A second interim dividend of 1.03p was declared on 7 April 2005.
Dividends declared and paid to date total 2.06p, the same level as paid last
year
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 2005
Chairman's Statement
Financial Highlights
The first half of the Company's financial year saw the Company continue to make
good progress. Net assets rose by over £5.2 million due to the rising value of
the Company's investments and also the issue of new shares. The net asset value
per share rose 13.1% and the yield on the ordinary shares was 6.3% on a share
price of 77p as at 31 March 2005, with dividends paid and declared to date at
the same level as last year.
Background
These results were achieved against the background of a steady increase in the
UK stockmarket underpinned by strong corporate results, increased merger and
acquisition activity and increases in dividend payments.
Investment Returns
The total return on net assets for the 6 months to 31 March 2005 was 17.8%, well
ahead of the 9.9% return on the FTSE All-Share Index, the Company's benchmark.
The total return to shareholders, at 21.3% was higher than the return on net
assets, reflecting strong demand for the Company's shares. The premium at which
the share price stood to net assets value rose to 5.5% compared to 2.2% at 30
September 2004.
New Share Issues
In the 2004 annual report I referred to a block listing facility of 2,850,000
ordinary shares put in place to meet smaller scale regular demand from
investors. To date 1,483,539 shares have been issued under this facility
resulting in proceeds of £1,095,000. A placing of 400,000 shares was also
achieved outside the blocklisting facility, which raised a further £296,000
before expenses.
On 28 April 2005 the company raised £15.1 million through a placing and open
offer for shares at a subscription price of 72p, a premium of approximately 3%
to the underlying net asset value per share. This increased the net assets of
the Company to over £50 million which should lead to increased liquidity in the
Company's shares and will help spread the fixed costs over a larger capital
base. The shares started trading on 5 May at a price of 74.5p, a small premium
to the issue price.
Dividends
On 7 April 2005 the Board declared a second interim dividend of 1.03p per share
which was paid on 29 April 2005 to shareholders on the register at close of
business on 15 April 2005. A first interim dividend of 1.03p per share was paid
on 31 January 2005. The shares issued in April did not qualify for this second
interim dividend. Dividends paid and declared to date in 2005 therefore total
2.06p per share, the same level paid as last year.
Portfolio and Gearing
In January 2005 the Company closed the original Zero Coupon Finance arrangement
which was due to expire in May 2005 and replaced it with a new tranche of Zero
Coupon Finance of £11.5 million. This was done in order to extend the Zero
Coupon Finance out a further five years and also to take advantage of attractive
market conditions. The new tranche is due to expire in January 2010 with a
maturity value of £15.2 million. This equates to a financing cost of 5.7% per
annum to be charged wholly to capital.
The distribution of assets shows that 101.4% of net assets were invested in
equities compared with 106.3% at 30 September 2004. This drop was mainly due to
the rise in equity prices over the period plus the repayment of approximately
£2.3 million of the Zero Coupon Finance when rolling over into the new tranche
mentioned above. The investment in fixed interest and convertible securities
amounted to 39.7% of net assets down from 47.1%
In the shorter term the Company aims to keep gearing at broadly similar levels
to those that existed prior to the share issue in April and within the equity
gearing limit of 115%. To achieve this result a further tranche of £7.5 million
Zero Coupon Finance has been taken out. This tranche has an expiry date of
January 2010 and a maturity value of £9.8 million again resulting in a financing
cost of 5.7% per annum.
Outlook
The rate of growth in the UK economy is forecast to decrease over the next
twelve months due to higher commodity prices and a slow down in consumer
spending. However, corporate earnings and dividends are still expected to show a
reasonable level of growth in the next year and this should enable the UK
stockmarket to offer attractive stock picking opportunities for the Company.
The Interim Report will be mailed to shareholders on 24 May 2005. Copies may be
obtained from the Mangers, Glasgow Investment Managers Limited, Sutherland
House, 149 St Vincent Street, Glasgow G2 5DR after that date.
R G Hanna
Chairman
Consolidated Statement of Total Return
(incorporating the Revenue Account)
for the half year ended 31 March 2005
Half year to 31 March 2005
(unaudited)
Revenue Capital Total
£000 £000 £000
Gains on investments - 4,081 4,081
Dividends and interest receivable 1,224 - 1,224
Profits less losses of dealing subsidiary 81 - 81
Traded option premiums 111 - 111
Investment management fee (73) (73) (146)
Other administrative expenses (87) - (87)
---------- ------------ -----------
Net return before finance 1,256 4,008 5,264
costs and taxation
Finance costs of borrowings - - -
---------- ------------ -----------
Return on ordinary activities 1,256 4,008 5,264
before taxation
Taxation (117) 25 (92)
---------- ------------ -----------
Return on ordinary activities 1,139 4,033 5,172
after taxation for the period
Dividends on equity shares (1,036) - (1,036)
---------- ------------ -----------
Transfer to reserves 103 4,033 4,136
---------- ------------ -----------
Return per share 2.31p 8.17p 10.48p
Dividends per share 2.06p
Consolidated Statement of Total Return
(continued)
Half year to 31 March 2004 Year to 30 September 2004
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Gains on investments - 3,772 3,772 - 3,366 3,366
Dividends and interest
receivable 1,166 - 1,166 2,666 - 2,666
Profits less losses of - - - - - -
dealing
subsidiary
Traded option premiums 31 - 31 289 - 289
Investment management
fee (60) (60) (120) (130) (130) (260)
Other administrative
expenses (129) - (129) (299) - (299)
-------- ------- ------- -------- ------- -------
Net return before
finance 1,008 3,712 4,720 2,526 3,236 5,762
costs and taxation
Finance costs of
borrowings (1) (1) (2) (19) (19) (38)
-------- ------- ------- -------- ------- -------
Return on ordinary
activities 1,007 3,711 4,718 2,507 3,217 5,724
before taxation
Taxation (114) 22 (92) (213) 44 (169)
-------- ------- ------- -------- ------- -------
Return on ordinary
activities 893 3,733 4,626 2,294 3,261 5,555
after taxation for the
period
Dividends on equity
shares (886) - (886) (2,252) - 2,252
-------- ------- ------- -------- ------- -------
Transfer to reserves 7 3,733 3,740 42 3,261 3,303
-------- ------- ------- -------- ------- -------
Return per share 2.21p 9.23p 11.44p 4.94p 7.03p 11.97p
Dividends per share 2.06p 4.85p
Note: These are not statutory accounts under section 240 of the Companies Act
1985 and are unaudited. The information relating to the group balance sheet as
at 30 September 2004 is an extract from the latest audited accounts which have
been delivered to the Registrar of Companies; the report of the auditors on
these accounts was unqualified and did not contain a statement under section 237
(2) or (3) of the Companies Act 1985.
Group Balance Sheet
as at 31 March 2005
31 March 2005 30 September 31 March 2004
(unaudited) 2004 (unaudited)
(audited)
£000 £000 £000
Fixed assets
Listed investments
Ordinary
shares 37,390 33,608 34,064
Convertibles 2,352 2,274 1,231
Corporate
bonds 12,280 12,624 12,633
----------- -------------- -----------
52,022 48,506 47,928
Current assets
Debtors 750 740 830
Investments of
dealing
subsidiary - 118 118
Cash at bank
and in hand 1,022 1,236 1,525
----------- -------------- -----------
1,772 2,094 2,473
----------- -------------- -----------
Creditors:
amounts
falling due (795) (14,647) (731)
within one year
----------- -------------- -----------
Net current
assets/
(liabilities) 977 (12,553) 1,742
----------- -------------- -----------
Total assets
less current
liabilities 52,999 35,953 49,670
Creditors: amounts falling due
after more than one year
Zero Coupon
Finance (16,131) (4,341) (17,624)
----------- -------------- -----------
Net assets 36,868 31,612 32,046
----------- -------------- -----------
Capital and reserves
Called up
share capital 12,627 12,244 12,244
Share premium
account 9,731 8,994 8,992
Special
reserve 5,000 5,000 5,000
Realised
capital
reserve 4,101 6,624 4,055
Unrealised
capital
reserve 4,348 (2,208) 832
Revenue
reserve 1,061 958 923
----------- -------------- -----------
Equity
shareholders'
funds 36,868 31,612 32,046
----------- -------------- -----------
Net asset
value per
share 73.00p 64.55 p 65.43p
Consolidated Cash Flow Statement
for the half year ended 31 March 2005
Half year to Half year to Year to
31 March 2005 31 March 2004 30 September
2004
(unaudited) (unaudited) (audited)
£000 £000 £000
Net cash inflow from
operating 1,310 658 2,214
activities
Servicing of finance
Interest paid - (3) (39)
Taxation
Corporation tax paid (70) (73) (160)
Investing activities
---------- --------- ----------
Purchases of investments (4,932) (17,960) (30,922)
Sales of investments 6,005 9,024 21,272
Zero Coupon Finance (2,269) 4,108 4,108
---------- --------- ----------
(1,196) (4,828) (5,542)
Equity dividends paid (1,378) (1,415) (2,423)
---------- --------- ----------
Net cash outflow before
financing (1,334) (5,661) (5,950)
Financing
---------- --------- ----------
Issues of shares 1,120 7,147 7,147
Debt due within one year
- decrease in short-term
borrowings - (300) (300)
---------- --------- ----------
1,120 6,847 (6,847)
---------- --------- ----------
(Decrease)/Increase in
cash (214) 1,186 897
---------- --------- ----------
Analysis of Changes in Net Debt
At Cash Other At
30 September flows non- cash 31 March
changes
2004 2005
£000 £000 £000 £000
Cash at bank and in hand 1,236 (214) - 1,022
Short-term borrowings - - - -
Zero Coupon Finance (17,896) 2,269 (504) (16,131)
---------- --------- --------- ---------
(16,660) 2,055 (504) (15,109)
---------- --------- --------- ---------
Distribution of Assets
Valuation at Purchases Sales Appreciation Valuation at
30 September 2004 31 March 2005
(audited) (unaudited)
£000 % £000 £000 £000 £000 %
Listed
investments
Ordinary
shares 33,608 106.3 2,856 (3,489) 4,415 37,390 101.4
Convertibles 2,274 7.2 - (4) 82 2,352 6.4
Corporate
bonds 12,624 39.9 2,076 (2,512) 92 12,280 33.3
------- ------- -------- ------- --------- ------- ------
48,506 153.4 4,932 (6,005) 4,589 52,022 141.1
-------- ------- ---------
Net current
(liabilities)/
assets (12,553) (39.7) 977 2.6
Total assets
less current
liabilities 35,953 113.7 52,999 143.7
Zero Coupon
Finance (4,341) (13.7) (16,131) (43.7)
------- ------- ------- ------
Net assets 31,612 100.0 36,868 100.0
------- ------- ------- ------
Net asset
value per
share 64.55p 73.00p
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