Interim Results

Glasgow Income Trust PLC 17 May 2007 News Release 17 May 2007 Glasgow Income Trust plc Interim Results for the six months to 31 March 2007 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 2007 30 September 2006 Total investments Â£185.4m Â£125.9m Shareholders' funds Â£125.7m Â£87.0m Net asset value per share 103.1p 92.6p Share price 106.0p 97.25p Dividends per share paid in the period 2.915p 2.79p* Yield 4.8% 5.2% * Half year to 31 March 2006. â€¢Total return on net assets was 13.5%, which is significantly higher than the return of 9.2% on the FTSE All-Share Index, the Company's benchmark. â€¢Yield of 4.8% on 106p share price at 31 March 2007. â€¢The Company raised Â£38 million through an open offer and a placing and a scheme of reconstruction by the Gartmore High Income Trust. â€¢Net assets of the Company exceed Â£100 million for the first time. â€¢Company entered the FTSE All-Share Index during the period. â€¢Dividends declared and paid to date total 2.21p, an increase of 3.5% on the same period to 31 March 2006. 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 2007 Chairman's Statement Financial Highlights During the first half of the financial year the Company continued to make further progress in relation to net asset value, share price, dividends payable and increasing the size of the fund. Net assets rose by over Â£38 million due to the rising value of the Company's investments and the issue of new shares. With net assets of over Â£100 million for the first time the Company was promoted into the FTSE All-Share Index. These events took place against a background of strong investment performance with both the net asset total return of 13.5% and the share price total return of 12.5% for the six month period to 31 March 2007 outperforming the FTSE All-Share Index benchmark total return of 9.2%. The Company declared dividends totalling 2.21p for the six month period to 31 March 2007 compared to 2.135p in the six months to 31 March 2006, an increase of 3.5%. New Share Issues In the 2006 annual report I referred to the fact that the Company had issued further shares through a successful placing and offer and had also been selected as a rollover vehicle for the Gartmore High Income Trust ("GHIT"). A total of 18,298,151 shares were issued through the placing and offer with a further 6,149,915 issued through the GHIT scheme of reconstruction. Both these share issues exceeded expectations, enhanced net assets for existing shareholders allowing expenses to be spread over a larger asset base and improving the liquidity of the Company's shares in the market. Due to continuing demand for the Company's equity a further 3,450,000 shares were placed in January 2007 at a premium of 3.5% to the underlying net asset value. Occasional demand from the Glasgow Investment Collection, the savings scheme operated by the manager, saw a further 59,409 new shares issued when existing shares could not be obtained in the market at a reasonable price. These shares were all issued at a premium to the underlying net asset value of the Company. Dividends Due to the timing of the share issues mentioned above the dividend paid in relation to the first quarter of the financial year 2006/07 was effectively split into two parts with a first and second interim dividend of 0.6846p and 0.4204p, totalling 1.105p, paid on 31 January 2007. This compares to 1.03p for the same period last year. As explained in previous reports, under International Financial Reporting Standards ("IFRS") only dividends paid in the period are included in the financial statements. As a result, the total dividend reflected in this interim report is 2.915p, comprising the fourth interim dividend from the 2005/06 financial year of 1.81p paid on 31 October 2006 and the first and second interim dividends of the 2006/07 financial year totalling 1.105p referred to above. On 3 April 2007, the Board declared a third interim dividend of 1.105p per share which was paid on 30 April 2007 to shareholders on the register at close of business on 13 April. Under IFRS this dividend is not reflected in these accounts. Portfolio Profile and Gearing During the period, the Company took out three new tranches of zero coupon finance totalling Â£15.1million in order to maintain the gearing levels after the recent share issues. The distribution of assets at the period end showed little movement in equity gearing with 104.0% of net assets invested in equities compared with 103.4% at 30 September 2006. The investment in fixed interest and convertibles rose slightly, being 43.5% of net assets compared with 41.3% at 30 September 2006. Almost all of the Company's gearing is invested in preference shares, convertible preference shares and predominantly corporate bonds of which 97.5% are investment grade. 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 At the UK corporate level, recent results have been satisfactory and in general accompanied by good news on dividend growth. The continuing merger and acquisition interest in UK companies also supports share valuations. Investment prospects for the next six months are likely to be dominated by trends in UK inflation and interest rates and whether the US economy slows significantly. As the rate of inflation remains above the Bank of England's 2% target, even given recent interest rate rises, it may be that interest rates will be increased again. Uncertainty about the peak in both inflation and interest rates is unsettling for equity markets and can cause bouts of volatility. The managers remain optimistic on the longer term outlook although the short term requires a little more caution. The Interim Report will be mailed to shareholders on 21 May 2007. 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 2007 Half year to 31 March 2007 (unaudited) Revenue Capital Total Â£000 Â£000 Â£000 Gains Gains on investments at fair value - 12,499 12,499 Revenue Dividend income 1,896 - 1,896 Interest income from investments 1,024 - 1,024 Deposit interest 108 - 108 Traded Options 170 - 170 Net gain of dealing subsidiary 16 - 16 --------- -------- -------- 3,214 12,499 15,713 --------- -------- -------- Expenses Investment management fee (252) (252) (504) Other administrative expenses (92) - (92) Finance cost of borrowings (10) (10) (10) Zero Coupon Finance Costs - (802) (802) --------- -------- -------- (354) (1,064) (1,418) --------- -------- -------- Profit before tax 2,860 11,435 14,295 Tax expense (310) 81 (229) --------- -------- -------- Profit for the period 2,550 11,516 14,066 --------- -------- -------- Earnings per ordinary share (pence) 13.7p 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 2007 31 March 2006 Â£000 Â£000 Revenue for the period 2,550 1,934 Dividends for the period (2,463)* (1,727)+ ------------- ------------- 87 207 ------------- ------------- *Relates to first three interim dividends (0.6846p, 0.4204p and 1.105p respectively) declared in respect of the financial year 2006/07. + Relates to first two interim dividends (1.03p and 1.105 respectively) declared in respect of the financial year 2005/06. Consolidated Income Statement (Continued) Half year to 31 March 2006 Year to 30 September 2006 Revenue Capital Total Revenue Capital Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Gains Gains on investments at fair value - 12,400 12,400 - 11,127 11,127 Revenue Dividend income 1,239 - 1,239 3,338 - 3,338 Interest income from investments 748 - 748 1,621 - 1,621 Traded Option premiums 218 - 218 109 - 109 Deposit interest 28 - 28 558 - 558 Net gain of dealing subsidiary 222 - 222 193 - 193 ------- ------- ------- ------- ------- ------- 2,455 12,400 14,855 5,819 11,127 16,946 ------- ------- ------- ------- ------- ------- Expenses Investment management fee (150) (150) (300) (334) (334) (668) Other administrative expenses (119) - (119) (257) - (257) Finance cost of borrowings (31) (31) (62) (38) (38) (76) Zero Coupon Finance Costs - (483) (483) - (1,380) (1,380) ------- ------- ------- ------- ------- ------- (300) (664) (964) (629) (1,752) (2,381) ------- ------- ------- ------- ------- ------- Profit before tax 2,155 11,736 13,891 5,190 9,375 14,565 Tax expense (221) 56 (165) (540) 112 (428) ------- ------- ------- ------- ------- ------- Profit for the period 1,934 11,792 13,726 4,650 9,487 14,137 ------- ------- ------- ------- ------- ------- Earnings per ordinary share (pence) 14.6p 16.2p Group Balance Sheet as at 31 March 2007 31 March 2007 30 September 31 March 2006 2006 (unaudited) Â£000 Â£000 Â£000 Non current assets Ordinary shares 130,834 89,955 79,466 Convertibles 4,227 5,247 5,613 Corporate Bonds 40,249 28,526 24,122 Other fixed interest 10,141 2,175 6,005 ---------- ---------- ---------- Securities at Fair Value 185,451 125,903 115,206 Zero Coupon Finance derivatives at fair value 21,862 12,845 13,637 ---------- ---------- ---------- 207,313 138,748 128,843 ---------- ---------- ---------- Current assets Trade and other receivables - 1,041 1,208 Accrued income and prepayments 2,222 1,792 1,149 Investments of dealing subsidiary 745 725 597 Cash and cash equivalents 575 102 3,421 ---------- ---------- ---------- 3,542 3,660 6,375 ---------- ---------- ---------- ---------- ---------- ---------- Total Assets 210,855 142,408 135,218 ---------- ---------- ---------- Current liabilities Trade and other payables (672) (1,509) (725) Short-term borrowings (6,000) (400) (1,280) ---------- ---------- ---------- (6,672) (1,909) (2,005) ---------- ---------- ---------- Non current liabilities Zero Coupon Finance derivatives at fair value (78,437) (53,491) (44,885) ---------- ---------- ---------- ---------- ---------- ---------- Total Liabilities (85,109) (55,400) (46,890) ---------- ---------- ---------- ---------- ---------- ---------- Net assets 125,746 87,008 88,328 ---------- ---------- ---------- Issued capital and reserves attributable to equity holders of the parent Called up share capital 30,486 23,496 23,437 Share premium account 53,213 32,715 32,552 Special Reserve 5,000 5,000 5,000 Retained Earnings Realised capital reserve 18,892 9,080 5,626 Unrealised capital reserve 15,620 13,916 19,676 Revenue reserve 2,535 2,801 2,037 ---------- ---------- ---------- 125,746 87,008 88,328 ---------- ---------- ---------- Net asset value per ordinary share (pence) 103.1p 92.6p 94.2p 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 2006 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 2007 Half year to Half year to Year to 31 March 31 March 30 September 2007 2006 2006 (unaudited) Â£000 Â£000 Â£000 Cash flows from operating activities Investment income received 2,596 2,222 4,634 Deposit interest received 107 25 109 Dealing subsidiary receipts - - 62 Other cash receipts 256 279 553 Administrative expenses paid (531) (368) (866) Dealing subsidiary payments - (375) (594) ---------- ---------- ---------- Cash generated from operations 2,428 1,783 3,898 Interest paid (20) (69) (83) Taxation (183) (152) (374) ---------- ---------- ---------- Net cash inflows from operating activities 2,225 1,562 3,441 ---------- ---------- ---------- Cash flows from investing activities Purchases of investments (101,599) (17,270) (54,970) Sales of investments 54,460 13,706 33,287 Zero Coupon Finance 15,127 1,604 10,108 ---------- ---------- ---------- Net Cash (Outflow) from investing activities (32,012) (1,960) (11,575) ---------- ---------- ---------- Cash flows from financing activities Proceeds of issue of shares 27,476 6,351 13,599 Equity dividends paid (2,816) (2,201) (4,152) ---------- ---------- ---------- Net cash inflow from financing activities 24,660 4,150 9,447 ---------- ---------- ---------- Net (decrease)/increase in cash and cash equivalents (5,127) 3,752 1,313 ---------- ---------- ---------- Cash and cash equivalents at start of period (298) (1,611) (1,611) ---------- ---------- ---------- Cash and cash equivalents at end of period (5,425) 2,141 (298) ---------- ---------- ---------- Cash and cash equivalents comprise: Cash and cash equivalents 575 3,421 102 Short-term borrowings (6,000) (1,280) (400) ---------- ---------- ---------- (5,425) 2,141 (298) ---------- ---------- ---------- Consolidated Statement of Changes in Equity (Unaudited) for the half year ended 31 March 2007 Share Share Premium Special Reserve Realised Unrealised Retained Total Capital Reserve Capital Reserve Revenue Reserve Capital Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 As at 30 September 23,496 32,715 5,000 9,080 13,916 2,801 87,008 2006 ------- -------- -------- -------- -------- -------- ------- Revenue for - - - - - 2,550 2,550 the period Capital profits for - - - 9,812 1,704 - 11,516 the period Equity dividends - - - - - (2,816) (2,816) Issue of Share 6,990 20,498 - - - - 27,488 Capital ------- -------- -------- -------- -------- -------- ------- As at 31 March 30,486 53,213 5,000 18,892 15,620 2,535 125,746 2007 ------- -------- -------- -------- -------- -------- ------- Distribution of Assets Valuation at Purchases Sales Appreciation/ Valuation at 30 September 2006 (Depreciation) 31 March 2007 (unaudited) Â£000 % Â£000 Â£000 Â£000 Â£000 % Listed investments Ordinary 89,955 103.4 65,186 (36,687) 12,380 130,834 104.0 shares Convertibles 5,247 6.0 1,703 (3,385) 662 4,227 3.4 Corporate 28,526 32.8 17,109 (4,620) (766) 40,249 32.0 Bonds Other fixed interest 2,175 2.5 16,701 (8,321) (414) 10,141 8.1 ------- ------ -------- ------- --------- ------- ------ 125,903 144.7 100,699 (53,013) 11,862 185,451 147.5 -------- ------- --------- Other non current 12,845 14.8 21,862 17.4 assets Current 3,660 4.2 3,542 2.8 assets Current liabilities (1,909) (2.2) (6,672) (5.3) Non current liabilities (53,491) (61.5) (78,437) (62.4) ------- ------ ------- ------ Net assets 87,008 100.0 125,746 100.0 ------- ------ ------- ------ Net asset 92.6p 103.1p value per share This information is provided by RNS The company news service from the London Stock Exchange

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