INVESCO Income Growth Trust plc
Unaudited Preliminary Announcement of
Interim Results
For the six months to 30 September 2003
Chairman's Statement
Performance
Following a significant fall during the early part of 2003, the UK stockmarket
has recovered during the period under review. Global equity markets bounced
sharply following the fall of the regime in Iraq, and have continued to rally
over the summer. This increase has been supported by a recovery in US economic
data and an improvement in corporate earnings. In the UK, meanwhile, we have
seen continued firmness in consumer spending and further increases in house
prices. Against this background it is pleasing to note that your Company has
outperformed its benchmark index. The total return (comprising the movement in
the Net Asset Value plus net dividends reinvested) was +26.8% compared with
that of 19.0% for the FTSE Actuaries All Share Index. It is further pleasing to
note that, for the period from 30 September 2003 to the time of writing on 10
December 2003, the total return was +8.4% compared with +7.2% for the FTSE
Actuaries All Share Index.
Market Background
Following the ending of hostilities in Iraq, investors' attention once again
focussed upon the outlook for the global economy and the US in particular. The
prospect of subdued growth, has led central banks to reduce interest rates to
their lowest levels for many years. In the UK, concerns over the economy led to
the Bank of England's Monetary Policy Committee to reduce rates by 0.25% to
3.5% in July, the lowest rate for over 40 years. This cut gave a further boost
to consumer spending, and supported the already buoyant housing market. The
economy has also been strengthened by a significant increase in Government
spending, particularly in areas such as health, education and housing. As a
result, although the economy is expected to grow below trend this year, the
outlook is much more positive. In November 2003, the Bank of England Monetary
Committee responded to this, more positive outlook, by increasing interest
rates by 0.25%.
In terms of the stockmarket, this increased optimism has renewed investors'
enthusiasm for `recovery' stocks, and economically sensitive areas of the
market. As a result, cyclical sectors such as Steel and Other Metals, Mining
and Construction have appreciated the most, while `defensive' sectors such as
Tobacco, Food Manufacturing and Pharmaceuticals have lost ground. With
investors also becoming less risk averse, the period has also been
characterised by significant outperformance from the Technology sector and from
"mid" and "smaller cap" stocks.
Gearing
The Board continues to monitor the Company's level of gearing which, when
prudently used, should enhance the return to shareholders. During the period
under review, borrowings decreased from �10,430,000 at the year-end to �
8,425,000 at 30 September 2003. At close of business on 10 December 2003 the
actual gearing had decreased to �5,000,000.
Dividend
The Board has declared an increased interim dividend of 2.0p (2002: 1.9p) per
share in respect of the six months to 30 September 2003. The dividend is
payable on 19 December 2003 to shareholders registered at the close of business
on 21 November 2003.
The Board currently anticipates that the final ordinary dividend for the year
ending 31 March 2004 will at least be maintained at last year's level (2003:
2.7p).
John J. McLachlan
Chairman
15 December 2003
Performance Statistics
At30 At 31 %
September
March
2003 2003 Change
Capital Return
Total net assets (�'000) 82,237 65,971 +24.7
Net asset value per ordinary
share
Basic 147.0p 117.9p +24.7
Fully diluted 147.4p 119.1p +23.8
Mid-market price per ordinary 135.5p 108.5p +24.9
share
Discount per ordinary share 7.8% 8.0%
Mid-market price of the CULS 96.5p 98.0p -1.5
Potential gearing 121 126
Actual gearing 113 119
Six months Six
months
ended ended
30September 30
September
2003 2002
Total Return
Net asset value (�'000)
(includes net dividends
reinvested)
- including proceeds from +26.8 -22.8
reconstruction
- excluding proceeds from +26.8 -25.8
reconstruction
FTSE-Actuaries All-Share Index +19.0 -28.4
Source: Datastream
Revenue
Net revenue after tax (�'000) 1,512 1,562 -3.2
Revenue return per ordinary 2.70p 2.90p -6.9
share
Dividends per ordinary share
- Interim 2.0p 1.90p +5.3
- Special - 0.50p
Statement of Total Return
(Incorporating the Revenue Account)
Six months to 30
September 2003
(Unaudited)
Revenue Capital Total
�'000 �'000 �'000
Gains/(Losses) on investments - - (3,317) (3,317)
realised
- unrealised - 19,586 19,586
Income
UK dividends 1,853 - 1,853
Deposit interest 3 - 3
Investment management fee - note 1 (118) (239) (357)
Other expenses (148) - (148)
Net return before finance costs
and taxation 1,590 16,030 17,620
Interest payable and similar
charges
- note 1 (78) (157) (235)
Return on ordinary activities
before tax 1,512 15,873 17,385
Tax on ordinary activities - - -
Return on ordinary activities after
tax for
the financial period
(attributable to
equity shareholders) 1,512 15,873 17,385
Dividends in respect of equity
shares
- note 2 (1,119) - (1,119)
Transfer to/(from) reserves 393 15,873 16,266
Return per ordinary share - note 3 2.70p 28.38p 31.08p
The Revenue column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the
period.
Statement of Total Return
(Incorporating the Revenue Account)
Year
ended
31 March
Six months to 30 2003
September 2002
(Unaudited) (Audited)
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Losses on investments - - (2,663) (2,663) (9,103)
realised
- unrealised - (27,633) (27,633) (28,428)
Income
UK dividends 1,912 - 1,912 3,781
UK unfranked investment - - - -
income
Deposit interest 2 - 2 4
Investment management fee - (129) (263) (392) (730)
note 1
Other expenses (135) (10) (145) (272)
Net return before finance
costs
and taxation 1,650 (30,569) (28,919) (34,748)
Interest payable and
similar charges
- note 1 (88) (171) (259) (565)
Return on ordinary
activities
before tax 1,562 (30,740) (29,178) (35,313)
Tax on ordinary activities - - - -
Return on ordinary
activities after tax
for the financial period
(attributable
to equity shareholders) 1,562 (30,740) (29,178) (35,313)
Dividends in respect of
equity shares
- note 2 (1,288) - (1,288) (2,798)
Transfer to/(from) reserves 274 (30,740) (30,466) (38,111)
Return per ordinary share - 2.90p (57.07)p (54.17)p (64.33)p
note 3
Balance Sheet
30 31 March 30
September September
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Fixed Assets
Investments 92,860 79,777 87,017
Current assets
Amounts due from brokers 831 477 264
Prepayments and accrued 645 1,076 770
income
Cash at bank 11 102 9
1,487 1,655 1,043
Creditors: amounts falling due within one
year
Bank overdraft and 3,425 5,430 5,675
short-term loans
Amounts due to brokers - 964 -
Proposed dividends 1,119 1,510 1,288
Accruals and deferred income 117 103 85
Interest on loans 83 88 31
4,744 8,095 7,079
Net current liabilities (3,257) 6,440 6,036
Total assets less current 89,603 73,337 80,981
liabilities
Creditors: amounts falling due
after more
than one year
Bank loan 5,000 5,000 5,000
4.75% Convertible Unsecured
Loan
Stock 2009 2,366 2,366 2,366
Total net assets 82,237 65,971 73,615
Capital and reserves
Called-up share capital - note 13,984 13,984 13,984
4
Share premium account 23,200 23,200 23,200
Other reserve
Capital redemption reserve 50 50 50
Special reserve share 19,728 19,728 19,728
buy-back
Capital reserve - realised 20,936 24,649 31,025
Capital reserve - unrealised 1,260 (18,326) (17,038)
Revenue reserve 3,079 2,686 2,666
Equity Shareholders' funds 82,237 65,971 73,615
Net asset value per ordinary 147.0p 117.9p 131.6p
share -
note 4
Cash Flow Statement
Six months Year to Six months
to to
30 31 March 30
September September
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Cash flow from operating 1,796 2,805 1,687
activities
Servicing of finance (241) (504) (255)
Taxation - - -
Capital expenditure and
financial investment
Purchase of investments (14,037) (32,316) (15,450)
Investments received from
INVESCO Convertible Trust - - (2,107)
plc
Sale of investments 15,906 27,447 11,932
Equity dividends paid (1,510) (2,736) (1,448)
Net cash (outflow)/inflow before
management of
liquid resources and 1,914 (5,304) (5,641)
financing
Management of liquid
resources
- Cash recalled from - 2,700 -
short-term deposits
Financing
Movement in debt (2,005) 1,560 865
Cash and time deposits
received from
INVESCO Convertible Trust - - 3,639
plc
(Decrease)/increase in cash (91) (1,044) (1,137)
in the period
Cash (inflow)/outflow from 2,005 (2,986) (3,231)
(increase)/decrease in debt
Movement in net (debt)/funds 1,914 (4,030) (4,368)
in the period
Net debt at beginning of (12,694) (8,664) (8,664)
period
Net debt at end of period (10,780) (12,694) (13,032)
Reconciliation of Operating Profit to Operating Cash Flows
Six months Year to Six months
to to
30 31 March 30
September September
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Net revenue before finance 1,590 3,282 1,650
costs and tax
Decrease/(increase) in debtors 431 68 374
Decrease in creditors 14 (46) (64)
Investment management fee (239) (489) (263)
charged to capital
Other expenses charged to - (10) (10)
capital
Net cash inflow from operating 1,796 2,805 1,687
activities
Reconciliation of Movement in Shareholders' Funds
Six months Year to Six months
to to
30 31 March 30
September September
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Net revenue retained for the 393 294 274
period
Capital return for the period 15,873 (38,405) (30,740)
Proceeds from issue of shares - 3,381 3,380
Net movement in Shareholders' 16,266 (34,730) (27,086)
funds
Opening Shareholders' funds 65,971 100,701 100,701
Closing Shareholders' funds 82,237 65,971 73,615
Notes to the interim accounts
1. Investment management fees and interest payable on borrowings are allocated
67% to capital reserve and 33% to revenue reserve.
2. The Directors have declared an interim dividend of 2.0p (2002: 1.9p plus a
special dividend of 0.5p) per ordinary share in respect of the six months
ending 30 September 2003 payable on 19 December 2003 to ordinary shareholders
registered on 21 November 2003.
3. Basic revenue return per ordinary share is based on the net revenue on
ordinary activities after taxation and on 55,935,724 (31 March 2003:
54,897,476; 30 September 2002: 53,866,067) ordinary shares, being the weighted
average number of shares in issue during the period.
Basic capital return per ordinary share is based on net capital gains on
ordinary activities after taxation and on 55,935,724 (31 March 2003:
54,897,476; 30 September 2002: 53,866,067) ordinary shares, being the weighted
average number of shares in issue during the period.
4. The net asset value per ordinary share of 25p has been calculated on
55,935,724 (31 March 2003: 55,935,724; 30 September 2002: 55,935,724) ordinary
shares in issue.
5. The financial information for the period to 30 September 2003 has been
prepared on the basis consistent with the accounting policies adopted by the
Company in its statutory accounts for the year ended 31 March 2003.
6. The foregoing financial information at 31 March 2003 is an abridged version
of the Company's full accounts which carry an unqualified Auditors' Report and
which have been filed with the Registrar of Companies.
By order of the Board
INVESCO Asset Management Limited
Secretaries
15 December 2003
END