Dunedin Income Growth Investment Trust : Half Yearly Report
09/24/2012| 05:10am US/Eastern
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Dunedin Income Growth Inv Tst PLC
DUNEDIN INCOME GROWTH INVESTMENT TRUST PLC
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 31 JULY
2012
The objective of Dunedin Income Growth Investment
Trust PLC is to achieve growth of income and capital from a
portfolio invested mainly in companies listed or quoted in
the United Kingdom.
Highlights
· Net asset
value per share up by 5.9% in total return terms and
theCompany's benchmark, the FTSE All-Share
Index increased by 1.9% in total return terms.
· Share price
increased by 11.8% on a total return basis.
For further information, please contact:-
Jeremy Whitley
Aberdeen Asset Managers
Limited
0131 528 4000
Andrew Leigh
Aberdeen Asset Managers
Limited
0207 463 6312
Please note that past performance is not necessarily
a guide to the future and 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.
CHAIRMAN'S STATEMENT
Review of the Period
This is the first interim statement since I became
the new Chairman of Dunedin Income Growth Investment Trust
immediately after the latest AGM and in keeping with the
tone of the past few years it has once again been a
challenging period for equity investors. Since the start of
the financial year growth in the developed world has all
but evaporated and emerging market economies have slowed
sharply. Meanwhile the crisis within the Eurozone rumbles
onwards as politics continues to collide head on with
market forces. Against this inauspicious backdrop the one
bright spot remains company performance, although even here
the headwinds are intensifying.
In these conditions the FTSE All-Share Index has,
perhaps surprisingly, risen slightly over the period, up
1.9% on a total return basis. On this same basis, including
dividends paid out, the Company's net asset value (NAV)
rose 5.9%. The Company's shares moved to trade at a
slight premium to its NAV (from the discount of 4.5% at the
year end) resulting in a total return to shareholders over
the period of 10.9%. On a wider basis, the MSCI World Index
rose 3.4% in sterling terms over the year.
As mentioned in the latest annual report we fully
expected a tough market environment to continue over the
course of 2012/13. Our Manager's priorities have, as
always, been to protect capital through focussing on good
quality businesses, to diversify our investments
effectively and to seek income growth where it can be
acquired at sensible prices.
Cash returns to shareholders from companies have
remained robust and we have experienced good growth in
underlying dividend income over the period. Income has
increased by 6.9% year on year, aided by a 5.2% rise in
dividend income and a significant increase in the value of
option premiums received. We have also seen the level and
proportion of income generated from overseas listed
holdings increase further - this accounted for nearly 25%
of dividends earned in the first half. Overall revenue per
share increased 7.2% to 6.84p. We expect that revenue
growth for the full year will be more modest given measures
to cap our exposure to certain companies, a reduction in
the option writing activity compared to the second half of
last year and the lack, so far, of a repeat of last
year's Vodafone distribution of its dividend from
Verizon Wireless.
As announced at the time of the full year results we
have taken the decision to move to the payment of quarterly
dividends. It is our intention to make three equal
distributions of 2.5p per share in each of August, November
and February and to pay a final dividend in May. Whilst we
have made a promising start this year, at this stage the
Board can only commit to the Company at least maintaining
the aggregate distribution made in respect of the latest
completed financial year.
Economic and Market Background
As I have already noted, negative economic factors
gathered momentum during the half-year and while corporate
performance was in aggregate respectable given the
conditions, we did see substantial downgrades to earnings
expectations for 2012 and an increasing number of profit
warnings. While headline market multiples look modest these
are somewhat distorted by the low valuations applied to the
heavily weighted proportion of indices accounted for by
mining and banking stocks. In fact, since the rise in the
market, we believe that valuations in general are no longer
cheap. The analyst community seems reluctant to look more
than twelve months ahead and still expects close to double
digit earnings growth in 2013; we consider that this is a
somewhat optimistic view. Companies considered safe and
secure which distribute a fair proportion of their profits
to shareholders have become "in vogue"
investments in recent times. While we are inclined to agree
with such a stance, we do keep a wary eye on valuations and
bear in mind that these will be a key determinate of our
investors' long-term returns.
In the UK, economic growth deteriorated over the
period, mainly due to very weak construction spending, with
Q2 GDP contracting 0.5% year on year, creating a run of
three successive quarters of negative growth. The
government remains for the time being committed to its
austerity plans. Some chinks of light came through in the
declining rate of inflation and, surprisingly, better than
expected employment data but the domestic picture remains
pretty bleak with uncertainty amongst economists about the
actual size of the output gap. However, it is worthwhile
remembering that whilst only 16% of the value of the
portfolio is listed overseas, well over 70% of the revenues
of the companies within it are drawn from outside the UK -
which makes the portfolio rather more sensitive to global
factors.
In the Eurozone the data remain mixed with a
continued divergence in economic performance between the
north and south of the region. In Spain the unemployment
rate hit 24.6% at the end of June, while in Germany it
remained at 6.8%. The ECB continues to balance
between policing reforms and budgetary restraints in the
most challenged economies and at the same time managing
monetary policy - although, as its President has noted, its
mechanisms for doing so have been increasingly undermined
by the market's perception of
"redenomination" risk. Given recent movements in
indicators of stress such as the VIX index, which hit a 5
year low in August, and government bond yields in Spain and
Italy (which have compressed markedly), the investment
community seems for the time being to have taken ECB
President Mario Draghi's promise to do "whatever
it takes" to save the Euro to heart. Investors though
would be wise to heed the track record of the past few
years and to continue to be alert to the risk of policy
failure leading to dramatic events for markets.
In the United States economic data continues to be
inconsistent and patchy but brighter than that seen in
Europe. Unemployment has remained stubbornly high but
housing data has shown signs of consistent improvement. The
Presidential election in November and what will be
difficult negotiations over the avoidance of the so-called
"fiscal cliff" are likely to re-introduce tension
into markets as we move into the final quarter of
2012.
In emerging markets, the growth engines of the global
economy, expansion rates have been slowing quite
dramatically, cooled by the troubles in the developed
world. Chinese GDP growth has slowed to 7.6% annualised at
the end of the second quarter of 2012. While this is still
significantly faster than the western world, it is a far
cry from the double-digit rates of just a year ago. The
need to create enough urban jobs to cope with the rapid
agrarian migration means that this lower level of growth
poses some worrying questions for the government and,
again, there is a degree of uncertainty with the
forthcoming emergence of a new generation of political
leaders. In Brazil, GDP growth slowed to a western
style 0.8% year on year at the end of June. Likewise, India
grew 5.3% in the same period, far slower than in recent
times and with the economy still significantly hampered by
an inflation rate close to 10%.
Gearing
The Company's gearing position was little changed
from the year end. Potential gearing has reduced slightly
as net assets increased reflecting the increase in value of
the equity portfolio over the period. Valuing debt at par,
potential gearing stood at 9.6% at 31 July 2012, down from
9.8% at 31 January 2012. On an equity gearing basis, taking
debt at par and offsetting our holdings of bonds and cash,
net indebtedness was 7.7% down from 8.7% at the year end.
This was the result of both higher net assets and increased
cash balances. Given the Company's need for income we
still consider it appropriate to maintain our modest level
of gearing, though it is kept under review.
Directors' Responsibility Statement
The Directors are responsible for preparing the
half-yearly financial report in accordance with applicable
law and regulations. The Directors confirm that to
the best of their knowledge:
- the condensed set of
financial statements within the half-yearly financial
report has been prepared in accordance with the statement
"Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board;
- the Chairman's
Statement (constituting the interim management report)
includes a fair review of the information required by rule
4.2.7R of the Disclosure and Transparency Rules (being an
indication of important events that have occurred during
the first six months of the financial year and their impact
on the condensed set of financial statements and a
description of the principal risks and uncertainties for
the remaining six months of the financial year) and 4.2.8R
(being related party transactions that have taken place
during the first six months of the financial year and that
have materially affected the financial position of the
Company during that period; and any changes in the related
party transactions described in the last annual report that
could so do).
Risk and Uncertainties
The Board has adopted a matrix of the key risks that
affect its business. Like most other companies, the present
economic conditions continue to represent the greatest
challenge, and risk, to the Company. The principal risks
associated with the Company are:
• Performance risk: A
fall in the market value of the Company's portfolio
would have an adverse effect on shareholders'
funds. The NAV performance relative to the Index and
the underlying stock weightings in the portfolio against
the Index weightings are monitored closely by the
Board.
• Discount volatility:
The Company's share price can trade at a discount to
its underlying net asset value. The Company operates
a share buyback programme which is reviewed on a continuing
basis.
• Regulatory risk: The
Company operates in a complex regulatory environment and
faces a number of regulatory risks. Breaches of
regulations, such as Chapter 4 of the Corporation Tax Act
2010 and the Investment Trust (Approved Company) (Tax)
Regulations 2011, the UKLA Listing Rules and the Companies
Act, could lead to a number of detrimental outcomes and
reputational damage. The Audit Committee monitors
compliance with regulations by reviewing internal control
reports from the Manager.
Going Concern
The Company's assets consist mainly of equity
shares in companies listed on the London Stock Exchange and
in most circumstances are realisable within a short
timescale. The Board has set limits for borrowing and
derivative contract positions and regularly reviews actual
exposures, cash flow projections and compliance with
banking covenants. The Company's Directors
believe that the Company has adequate resources to continue
its operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis
in preparing the accounts.
Outlook
In most countries around the world economic
conditions either remain difficult or are getting
tougher. That is the case for governments, consumers
and companies. Sadly we have little expectation of that
changing for the better any time soon. For companies where
prospects are a little rosier, be that for those exposed to
the faster growing parts of the developing world or for
those that have more structural growth drivers, share price
performance has been strong and valuations have grown
increasingly demanding.
The Company has made much progress in recent times
and in current conditions the focus on good quality
companies is likely to remain critical, but it is also
important to remain cognisant of the potential returns
available and as such valuation will remain an increasingly
important consideration. Rarely has the old Warren Buffett
maxim that "price is what you pay and value is what
you get" rung truer than it does today. Managing the
fine line between comfort and complacency will be very
important in the months ahead in securing an appropriate
balance between compensation and risk for the Company's
shareholders.
Rory Macnamara
Chairman
21 September 2012
Manager's Portfolio Review
We did not add any new companies to the portfolio
during the half-year. The portfolio was concentrated
further through the sale of the holdings in United
Utilities and Daily Mail & General Trust. United Utilities
was sold after strong absolute and relative performance
stretched the valuation beyond a level we felt likely to
offer us an acceptable return over the longer term. We also
have fairly extensive existing holdings within similar
types of business. Daily Mail was sold as we felt the risks
involved in the restructuring of their traditional
newspaper businesses outweighed the potential rewards of
the transition to new media forms.
We reduced our position in Aviva where our concerns
over operating performance and the strength of the balance
sheet only grew over the half-year. Profits were
taken after strong share price increases that had stretched
the valuations of Rolls Royce and Wood Group. Provident
Financial and Close Brothers were also trimmed as we looked
to control our absolute exposures. We also completed the
swap of our Royal Dutch Shell B shares for A shares to take
advantage of the discount and implicitly higher
yield.
We subscribed to capital raisings for what seemed
sensible acquisitions by both Linde and GKN. Additions were
made on weakness to Weir Group and Sage as investors
fretted about Weir's exposure to US shale gas and the
implications of weak southern European markets on Sage. In
both cases we believe the strength of the business model
and the diversity of earnings should hold the companies in
good stead even in these quite difficult conditions. In the
meantime we continued to build positions as opportunities
arose in good quality companies such as BHP Billiton,
Roche, Zurich Insurance Group and
Unibail-Rodamco.
At this interim point it seems inappropriate to dwell
too much on short-term performance but so far we have
generally been quite fortunate in avoiding the worst of
corporate profit warnings. Conditions though are far from
easy for our businesses. Tesco and AstraZeneca stand out as
two formerly highly rated companies struggling to reinvent
themselves in the face of challenging market and industry
conditions. The companies with difficulties, of which there
will always be some in the portfolio, are the most
demanding in terms of effort but are potentially the most
rewarding. While we have no special insight into the
fortunes of any of our investments we believe they have the
requisite qualities to recover and currently trade at
multiples that imply significant upside if they are
successful.
If any hubris had been allowed to build because we
held neither Barclays nor G4S and so avoided the share
price falls that accompanied the LIBOR scandal and the
Olympics, it was swiftly punctured by a rapid succession of
corporate malfeasances in three companies we do hold. This
began with GlaxoSmithKline's $3bn fine for illegal
sales practices, was continued by HSBC's $1bn penalty
for money laundering and ended with the dramatic share
price fluctuations that afflicted Standard Chartered as it
faced the potential loss of its US banking licence as a
result of its involvement with Iranian money flows. The
management of reputational and operational risks seems now
certain to become an increasingly important focus, both for
us as investors and for the senior executives of all quoted
companies.
Jeremy Whitley & Ben Ritchie
Aberdeen Asset Managers Ltd
21 September 2012
INCOME STATEMENT
Six months ended
31 July 2012
(unaudited)
Revenue
Capital
Total
£'000
£'000
£'000
Gains/(losses) on investments held at fair
value
-
10,304
10,304
Currency gains/(losses)
-
79
79
Income (note 2)
11,729
-
11,729
Investment management fee
(278)
(416)
(694)
Administrative expenses
(407)
-
(407)
_______
_______
_______
Net return before finance costs and
taxation
11,044
9,967
21,011
Finance costs
(486)
(726)
(1,212)
_______
_______
_______
Return on ordinary activities before
taxation
10,558
9,241
19,799
Taxation (note 3)
(253)
-
(253)
_______
_______
_______
Return on ordinary activities after
taxation
10,305
9,241
19,546
_______
_______
_______
Return per Ordinary share (pence)(note
5)
6.84
6.13
12.97
_______
_______
_______
The total column of this statement represents
the profit and loss account of the Company.
A Statement of Total Recognised Gains and
Losses has not been prepared as all gains and losses
have been reflected in the Income Statement.
All revenue and capital items in the above
statement derive from continuing operations.
INCOME STATEMENT
Six months ended
31 July 2011
(unaudited)
Revenue
Capital
Total
£'000
£'000
£'000
Gains/(losses) on investments held at fair
value
-
5,535
5,535
Currency gains/(losses)
-
(7)
(7)
Income (note 2)
10,977
-
10,977
Investment management fee
(288)
(432)
(720)
Administrative expenses
(410)
(2)
(412)
_______
_______
_______
Net return before finance costs and
taxation
10,279
5,094
15,373
Finance costs
(495)
(742)
(1,237)
_______
_______
_______
Return on ordinary activities before
taxation
9,784
4,352
14,136
Taxation (note 3)
(172)
-
(172)
_______
_______
_______
Return on ordinary activities after
taxation
9,612
4,352
13,964
_______
_______
_______
Return per Ordinary share (pence)(note
5)
6.38
2.89
9.27
_______
_______
_______
INCOME STATEMENT
Year ended
31 January 2012
(audited)
Revenue
Capital
Total
£'000
£'000
£'000
Gains/(losses) on investments held at fair
value
-
(4,394)
(4,394)
Currency gains/(losses)
-
(84)
(84)
Income (note 2)
19,173
-
19,173
Investment management fee
(560)
(840)
(1,400)
Administrative expenses
(788)
-
(788)
_______
_______
_______
Net return before finance costs and
taxation
17,825
(5,318)
12,507
Finance costs
(980)
(1,470)
(2,450)
_______
_______
_______
Return on ordinary activities before
taxation
16,845
(6,788)
10,057
Taxation (note 3)
(264)
-
(264)
_______
_______
_______
Return on ordinary activities after
taxation
16,581
(6,788)
9,793
_______
_______
_______
Return per Ordinary share (pence)(note
5)
11.00
(4.50)
6.50
_______
_______
_______
BALANCE SHEET
As at
As at
As at
31 July
2012
31 July
2011
31 January 2012
(unaudited)
(unaudited)
(audited)
Notes
£'000
£'000
£'000
Non-current assets
Investments at fair value through profit or
loss
377,310
378,691
370,711
_______
_______
_______
Current assets
Loans and receivables
1,561
1,834
2,887
Cash and short term deposits
6,386
6,058
3,890
_______
_______
_______
7,947
7,892
6,777
_______
_______
_______
Creditors: amounts falling due within one
year
Bank loan
(5,000)
(5,000)
(5,000)
Other creditors
(1,317)
(1,988)
(2,702)
_______
_______
_______
(6,317)
(6,988)
(7,702)
_______
_______
_______
Net current assets/(liabilities)
1,630
904
(925)
_______
_______
_______
Total assets less current liabilities
378,940
379,595
369,786
Creditors: amounts falling due after more than
one year
Debenture stock
(28,513)
(28,500)
(28,506)
_______
_______
_______
Net assets
350,427
351,095
341,280
_______
_______
_______
Capital and reserves
Called-up share capital
38,419
38,419
38,419
Share premium account
4,543
4,543
4,543
Capital redemption reserve
1,606
1,606
1,606
Capital reserve
7
284,370
286,269
275,129
Revenue reserve
21,489
20,258
21,583
_______
_______
_______
Equity shareholders' funds
350,427
351,095
341,280
_______
_______
_______
Adjusted net asset value per Ordinary share
(pence)
8
232.46
232.90
226.39
_______
_______
_______
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS'
FUNDS
Six months ended 31 July 2012
(unaudited)
Share
Capital
Share
premium
redemption
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 January 2012
38,419
4,543
1,606
275,129
21,583
341,280
Return on ordinary activities after
taxation
-
-
-
9,241
10,305
19,546
Dividends paid
4
-
-
-
-
(10,399)
(10,399)
_______
_______
_______
_______
_______
_______
Balance at 31 July 2012
38,419
4,543
1,606
284,370
21,489
350,427
_______
_______
_______
_______
_______
_______
Six months ended 31 July 2011
(unaudited)
Share
Capital
Share
premium
redemption
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 January 2011
38,419
4,543
1,606
281,917
20,442
346,927
Return on ordinary activities after
taxation
-
-
-
4,352
9,612
13,964
Dividends paid
4
-
-
-
-
(9,796)
(9,796)
_______
_______
_______
_______
_______
_______
Balance at 31 July 2011
38,419
4,543
1,606
286,269
20,258
351,095
_______
_______
_______
_______
_______
_______
Year ended 31 January 2012 (audited)
Share
Capital
Share
premium
redemption
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 January 2011
38,419
4,543
1,606
281,917
20,442
346,927
Return on ordinary activities after
taxation
-
-
-
(6,788)
16,581
9,793
Dividends paid
4
-
-
-
-
(15,440)
(15,440)
_______
_______
_______
_______
_______
_______
Balance at 31 January 2012
38,419
4,543
1,606
275,129
21,583
341,280
_______
_______
_______
_______
_______
_______
CASHFLOW STATEMENT
Six months ended
Six months ended
Year
ended
31 July
2012
31 July
2011
31 January 2012
(unaudited)
(unaudited)
(audited)
Notes
£'000
£'000
£'000
Net return on ordinary activities before
finance costs and taxation
21,011
15,373
12,507
Adjustment for:
(Gains)/losses on investments
(10,304)
(5,535)
4,394
Currency (gains)/losses
(79)
7
84
Increase in accrued income
(95)
(825)
(352)
(Increase)/decrease in other debtors
(163)
1,089
1,148
Increase in other creditors
162
647
188
__________
__________
__________
Net cash inflow from operating
activities
10,532
10,756
17,969
Servicing of finance
Interest paid
(1,206)
(1,213)
(2,442)
Taxation
Overseas withholding tax paid
(253)
(172)
(264)
Financial investment
Purchases of investments
(30,720)
(30,313)
(67,638)
Sales of investments
34,463
19,371
54,357
__________
__________
__________
Net cash inflow/(outflow) from financial
investment
3,743
(10,942)
(13,281)
Equity dividends paid
4
(10,399)
(9,796)
(15,440)
__________
__________
__________
Net cash inflow/(outflow) before use of liquid
resources and financing
2,417
(11,367)
(13,458)
Net cash inflow from management of liquid
resources
-
13,866
13,866
__________
__________
__________
Net cash inflow before financing
2,417
2,499
408
Financing
Drawdown of loans
-
5,000
-
Repayment of loans
-
(5,000)
-
__________
__________
__________
Net cash inflow from financing
-
-
-
__________
__________
__________
Increase in cash
2,417
2,499
408
__________
__________
__________
Reconciliation of net cash flow to movements in
net debt
Increase in cash as above
2,417
2,499
408
Net change in liquid resources
-
(13,866)
(13,866)
Exchange movements
79
(7)
(84)
Non-cash movements
(7)
(7)
(13)
__________
__________
__________
Movement in net debt in the period
2,489
(11,381)
(13,555)
Opening net debt
(29,616)
(16,061)
(16,061)
__________
__________
__________
Closing net debt
(27,127)
(27,442)
(29,616)
__________
__________
__________
Notes to the Financial Statements
For the six months ended 31 July 2012
1.
Accounting policies
(a)
Basis of accounting
The accounts have been prepared in accordance
with applicable UK Accounting Standards, with
pronouncements on half-yearly reporting issued by the
Accounting Standards Board and with the Statement of
Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital
Trusts'. They have also been prepared on the
assumption that approval as an investment trust will
continue to be granted. The financial statements have
been prepared on a going concern basis.
The financial statements and the net asset
value per share figures have been prepared in
accordance with UK Generally Accepted Accounting
Practice (UK GAAP).
The half yearly financial statements have been
prepared using the same accounting policies as the
preceding annual accounts.
(b)
Dividends payable
Dividends are recognised in the period in which
they are paid.
(c)
Investments
Investments have been designated upon initial
recognition at fair value through profit or loss.
Investments are recognised and de-recognised at trade
date where a purchase or sale is under contract whose
terms require delivery within the timeframe
established by the market concerned, and are measured
initially at fair value. Subsequent to initial
recognition, investments are recognised at fair value
through profit or loss. For listed investments, this
is deemed to be bid market prices or closing prices
for SETS stocks sourced from the London Stock
Exchange. SETS is the London Stock Exchange
electronic trading service covering most of the
market including all FTSE All-Share and most liquid
AIM constituents. Gains or losses arising from
changes in fair value are included in net profit or
loss for the period as a capital item in the Income
Statement.
(d)
Capital reserves
Gains or losses on the realisation of
investments and changes in fair values of investments
are transferred to the capital reserve. The capital
element of the management fee and relevant finance
costs are charged to this reserve. Any associated tax
relief is also credited to this reserve.
(e)
Allocation of expenses
Expenses are charged to capital when they are
incurred in connection with the maintenance or
enhancement of the value of investments. In this
respect the investment management fee and relevant
finance costs are allocated between revenue and
capital in line with the Board's expectation of
returns from the Company's investments over the
long term in the form of revenue and capital
respectively.
(f)
Traded Options
The Company may enter into certain derivatives
(e.g. options). Option contracts are accounted for as
separate derivative contracts and are therefore shown
in other assets or other liabilities at their fair
value i.e. market value adjusted for the amortisation
of transaction expenses. The premium received and
fair value changes in the open position are
recognised in the revenue column, losses realised on
the exercise of the contracts are recorded in the
capital column of the Income Statement.
In addition, the Company may enter into
derivative contracts to manage market risk and gains
or losses arising on such contracts are recorded in
the capital column of the Income Statement.
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
2.
Income
£'000
£'000
£'000
Income from investments
UK listed - franked
7,908
7,953
13,693
UK listed - unfranked
-
134
144
Overseas listed
2,693
2,083
3,048
Bond interest listed
-
199
273
Scrip dividends
427
113
195
__________
__________
__________
11,028
10,482
17,353
__________
__________
__________
Other income
Interest from AAA rated money market
funds
-
14
14
Deposit interest
1
-
2
Interest on VAT recovered
-
17
17
Income on derivatives
670
464
1,723
Income from stock lending
30
-
64
__________
__________
__________
701
495
1,820
__________
__________
__________
Total income
11,729
10,977
19,173
__________
__________
__________
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
3.
Taxation
£'000
£'000
£'000
Withholding tax on income from foreign
investments
253
172
264
__________
__________
__________
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
4.
Dividends
£'000
£'000
£'000
Interim dividend of 3.75p per share paid on 17
October 2011
-
-
5,651
Final dividend of 6.9p (2011 - 6.50p) per share
paid on 23 May 2012
10,399
9,796
9,796
Refund of unclaimed dividends from previous
periods
-
-
(7)
__________
__________
__________
10,399
9,796
15,440
__________
__________
__________
An interim dividend of 2.5p was
paid on 31 August 2012 to shareholders on the
register on 10 August 2012. The ex dividend date was
8 August 2012. This dividend was the first paid in
accordance with the quarterly cycle detailed in the
2012 annual accounts.
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
5.
Return per Ordinary share
p
p
p
Revenue return
6.84
6.38
11.00
Capital return
6.13
2.89
(4.50)
__________
__________
__________
Total return
12.97
9.27
6.50
__________
__________
__________
The returns per share figures are based on the
following:
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
£'000
£'000
£'000
Revenue return
10,305
9,612
16,581
Capital return
9,241
4,352
(6,788)
__________
__________
__________
Total return
19,546
13,964
9,793
__________
__________
__________
Weighted average number of Ordinary shares in
issue
150,706,187
150,706,187
150,706,187
__________
__________
__________
6.
Transaction costs
During the period, expenses were incurred in
acquiring or disposing of investments classified as
fair value through profit or loss. These have been
expensed through capital and are included within
gains on investments in the Income Statement. The
total costs were as follows :
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
£'000
£'000
£'000
Purchases
85
91
281
Sales
32
22
54
__________
__________
__________
117
113
335
__________
__________
__________
7.
Capital reserve
The capital reserve reflected in the Balance
Sheet at 31 July 2012 includes gains of £61,789,000
(31 July 2011 - gains of £69,183,000; 31 January 2012
- gains of £54,647,000) which relate to the
revaluation of investments held at the reporting
date.
8.
Net asset value
Equity shareholders' funds have been
calculated in accordance with the provisions of
Financial Reporting Standard 4 'Capital
Instruments'. The analysis of equity
shareholders' funds on the face of the Balance
Sheet does not reflect the rights under the Articles
of Association of the Ordinary shareholders on a
return of assets. These rights are reflected in the
net asset value and the net asset value per share
attributable to Ordinary shareholders at the period
end, adjusted to reflect the deduction of the
Debenture Stock at par. A reconciliation between the
two sets of figures is given below:
As at
As at
As at
31 July 2012
31 July 2011
31 January 2012
Equity shareholders' funds
£350,427,000
£351,095,000
£341,280,000
Adjusted net assets
£350,340,000
£350,995,000
£341,186,000
Number of Ordinary shares in issue at the
period end
150,706,187
150,706,187
150,706,187
Equity shareholders' funds per share
232.52p
232.97p
226.45p
Less: Unamortised Debenture Stock premium and
issue expenses
(0.06p)
(0.07p)
(0.06p)
__________
__________
__________
Adjusted net asset value per share
232.46p
232.90p
226.39p
__________
__________
__________
Six months ended
Six months ended
Year
ended
31 July 2012
31 July 2011
31 January 2012
9.
Stock lending
£'000
£'000
£'000
Aggregate value of securities on loan at the
period end
8,142
7,196
17,543
Maximum aggregate value of securities on loan
during the period
24,786
7,196
19,220
__________
__________
__________
Fee income from stock lending during the
period
30
-
64
__________
__________
__________
All stocks lent under these arrangements are
fully secured against collateral. The value of the
collateral held at 31 July 2012 was £8,734,000 (31
July 2011 - £7,569,000; 31 January 2012 -
£19,625,000).
At 31 July 2012 the collateral comprised of
government stocks and equities.
Stock lending is the temporary transfer of
securities by a lender to a borrower, with an
agreement by the borrower to return equivalent
securities to the lender at an agreed date.
Stock lending revenue is received for making
the investments available to the borrower. In all
cases the securities lent continue to be recognised
on the balance sheet.
10.
Called-up share capital
During the six months ended 31 July 2012 the
Company did not repurchase any Ordinary shares (31
July 2011 - nil; year ended 31 January 2012 -
nil).
11.
Half Yearly Report
The financial information contained in this
Half Yearly Report does not constitute statutory
accounts as defined in Sections 434 - 436 of the
Companies Act 2006. The financial information for the
six months ended 31 July 2012 and 31 July 2011 has
not been audited.
The information for the year ended 31 January
2012 has been extracted from the latest published
audited financial statements which have been filed
with the Registrar of Companies. The report of the
auditor on those accounts contained no qualification
or statement under Section 498 (2), (3) or (4) of the
Companies Act 2006.
The auditor has reviewed the financial
information for the six months ended 31 July 2012
pursuant to the International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim
Financial Information Performed by the Independent
Auditor of the Entity. The report of the auditor is
attached.
12.
This Half-Yearly Report was approved by the
Board on 21 September 2012 and the Half-Yearly Report
will be posted to shareholders at the beginning
of October 2012 and copies will be available from the
Manager or the Company's website,
wwwdunedinincomegrowth.co.uk.
Please note that past performance is not necessarily
a guide to the future and 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
Independent Review Report to Dunedin Income Growth
Investment Trust PLC
Introduction
We have been engaged by the Company to review the
condensed set of financial statements in the half-yearly
financial report for the six months ended 31 July 2012
which comprises the Income Statement, Balance Sheet, the
Reconciliation of Movements in Shareholders' Funds, the
Cash Flow Statement and the related explanatory notes. We
have read the other information contained in the
half-yearly financial report and considered whether it
contains any apparent misstatements or material
inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in
accordance with the terms of our engagement to assist the
Company in meeting the requirements of the Disclosure and
Transparency Rules ("the DTR") of the UK's
Financial Services Authority ("the UK FSA"). Our
review has been undertaken so that we might state to the
Company those matters we are required to state to it in
this report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for
this report, or for the conclusions we have reached.
Directors' Responsibilities
The half-yearly financial report is the
responsibility of, and has been approved by, the Directors.
The Directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK
FSA.
As disclosed in note 1, the annual financial
statements of the Company are prepared in accordance with
UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice). The condensed set of
financial statements included in this half-yearly financial
report has been prepared in accordance with the Statement
Half-Yearly Financial Reports as issued by the UK
Accounting Standards Board.
Our Responsibility
Our responsibility is to express to the Company a
conclusion on the condensed set of financial statements in
the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with
International Standard on Review Engagements (UK and
Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued
by the Auditing Practices Board for use in the UK. A review
of interim financial information consists of making
enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope
than an audit conducted in accordance with International
Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified
in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our
attention that causes us to believe that the condensed set
of financial statements in the half-yearly financial report
for the six months ended 31 July 2012 is not prepared, in
all material respects, in accordance with the Statement
Half-Yearly Financial Reports as issued by the UK
Accounting Standards Board and the DTR of the UK
FSA.
Phil Merchant
for and on behalf of KPMG Audit Plc, Statutory
Auditor
Chartered Accountants
Edinburgh
21 September 2012
This information is provided by RNS
The company news service from the London Stock Exchange
RNS news service provided by Hemscott Group Limited.
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