TIDMTIGT
RNS Number : 6725A
Troy Income & Growth Trust Plc
24 January 2024
TROY INCOME & GROWTH TRUST PLC
LEI: 213800HLNMQ1R6VBLU75
ANNUAL FINANCIAL REPORT FOR THE YEARED 30 SEPTEMBER 2023
1. CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the annual report for Troy Income &
Growth Trust plc (the 'Company') following my appointment as a
non-executive Director and Chairman in January 2023.
Company Aims
In March 2023, the Board held a Strategy meeting to set clear
targets which were agreed with the Managers ('Troy Asset Management
Limited') and are set out below. These clear targets have been
closely monitored at each Board meeting along with their associated
Key Performance Indicators.
-- Dividend growth of 4% per annum for Shareholders
The Board announced in September that the Company would pay a
fourth and final dividend for the financial year of 0.529p per
share (2022 - 0.50p). This results in a 4% increase in the total
dividends paid in FY23 - in-line with the Board's aim.
-- Share price total return (capital and income) above the FTSE
All-Share Index over a 5-year period
Performance over the latest five-year period has fallen short of
this target, with the portfolio lagging the
FTSE All-Share Index. Higher interest rates have been a headwind
for the Managers' approach of investing
only in companies with a record of good long term dividend
growth. Over the last five years, this approach has underperformed
other peer group Trusts' more value orientated styles. Sectors
typically eschewed by the Managers for their cyclicality and
capital intensity, particularly Energy and large Banks, performed
strongly. The Managers see a more balanced market today, with a
more challenging environment ahead for corporate profits. Such an
environment is likely to better suit the Managers' approach to the
market.
-- Share price volatility lower than the FTSE All-Share
Index
The Managers emphasise high-quality, resilient, dividend-paying
businesses that should drive consistent returns, avoiding the worst
of market sell offs. In particular, they believe a portfolio
suffering fewer and less destructive drawdowns will be in a better
position to compound returns over the long run. The Company has
consistently fared better than the FTSE All-Share Index during
market sell offs and has continued to provide a return with lower
share price volatility.
-- To maintain the Company's Discount Control Mechanism
The discount control mechanism ('DCM') has played an important
role in reducing share price volatility over the long term,
ensuring the Company's share price remains closely aligned with net
asset value. It has also allowed Shareholders to choose the time
best suited to them to redeem any shares, knowing that it will be
at a price close to net asset value.
On 2 November 2023, the Company announced the suspension of the
DCM and the buyback of its shares. Recent buyback activity had
resulted in the Company getting very close to (i) fully utilising
its existing authority to repurchase shares; and (ii) depleting its
distributable reserves, which are required to effect buybacks under
the DCM. At that point, the Board was reviewing possible options
for a combination with another investment trust and, in light of
all of these considerations, the DCM was suspended pending a
further announcement on the outcome of the review.
Proposed Merger with STS Global Income & Growth Trust
plc
As well as setting the targets detailed above, the Board has
been considering the best future for the Company, given recent and
current market challenges and the impact of the ongoing share
buybacks throughout the year on the size of the Company.
Following a review of a number of strategic options, on 28
November 2023 the Board announced that it had reached an agreement
with the Board of STS Global Income & Growth Trust plc ('STS')
for a proposed merger. Subject to shareholder approval, the merger
will be implemented through a scheme of reconstruction pursuant to
section 110 of the Insolvency Act 1986, resulting in the voluntary
liquidation of the Company and the rollover of its assets into STS
in exchange for the issue of new shares in STS. Shareholders will
also be offered the option of up to 100% cash exit.
The enlarged STS will continue to be managed, on the same basis
as currently, by Troy Asset Management, with James Harries
continuing as the lead portfolio manager, supported by Tomasz
Boniek and the wider Troy investment team.
The proposals are subject to the approval of both the Company's
shareholders and STS shareholders, and also to regulatory and tax
approvals.
In reaching this decision, the Board noted a number of
attractions to a combination with STS, including continued exposure
to Troy's investment ethos and process, commonality of UK
investments with the addition of global income growth equities, a
continuing discount control mechanism, reduced overall costs for
continuing shareholders and increased liquidity. Troy has also
agreed to make a significant cost contribution in the form of an
eighteen-month fee waiver on the assets transferred from the
Company to STS.
It is intended that the documentation in connection with the
proposal will be posted to shareholders in February 2024, with a
view to completing the transaction by the end of March 2024.
Performance
The Company delivered a net asset value ('NAV') per share total
return of +6.6% and a share price total return of +6.3% over the
year to 30 September 2023. Over the same period, the FTSE All-Share
Index produced a total return of +13.8%. The average NAV total
return for the AIC UK Equity Income sector was +12.6% for the same
period. The two most significant drags on performance were some of
the Company's holdings in large, low cyclicality Consumer Staples
companies and the two holdings in the Materials sector. Sterling's
strong appreciation against the dollar was also a headwind,
impacting the Company's small number of US-listed holdings as well
as the predominantly overseas earnings of the portfolio as a
whole.
In the volatile, macro-driven markets of the past year, it was
pleasing that a number of the Company's core holdings in large,
stable businesses contributed strongly to returns. RELX was the
largest positive driver, while GSK, AstraZeneca, Compass, and
Unilever were also in the top 10 contributors. The other notable
area of strength came from Consumer Discretionary stocks. In
particular, UK domestically focused businesses such as Domino's
Pizza and Next were fuelled by a combination of economic recovery
and strong earnings performance. Elsewhere, post-COVID rebounds in
global travel drove the share price of InterContinental Hotels
Group, while shares in niche industrial company Diploma rose on a
year of very strong growth. Across the broader UK index, positive
contributions came from large financial companies such as banks and
life insurers, some large cyclical industrial companies, and from
energy majors - all areas in which the Company tends to have
minimal exposure.
The Managers provide further commentary on portfolio performance
within their report.
Background
It has been a positive year for UK equities - perhaps a
surprising outcome given the various macroeconomic factors
conspiring to test global economies and markets; volatile
inflation, higher interest rates, the aftereffects of the pandemic,
and geopolitical clashes. Nevertheless, UK markets benefited from
regaining some political stability following the short-lived Truss
government, as well as more resilience than expected from the UK
economy and consumer.
Both the magnitude and speed of the current interest rate cycle
remain notable. However, after 14 consecutive rate rises beginning
in December 2021, the Bank of England finally paused for breath in
September of 2023, leaving the UK base rate flat at 5.25%. At the
time of writing, core inflation is currently still above 5% in the
UK, but is well past its peak of over 7%. Meanwhile, overall UK CPI
(consumer price index) inflation has moderated materially from over
11% to under 4%. The narrative from central banks indicates we are
probably at peak interest rates for this cycle, and markets have
now turned to speculating on the likely path of rate cuts. These
will depend on the strength of economies in the coming months. US
economic growth in particular has remained robust and markets are
talking of a possible 'soft landing', in which the US economy
manages to curtail inflation and absorb the impacts of this sharp
interest rate cycle without entering recession. Such a scenario is
uncommon but not without precedent. As the Managers discuss in
their review, they remain mindful that the full extent of impacts
from higher rates are likely still to be felt.
Portfolio
Large, high-quality, low cyclicality businesses continue to make
up the core of the portfolio. Some of the Company's largest
allocations include a c.30% weighting to Consumer Staples (e.g.
Unilever, Diageo and Reckitt), c.20% to non-discretionary
B2B-focused businesses (e.g. Compass Group, RELX and Bunzl) and
c.10% to the relatively non-cyclical Healthcare sector (e.g.
AstraZeneca and GSK).
Volatile markets have enabled the Managers to make six new
investments over the course of the year - Roche, London Stock
Exchange Group, Sage, Smiths Group, Imperial Brands and Howden
Joinery. These are all resilient, leading companies in their
respective industries and have strong balance sheets and
well-covered, growing dividends. The Managers have known and
followed each of these companies for multiple years and believe
market weakness has allowed them to purchase at attractive prices
and dividend yields.
Three positions were exited, all in the first six months of the
year: Haleon, Halma and AVEVA. AVEVA was subject to a bid by its
majority shareholder, following which the position was sold. Haleon
and Halma were sold on valuation and dividend yield grounds.
Dividends
The Board announced in September that the Company would pay a
fourth and final dividend for the financial year of 0.529p per
share (2022 - 0.50p). The total dividends for FY23 totalled 2.05p,
representing a 4% increase on the prior year. Over the year this
was above the peer group rate of dividend growth.
Discount Control Mechanism
The DCM is one way in which the Company has set itself apart
from other trusts in the sector. The DCM materially improves the
liquidity of the Company's shares and ensures Shareholders can
purchase and sell shares in the Company at a price that closely
reflects the NAV. This is particularly important in dampening
volatility for Shareholders during times of market stress, where it
is not uncommon for other trusts to trade at a material discount to
their NAVs.
As noted above, the DCM was suspended on 2 November 2023. In the
event that the proposed merger does not go ahead, then appropriate
steps will be taken to allow the DCM to recommence in due
course.
Outlook
In the coming year, the UK market is likely to continue focusing
on the path of interest rates, inflation, and the related impacts
on corporate and consumer health. The Managers expect continued
pressure on earnings, which resulted in a decline in aggregate UK
dividends in 2023. In this environment, the Board sees clear
virtues in an emphasis on quality, low cyclicality business models
that can fund growing, comfortably covered dividends and we remain
optimistic about this investment style for the future.
Bridget Guerin
Chairman
23 January 2024
2. MANAGERS' REVIEW
Investment Background
The investment backdrop during the past 12 months can be well
summarised as 'unsettled'. Inflation, interest rates, geopolitics,
and the aftershocks of COVID-related disruption have dominated the
narrative, driving volatility and uncertainty. Global and US
markets have risen strongly for much of the past year, with the
MSCI World and S&P 500 indices up +22% (total return USD) and
+23% (total return USD) respectively in the year ending 30
September 2023. However, the positive drivers have been extremely
narrow with the majority of gains stemming from the so-called
'Magnificent Seven' technology giants (Apple, Microsoft, Meta,
Amazon, Alphabet, Nvidia and Tesla) which have risen on a wave of
enthusiasm surrounding 'AI'.
The year as a whole was positive for UK equities with the FTSE
All-Share Index rising +13.8% (total return GBP). It was also
positive for the Company, albeit with a rise that lagged the market
- NAV and share price total returns were +6.6% and +6.3%
respectively. We discuss performance in more detail later in this
report.
The favourable return from the UK market came primarily in the
initial months of the period. The swift resolution to the
Truss/Kwarteng mini-budget episode set the FTSE All-Share Index on
a sharp rise through the first quarter of the Company's year. This
enthusiasm was extended by the post-COVID 'China reopening' as we
entered calendar year 2023 which supported the UK commodity and
consumer companies exposed to the geography. It seemed that some
stability and even renewed growth would provide support for
earnings and markets. However, February marked the high point for
the UK index. The US banking stress in March caused a sharp
sell-off in financial stocks globally and served as a sharp
reminder that higher interest rates are likely to have acute and
unpredictable impacts.
Peaking rates?
Thankfully, there proved minimal contagion from the March
sell-off but it is clear there is increased volatility in markets
after 12 years of extraordinarily low interest rates. Central banks
have continued to raise rates aggressively throughout much of the
year in the battle against inflation. Although economic data has
been varied, in general US and UK economies have proven robust,
spurring central bankers' efforts to act forcefully. Nevertheless,
it does appear we may be at or close to the peak of this
historically fast rate cycle; in September, the Bank of England
held their base interest rate steady at 5.25%, ending a 14-month
run of consecutive hikes.
Markets are now wrestling with whether rates stay 'higher for
longer' or could start to come down. Inflation (CPI growth) in the
UK seems likely to have peaked in October 2022 at 11.1% and by
September had slowed to 6.7%. However, it still remains well above
the Bank of England's target level and key inputs such as wage
inflation have remained robust, potentially supporting higher
rates. Conversely, there are signs that the shift in rates is
starting to have an impact; in the latter half of the year there
have been growing signs of earnings and economic conditions
weakening in several sectors. Additionally, the initial hope of a
sharp China rebound has turned to concern amidst weak consumer
spending and trouble in key sectors such as Real Estate. As a
result of the mixed backdrop, the UK market as a whole was largely
unchanged over the latter half of the year.
Cyclical risks
Our view is that the impact of higher rates will inevitably bite
consumers and corporates, but with a lag. We remain cautious on
corporate earnings and are determined to avoid companies with
excessive leverage. A recession at home and abroad certainly cannot
be ruled out. The portfolio continues to be defensively positioned
as a result, with exposure to resilient, quality companies. The
Company has significant weightings to consumer staples, healthcare,
subscription data and consumer non-discretionary stocks. These
businesses have a proven ability to navigate difficult economic
environments. On the other hand, the portfolio has no exposure to
banks, energy or mining companies which make up a significant
proportion of the UK market, but whose earnings and share prices
often prove highly cyclical.
Compelling UK Valuations
Despite our caution on near-term earnings, as long-term UK
investors, we are excited about valuations across the market. UK
equities have been out of favour ever since 2016's Brexit vote,
which appears in hindsight to have triggered the start of
significant outflows from UK equities. This has in turn caused a
severe de-rating of our stock market. Valuations in the UK are
today at a meaningful discount to the US-dominated global equity
market.
Prospective equity returns are a function of two things;
starting valuations and future growth. The portfolio in aggregate
trades with an earnings yield of over 6% (equivalent to a
Price-to-Earnings ('PE') ratio of c.16x). This is a level we deem
to be attractive given the quality of the companies held and the
resilient mid to high single digit earnings growth we expect the
portfolio to achieve over time.
We are often asked what the catalyst might be for a reversal of
fortunes for UK equity valuations. We do not claim to have a good
answer to this. That being said, and heading into a UK election
year in 2024, we are hopeful that better long-term political
thinking and prioritisation towards our home equity market will
emerge. The UK stock market has three significant attractions as we
see it. 1) It is the most international of all stock markets with
c.80% of aggregate revenues coming from abroad. 2) Valuations are
attractive. 3) We have a uniquely strong dividend culture,
especially when compared to the US market's preference for share
buybacks, which means the UK is a great market for income
investors. We are optimistic that stable politics, combined with
compelling starting valuations might be enough to turn the tide in
favour of UK equities. In the meantime, we are happy to benefit
from world-class companies trading at compelling prices, offering
dividend yields and dividend growth that should generate strong
returns.
Growing Income
One of the core aims of the Company is to deliver year-on-year
income growth to investors. Having re-based the Company's dividend
in 2021 to a sustainable level from which it can grow, it is
pleasing that the Company has grown its dividend in each of the
past two years. The Company currently aims to increase its dividend
by 4% per annum. The portfolio is producing healthy dividend growth
and we remain cautiously optimistic that mid-single digit per annum
dividend growth ought to be achieved over the long term. We
continue to expect the portfolio to produce a more resilient income
stream than the wider market.
Performance
Whilst we are pleased the Company delivered a positive return in
an uncertain environment, we are unsatisfied with relative returns.
The Company delivered a NAV total return of +6.6% and a share price
total return of +6.3% over the year. This compares with the FTSE
All-Share Index total return of +13.8% and places the Company
12(th) out of its 16-strong AIC UK equity income peer group when
ranked by NAV performance and 13th by share price. Underperformance
was a result of specific stock price movements, but it was also
because our quality-orientated investment style faced headwinds
compared to more value-orientated styles. The latter factor relates
to the impact that higher bond yields have had in the short term on
valuations for certain parts of the equity market. For example,
Consumer Staples companies, to which the portfolio is heavily
exposed, have generally fallen in value, whereas certain sectors in
which the Company does not invest, such as banks and energy
companies, have risen materially. We will stick to our investment
process which prioritises more stable businesses that compound
dividend growth over the long-term.
Contributors
Consumer Discretionary was the largest positive contributor to
returns, with Domino's Pizza gaining +74% over the year on the back
of solid results and the hiring of a well-regarded CEO. Within the
same sector, InterContinental Hotels Group and Next also performed
well rising +42% and +57% respectively. Holdings classified within
the industrials sector also contributed strongly with large
portfolio holding RELX gaining +29% and value-added distributor
Diploma gaining +32%. Defensive Healthcare holdings also performed
well with GSK gaining +19% and AstraZeneca rising +14%. Finally,
insurer Admiral performed well, rising +30%, as it recovered from a
particularly pronounced UK motor insurance cycle to post solid
results.
Detractors
Consumer Staples holdings detracted most from returns with
Diageo falling -18% and British American Tobacco -13%. Diageo's
sales growth is normalising following a very strong period whilst
British American Tobacco shares gave back gains made in the
previous year. Materials holdings were also weak, with Croda
falling -22% and Victrex falling -13%. Both of these speciality
chemicals companies are suffering cyclical destocking issues as the
economy slows. We expect these issues to prove temporary and have
added to both holdings. Finally, Financials holding St. James's
Place fell -15% as the company suffered weaker flows into the
business and reduced charges to clients which hurt short term
profits. The mixture of stock-specific and industry-wide cyclical
pressures have reduced the valuation multiples of St. James's Place
considerably and we continue to hold the shares.
Portfolio Changes
Selective changes were made to holdings over the year as we
found opportunities to further improve the quality, resilience and
valuation of the portfolio.
Three holdings were sold over the period. The Company's holding
in UK industrial software company AVEVA was exited following a bid
for the company by majority shareholder Schneider Electric.
Proceeds of the sale were used to start a new holding in
high-quality data company the London Stock Exchange Group at a
valuation of c.20x PE. We also sold the small holdings in Haleon
and Halma on the basis of their valuations and dividend yields.
A new holding in Swiss company Roche was also initiated. Roche
is one of the world's leading pharmaceutical and medical
diagnostics companies with an enviable track record of new drug
innovation. Roche shares have been weak in recent years and are
inexpensive, trading at around c.13x PE and with a dividend yield
of c.3.7%.
We also built a position in Sage Group ('Sage'). Sage is one of
the few software companies in the FTSE 350 and is a leading
provider of accounting solutions to small and medium-sized
businesses ('SMEs') in more than 23 countries. Due to the critical
nature of the subscription software it provides, Sage enjoys highly
recurring revenues which makes the business very defensive and
capable of strong dividend growth.
Elsewhere, we started a small holding in Howden Joinery. Howden
is the UK's leading supplier of kitchens to the trade. Whilst
demand for kitchens may well be subdued in these harder economic
times, we think this is largely reflected in the stock's low
valuation and c.3% dividend yield. Howden is an outstanding
business with a net cash balance sheet and is well placed to take
market share through more challenging times.
Finally, a new holding was started in Smiths Group, a leading
multinational engineering business that has been listed on the
London Stock Exchange for over 100 years. The quality and
reliability of Smiths' business has supported continuous dividend
payments for over 70 years. Smiths provides differentiated exposure
for the portfolio and the shares trade inexpensively at c.16x
earnings and with a c.3% dividend yield.
In terms of additions and part sales, we significantly reduced
the Company's holding in Domino's Pizza following a more than +50%
rise in share price between July and August. We also trimmed
InterContinental Hotels and Next, both of which have risen strongly
in the year. Finally, we added to Diageo, Croda and Victrex, all of
which have suffered short term weakness in their share prices and
trade at attractive prices.
Investment Outlook
Markets continue to be impacted by inflation and interest rate
expectations. It is encouraging therefore to see inflation peaking
in the US and UK after an unprecedently steep rise in rates. We are
highly conscious however that the lagged impact of meaningfully
higher rates will continue to be felt by consumers and corporates.
This will dampen growth and economic activity and we are
intentionally defensively positioned as a result. Investors should
be reassured by the portfolio's significant exposure to relatively
economically insensitive businesses that have strong balance sheets
and a track record of growing dividends through the cycle. This
includes Consumer Staples companies such Diageo, Healthcare
companies such as GSK and subscription software and data businesses
like RELX.
Despite our caution on near-term earnings, we believe that UK
equity valuations are compelling. The UK is home to various
world-class businesses and over the past year we have found
exciting valuation opportunities on offer. These have been across a
range of sectors and has resulted in six new holdings. We believe
the Company has a strong portfolio and a high-quality list of
potential stocks - we are well placed to take advantage as further
opportunities arise.
Finally, despite the uncertain environment, we are reassured
that the great majority of portfolio companies continue to
demonstrate strong operational performance and the potential for
long-term dividend growth.
Troy Asset Management Limited
23 January 2024
3. RESULTS & DIVIDS
Financial Highlights
2023 2022
Net asset value total return 6.6% -9.9%
Share price total return 6.3% -10.2%
FTSE All-Share Index total return 13.8% -4.0%
Increase in dividends per share 4.0% 0.5%
Dividend yield* 3.0% 2.9%
Dividends per share+ 2.049p 1.97p
Ongoing Charges 0.95% 0.89%
* Dividends per share as a percentage of share price at 30 September
+ Dividends per share reflect the years in which they were earned
Performance - Total Return (for the periods to 30 September 2023)
One Year Three Years Five Years Ten Years
Share price 6.3% 4.6% 3.3% 58.3%
Net asset value per share 6.6% 4.8% 4.6% 62.6%
FTSE All-Share Index 13.8% 39.8% 19.7% 71.8%
Distribution of Assets and Liabilities
Valuation Valuation
at at
30 September 30 September
2022 Purchases Sales Increase 2023
GBP'000 % GBP'000 GBP'000 GBP'000 GBP'000 %
Listed
investments
Ordinary shares 194,448 100.6 30,692 (63,865) 6,708 167,983 100.7
______ _____ ________ _______ ________ ______ _____
Current assets 9,265 4.8 3,328 2.0
Current liabilities (10,398) (5.4) (4,483) (2.7)
______ _____ ______ _____
Net assets 193,315 100.0 166,828 100.0
______ _____ ______ _____
Net asset value
per share 68.48p 70.42p
______ ______
4. STRATEGIC & DIRECTORS' REPORT EXTRACTS
Performance and Future Development
A review of the business performance, market background,
investment activity and portfolio during the year under review,
together with the investment outlook, is provided in the Chairman's
Statement and the Managers' Review.
Risk Management
The Directors are responsible for supervising the overall
management of the Company, whilst the day-to-day management of the
Company's assets has been delegated to the Managers. Portfolio
exposure has been limited by the guidelines which are detailed
within the Investment Guidelines section of the Annual Report.
The Board can confirm that the principal risks of the Company,
including those which would threaten its business model, future
performance, solvency or liquidity, have been robustly assessed for
the year ended 30 September 2023. A description of the principal
risks and how they are managed is set out below. The Board has also
assessed the emerging risks of geopolitical events, climate change
and rising inflation under performance and market risks.
Risk Mitigation
Performance risk: The Board To manage this risk the Managers provide
is responsible for deciding an explanation of significant stock selection
the investment strategy to decisions and the rationale for the composition
fulfil the Company's objective of the investment portfolio, including
and monitoring the performance responsible investment considerations.
of the Managers. An inappropriate The Board also receives and reviews regular
strategy or poor execution reports showing an analysis of the Company's
of strategy might lead to performance, both in income and capital
long-term underperformance growth terms, against the FTSE All-Share
against the comparator index Index (total return) and its peer group.
and the Company's peer group. The impact on the investment strategy
of the Russia/Ukraine and Israel/Hamas
conflicts and rising inflation has been
kept under regular review by the Board.
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Market risk: Market risk The Board monitors and maintains an adequate
arises from uncertainty about spread of investments in order to minimise
the future prices of the the risks or factors specific to a particular
Company's investments. investment or sector, based on the diversification
requirements inherent in the Company's
investment policy. The Board also monitors
the implementation of gearing strategy
and responsible investment strategy.
The underlying risks and potential increased
volatility associated with the Russia/Ukraine
and Israel/Hamas conflicts, and inflation
rate rises, are considered within market
risk.
----------------------------------------------------
Resource and operation risk: The Board reviews the performance of
Like most other investment its service providers, their internal
trusts, the Company has no controls and their compliance with agreements
employees. The Company therefore on a regular basis.
relies on services provided
by third parties and their
control systems. Disruption
to, or failure of, systems
and controls, including cyber-attacks,
at the Company's service
providers could result in
financial and reputational
damage to the Company.
----------------------------------------------------
Shareholder risk: Shareholder The Board reviews the performance of
risk arises from ongoing the Company at each Board meeting along
share buybacks reducing the with the business development and marketing
size of the Company threatening strategy in order to make the Company
its viability. an attractive investment. The Board along
with the Managers have also developed
a marketing strategy that reflects the
shift of investors to platforms which
can make direct engagement more difficult.
The Board constantly monitors the implementation
of the discount control mechanism with
the help of Juniper Partners. As discussed
in the Chairman's Statement the Board
is now recommending a merger with STS
Global Income & Growth Trust plc as they
believe that a larger entity with a more
global set of income stocks will be an
attractive proposition for shareholders.
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Regulatory risk: Breach The Company Secretary monitors the Company's
of regulatory rules could compliance with all relevant regulations
lead to the suspension of and compliance with the principal rules
the Company's London Stock is reviewed by the Directors at each
Exchange listing, financial Board meeting.
penalties or a qualified
audit report. Breach of sections
1158 and 1159 of the Corporation
Tax Act 2010 could lead to
the Company being subject
to corporation tax on capital
gains.
----------------------------------------------------
The Board have considered the Company's solvency and liquidity
risk and full disclosure of this is made in note 15 of the Annual
Report and the viability statement below.
Post Balance Sheet Events
On 2 November 2023 the Company announced it was suspending the
discount control mechanism and the buyback of its shares. On 28
November 2023 the Board announced proposals for a combination with
STS
Global Income & Growth Trust plc, through a scheme of
reconstruction pursuant to section 110 of the Insolvency Act 1986.
If approved by Shareholders this will result in the voluntary
liquidation of the Company.
Results and Dividends
The financial statements for the year ended 30 September 2023
appear below. Dividends in respect of the year amounted to 2.049p
per share (2022 - 1.97p). The fourth interim dividend of 0.529p per
share announced on 14 September 2023 (2022 - fourth interim 0.50p)
will be accounted for in the financial period commencing 1 October
2023.
Share Capital
The issued share capital at 30 September 2023 consisted of
236,890,487 Ordinary shares of 25p each and there were 110,621,500
Ordinary shares held in treasury. As at the latest practicable date
of 23 January 2024 the issued share capital consisted of
232,475,487 Ordinary shares of 25p each and there were 115,036,500
Ordinary shares held in treasury. Each holder of Ordinary shares,
excluding treasury shares, is entitled to one vote on a show of
hands and, on a poll, to one vote for every Ordinary share
held.
Management Arrangements
The Company appointed Juniper Partners, as its alternative
investment fund manager ('AIFM') on 22 July 2014. With effect from
that date, the AIFM delegated the portfolio management activities
relating to the Company back to Troy Asset Management Limited
('TAML' or the 'Managers') pursuant to a delegation agreement and
TAML continues to provide portfolio management services to the
Company. These arrangements are fully compliant with the AIFMD.
The AIFM services are provided to the Company by Juniper
Partners for a fee of 0.015% of the Company's net assets per annum,
subject to a minimum fee of GBP68,000 per annum. TAML reduce their
investment management fee by an equal amount so that there is no
overall change to the basis of the management fee incurred by the
Company.
The other terms of the AIFM's appointment are similar to those
applying to TAML under the investment management delegation
agreement detailed below.
Investment Management Delegation Agreement
Investment management services have been provided to the Company
by TAML since 1 August 2009. With effect from 1 January 2022, the
annual management fee was reduced from 0.65% of the Company's net
assets to a tiered annual management fee of 0.55% of net assets up
to GBP250 million and 0.50% of net assets above GBP250 million.
Company Secretary
Juniper Partners Limited provides company secretarial,
accounting and administration services to the Company.
Depositary
J.P. Morgan Europe Ltd is the Company's Depositary, with
responsibilities including cash monitoring, safe keeping of the
Company's financial instruments and monitoring the Company's
compliance with investment limits and leverage requirements. The
Depositary has delegated the custody function to J.P. Morgan Chase
Bank N.A.
Borrowings
In June 2022, the Company instituted a three-year revolving loan
facility of GBP15 million with The Royal Bank
of Scotland International Limited. Under the terms of the
facility, the Company has the option to increase the level of the
commitment from GBP15 million to GBP20 million at any time, subject
to the bank's credit approval, thus avoiding the expense of undrawn
commitment fees on this additional GBP5 million. As at 30 September
2023, GBP4 million had been drawn down from this facility at a rate
of 1.2% plus SONIA.
Independent Auditors
Following a tender process in 2015, PricewaterhouseCoopers LLP
were appointed the Company's Auditors in 2016.
Going Concern
The Board considered the appropriateness of continuing to
prepare the financial statements on a going concern basis.
Notwithstanding the material uncertainty in relation to going
concern surrounding the implementation of the proposed scheme of
reconstruction (the 'Scheme'), the Board concluded that it remained
appropriate to continue to prepare the financial statements on a
going concern basis. In reaching this conclusion the Board came to
the view that, as the Scheme is contingent on Shareholder approval
and the Company is considered solvent in all other regards, there
is no irrevocable path to liquidation and thus going concern
remained the most appropriate basis for preparation. In concluding
that the adoption of the going concern basis of accounting is
appropriate, the Directors, and specifically the Audit Committee
members, have given due consideration to the risks associated with
the implementation of the Scheme. The Directors monitor
developments closely and are confident that the going concern basis
remains appropriate.
Viability Statement
As Shareholders will be aware, the Board recently concluded a
review of possible options for a combination
with another investment trust, to be effected by a scheme of
reconstruction. The outcome of this review was a recommendation by
the Board that the Company's assets be combined with those of STS
Global Income & Growth Trust plc ('STS') by means of a section
110 scheme of reconstruction (the 'Scheme'). Upon completion of the
combination of the assets and the allotment of STS shares to
Shareholders, the implementation of the Scheme will, subject to
Shareholder approval at general meetings, result in the voluntary
liquidation of the Company. The outcome of the general meetings to
place the Company into liquidation represents a material
uncertainty in the context of the preparation of these financial
statements.
Notwithstanding this, the Directors have assessed the prospects
of the Company for a period of three years
should the scheme not proceed. The Directors have determined
that a three-year period is an appropriate
period over which to provide its viability statement. They
consider that three years is a reasonable time horizon to assess
the continuing viability of the Company and a suitable period over
which to measure the performance of the Company. This three-year
period remains consistent with the planning horizon used by the
Company in managing its activities.
In making this assessment, the Directors have identified the
following factors as potential contributors to ongoing
viability:
-- The principal risks and uncertainties detailed above and the
mitigating controls in place, including the ongoing impact of the
Russia/Ukraine and Israel/Hamas conflicts and the Company's
operational resilience;
-- The ongoing relevance of the Company's investment objective
in the current environment;
-- The level of current and historic ongoing charges incurred by
the Company;
-- The utilisation quantum of the discount control
mechanism;
-- The level of income generated by the Company;
-- The liquidity of the Company's portfolio;
-- The challenges posed by climate change, including any impact
this may have on investee companies.
The Company is fully invested in liquid assets, either in listed
securities or cash. The nature of these mean that even in a severe
market downturn the Company would be able to convert, in a
relatively short period of time, the portfolio into cash sufficient
to meet the Company's operating costs which run at approximately 1%
per annum of net assets. This includes both fixed and variable
costs, the largest single element of which is the variable
management fee which is based on the net asset value of the
Company. Based on these facts the Board has concluded that even in
exceptionally stressed operating conditions, the Company would
easily be able to meet its ongoing operating costs as they fall
due.
Based on the foregoing, the Directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year
period of this viability assessment.
Discount Control Mechanism
The Company's discount control mechanism is to ensure that the
Ordinary shares trade at close to net asset value through a
combination of share buy-backs and the issue of new Ordinary shares
at a premium to net asset value where demand exceeds supply.
This discount control mechanism is operated by Juniper Partners.
The fee is charged to the share premium account on shares issued
and against special/capital reserves on shares repurchased.
Subsequent to the year end, on 2 November 2023, the Company
suspended the operation of the discount control mechanism and any
fees in relation to this to Juniper Partners were stopped. In the
event that the proposed merger does not go ahead, then appropriate
steps will be taken to allow the DCM to recommence in due
course.
By Order of the Board
Juniper Partners Limited
Secretary
23 January 2024
5. STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and Financial Statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
UK-adopted international accounting standards.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing the financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and
understandable, and provide the information necessary for
Shareholders to assess the Company's position and performance,
business model and strategy. In reaching this conclusion the
Directors have assumed that the reader of the Annual Report and
Financial Statements would have a reasonable level of knowledge of
the investment industry and of investment trusts in particular.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, a Directors' Report,
a Corporate Governance Statement and a Directors' Remuneration
Report that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors' confirmations
Each of the Directors in office at 23 January 2024 confirm that,
to the best of their knowledge:
-- the Company's financial statements, which have been prepared
in accordance with UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities, financial
position and profit of the Company; and
-- the Strategic Report and the Directors' Report include a fair
review of the development and performance of the business and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces.
For and on behalf of Troy Income & Growth Trust plc
Brigid Sutcliffe
Chair of the Audit Committee
23 January 2024
STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 September 2023 30 September 2022
Revenue Capital Revenue Capital
Note return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Capital
Gains/(losses) on investments
held at fair value - 6,708 6,708 - (25,889) (25,889)
Net foreign currency
gains - 17 17 - 52 52
Revenue 2
Income from listed investments 6,207 - 6,207 6,666 - 6,666
Other income 13 - 13 - - -
-------- -------- --------- -------- --------- ---------
6,220 6,725 12,945 6,666 (25,837) (19,171)
-------- -------- --------- -------- --------- ---------
Expenses
Investment management
fees (357) (664) (1,021) (465) (864) (1,329)
Other administrative
expenses (687) - (687) (686) - (686)
Finance costs of borrowing (110) (208) (318) (19) (35) (54)
Profit/(loss) before
taxation 5,066 5,853 10,919 5,496 (26,736) (21,240)
Taxation 3 (126) - (126) (109) - (109)
Total comprehensive
income/(expense) 4,940 5,853 10,793 5,387 (26,736) (21,349)
Earnings per Ordinary
share (pence) 5 1.89 2.24 4.13 1.77 (8.80) (7.03)
-------- -------- --------- -------- --------- ---------
The total column of this statement represents the Statement of
Comprehensive Income, prepared in accordance with UK-adopted
international accounting standards. The supplementary revenue
return and capital return columns are both prepared as explained in
the accounting policies. All items in the above statement derive
from continuing operations.
No operations were acquired or discontinued during the year.
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment in predominantly UK
equities.
The accompanying notes are an integral part of these financial
statements.
STATEMENT OF FINANCIAL POSITION
As at As at
30 September 30 September
2023 2022
Note GBP'000 GBP'000
Non-current assets
Investments in ordinary shares 167,983 194,448
Investments held at fair value through
profit or loss 167,983 194,448
---------------------------- ----------------------
Current assets
Accrued income and prepayments 963 890
Trade and other receivables 1,562 3,665
Cash and cash equivalents 803 4,710
Total current assets 3,328 9,265
Total assets 171,311 203,713
Current liabilities
Bank loan (4,000) (5,000)
Trade and other payables (483) (5,398)
Total current liabilities (4,483) (10,398)
Net assets 166,828 193,315
---------------------------- ----------------------
Issued capital and reserves attributable
to equity holders
Called-up share capital 86,878 86,878
Share premium account 53,909 53,851
Special reserves - 9,684
Capital reserve - unrealised 15,613 18,854
Capital reserve - realised 3,989 17,152
Revenue reserve 6,439 6,896
Total equity 166,828 193,315
---------------------------- ----------------------
Net asset value per Ordinary share
(pence) 5 70.42 68.48
STATEMENT OF CHANGES IN EQUITY
For year ended 30 September
2023
Called-up Share Capital Capital
share premium Special reserve- reserve- Revenue Total
capital account reserves unrealised realised reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October
2022 86,878 53,851 9,684 18,854 17,152 6,896 193,315
(Loss)/profit
and total
comprehensive
(expense)/income
for the year - - - (3,241) 9,094 4,940 10,793
Equity dividends
(note 4) - - - - - (5,397) (5,397)
Shares bought
back into
treasury - - (31,817) - - - (31,817)
Discount control
costs (i) - 58 (124) - - - (66)
Transfer from
capital reserves - - 22,257 - (22,257) - -
Balance at 30
September 2023 86,878 53,909 - 15,613 3,989 6,439 166,828
------------ ------------ ------------ ------------- ------------- ------------ -----------
Balance at 1
October
2021 86,878 53,909 38,890 54,428 8,424 6,092 248,621
(Loss)/profit
and total
comprehensive
(expense)/income
for the year - - - (35,574) 8,838 5,387 (21,349)
Equity dividends
(note 4) - - (1,444) - - (4,583) (6,027)
Shares bought
back into
treasury - - (27,872) - - - (27,872)
Discount control
costs - (58) - - - - (58)
Transfer from
capital reserves - - 110 - (110) - -
Balance at 30
September 2022 86,878 53,851 9,684 18,854 17,152 6,896 193,315
------------ ------------ ------------ ------------- ------------- ------------ -----------
(i) Discount control costs are charged against the premium on
shares issued and against the special reserve on shares
repurchased. This includes a reclassification of GBP58,000 between
share premium and special reserve costs relating to previous share
repurchases.
The revenue reserve, special reserves and capital reserve -
realised are distributable. The full amount of each of these
reserves is available for distribution.
The capital reserve has been split between realised and
unrealised on the Statement of Financial Position and the Statement
of Changes in Equity to distinguish between the element of the
reserve that is distributable (realised) and the element of the
reserve that is not distributable (unrealised).
CASH FLOW STATEMENT
Year ended Year ended
30 September 2023 30 September 2022
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Investment income received 6,200 6,876
Other income received 12 -
Administrative expenses paid (1,697) (2,140)
----------------------------------- --------- --------- --------- ---------
Cash generated from operations
(note 9) 4,515 4,736
Finance costs paid (277) (60)
Taxation (203) (179)
----------------------------------- --------- --------- --------- ---------
Net cash inflows from operating
activities 4,035 4,497
----------------------------------- --------- --------- --------- ---------
Cash flows from investing
activities
Purchases of investments (32,774) (51,123)
Sales of investments 65,968 73,668
Capital distributions received
from investee companies - 113
----------------------------------- --------- --------- --------- ---------
Net cash inflows from investing
activities 33,194 22,658
----------------------------------- --------- --------- --------- ---------
Net cash inflows before financing 37,229 27,155
Cash flows from financing
activities
Proceeds from loan - 5,000
Repayment of loan (1,000) -
Cost of share buy backs (34,689) (25,365)
Dividends paid (5,397) (6,027)
Costs incurred on buyback
of shares (67) (56)
----------------------------------- --------- --------- --------- ---------
Net cash outflows from financing
activities (41,153) (26,448)
----------------------------------- --------- --------- --------- ---------
Net (decrease)/increase in
cash and short-term deposits (3,924) 707
Cash and cash equivalents
at the start of the year 4,710 3,951
Effect of foreign exchange
rate changes 17 52
----------------------------------- --------- --------- --------- ---------
Cash and cash equivalents
at the end of the year 803 4,710
----------------------------------- --------- --------- --------- ---------
Notes:
1. Basis of accounting
The financial statements of the Company have been prepared in
accordance with UK-adopted international accounting standards.
The financial statements have been prepared on a going concern
basis and under the historical cost convention, as modified
by the revaluation of financial assets and financial liabilities
held at fair value through profit and loss.
On 28 November 2023, the Board announced that it had agreed
heads of terms with STS Global Income & Growth Trust plc ('STS')
for a combination of the assets of the Company with STS by means
of a scheme of reconstruction pursuant to Section 110 of the
Insolvency Act 1986 (the 'Scheme'). The liquidation of the Company
is not imminent as the Scheme has not been approved by the shareholders
of the Company and STS. However, if the shareholders approve
the Scheme the Company will be liquidated after the assets have
been transferred to STS, which will be the continuing entity.
This represents a material uncertainty which may cast significant
doubt on the Company's ability to continue as a going concern.
If the shareholders do not approve the Scheme it is expected
that the Company would continue as a going concern.
The Financial Statements do not include the adjustments that
would result if the Company was unable to continue as a going
concern. In arriving at the decision on the basis of preparation,
the Board has considered the financial position of the Company,
its cashflow and liquidity position as well as the uncertainty
surrounding the outcome of the Scheme. The Board concluded that,
as the Scheme is contingent on shareholder approval and the
Company is considered solvent in all other regards, there is
no irrevocable path to liquidation and thus going concern remains
the most appropriate basis for preparation.
If it were not appropriate to prepare the Financial Statements
on a going concern basis of accounting then adjustments would
be required to write down assets to their realisable values,
reclassify all assets as current, and a provision for further
liabilities including liquidation costs would be made. In the
Directors' opinion the impact of these adjustments on the Financial
Statements is not expected to be significant.
The financial statements are presented in Sterling which is
regarded as the functional currency and all values are rounded
to the nearest thousand pounds (GBP'000) except where otherwise
indicated.
The principal accounting policies adopted are set out below.
These policies have been applied consistently throughout the
current and prior year.
Where presentational guidance set out in the Statement of Recommended
Practice ('SORP') 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (issued in July 2022)
is consistent with the requirements of IFRS, the Directors have
sought to prepare the financial statements on a basis compliant
with the recommendations of the SORP.
In order better to reflect the activities of an investment trust
company and in accordance with guidance issued by the AIC, supplementary
information which analyses the Statement of Comprehensive Income
between items of a revenue and capital nature has been presented
alongside the Statement of Comprehensive Income. Additionally,
the net revenue of the Company is the measure the Directors
believe appropriate in assessing the Company's compliance with
certain requirements set out in sections 1158 and 1159 of the
Corporation Tax Act 2010.
The Directors confirm that none of the following new standards
or amendments to existing standards, effective for accounting
periods beginning on or after 1 January 2022, have materially
affected the Company's financial statements:
Amendments to IAS 37 (Onerous contracts - cost of fulfilling a contract).
Amendments to IFRS 3 (Reference to the conceptual framework).
The Directors do not anticipate the adoption of the following
standards or amendments to existing standards, effective for
accounting periods beginning on or after 1 January 2023 and
thereafter, will have a material effect on the Company's financial
statements:
Amendments to IAS 1 and IFRS Practice Statement 2 (Disclosure of accounting
policies)
Amendments to IFRS 17 (Initial application of IFRS 17 and IFRS 9 - comparative
information).
Amendments to IAS 8 (Definition of accounting estimates).
Amendments to IAS 12 (Deferred tax related to assets and liabilities
arising from a single transaction).
Amendments to IAS 1 (Classification of liabilities as current or non-current).
Amendments to IAS 1 (Non-current liabilities with covenants).
2. Revenue
2023 2022
GBP'000 GBP'000
Income from listed investments
UK dividend income 5,252 5,783
Income from overseas investments 955 883
Other income 13 -
6,220 6,666
================ =======
The Company received capital special dividends of GBPnil in the
year ended 30 September 2023 (2022 - GBP113,000 from Admiral
Group).
3. Taxation
The taxation charge for the period represents withholding tax
suffered on overseas dividend income.
4. Dividends
2023 2022
GBP'000 GBP'000
Paid from revenue:
Fourth interim dividend for the year ended
30 September 2021 of 0.49p - 1,564
First and second interim dividends for
the year ended 30 September 2022 totalling
0.98p - 3,019
Fourth interim dividend for the year ended
30 September 2022 of 0.50p 1,411 -
First, second and third interim dividends
for the year ended 30 September 2023 totalling
1.52p 3,986 -
Total paid from revenue 5,397 4,583
Paid from distributable capital reserves:
Third interim dividend for year ended
30 September 2022 of 0.49p - 1,444
Total 5,397 6,027
-------- --------
The fourth interim dividend of 0.529p per share, declared
on 14 September 2023 and paid on 31 October 2023, has not
been included as a liability in these financial statements.
We also set out below the total dividend payable in respect
of the financial year, which is the basis on which the
requirements of Section 1159 of the Corporation Tax Act
2010 are considered.
2023 2022
GBP'000 GBP'000
Paid and payable from revenue:
First, second and third interim dividends
for the year ended 30 September 2023 totalling
1.52p 3,986 -
First and second interim dividends for
the year ended 30 September 2022 totalling
0.98p - 3,019
Fourth interim dividend payable for the
year ended 30 September 2023 of 0.529p
(2022 - 0.50p) 1,248 1,411
Total paid and payable from revenue 5,234 4,430
Paid from distributable capital reserves:
Third interim dividend for the year ended
30 September 2022 of 0.49p - 1,444
Total 5,234 5,874
-------- --------
5. Return and net asset value per share
2023 2022
GBP'000 GBP'000
The returns per share are based on
the following figures:
Revenue return 4,940 5,387
Capital return 5,853 (26,736)
Total 10,793 (21,349)
------------- -------------
Weighted average number of Ordinary
shares 261,442,569 303,874,343
------------- -------------
The net asset value per share is based on net assets attributable
to Shareholders of GBP166,828,000 (2022 - GBP193,315,000)
and on 236,890,487 (2022 - 282,284,487) Ordinary shares
in issue at the year end.
6. Financial instruments
The Company held the following categories of financial
instruments as at 30 September 2023:
Level
Level 1 Level 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments 167,983 - - 167,983
Total 167,983 - - 167,983
============ ========================= ================ ============ =======
The Company held the following categories of financial
instruments as at 30 September 2022:
Level
Level 1 Level 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments 194,448 - - 194,448
------------ ------------------------- ---------------- ---------------- -------
Total 194,448 - - 194,448
============ ========================= ================ ================ =======
The above table provides an analysis of financial assets and
financial liabilities based on the fair value hierarchy described
below. Short term balances are excluded from the table as their
carrying value at the reporting date approximates to their fair
value.
Fair Value Hierarchy
In accordance with International Financial Reporting Standards,
investments are classified using the fair value hierarchy:
Level 1 - reflects financial instruments quoted in an active
market.
Level 2 - reflects financial instruments the fair value of which
is evidenced by comparison with other observable current market
transactions in the same instrument or based on a valuation
technique whose variables includes only data from observable
markets.
Level 3 - reflects financial instruments the fair value of which
is determined in whole or in part using a valuation technique based
on assumptions that are not supported by prices from observable
market transactions in the same instrument and not based on
available observable market data.
There were no transfers of investments between levels during the
year ended 30 September 2023 (2022 - none).
7. Ordinary share capital
Ordinary shares
of 25p each
Called-up share capital Number GBP'000
Allotted, called up and fully paid
At 30 September 2023 236,890,487 59,223
Held in treasury 110,621,500 27,655
347,511,987 86,878
-------------- ---------
Allotted, called up and fully paid
At 30 September 2022 282,284,487 70,571
Held in treasury 65,227,500 16,307
-------------- ---------
347,511,987 86,878
-------------- ---------
During the years to 30 September 2023 and 30 September
2022, no new Ordinary shares of 25p each were issued, nor
were any shares re-issued from treasury.
During the year to 30 September 2023 there were 45,394,000
Ordinary shares of 25p each repurchased by the Company
(being 16.1% of the Company's issued share capital at the
start of the year), at a total cost of GBP31,817,000 and
placed in treasury.
During the year to 30 September 2022 there were 37,604,500
Ordinary shares of 25p each repurchased by the Company
(being 11.8% of the Company's issued share capital at the
start of the year), at a total cost of GBP27,872,000 and
placed in treasury.
No shares were purchased for cancellation during the year
(2022 - nil) and at the year-end 110,621,500 shares were
held in treasury (2022 - 65,227,500).
The costs of the operation of the discount control mechanism
of GBP66,000 (2022 - GBP58,000) have been charged against
the premium on shares issued and against special reserves
on shares repurchased. The GBP58,000 charged in the prior
year has been credited against the share premium and reallocated
against the special reserve in the current year as this
related wholly to the repurchase of shares.
8. Transaction costs
The total transaction costs on purchases was GBP134,000 (2022 -
GBP243,000) and on sales GBP23,000 (2022 - GBP29,000).
9. Reconciliation of operating profit/(loss) to operating cash flows
2023 2022
GBP'000 GBP'000
Profit/(loss) before taxation 10,919 (21,240)
Add interest payable 318 54
Adjustments for:
(Gains)/losses on investments (6,708) 25,889
Currency gains (17) (52)
(Increase)/decrease in accrued income & prepayments (15) 200
Increase/(decrease) in trade and other payables 18 (115)
--------- ---------
4,515 4,736
--------- ---------
10. The Company has a GBP15 million (2022: GBP15 million)
revolving loan facility in place with The Royal Bank of Scotland
International Limited which expires in June 2025. At 30 September
2023 GBP4 million had been drawn down at a rate of 1.2% plus SONIA
until 18 January 2024 (2022: GBP5 million drawn down at 1.2% plus
SONIA). The terms of the revolving loan, including interest rate,
are agreed at each draw down. The facility can be cancelled at any
time without cost to the Company.
11. Subsequent events
On 2 November 2023, the Company announced it was suspending the
discount control mechanism and the buyback of its shares.
On 28 November 2023, the Board announced that it had agreed
heads of terms with STS Global Income & Growth Trust plc
('STS') for a combination of the assets of the Company with STS by
means of a scheme of reconstruction pursuant to Section 110 of the
Insolvency Act 1986. The proposals are subject to the approval of
the Shareholders of the Company and STS.
12. This Annual Financial Report announcement is not the
Company's statutory accounts for the year ended 30 September 2023.
The statutory accounts for the year ended 30 September 2022
received an audit report which was unqualified.
The statutory accounts for the financial year ended 30 September
2023 were approved by the Directors on 23 January 2024.
13. The Annual Report will be posted to Shareholders in January
2024 and will be available in due course by download from the
Company's website ( www.tigt.co.uk ).
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January 24, 2024 02:00 ET (07:00 GMT)
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