REG - Troy Inc & Gwth Plc - Annual Results
24/01/2024 07:00
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RNS Number : 6725A Troy Income & Growth Trust Plc 24 January 2024
TROY INCOME & GROWTH TRUST PLC
LEI: 213800HLNMQ1R6VBLU75
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 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 & DIVIDENDS
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 at Valuation at
30 September 30 September
2022 Purchases Sales Increase 2023
£'000 % £'000 £'000 £'000 £'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 is responsible for deciding the investment To manage this risk the Managers provide an explanation of significant stock
strategy to fulfil the Company's objective and monitoring the performance of selection decisions and the rationale for the composition of the investment
the Managers. An inappropriate strategy or poor execution of strategy might portfolio, including responsible investment considerations. The Board also
lead to long-term underperformance against the comparator index and the receives and reviews regular reports showing an analysis of the Company's
Company's peer group. performance, both in income and capital growth terms, against the FTSE
All-Share Index (total return) and its 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.
Market risk: Market risk arises from uncertainty about the future prices of The Board monitors and maintains an adequate spread of investments in order to
the Company's investments. minimise the risks or factors specific to a particular 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: Like most other investment trusts, the Company The Board reviews the performance of its service providers, their internal
has no employees. The Company therefore relies on services provided by third controls and their compliance with agreements on a regular basis.
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 risk arises from ongoing share buybacks reducing The Board reviews the performance of the Company at each Board meeting along
the size of the Company threatening its viability. with the business development and marketing strategy in order to make the
Company 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.
Regulatory risk: Breach of regulatory rules could lead to the suspension of The Company Secretary monitors the Company's compliance with all relevant
the Company's London Stock Exchange listing, financial penalties or a regulations and compliance with the principal rules is reviewed by the
qualified audit report. Breach of sections 1158 and 1159 of the Corporation Directors at each Board meeting.
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
£68,000 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 £250 million and 0.50% of net assets above
£250 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
£15 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 £15
million to £20 million at any time, subject to the bank's credit approval,
thus avoiding the expense of undrawn commitment fees on this additional £5
million. As at 30 September 2023, £4 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
Note Revenue return Capital return Total Revenue return Capital return Total
£'000 £'000 £'000 £'000 £'000 £'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 £'000 £'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
£'000 £'000 £'000 £'000 £'000 £'000 £'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 £58,000 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
£'000 £'000 £'000 £'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
(£'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
£'000 £'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 £nil in the year ended 30
September 2023 (2022 - £113,000 from Admiral Group).
3. Taxation
The taxation charge for the period represents withholding tax suffered on
overseas dividend income.
4. Dividends
2023 2022
£'000 £'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 - 3,019
totalling 0.98p
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 3,986 -
totalling 1.52p
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
£'000 £'000
Paid and payable from revenue:
First, second and third interim dividends for the year ended 30 September 2023 3,986 -
totalling 1.52p
First and second interim dividends for the year ended 30 September 2022 - 3,019
totalling 0.98p
Fourth interim dividend payable for the year ended 30 September 2023 of 0.529p 1,248 1,411
(2022 - 0.50p)
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
£'000 £'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 £166,828,000 (2022 - £193,315,000) 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 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'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 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'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 £'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 £31,817,000 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 £27,872,000 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 £66,000 (2022
- £58,000) have been charged against the premium on shares issued and against
special reserves on shares repurchased. The £58,000 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 £134,000 (2022 - £243,000) and
on sales £23,000 (2022 - £29,000).
9. Reconciliation of operating profit/(loss) to operating cash flows
2023 2022
£'000 £'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 £15 million (2022: £15 million) revolving loan
facility in place with The Royal Bank of Scotland International Limited which
expires in June 2025. At 30 September 2023 £4 million had been drawn down at
a rate of 1.2% plus SONIA until 18 January 2024 (2022: £5 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 (http://www.tigt.co.uk) ).
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