Dunedin Income maintains divi after tax rebate

28th Mar 2011 16:35

Dunedin Income Growth, the largely UK-focused investment trust, bested the performance of its benchmark index last year by achieving a 19.6% increase in its net asset value (NAV) per share in total return terms. The FTSE All-Share Index's total return in the year to 31 January was 18.1%.NAV per share at the end of January 2011 stood at 226.81p from 198.80p a year earlier, calculated on a basis that prices debt at market value. During the course of the year the trust saw the income generated from option writing grow significantly, while it also received a boost to the coffers from the resolution of a long standing dispute with the tax man which resulted in a payment to the company of £2.42m, of which £1.84m was treated as income. With debt valued at par, potential gearing has decreased from 9.9% at the end of the January 2010 to 9.7% and, on a pure equity basis, allowing for the trust's small bond portfolio and its cash holdings, it now stands closer to 2.7%. The company's final dividend has been left unchanged, leading to an unchanged full year dividend of 10.25p. The preservation of the dividend level was in some doubt a year earlier as it was unclear whether the payment would be covered by earnings. Thanks to the settlement from the taxman, the fiscal 2010/11 dividend was 99% covered by earnings but without this windfall some 13% of the total dividend payment would have been paid for by dipping into reserves. - - - jh