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LONDON (Alliance News) - The Investment Company PLC Wednesday said its net asset value increased to 394.4 pence from 342.6p , a rise of 15.1%, in the year ended June 30.
In addition, the company, which has also paid four interim dividends amounting to 20.7p, representing a 6.0% yield on the NAV at the end of June 2013, said its total return in the year was therefore 19.5%.
"Following the reorganisation, and pursuant to the new investment policy, much of the additional capital raised at the time of the reorganisation has been invested in the equity of some promising quoted companies, many with attractive dividend yields," Chairman David Thomson said in a statement.
"In parallel, the portfolio still substantially comprises a range of preference shares, loan stocks, debentures and notes, which may also have the right to convert into the equity of the underlying issuer. At the end of June 2013, our largest holdings by a substantial margin were in Lloyds Banking Group PLC enhanced capital notes. An offer from Lloyds Banking Group to convert such instruments into a different note, gave us a good opportunity to reduce this position, realising substantial capital gains," Thomson said.
"The new strategy has made a good start, as reflected in the growth in NAV over the year. There is not a single representative benchmark index of this portfolio of investments. However, shareholders will note that the FTSE Actuaries Government Securities UK Gilts All Stocks Index rose 2.3% on a total return basis over the year, and the total return on the FTSE All-Share Index was 13.1%," David Thomson added.
The chairman also said the company believes there will be more opportunities to invest in convertible preference and convertible loan stocks.
"We believe the best of these will be particularly attractive to investors, as they often pay premium yields, and also offer investors scope to participate in the rise of the underlying equity if it appreciates markedly," Thomson said.
He also said the company intends to pay four dividends totalling some 23.6p in the current year. That intention is based on a NAV of 394.4p at the end of June 2014.
"Currently the dividend payable by the company each year is calculated as 6% of the NAV at the start of each year. Given that the asset value of the company could fluctuate significantly each year, the directors are considering modifying this in future years so that the dividend payable might grow more sustainably over the longer term," Thomson said.
The chairman said there are still opportunities for the company to deliver attractive returns, even though "asset prices have been boosted by the policies of central banks".
"Clearly the company is not immune from market fluctuations, but we believe the preference share and loan stock market in particular still offers a good mix of premium income along with the potential for capital gain," Thomson said.
The Investment Company shares Wednesday closed down 0.8% at 399.13p.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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