Investment Co. Regulatory News (INV)

THE INVESTMENT COMPANY PLC

Half-Yearly Financial Report (Unaudited) for the six months ended 31 December 2019

INVESTMENT OBJECTIVE

The Company's investment objective is to provide shareholders with an attractive level of dividends coupled with capital growth over the long term through investment in a portfolio of equities, preference shares, loan stocks, debentures and convertibles.

FINANCIAL CALENDAR

CHAIRMAN'S STATEMENT

Half-Year to 31 December 2019

During the period under review the FTSE All-Share Index increased by 3.44%. The Company's NAV was up by 26.51p, an increase of 7.61 %, which can be analysed as follows:

The Investment Manager has continued to make sound progress in recovering value from the legacy portfolio. In particular, I draw shareholders attention to the Manager's successful endeavours in securing an offer for our Liberty 6% & 9.5% preference shares, a welcome offer for our Aggregated Micro Power Holdings PLC equity holding, and the redemption of our Newcastle Building Society 3.886% Subordinated Notes. Cash proceeds from these sales have been recycled into higher yielding fixed interest and equity holdings. The Investment Managers' Report is set out on pages 4 and 5.

Current income projections anticipate that after covering the costs of running the Company, sufficient income will be available, such that it is likely we will be able to cover the cost of the dividends. This has been a key objective since July 2018, and I am delighted that the Investment Manager has managed the affairs of the Company such that it is likely this objective will be met in this prevailing year.

Your Board believes individuals' capital is scarce, and as such should be respected for its irreplaceability. We have seen savers in recent times suffer at the hands of hubris and unaccountability. We as a Board are conscious that the Company is still too small relative to its relatively fixed cost base, but we will only seek out opportunities that are likely to attract like-minded shareholders, and capital that has a long-term time horizon.

I. R. Dighé

Chairman

10 February 2020

INVESTMENT MANAGER'S REPORT

Performance

During the six month period to 31 December 2019 the NAV increased by 7.61% whilst the share price rose by 16.11%, which was ahead of major UK indices.

The period under review was dominated by two factors. Firstly concerns continued to build over the outlook for US/China trade tariffs and the impact they were having on the global economy. As a result the Federal Reserve took decisive action and cut interest rates three times during the period in order to shield the US economy from the impact of trade wars and the global economic slowdown. Towards the end of the period, following 18 months of fraught trade war negotiations, the US and Chinese administrations have agreed a preliminary phase one trade agreement. This was a major boost for the global economy and investor confidence.

Secondly, in the UK Brexit has dominated the agenda and the debate has pivoted around the potential of a satisfactory 'withdrawal agreement' being passed by Parliament. As the period progressed investor expectation grew of a potential withdrawal agreement being passed through Parliament and as a result Sterling strengthened against the US Dollar & Euro. The decisive general election result saw the government returned to power with a healthy majority which should ensure a resolution to the Brexit saga and a more market friendly agenda. Sterling initially surged on the result but has since drifted back. As we have mentioned in previous reports the general election outcome provides the much sought after clarity that international and UK investors were seeking as they assess the relatively attractive valuations of some UK assets. The FTSE 250, which is dominated by domestic equities such as - housebuilders, utilities and financials - performed strongly in December.

Portfolio

Towards the end of the period we received a takeover bid in cash for Aggregated Micro Power Holdings PLC which is a good outcome for the Company. Firstly we were having difficulty selling the shares in the market and secondly they were not paying a dividend. We have deployed this c.£500,000 of capital into existing portfolio holdings which will generate in excess of £30,000 of income per annum.

In August, we received a cash bid for Greene King from CK Asset Holdings Limited in Hong Kong at a significant premium to our purchase price. As a result, we sold the position at an attractive profit and have reinvested the proceeds into existing holdings such as Vistry (formerly Bovis), Polar Capital, Phoenix Group and New River REIT.

We also had a satisfactory resolution to the two preference share holdings in Liberty Limited and Liberty Retail Limited. These Liberty preference share issues have not been paying interest for a number of years and as a result they were a drag on the Company. More importantly, we have been able to deploy the capital received into existing fixed interest and equity holdings which will provide a significant boost towards covering the administration costs and paying the dividend.

During the period we also increased our exposure to housebuilders - Bellway, Persimmon and Vistry due to the increasingly favourable operating environment which was further enhanced by the well-received general election result and Brexit resolution. The housebuilders are currently paying generous and well covered dividends - both ordinary and specials - and are attractively valued.

We took the opportunity to take some profits in Restaurant Group as the price rise from our initial purchase made the yield less attractive and the company is still in the midst of restructuring itself in order to attract customers in the increasingly competitive casual dining market. We also took the opportunity to add to existing holdings in New River REIT, Phoenix Group and Standard Life Aberdeen. We were fully invested ahead of the general election due to the widely anticipated Conservative majority and this has been a boost for the portfolio.

In the fixed interest part of the portfolio we sold the EI Group 7.5% March 2024 at an attractive level following a strong performance over the last year. EI Group has been acquired by the Stonegate Pub Company. The bond is callable in September 2020 at a level below our sale price.

The Newcastle Building Society 3.886% December 2019 Subordinated Notes were redeemed by the company as planned. The yield was relatively low and the redemption has allowed us to re-allocate the returned capital into existing holdings within the portfolio that offer higher yields. These include additions to Lloyds Bank 7.625% Perpetual, Premier Oil 6.5% 2021 and Ecclesiastical Insurance 8.625% Preference shares.

Future Prospects

Fears of a global recession have eased somewhat with better economic data from the UK and US. In response, bond yields have backed off from their lows. Notwithstanding geo-political risks, the backdrop is generally supportive for equity markets although investors have become more discriminating in their evaluation of growth company ratings. This has led to a better period of performance for more value oriented stocks.

With the UK General Election now decided, the political uncertainty has been largely removed. However, the finer details of Brexit still need to be negotiated and there will undoubtedly be continuing concerns about the UK's long-term relationship with Europe and the progress made in agreeing trade deals with the rest of the world. With the Conservatives having such a large working majority, the major risk to the UK economy would appear to be a hard or no deal Brexit. This will no doubt be reflected in how Sterling moves against other currencies over the coming year.

M. Foster, J. Harrison, J Dieppe

Fiske plc

10 February 2020

TWENTY LARGEST INVESTMENTS

At 31 December 2019

# Issues with unrestricted voting rights.

The Group has a total of 59 portfolio investments holdings in 56 companies

INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT

Interim Management Report

The important events that have occurred during the period under review and their impact on the financial statements are set out in the Chairman's Statement on page 3 and the Investment Manager's Report on pages 4 and 5.

In the view of the Board, the principal risks facing the Group are substantially unchanged since the date of the Report and Accounts for the year ended 30 June 2019 and continue to be as set out in that report. Risks faced by the Group include, but are not limited to, market risk (which comprises market price risk, interest rate risk and liquidity risk). Details of the Company's management of these risks and exposure to them is set out in the Company's Report and Accounts for the year ended 30 June 2019.

There have been no significant changes in the related party disclosures set out in the Annual Report.

Responsibility Statement

The Directors confirm that to the best of their knowledge:

·; the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

·; this Half-Yearly Financial Report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions that could do so.

This Half-Yearly Financial Report was approved by the Board of Directors on 10 February 2020 and the above responsibility statement was signed on its behalf by I. R. Dighé, Chairman.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 December 2019

The total column of this statement is the condensed Consolidated Statement of Total Comprehensive Income of the Group prepared in accordance with International Financial Reporting Standards ("IFRS").The supplementary revenue and capital columns are prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies ("AIC SORP").

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

The notes on pages 13 to 16 form part of these condensed financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2019

CONDENSED CONSOLIDATED BALANCE SHEET

As at 31 December 2019

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 December 2019

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 31 December 2019

1. Significant accounting policies

Basis of Preparation

The condensed consolidated financial statements, which comprise the unaudited results of the Company and its wholly owned subsidiaries, Abport Limited and New Centurion Trust Limited, together referred to as the "Group", have been prepared in accordance with IFRS, as adopted by the United Kingdom, and as applied in accordance with the provisions of the Companies Act 2006. The financial statements have been prepared in accordance with the AIC SORP, except to any extent where it is not consistent with the requirements of IFRS. The accounting policies are as set out in the Report and Accounts for the year ended 30 June 2019.

The half-year financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting".

The financial information contained in this half year financial report does not constitute statutory accounts as defined by the Companies Act 2006.The financial information for the periods ended 31 December 2019 and 31 December 2018 have not been audited or reviewed by the Company's Auditor. The figures and financial information for the year ended 30 June 2019 are an extract from the latest published audited statements, and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and include a report of the Auditor, which was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.

Going Concern

The Directors have made an assessment of the Group's ability to continue as a going concern and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future (being a period of 12 months from the date these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern, having taken into account the liquidity of the Group's investment portfolio and the Group's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance).Therefore, the financial statements have been prepared on the going concern basis and on the basis that approval as an investment trust will continue to be met.

Segmental Reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business.

The Group primarily invests in companies listed in the UK.

2. Income

3. Return per Ordinary Share

Returns per share are based on the weighted average number of shares in issue during the period. Normal and diluted return per share are the same as there are no dilutive elements on share capital.

4. Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the period.

The Board declared an interim dividend of 3.75p per ordinary share, which was paid on 19 February 2020 to shareholders registered at the close of business on 17 January 2020. This dividend has not been included as a liability in these financial statements.

5. Ordinary Share Capital

The Company does not hold any shares in treasury as at 31 December 2019 (31 December 2018: Nil and 30 June 2019: Nil).

6. Net Asset Value per Ordinary Share

Net asset value per ordinary share is based on net assets at the period end and 4,772,049 (31 December 2018: 4,772,049 and 30 June 2019: 4,772,049) ordinary shares in issue at the period end excluding shares held in treasury if any.

7. Investment Management fee

The management fee payable monthly in arrears by the Company to the Investment Manager, Fiske plc is calculated at the rate of one-twelfth of 0.75% of the NAY as at the last business day of each calendar month.

At 31 December 2019 an amount of £11,175 (31 December 2018: £7,500 and 30 June 2019: £10,402) was outstanding and due to the Investment Manager.

8. Fair Value Hierarchy

The fair value is the amount at which an asset could be sold in an ordinary transaction between market participants at the measurement date, other than a forced or liquidation sale. The Group measures fair values using the following hierarchy that reflects the significance of the inputs used in making the measurements.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices, unadjusted in active markets for identical assets and liabilities.

Level 2 - valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included in Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data for the asset or liability.

The table below sets out fair value measurement of financial instruments as at 31 December 2019, by the level in the fair value hierarchy into which the fair value measurement is categorised.

Reconciliation of Level 3 investments

The following table summarises Level 3 investments that were accounted for at fair value.

9. Transactions with the Investment Manager and related parties

As disclosed in note 7 a fee is paid to the Investment Manager in respect of the services provided to the Company.