TI1.L Regulatory News (TI1)

4 September 2019

TRIAN INVESTORS 1 LIMITED(the "Company")

Interim Results

Interim Report and Unaudited Condensed Financial Statements for the period from 1 January 2019 to 30 June 2019

The Company announces its results for the six month period ended 30 June 2019. Further information is available on the Company's website www.trianinvestors1.com.

For further information, please contact:

Estera International Fund Managers (Guernsey) Limited(Administrator and Company Secretary)+44 (0)1481 742 742Mariana Enevoldsen

Overview of the Company

Trian Investors 1 Limited (the "Company") is a Guernsey-domiciled limited company incorporated on 24 August 2018. The Ordinary Shares of the Company were admitted for trading on the Specialist Fund Segment of the London Stock Exchange ("SFS") on 27 September 2018 ("Admission").

The investment objective of the Company, through its investment in Trian Investors 1, L.P. (Incorporated) (the "Investment Partnership"), is to generate significant capital appreciation through the investment activity of Trian Investors Management, LLC (the "Investment Manager") and its parent, Trian Fund Management, L.P. (collectively, "Trian"). Trian's investment strategy is to act as a highly engaged shareowner at the companies in which it invests, combining concentrated public equity ownership with operational expertise.

In accordance with its investment policy, the Company has made a substantial minority investment through the Investment Partnership, in the amount of approximately £250 million, in Ferguson plc ("Ferguson"), where Trian believes it has developed a compelling set of operational and strategic initiatives that will help generate significant shareholder value.

Chairman's Statement

For the period from 1 January 2019 to 30 June 2019

Dear Shareholder,

On behalf of the Board of Directors (the "Board"), I am pleased to present to you the Interim Report of the Company covering the period from 1 January 2019 to 30 June 2019.

On 13 June 2019, the Board announced that funds managed by Trian, including the Investment Partnership through which the Company invests, had acquired a 5.98% interest in the shares of Ferguson, valued at approximately £736 million at that time. This followed Trian's TR-1 notification to Ferguson disclosing that as at 10 June 2019, funds managed by Trian had acquired in the aggregate a 5.14% interest in the shares of Ferguson.

The Board had previously approved Trian's recommendation of a potential investment in Ferguson, and as at 12 June 2019, the Company had invested approximately £250 million in Ferguson at an average cost basis of £52.85 per share. In addition, because Ferguson receives the vast majority of its revenue in U.S. Dollars, the Company through the Investment Partnership entered into a currency hedge, in the form of an option to purchase Pounds Sterling, to offset a portion of the Company's U.S. Dollar exposure resulting from its investment in Ferguson, although there is no assurance that this hedging transaction will be effective at managing currency exposure.

Ferguson has approximately $22 billion in annual sales and 34,000 employees worldwide and is the largest distributor of plumbing and heating products in North America. Trian has advised the Board that it believes Ferguson is a compelling investment opportunity due to its attractive business model and secular growth opportunity and its industry's highly fragmented structure, and that it believes Ferguson trades at a discount to comparable U.S. peers.

Trian has kept the Board informed about its engagement with Ferguson's management team and board of directors. At the time of this writing, the Board has noted Ferguson's announcement on 3 September 2019 that the Group intends to demerge its UK operations, subject to shareholder approval, and that Kevin Murphy, CEO of Ferguson's US operations, will succeed John Martin as Group CEO as at 19 November 2019. In addition, Ferguson announced that in light of the fact that Ferguson will be wholly focused on North America following the demerger, its board is considering the most appropriate listing structure for the Group going forward. Trian has advised the Board that it is pleased with these developments.

As at 30 June 2019, the shares of Ferguson appreciated in value since the Company made its investment, which has led to an increase in the Company's net asset value. As at 30 June 2019, the Company's net asset value was £278.4 million, or 102.89 pence per ordinary share, based on a closing price of £56.00 per Ferguson ordinary share as at 28 June 2019 (the last trading day preceding 30 June 2019).

The principal risks and uncertainties of the Company are unchanged from 31 December 2018, and further details may be found in the Report of the Directors within the Annual Report and Audited Financial Statements of the Company for the period ended 31 December 2018. The Directors will continue to assess the principal risks and uncertainties relating to the Company for the remaining six months of the current fiscal year in light of the Ferguson investment and associated currency hedge, but currently expects them to remain substantially the same.

The Company intends to continue pursuing the strategy set out in its prospectus. We are grateful for your continued support and will keep you informed of the status of our investment in Ferguson as appropriate.

Yours sincerely,

Chris Sherwell

Chairman

3 September 2019

Directors' Responsibility Statement

Responsibility Statement

The Directors are responsible for preparing the Interim Report and Unaudited Condensed Interim Financial Statements in accordance with applicable law and regulations. The Board confirms that to the best of their knowledge:

• The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

 • The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and their impact on the condensed financial statements and description of principal risks and uncertainties for the remaining six months of the year); and

 • The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein); and

 • The condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer as required by DTR 4.2.10R.

The Board is 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 that enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008 (as amended). The Board is also responsible for the maintenance and integrity of the corporate and financial information included on the Company's website (www.trianinvestors1.com). Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Going Concern

Under the UK Corporate Governance Code and applicable regulations, the Directors are required to satisfy themselves that it is reasonable to assume that the Company is a going concern.

The Directors monitor the capital and liquidity requirements of the Company on a regular basis. They have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the ongoing cash flows and the level of cash balances as at the reporting date as well as taking forecasts of future cash flows into consideration and are of the opinion that the Company has adequate resources to continue its operational activities for the foreseeable future.

Based on these sources of information and their own judgement, the Directors believe it is appropriate to prepare the financial statements of the Company on a going concern basis.

On behalf of the Board

Chris Sherwell

Chairman

3 September 2019

Independent Review Report

INDEPENDENT REVIEW REPORT TO TRIAN INVESTORS 1 LIMITED

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly Interim Report for the six months ended 30 June 2019 which comprises the Unaudited Condensed Statement of Comprehensive Income, the Unaudited Condensed Statement of Financial Position, the Unaudited Condensed Statement of Changes in Equity, the Unaudited Condensed Cash Flow Statement and related notes 1 to 15. We have read the other information contained in the half-yearly Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly Interim Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly Interim Report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in the half-yearly Interim Report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly Interim Report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly Interim Report for the six months ended 30 June 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

St Peter Port, Guernsey

3 September 2019

Unaudited Condensed Statement of Financial Position

As at 30 June 2019

The Unaudited Condensed Interim Financial Statements were approved by the Board and authorised for issue on 3 September 2019.

The notes form an integral part of these financial statements.

Chris Sherwell Mark Thompson

Director Director

Unaudited Condensed Statement of Comprehensive Income

For the period from 1 January 2019 to 30 June 2019

All activities derive from continuing operations.

The notes form an integral part of these financial statements.

Unaudited Condensed Statement of Changes in Equity

For the period from 1 January 2019 to 30 June 2019

For the period from 24 August 2018 to 31 December 2018

The notes form an integral part of these financial statements.

Unaudited Condensed Statement of Cash Flows

For the period from 1 January 2019 to 30 June 2019

The notes form an integral part of these financial statements.

Notes to the Unaudited Condensed Interim Financial Statements

For the period from 1 January 2019 to 30 June 2019

1. Corporate information

Trian Investors 1 Limited (the "Company") is incorporated in and controlled from Guernsey as a company limited by shares with registered number 65419. The shares of the Company are admitted to the Specialist Fund Segment of the London Stock Exchange (the "SFS").

2. Accounting policies

The principal accounting policies applied in the preparation of these Unaudited Condensed Interim Financial Statements are set out below.

Basis of preparation

The annual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union, applicable legal and regulatory requirements of Guernsey Law and under the historical cost convention as modified by the revaluation of certain financial assets and liabilities. The accounting policies and valuation principles adopted are consistent with those of the previous financial period.

These condensed interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting. The same accounting policies and methods of computation are followed in the interim financial statements as compared with the annual financial statements. These condensed interim financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements as of 31 December 2018.

Going concern

The Directors monitor the capital and liquidity requirements of the Company on a regular basis. They have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the ongoing cash flows and the level of cash balances as at the reporting date as well as taking forecasts of future cash flows into consideration and are of the opinion that the Company has adequate resources to continue its operational activities for the foreseeable future.

Based on these sources of information and their own judgement, the Directors believe it is appropriate to prepare the interim financial statements of the Company on a going concern basis.

New and amended standards and interpretations applied

IFRS 16: Leases was applied in the current period but did not have a material impact as the Company does not have any lease contracts.

New and amended standards and interpretations not applied

The following new and amended standards and interpretations in issue are applicable to the Company but are not yet effective or have not been adopted by the European Union and therefore, have not been adopted by the Company:

- IFRS 17: Insurance Contracts (effective 1 January 2021)

The Company has considered the IFRS standards and interpretations that have been issued, but are not yet effective. None of these standards or interpretations are likely to have a material effect on the Company, as the Company does not expect to carry out any transactions that fall within their scope.

Accounting for subsidiaries

As explained in more detail below, the Company is an investment entity and accordingly accounts for its investments in subsidiaries as investments at fair value through profit and loss.

Segment reporting

The decision maker is the Board of the Directors of the Company (the "Board"). The Board is of the opinion that the Company is engaged in a single segment of business, being the investment through the Investment Partnership in a target company ("Target Company").

Revenue recognition

All income is accounted for on an accruals basis and recognised in the Statement of Comprehensive Income.

Expenses

Expenses are accounted for on an accruals basis. Expenses borne by subsidiaries are reflected in the Statement of Comprehensive Income through the revaluation of the investments.

All costs associated with the issue of shares are netted off against share capital in the Statement of Changes in Equity.

Dividends to shareholders

Dividends are accounted for in the period in which they are declared and approved by the Board.

Financial instruments

The classification of financial assets at initial recognition depends on the purpose for which each financial asset was acquired and its characteristics.

The Company's only significant financial assets comprise cash and cash equivalents and investments in subsidiaries held at fair value through profit and loss.

Cash and cash equivalents

Cash at bank and short term deposits which are held to maturity are carried at cost. Cash and cash equivalents consist of cash in hand, short-term deposits in banks and investments in money market funds with an original maturity of three months or less.

Receivables and prepayments

Receivables are initially recognised at fair value. An allowance for impairment is measured under the general approach under IFRS 9. At initial recognition, an impairment allowance is required for expected credit losses resulting from default events that are possible within the next 12 months. In the event of a significant increase in credit risk, an allowance is required for expected credit losses resulting from all possible default events over the expected life of the financial instrument.

Payables and accruals

Payables and accruals are recognised initially at fair value plus transaction costs and are subsequently measured at amortised cost using the effective interest rate method.

Investments at fair value through profit and loss

i. Classification

As explained in more detail below, the Company is an investment entity and accordingly accounts for its investment in subsidiaries as investments at fair value through profit and loss.

ii. Recognition

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investment.

iii. Measurement

Investments treated as "investments at fair value through profit or loss" will initially be recognised at fair value, being the fair value of consideration given. Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. Realised and unrealised gains or losses will be recognised in the Statement of Comprehensive Income.

iv. Fair value estimation

The level in the fair value hierarchy within which the financial assets or financial liabilities are categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.

Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

The fair value hierarchy has the following levels:

- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3 - inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Functional currency

Items included in the financial statements are measured using Pounds Sterling which is the currency of the primary economic environment in which the Company operates.

At each statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Transactions denominated in foreign currencies are translated into Pounds Sterling at the rate of exchange presiding at the date of the transaction. Exchange differences are recognised in the Statement of Comprehensive Income in the period in which they arise.

Significant accounting judgements, estimates and assumptions

The preparation of the interim financial statements requires the Directors to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for revenue and expenses during the period. The nature of the estimation means that actual outcomes could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The following critical judgements apply to the Company's investment.

Critical judgements in applying the Company's accounting policies - investment entity exception:

The Directors have considered whether the Company meets the definition of an investment entity as stipulated in the provisions of IFRS 10. Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries, other than those that provide investment services to the Company and do not themselves meet the definition of an investment entity, at fair value through profit or loss rather than consolidate them.

When entities are formed in connection with each other, the criteria for qualification as an investment entity is applied to the structure as a whole rather than for the entity in isolation.

The criteria that define an investment entity are, as follows:

• An entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;

• An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

• An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.

The Company's purpose is to invest through Trian Investors 1, L.P. (Incorporated) (the "Investment Partnership") in a Target Company for capital appreciation and it will measure performance (of the Target Company) on a fair value basis. The Company has made an investment in a Target Company, Ferguson plc ("Ferguson"), through its wholly owned subsidiary, Trian Investors 1 Midco Limited ("Midco"), which in turn invested in the Investment Partnership. The Board has assessed whether the Company has all the elements of control as prescribed by IFRS 10 in relation to the Company's investment in the Investment Partnership and has concluded that the Company does have control of the Investment Partnership. Midco and the Investment Partnership are therefore both classified as subsidiaries of the Company. The Board has also assessed that the Company meets the criteria of an investment entity and therefore the subsidiaries are recorded at fair value through profit and loss rather than consolidated. The Board's determination that the Company is classified as an investment entity involves a degree of judgement due to the complexity within the wider structure of the Company, Midco and the Investment Partnership.

3. Income tax

The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2008 and is charged an annual exemption fee of £1,200.

4. Investment at fair value through profit or loss

As at 30 June 2019, the Company held 264,000,000 Ordinary Shares in Midco which were subscribed for at 100 pence per share, and Midco has contributed £264,000,000 to the Investment Partnership. As at 30 June 2019, Midco holds 99.83% of the commitment in the Investment Partnership.

Investments at fair value through profit or loss comprise Midco's pro rata portion of the fair value of the Investment Partnership's Ferguson investment, currency option, cash and working capital balance, including the incentive allocation ("Incentive Allocation") allocable from the Investment Partnership to Trian Investors 1 SLP, L.P. The Investment Partnership's investment in Ferguson is currently treated as a "Stake Building Investment". If the investment continues to be a "Stake Building Investment" until realisation, the Incentive Allocation will be equal to 20% of net returns on the investment, payable after the Investment Partnership has distributed to its partners an amount equal to the aggregate capital contributions made in respect of the investment (excluding any capital contributions attributable to management fees). The Investment Partnership's investment in Ferguson, unless otherwise agreed with the Company, will cease to be considered a "Stake Building Investment", and will instead be considered an "Engaged Investment", if and when Trian Investors Management, LLC (the "Investment Manager") obtains representation on Ferguson's board of directors, through one or more partners of Trian Fund Management, L.P. ("Trian Management"). If the investment becomes an "Engaged Investment", the Incentive Allocation will be equal to 10% to 25% of the Investment Partnership's net returns on the investment (excluding any capital contributions attributable to management fees), as set forth in greater detail in the Company's Prospectus dated 21 September 2018 (the "Prospectus"). In addition, the Investment Partnership has invested in a £125,000,000 currency call option to offset a portion of the Investment Partnership's U.S. Dollar exposure arising from its investment in Ferguson, which receives the vast majority of its revenues in U.S. Dollars. The option offers protection against a weakening in the U.S. Dollar against Pounds Sterling and matures in June 2020.

Summary financial information for Midco's pro rata share of the Investment Partnership

5. Fair value

IFRS 13 'Fair Value Measurement' requires disclosure of fair value measurement by level.

The level in the fair value hierarchy within which the financial assets or financial liabilities are categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.

Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

The only financial instruments carried at fair value are the investments which are fair valued at each reporting date.

Midco's investment in the Investment Partnership has been classified within Level 2 as the Investment Partnership primarily invests in quoted securities which are classified within Level 1. The amount of Midco's investment in the Investment Partnership classified under Level 2 as at 30 June 2019 is £276,047,000. The amount of Midco's pro rata portion of the Investment Partnership's investments that is classified within Level 1, consisting of the Investment Partnership's investment in Ferguson Ordinary Shares, is £264,459,000, and the amount that is classified within Level 2, consisting of the Investment Partnership's investment in a currency option, is £3,008,000, in each case as at 30 June 2019.

Transfers during the period

A reconciliation of fair value measurements in Level 2 is set out in the following table. Due to the nature of the investments, they are always expected to be classified under Level 2. 

Valuation techniques

The value of Midco's investment in the Investment Partnership is based on the value of Midco's limited partner capital account within the Investment Partnership. This is based on the components within the Investment Partnership, principally the value of the underlying investee company, the currency option and cash. Any fluctuation in the value of the underlying investee company will directly impact on the value of Midco's investment in the Investment Partnership.

Valuations are determined in accordance with a pricing policy agreed between the Directors and the Investment Manager from time to time. Calculations will be made in accordance with IFRS principles or as otherwise determined by the Board.

In accordance with the Investment Partnership Agreement dated as of 21 September 2018 (the "Investment Partnership Agreement"), for the purposes of calculating the net asset value of the Investment Partnership, its assets will be valued on the following basis:

·; Securities which are listed or quoted on a securities exchange will be valued by the Investment Manager at their last sales price published by the principal securities exchange on which they are traded on the date of determination (or, if the date of determination is not a date upon which that securities exchange was open for trading, on the last prior date on which that securities exchange was so open not more than ten (10) days prior to the date of determination).

·; If no sales of the relevant securities occurred on the foregoing dates, the securities will be valued at the last "bid" price for long positions and the last "ask" price for short positions on the principal securities exchange on which they are traded on the date of determination (or, if the date of determination is not a date upon which that securities exchange was open for trading, on the last prior date on which it was so open not more than ten (10) days prior to the date of determination).

·; Securities which are not listed or quoted on a securities exchange will be valued by the Investment Manager, at their representative "bid" quotations if held long by the Investment Partnership and representative "ask" quotations if held short by the Investment Partnership, unless the securities are included in an organised over-the-counter trading system, in which case they will be valued based upon their last sales prices as reported on such trading system (if these prices are available) not more than ten (10) days prior to the date of determination.

·; The fair market value of all other securities and assets for which market quotations are not readily available will be reasonably determined in good faith by Trian Investors 1 General Partner, LLC (except in the case of the dissolution of the Investment Partnership where the fair market value of such assets will be determined by an independent financial expert). The valuation of the currency option is performed by utilising an external data source which uses proprietary software and valuation models to perform the fair value calculation. The valuation model used to value the foreign exchange option is the Black-Scholes model.

The Company approves the valuations performed by the Investment Manager and monitors the range of reasonably possible changes in significant observable inputs on a regular basis.

6. Receivables and prepayments

7. Trade and other payables

The carrying value of trade payables and other payables approximates their fair value.

8. Share capital and capital management

Capital risk management

The Company's objective for capital risk management is to safeguard the Company's ability to continue as a going concern and to provide returns for shareholders. The Company considers its capital to consist of the shares issued and retained earnings.

The Company does not currently have an active discount management policy. The Board regularly reviews net asset value, as calculated in accordance with IFRS, and share price performance in the context of market conditions with input from the Investment Manager and Numis Securities Limited and Jefferies International Limited (collectively, the "Corporate Brokers"). The Company expects that there will continue to be an ongoing dialogue between the Corporate Brokers and the Board about investors' views on any discount or premium and the need to introduce an active discount or premium management policy.

The Company has the ability to hold its own shares in treasury, and may use this ability for any future discount or premium management policy. The Company's Articles of Incorporation and the Companies Law do not limit the number of shares held in treasury, provided that at least one share of any class is held by a person or company other than the Company.

Ordinary shares of no par value

Ordinary shares of no par value

9. Net Asset Value per Share

The IFRS NAV per Share is arrived at by dividing the IFRS Net Assets by the number of Ordinary Shares in issue.

10. Earnings per share

The comparative earnings per share is based on the profit of the Company for the period and on the weighted average number of Ordinary Shares for that period. The earnings per share disclosed are not annualised.

There were no dilutive potential Ordinary Shares in issue as at 30 June 2019 or 31 December 2018.

11. Financial risk management

Financial risk management objectives

The Company's activities expose it to various types of financial risk, principally market risk, liquidity risk and credit risk. The Board has overall responsibility for the Company's risk management and sets policies to manage those risks at an acceptable level.

Financial risk factors

The Company's investment objective is to realise capital growth from its investment in the Target Company with the aim of generating significant capital return for shareholders. At present the Company's only significant financial assets are those held through the Investment Partnership, via Midco, in Ferguson, the currency option and cash and cash equivalents held at both levels.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company manages its credit risk by scrutinising the financial standing of counterparties with which it enters into transactions, using external credit ratings where available. Credit risk is reviewed periodically to identify balances that may have become impaired or uncollectable.

The Company is exposed to credit risk through its balances with banks and its holdings of money market funds which are classified as cash equivalents for the purposes of these financial statements. The table below shows the Company's material cash balances and the short-term issuer credit rating or money-market fund credit rating as at the period end date:

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company maintains a prudent approach to liquidity management by maintaining sufficient cash reserves to meet foreseeable working capital requirements.

As at 30 June 2019 and 31 December 2018, the Company had no financial liabilities other than trade and other payables. The Company had sufficient cash reserves to meet these obligations. The following table details these obligations:

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of market price changes. The Company is exposed to market price risk, currency risk and interest rate risk.

Market price risk

Market price risk arises as a result of the Company's exposure to the future values of the share price of Ferguson. It represents the potential loss the Company may suffer through investing in Ferguson. If the price of Ferguson moved by 10% the effect on the net asset value of the Company would be an increase or decrease of £26,446,000 (31 December 2018: £ nil).

Currency Risk

At 30 June 2019, the Company had exposure to currency risk through its investment through the Investment Partnership into Ferguson, which receives the vast majority of its revenue in U.S. Dollars. The Company through the Investment Partnership entered into a currency hedge, in the form of an option to purchase £125,000,000 for US$165,875,000, to offset a portion of the U.S. Dollar exposure resulting from the Company's investment in Ferguson, although there is no assurance that the hedging transaction will be effective at managing currency exposure. The option expires in June 2020.

Interest rate risk

The Company is subject to risks associated with changes in interest earned on its cash and cash equivalents which it seeks to mitigate by monitoring the placement of cash balances on an on-going basis in order to maximise the interest rates obtained.

As at 30 June 2019, the total interest sensitivity gap for interest bearing items at Company level was a surplus of £2,453,000 (31 December 2018: £266,167,000). The following table summarises the Company's interest bearing assets:

As at 30 June 2019, interest rates reported by the Bank of England of 0.75 per cent would equate to net income of £18,000 (31 December 2018: £1,996,000) per annum if interest bearing assets and liabilities remained constant. If interest rates were to fluctuate by 0.25 per cent, this would have a positive or negative effect of £6,000 (31 December 2018: £665,000) on the Company's annual income.

As at 30 June 2019, the total interest sensitivity gap for interest bearing items at the Investment Partnership level was a surplus of £11,598,000 (31 December 2018: £nil). The following table summarises the Investment Partnership's interest bearing assets:

As at 30 June 2019, interest rates reported by the Bank of England of 0.75 per cent would equate to net income of £87,000 (31 December 2018: £nil) per annum if interest bearing assets and liabilities remained constant. If interest rates were to fluctuate by 0.25 per cent, this would have a positive or negative effect of £29,000 (31 December 2018: £nil) on the Company's annual income.

12. Related parties

Key management personnel

The Directors are considered to be the Key Management Personnel of the Company. They are all non-executive and receive only an annual fee denominated in Pounds Sterling.

The Chairman receives an annual fee of £55,000, the Chairman of the Audit Committee receives £45,000, and the other non-executive Director receives £40,000.

Directors' fees and expenses for the period to 30 June 2019 amounted to £70,000 (period to 31 December 2018: £50,000), of which £nil was outstanding at the period end (period to 31 December 2018: £nil).

The Directors received no dividends on their shares during the period to 30 June 2019 (period to 31 December 2018: £nil).

13. Significant Agreements

Trademark fees

Trian Management has granted to the Company, Midco and the Investment Partnership a non-exclusive licence to use the name, logo and graphic identity "Trian" in the UK and the Channel Islands in the corporate name of these entities and in connection with the conduct of their business affairs, and the Company is using the name, logo and graphic identity "Trian" within the Interim Report pursuant to such licence. Trian Management receives a fee of £70,000 per annum for the use of the licensed name, logo and graphic identity. For the six month period ended 30 June 2019 fees of £35,000 were paid by the Company in relation to the licence (period ending 31 December 2018: £19,000).

Administration Agreement

On 19 September 2018, the Company and Estera International Fund Managers (Guernsey) Limited ("Estera") entered into an administration agreement. Under the terms of the agreement the Company (alongside the Investment Partnership) is charged a fixed administration fee of £95,000 per annum from 27 September 2018 payable quarterly in arrears, compliance officer services of £6,000 per annum, money laundering reporting officer services of £3,000 per annum and data protection services of £2,000 per annum. For the six month period ended 30 June 2019 aggregate fees of £69,000 were paid to Estera (period ended 31 December 2018: £27,000).

Management Agreement

On 19 September 2018, the Investment Partnership and the Investment Manager entered into a management agreement. The Investment Manager is entitled to management fees in consideration of its work equal to one twelfth of 1 per cent of the adjusted net asset value of the Investment Partnership, calculated as of the last business day of the preceding month. The management fee is payable in advance to the Investment Manager on the first business day of each calendar month. For the six month period ended 30 June 2019 management fees of £121,000 were paid to the Investment Manager (period ended 31 December 2018: £nil).

Investment Partnership Agreement

Under the terms of the Investment Partnership Agreement, Trian Investors 1 SLP, L.P., the special limited partner of the Investment Partnership, is entitled to receive an incentive allocation based on the investment performance of the Investment Partnership. The incentive allocation may be between 0 to 25 per cent of the net returns of the Investment Partnership. The calculation of the incentive allocation is described in more detail in note 4 above and the Prospectus. As at 30 June 2019, there was an incentive allocation accrual of £3,011,000 (period ended 31 December 2018: £nil).

14. Auditor remuneration

During the period, £16,000 was expensed to Deloitte LLP in Guernsey in relation to interim review fees.

Auditor's remuneration was broken down as follows:

All prior period non-audit fees paid to Deloitte LLP related to costs associated with the issue of shares and were netted off against share capital in the Statement of Changes in Equity.

15. Subsequent events

There were no events after the reporting date that require disclosure in these interim financial statements.

General Information