Interim Results

RNS Number : 9879C

Investment Company PLC

24 November 2009

 



The Investment Company plc

Unaudited Interim Results

For the six month period ended 30 September 2009

Chairman's Statement

In my Statement with the Report and Accounts in July I indicated to shareholders that the Board's policy was to invest all the cash in hand and on a gradual basis some of the £1.5 million of the bank overdraft facility that had been negotiated since the year end of 31 March 2009 in bank preference shares. I am pleased to say that this policy initially appears to have been profitable and successful; the net asset value per ordinary share was 80p at 31 March 2009 and 103p at 30 June 2009. This had increased to 134p at the end of July as announced at the Annual General Meeting. This figure has increased to 166p at the half year to 30 September 2009 and I can announce today that at 14 November the latest estimate is 186p.  

The dealing company Abport Limited has enjoyed a much happier half year making a contribution of £41,000. Further appreciation in Abport has been enjoyed over the last 6 weeks.  

The Revenue Account does not as yet reflect the income that will result from the recent purchases of bank preference shares but the second half of the financial year will see the substantial benefits of this policy. In consequence your Board has decided to maintain the interim dividend at 2p per share although some of the cost of this will as previously be paid out of Revenue Reserves.

This dividend will be paid on 8 January 2010 to ordinary shareholders registered on 11 December 2009. The ordinary shares will be quoted ex dividend on 9 December. The payment to the participating preference shareholders on 1 April 2010 will be 3.5p as usual. The amount of the participating dividend to be paid to the participating preference shareholders on 1 October 2010 will not be known until the final dividend on the ordinary shares for the year to 31 March 2010 is declared.  

The immediate prospects for any further appreciation in the net asset value of the ordinary shares depends on the outcome of the Lloyds Banking Group Offer to Exchange our preference share holdings for Enhanced Capital Notes which is current at the time of writing. Your Board is optimistic that several of our shareholdings will qualify for exchange into these new securities which, although paying interest rather than the dividends on our preference share holdings, will not have a detrimental effect on our net revenue because of tax losses brought forward. We anticipate therefore a continuing improvement in our Revenue Account as a result of these developments.

Accounting standards continue to evolve and shareholders will note certain changes in presentation. The Group applies revised IAS 1 Presentation of Financial Statements, which became effective as of 1 January 2009. As a result, the Company presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. This standard is concerned with presentation only and does not have any impact on the results or net assets of the Company. Comparative information has been re-presented where applicable so that it also is in conformity with the revised standard.

In conclusion there is little indication that the Bank of England intends in the immediate future to increase the base rate from its present minimal level for fear of squashing the economic recovery as it emerges. It remains our hope that investors will appreciate the merits of the high yields offered by preference shares and it surely must dawn upon many industrial companies soon that they can redeem preference capital at a time when money may be borrowed cheaply, at least by historical standards. It might behove many companies with preference shares in issue to offer to exchange them for ordinary shares or for cash which both simplifies the capital structure, reduces the cost and eliminates what in some instances are shackles on management's ability to run companies. The directors of any company in which we hold shares are most welcome to approach us for free advice on the advantages of such course of action.

Sir David Thomson Bt.  Chairman 23 November 2009

Registered office: 3rd Floor, Salisbury House London Wall London EC2M 5QS

Consolidated Statement of Comprehensive Income

For six months ended 30 September 2009

	Notes	6 months to 30 September 2009 (unaudited)			6 months to 30 September 2008 (unaudited)			Year to 31 March 2009 (audited)
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
		£	£	£	£	£	£	£	£	£
Total income		470,232	-	470,232	367,423	-	367,423	762,202	-	762,202
Administrative expenses		(200,435)	-	(200,435)	(194,864)	-	(194,864)	(374,567)	-	(374,567)
Loan note interest		(91,425)	-	(91,425)	(91,425)	-	(91,425)	(182,850)	-	(182,850)
Other finance costs		(174,818)	-	(174,818)	(174,818)	-	(174,818)	(349,636)	-	(349,636)
Other interest payable		(763)	-	(763)	-	-	-	-	-	-
Realised (losses)/gains on investments		-	(14,542)	(14,542)	-	24,443	24,443	-	27,175	27,175
Impairment provisions		-	707,837	707,837	-	(729,368)	(729,368)	-	(1,648,261)	(1,648,261)
Net return before taxation		2,791	693,295	696,086	(93,684)	(704,925)	(798,609)	(144,851)	(1,621,086)	(1,765,937)
Taxation		-	-	-	-	-	-	-	-	-
Net return after taxation		2,791	693,295	696,086	(93,684)	(704,925)	(798,609)	(144,851)	(1,621,086)	(1,765,937)
Movement in unrealised appreciation of investments:
Recognised in equity		-	1,026,843	1,026,843	-	(361,875)	(361,875)	-	(544,318)	(544,318)
Recognised in profit or loss		-	(35,761)	(35,761)	-	(17,498)	(17,498)	-	(31,395)	(31,395)
Total net recognised (losses)/gains for the financial period		2,791	1,684,377	1,687,168	(93,684)	(1,084,298)	(1,177,982)	(144,851)	(2,196,799)	(2,341,650)
Return per 50p Ordinary Share
From net return after taxation		0.08p	19.17p	19.25p	(2.59)p	(19.49)p	(22.08)p	(6.42)p	(44.81)p	(51.23)p
From movement in unrealised appreciation of investments:		-	27.40p	27.40p	-	(10.49)p	(10.49)p	-	(15.91)p	(15.91)p
Total: Basic and diluted	5	0.08p	46.57p	46.65p	(2.59)p	(29.98)p	(32.57)p	(6.42)p	(60.72)p	(67.14)p
Net asset value per 50p Ordinary Share				165.84p			150.57p			79.98p
All the Company's operations are continuing.

Consolidated Statement of Changes in Equity

For six months ended 30 September 2009

		Issued Capital	Share Premium	Own Shares Held	Capital Redemption Reserve	Revaluation Reserve	Capital Reserve	Revenue Account	Total
		£	£	£	£	£	£	£	£
Balance at 1 April 2009		1,808,728	1,019,246	(2,919,861)	685,250	564,764	2,695,158	163,680	4,016,965
Buy in of own shares		-	-	-	-	-	-	-	-
Movement in unrealised appreciation of investments
- recognised in equity		-	-	-	-	1,026,843	-	-	1,026,843
- recognised in profit or loss		-	-	-	-	(35,761)	-	-	(35,761)
Net increase in net assets from operations		-	-	-	-	-	693,295	2,791	696,086
Ordinary dividends paid		-	-	-	-	-	-	(56,022)	(56,022)
Participating element of preference dividends paid		-	-	-	-	-	-	-	-
Balance at 30 September 2009		1,808,728	1,019,246	(2,919,861)	685,250	1,555,846	3,388,453	110,449	5,648,111
Balance at 1 April 2008		1,808,728	1,019,246	(2,919,861)	685,250	1,140,477	4,316,244	579,346	6,629,430
Buy in of own shares		-	-	-	-	-	-	-	-
Movement in unrealised appreciation of investments
- recognised in equity		-	-	-	-	(361,875)	-	-	(361,875)
- recognised in profit or loss		-	-	-	-	(17,498)	-	-	(17,498)
Net increase in net assets from operations		-	-	-	-	-	(704,925)	(93,684)	(798,609)
Ordinary dividends paid		-	-	-	-	-	-	(93,370)	(93,370)
Participating element of preference dividends paid		-	-	-	-	-	-	-	-
Balance at 30 September 2008		1,808,728	1,019,246	(2,919,861)	685,250	761,104	3,611,319	392,292	5,358,078
Balance at 1 April 2008		1,808,728	1,019,246	(2,919,861)	685,250	1,140,477	4,316,244	579,346	6,629,430
Buy in of own shares		-	-	-	-	-	-	(52,689)	(52,689)
Movement in unrealised appreciation of investments
- recognised in equity		-	-	-	-	(544,318)	-	-	(544,318)
- recognised in profit or loss		-	-	-	-	(31,395)	-	-	(31,395)
Net increase in net assets from operations		-	-	-	-	-	(1,621,086)	(144,851)	(1,765,937)
Ordinary dividends paid		-	-	-	-	-	-	(130,717)	(130,717)
Participating element of preference dividends paid		-	-	-	-	-	-	(87,409)	(87,409)
Balance at 31 March 2009		1,808,728	1,019,246	(2,919,861)	685,250	564,764	2,695,158	163,680	4,016,965

Consolidated Balance Sheet

At 30 September 2009

		30 September 2009 (Unaudited) £	30 September 2008 (Unaudited) £	31 March 2009 (Audited) £
Investments Investments at cost		13,728,843	12,163,009	13,022,381
Unrealised (depreciation)/appreciation		(1,417,455)	(2,001,142)	(3,116,375)
Portfolio investments at market value		12,311,388	10,161,867	9,906,006
Current assets
Trade and other receivables		16,916	43,119	47,443
Investments		168,355	143,796	84,082
Cash and bank balances		77,749	1,499,139	487,425
		263,020	1,686,054	618,950
Current liabilities
Bank overdraft		383,434	-	-
Preference dividends payable		174,818	174,818	174,818
Trade and other payables		213,638	160,618	178,766
5% loan notes maturing 2010		1,828,502	-	-
		2,600,392	335,436	353,584
Net current assets		(2,337,372)	1,350,618	265,366
Non-current liabilities
5% loan notes maturing 2010 / 2015		(1,828,502)	(3,657,004)	(3,657,004)
Participating preference shares		(2,497,403)	(2,497,403)	(2,497,403)
Net assets		5,648,111	5,358,078	4,016,965
Capital and reserves
Issued capital		1,808,728	1,808,728	1,808,728
Share premium		1,019,246	1,019,246	1,019,246
Own shares held		(2,919,861)	(2,919,861)	(2,919,861)
Capital redemption reserve		685,250	685,250	685,250
Revaluation reserve		1,555,846	761,104	564,764
Capital reserve		3,388,453	3,611,319	2,695,158
Revenue reserves		110,449	392,292	163,680
Shareholders' funds		5,648,111	5,358,078	4,016,965
Net Asset Value per 50p Ordinary share		165.84p	150.57p	79.98p

  Consolidated Cash Flow Statement

For the six months ended 30 September 2009

	Notes	6 months to 30 September 2009 (unaudited)	6 months to 30 September 2008 (unaudited)	Year to 31 March 2009 (audited)
		£	£	£
Cash flows from operating activities
Cash received from investments		282,212	336,742	683,652
Interest received		188,565	110,364	163,780
Sundry income		-	-	1,431
Cash paid to and on behalf of employees		(71,366)	(85,250)	(155,834)
Other cash payments		(148,839)	(188,977)	(275,057)
Net cash inflow from operating activities		250,572	172,879	417,972
Cash flows from financing activities
Bank interest paid		(763)	-	-
Loan note interest paid		(91,425)	(91,425)	(182,850)
Purchase of own shares		-	-	(52,689)
Fixed element of dividends paid on preference shares		(174,818)	(174,818)	(349,636)
Participating element of dividends paid on preference shares		-	-	(87,409)
Dividends paid on ordinary shares		(11,197)	(89,183)	(127,405)
Net cash outflow from financing activities		(278,203)	(355,426)	(799,989)
Cash flows from investing activities
Purchase of investments		(1,869,793)	(834,128)	(1,716,882)
Sale of investments		1,104,314	419,948	490,458
Net cash outflow from investing activities		(765,479)	(414,180)	(1,226,424)
Net decrease in cash and cash equivalents	7	(793,110)	(596,727)	(1,608,441)

Notes to the Interim Report

Financial information

The financial information contained in this half year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 September 2009 and 30 September 2008 has been neither audited nor reviewed by the auditors.

The figures and financial information for the year ended 31 March 2009 are extracted from the latest published audited financial statements of the Company and do not constitute the statutory accounts for that year. The audited financial statements for the year ended 31 March 2009 have been filed with the Registrar of Companies. The report of the independent auditors on those accounts contained no qualification or statement under section 498(2) or section 498(3) of the Companies Act 2006.

Except as described below, the Group has applied consistent accounting policies in preparing the interim financial statements for the six months ended 30 September 2009, the comparative information for the six months ended 30 September 2008, and the financial statements for the period ended 31 March 2009.

The Group applies revised IAS 1 Presentation of Financial Statements, which became effective as of 1 January 2009. As a result, the Company presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. This standard is concerned with presentation only and does not have any impact on the results or net assets of the Company. Comparative information has been re-presented where applicable so that it also is in conformity with the revised standard.

Accounting policies

These financial statements have been prepared in accordance with International Accounting Standards (IAS) issued by the International Accounting Standards Board (IASB) as adopted by the EU and in accordance with the Interpretations of International Accounting Standards issued by the Standing Interpretations Committee of the IASB. 

These financial statements have been prepared under the historical cost convention, except for Portfolio Investments which are stated at market value. 

Directors' Responsibility Statement

The Directors confirm that, to the best of their knowledge:

(a) these condensed financial statements have been prepared in accordance with IAS 34;

(b) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (an indication of important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the

financial year); and

(c) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

Dividends payable

		6 months to 30 September 2009 (unaudited)	6 months to  30 September 2008 (unaudited)	Year to 31 March 2009 (audited)
		£	£	£
Participating preference shares
Participating preference element		-	-	87,409
Ordinary shares
Prior year final		56,022	93,370	93,370
Current year interim		-	-	37,347
Total dividends		56,022	93,370	218,126

Return per ordinary share

	6 months to 30 September 2009 (unaudited)		6 months to  30 September 2008 (unaudited)		Year to 31 March 2009 (audited)
Ordinary shares	3,617,456		3,617,456		3,617,456
	£	Per Share Pence	£	Per Share Pence	£	Per Share Pence
Revenue
Net return/(deficit) after taxation	2,791	0.08	(93,684)	(2.59)	(144,851)	(4.00)
Participating dividend	-	-	-	-	(87,409)	(2.42)
Capital
Net investment gains/(losses) after taxation	693,295	19.17	(704,925)	(19.49)	(1,621,086)	(44.81)
Net return/(deficit) after taxation	696,086	19.25	(798,609)	(22.08)	(1,853,346)	(51.23)
Movement in unrealised appreciation of investments	991,082	27.40	(379,373)	(10.49)	(575,713)	(15.91)
Total	1,687,168	46.65	(1,177,982)	(32.57)	(2,428,059)	(67.14)

As the Company has no options or warrants in issue, basic and diluted loss per share are the same. Of the ordinary shares in issue, 1,717,565 shares are held by the company, are non-voting, and are excluded when calculating the adjusted return per share:
Adjusted return per share
Ordinary shares	1,899,891		1,907,034		1,903,453
	6 months to 30 September 2009 (unaudited)		6 months to  30 September 2008 (unaudited)		Year to 31 March 2009 (audited)
	£	Per Share Pence	£	Per Share Pence	£	Per Share Pence
Revenue
Net return/(deficit) after taxation	2,791	0.15	(93,684)	(4.93)	(144,851)	(7.62)
Participating dividend	-	-	-	-	(87,409)	(4.60)
Capital
Net investment gains/(losses) after taxation	693,295	36.49	(704,925)	(37.10)	(1,621,086)	(85.33)
Net return/(deficit) after taxation	696,086	36.64	(798,609)	(42.03)	(1,853,346)	(97.55)
Movement in unrealised appreciation of investments	991,082	52.17	(379,373)	(19.97)	(575,713)	(30.30)
Total	1,687,168	88.81	(1,177,982)	(62.00)	(2,429,059)	(127.85)

Preference shares

The participating preference shares entitle the holders, in priority to the payment of any dividend to the holders of all or any other shares in the capital of the company, to a fixed net cash cumulative dividend at the rate of 7p per share per annum. In addition, holders are entitled to a participating dividend at the rate of 25% of any dividends paid on the Ordinary Shares in excess of 2p per share for any year, subject to a maximum participating dividend in respect of any year of 3p net per share. On any return of capital holders are entitled to the payment of a premium of 50p per share. 

Analysis of net debt

		At 30 September 2009 (unaudited)	Cash flow (unaudited)	At 1 April 2009 (audited)
		£	£	£
Cash at bank		77,749	(409,676)	487,425
Bank overdraft		(383,434)	(383,434)	-
5% loan notes maturing 2010		(1,828,502)	(1,828,502)	-
Long term debt		(1,828,502)	1,828,502	(3,657,004)
		(3,962,689)	(793,110)	(3,169,579)

Principal Risks and Uncertainties

The group's financial instruments comprise investments in fixed interest securities and prior charge investments, borrowings for investment purposes, cash balances and debtors and creditors that arise directly from its operations. Its principal risks are market price risk, interest rate risk and liquidity risk. These risks, and the way in which they are managed, are described in more detail within the Company's Annual Report and Accounts for the year ended 31 March 2009. The nature of the Company's principal risks and uncertainties has not changed materially since the date of that report.

Related Party Transactions

During the first six months of the current financial year, no new transactions with related parties have taken

Place. Details of related party transactions are contained in the Company's Annual Report for the year ended 31 March 2009.

 

END

 

 

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