THE INVESTMENT COMPANY PLCHALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED 31 DECEMBER 2013The Investment Company plc presents its Half-Yearly Report for the six monthperiod ended 31 December 2013. It is referred to as TIC, the Company or theGroup in the text of this report.Investment ObjectiveThe Company's investment objective is to provide Shareholders with anattractive 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.Summary of Investment PolicyIn June 2013, the Company amended its investment policy, appointed an externalinvestment manager, reorganised the Company's share capital and raisedadditional capital through a placing.The Company will invest primarily in the equity securities of quoted UKcompanies with a wide range of market capitalisations, many of which are, orare expected to be, dividend paying, with anticipated dividend growth in thelong term. The Company may also invest in large capitalisation companies,including FTSE 100 constituents, where this may increase the yield of theportfolio and where it is believed that this may increase shareholder value.The Company will also make investments in preference shares, loan stocks,debentures, convertibles and related instruments of quoted UK companies. Anyuse of derivatives for investment purposes will be made on the basis of thesame principles of risk spreading and diversification that apply to theCompany's direct investments, as described below. The Company will not enterinto uncovered short positions.Risk diversificationPortfolio risk will be mitigated by investing in a diversified spread ofinvestments. Investments in any one company shall not, at the time ofacquisition, exceed 15% of the value of the Company's investment portfolio.In the long term, it is expected that the Company's investments will be aportfolio of between 40 and 60 securities, most of which will representindividually no more than 3% of the value of the Company's total investmentportfolio, as at the time of acquisition.The Company will not invest more than 10% of its gross assets, at the time ofacquisition, in other listed closed-ended investment funds, whether managed bythe Manager or not, except that this restriction shall not apply to investmentsin listed closed-ended investment funds which themselves have stated investmentpolicies to invest no more than 15% of their gross assets in other listedclosed-ended investment funds.Unlisted investmentsThe Company may invest in unlisted securities from time to time subject toprior Board approval.Investments in unlisted securities in aggregate will not exceed 5% of the valueof the Company's investment portfolio as at the time of investment.Borrowing and gearing policyThe Company may use gearing, including bank borrowings and the use ofderivative instruments such as contracts for differences. The Company mayborrow (through bank facilities and derivative instruments) up to 15% of netasset value ("NAV") (calculated at the time of borrowing).Investment StrategyThe Manager intends to use a bottom-up investment approach for the portfolio,with a diversified portfolio of securities of various market capitalisationsizes. There will be a bias towards dividend paying smaller companies, but theportfolio will also include preference shares, loan stocks, debentures andconvertibles with attractive yields.The investment approach can be described as active and universal, as theCompany will not seek to replicate any benchmark and will target a significantproportion of smaller company equities within an overall diversified portfolio.Potential investments are assessed against the key criteria including, interalia, their yield, growth prospects, market positions, calibre of managementand risk and cash resources.A copy of the complete Investment Policy can be found in the Company's AnnualReport and Accounts for the period ended 30 June 2013.Dividend PolicyThe Company will seek to maintain an annualised dividend yield of 6% of NAV(based on the opening NAV at the start of each financial year). It is intendedthat dividends of roughly equal size will be paid quarterly. This income willbe paid out of revenue and/or capital as appropriate.Investment ManagerDuring the period to 31 December 2013, the Company was managed by Miton CapitalPartners Limited. On 1 January 2014, the Investment Management Agreement wasnovated from Miton Capital Partners Limited to Miton Asset Management Limited("Miton"), a subsidiary of Miton Group plc, an AIM quoted firm.Miton is a leading multi-asset and equity fund management specialist. The groupmanages £3.1bn of assets (as at 31 December 2013) including eleven open-endedinvestment companies, four investment trusts and segregated client accounts.Capital StructureAs at 31 December 2013 and the date of this report, the Group's share capitalconsisted of 4,772,049 ordinary shares of 50p each, of which 32,500 shares wereheld in Treasury and 4,739,549 shares were in circulation.Total Assets and Net Asset ValueThe Group had net assets of £18.8 million and a NAV of 395.7p per ordinaryshare at 31 December 2013.Websitewww.mitongroup.com/ticSUMMARY OF RESULTS At 31 December 2013 At 30 June 2013 (unaudited) (audited) ChangeEquity shareholders' funds 18,754,012 16,237,484 15.5%Number of ordinary shares 4,772,049 4,772,049in issueNet asset value per 395.69p 342.60p 15.5%ordinary shareOrdinary share price (mid) 380.00p 327.50p 16.0%Discount to net asset value 3.97% 4.41% 6 months 15 month period to 31 December 2013 to 30 June 2013* (unaudited) (audited)Total return per ordinary 58.59p 71.41pshareDividend declared per 10p 6pordinary share* The Company extended its accounting period from 31 March 2013 to 30 June2013.FINANCIAL CALENDARFebruary Payment of second interim dividend for the year ending 30 June 2014. Announcement of Half-Yearly Financial Report.May Payment of third interim dividend for the year ending 30 June 2014.August Payment of fourth interim dividend for the year ending 30 June 2014.September Announcement of Annual Results.November Payment of first interim dividend for the year ending 30 June 2015.December Annual General Meeting.CHAIRMAN'S STATEMENTHalf-year to 31 December 2013This is my first interim statement for TIC since the reorganisation of thecapital structure on 24 June 2013.On the announcement of the reorganisation, the ordinary share price of theCompany rose more closely to reflect the underlying NAV. Over the last sixmonths, TIC's share price has appreciated further, reflecting the Company's NAVappreciation of 15.5%, to 395.7p. In addition, the Board has now initiatedquarterly dividends that are planned to amount to a 6% yield, or 20.6p on the342.6p NAV as at 30 June 2013. So far, two dividends of 5p per share, amountingto 10p in total, have been declared and paid for the quarters ended30 September 2013 and 31 December 2013.The £4.3m of new capital raised at the time of the reconstruction has beeninvested mainly in a range of smaller company equities that have appreciated inthe period. The majority of the dividend income comes from premium yieldingpreference shares, loan stocks, debentures and enhanced capital notes ("ECN")where the scope for capital appreciation is often less pronounced.Going forward it is anticipated that there will be greater issuance ofconvertible loan stocks and convertible preference shares by smaller quotedcompanies. In time, it is expected that a large portion of the Company'sportfolio will be invested in convertibles such as these, as they have theadvantage of not only paying a good running yield, but also come with theoption of conversion, which can generate good capital gains if the relevantordinary shares perform well.Worldwide growth expectations moderated significantly during 2013. The Boardbelieves the Company is well placed as this environment looks to favour smallerand microcap stocks because as a group they are better able to grow, even attimes of economic stagnation. Historically, prior to the credit boom, smallerUK quoted companies outperformed for decades.The Company has been granted approval from HM Revenue & Customs as aninvestment trust in accordance with UK Corporation Tax legislation. Furtherdetails can be found below.Sir David ThomsonChairman26 February 2014MANAGER'S REPORTMarketsOver the six month period to 31 December 2013 prospects for the UK economy haveimproved. This has been reflected in a further rise of UK equities, with theFTSE All-Share Index rising 9.7% in the period. However, the economicimprovement has also led the US Federal Reserve to conclude that the time isnow right for them to start reducing their policy of buying bonds, known asQuantitative Easing ("QE"). So, in contrast to equities, bond markets havefallen back over the period.During the credit boom, midcap stocks generally have tended to outperform. Thelast two years have been marked by the outperformance of smaller stocks, andover the six month period the FTSE Smaller Companies Index (excludinginvestment companies) rose 23.8% and the FTSE AIM All-Share Index rose 23.0%.PortfolioThe portfolio is principally invested in a range of preference shares, loanstocks, debentures and notes. Although the largest corporate exposure in theportfolio is to Lloyds Banking Group through a number of different ECNs, thereare over 50 issuers from different companies in the portfolio. It is difficultto increase many of the holdings because they have obvious attractions and tendto be tightly held. On occasion, we find that they are redeemed, sometimes at apremium to their market prices, as happened during the period, in the case ofthe Skipton Building Society Floating Rate Notes.The £4.3m of new capital raised by the Company, has therefore been invested ina range of individual equities that, together, offer the prospect of good andgrowing dividend income. Many smaller companies have already enjoyed a periodof outperformance, but we continue to identify plenty of holdings wherevaluations appear far too low.However, market trends are changing and we believe that smaller companies arewell placed to enjoy a long period of outperformance. The change in attitudesto smaller quoted stocks is still nascent. Institutions tend to have littlecapital invested in smaller companies which are, by their nature, naturallydiminutive in scale and under-researched. Yet, prior to the credit boom,institutional portfolios were fully weighted in smaller companies, given thattheir key advantage is that as a group they can grow even at time of economicausterity. We believe that institutional weightings in the smallest stocks willtherefore be gradually rebuilt over the coming years.As a corollary, we believe the growing interest in funding smaller companieswill also lead to an increase in the issuance of convertible loan stocks andconvertible preference shares. These instruments offer the new investor aregular income at a premium yield, along with the right to convert into thequoted shares if the relevant share price appreciates significantly. InDecember 2013, the portfolio invested approximately £0.6m in the first suchissue: William Sinclair plc issued a Loan Note that pays an 11% yieldinitially, that is expected to fall back to 8% when the corporate debt ratiosreduce. Along with the Loan Notes, came some detachable Warrants into WilliamSinclair plc at 80p. The additional debt has facilitated the company's moveinto a new single operation, and the business is anticipated to prosper goingforward, and therefore their share price has already appreciated. Whilst suchissues are currently relatively rare, they were more popular prior to thecredit boom, and we anticipate they will be again.Criteria for selecting new investments for the portfolioThere are five criteria that the managers use to determine the scope for thebusiness to deliver good and growing dividends.The prospect of turnover growth If a business is to sustain and grow itsdividend, then the portfolio needs to invest in companies that will generatemore cash in the coming years. Without decent turnover growth this isnear-impossible to achieve over time.Sustained or improving margins A business needs to deliver significant value toits customer base if it is to sustain decent margins. Unexpected cost increasescannot be charged on to customers if they are anything less than delighted withtheir suppliers. Turnover growth will not lead to improved cash generation ifdeclining margins offset it.A forward-looking management team Businesses often need to make commercialdecisions on incomplete information. A thoughtful and forward-looking team hasa better chance of making better decisions.Robust balance sheet There are disproportionate advantages to having theindependence of a strong balance sheet in a period of elevated economic andpolitical risks. Conversely, corporates with imprudent borrowings can risk thetotal loss of shareholders' capital.Low expectation valuation Many of the most exciting stocks enjoy higher stockmarket valuations but almost none can consistently beat the high expectationsbaked into their share prices. Those with low expectations tend to be lessvulnerable to disappointment, but conversely can enjoy excellent share pricerises if they surprise on the upside.Companies that best meet these criteria on a prospective basis are believed tobe best positioned to deliver attractive returns to shareholders, as well asoffering moderated risk.These criteria, used in reverse, can also be useful in determining the timingof portfolio stocks that should be considered for divestment. So, a business indanger of suffering a period of turnover declines, for example, would naturallybe expected to generate less cash flow in future years and thereby struggle tosustain their current dividend over time, let alone grow it.PerformancePrior to the reconstruction, the ordinary share price stood at 235p, well belowthe NAV given that the capital structure was dominated by the rights of theparticipating preference shares. The conversion of the preference shares andthe raising of the new capital diluted the NAV for ordinary shares, but withjust one class of equity the ordinary share price is now close to theunderlying NAV. During the six month period to 31 December 2013, the NAV of theCompany has appreciated by 15.5% and dividends of 10p have been paid/declared.Most of that capital appreciation was delivered by the new holdings in the smallercompanies. However, in contrast, the 6% dividend yield anticipated over thefirst year has been principally funded from the portfolio of preference share,loan stocks, debentures and notes.ProspectsIt is reassuring that the UK is enjoying a period of economic recovery.However, in time this might not only lead to a reduction of QE, but alsopotentially an increase in UK interest rates. Whilst it is anticipated thatthese headwinds might inhibit the appreciation of markets, we are hopeful thatthe potential premium growth of well managed smaller businesses during a periodof austerity will become more appreciated. This is a trend that should befavourable for the Company.Gervais Williams and Martin TurnerMiton Asset Management Limited26 February 2014TWENTY LARGEST INVESTMENTSAt 31 December 2013Stock Number % of Book Market or % of issue cost Directors' total valuation portfolio £ £1. Lloyds Banking Group7.5884% ECN 12/05/20 (LBG 1,750,000 0.24 795,219 1,852,200Capital)7.975% ECN 15/09/24 (LBG 920,000 0.90 548,906 968,300Capital)7.8673% ECN 17/12/19 (LBG 500,000 0.15 167,613 530,400Capital)14.5% ECN 30/01/22 (LBG 300,000 0.38 246,247 389,940Capital)9.125% ECN 15/07/10 (LBG 100,000 0.03 89,224 105,560Capital)7.281% Perpetual (Bank of 400,000 0.27 315,331 413,240Scotland) 2,162,540 4,259,640 22.552. Phoenix Life7.25% perpetual notes 1,060,000 0.53 811,923 1,010,286 5.353. Royal Bank of ScotlandGroup9% series `A' non-cum pref 500,000 0.36 362,920 616,250(NatWest)Sponsored ADR rep pref C 20,000 1.67 55,473 304,181(NatWest) 418,393 920,431 4.874. Plus500Ordinary ILS 0.01 ‡ 263,445 0.23 318,350 811,411 4.295. AnparioOrdinary 23p ‡ 241,000 1.64 339,124 795,300 4.216. Seeing MachinesOrdinary NPV ‡ 9,000,000 1.12 450,000 765,000 4.057. Safestyle UKOrdinary 1p ‡ 469,000 0.60 469,000 698,810 3.708. Randall & QuilterInvestment HoldingsOrdinary 2p ‡ 387,000 0.54 502,731 684,990 3.639. Conygar Investment Co.Ordinary 5p ‡ 420,478 0.47 533,332 674,765 3.5610. Charles TaylorOrdinary 1p ‡ 230,000 0.55 419,215 579,600 3.0711. William Sinclair Holdings8% convertible loan notes † 550,000 6.67 550,000 550,000 2.9112. Lancashire HoldingsCommon stock ‡ 65,000 0.04 494,090 527,150 2.7913. Fishguard & Rosslare3.5% GTD preference stock 790,999 63.91 441,810 474,599 2.5114. Gable HoldingsOrdinary 2.5p ‡ 617,063 0.46 339,385 442,743 2.3415. Newcastle BuildingSociety6.25% sub notes 23/12/19 600,00 2.40 405,438 403,901 2.1416. REA Holdings9.5% GTD Notes 31/12/17 300,000 2.00 298,254 312,000 2.137.5% Dollar Notes 30/06/17 150,000 0.44 76,740 90,568 374,994 402,56817. Fairpoint GroupOrdinary 1p ‡ 300,000 0.71 307,992 390,000 2.0618. Juridica InvestmentsOrdinary NPV ‡ 295,000 0.27 384,596 380,550 2.0119. Arbuthnot Banking GroupOrdinary 1p ‡ 25,000 0.17 88,228 357,500 1.8920. Investec Investment Trust3.5% cum pref £1 461,508 35.50 271,938 272,2905% cum pref £1 104,043 30.12 92,858 79,333 364,796 351,623 1.86 10,175,937 15,480,867 81.92‡ Issues with unrestricted voting rights.† Unlisted investments at Directors' valuation.The Group has a total of 73 portfolio investment holdings in 56 companies.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the six months ended 31 December 2013 6 months to 6 months to 15 months to 31 December 2013 30 September 2012 30 June 2013 (unaudited) (unaudited)restated* (audited)restated* Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ £ £ £Gain on investments - 2,573,511 2,573,511 - 791,074 791,074 - 1,466,811 1,466,811held at fair valuethorugh profit orlossInvestment income 517,101 - 517,101 475,809 - 475,809 1,134,994 - 1,134,994Investment 3 (100,703) - (100,703) (55,500) - (55,500) (138,750) - (138,750)management feeOther administrative (194,512) - (194,512) (156,489) - (156,489) (568,601) - (568,601)expensesReturn before 221,886 2,573,511 2,795,397 263,820 791,074 1,054,894 427,643 1,466,811 1,894,454finance costs andtaxationFinance costsLoan note interest (18,436) - (18,436) (27,503) - (27,503) (62,700) - (62,700)Other finance costs - - - (174,818) - (174,818) (432,550) - (432,550)Other interest - - - (2,195) - (2,195) (2,195) - (2,195)payableParticipating - - - - - - (49,948) - (49,948)element of preferencedividends paidReturn before 203,450 2,573,511 2,776,961 59,304 791,074 850,378 (119,750) 1,466,811 1,347,061taxationTaxation - - - - - - - - -Return after 203,450 2,573,511 2,776,961 59,304 791,074 850,378 (119,750) 1,466,811 1,347,061taxationReturn per 50pordinary shareBasic and diluted 5 4.29p 54.30p 58.59p 3.18p 42.36p 45.54p (6.35)p 77.76p 71.41pThe Group does not have any income or expense that is not included in the`return for the period'. Accordingly, the `return for the period' is also theTotal Comprehensive Income for the period as defined in InternationalAccounting Standard 1 (revised), and consequently no separate Statement ofComprehensive Income has been presented.The total column of this statement is the Income Statement of the Groupprepared in accordance with International Financial Reporting Standards, asadopted by the European Union. The supplementary revenue and capital columnsare presented in accordance with the Statement of Recommended Practice issuedby the Association of Investment Companies ("AIC SORP").All revenue and capital items in the above statement derive from continuingoperations. No operations were acquired or discontinued during the period.During the period the Company was granted approval as an investment trust unders1158/1159 of the Corporation Tax Act 2010 for the year ending 30 June 2014.The Company will be treated as an investment trust company for each subsequentaccounting period, subject to there being no serious breaches. As such, and inaccordance with the AIC SORP, movements in unrealised appreciation ofinvestments recognised in equity and in profit and loss, that were previouslyrecorded as "Other Comprehensive Income", are now included as "Gains oninvestments held at fair value through profit and loss" and therefore shownwithin the return for the period.* The comparative figures have been restated to enable users of the accounts tocompare the current period's results with those of the previous periods and nowinclude all revaluation movements on investments held at fair value throughprofit or loss, which were previously shown as items within `OtherComprehensive Income'. This restatement is unaudited.The comparative figures for the 15 month period to 30 June 2013 have also beenrestated to include the participating element of preferencedividends paid as a finance cost. This restatement has resulted in net reportedrevenue return and total return for that period decreasing by £49,948.CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 31 December 2013 Own Capital Issued Share shares redemption Revaluation Capital Revenue capital premium held reserve reserve reserve account Total £ £ £ £ £ £ £ £Balance at 1 July 2013 2,386,025 4,464,443 - 2,408,820 3,511,569 3,013,972 452,655 16,237,484Total comprehensiveincomeNet return for the - - - - - 2,573,511 203,450 2,776,961periodTransactions withshareholders recordeddirectly to equityOrdinary dividends - - - - - - (236,977) (236,977)paidTransfer between - - - - (3,511,569) 3,511,569 - -reserves*Costs of issue - (23,456) - - - - - (23,456)Balance at 31 December 2,386,025 4,440,987 - 2,408,820 - 9,099,052 419,128 18,754,0122013Balance at 1 April 1,808,728 1,019,246 (2,919,861) 685,250 2,313,745 4,806,064 684,449 8,397,6212012Total comprehensiveincomeNet return for the - - - - 513,561 277,513 59,304 850,378periodTransactions withshareholders recordeddirectly to equityOrdinary dividends - - - - - - (74,693) (74,693)paidBalance at 1,808,728 1,019,246 (2,919,861) 685,250 2,827,306 5,083,577 669,060 9,173,30630 September 2012Balance at 1 April 1,808,728 1,019,246 (2,919,861) 685,250 2,313,745 4,806,064 684,449 8,397,6212012Total comprehensiveincomeNet return for the - - - - 1,197,824 268,987 (119,750) 1,347,061periodTransactions withshareholders recordeddirectly to equityOrdinary dividends - - - - - (112,044) (112,044)paidConversion of (858,782) - 2,919,861 - - (2,061,079) - -non-voting ordinaryshares into fixed ratepreference sharesConversion of 773,833 - - 1,723,570 - - - 2,497,403preference shares intoordinary sharesIssue of new ordinary 662,246 3,682,753 - - - - - 4,344,999sharesCosts of issue - (237,556) - - - - - (237,556)Balance at 30 June 2,386,025 4,464,443 - 2,408,820 3,511,569 3,013,972 452,655 16,237,4842013* The transfer between reserves arises from the re-allocation of unrealisedprofits on the Group's investments held at fair value through profit or loss,following the Company attaining formal approval as an investment trust companyand in accordance with the AIC SORP.CONSOLIDATED BALANCE SHEETAs at 31 December 2013 31 December 30 September 30 June 2013 2012 2013 (unaudited) (unaudited) (audited) Note £ £ £InvestmentsInvestments at cost 16,462,515 12,465,789 12,408,510Investment holding gains/ 2,431,366 (141,451) 390,084(losses)Portfolio investments at 18,893,881 12,324,338 12,798,594fair value through profitor lossCurrent assetsTrade and other 262,720 275,835 1,393,916receivablesInvestments held for 35,897 249,770 122,860tradingCash and bank balances 648,928 280,068 3,138,062 947,545 805,673 4,654,838Current liabilitiesPreference dividends - 174,818 82,914payableTrade and other payables 356,014 187,384 401,6345% loan notes maturing 365,700 365,700 365,7002014 721,714 727,902 850,248Net current assets 225,831 77,771 3,804,590Non-current liabilities5% loan notes maturing (365,700) (731,400) (365,700)2014/2015Participating preference - (2,497,403) -sharesNet assets 18,754,012 9,173,306 16,237,484Capital and reservesIssued capital 2,386,025 1,808,728 2,386,025Share premium 4,440,987 1,019,246 4,464,443Own shares held - (2,919,861) -Capital redemption 2,408,820 685,250 2,408,820reserveRevaluation reserve - 2,827,306 3,511,569Capital reserve 9,099,052 5,083,577 3,013,972Revenue reserves 419,128 669,060 452,655Shareholders' funds 18,754,012 9,173,306 16,237,484Net Asset Value per 50p 6 395.69p 357.50p 342.60pordinary shareCONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 December 2013 Notes 6 months to 6 months to 15 months to 31 December 30 September 30 June 2013 2012 2013 (unaudited) (unaudited) (audited) £ £ £Cash flows from operatingactivitiesCash received from investments 290,573 146,137 406,454Interest received 252,388 254,742 722,332Sundry income - - 468Cash paid to and on behalf of (17,307) (125,069) (250,687)employeesOther cash payments (433,521) (128,153) (377,647)Net cash inflow from operating 92,133 147,657 500,920activitiesCash flows from financingactivitiesBank interest paid - (2,195) (2,195)Loan note interest paid (17,859) (27,503) (53,583)Loan notes redeemed - - (365,700)Fixed element of dividends paid on - (174,818) (524,455)preference sharesParticipating element of dividends - - (49,948)paid on preference sharesDividends paid on ordinary shares (236,977) (70,954) (104,195)Share capital subscriptions 1,195,345 - 2,998,176receivedNet cash inflow/(outflow) from 940,509 (275,470) 1,898,100financing activitiesCash flows from investingactivitiesPurchase of investments (6,126,454) (241,186) (274,005)Sale of investments 2,604,678 864,550 1,228,530Net cash (outflow)/inflow from (3,521,776) 623,364 954,525investing activitiesNet (decrease)/increase in cash (2,489,134) 495,551 3,353,545and cash equivalentsReconciliation of net cash flow tomovement in net debt(Decrease)/increase in cash (2,489,134) 495,551 3,353,545Loan notes redeemed - - 365,700(Decrease)/increase in net cash (2,489,134) 495,551 3,719,245Net cash/(debt) at start of period 2,406,662 (1,312,583) (1,312,583)Net (debt)/cash at end of period (82,472) (817,032) 2,406,662Analysis of (net debt)/net cashCash and bank balances 648,928 280,068 3,138,0625% loan notes due within one year (365,700) (365,700) (365,700)5% loan notes due in more than one (365,700) (731,400) (365,700)year (82,472) (817,032) 2,406,662NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1. Financial informationThe Investment Company plc is a public limited company incorporated and registered inEngland and Wales. The address of its registered office and principal place ofbusiness is Beaufort House, 51 New North Road, Exeter EX4 4EP.The consolidated financial statements, which comprise the unaudited results ofthe Company and its wholly owned subsidiaries, Abport Limited and New CenturionTrust Limited, together referred to as the "Group", for the half year to 31December 2013, have been prepared under the historical cost basis, except forthe measurement at fair value of investments, and in accordance withInternational Financial Reporting Standards, as adopted by the European Union.Where guidance set out in the AIC SORP is consistent with the requirements ofIFRS, the Directors have sought to prepare the financial statements on a basiscompliant with the recommendations of the SORP.In order to better reflect the activities of an investment trust company and inaccordance with guidance issued by the AIC, supplementary information whichanalyses the Income Statement between items of a revenue and capital nature hasbeen presented alongside the Income Statement.The financial information contained in this half-yearly financial report doesnot constitute statutory accounts as defined in section 434 of the CompaniesAct 2006. The financial information for the half years ended 31 December 2013and 30 September 2012 has been neither audited nor reviewed by the auditors.The figures and financial information for the 15 months to 30 June 2013 areextracted from the latest published audited financial statements of the Companyand do not constitute the statutory accounts for that year. The auditedfinancial statements for the 15 months to 30 June 2013 have been filed with theRegistrar of Companies. The report of the independent auditors on thoseaccounts contained no qualification or statement under section 498(2) orsection 498(3) of the Companies Act 2006.Except as described below, the Group has applied consistent accounting policiesin preparing the half-yearly financial statements for the six months ended 31December 2013, the comparative information for the six months ended 30September 2012, and the financial statements for the 15 months to 30 June 2013.The Company changed its accounting reference date to 30 June, extending theaccounting period that was due to end on 31 March 2013 so as to end on 30 June2013.2. Changes in accounting policiesDuring the period, the Company applied for, and was granted, approval from HMRevenue & Customs as an investment trust under s1158/1159 of the CorporationTax Act 2010 for the year ending 30 June 2014.As a consequence of the adoption of the AIC SORP and in order better to reflectthe activities of an investment trust company, the Company has changed itsaccounting policies for its valuation of portfolio investments and treatment ofcertain reserves. These proposed changes are largely concerned with thepresentation of certain items only and do not materially impact on the resultsor net assets of the Company.The Company's policies set out in note 1 of the Annual Report and FinancialStatements for the period ended 30 June 2013 have remained substantiallyunchanged except for the following:a) Valuation of investmentsInvestments are recognised and derecognised on the trade date where a purchaseor sale is under a contract whose terms require delivery within the timeframeestablished by the market concerned, and are initially measured at fair value.All investments held by the Company are classified as at "fair value throughprofit or loss". Investments are initially recognised at cost, being the fairvalue of the consideration given. After initial recognition, investments aremeasured at fair value, with unrealised gains and losses on investments andimpairment of investments recognised in the Income Statement and allocated tocapital.For investments actively traded in organised financial markets, fair value isgenerally determined by reference to quoted market bid prices or closing pricesfor SETS (London Stock Exchange's electronic trading service) stocks sourcedfrom the London Stock Exchange on the Balance Sheet date, without adjustmentfor transaction costs necessary to realise the asset.After initial recognition, unlisted stocks are reviewed and valued by the Boardon a regular basis.b) ReservesCapital reserveThe following are accounted for in this reserve:• gains and losses on the realisation of investments;• net movement arising from changes in the fair value of investments that canbe readily converted to cash without accepting adverse terms;• net movement from changes in the fair value of derivative financialinstruments; and• expenses, together with related taxation effect, charged to this account inaccordance with the above policies.Revaluation reserveThe revaluation reserve represents the accumulated unrealised gains on theCompany's available-for-sale investments. Following investment trust statusbeing granted to the Company, and in order to better reflect the requirementsof investment companies in accordance with the AIC SORP, all such movements inunrealised gains and losses will be accounted for in the capital reserve asdescribed above.3. Management feeUnder the terms of the Management Agreement, the Manager is entitled to receivefrom the Company or any member of the Group in respect of its services providedunder this Agreement, a management fee payable monthly in arrears equal toone-twelfth of 1% per calendar month of the NAV of the Company. For thesepurposes, the NAV shall be calculated as at the last Business Day of each monthand is subject to the ongoing charges ratio of the Company not exceeding 2.5%per annum in respect of any completed financial year.4. Dividends 6 months to 6 months to 15 months to 31 December 30 September 30 June 2013 2012 2013 (unaudited) (unaudited) (audited) £ £ £Participating preference sharesParticipating preference element - - 49,948Ordinary sharesPrior year final dividend of 4p paid - 74,693 74,696on 1 September 2012Prior year interim dividend of 2p - - 37,348paid on 7 January 2013Current year first interim dividend 236,977 - -of 5p paid on 22 November 2013Total dividends 236,977 74,693 161,992The Board declared a second interim dividend of 5p per ordinary share,which was paid on 21 February 2014 to shareholders registered at the close ofbusiness on 31 January 2014. In accordance with IFRS, this dividend has notbeen included as a liability in these financial statements.5. Return per ordinary share 6 months to 15 months to 6 months to 30 September 2012 30 June 2013 31 December 2013 (unaudited) (audited) (unaudited) *restated *restated £ £ £Weighted average 4,739,549 1,867,391 1,886,328ordinary shares inissue £ Per £ Per £ Per share share share pence pence penceRevenue returnNet return aftertaxationattributable to 203,450 4.29 59,304 3.18 (119,750) (6.35)ordinary shareholdersCapital returnNet investments gains 2,573,511 54.30 791,074 42.36 1,466,811 77.76after taxTotal return 2,776,961 58.59 850,378 45.54 1,347,061 71.41* In order better to reflect the activities of an investment company and toensure consistency with reporting of performance, figures for both thecomparative periods have been restated to now include all valuation gains andlosses on the Company's investments held at fair value through profit or loss,that were previously recorded within `Other Comprehensive Income' as itemswithin capital return after tax for those periods. The effect of this on totalreturn after tax as a result of the restatement for the six month period to30 September 2012 is an increase of 27.50p from 18.04p to 45.54p; and for the15 month period to 30 June 2013 it is an increase of 63.50p from 7.91p originallystated to 71.41p as shown in the above table.6. Net asset value per ordinary shareNet asset value per ordinary share is based on net assets at the period end and4,739,549 (30 September 2012: 1,867,391 and 30 June 2013: 4,739,549) ordinaryshares, being in each case the number of ordinary shares in issue at the periodend less 32,500 shares held in Treasury.7. Principal risks and uncertaintiesThe principal risks facing the Group are substantially unchanged since the dateof the Annual Report for the period ended 30 June 2013 and continue to be asset out in that report. Risks faced by the Group include, but are not limitedto, investment decisions, investment valuations and macro-economic environmentfor preference shares and prior charge securities, market price risk, interestrate risk and liquidity risk.8. Responsibility statementThe Directors confirm that to the best of their knowledge:• the condensed set of financial statements has been prepared in accordancewith International Accounting Standard 34, Interim Financial Reporting, asadopted by the European Union; and gives a true and fair view of the assets,liabilities and financial position of the Group; and• this Half-Yearly Financial Report includes a fair review of the informationrequired by DTR 4.2.7R and DTR 4.2.8R.This Half-Yearly Financial Report was approved by the Board of Directors on 26February 2014 and the above responsibility statement was signed on its behalfby Sir David Thomson, Chairman.DIRECTORS AND ADVISERSDirectors (all non-executive) Independent AuditorsSir Frederick Douglas David Thomson Bt. Saffrey Champness(Chairman) Lion HousePeter Stanley Allen Red Lion StreetStephen John Cockburn London WC1R 4GBMartin Henry Withers Perrin RegistrarSecretary and Registered Office Capita Asset ServicesCapita Company Secretarial Services Shareholder Services DepartmentLimited The RegistryBeaufort House 34 Beckenham Road51 New North Road BeckenhamExeter EX4 4EP Kent BR3 4TUTelephone: 01392 412122 Telephone: 0871 664 0300Investment Manager Fax: 020 639 2342Miton Asset Management Limited Email:shareholderenquiries@capita.co.uk51 Moorgate Website: www.capitaassetservices.comLondon EC2R 6BHTelephone: 0118 338 4033Website: www.mitongroup.com
An investment company as defined under Section 833 of the Companies Act 2006.