The Investment Co PLC on Monday said its net asset value was up on a six-monthly basis, but noted its outlook was more averse, with directors currently intending to propose winding up the company at its annual general meeting later this year.
The Devon, England-based investment trust said net asset value per share on December 31 was 354.83 pence, up 5.5% from 336.30p on June 20.
Shares in The Investment Co were up 5.2% to 303.10p each in London on Monday afternoon.
During the half-year period, pretax total return was £896,572, more than doubling from £397,839.
However, it said improving performance was due to rising capital gains as opposed to income, meaning it would not propose an interim dividend payment to shareholders.
Across the financial year ended June 30, 2021, The Investment Co paid a total £15,012 in dividend payments.
Investment income fell 36% to £104,010 from £161,894 six months earlier, while expenses increased 15% to £201,786 from £175,482.
The Investment Co noted it has focused on a new investment objective of protecting its capital purchasing power in real terms, since shareholders approved the strategy in November 2020.
‘Since then, the UK [consumer prices index including owner occupiers’ housing cost] has increased by 14.8% and our net asset value per share, inclusive of dividends paid, increased by 16.0%,’ said Chair Ian Dighe. ‘Even though the CPIH and related metrics provide an inaccurate and one-dimensional view of how inflation threatens our savings, we must measure our results somehow and consider our results with this broad view in mind.
‘Two years is too short a time to evaluate the results of our approach, but it is ample time to consider whether the means we have employed are suitable for our objective.’
Looking ahead, Dighe was pessimistic about the future of The Investment Co.
‘The threats to our capital are more visible now than they were in 2020, as are the challenges of trying to excel as a small investment trust. We are also conscious of the illiquid nature of the company’s shares and the resulting challenges our shareholders face in realising the true value of their holdings in the market,’ said Dighe. ‘Whilst such growth opportunities are currently being explored, there can be no certainty that a proposal will be forthcoming that the directors can recommend to shareholders.
‘Therefore, if the board is not able to recommend an alternative proposal to shareholders at or before the 2023 annual general meeting [...] it is the directors’ current intention to propose that the company be wound up and its capital returned to shareholders.’
The Investment Co’s 2023 AGM is expected to be held in October later this year.
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