Final Results

Investment Company PLC
12 June 2006

The Investment Company plc - Preliminary Results for the year ended 31 March
2006



CHAIRMAN'S STATEMENT

The year under review has been less dramatic than the period on which I reported
at this time last year.

There has been no corporate activity within the Company, the Board has remained
unchanged and interest rates have remained low with the result that the value of
our preference shares have in the main remained firm.

Your company must be one of the smallest listed on the London Stock Exchange.
Many companies have grumbled about the increased regulatory requirements for
listed companies and of course the change from Generally Accepted Accounting
Principles to International Financial Reporting Standards has required a great
deal of expensive attention to the figures which ultimately add very little if
anything to shareholder value. In the short term, these changes certainly cost
professional fees and a great deal of work by the company's administrators,
secretaries and directors. In reaction to this, and in particular the
requirements of the United Kingdom Listing Authority, a number of companies and
not only small ones have moved down from a Full Listing to the more lightly
regulated Alternative Investment Market. This has the added advantage for some
shareholders that it is treated by law as an unlisted market with the result
that there are certain shareholder benefits in the matter of inheritance tax and
capital gains tax, although such benefits are not available to all shareholders.

As I remarked in my statement last year, we had explained in the circular
setting out the details of the acquisition of New Centurion Trust that, as a
result of ceasing to be a close company, your company might be able in future to
obtain the tax benefits granted to an Authorised Investment Trust under Section
842 of the Income and Corporation Taxes Act 1988. However, such benefits are
only available to fully listed companies and your board is therefore on the
horns of a dilemma. It would be imprudent to elect to move down to the
Alternative Investment Market if, in the foreseeable future, we were likely to
suffer tax on capital gains which we would not incur if we qualified as an
Authorised Investment Trust. It would also be a very costly process to move back
up from the Alternative Investment Market to a Full Listing and so, for the time
being, we have to suffer the disadvantages of that higher status.

Under the Companies Act there is a statutory definition of a Small Company. Such
companies do not have to include a business review in their Directors' Report. A
Small Company has to satisfy two of three criteria and The Investment Company
does; although its balance sheet total is in excess of £2.8 million our turnover
is less than £5.6 million and we have less than 50 employees! The bad news
however, is that a Small Company cannot take advantage of this exemption if it
is a public company which of course we are. There are new requirements on the
business review which is why my statement this year will have to attempt to
comply with these new requirements.

It is interesting to note that guidance has been issued by the Department of
Trade & Industry on the changes to the Directors' Report requirements in the
Companies Act 1985 which 'while having no legal force is intended to help
businesses understand the main features of the Directors' Report requirements
and the circumstances in which they apply'. It is quite obvious from a reading
of the guidance notes that an investment company such as ours with only
directors as employees is way outside the intended scope of the changes
introduced. With the best will in the world what is appropriate for BP and
Barclays Bank (companies of which the Chief Executive is paid more every year
than your company's entire equity capitalisation) is simply not relevant to a
company such as yours. 'One size fits all' is a preposterous concept to apply
across the full range of public companies. Our accounts do their best to explain
precisely what there is in your company without going so low as to listing
immaterial details. Judging by the number of shareholders who have attended
general meetings in the last ten years most shareholders have been satisfied
with the information that we publish. Any shareholder wishing to know more will
as always be welcome at the next Annual General Meeting.

Last year I pointed out that, following the New Centurion Trust transaction, the
asset backing of our participating preference shares was now more highly geared
which increased the risk profile of those securities. During the year the
manager of an insurance company retired and the new manager decided to sell the
fund's holding of our participating preference shares. Since that fund was the
largest holder of our shares we were able to purchase the maximum number allowed
under our shareholders permission (which is limited by Listing Rules) buying and
cancelling 1,240,000 participating preference shares on 26 September 2005. As
commented in my interim statement, this reduction of almost 20% in the number of
participating preference shares in issue has helped to rebalance the capital
gearing of your company and has partially relieved our revenue account of
expensive debt. This will not be fully reflected until the accounts for next
year are drawn up.

As an investment company, primarily investing in fixed coupon preference shares,
the business is exposed to the risks associated with changes in interest rates
and the underlying performance of the businesses in which the company holds
investments. Such risks are kept under constant review by the Directors. I wrote
last year of the repayment of an issue of preferred shares at par, despite the
fact that they had been trading at a premium of up to 20% in the months
preceding the repayment. Your board is cautious about the value of any
preference share trading above par. In consequence we have taken advantage of
shares standing above par to sell some of our long-standing holdings. Caffyns
was a company with which we had an unsatisfactory correspondence some years ago
when we questioned its right to repurchase for cancellation a significant
proportion of its ordinary shares without recognising the prior right, as we see
it, of a preference shareholder to repayment of capital ahead of ordinary
shareholders. We have therefore had two reasons to sell our 65% holding of the
issue of 61/2% preference shares. We have also sold the highest coupon issue of
Whitbread Hotels, the 8% issue of Austin Reed and the 6% issue of Guildhall
Properties where we were holders of over 75% of the issue. All sales were above
par.

We were concerned about events at Courtaulds Clothing Brands where we held 64%
of the 71/2% preference shares not owned within the Sara Lee Group. The
company's assets were loans to other companies in the group, whose Pension Fund
was assessed to be in serious deficit. We were relieved when the end March
dividend was paid after we had reduced our stake by selling about 30% of our
holding, xd and above par. We have taken further comfort from the announcement
that Sara Lee Corporation has reached an agreement with the Pension Protection
Fund which appears to stabilise any risk to the solvency of the Courtaulds
Textile Group which has now been sold for a nominal consideration to a private
overseas-based company. With the unfortunate precedent of Automotive Products
and Whitnash in the forefront of our thoughts, we have opened correspondence
with the directors of the subsidiary companies of this group in which we hold
preference shares to put them on notice of our concerns and to remind them of
their fiduciary responsibilities (as we interpret them) to us as shareholders
outside their group.

A year ago your directors resolved to recommend a maintained ordinary share
dividend but I said that we would consider the interim dividend for the current
year in the light of a more normal trading experience. In the event, as you will
be aware, the directors declared an interim dividend on the reduced number of
voting ordinary shares in issue of 4p compared with 3p in the previous year.
Your directors have now resolved to recommend a final dividend of 5p making a
total of 9p for the year. If approved at the Annual General Meeting on 16th
August 2006 this dividend will be paid on 18th August 2006. As a consequence of
this the dividend on the participating preference shares payable on 1st October
2006 will be 5.25p compared with 4.75p last year.

Helped by continuing low long term interest rates prevailing during the year,
the net asset value of our ordinary shares has risen from 215.65p at 31st March
2005, through 250.49p at 30th September 2005, to 283.36p at 31st March 2006.
These figures have been calculated on the same basis using International
Financial Reporting Standards which are now compulsory for listed companies.
Dividends declared and paid after the end of a trading period are no longer
shown as a liability in the balance sheet at the end of that period. However,
our basic preference dividends of 3.5p per half year are shown as a liability,
not least because they are payable on the day immediately after the end of each
six monthly trading period. The participating element is treated as an equity
dividend, and since it awaits its quantification until the approval of the final
dividend at our Annual General Meeting it is therefore, under IFRS, only
recognised in the accounts in the period during which it is paid.

Shareholders should appreciate that all these calculations of ordinary share
asset values are after deducting the participating preference shares in issue at
100p per share which would be those shareholders' entitlement on a return of
capital or in a liquidation. As a result of the low (by recent historical
standards) long term interest rates which have caused our assets to appreciate
in value, our own participating preference shares stand in the market at a
significant premium to their own asset entitlement.

Sir David Thomson Bt. Chairman

12 June 2006


CONSOLIDATED INCOME STATEMENT

For the year ended 31st March 2006
                                                                                         2006          2005
                                                                                            £             £

Total income                                                                        1,010,351    1,028,871
Expenses                                                                            (439,912)    (672,862)
Loan note interest                                                                  (194,748)            -
Bank interest                                                                        (27,636)     (24,594)
Net revenue before taxation                                                           348,055      331,415
Taxation                                                                              (5,200)            -
Net revenue, after taxation                                                           342,855      331,415
Dividends: Participating preference                                                 (470,971)    (514,371)
                  Ordinary                                                          (154,191)    (195,901)
Transfer from reserves                                                              (282,307)    (378,857)
(Loss)/earnings per 50p Ordinary Share                                                (3.51)p      (6.41)p

Basic

Adjusted                                                                              (6.64)p        6.27p
Net asset value per 50p Ordinary Share                                                283.36p      215.65p

All the Company's operations are continuing.



CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31st March 2006                                                       2006         2005
                                                                                           £             £

Distributable profits                                                                 

Net revenue, after taxation                                                           342,855      331,415

Non-distributable profits                                                           

Net profit on disposals of investments                                              1,446,075      505,081

Tax on realised gains                                                                       -            -

Capital redemption reserve                                                            

Movement in unrealised appreciation of investments                                    176,417      436,258

                                                                                    1,622,492      941,339

Total recognised gains and losses for the financial year                            1,965,347    1,272,754


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March 2006

                              Share     Share    Own Shares   Capital   Revaluation  Capital    Revenue         Total
                             Capital   Premium         Held Redemption    Reserve    Reserve    Account
                                                              Reserve
                                    £         £           £           £           £         £           £           £

Balance at 31st March &     4,566,695         -           -   2,439,800     154,363 3,622,403     527,926  11,311,187
1st April 2004

Ordinary shares issued        424,686         -           -           -           -         -           -     424,686

Premium on new shares               - 1,019,246           -           -           -         -           -   1,019,246
issued

Own shares held                     -         - (2,919,861)           -           -         -           - (2,919,861)

Realised capital gains              -         -           -           -           -   505,081           -     505,081

Movement in unrealised              -         -           -           -     436,258         -           -     436,258
appreciation of investment

Retained earnings for the           -         -           -           -           -         -   (378,857)   (378,857)
year

Balance at 31st March &     4,991,381 1,019,246 (2,919,861)   2,439,800     590,621 4,127,484     149,069  10,397,740
1st April 2005

Cancellation of capital             -         -           - (2,439,800)           -         -   2,439,800           -
redemption reserve

Cancellation of deferred     (50,000)         -           -      50,000           -         -           -           -
shares

Buy in of own shares        (621,500)         -           -     621,500           -         - (1,281,589) (1,281,589)

Realised capital gains              -         -           -           -           - 1,446,075           -   1,446,075

Movement in unrealised              -         -           -           -     176,417         -           -     176,417
appreciation of investment

Retained earnings for               -         -           -           -           -         -   (282,307)   (282,307)
the year

Balance at 31st March 2006  4,319,881 1,019,246 (2,919,861)     671,500     767,038 5,573,559   1,024,973  10,456,336


CONSOLIDATED BALANCE SHEET

At 31st March 2006
                                                    31st March 2006                31st March 2005
                                                  £              £           £                   £

Non-current assets                                     

Portfolio investments at cost                          12,391,868                       13,769,941

Unrealised appreciation                                   795,802                          619,385

Portfolio investments at                               13,187,670                       14,389,326
market value

Current assets                            

Trade and other receivables                 121,000                      29,198

Current asset investments                    81,224                     318,201

Cash at bank                              1,048,962                      27,236

                                          1,251,186                     374,635

Current liabilities                               

Bank overdraft                                    -                     273,582

Dividends                                   174,818                     218,218

Trade and other payables                    150,698                     217,417

                                            325,516                     709,217

Net current assets/                                       925,670                        (334,582)
(liabilities)

Non-current liabilities                               

Loan notes                                            (3,657,004)                      (3,657,004)

Net assets                                             10,456,336                       10,397,740

Capital and reserves                                     

Called up share capital                                  4,319,881                       4,991,381

Share premium                                           1,019,246                        1,019,246

Own shares held                                       (2,919,861)                      (2,919,861)

Capital redemption reserve                                671,500                        2,439,800

Revaluation reserve                                       767,038                          590,621

Capital reserve                                         5,573,559                        4,127,484

Revenue reserves                                        1,024,973                          149,069

Shareholders' funds                                    10,456,336                       10,397,740

Net asset value per:                                       
Participating Preference Share
of 50p
(4,994,805 shares, 2005: 6,234,805 shares)                 100.0p                           100.0p

Ordinary Share of 50p (1,927,391 shares,                  283.36p                          215.65p
2005: 1,930,391 shares)

                                                                             Approved by the Board
Sir David Thomson Bt.
Stephen. J. Cockburn                                                                  12 June 2006
Directors


COMPANY BALANCE SHEET

At 31st March 2006
                                                     31st March 2006                 31st March 2005
                                                   £                   £          £               £

                                                                                                  
Non-current assets                                            

Portfolio investments at cost                                 10,998,688                 12,113,431

Unrealised appreciation                                          672,166                     602,218

Portfolio investments at market                               11,670,854                  12,715,649
value

Investment in subsidiaries at                                  5,410,552                   5,410,552
cost

                                                              17,081,406                  18,126,201
Current assets                               

Trade and other receivables                  218,017                        333,806

Cash at bank                               1,042,242                         18,066

                                           1,260,259                        351,872

Current liabilities                                

Bank overdraft                                     -                        273,582

Dividends                                    174,818                        218,218

Intercompany balances                        887,542                        464,091

Trade and other payables                     150,699                        194,937

                                           1,213,059                      1,150,828

Net current assets/                                               
(liabilities)                                                    47,200                   (798,956)

Non-current liabilities                                      

Loan notes                                                  (3,657,004)                 (3,657,004)

Net assets                                                    13,471,602                  13,670,241

Capital and reserves                                           

Called up share capital                                        4,319,881                   4,991,381

Share premium                                                  1,019,246                   1,019,246

Capital redemption reserve                                       671,500                   2,439,800

Revaluation reserve                                              672,166                     602,218

Capital reserve                                                5,505,125                   4,127,484

Revenue reserves                                               1,283,684                     490,112

Shareholders' funds                                           13,471,602                  13,670,241

                                                                               Approved by the Board
Sir David Thomson Bt.
Stephen J. Cockburn                                                                     12 June 2006
Directors


CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31st March 2006
                                                            31st March 2006                   31st March
                                                                                                    2005
Notes                                                  £                  £              £             £

Operating activities                             

Cash received from investments                   927,335                           840,766

Interest received                                108,325                            59,788

Sundry income                                     26,400                             7,245

Cash paid to and on behalf of                  (184,403)                          (83,913)
employees

Other cash payments                            (282,126)                         (241,627)

UK corporation tax paid                          (5,200)                                 -

Net cash inflow from operating          A                           590,331                      582,259
activities

Financing activities                            

Bank interest                                   (30,636)                          (21,594)

Loan note interest paid                        (194,748)                                 -

Non-equity dividends paid                      (514,371)                         (514,371)

Net cash outflow from returns                                     (739,755)                    (535,965)
on investments and servicing
of finance

Investing activities                         

Purchase of investments                      (1,227,754)                       (3,820,714)

Further payment in respect of                   (34,655)                         (314,960)
purchase of subsidiaries

Cash acquired with subsidiary                          -                           469,091

Purchase of own shares                       (1,281,589)                                 -

Sale of investments                            4,142,985                         3,211,979


Net cash inflow/(outflow) from
capital expenditure and financial
investment                                                   1,598,987                 (454,604)

Equity dividends paid                                        (154,255)                 (194,389)

Increase/(decrease) in cash and
cash equivalents                       B                     1,295,308                 (602,699)



NOTES ON THE CONSOLIDATED

CASH FLOW STATEMENT

For the year ended 31st March 2006


                                                                     Group                   Group
                                                                      2006                    2005
                                                                         £                       £
A.        Reconciliation of operating profit to
            net cash inflow from operations:

            Net revenue before taxation                            348,055                 331,415
            UK corporation tax                                     (5,200)                       -
            Impairment of goodwill                                       -                 354,879
            Interest paid                                           30,636                  21,594
            Loan note interest paid                                194,748                       -
            Deemed income distribution                                   -                (92,127)
            Investment losses/(gains) of trading subsidiary         38,166                 (3,945)
            Decrease/(increase) in trade and other                  15,926                (28,674)
            receivables
            Decrease in trade and other payables                  (32,000)                   (883)

                                                                   590,331                 582,259

B.         Reconciliation of cash flow to
            movement in net debt

            Increase/(decrease) in cash and cash equivalents
            in the year                                          1,295,308               (602,699)
            Change in net debt resulting from cash flows         1,295,308               (602,699)
            Loan notes issued                                            -             (3,657,004)
            Decrease/(increase) in net debt                      1,295,308             (4,259,703)
            Net (debt)/funds at 1st April 2005                 (3,903,350)                 356,353
            Net debt at 31st March 2006                        (2,608,042)             (3,903,350)


C.         Analysis of net debt
                                            At 31st March             Cash            At 1st April
                                                     2006             Flow                    2005
                                                        £                £                       £

            Bank overdraft                              -          273,582               (273,582)
            Cash at bank                        1,048,962        1,021,726                  27,236

                                                1,048,962        1,295,308               (246,346)

            Long term debt                    (3,657,004)                -             (3,657,004)

                                                2,608,042        1,295,308             (3,903,350)


Dividend


The Directors are recommending a final dividend of 5p per ordinary share for the
year to 31 March 2006, (2005: final 4p) which will be paid, subject to
shareholder approval, on 18 August 2006 to shareholders on the register on 30
June 2006.  The shares will be marked ex-dividend on 28 June 2006.


Note to the financial information for the year ended 31 March 2006


The financial information does not constitute statutory financial statements
within the meaning of Section 240 of the Companies Act 1985 (as amended). These
statements have been prepared on a consistent basis with the accounting policies
as stated in the current years' financial statements.


The company's statutory accounts for the year ended 31 March 2006 have not been
signed and have not been reported on by the company's auditors.


Copies of this announcement are available from the company's registered office
at 3rd Floor, Salisbury House, London Wall, London, EC2M 5QS.


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