[ 5 ]

STATEMENT OF INVESTMENTS
June 30, 2016
(Unaudited)

[ 6 ]

[ 7 ]

See accompanying notes to financial statements.

[ 8 ]

STATEMENT OF ASSETS AND LIABILITIES

June 30, 2016
(Unaudited)

See accompanying notes to financial statements.

[ 9 ]

STATEMENT OF OPERATIONS

For the six months ended June 30, 2016
(Unaudited)

See accompanying notes to financial statements.

[ 10 ]

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended June 30, 2016
and the year ended December 31, 2015

See accompanying notes to financial statements.

[ 11 ]

STATEMENT OF CASH FLOWS

For the six months ended June 30, 2016
(Unaudited)

See accompanying notes to financial statements.

[ 12 ]

NOTES TO FINANCIAL STATEMENTS — (Unaudited)

     1. Significant Accounting Policies — Central Securities Corporation (the “Corporation”) is registered under the Investment Company Act of 1940, as amended, as a non-diversified, closed-end management investment company. The following is a summary of the significant accounting policies consistently followed by the Corporation in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles.

Security Valuation — Marketable common stocks are valued at the last or closing sale price or, if unavailable, at the closing bid price. Short-term investments are valued at amortized cost, which approximates fair value. Securities for which no ready market exists are valued at estimated fair value pursuant to procedures adopted by the Board of Directors. The determination of fair value involves subjective judgments. As a result, using fair value to price a security may result in a price materially different from the price used by other investors or the price that may be realized upon the actual sale of the security.

Federal Income Taxes — It is the Corporation’s policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net capital gains to its stockholders. Management has analyzed positions taken on the Corporation’s tax returns and has determined that no provision for income taxes is required in the accompanying financial statements.

Use of Estimates — The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results may differ from those estimates.

Other — Security transactions are accounted for as of the trade date, and cost of securities sold is determined by specific identification. Dividend income and distributions to stockholders are recorded on the ex-dividend date.

     2. Fair Value Measurements — The Corporation’s investments are categorized below in three broad hierarchical levels based on market price observability as follows:

     The designated Level for a security is not necessarily an indication of the risk associated with investing in that security.

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NOTES TO FINANCIAL STATEMENTS — continued (unaudited)

     The Corporation’s investments as of June 30, 2016 are classified as follows:

     The following is a reconciliation of the change in the value of Level 3 investments:

     Unrealized appreciation of Level 3 investments held at June 30, 2016 was unchanged during the six months ended June 30, 2016.

     In valuing the Plymouth Rock Level 3 investment as of June 30, 2016, management used a number of significant unobservable inputs to develop a range of possible values for the investment. It used a comparable company approach that utilized the following valuation multiples from selected publicly traded companies: price-to-book value (range: 0.6–2.5); price-to-earnings (range: 10.6–27.5); and price-to-revenue (range: 0.6–1.3). Management also used a discounted cash flow model based on a forecasted return on equity ranging from 7%–8% and a weighted average cost of capital of 9%. An independent valuation of Plymouth Rock’s shares was also considered. The value obtained from weighting the three methods described above (with greater weight given to the comparable company approach) was then discounted for lack of marketability by 20% and 40%, a range management believes market participants would apply. The resulting range of values, together with the underlying support, other information about Plymouth Rock’s financial condition and results of operations, its corporate governance, the insurance industry outlook, and transactions in Plymouth Rock’s shares were considered by management, which recommended a value for the investment. All of this information was subsequently considered by the Corporation’s directors, who selected the value.

     Significant increases (decreases) in the price-to-book value multiple, price-to-earnings multiple, price-to-revenue multiple and return on equity rate in isolation would result in a higher (lower) range of fair value measurements. Significant increases (decreases) in the discount for lack of marketability or weighted average cost of capital in isolation would result in a lower (higher) range of fair value measurements.

     3. Common Stock — At the Corporation’s annual meeting of stockholders on March 23, 2016, stockholders approved an increase in the authorized number of shares of Common Stock from 30,000,000 to 40,000,000.

[ 14 ]

NOTES TO FINANCIAL STATEMENTS — continued (unaudited)

     During the six months ended June 30, 2016, the Corporation purchased 266,422 shares of its Common Stock at an average price of $18.45 per share representing an average discount from net asset value of 20.46%. The Corporation may from time to time purchase its Common Stock in such amounts and at such prices as the Board of Directors may deem advisable in the best interests of the stockholders. Purchases will only be made at less than net asset value per share, thereby increasing the net asset value of shares held by the remaining stockholders. Shares so acquired may be held as treasury stock available for stock distributions, or may be retired.

     4. Investment Transactions — The aggregate cost of securities purchased and the aggregate proceeds of securities sold during the six months ended June 30, 2016, excluding short-term investments, were $30,286,102 and $33,806,335, respectively.

     As of June 30, 2016, based on cost for Federal income tax purposes, the aggregate gross unrealized appreciation and depreciation for all securities were $266,974,654 and $23,934,566, respectively.

     5. Affiliated Companies — Plymouth Rock is an affiliated company as defined in the Investment Company Act of 1940 due to the Corporation’s ownership of more than 5% of Plymouth Rock’s outstanding voting securities. During the six months ended June 30, 2016, the Corporation received dividends of $1,341,613 from Plymouth Rock. The President of the Corporation is a director of Plymouth Rock.

     6. Restricted Securities — The Corporation may from time to time invest in securities the resale of which is restricted. On June 30, 2016, the Corporation’s restricted securities consisted of 28,424 shares of Plymouth Rock that were acquired on December 15, 1982 at a cost of $710,600. These securities had a value of $113,696,000 at June 30, 2016, which was equal to 19.1% of the Corporation’s net assets. The Corporation does not have the right to demand registration of these securities.

     7. Bank Line of Credit — The Corporation has entered into a $25 million uncommitted, secured revolving line of credit with UMB Bank, n.a. (“UMB”), the Corporation’s custodian. All borrowings are payable on demand of UMB. Interest on any borrowings is payable monthly at a rate based on the federal funds rate, subject to a minimum annual rate of 2.50%. No borrowings were made during the six months ended June 30, 2016.

     8. Compensation and Benefit Plans — The aggregate compensation expense for all officers during the six months ended June 30, 2016 was $1,628,435, of which $1,255,000 was paid during the period.

     Officers and other employees participate in a 401(k) and profit sharing plan. The Corporation has agreed to contribute 3% of each participant’s qualifying compensation to the plan, which is immediately vested. Contributions in excess of 3% may be made at the discretion of the Board of Directors and vest after three years of service. During the six months ended June 30, 2016, the Corporation accrued $115,388 related to the plan.

[ 15 ]

NOTES TO FINANCIAL STATEMENTS — continued (unaudited)

     The Corporation maintains an incentive compensation plan (the “2012 Plan”) which permits the grant of awards of unrestricted stock, restricted stock, restricted stock units and cash to full-time employees and non-employee directors of the Corporation. The 2012 Plan provides for the issuance of up to 1,000,000 shares of the Corporation’s Common Stock over the ten-year life of the 2012 Plan, of which 962,361 remain available for future grants at June 30, 2016. The 2012 Plan limits the amount of shares that can be awarded to any one person in total or within a certain time period. Any award made under the 2012 Plan may be subject to performance conditions. The 2012 Plan is administered by the Corporation’s Compensation and Nominating Committee.

     Pursuant to the terms of the 2012 Plan, each non-employee director is awarded 500 shares of vested unrestricted Common Stock at his initial election to the Board of Directors or at his continuation of service as a director after the Corporation’s annual meeting. During the six months ended June 30, 2016, non-employee directors were granted a total of 3,000 shares of Common Stock valued at $18.995 per share, which was the average of the high and low prices of the Corporation’s Common Stock on the grant date. The aggregate share value of $56,985 plus cash payments of $78,500 made to all non-employee directors are included in Directors’ Fees expense in the accompanying Statement of Operations.

     During the six months ended June 30, 2016, no other awards were granted under the 2012 Plan.

     9. Operating Lease Commitment — The Corporation has an operating lease for office space that expires at June 30, 2019. Future minimum rental commitments under the lease at June 30, 2016 aggregate $1.1 million as follows: $187,442 in 2016, $374,884 annually in 2017 – 2018 and $187,442 in 2019. The lease agreement contains escalation clauses relating to operating costs and real property taxes. The landlord may terminate the lease with one-year’s notice, in which case the Corporation’s rental commitment would end as of the termination date.

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FINANCIAL HIGHLIGHTS

     The following table shows per share operating performance data, total returns, ratios and supplemental data for the six months ended June 30, 2016 and each year in the five-year period ended December 31, 2015. This information has been derived from information contained in the financial statements and market price data for the Corporation’s shares.

     The Corporation’s total returns reflect changes in market price or net asset value, as applicable, and assume reinvestment of all distributions. Distributions that are payable only in cash are assumed to be reinvested at the market price or net asset value, as applicable, on the payable date of the distribution. Cash distributions payable in subsequent years are assumed to be reinvested at the year-end market price or net asset value as applicable. Distributions that may be taken in shares are assumed to be reinvested at the price designated by the Corporation.

See accompanying notes to financial statements.

[ 17 ]

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OTHER STOCKHOLDER INFORMATION

Direct Registration

     The Corporation utilizes direct registration, a system that allows for book-entry ownership and the electronic transfer of the Corporation’s shares. Stockholders may find direct registration a convenient way of managing their investment. Stockholders wishing certificates may request them.

     A pamphlet which describes the features and benefits of direct registration, including the ability of shareholders to deposit certificates with our transfer agent, can be obtained by calling Computershare Trust Company at 1-800-756-8200, calling the Corporation at 1-866-593-2507 or visiting our website: www.centralsecurities.com under Contact Us.

Proxy Voting Policies and Procedures

     The policies and procedures used by the Corporation to determine how to vote proxies relating to portfolio securities and the Corporation’s proxy voting record for the twelve-month period ended June 30, 2016 are available: (1) without charge, upon request, by calling us at our toll-free telephone number (1-866-593-2507), (2) on the Corporation’s website at www.centralsecurities.com and (3) on the Securities and Exchange Commission’s website at www.sec.gov.

Quarterly Portfolio Information

     The Corporation files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Corporation’s Form N-Q filings are available on the SEC’s website at www.sec.gov. Those forms may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Annual Meeting of Stockholders

     The annual meeting of stockholders of the Corporation was held on March 23, 2016. At the meeting, all of the directors of the Corporation were reelected by the following vote of the holders of the Common Stock:

     A proposal to ratify the selection of KPMG LLP as independent auditors of the Corporation for the year 2016 was approved with 22,397,963 votes for, 196,357 votes against and 85,364 shares abstaining.

     A proposal recommending the amendment of the Certificate of Incorporation to increase the authorized number of shares of Common Stock from 30,000,000 to 40,000,000 was approved with 20,212,664 votes for, 2,264,475 votes against and 202,545 shares abstaining.

[ 19 ]

BOARD OF DIRECTORS

Wilmot H. Kidd, Chairman
L. Price Blackford, Lead Independent Director
Simms C. Browning
Donald G. Calder
David C. Colander
Jay R. Inglis
C. Carter Walker, Jr.

OFFICERS

Wilmot H. Kidd, President
John C. Hill, Vice President
Marlene A. Krumholz, Vice President and Secretary
Andrew J. O’Neill, Vice President
Lawrence P. Vogel, Vice President and Treasurer

OFFICE

630 Fifth Avenue
New York, NY 10111
212-698-2020
866-593-2507 (toll-free)
www.centralsecurities.com

TRANSFER AGENT AND REGISTRAR

Computershare Trust Company, N.A.
P.O. Box 30170, College Station, TX 77842-3170
800-756-8200
www.computershare.com

CUSTODIAN

UMB Bank, n.a.
Kansas City, MO

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP
New York, NY

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