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Rights and Issues Investment Trust PLC: Half Year Report for the period to 30th June 2022

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Rights and Issues Investment Trust PLC (RIII)
Rights and Issues Investment Trust PLC: Half Year Report for the period to 30th June 2022
01-Aug-2022 / 12:17 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

RIGHTS AND ISSUES INVESTMENT TRUST PLC

For the six months ended 30th June 2022

 

A copy of the Company's Half Yearly Financial Report for the six months ended 30th June 2022 will shortly be available to view and download from www.maitlandgroup.com/investments-trusts/rights-and-issues-investment-trust-plc/.  Neither the contents of this website nor the contents of any website accessible from hyperlinks on this website (or any other website) is incorporated into or forms part of this announcement.

 

Printed copies of the Report will be made available to shareholders shortly. Additional copies may be obtained from the Corporate Secretary – Maitland Administration Services Limited, Hamilton Centre, Rodney Way, Chelmsford, Essex CM1 3BY.

 

INTERIM DIVIDEND

 

An interim dividend of 10.75p per share has been approved by the Board and is payable on 26th September 2022 to shareholders on the register as at 26th August 2022 (ex-dividend 25th August 2022).

 

The following text is copied from the Half Yearly Financial Report.

 

HALF YEARLY FINANCIAL REPORT

for the six months ended 30th June 2022

 

DIRECTORS AND ADVISERS

 

DIRECTORS Dr D. M. BRAMWELL (Chairman)

D. M. BEST

Dr A. J. HOSTY

S. J. B. KNOTT

J. B. ROPER

REGISTERED OFFICE Hamilton Centre

Rodney Way

Chelmsford CM1 3BY

WEBSITE www.maitlandgroup.com/investment-trusts/

rights-and-issues-investment-trust-plc/

ADMINISTRATOR/SECRETARY MAITLAND ADMINISTRATION SERVICES LTD

Hamilton Centre

Rodney Way

Chelmsford CM1 3BY

SOLICITORS EVERSHEDS SUTHERLAND

1 Wood Street

London EC2V 7WS

AUDITOR BEGBIES

9 Bonhill Street

London EC2A 4DJ

REGISTRARS LINK GROUP

Central Square

29 Wellington Street

Leeds LS1 4DL

BROKERS FINNCAP LIMITED

One Bartholomew Close

London EC1A 7BL

BANKERS/CUSTODIAN NORTHERN TRUST COMPANY

50 Bank Street

Canary Wharf

London E14 5NT

 

REGISTRATION DETAILS

Company Registration Number: 00736898 (Registered in England)

SEDOL number: 0739207

ISIN number: GB0007392078

London Stock Exchange (EPIC) Code: RIII

Global Intermediary Identification Number (GIIN): I2ZVNY.99999.SL.826

Legal Entity Identifier (LEI): 2138002AWAM93Z6BP574

 

CHAIRMAN’S STATEMENT

 

It has been a turbulent six months with the war between Russia and Ukraine dominating the international political focus. Global supply chain problems have consequently increased further, creating significant inflationary pressure throughout the world.

The COVID-19 pandemic is still with us although travel and workplace restrictions have been lifted; it remains to be seen whether the removal of restrictions will result in increasing infections when the winter season is upon us. Supply chains remain significantly disrupted due to manufacturing restrictions in China and other key manufacturing nations.

Increases in labour, material and energy costs continue to stimulate a rise in inflation globally. As expected, interest rates are steadily increasing throughout the world but central banks are understandably careful not raise them too quickly.

The FTSE All-Share Index decreased by 7.7% in the first six months to 30th June 2022; however, it is important to note that this index contains a significant number of large petrochemical, gas, mining and other commodity companies which have benefitted from the inflationary and global supply chain shortages. The Company’s portfolio does not contain such companies. During the period, the Company’s net asset value reduced from 3036.6 to 2447.9 pence per share, a decrease of 19.4%.

Due to the uncertainties outlined above and overall equity values, the composition of the portfolio remained largely unchanged but further investments were made to rebalance the risk profile. The share buy-back programme continued and has had a beneficial impact on the Company’s net asset value.

On 7th June 2022 the Board announced that Simon Knott, Investment Director, intends to retire as the investment manager of the Company with effect from 1st September 2022 and that he will continue as a non-executive director of the Company. It was also announced that the Company intends to appoint Jupiter Unit Trust Managers Limited (“JUTM”) as the Company’s new investment manager.

Details of the proposed tender offer are expected to be announced shortly.

An interim dividend of 10.75p is proposed, reflecting the Directors’ awareness of the importance of dividend income to the Company’s investors and its robust underlying financial position. The Directors are closely monitoring the implications of the continuing market volatility and global response to the war in Ukraine, supply chain problems, inflation and the pandemic for the Company’s net asset position and future income streams and will make changes to the Company’s dividend policy when deemed appropriate to do so.

I am pleased to confirm that the composition of your Board continues to remain stable and I and my board colleagues look forward to overseeing the transition from a self-managed investment trust, confident in the Company’s ability to meet shareholders’ expectations over the long term.

Dr D. M. BRAMWELL

Chairman

1st August 2022

You can view or download copies of the Half Yearly and the Annual Reports from our website at www.maitlandgroup.com/investment-trusts/rights-and-issues-investment-trust-plc/

The Half Yearly Report will also be made available to shareholders and copies are available at the registered office of the Company on request.

Risks and uncertainties
Cautionary statement

This Half Yearly Report contains forward-looking statements that involve risk and uncertainty. These have been made by the Directors in good faith based on the information available to them at the time of their approval of this Report.

The Board is mindful of the continuing uncertain outlook for the global economy arising from the effects of the COVID-19 pandemic and, more recently, the conflict between Russia and Ukraine and significant increases in inflation. The Company’s assets and the potential level of revenue derived from the portfolio remain exposed to macro-economic deteriorations. The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objectives and projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound.

Should there be any future governmental interventions to restrict the spread of COVID-19, the Board believes that the Company and its key third party service providers have in place appropriate business continuity plans and will be able to maintain service levels to support the Company’s operational performance.

 

STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30th June 2022

Notes

Six months ended 30th June 2022

 

Six months ended 30th June 2021

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Investment income

2

2,473

2,473

2,541

2,541

Other operating income

2

1

1

Total income

 

2,474

2,474

2,541

2,541

(Losses)/gains through fair value

 

(43,713)

(43,713)

38,957

38,957

(Losses) on subsidiary holding

 

(411)

(411)

 

 

2,474

(43,713)

(41,239)

2,541

38,546

41,087

Expenses

 

 

 

 

 

 

 

Investment management fee

 

Other expenses

 

377

38

415

360

360

 

 

377

38

415

360

360

(Loss)/profit before tax

 

2,097

(43,751)

(41,654)

2,181

38,546

40,727

Tax

 

(Loss)/profit for the period

 

2,097

(43,751)

(41,654)

2,181

38,546

40,727

Earnings per share

 

 

 

 

 

 

 

Return per Ordinary
Share

 

28.9p

(603.0)p

(574.1)p

28.9p

511.2p

540.1p

 

Return per share is calculated using the weighted average number of Ordinary shares in issue during the period ended 30th June 2022 of 7,255,868 (2021: 7,540,321).

The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards as adopted by the UK. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement are those of the single entity and derive from continuing operations.

The loss for the period disclosed above represents the Company’s total Comprehensive Income. The Company does not have any other Comprehensive Income.

An interim dividend of 10.75p (2021: 10.75p) per share and amounting to £764,591 (calculated as at 28th July 2022) (2021: £810,585) is payable on 26th September 2022 to shareholders on the register as at 26th August 2022 (ex-dividend 25th August 2022).

 

Notes

 

Year ended 31st December 2021

Revenue

£'000

Capital

£'000

Total

£'000

Investment income

2

3,640

3,640

Other operating income

2

Total income

 

3,640

3,640

Gains through fair value

 

58,259

58,259

(Losses) on subsidiary holding

 

(758)

(758)

 

 

3,640

57,501

61,141

Expenses

 

 

 

 

Investment management fee

 

Other expenses

 

724

34

758

 

 

724

34

758

Profit before tax

 

2,916

57,467

60,383

Tax

 

Profit for the period

 

2,916

57,467

60,383

Earnings per share

 

 

 

 

Return per Ordinary
Share

 

38.8p

766.0p

804.8p

 

Return per share is calculated using the weighted average number of Ordinary shares in issue during the year ended 31st December 2021 of 7,502,568.

The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Sections 434 – 436 of the Companies Act 2006. The information for the six months to 30th June 2022 and 30th June 2021 has not been audited.

The information for the year ended 31st December 2021 has been extracted from the latest published audited accounts which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under Section 498 (2) or (4) of the Companies Act 2006.

 

The auditors have reviewed the financial information for the six months ended 30th June 2022 pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information and their report is on page 14.

 

BALANCE SHEET

as at 30th June 2022

Non-current assets

30th June

2022

£'000

30th June

2021

£'000

31st December

2021

£'000

Investments – fair value through profit or loss

162,608

169,877

196,397

 

162,608

169,877

196,397

Current assets

 

 

 

Trade and other receivables

1,312

937

641

Cash and cash equivalents

11,156

38,666

26,761

 

12,468

39,603

27,402

Total assets

175,076

209,480

223,799

Current liabilities

 

 

 

Trade and other payables

184

45

67

 

184

45

67

Total assets less current liabilities

174,892

209,435

223,732

Net assets

174,892

209,435

223,732

Equity

 

 

 

Called up share capital

1,786

1,885

1,842

Capital redemption reserve

469

370

413

Retained reserves:

 

 

 

Capital reserve

75,938

84,596

81,410

Revaluation reserve

94,246

120,403

137,959

Revenue reserve

2,453

2,181

2,108

Total equity

174,892

209,435

223,732

Net asset value per share

 

 

 

Ordinary shares

2,447.9p

2,777.5p

3,036.6p

 

The number of Ordinary shares in issue as at 30th June 2022 was 7,144,458 (30th June 2021: 7,540,321, 31st December 2021: 7,367,952).

 

STATEMENT OF CHANGES IN EQUITY

for the six months ended 30th June 2022

For the six months
ended 30th June 2021

Balance at

Share
capital

£'000

Capital redemption reserve

£'000

Capital
reserve

£'000

Revaluation reserve

£'000

Revenue
reserve

£'000

Total

£'000

31st December 2020

1,885

370

63,842

102,833

1,399

170,329

Profit for the period

20,976

17,570

2,181

40,727

Total recognised income
and expense

1,885

370

84,818

120,403

3,580

211,056

Ordinary shares bought back
and cancelled

Dividends (Note 3)

(222)

(1,399)

(1,621)

Balance at

30th June 2021

1,885

370

84,596

120,403

2,181

209,435

 

For the year ended
31st December 2021

Balance at

Share capital

£’000

Capital Redemption

reserve

£’000

Capital
reserve

£’000

Revaluation reserve

£’000

Revenue
reserve

£’000

Total

£’000

31st December 2020

1,885

370

63,842

102,833

1,399

170,329

Changes in equity for 2021

 

 

 

 

 

 

Profit for the year

22,341

35,126

2,916

60,383

Total recognised income
and expense

1,885

370

86,183

137,959

4,315

230,712

Ordinary shares bought back
and cancelled

(43)

43

(4,551)

(4,551)

Dividends (Note 3)

(222)

(2,207)

(2,429)

Balance at

31st December 2021

1,842

413

81,410

137,959

2,108

223,732

 

For the six months
ended 30th June 2022

Balance at

Share
capital

£'000

Capital redemption reserve

£'000

Capital
reserve

£'000

Revaluation reserve

£'000

Revenue
reserve

£'000

Total

£'000

31st December 2021

1,842

413

81,410

137,959

2,108

223,732

(Loss) for the period

(38)

(43,713)

2,097

(41,654)

Total recognised income
and expense

1,842

413

81,372

94,246

4,205

182,078

Ordinary shares bought back
and cancelled

(56)

56

(5,434)

(5,434)

Dividends (Note 3)

(1,752)

(1,752)

Balance at

30th June 2022

1,786

469

75,938

94,246

2,453

174,892

STATEMENT OF CASH FLOWS

for the six months ended 30th June 2022

Cashflows from operating activities

30th June

2022

£'000

30th June

2021

£'000

31st December

2021

£'000

(Loss)/profit before tax

(41,654)

40,727

60,383

Adjustments for:

 

 

 

Losses/(gains) on investments

43,713

(38,546)

(57,501)

Purchases of investments

(9,924)

(9,502)

Proceeds on disposal of investments

26,674

28,611

Operating cash flows before movements in working capital

(7,865)

28,855

21,991

(Increase)/decrease in receivables

(671)

(256)

40

Increase/(decrease) in payables

117

(28)

(6)

(Decrease) in amounts payable to group undertakings

(758)

(758)

Net cash flows from operating activities

(8,419)

27,813

21,267

Cashflows from financing activities

 

 

 

Ordinary shares bought back and cancelled

(5,434)

(4,551)

Dividends paid

(1,752)

(1,621)

(2,429)

Net cash used in financing activities

(7,186)

(1,621)

(6,980)

Net (decrease)/increase in cash and cash equivalents

(15,605)

26,192

14,287

Cash and cash equivalents at beginning of period

26,761

12,474

12,474

Cash and cash equivalents at end of period

11,156

38,666

26,761

 

 

The proposed interim dividend was approved by the Board on 1st August 2022 and has been calculated based on shares in issue as at 28th July 2022, being the latest practicable date prior to publication of this report. The interim dividend has not been included as a liability at 30th June 2022.

 

4. Valuation of financial instruments

IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 1 Investments, as set out in the Company’s Annual Report and Financial Statements for the year ended 31st December 2021.

The fair value hierarchy has the following levels:

Level 1 – Unadjusted prices quoted in active markets for identical assets and liabilities.

Level 2 – Having inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly (ie as prices) or indirectly (ie derived from prices).

Level 3 – Having inputs for the asset or liability that are not based on observable data.

30th June 2022

Level 1

Level 2

Level 3

Total

 

£'000

£'000

£'000

£'000

Financial assets at fair value through profit or loss

 

 

 

 

UK Equity Listed

135,871

135,871

AIM traded stocks

26,735

26,735

Unlisted stock

2

2

Investment in subsidiary undertaking

Net fair value

162,606

2

162,608

 

 

 

 

 

30th June 2021

Level 1

 

Level 2

Level 3

Total

 

£'000

£'000

£'000

£'000

Financial assets at fair value through profit or loss

 

 

 

 

UK Equity Listed

143,761

143,761

AIM traded stocks

26,114

26,114

Unlisted stock

2

2

Investment in subsidiary undertaking

 

-

Net fair value

169,875

2

-

169,877

 

 

31st December 2021

Financial assets at fair value through profit or loss

Level 1

£'000

Level 2

£'000

Level

£'000

Total

£'000

UK Equity Listed

168,664

 168,664

AIM traded stocks

27,731

 27,731

Unlisted stock

2

 2

Investment in subsidiary

 

Net fair value

196,395

2

 196,397

 

 

 

 

 

 

 

 

 

 

 

There were no transfers between Level 1 and Level 2 during the periods.

A reconciliation of fair value measurements in Level 3 is set out in the following table.

 

 

30th June

2022

£’000

 

30th June

2021

£’000

31st December

2021

£’000

Opening Balance

758

758

Purchases

Sales

Total gains or losses included in gains on investments in the Income Statement:

 

 

 

– on assets sold

– on assets held at period end

(758)

(758)

Closing Balance 

The Level 3 investment related to the Company’s subsidiary, Discretionary Unit Fund Managers Limited. At 30th June 2022 there were no Level 3 investments as the subsidiary was dissolved on 26th April 2022.

5. Related Party Transactions

Under IAS 24, the Directors have been identified as related parties. Their fees and interests for the year ended 31st December 2021 have been disclosed in the Directors’ Annual Remuneration Report within the 2021 Annual Report and Financial Statements.

On 26th April 2022 Discretionary Unit Fund Managers was dissolved. There were no transactions during the period relating to the subsidiary.

 

 

30th June

2022

£’000

 

30th June

2021

£’000

31st December

2021

£’000

Dividends received

758

758

 

758

758

Amounts owed by/(due to) subsidiary undertaking

 

6. Going Concern

The Company’s assets comprise mainly realisable equity securities and cash and the value of its assets is greater than its liabilities. Additionally, after reviewing the Company’s budget including the current financial resources and projected expenses for the next twelve months and its medium-term plans, the Directors believe that the Company's resources are adequate to continue in business for the foreseeable future.

Based on the above, the Board is satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31st December 2021.

 

DIRECTORS’ STATEMENT OF RESPONSIBILITY FOR THE HALF YEARLY FINANCIAL REPORT

 

The Directors are responsible for preparing the Half Yearly financial report in accordance with applicable law and regulations.

The Directors confirm that to the best of their knowledge:

  • the condensed set of financial statements has been prepared in accordance with UK adopted International Accounting Standard 34 “Interim Financial Reporting”; and

  • the Half Yearly management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.

This report was approved on 1st August 2022.

Dr D. M. BRAMWELL
Chairman

 

PORTFOLIO STATEMENT

 

Details of the investments held within the portfolio as at 30th June 2022 are given below by market value:

UK Investments

 

Holdings

 

Market Value

30th June 2022

31st December 2021

30th June 2021

31st December 2021

£’000

Vp

2,450,000

1,800,000

20,335

16,236

Macfarlane

17,250,000

17,250,000

19,751

22,425

Treatt

2,500,000

2,500,000

18,875

32,125

Hill & Smith

1,434,230

1,434,230

16,580

25,673

Colefax

2,050,000

2,050,000

14,555

12,505

Spirax-Sarco Engineering

120,714

120,714

11,917

19,368

RS

1,300,000

1,300,000

11,297

15,678

Renold

30,000,000

30,000,000

8,160

9,000

Videndum

500,000

500,000

6,500

7,100

Carr's

4,750,000

3,300,000

6,317

5,280

IMI

500,000

400,000

5,860

6,944

Menzies (John)

882,142

882,142

5,266

2,708

Morgan Advanced Materials

1,500,000

1,500,000

4,117

5,370

Eleco

4,520,781

4,520,781

3,210

4,069

Bellway

130,000

130,000

2,790

4,337

National Grid

137,500

137,500

1,446

1,457

Castings

400,000

400,000

1,240

1,400

GlaxoSmithKline

70,000

70,000

1,236

1,125

Titon

1,265,000

1,265,000

1,037

1,391

Dialight

238,095

238,095

714

738

Santander UK 10.375%

 

 

 

 

Non Cumulative Preferred

400,000

400,000

592

700

LPA

650,000

650,000

475

403

Coral Products

2,000,000

2,000,000

290

290

Chamberlin

1,000,000

1,000,000

46

73

Dyson

1,000,000

1,000,000

2

2

Costain

41

41

Discretionary Unit Fund Managers

2

 

 

 

162,608

196,397

 

Unless otherwise specified, the actual holdings are, in each case, of ordinary shares or stock units and of the nominal value for which listing has been granted.

 

INDEPENDENT REVIEW REPORT TO RIGHTS AND ISSUES INVESTMENT TRUST PLC

CONCLUSION

We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30th June 2022 which comprises the statement of comprehensive income, balance sheet, statement of changes in equity, statement of cash flows and the related notes 1 to 6.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 30th June 2022 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

BASIS FOR CONCLUSION

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued in the United Kingdom (ISRE). A review of interim information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than in an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

The annual financial statements of the Company are prepared in accordance with UK adopted International Accounting Standards. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34 “Interim Financial Reporting”.

CONCLUSIONS RELATING TO GOING CONCERN

Based on our review procedures, which are less extensive than those performed in an audit as described in the basis for conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with the ISRE, however future events or conditions may cause the Company to cease to continue as a going concern.

RESPONSIBILITIES OF THE DIRECTORS

The directors are responsible for preparing the half yearly financial report in accordance with the Disclosure

and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

In preparing the half yearly financial report, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE FINANCIAL INFORMATION

In reviewing the half yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half yearly financial report. Our conclusion, including our conclusion relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the basis for conclusion paragraph of this report.

USE OF OUR REPORT

The report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK) 2410 issued in the UK. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Begbies 9 Bonhill Street

Chartered Accountants London EC2A 4DJ

1st August 2022

 

 


ISIN:

GB0007392078

Category Code:

IR

TIDM:

RIII

LEI Code:

2138002AWAM93Z6BP574

Sequence No.:

178488

EQS News ID:

1410457


 

End of Announcement

EQS News Service

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