DJ Rights and Issues Investment Trust PLC: Half Year Report for the period to 30th June 2022
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.
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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
Six months ended 30th June Six months ended 30th June 2021
2022
Notes
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 28.9p (603.0)p (574.1)p 28.9p 511.2p 540.1p
Share
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 GBP764,591 (calculated as at 28th July 2022) (2021: GBP810,585) is payable on 26th September 2022 to shareholders on the register as at 26th August 2022 (ex-dividend 25th August 2022).
Year ended 31st December 2021
Notes Revenue Capital Total
GBP'000 GBP'000 GBP'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 38.8p 766.0p 804.8p
Share
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
30th June 30th June 31st December
Non-current assets 2022 2021 2021
GBP'000 GBP'000 GBP'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 Share Capital redemption reserve Capital Revaluation reserve Revenue Total
ended 30th June 2021 capital reserve reserve
GBP'000 GBP'000 GBP'000
Balance at GBP'000 GBP'000 GBP'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 1,885 370 84,818 120,403 3,580 211,056
and expense
Ordinary shares bought back - - - - - -
and cancelled
Dividends (Note 3) - - (222) - (1,399) (1,621)
Balance at
1,885 370 84,596 120,403 2,181 209,435
30th June 2021
For the year ended Capital Redemption Capital Revenue
31st December 2021 Share capital reserve Revaluation reserve reserve Total
reserve
Balance at GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'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 1,885 370 86,183 137,959 4,315 230,712
and expense
Ordinary shares bought back (43) 43 (4,551) - - (4,551)
and cancelled
Dividends (Note 3) - - (222) - (2,207) (2,429)
Balance at
1,842 413 81,410 137,959 2,108 223,732
31st December 2021
For the six months Share Capital redemption reserve Capital Revaluation reserve Revenue Total
ended 30th June 2022 capital reserve reserve
GBP'000 GBP'000 GBP'000
Balance at GBP'000 GBP'000 GBP'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 1,842 413 81,372 94,246 4,205 182,078
and expense
Ordinary shares bought back (56) 56 (5,434) - - (5,434)
and cancelled
Dividends (Note 3) - - - - (1,752) (1,752)
Balance at
1,786 469 75,938 94,246 2,453 174,892
30th June 2022
STATEMENT OF CASH FLOWS
for the six months ended 30th June 2022
30th June 30th June 31st December
Cashflows from operating activities 2022 2021 2021
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'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
Level 1
30th June 2021 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'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 Level 1 Level 2 Level Total
Financial assets at fair value through profit or loss GBP'000 GBP'000 GBP'000 GBP'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
30th June 31st December
2022
2021 2021
GBP'000
GBP'000 GBP'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
30th June 31st December
2022
2021 2021
GBP'000
GBP'000 GBP'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 InternationalAccounting Standard 34 "Interim Financial Reporting"; and
-- the Half Yearly management report includes a fair review of the information required by DTR 4.2.7R and4.2.8R.
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:
Holdings Market Value
UK Investments 31st December 2021
30th June 2022 31st December 2021 30th June 2021
GBP'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
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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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(END) Dow Jones Newswires
August 01, 2022 07:18 ET (11:18 GMT)
