Half Yearly Report For the six months ended 30t...

Rights and Issues Investment Trust PLC (RIII)
Rights and Issues Investment Trust PLC: Half Yearly Report For the six months ended 30th June 2020

03-Aug-2020 / 16:33 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 2020

 

A copy of the Company's Half Yearly Financial Report for the six months ended 30th June 2020 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 sent 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 28th September 2020 to shareholders on the register as at 28th August 2020 (ex-dividend 27th August 2020).

 

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

 

HALF YEARLY FINANCIAL REPORT

for the six months ended 30th June 2020

 

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

One Wood Street

London EC2V 7WS

AUDITOR 

BEGBIES

9 Bonhill Street

London EC2A 4DJ

REGISTRARS 

LINK MARKET SERVICES LTD

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

BROKERS 

SHORE CAPITAL LTD

Cassini House

57-58 St James's Street

London SW1A 1LD

BANKERS/CUSTODIAN 

NORTHERN TRUST

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

 

HALF YEARLY FINANCIAL REPORT

for the six months ended 30th June 2020

CHAIRMAN'S STATEMENT

I was optimistic that after the General Election in late 2019 the resolution of Brexit would be a reasonably well managed process throughout the 12 month transition period. However, the outcome of the trade negotiations with the EU is still unclear and is adversely affecting market sentiment. The Board closely monitors related developments to inform decision making on behalf of the Company.

The COVID19 pandemic, which arrived in the UK and mainland Europe in early 2020, has had an unprecedented and immediate negative impact on markets, particularly from March to May. It is highly likely that the pandemic will undermine corporate performance for some time to come, nevertheless we must battle on.

The FTSE All-Share Index fell by 18.7% during the first six months and, disappointingly, the Company's portfolio had a mixed six months with net asset value per share reducing by 20.9% to 1800.3p.

No shares were purchased under the Company's established share buy-back programme in the half year. The issued share capital therefore remained unchanged as at 30th June 2020 at 7,540,321, which represents a reduction of 16.4% since December 2016. The share buy-back programme has been paused for the foreseeable future.

The interim dividend is being maintained at 10.75p (2019: 10.75p), 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 pandemic for the Company's net asset position and future income streams, and will make changes to the Company's future dividend payments when deemed appropriate to do so.

Environmental, Social and Governance risks continue to be recognised as significant matters of global concern and the Board is committed to ensuring that the Company, through the Investment Director, appropriately manages and mitigates these risks through the investment strategy.

I am pleased to confirm that the composition of your Board has remained stable throughout the half year, and myself and my board colleagues look forward to overseeing implementation of the Company's investment strategy and improving returns for shareholders in the future.

Finally, in the medium term, the economic outlook is flat at best and the corporate environment is certainly tougher. However, we will continue to focus on delivering our overall strategy.

Dr D. M. BRAMWELL

Chairman

3rd August 2020

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 uncertainty surrounding the potential duration of the COVID-19 pandemic and its impact on the global economy, the Company's assets and the potential for the level of revenue derived from the portfolio to reduce from previous years. 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.

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 through the COVID-19 pandemic.

STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30th June 2020

Notes

 

Six months ended 30th June 2020

 

Six months ended 30th June 2019

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Investment income

2

315

-

315

1,911

-

1,911

Other operating income

2

-

-

-

8

-

8

Total income

 

315

-

315

1,919

-

1,919

Gains/(losses) through fair value

 

-

(34,137)

(34,137)

-

5,518

5,518

Gains on subsidiary holding

 

-

-

-

-

52

52

 

 

315

(34,137)

(33,822)

1,919

5,570

7,489

Expenses

 

 

 

 

 

 

 

Investment management fee

 

-

-

-

-

-

-

Other expenses

 

367

-

367

400

16

416

 

 

367

-

367

400

16

416

Profit/(loss) before tax

 

(52)

(34,137)

(34,189)

1,519

5,554

7,073

Tax-

 

 

-

-

-

-

-

Profit/(loss) for the period

 

(52)

(34,137)

(34,189)

1,519

5,554

7,073

Earnings per share

 

 

 

 

 

 

 

Return per Ordinary
Share

 

(0.7)p

(452.7)p

(453.4)p

19.1p

69.8p

88.9p

 

Return per share is calculated using the weighted average number of Ordinary shares in issue during the period ended 30th June 2020 of 7,540,321 (2019: 7,958,152).

The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards as adopted by the EU. 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 profit 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 (2019: 10.75p) per share and amounting to £810,585 (calculated as at 29th July 2020) (2019: £825,220) is payable on 28th September 2020 to shareholders on the register as at 28th August 2020 (ex-dividend 27th August 2020).

Notes

 

 

Year ended 31st December 2019

 

Revenue

£'000

Capital

£'000

Total

£'000

Investment income

2

3,150

-

3,150

Other operating income

2

9

-

9

Total income

 

3,159

-

3,159

Gains/(losses) through fair value

 

-

11,188

11,188

Gains on subsidiary holding

 

-

52

52

 

 

3,159

11,240

14,399

Expenses

 

 

 

 

Investment management fee

 

-

-

-

Other expenses

 

803

68

871

 

 

803

68

871

Profit/(loss) before tax

 

2,356

11,172

13,528

Tax

 

-

-

-

Profit/(loss) for the period

 

2,356

11,172

13,528

Earnings per share

 

 

 

 

Return per Ordinary
Share

 

30.2p

143.3p

173.5p

 

Return per share is calculated using the weighted average number of Ordinary shares in issue during the year ended 31st December 2019 of 7,797,775.

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 2020 and 30th June 2019 has not been audited.

The information for the year ended 31st December 2019 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 2020 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information and their report is on page 12.

 

BALANCE SHEET

as at 30th June 2020

Non-current assets

30th June

2020

£'000

30th June

2019

£'000

31st December

2019

£'000

Investments - fair value through profit or loss

123,519

163,207

155,701

 

123,519

163,207

155,701

Current assets

 

 

 

Trade and other receivables

33

1,095

534

Amounts due from Group undertakings

78

78

78

Cash and cash equivalents

12,158

7,642

15,322

 

12,269

8,815

15,934

Total assets

135,788

172,022

171,635

Current liabilities

 

 

 

Trade and other payables

43

154

80

 

43

154

80

Total assets less current liabilities

135,745

171,868

171,555

Net assets

135,745

171,868

171,555

Equity

 

 

 

Called up share capital

1,885

1,963

1,885

Capital redemption reserve

370

292

370

Retained reserves:

 

 

 

Capital reserve

63,842

59,481

64,742

Revaluation reserve

68,347

107,170

101,584

Revenue reserve

1,301

2,962

2,974

Total equity

135,745

171,868

171,555

Net asset value per share

 

 

 

Ordinary shares

1,800.3p

2,188.7p

2275.2p

STATEMENT OF CHANGES IN EQUITY

for the six months ended 30th June 2020

For the six months
ended 30th June 2019

Balance at

 

Share

capital

£'000

Capital redemption reserve

£'000

Capital reserve

£'000

 

Revaluation reserve

£'000

Revenue
reserve

£'000

 

 

Total

£'000

31st December 2018

2,002

253

61,984

102,217

3,119

169,575

Profit for the period

Total recognised income
and expense

Ordinary shares bought back
and cancelled

-

-

601

4,953

1,519

7,073

2,002

(39)

253

39

62,585

(3,104)

107,170

-

4,638

-

176,648

(3,104)

Dividends (Note 3)

Balance at

30th June 2019

-

-

-

-

(1,676)

(1,676)

1,963

292

59,481

107,170

2,962

171,868

 

For the year ended
31st December 2019

Balance at

 

Share

capital

£'000

Capital Redemption

reserve

£'000

 

Capital reserve

£'000

 

Revaluation reserve

£'000

 

Revenue
reserve

£'000

 

 

Total

£'000

31st December 2018
Changes in equity for 2019

2,002

253

61,984

102,217

3,119

169,575

Profit for the year

Total recognised income
and expense

Ordinary shares bought back
and cancelled

-

-

11,805

(633)

2,356

13,528

2,002

(117)

253

117

73,789

(9,047)

101,584

-

5,475

-

183,103

(9,047)

Dividends (Note 3)

Balance at

31st December 2019

-

-

-

-

(2,501)

(2,501)

1,885

370

64,742

101,584

2,974

171,555

 

For the six months
ended 30th June 2020

Balance at

 

Share

capital

£'000

Capital redemption reserve

£'000

 

Capital reserve

£'000

 

Revaluation reserve

£'000

 

Revenue
reserve

£'000

 

 

Total

£'000

31st December 2019

1,885

370

64,742

101,584

2,974

171,555

Loss for the period

Total recognised income
and expense

Ordinary shares bought back
and cancelled

-

-

(900)

(33,237)

(52)

(34,189)

1,885

-

370

-

63,842

-

68,347

-

2,922

-

137,366

-

Dividends (Note 3)

Balance at

30th June 2020

-

-

-

-

(1,621)

(1,621)

1,885

370

63,842

68,347

1,301

135,745

STATEMENT OF CASH FLOWS

for the six months ended 30th June 2020

Cashflows from operating activities

30th June

2020

£'000

30th June

2019

£'000

31st December

2019

£'000

Profit/(loss) before tax

(34,189)

7,073

13,528

Adjustments for:

 

 

 

(Gains)/losses on investments

34,137

(5,518)

(11,188)

(Gains) on revaluation of subsidiary

-

(52)

(52)

Purchases of investments

(6,697)

(2,815)

(8,671)

Proceeds on disposal of investments

4,742

825

19,857

Operating cash flows before movements in working capital

(2,007)

(487)

13,474

Decrease/(increase) in receivables

501

(474)

87

Decrease in payables

(37)

(35)

(1)

Net cash from operating activities

(1,543)

(996)

13,560

Cashflows from financing activities

 

 

 

Ordinary shares bought back and cancelled

-

(2,996)

(9,047)

Dividends paid

(1,621)

(1,676)

(2,501)

Net cash used in financing activities

(1,621)

(4,672)

(11,548)

Net (decrease)/increase in cash and cash equivalents

(3,164)

(5,668)

2,012

Cash and cash equivalents at beginning of period

15,322

13,310

13,310

Cash and cash equivalents at end of period

12,158

7,642

15,322

NOTES TO THE HALF YEARLY FINANCIAL REPORT

for the six months ended 30th June 2020

1. Accounting Standards

The condensed interim financial report has been prepared in accordance with International Financial Reporting Standards (IFRSs), including IAS 34 "Interim financial reporting" as adopted by the European Union. The same accounting policies and methods of computation are followed in the interim financial report as those used in the Company's latest published annual financial statements.

 

2.  Income

Total income comprises:

30th June

2020

£'000

30th June

2019

£'000

31st December

2019

£'000

Dividends

315

1,911

3,150

Interest

-

8

9

Total income

315

1,919

3,159

3.  Dividends

 

 

 

 

30th June

30th June

31st December

 

2020

2019

2019

 

£'000

£'000

£'000

Amounts recognised as distributions to equity holders in the year:

 

 

 

Interim dividend for the year ended 31st December 2019 of 10.75p per share

-

-

825

Final dividend for the year ended 31st December 2019

of 21.5p per share (year ended 31st December 2018: 21.00p)

1,621

1,676

1,676

 

1,621

1,676

2,501

 

30th June

  2020

  £'000

Income

Proposed interim dividend of 10.75p per share 811___

 811

This proposed interim dividend was approved by the Board on 3rd August 2020, has been calculated based on shares in issue at 29th July 2020, and has not been included as a liability at 30th

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 2019.

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 2020

Financial assets at fair value through profit or loss

Level 1

£000

Level 2

£000

Level 3

£000

Total

£000

UK Equity Listed

98,621

-

-

98,621

AIM traded stocks

24,138

-

-

24,138

Delisted stock

-

2

-

2

Investment in subsidiary undertaking

-

-

758

758

Net fair value

122,759

2

758

123,519

30th June 2019

Level 1

Level 2

Level 3

Total

 

£000

£000

£000

£000

Financial assets at fair value through profit or loss

 

 

 

 

UK Equity Listed

121,300

-

-

121,300

AIM traded stocks

41,147

-

-

41,147

Delisted stock

-

2

-

2

Investment in subsidiary undertaking

-

-

758

758

Net fair value

162,447

2

758

163,207

 

31st December 2019

Financial assets at fair value through profit or loss

Level 1

£000

Level 2

£000

Level 3

£000

Total

£000

UK Equity Listed

115,395

-

-

115,395

AIM traded stocks

39,546

-

-

39,546

Delisted stock

-

2

-

2

Investment in subsidiary

-

-

758

758

Net fair value

154,941

2

758

155,701

 

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

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

 

30th June

2020

£'000

30th June

2019

£'000

31st December

2019

£'000

Opening Balance

758

706

706

Purchases

-

-

-

Sales

-

-

-

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

 

 

 

- on assets sold

-

-

-

- on assets held at period end

-

52

52

Closing Balance

758

758

758

 

The Level 3 investment relates to the Company's subsidiary, Discretionary Unit Fund Managers Limited, which has been valued based on the most recent estimated NAV.

  1.   Related Party Transactions

Under IFRS, the Directors have been identified as related parties. Their fees and interests for the year ended 31st December 2019 have been disclosed in the Directors' Annual Remuneration Report within the 2019 Annual Report and Financial Statements.

During the period the Company had the following transactions with Discretionary Unit Fund Managers Limited, its subsidiary undertaking:

 30th June 30th June 31st December

 2020 2019 2019

 £'000 £'000 £'000

Dividends received - - -

- - -

Amounts owed by subsidiary undertaking 78 78 78

  1.   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 for continuing 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 2019.

In the view of the Board, the outbreak of an infectious respiratory illness caused by coronavirus known as COVID-19 has fundamentally altered the nature of the risks reported in the Annual Report and Financial Statements. COVID-19 has resulted in travel restrictions, closed international borders, disrupted supply chains and adversely affected consumer demand. The impact of COVID-19 has severely affected the economies of many nations across the entire global economy and capital markets and could continue with extents that cannot necessarily be foreseen.

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 IAS 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 3rd August 2020.

Dr D. M. BRAMWELL
Chairman

PORTFOLIO STATEMENT

Details of the twenty largest investments as at 30th June 2020 are given below by market value:

UK Investments

 

Holdings

 

Market Value

30th June 2020

31st December 2019

30th June 2020

£'000

31st December 2019

£'000

Hill & Smith Holdings

1,434,230

1,434,230

17,842

21,126

Treatt

3,500,000

4,250,000

17,185

19,125

Vp

1,800,000

1,800,000

12,780

16,920

Macfarlane Group

17,250,000

17,250,000

12,075

18,199

Spirax-Sarco Engineering

120,714

120,714

12,042

10,731

Electrocomponents

1,300,000

1,300,000

8,717

8,757

Colefax Group

2,365,000

2,100,000

8,278

8,820

Scapa Group

8,000,000

8,000,000

7,864

19,520

Elecosoft

4,520,781

4,520,781

3,436

3,526

Renold

30,000,000

30,000,000

3,000

5,100

Vitec Group

400,000

400,000

2,704

4,280

IMI

275,000

-

2,537

-

Morgan Advanced Materials

1,000,000

750,000

2,410

2,377

Bellway

80,000

80,000

2,037

3,046

Carr's Group

1,750,000

350,000

1,899

532

Castings

400,000

400,000

1,440

1,640

National Grid

137,500

137,500

1,359

1,298

GlaxoSmithKline

70,000

70,000

1,145

1,245

Menzies (John)

882,142

882,142

1,101

4,173

Titon Holdings

1,265,000

1,265,000

886

1,518

 

 

 

120,737

151,933

Balance held in other investments

 

 

2,782

3,768

 

 

 

123,519

155,701

 

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

INTRODUCTION

We have been engaged by the Company to review the financial statements in the Half Yearly Financial Report for the six months ended 30th June 2020 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Statement of Cash Flows and the related explanatory notes 1 to 6. We have read the other information contained in the Half Yearly Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

The report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. 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.

DIRECTORS' RESPONSIBILITIES

The Half Yearly Financial Report is the responsibility of, and has been approved by, 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.

As disclosed in note 1, the Annual Financial Statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The financial statements included in this Half Yearly Financial Report have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

OUR RESPONSIBILITY

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements

in the Half Yearly Financial Report based on our review.

SCOPE OF REVIEW

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. 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 Ireland) 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.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the financial statements in the Half Yearly Financial Report for the six months ended 30th June 2020 are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

JEREMY STAINES

For and on behalf of Begbies 9 Bonhill Street

Chartered Accountants London EC2A 4DJ

3rd August 2020

 

END



ISIN: GB0007392078
Category Code: IR
TIDM: RIII
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 79531
EQS News ID: 1108567

 
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