Final Results

RNS Number : 9443N

Rights and Issues Inv Trust PLC

26 February 2009

 



RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

CHAIRMAN'S STATEMENT

Since the Trust refocused its aims in 1984, I have witnessed many highs and lows in the UK stock market. 2008, without doubt, has proved to be the most difficult year of all. The bare statistic of a 32.8% fall in the FTSE All Share index does not describe the full agony of this past year. The performance of the FTSE Small Cap and the FTSE Fledgling indices which plunged by 45.8% and 42.3% respectively brings out the full extent of the tragedy.

The international banking crisis progressively worsened during the year and the failure of Lehman Brothers' in September opened the flood gates. Until that point the impact of the financial markets on the real economy was merely a pronounced slowdown with extreme pain only being experienced in a few sectors such as private house building. Since then there has been a collapse in confidence and the economy is now in a vicious recession.

Your Trust has suffered the full force of the current economic hurricane. The net asset value of the capital shares declined from 3342.1p to 1643.3p and that of the income shares from 851.4p to 459.0p. The falls of 50.8% and 46.1% go beyond disappointment.

Discretionary Unit Fund Managers has also been severely impacted by the declines in UK small company prices and only achieved a marginal profit. The decline in funds under management means that it is unlikely to match the recent level of profitability in the next five years. This has a significant effect on the Trust's ability to pay dividends. In recent years Discretionary Unit Fund Managers' profitability accounted for up to a fifth of Group profit before tax. Your Board has reviewed its medium term forecasts and decided that it would be prudent to rebase the level of the ordinary dividends for the income and capital classes.

Your Directors have therefore reduced the level of the dividend to 33.0p per income share and 1.65p per capital share. This new level should be sustainable but given the current level of uncertainty this cannot be guaranteed. Additionally, the supplementary capital dividend of 68.6829p per capital share was paid on 2nd January 2009 and, barring unforeseen circumstances, will be maintained at 68.6829p per capital payable on 2nd January 2010.

The outlook is far from good. The UK economy is likely to fall by over 3% in 2009 with only Japan registering a worse economic performance. The capital goods cycle is now in a profound downswing. Cross border banking relationships are not functioning starving the UK banking sector of funds to lend on. Still even in these most difficult of times some companies will produce reasonable profitability.

S. H. J. A. KNOTT

Chairman

You can view or download copies of the Half Year and Annual reports from our website at www.rightsandissues.co.uk.

They are to be posted to shareholders and are available at the registered office of the Company.

Risks and uncertainties

Cautionary statement

This 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. Due to the inherent uncertainties, including stock market risk factor, actual results may differ materially from those expressed or implied by these forward-looking statements.

Further information on the principal long-term risks and uncertainties of the Trust is included in the annual report.

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the annual report and accounts in accordance with applicable United Kingdom law and International Financial Reporting Standards (IFRS) as adopted by the European Union.

The Directors are required to prepare the accounts for each financial year which present fairly the financial position of the Group and the financial performance and cashflows of the Company and the Group for that period. In preparing those Accounts the Directors are required to:

•	select suitable accounting policies and then apply them consistently;

•	present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•	provide additional disclosures when compliance with the specific requirements of IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the group's financial position and financial performance;

•	state that the Company has complied with IFRS subject to any material departures disclosed and explained in the accounts; and

•	prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Accounts comply with the Companies Act 1985 and Article 4 of the IAS regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and the Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Visitors to the website need to be aware that legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors confirm that to the best of their knowledge that:

•	the accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group; and

•	the annual report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that they face.

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

CONSOLIDATED INCOME STATEMENT

for the year ended 31st December, 2008

				Year ended 31st December, 2008						Year ended 31st December, 2007
		Notes		Revenue		Capital		Total		Revenue		Capital		Total
				£		£		£		£		£		£
Investment income		2		2,190,628		-		2,190,628		2,148,467		-		2,148,467
Other operating income		2		601,994		-		601,994		902,022		-		902,022
Total income				2,792,622		-		2,792,622		3,050,489		-		3,050,489
Gains/(Losses) on fair value
through profit or loss assets		10		(316,824)		(37,130,786)		(37,447,610)		(48,570)		(7,171,726)		(7,220,296)
				2,475,798		(37,130,786)		(34,654,988)		3,001,919		(7,171,726)		(4,169,807)
Expenses
Investment management fee				-		-		-		-		-		-
Other expenses		3		540,400		-		540,400		533,232		-		533,232
				540,400		-		540,400		533,232		-		533,232
Profit before tax				1,935,398		(37,130,786)		(35,195,388)		2,468,687		(7,171,726)		(4,703,039)
Tax		5		1,561		-		1,561		86,213		-		86,213
Profit for the period				1,936,959		(37,130,786)		(35,193,827)		2,382,474		(7,171,726)		(4,789,252)
Earnings per share
Return per income share (p)		7		31.5p		(377.4)p		(345.9)p		48.9p		(72.9)p		(24.0)p
Return per capital share (p)		7		70.3p		(1698.1)p		(1627.8)p		71.1p		(328.0)p		(256.9)p

The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. 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 derive from continuing operations.

All income is attributable to the equity holders of the parent company. There are no minority interests.

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

CONSOLIDATED BALANCE SHEET

as at 31st December, 2008

						Company				Group
		Notes		2008		2007		2008		2007
				£		£		£		£
Non-current assets
Goodwill		8		-		-		65,191		65,191
Investments - Fair value through
profit or loss		10		35,413,748		72,359,805		34,982,276		71,928,333
				35,413,748		72,359,805		35,047,467		71,993,524
Current assets
Trading investments				-		-		419,606		619,797
Trade and other receivables		14		189,784		232,114		211,553		313,080
Amounts due from group undertakings				800,849		692,166		-		-
Cash and cash equivalents				2,202,487		2,835,625		3,031,234		3,692,284
				3,193,120		3,759,905		3,662,393		4,625,161
Total assets				38,606,868		76,119,710		38,709,860		76,618,685
Current liabilities
Trade and other payables		15		43,677		43,672		267,765		576,930
Current tax payable				-		-		-		86,813
				43,677		43,672		267,765		663,743
Total assets less current liabilities				38,563,191		76,076,038		38,442,095		75,954,942
Net assets				38,563,191		76,076,038		38,442,095		75,954,942
Equity
Called up share capital		16		1,225,000		1,225,000		1,225,000		1,225,000
Share premium account		17		225,326		225,326		225,326		225,326
Retained reserves:
Capital reserve		17		40,751,585		40,668,355		40,751,585		40,668,355
Revaluation reserve		17		(5,683,938)		31,530,078		(5,683,938)		31,530,078
Dividend equalisation reserve		17		2,045,218		2,427,279		1,924,122		2,306,183
Total equity				38,563,191		76,076,038		38,442,095		75,954,942
Net asset value per share
Income shares								459.0p		851.4p
Capital shares								1643.3p		3,342.1p

The financial statements were approved by the board and authorised for issue on 26th February 2009. They were signed on its behalf by:

S. H. J. A. Knott, Director

S. J. B. Knott, Director

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31st December, 2008

		Share capital  £		Share premium account  £		Capital reserve  £		Revaluation reserve  £		Dividend equalisation reserve  £		Total  £
Balance at 31st December, 2006		1,225,000		225,326		41,235,990		38,134,169		2,203,779		83,024,264
Changes in equity for 2007
(Loss)/Profit for the period		-		-		(567,635)		(6,604,091)		2,382,474		(4,789,252)
Total recognised income and expenses		-		-		(567,635)		(6,604,091)		2,382,474		(4,789,252)
Dividends		-		-		-		-		(2,280,070)		(2,280,070)
Balance at 31st December, 2007		1,225,000		225,326		40,668,355		31,530,078		2,306,183		75,954,942
Changes in equity for 2008
(Loss)/Profit for the period		-		-		83,230		(37,214,016)		1,936,959		(35,193,827)
Total recognised income and expenses		-		-		83,230		(37,214,016)		1,936,959		(35,193,827)
Dividends		-		-		-		-		(2,319,020)		(2,319,020)
Balance at 31st December, 2008		1,225,000		225,326		40,751,585		(5,683,938)		1,924,122		38,442,095

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 31st December, 2008

		Share  capital  £		Share premium account  £		Capital reserve  £		Revaluation reserve  £		Dividend equalisation  reserve  £		Total  £
Balance at 31st December, 2006		1,225,000		225,326		41,235,990		38,134,169		2,324,875		83,145,360
Changes in equity for 2007
(Loss)/Profit for the period		-		-		(567,635)		(6,604,091)		2,382,474		(4,789,252)
Total recognised income and expenses		-		-		(567,635)		(6,604,091)		2,382,474		(4,789,252)
Dividends		-		-		-		-		(2,280,070)		(2,280,070)
Balance at 31st December, 2007		1,225,000		225,326		40,668,355		31,530,078		2,427,279		76,076,038
Changes in equity for 2008
(Loss)/Profit for the period		-		-		83,230		(37,214,016)		1,936,959		(35,193,827)
Total recognised income and expenses		-		-		83,230		(37,214,016)		1,936,959		(35,193,827)
Dividends		-		-		-		-		(2,319,020)		(2,319,020)
Balance at 31st December, 2008		1,225,000		225,326		40,751,585		(5,683,938)		2,045,218		38,563,191

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

CASH FLOW STATEMENT

for the year ended 31st December, 2008

						Company				Group
				2008		2007		2008		2007
		Notes		£		£		£		£
Cashflows from operating activities
(Loss)/Profit before tax				(35,195,475)		(4,859,252)		(35,195,388)		(4,703,039)
Adjustments for:
Losses/(Gains) on investments				37,130,786		7,171,726		37,130,786		7,171,726
Purchases of investments		19		(953,318)		(2,255,669)		(953,318)		(2,255,669)
Proceeds on disposal of investments		19		768,589		3,455,921		768,589		3,455,921
Movement in trading investments				-		-		200,191		(210,071)
Operating cash flows before movements
in working capital				1,750,582		3,512,726		1,950,860		3,458,868
Decrease/(increase) in receivables				(134,705)		(91,594)		101,527		71,361
Increase/(decrease) in payables				5		26,056		(309,165)		(23,633)
Net cash from operating activities before income taxes				1,615,882		3,447,188		1,743,222		3,506,596
Income taxes paid				70,000		67,000		(85,252)		(90,837)
Net cash from operating activities				1,685,882		3,514,188		1,657,970		3,415,759
Cash flows from financing activities Dividends paid				(2,319,020)		(2,280,070)		(2,319,020)		(2,280,070)
Net cash (used in)/from financing activities				(2,319,020)		(2,280,070)		(2,319,020)		(2,280,070)
Net increase/(decrease) in cash and cash equivalents				(633,138)		1,234,118		(661,050)		1,135,689
Cash and cash equivalents at beginning of year				2,835,625		1,601,507		3,692,284		2,556,595
Cash and cash equivalents at end of year				2,202,487		2,835,625		3,031,234		3,692,284

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

Notes:

1. The figures set out above are derived from the audited consolidated accounts of Rights and Issues Investment Trust Plc and its subsidiaries for the years ended 31 December 2007 and 31 December 2008. The 2008 accounts will be sent to shareholders shortly.

2. The financial information contained in this announcement does not constitute full accounts within the meaning of section 254 of the Companies Act 1985. The 2008 accounts, on which the report of the auditors is unqualified, will be filed with the Registrar of Companies in due course. The audited accounts for the year ended 31 December 2007 on which the report of the auditors was unqualified and did not contain a statement under either Section 237(2) or 237(3) of the Companies Act 1985, have been filed with the Registrar of Companies.

3. DIVIDENDS AND OTHER APPROPRIATIONS

Amounts recognised as distributions to equity holders in the period:

		2008		2007		2008		2007
		p		p		£		£
Income
Final dividend for the year ended 31st December, 2007		30.50		29.50		750,300		725,700
Interim dividend for the year ended 31st December, 2008		16.00		15.50		393,600		381,300
Capital
Final dividend for the year ended 31st December, 2007		2.3000		2.1750		37,720		35,670
Supp cap dividend for the year ended 31st December, 2008		68.6829		68.6829		1,126,400		1,126,400
						2,308,020		2,269,070
Dividends on non-equity shares:
Cumulative preference		5.5%		5.5%		11,000		11,000

The Articles provide for a supplementary Dividend to Capital Shareholders to be paid not only in respect of future potential Preference Share issues which are not made, but also the 20,480,000 Preference Shares which could have been issued following the increases in the Capital Reserve revealed by the accounts since 1981.

		2008		2007		2008		2007
		p		p		£		£
Income
Proposed final dividend for the year ended 31st December, 2008		17.00		30.50		418,200		750,300
Capital
Proposed final dividend for the year ended 31st December, 2008		1.6500		2.3000		27,060		37,300

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 

END

 

 

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