HALF YEARLY MANAGEMENT REPORT
for the six months ended 30th June 2009
CHAIRMAN'S STATEMENT
The modest fall of 1.7% in the UK equity market as measured by the FT All-Share Index disguises a substantial fall in the earlier months followed by a major recovery in May. The world recession and the likelihood of any subsequent recovery continue to dominate investor sentiment.
The better background in small company markets has allowed the net asset value of the capital shares to recover by 6.5% to 1749.8p.
Dividends have continued to be impacted by companies' need to protect cash and the income received by the Trust in the first six months has been disappointing. In the light of this, the interim dividend has been reduced to 8.5p per income share.
The dramatic falls in economic activity in the major developed economies appears now to have ended but the prospects for any upturn remain uncertain.
Simon Knott
Chairman
July 2009
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 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. 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.
There are a number of potential risks and uncertainties which could have a material impact on Trust's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. Recent volatility in the stock market and in financial markets has added to uncertainty. The Trust's results continue to be exposed to the risk of market price. Further information on the principal long-term risks and uncertainties of the Trust is included in the latest annual report.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30th June 2009
|
|
Six months ended 30th June 2009 |
||||
|
|
Revenue |
|
Capital |
|
Total |
|
|
£ |
|
£ |
|
£ |
Investment income |
|
556,075 |
|
- |
|
556,075 |
Other operating income |
|
113,312 |
|
- |
|
113,312 |
|
|
|
|
|
|
|
Total income |
|
669,387 |
|
- |
|
669,387 |
Gains/(Losses) on fair value |
|
|
|
|
|
|
through profit or loss assets |
|
(19,394) |
|
2,370,843 |
|
2,351,449 |
|
|
|
|
|
|
|
|
|
649,993 |
|
2,370,843 |
|
3,020,836 |
Expenses |
|
|
|
|
|
|
Investment management fee |
|
- |
|
- |
|
- |
Other expenses |
|
240,569 |
|
- |
|
240,569 |
|
|
|
|
|
|
|
|
|
240,569 |
|
- |
|
240,569 |
Profit before tax |
|
409,424 |
|
2,370,843 |
|
2,780,267 |
Tax |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
Profit for the period |
|
409,424 |
|
2,370,843 |
|
2,780,267 |
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
Return per income share (p) |
|
(6.3)p |
|
24.1p |
|
17.8p |
Return per capital share (p) |
|
34.0p |
|
108.4p |
|
142.4p |
|
|
|
|
|
|
|
The interim dividend of 8.5p net (2008: 16.0p net) per income share and amounting to £209,100 (2008: £393,600) is payable on 30th September 2009 to shareholders on the register as at 28th August 2009. The sum accruing by way of dividend to the Capital shareholders will, in view of the small sum involved be included in the final dividend.
|
|
Six months ended 30th June 2008 |
|
Year ended 31st December 2008 |
||||||||
|
|
Revenue |
|
Capital |
|
Total |
|
Revenue |
|
Capital |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
Investment income |
|
1,114,231 |
|
- |
|
1,114,231 |
|
2,190,628 |
|
- |
|
2,190,628 |
Other operating income |
|
358,772 |
|
- |
|
358,772 |
|
601,994 |
|
- |
|
601,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
1,473,003 |
|
- |
|
1,473,003 |
|
2,792,622 |
|
- |
|
2,792,622 |
Gains/(Losses) on fair value |
|
|
|
|
|
|
|
|
|
|
|
|
through profit or loss assets |
|
(108,494) |
|
(9,065,365) |
|
(9,173,859) |
|
(316,824) |
|
(37,130,786) |
|
(37,447,610) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,364,509 |
|
(9,065,365) |
|
(7,700,856) |
|
2,475,798 |
|
(37,130,786) |
|
(34,654,988) |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fee |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Other expenses |
|
266,601 |
|
- |
|
266,601 |
|
540,400 |
|
- |
|
540,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266,601 |
|
- |
|
266,601 |
|
540,400 |
|
- |
|
540,000 |
Profit before tax |
|
1,097,908 |
|
(9,065,365) |
|
(7,967,457) |
|
1,935,398 |
|
(37,130,786) |
|
(35,195,388) |
Tax |
|
- |
|
- |
|
- |
|
1,561 |
|
- |
|
1,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
1,097,908 |
|
(9,065,365) |
|
(7,967,457) |
|
1,936,959 |
|
(37,130,786) |
|
(35,193,827) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
Return per income share (p) |
|
20.8p |
|
(92.1)p |
|
(71.3)p |
|
31.5p |
|
(377.4)p |
|
(345.9)p |
Return per capital share (p) |
|
35.4p |
|
(414.6)p |
|
(379.2)p |
|
70.3p |
|
(1698.1)p |
|
(1627.8)p |
|
|
|
|
|
|
|
|
|
|
|
|
|
These are not full statutory accounts in terms of Section 240 of the Companies Act 1985. The full audited
accounts for the year to 31st December 2008, have been filed with the Registrar of Companies.
The auditors' report on those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
CONSOLIDATED BALANCE SHEET
as at 30th June 2009
|
|
30th June |
|
30th June |
|
31st December |
|
|
2009 |
|
2008 |
|
2008 |
|
|
£ |
|
£ |
|
£ |
Non-current assets |
|
|
|
|
|
|
Goodwill |
|
65,191 |
|
65,191 |
|
65,191 |
Investments - Fair value through profit or loss |
|
37,432,888 |
|
62,848,563 |
|
34,982,276 |
|
|
|
|
|
|
|
|
|
37,498,079 |
|
62,913,754 |
|
35,047,467 |
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Trading investments |
|
318,650 |
|
550,217 |
|
419,606 |
Trade and other receivables |
|
262,149 |
|
534,826 |
|
211,553 |
Amounts due from group undertakings |
|
- |
|
- |
|
- |
Cash and cash equivalents |
|
2,876,077 |
|
3,680,281 |
|
3,031,234 |
|
|
|
|
|
|
|
|
|
3,456,876 |
|
4,765,324 |
|
3,662,393 |
|
|
|
|
|
|
|
Total Assets |
|
40,954,955 |
|
67,679,078 |
|
38,709,860 |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Trade and other payables |
|
746,553 |
|
961,499 |
|
267,765 |
Current tax payable |
|
- |
|
86,813 |
|
- |
|
|
|
|
|
|
|
|
|
746,553 |
|
1,048,312 |
|
267,765 |
|
|
|
|
|
|
|
Total assets less current liabilities |
|
40,208,402 |
|
66,630,766 |
|
38,442,095 |
|
|
|
|
|
|
|
Net Assets |
|
40,208,402 |
|
66,630,766 |
|
38,442,095 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Called up share capital |
|
1,225,000 |
|
1,225,000 |
|
1,225,000 |
Share premium account |
|
225,326 |
|
225,326 |
|
225,326 |
Retained reserves: |
|
|
|
|
|
|
Capital reserve |
|
40,751,585 |
|
40,682,762 |
|
40,751,585 |
Revaluation reserve |
|
(3,313,095) |
|
22,450,307 |
|
(5,683,938) |
Dividend equalisation reserve |
|
1,319,586 |
|
2,047,371 |
|
1,924,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
40,208,402 |
|
66,630,766 |
|
38,442,095 |
|
|
|
|
|
|
|
Net asset value per share |
|
|
|
|
|
|
Income shares |
|
459.9p |
|
749.6p |
|
459.0p |
Capital shares |
|
1749.8p |
|
2926.3p |
|
1643.3p |
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30th June 2009
|
|
|
|
Share |
|
|
|
|
|
Dividend |
|
|
|
|
Share |
|
premium |
|
Capital |
|
Revaluation |
|
equalisation |
|
|
|
|
capital |
|
account |
|
reserve |
|
reserve |
|
reserve |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
For the six months ended June 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
31st December 2007 |
|
1,225,000 |
|
225,326 |
|
40,668,355 |
|
31,530,078 |
|
2,306,183 |
|
75,954,942 |
Profit for the period |
|
- |
|
- |
|
14,407 |
|
(9,079,771) |
|
1,097,908 |
|
(7,967,456) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised income and expense |
|
1,225,000 |
|
225,326 |
|
40,682,762 |
|
22,450,307 |
|
3,404,091 |
|
67,987,486 |
Dividends |
|
- |
|
- |
|
- |
|
- |
|
(1,356,720) |
|
(1,356,720) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30th June 2008 |
|
1,225,000 |
|
225,326 |
|
40,682,762 |
|
22,450,307 |
|
2,047,371 |
|
66,630,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
|
|
|
Dividend |
|
|
|
|
Share |
|
premium |
|
Capital |
|
Revaluation |
|
equalisation |
|
|
|
|
capital |
|
account |
|
reserve |
|
reserve |
|
reserve |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
For the six months ended June 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
31st December 2008 |
|
1,225,000 |
|
225,326 |
|
40,751,585 |
|
(5,683,938) |
|
(1,924,122) |
|
38,442,095 |
Profit for the period |
|
- |
|
- |
|
- |
|
2,370,843 |
|
409,424 |
|
2,780,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised income and expense |
|
1,225,000 |
|
225,326 |
|
40,751,585 |
|
(3,313,095) |
|
2,333,546 |
|
41,222,362 |
Dividends |
|
- |
|
- |
|
- |
|
- |
|
(1,013,960) |
|
(1,013,960) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30th June 2009 |
|
1,225,000 |
|
225,326 |
|
40,751,585 |
|
(3,313,095) |
|
1,319,586 |
|
40,208,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30th June 2009
|
|
Group |
|
Group |
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
Cashflows from operating activities |
|
|
|
|
Profit before tax |
|
2,780,267 |
|
(7,967,457) |
|
|
|
|
|
Adjustments for: |
|
|
|
|
(Gains)/losses on investments |
|
(2,370,843) |
|
9,079,771 |
Purchase of investments |
|
(79,769) |
|
- |
Proceeds of investments |
|
- |
|
- |
Movement in trading investments |
|
100,956 |
|
69,580 |
|
|
|
|
|
Operating cash flows before movements in working capital |
|
430,611 |
|
1,181,894 |
Decrease/(increase) in receivables |
|
(50,596) |
|
(221,746) |
Increase/(decrease) in payables |
|
(89,912) |
|
(184,131) |
|
|
|
|
|
Net cash from operating activities before income taxes |
|
290,103 |
|
776,017 |
Income taxes paid |
|
- |
|
- |
|
|
|
|
|
Net cash from operating activities |
|
290,103 |
|
776,017 |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Dividends paid |
|
(445,260) |
|
(788,020) |
|
|
|
|
|
Net cash (used in)/from financing activities |
|
(445,260) |
|
(788,020) |
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
(155,157) |
|
(12,003) |
Cash and cash equivalents at beginning of year |
|
3,031,234 |
|
3,692,284 |
|
|
|
|
|
Cash and cash equivalents at end of period |
|
2,876,077 |
|
3,680,281 |
|
|
|
|
|
NOTES TO THE CONDENSED HALF YEARLY FINANCIAL REPORT
for the six months ended 30th June 2009
1. Accounting Standards
The condensed interim financial report has been prepared in accordance with International Financial Reporting Standard (IFRSs), including IAS 34 'Interim financial reporting'. 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. Dividends
|
|
2009 |
|
2008 |
Amounts recognised as distributions to equity holders in the period: |
|
|
|
|
Income (Paid) |
|
|
|
|
Final dividend for the year ended 31st December 2008 |
|
|
|
|
of 17.0p (2007: 30.5p) per share |
|
418,200 |
|
750,300 |
Capital (Paid) |
|
|
|
|
Final dividend for the year ended 31st December 2008 |
|
|
|
|
of 1.6500p (2007: 2.3000p) per share |
|
27,060 |
|
37,300 |
Capital Supplementary (Accrued) |
|
|
|
|
Payable 2nd January 2010 of 68.6829p (2009: 68.6829p) per share |
|
563,200 |
|
563,200 |
Dividends on non-equity shares: |
|
|
|
|
Cumulative preference 5.5% (Accrued) |
|
5,500 |
|
5,500 |
|
|
|
|
|
|
|
1,013,960 |
|
1,356,300 |
|
|
|
|
|
Income |
|
|
|
|
Proposed interim dividend for the year ended |
|
|
|
|
31st December 2009 of 8.5p (2008: 16.0p) per share |
|
209,100 |
|
393,600 |
|
|
|
|
|
This was approved by the Board on 31st July 2009 and has not been included as a liability at 30th June 2009.
3. Income
|
|
2009 |
|
2008 |
Total income comprises: |
|
|
|
|
Dividends |
|
556,075 |
|
1,114,231 |
Interest |
|
3,784 |
|
80,446 |
Other income |
|
109,528 |
|
278,326 |
|
|
|
|
|
|
|
669,387 |
|
1,473,003 |
|
|
|
|
|
4. Related Party Transactions
Transactions between the company and its subsidiaries, which are related parties have been eliminated on consolidation.
The Company's subsidiary company Discretionary Unit Fund Managers Limited manages the Discretionary Unit Fund and acts as principal in respect of all transactions of units in the Fund. In respect of this its fee for the six months amounted to £109,528 (2008: £278,326) and the amount owed by the Fund at the period end was £2,846 (2008: £5,578).
DIRECTORS' STATEMENT OF RESPONSIBILITY FOR THE HALF YEARLY REPORT
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. |
S. H. J. A. Knott
Chairman
July 2009
APPENDIX
TOP TEN HOLDINGS
Holding |
|
Investment |
Value £ |
2,700,000 |
|
RPS Group |
5,406,750 |
1,673,038 |
|
Hill & Smith Holdings |
3,847,987 |
1,500,000 |
|
Celsis Int'l |
2,685,000 |
500,000 |
|
Thorpe F.W. |
2,630,000 |
2,100,000 |
|
Colefax Group |
1,995,000 |
12,500,000 |
|
Intelek |
1,687,500 |
300,000 |
|
Aggreko |
1,555,500 |
1,000,000 |
|
VP |
1,480,000 |
10,425,000 |
|
Scapa Group |
1,459,500 |
500,000 |
|
Domino Printing Sciences |
1,261,250 |
INDEPENDENT REVIEW REPORT TO
RIGHTS AND ISSUES INVESTMENT TRUST PLC
Introduction
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 30 June 2009 which comprises the condensed consolidated income statement, balance sheet, statement of changes in equity, cash flow statement and the related explanatory notes 1 to 4. 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 Services 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 condensed set of financial statements included in this half-yearly financial report has 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 condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is 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 Services Authority.
Begbies Chettle Agar |
25 City Road |
Chartered Accountants |
London EC1Y 1AR |
July 2009