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Half-year Report

Released 09:19 28-Jul-2017

Half-year Report

RIGHTS AND ISSUES INVESTMENT TRUST PLC
HALF YEARLY FINANCIAL REPORT

for the six months ended 30th June 2017

A copy of the Company's Half Yearly Financial Report for the six months ended 30th June 2017 will shortly be available to view and download from www.rightsandissues.co.uk.  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, Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW.

INTERIM DIVIDEND
An interim dividend of 10.25p per share has been approved by the Board and is payable on 29th September 2017 to shareholders on the register as at 1st September 2017 (ex-dividend 31st August 2017).

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

CHAIRMAN’S STATEMENT
Markets have made further progress in 2017 with 3.3% rise in FTSE All-Share Index in the six months. UK Smaller Companies have performed even better with rises of over 10% in relevant indices.

The Company has again performed well with the net asset value of the Income shares increasing by 17.6% to 2353.6p. Total equity was a new record exceeding £200m for the first time.

The share buy-back programme has continued in the half year with a further £5.9m of purchases and the issued equity has now been reduced by 4%.

The interim income dividend is being raised by 2.5% to 10.25p.

The political situation in UK has been complicated by the recent General Election and the immediate future will remain dominated by Brexit.
 

Dr D. M. BRAMWELL
Chairman
28th July 2017
 

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

The Half Yearly Report will be posted to shareholders and copies 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 the Company’s performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Company’s results continue to be exposed to market price risk. Further information on the principal long-term risks and uncertainties of the Company is included in the latest Annual Report.


 

STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30th June 2017

Six months ended 30th June 2017 Six months ended 30th June 2016
Notes Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
Investment income 2 1,359 1,359 1,561 1,561
Other operating income 2 1 1 3 3
Total income 1,360 1,360 1,564 1,564
Gains on fair value through profit or loss assets 30,968 30,968 452 452
Losses on subsidiary holding (45) (45)
1,360 30,968 32,328 1,564 407 1,971
Expenses
Investment management fee
Other expenses 372 45 417 296 296
372 45 417 296 296
Profit before tax 988 30,923 31,911 1,268 407 1,675
Tax
Profit for the period 988 30,923 31,911 1,268 407 1,675
Earnings per share
Return per Income
        Share 11.2p 351.0p 362.2p 14.1p 4.5p 18.6p

Return per share is calculated using the weighted average number of Income shares in issue during the period ended 30th June 2017 of 8,810,500 (2016: 9,020,000).

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 10.25p (2016: 10.0p) per share and amounting to £884,000 (2016: £902,000) is payable on 29th September 2017 to shareholders on the register as at 1st September 2017 (ex-dividend 31st August 2017).

Year ended 31st December 2016
Notes Revenue
£'000
Capital
£'000
Total
£'000
Investment income 2 3,311 3,311
Other operating income 2 4 4
Total income 3,315 3,315
Gains on fair value through profit or loss assets 37,774 37,774
Losses on subsidiary holding (68) (68)
3,315 37,706 41,021
Expenses
Investment management fee
Other expenses 688 7 695
688 7 695
Profit before tax 2,627 37,699 40,326
Tax
Profit for the period 2,627 37,699 40,326
Earnings per share
Return per Income
        Share 29.1p 418.1p 447.2p


Return per share is calculated using the weighted average number of Income shares in issue during the year ended 31st December 2016 of 9,017,874.

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 2017 and 30th June 2016 has not been audited.

The information for the year ended 31st December 2016 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 2017 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 2017

Non-current assets 30th June
2017
£'000
30th June
2016
£'000
31st December
2016
£'000
Investments – fair value through profit or loss 184,168 125,347 159,821
184,168 125,347 159,821
Current assets
Trade and other receivables 2,182 742 517
Current tax receivable 29
Amounts due from Group undertakings 78 140 294
Cash and cash equivalents 17,529 16,509 19,071
19,789 17,420 19,882
Total assets 203,957 142,767 179,703
Current liabilities
Trade and other payables 228 41 200
228 41 200
Total assets less current liabilities 203,729 142,726 179,503
Net assets 203,729 142,726 179,503
Equity
Called up share capital 2,164 2,255 2,241
Capital redemption reserve 91 14
Retained reserves:
Capital reserve 65,784 62,665 62,695
Revaluation reserve 133,496 75,290 111,580
Revenue reserve 2,194 2,516 2,973
Total equity 203,729 142,726 179,503
Net asset value per share
Income shares 2,353.6p 1,582.3p 2002.2p


STATEMENT OF CHANGES IN EQUITY
for the six months ended 30th June 2017


Share
capital

£'000
Share premium account
£'000
Capital redemption reserve £'000
Capital
reserve

£'000

Revaluation reserve
£'000

Revenue
reserve

£'000


Total
£'000
For the six months ended June 2016
Balance at
31st December 2015
1,025 225 63,709 74,883 2,827 142,669
Profit for the period 407 1,268 1,675
Total recognised income and expense 1,025 225 63,709 75,290 4,095 144,344
Bonus issue of Income shares 1,230 (225) (1,005)
Cost of bonus issue (39) (39)
Dividends (Note 3) (1,579) (1,579)
Balance at
30th June 2016
2,255 62,665 75,290 2,516 142,726

Share
capital
£'000
Share
premium
account
£'000
Capital
redemption
reserve
£'000

Capital
reserve
£'000

Revaluation
reserve
£'000

Revenue
reserve
£'000


Total
£'000
For the year
ended December 2016
Balance at
31st December 2015
1,025 225 63,709 74,883 2,827 142,669
Profit for the year 1,002 36,697 2,627 40,326
Total recognised income and expense 1,025 225 64,711 111,580 5,454 182,995
Bonus issue of Income shares 1,230 (225) (1,005)
Cost of bonus issue (73) (73)
Income shares bought back and cancelled (14) 14 (938) (938)
Dividends (Note 3) (2,481) (2,481)
Balance at
31 December 2016
2,241 14 62,695 111,580 2,973 179,503

   


Share
capital
£'000
Share
Premium
Account
£’000
Capital redemption reserve £'000
Capital
reserve

£'000

Revaluation reserve
£'000

Revenue
reserve

£'000

Total
£'000
For the six months ended June 2017
Balance at
31st December 2016
2,241 14 62,695 111,580 2,973 179,503
Profit for the period 9,007 21,916 988 31,911
Total recognised income and expense 2,241 14 71,702 133,496 3,961 211,414
Income shares bought back and cancelled (77) 77 (5,918) (5,918)
Dividends (Note 3) (1,767) (1,767)
Balance at
30th June 2017
2,164 91 65,784 133,496 2,194 203,729


STATEMENT OF CASH FLOWS
for the six months ended 30th June 2017

Cashflows from operating activities 30 June
2017
£'000
30 June
2016
£'000
31 December
2016
£'000
Profit before tax 31,911 1,675 40,326
Adjustments for:
Gains on investments (30,968) (452) (37,774)
Losses on revaluation of subsidiary 45 68
Purchases of investments (7,226) (1,684) (2,721)
Proceeds on disposal of investments 12,199 3,862
Operating cash flows before movements in working capital 5,916 (416) 3,761
Decrease/(increase) in receivables 198 (330) (230)
(Decrease)/increase in payables (33) (36) 123
Net cash from operating activities before income taxes 6,081 (782) 3,654
Income taxes received
Net cash from operating activities 6,081 (782) 3,654
Cashflows from financing activities
Expenses from bonus issue (39) (73)
Income shares bought back and cancelled (5,856) (938)
Dividends paid (1,767) (1,579) (2,481)
Net cash used in financing activities (7,623) (1,618) (3,492)
Net (decrease)/increase in cash and cash equivalents (1,542) (2,400) 162
Cash and cash equivalents at beginning of period 19,071 18,909 18,909
Cash and cash equivalents at end of period 17,529 16,509 19,071


NOTES TO THE HALF YEARLY FINANCIAL REPORT
for the six months ended 30th June 2017

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
30 June 30 June 31 December
2017 2016 2016
£'000 £'000 £'000
Total income comprises:
Dividends 1,359 1,561 3,311
Interest 1 3 4
Total income 1,360 1,564 3,315
3.         Dividends
Amounts recognised as distributions to equity holders in the year: Income (Paid)
Interim dividend for the year ended 31 December 2016
30 June
2017
£'000
30 June
2016
£'000
31 December
2016
£'000
of 10.0p per share 902
Final dividend for the year ended 31 December 2016 of 20.0p per share (year ended 31 December 2015: 25.5p) 1,767 627 627
Special dividend for the year ended 31 December 2016 of 22.5p per share (year ended 31 December 2015: nil) 553 553
Capital (Paid)
Final dividend for the year ended 31 December 2016 of nil p per share (year ended 31 December 2015: 1.8p) 30 30
Special dividend for the year ended 31 December 2016 of 22.5p per share (year ended 31 December 2015: nil) 369 369
1,767 1,579 2,481

   

30 June
2017
£'000
Income
Proposed interim dividend of 10.25p per share 884
884

This proposed interim dividend was approved by the Board on 28th July 2017 and has not been included as a liability at 30th June 2017.

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 2016.

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.

30 June 2017 Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
UK Equity Listed 135,979 135,979
AIM trades stocks 47,634 47,634
Investment in subsidiary 555 555
Net fair value 183,613 555 184,168
30 June 2016 Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
UK Equity Listed 92,239 92,239
AIM trades stocks 32,530 32,530
Investment in subsidiary 578 578
Net fair value 124,769 578 125,347
31 December 2016 Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss £000 £000 £000 £000
UK Equity Listed 118,452 118,452
AIM trades stocks 40,814 40,814
Investment in subsidiary - 555 555
Net fair value 159,266 555 159,821

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.

30 June
2017
£'000
30 June
2016
£'000
31 December
2016
£'000
Opening Balance 555 623 623
Purchases
Sales
Total gains or losses included in gains on investments in the Income Statement:
– on assets sold
– on assets held at period end (45) (68)
Closing Balance 555 578 555

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.

5.            Related Party Transactions
Under IFRS, the Directors have been identified as related parties. Their fees and interests for the year nded 31st December 2016 have been disclosed in the Directors’ Annual Remuneration Report within the 2016 Annual Report and Financial Statements.

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

30 June 30 June 31 December
2017 2016 2016
£'000 £'000 £'000
Dividends received 125
125
Amounts owed by subsidiary undertaking 79 140 294

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 for continuing in business for the foreseeable future. Accordingly it is appropriate to continue to prepare accounts on a going concern basis.


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:

This report was approved on 28th July 2017.


Dr D. M. BRAMWELL
Chairman


PORTFOLIO STATEMENT


Details of the twenty largest investments as at 30th June 2017 are given below by the market value:

UK Investments Holdings Market Value
30 June 2017 31 December 2016 30 June 2017
£’000
31 December 2016
£’000
Scapa Group 6,650,000 8,000,000 31,455 26,800
Treatt 5,775,000 5,775,000 27,056 14,437
Hill & Smith Holdings 1,434,230 1,434,230 19,792 17,182
RPC Group 2,400,000 2,259,672 18,036 24,043
Vp 1,800,000 1,800,000 15,480 13,410
Colefax Group 2,436,979 2,050,000 11,697 10,455
Macfarlane Group 16,741,368 16,741,368 9,961 10,045
Electrocomponents 1,300,000 1,300,000 7,495 6,196
Spirax-Sarco Engineering 120,714 120,714 6,452 5,051
Menzies (John) 882,142 882,142 6,215 5,205
Renold 11,000,000 9,425,207 5,775 4,124
Low & Bonar 6,000,000 4,440,000 5,100 2,842
Vitec Group 400,000 400,000 4,044 2,572
Dialight 238,095 238,095 2,614 1,881
Elecosoft 4,520,781 4,520,781 2,034 1,311
Titon Holdings 1,265,000 1,265,000 1,986 1,391
Castings 400,000 400,000 1,800 1,644
National Grid 137,500 150,000 1,308 1,425
Chamberlin 1,000,000 1,000,000 1,300 730
GlaxoSmithKline 70,000 70,000 1,144 1,092
180,744 151,836
Balance held in other investments 3,424 7,985
184,168 159,821

Unless otherwise specified, the actual holdings as at 30th June 2017 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 2017 which comprises 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 2017 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.



COLIN WAIN
For and on behalf of Begbies
Chartered Accountants
9 Bonhill Street
London
EC2A 4DJ
28th July 2017


END.
 


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Half-year Report - RNS