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Half-year Report

Released 11:11 27-Jul-2018

Half-year Report

RIGHTS AND ISSUES INVESTMENT TRUST PLC
For the six months ended 30th June 2018

A copy of the Company's Half Yearly Financial Report for the six months ended 30th June 2018 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, Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW.

INTERIM DIVIDEND
An interim dividend of 10.50p per share has been approved by the Board and is payable on 28th September 2018 to shareholders on the register as at 31st August 2018 (ex-dividend 30th August 2018).

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

CHAIRMAN’S STATEMENT
Markets have stalled in 2018 with a 0.5% fall in the FTSE All-Share Index in the six months. UK Smaller Companies performed marginally better with a 1.5% increase in the relevant indices.

The Trust again made progress with the net asset value of the income shares increasing by 4.9% to 2487.9p. Total equity again exceeds £200m despite significant expenditure on share repurchases.

The share buy-back programme has continued in the half year with a further £5.8m of purchases and the issued equity has now been reduced by over 10% since commencement of the programme.

The interim income dividend is being raised by 2.4% to 10.5p.

Brexit remains the dominating political consideration in the UK and, even at this late stage in the exit process, it is unclear what end state will result.


Dr D. M. BRAMWELL
Chairman
27th July 2018

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 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 2018

Six months ended 30th June 2018 Six months ended 30th June 2017
Notes Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
Investment income 2 1,814 1,814 1,359 1,359
Other operating income 2 8 8 1 1
Total income 1,822 1,822 1,360 1,360
Gains on fair value through profit or loss assets 8,873 8,873 30,968 30,968
Gains on subsidiary holding
1,822 8,873 10,695 1,360 30,968 32,328
Expenses
Investment management fee
Other expenses 395 44 439 372 45 417
395 44 439 372 45 417
Profit before tax 1,427 8,829 10,256 988 30,923 31,911
Tax
Profit for the period 1,427 8,829 10,256 988 30,923 31,911
Earnings per share
Return per Income
Share 17.30p 107.30p 124.60p 11.20p 351.00p 362.20p

Return per share is calculated using the weighted average number of Income shares in issue during the period ended 30th June 2018 of 8,228,933 (2017: 8,810,500).

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 10.50p (2017: 10.25p) per share and amounting to £845,870 (calculated as at 26th July 2018 (2017: £884,000) is payable on 28th September 2018 to shareholders on the register as at 31st August 2018 (ex-dividend 30th August 2018).

Year ended 31st December 2017
Notes Revenue
£'000
Capital
£'000
Total
£'000
Investment income 2 3,329 3,329
Other operating income 2 3 3
Total income 3,332 3,332
Gains on fair value through profit or loss assets 31,083 31,083
Gains on subsidiary holding 151 151
3,332 31,234 34,566
Expenses
Investment management fee
Other expenses 810 89 899
810 89 899
Profit before tax 2,522 31,145 33,667
Tax
Profit for the period 2,522 31,145 33,667
Earnings per share
Return per Income
Share 29.10p 359.50p 388.60p

Return per share is calculated using the weighted average number of Income shares in issue during the year ended 31st December 2017 of 8,662,424.

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 2018 and 30th June 2017 has not been audited.

The information for the year ended 31st December 2017 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 2018 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information and their report is on subsequent pages.


BALANCE SHEET
as at 30th June 2018

Non-current assets 30th June
2018
£'000
30th June
2017
£'000
31st December
2017
£'000
Investments – fair value through profit or loss 188,173 184,168 179,144
188,173 184,168 179,144
Current assets
Trade and other receivables 937 2,182 579
Amounts due from Group undertakings 78 78 78
Cash and cash equivalents 12,302 17,529 19,069
13,317 19,789 19,726
Total assets 201,490 203,957 198,870
Current liabilities
Trade and other payables 65 228 180
65 228 180
Total assets less current liabilities 201,425 203,729 198,690
Net assets 201,425 203,729 198,690
Equity
Called up share capital 2,025 2,164 2,094
Capital redemption reserve 230 91 161
Retained reserves:
Capital reserve 62,096 65,784 65,434
Revaluation reserve 134,491 133,496 128,151
Revenue reserve 2,583 2,194 2,850
Total equity 201,425 203,729 198,690
Net asset value per share
Income shares 2,487.90p 2,353.60p 2,372.30p


STATEMENT OF CHANGES IN EQUITY
for the six months ended 30th June 2018

For the six months ended 30th June 2017
Balance at
Share capital
£'000
Capital redemption reserve £'000 Capital
reserve

£'000
Revaluation reserve
£'000
Revenue
reserve

£'000
Total
£'000
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

   

For the year
ended 31st December 2017
Balance at
Share capital
£'000
Capital redemption reserve £'000 Capital
reserve

£'000
Revaluation reserve
£'000
Revenue
reserve

£'000
Total
£'000
31st December 2016 2,241 14 62,695 111,580 2,973 179,503
Profit for the year 14,574 16,571 2,522 33,667
Total recognised income and expense 2,241 14 77,269 128,151 5,495 213,170
Income shares bought back and cancelled (147) 147 (11,835) (11,835)
Dividends (Note 3) (2,645) (2,645)
Balance at
31st December 2017
2,094 161 65,434 128,151 2,850 198,690

   

For the six months ended 30th June 2018
Balance at
Share capital
£'000
Capital redemption reserve £'000 Capital
reserve

£'000
Revaluation reserve
£'000
Revenue
reserve

£'000
Total
£'000
31st December 2017 2,094 161 65,434 128,151 2,850 198,690
Profit for the period 2,489 6,340 1,427 10,256
Total recognised income and expense 2,094 161 67,923 134,491 4,277 208,946
Income shares bought back and cancelled (69) 69 (5,827) (5,827)
Dividends (Note 3) (1,694) (1,694)
Balance at
30th June 2018
2,025 230 62,096 134,491 2,583 201,425


STATEMENT OF CASH FLOWS
for the six months ended 30th June 2018

Cashflows from operating activities 30th June
2018
£'000
30th June
2017
£'000
31st December
2017
£'000
Profit before tax 10,256 31,911 33,667
Adjustments for:
Gains on investments (8,873) (30,968) (31,083)
Gains on revaluation of subsidiary (151)
Purchases of investments (4,018) (7,226) (8,338)
Proceeds on disposal of investments 3,862 12,199 20,249
Operating cash flows before movements in working capital 1,227 5,916 14,344
(Increase)/decrease in receivables (358) 198 154
(Decrease)/increase in payables (33) (33) 7
Net cash from operating activities 836 6,081 14,505
Cashflows from financing activities
Income shares bought back and cancelled (5,909) (5,856) (11,862)
Dividends paid (1,694) (1,767) (2,645)
Net cash used in financing activities (7,603) (7,623) (14,507)
Net decrease in cash and cash equivalents (6,767) (1,542) (2)
Cash and cash equivalents at beginning of period 19,069 19,071 19,071
Cash and cash equivalents at end of period 12,302 17,529 19,069


NOTES TO THE HALF YEARLY FINANCIAL REPORT
for the six months ended 30th June 2018

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 30th June 30th June 31st December
2018 2017 2017
£'000 £'000 £'000
Total income comprises:
Dividends 1,814 1,359 3,329
Interest 8 1 3
Total income 1,822 1,360 3,332
3.        Dividends
30th June
2018
£'000
30th June
2017
£'000
31st December
2017
£'000
Amounts recognised as distributions to equity holders in the year:
Income (Paid)
Interim dividend for the year ended 31st December 2017 of 10.25p per share 879
Final dividend for the year ended 31st December 2017
of 20.50p per share (year ended 31st December 2016: 20.00p)
1,694 1,767 1,766
1,694 1,767 2,645

Income

846



Income
30th June
2018

£'000
Proposed interim dividend of 10.50p per share  846
846

This proposed interim dividend was approved by the Board on 27th July 2018, has been calculated based on shares in issue at 26th July 2018, and has not been included as a liability at 30th June 2018.

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 2017.

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 2018
Financial assets at fair value through profit or loss
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
UK Equity Listed 143,791 143,791
AIM traded stocks 43,655 43,655
Delisted stock 21 21
Investment in subsidiary undertaking 706 706
Net fair value 187,446 21 706 188,173
30th 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 traded stocks 47,634 47,634
Investment in subsidiary undertaking 555 555
Net fair value 183,613 555 184,168
31st December 2017 Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss £000 £000 £000 £000
UK Equity Listed 134,367 134,367
AIM traded stocks 44,050 44,050
Delisted stock 21 21
Investment in subsidiary undertaking 706 706
Net fair value 178,417 21 706 179,144

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
2018
£'000
30th June
2017
£'000
31st December
2017
£'000
Opening Balance 706 555 555
Purchases
Sales
Total gains or losses included in gains on investments in the Income Statement:
– on assets sold
– on assets held at period end 151
Closing Balance 706 555 706

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 ended 31st December 2017 have been disclosed in the Directors’ Annual Remuneration Report within the 2017 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
2018 2017 2017
£'000 £'000 £'000
Dividends received - - -
- - -
Amounts owed by subsidiary undertaking 78 78 78

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.

RIGHTS AND ISSUES INVESTMENT TRUST PUBLIC LIMITED COMPANY

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 27th July 2018.


Dr D. M. BRAMWELL
Chairman


PORTFOLIO STATEMENT

Details of the twenty largest investments as at 30th June 2018 are given below by market value:

UK Investments Holdings Market Value
30th June 2018 31st December 2017 30th June 2018
£’000
31st December 2017
£’000
Scapa Group 6,250,000 6,350,000 27,075 27,765
Hill & Smith Holdings 1,434,230 1,434,230 21,212 19,204
Treatt 4,700,000 4,750,000 20,586 21,577
Vp 1,800,000 1,800,000 18,540 15,570
Macfarlane Group 17,250,000 17,250,000 18,285 13,283
RPC Group 2,400,000 2,400,000 17,947 21,156
Colefax Group 2,250,000 2,436,979 11,475 12,429
Electrocomponents 1,300,000 1,300,000 9,849 8,132
Spirax-Sarco Engineering 120,714 120,714 7,865 6,784
Renold 27,000,000 12,300,000 7,749 5,719
Menzies (John) 882,142 882,142 5,531 5,941
Vitec Group 400,000 400,000 5,240 4,520
Elecosoft 4,520,781 4,520,781 3,345 1,854
Low & Bonar 6,000,000 6,000,000 2,868 3,195
Titon Holdings 1,265,000 1,265,000 2,404 1,923
Castings 400,000 400,000 1,620 1,763
Dialight 238,095 238,095 1,190 1,310
National Grid 137,500 137,500 1,153 1,202
GlaxoSmithKline 70,000 70,000 1,071 893
Chamberlin 1,000,000 1,000,000 900 640
185,905 174,860
Balance held in other investments 2,268 4,284
188,173 179,144

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 2018 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 2018 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
Chartered Accountants
9 Bonhill Street
London EC2A 4DJ
27th July 2018


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Half-year Report - RNS