DJ Rights and Issues Investment Trust PLC: Annual Report
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Rights and Issues Investment Trust PLC (RIII)
Rights and Issues Investment Trust PLC: Annual Report
26-Feb-2019 / 07:00 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
Annual Report & Accounts for the full year to 31 December 2018
Printed copies of the Annual 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.
The Annual General Meeting of the Company will be held at The Gridiron
Building, 8th Floor, Number One Pancras Square, Pancras Road, King's Cross,
London N1C 4AG on Tuesday 2nd April 2019 at 12 noon.
The Directors have proposed the payment of a final dividend of 21.0p per
Income share which, if approved by shareholders at the forthcoming Annual
General Meeting, will be payable on 4th April 2019 to shareholders whose names
appear on the register at the close of business on 15th March 2019
(ex-dividend 14th March 2019).
The following text is copied from the Annual Report & Accounts.
INVESTMENT OBJECTIVE & POLICY
The Board's objective is to exceed the benchmark index over the long term
whilst managing risk.
The Company invests in equities with an emphasis on smaller companies. UK
smaller companies will normally constitute at least 80% of the investment
portfolio. UK smaller companies include both listed securities and those
quoted on the Alternative Investment Market ("AIM").
The investment portfolio will normally lie in the range of 80% to 100% of
shareholders' funds and therefore gearing will normally be between -20% and
0%. As a result of the Alternative Investment Fund Managers Regulations 2013
it has been decided that the Company will not use gearing.
CAPITAL STRUCTURE
ISSUED SHARE CAPITAL (at 31st December 2018)
8,006,179 Income shares of 25p each.
INCOME ENTITLEMENT
Equal entitlement to dividends and other distributions.
CAPITAL ENTITLEMENT
Equal entitlement to the surplus assets.
VOTING
One vote per share.
PRICE (mid-market) (at 31st December 2018) 1970.00p.
DIVIDEND YIELD 1.60%.
DISCOUNT MANAGEMENT POLICY
On 7th December 2016, the Company implemented share buy-back arrangements to
encourage the level of discount to be not more than 10%.
SHARE BUY BACKS
During the year, the Company has bought back for cancellation a total of
369,079 Income shares for a total consideration of GBP7.9m, representing 4.1% of
the share capital of the Company at 7th December 2016.
DISCOUNT (at 31st December 2018) 6.99%.
RIGHTS AND ISSUES INVESTMENT TRUST PLC ('THE TRUST" or 'THE COMPANY") MAY BE
LIQUIDATED AT ANY TIME, BUT THE BOARD OF DIRECTORS HAS INDICATED THAT IT IS
NOT ITS PRESENT INTENTION TO DO SO PRIOR TO 25TH JULY 2021.
Note: The above is a summary of rights. For full information shareholders
should refer to the Articles of Association.
HISTORIC RECORD
Year to Net asset Net asset Net FTSE All FTSE All
value per value per Share Share
share share Index
(Rebased
31st dividend
December per Income Index
(Index share
1984 = 1984 =
100) 100)
1984 29.0p 100 3.80p 592.94 100
1990 75.4p 260 7.50p 1032.60 174
1995 175.0p 602 10.50p 1802.56 304
2000 473.9p 1631 25.50p 2983.81 503
2005 732.0p 2520 40.50p 2847.00 480
2010 776.4p 2673 25.50p 3094.41 522
2011 751.2p 2586 25.50p 2857.88 482
2012 962.0p 3312 26.75p 3093.41 522
2013 1382.5p 4759 40.00p* 3609.63 609
2014 1297.1p 4465 36.00p 3532.74 596
2015t 1595.6p 5492 36.00p 3444.26 581
2016 2002.2p 6892 52.50p* 3873.22 653
2017 2372.3p 8166 30.75p 4221.82 712
2018 2118.1p 7291 31.50p 3675.27 620
* Includes Special Dividend
From 2015 onwards the historic record is for the Company only and not the
Group.
Note: Until 2016 net asset value per share is based on the Capital shares
adjusted for the reconstruction (four Income shares for each Capital share).
Thereafter, performance is based on the Income shares (the only remaining
share class).
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
STOCKDALE SECURITIES LTD
100 Wood Street
London EC2V 7AN
BANKERS/CUSTODIAN
HSBC BANK PLC
London EC2P 2BX
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
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the fifty-sixth Annual General Meeting of the
members of Rights and Issues Investment Trust Public Limited Company will be
held in the Gridiron Building, 8th Floor, Number One Pancras Square, Pancras
Road, King's Cross, London N1C 4AG, on 2nd April 2019, at 12 noon, for the
following purposes:
ORDINARY BUSINESS
1. To receive the audited financial statements and Reports of the Directors
and Auditor for the year ended 31st December 2018.
2. To approve the Annual Report on Directors' Remuneration, set out on pages
21 to 26 (excluding the restated Remuneration Policy on pages 24 and 25), for
the financial year ended 31st December 2018.
3. To approve the payment of a final dividend of 21.0 pence per Income share
for the financial year ended 31st December 2018.
4. To re-elect Dr D. M. Bramwell as a Director.
5. To re-elect D. M. Best as a Director.
6. To re-elect Dr A. J. Hosty as a Director.
7. To re-elect S. J. B. Knott as a Director.
8. To re-elect J. B. Roper as a Director.
9. To reappoint Begbies as Auditor and authorise the Directors to determine
the Auditor's remuneration.
SPECIAL BUSINESS
To consider and, if thought fit, pass resolutions 10 and 11 as Special
Resolutions:
10. THAT the Company be and is hereby generally and unconditionally authorised
in accordance with section 701 of the Companies Act 2006 to make market
purchases (within the meaning of section 693 of the Companies Act 2006) of
Income shares, provided that:
10.1 the maximum aggregate number of Income shares hereby authorised to be
purchased shall be 1,196,769 (representing approximately 14.99% of the Income
shares in issue on 21st February 2019);
10.2 the minimum price (exclusive of expenses) which may be paid for an Income
share is 25 pence;
10.3 the maximum price (exclusive of expenses) which may be paid for an Income
share is not more than the higher of (i) an amount equal to 105% of the
average market value of the Income shares for the five business days
immediately preceding the day on which the Income share is purchased; and (ii)
the higher of the last independent bid and the highest current independent bid
on the London Stock Exchange when the purchase is carried out, or such other
amount as may be specified by the FCA from time to time;
10.4 the authority hereby conferred will expire at the conclusion of the
Annual General Meeting of the Company in 2020 unless such authority is renewed
prior to such time; and
10.5 the Company may make a contract to purchase Income shares under the
authority hereby conferred prior to the expiry of such authority which will or
may be executed wholly or partly after the expiration of such authority and
may make a purchase of Income shares pursuant to any such contract; provided
that all Income shares purchased pursuant to this authority shall be cancelled
or transferred into treasury immediately upon completion of the purchases.
11. THAT the Company's Income shares be renamed Ordinary shares and the draft
new articles of association produced to the meeting and initialled for
identification by the Chairman be adopted in substitution for and to the
exclusion of all previous articles of association.
By Order of the Board,
MAITLAND ADMINISTRATION SERVICES LTD Secretary, 25th February 2019
Notes:
1. Any shareholder entitled to attend and vote at the above meeting is
entitled to appoint one or more proxies (who need not be a shareholder of the
Company) to attend and to vote instead of the shareholder. To appoint more
than one proxy, additional proxy forms may be obtained by contacting the
Company's registrars. Please also indicate by ticking the box provided if the
proxy instructions are one of multiple instructions being given. All forms
must be signed and should be returned together in the same envelope.
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DJ Rights and Issues Investment Trust PLC: Annual -2-
Completion and return of a form of proxy will not preclude a shareholder from
attending and voting at the meeting in person, should he subsequently decide
to do so.
2. The right to appoint a proxy does not apply to persons whose Income shares
in the Company (the "Shares") are held on their behalf by another person and
who have been nominated to receive communications from the Company in
accordance with section 146 of the Companies Act 2006 ("nominated persons").
Nominated persons may have a right under an agreement with the registered
shareholder who holds the Shares on their behalf to be appointed (or to have
someone else appointed) as a proxy. Alternatively, if nominated persons do not
have such a right, or do not wish to exercise it, they may have a right under
such an agreement to give instructions to the person holding the Shares as to
the exercise of voting rights.
3. In order to be valid, a form of proxy, which is provided with this notice,
and a power of attorney or other authority under which it is signed, or
certified by a notary or office copy of such power or authority, must reach
the Company's registrars, Link Asset Services, PXS, 34 Beckenham Road,
Beckenham BR3 4TU not less than 48 hours (excluding any part of a day which is
a non-working day) before the time of the meeting or of any adjournment of the
meeting. A form of proxy is enclosed with this notice.
4. CREST members who wish to appoint a proxy or proxies by utilising the CREST
electronic proxy appointment service may do so by utilising the procedures
described in the CREST manual. CREST personal members or other CREST sponsored
members, and those CREST members who have appointed a voting service
provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
5. In order for a proxy appointment made by means of CREST to be valid, the
appropriate CREST message must be transmitted so as to be received by the
Company's agent, Link Market Services (whose CREST ID is RA10) by the
specified latest time(s) for receipt of proxy appointments. For this purpose,
the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST applications host) from which
the Company's agent is able to retrieve the message by enquiry to CREST in the
manner prescribed.
6. The Company may treat as invalid a CREST proxy instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001. A register showing the interests of each Director and their
connected persons, so far as they are aware, in the Income shares will be
available for inspection at the offices of the Company Secretary, Maitland
Administration Services Limited, Hamilton Centre, Rodney Way, Chelmsford,
Essex CM1 3BY, during normal business hours every weekday except Saturdays,
from the above date to the day preceding that of the general meeting. It will
also be available for inspection at the place of the meeting for 15 minutes
prior to the general meeting and during the meeting. Apart from the Investment
Director, there are no contracts of service existing between the Company and
any of the Directors.
7. Any shareholder attending the general meeting is entitled, pursuant to
section 319A of the Companies Act 2006, to ask any question relating to the
business being dealt with at the meeting. The Company will answer any such
questions unless:
i. to do so would interfere unduly with the preparation for the meeting or
involve the disclosure of confidential information;
ii. the answer has already been given on a website in the form of an answer to
a question; or
iii. it is undesirable in the interests of the Company or the good order of
the meeting that the question be answered.
From the date of this notice and for the following two years the following
information will be available on the Company's website and can be accessed at
www.maitlandgroup.com/investment-trust/rights-and-issues-investment-trust-plc:
[1]
i. the matters set out in this notice of general meeting;
ii. the total numbers of Shares in respect of which shareholders are entitled
to exercise voting rights at the meeting; and
iii. the totals of the voting rights that shareholders are entitled to
exercise at the meeting in respect of the Shares.
8. Any shareholders' statements, shareholders' resolutions and shareholders'
matters of business received by the Company after the date of this notice will
be added to the information already available on the website as soon as
reasonably practicable and will also be made available for the following two
years.
9. Where a poll is taken at the general meeting, from the date of this notice
and for the following two years the following information will be available on
the Company's website and can be accessed at
www.maitlandgroup.com/investment-trust/rights-and-issues-investment-trust-plc:
[2]:
i. the date of the general meeting;
ii. the text of the resolution or, as the case may be, a description of the
subject matter of the poll;
iii. the number of votes validly cast;
iv. the proportion of the Company's issued share capital represented by those
votes;
v. the number of votes cast in favour;
vi. the number of votes cast against; and
vii. the number of abstentions (if counted).
10. In order to attend and vote at this meeting you must comply with the
procedures set out in notes 1 to 3 by the time specified in note 3.
11. The right of shareholders to vote at the meeting is determined by
reference to the register of shareholders. As permitted by section 360B(3) of
the Companies Act 2006 and Regulation 41 of the Uncertificated Securities
Regulations 2001, shareholders (including those who hold Shares in
uncertificated form) must be entered on the Company's share register at close
of business on 29th March 2019 in order to be entitled to attend and vote at
the meeting. Such shareholders may only cast votes in respect of Shares held
at such time. Changes to entries on the relevant register after that time
shall be disregarded in determining the rights of any person to attend or vote
at the meeting.
12. The total number of Income shares of 25p in issue as at 21st February
2019, the last practicable day before printing this document, was 7,983,785
Shares and the total level of voting rights was 7,983,785.
CHAIRMAN'S STATEMENT
Weakness in US tech stocks have led to a very sharp correction in equity
markets since September and the FTSE All-Share Index declined by 12.9% in
2018.
The UK smaller company market was impacted with the FTSE Small Cap Index
falling by 13.2%.
Your Company's portfolio was also affected with the net asset value of the
Income shares down by 10.7% to 2118.1p.
The final income dividend proposed is 21.0p making 31.5p for the year, a 2.4%
increase.
The share buy-back programme amounted to GBP7.9m in 2018. During the year, the
average discount of Income shares to net asset value was 8.8% and therefore,
in accordance with the Articles, no tender offer is required. The programme is
again being extended for a further twelve months to February 2020.
With only weeks now left, Brexit remains uncertain and there is no clarity on
the nature of the future relationship. This is now having discernible impacts
on the UK economy.
Dr D. M. BRAMWELL
Chairman
25th February 2019
STRATEGIC REPORT
The Strategic Report is designed to provide information primarily about the
Company's business and results for the year ended 31st December 2018 and
should be read in conjunction with the Chairman's Statement on page 7.
STATUS
The Company is a self-managed investment trust. The Company is registered as
an investment company as defined in section 833 of the Companies Act 2006 and
operates as such. The Company is not a close company within the meaning of the
provisions of the Corporation Tax Act 2010.
The Board has been approved by the Financial Conduct Authority to be a Small
Registered Alternative Investment Fund Manager ("AIFM").
In the opinion of the Directors, the Company has conducted its affairs during
the year under review, so as to qualify as an investment trust for the
purposes of Chapter 4 of Part 24 of the Corporation Tax Act 2010 and continues
to meet the eligibility conditions set out in section 1158 of the Corporation
Tax Act 2010.
The Financial Conduct Authority rules in relation to non-mainstream pooled
investments do not apply to the Company.
STRATEGY FOR MEETING THE OBJECTIVES
The Board's objective is to exceed the benchmark index over the long term
whilst managing risk.
To achieve this objective, the Board continues with its long-term strategy of
seeking out undervalued investments that have characteristics consistent with
a matrix of criteria developed by the Investment Director. This is supported
by the five-yearly review that addresses the above objective. The latest
review was conducted in November 2015, which concluded that the continuation
of the Company for the period until July 2021 was in the best interests of
shareholders.
In pursuing its strategy, close attention is paid to the control of costs.
Further information on this is contained in the Key Performance Indicators on
page 9.
BUSINESS MODEL
There is a rigorous process of risk analysis at the level of the individual
investment, based on the characteristics of the investee company. This
controls the overall risk profile of the investment portfolio, allowing a
higher level of concentration in the investment portfolio.
The investment portfolio is then managed on a medium-term basis with a low
level of investment turnover. This minimises transaction costs and ensures
medium-term consistency of the investment approach.
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DJ Rights and Issues Investment Trust PLC: Annual -3-
The Company's investment activities are subject to the following limitations
and restrictions:
The policy does not envisage hedging either against price or currency
fluctuations. Whilst performance is compared against major UK indices, the
composition of indices has no influence on investment decisions or the
construction of the portfolio. As a result, it is expected that the Company's
investment portfolio and performance will deviate from the comparator indices.
REVIEW OF THE BUSINESS
A review of the year and commentary on the future outlook is provided in the
Chairman's Statement on page 7.
During the year under review, the assets of the Company were invested in
accordance with the Company's investment policy.
During the year the Company's assets have decreased from GBP198.7m to GBP169.6m
and at 31st December 2018 the net asset value was 2,118.1p per Income share.
KEY PERFORMANCE INDICATORS
The Board is provided with detailed information on the Company's performance
at every Board meeting. Key Performance Indicators are:
? Shareholders' funds equity return compared to the FTSE All-Share Index (the
Company's benchmark index).
? Dividends per Income share.
? Ongoing Charge (formerly titled the Total Expense Ratio).
Shareholders' funds equity return
In reviewing the performance of the Company, the Board monitors shareholders'
funds in relation to the FTSE All-Share Index. During the year shareholders'
funds decreased by 14.7% compared to a decrease of 12.9% by the FTSE All-Share
Index. Over the five years ended 31st December 2018 shareholders' funds
increased by 37% compared with a rise of 1.8% by the FTSE All-Share Index.
Dividends per Income share
The total dividend per Income share paid and proposed is 31.50p (2017:
30.75p).
Ongoing Charge
The Ongoing Charge shows the efficiency of control of management costs. The
Ongoing Charge for the year ended 31st December 2018 was 0.48% (2017: 0.41%).
PRINCIPAL RISKS
The Board of Directors has a process for identifying, evaluating and managing
the key risks of the Company. This process operated during the year and has
continued to the date of this report. The Directors confirm that they have
carried out a robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future performance,
solvency or liquidity. The Directors describe below those risks and how they
are being managed or mitigated.
Investment in an individual smaller company inherently carries a higher risk
than investment in an individual large company. In a diversified portfolio,
the portfolio risk of a smaller company portfolio is only slightly greater
than the portfolio risk of a large company portfolio. The Company manages a
diversified portfolio. Additionally, the Company invests overwhelmingly in
smaller UK listed and AIM traded companies and has no exposure to derivatives.
The principal risks are therefore market price risk and liquidity risk.
Further details on these risks and how they are managed may be found in Note
18 to the financial statements on page 45.
Additional key risks identified by the Company, together with the Board's
approach in dealing with them are as follows:
Investment performance - The performance of the investment portfolio will
deviate from the performance of the benchmark index. The Board's objective is
to exceed the benchmark index over the long term whilst managing risk. The
Board ensures that the Investment Director is managing the portfolio within
the scope of the investment policy; the Board monitors the Company's
performance against the benchmark; and the Board also receives detailed
portfolio attribution analysis. The Board has a clearly defined investment
philosophy and operates a diversified portfolio.
Share price discount - Investment trust shares often trade at discounts to
their underlying net asset values. The Board monitors the level of the
discount of the Income shares. On 7th December 2016, the Company implemented
share buy-back arrangements to mitigate the risk of the discount increasing.
Loss of key personnel - The Investment Director is crucial to performance and
the loss of the Investment Director could adversely affect performance in the
medium term. The Board reviews its strategy for this risk annually.
Regulatory risk - The Company must abide by section 1158 of the Corporation
Tax Act 2010 to maintain its investment trust status. This is achieved by the
consistent investment policy and is monitored by the Board. The Board seeks
assurance from the Administrator that the investment trust status is being
maintained. The Board also reviews a schedule of regulatory risk items at its
Board meetings in order to monitor and take action to address any regulatory
changes.
Protection of assets - The Company's assets are protected by the use of an
independent custodian, HSBC Bank plc, and the Board monitors the custodian to
ensure assets remain protected. In addition, the Company operates clear
internal controls to safeguard all assets.
Brexit - The risk associated with the decision of a majority of the UK
electorate to leave EU membership ("Brexit") could be considerable for the UK
and also for continental European countries. The links between the UK and the
EU are wide-ranging and the future relationship remains unclear, creating
conditions that could mean that markets react unpredictably to the uncertainty
created. This risk is challenging to mitigate but the Investment Director is
considering the Brexit risk for each investment in the portfolio based on its
individual circumstances.
These and other risks facing the Company are reviewed regularly by the Audit
and Compliance Committee and the Board.
VIABILITY
The Board reviews the performance and progress of the Company over five-year
periods and uses these assessments, regular investment performance updates
from the Investment Director and a continuing programme of monitoring risk to
assess the future viability of the Company. The Directors consider that a
period of five years is a reasonable time horizon to consider the viability of
the Company. The Company also uses this period for its strategic planning. The
following facts support the Directors' view of the viability of the Company:
- The Company has a liquid investment portfolio invested predominantly in
readily realisable smaller UK-listed and AIM traded securities and has some
short-term cash on deposit.
- The Company does not use gearing.
- Expenses of the Company are covered greater than four times by investment
income.
In order to maintain viability, the Company has a robust risk control
framework for the identification and mitigation of risk which is reviewed
regularly by Board. The Directors also seek reassurance from suppliers that
their operations are well managed and that they are taking appropriate action
to monitor and mitigate risk.
CORPORATE AND SOCIAL RESPONSIBILITY
When investments are made, the primary objective is to achieve the best
investment return while allowing for an acceptable degree of risk. In pursuing
this objective, various factors that may impact on the performance are
considered and these may include socially responsible investment issues.
As an investment trust, the Company has a limited impact on either environment
or social and community issues. All printed material, wherever possible, is on
recycled material. The Investment Director attempts to minimise the Company's
carbon footprint.
The Company has no greenhouse gas emissions to report from its operations for
the year to 31st December 2018 (2017: same). The Company does not purchase
electricity, heat, steam or cooling for its own use nor does it have
responsibility for any other emissions producing sources.
Of more importance is the conduct of the companies in the investment
portfolio. The Company does not invest in companies which have significant
adverse effect on the global environment and encourages those companies in
which it has an investment to pursue responsible environmental policies.
As an investment vehicle the Company does not provide goods or services in the
normal course of business, and does not have customers. Accordingly, the
Directors consider that the Company is not within the scope of the Modern
Slavery Act 2015.
COMPANY'S DIRECTORS AND EMPLOYEES
The number of directors and employees during the year was 5 (2017: 5).
*2018* 2017
Male Female Male Female
Directors (non-executive) 4 0 4 0
Directors (executive) 1 0 1 0
Employees 0 0 0 0
The Directors have considered the Strategic Report and believe that taken as a
whole it is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's performance and strategy.
The Strategic Report was approved by the Board and signed on its behalf by:
S. J. B. Knott, Director
25th February 2019
REPORT OF THE DIRECTORS
The Directors have pleasure in submitting their fifty-sixth Annual Report,
together with audited financial statements in respect of the year ended 31st
December 2018.
DIRECTORS
The Directors who served during the year were as follows:
Dr D. M. Chairman 71 Years He was Chairman
Bramwell of Intelek PLC.
D. M. Best Chairman of Audit 60 Years He is a former
Committee Managing
Director of YFM
Group and
former Group
Financial
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Director of
Peterhouse
Group PLC.
Dr A. J. Hosty Director 54 Years He is a
Director of
Consort Medical
PLC, RHI
Magnesita N.V.
and James
Cropper PLC.
S. J. B. Knott Investment Director 60 Years He has been
investment
manager for
more than 30
years.
J. B. Roper Chairman of Nominations 68 years He is a
and Remuneration solicitor and
Committee former partner
of Eversheds
LLP
specialising in
corporate
transactions.
The Company purchases liability insurance covering the Directors and Officers
of the Company.
DIVIDENDS
The Board is recommending a final dividend of 21.0p per Income share (2017:
20.50p). If approved, taken together with the interim dividend of 10.50p per
Income share (2017: 10.25p) this will result in a total dividend to the
holders of Income shares for the year of 31.50p per Income share (2017:
30.75p).
SUBSTANTIAL SHAREHOLDINGS
The Company has received notification to 21st February 2019, in accordance
with Chapter 5 of the Disclosure and Transparency Rules, of the following
voting rights:
Income shares % of voting
rights*
Dartmoor Investment Trust 742,892 8.24%
Henderson Global Investors 702,000 7.78%
Rathbone Brothers PLC 553,433 6.13%
S. J. B. Knott 488,111 6.03%
J. Knott 482,185 5.35%
CG Asset Management Ltd 441,200 4.89%
H. J. D. Knott 428,589 4.75%
P & J Allen 323,511 3.99%
* The percentage of voting rights is
as at the time of the notification.
DISCLOSURE OF SECTION 414C (11) SCHEDULE 7 INFORMATION
The Company has chosen to set out in the Strategic Report all information
relating to the above.
SECTION 992 COMPANIES ACT 2006 DISCLOSURES
Details of the Company's capital structure and voting rights are given on page
1 of this document and in Note 14 on page 43 of the financial statements.
CORPORATE GOVERNANCE
Full details are given in the Corporate Governance Statement on pages 14 to
17. The Corporate Governance Statement forms part of this Directors' Report.
SPECIAL BUSINESS AT THE ANNUAL GENERAL MEETING
The Notice of the Annual General Meeting to be held on 2nd April 2019 is set
out on pages 4 to 6.
Share Buy Back Facility (resolution 10): The Board is seeking to renew the
authority granted at the Annual General Meeting held on 26th March 2018 that
authorises the Company to make market purchases of Income shares for
cancellation. At the forthcoming Annual General Meeting the Directors will
seek to renew this authority to buy back for cancellation up to 14.99% of
Income shares in issue, representing 1,196,769 Income shares as at 21st
February 2019. The authority will expire at the conclusion of the next Annual
General Meeting of the Company in 2020 unless the authority is renewed. The
Board considers this authority an important part of the Company's discount
management policy. Stockdale, the Company's brokers, will be asked to continue
the facilitation of these buy backs on the Company's behalf and in accordance
with the relevant provisions of the Companies Act 2006 and Listing Rules.
Changing the name of Income shares to Ordinary shares and updating the
Articles of Association (resolution 11): The Board is seeking approval to
change the name of the Company's Income shares to call them Ordinary shares.
As the Company only has one class of share and the investment strategy does
not focus on income, the Board believes it would be clearer and good practice
to change the name. It is also proposed that the shareholders adopt new
articles of association, this is to update the references within the articles
to reference Ordinary shares rather than Income shares. There are no changes
to shareholders' underlying rights in respect of the shares and no other
changes to the articles of association to bring to the attention of
shareholders.
Recommendation: The Directors recommend that shareholders vote in favour of
the resolutions to be proposed at the Annual General Meeting, as they intend
to do in respect of their own beneficial holdings; all resolutions are
considered to be in the best interests of the Company and its members.
DIRECTORS' REMUNERATION REPORT
The Annual Report on Directors' Remuneration on pages 21 to 26 provides
information on the Directors' remuneration and their interests in the share
capital of the Company, together with details of their letters of appointment
and memoranda of service.
ADMINISTRATION & SECRETARIAL AGREEMENT
The accounting, company secretarial and administrative services are provided
by Maitland Administration Services Limited ("Maitland") under an agreement
terminable by either party on not less than six months' notice. The services
provided by Maitland are reviewed regularly by the Board.
DISCLOSURE OF INFORMATION TO AUDITOR
So far as each Director at the date of approval of this report is aware:
· there is no relevant audit information of which the Company's Auditor is
unaware; and
· the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
Auditor is aware of that information.
GOING CONCERN
The Company's assets comprise mainly readily 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 12 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 the financial statements on a going
concern basis.
GENERAL
No political contributions have been made during the year.
In accordance with section 489 of the Companies Act 2006, a resolution
proposing the reappointment of Begbies as Auditor of the Company will be put
to the Annual General Meeting.
The Directors' Report was approved by the Board and signed on its behalf by:
Dr D. M. Bramwell,
Chairman
25th February 2019
CORPORATE GOVERNANCE STATEMENT
AIC CODE & AIC GUIDE
The Board has considered the principles and recommendations of the AIC Code of
Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance
Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by
the AIC Guide, addresses all the principles set out in the UK Corporate
Governance Code, as well as setting out additional principles and
recommendations on issues that are of specific relevance to the Company.
The Board considers that reporting against the principles and recommendations
of the AIC Code and by reference to the AIC Guide will provide better
information to shareholders. However, as a self-managed investment trust
company, not all of the provisions of the AIC Code are directly applicable to
the Company. Full consideration has been given by the Board to the principles
of good governance. In so far as they are applicable to a smaller self-managed
investment trust, the Directors believe that they comply with the principles
other than the following matter:
· The Board had elected not to designate a senior independent non-executive
Director, as it considers that each Director has different strengths and
qualities on which they may provide leadership.
OPERATION OF THE BOARD OF DIRECTORS
The Directors of the Company, as shown on page 12, are Dr D. M. Bramwell, Mr
D. M. Best, Dr A. J. Hosty, Mr S. J. B. Knott and Mr J. B. Roper. All
directors served throughout the year under review. Their biographical details,
also set out on that page, demonstrate a breadth of investment, commercial and
professional experience.
The Board is collectively responsible for promoting the success of the
Company. It deals with the important aspects of the Company's affairs,
including the setting of parameters for, and the monitoring of investment
strategy and the review of, investment performance. It reviews the share price
and the discount or premium to net asset value. The Board sets limits on the
size and concentration of new investments. The application of these and other
restrictions, including those which govern the Company's tax status as an
investment trust, are reviewed regularly at meetings of the Board.
The Board delegates all investment matters to the Investment Director but
reserves to itself all decisions concerning unquoted investments. The
Investment Director takes decisions as to the purchase and sale of individual
investments and is responsible for effecting those decisions on the best
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