REG - Rights and Issues IT - Final Results
21/02/2025 07:00
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RNS Number : 9441X Rights and Issues Inv. Trust PLC 21 February 2025
RIGHTS AND ISSUES INVESTMENT TRUST PLC
Legal Entity Identifier (LEI): 2138002AWAM93Z6BP574
Annual Results for the year to 31st December 2024
The following text is extracted from the Company's financial statements for
the year ended 31st December 2024. Page numbers refer to the full financial
statements.
CHAIRMAN'S STATEMENT
Market backdrop
For small cap industrials and this investment trust which focuses on them 2024
can perhaps best be described as a year of two quite distinct halves. The
first half of the year saw the continued effects of economic policy decisions
on containing and reducing energy led inflation. This was combined with
increasing levels of investor confidence helping to support the FTSE
All-Share index to gain 7.4%. This was followed by a second half largely
driven by the post UK election sentiment where we saw government trying to
manage economic expectations downwards. Thus, despite inflation remaining
steady and two reductions in bank base rates, investor confidence weakened
with a corresponding reduction in demand. Consequently, progress in the
overall market was more subdued, with gains of only 1.9% in the second half.
The timing and results of the US elections and the UK Government's autumn
budget may also have played a role in making investors more cautious towards
the year end. These factors, as well as competitive pressures, will continue
to test the management of our portfolio companies. Our Investment Manager will
continue to monitor closely their ability to maintain market share and
margins.
Company performance
The Company's investments generated a NAV per share return for shareholders of
8.8% in 2024 compared to 5.5% for our chosen benchmark, the FTSE All-Share
Index. The share price increased by 11.7% over the year, from 2130.0p to
2380.0p; and at the end of the year the discount to NAV had narrowed to 6.4%,
a reduction from 8.9% at the end of the prior year, and averaged 9.7% over the
course of the year.
Jupiter
As reported in the half year report our portfolio is now managed by lead
manager Matt Cable, supported by Tim Service. They have continued to actively
manage the portfolio. In 2024 four complete exits were achieved and five new
positions were acquired. These changes and the performance of the individual
holdings that have driven the Company's performance are more fully described
in the Investment Manager's Review.
The Management Engagement Committee carried out its second formal review of
Jupiter's performance in November. It noted the continuity of investment
style, the changes that had been made to reduce the concentration of the
portfolio and discussed the new positions that have been taken. The Board will
continue to keep the Investment Manager's performance under regular review.
The increase in marketing activities for the Company reported on last year
have continued. These are carried out to try to raise awareness of the Company
to a much wider audience of investors, particularly the self-directed private
individual. Over the course of the year online and in person events were held
for a variety of investors, including wealth managers, professional fund
managers and private individuals. The Board recognises the importance of
engaging with existing and potential shareholders and supports the use of
third party 'paid for' research and video content agencies to achieve this.
This content can be found on the Company's web pages at www.jupiteram.com.
(http://www.jupiteram.com/)
Discount
At the end of December 2024 the discount stood at 6.4%. During the year the
Company bought back 778,881 Ordinary shares in the market at a cost of £17.7
million. The share buyback programme remains an important tool to try to
narrow the discount between the Company's share price and net asset value per
share or reduce its volatility. Buybacks at the margin provide a useful
increase in liquidity for those shareholders seeking to realise their
investment whilst also delivering an economic uplift for those shareholders
wishing to remain invested in the Company. Subject to shareholder approval of
the share buyback resolution at the forthcoming Annual General Meeting the
current buyback programme will run until July 2025.
Shareholder consultations
Over the course of 2024 the Board consulted with a number of major
shareholders to hear their views on a potential share split. Whilst there was
some continued support for this initiative on the basis that it was thought it
might help increase liquidity, the clear and significant majority thought
that at this time the costs of such an exercise far outweighed any potential
benefits to shareholders. Consequently, the Board has decided to call an
indefinite pause on these plans. There were also some shareholders that
thought a change of name might help promote the Company. Again, a clear and
significant majority of shareholders that were consulted were of the view
that the potential distraction of such an exercise far outweighed any likely
benefits.
Dividend
The Directors are aware of the appetite our shareholders have for income and
are proposing a final dividend of 32.00p per share which, if approved at the
upcoming AGM, would result in total dividends for the year of 44.00p per
share, an increase of 2.3% over the previous year's dividend.
Annual General Meeting
The Company's Annual General Meeting is to be held at 12 noon on Monday, 24th
March 2025 at Jupiter's offices, the Zig Zag Building, 70 Victoria Street,
London SW1E 6SQ. The AGM will be followed by a presentation by our Investment
Manager. My fellow Directors and I look forward to meeting as many
shareholders as possible at the meeting.
As we know, a significant number of shareholders hold their shares via
execution only platforms. These platforms are increasingly making it easier to
participate in voting. Your platform provider will be able to assist you in
this regard.
Irrespective of whether you intend to attend the AGM in person, please submit
your proxy votes in respect of the resolutions via the registrar's portal.
Details of how to do this can be found in the notice of AGM in the Annual
Report and Accounts. Alternatively, if you hold your shares via an execution
only platform or online stockbroker, the AIC has produced a helpful summary
setting out how to vote your shares on its website:
www.theaic.co.uk/how-to-vote-your-shares.
(http://www.theaic.co.uk/how-to-vote-your-shares) Should you have any
questions for the Board these can be submitted to our Company Secretary at the
registered office or via email to cosec-uk@apexgroup.com.
(mailto:cosec-uk@apexgroup.com)
Outlook
As we look forwards into 2025 it is fair to say that we expect to see
continued volatility in the markets, with the completion of the elections in
the UK and USA in 2024 potentially mitigating some of this. So, whilst there
are some signs that energy prices, inflation and interest rates may have
peaked, we are now seeing rising gilt yields and, in the UK where we focus,
higher employment taxes to contend with. As a Board we are very mindful of
these factors. These and other factors will provide opportunities as well as
challenges. Accordingly, we will continue to encourage our Investment Manager
to seek investments in differentiated companies operated by good management
teams that they believe to be fundamentally underpriced. The Board believes
that our team at Jupiter have the skills and knowledge to identify these and
so continue to be well placed to deliver for your Company into the future.
Dr Andrew J Hosty
Chairman
20th February 2025
INVESTMENT MANAGER'S REVIEW
Introduction
We are pleased to present our investment report to shareholders of Rights and
Issues for the year to December 2024.
As mentioned in our interim report, Dan Nickols announced his retirement from
the industry at the end of June. We wish him well and thank him for his
considerable contributions to the team and the early success of Rights and
Issues following our appointment as investment managers. In line with
Jupiter's well established succession plans, Matt Cable assumed the role of
lead manager for Rights and Issues, supported by Tim Service, who was also
appointed head of Jupiter's Small and Mid-Cap team. Tim is a longstanding
member of the team who also has lead manager responsibilities for a number of
Jupiter's small and mid-cap capabilities.
Given the continuity of management within the Jupiter team there is no change
to the Company's overall investment strategy. It remains a fundamental,
bottom-up stock picking process, expressed in a relatively concentrated but
well diversified portfolio. With the team's change of leadership, we have
made certain enhancements to this process, with a particular focus on stronger
risk controls based on new monitoring tools. These are designed to reduce
unintended exposures in the portfolio and hence limit unexpected performance
surprises.
In this report we discuss the current market backdrop, update shareholders on
performance and changes to the portfolio over the year and provide an outlook
for the year ahead.
Market backdrop
The first half of the year was characterised by moderating inflation and
increasing investor confidence that interest rates would fall and economic
growth accelerate. As we noted in our interim report, the FTSE All-Share index
gained 7.4% in the year to June. Inflation has remained broadly stable, as
expected, through the balance of the year and there have been two cuts to the
bank base rate. However, market interest rates have risen, with the yield on
two- year government gilts reaching around 4.4% at the end of the year - well
above the lows of about 3.6% in the summer.
As we have discussed before, higher interest rates generally have the effect
of supressing economic activity, which in turn impacts the value of equities.
At the same time, the newly elected Labour government spent much of the second
half of the year strenuously attempting to lower expectations, with much talk
of fiscal 'black holes' and 'painful decisions'. In the event, the autumn
budget was relatively benign (with the exception of an unwelcome increase in
employer national insurance contributions). The damage to confidence,
however, appeared to have been done, again reflected in equity performance.
In November Donald Trump was elected US President for a second time.
Furthermore, the Republican Party gained full control of Congress which will
allow the new administration much greater scope to implement its agenda. How
much of the pre-election rhetoric around tariffs, immigration and foreign
relations translates into policy remains to be seen, driving further
uncertainty. Interestingly the US equity market seems to have taken this all
in its stride, but elsewhere investors are once again taking a more cautious
approach.
Despite these challenges the UK market was broadly stable through the second
half of the year, with the FTSE All- Share returning 1.9%, and hence 9.5% for
the year as a whole.
Portfolio Performance
The Company's portfolio of investments returned 9.3% for the year on a total
return basis, marginally behind its benchmark, the FTSE All-Share Index. The
Company's shares performed significantly better than this at 14.0%,
reflecting a narrowing of their discount to net asset value.
Given the concentrated nature of the portfolio, relative performance is
largely a result of individual stock returns. Some of the most significant
contributors and detractors to performance for the year included (total return
for the year shown in brackets):
Renold (+35%)
For the second year running, industrial chain manufacturer Renold was one of
the top contributors to fund performance in 2024. Picking up where it left off
the previous year, the company has delivered a series of profit upgrades
driven by strong operational performance and attractive acquisitions. After
the share price peaked towards the end of the first half, it has drifted back
through the balance of the year. As such the valuation remains compelling in
our view and we remain positive on the investment case.
Eleco (+83%)
Building design and management software company Eleco was also a strong
performer in the year. Following a strong transition from a mainly
licence-based business model to one more focused on subscription income, Eleco
is now experiencing strong profit growth which has been rewarded by the
market. We see considerable scope for further growth and hence continue to
hold the shares.
Gamma Communications (+37%)
Supplier of telecommunications services mainly to smaller and mid-sized
businesses, Gamma Communications also contributed strongly to performance in
2024. Concerns about pricing power that had previously weighed on the
valuation have proved to be largely unfounded, allowing the shares to re-rate
throughout the year, supported by modest increases to profit expectations.
Again, we remain positive on prospects.
Spirax Group (-35%)
Industrial thermal energy and fluid products business Spirax Group was a
major detractor from performance for the year. Weakness in end markets drove a
series of profit downgrades and undermined confidence, resulting in a de-
rating of the shares. We believe that recovery may now take longer than the
market expects and have therefore sold the position completely.
Videndum (-58%)
Content creation product manufacturer Videndum detracted from performance for
the second year in a row as its end markets took longer to recover than
expected following strikes in Hollywood and a consumer downturn. Management
was changed towards the end of the year and we will wait to hear the plans of
the new team before taking a view on the future of the investment.
Vp (-6.4%)
Specialist equipment rental business Vp was also a performance detractor in
2024 as construction markets remained weak and profit expectations were
lowered. While frustrating, we continue to view Vp as a quality business with
what is now a very attractive valuation. We remain holders.
Portfolio changes
There were four complete sales and five new additions to the portfolio over
the year.
Sales included Spirax Group, as mentioned above, as well as agricultural
supplies and industrial business Carr's Group. We believe that recovery in
Carr's end market may take longer and be less complete than the market
expects. Software business Gresham Technologies and telecoms testing company
Spirent also left the portfolio as each received takeover bids.
New stocks added to the portfolio during the year included:
Jet2 is a vertically integrated airline and tour operator with what we see as
a differentiated model and customer proposition. This is validated by
consistent share gains that have left it as the largest operator (by IATA
licences) in its target markets.
Identity verification and fraud prevention business GB Group is a
high-quality operator in our view, but has been through a difficult
post-pandemic period as markets have normalised, exacerbated by an acquisition
that was poorly received by the stock market. We believe that this has created
an opportunity to invest in a quality business at an attractive valuation.
Alternative asset manager Foresight Group has strong positions in the
attractive infrastructure and regional private equity niches. It serves
clients ranging from retail investors to large institutions and has ambitious
plans to grow profits over the next few years.
Norcros is a designer and distributor of bathroom hardware through brands such
as Triton and Vado. Since disposing of its Johnson Tiles business, it has
operated a largely capital-light model with most of the manufacturing
outsourced to third parties. With a relatively new management team firmly
focused on a growth agenda we think the opportunity to create value is
significant.
Sthree is a global recruitment business with a focus on contract (rather than
permanent) placements and STEM (Science, Technology, Engineering and Maths)
disciplines. It is in a cyclical sector currently experiencing a deep and
prolonged downturn which, we believe, has created an attractive valuation
opportunity for long term investors.
Summary and Outlook
In many ways the year has played out broadly as expected. Inflation has
continued to moderate and interest rates have started to come down. By the
standards of recent years there have been relatively few macroeconomic shocks
for markets to contend with. While conflicts continue in Ukraine and the
Middle East (as well as other regions that attract less attention) they cannot
be said to be influencing commodity prices or global supply chains as they
did previously.
In this context it was not surprising to see markets performing reasonably
well in the first half of the year and somewhat frustrating that they have
lost momentum more recently. On a global level it is fair to say that caution
remains the watchword in many areas. The US remains an exception as deficit
funded spending and ongoing enthusiasm for all things AI have helped sustain
an appetite for risk that seems ever more decoupled from the rest of the
world.
In the UK a hoped-for recovery in activity has been choked off as much by
negative sentiment as policy (although higher employment taxes will have an
effect). Both consumers and businesses still seem to be in 'wait and see' mode
before committing to higher spending. While few businesses are seeing outright
market weakness, there are also few reports of sustained recovery.
In this environment we expect the equity market to remain fairly volatile with
potentially repeated 'false dawns' and occasional periods of weakness. This
does not mean we are any less enthusiastic about the longer term. Many
companies are still reporting depressed earnings and valuations remain
attractive. Pockets of strong structural growth remain. Hence there are
opportunities for investors with a longer-term outlook.
Given this backdrop we believe that a balanced approach to portfolio
construction remains appropriate. We are not positioned for a rapid recovery,
but neither are we taking an overly defensive stance that might miss out on
the recovery when it arrives. This will require patience but, we believe, will
ultimately yield positive results.
Matt Cable
Lead Manager
Tim Service
Fund Manager
20th February 2025
PORTFOLIO STATEMENT
Details of the investments held within the portfolio as at 31st December 2024
are given below by market value:
31st December 2024 31st December 2023
UK Investments Holdings Market Value % of Net Assets Holdings Market Value % of Net Assets
Renold 18,813,923 8,843 7.19 28,745,000 9,802 7.46
Gamma Communications 516,289 7,899 6.42 640,919 7,204 5.48
Vp 1,393,566 7,665 6.22 2,404,250 14,906 11.35
Macfarlane 7,090,653 7,587 6.16 11,680,653 13,666 10.40
Hill & Smith 404,313 7,544 6.13 522,465 9,969 7.59
Telecom Plus 430,975 7,387 6.00 459,113 7,401 5.63
Eleco 4,479,758 6,540 5.31 4,520,781 3,617 2.75
Colefax 835,952 6,520 5.29 1,055,952 7,286 5.55
Jet2 399,296 6,321 5.14 - - -
Treatt 1,281,009 6,232 5.06 1,281,009 6,444 4.91
OSB 1,401,694 5,666 4.95 1,401,694 6,501 4.95
GB 1,663,873 5,657 4.59 - - -
Alpha Group International 241,738 5,633 4.57 336,513 5,721 4.36
IMI 292,263 5,322 4.32 292,263 4,922 3.75
Oxford Instruments 245,735 5,296 4.30 58,268 1,337 1.02
Marshalls 1,545,642 4,536 3.68 1,545,642 4,319 3.29
RS 604,401 4,107 3.34 464,401 3,806 2.90
Morgan Advanced Materials 1,500,000 4,080 3.31 1,500,000 4,245 3.23
Foresight 877,203 3,588 2.91 - - -
Sthree 890,288 2,622 2.13 - - -
Videndum 959,582 1,397 1.13 959,582 3,339 2.54
Norcros 318,554 812 0.66 - - -
Dyson 1,000,000 31 0.03 1,000,000 41 0.03
Spirax-Sarco Engineering* - - - 59,668 6,268 4.77
Gresham Technologies* - - - 2,360,303 2,714 2.07
Spirent Communications* - - - 1,516,091 1,869 1.42
Carr's* - - - 4,750,000 4,617 3.51
Total Investments 121,285 98.49 129,994 98.96
.
Net current assets 1,862 1.51 1,365 1.04
Net Assets 123,147 100.00 131,359 100.00
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.
*Sold during the year to 31st December 2024.
STRATEGIC REPORT
The Strategic Report is designed to provide information primarily about the
Company's business and results for the year ended 31st December 2024 and
should be read in conjunction with the Chairman's Statement and the Investment
Manager's Review.
PERFORMANCE STATISTICS 31st December 31st December
2024 2023
NAV per Ordinary share 2,543.4p 2,337.1p
Closing mid-market price per Ordinary share 2,380.0p 2,130.0p
Discount to NAV* (6.4%) (8.9%)
Dividends per Ordinary Share1 44.00p 43.00p
Dividend yield* 1.8% 2.0%
Ongoing Charges* 0.9% 0.9%
Earnings per Ordinary Share - basic
Revenue 42.1p 50.4p
Capital 181.2p 11.0p
NAV return per Ordinary share* 8.8% 2.4%
FTSE All-Share Index 5.5% 3.8%
*These are Alternative Performance Measures.
(1)Assumes shareholder approval of the proposed final dividend of 32.00p per
Ordinary share at the forthcoming AGM.
Explanation of Alternative Performance Measures ("APM")
An alternative performance measure is a financial measure of historical or
future financial performance, financial position or cash flow that is not
prescribed by the relevant accounting standards. The APMs are the discount to
NAV, dividend yield, ongoing charges and NAV return as defined below.
Discount to NAV
The discount to net asset value is the amount, expressed as a percentage, by
which the share price is less than the net asaset value per share.
The discount to NAV is calculated as follows:
2024 2023
Net asset value per Ordinary share (a) 2,543.4p 2,337.1p
Closing mid-market price Ordinary Share (b) 2,380.0p 2,130.0p
Discount to NAV ((a-b)/a)*100 6.4% 8.9%
Dividend Yield
The dividend yield is a financial ratio which indicates how much the Company
pays out in dividends each year relative to its share price. The figure is
calculated by dividing the aggregate value of dividends per share in a given
year by the closing share price as at 31st December each year and is
represented as a percentage.
The dividend yield is calculated as follows:
2024 2023
Total Dividends paid per Ordinary Share1 (a) 44.00p 43.00p
Closing mid-market price Ordinary Share (b) 2,380.0p 2,130.0p
Dividend Yield (a)/(b)*100 1.8% 2.0%
(1)Assumes shareholder approval of the proposed final dividend of 32.00p per
Ordinary share at the forthcoming AGM.
Ongoing Charges
Ongoing charges are expenses charged to revenue or capital that relate to the
operation of the Company as an investment trust and are deemed likely to recur
in the foreseeable future. They do not include the costs of acquisition or
disposal of investments, financing costs and gains or losses arising on
investments. Ongoing charges are calculated on the basis of the annualised
ongoing charge as a percentage of the average net asset value in the period.
The calculation methodology for ongoing charges is set out by the Association
of Investment Companies ("AIC") and was calculated as follows:
2024 2023
£'000 £'000
Investment management fee 672 670
Other expenses 522 470
Total Expenses (a) 1,194 1,140
Average NAV (b) 134,330 133,930
Ongoing Charge (a)/(b)*100 0.9% 0.9%
NAV Return
The NAV return is the percentage change in closing NAV per share compared with
opening NAV per share.
The NAV return is calculated as follows:
NAV per Ordinary Share 31st December 2024 (a) 2,543.4p
NAV per Ordinary Share 31st December 2023 (b) 2,337.1p
NAV return (a/b-1)*100 8.8%
Status
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 Company is an "alternative investment fund" ("AIF") for the purposes of
the EU Alternative Investment Fund Managers ("AIFM") Directive, as adopted in
the UK. 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 Board is directly accountable to shareholders. The Company is listed on
the London Stock Exchange and is subject to the UK Listing Rules, Prospectus
Rules and Disclosure Guidance and Transparency Rules published by the
Financial Conduct Authority ("FCA"). The Company is governed by its articles
of association, amendments to which must be approved by shareholders by
special resolution. The Company is a member of the Association of Investment
Companies ("AIC").
The FCA rules in relation to non-mainstream pooled investments do not apply to
the Company.
Strategy for Meeting the Objectives
The Company's objective is to exceed the benchmark index over the long-term
whilst managing risk.
To achieve this objective, the Board appointed Jupiter on 3rd October 2022 to
continue the Company's long-term strategy of seeking out undervalued
investments. This is supported by the five-yearly review that addresses the
above objective. The most recent review was conducted in January 2021, at
which the Board concluded that the continuation of the Company for the period
until July 2026 was in the best interests of shareholders.
The Company fulfils its investment objective and policy by operating as an
investment company. The Board delegates operational matters to specialist
third-party service providers. The closed-ended nature of the Company allows a
longer-term view on investments because liquidity issues as a result of
redemptions are less likely to arise. The Board has closely monitored
performance in 2024 to ensure the Company's strategic objectives are
continuing to be met.
In pursuing its strategy, close attention is also paid to the control of
costs. Further information on this is contained in the Key Performance
Indicators.
Investment Selection
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.
Since its appointment the Investment Manager has taken steps to balance risk
and improve performance by reducing the Company's largest holdings and
investing in additional holdings at similar weights. The Investment Manager
has also invested in companies from a broader range of industries and sectors
over the past year and will continue to seek out undervalued investments that
offer the opportunity for capital growth.
The investment portfolio is 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.
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 comparator indices.
Full details of the Company's portfolio are set out above and further
information is set out in Notes 9 to 10 inclusive.
Sustainability of Business Model and promoting the success of the Company
The Board is responsible for the overall strategy of the Company and decisions
regarding corporate governance, asset allocation, risk and control. The
day-to-day management of the investments is delegated to the Investment
Manager and the management of the operations to specialist third-party
suppliers.
The Directors are conscious of their duties under section 172 of the Companies
Act 2006 and, in particular, the overarching duty to promote the success of
the Company for the benefit of the shareholders, with careful attention paid
to wider stakeholders' interests. The Board is aware of the importance of
ensuring that the Company has a sustainable, well-governed business model to
achieve its strategy and objectives.
As part of discharging its section 172 duties, the Company, through the
Investment Manager, uses its influence as a shareholder, where possible, to
encourage the companies in which it invests to adopt best practice on
environmental, social and corporate governance ("ESG") matters. Further
related information can be found on pages 18 to 20 of the Annual Report and
Accounts.
The third-party service providers are a key element of ensuring the success of
the business model. The Board monitors the chosen service providers closely to
ensure that they continue to deliver the expected level of service. The Board
also receives regular reporting from them, evaluates the control environment
and governing contract in place at each service provider and formally assesses
their appointment annually.
Culture & Values
All the Directors seek to discharge their responsibilities and meet
shareholder expectations in an open and transparent manner. The Board seeks to
recruit Directors who have diverse business experience including managing the
types of companies in which the Company invests. The industry experience on
the Board ensures that there is detailed knowledge and constructive challenge
in the decision-making process. This helps the Company achieve its overarching
aim of enhancing shareholder value. The Directors are mindful of costs and
seek to ensure that the best value is achieved in managing the Company.
The Company's values of skill, knowledge and integrity are aligned to the
delivery of its investment objective and are monitored closely by the Board.
The Board seeks to employ third party providers who share the Company's values
and, importantly, will work with the Directors openly and transparently to
achieve the Company's aims. As detailed in the Business Ethics section below,
the Board expects and seeks assurance that the companies with which it works
adopt working practices that are of a very high standard.
The Responsibilities as an Institutional Shareholder section below describes
the Company's approach to managing its investments, including ESG matters.
Business Ethics
The Company maintains a zero-tolerance policy towards the provision of illegal
services, bribery and corruption in its business activities, including the
facilitation of tax evasion. As the Company has no employees and the Company's
operations are delegated to third-party service providers, the Board seeks
assurances from those providers that they comply with the provisions of the
Modern Slavery Act 2015 and maintain adequate safeguards in keeping with the
provisions of the Bribery Act 2010 and Criminal Finances Act 2017.
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.
Board Diversity
The Company's affairs are overseen by a Board comprising four non-executive
Directors, one of whom is female, three of whom are male. None of the
Directors is from an ethnic minority background. The UK Listing Rules on board
diversity targets are as follows: at least 40% of board members should be
women, at least one board member should be from an ethnic minority background
and at least one of the senior positions on the board should be held by a
woman. The role of Audit, Risk and Compliance Committee Chair is held by a
woman, however, the first two of these targets are currently not met by the
Company. In terms of progress in achieving diversity, the Board is committed
to ensuring that vacancies arising are filled by the best qualified
candidates, whilst recognising the benefits of diversity in the composition
of the Board. Improving the Board's gender and ethnic diversity will be a key
focus when the Board undertakes any further recruitment. Further details on
the gender and ethnic background of the Directors are included in the
Corporate Governance Statement in the Annual Report and Accounts.
The Directors have broad experience, bringing knowledge of investment markets,
business, financial services, accounting and regulatory expertise to
discussions on the Company's business. The Directors regularly consider the
leadership needs and specific skills required to achieve the Company's
investment objective. Whilst appointments are based on skills and experience,
the Board is mindful of the importance of diversity of gender, social and
ethnic backgrounds, cognitive and personal strengths and experience. All
appointments are based on objective criteria and merit and are made following
a formal, rigorous and transparent process.
Responsibilities as an Institutional Shareholder
The Company's affairs are overseen by a Board comprising four non-executive
Directors, one of whom is female, three of whom are male. None of the
Directors is from an ethnic minority background. The UK Listing Rules on board
diversity targets are as follows: at least 40% of board members should be
women, at least one board member should be from an ethnic minority background
and at least one of the senior positions on the board should be held by a
woman. The role of Audit, Risk and Compliance Committee Chair is held by a
woman, however, the first two of these targets are currently not met by the
Company. In terms of progress in achieving diversity, the Board is committed
to ensuring that vacancies arising are filled by the best qualified
candidates, whilst recognising the benefits of diversity in the composition
of the Board. Improving the Board's gender and ethnic diversity will be a key
focus when the Board undertakes any further recruitment. Further details on
the gender and ethnic background of the Directors are included in the
Corporate Governance Statement in the Annual Report and Accounts.
The Directors have broad experience, bringing knowledge of investment markets,
business, financial services, accounting and regulatory expertise to
discussions on the Company's business. The Directors regularly consider the
leadership needs and specific skills required to achieve the Company's
investment objective. Whilst appointments are based on skills and experience,
the Board is mindful of the importance of diversity of gender, social and
ethnic backgrounds, cognitive and personal strengths and experience. All
appointments are based on objective criteria and merit and are made following
a formal, rigorous and transparent process.
In such circumstances the Investment Manager would not normally vote against
investee company management but would seek, through engagement, to achieve its
aim. The Investment Manager would, however, vote against resolutions it
considers would damage the Company's shareholder rights or economic interests.
The Company has a procedure in place such that where the Investment Manager,
on behalf of the Company, has voted against an investee company resolution, it
is reported to the Board.
The Board considers that it is not appropriate for the Company to formally
adopt the UK Stewardship Code. However, many of the UK Stewardship Code's
principles on good practice on engagement with investee companies are used by
the Company, as described above.
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's own direct environmental impact is
minimal. The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions-producing
sources under the Companies Act 2006 (Strategic Report and Directors' Reports)
Regulations 2013 for the year to 31st December 2024 (2023: same). The
Directors receive and use electronic meeting packs only. The Company provides
electronic copies of the annual and half-yearly reports and other shareholder
information on its website. All printed material, wherever possible, is on
recycled material. The Investment Manager attempts to minimise the Company's
carbon footprint. The Company's indirect impact occurs through the investments
it makes.
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.
Environmental, Social & Governance ("ESG") Reporting
Overview
As a high-conviction active asset manager, the Investment Manager recognises
that it has an important role to play in the allocation of capital, both as
active owners and long-term stewards of the assets in which it invests on
behalf of clients. The investment team has a defined investment process, and
consideration of material ESG issues is integrated into both investment
analysis and decision-making, influencing asset allocation, portfolio
construction, security selection, position sizing, stewardship, engagement and
subsequent decisions on whether to remain invested or exit.
This context is important when viewing the Investment Manager's approach to
ESG factors that are highlighted below. These are complex matters where
progress may not be linear and may manifest over multiple years. Furthermore,
certain environmental and social issues may also depend on a policy or
regulatory response in addition to investor input.
The Investment Manager's Responsible Investment Policy and Stewardship Report,
available on its website
(https://www.jupiteram.com/global/en/corporate/sustainability-at-jupiter/reports/),
(http://www.jupiteram.com/global/en/corporate/sustainability-at-jupiter/reports/))
describes how it supports the Company's integration of environmental, social
and governance (ESG) responsibilities, setting out its sustainability
governance and oversight, its approach to ESG integration and materiality and
core material ESG issues.
ESG in a UK small and mid-cap context
The Company's investment universe comprises small and mid-size companies which
may be exposed to important sustainability risks and opportunities that can
have material impacts on value. As an active investment manager, the
Investment Manager believes that effective ESG integration cannot be
outsourced to third parties, but must be incorporated into the fundamental
analysis conducted by the investment team.
In particular, smaller companies remain under-researched by ESG rating
agencies relative to their larger listed peers. Where they are covered at all,
smaller companies are often penalised by rating agencies, either due to their
corporate governance arrangements or a relative lack of detailed corporate
disclosure about ESG issues. These factors present challenges but also, in the
Investment Manager's view, opportunities to identify ESG risks or
opportunities affecting companies which are not priced efficiently by
financial markets.
Corporate Governance
To grow successfully, the leadership of smaller companies must not only
execute strategically, they must also lay the foundations for future growth by
creating appropriate corporate governance structures. The Investment Manager
believes that as corporate culture is set at an early stage, the relationships
formed with key stakeholders such as customers, the workforce and suppliers at
this point in a company's development can be fundamental to long-term success.
The Investment Manager fully endorses the principles of the UK Corporate
Governance Code and, while it acknowledges the need for pragmatism with
smaller companies, it still expects high standards of governance at investee
companies to support their growth in a sustainable manner.
The Investment Manager assesses company governance on a range of issues. These
issues may include but are not limited to:
■ Boards and executive leadership: The Investment Manager builds an
understanding of the quality of leadership teams and boards through assessment
of i) board and committee composition and independence, ii) board and
executive tenure and succession planning, iii) Diversity, Equity and Inclusion
("DE&I") oversight and actions at board level and throughout an
enterprise, iv) oversight and management of corporate culture.
■ Remuneration: Management incentivisation structures should be aligned with
shareholder interests. The Investment Manager considers KPIs governing short
and long-term incentivisation, as well as the overall quantum, when assessing
remuneration packages. It seeks to understand how remuneration structures
encourage correct behaviours and how management compensation decisions are
linked to successful strategic execution, management effectiveness, workforce
considerations and the sustainability agenda.
■ Protection of minority rights and related party transactions: The
Investment Manager will escalate engagement where it believes that minority
rights have been compromised.
■ Systemic risks: The environment in which companies operate continues to
change rapidly and the Investment Manager considers where businesses are
exposed to wider systemic risks, including through the assessment of global
standards, such as the UN Global Compact.
■ Conduct, litigation and relations with policy makers and regulators: Poor
relations with regulators can severely hamper corporate success and result in
value destruction for investors. The Investment Manager seeks to understand
board oversight of regulatory matters and how a company guards against
malpractice.
■ Corporate culture: The Investment Manager may engage with boards to
understand how corporate culture is being led, developed, and monitored and to
highlight strengths and areas for development. Where relevant, it seeks to
understand how management is advancing culture and where and how culture
challenges emerge.
■ Audit and control environment: The Investment Manager considers quality
and independence of auditors. It may escalate engagement with Audit Committee
chairs where it believes that audit standards are not in line with its
expectations.
Environmental
Climate
Limiting global temperature rises to 1.5 degrees above preindustrial levels,
in line with the Paris Agreement, is an urgent challenge facing the global
economy. The Investment Manager uses its influence as an investor through
stewardship and active ownership to encourage companies to identify, manage
and mitigate climate change risks or opportunities. It believes that the scale
of climate change will impact all sectors, industries and asset classes and it
acknowledges the positive role that investors can play in tackling it through
its investment decisions and capital allocation.
Biodiversity
The Investment Manager considers biodiversity impacts in its ESG analysis of
companies, in line with its approach and commitments. It engages with investee
companies where it believes their practices are unsustainable, with the goal
of achieving change, reversing biodiversity loss, while preserving and
enhancing the value of the Company's assets.
Social
Human Rights
Companies with poor management of human rights can face a range of issues
including fines, workforce issues and supply chain challenges which may
affect their licence to operate. The Investment Manager monitors and assesses
human rights policies and procedures for its investee companies to ensure that
they are promoting good governance and management of human rights issues. It
expects companies to comply with internationally-recognised human rights codes
and standards.
Human Capital
Good human capital management supports both value creation and business
resilience, and the Investment Manager believes that investing in human
capital correlates with longer-term business success. Promoting Diversity,
Equity and Inclusion (DE&I) enables companies to attract talent from a
wider talent pool. It also contributes to better decision-making, performance,
innovation and employee satisfaction and retention. The Investment Manager
understands that approaches to human capital management, including DE&I,
will differ and, as an active owner, it seeks to understand an investee
company's operating model and engage to advise on best practice and potential
improvements.
Health and safety
Where a company fails to meet health and safety standards, the Investment
Manager will engage and encourage the company to improve its practices and to
disclose health and safety indicators. Good health and safety should be
embedded in a business and the Investment Manager promotes a zero-harm ethos.
Engagement
Engagement is central to the Investment Manager's active ownership approach.
The investment team maintains a dialogue with companies to inform its
investment decisions and carry out strategic engagement, based on ESG
materiality. The Investment Manager regularly engages with companies to
monitor material ESG issues that will impact the long-term success of an
investment. The Investment Manager is committed to long-term engagement goals;
however, to protect shareholders' interests it reserves the right to exit an
investment if the investment team concludes that progress is insufficient or
does not meet the Company's strategic objectives. The Investment Manager also
engages in collective engagement where such action aligns with its own
objectives and this may also include dialogue with industry
bodies/associations and policy makers as well as dialogue with other
investors.
Proxy Voting
Exercising its shareholder voice through active proxy voting is central to the
Investment Manager's stewardship approach to represent the Company's
interests, hold boards to account and support investee companies. Its
investment managers are accountable for the exercise of their shareholder
votes supported by the Stewardship team, which is responsible for proxy voting
operations, the monitoring of meeting ballots and providing an initial
assessment of each meeting's agenda, including an assessment of independent
proxy advisory research. The Investment Manager's Proxy Voting Policy is
available on the above mentioned website.
Data Science and third-party data resource
The Investment Manager's in-house data science team has built a proprietary
desktop tool, known as ESG Hub, which allows the investment teams to apply
multi-factor ESG screening to their investment universe and to build custom
reports. The data science team also works with third-party ESG data providers
to challenge and provide constructive feedback to enhance the quality and
integrity of the ESG data sets it uses.
Screening
The Investment Manager does not exclude, except i) where required by law, ii)
in line with the specifications of the Company's mandate, or iii) if a
company is involved in banned activities under the following international
conventions:
■ The 1997 Ottawa Convention (Anti-Personnel Mine Ban Treaty)
■ The 2008 Convention on Cluster Munitions (CCM)
It uses third party vendors to screen for involvement in controversial and
banned weaponry.
Task Force on Climate-related Financial Disclosures
The Investment Manager's report on the UK's Task Force on Climate-related
Financial Disclosures Report ('TCFD') discloses estimates of the Company's
portfolio's climate-related risks and opportunities according to the Financial
Conduct Authority's Environmental, Social and Governance Sourcebook and the
Task Force on Climate-related Financial Disclosures Recommendation. It is
available on the Investment Manager's website: www.jupiteram.com/task-
(http://www.jupiteram.com/task-)
force-on-climate-related-financial-disclosures/.
Streamlined Energy and Carbon Reporting
The Company is categorised as a lower energy user under the HMRC Environmental
Reporting Guidelines March 2019 and is therefore not required to make the
detailed disclosures of energy and carbon information set out within the
guidelines. The Company's energy and carbon information is therefore not
disclosed in this Report.
Review of the Business
A review of the year and commentary on the future outlook is provided in the
Chairman's Statement.
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 net assets have decreased from £131.4m to
£123.1m, largely as a result of the ongoing share buyback programme, offset
by a modest increase in the value of investments. At 31st December 2024 the
net asset value per Ordinary share was 2543.4p (2023: 2,337.1p).
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 Ordinary share.
■ Ongoing Charges ratio (formerly titled the Total Expense Ratio).
Further information is provided in the Glossary of Terms in the Annual Report
and Accounts.
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 NAV per
Ordinary share increased by 8.8% compared to an increase of 5.5% in the FTSE
All- Share Index. Over the five years ended 31st December 2024 NAV per
Ordinary share increased by 11.8% compared with an increase of 6.5% in the
FTSE All-Share Index. The NAV return calculation can be found above.
Dividends per Ordinary share
The total dividend per Ordinary share paid and proposed is 44.0p (2023:
43.0p).
Ongoing Charges
Ongoing charges are expenses charged to revenue or capital that relate to the
operation of the Company as an investment trust and are deemed likely to recur
in the foreseeable future. They include the investment management fee but do
not include the costs of acquisition or disposal of investments, financing
costs and gains or losses arising on investments. Ongoing charges are
calculated on the basis of the annualised ongoing charges as a percentage of
the average net asset value in the period. The Ongoing Charges for the year
ended 31st December 2024 were 0.9% (2023: 0.9%). Under the terms of the
Investment Management Agreement, an operating expenses cap will be applied to
the Company's annual ordinary operating expenses at 0.8 per cent. of the
Company's average daily NAV during each financial year for a period of five
years with effect from 3rd October 2022. Further details are given in Note 3
to the financial statements.
Principal and Emerging Risks and Uncertainties
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 during the
year they have carried out a robust assessment of the emerging and principal
risks facing the Company, including those that would threaten its business
model, future performance, solvency or liquidity. Most of these risks are
market related and are similar to those of other investment trusts investing
primarily in listed markets. The Audit, Risk and Compliance Committee reviews
the Company's Risk Matrix and Risk Heat Map at each meeting and, as part of
this process, gives consideration to identifying emerging risks. Any emerging
risks that are identified and that are considered to be of significance will
be recorded in the Company's Risk Matrix, together with any mitigations. In
carrying out this assessment, consideration is given to the current market
conditions which may impact the Company. No emerging risks have been
identified.
The Company's principal risks and how they are being managed or mitigated are
described below.
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's portfolio
is diversified. Additionally, the Company invests overwhelmingly in smaller
UK listed and AIM traded companies and has no exposure to derivatives. The
principal financial 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 in the Annual Report and Accounts.
Additional principal risks identified by the Company, together with the
Board's approach to 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 Manager 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 analyses. The Board has a clearly defined investment philosophy
which requires the Investment Manager to operate a diversified portfolio.
Share price discount - Investment trust shares often trade at a discount to
their underlying net asset values. A disproportionate widening of the discount
comparative to peers could lead to a decrease in value for shareholders. The
Board continually monitors the level of the discount and discusses its
discount management policy with the Investment Manager. On 7th December 2016,
the Company implemented share buy-back arrangements to mitigate the risk of
the discount increasing. In July 2024, the Board announced a further extension
to the share buy-back programme. The Board authorised the repurchase of shares
of an average rolling £1 million per month until 31st July 2025 (subject to
the renewal of the buy-back authority at the forthcoming AGM).
Loss of key personnel - The Investment Manager is crucial to performance and
the loss of key personnel could adversely affect performance in the medium
term. The Board reviews its strategy for this risk annually. Jupiter Unit
Trust Managers Limited (JUTM) provides two dedicated fund managers to the
Company as part of the Investment Management Agreement. Jupiter also regularly
considers its remuneration packages in order to retain staff and routinely
reviews succession planning. Following the retirement of Dan Nickols, the lead
investment manager, in June 2024 the Board reviewed the management
arrangements for the Company within JUTM and concluded that Matt Cable was
well placed to succeed Mr Nickols as lead manager. Mr Cable is supported by
Tim Service. The Board took comfort from the many years combined investment
experience of Mr Cable and Mr Service, as well as the strength in depth of
Jupiter's Small and Mid-Cap Equities team.
Regulatory risk - The Company must comply with the requirements of 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 Audit, Risk and Compliance Committee
reviews a schedule of regulatory risk items at its meetings and takes action
to address any regulatory changes.
Protection of assets - The Company's assets are protected by the use of an
independent custodian, Northern Trust Company. The Board monitors the
custodian to ensure assets remain protected. The Company operates internal
controls to safeguard assets held by the custodian, for example, through the
Administrator which reconciles the Company's cash and stock positions to the
custodian's records on a daily basis.
Geopolitical risk - Changes in the political landscape could substantially
affect the Company's prospects and the value of its investment portfolio.
Geopolitical risks are discussed at Board meetings. The risks to market
stability as a result of international conflicts are discussed between the
Investment Manager and the Board, including the impact of the ongoing war
between Russia and Ukraine and the hostilities in the Middle East. The Company
has no exposure to investments within or impacted by the current conflict
areas.
Climate change risk - Climate change will bring fundamental shifts to economic
activity and human behaviour across the planet. The Board and Investment
Manager regularly consider how climate change could affect the Company's
investment portfolio and shareholder returns. In line with UK adopted
International Accounting Standards investments are valued at fair value which,
for the Company, are quoted bid prices for investments in active markets at
the Statement of Financial Position date and therefore reflect market
participants' views of climate change.
Pandemic Risk - The COVID-19 pandemic highlighted the speed at and extent to
which a pandemic or health emergency can exert strain on both global and
localised economies and infrastructure. The structural changes that have been
accelerated by the pandemic continue to present risks and opportunities for
different sectors and their products, markets and supply chains. The
Investment Manager mitigates exposure to these risks by carefully monitoring
performance and adaptability of portfolio companies, diversifying investments
and seeking to learn lessons from the COVID-19 pandemic which may be of use in
the event of future pandemics or health crises.
Cyber Risk - Cyber incidents are becoming increasingly common and may cause
disruption and impact business operations, potentially resulting in financial
losses, theft, interference with the ability to maintain the Company's
financial records, and reputational issues. The Company has appointed
experienced service providers that invest heavily in their IT operations, with
a particular focus on cyber security. The Board met with representatives from
the cyber security teams of each of the key service providers during the year
to gain an understanding of the processes that each has in place to manage
these risks in general and, specifically, in relation to the Company. The
Board took comfort from the assurances provided and will continue to keep this
area under review. The Company's key service providers periodically confirm
to the Board that they have in place business continuity plans and procedures
to mitigate the impact on the Company of a disruption in service.
Economic conditions - Changes in economic conditions including, but not
limited to, interest rates, rates of inflation, competition and tax
legislation, could have a significant effect on the Company's prospects and
the value of its investment portfolio. The Board reviews the investment
strategy and the portfolio with the Investment Manager at each Board meeting.
The Investment Manager continually considers economic conditions whilst
seeking to meet the Company's investment objective.
These and other risks facing the Company are reviewed regularly by the Audit,
Risk and Compliance Committee and the Board.
Section 172 Statement
The Board seeks to promote the success of the Company for the benefit of its
shareholders. In doing so it gives consideration to the likely long-term
consequences of any decision with regard to the interests of its business
relationships and the environment in which it operates. As at 31st December
2024, the Company had no employees.
Stakeholder Group Engagement in the year and their material issues
Shareholders Shareholders play an important role in monitoring and safeguarding the
governance of the Company. They have access to the Board via the Company
Secretary throughout the year. The Board welcomes the opportunity to engage
with shareholders at its Annual General Meeting. The Company continues to
communicate with shareholders via the Company Secretary, its website and the
publication of its financial reports throughout the year. The Chairman
regularly meets with larger investors to gauge investor sentiment and always
responds to questions from shareholders.
The Board encourages shareholders to ask questions of the Chairman of the
Board and all other Directors via the Company Secretary and to ask questions
of the Investment Manager. Shareholders may submit questions to
cosec-uk@apexgroup.com (mailto:cosec-uk@apexgroup.com) or investment
companies@jupiteram.com. (mailto:companies@jupiteram.com) Communication with
shareholders enables the Board to make informed decisions when considering how
to promote the success of the Company over the long term.
Suppliers The Board relies on a number of advisors for support in the successful
operation of the Company and in meeting its obligations. The Board therefore
considers the Investment Manager, Secretary/Administrator, Broker, Registrar,
Custodian and Depository to be stakeholders.
Key suppliers are required to report to the Board on a regular basis and there
is a robust framework in place to evaluate their performance annually. The
Company employs a collaborative approach and looks to build long-term
partnerships based on open terms of business and fair payment terms.
The Secretary engages with key suppliers to ensure that services provided are
satisfactory.
Investee Companies The Board recognises the benefits of good communication with and stewardship
of investee companies and the importance of such in meeting the Company's
investment objective.
The Investment Manager meets with the management of companies in which the
Company has a significant interest and reports on findings to the Board
regularly.
Regulators As a company listed on the London Stock Exchange, the Board ensures compliance
with the necessary rules and regulations relevant to the Company in order to
build trust and maintain its reputation in the market.
Community and environment As discussed in more detail in the Annual Report, in pursuing the Company's
objectives, various factors that may impact on performance are considered.
These may include environmental, social and governance ('ESG') issues. The
Board believes that poor practices can have an impact on the value of
investments and potential investments and consideration of ESG factors as part
of the investment process is therefore key.
Factoring Stakeholders into Principal Decisions
The Board defines principal decisions as not only those that are material to
the Company but also those that are significant to any of the Company's key
stakeholders as identified above. In making the following principal
decisions, the Board considered the outcome from its stakeholder engagement as
well as the need to maintain a reputation for high standards of business
conduct and the need to act fairly as between the members of the Company.
Principal Decision 1 Share buy-back programme
In July 2024 the Company announced a further extension of the share buyback
programme. The Board authorised repurchases of shares of up to an average £1
million per month until July 2025. The continuation of the programme is
designed to address the share price discount.
Principal Decision 2 Board Composition
The Board undertakes a detailed review of its own composition annually,
including assessing the knowledge and experience therein. As a result of this
review the Board concluded that it was not necessary to increase the current
number of directors at present. Mr Roper has declared his intention to retire
at the conclusion of the Annual General Meeting in 2026. A recruitment
exercise will be undertaken in 2025 to identify a suitable successor. The
Board will continue to review its composition annually or in the event of any
further changes.
Principal Decision 3 Dividend Policy
The Board continues to operate a progressive dividend policy. The Board has
increased the annual dividend, having paid and recommended dividends totalling
44.00p per share to shareholders for the financial year ended 31st December
2024 (2023: 43.0p).
Principal Decision 4 Remuneration
During the year the Nominations and Remuneration Committee undertook a review
of the level of non-executive Directors' fees. The Committee considered the
level of fees relative to various benchmarks, together with the Company's
performance and the need to attract and retain directors of a high calibre.
The Committee concluded that Directors' fees should be increased with effect
from 1st January 2025 by £1,635 for the Chair of the Audit, Risk and
Compliance Committee, by £1,900 for the Chairman and by £1,425 for each of
the other non- executive directors and that the fees should continue to be
reviewed annually to ensure that the levels of remuneration remain attractive
to current and prospective directors. On the recommendation of the Nominations
and Remuneration Committee the Board considered and approved the proposed
increase in Directors' fees.
Principal Decision 5 Management Engagement Committee
The Board monitors the Investment Manager's performance against the Company's
investment objective at each Board meeting. In addition, the Board took the
decision to establish a Management Engagement Committee in early 2023. The
Committee meets annually to review the contractual terms of the Investment
Management Agreement and the performance of the Investment Manager. On the
recommendation of the Management Engagement Committee the Board approved the
continuing appointment of the Investment Manager, having concluded that it was
in the best interests of the Company and its shareholders.
Principal Decision 6 Consideration of Share Split
During the year the Board reconsidered a sub-division of the Company's shares.
After due deliberation it again concluded that the benefits would not be
sufficiently far-reaching for the Company and its shareholders.
Principal Decision 7 Change of Name
Following feedback from a number of shareholders the Board considered the
merits of a change of name for the Company. After due deliberation the Board
concluded that a name change would not inherently improve the Company's
marketability and liquidity. Instead, the Board requested that JUTM put
greater emphasis on raising the profile of the Company.
Viability Statement
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 Manager and a continuing programme of risk monitoring 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's portfolio comprises marketable smaller UK-listed and AIM traded securities and has short term cash on deposit.
■ The Company does not use gearing.
■ The expenses of the Company were covered three times by investment income in 2024.
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. Consideration was also given to the principal risks and uncertainties faced by the Company, as detailed on pages 22 to 23 of the Annual Report and Accounts. The Directors seek assurances from suppliers that their operations are well managed and that they are taking appropriate action to monitor and mitigate risk. The Board also considered the political and economic environment in relation to the Company's investment positions, its future income streams and its ability to continue trading.
Based on the above, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.
Shareholder Communication
The Board is committed to maintaining open channels of communication with
shareholders. It is the Chairman's role to ensure effective communication with
the Company's shareholders and it is the responsibility of the Board to ensure
that satisfactory dialogue takes place, based on the mutual understanding of
objectives. The Board remains cognisant of the importance of clear
communications with shareholders and will respond to all reasonable requests
for information or meetings.
The Investment Manager maintains a regular dialogue with major shareholders
and reports to the Board. In the event that shareholders wish to raise issues
or concerns with the Directors, they are welcome to do so at any time via the
Company Secretary at cosec-uk@apexgroup.com. (mailto:cosec-uk@apexgroup.com)
The Annual Report and half-year results are circulated to shareholders wishing
to receive them and are available on the Company's website. These provide
shareholders with a clear understanding of the Company's portfolio and
financial position. This information is supplemented by the daily calculation
and publication of the NAV per share. JUTM also publishes a monthly factsheet
that can be found on the Company's website,
www.jupiteram.com/uk/en/individual/rights-and-issues-investment-trust-plc.
(http://www.jupiteram.com/uk/en/individual/rights-and-issues-investment-trust-plc)
Shareholders are encouraged to ask questions either at the Annual General
Meeting or via the Company Secretary.
2024 AGM Voting
At the AGM held on 27th March 2024 resolution 2, to approve the Directors'
Remuneration Report, and resolution 5, to re-elect Mr Simon Knott as a
Director, were passed with the necessary majority but with less than 80% of
the votes cast in favour of the resolutions by shareholders. In accordance
with Provision 4 of the UK Corporate Governance Code the Company is required
to provide an update on its consultation with the shareholder(s) that voted
against these resolutions.
The Board liaised with the significant shareholder who voted against both
resolutions and understands that the reason for the vote against the
Directors' Remuneration Policy was because of the ex-gratia payment to Dr
David Bramwell, the former Chairman. This payment was to fund a gift in
recognition of Dr Bramwell's long service to the Company and his contribution
as Chair. The shareholder acknowledged that the sum of the payment was
insignificant and the Board confirmed that this payment was not intended to
set a precedent for any such payments in the future and does not envisage
making such a payment again.
Regarding the decision to vote against the re-election of Mr Simon Knott, the
Board understands that it was a compliance driven vote reflecting the
institutional shareholder's view that Mr Knott was non-independent, having
formerly been the CEO of the Company prior to the appointment of Jupiter Unit
Trust Managers Limited as investment manager in October 2022, when it was a
self-managed investment trust. This contrasts with positive feedback received
by the Board regarding Mr Knott's continuing involvement as a non-executive
director. The Board clarified with the shareholder that Mr Knott has no
current or former association with JUTM other than as a non- executive
director of the Company and, despite his tenure as Investment Director, the
Board considers him to be independent. Furthermore, with his extensive
investment knowledge and in-depth understanding of the companies within the
portfolio, Mr Knott's contribution to the Board and its committees is
invaluable.
The percentage of the total shares in issue cast against resolutions 2 and 5
was 6.5% and 6.4% respectively. The weighting of these votes was
disproportionately distorted due to the relatively low number of votes cast at
the AGM. The Board urges shareholders to exercise their right to vote by
appointing the Chairman as their proxy and indicating how they would like
their votes to be cast.
Company's Directors and Employees
The number of directors at 31st December 2024 was four (2023: four).
2024 2023
Male Female Male Female
Directors (non-executive) 3 1 3 1
Other 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:
Dr Andrew J. Hosty
Chairman
20th February 2025
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable United Kingdom law and UK adopted
International Accounting Standards.
The Directors are required to prepare the financial statements for each
financial year which present fairly the financial position, the financial
performance and cash flows of the Company for that period. In preparing those
financial statements the Directors are required to:
■ select suitable accounting policies in accordance with UK adopted
International Accounting Standard 8 Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently;
■ make judgments and estimates that are reasonable and prudent;
■ present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
■ provide additional disclosures when compliance with the specific
requirements of UK adopted International Accounting Standards is insufficient
to enable users to understand the impact of particular transactions, other
events and conditions on the Company's financial position and financial
performance;
■ state that the Company has complied with UK adopted International
Accounting Standards subject to any material departures disclosed and
explained in the financial statements; and
■ prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report, Strategic Report and Directors' Remuneration
Report that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Visitors to the website need to be aware that legislation in the UK governing
the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors consider that the Annual Report and financial statements taken
as a whole are fair, balanced and understandable and provide shareholders with
the information necessary to assess the Company's position and performance,
business model and strategy.
The Directors confirm that to the best of their knowledge:
■ the financial statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
■ the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
Dr A. J. Hosty
Chairman
20th February 2025
Statement of Comprehensive Income
for the year ended 31st December 2024
Notes
Year ended 31st December 2024 Year ended 31st December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 2 3,313 - 3,313 3,999 - 3,999
Other operating income 2 108 - 108 94 - 94
Total income 3421 - 3,421 4,093 - 4,093
Gains on fair value through profit or loss assets 10 - 9,706 9,706 - 797 797
3421 9,706 13,127 4,093 797 4,890
Expenses
Investment management fee 3 672 - 672 670 - 670
Other expenses 4 522 131 653 470 156 626
1,194 131 1,325 1,140 156 1,296
Profit before finance costs and taxation 2,227 9,575 11,802 2,953 641 3,594
Finance costs - - - - - -
Profit before tax 2,227 9,575 11,802 2,953 641 3,594
Tax 6 - - - - - -
Profit for the year 2,227 9,575 11,802 2,953 641 3,594
Return per Ordinary share 8 42.1p 181.2p 223.3p 50.4p 11.0p 61.4p
The total column represents the statement of comprehensive income of the
Company.
The revenue and capital columns, including the revenue and capital earnings
per Ordinary Share, are supplementary information prepared under guidance
published by the AIC.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period. All
income is attributable to the equity holders of the Company.
The Company does not have any other comprehensive income. Therefore no
separate Statement of Comprehensive Income has been presented.
The accompanying notes form part of these financial statements.
Statement of Financial Position
as at 31st December 2024
31st December 31st December
2024 2023
Notes £'000 £'000
Non-current assets
Investments - fair value through profit or loss 10 121,285 129,994
Current assets
Other receivables 12 457 556
Cash and cash equivalents 1,893 1,051
2,350 1,607
Total assets 123,635 131,601
Current liabilities
Other payables 13 488 242
Total assets less current liabilities 123,147 131,359
Net assets 123,147 131,359
Equity
Called up share capital 14 1,210 1,405
Capital redemption reserve 15 1,045 850
Retained reserves:
Capital reserve 15 81,693 84,416
Revaluation reserve 15 36,483 41,873
Revenue reserve 15 2,716 2,815
Total equity 123,147 131,359
Net asset value per share
Ordinary shares 16 2,543.4p 2,337.1p
The accompanying notes form part of these financial statements.
The financial statements were approved by the Board and authorised for issue
on 20th February 2025. They were signed on its behalf by:
Dr A. J. Hosty
Chairman
Statement of Changes in Equity
for the year ended 31st December 2024
Share capital Capital Redemption Capital reserve Revaluation reserve Revenue reserve Total
£'000 reserve £'000 £'000 £'000 £'000
£'000
For the year ended 31st December 2024
Balance at 31st December 2023 1,405 850 84,416 41,873 2,815 131,359
Profit for the year - - 14,965 (5,390) 2,227 11,802
Total recognised income and expense 1,405 850 99,381 36,483 5,042 143,161
Ordinary shares bought back and cancelled (195) 195 (17,688) - - (17,688)
Dividends (Note 7) - - - - (2,326) (2,326)
Balance at 31st December 2024 1,210 1,045 81,693 36,483 2,716 123,147
Share capital Capital Redemption Capital reserve Revaluation reserve Revenue reserve Total
£'000 reserve £'000 £'000 £'000 £'000
£'000
For the year ended 31st December 2023
Balance at 31st December 2022 1,542 713 67,191 69,032 2,305 140,783
Loss for the year - - 27,800 (27,159) 2,953 3,594
Total recognised income and expense 1,542 713 94,991 41,873 5,258 144,377
Ordinary shares bought back and cancelled (137) 137 (10,575) - - (10,575)
Dividends (Note 7) - - - - (2,443) (2,443)
Balance at 31st December 2023 1,405 850 84,416 41,873 2,815 131,359
The accompanying notes form part of these financial statements.
Dividends paid were paid from the revenue reserve.
Cash Flow Statement
for the year ended 31st December 2024
Notes 31st December 2024 31st December 2023
£'000 £'000
Cashflows from operating activities
Profit before tax 11,802 3,594
Adjustments for:
Gains on investments (9,706) (797)
Purchases of investments 10 (23,495) (30,042)
Proceeds on disposal of investments 10 41,910 35,292
Operating cash flows before movements in working capital 20,511 8,047
Decrease in receivables 99 5
Increase/(decrease) in payables 62 (22)
Net cash from operating activities before income tax 20,672 8,030
Income taxes received - -
Net cash flows from operating activities 20,672 8,030
Cashflows from financing activities
Ordinary shares bought back (17,504) (10,575)
Dividends paid 7 (2,326) (2,443)
Net cash used in financing activities (19,830) (13,018)
Net increase/(decrease) in cash and cash equivalents 842 (4,988)
Cash and cash equivalents at beginning of year 1,051 6,039
Cash and cash equivalents at end of year 1,893 1,051
The net cash flows from operating activities includes cash flows of
£3,414,000 from dividend income (2023: £4,099,000) and £108,000 from
interest income (2023: £94,000).
The accompanying notes form part of these financial statements.
Notes to the Financial Statements
for the year ended 31st December 2024
1. Reporting Entity
Rights and Issues Investment Trust PLC is a closed-ended investment company,
registered in England and Wales on 2nd October 1962 with Company number
00736898. The Company's registered office is Hamilton Centre, Rodney Way,
Chelmsford CM1 3BY. Business operations commenced on 28th July 1966 when the
Company's shares were admitted to trading on the London Stock Exchange. The
Company invests primarily in a portfolio of equity securities with an emphasis
on smaller companies. UK smaller companies will normally constitute at least
80% of the investment portfolio. UK smaller companies include those listed on
either the London Stock Exchange or the Alternative Investment Market ("AIM").
Details of the Directors, Investment Manager and Advisors can be found on page
4 of the Annual Report and Accounts.
The financial statements of the Company are presented for the year ended 31st
December 2024 and were authorised for issue by the Board on 20th February
2025.
Basis of Accounting
The financial statements have been prepared in accordance with international
accounting standards and the applicable legal requirements of the Companies
Act 2006.
In preparing these financial statements, the Directors have considered the
impact of climate change risk and concluded there was no impact as the values
of investments are based on market quoted prices and therefore reflect market
participants view of climate change risk. None of the Company's other assets
and liabilities are considered to be potentially impacted by climate change.
Under international accounting standards, the AIC Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" ("SORP") issued in July 2022 has no formal status, but the
Company adheres to the guidance of the SORP.
Going concern
The financial statements have been prepared on a going concern basis. In
forming this opinion, the Directors have considered the general economic
backdrop, the potential impact of the war in Ukraine and the escalating
hostilities in the Middle East on the going concern and viability of the
Company. In making their assessment, the Directors have reviewed income and
expense projections and the liquidity of the investment portfolio, and
considered the mitigation measures which key service providers, including the
Investment Manager, have in place to maintain operational resilience.
The Directors have a reasonable expectation that the Company has adequate
operational resources to continue in operational existence for at least twelve
months from the date of approval of these financial statements and up to 28th
February 2026.
Significant accounting policies
a. Accounting convention
The accounts are prepared under the historical cost basis, except for the
measurement of fair value of investments.
b. Adoption of new IFRS standards
There have been minor amendments to IAS 1 and 7 and IFRS 7 and 16 which were
effective for annual periods beginning on or after 1st January 2024 and have
not had any material impact on the accounts. Amendments to IAS 21 (The Effects
of Changes in Foreign Exchange Rates) are effective for annual periods
beginning on or after 1st January 2025 and are not anticipated to have any
material impact on the accounts.
c. Income
Dividend income is included in the financial statements on the ex-dividend
date. All other income is included on an accruals basis.
d. Expenses
The Company's policy is to expense transaction costs on acquisition/disposal
through the gains on investment at fair value through profit or loss. All
other expenses are accounted for on an accruals basis and charged through the
revenue account.
e. Taxation
The charge for taxation is based on the net revenue for the year. Deferred
taxation is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date to which there are none
(2023: none). Investment trusts which have approval under section 1158 of the
Corporation Tax Act 2010 are not liable for taxation on capital gains.
f. Dividends
Dividends payable to shareholders are recognised in the financial statements
when they are paid or, in the case of final dividends, when they are approved
by the shareholders.
g. Cash and cash equivalents
Cash comprises cash in hand and deposits payable on demand. Cash equivalents
are short-term highly liquid investments that are readily convertible to known
amounts of cash.
h. Investments
Investments are classified as fair value through profit or loss as the
Company's business is investing in financial assets with a view to profiting
from their total return in the form of interest, dividends or capital growth.
Changes in the value of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the Income Statement as
"Gains or losses on investments held at fair value through profit or loss".
Also included within this heading are transaction costs in relation to the
purchase or sale of investments.
All investments, classified as fair value through profit or loss, are
further categorised into the following fair value hierarchy:
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.
Investments traded on active stock exchange markets are valued at their fair
value, which is determined by the quoted market bid price at the close of
business at the balance sheet date. Where trading in a security is suspended,
the investment is valued at the Board's estimate of its fair value.
The unquoted investment is valued by the Board at fair value using the
International Private Equity and Venture Capital Valuation Guidelines.
Judgments, estimates or assumptions
The Directors have reviewed matters requiring judgments, estimates or
assumptions. The preparation of the financial statements require management
to make judgments, estimates or assumptions that affect the amounts reported
for assets and liabilities as at the year end date and the amounts reported
for revenue and expenses during the year. However, the nature of the estimate
means that actual outcomes could differ from those estimates. No significant
judgments, estimates or assumptions have been made in the preparation of these
financial statements.
2. Income
2024 2023
£'000 £'000
Income from investments
Franked investment income 3,313 3,999
Other operating income
Deposit interest 108 94
Total income 3,421 4,093
Total income comprises:
Dividends 3,313 3,999
Interest 108 94
3,421 4,093
Income from investments
UK 3,313 3,990
Unlisted stock - 9
Total 3,313 3,999
3. Investment Management fee
2024 2023
£'000 £'000
Investment management fee 806 804
Operating expenses rebate (134) (134)
Total 672 670
Following the appointment of Jupiter as Investment Manager on 3rd October 2022
a management fee is payable quarterly to the Investment Manager on the
following basis:
0.60% per cent per annum on the Company's NAV up to and including £200
million.
0.50% per cent per annum on the Company's NAV in excess of £200 million.
An operating expenses cap (rebate) will be applied, in respect of each
financial year by means of a balancing charge, which will reduce the
management fee payable to the Investment Manager with respect to the quarter
ending 31st March of the following financial year. It will apply for a period
of 5 years with effect from 3rd October 2022. The operating expenses cap will
not apply to the extent that the management fee would be less than 0.50% of
the Company's average daily NAV during any financial year. The Manager and
the Board will review the operating expenses cap at least annually to
determine whether the level of the cap remains appropriate.
4. Other Expenses
2024 2023
£'000 £'000
Staff costs (note 5) 7 4
Non-executive Directors' fees 128 147
Administration fees 94 94
Auditor's remuneration
- Audit 66 19
Secretarial services 58 42
Other 169 164
522 470
Capital expenses 131 156
Total 653 626
5. Staff Costs and Directors' Remuneration
2024 2023
£'000 £'000
Social security costs 7 4
Total 7 4
2024 2023
£'000 £'000
Directors' emoluments 128 139
Payments to former directors - 8
128 147
The Company has not had any employees since the appointment of JUTM as
Investment Manager on 3rd October 2022.
5. Taxation
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax at 25% (2023: 23.5%) - - - - - -
Profit before tax 2,227 9,575 11,802 2,953 641 3,594
Tax on profit at effective rate 25% (2023: 23.5%) 557 2,394 2,951 694 151 845
Factors affecting the recovery/charge for the year:
Income not taxable (828) - (828) (940) - (940)
Capital items not taxable - (2,427) (2,427) - (187) (187)
Unutilised losses 271 33 304 246 36 282
Current tax charge for the year - - - - - -
At the year end there is a potential deferred tax asset of £2,486,287 (2023:
£2,214,810) in relation to surplus management expenses of £9,945,149 (2023:
£8,859,238). It is unlikely that the Company will generate sufficient taxable
profits in the future to utilise these expenses and therefore no deferred tax
asset has been recognised in the year. The Company has not provided for
deferred tax on capital gains or losses arising on the revaluation or disposal
of investments as it is exempt from tax on these items because of its status
as an investment trust company.
Factors that may affect future tax charges
The Company has not recognised any deferred tax asset arising as a result of
having unutilised management expenses. These expenses will only be utilised if
the tax treatment of the Company's income and capital gains changes or if the
Company's investment profile changes.
7. Dividends
Amounts recognised as distributions to equity holders in the year:
2024 2023
£'000 £'000
Paid
Final dividend for the year ended 31st December 2023 of 31.25p per share 1,702 1,767
(year ended 31st December 2022: 29.25p)
Interim dividend for the year ended 31st December 2024 of 12p per share (year 624 676
ended 31st December 2023: 11.75p)
2,326 2,443
2024 2023
£'000 £'000
Proposed
Final dividend payable for the year ended 31st December 2024 of 32.00p 1,537 1,720
per share (year ended 31st December 2023: 31.25p)
The final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements.
Set out below is the total dividend paid and payable in respect of the
financial year, which is the basis on which the requirements of section 1158
of the Corporation Tax Act 2010 are considered.
2024 2023
£'000 £'000
Revenue available for distribution by way of dividend for the year 2,227 2,953
Interim dividend for the year ended 31st December 2024 of 12p per share (624) (676)
(year ended 31st December 2023: 11.75p)
Proposed final dividend for the year ended 31st December 2024 of 32.00p per (1,537) (1,720)
share
(year ended 31st December 2023: 31.25p)
Net addition to Revenue reserve 66 557
8. Return per Ordinary Share
2024 2023
£'000 £'000
Return attributable to equity shareholders
Revenue return 2,227 2,953
Capital return 9,575 641
11,802 3,594
p p
Revenue return per share 42.1 50.4
Capital return per share 181.2 11.0
223.3 61.4
Return by share is calculated using the weighted average number of income
shares in issue during the year of 5,249,524 (2023: 5,854,307).
9. Investments
Analysis of the investments
The number of companies or institutions in which equities, convertibles or
fixed interest securities were held was 22 (2023: 22).
2024 2023*
£'000 % £'000 %
Equity Groups
Basic Materials
Chemicals 6,232 5.14 6,444 4.96
Industrial Metals and Mining 7,544 6.22 9,969 7.67
Consumer Discretionary
Leisure Goods 1,397 1.15 3,339 2.57
Consumer Staples
Food Producers - - 4,617 3.55
Financials
Finance and Credit Services 5,666 4.67 6,501 5.00
Investment Banking and Brokerage Services 9,221 7.60 5,721 4.40
Industrials
Construction and Materials 5,348 4.41 4,319 3.32
Electronic and Electrical Equipment 14,698 12.12 10,504 8.08
General Industrials 7,587 6.25 13,666 10.51
Industrial Engineering - - 6,268 4.82
Industrial Support Services 6,729 5.55 3,806 2.93
Industrial Transportation 7,665 6.32 14,906 11.47
Technology
Software and Computer Services - - 2,714 2.09
Telecommunications
Telecommunications Equipment - - 1,869 1.44
Utilities
Electricity 7,387 6.09 7,401 5.69
AIM Traded Stocks 41,780 34.45 27,909 21.47
Delisted 31 0.03 41 0.03
Fixed Interest
Preference - - - -
Total UK 121,285 100.00 129,994 100.00
* The figures for 2023 have been reworked based on the latest categories as
per the latest FTSE categorisation.
10. Investments held at fair value through profit or loss
2024 2023
£'000 £'000
Investments listed on a recognised investment exchange
UK equity listed investments at fair value 79,474 96,323
AIM traded stocks 41,780 33,630
Unlisted stock 31 41
121,285 129,994
Listed Total
2024 AIM traded/ Unlisted 2024
£'000 2024 £'000
£'000
Opening book cost 69,954 18,167 88,121
Opening unrealised appreciation 26,369 15,504 41,873
Opening valuation 96,323 33,671 129,994
Movement in the year:
Purchases at cost 13,762 9,733 23,495
Sales - proceeds (33,544) (8,366) (41,910)
Sales - realised gains on sales 11,474 3,622 15,096
Decrease/(increase) in unrealised appreciation (8,541) 3,151 (5,390)
Closing valuation 79,474 41,811 121,285
Closing book cost 61,646 23,156 84,802
Closing unrealised appreciation 17,828 18,655 36,483
79,474 41,811 121,285
Realised gains on sales 11,474 3,622 15,096
Decrease/(increase) in unrealised appreciation (8,541) 3,151 (5,390)
Gains on investments 2,933 6,773 9,706
With the exception of the unlisted stock, the Company's investments are Level
1 assets under the definition of IFRS 13 and comprise equity listed and AIM
traded investments classified as held at fair value through profit or loss.
Investments have been revalued over time and, until they are sold, any
unrealised gains or losses are included in the fair value movement on
investments.
During the year transaction costs of £75,583 were incurred on the acquisition
of investments (2023: £133,196). Costs relating to disposals of investments
during the year amounted to £19,154 (2023: £14,624). All transaction costs
have been included within the capital column of the Income Statement.
11. Significant Interests in Investee Companies
The Company has a holding of 3% or more that is material in the context of the
financial statements in the following investments as at 31st December 2024:
Name % holding
Colefax Group 14.13
Renold 8.35
Elecosoft 5.38
Macfarlane Group 4.44
Vp 3.44
12. Other Receivables
2024 2023
£'000 £'000
Amounts due from brokers 2 -
Prepayments and accrued income 455 556
457 556
Cash and cash equivalents
Cash at bank 1,893 1,051
13. Other payables
2024 2023
£'000 £'000
Accruals 304 242
Outstanding share buybacks 184 -
488 242
14. Share Capital
2024 2023
£'000 £'000
Allotted, Called Up and Fully Paid
4,841,803 Ordinary shares of 25p each (2023: 5,620,684) 1,210 1,405
Number of Ordinary
shares
2024
Balance at beginning of year 5,620,684
Ordinary shares bought back and cancelled (778,881)
4,841,803
15. Reserves
2024
Capital redemption reserve Capital Revaluation reserve Revenue reserve
reserve
£'000
£'000 £'000
£'000
Beginning of year 850 84,416 41,873 2,815
Ordinary shares bought back and cancelled 195 (17,688) - -
Decrease in unrealised appreciation - - (5,390) -
Net gains on realisation of investments - 15,096 - -
Expenses - (131) - -
Profit for year - - - 2,227
Dividends - - - (2,326)
End of year 1,045 81,693 36,483 2,716
2023
Capital redemption reserve Capital Revaluation reserve Revenue reserve
reserve
£'000
£'000 £'000
£'000
Beginning of year 713 67,191 69,032 2,305
Ordinary shares bought back and cancelled 137 (10,575) - -
Decrease in unrealised appreciation - - (27,159) -
Net gains on realisation of investments - 27,956 - -
Expenses - (156) - -
Profit for year - - - 2,953
Dividends - - - (2,443)
End of year 850 84,416 41,873 2,815
The capital reserve represents realised profits and losses arising on the
disposal of investments. The revaluation reserve represents unrealised
profits and losses arising on the revaluation of investments held. The
revenue reserve represents accumulated revenue less the distributions paid.
Both the capital reserve and revenue reserve together represent the total
distributable reserves at the year end.
16. Net Asset Value per share
The net asset value per Ordinary share calculated in accordance with the
Articles of Association was as follows:
Net asset value per Net asset value
Ordinary share attributable attributable
2024 2023 2024 2023
p p £'000 £'000
Ordinary shares 2543.4 2337.1 123,147 131,359
The movements during the year attributable to each class of share were as
follows:
Ordinary Ordinary
shares shares
2024 2023
£'000 £'000
Total net assets at beginning of year 131,359 140,783
Shares bought back and cancelled (17,688) (10,575)
Total recognised gains for the year 9,575 641
Transfer to reserves (99) 510
Total net assets attributable at end of year 123,147 131,359
Number of shares in issue 4,841,803 5,620,684
The Company may repurchase its own shares and then cancel them, reducing the
freely traded shares ranking for dividends and enhancing returns and earnings
per Ordinary Share to the remaining Shareholders. When the Company repurchases
its share, it does so at a total cost below the prevailing NAV per share.
The estimated percentage added to the NAV per share as a result of buybacks of
1.8% (2023: 1.6%) is derived from the repurchase of shares in the market at a
discount to the prevailing NAV at the point of repurchase. The shares were
bought back at a weighted average discount of 11.4% (2023: 16.0%).
2024 2023
Weighted average discount of buybacks 11.4% 16.0% a
Percentage of shares bought back 13.9% 8.8% b
NAV accretion from buyback 1.8% 1.6% (a*b)/(100-b)
17. Related Party Transactions
Fees payable during the year to the Directors and their interests in shares of
the Company are considered to be related party transactions. Details are
disclosed within the Directors' Remuneration Report in the Annual Report and
Accounts. The balance of fees due to Directors at the year end was £nil
(2023: £nil).
The Company has an agreement with Jupiter Unit Trust Managers Limited for the
provision of Investment Management services. Details of fees earned during the
year and balances outstanding at the year end are disclosed in note 3.
18. Financial assets and liabilities
The Company's financial assets and liabilities comprise securities, cash
balances and debtors and creditors that arise from its operations, for
example, in respect of sales and purchases awaiting settlement and debtors for
accrued income.
The investment policy and objectives of the Company are stated on page 2 of
the Annual Report and Accounts.
As an investment trust, the Company invests in securities for the long term.
Accordingly it is and has been throughout the year under review, the Company's
policy that no short term trading in investments or other financial
instruments should be undertaken.
The main risks arising from the Company's financial instruments are market
price risk, liquidity risk and credit risk. The Board's policy for managing
these risks is summarised below. These policies have remained unchanged since
the beginning of the year to which these financial statements relate.
Market price risk
Market price risk arises from uncertainty about future prices of financial
instruments held. It represents the potential loss the Company might suffer
through holding market positions in the face of price movements. Market Risk
comprises other price risk and interest rate risk.
Other price risk
The Board meets at least quarterly to consider the asset allocation of the
portfolio in order to minimise the risk associated with industry sectors. The
Investment Manager has responsibility for monitoring the existing portfolio
selected in accordance with the Company's investment objectives and seeks to
ensure that individual stocks meet an acceptable risk-reward profile.
Company's exposure to changes in market prices as at 31st December 2024 on its
quoted equity investments was £121,254,000 (2023: £129,953,000).
If the price of the investments held increased or decreased by 10%, with all
other variables held constant, the net assets attributable to Shareholders
would increase or decrease by approximately £1,212,500 (2023: £1,299,530).
Interest rate risk
The Company has limited exposure to Interest Rate risk on the underlying
investments held. The only exposure to interest rate risk is from cash held at
bank of £1,893,000 (2023: £1,051,000).
If the value of sterling increased or decreased by 10%, with all other
variables held constant, then the net assets attributable to Shareholders
would increase or decrease by approximately £189,300 (2023: £105,100).
Liquidity risk
Liquidity risk is not considered significant. All liabilities are payable
within three months. The company's assets comprise mainly readily realisable
securities which can be sold to meet funding requirements if necessary. The
Company currently holds one unquoted security, Dyson, which is not quoted on
the London Stock Exchange or AIM.
Credit risk
Credit risk is the failure of the counterparty to a transaction to discharge
its obligations which could result in the Company suffering a loss. At the
year end the Company's maximum exposure to credit risk was as follows:
2024 2023
£'000 £'000
Receivables 457 556
Cash and cash equivalents 1,893 1,051
2,350 1,607
The risk is managed by dealing only with brokers and banks which have
satisfactory credit ratings and are approved by the Audit, Risk and Compliance
Committee.
Financial assets and liabilities
All assets and liabilities are included at fair value.
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 1h Investments.
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.
31st December 2024 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
UK Equity Listed 79,474 - -
79,474
AIM traded stocks 41,780 - -
41,780
Unlisted stock - 31 -
31
Net fair value 121,254 31 -
121,285
31st December 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
UK Equity Listed 96,323 - -
96,323
AIM traded stocks 33,630 - -
33,630
Unlisted stock - 41 -
41
Net fair value 129,953 41 -
129,994
There were no transfers between Level 1 and Level 2 during the period.
The fair value of the Company's investment in Dyson, which is classified above
as Level 2, is determined using the outsourced provider S&P Global with
their valuation techniques and price assessed and agreed by the governance
process in place by the Unlisted Assets Valuation Committee of the Investment
Manager and ratified by the Board.
19. Capital Management Policies and Procedures
The Company's capital comprises the equity share capital, share premium and
reserves as shown in the Statement of Financial Position.
The Board, with the assistance of the Investment Manager, monitors and reviews
the broad structure of the Company's capital on an ongoing basis. This review
includes:
· The need to buy back Ordinary shares, either for cancellation or to
hold in treasury, which takes account of the difference between the net asset
value per share and the share price (i.e. the level of share price discount or
premium); and
· The extent to which revenue in excess of that which is required to
be distributed should be retained. During the period, the Company complied
with the externally imposed capital requirements:
· As a public company, the Company has a minimum share capital of
£50,000; and
· In order to be able to pay dividends out of profits available for
distribution, the Company has to be able to meet one of the two capital
restriction tests imposed on investment companies by Company law
20. Post Balance Sheet Events
Between the year end and 19th February 2025, the latest practicable date
before the publication of the financial statements, the Company has bought
back and cancelled 39,120 Ordinary shares for a cost of £848,653.
A copy of the Company's Annual Report for the year ended 31st December 2024
will shortly be available to view and download from the Company's website
www.jupiteram.com/uk/en/individual/rights-and-issues-investment-trust-plc.
(http://www.jupiteram.com/uk/en/individual/rights-and-issues-investment-trust-plc)
Printed copies of the Annual Report will be sent to those shareholders
electing to receive hard copies shortly. Additional copies may be obtained
from the Company Secretary - Apex Fund Administration Services (UK) Limited,
Hamilton Centre, Rodney Way, Chelmsford, Essex CM1 3BY.
The Annual General Meeting of the Company will be held in the Zig Zag
Building, 70 Victoria Street, London SW1E 6SQ on 24th March 2025, at 12 noon.
END
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