SELF MANAGED INVESTMENT TRUST HALF YEARLY FINANCIAL REPORT for the six months ended 30th June 2014 CHAIRMAN S STATEMENT The first half of 2014 has been much quieter with the FTSE All-Share Index registering a fall of -0.3%. The Trust progressed with a 3.2% rise in the net asset value of the capital shares to 5708.8p. The Trust benefited as smaller companies again outperformed their larger peers. During the six months, the repurchase of the Preference Class was completed at a cost of 250,000, not including professional expenses. The interim dividend is being increased to 10.5p per income share. The capital progress achieved by the Trust in recent years continues to generate income improvements. The current indecision of the stock market is a product of the competing forces which it faces. The UK economy is undoubtedly recovering but valuations are already high and interest rate rises will follow. Competitive pressures can also suddenly intensify to the detriment of corporate profitability. Still, it is encouraging to see the solid operating performances achieved by so many of the Trust s major investments. Dr D. M. Bramwell Chairman July 2014 You can view or download copies of the Half Year and Annual reports from our website at www.rightsandissues.co.uk. The Half Yearly Report is to be posted to shareholders and is available at the registered office of the Company. Risks and uncertainties Cautionary statement This half-yearly report contains forward-looking statements that involve risk and uncertainty. These have been made by the directors in good faith based on the information available to them at the time of their approval of this report. Due to the inherent uncertainties, including stock market risk factor, actual results may differ materially from those expressed or implied by these forward-looking statements. There are a number of potential risks and uncertainties which could have a material impact on the Company s performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Company s results continue to be exposed to the risk of market price. Further information on the principal long-term risks and uncertainties of the Company is included in the latest annual report. 1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30th June 2014 Six months ended 30th June 2014 Revenue Capital Total Investment income 1,492,429 1,492,429 Other operating income 198,490 198,490 Total income 1,690,919 1,690,919 Gains/(Losses) on fair value through profit or loss assets 20,429 3,931,346 3,951,775 1,711,348 3,931,346 5,642,694 Expenses Investment management fee Other expenses 360,418 360,418 360,418 360,418 Profit before tax 1,350,930 3,931,346 5,282,276 Tax Profit for the period 1,350,930 3,931,346 5,282,276 Earnings per share Return per income share (p) 23.3p 39.9p 63.2p Return per capital share (p) 44.3p 179.8p 224.1p The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of the parent company and there are no minority interests. The interim dividend of 10.5p net (2013: 9.5p net) per income share and amounting to 258,300 (2013: 233,700) is payable on 30th September 2014 to shareholders on the register as at 29th August 2014. The sum accruing by way of dividend to the Capital shareholders will, in view of the small sum involved, be included in the final dividend. 2
Six months ended 30th June 2013 Year ended 31st December 2013 Revenue Capital Total Revenue Capital 1,456,043 1,456,043 2,869,243 2,869,243 158,030 158,030 340,063 340,063 1,614,073 1,614,073 3,209,306 3,209,306 Total 34,999 8,430,299 8,465,298 237,002 36,746,082 36,983,084 1,649,072 8,430,299 10,079,371 3,446,308 36,746,082 40,192,390 331,901 331,901 738,842 738,842 331,901 331,901 738,842 738,842 1,317,171 8,430,299 9,747,470 2,707,466 36,746,082 39,453,548 1,317,171 8,430,299 9,747,470 2,707,466 36,746,082 39,453,548 25.2p 85.7p 110.9p 53.3p 373.4p 426.7p 42.2p 385.5p 427.7p 84.5p 1680.5p 1765.0p The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Sections 434 436 of the Companies Act 2006. The information for the six months to 30th June 2014 and 30th June 2013 has not been audited. The information for the year ended 31st December 2013 has been extracted from the latest published audited accounts which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under Section 498 (2) or (4) of the Companies Act 2006. The auditors have reviewed the financial information for the six months ended 30th June 2014 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. 3
CONSOLIDATED BALANCE SHEET as at 30th June 2014 Non-current assets 30th June 2014 30th June 2013 31st December Goodwill 65,191 65,191 65,191 Investments Fair value through profit or loss 122,314,380 90,276,847 117,784,849 2013 122,379,571 90,342,038 117,850,040 Current Assets Trading investments 509,248 697,007 772,828 Trade and other receivables 819,059 745,355 617,202 Cash and cash equivalents 4,509,908 4,012,609 4,564,412 5,838,215 5,454,971 5,954,442 Total Assets 128,217,786 95,797,009 123,804,482 Current Liabilities Trade and other payables 971,036 886,912 98,508 Current tax payable 971,036 886,912 98,508 Total assets less current liabilities 127,246,750 94,910,097 123,705,974 Net Assets 127,246,750 94,910,097 123,705,974 Equity Called up share capital 1,025,000 1,225,000 1,225,000 Share premium account Retained reserves: Capital reserve 225,326 51,973,014 225,326 50,156,680 225,326 51,796,430 Revaluation reserve 72,007,234 41,576,439 68,252,472 Dividend equalisation reserve 2,016,176 1,726,652 2,206,746 Total equity 127,246,750 94,910,097 123,705,974 Net asset value per share Income shares 1366.7p 1027.6p 1334.0p Capital shares 5708.8p 4233.6p 5529.9p 4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 30th June 2014 For the six months ended June 2013 Share Dividend Share premium Capital Revaluation equalisation capital account reserve reserve reserve Total Balance at 31st December 2012 1,225,000 225,326 49,005,514 34,297,306 1,556,866 86,310,012 Profit for the period 1,151,166 7,279,133 1,317,171 9,747,470 Total recognised income and expense 1,225,000 225,326 50,156,680 41,576,439 2,874,037 96,057,482 Dividends (1,147,385) (1,147,385) Balance at 30th June 2013 1,225,000 225,326 50,156,680 41,576,439 1,726,652 94,910,097 For the six months ended June 2014 Share Dividend Share premium Capital Revaluation equalisation capital account reserve reserve reserve Total Balance at 31st December 2013 1,225,000 225,326 51,796,430 68,252,472 2,206,746 123,705,974 Profit for the period 176,584 3,754,762 1,350,930 5,282,276 Total recognised income and expense 1,225,000 225,326 51,973,014 72,007,234 3,557,676 128,988,250 Dividends (1,491,500) (1,491,500) Redemption of Preference shares (200,000) (50,000) (250,000) Balance at 30th June 2014 1,025,000 225,326 51,973,014 72,007,234 2,016,176 127,246,750 5
CONSOLIDATED CASH FLOW STATEMENT for the six months ended 30th June 2014 Cashflows from operating activities Group Group 2014 2013 Profit before tax 5,282,276 9,747,470 Adjustments for: (Gains)/losses on investments (3,931,346) (8,430,299) Purchase of investments (1,793,489) (6,332,704) Proceeds of investments 1,195,304 1,537,780 Movement in trading investments 263,580 (50,423) Operating cash flows before movements in working capital 1,016,325 (3,528,176) Decrease/(increase) in receivables (201,857) (364,339) Increase/(decrease) in payables 164,128 (100,306) Net cash from operating activities before income taxes 978,596 (3,992,821) Income taxes paid Net cash from operating activities 978,596 (3,992,821) Cash flows from financing activities Preference shares redeemed (250,000) Dividends paid (783,100) (470,885) Net cash (used in)/from financing activities (1,033,100) (470,885) Net increase/(decrease) in cash and cash equivalents (54,504) (4,463,706) Cash and cash equivalents at beginning of year 4,564,412 8,476,315 Cash and cash equivalents at end of period 4,509,908 4,012,609 6
NOTES TO THE HALF YEARLY FINANCIAL REPORT for the six months ended 30th June 2014 1. Accounting Standards The condensed interim financial report has been prepared in accordance with International Financial Reporting Standards (IFRSs), including IAS 34 Interim financial reporting as adopted by the European Union. The same accounting policies and methods of computation are followed in the interim financial report as those used in the Company s latest published annual financial statements. 2. Dividends 2014 2013 Amounts recognised as distributions to equity holders in the period: Income (Paid) Final dividend for the year ended 31st December 2013 of 20.50p (2012: 18.25p) per share 504,300 448,950 Special dividend for the year ended 31st December 2013 of 10.00p (2012: 00.00p) per share 246,000 Capital (Paid) Final dividend for the year ended 31st December 2013 of 1.50p (2012: 1.3375p) per share 24,600 21,935 Special dividend for the year ended 31st December 2013 of 0.50p (2012: 00.00p) per share 8,200 Capital Supplementary (Accrued) Payable 2nd January 2015 of 86.3902p (2014: 81.8293p) per share 708,400 671,000 Dividends on non-equity shares: Cumulative preference 5.5% (Accrued) 5,500 1,491,500 1,147,385 Income Proposed interim dividend for the year ended 31st December 2014 of 10.5p (2013: 9.5p) per share 258,300 233,700 This was approved by the Board on 11th July 2014 and has not been included as a liability at 30th June 2014. 3. Income Total income comprises: Dividends Interest Other income 2014 2013 1,491,781 1,455,256 648 787 198,490 158,030 1,690,919 1,614,073 4. Related Party Transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. The Company s subsidiary company Discretionary Unit Fund Managers Limited manages the Discretionary Unit Fund and acts as principal in respect of all transactions of units in the Fund. In respect of this its fee for the six months amounted to 198,490 (2013: 158,030) and the amount owed by the Fund at the period end was 27,488 (2013: 27,387). 5. Going concern The Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements. The assets of the Company consist mainly of securities that are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. 7
DIRECTORS STATEMENT OF RESPONSIBILITY FOR THE HALF YEARLY FINANCIAL REPORT The Directors are responsible for preparing the half yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge: the condensed set of financial statements has been prepared in accordance with IAS 34 Interim financial reporting ; and the half yearly management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R. This report was approved on 11th July 2014. Dr D. M. Bramwell Chairman 8
TOP TEN HOLDINGS Holding Investment Value 10,425,000 Scapa Group 13,265,813 2,700,000 Brammer 12,318,750 1,800,000 VP 12,159,000 1,625,000 RPC Group 10,180,625 5,775,000 Treatt 9,990,750 2,050,000 Colefax Group 7,585,000 1,434,230 Hill & Smith Holdings 7,214,777 15,659,184 Macfarlane Group 5,989,638 8,480,000 Renold 5,384,800 764,325 British Polythene Ind 4,983,399