Final Results, 21 Feb 2024 07:00

21 February 2024, 07:00

Source - LSE Regulatory

RNS Number : 8350D

Rights and Issues Inv. Trust PLC

21 February 2024

RIGHTS AND ISSUES INVESTMENT TRUST PLC

Legal Entity Identiﬁer (LEI): 2138002AWAM93Z6BP574

Annual Results for the year to 31st December 2023

The following text is extracted from the Company's financial statements for the year ended 31st December 2023. Page numbers refer to the full financial statements.

CHAIRMAN'S STATEMENT

Market backdrop

Market conditions throughout 2023 proved to be very challenging. We saw signiﬁcant changes in sentiment over the course of the year and this was combined with a sustained lack of appetite for investing in smaller industrial companies and trusts. From time to time, when conﬁdence did return to the market this proved to be short-lived. This led to substantial changes in valuations throughout the year. Policy response to energy price-led inﬂation was to increase bank base interest rates to ﬁfteen-year highs. Towards the end of the calendar year these inﬂationary factors seemed to be easing and the markets ﬁnished the year in positive territory. These macro-economic factors as well as the global political environment have tested our investee companies' market positioning and can be measured by their success in passing on prices to their customers and their ability to maintain market share and margins.

Company performance

The Company's overall performance should be seen against this backdrop. The Company's investments generated a positive return in 2023. Although behind our chosen benchmark, the FTSE All-Share index, the share price improved over the year from 1890.0p to 2130.0p and the discount to net asset value per share reduced from 17.2% to 8.9%. Overall shareholders achieved a return of 2.4% compared to 3.8% for our chosen benchmark.

Jupiter

Our Portfolio Managers at Jupiter, Dan Nickols and Matt Cable, have been in place for just over twelve months. The Board carried out its ﬁrst review of the Investment Manager following our meeting in November. We noted the continuity of investment style, the changes that had been made to reduce the concentration of the portfolio and the interesting new positions that have been taken. These are more fully described in the Investment Manager's Report. We will continue to keep these under regular review. The Board was encouraged to note the increase in marketing activities for the Company. These were carried out to raise awareness to a much wider audience of potential investors. Over the course of the year events were held that included wealth managers, professional fund managers and private individuals via a number of traditional and digital marketing tools.

Discount

At December 2023 the discount stood at 8.9%. During the year the Company bought back 545,305 shares in the market at a total cost of £10.6m. The share buyback programme is an important tool that the Board uses 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 an increase in liquidity for those shareholders seeking to realise their investment and at the same time deliver an economic uplift for those shareholders wishing to remain invested in the Company. The Company's current buyback programme runs until July 2024.

Shareholder consultations

Over the course of 2023 the Board consulted with a number of major shareholders to hear their views on a potential share split. Whilst there was some support for this initiative as it was thought it might help increase liquidity, the clear and signiﬁcant majority thought that at this stage of the Company's life 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.

Board Changes

In August of 2023 David Best retired from the Board after over 13 years of service. I would like to take this opportunity to thank him for his sage advice and guidance over the years. We wish him a long and enjoyable retirement.

Dividends

The Directors are aware of the appetite our shareholders have for income and are proposing a ﬁnal dividend of 31.25p per Ordinary share which, if approved at the upcoming AGM, would result in total dividend payments of 43.00p per Ordinary share in respect of the year ended 31st December 2023, an increase of 7.5% over the prior year's dividend. Subject to shareholder approval at the AGM the dividend will be paid on 5th April 2024 to shareholders on the register at 8th March 2024. The ex-dividend date will be 7th March 2024.

Outlook

As we look forwards into 2024 it is fair to say that we expect to see continued volatility in the markets. Noting that it is an election year in the UK and USA, that potentially causes greater short-term volatility in share prices. That said, there are some signs that energy prices, inﬂation and interest rates may have peaked. Whilst we are mindful of these factors, we will continue to encourage our Investment Manager to seek opportunities to invest in differentiated companies operated by good managers that they believe to be fundamentally underpriced. As noted above, there may also be conditions in place for a reassessment of the pricing of the smaller companies sector. The Board believes that our team at Jupiter has 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 2024

INVESTMENT MANAGER'S REVIEW

Introduction

We are pleased to present our investment report to shareholders of Rights and Issues following our ﬁrst full year as managers of the Company. As we said in our interim report, it has been a year of signiﬁcant uncertainty and volatility in markets. In that context we are pleased to report a modest positive investment return from the portfolio, alongside a signiﬁcantly stronger share price performance.

In the following paragraphs 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 Russian invasion of Ukraine in early 2022 sparked a surge in inﬂation around the world that has dominated markets ever since. As the direct effects of energy prices fed through into goods, services and wages, central banks reacted by sharply tightening monetary policy. This resulted in interest rates that have not been seen since before the ﬁnancial crisis a decade and a half ago.

At the macro level this led to the market questioning whether monetary policy could tame inﬂation without causing a painful recession. For individual companies it was a test of both pricing power (the ability to pass on inﬂation to customers) and balance sheet strength (through the cost of debt ﬁnance). Meanwhile the implied market 'discount rate', or cost of equity, caused valuations to decline, especially in the case of higher-growth companies whose cash- ﬂows are assumed to be higher further into the future. The combination of these factors has resulted in both weak returns and heightened volatility in markets around the world.

The UK has been no exception, with the FTSE All-Share index experiencing a series of dramatic swings throughout the year as market sentiment shifted from relative optimism to doom and gloom and back again. While it is clearly too early to deﬁnitively say that this phase is over, it is reassuring to note that global inﬂationary indicators were starting to look more benign towards the end of the year. As a result, the outlook for interest rates has started to come down while economic activity seems to be holding up. This combination suggests an increasing chance that inﬂation can be bought under control without the need for a damaging recession.

Under these circumstances it is no surprise that equity markets performed well into the end of the year, with the FTSE All-share index ultimately posting a positive return for 2023 as a whole.

Performance

The Company's portfolio of investments delivered a positive return for the year, which was pleasing in the context of the volatility noted above. This return was, however, modestly lower than that of the Company's benchmark, the FTSE All-Share index. Pleasingly the Company's shares performed signiﬁcantly better than this as the discount to NAV declined over the year. Ultimately shareholders experienced a total share price return (including dividends) of 15.0% compared to 7.9% for the Company's benchmark. (Source: Morningstar)

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:

Renold (+64%)

Manufacturer of industrial chains and transmissions Renold has continued to see positive trading through the year, issuing a series of upgrades to proﬁt expectations. The increase in interest rates has helped to reduce the company's pension deﬁcit to a level which should be seen as largely immaterial by the stock market. We view the stock's valuation as depressed and are therefore pleased to the see strong operating performance translating into excellent stock returns.

Hill & Smith (+67%)

As a provider of infrastructure-related products and services, Hill & Smith has begun to see the beneﬁt of both increased government spending and a trend to 'onshoring' of manufacturing, especially in the USA. With upgraded proﬁt expectations through the year and some modestly-sized but attractive acquisitions, the market has taken a positive view of the shares.

Macfarlane Group (+16%)

As the market leading distributor of value-added packaging in the UK, as well as a packaging manufacturer in its own right, Macfarlane has delivered a resilient operating performance in 2023 against soft end markets. We believe that the business is well placed to beneﬁt from improving economic conditions and that this is still not reﬂected in the shares' modest valuation.

Videndum (-66%)

As we reported at the half-year, Videndum has endured an extremely challenging period. As a manufacturer of products used in content creation, they have been hit especially hard by the writers' and actors' strikes in the USA, as well as weak demand from consumers. Given relative high levels of debt coming into the year, the company ultimately needed to raise funding from the equity market in the second half of the year, signiﬁcantly diluting existing shareholders. With that process now complete, the company is in a signiﬁcantly better positioned to beneﬁt from a recovery in demand.

Treatt (-18%)

After a difficult prior year it was pleasing to see ﬂavour specialist Treatt deliver a resilient operating performance in its ﬁnancial year to September 2023. It did, however, experience some weaker demand later in that period and this probably accounts for the weak share price performance. Although the loss of the company's long-standing and highly regarded CEO may be seen as a negative, we continue to view the business as well positioned for the future given recent investments in state-of-the-art facilities in the USA and UK.

Telecom Plus (-23%)

Multi-utility provider Telecom Plus (which trades as Utility Warehouse) delivered a robust operating performance over the year but the shares underperformed as the market appeared to fret over future growth prospects. We think this may reﬂect a misunderstanding: the company's growth rate has accelerated recently due to the removal from the market of weak, undercapitalised competitors, rather than high energy prices per se. As such we think prospects from here look attractive, while valuation now looks depressed.

Portfolio changes

As we said in our last annual and interim reports, we have been working to reduce the level of concentration in the portfolio by bringing down some of the largest position sizes. We also set out to dispose some of the very smallest companies in the portfolio and introduce some new positions based on our team's well established investment process.

At the start of the year the Company held positions in 22 stocks with the top ﬁve positions accounting for 50% of NAV and the top ten for 76%. As at the end of December 2023, the Company had investments in 22 stocks, but the top ﬁve positions accounted for 43% of NAV and the top ten for 68%. While portfolio construction is always a dynamic process and further changes are likely, we are now broadly happy with the shape of the portfolio.

Over the course of the year we sold ﬁve stocks and added ﬁve new investments. Sales included Titon Holdings (£8m market cap) and Coral Products (£14m market cap) on the grounds of size. We also sold the Company's tiny residual holding in Costain and some preference shares issued by Santander which we felt did not ﬁt the fund's stated objectives. Finally, we disposed of the holding in Castings which we felt offered limited valuation upside.

The ﬁve new holdings are:

OSB Group (£1.7bn market cap1)

OSB is the UK's largest specialist buy-to-let mortgage lender. It beneﬁts from a state of the art lending platform, strong deposit base and a balance sheet free of legacy pre-ﬁnancial crisis loans. OSB is very well capitalised and has consistently generated excellent returns, allowing the company to return capital to shareholders through ordinary and special dividends as well as a share buyback. As well as a compelling growth and valuation case, OSB brings exposure to ﬁnancial services and UK consumer cyclicality, which was previously a signiﬁcant underweight in the portfolio.

Spirent (£682m market cap1)

Spirent is a global provider of testing equipment and software for the telecommunications industry. Its structural growth drivers include the expansion of 5G technology and the ever-higher demands for speed in networks and data centres. Some short-term disruption to the 5G market, especially in the US, has resulted in a moderation to immediate growth expectations, but we see the long-term drivers as fully intact. Spirent is very well capitalised, with over $200m of net cash on its balance sheet2.

Gresham Technologies (£97m market cap1)

Gresham is a software business tightly focused on the market for advanced data reconciliation. Selling primarily into the ﬁnancial services sector, Gresham addresses the ever-increasing need to fully reconcile large, complex data-sets, often across multiple systems and in real time. This has allowed them to consistently take share with their long-term subscription-based products around the world. We see the growth and valuation case as highly attractive, and along with Spirent (above) an important source of exposure to technology for the portfolio.

Marshalls (£659m market cap1)

Marshalls is one of the UK's leading providers of heavy building materials such as blocks, stone and concrete rooﬁng tiles. It sells into the new-build housing, commercial, infrastructure and repair and maintenance markets. The well publicised challenges in some of these markets in recent months have led to a signiﬁcant decline in Marshalls's share price which we believe now represents a signiﬁcant opportunity for long-term investors to invest in an excellent business at a very attractive valuation. The inherent uncertainty in timing the bottom of the cycle means we have started the holding at a modest position size, with a view to building it as the path of recovery becomes clearer.

Oxford Instruments (£1.3bn market cap1)

Oxford Instruments is a global leader in the design and manufacture of highly specialist electronic equipment used in research and advanced manufacturing. It beneﬁts from decades of experience in niche areas such as microscopy, cryogenics and chemical deposition. An updated strategy of taking a more commercial approach to its markets is starting bear fruit, which we think will afford the company opportunities to grow rapidly for many years to come. Oxford Instruments adds exposure to long term structural growth to the portfolio.

Summary and Outlook

It has been a busy year for the Company and we are pleased that the investment portfolio is now broadly in the shape we intended. We believe we have added some attractive long-term investments which will complement the existing collection of quality businesses the Company owns and add thematic balance. We continue to look for potential new holdings and will add to the portfolio as appropriate and according to the team's established investment process.

While it is too early to say for certain that inﬂation is under control, there have been encouraging recent signs of a return towards central bank targets. This in turn should allow interest rates to moderate towards long-term norms and hence remove a source of signiﬁcant uncertainty for companies and markets alike. While we are more conﬁdent in this outlook than we were six months ago, we do not expect a straight-line recovery and recognise the scope for signiﬁcant bumps along the road. As such we continue to feel that a degree of balance is appropriate in portfolios and will continue to reﬂect this in the Company's holdings.

Looking further ahead, we believe that the UK mid- and small-cap equity market is attractively valued and hence offers an exciting opportunity for long-term investors as it emerges from this period of volatility.

Dan Nickols

Lead Manager

Matt Cable

Fund Manager

20th February 2024

1 Market cap as at 10/1/24

2 As at the end of 2022

PORTFOLIO STATEMENT

Details of the investments held within the portfolio as at 31st December 2023 are given below by market value:

		31st December 2023			31st December 2022
UK Investments	Holdings	Market Value	% of Net Assets	Holdings	Market Value	% of Net Assets
Vp	2,404,250	14,906	11.35	2,450,000	16,170	11.49
Macfarlane	11,680,653	13,666	10.40	17,250,000	17,509	12.44
Hill & Smith	522,465	9,969	7.59	1,246,286	14,606	10.37
Renold	28,745,000	9,802	7.46	30,000,000	6,240	4.43
Telecom Plus	459,113	7,401	5.63	263,070	5,774	4.10
Colefax	1,055,952	7,286	5.55	1,606,500	9,639	6.85
Gamma Communications	640,919	7,204	5.48	640,919	6,935	4.93
OSB	1,401,694	6,501	4.95	-	-	-
Treatt	1,281,009	6,444	4.91	2,012,000	12,535	8.90
Spirax-Sarco Engineering	59,668	6,268	4.77	94,415	10,022	7.12
Alpha Group International	336,513	5,721	4.36	98,611	1,824	1.30
IMI	292,263	4,922	3.75	292,263	3,764	2.67
Carr's	4,750,000	4,617	3.51	4,750,000	5,629	4.00
Marshalls	1,545,642	4,319	3.29	-	-	-
Morgan Advanced Materials	1,500,000	4,245	3.23	1,500,000	4,718	3.35
RS	464,401	3,806	2.90	838,870	7,512	5.34
Eleco	4,520,781	3,617	2.75	4,520,781	3,029	2.15
Videndum	959,582	3,339	2.54	500,000	5,370	3.81
Gresham Technologies	2,360,303	2,714	2.07	-	-	-
Spirent Communications	1,516,091	1,869	1.42	-	-	-
Oxford Instruments	58,268	1,337	1.02	-	-	-
Dyson	1,000,000	41	0.03	1,000,000	41	0.03
Castings*	-	-	-	400,000	1,384	0.98
Titon*	-	-	-	1,265,000	886	0.63
Santander UK 10.375% Non Cumulative Preferred*	-	-	-	400,000	540	0.38
Coral Products*	-	-	-	2,000,000	320	0.23
Costain*	-	-	-	41	-	-
Total Investments		129,994	98.96		134,447	95.50
Net current assets		1,365	1.04		6,336	4.50
Net Assets		131,359	100.00		140,783	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 2023.

STRATEGIC REPORT

The Strategic Report is designed to provide information primarily about the Company's business and results for the year ended 31st December 2023 and should be read in conjunction with the Chairman's Statement and the Investment Manager's Review.

PERFORMANCE STATISTICS	31st December 2023	31st December 2022	% change
NAV per Ordinary Share	2,337.1p	2,283.2p	2.4%
Discount to NAV	(8.9%)	(17.2%)	8.3%
Closing mid-market price per Ordinary Share	2,130.0p	1,890.0p	12.7%
Dividends per Ordinary Share1	43.00p	40.00p
Dividend yield*	2.0%	2.1%
Ongoing Charges*	0.9%	0.5%
Earnings per Ordinary Share - basic
Revenue	50.4p	38.9p
Capital	11.0p	-818.2p
NAV return*	2.4%	-24.8%
FTSE All-Share Index	3.8%	-3.2%

*These are Alternative Performance Measures.

¹Assumes shareholder approval of the proposed ﬁnal dividend of 31.25p per Ordinary share at the forthcoming AGM.

Explanation of Alternative Performance Measures ("APMS")

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 dividend yield, ongoing charges and NAV return as deﬁned below.

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 was calculated as follows:
	2023	2022
Total Dividends paid per Ordinary Share1 (a)	43.00p	40.00p
Closing mid-market price Ordinary Share (b)	2,130.0p	1,890.0p
Dividend Yield (a)/(b)*100	2.0%	2.1%

¹Assumes shareholder approval of the proposed ﬁnal dividend of 31.25p per Ordinary share at the forthcoming AGM.

Ongoing Charges

The calculation methodology for ongoing charges is set out by the Association of Investment Companies ("AIC") and was calculated as follows:

	2023 £'000		2022 £'000
Investment management fee^†	670	175
Other expenses	470	767
Total Expenses (a)	1,140	942
Average NAV (b)	133,930	174,479
Ongoing Charge (a)/(b)*100	0.9%	0.5%

†Following the appointment of Jupiter Unit Trust Managers as Investment Manager on 3rd October 2022, a management fee is payable quarterly to the Investment Manager. For more information see Note 3 on page 55.

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 2023 (a)		2,337.1p
NAV per Ordinary Share 31st December 2022 (b)		2,283.2p
NAV return (a/b-1)*100		2.4%

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 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 2023 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 on page 21.

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 also plans to invest in companies from a broader range of industries and sectors over time.

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 on page 13 and further information is set out in Notes 9 to 11 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, where possible, as a shareholder 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.

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

Mr D Best retired as a Director of the Company on 31st August 2023. Upon Mr Best's retirement Dr A Hosty became Chairman of the Company. 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 FCA 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 on page 31.

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 Board has delegated authority to the Investment Manager for monitoring the corporate governance of investee companies. The Board has delegated to the Investment Manager responsibility for selecting the portfolio of investments within investment guidelines established by the Board and for monitoring the performance and activities of investee companies. On behalf of the Company the Investment Manager carries out detailed research on investee companies and possible future investee companies through internally generated research. The research includes an evaluation of fundamental details such as ﬁnancial strength, quality of management, market position and product differentiation. Other aspects of research include an appraisal of social, ethical and environmentally responsible investment policies.

The Board has delegated authority to the Investment Manager to vote on behalf of the Company in accordance with the Company's best interests. The primary aim of the use of voting rights is to address any issues which might impinge on the creation of a satisfactory return from investments. The Company's policy is, where appropriate, to enter into engagement with an investee company in order to communicate its views and allow the investee company an opportunity to respond.

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 2023 (2022: 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.

The Investment Manager's Responsible Investment Policy and Stewardship Report, available on its website (https://www.jupiteram.com/board-and-governance/#our-approach-to-stewardship), 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 the wider employee and 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.

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.

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.

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 on pages 8 and 9.

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 £140.8m to £131.4m, largely as a result of the ongoing share buyback programme, offset by a modest increase in the value of investments. At 31st December 2023 the net asset value per Ordinary share was 2,337.1p (2022: 2,283.2p).

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).

Shareholders' funds equity return

In reviewing the performance of the Company, the Board monitors shareholders' funds in relation to the FTSE All- Share Index. During the year shareholders' funds increased by 2.4% compared to an increase of 3.8% in the FTSE All- Share Index. Over the ﬁve years ended 31st December 2023 shareholders' funds increased by 10.3% compared with an increase of 15.1% in the FTSE All-Share Index.

Dividends per Ordinary share

The total dividend per Ordinary share paid and proposed is 43.0p (2022: 40.0p).

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 2023 were 0.9% (2022: 0.5%). 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 on page 29.

Principal Risks

The Board of Directors has a process for identifying, evaluating and managing the key risks of the Company. This process operated during the year and has continued to the date of this report. The Directors conﬁrm that during the year they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The 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 risks are therefore market price risk and liquidity risk. Further details on these risks and how they are managed may be found in Note 18 to the ﬁnancial statements on pages 63 and 64.

Additional key 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 August 2023, the Board announced a further extension to the share buy-back programme. The Board has authorised the repurchase of shares up to a rolling £1 million per month until July 2024 (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. The Board has decreased the risk of having no key personnel available by appointing Jupiter Unit Trust Managers Limited (JUTM) as Investment Manager, in place of a sole Investment Director. Jupiter 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.

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 Board reviews a schedule of regulatory risk items at its Board 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.

Political risk - Changes in the political landscape could substantially affect the Company's prospects and the value of its investment portfolio. Political 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 escalating hostilities in the Middle East. The Company has no exposure to Russian stocks within its portfolio and therefore there has been no need to amend the Company's investment approach.

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.

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.

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 at each Board meeting, taking into account economic conditions in the market sectors in which the Company invests. The Board 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 2023, the Company had no employees.

Stakeholder Group	Engagement in the year and their material issues
Investors	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 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@maitlandgroup.com or investment 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, as detailed on page 16, 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 on pages 21 to 23 and throughout this 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	Audit Tender The Company conducted a competitive tender of its audit services during the year under review led by the Audit, Risk and Compliance Committee. The result of the tender process, described more fully on page 36, is that the Board proposes the appointment of Ernst & Young LLP ('EY') as auditor for the ﬁnancial year ending 31st December 2024. The appointment is subject to shareholder approval at the Annual General Meeting to be held on 27th March 2024. Resolutions concerning EY's appointment and remuneration will be submitted to that meeting.
Principal Decision 2	Board Composition On 31st August 2023 Mr D Best retired from the Board. Following his retirement the Board undertook a detailed review of its own composition, including 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. The Board will continue to review its composition annually or in the event of any further changes.
Principal Decision 3	Share buy-back programme In August 2023 the Company announced a further extension of the share buyback programme. The Board has authorised repurchases of shares up to a rolling £1 million per month until July 2024. The continuation of the programme is designed to address the share price discount.
Principal Decision 4	Dividend Policy The Board continues to operate a progressive dividend policy. Despite the political and economic outlook, the Board has increased the annual dividend, having paid and recommended dividends totalling 43.00p per share to shareholders for the ﬁnancial year ended 31st December 2023 (2022: 40.0p).
Principal Decision 5	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 by £1,250 for the Chair of the Audit, Risk and Compliance Committee, by £2,000 for the Chairman and by £1,500 for each of the other non-executive directors with effect from 1st January 2024 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 6	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.
Principal Decision 7	Withdrawal of Share Split Resolution The 2023 notice of Annual General Meeting ('AGM') contained a resolution proposing that the Company's existing Ordinary shares of 25p each be sub-divided into 10 new Ordinary shares of 2.5p each. The Directors believed that the sub-division may improve the liquidity in and marketability of the Company's shares for the beneﬁt of all shareholders. Following shareholder consultation subsequent to the AGM notice being circulated to shareholders, the resolution to sub-divide the shares was withdrawn from the business of the 2023 AGM. Having completed this further consultation, the Board concluded that the beneﬁts of the share split would not be as far-reaching as originally anticipated. Consequently, there is no intention to propose a sub-division of the shares in the foreseeable future.

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 3.5 times by investment income in 2023.

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 21 to 23. 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@maitlandgroup.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. Shareholders are encouraged to ask questions either at the Annual General Meeting or via the Company Secretary.

Company's Directors and Employees

The number of directors at 31st December 2023 was four (2022: ﬁve).

		2023		2022
	Male	Female	Male	Female
Directors (non-executive)	3	1	5	0
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 2024

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 2024

Statement of Comprehensive Income

for the year ended 31st December 2023

	Notes	Year ended 31st December 2023			Year ended 31st December 2022
	Notes	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income	2	3,999	-	3,999	3,633	-	3,633
Other operating income	2	94	-	94	19	-	19
Total income		4,093	-	4,093	3,652	-	3,652
Gains/(losses) on fair value through profit or loss assets	10	-	797	797	-	(56,774)	(56,774)
		4,093	797	4,890	3,,652	(56,774)	(56,774)
Expenses
Investment management fee	3	670	-	670	175	-	175
Other expenses	4	470	156	626	767	181	948
		1,140	156	1,296	942	181	1,123
Profit/(losses) before finance costs and taxation		2,953	641	3,594	2,710	(56,955)	(54,245)
Finance costs		-	-	-	-	-	-
Profit/(losses) before taxation		2,953	641	3,594	2,710	(56,955)	(54,245)
Tax	6	-	-	-	-	-	-
Profit/(losses) after taxation		2,953	641	3,594	2,710	(56,955)	(54,245)
Return per Ordinary share	8	50.4p	11.0p	61.4p	38.9p	(818.2)p	(779.3)p

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.

Statement of Financial Position

as at 31st December 2023

	Notes	31st December 2023 £'000	31st December 2022 £'000
Non-current assets
Investments - fair value through profit or loss	10	129,994	134,447
Current assets
Other receivables	12	556	561
Cash and cash equivalents		1,051	6,039
		1,607	6,600
Total assets		131,601	141,047
Current liabilities
Other payables	13	242	264
Total assets less current liabilities		131,359	140,783
Net assets		131,359	140,783
Equity attributable to equity holders
Called up share capital	14	1,405	1,542
Capital redemption reserve	15	850	713
Retained reserves:
Capital reserve	15	84,416	67,191
Revaluation reserve	15	41,873	69,032
Revenue reserve	15	2,815	2,305
Total equity shareholders' funds		131,359	140,783
Net asset value per share
Ordinary shares	16	2,337.1p	2283.2p

The accompanying notes form part of these financial statements.

The financial statements were approved by the Board and authorised for issue on 20th February 2024. They were signed on its behalf by:

Dr A. J. Hosty

Chairman

Statement of Changes in Equity

for the year ended 31st December 2023

	Share capital £'000	Capital Redemption reserve £'000	Capital reserve £'000	Revaluation reserve £'000	Revenue reserve £'000	Total £'000
For the year ended 31st December 2023
Balance at 31st December 2022	1,542	713	67,191	69,032	2,305	140,783
Profit/(loss) for the year	-	-	27,800	(27,159)	2,953	3,594
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

	Share capital £'000	Capital Redemption reserve £'000	Capital reserve £'000	Revaluation reserve £'000	Revenue reserve £'000	Total £'000
For the year ended 31st December 2022
Balance at 31st December 2021	1,842	413	81,410	137,959	2,108	223,732
Profit/(loss) for the year	-	-	11,972	(68,927)	2,710	(54,245)
Ordinary shares bought back and cancelled	(300)	300	(10,838)	-	-	(10,838)
Tender offer	-	-	(15,111)	-	-	(15,111)
Tender offer costs	-	-	(242)	-	-	(242)
Dividends (Note 7)	-	-	-	-	(2,513)	(2,513)
Balance at 31st December 2022	1,542	713	67,191	69,032	2,305	140,783

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 2023

	Notes	31st December 2023 £'000	31st December 2022 £'000
Cashflows from operating activities
(Profit/(loss) before tax		3,594	(54,245)
Adjustments for:
Gains/(losses) on investments		(797)	56,774
Purchases of investments	10	(30,042)	(24,439)
Proceeds on disposal of investments	10	35,292	29,615
Operating cash flows before movements in working capital		8,047	7,705
Decrease in receivables		5	80
(Decrease)/increase in payables		(22)	197
Net cash from operating activities before income taxes		8,030	7,982
Income taxes received		-	-
Net cashflows from operating activities		8,030	7,982
Cashflows from financing activities
Ordinary shares bought back		(10,575)	(10,838)
Tender offer		-	(15,111)
Tender costs paid		-	(242)
Dividends paid	7	(2,443)	(2,513)
Net cash used in financing activities		(13,018)	(28,704)
Net decrease in cash and cash equivalents		(4,988)	(20,722)
Cash and cash equivalents at beginning of year		6,039	26,761
Cash and cash equivalents at end of year		1,051	6,039

The accompanying notes form part of these financial statements.

Notes to the Financial Statements

for the year ended 31st December 2023

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 both listed securities and those admitted to trading on the Alternative Investment Market ("AIM").

Details of the Directors, Investment Manager and Advisors can be found on page 4 of the Annual Report.

The ﬁnancial statements of the Company are presented for the year ended 31st December 2023 and were authorised for issue by the Board on 20th February 2024.

Basis of Accounting

The ﬁnancial statements have been prepared in accordance with UK-adopted international 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. None of the Company's other assets and liabilities are considered to be potentially impacted by climate change.

Under UK-adopted International Accounting Standards, the AIC Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued in April 2021 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. Further information on the Company's going concern can be found on page 29.

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

In accordance with IFRS 10 (Investment Entities Amendments), the Company measured its subsidiary at fair value through proﬁt and loss and did not consolidate it. The subsidiary was dissolved on 26th April 2022.

There have been minor amendments to IAS 1 and 8 and IFRS 4 and 17 which were effective for annual periods beginning on or after 1st January 2023 and have not had any material impact on the accounts. Amendments to IAS 1 (Non-current Liabilities with Covenants), IAS 7 and IFRS 7 (Supplier Finance Arrangements) and IFRS 16 (Lease Liability in a Sale and Leaseback) are effective for annual periods beginning on or after 1st January 2024 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

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue account except as follows:

■ Expenses which are incidental to the acquisition of an investment are included within the cost of the investment.

■ Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment.

e. Taxation

The charge for taxation is based on the net revenue for the year. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. 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.

Unquoted investments are 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
	2023 £'000	2022 £'000
Income from investments
Franked investment income	3,999	3,633
Other operating income
Deposit interest	94	19
Total income	4,093	3,652
Income from investments
UK	3,990	3,617
Unlisted stock	9	16
Total	3,999	3,633

3.	Investment Management fee
		2023	2022
		£'000	£'000
Investment management fee		804	210
Operating expenses rebate		(134)	(35)
Total		670	175

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
	2023 £'000	2022 £'000
Staff costs (note 5)	4	227
Non-executive Directors' fees	147	136
Administration fees	94	122
Auditor's remuneration
- Audit	19	18
- Review of the half yearly report	-	5
Secretarial services	42	42
Other	164	217
	470	767
Capital expenses	156	181
Total	626	948

5. Staff Costs and Directors' Remuneration
	2023 £'000	2022 £'000
Wages and salaries	-	191
Social security costs	4	36
Total	4	227
	2023 number	2022 number
The average number of staff employed by the Company was	-	1

	2023 £'000	2022 £'000
Directors' emoluments	139	327
Payments to former directors	8	-
	147	327

The Company has not had any employees since the appointment of JUTM as Investment Manager on 3rd October 2022. Prior to this the highest paid Director, being the Investment Director, received total emoluments of £191,250 covering the period 1st January 2022 to 3rd October 2022.

5. Taxation
		2023 2022			2022 2021
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Corporation tax at 23.5% (2022: 19.00%)	-	-	-	-	-	-
	Profit before tax	2,953	641	3,594	2,710	(56,955)	(54,245)
	Tax on profit at effective rate 23.5% (2022:19.0%)	694	151	845	515	(10,821)	(10,306)
	Factors affecting the recovery/charge for the year:
	Income not taxable	(940)	-	(940)	(690)	-	(690)
	Capital items not taxable	-	(187)	(187)	-	10,787	10,787
	Unutilised losses	246	36	282	175	34	209
	Current tax charge for the year	-	-	-	-	-	-

At the year end there is a potential deferred tax asset of £2,214,810 (2022: £1,953,135) in relation to surplus management expenses of £8,859,238 (2022: £7,812,538). 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:

	2023	2022
	£'000	£'000
Paid
Final dividend for the year ended 31st December 2022 of 29.25p per share (year ended 31st December 2021: 24.0p)	1,767	1,752
Interim dividend for the year ended 31st December 2023 of 11.75p per share (year ended 31st December 2022: 10.75p)	676	761
	2,443	2,513

	2023	2022
	£'000	£'000
Proposed
Final dividend payable for the year ended 31st December 2023 of 31.25p per share (year ended 31st December 2022: 29.25)	1,720	1,781

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.

	2023	2022
	£'000	£'000
Revenue available for distribution by way of dividend for the year	2,953	2,710
Interim dividend for the year ended 31st December 2023 of 11.75p per share (year ended 31st December 2022: 10.75p)	(676)	(761)
Proposed final dividend for the year ended 31st December 2023 of 31.25p per share (year ended 31st December 2022: 29.25p)	(1,720)	(1,781)
Net addition to Revenue reserve	557	168

8. Return per Ordinary Share

	2023 Income	2022 Income
	£'000	£'000
Return attributable to equity shareholders
Revenue return	2,953	2,710
Capital return	641	(56,955)
	3,594	(54,245)

	p	p
Revenue return per share	50.4	38.9
Capital return per share	11.0	(818.2)
	61.4	(779.3)

Return per Ordinary share is calculated using the weighted average number of Ordinary shares in issue during the year of 5,854,307 (2022: 6,960,445).

9. Investments

Analysis of the investments

The number of companies or institutions in which equities, convertibles or fixed interest securities were held was 22 (2022: 22).

		2023		2022
	£'000	%	£'000	%
Equity Groups
Basic Materials
Chemicals	6,444	4.96	12,535	9.32
Industrial Metals and Mining	9,969	7.67	14,606	10.86
Consumer Staples
Food Producers	4,617	3.55	5,629	4.19
Financials
Finance and Credit Services	6,501	5.00	-	-
Industrials
Construction and Materials	4,319	3.32	-	-
Electronic and Electrical Equipment	10,504	8.08	8,482	6.31
General Industrials	13,666	10.51	17,509	13.02
Industrial Engineering	9,607	7.39	16,776	12.48
Industrial Support Services	3,806	2.93	7,512	5.59
Industrial Transportation	14,906	11.47	16,170	12.03
Technology
Software and Computer Services	2,714	2.09	-	-
Telecommunications
Telecommunications Equipment	1,869	1.44	-	-
Telecommunications Service Providers	7,401	5.69	5,774	4.29
AIM Traded Stocks	33,630	25.87	28,873	21.48
Unlisted	41	0.03	41	0.03
Fixed Interest
Preference	-	-	540	0.40
Total UK	129,994	100.00	134,447	100.00

The ﬁgures for 2022 have been reworked based on the latest categories as per the latest FTSE categorization.

10. Investments held at fair value through profit or loss

	2023 £'000	2022 £'000
Investments listed on a recognised investment exchange
UK equity listed investments at fair value	96,323	105,533
AIM traded stocks	33,630	28,873
Unlisted stock	41	41
	129,994	134,447

	Listed 2023 £'000	AIM traded/ Unlisted 2023 £'000	Total 2023 £'000
Opening book cost	42,717	22,698	65,415
Opening unrealised appreciation	62,816	6,216	69,032
Opening valuation	105,533	28,914	134,447
Purchases at cost	25,715	4,327	30,042
Sales - proceeds	(29,931)	(5,361)	(35,292)
Sales - realised gains on sales	25,411	2,545	27,956
(Decrease)/increase) in unrealised appreciation	(30,405)	3,246	(27,159)
Market value of investments at end of year	96,323	33,671	129,994
Closing book cost	63,912	24,209	88,121
Closing unrealised appreciation	32,411	9,462	41,873
	96,323	33,671	129,994
Realised gains on sales	25,411	2,545	27,956
(Decrease)/increase in unrealised appreciation	(30,405)	3,246	(27,159)
Gains on investments	(4,994)	5,791	797

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 £133,196 were incurred on the acquisition of investments (2022: £118,699). Costs relating to disposals of investments during the year amounted to £14,624 (2022: £26,614). All transaction costs have been included within the capital column of the Income Statement.

11. Significant Interests

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 2023:

Name		% holding
Colefax		16.97
Renold		12.75
Macfarlane		7.35
Vp		5.99
Eleco		5.43
Carr's		5.05

12.	Other Receivables
			2023	2022
			£'000	£'000
	Prepayments and accrued income		556	561
13.	Other payables
			2023	2022
			£'000	£'000
	Accruals		242	264
14.	Share Capital
			2023	2022
	Allotted, Called Up and Fully Paid		£'000	£'000
	5,620,684 Ordinary shares of 25p each (2022: 6,165,989)		1,542	1,842

				Number of Ordinary shares 2023
	Balance at beginning of year			6,165,989
	Ordinary shares bought back and cancelled			(545,305)
	Balance at end of year			5,620,684

15. Reserves

	Capital redemption reserve £'000		Capital reserve £'000	Revaluation reserve £'000	Revenue reserve £'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 Ordinary share attributable						Net asset value attributable
			2023	2022		2023			2022
			p	p		£'000			£'000
Ordinary shares			2337.1		2283.2		131,359	140,783
The movements during the year were as follows:
								Ordinary
								shares
								£'000
Total net assets attributable at beginning of year								140,783
Shares bought back and cancelled								(10,575)
Total recognised gains for the year								641
Transfer to reserves								510
Total net assets attributable at end of year								131,359
Number of Ordinary shares in issue								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 1.6% (2022: 0.9%) 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 16.0% (2022: 12.9%).

	2023	2022
Weighted average discount of buybacks	16.0%	12.9%	a
Percentage of shares bought back	8.8%	6.7%	b
NAV accretion from buyback	1.6%	0.9%		(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 on pages 38 to 40. The balance of fees due to Directors at the year end was £nil (2022: £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.

On 26th April 2022 the Company's only subsidiary, Discretionary Unit Fund Managers, was dissolved. There were no transactions during the year relating to the subsidiary.

18. Financial assets and liabilities

The Company's ﬁnancial instruments 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 1.

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. 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.

The Company's exposure to changes in market prices at 31st December 2023 on its quoted equity investments was £129,953,000 (2022: £134,406,000).

Liquidity risk

Liquidity risk is the possibility of the Company having difficulties in realising sufficient assets to meet its ﬁnancial obligations. All investments are made in quoted securities, which are normally listed on the London Stock Exchange or AIM. Transactions in these securities may be subject to some short-term liquidity constraint, in common with other smaller and medium sized listed securities, but subject to that they are considered to be reasonably realisable.

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 £1,051,000 (2022: £6,039,000).

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:

	2023 £'000	2022 £'000
Receivables	556	561
Cash and cash equivalents	1,051	6,039
	1,607	6,600

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 2023	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'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

31st December 2022	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assets at fair value through profit or loss
UK Equity Listed	105,533	-	-	105,533
AIM traded stocks	28,873	-	-	28,873
Unlisted stock	-	41	-	41
Net fair value	134,406	41	-	134,447

There were no transfers between Level 1 and Level 2 during the period.

19. Post Balance Sheet Events

Between the year end and 16th February 2024, the latest practicable date before the publication of the ﬁnancial statements, the Company has bought back and cancelled 122,046 Ordinary shares for a cost of £2,547,000.

A copy of the Company's Annual Report for the year ended 31st December 2023 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

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 27th March 2023, at 12 noon.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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FR SEUFUSELSEIE

Introduction

Market backdrop

Performance

Renold (+64%)

Hill & Smith (+67%)

Macfarlane Group (+16%)

Videndum (-66%)

Treatt (-18%)

Telecom Plus (-23%)

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Dan Nickols

Matt Cable

Viability Statement

Shareholder Communication

Dr Andrew J. Hosty

Dr A. J. Hosty

Basis of Accounting

Going concern

Signiﬁcant accounting policies

Judgments, estimates or assumptions

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Introduction

Market backdrop

Performance

Renold (+64%)

Hill & Smith (+67%)

Macfarlane Group (+16%)

Videndum (-66%)

Treatt (-18%)

Telecom Plus (-23%)

Portfolio changes

OSB Group (£1.7bn market cap1)

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Summary and Outlook

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Viability Statement

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Judgments, estimates or assumptions

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