RIII Rights & Issues Investment Trust Plc

RIGHTS AND ISSUES INVESTMENT TRUST PLC

Legal Entity Identifier (LEI): 2138002AWAM93Z6BP574

Half Yearly Results for the six months ended 30th June 2024

A copy of the Company's Half Yearly Financial Report for the six months ended 30th June 2024 will shortly be available to view and download from www.jupiteram.com/rightsandissues.  Neither the contents of this website nor the contents of any website accessible from hyperlinks on this website (or any other website) is incorporated into or forms part of this announcement.

Printed copies of the Report will be made available to shareholders shortly. Additional copies may be obtained from the Corporate Secretary - Apex Fund Administration Services (UK) Limited, Hamilton Centre, Rodney Way, Chelmsford, Essex CM1 3BY.

INTERIM DIVIDEND

An interim dividend of 12.0p per share has been approved by the Board and is payable on 27th September 2024 to shareholders on the register as at 23rd August 2024 (ex-dividend 22nd August 2024).

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

HALF YEARLY FINANCIAL REPORT

for the six months ended 30th June 2024

Financial Highlights

Financial Highlights for the six months to 30th June 2024

Capital Performance

†   Source: Jupiter, Morningstar

†† Source: Trustnet

Chairman's Statement

I am pleased to present the Chairman's Interim Statement for Rights and Issues Investment Trust. I am delighted to report on our progress for the first half of the financial year ending December 2024. Despite continued global economic uncertainties, your Company has produced a robust performance, driven by our highly concentrated and actively managed stock portfolio.

Net Asset Value & Share Price Returns

Our investments have seen a good first half, with net asset value up 13.2% and total shareholder returns (share price performance plus dividends) reaching 15.8%, outperforming our formal benchmark measure the FTSE All-Share, which gained 7.4% on a total return basis. We are particularly pleased to note the reduction in the Company's discount over the period, closing at 8.2%.

Portfolio Activity

The positive returns achieved over the review period were the result of the Company's strategic approach. This is an actively managed fund with a highly concentrated portfolio. We saw two of our holdings being acquired, while we made the decision to divest from Carr's Group. Additionally, we enhanced our portfolio with strategic additions of Jet2 and GB Group. This continues the work started eighteen months ago to thoughtfully diversify and modestly reduce concentration of the portfolio, whilst maintaining the Company's traditional approach to UK listed smaller companies. You will find more details on stock selection and performance in the Investment Manager's Review on pages 7 and 8.

Discount Control

During the first half of the year the Company bought back 346,320 shares in the market at a total cost of c. £7.4m. The share buyback program remains an important tool that the Board uses to try to narrow the share price discount to net asset value or to reduce its volatility. These buybacks at the margin provide an important mechanism for those shareholders seeking to realise their investment and at the same time generate an economic uplift for remaining shareholders. A special resolution was adopted at the AGM in March to extend this authority to the next AGM. On 31st July 2024 the Company announced the extension of the share buyback programme for a further 12 months.

Dividends

The Directors are mindful of the importance of income to shareholders and therefore the Company will be paying an interim dividend of 12.0p (2023: 11.75p) per share, an increase of 2.1%, payable to shareholders on 27th September 2024.

Shareholder Engagement

Over the first half of the year your Board and their advisors continued with our regular dialogue with major shareholders. In addition to meeting a number of them at our AGM, we followed up with some one-on-one meetings to discuss their voting decisions. The feedback we received was clear. The small size of the Board was greatly appreciated as was the continued involvement of Simon Knott. As a consequence, the Board will not be changing its composition or that of its committees in the immediate future and will review these arrangements towards the end of the financial year.

Marketing

Our partnership with Jupiter continues to work well and we have seen significant marketing efforts underway to raise awareness of the Company to a wider audience. This proactive approach aims to enhance visibility and attract potential investors. Over the course of the period events were held that included wealth managers, professional fund managers and private individuals via a range of traditional in-person activities, as well as digital content and video tools, which you will be able to find on our Investment Manager's website: www.jupiteram.com/rightsandissues.

Investment Manager Succession

As previously announced, lead investment manager Dan Nickols decided to retire from the industry and formally left Jupiter Asset Management on 30th June. The Board would like to take this opportunity to thank Dan for his service to the Company over the last 20 months, helping us to navigate the transition from a self-managed company, and some of the most challenging market conditions for UK Smaller Companies. We wish him well for the future.

As part of a well-managed succession process Matt Cable, who began his investment career in 2001, has been co- manager of the Company since Jupiter's appointment in October 2022, working with Dan for over four years. Matt was appointed as lead manager for the Company with effect from 30th June, supported by Tim Service and the other members of Jupiter's UK Small and Mid-Cap team.

Outlook

With the recent change in Government following the UK general election, we are closely monitoring policy developments. With inflation appearing to steady and the potential for interest rate reductions to occur, we think this should provide an improved environment for investors. That said, there remain significant global headwinds with the continuing conflicts in the Ukraine and Middle East, plus the uncertainty around an election in the USA. Whilst we are aware of these factors, we will continue to encourage our Investment Manager to seek out opportunities to invest in differentiated companies operated by good management that they believe to be fundamentally under- priced. There may also now be stronger macroeconomic forces that would result in a fundamental reassessment of the pricing of the UK's smaller companies' sector. Our commitment to rigorous risk management and disciplined investment practices remains steadfast. The Board believes that our Investment Managers at Jupiter have the skills and knowledge to identify these opportunities and continue to be well placed to deliver value for your Company into the future.

Thank you for your continued support and confidence in Rights and Issues Investment Trust.

Andrew Hosty

Chairman

5th August 2024

You can view or download copies of the Half Yearly and the Annual Reports from the Company's website at www.jupiteram.com/rightsandissues

The Half Yearly Report will also be made available to shareholders and copies are available at the registered office of the Company on request.

Investment Manager's Review

Introduction

We are pleased to present our investment report for the first half of 2024 to shareholders of the Company. Overall, it has been a positive period for both markets and the Company's performance, with NAV per share up 13.2% and total shareholder returns (share price performance plus dividends) of 15.8%.

At the end of the period Dan Nickols retired from his role as investment manager at Jupiter Asset Management and will therefore no longer be lead manager for Rights and Issues. In line with Jupiter's well established succession plans, Matt Cable will assume the role of lead manager supported by Tim Service, who also succeeds Dan as head of Jupiter's Small and Mid-Cap team. Tim is a longstanding member of the team who also has lead manager responsibilities for Jupiter's Mid-Cap, Specialist Equity and Dynamic Equity funds. Given the continuity of management within the Jupiter team, we do not envisage any changes to the Rights and Issues portfolio outside business-as-usual activities. We wish Dan well for his retirement.

Market backdrop

As discussed in our last annual report, inflation has continued to moderate in the UK, broadly in line with market expectations. This in turn has increased investor confidence in interest rate cuts later in the year which should be positive for economic activity and hence equity returns. A notable feature of the first half has been a divergence between such expectations for the UK and the US, where there remains greater uncertainty.

In this context UK equity markets have reacted positively, with the FTSE All-Share gaining 5.2% in the period. Small and medium sized companies have performed broadly in line with the wider market; the Deutsche Numis Smaller Companies Index (DNSCI) returning 5.5%.

The UK general election was called towards the end of the period and held on 4th July and, as expected, the Labour party won with a large majority. This outcome was widely anticipated so is unlikely to have a short-term impact on markets. Over the coming months we will be watching closely as government policy becomes more apparent, especially in areas such as labour policy, tax and international relations.

Performance

The Company's investment portfolio performed well over the period, delivering a NAV return of 14.7% (including dividends). This was ahead of both its formal benchmark (the FTSE All-Share index) and the DNSCI, which is more representative of the portfolio's small and mid-cap investment universe. Given a narrowing of the Company's discount over the period, its shares performed better, positing a total return of 15.8% (again including dividends).

Given the highly concentrated nature of the portfolio, performance is principally a function of stock selection as opposed to sector or factor weights. The following individual investments were among the most significant contributors to performance.

Renold (+65%)

Manufacturer of industrial chains and transmissions Renold has again delivered positive trading and upgrades to profit expectations through the period. Despite a period of very strong performance, we continue to view the stock's valuation as depressed and therefore offering further opportunity.

Gamma Communications (+26%)

Business telecommunications group Gamma has continued to perform well through the first half of the year which has helped to dispel market concerns about selling prices for some of its older products. As confidence has returned the shares have begun to better reflect what we view as the company's exciting growth potential.

Alpha Group (+30%)

Specialist FX and banking group Alpha has performed strongly through the period as the market has increasingly recognised the quality of its business. This process has undoubtedly been helped by Alpha's move from AIM to the FTSE 250 index where it will be exposed to a wider range of potential investors.

Spirax Group (-18%)

Spirax Group (formerly Spirax-Sarco) has underperformed over the period as weaker trading has highlighted softer conditions in some of its industrial end markets. While the risk of further profit downgrades remains, we view the quality of the business as attractive in the long term.

Treatt (-14%)

Flavours and fragrances business Treatt has seen share price weakness over the first half of the year, although this is not obviously related to any trading underperformance. We hope the arrival of a highly regarded new CEO and the benefits of Treatt's recent investment program will drive operational delivery and hence returns in the coming periods.

Portfolio changes

During the period the Company disposed of one holding and added two new positions.

Agricultural supplies and engineering business Carr's Groupwas sold early in the year, reflecting our view that risks to the business were not adequately discounted in its valuation. Specifically, we are concerned that weak trading in the US due to drought conditions may be a structural trend caused by climate change rather than a purely cyclical effect.

Vertically integrated airline and tour operator Jet2 was added to the portfolio during the period. We believe that Jet2 has a differentiated model and customer proposition, validated by consistent share gains that have left it as the largest operator (by IATA licences) in its target markets. Given our relatively optimistic views on the UK consumer we wanted to add exposure to the domestic market without being exposed to structurally challenged areas such as retail.

Following takeover bids for two of the Company's technology holdings in the period (Spirent Communications and Gresham Technologies), we were keen to maintain exposure to the sector. Identity verification and fraud prevention business GB Groupis a high quality operator in our view, but has been through a difficult post-pandemic period as markets have normalised, exacerbated by an acquisition that was poorly received by the stock market. We believe that this has created an opportunity to invest in a quality business at an attractive valuation.

Summary and Outlook

Following a challenging period for UK equities the macroeconomic backdrop appears to be improving, with inflation under control and the potential for lower interest rates. This should create better conditions for equity investors. At the same time, the UK election allows for a period of greater political stability which should mean businesses can plan with more certainty and investors can build confidence in the outlook.

Clearly macroeconomic risks remain, from the ongoing conflict in Ukraine to uncertainty around the US election. However, we approach the remainder of the year with a degree of optimism and continue to look for attractively valued investment opportunities in our market.

Matt Cable
Lead Manager
Tim Service
Investment Manager
5th August 2024