Final Results

RNS Number : 4299Z

RIT Capital Partners PLC

07 March 2013

 



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7 March 2013

RIT Capital Partners plc

Results for the nine months ending 31 December 2012 and Net Asset Value Update

RIT Capital Partners plc today publishes an update of its net asset value, together with results for the nine months ending 31 December 2012.

Net Asset Value Update

·      Net asset value per share (NAV) at 22 February 2013 of 1,309 pence, representing an all-time high for the Company

·      NAV up 9.9% since 31 December 2012

·      Net assets now over £2 billion for the first time in the Company's history

Investment Highlights for the nine months ending 31 December 2012

·      Increased net quoted equity exposure to 61% and overall investment exposure to 101%

·      Consolidated portfolio, increasing focus on specific situations

·      NAV per share at 31 December 2012 of 1,191 pence

·      A shareholder who invested in RIT at inception will have seen their share price increase by 11.4% per annum

Dividend

·      Total dividend paid in August 2012 of 28 pence per share (August 2011: 4.0p)

·      Board intends to pay dividends of 14 pence per share in April 2013 and 14 pence per share in October 2013

Commenting, Lord Rothschild, Chairman of RIT Capital Partners plc, said;

"For the first time in RIT's history net assets now exceed £2 billion, while the NAV on 22 February of 1,309p represents a new all-time high. These results have been achieved through the most perilous financial era of a lifetime.

We have not abandoned the overall caution which the world economy still demands but our focus has shifted more towards growth. To reflect our increasing confidence in markets we have reduced our defensive hedges and identified investments which are attractively valued. Our particular emphasis in the current year has been targeted at an improving US economy."

ENQUIRIES:

Brunswick Group LLP:

Tom Burns / Sophie Brand                                                 020 7404 5959

About RIT Capital Partners plc:

RIT Capital Partners plc is an investment trust listed on the London Stock Exchange with net assets of over £2 billion. It is chaired by Lord Rothschild, whose family interests retain a significant holding. www.ritcap.com

Financial Summary

	31 December 2012	31 March 2012	% Change
Net assets1	£1,847m	£1,920m	(3.8)
Market capitalisation	£1,757m	£1,877m	(6.4)
Shares outstanding	155.4m	153.9m	1.0
NAV per share2	1,191.4p	1,249.3p	(4.6)
Share price	1,131.0p	1,220.0p	(7.3)
Discount	-5.1%	-2.3%	-
Dividend paid per share	28p	4p	600.0
Gearing (Debt/Net Assets)	8.2%	13.3%	-
Ongoing Charges (TER)3	1.02%	0.97%	-

1:Net assets are after payment of a £43m dividend and £19m share issuance.

2: Unless otherwise stated NAV per share is diluted NAV per share taking into account the effect of Share Appreciation Rights and shares held in the Employee Benefit Trust.

3: The Ongoing Charges % replaces the Total Expense Ratio.  The 31 December 2012 figure is an estimated annualised number.

PERFORMANCE

	Percentage Changes to Date
	9 Months	1 Year	5 Years	10 Years
NAV per share total return	(2.4)	5.4	9.3	189.8
MSCI World (£) total return	2.2	10.6	15.0	104.5
Share price total return	(5.1)	(5.4)	14.2	218.7
NAV per share	(4.6)	2.9	4.8	171.8
MSCI World (£)	0.4	8.1	2.8	67.5
Share price	(7.3)	(7.6)	9.4	198.4

CHAIRMAN'S STATEMENT

Our new financial year starting on 1 January 2013 has seen our net asset value per share (NAV) at 31 January increase by 6.2% to 1,267p. For the first time in your Company's history net assets now exceed £2 billion while our most recent NAV on 22 February of 1,309p represents a new all time high.

These results have been achieved through the most perilous financial era of a lifetime. Throughout this period we have followed our objective of protecting your capital. The price has been, as I have referred to in previous statements to you, modest underperformance as we refused to put all your capital at risk when the economies of many areas, notably in Europe, have experienced moments of near collapse, and when political events in the Middle East and beyond have been so threatening. Over the nine months to the Company's new year end the NAV decreased by 2.4% on a total return basis, compared to a 2.2% increase in the MSCI. For the calendar year 2012 the NAV was 5.4% higher, in comparison with a 10.6% increase in the MSCI.

Sacrificing growth in value to insure against danger has been an uncomfortable process. But necessary. We have not abandoned the overall caution which the world economy, in my view, still demands. However our focus has shifted more towards growth. This is our long-term goal and the source of our long-term track record. Over the last 10 years your Company's NAV total return is 190% compared to the MSCI of 105%. A shareholder who invested in RIT at inception will have seen their share price increase by 11.4% per annum and the NAV per share by 10.4% without taking into account dividends paid.

For the moment, as Mr John Authers wrote in the Financial Times recently, "there is nowhere for asset prices to go but upwards". The central banks are creating money on an epic scale - the US Federal Reserve by $85 billion a month upon a total US government debt that has already topped sixteen trillion dollars. The US yield curve is now steep. The Eurozone's central bank finally loosened its money tap during 2012. UK government debt, as a further example, will have doubled by 2017 from its high level in 2010 when its current government was elected, pledged to impose "austerity". Japan's recently elected prime minister is dedicating himself to a Keynesian experiment.

All such official actions carry vast eventual risk. The snag being that nobody can tell you when that "eventual" moment will be or what political maelstrom might trigger it.

What we do recognise is that the existential risk appears to have reduced. This has allowed us to look beyond "risk on/risk off" to more fundamentally driven situations and identify investments which are attractively valued. As a consequence, our quoted equity exposure (including futures) increased from a cautious 51% in September to 61% by the year end and our overall investment exposure from 90% to 101%. Defensive hedges cost us money last year, as did our historically profitable gold positions. To reflect our increasing confidence in markets we reduced our hedges in the latter part of 2012.

Geographic diversity has always been a feature of your Company but our particular emphasis in the current year has been targeted at an improving US economy. This was implemented in a number of ways. We bought individual stocks which are particularly sensitive to the US cycle. By the year end around 48% of our net assets were in North America (predominately in the US) and our US Dollar exposure was 62%. We have given support to a new hedge fund with a particular focus on the financial sector which will be run by Gunnar Overstrom and sponsored by Corsair Capital. We have also become seed investors in Tekne, a high-tech fund set up by Beeneet Kothari which will give us increased exposure to the technology sector in the US.

Our exposure to the Japanese stock market increased in the last quarter of 2012. We felt that the impact of reflationary policies against an undervalued stock market provided us with an exceptional investment opportunity. Equally these policies were negative for the currency and we took a net short Yen position.

In respect of Sterling, while our exposure was higher during the year we reduced it to 16% by the year end and we have reduced our position further in recent weeks.

On the portfolio itself we concluded that, over time, it had become too diversified and therefore we sold down small positions in stocks, increasing our focus on specific situations.

We are increasingly developing new investment ideas with the partner teams with whom we have forged relationships over the past year or so: Rockefeller & Co, Corsair Capital and the Edmond de Rothschild Group. The Board of our operating company, JRCM, has been strengthened through the additions of Reuben Jeffery, the Chief Executive of Rockefeller Financial, Rick Sopher of the Edmond de Rothschild Group and Lord Davies of Corsair Capital. In addition, Ignacio Jayanti of Corsair Capital has also joined the Board of JRCM as Vice Chairman. These changes are enabling us to increase co-operation with our partners and we believe will benefit our management team.

We expect each of these important relationships to be profitable in their own right. In addition, however, we have through them leveraged our sourcing of ideas and potential co-investments. These are early days. The private investments part of our business - a quarter of our invested capital - is in a period of consolidation following the stellar realisations of early 2012. This moment is being used by our direct investment team to develop joint ideas and investments with our partners. Direct private investments have been a very successful area for RIT over its history, however the returns can be lumpy and the investments typically have a longer cycle than other asset classes. Against rapid market increases, these assets do not re-price at the same rate. As a consequence your investment portfolio is likely to lag markets when they are rising but to outperform markets when they are falling.

Risk continues. A global recovery largely built on printing money cannot be riskless. Yet you can see from this brief summary above that your Company has rarely been more active in repositioning itself. We will continue to remain vigilant to risks and opportunities, always keeping in mind that, at our core, we are an investor in equities.

And we shall continue what we started last year: to bolster your realised return through these still dangerous times by paying out a significantly larger dividend than was our wont in the days of apparently easy economic growth. During the coming year we intend to pay dividends of 14p in April and 14p in October.

Capital preservation remains critical to us. We are however confident, over longer than a single year, and with a fresh sense of purpose and investment alliances, that our signally loyal investor base will be rewarded by our other primary mission: continued growth.

Rothschild

6 March 2013

Net Assets by Category

	31 December 2012 % Net Assets	31 March 2012 % Net Assets
Quoted Equity - Internally Managed	18.5	18.7
Quoted Equity - Externally Managed	44.2	45.0
Unquoted Investments - Direct	11.5	15.5
Unquoted Investments - Funds	14.6	13.7
Real Assets	5.5	5.8
Absolute Return & Credit, Government Bonds and Currency	2.9	7.2
Net Liquidity/ Borrowings and Other	2.8	(5.9)
Total	100.0	100.0

Note: The above table excludes notional exposure through derivatives including, for example those relating to Nikkei futures, US banks and gold.

Net Assets by Geography

	31 December 2012  % Net Assets	31 March 2012 % Net Assets
North America	48.2	44.8
United Kingdom	16.9	14.3
Emerging Markets	15.2	18.7
Global	2.7	3.9
Japan	8.0	3.7
Europe	12.1	16.1
Asia	0.5	-1.3
Liquidity, Borrowings, Currency	6.2	-1.6
Total	109.8	98.6

Note: This chart includes market exposure resulting from index futures and therefore does not sum to 100.

Net Assets by Currency

	31 December 2012  % Net Assets	31 March 2012 % Net Assets
US Dollar	61.9	52.8
Sterling	16.1	15.0
Norwegian Krone	8.4	3.3
Canadian Dollar	5.6	10.9
Mexican Peso	3.9	5.6
Euro	1.8	-5.2
Singapore Dollar	1.8	13.0
Japanese Yen	-3.6	0.4
Other	4.1	4.2
Total	100.0	100.0

Consolidated Income Statement

For the period ended 31 December 2012	Revenue £ million	Capital £ million		Total £ million
Income
Investment income	11.2	-		11.2
Other income	2.9	-		2.9
Gains/(losses) on dealing investments held at fair value	(10.5)	-		(10.5)
	3.6	-		3.6
Gains/(losses) on portfolio investments held at fair value	-	(23.9)		(23.9)
Exchange gains/(losses) on monetary items and borrowings	-	(0.1)		(0.1)
	3.6	(24.0)		(20.4)
Expenses
Administrative expenses	(14.8)	(1.7)		(16.5)
Investment management fees	(2.6)	(1.1)		(3.7)
Profit/(loss) before finance costs and tax	(13.8)	(26.8)		(40.6)
Finance costs	(4.7)	-		(4.7)
Profit/(loss) before tax	(18.5)	(26.8)		(45.3)
Taxation	(0.7)	0.4		(0.3)
Profit/(loss) for the period	(19.2)	(26.4)		(45.6)
Earnings per ordinary share - basic	(12.4p)		(17.2p)		(29.6p)
Earnings per ordinary share - diluted	(12.4p)		(17.2p)		(29.6p)

The total column of this statement represents the Group's Consolidated Income Statement, prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

Consolidated Statement of Comprehensive Income

For the period ended 31 December 2012	Revenue £ million	Capital £ million	Total £ million
Profit/(loss) for the period	(19.2)	(26.4)	(45.6)
Other comprehensive income/(expense):
Actuarial loss in defined benefit pension plan	(1.4)	-	(1.4)
Total comprehensive income/(expense) for the period	(20.6)	(26.4)	(47.0)

The amounts included above are net of tax where applicable.

Consolidated Income Statement

For the year ended 31 March 2012	Revenue £ million	Capital £ million		Total £ million
Income
Investment income	27.8	-		27.8
Other income	3.0	-		3.0
Gains/(losses) on dealing investments held at fair value	13.8	-		13.8
	44.6	-		44.6
Gains/(losses) on portfolio investments held at fair value	-	(61.1)		(61.1)
Exchange gains/(losses) on monetary items and borrowings	-	(2.6)		(2.6)
	44.6	(63.7)		(19.1)
Expenses
Administrative expenses	(18.3)	(2.0)		(20.3)
Investment management fees	(3.8)	(0.5)		(4.3)
Profit/(loss) before finance costs and tax	22.5	(66.2)		(43.7)
Finance costs	(12.1)	-		(12.1)
Profit/(loss) before tax	10.4	(66.2)		(55.8)
Taxation	1.3	(0.4)		0.9
Profit/(loss) for the year	11.7	(66.6)		(54.9)
Earnings per ordinary share - basic	7.6p		(43.3p)		(35.7p)
Earnings per ordinary share - diluted	7.6p		(43.3p)		(35.7p)

The total column of this statement represents the Group's Consolidated Income Statement, prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2012	Revenue £ million	Capital £ million	Total £ million
Profit/(loss) for the year	11.7	(66.6)	(54.9)
Other comprehensive income/(expense):
Actuarial profit/(loss) in defined benefit pension plan	(2.8)	-	(2.8)
Total comprehensive income/(expense) for the year	8.9	(66.6)	(57.7)

The amounts included above are net of tax where applicable.

Consolidated balance sheet

	31 December 2012 £ million	31 March 2012 £ million
Non-current assets
Investments held at fair value	1,801.4	2,024.1
Investment property	46.1	40.4
Property, plant and equipment	0.2	0.3
Deferred tax asset	2.7	2.7
	1,850.4	2,067.5
Current assets
Derivative financial instruments	25.0	27.2
Sales for future settlement	66.9	7.7
Other receivables	25.6	31.5
Tax receivable	0.5	0.9
Cash at bank	66.4	75.1
	184.4	142.4
Total assets	2,034.8	2,209.9
Current liabilities
Borrowings	(147.8)	(250.1)
Purchases for future settlement	(4.5)	(8.1)
Derivative financial instruments	(20.2)	(13.8)
Provisions	(1.2)	(0.9)
Tax payable	(0.2)	(0.1)
Other payables	(5.9)	(4.8)
	(179.8)	(277.8)
Net current assets/(liabilities)	4.6	(135.4)
Total assets less current liabilities	1,855.0	1,932.1
Non-current liabilities
Derivative financial instruments	-	(4.7)
Provisions	(5.4)	(5.6)
Finance lease liability	(0.5)	(0.5)
Retirement benefit liability	(1.9)	(1.3)
	(7.8)	(12.1)
Net assets	1,847.2	1,920.0
Equity attributable to owners of company
Share capital	155.4	153.9
Share premium	17.3	-
Capital redemption reserve	36.3	36.3
Own shares reserve	(6.4)	(5.8)
Share based payment reserve	4.7	5.7
Foreign currency translation reserve	0.2	0.2
Capital reserve	1,609.4	1,666.8
Revenue reserve	30.3	62.9
Total equity	1,847.2	1,920.0
Net asset value per ordinary share - basic	1,192.4p		1,251.7p
Net asset value per ordinary share - diluted	1,191.4p		1,249.3p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital £million	Capital redemption reserve £million	Own shares reserve £million	Share based payment reserve £million	Foreign currency translation reserve £million	Capital reserve £million	Revenue reserve £million	Share premium £million	Total equity £million
Balance at 1 April 2011	153.9	36.3	-	-	0.2	1,733.4	60.2	-	1,984.0
Profit/(loss) for the year	-	-	-	-	-	(66.6)	11.7	-	(54.9)
Actuarial gain/(loss) in defined
benefit plan	-	-	-	-	-	-	(2.8)	-	(2.8)
Total Comprehensive
income/(expense) for the year	-	-	-	-	-	(66.6)	8.9	-	(57.7)
Dividends paid	-	-	-	-	-	-	(6.2)	-	(6.2)
Movement in Own shares
reserve	-	-	(5.8)	-	-	-	-	-	(5.8)
Movement in Share based
payment reserve	-	-	-	5.7	-	-	-	-	5.7
Shares issued	-	-	-	-	-	-	-	-	-
Balance at 31 March 2012	153.9	36.3	(5.8)	5.7	0.2	1,666.8	62.9	-	1,920.0
Balance at 1 April 2012	153.9	36.3	(5.8)	5.7	0.2	1,666.8	62.9	-	1,920.0
Profit/(loss) for the period	-	-	-	-	-	(26.4)	(19.2)	-	(45.6)
Actuarial gain/(loss) in defined
benefit plan	-	-	-	-	-	-	(1.4)	-	(1.4)
Total Comprehensive
income/(expense) for the period	-	-	-	-	-	(26.4)	(20.6)	-	(47.0)
Dividends paid	-	-	-	-	-	(31.0)	(12.0)	-	(43.0)
Movement in Own shares
reserve	-	-	(0.6)	-	-	-	-	-	(0.6)
Movement in Share based
payment reserve	-	-	-	(1.0)	-	-	-	-	(1.0)
Shares issued	1.5	-	-	-	-	-	-	17.3	18.8
Balance at 31 December  2012	155.4	36.3	(6.4)	4.7	0.2	1,609.4	30.3	17.3	1,847.2

CONSOLIDATED CASH FLOW STATEMENT

	Period ended 31 December 2012 £ million	Year ended 31 March 2012 £ million
Operating activities:
Cash inflow/(outflow) before taxation and interest	137.8	28.6
Taxation received/(paid)	0.1	(1.7)
Interest paid	(6.1)	(8.3)
Net cash inflow/(outflow) from operating activities	131.8	18.6
Investing activities:
Purchase of property, plant and equipment	(0.1)	(0.1)
Sale of property, plant and equipment	0.1	-
Net cash inflow/(outflow) from investing activities	-	(0.1)
Financing activities:
Purchase of ordinary shares by Employee Benefit Trust1	(2.3)	(5.8)
Repayment of borrowings	(103.4)	-
Equity dividend paid	(43.0)	(6.2)
Net cash inflow/(outflow) from financing activities	(148.7)	(12.0)
Increase/(decrease) in cash and cash equivalents in the period/year	(16.9)	6.5
Cash and cash equivalents at the start of the period/year	103.0	99.1
Effect of foreign exchange rate changes on cash and cash equivalents	2.7	(2.6)
Cash and cash equivalents at the period/year end	88.8	103.0
Reconciliation:
Cash at bank	66.4	75.1
Money market funds (included in portfolio investments)	22.4	27.9
Cash and cash equivalents at the period/year end	88.8	103.0

1: Shares are disclosed in 'own shares reserve' on the consolidated balance sheet.

DIVIDEND

	Period ended	Year ended	Period ended	Year ended
	31 December 2012	31 March 2012	31 December 2012	31 March 2012
	Pence per	Pence per
	share	share	£ million	£million
Dividends paid in period/year	28.0	4.0	43.0	6.2

The above amounts were paid as distributions to equity holders of the Company in the relevant periods.  The Directors proposed a final dividend of 8.0p in respect of year ended 31 March 2012 and an interim dividend of 20.0p in respect of the period ended 31 December 2012 on 26 July 2012.  Following approval at the AGM these amounts were paid on 24 August 2012.

The Board declares the payment of a first interim dividend of 14.0p per share in respect of the year ended 31 December 2013.  This will be paid on 26 April 2013 to shareholders on the register at 5 April 2013.

EARNINGS/(LOSS) PER ORDINARY SHARE - BASIC AND DILUTED

The basic earnings per ordinary share for the period ended 31 December 2012 is based on the net loss of £45.6 million (31 March 2012: £54.9 million) and the weighted average number of ordinary shares in issue during the period of 154.2 million (31 March 2012: 153.7 million).

	Period ended	Year ended
	31 December	31 March
	2012	2012
	£ million	£ million
Net revenue profit/(loss)	(19.2)	11.7
Net capital profit/(loss)	(26.4)	(66.6)
	(45.6)	(54.9)
	Pence	Pence
	per share	per share
Revenue earnings per ordinary share - basic	(12.4)	7.6
Capital earnings per ordinary share - basic	(17.2)	(43.3)
	(29.6)	(35.7)

The diluted earnings per ordinary share for the period ended 31 December 2012 (year ended 31 March 2012) is based on the weighted average number of ordinary shares in issue during the period adjusted for the weighted average dilutive effect of Share Appreciation Rights (SARs) awards at the average market price for the period ended 31 December 2012 (year ended 31 March 2012).

	Period ended	Year ended
	31 December	31 March
	2012	2012
Weighted average number of shares in issue (million)	154.2	153.7
Weighted average effect of dilutive SARs (million)	-	0.3
	154.2	154.0
	Pence	Pence
	per share	per share
Revenue earnings per ordinary share - diluted	(12.4)	7.6
Capital earnings per ordinary share - diluted	(17.2)	(43.3)
	(29.6)	(35.7)

NET ASSET VALUE PER ORDINARY SHARE - BASIC AND DILUTED

Net asset value per ordinary share is based on the following data:

	31 December	31 March
	2012	2012
Net assets (£ million)	1,847.2	1,920.0
Number of shares in issue (million)	155.4	153.9
Own shares (million)	(0.5)	(0.5)
	154.9	153.4
Effect of dilutive potential ordinary shares
SARs (million)	0.1	0.3
Diluted shares	155.0	153.7

	31 December	31 March
	2012	2012
	Pence	Pence
	per share	per share
Net asset value per ordinary share - basic	1,192.4	1,251.7
Net asset value per ordinary share - diluted	1,191.4	1,249.3

It is the intention of the Group to settle all SAR exercises using the ordinary shares of the Company.

BASIS OF PRESENTATION

The financial information for the nine month period ended 31 December 2012 has been extracted from the statutory accounts for that period.  The auditor's report on these accounts was unqualified and did not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.  The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The financial information for the year ended 31 March 2012 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The auditor's report on these accounts was unqualified and did not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.

REPORT AND ACCOUNTS

The full statutory accounts are available to be viewed or downloaded from the Company's website at www.ritcap.com. Neither the contents of the Company's website nor the contents of any website accessible from the Company's website (or any other website) is incorporated into, or forms part of this announcement.

 

END

 

 

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