Half Yearly Report and Dividend

RNS Number : 6439V

RIT Capital Partners PLC

11 August 2015

 



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11 August 2015

RIT Capital Partners plc

Results for the six months ended 30 June 2015

RIT Capital Partners plc today publishes its results for the six months ended 30 June 2015.

THE FOLLOWING IS EXTRACTED FROM THE COMPANY'S HALF-YEARLY FINANCIAL REPORT

FINANCIAL SUMMARY

	30 June 2015	31 December 2014	Change
Net assets	£2,425m	£2,300m	£125m
NAV per share¹	1,563p	1,483p	80p
Share price	1,547p	1,397p	150p
Discount	-1.0%	-5.8%	4.8%
First interim dividend paid2	15.0p	14.7p	2.0%
Second interim dividend declared/paid	15.0p	14.7p	2.0%
Total Dividend	30.0p	29.4p	2.0%
Gearing	14.5%	15.4%	-0.9%
NAV per share total return			6.4%
Share price total return			11.8%
RPI plus 3.0% per annum			2.0%
MSCI All Country World Index3			3.0%

Percentage Changes to Date	6 Months	1 Year	5 Years	10 Years
NAV per share total return	6.4%	13.7%	53.4%	136.8%
Share price total return	11.8%	20.0%	46.2%	128.1%
RPI plus 3.0% per annum	2.0%	4.0%	33.4%	79.5%
MSCI All Country World Index3	3.0%	8.9%	75.5%	100.4%

¹ Diluted NAV per share with debt held at fair value.

² The first interim dividend of 15.0 pence per share (£23.2 million) was paid in April. The second interim dividend for the same amount will be paid in October 2015.

³ The MSCI All Country World Index (ACWI) we have adopted is a total return index based on 50% of the ACWI measured in Sterling and 50% measured in local currencies.

CHAIRMAN'S STATEMENT

Over the six months the share price of your Company increased by 11.8% on a total return basis. This reflects profits of £151 million before dividends of £23 million (a total return of 6.4%), and the narrowing of the discount at which your shares trade. The net assets of your Company now amount to £2.4 billion.

Following the first interim dividend of 15 pence paid in April, we have declared a second interim dividend of the same amount. This will be paid on 23 October to shareholders registered on 2 October and will provide shareholders with a total dividend of 30 pence in 2015, an increase of just over 2% compared to 2014.

During this period, markets continued to reflect central banks' policies of helping economies to grow by inflating asset prices, particularly in Europe and Japan through a policy of low interest rates and quantitative easing. As a consequence, equities in Europe and Japan have made gains, while the US and UK have done less well. The first group has pursued aggressive, stimulative policies, while the Anglo-Saxon countries are contemplating small steps to remove some of the accommodation in the light of improving economic prospects. The question now is whether stock market values are sustainable as interest rates rise and quantitative easing tails off.

Against this background your Company, by reducing its exposure to US equity markets, has been able to capitalise on the strong performances in Japanese and eurozone markets. Gains were also realised from Chinese investments. Overall, our quoted equity investments have meaningfully outperformed market indices.

In foreign exchange we continued to emphasise the US Dollar and more recently Sterling, while adopting a negative exposure to Asian currencies. This approach contributed to profits, notwithstanding Sterling's appreciation against most currencies during the period.

Recognising the unsustainably low level of bond yields, we took advantage of the fixed interest private placement market to raise £151 million in long-dated notes with a coupon of 3.45%. The notes are unsecured with a weighted average life of approximately 16 years. The proceeds have been used to repay part of our floating rate credit facilities.

Just under 23% of our assets are held in private investments. There were some successful realisations in funds managed by third parties - in particular the venture capital and other early stage exposures. Our permanent capital allows us to take a long term view on our direct investments. We are optimistic the portfolio will result in gains over time.

Outlook

Looking to the future, we are particularly mindful of our principle of capital preservation at a time of diminishing growth forecasts for world economies, while stock market valuations remain high. There are so many factors which cause concern: for example growth in China is slowing down, reflected in the worldwide sell off in commodities; we cannot but be alarmed by the political and economic situations in the Middle East, Greece, Russia and Ukraine; the burden of vastly increased and often unproductive debt must surely undermine prospects for future growth. We continue however to search for compelling investment opportunities, recognising that the climate is one where the wind may well not be behind us.

Rothschild

10 August 2015

CONTRIBUTION TO TOTAL RETURN, 6 MONTHS TO JUNE 2015

Asset Category	30 June 2015 % NAV	Contribution  %
Quoted Equities	68%	6.3%
Private Investments	23%	-0.1%
Absolute Return & Credit	14%	0.4%
Real Assets	4%	-0.2%
Currency¹	1%	0.2%
Liquidity, Borrowings & Other	-10%	-0.2%
Total	100%	6.4%

¹ Currency exposure is managed centrally on an overlay basis, with the translation impact and the profits from the overlay activity included in the Currency category.

Net Asset VALUE BY ASSET CATEGORY (%)

	30 June 2015 % Net Assets	31 December 2014 % Net Assets
Quoted Equity	68%	69%
Private Investments	23%	24%
Absolute Return & Credit	14%	17%
Real Assets	4%	4%
Currency, Liquidity, Borrowings, Other	-9%	-14%
Total	100%	100%

Net Asset VALUE by Currency (%)

	30 June 2015  % Net Assets	31 December 2014 % Net Assets
Sterling	53%	50%
US Dollar	50%	67%
Japanese Yen	4%	-2%
Euro	1%	-5%
Asian Currencies	-9%	-7%
Indian Rupee	0%	4%
Australian Dollar	0%	-6%
Canadian Dollar	0%	-5%
Other	1%	4%
Total	100%	100%

Note: This table excludes exposure from currency options.

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

For the six months ended 30 June 2015	Notes	Revenue return £ million	Capital return £ million	Total £ million
Income
Investment income		13.2	-	13.2
Other income		5.3	-	5.3
Total income		18.5	-	18.5
Gains/(losses) on portfolio investments held at fair value		-	133.0	133.0
Gains/(losses) on monetary items and borrowings		-	19.6	19.6
		18.5	152.6	171.1
Expenses
Administrative expenses		(12.8)	(1.1)	(13.9)
Investment management fees		(1.3)	0.2	(1.1)
Profit/(loss) before finance costs and tax		4.4	151.7	156.1
Finance costs		(5.1)	-	(5.1)
Profit/(loss) before tax		(0.7)	151.7	151.0
Taxation		0.2	-	0.2
Profit/(loss) for the period	2	(0.5)	151.7	151.2
Earnings per ordinary share - basic	2	(0.3p)	98.0p	97.7p
Earnings per ordinary share - diluted	2	(0.3p)	97.8p	97.5p

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. The notes are an integral part of these condensed interim financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For the six months ended 30 June 2015	Revenue return £ million	Capital return £ million	Total £ million
Profit/(loss) for the period	(0.5)	151.7	151.2
Other comprehensive income/(expense) that will not be subsequently reclassified to profit or loss:
Revaluation gain/(loss) on property, plant and equipment	-	1.0	1.0
Deferred tax (charge)/credit relating to pension plan	(1.9)	-	(1.9)
Actuarial gain/(loss) in defined benefit pension plan	0.5	-	0.5
Total comprehensive income/(expense) for the period	(1.9)	152.7	150.8

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

For the six months ended 30 June 2014 (restated)	Notes	Revenue return £ million	Capital return £ million	Total £ million
Income
Investment income		13.6	-	13.6
Other income		0.9	-	0.9
Total income		14.5	-	14.5
Gains/(losses) on portfolio investments held at fair value		-	47.3	47.3
Gains/(losses) on monetary items and borrowings		-	6.6	6.6
		14.5	53.9	68.4
Expenses
Administrative expenses		(8.4)	(1.0)	(9.4)
Investment management fees		(1.9)	(0.3)	(2.2)
Profit/(loss) before finance costs and tax		4.2	52.6	56.8
Finance costs		(6.4)	-	(6.4)
Profit/(loss) before tax		(2.2)	52.6	50.4
Taxation		-	-	-
Profit/(loss) for the period	2	(2.2)	52.6	50.4
Earnings per ordinary share - basic	2	(1.4p)	34.0p	32.6p
Earnings per ordinary share - diluted	2	(1.4p)	33.9p	32.5p

The total column of this statement represents the Group's Consolidated Income Statement, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. The notes are an integral part of these condensed interim financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For the six months ended 30 June 2014 (restated)	Revenue return £ million	Capital return £ million	Total £ million
Profit/(loss) for the period	(2.2)	52.6	50.4
Other comprehensive income/(expense) that will not be subsequently reclassified to profit or loss:
Revaluation gain/(loss) on property, plant and equipment	-	1.4	1.4
Deferred tax (charge)/credit relating to actuarial loss	-	-	-
Actuarial gain/(loss) in defined benefit pension plan	(0.4)	-	(0.4)
Total comprehensive income/(expense) for the period	(2.6)	54.0	51.4

CONSOLIDATED BALANCE SHEET (UNAUDITED)

	Notes	30 June 2015 £ million	31 December    2014 £ million
Non-current assets
Investments held at fair value		2,754.7	2,634.0
Investment property		31.8	30.2
Property, plant and equipment		27.5	26.8
Deferred tax asset		0.7	1.8
Derivative financial instruments		5.8	5.0
		2,820.5	2,697.8
Current assets
Derivative financial instruments		64.3	29.4
Sales for future settlement		1.2	1.0
Other receivables		71.0	44.3
Tax receivable		0.7	0.4
Cash at bank		64.2	101.4
		201.4	176.5
Total assets		3,021.9	2,874.3
Current liabilities
Bank loans and overdrafts		(233.0)	(402.9)
Purchases for future settlement		(23.9)	(1.2)
Derivative financial instruments		(29.0)	(27.4)
Provisions		(0.6)	(0.8)
Other payables		(162.8)	(135.6)
		(449.3)	(567.9)
Net current assets/(liabilities)		(247.9)	(391.4)
Total assets less current liabilities		2,572.6	2,306.4
Non-current liabilities
Loan notes		(142.5)	-
Derivative financial instruments		(2.5)	(3.2)
Provisions		(2.0)	(2.1)
Finance lease liability		(0.5)	(0.5)
Retirement benefit liability		-	(1.0)
		(147.5)	(6.8)
Net assets		2,425.1	2,299.6
Equity attributable to owners of the Company
Share capital		155.4	155.4
Share premium		17.3	17.3
Capital redemption reserve		36.3	36.3
Own shares reserve		(11.4)	(9.2)
Share-based payment reserve		5.8	6.2
Capital reserve		2,195.3	2,066.8
Revenue reserve		10.5	12.4
Revaluation reserve		15.2	14.2
Other reserves		0.7	0.2
Total shareholders' equity		2,425.1	2,299.6
Net asset value per ordinary share - basic	3	1,567p	1,486p
Net asset value per ordinary share - diluted	3	1,563p	1,483p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

Period ended 30 June 2015	Share capital £ million	Share premium £ million	Capital redemption reserve £ million	Own shares reserve £ million	Share- based payment reserve £ million	Capital reserve £ million	Revenue reserve £ million	Revaluation reserve £ million	Other reserves £ million	Total equity £ million
Balance at 1 January 2015	155.4	17.3	36.3	(9.2)	6.2	2,066.8	12.4	14.2	0.2	2,299.6
Profit/(loss) for the period	-	-	-	-	-	151.7	(0.5)	-	-	151.2
Revaluation gain on property, plant and equipment	-	-	-	-	-	-	-	1.0	-	1.0
Deferred tax (charge)/credit relating to pension plan	-	-	-	-	-	-	(1.9)	-	-	(1.9)
Actuarial gain/(loss) in defined benefit plan	-	-	-	-	-	-	0.5	-	-	0.5
Total Comprehensive income/(expense) for the period	-	-	-	-	-	151.7	(1.9)	1.0	-	150.8
Dividends paid (note 4)	-	-	-	-	-	(23.2)	-	-	-	(23.2)
Movement in Own shares reserve	-	-	-	(2.2)	-	-	-	-	-	(2.2)
Movement in Share-based payment reserve	-	-	-	-	(0.4)	-	-	-	-	(0.4)
Movement in Other reserves	-	-	-	-	-	-	-	-	0.5	0.5
Balance at 30 June 2015	155.4	17.3	36.3	(11.4)	5.8	2,195.3	10.5	15.2	0.7	2,425.1

(restated) Period ended 30 June 2014	Share capital £ million	Share premium £ million	Capital redemption reserve £ million	Own shares reserve £ million	Share- based payment reserve £ million	Capital reserve £ million	Revenue reserve £ million	Revaluation reserve £ million	Other reserves £ million	Total equity £ million
Balance at 1 January 2014	155.4	17.3	36.3	(5.5)	5.0	1,904.4	21.1	11.8	0.2	2,146.0
Profit/(loss) for the period	-	-	-	-	-	52.6	(2.2)	-	-	50.4
Revaluation gain on property, plant and equipment	-	-	-	-	-	-	-	1.4	-	1.4
Actuarial gain/(loss) in defined benefit plan	-	-	-	-	-	-	(0.4)	-	-	(0.4)
Total Comprehensive income/(expense) for the period	-	-	-	-	-	52.6	(2.6)	1.4	-	51.4
Dividends paid (note 4)	-	-	-	-	-	(22.7)	-	-	-	(22.7)
Movement in Own shares reserve	-	-	-	(2.3)	-	-	-	-	-	(2.3)
Movement in Share-based payment reserve	-	-	-	-	0.2	-	-	-	-	0.2
Balance at 30 June 2014	155.4	17.3	36.3	(7.8)	5.2	1,934.3	18.5	13.2	0.2	2,172.6

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

	Six months ended 30 June 2015 £ million	Six months ended 30 June 2014 £ million
Cash inflow/(outflow) before taxation and interest Taxation received/(paid) Interest paid	2.8 - (5.1)	(71.3) - (4.6)
Net cash inflow/(outflow) from operating activities	(2.3)	(75.9)
Investing activities:
Purchase of property, plant and equipment	-	-
Net cash inflow/(outflow) from investing activities	-	-
Financing activities:
Proceeds from bank loans and overdrafts	-	200.0
Repayments of bank loans and overdrafts	(151.8)	-
Proceeds from issue of loan notes	151.0	-
Equity dividend paid	(23.2)	(22.7)
Purchase of ordinary shares by Employee Benefit Trust¹	(4.0)	(2.8)
Net cash inflow/(outflow) from financing activities	(28.0)	174.5
Increase/(decrease) in cash and cash equivalents in the period	(30.3)	98.6
Cash and cash equivalents at the start of the period	118.5	86.4
Effect of foreign exchange rate changes	(2.8)	(6.4)
Cash and cash equivalents at the period end	85.4	178.6
Reconciliation:
Cash at bank	64.2	147.4
Money market funds (included in portfolio investments)	21.2	31.2
Cash and cash equivalents at the period end	85.4	178.6

¹ Shares are disclosed in 'Own shares reserve'on the Consolidated Balance Sheet.

NOTES TO THE FINANCIAL STATEMENTS

1.   Basis of Accounting

These condensed financial statements are the half-yearly consolidated financial statements of RIT Capital Partners plc ('the Company') and its subsidiaries (together 'the Group') for the six months ended 30 June 2015. They are prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, and with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the European Union, and were approved on 10 August 2015. These half-yearly financial statements should be read in conjunction with the Report and Accounts for the year ended 31 December 2014, which were prepared in accordance with IFRS, as adopted by the European Union, as they provide an update of previously reported information.

The half-yearly consolidated financial statements have been prepared in accordance with the accounting policies set out in the notes to the consolidated financial statements for the year ended 31 December 2014. Certain comparative figures have been restated to reflect the Group's decision in late 2014 to treat part of Spencer House as Property, Plant and Equipment under IAS 16. This change has no effect on net asset value per share but reduces earnings per share. Full details of this change may be found in the Report and Accounts for the year ended 31 December 2014.

The interim results are unaudited and include the results of GVQ Investment Management Limited from 17 January 2015.

Critical Accounting Assumptions and Judgements

Private Investments - Direct are valued at management's best estimate of fair value in accordance with IFRS, having regard to International Private Equity and Venture Capital Valuation Guidelines as recommended by the British Venture Capital Association. The inputs into the valuation methodologies adopted include observable historical data such as earnings or cash flow as well as more subjective data such as earnings forecasts or discount rates. As a result of this, the determination of fair value requires significant management judgement.

2.   Earnings Per Ordinary Share

The earnings per ordinary share for the six months ended 30 June 2015 is based on the net profit of £151.2 million (six months ended 30 June 2014: net profit of £50.4 million) and the weighted average number of ordinary shares in issue during the period of 154.6 million (six months ended 30 June 2014: 154.8 million) as shown below:

	Six months ended 30 June 2015  million	(restated) Six months ended 30 June 2014  million
Weighted average number of shares in issue	154.6	154.8
Weighted average effect of Share Appreciation Rights	0.5	0.2
	155.1	155.0

The earnings per ordinary share figure can be further analysed between revenue and capital as set out below:

	Six months ended 30 June 2015 million	(restated) Six months ended 30 June 2014 million
Net revenue profit/(loss)	(0.5)	(2.2)
Net capital profit/(loss)	151.7	52.6
Net profit/(loss)	151.2	50.4
	Pence per share	Pence per share
Revenue earnings per ordinary share - basic	(0.3)	(1.4)
Capital earnings per ordinary share - basic	98.0	34.0
Earnings per ordinary share - basic	97.7	32.6
	Pence per share	Pence per share
Revenue earnings per ordinary share - diluted	(0.3)	(1.4)
Capital earnings per ordinary share - diluted	97.8	33.9
Earnings per ordinary share - diluted	97.5	32.5

3.   Net Asset Value Per Ordinary Share - Basic and Diluted

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

	30 June 2015			31 December 2014
Net assets (£ million)	2,425.1			2,299.6
Number of shares in issue (million)	155.4			155.4
Own shares (million)	(0.7)			(0.6)
	154.7			154.8
Effect of dilutive potential ordinary shares:
Share Appreciation Rights (million)	0.5			0.3
Diluted shares	155.2			155.1
		30 June 2015 Pence per share	31 December 2014 Pence per share
Net asset value per ordinary share - basic		1,567p	1,486p
Net asset value per ordinary share - diluted		1,563p	1,483p

4.   Dividends

	Six months ended 30 June 2015	Six months ended 30 June 2014
Dividends (£ million)	23.2	22.7
Dividends (Pence per share)	15.0	14.7

The Board of Directors declared an interim dividend of 15.0p per ordinary share (£23.2 million) on 26 February 2015.   This amount was paid on 29 April 2015. The Board has declared the payment of a second interim dividend of 15.0p per ordinary share (£23.2 million) in respect of the year ending 31 December 2015. This will be paid on 23 October 2015 to shareholders on the register on 2 October 2015.

A more detailed commentary may be found in the Chairman's Statement in the Report and Accounts for the year ended 31 December 2014.

5.   Financial Assets & Liabilities

IFRS 13 requires the Group to classify its fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making those measurements. These are as follows:

·      Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

·      Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

·      Level 3: Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).

The vast majority of the Group's financial assets and liabilities and the investment properties are measured at fair value on a recurring basis. For all other financial assets and liabilities as shown on the Consolidated Balance Sheet, the carrying amount is a reasonable approximation of fair value.

The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting period when they are deemed to occur. No financial assets or liabilities were reclassified as a result of any change in their purpose or use during the period.

A description of the valuation techniques used by the Group with regard to investments categorised in each level of the fair value hierarchy is detailed below. Where the Group invests in a fund or a partnership, the categorisation of such investment between levels 1 to 3 is determined by reference to the nature of the underlying investments. If the underlying investments are categorised across different levels, the lowest level that forms a significant proportion of the fund or partnership exposure is used to determine the reporting disclosure.

Level 1

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price or the last traded price depending on the convention of the exchange on which the investment is quoted. Where a market price is available but the market is not considered active, the Group has classified these investments as level 2.

Level 2

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques which maximise the use of observable market data where it is available. Specific valuation techniques used to value OTC derivatives include quoted market prices for similar instruments, counterparty quotes and the use of forward exchange rates to estimate the fair value of forward foreign exchange contracts at the balance sheet date. Investments in externally managed funds which themselves invest primarily in listed securities are valued at the price or net asset value released by the investment manager/fund administrator as at the balance sheet date.

Level 3

The Group considers all private investments, direct and funds, as level 3 assets, as the valuations of these assets are not based on observable market data. Where other funds invest a significant proportion of their assets into illiquid stocks, these are also considered by the Group to be level 3 assets.

For the Private Investments - Funds, fair value is deemed to be the capital statement account balance as reported by the General Partner of the investee fund which represents RIT's pro-rata proportion of the fund's net asset value. A review is conducted annually over the valuation basis of the investee funds to confirm these are valued in accordance with fair value methodologies.

Private Investments - Direct, are valued on a semi-annual basis using techniques including a market approach, cost approach or income approach. The valuation process involves the finance and investment functions with the final valuations being reviewed by the Valuation Committee. The specific techniques used will typically include earnings multiples, discounted cash flow analysis, the value of recent share transactions and, where appropriate, industry rules of thumb. The valuations will often reflect a synthesis of a number of distinct approaches in determining the final fair value estimate. The individual approach for each investment will vary depending on relevant factors that a market participant would take into account in pricing the asset. These might include the specific industry dynamics, the company's stage of development, profitability, growth prospects or risk as well as the rights associated with the particular security.

Borrowings at 30 June 2015 comprise bank loans and senior loan notes. The bank loans are multi-currency revolving credit facilities, and are typically drawn in tranches with a duration of three months. The loans are therefore short term in nature, and their fair value approximates their nominal value. On 1 June 2015, the Company issued £151 million of senior unsecured loan notes, proceeds of which were used to partially repay existing bank loans. The notes have tenors of between 10 and 20 years with an average of 16 years. They are valued on a monthly basis using a discounted cash flow model where the discount rate is derived from the yield of similar tenor UK Government bonds, adjusted for any significant changes in either credit spreads or the perceived credit risk of the Company.

The fair value of investments in non-consolidated subsidiaries is considered to be the net asset value of the individual subsidiary as at the balance sheet date. The net asset value comprises various assets and liabilities which are fair valued on a recurring basis and is considered to be level 3.

On a semi-annual basis, the Group engages external, independent and qualified valuers to determine the fair value of the Group's properties. These were valued at 30 June 2015 by JLL in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors on the basis of open market value.

The following table analyses within the fair value hierarchy the Group's assets and liabilities at 30 June 2015:

As at 30 June 2015	Level 1 £ million	Level 2 £ million	Level 3 £ million	Total £  million
Financial assets at fair value through profit and loss:
Quoted Equity - Stocks	564.9	14.3	-	579.2
Quoted Equity - Funds	22.6	1,002.7	6.1	1,031.4
Private Investments - Direct	-	-	406.2	406.2
Private Investments - Funds	-	-	301.5	301.5
Absolute Return & Credit - Funds	-	262.5	69.3	331.8
Real Assets	18.5	17.1	-	35.6
Liquidity	69.0	-	-	69.0
Derivative financial instruments	2.0	68.1	-	70.1
Total financial assets at fair value through profit or loss	677.0	1,364.7	783.1	2,824.8
Non-financial assets measured at fair value:
Investment property	-	-	31.8	31.8
Revalued property, plant and equipment	-	-	27.2	27.2
Total non-financial assets measured at fair value	-	-	59.0	59.0
Financial liabilities at fair value through profit or loss:
Borrowings	-	-	(375.5)	(375.5)
Derivative financial instruments	(1.0)	(30.5)	-	(31.5)
Total financial liabilities at fair value through profit or loss	(1.0)	(30.5)	(375.5)	(407.0)
Total net financial assets measured at fair value	676.0	1,334.2	466.6	2,476.8

Further information on the movements in level 3 assets for the period ended 30 June 2015 is shown in the following table:

Period ended 30 June 2015	Opening Balance £ million	Purchases £ million	Sales £ million	Realised gains through profit or loss £ million	Unrealised gains through profit or loss   £ million	Reclass- ifications £ million	Closing Balance £ million
Quoted Equity - Funds	7.1	-	-	-	(1.0)	-	6.1
Private Investments - Direct	387.4	73.0	(32.6)	4.2	(25.8)	-	406.2
Private Investments - Funds	285.8	30.7	(29.9)	(3.1)	18.0	-	301.5
Absolute Return & Credit - Funds	65.2	7.4	(1.9)	-	(1.4)	-	69.3
Investment Property	30.2	0.9	-	-	0.7	-	31.8
Revalued property, plant and equipment	26.4	-	-	-	0.8	-	27.2
	802.1	112.0	(64.4)	1.1	(8.7)	-	842.1

The realised and unrealised gains and losses shown in the table above for level 3 assets are included in 'Gains/(losses) on portfolio investments held at fair value' in the Consolidated Income Statement.

Further information in relation to the directly held private investment portfolio at 30 June 2015 is set out below:

Sector	Fair Value £ million	Valuation Methods/Inputs
UK Commercial Property	59.0	Sales comparisons (£1,500-£2,050/sq ft); discounted expected rental values (£70-£80/sq ft)
Financials	51.6	Revenue multiples (1.1x); Book value multiples (0.7x-0.9x); DCF (16%-20% cost of capital); P/E (11x-17x); EV/EBITDA (6x)
Technology	56.1	DCF (16%-17% cost of capital); EV/EBITDA (7x-20x)
Consumer Staples	17.4	EV/EBITDA (7.8x)
Industrial	2.5	EV/EBITDA (5x-6x); P/E (9x)
Total	186.6

The remainder of the portfolio was valued using the following primary methods: Indicative offer (£62.9 million); cost of recent investment (£58.1 million); price of a recent financing round (£19.0 million); third party valuations (£3.3 million) and discount to net asset value (£3.0 million). The unconsolidated subsidiaries were valued at their fair value (representing their individual assets and liabilities) of £131.2 million.

Given the range of techniques and inputs used in the valuation process, and the fact that in most cases more than one approach is used, a sensitivity analysis is not considered to be a practical or meaningful disclosure. Shareholders should note however that increases or decreases in any of the inputs listed above in isolation may result in higher or lower fair value measurements.

The following table analyses within the fair value hierarchy the Group's assets and liabilities at 31 December 2014:

As at 31 December 2014	Level 1 £ million	Level 2 £ million	Level 3 £ million	Total £  million
Financial assets at fair value through profit or loss:
Quoted Equity - Stocks	538.4	12.4	-	550.8
Quoted Equity - Funds	-	982.0	7.1	989.1
Private Investments - Direct	-	-	387.4	387.4
Private Investments - Funds	-	-	285.8	285.8
Absolute Return & Credit - Funds	-	316.1	65.2	381.3
Real Assets	4.3	18.2	-	22.5
Liquidity	17.1	-	-	17.1
Derivative financial instruments	-	34.4	-	34.4
Total financial assets at fair value through profit or loss	559.8	1,363.1	745.5	2,668.4
Non-financial assets measured at fair value:
Investment property	-	-	30.2	30.2
Total non-financial assets measured at fair value	-	-	30.2	30.2
Financial liabilities at fair value through profit or loss:
Derivative financial instruments	-	(30.6)	-	(30.6)
Total financial liabilities at fair value through profit or loss	-	(30.6)	-	(30.6)
Total net financial assets measured at fair value	559.8	1,332.5	775.7	2,668.0

Further information on the movements in level 3 assets for the year ended 31 December 2014 is shown in the following table:

Year ended 31 December 2014	Opening Balance £ million	Purchases £ million	Sales £ million	Realised gains through profit or loss £ million	Unrealised gains through profit or loss £ million	Reclass- ifications £ million	Closing Balance £ million
Quoted Equity - Funds	1.7	0.3	-	-	(0.2)	5.3	7.1
Private Investments - Direct	377.2	8.8	(28.1)	11.9	17.6	-	387.4
Private Investments - Funds	282.9	28.0	(76.8)	13.2	38.5	-	285.8
Absolute Return & Credit - Funds	149.9	91.2	(43.3)	3.0	32.7	(168.3)	65.2
Investment property	29.0	-	-	-	1.2	-	30.2
Total	840.7	128.3	(148.2)	28.1	89.8	(163.0)	775.7

Further information in relation to the directly held private investment portfolio at 31 December 2014 is set out below:

Sector	Fair Value £ million	Valuation Methods/Inputs
UK Commercial Property	30.2	Sales comparisons (£1,500-£2,050/sq ft); discounted expected rental values (£70-£80/sq ft)
Financials	21.4	Revenue multiples (1.1x); Book value multiples (0.7x-0.9x); DCF (5%-20% cost of capital); P/E (11x-17x); EV/EBITDA (6x)
Technology	26.4	DCF (16%-17% cost of capital); EV/EBITDA (7x-20x)
Consumer Staples	17.5	EV/EBITDA (7.8x)
Industrial	3.9	EV/EBITDA (5x-6x); P/E (9x)
Total	99.4

The remainder of the portfolio was valued using the following primary methods: Indicative offer (£32.1 million); price of a recent financing round (£94.4 million); cost of a recent investment (£44.9 million) and third party valuations (£15.5 million). The unconsolidated subsidiaries were valued at their fair value (representing their individual assets and liabilities) of £131.3m.

6.   Comparative Information

The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 June 2015 and 30 June 2014 has been neither reviewed nor audited.

The information for the year ended 31 December 2014 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 31 December 2014 have been filed with the Registrar of Companies and the report of the auditors on those accounts contained no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

REGULATORY DISCLOSURES

Statement of Directors' Responsibilities

In accordance with the Disclosure and Transparency Rules 4.2.4R, 4.2.7R and 4.2.8R, we confirm that to the best of our knowledge:

(a)   The condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union, as required by the Disclosure and Transparency Rule 4.2.4R;

(b)   The Chairman's Statement includes a fair review of the information required to be disclosed under the Disclosure and Transparency Rule 4.2.7R, interim management report. This includes an indication of important events that have occurred during the first six months of the financial year, and their impact on that condensed set of financial statements presented in the Half-Yearly Financial Report. A description of the principal risks and uncertainties for the remaining six months of the financial year is set out below; and

(c)   There were no changes in the transactions or arrangements with related parties as described in the Group's Report and Accounts for the year ended 31 December 2014 that would have had a material effect on the financial position or performance of the Group in the first six months of the current financial year.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Group for the second half of the financial year are substantially the same

as those described in the Report and Accounts for the year ended 31 December 2014. As with any investment company, the

main risk is market risk.

Going Concern

The factors likely to effect the Group's ability to continue as a going concern were set out in the Report and Accounts for

the year ended 31 December 2014. As at 30 June 2015, there have been no significant changes to these factors. Having

reviewed the Company's forecasts and other relevant evidence, the Directors have a reasonable expectation that the

Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed financial statements.

Rothschild

10 August 2015

For and on behalf of the Board

END OF HALF-YEARLY FINANCIAL REPORT EXTRACTS

ENQUIRIES:

Brunswick Group LLP:

Tom Burns / Rowan Brown 020 7404 5959

About RIT Capital Partners plc:

RIT Capital Partners plc is an investment company listed on the London Stock Exchange. Its net assets have grown from £280 million on listing to £2.4 billion today. It is chaired by Lord Rothschild, whose family interests retain a significant holding. www.ritcap.com

 

END

 

 

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