Interim Results

RIT Capital Partners PLC 15 November 2007 HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007 The following is derived from the Chairman's Statement which will appear in the Half-Yearly Financial Report CHAIRMAN'S STATEMENT During the half year to 30 September, your Company's net asset value per share increased by 7.7% from 1,047.3p to 1,127.7p and its total net assets to £1,747.5 million. Over this period the Morgan Stanley Capital International Index (in Sterling), the FTSE All-Share Index and the Investment Trust Net Assets Index rose by 3.9%, 1.0% and 4.6% respectively. RITCP's net asset value per share at 9 November, the latest available date, had increased to 1,138.2p. Since 31 December 2006 your Company's net asset value per share has increased by 15.9% and its net worth by £230 million; over the same period the above indices had increased by 0.6%, 0.5% and 8.0% respectively. My Chairman's Statement in the Annual Report commented on increasing levels of risk in a number of areas including credit, and therefore at the time we reduced our exposure to equity markets. In the first half of this year the outlook has, if anything, become even more uncertain and treacherous. Stock markets, encouraged by the Federal Reserve's rate cuts, have at least until very recently turned a relatively blind eye to the negative factors which have emerged - the dramatic decline in new housing sales in the USA, extreme credit market turmoil, the price of oil approaching $100 a barrel, food price inflation, a sinking dollar and forecasts of slowing economic growth in the west, accompanied by a slide in consumer confidence. Taken together, these factors could tip the economies of the western world along the path of lower growth, leading possibly to recession. Central banks will do their best to fend off these risks, but the lowering of interest rates carries inflationary risks which could take their toll on stock markets. We should weigh against these negative factors reasonable equity valuations, the resilience of the US consumer and evidence of continuing global growth. Given our primary objective - to deliver long term capital growth while preserving shareholders' capital - we continue to position your Company relatively defensively, and have made some further reductions to market exposure. We have also endeavoured to find non-correlated assets to add to our widely diversified portfolio, increasing our gold and commodity holdings, and investing for the first time in the countries of the Middle East which will benefit from the rise in the oil price and economic activity. QUOTED PORTFOLIO At 30 September, £976.8 million, or 51.3% of the portfolio, was held directly in quoted investments, compared with 57.6% at 31 March. A further £366.9 million, or 19.1% of the portfolio, was held in hedge and long equity funds which invest mainly in quoted securities. Taking these two categories together, some 70.4% of the portfolio was invested in quoted or other marketable securities, compared with 74% at 31 March. UNQUOTED PORTFOLIO There has been a slight increase in the allocation to unquoted investments, which were valued at some £418.3 million, or 21.9% of the portfolio, compared with an exposure of £407.4 million at 31 March 2007, representing 22.0% of the portfolio. Of the £418.3 million, £282.1 million, or 14.8%, represents investments made directly by management and £136.2 million, or 7.1%, represents investments in limited partnerships managed by third parties. Valuations of our directly held unquoted investments were largely unchanged over the period. However, we have been active in making a number of new investments, for example the recent acquisition of a minority interest in the leading Edinburgh-based money management firm Martin Currie. INVESTMENT AND CURRENCY EXPOSURE We ended the half year with an investment portfolio (excluding government securities and liquidity) equivalent to 103% of underlying net assets and with exposure to publicly traded equity markets of 72.3% (including hedge funds). During the period we grew increasingly bearish on the US dollar and reduced our exposure from 8.9% to 3.6%. BOARD Christopher Hohn resigned as a Director with effect from 19 July, the date of the Company's Annual General Meeting. I would like to thank him, on your behalf, for his valuable insights and significant contribution to the Company. BORROWINGS As mentioned in my Statement in the Annual Report, in May we added to our borrowings with the completion of a £150 million, three year multi-currency loan. We now have medium and long-term borrowings equivalent to £328 million to add to our capital. SHARE BUY BACKS During the half year we bought back for cancellation 1,218,585 shares at prices of between 1,020p and 1,040p, at a total cost of £12.7 million. Rothschild 15 November 2007 Enquiries: David Haysey Chief Investment Officer 020 7514 1926 RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT In accordance with the Disclosure and Transparency Rules 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 (i) an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements presented in the half-yearly financial report and (ii) a description of the principal risks and uncertainties for the remaining six months of the financial year; and (c) There were no changes in the transactions or arrangements with related parties as described in the Group's annual report for the year ended 31 March 2007 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. Duncan Budge Director and Chief Operating Officer 15 November 2007 For and on behalf of the Board, the members of which are listed on page 18 of the half-yearly report. INDEPENDENT REVIEW REPORT TO RIT CAPITAL PARTNERS PLC Introduction We been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2007, which comprises the income statement, balance sheet, statement of changes in equity, cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2007 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLP Chartered Accountants 15 November 2007 London CONSOLIDATED INCOME STATEMENT --------------------------------------------------------------------------------- Revenue Capital return return Total Six months ended 30 September 2007 Notes £m £m £m --------------------------------------------------------------------------------- Income Investment Income 22.1 - 22.1 Other income 0.7 - 0.7 Losses on dealing investments held at fair value (10.6) - (10.6) --------------------------------------------------------------------------------- Total income 12.2 - 12.2 Gains on portfolio investments held at fair value - 124.7 124.7 Other capital items - 15.1 15.1 --------------------------------------------------------------------------------- 12.2 139.8 152.0 Expenses Administrative expenses (4.9) (2.2) (7.1) Investment management fees (3.5) (3.9) (7.4) --------------------------------------------------------------------------------- Profit before finance costs and tax 3.8 133.7 137.5 Finance costs (6.8) - (6.8) --------------------------------------------------------------------------------- Profit before tax (3.0) 133.7 130.7 Taxation (2.3) 1.1 (1.2) --------------------------------------------------------------------------------- Profit for the period (5.3) 134.8 129.5 --------------------------------------------------------------------------------- Earnings per ordinary share 2 (3.4)p 86.7p 83.3p --------------------------------------------------------------------------------- The total column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards. 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 INCOME STATEMENT (CONTINUED) ---------------------------------------------------------------------------------------------------------------- Six months ended 30 September 2006 Year ended 31 March 2007 Revenue Capital Total Revenue Capital Total return return return return return return Notes £m £m £m £m £m £m ---------------------------------------------------------------------------------------------------------------- Income Investment income 18.7 - 18.7 32.6 - 32.6 Other income 0.3 - 0.3 1.1 - 1.1 Losses on dealing investments held at fair value (31.3) - (31.3) (43.2) - (43.2) ---------------------------------------------------------------------------------------------------------------- Total income (12.3) - (12.3) (9.5) - (9.5) (Losses)/gains on portfolio investments held at fair value - (83.3) (83.3) - 116.0 116.0 Other capital items - 8.9 8.9 - 28.4 28.4 ---------------------------------------------------------------------------------------------------------------- (12.3) (74.4) (86.7) (9.5) 144.4 134.9 Expenses Administrative expenses (5.2) (0.2) (5.4) (11.1) (1.4) (12.5) Investment management fees (3.1) - (3.1) (5.9) (1.4) (7.3) ----------------------------------------------------------------------------------------------------------------- (Loss)/profit before finance costs and tax (20.6) (74.6) (95.2) (26.5) 141.6 115.1 Finance costs (4.1) - (4.1) (9.0) - (9.0) ----------------------------------------------------------------------------------------------------------------- (Loss)/profit before tax (24.7) (74.6) (99.3) (35.5) 141.6 106.1 Taxation (1.2) (0.6) (1.8) (1.4) (0.1) (1.5) ----------------------------------------------------------------------------------------------------------------- (Loss)/profit for the period (25.9) (75.2) (101.1) (36.9) 141.5 104.6 ----------------------------------------------------------------------------------------------------------------- Earnings per ordinary share 2 (16.6)p (48.1)p (64.7)p (23.6)p 90.6p 67.0p ----------------------------------------------------------------------------------------------------------------- The total column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards. 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 BALANCE SHEET --------------------------------------------------------------------------------- 30 September 31 March 30 September 2007 2007 2006 Notes £m £m £m --------------------------------------------------------------------------------- Non-current assets Investments held at fair value 4 1,875.0 1,819.3 1,476.8 Investment property 34.0 34.8 30.7 Property, plant and equipment 0.3 0.3 0.3 Derivative financial instruments 6.2 5.4 3.7 Retirement benefit asset 2.9 1.7 1.1 Deferred tax asset 2.2 2.3 1.6 --------------------------------------------------------------------------------- 1,920.6 1,863.8 1,514.2 --------------------------------------------------------------------------------- Current assets Dealing investments held at fair value 1.5 0.3 0.9 Sales for future settlement 48.5 8.0 46.6 Other receivables 7.7 6.7 11.3 Tax receivable 0.7 0.5 0.5 Cash at bank 222.2 131.6 89.5 --------------------------------------------------------------------------------- 280.6 147.1 148.8 --------------------------------------------------------------------------------- Total assets 2,201.2 2,010.9 1,663.0 --------------------------------------------------------------------------------- Current liabilities Bank loans and overdrafts (68.4) (151.1) (1.2) Securities sold short (2.0) (2.2) (13.3) Purchases for future settlement (35.6) (21.3) (17.1) Tax payable (0.2) (0.4) (0.3) Other payables (2.7) (11.6) (8.4) --------------------------------------------------------------------------------- (108.9) (186.6) (40.3) --------------------------------------------------------------------------------- Net current assets/(liabilities) 171.7 (39.5) 108.5 --------------------------------------------------------------------------------- Total assets less current liabilities 2,092.3 1,824.3 1,622.7 --------------------------------------------------------------------------------- Non-current liabilities Derivative financial instruments (1.0) - - Bank loans (327.6) (178.2) (181.9) Provisions (16.2) (10.5) (12.6) --------------------------------------------------------------------------------- (344.8) (188.7) (194.5) --------------------------------------------------------------------------------- Net assets 1,747.5 1,635.6 1,428.2 --------------------------------------------------------------------------------- Equity attributable to equity holders Called up share capital 155.0 156.2 156.2 Capital redemption reserve 35.2 34.0 34.0 Cash flow hedging reserve 5.2 5.4 3.7 Foreign currency translation reserve (0.1) (0.2) (0.1) Capital reserve-realised 1,312.1 1,193.3 1,019.5 Capital reserve-unrealised 304.5 301.2 258.2 Revenue reserve (64.4) (54.3) (43.3) --------------------------------------------------------------------------------- Total shareholders' equity 1,747.5 1,635.6 1,428.2 --------------------------------------------------------------------------------- Net asset value per ordinary share 1,127.7p 1,047.3p 914.5p --------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN EQUITY -------------------------------------------------------------------------------------------------------------------- Cash Foreign Capital flow currency Share redemption hedging translation Capital Revenue capital reserve reserve reserve reserve reserve Total Six months ended 30 September 2007 £m £m £m £m £m £m £m ------------------------------------------------------------------------------------------------------------------- Balance at 31 March 2007 156.2 34.0 5.4 (0.2) 1,494.5 (54.3) 1,635.6 Profit for the period - - - - 134.8 (5.3) 129.5 Cash flow hedges Gains/(losses) taken to equity - - 0.3 - - - 0.3 Transferred to the income statement for the period - - (0.5) - - - (0.5) Exchange movements arising on consolidation - - - 0.1 - - 0.1 Ordinary dividend paid - - - - - (4.8) (4.8) Purchase of own shares (1.2) 1.2 - - (12.7) - (12.7) ------------------------------------------------------------------------------------------------------------------- Balance at 30 September 2007 155.0 35.2 5.2 (0.1) 1,616.6 (64.4) 1,747.5 ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- Cash Foreign Capital flow currency Share redemption hedging translation Capital Revenue capital reserve reserve reserve reserve reserve Total Six months ended 30 September 2006 £m £m £m £m £m £m £m -------------------------------------------------------------------------------------------------------------------- Balance at 31 March 2006 156.2 34.0 4.1 0.1 1352.9 (12.6) 1,534.7 Loss for the period - - - - (75.2) (25.9) (101.1) Cash flow hedges Gains/(losses)taken to equity - - (0.5) - - - (0.5) Transferred to the income statement for the period - - 0.1 - - - 0.1 Exchange movements arising on consolidation - - - (0.2) - - (0.2) Ordinary dividend paid - - - - - (4.8) (4.8) -------------------------------------------------------------------------------------------------------------------- Balance at 30 September 2006 156.2 34.0 3.7 (0.1) 1,277.7 (43.3) 1,428.2 -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Cash Foreign Capital flow currency Share resemption hedging Translation Capital Revenue capital reserve reserve reserve reserve reserve Total Year ended 31 March 2007 £m £m £m £m £m £m £m -------------------------------------------------------------------------------------------------------------------- Balance at 31 March 2006 156.2 34.0 4.1 0.1 1,352.9 (12.6) 1,534.7 Profit for the period - - - - 141.6 (36.9) 104.7 Cash flow hedges Gains/(losses) taken to equity - - 1.5 - - - 1.5 Transferred to the income statement for the period - - (0.2) - - - (0.2) Exchange movements arising on consolidation - - - (0.3) - - (0.3) Ordinary dividend paid - - - - - (4.8) (4.8) --------------------------------------------------------------------------------------------------------------------- Balance at 31 March 2007 156.2 34.0 5.4 (0.2) 1,494.5 (54.3) 1,635.6 --------------------------------------------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT --------------------------------------------------------------------------------------- Six months Six months Year ended ended 30 September ended 30 September 31 March 2007 2006 2007 £m £m £m --------------------------------------------------------------------------------------- Cash inflow/(outflow) from Operating Activities 65.7 89.2 (9.0) --------------------------------------------------------------------------------------- Investing Activities Purchase of property, plant and equipment (0.1) (0.2) (0.2) --------------------------------------------------------------------------------------- Net cash outflow from Investing Activities (0.1) (0.2) (0.2) --------------------------------------------------------------------------------------- Financing Activities Purchase of own shares (12.7) - - Increase in term loan 150.0 - - Equity dividend paid (4.8) (4.8) (4.8) --------------------------------------------------------------------------------------- Net cash inflow/(outflow) from Financing Activities 132.5 (4.8) (4.8) --------------------------------------------------------------------------------------- Increase/(decrease) in cash and cash equivalents in the period 198.1 84.2 (14.0) Cash and cash equivalents at the start of the period 10.8 27.0 27.0 Effect of foreign exchange rate changes 0.2 (1.2) (2.2) -------------------------------------------------------------------------------------- Cash and cash equivalents at the period end 209.1 110.0 10.8 -------------------------------------------------------------------------------------- Reconciliation: Cash at bank 222.2 89.5 131.6 Money market funds (included in portfolio investments) 55.3 21.7 30.3 Bank loans and overdrafts (68.4) (1.2) (151.1) -------------------------------------------------------------------------------------- Cash and cash equivalents at period end 209.1 110.0 10.8 -------------------------------------------------------------------------------------- NOTES TO THE FINANCIAL STATEMENTS 1. BASIS OF ACCOUNTING These financial statements are the half-yearly consolidated financial statements of RIT Capital Partners plc and its subsidiaries for the six months ended 30 September 2007. They are prepared in accordance with International Accounting Standard IAS 34, Interim Financial Reporting, and were approved on 15 November 2007. These interim financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 March 2007 as they provide an update of previously reported information. The half-yearly 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 March 2007. 2. EARNINGS PER ORDINARY SHARE The earnings per ordinary share for the six months ended 30 September 2007 is based on the net profit of £129.5 million (six months ended 30 September 2006: net loss of £101.1 million; year ended 31 March 2007: net profit of £104.6 million) and the weighted average number of ordinary shares in issue during the period of 155.6 million (six months ended 30 September 2006: 156.2 million; year ended 31 March 2007: 156.2 million). The earnings per ordinary share figure detailed above can be further analysed between revenue and capital as set out below: Six months ended 30 Six months ended 30 Year ended September 2007 September 2006 31 March 2007 £m £m £m --------------------------------------------------------------------------------- Net revenue loss (5.3) (25.9) (36.9) Net capital profit/(loss) 134.8 (75.2) 141.5 --------------------------------------------------------------------------------- 129.5 (101.1) 104.6 --------------------------------------------------------------------------------- Pence Pence Pence per share per share per share --------------------------------------------------------------------------------- Revenue loss per ordinary share (3.4) (16.6) (23.6) Capital earnings/(loss) per ordinary share 86.7 (48.1) 90.6 --------------------------------------------------------------------------------- 83.3 (64.7) 67.0 --------------------------------------------------------------------------------- 3. NET ASSET VALUE PER ORDINARY SHARE The net asset value per ordinary share as at 30 September 2007 is based on the net assets attributable to equity shareholders of £1,747.5 million (30 September 2006: £1,428.2 million; 31 March 2007: £1,635.6 million) and the number of ordinary shares in issue at 30 September 2007 of 155.0 million (30 September 2006: 156.2 million; 31 March 2007: 156.2 million). 4. MOVEMENTS IN INVESTMENTS Unquoted Funds and Other Quoted and property partnerships securities Total £m £m £m £m £m --------------------------------------------------------------------------------- At 31 March 2007 1,069.0 311.0 435.3 38.8 1,854.1 Additions 555.6 40.3 105.2 250.3 951.4 Disposals (694.2) (33.4) (70.6) (176.6) (974.8) Revaluation 46.4 (1.8) 33.2 0.5 78.3 --------------------------------------------------------------------------------- At 30 September 2007 976.8 316.1 503.1 113.0 1,909.0 --------------------------------------------------------------------------------- 5. DIVIDENDS PAID Six months ended Six months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £m £m £m --------------------------------------------------------------------------------- Dividends paid 4.8 4.8 4.8 --------------------------------------------------------------------------------- Pence per share 3.1p 3.1p 3.1p --------------------------------------------------------------------------------- 6. CONTINGENT ASSET Following a decision earlier this year of the European Court of Justice, H M Revenue & Customs have announced that they have accepted that management fees for investment trusts should be treated as exempt from UK VAT. A statutory limit is imposed by UK VAT law on claims for refunds of VAT accounted for in error, restricting such refunds to VAT paid in the three years prior to the date on which the refund claim was made. However, a recent case has found this restriction to be invalid and it may be possible for claims to be made in respect of the period from 1 January 1990 to 4 December 1996. H M Revenue & Customs has appealed against this ruling and the case will shortly be heard before the House of Lords. If there is a favourable outcome to this case, the Company should be able to recover VAT of approximately £6 million, together with interest thereon. 7. COMPARATIVE INFORMATION The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half-years ended 30 September 2007 and 30 September 2006 has not been audited. The information for the year ended 31 March 2007 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 31 March 2007 have been filed with the Registrar of Companies and the report of the auditors on those accounts contained no qualification or statement under section 237(2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange

Companies

RIT Capital Partners (RCP)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today