Interim Results
RIT Capital Partners PLC
16 November 2006
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2006
The following is derived from the Chairman's Statement which will appear in the
Interim Report
CHAIRMAN'S STATEMENT
Although stock market conditions have improved since your Company's half year
ended on 30 September, it is disappointing to report for the period under review
a reduction in your Company's net asset value per share of 6.9% from 982.7p to
914.5p, while the Morgan Stanley Capital International Index (in Sterling) and
the Investment Trust Net Assets Index decreased by 4.5% and 2.1%, with the FTSE
All-Share Index rising marginally by 0.1%. RITCP's net asset value per share at
10 November, the latest available date, had increased to 932.4p.
My Chairman's Statement in the Annual Report commented on the sharp setback in
markets which occurred in May and the clear accumulation of risk in a number of
areas and I went on to say that shareholders should not expect returns
comparable to last year, when your Company's net asset value per share increased
by 37.9%. Although we somewhat reduced exposure ahead of the market turbulence,
both the internally managed and externally managed portfolios were affected by
stock market declines during this period. Since the market trough in June, we
have raised market exposure again slightly. With the equity bull market well
into its fourth year and with appetite for risk in global equity markets again
on the rise, we remain somewhat cautious. We continue, however, to find
interesting investment opportunities both in the quoted and unquoted sectors.
QUOTED PORTFOLIO
At 30 September, £785.7 million, or 52.1% of the portfolio, was held directly in
quoted investments, compared with 62% at 31 March. A further £307.1 million, or
20.4% of the portfolio, was held in hedge and long equity funds which invest
mainly in quoted securities. Taking these two categories together, some 72% of
the portfolio was invested in quoted or other marketable securities, compared
with 78% at 31 March.
UNQUOTED PORTFOLIO
There has been an increase in your Company's allocation to unquoted investments,
which were valued at some £344.2 million, or 22.8% of the portfolio, compared
with an exposure of £282 million, representing 16.1% of the portfolio, at 31st
March 2006. Of the £344.2 million, £230.6 million, or 15.3%, represents
investments made directly by management and £113.6 million, or 7.5%, represents
investments in limited partnerships managed by third parties.
We benefited from a number of realisations and upward revaluations during the
period. In particular, the sale of Eclipse Scientific, the flotation of GAGFAH
(a company investing in German residential properties) and the excellent
performance of Harbourmaster have contributed.
We have made a commitment to support an initiative in the private equity sector
through becoming cornerstone investors in the creation of a new firm, founded by
three talented individuals from two leading private equity companies. Their
focus will be on the lower to middle market buyout sector in the U.K. and
Ireland. Your Company has committed to invest up to £50 million over time in
this new venture. Additional funds will be raised from outside investors in
early 2007.
INVESTMENT AND CURRENCY EXPOSURE
At the half year-end, your Company's net assets stood at £1,428.2 million and
its portfolio of investments at £1,507.5 million. The difference of £79.3
million, or 5.6% of our net assets, represents the extent to which we have
deployed our borrowings to make investments.
During the period, we increased our exposure to Sterling from 26.4% to 48.8% and
reduced our exposure to the US dollar from 21.0% to 8.1%.
Rothschild
16 November 2006
Enquiries: David Haysey, Chief Investment Officer - 020 7514 1926
Duncan Budge, Chief Operating Officer - 020 7514 1928
Consolidated Income Statement
Six months ended 30 September 2006
Revenue Capital Total
return return
Notes £m £m £m
________________________________________________________________________________
Income
Investment Income 18.7 - 18.7
Other income 0.3 - 0.3
Losses on dealing investments
held at fair value (31.3) - (31.3)
________________________________________________________________________________
Total income (12.3) - (12.3)
Losses on portfolio investments
held at fair value - (83.3) (83.3)
Other capital items - 8.9 8.9
________________________________________________________________________________
(12.3) (74.4) (86.7)
Expenses
Administrative expenses (5.2) (0.2) (5.4)
Investment management fees (3.1) - (3.1)
________________________________________________________________________________
Loss before finance costs and tax (20.6) (74.6) (95.2)
Finance costs (4.1) - (4.1)
________________________________________________________________________________
Loss before tax (24.7) (74.6) (99.3)
Taxation (1.2) (0.6) (1.8)
________________________________________________________________________________
Loss for the period (25.9) (75.2) (101.1)
________________________________________________________________________________
Loss attributable to minority interests - - -
Loss attributable to equity shareholders (25.9) (75.2) (101.1)
________________________________________________________________________________
(25.9) (75.2) (101.1)
________________________________________________________________________________
Earnings per ordinary share 2 (16.6)p (48.1)p (64.7)p
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 2005 Year ended 31 March 2006
Revenue Capital Total Revenue Capital Total
return return return return
Notes £m £m £m £m £m £m
__________________________________________________________________________________
Income
Investment income 13.6 - 13.6 27.0 - 27.0
Other income 0.8 - 0.8 1.1 - 1.1
Losses on dealing
investments held at
fair value (7.8) - (7.8) (20.8) - (20.8)
__________________________________________________________________________________
Total income 6.6 - 6.6 7.3 - 7.3
Gains on portfolio
investments held at
fair value - 197.5 197.5 - 461.8 461.8
Other capital items - (11.1) (11.1) - 1.9 1.9
__________________________________________________________________________________
6.6 186.4 193.0 7.3 463.7 471.0
Expenses
Administrative expenses (3.7) (4.3) (8.0) (11.0) (8.4) (19.4)
Investment management fees (3.5) (2.8) (6.3) (5.7) (8.6) (14.3)
___________________________________________________________________________________
Profit before finance
costs and tax (0.6) 179.3 178.7 (9.4) 446.7 437.3
Finance costs (2.5) - (2.5) (7.3) - (7.3)
__________________________________________________________________________________
Profit before tax (3.1) 179.3 176.2 (16.7) 446.7 430.0
Taxation (0.9) (5.9) (6.8) 0.1 (7.9) (7.8)
__________________________________________________________________________________
Profit for the period (4.0) 173.4 169.4 (16.6) 438.8 422.2
Profit attributable to - - - - - -
minority interests
Profit attributable
to equity shareholders (4.0) 173.4 169.4 (16.6) 438.8 422.2
__________________________________________________________________________________
(4.0) 173.4 169.4 (16.6) 438.8 422.2
__________________________________________________________________________________
Earnings per
ordinary share 2 (2.6)p 111.1p 108.5p (10.6)p 280.9p 270.3p
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 Statement of Changes in Equity
Share Capital Cash Foreign Capital Revenue Minority Total
capital redemption flow currency reserve reserve interests
reserve hedging translation
Six months ended reserve reserve
30 September 2006 £m £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
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
_________________________________________________________________________________________________________
Share Capital Cash Foreign Capital Revenue Minority Total
capital redemption flow currency reserve reserve interests
reserve hedging translation
Six months ended reserve reserve
30 September 2005 £m £m £m £m £m £m £m £m
_________________________________________________________________________________________________________
Balance at 31 March 2005 156.2 34.0 - - 914.2 8.8 0.1 1,113.3
Profit for the period - - - - 173.4 (4.1) - 169.3
Cash flow hedges
Gains/(losses)
taken to equity - - (0.9) - - - - (0.9)
Transferred to the income
statement for the period - - 0.2 - - - - 0.2
Exchange movements
arising on consolidation - - - 0.7 - - - 0.7
Ordinary dividend paid - - - - - (4.8) - (4.8)
_________________________________________________________________________________________________________
Balance at
30 September 2005 156.2 34.0 (0.7) 0.7 1,087.6 (0.1) 0.1 1,277.8
_________________________________________________________________________________________________________
Share Capital Cash Foreign Capital Revenue Minority Total
capital redemption flow currency reserve reserve interests
reserve hedging translation
Year ended reserve reserve
31 March 2006 £m £m £m £m £m £m £m £m
_________________________________________________________________________________________________________
Balance at 31 March 2005 156.2 34.0 - - 914.2 8.8 0.1 1,113.3
Profit for the period - - - - 438.7 (16.6) - 422.1
Cash flow hedges
Gains/(losses)
taken to equity - - 3.5 - - - - 3.5
Transferred to the income
statement for the period - - 0.6 - - - - 0.6
Disposal of subsidiaries - - - - - - (0.1) (0.1)
Exchange movements
arising on consolidation - - - 0.1 - - - 0.1
Ordinary dividend paid - - - - - (4.8) - (4.8)
_________________________________________________________________________________________________________
Balance at
31 March 2006 156.2 34.0 4.1 0.1 1,352.9 (12.6) - 1,534.7
_________________________________________________________________________________________________________
Consolidated Balance Sheet
Notes 30 September 31 March 30 September
2006 2006 2005
£m £m £m
________________________________________________________________________________________
Non-current assets
Investments held at fair value 4 1,476.8 1,720.8 1,409.9
Investment property 30.7 28.9 27.5
Property, plant and equipment 0.3 0.2 0.2
Derivative financial instruments 3.7 4.1 -
Retirement benefit asset 1.1 1.4 0.6
Deferred tax asset 1.6 2.4 2.6
________________________________________________________________________________________
1,514.2 1,757.8 1,440.8
________________________________________________________________________________________
Current assets
Dealing investments held at fair value 0.9 2.7 2.0
Sales for future settlement 46.6 10.9 65.3
Other receivables 11.3 11.9 12.1
Tax receivable 0.5 0.2 0.1
Cash at bank 89.5 65.1 80.4
________________________________________________________________________________________
148.8 90.8 159.9
________________________________________________________________________________________
Total assets 1,663.0 1,848.6 1,600.7
________________________________________________________________________________________
Current liabilities
Bank loans and overdrafts (1.2) (67.2) (63.8)
Securities sold short (13.3) (9.5) (10.0)
Purchases for future settlement (17.1) (21.5) (38.0)
Tax payable (0.3) (0.3) -
Other payables (8.4) (10.1) (3.9)
________________________________________________________________________________________
(40.3) (108.6) (115.7)
________________________________________________________________________________________
Net current assets/(liabilities) 108.5 (17.8) 44.2
________________________________________________________________________________________
Total assets less current liabilities 1,622.7 1,740.0 1,485.0
________________________________________________________________________________________
Non-current liabilities
Bank loans (181.9) (191.0) (186.8)
Provisions (12.6) (14.3) (20.4)
________________________________________________________________________________________
(194.5) (205.3) (207.2)
________________________________________________________________________________________
Net assets 1,428.2 1,534.7 1,277.8
________________________________________________________________________________________
Consolidated Balance Sheet, continued
Notes 30 September 31 March 30 September
2006 2006 2005
£m £m £m
________________________________________________________________________________________
Equity attributable to equity holders
Called up share capital 156.2 156.2 156.2
Capital redemption reserve 34.0 34.0 34.0
Cash flow hedging reserve 3.7 4.1 (0.7)
Foreign currency translation reserve (0.1) 0.1 0.7
Capital reserve-realised 1,019.5 932.1 809.7
Capital reserve-unrealised 258.2 420.8 277.9
Revenue reserve (43.3) (12.6) (0.1)
________________________________________________________________________________________
Total shareholders' equity 1,482.2 1,534.7 1,277.7
Minority interest in equity - - 0.1
________________________________________________________________________________________
Total equity 1,428.2 1,534.7 1,277.8
________________________________________________________________________________________
Net asset value per ordinary share 914.5p 982.7p 818.1p
________________________________________________________________________________________
Consolidated Cash Flow Statement
Six months Six months Year ended
ended 30 September ended 30 September 31 March 2006
2006 2005
£m £m £m
_____________________________________________________________________________________________
Cash inflow/(outflow) from
Operating Activities 89.2 (141.2) (145.5)
_____________________________________________________________________________________________
Investing Activities
Purchase of property, plant and equipment (0.2) (0.1) (0.2)
Sale of property, plant and equipment - - 0.1
_____________________________________________________________________________________________
Net cash outflow from Investing Activities (0.2) (0.1) (0.1)
_____________________________________________________________________________________________
Financing Activities
Increase in term loan - 103.4 103.4
Equity dividend paid (4.8) (4.8) (4.8)
Minority interests - - (0.1)
_____________________________________________________________________________________________
Net cash inflow/(outflow) from
Financing Activities (4.8) 98.6 98.5
_____________________________________________________________________________________________
Increase/(decrease) in cash and cash
equivalents in the period 84.2 (42.7) (47.1)
Cash and cash equivalents at the start of
the period 27.0 77.4 77.4
Effect of foreign exchange rate changes (1.2) (3.5) (3.3)
_____________________________________________________________________________________________
Cash and cash equivalents at the period end 110.0 31.2 27.0
_____________________________________________________________________________________________
Reconciliation:
Cash at bank 89.5 80.4 65.1
Money market funds (included in portfolio
investments) 21.7 14.6 29.1
Bank loans and overdrafts (1.2) (63.8) (67.2)
_____________________________________________________________________________________________
Cash and cash equivalents at period end 110.0 31.2 27.0
_____________________________________________________________________________________________
Notes to the Financial Statements
1. BASIS OF ACCOUNTING
These financial statements are the interim consolidated financial statements of
RIT Capital Partners plc and its subsidiaries for the six months ended 30
September 2006. They are prepared in accordance with International Accounting
Standard IAS 34, Interim Financial Reporting, and were approved on 15 November
2006. These interim financial statements should be read in conjunction with the
Annual Report and Accounts for the year ended 31 March 2006 as they provide an
update of previously reported information. The interim 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 2006.
2. EARNINGS PER ORDINARY SHARE
The earnings per ordinary share for the six months ended 30 September 2006 is
based on the net loss of £101.1 million (six months ended 30 September 2005: net
gain of £169.4; year ended 31 March 2006: net gain of £422.2 million) and the
weighted average number of ordinary shares in issue during the period of 156.2
million (six months ended 30 September 2005: 156.2 million; year ended 31 March
2006: 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 2006 September 2005 31 March 2006
£m £m £m
_______________________________________________________________________________
Net revenue loss (25.9) (4.0) (16.6)
Net capital (loss)/profit (75.2) 173.4 438.8
_______________________________________________________________________________
(101.1) 169.4 422.2
_______________________________________________________________________________
Pence per share Pence per share Pence per share
_______________________________________________________________________________
Revenue loss per
ordinary share (16.6) (2.6) (10.6)
Capital (loss)/earnings
per ordinary share (48.1) 111.1 280.9
_______________________________________________________________________________
(64.7) 108.5 270.3
_______________________________________________________________________________
3. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share as at 30 September 2006 is based on the
net assets attributable to equity shareholders of £1,428.2 million (30 September
2005: £1,277.7 million; 31 March 2006: £1,534.7 million) and the number of
ordinary shares in issue at 30 September 2006 of 156.2 million (30 September
2005: 156.2 million; 31 March 2006: 156.2 million).
4. MOVEMENTS IN INVESTMENTS
Quoted Unquoted Funds and Other Total
and partnerships securities
property
£m £m £m £m £m
_______________________________________________________________________________
At 31 March 2006 1,084.1 210.8 379.4 75.4 1,749.7
Additions 404.4 49.2 116.5 114.9 685.0
Disposals (639.2) (25.3) (64.1) (150.5) (879.1)
Revaluation (63.6) 26.6 (11.1) - (48.1)
_______________________________________________________________________________
At 30 September 2006 785.7 261.3 420.7 39.8 1,507.5
_______________________________________________________________________________
5. TAXATION
Six months Six months Year ended
ended 30 September ended 30 September 31 March
2006 2005 2006
£m £m £m
_______________________________________________________________________________
UK corporation tax - - 0.3
Adjustments in respect of - - (0.1)
prior years
Overseas taxation 1.0 0.7 1.6
Double taxation relief - - (0.3)
_______________________________________________________________________________
Current tax charge 1.0 0.7 1.5
Deferred tax 0.4 6.1 6.5
Adjustments in respect of
prior years 0.4 - (0.2)
_______________________________________________________________________________
1.8 6.8 7.8
_______________________________________________________________________________
6. DIVIDENDS PAID
Six months Six months Year ended
ended 30 September ended 30 September 31 March
2006 2005 2006
£m £m £m
_______________________________________________________________________________
Dividends paid 4.8 4.8 4.8
_______________________________________________________________________________
Pence per share 3.1p 3.1p 3.1p
_______________________________________________________________________________
7. LITIGATION
The litigation involving H-G Holdings Inc was discontinued and dismissed with
prejudice in October 2006 and the Company did not incur any material costs in
respect of these proceedings.
8. COMPARATIVE INFORMATION
The financial information contained in this interim 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 2006 and 30
September 2005 has not been audited.
The information for the year ended 31 March 2006 has been extracted from the
latest published audited financial statements. The audited financial statements
for the year ended 31 March 2006 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.
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