Half Yearly Report

RNS Number : 0861Y

Ruffer Investment Company Limited

24 February 2012

 



RUFFER INVESTMENT COMPANY LIMITED

HALF YEARLY REPORT

The Company has today, in accordance with DTR 6.3.5, released its Interim Financial Report for the six months ended 31st December 2011. The Report will shortly be available from the Company's website www.ruffer.co.uk.

Investment Objective and Policy

To achieve a positive total annual return, after all expenses, of at least twice the Bank of England base rate (0.5% for the period ended 31 December 2011) by investing in internationally listed or quoted equities or equity-related securities (including convertibles) and bonds which are issued by corporate issuers, supra-nationals or government organisations.

Financial Highlights

      31.12.11

          Offer Price              Net Asset Value

                                                                                                              £                                      £

Redeemable participating preference shares                                        1.980†                               1.935*

† The price an investor would be expected to pay in the market (London Stock Exchange).

* This is the Net Asset Value for valuation purposes as at 31.12.11. The Fund is valued weekly and at month end.

Company Information

Incorporation Date                                01.06.04

Launch Date                                         08.07.04 (C shares: 29.09.05)

Initial Net Asset Value                          98p per share (98p per 'C' share)**

Launch Price                                        100p per share (100p per 'C' share)

Accounting dates                                   Interim                          Final

31 December                30 June

(Unaudited)                   (Audited)

** On 12 December 2005, the 'C' shares were converted into redeemable participating preference shares in  the Company at a ratio of 0.8314 redeemable participating preference shares for each 'C' share, in accordance with the conversion method in the Placing and Offer for Subscription Document. 

Investment Manager's Report

For the period from 1 July 2011 to 31 December 2011

In the six month period from 1 July 2011 to 31 December 2011, the net asset value per share of the Company fell in capital terms from 195.6* to 193.5p* which, together with a dividend of 1.5p, represents a total return of -0.3%, compared to the target return of 0.5%, being twice the Bank of England base rate over the period. Over the same period the FTSE All Share fell 6.2% on a total return basis.

Since launch on 8 July 2004 the NAV of the Company has risen by 120.2%**, including dividends and over the same period the FTSE All Share has produced a total return of 69.3%.

Despite a small decline in value during the six months this was a period "to be got through" and that has by-and-large been achieved. Markets experienced a high level of volatility (the FTSE All Share declined 18% from its peak in July to its trough in October) and the net asset value of the Company was pleasingly steady throughout. Our offsetting assets came into their own in the dark days of August and September. Both the US dollar and our Australian dollar put options proved their worth but index-linked bonds stole the show giving a positive contribution of over 4% and offsetting the losses experienced in the equity portfolio. The long dated bonds were the best performers and some profits were taken during the period in a reverse twist operation; we sold the better performing 2040 TIPS and reinvested the proceeds in the 2015 TIPS thus maintaining our USD exposure but reducing the duration (and volatility) of the US index-linked bonds. The buyer of our long bonds was the US Federal Reserve in its quantitative easing programme playing out the opposite version of our "twist" and unsurprisingly, given that the objective is to lower long term interest rates, the prices were well bid!

There were no tectonic shifts in asset allocation. Equity trades within the company were biased to the buy side as we invested the proceeds from new share issuance. We maintain a preference for large, defensive and typically high and well-covered dividend paying companies and these stocks rode through the volatility better than their smaller and more cyclical counterparts. In the case of the US equity holdings we made positive returns in local and base currencies.

We wrote in June that the price of safety had risen considerably in the preceding twelve months and this was well exemplified in the cost of assets such as gold, the Swiss franc and even cash when considered in real terms. Index-linked bonds have been a beneficiary of this continuing trend but this leaves us in a quandary; they are expensive relative to any point in their (quite short) history and it is therefore tempting to take profits but if our outlook is correct in terms of real interest rates then we may only be in the foothills of what this asset class can do for us. We believe that firmly negative real interest rates will be the solution to this credit fuelled crisis and now that a large proportion of the accumulated debt has moved from the private sector onto sovereigns the likely road is to default, but this will now be an inflationary one rather than an outright default. Do we sell our index-linked bonds? No, but we need to ensure that there are other assets in the portfolio that will benefit from a reversal of the safe-haven buying that has taken place and this means keeping up our equity weightings.

Europe must of course be mentioned given the magnitude of the crisis that is unfolding but we do not feel that there is much that we can add to an already crowded debate. Our approach thus far has been one of avoidance (with the exception of the German property stocks which could prove to be a direct beneficiary). We are hedged on the currency, we have avoided direct exposure to peripheral sovereign debt or companies which may hold that debt (i.e. financials) and most of our European equities are global rather than euro-centric businesses. It is of course impossible to avoid the secondary effects entirely.

On an administrative note, after reviewing the custodial arrangements, the Company's board decided on 24 November to change custodian from RBC Dexia and on 14 December 2011 this change was effected with the appointment of Northern Trust (Guernsey) Limited.

Ruffer LLP

16 January 2012

*    Value reported to the London Stock Exchange, using mid market price.

** The calculation of the Total Return includes an amount of 6.33 pence per share which represents the notional amount by which dividends paid to date would have grown if they had not been paid out as dividends but reinvested within the Company. 

Company Performance

		Price				Change in
		at 31.12.11				Bid Price
		Bid		Offer		From		From
		Price		Price		Launch		30.06.11
		£		£		%		%
Shares		1.970		1.980		+ 97.00		-2.48

Prices are published in the Financial Times in the "Investment Companies" section, and in the Daily Telegraph's "Share Prices & Market Capitalisations" section under "Investment Trusts".

Fund Size

				Net Asset		Net Asset	Number of
				Value		Value per Share	Shares In Issue
				£		£
		31.12.11		257,398,528		1.930	*	133,338,416
		30.06.11		248,248,134		1.953		127,138,416
		30.06.10		178,695,014		1.823		98,042,672
		30.06.09		135,603,281		1.521		89,129,703
		30.06.08		116,617,351		1.308		89,129,703
		30.06.07		123,690,774		1.166		106,117,074

* Net Asset Value per share reported to the London Stock Exchange was 1.935 using mid market values. Bid prices are presented as fair value in the financial statements.

Share Price Range

						Highest		Lowest
		Accounting				Offer Price		Bid Price
		Period to:				£		£
		31.12.11				2.070		1.900
		30.06.11				2.110		1.850
		30.06.10				2.005		1.555
		30.06.09				1.570		1.250
		30.06.08				1.300		1.085
		30.06.07				1.260		1.110

NAV Range

						Highest		Lowest
		Accounting				NAV		NAV
		Period to:				£		£
		31.12.11				1.991		1.871
		30.06.11				1.960		1.810
		30.06.10				1.897		1.518
		30.06.09				1.526		1.266
		30.06.08				1.333		1.176
		30.06.07				1.211		1.166

Past performance is not a guide to the future. The value of the shares and the income from them can go down as well as go up and you may not get back the amount originally invested.

Top Ten Holdings

				Fair		% of
		Holding at		Value		Total Net
Stock name	Currency	31.12.2011		£		Assets
UK Index-Linked Gilt 1.25% 22/11/2017	GBP	13,700,000		19,415,558		7.54
UK Index-Linked Gilt 1.25% 22/11/2055	GBP	8,430,000		16,852,598		6.55
US Treasury Inflation Indexed 1.625% Bond 15/01/2018	USD	16,300,000		12,910,248		5.02
US Treasury Inflation Indexed 1.625% Bond 15/01/2015	USD	15,000,000		12,345,402		4.79
Vodafone Group Plc	GBP	5,050,000		9,034,450		3.51
US Treasury Inflation Indexed 2.125% Bond 15/02/2040	USD	9,691,000		8,767,343		3.41
US Treasury Inflation Indexed 1.875% Bond 15/07/2015	USD	10,100,000		8,344,089		3.24
CF Ruffer Japanese Fund*	GBP	7,500,000		7,377,750		2.87
CF Ruffer Baker Steel Gold Fund*	GBP	2,830,683		7,205,222		2.80
UK Index-Linked Gilt 2.50% 26/07/2016	GBP	2,005,000		6,839,282		2.66

* CF Ruffer Baker Steel Gold Fund and CF Ruffer Japanese Fund are classed as related parties as they share the same Investment Manager as the Company.

The market value of all related investment funds are deducted from the NAV of the Company before the calculation of management fees on a monthly basis.

Responsibility Statement

Responsibility statement of the Directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

·     the condensed set of half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting;"

·     the Investment Manager's Report meets the requirements of an interim management report and includes a fair review of the information required by:

a)   DTR 4.2.7R of the Disclosure and Transparency Rules, being 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; and a description of principal risks and uncertainties for the remaining six months of the year; and

b)   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board,

Ashe Windham                                                Christopher Spencer

Chairman                                             Director

23 February 2012                                  23 February 2012         

Independent Review Report

To the Members of Ruffer Investment Company Limited

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2011 which comprises the condensed statement of financial position, condensed statement of comprehensive income, condensed statement of changes in equity, condensed statement of cash flow and summary of significant accounting policies and other explanatory 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 Company are prepared in accordance with International Financial Reporting Standards. 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".

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.

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 inquiries, 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 31 December 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

MOORE STEPHENS

Chartered Accountants

Town Mills South

La Rue Du Pre

St Peter Port

Guernsey GY1 3HZ

23 February 2012

Condensed Statement of Financial Position (Unaudited)

			(Unaudited)		(Audited)
			31.12.2011		30.06.11
	Notes		£		£
ASSETS
Cash and cash equivalents			5,045,766		10,760,249
Unrealised gain on open forward foreign currency contracts			130,094		360,891
Receivables			1,010,179		3,712,244
Financial assets at fair value through profit or loss			252,377,425		235,966,572
Total assets			258,563,464		250,799,956
EQUITY
Capital and reserves attributable to the
Company's shareholders
Management share capital	3		2		2
Net assets attributable to holders of Redeemable
participating preference shares			257,398,528		248,248,134
Total equity			257,398,530		248,248,136
LIABILITIES
Payables			373,356		1,413,465
Unrealised loss on open forward foreign currency contracts			791,578		1,138,355
Total liabilities			1,164,934		2,551,820
Total Equity and Liabilities			258,563,464		250,799,956
Net assets attributable to holders of Redeemable
participating preference shares (per share)			1.930		1.953

The financial statements were approved on 23 February 2012 and signed on behalf of the Board of Directors by:

Ashe Windham                                                                 Christopher Spencer                                                            

Chairman                                                          Director

Condensed Statement of Comprehensive Income (Unaudited)

						01.07.2011 to		01.07.10 to
						31.12.2011		31.12.10
		Revenue		Capital		Total		Total
		£		£		£		£
Bank interest income		5,362		-		5,362		6,572
Fixed interest income		477,401		-		477,401		919,746
Dividend income		2,134,634		-		2,134,634		1,666,505
Net gains on financial assets at
fair value through profit or loss		-		860,994		860,994		17,921,449
Other losses		-		(2,738,371)		(2,738,371)		(2,160,562)
Total income		2,617,397		(1,877,377)		740,020		18,353,710
Management fees		-		(1,146,083)		(1,146,083)		(955,901)
Expenses		(452,434)		(111,195)		(563,629)		(568,224)
Total expenses		(452,434)		(1,257,278)		(1,709,712)		(1,524,125)
(Loss)/profit for the period before tax		2,164,963		(3,134,655)		(969,692)		16,829,585
Withholding tax		(226,894)		-		(226,894)		(212,883)
(Loss)/profit for the period after tax		1,938,069		(3,134,655)		(1,196,586)		16,616,702
Total comprehensive (expense)/income
for the period		1,938,069		(3,134,655)		(1,196,586)		16,616,702
Basic and diluted (loss)/earnings per share *		1.48p		(2.40p)		(0.92p)		14.73p

*Basic and diluted earnings per share are calculated by dividing the profit after taxation and increase in net assets attributable to holders of redeemable participating preference shares by the weighted average number of redeemable participating preference shares. The weighted average number of shares for the period was 130,585,970 (30.06.2011: 118,922,387).

Condensed Statement of Changes in Equity (Unaudited)

						Total
				Share	Distributable	01.07.2011 to
				capital	reserves	31.12.2011
				£	£	£
Balance at 30 June 2011				69,663,683	178,584,451	248,248,134
Total comprehensive income for the period				-	(1,196,586)	(1,196,586)
Transactions with Shareholders:
Share capital issued				12,310,306	-	12,310,306
Distribution for the period				-	(1,963,326)	(1,963,326)
Balance at 31 December 2011				81,973,989	175,424,539	257,398,528

Net Assets attributable to holders of Redeemable participating preference

shares at the end of the period                                                                                      257,398,528

						Total
				Share	Distributable	01.07.2011 to
				capital	reserves	31.12.2011
				£	£	£
Balance at 30 June 2010				15,897,171	162,797,843	178,695,014
Total comprehensive income for the period				-	16,616,702	16,616,702
Transactions with Shareholders:
Share capital issued				50,000,000	-	50,000,000
Share issue costs				(1,217,863)	-	(1,217,863)
Distribution for the period				-	(1,470,640)	(1,470,640)
Balance at 31 December 2010				64,679,308	177,943,905	242,623,213

Net Assets attributable to holders of Redeemable participating preference

shares at the end of the period                                                                                     242,623,213  

Under The Companies (Guernsey) Law, 2008, the Company can distribute dividends from capital and revenue reserves, subject to a net asset and solvency test.

Condensed Statement of Cash Flows (Unaudited)

				01.07.2011 to		01.07.10 to
				31.12.2011		31.12.10
				£		£
Cash flows from operating activities
Purchase of financial assets at fair value through profit or loss				(61,182,312)		(88,250,624)
Proceeds from sale of financial assets at fair value through profit or loss (including realised gains)				44,476,478		36,810,845
Transaction costs paid to brokers				(111,195)		(245,859)
Bank interest received				5,362		6,572
Fixed interest income received				532,602		362,775
Dividends received				2,231,867		1,660,876
Withholding tax				(228,042)		(203,202)
Operating expenses paid				(1,598,121)		(1,207,722)
Foreign exchange losses				(2,854,352)		(1,070,816)
Net cash used in operating activities				(18,727,713)		(52,137,155)
Cash flows from financing activities
Dividends paid				(1,963,326)		(1,470,640)
Proceeds from issue of Redeemable participating preference shares				14,976,556		50,000,000
Share issue costs				-		(1,217,862)
Net cash generated from financing activities				13,013,230		47,311,498
Net decrease in cash and cash equivalents				(5,714,483)		(4,825,657)
Cash and cash equivalents at beginning of the period				10,760,249		9,404,633
Cash and cash equivalents at end of the period				5,045,766		4,578,976

Notes to the Unaudited Interim Condensed Financial Statements

1. Significant accounting policies

The following accounting policies have been applied consistently in dealing with items which are considered to be material in relation to the Company's interim condensed financial statements.

Basis of preparation

The unaudited interim condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") and in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the Disclosure and Transparency Rules ("DTR's") of the UK's Financial Services Authority.

They have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss, and in accordance with the Principal Documents and applicable Guernsey Law.

This half-yearly financial report, covering the period from 1 July 2011 to 31 December 2011, is not audited.

In order to better reflect the activities of an investment company supplementary information which analyses the income statement between items of revenue and capital nature has been presented within the Condensed Statement of Comprehensive Income.

The same accounting policies and methods of computation have been applied to the interim condensed financial statements as in the annual financial report at 30 June 2011. The presentation of the interim condensed financial statements is consistent with the Annual Financial Report.

The interim condensed financial statements do not include all the information and disclosures required in the annual financial report and should be read in conjunction with the annual financial report for the year ended 30 June 2011. The Audit Report on those accounts was not qualified.

The preparation of the interim condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.

Standards, amendments and interpretations that are not yet effective

The following standards and interpretations, which have not been applied in these financial statements, were in issue at the reporting date but not yet effective:

IFRS 9 - Financial instruments: Classification and measurement (effective date - 1 January 2013)

IFRS 10 - Consolidated Financial Statements (effective date - 1 January 2013)

IFRS 11 - Joint arrangements (effective date - 1 January 2013)

IFRS 12 - Disclosure of interest in other entities (effective date - 1 January 2013)

IFRS 13 - Fair value measurement (effective date - 1 January 2013)

Amendments to IFRS 1 - Presentation of Items of Other Comprehensive Income (effective date - 1 July 2012)

The Board anticipate that the adoption of these standards and interpretations in a future period will not have a material impact on the financial statements of the Company, other than IFRS 9 and IFRS 13. The Company is currently evaluating the potential effect of these standards.

2. Dividends to shareholders

Dividends, if any, will be declared semi-annually usually in September and March each year. An interim dividend of 1.5p per share (£1,963,326) was approved on 23 September 2011 and paid on 28 October 2011, in respect of the period from 1 January 2011 until 30 June 2011. An interim dividend of 1.6p per share in respect of the half year ending 31 December 2011 was declared on 23 February 2012. The dividend is payable on 23 March 2012 to shareholders on record at 2 March 2012.

3. Share capital account

					31.12.2011		30.06.11
					£		£
Authorised share capital
100 Management Shares of £1.00 each					100		100
200,000,000 Unclassified Shares of 0.01p each					20,000		20,000
75,000,000 C Shares of 0.1p each					75,000		75,000
					95,100		95,100
	Number of shares				Share capital
	31.12.2011		30.06.11		31.12.2011		30.06.11
Issued share capital					£		£
Management shares
Management Shares of £1.00 each	2		2		2		2
Equity shares
Redeemable Participating Preference
Shares of 0.01p each:
Balance at start of period/year	127,138,416		98,042,672		69,663,683		15,897,171
Issued during the period/year	6,200,000		29,095,744		12,310,306		54,984,375
Share issues costs written off	-		-		-		(1,217,863)
Balance as at end of period/year	133,338,416		127,138,416		81,973,989		69,663,683

Blocklisting and additional shares issued

During the period the Company made an application to the Financial Services Authority and to the London Stock Exchange for 13,193,841 redeemable participating preference shares of 0.01pence each to be admitted to the Official List under a general corporate purposes blocklisting facility. Under the blocklisting facility, 6,200,000 new redeemable participating preference shares of 0.01 pence each were allotted and issued during the period. These new redeemable participating preference shares rank pari passu with the existing shares in issue.

As at 31 December 2011, the Company had the ability to issue a further 16,957,682 redeemable participating preference shares under the blocklisting facility.

Redeemable participating preference shares in issue

As at 31 December 2011 the Company had 133,138,416 redeemable participating preference shares of 0.01 pence each and 2 Management shares of £1.00 each in issue. Therefore, the total voting rights in the Company at 31 December 2011 were 133,138,418.

Purchase of Own Shares by the Company  

An ordinary resolution was granted on 24 November 2011 which authorised the Company in accordance with The Companies (Guernsey) Law, 2008 to make purchases of its own shares as defined in that Ordinance of its Participating Shares of 0.0l pence each, provided that:

(i)     the maximum number of Shares the Company can purchase is no more than 14.99% of the Company's issued share capital:

(ii)     the minimum price (exclusive of expenses) which may be paid for a Share is 0.01 pence, being the nominal value per share;

(iii)    the maximum price (exclusive of expenses) which may be paid for the Share is an amount equal to the higher of (i) 105 % of the average of the middle market quotations for a Share taken from the London Stock Exchange Daily Official List for the 5 business days immediately preceding the day on which the Share is purchased and (ii) the price stipulated in Article 5(i) of the Buy-back and Stabilisation Regulation (No 2237 of 2003);

(iv)    purchases may only be made pursuant to this authority if the Shares are (at the date of the proposed purchase) trading on the London Stock Exchange at a discount to the lower of the undiluted or diluted Net Asset Value;

(v)    the authority conferred shall expire at the conclusion of the Annual General Meeting ("AGM") of the Company in 2012 or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such authority is renewed prior to such time; and

(vi)    the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract.     

4. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for the Company's activities.

Investment Management Agreement

The Company is managed by Ruffer LLP, an independent business incorporated in England and Wales as a limited liability partnership. The Company and the Investment Manager have entered into an Investment Management Agreement under which the Investment Manager has been given responsibility for the day-to-day discretionary management of the Company's assets (including uninvested cash) in accordance with the Company's investment objective and policy, subject to the overall supervision of the Directors and in accordance with the investment restrictions in the Investment Management Agreement and the Company's Articles of Association. The Investment Management Agreement will continue in force until determined by the Investment Manager or the Company giving to the other party thereto not less than 12 months notice.

The market value of all related investment funds are deducted from the NAV of the Company before the calculation of management fees on a monthly basis.

The Investment Manager receives an annual fee, payable monthly in arrears, at the rate of 1 per cent. per annum of the Net Asset Value of the Company on a mid-market basis. 

During the period ended 31 December 2011, management fees of £1,146,083 (31.12.10: £955,901) were charged to the Company, of which £1,146,083 (31.12.10: £955,901) was charged to the capital reserves of the Company. The amount of £193,284 (30.06.11: £180,821) remained payable at the period/year end.

Shares held in the Managing Member of the Investment Manager

As at 31 December 2011, an immediate family member of the Chairman Ashe Windham owned 100 (30.06.11: 100) shares in the Managing Member of the Investment Manager.

Directors

The Company has six non-executive directors, all of whom except Wayne Bulpitt and Peter Luthy are independent of the Investment Manager.

Under the Corporate Governance Code Wayne Bulpitt and Peter Luthy are not considered to be independent by reason of being directors of Ruffer Illiquid Strategies Fund of Funds 2009 Limited and Ruffer Illiquid Strategies Fund of Funds 2011 Limited, two Guernsey registered investment companies managed by the Company's Investment Manager.

The Directors of the Company are remunerated for their services at such a rate as the Directors determine provided that the aggregate amount of such fees does not exceed £170,000 (30.06.11: £170,000) per annum.

Each Director was paid a fee of £20,000 (30.06.11: £20,000) per annum, except for the Chairman who was paid £28,500 (30.06.11: £28,500).

Total Directors' fees for the period, including the outstanding Directors' fees at the end of the period, are detailed below.

					01.07.2011 to		01.07.10 to
					31.12.2011		31.12.10
					£		£
Directors' fees for the period					63,578		64,250
Payable at end of the period					32,125		37,125

Shares held by related parties

As at 31 December 2011, Directors of the Company held the following numbers of shares beneficially:-

					31.12.11		30.06.11
					Shares		Shares
Directors
Peter Luthy					120,000		-
Wayne Bulpitt					20,000		20,000
Jeannette Etherden					36,627		36,627
Christopher Spencer					14,157		14,157
Ashe Windham					68,000		68,000

As at 31 December 2011, Jonathan Ruffer, Chief Executive Officer of the Investment Manager and his immediate family owned 981,635 (30.06.11: 981,635) shares in the Company.

As at 31 December 2011, Hamish Baillie, Investment Director of the Investment Manager owned 20,000 (30.06.11: Nil) shares in the Company.

As at 31 December 2011, Steve Russell, Investment Director of the Investment Manager owned 6,450 (30.06.11: 6,450) shares in the Company.

As at 31 December 2011, the Investment Manager held 13,660,853 (30.06.2011: 14,221,788) shares on behalf of its discretionary clients in the Company.

Investments in related funds

As at 31 December 2011, the Company held investments in three (30.06.11: three) related investment funds valued at £21,108,121 (30.06.11: £23,748,502). Refer to the Portfolio Statement for details.

5. Operating segment reporting

The Board of Directors makes the strategic resource allocations on behalf of the Company. The Company has determined the operating segments based on the reports reviewed by the Board, which are used to make strategic decisions.

The Board is responsible for the Company's entire portfolio and considers the business to have a single operating segment. The Board's asset allocation decisions are based on a single, integrated investment strategy, and the Company's performance is evaluated on an overall basis.

There were no changes in the reportable segments during the period.

As required by IFRS 8, the total fair value of the financial instruments held by the Company by each major geographical segment, and the equivalent percentages of the total value of the Company, are reported in the Portfolio Statement.

Revenue earned is reported separately on the face of the Condensed Statement of Comprehensive Income as dividend income received from equities, and interest income received from fixed interest securities and bank deposits.

The Condensed Statement of Cash Flows separately reports cash flows from operating, investing and financing activities.

6. Principle risks and uncertainties

In general terms these may be highlighted as including an unexpected and sharp appreciation of Sterling against the US Dollar and other currencies held in the portfolio. A sudden decline in inflation expectations or a prolonged period of outright deflation across developed economies could also have an adverse impact on the portfolio, as could a sudden rise in real interest rates in the UK or US. Other potential risks include a sharp fall in the price of gold and unexpected stock specific declines in the share prices of the portfolio's equity investments. Equities currently constitute 53.17% of the Company's Net Asset Value, with no single exposure greater than 5.00%. The above risks could specifically affect, among other things, the Company's 27.30% in US Dollar denominated assets, 34.69% in government index-linked bonds and 5.00% in gold and gold equities.

7. Subsequent events

These financial statements were approved for issuance by the Board on 23 February 2012. Subsequent events have been evaluated until this date.

Under the blocklisting facility the following participating preference shares of 0.01 pence each were allotted and issued subsequent to the period end and up to the date of this report.

                                                                                                                                                     Price per         

Date                                                                                                Shares                           share               Total

                                                                                                                                                    £                       £

31 January 2012                                                                                   250,000                            2.0100               502,500

07 February 2012                                                                                 150,000                            2.0200               303,300

14 February 2012                                                                                 400,000                             2.0230              809,200

21 February 2012                                                                                 400,000                             2.0400              816,000

                                                                                                            1,200,000                                                   2,430,700

At the date of this report the Company had the ability to issue a further 15,757,982 redeemable preference shares under the blocklisting facility.

As at the date of this report, the Company had 134,538,416 redeemable participating preference shares of 0.01 pence each and 2 Management shares of £1.00 each in issue. Therefore, the total voting rights in the Company at the date of this report were 134,538,418.

Portfolio Statement (Unaudited)

		Holding	Fair		% of
		at	Value		Total Net
	Currency	31.12.2011	£		Assets*
Government Index-Linked Bonds 34.64%
(30.06.11 - 29.53%)
United Kingdom
UK Index-Linked Gilt 2.50% 16/08/2013	GBP	1,300,000	3,682,953		1.43
UK Index-Linked Gilt 2.50% 26/07/2016	GBP	2,005,000	6,839,282		2.66
UK Index-Linked Gilt 1.25% 22/11/2017	GBP	13,700,000	19,415,558		7.54
UK Index-Linked Gilt 1.25% 22/11/2055	GBP	8,430,000	16,852,598		6.55
			46,790,391		18.18
United States
US Treasury Inflation Indexed 1.625% Bond 15/01/2015	USD	15,000,000	12,345,402		4.79
US Treasury Inflation Indexed 1.875% Bond 15/07/2015	USD	10,100,000	8,344,089		3.24
US Treasury Inflation Indexed 1.625% Bond 15/01/2018	USD	16,300,000	12,910,248		5.02
US Treasury Inflation Indexed 2.125% Bond 15/02/2040	USD	9,691,000	8,767,343		3.41
			42,367,082		16.46
Total Government Indexed-Linked Bonds			89,157,473		34.64
Warrants 0.20%
(30.06.11 - 0.23%)
Luxembourg
CAD$ Protection Warrant 1.04 21/03/2012	USD	1,083	511,500		0.20
Total Warrants			511,500		0.20
Equities 53.87%
(30.06.11 - 55.21%)
Europe
Austria
Conwert Immobilien Invest	EUR	168,401	1,179,066		0.46
			1,179,066		0.46
Belgium
Groupe Bruxelles Lambert	EUR	20,150	866,987		0.34
			866,987		0.34
Germany
Fresenius Medical Care	EUR	63,500	2,787,886		1.08
TAG Immobilien AG	EUR	143,300	730,765		0.29
			3,518,651		1.37

Netherlands
Koninklijke KPN	EUR	812,000	6,270,596		2.44
			6,270,596		2.44
Sweden
Ericsson (LM) Telecom	SEK	500,000	3,287,552		1.28
			3,287,552		1.28
Switzerland
Novartis ADR	USD	144,000	5,295,412		2.06
Swisscom	CHF	5,900	1,441,669		0.56
			6,737,081		2.62
United Kingdom
Better Capital Ltd	GBP	1,727,800	2,090,638		0.81
Better Capital Sub Shares	GBP	345,560	-		-
Booker Group Plc	GBP	2,500,000	1,850,000		0.72
BT Group Plc	GBP	3,333,000	6,362,697		2.47
Carphone Warehouse Group Plc	GBP	330,000	1,019,700		0.40
Charles Taylor Consulting Plc	GBP	952,936	1,191,170		0.46
Colt Group	GBP	645,225	587,155		0.23
Invensys Plc	GBP	1,000,000	2,105,000		0.82
London & Stamford Property Plc	GBP	290,300	313,524		0.12
Oakley Capital Investments Ltd	GBP	2,825,794	3,645,274		1.41
Ocado Group Plc	GBP	1,000,000	544,000		0.21
RSA Insurance Group Plc	GBP	4,897,000	5,151,644		2.00
Seaenergy Plc	GBP	300,000	75,000		0.03
ServicePower Technology Plc	GBP	8,860,000	620,200		0.24
Tesco Plc	GBP	750,000	3,025,875		1.17
Vodafone Group Plc	GBP	5,050,000	9,034,450		3.51
			37,616,327		14.60
Total European Equities			59,476,260		23.11
Australia
Newcrest Mining Ltd	AUD	48,946	955,737		0.37
Total Australian Equities			955,737		0.37
Canada
Barrick Gold Corp	USD	70,000	2,038,607		0.79
Total Canadian Equities			2,038,607		0.79

United States
Clean Diesel Technology Inc	USD	33,536	59,774		0.02
Johnson & Johnson	USD	132,700	5,597,120		2.17
Kraft Foods Inc	USD	170,000	4,085,644		1.59
Merck & Co Inc	USD	150,000	3,637,797		1.41
Wal-Mart Stores Inc	USD	156,810	6,026,807		2.35
Total United States Equities			19,407,142		7.54
Asia
Japan
Daiei Inc	JPY	990,000	2,293,421		0.89
Inpex Corp	JPY	1,400	5,666,857		2.20
Japan Real Estate Investment Corp	JPY	945	4,718,185		1.83
Japan Residential Investment Co Ltd	GBP	8,330,000	4,498,200		1.75
Kao Corp	JPY	255,000	4,472,058		1.74
Mitsubishi UFJ Financial Group	JPY	920,000	2,500,576		0.97
Nippon Telegraph & Telephone Corp	JPY	200,000	6,565,057		2.55
Nomura Research Institute Ltd	JPY	210,000	3,045,350		1.19
NTT Data Corp	JPY	2,000	4,106,297		1.60
Resona Holdings Inc	JPY	938,000	2,651,480		1.03
Sumitomo Mitsui Financial Group Inc	JPY	210,000	3,761,903		1.46
Toshiba Plant Systems & Services Corp	JPY	420,000	2,732,736		1.06
T&D Holdings Inc	JPY	1,134,000	6,771,425		2.63
			53,783,545		20.90
Hong Kong
Esprit Holdings Ltd	HKD	417,000	345,483		0.13
			345,483		0.13
Total Asian Equities			54,129,028		21.03
Africa
South Africa
Gold Fields Ltd	ZAR	120,000	1,177,537		0.46
Gold Fields ADR Rep	USD	150,000	1,473,843		0.57
Total African Equities			2,651,380		1.03
Total Equities			138,658,154		53.87

Investment Funds 9.34%
(30.06.11 - 10.09%)
United Kingdom
CF Ruffer Baker Steel Gold Fund**	GBP	2,830,683	7,205,222		2.80
CF Ruffer Japanese Fund**	GBP	7,500,000	7,377,750		2.87
Herald Worldwide Fund	GBP	64,341	1,212,177		0.46
Renn Universal Growth Trust Ltd	GBP	1,000,000	1,730,000		0.67
Ruffer Illiquid Strategies Fund of Funds 2009 Limited**	GBP	5,581,750	6,525,149		2.54
			24,050,298		9.34
Total Investment Funds			24,050,298		9.34
Total financial assets at fair value through profit or loss			252,377,425		98.05
Other net current			5,021,105		1.95
Management share capital			(2)		-
Total Value of Company
(attributable to redeemable participating preference shares)			257,398,528		100.00

* All percentages relate to net assets attributable to holders of redeemable participating preference shares
**CF Ruffer Baker Steel Gold Fund, CF Ruffer Japanese Fund and Ruffer Illiquid Strategies Fund are classed as related parties as they share the same Investment Manager as the Company.

General Information

Ruffer Investment Company Limited was incorporated with limited liability in Guernsey as a company limited by shares and as an authorised closed-ended investment company on 1 June 2004. The objective of the Company is to achieve a positive total annual return, after all expenses, of at least twice the Bank of England base rate by investing in internationally listed or quoted equities or equity related securities (including convertibles) and bonds which are issued by corporate issuers, supra-nationals or government organisations.

The Company's redeemable participating shares are listed on the London Stock Exchange.

The accounting date of the Company is 30 June in each year. These interim financial statements were authorised for issue on 23 February 2012 by the Directors.

The prices of the shares in the Company are published in The Financial Times in the "Investment Companies" section, and in the Daily Telegraph's "Share Prices & Market Capitalisations" section under "Investment Trusts".

It is the intention of the Investment Manager to conduct the affairs of the Company so as to ensure that it will not become resident in the United Kingdom. Accordingly, and provided that the Company does not carry on a trade in the United Kingdom through a branch or agency situated therein, the Company will not be subject to United Kingdom Corporation Tax or Income Tax.

The Investment Manager receives an annual fee, payable monthly in arrears, at the rate of 1 per cent. per annum of the NAV of the Company on a mid market basis.

The Administrator is entitled to receive an annual fee equal to 0.15 per cent. per annum on the first £100 million and 0.10 per cent. per annum thereafter on the NAV of the Company on a mid market basis, subject to a minimum fee of £60,000 per annum.

On 14 December 2011, the Company changed Custodian from RBC Dexia to Northern Trust (Guernsey) Limited. Northern Trust (Guernsey) Limited (the "Custodian") is entitled to receive from the Company a fee of £2,000 per annum. The Custodian is also entitled to charge for certain expenses incurred by it in connection with its duties.

Prior to 14 December 2011, RBC Dexia was entitled to receive an annual fee equal to agreed safekeeping fees calculated on the basis of a percentage of the NAV of each holding of securities (which vary dependent on the location of the market on which those securities are traded) together with fixed transaction fees which similarly vary on a market by market basis.

Management and Administration

Directors		Registered Office		Auditor
Ashe Windham Wayne Bulpitt Jeannette Etherden Peter Luthy Christopher Spencer John V Baldwin		Trafalgar Court, Les Banques, St. Peter Port, Guernsey, Channel Islands, GY1 3QL		David Green Moore Stephens, Town Mills South, La Rue du Pre, St. Peter Port, Guernsey, Channel Islands, GY1 3HZ
Investment Manager		Sponsor and Broker		Solicitors to the Company as to UK law
Ruffer LLP, 80 Victoria Street, London, SW1E 5JL		Cenkos Securities Plc, 6.7.8 Tokenhouse Yard, London, EC2R 7AS		Lawrence Graham LLP, 4 More London Riverside, London, SE1 2AU
Company Secretary, Administrator and Registrar		CREST Agent		Advocates to the Company as to Guernsey law
Northern Trust International Fund Administration Services (Guernsey) Limited, Trafalgar Court, Les Banques, St. Peter Port,    Guernsey, Channel Islands, GY1 3QL		Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St. Helier, Jersey, JE1 1ES		Mourant Ozannes, 1 Le Marchant Street, St. Peter Port, Guernsey, Channel Islands, GY1 4HP
Custodian *
Northern Trust (Guernsey) Limited,
Trafalgar Court, Les Banques, St. Peter Port,    Guernsey, Channel Islands, GY1 3QL

* Appointed on 14 December 2011. Prior to this date, the Custodian for the Company was RBC Dexia Investor Services Trust, 155 Wellington St W, Toronto, Ontario, M5V 3L3 Canada.

 

END

 

 

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