Annual Financial Report

RNS Number : 8005R

RIT Capital Partners PLC

05 March 2019

 

Please click here to view the Company's Report and Accounts

http://www.rns-pdf.londonstockexchange.com/rns/8005R_1-2019-3-4.pdf

 05 March 2019

RIT Capital Partners plc

Results for the year ended 31 December 2018

RIT Capital Partners plc today published its results for the year ended 31 December 2018.

Financial Highlights:

·      Net Asset Value (NAV) per share total return of 0.8% for the year, a meaningful outperformance of equity markets

·      Investment outperformance of RIT's equity index (ACWI)¹ by almost 7%

·      NAV per share² of 1,821 pence at 31 December 2018

·      Total net assets stood at £2.8 billion

·      Premium averaged 7% over the year

Performance Highlights:

·      Positive performance achieved in a year when the majority of indices across all asset classes were negative

·      Defensive portfolio positioning with an emphasis on capital preservation

·      Returns achieved with prudent net quoted equity exposure averaging 47% over the year

·      Diversified approach successfully produced distinctive sources of return

·      Strong contribution to overall returns from private investments

·      Positive contribution from all non-equity allocations - including Absolute Return & Credit and currencies

·      Long position in US Government bonds made a useful contribution in the last quarter of the year

·      A more challenging year for the long-term structural allocation to Asia

Dividends:

·     Dividends paid in April and October 2018 totalling 33 pence per share

·     The Board intends to pay a dividend of 34 pence per share in 2019, comprising 17 pence per share in April and 17 pence per share in October. This represents an increase of 3% over the previous year

Summary:

·     Over the past five years, share price total return was 66% versus 47% for our equity index (ACWI)

·     Over the same five-year period, net assets have grown by £924 million (before dividends)

·     Since inception, RIT has now participated in 74% of market upside but only 39% of market declines

·    Over the same period, total shareholder return has compounded at 12.1% per annum compared to the ACWI of 6.7%

·     £10,000 invested in RIT at inception in 1988 would be worth ~£326,000 today (with dividends reinvested) compared to the same amount invested in the ACWI which would be worth ~£73,000

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

"2018 was the most difficult and treacherous year for investors since 2008, with negative returns in all major asset classes. In this context, we are pleased to be able to report that we delivered on our primary long-term aim of preserving shareholders' capital, with an increase of 0.8% in your Company's net asset value per share (including dividends). We were able to deliver this return in part by having reduced quoted equity exposure in advance of a fourth quarter which saw global equity indices fall by 13%.

…The dangers of holding assets inflated by low interest rates and quantitative easing are now visible to all. Throughout the year therefore we managed our asset allocation to keep net quoted exposure towards the lower levels of our historical ranges with higher levels of cash than usual.

…In the current year stock markets have, so far, shown significant gains. We remain however cautious about future prospects for markets, concerned over the accumulation of downside risks. Global growth is declining, with the IMF having further reduced its forecasts. The weakest Chinese GDP growth in nearly three decades is clearly having an impact on other regions, while German manufacturing output has contracted for the first time in four years. The most recent retail figures in the US lead one to believe that the economy will find it difficult to repeat last year's fiscal-fuelled results. Against this weakening backdrop, geopolitical risks have not subsided. We are surely witnessing the worst political situation in the United Kingdom since the Suez crisis, while social unrest and populism in a number of European countries cloud the future.

…We therefore anticipate a continuation of heightened market volatility. In these circumstances, capital preservation will remain as high a priority as any in the management of your Company's interest.

…I am delighted to announce two new non-executive Directors who will join the Board at the AGM, subject to shareholder approval - Maggie Fanari and Sir James Leigh-Pemberton. Maggie is the Director of Relationship Investing in London for Ontario Teachers' Pension Plan, one of Canada's largest pension plans and a major global investor. James was CEO of Credit Suisse UK, before leaving to chair UK Financial Investments. He also served as a non-executive Director here, from 2004 until 2013. I believe James and Maggie will be excellent additions to our Board.

…We have an impressive senior team at your Company's wholly-owned manager, J. Rothschild Capital Management Limited (JRCM). Led by Francesco Goedhuis (CEO) and Ron Tabbouche (CIO), JRCM has been instrumental in steering our business through some of the most difficult times in recent market history. Ably supported by Andrew Jones (CFO) and Jonathan Kestenbaum (COO), I believe the way forward for JRCM is in good hands and secure."

Commenting, Francesco Goedhuis, Chief Executive of J. Rothschild Capital Management Ltd, said:

"…Over the last five years, RIT's shareholders have seen a total return of 66% compared to 47% from the market.

…We believe the extent of our global reach and unique network allows us to maximise our ability to deploy capital effectively… our strong relationships with many of our managers provides co-investment opportunities in addition to our core fund holdings.

…The portfolio delivered a positive return of 0.8% in 2018, a pleasing performance against the broad declines in global equity markets and other asset classes. With a return in volatility and many investors struggling to navigate the markets, our cautious positioning was clearly helpful. Perhaps even more importantly was where we deployed our exposure - with our private investments and non-equity positions in particular providing a helpful offset to our equity book..."

ENQUIRIES:

Brunswick Group LLP:

Tom Burns / Sharan Kaur: 020 7404 5959

About RIT Capital Partners plc:

RIT Capital Partners plc is an investment company listed on the London Stock Exchange.  Its net assets have grown from £280 million on listing in 1988 to ~£2.9 billion today.  RIT is chaired by Lord Rothschild, whose family interests retain a significant holding. www.ritcap.com

¹ This is the total return index based on 50% of the MSCI All Country World Index (ACWI) measured in Sterling and 50% measured in local currencies.

²  Diluted NAV per share with debt at fair value.

FINANCIAL SUMMARY

Performance for the Year			2018
NAV per share total return			0.8%
Share price total return			-1.0%
RPI plus 3.0%			5.7%
MSCI All Country World Index			-5.8%

31 December unless otherwise stated	2018	2017	Change
NAV per share	1,821 pence	1,839 pence	- 1.0%
Share price	1,910 pence	1,962 pence	-2.7%
Premium	4.9%	6.7%	-1.8%
Net assets	£2,830 million	£2,858 million	-1.0%
Gearing	11.5%	13.5%	-2.0%
Average net quoted equity exposure for the year	47%	44%	3%
Ongoing Charges Figure for the year	0.68%	0.66%	0.02%
First interim dividend (April)	16.5 pence	16.0 pence	3.1%
Second interim dividend (October)	16.5 pence	16.0 pence	3.1%
Total dividend in year	33.0 pence	32.0 pence	3.1%

Performance History	3 Years	5 Years	10 Years
NAV per share total return	22.3%	44.8%	111.1%
Share price total return	19.6%	66.3%	152.2%
RPI plus 3.0% per annum	19.4%	30.2%	78.8%
MSCI All Country World Index	30.3%	46.8%	170.8%

CHAIRMAN'S STATEMENT

2018 was the most difficult and treacherous year for investors since 2008, with negative returns in all major asset classes. In this context, we are pleased to be able to report that we delivered on our primary long-term aim of preserving shareholders' capital, with an increase of 0.8% in your Company's net asset value per share (including dividends). We were able to deliver this return in part by having reduced quoted equity exposure in advance of a fourth quarter which saw global equity indices fall by 13%. Our private investment portfolio made positive returns, as did credit and bonds. Our investments in Asia, however, suffered, in particular China, whose stock market fell by some 25% during the course of the year. Nevertheless, we remain committed to the region believing in its future prospects.

In our Half-Yearly Report last year, I commented that, notwithstanding broad-based economic growth and low unemployment, it was not an appropriate time to add to risk. The dangers of holding assets inflated by low interest rates and quantitative easing are now visible to all. Throughout the year therefore we managed our asset allocation to keep net quoted exposure towards the lower levels of our historical ranges with higher levels of cash than usual.

Timely additions to government bonds and gold benefitted from 'flight to safety' flows towards the end of the year. The absolute return and credit portfolio held its ground, even with the downdraft in credit markets. Our currency allocations profited from the rally in the US dollar.

Our private investments contributed significantly to performance, both directly and through third-party managers. For example, in 2016 we made an initial investment alongside BDT Capital Partners into Acorn - a holding company for global coffee businesses - and we increased our investment in mid-2018 to support the merger of its Keurig business with Dr Pepper. The merger was well received by the market and the valuation of our interest has increased accordingly. In April 2018 we invested in Coupang, the South Korean online consumer business. Since then the company has benefitted from a sizeable new investment from Softbank at a significant uplift to our earlier investment. Our third-party managers, in particular ICONIQ and Thrive, made a number of profitable investments.

In the current year stock markets have, so far, shown significant gains. We remain however cautious about future prospects for markets, concerned over the accumulation of downside risks. Global growth is declining, with the IMF having further reduced its forecasts. The weakest Chinese GDP growth in nearly three decades is clearly having an impact on other regions, while German manufacturing output has contracted for the first time in four years. The most recent retail figures in the US lead one to believe that the economy will find it difficult to repeat last year's fiscal-fuelled results. Against this weakening backdrop, geopolitical risks have not subsided. We are surely witnessing the worst political situation in the United Kingdom since the Suez crisis, while social unrest and populism in a number of European countries cloud the future.

The question is whether current stock market valuations discount these concerns and take into account the likelihood that corporate profits are on the way down, undermined by reduced demand, increased wages, and higher input costs (due to tariffs). We therefore anticipate a continuation of heightened market volatility. In these circumstances, capital preservation will remain as high a priority as any in the management of your Company's interest.

While we remain cautious and selective, we continue to see specific opportunities across equity and debt markets, and seek to ensure that new investments provide a 'margin of safety' in terms of valuation. On private investments we seek to structure investments with an emphasis on downside protection. We are confident that our approach under current conditions will help in building the foundation for longer-term growth.

Dividend

We are intending to pay a dividend of 34 pence per share in 2019, an increase of just over 3% above the previous year. This will be paid in two equal instalments of 17 pence per share, in April and October.

Governance

I am delighted to announce two new non-executive Directors who will join the Board at the AGM, subject to shareholder approval - Maggie Fanari and Sir James Leigh-Pemberton. Maggie is the Director of Relationship Investing in London for Ontario Teachers' Pension Plan, one of Canada's largest pension plans and a major global investor. James was CEO of Credit Suisse UK, before leaving to chair UK Financial Investments. He also served as a non-executive Director here, from 2004 until 2013. I believe James and Maggie will be excellent additions to our Board.

In addition, we have been considering the important role of Senior Independent Director (SID). Michael Marks has served on the Board for more than nine years, and under the rules as they are now, it is time for him to relinquish the role. I would like to take this opportunity, on behalf of shareholders and the Board, to express my gratitude and appreciation for his wise counsel as SID; we will be putting him forward for re-election as a non-independent Director at the AGM. We are delighted that Philippe Costeletos has agreed to act as SID, and will take over from Michael at the AGM.

We have an impressive senior team at your Company's wholly-owned manager, J. Rothschild Capital Management Limited (JRCM). Led by Francesco Goedhuis (CEO) and Ron Tabbouche (CIO), JRCM has been instrumental in steering our business through some of the most difficult times in recent market history. Ably supported by Andrew Jones (CFO) and Jonathan Kestenbaum (COO), I believe the way forward for JRCM is in good hands and secure.

Rothschild
4 March 2019

EXTRACT FROM STRATEGIC REPORT

Strategic Aims

Our strategic aims are best illustrated by our Corporate Objective:

"to deliver long-term capital growth, while preserving shareholders' capital; to invest without the constraints of a formal benchmark, but to deliver for shareholders increases in capital value in excess of the relevant indices over time."

We believe this accurately reflects our long-term aims. However, we have sought to provide further clarification to assist shareholders in understanding what we are trying to achieve for them over time - in particular because we differ from many other large trusts who always aim to be fully invested in quoted equities.

The most important objective is long-term capital growth while preserving shareholders' capital. The essence of our investing DNA is about protecting and enhancing shareholders' wealth.

There may be times when we will deliberately place protection of shareholders' funds ahead of growth - as happened in the run up to the 2008 global financial crisis and more recently. However, we also recognise that such 'market timing' is unlikely to be sustainable in the long term.

We believe that our active management of equity exposure, combined with early identification of opportunities and themes across multiple asset classes, is more likely to lead to long-term outperformance. We would hope to display healthy participation in up markets, and reasonable protection in down markets. Over time, this should allow us to compound ahead of markets throughout the cycles. Indeed, since your Company's listing in 1988, we have participated in 74% of the market upside but only 39% of the market declines. This has resulted in our NAV per share total return compounding at 11.0% per annum, a meaningful outperformance of global equity markets. Over the same period the total return to shareholders was 12.1% per annum.

Investment Approach

The strategic aims are expressed in more practical terms in our Investment Policy:

"to invest in a widely diversified, international portfolio across a range of asset classes, both quoted and unquoted; to allocate part of the portfolio to exceptional managers in order to ensure access to the best external talent available."

It is this policy which guides us as we manage your portfolio. So, while we retain at our core an equity bias, we nonetheless have the freedom to invest your portfolio across multiple asset classes, geographies, industries and currencies. This has been the basis of our style over many years - combining thematic investing with individual securities, and private investments with public stocks. The long-term success of your Company has been drawn from a distinctive blend of stocks, private investments, equity funds, real assets, and absolute return and credit, all overlaid with currency positioning and macro exposure management.

We believe the extent of our global reach and unique network allows us to maximise our ability to deploy capital effectively. We seek to capitalise on an in-house investment team working closely with our core external managers, investing in funds which are largely closed to new investors, and cannot be accessed by a retail investor. This aspect of our model is key to our ability to identify and deliver value from differing sectors, markets and assets. And while access to such specialist managers comes at a cost, it is one which forms a clear part of our investment decision and, if warranted, we are comfortable paying. Equally, our strong relationships with many of our managers provides co-investment opportunities in addition to our core fund holdings.

Above all, our approach is long term. For example, in relation to private investments, we are not constrained by the typical industry model of a limited life partnership. This means we can hold such investments over an extended period and choose to realise them at an optimum time.

On quoted investments, we aim to avoid being forced sellers of stocks if we are comfortable with their underlying fundamentals, even if it means incurring short-term losses.

We also deploy derivatives to assist our approach, whether seeking to protect or reduce unwanted exposure, or to enhance returns. This might be in relation to managing our net exposure to equity markets, or to adjust our exposure to currency risk. Alternatively, we may use derivatives to express views on the future direction of interest rates.

In summary, our flexible model, utilising multiple asset classes and different investment structures to express our views, allows us to deploy capital and manage risks as efficiently as possible.

2018 Performance

The portfolio delivered a positive return of 0.8% in 2018, a pleasing performance against the broad declines in global equity markets and other asset classes.

With a return in volatility and many investors struggling to navigate the markets, our cautious positioning was clearly helpful. Perhaps even more importantly was where we deployed our exposure - with our private investments and non-equity positions in particular providing a helpful offset to our equity book.

I believe this year was an excellent illustration of our rigorous and careful portfolio management approach, with our Chief Investment Officer, Ron Tabbouche, providing more details in the Investment Review.

The ACWI ended the year down -5.8%, while our absolute KPI of RPI plus 3.0% measured 5.7%. With the sizeable downturn in equities, it was no surprise that we did not keep pace with the absolute hurdle. However, I am delighted that we delivered on our capital preservation aims, and outperformed the ACWI by almost seven percentage points.

We saw our premium maintained over the year - averaging 7% on a monthly basis - with a modest decline at the year end. As a result, the TSR was -1.0% for the year. If I look back over the last five years, RIT's shareholders have seen a TSR of 66.3% compared to the ACWI at 46.8%. This is a great testament to our CIO and the rest of the team at JRCM.

Francesco Goedhuis

Chairman and Chief Executive Officer

J. Rothschild Capital Management Limited

ASSET ALLOCATION AND PORTFOLIO CONTRIBUTION

Asset Category	31 December 2018 % NAV	2018 Contribution %	31 December 2017 % NAV	2017 Contribution %
Quoted Equity	47.0%	(6.3%)1	55.6%	9.1%1
Private Investments	25.7%	4.9%	21.8%	2.6%
Absolute Return and Credit	23.7%	0.5%	25.0%	1.6%
Real Assets	3.1%	0.1%	3.5%	0.9%
Government Bonds and Rates	0.5%	0.4%	0.2%	(0.2%)
Currency	(0.3%)	2.2%2	1.0%	(4.3%)2
Total Investments	99.7%	1.8%	107.1%	9.7%
Liquidity, Borrowings and Other	0.3%	(1.0%)3	(7.1%)	(1.5%)3
Total	100.0%	0.8%	100.0%	8.2%
Average Net Quoted Equity Exposure1	47%		44%

¹ The Quoted Equity contribution reflects the profits from the net quoted equity exposure during the year. This can differ from the % NAV as it reflects notional exposure through derivatives as well as estimated adjustments for derivatives and/or liquidity held by managers.

² Currency exposure is managed centrally on an overlay basis, with the translation impact and the result of the currency hedging and overlay activity included in this category.

³ This category includes interest, mark-to-market movements on the fixed interest notes, and expenses.

CURRENCY EXPOSURE OF NET ASSETS

		31 December 2018 % Net Assets	31 December 2017 % Net Assets
US Dollar		30%	30%
Sterling		44%	47%
Euro		6%	12%
Japanese Yen		6%	0%
Swiss Franc		5%	2%
Other		9%	9%
Total		100%	100%

CONSOLIDATED INCOME STATEMENT

Year ended 31 December
£ million		Revenue	Capital	2018 Total	Revenue	Capital	2017 Total
Income and gains
Investment income		20.8	-	20.8	19.0	-	19.0
Other income		4.6	-	4.6	11.9	-	11.9
Gains/(losses) on fair value investments		-	28.3	28.3	-	244.7	244.7
Gains/(losses) on monetary items and borrowings		-	18.2	18.2	-	(13.9)	(13.9)
		25.4	46.5	71.9	30.9	230.8	261.7
Expenses
Operating expenses		(24.0)	(4.6)	(28.6)	(23.7)	(4.9)	(28.6)
Profit/(loss) before finance costs and tax		1.4	41.9	43.3	7.2	225.9	233.1
Finance costs		(3.0)	(11.9)	(14.9)	(12.8)	-	(12.8)
Profit/(loss) before tax		(1.6)	30.0	28.4	(5.6)	225.9	220.3
Taxation		-	(1.3)	(1.3)	(0.1)	0.3	0.2
Profit/(loss) for the year		(1.6)	28.7	27.1	(5.7)	226.2	220.5
Earnings per ordinary share - basic		(1.0p)	18.6p	17.6p	(3.7p)	146.6p	142.9p
Earnings per ordinary share - diluted		(1.0p)	18.5p	17.5p	(3.7p)	146.1p	142.4p

The total column of this statement represents the Group's Consolidated Income Statement, prepared in accordance with IFRS as adopted by the European Union. The supplementary revenue and capital columns are both prepared under guidance published by the AIC. All items in the above statement derive from continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December				2018			2017
£ million		Revenue	Capital	Total	Revenue	Capital	Total
Profit/(loss) for the year		(1.6)	28.7	27.1	(5.7)	226.2	220.5
Other comprehensive income/(expense) that will not be subsequently reclassified to profit or loss:
Revaluation gain/(loss) on property, plant and equipment		-	(1.3)	(1.3)	-	(0.4)	(0.4)
Actuarial gain/(loss) in defined benefit pension plan		(0.9)	-	(0.9)	2.8	-	2.8
Deferred tax (charge)/credit allocated to actuarial (gain)/loss		0.2	-	0.2	(0.9)	-	(0.9)
Movement in other reserves		-	-	-	-	(0.3)	(0.3)
Total comprehensive income/(expense) for the year		(2.3)	27.4	25.1	(3.8)	225.5	221.7

The amounts included above are net of tax where applicable.

CONSOLIDATED BALANCE SHEET

At 31 December

£ million		2018	2017
Non-current assets
Investments held at fair value		2,808.0	2,995.5
Investment property		35.4	36.1
Property, plant and equipment		26.2	27.9
Deferred tax asset		2.0	3.1
Retirement benefit asset		1.3	1.8
Derivative financial instruments		8.3	6.4
		2,881.2	3,070.8
Current assets
Derivative financial instruments		24.6	49.2
Other receivables		248.9	123.3
Amounts owed by group undertakings		-	0.1
Cash at bank		210.9	122.9
		484.4	295.5
Total assets		3,365.6	3,366.3
Current liabilities
Borrowings		(275.0)	(275.0)
Derivative financial instruments		(38.2)	(9.8)
Other payables		(51.7)	(42.9)
Amounts owed to group undertakings		(11.8)	(11.7)
		(376.7)	(339.4)
Net current assets/(liabilities)		107.7	(43.9)
Total assets less current liabilities		2,988.9	3,026.9
Non-current liabilities
Borrowings		(155.1)	(163.2)
Derivative financial instruments		(0.6)	(2.4)
Provisions		(2.5)	(2.5)
Finance lease liability		(0.5)	(0.5)
		(158.7)	(168.6)
Net assets		2,830.2	2,858.3
Equity attributable to owners of the Company
Share capital		155.4	155.4
Share premium		17.3	17.3
Capital redemption reserve		36.3	36.3
Own shares reserve		(13.4)	(17.6)
Share-based payment reserve		-	4.6
Capital reserve		2,624.3	2,648.4
Revenue reserve		(5.0)	(2.7)
Revaluation reserve		15.3	16.6
Total equity		2,830.2	2,858.3
Net asset value per ordinary share - basic		1,827p	1,847p
Net asset value per ordinary share - diluted		1,821p	1,839p

The financial statements were approved by the Board of Directors and authorised for issue on 4 March 2019.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

£ million	Share capital	Share premium	Capital redemption reserve	Own shares reserve	Share-based payment reserve	Capital reserve	Revenue reserve	Revaluation reserve	Other reserves	Total equity
Balance at 1 January 2017	155.4	17.3	36.3	(14.4)	7.5	2,471.6	1.1	17.0	0.3	2,692.1
Profit/(loss) for the year	-	-	-	-	-	226.2	(5.7)	-	-	220.5
Revaluation loss on property, plant and equipment	-	-	-	-	-	-	-	(0.4)	-	(0.4)
Actuarial gain/(loss) in defined benefit plan	-	-	-	-	-	-	2.8	-	-	2.8
Deferred tax (charge)/credit allocated to actuarial gain	-	-	-	-	-	-	(0.9)	-	-	(0.9)
Other reserves	-	-	-	-	-	-	-	-	(0.3)	(0.3)
Total comprehensive income/(expense) for the year	-	-	-	-	-	226.2	(3.8)	(0.4)	(0.3)	221.7
Dividends paid	-	-	-	-	-	(49.4)	-	-	-	(49.4)
Movement in Own shares reserve	-	-	-	(3.2)	-	-	-	-	-	(3.2)
Movement in Share-based payment reserve	-	-	-	-	(2.9)	-	-	-	-	(2.9)
Balance at 31 December 2017	155.4	17.3	36.3	(17.6)	4.6	2,648.4	(2.7)	16.6	-	2,858.3
Balance at 1 January 2018	155.4	17.3	36.3	(17.6)	4.6	2,648.4	(2.7)	16.6	-	2,858.3
Profit/(loss) for the year	-	-	-	-	-	28.7	(1.6)	-	-	27.1
Revaluation loss on property, plant and equipment	-	-	-	-	-	-	-	(1.3)	-	(1.3)
Actuarial gain/(loss) in defined benefit plan	-	-	-	-	-	-	(0.9)	-	-	(0.9)
Deferred tax (charge)/credit allocated to actuarial gain	-	-	-	-	-	-	0.2	-	-	0.2
Other reserves	-	-	-	-	-	-	-	-	-	-
Total comprehensive income/(expense) for the year	-	-	-	-	-	28.7	(2.3)	(1.3)	-	25.1
Dividends paid	-	-	-	-	-	(51.0)	-	-	-	(51.0)
Movement in Own shares reserve	-	-	-	4.2	-	-	-	-	-	4.2
Movement in Share-based payment reserve	-	-	-	-	(6.4)	-	-	-	-	(6.4)
Transfer to Capital reserve	-	-	-	-	1.8	(1.8)	-	-	-	-
Balance at 31 December 2018	155.4	17.3	36.3	(13.4)	-	2,624.3	(5.0)	15.3	-	2,830.2

CONSOLIDATED CASH FLOW STATEMENT

Year ended 31 December

		Consolidated Cash Flow
£ million		2018	2017
Cash flows from operating activities:
Cash inflow/(outflow) before taxation and interest		151.7	34.8
Interest paid		(14.9)	(12.8)
Net cash inflow/(outflow) from operating activities		136.8	22.0
Cash flows from investing activities:
Sale/(purchase) of property, plant and equipment		(0.2)	(0.1)
Disposal of subsidiary		3.01	(4.4)
Investments in subsidiary undertakings		-	-
Net cash inflow/(outflow) from investing activities		2.8	(4.5)
Cash flows from financing activities:
Purchase of ordinary shares by EBT2		(6.6)	(11.8)
Equity dividend paid		(51.0)	(49.4)
Net cash inflow/(outflow) from financing activities		(57.6)	(61.2)
Increase/(decrease) in cash and cash equivalents in the year		82.0	(43.7)
Cash and cash equivalents at the start of the year		122.9	170.5
Effect of foreign exchange rate changes on cash and cash equivalents		6.0	(3.9)
Cash and cash equivalents at the year end		210.9	122.9
Reconciliation:
Cash at bank		210.9	122.9
Cash and cash equivalents at the year end		210.9	122.9

¹ Deferred consideration.

² Shares are disclosed in 'Own shares reserve' on the consolidated balance sheet. 

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

The basic earnings per ordinary share for 2018 is based on the profit of £27.1 million (2017: £220.5 million) and the weighted average number of ordinary shares in issue during the year of 154.5 million (2017: 154.3 million). The weighted average number of shares is adjusted for shares held in the EBT in accordance with IAS 33.

£ million	2018	2017
Net revenue profit/(loss)	(1.6)	(5.7)
Net capital profit/(loss)	28.7	226.2
Total profit/(loss) for the year	27.1	220.5
pence	2018	2017
Revenue earnings/(loss) per ordinary share - basic	(1.0)	(3.7)
Capital earnings/(loss) per ordinary share - basic	18.6	146.6
Total earnings per share - basic	17.6	142.9

The diluted earnings per ordinary share for the year is based on the weighted average number of ordinary shares in issue during the year, adjusted for the weighted average dilutive effect of share-based awards at the average market price for the year.

million	2018	2017
Weighted average number of shares in issue	154.5	154.3
Weighted average effect of dilutive share-based awards	0.5	0.6
Total diluted shares	155.0	154.9
pence	2018	2017
Revenue earnings/(loss) per ordinary share - diluted	(1.0)	(3.7)
Capital earnings/(loss) per ordinary share - diluted	18.5	146.1
Total earnings per share - diluted	17.5	142.4

NET ASSET VALUE PER ORDINARY SHARE - BASIC AND DILUTED

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

31 December	2018	2017
Net assets (£ million)	2,830.2	2,858.3
Number of shares in issue (million)	155.4	155.4
Own shares (million)	(0.4)	(0.6)
Subtotal (million)	155.0	154.8
Effect of dilutive potential ordinary shares in respect of share-based payments (million)	0.4	0.6
Diluted shares (million)	155.4	155.4

	2018	2017
31 December	pence	pence
Net asset value per ordinary share - basic	1,827	1,847
Net asset value per ordinary share - diluted	1,821	1,839

DIVIDENDS

	2018	2017
	Pence	Pence	2018	2017
	per share	per share	£ million	£ million
Dividends paid in year	33.0	32.0	51.0	49.4

The above amounts were paid as distributions to equity holders of the Company in the relevant year from accumulated capital profits.

On 26 February 2018 the Board declared a first interim dividend of 16.5 pence per share in respect of the year ended 31 December 2018 that was paid on 30 April 2018. A second interim dividend of 16.5 pence per share was declared by the Board on 6 August 2018 and paid on 31 October 2018.

The Board declares the payment of a first interim dividend of 17 pence per share in respect of the year ending 31 December 2019. This will be paid on 30 April 2019 to shareholders on the register on 5 April 2019, and funded from the accumulated capital profits.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Report and Accounts in accordance with applicable law and

regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs, and of the profit or loss of the Group and Parent Company for that period. In preparing these financial statements, the Directors are required to:

·     select suitable accounting policies and then apply them consistently;

·     state whether applicable IFRS as adopted by the European Union have been followed for both the Group and Company financial statements, subject to any material departures disclosed and explained in the financial statements;

·     make judgements and accounting estimates that are reasonable and prudent; and

·    prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of IAS Regulation.

The Directors are also responsible for safeguarding the assets of the Group and Parent Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Parent Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that, following advice from the Audit and Risk Committee, the Report and Accounts taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Parent Company's position, performance, business model and strategy. The Audit and Risk Committee had reviewed the draft Report and Accounts for the purpose of this assessment.

Each of the Directors, whose names and responsibilities are listed in the Corporate Governance Report confirm

that, to the best of their knowledge:

·     the Parent Company financial statements, which have been prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit for the Company;

·     the Group financial statements, which have been prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·   the Strategic Report contains a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

BASIS OF PRESENTATION

The financial information for the year ended 31 December 2018 has been extracted from the statutory accounts for that year. The auditors' report on these accounts is unqualified and does not contain a statement under either Section 498(2) or (3) of the Companies Act 2006. The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The financial information for the year ended 31 December 2017 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors' report on these accounts is unqualified and does not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.

REPORT AND ACCOUNTS

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

 

END

 

 

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