RIT Cap. Partners - Half-year Report
01/08/2024 07:00
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RNS Number : 6782Y RIT Capital Partners PLC 01 August 2024
Please click here to view the Company's Half-Yearly Financial
Report http://www.rns-pdf.londonstockexchange.com/rns/6782Y_1-2024-7-31.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6782Y_1-2024-7-31.pdf)
1 August 2024
RIT Capital Partners plc
(the "Company")
Results for the half year ended 30 June 2024
The Company today publishes its results for the half year ended 30 June 2024.
Summary:
· Net asset value (NAV) per share total return for the period was 4.2% with
positive contributions from all three investment pillars - Quoted Equities,
Private Investments and Uncorrelated Strategies.
· NAV total return of 112.4% over the last ten years, with less volatility than
global stock markets.
· The Company continued its active buyback programme during the period with
almost 7% of capital returned via shares repurchased since the beginning of
2023, one of the largest buyback programmes in the investment company sector.
· Significant investment in communications and investor relations was made
during the period with a number of initiatives including launching a new
Company website and the appointment of Cadarn Capital as an investor relations
advisor.
Performance Highlights:
· NAV per share of 2,508p as at 30 June 2024 (31 December 2023: 2,426p).
· Quoted Equities returned 8.5% during the period, contributing 3.8% to NAV. The
key drivers of performance were our small and mid-cap stocks and exposure both
directly and via managers to 'Quality' and Japanese equities.
· Private Investments returned 1.9%, contributing 0.7% to NAV with a number of
direct positions exited at or above carrying value during the period (and
subsequently in July) and healthy distributions from funds.
· Total undrawn private fund commitments reduced during the period by capital
calls and cancellations of older commitments.
· Uncorrelated Strategies returned 2.2%, contributing 0.7% to NAV with good
performance from our underlying liquid credit positions, as well as our
exposure to gold.
· Currency detracted -0.7% from the NAV performance during the period.
Dividends and buybacks:
· A dividend of 19.5p per share was paid to shareholders during the period with
a further interim dividend of 19.5p per share to be paid in October.
· The 2024 total dividend of 39p represent a 2.6% annual increase, the 10(th)
consecutive year of dividend increases.
· Since January 2023, the Company has returned approximately £280m to
shareholders through buybacks and dividends.
Asset Allocation as at 30 June 2024:
· Quoted Equities: 40.5%
· Private Investments: 35.8%
· Uncorrelated Strategies: 24.3%
· Liquidity, borrowings and other: -0.6%
Commenting, Sir James Leigh-Pemberton, Chairman of RIT Capital Partners plc,
said:
"The first half of 2024 saw solid investment performance, with the NAV per
share increasing by 4.2% (including dividends), ending the period at 2,508p.
Each of our three strategic investment pillars - Quoted Equities, Private
Investments and Uncorrelated Strategies - produced positive performance. The
largest contributor was our Quoted Equities, where our Manager, JRCM, made
timely changes. From an asset allocation perspective, total quoted equity
exposure was increased, and within the portfolio, capital was deployed more
towards direct stocks, where we continue to see an exciting opportunity set
…
The Board is delighted with the encouraging start that our new JRCM leadership
team of Maggie Fanari (CEO) and Nicholas Khuu (CIO) has made. It is early
days, but the improvements they are implementing to our portfolio strategy,
team and approach, are already starting to bear fruit and leave me with great
confidence for the future."
Commenting, Maggie Fanari, Chief Executive Officer of J. Rothschild Capital
Management Limited, said:
"I am delighted to have had the opportunity to meet with many of our
shareholders as well as colleagues and other stakeholders since assuming the
role of CEO of JRCM in March of this year. Over these last five months, I
have prioritised actively listening and learning, and I am grateful for the
valuable feedback I have received during these discussions …
Looking ahead, we can expect to see continued market volatility and complexity
for investors amidst a backdrop of uncertainty across the geopolitical,
economic, and investment environments … Our portfolio is built for times
like this - focused on capturing long-term growth opportunities while being
resilient through diversification. I am confident in our team's ability to
capture the new opportunities presented by the rapidly evolving market
landscape."
For more information
J. Rothschild Capital Management Limited (Manager):
T: 020 7647 8565
E: investorrelations@ritcap.co.uk (mailto:investorrelations@ritcap.co.uk)
Numis Securities Limited (Joint broker):
David Benda
T: 020 7260 1000
JP Morgan Cazenove (Joint broker):
William Simmonds
T: 020 3493 8000
Brunswick Group LLP (Media enquiries):
Nick Cosgrove, Tom Burns
T: 020 7404 5959
E: RIT@BrunswickGroup.com (mailto:RIT@BrunswickGroup.com)
www.ritcap.com (http://www.ritcap.com/)
A description of all terms used above, including further information on the
calculation of Alternative Performance Measures (APMs) is set out in the
Glossary and APMs section at the end of this RNS.
THE FOLLOWING IS EXTRACTED FROM THE COMPANY'S HALF-YEARLY FINANCIAL REPORT
Performance for the period 30 June 2024
RIT NAV per share total return(1) 4.2%
CPI plus 3.0% 2.5%
MSCI All Country World Index (ACWI) 12.9%
RIT share price total return(1) -2.2%
FTSE 250 Index(2) 4.8%
Key company data 30 June 2024 31 December 2023 Change
NAV per share 2,508p 2,426p 3.4%
Share price 1,820p 1,882p -3.3%
Premium/(discount) -27.4% -22.4% -5.0% pts
Total assets £4,030m £3,902m 3.3%
Net assets £3,641m £3,573m 1.9%
Gearing(1) 6.7% 3.5% 3.2% pts
Average net quoted equity exposure for the period 48% 39% 9% pts
Ongoing charges figure(1) n/a 0.77% n/a
First interim dividend (April) 19.5p 19.0p 2.6%
Second interim dividend (October) 19.5p 19.0p 2.6%
Total dividend in year 39.0p 38.0p 2.6%
Performance history 1 Year 3 Years 5 Years 10 Years Since
inception
RIT NAV per share total return(1) 7.7% -3.3% 38.5% 112.4% 3,487%
CPI plus 3.0% per annum 5.0% 30.9% 43.1% 78.3% 658%
MSCI All Country World Index (ACWI) 20.3% 24.3% 66.8% 168.4% 1,284%
RIT share price total return(1) -0.5% -20.9% -4.5% 65.5% 3,330%
FTSE 250 Index(2) 13.9% -0.9% 19.1% 69.0% 1,689%
1 The Group's designated APMs are the NAV per share total return, share price
total return, gearing and the ongoing charges figure.
2 RIT's shares are a constituent of the FTSE 250 Index, which is not considered
a Key Performance Indicator (KPI).
CHAIRMAN'S STATEMENT
The first half of 2024 saw solid investment performance, with the NAV per
share increasing by 4.2% (including dividends), ending the period at 2,508p.
Each of our three strategic investment pillars - Quoted Equities, Private
Investments and Uncorrelated Strategies - produced positive performance. The
largest contributor was our Quoted Equities, where our Manager, JRCM, made
timely changes. From an asset allocation perspective, total quoted equity
exposure was increased, and within the portfolio, capital was deployed more
towards direct stocks, where we continue to see an exciting opportunity set.
Private Investments were positive; we received distributions from a number of
funds following sales of unlisted holdings at a premium to the valuations
previously reported by the managers. In a similar vein, in our private direct
portfolio, we made realisations during the period and subsequent to the period
end, all at prices above our previous carrying values. Uncorrelated Strategies
produced a positive return, led by our credit investments and gold. Currency
translation was a modest offset, with further detail on performance and
attribution set out in the Manager's Report.
Our goal remains to grow your wealth meaningfully over time, through a
diversified and resilient global portfolio. Our approach to achieving this is
set out in the Manager's Report and has driven a meaningful NAV total return
of 112% over the last ten years. Since inception in 1988, our NAV has averaged
an increase of 10.5% per annum (including dividends), with lower volatility
than stock markets.
Our share price returns since inception have also averaged 10.3% per year, but
more recently we have seen a widening of the gap between our investment
performance and our share price. The latter has been significantly more
volatile than our underlying portfolio, and the discount remains wider than we
feel is warranted. We have maintained a focus on closing the discount and have
taken a number of steps to address it. Our shareholder engagement has been
enhanced; Philippe Costeletos, our Senior Independent Director, and I are very
grateful for the time and constructive feedback we have been given by
shareholders. We have also allocated additional resources to our
communications and investor relations efforts, including the appointment of a
specialist distribution and investor relations company to support our internal
team in this area.
Having undertaken one of the largest share buybacks in our industry in 2023,
we have continued to allocate capital to buybacks within the context of our
overall capital allocation framework. Buying a portfolio we believe in at a
sizeable discount delivers attractive accretion to our NAV per share. At the
same time, we are mindful of our core objective to deliver long-term capital
growth for shareholders. Our capital allocation strategy will therefore
continue to balance the one-time gains from buying our shares, with the need
to reinvest in the future growth of the portfolio. During the half year we
paid our first planned interim dividend of 19.5p per share, and have declared
a second interim dividend of the same amount to be paid on 25 October to
shareholders registered on 4 October. This will provide shareholders with a
total dividend in 2024 of 39p per share, an increase of 2.6% over last year
and representing the 10th consecutive year of dividend increases. Since
January 2023, we have returned approximately £280m to shareholders, with
buybacks representing almost 7% of share capital.
Outlook
After several years of negative shocks, global growth appears relatively
robust, in part supported by technical innovation (including, of course, AI).
There are signs of a moderate easing in global inflationary pressures, raising
the prospect of lower interest rates. However, with strong US demand and full
employment, and historically high levels of government borrowing, the pace at
which inflation may fall, and easier monetary policy can be introduced, is far
from clear. Wealth inequality has risen post-Covid, and political polarisation
is being tested in elections across many key parts of the globe. A complex set
of geopolitical tensions persist, showing few signs of easing, and in markets
the continuing dominance of a small number of stocks in the performance of
major indices presents further challenges.
However, this complex environment presents a rich set of opportunities for our
Manager's distinctive investment approach. The Board is delighted with the
encouraging start that our new JRCM leadership team of Maggie Fanari (CEO) and
Nicholas Khuu (CIO) has made. It is early days, but the improvements they are
implementing to our portfolio strategy, team and approach, are already
starting to bear fruit and leave me with great confidence for the future.
Sir James Leigh-Pemberton
Chairman
31 July 2024
MANAGER'S REPORT - EXTRACTS
Introductory comments from our CEO
I am delighted to have had the opportunity to meet with many of our
shareholders as well as colleagues and other stakeholders since assuming the
role of CEO of JRCM in March of this year. Over these last five months, I have
prioritised actively listening and learning, and I am grateful for the
valuable feedback received during these discussions.
The queries around our shares trading at a discount to net asset value are
justified. That said, we believe the level at which our shares are trading
relative to NAV is not representative of our business, which has a diversified
investment strategy built for long-term value creation, a performance-driven
team, and a solid balance sheet. In response, we continue to buy back our
shares in a programme which remains one of the largest seen in our industry to
date. We have also significantly advanced our efforts to improve our
communication and investor relations, appointing Cadarn Capital earlier this
year. Cadarn is a specialist firm focused on improving liquidity, diversifying
investor bases and supporting investment trust ratings. Additionally, we have
created a new website which more clearly presents our business and approach,
as well as providing shareholders with easy access to relevant materials.
With respect to performance, I am pleased to report positive momentum in the
first half of this year. While this is a short period to judge performance
given the long-term nature of our investment strategy, the drivers of our
returns are a direct result of both top-down and bottom-up portfolio decisions
we highlighted in our 2023 Annual Report, which are already delivering
results. This activity has included increasing our Quoted Equities portfolio
allocation and selecting new investment opportunities in areas of the market
offering superior risk-adjusted returns. Further detail on our performance,
investment activity and portfolio are provided later in this report.
I am also happy to highlight progress made in completing a number of
realisations in our Private Investments during the first half of the year - a
trend that has continued in July with additional realisations at a premium to
NAV. These exits have happened in the absence of a strong IPO market, through
secondary and M&A transactions, and we anticipate that once the IPO market
re-opens the pace of realisations will increase, given the maturity and
diversified nature of the Privates portfolio across vintages, sectors and
geographies.
Looking ahead, we can expect to see continued market volatility and complexity
for investors amidst a backdrop of uncertainty across the geopolitical,
economic, and investment environments. At the same time, while the impact of
generative AI remains to be seen, we can be sure that it will be disruptive,
creating both challenges and opportunities for investors. Our portfolio is
built for times like this - focused on capturing long-term growth
opportunities while being resilient through diversification. I am confident in
our team's ability to capture the new opportunities presented by the rapidly
evolving market landscape.
With this in mind, we have a number of priorities in the second half of this
year: finding attractive investment opportunities with the best partners;
investing in our people and culture; and continuing to listen to shareholders
and engage with stakeholders. We look forward to providing a further update at
the end of the year.
Our approach
Our goal is to grow your wealth meaningfully over time, through a diversified
and resilient global portfolio. To achieve this takes a very distinctive
approach. We leverage our unrivalled network and internal expertise to source
often hard-to-access investments.
By design, our investment mandate is flexible, allowing us to invest in a
capital efficient way across different structures, asset classes and
geographies. Our permanent capital base provides us the advantage of time,
where our investment decisions are dictated by our assessment of value and not
by liquidity pressures. We invest in a diversified portfolio of
high-conviction opportunities of differing profiles and varying underlying
return drivers.
Our decision-making starts with a considered, macro-economic appraisal and our
investments capitalise on structural themes and market dislocations, often
leveraging our extensive network of partners and managers to find compelling
opportunities unavailable to most. We may choose to invest directly or
alongside a manager, depending on how best to access the opportunity.
The portfolio comprises three primary pillars: Quoted Equities, Private
Investments and Uncorrelated Strategies. Each pillar is designed to serve a
distinct purpose within the portfolio, with investments of complementary
profiles and return drivers, allowing us to benefit from this broad
diversification over time.
The portfolio is overlaid with disciplined risk management, incorporating
quantitative and qualitative measures as well as the considered use of hedging
strategies (including in relation to currencies). We size investments based on
their individual risk, their expected returns, and how these impact the
overall portfolio. We do not target an absolute return; ensuring we have
sufficient capital deployed to generate long-term growth results in us being
exposed to market risk. However, through the cycles, we believe this approach
will produce superior long-term performance, with less risk than equity
markets.
Performance highlights
Our NAV per share total return for the first half of the year was 4.2%.
Against our two reference indices, the MSCI ACWI (50% £) and CPI plus 3%, our
performance lagged the former, which was up 12.9%, and exceeded the latter
which was up 2.5%. Our positive portfolio return for the period saw all three
pillars contributing, with key drivers including:
· Shares of small to medium-sized companies (SMID-cap) provided significant
returns. This is an area of the market we have discussed in the past,
believing it to be mispriced given the market's focus on larger companies.
With the valuation discount between smaller and larger companies hitting the
highest level in two decades, this was a clear opportunity for us.
· Our investments focusing on technology, such as fintech, software innovation
and AI, generated value in both our Quoted Equities and Private Investments
pillars.
· Having seen European credit spread dispersion hit near decade highs, our focus
on liquid credit also performed well, with our managers active in identifying
and capitalising on mispriced opportunities.
· This positive performance across our investment pillars was partially offset
by the impact of currency translation on our global portfolio.
Asset allocation, returns and contribution
Asset category % NAV(1) Return(2) % Contribution
Quoted Equities 40.5% 8.5% 3.8%
Private Investments 35.8% 1.9% 0.7%
Uncorrelated Strategies 24.3% 2.2% 0.7%
Currency 0.0% n/a -0.7%
Total Investments 100.6% n/a 4.5%
Liquidity, borrowings and other -0.6% n/a -0.3%(3)
NAV 100.0% n/a 4.2%
1 The % NAV reflects the market value of the positions (excluding notional
exposures from derivatives).
2 Returns are estimated, local currency returns, taking into account
derivatives.
3 Including interest, expenses, and accretion benefit of 0.3% from share
buybacks.
Balance Sheet
With total assets of over £4.0bn and around £280m of borrowings, our balance
sheet has modest gearing. The combination of our liquidity of £125m (which
can be further enhanced by £109m of UK gilts), committed and undrawn
borrowings of £40m, as well as a sizeable portfolio of liquid investments,
provides us with ample resources to meet our liquidity needs.
Outlook
We face a mixed economic backdrop ahead and although we see inflation
continuing to taper, the risk of an economic slowdown remains. Many
consumer-facing companies in the US have highlighted weakening consumer
demand, the lack of discretionary spending and a general malaise. Amidst this
mixed macroeconomic backdrop, we continue to focus on specific top-down themes
and bottom-up individual investments, seeing opportunities across our pillars.
Within Quoted Equities, we are finding compelling opportunities in SMID-cap
companies, especially in Europe and the US. Among larger companies, we remain
very selective in those that we believe are misunderstood by the market, and
our bias remains towards quality, given slowing economic data and uncertainty
driven by elections. Regionally, we continue to favour Japan which offers
attractive valuations, resilient earnings revisions as well as a fertile stock
picking ground.
Across Uncorrelated Strategies, we believe returns on our credit portfolio
should remain healthy, as the historically high yields on offer in specific
individual companies are compelling. As part of ensuring we have a resilient
portfolio, we will continue to use our gold exposure as a helpful diversifier
in times of heightened geopolitical tensions, or should rates fall more
sharply than expectations on the back of a rapid downturn in growth.
On our Private Investments, we are optimistic that the recent uptick in
transactions will build momentum in the second half of the year. M&A
volumes on the public side have increased so far in 2024, normally a good lead
indicator for IPOs. We believe we may well see increasing signs of recovery as
the year progresses and into 2025 which should offer encouraging signs for the
monetisation of parts of the portfolio.
In conclusion, we are confident in the portfolio's core investments and its
underlying structural themes. We believe that our disciplined approach,
considered portfolio construction and our specialist network of partners will
go on benefitting RIT shareholders in the long term, as we continue to
identify opportunities across asset classes and capital structures in the
second half of the year and into 2025.
Maggie Fanari
Chief Executive Officer
J. Rothschild Capital Management Limited
Nicholas Khuu
Chief Investment Officer
J. Rothschild Capital Management Limited
REGULATORY DISCLOSURES
Statement of Directors' responsibilities
In accordance with the Disclosure and Transparency Rules 4.2.4R, 4.2.7R and
4.2.8R, we confirm that to the best of our knowledge:
(a) The condensed set of financial statements has been prepared in accordance with
IAS 34, Interim Financial Reporting, as contained in UK adopted international
accounting standards (UK adopted IAS), as required by the Disclosure and
Transparency Rule 4.2.4R;
(b) The Interim Review includes a fair review of the information required to be
disclosed under the Disclosure and Transparency Rule 4.2.7R in an interim
management report. This includes an indication of important events that have
occurred during the first six months of the financial year, and their impact
on the condensed set of financial statements presented in the Half-Yearly
Financial Report. A further description of the principal risks and
uncertainties for the remaining six months of the financial year is set out
below; and
(c) In addition, in accordance with the disclosures required under the Disclosure
and Transparency Rule 4.2.8R, there were no transactions with related parties
in the first six months of the current financial year that have had a material
effect on the financial position or performance of the Group, or any changes
to related party transactions described in the Group's Report and Accounts for
the year ended 31 December 2023 that could do so.
Principal risks and uncertainties
The principal risk categories facing the Group for the second half of the
financial year are unchanged from those described in the Report and Accounts
for the year ended 31 December 2023. These principal risks are kept under
continual review. No material emerging risks have been identified in the first
half of the year, and following the reclassification of two separate principal
risks in the 2023 ARA, the principal risks we identify comprise:
● Investment strategy risk
● Discount risk;
● Market risk;
● Liquidity risk;
● Credit risk;
● Key person dependency;
● Climate-related risks;
● Legal and regulatory risk;
● Operational risk; and
● Cyber security risk.
As an investment company, the most significant risk is market risk. As
described in the Chairman's Statement and Manager's Report, geopolitical
tensions, the uncertainty surrounding the pace at which inflation will fall
and the dominance of a small number of technology stocks in driving the
performance of global indices, are some of the challenges we face in 2024.
From an operational risk perspective, we continue to keep our internal
controls under close scrutiny and remain satisfied that the control
environment is effective.
Going concern
The key factors likely to affect the Group's ability to continue as a going
concern were set out in the Report and Accounts for the year ended 31 December
2023. As at 30 June 2024 there have been no significant changes to these
factors. Having reviewed the Company's forecasts and other relevant evidence,
the Directors have a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the condensed interim financial statements.
Sir James Leigh-Pemberton
Chairman
31 July 2024
For and on behalf of the Board.
CONDENSED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Six months ended 30 June
2024 2023
£m Notes Revenue Capital Total Revenue Capital Total
Income and gains
Investment income 15.2 - 15.2 14.4 - 14.4
Other income 0.1 - 0.1 0.1 - 0.1
Gains/(losses) on fair value investments - 157.7 157.7 - (14.0) (14.0)
Gains/(losses) on monetary items and borrowings - 3.0 3.0 - 3.4 3.4
15.3 160.7 176.0 14.5 (10.6) 3.9
Expenses
Operating expenses (18.2) (1.8) (20.0) (17.8) (1.8) (19.6)
Profit/(loss) before finance costs and tax 2 (2.9) 158.9 156.0 (3.3) (12.4) (15.7)
Finance costs (2.9) (11.7) (14.6) (3.4) (13.6) (17.0)
Profit/(loss) before tax (5.8) 147.2 141.4 (6.7) (26.0) (32.7)
Taxation - - - - - -
Profit/(loss) for the period (5.8) 147.2 141.4 (6.7) (26.0) (32.7)
Earnings per ordinary share - basic 3 (4.0)p 101.4p 97.4p (4.4)p (17.1)p (21.5)p
Earnings per ordinary share - diluted 3 (4.0)p 101.1p 97.1p (4.4)p (17.1)p (21.5)p
Note: The total column of this statement represents the Group's consolidated
income statement, prepared in accordance with UK adopted international
accounting standards (UK adopted IAS). The supplementary revenue and capital
columns are both prepared under guidance published by the Association of
Investment Companies (AIC). All items in the above statement derive from
continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 June
2024 2023
£m Revenue Capital Total Revenue Capital Total
Profit/(loss) for the period (5.8) 147.2 141.4 (6.7) (26.0) (32.7)
Revaluation gain/(loss) on property, plant and equipment - (0.6) (0.6) - (0.6) (0.6)
Actuarial gain/(loss) in defined benefit pension plan (0.0) - (0.0) - - -
Deferred tax (charge)/credit allocated to actuarial gain/(loss) 0.0 - 0.0 - - -
Total comprehensive income/(expense) for the period (5.8) 146.6 140.8 (6.7) (26.6) (33.3)
The notes are an integral part of these condensed interim financial
statements.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
£m Notes 30 June 31 December
2024
2023
Non-current assets
Investments held at fair value 3,626.5 3,499.4
Investment property 33.7 34.1
Property, plant and equipment 21.0 21.6
Retirement benefit asset - 0.1
Derivative financial instruments 10.4 5.9
3,691.6 3,561.1
Current assets
Derivative financial instruments 53.7 65.4
Other receivables 140.5 71.2
Amounts owed by group undertakings 0.2 0.1
Cash at bank 144.3 204.3
338.7 341.0
Total assets 4,030.3 3,902.1
Current liabilities
Borrowings (146.7) (142.9)
Derivative financial instruments (29.0) (2.8)
Other payables (63.7) (39.2)
Amounts owed to group undertakings (1.2) (0.1)
(240.6) (185.0)
Net current assets/(liabilities) 98.1 156.0
Total assets less current liabilities 3,789.7 3,717.1
Non-current liabilities
Borrowings (134.8) (137.9)
Derivative financial instruments (8.2) (0.0)
Deferred tax liability - (0.0)
Retirement benefit liability (0.0) -
Provisions (3.1) (3.0)
Lease liability (2.7) (2.9)
(148.8) (143.8)
Net assets 3,640.9 3,573.3
Equity attributable to owners of the Company
Share capital 156.8 156.8
Share premium 45.7 45.7
Capital redemption reserve 36.3 36.3
Own shares reserve (23.4) (36.7)
Capital reserve 3,453.8 3,393.1
Revenue reserve (38.0) (32.2)
Revaluation reserve 9.7 10.3
Total equity 3,640.9 3,573.3
Net asset value per ordinary share - basic 4 2,517p 2,449p
Net asset value per ordinary share - diluted 4 2,508p 2,426p
The notes are an integral part of these condensed interim financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Share Share Capital redemption Own shares Capital Revenue Revaluation Total
£m capital premium reserve reserve reserve reserve reserve equity
Balance at 1 January 2024 156.8 45.7 36.3 (36.7) 3,393.1 (32.2) 10.3 3,573.3
Profit/(loss) for the period - - - - 147.2 (5.8) - 141.4
Revaluation gain/(loss) on property, plant and equipment - - - - - - (0.6) (0.6)
Actuarial gain/(loss) in defined benefit pension plan - - - - - (0.0) - (0.0)
Deferred tax (charge)/credit allocated to actuarial gain/(loss) - - - - - 0.0 - 0.0
Total comprehensive income/(expense) for the period - - - - 147.2 (5.8) (0.6) 140.8
Dividends paid (note 5) - - - - (28.4) - - (28.4)
Purchase of treasury shares - - - - (33.1) - - (33.1)
Movement in own shares reserve - - - 13.3 - - - 13.3
Movement in share-based payments - - - - (25.0) - - (25.0)
Balance at 30 June 2024 156.8 45.7 36.3 (23.4) 3,453.8 (38.0) 9.7 3,640.9
Share Share Capital redemption Own shares Capital Revenue Revaluation Total
£m capital premium reserve reserve reserve reserve reserve equity
Balance at 1 January 2023 156.8 45.7 36.3 (46.3) 3,548.9 (29.1) 9.4 3,721.7
Profit/(loss) for the period - - - - (26.0) (6.7) - (32.7)
Revaluation gain/(loss) on property, plant and equipment - - - - - - (0.6) (0.6)
Actuarial gain/(loss) in defined benefit pension plan - - - - - - - -
Deferred tax (charge)/credit allocated to
actuarial gain/(loss) - - - - - - - -
Total comprehensive income/(expense) for the period - - - - (26.0) (6.7) (0.6) (33.3)
Dividends paid (note 5) - - - - (28.8) - - (28.8)
Purchase of treasury shares - - - - (104.9) - - (104.9)
Movement in own shares reserve - - - 9.7 - - - 9.7
Movement in share-based payments - - - - (13.5) - - (13.5)
Balance at 30 June 2023 156.8 45.7 36.3 (36.6) 3,375.7 (35.8) 8.8 3,550.9
The notes are an integral part of these condensed interim financial
statements.
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Six months ended 30 June 30 June
£m 2024 2023
Cash flows from operating activities:
Cash inflow/(outflow) before taxation and interest 25.8 174.1
Interest paid (14.6) (17.0)
Net cash inflow/(outflow) from operating activities 11.2 157.1
Cash flows from investing activities:
Purchase of property, plant and equipment (0.0) (0.1)
Net cash inflow/(outflow) from investing activities (0.0) (0.1)
Cash flows from financing activities:
Repayment of borrowings (143.4) (311.5)
Proceeds of borrowings 145.8 324.4
Purchase of ordinary shares by employee benefit trust(1) (12.0) (9.5)
Purchase of ordinary shares into treasury (33.1) (104.9)
Dividends paid (28.4) (28.8)
Net cash inflow/(outflow) from financing activities (71.1) (130.3)
Increase/(decrease) in cash in the period (59.9) 26.7
Cash at the start of the period 204.3 218.0
Effect of foreign exchange rate changes on cash (0.1) (2.6)
Cash at the period end 144.3 242.1
1 Shares are disclosed in the own shares reserve on the consolidated balance
sheet (unaudited).
The notes are an integral part of these condensed interim financial
statements.
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of accounting
These condensed financial statements are the half-yearly consolidated
financial statements of RIT Capital Partners plc (RIT or the Company) and its
subsidiaries (together, the Group) for the six months ended 30 June 2024. They
are prepared in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority, and with International Accounting Standard (IAS)
34, Interim Financial Reporting, as adopted by the United Kingdom, and were
approved on 31 July 2024. These half-yearly consolidated financial statements
should be read in conjunction with the Report and Accounts for the year ended
31 December 2023, which were prepared in accordance with UK adopted IAS. There
have been no changes to the IAS since December 2023 that impact our reporting
requirements.
The half-yearly consolidated financial statements have been prepared in
accordance with the accounting policies set out in the notes to the
consolidated financial statements for the year ended 31 December 2023.
Critical accounting assumptions and judgements
As further described in the Report and Accounts for the year ended 31 December
2023, areas requiring a higher degree of judgement or complexity and areas
where assumptions and estimates are significant to the consolidated financial
statements, are in relation to the valuation of private investments and
property.
2. Business and geographical segments
For both the six months ended 30 June 2024 and the six months ended 30 June
2023, the Group is considered to have three principal operating segments, all
based in the UK, as follows:
AUM(1, 2)
Segment Business £m Employees(2)
RIT Investment trust - -
JRCM(3) Investment manager/administration 4,030.3 49
SHL(4) Events/premises management - 13
1 Total assets.
2 As at 30 June 2024.
3 J. Rothschild Capital Management Limited.
4
Spencer House Limited.
Key financial information for the six months ending 30 June 2024 is as
follows:
Net Income/ Operating Profit/
£m assets gains(1) expenses(1) (loss)(2)
RIT 3,531.3 174.4 (25.4) 149.0
JRCM 115.9 23.5 (16.6) 6.9
SHL 1.4 1.9 (1.8) 0.1
Adjustments(3) (7.7) (23.8) 23.8 -
Total 3,640.9 176.0 (20.0) 156.0
Key financial information for the six months ending 30 June 2023 is as
follows:
Net Income/ Operating Profit/
£m assets gains(1) expenses(1) (loss)(2)
RIT 3,446.6 2.1 (21.7) (19.6)
JRCM 110.5 20.4 (16.6) 3.8
SHL 0.9 1.8 (1.7) 0.1
Adjustments(3) (7.1) (20.4) 20.4 -
Total 3,550.9 3.9 (19.6) (15.7)
1 Includes intra-group income and expenses.
2 Profit/(loss) before finance costs and tax.
3 Consolidation adjustments in accordance with IFRS 10 Consolidated Financial
Statements.
3. Earnings per ordinary share - basic and diluted
The basic earnings per ordinary share for the six months ended 30 June 2024 is
based on the profit of £141.4m (six months ended 30 June 2023: loss of
£32.7m) and the weighted average number of ordinary shares in issue during
the period of 156.8m (six months ended 30 June 2023: 156.8m). The weighted
average number of shares is adjusted for shares held in the employee benefit
trust (EBT) and in treasury in accordance with IAS 33.
Six months Six months
ended ended
£m 30 June 2024 30 June 2023
Net revenue profit/(loss) (5.8) (6.7)
Net capital profit/(loss) 147.2 (26.0)
Total profit/(loss) for the period 141.4 (32.7)
Six months Six months
ended ended
Weighted average (m) 30 June 2024 30 June 2023
Number of shares in issue 156.8 156.8
Shares held in EBT (1.4) (2.0)
Shares held in treasury (10.3) (2.8)
Basic shares 145.1 152.0
Six months Six months
ended ended
pence 30 June 2024 30 June 2023
Revenue earnings/(loss) per ordinary share - basic (4.0) (4.4)
Capital earnings/(loss) per ordinary share - basic 101.4 (17.1)
Total earnings per share - basic 97.4 (21.5)
The diluted earnings per ordinary share for the period is based on basic
shares (above) adjusted for the effect of dilutive share-based payment awards
for the period.
The latter adjustment was not required for the period ended 30 June 2023 as an
increase in the shares in issue would have reduced the basic loss per ordinary
share. As a result, there was no difference between the basic and diluted
earnings per ordinary share for that period.
Six months Six months
ended ended
Weighted average (m) 30 June 2024 30 June 2023
Basic shares 145.1 152.0
Effect of share-based payment awards 0.5 -
Diluted shares 145.6 152.0
Six months Six months
ended ended
pence 30 June 2024 30 June 2023
Revenue earnings/(loss) per ordinary share - diluted (4.0) (4.4)
Capital earnings/(loss) per ordinary share - diluted 101.1 (17.1)
Total earnings/(loss) per ordinary share - diluted 97.1 (21.5)
4. Net asset value per ordinary share - basic and diluted
Net asset value per ordinary share is based on the following data:
30 June 31 December
2024 2023
Net assets (£m) 3,640.9 3,573.3
Number of shares in issue (m) 156.8 156.8
Shares held in EBT (m) (1.1) (1.6)
Shares held in treasury (m) (11.0) (9.3)
Basic shares (m) 144.7 145.9
Effect of share-based payment awards (m) 0.5 1.4
Diluted shares (m) 145.2 147.3
30 June 31 December
pence 2024 2023
Net asset value per ordinary share - basic 2,517 2,449
Net asset value per ordinary share - diluted 2,508 2,426
5. Dividends
Six months Six months Six months Six months
ended ended ended ended
June 2024 June 2023 June 2024 June 2023
p per share p per share £m £m
Dividends paid in period 19.5 19.0 28.4 28.8
The Board of Directors declared an interim dividend of 19.5p per ordinary
share (£28.4m) on 4 March 2024, which was paid on 28 April 2024. The Board
has declared the payment of a second interim dividend of 19.5p per ordinary
share in respect of the year ending 31 December 2024. This will be paid on 25
October 2024 to shareholders on the register on 4 October 2024. Both payments
are funded from accumulated capital profits.
Dividends are not paid on shares held in treasury and the EBT waives its
rights to all dividends.
Additional commentary may be found in the Report and Accounts for the year
ended 31 December 2023.
6. Financial instruments
IFRS 13 requires the Group to classify its financial instruments held at fair
value using a hierarchy that reflects the significance of the inputs used in
the valuation methodologies. These are as follows:
· Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities;
· Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
· Level 3: Inputs for the asset or liability that are not based on observable
market data (i.e. unobservable inputs).
The vast majority of the Group's financial assets and liabilities, investment
properties and property, plant and equipment are measured at fair value on a
recurring basis.
The Group's policy is to recognise transfers into and transfers out of fair
value hierarchy levels at the end of the reporting period when they are deemed
to occur.
A description of the valuation techniques used by the Group with regards to
investments categorised in each level of the fair value hierarchy is detailed
below. Where the Group invests in a fund or a partnership, which is not itself
listed on an active market, the categorisation of such investment between
levels 2 and 3 is determined by reference to the nature of the fund or
partnership's underlying investments. If such investments are categorised
across different levels, the lowest level of the hierarchy that forms a
significant proportion of the fund or partnership exposure is used to
determine the reporting disclosure.
If the proportion of the underlying investments categorised between levels
changes during the period, these will be reclassified to the most appropriate
level.
Level 1
The fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date. A market is regarded as active
if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions on an
arm's length basis. The quoted market price used for financial assets held by
the Group is the current bid price or the last traded price, depending on the
convention of the exchange on which the investment is quoted. Where a market
price is available but the market is not considered active, the Group has
classified these investments as level 2.
Level 2
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques which maximise the use of
observable market data where it is available. Specific valuation techniques
used to value OTC derivatives include quoted market prices for similar
instruments, counterparty quotes and the use of forward exchange rates to
estimate the fair value of forward foreign exchange contracts at the balance
sheet date. Investments in externally‑managed funds which themselves invest
primarily in listed securities are valued at the price or net asset value
released by the investment manager or fund administrator as at the balance
sheet date.
Level 3
The Group considers all private investments, whether direct or funds, as level
3 assets, as the valuations of these assets are not typically based on
observable market data. Where other funds invest into illiquid stocks, these
are also considered by the Group to be level 3 assets.
Private fund investments are held at the most recent fair values provided by
the GPs managing those funds, adjusted for subsequent investments,
distributions, and currency movements up to the period end, and are subject to
periodic review by the Manager.
Direct co-investments are also held at the most recent fair values provided by
the GPs managing those co-investments, adjusted for subsequent investments,
distributions, currency moves, as well as pricing events where the Manager has
sufficient information to suggest the period-end valuation should be adjusted.
The remaining directly-held private investments are valued on a semi-annual
basis using techniques including a market approach, income approach and/or
cost approach. The valuation process involves the investment functions of the
Manager who prepare the initial valuations, which are then subject to review
by the finance function, with the final valuations being determined by the
Valuation Committee, comprised of independent non-executive Directors, of
which the Audit and Risk Committee Chair is also a member.
Specific valuation techniques used will typically include the value of recent
transactions, earnings multiples, discounted cash flow analysis, and, where
appropriate, industry specific methodologies. The acquisition cost, if
determined to be fair value, may be used to calibrate inputs to the valuation.
The valuations will often reflect a synthesis of a number of distinct
approaches in determining the final fair value estimate. The individual
approach for each investment will vary depending on relevant factors that a
market participant would take into account in pricing the asset. These might
include the specific industry dynamics, the company's stage of development,
profitability, growth prospects or risk as well as the rights associated with
the particular security.
Borrowings as at 30 June 2024 comprise bank loans and senior loan notes. The
bank loans are revolving credit facilities paying floating interest, and are
typically drawn in tranches with a duration of three or six months. The loans
are therefore short-term in nature, and their fair value approximates their
nominal value. The loan notes were issued in 2015 with tenors of between 10
and 20 years with a weighted average of 16 years. They are valued on a monthly
basis using a discounted cash flow model where the discount rate is derived
from the yield of similar tenor UK Government bonds, adjusted for any
significant changes in either credit spreads or the perceived credit risk of
the Company.
The fair value of investments in non-consolidated subsidiaries is considered
to be the net asset value of the individual subsidiary as at the balance sheet
date. The net asset value comprises various assets and liabilities which are
fair valued on a recurring basis and is considered to be level 3.
On a semi-annual basis, the Group engages external, independent and qualified
valuers to determine the fair value of the Group's investment properties and
property, plant and equipment held at fair value.
The following table analyses the Group's assets and liabilities within the
fair value hierarchy, as at 30 June 2024:
As at 30 June 2024
£m Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss (FVPL):
Portfolio investments 925.9 887.8 1,664.8 3,478.5
Non-consolidated subsidiaries - - 148.0 148.0
Investments held at fair value 925.9 887.8 1,812.8 3,626.5
Derivative financial instruments 7.4 56.7 - 64.1
Total financial assets at FVPL 933.3 944.5 1,812.8 3,690.6
Non-financial assets measured at fair value:
Investment property - - 33.7 33.7
Property, plant and equipment - - 21.0 21.0
Total non-financial assets measured at fair value - - 54.7 54.7
Financial liabilities at FVPL:
Borrowings - - (281.5) (281.5)
Derivative financial instruments (9.4) (27.8) - (37.2)
Total financial liabilities at FVPL (9.4) (27.8) (281.5) (318.7)
Total net assets measured at fair value 923.9 916.7 1,586.0 3,426.6
Other non-current assets -
Cash at bank 144.3
Other current assets 140.7
Other current liabilities (64.9)
Other non-current liabilities (5.8)
Net assets 3,640.9
Movement in level 3 assets
Six months ended 30 June 2024 Investments held at fair value Properties Total
£m
Opening balance 1,765.2 55.7 1,820.9
Purchases 95.3 - 95.3
Sales (102.4) - (102.4)
Gains/(losses) through profit or loss(1) 54.7 (0.4) 54.3
Unrealised gains/(losses) through other comprehensive income - (0.6) (0.6)
Other - - -
Closing balance 1,812.8 54.7 1,867.5
1 Included within gains/(losses) through profit or loss is £21.4m (December
2023: £23.3m gain) of unrealised gains, including currency translation,
relating to those level 3 assets held at the end of the reporting period.
Further information in relation to the directly-held private investments is
set out in the following table. This summarises the portfolio by the primary
method used in estimating the fair value of the investments. As we seek to
employ a range of valuation methods and inputs in the valuation process,
selection of a primary method is subjective, and designed primarily to assist
the subsequent sensitivity analysis.
Primary valuation method/approach 30 June 31 December 2023
£m
2024
Third-party valuations(1) 197.9 259.7
Recent transaction 80.1 60.0
Other industry metrics 16.8 23.1
Liquidation value(2) 16.8 5.8
Discount to sale proceeds(1) 15.9 13.3
Earnings multiple 12.3 7.5
Discount to recent transaction 9.8 22.3
Total 349.6 391.7
1 Included in these methods are direct private investments held within the
non-consolidated subsidiaries with a total of £23.5m (December
2023: £25.1m).
2 Liquidation value was previously included within Other industry metrics.
The majority of the direct private investments are structured as
co-investments, managed by a GP. For these investments, the valuation approach
is to typically use the latest quarterly fair valuations provided by the GP,
adjusted for any subsequent investments/distributions and currency moves as
well as pricing events, where there is sufficient information to suggest the
period end valuation should be adjusted.
Where the Manager has sufficient information to undertake its own valuation, a
range of methods will typically be used. For companies with positive earnings,
this will usually involve an earnings multiple approach, typically using
EBITDA or similar. The earnings multiple is assessed by reference to similar
listed companies or transactions involving similar companies. When an asset is
undergoing a sale and the price has been agreed but not yet completed or an
offer has been submitted, the agreed or offered price will be used, often with
a discount as appropriate to reflect the risks associated with the transaction
completing or any price adjustments. Where a company has been the subject of a
recent financing round which is viewed as representative of fair value, this
transaction price will be used. Other methods employed include discounted cash
flow analysis and industry metrics such as multiples of assets under
management or revenue, where market participants use these approaches in
pricing assets.
The following table provides a sensitivity analysis of the valuation of
directly-held private investments and the impact on net assets:
Valuation method/approach Sensitivity analysis
Third-party valuations A 5% change in the value of these assets would result in a £9.9m or 0.3%
(2023: £13.0m, 0.4%) change in net assets.
Recent transaction A 5% change in the value of these assets would result in a £4.0m or 0.1%
(2023: £3.0m, 0.08%) change in net assets.
Other industry metrics A 5% change in the value of these assets would result in a £0.8m or
0.02% (2023: £1.2m, 0.03%) change in net assets.
Liquidation value A 5% change in the value of these assets would result in a £0.8m or 0.02%
(2023: £0.3m, <0.01%) change in net assets.
Discount to sale proceeds The asset in this category is valued at a 20% discount to an agreed offer.
A 5% change in discount would result in a £0.2m or <0.01% (2023: £0.03m,
<0.001%) change in net assets.
Earnings multiple Assets in this category are valued using EV/sales multiples in the range of
2.3x - 14.0x. If the multiple used for valuation purposes is increased or
decreased by 5% then the net assets would increase/decrease by £0.6m or 0.02%
(2023: £0.5m, 0.02%).
Discount to recent transaction Assets in this category are valued using a discount applied to a recent
financing round or secondary transaction. Discounts range between 10% and 85%,
reflecting factors such as the elapsed time since the transaction and the
movement in market prices of broadly similar listed companies. A 5% change to
the discounts applied would result in a £0.5m or 0.01% (2023: £1.1m, 0.03%)
change in net assets.
The investment property and property, plant and equipment with an aggregate
fair value of £54.7m (2023: £55.7m) were valued using a third-party
valuation provided by Jones Lang LaSalle. The properties were valued using
weighted average capital values of £1,476 per square foot (2023: £1,499)
developed from rental yields and supported by recent market transactions. A
£25 per square foot increase/decrease in capital values would result in a
£0.8m increase/decrease in fair value (2023: £0.8m increase/decrease).
The non-consolidated subsidiaries are held at their fair value of £148.0m
(2023: £137.1m) representing £129.2m of portfolio investments (2023:
£138.1m) and £18.8m of remaining assets (2023: £1.0m of remaining
liabilities). A 5% change in the value of these assets would result in £7.4m
or 0.2% (2023: £6.9m, 0.2%) change in total net assets.
The remaining investments held at fair value and classified as level 3 of
£1,338.7m (2023: £1,261.5m) were valued using third-party valuations from a
GP, administrator or fund manager, or in-house valuation models. A 5% change
in the value of these assets would result in a £66.9m or 1.84% (2023:
£63.1m, 1.77%) change in net assets.
In aggregate, the sum of the direct private investments, investment property,
property, plant and equipment, non-consolidated subsidiaries and the remaining
fund investments represents the total level 3 assets of £1,867.5m (2023:
£1,820.9m).
The following table analyses the Group's assets and liabilities within the
fair value hierarchy, at 31 December 2023:
As at 31 December 2023
£m Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss (FVPL):
Portfolio investments 668.4 1,065.8 1,628.1 3,362.3
Non-consolidated subsidiaries - - 137.1 137.1
Investments held at fair value 668.4 1,065.8 1,765.2 3,499.4
Derivative financial instruments 8.7 62.6 - 71.3
Total financial assets at FVPL 677.1 1,128.4 1,765.2 3,570.7
Non-financial assets measured at fair value:
Investment property - - 34.1 34.1
Property, plant and equipment - - 21.6 21.6
Total non-financial assets measured at fair value - - 55.7 55.7
Financial liabilities at FVPL:
Borrowings - - (280.8) (280.8)
Derivative financial instruments (1.8) (1.0) - (2.8)
Total financial liabilities at FVPL (1.8) (1.0) (280.8) (283.6)
Total net assets measured at fair value 675.3 1,127.4 1,540.1 3,342.8
Other non-current assets 0.1
Cash at bank 204.3
Other current assets 71.3
Other current liabilities (39.3)
Other non-current liabilities (5.9)
Net assets 3,573.3
Movements in level 3 assets
Investments
Year ended 31 December 2023 held at fair
£m value Properties Total
Opening balance 1,875.3 58.6 1,933.9
Purchases 187.2 - 187.2
Sales (159.0) - (159.0)
Gains/(losses) through profit or loss (143.2) (2.9) (146.1)
Unrealised gains/(losses) through other comprehensive income - 0.3 0.3
Other 4.9 (0.3) 4.6
Closing balance 1,765.2 55.7 1,820.9
During the period no investments were reclassified between level 2 and level
3.
7. Comparative information
The financial information contained in this Half-Yearly Financial Report does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. The financial information for the half years ended 30 June 2024 and
30 June 2023 has been neither reviewed nor audited.
The information for the year ended 31 December 2023 has been extracted from
the latest published audited financial statements.
The audited financial statements for the year ended 31 December 2023 have been
filed with the Registrar of Companies and the report of the auditors on those
accounts contained no qualification or statement under section 498(2) or (3)
of the Companies Act 2006.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
Glossary
Within this Half-Yearly Financial Report, we publish certain financial
measures common to investment trusts. Where relevant, these are prepared in
accordance with guidance from the AIC, and this glossary provides additional
information in relation to them.
Alternative performance measures (APMs): APMs are numerical measures of the
Company's current, historical or future financial performance, financial
position or cash flows, other than financial measures defined or specified in
the Company's applicable financial framework - namely UK adopted IAS and the
AIC SORP. They are denoted with an * in this section.
CPI: The CPI refers to the United Kingdom Consumer Price Index as calculated
by the Office for National Statistics and published monthly. It is the UK
Government's target measure of inflation and is used as a measure of inflation
in one of the Company's key performance indicators (KPIs), CPI plus 3.0% per
annum.
Gearing*: Gearing is a measure of the level of debt deployed within the
portfolio. The ratio is calculated in accordance with AIC guidance as total
assets, excluding cash, divided by net assets and expressed as a 'net'
percentage, e.g. 110% would be shown as 10%.
30 June 31 December
£m 2024 2023
Total assets 4,030.3 3,902.1
Less: cash (144.3) (204.3)
Sub total 3,886.0 3,697.8
Net assets 3,640.9 3,573.3
Gearing 6.7% 3.5%
Leverage: Leverage, as defined by the UK Alternative Investment Fund Managers
Directive (AIFMD), is any method which increases the exposure of the
portfolio, whether through borrowings or leverage embedded in derivative
positions or by any other means.
MSCI All Country World Index: The MSCI All Country World Index is a total
return, market capitalisation-weighted equity index covering major developed
and emerging markets. Described in this report as the ACWI or the ACWI (50%
£), this is one of the Company's KPIs or reference hurdles and, since its
introduction in 2013, has incorporated a 50% sterling measure. This is
calculated using 50% of the ACWI measured in sterling and therefore exposed to
translation risk from the underlying foreign currencies. The remaining 50%
uses a sterling-hedged ACWI from 1 January 2015 (from when this is readily
available). This incorporates hedging costs, which the portfolio also incurs,
to protect against currency risk and is an investable index. Prior to this
date it uses the index measured in local currencies. Before December 1998,
when total return indices were introduced, the index is measured using a
capital-only version.
Net asset value (NAV) per share: The NAV per share is calculated by dividing
the total value of all the assets of the trust less its liabilities (net
assets) by the number of shares outstanding. Unless otherwise stated, this
refers to the diluted NAV per share, with debt held at fair value.
NAV total return*: The NAV total return for a period represents the change in
NAV per share, adjusted to reflect dividends paid during the period. The
calculation assumes that dividends are reinvested in the NAV at the month end
following the NAV going ex-dividend. The NAV per share as at 30 June 2024 was
2,508p, an increase of 82p, or 3.4%, from 2,426p at the previous year end. As
dividends totalling 19.5p per share were paid during the period, the effect of
reinvesting the dividends in the NAV is 0.8%, which results in a NAV total
return of 4.2%.
Net quoted equity exposure: This is the estimated level of exposure that the
trust has to listed equity markets. It includes the assets held in the quoted
equity category of the portfolio adjusted for the notional exposure from
quoted equity derivatives, as well as estimated cash balances held by
externally-managed funds and estimated exposure levels from hedge fund
managers.
Notional: In relation to derivatives, this represents the estimated exposure
that is equivalent to holding the same underlying position through a cash
security.
Ongoing charges figure (OCF)*: As a self-managed investment trust with
operating subsidiaries, the calculation of the Company's OCF requires
adjustments to the total operating expenses. In accordance with AIC guidance,
the main adjustments are to remove non-recurring costs as well as direct
performance-related compensation from JRCM, as this is analogous to a
performance fee for an externally-managed trust.
% Average net
£m 2023 assets
Operating expenses 42.7 1.18%
Adjustments (15.0) (0.41%)
Ongoing charges 27.7 0.77%
Average net assets 3,614
OCF 0.77%
In addition to the above, managers charge fees within the external funds (and
in a few instances directly to RIT in relation to segregated accounts). We
have estimated that, based on average net assets across the year and annual
management fee rates per fund (excluding performance fees), these represented
an additional 0.94% of average net assets for 2023.
Premium/discount: The premium or discount (or rating) is calculated by taking
the closing share price on 30 June 2024 and dividing it by the NAV per share
as at 30 June 2024, expressed as a net percentage. If the share price is
above/below the NAV per share, the shares are said to be trading at a
premium/discount.
Share price total return or total shareholder return (TSR)*:
The TSR for a period represents the change in the share price adjusted to
reflect dividends paid during the period. Similar to calculating a NAV total
return, the calculation assumes the dividends are notionally reinvested at the
daily closing share price following the shares going ex-dividend. The share
price on 30 June 2024 closed at 1,820p, a decrease of 62p, or 3.3%, from
1,882p at the previous year end. Dividends totalling 19.5p per share were paid
during the period, and the effect of reinvesting the dividends in the share
price is 1.1% which results in a TSR of -2.2%. The TSR is one of the Company's
KPIs.
END OF HALF-YEARLY FINANCIAL REPORT EXTRACTS
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