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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ruffer Investment Company Ltd | LSE:RICA | London | Ordinary Share | GB00B018CS46 | RED PTG PREF SHS 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.50 | 0.18% | 274.00 | 273.00 | 273.50 | 275.50 | 271.50 | 273.50 | 644,675 | 16:35:12 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 31.73M | -34.42M | - | N/A | 0 |
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TIDMRICA
Ruffer Investment Company Limited
YEARLY REPORT
The Company has today, in accordance with DTR 6.3.5, released its Annual
Financial Report for the year ended 30 June 2015. The Report will shortly be
available via the Company's Investment Manager's website www.ruffer.co.uk and
will shortly be available for inspection online at www.hemscott.com/nsm.do
website.
Financial Highlights
30.06.15
Offer Price (per share) Net Asset Value (per
share
GBP GBP
Redeemable participating preference 2.250 ? 2.188 *
shares
? The price an investor would be expected to pay at the close of trading in the
market (London Stock Exchange ("LSE")).
* This is the Net Asset Value ("NAV") per share using International Financial
Reporting Standards as at 30 June 2015. The Fund is valued weekly and at month
end. Refer to Note 14 for the NAV reconciliation.
Key Performance Indicators**
30.06.15 30.06.14
Share Price Total Return over 12 11.90% -4.60%
months
NAV Total Return per share over 12 7.80% -2.60%
months
Premium/discount of share price to NAV 1.92% -1.84%
Dividends per share 3.4p 3.4p
Dividend yield 1.50% 1.70%
Total expenses as a ratio of net 1.18% 1.18%
assets
NAV Total Return per share since 164.40% 144.10%
inception
** Figures use NAV per share at mid-market prices as reported to the LSE.
Company Information
Incorporation Date 01.06.04
Launch Date 08.07.04 (C shares:
29.09.05)
Initial Net Asset 98p per share (98p per 'C' share)***
Value
Launch Price 100p per share (100p per 'C' share)
Accounting dates Interim Final
31 December 30 June
(Unaudited) (Audited)
*** On 12 December 2005, the 'C' shares were converted into redeemable
participating preference shares in the Company at a ratio of 0.8314 redeemable
participating preference shares for each 'C' share, in accordance with the
conversion method in the Placing and Offer for Subscription Document.
Company Performance
Price Change in
at 30.06.15 Bid
Price
Bid Offer From From
Price Price Launch 30.06.14
GBP GBP % %
Shares 2.230 2.250 + 123.00 + 10.23
Prices are published in the Financial Times in the "Investment Companies"
section, and in the Daily Telegraph's "Share Prices & Market Capitalisations"
section under "Investment Trusts".
Fund Size
Net Asset Net Asset Number of
Value Value per Shares In Issue
Share
GBP GBP
30.06.15 337,222,401 2.184* 154,413,416
30.06.14 318,040,568 2.065 154,013,416
30.06.13 319,114,093 2.139 149,188,416
30.06.12 270,884,661 1.915 141,488,416
30.06.11 248,248,134 1.953 127,138,416
30.06.10 178,695,014 1.823 98,042,672
* Net Asset Value per share reported to the London Stock Exchange was GBP2.188
using mid market values. Bid prices are presented as fair value in the
financial statements.
Share Price Range
Highest Lowest
Accounting Offer Price Bid Price
Period to: GBP GBP
30.06.15 2.260 1.943
30.06.14 2.290 2.005
30.06.13 2.310 1.915
30.06.12 2.070 1.900
30.06.11 2.110 1.850
30.06.10 2.005 1.555
Net Asset Value Range
Highest Lowest
Accounting NAV NAV
Period to: GBP GBP
30.06.15 2.243 2.041
30.06.14 2.206 2.034
30.06.13 2.208 1.903
30.06.12 1.991 1.871
30.06.11 1.960 1.810
30.06.10 1.897 1.518
Past performance is not a guide to the future. The value of the shares and the
income from them can go down as well as go up and you may not get back the
amount originally invested.
Chairman's Review
Performance*
In the twelve months from 1 July 2014 to 30 June 2015, Ruffer Investment
Company Limited's (the "Company") net asset value (NAV) per share rose from
206.05p* to 218.80p*. After allowing for the dividends of 3.4p paid during the
period this equates to a total return of 7.8%. The Company's share price
appreciated by 11.9% on a total return basis as the shares moved from a
discount to finish the period on a premium of 1.9%. The target return, being
twice the Bank of England base rate, amounted to 1% over the period and by way
of context the FTSE All-Share Total Return index rose by 2.6%. Since launch on
8 July 2004, the NAV of the company has risen by 163.4%** including dividends,
compared with an appreciation of 65.4% in the target return and a rise of
140.3% in the FTSE All-Share Total Return index.
It is pleasing to be able to report a result well in excess of our target
return for the financial year. The Company's NAV on 9 September 2015 was
211.53p.
Earnings and Dividends
Earnings for the year were 2.22p per share on the revenue account and 13.06p
per share on the capital account. In the course of the year dividends totalling
3.40p per share were paid. A third interim dividend of 1.70p per share in
respect of the year to 30 June 2015 was approved on 9 September 2015 and will
be paid on 9 October 2015. I would like to briefly discuss the Directors'
attitude towards the dividend. The Directors are adamant that Ruffer AIFM
Limited (the "Company's Alternative Investment Fund Manager and Investment
Manager") should not compromise their capital preservation objective by being
forced to produce enough income to ensure the sustainability of the dividend.
The income produced by the Company's investments has always been regarded as a
by-product of the investment process and not as a target in itself. The manager
adopts a total return approach and this is reflected in the significant capital
gains which have accrued to shareholders over the years. The Ruffer Investment
Company has always been billed as a 'slice of Ruffer' and it is the Directors'
view that it would be quite wrong to skew the portfolio towards achieving
higher yield thereby pushing it out of kilter with the core Ruffer investment
strategy.
Strategy
This Company does not aim to 'shoot the lights out', but is focused on the
preservation of our shareholders' capital. We take some pride in the fact that
over the 'Financial Crash' period from 1 July 2007 until 30 June 2009 the total
return to our shareholders was 36% compared to a return of -31% for the FTSE
All Share Total Return Index. These returns were quite exceptional and, in a
world where a rising tide really has lifted all boats, are unlikely to be
repeated. We take more pride in the fact that the NAV has not fallen in any
calendar year since inception. Our experience is that the Investment Manager is
often early in calling the big strategic moves but over the two decades of its
existence its big calls have to date proved correct. Shareholders may recall
that from early 2011 this Company had over a quarter of its assets in Japanese
equities, which performed powerfully from Prime Minister Abe's launch of his
Three Arrows strategy in the latter part of 2012 - the position has since been
reduced to 18% but continues to perform well. The Company currently has 36% of
its capital exposed to UK and US government issued index-linked securities,
which, in spite of the lack of discernible inflation, performed exceptionally
well over the past year. The Directors remain committed to safeguarding the
Company's assets against the ravages of inflation - the likely denouement of
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September 10, 2015 12:05 ET (16:05 GMT)
unfettered printing of bank notes of a great many denominations. Within the
investment universe index-linked securities remain the best way to achieve this
protection.
Some of our investors have asked whether Jonathan Ruffer has distanced himself
from the successful asset management business, which he founded in 1994, to
concentrate on his philanthropic activities centred on Bishop Auckland. This is
far from being the case. He chairs the weekly strategy meeting in London every
Monday morning and he spends until Wednesday afternoon in Ruffer's Victoria
Street offices. He then decamps to Bishop Auckland, from where he keeps a beady
eye on markets, whilst overseeing the future regeneration of a sizeable chunk
of Co. Durham. He returns to London every Sunday. The Directors carry out a due
diligence visit to Ruffer's offices twice a year and are appraised of the
latest strategic developments. They are content that the firm is well resourced
and has particular strength in depth in terms of the quality of its investment
managers and strategists. In conclusion the Board remains confident in the
ability of the Investment Manager to achieve the Company's objectives. For
further information on strategy please look at the Business Model and Strategy
section.
Share Issuance
At the start of the year, the Company had the ability to issue 14,081,342
redeemable participating shares under a blocklisting facility. On 19 November
2014, at the Company's Annual General Meeting ("AGM"), a resolution to issue up
to a further 10% of the Company's share capital by way of a block listing
facility was passed. As at 9 September 2015, the date of this report, out of a
possible total of 14,081,342 shares, 1,325,000 had been issued at a 2% or
higher premium to the Company's prevailing NAV. All, apart from 925,000, of
these new shares were issued during the year ended 30 June 2015. The Board is
content that the issuance of shares at a premium of more than 1.1% to the
prevailing NAV is value enhancing to existing shareholders. Your Board is happy
to continue to grow the Company organically, when the opportunity presents
itself, as spreading the overheads over a larger number of shares has the
effect of reducing the Total Expense Ratio (TER) thus benefitting all
shareholders.
As at the date of this report the Company had 155,338,416 redeemable
participating preference shares of 0.01p each and 2 Management shares of GBP1.00
each in issue. Therefore, the total voting rights in the Company at the date of
this report were 155,338,418.
Annual General Meeting
The AGM of the Company will be held at 10.30 a.m. on 19 November 2015 at the
Company's registered office at Trafalgar Court, Les Banques, St Peter Port,
Guernsey.
Board Governance
As mentioned in last year's report we have plans to refresh the Board over the
next few years. At this year's AGM we will bid farewell to Peter Luthy, who has
provided much wise counsel since the inception of your Company especially on
fixed interest matters. At present the Directors are in the middle of an
exercise to see whether moving our tax domicile from Guernsey to the UK would
be in the best interests of shareholders. As this study has not yet been
concluded it would be premature to recruit another Director until we know
whether we need a UK or an overseas resident Director. Furthermore it has been
agreed that Wayne Bulpitt, another of the original Directors from our launch in
1994, will retire on 30 June 2016. In the interim, because we still have three
Directors who have served for over nine years, we have decided that all the
Directors will offer themselves up for re-election at the AGM until the
Directors who have served for more than nine years are in a minority.
Shareholders with strong views on the question of tax domicile are invited to
communicate via the Company Secretary.
Share Buyback Authority
Your Company's shares have traded close to NAV during the year to 30 June 2015
and ended the period on a 2% premium. The Board has resolved to seek, at the
AGM on 19 November 2015, a renewal of its authority to buy back shares at a
discount to NAV under terms to be stated in a Special Resolution. No shares
have yet been bought back under authorisations granted at previous AGMs.
Share Redemption Facility
The Company has a Redemption Facility operable in November each year. The
Company has traded at a premium to its NAV for most of the previous year. At
those moments when the shares moved to a small discount the board took the view
that such a discount remained manageable through share re-purchases. No such
purchases were required. Given that the shares have returned to a premium, the
Board has resolved not to offer the Redemption Facility in November 2015.
Ashe Windham
Chairman
9 September 2015
* Figures use Net Asset Value per share at mid-market prices as reported to
the London Stock Exchange. For further by explanation of the reconciliation of
IFRS NAV and London Stock Exchange NAV please see note 14.
** The calculation of the Total Return includes an amount of 39.34 pence per
share, which represents the notional amount by which dividends paid to date
(27.60p) would have grown if they had not been paid out as dividends but
reinvested within the Company.
Business Model and Strategy
Ruffer Investment Company Limited (the "Company") carries on business as a
closed-ended investment company. Its shares are traded on the Main Market of
the London Stock Exchange (the "LSE").
Board
The Board of Directors is responsible for the overall stewardship of the
Company, including general management, structure, finance, corporate
governance, marketing, risk management, compliance, asset allocation and
gearing, contracts and performance. Biographical details of the Directors, all
of whom are non-executive, are listed on Directors and on the Management and
Administration summary. The Company has no executive directors or employees.
The Board has contractually delegated to external parties various functions as
disclosed in the Corporate Governance Statement.
Investment Objective
The principal objective of the Company is to achieve a positive total annual
return, after all expenses, of at least twice the Bank of England base rate.
Investment Strategy
The Company's strategy is to create a balanced portfolio of offsetting assets.
The Company predominantly invests in internationally listed or quoted equities
or equity related securities (including convertibles) and/or bonds which are
issued by corporate issuers, supra-nationals or government organisations.
Investment Policies
In selecting investments the Company adopts a stock picking approach and does
not adopt any investment weightings by reference to any benchmark. Both the
Board and the Investment Manager believe that the adoption of any index related
investment style would inhibit the ability of the Company to deliver its
objectives.
The Company invests across a broad range of assets, geographies and sectors in
order to achieve its objective. This allocation will change over time to
reflect the risks and opportunities identified by the Investment Manager across
global financial markets, with an underlying focus on capital preservation. The
allocation of the portfolio between equities and bonds will vary from time to
time so as to enable the Company to achieve its objective. There are no
restrictions on the geographical or sectoral exposure of the portfolio (except
those restrictions noted below).
The universe of equity, equity related securities or bonds in which the Company
may invest is wide and may include companies domiciled in, and bonds issued by
entities based in, non-European countries, including countries that are classed
as emerging or developing. This may result in a significant exposure to
currencies other than sterling.
The Company may use derivatives, including (but not limited to) futures,
options, swap agreements, structured products, warrants and forward currency
contracts, for efficient portfolio management purposes only.
Investment Restrictions and Guidelines
It is not intended for the Company to have any structural gearing. The Company
has the ability to borrow up to 30 per cent. of the NAV at any time for short
term or temporary purposes, as may be necessary for settlement of transactions,
to facilitate share redemption or to meet ongoing expenses.
The proportion of the portfolio invested into companies based in emerging or
developing countries will be limited, at the time of any investment, to below
15 per cent. of the Company's gross assets.
The Directors have determined that the Company will not engage in currency
hedging except where the Investment Manager considers such hedging to be in the
interests of efficient portfolio management.
The Directors have determined that not more than 10 per cent., in aggregate, of
the value of the gross assets of the Company at the time of the acquisition may
be invested in other UK listed investment companies (including UK listed
investment trusts) except that this restriction does not apply to investments
in such entities which themselves have stated investment policies to invest no
more than 15 per cent. of their gross assets in other UK listed investment
companies (including listed investment trusts). Regardless of the above
restriction, the Directors have further determined that no more than 15 per
cent. in aggregate of the Company's gross assets will be invested in listed
investment companies (including listed investment trusts).
General
In accordance with the requirements of the United Kingdom Financial Conduct
Authority (the "FCA"), any material changes in the Investment Policy of the
Company may only be made with the approval of shareholders.
Investment of Assets
At each quarterly Board meeting, the Board receives a detailed presentation
from the Company's Investment Manager which includes a review of investment
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performance, recent portfolio activity and a market outlook. It also considers
compliance with the investment policy and other investment restrictions during
the reporting period. The Company's Top Ten holdings and Portfolio Statement
are shown below.
Environmental Policy
Due to the Company's listing on the LSE, the Company is required to disclose
its Environmental Policy but this is not applicable due to the nature of its
operations. Ruffer AIFM Limited's Environmental, Social and Governance Policy
is available upon request from the Investment Manager.
Shareholder Value
The Board reviews on an ongoing basis the performance of the Investment Manager
and considers whether the investment strategy utilised is likely to achieve the
Company's investment objective of realising a positive total annual portfolio
return, after all expenses, of at least twice the return of the Bank of England
base rate. Having considered the portfolio performance and investment strategy,
the Board has unanimously agreed that the interests of the shareholders as a
whole are best served by the continuing appointment of the Investment Manager
on the terms agreed.
Principal Risks and Uncertainties and their Management
As stated within the Report of the Audit Committee, The Board with the
assistance of the Administrator and the Investment Manager has drawn up a risk
assessment matrix, which identifies the key risks to the Company. The principal
risks and uncertainties faced by the Company are described below. Note 19 of
the Financial Statements provides detailed explanations of the risks associated
with the Company's financial instruments:
* Investment Risks: The Company is exposed to the risk that its portfolio
fails to perform in line with the Company's objectives if it is
inappropriately invested or markets move adversely. The Board reviews
reports from the Investment Manager at each quarterly Board meeting, paying
particular attention to the diversification of the portfolio and to the
performance and volatility of underlying investments;
* Operational Risks: The Company is exposed to the risks arising from any
failure of systems and controls in the operations of the Investment Manager
or the Administrator. The Board receives reports annually from the
Investment Manager and Administrator on their internal controls and reviews
pricing reports covering the valuations of underlying investments at each
quarterly Board meeting;
* Accounting, Legal and Regulatory Risks: The Company is exposed to risk if
it fails to comply with the regulations of the UK Listing Authority or the
Guernsey Financial Services Commission or if it fails to maintain accurate
accounting records. The Administrator provides the Board with regular
reports on changes in regulations and accounting requirements; and
* Financial Risks: The financial risks faced by the Company include market,
credit and liquidity risk. These risks and the controls in place to
mitigate them are reviewed at each quarterly Board meeting. Further details
on financial risks are discussed in note 19 of the Financial Statements.
The Board seeks to mitigate and manage these risks through continual review,
policy-setting and enforcement of contractual obligations. It also regularly
monitors the investment environment and the management of the Company's
portfolio.
Key Performance Indicators
The Board uses a number of performance measures to assess the Company's success
in meeting its objectives. The key performance indicators are disclosed in
above.
Investment Manager's Report
For the year ended 30 June 2015
We are often told by investors that they hold the Company as an offset to their
other investments. While we can never guarantee that such negative correlation
will be achieved it has served this role over the last 12 months and we have
produced a healthy positive return with a relatively low exposure to equities.
Our exposure to Japanese equities once again proved profitable contributing
4.9% to the overall return. After the blip of October's vol-shock, which
knocked equity markets across the world, it was pretty much one way traffic in
Japan and the news flow has been positive. The effects of the Bank of Japan's
Quantitative Easing (QE) program (expanded on 31 October) persisted and Abe won
a resounding election victory in December almost unopposed. His economic reform
program continues to make progress as companies are forced to focus on better
corporate governance and they have returned record amounts to shareholders
through dividends and share buybacks. Remarkably, companies are now being made
to justify themselves to a new government department should they fail to attain
centrally mandated return-on-equity targets. It is indeed rare for a government
in Japan, or anywhere else for that matter, to be so supportive of
shareholders, but Abe realises that this is key to Japan escaping deflation.
Balance sheets are too cautiously positioned and cash needs to be put to work
elsewhere in the economy. As well as the flow back to shareholders we also saw
an improvement for employees with another year of positive wage growth in Japan
and signs of tightness in the labour market. Foreign investor interest is
growing (but from a very low level).
Western equities continued to make progress over the period and this
contributed positively to the portfolio, adding 1.5% to NAV (As at 30 June 2015
the US equity bull market had lasted 89 months - the third longest such streak
on record. It is worth noting in passing that the other two episodes did not
end well). Another helpful development was the continued strength of the US
dollar through the second half of 2014. This position was reduced in the first
quarter of 2015 and at 30 June our USD exposure stood at 8%.
In some ways our views have changed little in the seven years since the global
financial crisis; not through dogmatism but because many of the fundamental
causes of the financial crisis continue to threaten the world today. There was,
and remains, too much debt in the world (or looked at another way, not enough
collateral) and the authorities have thus far failed to massage real interest
rates low enough to provide any meaningful relief from this burden. The
experimentation with ZIRP (zero interest rate policy) and now NIRP (negative
interest rate policy) was an obvious and necessary condition for survival in a
debt laden world. However, the persistent lack of inflation, has robbed the
authorities of the ability to use negative real interest rates to erode the
millstone of liabilities. A recent BIS/McKinsey report* shows that developed
world debts have barely shifted from pre-crisis levels. Marry this to the
capital market deepening in emerging economies and total global debt is now
some $200tn, up from $142tn in 2007, and equates to 286% of global GDP compared
to 269% in 2007. We live in a world where the authorities are settling for
refinancing the debt burden at ever lower rates, thereby extending the current
low growth environment, and simultaneously providing encouragement for the
previously un-indebted (US corporates/China) to increase their own debts to
fund share buybacks so that earnings per share can grow even if capex and real
profits are not increasing.
We continue to believe that these obligations are unpayable, and therefore will
be defaulted on - in our view via the pernicious but politically more palatable
option of inflation and negative real interest rates. This is a benign outcome
for the over-indebted, but a game-changer for savers amongst whom we would
count the Company's shareholders. While this may be taking some time to play
out, the direction of travel has not changed and this remains the single
biggest threat to the spending power of our investors' savings.
But even here there is a problem. It seems that 'some inflation' is
surprisingly difficult to create when there is none (just ask the Japanese, or
even the Germans, forced into QE by the inconvenience of the oil price halving
just as Eurozone inflation fell to zero). Naturally, in response to ECB QE,
equities shot higher celebrating easing monetary conditions and German bond
yields were driven to negative yields. In the closing days of April the
quiescence in Eurozone bond markets was violently disrupted as German ten year
yields shot higher by 1,000% (to a still meagre 1%) which attests only to the
absurd levels to which they were driven.
The life-support policy of easy money has created inflation but only in
financial assets and not in the real economy. It has created 'voucher money'
which can only be spent within the financial system. The next step to stimulate
the real economy may involve the crossing of another Rubicon in using fiscal
stimulus. Think Franklin D Roosevelt's "New Deal", infrastructure projects,
even Help to Buy II. We believe this can and will be done if required; it seems
eminently appealing when politicians know voters prefer the carrot to the
stick. An interesting thought experiment asks - what if there is a shock to
markets before rates have been dragged off the floor? What is left in the
toolkit to provoke the same shock and awe as the lowest interest rates in 300
years and $5tn of global quantitative easing? Like Pavlov's Dogs, investors
have been well trained to respond to the signals of central bankers, but the
law of diminishing returns requires bolder and more wanton action at each
crisis.
Lastly, as absolute return investors we worry about broad-based correlations
across asset classes. If the rising tide can float all boats, which is broadly
what has happened since the financial crisis, then there must be a good chance
that asset prices fall in tandem when that same tide goes out. The only way to
avoid that is to replace monetary stimulus with robust economic growth and that
remains elusive except on a beggar-my-neighbour basis. In high yield debt and
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September 10, 2015 12:05 ET (16:05 GMT)
other contexts, the Fed has recently been voicing concerns over the risk of a
dislocation arising from a lack of liquidity in certain areas of the financial
system. When combined with an equity bull market getting long in the tooth,
these factors emphasise the need to keep our primary aim of capital
preservation firmly in view. The majority of the transactions during the first
half of 2015 were aimed at moving the portfolio onto a more defensive footing;
profit-taking in a number of our equity positions, buying protection against
rising bond yields and the possibility of a correlated sell-off in equity and
fixed income markets.
To end on a brighter note, the Company has produced a healthy positive return
over the financial year with less than half the assets held in equities. We
have also avoided three periods of significant market volatility. That is the
role we would like the Company to play for our investors and we shall endeavour
to do more of the same in the year ahead.
Ruffer AIFM Limited
23 July 2015
*"Debt and (not much) deleveraging", February 2015 by Richard Dobbs, Susan
Lund, Jonathan Woetzel, and Mina Mutafchieva.
Top Ten Holdings
Fair % of
Holding at Value Total Net
Investments Currency 30.06.15 GBP Assets
UK Index-Linked Gilt 1.875% 22/11/ GBP 13,700,000 20,914,596 6.21
2022
UK Index-Linked Gilt 1.25% 22/11/ GBP 7,200,000 18,923,911 5.61
2055
Ruffer Illiquid Multi Strategies GBP 16,450,000 16,383,542 4.86
Fund 2015 Ltd*
US Treasury Inflation Indexed 1.125% USD 22,000,000 16,002,352 4.75
Bond 15/01/2021
UK Inflation Indexed Gilt 0.375% 22/ GBP 8,000,000 14,629,104 4.34
03/2062
US Treasury Inflation Indexed 0.625% USD 19,350,000 13,330,762 3.95
Bond 15/07/2021
US Treasury Inflation Indexed 0.125% USD 19,000,000 12,164,051 3.61
Bond 15/01/2023
US Treasury Inflation Indexed 0.375% USD 17,000,000 11,028,476 3.27
Bond 15/07/2023
CF Ruffer Japanese Fund** GBP 4,500,000 8,819,550 2.62
T&D Holdings Inc JPY 900,000 8,532,637 2.53
* Ruffer Illiquid Multi Strategies Fund 2015 Ltd is classed as a related
party as it shares the same Investment Manager as the Company.
** CF Ruffer Japanese Fund is classed as a related party because its investment
manager, Ruffer LLP, is the parent company of the Company's Investment Manager.
Directors
The Company has six non-executive Directors, all of whom are independent except
for Wayne Bulpitt and Peter Luthy, details of whom are set out below.
Ashe Windham, CVO, aged 58 and a resident of the United Kingdom. He joined
Barclays de Zoete Wedd ("BZW") in 1987 as an institutional equities salesman
and was appointed a Director of BZW's Equities Division in 1991. He joined
Credit Suisse First Boston in 1997 when they acquired BZW's equities business.
In 2004 he joined Man Investments as Head of Internal Communications and in
2007 became Man Group's Global Head of Internal Communications. In June 2009 he
resigned from Man Group plc to set up a private family office. He is a
non-executive Director of EFG Asset Management (UK) Ltd and a non-executive
Director of Miton UK MicroCap Trust Plc. Mr Windham was appointed to the Board
on 24 February 2009.
Wayne Bulpitt, aged 53 and a resident of Guernsey. He is Managing Director and
Principal of Active Group Limited and Chairman of BlueCrest BlueTrend Limited.
He was formerly Head of Offshore Investment Services for Canadian Imperial Bank
of Commerce, Global Private Banking & Trust division (1998-2001) and Managing
Director of CIBC Fund Managers (Guernsey) Limited (1992-1998). He is also a
Director of Ruffer Illiquid Strategies Fund of Funds 2009 Limited, Ruffer
Illiquid Strategies Fund of Funds 2011 Limited, Ruffer Illiquid Multi
Strategies Fund 2015 Limited and Ruffer Multi Strategies Fund Limited which are
all Guernsey registered investment companies managed by the Company's
Investment Manager. Mr Bulpitt was appointed to the Board on 1 June 2004.
Jeannette Etherden (Jan), aged 55 and a resident of the United Kingdom. She
started in 1983 as a research analyst at Confederation Life (acquired by Sun
Life of Canada in 1994) and was Head of UK Equities from 1991. In 1996 she
moved to Newton Investment Management as a multi-asset fund manager. She was
appointed a Director for Newton in 1997 and additionally was Chief Operating
Officer, Investments from 1999 until her resignation in 2001. From January 2004
to January 2006 she was Business Development Manager for the Candela Fund at
Olympus Capital Management. Ms Etherden is also a non-executive Director of
Miton UK MicroCap Trust Plc and of TwentyFour Income Fund Limited. Ms Etherden
was appointed to the Board on 1 June 2004.
Peter Luthy, aged 64 and a resident of the United Kingdom. He has worked in the
fixed income market for 25 years. In 1990, he co-founded a credit focussed bond
broker, Luthy Baillie Dowsett Pethick and Co. Limited ("LBDP"). Dresdner
Kleinwort Benson acquired LBDP in 1996 where he was global head of credit
products. In 1998 he became global head of investment banking at Barclays
Capital and, after 2001, acted as a consultant on bank credit portfolios. He
was a Managing Partner of Banquo Credit Management LLP until June 2014. He is
also a Director of Ruffer Illiquid Strategies Fund of Funds 2009 Limited,
Ruffer Illiquid Strategies Fund of Funds 2011 Limited, Ruffer Illiquid Multi
Strategies 2015 Fund Limited and Ruffer Multi Strategies Fund Limited which are
all Guernsey registered investment companies managed by the Company's
Investment Manager. Mr Luthy was appointed to the Board on 1 June 2004.
Christopher Spencer, aged 65 and a resident of Guernsey. He qualified as a
chartered accountant in London in 1975. Following two years in Bermuda he moved
to Guernsey. Mr Spencer, who specialized in audit and fiduciary work, was
Managing Partner/Director of Pannell Kerr Forster (Guernsey) Limited from 1990
until his retirement in May 2000. Mr Spencer is a member of the AIC Offshore
Committee, a past President of the Guernsey Society of Chartered and Certified
Accountants, and a past Chairman of the Guernsey Branch of the Institute of
Directors. He is a non-executive Director of a number of listed fund companies
and other finance related companies. Mr Spencer was appointed to the Board on 1
June 2004.
John V Baldwin, aged 65 and a resident of Italy. After taking a Master's Degree
in Asian Studies at Yale University, he joined Robert Fleming & Co. in 1983 as
an investment analyst trainee. In 1984 he was seconded to the Tokyo Branch of
Jardine Fleming as an investment analyst, where he continued in various roles
for 16 years, the final five as a Director of Jardine Fleming Securities (Asia)
and Tokyo Branch Manager. The first foreigner appointed Member Governor of the
Tokyo Stock Exchange, he also served on various committees of the Japan
Securities Dealers Association. In 2001 he retired from successor firm JPMorgan
Chase after serving as Head of Japanese Cash Equities. Mr Baldwin was appointed
to the Board on 24 February 2011.
Report of the Directors
The Directors of the Company present their Annual Financial Report (the
"Financial Statements") for the year ended 30 June 2015 which have been
prepared in accordance with the Companies (Guernsey) Law, 2008 (the "Company
Law").
Registration
The Company was incorporated with limited liability in Guernsey on 1 June 2004
as a company limited by shares and as an authorised closed-ended investment
company. As an existing closed-ended fund the Company is deemed to be granted
an authorised declaration in accordance with section 8 of the Protection of
Investors (Bailiwick of Guernsey) Law, 1987, as amended and rule 6.02 of the
Authorised Closed-ended Investment Schemes Rules 2008.
Principal Activity and Investment Objective
The Company is a Guernsey authorised closed-ended investment company with a
premium listing on the LSE. The principal objective of the Company is detailed
in the Business Model and Strategy.
Going Concern
The Directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the Financial Statements since the assets of the
Company consist mainly of securities which are readily realisable and,
accordingly, the Company has adequate financial resources to continue in
operational existence for the foreseeable future.
The Board also has the discretion to operate the Redemption Facility, offering
shareholders the possibility of redeeming all or part of their shareholding for
cash at the NAV, if it appears appropriate to do so.
Blocklisting Facility
The blocklisting facility is set out in note 13.
Purchase of Own Shares by the Company
The Company operates a Share Buyback Facility whereby it may purchase, subject
to various terms as set out in its Articles and in accordance with the
Companies (Guernsey) Law, 2008, up to 14.99 per cent. of the Company's shares
in issue following the admission of shares trading on the LSE's market for
listed securities. For additional information refer to note 20.
The Company did not buyback any shares during the year (30.06.14: Nil).
Results and Dividends
The results for the year are set out in the Statement of Comprehensive Income.
Details of dividends paid and proposed are set out in note 5.
Subsequent Events
Events occurring after the balance sheet date are disclosed in note 21 in the
Notes to the Financial Statements.
Shareholder Information
The Company announces its unaudited NAV on a weekly basis and at the month end.
A monthly report on investment performance is published by the Company's
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Investment Manager, on the Investment Manager's website, www.ruffer.co.uk.
Investment Management
The key terms of the Investment Management Agreement and specifically the fee
charged by the Investment Manager are set out in notes 8 and 16 of the
Financial Statements. The Board believes that the investment management fee is
competitive with other investment companies with similar investment mandates.
The Board reviews on an ongoing basis the performance of the Investment Manager
and considers whether the investment strategy utilised is likely to achieve the
Company's investment objective of realising a positive total annual portfolio
return, after all expenses, of at least twice the return of the Bank of England
base rate.
In accordance with Listing Rule 15.6.2 (2) R and having formally appraised the
performance, investment strategy and resources of the Investment Manager, the
Board has unanimously agreed that the interests of the shareholders as a whole
are best served by the continuing appointment of the Investment Manager on the
terms agreed.
The Investment Management Agreement will continue in force until terminated by
the Investment Manager or the Company giving to the other party thereto not
less than 12 months' notice in writing.
Directors
The details of the Directors of the Company during the year and at the date of
this Report are set out on Directors and on the Management and Administration
summary.
Directors' Interests
The details of the number of redeemable participating preference shares held
beneficially by the Directors who held office at 30 June 2015 and up to the
date of this Report are set out in note 16.
Substantial Share Interests
As at 30 June 2015, the Company has received notifications in accordance with
the FCA's Disclosure and Transparency Rule 5.1.2 R of the following interests
in 3% or more of the voting rights attaching to the Company's issued shares.
Investor Shares % of issued
held share
capital
Brewin Nominees Limited 13,741,663 8.90
HSBC Global Custody Nominee (UK) Limited 12,825,166 8.31
State Street Nominees Limited 11,857,823 7.68
Roy Nominees Limited 10,013,175 6.48
Alliance Trust Savings Nominees Limited 8,516,631 5.52
Rathbone Nominees Limited 5,541,495 3.59
Rock Nominees Limited 5,256,300 3.40
Luna Nominees Limited 5,186,038 3.36
Platform Securities Nominees Limited 5,159,776 3.34
Foreign Account Tax Compliance Act
For purposes of the US Foreign Accounts Tax Compliance Act, the company
registered with the US Internal Revenue Service ("IRS") as a Guernsey reporting
Foreign Financial Institution ("FFI") in June 2014, received a Global
Intermediary Identification Number, and can be found on the IRS FFI list under
the link http://apps.irs.gov/app/fatcaFfiList/flu.jsf.
The Company is subject to Guernsey regulations and guidance based on reciprocal
information sharing inter-governmental agreements which Guernsey has entered
into with the United Kingdom and the United States of America. The Board will
take the necessary actions to ensure that the Company is compliant with
Guernsey regulations and guidance in this regard.
Alternative Investment Fund Managers ("AIFM") Directive
Due to the recent changes introduced by virtue of the Alternative Investment
Fund Managers Directive ("AIFMD"), the Company terminated the Investment
Management Agreement with Ruffer LLP and appointed Ruffer AIFM Limited as the
new Investment Manager with effect from 22 July 2014.
The Board resolved to amend and restate the Company's Administration agreement
with Northern Trust International Fund Administration Services (Guernsey)
Limited (the "Administrator") to the extent necessary to ensure that the
relationship between the Company, the Investment Manager and the Administrator
is compliant with the requirements of AIFMD.
The Board appointed of Northern Trust (Guernsey) Limited (the "Depositary") to
act as the Company's Depositary on the terms and subject to the conditions of a
Depositary Agreement between the Company, the Investment Manager and the
Depositary with effect from 22 July 2014.
For additional information on the above changes refer to the General
Information.
Independent Auditor
During the year the Board entered into a competitive audit tender process and
on the 9 March 2015, Deloitte LLP was appointed as the Company's new auditor,
replacing Moore Stephens, who had been the independent external auditor from
the date of the initial listing on the LSE.
Disclosure of Information to the Independent Auditor
Deloitte LLP have expressed their willingness to continue in office as auditor
and a resolution to re-appoint them will be proposed at the next AGM. Each of
the persons who is a Director at the date of approval of the financial
statements confirms that:
(1) so far as each Director is aware, there is no relevant audit information of
which the Company's auditor is unaware; and
(2) each Director has taken all steps he ought to have taken as a Director to
make himself aware of any relevant audit information and to establish that the
Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the
provisions of Section 249 of the Company Law.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations. The Directors
believe that the financial statements and all reports therein reflect a fair,
balanced and understandable statement of the Company's affairs.
The Company Law requires the Directors to prepare financial statements for each
financial year. Under the Company Law the Directors have elected to prepare the
Company's Financial Statements in accordance with International Financial
Reporting Standards (IFRSs). 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 of the Company and of the profit or loss of
the Company for that period. In preparing these financial statements,
International Accounting Standard 1 requires that directors:
* properly select and apply accounting policies;
* present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
* provide additional disclosures when compliance with the specific
requirements in IFRS are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the
entity's financial position and financial performance; and
* make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with Company Law.
The Directors are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the oversight of the maintenance and
integrity of the corporate and financial information included on the Company's
website. Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names are set out on this Annual Financial Report,
confirms that to the best of their knowledge that:
* these Financial Statements have been prepared in conformity with IFRS, give
a true and fair view of the assets, liabilities, financial position and
profit of the Company as required by DTR 4.1.12;
* the Annual Financial Report, taken as a whole, is fair, balanced and
understandable and provide the information necessary for the shareholders
to assess the Company's performance, business model and strategy; and
* the Annual Financial Report includes information detailed in the Chairman's
Review, the Report of the Directors, the Investment Manager's Review, the
Depositary Statement and the notes to the accounts, which includes a fair
view of the development and performance of the business and the position of
the Company, together with a description of the principal risks and
uncertainties that it faces, as required by:
(a) DTR 4.1.8 of the Disclosure and Transparency Rules, being a fair review of
the Company business and a description of the principal risks and uncertainties
facing the Company; and
(b) DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of
important events that have occurred since the end of the financial year and the
likely future development of the Company.
On behalf of the Board
Ashe Windham Christopher
Spencer
Chairman
Director
9 September 2015
Corporate Governance Statement
Corporate Governance
The Board is committed to high standards of corporate governance and has
implemented a framework for corporate governance which it considers to be
appropriate for an investment company in order to comply with the principles of
the UK Corporate Governance Code (the "UK Code"). The Company is also required
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to comply with the Code of Corporate Governance issued by the Guernsey
Financial Services Commission (the "GFSC Code").
The Financial Reporting Council (the "FRC") issued a revised Code in September
2014, for reporting periods beginning on or after 1 October 2014. The Board
will adopt the revised Code for the financial year beginning 1 July 2015.
Compliance Statement
The UK Listing Authority requires all UK listed premium companies to disclose
how they have complied with the provisions of the UK Code. This Corporate
Governance Statement, together with the Going Concern statement and the
Statement of Directors' Responsibilities set out on Report of the Directors,
indicate how the Company has complied with the principles of good governance of
the UK Code and its requirements on Internal Control.
The Board has considered the principles and recommendations of the UK Code, and
considers that reporting against the UK Code will provide better information to
shareholders. To ensure ongoing compliance with these principles the Board
receives a report from the Company Secretary, at each quarterly meeting,
identifying how the Company is in compliance and identifying any changes that
might be necessary.
The UK Code is available in the FRC's website, www.frc.org.uk.
The Board, having reviewed the UK Code, considers that it has maintained
procedures during the year ended 30 June 2015 and up to the date of this report
to ensure that it complies with the UK Code except as explained elsewhere in
the Corporate Governance Statement.
Guernsey Regulatory Environment
The Guernsey Financial Services Commission's (the "Commission") Finance Sector
GFSC Code comprises Principles and Guidance, and provides a formal expression
of good corporate practice against which Shareholders, boards and the
Commission can better assess the governance exercised over companies in
Guernsey's finance sector. The Commission recognises that the different nature,
scale and complexity of business will lead to differing approaches to meeting
the GFSC Code. Companies reporting against the UK Code are deemed to comply
with the GFSC Code.
Role of the Board
The Board is the Company's governing body and has overall responsibility for
maximising the Company's success by directing and supervising the affairs of
the business and meeting the appropriate interests of Shareholders and relevant
stakeholders, while enhancing the value of the Company and also ensuring
protection of investors. A summary of the Board's responsibilities is as
follows:
* statutory obligations and public disclosure;
* strategic matters and financial reporting;
* risk assessment and management including reporting compliance, governance,
monitoring and control; and
* other matters having a material effect on the Company.
The Board's responsibilities for the Annual Report are set out in the Statement
of Directors' Responsibilities.
The Board has contractually delegated responsibility for the management of its
investment portfolio, the arrangement of custodial and depositary services and
the provision of accounting and company secretarial services.
The Board needs to ensure that the Financial Statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
Shareholders to assess the Company's performance, business model and strategy.
In seeking to achieve this, the Directors have set out the Company's investment
objective and policy and have explained how the Board and its delegated
Committees operate and how the Directors review the risk environment within
which the Company operates and set appropriate risk controls. Furthermore,
throughout the Financial Statements the Board has sought to provide further
information to enable Shareholders to have a fair, balanced and understandable
view.
Composition and Independence of the Board
The Board currently comprises six non-executive Directors, all of whom are
independent with the exception of Wayne Bulpitt and Peter Luthy. The Directors
of the Company are listed on Directors and on the Management and Administration
summary.
Under the UK Code Wayne Bulpitt and Peter Luthy are considered not to be
independent by reason of being Directors of other group related companies. None
of the Directors has a contract of service with the Company.
The Chairman is Ashe Windham. The Chairman of the Board must be independent for
the purposes of Chapter 15 of the Listing Rules. Ashe Windham is considered
independent because he:
* has no current or historical employment with the Investment Manager; and
* has no current directorships in any other investment funds managed by the
Investment Manager.
The Board does not consider it appropriate to appoint a Senior Independent
Director because the Board is deemed to be independent of the Company except
for Wayne Bulpit and Peter Luthy. The Company has no employees and therefore
there is no requirement for a chief executive. The Board believes it has a good
balance of skills and experience to ensure it operates effectively. The
Chairman, Ashe Windham, is responsible for leadership of the Board and ensuring
its effectiveness.
The Board has engaged external companies to undertake the investment
management, administrative and custodial activities of the Company. Documented
contractual arrangements are in place with these companies which define the
areas where the Board has delegated responsibility to them.
The Company holds a minimum of four Board meetings per year to discuss
strategy, general management, structure, finance, corporate governance,
marketing, risk management, compliance, asset allocation and gearing, contracts
and performance. The quarterly Board meetings are the principal source of
regular information for the Board enabling it to determine policy and to
monitor performance, compliance and controls but these meetings are
supplemented by communication and discussions throughout the year.
A representative of the Investment Manager, Administrator and Company Secretary
attends each Board meeting either in person or by telephone thus enabling the
Board to fully discuss and review the Company's operations and performance. In
addition, representatives from the Company's Broker attend at least two Board
meetings a year. Each Director has direct access to the Investment Manager and
Company Secretary and may at the expense of the Company seek independent
professional advice on any matter.
Attendance at the Board and other Committee meetings during the year was as
follows:
Number of Wayne Jeannette Peter Christopher Ashe John V
Meetings Bulpitt Etherden Luthy Spencer Windham Baldwin
held
Board Meetings 5* 5 5 5 5 5 5
Audit Committee 3* 3 3 3 3 3 3
Meetings
Management 2* N/A 2 N/A 1 2 2
Engagement
Committee Meetings
Ad-hoc Board 1 1 1 1 1 1 1
Meetings
* The final scheduled meetings for the year ended 30 June 2014 were delayed
until 10 July 2014.
Directors' Indemnity
Directors' and Officers' liability insurance cover is maintained by the Company
on behalf of the Directors.
Re-election
At each AGM all of the Directors shall retire from office and may offer
themselves for re-election except for Peter Luthy who will not offer himself
for re-election. For additional information refer to the Chairman's Review.
On 19 November 2014 at the 10th AGM of the Company, Ashe Windham, John Baldwin,
Jeannette Etherden, Wayne Bulpitt, Peter Luthy and Christopher Spencer retired
as Directors of the Company and being eligible had offered themselves for
re-election and were re-elected as Directors of the Company by the
Shareholders. As Peter Luthy and Wayne Bulpitt are Directors of other companies
managed by the Company's Investment Manager they are deemed to be
non-independent Directors and therefore stand for re-election at each AGM.
The Directors may at any time appoint any person to be a Director either to
fill a casual vacancy or as an addition to the existing Directors. Any Director
so appointed shall hold office only until, and shall be eligible for
re-election at, the next general meeting following their appointment but shall
not be taken into account in determining the Directors or the number of
Directors who are to retire by rotation at that meeting if it is an AGM.
Board Evaluation and Succession Planning
The Directors consider how the Board functions as a whole taking balance of
skills, experience and length of service into consideration and also reviews
the individual performance of its members on an annual basis.
To enable this evaluation to take place, the Company Secretary will circulate a
detailed questionnaire plus a separate questionnaire for the evaluation of the
Chairman. The questionnaires, once completed, are returned to the Company
Secretary who collates responses, prepares a summary and discusses the Board
evaluation with the Chairman prior to circulation to the remaining Board
members. The performance of the Chairman is evaluated by the other Directors.
On occasions, the Board may seek to employ an independent third party to
conduct a review of the Board.
The Board considers it has a breadth of experience relevant to the Company, and
the Directors believe that any changes to the Board's composition can be
managed without undue disruption. An induction programme has been prepared for
any future Director appointments.
The Board is currently considering its composition. For additional information
refer to the Chairman's Review.
The Board has also given careful consideration to the recommendations of the
Davies Report on women on boards and as recommended in that report has reviewed
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its composition and believes that it has available an appropriate range of
skills and experience. In order to extend its diversity, the Board is committed
to implementing the recommendations of the Davies Report, if possible within
the timescales proposed in the Davies Report, and to that end will ensure that
women candidates are considered when appointments to the Board are under
consideration - as indeed has always been its practice.
Committees of the Board
The Board has established Audit and Management Engagement Committees and
approved their terms of reference, copies of which can be obtained from the
Company Secretary upon request.
Audit Committee
The Company has established an Audit Committee, with formally delegated duties
and responsibilities within written terms of reference. The Company's Audit
Committee is comprised of the entire Board. The Audit Committee is chaired by
Christopher Spencer. The Audit Committee meets formally at least twice a year
and each meeting is attended by the independent external auditor and
Administrator.
The table above sets out the number of Audit Committee Meetings held during the
year ended 30 June 2015 and the number of such meetings attended by each Audit
Committee member.
A report of the Audit Committee detailing responsibilities and activities is
presented on the Audit Committee Report.
Management Engagement Committee
The Company has established a Management Engagement Committee, with formally
delegated duties and responsibilities within written terms of reference. The
Management Engagement Committee is comprised of the independent non-executive
Directors of the Company, with John V Baldwin appointed as Chairman. The
Management Engagement Committee meets formally once a year.
The principal duties of the Management Engagement Committee are to review the
performance of and contractual arrangements with the Investment Manager and all
other service providers to the Company (other than the external auditors).
During the year the Management Engagement Committee has reviewed the services
provided by the Investment Manager as well as the other service providers and
have recommended to the Board that their continuing appointments is in the best
interests of the Shareholders. The last meeting was held on 5 June 2015.
The table above sets out the number of Management Engagement Committee Meetings
held during the year and the number of such meetings attended by each
Management Engagement Committee member.
Nomination Committee
The Board does not have a separate Nomination Committee. The Board as a whole
fulfils the function of a Nomination Committee. Any proposal for a new Director
will be discussed and approved by the Board. The Board will determine whether
in future an external search consultancy or open advertising is used in the
appointments of non-executive Directors.
Remuneration Committee
In view of its non-executive and independent nature, the Board considers that
it is not appropriate for there to be a Remuneration Committee as anticipated
by the UK Code because this function is carried out as part of the regular
Board business.
Internal Control
The Company's risk exposure and the effectiveness of its risk management and
internal control systems are reviewed by the Audit Committee at its meetings
and annually by the Board.
The Board is responsible for establishing and maintaining the Company's system
of internal controls and for maintaining and reviewing its effectiveness. The
system of internal controls is designed to manage rather than to eliminate the
risk of failure to achieve business objectives and as such can only provide
reasonable, but not absolute assurance against material misstatement or loss.
These controls aim to ensure that assets of the Company are safeguarded, proper
accounting records are maintained and the financial information for publication
is reliable. The Board uses a formal risk assessment matrix to identify and
monitor business risks.
The Board has contractually delegated to external parties various functions as
listed below. The duties of investment management, administration and custody
are segregated. Each of the contracts entered into with the parties was entered
into after full and proper consideration by the Board of the quality and cost
of services offered, including the control systems in operation as far as they
relate to the affairs of the Company.
The Board considers on an ongoing basis the process for identifying, evaluating
and managing any significant risks faced by the Company. The process includes
reviewing reports from the Company Secretary on risk control and compliance, in
conjunction with the Investment Manager's regular reports which cover
investment performance.
* Investment Management is provided by Ruffer AIFM Limited, a company
authorised by the FCA.
* Administration, Accounting, Registrar, and Company Secretarial duties are
performed by Northern Trust International Fund Administration Services
(Guernsey) Limited, a company licensed and regulated by the Guernsey
Financial Services Commission.
* CREST agency functions are performed by Computershare Investor Services
(Jersey) Limited, a company licensed and regulated by the Jersey Financial
Services Commission.
* Depositary services performed by Northern Trust (Guernsey) Limited, a
company licensed and regulated by the Guernsey Financial Services
Commission.
* Custody of assets is undertaken by Northern Trust (Guernsey) Limited, a
company licensed and regulated by the Guernsey Financial Services
Commission.
The Board reviews regularly the performance of the services provided by these
companies. The Board reviews the performance of the Investment Manager annually
by assessing the performance of the investments, and the Investment Manager's
position against its peers.
In common with most investment companies, the Company does not have an internal
audit function. All of the Company's management functions are delegated to the
Investment Manager and Administrator which has their own internal audit and
risk assessment functions. As such, an internal audit function specific to the
Company is therefore considered unnecessary, as explained in the Audit
Committee Report.
Principal Risks and Uncertainties
Principal risks and uncertainties in the Business Model and Strategy above.
Relations with Shareholders
The Board welcomes shareholders' views and places great importance on
communication with its shareholders. The Board receives regular reports on the
views of its shareholders from the Company's Corporate Broker and Investment
Manager.
The Chairman and other Directors are available to meet shareholders if required
and the AGM of the Company provides a forum for shareholders to meet and
discuss issues with the Directors of the Company.
In addition, the Investment Manager maintains a website which contains
comprehensive information, including financial reports, prospectus and monthly
reports on investment performance which contains share price information,
investment objectives, investment reports and investor contacts.
Going concern
The going concern assumption is disclosed in the Report of Directors.
Subsequent Events
The subsequent events since the year end that the Directors consider require
adjustment to or disclosure in this report or the financial statements are
disclosed in note 21.
Directors' Remuneration Report
Introduction
An ordinary resolution for the approval of the annual remuneration report was
put to the shareholders at the AGM held on 19 November 2014.
Remuneration policy
All Directors are non-executive and a Remuneration Committee has not been
established. The Board as a whole considers matters relating to the Directors'
remuneration. No advice or services were provided by any external person in
respect of its consideration of the Directors' remuneration.
The Company's policy is that the fees payable to the Directors should reflect
the time spent by the Directors on the Company's affairs and the
responsibilities borne by the Directors and be sufficient to attract, retain
and motivate directors of a quality required to run the Company successfully.
The Chairman of the Board is paid a higher fee in recognition of his additional
responsibilities. The policy is to review fee rates periodically, although such
a review will not necessarily result in any changes to the rates, and account
is taken of fees paid to directors of comparable companies.
There are no long term incentive schemes provided by the Company and no
performance fees are paid to Directors.
No Director has a service contract with the Company but each of the Directors
is appointed by a letter of appointment which sets out the main terms of their
appointment. Directors hold office until they retire by rotation or cease to be
a director in accordance with the Articles of Incorporation, by operation of
law or until they resign.
Remuneration
The Directors of the Company are remunerated for their services at such a rate
as the Directors determine provided that the aggregate amount of such fees does
not exceed GBP200,000 (30 June 2014: GBP200,000) per annum.
Directors are remunerated in the form of fees, payable quarterly in arrears, to
the Director personally. No Directors have been paid additional remuneration
outside their normal Directors' fees and expenses. Directors fees have not
increased during the year (2014: no increase during the year).
30.06.15 30.06.14
GBP GBP
Ashe Windham 35,000 35,000
Christopher Spencer 25,000 25,000
Jeannette Etherden 25,000 25,000
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Peter Luthy 25,000 25,000
Wayne Bulpit 25,000 25,000
John V Baldwin 25,000 25,000
160,000 160,000
During the year ended 30 June 2015 Director fees of GBP160,000 (30 June 2014: GBP
160,000) were charged to the Company of which GBP40,000 (30 June 2014: GBP40,000)
remained payable at the year end.
Audit Committee Report
On the following, we present the Audit Committee's Report for the year ended 30
June 2015, setting out the responsibilities of the Audit Committee and its key
activities for the year from 1 July 2014 to 30 June 2015. As in previous years,
the Committee has reviewed the Company's financial reporting, the independence
and effectiveness of the independent external auditor and the internal control
and risk management systems of service providers. In order to assist the Audit
Committee in discharging these responsibilities, regular reports are received
from the Investment Manager, Administrator and independent external auditor.
A member of the Audit Committee will continue to be available at each AGM to
respond to any shareholder questions on the activities of the Audit Committee.
Responsibilities
The Audit Committee reviews and recommends to the Board, the Financial
Statements of the Company and is the forum through which the independent
external auditor reports to the Board of Directors.
The role of the Audit Committee includes:
* Monitoring and reporting to the Board on such matters as the integrity of
the Financial Statements of the Company and any formal announcements
relating to the Company's financial performance, and any significant
financial reporting judgements;
* considering the appropriateness of accounting policies and practices
including critical judgement areas;
* reviewing and considering the UK Code and FRC Guidance on Audit Committees;
* monitoring and reviewing the quality, effectiveness and independence of the
independent external auditors and the effectiveness of the audit process
considering and making recommendations to the Board on the appointment,
reappointment, replacement and remuneration to the Company's external
auditor;
* reviewing the Company's procedures for prevention, detection and reporting
of fraud, bribery and corruption; and
* monitoring and reviewing the internal control and risk management systems
of the service providers together with the need for an Internal Audit
function.
The Audit Committee's full terms of reference can be obtained by contacting the
Company's Secretary.
Key Activities of the Audit Committee
The following sections discuss the assessments made by the Audit Committee
during the year:
Financial Reporting
The Audit Committee's review of the Half Yearly Financial Report and Audited
Annual Financial Report focused on the following significant risks; valuation
and ownership of investments. The investments comprise the majority of NAV
value and hence form part of the Key Performance Indicator ("KPI") NAV per
share. Hence any significant error in valuation or overstatement of holdings
could significantly impact the NAV and hence the reported NAV per share of the
Company.
Valuation of Investments
The Company's investments had a fair value of GBP314,296,168 as at 30 June 2015
and represented the majority of the net assets of the Company. The investments
are predominantly all listed except for investments in investment funds and the
valuation of the investments is in accordance with the requirements of IFRS.
The Audit Committee considered the fair value of the investments held by the
Company as at 30 June 2015 to be reasonable based on information provided by
the Investment Manager and Administrator. All prices are confirmed to
independent pricing sources as at 30 June 2015 by the Administrator and are
subject to review process at the Administrator and oversight at the Investment
Manager.
Ownership of Investments
The Company's investment holdings are reconciled to independent reports from
the Custodian by the Administrator with any discrepancies being fully
investigated and reconciled by the Administrator. The Audit Committee therefore
consider the ownership of the investments held by the Company as at 30 June
2015 to be reasonable based on a review of information provided by the
Investment Manager, Custodian, Depositary and Administrator.
The independent external auditor reported to the Audit Committee any
misstatements found in the course of its work, however no material
misstatements were found.
Risk Management
The Audit Committee considered the process for managing the risk of the Company
and its service providers. Risk management procedures for the Company, as
detailed in the Company's risk assessment matrix, were reviewed and approved by
the Audit Committee. Regular reports are received from the Investment Manager
and Administrator on the Company's risk evaluation process and reviews. Refer
the Business Model and Strategy for details on principal risks and
uncertainties and their management. Financial risks faced by the Company are
discussed in note 19 of the Financial Statements.
With the introduction of AIFMD the Company's AIFM, Ruffer AIFM Limited,
undertakes certain responsibilities in terms of the risk management of the
Company.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and corruption
policies of the Company. The Board receives a confirmation from all service
providers that there have been no instances of fraud, bribery or corruption.
The Independent External Auditor
During the year the Board entered into a competitive audit tender process and
on the 9 March 2015, Deloitte LLP was appointed as the Company's new auditor,
replacing Moore Stephens, who had been the independent external auditor from
the date of the initial listing on the LSE.
Independence, Objectivity and Fees
The independence and objectivity of the independent external auditor is
reviewed by the Audit Committee which also reviews the terms under which the
independent external auditor is appointed to perform non-audit services. The
Audit Committee has established pre-approval policies and procedures for the
engagement of Deloitte LLP to provide audit, assurance and tax services. No tax
services were provided during the year. These are that the external auditors
may not provide a service which:
* places them in a position to audit their own work;
* creates a mutuality of interest;
* results in the external auditor developing close relationships with service
providers of the Company;
* results in the external auditor functioning as a manager or employee of the
Company; or
* puts the external auditor in the role of advocate of the Company.
As a general rule, the Company does not utilise external auditors for internal
audit purposes, secondments or valuation advice. Services which are in the
nature of audit, such as tax compliance, tax structuring, private letter
rulings, accounting advice, quarterly reviews and disclosure advice are
normally permitted but must be pre-approved where individual fees are likely to
be above GBP25,000.
The following table summarises the remuneration paid to the previous and
current auditors for audit and non-audit services during the years ended 30
June 2015 and 2014:
30.06.15 30.06.14
GBP GBP
Statutory Audit 25,000 21,850
Total Audit fees 25,000 21,850
Interim Review 7,790 7,513
Total non-audit related fees 7,790 7,513
In line with the policies and procedures above, the Audit Committee does not
consider that the provision of these non-audit services, which comprised of
independent review of the Half Yearly Financial Report, to be a threat to the
objectivity and independence of the independent auditor.
Deloitte LLP also has safeguards in place to ensure objectivity and
independence. This includes:
* Review and challenge of key decisions by the Engagement Quality Review
Partner and engagement quality control review by a member of the
Independent Professional Standards Review Team.
When considering the effectiveness and independence of the independent external
auditors, and the effectiveness of the audit process, the Audit Committee meets
regularly with the external auditors to discuss the audit plan and the scope of
the audit. The Audit Committee also takes account of factors such as:
* The audit plan presented to them before each audit;
* The post audit report including variations from the original plan;
* Changes in audit personnel;
* The independent external auditors own internal procedures to identify
threats to independence; and
* Feedback from both the Investment Manager and Administrator evaluating the
performance of the team.
The Audit Committee has examined the scope and results of the audit, its cost
effectiveness and the independence and objectivity of the independent external
auditor, with particular regard to non-audit fees, and is satisfied that an
effective audit has been completed with diligence and professional scepticism,
that the scope of the audit was appropriate and significant judgements have
been challenged robustly. It also considers Deloitte LLP, as independent
external auditor, to be independent of the Company.
Reappointment of external auditors
Consequent to this review process, the Audit Committee has recommended to the
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Board that a resolution be put to the 2015 AGM for the reappointment of
Deloitte LLP as independent external auditor. The Board has accepted this
recommendation.
Internal control and risk management systems
The Audit Committee, after consultation with the Investment Manager and
independent external auditor, considers the key risk of misstatement in its
Financial Statements to be the override of controls by its service providers,
the Investment Manager and Administrator.
The Audit Committee reviews and examines externally prepared assessments of the
control environment in place at the Investment Manager and the Administrator.
No significant failings or weaknesses were identified in these reports.
The Audit Committee has also reviewed the need for an internal audit function.
The Audit Committee has decided that the systems and procedures employed by the
Investment Manager and the Administrator, including their internal audit
functions, provide sufficient assurance that a sound system of internal
control, which safeguards the Company's assets, is maintained. An internal
audit function specific to the Company is therefore considered unnecessary.
For any questions on the activities of the Audit Committee not addressed in the
foregoing, a member of the Audit Committee remains available to attend each AGM
to respond to such questions.
In finalising the Financial Statements for recommendation to the Board for
approval, the Audit Committee has satisfied itself that the Financial
Statements taken as a whole are fair, balanced and understandable, and provide
the information necessary for shareholders to assess the Company's performance,
business model and strategy.
Christopher Spencer
Chairman, Audit Committee
9 September 2015
Report of the Depositary to the Shareholders of Ruffer Investment Company
Limited
Northern Trust (Guernsey) Limited has been appointed as Depositary to Ruffer
Investment Company Limited (the "Company") in accordance with the requirements
of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of
the European Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and
Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the "AIFM Directive").
We have enquired into the conduct of Ruffer AIFM Limited (the "AIFM") and the
Company for the year ended 30 June 2015, in our capacity as Depositary to the
Company.
This report including the review provided below has been prepared for and
solely for the Shareholders in the Company. We do not, in giving this report,
accept or assume responsibility for any other purpose or to any other person to
whom this report is shown.
Our obligations as Depositary are stipulated in the relevant provisions of the
AIFM Directive and the relevant sections of Commission Delegated Regulation
(EU) No 231/2013 (collectively the "AIFMD legislation") and The Authorised
Closed Ended Investment Scheme Rules 2008.
Amongst these obligations is the requirement to enquire into the conduct of the
AIFM and the Company and their delegates in each annual accounting period.
Our report shall state whether, in our view, the Company has been managed in
that period in accordance with the AIFMD legislation. It is the overall
responsibility of the AIFM and the Company to comply with these provisions. If
the AIFM, the Company or their delegates have not so complied, we as the
Depositary will state why this is the case and outline the steps which we have
taken to rectify the situation.
The Depositary and its affiliates is or may be involved in other financial and
professional activities which may on occasion cause a conflict of interest with
its roles with respect to the Company. The Depositary will take reasonable care
to ensure that the performance of its duties will not be impaired by any such
involvement and that any conflicts which may arise will be resolved fairly and
any transactions between the Depositary and its affiliates and the Company
shall be carried out as if effected on normal commercial terms negotiated at
arm's length and in the best interests of Shareholders.
Basis of Depositary Review
The Depositary conducts such reviews as it, in its reasonable discretion,
considers necessary in order to comply with its obligations and to ensure that,
in all material respects, the Company has been managed (i) in accordance with
the limitations imposed on its investment and borrowing powers by the
provisions of its constitutional documentation and the appropriate regulations
and (ii) otherwise in accordance with the constitutional documentation and the
appropriate regulations. Such reviews vary based on the type of Fund, the
assets in which a Fund invests and the processes used, or experts required, in
order to value such assets.
Review
In our view, the Company has been managed during the period, in all material
respects:
(i) in accordance with the limitations imposed on the investment and
borrowing powers of the Company by the constitutional document; and by the
AIFMD legislation; and
(ii) otherwise in accordance with the provisions of the
constitutional document; and the AIFMD legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
9 September 2015
Independent Auditor's Report
To the Shareholders of Ruffer Investment Company Limited
Opinion on financial statements of Ruffer Investment Company Limited
In our opinion the financial statements:
* give a true and fair view of the state of the Company's affairs as at 30 June
2015 and of its profit for the year then ended;
* have been properly prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union; and
* have been prepared in accordance with the requirements of the Companies
(Guernsey) Law, 2008.
The financial statements comprise the Statement of Comprehensive Income, the
Statement of Financial Position, the Statement of Cash Flows, the Statement of
Changes in Equity and the related notes 1 to 21. The financial reporting
framework that has been applied in their preparation is applicable law and
IFRSs as adopted by the European Union.
Going concern
We have reviewed the Directors' statement that the Company is a going concern.
We confirm that:
* we have concluded that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate; and
* we have not identified any material uncertainties that may cast significant
doubt on the Company's ability to continue as a going concern.
However, because not all future events or conditions can be predicted, this
statement is not a guarantee as to the Company's ability to continue as a going
concern.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had
the greatest effect on our audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team:
Risk How the scope of our audit Findings
responded to the risk
Valuation and ownership of
investments
The investments balance of GBP We assessed the design and We did not identify any
314 million on the Company's implementation of controls differences that exceed
statement of financial around valuation and the clearly trivial
position as at 30 June 2015 ownership of investments. threshold between the
is the most quantitatively To test the valuation of prices used by the
significant balance and is investments as at 30 June Company and the
an area of focus because it 2015, we performed the independent pricing
is the main driver of the following: sources used in our
Company's performance and testing.
net asset value. Errors or To test the ownership of
deliberate manipulation of investments balance held We concur with
valuations or failure to within the portfolio as at management's assessment
maintain proper legal title 30 June 2015, we performed of the investments
of the assets held by the the following: classification on the
Company could result in fair value hierarchy.
material misstatement of the
financial statements.
Further details of the
accounting policy and how
investments are valued is in
note 2 and details of the
investments are disclosed in
note 10.
All investments were
appropriately agreed to
custodian confirmations
and investments
transactions we tested
were recorded in the
correct period.
Revenue recognition
The significant portion of We assessed the design and No misstatements were
the Company's income implementation of controls identified by our
emanates from fair value around income recognition. testing which required
adjustments (GBP20 million) on The gains/losses on reporting to those
investments held at fair investments held at fair charged with
value due to the materiality value comprise realised and governance.
of the investments balance unrealised gains/losses:
(see Note 6 and Note 10).
Inaccurate calculation of
the fair value gain/(loss)
adjustment would have a
material impact on income
recognition and thus the
Company's performance.
The description of risks above should be read in conjunction with the
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significant issues considered by the Audit Committee.
Our audit procedures relating to these matters were designed in the context of
our audit of the financial statements as a whole, and not to express an opinion
on individual accounts or disclosures. Our opinion on the financial statements
is not modified with respect to any of the risks described above, and we do not
express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
We determined materiality for the Company to be GBP6,744,000 which is
approximately 2% of net asset value. We have derived our materiality based on
the net asset value of the Company as we consider it to be the most important
balance on which the shareholders would judge the performance of the Company.
In 2014 the previous auditors set materiality at GBP3,150,000 on the basis of 1%
of total assets.
We agreed with the Audit Committee that we would report to the Committee all
audit differences in excess of GBP135,000 (2014: GBP150,000 was used by the
previous auditors), as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its
environment, including internal control, and assessing the risks of material
misstatement. Audit work to respond to the risks of material misstatement was
performed directly by the audit engagement team.
The Company is administered by a third party Guernsey regulated service
provider and as part of our audit we assessed the adequacy of the control
environment at the service provider for the purposes of our audit.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies (Guernsey) Law, 2008 we are required to report to you if,
in our opinion:
* we have not received all the information and explanations we require for our
audit; or
* proper accounting records have not been kept; or
* the financial statements are not in agreement with the accounting records.
We have nothing to report in respect of these matters.
Corporate Governance Statement
Under the Listing Rules we are also required to review the part of the
Corporate Governance Statement relating to the company's compliance with ten
provisions of the UK Corporate Governance Code. We have nothing to report
arising from our review.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are required to
report to you if, in our opinion, information in the annual report is:
* materially inconsistent with the information in the audited financial
statements; or
* apparently materially incorrect based on, or materially inconsistent with,
our knowledge of the Company acquired in the course of performing our audit; or
* otherwise misleading.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors. We also comply with International Standard on Quality
Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that
our quality control procedures are effective, understood and applied. Our
quality controls and systems include our dedicated professional standards
review team and independent partner reviews.
This report is made solely to the company's members, as a body, in accordance
with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and/or those further matters
we have expressly agreed to report to them on in our engagement letter and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we
have formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the annual report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications
for our report.
John Clacy FCA (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
St Peter Port, Guernsey
9 September 2015
Statement of Financial Position
30.06.15 30.06.14
Notes GBP GBP
ASSETS
Cash and cash equivalents 16,441,960 15,193,265
Derivative financial assets 18,19 6,770,940 850,868
Receivables 11 472,757 3,547,454
Investment assets at fair value through 10 314,296,168 300,291,140
profit or loss
Total assets 337,981,825 319,882,727
EQUITY
Capital and reserves attributable to the
Company's shareholders
Management share capital 13 2 2
Net assets attributable to holders of
redeemable
participating preference shares 337,222,401 318,040,568
Total equity 337,222,403 318,040,570
LIABILITIES
Payables 12 714,545 1,842,157
Derivative financial liability 18,19 44,877 -
Total liabilities 759,422 1,842,157
Total equity and liabilities 337,981,825 319,882,727
Net assets attributable to holders of
redeemable
participating preference shares (per 13,14 2.184 2.065
share)
The financial statements were approved on 9 September 2015 and signed on behalf
of the Board of Directors by:
Ashe Windham Christopher Spencer
Chairman Director
Statement of Comprehensive Income
01.07.14 to 01.07.13 to
30.06.15 30.06. 14
Notes Revenue Capital Total Total
GBP GBP GBP GBP
Fixed interest income 953,913 - 953,913 938,916
Dividend income 2 3,668,247 - 3,668,247 5,585,969
Net changes in fair value on
financial assets
at fair value through profit or 6 - 20,030,558 20,030,558 (13,973,194)
loss
Other gains 7 - 3,406,833 3,406,833 5,692,211
Total income 4,622,160 23,437,391 28,059,551 (1,756,098)
Management fees - (3,109,109) (3,109,109) (3,069,320)
Expenses (799,433) (212,245) (1,011,678) (959,078)
Total expenses (799,433) (3,321,354) (4,120,787) (4,028,398)
Profit/(loss) for the year 3,822,727 20,116,037 23,938,764 (5,784,496)
before tax
Withholding tax (401,806) - (401,806) (669,054)
Profit/(loss) for the year 3,420,921 20,116,037 23,536,958 (6,453,550)
after tax
Total comprehensive income/
(expense)
for the year 3,420,921 20,116,037 23,536,958 (6,453,550)
Basic and diluted earnings/ 2.22p 13.06p 15.28p (4.23p)
(loss) per share *
*Basic and diluted earnings/(loss) per share are calculated by dividing the
profit after taxation by the weighted average number of redeemable
participating preference shares. The weighted average number of shares for the
year was 154,065,196 (30.06.14: 152,720,745).
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Statement of Changes in Equity
Total
Share Other 01.07.14 to
capital reserves 30.06.15
GBP GBP GBP
Balance at 30 June 124,887,120 193,153,448 318,040,568
2014
Total comprehensive income for - 23,536,958 23,536,958
the year
Transactions with
Shareholders:
Share capital issued 891,950 - 891,950
Share issue costs (8,919) - (8,919)
Distribution for the - (5,238,156) (5,238,156)
year
Balance at 30 June 125,770,151 211,452,250 337,222,401
2015
Net Assets attributable to holders of redeemable participating
preference shares
at the end of the year 337,222,401
Total
Share Other 01.07.13 to
capital reserves 30.06.14
GBP GBP GBP
Balance at 30 June 114,304,639 204,809,454 319,114,093
2013
Total comprehensive expense for - (6,453,550) (6,453,550)
the year
Transactions with Shareholders:
Share capital issued 10,689,375 - 10,689,375
Share issue costs (106,894) - (106,894)
Distribution for the - (5,202,456) (5,202,456)
year
Balance at 30 June 124,887,120 193,153,448 318,040,568
2014
Net Assets attributable to holders of redeemable participating
preference shares
at the end of the year 318,040,568
Under The Companies (Guernsey) Law, 2008, the Company can distribute dividends
from capital and revenue reserves, subject to a net asset and solvency test.
Statement of Cash Flows
01.07.14 to 01.07.13 to
30.06.15 30.06.14
GBP GBP
Cash flows from operating activities
Purchase of financial assets at fair value (176,257,940) (113,427,911)
through profit or loss
Proceeds from sale of financial assets at 184,125,575 94,899,199
fair value through profit or loss
(including realised gains)
Other receivables (5,179) (1,794)
Transaction costs paid to brokers (212,245) (220,639)
Fixed interest income received 1,011,568 879,208
Dividends received 3,269,448 5,395,419
Operating expenses paid (3,859,045) (3,511,886)
Foreign exchange (gains)/losses (2,468,362) 4,384,532
Cash generated/(used in) from operating 5,603,820 (11,603,872)
activities
Cash flows from financing activities
Dividends paid (5,238,156) (5,202,456)
Proceeds from issue of redeemable participating 891,950 11,014,725
preference shares
Share issue costs (8,919) (110,147)
Net cash (used in)/generated from (4,355,125) 5,702,122
financing activities
Net increase/(decrease) in cash and cash 1,248,695 (5,901,750)
equivalents
Cash and cash equivalents at beginning of 15,193,265 21,095,015
the year
Cash and cash equivalents at end of the 16,441,960 15,193,265
year
The notes form an integral part of these accounts.
Notes to the Financial Statements
1. The Company
The Company was incorporated with limited liability in Guernsey on 1 June 2004
as a company limited by shares and as an authorised closed-ended investment
company. As an existing closed-ended fund the Company is deemed to be granted
an authorised declaration in accordance with section 8 of the Protection of
Investors (Bailiwick of Guernsey) Law, 1987, as amended and rule 6.02 of the
Authorised Closed-ended Investment Schemes Rules 2008. The Company is listed on
the Main Market of the LSE.
2. Significant accounting policies
1. The Company
The Company was incorporated with limited liability in Guernsey on 1 June 2004
as a company limited by shares and as an authorised closed-ended investment
company. As an existing closed-ended fund the Company is deemed to be granted
an authorised declaration in accordance with section 8 of the Protection of
Investors (Bailiwick of Guernsey) Law, 1987, as amended and rule 6.02 of the
Authorised Closed-ended Investment Schemes Rules 2008. The Company is listed on
the Main Market of the LSE.
2. Significant accounting policies
a) Statement of Compliance
The Financial Statements of the Company for the year ended 30 June 2015 have
been prepared in accordance with International Financial Reporting Standards
("IFRS") issued by the European Union and the Listing Rules of the London Stock
Exchange. They give a true and fair view and are in compliance with the
Companies (Guernsey) Law, 2008.
b) Basis of preparation
The Financial Statements are prepared in pounds sterling (GBP), which is the
Company's functional and presentation currency. The financial statements have
been prepared on a going concern basis under the historical cost convention, as
modified by the revaluation of financial assets and financial liabilities at
fair value through profit or loss.
This annual report and financial statements, covering the year from 1 July 2014
to 30 June 2015, has been audited.
c) Standards, amendments and interpretations that are not yet effective
The following standards and interpretations, which have not been applied in
these financial statements, were in issue at the reporting date but not yet
effective:
IFRS 9 - Financial instruments: Classification and measurement (effective date
- 1 January 2018)
IFRS 15 - Revenue from Contracts with Customers (effective date - 1 January
2018)
The Board anticipate that the adoption of these standards and interpretations
in a future period will not have a material impact on the financial statements
of the Company, other than IFRS 9. The Company is currently evaluating the
potential effect of this standard.
d) Financial instruments
i) Classification
Financial assets are classified into the following categories: financial assets
at fair value through profit or loss and loans and receivables.
The classification depends on the nature and purpose of the financial assets
and is determined at the time of initial recognition.
Financial liabilities are classified as either financial liabilities at fair
value through profit or loss or other financial liabilities.
ii) Recognition
Investment assets at fair value through profit or loss ("investments")
Financial assets and derivatives are recognised in the Company's Statement of
Financial Position when the Company becomes a party to the contractual
provisions of the instrument.
Purchases and sales of investments are recognised on the trade date (the date
on which the Company commits to purchase or sell the investment). Investments
purchased are initially recorded at fair value, being the consideration given
and excluding transaction or other dealing costs associated with the
investment.
Subsequent to initial recognition, investments are measured at fair value.
Gains and losses arising from changes in the fair value of investments and
gains and losses on investments that are sold are recognised through profit or
loss in the Statement of Comprehensive Income within net changes in fair value
of financial assets at fair value through profit or loss.
Derivatives
Forward foreign currency contracts are treated as derivative contracts and as
such are recognised at fair value on the date on which they are entered into
and subsequently re-measured at their fair value. Fair value is determined by
rates in active currency markets. All derivatives are carried as assets when
fair value is positive and as liabilities when fair value is negative. The gain
or loss on re-measurement to fair value is recognised immediately through
profit or loss in the Statement of Comprehensive Income within other gains in
the period in which they arise.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount
reported in the Statement of Financial Position if, and only if, there is a
currently enforceable legal right to offset the recognised amounts and there is
an intention to settle on a net basis, or to realise assets and settle the
liabilities simultaneously.
iii) Measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. Investments traded in active markets are valued at the
latest available bid prices ruling at midnight on the reporting date. The
Directors are of the opinion that the bid-market prices are the best estimate
on fair value. Gains and losses arising from changes in the fair value of
financial assets/(liabilities) are shown as net gains or losses on financial
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assets through profit or loss in note 10 and recognised in the Statement of
Comprehensive Income in the period in which they arise.
Derecognition of financial instruments
A financial asset is derecognised when: (a) the rights to receive cash flows
from the asset have expired, (b) the Company retains the right to receive cash
flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a "pass through arrangement"; or (c) the
Company has transferred substantially all the risks and rewards of the asset,
or has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability
is discharged, cancelled or expired.
Realised and unrealised gains and losses
Realised gains and losses arising on disposal of investments are calculated by
reference to the proceeds received on disposal and the average cost
attributable to those investments, and are recognised in the Statement of
Comprehensive Income. Unrealised gains and losses on investments are recognised
in the Statement of Comprehensive Income.
Fair value
Investments consist of listed or quoted equities or equity related securities,
options and bonds which are issued by corporate issuers, supra-nationals or
government organisations and investment in funds.
Investments traded in active markets are valued at the latest available bid
prices ruling at midnight on the reporting date.
Shares in investment funds are not listed on an actively traded exchange and
these are valued at the latest estimate of NAV from the administrator of the
respective investment funds as the most recent price is the best estimate of
the amount for which holdings could have been disposed of at the reporting
date.
e) Income
Dividend income from equity investments is recognised through profit or loss in
the Statement of Comprehensive Income when the relevant investment is quoted
ex-dividend. Investment income is included gross of withholding tax. Interest
income is recognised through profit or loss in the Statement of Comprehensive
Income for all debt instruments using the effective interest rate method.
f) Expenses
Expenses are accounted for on an accruals basis. Expenses incurred on the
acquisition of financial assets at fair value through profit or loss and
management fees are charged to the Statement of Comprehensive Income in
capital. All other expenses are recognised through profit or loss in the
Statement of Comprehensive Income in revenue.
g) Cash and cash equivalents
Cash comprises cash in hand and deemed deposits. Cash equivalents are
short-term, highly liquid investments with original maturities of three months
or less and bank overdrafts.
h) Translation of foreign currency
Functional and presentation currency
The financial statements of the Company are presented in the currency of the
primary economic environment in which the Company operates (its 'functional
currency'). The Directors have considered the currency in which the original
capital was raised, distributions will be made and ultimately the currency in
which capital would be returned in a liquidation. On balance, the Directors
believe that pounds sterling best represents the functional currency of the
Company. For the purpose of the financial statements, the results and financial
position of the Company are expressed in pounds sterling, which is the
presentation currency of the Company.
Foreign currency transactions are translated into the functional currency using
the exchange rate prevailing at the transaction date. Foreign exchange gains
and losses resulting from the settlement of such transactions and those from
the translation at period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of
Comprehensive Income.
Translation differences on non-monetary items such as financial assets held at
fair value through profit or loss are reported as part of net changes in fair
value on financial assets through profit or loss in the Statement of
Comprehensive Income.
i) Share issue costs
Share issue costs are fully written off against the share capital account in
the period of the share issue.
j) Redeemable participating preference shares
As the Company's redeemable participating preference shares are redeemable at
the sole option of the Directors they are required to be classified as equity
instruments.
k) Receivables
Receivables are amounts due in the ordinary course of business. If collection
is expected in one year or less, they are classified as current assets. If not,
they are presented as non-current assets. Receivables are recognised initially
at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
l) Payables
Payables are obligations to pay for services that have been acquired in the
ordinary course of business. Payables are classified as current liabilities if
payment is due within one year or less. If not, they are presented as
non-current liabilities. Payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method.
The following standards and interpretations, which have not been applied in
these financial statements, were in issue at the reporting date but not yet
effective:
IFRS 9 - Financial instruments: Classification and measurement (effective date
- 1 January 2018)
IFRS 15 - Revenue from Contracts with Customers (effective date - 1 January
2018)
The Board anticipate that the adoption of these standards and interpretations
in a future period will not have a material impact on the financial statements
of the Company, other than IFRS 9. The Company is currently evaluating the
potential effect of this standard.
d) Financial instruments
i. Classification
Financial assets are classified into the following categories: financial assets
at fair value through profit or loss and loans and receivables.
The classification depends on the nature and purpose of the financial assets
and is determined at the time of initial recognition.
Financial liabilities are classified as either financial liabilities at fair
value through profit or loss or other financial liabilities.
ii) Recognition
Investment assets at fair value through profit or loss ("investments")
Financial assets and derivatives are recognised in the Company's Statement of
Financial Position when the Company becomes a party to the contractual
provisions of the instrument.
Purchases and sales of investments are recognised on the trade date (the date
on which the Company commits to purchase or sell the investment). Investments
purchased are initially recorded at fair value, being the consideration given
and excluding transaction or other dealing costs associated with the
investment.
Subsequent to initial recognition, investments are measured at fair value.
Gains and losses arising from changes in the fair value of investments and
gains and losses on investments that are sold are recognised through profit or
loss in the Statement of Comprehensive Income within net changes in fair value
of financial assets at fair value through profit or loss.
Derivatives
Forward foreign currency contracts are treated as derivative contracts and as
such are recognised at fair value on the date on which they are entered into
and subsequently re-measured at their fair value. Fair value is determined by
rates in active currency markets. All derivatives are carried as assets when
fair value is positive and as liabilities when fair value is negative. The gain
or loss on re-measurement to fair value is recognised immediately through
profit or loss in the Statement of Comprehensive Income within other gains in
the period in which they arise.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount
reported in the Statement of Financial Position if, and only if, there is a
currently enforceable legal right to offset the recognised amounts and there is
an intention to settle on a net basis, or to realise assets and settle the
liabilities simultaneously.
iii) Measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. Investments traded in active markets are valued at the
latest available bid prices ruling at midnight on the reporting date. The
Directors are of the opinion that the bid-market prices are the best estimate
on fair value. Gains and losses arising from changes in the fair value of
financial assets/(liabilities) are shown as net gains or losses on financial
assets through profit or loss in note 10 and recognised in the Statement of
Comprehensive Income in the period in which they arise.
Derecognition of financial instruments
A financial asset is derecognised when: (a) the rights to receive cash flows
from the asset have expired, (b) the Company retains the right to receive cash
flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a "pass through arrangement"; or (c) the
Company has transferred substantially all the risks and rewards of the asset,
or has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability
is discharged, cancelled or expired.
Realised and unrealised gains and losses
Realised gains and losses arising on disposal of investments are calculated by
reference to the proceeds received on disposal and the average cost
attributable to those investments, and are recognised in the Statement of
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September 10, 2015 12:05 ET (16:05 GMT)
Comprehensive Income. Unrealised gains and losses on investments are recognised
in the Statement of Comprehensive Income.
Fair value
Investments consist of listed or quoted equities or equity related securities,
options and bonds which are issued by corporate issuers, supra-nationals or
government organisations and investment in funds.
Investments traded in active markets are valued at the latest available bid
prices ruling at midnight on the reporting date.
Shares in investment funds are not listed on an actively traded exchange and
these are valued at the latest estimate of NAV from the administrator of the
respective investment funds as the most recent price is the best estimate of
the amount for which holdings could have been disposed of at the reporting
date.
e) Income
Dividend income from equity investments is recognised through profit or loss in
the Statement of Comprehensive Income when the relevant investment is quoted
ex-dividend. Investment income is included gross of withholding tax. Interest
income is recognised through profit or loss in the Statement of Comprehensive
Income for all debt instruments using the effective interest rate method.
f) Expenses
Expenses are accounted for on an accruals basis. Expenses incurred on the
acquisition of financial assets at fair value through profit or loss and
management fees are charged to the Statement of Comprehensive Income in
capital. All other expenses are recognised through profit or loss in the
Statement of Comprehensive Income in revenue.
g) Cash and cash equivalents
Cash comprises cash in hand and deemed deposits. Cash equivalents are
short-term, highly liquid investments with original maturities of three months
or less and bank overdrafts.
h) Translation of foreign currency
Functional and presentation currency
The financial statements of the Company are presented in the currency of the
primary economic environment in which the Company operates (its 'functional
currency'). The Directors have considered the currency in which the original
capital was raised, distributions will be made and ultimately the currency in
which capital would be returned in a liquidation. On balance, the Directors
believe that pounds sterling best represents the functional currency of the
Company. For the purpose of the financial statements, the results and financial
position of the Company are expressed in pounds sterling, which is the
presentation currency of the Company.
Foreign currency transactions are translated into the functional currency using
the exchange rate prevailing at the transaction date. Foreign exchange gains
and losses resulting from the settlement of such transactions and those from
the translation at period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of
Comprehensive Income.
Translation differences on non-monetary items such as financial assets held at
fair value through profit or loss are reported as part of net changes in fair
value on financial assets through profit or loss in the Statement of
Comprehensive Income.
i) Share issue costs
Share issue costs are fully written off against the share capital account in
the period of the share issue.
j) Redeemable participating preference shares
As the Company's redeemable participating preference shares are redeemable at
the sole option of the Directors they are required to be classified as equity
instruments.
k) Receivables
Receivables are amounts due in the ordinary course of business. If collection
is expected in one year or less, they are classified as current assets. If not,
they are presented as non-current assets. Receivables are recognised initially
at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
l) Payables
Payables are obligations to pay for services that have been acquired in the
ordinary course of business. Payables are classified as current liabilities if
payment is due within one year or less. If not, they are presented as
non-current liabilities. Payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Financial Statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities,
income and expense and the accompanying disclosures. Uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future
periods.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and future periods if the revision affects both current and future
periods.
Judgements
In the process of applying the Company's accounting policies, management has
made the following judgement, which has the most significant effect on the
amounts recognised in the Financial Statements:
Functional currency
As disclosed in note 2(h), the Company's functional currency is Sterling.
Sterling is the currency in which the original capital was raised,
distributions are made and ultimately the currency in which capital would be
returned in a liquidation.
4. Taxation
The Company has been granted Exempt Status under the terms of The Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989 to income tax in Guernsey. Its
liability is an annual fee of GBP600 (which has increased to GBP1,200 with effect
from 1 January 2015).
The amounts disclosed as taxation in the Statement of Comprehensive Income
relates solely to withholding tax suffered at source on income. Foreign capital
gains tax charges are deducted from realised investment gains.
5. Dividends to shareholders
Dividends, if any, are declared semi-annually, usually in September and March
each year. The Company paid and declared the following dividends during the
year:
01.07.14 to 01.07.13 to
30.06.15 30.06.14
GBP GBP
2014 Second interim dividend of 1.7p 2,618,228 2,584,228
(2014: 1.7p)
2015 First interim dividend of 1.7p 2,619,928 2,618,228
(2014: 1.7p)
5,238,156 5,202,456
6. Net changes on financial assets at fair value through profit or loss
01.07.14 to 01.07.13 to
30.06.15 30.06.14
GBP GBP
Net changes on financial assets at fair value through
profit or loss
during the year
comprise:
Gains realised on investments sold 25,992,478 14,411,342
during the year
Losses realised on investments sold during the year (11,885,266) (10,660,518)
Movement in unrealised gains arising from changes in 13,234,311 4,507,503
fair value
Movement in unrealised losses arising from changes in (7,310,965) (22,231,521)
fair value
Net changes in fair value on financial assets at fair
value
through profit or 20,030,558 (13,973,194)
loss
7. Other gains
01.07.14 to 01.07.13 to
30.06.15 30.06.14
GBP GBP
Unrealised gains on forward foreign currency contracts 5,875,195 1,307,679
Realised (losses)/gains on forward foreign currency (836,339) 5,310,222
contracts
Other realised and unrealised foreign exchange losses (1,632,023) (925,690)
3,406,833 5,692,211
8. Management fees
Due to the recent changes introduced by virtue of the Alternative Investment
Fund Managers Directive ("AIFMD"), the Company terminated the Investment
Management Agreement with Ruffer LLP and appointed Ruffer AIFM Limited as the
new Investment Manager with effect from 22 July 2014. For additional
information refer to the General Information.
The management fees were charged to the capital reserves of the Company.
The management fees for the year, including outstanding balances at end of the
year, are detailed below.
01.07.14 to 01.07.13 to
30.06.15 30.06.14
GBP GBP
Management fees for the 3,109,109 3,069,320
year
Payable at end of 541,101 504,487
the year
The basis for calculating the management fees is set out in the General
Information.
9. Expenses
01.07.14 to 01.07.13 to
30.06.15 30.06.14
GBP GBP
Administration fee* 376,447 374,088
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Transaction costs 212,245 220,639
Directors' fees 160,000 160,000
General expenses 169,492 138,700
Custodian and Depositary 60,704 36,254
fees*
Audit fee 25,000 21,884
Auditors' remuneration for interim 7,790 7,513
review**
1,011,678 959,078
* The basis for calculating the Administration fees as well as the Custodian
and Depositary fees are set out in the General Information.
** Fees of GBP7,790 (30.06.14: GBP7,513) were paid to the Moore Stephens, in
respect of the interim review.
All expenses were charged to revenue apart from transaction costs of GBP212,245
(30.06.14: GBP220,639) which were charged to the capital reserves of the Company.
10. Investment assets at fair value through profit or loss
30.06.15 30.06.14
GBP GBP
Cost of investments held at start of 280,355,440 260,996,330
the year
Acquisitions at cost during the year 175,097,659 111,690,045
Disposals at cost during (167,015,977) (92,330,935)
the year
Cost of investments held at end of the 288,437,122 280,355,440
year
Fair value movement 25,859,046 19,935,700
Investments designated at fair value through profit or 314,296,168 300,291,140
loss
11. Receivables
30.06.15 30.06.14
GBP GBP
Amounts falling due within one year:
Sales of investments awaiting - 3,002,386
settlement
Investment income 250,943 270,778
receivable
Fixed interest income 212,138 269,793
receivable
Due on issue of redeemable participating preference - -
shares
Other receivables 9,676 4,497
472,757 3,547,454
The Directors consider that the carrying amount of receivables approximate to
their fair value.
12. Payables
30.06.15 30.06.14
GBP GBP
Amounts falling due within one year:
Purchases of investments awaiting - 1,160,280
settlement
Management fees 541,101 504,487
payable
Withholding taxes 32,831 49,659
payable
Directors' fees 40,000 40,000
payable
Other payables 100,613 87,731
714,545 1,842,157
The Directors consider that the carrying amount of payables approximate to
their fair value.
13. Share capital account
30.06.15 30.06.14
Authorised Share GBP GBP
Capital
100 Management Shares of GBP1.00 each 100 100
200,000,000 Unclassified Shares of 20,000 20,000
0.01p each
75,000,000 C Shares of 75,000 75,000
0.1p each
95,100 95,100
Number of shares Share Capital
30.06.15 30.06.14 30.06.15 30.06.14
Issued Share GBP GBP
Capital
Management Shares
Management Shares of GBP 2 2 2 2
1.00 each
Equity Shares
Redeemable Participating Preference
Shares of 0.01p
each:
Balance at start of 154,013,416 149,188,416 124,887,120 114,304,639
year
Issued during the 400,000 4,825,000 891,950 10,689,375
year
Share issue costs - - (8,919) (106,894)
Balance as at end 154,413,416 154,013,416 125,770,151 124,887,120
of year
Management shares
The Management shares, of which there are 2 in issue, were created to comply
with the Company Memorandum and Amended and Restated Articles of Association.
The management shares carry one vote each on a poll, do not carry any right to
dividends and, in a winding-up, rank only for a return of the amount of the
paid-up capital on such shares after return of capital on all other shares in
the Company. The management shares are not redeemable.
Unclassified shares
Unclassified shares can be issued as nominal shares or redeemable participating
preference shares. Nominal shares can only be issued at par to the
Administrator. The Administrator is obliged to subscribe for nominal shares for
cash at par when redeemable participating preference shares are redeemed to
ensure that funds are available to redeem the nominal amount paid up on
redeemable participating preference shares.
The holder or holders of nominal shares shall have the right to receive notice
of and to attend general meetings of the Company but shall not be entitled to
vote thereat. Nominal shares shall carry no right to dividends. In a
winding-up, holders of nominal shares shall be entitled to be repaid an amount
equal to their nominal value out of the assets of the Company.
The holders of fully paid redeemable participating preference shares carry a
preferential right to a return of capital in priority to the management shares
but have no pre-emptive right and are entitled to one vote at all meetings of
the relevant class of shareholders.
C Shares
There were no C Shares in issue at year end (30.06.14: Nil).
Blocklisting and additional shares issued
At the start of the year, the Company had the ability to issue 14,081,342
redeemable participating shares under a blocklisting facility. During the year
the Company made no (30.06.14: 3,464,820) further application to the Financial
Conduct Authority and to the London Stock Exchange for redeemable participating
preference shares of 0.01 pence each to be admitted to the Official List under
a general corporate purposes blocklisting facility. Under the blocklisting
facility, 400,000 new redeemable participating preference shares of 0.01 pence
each were allotted and issued during the year for a total consideration of GBP
891,950. These new redeemable participating preference shares rank pari passu
with the existing shares in issue.
As at 30 June 2015, the Company had the ability to issue a further 13,681,342
(30.06.14 14,081,342) redeemable participating preference shares under the
blocklisting facility.
Redeemable participating preference shares in issue
As at 30 June 2015 the Company had 154,413,416 redeemable participating
preference shares of 0.01 pence each and 2 Management shares of GBP1.00 each in
issue. Therefore, the total voting rights in the Company at 30 June 2015 were
154,413,418.
Purchase of Own Shares by the Company
The Company operates a Share Buyback Facility whereby it may purchase, subject
to various terms as set out in its Articles and in accordance with the
Companies (Guernsey) Law, 2008, up to 14.99 per cent. of the Company's shares
in issue following the admission of shares trading on the LSE's market for
listed securities.
During the year the Company did not purchase any of its own shares (2014: Nil).
For additional information refer to note 20.
14. NAV reconciliation
The Company announces its NAV, based on mid-market value, to the LSE after each
weekly and month end valuation point. The following is a reconciliation of the
NAV per share attributable to redeemable participating preference shareholders
as presented in these financial statements, using International Financial
Reporting Standards to the NAV per share reported to the LSE:
30.06.15 30.06.14
GBP GBP
NAV per share for valuation purposes 2.188 2.061
IAS 39 valuations (MID (0.004) (0.002)
to BID)
Adjustment to valuation* - 0.006
Net assets attributable to holders of
redeemable
participating preference shares (per 2.184 2.065
share)
*This was an adjustment to the valuation which had been understated at 30 June
2014 as a result of an administrative error.
15. Contingent liabilities
There were no contingent liabilities as at 30 June 2015 (30.06.14 no contingent
liabilities).
16. Related party transactions
The Directors are responsible for the determination of the investment policy of
the Company and have overall responsibility for the Company's activities.
Investment Management Agreement
Due to the recent changes introduced by virtue of the Alternative Investment
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Fund Managers Directive ("AIFMD"), the Company terminated the Investment
Management Agreement with Ruffer LLP and appointed Ruffer AIFM Limited as the
new Investment Manager with effect from 22 July 2014. For further details refer
to the General Information.
The Company is managed by Ruffer AIFM Ltd, a subsidiary of Ruffer LLP, a
privately owned business registered in England and Wales as a limited liability
partnership. The Company and the Investment Manager have entered into an
Investment Management Agreement under which the Investment Manager has been
given responsibility for the day-to-day discretionary management of the
Company's assets (including uninvested cash) in accordance with the Company's
investment objective and policy, subject to the overall supervision of the
Directors and in accordance with the investment restrictions in the Investment
Management Agreement and the Company's Articles of Association.
The market value of CF Ruffer Japanese Fund, CF Ruffer Gold Fund and Ruffer
Illiquid Strategies Fund of Funds 2009 Limited are deducted from the NAV of the
Company before the calculation of management fees on a monthly basis. For
additional information refer to the Portfolio Statement. Management fees for
the year and payable at end of the year are disclosed in Note 8.
Shares held in the managing member of Ruffer LLP
As at 30 June 2015, an immediate family member of the Chairman Ashe Windham
owned 100 (30.06.14: 100) shares in the Managing Member of the Ruffer LLP. This
amounts to less than 5% (30.06.14: less than 5%) of the company's issued share
capital.
Directors
The Company has six non-executive directors, all of whom except Wayne Bulpitt
and Peter Luthy are independent of the Investment Manager.
Under the Corporate Governance Code Wayne Bulpitt and Peter Luthy are not
considered to be independent by reason of being directors of Ruffer Illiquid
Strategies Fund of Funds 2009 Limited, Ruffer Illiquid Strategies Fund of Funds
2011 Limited, Ruffer Illiquid Multi Strategies 2015 Fund Limited and Ruffer
Illiquid Multi Strategies Fund Limited, all of which are Guernsey registered
investment companies managed by the Company's Investment Manager.
Remuneration
Directors remuneration is set out in the Directors' Remuneration Report.
Shares held by related parties
As at 30 June 2015, Directors of the Company held the following numbers of
shares beneficially:
30.06.15 30.06.14
Directors Shares Shares
Ashe Windham* 85,000 80,000
Christopher Spencer 14,157 14,157
Jeannette Etherden 36,627 36,627
Peter Luthy 120,000 120,000
Wayne Bulpitt 20,000 20,000
* Ashe Windham holds 67,000 shares whilst his wife holds 18,000.
As at 30 June 2015, Hamish Baillie, Investment Director of the Investment
Manager owned 143,000 (30.06.14: 100,000) shares in the Company. Hamish Baillie
acquired a further 43,000 shares on 18 August 2014.
As at 30 June 2015, Steve Russell, Investment Director of the Investment
Manager owned 6,450 (30.06.14: 6,450) shares in the Company.
As at 30 June 2015, the Ruffer LLP (the parent company of the Company's
Investment Manager) and other entities within the Ruffer Group held 10,198,775
(30.06.14: 9,651,004) shares in the Company on behalf of its discretionary
clients.
Investments in related funds
As at 30 June 2015, the Company held investments in seven (30.06.14: six)
related investment funds valued at GBP49,095,612 (30.06.14: GBP26,042,209). Refer
to the Portfolio Statement for details.
17. Operating segment reporting
The Board of Directors makes the strategic resource allocations on behalf of
the Company. The Company has determined the operating segments based on the
reports reviewed by the Board, which are used to make strategic decisions.
The Board is responsible for the Company's entire portfolio and considers the
business to have a single operating segment. The Board's asset allocation
decisions are based on a single, integrated investment strategy, and the
Company's performance is evaluated on an overall basis.
There were no changes in the reportable segments during the year.
As required by IFRS 8, the total fair value of the financial instruments held
by the Company by each major geographical segment, and the equivalent
percentages of the total value of the Company, are reported in the Portfolio
Statement.
Revenue earned is reported separately on the face of the Condensed Statement of
Comprehensive Income as dividend income received from equities, and interest
income received from fixed interest securities and bank deposits.
The Statement of Cash Flows separately reports cash flows from operating,
investing and financing activities.
18. Financial instruments
In accordance with its investment objectives and policies, the Company holds
financial instruments which at any one time may comprise the following:
* securities held in accordance with the investment objectives and policies;
* cash and short-term receivables and payables arising directly from
operations;
* derivative transactions including investment in forward foreign currency
contracts; and
* borrowing used to finance investment activity up to a maximum of 30% of the
NAV of the Company.
Terms, conditions and accounting policies
The financial instruments held by the Company comprise principally of
internationally listed or quoted equities or equity related securities
(including convertibles), and/or bonds which are issued by corporate issuers,
supra-nationals or government organisations.
Details of the significant accounting policies and methods adopted, including
the criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of its financial assets and
liabilities are disclosed in note 2. The following table analyses the carrying
amounts of the financial assets and liabilities by category as defined in IAS
39.
The following are the categories of financial instruments held by the Company
at the reporting date:
30.06.15 30.06.14
Fair Value Fair Value
GBP GBP
Financial assets
Listed securities 291,449,609 280,066,780
UCITS funds 22,846,559 20,224,360
Derivative financial 6,770,940 850,868
assets
Total financial assets at fair value through profit 321,067,108 301,142,008
and loss
Other financial assets* 16,914,717 18,740,719
*Other financial assets include cash and cash equivalents and receivables.
30.06.15 30.06.14
Fair Value Fair Value
GBP GBP
Financial liabilities
Payables 714,545 1,842,157
Derivative financial 44,877 -
liabilities
759,422 1,842,157
19. Financial risk management and associated risks
The Company is exposed to a variety of financial risks as a result of its
activities. These risks include market risk (including price risk, foreign
currency risk and interest rate risk), credit risk and liquidity risk. These
risks, which have applied throughout the year and the Investment Manager's
policies for managing them are summarised as follows:
Market risk
Market risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. The Company's
activities expose it primarily to the market risks of changes in market prices,
interest rates and foreign currency exchange rates.
Market price risk
Market price risk arises mainly from the uncertainty about future prices of the
financial instruments held by the Company. It represents the potential loss the
Company may suffer through holding market positions in the face of price
movements.
The Company's investment portfolio is exposed to market price fluctuations
which are monitored by the Investment Manager in pursuance of the investment
objectives and policies. Adherence to investment guidelines and to investment
and borrowing powers set out in the Placing and Offer for Subscription document
mitigates the risk of excessive exposure to any particular type of security or
issuer.
Market price sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to
equity, investment funds and bond price risks at the reporting date. The 10%
reasonably possible price movement for equity related securities and investment
funds and a 100 basis point increase or a 25 basis point reduction for the
interest rate used by the Company is based on the Investment Manager's best
estimates.
A 10% (30.06.14: 10%) increase in the market prices of equity related
investments as at 30 June 2015 would have increased the net assets attributable
to holders of redeemable participating preference shares by GBP19,646,011
(30.06.14: GBP19,269,921) and an equal change in the opposite direction would
have decreased the net assets attributable to holders of redeemable
participating preference shares by an equal opposite amount.
(MORE TO FOLLOW) Dow Jones Newswires
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A sensitivity analysis based on the interest rates of bond related investments
as at 30 June 2015 has been considered under Interest rate risk.
Actual trading results may differ from the above sensitivity analysis and these
differences could be material.
Foreign currency risk
Foreign currency risk arises from fluctuations in the value of a foreign
currency. It represents the potential loss the Company may suffer though
holding foreign currency assets in the face of foreign exchange movements.
As a portion of the Company's investment portfolio is invested in securities
denominated in currencies other than Sterling (the functional and presentation
currency of the Company) the Statement of Financial Position may be
significantly affected by movements in the exchange rates of such currencies
against Sterling. The Investment Manager has the power to manage exposure to
currency movements by using options, warrants and/or forward foreign currency
contracts and details of the holdings of such instruments at the date of these
financial statements is set out below and on the following.
As at 30 June 2015, the Company had seven (30.06.14: four) open forward foreign
currency contracts.
Forward contracts
Notional 30.06.15
amount
of contracts Fair value
Expiration Underlying outstanding assets/
(liabilities)
GBP
17 July 2015 Foreign currency (Purchase US$106,091,000 4,616,671
of USD)
17 July 2015 Foreign currency (Purchase US$14,033,000 121,227
of USD)
17 July 2015 Foreign currency (Purchase ¥2,810,016,000 1,360,983
of JPY)
17 July 2015 Foreign currency (Purchase ¥3,725,600,000 438,199
of JPY)
14 August 2015 Foreign currency (Purchase EUR 19,842,000 233,860
of EUR)
14 August 2015 Foreign currency (Sale of EUR 942,000 (18,951)
EUR)
14 August 2015 Foreign currency (Sale of EUR 2,814,000 (25,926)
EUR)
6,726,063
Notional 30.06.14
amount
of contracts Fair value
Expiration Underlying outstanding assets/
(liabilities)
GBP
02 July 2014 Foreign currency (Purchase US$2,538,376 7,239
of USD)
14 July 2014 Foreign currency (Purchase US$25,096,800 412,383
of USD)
15 August 2014 Foreign currency (Purchase EUR10,042,000 180,260
of EUR)
12 September 2014 Foreign currency (Purchase ¥ 247,178
of JPY) 4,379,336,200
847,060
Spot Contracts
As at 30 June 2015, the Company had no (30.06.14: one) open spot foreign
currency contracts.
Notional 30.06.14
amount
of contracts Fair value
Expiration Underlying outstanding asset
GBP
2 July 2014 Foreign currency (Sale of US$2,595,254 3,808
USD)
3,808
The Investment Manager's treatment of currency transactions other than in
Sterling is set out in note 2 to the financial statements under "Translation of
foreign currency" and "Forward foreign currency contracts".
As at 30 June 2015 and 2014, the Company held the following assets and
liabilities in currencies other than the functional currency:
30.06.15 30.06.15 30.06.14 30.06.14
Assets Liabilities Assets Liabilities
GBP GBP GBP GBP
Japanese Yen 50,636,118 3,677 43,376,209 -
United States Dollar 99,471,282 - 64,038,696 33,872
Swiss Franc 1,494,382 - - -
Euro 12,006,750 54,568 9,875,352 -
Canadian Dollar - - 6,396,711 -
Australian Dollar - - 1,242,410 -
Hong Kong Dollar 6,574,321 10,068 6,169,541 -
Singapore Dollar - - 4,610,654 -
Foreign currency sensitivity
As at 30 June 2015, if the foreign exchange rates had weakened 10% (30.06.14:
10%) against Sterling with all other variables held constant, net assets
attributable to holders of redeemable participating preference shares would be
GBP40,549,845 (30.06.14: GBP19,674,339) lower net of open forward foreign currency
contracts and due mainly as a result of foreign currency losses on translation
of these financial assets and liabilities to Sterling. As at 30 June 2015, a
10% (30.06.14: 10%) strengthening of the foreign exchange rates against
Sterling would have resulted in an equal but opposite effect on the net assets
attributable to holders of redeemable participating preference shares. Any
changes in the foreign exchange rate will directly affect the profit and loss,
allocated to the capital column of the Statement of Comprehensive Income.
Actual trading results may differ from the above sensitivity analysis and these
differences could be material.
Interest rate risk
Interest rate risk represents the uncertainty of investment return due to
changes in the market rates of interest.
The Company invests in fixed and floating rate securities. The income of the
Company may be affected by changes to interest rates relevant to particular
securities or as a result of the Investment Manager being unable to secure
similar returns on the expiry of contracts or sale of securities. Interest
receivable on bank deposits or payable on the bank overdraft positions will be
affected by fluctuations in interest rates.
The Investment Manager actively manages the Company's exposure to interest rate
risk, paying heed to prevailing interest rates and economic conditions, market
expectations and their own opinions of likely movements in interest rates.
Currently the entire exposure of the Company to fixed interest securities is in
the form of index-linked bonds. The value of these investments is determined by
current and expected inflation and interest rates.
The value of fixed interest securities will be affected by general changes in
interest rates that will in turn result in increases or decreases in the market
value of those instruments. When interest rates decline, the value of the
Company's investments in fixed rate debt obligations can be expected to rise,
and when interest rates rise, the value of those investments may decline.
The investment portfolio details the security type, issuer, interest rate, and
maturity date of all of the Company's fixed and floating rate securities as at
30 June 2015 and 2014.
The tables below summarises the Company's exposure to interest rate risks. It
includes the Company's financial assets and liabilities at fair values,
categorised by the earlier of contractual re-pricing or maturity dates.
As at 30 June 2015
Floating Fixed Non-Interest Total
rate rate bearing 30.06.15
GBP GBP GBP GBP
Financial Assets
Cash and cash 16,441,960 - - 16,441,960
equivalents
Investments designated at
fair value
through profit or - 117,836,056 196,460,112 314,296,168
loss
Unrealised gain on open
forward
foreign currency - - 6,770,940 6,770,940
contracts
Receivables - - 472,757 472,757
16,441,960 117,836,056 203,703,809 337,981,825
Financial
Liabilities
Payables - - 714,545 714,545
Unrealised loss on open
forward
foreign currency - - 44,877 44,877
contracts
- - 759,422 759,422
As at 30 June 2014
Floating Fixed Non-Interest Total
rate rate bearing 30.06.14
(MORE TO FOLLOW) Dow Jones Newswires
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GBP GBP GBP GBP
Financial Assets
Cash and cash 15,193,265 - - 15,193,265
equivalents
Investments designated at
fair value
through profit or - 107,591,933 192,699,207 300,291,140
loss
Unrealised gain on open
forward
foreign currency - - 850,868 850,868
contracts
Receivables - - 3,547,454 3,547,454
15,193,265 107,591,933 197,097,529 319,882,727
Financial
Liabilities
Payables - - 1,842,157 1,842,157
- - 1,842,157 1,842,157
The table below summarises weighted average effective interest rates for
financial instruments.
Weighted Weighted
average average
period period
30.06.15 for which 30.06.14 for which
rate/ rate/
% p.a. yield is % p.a. yield is
fixed fixed
United Kingdom government -0.8478% 27.05 years -0.5971% 24.79 years
bonds
United States government 0.2619% 8.02 years -0.0523% 11.45 years
bonds
Interest rate sensitivity analysis
An increase of 100 basis points (30.06.14: 100 basis points) in interest rates
as at the reporting date would have decreased the net assets attributable to
holders of redeemable participating preference shares by GBP19,373,301 (30.06.14:
GBP17,474,743) and a decrease of 25 basis points (30.06.14: 25 basis points) in
interest rates would have increased the net assets attributable to holders of
redeemable participating preference shares by GBP4,843,325 (30.06.14: GBP
4,368,686).
Key determinants include economic growth prospects, inflation, governments'
fiscal positions and rates on nominal bonds of similar maturities. This
sensitivity analysis assumes only a 100 basis point increase and a 25 basis
point decrease in interest rates, with all other variables unchanged. This
would be the equivalent of a 100 basis point increase and 25 basis point
decreases in 'real' interest rates and as such is likely to overstate the
actual impact of such a move in nominal rates.
As all the Company's fixed rate securities are index-linked bonds, their
yields, and as a consequence their prices, are determined by market perception
as to the appropriate level of yields given the economic background.
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company.
Failure of any relevant counterparty to perform its obligations in respect of
these items may lead to a financial loss.
The Company is exposed to credit risk in respect of cash and cash equivalents
and receivables. The credit risk associated with debtors is limited to the
unrealised gains on open derivative contracts such as forward foreign currency
contracts, as detailed above and receivables. It is the opinion of the Board of
Directors that the carrying amounts of these financial assets represent the
maximum credit risk exposure as at the reporting date.
The Company will not invest in the securities of any company that is not quoted
or does not have a listing on a market specified in the Financial Services and
Markets Act 2000 (Financial Promotions) Order 2001 except for investments in
investment funds and such other financial markets as may be specifically agreed
from time to time between the Board and the Investment Manager.
All transactions in listed securities are settled/paid upon delivery using
approved brokers. The risk of default is considered minimal, as delivery of
securities sold is only made once the broker has received payment. Payment is
made on a purchase once the securities have been received by the broker. The
trade will fail if either party fails to meet their obligation.
The Placing and Offer for Subscription document allows investment in a wide
universe of equity related securities and bonds, including countries that may
be classed as emerging or developing. In adhering to investment restrictions
set out within the document, the Company mitigates the risk of any significant
concentration of credit risk.
Credit risk analysis
The Company's maximum credit exposure is limited to the carrying amount of
financial assets recognised at the reporting date, as summarised below:
30.06.15 30.06.14
GBP GBP
Cash and cash 16,441,960 15,193,265
equivalents
Unrealised gain in open forward foreign currency 6,770,940 850,868
contracts
Receivables 472,757 3,547,454
Financial assets at fair value through 314,296,168 300,291,140
profit or loss
337,981,825 319,882,727
The Company is exposed to material credit risk in respect of cash and cash
equivalents. All cash is placed with Northern Trust (Guernsey) Limited
("NTGL").
NTGL is a wholly owned subsidiary of The Northern Trust Corporation ("TNTC").
TNTC is publicly traded and a constituent of the S&P 500. TNTC has a credit
rating of A+ (30.06.14: A+) from Standard & Poor's and A2 (30.06.14: A2) from
Moody's.
The Moody's and/or Standard and Poor (S&P) credit ratings of the issuers of
Bonds held by the Company as at 30 June 2015 were as follows:
30.06.15
S&P Moody's
UK Index-Linked Gilt 1.875% 22/11/2022 NR Aa1
UK Inflation Indexed Gilt 0.125% 22/03/2024 NR Aa1
UK Index-Linked Gilt 1.25% 22/11/2055 NR Aa1
UK Inflation Indexed Gilt 0.375% 22/03/ NR Aa1
2062
US Treasury Inflation Indexed 1.125% Bond 15/01/2021 AA+ Aaa
US Treasury Inflation Indexed 0.625% Bond 15/07/2021 AA+ Aaa
US Treasury Inflation Indexed 0.125% Bond 15/01/2023 AA+ Aaa
US Treasury Inflation Indexed 0.375% Bond 15/07/2023 AA+ Aaa
US Treasury Inflation Indexed 2.125% Bond 15/02/2041 AA+ Aaa
US Treasury Inflation Indexed 0.625% Bond 15/02/2043 AA+ Aaa
AA+ Aaa
NR: indicates that these securities are not rated by S&P.
None of the Company's financial assets are secured by collateral or other
credit enhancements.
Derivatives
The Company has gained exposure to derivative contracts (predominantly options
and forward currency contracts) as a risk management tool. The intention of
using such derivative contracts has been primarily to minimise the exposure of
the Company to negative consequences arising from changes to foreign exchange
rates, interest rates, market volatility and to protect the portfolio from a
correlated fall in bonds and equities. At the Statement of Financial Position
date all such instruments (except forward foreign exchange contracts) were held
within the Ruffer Protection Strategies vehicle as detailed in the Portfolio
Statement.
Fair value
IFRS 7 requires the Company to classify fair value hierarchy that reflects the
significance of the inputs used in making the measurements. IFRS 7 establishes
a fair value hierarchy that prioritises the inputs to valuation techniques used
to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy under IFRS 7 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 (that is, as prices) or
indirectly (that is, derived from prices); and
Level 3 Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety. For
this purpose, the significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses observable inputs
that require significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Assessing the significance of a
particular input to the fair value measurement in its entirety requires
judgment, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant
judgment by the Company. The Company considers observable data to be that
market data that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
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The following table presents the Company's financial assets and liabilities by
level within the valuation hierarchy as of 30 June 2015.
30.06.15
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at fair
value
through profit or loss:
Government Indexed-Linked Bonds 117,836,056 - - 117,836,056
Preference Shares 4,495,206 - - 4,495,206
Options - 6,635,373 - 6,635,373
Equities 150,945,921 - 1,409,625 152,355,546
Investment Funds - 32,973,987 - 32,973,987
Derivative financial asset - 6,770,940 - 6,770,940
Total assets 273,277,183 46,380,300 1,409,625 321,067,108
Financial liabilities at
fair value
through profit or loss:
Unrealised loss on open
forward
Derivative financial - 44,877 - 44,877
liability
Total liabilities - 44,877 - 44,877
The following table presents the Company's financial assets and liabilities by
level within the valuation hierarchy as of 30 June 2014.
30.06.14
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at
fair value
through profit or loss:
Government Indexed-Linked 107,591,933 - - 107,591,933
Bonds
Preference Shares 716,038 716,038
Options 2,616,339 - - 2,616,339
Equities 173,010,033 - - 173,010,033
Investment Funds - 16,356,797 - 16,356,797
Derivative financial - 850,868 - 850,868
asset
Total assets 283,934,343 17,207,665 - 301,142,008
Financial liabilities
at fair value
through profit or loss:
Unrealised loss on open - - - -
forward
Derivative financial - - - -
liability
Total liabilities - - - -
The Company recognises transfers between levels of fair value hierarchy as of
the end of the reporting period during which the transfer has occurred. At 30
June 2015, the following transfers were made:
* the investment in Renn Universal Growth Trust Ltd ("Renn") was transferred
from Level 1 to Level 3 as a result of delisting Renn's shares from the
stock exchange in early 2015; and
* the investment in Ruffer Protection Strategies International ("RPSI") was
transferred from Level 1 to Level 2 as RPSI's investments are mostly in
over-the-counter options.
Movements in Level 3 investments
30.06.15 30.06.14
GBP GBP
Opening valuation - -
Transfer from Level 1,409,625 -
1
Purchases at cost - -
Sales proceeds - -
Realised gains on - -
sale
Unrealised movement on revaluation of investments - -
Closing valuation 1,409,625 -
Assets classified in Level 1 consists of listed or quoted equities or equity
related securities, options and bonds which are issued by corporate issuers,
supra-nationals or government organisations.
Assets classified in Level 2 are investment in funds fair-valued using the
official NAV of each fund as reported by each fund's independent administrator
at the reporting date.
Liquidity risk
Liquidity risk is the risk that the Company will find it difficult or
impossible to realise assets or otherwise raising funds to meet financial
commitments.
The Company's liquidity risk is managed by the Investment Manager who monitors
the cash positions on a regular basis. The Company's overall liquidity risks
are monitored on a regular basis by the Board of Directors and a formal report
is made by the Investment Manager to the Directors at each Board Meeting.
As at 30 June 2015 and 2014, the Company had no significant financial
liabilities other than short-term payables arising directly from investing
activity.
20. Capital risk management
The fair value of the Company's financial assets and liabilities approximate to
their carrying amounts at the reporting date. For the purposes of this
disclosure, redeemable participating preference shares are considered to be
capital.
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. There are no
externally-imposed capital requirements on the Company.
The Company has the ability to borrow up to 30% of its NAV at any time for
short-term or temporary purposes as is necessary for the settlement of
transactions, to facilitate redemption (where applicable) or to meet ongoing
expenses. The Company does not have, nor does it intend to adopt, any
structural gearing. The gearing ratio below is calculated as total liabilities
divided by total equity.
30.06.15 30.06.14
GBP GBP
Total assets 337,981,825 319,882,727
Less: total (759,422) (1,842,157)
liabilities
Total equity 337,222,403 318,040,570
Gearing ratio 0.23% 0.58%
The Board considers this gearing ratio to be adequate since total liabilities
above refer only to other payables and unrealised losses on open forward
foreign currency contracts.
Redemption Facility
The Company has a Redemption Facility (which takes the form of a tender offer
to all holders of redeemable participating preference shares) which was made
available after 8 July 2007. This facility may operate annually, in November
each year, at the discretion of the Directors. Redemptions on any Redemption
Date may be restricted to a maximum of 25% in aggregate of the Shares then in
issue, with any tender requests from shareholders in excess of this being
scaled back pro rata.
The facility is intended to address any imbalance in the supply and demand for
the shares and to assist in maintaining a narrow discount to the NAV per Share
at which the shares may be trading. The Company, will at the sole discretion of
the Directors:
i. purchase shares when deemed appropriate; and
ii. allow an annual redemption of up to 25% of the issued shares at the
prevailing NAV per Share and may operate annually in November of each year.
Purchase of Own Shares by the Company
An ordinary resolution was granted on 19 November 2014 which authorised the
Company in accordance with The Companies (Guernsey) Law, 2008 to make purchases
of its own shares as defined in that Ordinance of its redeemable participating
preference shares of 0.0lp each, provided that:
i. the maximum number of Shares the Company can purchase is no more than
14.99% of the Company's issued share capital;
ii. the minimum price (exclusive of expenses) which may be paid for a Share is
0.01 pence, being the nominal value per share;
iii. the maximum price (exclusive of expenses) which may be paid for the Share
is an amount equal to the higher of (i) 105% of the average of the middle
market quotations for a Share taken from the London Stock Exchange Daily
Official List for the 5 business days immediately preceding the day on
which the Share is purchased and (ii) the price stipulated in Article 5(i)
of the Buyback and Stabilisation Regulation (No 2237 of 2003);
iv. purchases may only be made pursuant to this authority if the Shares are (at
the date of the proposed purchase) trading on the London Stock Exchange at
a discount to the lower of the undiluted or diluted NAV;
v. the authority conferred shall expire at the conclusion of the AGM of the
Company in 2014 or, if earlier, on the expiry of 15 months from the passing
of this resolution, unless such authority is renewed prior to such time;
and
vi. the Company may make a contract to purchase Shares under the authority
hereby conferred prior to the expiry of such authority which will or may be
executed wholly or partly after the expiration of such authority and may
make a purchase of Shares pursuant to any such contract.
21. Subsequent events
These financial statements were approved for issuance by the Board on 9
September 2015. Subsequent events have been evaluated until this date.
Subsequent to the year end and up to the date of this report, the Company
allotted and issued 925,000 redeemable participating preference shares of 0.01
pence under the blocklisting facility for a consideration of GBP2,015,600.
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As at the date of this report the Company had 155,338,416 redeemable
participating preference shares of 0.01p each and 2 Management shares of GBP1.00
each in issue. Therefore, the total voting rights in the Company at the date of
this report were 155,338,418.
Portfolio Statement as at 30 June 2015
Fair %
Holding at Value of Total
Currency 30.06.15 GBP Net
Assets*
Government Index-Linked Bonds 34.95%
(30.06.14 - 33.83%)
United Kingdom
UK Index-Linked Gilt 1.875% 22/11/2022 GBP 13,700,000 20,914,596 6.21
UK Inflation Indexed Gilt 0.125% 22/03/2024 GBP 6,190,000 7,128,695 2.11
UK Index-Linked Gilt 1.25% 22/11/2055 GBP 7,200,000 18,923,911 5.61
UK Inflation Indexed Gilt 0.375% 22/03/2062 GBP 8,000,000 14,629,104 4.34
61,596,306 18.27
United States
US Treasury Inflation Indexed 1.125% Bond USD 22,000,000 16,002,352 4.75
15/01/2021
US Treasury Inflation Indexed 0.625% Bond USD 19,350,000 13,330,762 3.95
15/07/2021
US Treasury Inflation Indexed 0.125% Bond USD 19,000,000 12,164,051 3.61
15/01/2023
US Treasury Inflation Indexed 0.375% Bond USD 17,000,000 11,028,476 3.27
15/07/2023
US Treasury Inflation Indexed 2.125% Bond USD 955,000 813,715 0.24
15/02/2041
US Treasury Inflation Indexed 0.625% Bond USD 5,000,000 2,900,394 0.86
15/02/2043
56,239,750 16.68
Total Government Indexed-Linked Bonds 117,836,056 34.95
Preference Shares 1.33%
(30.06.14 - 0.23%)
Germany
Volkswagen EUR 26,080 3,851,472 1.14
3,851,472 1.14
United Kingdom
Raven Russia Preference Shares GBP 466,474 643,734 0.19
643,734 0.19
Total Preference Shares 4,495,206 1.33
Equities 41.05%
(30.06.14 - 49.55%)
Europe
France
Rubis EUR 23,830 1,037,609 0.31
1,037,609 0.31
Germany
Deutsche Wohnen EUR 126,217 1,846,078 0.55
Heliocentris Energy Solutions AG EUR 422,856 1,608,732 0.48
TAG Immobilien AG EUR 283,782 2,102,974 0.62
5,557,784 1.65
Norway
Aker EUR 95,000 1,293,722 0.38
1,293,722 0.38
Switzerland
UBS AG CHF 110,817 1,494,382 0.44
1,494,382 0.44
United Kingdom
Better Capital Ltd (2009) GBP 1,727,800 1,719,161 0.51
Better Capital Ltd (2012) GBP 3,088,700 2,162,090 0.64
Cape Plc GBP 850,000 2,146,250 0.64
Colt Group GBP 645,225 1,212,378 0.36
Games Workshop Group Plc GBP 250,000 1,265,000 0.38
Glencore Plc GBP 675,000 1,723,275 0.51
IP Group Plc GBP 574,216 1,185,756 0.35
Hellermann Tyton Group Plc GBP 525,600 1,802,282 0.53
Lloyds Banking Group Plc GBP 3,956,300 3,371,955 1.00
Oakley Capital Investments Ltd GBP 2,825,794 4,493,013 1.33
P2P Global Investments Plc GBP 217,740 2,314,576 0.69
Raven Russia Ltd GBP 1,738,494 925,748 0.27
Renn Universal Growth Trust Ltd GBP 937,500 1,409,625 0.42
Seaenergy Plc GBP 300,000 33,000 0.01
Secure Trust Bank Plc GBP 48,345 1,358,495 0.40
The Royal Bank of Scotland Group Plc GBP 688,400 2,419,038 0.72
Vodaphone Group Plc GBP 1,109,727 2,550,708 0.76
32,092,350 9.52
Total European Equities 41,475,847 12.30
United States
Checkpoint Software Technologies Ltd USD 41,500 2,098,617 0.62
Ebay Inc USD 90,600 3,469,726 1.03
International Paper Co USD 75,000 2,269,505 0.67
Leucadia National Corp USD 237,580 3,666,349 1.09
Lockheed Martin Corp USD 40,000 4,726,903 1.40
Microsoft Corp USD 115,000 3,228,365 0.96
News Corp USD 165,412 1,534,534 0.46
Oracle Corp USD 80,000 2,049,978 0.61
The Boeing Company USD 59,017 5,204,094 1.54
Total United States Equities 28,248,071 8.38
Asia
China
Bank of China Ltd HKD 3,398,000 1,399,061 0.41
China Life Insurance Co Ltd HKD 459,000 1,264,916 0.38
Citic Securities Co Ltd HKD 528,000 1,208,225 0.36
Picc Property & Casualty Co Ltd HKD 1,794,000 2,601,443 0.77
6,473,645 1.92
Japan
Bridgestone Corp JPY 77,000 1,811,132 0.54
CF Ruffer Japanese Fund** GBP 4,500,000 8,819,550 2.62
Fujitsu Ltd JPY 675,000 2,395,639 0.71
Japan Residential Investment Co Ltd GBP 8,330,000 4,602,325 1.36
Mitsubishi UFJ Financial Group Inc JPY 1,664,000 7,607,364 2.26
Mizuho Financial Group Inc JPY 5,987,000 8,228,712 2.44
NTT Data Corp JPY 150,000 4,154,468 1.23
NTT Urban Development Corp JPY 419,000 2,645,375 0.78
Rakuten Inc JPY 283,100 2,895,824 0.86
Resona Holdings Inc JPY 1,080,000 3,749,964 1.11
Sumitomo Mitsui Financial Group Inc JPY 240,000 6,791,814 2.01
T&D Holdings Inc JPY 900,000 8,532,637 2.53
62,234,804 18.45
Total Asian Equities 68,708,449 20.37
Total Equities 138,432,367 41.05
Investment Funds 9.77%
(30.06.14 - 5.14%)
United Kingdom
Herald Worldwide Fund GBP 64,341 1,832,420 0.54
Ruffer Illiquid Strategies Fund of Funds GBP 2,535,409 5,062,558 1.50
2009 Ltd**
Ruffer Illiquid Multi Strategies Fund 2015 GBP 16,450,000 16,383,542 4.86
Ltd**
Ruffer SICAV Global Smaller Companies Fund* GBP 45,129 5,947,491 1.76
*
Ruffer SICAV UK Mid & Smaller Companies GBP 13,235 2,416,976 0.72
Fund**
Weiss Korea Opportunity Fund Ltd GBP 1,100,000 1,331,000 0.39
32,973,987 9.77
Total Investment Funds 32,973,987 9.77
Gold & Gold Mining Equities 4.13%
(30.06.14 - 4.85%)
United Kingdom
CF Ruffer Gold Fund** GBP 4,566,192 3,830,122 1.14
Gold Bullion Securities Ltd USD 115,000 8,193,394 2.43
12,023,516 3.57
Canada
Barrick Gold Corp USD 280,000 1,899,663 0.57
1,899,663 0.57
Total Gold & Gold Mining Equities 13,923,179 4.13
Options 1.97%
(30.06.14 - 0.82%)
United Kingdom
Ruffer Protection Strategies International GBP 4,292,462 6,635,373 1.97
6,635,373 1.97
Total financial assets at fair value 314,296,168 93.20
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 12:05 ET (16:05 GMT)
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