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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rit Capital Partners Plc | LSE:RCP | London | Ordinary Share | GB0007366395 | ORD �1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,968.00 | 1,964.00 | 1,968.00 | 1,980.00 | 1,964.00 | 1,966.00 | 142,515 | 16:35:13 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 108.8M | 66.1M | 0.4508 | 43.57 | 2.88B |
From May 2019 to May 2024
TIDMRCP
RNS Number : 7530E
RIT Capital Partners PLC
03 March 2020
3 March 2020
RIT Capital Partners plc
Results for the year ended 31 December 2019
RIT Capital Partners plc today published its results for the year ended 31 December 2019.
Financial Highlights:
Hot Features
Premium
-- Growth in net assets in 2019 of GBP368 million (before
dividends)
-- Total net assets exceeded GBP3 billion at year end; a
new all-time high
-- Net Asset Value per share(1) (NAV) total return of 12.0%
for the period
-- NAV of 2,004 pence at 31 December 2019
-- Share price total return over the year of 12.5%
Performance Highlights:
-- The portfolio generated healthy double-digit returns
in 2019, following the successful preservation of capital
during the global market declines of 2018
-- Defensive portfolio positioning over the year with an
emphasis on capital preservation
-- Healthy double-digit returns achieved with prudent net
quoted equity exposure averaging 43% over the year
-- Diversified approach successfully produced distinctive
sources of return
-- Strong contribution to overall returns from the single
stocks portfolio which generated meaningful outperformance
of global markets
-- Continued steady returns from the absolute return and
credit portfolio
-- Useful contribution from the real assets portfolio driven
by gold-related assets
-- Private investments delivered positive returns and we
deployed capital into several new investment opportunities
-- Moderate net quoted equity exposure meant the NAV lagged
a fully invested equity portfolio
Dividends:
-- Dividends paid in April and October 2019 totalling 34
pence per share
-- The Board intends to pay a dividend of 35 pence per
share in 2020, comprising 17.5 pence per share in April
and 17.5 pence per share in October. This represents
an increase of 2.9% over the previous year
Summary:
-- Over the past five years, the share price total return
was 65.2%, an outperformance of the equity index (ACWI)(2)
over that period
-- Over the same five-year period, the net assets have
grown by GBP1 billion (before dividends)
-- Since inception, RIT has now participated in 73% of
market upside but only 38% of market declines
-- Over the same period, total shareholder return has compounded
at 12.2% per annum compared to the ACWI of 7.3%
-- GBP10,000 invested in RIT at inception in 1988 would
be worth GBP367,000 today (with dividends reinvested)
compared to the same amount invested in the ACWI which
would be worth GBP90,000
(1) Diluted NAV per share with debt at fair value.
(2) This is the total return index based on 50% of the MSCI All Country World Index (ACWI) measured in sterling and 50% measured in local currencies.
Commenting, Sir James Leigh-Pemberton, Chairman of RIT Capital Partners plc, said:
"During 2019, I am pleased to report that your Company's net asset value per share (NAV) increased to 2,004 pence, representing a total return (including dividends) of 12.0%. The share price total return was 12.5%...
We maintained our cautious positioning, mindful of the risks inherent in both fully valued equity markets and historically low returns in bond markets...
Considered allocations to a number of key themes, in particular where we saw opportunities to benefit from long-term structural trends, together with rigorous security selection and careful portfolio construction, allowed us to meet our objective of capital growth. This builds on the 2018 results, where we were able to protect capital when global markets suffered a marked correction and many in the industry lost money. As we have explained in previous years, when we choose to emphasise caution in such a way, we do so to remain consistent with our strategy of protecting capital and delivering superior risk-adjusted returns over the long term...
While we are comfortable with our core positions, and continue to uncover areas of opportunity, the environment necessitates an even greater focus on maintaining our disciplined investment approach and rigorous portfolio construction. More than ever, we remain convinced of the relevance of RIT's differentiated approach, and believe we are well positioned for the inevitable challenges and opportunities that the markets will provide."
Commenting, Francesco Goedhuis, Chief Executive Officer of the Company's Manager, J. Rothschild Capital Management Limited (JRCM), and Ron Tabbouche, Chief Investment Officer of JRCM, said:
"Following 2018's broad equity market declines, 2019 saw resurgent markets. Having produced a positive NAV return in 2018, we are satisfied to have generated healthy double-digit performance in 2019...
In light of the clear risks and our overriding capital preservation focus, we retained a cautious stance in the portfolio, with modest quoted equity exposure complemented by carefully structured allocations to other asset classes. We adjusted the portfolio positioning during the year where we saw opportunities or clear risks...
As we enter 2020, we are cognisant that interest rates remain very low, which for some investors, makes equities the 'only show in town'. Our view is that a significant amount of good news is already priced in, and the market is unlikely to show resilience against any sustained macro or geopolitical volatility. Furthermore, after such a strong run in many of our structural themes we are, if anything, more focused on managing risk rather than adding exposure. This backdrop means that incremental equity additions are likely to be more selective than ever."
Please click here to view the Company's Report and Accounts:
http://www.rns-pdf.londonstockexchange.com/rns/7530E_1-2020-3-2.pdf
ENQUIRIES:
Brunswick Group LLP
Tom Burns: 020 7404 5959
About RIT Capital Partners plc:
RIT Capital Partners plc is an investment company listed on the London Stock Exchange. Its net assets have grown from GBP280 million on listing in 1988 to over GBP3 billion at year end. Lord Rothschild and his immediate family interests retain a significant holding.
www.ritcap.com
The following is extracted from the Company's Report and Accounts
COMPANY HIGHLIGHTS
Performance for the year 2019
============================= =====
NAV per share total return 12.0%
Share price total return 12.5%
RPI plus 3.0% 5.2%
MSCI All Country World Index 24.0%
============================= =====
31 December unless otherwise stated 2019 2018 Change
==================================== =========== =========== ======
NAV per share 2,004 pence 1,821 pence 10.0%
Share price 2,115 pence 1,910 pence 10.7%
Premium 5.5% 4.9% 0.6%
GBP3,146 GBP2,830
Net assets million million 11.2%
Gearing 7.2% 11.5% -4.3%
Average net quoted equity exposure 43% 47% -4%
Ongoing charges figure for the year 0.68% 0.68% -
First interim dividend (April) 17.0 pence 16.5 pence 3.0%
Second interim dividend (October) 17.0 pence 16.5 pence 3.0%
----------- ----------- ------
Total dividend in year 34.0 pence 33.0 pence 3.0%
==================================== =========== =========== ======
Performance history 3 Years 5 Years 10 Years
============================= ======= ======= ========
NAV per share total return 22.2% 48.1% 119.7%
Share price total return 17.9% 65.2% 138.0%
RPI plus 3.0% per annum 19.1% 30.9% 78.4%
MSCI All Country World Index 36.0% 65.0% 168.0%
============================= ======= ======= ========
CHAIRMAN'S STATEMENT
I am delighted to be writing my first Chairman's Statement, following my appointment on 1 October 2019.
I must start by expressing, on behalf of colleagues and shareholders, our respect, admiration and gratitude for Lord Rothschild's exceptional leadership of the Company over many years. Jacob became chairman of the precursor of this Company - Rothschild Investment Trust - in 1971, when it was capitalised at approximately GBP5 million. Your Company ended 2019 with a market capitalisation in excess of GBP3.3 billion and net assets of some GBP3.1 billion. Over the 31 years since this Company's listing in 1988, we have produced annualised returns to shareholders of 12.2% per annum, comfortably in excess of general market indices and a very healthy premium above inflation. It is Lord Rothschild's exceptional drive, vision and values which have contributed so much to making RIT one of the country's most admired investment companies.
I must also pay tribute to the foresight shown by Jacob and Board colleagues for ensuring that a carefully constructed transition plan was in place, and in particular for the establishment and cultivation of an excellent team at our Manager and subsidiary - J. Rothschild Capital Management Limited (JRCM) - led by Francesco Goedhuis (CEO) and Ron Tabbouche (CIO). Succeeding Lord Rothschild is a daunting task, but his legacy is a company which is well positioned to continue to execute its established strategy, delivering long-term capital growth while preserving shareholders' capital, by investing in a diversified portfolio across a range of asset classes, and by allocating funds to exceptional managers to ensure access to the best available external talent.
Performance
During 2019, I am pleased to report that your Company's net asset value per share (NAV) increased to 2,004 pence, representing a total return (including dividends) of 12.0%. The share price total return was 12.5%, with the shares ending the year at 2,115 pence, a premium of 5.5% above the NAV.
Despite a muted outlook for global growth and earnings, 2019 was one of the best years for financial assets, with many investors prepared to take more risks than we considered warranted as risk-free rates moved lower and central banks eased policy. We maintained our cautious positioning, mindful of the risks inherent in both fully valued equity markets and historically low returns in bond markets. As a result, our returns lagged fully-invested market indices. However, this did not stop our portfolio from generating a healthy absolute return. Considered allocations to a number of key themes, in particular where we saw opportunities to benefit from long-term structural trends, together with rigorous security selection and careful portfolio construction, allowed us to meet our objective of capital growth. This builds on the 2018 results, where we were able to protect capital when global markets suffered a marked correction and many in the industry lost money. As we have explained in previous years, when we choose to emphasise caution in such a way, we do so to remain consistent with our strategy of protecting capital and delivering superior risk-adjusted returns over the long term.
It is a feature of this approach that, while we have a natural bias for equities, we have a broad investment policy. This allows JRCM the freedom to deploy capital across multiple asset classes. As explained in detail in our Manager's Report, the approach seeks to utilise our enviable network and combine diversified and uncorrelated sources of return, targeting a high-quality return through the market cycles.
Dividend
Unlike many trusts, we do not invest with a view to producing a particular income yield from the portfolio. Our core objective is to invest to produce capital growth over the long term. However, we recognise that for many shareholders, dividends are important, and our significant reserves give us the flexibility to support our policy of maintaining or increasing the annual dividend, as long as it does not come into conflict with your Company's core objective. For 2020, we are intending to pay a dividend of 35 pence per share, an increase of 2.9% over the previous year. This will be paid in two equal instalments of 17.5 pence per share in April and October.
Share capital
Your Board monitors the level of premium or discount of the share price relative to the NAV and recognises that shareholders prefer lower volatility in this rating. While we do not use a formal rating target, we have in the past bought back shares when they trade at a discount, to the benefit of shareholders. Equally, when the shares are trading at a premium, it is possible to issue new shares accretively. During the year, we issued approximately 1.5 million new shares at a premium to NAV in order to fund a very interesting new investment. We expect to continue to utilise the flexibility to issue new shares at a premium where we consider it is in shareholders' interests.
Board and governance
I am very grateful to my colleagues on the Board for their support and guidance as I reacquainted myself as a non-executive Director from April 2019 and Chairman from October. We are all mindful of the need to periodically refresh the experience, ideas and composition of the Board and I am delighted to announce that Maxim Parr and Jonathan Sorrell will be joining in April, subject to shareholder approval at the AGM. Maxim is CEO of nr2, a cross-border technology investment platform, focused on China, and has extensive experience in investments, in particular in East Asia. Jonathan is President of Capstone, a global asset manager, having previously been President and CFO of Man Group plc.
Having served on the Board for approximately 10 and 15 years respectively, the Duke of Wellington and Michael Marks have announced they will not be standing for re-election at the forthcoming AGM. Charles and Michael have made an enormous contribution to the success of your Company over the years. Their wisdom and dedication, and their valued contributions to the work of the Board and its Committees, will be much missed. On behalf of all my colleagues, I would like to thank them for their many years of service to the Company.
Outlook
The macro concerns I have highlighted above have not abated since year end. Valuations in many asset classes are already expensive and we find ourselves in the eleventh year of this market cycle. While we are comfortable with our core positions, and continue to uncover areas of opportunity, the environment necessitates an even greater focus on maintaining our disciplined investment approach and rigorous portfolio construction. More than ever, we remain convinced of the relevance of RIT's differentiated approach, and believe we are well positioned for the inevitable challenges and opportunities that the markets will provide.
Sir James Leigh-Pemberton
2 March 2020
MANAGER'S REPORT - EXTRACTS
Overview
Following 2018's broad equity market declines, 2019 saw resurgent markets. Having produced a positive NAV return in 2018, we are satisfied to have generated healthy double-digit performance in 2019.
While our approach is fundamentally long term, we try to blend this with appropriate levels of pragmatism where warranted over the shorter term.
In light of the clear risks and our overriding capital preservation focus, we retained a cautious stance in the portfolio, with modest quoted equity exposure complemented by carefully structured allocations to other asset classes. We adjusted the portfolio positioning during the year where we saw opportunities or clear risks.
We saw strong returns in our quoted equity portfolio, supported by broad returns across our other asset classes. Many of our underlying, long-term structural allocations (for example to China, biotech and technology) performed particularly well.
Overall, the NAV total return for the year was 12.0%, above our absolute KPI, RPI plus 3.0% per annum, and behind the fully-invested equity index (ACWI) which returned 24.0%. With the premium increasing slightly over the year to 5.5%, the TSR was 12.5%.
Markets, positioning and performance
Notwithstanding the increasing evidence of a deteriorating outlook for global growth and earnings as well as other challenges, developed equity markets ended 2019 more than 20% higher.
There were broadly two phases to the rally. The initial bounce-back followed the treacherous end to 2018, as investors realised that economies were not at the precipice of a recession. Furthermore, global policy accommodation and reduced trade tensions resulted in a sharp decline in risk premia across all asset classes, with little consideration for fundamentals. For example, there was minimal earnings growth throughout the rally.
Moreover, equities did not attach any risk to what has clearly been a worsening economic outlook. This kind of market behaviour tends to be associated with the early, recovery phase of the business cycle, not some 10 years into the longest expansion on record. This made it a particularly unpredictable year.
Within this context, it should not be surprising that we adjusted our portfolio exposure as the year unfolded. We started 2019 with a somewhat higher quoted exposure following the 2018 sell-off, reducing our hedges and deploying capital to areas where we saw long-term structural support. As we observed clearer indicators of slowdown during the latter part of the year, we reduced our overall exposure to market risk.
Similarly, sterling's politically-induced volatility over 2019 was an area which required careful risk management, to avoid an undue impact on the NAV.
Overall, the key performance drivers for 2019 were:
-- a significant recovery from structural themes including
allocations to China, biotech and technology;
-- the single stocks portfolio delivered strong returns from
growth stocks in the first half of the year, then benefitted
from a rotation into more value-driven stocks in the second
half of the year;
-- steady returns from private investments following an excellent
2018; and
-- a healthy contribution from non-equity investments led
by real assets.
The main headwinds were:
-- the broad appreciation of sterling against most major
currencies; and
-- on a relative basis, our cautious net quoted equity exposure,
which averaged 43% over the year.
Asset allocation and portfolio contribution
31 December 31 December
2019 2018
2019 contribution 2018 contribution
Asset category % NAV % % NAV %
====================================== =========== ================= =========== =================
Quoted equity 46.7% 12.7%(1) 47.0% (6.3%)(1)
Private investments 25.1% 2.4% 25.7% 4.9%
Absolute return and credit 22.9% 0.7% 23.7% 0.5%
Real assets 2.9% 0.9% 3.1% 0.1%
Government bonds and rates 1.2% (0.1%) 0.5% 0.4%
Currency 1.3% (3.1%)(2) (0.3%) 2.2%(2)
----------- ----------------- ----------- -----------------
Total investments 100.1% 13.5% 99.7% 1.8%
Liquidity, borrowings and other (0.1%) (1.5%)(3) 0.3% (1.0%)(3)
====================================== =========== ================= =========== =================
Total 100.0% 12.0% 100.0% 0.8%
-------------------------------------- ----------- ----------------- ----------- -----------------
Average net quoted equity exposure(1) 43% 47%
====================================== =========== ================= =========== =================
(1.) The quoted equity contribution reflects the profits from the net quoted equity exposure during the year. The exposure can differ from the % NAV as the former reflects notional exposure through derivatives as well as estimated adjustments for derivatives and/or liquidity held by managers.
(2.) Currency exposure is managed centrally on an overlay basis, with the translation impact and the result of the currency hedging and overlay activity included in this category's contribution.
(3.) This category's contribution includes interest, mark-to-market movements on the fixed interest notes and expenses.
Currency exposure as % of NAV (1)
31 December 2019 31 December 2018
% NAV % NAV
------------- --- ---------------- ----------------
US dollar 9% 30%
Sterling 69% 44%
Euro 4% 6%
Japanese yen 6% 6%
Swiss franc 0% 5%
Other 12% 9%
------------------ ---------------- ----------------
Total 100% 100%
------------------ ---------------- ----------------
(1) This table excludes exposure from currency options
Outlook
As we enter 2020, we are cognisant that interest rates remain very low, which for some investors, makes equities the 'only show in town'. Our view is that a significant amount of good news is already priced in, and the market is unlikely to show resilience against any sustained macro or geopolitical volatility. Furthermore, after such a strong run in many of our structural themes we are, if anything, more focused on managing risk rather than adding exposure. This backdrop means that incremental equity additions are likely to be more selective than ever.
Francesco Goedhuis Ron Tabbouche Chairman and Chief Executive Chief Investment Officer Officer J. Rothschild Capital Management J. Rothschild Capital Management Limited Limited
PRINCIPAL RISKS
Risk management and internal control
The principal risks facing RIT are both financial and operational. The ongoing process for identifying, evaluating and managing these risks, as well as any emerging risks, is the ultimate responsibility of the Board and the Audit and Risk Committee. Day-to-day management is undertaken by JRCM within parameters set by the Board.
As an investment company, RIT is exposed to financial risks inherent in its portfolio, which are primarily market- related and common to any portfolio with significant exposure to equities and other financial assets. The ongoing portfolio and risk management includes an assessment of the macroeconomic or geopolitical factors that can influence market risk, as well as consideration of investment-specific risk factors.
As described in the Manager's Report, while 2019 ultimately ended with global equity markets posting sizeable gains, the year saw a material rotation between the areas showing market leadership, increasing signs of macro slowdown and ongoing geopolitical concerns. All of which necessitated a careful approach to risk management.
In addition to equity markets, currencies were also a key focus. As a UK company with global investments, sterling's exchange rate can have an important impact on the NAV. 2019 was particularly challenging as a result of the ongoing uncertainty surrounding the UK Government and the Brexit process. While the short-term implications became clearer following the general election, the medium to long-term path remains unclear.
In terms of the Group's operations, we had assessed the implications from the UK's departure from the EU, concluding that there should be no significant impacts to the Manager's operations.
Furthermore, your Company's broad and flexible investment mandate allows the Manager to take whatever action is considered appropriate in mitigating any attendant risks to the portfolio.
The Board sets the portfolio risk parameters within which JRCM operates. This involves an assessment of the nature and level of risk within the portfolio using qualitative and quantitative methods.
Operational risks include those related to the legal environment, regulation, taxation and other areas where internal or external factors could result in financial or reputational loss. These are managed by JRCM with regular reporting to, and review by, the Audit and Risk Committee and the Board.
The Board is responsible for the Group's system of internal controls and it has delegated the supervision of the system to the Audit and Risk Committee. Such systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives and, as such, can provide only reasonable and not absolute assurance against any material misstatement or loss.
Principal Risks
The Board has carried out a robust assessment of the emerging and principal risks facing the Company, concluding that the principal risks remain as described below:
Financial risks Mitigation
Investment strategy risk
As an investment company, a The Board is responsible for
key risk is that the investment monitoring the investment strategy
strategy, guided by the Investment to ensure it is consistent with
Policy: the Investment Policy and appropriate
to meet the Corporate Objective.
"To invest in a widely diversified, The Directors receive a detailed
international portfolio across monthly report from the Manager
a range of asset classes, both to enable them to monitor investment
quoted and unquoted; to allocate performance, attribution and
part of the portfolio to exceptional exposure. They also receive
managers in order to ensure a comprehensive investment report
access to the best external from the JRCM CIO in advance
talent available." of the quarterly Board meetings.
does not deliver the Corporate The overall risk appetite is
Objective: set by the Board, with portfolio
risk managed by JRCM within
"To deliver long-term capital prescribed limits. This involves
growth, while preserving shareholders' careful assessment of the nature
capital; to invest without the and level of risk within the
constraints of a formal benchmark, portfolio using qualitative
but to deliver for shareholders and quantitative methods.
increases in capital value in The JRCM Investment Committee
excess of the relevant indices meets regularly to review overall
over time." investment performance, portfolio
exposure and significant new
investments.
-------------------------------------------
Market risk
RIT invests in a number of asset The Group has a widely diversified
categories including stocks, investment portfolio which significantly
equity funds, private investments, reduces the exposure to individual
absolute return and credit, asset price risk. Detailed portfolio
real assets, government bonds valuations and exposure analysis
and derivatives. The portfolio are prepared regularly, and
is therefore exposed to the form the basis for the ongoing
risk that the fair value of risk management and investment
these investments will fluctuate decisions. In addition, regular
because of changes in market scenario analysis is undertaken
prices. to assess likely downside risks
and sensitivity to broad market
Consistent with the Investment changes, as well as assessing
Policy, the Group invests globally the underlying correlations
in assets denominated in currencies amongst the separate asset classes.
other than sterling as well
as adjusting currency exposure Exposure management is undertaken
to either seek to hedge and/or with a variety of techniques
enhance returns. This approach including using equity index
exposes the portfolio to currency futures and options to hedge
risk as a result of changes or to increase equity exposure
in exchange rates. depending on overall macroeconomic
and market views.
In addition, the Group is exposed
to the direct and indirect impact Currency exposure is managed
of changes in interest rates. via an overlay strategy, typically
using a combination of currency
forwards and/or options to adjust
the natural currency of the
investments in order to achieve
a desired net exposure. The
geographic revenue breakdown
for stocks as well as correlations
with other asset classes are
also considered as part of our
hedging strategy.
-------------------------------------------
Liquidity risk
Liquidity risk is the risk that The Group manages its liquid
the Group will have difficulty resources to ensure sufficient
in meeting its obligations in cash is available to meet its
respect of financial liabilities expected needs. It monitors
as they fall due. the level of short-term funding,
and balances the need for access
The Group has significant investments to such funding and liquidity,
in and commitments to direct with the long-term funding needs
private investments and funds of the Group, and the desire
which are inherently illiquid. to achieve investment returns.
In addition, the Group holds Covenants embedded within the
investments with other third-party banking facilities and long-term
organisations which may require notes are monitored on an ongoing
notice periods in order to be basis for compliance, and form
realised. Capital commitments part of the regular stress tests.
could, in theory, be drawn within
minimal notice. In addition, In addition, existing cash reserves,
the Group may be required to as well as the significant liquidity
provide additional margin to that could be realised from
support derivative financial the sale or redemption of portfolio
instruments. investments and undrawn, committed
borrowings, could all be utilised
to meet short-term funding requirements
if necessary. As a closed-ended
company, there is no requirement
to maintain liquidity to service
investor redemptions.
As Depositary, BNP Paribas Securities
Services (BNP) has separate
responsibilities in monitoring
the Company's cash flow.
-------------------------------------------
Credit risk
Credit risk is the risk that The majority of the exposure
a counterparty to a financial to credit risk within the absolute
instrument held by the Group return and credit portfolio
will fail to meet an obligation is indirect exposure as a result
which could result in a loss of positions held within funds
to the Group. managed externally. These are
typically diversified portfolios
Certain investments held within monitored by the third-party
the absolute return and credit managers themselves, as well
portfolio are exposed to credit as through JRCM's ongoing portfolio
risk, including in relation management oversight.
to underlying positions held
by funds. Listed transactions are settled
on a delivery versus payment
Substantially all of the listed basis using a wide pool of brokers.
portfolio investments capable Cash holdings and margin balances
of being held in safe custody, are also divided between a number
are held by BNP as custodian of different financial institutions,
and depositary. Bankruptcy or whose credit ratings are regularly
insolvency of BNP may cause monitored.
the Group's rights with respect
to securities held by BNP to All assets held by the custodian
be delayed. are in fully segregated client
accounts. Other than where local
Unrealised profit on derivative market regulations do not permit
financial instruments held by it, these accounts are designated
counterparties is potentially in RIT's name. The custodian's
exposed to credit risk in the most recent credit rating was
event of the insolvency of a A from Standard & Poor's (S&P).
broker counterparty.
-------------------------------------------
Operational risks Mitigation
-------------------------------------------
Key person dependency
In common with other investment This risk is closely monitored
trusts, investment decisions by the Board, through its oversight
are the responsibility of a of the Manager's incentive schemes
small number of key individuals as well as the succession plans
within the Manager. If for any for key individuals. The potential
reason the services of these impact is also reduced by an
individuals were to become unavailable, experienced Board of Directors,
there could be a significant with distinguished backgrounds
impact on our business. in financial services and business.
-------------------------------------------
Legal and regulatory risk
As an investment trust, RIT's The Operational Risk Committee
operations are subject to wide of JRCM provides oversight of
ranging laws and regulations all legal, regulatory and other
including in relation to the operational risks across the
Listing Rules and Disclosure, Group. This Committee reports
Guidance and Transparency Rules key findings to the JRCM Executive
of the FCA's Primary Markets Committee and the Audit and
function, the Companies Act Risk Committee.
2006, corporate governance codes,
as well as continued compliance JRCM employs a legal counsel
with relevant tax legislation and a compliance officer as
including ongoing compliance well as other personnel with
with the rules for investment experience of legal, regulatory
trusts. JRCM is authorised and and taxation matters. In addition,
regulated by the Financial Conduct specialist external advisers
Authority (FCA) and acts as are engaged in relation to complex
Alternative Investment Fund or sensitive matters.
Manager.
Where necessary, co-investments
The financial services sector and other transactions are subject
continues to experience regulatory to review by the Conflicts Committee
change at national and international and/or the FCA.
levels. Failure to act in accordance
with these laws and regulations
could result in fines, censure
or other losses including taxation
or reputational loss.
Co-investments and other arrangements
with related
parties may result in conflicts
of interest.
-------------------------------------------
Operational risk
Operational risks are those Systems and control procedures
arising from inadequate or failed are the subject of continued
processes, people and systems development and regular review,
or external factors. for example, 2019 saw further
development of JRCM's investment
Key operational risks include database.
reliance on third-party suppliers,
dealing errors, processing failures, Processes are in place to ensure
pricing errors, fraud, reliability the recruitment and ongoing
of core systems and IT security training of appropriately skilled
issues. staff within key operational
functions. Suitable remuneration
policies are in place to encourage
staff retention and the delivery
of the Group's objectives over
the medium term.
Independent pricing sources
are used where available and
performance is subject to regular
monitoring. In relation to more
subjective areas such as private
investments and property, the
valuations are estimated by
experienced staff and specialist
external valuers using industry
standard approaches, with the
final decisions taken by the
independent Valuation Committee,
and subject to external audit
as part of the year-end financial
statements.
A business continuity and disaster
recovery plan is maintained,
and includes the ability to
utilise an offsite facility
in the event of any business
disruption. This was satisfactorily
tested during the year.
Cyber security continues to
receive an enhanced focus, with
systems and processes designed
to combat the ongoing risk developments
in this area.
-------------------------------------------
Consolidated income statement
Year ended 31 December 2019 2018
GBP million Revenue Capital Total Revenue Capital Total
============================= ======= ======= ====== ======= ======= ======
Investment income 33.0 - 33.0 20.8 - 20.8
Other income 8.6 - 8.6 4.6 - 4.6
Gains/(losses) on fair value
investments - 365.9 365.9 - 28.3 28.3
Gains/(losses) on monetary
items and borrowings - (14.2) (14.2) - 18.2 18.2
============================== ======= ======= ====== ======= ======= ======
41.6 351.7 393.3 25.4 46.5 71.9
Expenses
Operating expenses (24.8) (5.2) (30.0) (24.0) (4.6) (28.6)
============================== ======= ======= ====== ======= ======= ======
Profit/(loss) before finance
costs and tax 16.8 346.5 363.3 1.4 41.9 43.3
Finance costs (4.1) (16.3) (20.4) (3.0) (11.9) (14.9)
============================== ======= ======= ====== ======= ======= ======
Profit/(loss) before tax 12.7 330.2 342.9 (1.6) 30.0 28.4
Taxation - (0.6) (0.6) - (1.3) (1.3)
============================== ======= ======= ====== ======= ======= ======
Profit/(loss) for the year 12.7 329.6 342.3 (1.6) 28.7 27.1
============================== ======= ======= ====== ======= ======= ======
Earnings/(loss) per ordinary
share - basic 8.2p 212.9p 221.1p (1.0p) 18.6p 17.6p
Earnings/(loss) per ordinary
share - diluted 8.2p 212.6p 220.8p (1.0p) 18.5p 17.5p
============================== ======= ======= ====== ======= ======= ======
The total column of this statement represents the Group's consolidated income statement, prepared in accordance with IFRS as adopted by the European Union. The supplementary revenue and capital columns are both prepared under guidance published by the AIC. All items in the above statement derive from continuing operations.
Consolidated statement of comprehensive income
Year ended 31 December 2019 2018 GBP million Revenue Capital Total Revenue Capital Total ======================================= ======= ======= ===== ======= ======= ===== Profit/(loss) for the year 12.7 329.6 342.3 (1.6) 28.7 27.1 Revaluation gain/(loss) on property, plant and equipment - (1.8) (1.8) - (1.3) (1.3) Actuarial gain/(loss) in defined benefit pension plan (0.8) - (0.8) (0.9) - (0.9) Deferred tax (charge)/credit allocated to actuarial loss 0.1 - 0.1 0.2 - 0.2 ======================================= ======= ======= ===== ======= ======= ===== Total comprehensive income/(expense) for the year 12.0 327.8 339.8 (2.3) 27.4 25.1 ======================================= ======= ======= ===== ======= ======= =====
Consolidated balance sheet
At 31 December
GBP million 2019 2018
============================================= ======= =======
Non-current assets
Investments held at fair value 3,086.1 2,808.0
Investment property 36.1 35.4
Property, plant and equipment 24.2 26.2
Deferred tax asset 1.5 2.0
Retirement benefit asset 1.0 1.3
Derivative financial instruments 0.7 8.3
============================================== ======= =======
3,149.6 2,881.2
============================================= ======= =======
Current assets
Derivative financial instruments 50.4 24.6
Other receivables 172.2 248.9
Cash at bank 61.1 210.9
============================================== ======= =======
283.7 484.4
============================================= ======= =======
Total assets 3,433.3 3,365.6
============================================== ======= =======
Current liabilities
Borrowings (50.0) (275.0)
Derivative financial instruments (2.9) (38.2)
Other payables (55.3) (51.7)
Amounts owed to group undertakings (3.3) (11.8)
============================================== ======= =======
(111.5) (376.7)
============================================= ======= =======
Net current assets/(liabilities) 172.2 107.7
============================================== ======= =======
Total assets less current liabilities 3,321.8 2,988.9
============================================== ======= =======
Non-current liabilities
Borrowings (166.4) (155.1)
Derivative financial instruments (7.9) (0.6)
Provisions (1.4) (2.5)
Lease liability (0.5) (0.5)
============================================== ======= =======
(176.2) (158.7)
============================================= ======= =======
Net assets 3,145.6 2,830.2
---------------------------------------------- ------- -------
Equity attributable to owners of the Company
Share capital 156.8 155.4
Share premium 45.7 17.3
Capital redemption reserve 36.3 36.3
Own shares reserve (7.8) (13.4)
Capital reserve 2,894.1 2,624.3
Revenue reserve 7.0 (5.0)
Revaluation reserve 13.5 15.3
============================================== ======= =======
Total equity 3,145.6 2,830.2
============================================== ======= =======
Net asset value per ordinary share - basic 2,007p 1,827p
Net asset value per ordinary share - diluted 2,004p 1,821p
============================================== ======= =======
The financial statements were approved by the Board and authorised for issue on 2 March 2020.
Consolidated statement of changes in equity
Capital Own Share-based
Share Share redemption shares payment Capital Revenue Revaluation Total
GBP million capital premium reserve reserve reserve reserve reserve reserve equity
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Balance at 1 January
2018 155.4 17.3 36.3 (17.6) 4.6 2,648.4 (2.7) 16.6 2,858.3
Profit/(loss) for
the year -- - - - - 28.7 (1.6) - 27.1
Revaluation loss on
property, plant and
equipment - - - - - - - (1.3) (1.3)
Actuarial
gain/(loss)
in defined benefit
plan - - - - - - (0.9) - (0.9)
Deferred tax
(charge)/credit
allocated to
actuarial
gain - - - - - - 0.2 - 0.2
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Total comprehensive
income/(expense)
for
the year - - - - - 28.7 (2.3) (1.3) 25.1
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Dividends paid - - - - - (51.0) - - (51.0)
Movement in own
shares
reserve - - - 4.2 - - - - 4.2
Movement in
share-based
payment reserve - - - - (6.4) - - - (6.4)
Transfer to capital
reserve - - - - 1.8 (1.8) - - -
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Balance at 31
December
2018 155.4 17.3 36.3 (13.4) - 2,624.3 (5.0) 15.3 2,830.2
-------------------- -------- -------- ----------- -------- ----------- -------- -------- ----------- -------
Balance at 1 January
2019 155.4 17.3 36.3 (13.4) - 2,624.3 (5.0) 15.3 2,830.2
Profit/(loss) for
the year - - - - - 329.6 12.7 - 342.3
Revaluation loss on
property, plant and
equipment - - - - - - - (1.8) (1.8)
Actuarial
gain/(loss)
in defined benefit
plan - - - - - - (0.8) - (0.8)
Deferred tax
(charge)/credit
allocated to
actuarial
gain - - - - - - 0.1 - 0.1
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Total comprehensive
income for the year - - - - - 329.6 12.0 (1.8) 339.8
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Dividends paid - - - - - (52.6) - - (52.6)
Movement in own
shares
reserve - - - 5.6 - - - - 5.6
Movement in
share-based
payments - - - - - (7.2) - - (7.2)
Share issuance 1.4 28.4 - - - - - - 29.8
==================== ======== ======== =========== ======== =========== ======== ======== =========== =======
Balance at 31
December
2019 156.8 45.7 36.3 (7.8) - 2,894.1 7.0 13.5 3,145.6
-------------------- -------- -------- ----------- -------- ----------- -------- -------- ----------- -------
Consolidated cash flow statement
Year ended 31 December Consolidated cash flow GBP million 2019 2018 ========================================= ============ ========== Cash flows from operating activities: Cash inflow/(outflow) before taxation and interest 155.9 151.7 Interest paid (20.4) (14.9) ========================================== ============ ========== Net cash inflow/(outflow) from operating activities 135.5 136.8 ========================================== ============ ========== Cash flows from investing activities: Sale/(purchase) of property, plant and equipment (0.2) (0.2) Disposal of subsidiary(1) - 3.0 Investments in subsidiary undertakings - - ========================================= ============ ========== Net cash inflow/(outflow) from investing activities (0.2) 2.8 ========================================== ============ ========== Cash flows from financing activities: Repayment of borrowings (225.0) - Purchase of ordinary shares by Employee Benefit Trust (EBT)(2) (7.1) (6.6) Equity dividend paid (52.6) (51.0) ========================================== ============ ========== Net cash inflow/(outflow) from financing activities (284.7) (57.6) ========================================== ============ ========== Increase/(decrease) in cash and cash equivalents in the year (149.4) 82.0 ========================================== ============ ========== Cash and cash equivalents at the start of the year 210.9 122.9 ========================================== ============ ========== Effect of foreign exchange rate changes on cash and cash equivalents (0.4) 6.0 ========================================== ============ ========== Cash and cash equivalents at the year end 61.1 210.9 ------------------------------------------ ------------ ---------- Reconciliation: Cash at bank 61.1 210.9 ========================================== ============ ========== Cash and cash equivalents at the year end 61.1 210.9 ------------------------------------------ ------------ ----------
(1) Deferred consideration.
(2) Shares are disclosed in the own shares reserve on the consolidated balance sheet.
Earnings/(loss) per ordinary share - basic and diluted
The basic earnings per ordinary share for 2019 is based on the profit of GBP342.3 million (2018: profit of GBP27.1 million) and the weighted average number of ordinary shares in issue during the period of 154.8 million (2018: 154.5 million). The weighted average number of shares is adjusted for shares held in the employee benefit trust in accordance with IAS 33.
GBP million 2019 2018 ================================= ===== ===== Net revenue profit/(loss) 12.7 (1.6) Net capital profit/(loss) 329.6 28.7 ================================= ===== ===== Total profit/(loss) for the year 342.3 27.1 ================================= ===== ===== pence 2019 2018 =================================================== ===== ===== Revenue earnings/(loss) per ordinary share - basic 8.2 (1.0) Capital earnings/(loss) per ordinary share - basic 212.9 18.6 =================================================== ===== ===== Total earnings per share - basic 221.1 17.6 =================================================== ===== =====
The diluted earnings per ordinary share for the period is based on the weighted average number of ordinary shares in issue during the period adjusted for the weighted average dilutive effect of share-based payment awards at the average market price for the period.
Weighted average (million) 2019 2018 ===================================== ===== ===== Number of shares in issue 155.4 155.4 Own shares (0.6) (0.9) ===================================== ===== ===== Basic shares 154.8 154.5 Effect of share-based payment awards 0.2 0.5 ===================================== ===== ===== Diluted shares 155.0 155.0 ===================================== ===== ===== pence 2019 2018 ===================================================== ===== ===== Revenue earnings/(loss) per ordinary share - diluted 8.2 (1.0) Capital earnings/(loss) per ordinary share - diluted 212.6 18.5 ===================================================== ===== =====
Earnings per ordinary share - diluted 220.8 17.5 ===================================================== ===== =====
Net asset value per ordinary share - basic and diluted
Net asset value per ordinary share is based on the following data:
31 December 2019 2018
=============================================== ======= =======
Net assets (GBPmillion) 3,145.6 2,830.2
=============================================== ======= =======
Number of shares in issue (million) 156.8 155.4
Own shares adjustment (million)(1) (0.1) (0.4)
=============================================== ======= =======
Basic shares (million) 156.7 155.0
Effect of share-based payment awards (million) 0.2 0.4
=============================================== ======= =======
Diluted shares (million) 156.9 155.4
=============================================== ======= =======
(1) EBT shares offset by deferred shares.
2019 2018
31 December pence pence
--------------------------------------------- ----- -----
Net asset value per ordinary share - basic 2,007 1,827
--------------------------------------------- ----- -----
Net asset value per ordinary share - diluted 2,004 1,821
============================================= ===== =====
Dividends
2019 2018
Pence Pence 2019 2018
per share per share GBP million GBP million
======================= ========= ========= =========== ===========
Dividends paid in year 34.0 33.0 52.6 51.0
======================= ========= ========= =========== ===========
The above amounts were paid as distributions to equity holders of the Company in the relevant year from accumulated capital profits.
On 4 March 2019 the Board declared a first interim dividend of 17.0 pence per share in respect of the year ended 31 December 2019 that was paid on 30 April 2019. A second interim dividend of 17.0 pence per share was declared by the Board on 2 August 2019 and paid on 31 October 2019.
The Board declares the payment of a first interim dividend of 17.5 pence per share in respect of the year ending 31 December 2020. This will be paid on 30 April 2020 to shareholders on the register on 3 April 2020, and funded from the accumulated capital profits.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Report and Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs, and of the profit or loss of the Group and Parent Company for that period. In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- state whether applicable IFRS as adopted by the European
Union have been followed for both the Group and Company
financial statements, subject to any material departures
disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable
and prudent; and
-- prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of IAS Regulation.
The Directors are also responsible for safeguarding the assets of the Group and Parent Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Parent Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that, following advice from the Audit and Risk Committee, the Report and Accounts taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Parent Company's position, performance, business model and strategy. The Audit and Risk Committee had reviewed the draft Report and Accounts for the purpose of this assessment.
Each of the Directors, whose names and responsibilities are listed in the Corporate Governance Report confirm that, to the best of their knowledge:
-- the Parent Company financial statements, which have been
prepared in accordance with IFRS, give a true and fair
view of the assets, liabilities, financial position and
profit for the Company;
-- the Group financial statements, which have been prepared
in accordance with IFRS, give a true and fair view of
the assets, liabilities, financial position and profit
of the Group; and
-- the Strategic Report contains a fair review of the development
and performance of the business and the position of the
Group, together with a description of the principal risks
and uncertainties that it faces.
Basis of presentation
The financial information for the year ended 31 December 2019 has been extracted from the statutory accounts for that year. The auditor's report on these accounts is unqualified and does not contain a statement under either Section 498(2) or (3) of the Companies Act 2006. The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
The financial information for the year ended 31 December 2018 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors' report on these accounts is unqualified and does not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.
Report and Accounts
The full statutory accounts are available to be viewed or downloaded from the Company's website at www.ritcap.com. Neither the contents of the Company's website nor the contents of any website accessible from the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR UUVNRRAUORAR
(END) Dow Jones Newswires
March 03, 2020 02:00 ET (07:00 GMT)
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