- Title:
Final Results - Amendment - Time:
13:45:00 - Date:
5 Jun 2006 - Category:
Results - ID:
1171_
Released : 05/06/2006 12:45
RIT Capital Partners PLC
05 June 2006
The following announcement replaces the 'Final Results' announcement released on
30 May 2006 at 15:40 under RNS Number 7673D.
1. The reference to the Company's exposure to stock markets as of 25 May
2006 contained in the third paragraph of the Chairman's Statement should have
read 80%.
2. The reference to the Company's exposure to publicly traded equity
markets at the end of the Company's financial year on 31 March 2006 contained in
the Asset Allocation section of the Chairman's Statement should have read 89%.
The final dividend record date change described in the further announcement also
released on 30 May (RNS Number 7813D) has been incorporated into the text below.
All other details remain unchanged.
30 May 2006
PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2006
The following is derived from the Chairman's Statement which will appear in the
annual report and accounts.
CHAIRMAN'S STATEMENT
In the year to 31 March 2006, your Company's net asset value per share increased
by 37.9%, from 712.7p to 982.7p, its net worth by some £421 million, and its
share price from 694p to 1,020p, a rise of 47%. Over the same period, the Morgan
Stanley Capital International Index (in Sterling), the FTSE All-Share Index and
the Investment Trust Net Assets Index increased by 26.3%, 24% and 34.2%
respectively.
Over the last three years, stock market conditions have been favourable and the
returns to shareholders exceptional: value creation of £870 million, a share
price which has risen from 371.5p to 1,020p, an increase of 175%, while your
company's net asset value per share has risen from 430.2p to 982.7p, an increase
of 128%. It should come as no surprise therefore that the risk reward ratio of
investing has become more difficult and challenging. Our reaction is to be more
defensive and we have reduced our exposure since the year end by some £150
million through a combination of some share sales, a reduction in the amounts
managed by some of our external managers and through the selling of stock market
indices in the US, Europe and the Far East. We are not however unduly
pessimistic and remain well positioned to take advantage of opportunities,
particularly having put in place borrowings at low levels of interest rates. In
August 2005 we completed a €150 million seven year loan with an effective
interest rate of 3.732%. Taken together with our $150 million loan, which bears
an interest rate of 3.93%, we have long-term borrowings equivalent to £191
million to add to our permanent capital.
After taking account of these defensive measures, your Company's exposure to
stock markets amounted to 80% as of 25 May, the latest available date.
Inevitably your Company's net asset value has not been immune from the recent
decline in the stock markets. On 25 May the net asset value per share was 918p.
ASSET ALLOCATION
Set out below is our asset allocation at the year end.
% of % of
Portfolio at Portfolio at
31 March 2006 31 March 2005
Quoted investments 62.0 56.3
Government securities and money market funds 4.3 10.0
Hedge funds 6.0 6.7
Long equity funds 10.0 6.1
Unquoted investments 10.4 12.3
Private equity partnerships 5.7 6.3
Property 1.6 2.3
100.0 100.0
The principal change over the course of the year has been the increase in the
quoted portfolio, both internally and externally managed. For the most part this
reflects the favourable movement in the global equity market, but in addition
your Company took advantage of the benign outlook and low interest rates to
increase levels of investment exposure. We ended the year with an investment
portfolio (excluding government securities and liquidity) equivalent to 109% of
underlying net assets and with exposure to publicly traded equity markets of 89%
(including hedge funds).
In terms of geographical exposure, the balance of the portfolio has not greatly
changed from a year ago. On currencies, we have continued to diversify our
currency exposure away from Sterling into the Asian currencies and the Swiss
Franc. In addition, we continued to hedge a proportion of our US Dollar and Euro
denominated holdings.
QUOTED PORTFOLIO
At the year end, £1,084.1 million, or 62% of the portfolio, was held in quoted
investments, compared with 56.3% a year earlier. About half of the quoted
portfolio, amounting to £546 million, was managed internally, with a significant
exposure to the energy and resource sectors which performed strongly during the
period under review. Other internally managed investments also contributed,
notably our holding in the UK electronic payment systems company, PayPoint, (a
former component of the unquoted portfolio), and Deutsche Borse, which operates
the German stock exchange.
The other half of the quoted portfolio, amounting to £538 million, was managed
by external investment managers with whom we have established long-term
relationships. During the past year we have allocated resources to some new
managers to give us additional exposure to a diverse range of geographies and
sectors, including India, Japan, Canada, and US technology stocks.
UNQUOTED PORTFOLIO
Last year, I commented on the number of successful realisations that we had made
in the previous twelve months. In contrast, during the period now under review,
we have been active in making new unquoted investments.
In April 2005 we acquired a 24.6% interest in Harbourmaster, an arranger and
manager of collateralised debt and loan obligations, at a cost of £10.2 million.
The valuation has been increased to £20.9 million at the year-end to reflect the
company's excellent performance and a significant increase in its funds under
management. In November, we invested £11.2 million as part of a consortium which
acquired the Netherlands Investment Bank (NIB). In February, we invested £11.5
million in Access Point Medical, a US based company involved in the field of
medical equipment which will be manufactured in China.
The only significant realisation during the period arose from a repayment of £20
million from our investment in Esporta, the health club operator.
Our exposure to unquoted investments and private equity partnerships amounted to
£282 million, or 16.1% of the portfolio at the year end. Of this, £181.9
million, or 10.4%, represents investments made directly by our management. The
balance of £100.1 million, or 5.7%, is invested in limited partnerships managed
by third parties. Our undrawn commitments to these externally managed
partnerships amounted to £120.3 million at the year-end.
DIVIDEND
We are proposing to pay a dividend of 3.1p per share on 19 July 2006 to
shareholders on the register at 16 June 2006, the same level of dividend as last
year. The focus of your Company remains one of achieving capital growth rather
than increases in dividend income.
OUTLOOK
The big question is whether the sharp setback in the stock markets which we have
witnessed in May is a temporary correction after a long period of gains, or
whether the bull market of the last three years has come to an end.
The accumulation of risk is clear: long-term interest rates have risen, equity
prices in many areas have more than doubled over the last three years, global
trading imbalances are potentially destabilising, particularly for the dollar,
while the geopolitical situation, avian flu, the impact of climate change and
the housing bubbles around the world all give cause for concern. Inflation may
be subdued but high oil and commodity prices will inevitably affect both
industrial and domestic costs. Against these negative factors, corporate
profitability and cash flows remain strong and equity values are not
unreasonable by historic standards, particularly in the USA. Growth continues
throughout most of the major economies of the world and international policy
makers well understand their common interest in ensuring that growth continues
at a reasonable pace.
Although we have become more defensive and risk averse, on balance we feel that
the outlook for stock markets remains positive, but we should not expect returns
comparable to last year. We retain a significant exposure to equities through a
portfolio which is highly diversified in terms of stocks and country risk as
well as asset classes. We continue to identify interesting and potentially
profitable opportunities through stock selection and through our access to
exceptionally talented investment managers.
Rothschild
30 May 2006
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2006
Revenue Capital Total
return return £'000
£'000 £'000
Income
Investment income 27,014 - 27,014
Other income 1,156 - 1,156
Losses on dealing investments held at fair
value (20,790) - (20,790)
Total income 7,380 - 7,380
Gains on portfolio investments held at fair
value - 461,763 461,763
Other capital items - 1,952 1,952
7,380 463,715 471,095
Expenses
Administrative expenses (11,025) (8,376) (19,401)
Investment management fees (5,717) (8,625) (14,342)
Profit before finance costs and tax (9,362) 446,714 437,352
Finance costs (7,296) - (7,296)
Profit before tax (16,658) 446,714 430,056
Taxation 79 (7,946) (7,867)
Profit for the period (16,579) 438,768 422,189
Profit attributable to minority interests - - -
Profit attributable to equity shareholders (16,579) 438,768 422,189
(16,579) 438,768 422,189
Earnings per ordinary share (10.6)p 280.9p 270.3p
The total column of this statement represents the Group's Income Statement,
prepared in accordance with International Financial Reporting Standards. The
supplementary revenue return and capital return columns are both prepared under
guidance published by the Association of Investment Trust Companies. All items
in the above statement derive from continuing operations.
CONSOLIDATED INCOME STATEMENT
Restated for the year ended 31 March 2005
Revenue Capital Total
return return £'000
£'000 £'000
Income
Investment income 20,838 - 20,838
Other income 350 - 350
Losses on dealing investments held at fair (12,644) - (12,644)
value
Total income 8,544 - 8,544
Gains on portfolio investments held at fair
value - 146,038 146,038
Other capital items - 8,999 8,999
8,544 155,037 163,581
Expenses
Administrative expenses (6,096) (4,042) (10,138)
Investment management fees (4,860) (5,347) (10,207)
Profit before finance costs and tax (2,412) 145,648 143,236
Finance costs (3,308) - (3,308)
Profit before tax (5,720) 145,648 139,928
Taxation (374) 1,241 867
Profit for the period (6,094) 146,889 140,795
Profit attributable to minority interests - 91 91
Profit attributable to equity shareholders (6,094) 146,798 140,704
(6,094) 146,889 140,795
Earnings per ordinary share (3.9)p 93.9p 90.0p
The total column of this statement represents the Group's Income Statement,
prepared in accordance with International Financial Reporting Standards
('IFRS'). The supplementary revenue return and capital return columns are both
prepared under guidance published by the Association of Investment Trust
Companies. All items in the above statement derive from continuing operations.
The financial statements for the year ended 31 March 2005 have been restated to
take account of the transition to IFRS.
CONSOLIDATED BALANCE SHEET
31 March 2006 31 March 2005
£'000 £'000
Non-current assets
Investments held at fair value 1,720,815 1,100,755
Investment property 28,889 25,489
Property, plant and equipment 236 214
Derivative financial instruments 4,062 -
Retirement benefit asset 1,433 734
Deferred tax asset 2,370 8,736
1,757,805 1,135,928
Current assets
Dealing investments at fair value 2,645 -
Sales for future settlement 10,900 20,026
Other receivables 11,893 12,365
Tax receivable 238 26
Cash at bank 65,081 70,416
90,757 102,833
Total assets 1,848,562 1,238,761
Current liabilities
Bank loans and overdrafts (67,244) (7,829)
Securities sold short (9,517) (7,893)
Purchases for future settlement (21,442) (7,596)
Other payables (10,073) (8,580)
Tax payable (331) -
(108,607) (31,898)
Net current (liabilities)/assets (17,850) 70,935
Total assets less current liabilities 1,739,955 1,206,863
Non-current liabilities
Bank loans (190,957) (79,304)
Provisions (14,302) (14,303)
(205,259) (93,607)
Net assets 1,534,696 1,113,256
Equity attributable to equity holders
Ordinary share capital 156,178 156,178
Capital redemption reserve 33,978 33,978
Cash-flow hedging reserve 4,062 -
Foreign currency translation reserve 113 (52)
Capital reserve-realised 932,107 757,544
Capital reserve-unrealised 420,867 156,662
Retained (loss)/profit (12,609) 8,812
Total shareholders' equity 1,534,696 1,113,122
Minority interest in equity - 134
Total equity 1,534,696 1,113,256
Net asset value per ordinary share 982.7p 712.7p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2006
Cash- Foreign
Capital flow currency Retained
Share redemption hedging translation Capital profit/ Minority
Capital Reserve reserve reserve reserve (loss) interests Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at
31 March 2005 156,178 33,978 - (52) 914,206 8,812 134 1,113,256
Profit for the
period - - - - 438,768 (16,579) - 422,189
Cash flow hedges
Gains taken
to equity - - 3,531 - - - - 3,531
Transferred
to the income
statement for
the period - - 531 - - - - 531
Disposal of
subsidiaries - - - - - - (134) (134)
Exchange movements
arising on
consolidation - - - 165 - - - 165
Ordinary dividend
paid - - - - - (4,842) - (4,842)
Balance at 31
March 2006 156,178 33,978 4,062 113 1,352,974 (12,609) - 1,534,696
Year ended 31 March 2005 restated
Cash- Foreign
Capital flow currency
Share redemption hedging translation Capital Retained Minority
Capital Reserve reserve reserve reserve profit interests Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31
March 2004 156,848 33,308 - - 771,085 19,768 43 981,052
Profit for
the period - - - - 146,798 (6,094) 91 140,795
Exchange
movements
arising on
consolidation - - - (52) - - - (52)
Ordinary
dividend paid - - - - - (4,862) - (4,862)
Purchase of
own shares (670) 670 - - (3,677) - - (3,677)
Balance at 31
March 2005 156,178 33,978 - (52) 914,206 8,812 134 1,113,256
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 March 2006 31 March 2005
£'000 Restated
£'000
Cash outflow from Operating Activities (145,461) (15,769)
Investing Activities
Purchase of property, plant and equipment (178) (81)
Sale of property, plant and equipment 56 19
Net cash outflow from Investing Activities (122) (62)
Financing Activities
Buy-back of ordinary shares - (3,677)
Increase in term loan 103,488 -
Equity dividend paid (4,842) (4,862)
Minority interests (134) 91
Net cash inflow/(outflow) from Financing
Activities 98,512 (8,448)
Decrease in cash and cash equivalents in the
period (47,071) (24,279)
Cash and cash equivalents at the start of the
period 77,443 101,925
Effect of foreign exchange rates (3,419) (203)
Cash and cash equivalents at the period end 26,953 77,443
Reconciliation:
Cash at bank 65,081 70,416
Money market funds (included in portfolio
investments) 29,116 14,856
Bank loans and overdrafts (67,244) (7,829)
Cash and cash equivalents at the period end 26,953 77,443
NOTES
1. ACCOUNTING POLICIES
The Group's consolidated financial statements for the year ended 31 March 2006
have been drawn up in accordance with International Financial Reporting
Standards as adopted by the EU. The accounting policies are unchanged from
those adopted by the Group and disclosed within the interim report and accounts
for the six months ended 30 September 2005.
2. EARNINGS PER ORDINARY SHARE
The earnings per share for the year ended 31 March 2006 is based on the net gain
of £422.2 million (31 March 2005: £140.7 million as restated) and the weighted
average number of ordinary shares in issue during the year of 156.2 million (31
March 2005: 156.4 million).
3. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share at 31 March 2006 is based on the net
assets attributable to the equity shareholders of £1,534.7 million (31 March
2005: £1,113.1 million as restated) and the number of ordinary shares in issue
at 31 March 2006 of 156.2 million (31 March 2005: 156.2 million).
4. MOVEMENTS IN INVESTMENTS
Quoted Unquoted Funds and Other Total
£'000 and partnerships securities £'000
property £'000 £'000
£'000
Cost at 31 March
2005 493,272 173,500 190,175 113,741 970,688
Appreciation/
(depreciation)
at 31 March 2005 140,373 (9,545) 25,421 (693) 155,556
Valuation at 31
March 2005 633,645 163,955 215,596 113,048 1,126,244
Reclassifications 722 10,580 (11,302) - -
Additions 918,698 78,027 142,504 302,932 1,442,161
Disposals (698,207) (73,336) (65,205) (340,526) (1,177,274)
Revaluation 229,290 31,551 97,844 (112) 358,573
Valuation at 31
March 2006 1,084,148 210,777 379,437 75,342 1,749,704
Cost at 31 March
2006 759,519 210,982 255,479 75,454 1,301,434
Appreciation/
(depreciation)
at 31 March 2006 324,629 (205) 123,958 (112) 448,270
Portfolio investments 1,720,815
Investment property 28,889
Fair value of investments 1,749,704
Investment properties were valued at 31 March 2006 by Jones Lang LaSalle in
accordance with the Appraisal and Valuation Manual of the Royal Institution of
Chartered Surveyors on the basis of open market value.
Funds and partnerships comprise hedge funds, long equity funds and private
equity partnerships. Other securities comprise government securities and
investments in money market funds.
5. OTHER CAPITAL ITEMS
Other capital items include profits arising on forward currency contracts,
exchange movements and movements on provisions.
6. LITIGATION
In November 1997 proceedings were issued in the New York Courts against a total
of ten defendants, including the Company, by Richbell Information Services Inc.
('RIS') and certain connected entities. The proceedings relate to the Company's
investment in H-G Holdings Inc. and a loan made to RIS by the Company's
wholly-owned subsidiary, Atlantic and General Investment Trust Limited ('AGIT').
The claim against all of the defendants was for approximately US$240 million. On
15 March 2002 the New York Court dismissed the proceedings in their entirety at
their initial stage for failure to state a claim upon which relief could be
granted. On 1 April 2002 the plaintiffs filed an appeal against that dismissal.
On 23 September 2003 the New York Appellate Court affirmed the dismissal of the
proceedings as to thirty causes of action included in the claim and as to AGIT.
The New York Appellate Court reinstated three of the causes of action as to
seven of the defendants, including the Company, and referred the matter back to
the New York Court for further proceedings with respect to those three causes of
action.
Based upon legal advice received, the Directors do not believe that the
proceedings will have a material effect on the financial position of the
Company.
7. UNAUDITED STATEMENTS
The results for the year ended 31 March 2006 are unaudited and do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 31 March 2005 have been delivered to the
Registrar of Companies. The auditors have made a report under Section 235 of the
Companies Act 1985 on those statutory accounts which was unqualified and did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
8. ANNUAL REPORT
It is intended that the Company's Annual Report and Accounts for the year ended
31 March 2006 will be posted to shareholders on Friday 9 June 2006. Copies of
this announcement and the Annual Report will be available to the public at the
Company's registered office at 27 St James's Place, London SW1A 1NR.
This information is provided by RNS
The company news service from the London Stock Exchange
Final Results - Amendment13:45:005 Jun 2006Results1171_