RCP Rit Capital Partners Plc

Please click here to view the Company's Half-Yearly Financial Report http://www.rns-pdf.londonstockexchange.com/rns/6782Y_1-2024-7-31.pdf

1 August 2024

RIT Capital Partners plc
(the "Company")

Results for the half year ended 30 June 2024

The Company today publishes its results for the half year ended 30 June 2024.

Summary:

Performance Highlights:

Dividends and buybacks:

Asset Allocation as at 30 June 2024:

Commenting, Sir James Leigh-Pemberton, Chairman of RIT Capital Partners plc, said:

"The first half of 2024 saw solid investment performance, with the NAV per share increasing by 4.2% (including dividends), ending the period at 2,508p. Each of our three strategic investment pillars - Quoted Equities, Private Investments and Uncorrelated Strategies - produced positive performance. The largest contributor was our Quoted Equities, where our Manager, JRCM, made timely changes. From an asset allocation perspective, total quoted equity exposure was increased, and within the portfolio, capital was deployed more towards direct stocks, where we continue to see an exciting opportunity set …

The Board is delighted with the encouraging start that our new JRCM leadership team of Maggie Fanari (CEO) and Nicholas Khuu (CIO) has made. It is early days, but the improvements they are implementing to our portfolio strategy, team and approach, are already starting to bear fruit and leave me with great confidence for the future."

Commenting, Maggie Fanari, Chief Executive Officer of J. Rothschild Capital Management Limited, said:

"I am delighted to have had the opportunity to meet with many of our shareholders as well as colleagues and other stakeholders since assuming the role of CEO of JRCM in March of this year.  Over these last five months, I have prioritised actively listening and learning, and I am grateful for the valuable feedback I have received during these discussions …

Looking ahead, we can expect to see continued market volatility and complexity for investors amidst a backdrop of uncertainty across the geopolitical, economic, and investment environments … Our portfolio is built for times like this - focused on capturing long-term growth opportunities while being resilient through diversification. I am confident in our team's ability to capture the new opportunities presented by the rapidly evolving market landscape."

For more information

J. Rothschild Capital Management Limited (Manager):

T: 020 7647 8565

E: investorrelations@ritcap.co.uk

Numis Securities Limited (Joint broker):

David Benda

T: 020 7260 1000

JP Morgan Cazenove (Joint broker):

William Simmonds

T: 020 3493 8000

Brunswick Group LLP (Media enquiries):

Nick Cosgrove, Tom Burns

T: 020 7404 5959

E: RIT@BrunswickGroup.com 

www.ritcap.com

A description of all terms used above, including further information on the calculation of Alternative Performance Measures (APMs) is set out in the Glossary and APMs section at the end of this RNS. 

THE FOLLOWING IS EXTRACTED FROM THE COMPANY'S HALF-YEARLY FINANCIAL REPORT

CHAIRMAN'S STATEMENT

The first half of 2024 saw solid investment performance, with the NAV per share increasing by 4.2% (including dividends), ending the period at 2,508p. Each of our three strategic investment pillars - Quoted Equities, Private Investments and Uncorrelated Strategies - produced positive performance. The largest contributor was our Quoted Equities, where our Manager, JRCM, made timely changes. From an asset allocation perspective, total quoted equity exposure was increased, and within the portfolio, capital was deployed more towards direct stocks, where we continue to see an exciting opportunity set. Private Investments were positive; we received distributions from a number of funds following sales of unlisted holdings at a premium to the valuations previously reported by the managers. In a similar vein, in our private direct portfolio, we made realisations during the period and subsequent to the period end, all at prices above our previous carrying values. Uncorrelated Strategies produced a positive return, led by our credit investments and gold. Currency translation was a modest offset, with further detail on performance and attribution set out in the Manager's Report.

Our goal remains to grow your wealth meaningfully over time, through a diversified and resilient global portfolio. Our approach to achieving this is set out in the Manager's Report and has driven a meaningful NAV total return of 112% over the last ten years. Since inception in 1988, our NAV has averaged an increase of 10.5% per annum (including dividends), with lower volatility than stock markets.

Our share price returns since inception have also averaged 10.3% per year, but more recently we have seen a widening of the gap between our investment performance and our share price. The latter has been significantly more volatile than our underlying portfolio, and the discount remains wider than we feel is warranted. We have maintained a focus on closing the discount and have taken a number of steps to address it. Our shareholder engagement has been enhanced; Philippe Costeletos, our Senior Independent Director, and I are very grateful for the time and constructive feedback we have been given by shareholders. We have also allocated additional resources to our communications and investor relations efforts, including the appointment of a specialist distribution and investor relations company to support our internal team in this area.

Having undertaken one of the largest share buybacks in our industry in 2023, we have continued to allocate capital to buybacks within the context of our overall capital allocation framework. Buying a portfolio we believe in at a sizeable discount delivers attractive accretion to our NAV per share. At the same time, we are mindful of our core objective to deliver long-term capital growth for shareholders. Our capital allocation strategy will therefore continue to balance the one-time gains from buying our shares, with the need to reinvest in the future growth of the portfolio. During the half year we paid our first planned interim dividend of 19.5p per share, and have declared a second interim dividend of the same amount to be paid on 25 October to shareholders registered on 4 October. This will provide shareholders with a total dividend in 2024 of 39p per share, an increase of 2.6% over last year and representing the 10th consecutive year of dividend increases. Since January 2023, we have returned approximately £280m to shareholders, with buybacks representing almost 7% of share capital.

Outlook

After several years of negative shocks, global growth appears relatively robust, in part supported by technical innovation (including, of course, AI). There are signs of a moderate easing in global inflationary pressures, raising the prospect of lower interest rates. However, with strong US demand and full employment, and historically high levels of government borrowing, the pace at which inflation may fall, and easier monetary policy can be introduced, is far from clear. Wealth inequality has risen post-Covid, and political polarisation is being tested in elections across many key parts of the globe. A complex set of geopolitical tensions persist, showing few signs of easing, and in markets the continuing dominance of a small number of stocks in the performance of major indices presents further challenges.

However, this complex environment presents a rich set of opportunities for our Manager's distinctive investment approach. The Board is delighted with the encouraging start that our new JRCM leadership team of Maggie Fanari (CEO) and Nicholas Khuu (CIO) has made. It is early days, but the improvements they are implementing to our portfolio strategy, team and approach, are already starting to bear fruit and leave me with great confidence for the future.

Sir James Leigh-Pemberton

Chairman

31 July 2024

MANAGER'S REPORT - EXTRACTS

Introductory comments from our CEO

I am delighted to have had the opportunity to meet with many of our shareholders as well as colleagues and other stakeholders since assuming the role of CEO of JRCM in March of this year. Over these last five months, I have prioritised actively listening and learning, and I am grateful for the valuable feedback received during these discussions.

The queries around our shares trading at a discount to net asset value are justified. That said, we believe the level at which our shares are trading relative to NAV is not representative of our business, which has a diversified investment strategy built for long-term value creation, a performance-driven team, and a solid balance sheet. In response, we continue to buy back our shares in a programme which remains one of the largest seen in our industry to date. We have also significantly advanced our efforts to improve our communication and investor relations, appointing Cadarn Capital earlier this year. Cadarn is a specialist firm focused on improving liquidity, diversifying investor bases and supporting investment trust ratings. Additionally, we have created a new website which more clearly presents our business and approach, as well as providing shareholders with easy access to relevant materials.

With respect to performance, I am pleased to report positive momentum in the first half of this year. While this is a short period to judge performance given the long-term nature of our investment strategy, the drivers of our returns are a direct result of both top-down and bottom-up portfolio decisions we highlighted in our 2023 Annual Report, which are already delivering results. This activity has included increasing our Quoted Equities portfolio allocation and selecting new investment opportunities in areas of the market offering superior risk-adjusted returns. Further detail on our performance, investment activity and portfolio are provided later in this report.

I am also happy to highlight progress made in completing a number of realisations in our Private Investments during the first half of the year - a trend that has continued in July with additional realisations at a premium to NAV. These exits have happened in the absence of a strong IPO market, through secondary and M&A transactions, and we anticipate that once the IPO market re-opens the pace of realisations will increase, given the maturity and diversified nature of the Privates portfolio across vintages, sectors and geographies.

Looking ahead, we can expect to see continued market volatility and complexity for investors amidst a backdrop of uncertainty across the geopolitical, economic, and investment environments. At the same time, while the impact of generative AI remains to be seen, we can be sure that it will be disruptive, creating both challenges and opportunities for investors. Our portfolio is built for times like this - focused on capturing long-term growth opportunities while being resilient through diversification. I am confident in our team's ability to capture the new opportunities presented by the rapidly evolving market landscape.

With this in mind, we have a number of priorities in the second half of this year: finding attractive investment opportunities with the best partners; investing in our people and culture; and continuing to listen to shareholders and engage with stakeholders. We look forward to providing a further update at the end of the year.

Our approach

Our goal is to grow your wealth meaningfully over time, through a diversified and resilient global portfolio. To achieve this takes a very distinctive approach. We leverage our unrivalled network and internal expertise to source often hard-to-access investments.

By design, our investment mandate is flexible, allowing us to invest in a capital efficient way across different structures, asset classes and geographies. Our permanent capital base provides us the advantage of time, where our investment decisions are dictated by our assessment of value and not by liquidity pressures. We invest in a diversified portfolio of high-conviction opportunities of differing profiles and varying underlying return drivers.

Our decision-making starts with a considered, macro-economic appraisal and our investments capitalise on structural themes and market dislocations, often leveraging our extensive network of partners and managers to find compelling opportunities unavailable to most. We may choose to invest directly or alongside a manager, depending on how best to access the opportunity.

The portfolio comprises three primary pillars: Quoted Equities, Private Investments and Uncorrelated Strategies.  Each pillar is designed to serve a distinct purpose within the portfolio, with investments of complementary profiles and return drivers, allowing us to benefit from this broad diversification over time.

The portfolio is overlaid with disciplined risk management, incorporating quantitative and qualitative measures as well as the considered use of hedging strategies (including in relation to currencies). We size investments based on their individual risk, their expected returns, and how these impact the overall portfolio. We do not target an absolute return; ensuring we have sufficient capital deployed to generate long-term growth results in us being exposed to market risk. However, through the cycles, we believe this approach will produce superior long-term performance, with less risk than equity markets.

Performance highlights

Our NAV per share total return for the first half of the year was 4.2%. Against our two reference indices, the MSCI ACWI (50% £) and CPI plus 3%, our performance lagged the former, which was up 12.9%, and exceeded the latter which was up 2.5%. Our positive portfolio return for the period saw all three pillars contributing, with key drivers including:

Asset allocation, returns and contribution

Balance Sheet

With total assets of over £4.0bn and around £280m of borrowings, our balance sheet has modest gearing. The combination of our liquidity of £125m (which can be further enhanced by £109m of UK gilts), committed and undrawn borrowings of £40m, as well as a sizeable portfolio of liquid investments, provides us with ample resources to meet our liquidity needs.

Outlook

We face a mixed economic backdrop ahead and although we see inflation continuing to taper, the risk of an economic slowdown remains. Many consumer-facing companies in the US have highlighted weakening consumer demand, the lack of discretionary spending and a general malaise. Amidst this mixed macroeconomic backdrop, we continue to focus on specific top-down themes and bottom-up individual investments, seeing opportunities across our pillars.

Within Quoted Equities, we are finding compelling opportunities in SMID-cap companies, especially in Europe and the US. Among larger companies, we remain very selective in those that we believe are misunderstood by the market, and our bias remains towards quality, given slowing economic data and uncertainty driven by elections. Regionally, we continue to favour Japan which offers attractive valuations, resilient earnings revisions as well as a fertile stock picking ground.

Across Uncorrelated Strategies, we believe returns on our credit portfolio should remain healthy, as the historically high yields on offer in specific individual companies are compelling. As part of ensuring we have a resilient portfolio, we will continue to use our gold exposure as a helpful diversifier in times of heightened geopolitical tensions, or should rates fall more sharply than expectations on the back of a rapid downturn in growth.

On our Private Investments, we are optimistic that the recent uptick in transactions will build momentum in the second half of the year. M&A volumes on the public side have increased so far in 2024, normally a good lead indicator for IPOs. We believe we may well see increasing signs of recovery as the year progresses and into 2025 which should offer encouraging signs for the monetisation of parts of the portfolio.

In conclusion, we are confident in the portfolio's core investments and its underlying structural themes. We believe that our disciplined approach, considered portfolio construction and our specialist network of partners will go on benefitting RIT shareholders in the long term, as we continue to identify opportunities across asset classes and capital structures in the second half of the year and into 2025.

Maggie Fanari

Chief Executive Officer

J. Rothschild Capital Management Limited

Nicholas Khuu

Chief Investment Officer

J. Rothschild Capital Management Limited

REGULATORY DISCLOSURES

Statement of Directors' responsibilities

In accordance with the Disclosure and Transparency Rules 4.2.4R, 4.2.7R and 4.2.8R, we confirm that to the best of our knowledge:

Principal risks and uncertainties

The principal risk categories facing the Group for the second half of the financial year are unchanged from those described in the Report and Accounts for the year ended 31 December 2023. These principal risks are kept under continual review. No material emerging risks have been identified in the first half of the year, and following the reclassification of two separate principal risks in the 2023 ARA, the principal risks we identify comprise:

As an investment company, the most significant risk is market risk. As described in the Chairman's Statement and Manager's Report, geopolitical tensions, the uncertainty surrounding the pace at which inflation will fall and the dominance of a small number of technology stocks in driving the performance of global indices, are some of the challenges we face in 2024.

From an operational risk perspective, we continue to keep our internal controls under close scrutiny and remain satisfied that the control environment is effective.

Going concern

The key factors likely to affect the Group's ability to continue as a going concern were set out in the Report and Accounts for the year ended 31 December 2023. As at 30 June 2024 there have been no significant changes to these factors. Having reviewed the Company's forecasts and other relevant evidence, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed interim financial statements.

Sir James Leigh-Pemberton

Chairman

31 July 2024

For and on behalf of the Board.

CONDENSED INTERIM FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

Six months ended 30 June

Note: The total column of this statement represents the Group's consolidated income statement, prepared in accordance with UK adopted international accounting standards (UK adopted IAS). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Six months ended 30 June

The notes are an integral part of these condensed interim financial statements.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

The notes are an integral part of these condensed interim financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

The notes are an integral part of these condensed interim financial statements.

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

The notes are an integral part of these condensed interim financial statements.

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of accounting

These condensed financial statements are the half-yearly consolidated financial statements of RIT Capital Partners plc (RIT or the Company) and its subsidiaries (together, the Group) for the six months ended 30 June 2024. They are prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, and with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the United Kingdom, and were approved on 31 July 2024. These half-yearly consolidated financial statements should be read in conjunction with the Report and Accounts for the year ended 31 December 2023, which were prepared in accordance with UK adopted IAS. There have been no changes to the IAS since December 2023 that impact our reporting requirements.

The half-yearly consolidated financial statements have been prepared in accordance with the accounting policies set out in the notes to the consolidated financial statements for the year ended 31 December 2023.

Critical accounting assumptions and judgements

As further described in the Report and Accounts for the year ended 31 December 2023, areas requiring a higher degree of judgement or complexity and areas where assumptions and estimates are significant to the consolidated financial statements, are in relation to the valuation of private investments and property.

2. Business and geographical segments

For both the six months ended 30 June 2024 and the six months ended 30 June 2023, the Group is considered to have three principal operating segments, all based in the UK, as follows:

Key financial information for the six months ending 30 June 2024 is as follows:

Key financial information for the six months ending 30 June 2023 is as follows:

3. Earnings per ordinary share - basic and diluted

The basic earnings per ordinary share for the six months ended 30 June 2024 is based on the profit of £141.4m (six months ended 30 June 2023: loss of £32.7m) and the weighted average number of ordinary shares in issue during the period of 156.8m (six months ended 30 June 2023: 156.8m). The weighted average number of shares is adjusted for shares held in the employee benefit trust (EBT) and in treasury in accordance with IAS 33.

The diluted earnings per ordinary share for the period is based on basic shares (above) adjusted for the effect of dilutive share-based payment awards for the period.

The latter adjustment was not required for the period ended 30 June 2023 as an increase in the shares in issue would have reduced the basic loss per ordinary share. As a result, there was no difference between the basic and diluted earnings per ordinary share for that period.

4. Net asset value per ordinary share - basic and diluted

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

5. Dividends

The Board of Directors declared an interim dividend of 19.5p per ordinary share (£28.4m) on 4 March 2024, which was paid on 28 April 2024. The Board has declared the payment of a second interim dividend of 19.5p per ordinary share in respect of the year ending 31 December 2024. This will be paid on 25 October 2024 to shareholders on the register on 4 October 2024. Both payments are funded from accumulated capital profits.

Dividends are not paid on shares held in treasury and the EBT waives its rights to all dividends.

Additional commentary may be found in the Report and Accounts for the year ended 31 December 2023.

6. Financial instruments

IFRS 13 requires the Group to classify its financial instruments held at fair value using a hierarchy that reflects the significance of the inputs used in the valuation methodologies. These are as follows:

The vast majority of the Group's financial assets and liabilities, investment properties and property, plant and equipment are measured at fair value on a recurring basis.

The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting period when they are deemed to occur.

A description of the valuation techniques used by the Group with regards to investments categorised in each level of the fair value hierarchy is detailed below. Where the Group invests in a fund or a partnership, which is not itself listed on an active market, the categorisation of such investment between levels 2 and 3 is determined by reference to the nature of the fund or partnership's underlying investments. If such investments are categorised across different levels, the lowest level of the hierarchy that forms a significant proportion of the fund or partnership exposure is used to determine the reporting disclosure.

If the proportion of the underlying investments categorised between levels changes during the period, these will be reclassified to the most appropriate level.

Level 1

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Where a market price is available but the market is not considered active, the Group has classified these investments as level 2.

Level 2

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques which maximise the use of observable market data where it is available. Specific valuation techniques used to value OTC derivatives include quoted market prices for similar instruments, counterparty quotes and the use of forward exchange rates to estimate the fair value of forward foreign exchange contracts at the balance sheet date. Investments in externally‑managed funds which themselves invest primarily in listed securities are valued at the price or net asset value released by the investment manager or fund administrator as at the balance sheet date.

Level 3

The Group considers all private investments, whether direct or funds, as level 3 assets, as the valuations of these assets are not typically based on observable market data. Where other funds invest into illiquid stocks, these are also considered by the Group to be level 3 assets.

Private fund investments are held at the most recent fair values provided by the GPs managing those funds, adjusted for subsequent investments, distributions, and currency movements up to the period end, and are subject to periodic review by the Manager.

Direct co-investments are also held at the most recent fair values provided by the GPs managing those co-investments, adjusted for subsequent investments, distributions, currency moves, as well as pricing events where the Manager has sufficient information to suggest the period-end valuation should be adjusted. The remaining directly-held private investments are valued on a semi-annual basis using techniques including a market approach, income approach and/or cost approach. The valuation process involves the investment functions of the Manager who prepare the initial valuations, which are then subject to review by the finance function, with the final valuations being determined by the Valuation Committee, comprised of independent non-executive Directors, of which the Audit and Risk Committee Chair is also a member.

Specific valuation techniques used will typically include the value of recent transactions, earnings multiples, discounted cash flow analysis, and, where appropriate, industry specific methodologies. The acquisition cost, if determined to be fair value, may be used to calibrate inputs to the valuation. The valuations will often reflect a synthesis of a number of distinct approaches in determining the final fair value estimate. The individual approach for each investment will vary depending on relevant factors that a market participant would take into account in pricing the asset. These might include the specific industry dynamics, the company's stage of development, profitability, growth prospects or risk as well as the rights associated with the particular security.

Borrowings as at 30 June 2024 comprise bank loans and senior loan notes. The bank loans are revolving credit facilities paying floating interest, and are typically drawn in tranches with a duration of three or six months. The loans are therefore short-term in nature, and their fair value approximates their nominal value. The loan notes were issued in 2015 with tenors of between 10 and 20 years with a weighted average of 16 years. They are valued on a monthly basis using a discounted cash flow model where the discount rate is derived from the yield of similar tenor UK Government bonds, adjusted for any significant changes in either credit spreads or the perceived credit risk of the Company.

The fair value of investments in non-consolidated subsidiaries is considered to be the net asset value of the individual subsidiary as at the balance sheet date. The net asset value comprises various assets and liabilities which are fair valued on a recurring basis and is considered to be level 3.

On a semi-annual basis, the Group engages external, independent and qualified valuers to determine the fair value of the Group's investment properties and property, plant and equipment held at fair value.

The following table analyses the Group's assets and liabilities within the fair value hierarchy, as at 30 June 2024:

Movement in level 3 assets

Further information in relation to the directly-held private investments is set out in the following table. This summarises the portfolio by the primary method used in estimating the fair value of the investments. As we seek to employ a range of valuation methods and inputs in the valuation process, selection of a primary method is subjective, and designed primarily to assist the subsequent sensitivity analysis.

The majority of the direct private investments are structured as co-investments, managed by a GP. For these investments, the valuation approach is to typically use the latest quarterly fair valuations provided by the GP, adjusted for any subsequent investments/distributions and currency moves as well as pricing events, where there is sufficient information to suggest the period end valuation should be adjusted.

Where the Manager has sufficient information to undertake its own valuation, a range of methods will typically be used. For companies with positive earnings, this will usually involve an earnings multiple approach, typically using EBITDA or similar. The earnings multiple is assessed by reference to similar listed companies or transactions involving similar companies. When an asset is undergoing a sale and the price has been agreed but not yet completed or an offer has been submitted, the agreed or offered price will be used, often with a discount as appropriate to reflect the risks associated with the transaction completing or any price adjustments. Where a company has been the subject of a recent financing round which is viewed as representative of fair value, this transaction price will be used. Other methods employed include discounted cash flow analysis and industry metrics such as multiples of assets under management or revenue, where market participants use these approaches in pricing assets.

The following table provides a sensitivity analysis of the valuation of directly-held private investments and the impact on net assets:

The investment property and property, plant and equipment with an aggregate fair value of £54.7m (2023: £55.7m) were valued using a third-party valuation provided by Jones Lang LaSalle. The properties were valued using weighted average capital values of £1,476 per square foot (2023: £1,499) developed from rental yields and supported by recent market transactions. A £25 per square foot increase/decrease in capital values would result in a £0.8m increase/decrease in fair value (2023: £0.8m increase/decrease).

The non-consolidated subsidiaries are held at their fair value of £148.0m (2023: £137.1m) representing £129.2m of portfolio investments (2023: £138.1m) and £18.8m of remaining assets (2023: £1.0m of remaining liabilities). A 5% change in the value of these assets would result in £7.4m or 0.2% (2023: £6.9m, 0.2%) change in total net assets.

The remaining investments held at fair value and classified as level 3 of £1,338.7m (2023: £1,261.5m) were valued using third-party valuations from a GP, administrator or fund manager, or in-house valuation models. A 5% change in the value of these assets would result in a £66.9m or 1.84% (2023: £63.1m, 1.77%) change in net assets.

In aggregate, the sum of the direct private investments, investment property, property, plant and equipment, non-consolidated subsidiaries and the remaining fund investments represents the total level 3 assets of £1,867.5m (2023: £1,820.9m).

The following table analyses the Group's assets and liabilities within the fair value hierarchy, at 31 December 2023:

As at 31 December 2023

Movements in level 3 assets

During the period no investments were reclassified between level 2 and level 3.

7. Comparative information

The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 June 2024 and 30 June 2023 has been neither reviewed nor audited.

The information for the year ended 31 December 2023 has been extracted from the latest published audited financial statements.

The audited financial statements for the year ended 31 December 2023 have been filed with the Registrar of Companies and the report of the auditors on those accounts contained no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES

Glossary

Within this Half-Yearly Financial Report, we publish certain financial measures common to investment trusts. Where relevant, these are prepared in accordance with guidance from the AIC, and this glossary provides additional information in relation to them.

Alternative performance measures (APMs): APMs are numerical measures of the Company's current, historical or future financial performance, financial position or cash flows, other than financial measures defined or specified in the Company's applicable financial framework - namely UK adopted IAS and the AIC SORP. They are denoted with an * in this section.

CPI: The CPI refers to the United Kingdom Consumer Price Index as calculated by the Office for National Statistics and published monthly. It is the UK Government's target measure of inflation and is used as a measure of inflation in one of the Company's key performance indicators (KPIs), CPI plus 3.0% per annum.

Gearing*: Gearing is a measure of the level of debt deployed within the portfolio. The ratio is calculated in accordance with AIC guidance as total assets, excluding cash, divided by net assets and expressed as a 'net' percentage, e.g. 110% would be shown as 10%.

Leverage: Leverage, as defined by the UK Alternative Investment Fund Managers Directive (AIFMD), is any method which increases the exposure of the portfolio, whether through borrowings or leverage embedded in derivative positions or by any other means.

MSCI All Country World Index: The MSCI All Country World Index is a total return, market capitalisation-weighted equity index covering major developed and emerging markets. Described in this report as the ACWI or the ACWI (50% £), this is one of the Company's KPIs or reference hurdles and, since its introduction in 2013, has incorporated a 50% sterling measure. This is calculated using 50% of the ACWI measured in sterling and therefore exposed to translation risk from the underlying foreign currencies. The remaining 50% uses a sterling-hedged ACWI from 1 January 2015 (from when this is readily available). This incorporates hedging costs, which the portfolio also incurs, to protect against currency risk and is an investable index. Prior to this date it uses the index measured in local currencies. Before December 1998, when total return indices were introduced, the index is measured using a capital-only version.

Net asset value (NAV) per share: The NAV per share is calculated by dividing the total value of all the assets of the trust less its liabilities (net assets) by the number of shares outstanding. Unless otherwise stated, this refers to the diluted NAV per share, with debt held at fair value.

NAV total return*: The NAV total return for a period represents the change in NAV per share, adjusted to reflect dividends paid during the period. The calculation assumes that dividends are reinvested in the NAV at the month end following the NAV going ex-dividend. The NAV per share as at 30 June 2024 was 2,508p, an increase of 82p, or 3.4%, from 2,426p at the previous year end. As dividends totalling 19.5p per share were paid during the period, the effect of reinvesting the dividends in the NAV is 0.8%, which results in a NAV total return of 4.2%.

Net quoted equity exposure: This is the estimated level of exposure that the trust has to listed equity markets. It includes the assets held in the quoted equity category of the portfolio adjusted for the notional exposure from quoted equity derivatives, as well as estimated cash balances held by externally-managed funds and estimated exposure levels from hedge fund managers.

Notional: In relation to derivatives, this represents the estimated exposure that is equivalent to holding the same underlying position through a cash security.

Ongoing charges figure (OCF)*: As a self-managed investment trust with operating subsidiaries, the calculation of the Company's OCF requires adjustments to the total operating expenses. In accordance with AIC guidance, the main adjustments are to remove non-recurring costs as well as direct performance-related compensation from JRCM, as this is analogous to a performance fee for an externally-managed trust.

In addition to the above, managers charge fees within the external funds (and in a few instances directly to RIT in relation to segregated accounts). We have estimated that, based on average net assets across the year and annual management fee rates per fund (excluding performance fees), these represented an additional 0.94% of average net assets for 2023.

Premium/discount: The premium or discount (or rating) is calculated by taking the closing share price on 30 June 2024 and dividing it by the NAV per share as at 30 June 2024, expressed as a net percentage. If the share price is above/below the NAV per share, the shares are said to be trading at a premium/discount.

Share price total return or total shareholder return (TSR)*:

The TSR for a period represents the change in the share price adjusted to reflect dividends paid during the period. Similar to calculating a NAV total return, the calculation assumes the dividends are notionally reinvested at the daily closing share price following the shares going ex-dividend. The share price on 30 June 2024 closed at 1,820p, a decrease of 62p, or 3.3%, from 1,882p at the previous year end. Dividends totalling 19.5p per share were paid during the period, and the effect of reinvesting the dividends in the share price is 1.1% which results in a TSR of -2.2%. The TSR is one of the Company's KPIs.

END OF HALF-YEARLY FINANCIAL REPORT EXTRACTS