Interim / Quarterly Report • Feb 28, 2020
Interim / Quarterly Report
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RNS Number : 5476E
Ruffer Investment Company Limited
28 February 2020
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in Guernsey with registration number 41996)
LEI 21380068AHZKY7MKNO47
28 February 2020
HALF-YEARLY FINANCIAL REPORT
The Company has today, in accordance with DTR 6.3.5, released its Half-Yearly Financial Report for the six months ended 31 December 2019 and is attached.
The Chairman states in his report that "As at today, whilst the markets are enduring a sharp fall, the portfolio's protective assets are performing as expected."
http://www.rns-pdf.londonstockexchange.com/rns/5476E_1-2020-2-28.pdf
The Half-Yearly Financial Report is also available via the Company's Investment Manager's website www.ruffer.co.uk.
| ## Key performance indicators | 31 Dec 19 % | 31 Dec 18 % | ||
| Share price total return over six months[1] | 3.80 | (10.02) | ||
| NAV total return per share over six months1 | 3.35 | (5.08) | ||
| Discount of traded share price to NAV | (3.47) | (3.83) | ||
| Dividends per share over six months[2] | 0.9p | 0.9p | ||
| Annualised dividend yield[3] | 0.80 | 0.87 | ||
| Annualised NAV total return per share since launch1 | 7.17 | 7.30 | ||
| Ongoing charges ratio[4] | 1.07 | 1.20 | ||
| ## Financial highlights | 31 Dec 19 | 30 Jun 19 | ||
| Share price | 223.32p | 216.00p | ||
| NAV as calculated on an IFRS basis | £418,228,717 | £406,274,997 | ||
| NAV as reported to the LSE5 | £418,351,672 | £406,745,803 | ||
| Market capitalisation | £403,736,691 | £390,502,979 | ||
| Number of shares in issue | 180,788,416 | 180,788,416 | ||
| NAV per share as calculated on an IFRS basis | 231.34p | 224.72p | ||
| NAV per share as reported to the LSE[5] | 231.40p | 224.98p | ||
| ## Company information | ||||
| Incorporation date | 1 June 2004 | |||
| Launch date | 8 July 2004 | |||
| Launch price | 100p per share | |||
| Initial Net Asset Value | 98p per share | |||
| Accounting dates | Interim | Final | ||
| 31 December | 30 June | |||
| (Unaudited) | (Audited) | |||
Over the six months under review, the Company's Net Asset Value (NAV) rose from 224.72p to 231.34p (a total return of +3.35% including dividends paid), whilst the share price appreciated from 216.00p to 223.32p (a total return of +3.80% including dividends). During the 12 months to 31 December 2019 the Company's NAV rose by 8.4% and the share price rose by 8.7%, both on a total return basis. After a disappointing 2018, this return has more than made up the lost ground and is ahead of our long-term average. Importantly it has been achieved while carrying a significant amount of protection in the portfolio. In the context of our principal objective, which is to achieve a positive total annual return, after all expenses, of at least twice the Bank of England Bank Rate (1.5%), this was a good result. Incidentally, your Board has often discussed the benchmark with Ruffer AIFM Limited (the 'Investment Manager' or the 'Manager'), given how low interest rates have been over the last decade. The Directors concluded that, as we believe that this Company is bought mainly by those institutions and individuals whose primary motivation is to invest in a vehicle that will preserve their capital, the target remains relevant. As we saw in 2019, the returns can be well ahead of this benchmark, but it remains a useful baseline.
The Directors like to monitor how Ruffer Investment Company Limited ('the Company') is performing on a risk-adjusted basis. A characteristic of many absolute return investment strategies is that, relative to equity indices, they tend either to look stellar (in falling markets) or pedestrian (in rising markets), when the truth is that they may be doing the same thing in both scenarios. For this reason, many professional investors look at Sharpe and Sortino ratios. We have included the details for the Company below - a higher ratio equates to a better risk-adjusted return. The purpose of these measures is to look beyond simple returns and measure the return in relation to the amount of risk taken. This is key for a capital preservation vehicle as investors are likely to place as much emphasis on risk as they do on returns. The Sharpe Ratio measures the average portfolio return less the risk-free rate of interest divided by variability of the portfolio return, which represents risk. For example, since its inception, the Company has produced 35% more return per unit of risk than global stock markets (0.85/0.63 from the table below).
The Sortino Ratio is an adaptation of the Sharpe Ratio. While the Sharpe ratio estimates risk by the variability of returns, the Sortino Ratio only takes into account downside variability. This seems more intuitive as investors tend to be less concerned about volatility when prices are rising. Again, the results for the Company since inception should appeal to investors; a Sortino Ratio of 1.84 compared to 0.59 for the MSCI World Index - interestingly the equity index's Sortino Ratio is lower than its Sharpe Ratio, whereas the opposite is the case for the Company - this shows both how the Company has acted as a genuine diversifier to equity exposure and also how damaging the impact of a bear market can be to equity investors.
| Sharpe ratio | Sortino ratio | |
| Ruffer Investment Company since inception (July 2004) | 0.85 | 1.84 |
| MSCI World Index since July 2004 | 0.63 | 0.59 |
MSCI World Index in GBP priced at US market close. Source: Bloomberg. Ruffer Investment Company data is Total Return NAV. All data measured to 31 December 2019.
The eagle-eyed amongst you will have noted the sharp fall in the Ongoing Charges Ratio from 1.20% in the prior period to 1.07% during this period. This useful reduction in costs was primarily due to the appointment of Praxis IFM as Administrator and Company Secretary in early 2019.
Earnings for the half year were 1.21p per share on the revenue account (2018: 0.94p per share) and 6.30p per share on the capital account (2018: loss of 12.63p per share). Earnings from the revenue account remain on the low side due to the high weightings in index-linked securities, unconventional protective assets, gold and gold equities, most of which yield next to nothing, but instead have valuable capital preservation qualities.
As outlined in the Investment Manager's Report, there were some material asset allocation changes in the last six months - notably the reduction in long dated index-linked gilts and the increase in UK equities. These appear to have been well timed. The sales of index-linked stock did not suffer from any adverse liquidity consequences. In total, the sale of £975 million of index-linked gilts across Ruffer LLP's ('Ruffer') portfolios - a material amount - was achieved within seven business days and had no discernible market impact. This is what the Manager had expected and the Board is reassured to see proof of its assumptions.
If there has been one topic which has come to the fore over the past 12 months during discussions with asset managers it has been that of environmental, social and governance (ESG) considerations. Naturally, your Directors interrogated the Manager on this subject and its plans for the future. We already knew that Ruffer had been undertaking a great deal of work in this area for a number of years, and we learnt that there are ambitious plans to do more going forward. Ruffer appears to be well ahead of the competition in embedding ESG into their investment process and using it to identify both risks and opportunities in their investment universe. They believe that investing responsibly will lead to better long-term outcomes for their clients and that ESG considerations are important drivers of investment performance. With a relatively concentrated portfolio of equities they are able to have an impact when engaging with senior management of their investee companies.
What does an integrated ESG approach look like for Ruffer? Put simply, the decision to invest in companies is based on both financial and ESG analysis and they will use voting powers to both support and challenge management. Full details of Ruffer's work in this area are disclosed on the Ruffer website with a diverse array of examples from climate change to indigenous rights and executive pay to workforce safety. Your Directors were encouraged to discover recently that Ruffer ruled out an investment in a cruise ship company as they had been involved in the dumping of waste at sea. This sort of behaviour was indicative of an inadequate governance structure in this particular company which was also evident in their approach to disclosing details on carbon emissions and their attitude to tackling climate change. Your Manager's dedicated Responsible Investment Team work closely with the analysts in the research team to identify and evaluate the risks and impacts to the environment and society that could arise as a result of a company's operations. The risks associated with weak corporate governance practices are also considered. Ruffer uses MSCI ESG Research and other relevant sources, such as the Sustainability Accounting Standards Board (SASB), Transition Pathway Initiative (TPI) and the Carbon Disclosure Project (CDP) to inform their analysis. Ruffer was an early signatory to the UN Principles for Responsible Investment (UNPRI) in order to strengthen their commitment to integrating ESG into their investment approach. Lastly on this topic, Ruffer as a business was first certified as being carbon neutral in 2017.
Ruffer also believe that they have a duty to act as responsible stewards of their clients' assets, and so they use their professional judgement to determine when to engage and how to vote at shareholder meetings to best protect the economic interests of their clients, while being cognisant of the impact on all stakeholders. Your Company votes on all resolutions of its underlying investee companies. The Manager believes that engagement with the companies in which it invests is an effective tool to achieve meaningful change and gives it an opportunity to improve its understanding of investee companies. On issues such as climate change, it often engages through collaborative initiatives such as Climate Action 100+, to which Ruffer was a founding signatory. Ruffer take the opportunity to vote seriously, as it enables them to encourage boards and management teams to consider and address areas that they are concerned about. We have co-filed resolutions where it was felt this was the most appropriate course of action.
I have previously mentioned the steps which we are taking to refresh the Board. We have engaged a full service specialist investment trust head hunter to help us with this process and we have now narrowed a strong field to five offshore candidates and five onshore candidates. Once the two appointments have been made, we will send out an announcement. John Baldwin will retire before June 2020, whilst I will depart at the end of this year. On other Board matters, I am grateful to David Staples and Chris Russell for their work on the recruitment of a Board Apprentice, through a scheme run by the Guernsey Training Agency. Following a series of interviews Ms Susan Norman was appointed on 18 November 2019 and she will understudy the Board for 12 months. This is part of a UK-wide scheme which was founded to help educate and train future board members and widen and diversify the pool of board-ready individuals.
This power has not been invoked over the period of this report. The Board sought at the AGM on 5 December 2019 a renewal of its authority to buy back shares at a discount to NAV and this Resolution was carried. We have the mechanisms in place to buy back shares if the NAV were to fall to a persistent or significant discount. We do not think it sensible to have a rigid formula in place, but rest assured that we will act to prevent the Company falling to a sustained and meaningful discount. As it happens, we came very close to buying back shares in the period but our broker had an order to purchase shares for a client at the same time, so we desisted.
The decisive Conservative election victory has spurred on the UK Equity market, and it seems to me that there is more ground to be made up, since the underperformance of the UK market relative to its global peers since the Brexit vote on 23 June 2016 is stark. The twin threats of a socialist government and the uncertainty over Brexit are receding, leaving the UK as a much more attractive place in which to invest. Your Company, with 17% now allocated to UK equities (and many of those with a domestic focus), is well positioned to benefit. Regarding the recently emerged COVID-19 coronavirus threat, the Board is monitoring its spread and the Manager has confirmed that it is in contact with our investee companies about the likely impact.
While continuing to look for attractive opportunities in equity markets, your Manager is ever cognisant of the risks hanging over financial markets. This bull market is now long in the tooth and corporate profits are being maintained by share buybacks and cost cutting, whilst the amount of debt outstanding now dwarfs the position which prevailed in 2008. Interest rates are at all-time lows and thus there is little ammunition left to offset any downturn. Investors in this Company should understand that the strategy is to try to preserve and grow their assets. The Manager and the Directors are firmly of the belief that the path to superior long-term returns often means protecting what you have. Of course this means that we may miss out on some apparently easy returns when markets are at their most exuberant - this is the price of protecting when the downturn comes. The nature of some of the Company's protective investments is that there is an absolute cost as well as an opportunity cost. The role of the Manager is to seek out returns to cover this cost and grow our shareholders' assets, knowing that when the storm hits these 'insurance policies' will earn their keep. As at today, whilst the markets are enduring a sharp fall, the portfolio's protective assets are performing as expected. Your Directors remain confident that the Company is pursuing the right course - when this approach will be vindicated, is, of course, the unknown element.
Ashe Windham
28 February 2020
The Chairman's statement details how the positive return of the six months to 31 December 2019 has resulted in an increase in NAV of 8.4% for calendar year 2019 including dividends. This is marginally ahead of our average total annual return (7.2%) since inception 15 years ago and ahead of our 12 month objective. The last six months have demonstrated how the Ruffer investment strategy should perform. When markets were rising (which they did for most of the period) we were able to capture some of that upside and when they fell (August being the only example of a significant fall in equity markets) we were able to protect our shareholders (NAV was up 0.6% in August). While these are very short time periods to analyse, they do help us to test the resilience of the current portfolio and we remain confident that the current asset allocation is well placed to achieve our investment objectives in a variety of market scenarios.
In the past we have written about the dangers of the rising tide of liquidity, which has floated all boats in financial markets. This was undoubtedly the case in 2019. The chart contained within the Half-Yearly Financial Report shows how far bond yields would have to fall to offset a 10% decline in equities in a traditional balanced portfolio. The conclusion? Bonds are highly unlikely to do well enough to offset the losses. We rely on our protective assets going up in such a scenario and not just standing still. This makes the unconventional credit and option protection in the Company intensely interesting and a clear differentiator from conventional defensive portfolios.
The role of the Company should be to give investors something in their portfolios, which, in a market downturn, can add value or be used as a source of cash should they need to draw on their funds in extremis.
Of course, we want to make steady positive progress in benign markets and in the last six months notable positive contributions came from UK equities (+186bps) and Japanese equities (+167bps), gold (+93bps) and interest rate protection (+78bps), while credit protection (-119bps) and equity protection (-66bps) were the principal detractors as loose monetary policy continued to support markets.
UK equities - we have added significantly to UK equities in the last six months such that they are now our largest geographical equity weighting at 17% (30 June 2019: 11%). The Tory election victory has both removed the risk of a socialist government for the foreseeable future and increased the certainty on the path of Brexit. Noise from trade negotiations will take some of the gloss off this story, but regardless of that it seems likely that capital will flow into the UK and we will see a pick-up in corporate activity from pent-up demand, which has been waiting to see how the cards would fall. The Brexit/sterling discount makes UK companies look cheap in expensive global markets (as demonstrated in the chart contained within the Half-Yearly Financial Report).
We believe there is now a compelling story for the international investor, who has rightly shunned the UK for the last few years. Trade buyers and private equity sponsors have access to cheap financing and a willingness to do deals, and Britain is suddenly open for business. As an anecdotal example we witnessed another opportunistic takeover of one of the Company's UK holdings in October as cyber security business, Sophos (+17bps) was taken over at a 37% premium to the prevailing share price. We expect more transactions like this. Looking further forward it is likely that consumer confidence in the UK will pick up even if the fiscal boost takes longer to come through.
Ultra-long dated index-linked gilts - we have reduced the duration of our much-cherished long dated linkers. These performed strongly through the summer, and we grew increasingly concerned that generous spending promises from the government would see bond yields rise. Even if this eventually results in higher inflation, our concern was that the first move in bond yields would hurt the linkers. In the past we have hedged out some of this risk through interest rate options and financial sector equities. We continue to do this and both these investments performed well in the latter stages of the year, but we also felt that we should reduce our long duration exposure, and so long-dated index-linked gilts were taken down from 14% to 10% in October. It is important to emphasise that we retain confidence in the inflation story and the likelihood of falling real yields. The index-linked exposure remains our largest position. Many of the events of the last year have demonstrated that the direction of travel remains consistent - the intolerance of the market to higher interest rates and the fiscal splurge being the best examples. The value of long linkers has increased two and a half fold in the last 10 years and so locking in some profits feels appropriate.
US healthcare - elsewhere in equity markets we continue to look for undervalued opportunities and US healthcare stocks presented one such opportunity. Political noise from Democrat candidates for the US presidency indicated that a victory would herald free healthcare for all. The healthcare stocks suffered off the back of this (giving us a buying opportunity) but our analysis suggested that this is completely unaffordable and sure enough this has been revealed to be the case and healthcare stocks have bounced around 50% from their autumn lows netting us around 107 bps in performance.
Sterling - although this position has not changed much in the last six months, we have rolled our hedges to maintain a high sterling weighting. This has been justified as sterling rallied 4% against the US dollar over the period and 6% against the euro. Many UK based global investors have been held back by this headwind and so it is valuable that these hedges have proved their worth.
During the period we took a small amount of profits from the gold equity trade we added to in size in mid-2018. Total sales were slightly less than 50bps but the LF Ruffer Gold Fund was up 70% since those additions. The LF Ruffer Gold Fund remains our largest position in the portfolio at 7.1%. We continue to view the prospects positively for gold mining shares as there are two ways to win - either macro events will develop favourably for gold or if capital markets stay open we will see further deals and consolidation in the sector.
We should not forget how extraordinary current conditions are. In the Annual Financial Report we referred to the large amount of debt trading at negative yields across the world and how this has distorted the prices of many different asset classes. This distortion persists and if there is a lesson to be learned from the last 15 years it is that these things can go on longer than seems logical. Much has been written about what would have happened had the Federal Reserve ('the Fed') not performed a spectacular u-turn 12 months ago. Perhaps the more interesting question will be whether in a decade's time that volte-face will matter, or, as we believe, will simply be seen to have put off the inevitable. However, we also acknowledge that the Fed has masterfully kept the show on the road in recent years and our investment strategy needs to be able to capture some of the benefit should that continue in the short to medium term.
Looking forward we worry about the combination of highly indebted corporates and consumers, a widespread insouciance on inflation and growing concerns about liquidity mismatches in financial markets. 12 months ago no one thought that markets would rise over the following year and now no one thinks that they can fall. We remain positioned to protect and grow our investors' assets in either outcome.
Ruffer AIFM Limited
28 February 2020
| Investments | Currency | Holding at 31 Dec 19 |
Fair value £ | % of total net assets |
| LF Ruffer Gold Fund* | GBP | 14,102,178 | 29,551,043 | 7.07 |
| Ruffer Illiquid Multi Strategies Fund 2015† | GBP | 55,461,992 | 24,298,564 | 5.81 |
| US Treasury inflation indexed bond 0.625% 15/07/2021 | USD | 22,350,000 | 19,464,991 | 4.66 |
| UK index-linked gilt 0.125% 22/03/2068 | GBP | 6,600,000 | 18,194,046 | 4.36 |
| UK index-linked gilt 0.375% 22/03/2062 | GBP | 5,900,000 | 16,363,373 | 3.91 |
| US Treasury inflation indexed bond 0.125% 15/04/2021 | USD | 20,000,000 | 16,346,603 | 3.91 |
| UK index-linked gilt 2.000% 22/07/2020 | GBP | 15,000,000 | 15,111,750 | 3.61 |
| US Treasury inflation indexed bond 0.125% 15/04/2020 | USD | 18,234,000 | 15,097,182 | 3.61 |
| US Treasury inflation indexed bond 1.25% 15/07/2020 | USD | 15,090,000 | 13,553,629 | 3.24 |
| US Treasury inflation indexed bond 1.125% 15/01/2021 | USD | 15,000,000 | 13,433,767 | 3.21 |
* LF Ruffer Gold Fund is classed as a related party because its investment manager, Ruffer LLP, is the parent company of the Company's Investment Manager.
† Ruffer Illiquid Multi Strategies Fund 2015 Ltd is classed as a related party as it shares the same Investment Manager as the Company.
The Board is responsible for the Company's system of internal controls and for reviewing its effectiveness. The Board, through its Audit Committee, has carried out a robust assessment of the principal risks and uncertainties facing the Company by using a comprehensive risk matrix as the basis for analysing the Company's system of internal controls while monitoring the investment limits and restrictions set out in the Company's investment objective and policy.
The principal risks assessed by the Board relating to the Company were disclosed in the Annual Financial Report for the year ended 30 June 2019. The principal risks disclosed include investment risk, operational risk, accounting, legal and regulatory risk and financial risks. A detailed explanation of these can be found on page 13 of the Annual Financial Report. The Board and Investment Manager do not consider these risks to have materially changed during the six months ended 31 December 2019, and are not expected to change in the remaining six months of the financial year.
The Directors believe that, having considered the Company's investment objective (see Business Model and Strategy on page 10 of the Annual Financial Report), financial risk management and associated risks (see note 19 to the Financial Statements on pages 81 to 93 of the Annual Financial Report) and in view of the liquidity of investments, the income deriving from those investments and its holding in cash and cash equivalents, the Company has adequate financial resources and suitable management arrangements in place to continue as a going concern for at least 12 months from the date of approval of these Interim Financial Statements.
We confirm that to the best of our knowledge
- the half-yearly financial report and Unaudited Condensed Interim Financial Statements have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting as adopted by the European Union; and
- the half-yearly financial report and Unaudited Condensed Interim Financial Statements (including the Chairman's Statement and the Investment Manager's Report) meet the requirements of an interim management report and include a fair review of the information required by:
a DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of principal risks and uncertainties for the remaining six months of the year; and
b DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period and any changes in the related party transactions described in the last Annual Financial Report that could do so.
On behalf of the Board
Ashe Windham Chairman David Staples, Director
28 February 2020 28 February 2020
We have been engaged by Ruffer Investment Company Limited ('the Company') to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2019 which comprises the condensed statement of comprehensive income, condensed statement of financial position, the condensed statement of changes in equity and the condensed statement cash flows and related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union.
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
St Peter Port
Guernsey
28 February 2020
| 31 Dec 2019 £ | 30 Jun 2019 £ | ||
| Notes | (unaudited) | (audited) | |
| Assets | |||
| Non-current assets | |||
| Investments at fair value through profit or loss | 10,11 | 376,538,109 | 390,217,885 |
| Current assets | |||
| Cash and cash equivalents | 39,953,139 | 19,375,840 | |
| Derivative financial assets | 11 | 944,382 | - |
| Trade and other receivables | 1,515,821 | 556,885 | |
| Total current assets | 42,413,342 | 19,932,725 | |
| Total assets | 418,951,451 | 410,150,610 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | 523,927 | 3,543,576 | |
| Derivative financial liabilities | 11 | 198,807 | 332,037 |
| Total liabilities | 722,734 | 3,875,613 | |
| Net assets | 418,228,717 | 406,274,997 | |
| Equity | |||
| Capital and reserves attributable to the Company's shareholders | |||
| Share capital | 4 | 186,459,986 | 186,459,986 |
| Capital reserve | 132,792,164 | 121,407,708 | |
| Retained earnings | 98,976,567 | 98,407,303 | |
| Total equity | 418,228,717 | 406,274,997 | |
| Net assets attributable to holders of redeemable participating preference shares (per share) |
12 | 231.34p | 224.72p |
The Unaudited Condensed Interim Financial Statements were approved on 28 February 2020 and signed on behalf of the Board of Directors by
Ashe Windham, Chairman David Staples, Director
The notes form an integral part of these Unaudited Condensed Interim Financial Statements.
| Notes | Revenue £ | Capital £ | 1 Jul 19 to 31 Dec 19 total £ |
1 Jul 18 to 31 Dec 18 total £ |
|
| Fixed interest income | 681,489 | - | 681,489 | 364,621 | |
| Dividend income | 2,093,889 | - | 2,093,889 | 2,117,356 | |
| Net changes in fair value of financial assets at fair value through profit or loss | 5,10 | - | 9,065,572 | 9,065,572 | (16,376,855) |
| Other gains/(losses) | 6 | - | 4,236,668 | 4,236,668 | (4,342,668) |
| Total income/(loss) | 2,775,378 | 13,302,240 | 16,077,618 | (18,237,546) | |
| Management fees | 8 | - | (1,917,784) | (1,917,784) | (1,891,129) |
| Expenses | 7 | (328,847) | - | (328,847) | (509,710) |
| Total expenses | (328,847) | (1,917,784) | (2,246,631) | (2,400,839) | |
| Profit/(loss) for the period before tax | 2,446,531 | 11,384,456 | 13,830,987 | (20,638,385) | |
| Withholding tax | (250,171) | - | (250,171) | (284,498) | |
| Profit/(loss) for the period after tax | 2,196,360 | 11,384,436 | 13,580,816 | (20,922,883) | |
| Total comprehensive income/(loss) for the period |
2,196,360 | 11,384,436 | 13,580,816 | (20,922,883) | |
| Basic and diluted earnings/(loss) per share* | 1.21p | 6.30p | 7.51p | (11.69p) |
* Basic and diluted earnings per share are calculated by dividing the profit after taxation by the weighted average number of redeemable participating preference shares. The weighted average number of shares for the period was 180,788,416 (31 December 2018: 179,033,254).
All items in the above statement are derived from continuing operations.
The notes on form an integral part of these Unaudited Condensed Interim Financial Statements.
| Notes | Share capital £ | Capital reserve £ |
Retained earnings £ | Total 1 Jul 19 to 31 Dec 19 £ |
|
| Balance at 30 June 2019 | 186,459,986 | 121,407,708 | 98,407,303 | 406,274,997 | |
| Total comprehensive income for the period | - | 11,384,456 | 2,196,360 | 13,580,816 | |
| Transactions with Shareholders | |||||
| Distribution for the period | 3 | - | - | (1,627,096) | (1,627,096) |
| Balance at 31 December 2019 | 186,459,986 | 132,792,164 | 98,976,567 | 418,228,717 | |
| Notes | Share capital £ |
Capital reserve £ |
Retained earnings £ | Total 1 Jul 18 to 31 Dec 18 £ |
|
| Balance at 30 June 2018 | 178,294,916 | 130,253,655 | 97,759,432 | 406,308,003 | |
| Total comprehensive loss for the period | - | 1,687,769 | (22,610,652) | (20,922,883) | |
| Transactions with Shareholders | |||||
| Share capital issued | 4 | 8,206,100 | - | - | 8,206,100 |
| Share issue costs | 4 | (41,031) | - | - | (41,031) |
| Distribution for the period | 3 | - | - | (1,612,696) | (1,612,696) |
| Balance at 31 December 2018 | 186,459,985 | 131,941,424 | 73,536,084 | 391,937,493 |
Under The Companies (Guernsey) Law, 2008, the Company can distribute dividends from capital and reserves, subject to satisfying a solvency test.
The notes form an integral part of these Unaudited Condensed Interim Financial Statements.
| Notes | 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Cash flows from operating activities | |||
| Profit/(loss) for the period after tax | 13,580,816 | (20,922,883) | |
| Adjustments for | |||
| Net realised (gains)/losses on investments | 5,10 | (20,351,226) | 23,547,487 |
| Movement in unrealised losses/(gains) on investments | 5,10 | 11,285,654 | (7,170,632) |
| Realised (gains)/losses on forward foreign exchange contracts | 6 | (3,282,313) | 5,577,426 |
| Movement in unrealised gains on forward foreign exchange contracts | 6 | (1,077,612) | (1,094,722) |
| Foreign exchange losses/(gains) on cash and cash equivalents | 123,257 | (110,209) | |
| Increase in trade and other receivables | (92,789) | (204,145) | |
| (Decrease)/increase in trade and other payables | (332,040) | 333,244 | |
| (146,253) | (44,434) | ||
| Net cash received/(paid) on closure of forward foreign exchange contracts | 3,282,313 | (5,577,426) | |
| Purchases of investments | (130,482,705) | (133,872,492) | |
| Sales of investments | 149,674,298 | 102,263,063 | |
| Net cash generated from/(used in) operating activities | 22,327,652 | (37,231,289) | |
| Cash flows from financing activities | |||
| Dividend paid | 3 | (1,627,096) | (1,612,696) |
| Proceeds from issue of redeemable participating preference shares | - | 8,439,100 | |
| Share issue costs | - | (42,197) | |
| Net cash (used in)/generated from financing activities | (1,627,096) | 6,784,207 | |
| Net increase/(decrease) in cash and cash equivalents | 20,700,556 | (30,447,082) | |
| Cash and cash equivalents at beginning of the period | 19,375,840 | 47,636,234 | |
| Exchange (losses)/gains on cash and cash equivalents | (123,257) | 110,209 | |
| Cash and cash equivalents at end of the period | 39,953,139 | 17,299,361 |
The notes form an integral part of these Unaudited Condensed Interim Financial Statements.
1 The Company
The Company was incorporated with limited liability in Guernsey on 1 June 2004 as a company limited by shares and as an authorised closed-ended investment company. As an existing closed- ended fund the Company is deemed to be granted an authorised declaration in accordance with section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and rule 6.02 of the Authorised Closed-ended Investment Schemes Rules 2008. The Company is listed on the Main Market of the London Stock Exchange (LSE) and was admitted to the premium segment of the Official List of the UK Listing Authority on 20 December 2005.
2 Significant accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered to be material in relation to the Company's Unaudited Condensed Interim Financial Statements.
The Unaudited Condensed Interim Financial Statements for the period ended 31 December 2019 have been prepared using accounting policies consistent with IFRS and in accordance with IAS 34 as adopted by the European Union, and the Disclosure and Transparency Rules of the UK Financial Conduct Authority.
They have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss.
This half-yearly financial report, covering the period from 1 July 2019 to 31 December 2019, is not audited.
The Unaudited Condensed Interim Financial Statements do not include all the information and disclosures required in the Annual Financial Report and should be read in conjunction with the Annual Financial Report for the year ended 30 June 2019, which was prepared in accordance with IFRSs as adopted by the European Union. The Audit Report on those accounts was not qualified.
In the financial period under review, there were no changes to the significant accounting judgements, estimates and assumptions from those applied in the Annual Financial Report for the year ended 30 June 2019.
The accounting policies adopted are consistent with those used in the Annual Financial Report for the year ended 30 June 2019. There were no new standards, interpretations or amendments to standards issued and effective for the period that materially impacted the Company.
3 Dividends to shareholders
Dividends, if any, are declared semi-annually, usually in September and March each year. The Company declared and paid the following dividends during the period.
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Interim dividend of 0.9p (2018: 0.9p) | 1,627,096 | 1,612,696 |
A second interim dividend of 0.95p per share in respect of the half year ended 31 December 2019 was declared on 28 February 2020. The dividend is payable on 27 March 2020 to shareholders on record at 13 March 2020.
4 Share capital
| Authorised share capital | 31 Dec 19 £ | 30 Jun 19 £ |
| Unclassified shares of 0.01p each | Unlimited | Unlimited |
| 75,000,000 C shares of 0.10p each | 75,000 | 75,000 |
| 75,000 | 75,000 |
| Number of shares | Share capital | ||||
| Issued share capital | 1 Jul 19 to 31 Dec 19 |
1 Jul 18 to 30 Jun 19 |
1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 30 Jun 19 £ |
|
| Redeemable Participating Preference Shares of 0.01p each | |||||
| Balance at start of period | 180,788,416 | 177,188,416 | 186,459,986 | 178,294,916 | |
| Issued and fully paid during the period | - | 3,500,000 | - | 8,206,100 | |
| Issued and awaiting settlement | - | 100,000 | - | - | |
| Share issue costs | - | - | - | (41,030) | |
| Balance as at end of period | 180,788,416 | 180,788,416 | 186,459,986 | 186,459,986 |
Unclassified shares can be issued as nominal shares or redeemable participating preference shares. Nominal shares can only be issued at par to the Administrator. The Administrator is obliged to subscribe for nominal shares for cash at par when redeemable participating preference shares are redeemed to ensure that funds are available to redeem the nominal amount paid up on redeemable participating preference shares. The holder or holders of nominal shares shall have the right to receive notice of and to attend general meetings of the Company but shall not be entitled to vote thereat. Nominal shares shall carry no right to dividends. In a winding-up, holders of nominal shares shall be entitled to be repaid an amount equal to their nominal value out of the assets of the Company.
The holders of fully paid redeemable participating preference shares are entitled to one vote at all meetings of the relevant class of shareholders.
There were no C shares in issue at period end (30 June 2019: Nil).
At the start of the period, the Company had the ability to issue 6,321,341 redeemable participating shares under a blocklisting facility. No new redeemable participating preference shares were allotted and issued under the blocklisting facility during the period (30 June 2019: 3,600,000 for a total consideration of £8,206,100). New redeemable participating preference shares rank pari passu with the existing shares in issue.
As at 31 December 2019, the Company had the ability to issue a further 6,321,341 (30 June 2019: 6,321,341) redeemable participating preference shares under the blocklisting facility.
As at 31 December 2019, the Company had 180,788,416 (30 June 2019: 180,788,416) redeemable participating preference shares of 0.01 pence each in issue. Therefore, the total voting rights in the Company at 31 December 2019 were 180,788,416 (30 June 2019: 180,788,416).
A special resolution was passed on 5 December 2019 which authorised the Company in accordance with The Companies (Guernsey) Law, 2008 to make purchases of its own shares as defined in that Ordinance of its Participating Shares of 0.01 pence each, provided that -
i the maximum number of shares the Company can purchase is no more than 14.99% of the Company's issued share capital
ii the minimum price (exclusive of expenses) which may be paid for a share is 0.01 pence, being the nominal value per share
iii the maximum price (exclusive of expenses) which may be paid for the share is an amount equal to the higher of (i) 105% of the average of the middle market quotations for a share taken from the LSE Daily Official List for the 5 business days immediately preceding the day on which the Share is purchased and (ii) the price stipulated in Article 5(i) of the Buy-back and Stabilisation Regulation (No 2237 of 2003)
iv purchases may only be made pursuant to this authority if the shares are (at the date of the proposed purchase) trading on the LSE at a discount to the lower of the undiluted or diluted NAV
v the authority conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2019 or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such authority is renewed prior to such time and
vi the Company may make a contract to purchase shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make an acquisition of shares pursuant to any such contract.
5 Net changes in financial assets at fair value through profit or loss
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Net changes in financial assets at fair value through profit or loss during the period comprise |
||
| Gains realised on investments sold during the period | 22,393,284 | 12,751,383 |
| Losses realised on investments sold during the period | (2,042,058) | (36,298,870) |
| Net realised gains/(losses) on investments sold during the period | 20,351,226 | (23,547,487) |
| Movement in unrealised (losses)/gains arising from changes in fair value | (11,285,654) | 7,170,632 |
| Net changes in fair value on financial assets at fair value through profit or loss | 9,065,572 | (16,376,855) |
6 Other gains/(losses)
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Movement in unrealised gain on forward foreign currency contracts | 1,077,612 | 1,094,722 |
| Realised gains/(losses) on forward foreign currency contracts | 3,282,313 | (5,577,426) |
| Foreign exchange (losses)/gains on cash and cash equivalents | (123,257) | 140,036 |
| 4,236,668 | (4,342,668) |
7 Expenses
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Administration fee* | 82,017 | 229,503 |
| Directors' fees (note 8) | 80,919 | 77,750 |
| Custodian and Depositary fees* | 40,066 | 37,874 |
| Printing costs | 3,626 | 20,616 |
| Broker's fees | 17,604 | 36,614 |
| Audit fee | 13,475 | 15,475 |
| Auditor's remuneration for interim review | 8,400 | 8,400 |
| Other expenses | 82,740 | 83,478 |
| 328,847 | 509,710 |
* The basis for calculating the Administration fee as well as the Custodian and Depositary fees are set out in the General Information.
The ongoing charges ratio (OCR) of an investment company is the annual percentage reduction in shareholder returns as a result of recurring operational expenditure. Ongoing charges are classified as those expenses which are likely to recur in the foreseeable future, and which relate to the operation of the company, excluding investment transaction costs, financing charges, gains or losses on investments and any other expenses of a non-recurring nature. The OCR for the current period has been calculated as the total ongoing charges for the period divided by the average net asset value over that period, in accordance with the methodology recommended by the Association of Investment Companies (AIC).
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
||
| Management fee (see note 8) | 1,917,784 | 1,891,129 | |
| Other expenses (see above) | 328,847 | 509,710 | |
| 2,246,631 | 2,400,839 | ||
| Excluded expenses* | (27,000) | - | |
| Total ongoing expenses | 2,219,631 | 2,400,839 | |
| Average NAV | 414,408,659 | 401,641,128 | |
| Annualised ongoing charges ratio† | 1.07% | 1.20% |
* Excluded expenses in the current period include consultancy costs relating to Board recruitment & certain non-recurring project costs.
† In the Company's 2018 Interim Financial Report, the OCR for the period ended 31 December 2018 was reported as 1.18%, which was calculated as total ongoing charges divided by the opening IFRS NAV. In order to align the calculation with AIC methodology, and to provide comparability with the current period, the prior period OCR presented here has been recalculated using average NAV over the period.
8 Related party transactions
The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for the Company's activities.
The Company is managed by Ruffer AIFM Ltd, a subsidiary of Ruffer LLP, a privately owned business registered in England and Wales as a limited liability partnership. The Company and the Investment Manager have entered into an Investment Management Agreement under which the Investment Manager has been given responsibility for the day-to-day discretionary management of the Company's assets (including uninvested cash) in accordance with the Company's investment objective and policy, subject to the overall supervision of the Directors and in accordance with the investment restrictions in the Investment Management Agreement and the Company's Articles of Incorporation.
The market value of LF Ruffer Japanese Fund and LF Ruffer Gold Fund are deducted from the NAV of the Company before the calculation of management fees on a monthly basis. For additional information, refer to the Portfolio Statement.
Total management fees charged to the capital reserves of the Company, including the outstanding management fees at the end of the period, are detailed below.
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Management fees for the period | 1,917,784 | 1,891,129 |
| 31 Dec 2019 £ | 30 June 2019 £ | |
| Payable at end of the period | 332,031 | 612,539 |
As at 31 December 2019, an immediate family member of the Chairman, Ashe Windham, owned 100 (30 June 2019: 100) Shares in RML, the Managing Member of Ruffer LLP, which is the parent entity of the Investment Manager of the Company. This amounts to less than 1% (30 June 2019: less than 1%) of RML's issued share capital.
As at 31 December 2019, the Company had five non-executive Directors, all of whom were independent from the Investment Manager and its parent entity, Ruffer LLP. There was no change to directorships during the period ended 31 December 2019.
The Directors of the Company are remunerated for their services at such a rate as the Directors determine provided that the aggregate amount of such fees does not exceed £200,000 (30 June 2019: £200,000) per annum.
Each Director was paid a fee of £28,750 (30 June 2019: £28,750) per annum, except for the Chairman who was paid £40,500 (30 June 2019: £40,500) per annum and the Chairman of the Audit Committee who was paid £33,000 (30 June 2019: £33,000) per annum.
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 31 Dec 18 £ |
|
| Directors' fees for the period | 80,919 | 77,750 |
| 31 Dec 2019 £ | 30 June 2019 £ | |
| Payable at end of the period | - | - |
As at 31 December 2019, Directors of the Company held the following numbers of shares beneficially.
| Directors | 31 Dec 19 shares | 30 Jun 19 shares |
| Ashe Windham* | 105,000 | 105,000 |
| Christopher Russell | 50,000 | 50,000 |
| David Staples | 40,000 | 40,000 |
| Jill May | 11,000 | 11,000 |
| John V Baldwin | - | - |
| 206,000 | 206,000 |
* Ashe Windham holds 80,000 shares whilst his wife holds 25,000 shares
As at 31 December 2019, Hamish Baillie, Investment Director of the Investment Manager owned 205,000 (30 June 2019: 205,000) shares in the Company.
As at 31 December 2019, Steve Russell, Investment Director of the Investment Manager owned 6,450 (30 June 2019: 6,450) shares in the Company.
As at 31 December 2019, Duncan MacInnes, Investment Director of the Investment Manager owned 28,800 (30 June 2019: 28,800) shares in the Company.
As at 31 December 2019, Jonathan Ruffer, chairman of Ruffer LLP, owned 1,039,335 (30 June 2019: 1,039,335) shares in the Company.
As at 31 December 2019, Ruffer LLP (the parent entity of the Company's Investment Manager) and other entities within the Ruffer Group held 6,783,039 (30 June 2019: 6,775,074) shares in the Company on behalf of its discretionary clients.
As at 31 December 2019, the Company held investments in five (30 June 2019: five) related investment funds valued at £81,822,744 (30 June 2019: £72,973,335). Refer to the Portfolio Statement for details.
9 Operating segment reporting
The Board of Directors makes the strategic decisions on behalf of the Company. The Company has determined the operating segments based on the reports reviewed by the Board, which are used to make strategic decisions.
The Board is responsible for monitoring the Investment Manager's positioning of the Company's portfolio and considers the business to have a single operating segment.
There were no changes in the reportable segments during the period.
Revenue earned is reported separately in the Statement of Comprehensive Income as dividend income received from equities, and interest income received from fixed interest securities and bank deposits.
The Statement of Cash Flows separately reports cash flows from operating and financing activities.
10 Investments at fair value through profit or loss
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 30 Jun 19 £ |
|
| Cost of investments at the start of the period/year | 351,139,573 | 334,523,278 |
| Acquisitions at cost during the period/year | 127,795,096 | 295,763,936 |
| Disposals during the period/year | (150,540,444) | (265,156,928) |
| Gains/(losses) on disposals during the period/year | 20,351,226 | (13,990,713) |
| Cost of investments held at the end of the period/year | 348,745,451 | 351,139,573 |
| Fair value above cost | 27,792,658 | 39,078,312 |
| Fair value of investments held at the end of the period/year | 376,538,109 | 390,217,885 |
11 Fair Value Measurement
IFRS 13 establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value, and requires the Company to classify its financial instruments into the level of the fair value hierarchy that best reflects the significance of the inputs used in making fair value measurements. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows -
Level 1: Quoted prices, based on bid prices, (unadjusted) in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices) and
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires judgment by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following table presents the Company's financial assets and liabilities by level within the valuation hierarchy at 31 December 2019.
| Level 1 £ | Level 2 £ | Level 3 £ | 31 Dec 19 total £ |
|
| Financial assets at fair value through profit or loss | ||||
| Government index-linked bonds | 137,548,026 | - | - | 137,548,026 |
| Options | - | 8,536,825 | - | 8,536,825 |
| Equities | 151,158,784 | 19,436,312 | 1,593,750 | 172,188,846 |
| Gold and gold mining equities | 1,908,605 | 29,551,043 | - | 31,459,648 |
| Investment funds | 1,617,000 | 25,187,764 | - | 26,804,764 |
| Derivative financial assets | - | 944,382 | - | 944,382 |
| Total assets | 292,232,415 | 83,656,326 | 1,593,750 | 377,482,491 |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative financial liabilities | - | 198,807 | - | 198,807 |
| Total liabilities | - | 198,807 | - | 198,807 |
The following table presents the Company's financial assets and liabilities by level within the valuation hierarchy at 30 June 2019.
| Level 1 £ | Level 2 £ | Level 3 £ | 30 Jun 19 total £ |
|
| Financial assets at fair value through profit or loss | ||||
| Government index-linked bonds | 103,537,709 | - | - | 103,537,709 |
| Short dated conventional government bonds | 54,914,791 | - | - | 54,914,791 |
| Options | - | 4,874,494 | - | 4,874,494 |
| Equities | 147,150,646 | 14,131,054 | 1,593,750 | 162,875,450 |
| Gold and gold mining equities | 6,628,974 | 24,760,560 | - | 31,389,534 |
| Investment funds | 1,716,000 | 30,909,907 | - | 32,625,907 |
| Total assets | 313,948,120 | 74,676,015 | 1,593,750 | 390,217,885 |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative financial liabilities | - | 332,037 | - | 332,037 |
| Total liabilities | - | 332,037 | - | 332,037 |
The Company recognises transfers between levels of fair value hierarchy as of the end of the reporting period during which the transfer has occurred. During the period ended 31 December 2019, no transfers were made. In the prior year ended 30 June 2019, no transfers were made.
| 1 Jul 19 to 31 Dec 19 £ |
1 Jul 18 to 30 Jun 19 £ |
|
| Opening valuation | 1,593,750 | 1,593,750 |
| Unrealised movement on revaluation of investments | - | - |
| Closing valuation | 1,593,750 | 1,593,750 |
Assets classified in Level 1 consist of listed or quoted equities or bonds which are issued by corporate issuers, supra-nationals or government organisations.
Assets classified in Level 2 are investments in funds fair-valued using the official NAV of each fund as reported by each fund's independent administrator at the reporting date. Where these funds are invested in equity type products, they are classified as equity in the table above. Options and foreign exchange forwards are fair valued using publicly available data. The foreign exchange forwards are shown as derivative financial assets and liabilities in the fair value hierarchy table.
Assets classified in Level 3 consist of investments for which no market exists for trading, for example investments in liquidating or illiquid funds, and are reported using the latest available official NAV less dividends declared to date of each fund as reported by each fund's independent administrator at the last reporting date. Where a market exists for trading in illiquid funds, these are classified in Level 2.
12 NAV reconciliation
The Company announces its NAV, based on bid value, to the LSE after each weekly and month end valuation point. At the time of releasing the NAV to the LSE for 31 December 2019, not all the latest prices were available. Adjustments were made to the NAV in the Financial Statements once these prices became available. The following is a reconciliation of the NAV per share attributable to redeemable participating preference shareholders as presented in these Financial Statements, using IFRS, to the NAV per share reported to the LSE.
| 31 Dec 2019 | 30 June 19 | ||||
| NAV £ | NAV per share £ | NAV £ | NAV per share £ |
||
| NAV per share published on the LSE as at the period/year end | 418,351,672 | 2.3140 | 406,745,803 | 2.2498 | |
| Adjustments to valuations | (122,955) | (0.0006) | (470,806) | (0.0026) | |
| Net assets attributable to holders of redeemable participating preference shares | 418,228,717 | 2.3134 | 406,274,997 | 2.2472 |
13 Subsequent events
These Financial Statements were approved for issuance by the Board on 28 February 2020. Subsequent events have been evaluated up until this date.
A second interim dividend of 0.95p per share in respect of the half year ended 31 December 2019 was declared on 28 February 2020. The dividend is payable on 27 March 2020 to shareholders on record at 13 March 2020.
| Currency | Holding at 31 Dec 19 |
Fair value £ | % of total net assets |
|
|---|---|---|---|---|
| Government index-linked bonds 32.89% | ||||
| (30 Jun 19: 39.00%) | ||||
| United Kingdom | ||||
| UK index-linked Gilt 2.000% 22/07/2020 | GBP | 15,000,000 | 15,111,750 | 3.61 |
| UK index-linked Gilt 1.875% 22/11/2022 | GBP | 1,500,000 | 2,386,392 | 0.57 |
| UK index-linked Gilt 0.375% 22/03/2062 | GBP | 5,900,000 | 16,363,373 | 3.91 |
| UK index-linked Gilt 0.125% 22/03/2068 | GBP | 6,600,000 | 18,194,046 | 4.36 |
| 52,055,561 | 12.45 | |||
| Japan | ||||
| Japanese Index Linked Bond 10/03/2026 | JPY | 350,000,000 | 2,525,373 | 0.60 |
| Japanese Index Linked Bond 10/03/2027 | JPY | 350,000,000 | 2,543,678 | 0.61 |
| Japanese Index Linked Bond 10/03/2028 | JPY | 350,000,000 | 2,527,242 | 0.60 |
| 7,596,293 | 1.81 | |||
| United States | ||||
| US Treasury Inflation Indexed Bond 0.125% 15/04/2020 | USD | 18,234,000 | 15,097,182 | 3.61 |
| US Treasury Inflation Indexed Bond 1.250% 15/07/2020 | USD | 15,090,000 | 13,553,629 | 3.24 |
| US Treasury Inflation Indexed Bond 1.125% 15/01/2021 | USD | 15,000,000 | 13,433,767 | 3.21 |
| US Treasury Inflation Indexed Bond 0.125% 15/04/2021 | USD | 20,000,000 | 16,346,603 | 3.91 |
| US Treasury Inflation Indexed Bond 0.625% 15/07/2021 | USD | 22,350,000 | 19,464,991 | 4.66 |
| 77,896,172 | 18.63 | |||
| Total government index-linked bonds | 137,548,026 | 32.89 | ||
| Equities 41.17% | ||||
| (30 Jun 19: 40.09%) | ||||
| Europe | ||||
| France | ||||
| Vivendi | EUR | 33,000 | 2,904,068 | 0.69 |
| 2,904,068 | 0.69 | |||
| Norway | ||||
| Equinor | NOK | 224,066 | 3,376,777 | 0.81 |
| Yara International | NOK | 60,000 | 1,881,618 | 0.45 |
| 5,258,395 | 1.26 | |||
| Luxembourg | ||||
| ArcelorMittal | EUR | 365,000 | 4,826,951 | 1.15 |
| 4,826,951 | 1.15 |
| Currency | Holding at 31 Dec 19 |
Fair value £ | % of total net assets |
|
| United Kingdom | ||||
| Belvoir Lettings | GBP | 890,000 | 1,237,100 | 0.30 |
| Better Capital (2012) | GBP | 3,088,700 | 216,209 | 0.05 |
| Better Capital (2009) | GBP | 294,641 | 138,481 | 0.03 |
| BHP | GBP | 117,990 | 2,096,446 | 0.50 |
| Breedon | GBP | 1,700,000 | 1,411,000 | 0.34 |
| Countryside Properties | GBP | 724,340 | 3,297,196 | 0.79 |
| Dixons Carphone | GBP | 1,210,626 | 1,745,723 | 0.42 |
| Hipgnosis Songs Fund | GBP | 1,781,379 | 1,923,889 | 0.46 |
| Hipgnosis Songs Fund C | GBP | 400,000 | 412,000 | 0.10 |
| International Consolidated Airline | GBP | 780,000 | 4,875,000 | 1.16 |
| Land Securities | GBP | 180,000 | 1,781,640 | 0.43 |
| Lloyds Banking Group | GBP | 15,200,000 | 9,500,000 | 2.27 |
| Ocado Group | GBP | 400,000 | 5,094,000 | 1.22 |
| PRS Real Estate Investment Trust | GBP | 2,500,000 | 2,250,000 | 0.54 |
| Renn Universal Growth Trust | GBP | 937,500 | 1,593,750 | 0.38 |
| Royal Bank of Scotland Group | GBP | 2,561,530 | 6,155,357 | 1.47 |
| Ruffer SICAV UK Mid & Smaller Companies Fund* | GBP | 53,136 | 11,927,892 | 2.85 |
| Secure Trust Bank | GBP | 58,345 | 921,851 | 0.22 |
| Supermarket Real Estate Investment Trust | GBP | 689,907 | 751,999 | 0.18 |
| System1 Group | GBP | 434,674 | 869,348 | 0.21 |
| Tesco | GBP | 3,612,600 | 9,212,130 | 2.20 |
| Tufton Oceanic Assets | GBP | 2,348,347 | 1,824,544 | 0.44 |
| Valaris | USD | 448,385 | 2,211,992 | 0.53 |
| Van Elle | GBP | 1,525,573 | 762,787 | 0.18 |
| 72,210,334 | 17.27 | |||
| Total European equities | 85,199,748 | 20.37 |
| Currency | Holding at 31 Dec 19 |
Fair value £ | % of total net assets |
|
| United States | ||||
| Bristol Myers Squibb CVR | USD | 77,000 | 178,313 | 0.04 |
| Bristol Myers Squibb | USD | 77,000 | 3,724,832 | 0.89 |
| Centene | USD | 76,000 | 3,602,504 | 0.86 |
| Cigna | USD | 21,000 | 3,237,203 | 0.77 |
| ExxonMobil | USD | 90,000 | 4,735,234 | 1.13 |
| Foot Locker | USD | 98,000 | 2,881,527 | 0.69 |
| Freeport - McMoran Copper B | USD | 250,000 | 2,474,165 | 0.59 |
| General Motors | USD | 220,000 | 6,073,772 | 1.45 |
| Humana | USD | 8,000 | 2,210,938 | 0.53 |
| McKesson | USD | 15,000 | 1,564,381 | 0.37 |
| National Oilwell Varco | USD | 148,000 | 2,796,560 | 0.67 |
| Synchrony Financial | USD | 90,000 | 2,443,992 | 0.59 |
| Walt Disney | USD | 95,000 | 10,358,490 | 2.48 |
| Total United States equities | 46,281,911 | 11.06 | ||
| Asia | ||||
| Japan | ||||
| Bandai Namco Holdings | JPY | 81,000 | 3,727,511 | 0.89 |
| LF Ruffer Japanese Fund* | GBP | 2,600,000 | 7,508,420 | 1.80 |
| Fujitsu | JPY | 61,600 | 4,388,944 | 1.05 |
| Hoya | JPY | 50,000 | 3,624,924 | 0.87 |
| Mitsubishi Electric | JPY | 260,000 | 2,703,370 | 0.65 |
| Mitsubishi UFJ Financial Group | JPY | 500,000 | 2,058,346 | 0.49 |
| Nomura Real Estate Holdings | JPY | 245,000 | 4,450,310 | 1.06 |
| Sony | JPY | 125,000 | 6,415,195 | 1.53 |
| Sumitomo Mitsui Financial Group | JPY | 70,000 | 1,961,450 | 0.47 |
| T&D Holdings | JPY | 250,000 | 2,420,665 | 0.58 |
| 39,259,135 | 9.39 | |||
| Total Asian equities | 39,259,135 | 9.39 |
| Currency | Holding at 31 Dec 19 |
Fair value £ | % of total net assets |
|
| Africa | ||||
| South Africa | ||||
| Grit Real Estate | USD | 1,626,850 | 1,448,052 | 0.35 |
| Total African equities | 1,448,052 | 0.35 | ||
| Total equities | 172,188,846 | 41.17 | ||
| Global investment funds 6.41% | ||||
| (30 Jun 19: 8.03%) | ||||
| United Kingdom | ||||
| Herald Worldwide Fund | GBP | 13,000 | 889,200 | 0.21 |
| Ruffer Illiquid Multi Strategies Fund 2015* | GBP | 55,461,992 | 24,298,564 | 5.81 |
| Weiss Korea Opportunity Fund | GBP | 1,100,000 | 1,617,000 | 0.39 |
| 26,804,764 | 6.41 | |||
| Total global investment funds | 26,804,764 | 6.41 | ||
| Gold and gold mining equities 7.52% | ||||
| (30 Jun 19: 7.73%) | ||||
| United Kingdom | ||||
| LF Ruffer Gold Fund* | GBP | 14,102,178 | 29,551,043 | 7.06 |
| 29,551,043 | 7.06 | |||
| United States | ||||
| Ishares Physical Gold | USD | 85,000 | 1,908,605 | 0.46 |
| 1,908,605 | 0.46 | |||
| Total gold and gold mining equities | 31,459,648 | 7.52 | ||
| Options 2.04% | ||||
| (30 Jun 19: 1.20%) | ||||
| United Kingdom | ||||
| Ruffer Protection Strategies International* | GBP | 5,500,177 | 8,536,825 | 2.04 |
| Total options | 8,536,825 | 2.04 | ||
| Total financial assets at fair value through profit or loss | 376,538,109 | 90.03 | ||
| Other net current assets | 41,690,608 | 9.97 | ||
| Total value of Company (attributable to redeemable participating preference shares) |
418,228,717 | 100.00 |
* Ruffer Protection Strategies International and Ruffer Illiquid Multi Strategies Fund 2015 Ltd are classed as related parties as they share the same Investment Manager (Ruffer AIFM Limited) as the Company. LF Ruffer Gold Fund, LF Ruffer Japanese Fund and Ruffer SICAV Global Smaller Companies Fund are also classed as related parties as their investment manager (Ruffer LLP) is the parent of the Company's Investment Manager.
Ruffer Investment Company Limited was incorporated in Guernsey as a company limited by shares and as an authorised closed-ended investment company on 1 June 2004. The principal objective of the Company is to achieve a positive total annual return, after all expenses, of at least twice the Bank of England base rate. The Company invests predominantly in internationally listed or quoted equities or equity related securities (including convertibles) and/or bonds which are issued by corporate issuers, supra-nationals or government organisations.
The Company's redeemable participating preference shares are listed on the London Stock Exchange.
The accounting date of the Company is 30 June in each year. These Unaudited Condensed Interim Financial Statements were authorised for issue on 28 February 2020 by the Directors.
The Investment Manager is authorised and regulated by the United Kingdom Financial Conduct Authority as a full-scope Alternative Investment Fund Manager (AIFM). The Investment Manager is entitled to an investment management fee payable to the AIFM monthly in arrears at a rate of 1% of the Net Asset Value per annum.
The Investment Manager and the Board intend to conduct the affairs of the Company so as to ensure that it will not become resident in the United Kingdom. Accordingly, and provided that the Company does not carry on a trade in the United Kingdom through a branch or agency situated therein, the Company will not be subject to United Kingdom Corporation Tax or Income Tax.
The Company intends to be operated in such a manner that its shares are not categorised as non- mainstream pooled investments. This means that the Company might pay dividends in respect of any income that it receives or is deemed to receive for UK tax purposes so that it would qualify as an investment trust if it were UK tax-resident.
Praxis Fund Services Limited (the 'Administrator') is entitled to receive an annual fee equal to 0.08%. per annum on the first £100 million; 0.04%. per annum between £100 million and £200 million; 0.02%. per annum between £200 million and £300 million; and 0.015%. per annum thereafter; based on the NAV of the Company on a mid-market basis, subject to a minimum fee of £100,000 per annum.
Northern Trust (Guernsey) Limited (the 'Custodian') is entitled to receive from the Company a fee of £2,000 per annum. The Custodian is also entitled to charge for certain expenses incurred by it in connection with its duties.
Northern Trust (Guernsey) Limited (the 'Depositary') is entitled to an annual Depositary fee payable monthly in arrears at a rate of 0.01% of the Net Asset Value of the Company up to £100 million, 0.008% on the next £100 million and 0.006% thereafter as at the last business day of the month subject to a minimum fee of £20,000 per annum.
Ashe Windham
John V Baldwin
Christopher Russell
Jill May
David Staples
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
Ruffer AIFM Limited
80 Victoria Street
London SW1E 5JL
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Gowling WLG
4 More London Riverside
London SE1 2AU
Praxis Fund Services Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
Computershare Investor Services (Jersey) Limited Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES
Mourant Ozanne
Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4HP
Northern Trust (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3DA
Northern Trust (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3DA
[1] Assumes reinvestment of dividends
[2] Dividends per share over six months relates to declared during the period
[3] Annualised dividend yield is calculated using share price at the period end and dividends during the period
[4] See note 7
[5] This is the NAV/NAV per share (NAVPS) as released on the LSE. The NAV/NAVPS is calculated weekly and at month end. Refer to note 12 for the reconciliation to the NAV/NAVPS as per the Financial Statements
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 [email protected] or visit www.rns.com.
END
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