RIT Capital Partners Regulatory News (RCP)

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5 March 2024

RIT Capital Partners plc

("RIT" or the "Company")

Results for the year ended 31 December 2023

RIT's disciplined, flexible model well placed to deliver long-term capital growth

FINANCIAL HIGHLIGHTS

CAPITAL ALLOCATION

GENERAL

FINANCIAL SUMMARY

1 The final audited NAV per share as 31 December 2023 is unchanged from the preliminary unaudited NAV per share published by the Company on 7 February 2024.

2 Total return for the year, with dividends reinvested.

PORTFOLIO SUMMARY

A diversified, global portfolio invested for the long term across three key pillars:

Quoted equities: 38.4% of NAV

Private investments: 35.9% of NAV

Uncorrelated strategies: 25.6% of NAV

OUTLOOK

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

"Our net asset value per share finished the year at 2,426 pence, representing a total return (including dividends) of 3.2%... This brings our 10-year performance to 109%, a more than doubling of shareholders' capital over the period? Our portfolio is made up of high-conviction investments with differing characteristics and return drivers?

While the most important driver of our share price performance over the long term is our NAV, the Board is also intensely focused on the rating of our shares... Discounts for investment trusts widened considerably, and our discount was no exception ending the year at -22%... The Board and our Manager have been, and continue to be, acutely focused on closing the discount...

I would like to thank my colleagues on the Board, and our talented and dedicated employees for their hard work and commitment throughout the year. This diverse group shares a single aim - creating long-term value for RIT's shareholders... We have the flexibility to select the best investments across any asset class, sector or geography, coupled with the strength of our network which opens doors to opportunities that others cannot access. These remain important differentiators on which we will continue to build for the future."

Nick Khuu, Chief Investment Officer of JRCM, said:

"In the face of challenges posed by rising interest rates early in the year, geopolitical unrest, and bank collapses, major indices recorded robust gains in 2023. A substantial portion of these gains was attributable to a select few mega-cap technology companies, overshadowing more modest returns in other sectors...

The positive drivers of our portfolio's performance in 2023, including high-quality stock picking, strategic geographic exposure, and the agility of our credit managers, is illustrative of how our portfolio can perform. Whatever the market challenges, our proactive approach to navigate these complexities sets the stage for continued thoughtful and resilient portfolio management in the coming period...

We believe RIT's competitive edge is derived from our in-house expertise, our capital structure - enabling a nimble and flexible investment approach - as well as our unique access and ability to foster deep, long-term specialist partnerships. As the market enters a more idiosyncratic phase, we recognise that careful stock picking and asset selection exercised within our robust risk management framework, will be key to delivering performance."

About RIT Capital Partners plc

RIT's corporate objective is to deliver long-term capital growth, while preserving shareholders' capital; to invest without the constraints of a formal benchmark, but to deliver for shareholders increases in capital value in excess of the relevant indices over time.

For more information

J. Rothschild Capital Management (Manager):

T: 020 7647 8565

E: investorrelations@ritcap.co.uk

Numis (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 Report and Accounts

Company Highlights

CHAIRMAN'S STATEMENT

Sir James Leigh-Pemberton

In the first half of 2023, most major indices traded in a relatively narrow range, punctuated by periods of weakness and recovery. As the year progressed, a belief that interest rates may have peaked led to a rebound in developed world equity markets, which was particularly marked in the fourth quarter. US equity markets finished the year strongly, buoyed by a small number of very large technology companies. These so-called 'magnificent seven' tech stocks accounted for the majority of the S&P 500's gains. Excluding these few companies, the overall market returns were more modest.

Our net asset value per share finished the year at 2,426 pence, representing a total return (including dividends) of 3.2%, lagging our investment hurdles of CPI+3%, which was up 7.0%, and the MSCI ACWI (50% sterling) which rose 18.4%. This brings our 10-year performance to 109%, a more than doubling of shareholders' capital over the period. Our investment portfolio is structured around three core pillars of quoted equities, private investments, and uncorrelated strategies. During 2023, the portfolio saw good performance from quoted equities, driven primarily by our successful single stock selection and exposure to Japan. Uncorrelated strategies also made a positive contribution, helped by the outperformance of our credit managers, as well as our investments in carbon credits. However, the value of our private investments softened, reflecting lower valuations of external funds carried over from the fourth quarter of 2022 and our carefully considered revaluation of our direct investments. Currency was also a headwind; the pound's appreciation of some 5% against the US dollar over the year impacting the translated value of our global investments.

Our portfolio is made up of high-conviction investments with differing characteristics and return drivers. While there will be times when not all asset classes meet our long-term expectations, we remain committed to our diversified approach. Our belief is that utilising a carefully constructed blend of different assets, overlaid with a top-down risk management function, remains the best way to manage our investments for the long-term benefit of shareholders. Our Manager's Report from J. Rothschild Capital Management (JRCM or the Manager) provides a detailed review of investment performance, attribution, positioning and risk management.

While the most important driver of our share price performance over the long term is our NAV, the Board is also intensely focused on the rating of our shares, and in this regard 2023 was a difficult year. Discounts for investment trusts widened considerably, and our discount was no exception ending the year at -22%, resulting in a total shareholder return (including dividends) of -9.6%. This is a source of frustration to our shareholders, as well as to the Board and our Manager. Directors' shareholdings are disclosed in this Report and our colleagues in our Manager also have significant 'skin in the game', with interests in approximately £18 million RIT shares at the year end, reinforcing the close alignment with shareholders' interests. The Board and our Manager have been, and continue to be, acutely focused on closing the discount.

During 2023, we increased the level of our interactions with shareholders, and I am very grateful for their candid and thoughtful feedback in these discussions, which has been very helpful in guiding our plans to reduce the discount. I address below four core topics: private investments, capital allocation, costs and marketing.

Private investments are currently out of favour with investors, and discounts for trusts exposed to these assets have widened significantly in 2023. RIT has always had private investments as a core part of its approach, and despite mark-to-market volatility in the short term, over the long term the success of these investments has been a strong contributor to our returns. Our earlier successes have, in part, placed us in a challenging position; healthy capital growth is one of the main reasons why, over the past five years, our private investments had come to represent a higher proportion of the portfolio than in the past. We are committed to this asset class and continue to believe that our long-standing relationships are a source of competitive advantage and attractive returns to shareholders. This is reflected in our portfolio, which in aggregate is sitting on sizeable profits, over and above the capital we invested. The returns generated by our private portfolio are set out in more detail in the Manager's Report. Most of our largest direct investments are profitable companies with growing revenues and earnings. Our close manager relationships and brand strength, often enable us to access a preferred position in the capital structure of a company, with the majority of our direct investments having some element of downside protection.

Nevertheless, over the next two years we will look to reduce the proportion of the portfolio represented by private investments to a level of between around a quarter and a third of NAV. This will be achieved by organic exits and the continuation of a very high return bar for any new investments. Where we see realisations from this portfolio, we expect to deploy the capital to buy back our shares or to make new investments in the liquid portfolio, depending on the level of discount, the opportunity set and general portfolio management needs. What we will not do is accelerate exits or engage in sales at discounts to fair value to the detriment of long-term shareholder value.

During 2023, we undertook one of the largest buybacks in the investment trust industry, acquiring some 8.6 million shares at a cost of £163 million, our largest single allocation of capital in the year. This generated a strong return on investment, increasing the NAV per share return for shareholders; the buyback also reinforced the confidence that we have both in our NAV and our approach. If compelling returns from allocating our capital in this way continue to be available, we will retain the flexibility to act.

Over the year, we also paid dividends of 38 pence per share, an increase of almost 3% over 2022, and totalling £57 million. Our approach remains to maintain or increase the dividend, subject to the overriding capital preservation objective. In 2024, we intend to pay a dividend of 39 pence per share, an increase of 2.6% over 2023. The dividend will be paid as normal in equal instalments in April and October, funded from our significant reserves.

Our long-standing investment approach covers multiple asset classes, sectors and geographies, and provides shareholders with access to investments, including specialist funds, which are not typically accessible to individual shareholders. This approach is in line with our Investment Policy and has been deployed consistently year on year. It is a key driver of RIT's strong long-term performance. By design, it will not be the cheapest approach to managing investments, but whenever we allocate capital, we do so only if the anticipated risk-adjusted return, net of all costs (both internal costs and any fees paid to external managers) delivers value to shareholders.

We continue to look for ways to reduce costs, and enhance our communications, with a portion of the savings made over the year reinvested into improving our marketing and investor relations efforts. We will continue to invest in more regular and informative direct contact with shareholders.

Our environmental, social, and governance (ESG) initiatives remain an area of particular focus, with our Manager, JRCM, submitting its first report during the year as a signatory of the UN Principles for Responsible Investment (UN PRI). We also include our first Sustainability Report within the Annual Report, where we have collated in one location, all of the activities we undertake in respect of our wider commitments to society and the environment.

Governance and employees

Following an extensive international search process, Maggie Fanari retired from the Board on 29 February, joining JRCM on 1 March as its CEO. Maggie has an outstanding track record of successfully leading teams investing across different asset classes and geographies at one of the largest and most respected investment companies in the world - Ontario Teachers' Pension Plan - where she was the Senior Managing Director and Global Group Head High Conviction Equities. We are delighted that Maggie has joined the exceptional team at JRCM, and we look forward to working closely with her in the execution of the important initiatives outlined above.

Maggie succeeds Francesco Goedhuis, who retired as JRCM's CEO in December as a result of an illness in his immediate family. Francesco joined JRCM in 2010 and was appointed CEO in 2014. During his 13 years with the Manager, Francesco has provided outstanding leadership, continuously strengthening both the team in JRCM and our exceptional network of investment partners. The Board was very pleased to announce recently that he will continue his association with RIT in his new role as Senior Adviser to JRCM.

After 11 years, Ron Tabbouche (latterly the co-CIO at JRCM) retired to join his family in Israel, with Nick Khuu appointed to the role of CIO. Nick is a very experienced investor across multiple asset classes, having worked at leading investment firms in New York and San Francisco. He has been with JRCM for over four years operating in senior investment roles, and we are delighted with his appointment.

On behalf of the Board, I would like to express our gratitude to Francesco and Ron for their very significant contributions to the Manager and to your Company's performance over more than a decade.

At the end of September, after more than three years as a Director of RIT, Maxim Parr retired from the Board to take on the position of Chair of JRCM, providing valuable leadership and additional resources during a period of transition of its senior leadership team.

I would like to thank my colleagues on the Board, and our talented and dedicated employees for their hard work and commitment throughout the year. This diverse group shares a single aim - creating long-term value for RIT's shareholders. At a time when the outlook for global economies and markets and the geopolitical environment are particularly complicated, these colleagues, together with our investment partners and advisers, are the key to our future success. We have the flexibility to select the best investments across any asset class, sector or geography, coupled with the strength of our network which opens doors to opportunities that others cannot access. These remain important differentiators on which we will continue to build for the future.

Nathaniel Charles Jacob Rothschild 1936 - 2024

Finally, it is with great sadness that we mourn the recent death of our founder and former chairman, Lord Jacob Rothschild. Jacob was chairman of the Rothschild Investment Trust, subsequently renamed RIT Capital Partners plc, from 1971 to 2019. He devised, developed, and led the growth of the Company, including its listing on the London Stock Exchange in 1988. During his tenure, the net asset value increased from £5 million to over £3 billion by the time he retired from the Board in September 2019 and was granted the title of Honorary President. Our thoughts and condolences are with Hannah Rothschild, his daughter and current Director, and the rest of the Rothschild family at this time. He will be missed.

Sir James Leigh-Pemberton

Chairman

4 March 2024

MANAGER'S REPORT - EXTRACTS

Summary

In the face of challenges posed by rising interest rates early in the year, geopolitical unrest, and bank collapses, major indices recorded robust gains in 2023. A substantial portion of these gains was attributable to a select few mega-cap technology companies, overshadowing more modest returns in other sectors. November and December saw substantial market returns, when indications by the US Federal Reserve of a path to lower rates, together with falling inflation over the course of the year, caused 10-year US treasury yields to tighten from 4.9% to 3.9%. The majority of annual returns for indices globally came during this end of year rally, including our reference hurdle, ACWI (50% £). Our portfolio produced positive returns and trailed just behind this index for most of the year, but lagged strongly rising markets in the last two months of the year.

Despite the headwinds faced in 2022 and 2023, we remain confident in our long-term investment approach. Our careful portfolio construction is disciplined, diversified, and carefully risk managed such that, over time, we believe we can deliver capital appreciation to shareholders with attractive risk-reward characteristics.

Portfolio positioning

Within a tried and tested investment risk framework, our investment "reach" is unconstrained. Having a flexible investment mandate enables us to invest across capital structures, asset classes and geographies. Nevertheless, our portfolio has historically maintained a core equity bias and will continue to do so.

Decision-making starts with a considered, top-down macro-economic view. We allocate capital to take advantage of identified structural themes and market dislocations, drawing upon our seasoned internal resources and very often leveraging our extensive global network of managers and partners.

We structure our investment portfolio by allocating capital across three pillars:

By design, each pillar serves a distinct purpose within the portfolio, with investments of differing profiles and return drivers allowing us to benefit from this broad diversification. Additionally, we make use of risk management tools and hedging strategies to manage risk, including currency translation risk.

Performance highlights

Our results for the year produced a NAV per share total return of 3.2%. Comparatively, our two reference hurdles, ACWI (50% £) and the 'inflation plus' hurdle CPI+3% returned 18.4% and 7.0%.

Two noteworthy aspects underscored the strength observed in the market-capitalised weighted indices. First, the market rally exhibited an unusual narrowness, primarily propelled by a select group of stocks termed the 'magnificent seven' (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla), which accounted for approximately 20% of the MSCI World index and demonstrated a remarkable 74% increase, while the remaining 1,473 stocks collectively experienced a more modest gain of 12%. Second, a substantial portion of returns across various asset classes materialised during the liquidity-fueled surge in November and December. For instance, the Bloomberg Aggregate Bond index posted -0.6% returns through October 31 and +9.9% over November and December. Similarly, the ACWI exhibited +7.0% returns through October 31, and then +10.6% over November and December.

Asset allocation and portfolio contribution

Positive drivers of portfolio performance for the year were:

Negative drivers were:

Outlook

In 2024, we are navigating a landscape characterised by a balance of conflicting macro indicators. While US GDP estimates are trending upward, certain credit indicators are exhibiting signs of decline. Significant geopolitical risks, such as conflicts in Ukraine and the Middle East, coupled with the potential repercussions of the USA elections in November, cast a shadow over the horizon. The market's late upturn in 2023 was driven by the perception that interest rates may have reached their peak, and that a soft landing is becoming more probable. This has led to a scenario where many assets are perceived to be fully valued.

The above notwithstanding, we believe there are individual assets that currently trade at appealing price points, and therefore provide attractive opportunities for capital deployment. As investors who integrate a top-down and bottom-up approach, we would highlight the confidence we have in our own investment portfolio. Within our private investments book, we see some strong underlying operating performance, a shift towards prioritising profit over pure growth, and broader tailwinds driven by digital transition. These factors underpin our confidence in the long-term intrinsic value of our private investments. The reopening of the IPO markets may also serve as a near-term catalyst for validating their valuations.

We are also excited about quoted equities, where the environment is particularly conducive for bottom-up, fundamental stock picking. We think there are a multitude of areas to deploy long-term capital with attractive return potential in areas such as the often overlooked small to medium-capitalisation stocks, or in 'event-driven' stocks. As such, we will lean more into stocks that we directly own, with this proportion of the portfolio set to increase. At the same time, we continue to be excited by themes such as healthcare and Japan, where our network of specialist external managers means we are well-positioned to identify and take advantage of these opportunities.

In uncorrelated strategies, we are enthusiastic about current opportunities in the corporate credit markets, driven by factors such as the increase in interest rates, reluctance by traditional banks to lend to mid-sized businesses, and the maturing of around $0.6 trillion in loans over the next two years, which were issued at lower rates. Where there is a dislocation in credit markets, our partnerships with specialist managers provides us with the potential to generate returns of mid-teens or greater, in quality credits, with limited risk to our capital due to robust creditor protections. And, even where there isn't a dislocation, the managers can still earn high single digit to low double digit returns on quality credits.

The positive drivers of our portfolio's performance in 2023, including high-quality stock picking, strategic geographic exposure, and the agility of our credit managers, is illustrative of how our portfolio can perform. Whatever the market challenges, our proactive approach to navigate these complexities sets the stage for continued thoughtful and resilient portfolio management in the coming period.

Although the percentage allocation across our three pillars may see modest variations over shorter periods of time, our portfolio construction and risk management principles aim to provide shareholders with a diversified portfolio that delivers long-term capital appreciation on an attractive risk-adjusted basis.

To conclude, we believe RIT's competitive edge is derived from our in-house expertise, our capital structure - enabling a nimble and flexible investment approach - as well as our unique access and ability to foster deep, long-term specialist partnerships. As the market enters a more idiosyncratic phase, we recognise that careful stock picking and asset selection exercised within our robust risk management framework, will be key to delivering performance.

J. Rothschild Capital Management Limited

PRINCIPAL RISKS - EXTRACT

Risk management and internal control

The principal risks facing RIT are both financial and operational. The ongoing process for identifying, evaluating and managing these risks, as well as any emerging risks, is the responsibility of the Board and the Audit and Risk Committee.

The Board sets the portfolio risk parameters within which JRCM operates. This involves an assessment of the nature and level of risk within the portfolio using qualitative and quantitative methods.

The Board is ultimately responsible for the Group's system of internal controls, and has delegated the supervision of the internal control system to the Audit and Risk Committee. Such systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives and, as such, can provide only reasonable and not absolute assurance against any material misstatement or loss.

As an investment company, RIT is exposed to financial risks inherent in its portfolio, which are primarily market-related and common to any portfolio with significant exposure to equities and other financial assets. The ongoing portfolio and risk management includes an assessment of the macroeconomic and geopolitical factors that can influence market risk, as well as consideration of investment-specific risk factors.

Your Company's broad and flexible investment mandate allows the Manager to take a relatively unconstrained approach to asset allocation and utilise whatever action is considered appropriate in mitigating any attendant risks to the portfolio.

With a high degree of volatility in markets and continued geopolitical tensions, risk management remains critical. The portfolio risk management approach undertaken by the Manager, and considered regularly by the Board, is designed to produce a healthy risk-adjusted return over the long term, through careful portfolio construction, security selection and the considered use of hedging.

As an investment business, the vast majority of the day-to-day activities involve the measurement, evaluation and management of risk and reward. With a corporate objective which includes an element of capital preservation, the culture and practice of seeking to protect the NAV from undue participation in down markets through the cycles is well established. However, it is important to recognise that a carefully designed risk management and internal control system can only aim to reduce the probability or mitigate the impact; it cannot remove the risk. With a global investment portfolio having meaningful exposure to equities, rather than a pure absolute return mandate, RIT's NAV will not be immune to either falling markets and/or volatility in currency markets. Equally, with a diversified set of individual and typically uncorrelated, high return-seeking drivers, the portfolio could encounter occasions when the level of volatility results in negative alpha in the short term.

As a permanent capital vehicle, and unlike open-ended funds, we do not need to manage the portfolio to meet redemptions. With sizeable assets relative to our modest borrowings and ongoing liabilities, as confirmed later in this section, we do not consider the Company's viability or going concern to represent principal risks. Nevertheless, and in particular at times of market stress, the Manager utilises a detailed, day-to-day liquidity risk management framework to help effectively manage the balance sheet, including careful monitoring of the banking covenants.

Operational and other risks include those related to the legal environment, regulation, taxation, cyber security, climate and other areas where internal or external factors could result in financial or reputational loss. These are also managed by JRCM with regular reporting to, and review by, the Audit and Risk Committee and the Board.

Principal risks

The Board has carried out a robust assessment of the emerging and principal risks facing the Company, with input from the Audit and Risk Committee, as well as the Manager. Following this assessment, the Board has concluded that there are no material emerging risks, and it is appropriate to reclassify two risks as separate principal risks. The material widening of the discount at which the shares trade relative to the NAV, has led us to establish a new principal risk - Discount risk. In addition, the ongoing developments in cyber risk, coupled with the potential that AI could enhance fraud attempts, means we have also reclassified Cyber security as a new principal risk. The resulting principal risks are as described below:

Corporate Governance Report - Extract

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Parent Company financial statements in accordance with UK adopted international accounting standards (UK adopted IAS). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of the profit or loss of the Group and the Parent Company for that period.

In preparing these financial statements the directors are required to:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and the Group and enable them to ensure that the Parent Company and the Group financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and corporate governance statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Parent Company's website.

The Directors confirm, to the best of their knowledge:

FINANCIAL STATEMENTS - EXTRACTS

Consolidated income statement

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

Consolidated balance sheet

The financial statements were approved by the Board and authorised for issue on 4 March 2024.

Consolidated statement of changes in equity

Consolidated cash flow statement

1 Shares are disclosed in the own shares reserve on the consolidated balance sheet.

NOTES TO THE FINANCIAL STATEMENTS - EXTRACTS

Earnings per ordinary share - basic and diluted

The basic earnings per ordinary share for 2023 is based on the profit of £66.1 million (2022: loss of £577.2 million) and the weighted average number of ordinary shares in issue during the period of 149.5 million (2022: 155.5 million). The weighted average number of shares is adjusted for shares held in the EBT and in treasury in accordance with IAS 33 - Earnings per share.

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

This adjustment was not required for 2022 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 loss per ordinary share in the prior year.

Net asset value per ordinary share - basic and diluted

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

Dividends

The above amounts were paid as distributions to equity holders of the Company in the relevant year from accumulated capital profits.

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

On 27 February 2023 the Board declared a first interim dividend of 19.0 pence per share in respect of the year ended 31 December 2023 that was paid on 28 April 2023. A second interim dividend of 19.0 pence per share was declared by the Board on 31 July 2023 and paid on 27 October 2023.

The Board declares the payment of a first interim dividend of 19.5 pence per share in respect of the year ending 31 December 2024. This will be paid on 26 April 2024 to shareholders on the register on 5 April 2024, and funded from the accumulated capital profits.

Glossary and Alternative Performance Measures

Glossary

Within the Annual Report and Accounts, 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, from 1 January 2022, is used as a measure of inflation in one of the Company's 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, net of 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 at 31 December 2023 was 2,426 pence, an increase of 38 pence, or 1.6%, from 2,388 pence at the previous year end. As dividends totalling 38 pence per share were paid during the year, the effect of reinvesting the dividends in the NAV is 1.6%, which results in a NAV total return of +3.2%.

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 represent an additional 0.94% of average net assets (2022: 0.88%).

Premium/discount: The premium or discount (or rating) is calculated by taking the closing share price on 31 December 2023 and dividing it by the NAV per share at 31 December 2023, 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 31 December 2023 closed at 1,882 pence, a decrease of 243 pence, or 11.4%, from 2,125 pence at the previous year end. Dividends totalling 38 pence per share were paid during the year, and the effect of reinvesting the dividends in the share price is 1.8%, which results in a TSR of -9.6%. The TSR is one of the Company's KPIs.

Basis of presentation

The financial information for the year ended 31 December 2023 has been extracted from the statutory accounts for that year. The auditor's report on these accounts is unqualified and does not contain a statement under either Section 498(2) or (3) of the Companies Act 2006. The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The financial information for the year ended 31 December 2022 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor's report on these accounts is unqualified and does not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.

Report and Accounts

The full statutory accounts are available to be viewed or downloaded from the Company's website at www.ritcap.com. Neither the contents of the Company's website nor the contents of any website accessible from the Company's website (or any other website) is incorporated into, or forms part of, this announcement.