Interim Results - 6 Months Ended 30 September 1999

RIT CAPITAL PARTNERS PLC 28 October 1999 PRELIMINARY ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999 INVESTMENT PERFORMANCE During the half year to 30 September, the Company's net asset value per share (on a fully diluted basis) increased by 5.4% from 398.6p to 420.2p. Over the same period, the Morgan Stanley Capital International Index (in Sterling) and the Investment Trust Net Assets Index increased by 0.6% and 5.7% respectively, while the FTSE All-Share Index declined by 2.4%. RITCP's net asset value per share on 26 October 1999 was 420.2p. As nearly a third of the portfolio is invested in unquoted investments, specialist funds and property, a strict comparison with indices over the short term is misleading. In addition, even within the quoted element of the portfolio we have never followed a rigid geographical asset allocation policy, based on the weighting of a particular benchmark index. As the size and balance of the portfolio changes over time through the buy-back of shares, any benchmarking of RITCP to indices, particularly over relatively short periods, becomes less relevant. Nevertheless, we aim, over time, to deliver for our shareholders increases in capital value in excess of the relevant indices. Since its inception in 1988, RITCP has significantly outperformed these indices with an increase in capital value of 296.8%, compared to increases of 178.5%, 156.5% and 192.3% respectively for the indices mentioned above. INVESTMENT PORTFOLIO Most major world stock markets, other than Japan, have given up most of the gains made earlier this year, anticipating an increase in US interest rates. In view of this climate of uncertainty, we have maintained a relatively high degree of liquidity in the portfolio, which has served us well, particularly in the volatile market conditions of the past few weeks. At the half year stage, about half the portfolio was invested in quoted equities, 21% in government securities (as liquidity), 17% in unquoted investments, 9% in specialist funds and 4% in property. The size of RITCP's portfolio has been reduced by the repurchase of £93 million of our shares and the repayment of our US$150 million borrowings, in favour of more flexible, shorter term facilities (which are currently not being used). FUND MANAGEMENT Over the last six months or so there have been a number of developments which are worthy of comment. In August we announced that, after many years of successful association with RITCP, Nils Taube would be relinquishing his role as the principal investment adviser for the quoted portfolio. We are particularly grateful to Nils for his contribution over the years and wish him well for the future. We also announced that £200 million of this part of the portfolio would be allocated to Sofaer Capital Inc. Sofaer Capital is a well established global money management firm with which RITCP has had a long association. We are pleased that Michael Sofaer has joined the Board of RITCP as a non- executive director. He and his team will be investing internationally and will focus principally on substantial companies in which there is ready liquidity. In the 1998 Chairman's Statement we commented that, as a self-managed company, RITCP seeks to diversify the management of its portfolio by complementing the skills available to us. At that time we announced that we had formed an association with an investment manager, James Findlay, who, together with his partner, Charles Park, have invested US$30 million of RITCP's portfolio in small to medium sized US companies, their particular area of expertise. Since then, we have continued this process and have allocated similar or lesser amounts to a small number of other managers who offer expertise in a particular geographical or industry sector. RITCP has allocated £20 million to Talal Shakerchi, who invests in European equities with an emphasis on medium sized companies. He established an outstanding track record as manager of the Old Mutual European Unit Trust, until he left last year to set up his own fund management company. We have also allocated US$30 million to Jeffrey Gendell, a US fund manager who left Odyssey Partners of New York to set up his own firm in 1996. He aims to identify companies where the long-term earnings potential has not been fully appreciated by the stock market. The funds managed in this way are usually structured as segregated accounts, established specially for RITCP. The amounts are included within the 'quoted investments' part of RITCP's portfolio. SHARE BUY-BACK Following the preliminary announcement of RITCP's results on 6 May 1999, RITCP has been able to buy back its own shares without the adverse tax consequences which would have resulted previously. We have subsequently bought for cancellation 25.65 million shares, representing over 14% of RITCP's issued share capital, at a total cost of £93 million. You may remember that we had shareholders' permission to buy back up to 15% of RITCP's shares over the period to the end of September, the largest amount allowed by market purchases under the rules of the Stock Exchange. We are pleased that we have been able to make such full use of this facility despite being restricted to a five month period. As these shares were acquired at a discount to the underlying value, the Company's net asset value has been boosted by 9p per share. At the AGM in July shareholders gave their permission for RITCP to buy back up to 15% of its shares in the period to 30 September 2000. This further facility will be available for us to use from tomorrow. RESULTS The total return before tax for the six months to 30 September was £26.7 million. In line with our established policy, RITCP will not be paying an interim dividend. For further information please contact: Duncan Budge 0171-514 1928 CONSOLIDATED STATEMENT OF TOTAL RETURN for the six months ended 30 September 1999 Revenue Capital Total £'000 £'000 £'000 Gains on investments - 19,885 19,885 Dealing profits 65 - 65 Investment income 13,853 - 13,853 Other income 545 - 545 Administrative expenses (2,294) - (2,294) Investment management fees (1,383) - (1,383) Premium on purchase of convertible stock - (828) (828) Other capital items - (2,529) (2,529) ------ ------ ------ Net return before finance costs and taxation 10,786 16,528 27,314 Interest payable and similar charges (644) - (644) ------ ------ ------ Return on ordinary activities before taxation 10,142 16,528 26,670 Taxation on ordinary activities (2,238) 630 (1,608) ------ ------ ------ Return on ordinary activities after taxation attributable to equity shareholders 7,904 17,158 25,062 Dividends 329 - 329 ------ ------ ------ Transfer to reserves 8,233 17,158 25,391 ====== ====== ====== Return per ordinary share Basic 4.6p 10.1p 14.7p Fully diluted 4.5p 9.6p 14.1p The revenue column of this statement is the consolidated profit and loss account of the Group. The accompanying notes are an integral part of this statement. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. CONSOLIDATED STATEMENT OF TOTAL RETURN for the six months ended 30 September 1998 Revenue Capital Total £'000 £'000 £'000 Losses on investments - (56,751) (56,751) Dealing profits 740 - 740 Investment income 12,590 - 12,590 Other income 462 - 462 Administrative expenses (1,972) - (1,972) Investment management fees (878) - (878) Premium on purchase of convertible stock - (3,654) (3,654) Currency translation of loan - 1,307 1,307 notes Other capital items - (987) (987) ------ ------ ------ Net return before finance costs and taxation 10,942 (60,085) (49,143) Interest payable and similar charges (3,900) - (3,900) ------ ------ ------ Return on ordinary activities before taxation 7,042 (60,085) (53,043) Taxation on ordinary activities (2,216) 1,259 (957) ------ ------ ------ Return on ordinary activities after taxation attributable to equity shareholders 4,826 (58,826) (54,000) Dividends - - - ------ ------ ------ Transfer to/(from) reserves 4,826 (58,826) (54,000) ====== ====== ====== Return/(loss) per ordinary share Basic 2.7p (32.3)p (29.6)p Fully diluted 2.6p - - The revenue column of this statement is the consolidated profit and loss account of the Group. The accompanying notes are an integral part of this statement. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. CONSOLIDATED BALANCE SHEET 30 September 30 March 30 September 1999 1999 1998 £'000 £'000 £'000 Fixed assets Investments 663,637 832,867 756,215 Tangible fixed assets 190 218 243 ------- ------- ------- 663,827 833,085 756,458 ------- ------- ------- Current assets 67,799 55,689 53,389 Creditors: Amounts falling due within one year (41,454) (131,935) (33,812) ------- ------- ------- Net current assets/ (liabilities) 26,345 (76,246) 19,577 ------- ------- ------- Total assets less current liabilities 690,172 756,839 776,035 Creditors: Amounts falling due after more than one year Convertible stock - - (8,608) US Dollar loan notes - - (88,029) Provisions for liabilities and charges (5,712) (5,773) (5,981) ------- ------- ------- 684,460 751,066 673,417 ======= ======= ======= Capital and reserves Called up share capital 157,372 181,959 181,959 Capital redemption reserve 25,648 - - Capital reserve - realised 430,372 466,670 480,210 Capital reserve - 57,533 97,096 1,841 unrealised Revenue reserve 13,535 5,341 9,407 ------- ------- ------- Equity shareholders' funds 684,460 751,066 673,417 ======= ======= ======= Diluted net asset value per share 420.2p 398.6p 357.9p Undiluted net asset value per share 434.9p 412.8p 370.1p Diluted net assets £691.7m £759.7m £682.0m NOTES 1 ACCOUNTING POLICIES The accounting policies used by the Group in the preparation of this interim report are consistent with those applied in preparing statutory accounts for the year ended 31 March 1999, with the exception of the valuation of the current asset investments held by the dealing subsidiary which are now stated in the balance sheet at market value. 2 DIVIDEND During the period the Company purchased some of its own shares prior to the ex-dividend date. As a result, there was a reduction of £0.3 million in the dividend for the year ended 31 March 1999 which was paid to shareholders on 9 July 1999. This amount has been credited to the revenue account in the current period. 3 RETURN PER ORDINARY SHARE The return per share for the six months ended 30 September 1999 is based on the revenue return after tax of £7.9 million and the capital return after tax of £17.2 million, and the weighted average number of ordinary shares in issue during the period of 170.5 million. The fully diluted return per share for the six months ended 30 September 1999 is based on the revenue return after tax of £8 million and the capital return after tax of £17.2 million, and the weighted average fully diluted number of ordinary shares of 178 million. The fully diluted return per share based on the capital loss after tax for the period ended 30 September 1998 exceeded the undiluted return per share and, in accordance with standard accounting practice, is not disclosed. 4 MOVEMENTS IN FIXED ASSET INVESTMENTS Unquoted Government and Specialist Quoted Securities Property Funds Total £million £million £million £million £million At 31 March 1999 578.2 75.2 124.7 54.8 832.9 Additions 101.2 347.6 14.5 6.8 470.1 Disposals (347.7) (281.2) (0.4) (6.2) (635.5) Revaluation (5.9) (0.7) (2.4) 5.1 (3.9) ----- ----- ----- ---- ----- At 30 September 325.8 140.9 136.4 60.5 663.6 1999 ===== ===== ===== ==== ===== 5 CONVERTIBLE STOCK £'000 At 31 March 1999 8,608 Purchased during the period and subsequently cancelled (300) Converted into ordinary shares (1,061) ------ At 30 September 1999 7,247 ====== During the period the Company purchased £300,000 convertible stock at a cost of £1.1 million. The Company intends to convert the convertible stock into ordinary shares on 31 March 2000 provided this is not detrimental to the interests of stockholders. 6 SHARE CAPITAL £'000 At 31 March 1999 181,959 Purchased during the period and subsequently cancelled (25,648) Issued on conversion of convertible stock 1,061 ------- At 30 September 1999 157,372 ======= During the period the Company purchased 25.6 million ordinary shares at a cost of £93 million. This amount has been charged to Capital Reserve. The authorised share capital of the Company is 320 million ordinary £1 shares, of which 7.2 million are reserved for the conversion of the convertible stock. 7 DILUTED NET ASSET VALUE PER SHARE The diluted net asset value per share is based on diluted net assets of £691.7 million and diluted share capital of 164.6 million ordinary shares. This assumes that all of the convertible stock was converted at the balance sheet date. 8 CONTINGENCIES AND FINANCIAL COMMITMENTS There has been no material change to the position reported at 31 March 1999 in connection with the litigation proceedings issued in New York by Richbell Information Services Inc. 9 YEAR 2000 COMPLIANCE The Company's in-house systems have all been upgraded to be Year 2000 compliant and are presently undergoing comprehensive testing. The Company does not anticipate any adverse repercussions from the functionality of either its own systems or those of third party suppliers. 10 STATUTORY ACCOUNTS The financial information in this publication is unaudited and does not constitute statutory accounts. The statutory accounts for the year ended 31 March 1999 have been delivered to the UK Registrar of Companies and the report of the auditors on those accounts was unqualified. 11 INTERIM REPORT The Company's Interim Report for the six months ended 30 September 1999 will be posted to shareholders on Wednesday, 3 November 1999. Copies of this announcement and the Interim Report will be available to the public at the Company's registered office at 27 St James's Place, London SW1A 1NR.

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