Ruffer Investment
Company Limited
YEARLY REPORT
The Company has today, in accordance with DTR 6.3.5, released
its Annual Financial Report for the year ended 30 June 2015. The Report will shortly be
available via the Company's Investment Manager’s website
www.ruffer.co.uk and will shortly be available for
inspection online at www.hemscott.com/nsm.do
website.
Financial Highlights
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30.06.15 |
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Offer Price (per share) |
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Net
Asset Value (per share |
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£ |
£ |
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Redeemable
participating preference shares |
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2.250 |
† |
2.188 |
* |
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† The price an investor would be expected to pay at the close of
trading in the market (London Stock Exchange (“LSE”)).
* This is the Net Asset Value ("NAV") per share using
International Financial Reporting Standards as at 30 June 2015. The Fund is valued weekly and at
month end. Refer to Note 14 for the NAV reconciliation.
Key Performance Indicators**
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30.06.15 |
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30.06.14 |
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Share Price Total
Return over 12 months |
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11.90% |
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-4.60% |
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NAV Total Return per
share over 12 months |
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7.80% |
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-2.60% |
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Premium/discount of share price to NAV |
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1.92% |
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-1.84% |
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Dividends per
share |
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3.4p |
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3.4p |
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Dividend yield |
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1.50% |
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1.70% |
Total expenses as a ratio of net assets |
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1.18% |
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1.18% |
NAV Total Return per
share since inception |
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164.40% |
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144.10% |
** Figures use NAV per share at mid-market prices as
reported to the LSE.
Company Information
Incorporation Date |
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01.06.04 |
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Launch
Date |
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08.07.04
(C shares: 29.09.05) |
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Initial
Net Asset Value |
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98p per
share (98p per 'C' share)*** |
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Launch
Price |
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100p per
share (100p per 'C' share) |
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Accounting
dates |
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Interim |
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Final |
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31 December |
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30 June |
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(Unaudited) |
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(Audited) |
*** On 12 December 2005, the ‘C’
shares were converted into redeemable participating preference
shares in the Company at a ratio of 0.8314 redeemable participating
preference shares for each ‘C’ share, in accordance with the
conversion method in the Placing and Offer for Subscription
Document.
Company Performance
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Price |
Change in |
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at 30.06.15 |
Bid Price |
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Bid |
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Offer |
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From |
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From |
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Price |
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Price |
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Launch |
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30.06.14 |
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£ |
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£ |
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% |
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% |
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Shares |
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2.230 |
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2.250 |
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+
123.00 |
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+
10.23 |
Prices are published in the Financial Times in the “Investment
Companies” section, and in the Daily Telegraph’s “Share Prices
& Market Capitalisations” section under “Investment
Trusts”.
Fund Size
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Net
Asset |
Net
Asset |
Number of |
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Value |
Value
per Share |
Shares In Issue |
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£ |
£ |
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30.06.15 |
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337,222,401 |
2.184* |
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154,413,416 |
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30.06.14 |
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318,040,568 |
2.065 |
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154,013,416 |
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30.06.13 |
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319,114,093 |
2.139 |
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149,188,416 |
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30.06.12 |
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270,884,661 |
1.915 |
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141,488,416 |
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30.06.11 |
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248,248,134 |
1.953 |
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127,138,416 |
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30.06.10 |
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178,695,014 |
1.823 |
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98,042,672 |
* Net Asset Value per share reported to the London Stock
Exchange was £2.188 using mid market values. Bid prices are
presented as fair value in the financial statements.
Share Price Range
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Highest |
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Lowest |
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Accounting |
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Offer
Price |
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Bid
Price |
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Period
to: |
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£ |
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£ |
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30.06.15 |
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2.260 |
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1.943 |
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30.06.14 |
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2.290 |
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2.005 |
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30.06.13 |
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2.310 |
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1.915 |
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30.06.12 |
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2.070 |
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1.900 |
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30.06.11 |
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2.110 |
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1.850 |
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30.06.10 |
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2.005 |
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1.555 |
Net Asset Value Range
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Highest |
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Lowest |
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Accounting |
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NAV |
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NAV |
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Period
to: |
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£ |
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£ |
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30.06.15 |
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2.243 |
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2.041 |
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30.06.14 |
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2.206 |
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2.034 |
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30.06.13 |
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2.208 |
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1.903 |
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30.06.12 |
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1.991 |
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1.871 |
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30.06.11 |
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1.960 |
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1.810 |
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30.06.10 |
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1.897 |
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1.518 |
Past performance is not a guide to
the future. The value of the shares and the income from them can go
down as well as go up and you may not get back the amount
originally invested.
Chairman’s
Review
Performance*
In the twelve months from 1 July
2014 to 30 June 2015, Ruffer
Investment Company Limited’s (the “Company”) net asset value (NAV)
per share rose from 206.05p* to 218.80p*. After allowing for the
dividends of 3.4p paid during the period this equates to a total
return of 7.8%. The Company’s share price appreciated by 11.9% on a
total return basis as the shares moved from a discount to finish
the period on a premium of 1.9%. The target return, being twice the
Bank of England base rate,
amounted to 1% over the period and by way of context the FTSE
All-Share Total Return index rose by 2.6%. Since launch on
8 July 2004, the NAV of the company
has risen by 163.4%** including dividends, compared with an
appreciation of 65.4% in the target return and a rise of 140.3% in
the FTSE All-Share Total Return index.
It is pleasing to be able to report a result well in excess of
our target return for the financial year. The Company’s NAV on
9 September 2015 was 211.53p.
Earnings and Dividends
Earnings for the year were 2.22p per share on the revenue
account and 13.06p per share on the capital account. In the course
of the year dividends totalling 3.40p per share were paid. A third
interim dividend of 1.70p per share in respect of the year to
30 June 2015 was approved on
9 September 2015 and will be paid on
9 October 2015. I would like to
briefly discuss the Directors’ attitude towards the dividend. The
Directors are adamant that Ruffer AIFM Limited (the “Company’s
Alternative Investment Fund Manager and Investment Manager”) should
not compromise their capital preservation objective by being forced
to produce enough income to ensure the sustainability of the
dividend. The income produced by the Company’s investments has
always been regarded as a by-product of the investment process and
not as a target in itself. The manager adopts a total return
approach and this is reflected in the significant capital gains
which have accrued to shareholders over the years. The Ruffer
Investment Company has always been billed as a ‘slice of Ruffer’
and it is the Directors’ view that it would be quite wrong to skew
the portfolio towards achieving higher yield thereby pushing it out
of kilter with the core Ruffer investment strategy.
Strategy
This Company does not aim to ‘shoot the lights out’, but is
focused on the preservation of our shareholders’ capital. We take
some pride in the fact that over the ‘Financial Crash’ period from
1 July 2007 until 30 June 2009 the total return to our shareholders
was 36% compared to a return of -31% for the FTSE All Share Total
Return Index. These returns were quite exceptional and, in a world
where a rising tide really has lifted all boats, are unlikely to be
repeated. We take more pride in the fact that the NAV has not
fallen in any calendar year since inception. Our experience is that
the Investment Manager is often early in calling the big strategic
moves but over the two decades of its existence its big calls have
to date proved correct. Shareholders may recall that from early
2011 this Company had over a quarter of its assets in Japanese
equities, which performed powerfully from Prime Minister Abe’s
launch of his Three Arrows strategy in the latter part of 2012 –
the position has since been reduced to 18% but continues to perform
well. The Company currently has 36% of its capital exposed to UK
and US government issued index-linked securities, which, in spite
of the lack of discernible inflation, performed exceptionally well
over the past year. The Directors remain committed to safeguarding
the Company’s assets against the ravages of inflation - the likely
denouement of unfettered printing of bank notes of a great many
denominations. Within the investment universe index-linked
securities remain the best way to achieve this protection.
Some of our investors have asked whether Jonathan Ruffer has distanced himself from the
successful asset management business, which he founded in 1994, to
concentrate on his philanthropic activities centred on Bishop
Auckland. This is far from being the case. He chairs the weekly
strategy meeting in London every
Monday morning and he spends until Wednesday afternoon in Ruffer’s
Victoria Street offices. He then
decamps to Bishop Auckland, from where he keeps a beady eye on
markets, whilst overseeing the future regeneration of a sizeable
chunk of Co. Durham. He returns to
London every Sunday. The Directors
carry out a due diligence visit to Ruffer’s offices twice a year
and are appraised of the latest strategic developments. They are
content that the firm is well resourced and has particular strength
in depth in terms of the quality of its investment managers and
strategists. In conclusion the Board remains confident in the
ability of the Investment Manager to achieve the Company’s
objectives. For further information on strategy please look at the
Business Model and Strategy section.
Share Issuance
At the start of the year, the Company had the ability to issue
14,081,342 redeemable participating shares under a blocklisting
facility. On 19 November 2014, at the
Company’s Annual General Meeting (“AGM”), a resolution to issue up
to a further 10% of the Company’s share capital by way of a block
listing facility was passed. As at 9
September 2015, the date of this report, out of a possible
total of 14,081,342 shares, 1,325,000 had been issued at a 2% or
higher premium to the Company’s prevailing NAV. All, apart from
925,000, of these new shares were issued during the year ended
30 June 2015. The Board is content
that the issuance of shares at a premium of more than 1.1% to the
prevailing NAV is value enhancing to existing shareholders. Your
Board is happy to continue to grow the Company organically, when
the opportunity presents itself, as spreading the overheads over a
larger number of shares has the effect of reducing the Total
Expense Ratio (TER) thus benefitting all shareholders.
As at the date of this report the Company had 155,338,416
redeemable participating preference shares of 0.01p each and 2
Management shares of £1.00 each in issue. Therefore, the total
voting rights in the Company at the date of this report were
155,338,418.
Annual General Meeting
The AGM of the Company will be held at 10.30 a.m. on 19 November
2015 at the Company’s registered office at Trafalgar Court,
Les Banques, St Peter Port, Guernsey.
Board Governance
As mentioned in last year’s report we have plans to refresh the
Board over the next few years. At this year’s AGM we will bid
farewell to Peter Luthy, who has
provided much wise counsel since the inception of your Company
especially on fixed interest matters. At present the Directors are
in the middle of an exercise to see whether moving our tax domicile
from Guernsey to the UK would be in the best interests of
shareholders. As this study has not yet been concluded it would be
premature to recruit another Director until we know whether we need
a UK or an overseas resident Director. Furthermore it has been
agreed that Wayne Bulpitt, another
of the original Directors from our launch in 1994, will retire on
30 June 2016. In the interim, because
we still have three Directors who have served for over nine years,
we have decided that all the Directors will offer themselves up for
re-election at the AGM until the Directors who have served for more
than nine years are in a minority. Shareholders with strong views
on the question of tax domicile are invited to communicate via the
Company Secretary.
Share Buyback Authority
Your Company’s shares have traded close to NAV during the year
to 30 June 2015 and ended the period
on a 2% premium. The Board has resolved to seek, at the AGM on
19 November 2015, a renewal of its
authority to buy back shares at a discount to NAV under terms to be
stated in a Special Resolution. No shares have yet been bought back
under authorisations granted at previous AGMs.
Share Redemption Facility
The Company has a Redemption Facility operable in November each
year. The Company has traded at a premium to its NAV for most of
the previous year. At those moments when the shares moved to a
small discount the board took the view that such a discount
remained manageable through share re-purchases. No such purchases
were required. Given that the shares have returned to a premium,
the Board has resolved not to offer the Redemption Facility in
November 2015.
Ashe Windham
Chairman
9 September 2015
* Figures use Net Asset Value per share at
mid-market prices as reported to the London Stock Exchange. For
further by explanation of the reconciliation of IFRS NAV and London
Stock Exchange NAV please see note 14.
** The calculation of the Total Return includes an amount of
39.34 pence per share, which
represents the notional amount by which dividends paid to date
(27.60p) would have grown if they had not been paid out as
dividends but reinvested within the Company.
Business Model and
Strategy
Ruffer Investment Company Limited (the “Company”) carries on
business as a closed-ended investment company. Its shares are
traded on the Main Market of the London Stock Exchange (the
“LSE”).
Board
The Board of Directors is responsible for the overall
stewardship of the Company, including general management,
structure, finance, corporate governance, marketing, risk
management, compliance, asset allocation and gearing, contracts and
performance. Biographical details of the Directors, all of whom are
non-executive, are listed on Directors and on the Management and
Administration summary. The Company has no executive directors or
employees.
The Board has contractually delegated to external parties
various functions as disclosed in the Corporate Governance
Statement.
Investment Objective
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.
Investment Strategy
The Company’s strategy is to create a balanced portfolio of
offsetting assets. The Company predominantly invests 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.
Investment Policies
In selecting investments the Company adopts a stock picking
approach and does not adopt any investment weightings by reference
to any benchmark. Both the Board and the Investment Manager believe
that the adoption of any index related investment style would
inhibit the ability of the Company to deliver its objectives.
The Company invests across a broad range of assets, geographies
and sectors in order to achieve its objective. This allocation will
change over time to reflect the risks and opportunities identified
by the Investment Manager across global financial markets, with an
underlying focus on capital preservation. The allocation of the
portfolio between equities and bonds will vary from time to time so
as to enable the Company to achieve its objective. There are no
restrictions on the geographical or sectoral exposure of the
portfolio (except those restrictions noted below).
The universe of equity, equity related securities or bonds in
which the Company may invest is wide and may include companies
domiciled in, and bonds issued by entities based in, non-European
countries, including countries that are classed as emerging or
developing. This may result in a significant exposure to currencies
other than sterling.
The Company may use derivatives, including (but not limited to)
futures, options, swap agreements, structured products, warrants
and forward currency contracts, for efficient portfolio management
purposes only.
Investment Restrictions and
Guidelines
It is not intended for the Company to have any structural
gearing. The Company has the ability to borrow up to 30 per cent.
of the NAV at any time for short term or temporary purposes, as may
be necessary for settlement of transactions, to facilitate share
redemption or to meet ongoing expenses.
The proportion of the portfolio invested into companies based in
emerging or developing countries will be limited, at the time of
any investment, to below 15 per cent. of the Company’s gross
assets.
The Directors have determined that the Company will not engage
in currency hedging except where the Investment Manager considers
such hedging to be in the interests of efficient portfolio
management.
The Directors have determined that not more than 10 per cent.,
in aggregate, of the value of the gross assets of the Company at
the time of the acquisition may be invested in other UK listed
investment companies (including UK listed investment trusts) except
that this restriction does not apply to investments in such
entities which themselves have stated investment policies to invest
no more than 15 per cent. of their gross assets in other UK listed
investment companies (including listed investment trusts).
Regardless of the above restriction, the Directors have further
determined that no more than 15 per cent. in aggregate of the
Company’s gross assets will be invested in listed investment
companies (including listed investment trusts).
General
In accordance with the requirements of the United Kingdom
Financial Conduct Authority (the “FCA”), any material changes in
the Investment Policy of the Company may only be made with the
approval of shareholders.
Investment of Assets
At each quarterly Board meeting, the Board receives a detailed
presentation from the Company’s Investment Manager which includes a
review of investment performance, recent portfolio activity and a
market outlook. It also considers compliance with the investment
policy and other investment restrictions during the reporting
period. The Company’s Top Ten holdings and Portfolio Statement are
shown below.
Environmental Policy
Due to the Company’s listing on the LSE, the Company is required
to disclose its Environmental Policy but this is not applicable due
to the nature of its operations. Ruffer AIFM Limited’s
Environmental, Social and Governance Policy is available upon
request from the Investment Manager.
Shareholder Value
The Board reviews on an ongoing basis the performance of the
Investment Manager and considers whether the investment strategy
utilised is likely to achieve the Company’s investment objective of
realising a positive total annual portfolio return, after all
expenses, of at least twice the return of the Bank of England base rate. Having considered the
portfolio performance and investment strategy, the Board has
unanimously agreed that the interests of the shareholders as a
whole are best served by the continuing appointment of the
Investment Manager on the terms agreed.
Principal Risks and Uncertainties and
their Management
As stated within the Report of the Audit Committee, The Board
with the assistance of the Administrator and the Investment Manager
has drawn up a risk assessment matrix, which identifies the key
risks to the Company. The principal risks and uncertainties faced
by the Company are described below. Note 19 of the Financial
Statements provides detailed explanations of the risks associated
with the Company’s financial instruments:
- Investment Risks: The Company is exposed to the risk that its
portfolio fails to perform in line with the Company's objectives if
it is inappropriately invested or markets move adversely. The Board
reviews reports from the Investment Manager at each quarterly Board
meeting, paying particular attention to the diversification of the
portfolio and to the performance and volatility of underlying
investments;
- Operational Risks: The Company is exposed to the risks arising
from any failure of systems and controls in the operations of the
Investment Manager or the Administrator. The Board receives reports
annually from the Investment Manager and Administrator on their
internal controls and reviews pricing reports covering the
valuations of underlying investments at each quarterly Board
meeting;
- Accounting, Legal and Regulatory Risks: The Company is exposed
to risk if it fails to comply with the regulations of the UK
Listing Authority or the Guernsey Financial Services Commission or
if it fails to maintain accurate accounting records. The
Administrator provides the Board with regular reports on changes in
regulations and accounting requirements; and
- Financial Risks: The financial risks faced by the Company
include market, credit and liquidity risk. These risks and the
controls in place to mitigate them are reviewed at each quarterly
Board meeting. Further details on financial risks are discussed in
note 19 of the Financial Statements.
The Board seeks to mitigate and manage these risks through
continual review, policy-setting and enforcement of contractual
obligations. It also regularly monitors the investment environment
and the management of the Company’s portfolio.
Key Performance Indicators
The Board uses a number of performance measures to assess the
Company’s success in meeting its objectives. The key performance
indicators are disclosed in above.
Investment
Manager’s Report
For the year ended 30 June 2015
We are often told by investors that they hold the Company as an
offset to their other investments. While we can never guarantee
that such negative correlation will be achieved it has served this
role over the last 12 months and we have produced a healthy
positive return with a relatively low exposure to equities.
Our exposure to Japanese equities once again proved profitable
contributing 4.9% to the overall return. After the blip of
October’s vol-shock, which knocked equity markets across the
world, it was pretty much one way traffic in Japan and the news flow has been positive. The
effects of the Bank of Japan’s Quantitative Easing (QE) program
(expanded on 31 October) persisted and Abe won a resounding
election victory in December almost unopposed. His economic reform
program continues to make progress as companies are forced to focus
on better corporate governance and they have returned record
amounts to shareholders through dividends and share buybacks.
Remarkably, companies are now being made to justify themselves to a
new government department should they fail to attain centrally
mandated return-on-equity targets. It is indeed rare for a
government in Japan, or anywhere
else for that matter, to be so supportive of shareholders, but Abe
realises that this is key to Japan
escaping deflation. Balance sheets are too cautiously positioned
and cash needs to be put to work elsewhere in the economy. As well
as the flow back to shareholders we also saw an improvement for
employees with another year of positive wage growth in Japan and signs of tightness in the labour
market. Foreign investor interest is growing (but from a very low
level).
Western equities continued to make progress over the period and
this contributed positively to the portfolio, adding 1.5% to NAV
(As at 30 June 2015 the US equity
bull market had lasted 89 months – the third longest such streak on
record. It is worth noting in passing that the other two episodes
did not end well). Another helpful development was the continued
strength of the US dollar through the second half of 2014. This
position was reduced in the first quarter of 2015 and at 30 June
our USD exposure stood at 8%.
In some ways our views have changed little in the seven years
since the global financial crisis; not through dogmatism but
because many of the fundamental causes of the financial crisis
continue to threaten the world today. There was, and remains, too
much debt in the world (or looked at another way, not enough
collateral) and the authorities have thus far failed to massage
real interest rates low enough to provide any meaningful relief
from this burden. The experimentation with ZIRP (zero interest rate
policy) and now NIRP (negative interest rate policy) was an obvious
and necessary condition for survival in a debt laden world.
However, the persistent lack of inflation, has robbed the
authorities of the ability to use negative real interest rates to
erode the millstone of liabilities. A recent BIS/McKinsey report*
shows that developed world debts have barely shifted from
pre-crisis levels. Marry this to the capital market deepening in
emerging economies and total global debt is now some $200tn, up
from $142tn in 2007, and equates to 286% of global GDP compared to
269% in 2007. We live in a world where the authorities are settling
for refinancing the debt burden at ever lower rates, thereby
extending the current low growth environment, and simultaneously
providing encouragement for the previously un-indebted (US
corporates/China) to increase
their own debts to fund share buybacks so that earnings per share
can grow even if capex and real profits are not increasing.
We continue to believe that these obligations are unpayable, and
therefore will be defaulted on – in our view via the pernicious but
politically more palatable option of inflation and negative real
interest rates. This is a benign outcome for the over-indebted, but
a game-changer for savers amongst whom we would count the Company’s
shareholders. While this may be taking some time to play out, the
direction of travel has not changed and this remains the single
biggest threat to the spending power of our investors’ savings.
But even here there is a problem. It seems that ‘some inflation’
is surprisingly difficult to create when there is none (just ask
the Japanese, or even the Germans, forced into QE by the
inconvenience of the oil price halving just as Eurozone inflation
fell to zero). Naturally, in response to ECB QE, equities shot
higher celebrating easing monetary conditions and German bond
yields were driven to negative yields. In the closing days of April
the quiescence in Eurozone bond markets was violently disrupted as
German ten year yields shot higher by 1,000% (to a still meagre 1%)
which attests only to the absurd levels to which they were
driven.
The life-support policy of easy money has created inflation but
only in financial assets and not in the real economy. It has
created ‘voucher money’ which can only be spent within the
financial system. The next step to stimulate the real economy may
involve the crossing of another Rubicon in using fiscal stimulus.
Think Franklin D Roosevelt’s “New Deal”, infrastructure projects,
even Help to Buy II. We believe this can and will be done if
required; it seems eminently appealing when politicians know voters
prefer the carrot to the stick. An interesting thought experiment
asks - what if there is a shock to markets before rates have been
dragged off the floor? What is left in the toolkit to provoke the
same shock and awe as the lowest interest rates in 300 years and
$5tn of global quantitative easing? Like Pavlov’s Dogs, investors
have been well trained to respond to the signals of central
bankers, but the law of diminishing returns requires bolder and
more wanton action at each crisis.
Lastly, as absolute return investors we worry about broad-based
correlations across asset classes. If the rising tide can float all
boats, which is broadly what has happened since the financial
crisis, then there must be a good chance that asset prices fall in
tandem when that same tide goes out. The only way to avoid that is
to replace monetary stimulus with robust economic growth and that
remains elusive except on a beggar-my-neighbour basis. In high
yield debt and other contexts, the Fed has recently been voicing
concerns over the risk of a dislocation arising from a lack of
liquidity in certain areas of the financial system. When combined
with an equity bull market getting long in the tooth, these factors
emphasise the need to keep our primary aim of capital preservation
firmly in view. The majority of the transactions during the first
half of 2015 were aimed at moving the portfolio onto a more
defensive footing; profit-taking in a number of our equity
positions, buying protection against rising bond yields and the
possibility of a correlated sell-off in equity and fixed income
markets.
To end on a brighter note, the Company has produced a healthy
positive return over the financial year with less than half the
assets held in equities. We have also avoided three periods of
significant market volatility. That is the role we would like the
Company to play for our investors and we shall endeavour to do more
of the same in the year ahead.
Ruffer AIFM Limited
23 July 2015
*“Debt and (not much) deleveraging”, February 2015 by Richard
Dobbs, Susan Lund,
Jonathan Woetzel, and Mina
Mutafchieva.
Top Ten
Holdings
|
|
|
Fair |
%
of |
|
|
Holding at |
Value |
Total
Net |
Investments |
Currency |
30.06.15 |
£ |
Assets |
|
|
|
|
|
UK Index-Linked Gilt
1.875% 22/11/2022 |
GBP |
13,700,000 |
20,914,596 |
6.21 |
UK Index-Linked Gilt
1.25% 22/11/2055 |
GBP |
7,200,000 |
18,923,911 |
5.61 |
Ruffer Illiquid Multi
Strategies Fund 2015 Ltd* |
GBP |
16,450,000 |
16,383,542 |
4.86 |
US Treasury Inflation
Indexed 1.125% Bond 15/01/2021 |
USD |
22,000,000 |
16,002,352 |
4.75 |
UK Inflation Indexed
Gilt 0.375% 22/03/2062 |
GBP |
8,000,000 |
14,629,104 |
4.34 |
US Treasury Inflation
Indexed 0.625% Bond 15/07/2021 |
USD |
19,350,000 |
13,330,762 |
3.95 |
US Treasury Inflation
Indexed 0.125% Bond 15/01/2023 |
USD |
19,000,000 |
12,164,051 |
3.61 |
US Treasury Inflation
Indexed 0.375% Bond 15/07/2023 |
USD |
17,000,000 |
11,028,476 |
3.27 |
CF Ruffer Japanese
Fund** |
GBP |
4,500,000 |
8,819,550 |
2.62 |
T&D Holdings
Inc |
JPY |
900,000 |
8,532,637 |
2.53 |
* Ruffer Illiquid Multi Strategies Fund 2015
Ltd is classed as a related party as it shares the same Investment
Manager as the Company.
** CF Ruffer Japanese Fund is classed as a related party because
its investment manager, Ruffer LLP, is the parent company of the
Company’s Investment Manager.
Directors
The Company has six non-executive Directors, all of whom are
independent except for Wayne Bulpitt
and Peter Luthy, details of whom are
set out below.
Ashe Windham, CVO, aged 58 and a resident of the
United Kingdom. He joined Barclays
de Zoete Wedd (‘‘BZW’’) in 1987 as an institutional equities
salesman and was appointed a Director of BZW’s Equities Division in
1991. He joined Credit Suisse First Boston in 1997 when they
acquired BZW’s equities business. In 2004 he joined Man Investments
as Head of Internal Communications and in 2007 became Man Group’s
Global Head of Internal Communications. In June 2009 he resigned from Man Group plc to set
up a private family office. He is a non-executive Director of EFG
Asset Management (UK) Ltd and a non-executive Director of Miton UK
MicroCap Trust Plc. Mr Windham was appointed to the Board on
24 February 2009.
Wayne Bulpitt, aged
53 and a resident of Guernsey. He is Managing Director and
Principal of Active Group Limited and Chairman of BlueCrest
BlueTrend Limited. He was formerly Head of Offshore Investment
Services for Canadian Imperial Bank of Commerce, Global Private
Banking & Trust division (1998-2001) and Managing Director of
CIBC Fund Managers (Guernsey) Limited (1992-1998). He is also a
Director of Ruffer Illiquid Strategies Fund of Funds 2009 Limited,
Ruffer Illiquid Strategies Fund of Funds 2011 Limited, Ruffer
Illiquid Multi Strategies Fund 2015 Limited and Ruffer Multi
Strategies Fund Limited which are all Guernsey registered
investment companies managed by the Company’s Investment Manager.
Mr Bulpitt was appointed to the Board on 1
June 2004.
Jeannette Etherden
(Jan), aged 55 and a resident of the United Kingdom. She started in 1983 as a
research analyst at Confederation Life (acquired by Sun Life of
Canada in 1994) and was Head of UK
Equities from 1991. In 1996 she moved to Newton Investment
Management as a multi-asset fund manager. She was appointed a
Director for Newton in 1997 and additionally was Chief Operating
Officer, Investments from 1999 until her resignation in 2001. From
January 2004 to January 2006 she was Business Development Manager
for the Candela Fund at Olympus Capital Management. Ms Etherden is
also a non-executive Director of Miton UK MicroCap Trust Plc and of
TwentyFour Income Fund Limited. Ms Etherden was appointed to the
Board on 1 June 2004.
Peter Luthy, aged
64 and a resident of the United
Kingdom. He has worked in the fixed income market for 25
years. In 1990, he co-founded a credit focussed bond broker,
Luthy Baillie Dowsett Pethick and
Co. Limited (‘‘LBDP’’). Dresdner Kleinwort Benson acquired LBDP in
1996 where he was global head of credit products. In 1998 he became
global head of investment banking at Barclays Capital and, after
2001, acted as a consultant on bank credit portfolios. He was a
Managing Partner of Banquo Credit Management LLP until June 2014. He is also a Director of Ruffer
Illiquid Strategies Fund of Funds 2009 Limited, Ruffer Illiquid
Strategies Fund of Funds 2011 Limited, Ruffer Illiquid Multi
Strategies 2015 Fund Limited and Ruffer Multi Strategies Fund
Limited which are all Guernsey registered investment companies
managed by the Company’s Investment Manager. Mr Luthy was appointed
to the Board on 1 June 2004.
Christopher
Spencer, aged 65 and a resident of Guernsey. He
qualified as a chartered accountant in London in 1975. Following two years in
Bermuda he moved to Guernsey. Mr
Spencer, who specialized in audit and fiduciary work, was Managing
Partner/Director of Pannell Kerr
Forster (Guernsey) Limited from 1990 until his retirement in
May 2000. Mr Spencer is a member of
the AIC Offshore Committee, a past President of the Guernsey
Society of Chartered and Certified Accountants, and a past Chairman
of the Guernsey Branch of the Institute of Directors. He is a
non-executive Director of a number of listed fund companies and
other finance related companies. Mr Spencer was appointed to the
Board on 1 June 2004.
John V Baldwin, aged 65 and a resident of
Italy. After taking a Master's
Degree in Asian Studies at Yale
University, he joined Robert
Fleming & Co. in 1983 as an investment analyst trainee.
In 1984 he was seconded to the Tokyo Branch of Jardine Fleming as an investment analyst, where
he continued in various roles for 16 years, the final five as a
Director of Jardine Fleming Securities (Asia) and Tokyo Branch Manager. The first foreigner
appointed Member Governor of the Tokyo Stock Exchange, he also
served on various committees of the Japan Securities Dealers
Association. In 2001 he retired from successor firm JPMorgan Chase
after serving as Head of Japanese Cash Equities. Mr Baldwin was
appointed to the Board on 24 February
2011.
Report of the
Directors
The Directors of the Company present their Annual Financial
Report (the “Financial Statements”) for the year ended 30 June 2015 which have been prepared in
accordance with the Companies (Guernsey) Law, 2008 (the “Company
Law”).
Registration
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.
Principal Activity and Investment
Objective
The Company is a Guernsey authorised closed-ended investment
company with a premium listing on the LSE. The principal objective
of the Company is detailed in the Business Model and Strategy.
Going Concern
The Directors believe that it is appropriate to continue to
adopt the going concern basis in preparing the Financial Statements
since the assets of the Company consist mainly of securities which
are readily realisable and, accordingly, the Company has adequate
financial resources to continue in operational existence for the
foreseeable future.
The Board also has the discretion to operate the Redemption
Facility, offering shareholders the possibility of redeeming all or
part of their shareholding for cash at the NAV, if it appears
appropriate to do so.
Blocklisting Facility
The blocklisting facility is set out in note 13.
Purchase of Own Shares by the
Company
The Company operates a Share Buyback Facility whereby it may
purchase, subject to various terms as set out in its Articles and
in accordance with the Companies (Guernsey) Law, 2008, up to 14.99
per cent. of the Company’s shares in issue following the admission
of shares trading on the LSE’s market for listed securities. For
additional information refer to note 20.
The Company did not buyback any shares during the year
(30.06.14: Nil).
Results and Dividends
The results for the year are set out in the Statement of
Comprehensive Income. Details of dividends paid and proposed are
set out in note 5.
Subsequent Events
Events occurring after the balance sheet date are disclosed in
note 21 in the Notes to the Financial Statements.
Shareholder Information
The Company announces its unaudited NAV on a weekly basis and at
the month end. A monthly report on investment performance is
published by the Company’s Investment Manager, on the Investment
Manager’s website, www.ruffer.co.uk.
Investment Management
The key terms of the Investment Management Agreement and
specifically the fee charged by the Investment Manager are set out
in notes 8 and 16 of the Financial Statements. The Board believes
that the investment management fee is competitive with other
investment companies with similar investment mandates.
The Board reviews on an ongoing basis the performance of the
Investment Manager and considers whether the investment strategy
utilised is likely to achieve the Company’s investment objective of
realising a positive total annual portfolio return, after all
expenses, of at least twice the return of the Bank of England base rate.
In accordance with Listing Rule 15.6.2 (2) R and having formally
appraised the performance, investment strategy and resources of the
Investment Manager, the Board has unanimously agreed that the
interests of the shareholders as a whole are best served by the
continuing appointment of the Investment Manager on the terms
agreed.
The Investment Management Agreement will continue in force until
terminated by the Investment Manager or the Company giving to the
other party thereto not less than 12 months’ notice in writing.
Directors
The details of the Directors of the Company during the year and
at the date of this Report are set out on Directors and on the
Management and Administration summary.
Directors’ Interests
The details of the number of redeemable participating preference
shares held beneficially by the Directors who held office at
30 June 2015 and up to the date of
this Report are set out in note 16.
Substantial Share Interests
As at 30 June 2015, the Company
has received notifications in accordance with the FCA’s Disclosure
and Transparency Rule 5.1.2 R of the following interests in 3% or
more of the voting rights attaching to the Company’s issued
shares.
Investor |
Shares held |
% of
issued share capital |
Brewin Nominees
Limited |
13,741,663 |
8.90 |
HSBC Global Custody
Nominee (UK) Limited |
12,825,166 |
8.31 |
State Street Nominees
Limited |
11,857,823 |
7.68 |
Roy Nominees
Limited |
10,013,175 |
6.48 |
Alliance Trust Savings
Nominees Limited |
8,516,631 |
5.52 |
Rathbone Nominees
Limited |
5,541,495 |
3.59 |
Rock Nominees
Limited |
5,256,300 |
3.40 |
Luna Nominees
Limited |
5,186,038 |
3.36 |
Platform Securities
Nominees Limited |
5,159,776 |
3.34 |
Foreign Account Tax Compliance Act
For purposes of the US Foreign Accounts Tax Compliance Act, the
company registered with the US Internal Revenue Service (“IRS”) as
a Guernsey reporting Foreign Financial Institution (“FFI”) in
June 2014, received a Global
Intermediary Identification Number, and can be found on the IRS FFI
list under the link
http://apps.irs.gov/app/fatcaFfiList/flu.jsf.
The Company is subject to Guernsey regulations and guidance
based on reciprocal information sharing inter-governmental
agreements which Guernsey has entered into with the United Kingdom and the United States of America. The Board will
take the necessary actions to ensure that the Company is compliant
with Guernsey regulations and guidance in this regard.
Alternative Investment Fund Managers
("AIFM") Directive
Due to the recent changes introduced by virtue of the
Alternative Investment Fund Managers Directive (“AIFMD”), the
Company terminated the Investment Management Agreement with Ruffer
LLP and appointed Ruffer AIFM Limited as the new Investment Manager
with effect from 22 July 2014.
The Board resolved to amend and restate the Company's
Administration agreement with Northern Trust International Fund
Administration Services (Guernsey) Limited (the "Administrator") to
the extent necessary to ensure that the relationship between the
Company, the Investment Manager and the Administrator is compliant
with the requirements of AIFMD.
The Board appointed of Northern Trust (Guernsey) Limited (the
"Depositary") to act as the Company's Depositary on the terms and
subject to the conditions of a Depositary Agreement between the
Company, the Investment Manager and the Depositary with effect from
22 July 2014.
For additional information on the above changes refer to the
General Information.
Independent Auditor
During the year the Board entered into a competitive audit
tender process and on the 9 March
2015, Deloitte LLP was appointed as the Company’s new
auditor, replacing Moore Stephens, who had been the independent
external auditor from the date of the initial listing on the
LSE.
Disclosure of Information to the
Independent Auditor
Deloitte LLP have expressed their willingness to continue in
office as auditor and a resolution to re-appoint them will be
proposed at the next AGM. Each of the persons who is a Director at
the date of approval of the financial statements confirms that:
(1) so far as each Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
(2) each Director has taken all steps he ought to have
taken as a Director to make himself aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 249 of the Company
Law.
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the Annual Report
and Financial Statements in accordance with applicable law and
regulations. The Directors believe that the financial statements
and all reports therein reflect a fair, balanced and understandable
statement of the Company’s affairs.
The Company Law requires the Directors to prepare financial
statements for each financial year. Under the Company Law the
Directors have elected to prepare the Company’s Financial
Statements in accordance with International Financial Reporting
Standards (IFRSs). 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 Company and of
the profit or loss of the Company for that period. In preparing
these financial statements, International Accounting Standard 1
requires that directors:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
- make an assessment of the Company's ability to continue as a
going concern.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with Company Law.
The Directors are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the oversight of the
maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in
Guernsey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names are set out on this Annual
Financial Report, confirms that to the best of their knowledge
that:
- these Financial Statements have been prepared in conformity
with IFRS, give a true and fair view of the assets, liabilities,
financial position and profit of the Company as required by DTR
4.1.12;
- the Annual Financial Report, taken as a whole, is fair,
balanced and understandable and provide the information necessary
for the shareholders to assess the Company’s performance, business
model and strategy; and
- the Annual Financial Report includes information detailed in
the Chairman's Review, the Report of the Directors, the Investment
Manager's Review, the Depositary Statement and the notes to the
accounts, which includes a fair view of the development and
performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that it faces, as required by:
(a) DTR 4.1.8 of the Disclosure and Transparency Rules, being a
fair review of the Company business and a description of the
principal risks and uncertainties facing the Company; and
(b) DTR 4.1.11 of the Disclosure
and Transparency Rules, being an indication of important events
that have occurred since the end of the financial year and the
likely future development of the Company.
On behalf of the Board
Ashe Windham
Christopher Spencer
Chairman
Director
9 September 2015
Corporate
Governance Statement
Corporate Governance
The Board is committed to high standards of corporate governance
and has implemented a framework for corporate governance which it
considers to be appropriate for an investment company in order to
comply with the principles of the UK Corporate Governance Code (the
“UK Code”). The Company is also required to comply with the Code of
Corporate Governance issued by the Guernsey Financial Services
Commission (the “GFSC Code”).
The Financial Reporting Council (the “FRC”) issued a revised
Code in September 2014, for reporting
periods beginning on or after 1 October
2014. The Board will adopt the revised Code for the
financial year beginning 1 July
2015.
Compliance Statement
The UK Listing Authority requires all UK listed premium
companies to disclose how they have complied with the provisions of
the UK Code. This Corporate Governance Statement, together with the
Going Concern statement and the Statement of Directors’
Responsibilities set out on Report of the Directors, indicate how
the Company has complied with the principles of good governance of
the UK Code and its requirements on Internal Control.
The Board has considered the principles and recommendations of
the UK Code, and considers that reporting against the UK Code will
provide better information to shareholders. To ensure ongoing
compliance with these principles the Board receives a report from
the Company Secretary, at each quarterly meeting, identifying how
the Company is in compliance and identifying any changes that might
be necessary.
The UK Code is available in the FRC’s website,
www.frc.org.uk.
The Board, having reviewed the UK Code, considers that it has
maintained procedures during the year ended 30 June 2015 and up to the date of this report to
ensure that it complies with the UK Code except as explained
elsewhere in the Corporate Governance Statement.
Guernsey Regulatory Environment
The Guernsey Financial Services Commission’s (the “Commission”)
Finance Sector GFSC Code comprises Principles and Guidance, and
provides a formal expression of good corporate practice against
which Shareholders, boards and the Commission can better assess the
governance exercised over companies in Guernsey’s finance sector.
The Commission recognises that the different nature, scale and
complexity of business will lead to differing approaches to meeting
the GFSC Code. Companies reporting against the UK Code are deemed
to comply with the GFSC Code.
Role of the Board
The Board is the Company’s governing body and has overall
responsibility for maximising the Company’s success by directing
and supervising the affairs of the business and meeting the
appropriate interests of Shareholders and relevant stakeholders,
while enhancing the value of the Company and also ensuring
protection of investors. A summary of the Board’s responsibilities
is as follows:
- statutory obligations and public disclosure;
- strategic matters and financial reporting;
- risk assessment and management including reporting compliance,
governance, monitoring and control; and
- other matters having a material effect on the Company.
The Board’s responsibilities for the Annual Report are set out
in the Statement of Directors’ Responsibilities.
The Board has contractually delegated responsibility for the
management of its investment portfolio, the arrangement of
custodial and depositary services and the provision of accounting
and company secretarial services.
The Board needs to ensure that the Financial Statements, taken
as a whole, are fair, balanced and understandable and provide the
information necessary for Shareholders to assess the Company’s
performance, business model and strategy.
In seeking to achieve this, the Directors have set out the
Company’s investment objective and policy and have explained how
the Board and its delegated Committees operate and how the
Directors review the risk environment within which the Company
operates and set appropriate risk controls. Furthermore, throughout
the Financial Statements the Board has sought to provide further
information to enable Shareholders to have a fair, balanced and
understandable view.
Composition and Independence of the
Board
The Board currently comprises six non-executive Directors, all
of whom are independent with the exception of Wayne Bulpitt and Peter
Luthy. The Directors of the Company are listed on Directors
and on the Management and Administration summary.
Under the UK Code Wayne Bulpitt and Peter Luthy are considered not to be independent
by reason of being Directors of other group related companies. None
of the Directors has a contract of service with the Company.
The Chairman is Ashe Windham. The Chairman of the Board must be
independent for the purposes of Chapter 15 of the Listing Rules.
Ashe Windham is considered independent because he:
- has no current or historical employment with the Investment
Manager; and
- has no current directorships in any other investment funds
managed by the Investment Manager.
The Board does not consider it appropriate to appoint a Senior
Independent Director because the Board is deemed to be independent
of the Company except for Wayne
Bulpit and Peter Luthy. The
Company has no employees and therefore there is no requirement for
a chief executive. The Board believes it has a good balance of
skills and experience to ensure it operates effectively. The
Chairman, Ashe Windham, is responsible for leadership of the Board
and ensuring its effectiveness.
The Board has engaged external companies to undertake the
investment management, administrative and custodial activities of
the Company. Documented contractual arrangements are in place with
these companies which define the areas where the Board has
delegated responsibility to them.
The Company holds a minimum of four Board meetings per year to
discuss strategy, general management, structure, finance, corporate
governance, marketing, risk management, compliance, asset
allocation and gearing, contracts and performance. The quarterly
Board meetings are the principal source of regular information for
the Board enabling it to determine policy and to monitor
performance, compliance and controls but these meetings are
supplemented by communication and discussions throughout the
year.
A representative of the Investment Manager, Administrator and
Company Secretary attends each Board meeting either in person or by
telephone thus enabling the Board to fully discuss and review the
Company’s operations and performance. In addition, representatives
from the Company’s Broker attend at least two Board meetings a
year. Each Director has direct access to the Investment Manager and
Company Secretary and may at the expense of the Company seek
independent professional advice on any matter.
Attendance at the Board and other Committee meetings during the
year was as follows:
|
Number of Meetings held |
Wayne
Bulpitt |
Jeannette Etherden |
Peter
Luthy |
Christopher Spencer |
Ashe
Windham |
John
V Baldwin |
|
|
|
|
|
|
|
|
Board Meetings |
5* |
5 |
5 |
5 |
5 |
5 |
5 |
Audit Committee
Meetings |
3* |
3 |
3 |
3 |
3 |
3 |
3 |
Management Engagement
Committee Meetings |
2* |
N/A |
2 |
N/A |
1 |
2 |
2 |
Ad-hoc Board
Meetings |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
* The final scheduled meetings for the year ended 30 June 2014 were delayed until 10 July 2014.
Directors’ Indemnity
Directors' and Officers’ liability insurance cover is maintained
by the Company on behalf of the Directors.
Re-election
At each AGM all of the Directors shall retire from office and
may offer themselves for re-election except for Peter Luthy who will not offer himself for
re-election. For additional information refer to the Chairman’s
Review.
On 19 November 2014 at the 10th
AGM of the Company, Ashe Windham, John
Baldwin, Jeannette Etherden,
Wayne Bulpitt, Peter Luthy and Christopher Spencer retired as Directors of the
Company and being eligible had offered themselves for re-election
and were re-elected as Directors of the Company by the
Shareholders. As Peter Luthy and
Wayne Bulpitt are Directors of other
companies managed by the Company’s Investment Manager they are
deemed to be non-independent Directors and therefore stand for
re-election at each AGM.
The Directors may at any time appoint any person to be a
Director either to fill a casual vacancy or as an addition to the
existing Directors. Any Director so appointed shall hold office
only until, and shall be eligible for re-election at, the next
general meeting following their appointment but shall not be taken
into account in determining the Directors or the number of
Directors who are to retire by rotation at that meeting if it is an
AGM.
Board Evaluation and Succession
Planning
The Directors consider how the Board functions as a whole taking
balance of skills, experience and length of service into
consideration and also reviews the individual performance of its
members on an annual basis.
To enable this evaluation to take place, the Company Secretary
will circulate a detailed questionnaire plus a separate
questionnaire for the evaluation of the Chairman. The
questionnaires, once completed, are returned to the Company
Secretary who collates responses, prepares a summary and discusses
the Board evaluation with the Chairman prior to circulation to the
remaining Board members. The performance of the Chairman is
evaluated by the other Directors. On occasions, the Board may seek
to employ an independent third party to conduct a review of the
Board.
The Board considers it has a breadth of experience relevant to
the Company, and the Directors believe that any changes to the
Board’s composition can be managed without undue disruption. An
induction programme has been prepared for any future Director
appointments.
The Board is currently considering its composition. For
additional information refer to the Chairman’s Review.
The Board has also given careful consideration to the
recommendations of the Davies Report on women on boards and as
recommended in that report has reviewed its composition and
believes that it has available an appropriate range of skills and
experience. In order to extend its diversity, the Board is
committed to implementing the recommendations of the Davies Report,
if possible within the timescales proposed in the Davies Report,
and to that end will ensure that women candidates are considered
when appointments to the Board are under consideration – as indeed
has always been its practice.
Committees of the Board
The Board has established Audit and Management Engagement
Committees and approved their terms of reference, copies of which
can be obtained from the Company Secretary upon request.
Audit Committee
The Company has established an Audit Committee, with formally
delegated duties and responsibilities within written terms of
reference. The Company's Audit Committee is comprised of the entire
Board. The Audit Committee is chaired by Christopher Spencer. The Audit Committee meets
formally at least twice a year and each meeting is attended by the
independent external auditor and Administrator.
The table above sets out the number of Audit Committee Meetings
held during the year ended 30 June
2015 and the number of such meetings attended by each Audit
Committee member.
A report of the Audit Committee detailing responsibilities and
activities is presented on the Audit Committee Report.
Management Engagement Committee
The Company has established a Management Engagement Committee,
with formally delegated duties and responsibilities within written
terms of reference. The Management Engagement Committee is
comprised of the independent non-executive Directors of the
Company, with John V Baldwin appointed as Chairman. The Management
Engagement Committee meets formally once a year.
The principal duties of the Management Engagement Committee are
to review the performance of and contractual arrangements with the
Investment Manager and all other service providers to the Company
(other than the external auditors).
During the year the Management Engagement Committee has reviewed
the services provided by the Investment Manager as well as the
other service providers and have recommended to the Board that
their continuing appointments is in the best interests of the
Shareholders. The last meeting was held on 5
June 2015.
The table above sets out the number of Management Engagement
Committee Meetings held during the year and the number of such
meetings attended by each Management Engagement Committee
member.
Nomination Committee
The Board does not have a separate Nomination Committee. The
Board as a whole fulfils the function of a Nomination Committee.
Any proposal for a new Director will be discussed and approved by
the Board. The Board will determine whether in future an external
search consultancy or open advertising is used in the appointments
of non-executive Directors.
Remuneration Committee
In view of its non-executive and independent nature, the Board
considers that it is not appropriate for there to be a Remuneration
Committee as anticipated by the UK Code because this function is
carried out as part of the regular Board business.
Internal Control
The Company’s risk exposure and the effectiveness of its risk
management and internal control systems are reviewed by the Audit
Committee at its meetings and annually by the Board.
The Board is responsible for establishing and maintaining the
Company’s system of internal controls and for maintaining and
reviewing its effectiveness. The system of internal controls is
designed to manage rather than to eliminate the risk of failure to
achieve business objectives and as such can only provide
reasonable, but not absolute assurance against material
misstatement or loss. These controls aim to ensure that assets of
the Company are safeguarded, proper accounting records are
maintained and the financial information for publication is
reliable. The Board uses a formal risk assessment matrix to
identify and monitor business risks.
The Board has contractually delegated to external parties
various functions as listed below. The duties of investment
management, administration and custody are segregated. Each of the
contracts entered into with the parties was entered into after full
and proper consideration by the Board of the quality and cost of
services offered, including the control systems in operation as far
as they relate to the affairs of the Company.
The Board considers on an ongoing basis the process for
identifying, evaluating and managing any significant risks faced by
the Company. The process includes reviewing reports from the
Company Secretary on risk control and compliance, in conjunction
with the Investment Manager’s regular reports which cover
investment performance.
- Investment Management is provided by Ruffer AIFM Limited, a
company authorised by the FCA.
- Administration, Accounting, Registrar, and Company Secretarial
duties are performed by Northern Trust International Fund
Administration Services (Guernsey) Limited, a company licensed and
regulated by the Guernsey Financial Services Commission.
- CREST agency functions are performed by Computershare Investor
Services (Jersey) Limited, a company licensed and regulated by the
Jersey Financial Services Commission.
- Depositary services performed by Northern Trust (Guernsey)
Limited, a company licensed and regulated by the Guernsey Financial
Services Commission.
- Custody of assets is undertaken by Northern Trust (Guernsey)
Limited, a company licensed and regulated by the Guernsey Financial
Services Commission.
The Board reviews regularly the performance of the services
provided by these companies. The Board reviews the performance of
the Investment Manager annually by assessing the performance of the
investments, and the Investment Manager’s position against its
peers.
In common with most investment companies, the Company does not
have an internal audit function. All of the Company’s management
functions are delegated to the Investment Manager and Administrator
which has their own internal audit and risk assessment functions.
As such, an internal audit function specific to the Company is
therefore considered unnecessary, as explained in the Audit
Committee Report.
Principal Risks and Uncertainties
Principal risks and uncertainties in the Business Model and
Strategy above.
Relations with Shareholders
The Board welcomes shareholders’ views and places great
importance on communication with its shareholders. The Board
receives regular reports on the views of its shareholders from the
Company’s Corporate Broker and Investment Manager.
The Chairman and other Directors are available to meet
shareholders if required and the AGM of the Company provides a
forum for shareholders to meet and discuss issues with the
Directors of the Company.
In addition, the Investment Manager maintains a website which
contains comprehensive information, including financial reports,
prospectus and monthly reports on investment performance which
contains share price information, investment objectives, investment
reports and investor contacts.
Going concern
The going concern assumption is disclosed in the Report of
Directors.
Subsequent Events
The subsequent events since the year end that the Directors
consider require adjustment to or disclosure in this report or the
financial statements are disclosed in note 21.
Directors’
Remuneration Report
Introduction
An ordinary resolution for the approval of the annual
remuneration report was put to the shareholders at the AGM held on
19 November 2014.
Remuneration policy
All Directors are non-executive and a Remuneration Committee has
not been established. The Board as a whole considers matters
relating to the Directors’ remuneration. No advice or services were
provided by any external person in respect of its consideration of
the Directors’ remuneration.
The Company’s policy is that the fees payable to the Directors
should reflect the time spent by the Directors on the Company’s
affairs and the responsibilities borne by the Directors and be
sufficient to attract, retain and motivate directors of a quality
required to run the Company successfully. The Chairman of the Board
is paid a higher fee in recognition of his additional
responsibilities. The policy is to review fee rates periodically,
although such a review will not necessarily result in any changes
to the rates, and account is taken of fees paid to directors of
comparable companies.
There are no long term incentive schemes provided by the Company
and no performance fees are paid to Directors.
No Director has a service contract with the Company but each of
the Directors is appointed by a letter of appointment which sets
out the main terms of their appointment. Directors hold office
until they retire by rotation or cease to be a director in
accordance with the Articles of Incorporation, by operation of law
or until they resign.
Remuneration
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 2014: £200,000) per
annum.
Directors are remunerated in the form of fees, payable quarterly
in arrears, to the Director personally. No Directors have been paid
additional remuneration outside their normal Directors’ fees and
expenses. Directors fees have not increased during the year (2014:
no increase during the year).
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
£ |
|
£ |
Ashe Windham |
|
|
|
35,000 |
|
35,000 |
Christopher
Spencer |
|
|
|
25,000 |
|
25,000 |
Jeannette
Etherden |
|
|
|
25,000 |
|
25,000 |
Peter Luthy |
|
|
|
25,000 |
|
25,000 |
Wayne Bulpit |
|
|
|
25,000 |
|
25,000 |
John V Baldwin |
|
|
|
25,000 |
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000 |
|
160,000 |
|
|
|
|
|
|
|
During the year ended 30 June 2015
Director fees of £160,000 (30 June
2014: £160,000) were charged to the Company of which £40,000
(30 June 2014: £40,000) remained
payable at the year end.
Audit Committee
Report
On the following, we present the Audit Committee’s Report for
the year ended 30 June 2015, setting
out the responsibilities of the Audit Committee and its key
activities for the year from 1 July
2014 to 30 June 2015. As in
previous years, the Committee has reviewed the Company's financial
reporting, the independence and effectiveness of the independent
external auditor and the internal control and risk management
systems of service providers. In order to assist the Audit
Committee in discharging these responsibilities, regular reports
are received from the Investment Manager, Administrator and
independent external auditor.
A member of the Audit Committee will continue to be available at
each AGM to respond to any shareholder questions on the activities
of the Audit Committee.
Responsibilities
The Audit Committee reviews and recommends to the Board, the
Financial Statements of the Company and is the forum through which
the independent external auditor reports to the Board of
Directors.
The role of the Audit Committee includes:
- Monitoring and reporting to the Board on such matters as the
integrity of the Financial Statements of the Company and any formal
announcements relating to the Company’s financial performance, and
any significant financial reporting judgements;
- considering the appropriateness of accounting policies and
practices including critical judgement areas;
- reviewing and considering the UK Code and FRC Guidance on Audit
Committees;
- monitoring and reviewing the quality, effectiveness and
independence of the independent external auditors and the
effectiveness of the audit process considering and making
recommendations to the Board on the appointment, reappointment,
replacement and remuneration to the Company's external
auditor;
- reviewing the Company's procedures for prevention, detection
and reporting of fraud, bribery and corruption; and
- monitoring and reviewing the internal control and risk
management systems of the service providers together with the need
for an Internal Audit function.
The Audit Committee's full terms of reference can be obtained by
contacting the Company’s Secretary.
Key Activities of the Audit
Committee
The following sections discuss the assessments made by the Audit
Committee during the year:
Financial Reporting
The Audit Committee's review of the Half Yearly Financial Report
and Audited Annual Financial Report focused on the following
significant risks; valuation and ownership of investments. The
investments comprise the majority of NAV value and hence form part
of the Key Performance Indicator (“KPI”) NAV per share. Hence any
significant error in valuation or overstatement of holdings could
significantly impact the NAV and hence the reported NAV per share
of the Company.
Valuation of Investments
The Company’s investments had a fair value of £314,296,168 as at
30 June 2015 and represented the
majority of the net assets of the Company. The investments are
predominantly all listed except for investments in investment funds
and the valuation of the investments is in accordance with the
requirements of IFRS. The Audit Committee considered the fair value
of the investments held by the Company as at 30 June 2015 to be reasonable based on
information provided by the Investment Manager and Administrator.
All prices are confirmed to independent pricing sources as at
30 June 2015 by the Administrator and
are subject to review process at the Administrator and oversight at
the Investment Manager.
Ownership of Investments
The Company’s investment holdings are reconciled to independent
reports from the Custodian by the Administrator with any
discrepancies being fully investigated and reconciled by the
Administrator. The Audit Committee therefore consider the ownership
of the investments held by the Company as at 30 June 2015 to be reasonable based on a review
of information provided by the Investment Manager, Custodian,
Depositary and Administrator.
The independent external auditor reported to the Audit Committee
any misstatements found in the course of its work, however no
material misstatements were found.
Risk Management
The Audit Committee considered the process for managing the risk
of the Company and its service providers. Risk management
procedures for the Company, as detailed in the Company's risk
assessment matrix, were reviewed and approved by the Audit
Committee. Regular reports are received from the Investment Manager
and Administrator on the Company’s risk evaluation process and
reviews. Refer the Business Model and Strategy for details on
principal risks and uncertainties and their management. Financial
risks faced by the Company are discussed in note 19 of the
Financial Statements.
With the introduction of AIFMD the Company’s AIFM, Ruffer AIFM
Limited, undertakes certain responsibilities in terms of the risk
management of the Company.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and
corruption policies of the Company. The Board receives a
confirmation from all service providers that there have been no
instances of fraud, bribery or corruption.
The Independent External Auditor
During the year the Board entered into a competitive audit
tender process and on the 9 March
2015, Deloitte LLP was appointed as the Company’s new
auditor, replacing Moore Stephens, who had been the independent
external auditor from the date of the initial listing on the
LSE.
Independence, Objectivity and Fees
The independence and objectivity of the independent external
auditor is reviewed by the Audit Committee which also reviews the
terms under which the independent external auditor is appointed to
perform non-audit services. The Audit Committee has established
pre-approval policies and procedures for the engagement of Deloitte
LLP to provide audit, assurance and tax services. No tax services
were provided during the year. These are that the external auditors
may not provide a service which:
- places them in a position to audit their own work;
- creates a mutuality of interest;
- results in the external auditor developing close relationships
with service providers of the Company;
- results in the external auditor functioning as a manager or
employee of the Company; or
- puts the external auditor in the role of advocate of the
Company.
As a general rule, the Company does not utilise external
auditors for internal audit purposes, secondments or valuation
advice. Services which are in the nature of audit, such as tax
compliance, tax structuring, private letter rulings, accounting
advice, quarterly reviews and disclosure advice are normally
permitted but must be pre-approved where individual fees are likely
to be above £25,000.
The following table summarises the remuneration paid to the
previous and current auditors for audit and non-audit services
during the years ended 30 June 2015
and 2014:
|
|
30.06.15 |
|
30.06.14 |
|
|
£ |
|
£ |
Statutory Audit |
|
25,000 |
|
21,850 |
Total Audit fees |
|
25,000 |
|
21,850 |
|
|
|
|
|
Interim Review |
|
7,790 |
|
7,513 |
Total non-audit related
fees |
|
7,790 |
|
7,513 |
In line with the policies and procedures above, the Audit
Committee does not consider that the provision of these non-audit
services, which comprised of independent review of the Half Yearly
Financial Report, to be a threat to the objectivity and
independence of the independent auditor.
Deloitte LLP also has safeguards in place to ensure objectivity
and independence. This includes:
- Review and challenge of key decisions by the Engagement Quality
Review Partner and engagement quality control review by a member of
the Independent Professional Standards Review Team.
When considering the effectiveness and independence of the
independent external auditors, and the effectiveness of the audit
process, the Audit Committee meets regularly with the external
auditors to discuss the audit plan and the scope of the audit. The
Audit Committee also takes account of factors such as:
- The audit plan presented to them before each audit;
- The post audit report including variations from the original
plan;
- Changes in audit personnel;
- The independent external auditors own internal procedures to
identify threats to independence; and
- Feedback from both the Investment Manager and Administrator
evaluating the performance of the team.
The Audit Committee has examined the scope and results of the
audit, its cost effectiveness and the independence and objectivity
of the independent external auditor, with particular regard to
non-audit fees, and is satisfied that an effective audit has been
completed with diligence and professional scepticism, that the
scope of the audit was appropriate and significant judgements have
been challenged robustly. It also considers Deloitte LLP, as
independent external auditor, to be independent of the Company.
Reappointment of external auditors
Consequent to this review process, the Audit Committee has
recommended to the Board that a resolution be put to the 2015 AGM
for the reappointment of Deloitte LLP as independent external
auditor. The Board has accepted this recommendation.
Internal control and risk management
systems
The Audit Committee, after consultation with the Investment
Manager and independent external auditor, considers the key risk of
misstatement in its Financial Statements to be the override of
controls by its service providers, the Investment Manager and
Administrator.
The Audit Committee reviews and examines externally prepared
assessments of the control environment in place at the Investment
Manager and the Administrator. No significant failings or
weaknesses were identified in these reports.
The Audit Committee has also reviewed the need for an internal
audit function. The Audit Committee has decided that the systems
and procedures employed by the Investment Manager and the
Administrator, including their internal audit functions, provide
sufficient assurance that a sound system of internal control, which
safeguards the Company’s assets, is maintained. An internal audit
function specific to the Company is therefore considered
unnecessary.
For any questions on the activities of the Audit Committee not
addressed in the foregoing, a member of the Audit Committee remains
available to attend each AGM to respond to such questions.
In finalising the Financial Statements for recommendation to the
Board for approval, the Audit Committee has satisfied itself that
the Financial Statements taken as a whole are fair, balanced and
understandable, and provide the information necessary for
shareholders to assess the Company’s performance, business model
and strategy.
Christopher
Spencer
Chairman, Audit Committee
9 September 2015
Report of the
Depositary to the Shareholders of Ruffer Investment Company
Limited
Northern Trust (Guernsey) Limited has been appointed as
Depositary to Ruffer Investment Company Limited (the “Company”) in
accordance with the requirements of Article 36 and Articles 21(7),
(8) and (9) of the Directive 2011/61/EU of the European Parliament
and of the Council of 8 June 2011 on
Alternative Investment Fund Managers and amending Directives
2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and
(EU) No 1095/2010 (the “AIFM Directive”).
We have enquired into the conduct of Ruffer AIFM Limited (the
“AIFM”) and the Company for the year ended 30 June 2015, in our capacity as Depositary to
the Company.
This report including the review provided below has been
prepared for and solely for the Shareholders in the Company. We do
not, in giving this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is
shown.
Our obligations as Depositary are stipulated in the relevant
provisions of the AIFM Directive and the relevant sections of
Commission Delegated Regulation (EU) No 231/2013 (collectively the
“AIFMD legislation”) and The Authorised Closed Ended Investment
Scheme Rules 2008.
Amongst these obligations is the requirement to enquire into the
conduct of the AIFM and the Company and their delegates in each
annual accounting period.
Our report shall state whether, in our view, the Company has
been managed in that period in accordance with the AIFMD
legislation. It is the overall responsibility of the AIFM and the
Company to comply with these provisions. If the AIFM, the Company
or their delegates have not so complied, we as the Depositary will
state why this is the case and outline the steps which we have
taken to rectify the situation.
The Depositary and its affiliates is or may be involved in other
financial and professional activities which may on occasion cause a
conflict of interest with its roles with respect to the Company.
The Depositary will take reasonable care to ensure that the
performance of its duties will not be impaired by any such
involvement and that any conflicts which may arise will be resolved
fairly and any transactions between the Depositary and its
affiliates and the Company shall be carried out as if effected on
normal commercial terms negotiated at arm's length and in the best
interests of Shareholders.
Basis of Depositary Review
The Depositary conducts such reviews as it, in its reasonable
discretion, considers necessary in order to comply with its
obligations and to ensure that, in all material respects, the
Company has been managed (i) in accordance with the limitations
imposed on its investment and borrowing powers by the provisions of
its constitutional documentation and the appropriate regulations
and (ii) otherwise in accordance with the constitutional
documentation and the appropriate regulations. Such reviews vary
based on the type of Fund, the assets in which a Fund invests and
the processes used, or experts required, in order to value such
assets.
Review
In our view, the Company has been managed during the period, in
all material respects:
(i)
in accordance with the limitations imposed on the investment and
borrowing powers of the Company by the constitutional document; and
by the AIFMD legislation; and
(ii)
otherwise in accordance with the provisions of the constitutional
document; and the AIFMD legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
9 September 2015
Independent
Auditor’s Report
To the
Shareholders of Ruffer Investment Company Limited
Opinion on financial statements of
Ruffer Investment Company Limited
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s
affairs as at 30 June 2015 and of its
profit for the year then ended;
• have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
• have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
The financial statements comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Statement of Cash
Flows, the Statement of Changes in Equity and the related notes 1
to 21. The financial reporting framework that has been applied in
their preparation is applicable law and IFRSs as adopted by the
European Union.
Going concern
We have reviewed the Directors’ statement that the Company is a
going concern. We confirm that:
• we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements
is appropriate; and
• we have not identified any material uncertainties that may
cast significant doubt on the Company’s ability to continue as a
going concern.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Company’s
ability to continue as a going concern.
Our assessment of risks of material
misstatement
The assessed risks of material misstatement described below are
those that had the greatest effect on our audit strategy, the
allocation of resources in the audit and directing the efforts of
the engagement team:
Risk |
How the scope of our
audit responded to the risk |
Findings |
Valuation and ownership of investments
The investments balance of £314 million on the Company’s statement
of financial position as at 30 June 2015 is the most quantitatively
significant balance and is an area of focus because it is the main
driver of the Company’s performance and net asset value. Errors or
deliberate manipulation of valuations or failure to maintain proper
legal title of the assets held by the Company could result in
material misstatement of the financial statements.
Further details of the accounting policy and how investments are
valued is in note 2 and details of the investments are disclosed in
note 10. |
We assessed the design and implementation of controls around
valuation and ownership of investments.
To test the valuation of investments as at 30 June 2015, we
performed the following:
To test the ownership of investments balance held within the
portfolio as at 30 June 2015, we performed the following: |
We did not identify any differences that exceed the clearly trivial
threshold between the prices used by the Company and the
independent pricing sources used in our testing.
We concur with management’s assessment of the investments
classification on the fair value hierarchy.
All investments were appropriately agreed to custodian
confirmations and investments transactions we tested were recorded
in the correct period. |
Revenue recognition
The significant portion of the Company’s income emanates from fair
value adjustments (£20 million) on investments held at fair value
due to the materiality of the investments balance (see Note 6 and
Note 10). Inaccurate calculation of the fair value gain/(loss)
adjustment would have a material impact on income recognition and
thus the Company’s performance. |
We assessed the design and implementation of controls around income
recognition. The gains/losses on investments held at fair value
comprise realised and unrealised gains/losses: |
No misstatements were identified by our testing which required
reporting to those charged with governance.
|
The description of risks above should be read in conjunction
with the significant issues considered by the Audit Committee.
Our audit procedures relating to these matters were designed in
the context of our audit of the financial statements as a whole,
and not to express an opinion on individual accounts or
disclosures. Our opinion on the financial statements is not
modified with respect to any of the risks described above, and we
do not express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
We determined materiality for the Company to be £6,744,000 which
is approximately 2% of net asset value. We have derived our
materiality based on the net asset value of the Company as we
consider it to be the most important balance on which the
shareholders would judge the performance of the Company. In 2014
the previous auditors set materiality at £3,150,000 on the basis of
1% of total assets.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £135,000 (2014:
£150,000 was used by the previous auditors), as well as differences
below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our
audit
Our audit was scoped by obtaining an understanding of the
Company and its environment, including internal control, and
assessing the risks of material misstatement. Audit work to respond
to the risks of material misstatement was performed directly by the
audit engagement team.
The Company is administered by a third party Guernsey regulated
service provider and as part of our audit we assessed the adequacy
of the control environment at the service provider for the purposes
of our audit.
Matters on which we are required to
report by exception
Adequacy of explanations received and
accounting records
Under the Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
• we have not received all the information and explanations we
require for our audit; or
• proper accounting records have not been kept; or
• the financial statements are not in agreement with the
accounting records.
We have nothing to report in respect of these matters.
Corporate Governance Statement
Under the Listing Rules we are also required to review the part
of the Corporate Governance Statement relating to the company’s
compliance with ten provisions of the UK Corporate Governance Code.
We have nothing to report arising from our review.
Our duty to read other information in
the Annual Report
Under International Standards on Auditing (UK and Ireland), we are required to report to you if,
in our opinion, information in the annual report is:
• materially inconsistent with the information in the audited
financial statements; or
• apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or
• otherwise misleading.
Respective responsibilities of
directors and auditor
As explained more fully in the Directors’ Responsibilities
Statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s Ethical Standards for Auditors.
We also comply with International Standard on Quality Control 1 (UK
and Ireland). Our audit
methodology and tools aim to ensure that our quality control
procedures are effective, understood and applied. Our quality
controls and systems include our dedicated professional standards
review team and independent partner reviews.
This report is made solely to the company’s members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the company’s members those matters we are required to state to
them in an auditor’s report and/or those further matters we have
expressly agreed to report to them on in our engagement letter 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 and the company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Scope of the audit of the financial
statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company’s circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
John Clacy FCA (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
St Peter Port, Guernsey
9 September 2015
Statement of
Financial Position
|
|
|
30.06.15 |
|
30.06.14 |
|
Notes |
|
£ |
|
£ |
ASSETS |
|
|
|
|
|
Cash and cash
equivalents |
|
|
16,441,960 |
|
15,193,265 |
Derivative financial
assets |
18,19 |
|
6,770,940 |
|
850,868 |
Receivables |
11 |
|
472,757 |
|
3,547,454 |
Investment assets at
fair value through profit or loss |
10 |
|
314,296,168 |
|
300,291,140 |
|
|
|
|
|
|
Total
assets |
|
|
337,981,825 |
|
319,882,727 |
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Capital and
reserves attributable to the |
|
|
|
|
|
Company's
shareholders |
|
|
|
|
|
Management share
capital |
13 |
|
2 |
|
2 |
Net assets
attributable to holders of redeemable |
|
|
|
|
|
participating
preference shares |
|
|
337,222,401 |
|
318,040,568 |
|
|
|
|
|
|
Total
equity |
|
|
337,222,403 |
|
318,040,570 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Payables |
12 |
|
714,545 |
|
1,842,157 |
Derivative financial
liability |
18,19 |
|
44,877 |
|
- |
|
|
|
|
|
|
Total
liabilities |
|
|
759,422 |
|
1,842,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and
liabilities |
|
|
337,981,825 |
|
319,882,727 |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
attributable to holders of redeemable |
|
|
|
|
|
participating
preference shares (per share) |
13,14 |
|
2.184 |
|
2.065 |
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements were approved on 9 September 2015 and signed on behalf of the
Board of Directors by:
Ashe Windham
Christopher
Spencer
Chairman
Director
Statement of
Comprehensive Income
|
|
|
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
|
|
|
30.06.15 |
|
30.06. 14 |
|
Notes |
|
Revenue |
|
Capital |
|
Total |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
Fixed interest
income |
|
|
953,913 |
|
- |
|
953,913 |
|
938,916 |
Dividend income |
2 |
|
3,668,247 |
|
- |
|
3,668,247 |
|
5,585,969 |
Net changes in fair
value on financial assets |
|
|
|
|
|
|
|
|
|
at fair value through
profit or loss |
6 |
|
- |
|
20,030,558 |
|
20,030,558 |
|
(13,973,194) |
Other gains |
7 |
|
- |
|
3,406,833 |
|
3,406,833 |
|
5,692,211 |
|
|
|
|
|
|
|
|
|
|
Total
income |
|
|
4,622,160 |
|
23,437,391 |
|
28,059,551 |
|
(1,756,098) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees |
|
|
- |
|
(3,109,109) |
|
(3,109,109) |
|
(3,069,320) |
Expenses |
|
|
(799,433) |
|
(212,245) |
|
(1,011,678) |
|
(959,078) |
|
|
|
|
|
|
|
|
|
|
Total
expenses |
|
|
(799,433) |
|
(3,321,354) |
|
(4,120,787) |
|
(4,028,398) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for
the year before tax |
|
|
3,822,727 |
|
20,116,037 |
|
23,938,764 |
|
(5,784,496) |
Withholding tax |
|
|
(401,806) |
|
- |
|
(401,806) |
|
(669,054) |
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for
the year after tax |
|
|
3,420,921 |
|
20,116,037 |
|
23,536,958 |
|
(6,453,550) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income/(expense) |
|
|
|
|
|
|
|
|
|
for the
year |
|
|
3,420,921 |
|
20,116,037 |
|
23,536,958 |
|
(6,453,550) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings/(loss) per share * |
|
|
2.22p |
|
13.06p |
|
15.28p |
|
(4.23p) |
*Basic and diluted earnings/(loss) 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 year was 154,065,196 (30.06.14:
152,720,745).
Statement of Changes in
Equity
|
|
|
|
|
Total |
|
|
|
Share |
Other |
01.07.14 to |
|
|
|
capital |
reserves |
30.06.15 |
|
|
|
£ |
£ |
£ |
Balance at 30 June
2014 |
|
|
124,887,120 |
193,153,448 |
318,040,568 |
Total
comprehensive income for the year |
|
- |
23,536,958 |
23,536,958 |
Transactions with
Shareholders: |
|
|
|
|
|
Share capital
issued |
|
|
891,950 |
- |
891,950 |
Share issue costs |
|
|
(8,919) |
- |
(8,919) |
Distribution for the
year |
|
|
- |
(5,238,156) |
(5,238,156) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June
2015 |
|
|
125,770,151 |
211,452,250 |
337,222,401 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
attributable to holders of redeemable participating preference
shares |
|
at the end of the
year |
|
|
|
|
337,222,401 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Share |
Other |
01.07.13 to |
|
|
|
capital |
reserves |
30.06.14 |
|
|
|
£ |
£ |
£ |
Balance at 30 June
2013 |
|
|
114,304,639 |
204,809,454 |
319,114,093 |
Total
comprehensive expense for the year |
|
- |
(6,453,550) |
(6,453,550) |
Transactions with Shareholders: |
|
|
|
|
Share capital
issued |
|
|
10,689,375 |
- |
10,689,375 |
Share issue
costs |
|
|
(106,894) |
- |
(106,894) |
Distribution for
the year |
|
|
- |
(5,202,456) |
(5,202,456) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June
2014 |
|
|
124,887,120 |
193,153,448 |
318,040,568 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets attributable to holders of redeemable participating
preference shares |
|
at the end of the
year |
|
|
|
|
318,040,568 |
|
|
|
|
|
|
Under The Companies (Guernsey) Law, 2008, the Company can
distribute dividends from capital and revenue reserves, subject to
a net asset and solvency test.
Statement of Cash
Flows
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
£ |
|
£ |
Cash flows from
operating activities |
|
|
|
|
|
|
Purchase of financial
assets at fair value through profit or loss |
|
|
|
(176,257,940) |
|
(113,427,911) |
Proceeds from sale of
financial assets at fair value through profit or loss (including
realised gains) |
|
|
|
184,125,575 |
|
94,899,199 |
Other receivables |
|
|
|
(5,179) |
|
(1,794) |
Transaction costs paid
to brokers |
|
|
|
(212,245) |
|
(220,639) |
Fixed interest income
received |
|
|
|
1,011,568 |
|
879,208 |
Dividends
received |
|
|
|
3,269,448 |
|
5,395,419 |
Operating expenses
paid |
|
|
|
(3,859,045) |
|
(3,511,886) |
Foreign exchange
(gains)/losses |
|
|
|
(2,468,362) |
|
4,384,532 |
|
|
|
|
|
|
|
Cash
generated/(used in) from operating activities |
|
|
|
5,603,820 |
|
(11,603,872) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
Dividends paid |
|
|
|
(5,238,156) |
|
(5,202,456) |
Proceeds
from issue of redeemable participating preference shares |
|
891,950 |
|
11,014,725 |
Share issue costs |
|
|
|
(8,919) |
|
(110,147) |
|
|
|
|
|
|
|
Net cash (used
in)/generated from financing activities |
|
|
|
(4,355,125) |
|
5,702,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents |
|
|
|
1,248,695 |
|
(5,901,750) |
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of the year |
|
|
|
15,193,265 |
|
21,095,015 |
|
|
|
|
|
|
|
Cash and cash
equivalents at end of the year |
|
|
|
16,441,960 |
|
15,193,265 |
|
|
|
|
|
|
|
The notes form an integral part of these accounts.
Notes to the
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
LSE.
2. Significant accounting policies
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
LSE.
2. Significant accounting policies
a) Statement
of Compliance
The Financial Statements of the Company for the year ended
30 June 2015 have been prepared in
accordance with International Financial Reporting Standards
("IFRS") issued by the European Union and the Listing Rules of the
London Stock Exchange. They give a true and fair view and are in
compliance with the Companies (Guernsey) Law, 2008.
b) Basis of
preparation
The Financial Statements are prepared in pounds sterling (£),
which is the Company’s functional and presentation currency. The
financial statements have been prepared on a going concern basis
under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities at fair
value through profit or loss.
This annual report and financial statements, covering the year
from 1 July 2014 to 30 June 2015, has been audited.
c) Standards,
amendments and interpretations that are not yet effective
The following standards and interpretations, which have not been
applied in these financial statements, were in issue at the
reporting date but not yet effective:
IFRS 9 – Financial instruments: Classification and measurement
(effective date – 1 January 2018)
IFRS 15 – Revenue from Contracts with Customers (effective date
– 1 January 2018)
The Board anticipate that the adoption of these standards and
interpretations in a future period will not have a material impact
on the financial statements of the Company, other than IFRS 9. The
Company is currently evaluating the potential effect of this
standard.
d) Financial
instruments
i)
Classification
Financial assets are classified into the following categories:
financial assets at fair value through profit or loss and loans and
receivables.
The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial
recognition.
Financial liabilities are classified as either financial
liabilities at fair value through profit or loss or other financial
liabilities.
ii) Recognition
Investment assets at fair value
through profit or loss (“investments”)
Financial assets and derivatives are recognised in the Company’s
Statement of Financial Position when the Company becomes a party to
the contractual provisions of the instrument.
Purchases and sales of investments are recognised on the trade
date (the date on which the Company commits to purchase or sell the
investment). Investments purchased are initially recorded at fair
value, being the consideration given and excluding transaction or
other dealing costs associated with the investment.
Subsequent to initial recognition, investments are measured at
fair value. Gains and losses arising from changes in the fair value
of investments and gains and losses on investments that are sold
are recognised through profit or loss in the Statement of
Comprehensive Income within net changes in fair value of financial
assets at fair value through profit or loss.
Derivatives
Forward foreign currency contracts are treated as derivative
contracts and as such are recognised at fair value on the date on
which they are entered into and subsequently re-measured at their
fair value. Fair value is determined by rates in active currency
markets. All derivatives are carried as assets when fair value is
positive and as liabilities when fair value is negative. The gain
or loss on re-measurement to fair value is recognised immediately
through profit or loss in the Statement of Comprehensive Income
within other gains in the period in which they arise.
Offsetting of financial
instruments
Financial assets and financial liabilities are offset and the
net amount reported in the Statement of Financial Position if, and
only if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net
basis, or to realise assets and settle the liabilities
simultaneously.
iii) Measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Investments traded in
active markets are valued at the latest available bid prices ruling
at midnight on the reporting date. The Directors are of the opinion
that the bid-market prices are the best estimate on fair value.
Gains and losses arising from changes in the fair value of
financial assets/(liabilities) are shown as net gains or losses on
financial assets through profit or loss in note 10 and recognised
in the Statement of Comprehensive Income in the period in which
they arise.
Derecognition of financial
instruments
A financial asset is derecognised when: (a) the rights to
receive cash flows from the asset have expired, (b) the Company
retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to
a third party under a “pass through arrangement”; or (c) the
Company has transferred substantially all the risks and rewards of
the asset, or has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled or expired.
Realised and unrealised gains and
losses
Realised gains and losses arising on disposal of investments are
calculated by reference to the proceeds received on disposal and
the average cost attributable to those investments, and are
recognised in the Statement of Comprehensive Income. Unrealised
gains and losses on investments are recognised in the Statement of
Comprehensive Income.
Fair value
Investments consist of listed or quoted equities or equity
related securities, options and bonds which are issued by corporate
issuers, supra-nationals or government organisations and investment
in funds.
Investments traded in active markets are valued at the latest
available bid prices ruling at midnight on the reporting date.
Shares in investment funds are not listed on an actively traded
exchange and these are valued at the latest estimate of NAV from
the administrator of the respective investment funds as the most
recent price is the best estimate of the amount for which holdings
could have been disposed of at the reporting date.
e) Income
Dividend income from equity investments is recognised through
profit or loss in the Statement of Comprehensive Income when the
relevant investment is quoted ex-dividend. Investment income is
included gross of withholding tax. Interest income is recognised
through profit or loss in the Statement of Comprehensive Income for
all debt instruments using the effective interest rate method.
f) Expenses
Expenses are accounted for on an accruals basis. Expenses
incurred on the acquisition of financial assets at fair value
through profit or loss and management fees are charged to the
Statement of Comprehensive Income in capital. All other expenses
are recognised through profit or loss in the Statement of
Comprehensive Income in revenue.
g) Cash and cash equivalents
Cash comprises cash in hand and deemed deposits. Cash
equivalents are short-term, highly liquid investments with original
maturities of three months or less and bank overdrafts.
h) Translation of foreign currency
Functional and presentation
currency
The financial statements of the Company are presented in the
currency of the primary economic environment in which the Company
operates (its ‘functional currency’). The Directors have considered
the currency in which the original capital was raised,
distributions will be made and ultimately the currency in which
capital would be returned in a liquidation. On balance, the
Directors believe that pounds sterling best represents the
functional currency of the Company. For the purpose of the
financial statements, the results and financial position of the
Company are expressed in pounds sterling, which is the presentation
currency of the Company.
Foreign currency transactions are translated into the functional
currency using the exchange rate prevailing at the transaction
date. Foreign exchange gains and losses resulting from the
settlement of such transactions and those from the translation at
period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement
of Comprehensive Income.
Translation differences on non-monetary items such as financial
assets held at fair value through profit or loss are reported as
part of net changes in fair value on financial assets through
profit or loss in the Statement of Comprehensive Income.
i) Share issue costs
Share issue costs are fully written off against the share
capital account in the period of the share issue.
j) Redeemable participating preference
shares
As the Company’s redeemable participating preference shares are
redeemable at the sole option of the Directors they are required to
be classified as equity instruments.
k) Receivables
Receivables are amounts due in the ordinary course of business.
If collection is expected in one year or less, they are classified
as current assets. If not, they are presented as non-current
assets. Receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
l) Payables
Payables are obligations to pay for services that have been
acquired in the ordinary course of business. Payables are
classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities.
Payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
The following standards and interpretations, which have not been
applied in these financial statements, were in issue at the
reporting date but not yet effective:
IFRS 9 – Financial instruments: Classification and measurement
(effective date – 1 January 2018)
IFRS 15 – Revenue from Contracts with Customers (effective date
– 1 January 2018)
The Board anticipate that the adoption of these standards and
interpretations in a future period will not have a material impact
on the financial statements of the Company, other than IFRS 9. The
Company is currently evaluating the potential effect of this
standard.
d) Financial
instruments
- Classification
Financial assets are classified into the following categories:
financial assets at fair value through profit or loss and loans and
receivables.
The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial
recognition.
Financial liabilities are classified as either financial
liabilities at fair value through profit or loss or other financial
liabilities.
ii) Recognition
Investment assets at fair value
through profit or loss (“investments”)
Financial assets and derivatives are recognised in the Company’s
Statement of Financial Position when the Company becomes a party to
the contractual provisions of the instrument.
Purchases and sales of investments are recognised on the trade
date (the date on which the Company commits to purchase or sell the
investment). Investments purchased are initially recorded at fair
value, being the consideration given and excluding transaction or
other dealing costs associated with the investment.
Subsequent to initial recognition, investments are measured at
fair value. Gains and losses arising from changes in the fair value
of investments and gains and losses on investments that are sold
are recognised through profit or loss in the Statement of
Comprehensive Income within net changes in fair value of financial
assets at fair value through profit or loss.
Derivatives
Forward foreign currency contracts are treated as derivative
contracts and as such are recognised at fair value on the date on
which they are entered into and subsequently re-measured at their
fair value. Fair value is determined by rates in active currency
markets. All derivatives are carried as assets when fair value is
positive and as liabilities when fair value is negative. The gain
or loss on re-measurement to fair value is recognised immediately
through profit or loss in the Statement of Comprehensive Income
within other gains in the period in which they arise.
Offsetting of financial
instruments
Financial assets and financial liabilities are offset and the
net amount reported in the Statement of Financial Position if, and
only if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net
basis, or to realise assets and settle the liabilities
simultaneously.
iii) Measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Investments traded in
active markets are valued at the latest available bid prices ruling
at midnight on the reporting date. The Directors are of the opinion
that the bid-market prices are the best estimate on fair value.
Gains and losses arising from changes in the fair value of
financial assets/(liabilities) are shown as net gains or losses on
financial assets through profit or loss in note 10 and recognised
in the Statement of Comprehensive Income in the period in which
they arise.
Derecognition of financial
instruments
A financial asset is derecognised when: (a) the rights to
receive cash flows from the asset have expired, (b) the Company
retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to
a third party under a “pass through arrangement”; or (c) the
Company has transferred substantially all the risks and rewards of
the asset, or has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled or expired.
Realised and unrealised gains and
losses
Realised gains and losses arising on disposal of investments are
calculated by reference to the proceeds received on disposal and
the average cost attributable to those investments, and are
recognised in the Statement of Comprehensive Income. Unrealised
gains and losses on investments are recognised in the Statement of
Comprehensive Income.
Fair value
Investments consist of listed or quoted equities or equity
related securities, options and bonds which are issued by corporate
issuers, supra-nationals or government organisations and investment
in funds.
Investments traded in active markets are valued at the latest
available bid prices ruling at midnight on the reporting date.
Shares in investment funds are not listed on an actively traded
exchange and these are valued at the latest estimate of NAV from
the administrator of the respective investment funds as the most
recent price is the best estimate of the amount for which holdings
could have been disposed of at the reporting date.
e) Income
Dividend income from equity investments is recognised through
profit or loss in the Statement of Comprehensive Income when the
relevant investment is quoted ex-dividend. Investment income is
included gross of withholding tax. Interest income is recognised
through profit or loss in the Statement of Comprehensive Income for
all debt instruments using the effective interest rate method.
f) Expenses
Expenses are accounted for on an accruals basis. Expenses
incurred on the acquisition of financial assets at fair value
through profit or loss and management fees are charged to the
Statement of Comprehensive Income in capital. All other expenses
are recognised through profit or loss in the Statement of
Comprehensive Income in revenue.
g) Cash and cash equivalents
Cash comprises cash in hand and deemed deposits. Cash
equivalents are short-term, highly liquid investments with original
maturities of three months or less and bank overdrafts.
h) Translation of foreign currency
Functional and presentation
currency
The financial statements of the Company are presented in the
currency of the primary economic environment in which the Company
operates (its ‘functional currency’). The Directors have considered
the currency in which the original capital was raised,
distributions will be made and ultimately the currency in which
capital would be returned in a liquidation. On balance, the
Directors believe that pounds sterling best represents the
functional currency of the Company. For the purpose of the
financial statements, the results and financial position of the
Company are expressed in pounds sterling, which is the presentation
currency of the Company.
Foreign currency transactions are translated into the functional
currency using the exchange rate prevailing at the transaction
date. Foreign exchange gains and losses resulting from the
settlement of such transactions and those from the translation at
period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement
of Comprehensive Income.
Translation differences on non-monetary items such as financial
assets held at fair value through profit or loss are reported as
part of net changes in fair value on financial assets through
profit or loss in the Statement of Comprehensive Income.
i) Share issue costs
Share issue costs are fully written off against the share
capital account in the period of the share issue.
j) Redeemable participating preference
shares
As the Company’s redeemable participating preference shares are
redeemable at the sole option of the Directors they are required to
be classified as equity instruments.
k) Receivables
Receivables are amounts due in the ordinary course of business.
If collection is expected in one year or less, they are classified
as current assets. If not, they are presented as non-current
assets. Receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
l) Payables
Payables are obligations to pay for services that have been
acquired in the ordinary course of business. Payables are
classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities.
Payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
3. Significant accounting judgements,
estimates and assumptions
The preparation of the Financial Statements in conformity with
IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expense and
the accompanying disclosures. Uncertainty about these assumptions
and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of revision and future periods
if the revision affects both current and future periods.
Judgements
In the process of applying the Company’s accounting policies,
management has made the following judgement, which has the most
significant effect on the amounts recognised in the Financial
Statements:
Functional currency
As disclosed in note 2(h), the Company’s functional currency is
Sterling. Sterling is the currency in which the original capital
was raised, distributions are made and ultimately the currency in
which capital would be returned in a liquidation.
4. Taxation
The Company has been granted Exempt Status under the terms of
The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 to income
tax in Guernsey. Its liability is an annual fee of £600 (which has
increased to £1,200 with effect from 1
January 2015).
The amounts disclosed as taxation in the Statement of
Comprehensive Income relates solely to withholding tax suffered at
source on income. Foreign capital gains tax charges are deducted
from realised investment gains.
5. Dividends to shareholders
Dividends, if any, are declared semi-annually, usually in
September and March each year. The Company paid and declared the
following dividends during the year:
|
|
|
|
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
2014
Second interim dividend of 1.7p (2014: 1.7p) |
|
|
|
2,618,228 |
|
2,584,228 |
2015 First
interim dividend of 1.7p (2014: 1.7p) |
|
|
|
2,619,928 |
|
2,618,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,238,156 |
|
5,202,456 |
|
|
|
|
|
|
|
|
|
|
|
6. Net changes on financial assets at
fair value through profit or loss
|
|
|
|
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Net
changes on financial assets at fair value through profit or
loss |
|
|
|
|
during the year
comprise: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains
realised on investments sold during the year |
|
|
|
25,992,478 |
|
14,411,342 |
Losses
realised on investments sold during the year |
|
(11,885,266) |
|
(10,660,518) |
Movement
in unrealised gains arising from changes in fair value |
|
13,234,311 |
|
4,507,503 |
Movement
in unrealised losses arising from changes in fair value |
|
(7,310,965) |
|
(22,231,521) |
|
|
|
|
|
|
|
|
|
|
|
Net
changes in fair value on financial assets at fair value |
|
|
|
|
through profit or
loss |
|
|
|
|
|
|
|
20,030,558 |
|
(13,973,194) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Other gains
|
|
|
|
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Unrealised
gains on forward foreign currency contracts |
|
5,875,195 |
|
1,307,679 |
Realised
(losses)/gains on forward foreign currency contracts |
|
(836,339) |
|
5,310,222 |
Other
realised and unrealised foreign exchange losses |
|
(1,632,023) |
|
(925,690) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,406,833 |
|
5,692,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. Management fees
Due to the recent changes introduced by virtue of the
Alternative Investment Fund Managers Directive (“AIFMD”), the
Company terminated the Investment Management Agreement with Ruffer
LLP and appointed Ruffer AIFM Limited as the new Investment Manager
with effect from 22 July 2014. For
additional information refer to the General Information.
The management fees were charged to the capital reserves of the
Company.
The management fees for the year, including outstanding balances
at end of the year, are detailed below.
|
|
|
|
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Management
fees for the year |
|
|
|
|
|
3,109,109 |
|
3,069,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable at end of the
year |
|
|
|
|
|
|
|
541,101 |
|
504,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The basis for calculating the management fees is set out in the
General Information.
9. Expenses
|
|
|
|
|
|
|
|
01.07.14 to |
|
01.07.13 to |
|
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
|
£ |
|
£ |
|
Administration
fee* |
|
|
|
|
|
|
|
376,447 |
|
374,088 |
|
Transaction costs |
|
|
|
|
|
|
|
212,245 |
|
220,639 |
|
Directors' fees |
|
|
|
|
|
|
|
160,000 |
|
160,000 |
|
General expenses |
|
|
|
|
|
|
|
169,492 |
|
138,700 |
|
Custodian
and Depositary fees* |
|
|
|
|
|
60,704 |
|
36,254 |
|
Audit fee |
|
|
|
|
|
|
|
25,000 |
|
21,884 |
|
Auditors'
remuneration for interim review** |
|
|
|
7,790 |
|
7,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,011,678 |
|
959,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The basis for calculating the Administration fees as well as
the Custodian and Depositary fees are set out in the General
Information.
** Fees of £7,790 (30.06.14: £7,513) were paid to the Moore
Stephens, in respect of the interim review.
All expenses were charged to revenue apart from transaction
costs of £212,245 (30.06.14: £220,639) which were charged to the
capital reserves of the Company.
10. Investment assets at fair value
through profit or loss
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Cost of
investments held at start of the year |
|
|
|
280,355,440 |
|
260,996,330 |
Acquisitions at cost during the year |
|
|
|
175,097,659 |
|
111,690,045 |
Disposals
at cost during the year |
|
|
|
|
|
(167,015,977) |
|
(92,330,935) |
Cost of
investments held at end of the year |
|
|
|
288,437,122 |
|
280,355,440 |
Fair value
movement |
|
|
|
|
|
|
|
25,859,046 |
|
19,935,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments designated at fair value through profit or loss |
|
314,296,168 |
|
300,291,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11. Receivables
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Amounts
falling due within one year: |
|
|
|
|
|
|
Sales of
investments awaiting settlement |
|
|
|
- |
|
3,002,386 |
Investment
income receivable |
|
|
|
|
|
250,943 |
|
270,778 |
Fixed
interest income receivable |
|
|
|
|
|
212,138 |
|
269,793 |
Due on
issue of redeemable participating preference shares |
|
- |
|
- |
Other receivables |
|
|
|
|
|
|
|
9,676 |
|
4,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
472,757 |
|
3,547,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Directors consider that the carrying amount of receivables
approximate to their fair value.
12. Payables
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Amounts
falling due within one year: |
|
|
|
|
|
|
Purchases
of investments awaiting settlement |
|
|
|
- |
|
1,160,280 |
Management fees
payable |
|
|
|
|
|
|
|
541,101 |
|
504,487 |
Withholding taxes
payable |
|
|
|
|
|
|
|
32,831 |
|
49,659 |
Directors' fees
payable |
|
|
|
|
|
|
|
40,000 |
|
40,000 |
Other payables |
|
|
|
|
|
|
|
100,613 |
|
87,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
714,545 |
|
1,842,157 |
|
|
|
|
|
|
|
|
|
|
|
The Directors consider that the carrying amount of payables
approximate to their fair value.
13. Share capital account
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
Authorised Share
Capital |
|
|
|
|
|
|
|
£ |
|
£ |
100
Management Shares of £1.00 each |
|
|
|
100 |
|
100 |
200,000,000 Unclassified Shares of 0.01p each |
|
|
|
20,000 |
|
20,000 |
75,000,000
C Shares of 0.1p each |
|
|
|
|
|
75,000 |
|
75,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,100 |
|
95,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares |
|
Share Capital |
|
|
|
|
30.06.15 |
|
30.06.14 |
|
30.06.15 |
|
30.06.14 |
Issued Share
Capital |
|
|
|
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
Management
Shares |
|
|
|
|
|
|
|
|
|
|
Management
Shares of £1.00 each |
|
2 |
|
2 |
|
2 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
Equity
Shares |
|
|
|
|
|
|
|
|
|
|
Redeemable
Participating Preference |
|
|
|
|
|
|
Shares of 0.01p
each: |
|
|
|
|
|
|
|
|
|
|
Balance at start of
year |
|
|
|
154,013,416 |
|
149,188,416 |
|
124,887,120 |
|
114,304,639 |
Issued during the
year |
|
|
|
400,000 |
|
4,825,000 |
|
891,950 |
|
10,689,375 |
Share issue costs |
|
|
|
- |
|
- |
|
(8,919) |
|
(106,894) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at end of
year |
|
|
|
154,413,416 |
|
154,013,416 |
|
125,770,151 |
|
124,887,120 |
|
|
|
|
|
|
|
|
|
|
|
Management shares
The Management shares, of which there are 2 in issue, were
created to comply with the Company Memorandum and Amended and
Restated Articles of Association. The management shares carry one
vote each on a poll, do not carry any right to dividends and, in a
winding-up, rank only for a return of the amount of the paid-up
capital on such shares after return of capital on all other shares
in the Company. The management shares are not redeemable.
Unclassified shares
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 carry a preferential right to a return of capital in
priority to the management shares but have no pre-emptive right and
are entitled to one vote at all meetings of the relevant class of
shareholders.
C Shares
There were no C Shares in issue at year end (30.06.14: Nil).
Blocklisting and additional shares
issued
At the start of the year, the Company had the ability to issue
14,081,342 redeemable participating shares under a blocklisting
facility. During the year the Company made no (30.06.14: 3,464,820)
further application to the Financial Conduct Authority and to the
London Stock Exchange for redeemable participating preference
shares of 0.01 pence each to be
admitted to the Official List under a general corporate purposes
blocklisting facility. Under the blocklisting facility, 400,000 new
redeemable participating preference shares of 0.01 pence each were allotted and issued during
the year for a total consideration of £891,950. These new
redeemable participating preference shares rank pari passu
with the existing shares in issue.
As at 30 June 2015, the Company
had the ability to issue a further 13,681,342 (30.06.14 14,081,342) redeemable participating
preference shares under the blocklisting facility.
Redeemable participating preference
shares in issue
As at 30 June 2015 the Company had
154,413,416 redeemable participating preference shares of
0.01 pence each and 2 Management
shares of £1.00 each in issue. Therefore, the total voting rights
in the Company at 30 June 2015 were
154,413,418.
Purchase of Own Shares by the
Company
The Company operates a Share Buyback Facility whereby it may
purchase, subject to various terms as set out in its Articles and
in accordance with the Companies (Guernsey) Law, 2008, up to 14.99
per cent. of the Company’s shares in issue following the admission
of shares trading on the LSE’s market for listed securities.
During the year the Company did not purchase any of its own
shares (2014: Nil). For additional information refer to note
20.
14. NAV reconciliation
The Company announces its NAV, based on mid-market value, to the
LSE after each weekly and month end valuation point. The following
is a reconciliation of the NAV per share attributable to redeemable
participating preference shareholders as presented in these
financial statements, using International Financial Reporting
Standards to the NAV per share reported to the LSE:
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
£ |
|
£ |
NAV per
share for valuation purposes |
|
|
|
2.188 |
|
2.061 |
IAS 39 valuations (MID
to BID) |
|
|
|
|
|
(0.004) |
|
(0.002) |
Adjustment to
valuation* |
|
|
|
|
|
- |
|
0.006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
attributable to holders of redeemable |
|
|
|
|
|
|
participating preference shares (per share) |
|
|
|
2.184 |
|
2.065 |
|
|
|
|
|
|
|
|
|
*This was an adjustment to the valuation which had been
understated at 30 June 2014 as a
result of an administrative error.
15. Contingent liabilities
There were no contingent liabilities as at 30 June 2015 (30.06.14 no contingent liabilities).
16. 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.
Investment Management Agreement
Due to the recent changes introduced by virtue of the
Alternative Investment Fund Managers Directive (“AIFMD”), the
Company terminated the Investment Management Agreement with Ruffer
LLP and appointed Ruffer AIFM Limited as the new Investment Manager
with effect from 22 July 2014. For
further details refer to the General Information.
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 Association.
The market value of CF Ruffer Japanese Fund, CF Ruffer Gold Fund
and Ruffer Illiquid Strategies Fund of Funds 2009 Limited 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. Management fees for the year and
payable at end of the year are disclosed in Note 8.
Shares held in the managing member of
Ruffer LLP
As at 30 June 2015, an immediate
family member of the Chairman Ashe Windham owned 100 (30.06.14:
100) shares in the Managing Member of the Ruffer LLP. This amounts
to less than 5% (30.06.14: less than 5%) of the company’s issued
share capital.
Directors
The Company has six non-executive directors, all of whom except
Wayne Bulpitt and Peter Luthy are independent of the Investment
Manager.
Under the Corporate Governance Code Wayne Bulpitt and
Peter Luthy are not considered to be
independent by reason of being directors of Ruffer Illiquid
Strategies Fund of Funds 2009 Limited, Ruffer Illiquid Strategies
Fund of Funds 2011 Limited, Ruffer Illiquid Multi Strategies 2015
Fund Limited and Ruffer Illiquid Multi Strategies Fund Limited, all
of which are Guernsey registered investment companies managed by
the Company’s Investment Manager.
Remuneration
Directors remuneration is set out in the Directors’ Remuneration
Report.
Shares held by related parties
As at 30 June 2015, Directors of
the Company held the following numbers of shares beneficially:
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
Directors |
|
|
|
|
|
Shares |
|
Shares |
Ashe Windham* |
|
|
|
|
|
85,000 |
|
80,000 |
Christopher
Spencer |
|
|
|
|
|
14,157 |
|
14,157 |
Jeannette
Etherden |
|
|
|
|
|
36,627 |
|
36,627 |
Peter Luthy |
|
|
|
|
|
120,000 |
|
120,000 |
Wayne Bulpitt |
|
|
|
|
|
20,000 |
|
20,000 |
* Ashe Windham holds 67,000 shares whilst his wife holds
18,000.
As at 30 June 2015, Hamish Baillie, Investment Director of the
Investment Manager owned 143,000 (30.06.14: 100,000) shares in the
Company. Hamish Baillie acquired a
further 43,000 shares on 18 August
2014.
As at 30 June 2015, Steve Russell, Investment Director of the
Investment Manager owned 6,450 (30.06.14: 6,450) shares in the
Company.
As at 30 June 2015, the Ruffer LLP
(the parent company of the Company’s Investment Manager) and other
entities within the Ruffer Group held 10,198,775 (30.06.14:
9,651,004) shares in the Company on behalf of its discretionary
clients.
Investments in related funds
As at 30 June 2015, the Company
held investments in seven (30.06.14: six) related investment funds
valued at £49,095,612 (30.06.14: £26,042,209). Refer to the
Portfolio Statement for details.
17. Operating segment reporting
The Board of Directors makes the strategic resource allocations
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 the Company’s entire portfolio and
considers the business to have a single operating segment. The
Board’s asset allocation decisions are based on a single,
integrated investment strategy, and the Company’s performance is
evaluated on an overall basis.
There were no changes in the reportable segments during the
year.
As required by IFRS 8, the total fair value of the financial
instruments held by the Company by each major geographical segment,
and the equivalent percentages of the total value of the Company,
are reported in the Portfolio Statement.
Revenue earned is reported separately on the face of the
Condensed 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, investing and financing activities.
18. Financial instruments
In accordance with its investment objectives and policies, the
Company holds financial instruments which at any one time may
comprise the following:
- securities held in accordance with the investment objectives
and policies;
- cash and short-term receivables and payables arising directly
from operations;
- derivative transactions including investment in forward foreign
currency contracts; and
- borrowing used to finance investment activity up to a maximum
of 30% of the NAV of the Company.
Terms, conditions and accounting
policies
The financial instruments held by the Company comprise
principally of 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.
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of its financial assets and liabilities are
disclosed in note 2. The following table analyses the carrying
amounts of the financial assets and liabilities by category as
defined in IAS 39.
The following are the categories of financial instruments held
by the Company at the reporting date:
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
Fair
Value |
|
Fair Value |
|
|
|
|
|
|
£ |
|
£ |
Financial
assets |
|
|
|
|
|
|
|
|
Listed securities |
|
|
|
|
|
291,449,609 |
|
280,066,780 |
UCITS funds |
|
|
|
|
|
22,846,559 |
|
20,224,360 |
Derivative financial
assets |
|
|
|
|
|
6,770,940 |
|
850,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
financial assets at fair value through profit and loss |
|
321,067,108 |
|
301,142,008 |
|
|
|
|
|
|
|
|
|
Other financial
assets* |
|
|
|
|
|
16,914,717 |
|
18,740,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Other financial assets include cash and cash equivalents and
receivables.
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
Fair
Value |
|
Fair Value |
|
|
|
|
|
|
£ |
|
£ |
Financial
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables |
|
|
|
|
|
714,545 |
|
1,842,157 |
Derivative financial
liabilities |
|
|
|
|
|
44,877 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
759,422 |
|
1,842,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19. Financial risk management and
associated risks
The Company is exposed to a variety of financial risks as a
result of its activities. These risks include market risk
(including price risk, foreign currency risk and interest rate
risk), credit risk and liquidity risk. These risks, which have
applied throughout the year and the Investment Manager’s policies
for managing them are summarised as follows:
Market risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices. The Company’s activities expose it primarily to the
market risks of changes in market prices, interest rates and
foreign currency exchange rates.
Market price risk
Market price risk arises mainly from the uncertainty about
future prices of the financial instruments held by the Company. It
represents the potential loss the Company may suffer through
holding market positions in the face of price movements.
The Company’s investment portfolio is exposed to market price
fluctuations which are monitored by the Investment Manager in
pursuance of the investment objectives and policies. Adherence to
investment guidelines and to investment and borrowing powers set
out in the Placing and Offer for Subscription document mitigates
the risk of excessive exposure to any particular type of security
or issuer.
Market price sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to equity, investment funds and bond price risks at the
reporting date. The 10% reasonably possible price movement for
equity related securities and investment funds and a 100 basis
point increase or a 25 basis point reduction for the interest rate
used by the Company is based on the Investment Manager’s best
estimates.
A 10% (30.06.14: 10%) increase in the market prices of equity
related investments as at 30 June
2015 would have increased the net assets attributable to
holders of redeemable participating preference shares by
£19,646,011 (30.06.14: £19,269,921) and an equal change in the
opposite direction would have decreased the net assets attributable
to holders of redeemable participating preference shares by an
equal opposite amount.
A sensitivity analysis based on the interest rates of bond
related investments as at 30 June
2015 has been considered under Interest rate risk.
Actual trading results may differ from the above sensitivity
analysis and these differences could be material.
Foreign currency risk
Foreign currency risk arises from fluctuations in the value of a
foreign currency. It represents the potential loss the Company may
suffer though holding foreign currency assets in the face of
foreign exchange movements.
As a portion of the Company’s investment portfolio is invested
in securities denominated in currencies other than Sterling (the
functional and presentation currency of the Company) the Statement
of Financial Position may be significantly affected by movements in
the exchange rates of such currencies against Sterling. The
Investment Manager has the power to manage exposure to currency
movements by using options, warrants and/or forward foreign
currency contracts and details of the holdings of such instruments
at the date of these financial statements is set out below and on
the following.
As at 30 June 2015, the Company
had seven (30.06.14: four) open forward foreign currency
contracts.
Forward contracts
|
|
|
|
|
|
Notional amount |
|
30.06.15 |
|
|
|
|
|
|
of
contracts |
|
Fair
value |
Expiration |
|
Underlying |
|
|
|
outstanding |
|
assets/ |
|
|
|
|
|
|
|
|
(liabilities) |
|
|
|
|
|
|
|
|
£ |
17 July 2015 |
|
Foreign
currency (Purchase of USD) |
US$106,091,000 |
|
4,616,671 |
17 July 2015 |
|
Foreign
currency (Purchase of USD) |
US$14,033,000 |
|
121,227 |
17 July 2015 |
|
Foreign
currency (Purchase of JPY) |
¥2,810,016,000 |
|
1,360,983 |
17 July 2015 |
|
Foreign
currency (Purchase of JPY) |
¥3,725,600,000 |
|
438,199 |
14 August 2015 |
|
Foreign
currency (Purchase of EUR) |
€
19,842,000 |
|
233,860 |
14 August 2015 |
|
Foreign
currency (Sale of EUR) |
|
€
942,000 |
|
(18,951) |
14 August 2015 |
|
Foreign
currency (Sale of EUR) |
|
€
2,814,000 |
|
(25,926) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,726,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional amount |
|
30.06.14 |
|
|
|
|
|
|
of
contracts |
|
Fair value |
Expiration |
|
Underlying |
|
|
|
outstanding |
|
assets/ |
|
|
|
|
|
|
|
|
(liabilities) |
|
|
|
|
|
|
|
|
£ |
02 July
2014 |
|
Foreign
currency (Purchase of USD) |
US$2,538,376 |
|
7,239 |
14 July
2014 |
|
Foreign
currency (Purchase of USD) |
US$25,096,800 |
|
412,383 |
15 August
2014 |
|
Foreign
currency (Purchase of EUR) |
€10,042,000 |
|
180,260 |
12 September
2014 |
|
Foreign
currency (Purchase of JPY) |
¥4,379,336,200 |
|
247,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
847,060 |
|
|
|
|
|
|
|
|
|
Spot Contracts
As at 30 June 2015, the Company
had no (30.06.14: one) open spot foreign currency contracts.
|
|
|
|
|
|
Notional amount |
|
30.06.14 |
|
|
|
|
|
|
of
contracts |
|
Fair value |
Expiration |
Underlying |
|
|
|
outstanding |
|
asset |
|
|
|
|
|
|
|
|
£ |
2 July
2014 |
Foreign
currency (Sale of USD) |
|
US$2,595,254 |
|
3,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,808 |
|
|
|
|
|
|
|
|
|
The Investment Manager’s treatment of currency transactions
other than in Sterling is set out in note 2 to the financial
statements under “Translation of foreign currency” and “Forward
foreign currency contracts”.
As at 30 June 2015 and 2014, the
Company held the following assets and liabilities in currencies
other than the functional currency:
|
|
30.06.15 |
|
30.06.15 |
|
30.06.14 |
|
30.06.14 |
|
|
Assets |
|
Liabilities |
|
Assets |
|
Liabilities |
|
|
£ |
|
£ |
|
£ |
|
£ |
Japanese Yen |
|
50,636,118 |
|
3,677 |
|
43,376,209 |
|
- |
United States
Dollar |
|
99,471,282 |
|
- |
|
64,038,696 |
|
33,872 |
Swiss Franc |
|
1,494,382 |
|
- |
|
- |
|
- |
Euro |
|
12,006,750 |
|
54,568 |
|
9,875,352 |
|
- |
Canadian Dollar |
|
- |
|
- |
|
6,396,711 |
|
- |
Australian Dollar |
|
- |
|
- |
|
1,242,410 |
|
- |
Hong Kong Dollar |
|
6,574,321 |
|
10,068 |
|
6,169,541 |
|
- |
Singapore Dollar |
|
- |
|
- |
|
4,610,654 |
|
- |
Foreign currency sensitivity
As at 30 June 2015, if the foreign
exchange rates had weakened 10% (30.06.14: 10%) against Sterling
with all other variables held constant, net assets attributable to
holders of redeemable participating preference shares would be
£40,549,845 (30.06.14: £19,674,339) lower net of open forward
foreign currency contracts and due mainly as a result of foreign
currency losses on translation of these financial assets and
liabilities to Sterling. As at 30 June
2015, a 10% (30.06.14: 10%) strengthening of the foreign
exchange rates against Sterling would have resulted in an equal but
opposite effect on the net assets attributable to holders of
redeemable participating preference shares. Any changes in the
foreign exchange rate will directly affect the profit and loss,
allocated to the capital column of the Statement of Comprehensive
Income.
Actual trading results may differ from the above sensitivity
analysis and these differences could be material.
Interest rate risk
Interest rate risk represents the uncertainty of investment
return due to changes in the market rates of interest.
The Company invests in fixed and floating rate securities. The
income of the Company may be affected by changes to interest rates
relevant to particular securities or as a result of the Investment
Manager being unable to secure similar returns on the expiry of
contracts or sale of securities. Interest receivable on bank
deposits or payable on the bank overdraft positions will be
affected by fluctuations in interest rates.
The Investment Manager actively manages the Company’s exposure
to interest rate risk, paying heed to prevailing interest rates and
economic conditions, market expectations and their own opinions of
likely movements in interest rates. Currently the entire exposure
of the Company to fixed interest securities is in the form of
index-linked bonds. The value of these investments is determined by
current and expected inflation and interest rates.
The value of fixed interest securities will be affected by
general changes in interest rates that will in turn result in
increases or decreases in the market value of those instruments.
When interest rates decline, the value of the Company’s investments
in fixed rate debt obligations can be expected to rise, and when
interest rates rise, the value of those investments may
decline.
The investment portfolio details the security type, issuer,
interest rate, and maturity date of all of the Company’s fixed and
floating rate securities as at 30 June
2015 and 2014.
The tables below summarises the Company’s exposure to interest
rate risks. It includes the Company’s financial assets and
liabilities at fair values, categorised by the earlier of
contractual re-pricing or maturity dates.
As at 30 June
2015
|
|
|
Floating |
|
Fixed |
|
Non-Interest |
|
Total |
|
|
|
rate |
|
rate |
|
bearing |
|
30.06.15 |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
Financial
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
16,441,960 |
|
- |
|
- |
|
16,441,960 |
Investments designated at fair value |
|
|
|
|
|
|
|
|
through profit or
loss |
|
|
- |
|
117,836,056 |
|
196,460,112 |
|
314,296,168 |
Unrealised
gain on open forward |
|
|
|
|
|
|
|
|
foreign currency
contracts |
|
|
- |
|
- |
|
6,770,940 |
|
6,770,940 |
Receivables |
|
|
- |
|
- |
|
472,757 |
|
472,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,441,960 |
|
117,836,056 |
|
203,703,809 |
|
337,981,825 |
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables |
|
|
- |
|
- |
|
714,545 |
|
714,545 |
Unrealised
loss on open forward |
|
|
|
|
|
|
|
|
foreign currency
contracts |
|
|
- |
|
- |
|
44,877 |
|
44,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
759,422 |
|
759,422 |
|
|
|
|
|
|
|
|
|
|
As at 30 June 2014
|
|
|
Floating |
|
Fixed |
|
Non-Interest |
|
Total |
|
|
|
rate |
|
rate |
|
bearing |
|
30.06.14 |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
Financial
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
15,193,265 |
|
- |
|
- |
|
15,193,265 |
Investments designated at fair value |
|
|
|
|
|
|
|
|
through profit or
loss |
|
|
- |
|
107,591,933 |
|
192,699,207 |
|
300,291,140 |
Unrealised gain on open forward |
|
|
|
|
|
|
|
|
foreign currency
contracts |
|
|
- |
|
- |
|
850,868 |
|
850,868 |
Receivables |
|
|
- |
|
- |
|
3,547,454 |
|
3,547,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,193,265 |
|
107,591,933 |
|
197,097,529 |
|
319,882,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables |
|
|
- |
|
- |
|
1,842,157 |
|
1,842,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
1,842,157 |
|
1,842,157 |
|
|
|
|
|
|
|
|
|
|
The table below summarises weighted average effective interest
rates for financial instruments.
|
|
|
|
Weighted |
|
Weighted |
|
|
|
|
average period |
|
average period |
|
|
|
30.06.15 |
for
which rate/ |
30.06.14 |
for which rate/ |
|
|
|
%
p.a. |
yield
is fixed |
%
p.a. |
yield is fixed |
|
|
|
|
|
|
|
United
Kingdom government bonds |
|
-0.8478% |
27.05
years |
-0.5971% |
24.79
years |
United
States government bonds |
|
0.2619% |
8.02
years |
-0.0523% |
11.45
years |
Interest rate sensitivity
analysis
An increase of 100 basis points (30.06.14: 100 basis points) in
interest rates as at the reporting date would have decreased the
net assets attributable to holders of redeemable participating
preference shares by £19,373,301 (30.06.14: £17,474,743) and a
decrease of 25 basis points (30.06.14: 25 basis points) in interest
rates would have increased the net assets attributable to holders
of redeemable participating preference shares by £4,843,325
(30.06.14: £4,368,686).
Key determinants include economic growth prospects, inflation,
governments’ fiscal positions and rates on nominal bonds of similar
maturities. This sensitivity analysis assumes only a 100 basis
point increase and a 25 basis point decrease in interest rates,
with all other variables unchanged. This would be the equivalent of
a 100 basis point increase and 25 basis point decreases in ‘real’
interest rates and as such is likely to overstate the actual impact
of such a move in nominal rates.
As all the Company’s fixed rate securities are index-linked
bonds, their yields, and as a consequence their prices, are
determined by market perception as to the appropriate level of
yields given the economic background.
Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company. Failure of any relevant counterparty to perform
its obligations in respect of these items may lead to a financial
loss.
The Company is exposed to credit risk in respect of cash and
cash equivalents and receivables. The credit risk associated with
debtors is limited to the unrealised gains on open derivative
contracts such as forward foreign currency contracts, as detailed
above and receivables. It is the opinion of the Board of Directors
that the carrying amounts of these financial assets represent the
maximum credit risk exposure as at the reporting date.
The Company will not invest in the securities of any company
that is not quoted or does not have a listing on a market specified
in the Financial Services and Markets Act 2000 (Financial
Promotions) Order 2001 except for investments in investment funds
and such other financial markets as may be specifically agreed from
time to time between the Board and the Investment Manager.
All transactions in listed securities are settled/paid upon
delivery using approved brokers. The risk of default is considered
minimal, as delivery of securities sold is only made once the
broker has received payment. Payment is made on a purchase once the
securities have been received by the broker. The trade will fail if
either party fails to meet their obligation.
The Placing and Offer for Subscription document allows
investment in a wide universe of equity related securities and
bonds, including countries that may be classed as emerging or
developing. In adhering to investment restrictions set out within
the document, the Company mitigates the risk of any significant
concentration of credit risk.
Credit risk analysis
The Company’s maximum credit exposure is limited to the carrying
amount of financial assets recognised at the reporting date, as
summarised below:
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
£ |
|
£ |
Cash and cash
equivalents |
|
|
|
|
|
|
16,441,960 |
|
15,193,265 |
Unrealised
gain in open forward foreign currency contracts |
|
6,770,940 |
|
850,868 |
Receivables |
|
|
|
|
|
|
472,757 |
|
3,547,454 |
Financial
assets at fair value through profit or loss |
|
|
|
314,296,168 |
|
300,291,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
337,981,825 |
|
319,882,727 |
|
|
|
|
|
|
|
|
|
|
The Company is exposed to material credit risk in respect of
cash and cash equivalents. All cash is placed with Northern Trust
(Guernsey) Limited (“NTGL”).
NTGL is a wholly owned subsidiary of The Northern Trust
Corporation (“TNTC”). TNTC is publicly traded and a constituent of
the S&P 500. TNTC has a credit rating of A+ (30.06.14: A+) from
Standard & Poor’s and A2 (30.06.14: A2) from Moody’s.
The Moody’s and/or Standard and Poor (S&P) credit ratings of
the issuers of Bonds held by the Company as at 30 June 2015 were as follows:
|
|
|
|
|
|
|
|
|
30.06.15 |
|
|
|
|
|
|
|
S&P |
|
Moody's |
UK
Index-Linked Gilt 1.875% 22/11/2022 |
|
NR |
|
Aa1 |
UK
Inflation Indexed Gilt 0.125% 22/03/2024 |
|
NR |
|
Aa1 |
UK
Index-Linked Gilt 1.25% 22/11/2055 |
|
NR |
|
Aa1 |
UK
Inflation Indexed Gilt 0.375% 22/03/2062 |
|
|
NR |
|
Aa1 |
US
Treasury Inflation Indexed 1.125% Bond 15/01/2021 |
|
AA+ |
|
Aaa |
US
Treasury Inflation Indexed 0.625% Bond 15/07/2021 |
|
AA+ |
|
Aaa |
US
Treasury Inflation Indexed 0.125% Bond 15/01/2023 |
|
AA+ |
|
Aaa |
US
Treasury Inflation Indexed 0.375% Bond 15/07/2023 |
|
AA+ |
|
Aaa |
US
Treasury Inflation Indexed 2.125% Bond 15/02/2041 |
|
AA+ |
|
Aaa |
US
Treasury Inflation Indexed 0.625% Bond 15/02/2043 |
|
AA+ |
|
Aaa |
|
|
|
|
|
|
|
AA+ |
|
Aaa |
NR: indicates that these securities are not rated by
S&P.
None of the Company’s financial assets are secured by collateral
or other credit enhancements.
Derivatives
The Company has gained exposure to derivative contracts
(predominantly options and forward currency contracts) as a risk
management tool. The intention of using such derivative contracts
has been primarily to minimise the exposure of the Company to
negative consequences arising from changes to foreign exchange
rates, interest rates, market volatility and to protect the
portfolio from a correlated fall in bonds and equities. At the
Statement of Financial Position date all such instruments (except
forward foreign exchange contracts) were held within the Ruffer
Protection Strategies vehicle as detailed in the Portfolio
Statement.
Fair value
IFRS 7 requires the Company to classify fair value hierarchy
that reflects the significance of the inputs used in making the
measurements. IFRS 7 establishes a fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair
value. 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 under IFRS 7 are as follows:
Level 1 Quoted 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
significant 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 as of
30 June 2015.
|
|
|
|
|
|
|
|
30.06.15 |
|
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
|
Financial assets at
fair value |
|
|
|
|
|
|
|
|
|
through profit or
loss: |
|
|
|
|
|
|
|
|
|
Government
Indexed-Linked Bonds |
117,836,056 |
|
- |
|
- |
|
117,836,056 |
Preference Shares |
|
4,495,206 |
|
- |
|
- |
|
4,495,206 |
Options |
|
- |
|
6,635,373 |
|
- |
|
6,635,373 |
Equities |
|
150,945,921 |
|
- |
|
1,409,625 |
|
152,355,546 |
Investment Funds |
|
- |
|
32,973,987 |
|
- |
|
32,973,987 |
Derivative financial
asset |
|
- |
|
6,770,940 |
|
- |
|
6,770,940 |
Total assets |
|
273,277,183 |
|
46,380,300 |
|
1,409,625 |
|
321,067,108 |
Financial liabilities
at fair value |
|
|
|
|
|
|
|
|
|
through profit or
loss: |
|
|
|
|
|
|
|
|
|
Unrealised loss on
open forward |
|
|
|
|
|
|
|
|
|
Derivative financial
liability |
|
- |
|
44,877 |
|
- |
|
44,877 |
|
Total liabilities |
|
- |
|
44,877 |
|
- |
|
44,877 |
|
The following table presents the Company’s financial assets and
liabilities by level within the valuation hierarchy as of
30 June 2014.
|
|
|
|
|
|
|
|
30.06.14 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
£ |
Financial assets at
fair value |
|
|
|
|
|
|
|
|
through profit or
loss: |
|
|
|
|
|
|
|
|
Government Indexed-Linked Bonds |
107,591,933 |
|
- |
|
- |
|
107,591,933 |
Preference
Shares |
|
716,038 |
|
|
|
|
|
716,038 |
Options |
|
2,616,339 |
|
- |
|
- |
|
2,616,339 |
Equities |
|
173,010,033 |
|
- |
|
- |
|
173,010,033 |
Investment
Funds |
|
- |
|
16,356,797 |
|
- |
|
16,356,797 |
Derivative
financial asset |
|
- |
|
850,868 |
|
- |
|
850,868 |
Total
assets |
|
283,934,343 |
|
17,207,665 |
|
- |
|
301,142,008 |
Financial
liabilities at fair value |
|
|
|
|
|
|
|
|
through profit or
loss: |
|
|
|
|
|
|
|
|
Unrealised loss on
open forward |
|
- |
|
- |
|
- |
|
- |
Derivative
financial liability |
|
- |
|
- |
|
- |
|
- |
Total
liabilities |
|
- |
|
- |
|
- |
|
- |
The Company recognises transfers between levels of fair value
hierarchy as of the end of the reporting period during which the
transfer has occurred. At 30 June
2015, the following transfers were made:
- the investment in Renn Universal Growth Trust Ltd (“Renn”) was
transferred from Level 1 to Level 3 as a result of delisting Renn’s
shares from the stock exchange in early 2015; and
- the investment in Ruffer Protection Strategies International
(“RPSI”) was transferred from Level 1 to Level 2 as RPSI’s
investments are mostly in over-the-counter options.
Movements in Level 3 investments
|
|
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
|
|
£ |
|
£ |
Opening valuation |
|
|
|
|
|
|
|
- |
|
- |
Transfer from Level
1 |
|
|
|
|
|
|
|
1,409,625 |
|
- |
Purchases at cost |
|
|
|
|
|
|
|
- |
|
- |
Sales proceeds |
|
|
|
|
|
|
|
- |
|
- |
Realised gains on
sale |
|
|
|
|
|
|
|
- |
|
- |
Unrealised
movement on revaluation of investments |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Closing valuation |
|
|
|
|
|
|
|
1,409,625 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Assets classified in Level 1 consists of listed or quoted
equities or equity related securities, options and bonds which are
issued by corporate issuers, supra-nationals or government
organisations.
Assets classified in Level 2 are investment in funds fair-valued
using the official NAV of each fund as reported by each fund’s
independent administrator at the reporting date.
Liquidity risk
Liquidity risk is the risk that the Company will find it
difficult or impossible to realise assets or otherwise raising
funds to meet financial commitments.
The Company’s liquidity risk is managed by the Investment
Manager who monitors the cash positions on a regular basis. The
Company’s overall liquidity risks are monitored on a regular basis
by the Board of Directors and a formal report is made by the
Investment Manager to the Directors at each Board Meeting.
As at 30 June 2015 and 2014, the
Company had no significant financial liabilities other than
short-term payables arising directly from investing activity.
20. Capital risk management
The fair value of the Company’s financial assets and liabilities
approximate to their carrying amounts at the reporting date. For
the purposes of this disclosure, redeemable participating
preference shares are considered to be capital.
The Company’s objectives when managing capital are to safeguard
the Company’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. There are no externally-imposed capital
requirements on the Company.
The Company has the ability to borrow up to 30% of its NAV at
any time for short-term or temporary purposes as is necessary for
the settlement of transactions, to facilitate redemption (where
applicable) or to meet ongoing expenses. The Company does not have,
nor does it intend to adopt, any structural gearing. The gearing
ratio below is calculated as total liabilities divided by total
equity.
|
|
|
|
|
|
30.06.15 |
|
30.06.14 |
|
|
|
|
|
|
£ |
|
£ |
Total assets |
|
|
|
|
|
337,981,825 |
|
319,882,727 |
Less: total
liabilities |
|
|
|
|
|
(759,422) |
|
(1,842,157) |
Total equity |
|
|
|
|
|
337,222,403 |
|
318,040,570 |
|
|
|
|
|
|
|
|
|
Gearing ratio |
|
|
|
|
|
0.23% |
|
0.58% |
The Board considers this gearing ratio to be adequate since
total liabilities above refer only to other payables and unrealised
losses on open forward foreign currency contracts.
Redemption Facility
The Company has a Redemption Facility (which takes the form of a
tender offer to all holders of redeemable participating preference
shares) which was made available after 8
July 2007. This facility may operate annually, in November
each year, at the discretion of the Directors. Redemptions on any
Redemption Date may be restricted to a maximum of 25% in aggregate
of the Shares then in issue, with any tender requests from
shareholders in excess of this being scaled back pro rata.
The facility is intended to address any imbalance in the supply
and demand for the shares and to assist in maintaining a narrow
discount to the NAV per Share at which the shares may be trading.
The Company, will at the sole discretion of the Directors:
- purchase shares when deemed appropriate; and
- allow an annual redemption of up to 25% of the issued shares at
the prevailing NAV per Share and may operate annually in November
of each year.
Purchase of Own Shares by the
Company
An ordinary resolution was granted on 19
November 2014 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 redeemable
participating preference shares of 0.0lp each, provided that:
- the maximum number of Shares the Company can purchase is no
more than 14.99% of the Company’s issued share capital;
- the minimum price (exclusive of expenses) which may be paid for
a Share is 0.01 pence, being the
nominal value per share;
- 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
London Stock Exchange 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 Buyback and
Stabilisation Regulation (No 2237 of 2003);
- purchases may only be made pursuant to this authority if the
Shares are (at the date of the proposed purchase) trading on the
London Stock Exchange at a discount to the lower of the undiluted
or diluted NAV;
- the authority conferred shall expire at the conclusion of the
AGM of the Company in 2014 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
- 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 a purchase of Shares pursuant to any
such contract.
21. Subsequent events
These financial statements were approved for issuance by the
Board on 9 September 2015. Subsequent
events have been evaluated until this date.
Subsequent to the year end and up to the date of this report,
the Company allotted and issued 925,000 redeemable participating
preference shares of 0.01 pence under
the blocklisting facility for a consideration of £2,015,600.
As at the date of this report the Company had 155,338,416
redeemable participating preference shares of 0.01p each and 2
Management shares of £1.00 each in issue. Therefore, the total
voting rights in the Company at the date of this report were
155,338,418.
Portfolio
Statement as at 30 June 2015
|
|
|
Fair |
|
% |
|
|
Holding at |
Value |
|
of
Total |
|
Currency |
30.06.15 |
£ |
|
Net Assets* |
|
|
|
|
|
|
Government
Index-Linked Bonds 34.95% |
|
|
|
|
|
(30.06.14 -
33.83%) |
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom |
|
|
|
|
|
UK Index-Linked Gilt
1.875% 22/11/2022 |
GBP |
13,700,000 |
20,914,596 |
|
6.21 |
UK Inflation Indexed
Gilt 0.125% 22/03/2024 |
GBP |
6,190,000 |
7,128,695 |
|
2.11 |
UK Index-Linked Gilt
1.25% 22/11/2055 |
GBP |
7,200,000 |
18,923,911 |
|
5.61 |
UK Inflation Indexed
Gilt 0.375% 22/03/2062 |
GBP |
8,000,000 |
14,629,104 |
|
4.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,596,306 |
|
18.27 |
|
|
|
|
|
|
United
States |
|
|
|
|
|
US Treasury Inflation
Indexed 1.125% Bond 15/01/2021 |
USD |
22,000,000 |
16,002,352 |
|
4.75 |
US Treasury Inflation
Indexed 0.625% Bond 15/07/2021 |
USD |
19,350,000 |
13,330,762 |
|
3.95 |
US Treasury Inflation
Indexed 0.125% Bond 15/01/2023 |
USD |
19,000,000 |
12,164,051 |
|
3.61 |
US Treasury Inflation
Indexed 0.375% Bond 15/07/2023 |
USD |
17,000,000 |
11,028,476 |
|
3.27 |
US Treasury Inflation
Indexed 2.125% Bond 15/02/2041 |
USD |
955,000 |
813,715 |
|
0.24 |
US Treasury Inflation
Indexed 0.625% Bond 15/02/2043 |
USD |
5,000,000 |
2,900,394 |
|
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,239,750 |
|
16.68 |
|
|
|
|
|
|
Total Government
Indexed-Linked Bonds |
|
|
117,836,056 |
|
34.95 |
|
|
|
|
|
|
|
|
|
|
|
|
Preference Shares
1.33% |
|
|
|
|
|
(30.06.14 -
0.23%) |
|
|
|
|
|
|
|
|
|
|
|
Germany |
|
|
|
|
|
Volkswagen |
EUR |
26,080 |
3,851,472 |
|
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,851,472 |
|
1.14 |
|
|
|
|
|
|
United
Kingdom |
|
|
|
|
|
Raven Russia
Preference Shares |
GBP |
466,474 |
643,734 |
|
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
643,734 |
|
0.19 |
|
|
|
|
|
|
Total Preference
Shares |
|
|
4,495,206 |
|
1.33 |
|
|
|
|
|
|
Equities
41.05% |
|
|
|
|
|
(30.06.14 -
49.55%) |
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
|
|
|
|
|
|
|
|
|
France |
|
|
|
|
|
Rubis |
EUR |
23,830 |
1,037,609 |
|
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,037,609 |
|
0.31 |
|
|
|
|
|
|
Germany |
|
|
|
|
|
Deutsche Wohnen |
EUR |
126,217 |
1,846,078 |
|
0.55 |
Heliocentris Energy
Solutions AG |
EUR |
422,856 |
1,608,732 |
|
0.48 |
TAG Immobilien AG |
EUR |
283,782 |
2,102,974 |
|
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,557,784 |
|
1.65 |
|
|
|
|
|
|
Norway |
|
|
|
|
|
Aker |
EUR |
95,000 |
1,293,722 |
|
0.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,293,722 |
|
0.38 |
|
|
|
|
|
|
Switzerland |
|
|
|
|
|
UBS AG |
CHF |
110,817 |
1,494,382 |
|
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,494,382 |
|
0.44 |
|
|
|
|
|
|
United
Kingdom |
|
|
|
|
|
Better Capital Ltd
(2009) |
GBP |
1,727,800 |
1,719,161 |
|
0.51 |
Better Capital Ltd
(2012) |
GBP |
3,088,700 |
2,162,090 |
|
0.64 |
Cape Plc |
GBP |
850,000 |
2,146,250 |
|
0.64 |
Colt Group |
GBP |
645,225 |
1,212,378 |
|
0.36 |
Games Workshop Group
Plc |
GBP |
250,000 |
1,265,000 |
|
0.38 |
Glencore Plc |
GBP |
675,000 |
1,723,275 |
|
0.51 |
IP Group Plc |
GBP |
574,216 |
1,185,756 |
|
0.35 |
Hellermann Tyton Group
Plc |
GBP |
525,600 |
1,802,282 |
|
0.53 |
Lloyds Banking Group
Plc |
GBP |
3,956,300 |
3,371,955 |
|
1.00 |
Oakley Capital
Investments Ltd |
GBP |
2,825,794 |
4,493,013 |
|
1.33 |
P2P Global Investments
Plc |
GBP |
217,740 |
2,314,576 |
|
0.69 |
Raven Russia Ltd |
GBP |
1,738,494 |
925,748 |
|
0.27 |
Renn Universal Growth
Trust Ltd |
GBP |
937,500 |
1,409,625 |
|
0.42 |
Seaenergy Plc |
GBP |
300,000 |
33,000 |
|
0.01 |
Secure Trust Bank
Plc |
GBP |
48,345 |
1,358,495 |
|
0.40 |
The Royal Bank of
Scotland Group Plc |
GBP |
688,400 |
2,419,038 |
|
0.72 |
Vodaphone Group
Plc |
GBP |
1,109,727 |
2,550,708 |
|
0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,092,350 |
|
9.52 |
|
|
|
|
|
|
Total European
Equities |
|
|
41,475,847 |
|
12.30 |
|
|
|
|
|
|
United
States |
|
|
|
|
|
Checkpoint Software
Technologies Ltd |
USD |
41,500 |
2,098,617 |
|
0.62 |
Ebay Inc |
USD |
90,600 |
3,469,726 |
|
1.03 |
International Paper
Co |
USD |
75,000 |
2,269,505 |
|
0.67 |
Leucadia National
Corp |
USD |
237,580 |
3,666,349 |
|
1.09 |
Lockheed Martin
Corp |
USD |
40,000 |
4,726,903 |
|
1.40 |
Microsoft Corp |
USD |
115,000 |
3,228,365 |
|
0.96 |
News Corp |
USD |
165,412 |
1,534,534 |
|
0.46 |
Oracle Corp |
USD |
80,000 |
2,049,978 |
|
0.61 |
The Boeing
Company |
USD |
59,017 |
5,204,094 |
|
1.54 |
|
|
|
|
|
|
|
|
|
|
|
|
Total United States
Equities |
|
|
28,248,071 |
|
8.38 |
|
|
|
|
|
|
Asia |
|
|
|
|
|
|
|
|
|
|
|
China |
|
|
|
|
|
Bank of China Ltd |
HKD |
3,398,000 |
1,399,061 |
|
0.41 |
China Life Insurance
Co Ltd |
HKD |
459,000 |
1,264,916 |
|
0.38 |
Citic Securities Co
Ltd |
HKD |
528,000 |
1,208,225 |
|
0.36 |
Picc Property &
Casualty Co Ltd |
HKD |
1,794,000 |
2,601,443 |
|
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,473,645 |
|
1.92 |
|
|
|
|
|
|
Japan |
|
|
|
|
|
Bridgestone Corp |
JPY |
77,000 |
1,811,132 |
|
0.54 |
CF Ruffer Japanese
Fund** |
GBP |
4,500,000 |
8,819,550 |
|
2.62 |
Fujitsu Ltd |
JPY |
675,000 |
2,395,639 |
|
0.71 |
Japan Residential
Investment Co Ltd |
GBP |
8,330,000 |
4,602,325 |
|
1.36 |
Mitsubishi UFJ
Financial Group Inc |
JPY |
1,664,000 |
7,607,364 |
|
2.26 |
Mizuho Financial Group
Inc |
JPY |
5,987,000 |
8,228,712 |
|
2.44 |
NTT Data Corp |
JPY |
150,000 |
4,154,468 |
|
1.23 |
NTT Urban Development
Corp |
JPY |
419,000 |
2,645,375 |
|
0.78 |
Rakuten Inc |
JPY |
283,100 |
2,895,824 |
|
0.86 |
Resona Holdings
Inc |
JPY |
1,080,000 |
3,749,964 |
|
1.11 |
Sumitomo Mitsui
Financial Group Inc |
JPY |
240,000 |
6,791,814 |
|
2.01 |
T&D Holdings
Inc |
JPY |
900,000 |
8,532,637 |
|
2.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,234,804 |
|
18.45 |
|
|
|
|
|
|
Total Asian
Equities |
|
|
68,708,449 |
|
20.37 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Equities |
|
|
138,432,367 |
|
41.05 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment Funds
9.77% |
|
|
|
|
|
(30.06.14 -
5.14%) |
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom |
|
|
|
|
|
Herald Worldwide
Fund |
GBP |
64,341 |
1,832,420 |
|
0.54 |
Ruffer Illiquid
Strategies Fund of Funds 2009 Ltd** |
GBP |
2,535,409 |
5,062,558 |
|
1.50 |
Ruffer Illiquid Multi
Strategies Fund 2015 Ltd** |
GBP |
16,450,000 |
16,383,542 |
|
4.86 |
Ruffer SICAV Global
Smaller Companies Fund** |
GBP |
45,129 |
5,947,491 |
|
1.76 |
Ruffer SICAV UK Mid
& Smaller Companies Fund** |
GBP |
13,235 |
2,416,976 |
|
0.72 |
Weiss Korea
Opportunity Fund Ltd |
GBP |
1,100,000 |
1,331,000 |
|
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,973,987 |
|
9.77 |
|
|
|
|
|
|
Total Investment
Funds |
|
|
32,973,987 |
|
9.77 |
|
|
|
|
|
|
Gold & Gold
Mining Equities 4.13% |
|
|
|
|
|
(30.06.14 -
4.85%) |
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom |
|
|
|
|
|
|
|
|
|
|
|
CF Ruffer Gold
Fund** |
GBP |
4,566,192 |
3,830,122 |
|
1.14 |
Gold Bullion
Securities Ltd |
USD |
115,000 |
8,193,394 |
|
2.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,023,516 |
|
3.57 |
|
|
|
|
|
|
Canada |
|
|
|
|
|
Barrick Gold Corp |
USD |
280,000 |
1,899,663 |
|
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,899,663 |
|
0.57 |
|
|
|
|
|
|
Total Gold &
Gold Mining Equities |
|
|
13,923,179 |
|
4.13 |
|
|
|
|
|
|
|
|
|
|
|
|
Options
1.97% |
|
|
|
|
|
(30.06.14 -
0.82%) |
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom |
|
|
|
|
|
Ruffer Protection
Strategies International |
GBP |
4,292,462 |
6,635,373 |
|
1.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,635,373 |
|
1.97 |
|
|
|
|
|
|
|
|
|
|
|
|
Total financial
assets at fair value through profit or loss |
|
|
314,296,168 |
|
93.20 |
|
|
|
|
|
|
Other net current
assets |
|
|
22,926,235 |
|
6.80 |
|
|
|
|
|
|
Management share
capital |
|
|
(2) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of
Company |
|
|
|
|
|
(attributable to redeemable participating preference
shares) |
|
337,222,401 |
|
100.00 |
* All percentages relate to net assets attributable to holders
of redeemable participating preference shares
** 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. CF Ruffer Gold Fund, CF Ruffer Japanese
Fund, Ruffer SICAV Global Smaller Companies Fund, Ruffer SICAV UK
Mid & Smaller Companies Fund and Ruffer Illiquid Strategies
Fund of Funds 2009 are also classed as related parties as their
investment manager (Ruffer LLP) is the parent of the Company’s
Investment Manager.
General
Information
Ruffer Investment Company Limited was incorporated with limited
liability 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 predominantly
invests 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 annual financial statements were authorised for issue on
9 September 2015 by the
Directors.
The prices of the shares in the Company are published in The
Financial Times in the “Investment Companies” section, and in the
Daily Telegraph’s “Share Prices & Market Capitalisations”
section under “Investment Trusts”.
Due to the recent changes introduced by virtue of the
Alternative Investment Fund Managers Directive (“AIFMD”), the
Company terminated the Investment Management Agreement with Ruffer
LLP and appointed Ruffer AIFM Limited as the new Investment Manager
with effect from 21 July 2014. The
new 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 is authorised and
regulated by the United Kingdom Financial Conduct Authority as a
full-scope alternative investment fund manager. Pursuant to the
AIFMD and its implementing legislation, the Investment Manager is
subject to a new supervisory regime, and new rules governing its
portfolio and risk management activities.
Assuming a continued Guernsey domicile of the Company, the
Investment Manager intends 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.
Due to the recent changes introduced by virtue of the
Alternative Investment Fund Management Directive, the Company and
the Administrator have amended and restated the existing
Administration Agreement to include Ruffer AIFM Limited as a party
in accordance with the terms of the Administration Agreement with
effect from the 21 July 2014. The
Administrator is entitled to receive an annual fee equal to 0.15
per cent per annum on the first £100 million and 0.10 per cent per
annum thereafter on the NAV of the Company on a mid market basis,
subject to a minimum fee of £60,000 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.
Due to the recent changes introduced by virtue of the
Alternative Investment Fund Management Directive, the Company
entered into an agreement with Northern Trust (Guernsey) Limited
for the provision of depository services with effect from
21 July 2014. The Depositary is
entitled to an annual Depositary fee payable to Northern Trust
(Guernsey) Limited monthly in arrears at a rate of 0.01% of the Net
Asset Value of the Company below £100 million, 0.008% on Net Assets
between £100 million and £200 million and 0.006% in excess of £200
million as at the last business day of the month subject to a
minimum fee of £20,000 per annum.
Management and
Administration
Directors |
|
Registered Office |
|
Auditor |
Ashe Windham
Wayne Bulpitt
Jeannette Etherden
Peter Luthy
Christopher Spencer
John V Baldwin |
|
PO Box 255
Trafalgar Court,
Les Banques,
St. Peter Port,
Guernsey,
Channel Islands, GY1 3QL |
|
John Clacy
Deloitte LLP
(appointed 9 March 2015)
Regency Court,
Glategny Esplanade,
St. Peter Port,
Guernsey,
Channel Islands, GY1 3HW |
Investment Manager |
|
Sponsor and Broker |
|
Solicitors to the Company
as to UK law |
Ruffer LLP (Investment
Management Agreement terminated 22 July 2014),
80 Victoria Street,
London, SW1E 5JL |
|
Cenkos Securities
Plc,
6.7.8 Tokenhouse Yard,
London, EC2R 7AS |
|
Lawrence Graham
LLP,
4 More London Riverside,
London, SE1 2AU |
|
|
|
|
|
Company Secretary,
Administrator and Registrar |
|
CREST Agent |
|
Advocates to the Company
as to Guernsey law |
Northern Trust
International
Fund Administration Services
(Guernsey) Limited,
Trafalgar Court,
Les Banques,
St. Peter Port,
Guernsey,
Channel Islands, GY1 3QL |
|
Computershare
Investor
Services (Jersey)
Limited,
Queensway House,
Hilgrove Street,
St. Helier,
Jersey, JE1 1ES |
|
Mourant Ozannes,
1 Le Marchant Street,
St. Peter Port,
Guernsey,
Channel Islands, GY1 4HP |
Custodian |
|
Depositary |
|
Investment Manager and Alternative Investment Fund
Manager |
Northern Trust
(Guernsey)
Limited,
Trafalgar Court,
Les Banques,
St. Peter Port,
Guernsey,
Channel Islands, GY1 3QL |
|
Northern Trust
(Guernsey)
Limited (appointed 22 July 2014),
Trafalgar Court,
Les Banques,
St. Peter Port,
Guernsey,
Channel Islands, GY1 3QL |
|
Ruffer AIFM Limited,
(appointed 22 July 2014),
80 Victoria Street,
London, SW1E 5JL |
Auditor |
|
|
|
|
David Green
Moore Stephens,
(resigned 9 March 2015)
Town Mills South,
La Rue du Pre,
St. Peter Port,
Guernsey,
Channel Islands, GY1 3HZ |
|
|
|
|