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for the year ended 31 December 2013 Contents Company Highlights 1 Strategic Report Chairman’s Statement 3 Our Strategy & Business Model 6 Investment & Business Review 10 Investment Portfolio 16 Governance Board of Directors 20 J Rothschild Capital Management 23 Corporate Governance Report 24 Audit and Risk Committee Report 30 Directors’ Remuneration Report 32 Directors’ Report 43 Financial Statements Consolidated Income Statement and Consolidated Statement of Comprehensive Income 48 Consolidated Balance Sheet 50 Parent Company Balance Sheet 51 Consolidated Statement of Changes in Equity 52 Parent Company Statement of Changes in Equity 53 Consolidated Cash Flow Statement 54 Parent Company Cash Flow Statement 55 Group and Parent Company Accounting Policies 56 Notes to the Financial Statements 62 Independent Auditors’ Report 102 Other Information Investment Portfolio Reconciliation 108 Historical Information and Financial Calendar 109 Advisers 110 | Company Highlights Company Company Highlights Corporate Objective Investment Policy To deliver long-term capital growth, while preserving To invest in a widely diversified, international portfolio shareholders’ capital; to invest without the across a range of asset classes, both quoted and constraints of a formal benchmark, but to deliver for unquoted; to allocate part of the portfolio to shareholders increases in capital value in excess of exceptional managers in order to ensure access to the relevant indices over time. the best external talent available. | Strategic Report Strategic Financial Summary 31 December 2013 31 December 2012 Change Net Assets £2,146m £1,847m £299m | NAV per share 1,384p 1,191p 193p Governance Share price 1,260p 1,131p 129p Discount -9.0% -5.0% -4.0% Dividends paid 28p 28p – Gearing 5.2% 0.0% 5.2% | Financial Statements Financial Ongoing Charges % 0.83% 0.77% 0.06% NAV per share total return 18.6% Share price total return 14.0% RPI plus 3.0%1 5.7% MSCI All Country World Index2 23.0% Performance History 1 Year 5 Years 10 Years | NAV per share total return 18.6% 45.8% 180.1% Information Other RPI plus 3.0%1 5.7% 38.0% 85.6% MSCI All Country World Index2 23.0% 85.3% 103.2% 10 Year Performance | 200% RIT NAV per share (TR) ACWI (TR) RPI plus 3.0% 150% 100% 50% 0% -50% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1 We have adopted RPI plus 3.0% as a key performance indicator as described on page 7. 2 The MSCI All Country World Index (ACWI) we have adopted is a total return index and is based on 50% of the ACWI measured in Sterling and 50% measured in local currencies. RIT Capital Partners plc Report and Accounts December 2013 1 Strategic Report | Company Highlights Company Chairman’s Statement ur shareholders expect a clear and consistent approach. At the heart of | O Report Strategic this approach, rests its commitment to the preservation of shareholders’ capital, which remains our highest priority. We did not forsake our focus on long-term Lord Rothschild, OM GBE growth and for this our shareholders have rewarded us with their loyalty. | Governance Governance s market conditions have become more these relationships typically come with enhanced Avolatile,Iam increasingly satisfied with the economics, as well as enriching our market insights. progress which your Company made during the year We have been active in managing our currency under review. The net asset value per share (NAV) | increased from 1,191 pence to 1,384 pence, exposure, initially capitalising on Sterling’s weakness Statements Financial representing a total return of 18.6%. Total net assets by bringing our exposure to minimal levels, only to increased by £343 million (before dividends and buy- increase these levels materially when we saw early backs of £44 million) to £2,146 million, a new all-time signs of a UK revival. We concentrated the vast high. majority of our non-Sterling exposure into the US Dollar, and therefore avoided the fallout that ‘tapering’ Our shareholders expect a clear and consistent induced on many of the emerging market currencies. approach. At the heart of this approach, rests its | Other Information Other commitment to the preservation of shareholders’ Our direct private investment portfolio and the capital, which remains our highest priority taking externally managed private funds gave modest precedence over tactical manoeuvres based on short- financial returns during the year. As I have drawn term returns. Our 2013 performance combined attention to in the past, such investments should be appropriate levels of caution with a significant assessed over a long time frame. A good example of participation in stock market increases. We did not this is Paypoint, where we sold our remaining shares | forsake our focus on long-term growth and for this for a 30% return during 2013. However the full story our shareholders have rewarded us with their loyalty. dates back to our initial £3 million investment in 1999 into what was then a private and problematic In 2013 we identified a number of key themes which company. The company obtained a stock market helped to produce a strong performance in our listing in 2004 and, over its full life, has produced a quoted equity book. Our continued focus on the US return of 15 times our investment with an IRR of and increased allocation to Japan were rewarded as almost 29% per annum. these were the two strongest of the major stock markets in 2013. Investment in technology also We have made two sizeable private investments in proved to be a fertile area through direct stock the past year. The first was in Metron, a promising selections as well as specialist money managers. Norwegian oil and gas services business. The second External funds performed strongly as we consolidated was our widely reported investment in Williams and our relationships into a reduced number of money Glyn’s, the new ‘challenger’ bank created from the managers, whose skills we believe will deliver strong Royal Bank of Scotland. Last year I drew performance in the years ahead. For many years now, shareholders’ attention to the potential of the global RIT has sought to identify and support emerging talent. relationships which your Company has built. The We have seeded four different managers in the past investment in Williams and Glyn’s emerged directly 18 months, specialising in technology, financials, from one of these relationships, as the transaction distressed debt and most recently Japanese equities. In was led by Corsair Capital, where we are investors in addition to being good performers in their own right, their General Partnership. The main detractor from our performance during the otal net assets increased by £343 million year was our allocation to gold and gold miners, T(before dividends and buy-backs of where the decline in the commodity price resulted in £44 million) to £2,146 million, a new a negative return for our real asset investments. In all-time high. the current year there has been an improvement in this sector. RIT Capital Partners plc Report and Accounts December 2013 3 Chairman’s Statement Dividend As the significant amount of capital invested in low or We are intending to pay a dividend of 29.4 pence per zero yielding assets looks for alternative homes, the share in 2014, in two equal payments in April and demand for equities has not surprisingly been strong, October. This represents a 5.0% increase over 2013, stimulated by central banks who remain concerned and we expect to maintain or increase this level in the and cautious about removing the ‘punchbowl’. years ahead, as long as this does not come into conflict with your Company’s primary objective of capital Inevitably higher valuations imply lower margins of preservation and growth. safety and consequently the market’s vulnerability to shocks is greater. With the world recovery still fragile Board and Management and reliant to a large extent on policy support, it is not We continue to strengthen your Board and I am hard to envisage markets having to deal with such grateful to Directors for the considerable time which shocks in the coming year and indeed they were felt they devote to the governance of the Company. during January. Early in 2014 investors have become increasingly concerned on a number of fronts: these My daughter Hannah joined the Board in August. Her include signs of a slow-down in the Chinese appointment serves to reinforce my family’s ties to economy, emerging market turmoil in response to the your Company. In October the Board was further timing of the Federal Reserve’s tapering, doubts as to strengthened by the appointment of Mike Wilson, a whether ‘Abenomics’ in Japan will succeed, joint-founder together with myself of St James’s disappointing recent US economic data and the risk of Place plc where he served with distinction and deflation and economic stagnation in Europe. Lastly it success as their CEO. is difficult to forecast with conviction the consequences of the massive money printing As we have recently announced, Mike Power has experiment of the past few years. now joined the Board as a non-executive Director. He is a Professor of Accounting at the London School of The new year has already displayed further volatility. Economics and Political Science, an honorary fellow Our latest reported NAV at the end of January was of the Institute of Risk Management and was until 1,371 pence. This represents a decline of 0.9% recently on the board of St James’s Place plc. against broader market falls of 3% to 4%, reflecting our somewhat cautious approach. In February We are delighted to have the benefit of these three however, markets have improved.

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