Final Results

RNS Number : 9427K

Witan Pacific Investment Trust PLC

28 April 2010

 



WITAN PACIFIC INVESTMENT TRUST PLC

Investment Objective is to provide shareholders with a balanced portfolio of investments in the Asia Pacific region with the aim of outperforming the MSCI AC Asia Pacific Free Index (£)

Chairman's statement

Market Background

The past year has seen a transformational change in investor confidence and equity market returns. Government and central bank initiatives to contain the financial crisis and reverse its negative effects on economic growth have started to bear fruit. The recovery underway at the time of our interim results has continued, with the MSCI Asia Pacific Free Index (our benchmark) recording a return in local currency terms of 35.3% during our financial year. The pound strengthened somewhat during the year, so in Sterling terms the rise was less, but still robust at 29.6%.

Against this background of an unexpectedly sharp rally in markets it is pleasing to record not only a year of strong absolute returns by the Fund but also outperformance in NAV terms of nearly 4% relative to the Company's stated benchmark.

Economic growth in the region recovered in response to the normalisation of international trade and to local economic stimuli, particularly the huge fiscal boost in China. In response to this success, as our financial year ended the Beijing authorities were taking steps to curb the risk that the economy will overheat later in 2010. At the opposite extreme of the region's economic fortunes, Japan was badly hit by the recession and is struggling to break out of its two decade era of stagnation. Its equity index returned 17.4% over the year but remains down almost a third on January 2008. The changes in Sterling terms have been more muted, owing to swings in the Yen, with the index returning 4.7% during our financial year and -0.1% since two years ago.

Performance

The Company's NAV total return was 33.4% (Sterling adjusted) which compares favourably with the MSCI AC Asia Pacific Index return of 29.6% (£). Total shareholder return was 36.1% which reflects a narrowing of the discount since the end of January 2009.

The Company's multi-manager strategy is in its fifth year and since adoption of this investment approach the portfolio investment outperformance has averaged 1.7% per annum (source: WM Performance Measurement Services).

Shareholders will be aware that a key rationale for the multi-manager strategy is the diversification benefit of not relying on one manager to drive returns and therefore smooth out the volatility of returns. To this end the Company has engaged two Managers with very distinct styles. Aberdeen are less likely to embrace the individual country weightings which comprise the benchmark; in particular they have for many years maintained a strong preference for the Asian markets over Japan and consequently have a very low exposure to Japan. Such a stance continues to be a major positive for their portfolio and as a result Aberdeen's portfolio return was 39.8% (£), an outperformance of 10.2% over the Index. Nomura take a much more index-like position to their country weightings and whilst they too preferred the growth characteristics of Asian markets over Japan their degree of over and underweighting was far less marked. Consequently their portfolio return was more index-like, being +29.2% (£). Further details of each Manager's performance, country and stock selection are given in the Investment Review section of the Business Review.

The Board meets both Managers regularly throughout the year to monitor their progress. During the year the Board also conducted in depth interviews at the Managers' offices in Singapore and Tokyo to gain an on-site understanding of their investment and control processes.

Dividend

Our revenue was lower in the year, for a number of reasons. The receipts related to the previous year's VAT reclaim were not repeated and there was a recession-linked fall in dividend payouts, offset by a decline in the taxation charge for overseas dividend income. We are therefore able to continue with our practice in recent years of increasing the dividend and are declaring a final dividend of 2.10p per share, a 13.5% rise on the 1.85p ordinary dividend paid last year (excluding last year's one-off special dividend of 1.00p per share attributable to the VAT refund). This is a doubling of the level of dividends paid prior to 2005 and represents compound dividend growth of 14.9% p.a. over 5 years. Subject to shareholder approval, the final dividend will be paid on 25 June 2010 to shareholders on the register at the close of business on 28 May 2010 (ex-dividend 26 May 2010).

Share Buy-Backs

Your Board believes that it is in shareholders' interests to buy back the Company's shares when they are standing at a substantial discount to their NAV and with the objective that the discount should be comparable to that of our peers, taking account of the prevailing market conditions. The Company repurchased a total of 50,000 shares for cancellation during the year. It is intended to seek renewal of the buy-back authority at the forthcoming Annual General Meeting ("AGM"). In addition, the Board proposes to seek the renewal of authority to take shares into treasury for re-sale in the market at a later date. This power will be used to issue shares only at NAV or a premium to NAV.

Asia Pacific

In both of the last two years, one part of our benchmark has performed dramatically better than the other. In 2008, it was Japan which performed well, whereas in 2009 it was the Pacific region ex-Japan. By holding shares in Witan Pacific, shareholders have been able to participate in the Far East's good relative equity returns, without the risk of being caught on the wrong side of these fluctuating relative fortunes within the region.

Our underweight exposure to Japan over the past year has resulted in outperforming our benchmark, the MSCI index as described above, and shows once again the advantage of using a fund that makes the asset allocation between countries in the region on the investor's behalf. Looking ahead, the Board will continue to review with its Managers the appropriate balance of exposure to Japan and the other regional equity markets.

Shareholder Information

As you know we outsource the day to day management of the Trust to Witan Investment Services Limited and Andrew Bell, an experienced investment trust professional, was appointed in February as the new Chief Executive of Witan. I would like to take this opportunity of thanking the previous CEO Robert Clarke for all the help he has given during his tenure.

The Witan Pacific web site, www.witanpacific.com, has recently been completely revamped and is an excellent and easy to use source of up to date information on the Trust. In addition you will find regular market commentary from Andrew Bell on the website, covering both the Asia Pacific and other regions.

Witan Wealthbuilder provides a cost effective facility for regular savers to invest either through a regular share savings scheme or through an ISA. Details of investing through Witan Wealthbuilder are available at www.witanwealthbuilder.com.

Board Changes

I am very sad to report that, after six years on the Board William Courtauld recently passed away, after a courageous fight with a long illness. I would like to take this opportunity to record the Board's appreciation of his insights and invaluable contribution to the Company. We send our condolences to his family.

William was intending to stand down from the Board this year, so we have initiated a search for a replacement Director using professional advisers to assist us.

Outlook

The economic resilience of Asian economies has become better appreciated during the past year, as regional economies shrugged off the worst of the global recession and have since regained momentum. Although the region is integrated with the global economy, its vulnerability is less than many believed in 2008. Whilst those sectors heavily dependent on exports to Western and more developed economies have not fully recovered from the late 2008 slump in world trade, the ability of Asian governments to spend on domestic infrastructure and the growth of personal consumption in relatively underleveraged economies has mitigated these negative external factors. This has helped drive a substantial recovery in the region's markets. A key test in the coming year will be whether the authorities can sustain the momentum in their domestic economies without sparking off inflation and, particularly, whether China's unique mix of free markets and central political direction will succeed in moderating lending growth without bringing the economy to a grinding halt.

The other major conundrum in the region is Japan. It seems extraordinary after nearly twenty years of negligible growth and flat or declining prices that no political consensus has emerged to adopt more aggressive policies to promote growth.  The sweeping election victory by the opposition parties last autumn, ending half a century of almost unbroken LDP rule, raised hopes of economic and fiscal changes but these have not been forthcoming as yet. Although the Japanese equity market appears relatively cheap, the catalyst to unlock this value and improve investment returns remains elusive.

Our two Managers' complementary styles have enabled your Company to outperform in a variety of market conditions during recent years. We will continue to review the appropriate balance of investment styles and geographical exposure to deliver benefits for shareholders from what we believe to be the Asia-Pacific region's enduring growth story.

The AGM of the Company will be held on Tuesday, 8 June 2010 at 12 noon at the J.P. Morgan Cazenove Auditorium, 20 Moorgate, London EC2R 6DA, and I look forward to meeting as many of you as are able to attend the meeting.

Gillian Nott

Chairman

28 April 2010

Business Review

This Business Review provides shareholders and other readers with information about the Company's business and results for the year ended 31 January 2010 and comments on the main trends and factors likely to affect the future development of the business. It is divided into two sections: Corporate Review and Investment Review.

Corporate Review

Objectives and Strategy

The Company's investment objective is to provide shareholders with a balanced portfolio of investments in the Asia Pacific region designed to outperform the MSCI AC Asia Pacific Free Index ("MSCI Index") in Sterling terms. From an investment perspective this means that your Company will seek to provide steady above average performance compared with the relevant MSCI Index in Sterling terms predominantly aiming to achieve this through growth in capital. Your Company aims to outperform by using an active multi-manager approach. Currently the Board has appointed two Investment Managers but their performance is subject to regular review and the Board has the ability, should it wish, to change the managers and to increase/decrease the number of managers used.

The Company has a policy of deploying gearing in a tactical sense, when circumstances point to the prospect of additional benefit for shareholders. Your Company will distribute as much income as may be prudent on an annual basis to shareholders. The Board employs share buy-backs to manage the discount appropriately expecting that the level will be comparable to that of its peers. Share buy-backs provide liquidity and enhance the NAV per share of the Company. In addition, your Company sponsors an ongoing marketing programme provided by Witan Investment Services Limited. This programme reaches out to both the private and professional investor using a blend of targeted marketing programmes.

Your Board aims to provide the best possible return to shareholders. The unbundling of the investment management services and other necessary services has provided greater transparency of the Company's cost base. Your Board applies strict controls on costs and expenses. For the last financial year the total expense ratio (TER) including performance fees has risen to 1.3% as a result of performance fees. Excluding performance fees the TER is 0.8%, the same as last year.

Management Arrangements

The management of the Company's assets is entirely outsourced to third parties. Witan Investment Services Limited acts as Executive Manager to manage and monitor the outsourced structure and relationships and to assist the Board on investment strategy and marketing. In summary, the Board sets the Company's strategy and the Executive Manager monitors and implements this same strategy. The following table shows the investment management arrangements:

Equity Mandate	Investment Manager	Mandate Benchmark (£)	% of Initial Portfolio as at 31 May 2005	Actual % as at 31 January 2010
Asia Pacific	Aberdeen	MSCI AC Asia Pacific Free Index	50%	53%
Asia Pacific	Nomura	MSCI AC Asia Pacific Free Index	50%	47%

Your Company has also appointed third parties for the various supporting services it requires. The principal ones are J.P. Morgan Chase for global custody, BNP Paribas Securities Services for investment accounting and administration and Phoenix Administration Services Limited for company secretarial services. From time to time, as required, the Company also buys in services for legal, investment consulting, financial and tax advice.

As a result of its outsourced structure the Company has no employees. Accordingly it has no direct impact on social matters. However it reviews its Managers' reports on their policies relating to social issues and on corporate governance standards. Both Managers are prepared to use their votes in these areas in the interests of the investments made on our behalf.

Dividend Policy

As the Chairman has said in her statement, the Company will continue the policy of distributing as much income as may be prudent. The future level of income from the portfolio is carefully monitored, taking account of forecasting uncertainties and the Company has substantial revenue reserves which can be used if necessary to smooth its distribution policy.

Buy-back Policy

Your Board believes that it is in shareholders' interests to buy back the Company's shares when they are standing at a substantial discount to NAV. The purchase of shares priced at a discount to the Company's net asset value (NAV) per share will, all other things being equal, increase the Company's NAV per share and support the Company's share price. In the year ended 31 January 2010 the Company bought back and cancelled a total of 50,000 Ordinary shares of 25p at a cost of £59,000 including stamp duty.

The Board has an active marketing programme designed to promote and create demand for Witan Pacific shares. The Witan Pacific web site, www.witanpacific.com , has recently been completely revamped and is an excellent and easy to use source of up to date information on the Trust.

Witan Wealthbuilder provides a cost effective facility for regular savers to invest in the Company's shares either through a regular share savings scheme or through an ISA. Details of investing through Witan Wealthbuilder are available at www.witanwealthbuilder.com

Borrowings & Gearing

The Company has the power under its Articles of Association to borrow up to 100% of the adjusted total of capital and reserves. Essentially this allows the Board to seek to improve performance through gearing by borrowing amounts equivalent in value to shareholders' funds. In practice the Board would not, other than in exceptional circumstances, borrow more than 20%. Over the past five years fully invested gearing has varied between 0% and 5%. At the start of the year the Company had in place a borrowing facility of £4m and during the course of the year it arranged an additional facility of £5m to enable it to further enhance returns in times of rising markets. At the end of the year the Company was effectively ungeared.

Key Performance Indicators

Your Board assesses its performance in meeting the Company's objective against the following key performance indicators:

·      Net asset value return

·      Total shareholder return

·      Performance against the benchmark

·      Discount to net asset value

·      Dividend payout

·      The level of buy-back activity

·      Total expense ratio

·      Growth in number of private investors

The Board also reviews both absolute and relative volatility and risk statistics for the portfolio.

Principal Risks

Because the Company is essentially a vehicle for overseas equity investment, your Board is likely in normal conditions to be fully invested subject to the tactical positions of the Investment Managers. The prime risks, therefore, of investing in the Company, are a fall in equity prices and adverse movements in foreign currency exchange rates. There are also other risks relating to the selection of Investment Managers and more generic risks associated with any international or regional equity portfolio relating to strategy, country, industrial sector and stock selection. Your Board seeks to manage these risks through the regular monitoring and review of portfolio information including adherence to the investment mandates, the monitoring of the investment policies and stock selection activities of the Investment Managers and the appropriate application of gearing and liquidity criteria. While foreign currency exposures are reviewed on a regular basis, these are inherent in investing in overseas securities and at present there are no currency hedging contracts in place.

The adverse effects of a failure, however defined, by an individual Investment Manager are reduced by the multi-manager structure, the different styles of the two Investment Managers and by the Board's regular reviews of the Investment Managers' performance against the relevant Key Performance Indicators. In addition, your Company also faces the risk that its objective and strategy become inappropriate due to changes in the financial services and savings market. This is a matter which is reviewed regularly at meetings of your Board. These reviews focus on investment policy, the role of marketing and the Witan Wealthbuilder savings schemes and discount control policies, as well as wider industry trends.

Finally, there are operational and regulatory risks, and the risk of errors and omissions. We are affected by a complex set of regulations and laws and changes in any of these may affect returns to shareholders. In particular, the consequences of the EC Directive on Alternative Investment Fund Managers could be adverse although the details are far from settled at this point.

All of these risks are regularly reviewed by the Company's Audit Committee. Your Board also takes professional legal, accounting and tax advice in advance, concerning any material proposed activity of your Company. Operationally, the multi-manager structure is robust as each of the Investment Managers, the custodian and the fund accountants keep their own records which are reconciled on a monthly basis. In addition, our Executive Manager, Witan Investment Services Limited monitors the activities of all third parties and reports any issues to the Board. Comprehensive contractual obligations and indemnification provisions have been put in place with each of the third party service providers. In order to qualify as an investment trust the Company must comply with section 842 of the Income and Corporation Taxes Act 1988 ("section 842"). A breach of section 842 could result in the Company losing investment trust status and, as a consequence, capital gains realised within the Company's portfolio would be subject to Corporation Tax. Compliance with the requirements of section 842 is continually monitored by the Fund Administrators.

The Company must comply with the provisions of the Companies Act 2006, and, as the Company's shares are listed for trading on the London Stock Exchange, the Company must comply with the UK Listing Authority's Listing Rules and Disclosure Rules and Transparency Rules ("UKLA Rules"). A breach of the Companies Act could result in the Company and/or the directors being fined or becoming the subject of criminal proceedings. A breach of the UKLA Rules could result in the suspension of the Company's shares which would in turn lead to a breach of section 842. The Board relies on the Executive Manager, the Company Secretary and the Company's professional advisers to ensure compliance with the Companies Act 2006 and UKLA Rules.

The Audit Committee regularly reviews these risks by considering a Risk Map which assesses the likelihood of such risks occurring and the severity of the potential impact of such risks. This enables the Board to take action and develop strategies in order to mitigate the effect of such risks to the extent possible.

Priorities for 2010

At its annual 'Strategy Away Day', the Board agreed that over the coming year it would:

·      Continue to monitor and assess the Investment Managers' performance against the Company's MSCI AC Asia Pacific Free Index (£) benchmark.

·      Conduct market research to gain a better understanding of what investment advisors and shareholders seek from investing in the Company.

·      Consider making greater use of tactical gearing to seek to enhance returns.

Investment Review

In February 2009 investors were shell shocked after the catastrophic events of 2008 and the outlook was uniformly pessimistic. The MSCI Asia Pacific index fell to a level in early March 2009 which was nearly 40% below its late-2007 high. This low marked the start of an astounding period that saw Asian equities soar across the region. Returns for the year under review ranged from +127% in Indonesia to +34% in Hong Kong. Japan was the laggard as the strong Yen and uncertain economic outlook weighed heavily on expectations. Consequently the Japan stockmarket was by far the poorest performer out of the countries that make up the Company's benchmark registering a rise of just 4.7%. (Source for all indices quoted is MSCI Sterling adjusted).

By mid 2009 investors were relieved that concerted action by governments and Central Banks had averted a depression. Investors returned to the fray, encouraged by signs of economic stabilisation and by low interest rates. The stock markets of Asia were a major beneficiary of this new found appetite for risk and the MSCI AC Asia Pacific ex Japan Index (£) rose some 70% before profit taking in early 2010 trimmed the return to +58% for the year.

The Company's investments are managed by Aberdeen Asset Managers and Nomura Asset Management, each of whom manages approximately half the total assets. Although both have strong investment philosophies their approaches differ substantially. Aberdeen are bottom up stock pickers and their country weightings are dictated more by the stock selection process than by market capitalisation weightings. Nomura operate by first assessing country and industry weightings before selecting stocks. Nomura hold a large number of stocks, in excess of 200, while Aberdeen hold a more concentrated portfolio of around 50 stocks.

During the year under review the combined portfolio as measured by WM Performance Measurement Services returned +34.6% (net of management fees but before taking account of corporate overheads). This compares with the benchmark MSCI AC Asia Pacific Index return of +29.6%, both figures being Sterling adjusted.

Aberdeen

Aberdeen Asset Managers' portfolio rose by 39.8% (Sterling adjusted), an outperformance of 10.2 percentage points. Both stock selection and country allocation contributed to the outperformance. The biggest contributors to asset allocation were the underweight position in Japan, along with overweight positions in both Singapore and India. Conversely, the underweight positions in Australia, China and Korea detracted the most.

The holding in the Aberdeen Global Indian Equity Fund was among the biggest contributors to relative return. The Indian market as a whole was lifted by strong corporate earnings growth and its resilience to the global downturn, given its domestically driven economy. In Indonesia, where the economy is similarly insulated from the external environment because of its large, domestically-driven economy, leading automobile-distributor PT Astra International was among the best performers. In contrast, the Japanese holdings, Seven & I Holdings and Bank of Kyoto proved costly, as the entire Japanese market lagged its regional peers.

There was minimal activity in the portfolio during the year. Aberdeen introduced Unicharm - a leading personal products manufacturer in Japan with a growing Asian presence, as well as BHP Billiton, a low-cost Australian mining group which has a solid balance sheet and top-quality assets. Aberdeen consider the investment case for BHP to be both simple and compelling: roughly two thirds of the world's population is in the early stages of a path to prosperity, a path that will require the consumption of vast quantities of minerals over the next few decades.

Aberdeen's outlook for the region:

"Last year's stellar performance posted by Asian equity markets is unlikely to be repeated in the year ahead as share prices have far outpaced the economic rebound that has been largely the result of government support. With the recent improvements on the economic front has come a growing anticipation that the time will soon come for governments to dismantle the raft of stimulus measures.

The good news for Asia is that for most countries, withdrawal of stimulus is a matter of choice, thanks to strong economic recoveries. In the developed economies on the other hand, it is the fear of unmanageable deficits that is causing governments to consider reining in stimulus programs. We remain optimistic about the long-term prospects for Asia. While valuations are no longer cheap following last year's run-up, they still appear reasonable, given the region's low levels of corporate and government debt. Stock picking will become increasingly important as investors re-focus on the fundamentals. Given our disciplined and careful approach, we believe we are well placed to identify stocks that are undervalued and will do well in the long run."

Nomura

Nomura's portfolio returned +29.2% (£) compared with the benchmark's return of +29.6% (£). This slight underperformance was mainly attributable to negative stock selection while the overall country selection was positive. The underweight position in Japan was a positive and stock selection there also added value. Negative stock selection results were mainly concentrated in India, China and Taiwan.

Nomura's defensive positions in China with holdings such as China Resources Power and China Railway Construction lagged the more cyclical stocks. In Taiwan, HTC had a negative impact as margins declined despite the launch of new smart-phones. On the positive side an overweight position in Australia's Rio Tinto was one of the largest contributors to positive stock selection as it was a potential acquisition target. Australian banks such as Westpac and ANZ also performed strongly due to their attractive valuations and lower than expected bad debt charges.

The Japan portion of the portfolio outperformed with both sector and stock selection contributing positively. Under the very uncertain economic conditions Nomura favoured companies with solid demand prospects and a focus on cost reduction. Stocks in the electronics sector contributed most, for example Makita produced a strong earnings recovery on the back of strong global demand and well controlled inventory levels.

Nomura's outlook for the region:

"There are several reasons for adopting a more cautious approach. One reason is that surveys of investor sentiment now indicate an excessive degree of optimism. Although we agree that the outlook for Asian equities is very positive, relative to the rest of the world, we believe market participants have already acted accordingly. For example, Asian equities are historically high, while institutional cash levels are historically low …

Therefore we believe there is room for disappointment that could induce further selling pressure.

Such disappointments could materialize chiefly due to the inflationary pressures that are growing rapidly, especially in the two largest regional economies of China and India …

However we should emphasise that such a "mid cycle" correction is normal and that once the element of uncertainty has been reduced and inflationary expectations moderate, Asian markets will resume their upward trend."

Income Statement

for the year ended 31 January 2010

	Year ended 31 January 2010				Year ended 31 January 2009
	Revenue return £'000	Capital return £'000		Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Gains/(losses) on investments held at fair value through profit or loss
	-	32,078	32,078		-	(26,220)	(26,220)
Exchange (losses)/gains	-	(222)		(222)	-	592	592
Investment income (note 2)	2,950	-		2,950	3,812	-	3,812
Management fees	(305)	-		(305)	(283)	-	(283)
Refund of prior years' VAT	-	-		-	557	-	557
Performance fees	-	(638)		(638)	-	(318)	(318)
Other expenses	(663)	(57)		(720)	(576)	(45)	(621)
Net return/(loss) before finance charges and taxation	1,982	31,161		33,143	3,510	(25,991)	(22,481)
Finance charges	(129)	-		(129)	(203)	-	(203)
Net return/(loss) on ordinary activities before taxation	1,853	31,161		33,014	3,307	(25,991)	(22,684)
Taxation on ordinary activities	(199)	34		(165)	(963)	90	(873)
Net return/(loss) on ordinary activities after taxation	1,654	31,195		32,849	2,344	(25,901)	(23,557)
Return/(loss) per Ordinary share - pence (note 3)	2.49	47.05		49.54	3.50	(38.66)	(35.16)

All revenue and capital items in the above statement derive from continuing operations.

The total columns of this statement represent the Income Statement of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

The Company had no recognised gains or losses other than those disclosed in the Income Statement.

Reconciliation of Movements in Shareholders' Funds

for the year ended 31 January 2010

	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
Year ended 31 January 2010
At 31 January 2009	16,590	5	40,981	33,339	10,151	101,066
Net return on ordinary activities after taxation	-	-	-	31,195	1,654	32,849
Dividends paid in respect of year ended 31 January 2009	-	-	-	-	(1,890)	(1,890)
Purchase of own shares	(13)	-	13	(59)	-	(59)
At 31 January 2010	16,577	5	40,994	64,475	9,915	131,966
Year ended 31 January 2009
At 31 January 2008	16,887	5	40,684	61,091	8,916	127,583
Net (loss)/return on ordinary activities after taxation	-	-	-	(25,901)	2,344	(23,557)
Dividends paid in respect of year ended 31 January 2008	-	-	-	-	(1,109)	(1,109)
Purchase of own shares	(297)	-	297	(1,851)	-	(1,851)
At 31 January 2009	16,590	5	40,981	33,339	10,151	101,066

Balance Sheet

at 31 January 2010

	2010 £'000	2009  £'000
Fixed assets
Investments held at fair value through profit or loss	133,318	99,470
Current assets
Debtors	1,485	708
Cash at bank and short term deposits	5,992	5,686
	7,477	6,394
Creditors: amounts falling due within one year
Bank loan	(5,900)	(3,000)
Other	(2,929)	(1,768)
	(8,829)	(4,768)
Net current (liabilities) /assets	(1,352)	1,626
Total assets less current liabilities	131,966	101,096
Provisions for liabilities and charges	-	(30)
Net assets	131,966	101,066
Capital and reserves
Called up share capital	16,577	16,590
Share premium account	5	5
Capital redemption reserve	40,994	40,981
Capital reserves	64,475	33,339
Revenue reserve	9,915	10,151
Shareholders' funds	131,966	101,066
Net asset value per Ordinary share - pence (note 5)	199.02	152.30

Cash Flow Statement

for the year ended 31 January 2010

	2010 £'000	2010 £'000	2009 £'000	2009 £'000
Net cash inflow from operating activities		1,717		3,349
Servicing of finance
Bank and loan interest paid	(177)		(207)
Net cash outflow from servicing of finance		(177)		(207)
Taxation
UK Corporation tax paid	(497)		(476)
Net tax paid		(497)		(476)
Capital expenditure and financial investment
Purchases of investments	(47,813)		(36,382)
Sales of investments	46,404		39,667
Capital expenses and performance fee payments	(57)		(208)
Net cash (outflow)/inflow from financial investment		(1,466)		3,077
Equity dividends paid		(1,890)		(1,109)
Net cash (outflow)/inflow before financing		(2,313)		4,634
Financing
Drawdown of loan	2,900		-
Repurchase of own shares	(59)		(1,851)
Net cash inflow/(outflow) from financing		2,841		(1,851)
Increase in cash		528		2,783
Reconciliation of net cash flow to movements
in net funds
Increase in cash as above		528		2,783
Net cash inflow from drawdown of loan		(2,900)		-
Exchange movements		(222)		592
Movement in net funds in the year		(2,594)		3,375
Net funds/(debt) at 1 February		2,686		(689)
Net funds at 31 January		92		2,686

Notes to the Accounts

for the year ended 31 January 2010

1.   Basis of accounting

The financial statements have been prepared on a going concern basis and under the historical cost convention, modified to include revaluation of fixed asset investments at fair value and in accordance with the Companies Act 2006, accounting standards applicable in the United Kingdom and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' revised December 2009 (the revised SORP).

2.   Investment income

	2010 £'000	2009 £'000
Income from investments held at fair value through profit or loss:
Overseas dividends	2,654	3,244
UK dividends	78	60
Overseas scrip dividends	210	23
Total dividend income	2,942	3,327
Other income:
Bank interest	2	75
Interest relating to refund of prior years' VAT	-	379
Stock lending fees	-	29
Underwriting commissions	6	2
Total other income	8	485
Total income	2,950	3,812

3.   Return/ (loss) per Ordinary share

The total return per Ordinary share is based on the net return attributable to the Ordinary shares of £32,849,000 (2009: loss £23,557,000) and on 66,312,703 Ordinary shares (2009: 67,001,745) being the weighted average number of shares in issue during the year.

The total return can be further analysed as follows:

	2010 £'000	2009 £'000
Revenue return	1,654	2,344
Capital return/(loss)	31,195	(25,901)
Total return/(loss)	32,849	(23,557)
Weighted average number of Ordinary shares	66,312,703	67,001,745
Revenue return per Ordinary share - pence	2.49	3.50
Capital return/(loss) per Ordinary share - pence	47.05	(38.66)
Total return/(loss) per Ordinary share - pence	49.54	(35.16)

The Company does not have any dilutive securities.

4.  Dividends

Dividends on Ordinary shares	Record date	Payment date	2010 £'000	2009 £'000
Final dividend (1.65p) for the year ended 31 January 2008	30 May 2008	27 June 2008	-	1,109
Final dividend (2.85p) (includes 1.00p special) for the year ended 31 January 2009	27 May 2009	26 June 2009	1,890	-
			1,890	1,109

The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these financial statements.

The total dividend payable in respect of the financial year which forms the basis of Section 842 of the ICTA 1988 is set out below.

	2010 £'000
Revenue available for distribution by way of dividend for the year	1,654
Proposed final dividend of 2.10p for the year ended 31 January 2010 (based on 66,273,868 Ordinary shares in issue at 27 April 2010)	(1,392)
Undistributed revenue for Section 842 ICTA purposes*	262

*Undistributed revenue comprises 8.9% of income from investments of £2,942,000 (see note 2).

5.   Net asset value per Ordinary share

Net asset values are based on net assets of £131,966,000 (2009: £101,066,000) and on 66,308,868 (2009: 66,358,868) Ordinary shares in issue at the year end.

6.   Statement of Directors' Responsibilities

in respect of the Annual Report, the Directors' Remuneration Report and the Financial Statements

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 net return of the Company for that period. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements respectively; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate 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 and the Directors' Remuneration Report comply with the Companies Act 2006. They 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 financial statements are published on www.witanpacific.com, which is a website maintained by the Company's Executive Manager, Witan Investment Services Limited ("Witan"). The Directors are responsible for the maintenance and integrity of the Company's website. The work carried out by the Auditors does not involve consideration of the maintenance and integrity of the website and accordingly, the Auditors accept no responsibility for any changes that have occurred to the Annual Report and Financial Statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Each of the Directors confirm that to the best of their knowledge:

·      the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

·      the Annual Report includes a fair review 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.

7.   Financial Statements - Availability and Comparative Information

The financial information contained in this announcement does not constitute statutory accounts for the year ended 31 January 2010 nor 31 January 2009 as defined by the Companies Act 2006 but is derived from those accounts. The statutory accounts for the year ended 31 January 2009 have been delivered to the Registrar of Companies and those for the year ended 31 January 2010 will be delivered following the Company's Annual General Meeting. The Independent Auditor's report on those accounts was unqualified and did not contain any statements under section 498 (2) or (3) of the Companies Act 2006.

Copies of the Annual Reports and Financial Statements for the year ended 31 January 2010 will be posted to shareholders shortly and can be requested from the Registered Office of the Company or downloaded from the Company's website www.witanpacific.com .  

Phoenix Administration Services Limited

28 April 2010

 

END

 

 

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