Final Results

Witan Investment Trust PLC 06 March 2008 6 March 2008 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Financial Highlights Year ended Year ended 31 December 2007 31 December 2006 Per Ordinary Share: in pence in pence Net Asset Value 545.7 517.1 Revenue return 11.08 10.24 Dividends - two interims 9.90 9.20 Highlights of the Year • Total shareholder return of 7.5% • NAV performance ahead of the benchmark (5.5% compared to 5.3%) • Discount management policy enhances NAV • Three new managers appointed • Total expense ratio of 0.53% • Dividend increased by 7.6% Extracts from the Chairman's Statement: Opening Remarks There is nothing worse than a smart Alec or indeed a Board that claims it always gets everything right. However, in last year's Business Review, looking to 2007, we highlighted the problem of excess credit, the high valuation of smaller companies and a general appetite for risk with the likelihood of more volatile markets. These themes are today's headlines for commentators looking back over the last twelve months. Despite having correctly identified some of the current problems and despite a reasonable increase from major Western equity markets in 2007, I suspect we all feel somewhat battered. For example, the global financial sector fell by more than 20% due to banks writing off more than US$100 billion related to losses in credit markets. Furthermore, any security relating to the housing market or to consumer spending patterns fell in value. In the US every sector in the S&P 500 Index rose by more than the market, excluding the Financials and Consumer Discretionary sectors, with big companies outperforming smaller ones. Losses have therefore been specific and explicable, confined to areas that had been subject to irresponsible leverage or lending. Emerging markets successfully decoupled over the year, with China and India heading the charge. Unlike many investors we did not give up on Japan, where stocks fell. As we all know oil, gold and agricultural commodities all leapt in price while the US dollar fell in value against almost all major currencies. Oh to have had more of what went up and less of that which performed poorly; but that said, a net asset value total return of 7.1% was a reasonable outcome. Shareholder Returns and Performance The share price rose over the year by 5.3% which, combined with the dividends paid during the year, gives shareholders a 2007 share price total return of 7.5%. Which means that, over the last five years, Witan shareholders have experienced an annualised return of 15.8%, some 12.5% more per annum than the rate of inflation. Witan, with its global equity portfolio, has done its job. In last year's report I stated that it was important to look at returns over the long term. We will look at our hundred year story next year but suffice to say that, over an economic cycle, Witan has delivered inflation plus 4%. For the fifth consecutive year Witan's net asset value per share (NAV) (up 5.5%) has risen by more than the benchmark (up 5.3%), calculated on a capital change only basis. There is more information on manager performance on page 5, in the extracts from the Business Review section, but in general the key points are that our share buy-back programme, gearing and overweight positions in Asia (outside of Japan) and Europe have been positive, while an overweight position in Japan and underperformance from some of our managers have been negative contributors. Page 2 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Extracts from the Chairman's Statement continued Strategic Review Your Board felt that as we approached the third anniversary of the move to multi-manager it was the right time to undertake a strategic review. The process reinforced the benefits of multi-manager in that we were able to change that which we felt was not working for us without a wholesale change in the investment arrangements of your Company. Your Board is persuaded by the opportunity presented by a global investment approach; comparing companies and their stock market valuations across borders rather than within a single country, at least for larger more international companies, seems to be sensible. The analysis supporting this proposition lay behind our decision to increase the proportion managed in this manner by appointing Thomas White to our third global equities mandate, to manage 10% of the total portfolio. The second major change resulting from the review was to replace the underperforming APS, our Asia Pacific manager, with a combination of Comgest, to manage the region excluding Japan and Australasia, and Orbis, for Australasia by itself. Unsurprisingly the benchmark and its importance to you, our shareholders, and to the Board was a source of considerable debate over the strategic review. On page 4, in the extracts from the Business Review section, we cover this topic in detail and the changes we have made to our benchmark. At the very least it must not drive our investment approach but it must allow you, our shareholders, to understand better what you might expect from your investment and for us, the Board, to judge how the Company is doing. The change in the benchmark, reducing the proportion represented by the UK, was driven by our wish to pursue the best global opportunities and to diversify risk away from the UK. Another impact of these changes is to reduce Witan's exposure to enhanced indexed techniques of fund management, which have proved to have been very successful to date, and to increase its exposure to more active managers. In the industry jargon we have reduced beta in favour of alpha. This is a deliberate move by the Board, which believes that returns from markets themselves are likely to be lower and more volatile in the future, thereby increasing the attractiveness of more active management. Total Expense Ratio The average global unit trust has a total expense ratio of 1.63%, which is over three times more expensive than Witan's annual ratio of 0.53%. This means that these alternatives have to continually outperform Witan by over 1%, each and every year, just to keep pace. Your Board believes that it is good practice to keep costs to a minimum without compromising the effectiveness of Witan's business scope and investment engine. VAT on Management Fees As a result of the outcome of various court cases that have taken place over the last twelve months, Witan will be able to reclaim some of the VAT it has paid since 1990. Those monies which the Board believe Witan is virtually certain to be able to reclaim have been included in these accounts (see the Income Statement on page 6). Dividend Your Board has declared a second interim dividend of 5.8 pence per ordinary share, to make a total distribution for the year of 9.9 pence (2006: 9.2 pence). This represents an increase of 7.6%, which is in line with our stated policy of paying an annual dividend at least in line with inflation indicators. Share Buy-Backs During 2007 your Company repurchased 37.3 million shares for cancellation. This amounted to 14.3% of the Trust's capital at the start of the year. In turn these buy-backs enhanced Witan's NAV by around 1.4%. Your Board believes that buying in its own shares at a discount is clearly helpful to investors. This process is managed in accordance with Witan's commitment to buy back shares with a view to keeping the discount at 10% or below in fair value terms. Witan Investment Services (WIS) Witan's subsidiary company, WIS, is a FSA registered entity responsible for the marketing of the Witan brand and the promotion of its saving schemes to investors. WIS also provides similar services to Witan Pacific Investment Trust plc and acts as Executive Manager for that Trust. WIS's corporate aim is to create demand for Witan shares and to do so profitably. The company was true to this aim during 2007 and it provided a healthy revenue stream which mitigated costs normally incurred by its parent. Your Board intends to maximise WIS's potential as a contributor to Witan's overall return through the provision of new products and services, as appropriate. However, such activities must always present a tangible benefit for Witan's shareholders. Page 3 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Extracts from the Chairman's Statement continued Outlook There are a number of questions that need to be answered as one addresses the economic outlook for 2008. Firstly, will the US be able to avoid a recession? Secondly, how well will the other economies be able to cope if the US goes into recession? Thirdly, if the US economy does have a recession, how deep will it be? Lastly, how long will the credit crisis be an issue? It was a year ago that the former Fed chairman, Alan Greenspan, thought that the risk of a US recession was 1 in 3. I am afraid that it is now odds-on favourite but, as a result, further rate cuts have been made and a fiscal stimulus to the economy has taken place. This will obviously help but is likely to come too late to avoid some sort of slowdown; nevertheless, it looks as if it may be not too severe. In the past a downturn in the US has led to weakness across the globe and, as the US continues to be the largest economy, a serious slowdown will also be felt elsewhere. However, the Asian economies are now in a far better position to cope with a US slowdown. So, given the favourable long term growth perspective for these emerging economies, corrections in their equity markets should provide long term buying opportunities. The question concerning the length of the credit crisis is perhaps the most difficult, as we are somewhat in uncharted waters, but our best guess is that the worst should be behind us by some time in the second half of the year. In summary, we feel there will be a relatively mild US recession which will have less of an impact on the emerging economies of the world than in the past. The credit crisis has some more bad news to throw at us but we hope the end is not too far away. Equity markets are likely to be more volatile but, if we are right about the depth of the US recession, this will present Witan with good money-making opportunities, given the current attractiveness of corporate valuations. Page 4 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Extracts from the Business Review: Management Arrangements During the year the Board made some changes to the investment manager line-up. Following a formal review, APS were removed and replaced by a combination of Comgest and Orbis. In addition, Thomas White - a third global manager - was appointed. Their portfolio was funded by a reduction in the size of, primarily, the UK mainstream and North American portfolios. Although multi-manager arrangements can prove expensive, Witan's careful cost control has resulted in a total expense ratio of 0.53%, one of the lowest in the investment trust industry and much lower than any multi-manager unit trust. This, in turn, has allowed Witan to continue paying rising dividends. The Witan Benchmark Your Company's benchmark is a quantitative representation of what shareholders can expect in the long term from an investment in Witan both in terms of the underlying investment structure of the portfolio and performance. It enables the aims of your Company to be encapsulated succinctly without the need for a detailed description. It is an equity benchmark, although your Board reserves the right to invest in other assets if it deems it to be appropriate, for better performance or capital preservation. Similarly, the benchmark does not drive either portfolio distribution or mandate allocation, as can be seen from the table on page 5 showing the investment management arrangements, but it does provide a marker for the long term performance of the Company. Over shorter periods, performance can be expected to vary, sometimes considerably, from that of the benchmark. From 1 October 2007 the Company's benchmark changed from 50% FTSE All-Share Index; 50% FTSE World (ex UK) Index to 40% FTSE All-Share Index; 20% FTSE All-World North America; 20% FTSE All-World Europe (ex UK); 20% FTSE All-World Asia Pacific. This change recognises that the world economy in GDP terms is increasingly split into three trading areas: the Americas, Europe, and Asia Pacific and, within these regions, a large proportion of trade flows are internal. The Board feels an equal weighting of all three areas in the Trust's benchmark gives a fairer representation of the Company's proposition to its investors and ultimately will offer a truer gauge of its long term performance. The new benchmark allocates a greater weighting to the Asia Pacific region, an area which your Board expects to outperform in the long term. Portfolio Review 2007 was another good year for equity investors, albeit one of rising volatility particularly in the second half of the year. Over the year world markets, as measured by the FTSE World (ex UK) Index in sterling terms, returned 9.7%. The star performers were the Emerging Markets particularly Brazil and India, which returned in excess of 70%. The worst performing markets were Ireland (-17.2%) and Japan (-6.4%). The UK equity market, as measured by the FTSE All-Share Index, returned 5.3%. Currencies had much less of an impact on returns than in 2006, although the major currencies were just as volatile. The strength of the Euro was the main feature, enhancing returns from Europe (ex UK) to the sterling investor by 8.3% to 15.7%. Over the last five years equity markets have performed exceptionally well with the UK returning 15.4% per annum and the rest of the world 13.5%. This represents an above average rate of progress albeit from a low starting point. What has been remarkable throughout this period, until the last few months, has been the lack of volatility in markets. That, at least, appears to be changing as the sub-prime crisis, and its after-effects, have increased investors' sensitivity to risk. Witan's shareholders also saw good returns with a total return from holding the shares during the year of 7.5%. Witan's net asset value rose by 5.5% over the year, 0.2% ahead of the benchmark. Positive contributions to this came from buying back shares at a discount to net asset value, the Board's gearing policy and the overweight allocation to Europe and Asia (outside Japan) in the first nine months of the year. (As noted above the Board amended the Trust's benchmark from October, raising the weighting in both of these regions. This made the benchmark much harder to beat in the final quarter of the year.) Henderson's UK smaller companies and North American teams, Brandes and the new managers, Thomas White, Comgest and Orbis (in the final quarter), all contributed positively towards performance. The overweighting of Japan and the underperformance of Wellington, Southeastern, MFS, Mellon, our currency manager, and APS (in the first half of the year) detracted from the relative return. Page 5 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Extracts from the Business Review continued EQUITY MANDATE INVESTMENT MANAGER MANDATE BENCHMARK INVESTMENT STYLE (TOTAL RETURN) UK mainstream equities Henderson Global FTSE 350 (ex investment Enhanced index Investors companies) UK smaller companies Henderson Global Hoare Govett Smaller Companies Growth at an attractive Investors price (ex investment companies) Global Southeastern Asset FTSE All-World Quality at a discounted Management valuation Global MFS International FTSE All-World Growth at an attractive price Global Thomas White FTSE All-World Fundamental valuation International techniques Continental Europe Wellington Management FTSE World Europe (ex UK) Fundamental research Company North America Henderson Global FTSE World North America Enhanced index Investors Japan Brandes Investment FTSE Japan Value Partners Far East Comgest FTSE All-World Asia (ex Japan/Australia/New Zealand) Fundamental research Australasia Orbis Investment FTSE Australia Value Management Performance For the year ended 31 December 2007 and from inception to 31 December 2007. Performance Benchmark Value of in the period performance Funds under % of Witan's Performance Benchmark since since Management Assets under in the period Performance inception inception £m at Management 31.12.06 to 31.12.06 to 31.12.07 to 31.12.07 31.12.07 at 31.12.07* 31.12.07 to 31.12.07 (annualised) (annualised) Investment Manager Henderson Global Investors (UK mainstream) 403.7 31.5 +5.6 +5.8 +15.7 (A) +15.6 (A) Henderson Global Investors (UK smaller) 56.1 4.4 -5.0 -8.3 +17.7 (A) +16.4 (A) Southeastern Asset Management (Global) 190.2 14.8 +6.4 +10.8 +10.9 (A) +14.9 (A) MFS International (Global) 131.2 10.3 +9.1 +10.8 +14.8 (A) +14.9 (A) Thomas White (Global) 127.9 10.0 not applicable +3.0 (C) +0.9 (C) Wellington Management Company (Europe) 118.4 9.3 +6.8 +15.7 +16.2 (A) +22.2 (A) Henderson Global Investors (USA) 79.0 6.2 +6.8 +5.6 +9.8 (A) +9.2 (A) Brandes Investment Partners (Japan) 73.5 5.7 -5.0 -6.4 +5.6 (A) +8.2 (A) Comgest (Far East) 76.3 6.0 not applicable +16.5 (B) +15.7 (B) Orbis (Australasia) 23.1 1.8 not applicable +15.3 (B) +10.8 (B) (A) From 30.09.04 (B) From 31.07.07 (C) From 28.09.07 *excluding cash balances held centrally by Witan and the unquoted investments. Source: The WM Company. Page 6 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Consolidated Income Statement Year ended Year ended 31 December 2007 31 December 2006 Revenue Capital Revenue Capital return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 Investment income (note 1) 31,817 - 31,817 32,483 - 32,483 Other income (note 1) 7,659 - 7,659 7,276 - 7,276 Gains on investments held at fair value through profit or loss - 54,884 54,884 - 112,547 112,547 ---------- ---------- ---------- ---------- ---------- ---------- Total income 39,476 54,884 94,360 39,759 112,547 152,306 Expenses Management fees (note 2) (505) (2,009) (2,514) (460) (2,044) (2,504) Write-back of prior years' VAT (note 324 1,126 1,450 - - - 2) Other expenses (5,432) - (5,432) (4,990) - (4,990) ---------- ---------- ---------- ---------- ---------- ---------- Profit before finance costs and 33,863 54,001 87,864 34,309 110,503 144,812 taxation Finance costs (2,618) (7,600) (10,218) (2,632) (7,647) (10,279) ---------- ---------- ---------- ---------- ---------- ---------- Profit before taxation 31,245 46,401 77,646 31,677 102,856 134,533 Taxation (4,108) 2,494 (1,614) (4,112) 2,410 (1,702) ---------- ---------- ---------- ---------- ---------- ---------- Profit attributable to equity holders of the parent company 27,137 48,895 76,032 27,565 105,266 132,831 ====== ====== ====== ====== ====== ====== Earnings per ordinary share (note 3) 11.08p 19.97p 31.05p 10.24p 39.13p 49.37p ====== ====== ====== ====== ====== ====== The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS as adopted by the European Union. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Witan Investment Trust plc, the parent company. There are no minority interests. Page 7 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Consolidated and Individual Company Statements of Changes in Equity Group Year ended 31 December 2007 Ordinary Share Capital Other share premium redemption capital Revenue capital account reserve reserve reserves Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2006 65,193 16,237 28,633 1,192,597 45,874 1,348,534 Profit for the year - - - 48,895 27,137 76,032 Ordinary dividends paid (note 5) - - - - (23,707) (23,707) Buy-backs of ordinary shares (9,336) - 9,336 (181,553) - (181,553) ----------- --------- --------- ------------- ---------- ------------- At 31 December 2007 55,857 16,237 37,969 1,059,939 49,304 1,219,306 ====== ===== ===== ======= ====== ======= Company Year ended 31 December 2007 Ordinary Share Capital Other share premium redemption capital Revenue capital account reserve reserves reserve Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2006 65,193 16,237 28,633 1,192,451 46,020 1,348,534 Profit for the year - - - 49,127 26,905 76,032 Ordinary dividends paid (note 5) - - - - (23,707) (23,707) Buy-backs of ordinary shares (9,336) - 9,336 (181,553) - (181,553) ---------- ----------- ----------- ----------- ----------- ----------- At 31 December 2007 55,857 16,237 37,969 1,060,025 49,218 1,219,306 ====== ======= ======= ======== ======= ======= Group Year ended 31 December 2006 Ordinary Share Capital Other share premium redemption capital Revenue capital account reserve reserves reserve Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 73,747 16,237 20,079 1,232,310 42,544 1,384,917 Profit for the year - - - 105,266 27,565 132,831 Ordinary dividends paid (note 5) - - - - (24,235) (24,235) Buy-backs of ordinary shares (8,554) - 8,554 (144,979) - (144,979) ----------- --------- --------- ------------- ---------- ------------- At 31 December 2006 65,193 16,237 28,633 1,192,597 45,874 1,348,534 ====== ===== ===== ======= ====== ======= Company Year ended 31 December 2006 Ordinary Share Capital Other share premium redemption capital Revenue capital account reserve reserves reserve Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 73,747 16,237 20,079 1,232,228 42,626 1,384,917 Profit for the year - - - 105,202 27,629 132,831 Ordinary dividends paid (note 5) - - - - (24,235) (24,235) Buy-backs of ordinary shares (8,554) - 8,554 (144,979) - (144,979) ---------- ----------- ----------- ------------ ----------- ------------ At 31 December 2006 65,193 16,237 28,633 1,192,451 46,020 1,348,534 ====== ====== ====== ======= ====== ======= Page 8 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Consolidated and Individual Company Balance Sheets as at 31 December 2007 Group Company Group Company 31 December 31 December 31 December 31 December 2007 2007 2006 2006 £'000 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 1,276,354 1,277,340 1,382,554 1,383,308 ------------ ------------ ------------ ------------ Current assets Other receivables 6,742 6,625 6,368 6,143 Cash and cash equivalents 88,394 87,166 114,610 113,934 ------------ ------------- ------------ ------------- 95,136 93,791 120,978 120,077 ------------ ------------ ------------ ------------ Total assets 1,371,490 1,371,131 1,503,532 1,503,385 ------------ ------------ ------------ ------------ Current liabilities Other payables (5,277) (4,918) (8,170) (8,023) ------------- ------------- ------------- ------------- Total assets less current liabilities 1,366,213 1,366,213 1,495,362 1,495,362 ------------- ------------- ------------- ------------- Non current liabilities 81/2 per cent. Debenture Stock 2016 (45,779) (45,779) (45,779) (45,779) 6.125 per cent. Secured Bonds due 2025 (98,573) (98,573) (98,494) (98,494) 3.4 per cent. cumulative preference (2,055) (2,055) (2,055) (2,055) shares of £1 2.7 per cent. cumulative preference (500) (500) (500) (500) shares of £1 ------------ ------------ ------------ ------------ (146,907) (146,907) (146,828) (146,828) ------------ ------------ ------------ ------------ Net assets 1,219,306 1,219,306 1,348,534 1,348,534 ======= ======= ======= ======= Equity attributable to equity holders Ordinary share capital 55,857 55,857 65,193 65,193 Share premium account 16,237 16,237 16,237 16,237 Capital redemption reserve 37,969 37,969 28,633 28,633 Retained earnings: Other capital reserves 1,059,939 1,060,025 1,192,597 1,192,451 Revenue reserve 49,304 49,218 45,874 46,020 ------------ ------------ ------------ ------------ Total equity 1,219,306 1,219,306 1,348,534 1,348,534 ======= ======= ======= ======= Net asset value per ordinary share (note 4) 545.7p 545.7p 517.1p 517.1p ======= ======= ======= ======= Page 9 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Consolidated and Individual Company Cash Flow Statements for the year ended 31 December 2007 Group Company Group Company Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 2007 2007 2006 2006 £'000 £'000 £'000 £'000 Operating activities Profit before taxation 77,646 77,646 134,533 134,533 Interest paid 10,072 10,072 10,183 10,183 Gains on investments held at fair value through profit or loss (54,884) (55,116) (112,547) (112,483) Net sales of investments held at fair value through profit or loss 158,309 158,309 175,508 175,508 (Increase)/decrease in other receivables (1,202) (1,310) (106) 249 (Decrease)/increase in other (420) (632) 245 167 payables Cash inflow from futures contracts 3,029 3,029 1,316 1,316 Scrip dividends included in investment income (269) (269) (414) (414) ------------ ------------ ------------ ------------ Net cash inflow from operating activities before interest and taxation 192,281 191,729 208,718 209,059 Interest paid (10,072) (10,072) (10,183) (10,183) Amortisation of debt issue costs 79 79 80 80 Tax on overseas income (1,836) (1,836) (1,558) (1,558) ------------ ------------ ------------ ------------ Net cash inflow from operating activities 180,452 179,900 197,057 197,398 ------------ ------------ ------------ ------------ Financing activities Equity dividends paid (23,707) (23,707) (24,235) (24,235) Buy-backs of ordinary shares (182,567) (182,567) (143,001) (143,001) ------------ ------------ ------------ ------------ Net cash outflow from financing activities (206,274) (206,274) (167,236) (167,236) ------------ ------------ ------------ ------------ (Decrease)/increase in cash and cash equivalents (25,822) (26,374) 29,821 30,162 Cash and cash equivalents at the start of the year 114,610 113,934 86,319 85,302 Effect of foreign exchange rate (394) (394) (1,530) (1,530) changes ------------ ------------ ------------ ------------ Cash and cash equivalents at the end of the year 88,394 87,166 114,610 113,934 ======= ======= ======= ======= Page 10 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 Notes 1. Income Year ended Year ended 31 December 31 December 2007 2006 £'000 £'000 Investment income Franked: UK dividends from listed investments 16,603 17,853 Special dividends from listed investments 391 294 UK dividends from unquoted investments 338 267 ---------- ---------- 17,332 18,414 ---------- ---------- Unfranked: Overseas dividends from listed investments 13,531 13,463 Scrip dividends from listed investments 269 414 Special dividends from listed investments 657 180 Overseas fixed interest and convertible bonds 28 12 --------- --------- 14,485 14,069 --------- --------- Total investment income 31,817 32,483 ===== ===== Other income Deposit interest 6,129 5,091 Stock lending income 375 1,319 Underwriting commission 6 28 Income from subsidiary company's third party business 1,142 803 Other income 7 35 -------- --------- 7,659 7,276 ===== ===== 2. Management fees Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Management fees 485 1,453 1,938 413 1,239 1,652 Performance fees - 487 487 - 593 593 Irrecoverable VAT thereon 20 69 89 47 212 259 --------- --------- --------- --------- --------- --------- 505 2,009 2,514 460 2,044 2,504 VAT write-back (324) (1,126) (1,450) - - - --------- --------- --------- --------- --------- --------- 181 883 1,064 460 2,044 2,504 ===== ===== ===== ===== ===== ===== The sum of £1,450,000 represents the amount which, following the acceptance by HM Revenue & Customs of the court judgment that investment management fees paid by investment trust companies should be exempt from VAT, the Board considers the Company to be certain of recovering in due course. Page 11 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 3. Earnings per ordinary share The earnings per ordinary share figure is based on the net profit for the year of £76,032,000 (year ended 31 December 2006: £132,831,000) and on 244,901,514 ordinary shares (year ended 31 December 2006: 269,065,426), being the weighted average number of ordinary shares in issue during the year. The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below. The Company has no securities in issue that could dilute the return per ordinary share. Therefore the basic and diluted earnings per ordinary share are the same. Year ended Year ended 31 December 31 December 2007 2006 £'000 £'000 Net revenue profit 27,137 27,565 Net capital profit 48,895 105,266 ---------- ---------- Net total profit 76,032 132,831 ===== ====== Weighted average number of ordinary shares in issue during the year 244,901,514 269,065,426 Pence Pence Revenue earnings per ordinary share 11.08 10.24 Capital earnings per ordinary share 19.97 39.13 --------- --------- Total earnings per ordinary share 31.05 49.37 ===== ===== 4. Issued share capital The number of ordinary shares of 25p each in issue at 31 December 2007 was 223,426,499 (2006: 260,772,887). Page 12 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 5. Dividends Year ended Year ended 31 31 December December 2006 2007 £'000 £'000 Amounts recognised as distributions to equity holders in the year: Second interim dividend for the year ended 31 December 2006 of 5.30p (2005: 5.00p) per ordinary share 13,694 14,050 First interim dividend for the year ended 31 December 2007 of 4.10p (2006: 3.90p) per ordinary share 10,024 10,189 Write-back of unclaimed dividends relating to prior years (11) (4) ---------- ---------- 23,707 24,235 ====== ====== Proposed second interim dividend for the year ended 31 December 2007 of 5.80p (2006: 5.30p) per ordinary share 12,849 13,694 ====== ====== The proposed second interim dividend has not been included as a liability in these financial statements. Set out below is the total dividend to be paid in respect of the year. This is the basis on which the requirements of section 842 of the Income and Corporation Taxes Act 1988 are considered. Year ended Year ended 31 December 31 December 2007 2006 £'000 £'000 First interim dividend for the year ended 31 December 2007 of 4.10p (2006: 3.90p) per ordinary share 10,024 10,189 Proposed second interim dividend for the year ended 31 December 2007 of 5.80p (2006: second interim dividend of 5.30p) per ordinary 12,849 13,694 share ---------- --------- 22,873 23,883 ====== ====== The second interim dividend of 5.80p per ordinary share of 25p each will be paid on 3 April 2008 to shareholders on the register on 14 March 2008. 6. Consolidation The Group accounts consolidate the accounts of Witan Investment Trust plc and the accounts of its wholly-owned subsidiary, Witan Investment Services Limited. 7. 2007 Accounts The preliminary figures for the year ended 31 December 2007 are an extract from the Company's latest accounts for that period and do not constitute statutory accounts. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish later in March 2008 full financial statements that comply with IFRSs as adopted by the European Union. 8. 2006 Accounts The figures and financial information for the year ended 31 December 2006 are extracted from the latest published accounts of the Company and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 9. Annual Report The full annual report and accounts will be posted to shareholders in the week beginning 24 March 2008 and copies will be available from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. 10. Annual General Meeting The Annual General Meeting will be held at 2.30 pm on Monday 28 April 2008 at Merchant Taylors' Hall, 30 Threadneedle Street, London EC2R 8JB. Page 13 of 13 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2007 For further information please contact: James Budden Witan Investment Trust plc Telephone: 020 7227 9772 or Eleanor Mitchell/Hugo Mortimer-Harvey Quill Communications Tel: 020 7758 2240/2234 This information is provided by RNS The company news service from the London Stock Exchange

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