Final Results
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
15 March 2010
This announcement contains regulated information
Directors' Report: Chairman's Statement
Highlights
• NAV total return ahead of benchmark by 1.4%
• increased gearing at market low point in late February
• total shareholder return over last five years of 51.2% - exceeding benchmark by 9.3%
• dividend increased for the 35th year
• new Chief Executive - Andrew Bell
Opening Remarks
Last year my Chairman's Statement concluded by pointing out that in the past, when equity markets have fallen by more than 20% in any twelve month period, in most instances there has been a significant rise the following year. It is therefore with some relief that I am writing the 2009 Chairman's Statement for a year in which most major equity indices rose by over 20% and by 65% from the March 2009 lows. Witan achieved a share price total return of 30.6%.
Last year I commented on the reduction that has taken place over many years in the percentage of our assets held in the UK equity market. Given the terrible state of the UK's finances, the uncertainties around the impact on the economy of stopping quantitative easing and the additional factor of a general election, one might ask why we have any exposure at all. The good news for UK equity markets is that nearly three quarters of the revenues of the quoted corporate sector originate from overseas and that improving growth momentum is being predicted for most major economies in 2010. We have maintained our overall exposure to the UK but in this element of the Witan portfolio we have reduced the smaller company exposure - the sector of the market which is more UK dependent.
Shareholder Returns and Performance
The share price rose by 26.7% which, combined with the dividend paid during the year, resulted in a respectable total shareholder return of 30.6%. As a long term savings vehicle the longer term perspective is important and it is therefore worth reminding ourselves of the average total shareholder return of 8.6% per annum over the last five years.
Over the last twelve months investment managers have found the going firm but the pace a little too fast, as most fund managers underperformed the strong recovery in the market indices. Under these circumstances a benchmark performance from the totality of your chosen managers is a reasonable outcome. On page 15 below you will find a detailed breakdown of investment performance by manager; it is worth highlighting the performance of three of your managers against their individual benchmarks, namely Southeastern, Orbis and Wellington who respectively outperformed by 7.7%, 18.2% and 9.0%. Obviously there was a counterbalance of underperforming managers but in a difficult year in which to make the correct investment decisions the multi-manager approach has worked in our favour as across the market three quarters of managers in the investment industry have underperformed.
Page 2 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Chairman's Statement continued
Portfolio Attribution and Investment Decisions
The most important decision taken in 2009 was to reintroduce gearing into the Trust. At the end of 2008 we had completely neutralised the gearing effect of our debt but as the market fell we increasingly believed that global equities offered great value. In February and March we deployed £30 million of cash, gearing the portfolio by 6% of total assets on average. From the attribution summary you can see that this decision alone added 2.5% to the outperformance of the Trust.
Performance Attribution
for the year ended 31 December 2009 (based on the Company's financial statements)
|
Net asset value total return |
+25.9% |
Portfolio investment total return |
|
+24.4% |
|
|
|
|
|
|
|
Benchmark total return |
+24.5% |
Benchmark total return |
|
+24.5% |
|
|
|
|
|
---------- |
|
|
|
Investment underperformance |
|
-0.1% |
|
|
|
|
|
|
|
|
|
Gearing impact |
+2.5% |
|
|
|
|
Share buy-backs |
+0.8% |
|
|
|
|
Interest on cash, etc |
+0.2% |
|
|
|
|
|
---------- |
|
|
|
|
|
|
+3.5% |
|
|
|
|
|
---------- |
|
|
|
|
|
+3.4% |
|
|
|
|
|
|
|
|
|
Borrowing costs |
-0.9% |
|
|
|
|
Operating costs and tax |
-1.1% |
|
|
|
|
|
---------- |
|
|
|
|
|
|
-2.0% |
|
|
---------- |
|
|
---------- |
|
Outperformance |
+1.4% |
|
|
+1.4% |
|
|
====== |
|
|
====== |
Total Expense Ratio
Including performance fees our Total Expense Ratio (TER) has increased from 0.71% to 0.98%. The two main factors responsible for the increase are a higher level of performance fees paid to our managers this year combined with a reduction in the level of average net assets. As explained in more detail in the Business Review, performance fees are payable to individual managers for outperforming their relevant benchmarks, although the aggregate investment performance of our managers was just below Witan's overall benchmark. Our TER excluding performance fees was 0.71% compared with 0.58% in 2008. These figures should be evaluated against the weighted average TER for the investment trust sector as a whole of 1.4%.
Dividend
Your Board has declared a second interim dividend of 6.2 pence per share, to be paid to shareholders on 1 April 2010, making a total distribution for the year of 10.5 pence (2008: 10.2 pence). This represents an increase of 2.9% over 2008 and maintains our policy of increasing dividends at least in line with inflation. This is the 35th consecutive year during which we have increased the dividend.
Page 3 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Chairman's Statement continued
Share Buy-Backs and Discount
The level of share buy-backs increased in the second half of our financial year with the Company purchasing a total over the year of 5.1% of the shares in issue at 1 January 2009. These share buy-backs not only generated an increase in net asset value per share of 0.8% but also helped to reduce our discount, which ended the year at 10.5%. Our average discount during the year was 11.2%, which is not unreasonable given the general widening in discounts in the middle of the year and the less active buy-back policies operated by some trusts in the sector trading on wider discounts.
Changes to the Executive Management Team
In September 2008 Robert Clarke was appointed to the Board as Chief Executive Officer to explore business development opportunities and to manage the overall business. Mark Lynam was appointed Chief Investment Officer to take responsibility for investment policy, manager selection and monitoring. However, in light of the greater uncertainties of the financial world following the global financial crisis, the Board wanted to increase the investment resource available to the Group and combine the two roles with the appointment of a single new Chief Executive. In October the Board decided to restructure the Group's management team with an enhanced focus on the implementation of investment policy. After a thorough search and recruitment process we announced in January the appointment of Andrew Bell as Witan's new Chief Executive. He was previously Head of Research at Rensburg Sheppards since 2003, having joined the company in 2000 after 12 years specialising in investment strategy and equity markets with Barclays de Zoete Wedd and Credit Suisse First Boston.
Andrew joined Witan as Chief Executive Officer on 8 February 2010 and, after a handover period, Robert Clarke and Mark Lynam will step down to pursue other interests. The Board would like to thank both Robert and Mark for their contributions and hard work in successfully managing the Group over the past 18 months.
Articles of Association
We propose to adopt revised Articles of Association and a resolution to this effect will be put to the forthcoming Annual General Meeting. The revised Articles, summarised in the Annual Report, incorporate the changes required to bring the Company's constitution into line with the Companies Act 2006 and the recent enactment of the Shareholder Rights Directive.
AGM
Our Annual General Meeting will be held at Merchant Taylors' Hall on Tuesday 27 April 2010 at 2.30 pm.
Outlook
I have commented on the rise in equity markets through 2009 but we leave the noughties posting the worst ever 10-year performance record for equities with the MSCI World index down 17% since 1999.
Page 4 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Chairman's Statement continued
Although such periods do nothing for investor confidence, history shows that buying after periods of poor performance can prove rewarding. Since 1899, there have been three decades when UK equity returns were negative after allowing for inflation: the period spanning the First World War, the 1970s (high inflation) and the most recent decade (after the implosion of the technology and debt bubbles). The subsequent 10 year periods in the first two cases delivered real annual returns substantially exceeding the long term average of around 5% (7.8% in the 1920s, 15.6% in the 1980s). (Source: 2010 Barclays Equity Gilt Study). The outcome from 2009 to 2019 remains to be seen but the rally experienced so far is consistent with a similar possible outcome.
Whatever the past, equities are more favourably valued than they were ten years ago with the MSCI forward earnings multiple nearly half, the dividend yield higher by a factor of two and the risk free rate of return some 40% lower. Despite the uncertainties surrounding the future, equity markets appear undemandingly valued, particularly given a backdrop of low income yields from deposits and government bonds.
Harry Henderson
12 March 2010
Page 5 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review
This Business Review provides shareholders and other readers with information about the Company's business and results in 2009 and looks forward to the year ahead. It is divided into two sections: Corporate and Investment.
CORPORATE SECTION
Objectives & Strategy
Witan's objective is to be the first choice for wealth creation through equity investment. From an investment perspective this means that Witan will seek to outperform the global stock markets represented by its benchmark consistently, adding value in the long term for its investors. In addition Witan seeks to attract new investors to buy the Trust's shares in order to provide ongoing liquidity for shareholders.
Witan aims to outperform by using a multi-manager investment structure. This allows us to select fund managers from around the world - often where the fund manager is not otherwise available to the UK investor.
Your Board pays close attention to the control of risk and this is clearly particularly relevant given recent years' economic and market uncertainties. However, the Board is at the same time mindful that risk needs to be embraced in order to generate investment return and enhance performance. We will therefore consider employing innovative investment techniques and diverse asset classes if, and when, these are deemed appropriate. Investment trusts can borrow in order to improve performance in rising markets and Witan has £110 million of long term debt (including preference shares) which it can deploy or neutralise with cash balances according to our view of the future outlook for markets.
Management Arrangements
As already mentioned, the management of Witan's portfolio is outsourced to third party fund managers around the world. Witan's in-house executive management team manages and controls these relationships, selects new managers when a change is appropriate, runs Witan Investment Services and advises the Board on all relevant investment and business matters.
Changes to the investment manager line-up during the year are referred to in greater detail in the Investment Section on pages 11 to 19 below, along with other investment issues.
Witan has also appointed third parties for the various supporting services it requires including:
• BNP Paribas Securities Services SA ("BPSS") for global custody and for investment accounting and administration, and plan administrator for the Jump CTF
• Henderson Secretarial Services Limited for company secretarial services
• Equiniti Limited as plan administrators of Witan Wealthbuilder
• Towers Watson for manager research and performance analysis.
From time to time, and as required, Witan also procures professional advice in the areas of legal, compliance, investment consulting, financial and tax advice.
Page 6 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Witan's aim is to provide the best possible return to shareholders. With this in mind, your Board applies strict controls to costs. Expenditure is only undertaken when necessary and relevant or when a specific project has been identified which is likely to achieve a profitable return for the original outlay. Although, along with other funds, we have seen our TER increase as a result of falling asset values, at 0.98% it is below the average for the investment trust sector.
Since November 2005 the Company has had a lease on office premises at 14 Queen Anne's Gate, London SW1H 9AA. The Company's registered office is at 201 Bishopsgate, London EC2M 3AE.
The Company's policy towards its employees is to attract and retain staff with the particular skills and expertise required to manage the affairs of an investment trust company. The Group has no specific policies in respect of environmental or social and community affairs.
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 in 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. Since 1 October 2007 the benchmark has been:
40% FTSE All-Share Index
20% FTSE All-World North America Index (£)
20% FTSE All-World Europe (ex UK) Index (£)
20% FTSE All-World Asia Pacific Index (£).
The benchmark does not drive the portfolio structure nor the specific allocation of mandates to managers 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.
Dividend Policy
The Board has declared a second interim dividend of 6.2 pence per share, to be paid to shareholders on 1 April 2010, making a total distribution for the year of 10.5 pence (2008: 10.2 pence). This is the 35th consecutive year that the annual dividend has increased and underlines the Company's ongoing intention to increase dividend income for shareholders at least in line with inflation.
Share Buy-Backs and Discount Policy
Your Board places great importance on the need to provide liquidity in Witan's shares to the market place. Shareholders should be able to sell Witan shares at a price that reflects prevailing market value while potential new shareholders should be able to invest when they wish to do so. Shares are bought back when they stand at a significant discount with the objective, subject to market conditions, of keeping the discount to net asset value at less than 10%. This policy has the impact of improving net asset value per share, improving liquidity and bringing the share price closer to that of net asset value - all other things being equal.
Page 7 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
The level of share buy-backs during 2009 is referred to in detail in the Chairman's Statement. This activity not only generated an increase in net asset value per share of 0.8% but also helped to reduce our discount which ended the year at 10.5%. Our average discount during the year was 11.2%.
In addition to share buy-backs, Witan operates an ongoing marketing programme designed to stimulate demand for, and encourage new investment into, the Company's shares. This programme reaches out to private and professional investors and to financial advisers and intermediaries using a blend of targeted marketing disciplines.
Debt and Gearing Policy
As already mentioned, Witan has long term debt consisting of debentures, secured bonds and preference share capital. We can deploy or neutralise the gearing effect of this debt with cash balances according to our view of the future outlook for markets. In March we took up a special opportunity to buy back £30 million of our long term debt at a relatively low premium cost of £2 million. Although this involved a one-off charge to net assets, there was an immediate reduction in our interest bill which is evidenced by the decrease in the finance charge from £9.9 million in 2008 to £8.3 million in 2009.
Key Performance Indicators
Your Board assesses its performance in meeting the Company's objective against the following key performance indicators:
- net asset value total return
- total shareholder return
- investment performance compared with the benchmark
- annual dividend growth
- discount to net asset value
- the level of buy-back activity
- total expense ratio
- growth in the number of private investors.
Witan's performance in 2009 against the above parameters is shown on page 20 below. Most of the parameters are addressed in the Chairman's Statement on pages 1 to 4 above. The Board also reviews both absolute and relative volatility and risk statistics for the portfolio and evaluates employee performance.
Management Team Changes
The Chairman's Statement on pages 1 to 4 above explains the management changes which have taken place. Robert Clarke has been Chief Executive Officer ("CEO") throughout the financial year and in 2010 until Andrew Bell started as CEO on 8 February 2010. Mark Lynam was Chief Investment Officer ("CIO") in 2009 until 1 November, since when he has continued to advise the Company on a consultancy basis.
Principal Risks and Uncertainties
The Board has summarised the key risks to the Group in a risk matrix document. The risks relating to Witan's subsidiary company, Witan Investment Services Limited ("WIS"), are separately recorded. The respective documents are reviewed and updated regularly by the relevant Board of directors.
Page 8 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
The Board is conscious that it must regularly review the nature of its objective and corporate strategy to ensure that both remain relevant and appropriate in a rapidly changing financial services and savings market. These issues are reviewed at least annually by the Board and include scrutiny of investment policies, the role of marketing and the Witan Wealthbuilder savings schemes as well as wider industry trends.
The Group's key risks fall broadly under the following categories:
Market and portfolio
Witan is essentially a vehicle for UK and overseas equity investment. The Board is unlikely, in normal conditions, to allow the invested level to drop below 80%. Therefore the prime risk of investing in Witan is a fall in equity prices.
The other generic risks associated with any international equity portfolio are those of strategy and of country, currency, industrial sector, and stock selection. There are also risks associated with the choice of managers. Your Board seeks to manage these risks through:
• appropriate decisions regarding asset allocation
• regular reviews of the competency and stock selection skills of fund managers
• monitoring the economic outlook, geo-political environment and stock market conditions around the world
• the application of relevant policies on gearing and liquidity.
The multi-manager structure of the portfolio means that from a risk point of view we are less dependent on one investment manager than with a conventionally structured portfolio.
Investment activity and strategy
An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may lead to underperformance against the Company's benchmark index and compared with the companies in its peer group. It may also result in the Company's shares trading on a wider discount. The Board seeks to manage these risks by setting an appropriate asset allocation, ensuring a diversification of investment managers and investments and a regular review of these aspects, alongside the extent of borrowings.
During the year Robert Clarke and Mark Lynam managed the overall business and investment portfolio in accordance with limits and restrictions determined by the Board. These include limits on the extent to which borrowings may be used. The Board reviews regularly the matters delegated to executive management and the CEO confirms compliance at each Board meeting. Directors are provided with comprehensive management information covering many aspects of the business including investment performance data, financial reports and shareholder analyses. The Board reviews investment strategy at each Board meeting and monitors the implementation and results of the investment process with the CEO. The CEO regularly reviews reports and data which monitor the various risk factors in respect of the portfolio.
Corporate governance and shareholder relations
Details of the Company's compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement in the Annual Report.
Page 9 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Operational and regulatory risks are regularly and extensively reviewed by Witan's Audit Committee. WIS and its marketing activities are regulated by the Financial Services Authority and the subsidiary is subject to its own operating rules and regulations. Your Board takes its own regulatory responsibilities very seriously and reviews the main points of compliance against requirements on a quarterly basis. Your Board also takes corporate, legal, accounting and tax advice as appropriate.
Operationally, the multi-manager structure is a robust one as each of the investment managers, the custodian and the fund accountants keep their own records which are reconciled on a monthly basis. Management monitors the activities of all third parties and reports any significant issues to the Board. Comprehensive contractual obligations and indemnification provisions have been put in place with each of the third party service providers.
Accounting, legal and regulatory
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. The section 842 criteria are monitored by the CEO. The Company must comply with the provisions of the Companies Act 2006 ("the Companies Act"), 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 ("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. 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 CEO, the Company Secretary and the Group's professional advisers to ensure compliance with the Companies Act and the UKLA Rules. WIS is regulated by the Financial Services Authority for the marketing and administration of savings plans. These plans are administered on behalf of WIS by Equiniti Limited and BPSS. The operation of the savings plans is monitored closely by the Board of WIS and by the member of staff appointed as Compliance Officer.
The Company continues to monitor the progress of the draft Alternative Investment Fund Managers Directive through the European policy making process. Both directly and via membership of the Association of Investment Companies (AIC), the Company is working to ensure that any adverse effects on the closed end funds sector are minimised.
Operational
Many of the Group's operations are outsourced to third parties, principally BPSS. Disruption to, or failure of, the accounting, payment systems or custody records operated by BPSS could prevent the accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by BPSS and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement in the Annual Report.
Page 10 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Witan Investment Services ("WIS")
Witan Investment Services Limited is a wholly owned subsidiary of Witan Investment Trust plc. It was established in March 2005 and is authorised and regulated by the FSA to provide investment products and services.
WIS has two discernible channels of income by which its performance may be judged. These are firstly revenues from transaction fees and annual management charges relating to its savings plan business and, secondly, executive management and marketing fees paid by its corporate clients, Witan Investment Trust plc and Witan Pacific Investment Trust plc.
The platform provides savings plans to WIS clients and is marketed under the Witan Wealthbuilder and Jump brands. It currently has over 29,611 customers with assets of some £192 million invested. The major costs incurred by WIS are its fee to Equiniti Limited, the administrators of the Witan Wealthbuilder platform, and to BPSS for the Jump CTF.
Administration
We have recently taken the decision to change our arrangements for the administration of Witan's savings schemes. This will involve a significant migration project to a new administrator during 2010. Once the process has been completed we believe that the standard of service will be greatly enhanced.
WIS' overall aim is to stimulate demand for the shares of Witan and Witan Pacific.
Its objectives are:
• to operate a reliable and efficient investment savings platform for Witan and Witan Pacific investors
• to minimise the operating costs for Witan Investment Trust
• to seek sources of revenue to generate a profit.
Refund of VAT
During the year we received from HM Revenue & Customs all the VAT on management fees borne by the Trust in the period 1990 to 1996 and the balance of the VAT on management fees borne by the Trust in the period 2000 to 2007. The VAT recovered amounts in total to £3,264,000. We also received simple interest of £1,191,000 on this amount. In summary, the total recognised over three years in the Income Statement, and now received in full, amounts to £4,455,000, of which £2,233,000 was included in the year under review.
Priorities for 2010
2009's major challenge was how to adapt to a rapidly changing economic environment and ensure that Witan was positioned to capture fully the recovery in equity markets. The objective in 2010 is to continue to navigate through the current rough but at least economically more predictable waters to add value for our shareholders.
During 2009, the Company took the decision to shift the balance of resources in the executive team more in the direction of investment management, reacting to the increased volatility in the economic and market environment since summer 2008. This shift took the form of the recruitment of a new Chief Executive, Andrew Bell, whose 22 years in the City have been spent specialising in investment strategy and asset allocation. Andrew joined us in February 2010, as referred to
Page 11 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
elsewhere in this report. The Company has also enlisted the services of a leading firm of investment consultants to strengthen our performance analysis and investment manager research capability.
Witan's portfolio is well-diversified both geographically and at the stock selection level, with our range of managers giving a spread of styles as well as protecting against undue volatility if a particular manager's performance departs significantly from expectations. In 2010, the issues that will remain our principal focus include:
• having an appropriate strategic asset allocation to reflect themes and opportunities arising from changes in the world economy
• selecting and monitoring suitable managers to deliver our strategic objectives while taking proper account of risk control
• responding to tactical opportunities that may arise to improve returns or to moderate risk
• aiming to maintain dividend growth ahead of inflation
• improving the style and content of our website (which has been newly launched, with regular investment comment from our CEO)
• delivering a good service to Witan Investment Services' clients, both corporate and individual
• seeking business development opportunities where Witan's multi-manager expertise can be applied beneficially.
In summary, we aim to retain the advantages of our diversified and risk-controlled approach to equity markets while adapting to strategic and tactical opportunities where these can offer the scope for enhancing returns.
INVESTMENT SECTION
Investment Policy
Witan invests primarily in global equities: the minimum equity level is set at 80% of net assets. The Board is prepared to consider alternative investments when appropriate.
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, allow gearing as defined on page 20 to rise to more than 20%. Over the past five years it has varied between 0% and 15% while, occasionally, the Company has held a small net cash position. At the end of 2009, the Company had in place £110 million of long-term debt (equivalent to 10.8% of shareholders' funds), although effective gearing was less than this, owing to offsetting cash.
Investment risk is managed through:
• the selection of diverse investment managers with different mandates
• the adoption of a global geographic benchmark, ensuring diversity
• monitoring of investment manager performance and portfolios
• monitoring of asset allocation, currency exposures and gearing levels.
During the year the Company invested its assets with a view to spreading investment risk and in accordance with the investment policy as set out above. In particular it has maintained a diversified portfolio in terms of stocks, sectors and geography. The portfolio has been actively managed by the investment managers, under the direction of Witan's executive team. The directors have received regular reports on investment activity and portfolio construction, both at and outwith the regular meetings of the Board.
Page 12 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Portfolio Review
2009 was a remarkable year as markets confounded the majority of commentators and, after a depressing first quarter during which global stock markets fell as much as 20%, the direction was relentlessly upwards, culminating in a return of 19.6% for the FTSE World Index (£). The widely feared depression did not materialise and during the second half of the year earnings reports were positive, mainly due to deep cost cutting by companies. As the year progressed investors' risk appetite returned and markets were supported by low interest rates and fiscal concessions. With hindsight a key turning point was the Central Banks' combined and co-ordinated intervention, including the Bank of England announcing on 5 March a £75 billion asset purchasing programme (what we now know as quantitative easing), while cutting base rates to 0.5%, the lowest level since 1695. From this point all markets staged substantial recoveries but it is interesting to note that most emerging markets outperformed developed markets and the dominance of the biggest countries by stock market capitalisation, namely the US, Japan and the UK, has diminished further. These three combined represented 73% of the MSCI AC Index seven years ago, but by the end of 2009 this had shrunk to 59% (source: SG Research). The counterbalancing effect is that China and Brazil have both seen big increases in their weight, along with commodity rich countries such as Australia.
In order to capture these changing global dynamics your Witan portfolio is well diversified across regional stock markets and, importantly, across a range of managers. As expected in a multimanager portfolio, individual manager returns vary; however more than half the managers outperformed their respective benchmarks and, along with the decision to gear the portfolio from February onwards, the overall result is that the Company enjoyed a NAV total return of 25.9%, outperforming the Witan benchmark which returned 24.5%.
Witan is predominantly equity based but the remit does also allow investment in other areas when considered appropriate. Corporate bonds, specifically the higher quality investment grade credit bonds, were one such investment we made in early 2009 via the PIMCO Global Credit Bond Fund. Our judgement was that the corporate bond market had been overly depressed during the "credit crisis". As credit conditions improved through the year and some normality returned, prices did indeed recover substantially. We took the decision to sell the holding in the PIMCO fund in December 2009, benefiting from a rise of 19.1% during the period held.
Page 13 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
The table below shows the current investment management arrangements:
|
EQUITY MANDATE |
INVESTMENT MANAGER |
BENCHMARK (TOTAL RETURN)
|
INVESTMENT STYLE |
|
UK mid-large |
Henderson Global Investors |
FTSE 350 (ex investment companies) |
Enhanced index
|
|
UK |
Artemis |
FTSE All-Share |
Recovery/special situations
|
|
UK |
Marathon |
FTSE All-Share |
Capital cycles
|
|
UK smaller companies |
Henderson Global Investors |
Hoare Govett Smaller Companies (ex investment companies)
|
Growth at an attractive price
|
|
Global |
Southeastern Asset Management
|
FTSE All-World |
Value
|
|
Global |
MFS International |
FTSE All-World |
Growth at an attractive price
|
|
Global |
Thomas White International |
FTSE All-World |
Fundamental research
|
|
Continental Europe |
Wellington Management Company
|
FTSE World Europe (ex UK) |
Fundamental research
|
|
Europe (inc UK) |
Varenne |
FTSE All-World Developed Europe
|
Value |
|
North America |
Henderson Global Investors |
FTSE World North America |
Enhanced index
|
|
Japan |
Brandes Investment Partners
|
FTSE Japan |
Value |
|
Asia Pacific (ex Japan) |
Comgest |
FTSE All-World Asia (ex Japan/Australia/New Zealand)
|
Fundamental research
|
|
Australasia |
Orbis Investment Management |
FTSE Australia |
Value |
Amongst the individual managers Orbis, managing some 2% of assets, in Australia, was the best performing, up 76.2% in sterling terms, whilst the biggest manager contribution to overall portfolio performance was produced by one of our global managers, Southeastern Asset Management, who account for 15% of assets, up 28.9% in sterling terms. Both these managers are value investors whilst the quality growth managers such as MFS and Comgest posted respectable absolute returns, of 20% and over 30% respectively, but failed to match their regional benchmarks. These latter managers tend to underperform during swift market upswings that follow exaggerated falls as their investment strategies do not benefit from shorter term volatility.
Investment Managers
As listed above, the portfolio consists of 13 separate mandates managed by 11 different fund management firms.
Page 14 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Each of the managers is entitled to a base management fee, calculated according to the value of the assets under management, and/or a performance fee, calculated according to investment performance, over a rolling three year period, relative to the benchmark applicable to the relevant investment mandate. With three exceptions, the fees for each of the segregated investment management agreements are subject to a cap in respect of each accounting year. Each agreement can be terminated on one month's notice, with one exception. Two of the investment mandates are fund vehicles. One of these is not subject to a specific investment management agreement as it is in effect a direct investment. However, the relevant terms are similar to what is described above.
The base management fee rates range from nil to 0.94 per cent per annum and the performance fees range from nil to 25 per cent per annum of the relevant outperformance. All the fees are payable quarterly in arrears. The performance fees are payable on a pro rata basis, after a minimum initial period of one year, and after three years are calculated on a rolling three year basis.
The average aggregate base management fee, including the investments in pooled vehicles, calculated on a size-weighted basis according to the value of the funds under management, was 0.30 per cent as at 31 December 2009 (and 0.28 per cent as at 31 December 2008). The investment in the fund covering Australasia is subject to uncapped performance fees of 20% of outperformance. Excluding this investment, the maximum performance fees payable, if each of the other investment mandates performs to at least the extent that the relevant cap applies, would result in total fees of 1.12 per cent being paid (based on the value of the funds under management at 31 December 2009).
The investment managers may use certain services which are paid for, or provided by, various brokers. In return they may place business, including transactions relating to the Company, with these brokers.
Manager Review
The table below shows the performance of the individual equity managers for 2009 and also since inception compared with their respective benchmarks. Our UK managers in aggregate outperformed the FTSE All-Share Index with Henderson's Enhanced Index approach and Artemis active management both comfortably ahead. Henderson UK Enhanced Index Portfolio produced a very creditable return some 2% ahead of the index. Having positioned themselves at the beginning of 2009 with more risk than most, "swimming against the prevailing tide of doom and gloom", Henderson was able to take advantage of the bounce in cyclical companies such as the engineering company Weir Pumps and Hays the employment agency. The portfolio benefited from this exposure but as the recovery came through and valuations normalised Henderson gradually reduced this bias. They are mindful of the risks facing the UK economy but also believe there will continue to be opportunities across a wide spectrum of stocks. Artemis did especially well in the first half of the year as the manager repositioned the portfolio towards oversold stocks, especially in the financial and oil sectors. They also moved down the market capitalisation scale and bought some distressed smaller companies. However a lack of confidence in the commodities rally led Artemis to a zero weighting in mining stocks which was a negative for the portfolio as the cyclical rally and the China effect led to strong share price gains in this sector. By the close of the year the Artemis portfolio was ahead of the FTSE All-Share Index but the margin had been reduced. Artemis continues to be cautious about the more cyclical areas of the market. It favours overseas earners "expecting growth in the emerging economies to be somewhat greater than the UK over almost any period". Current Artemis investments include Sterling Energy, an oil exploration company with interests in Kurdistan and Cameroon.
Page 15 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
|
Performance |
|
||||||
|
For the year ended 31 December 2009 and from inception to 31 December 2009 |
|||||||
|
Investment Manager |
Value of funds under management £m at 31.12.09 |
% of Witan's assets under management at 31.12.09* |
Performance in the period 31.12.08 to 31.12.09 (%) |
Benchmark Performance 31.12.08 to 31.12.09 (%) |
Performance since inception to 31.12.09 (%) (annualised) |
Benchmark Performance since inception to 31.12.09 (%) (annualised) |
|
|
|
|
|
|
|
|
|
|
|
Henderson Global Investors (UK mid-large) |
169.6 |
15.5 |
+31.7 |
+29.6 |
+8.0 |
+7.5(B) |
|
|
Artemis Investment Management (UK) |
87.4 |
8.0 |
+32.0 |
+30.1 |
+3.7 |
-4.1(F) |
|
|
Marathon Asset Management (UK) |
80.3 |
7.3 |
+26.7 |
+30.1 |
-2.5 |
-4.1(F) |
|
|
Henderson Global Investors (UK smaller) |
34.4 |
3.1 |
+48.2 |
+60.7 |
+8.7 |
+9.3(A) |
|
|
Southeastern Asset Management (Global) |
165.1 |
15.0 |
+28.9 |
+21.2 |
+6.3 |
+8.5(B) |
|
|
MFS International (Global) |
131.8 |
12.0 |
+20.0 |
+21.2 |
+10.8 |
+8.5(B) |
|
|
Thomas White (Global) |
104.6 |
9.5 |
+17.9 |
+21.2 |
-0.4 |
-0.6(D) |
|
|
Wellington Management Company (Europe) |
94.1 |
8.6 |
+30.8 |
+21.8 |
+9.6 |
+11.3(B) |
|
|
Varenne Capital (Europe) |
27.8 |
2.5 |
+18.7 |
+23.5 |
-7.8 |
-3.4(E) |
|
|
Henderson Global Investors (North America) |
56.0 |
5.1 |
+15.5 |
+14.8 |
+5.8 |
+5.6(A) |
|
|
Brandes Investment Partners (Japan) |
62.2 |
5.7 |
-8.8 |
-5.8 |
+5.0 |
+3.6(B) |
|
|
Comgest (Asia Pacific (ex Japan)) |
65.8 |
6.0 |
+34.5 |
+54.9 |
+7.4 |
+7.4(C) |
|
|
Orbis (Australasia) |
19.1 |
1.7 |
+76.2 |
+58.0 |
+8.3 |
+6.5(C) |
|
(A) from 31.08.04
(B) from 30.09.04
(C) from 31.07.07
(D) from 28.09.07
(E) from 30.04.08
(F) from 06.05.08
*excluding cash balances held centrally by Witan and the unquoted investments.
Source: The WM Company.
Marathon had a poor 2009 by its standards but remains ahead since being appointed. Lack of exposure to cyclical companies and a portfolio more defensively positioned in stocks which had performed well in the downturn was the main factor. Marathon continues to be concerned about upside risks in interest rates at a time when there is also likely to be a depressing impact of rising taxes on the economy. Their portfolio positioning retains a bias towards defensive stocks at the expense of cyclicals.
The exposure to UK smaller companies via a specialist small cap portfolio managed by Henderson was positive for the portfolio - returning 48.2%, despite the fact that the manager underperformed his dedicated small cap benchmark. Late in the year we reduced our exposure to UK smaller companies in recognition of their strong run and the fact that their valuation characteristics relative to larger UK companies had become less attractive.
Turning overseas and firstly to the US market our manager, Henderson, enjoyed a successful 2009, mitigating the underperformance of 2008. The Henderson North America Enhanced portfolio investment strategy seeks to add value through a mix of fundamental and technical strategies and all four of their investment strategies contributed positively. For example fundamental stock picking focused on companies that would weather the economic crisis and emerge with enhanced prospects, such as Dreamwork Animation and Emerson, an industrial company with exposure to key areas such as energy efficiency and emerging markets. Elsewhere the event driven strategies benefited from several cash deals such as Pfizer's $65bn acquisition of Wyeth.
Page 16 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
The European portion of the portfolio is managed by two separate investment houses. Wellington had a very strong year in 2009. A contrarian approach which emphasises "trawling the markets for misunderstood companies and mispriced stocks" was rewarded with a return some 9% ahead of their benchmark. Whilst valuations are not as extreme as in early 2009 they believe opportunities still remain in certain cyclical areas such as media, including stocks such as Havas, Lagardere and Mondadori. Their preference for strong balance sheets allows them to take some cyclical risk while taking less financial risk. Witan's other European manager, Varenne, is a very different type of manager, running a concentrated portfolio of 10 stocks. Its stock selection process is very close to the due diligence of a private equity investor, seeking out only companies with, in their opinion, sustainable competitive advantage. Varenne performed solidly but in the second half lagged the broader index which was led by highly cyclical stocks in industries, many of which had received public aid. In contrast companies in the Varenne portfolio performed well with none of them needing bail outs or public aid.
Japan has been a most disappointing market and in fact was the only major market to fall (£ adjusted) in 2009. Brandes, being a bottom up stockpicker seeks to buy and hold undervalued companies on a 3 to 5 year view, over which time they expect the intrinsic value to be recognised by the wider market resulting in capital appreciation. In 2009 the portfolio benefited from holdings in semi-conductors and equipment industry such as Tokyo Electron, Rohm and Advantest. Elsewhere declines in consumer finance stocks such as Promise Company and Okumura (construction and engineering) resulted in an overall return marginally below the Japan index over the course of the year.
In Asia Pacific ex Japan, Comgest's conservative style was beneficial in 2008 but not in 2009 as the region's markets rallied strongly. In absolute terms a return of 34.5% (£) lagged the broader index return of over 50% (£). We have already mentioned Orbis, which produced a return of 76.2% (£) reflecting a bounce back from depressed valuations of 2008. Describing itself as contrarian and therefore tending to buy shares that are disliked and out of favour has proved very rewarding with stocks such as Caltex, the largest holding in the Orbis portfolio, being a strong performer.
Our trio of global managers are free to pick stocks actively on a regionally unconstrained basis. After a disappointing period for Southeastern Asset Management (SEAM), its style and patience were rewarded in 2009. This Memphis based manager had expressed confidence in the stocks it held during difficult times and the result in 2009 was a portfolio that materially outperformed the FTSE All-World benchmark for the year. At the beginning of 2009, SEAM faced a decision of whether or not to hold onto companies whose prices were acutely punished in the macro-driven market crisis of 2008. It reassessed the cases for all of its holdings and held onto those long term business franchises that they believed were competitively positioned to endure the economic slowdown. The result was that most of the stocks in the Witan portfolio added to returns this year. Among the largest contributors were the very names that drove underperformance in 2008, including: Sun Microsystems, Liberty Media, Ingersoll-Rand, Chesapeake Energy, and Dell. Only NipponKoa and Sompo materially detracted from returns. Whilst the returns of 2009 reflected excessively cheap prices moving to more normal levels, we are encouraged that SEAM believe the underlying holdings in the Witan portfolio are well positioned for significant value growth over the next several years.
Page 17 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Thomas White is a global manager based in Chicago and follows a more broadly diversified approach than SEAM. Its portfolio moderately lagged the FTSE All-World benchmark, largely because it did not fully participate in the swift rally in the US and Asia in the second quarter. As a consequence of concerns about further downside risk following 2008, the Thomas White portfolio was deliberately underexposed to the more highly volatile stocks that benefited from the US authorities' aggressive intervention policies during this period. As the risk of further disruption to the financial system subsided and the global economic outlook improved, the portfolio was rebalanced. For example, the emerging market exposure rose to 16.2% at the end of the year from a starting level of 9.8%.
Our third global equity manager, MFS, was substantially ahead of the benchmark index in 2008 thanks to its preference for high quality stocks. Whilst 2009 was not an ideal backdrop for its style, it performed creditably and was only marginally shy of the FTSE All-World index.
Stock selection in basic materials and energy along with an underweight position in financial services were negatives. Conversely, stock selection in retailing and industrial goods and services contributed positively to relative performance, as did an underweight position in utilities and communications. MFS has been closely monitoring shifts within the market and taking advantage of relative valuation opportunities as they emerge. Early in the year it purchased some economically sensitive companies that had underperformed due to short term earnings concerns but continued to have attractive long term prospects and valuations. Examples of those were computer networking company Cisco Systems and medical technology companies Alcon and Dentsply.
|
Top 10 Overweight Positions at 31 December 2009 |
|
|
|
|
|
|
|
Name |
Sector |
Portfolio Weighting minus Benchmark Weighting |
|
DirecTV |
Consumer Services |
1.63 |
|
Walt Disney |
Consumer Services |
1.34 |
|
Fairfax Financial |
Financials |
1.31 |
|
Accor |
Consumer Services |
1.08 |
|
Yum! Brands |
Consumer Services |
1.01 |
|
Cheung Kong |
Financials |
0.95 |
|
ACS Actividades |
Industrials |
0.89 |
|
Chesapeake Energy |
Oil & Gas |
0.87 |
|
Dell |
Technology |
0.83 |
|
Philips Electronics |
Consumer Goods |
0.78 |
|
Top 10 Underweight Positions at 31 December 2009 |
|
|
|
|
|
|
|
Name |
Sector |
Portfolio Weighting minus Benchmark Weighting |
|
HSBC |
Financials |
-1.43 |
|
BP |
Oil & Gas |
-1.10 |
|
Royal Dutch Shell |
Oil & Gas |
-0.80 |
|
Vodafone |
Telecoms |
-0.79 |
|
Anglo American |
Basic Materials |
-0.48 |
|
British American Tobacco |
Consumer Goods |
-0.47 |
|
Rio Tinto |
Basic Materials |
-0.44 |
|
Total |
Oil & Gas |
-0.44 |
|
Telefonica |
Telecoms |
-0.42 |
|
Banco Santander |
Financials |
-0.41 |
Source of both tables: BNP Paribas Securities Services and Style Research as at 31 December 2009
Page 18 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Outlook
2010 is expected to unfold with a muted recovery in the developed economies, which are debt laden to record degrees. For example, in the UK it is now predicted that the public sector borrowing requirement ("PSBR") will exceed £170 billion this financial year and national debt will rise to over 77% of GDP by 2015 (source: HM Treasury). The big question is how this debt in the Western economies will be serviced, especially once Central Banks end quantitative easing policies that have purchased substantial quantities of government debt. Although rising yields would be a negative for markets, governments and central banks seem likely to continue to adopt policies to nurture the nascent economic recovery.
Despite the risks, there is an encouraging theme running through our managers' commentaries. This is founded on developing economies experiencing robust recoveries which are likely to exert a positive influence on the global economy. Their growth is not inhibited by Western style high levels of government and private debt. Given this latter positive influence and the likelihood that the era of low interest rates will persist for some time, militating against holding cash, we currently expect to remain fully invested and continue to make use of our ability to gear.
Witan's Multi-Manager Approach
As referred to elsewhere in this report, Witan manages the portfolio using a multi-manager approach. This was adopted in 2004, in the belief that no single investment manager was likely to excel in all asset classes over economic cycles or longer time periods. Therefore, seeking to employ managers to invest in their areas of greatest competence has the potential both to improve returns and to reduce risk relative to using a single manager across the investment waterfront.
The Board and the executive team are responsible for setting the portfolio's asset allocation, choosing a suitable range of managers to use their stock selection skills to implement the strategy, designing appropriate incentives and monitoring performance against targets.
Witan selects its managers from amongst those whose processes, principles and performance commend them as long term custodians of investors' wealth. This fits with a fundamental dictum of equity investment, that in the short term markets are a voting machine but in the long term they are a weighing machine. We are seeking managers who can capture the longer term growth rewards from equity investment while mitigating the shorter term volatility that periodically afflicts markets. Central to this approach is the idea of balance. Just as exposure to a single market or a small number of investments can lead to volatile performance, so can investing with a single manager or a group of managers with the same philosophy. Witan's approach aims to balance different factors (such as value and growth, geographical diversification, concentrated versus widely diversified portfolios or secular growth versus cyclical trends) with the intention of smoothing out stylistic fashions and profiting from the managers' ability to outperform over time.
Our Current Managers
The tables on pages 13 and 15 above give a summary of the range of styles amongst our current investment managers, the proportion of Witan's portfolio they manage and their performance over the past year and since appointment. These are intended to give a sense of the investment infrastructure and dynamics underlying the management of the portfolio.
Page 19 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
An Evolving Process
Witan's multi-manager approach has evolved in stages from its pre 2004 model as a Company with a single manager. Our investment processes are focused on continuing to adapt to structural changes and themes in the global economy while being resilient against the shorter term influences of economic cycles and investment fads.
Page 20 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Business Review continued
Corporate Key Performance Indicators
|
|
31 December 2009 |
31 December 2008 |
% change |
|
Share price |
444.6p |
351.0p |
+26.7 |
|
Net asset value per ordinary share (debt at par value) |
502.7p |
410.1p |
+22.6 |
|
Net asset value per ordinary share (debt at fair value) |
497.0p |
400.3p |
+24.2 |
|
Dividends per ordinary share |
10.5p |
10.2p |
+2.9 |
|
Discount (debt at par value) |
11.6% |
14.4% |
|
|
Discount (debt at fair value ) (A) |
10.5% |
12.3% |
|
|
Share buy-backs (B) |
5.1% |
4.0% |
|
|
Total expense ratio including performance fees (C) |
0.98% |
0.71% |
|
|
Total expense ratio exluding performance fees (C) |
0.71% |
0.58% |
|
|
Number of private investors (D) |
39,580 |
40,356 |
-1.9 |
(A) The average discount in 2009 was 11.2%. (2008: 10.1%). (Source: Datastream)
(B) The percentage of the ordinary share capital in issue at the previous year end that was bought back during the year.
(C) The total of the management fees and other administrative expenses (excluding the expenses of the subsidiary company) as a percentage of the average of shareholders' funds at the beginning and end of the year.
(D) The sum of the number of accounts on the Company's register of members and the number of accounts in Witan Wealthbuilder, Jump and Jump CTF.
Performance
|
Total returns to 31 December 2009 |
1 year % return |
3 years % return |
5 years % return |
|
Total shareholder return (E) |
30.6 |
5.4 |
51.2 |
|
Net asset value total return (F) |
25.9 |
3.9 |
43.5 |
|
Benchmark (G) |
24.5 |
2.7 |
41.9 |
|
FTSE All-Share Index (H) |
30.1 |
-4.0 |
36.8 |
|
FTSE World (ex UK) Index (H) |
18.9 |
8.1 |
42.6 |
(E) The movement in the ordinary share price adjusted to include the notional reinvestment of dividends.
(F) The movement in the net asset value per share adjusted to include the notional reinvestment of dividends.
(G) Source: WM Performance Services. Since 1 October 2007 the benchmark has been a composite of four indices: the FTSE All-Share Index 40%, the FTSE All-World North America Index 20%, the FTSE All-World Europe (ex UK) Index 20% and the FTSE All-World Asia Pacific Index 20%. From 1 September 2004 to 30 September 2007 the benchmark comprised the FTSE All-Share Index 50% and the FTSE World (ex UK) Index 50%. Prior to 1 September 2004 the benchmark comprised the FTSE All-Share Index 60% and the FTSE World (ex UK) Index 40%.
(H) Source: Datastream
Other Financial Information
|
|
31 December 2009 |
31 December 2008 |
% change |
|
Net assets |
£1,022,819,000 |
£879,247,000 |
+16.3 |
|
Number of ordinary shares in issue |
203,464,280 |
214,398,654 |
-5.1 |
|
Revenue return per ordinary share |
10.63p |
11.60p |
-8.4 |
|
Gearing* |
5.0% |
0.1% |
|
* The total market value of the investments less shareholders' funds as a percentage of shareholders' funds.
Page 21 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Directors' Report: Statement of Directors' Responsibilities
Statement under DTR 4.1.12
The directors as at the date of this report each confirm to the best of their knowledge that:
(a) the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
(b) the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
For and on behalf of the Board
H M Henderson
Chairman
12 March 2010
A L C Bell
Chief Executive Officer
12 March 2010
Page 22 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Consolidated Income Statement
for the year ended 31 December 2009
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
||||
|
|
Revenue return £'000 |
Capital return £'000 |
Total £'000 |
Revenue Return £'000 |
Capital Return £'000 |
Total £'000 |
|
Investment income (note 2) |
29,199 |
- |
29,199 |
29,577 |
- |
29,577 |
|
Other income (note 3) |
2,304 |
- |
2,304 |
8,185 |
- |
8,185 |
|
Gains/(losses) on investments held at fair value through profit or loss |
- |
196,885 |
196,885 |
- |
(297,614) |
(297,614) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Total income |
31,503 |
196,885 |
228,388 |
37,762 |
(297,614) |
(259,852) |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Management fees (note 4) |
(583) |
(4,310) |
(4,893) |
(490) |
(2,831) |
(3,321) |
|
Write-back of prior years' VAT (note 8) |
1,249 |
- |
1,249 |
141 |
424 |
565 |
|
Other expenses |
(5,172) |
(74) |
(5,246) |
(5,045) |
- |
(5,045) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Profit/(loss) before finance costs and taxation |
26,997 |
192,501 |
219,498 |
32,368 |
(300,021) |
(267,653) |
|
|
|
|
|
|
|
|
|
Finance costs |
(2,146) |
(6,189) |
(8,335) |
(2,527) |
(7,334) |
(9,861) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Profit/(loss) before taxation |
24,851 |
186,312 |
211,163 |
29,841 |
(307,355) |
(277,514) |
|
|
|
|
|
|
|
|
|
Taxation |
(2,327) |
723 |
(1,604) |
(4,580) |
2,878 |
(1,702) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Profit/(loss) attributable to equity holders of the parent company |
22,524 |
187,035 |
209,559 |
25,261 |
(304,477) |
(279,216) |
|
|
====== |
====== |
====== |
====== |
====== |
====== |
|
|
|
|
|
|
|
|
|
Earnings/(loss) per ordinary share (note 5) |
10.63p |
88.27p |
98.90p |
11.60p |
(139.86)p |
(128.26)p |
|
|
====== |
====== |
====== |
====== |
====== |
====== |
A Statement of Comprehensive Income has not been prepared as there is no other comprehensive income.
The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRSs 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 23 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Consolidated and Individual Company Statements of Changes in Equity
for the year ended 31 December 2009
|
|
Group Year ended 31 December 2009 |
|||||
|
|
Ordinary share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
At 31 December 2008 |
53,600 |
16,237 |
40,226 |
716,756 |
52,428 |
879,247 |
|
Profit for the year |
- |
- |
- |
187,035 |
22,524 |
209,559 |
|
Ordinary dividends paid |
- |
- |
- |
- |
(21,791) |
(21,791) |
|
Buy-backs of ordinary shares |
(2,734) |
- |
2,734 |
(44,196) |
- |
(44,196) |
|
|
----------- |
--------- |
--------- |
------------- |
---------- |
------------- |
|
At 31 December 2009 |
50,866 |
16,237 |
42,960 |
859,595 |
53,161 |
1,022,819 |
|
|
====== |
===== |
===== |
======= |
====== |
======= |
|
|
|
|||||
|
|
Company Year ended 31 December 2009 |
|||||
|
|
Ordinary share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
At 31 December 2008 |
53,600 |
16,237 |
40,226 |
716,897 |
52,287 |
879,247 |
|
Profit for the year |
- |
- |
- |
187,010 |
22,549 |
209,559 |
|
Ordinary dividends paid |
- |
- |
- |
- |
(21,791) |
(21,791) |
|
Buy-backs of ordinary shares |
(2,734) |
- |
2,734 |
(44,196) |
- |
(44,196) |
|
|
----------- |
--------- |
--------- |
--------- |
--------- |
--------- |
|
At 31 December 2009 |
50,866 |
16,237 |
42,960 |
859,711 |
53,045 |
1,022,819 |
|
|
====== |
===== |
===== |
====== |
===== |
======= |
|
|
|
|||||
|
|
Group Year ended 31 December 2008 |
|||||
|
|
Ordinary share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
At 31 December 2007 |
55,857 |
16,237 |
37,969 |
1,059,939 |
49,304 |
1,219,306 |
|
(Loss)/profit for the year |
- |
- |
- |
(304,477) |
25,261 |
(279,216) |
|
Ordinary dividends paid |
- |
- |
- |
- |
(22,137) |
(22,137) |
|
Buy-backs of ordinary shares |
(2,257) |
- |
2,257 |
(38,706) |
- |
(38,706) |
|
|
----------- |
--------- |
--------- |
------------- |
---------- |
------------- |
|
At 31 December 2008 |
53,600 |
16,237 |
40,226 |
716,756 |
52,428 |
879,247 |
|
|
====== |
===== |
===== |
======= |
====== |
======= |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Company Year ended 31 December 2008 |
|||||
|
|
Ordinary share capital £'000 |
Share premium Account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
At 31 December 2007 |
55,857 |
16,237 |
37,969 |
1,060,025 |
49,218 |
1,219,306 |
|
(Loss)/profit for the year |
- |
- |
- |
(304,422) |
25,206 |
(279,216) |
|
Ordinary dividends paid |
- |
- |
- |
- |
(22,137) |
(22,137) |
|
Buy-backs of ordinary shares |
(2,257) |
- |
2,257 |
(38,706) |
- |
(38,706) |
|
|
---------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
At 31 December 2008 |
53,600 |
16,237 |
40,226 |
716,897 |
52,287 |
879,247 |
|
|
====== |
======= |
======= |
======== |
======= |
======= |
Page 24 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Consolidated and Individual Company Balance Sheets
for the year ended 31 December 2009
|
|
Group 31 December 2009 £'000 |
Company 31 December 2009 £'000 |
Group 31 December 2008 £'000 |
Company 31 December 2008 £'000 |
|
Non current assets |
|
|
|
|
|
Investments held at fair value through profit or loss |
1,074,189 |
1,075,205 |
880,013 |
881,054 |
|
|
------------ |
------------ |
------------ |
------------ |
|
Current assets |
|
|
|
|
|
Other receivables |
5,978 |
6,251 |
19,830 |
20,204 |
|
Cash and cash equivalents |
58,638 |
57,084 |
124,383 |
122,815 |
|
|
------------ |
------------- |
------------ |
------------- |
|
|
64,616 |
63,335 |
144,213 |
143,019 |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
|
|
|
|
|
Total assets |
1,138,805 |
1,138,540 |
1,024,226 |
1,024,073 |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Other payables |
(5,820) |
(5,555) |
(4,892) |
(4,739) |
|
|
------------- |
------------- |
------------- |
------------- |
|
Total assets less current liabilities |
1,132,985 |
1,132,985 |
1,019,334 |
1,019,334 |
|
|
------------- |
------------- |
------------- |
------------- |
|
|
|
|
|
|
|
Non current liabilities |
|
|
|
|
|
8½ per cent. Debenture Stock 2016 |
(44,589) |
(44,589) |
(45,779) |
(45,779) |
|
6.125 per cent. Secured Bonds due 2025 |
(63,022) |
(63,022) |
(91,753) |
(91,753) |
|
3.4 per cent. cumulative preference shares of £1 |
(2,055) |
(2,055) |
(2,055) |
(2,055) |
|
2.7 per cent. cumulative preference shares of £1 |
(500) |
(500) |
(500) |
(500) |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
(110,166) |
(110,166) |
(140,087) |
(140,087) |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
|
|
|
|
|
Net assets |
1,022,819 |
1,022,819 |
879,247 |
879,247 |
|
|
======= |
======= |
======= |
======= |
|
|
|
|
|
|
|
Equity attributable to equity holders |
|
|
|
|
|
Ordinary share capital |
50,866 |
50,866 |
53,600 |
53,600 |
|
Share premium account |
16,237 |
16,237 |
16,237 |
16,237 |
|
Capital redemption reserve |
42,960 |
42,960 |
40,226 |
40,226 |
|
Retained earnings: |
|
|
|
|
|
Other capital reserves |
859,595 |
859,711 |
716,756 |
716,897 |
|
Revenue reserve |
53,161 |
53,045 |
52,428 |
52,287 |
|
|
------------ |
------------ |
------------ |
------------ |
|
Total equity |
1,022,819 |
1,022,819 |
879,247 |
879,247 |
|
|
======= |
======= |
======= |
======= |
|
|
|
|
|
|
|
Net asset value per ordinary share |
502.7p |
502.7p |
410.1p |
410.1p |
|
|
======= |
======= |
======= |
======= |
Page 25 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Consolidated and Individual Company Cash Flow Statements
for the year ended 31 December 2009
|
|
Group Year ended 31 December 2009 £'000 |
Company Year ended 31 December 2009 £'000 |
Group Year ended 31 December 2008 £'000 |
Company Year ended 31 December 2008 £'000 |
|
Operating activities |
|
|
|
|
|
Profit/(loss) before taxation |
211,163 |
211,163 |
(277,514) |
(277,514) |
|
Interest paid |
8,233 |
8,233 |
9,664 |
9,664 |
|
(Gains)/losses on investments held at fair value through profit or loss |
(196,885) |
(196,860) |
297,614 |
297,559 |
|
Net sales of investments held at fair value through profit or loss |
17,248 |
17,248 |
89,327 |
89,327 |
|
Net gain/(loss) from futures contracts |
1,101 |
1,101 |
(5,934) |
(5,934) |
|
Scrip dividends included in investment income |
(94) |
(94) |
(537) |
(537) |
|
Decrease/(increase) in other receivables |
1,367 |
1,468 |
150 |
(341) |
|
Increase in other payables |
864 |
752 |
1,037 |
1,243 |
|
|
------------ |
------------ |
------------ |
------------ |
|
Net cash inflow from operating activities before interest and taxation |
42,997 |
43,011 |
113,807 |
113,467 |
|
Interest paid |
(8,233) |
(8,233) |
(9,664) |
(9,664) |
|
Amortisation of debt issue costs |
79 |
79 |
80 |
80 |
|
Tax on overseas income |
(1,513) |
(1,513) |
(1,633) |
(1,633) |
|
|
------------ |
------------ |
------------ |
------------ |
|
Net cash inflow from operating activities |
33,330 |
33,344 |
102,590 |
102,250 |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Equity dividends paid |
(21,791) |
(21,791) |
(22,137) |
(22,137) |
|
Buy-backs of ordinary shares |
(44,316) |
(44,316) |
(39,264) |
(39,264) |
|
Buy-backs of secured bonds and debenture stock |
(32,038) |
(32,038) |
(7,518) |
(7,518) |
|
|
------------ |
------------ |
------------ |
------------ |
|
Net cash outflow from financing activities |
(98,145) |
(98,145) |
(68,919) |
(68,919) |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
|
|
|
|
|
(Decrease)/increase in cash and cash equivalents |
(64,815) |
(64,801) |
33,671 |
33,331 |
|
Cash and cash equivalents at the start of the year |
124,383 |
122,815 |
88,394 |
87,166 |
|
Effect of foreign exchange rate changes |
(930) |
(930) |
2,318 |
2,318 |
|
|
------------ |
------------ |
------------ |
------------ |
|
Cash and cash equivalents at the end of the year |
58,638 |
57,084 |
124,383 |
122,815 |
|
|
======= |
======= |
======= |
======= |
Page 26 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Notes to the Financial Statements
for the year ended 31 December 2009
|
1. |
Accounting Policies |
|
|
The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation. These comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee ("IASC") that remain in effect, to the extent that they have been adopted by the European Union.
|
|
|
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. |
|
|
(a) |
Basis of preparation |
|
|
|
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice Financial Statements of Investment Trust Companies ("the SORP") issued by the Association of Investment Companies ("the AIC") in January 2003 (revised in December 2009) is consistent with the requirements of IFRSs as adopted by the European Union, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
|
|
|
(b) |
Going concern |
|
|
|
The Group's business activities, together with the factors likely to affect its future development and performance, are set out in the Business Review section of the Directors' Report on pages 5 to 12 above. The financial position of the Group as at 31 December 2009 is shown in the balance sheet on page 24 above. The cash flows of the Group for the year ended 31 December 2009, which are not untypical, are set out on page 25 above. The Company had fixed debt and preference share capital totalling £110,166,000; none of the borrowings is repayable before 2016. The Group has no short term borrowings or borrowing facilities. As at 31 December 2009 the Group's total assets less current liabilities exceeded its total non current liabilities by a multiple of over ten. The assets of the Group consist mainly of securities that are held in accordance with the Company's investment policy, as set out on page 11 above. Most of these securities are readily realisable even in the more volatile markets experienced in recent months and despite the continuing uncertain economic outlook. The directors, who have reviewed carefully the Group's budget and forecast for the coming year, consider that the Group has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly, the directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group's accounts.
|
|
|
(c) |
Basis of consolidation |
|
|
|
The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used by them into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
|
|
|
(d) |
Presentation of Income Statement |
|
|
|
In order to better reflect the activities of an investment trust company, and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally, the net revenue is the measure the directors believe appropriate in assessing the Group's compliance with certain requirements set out in section 842 of the Income and Corporation Taxes Act 1988. |
Page 27 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Notes to the Financial Statements continued
|
2. |
Income |
|
|
|
|
|
Year ended 31 December 2009 £'000 |
Year ended 31 December 2008 £'000 |
|
|
Investment income |
|
|
|
|
Franked: |
|
|
|
|
UK dividends from listed investments |
13,401 |
13,224 |
|
|
Special dividends from listed investments |
- |
48 |
|
|
UK dividends from unquoted investments |
308 |
379 |
|
|
|
---------- |
---------- |
|
|
|
13,709 |
13,651 |
|
|
|
---------- |
---------- |
|
|
Unfranked: |
|
|
|
|
Overseas dividends from listed investments |
14,754 |
14,798 |
|
|
Scrip dividends from listed investments |
94 |
537 |
|
|
Special dividends from listed investments |
- |
582 |
|
|
Overseas fixed interest and convertible bonds |
642 |
9 |
|
|
|
--------- |
--------- |
|
|
|
15,490 |
15,926 |
|
|
|
--------- |
--------- |
|
|
|
|
|
|
|
Total investment income |
29,199 |
29,577 |
|
|
|
===== |
===== |
|
|
|
|
|
|
|
Analysis of investment income by geographical segment: |
|
|
|
|
United Kingdom |
14,075 |
14,054 |
|
|
North America |
3,429 |
3,114 |
|
|
Continental Europe |
7,346 |
7,658 |
|
|
Japan |
1,994 |
2,180 |
|
|
Asia Pacific (ex Japan) |
2,111 |
2,032 |
|
|
South America |
229 |
526 |
|
|
Other |
15 |
13 |
|
|
|
-------- |
-------- |
|
|
|
29,199 |
29,577 |
|
|
|
===== |
===== |
|
3. |
Other income
|
|
|
|
|
Deposit interest |
252 |
6,903 |
|
|
Stock lending income |
30 |
268 |
|
|
Underwriting commission |
134 |
11 |
|
|
Income from subsidiary company's third party business |
724 |
766 |
|
|
Interest on VAT recovered |
984 |
207 |
|
|
Other income |
180 |
30 |
|
|
|
-------- |
--------- |
|
|
|
2,304 |
8,185 |
|
|
|
===== |
===== |
Page 28 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Notes to the Financial Statements continued
|
4. |
Management fees |
|
|||||
|
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
||||
|
|
|
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
|
Management fees |
583 |
1,747 |
2,330 |
490 |
1,470 |
1,960 |
|
|
Performance fees |
- |
2,563 |
2,563 |
- |
1,361 |
1,361 |
|
|
|
--------- |
--------- |
--------- |
--------- |
--------- |
--------- |
|
|
|
583 |
4,310 |
4,893 |
490 |
2,831 |
3,321 |
|
|
|
===== |
===== |
===== |
===== |
===== |
===== |
|
5. |
Earnings/(loss) per ordinary share |
||
|
|
The earnings per ordinary share figure is based on the net profit for the year of £209,559,000 (2008: loss of £279,216,000) and on 211,898,833 ordinary shares (2008: 217,695,259), 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 31 December 2009 £'000 |
Year ended 31 December 2008 £'000 |
|
|
|
|
|
|
|
Net revenue profit |
22,524 |
25,261 |
|
|
Net capital profit/(loss) |
187,035 |
(304,477) |
|
|
|
---------- |
---------- |
|
|
Net total profit/(loss) |
209,559 |
(279,216) |
|
|
|
======= |
====== |
|
|
Weighted average number of ordinary shares in issue during the year |
211,898,833 |
217,695,259 |
|
|
|
|
|
|
|
|
Pence |
Pence |
|
|
Revenue earnings per ordinary share |
10.63 |
11.60 |
|
|
Capital earnings/(loss) per ordinary share |
88.27 |
(139.86) |
|
|
|
--------- |
--------- |
|
|
Total earnings/(loss) per ordinary share |
98.90 |
(128.26) |
|
|
|
===== |
===== |
|
|
|
||
|
6. |
Issued share capital |
|
|
|
|
The number of ordinary shares of 25p each in issue at 31 December 2009 was 203,464,280 (2008: 214,398,654). |
||
Page 29 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Notes to the Financial Statements continued
|
7. |
Dividends |
||
|
|
|
Year ended 31 December 2009 £'000 |
Year ended 31 December 2008 |
|
|
Amounts recognised as distributions to equity holders in the year: |
|
|
|
|
Second interim dividend for the year ended 31 December 2008 of 5.90p (2007: 5.80p) per ordinary share |
12,629 |
12,849 |
|
|
First interim dividend for the year ended 31 December 2009 of 4.30p (2008: 4.30p) per ordinary share |
9,162 |
9,288 |
|
|
|
---------- |
---------- |
|
|
|
21,791 |
22,137 |
|
|
|
====== |
====== |
|
|
Second interim dividend for the year ended 31 December 2009 of 6.20p (2008: 5.90p) per ordinary share |
12,407 |
12,629 |
|
|
|
====== |
====== |
|
|
|
|
|
|
|
The second interim dividend has not been included as a liability in these financial statements. |
||
|
|
|
||
|
|
Total in respect of the year: |
|
|
|
|
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 31 December 2009 £'000 |
Year ended 31 December 2008 £'000 |
|
|
First interim dividend for the year ended 31 December 2009 of 4.30p (2008: 4.30p) per ordinary share |
9,162 |
9,288 |
|
|
Second interim dividend for the year ended 31 December 2009 of 6.20p (2008: 5.90p) per ordinary share |
12,407 |
12,629 |
|
|
|
---------- |
--------- |
|
|
|
21,569 |
21,917 |
|
|
|
====== |
====== |
|
|
|
|
|
|
8. |
Value Added Tax on management fees |
|
|
In 2004 the Association of Investment Companies (the "AIC"), together with JPMorgan Claverhouse Investment Trust plc, launched a case against HM Revenue & Customs ("HMRC") to challenge whether Value Added Tax ("VAT") should have been charged on fees paid for management services provided to investment trust companies. On 28 June 2007 the European Court of Justice delivered its judgement on the case in favour of the AIC. Since then HMRC has accepted that the provision of investment management services to investment trust companies is VAT exempt and has acknowledged its liability to pay claims in respect of VAT borne by investment companies in respect of much, but not all, of the period from 1 January 1990 to the point in 2007 from which VAT ceased to be applied to investment management fees. |
|
|
|
|
|
Henderson Global Investors Limited ("Henderson"), which was the Company's sole investment manager until 2004 and has been one of the Company's investment managers since 2004, has now been able, on behalf of the Company, to reclaim from HMRC the VAT borne, together with simple interest thereon. Similarly, the Company has been able to recover the VAT borne in respect of its other investment management contracts. |
Page 30 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
Notes to the Financial Statements continued
|
|
An aggregate amount of £2,015,000, in respect of the VAT on investment management fees borne by the Company in the period from October 2000 to 2007, was written back in the years ended 31 December 2007 and 2008. An amount of £1,249,000, in respect of the period from 1 January 1990 to 4 December 1996, has been written back in the year ended 31 December 2009. These amounts have been received in full by the Company and represent all the VAT on investment management fees borne by the Company in respect of the two periods. The write-backs of VAT have been allocated between revenue return and capital return according to the allocation of the amounts originally paid. |
|
|
|
|
|
The Company has also received from Henderson the interest paid by HMRC on the amounts of VAT that it recovered. Interest totalling £207,000 was recognised in the year ended 31 December 2008 and a further £984,000 has been recognised in the year ended 31 December 2009. These amounts have been received in full by the Company and are included in other income. |
|
|
|
|
9. |
2009 Accounts |
|
|
The figures and financial information for 2009 are extracted from the Annual Report and Financial Statements for the year ended 31 December 2009 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements has not yet been delivered to the Registrar of Companies. |
|
10. |
2008 Accounts |
|
|
The figures and financial information for 2008 are extracted from the published Annual Report and Financial Statements for the year ended 31 December 2008 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. |
|
11. |
Annual Report and Financial Statements |
|
|
Copies of the Annual Report and Financial Statements will be posted to shareholders by the end of March 2010 and will be available on the Company's website (www.witan.com) or in hard copy format from the Registered Office, 201 Bishopsgate, London, EC2M 3AE.
The Annual General Meeting will be held at 2.30 pm on Tuesday 27 April 2010 at Merchant Taylors' Hall, 30 Threadneedle Street, London EC2R 8JB.
|
Page 31 of 31
WITAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
For further information please contact:
Andrew Bell
Chief Executive Officer
Witan Investment Trust plc
Telephone: 020 7227 9770
James Frost
Marketing Director
Witan Investment Trust plc
Telephone: 020 7227 9770
Eleanor Mitchell or Hugo Mortimer-Harvey
Quill Communications
Telephone: 020 7758 2240/2234
This information is provided by RNS
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