Final Results

Witan Investment Trust PLC 14 February 2005 14 February 2005 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Financial Highlights Year ended Year ended 31 December 2004 31 December 2003 Per Ordinary Share: in pence in pence Net Asset Value 385.6 358.2 Earnings 8.63 8.98 Dividends - interim and final (net) 8.60 8.30 Extracts from the Chairman's Statement: Highlights of the Year • Witan's share price rose 9.6%, outperforming both FTSE world and domestic indices. • The move to multi-manager was completed in September 2004. • The team of managers has outperformed since appointment. • The dividend policy has been reinforced. • A progressive discount management policy has been announced. • The total expense ratio for 2004 was materially unchanged at 0.60% (2003: 0.59%)*. * defined here as the total of the management fees and other administrative expenses as a percentage of the average shareholders' funds at the beginning and end of the year. Review of 2004 In the last twelve months we have implemented the changes announced at the end of 2003 and we are encouraged by the early results. Witan's share price rose by 9.6% over the year; the net asset value per share rose by 7.6% over the twelve months and is now 46.2% above its low point in March 2003. The decision to reduce the UK exposure was taken in the belief that in the long term world growth is likely to be driven by the developing economies of the world, in particular those in Asia. Your Board has also decided to downplay the importance of the benchmark in the management of the portfolio; this will enable your global managers to invest in the markets and companies that offer the best value at any one moment in time. - 2 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Extracts from the Chairman's Statement, continued Prior to the appointment of new managers in September, the Witan portfolio was managed in a fashion labelled by the industry as 'benchmark aware'. This means that the portfolio was invested with the hope of achieving a modest quarter by quarter relative performance. This approach is that advocated by Keynes when he said investing in the stock market was like a beauty contest where 'it is important to choose not who you think is the prettiest girl but who the judges will think is the prettiest girl'. In the future, half the portfolio will continue to be managed in this manner while the other half is being run by managers who believe they have a true eye for beauty. They are high conviction managers, investing in companies and markets with little regard to the relevant index; these managers, we believe, will produce lumpy but higher returns over time. Your Board has worked hard to select the highest quality manager talent available in the world today. Markets In 2004 the world experienced the fastest economic growth for thirty years which is surprising considering the battering confidence had taken from global terrorism, technology bubbles, rising oil prices and war. The resulting earnings growth has driven good returns in global equity markets. As always at this point in the cycle, one questions the sustainability of the recovery. It would seem that the answer this time rests more with the politicians; the concerns for the year ahead are well rehearsed in the press, namely oil prices, the US deficits, demand in Japan and the Euro zone, house prices, protectionism and Chinese growth. To keep these risks at bay policymakers must continue to foster global co-operation and adopt sensible domestic policies. Discount Management Your Board believes that one of the more important long-term objectives is to create sustainable liquidity in Witan's shares at or near to asset value. Our strategy for achieving this goal has been, first, to put in place a team of investment managers to improve investment performance. Secondly, we have put in place an approach that is clearly different from our competitors, namely our unique combination of talented managers and the price at which they are accessed through an investment in Witan. Thirdly, we have initiated a buy-back programme that will give investors the confidence that any narrowing of the discount is sustainable and not just an opportunity to sell. To this end, we announced in December that our aim was to reduce the level of the discount to at least 10%, calculated by valuing Witan's long-term borrowings at market value ('fair value '). I am pleased to report that, at the time of writing, this goal has been achieved and it is your Board's wish and intention that the shares' rating should improve further. Therefore, the Board will continue to employ share buy-backs with a new aim of permanently reducing the level of the discount well below 10% (with debt at fair value) over the medium term. - 3 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Extracts from the Chairman's Statement, continued Dividend Policy In October 2004 Witan announced that it would continue to grow its dividend in line with inflation. This was a formal clarification of Witan's policy in the light of recent investment changes. It is our intention, subject to shareholders' approval, to pay a final dividend of 4.90 pence per ordinary share to make a total distribution for the year of 8.60 pence (2003: 8.30 pence) out of earnings of 8.63 pence per share. This is an increase of 3.6%. H M Henderson - 4 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Statement of Total Return (incorporating the revenue account) (unaudited) (audited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net capital gains from investments - 101,147 101,147 - 180,470 180,470 Income from fixed asset investments 34,373 - 34,373 36,068 - 36,068 Other interest receivable and similar income 3,018 - 3,018 2,576 - 2,576 ----------- ----------- ----------- ----------- ----------- ----------- Gross revenue and capital gains 37,391 101,147 138,538 38,644 180,470 219,114 Management fees (933) (3,523) (4,456) (1,059) (3,175) (4,234) Other administrative expenses (3,199) - (3,199) (2,540) - (2,540) ----------- ----------- ----------- ----------- ----------- ----------- Net return on ordinary activities before finance costs and taxation 33,259 97,624 130,883 35,045 177,295 212,340 Finance costs (2,534) (7,619) (10,153) (2,532) (7,599) (10,131) ----------- ----------- ----------- ----------- ----------- ----------- Net return on ordinary activities before taxation 30,725 90,005 120,730 32,513 169,696 202,209 Taxation on net return on ordinary activities (1,312) 154 (1,158) (1,151) - (1,151) ----------- ----------- ----------- ----------- ----------- ----------- Net return on ordinary activities after taxation 29,413 90,159 119,572 31,362 169,696 201,058 Dividends - preference shares (83) - (83) (83) - (83) ----------- ----------- ----------- ----------- ----------- ----------- Attributable to the ordinary shareholders 29,330 90,159 119,489 31,279 169,696 200,975 ----------- ----------- ----------- ----------- ----------- ----------- Dividends - ordinary shares Interim payment of 3.70p (2003: 3.70p) (12,379) - (12,379) (12,832) - (12,832) Final proposed of 4.90p (2003: 4.60p) (16,608) - (16,608) (15,802) - (15,802) ----------- ----------- ----------- ----------- ----------- ----------- (28,987) - (28,987) (28,634) - (28,634) ----------- ----------- ----------- ----------- ----------- ----------- Transfer to reserves 343 90,159 90,502 2,645 169,696 172,341 ====== ====== ====== ====== ====== ====== Return per ordinary share 8.63p 26.55p 35.18p 8.98p 48.70p 57.68p ====== ====== ====== ====== ====== ====== The revenue columns of this statement represent the revenue accounts of the Company. - 5 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Balance Sheet at 31 December 2004 (unaudited) (audited) 2004 2003 £'000 £'000 Fixed asset investments Listed in the United Kingdom (at market value) 666,029 776,212 Listed abroad (at market value) 713,542 545,922 Investment in index futures 4,254 - Unquoted (at directors' valuation) 11,643 10,573 ------------- ------------- 1,395,468 1,332,707 ------------- ------------- Current assets Debtors 11,933 6,802 Cash at bank and short term deposits 79,568 56,435 ------------- ------------- 91,501 63,237 Creditors: amounts falling due within one year (33,210) (18,750) ------------- ------------- Net current assets 58,291 44,487 ------------- ------------- Total assets less current liabilities 1,453,759 1,377,194 Creditors: amounts falling due after more than one year (144,284) (144,255) ------------- ------------- Total net assets 1,309,475 1,232,939 ======== ======= Capital and reserves Called up share capital Preference shares 2,555 2,555 Ordinary shares 84,736 85,880 Share premium 16,237 16,237 Other capital reserves Redemption reserve 9,090 7,946 Capital reserve - realised 990,586 907,689 Capital reserve - unrealised 180,599 187,303 Revenue reserve 25,672 25,329 ------------- ------------- Shareholders' funds (including non-equity interests of £2,555,000) 1,309,475 1,232,939 ======= ======= Net asset value per ordinary share 385.6p 358.2p ======= ======= - 6 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Cash Flow Statement for the year ended 31 December 2004 (unaudited) (audited) 2004 2003 2003 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 29,976 29,852 Servicing of finance Debenture and secured bond interest paid (10,037) (10,035) Bank interest paid (25) (26) Dividends paid on preference shares (83) (83) ------------ ------------ Net cash outflow from servicing of finance (10,145) (10,144) Taxation UK tax recovered 4 - Overseas tax recovered 101 190 ------------ ------------ Net tax recovered 105 190 Financial investment Purchases of investments (1,065,472) (393,968) Sales of investments 1,112,712 411,992 Cash inflow from forward exchange contracts 3,330 - Cash inflow/(outflow) from futures contracts 129 (23) ------------ ------------ Net cash inflow from financial investment 50,699 18,001 Equity dividends paid (28,180) (28,422) Management of liquid resources Cash withdrawn from deposit 40,000 - ------------ ------------ 40,000 - ------------ ------------ Net cash inflow before financing 82,455 9,477 Financing Buy-backs of ordinary shares (13,966) (19,660) Repurchase of debt (64) - ------------ ------------ Net cash outflow from financing (14,030) (19,660) ------------ ------------ Increase/(decrease) in cash 68,425 (10,183) ======= ======= Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash as above 68,425 (10,183) Cash inflow from management of liquid resources (40,000) - ------------ ------------ Change in net debt resulting from cash flows 28,425 (10,183) Exchange movements (5,292) (2,188) Increase in valuation of debt (29) (79) ------------ ------------ Movement in net debt in the year 23,104 (12,450) Net debt at 1 January (87,820) (75,370) ------------ ------------ Net debt at 31 December (64,716) (87,820) ======= ======= - 7 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Notes : 1. Return per ordinary share The revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £29,330,000 (2003: £31,279,000) and on the weighted average number of ordinary shares of 25p each in issue during the year of 339,685,587 (2003: 348,414,853). The capital return per ordinary share is based on the net capital gains for the year of £90,159,000 (2003: £169,696,000) and on the weighted average number of ordinary shares of 25p each in issue during the year, as stated above. 2. Issued share capital The number of ordinary shares of 25p each in issue at 31 December 2004 was 338,944,785 (2003: 343,518,086). 3. Dividend A final dividend of 4.90p per share has been recommended, payable on 4 April 2005. The record date for the dividend will be 4 March 2005 and the ex-dividend date will be 2 March 2005. 4. 2004 Accounts The preliminary figures for the year ended 31 December 2004 are an extract from the Company's latest accounts for that period and do not constitute statutory accounts as defined by section 240 of the Companies Act 1985. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 5. 2003 Accounts The figures and financial information for the year ended 31 December 2003 are an extract 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. 6. Annual Report and Annual General Meeting The full annual report and accounts will be posted to shareholders at the end of February 2005 and copies will be available from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held at 2.30 pm on Thursday 31 March 2005 at Drapers' Hall, Throgmorton Avenue, London EC2. For further information please contact: James Budden Witan Investment Trust plc Telephone: 020 7818 3121 or Gordon Puckey Quill Communications Telephone: 020 7763 6975 This information is provided by RNS The company news service from the London Stock Exchange TMMJBMRA

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