Half Yearly Report

RNS Number : 0048K

Witan Investment Trust PLC

14 August 2012

 



WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

HIGHLIGHTS

·    During the first half of 2012, the Company's Net Asset Value total return was +5.1% compared with a benchmark return of +4.0% for the same period - a relative outperformance of 1.1%.

·    Seven of the eleven external managers, as well as the directly held portfolio, outperformed their respective benchmarks during the period.

·    An interim dividend of 6p per ordinary share is declared (2011: 5.45p), being 50% of the total payment made in respect of 2011 (12p). 

·    Gearing was moderately reduced from 10.5% at the year-end to 7.0% at 30 June 2012, following the rally seen during the early months of the year.

Page 2 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

FINANCIAL HIGHLIGHTS

Corporate Key Performance Indicators
	(Unaudited) 30 June  2012	Change since 31 December 2011	(Unaudited) 30 June 2011	(Audited) 31 December 2011
Share price	454.9p	1.1%	522.0p	450.0p
Net asset value per ordinary share (debt at par value)	535.5p	3.6%	598.9p	516.9p
Net asset value per ordinary share (debt at fair value)	523.3p	3.9%	592.5p	503.7p
Dividends per ordinary share	6.00p		5.45p	12.00p
Discount (debt at par value)	15.1%		12.8%	12.9%
Discount (debt at fair value)	13.1%		11.9%	10.7%
Share buy-backs (A)	0.8%		1.2%	1.5%
Total expense ratio including performance fees(B)	0.52%		0.46%	0.88%
Total expense ratio excluding performance fees (B)	0.37%		0.37%	0.72%
Number of private investors (C)	32,115		35,077	33,421

(A)	The percentage of the ordinary share capital in issue at the previous year end that was bought back during the period.
(B)	The total of the management fees and other administrative expenses for the period (excluding the expenses of the subsidiary company) as a percentage of the daily average net assets including debt at fair value (June 2011 and December 2011 restated following calculation change from period end average to daily average of net assets including debt at fair  value).
(C)	The sum of the number of accounts on the Company's register of members and the number of accounts in Witan Wisdom and Jump.

Performance
Total Returns to 30 June 2012	6 months return	1 year return	3 years return	5 years return
Total shareholder return (D)	2.5%	-10.6%	42.0%	4.9%
Net asset value total return (E)	5.1%	-9.6%	41.8%	7.1%
Benchmark (F)	4.0%	-6.1%	41.6%	6.3%
FTSE All-Share Index	3.3%	-3.1%	47.4%	2.0%
FTSE World (ex UK) Index	5.4%	-3.5%	45.1%	16.3%

(D)	The movement in the ordinary share price adjusted to include the notional reinvestment of dividends.
(E)	The movement in the net asset value per share adjusted to include the notional reinvestment of dividends.
(F)	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%.
Source:  Datastream

Page 3 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

OTHER FINANCIAL HIGHLIGHTS
	(Unaudited) 30 June 2012	Change since 31 December 2011	(Unaudited) 30 June 2011	(Audited) 31 December 2011
Net assets	£1,022m	2.8%	£1,156m	£994m
Number of ordinary shares in issue	190,889,000	-0.8%	193,101,000	192,367,000
Revenue return per ordinary share	8.13p		7.68p	13.27p
Gearing(G)	7.0%		9.3%	10.5%

(G) The difference between the shareholders' funds and the total market value of the investments (including the face value of equity index futures positions) expressed as a percentage of shareholders' funds.   

PORTFOLIO INFORMATION

Portfolio by geographical classification as at 30 June 2012
United Kingdom	48.7%
North America	18.5%
Continental Europe	15.3%
Asia Pacific (Ex-Japan)	11.5%
Other countries	4.6%
Japan	1.4%
	----------
	100.0%
	======

Portfolio by sector breakdown as at 30 June 2012
Financials	23.6%
Consumer Services	14.0%
Industrials	12.9%
Consumer Goods	11.8%
Technology	8.2%
Oil & Gas	8.1%
Health Care	7.3%
Open-ended Funds	5.0%
Basic Materials	4.1%
Telecoms	4.0%
Utilities	1.0%
	----------
	100.0%
	======

Page 4 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

INTERIM MANAGEMENT REPORT

Market Background

There was a contrast between the confident mood of equity markets in the early months of the year and the increased caution which characterised the early summer. In a reprise of 2010 and 2011 the catalysts were disappointing economic indicators and continued turmoil in the Eurozone.

The start of the year saw a positive combination of better than expected economic growth and abundant liquidity, especially in Europe owing to the generous funding terms offered by the European Central Bank. Equities rose strongly until early March, recovering losses sustained in 2011. At this point, it became increasingly clear that many European economies were weakening under the impact of fiscal austerity policies. This led to rising government borrowing costs in countries whose finances were already strained, sparking fears that rising budget deficits and weaker economic growth would feed on each other. The argument whether to prioritise austerity or economic growth came to a head in the French and Greek elections. These brought European policy differences out into the open once again, since Germany had argued for deficit reductions to be implemented despite a weakening growth backdrop while others had argued that austerity without growth would prove self-defeating.

Elsewhere the rise in the oil price, which was linked to increased tension over economic sanctions being applied to Iran, had a dampening effect on economic growth. Consequently by May the earlier positive bias of economic reports had turned down, creating a return of risk-averse attitudes by investors, reflected in corrections in global equity markets and commodity prices. At the same time bond yields in "favoured" countries (the US, UK and Germany) hit all-time lows, falling well below most long term forecasts for inflation. This was attributed to risk aversion in equity markets prompting a flight to "safety" which was exacerbated by capital withdrawn from other government bond markets in Europe being invested in the shortening list of assets viewed as safe and liquid.

Despite the anaemic economic backdrop and continuing instability in Europe, global equities held on to modest gains in the first half of 2012.

Portfolio Changes

There were no changes to the list of external managers in place at the end of 2011. European exposure was reduced in April to cut borrowings following the market rally.

The Japanese investment trust holding was sold during the period, while retaining a Nikkei index futures position (1.4% of assets), which is a more liquid means of supplementing the external managers' Japanese stock positions. Whilst the portfolio remains significantly underweight in Japan, we also recognise that this position could hinder performance when the present negative consensus changes. After 22 years, the Japanese bear market is no spring chicken.

Early this year, the divergence between government bond yields and inflation appeared increasingly unsustainable in the longer term (assuming that investors expect a real return from their investment). We sold gilt futures to establish a short position (of 2½% of assets) in the 10 year gilt market. We believe gilts are materially overvalued, while being mindful of the risk that this could persist for longer than expected if efforts to revive Western economies fail. 

Page 5 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

INTERIM MANAGEMENT REPORT, continued

Investment Performance

The NAV total return (taking debt at fair value) was +5.1%, which compares favourably with the +4.0% total return on our benchmark. Taking debt at par value, the NAV total return was +4.8%. The share price total return was +2.5%, since the discount widened during the period. The portfolio's total return before costs and the effect of gearing and share buybacks was +5% in the first half of the year (1% ahead of the benchmark). Seven of the eleven external managers outperformed their respective benchmarks, with nine registering a positive absolute return during the period. The directly held investment portfolio also outperformed.

Gearing

The Company has structural borrowings of £110 million, amounting to 10.8% of net assets, in addition to a short term £50m multi-currency facility, on which the drawn balance was £15m at the end of the period. Taking account of cash balances at the end of June, gearing was 8.3% or 7.0% taking into account of the Japanese and Gilt futures positions.

Expenses

General expenses (excluding fund management fees) declined 14% in the first half of the year, principally due to savings in marketing costs and consultancy fees. The Board believes that discipline over expenses is more important than ever when investment returns are as variable as they have been in recent years. Base management fees were in line with those in the first half of 2011, while performance fees accrued for the period were £1.6 million, up from £1 million in the 2011 interim report.

The total expense ratio ("TER") for the six months was 0.52%, up from 0.46% for the first half of 2011, as a result of the higher performance fees. Without performance fees, the TER was 0.37% for the first half of 2012, level with the TER for the same period in 2011. In both cases, the lower level of average net assets (which were 9% lower than the first half of 2011) influenced the TER upward, outweighing the beneficial impact of the lower operating expenses. These figures apply for the first half and are not annualised. The TER for the whole of 2011 was 0.88% including performance fees and 0.72% excluding performance fees (the 2011 figures have been restated to reflect new rules for calculating charges).

Investment Income

Portfolio revenue has continued to show growth, at a more moderate rate than in 2011. The Company's revenue earnings per share rose 5.9% compared with the first half of 2011, to 8.13p. Although it is appropriate to be cautious in extrapolating such figures, given prevailing economic uncertainties, our revenue earnings per share appear on target at least to match last year's 13.27p.

Dividend

In 2011, the Board introduced a policy that the first interim dividend of the financial year would be set (subject to market circumstances) at 50% of the amount distributed in respect of the previous financial year. Last year's total dividend, which was fully covered by revenue earnings for the year, was 12.00p. Accordingly, this year's first interim dividend will be 6.00p (2011: 5.45p), which is 10% higher than the payment a year ago. This dividend will be paid on 14 September 2012 to holders on the register on 24 August 2012.

Page 6 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

INTERIM MANAGEMENT REPORT, continued

The full year's dividend is intended to be consistent with the Company's policy to increase the total annual dividend in real terms, ahead of inflation. The second payment, which is normally announced in February, will be the difference between the total dividend declared for 2012 and the first payment of 6.00p.

The Company has increased its dividend every year since 1974 (a 37 year record of increases), recognising the importance for its investors of a reliable and growing income.

Share Buy-backs

The Company has continued with its established policy of repurchasing shares at a discount, with the objective of achieving a sustainable discount of 10% or less, relative to the net asset value excluding income, taking debt at fair value. This policy increases the net asset value per share and reduces the volatility in the discount as well as its level, relative to what would prevail in the absence of the policy. During the period, 0.8% of the shares were purchased for cancellation, adding 0.45p (approximately 0.1%) to the net asset value per share.  The discount widened, particularly in the volatile market conditions during May and June. The pace of share purchases was increased in response, with the discount having reduced from 11.7% at the end of June to 10.3% as at 10 August 2012. The average discount during the reporting period was 10.98%.

Outlook

Since 2009, the mature developed economies have undergone a slower than normal recovery from recession. This has reflected the pressure on borrowers to reduce their debts, following the ending of the credit boom in 2008. Debt repayment and fiscal austerity, whilst necessary in the longer term, have acted as a headwind to the recovery. Despite unprecedented cuts in interest rates, global growth has remained below average, coming off the base of an unusually deep recession. Since growth tends to fluctuate, the low underlying rate means that fluctuations below trend feel uncomfortably close to renewed recession. In each of the last three years there have been periods when the equity markets have sold off on fears that flagging momentum in the economic indicators was a harbinger of a "double-dip" recession. The impact of weak markets has added to concerns, by further sapping consumer and corporate confidence.

In the 2010 and 2011 setbacks, after a few months it became clear that the economic data were better than the markets feared, allowing a stabilisation and then recovery in equity markets. These recoveries were helped by policy easing from central banks. 2012 seems to be following a similar path, with many central banks cutting interest rates or pursuing other policies to reduce the costs of borrowing or to encourage banks to increase lending. The recent decline in the oil price reverses an earlier squeeze on energy consumers, which should support a recovery in demand during the second half of the year.

This general picture masks variations. Emerging and higher growth markets have performed better economically since, although they are reliant on exports to developed economies, their domestic economies are less affected by credit problems. On the other hand, Europe has done worse and remains enmeshed in disputes over the balance between punishing the profligate for past mistakes and creating a sustainable economic framework for the future of the Eurozone. The US also faces the risk of an uncomfortably sharp fiscal tightening in early 2013.

Page 7 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

INTERIM MANAGEMENT REPORT, continued

The unresolved Eurozone and US "fiscal cliff" problems will continue to overhang markets.  However, both problems are well-known to investors. Whilst it is always possible for political misjudgement to worsen a known problem it is also possible that the handling of both issues will be less disruptive to economic confidence than over the past two years. In Europe, this means ensuring that the financial system is made sufficiently robust to recognise loan losses and finance economic growth while in the US a mature compromise will be needed if neither advocates of spending cuts nor of tax increases win the coming elections. The tug-of-war for equities between relatively low valuations and the event risk from politics may make for a continued bumpy ride. It is more than usually important to take an investment viewpoint focusing on fundamentals, rather than a short-term trading view dominated by sentiment. From present valuations time should be on the side of the equity investor, subject to the usual caveats of diversification and ensuring one can emotionally and financially tough out the shorter-term turbulence.

For and on behalf of the Board

Harry Henderson

Chairman

14 August 2012

Page 8 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

REGULATORY DISCLOSURES

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or performance of the Company during the period. Details of related party transactions are contained in the Company's Annual Report for the year ended 31 December 2011.

Principal Risks and Uncertainties

The principal risks and uncertainties associated with the Company's business can be divided into various areas:

• a fall in equity prices

• the application of investment strategy: country, currency, industrial sector, stock selection, choice of investment manager

• the appropriateness of the corporate objective and strategy

• operational and regulatory risks.

Information on these risks is given in the Business Review and in the Notes to the Financial Statements in the Company's Annual Report for the year ended 31 December 2011.

In the view of the Board these principal risks and uncertainties are applicable to the remaining six months of the financial year as they were to the six months under review.

Directors' Responsibility Statement

The Directors confirm that, to the best of their knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34;

(b) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (an indication of important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

(c) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

For and on behalf of the Board

Harry Henderson

Chairman

14 August 2012

Page 9 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Investment Managers:  Assets under Management and Investment Performance as at 30 June 2012

Performance For the half year ended 30 June 2011 and from inception to 30 June 2012 Investment Manager	Value of funds under management £m at 30.06.12	% of Witan's funds under management at 30.06.12*	Performance in the period 01.01.12 to 30.06.12 (%)	Benchmark Performance 01.01.12 to 30.06.12 (%)	Performance in the period since inception to 30.06.12 (%) (annualised)	Benchmark Performance since inception to 30.06.12 (%) (annualised)
Artemis Investment Management (UK)	94	8.3	6.1	3.3	6.5(E)	1.5(E)
Lindsell Train (UK)	134	11.8	9.5	3.3	15.0(G)	6.0(G)
NewSmith Asset Management (UK)	105	9.3	4.1	3.3	4.9 (G)	6.0(G)
Henderson Global Investors (UK smaller)	22	2.0	15.9	11.6	11.9(A)	9.9(A)
Southeastern Asset Management (Global)	103	9.1	(0.8)	5.1	4.8(B)	7.6(B)
MFS International (Global)	96	8.5	7.9	5.1	10.1(B)	7.6(B)
Thomas White International (Global)	101	8.9	5.2	5.1	4.4(D)	2.6(D)
Veritas Asset Management (Global)	143	12.6	4.7	5.0	8.5(H)	2.6(H)
Marathon Asset Management (Pan-Europe)	87	7.6	5.6	2.3	2.5(F)	1.0(F)
Comgest (Asia Pacific excluding Japan)	76	6.7	0.2	5.1	5.0(C)	5.7(C)
Trilogy Global Advisors (Emerging Markets)	49	4.3	(0.4)	3.2	(13.1)(I)	(7.8)(I)
Witan Direct Holdings	123	10.9	7.7	4.0	(1.6)†	1.4†

Notes:

*	The figures exclude the cash balances held centrally by Witan and the unquoted investments.
	(A) from 31.08.04	(C) from 31.07.07	(E) from 06.05.08	(G) from 01.09.10	(I) from 09.12.10
	(B) from 30.09.04	(D) from 28.09.07	(F) from 23.07.10	(H) from 11.11.10
†	The Witan Direct Holdings Portfolio comprises holdings selected by the CEO; the first investments were made in March 2010.
Source:  The WM Company.

Page 10 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Consolidated Statement of Comprehensive Income

	(Unaudited)   Half year ended   30 June 2012			(Unaudited)   Half year ended   30 June 2011			(Audited) Year ended 31 December 2011
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment income	19,718	-	19,718	19,564	-	19,564	34,247	-	34,247
Other income	776	-	776	653	-	653	1,269	-	1,269
Gains/(losses) on investments    held at fair value through profit    or loss (Note 2)	-	37,651	37,651	-	29,757	29,757	-	(124,144)	(124,144)
	----------	----------	----------	----------	----------	----------	----------	----------	----------
Total income/(loss)	20,494	37,651	58,145	20,217	29,757	49,974	35,516	(124,144)	(88,628)
Expenses
Management and performance    fees	(420)	(2,810)	(3,230)	(413)	(2,249)	(2,662)	(809)	(4,151)	(4,960)
Other expenses	(2,548)	(51)	(2,599)	(2,720)	(315)	(3,035)	(5,190)	(440)	(5,630)
	----------	----------	----------	----------	----------	----------	----------	----------	----------
Profit/(loss) before finance costs    and taxation	17,526	34,790	52,316	17,084	27,193	44,277	29,517	(128,735)	(99,218)
Finance costs	(1,073)	(3,092)	(4,165)	(1,071)	(3,087)	(4,158)	(2,163)	(6,239)	(8,402)
	---------	---------	---------	---------	---------	---------	---------	---------	---------
Profit/(loss) before taxation	16,453	31,698	48,151	16,013	24,106	40,119	27,354	(134,974)	(107,620)
Taxation	(840)	-	(840)	(1,103)	-	(1,103)	(1,675)	-	(1,675)
	----------	----------	----------	----------	----------	----------	----------	----------	----------
Profit/(loss) attributable to equity holders of the parent company	15,613	31,698	47,311	14,910	24,106	39,016	25,679	(134,974)	(109,295)
	======	======	======	======	======	======	======	======	======
Earnings/(loss) per ordinary    share (Note 3)	8.13p	16.52p	24.65p	7.68p	12.41p	20.09p	13.27p	(69.75)p	(56.48)p
	======	======	======	======	======	======	======	======	======

The total column of this statement represents the Group's Statement of Comprehensive Income, 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.

The Group does not have any Other Comprehensive Income and hence the total profit/(loss) for the period, as disclosed above, is the same as the Group's Total Comprehensive Income.

All income is attributable to the equity holders of Witan Investment Trust plc, the parent company.  There are no minority interests.

Page 11 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Consolidated Statement of Changes in Equity

			(Unaudited) Half year ended 30 June 2012
		Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2011		48,092	16,237	45,734	830,930	53,356	994,349
Total comprehensive income:   Profit for the period		-	-	-	31,698	15,613	47,311
Transactions with owners,   recorded directly to equity:   Ordinary dividend paid		-	-	-	-	(12,589)	(12,589)
Buy-backs of ordinary shares	(Note 5)	(370)	-	370	(6,872)	-	(6,872)
		----------	-----------	----------	-------------	-----------	------------
At 30 June 2012		47,722	16,237	46,104	855,756	56,380	1,022,199
		======	======	======	========	======	=======

			(Unaudited) Half year ended 30 June 2011
		Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2010		48,844	16,237	44,982	980,884	50,818	1,141,765
Total comprehensive income:  Profit for the period		-	-	-	24,106	14,910	39,016
Transactions with owners,   recorded directly to equity:   Ordinary dividend paid		-	-	-	-	(12,654)	(12,654)
Buy-backs of ordinary shares	(Note 5)	(569)	-	569	(11,647)	-	(11,647)
		----------	-----------	----------	-------------	-----------	------------
At 30 June 2011		48,275	16,237	45,551	993,343	53,074	1,156,480
		======	======	======	========	======	=======

			(Audited) Year ended 31 December 2011
		Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2010		48,844	16,237	44,982	980,884	50,818	1,141,765
Total comprehensive income:   (Loss)/profit for the year		-	-	-	(134,974)	25,679	(109,295)
Transactions with owners,   recorded directly to equity:   Ordinary dividends paid		-	-	-	-	(23,141)	(23,141)
Buy-backs of ordinary shares	(Note 5)	(752)	-	752	(14,980)	-	(14,980)
		------------	------------	------------	-------------	---------	------------
At 31 December 2011		48,092	16,237	45,734	830,930	53,356	994,349
		=======	======	=======	========	=====	=======

Page 12 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Consolidated Balance Sheet

	(Unaudited) 30 June  2012 £'000	(Unaudited) 30 June 2011 £'000	(Audited) 31 December 2011 £'000
Non current assets
Investments held at fair value through profit or loss	1,107,068	1,263,586	1,083,393
	--------------	--------------	-------------
Current assets
Other receivables	13,393	6,762	4,346
Cash and cash equivalents	38,947	40,141	37,150
	--------------	--------------	-------------
	52,340	46,903	41,496
	--------------	--------------	-------------
Total assets	1,159,408	1,310,489	1,124,889
	--------------	--------------	-------------
Current liabilities
Other payables	(11,910)	(8,770)	(5,277)
Bank loan	(15,000)	(35,000)	(15,000)
	--------------	--------------	-------------
	(26,910)	(43,770)	(20,277)
	--------------	--------------	-------------
Total assets less current liabilities	1,132,498	1,266,719	1,104,612
	--------------	--------------	--------------
Non current liabilities
At amortised cost:
8½ per cent. Debenture Stock 2016	(44,585)	(44,581)	(44,585)
6.125 per cent. Secured Bonds due 2025	(63,159)	(63,103)	(63,123)
3.4 per cent. cumulative preference shares of £1	(2,055)	(2,055)	(2,055)
2.7 per cent. cumulative preference shares of £1	(500)	(500)	(500)
	--------------	--------------	--------------
	(110,299)	(110,239)	(110,263)
	--------------	--------------	--------------
Net assets	1,022,199	1,156,480	994,349
	========	========	========
Equity attributable to equity holders
Ordinary share capital (Note 5)	47,722	48,275	48,092
Share premium account	16,237	16,237	16,237
Capital redemption reserve	46,104	45,551	45,734
Retained earnings:
Other capital reserves	855,756	993,343	830,930
Revenue reserve	56,380	53,074	53,356
	--------------	--------------	-------------
Total equity	1,022,199	1,156,480	994,349
	========	========	========
Net asset value per ordinary share (Note 6)	535.5p	598.9p	516.9p
	========	========	========

Page 13 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Consolidated Cash Flow Statement

	(Unaudited) Half Year ended 30 June 2012 £'000	(Unaudited) Half Year ended 30 June 2011 £'000	(Audited) Year ended 31 December 2011 £'000
Operating activities
Profit/ (loss) before taxation	48,151	40,119	(107,620)
Interest paid	4,087	4,082	8,278
(Gains)/losses on investments held at fair value through profit or loss	(37,651)	(29,757)	124,144
Net sales/(purchases) of investments held at fair value through profit or loss	12,577	(30,695)	(2,654)
Increase in other receivables	(780)	(1,504)	(977)
Increase/(decrease) in other payables	1,349	177	(1,525)
Scrip dividends included in investment income	(708)	-	(810)
Net (loss)/gain from futures contracts	(167)	946	201
	-----------	-----------	-----------
Net cash inflow/(outflow) from operating    activities before interest and taxation	26,858	(16,632)	19,037
Interest paid	(4,087)	(4,082)	(8,278)
Amortisation of debt issue costs	36	(7)	17
Tax on overseas income	(1,016)	(1,523)	(1,943)
	----------	----------	------------
Net cash inflow/(outflow) from operating activities	21,791	(22,244)	8,833
	----------	----------	------------
Financing activities
Equity dividends paid	(12,589)	(12,654)	(23,141)
Buy-backs of ordinary shares	(6,720)	(12,085)	(15,364)
Drawdown of bank loans	-	35,000	15,000
	-----------	-----------	------------
Net cash (outflow)/inflow from financing activities	(19,309)	10,261	(23,505)
	-----------	-----------	------------
Increase/(decrease) in cash and cash equivalents	2,482	(11,983)	(14,672)
Cash and cash equivalents at the start of the period	37,150	52,510	52,510
Effect of foreign exchange rate changes	(685)	(386)	(688)
	------------	------------	------------
Cash and cash equivalents at the end of the period	38,947	40,141	37,150
	=======	=======	=======

Page 14 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Notes to the Financial Statements

1	Basis of preparation The condensed set of financial statements for the half year ended 30 June 2012 has been prepared on the basis of the accounting policies set out in the consolidated financial statements for the year ended 31 December 2011.
2	Transaction costs The gains/(losses) on investments held at fair value through profit or loss include purchase transaction costs of £515,000 (half year ended 30 June 2011: £803,000; year ended 31 December 2011: £1,276,000) and sale transaction costs of £196,000 (half year ended 30 June 2011: £233,000; year ended 31 December 2011: £573,000).  The purchase transaction costs comprise mainly stamp duty and commissions.  The sale transaction costs comprise mainly commissions.
3	Earnings/(loss) per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of £47,311,000 (half year ended 30 June 2011: profit of £39,016,000; year ended 31 December 2011: loss of £109,295,000) and on 191,933,781 ordinary shares (half year ended 30 June 2011: 194,165,913; year ended 31 December 2011: 193,509,347), being the weighted average number of ordinary shares in issue during the period. The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
		(Unaudited) Half year ended 30 June 2012 £'000	(Unaudited) Half year ended 30 June 2011 £'000	(Audited) Year ended 31 December 2011 £'000
	Net revenue profit	15,613	14,910	25,679
	Net capital profit/(loss)	31,698	24,106	(134,974)
		--------------	--------------	--------------
	Net total profit/(loss)	47,311	39,016	(109,295)
		========	========	========
	Weighted average number of ordinary shares in issue during the period	191,933,781	194,165,913	193,509,347
		Pence	Pence	Pence
	Revenue earnings per ordinary share	8.13	7.68	13.27
	Capital earnings/(loss) per ordinary share	16.52	12.41	(69.75)
		--------------	--------------	--------------
	Total earnings/(loss) per ordinary share	24.65	20.09	(56.48)
		========	========	========

Page 15 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Notes to the Financial Statements (continued)

4	Interim dividend The directors have declared an interim dividend of 6.00p (2011: 5.45p) per ordinary share, payable on Friday 14 September 2012 to shareholders registered on Friday 24 August 2012.  The shares will be quoted ex-dividend on Wednesday 22 August 2012.
5	Ordinary share capital At 30 June 2012 there were 190,889,000 ordinary shares in issue (30 June 2011: 193,101,000; 31 December 2011: 192,367,000). During the half year ended 30 June 2012 the Company bought 1,478,000 of its own issued ordinary shares in the market for cancellation (half year ended 30 June 2011: 2,274,220; year ended 31 December 2011: 3,008,220). The cost of the share buy-backs, including stamp duty, amounted to £6,872,000 (half year ended 30 June 2011: £11,647,000; year ended 31 December 2011: £14,980,000).
6	Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to the equity shareholders of £1,022,199,000 (30 June 2011: £1,156,480,000; 31 December 2011: £994,349,000) and on 190,889,000 (30 June 2011: 193,101,000; 31 December 2011: 192,367,000) ordinary shares, being the number of ordinary shares in issue at the period end.
7	Subsidiary undertaking The Company has an investment in the issued ordinary share capital of its wholly owned subsidiary undertaking, Witan Investment Services Limited, which is registered in England and Wales, operates in the United Kingdom and is regulated by the Financial Services Authority.
8	Segment Reporting As detailed in the Company's Annual Report for the year ended 31 December 2011, geographical segments are considered to be the Group's primary reporting segment and business segments the secondary reporting segment.  The Group has two business segments:  its activity as an investment trust, which is the business of the parent company, and the business of the subsidiary company, Witan Investment Services Limited, which provides management services within the United Kingdom only.  The investment trust is managed by reference to a geographical benchmark, as detailed on page 2 above; the geographical allocation of the portfolio, as at 30 June 2012, is set out on page 3 above.  The schedule on page 9 above summarises the assets under management and investment performance relating to each investment manager.  This information is updated and reviewed regularly for internal management purposes and is essential for assessing the structure of the overall portfolio and the performance of each investment manager.
		Half year ended 30 June 2012		Half year ended 30 June 2011		Year ended 31 December 2011
		Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000
	Revenue from external customers	19,943*	551	19,769*	448	34,641*	875
	Carrying amount of assets	1,021,315	884	1,155,510	970	993,486	863
	*The investment and other income of the parent company.

Page 16 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2012

Notes to the Financial Statements (continued)

9	Half year accounts The condensed set of financial statements, forming the half year accounts, has been neither audited nor reviewed by the Company's auditors.
10	Comparative information The financial information contained in this half year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 June 2012 and 30 June 2011 has been neither audited nor reviewed by the auditors. The figures and financial information for the year ended 31 December 2011 are extracted from the latest published audited financial statements of the Company and do not constitute the statutory accounts for that year.  The audited financial statements for the year ended 31 December 2011 have been filed with the Registrar of Companies. The report of the independent auditors on those accounts contained no qualification or statement under section 498(2) or section 498(3) of the Companies Act 2006.
Financial report for the half year ended 30 June 2012 The financial report for the half year ended 30 June 2012 will be filed with the UK Listing Authority by 31 August 2012 and will be made available on the Company's website.  Printed copies will be sent to shareholders in September 2012 and will be available thereafter from the Secretary at the Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA.

For further information please contact:

Andrew Bell

Chief Executive Officer

Witan Investment Trust plc

Telephone:  [phone]

James Frost

Marketing Director

Witan Investment Trust plc

Telephone:  [phone]

-  ENDS -

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

END

 

 

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