Interim Results

Witan Investment Trust PLC 29 August 2007 WITAN INVESTMENT TRUST PLC 29 August 2007 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Financial Highlights (Unaudited) Change since (Unaudited) (Audited) 30 June 2007 31 December 30 June 2006 31 December 2006 in pence 2006 in pence in pence Share price 491.5 +8.1% 416.3 454.5 Net asset value per ordinary share (Note 1) 543.6 +6.9% 470.3 508.4 Discount (Note 1) 9.6% 11.5% 10.6% Gearing (Note 2) -0.6% 4.7% 2.5% (Unaudited) (Unaudited) (Audited) Half year ended % change since Half year ended Year ended 30 June 2007 30 June 30 June 2006 31 December 2006 in pence 2006 in pence in pence Revenue earnings per ordinary share 6.56 +10.3 5.95 10.24 Dividends per ordinary share 4.10 +5.1 3.90 9.20 Notes: 1. The net asset value per ordinary share shown above is calculated by deducting from the net assets less current liabilities of the Group the preference shares, debenture stock and secured bonds (together 'the prior charges') at their market (or fair) values rather than at their par (or book) values, as is now regarded as best practice. The financial statements on pages 6 to 9 are prepared using their par values, in accordance with IFRS. Because in aggregate the market values of the prior charges are more than their par values, the net asset value per ordinary share shown above is less than that shown on page 8. 2. Defined here as the total market value of the investments less shareholders' funds as a percentage of shareholders' funds. The negative figure at 30 June 2007 is a result of increasing the cash balances by realising a proportion of the investments from the portfolios. Page 2 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Performance Total returns to 30 June 2007 1 year 3 years 5 years % return % return % return Share price 20.6 74.2 59.5 Net asset value per ordinary share 17.3 59.3 58.9 FTSE All-Share Index 18.4 68.2 77.5 FTSE World (ex UK) Index 15.5 48.8 53.6 Capital returns to 30 June 2007 1 year 3 years 5 years % return % return % return Net asset value per ordinary share 14.8 49.9 42.2 FTSE All-Share Index 14.7 52.7 50.4 FTSE World (ex UK) Index 13.1 39.8 38.7 Benchmark 13.9 see note 2 see note 2 below below Notes: 1. Source: Datastream (except the NAV figures: Association of Investment Companies). 2. The benchmark comprises the FTSE All-Share Index and the FTSE World (ex UK) Index in the proportion of 50 : 50 (capital change only). The benchmark in this proportion has applied only since 1 September 2004. Dividend An interim dividend of 4.10p (2006: 3.90p) per ordinary share will be paid on Friday 7 September 2007 to shareholders registered on Friday 17 August 2007. The shares will be quoted ex-dividend on 15 August 2007. Page 3 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Chairman's Statement The share price rose by 8.1% between 31 December 2006 and 30 June 2007 and was up by 18.1% over twelve months. The net asset value per share (NAV), which rose by 6.3% over the six months and by 14.8% over twelve months, was ahead of both the FTSE All-Share and the FTSE World (ex-UK) Indices over both periods and therefore outperformed the benchmark. Underlying that however, some managers outperformed and some underperformed as can be seen on page 5. Jim Horsburgh makes further comment on this in his report. During July this year your Board announced that it had completed its first formal review of its underlying investment managers since moving to multi-manager in October 2004, replacing the incumbent Asia ex-Japan manager APS Asset Management with Comgest and Orbis to run Witan's Asia ex-Japan and Australian portfolios respectively. Further information about these managers can be found by visiting Witan's website www.witan.com. One of the advantages of open architecture is your Board's ability to change managers, with little disruption to the portfolio, either to improve the manager line up or to adapt to new developments and market conditions. In 2004 we populated the Witan portfolio with what we judged to be the right combination of managers, in the main not readily accessible to UK retail investors, with the correct mandates but we have always said that these arrangements would be reviewed as we approach the third anniversary of their implementation. Going forward this review process will be continuous, but always rigorous and disciplined, as your Board is aware of the costs associated with manager change. Your Board increased the interim dividend to 4.10p per ordinary share (2006: 3.90p), a rise of 5.1%. This is somewhat ahead of the current rate of inflation but represents the current healthy state of the revenue account as well as your Board's desire to have a more even distribution of dividend payments over time. Your Board has continued to implement its share buy-back policy and in the first six months of 2007 bought back 15,283,137 shares, adding some 0.5% to NAV. This also helped to reduce the volatility of the discount. You will note that at the end of June your Company was effectively ungeared. This was because during June the Board raised cash from the fund managers, reducing gearing from a then 10%. Whilst we have no worries about the medium term outlook for world equity markets, it did appear to us that at that time investors, in general, were ignoring potential risks and this is always a dangerous situation. Jim Horsburgh, who has been your Company's chief executive since February 2004, has confirmed to the Board his decision to retire by the AGM in 2009. We will put in place a search to find his successor at an appropriate time to ensure a smooth transition. The strategic review referred to earlier is not just about changing managers but is also about ensuring that your Company's strategy with regard to asset and geographical distribution and manager mandates provides it with the best opportunity to make money for shareholders over the medium term. Your Board is committed to implementing all necessary changes in order to achieve this aim. Page 4 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Chief Executive Officer's Statement The net asset value per share of the Trust rose 6.3% in the first six months of 2007, reflecting the continuing rise of world equity markets. Despite a correction in February which saw markets fall by around 5%, the FTSE All-Share Index rose by 5.7% whilst the FTSE World (ex UK) Index rose by 6.0%. Since the new management arrangements were put in place in September 2004, the net asset value performance is 4.7% ahead of benchmark, primarily due to the beneficial impact of your Company's share buy-back programme. A break down of the individual managers' performance over the six months to end June is shown in the table on page 5. It is encouraging to see continued good performance from the Henderson UK smaller companies team and the improving performance from Brandes and Southeastern but the performance of Wellington still gives the Board cause for concern. As you will have seen in the Chairman's Statement, APS, whose performance continued to disappoint, has been replaced This was primarily because it became clear that APS' investment process produced a portfolio that was not in accord with the Board's aspirations. There is more detail on this below. On a positive note the two enhanced indexed portfolios performed well. Not only are both now ahead of their respective benchmark indices but, since September 2004, the North American portfolio would have outperformed the average UK-based North American unit trust and OEIC by 3.0% per annum. The total UK portfolio, combining mainstream and smaller company equities, would also have been in the upper quartile of all non-specialist UK equity invested unit trusts and OEICs, having produced a total return of 67.4% versus 63.5% for the FTSE All-Share Index. The investment in the UBS Mellon currency loan note fell by £2.5 million, equivalent to a return of -0.7% on a notional £350 million currency portfolio. This was mainly due to overweight positions in the yen and the US dollar. As we indicated at the time of the appointment, this vehicle was always expected to be volatile and this outcome, whilst a disappointing start, was within the anticipated range. The Witan multi-manager structure is approaching its three year anniversary. With this in mind the Board of Witan has been undertaking a strategic review of the Trust's structure, mandates and managers. The first result of this review was the replacement, in July, of APS by a combination of Comgest SA and Orbis Investment Management (Australia) Pty Limited. They will manage £56 million and £20 million respectively. Comgest is a Paris-based Asian and Emerging Markets specialist and it is managing a segregated mandate for Witan covering the Pacific but excluding Japan, Australia and New Zealand. The £20 million managed by Orbis has been invested in the Orbis/SM Australia Equity Fund, which also has investments in New Zealand. The Board of Witan judged that, as the outlook for Australia is driven by different factors (e.g. commodity prices) to other Pacific countries, it should have a specialist focus. Further changes arising from this review will be implemented in the coming months. Since the end of June markets have had a turbulent time, ostensibly triggered by failures in the sub-prime lending markets. The only real connection between this market and equity markets, however, is that the problems of sub-prime lending served to remind investors that investment is not a risk free exercise. Investors around the world had been chasing the highest returns without due regard for the risks involved. Whilst we may see further falls in world equity markets in the short term as these issues unwind, if this turbulence results ultimately in a more sensible pricing of risk, then, in the medium term, we would regard this as a very positive event for Witan shareholders. Page 5 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Performance of the Investment Managers for the periods from 1 January 2007 to 30 June 2007 and from inception to 30 June 2007 Performance Benchmark Value of Funds Performance in Benchmark in the period Performance under % of Witan's the period Performance since inception since inception Management Assets under 01.01.07 to 01.01.07 to 30.09.04 to 30.09.04 to £m at 30.06.07 Management at 30.06.07 30.06.07 30.06.07 30.06.07 Investment Manager 30.06.07* (%) (%) (% annualised) (% annualised) Henderson Global 519.6 39.3 +7.9 +7.7 +19.8 +19.5 Investors (UK) Henderson Global Investors 69.6 5.3 +8.5 +4.6 +27.3 +25.6 (UK smaller) Southeastern Asset 207.0 15.7 +7.6 +7.6 +13.5 +16.6 Management MFS International 144.1 10.9 +5.8 +7.6 +16.4 +16.6 Wellington Management Company 122.2 9.2 +6.1 +11.4 +19.1 +25.0 Henderson Global 121.3 9.2 +6.0 +5.1 +11.4 +10.8 Investors (USA) Brandes Investment 61.9 4.7 +1.2 0.0 +9.1 +12.4 Partners APS Asset Management 75.6 5.7 +11.1 +16.2 +18.1 +28.9 * excluding cash balances and unquoted investments held centrally by Witan. Source: The WM Company The investment in the UBS Mellon currency loan note fell by £2.5 million over the six months to 30 June 2007, equivalent to a return of -0.7% on a notional £350 million currency portfolio. Page 6 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Consolidated Income Statement (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 June 2007 30 June 2006 31 December 2006 Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment income 20,763 - 20,763 19,818 - 19,818 32,483 - 32,483 Other income 3,036 - 3,036 3,051 - 3,051 7,276 - 7,276 Gains on investments held at fair value through profit or loss - 74,322 74,322 - 11,103 11,103 - 112,547 112,547 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total income 23,799 74,322 98,121 22,869 11,103 33,972 39,759 112,547 152,306 --------- --------- --------- --------- --------- --------- ---------- --------- ---------- Expenses Management and performance (244) (1,107) (1,351) (233) (1,057) (1,290) (460) (2,044) (2,504) fees Other expenses (3,025) - (3,025) (2,385) - (2,385) (4,990) - (4,990) ---------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- Profits before finance costs 20,530 73,215 93,745 20,251 10,046 30,297 34,309 110,503 144,812 and taxation Finance costs (1,316) (3,822) (5,138) (1,316) (3,821) (5,137) (2,632) (7,647) (10,279) --------- --------- --------- --------- --------- --------- --------- --------- --------- Profit before taxation 19,214 69,393 88,607 18,935 6,225 25,160 31,677 102,856 134,533 --------- --------- --------- --------- --------- --------- --------- --------- --------- Taxation (2,527) 1,362 (1,165) (2,454) 1,055 (1,399) (4,112) 2,410 (1,702) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Profit attributable to equity holders of the parent company 16,687 70,755 87,442 16,481 7,280 23,761 27,565 105,266 132,831 ====== ====== ====== ====== ====== ====== ====== ====== ====== Earnings per ordinary share 6.56p 27.85p 34.41p 5.95p 2.63p 8.58p 10.24p 39.13p 49.37p (note 2) ====== ====== ====== ====== ====== ====== ====== ====== ====== The total columns of this statement represent the Group's Income Statement, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Witan Investment Trust plc, the parent company. There are no minority interests. Page 7 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Consolidated Statement of Changes in Equity (Unaudited) Half year ended 30 June 2007 Ordinary Capital Other share Share redemption capital Retained capital premium reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2006 65,193 16,237 28,633 1,192,597 45,874 1,348,534 Profit for the period - - - 70,755 16,687 87,442 Ordinary dividend paid - - - - (13,689) (13,689) Buy-backs of ordinary shares (Note 3) (3,821) - 3,821 (73,401) - (73,401) ---------- ----------- ---------- ------------- ----------- ------------ At 30 June 2007 61,372 16,237 32,454 1,189,951 48,872 1,348,886 ====== ====== ====== ======== ====== ======= (Unaudited) Half year ended 30 June 2006 Ordinary Capital Other share Share redemption capital Retained capital premium reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 73,747 16,237 20,079 1,232,310 42,544 1,384,917 Profit for the year - - - 7,280 16,481 23,761 Ordinary dividend paid - - - - (14,046) (14,046) Buy-backs of ordinary (Note 3) (7,780) - 7,780 (131,905) - (131,905) shares ------------ ------------ ------------ ------------ ---------- ------------ 65,967 16,237 27,859 1,107,685 44,979 1,262,727 At 30 June 2006 ======= ======= ======= ======= ====== ======= (Audited) Year ended 30 December 2006 Ordinary Capital Other share Share redemption capital Retained capital premium reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 73,747 16,237 20,079 1,232,310 42,544 1,384,917 Profit for the year - - - 105,266 27,565 132,831 Ordinary dividend paid - - - - (24,235) (24,235) Buy-backs of ordinary (Note 3) (8,554) - 8,554 (144,979) - (144,979) shares ------------ ------------ ------------ ------------- --------- ------------ At 31 December 2005 65,193 16,237 28,633 1,192,597 45,874 1,348,534 ======= ====== ======= ======== ===== ======= Page 8 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Consolidated Balance Sheet (Unaudited) (Unaudited) (Audited) 30 June 30 June 2006 31 December 2006 2007 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 1,340,578 1,321,933 1,382,554 -------------- ------------- ------------- Current assets Other receivables 11,133 8,884 6,368 Cash and cash equivalents 152,173 90,286 114,610 -------------- ------------- ------------- 163,306 99,170 120,978 -------------- ------------- ------------- Total assets 1,503,884 1,421,103 1,503,532 -------------- ------------- ------------- Current liabilities Other payables 8,131 11,588 8,170 -------------- -------------- ------------- Total assets less current liabilities 1,495,753 1,409,515 1,495,362 -------------- -------------- -------------- Non current liabilities 81/2 per cent Debenture Stock 2016 45,779 45,779 45,779 6.125 per cent Secured Bonds due 2025 98,533 98,454 98,494 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 -------------- -------------- -------------- 146,867 146,788 146,828 -------------- -------------- -------------- Net assets 1,348,886 1,262,727 1,348,534 ======== ======== ======== Equity attributable to equity holders Ordinary share capital 61,372 65,967 65,193 Share premium 16,237 16,237 16,237 Capital redemption reserve 32,454 27,859 28,633 Other capital reserves 1,189,951 1,107,685 1,192,597 Retained earnings 48,872 44,979 45,874 ------------- ------------ ------------ Total equity 1,348,886 1,262,727 1,348,534 ======== ======== ======== Net asset value per ordinary share (Note 7) 549.5p 478.5p 517.1p ======= ======== ======== Page 9 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Consolidated Cash Flow Statement (Unaudited) (Unaudited) Half Half (Audited) Year ended Year ended Year ended 31 30 June 30 June December 2007 2006 2006 £'000 £'000 £'000 Operating activities Profit before taxation 88,607 25,160 134,533 Interest paid 5,114 5,094 10,183 Gains on investments held at fair value through profit or loss (74,322) (11,103) (112,547) Net sales of investments held at fair value through profit or loss 111,810 136,329 175,508 Increase in other receivables (881) (1,316) (106) (Decrease)/increase in other payables (582) 197 245 Increase in unrealised gains on derivatives - 45 - Cash inflows from future contracts 2,421 1,190 1,316 Scrip dividends included in investment income (262) (240) (414) ------------ ------------- ------------ Net cash inflow from operating activities before interest and taxation 131,905 155,356 208,718 Interest paid (5,114) (5,094) (10,183) Amortisation of debt issue costs 39 40 80 Tax on overseas income (1,493) (1,615) (1,558) ------------ ------------ ------------ Net cash inflow from operating activities 125,337 148,687 197,057 ------------ ------------ ------------ Financing activities Equity dividend paid (13,689) (14,046) (24,235) Buy-backs of ordinary shares (73,892) (129,720) (143,001) ------------ ------------- ------------- Net cash outflow from financing (87,581) (143,766) (167,236) ------------ ------------- ------------ Increase in cash and cash equivalents 37,756 4,921 29,821 Cash and cash equivalents at the start of the period 114,610 86,319 86,319 Effect of foreign exchange rate changes (193) (954) (1,530) ----------- ------------ ------------ Cash and cash equivalents at the end of the period 152,173 90,286 114,610 ======= ======= ======= The gains on investments held at fair value through profit or loss include purchase transaction costs of £624,000 (half year ended 30 June 2006: £947,000; year ended 31 December 2006: £1,695,000) and sales transaction costs of £284,000 (half year ended 30 June 2006: £500,000; year ended 31 December 2006: £836,000). Page 10 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Notes to the Accounts 1 Basis of preparation The financial statements for the half year ended 30 June 2007 have been prepared on the basis of the accounting policies set out in the consolidated financial statements for the year ended 31 December 2006. 2 Earnings per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of £87,442,000 (half year ended 30 June 2006: £23,761,000; year ended 31 December 2006: £132,831,000) and on 254,093,240 ordinary shares (half year ended 30 June 2006: 276,850,937; year ended 31 December 2006: 269,065,426), 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) (Unaudited) Half year ended Half year ended (Audited) 30 June 30 June Year ended 2007 2006 31 December 2006 £'000 £'000 £'000 Net revenue profit 16,687 16,481 27,565 Net capital profit 70,755 7,280 105,266 -------------- --------------- -------------- Net total profit 87,442 23,761 132,831 ======== ========= ======== Weighted average number of ordinary shares in issue during the period 254,093,240 276,850,937 269,065,426 pence pence pence Revenue earnings per ordinary share 6.56 5.95 10.24 Capital earnings per ordinary share 27.85 2.63 39.13 -------------- -------------- -------------- Total earnings per ordinary share 34.41 8.58 49.37 ======== ======== ======== Page 11 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Notes to the Accounts (continued) 3 Ordinary share capital At 30 June 2007 there were 245,489,750 ordinary shares in issue (30 June 2006: 263,869,887; 31 December 2006: 260,772,887). During the half year ended 30 June 2007 the Company bought 15,283,137 of its own issued ordinary shares in the market for cancellation (half year ended 30 June 2006: 31,118,264; year ended 31 December 2006: 34,215,264). The cost of the share buy-backs, including stamp duty, amounted to £73,401,000 (half year ended 30 June 2006: £131,905,000; year ended 31 December 2006: £144,979,000). 4 Interim dividend The directors have declared an interim dividend of 4.10p (2006: 3.90p) per ordinary share, payable on Friday 7 September 2007 to shareholders registered on Friday 17 August 2007. The shares will be quoted ex-dividend on 15 August 2007. 5 Half year accounts The half year accounts have been neither audited nor reviewed by the auditors. 6 Comparative information The financial information contained in this half year report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half years ended 30 June 2007 and 30 June 2006 has not been audited. The information for the year ended 31 December 2006 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 31 December 2006 have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under either section 237(2) or section 237(3) of the Companies Act 1985. 7 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 £1,348,886,000 (half year ended 30 June 2006: £1,262,727,000; year ended 31 December 2006: £1,348,534,000) and on 245,489,750 (half year ended 30 June 2006: 263,869,887; year ended 31 December 2006: 260,772,887) ordinary shares, being the number of ordinary shares in issue at the period end. 8 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. 9 Half year report The half year report will be sent to shareholders in September 2007 and copies will be available thereafter from the Secretary at the Company's registered office, 4 Broadgate, London EC2M 2DA. - ENDS - Page 12 of 12 WITAN INVESTMENT TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 For further information please contact: Jim Horsburgh Witan Investment Trust plc Tel: 020 7227 9779 James Budden Witan Investment Trust plc Tel: 020 7227 9772 Eleanor Mitchell/Hugo Mortimer-Harvey Quill Communications Tel: 020 7758 2240/2234 This information is provided by RNS The company news service from the London Stock Exchange

Companies

Witan Inv Trust (WTAN)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today