Interim Results
Witan Pacific Investment Trust PLC
26 September 2007
WITAN PACIFIC INVESTMENT TRUST PLC
Preliminary announcement of unaudited interim results for the six months to
31 July 2007
Financial Highlights
Summary of Unaudited Results attributable to equity shareholders
31 July 2007 31 January 2007 % change
Net asset value per share 195.33p 181.85p 7.4
Share price 173.00p 161.50p 7.1
Discount -11.4% -11.2%
MSCI AC Asia Pacific Free Index (£)
- Capital only* 76.75 71.86 6.8
* Source: Datastream
Chairman's Statement
In my first annual report earlier this year I noted that for the first time in a
number of years the Company's net asset value ('NAV') had outperformed its
benchmark. I am very pleased to report that this outperformance has continued in
the first six months to 31 July 2007 with an NAV total return of 9.0% (source:
AIC MIS Services Ltd) for the period. However when this figure is adjusted for
the impact of the payment of last year's dividend, the underlying total return
for the period was 8.3% versus a total return of 8.0% for the MSCI AC Asia
Pacific Free Index in sterling terms. Over the six months the Aberdeen portfolio
returned 7.1% whilst the Nomura portfolio returned 10.2%.
Although these numbers suggest a healthy return from markets in the region over
the six months, they mask periods of significant volatility, primarily in
February when, on average, Asia Pacific markets fell by around 5%. In addition,
there was a very diverse spread of market returns with China, Korea and Thailand
all rising by more than 30% in sterling terms over the six months whilst the
largest market in the area, Japan, fell by nearly 2%, again, in sterling terms.
Aberdeen's underperformance over the period was due to poor stock selection,
primarily in Japan and South Korea. This was partially offset by being very
underweight in the poorly performing Japanese market. Nomura also benefited from
being underweight in Japan, and, in their case, Taiwan and from being overweight
in China. Stock selection outside Japan was also strong. Since these managers
were appointed Aberdeen have outperformed the benchmark by 0.9% and Nomura by
2.6%.
During the six months the Company bought back 2,243,472 shares representing 3.1%
of the share capital which enhanced the NAV by 0.3%. This represents a slower
underlying rate of buy-backs than in the previous year.
I am delighted to welcome Alan Barber to the Board and as Chairman of the Audit
Committee. As a former partner of the international accounting firm KPMG, he
brings a considerable breadth of experience to the Board and the Audit
Committee, as well as experience of the Japanese market.
To mark your Company's 100th anniversary in January this year, we commissioned
John Newlands to write a history of the Company and this is enclosed with your
half year report. This is a fascinating read and, given the many financial
storms in the past which your Company has weathered, it also helps to put into
context the current market perturbation. For example, a past chairman noted that
an investment of £1,000 in 1951 would have been worth almost five times that
amount a decade later, that is despite the turbulence caused by the Suez crisis
in the middle of that period.
The recent market falls were triggered by problems in the US sub-prime lending
market. This has caused investors across the world to re-price risk, even when
markets concerned, as in the case of Asia Pacific, are not directly affected by
the US sub-prime lending problems. As a result, the market momentum caused by
some investors chasing returns without due regard for risk has started to
dissipate. Whilst this turbulence may continue for a while, we still believe
that over the longer term equities will continue to outperform other asset
classes, and that the Pacific region in particular has potential for real
growth.
Gillian Nott
Chairman
26 September 2007
Unaudited Income Statement
for the six months to 31 July 2007
(Unaudited) (Unaudited) (Audited)
Six months to 31 July 2007 Six months to 31 July 2006 Year to 31 January 2007
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total gains/
(losses) from
investments held at
fair
value through
profit or loss - 9,760 9,760 - (10,650) (10,650) - (966) (966)
Exchange losses - (108) (108) - (89) (89) - (144) (144)
Income from
investments
held at fair value
through
profit or loss 2 1,626 - 1,626 1,979 - 1,979 3,491 - 3,491
Management fee 3 (172) - (172) (172) - (172) (323) - (323)
Performance-related
management fee 3 - (35) (35) - (62) (62) - (134) (134)
Other expenses (336) (23) (359) (393) (12) (405) (826) (40) (866)
--------- --------- --------- --------- --------- --------- --------- --------- --------
Net return/(loss)
before finance
charges
and taxation 1,118 9,594 10,712 1,414 (10,813) (9,399) 2,342 (1,284) 1,058
Finance charges (86) - (86) (76) - (76) (173) - (173)
--------- --------- --------- --------- --------- --------- --------- --------- --------
Return/(loss) on
ordinary activities
before taxation 1,032 9,594 10,626 1,338 (10,813) (9,475) 2,169 (1,284) 885
Taxation on
ordinary activities (341) 11 (330) (450) 19 (431) (739) 40 (699)
---------- --------- ---------- ---------- ---------- ---------- ---------- --------- --------
Net return/(loss)
on ordinary
activities
after taxation 691 9,605 10,296 888 (10,794) (9,906) 1,430 (1,244) 186
====== ===== ====== ====== ====== ====== ====== ===== =====
Return/(loss) per
ordinary share -
pence 5 0.96 13.39 14.35 1.04 (12.66) (11.62) 1.75 (1.52) 0.23
====== ===== ====== ====== ====== ====== ====== ===== =====
The columns of this statement headed 'total' represent the Company's income
statement, prepared in accordance with UK GAAP. The revenue and capital columns
are supplementary to this and are published under guidance from the Association
of Investment Companies.
The Company had no recognised gains or losses other than those disclosed in the
Income Statement and Reconciliation of Movements in Shareholders' Funds.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
Reconciliation of Movements in Shareholders' Funds
for the six months to 31 July 2007
Six months to Called up Share Capital Capital Revenue Total
31 July 2007 share premium redemption reserves reserve
(Unaudited) capital account reserve
£'000 £'000 £'000 £'000 £'000 £'000
At 31 January 2007 18,223 5 39,348 66,387 8,586 132,549
Net return from
ordinary activities
after taxation - - - 9,605 691 10,296
Dividend paid in
respect of year
ended
31 January 2007 - - - - (1,077) (1,077)
Repurchase of
2,243,472 ordinary
shares for
cancellation (561) - 561 (3,773) - (3,773)
---------- ---------- ---------- ---------- ---------- ----------
At 31 July 2007 17,662 5 39,909 72,219 8,200 137,995
====== ====== ====== ====== ====== ======
Six months to Called up Share Capital Capital Revenue Total
31 July 2006 share premium redemption reserves reserve
(Unaudited) capital account reserve
£'000 £'000 £'000 £'000 £'000 £'000
As at 31 January 21,701 5 35,870 89,691 8,286 155,553
2006
Net (loss)/return
from ordinary
activities after
taxation - - - (10,794) 888 (9,906)
Dividend paid in
respect of year
ended
31 January 2006 - - - - (1,130) (1,130)
Repurchase of
2,453,119 ordinary
shares for
cancellation (613) - 613 (4,023) - (4,023)
---------- ---------- ---------- ---------- ---------- ----------
At 31 July 2006 21,088 5 36,483 74,874 8,044 140,494
====== ====== ====== ====== ====== ======
Year to 31 January Called up Share Capital
2007 (Audited) share premium redemption Capital Revenue Total
capital account reserve reserves reserve
£'000 £'000 £'000 £'000 £'000 £'000
At 31 January 2006 21,701 5 35,870 89,691 8,286 155,553
Net (loss)/return
from ordinary
activities after
taxation - - - (1,244) 1,430 186
Dividend paid in
respect of year
ended 31 January 2006 - - - - (1,130) (1,130)
Repurchase of
13,914,940 ordinary
shares for
cancellation (3,478) - 3,478 (22,060) - (22,060)
----------- ----------- ----------- ------------ ---------- -----------
At 31 January 2007 18,223 5 39,348 66,387 8,586 132,549
====== ====== ====== ====== ====== ======
Purchase transaction costs for the six months to 31 July 2007 were £30,000 (six
months to 31 July 2006: £25,000; year to 31 January 2007: £55,000). Sale
transaction costs for the six months to 31 July 2007 were £39,000 (six months to
31 July 2006: £39,000; year to 31 January 2007: £98,000).
Unaudited Balance Sheet
at 31 July 2007
(Unaudited) (Unaudited) (Audited)
31 July 2007 31 July 2006 31 January 2007
Note £'000 £'000 £'000
Fixed assets
Investments held at fair value
through profit or loss 137,561 139,859 133,353
------------ ------------ ------------
Current assets
Debtors 574 1,204 673
Cash at bank and short term deposits 4,074 4,434 2,903
----------- ----------- -----------
4,648 5,638 3,576
----------- ---------- ----------
Creditors: amounts falling
due within one year
Loans (3,000) (3,000) (3,000)
Other (1,174) (1,944) (1,334)
----------- ----------- -----------
(4,174) (4,944) (4,334)
----------- ----------- -----------
Net current assets/(liabilities) 474 694 (758)
----------- ----------- -----------
Total assets less current liabilities 138,035 140,553 132,595
Provision for liabilities (40) (59) (46)
----------- ----------- -----------
Net assets 137,995 140,494 132,549
------------ ------------ ------------
Capital and reserves
Called up share capital 17,662 21,088 18,223
Share premium account 5 5 5
Capital redemption reserve 39,909 36,483 39,348
Capital reserves 72,219 74,874 66,387
Revenue reserve 8,200 8,044 8,586
----------- ------------ -----------
Equity shareholders' funds 137,995 140,494 132,549
======= ======= =======
Net asset value per ordinary 6 195.33 166.56 181.85
share - pence
======= ======= =======
Unaudited Cash Flow Statement
for the six months to 31 July 2007
(Unaudited) (Unaudited) (Audited)
Six months to 31 July Six months to 31 July Year to 31 January
2007 2006 2007
Note £'000 £'000 £'000
Net cash inflow from operating
activities 7 851 1,069 2,109
Interest paid - (2) (162)
Net tax paid (329) (376) (696)
Net cash inflow from financial
investment 5,612 3,752 19,748
Equity dividends paid (1,077) (1,130) (1,130)
----------- ----------- ----------
Net cash inflow before
financing 5,057 3,313 19,869
Net cash outflow from financing (3,778) (4,023) (22,055)
----------- ----------- -----------
Increase/(decrease) in cash
during the period 1,279 (710) (2,186)
----------- ----------- -----------
Reconciliation of net cash
flow to movement in net funds
Increase/(decrease) in cash 1,279 (710) (2,186)
Foreign exchange movements (108) (89) (144)
----------- ---------- -----------
Movement in net funds/(debt) 1,171 (799) (2,330)
Net (debt)/funds at the
beginning of the period (97) 2,233 2,233
---------- ---------- -----------
Net funds/(debt) at the
end of the period 1,074 1,434 (97)
----------- ---------- -----------
Represented by
Cash at bank 4,074 4,434 2,903
Loans - short term (3,000) (3,000) (3,000)
----------- ----------- -----------
Net funds/(debt) at the
end of the period 1,074 1,434 (97)
====== ======= ======
Notes to the Accounts
at 31 July 2007
1 Accounting policies
The accounts have been prepared under the historical cost convention, modified
to include the revaluation of investments and in accordance with applicable
Accounting Standards, pronouncements on interim reporting issued by the
Accounting Standards Board and with the Statement of Recommended Practice '
Financial Statements of Investment Trust Companies' (SORP) revised December
2005.
All of the Company's operations are of a continuing nature.
The same accounting policies used for the year to 31 January 2007 have been
applied.
2 Income
(Unaudited) (Unaudited) (Audited)
Six months to 31 July Six months to 31 July Year to 31 January
2007 2006 2007
£'000 £'000 £'000
Overseas dividends 1,534 1,896 3,204
UK dividends 18 - 27
Overseas scrip dividends
7 13 81
Interest on cash and
deposits 51 61 155
Stock lending fees 16 9 24
--------- --------- ---------
1,626 1,979 3,491
===== ===== =====
3 Management fee and performance-related management fee
On 27 May 2005, your Board appointed Witan as Executive Manager and Aberdeen and
Nomura as the new Investment Managers. Each of the Investment Managers is
entitled to a base management fee, calculated according to the value of the
assets under their management, and a performance fee. The performance fee is
calculated according to investment performance over a three year rolling period
and is subject to a cap. Each Management Agreement can be terminated at one
month's notice. The base management fees range from 0.2% to 0.25% per annum and
the performance fees range from 10% to 15% per annum of the relevant
outperformance.
The provisions included in the Income Statement at 31 July 2007, are calculated
based on the performance of each Investment Manager relative to the benchmark
index. Each provision assumes that both the benchmark and each Investment
Manager's assets under management remain unchanged to 31 May 2008, being
the date the third performance period ends.
4 Dividends per ordinary share
No interim dividend payment will be made (six months to 31 July 2006: nil;
year to 31 January 2007: final of 1.50p per share).
5 Return per ordinary share
The return per ordinary share is based on the net return attributable to the
ordinary shares of £10,296,000 (six months to 31 July 2006: loss £9,906,000;
year to 31 January 2007: return £186,000) and on 71,755,548 ordinary shares
(six months to 31 July 2006: 85,284,030; year to 31 January 2007: 81,701,101)
being the weighted average number of ordinary shares in issue during the period.
(Unaudited) (Unaudited) (Audited)
Six months to 31 July Six months to 31 July Year to 31 January
2007 2006 2007
£'000 £'000 £'000
Net revenue return 691 888 1,430
Net capital return 9,605 (10,794) (1,244)
---------- ----------- -----------
Net total return 10,296 (9,906) 186
====== ====== ======
Weighted average number of
ordinary shares in issue
during
the period 71,755,548 85,284,030 81,701,101
Revenue return per
ordinary
share - pence 0.96 1.04 1.75
Capital return per
ordinary
share - pence 13.39 (12.66) (1.52)
---------- ---------- ----------
Total return per ordinary
share - pence 14.35 (11.62) 0.23
====== ====== ======
6 Net asset value per ordinary share
Net asset value per ordinary share is based on 70,646,851 ordinary
shares of 25p each in issue at 31 July 2007 (31 July 2006: 84,352,144 and
31 January 2007: 72,890,323).
7 Reconciliation of revenue return before finance costs and taxation to
net cash inflow from operating activities
(Unaudited) (Unaudited) (Audited)
Six months to 31 July Six months to 31 July Year to 31 January
2007 2006 2007
£'000 £'000 £'000
Total return/(loss) before
finance charges and
taxation 10,712 (9,399) 1,058
Less capital return before
finance charges and
taxation (9,594) 10,813 1,284
----------- ---------- ----------
Revenue return before
finance costs and taxation 1,118 1,414 2,342
Decrease/(increase) in
accrued income 58 (54) (38)
Increase in debtors of a
revenue nature (4) (23) (21)
(Decrease)/increase in
creditors of a revenue
nature (260) (193) 24
Management fee rebate (54) (62) (117)
Scrip dividends (7) (13) (81)
-------- -------- --------
Net cash inflow from
operating activities 851 1,069 2,109
===== ===== =====
8 Results
The results for the six months to 31 July 2007 and 31 July 2006, which are
unaudited, constitute non-statutory accounts within the meaning of Section 240
of the Companies Act 1985. The latest published accounts which have been
delivered to the Registrar of Companies are for the year to 31 January 2007,
the report of the auditors thereon was unqualified and did not contain a
statement under Section 237 of the Companies Act 1985. The comparative figures
for the year to 31 January 2007 have been extracted from those accounts.
Copies of the Interim Report will be sent to shareholders in October and will be
available from BNP Paribas Secretarial Services Ltd on the number below.
For further information contact:
BNP Paribas Secretarial Services Limited
Secretary
Tel: 0141 225 3120
26 September 2007
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