Final Results

RNS Number : 9845S

Witan Investment Trust PLC

15 March 2023

 

 Page 1 of 33

WITAN INVESTMENT TRUST PLC

This announcement contains regulated information

  Annual Financial Report for the year ended 31 December 2022

Chairman's Report

HIGHLIGHTS

· Full-year NAV total return of -10.3%. Share price total return -9.8%

· The benchmark returned -6.2%, and the AIC Global sector's NAV total return was

-20.4%

· Ten-year NAV total return of 159%, compared with benchmark's 158%

· Share price discount to NAV 5.4% at year-end (2021: 5.8%)

· The NAV uplift from share buybacks offset the majority of the Company's ongoing charges during the year

· Dividend increased by 3.6% to 5.8 pence, more than double that paid in 2012 and an unbroken 48 year run of increases 

· 2023 NAV total return to 10 March +5.6%, 3.6% ahead of the benchmark total return of 2.0%

2022 was expected to be a year of continuing recovery, as the world left behind the earlier restrictions introduced to control the pandemic. In the event, positive reopening developments (other than in China) were overwhelmed by a surge in inflation, exacerbated by Russia's invasion of Ukraine, prompting central banks worldwide to raise interest rates sharply from the low levels that had prevailed for many years. The combination of increases in the price of essentials (such as food and energy) and rising borrowing costs reversed earlier hopes for economic recovery, creating near-recessionary conditions in many economies, particularly those most dependent on Russian energy and Ukrainian food exports.

Aside from the direct economic disappointments, 2022's increase in interest rates and the tightening of global liquidity (as central banks turned from quantitative easing to quantitative tightening) led to a widespread derating of investment markets. Amongst the most extreme corrections occurred in the government bond markets, where the years of easy money had driven yields near to zero and in some cases to negative levels, offering little or no absolute return or protection against inflation. The bond bubble comprehensively burst in 2022, along with the over-optimistic valuations embedded in many technology companies and the more speculative markets such as crypto tokens.

There is a healthy aspect to this, with cash and bonds now offering tangible returns and growth stocks now available on more plausible ratings. Nonetheless the effect on investors' wealth of falls in almost all assets, allied to the geopolitical and inflationary headwinds, fuelled an increasingly negative mood. As a consequence, 2022 will go down as a highly challenging year for investors, with both equities and bonds (at least in the US) falling in tandem for the first time for 30 years.

At the start of the year, our portfolio reflected expectations of a broadening of economic growth. The unforeseen onset of war therefore had a negative impact on Witan's performance. Our NAV total return in the first nine weeks of 2022 was -15%, 6% behind the benchmark's return. During the rest of the year, Witan recovered some of the lost ground, ending the year with a total return of

-10.3%, 4.1% behind the benchmark's loss of 6.2%. Whilst it is disappointing that we underperformed this measure over the year as a whole, we outperformed the AIC Global sector after lagging it in recent years. Shareholders can also take comfort from the steady and improving performance our managers delivered after the initial shock, during an exceptionally volatile period that was beset by political instability, international crises and inflation reaching levels not seen in 40

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WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Chairman's Report (continued)

years. Andrew Bell's CEO report covers these points, as well as the macroeconomic backdrop, in more detail.

The improvement in performance has accelerated during the early months of 2023, as our portfolio was positioned to benefit from an improvement in economic expectations, relative to the unusually pessimistic investor mood at the end of 2022. Whilst this is a short period, Witan's NAV total return to 10 March 2023 is +5.6%, 3.6% ahead of our benchmark's return of 2.0%.

Over the long term, since Witan adopted a multi-manager approach in 2004, we have beaten the returns on our benchmark and raised the dividend well ahead of the rate of inflation. Even after the underperformance since 2020, over the ten years to the end of 2022 Witan achieved a NAV total return of 159% and a share price total return of 180%, compared with the benchmark's 158% return and (with inflation now back on investors' radar) well ahead of the 30% rise in the UK Consumer Price Index over the period.

RESPONSIBLE INVESTMENT

In last year's Annual Report, we introduced our updated responsible investment strategy which, in addition to our commitment to the Net Zero Asset Managers initiative ('NZAM'), set a target to have a portfolio which consists entirely of sustainable businesses by 2030. This does not impose blanket exclusions on our managers, as we believe that engagement with companies often has a greater positive impact than divestment. However, if engagement has run its course and ESG failings undermine the investment rationale, they are able to exit, or avoid, an investment in order to protect our shareholders' capital. This is one of the most significant advantages of active management, as passive (index tracking) funds can find it difficult to reconcile their commitments to responsible investment initiatives with their inability to divest from companies with poor governance standards.

Ongoing ESG oversight, as part of the investment process, remains one of the key responsibilities of Witan's Executive team and of our managers. Our bespoke approach to responsible investment focuses on identifying companies' progress and direction of travel, rather than simply their sustainability credentials at a point in time.

In 2022 we focused on two key projects to support this approach. Firstly, formulating our NZAM commitments, made in shareholders' long-term best interests and, secondly, implementing our "Sustainable by 2030" commitment. This entailed assessing the current characteristics of the portfolio (using our own criteria and our managers' knowledge of investee companies) and identifying how to measure progress. The Board asked James Hart, Witan's Investment Director, to lead on this programme, which has provided us with valuable insights into how our managers and portfolio companies approach ESG issues and created a baseline from which our sustainability performance can be measured. The responsible investment section, which is on pages 18 to 25 of the Annual Report, introduces the framework, sets out its preliminary results and reports on other progress made during the year.

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WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Chairman's Report (continued)

2022 DIVIDEND

A fourth interim dividend of 1.60 pence was declared in February 2023, payable on 17 March 2023. As a result, the dividend for the year increased by 3.6% to 5.80 pence per share (2021: 5.60 pence). This year's dividend was covered an improved 84% by 2022 revenue earnings (2021: 65%), with a reduced call of £6.4 million on our revenue reserves (in 2021 we used £14.6 million).

The Board expects portfolio dividends to recover further in coming years and it is the Company's intention to continue to make use of retained earnings to increase the dividend to shareholders annually while full cover is restored.

We have increased the dividend every year for the last 48 years and the latest dividend is more than double that paid in 2012. Although 2022's increase does not match the exceptionally high rate of UK inflation in 2022 (10.5% at the year-end), Witan's dividend has grown substantially ahead of UK inflation over the past 5 and 10 years.

BOARD COMPOSITION

The Board currently consists of ten directors, nine of whom are non-executive, representing a broad diversity in background, experience, ethnicity and gender. Above all, the Board has the right balance of skills to oversee the Company's affairs while fully meeting formal corporate governance guidelines on diversity.

Suzy Neubert, our Senior Independent Director, will be standing down at this year's AGM, after serving on the Board for 11 years. On behalf of shareholders, I would like to thank Suzy for her valuable insights, judgment and advice over this period. She will be succeeded as Senior Independent Director by Rachel Beagles, who joined the Board in 2020.

As part of the Board's succession planning, two new Directors joined the Board in February and will be standing for election at this year's AGM. Shauna Bevan has particular experience in selecting investment managers for the wealth management sector, while Shefaly Yogendra brings wider experience from the corporate sector. Both have board level experience in investment trusts and I have pleasure in welcoming each of them to Witan's Board.

Following these changes, after the AGM the Board will consist of eight non-executive directors and one executive director, our CEO Andrew Bell. All directors stand for re-election each year.

AGM

We very much look forward to being able to meet shareholders again at this year's Annual General Meeting ('AGM'). Our 115th AGM will be held on 4 May 2023, at the Merchant Taylors' Hall. For those not able to attend in person, there will be the opportunity to attend the meeting virtually and put questions to the Board. Details will be included in the formal notice of the meeting which will be sent to shareholders at the end of March.

Andrew Ross

Chairman

14 March 2023

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WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's Review of the year

The end of the zero rates era

2022 may come to be seen as the end of an era in economic policy terms. A prolonged period of low interest rates had fostered speculative conditions in a range of investment markets, from government bonds (widely considered to be conservative investments) to the more speculative realms of early-stage technology companies, crypto markets and "non-fungible tokens". The Russian war in Ukraine made tackling the inflationary consequences of the pandemic more urgent and harder to manage, as inflation in many countries at the end of 2022 was more than double the rate expected a year earlier, reaching levels not seen since the 1980s. The resulting squeeze on consumers' spending power created an increasing headwind for economic growth.

Inflationary pressures were already building in 2021, due to the pandemic's shocks to demand and to the world's ability to supply goods and services. When economies reopened demand surged, while supply chains remained disrupted and the global workforce was reduced by mortality, sickness, early retirement and barriers to free movement. Allied to this, years of underinvestment in energy supply (linked to climate change concerns) left the world short of oil and gas, whose supply was further disrupted by sanctions on Russian energy exports.

Although the level of interest rates remains low by historic standards, the pace of increase was unusually rapid, particularly in the US. In addition, central banks, having been major buyers of government bonds in recent years, stopped buying and began to reduce their holdings. With less liquidity available, on more expensive terms, the price of financial investments fell across the board, with the greatest declines in those which had previously inflated the most. One eye-catching statistic is that the price of the longest dated UK index-linked gilt (a security with a government guarantee of inflation protection) fell by more than the price of bitcoin (which carries no guarantees of anything) - a reminder that "safety" rests upon the price paid, not simply the product characteristics. There was almost no place to hide, with the energy sector a rare positive performer in a predominantly negative environment.

As noted in the Chairman's Statement, even after the initial dramatic shock to confidence caused by Russia's invasion of Ukraine, sentiment remained highly changeable throughout the year, affected by increased concerns over inflation, the drag on growth from rising commodity prices, fears of conflict in Taiwan, attempted nuclear blackmail in Ukraine and topsy-turvy politics at home in the UK. Most global equity regions showed local currency declines exceeding 10%, although these were mitigated by sterling's weakness, particularly against the US dollar. The UK was a standout performer, with a marginal positive return, helped by its exposure to the oil and commodity sectors. However, the UK's mid-sized and smaller companies indices both suffered falls of more than 16%. Global equities finished the year with a loss of 8% in sterling terms, with the US (-8%) and emerging markets (-10%) at the weaker end, Europe down 7% and Japan (-4%) performing relatively well.

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WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

By the year end, there were signs that inflation was peaking in the UK and elsewhere, although interest rates continue to rise to counter the risk that 2022's inflationary surge might become entrenched. Growth forecasts for the coming year are subdued, with much depending on whether slowing inflation allows central banks to take their feet off the brakes before a global recession ensues. One bright spot is that China's abandonment of its zero-Covid policy makes it likely that its economy will grow more rapidly in 2023 than last year, acting as a counterweight to slowdowns elsewhere.

WITAN'S PERFORMANCE

Witan's NAV total return in 2022 was -10.3%, which was 4.1% behind the 6.2% decline in our benchmark. This was more than entirely suffered during the market's immediate reaction to the Russian invasion of Ukraine, as the remaining ten months of the year saw our portfolio recover around one third of the initial setback in both absolute and relative terms.

The past three years have seen unprecedented events affect financial markets and it is personally frustrating (professionally and as a shareholder) that Witan's longer-term record of outperformance has been eroded by underperformance since 2020, concentrated in the first quarter of 2020, with the advent of the pandemic, and the period leading up to the Russian invasion of Ukraine in February 2022.

A year ago, we stated that, despite the uncertainties created by Russia's aggression, our managers believed that being positioned for a recovery from the Covid-19 pandemic and the prospect of a broadening economic recovery remained appropriate, although the timing had become less certain and the risks had increased. So far, this has been borne out by the subsequent recovery in performance. It is often hardest to stick to a strategy when the markets have just punished it with underperformance but (while learning from experience) it makes no more sense to invest using the rear-view mirror than to drive a car looking backwards.

Witan's portfolio is invested via a diversified group of mainstream and specialist managers, with well-tested and resourced investment approaches. It includes core holdings of quality growth companies offering compounding earnings growth, as well as exposure to sectors expected to benefit from economic growth, from decarbonisation, and from the growth in infrastructure spending.

PRINCIPAL PERFORMANCE DRIVERS

The financial statements on pages 89 to 114 of the Annual Report (see extracts on pages 25 to 32 below) set out the required statutory reporting measures of the Company's financial performance.

A chart on page 11 of the Annual Report shows the contributions (in pence per share) attributable to the various components of investment performance and costs, which together constitute the decline from the 267.4 pence starting NAV to the year-end NAV of 234.1 pence, after the payment of dividends to shareholders.

A breakdown of the relative performance attribution in 2022 (based on the Company's financial statements) is shown in the table below.

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WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

Our portfolio managers collectively underperformed significantly during the year, so our overall returns lagged our benchmark. Gearing was a drag on returns for the first half of the year (when our NAV hit its low point) but this was mitigated by a positive contribution during the second half. As in 2021, Witan benefited from taking advantage of the widening in our discount to buy back 7.9% of our shares, which generated an uplift in NAV of £10.9 million, offsetting the majority of our ongoing charges. In addition, the rise in gilt yields, while weighing on equity market performance, reduced the fair value of our fixed-rate debt, thus benefiting the NAV .

BREAKDOWN OF THE PERFORMANCE ATTRIBUTION IN 2022 (%)

Net asset value total return	-10.3	Portfolio total return (before costs)	-12.3
Benchmark total return	-6.2	Benchmark total return	-6.2
		Relative investment performance	-6.1
		Investment management costs	-0.4
		Investment contribution		-6.5
		Gearing impact	-1.0
		Borrowing costs	-0.4
		Gearing contribution		-1.4
		Effect of changed fair value of debt	3.6
		Share buybacks	0.5
		Other contributors		4.1
		Other operating costs and tax	-0.3
				-0.3
Relative performance(1)	-4.1			-4.1

(1) N.B. Figures may not sum due to rounding.

PORTFOLIO STRUCTURE AND MANAGER PERFORMANCE

Our portfolio is structured with c.75% allocated to mainstream 'core' managers (five global, one UK) and the 25% balance allocated to specialist regional or sector managers; up to 15% may be invested in investment companies offering exposure to faster-growing or otherwise attractive asset categories.

There were no changes to the six core managers in 2022, although small additions were made to Jennison following weakness in the first half. Their concentration on companies with exceptional growth prospects is attractive in the longer term, with the derating seen in 2022 offering a better entry point for what currently remains our smallest global manager allocation.

We increased our allocation to the GMO Climate Change fund in June, after a period of market weakness, reflecting our increasing conviction in this as a long-term growth area. The fund has delivered strong returns since purchase in 2019 and the price dip offered a good chance to increase our exposure.

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WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

Our third-party managers implement mandates set by the Company. Each manager's mandate, benchmark, investment style and date of appointment are shown on pages 28 to 31 of the Annual Report. Their returns during the year and since appointment are set out in the table below. Only three of our external managers (GMO Climate Change, Lansdowne and Lindsell Train) outperformed their benchmarks during the year. Over the longer term, since inception the majority of the managers have outperformed their benchmarks. The exceptions are Jennison and WCM, our two growth specialists which were appointed in Q3 2020, with their relatively low allocations reflecting the elevated valuations in parts of the growth company universe (which have corrected during the markets falls of 2022). Lindsell Train's global portfolio has lagged overall since it was adopted in 2020, due to a poor year in 2021, but they outperformed in 2022 and have materially outperformed for Witan since their original appointment in 2010, albeit running a UK portfolio from 2010 to 2019.

The principal underperformer in 2022 was Jennison, whose portfolio was exposed more than most to some long-term growth companies whose ratings had risen sharply during the period of abundant liquidity and which came down to earth in 2022. Their 24% underperformance was mostly incurred during the first half. WCM, another growth manager, also underperformed for similar reasons. Artemis underperformed the relatively strong UK market, owing to its longstanding concentration on overlooked "self-help" opportunities in the mid-cap part of the market. The other notable underperformer in 2022 was the directly-held portfolio of investment companies (discussed in the following section).

As noted earlier, our NAV performance in the second half of the year improved and was ahead of our equity benchmark over that period. We believe our diverse range of managers is well-positioned for 2023 which, with a number of the principal risks substantially factored into equity prices, has a better chance of favourably surprising expectations than was the case in 2022.

INVESTMENT MANAGERS' PERFORMANCE

	Appoint- ment date	Witan assets managed as at 31.12.22(1)		Performance in 2022 %		Performance since appointment %
Investment manager and mandate		£m	%	Manager	Benchmark	Manager	Benchmark
CORE
Jennison (Global)	31.08.20	108.3	6.0	(31.2)	(7.6)	(6.6)	8.4
Lansdowne (Global)	14.12.12	313.9	17.4	(6.2)	(7.6)	13.0	11.8
Lindsell Train (Global)	31.12.19	300.7	16.7	(5.2)	(7.6)	3.8	7.8
Veritas (Global)	11.11.10	316.2	17.5	(10.9)	(7.6)	11.7	10.6
WCM (Global)	31.08.20	199.8	11.1	(21.5)	(7.6)	1.7	8.4
Artemis (UK)	06.05.08	118.9	6.5	(9.7)	1.6	7.8	5.5
SPECIALIST
GMO (Climate Change)	05.06.19	106.8	5.9	0.4	(7.6)	17.1	9.3
GQG (Emerging Markets)	16.02.17	101.4	5.6	(10.6)	(9.6)	7.0	3.7
Unquoted Growth (Specialist Funds)	02.07.21	32.7	1.9	(6.5)	(6.2)	(7.8)	0.0
Witan Direct Holdings (Specialist Funds)	19.03.10	204.1	11.3	(15.0)	(6.2)	9.6	8.7

(1) Amount and percentage of Witan's investments managed, excluding centrally managed cash.

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WITAN INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

DIRECTLY HELD INVESTMENTS

The return on the portfolio of directly managed investment company holdings was -15.0%, well behind the 6.2% fall in our composite benchmark. The principal detractors were the two residual holdings inherited from our holding in Electra Private Equity PLC, one a restaurant group and the

other a specialist retailer. Clearly, economic conditions in 2022 did not favour either sector. Added to this, the Electra shareholder base had little overlap with the natural holders of two UK micro-cap companies, leading to an overhang, with some legacy holders (not including Witan) wishing to sell. The resulting fall in value accounted for the majority of the decline in the direct holdings' value.

The other main detractor was Princess Private Equity which (for reasons of mismanagement and poor communication) unexpectedly cancelled its second dividend in 2022, the consequent loss of investor confidence contributing to a 36% fall in the share price total return, despite the NAV being little changed in sterling terms. This (in our view avoidable) action was particularly unwelcome for a company we have backed since 2011 and we forcefully communicated our views to the Board. Even after this fall, the holding has delivered returns close to 10% p.a. over 12 years and we anticipate a restoration of dividends in 2023 and a recovery in performance. Syncona's NAV fell a resilient 3% but the price moved from a 6% premium to a 7% discount, affected by adverse sentiment in the biotech sector. Similarly, Schroder Real Estate delivered a single digit decline in NAV total return but also derated along with the rest of the property sector. We reduced the holding at materially higher prices in April and, with the dividend having increased above pre-pandemic levels, have taken advantage of the subsequent setback to add.

On the positive side, a notably good performer was BlackRock World Mining Trust, with a 26% total return, in addition to which we sold a significant proportion of the holding in early 2022 at higher prices. VH Global Sustainable Energy, which was 2% down (despite an 8% return in NAV terms) also proved resilient.

One unusual feature this year was that the political turmoil in the UK gave us an opportunity to make two profitable investments in the Gilt market, with low risk. Witan has £155 million of long-term fixed rate debt issued at an average yield of under 3%. When gilt yields went through 5% in the wake of the Truss administration's "fiscal event", we invested £24 million in a gilt closely matching the maturity of our debt, reasoning that if gilt prices continued to fall we could hold to maturity, having locked in an income gain relative to the interest rate we were paying. In the event, the distressed conditions in the market reversed, allowing us to register a rapid profit. A similar opportunity arose two weeks later, with the gains on the two investments totalling c.£4.3 million. Although out of the mainstream of what we invest in, it demonstrates our investment flexibility.

The common factor in this year's direct holdings underperformance was a widening in discounts, contrasting with generally resilient or robust underlying business performances. This gives us confidence in the portfolio's prospects for 2023 and beyond.

The direct portfolio was 10.9% of the investment portfolio at the start of the year and 11.3% at the end of 2022. Over the period since March 2010, it has delivered a compound annual return of 9.6%, outperforming Witan's benchmark by 0.9% p.a. Aside from performance, it gives Witan's shareholders exposure to specialist asset categories that our core managers (and many shareholders themselves) do not cover.

Page 9 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

The two specialist Unquoted Growth funds investing predominantly in unlisted assets amount to 1.9% of assets. Lansdowne Opportunities Fund (0.9% of assets) declined in value by c 24% during the year, principally owing to the fall in price of its largest holding, Oxford Nanopore Technologies, since its listing in October 2021. Greenoaks Lindenwood (1.0%) experienced a 3% decline in sterling terms, with the strength of the dollar against sterling mitigating a 14% fall in the dollar valuation of its assets. Regular reports (monthly and quarterly respectively) are received on the funds, whose valuation policies follow private equity guidelines.

GEARING ACTIVITY DURING THE YEAR

Gearing ranged between 10% and 14% during the year. Although it would have been desirable, with the benefit of hindsight, not to be geared before the Russian invasion, once the markets had fallen to reflect this shock we elected to keep our existing gearing in place and to increase it following the sharp market decline in the early summer. The average gearing level of 12.5% nonetheless cost 1% in a year of falling markets, or 1.4% after taking account of the (mostly fixed) interest charges. Gearing has contributed positively to returns in seven out of the past ten years, as illustrated in the KPI chart on page 5 of the Annual Report.

Under its Articles of Association, the Company may borrow up to 100% of the adjusted total of shareholders' funds. However, the Board's longstanding policy is not to allow gearing (as defined on page 118 of the Annual Report) to be more than 20%, other than temporarily in exceptional circumstances. Where appropriate, the Company may hold a net cash position.

At the end of 2021, net gearing (the total value of borrowings less cash) was 11.3% of net assets. At the end of 2022, gearing (on the same basis) was 14.2%.

STRUCTURE OF BORROWINGS

The Company has fixed-rate borrowings (including £2.6 million preference shares) of £158 million, consisting principally of:

Secured Notes 2035 3.29%	£21m
Secured Notes 2045 3.47%	£54m
Secured Notes 2051 2.39%	£50m
Secured Notes 2054 2.74%	£30m

The Company has a £125 million one-year borrowing facility (expandable to £150 million), providing additional flexibility over the level of gearing, as well as enabling the Company to borrow in currencies other than sterling, if deemed appropriate. The drawn balance was £96.5 million at the end of 2022 (2021: £98.0 million). The average interest rate on the Company's fixed-rate borrowings is 3.0% (2021: 3.0%). The average interest rate, including short-term borrowings, is currently 3.5% (2021: 2.1%).

Page 10 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

The rise in gilt yields means that the fair value of the Company's fixed-rate debt (valued based on the relevant gilt yield +1.4%) has declined during the year and stands at a discount to its eventual repayment value. As in previous years (when the fair value shift often detracted from returns), the Company continues to follow AIC guidance that fair valuing both assets and liabilities is the most appropriate basis for calculating NAVs, while continuing to release daily NAVs calculated with debt at par value as well as at fair value.

Witan will either invest its long-term borrowings fully or neutralise their effect with cash balances according to its assessment of the markets. The Company's third-party managers are not permitted to borrow within their portfolios but may hold cash.

DERIVATIVES ACTIVITY

An investment of £12 million was made in US equity index futures in September and sold for a £1 million gain in November. This enabled Witan to invest in the US market when it was at a low index level, without returns being eroded by the subsequent recovery in sterling from its politically depressed level at the end of September. There were no derivatives positions outstanding at the year end.

DIVIDEND AND REVENUE PERFORMANCE

The Company has already paid three quarterly dividends of 1.40 pence per share in respect of 2022 which, together with the fourth interim dividend of 1.60 pence per share, increases the total distribution for the year to 5.80 pence (2021: 5.60 pence). This marks the 48th consecutive year of dividend growth. At the end of 2021, retained revenue reserves were £37.5 million (after deducting the fourth interim dividend payment). The purpose of such reserves is to enable income payments to shareholders to be supported during leaner times, and £6.4 million was used towards funding the 2022 dividend (2021: £14.6 million). Revenue reserves were £31.3 million at the end of 2022, after allowing for the fourth interim dividend payment.

Revenue earnings per share rose by 33% to 4.78 pence per share in 2022. The recovery in revenue earnings has facilitated an increase in the dividend, an increased level of dividend cover (from 65% to 84%) and a much lower call on past revenue reserves.

The Board has reviewed the prospects for portfolio dividend growth in 2023 and future years and, recognising the importance for many shareholders of a reliable and growing income, intends to use revenue reserves to bridge what is expected to be a narrowing gap between portfolio revenue earnings and the dividends paid to shareholders. The Board anticipates dividend cover improving in coming years, alongside continued annual dividend growth.

2023 DIVIDENDS

The first three quarterly payments for 2023 (in June, September and December) will, in the absence of unforeseen circumstances, be paid at a rate of 1.45 pence per share (2022: 1.40 pence), being one quarter of the 5.80 pence per share full-year payment for 2022. The fourth payment (in March 2024) will be a balancing amount, reflecting the difference between the three quarterly dividends already paid and the payment decided for the full year.

Page 11 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

WITAN'S SHARES IN THE MARKET - LIQUIDITY AND DISCOUNTS

Witan is a member of the FTSE 250 Index, with a market capitalisation of over £1.5 billion.

The Board has always paid attention to discount-related issues and has, over many years, made significant use of share buybacks, when Witan's shares have stood at a discount as well as being prepared to issue shares at a premium to NAV to meet demand from investors. Both actions are accretive to NAV, provide liquidity in the market and help to moderate discount volatility.

WITAN INVESTMENT TRUST DISCOUNT TREND

The discount trend during the past five years is illustrated in a chart on page 15 of the Annual Report. Along with others in the sector, the discount widened significantly for much of 2022. Witan was active in buying back shares, helping to moderate the level of the discount, as well as delivering an uplift to NAV. During the year 58.2 million shares were bought back (7.9% of the total at the start of the year), at an average 7.8% discount to NAV, which resulted in an uplift to NAV of £10.9 million, or 1.6 pence per share. For perspective, this sum exceeds the investment management fees paid to our external managers, offsetting the majority of the Company's ongoing charges.

The discount finished the year at 5.4% (2021: 5.8%) and the average discount during the year was 7.8% (2021: 6.9%).

Discounts are affected by many factors outside the Company's control but where it is in shareholders' interests (taking account of market conditions), the Company remains prepared to buy back shares at a discount to NAV or to issue shares (though only at a premium). It remains a long-term objective to create sustainable liquidity in Witan's shares at or near to asset value and the robust actions taken over recent years are evidence of this continuing commitment.

OUTLOOK

2023 began with interest rates and economies poised close to potential turning points. In the case of rates, after a flurry of increases in late 2022 we may be near a peak, even if the shape is likely to be more like Table Mountain than the Matterhorn. After a decade or more of zero or negative rates, central banks will be keen to retain more normal levels of interest rates, quite apart from continuing to bear down on inflationary pressures, which may be waning but have not disappeared. In the case of economies, stagnation or moderate recession is widely forecast for part of 2023 but the interesting question is when the headwinds from energy prices wane and the tailwind from China's reopening quickens, helping engender a cyclical recovery.

China's abandonment of its zero-Covid policy and likely economic acceleration this year is a significant offset to the expected slowdown elsewhere. China's slowdown in 2022 fortuitously blunted the inflationary impact from commodities and gave supply chains time to normalise but at the cost of a dramatic slowing in its own growth rate. Pent-up demand, a restoration of industrial production and determined government efforts to end the slump in China's property sector are likely to mean the world's second largest economy is the only major centre to pick up speed in 2023, mitigating the weakness elsewhere.

Page 12 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

CEO's review of the year (continued)

The past year has been dominated by the effects of President Putin's infliction of war and destruction on Ukraine. Although predicting how this conflict will evolve or be solved is hazardous, developments that could prove less negative than in 2022 seem as plausible as the opposite. Concerns that relations between China and Taiwan could descend into conflict have reduced, possibly influenced by Russia's problems following its own aggression, although relations between the US and China remain tetchy.

Falling inflation in many economies has moderated, though not eliminated, the risk of over-aggressive monetary tightening and increased the possibility of either a soft landing for the world economy or a period of relatively mild recession. This should allow secular boosts to growth to take over and favourably alter the outcome for 2024 and beyond. 2022's geopolitical events will lead to higher defence spending, resilience investment (to reduce risks from supply chain disruption) and reshoring of capacity for strategically important sectors such as semiconductors and rare earths. The energy crisis seems likely to accelerate efforts to reduce dependence on unreliable producers of (ultimately undesirable) fossil fuels. We anticipate greater infrastructure investment in sustainable energy sources, as well as a shorter-term boost to investment in producing the hydrocarbons needed until sustainable sources can render them redundant.

Inflation seems likely to be higher in the coming decade than was the norm prior to 2022. Although there will be little tolerance for the destabilising inflation rates of the past year, indebted governments and their central banks will be aware that moderate inflation is an effective way to reduce debt burdens, particularly when it coincides with consistent economic growth. Current debt levels appear intractable without stronger economic growth so governments and central banks are likely to seek (or condone) faster inflation than the 2% norm of recent decades, while placing a high priority on economic growth, partly justified by the secular objectives noted earlier.

Setbacks in investment markets such as those experienced in 2022 are rarely welcomed by those whose savings are impacted but they produce the platform from which better longer-terms can be achieved. In the wake of the falls, a wider range of assets can be rationally invested in once more, including cash, bonds and growth opportunities whose attractions were compromised by over-valuation. With 2023 having begun at a time of privation for many and widespread pessimism about the future, there is a risk that some of the longer-term positive drivers for growth in coming years are being overlooked.

Andrew Bell

Chief Executive Officer

14 March 2023

Page 13 of 33

WITAN INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 December 2022

Strategic Report

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency, liquidity or reputation. These risks, and the actions taken to mitigate them, are set out below.

Risks are inherent in investment and corporate management. It is important to identify risks and ways to control or avoid them. Witan Investment Services Limited ('WIS') has a Risk Committee in order to monitor compliance with its risk management and reporting obligations as Witan's Alternative Investment Fund Manager ('AIFM'). The Company maintains a framework of the key risks, with the policies and processes devised to monitor, manage and mitigate them where possible. Its detailed risk map is reviewed regularly by the Audit & Risk Committee and the WIS Risk Committee, which report on pertinent issues to their respective Boards.

The guiding principles remain watchfulness, proper analysis, prudence and a clear system of risk management.

Where appropriate, the Witan and WIS Boards meet jointly to cover matters of common interest. The WIS Board consists of five non-executive directors and one executive director who are also directors of Witan, and one executive director who is a Company employee.

The Board's policy on risk management has not materially changed during the course of the reporting period and up to the date of this report.

Page 14 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

The Company's key risks fall broadly under the following categories:

Market and investment portfolio			(Increased)
Risk		Mitigation
As an equity fund, a key risk of investing is a general fall in equity prices and investment income, which could be exacerbated by gearing and the risks associated with the performance of its investment managers and changes in Witan's share price rating. Other risks are the portfolio's exposure to country, currency, industrial sector and stock-specific factors (including those relating to the sustainability of the business model taking account of environmental, social and governance factors). Political and macroeconomic topics such as Brexit, inflation, pandemics (e.g. Covid-19), trade wars and military conflicts (e.g. the Russian invasion of Ukraine) can all be expected to lead to market volatility.		The Board seeks to manage these risks through: · a broadly diversified equity benchmark; · appropriate asset allocation decisions; · selecting competent managers and regularly monitoring their performance, awareness of emerging risks and the robustness of their processes for taking account of those risks; · paying attention to key economic and political events; · engagement with shareholders and other stakeholders · active management of risk, whether to preserve capital or capitalise on opportunities; · the application of relevant policies on gearing and liquidity; and · share buybacks and issuance to respond to market supply and demand. During the year, Andrew Bell, the CEO, managed the overall business and the investment portfolio in accordance with limits determined by the Board and the AIFM, on which the CEO reports at each Board meeting. The Board also regularly reviews investment strategy and performance, supported by comprehensive management information and analysis.

Operational and cyber		(Increased)
Risk		Mitigation
Many of the Company's financial systems are outsourced to third parties, principally BNP Paribas London Branch ('BNP Paribas'). Disruption to their accounting, payment systems or custody records could prevent the accurate reporting and monitoring of the Company's financial position.		The Witan and WIS Executive undertake a detailed due diligence programme, focused upon the operational and cyber arrangements of all the Company's suppliers. BNP Paribas, as the Company's depositary, has a key responsibility for monitoring such issues on behalf of the Company. The Board and AIFM monitor the depositary as well as its other suppliers. Details of the Board's monitoring and control processes are explained further in the Corporate Governance Statement on pages 48 to 58 of the Annual Report.

Page 15 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

Compliance and regulatory change		(Unchanged)
Risk		Mitigation
The Company breaches compliance/regulatory requirements or fails to assess the impact.		The Board takes its regulatory responsibilities very seriously and compliance issues and potential regulatory changes are regularly reviewed by the Board and its AIFM. Details of the Company's corporate governance policies are set out in the Corporate Governance Statement on pages 48 to 58 of the Annual Report. The Board conducts an annual assessment of the effectiveness of its governance processes. There is also a three-yearly independent external review, the most recent of which was in 2021. See page 57 of the Annual Report for further details. Following the closure of the Company's savings plans, the risks associated with the holding of and accounting for client assets has been substantially reduced and will be eliminated in future. Operational and regulatory risks are regularly reviewed by Witan's Audit & Risk Committee and WIS's Risk Committee. WIS is subject to its own operating rules and regulations and is regulated by the Financial Conduct Authority ('FCA'). The Company has established a modus operandi for the effective coordination of its responsibilities and those of WIS, as its AIFM. Operationally the multi-manager structure is robust, as the investment managers, the custodian and the fund accountants keep their own records which are regularly reconciled. The depositary, the AIFM and the Board provide additional checks and safeguards. Management monitors the activities of all third parties and reports any significant issues to the Board.

Page 16 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

Accounting, taxation and legal		(Unchanged)
Risk		Mitigation
The Company must comply with sections 1158-59 of the Corporation Tax Act 2010 ('CTA'). A breach could result in the Company losing investment trust status and, as a consequence, capital gains realised would be subject to corporation tax. The Company must comply with the provisions of the Companies Act 2006 ('Companies Act') and 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 itself constitute a breach of the provisions of the CTA.		The accounting requirements are monitored by the CEO and AIFM and the Company carefully monitors compliance with the applicable rules. These requirements offer significant protection for shareholders. The Board receives reports from the CEO, the AIFM, the Company Secretary and the Company's professional advisers to enable it to ensure compliance with all applicable rules. WIS is authorised and regulated by the FCA to act as the AIFM for Witan.
Liquidity		(Unchanged)
Risk		Mitigation
The Company's portfolio of securities might not be realisable.		The Company's portfolio consists mainly of readily realisable securities. The Company and its AIFM regularly review liquidity needs (for example, operational costs, loan servicing and repayment, shareholder dividends and share buybacks) relative to the Company's portfolio income and the value and tradability of the Company's assets. Most of the likely liquidity requirements are foreseeable (for example, timetabled loan payments and dividends) while others (such as share buybacks) are subject to the Company's discretion. The Board is satisfied that unexpected liquidity needs are not significant and could readily be met without compromising normal portfolio management.

Page 17 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

Environmental, social and governance factors		(Unchanged)
Risk		Mitigation
Failure to identify, understand or mitigate the risks arising from ESG issues may negatively impact investment returns, increase the potential for reputation risk to Witan and adversely affect the net asset value and/or price of Witan's shares.		Witan has a responsible investment policy which was developed by the Board in consultation with Witan's Executive team. This is discussed fully on pages 18 to 25 of the Annual Report. Witan expects its external managers to integrate ESG factors into their investment processes. Witan requires managers to report on any ESG issues in a timely manner and the Executive monitors the portfolios using various third-party data providers to ensure that such issues are being identified. Managers are also expected to report on engagement and voting activities. The Executive holds regular ESG review meetings with each of the managers where these activities, as well as evolving best practice and new responsible investment initiatives, are discussed. The Executive presents its findings to the Board on a regular basis .

CORPORATE AND OPERATIONAL STRUCTURE

Witan is an investment trust with a Premium Listing on the London Stock Exchange. It has a single, wholly owned subsidiary, Witan Investment Services Limited ('WIS') which acts as the Company's Alternative Investment Fund Manager ('AIFM').

The overwhelming majority of the portfolio is in segregated accounts, held in custody by the Company's depositary. The operations of the custodian and the safeguarding of the Company's assets are supervised by the depositary.

OPERATIONAL MANAGEMENT ARRANGEMENTS

In addition to the appointment of third-party investment managers, Witan and WIS contract with third parties for other services, including:

· BNP Paribas London Branch for depositary services, custody, investment accounting and administration;

            Frostrow Capital LLP for company secretarial services;

· MSCI, StyleAnalytics and Morningstar/Sustainalytics for monitoring of its investment holdings; and

· specialist advice on regulatory compliance issues and, as required, legal, investment consulting, financial and tax advice.

The service quality and value received from major service providers are reviewed regularly by the Board.

The contracts governing the provision of all services are formulated with legal advice and stipulate clear objectives and guidelines for the service required.

Page 18 of 33

WITAN INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

STAFFING

The Company's policy towards its employees is to attract and retain staff with the skills and expertise required to manage the affairs of an investment trust company. Details of the Company's remuneration policies and required disclosures are set out in the Directors' Remuneration Report on pages 62 to 74 of the Annual Report. Employees and those who seek to work at Witan are treated equally regardless of age, gender, race, disability, marital status, sexual orientation and religion. The Company currently has six direct employees, three men and three women. The Board currently consists of nine non-executive directors (four men and five women) and the CEO, Andrew Bell, who is an employee. Given its outsourced model and the small number of direct employees, the Group has no employment-related specific policies in respect of environmental or social and community affairs. However, as described elsewhere, an increased focus on ESG issues has been formalised by the Company's commitments, which are detailed in the section on responsible investment on pages 18 to 25.

WITAN INVESTMENT SERVICES

WIS is authorised and regulated by the Financial Conduct Authority. It is authorised to act as Witan's AIFM and to provide marketing services.

WIS's principal activities are acting as Witan's AIFM, providing executive management services to the Board of Witan and communicating information about the Company to the market.

WIS's operational objectives for 2022 were:

● to fulfil its responsibilities as Witan's AIFM; and

● to control the net operating costs for Witan.

In 2022, WIS's principal sources of income were the fees (as AIFM or Executive Manager and for marketing services) paid by Witan Investment Trust plc. The main costs incurred were staff costs and professional advice to ensure compliance with regulatory and accounting obligations.

Page 19 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

COSTS

INVESTMENT MANAGEMENT FEES

Each of the third-party managers is entitled to a management fee, based on the assets under management. The agreements can be terminated on one to three months' notice. The base fee rates for managers in place at the end of 2022 ranged from 0.28% to 0.65% per annum. The weighted average base fee was 0.51% as at 31 December 2022 (2021: 0.51%). One manager (covering 6% of Witan's portfolio), has a performance-related fee, which has a high-water mark and is subject to capping in any particular year.

Witan takes care to ensure the competitiveness of the fees it pays. We negotiated a 15% reduction in fee for one of the incumbent managers during the year and most of the fee structures incorporate a 'taper' whereby the average fee rate reduces as the portfolio grows.

The Company's investment managers may use services which are paid for, or provided by, various brokers. They may place business, including transactions relating to the Company, with those brokers. Under the requirements of MiFID II, broker-provided services (other than the execution of transactions) must either be minor non-monetary benefits or, for research received by investment managers and charged to the Company, separately accounted for.

ONGOING CHARGES AND COSTS

The Company's established measure of the costs of operation is the Ongoing Charges Figure ('OCF'). This represents the recurring costs of operating the business (principally the investment management fees paid to our external managers as well as the Company's fixed and variable overhead costs), as a percentage of net assets. This is calculated in accordance with the AIC's guidelines and provides a consistent basis for the comparison of costs from one year to the next and relative to other investment companies.

The OCF was 0.77% in 2022, (2021: 0.71%).). When performance fees due to third-party managers are included, the OCF was also 0.77% in 2022 (2021: 0.73%).

The main cost headings within the OCF are set out on page 20. The figures for transaction costs, borrowing costs and the pro rata ongoing charges of underlying funds are also included in the table, for easy reference. In calculating a KPI, the Board does not consider it relevant to consider the ongoing charges of underlying investment companies in which the Company invests, as the Company is not a fund of funds and to include ongoing charges of some investee companies but not of others would not be appropriate. For this reason, although the AIC's suggested approach is to include such charges in the OCF, the Company has chosen not to do so as part of its KPIs, but has disclosed below an estimate of this figure.

The Company exercises strict scrutiny and control over costs. The Board believes that the OCF during the year represents good value for money for shareholders, taking account of longer-term performance.

Page 20 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

The UK version of the EU PRIIPS regulations, which are applicable to UK Investment Companies, mandates the preparation of a Key Information Document ('KID') calculated on a formulaic basis, which contains a different measure of costs from the OCF, averaged over longer periods rather than specific to one year. The other principal differences between the OCF and the KID measure are the inclusion of transaction costs, borrowing costs, and the underlying costs of holdings in other collective investments.

The Company's investment performance is reported after all costs, however measured.

ANALYSIS OF COSTS

		2022		2021
	2022	% of average	2021	% of average
Category of cost	£m	net assets	£m	net assets
Investment management base fees (note 4, page 31)	7.67	0.45	9.33	0.47
Other expenses (excluding those expenses relating to the operation of the subsidiary(1), loan arrangement and one-off costs)	5.38	0.32	4.77	0.24
Ongoing Charges Figure (including investment management base fees)	13.05	0.77	14.10	0.71
Investment management performance fees (note 4, page 31)	-	-	0.39	0.02
Ongoing Charges Figure (including performance fees)	13.05	0.77	14.49	0.73
Pro rata ongoing charges of underlying funds(2)	3.90	0.23	4.37	0.22
OCF plus look through fund costs	16.95	1.00	18.86	0.95
Portfolio transaction costs	1.84	0.11	3.95	0.20
Interest costs	6.29	0.37	5.21	0.26
Total costs including transaction costs, borrowing costs and underlying fund costs	25.08	1.48	28.02	1.41

(1) those expenses not relating to the operation of the investment company

(2) this cost represents an estimate of the pro rata attributable fees charged by the managers of the external

specialist collective funds held within the portfolio.

N.B. Figures may not sum due to rounding.

VIABILITY STATEMENT

In accordance with the UK Corporate Governance Code, the Board has assessed the prospects of the Company over a longer period than the 12 months required by the 'going concern' provision.

The Company's current position and prospects are set out in the Chairman's and Chief Executive Officer's reports and the Strategic Report. The principal risks are set out on pages 13 to 17.

Page 21 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

The Board has considered the Company's financial position and its ability to liquidate its portfolio and meet its expenses as they fall due and notes the following:

● The portfolio consists of investments traded on major international stock exchanges and there

  is a spread of investments. In normal conditions, the current portfolio could be liquidated to the extent of more than 85% (source: Bloomberg) within five trading days and there is no expectation that the nature of the investments held will be materially different in future.

● The closed-ended nature of the Company means that, unlike an open-ended fund, it does not need to realise investments when shareholders wish to sell their shares.

● The Board has considered the viability of the Company under various scenarios, including periods of acute stock market and economic volatility such as experienced in 2020, and concluded that it would expect to be able to ensure the financial stability of the Company through the benefits of having a diversified portfolio of listed and realisable assets. As illustrated in note 14 to the accounts in the Annual Report, the Board has considered price sensitivity risk (the sensitivity of the profit after taxation for the year and the value of the shareholders' funds to changes in the fair value of the Group's investments) and foreign currency sensitivity (the sensitivity to changes in key exchange rates to which the portfolio is exposed).

● In addition to its cash balances, which were £35 million at 31 December 2022 (2021: £33 million), the Company has a short-term bank facility (which is renewable annually) which can be used to meet its liabilities, and fixed-rate financing in the form of secured notes and cumulative preference shares. With the exception of the short-term facility, this financing will remain in place until at least 2035. Details of the Company's current and non-current liabilities are set out in note 13 to the accounts in the Annual Report.

● The expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments currently foreseen which would alter that position.

As well as considering the principal risks on pages 13 to 17 and the financial position of the Company, the Board has made the following assumptions in considering the Company's longer-term viability:

● The Company's remit of investing in the securities of global listed companies will continue to be an activity to which investors will wish to have exposure.

● Investors will continue to want to invest in closed-ended investment trusts.

● The performance of the Company will continue to be satisfactory. The Board is able to replace any of the current investment managers when it considers it appropriate to do so.

● The Company will continue to have access to adequate capital when required.

● The Company will continue to be able to fund share buybacks when required.

●  The Company bought back 58 million ordinary shares in 2022 at a cost of £129 million and experienced no problem with liquidity in doing so. It had shareholders' funds in excess of £1.5 billion at the end of 2022.

Page 22 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Strategic Report continued

Based on the results of its review and taking into account the long-term nature of the Company and its financing, the Board has a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due for the foreseeable future, taken to mean at least the next five years. The Board has chosen this period after reviewing its investment policy and evaluating the investment cycle and the ability to deliver the Company's objectives over the short to medium term. Forecasting over longer periods is imprecise. The Board has no information to suggest this judgement will need to change in the coming five years. The Board's long-term view of viability will, of course, be updated each year in the Annual Report.

GOING CONCERN

In light of the conclusions drawn in the foregoing statement on liquidity risk on page 16 and the Viability Statement, the directors believe that the Company has adequate financial resources to continue in operational existence for at least the next 12 months from the date of this Report. Therefore, the directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial Reporting Council.

APPROVAL

This report was approved by the Board of directors on 14 March 2023 and is signed on its behalf by:

A J Ross	A L C Bell
Chairman	Chief Executive Officer

14 March 2023

Page 23 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Statement of Directors' Responsibilities

in respect of the Annual Report and the financial statements

Responsibility statement

The directors as at the date of the Annual Report confirm, to the best of their knowledge, that :

· the financial statements, prepared in accordance with UK-adopted International Accounting Standards, 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

· the Strategic 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 (on pages 13 to 17) of the principal risks and uncertainties that they face.

The directors also confirm that the financial statements, taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

By order of the Board

A J Ross

Chairman

A L C Bell

Chief Executive

14 March 2023

Page 24 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Financial Highlights as at 31 December 2022

Key data

	2022	2021
Share price	221.5p	252.0p
NAV per ordinary share (debt at fair value)(3)	234.1p	267.4p
Discount (NAV including income, debt at fair value)(3)	5.4%	5.8%
Dividend per share	5.80p	5.60p

Total return performance
	1 year % return	5 years % return	10 years % return
Share price total return(1)(3)	(9.8)	16.3	179.6
NAV total return(1)(3)	(10.3)	20.4	158.6
Witan benchmark(1)	(6.2)	38.1	157.8
MSCI UK IMI INDEX(2)	1.6	13.9	83.4
MSCI ACWI INDEX(2)	(7.6)	48.7	206.6

Percentage of total funds
North America	36%
Europe	21%
United Kingdom	20%
Other, including Investment Companies	12%
Asia ex Japan	4%
Japan	3%
Latin America	2%
Unquoted Funds	2%

Sector breakdown of the portfolio
Industrials	15.1%
Financials	11.6%
Information Technology	11.6%
Investment Companies	11.6%
Consumer Staples	11.4%
Healthcare	10.6%
Consumer Discretionary	6.9%
Materials	6.9%
Communication Services	6.6%
Energy	4.7%
Unquoted Funds	2.0%
Utilities	0.7%
Real Estate	0.3%

Company size breakdown of the portfolio
Large Cap	71.0%
Mid Cap	9.7%
Small Cap	5.7%
Unquoted Funds	2.0%
Investment Companies	11.6%

(1)  Source: Morningstar. (2) Source: Morningstar. See also MSCI for conditions of use (www.msci.com).

(3)  Alternative performance measure: The financial statements on pages 89 to 114 of the Annual Report set out the required statutory reporting measures of the Company's financial performance. In addition, the Board assesses the Company's performance against a range of criteria which are viewed as particularly relevant for investment trusts, which are summarised in the key performance indicators on pages 4 and 5 of the Annual Report. Definitions of the terms used are set out and a reconciliation of the NAV per ordinary share (debt at par value) to the NAV per ordinary share (debt at fair value) are shown in note 18 on page 112 the Annual Report.

Page 25 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2022

	Year ended 31 December 2022			Year ended 31 December 2021
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment income (note 2)	43,605	-	43,605	37,443	-	37,443
Other income (note 3)	601	-	601	129	-	129
(Losses) /gains on investments held at fair value through profit or loss	-	(303,607)	(303,607)	-	248,107	248,107
Foreign exchange gains/ (losses) on cash and cash equivalents	-	87	87	-	(1,178)	(1,178)
	----------	----------	----------	----------	----------	----------
Total income	44,206	(303,520)	(259,314)	37,572	246,929	284,501
Expenses
Management and performance fees (note 4)	(1,918)	(5,754)	(7,672)	(2,331)	(7,383)	(9,714)
Other expenses	(5,384)	(101)	(5,485)	(4,815)	(101)	(4,916)
	----------	----------	----------	----------	----------	----------
Profit/(loss) before finance costs and taxation	36,904	(309,375)	(272,471)	30,426	239,445	269,871
Finance costs	(1,637)	(4,657)	(6,294)	(1,366)	(3,842)	(5,208)
	----------	----------	----------	----------	----------	----------
Profit/(loss) before taxation	35,267	(314,032)	(278,765)	29,060	235,603	264,663
Taxation	(1,451)	(338)	(1,789)	(1,432)	(488)	(1,920)
	----------	----------	----------	----------	----------	----------
Profit/(loss) attributable to equity shareholders of the parent company	33,816	(314,370)	(280,554)	27,628	235,115	262,743
	----------	----------	----------	----------	----------	----------
Earnings per ordinary share (note 5)	4.78p	(44.43)p	(39.65)p	3.59p	30.53p	34.12p
	======	======	======	======	======	======

The total column of this statement represents the Group's Statement of Comprehensive Income prepared in accordance with IFRSs.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

The Group does not have any other comprehensive income and hence the total profit/(loss), as disclosed above, is the same as the Group's total comprehensive income.

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 non-controlling interests.

Page 26 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Consolidated and Individual Statements of Changes in Equity

for the year ended 31 December 2022

Group: Year ended 31 December 2022
			Ordinary	Share	Capital	Other
			share	premium	redemption	capital	Revenue
			capital	account	reserve	reserves	reserve	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 31 December 2021			50,018	99,251	46,498	1,747,379	48,895	1,992,041
Total comprehensive income:
(Loss)/profit for the year			-	-	-	(314,370)	33,816	(280,554)
Transactions with owners, recorded directly to equity:
Ordinary dividends paid (note 7)			-	-	-	-	(40,409)	(40,409)
Buybacks of ordinary shares (held in treasury)			-	-	-	(129,269)	-	(129,269)
			--------	---------	---------	------------	---------	------------
Total equity at 31 December 2022			50,018	99,251	46,498	1,303,740	42,302	1,541,809
Company: Year ended 31 December 2022
			Ordinary	Share	Capital	Other
			share	premium	redemption	capital	Revenue
			capital	account	reserve	reserves	reserve	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 31 December 2021			50,018	99,251	46,498	1,747,595	48,679	1,992,041
Total comprehensive income:
(Loss)/profit for the year			-	-	-	(314,295)	33,741	(280,554)
Transactions with owners, recorded directly to equity:
Ordinary dividends paid (note 7)			-	-	-	-	(40,409)	(40,409)
Buybacks of ordinary shares (held in treasury)			-	-	-	(129,269)	-	(129,269)
			--------	---------	---------	------------	---------	------------
Total equity at 31 December 2022			50,018	99,251	46,498	1,304,031	42,011	1,541,809
Group: Year ended 31 December 2021
			Ordinary	Share	Capital	Other
			share	premium	redemption	capital	Revenue
			capital	account	reserve	reserves	reserve	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 31 December 2020			50,018	99,251	46,498	1,665,775	63,666	1,925,208
Total comprehensive income:
Profit for the year			-	-	-	235,115	27,628	262,743
Transactions with owners, recorded directly to equity:
Ordinary dividends paid (note 7)			-	-	-	-	(42,399)	(42,399)
Buybacks of ordinary shares (held in treasury)			-	-	-	(153,511)	-	(153,511)
			---------	---------	------------	---------	------------	------------
Total equity at 31 December 2021			50,018	99,251	46,498	1,747,379	48,895	1,992.041
Company: Year ended 31 December 2021
			Ordinary	Share	Capital	Other
			share	premium	redemption	capital	Revenue
			capital	account	reserve	reserves	reserve	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 31 December 2020			50,018	99,251	46,498	1,666,030	63,411	1,925,208
Total comprehensive income:
Profit for the year			-	-	-	235,076	27,667	262,743
Transactions with owners, recorded directly to equity:
Ordinary dividends paid (note 7)			-	-	-	-	(42,399)	(42,399)
Buybacks of ordinary shares (held in treasury)			-	-	-	(153,511)	-	(153,511)
			--------	---------	---------	---------------	---------	------------
Total equity at 31 December 2021			50,018	99,251	46,498	1,747,595	48,679	1,992,041

Page 27 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Consolidated and Individual Balance Sheets

As at 31 December 2022

	Group	Company	Group	Company
	31 December	31 December	31 December	31 December
	2022	2022	2021	2021
	£'000	£'000	£'000	£'000
Non current assets
Investments held at fair value through profit or loss	1,760,824	1,762,015	2,217,455	2,218,571
Right of use asset: property	196	196	249	249
	--------------	--------------	--------------	--------------
Total non current assets	1,761,020	1,762,211	2,217,704	2,218,820
	--------------	--------------	--------------	--------------
Current assets
Other receivables	4,661	4,885	5,840	5,782
Cash and cash equivalents	36,352	34,888	34,590	33,491
	-----------	-----------	-----------	-----------
Total current assets	41,013	39,773	40,430	39,273
	-----------	-----------	-----------	-----------
Total assets	1,802,033	1,801,984	2,258,134	2,258,093
	---------------	---------------	---------------	---------------
Current liabilities
Other payables	(6,242)	(6,193)	(10,347)	(10,306)
Bank loans	(96,500)	(96,500)	(98,000)	(98,000)
	----------	----------	----------	----------
Total current liabilities	(102,742)	(102,693)	(108,347)	(108,306)
	----------	----------	----------	----------
Total assets less current liabilities	1,699,291	1,699,291	2,149,787	2,149,787
Non current liabilities
Other payables	(218)	(218)	(287)	(287)
Deferred tax liability on Indian capital gains	(667)	(667)	(886)	(886)
Borrowings:
Secured debt	(154,042)	(154,042)	(154,018)	(154,018)
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)
	----------	----------	----------	----------
Total non current liabilities	(157,482)	(157,482)	(157,746)	(157,746)
	----------	----------	----------	----------
Net assets	1,541,809	1,541,809	1,992,041	1,992,041
Equity attributable to equity holders
Ordinary share capital	50,018	50,018	50,018	50,018
Share premium account	99,251	99,251	99,251	99,251
Capital redemption reserve	46,498	46,498	46,498	46,498
Retained earnings:
Other capital reserves	1,303,740	1,304,031	1,747,379	1,747,595
Revenue reserve	42,302	42,011	48,895	48,679
	----------	----------	----------	----------
Total equity	1,541,809	1,541,809	1,992,041	1,992,041
Net asset value per ordinary share	226.80p	226.80p	269.93p	269.93p

The financial statements of Witan Investment Trust plc (registered number 101625) were approved by directors and authorised for issue on 14 March 2023 and were signed on their behalf by

A J S Ross  A L C Bell

As permitted by section 408 of the Companies Act 2006, the Company has not presented its own income statement. The loss of the Company dealt with in the accounts of the Group amounted to £280,554,000 (2021: profit of £262,743,000).

Page 28 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Consolidated and Individual Company Cash Flow Statements

for the year ended 31 December 2022

	Group	Company	Group	Company
	2022	2022	2021	2021
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received	42,739	42,739	37,986	37,986
Interest received	299	291	149	149
Other income received	646	216	361	141
Operating expenses paid	(14,095)	(14,022)	(15,430)	(15,316)
Taxation on overseas income	(1,870)	(1,870)	(3,794)	(3,794)
Taxation recovered	2,640	2,640	81	81
	----------	-----------	----------	-----------
Net cash inflow from operating activities	30,359	29,994	19,353	19,247
	----------	-----------	----------	-----------
Cash flows from investing activities
Purchases of investments	(797,777)	(797,777)	(1,004,934)	(1,004,934)
Sales of investments	948,911	948,911	1,194,779	1,194,779
Overseas capital gain on tax on sales	(518)	(518)	-	-
Settlement of futures contracts	1,001	1,001	-	-
	----------	-----------	----------	-----------
Net cash inflow from investing activities	151,617	151,617	189,845	189,845
	----------	-----------	----------	-----------
Cash flow from financing activities
Equity dividends paid (note 7)	(40,409)	(40,409)	(42,399)	(42,399)
Buybacks of ordinary shares	(132,281)	(132,281)	(150,942)	(150,942)
Interest paid	(6,044)	(6,044)	(5,167)	(5,167)
Repayment of lease liability	(67)	(67)	(67)	(67)
Drawdown of bank loans	195,000	195,000	176,250	176,250
Repayment of bank loans	(196,500)	(196,500)	(187,250)	(187,250)
	----------	-----------	----------	-----------
Net cash outflow from financing activities	(180,301)	(180,301)	(209,575)	(209,575)
	----------	-----------	----------	-----------
Increase/(decrease) in cash and cash equivalents	1,675	1,310	(377)	(483)
Cash and cash equivalents at the start of the period	34,590	33,491	36,145	35,152
Effect of foreign exchange rate changes	87	87	(1,178)	(1,178)
	----------	-----------	----------	-----------
Cash and cash equivalents at the end of the period	36,352	34,888	34,590	33,491

Page 29 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Notes to the Financial Statements

for the year ended 31 December 2022

1.  Accounting policies

The financial statements of the Group and parent company have been prepared in accordance with UK-adopted International Accounting Standards ('IASs'). 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 in the financial statements. Where presentational guidance set out in the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies (the 'AIC') in July 2022 is consistent with the requirements of IASs, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

Judgements and sources of estimation uncertainty

In the application of the Group's accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not always readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may vary from these estimates.

The directors do not consider that there are any significant estimates or critical judgements in these financial statements.

(b) Going concern

The financial statements have been prepared on a going concern basis.  The Group's business activities, together with the factors likely to affect its future development and performance, are set out in the Strategic Report in the Annual Report. The financial position of the Group as at 31 December 2022 is shown in the balance sheet on page 27. The cash flows of the Group for the year ended 31 December 2022 are not untypical and are set out on page 28.

(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.

In accordance with IFRS 10 the Company has been designated as an investment entity on the basis that:

· It obtains funds from investors and provides those investors with investment management services;

· It commits to its investors that its business purpose is to invest solely for returns from capital appreciation and   investment income; and

· It measures and evaluates performance of substantially all of its investments on a fair value basis.

The subsidiary of the Company was established for the sole purpose of operating or supporting the investment operations of the Company and is not itself an investment entity. Therefore, under the principles of IFRS 10, the Company has consolidated its subsidiary as it is a controlled entity that supports the investment activity of the investment entity. 

Control is achieved where the Company is exposed, or has the right, to variable returns from its investment in the subsidiary and has the ability to affect those returns through its power to direct the relevant activities. Where necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used by it into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Page 30 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Notes to the Financial Statements continued

(d) Presentation of the Statement of Comprehensive Income

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 Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. Additionally, the net revenue is the measure the directors believe appropriate in assessing the Group's compliance with certain requirements set out in section 1158 of the Corporation Tax Act 2010.

2.  Investment income

	2022	2021
	£'000	£'000
UK dividends from listed investments	11,869	11,693
UK special dividends from listed investments	1,589	455
UK stock dividends from listed investments	772 -----------	170 -----------
Total UK dividends	14,230	12,318
	-----------	-----------
Overseas dividends from listed investments	28,522	24,502
Overseas special dividends from listed investments	832	623
Fixed interest	21	-
	-----------	-----------
Total investment income	43,605	37,443
	2022	2021
	£'000	£'000
Analysis of investment income by geographical segment:
United Kingdom	14,251	12,318
North America	5,009	4,407
Continental Europe	5,906	5,614
Japan	1,517	1,450
Asia (ex Japan)	2,156	2,709
Latin America	5,735	2,147
Other	9,031	8,798
	-----------	-----------
Total investment income	43,605	37,443

3.  Other income

	2022	2021
	£'000	£'000
Deposit interest	379	3
Stock lending income	222	126
	-----------	-----------
	601	129

At 31 December 2022 the total value of securities on loan by the Company for stock lending purposes was £35,830,000 (2021: £57,111,000). The maximum aggregate value of securities on loan at any time during the year ended 31 December 2022 was £122,950,000 (2021: £188,480,000). Collateral, revalued on a daily basis at a level equivalent to at least 105% (2021: 105%) of the market value of the securities lent, was provided against all loans.

Page 31 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Notes to the Financial Statements continued

4.  Management and performance fees

	Year ended 31 December 2022			Year ended 31 December 2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Management fees paid to third-party managers	1,918	5,754	7,672	2,331	6,994	9,325
Performance fee payable to third-party managers	-	-	-	-	389	389
	----------	-----------	-----------	----------	-----------	-----------
Total management and performance fees	1,918	5,754	7,672	2,331	7,383	9,714

5.  Earnings per ordinary share

The earnings per ordinary share figure is based on the net loss for the year of £280,554,000 (2021: profit of £262,743,000) and on 707,617,951 ordinary shares (2021: 770,137,797), 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.

	2022	2021
	£'000	£'000
Net revenue profit	33,816	27,628
Net capital (loss)/ profit	(314,370)	235,115
Net total(loss)/ profit	(280,554)	262,743
Weighted average number of ordinary shares in issue during the year	707,617,951	770,137,797
	Pence	Pence
Revenue earnings per ordinary share	4.78	3.59
Capital(loss)/ earnings per ordinary share	(44.43)	30.53
Total (loss) /earnings per ordinary share	(39.65)	34.12

6.  Issued share capital

The number of ordinary shares of 5p each in issue at 31 December 2022 was 1,000,355,000 (2021: 1,000,355,000), of which 320,531,829 ordinary shares of 5p each (2021: 262,379,133) were held in treasury.

Page 32 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Notes to the Financial Statements continued

7.  Dividends

	2022 £'000	2021 £'000
Amounts recognised as distributions to equity holders in the year:
Fourth interim dividend for the year ended 31 December 2021 of 1.52p (2020: 1.43p) per ordinary share	11,107	11,294
First interim dividend for the year ended 31 December 2022 of 1.40p (2021: 1.36p) per ordinary share	10,003	10,563
Second interim dividend for the year ended 31 December 2022 of 1.40p (2021: 1.36p) per ordinary share	9,779	10,385
Third interim dividend for the year ended 31 December 2022 of 1.40p (2021: 1.36p) per ordinary share	9,584	10,157
Refund of unclaimed dividends	(64)	-
	----------	----------
	40,409	42,399
	======	======
Fourth interim dividend for the year ended 31 December 2022 1.60p (2021: 1.52p) per ordinary share	10,746	11,107
	======	======
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 minimum distribution requirements of section 1158 of the Corporation Tax Act 2010 are considered.
	2022 £'000	2021 £'000
Revenue profits available for distribution (Company only)	33,741	27,667
First interim dividend for the year ended 31 December 2022 of 1.40p (2021: 1.36p) per ordinary share	(10,003)	(10,563)
Second interim dividend for the year ended 31 December 2022 of 1.40p (2021: 1.36p) per ordinary share	(9,779)	(10,385)
Third interim dividend for the year ended 31 December 2022 of 1.40p (2021: 1.36p) per ordinary share	(9,584)	(10,157)
Fourth interim dividend for the year ended 31 December 2022 of 1.60p (2021: 1.52p) per ordinary share	(10,746)	(11,107)
	----------	----------
Revenue reserves utilised in the year (Company only)	(6,371)	(14,545)
	======	======

8.  2022 Accounts

The figures and financial information for 2022 are extracted from the Annual Report and financial statements for the year ended 31 December 2022 and do not constitute the statutory accounts for the year.  The Annual Report and financial statements include the Report of the Independent Auditor 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 have not yet been delivered to the Registrar of Companies.

Page 33 of 33

WITAN INVESTMENT TRUST PLC

  Annual Financial Report for the year ended 31 December 2022

Notes to the Financial Statements continued

9.  2021 Accounts

The figures and financial information for 2021 are extracted from the published Annual Report and financial statements for the year ended 31 December 2021 and do not constitute the statutory accounts for that year. The Annual Report and financial statements have been delivered to the Registrar of Companies and included the Report of the Independent Auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

10.    Annual report and financial statements

A copy of the Annual Report and financial statements to 31 December 2022 will shortly be available for inspection at the National Storage Mechanism ( https://data.fca.org.uk/#/nsm/nationalstoragemechanism ) and on the Company's website, www.witan.com  

Copies of the Annual Report and financial statements will be posted to shareholders by the end of March 2023 and will be available on the Company's website (www.witan.com) or in hard copy format from the Registered Office, 14 Queen Anne's Gate, London, SW1H 9AA.

The Annual General Meeting will be held on Thursday 4 May 2023 at the Merchant Taylors' Hall, 30 Threadneedle Street, London EC2R 8JB. For further details regarding arrangements, see the Notice of AGM which will be published by the end of March 2023.

For further information please contact:

Andrew Bell

Chief Executive

Witan Investment Trust plc

Telephone:  [phone]

Isabella Seekings

Director of Marketing

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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