Half-year Report

RNS Number : 6712X

Witan Investment Trust PLC

14 August 2018

 

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

HIGHLIGHTS

•     During the first half of 2018, the Company's net asset value (NAV) total return was +1.11% in line with the benchmark return of +1.06%.

•     The share price total return was +2.0%, as the discount narrowed from 1.6% at the end of 2017 to 0.7% at the end of June.

•     A second interim quarterly dividend of 5.25p per ordinary share will be paid in September. Total dividends paid in respect of the period are 10.5p per ordinary share (2017: 9.5p).

•     Eight of the ten external managers outperformed, as did the portfolio of direct holdings.

FINANCIAL HIGHLIGHTS

Key data
	(Unaudited) 30 June  2018	(Unaudited) 30 June 2017	(Audited) 31 December 2017	Change since 31 December 2017
Share price	1088.0p	1001.0p	1079.0p	0.8%
Net asset value per ordinary share(4) (debt at par value)	1110.3p	1042.7p	1109.8p	0.0%
Net asset value per ordinary share(4) (debt at fair value)	1096.2p	1029.1p	1096.2p	0.0%
Dividends per ordinary share	10.5p	9.5p	21.0p
Discount (debt at fair value)(4)	0.7%	2.7%	1.6%
Share buybacks	0.1%	1.3%	1.5%
Ongoing charges excluding performance fees(4)	0.38%	0.37%	0.76%
Ongoing charges including performance fees(4)	0.42%	0.38%	0.78%

Total return performance
	6 months  return %	1 year  return %	3 years return %	5 years return %
Total shareholder return (1)(4)	2.0	10.9	47.3	105.8
Net asset value total return (2)(4)	1.1	8.7	49.3	86.3
Benchmark (1)(4)	1.1	8.3	43.0	69.4
FTSE All-Share Index(3)	1.7	9.0	31.6	52.8
FTSE World (ex UK) Index(3)	2.1	9.4	53.3	85.3

(1)	Source: Morningstar.
(2)	Source: Morningstar/Witan
(3)	Source: Morningstar.  See also FTSE International for conditions of use (www.ftse.com).
(4)	Alternative performance measures*

*Alternative performance measures

The financial statements (on page 10 to 17) 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.  Definition of the terms used and the Witan benchmark are set out in the Half Year Report. 

Page 2 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Other financial information
	(Unaudited) 30 June 2018	(Unaudited) 30 June 2017	(Audited) 31 December 2017	Change since 31 December 2017
Net assets	£1,979m	£1,865m	£1,981m	(0.1)%
Shares with full voting rights (i.e. excluding treasury shares) (1)	178,233,760	178,872,058	178,449,589	(0.1)%
Revenue earnings per ordinary share	15.69p	14.48p	23.82p
Gearing	10.2%	11.0%	9.7%

Notes

1. Total number of ordinary shares in issue, including treasury shares: 200,071,000 (June 2017: 200,071,000; December 2017 200,071,000).

PORTFOLIO INFORMATION

Portfolio by geographical classification as at 30 June 2018	%
United Kingdom	35.5
North America	22.6
Continental Europe	21.3
Asia Pacific (ex Japan)	14.6
Japan	3.9
Other Emerging	2.1
	----------
	100.0
	======

Sector breakdown of the portfolio as at 30 June 2018	%
Financials*	28.0
Consumer Services	16.3
Industrials	14.6
Technology	12.6
Consumer Goods	11.8
Health Care	6.7
Oil & Gas	3.0
Basic Materials	2.6
Telecommunications	2.5
Utilities	1.1
Open-ended Funds	0.8
	----------
	100.0
	======
* includes 8.8% in Investment Companies

Page 3 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

INTERIM MANAGEMENT REPORT

Summary

Equity markets travelled a long way to go almost nowhere during the first half of 2018. The mood proved changeable, ranging from New Year euphoria over US tax cuts and synchronised global growth, concerns about renascent inflation and Fed tightening, growth disappointment, strong earnings, renewed growth optimism, concern about energy prices and, latterly, political worries centred on US trade policy and European cohesion.

This period of consolidation, which follows two years of very strong gains in sterling terms, appears healthy, provided that the adverse influences do not tip the world into growth disappointment or recession. It allows the rise in corporate earnings to catch up with the optimism already built into valuations, while enabling investors to assess the risks posed by rising oil prices, the threat of trade tariffs and the gradual rise in global interest rates.

Market background

The year started strongly, with global equities taking their cue from the US, where a strengthening economic recovery during 2017 was supplemented by significant tax cuts for both the corporate sector and the consumer. This proved a heady cocktail, with the US market up 7% in late January, before dropping 10% in the following 10 days. Concerns grew that the economy, already in its ninth year of recovery, might overheat, forcing the Federal Reserve to raise rates more rapidly than expected, posing a threat either to the valuation of equity markets or to the growth that underlay them. A number of economies experienced a slow start to the year, amid uncertainty whether this was due to severe winter weather or a fizzling out of the recovery that had taken hold, in Europe especially, during 2017.

The sharp fall in equity markets in early February, as investors tried to factor in the perceived risks to growth and inflation, was exacerbated by risk reduction on the part of some leveraged investors, such as hedge funds, introducing significantly more volatile market conditions than during the preceding two years.

By the spring, corporate earnings became a more dominant factor. They were generally strong, restoring confidence to equities and leading to a significant recovery of earlier losses. However two other factors obstructed a full return to earlier confidence. The first was a 20% rise in the oil price, linked to disruption in Venezuela's oil industry and an expected reduction in Iranian oil exports, after the US Administration said it would reimpose economic sanctions on Tehran. The second was an increasing risk of a trade war, as the US threatened to introduce tariffs on imports, prompting reciprocal threats from China and other trading partners. Although economic growth showed evidence of renewed momentum after the winter slowdown, this was not sufficient to shake off the worries about higher oil prices (which have in the past often led to recessions) and a trade war (of which most investors have little knowledge, given that the flow of history in recent decades has been towards lower tariffs and freer trade). Hence by mid-year the FTSE World Index showed a gain of just 2.1% in sterling terms, with a wide spread between the US (+5.2%) and emerging markets (-4.5%). The UK, down over 7% in the first quarter, was up over 9% in the second, for a six month gain of 1.7%. Despite the continued uncertainty over the Brexit process, lower UK valuations appear to have attracted some seekers after value.

Page 4 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

INTERIM MANAGEMENT REPORT, continued

Investment performance

During the first half of 2018, Witan's net asset value (NAV) total return was 1.14% taking the par value of our debt and 1.11% taking debt at fair value. This was marginally ahead of the benchmark's return of 1.06% during the period. Over the longer term, performance is more significantly ahead, with a 5 year NAV total return performance of 86.3%, compared with 69.4% for the benchmark.

Our combined investment portfolio's total return was 1.5 %, with NAV performance also assisted by the use of gearing.  The modest investment outperformance was mostly offset by costs during the period. Eight of the external managers outperformed their benchmarks, while two underperformed. The strongest gains came from the three UK managers (up by between 4% and 7%), with Veritas (+3%) the strongest of the overseas managers. The Direct Holdings portfolio also outperformed, with a gain of 3%. Performance figures for all of the managers are shown in the table on page 9.

The share price total return of 2.0% was ahead of the NAV total return, due to a further narrowing of the discount, to 0.7%.

Portfolio changes

In January, the remaining £23m European index futures holding was sold and £10m each allocated to our two European managers, CRUX and SW Mitchell. This reflected our preference for stock-picking rather than market index investment.

In April, following an extended due diligence process, £14m was allocated to Latitude Investment Management to invest in global equities. This was the first investment under a new initiative to invest using newly-established or more specialist managers viewed as having strong potential to add value. This portfolio has outperformed global equities by 3.3% in the period since appointment. It forms part of the portfolio managed by the Executive team, which can invest up to 10% in specialist collective funds and (since 2018) up to 2.5% in smaller investment mandates as described.

In May, index futures to a value of £20m (1% of assets) were sold short, as a liquid means of reducing Witan's gearing without incurring the transaction costs of selling underlying investments. This was in response to a recovery in markets, which appeared at some risk from the rising oil price and the threat of a trade war. These index futures were bought back during May and June for a small investment gain, as incoming economic news improved and the risk of a further spike in oil prices was felt to have diminished. There was a £0.4m gain on futures investment in the first half of 2018.

This is the first time in recent years that Witan has used equity index futures to reduce equity exposure, although their use for efficient portfolio management is an established part of Witan's investment activity.

Gearing

The Company began the year with gearing of 9.7%. This was maintained in a range of 9% to 10.5% for most of the period, ending June at 10.2%. Although there are shadows in the form of high oil prices and the threat of a trade war, corporate earnings and economic growth have been robust (particularly in the US), providing support for equities.

Page 5 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

INTERIM MANAGEMENT REPORT, continued

The Company has a £125m short-term facility, in addition to its fixed-rate borrowings. The drawn balance at the end of June 2018 was £87m.

Investment income and expenses

Revenue earnings per share for the period were 15.7 pence per share, a rise of 8% from the 14.5 pence per share for the first half of 2017. Investment income benefited from higher company pay-outs, which offset a moderate headwind from a firmer level of sterling against overseas currencies.

Base investment management fees paid to external delegated managers were 17% higher than those in the first half of 2017, owing to 8% growth in average assets, the shift of earlier futures investments into managers' portfolios and changes in managers during 2017.

Other operational expenses were up 2.6% at £3.2m. Finance costs rose by 15%, due to the rise in interest rates, higher borrowings and the part switch from short-term to long-term fixed rate borrowings.

The ongoing charges figure (OCF) for the six months was 0.38% compared with 0.37% in the first half of 2017. Including performance fees, the OCF was 0.42% for the first half of 2018, compared with 0.38% for the same period in 2017. These figures apply for the first half and are not annualised. The OCF for the whole of 2017 was 0.76% excluding performance fees and 0.78% including performance fees.

Dividend

The Board's policy (subject to circumstances) is to grow the dividend ahead of inflation (measured by the UK CPI). The first three interim dividends of the financial year (paid in June, September and December) are, in the absence of unforeseen events, paid at the rate of one quarter of the total payment made in respect of the previous year.

Accordingly, following the first interim dividend of 5.25p per ordinary share that was paid on 18 June 2018 (being one quarter of the total of 21.0p paid in respect of 2017) a second interim dividend of 5.25p per ordinary share will be paid on 18 September 2018. The ex-dividend date will be 23 August 2018. The fourth payment (in March 2019) will be a balancing amount, reflecting the difference between the first three quarterly dividends and the payment decided for the full year.

The Company has increased its dividend every year since 1974 (a 43 year record of increases), recognising the importance for its investors of a reliable and growing income.

In the absence of unforeseen developments, the full year's dividend for 2018 is expected to show a further year of growth significantly ahead of inflation, fully funded from current year revenue earnings, with a further addition to revenue reserves.

Discount and buybacks

One of the Company's key performance indicators is for its shares to trade at a sustainable low discount or a premium to NAV, subject to market circumstances. Witan's shares ended 2017 on a 1.6% discount, which narrowed to a discount of 0.7% at the end of June 2018.

Page 6 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

INTERIM MANAGEMENT REPORT, continued

During the first half of 2018, the Company has continued to buy back shares into Treasury, purchasing 0.2m shares at an average discount (after purchase costs) of 1.7%. This added modestly to the net asset value but, just as important, showed that the Company was willing to continue buying back shares on tight discounts because of the benefit for shareholders of the shares trading at or near to net asset value.

The long-term objective is for shareholders to enjoy sustainable liquidity in Witan's shares at or near to net asset value. The Company remains prepared to buy back shares, taking account of prevailing market conditions (which are not under the Board's control), the level of the discount and the impact on the NAV per share. The Company will only issue shares at a premium to NAV.

Board composition

Following a review of the skills represented on the Board, Paul Yates joined the Board in May 2018. Paul has 37 years of investment management experience and was CEO of UBS Global Asset Management UK Limited prior to 2007, experience which will be particularly helpful with the Board's selection of new managers and evaluation of existing ones. He is also a non-executive director of a number of other investment companies.

Outlook

The economic backdrop mid-year shows relatively strong growth in the US and moderate growth elsewhere, with inflation higher than a year ago but not seemingly accelerating. In isolation, these are positive conditions for global equities.

The main global uncertainties of oil prices and trade policy are both compounded by their connection with unpredictable policy formation emanating from Washington. If the headlines about trade tariffs ultimately prove to be a form of negotiation by foghorn, the fears that tariffs will raise inflation, disrupt global supply chains and deter investment will recede. Similarly, if other oil producers can replace the lost production from Iran and others, the drag on growth from higher oil prices will peak and may reverse.

In the UK, the Brexit process appears to be inching erratically towards a limited separation that maintains important industrial links with an extended transition period for changes in other areas. As the end-point for negotiations looms closer, economic considerations appear to be pushing policy in a more pragmatic direction, despite the protests of zealots on both sides of the Channel.

2018 appears to mark a general turning point in global monetary policy, although tightening remains gradual. The US is steadily raising rates, the UK raised rates in August, having deferred a move from May, and a number of emerging markets have increased rates in response to higher US rates and upward pressure on inflation due to oil prices. However, the ECB appears set to keep rates low for another year, while Japan continues to target near-zero interest rates.

The combination of gradually rising interest rates and reducing central bank demand for bonds is a slow-burn fuse for bond markets, given their dependence on central bank buying since 2009. Consequently, the risks appear to lie in the direction of higher yields.

Page 7 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

INTERIM MANAGEMENT REPORT, continued

Equities remain relatively lowly valued compared with bonds and absolute valuations have moderated due to the rise in corporate earnings in 2018. If the reason for rising rates is that the world economy is moving out of the convalescent ward towards greater health, higher rates are more reassuring than otherwise. The main proviso is the avoidance of recession, whether caused by rates rising too high due to central bank misjudgement or because of a trade war initiated by the US.

We are attentive to, but do not exaggerate the importance of, the various political risks. We remain focused on active stock-selection and a prudent but opportunistic attitude to risk in order to add value for Witan's shareholders.

For and on behalf of the Board

Harry Henderson

Chairman

13 August 2018

Page 8 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

REGULATORY DISCLOSURES

Going concern

The assets of the Company consist mainly of securities that are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. 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.

Related party transactions

During the first six months of the year, no transactions with related parties have taken place which have materially affected the financial position or performance of the Company.  Details of related party transactions during 2017 are contained in the Company's Annual Report for the year ended 31 December 2017.

Principal risks and uncertainties

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

• a fall in equity prices;

• the appropriateness of the corporate objective and strategy;

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

• operational and regulatory risks.

Information on these risks and other risks is given in the Strategic Report and in the Notes to the Financial Statements in the Company's Annual Report for the year ended 31 December 2017. 

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

Directors' responsibility statement

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

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

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

(c) the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

For and on behalf of the Board

Harry Henderson, Chairman

13 August 2018

Page 9 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Investment managers:  Assets under management and investment performance as at 30 June 2018

Investment manager	Appointment date	% of Witan's assets under management at 30.06.18(1)	Performance in the half year (%)	Benchmark performance in the half year (%)	Performance since appointment  (%)(2)	Benchmark performance since appointment  (%)(2)
Artemis Investment Management (UK)	06.05.08	8.3	4.3	1.7	10.0	6.6
Heronbridge Investment Management (UK)	17.06.13	6.5	4.9	1.7	11.1	8.4
Lindsell Train (UK)	01.09.10	8.4	7.2	1.7	16.7	9.6
Lansdowne Partners (Global)	14.12.12	14.5	0.0	4.5	20.5	15.5
Pzena Investment Management (Global)	02.12.13	13.6	(1.6)	2.1	11.8	13.2
Veritas Asset Management (Global)	11.11.10	13.8	3.3	2.1	14.0	11.8
CRUX Asset Management (Europe ex-UK)	26.10.17	4.7	(1.1)	(1.4)	(0.5)	(2.8)
S.W. Mitchell Capital (Europe ex-UK)	26.10.17	4.9	1.4	(1.4)	0.2	(2.8)
Matthews International Capital Management (Asia Markets)	20.02.13	11.5	(0.5)	(0.8)	11.4	9.8
GQG Partners (Emerging Markets)	16.02.17	4.0	(3.8)	(4.2)	8.9	8.0
Witan Direct Portfolio (Directly-held investments)	19.03.10	9.8	3.0	1.1	12.5	9.5

Notes:

1	Percentage of Witan's assets managed, excluding central cash balances.
2	Percentages are annualised where the appointment date was before June 2017.
Source:  BNP Paribas Securities Services

Page 10 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Consolidated Statement of Comprehensive Income

	(Unaudited)   Half year ended   30 June 2018			(Unaudited)   Half year ended   30 June 2017			(Audited) Year ended 31 December 2017
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment income	34,458	-	34,458	31,701	-	31,701	54,425	-	54,425
Other income	743	-	743	905	-	905	1,318	-	1,318
Gains on investments held at fair value through profit or loss (Note 2)	-	2,410	2,410	-	161,140	161,140	-	289,268	289,268
Foreign exchange losses on cash and cash equivalents	-	(543)	(543)	-	(661)	(661)	-	(1,686)	(1,686)
	---------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Total income	35,201	1,867	37,068	32,606	160,479	193,085	55,743	287,582	343,325
Expenses
Management and performance fees	(1,255)	(4,547)	(5,802)	(1,075)	(3,309)	(4,384)	(2,255)	(7,294)	(9,549)
Other expenses	(3,121)	(51)	(3,172)	(3,041)	(51)	(3,092)	(6,361)	(101)	(6,462)
	---------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Profit/(loss) before finance costs and taxation	30,825	(2,731)	28,094	28,490	157,119	185,609	47,127	280,187	327,314
Finance costs	(1,087)	(3,130)	(4,217)	(948)	(2,714)	(3,662)	(1,967)	(5,651)	(7,618)
	---------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Profit/(loss) before taxation	29,738	(5,861)	23,877	27,542	154,405	181,947	45,160	274,536	319,696
Taxation	(1,754)	-	(1,754)	(1,516)	-	(1,516)	(2,493)	-	(2,493)
	---------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Profit/(loss) attributable to equity shareholders of the parent company	27,984	(5,861)	22,123	26,026	154,405	180,431	42,667	274,536	317,203
	=====	======	======	=====	======	======	=====	======	======
Earnings/(loss) per ordinary share (Note 3)	15.69p	(3.29)p	12.40p	14.48p	85.92p	100.40p	23.82p	153.24p	177.06p
	=====	======	======	=====	======	======	=====	======	======

The total column of this statement represents the Group's Statement of Comprehensive Income, prepared in accordance with IFRSs as adopted by the European Union. 

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

The Group does not have any other comprehensive income and hence the total profit, 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 11 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Consolidated Statement of Changes in Equity

		(Unaudited) Half year ended 30 June 2018
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2017	50,018	99,251	46,498	1,712,019	72,735	1,980,521
Total comprehensive income:   (Loss)/profit for the period	-	-	-	(5,861)	27,984	22,123
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(21,395)	(21,395)
Buybacks of ordinary shares into treasury   (note 5)	-	-	-	(2,272)	-	(2,272)
	-----------	-----------	-------------	-------------	-----------	-------------
At 30 June 2018	50,018	99,251	46,498	1,703,886	79,324	1,978,977
	=======	=======	========	========	=======	========

		(Unaudited) Half year ended 30 June 2017
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2016	50,018	99,251	46,498	1,464,105	66,765	1,726,637
Total comprehensive income:   Profit for the period	-	-	-	154,405	26,026	180,431
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(19,755)	(19,755)
Buybacks of ordinary shares into treasury   (note 5)	-	-	-	(22,221)	-	(22,221)
	-----------	-----------	-------------	-------------	-----------	-------------
At 30 June 2017	50,018	99,251	46,498	1,596,289	73,036	1,865,092
	=======	=======	========	========	=======	========

		(Audited) Year ended 31 December 2017
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2016	50,018	99,251	46,498	1,464,105	66,765	1,726,637
Total comprehensive income:   Profit for the year	-	-	-	274,536	42,667	317,203
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(36,697)	(36,697)
Buybacks of ordinary shares into treasury   (note 5)	-	-	-	(26,622)	-	(26,622)
	-----------	-----------	-------------	-------------	-----------	-------------
At 31 December 2017	50,018	99,251	46,498	1,712,019	72,735	1,980,521
	=======	=======	========	========	=======	========

Page 12 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Consolidated Balance Sheet

	(Unaudited) 30 June  2018 £'000	(Unaudited) 30 June 2017 £'000	(Audited) 31 December 2017 £'000
Non current assets
Investments held at fair value through profit or loss	2,180,715	2,036,591	2,149,267
	---------------	---------------	-------------
Current assets
Other receivables	13,117	23,465	5,217
Cash and cash equivalents	52,823	66,199	75,795
	---------------	---------------	-------------
	65,940	89,664	81,012
	---------------	---------------	-------------
Total assets	2,246,655	2,126,255	2,230,279
Current liabilities
Other payables	(10,255)	(13,621)	(6,393)
Bank loans	(87,000)	(107,000)	(73,000)
	---------------	---------------	-------------
	(97,255)	(120,621)	(79,393)
	---------------	---------------	-------------
Total assets less current liabilities	2,149,400	2,005,634	2,150,886
	---------------	---------------	-------------
Non current liabilities
At amortised cost:
6.125 per cent. Secured Bonds due 2025	(63,581)	(63,464)	(63,538)
3.29 per cent. Secured Notes due 2035	(20,875)	(20,871)	(20,871)
3.47 per cent. Secured Notes due 2045	(53,659)	(53,652)	(53,652)
2.74 per cent. Secured Notes due 2054	(29,753)	-	(29,749)
3.4 per cent. cumulative preference shares of £1	(2,055)	(2,055)	(2,055)
2.7 per cent. cumulative preference shares of £1	(500)	(500)	(500)
	---------------	---------------	-------------
	(170,423)	(140,542)	(170,365)
	---------------	---------------	-------------
Net assets	1,978,977	1,865,092	1,980,521
	=========	=========	========
Capital and reserves
Ordinary share capital (Note 5)	50,018	50,018	50,018
Share premium account	99,251	99,251	99,251
Capital redemption reserve	46,498	46,498	46,498
Retained earnings:
Other capital reserves	1,703,886	1,596,289	1,712,019
Revenue reserve	79,324	73,036	72,735
	---------------	---------------	-------------
Total equity	1,978,977	1,865,092	1,980,521
	=========	=========	========
Net asset value per ordinary share (Note 6)	1110.33p	1042.70p	1109.85p
	=========	=========	========

Page 13 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Consolidated Cash Flow Statement

	(Unaudited) Half year ended 30 June 2018 £'000	(Unaudited) Half year ended 30 June 2017 £'000	(Audited) Year ended 31 December 2017 £'000
Cash flows from operating activities
Dividend income received	31,931	31,649	55,464
Interest received	76	13	29
Other income received	760	1,293	2,105
Operating expenses paid	(9,056)	(5,764)	(12,644)
Taxation on overseas income	(2,036)	(1,692)	(3,014)
Taxation received	258	290	412
	-------------	-------------	-------------
Net cash inflow from operating activities	21,933	25,789	42,352
	-------------	-------------	-------------
Cash flows from investing activities
Purchases of investments	(395,022)	(558,660)	(1,097,207)
Sales of investments	364,108	553,891	1,113,894
Realised gain on futures	437	5,237	7,593
	-------------	-------------	-------------
Net cash (outflow)/inflow from investing activities	(30,477)	468	24,280
	-------------	-------------	-------------
Cash flow from financing activities
Equity dividends paid	(21,395)	(19,755)	(36,697)
Issue of secured notes net of issue expenses	-	-	29,748
Buybacks of ordinary shares	(2,318)	(22,609)	(27,413)
Interest paid	(4,172)	(3,589)	(7,345)
Drawdown of bank loans	14,000	36,000	2,000
	-------------	-------------	-------------
Net cash outflow from financing	(13,885)	(9,953)	(39,707)
	-------------	-------------	-------------
(Decrease)/increase in cash and cash equivalents	(22,429)	16,304	26,925
Cash and cash equivalents at the start of the period	75,795	50,556	50,556
Effect of foreign exchange rate changes	(543)	(661)	(1,686)
	-------------	-------------	-------------
Cash and cash equivalents at the end of the period	52,823	66,199	75,795
	========	========	========

Page 14 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Notes to the Financial Statements

1	Basis of preparation The condensed set of financial statements for the half year ended 30 June 2018 has been prepared on the basis of the accounting policies set out in the consolidated financial statements for the year ended 31 December 2017.
2	Transaction costs The gains on investments held at fair value through profit or loss include purchase transaction costs of £801,000 (half year ended 30 June 2017: £1,089,000; year ended 31 December 2017: £2,306,000) and sale transaction costs of £354,000 (half year ended 30 June 2017: £398,000; year ended 31 December 2017: £869,000). The purchase transaction costs comprise mainly stamp duty and commissions. The sale transaction costs comprise mainly commissions and research fees.
3	Earnings per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of £22,123,000 (half year ended 30 June 2017: £180,431,000; year ended 31 December 2017: £317,203,000) and on 178,301,840 ordinary shares (half year ended 30 June 2017: 179,691,544; year ended 31 December 2017: 179,149,747) being the weighted average number of ordinary shares in issue during the period. The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
		(Unaudited) Half year ended 30 June 2018 £'000	(Unaudited) Half year ended 30 June 2017 £'000	(Audited) Year ended 31 December 2017 £'000
	Net revenue profit	27,984	26,026	42,667
	Net capital (loss)/profit	(5,861)	154,405	274,536
		--------------	--------------	--------------
	Net total profit	22,123	180,431	317,203
		========	========	========
	Weighted average number of ordinary shares in issue during the period	178,301,840	179,691,544	179,149,747
		Pence	Pence	Pence
	Revenue earnings per ordinary share	15.69	14.48	23.82
	Capital (loss)/earnings per ordinary share	(3.29)	85.92	153.24
		--------------	--------------	--------------
	Total earnings per ordinary share	12.40	100.40	177.06
		========	========	========
4	Interim dividend The Directors have declared a second interim dividend of 5.25p per ordinary share (2017: 4.75p), payable on 18 September 2018 to shareholders registered on 24 August 2018. The shares will be quoted ex-dividend on 23 August 2018. A first interim dividend of 5.25p (2017: 4.75p) was paid on 18 June 2018.

Page 15 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Notes to the Financial Statements (continued)

5	Ordinary share capital At 30 June 2018 there were 178,233,760 ordinary shares in issue (30 June 2017: 178,872,058; 31 December 2017: 178,449,589) and 21,837,240 shares held in treasury (30 June 2017: 21,198,942; 31 December 2017: 21,621,411). During the half year ended 30 June 2018 the Company bought back 215,829 of its own ordinary shares (half year ended 30 June 2017: 2,338,681; year ended 31 December 2017: 2,761,150). The costs of the share buybacks were £2,272,000 (half year ended 30 June 2017: £22,221,000; year ended 31 December 2017: £26,622,000).
6	Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to the equity shareholders of £1,978,977,000 (30 June 2017: £1,865,092,000; 31 December 2017: £1,980,521,000) and on 178,233,760 (30 June 2017: 178,872,058; 31 December 2017: 178,449,589) ordinary shares, being the number of ordinary shares in issue at the period end.
7	Subsidiary undertaking The Company has an investment in the issued ordinary share capital of its wholly owned subsidiary undertaking, Witan Investment Services Limited, which is registered in England and Wales, operates in the United Kingdom and is regulated by the Financial Conduct Authority.
8	Financial instruments
	Balance sheet amount versus fair value At the period end, the carrying value of financial assets and financial liabilities approximates their fair value with the exception of the non current liabilities as detailed below:
	Financial liabilities measured at amortised cost	Fair value £'000	Balance Sheet amount £'000
	Non current liabilities
	Preference shares	1,354	2,555
	Secured bonds	80,732	63,581
	Secured notes	113,573	104,287
		--------------	--------------
		195,659	170,423
		--------------	--------------
	Financial instruments carried at fair value
	Fair value hierarchy
	The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows:
	Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability.

Page 16 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Notes to the Financial Statements (continued)

8	Financial instruments (continued)
	Financial assets and financial liabilities at fair value through profit or loss at 30 June 2018	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
	Investments including derivatives:
	Equity securities designated at fair value through profit or loss	2,165,892	-	-	2,165,892
	Investments in other funds	-	14,823	-	14,823
		-------------	-----------	---------	------------
	Total financial assets carried at fair value	2,165,892	14,823	-	2,180,715
		========	======	=====	=======
	There were no Level 3 investments during the six months to 30 June 2018. There have been no transfers between levels of the fair value hierarchy during the period. Transfers between levels of fair value hierarchy are deemed to have occurred at the date of the event or change in circumstances that caused the transfer. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows: Level 1: valued using quoted prices in active markets for identical assets. Level 2: valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1. Included in Level 2 is an investment in Somerset Emerging Markets Small Cap Fund. Level 3: valued by reference to valuation techniques using inputs that are not based on observable market data. The valuation techniques used by the Group are explained in the accounting policies in the year end accounts.
9	Segment reporting As detailed in the Company's Annual Report for the year ended 31 December 2017, geographical segments are considered to be the Group's primary reporting segment and business segments the secondary reporting segment. The Group has two business segments: (i) its activity as an investment trust, which is the business of the parent company; and (ii) the provision of alternative investment fund manager, executive and marketing management services and the management of savings schemes, which is the business of the subsidiary, Witan Investment Services Limited, and recorded in the accounts of that company. The investment trust is managed by reference to a geographical benchmark; the geographical allocation of the portfolio, as at 30 June 2018, is set out on page 2 above. The schedule on page 9 above summarises the assets under management and investment performance relating to each investment manager. This information is updated and reviewed regularly for internal management purposes and is essential for assessing the structure of the overall portfolio and the performance of each investment manager.

Page 17 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

Notes to the Financial Statements (continued)

9	Segment reporting (continued)
		Half year ended 30 June 2018		Half year ended 30 June 2017		Year ended 31 December 2017
		Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000
	Revenue*	34,641	560	32,059	547	54,649	1,094
	Interest expense	4,217	-	3,662	-	7,618	-
	Net result	22,123	-	180,431	-	317,203	-
	Carrying amount of assets	1,977,764	1,213	1,863,363	1,729	1,979,169	1,352
	*The investment and other income of the parent company.
10	Comparative information The financial information contained in this half year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 June 2018 and 30 June 2017 has been neither audited nor reviewed by the auditors. The figures and financial information for the year ended 31 December 2017 are extracted from the latest published audited financial statements of the Company and do not constitute the statutory accounts for that year. The audited financial statements for the year ended 31 December 2017 have been filed with the Registrar of Companies. The report of the independent auditors on those accounts contained no qualification or statement under section 498(2) or section 498(3) of the Companies Act 2006.
Financial report for the half year ended 30 June 2018 The financial report for the half year ended 30 June 2018 will be filed with the UK Listing Authority by 31 August 2018 and will be made available on the Company's website. Printed copies or electronic notification will be sent to shareholders in August 2018 and will be available thereafter from the Secretary at the Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA.

For further information please contact:

Andrew Bell Chief Executive Officer Witan Investment Trust plc Telephone:  [phone]

Alexis Barling 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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