Half-year Report

RNS Number : 0733I

Witan Investment Trust PLC

10 August 2021

 

              WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

SUMMARY

• Witan's NAV total return for the first half of 2021 was 12.4%, 1% ahead of our composite global benchmark

• Gearing was maintained at over 10% during the period and was a significant contributor to returns

• The discount widened, along with others in the sector; we continued with our active buyback policy, with 4.1% of our shares bought into treasury, at an average discount of close to 7%. The Board retains its long-term commitment to achieving a share price which trades in line with the NAV

• A second interim quarterly dividend of 1.36p per ordinary share will be paid in September. Total dividends paid in respect of the period are 2.72p per ordinary share (2020: 2.68p)

• Engagement deepened with our managers on ESG issues and further investments were made in positions which will benefit from businesses committed to combatting  climate change

Key data
	(Unaudited) 30 June  2021	(Audited) 31 December 2020
Share price	241.5p	230.5p
Net asset value per ordinary share (debt at fair value) (3)(4)	262.3p	236.0p
Net asset value total return (3)(4)	12.4%	4.2%

	30 June 2021	30 June 2020	31 December 2020
Dividends per share	2.72p	2.68p	5.45p

Total return performance
	6 months  return %	1 year  return %	5 years return %	10 years return %
Share price total return (1)(3)	6.0	34.7	81.0	194.0
Net asset value total return (1)(3)	12.4	37.3	79.0	177.7
Witan benchmark (1)	11.4	24.5	79.9	161.3
MSCI ACWI Index(2)	11.4	25.1	96.3	214.9
MSCI UK IMI Index(2)	11.2	20.3	32.6	78.8

(1)	Source: Morningstar.
(2)	Source: Morningstar.  See also MSCI for conditions of use (www.msci.com).
(3)	Alternative performance measures The financial statements (on pages 11 to 18) 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.
(4)	30 June 2021 data is unaudited.

Page 2 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Percentage of total funds as at 30 June 2021	%
North America	38
United Kingdom	21
Europe	17
Asia	8
Japan	3
Other, including Investment Companies	13

Sector breakdown of the portfolio as at 30 June 2021	%
Information Technology	15
Industrials	13
Communication Services	11
Investment Companies	11
Consumer Staples	10
Financials	10
Healthcare	10
Consumer Discretionary	9
Materials	9
Other	2

Company size breakdown of the portfolio as at 30 June 2021	%
Large Cap	75.0
Mid Cap	9.0
Small Cap	5.0
Investment Companies	11.0

Source: BNP Paribas

Page 3 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

INTERIM MANAGEMENT REPORT

Market background

The year began on a subdued note, as the pandemic intensified through the Northern Hemisphere winter. From February onwards, the deceleration in case numbers, in parallel with the rapid implementation of vaccination programmes prompted a change in sentiment, anticipating a progressive reopening in economies. The cyclical recovery was expected to be unusually rapid, assisted by substantial fiscal stimulus measures, record low interest rates and pent-up demand after the extensive lockdowns since March 2020.

Despite this improving outlook, sentiment proved changeable. Cyclical sectors were strong in the first quarter but lost momentum in the second, while growth stocks did the opposite. A sharp rise in government bond yields in February and March was partly reversed by mid-year. Asian and emerging markets lagged the global average while the UK, having outperformed in the first quarter, lagged in the second.

Much of this variation in performance was caused by the timing of peaks in COVID-19 cases, differences in the pace of vaccination and by the emergence of variant viruses, with the attendant worries that vaccinations might prove less effective, and the process of reopening might therefore be under threat. Nonetheless, global equities delivered positive returns in both quarters with a total return of 11.4% in Witan's benchmark to the end of June.

Investment performance

Witan outperformed in both quarters, with our NAV total return of 12.4% to the end of June being 1% ahead of the benchmark.

The full table of the performance of our incumbent managers as at 30 June is shown on the following page. All the managers delivered positive returns, with notable contributions from managers whose portfolios were positioned for a cyclical recovery (such as Artemis and Lansdowne). Those with quality and growth-focused styles (such as Jennison, Lindsell Train, Veritas and WCM) delivered less strong returns, due to the markets' focus on the pace of economic recovery described above. In the specialist section of the portfolio, the global portfolio managed by Latitude and the GMO Climate Change portfolio delivered strong returns, as did the portfolio of direct holdings in specialist investment companies, while the emerging market portfolio managed by GQG lagged, as did the Matthews Asia-Pacific portfolio (which was reallocated to other managers in April).

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WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

INTERIM MANAGEMENT REPORT continued

Investment managers:  Assets under management and investment performance as at 30 June 2021

			Witan assets under management at 30.06.21		Performance in 2021 (%)		Performance since appointment(2) (%)
Investment manager	Strategy	Start date	£'m	(%)(1)	Manager	Benchmark	Manager	Benchmark
CORE
Jennison	Global	31.08.20	125.4	5.5	3.2	11.4	16.0	21.2
Lansdowne Partners	Global	14.12.12	465.1	20.4	15.7	11.4	16.1	14.1
Lindsell Train	Global	31.12.19	328.9	14.4	6.7	11.4	13.5	16.6
Veritas	Global	11.11.10	402.6	17.7	10.0	11.4	14.0	12.2
WCM Investment Management	Global	31.08.20	240.5	10.5	7.3	11.4	21.6	21.2
Artemis	UK	06.05.08	142.8	6.3	14.9	11.2	9.5	5.5
SPECIALIST
GQG	EM	16.02.17	149.1	6.5	3.5	6.5	13.2	9.4
Witan Direct Holdings(3)	Specialist Funds	19.03.10	249.8	11.0	13.8	11.4	12.2	9.8
Latitude	Global	31.03.18	34.0	1.5	13.6	11.4	13.1	14.5
GMO	Climate Change	05.06.19	85.1	3.7	11.9	11.4	30.4	16.7

Notes:

1	Percentage of Witan's investments managed.
2	Percentages are annualised where the appointment date was more than one year ago.
3	Direct holdings do not include the US ETF held for part of the period (2.5% at 30 June 2021).
Source: BNP Paribas Securities Services

Portfolio changes

After the significant portfolio restructuring during 2020, there was only one manager change in the first half of 2021. The Asia-Pacific portfolio managed by Matthews was sold in April, with the proceeds used to increase our US exposure. We retain exposure to the Asia-Pacific region via our global managers and the GQG Emerging Markets portfolio.

We added to the WCM and Jennison portfolios during this period of weak relative performance for growth-oriented managers. Both had received lower initial allocations than our other global managers, reflecting the elevated performance of growth stocks during 2020. The increased allocations were funded by reducing the larger allocations to Veritas and Lansdowne.

We added to the holding in the GMO Climate Change portfolio after a period of flat relative performance. Our investment with GMO (held since 2019) increased from 3% to 4% of net assets and we also made an investment of just under 1% in a sustainable energy fund. The common factor is that both are set up to benefit from the acceleration of moves to mitigate, avert, or adapt to the consequences of human economic activity on global warming. We see this theme as offering an enduring boost to investment returns, as well as being a financial commitment to addressing a looming global problem.

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WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

INTERIM MANAGEMENT REPORT continued

In the portfolio of direct investment company holdings, particularly strong returns were enjoyed by the two holdings most exposed to the UK domestic economy, Electra Private Equity (+121%) and Schroder Real Estate Investment Trust (+29%); we added significantly to the latter in April. We sold one third of the holding in BlackRock World Mining Trust, which gained 19% to June. At the other end of the scale, the innovative life sciences company Syncona fell by 20% during the period due to some disappointments and delays amongst its investments and a reduced premium to NAV. We significantly trimmed the position before the fall but retain confidence in its longer-term potential.

Environmental, Social and Governance policy ('ESG')

Recent years have seen a rapid rise in the investment focus on ESG. This is leading to substantive changes in investment policies, ranging from divestment to increased pressure on companies to improve their corporate governance or their carbon footprint. Many governments are also increasing incentives for companies to invest in renewable energy infrastructure and to reduce their use of fossil fuels and plastics, which have lasting deleterious effects on global weather, human wellbeing, and wildlife ecosystems.

Witan wholeheartedly endorses this trend. It may be too late to avoid some negative effects, as evidenced by increasingly extreme weather events, wild fires, melting ice caps and rising sea levels.  Nonetheless, there is an encouraging (if so far insufficient) trend for governments to be willing to incur costs today to avoid predicted negative environmental events decades into the future, beyond the usually myopic electoral cycle. This October the UK is hosting the 26^th UN Climate Change Conference ('COP26') in Glasgow, which is intended to reaffirm and intensify the efforts to introduce policies to enable the commitments made in the 2015 Paris Climate Change Agreement to be met.

This is likely to increase the focus in capital markets towards backing technologies and businesses committed to reducing carbon emissions and other forms of pollution, while also pressing companies in other sectors to reform. Regulation and taxation policies are likely to increase the risks for businesses which are slow to adapt. Taking proper account of the risks for businesses is as much part of the investment process as trying to model future sales and earnings, so Witan and its managers have always paid close attention to the integrity of management, quality of corporate governance and resilience of businesses to known and unknown risks. However, Witan has become more demanding of its managers in this field, and we will continue to work with them to ensure your portfolio is at the forefront of sustainable investing. The other aspect that is changing is the detail and formality of reporting, to enable investors to assess our commitment and performance in these areas. Having become a signatory to the UN Principles of Responsible Investment ('UNPRI') in early 2020, Witan's first annual report is being assessed by the PRI and reports for future years will be publicly disclosed.

Page 6 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

INTERIM MANAGEMENT REPORT continued

Investment income and expenses

Revenue earnings per share for the period were 1.80p per share, a rise of 9% from the depressed level of 1.65p per share seen in the first half of 2020. Dividend cuts continued to be reflected in the full-year 2020 results for some companies (announced in early 2021) but the trend since April has been more positive, as companies have reintroduced or increased dividends in response to improved trading conditions.

Administrative expenses declined by £0.3m to £2.6m, principally due to lower tax advisory and bank charges. Investment management base fees declined by £0.1m to £4.7m, while performance fee accruals rose by £0.2m from £0.6m at the end of 2020, owing to the continued outperformance by the remaining manager with a performance fee structure (whose base fee is lower than the others). Overall investment management costs rose by £0.1m or 2% to £4.9m, compared with the first half of 2020, while average net assets were 14% higher than a year earlier.

First half total costs of £7.5m were down 1% on the comparative 2020 figure of £7.6m. Given the higher average level of net assets, this reduced the ongoing charges figure ('OCF') for the six months to 0.36% (2020: 0.43%). Including performance fees, the OCF was 0.40% for the first half of 2021 (2020: 0.43%). The OCF for the whole of 2020 was 0.78% excluding performance fees and 0.82% including performance fees.

Dividend

The Company's revenue earnings per share for 2021 have so far shown a 9% recovery from the first half of 2020. This is despite the follow-through cuts in some company dividends in early 2021 and Witan's transition to a lower-yielding portfolio during 2020. The Company began 2021 with carried forward revenue reserves of £52.1m, amounting to over 1.2 times the annual dividend. The Board has stated its willingness to continue to smooth dividend payouts using revenue reserves.  Investment companies also have the ability, where warranted, to use realised capital reserves to support distributions and some other leading investment trusts already partly fund their dividends in this way. The Company would only propose such a step as part of a defined path towards dividends being fully funded by revenue earnings or if judged to be sustainable based upon the total returns earned by the portfolio over time.

The Company has increased its dividend every year since 1974 (a 46-year record of increases), recognising the importance for many of its investors of a reliable and growing income. The Board's policy remains to grow the dividend each year and the full year's dividend for 2021 is expected to show a further year of growth.

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. The fourth payment (in March 2022) will be a balancing amount, reflecting the difference between the first three quarterly dividends and the payment decided for the full year.

Page 7 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

INTERIM MANAGEMENT REPORT continued

Accordingly, a second interim dividend of 1.36p per ordinary share, being approximately one quarter of the total paid in respect of 2020 (5.45p), will be paid on 17 September 2021. The ex-dividend date will be 19 August 2021. This follows the first interim dividend of 1.36p per ordinary share paid on 18 June 2021.

Gearing

The Company came into the year with gearing of 12%, which was maintained around that level before being trimmed slightly in April, as market levels rose. The average level of gearing during the period was approximately 11%, which contributed materially to returns during a period of rising markets.

The Company has fixed rate borrowings of £155m with an average interest rate of 3%. In addition, it has a £125m short-term multi-currency facility, of which £83m was drawn at the period end.

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. This has been difficult in 2020-21, given market conditions. Witan's shares traded at an average discount of 6% during 2020, ending the year at a 2.4% discount. Along with others in the sector, our discount has widened during 2021, trading at an average of 6.7% and ending the period at 7.9%.

The Company has been active (in absolute terms and relative to its peers) in buying back shares, buying 32.6m shares (4.1% of the total) into treasury in the period, at an average discount of 6.8%. This added £5.1m to the net asset value.

The Company remains prepared to buy back shares, taking account of prevailing market conditions, the level of the discount and the impact on the NAV per share. The Company will only issue shares at a premium to NAV.

Outlook

The first half of the year has seen fluctuating fortunes between sectors and regions, as hopes for economic recovery were affected by countries' differing success in tackling the pandemic. Investors are also uncertain how much of the increase in inflation rates is driven by transitory factors such as the bounce in energy prices from low levels and current disruptions to supply chains. If inflation shows a sustained rise, some investors fear a rise in interest rates that could cut short the economic recovery, affecting the performance of cyclically sensitive sectors. Other investors fear that if central banks tolerated a rise in inflation, in order to foster economic recovery, it would lead to a rise in government bond yields, undermining the valuation of highly rated growth stocks.

Page 8 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

INTERIM MANAGEMENT REPORT continued

Coming months seem likely to affect this debate in several ways. The interim reporting season is providing a measure of earnings strength in cyclical sectors, helping to confirm the recovery hopes that have driven their performance. Given the turbulence of the past few years, investors understandably want tangible evidence to confirm their optimism and distinguish between low valuations and cheapness (or undervalued growth). For higher-rated growth stocks too, earnings performance (which was such a relative strength in 2020) will be important to underpin valuations, particularly given increased regulatory scrutiny of some of the globally dominant companies.

The balance between the rollout of effective vaccines and the threat of virus mutations that may prove harder to control remains key. Fluctuations in case numbers and severity are likely to continue to affect economic confidence even in largely vaccinated populations, leaving aside that many less-wealthy nations have not yet been able to obtain or distribute sufficient vaccines.

As more economies reopen and the worst of 2020's disruptions drop out of the year-on-year comparisons, it will become clearer whether the pick-up in inflation is transient, limited or immediately problematic. In the meanwhile, it seems likely that central banks and governments will be true to their recent announcements that economic stimulus will be maintained until the recovery has become fully established. This should be a conducive environment for equity performance, although high valuations in some markets and sectors (even allowing for the low level of interest rates) mean that a selective approach and thorough risk evaluation are called for.

For and on behalf of the Board

Andrew Ross

Chairman

9 August 2021

Page 9 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

REGULATORY DISCLOSURES

Principal risks and uncertainties

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

· market and investment portfolio;

· operational and cyber;

· compliance and regulatory change;

· accounting, taxation and legal;

· liquidity; and

· COVID-19 global pandemic.

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 2020.

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. These risks include the substantial impact on the global economy from COVID-19, which could affect the performance of the Company's underlying investments and therefore the performance of the Company.

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

Andrew Ross

Chairman

9 August 2021

Page 10 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

REGULATORY DISCLOSURES continued

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 at least the next 12 months.

The Company has at all times traded, and remains, well clear of all financial covenants on its borrowings (which are detailed in note 13 of its 2020 Annual Report).

Since 2019, our business continuity contingency plans have envisaged staff working from home, accessing a secure cloud computing network on the internet. These arrangements proved well-suited to the circumstances created by the government's COVID-19 guidance and have worked well, with all Witan employees having worked from home since March 2020, without interruption to operations. Similar arrangements have been in place for our major suppliers, with no interruption in service.

Therefore, the Board has determined 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 2020 are contained in the Company's Annual Report for the year ended 31 December 2020.

Page 11 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Consolidated Statement of Comprehensive Income

	(Unaudited) Half year ended 30 June 2021			(Unaudited) Half year ended 30 June 2020			(Audited) Year ended 31 December 2020
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment income	19,371	-	19,371	20,069	-	20,069	36,083	-	36,083
Other income	88	-	88	442	-	442	604	-	604
Gains/(losses)/ on investments held at fair value through profit or loss (Note 2)	-	198,197	198,197	-	(276,391)	(276,391)	-	57,813	57,813
Foreign exchange losses on cash and cash equivalents	-	(718)	(718)	-	(2,076)	(2,076)	-	(3,259)	(3,259)
	----------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Total income	19,459	197,479	216,938	20,511	(278,467)	(257,956)	36,687	54,554	91,241
Expenses
Management and performance fees	(1,164)	(3,695)	(4,859)	(1,182)	(3,545)	(4,727)	(2,176)	(7,103)	(9,279)
Other expenses	(2,543)	(51)	(2,594)	(2,840)	(51)	(2,891)	(5,050)	(260)	(5,310)
	----------	----------	----------	---------	----------	-----------	---------	-----------	-----------
Profit/(loss) before finance costs and taxation	15,752	193,733	209,485	16,489	(282,063)	(265,574)	29,461	47,191	76,652
Finance costs	(691)	(1,946)	(2,637)	(1,017)	(24,984)	(26,001)	(1,674)	(26,815)	(28,489)
	----------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Profit/(loss) before taxation	15,061	191,787	206,848	15,472	(307,047)	(291,575)	27,787	20,376	48,163
Taxation	(969)	(240)	(1,209)	(1,256)	-	(1,256)	(1,876)	(398)	(2,274)
	----------	----------	-----------	---------	----------	-----------	---------	-----------	-----------
Profit/(loss) attributable to equity shareholders of the parent company	14,092	191,547	205,639	14,216	(307,047)	(292,831)	25,911	19,978	45,889
	======	======	======	=====	======	======	=====	======	======
Earnings per ordinary share (Note 3)	1.80p	24.41p	26.21p	1.65p	(35.63)p	(33.98)p	3.08p	2.37p	5.45p
	=====	======	======	=====	======	======	=====	======	======

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

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 12 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Consolidated Statement of Changes in Equity

		(Unaudited) Half year ended 30 June 2021
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'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 period	-	-	-	191,547	14,092	205,639
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(21,870)	(21,870)
Buybacks of ordinary shares (held in   treasury) (Note 6)	-	-	-	(76,097)	-	(76,097)
	-----------	-----------	-------------	-------------	-----------	-------------
Total equity at 30 June 2021	50,018	99,251	46,498	1,781,225	55,888	2,032,880
	=======	=======	========	========	=======	========

		(Unaudited) Half year ended 30 June 2020
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 December 2019	50,018	99,251	46,498	1,768,281	87,058	2,051,106
Total comprehensive income:   (Loss)/profit for the period	-	-	-	(307,047)	14,216	(292,831)
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(27,319)	(27,319)
Buyback of ordinary shares (held in   treasury) (Note 6)	-	-	-	(37,331)	-	(37,331)
	-----------	-----------	-------------	-------------	-----------	-------------
Total equity at 30 June 2020	50,018	99,251	46,498	1,423,903	73,955	1,693,625
	=======	=======	========	========	=======	========

		(Audited) Year ended 31 December 2020
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 December 2019	50,018	99,251	46,498	1,768,281	87,058	2,051,106
Total comprehensive income:   Profit for the year	-	-	-	19,978	25,911	45,889
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(49,303)	(49,303)
Buyback of ordinary shares (held in   treasury) (Note 6)	-	-	-	(122,484)	-	(122,484)
	-----------	-----------	-------------	-------------	-----------	-------------
Total equity at 31 December 2020	50,018	99,251	46,498	1,665,775	63,666	1,925,208
	=======	=======	========	========	=======	========

Page 13 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Consolidated Balance Sheet

	(Unaudited) 30 June  2021 £'000	(Unaudited) 30 June 2020 £'000	(Audited) 31 December 2020 £'000
Non current assets
Investments held at fair value through profit or loss	2,240,560	1,833,190	2,162,722
Right-of-use asset: property	282	448	315
	---------------	---------------	-------------
	2,240,842	1,833,638	2,163,037
Current assets
Other receivables	11,163	7,005	10,877
Cash and cash equivalents	30,060	19,280	36,145
	---------------	---------------	-------------
	41,223	26,285	47,022
	---------------	---------------	-------------
Total assets	2,282,065	1,859,923	2,210,059
Current liabilities
Other payables	(8,574)	(9,252)	(18,488)
Bank loans	(83,000)	-	(109,000)
	---------------	---------------	-------------
	(91,574)	(9,252)	(127,488)
	---------------	---------------	-------------
Total assets less current liabilities	2,190,491	1,850,671	2,082,571
	---------------	---------------	-------------
Non current liabilities
Other payables	(415)	(517)	(417)
Deferred tax liability on Indian capital gains	(638)	-	(398)
Borrowings:
Secured debt (Note 5)	(154,003)	(153,974)	(153,993)
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)
	---------------	---------------	-------------
	(157,611)	(157,046)	(157,363)
	---------------	---------------	-------------
Net assets	2,032,880	1,693,625	1,925,208
	=========	=========	========
Equity attributable to equity holders
Ordinary share capital (Note 6)	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	1,781,225	1,423,903	1,665,775
Revenue reserve	55,888	73,955	63,666
	---------------	---------------	-------------
Total equity	2,032,880	1,693,625	1,925,208
	=========	=========	========
Net asset value per ordinary share (Note 7)	264.31p	200.32p	240.14p
	=========	=========	========

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WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Consolidated Cash Flow Statement

	(Unaudited) 30 June  2021	(Unaudited) 30 June 2020	(Audited) 31 December 2020
	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received	19,374	20,240	37,152
Interest received	31	54	89
Other income received	276	649	1,142
Operating expenses paid	(8,068)	(8,546)	(15,757)
Taxation on overseas income	(1,033)	(1,659)	(2,233)
Taxation recovered	61	451	485
	-------------	-------------	-------------
Net cash inflow from operating activities	10,641	11,189	20,878
Cash flows from investing activities
Purchases of investments	(578,049)	(1,072,646)	(1,687,329)
Sales of investments	687,467	1,237,146	1,859,846
Settlement of futures contracts	-	4,855	4,892
	-------------	-------------	-------------
Net cash inflow from investing activities	109,418	169,355	177,409
Cash flow from financing activities
Equity dividends paid	(21,858)	(27,322)	(49,303)
Issue of secured notes net of issue expenses	-	-	(17)
Buybacks of ordinary shares	(74,934)	(36,213)	(120,437)
Repayment of secured bond	-	(85,750)	(85,750)
Interest paid	(2,606)	(4,081)	(6,529)
Repayment of lease liability	(28)	(45)	(70)
Net (repayment)/drawdown of bank loans	(26,000)	(50,500)	58,500
	-------------	-------------	-------------
Net cash outflow from financing activities	(125,426)	(203,911)	(203,606)
Decrease in cash and cash equivalents	(5,367)	(23,367)	(5,319)
Cash and cash equivalents at the start of the period	36,145	44,723	44,723
Effect of foreign exchange rate changes	(718)	(2,076)	(3,259)
	-------------	-------------	-------------
Cash and cash equivalents at the end of the period	30,060	19,280	36,145
	========	========	========

Page 15 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Notes to the Financial Statements

1	Basis of preparation The condensed set of financial statements for the half year ended 30 June 2021 has been prepared on a going concern basis and in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and with the Statement of Recommended Practice of Investment Trust Companies and Venture Capital Trusts (the 'SORP') issued by the Association of Investment Companies (the 'AIC') in April 2021. Where the SORP is consistent with the requirements of International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1660/2002 as it applies in the European Union ('IFRSs'), the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. In assessing going concern, the directors have considered the effects and potential effects of the COVID-19 pandemic. The directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for at least a period of 12 months from the date of this report. For this reason, the Company continues to adopt the going concern basis of accounting in preparing the financial statements. The condensed set of financial statements for the half year ended 30 June 2021 has been prepared on the basis of the accounting policies set out in the audited consolidated financial statements for the year ended 31 December 2020. These condensed financial statements have not been audited or reviewed by the Company's auditors.
2	Transaction costs The gains/(losses) on investments held at fair value through profit or loss include purchase transaction costs of £1,104,000 (half year ended 30 June 2020: £1,561,000; year ended 31 December 2020: £2,410,000) and sale transaction costs of £460,000 (half year ended 30 June 2020: £940,000; year ended 31 December 2020: £1,170,000). The purchase and sale transaction costs comprise mainly stamp duty and commissions.
3	Earnings per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of £205,639,000 (half year ended 30 June 2020: loss of £292,831,000; year ended 31 December 2020: profit of £45,889,000) and on 784,730,376 ordinary shares (half year ended 30 June 2020: 861,845,539; year ended 31 December 2020: 841,523,451) 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. 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.
		(Unaudited) Half year ended 30 June 2021 £'000	(Unaudited) Half year ended 30 June 2020 £'000	(Audited) Year ended 31 December 2020 £'000
	Net revenue profit	14,092	14,216	25,911
	Net capital profit)/(loss)	191,547	(307,047)	19,978
		--------------	--------------	--------------
	Net total profit/(loss)	205,639	(292,831)	45,889
		========	========	========
	Weighted average number of ordinary shares in issue during the period	784,730,376	861,845,539	841,523,451

Page 16 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Notes to the Financial Statements continued

3	Earnings per ordinary share (continued)
		Pence	Pence	Pence
	Revenue earnings per ordinary share	1.80	1.65	3.08
	Capital earnings per ordinary share	24.41	(35.63)	2.37
		--------------	--------------	--------------
	Total earnings per ordinary share	26.21	(33.98)	5.45
		========	========	========

4

Interim dividend The directors have declared a second interim dividend of 1.36p per ordinary share (2020: 1.34p), payable on 17 September 2021 to shareholders registered on 20 August 2021. The shares will be quoted ex-dividend on 19 August 2021. A first interim dividend of 1.36p (2020: 1.34p) was paid on 18 June 2021.

5	Secured debt
		(Unaudited) Half year ended 30 June 2021 £'000	(Unaudited) Half year ended 30 June 2020 £'000	(Audited) Year ended 31 December 2020 £'000
	3.29 per cent. secured notes due 2035	20,888	20,880	20,884
	3.47 per cent. secured notes due 2045	53,671	53,663	53,669
	2.39 per cent. secured notes due 2051	49,683	49,674	49,679
	2.74 per cent. secured notes due 2054	29,761	29,757	29,761
		--------------	--------------	--------------
		154,003	153,974	153,993
		========	========	========
6	Ordinary share capital At 30 June 2021 there were 769,127,886 ordinary shares in issue (30 June 2020: 845,452,301; 31 December 2020: 801,713,287) and 231,227,114 shares held in treasury (30 June 2020: 154,902,699; 31 December 2020: 198,641,713). During the half year ended 30 June 2021, the Company bought back 32,585,401 of its own ordinary shares (half year ended 30 June 2020: 20,526,134; year ended 31 December 2020: 64,265,148). The costs of the share buybacks were £76,097,000 (half year ended 30 June 2020: £37,331,000; year ended 31 December 2020: £122,484,000).
7	Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to the equity shareholders of £2,032,880,000 (30 June 2020: £1,693,625,000; 31 December 2020: £1,925,208,000) and on 769,127,886 (30 June 2020: 845,452,301; 31 December 2020: 801,713,287) ordinary shares, being the number of ordinary shares in issue at the period end.
8	Subsidiary undertaking The Company has an investment in the issued ordinary share capital of its wholly owned subsidiary undertaking, Witan Investment Services Limited, which was incorporated on 28 October 2004, is registered in England and Wales, operates in the United Kingdom and is regulated by the Financial Conduct Authority.

Page 17 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Notes to the Financial Statements continued

9	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 using effective interest method:	Fair value £'000		Balance Sheet amount £'000
	Non current liabilities
	Preference shares	1,354		2,555
	Secured notes	170,957		154,003
		--------------		--------------
		172,311		156,558
		--------------		--------------
	Fair value hierarchy
	The table above analyses recurring fair value measurements for 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 financial liabilities: The Company's preference shares are actively traded on a recognised stock exchange. Their fair value has therefore been deemed to be Level 1. Level 3 financial liabilities: The Company's secured notes are not traded on a recognised stock exchange and so the fair value is calculated by using a discount rate which reflects the yield on a UK gilt of similar maturity plus a credit spread of 1.20%. Their fair value has therefore been deemed to be Level 3. The table below analyses fair value measurements for financial assets.
	Financial assets at fair value through profit or loss at 30 June 2021	Level 1 £'000	Level 2 £'000		Level 3 £'000	Total £'000
	Investments including derivatives:
	Equity securities designated at fair value through profit or loss	2,102,474	-		-	2,102,474
	Investments in other funds	-	138,086		-	138,086
		-------------	----------		---------	------------
	Total financial assets carried at fair value	2,102,474	138,086		-	2,240,560
		========	======		=====	=======
	There were no Level 3 investments during the six months to 30 June 2021. 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 an active market 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 are investments in Vanguard S&P 500 ETF and GMO Climate Change 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.

Page 18 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Notes to the Financial Statements continued

10	Segment reporting
	As detailed in the Company's Annual Report for the year ended 31 December 2020, 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, 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 2021, is set out on page 2. The schedule on page 4 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.
		(Unaudited) Half year ended 30 June 2021			(Unaudited) Half year ended 30 June 2020			(Audited) Year ended 31 December 2020
		Invest-ment trust £'000	Manage-ment services £'000	Total £'000	Invest-ment trust £'000	Manage-ment services £'000	Total £'000	Invest-ment trust £'000	Manage-ment services £'000	Total £'000
External revenue		19,459	-	19,459	20,339	-	20,339	36,445	-	36,445
Other revenue		197,479	-	197,479	(278,467)	-	(278,467)	54,554	-	54,554
Revenue from other operating segments		-	-	-	-	172	172	-	242	242
Segment expenses
-Management expenses		(4,859)	-	(4,859)	(4,727)	-	(4,727)	(9,279)	-	(9,279)
-Other expenses		(2,352)	(242)	(2,594)	(2,567)	(324)	(2,891)	(4,725)	(585)	(5,310)
-Finance costs		(2,637)	-	(2,637)	(26,001)	-	(26,001)	(28,489)	-	(28,489)
Segment profit/(loss) before taxation		205,639	-	205,639	(292,831)	-	(292,831)	48,506	(343)	48,163
Segment assets		2,031,747	1,133	2,032,880	1,692,499	1,126	1,693,625	1,924,053	1,155	1,925,208

11

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 2021 and 30 June 2020 has not been audited or reviewed by the auditors. The figures and financial information for the year ended 31 December 2020 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 2020 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.

Page 19 of 19

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2021

Notes to the Financial Statements continued

Financial report for the half year ended 30 June 2021 A copy of the financial report for the half year ended 30 June 2021 has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website, www.witan.com . Printed copies or electronic notification will be sent to shareholders in August 2021 and will be available thereafter from the Secretary at the Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA.

-  ENDS -

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]

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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