Final Results

Witan Pacific Investment Trust PLC 27 April 2006 WITAN PACIFIC INVESTMENT TRUST PLC For the year ended 31 January 2006 Chairman's Statement Introduction The year to 31 January 2006 has been a very significant one in the history of your Company. There have been major changes in the management structure of the Company which have been reflected in the change of name. The share price has risen strongly, returning in total 47.4%, while the net asset value per share returned 39.2%. This result reflected both the strong performance of the stock markets of the Asia-Pacific region in which we invest and the narrowing of the discount to net asset value at which the shares have traded. New Management Structure During the year we introduced a new management structure for your Company. I reported in some detail on these changes in last year's annual report and in the interim report. We have an Executive Manager, Witan Investment Services Limited ('WIS'), as well as two new Investment Managers, Aberdeen Asset Managers Limited ('Aberdeen') and Nomura Asset Management U.K. Limited ('Nomura'), together with a new Company Secretary and Fund Administrator. We believe the considerable strengths of our new Investment Managers are likely to lead to better performance. In addition, by putting in place this new structure, we have increased our flexibility and reduced our dependence on any one investment management group for the provision of all these services. We have also reduced our dependence on any one investment style or approach which should limit the volatility of returns we deliver relative to our benchmark. The Company remains a core investment for those investors who wish to invest in the pan-Pacific region. Aberdeen and Nomura took the place of F&C Management Limited ('F&C Management'). They are each responsible for investing approximately half of the Company's assets, and each has the same benchmark: the MSCI AC Asia Pacific Free Index, denominated in sterling. Since they took responsibility for their respective portfolios at the end of May 2005 Aberdeen had a total return of 34.9% while Nomura had a total return of 39.7% against an index performance of 38.0% over the period to 31 January 2006. The Executive Manager will expand on investment performance in the report and accounts. Although it is early days the Board is encouraged by the Investment Managers' approach to investment and by their performance to date. Expenses The total expense ratio ('TER') of the Company (management fees and administrative expenses as a percentage of net assets) over the year was 0.9%, excluding an accrual for performance fees (1.0% including this accrual). The costs of reorganisation and of the tender offer amounted to £1.1m (of which £0.1m is included in the calculation of the TER above and charged to income, and £1.0m has been charged to capital); but this was more than compensated by the uplift from the tender offer which added 1.8 per cent to NAV. Your Company in its new structure is competitive on costs against other investment trusts and against unit trusts. Dividend This year your Board is recommending a dividend of 1.33 pence per share compared to 1.05 pence per share in 2005. This dividend is payable on 30 June 2006 to shareholders on the register at the close of business on 12 May 2006. This represents an increase of 26.7% year on year. Although dividend yields in the pan-Pacific region have risen they remain low. In future years your Board proposes to distribute as much income to shareholders as may be prudent but our objective remains to maximise shareholders' total return, predominantly through capital growth. Share Buy-backs As part of the reorganisation there was a tender offer through which 62,189,318 (net) shares were tendered. After the reorganisation the Company continued its policy to use share buy-backs in order to manage the discount appropriately and a further 4,684,253 were purchased for cancellation. The combined effect of all these purchases was an enhancement of 2.3% to net asset value per share. The Board will propose to the Annual General Meeting that powers for further purchases should be taken. As at 31 January 2006, the net assets of the Company were £155.6m. Treasury Shares At this year's Annual General Meeting the Company is seeking powers to take shares into Treasury. An investment trust may hold up to 10% of its share capital in this way. The Board feels that as pan-Pacific trusts can move to a premium when the region is in favour it may be in shareholders' interests to have taken shares into Treasury rather than cancel them. This process facilitates the issue of shares in order to manage a premium effectively when it occurs. Gearing The Board gives its Investment Managers discretion to hold up to 10% of their portfolio in cash or to borrow up to 10%. Since the new Investment Managers took over both have remained approximately fully invested. Savings Plans Many of you hold your shares in the Company through savings schemes managed by F &C Asset Managers. We are making arrangements for the majority of these plans to be transferred to the Executive Manager, Witan Investment Services. Savings plan investors will receive relevant communications concerning the transfer to Witan Investment Services during the summer of 2006. In the mean time current and potential shareholders may invest either directly through a bank or stockbroker or through savings plans using the methods described in the annual report and accounts. Directors and Chairman Directors stand for re-election to the Board every three years and at this year's Annual General Meeting it is Mrs Nott's turn to stand for re-election. I have been on the Board for nine years and have decided that I will stand down at this year's Annual General Meeting. Providing she is re-elected to the Board, Mrs Nott, who has been a Board member for seven years, will succeed me as Chairman on that date. I warmly commend her re-election to you. It has been satisfying for me to oversee the Company's transition to a multi-manager vehicle which will have been in place for over a year by the time of the Annual General Meeting. I am confident that Mrs Nott's expertise and leadership qualities coupled with the strength of her fellow Board members will ensure the future success of the Company. Annual General Meeting We hope that you will be able to attend the Company's Annual General Meeting. The Annual General Meeting this year will be held at the offices of JPMorgan Cazenove, 20 Moorgate, London EC2R 6DA at 11am on Thursday, 22 June 2006. Conclusion Your Board believes that the case for a pan-Pacific mandate is stronger than ever. The Asia-Pacific region is developing into a major integrated economy with significant opportunities for profitable investment. The Board believes that the Investment Managers should be able to exploit investment opportunities across the region and be able to switch between the different markets and industries. Your Company is now one of the leading vehicles for those wishing to have a broad exposure to Asia-Pacific. Christopher Purvis CHAIRMAN 27 April 2006 INCOME STATEMENT For the year ended 31 January 2006 (Restated*) Year ended 31 January 2006 Year ended 31 January 2005 Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value through - 40,221 40,221 - 7,784 7,784 profit or loss Exchange gains/(losses) - 82 82 4 (259) (255) Income from investments held at fair value 3,825 - 3,825 3,962 - 3,962 through profit or loss Management fee (598) - (598) (1,158) - (1,158) Provision for performance-related management - (92) (92) - 644 644 fee Other expenses (788) (58) (846) (597) (59) (656) ---------- ---------- --------- ---------- --------- ---------- Net return before finance charges and taxation 2,439 40,153 42,592 2,211 8,110 10,321 Finance charges (208) - (208) (395) - (395) ---------- ---------- --------- --------- --------- ---------- Net return on ordinary activities before 2,231 40,153 42,384 1,816 8,110 9,926 taxation Taxation on ordinary activities (note 2) (786) (63) (849) (616) (193) (809) ---------- ---------- --------- --------- --------- --------- Net return on ordinary activities after 1,445 40,090 41,535 1,200 7,917 9,117 taxation ====== ===== ===== ===== ===== ===== Return per ordinary share - pence (note 3) 1.33 36.84 38.17 0.74 4.87 5.61 ====== ===== ===== ===== ===== ===== All revenue and capital items in the above statement derive from continuing operations. The total columns of this statement represent the profit and loss account of the Company. The Company had no recognised gains or losses other than those disclosed in the Income Statement and Reconciliation of Movements in Shareholders' funds. * See notes 1 c) and 5 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Called up Share premium Capital Capital Revenue Total share capital account redemption reserves reserves reserve £'000 £'000 £'000 £'000 £'000 £'000 Year ended 31 January 2006 At 31 January 2005 (restated see 38,420 5 19,151 133,148 8,455 199,179 note 5) Net return from ordinary - - - 40,090 1,445 41,535 activities Dividends paid in respect of year - - - - (1,614) (1,614) ended 31 January 2005 Tender offer (including costs) (15,547) - 15,547 (77,451) - (77,451) Purchase of own shares (1,172) - 1,172 (6,096) - (6,096) ----------- ----------- ----------- ----------- ----------- ------------- At 31 January 2006 21,701 5 35,870 89,691 8,286 155,553 ====== ====== ====== ====== ====== ======= Year ended 31 January 2005 At 31 January 2004 (restated see 42,750 5 14,821 144,188 9,040 210,804 note 5) Net return from ordinary - - - 7,917 1,200 9,117 activities Dividends paid in respect of year - - - - (1,785) (1,785) ended 31 January 2004 Purchase of own shares (4,330) - 4,330 (18,957) - (18,957) ----------- ---------- ---------- ----------- ----------- ------------ At 31 January 2005 38,420 5 19,151 133,148 8,455 199,179 ====== ====== ====== ====== ====== ======= BALANCE SHEET at 31 January 2006 (Restated*) 2006 2005 £'000 £'000 Fixed assets Investments designated as held at fair value through profit or loss 153,733 209,155 ----------- ------------ Current assets Debtors 2,384 986 Cash at bank and short term deposits 5,233 5,488 ----------- ----------- 7,617 6,474 ----------- ----------- Creditors: amounts falling due within one year Loans (3,000) (14,845) Other (2,759) (1,571) ----------- ----------- (5,759) (16,416) ----------- ----------- Net current assets/(liabilities) 1,858 (9,942) ----------- ----------- Total assets less current liabilities 155,591 199,213 ----------- ----------- Provisions for liabilities (38) (34) ----------- ----------- Net assets 155,553 199,179 ====== ====== Capital and reserves Called up share capital 21,701 38,420 Share premium account 5 5 Capital redemption reserve 35,870 19,151 Capital reserves 89,691 133,148 Revenue reserve 8,286 8,455 ----------- ---------- Equity shareholders' funds 155,553 199,179 ====== ====== Net asset value per ordinary share - pence (note 4) 179.20 129.61 ====== ====== * restated see notes 1 c) and 5 CASH FLOW STATEMENT For the year ended 31 January 2006 2006 2006 2005 2005 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 2,609 2,054 Servicing of finance Bank and loan interest paid (181) (402) ------------ ----------- Net cash outflow from servicing of finance (181) (402) Taxation UK Corporation tax paid (678) (400) Withholding and income tax paid (350) (285) ------------ ----------- Net tax paid (1,028) (685) Financial investment Purchases of investments (138,449) (319,195) Sales of investments 234,037 353,598 Capital expenses and performance fee repayments 590 555 ------------ ----------- Net cash inflow from financial investment 96,178 34,958 Equity dividends paid (1,614) (1,785) ----------- ----------- Net cash inflow before use of liquid resources and financing 34,140 95,964 Management of liquid resources Cash withdrawn from/(placed on) deposit 2,621 (3,826) Financing Repurchase on own shares (84,456) (19,039) Drawdown of sterling loan 3,000 - Repayment of US dollar loans (15,205) (9,605) ------------ ----------- Net cash outflow from financing (96,661) (28,644) ----------- ----------- Increase in cash 1,924 1,670 ====== ====== Reconciliation of net cash flow to movements in net funds/ (debt) Increase in cash as above 1,924 1,670 Cash (inflow)/outflow from short term deposits (2,621) 3,826 Cash outflow from movement in debt financing 12,205 9,605 ----------- ----------- Change in net debt resulting from cash flows 11,508 15,101 Exchange movements 82 (255) ----------- ----------- Movement in net debt in the year 11,590 14,846 Net debt at 1 February (9,357) (24,203) ----------- ----------- Net funds/(debt) at 31 January 2,233 (9,357) ====== ====== NOTES TO THE ACCOUNTS 1. Accounting policies a) Basis of accounting The accounts have been prepared under the historical cost convention, modified to include fixed asset investments at valuation and in accordance with the Companies Act 1985, accounting standards applicable in the United Kingdom and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' revised December 2005 (the revised SORP). b) Changes in presentation The Company has adopted the provisions of the revised SORP which has resulted in some changes to the presentation of the Company's accounts. What was previously called the Statement of Total Return is now the Income Statement. Dividends payable to equity shareholders are no longer reflected in the Income Statement, although they continue to be shown in the Reconciliation of Movements in Shareholders' Funds which is now presented as a primary statement. c) Changes in accounting policy The Company has changed its accounting policy for the valuation of listed investments and the recognition of dividends payable to equity shareholders in accordance with the provisions of FRS 26 - Financial Instruments: Recognition and Measurement ('FRS 26') and FRS 21 - Events after the balance sheet date ('FRS 21') respectively. These changes in policy and the associated impact on the results of the Company are referred to below. d. Valuation of investments Investments - prior to 1 February 2005, listed investments were valued at middle market prices. Following the adoption of FRS 26, listed investments have been designated by the Board as held at fair value through profit or loss and accordingly are valued at fair value, deemed to be bid market prices for quoted investments. Comparatives have been restated for this change and note 5 shows the effect on the Balance Sheet and the Income Statement for the year ended 31 January 2005. Unquoted investments are valued by the Directors using primary valuation techniques such as earnings, multiples, recent transactions and net assets. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as 'Gains or losses on investments held at fair value through profit or loss'. Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. All purchases and sales are accounted for on a trade date basis. e. Foreign currency The results and financial position of the Company are expressed in pounds sterling, which is the functional and presentational currency of the Company. The Directors, having regard to the Company's share capital and the predominant currency in which it's shareholders operate, have determined the functional currency to be sterling. Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange rates. Assets and liabilities denominated in overseas currencies at the Balance Sheet date are translated into sterling at the exchange rates ruling at the date. Any gains or losses on the translation of foreign currency balances, whether realised or unrealised, are taken to the capital or the revenue return of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature. f. Income Income from equity shares is brought into the Revenue Return of the Income Statement (except where, in the opinion of the Directors, its nature indicates it should be recognised as capital return) on the ex-dividend date or, where no ex-dividend date is quoted, when the Company's right to receive payment is established. Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the investment. Dividends are accounted for in accordance with Financial Report Standard 16 'Current Taxation' on the basis of income actually receivable, without adjustment for the tax credit attaching to the dividends. Dividends from overseas companies continue to be shown gross of withholding tax. Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised in the capital reserve. The bank interest and stock lending fees are accounted for on an accruals basis. g) Expenses including finance costs Management fee rebates received in the form of new units in the Aberdeen International India Opportunities Fund are offset against management fees paid. Expenses are charged to the Revenue Return of the Income Statement, other than: • performance-related management fees/repayments insofar as they relate to capital performance which are charged/credited through the capital reserve realised; • expenses incurred buying back the Company's own shares ; and • expenses incidental to the acquisition or disposal of investments which are charged to capital reserve realised. All expenses are accounted for on an accruals basis. h. Taxation The tax effect of different items of expenditure is allocated between capital and revenue using the marginal basis. Deferred taxation is provided on all timing differences that have originated but not been reversed by the Balance Sheet date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money. i. Bank borrowings Interest bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, including interest payable, premiums on settlement or redemption and direct issue costs are accounted for on an accruals basis in the Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. j) Dividends payable to equity shareholders Under FRS 21 dividends should not be accrued in the accounts unless they have been approved by shareholders before the Balance Sheet date. Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds when they have been approved by shareholders and become a liability of the Company. There is no impact from this change on the recognised gains and losses in either 2005 or 2006. However, the net assets at 31 January 2005 and 31 January 2004 have been impacted as disclosed in note 5. The effect of this change is to increase net assets at 31 January 2005 by £1,614,000 (or 1.05p per share) (31 January 2004: £1,796,000 or 1.05p per share). 2. Taxation on ordinary activities Analysis of tax charge for the year 2006 2006 2006 2005 2005 2005 Revenue Return Capital Return Total Revenue Return Capital Return Total £'000 £'000 £'000 £''000 £'000 £'000 Corporation tax payable at 30% 646 35 681 589 193 782 (2005: 30%) Relief for overseas taxation (185) - (185) (231) - (231) ---------- --------- --------- ---------- --------- ---------- 461 35 496 358 193 551 Under provision in prior years 5 - 5 - - - Overseas taxation 316 28 344 285 - 285 ---------- ---------- --------- ----------- ---------- ---------- Total current taxation charge 782 63 845 643 193 836 Deferred tax On accrued income 4 - 4 (27) - (27) ---------- ---------- --------- ----------- ----------- ---------- Taxation on ordinary 786 63 849 616 193 809 activities ---------- ---------- --------- ----------- ---------- --------- 3. Return per ordinary share Revenue return Revenue return per share is based on the revenue return attributable to equity shareholders of £1,445,000 (2005: £1,200,000). No diluted results are shown as the Company does not have any potentially dilutive securities in the current or prior year. Capital Return Capital return per share is based on the capital return attributable to equity shareholders of £40,090,000 (2005: £7,917,000 as restated). Both the revenue and capital returns are based on a weighted average of 108,816,460 ordinary shares in issue during the year (2005: 162,597,412). 4. Net asset value per ordinary share Net asset values are based on net assets of £155,553,000 (2005: £199,179,000 as restated) and on 86,805,263 (2005: 153,678,834) ordinary shares in issue at the year end. 5. Restatement of opening balances at 31 January 2005 and 31 January 2004 Previously Restated Previously Restated reported reported 31 January 2005 Adjustments 31 January 31 January Adjustments 31 January 2005 2004 2004 Notes £'000 £'000 £'000 £'000 £'000 £'000 Fixed assets Investments 1 209,644 (489) 209,155 234,408 (873) 233,535 Currents assets 6,474 - 6,474 8,545 - 8,545 Creditors: amounts falling due 2 (18,030) 1,614 (16,416) (33,011) 1,796 (31,215) within one year ----------- ----------- ----------- ----------- ----------- ------------ Total assets less 198,088 1,125 199,213 209,942 923 210,865 current liabilities Provision for (34) - (34) (61) - (61) liabilities ----------- ----------- ----------- ----------- ----------- ----------- 198,054 1,125 199,179 209,881 923 210,804 ====== ====== ====== ====== ====== ====== Capital and reserves Ordinary called up 38,420 - 38,420 42,750 - 42,750 share capital Share premium 5 - 5 5 - 5 Capital redemption 19,151 - 19,151 14,821 - 14,821 reserve Capital reserves 1 133,637 (489) 133,148 145,061 (873) 144,188 Revenue reserve 2 6,841 1,614 8,455 7,244 1,796 9,040 ----------- ----------- ----------- ---------- ---------- ----------- 198,054 1,125 199,179 209,881 923 210,804 ====== ====== ====== ====== ====== ====== Net asset value per 128.88 0.73 129.61 122.74 0.54 123.28 ordinary share ====== ====== ====== ====== ====== ====== Notes to the reconciliation 1. Prior to 1 February 2005, listed investments were valued at middle market prices. Following the adoption of FRS 26, listed investments have been designated as held at fair value through profit or loss and are valued at fair value deemed to be bid market prices. The adoption of bid market prices at 31 January 2005 decreased the value of listed investments by £489,000 (31 January 2004: £873,000). 2. Under FRS 21 dividends should not be accrued in the accounts unless they have been approved by shareholders before the Balance Sheet date. Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds when they have been approved by shareholders and become a liability of the Company. The effect of this change is to increase net assets at 31 January 2005 by £1,614,000 (31 January 2004: £1,796,000). Reconciliation of the Statement of Total Return to the Income Statement for the year ended 31 January 2005 £'000 Return on ordinary activities after taxation per Statement of Total Return 8,733 Change from mid to bid at 31 January 2004 873 Change from mid to bid at 31 January 2005 (489) ----------- Net return per Income Statement 9,117 ====== 6. The above financial information for the year ended 31 January 2006 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 January 2006 will be finalised on the basis of information included within this announcement. The audit report on the full financial statements for the year ended 31 January 2006 has yet to be signed. Statutory accounts for the year ended 31 January 2006 will be delivered to the Registrar of Companies in due course. The Annual General Meeting will be held on Thursday, 22 June 2006 at 11 am at the offices of JPMorgan Cazenove, 20 Moorgate, London, EC2R 6DA. Copies of the annual report will be sent to shareholders in May 2006 and will be available from the Company Secretary. For further information, please contact: Susan Venables BNP Paribas Secretarial Services Limited Tel: 020 7410 5971 27 April 2006 This information is provided by RNS The company news service from the London Stock Exchange

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