Interim Results
Witan Pacific Investment Trust PLC
29 September 2006
WITAN PACIFIC INVESTMENT TRUST PLC
Preliminary announcement of unaudited interim results for the six months to
31 July 2006
Financial Highlights
Summary of Unaudited Results attributable to equity shareholders
31 July 2006 31 January 2006 % change
Net asset value per share 166.56p 179.20p -7.1%
Share price 150.75p 168.00p -10.3%
Discount 9.5% 6.3%
MSCI AC Asia Pacific Free Index (£) - Capital only* -7.2%
* Source: Datastream.
Chairman's Statement
It is a pleasure to present my first Interim Statement to shareholders after my
appointment as Chairman in June 2006. Since the beginning of the financial year
markets in general, but in the Asia Pacific region in particular, have been on a
rollercoaster ride and it has been difficult to judge their direction. However,
our Managers were appointed for their long-term approach to investment in the
region and they have continued to pursue the individual management styles and
strategies for which they were appointed.
Over the six months under review markets in the region have generally fallen.
The NAV of the Company has performed in line with the benchmark index over the
six months. Both the Fund Managers outperformed the Index in the period,
Aberdeen returning -5.1% and Nomura somewhat less at -6.2%. The running costs of
the Company, including tax, accounted for the difference between the Managers'
underlying performance and the final NAV of -7.1% indicated above. Since the new
management arrangements were put into place the Aberdeen portfolio has risen
23.6% and Nomura 26.1% against an index return of 24.7%. These varying outcomes
show the benefit of having two investment managers with different approaches.
The severe setback in markets in May and June 2006 saw investment trust
discounts widen, particularly in those trusts invested in Emerging Markets and
the Pacific Basin. As a result of this setback the Company's share price
declined 10.3% over the reporting period. This occurred as the discount widened
to 9.5% from 6.3% as at the end of January 2006. Over the twelve months to end
July 2006 and despite the recent market falls, the share price has risen 15.7%.
The Board has continued with its policy to buy back the Company's shares
expecting that the discount will be comparable to that of its peers.
During the six months to 31 July 2006 Aberdeen's strategy in this more volatile
period was to take selective profits in shares which they thought had run up too
far. They then invested the proceeds in slightly more defensive type companies
whose underlying operations will continue to generate strong cash flow and
continued earnings growth in the medium term. Nomura reduced their overweight
exposure to the Japanese market to an index weighting, believing that they can
deploy cash resources more effectively in other regional markets. Aberdeen
remains very underweight in Japan.
As those of you who invest in the Company through the F&C savings schemes will
be aware, F&C will no longer be offering this facility to Witan Pacific
shareholders. Your Board has arranged for Witan Investment Services to offer
similar savings product plans to those offered by F&C. I hope that those of you
to whom this applies and, who are now in receipt of an information pack on this
matter, will have made your decision and returned your election form. If you
have not, please do so immediately as in the event that you fail to return your
completed form by 9 November 2006 F&C will sell your shares on your behalf. I do
hope you will choose to remain a Witan Pacific shareholder.
After the period of heightened volatility which has brought markets back to
lower levels there are some reasons for caution in the current environment.
However, the region's economies are still likely to grow faster than the more
developed western economies and markets across the region would appear to be
reasonably priced. Our Managers remain confident of their respective investment
strategies.
Gillian Nott
Chairman
29 September 2006
Unaudited Income Statement
for the six months to 31 July 2006
(Unaudited) (Unaudited) (Audited)
Six months to 31 July 2006 Six months to 31 July 2005 Year to 31 January 2006
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total
(losses)/ - (10,650) (10,650) - 9,770 9,770 - 40,221 40,221
gains from
investments
held at
fair value
through
profit or loss
Exchange
(losses)/ - (89) (89) - 119 119 - 82 82
gains
Income from 2 2,058 - 2,058 2,620 - 2,620 3,825 - 3,825
investments
held at
fair value
through
profit or
loss
Management
fee 3 (172) - (172) (417) - (417) (598) - (598)
Performance
-related 3 - (62) (62) - (348) (348) - (92) (92)
management
fee
Other
expenses (393) (12) (405) (424) (19) (443) (788) (58) (846)
-------------------------------------------------------------------------------------------------------
Net return/
(loss) 1,493 (10,813) (9,320) 1,779 9,522 11,301 2,439 40,153 42,592
before finance
charges and
taxation
Finance
charges (76) - (76) (139) - (139) (208) - (208)
-------------------------------------------------------------------------------------------------------
Return/
(loss) on 1,417 (10,813) (9,396) 1,640 9,522 11,162 2,231 40,153 42,384
ordinary
activities
before
taxation
Taxation
on (529) 19 (510) (587) 75 (512) (786) (63) (849)
ordinary
activities
-------------------------------------------------------------------------------------------------------
Net return/
(loss) 5 888 (10,794) (9,906) 1,053 9,597 10,650 1,445 40,090 41,535
on ordinary
activities
after
taxation =======================================================================================================
Return/
(loss) per 1.04 (12.66) (11.62) 0.81 7.34 8.15 1.33 36.84 38.17
ordinary share -
pence
=======================================================================================================
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.
Reconciliation of Movement in Shareholders' Funds
for the six months to 31 July 2006
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
At 31 January 2006 21,701 5 35,870 89,691 8,286 155,553
Net (loss)/return from ordinary activities - - - (10,794) 888 (9,906)
Dividend paid in respect of year ended 31 - - - - (1,130) (1,130)
January 2006
Repurchase of 2,453,119 ordinary shares for (613) - 613 (4,023) - (4,023)
cancellation
-------------------------------------------------------------------
At 31 July 2006 21,088 5 36,483 74,874 8,044 140,494
===================================================================
Purchase transaction costs for the six months to 31 July 2006 were £25,000 (six
months to 31 July 2005: £88,000; year to 31 January 2006: £105,000). Sale
transaction costs for the six months to 31 July 2006 were £39,000 (six months to
31 July 2005: £165,000; year to 31 January 2006: £243,000).
Unaudited Balance Sheet
as at 31 July 2006
Note (Unaudited) (Unaudited) (Audited)
31 July 2006 31 July 2005 31 January 2006
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or 139,859 122,825 153,733
loss
------------- ------------ ------------
Current assets
Debtors 1,204 609 2,384
Cash at bank and short-term deposits 4,434 6,190 5,233
------------- ------------ ------------
5,638 6,799 7,617
------------- ------------- -------------
Creditors: amounts falling due within one year:
Loans (3,000) - (3,000)
Other (1,944) (1,298) (2,759)
-------------- ------------ ------------
(4,944) (1,298) (5,759)
-------------- ------------ ------------
Net current assets 694 5,501 1,858
-------------- ------------ -----------
140,553 128,326 155,591
Total assets less current liabilities
Provision for liabilities (59) (341) (38)
-------------- ------------ -----------
Net assets 140,494 127,985 155,553
============== ============ ===========
Capital and reserves
Called up share capital 21,088 22,232 21,701
Share premium account 5 5 5
Capital redemption reserve 36,483 35,339 35,870
Capital reserves 74,874 62,515 89,691
Revenue reserve 8,044 7,894 8,286
------------- ------------ ------------
Equity shareholders' funds 140,494 127,985 155,553
============= ============ ============
Net asset value per ordinary share - pence 6 166.56 143.92 179.20
============= ============= ===========
Unaudited Cash Flow Statement
for the six months to 31 July 2006
Note (Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 July 2006 31 July 2005 31 January 2006
£'000 £'000 £'000
Net cash inflow from operating activities 7 1,148 1,703 2,609
Interest paid (2) (161) (181)
Net tax paid (455) (604) (1,028)
Net cash inflow from financial investment 3,752 97,330 96,178
Equity dividends paid (1,130) (1,614) (1,614)
-------------- -------------- ---------------
Net cash inflow before use of liquid resources 3,313 96,654 95,964
and financing
Decrease in short-term deposits -- 2,621 2,621
Net cash outflow from financing (4,023) (96,431) (96,661)
-------------- -------------- --------------
(Decrease)/increase in cash during the period (710) 2,844 1,924
============ ============ ============
Reconciliation of net cash flow to movement in
net funds
(Decrease)/increase in cash (710) 2,844 1,924
Decrease in short-term deposits - (2,621) (2,621)
Decrease in loans - 15,205 12,205
------------- ------------- -------------
Change in net funds resulting from cash flows (710) 15,428 11,508
Foreign exchange movements (89) 119 82
------------- ------------- -------------
Movement in net funds (799) 15,547 11,590
Net funds/(debt) at the beginning of the period 2,233 (9,357) (9,357)
------------- ------------- -------------
Net funds at the end of the period 1,434 6,190 2,233
============ ============ ============
Represented by
Cash at bank 4,434 6,190 5,233
Loans - short-term (3,000) - (3,000)
------------ ------------- ------------
Net funds at the end of the period 1,434 6,190 2,233
============ ============= ============
Notes to the Accounts
as at 31 July 2006
1 Accounting policies
The accounts have been prepared under the historical cost convention,
modified to include the revaluation of investments and in accordance with
applicable Accounting Standards and with the Statement of Recommended Practice '
Financial Statements of Investment Trust Companies' ('SORP') revised December
2005. All of the Company's operations are of a continuing nature.
The same accounting policies used for the year ended 31 January 2006
have been applied.
2 Income
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 July 2006 31 July 2005 31 January 2006
£'000 £'000 £'000
Overseas dividends 1,975 2,382 3,448
Scrip dividends 13 42 116
Interest on loans and deposits 61 160 225
Stock lending fees 9 36 36
------------ ------------ ------------
2,058 2,620 3,825
============ ============ ============
3 Management fee and performance related management fee
On 27 May 2005, your Board appointed Witan as Executive Manager and
Aberdeen and Nomura as the new Investment Managers. Each of the investment
managers is entitled to a base management fee, calculated according to the value
of the assets under their management, and a performance fee. The performance fee
is calculated according to investment performance over a 3 year rolling period
and is subject to a cap. Each management agreement can be terminated at one
month's notice. The base management fees range from 0.2% to 0.25% per annum and
the performance fees range from 10% to 15% per annum of the relevant
performance.
The provisions included in the Income Statement at 31 July 2006, are
calculated based on the performance of each investment manager relative to the
benchmark index for the two months to 31 July 2006 and 12 months to 31 May 2006.
Each provision assumes that both the benchmark and each manager's assets under
management remain unchanged to 31 May 2007, being the date the second
performance period ends.
4 Dividends on ordinary shares
No interim dividend payment will be made (6 months ended 31 July 2005:
nil and year ended 31 January 2006: final of 1.33p per share).
5 Return per ordinary shares
The return per ordinary share is based on the net loss attributable to
the ordinary shares of £9,906,000 (six months to 31 July 2005: return
£10,650,000; year to 31 January 2006: return £41,535,000) and on 85,284,030
ordinary shares (six months to 31 July 2005: 130,705,513; year to 31 January
2006: 108,816,460) being the weighted average number of ordinary shares in issue
during the period.
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 July 2006 31 July 2005 31 January 2006
Net revenue return (£'000) 888 1,053 1,445
Net capital return (£'000) (10,794) 9,597 40,090
-------------- ------------- ---------------
Net total return (£'000) (9,906) 10,650 41,535
============== ============= ===============
Weighted average number of ordinary shares in issue 85,284,030 130,705,513 108,816,460
during the period
Revenue return per ordinary share - pence 1.04 0.81 1.33
Capital return per ordinary share - pence (12.66) 7.34 36.84
---------------- ---------------- -----------------
Total return per ordinary share - pence (11.62) 8.15 38.17
============== ============= ===============
6 Net asset value per ordinary share
Net asset value per ordinary share is based on 84,352,144 ordinary
shares of 25p each in issue at 31 July 2006 (31 July 2005: 88,926,220 and 31
January 2006: 86,805,263).
7 Reconciliation of revenue return before finance costs and taxation
to net cash inflow from operating activities
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 July 2006 31 July 2005 31 January 2006
£'000 £'000 £'000
Total (loss)/return before finance charges (9,320) 11,301 42,592
and taxation
Less capital return before finance charges 10,813 (9,522) (40,153)
and taxation
---------------- ---------------- ---------------
Revenue return before finance costs and 1,493 1,779 2,439
taxation
Increase in accrued income (54) (169) (11)
(Increase)/decrease in debtors of a revenue (23) - 27
nature
(Decrease)/increase in creditors of a revenue (193) 135 323
nature
Management fee rebate (62) - (53)
Scrip dividends (13) (42) (116)
---------------- --------------- ----------------
Net cash inflow from operating activities 1,148 1,703 2,609
================ =============== ===============
8 Results
The results for the six months to 31 July 2006 and 31 July 2005, which
are unaudited, constitute non-statutory accounts within the meaning of Section
240 of the Companies Act 1985. The latest published accounts which have been
delivered to the Registrar of Companies are for the year ended 31 January 2006.
The report of the auditors thereon was unqualified and did not contain a
statement under Section 237 of the Companies Act 1985. The comparative figures
for the year ended 31 January 2006 have been extracted from those accounts.
Copies of the interim report will be sent to shareholders in October 2006 and
will be available from the Company Secretary.
For further information, please contact:
Jyoti Jeetun
Company Secretary - Investment Trusts
BNP Paribas Secretarial Services Limited
Tel: 020 7410 3132
29 September 2006
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