Interim Results
Witan Pacific Investment Trust PLC
13 October 2005
WITAN PACIFIC INVESTMENT TRUST PLC
Preliminary announcement of interim results for the six months to 31 July 2005
Chairman's Statement
Introduction The period under review has been an eventful and successful one for
your Company: new investment managers have been appointed; a new management
structure has been put in place; the Trust has changed its name and there has
been a tender offer.
Performance in the Six Months under Review The markets in which your Company
invests continued to rise strongly during the first six months of this year. The
table below illustrates the market environment and the returns of your Company
during the six months to 31 July 2005:
Increase
NAV per share (including income) 10.8%
Benchmark (MSCI AC Asia Pacific Free Index including 10.1%
income)
Share price (total return including dividend paid on 14.3%
24 June 2005)
The net asset value ('NAV') per share rose by more than the benchmark. In the
brief period for which the new managers had responsibility, both outperformed
the benchmark. The overall impact of the reorganisation, transition and tender
offer was small. The fixed costs of the reorganisation, which were less than the
estimate given in the Circular to shareholders, were outweighed by the benefit
of the tender offer.
New Management Structure I reported in some detail in the annual report
published in May on the new management structure that we have introduced for
your Company. All these changes were implemented during the period under review
in this report.
Aberdeen Asset Managers Limited and Nomura Asset Management U.K Limited took
responsibility for the Trust's portfolio on 27 May 2005 and have outperformed
the benchmark collectively since that date. Both managers have considerable
resource in the region and long, successful track records in performance terms.
The appointment of Witan Investment Services Limited as Executive Manager with
responsibility for the commercial management of the Trust facilitated the
creation of the Trust's new structure.
Extraordinary General Meeting - 18 May 2005 As a consequence of the change in
management structure the Trust has a new name, Witan Pacific Investment Trust
plc. In addition shareholders agreed to a tender offer which settled on 1st June
2005, leaving 59.53% of the share capital in place.
Discount Management Following the appointment of the new investment team the
Board expects the discount of the Trust to match that of its peers. In the past
the Board has been willing to buy back the Trust's shares and will do so again
in order to manage the discount appropriately.
The Board believes, however, that improved performance and the stimulation of
demand for the Trust's shares are the key factors in longer term management of
the Trust's discount to NAV.
Discount
31 January 2005 11.5%
31 July 2005 9.5%
Savings scheme and PEP/ISA arrangements F&C Management Limited continues to be
responsible for the savings scheme arrangements in which existing savings scheme
investors currently participate. It is expected that Witan Investment Services
Limited will be responsible for the administration and servicing of new savings
schemes to be launched in due course.
Conclusion The transition has been implemented successfully and your Company is
now a more attractive proposition for investors seeking outperformance from the
Asia Pacific region, at a time when enthusiasm for the region is greater than
for many years.
Your managers have got off to a good start. Your Board is confident that the
blend of the managers' investment philosophies and the new structure is well
suited to achieving the Trust's aim of maximising returns in the Asia Pacific
region.
Christopher Purvis
CHAIRMAN
13 October 2005
UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account*)
For the six months to 31 July 2005
(Unaudited)
Six months to 31 July 2005
Note Revenue Capital Total
£'000 £'000 £'000
Total capital gains on investments - 9,972 9,972
Exchange gains - 119 119
Income 3 2,620 - 2,620
Management fee 4 (417) - (417)
Performance-related management fee 4 - (348) (348)
Other expenses (424) (221) (645)
---------------- ---------------- ---------------
Net return before finance costs and 1,779 9,522 11,301
taxation
Interest payable and similar charges (139) - (139)
---------------- ---------------- --------------
Net return on ordinary activities before 1,640 9,522 11,162
taxation
Taxation on ordinary activities (587) 75 (512)
---------------- ---------------- ------------
Net return on ordinary activities after 1,053 9,597 10,650
taxation
---------------- ---------------- ------------
Return per ordinary share - pence 6 0.81 7.34 8.15
---------------- ---------------- ------------
* The total columns of this statement represent the profit and loss account of
the Company.
All revenue and capital items in the above statement derive from continuing
operations.
UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account*)
(continued)
For the six months to 31 July 2005
(Unaudited)
Six months to 31 July 2004
Note Revenue Capital Total
£'000 £'000 £'000
Total capital losses on investments - (10,520) (10,520)
Exchange gains - 395 395
Income 3 2,057 - 2,057
Management fee 4 (607) - (607)
Performance-related management fee 4 - 321 321
Other expenses (323) (1,082) (1,405)
---------------- ---------------- ---------------
Net return/(loss) before finance costs and 1,127 (10,886) (9,759)
taxation
Interest payable and similar charges (183) - (183)
---------------- ---------------- ----------------
Net return/(loss) on ordinary activities before 944 (10,886) (9,942)
taxation
Taxation on ordinary activities (281) (96) (377)
---------------- ---------------- ----------------
Net return/(loss) on ordinary activities after 663 (10,982) (10,319)
taxation
---------------- ---------------- ----------------
Return/(loss) per ordinary share - pence 6 0.40 (6.64) (6.24)
---------------- ---------------- ----------------
*The total columns of this statement represent the profit and loss account of
the Company.
All revenue and capital items in the above statement derive from continuing
operations.
UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account*)
(continued)
For the six months to 31 July 2005
(Audited and restated**)
Year to 31 January 2005
Note Revenue Capital Total
£'000 £'000 £'000
Total capital gains on investments - 8,988 8,988
Exchange gains/(losses) 4 (259) (255)
Income 3 3,962 - 3,962
Management fee 4 (1,158) - (1,158)
Performance-related management fee 4 - 644 644
Other expenses (597) (1,647) (2,244)
---------------- ---------------- ----------------
Net return before finance costs and taxation 2,211 7,726 9,937
Interest payable and similar charges (395) - (395)
---------------- ---------------- ----------------
Net return on ordinary activities before 1,816 7,726 9,542
taxation
Taxation on ordinary activities (616) (193) (809)
---------------- ---------------- ----------------
Net return on ordinary activities after 1,200 7,533 8,733
taxation
---------------- ---------------- ----------------
Return per ordinary share - pence 6 0.74 4.63 5.37
---------------- ---------------- ----------------
*The total columns of this statement represent the profit and loss account for
the Company.
** See note 2(a)
All revenue and capital items in the above statement derive from continuing
operations.
UNAUDITED BALANCE SHEET
as at 31 July 2005
(Unaudited) (Unaudited) (Audited and Restated*)
31 July 2005 31 July 2004 31 January 2005
£'000 £'000 £'000
Note
Non-current assets
Investments designated as held at
fair value through profit and loss
122,825 190,964 209,644
--------------- ---------------- ----------------
Current assets
Debtors 609 4,428 986
Cash at bank and short term 6,190 23,222 5,488
deposits
---------------- ---------------- ----------------
6,799 27,650 6,474
---------------- ---------------- ----------------
Creditors: amounts falling due
within one year:
Loans 7 - (25,862) (14,845)
Other (1,298) (3,235) (1,605)
---------------- ---------------- ----------------
(1,298) (29,097) (16,450)
---------------- ---------------- ----------------
Net current assets/(liabilities) 5,501 (1,447) (9,976)
---------------- ---------------- ----------------
Total assets less current 128,326 189,517 199,668
liabilities
---------------- ---------------- ----------------
Provisions for liabilities and (341) - -
charges
---------------- ---------------- ----------------
Net assets 127,985 189,517 199,668
========= ========= =========
Capital and reserves
Called up share capital 8 22,232 40,466 38,420
Capital redemption reserve 8 35,339 17,105 19,151
Share premium account 8 5 5 5
Capital reserves 8 62,515 124,034 133,637
Revenue reserves 8 7,894 7,907 8,455
---------------- ---------------- ----------------
Total equity shareholders' funds 127,985 189,517 199,668
========= ========= =========
Net asset value per ordinary share 9 143.92 117.08 129.93
- pence
* See note 2b
UNAUDITED CASH FLOW STATEMENT
For the six months to 31 July 2005
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
Note 31 July 2005 31 July 2004 31 January 2005
£'000 £'000 £'000
Net cash inflow from operating activities 10 1,703 924 2,054
Interest paid (161) (200) (402)
Net tax paid (604) (366) (685)
Net cash inflow from financial investment 97,330 32,106 34,958
Equity dividends paid (1,614) (1,785) (1,785)
----------------- ----------------- ------------------
Net cash inflow before use of liquid 96,654 30,679 34,140
resources and financing
Decrease/(increase) in short term deposits 2,621 - (3,826)
Net outflow from financing (96,431) (8,704) (28,644)
---------------- ----------------- ------------------
Increase in cash during the period 2,844 21,975 1,670
========= ========== ==========
Reconciliation of net cash flow to
movement in net cash/(debt)
Increase in cash 2,844 21,975 1,670
(Decrease)/increase in short term deposits (2,621) - 3,826
Decrease/(increase) in loans 15,205 (807) 9,605
---------------- ---------------- -----------------
Change in net cash resulting from cash 15,428 21,168 15,101
flows
Exchange movements 119 395 (255)
---------------- ---------------- -----------------
Movement in net cash 15,547 21,563 14,846
Net debt at the beginning of the period (9,357) (24,203) (24,203)
---------------- ---------------- -----------------
Net cash/(debt) at the end of the period 6,190 (2,640) (9,357)
========= ========= ==========
Represented by
Cash at bank 6,190 23,222 2,837
Short term deposits - - 2,651
---------------- ---------------- ------------------
Cash at hand and short term deposits 6,190 23,222 5,488
Loans - short term - (25,862) (14,845)
---------------- ---------------- ------------------
Net cash/(debt) at the end of the period 6,190 (2,640) (9,357)
========= ========= ==========
NOTES TO THE ACCOUNTS as at 31 July 2005
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 UK
Accounting Standards and with the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies' ('SORP') dated January 2003. The
Company has not adopted the International Financial Reporting Standards
('IFRS').
The same accounting policies used for the year ended 31 January 2005 have been
applied with the following exceptions:
a. Investments - Prior to 1 February 2005, listed investments were valued at
middle market prices. Following the introduction of FRS 26 - Financial
instruments: Recognition and Measurement, listed investments are now
designated as held at fair value through profit and loss with fair value
deemed to be bid market prices. Investments not listed are stated at
Directors' best estimate of fair value.
The effect of this change is to decrease the value of listed investments at
31 July 2005 and decrease net return on ordinary activities after taxation
for the six months to 31 July 2005 by £234,000. Comparatives have not been
restated as permitted by FRS 26.
FRS 26 also requires, where investments are held at fair value through
profit and loss account, that the purchase and sale transaction costs should
be recognised as a separate item from gains and losses on investments. These
costs are shown within other expenses in the capital columns of the
Statement of Total Return.
b. Under FRS 21 - Events after the Balance Sheet Date, final dividends are not
accrued in the accounts but are recognised in the period in which they are
paid. As a result of this change the accounts for the year ended 31 January
2005 have been restated as per note 2 below.
2. Restatement in respect of final dividend for the year ended 31 January 2005
a. Statement of Total Return
The Statement of Total Return no longer reflects the payment of dividends,
these are now shown in the Statement of Changes in Equity during the period
in which they are declared and paid (see note 8). The Statement of Total
Return for the year ended 31 January 2005 has been restated accordingly.
b. Balance sheet as at 31 January 2005
£'000 Per share
Balance sheet as at 31 January 2005 as previously stated 198,054 128.88p
Add back 2005 final dividend declared on 5 May 2005 1,614 1.05p
-------------- --------------
Restated net assets as at 31 January 2005 199,668 129.93p
-------------- --------------
The Balance sheet as at 31 July 2004 remains unchanged.
2. Income
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 July 2005 31 July 2004 31 January 2005
Overseas dividends 2,382 1,854 3,389
Scrip dividends 42 31 219
Interest on loans and deposits 160 128 230
Stock lending fees 36 44 124
---------- ----------- ------------
2,620 2,057 3,962
--------- ----------- -----------
4. Management fee and performance related management fee
The previous manager, F&C Management Limited received a quarterly fee of 0.15%
of net assets payable in advance. The performance fee was calculated annually in
arrears at the rate of an additional 0.15% per annum of net assets for each 1%
of outperformance of the benchmark index and a payment to the Company by the
manager of 0.15% per annum for each 1% of underperformance. This agreement was
terminated on 17 May 2005.
On 21 March 2005, your Board appointed Witan Investment Services Limited as
Executive Manager and Aberdeen Asset Managers Limited ('Aberdeen') and Nomura
Asset Management U.K Limited ('Nomura') as the new investment managers. On 27
May 2005, Aberdeen and Nomura took on responsibility for the management of the
Trust's portfolio.
The investment managers are each 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 three 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 outperformance.
The provisions included in the Statement of Total Return at 31 July 2005, are
calculated based on the performance of each investment manager relative to the
benchmark index for the two months to 31 July 2005. Each provision assumes that
both the benchmark and each manager's assets under management remain unchanged
to 31 May 2006, being the date the first performance period ends.
5. Dividends on ordinary shares
No interim dividend payment will be made (six months to 31 July 2004: £nil). The
dividend payment shown in note 8 is the final dividend for the year ended 31
January 2005 which was declared on 5 May 2005 and paid on 24 June 2005.
6. Total Return per ordinary share
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 July 2005 31 July 2004 31 January 2005
£'000 £'000 £'000
The return per ordinary share is based on the
following figures:
Revenue return 1,053 663 1,200
Capital return/(loss) 9,597 (10,982) 7,533
------------ ------------- -------------
Total return/(loss) 10,650 (10,319) 8,733
----------- ------------- -------------
Weighted average number of ordinary shares in 130,705,513 165,319,117 162,597,412
issue
Revenue return per ordinary share (pence) 0.81 0.40 0.74
Capital return/(loss) per ordinary share (pence) 7.34 (6.64) 4.63
----------- ------------- ------------
Total return/(loss) per ordinary share 8.15 (6.24) 5.37
----------- ------------- -----------
7. Loans
(Unaudited) (Unaudited) (Audited)
31 July 2005 31 July 2004 31 January 2005
£'000 £'000 £'000
Repayable with in one year - 25,862 14,845
---------------- --------------- --------------
Comprise:
Japanese yen denominated - Y3.0125bn -
United States dollar denominated - US$20.0m US$28.0m
---------------- --------------- --------------
8. Statement of changes in equity
Called up share Capital Share premium
capital redemption account
reserve Capital reserves Revenue reserve
£'000 £'000 £'000 £'000 £'000
Balance at 31 January 2005 as 38,420 19,151 5 133,637 6,841
previously reported
Add back accrued final dividend at 31 - - - - 1,614
January 2005
------------ ------------ ------------ ------------ ------------
Balance at 31 January 2005 (restated 38,420 19,151 5 133,637 8,455
see note 2b)
Final dividend paid in respect of the - - - - (1,614)
year ended 31 January 2005
Shares repurchased by the Company* (16,188) 16,188 - (80,719) -
Net return on ordinary activities - - - 9,597 1,053
---------- ---------- ---------- ---------- ----------
Balance at 31 July 2005 22,232 35,339 5 62,515 7,894
--------- --------- --------- ---------- ---------
* 64,752,614 ordinary shares were purchased during the period at a total cost of
£80,719,000. Since the period end a further 1,520,957 have been purchased
leaving 87,405,263 shares in issue at 13 October 2005.
9. Net asset value per ordinary share
Net asset value per ordinary share is based on 88,926,220 ordinary shares of 25p
each in issue at 31 July 2005 (31 July 2004: 161,865,608; and 31 January 2005:
153,678,834).
10. Reconciliation of revenue return before finance costs and taxation to net
cash inflow from operating activities
(Unaudited) (Unaudited) (Audited)
6 months to 31 July 6 months to 31 July Year to 31 January 2005
2005 2004
£'000 £'000 £'000
Revenue return before finance costs 1,779 1,127 2,211
Exchange gains of a revenue nature - - (4)
(Increase)/decrease in accrued income (169) 10 (93)
Decrease in debtors of a revenue nature - 4 151
Increase/(decrease) in creditors of a revenue 135 (186) 8
nature
Scrip dividends (42) (31) (219)
--------- ---------- ----------
Net cash inflow from operating activities 1,703 924 2,054
--------- --------- ---------
11. Results
The results for the six months to 31 July 2005 and 31 July 2004, 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 2005,
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 2005 (as restated) have been extracted from those
accounts.
Copies of the interim report will be sent to shareholders in October 2005 and
will be available from the Company Secretary.
For further information, please contact:
Susan Venables
BNP Paribas Secretarial Services Limited
Tel: 020 7410 5971
13 OCTOBER 2005
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