Final Results

Witan Investment Trust PLC 31 January 2003 WITAN INVESTMENT TRUST PLC HENDERSON GLOBAL INVESTORS 31 January 2003 WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Financial Highlights Year ended Year ended 31 December 2002 31 December 2001 Per Ordinary Share: in pence in pence Net Asset Value 307.6 429.3 Earnings* 8.92 8.40 Dividends - interim and final (net) 8.10 7.95 * See note 4 Extracts from the Chairman's Statement: Background There has been another massive decline in the market value of equities worldwide this year, which, when taken cumulatively with the equity returns of the previous two and a half years, has halved the value of corporate worth along with everyone's hard-earned savings in them. Overview This is the third year in a row I have to report a fall in our asset value and underperformance of our benchmark. Even if one goes back four years, which includes a frothy 32.3% rise in net asset value per share in 1999, our investment results still show a depressing fall of 27.2%, but they are better than our benchmark over that period. The common thread that runs throughout these periods is the gyrations seen in the market value placed on smaller companies, and the adverse effect since the end of 1999 of our own modest gearing. Our mainstream investments in well managed large multinational companies have for the most part beaten their various indices, in spite of some unwelcome surprises. That outperformance has been spirited away by the abysmal showing of our smaller companies (and our gearing) - in spite of the fact that we have never invested more than 10% of our assets into smaller companies and our gearing has never reached 10%. - MORE - - 2 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Chairman's Statement continued.../ Performance Analysis 1 year 4 years % % Witan Capital Return -27.5 -27.2 Benchmark Return -26.4 -27.8 -------- -------- Relative Performance -1.1 0.6 -------- -------- Attribution: Stock Selection UK Mainstream 3.8 10.6 UK Specialist Growth -2.6 -5.0 North America -0.6 -2.5 Europe excluding UK - 2.8 Japan -0.2 1.2 Pacific excluding Japan -0.2 -0.3 Emerging Markets - - -------- -------- 0.2 6.8 Geographical Asset Allocation 1.0 -2.1 Net Gearing Effect -2.3 -4.1 -------- -------- -1.1 0.6 -------- -------- Source: WM (before expenses and management fees) Equity Risk There is no consensus even among individuals in the same firm as to how much or little equity sail we should be carrying, although I have noticed the 'old' are considerably less optimistic than the 'young'. Many economists and politicians appear to be totally oblivious to the effects that the halving of equity values is likely to have, and individuals have been comforted by the escalation in value of their houses which has blinded them temporarily to the seriousness of the situation. As you know, by the end of the year 2000 the Board felt there was likely to be a market correction in values of about 25% but that it would be of relatively short duration. We took steps to protect our dividend; we took powers to buy back stock and to continue our marketing campaign to protect the discount; we took holdings in absolute return funds and weeded out our own portfolio. The turning circle looked too tight to go for liquidity and back again but, to paraphrase Mr Warren Buffett, 'predicting rain is not the same thing as building an ark'. - MORE - - 3 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Chairman's Statement continued.../ The point I am trying to bring home is that our mission statement has been adhered to, but the blend of large and small companies in our portfolio (with modest and limited gearing) has not withstood, in the last three years, the onslaught meted out to young companies. Yet, in the past, they have been a key feature of our outperformance. We have been criticised by some shareholders for owning another investment trust in the Henderson stable which holds a global portfolio of smaller companies - Henderson Strata - as they believed it somehow conferred more benefit on Henderson in terms of fees than on Witan in terms of an investment. Whilst they are patently wrong as far as fees are concerned as Henderson Strata is a quoted closed-ended company, they are right in saying it has underperformed the international smaller companies indices, although it has performed better than our directly-owned smaller company holdings. We have brought the 'ownership' of Henderson Strata under the aegis of our UK manager, Job Curtis, and given Neil Hermon the management responsibility for any separate UK smaller companies we may hold. As we all know, it is pretty important for the photographer to appear at the right moment; you don't want the sun in your eyes or a gale at your back to look your best. Equally, if you are going to fiddle with the camera it is important to get the settings right. Your Board continues to believe that, taking the long view, our focus and mix are about right, but, for the moment, we have reduced the size of our smaller companies' aperture (over and above market attrition) and capped our gearing. Where volatility in selected stocks is viewed as unjustifiably high, we have started selling option premia in a very controlled way. For some time we have not been invested in emerging markets (excluding Asia) and our unquoted portfolio is very small. These moves may not be enough to protect your capital in the short term: institutional fire sales are likely to continue and recovery could be slow and painful. At current levels, however, there are some signs of consolidation in markets, as the dividend yield curve rises through the gilt yield slope, but the big unknown is still - how strong is the consumer going to be? Management Fees As a token of goodwill our investment managers - Henderson Global Investors - have waived their entitlement to any inflation adjusted increase in their annual fee which might be due to them for the year 2002. The Board is very appreciative of this gesture. Dividends In line with our declared dividend policy of making progressive increases when possible, it is our intention to pay, subject to shareholders' approval, a final dividend of 4.45 pence per share to make a total distribution for the year of 8.10 pence (2001: 7.95 pence) out of the earnings per share of 8.92 pence. On the face of it the increase looks rather parsimonious, but, in the present hostile economic climate, it is possible that dividends could come under increasing pressure, particularly in the UK where the bulk of our income is derived. - MORE - - 4 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Chairman's Statement continued.../ Board Changes In the place of Robin Inchyra, who retired at our last AGM, we are delighted to have appointed Andrew Bruce who brings to the Board a wealth of experience in banking and financial services and we warmly welcome him. I will be retiring as a director at the forthcoming AGM, having carried a lot of 'incorrect regulatory baggage' for quite a long stint. In spite of this I would like to think I have always put shareholders' interests first. Whilst I am unhappy not to be leaving with a better story to tell them, I am pleased that Harry Henderson will be coming in to bat for us when, hopefully, most of the spin is out of the wicket. Lord Faringdon Chairman 30 January 2003 - MORE - - 5 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Statement of Total Return (incorporating the revenue account) Year ended 31 December 2002 Year ended 31 December 2001 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net capital losses from investments - (420,454) (420,454) - (316,911) (316,911) Income from fixed asset investments 36,034 - 36,034 35,894 - 35,894 Other interest receivable and similar 2,376 - 2,376 2,369 - 2,369 income ----------- ----------- ----------- ----------- ----------- ----------- Gross revenue and capital losses 38,410 (420,454) (382,044) 38,263 (316,911) (278,648) Management fee (1,018) (3,057) (4,075) (1,022) (3,065) (4,087) Other administrative expenses (2,341) - (2,341) (2,645) - (2,645) ----------- ----------- ----------- ----------- ----------- ----------- Net return/(loss) on ordinary activities 35,051 (423,511) (388,460) 34,596 (319,976) (285,380) before interest payable and taxation Interest payable (2,535) (7,606) (10,141) (2,533) (7,599) (10,132) ----------- ----------- ----------- ----------- ----------- ----------- Net return/(loss) on ordinary activities 32,516 (431,117) (398,601) 32,063 (327,575) (295,512) before taxation Taxation on net return on ordinary (1,071) - (1,071) (2,429) 1,514 (915) activities ----------- ----------- ----------- ----------- ----------- ----------- Net return/(loss) on ordinary activities 31,445 (431,117) (399,672) 29,634 (326,061) (296,427) after taxation Dividends - preference shares (83) - (83) (83) - (83) ----------- ----------- ----------- ----------- ----------- ------------ Attributable to the ordinary 31,362 (431,117) (399,755) 29,551 (326,061) (296,510) shareholders ----------- ----------- ----------- ----------- ----------- ----------- Dividends - ordinary shares Interim payment of 3.65p (2001: 3.60p) (12,822) - (12,822) (12,654) - (12,654) Final proposed of 4.45p (2001: 4.35p) (15,590) - (15,590) (15,298) - (15,298) ----------- ----------- ----------- ----------- ----------- ----------- (28,412) - (28,412) (27,952) - (27,952) ----------- ----------- ----------- ----------- ----------- ----------- Transfer to/(from) reserves 2,950 (431,117) (428,167) 1,599 (326,061) (324,462) ====== ====== ====== ====== ====== ====== Return/(loss) per ordinary share 8.92p (122.68)p (113.76)p 8.40p (92.71)p (84.31)p ====== ====== ====== ====== ====== ====== The revenue columns of this statement represent the revenue accounts of the Company. - MORE - - 6 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Balance Sheet at 31 December 2002 2002 2001 £'000 £'000 Fixed asset investments Listed in the United Kingdom (at market value) 690,176 933,538 Listed abroad (at market value) 454,346 657,787 Unquoted (at directors' valuation) 26,067 32,586 ------------- ------------- 1,170,589 1,623,911 ------------- ------------- Current assets Debtors 3,306 6,154 Cash at bank and short term deposits 68,806 45,931 ------------- ------------- 72,112 52,085 Creditors: amounts falling due within one year (18,267) (19,677) ------------- ------------- Net current assets 53,845 32,408 ------------- ------------- Total assets less current liabilities 1,224,434 1,656,319 Creditors: amounts falling due after more than one year (144,176) (144,097) ------------- ------------- Total net assets 1,080,258 1,512,222 ======= ======= Capital and reserves Called up share capital Preference shares 2,555 2,555 Ordinary shares 87,585 87,921 Share premium 16,237 16,237 Other capital reserves Redemption reserve 6,241 5,905 Capital reserve - realised 977,552 1,072,787 Capital reserve - unrealised (32,596) 307,083 Revenue reserve 22,684 19,734 ------------- ------------- Shareholders' funds (including non-equity interests of £2,555,000) 1,080,258 1,512,222 ======= ======= Net asset value per ordinary share 307.6p 429.3p ======= ======= - MORE - - 7 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Cash Flow Statement for the year ended 31 December 2002 2002 2002 2001 2001 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 30,180 31,543 Servicing of finance Debenture and secured bond interest paid (10,035) (10,035) Bank interest paid (29) (17) Dividends paid on preference shares (83) (83) ------------ ------------ Net cash outflow from servicing of finance (10,147) (10,135) Taxation UK tax recovered 41 73 Overseas tax recovered 397 500 ------------ ------------ Net tax recovered 438 573 Financial investment Purchases of investments (618,200) (585,091) Sales of investments 650,333 567,686 Cash inflow from forward exchange contracts 2,269 185 Cash inflow from futures contracts 1,184 - ------------ ------------ Net cash inflow/(outflow) from financial investment 35,586 (17,220) Equity dividends paid (28,120) (27,601) Management of liquid resources Cash (placed on)/recalled from short term deposit (25,000) 5,000 ------------ ------------ (25,000) 5,000 ------------ ------------ Net cash inflow/(outflow) before financing 2,937 (17,840) Financing Buy-backs of ordinary shares (3,797) - Issue expenses paid in respect of the secured bonds - (56) 2025 ------------ ------------ Net cash outflow from financing (3,797) (56) ------------ ------------ Decrease in cash (860) (17,896) ======= ======= Reconciliation of net cash flow to movement in net debt Decrease in cash as above (860) (17,896) Cash outflow/(inflow) from management of liquid 25,000 (5,000) resources Cash outflow from debt financing - 56 ------------ ------------ Change in net debt resulting from cash flows 24,140 (22,840) Exchange movements (1,265) (830) Increase in valuation of debt (79) (150) ------------ ------------ Movement in net debt in the year 22,796 (23,820) Net debt at 1 January (98,166) (74,346) ------------ ------------ Net debt at 31 December (75,370) (98,166) ======= ======= - MORE - - 8 - WITAN INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2002 Notes : 1. Return/(loss) per ordinary share The revenue return per ordinary share is based on the earnings attributable to the ordinary shareholders of £31,362,000 (2001: £29,551,000) and on the weighted average number of ordinary shares of 25p each in issue during the year of 351,412,865 (2001: 351,682,244) The capital loss per ordinary share is based on the net capital losses for the year of £431,117,000 (2001: losses of £326,061,000) and on the weighted average number of ordinary shares of 25p each in issue during the year, as stated above. 2. Issued share capital The number of ordinary shares of 25p each in issue at 31 December 2002 was 350,338,086 (2001: 351,682,244). 3. Dividend A final dividend of 4.45p per share has been recommended, payable on 2 April 2003. The record date for the dividend will be 7 March 2003 and the ex-dividend date will be 5 March 2003. 4. Allocation of tax relief With effect from 1 January 2002, the tax relief available to the Company on its management, administrative and finance costs is allocated between revenue and capital according to the 'marginal basis' whereby revenue expenses are matched first against taxable income arising in the revenue account; the effect of this is that in the year ended 31 December 2002 all the tax relief was allocated to revenue. In 2001 the tax relief was allocated according to the 'proportional basis'. Had the comparative figures been calculated on the same basis, the revenue return for the year ended 31 December 2001 would have been 8.77p rather than 8.40p. 5. 2002 Accounts The preliminary figures for the year ended 31 December 2002 are an extract from the Company's latest accounts for that period and do not constitute statutory accounts as defined by section 240 of the Companies Act 1985. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 6. 2001 Accounts The figures and financial information for the year ended 31 December 2001 are an extract from the latest published accounts of the Company and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. The preliminary figures are prepared on the basis of the accounting policies as stated in the annual report for the year ended 31 December 2001. 7. Annual Report and Annual General Meeting The full annual report and accounts will be posted to shareholders in February 2003 and copies will be available from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held at 2.30 pm on Monday 24 March 2003 at Drapers' Hall, Throgmorton Avenue, London EC2. For further information please contact: James Budden Witan Investment Trust plc Telephone: 020 7818 3121 or Gordon Puckey Quill Communications Telephone: 020 7763 6975 This information is provided by RNS The company news service from the London Stock Exchange

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