Half-year Report

RNS Number : 5824N

Witan Investment Trust PLC

10 August 2017

 

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

HIGHLIGHTS

•     During the first half of 2017, the Company's net asset value ('NAV') total return was +10.8% compared with a benchmark return of +7.4% - outperformance of 3.4%.

•     The share price total return was +12.2%, as the discount narrowed from 4.0% at the end of 2016 to 2.7% at the end of June.

•     A second interim quarterly dividend of 4.75 pence per ordinary share will be paid in September. Total dividends paid in respect of the period are 9.5 pence per ordinary share (2016: 8.5 pence)

•     Eight of the ten external managers in place at the end of 2016 outperformed, as did the portfolio of direct holdings.

FINANCIAL HIGHLIGHTS

Corporate key performance indicators
	(Unaudited) 30 June  2017	Change since 31 December 2016		(Unaudited) 30 June 2016	(Audited) 31 December 2016
Share price	1001.0p	11.0%		751.0p	902.0p
Net asset value per ordinary share (debt at par value)	1042.7p	9.4%		836.8p	952.8p
Net asset value per ordinary share (debt at fair value)	1029.1p	9.6%		820.6p	939.2p
Dividends per ordinary share	9.5p			8.5p	19.0p
Discount (debt at fair value)	2.7%			8.5%	4.0%
Share buybacks(A)	1.3%			7.6%	9.4%
On-going charges including performance fees(B)	0.38%			0.24%	0.65%
On-going charges excluding performance fees(B)	0.37%			0.37%	0.75%

(A)	The percentage of the ordinary share capital in issue (excluding those held in treasury) at the previous year end that was bought back during the period.
(B)	The total of the recurring operating and investment management costs (excluding the expenses of the subsidiary company) expressed as a percentage of the daily average net assets including debt at fair value.

Performance
Total Returns to 30 June 2017	6 months  return %	1 year  return %	3 years return %	5 years return %
Total shareholder return (C)	12.2	36.2	51.3	147.5
Net asset value total return (D)	10.8	28.0	52.8	119.7
Benchmark (E)	7.4	22.7	41.0	89.2
FTSE All-Share Index(F)	5.5	18.1	23.9	65.2
FTSE World (ex UK) Index(F)	6.3	23.3	57.7	112.4

(C)	Source: Morningstar.  The movement in the ordinary share price adjusted to include the reinvestment of each dividend paid during the respective period's calculation.
(D)	Source: Morningstar/Witan.  The movement in the net asset value per share (debt at fair value) adjusted to include the reinvestment of each dividend paid during the respective period's calculation.
(E)	Source: Morningstar/Witan.  The benchmark is a composite of five indices: the FTSE All-Share Index 30%, the FTSE All-World North America Index 25%, the FTSE All-World Europe (ex UK) Index 20%, the FTSE All-World Asia Pacific Index 20% and the FTSE Emerging Markets Index 5%.  Before 2017, the benchmark was a composite of four indices: the FTSE All-Share Index 40%, the FTSE All-World North America Index 20%, the FTSE All-World Europe (ex UK) Index 20% and the FTSE All-World Asia Pacific Index 20%.
(F)	Source: Morningstar.  See also FTSE International for conditions of use (www.ftse.com).

Page 2 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Other financial information
	(Unaudited) 30 June 2017	Change since 31 December 2016	(Unaudited) 30 June 2016		(Audited) 31 December 2016
Net assets	£1,865m	8.0%	£1,547m		£1,727m
Shares with full voting rights (i.e. excluding treasury shares)(G)	178,872,058	(1.3)%	184,823,354		181,210,739
Revenue return per ordinary share	14.48p		12.60p		22.11p
Gearing(H)	11.0%		12.2%		10.3%

(G) Total number of ordinary shares in issue: 200,071,000 (June 2016: 200,071,000; December 2016 200,071,000).

(H) The difference between shareholders' funds and the total market value of the investments (including the face value of futures positions) expressed as a percentage of shareholders' funds.

PORTFOLIO INFORMATION

Portfolio by geographical classification as at 30 June 2017	%
United Kingdom	37.4
North America	23.7
Continental Europe	17.9*
Asia Pacific (ex Japan)	13.2
Japan	5.1
Latin America	0.9
Other	1.8
	----------
	100.0
	======

* underlying exposure including index futures investment

Sector breakdown of the portfolio as at 30 June 2017	%
Financials	30.2
Consumer Services	17.5
Industrials	14.1
Consumer Goods	10.8
Technology	10.6
Health Care	7.2
Oil & Gas	3.3
Telecommunications	2.6
Basic Materials	2.1
Open-ended Funds	0.8
Utilities	0.8
	----------
	100.0
	======

Page 3 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

INTERIM MANAGEMENT REPORT

Summary

Political developments presented contrasting surprises during the first half of 2017. An indecisive result from the election in the UK increased instability ahead of the crucial Brexit negotiations, contrasting with generally favourable outcomes from scheduled elections in Europe which reduced worries over European political cohesion and added to the more optimistic mood engendered by the region's economic recovery. In the US, the inauguration of President Trump has changed the style and manners of US diplomacy, causing a degree of disquiet, but there have been few substantive developments (good or bad) other than the US withdrawal from the Paris Climate Agreement, which has been widely criticised.  Economic growth has been steady in the US, while improving in Europe and Japan, increasing confidence in equity markets, which registered gains in the first half of the year.

Market background

Markets ended 2016 on a high note but began 2017 apprehensive over the direction of European politics and concerned in case President Trump implemented some of the protectionist policies on which he had campaigned. France, Germany and the Netherlands all faced national elections and there was a risk that Italy would also call an early poll. In each country, there was a strong populist/Eurosceptic element in public opinion and, after the Brexit and Trump surprises of 2016 few were willing to assume that these elections would be helpful for cohesion between Eurozone countries, with consequent risks for financial stability.

In the event, little has happened on the US policy front, while the European election results so far have resulted in pro-European parties winning, with Chancellor Merkel also looking well-placed for the September election in Germany. Helped by an economic recovery, populism (at least in its illiberal form) has lost support, which should be helpful for economic and political progress in Europe. 

The UK has struck a different note, with an unanticipated General Election producing a hung parliament and hence uncertainty over both the direction of government domestic policy and the conduct of the Brexit negotiations. On the plus side, hopes have increased for a less confrontational deal with the EU than some of the more strident pre-election rhetoric had implied. The possibility of a rerun of the referendum itself, whilst not currently probable, cannot be ruled out as a way of resolving a parliamentary stalemate if public opinion swung to believe that the costs to the economy and compromises involved in securing a deal were less appealing than the proposition presented to voters in 2016. On the negative side, irresolute government and a left-wing alternative waiting in the wings cloud visibility of the outlook for the UK economy.

Page 4 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

INTERIM MANAGEMENT REPORT, continued

Bond yields fell back during the spring, owing to subdued inflation and a temporary slackening in US economic growth but were little changed by the end of June in the US and the UK, while rising in Europe, where the political relief and economic improvement were most notable. On the foreign exchanges the US dollar was less in demand, as European political reassurance boosted the Euro across the board, while sterling recovered 5% from its end 2016 level against the dollar, when it had been close to the post-referendum lows. Equities delivered solidly positive returns in the period, with the UK, US and Japan all up 4-6%, while Europe and the Asia-Pacific region rose 12-13%.

Investment performance

Witan's net asset value (NAV) total return was 10.6% taking the par value of our debt and 10.8% taking debt at fair value. This was well ahead of the benchmark's return of 7.4% during the period. Over the longer term, performance also remains ahead of our benchmark, with a 5 year NAV total return performance of 119.7%, compared with 89.2% for the benchmark.

Our investment portfolio significantly outperformed, returning 9.6%, with performance further assisted by the use of gearing and, to a small extent, the uplift from share buybacks. During the first half of 2017, six of the external managers (and both of the two managers terminated in May) outperformed their benchmarks, while two underperformed. The strongest relative performances came from Veritas (+15.4% compared with +6.3% for its global benchmark) and the Direct Holdings portfolio (+13.7% compared with Witan's benchmark's +7.4%). Performance figures for all of the managers are shown in the table on page 9.

The share price total return of 12.2% was ahead of the NAV total return, due to further progress in narrowing the discount.

Portfolio changes

Following a search conducted in autumn 2016, the appointment of GQG Partners to manage an Emerging Markets portfolio was implemented in February, with the manager being allocated £70m or 4% of net assets. The holding in MSCI emerging market index futures was subsequently sold, as the exposure had been replaced.

In May, the Company consolidated the portfolios of its five global equity managers, dividing the assets between three of the existing managers, Lansdowne, Pzena and Veritas. Our analysis indicated that the resulting combination retained a desirable level of diversification, while reducing duplication and (as a result, we believe) enhancing the scope for outperformance in the future.

Page 5 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

INTERIM MANAGEMENT REPORT, continued

During April, shortly before the French Presidential election vote, an investment of 2% of assets was made in European equity index futures, to boost exposure to Europe, where the portfolio was under-represented. The political risks in Europe appeared to be reducing (subsequently confirmed by the election of a moderate candidate to the French Presidency) yet European markets had performed indifferently despite an improving economic outlook. The timing proved beneficial and part of the futures position was subsequently replaced with an increased allocation to Europe.

Gearing

The Company began the year with gearing of 10.3%. This was maintained in a range of 10-12% for most of the period, ending June at 11.0%.

The Company has a £125m short-term loan facility, in addition to its fixed-rate borrowings. The drawn balance at the end of June 2017 was £107m.

Investment income and expenses 

Revenue earnings per share for the period were 14.5 pence per share, a rise of 14.9% from the 12.6 pence per share for the first half of 2016. The figures benefited from higher company pay-outs and from a weaker level of sterling, boosting the sterling value of dividends declared in other currencies.

Base management fees paid to external delegated managers were 20% higher than those in the first half of 2016, owing to the growth in the assets under management in the managers' portfolios. There was no significant accrual for performance fees. Although the majority of our managers outperformed, most do not have performance fee structures, while some that do were making up for underperformance in 2016.

Other expenses charged to revenue rose by 21%.  Within operating expenses, there were rises in regulatory compliance costs and asset related items such as investment accounting and custody fees. There was a rise in payroll costs compared with the first half of 2016, owing to salary increases and an increase in performance-related accruals. Finance costs fell by 29% following the repayment of the 8.5% debenture in October 2016.

The ongoing charges figure ('OCF') for the six months was 0.37 %, in line with the first half of 2016. Including performance fees, the OCF was 0.38% for the first half of 2017, compared with 0.24% for the same period in 2016 (when the portfolio underperformed, resulting in a write-back of previous accruals for performance fees). These figures apply for the first half and are not annualised. The OCF for the whole of 2016 was 0.75% excluding performance fees and 0.65% including performance fees (owing to reduced provisions for performance fees during 2016).

Page 6 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

INTERIM MANAGEMENT REPORT, continued

Dividend

The Board's policy is that the first three interim dividends of the financial year (paid in June, September and December) will, in the absence of unforeseen circumstances, be paid at the rate of one quarter of the total payment made in respect of the previous year.

Accordingly, a second interim dividend of 4.75 pence per ordinary share, being one quarter of the total dividend paid in respect of 2016 (19.0 pence), will be paid on 18 September 2017 to shareholders on the register on 25 August 2017. This follows the first interim dividend of 4.75 pence per ordinary share paid on 16 June 2017. The fourth payment (in March 2018) will be a balancing amount, reflecting the difference between the three quarterly dividends already paid and the payment decided for the full year.

The Company has increased its dividend every year since 1974 (a 42 year record of increases), recognising the importance for its investors of a reliable and growing income.

In the absence of unforeseen developments, the full year's dividend for 2017 is expected to show a further year of growth, consistent with the Company's policy to increase the total annual dividend ahead of inflation.

Discount and buybacks

One of the Company's key performance indicators is for its shares to trade at a low discount, or a premium to NAV, subject to market circumstances. Witan's shares ended 2016 on a 4.0% discount, which was below the widest levels reached in the aftermath of the Brexit referendum but wider than the average in recent years. At the end of June 2017, the discount was 2.7%.

During the first half of 2017, the Company has continued to buy back shares into treasury, purchasing 2m shares at an average discount of 4.0% in the early months of the year and a further 0.3m shares in May and June at an average discount of 2.1%. This added £0.9m to the net asset value of the Company but, just as important, showed that the Company was willing to continue buying back shares on tight discounts because of the benefit for shareholders of the shares trading at or near to net asset value, as well as the accretion to NAV per share.

The long-term objective is to create sustainable liquidity in Witan's shares at or near to net asset value. Discounts are affected by many factors not under the Company's control but 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. The criterion for the Company's transactions in its own shares will always be that it should be in shareholders' interests.

Since the period end, a further 0.2m shares have been bought back and placed in treasury. At the time of writing, the discount was 2.1%.

Page 7 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

INTERIM MANAGEMENT REPORT, continued

Outlook

Economic recovery appears to have taken firmer root in Europe and Japan, while remaining established in the US. Although there are some concerns over the ability of China to maintain robust growth while addressing excesses in its banking system, so far these have proven incorrect, or at least premature.

Several of the world's Central Banks signalled in late June that they were sufficiently reassured by the recovery, and receding risks of deflation, to tighten the stance of monetary policy. In the US this has taken the form of rising short-term interest rates and a plan to reduce the Federal Reserve's bond holdings. In the UK and Europe, actual tightening seems a more distant prospect but the nuance has changed towards reducing monetary support for the economy.

Over the year ahead, a combination of gradually-rising interest rates and reduced central bank buying of bonds is likely to exert upward pressure on bond yields, presenting a valuation headwind for equities. Equity investors will need confirmation that a tailwind from improving corporate earnings is in place to offset this. Recent inflation numbers worldwide suggest a relatively modest underlying rise, which should allow the central banks to take their time in tightening and reduce the extent of any rise in longer-term bond yields. It also seems likely that the improvement in corporate earnings will be unevenly distributed, with positive cyclical effects interacting with disruption from technological change in many sectors. With this in mind, although the level of markets offers few windfalls we remain focused on active and selective stock-selection and a prudent but opportunistic attitude to risk in order to add value for Witan's shareholders.

For and on behalf of the Board

Harry Henderson

Chairman

9 August 2017

 

Page 8 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

REGULATORY DISCLOSURES

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 the foreseeable future. Therefore, the Directors believe 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 2016 are contained in the Company's Annual Report for the year ended 31 December 2016.

Principal risks and uncertainties

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

• a fall in equity prices;

• the appropriateness of the corporate objective and strategy;

• the application of investment strategy: country, currency, industrial sector, stock selection, choice of investment manager;

• operational and regulatory risks.

Information on these 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 2016. 

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.

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

Harry Henderson, Chairman

9 August 2017

Page 9 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Investment managers:  Assets under management and investment performance as at 30 June 2017

Investment manager	Appointment date	% of Witan's assets under management at 30.06.17(1)	Performance in the half year (%)	Benchmark performance in the half year (%)	Performance since appointment  (%)(2)	Benchmark performance since appointment  (%)(2)
Artemis Investment Management (UK)	06.05.08	8.8	2.7	5.5	10.1	6.4
Heronbridge Investment Management (UK)	17.06.13	5.9	9.4	5.5	12.1	8.3
Lindsell Train (UK)	01.09.10	8.1	10.8	5.5	16.5	9.7
Lansdowne Partners (Global)	14.12.12	14.4	7.5	4.3	22.7	16.3
Pzena Investment Management (Global)	02.12.13	14.1	5.6	6.3	13.5	14.3
Veritas Asset Management (Global)	11.11.10	14.7	15.4	6.3	15.4	12.1
Marathon Asset Management (Pan-European)	23.07.10	8.2	11.2	10.3	11.9	10.0
Matthews International Capital Management  (Asia Pacific)	20.02.13	12.4	12.7	10.3	12.3	10.1
GQG Partners (Emerging Markets)	16.02.17	3.4	-	-	3.5	4.0
Witan Direct Holdings (Directly-held investments)	19.03.10	10.0	13.7	7.4	12.1	9.7

Notes:

1	Percentage of Witan's assets managed, excluding central cash balances.
2	Percentages are annualised where the appointment date was before 2016.
3	The mandates with MFS and Tweedy Browne were closed on 24 May 2017
Source:  BNP Paribas Securities Services

Page 10 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Consolidated Statement of Comprehensive Income

	(Unaudited)   Half year ended   30 June 2017			(Unaudited)   Half year ended   30 June 2016			(Audited) Year ended 31 December 2016
	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	31,701	-	31,701	30,237	-	30,237	52,452	-	52,452
Other income	905	-	905	785	-	785	1,475	-	1,475
Gains on investments held at fair value through profit or loss (Note 2)	-	161,140	161,140	-	81,422	81,422	-	297,032	297,032
Foreign exchange losses on cash and cash equivalents	-	(661)	(661)	-	(750)	(750)	-	(417)	(417)
	---------	----------	-----------	---------	---------	-----------	---------	-----------	-----------
Total income	32,606	160,479	193,085	31,022	80,672	111,694	53,927	296,615	350,542
Expenses
Management and performance fees	(1,075)	(3,309)	(4,384)	(897)	(689)	(1,586)	(1,905)	(4,252)	(6,157)
Other expenses	(3,041)	(51)	(3,092)	(2,507)	(51)	(2,558)	(5,109)	(101)	(5,210)
	---------	----------	-----------	---------	---------	-----------	---------	-----------	-----------
Profit before finance costs and taxation	28,490	157,119	185,609	27,618	79,932	107,550	46,913	292,262	339,175
Finance costs	(948)	(2,714)	(3,662)	(1,333)	(3,871)	(5,204)	(2,467)	(7,148)	(9,615)
	---------	----------	-----------	---------	---------	-----------	---------	-----------	-----------
Profit before taxation	27,542	154,405	181,947	26,285	76,061	102,346	44,446	285,114	329,560
Taxation	(1,516)	-	(1,516)	(1,454)	-	(1,454)	(2,415)	-	(2,415)
	---------	----------	-----------	---------	---------	-----------	---------	-----------	-----------
Profit attributable to equity shareholders of the parent company	26,026	154,405	180,431	24,831	76,061	100,892	42,031	285,114	327,145
	=====	======	======	=====	=====	======	=====	======	======
Earnings per ordinary share (Note 3)	14.48p	85.92p	100.40p	12.60p	38.58p	51.18p	22.11p	149.95p	172.06p
	=====	======	======	=====	=====	======	=====	======	======

The total column of this statement represents the Group's Statement of Comprehensive Income, prepared in accordance with IFRSs as adopted by the European Union. 

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 11 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Consolidated Statement of Changes in Equity

		(Unaudited) Half year ended 30 June 2017
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2016	50,018	99,251	46,498	1,464,105	66,765	1,726,637
Total comprehensive income:   Profit for the period	-	-	-	154,405	26,026	180,431
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(19,755)	(19,755)
Buybacks of ordinary shares into treasury   (note 5)	-	-	-	(22,221)	-	(22,221)
	-----------	-----------	-------------	-------------	-----------	-------------
At 30 June 2017	50,018	99,251	46,498	1,596,289	73,036	1,865,092
	=======	=======	========	========	=======	========

		(Unaudited) Half year ended 30 June 2016
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2015	50,018	99,251	46,498	1,321,909	59,654	1,577,330
Total comprehensive income:   Profit for the period	-	-	-	76,061	24,831	100,892
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(19,385)	(19,385)
Buybacks of ordinary shares into treasury   (note 5)	-	-	-	(112,289)	-	(112,289)
	-----------	-----------	-------------	-------------	-----------	-------------
At 30 June 2016	50,018	99,251	46,498	1,285,681	65,100	1,546,548
	=======	=======	========	========	=======	========

		(Audited) Year ended 31 December 2016
	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2015	50,018	99,251	46,498	1,321,909	59,654	1,577,330
Total comprehensive income:   Profit for the year	-	-	-	285,114	42,031	327,145
Transactions with owners, recorded directly to equity:   Ordinary dividends paid	-	-	-	-	(34,920)	(34,920)
Buybacks of ordinary shares into treasury   (note 5)	-	-	-	(142,918)	-	(142,918)
	-----------	-----------	-------------	-------------	-----------	-------------
At 31 December 2016	50,018	99,251	46,498	1,464,105	66,765	1,726,637
	=======	=======	========	========	=======	========

Page 12 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Consolidated Balance Sheet

	(Unaudited) 30 June  2017 £'000	(Unaudited) 30 June 2016 £'000	(Audited) 31 December 2016 £'000
Non current assets
Investments held at fair value through profit or loss	2,036,591	1,672,341	1,884,037
	---------------	--------------	-------------
Current assets
Other receivables	23,465	13,925	11,638
Cash and cash equivalents	66,199	65,264	50,556
	---------------	--------------	-------------
	89,664	79,189	62,194
	---------------	--------------	-------------
Total assets	2,126,255	1,751,530	1,946,231
Current liabilities
Other payables	(13,621)	(19,959)	(8,102)
8½ per cent. Debenture Stock 2016	-	(44,585)	-
Bank loans	(107,000)	-	(71,000)
	---------------	--------------	-------------
	(120,621)	(64,544)	(79,102)
	---------------	--------------	-------------
Total assets less current liabilities	2,005,634	1,686,986	1,867,129
	---------------	--------------	-------------
Non current liabilities
At amortised cost:
6.125 per cent. Secured Bonds due 2025	(63,464)	(63,389)	(63,434)
3.29 per cent. Secured Notes due 2035	(20,871)	(20,500)	(20,864)
3.47 per cent. Secured Notes due 2045	(53,652)	(53,994)	(53,639)
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)
	---------------	--------------	-------------
	(140,542)	(140,438)	(140,492)
	---------------	--------------	-------------
Net assets	1,865,092	1,546,548	1,726,637
	=========	========	========
Capital and reserves
Ordinary share capital (Note 5)	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	1,596,289	1,285,681	1,464,105
Revenue reserve	73,036	65,100	66,765
	---------------	--------------	-------------
Total equity	1,865,092	1,546,548	1,726,637
	=========	========	========
Net asset value per ordinary share (Note 6)	1042.70p	836.77p	952.83p
	=========	========	========

Page 13 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Consolidated Cash Flow Statement

	(Unaudited) Half year ended 30 June 2017 £'000	(Unaudited) Half year ended 30 June 2016 £'000	(Audited) Year ended 31 December 2016 £'000
Cash flows from operating activities
Dividend income received	31,649	29,519	49,178
Interest received	13	62	90
Other income received	1,293	709	1,384
Operating expenses paid	(5,764)	(7,082)	(14,688)
Taxation on overseas income	(1,692)	(1,640)	(2,883)
Taxation received	290	-	371
	-------------	-------------	-------------
Net cash inflow from operating activities	25,789	21,568	33,452
	-------------	-------------	-------------
Cash flows from investing activities
Purchases of investments	(558,660)	(237,801)	(525,517)
Sales of investments	553,891	363,224	641,967
Realised gain on futures	5,237	942	7,548
	-------------	-------------	-------------
Net cash inflow from investing activities	468	126,365	123,998
	-------------	-------------	-------------
Cash flow from financing activities
Equity dividends paid	(19,755)	(19,385)	(34,920)
Buybacks of ordinary shares	(22,609)	(111,873)	(142,081)
Repayment of debenture	-	-	(44,589)
Interest paid	(3,589)	(5,248)	(10,474)
Drawdown/(repayment) of bank loans	36,000	(3,000)	68,000
	-------------	-------------	-------------
Net cash outflow from financing	(9,953)	(139,506)	(164,064)
	-------------	-------------	-------------
Increase/(decrease) in cash and cash equivalents (Note 7)	16,304	8,427	(6,614)
Cash and cash equivalents at the start of the period	50,556	57,587	57,587
Effect of foreign exchange rate changes	(661)	(750)	(417)
	-------------	-------------	-------------
Cash and cash equivalents at the end of the period	66,199	65,264	50,556
	========	========	========

Page 14 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Notes to the Financial Statements

1	Basis of preparation The condensed set of financial statements for the half year ended 30 June 2017 has been prepared on the basis of the accounting policies set out in the consolidated financial statements for the year ended 31 December 2016.
2	Transaction costs The gains on investments held at fair value through profit or loss include purchase transaction costs of £1,089,000 (half year ended 30 June 2016: £686,000; year ended 31 December 2016: £1,520,000) and sale transaction costs of £398,000 (half year ended 30 June 2016: £241,000; year ended 31 December 2016: £475,000). The purchase transaction costs comprise mainly stamp duty and commissions. The sale transaction costs comprise mainly commissions.
3	Earnings per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of £180,431,000 (half year ended 30 June 2016: £100,892,000; year ended 31 December 2016: £327,145,000) and on 179,691,544 ordinary shares (half year ended 30 June 2016: 197,119,019; year ended 31 December 2016: 190,131,108) 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.
		(Unaudited) Half year ended 30 June 2017 £'000	(Unaudited) Half year ended 30 June 2016 £'000	(Audited) Year ended 31 December 2016 £'000
	Net revenue profit	26,026	24,831	42,031
	Net capital profit	154,405	76,061	285,114
		--------------	--------------	--------------
	Net total profit	180,431	100,892	327,145
		========	========	========
	Weighted average number of ordinary shares in issue during the period	179,691,544	197,119,019	190,131,108
		Pence	Pence	Pence
	Revenue earnings per ordinary share	14.48	12.60	22.11
	Capital earnings per ordinary share	85.92	38.58	149.95
		--------------	--------------	--------------
	Total earnings per ordinary share	100.40	51.18	172.06
		========	========	========
4	Interim dividend The Directors have declared a second interim dividend of 4.75p per ordinary share (2016: 4.25p), payable on 18 September 2017 to shareholders registered on 25 August 2017. The shares will be quoted ex-dividend on 24 August 2017. A first interim dividend of 4.75p (2016: 4.25p) was paid on 16 June 2017.

Page 15 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Notes to the Financial Statements (continued)

5	Ordinary share capital At 30 June 2017 there were 178,872,058 ordinary shares in issue (30 June 2016: 184,823,354; 31 December 2016: 181,210,739) and 21,198,942 shares held in treasury (30 June 2016: 15,247,646; 31 December 2016: 18,860,261). During the half year ended 30 June 2017 the Company bought back 2,338,681 of its own ordinary shares (half year ended 30 June 2016: 15,247,646; year ended 31 December 2016: 18,860,261). The costs of the share buybacks were £22,221,000 (half year ended 30 June 2016: £112,289,000; year ended 31 December 2016: £142,918,000).
6	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 £1,865,092,000 (30 June 2016: £1,546,548,000; 31 December 2016: £1,726,637,000) and on 178,872,058 (30 June 2016: 184,823,354; 31 December 2016: 181,210,739) ordinary shares, being the number of ordinary shares in issue at the period end.
7	Movement in net debt
		(Unaudited) Half year ended 30 June 2017 £'000		(Unaudited) Half year ended 30 June 2016 £'000	(Audited) Year ended 31 December 2016 £'000
	Increase/(decrease) in cash and cash equivalents	16,304		8,427	(6,614)
	Effect of foreign exchange rate changes	(661)		(750)	(417)
	Amortisation of expenses	(50)		(48)	(106)
	(Drawdown)/repayment of bank loans	(36,000)		3,000	(68,000)
	Repayment of debenture	-		-	44,589
	Change in net debt in the year	(20,407)		10,629	(30,548)
	Opening net debt	(160,936)		(130,388)	(130,388)
	Closing net debt	(181,343)		(119,759)	(160,936)
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 is registered in England and Wales, operates in the United Kingdom and is regulated by the Financial Conduct Authority.
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 at amortised cost		Fair value £'000		Balance Sheet amount £'000
	Non current liabilities
	Preference shares		1,384		2,555
	Secured bonds		82,867		63,464
	Secured notes		80,626		74,523
			--------------		--------------
			164,877		140,542
			--------------		--------------

Page 16 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Notes to the Financial Statements (continued)

9	Financial instruments (continued)
	Financial instruments carried at fair value
	Fair value hierarchy
	The table below analyses recurring fair value measurements for financial assets and 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: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability.
	Financial assets and financial liabilities at fair value through profit or loss at 30 June 2017	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
	Investments including derivatives:
	Equity securities designated at fair value through profit or loss	2,021,178	-	-	2,021,178
	Investments in other funds	-	15,413	-	15,413
	Derivatives (nominal exposure of £33,140,000)	(832)	-	-	(832)
		-------------	-----------	---------	------------
	Total financial assets and liabilities carried at fair value	2,020,346	15,413	-	2,035,759
		========	======	=====	=======
	There were no Level 3 investments during the 6 months to 30 June 2017. 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 active markets 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 is an investment in MI Somerset Emerging Markets Small Cap 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 17 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

Notes to the Financial Statements (continued)

10	Segment reporting As detailed in the Company's Annual Report for the year ended 31 December 2016, 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 and the management of savings schemes, 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, as detailed on page 1 above; the geographical allocation of the portfolio, as at 30 June 2017, is set out on page 2 above. The schedule on page 9 above 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.
		Half year ended 30 June 2017		Half year ended 30 June 2016		Year ended 31 December 2016
		Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000
	Revenue	32,059*	547	30,479*	543	52,816*	1,111
	Interest expense	3,662	-	5,204	-	9,615	-
	Net result	180,431	-	100,892	-	327,145	-
	Carrying amount of assets	1,863,363	1,729	1,544,929	1,619	1,724,927	1,710
	*The investment and other income of the parent company.
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 2017 and 30 June 2016 has been neither audited nor reviewed by the auditors. The figures and financial information for the year ended 31 December 2016 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 2016 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.
Financial report for the half year ended 30 June 2017 The financial report for the half year ended 30 June 2017 will be filed with the UK Listing Authority by 31 August 2017 and will be made available on the Company's website. Printed copies or electronic notification will be sent to shareholders in August 2017 and will be available thereafter from the Secretary at the Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA.

Page 18 of 18

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2017

For further information please contact:

Andrew Bell Chief Executive Officer Witan Investment Trust plc Telephone:  [phone]

Hannah Philp Director of Marketing Witan Investment Trust plc Telephone:  [phone]

-  ENDS -

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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