Half Yearly Report

RNS Number : 6283L

Witan Investment Trust PLC

14 August 2013

 



WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

HIGHLIGHTS

·    During the first half of 2013, the Company's Net Asset Value total return was +16.7% compared with a benchmark return of +11.4% for the same period - a relative outperformance of 5.3%.

·    Eight out of the 10 external managers who were in place for the full six month period, as well as the directly held portfolio, outperformed their respective benchmarks during the period.

·    A second interim quarterly dividend of 3.3p per ordinary share is declared, being 25% of the total payment made in respect of 2012 (13.2p).

·    Two new managers were appointed, covering Asian equities (including Japan) and UK equities.

·    Our weighting in Japan was significantly increased in response to changes in local economic policy.

 

Page 2 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

FINANCIAL HIGHLIGHTS

Corporate Key Performance Indicators
	(Unaudited) 30 June  2013	Change since 31 December 2012	(Unaudited) 30 June 2012		(Audited) 31 December 2012
Share price	589.0p	17.1%	454.9p		503.0p
Net asset value per ordinary share (debt at par value)	663.2p	14.0%	535.5p		581.8p
Net asset value per ordinary share (debt at market value)	653.3p	14.8%	523.3p		568.9p
Dividends per ordinary share	6.6p		6.0p		13.2p
Discount (debt at par value)	11.2%		15.1%		13.5%
Discount (debt at market value)	9.8%		13.1%		11.6%
Share buy-backs (A)	0.4%		0.8%		1.2%
On-going charges including performance fees (B)	0.60%		0.52%		0.97%
On-going charges excluding performance fees (B)	0.33%		0.37%		0.69%

(A)	The percentage of the ordinary share capital in issue 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 market value.

Performance
Total Returns to 30 June 2013	6 months return	1 year return		3 years return		5 years return
Total shareholder return (C)	19.2%	33.4%		51.9%		60.9%
Net asset value total return (D)	16.7%	28.2%		46.9%		56.0%
Benchmark (E)	11.4%	21.0%		40.4%		44.5%
FTSE All-Share Index(F)	8.5%	17.9%		43.5%		38.2%
FTSE World (ex UK) Index(F)	15.5%	22.7%		44.5%		55.3%

(C)	Source: Datastream.  The movement in the ordinary share price adjusted to include the notional reinvestment of dividends.
(D)	Source: Datastream/Witan.  The movement in the net asset value per share adjusted to include the notional reinvestment of dividends.
(E)	Source: Witan.   Since 1 October 2007 the benchmark has been 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: Datastream.  See also FTSE International for conditions of use (www.ftse.com).

Page 3 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

OTHER FINANCIAL HIGHLIGHTS
	(Unaudited) 30 June 2013	Change since 31 December 2012	(Unaudited) 30 June 2012		(Audited) 31 December 2012
Net assets	£1,256m	13.6%	£1,022m		£1,106m
Number of ordinary shares in issue	189,346,000	-0.4%	190,889,000		190,079,500
Revenue return per ordinary share	9.03p		8.13p		14.50p
Gearing (G)	11.7%		7.0%		6.1%

(G) 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 2013
United Kingdom	42.2%
North America	23.2%
Continental Europe	15.6%
Asia Pacific (Ex-Japan)	11.7%
Japan*	4.3%
Latin America	1.6%
Other countries	1.4%
	----------
	100.0%
	======

* underlying exposure 7.2% including index futures investment

Portfolio by sector breakdown as at 30 June 2013
Financials	24.7%
Consumer Services	15.4%
Industrials	14.5%
Consumer Goods	13.6%
Health Care	7.9%
Technology	5.9%
Open-ended Funds	5.9%
Oil & Gas	5.4%
Telecoms	3.4%
Basic Materials	2.3%
Utilities	1.0%
	----------
	100.0%
	======

Page 4 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

INTERIM MANAGEMENT REPORT

Market Background

Equity markets enjoyed a strong start to 2013, which survived a second quarter of consolidation to leave global equities well ahead at the mid-year point. Two positive themes were signs that the US recovery had become more broadly established, shrugging off tighter fiscal policy, while on the other side of the Pacific the Japanese authorities' aggressive efforts to generate economic recovery and an end to years of deflation spurred a strong run in Tokyo, in anticipation of earnings upgrades and a greater political commitment to domestic economic reforms. The Chinese economy was weaker than expected, as the new leadership sought to curb speculation in the property market and dampened hopes of further stimulus. This had knock-on effects in the commodities markets, where prices generally fell. Whilst falling costs are beneficial for users of commodities, they are less so for producers, which include many emerging economies which, as a group, had a weak half year. Europe was another weak spot, although there are hopes that the low point of the recession in the Eurozone may have passed. In the UK, the economy appears to be starting a modest recovery from a base which (after revision to official growth figures) was less weak than originally reported. Following the change of Bank of England Governor, investors are watching closely for signs of a more pro-active monetary policy to help support the recovery.

During May, the US Federal Reserve Chairman indicated that, if signs of improvement in the US economy persisted, the Fed would look to reduce the pace of monetary stimulus. This was read in certain quarters as threatening imminent official rate rises, leading to sharp rises in government bond yields and weakness in equity markets (which would be vulnerable if tightening occurred before economic growth was firmly-enough established to withstand it). The frenetic nature of some reactions appeared to owe more to overstretched bond markets (or over-leveraged speculative positions) and a need for equities to draw breath after a strong rally than to any fundamental shift in official policy attitudes. It should be a source of comfort if the need for exceptional central bank support wanes, since that is likely to follow an improvement in economic growth.

Portfolio Changes

There were two changes to the list of external managers during the period. As announced in the Annual Report, Matthews International Capital Management was appointed in February for a mandate based on their Asia Dividend Strategy, covering the Asia Pacific region, including Japan. They replaced Comgest, whose remit had excluded Japan.

In June, Heronbridge Investment Management was appointed to manage a UK portfolio in accordance with their value-based approach focusing on growing the intrinsic value of a portfolio of soundly financed cash-generative companies with established franchises. They replaced NewSmith, who had managed a portfolio for Witan since 2010.

In addition, there was an increase in the funds allocated to Lansdowne Partners, who had been appointed in December 2012.

Page 5 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

INTERIM MANAGEMENT REPORT, continued

A decision was made to increase Witan's exposure to the Japanese market from 1% to 7% during the period. We are selective in making decisions to override the asset allocation which results from our Managers' stock-picking decisions but the radical approach adopted by the Japanese authorities to boost their economy appeared to have a better prospect of success than investors (scarred by 20 years of poor Japanese economic performance) were willing to give credit for. The increase in weighting was partly achieved by the Matthews appointment referred to. This was supplemented in the second quarter by a purchase of Japan Equity Index futures and by holdings in the Polar Japan Growth and Polar Japan Alpha funds, managed by the experienced team at Polar Capital.

Investment Performance

The NAV total return (taking debt at fair value) was +16.7%, more than 5% ahead of the 11.4% total return on our benchmark. Taking debt at par value, the NAV total return was 15.8%. The share price total return was 19.2 %, boosted by a narrowing in the discount. Eight of the 10 external managers who were in place for the full six month period outperformed their respective benchmarks. The directly held investment portfolio also outperformed, buoyed by a rerating of the listed private equity holdings (particularly 3i Group). Profits were taken in a number of positions, notably 3i Group and Electra Private Equity's convertible bonds, leading to a reduction in the size of the direct portfolio during the half year.

Gearing

The Company has structural borrowings of £110 million, amounting to 8.8% of net assets, in addition to a short term £50m multi-currency facility, on which the drawn balance was £42m at the end of June. Taking account of the face value of equity index futures and of cash balances, at the end of June gearing was 11.7%.

Expenses

General expenses were 8% higher than the figure for the first half of 2012. The Board ensures careful monitoring and control of expenses, to see that value for money is obtained for shareholders. Base management fees were 9% higher than those in the first half of 2012, owing to higher asset levels. Performance fees accrued for the period were £3.2m, up from £1.6m in the 2012 interim report.

The ongoing charges figure ("OCF") for the six months was 0.60%, compared with 0.52% for the first half of 2012, with the higher level of net assets (23% higher than in the year-earlier period) reducing the figure, offset by higher performance fees. Without performance fees, the OCF was 0.33% for the first half of 2013, down from 0.37% for the same period in 2012. These figures apply for the first half and are not annualised. The OCF for the whole of 2012 was 0.97% including performance fees and 0.69% excluding performance fees.

Investment Income

Investment income rose 9%, reflecting changes within the portfolio as well as dividend growth. With the rise in market levels, investment management costs have also risen, although other costs were well contained. The Company's revenue earnings per share rose 11.1% compared with the first half of 2012, to 9.03p. Although it is appropriate to be cautious in extrapolating such figures, our revenue earnings per share appear on target to surpass last year's 14.50p.

Page 6 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

INTERIM MANAGEMENT REPORT, continued

Dividend

A second interim dividend of 3.3p is declared, to be paid on 18 September to shareholders on the register on 23 August 2013. A first interim dividend of 3.3p was paid on 18 June 2013.

The Company announced in March 2013 that in future dividends would be paid quarterly. The first three payments for 2013 (in June, September and December) will, in the absence of unforeseen circumstances, be paid at a rate of 3.3p, being one quarter of the full year payment for 2012 (13.2p). The fourth payment (in March 2014) will be a balancing amount, reflecting the difference between the payment decided for the full year and the three quarterly dividends which will by then have been paid. The full year's dividend is intended to be consistent with the Company's policy to increase the total annual dividend in real terms, ahead of inflation.

The Company has increased its dividend every year since 1974 (a 38 year record of increases), recognising the importance for its investors of a reliable and growing income.

Share Buy-backs

The Company has continued with its policy of repurchasing shares at a discount, with the objective of achieving a sustainable discount of 10% or less (relative to the net asset value excluding income, taking debt at market value). The average discount in 2013 on this basis has been 9.0%. During the period, 0.4% of the shares were purchased for cancellation, adding 0.23p (approximately 0.04%) to the net asset value per share.  The discount narrowed during the period, helped by more positive stock market sentiment in general as well as Witan's strong investment performance. In a change from past practice, the Company continued to buy back shares at discounts well below 10%, reflecting the Board's wish to encourage the trend of a narrowing discount, although it is recognised that market conditions and performance will also have a material influence.

Audit Committee membership

Catherine Claydon has been appointed as a member of the Audit Committee following the retirement of Andrew Bruce from the Board in April.

Outlook  

Equities have risen against a backdrop of a continuing sub-par recovery, with emerging economies and Europe falling short of forecasts. A number of potentially destabilising events have been downplayed, including recession in Europe, the Cyprus crisis and fiscal tightening in the US. In recent years any of these would have severely tested equity market confidence. Quite simply, investors' fear of a relapse into recession seems to have reduced, allowing a greater focus on better news from the US, Japanese and UK economies.

The two principal risks to the new-found confidence of equity investors are a significant rise in bond yields (putting pressure on valuations and raising the cost of debt) and disappointment of hopes for economic growth (undermining earnings). The protective buffer of cheap valuations has been eroded by the recovery in equity prices. Although equities appear cheaply rated relative to deposit rates and yields on government bonds, on most assessments the latter are well below normal levels - appearing cheap compared with something which is expensive offers limited protection if the market starts to sell bonds rather than buying equities.

Page 7 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

INTERIM MANAGEMENT REPORT, continued

The warning from the Fed that it might start to reduce policy stimulus in the coming year was based on continued economic improvement in the US but the suggestion helped to catalyse a rise in bond yields (although they remain lower in many markets than at any time before 2012). This warning may prove healthy, if it flushes out leverage and speculation in government bond markets and prevents bubble valuations spreading to equity markets. The near-term worry is that US monetary tightening (even if it is more like reducing pressure on the accelerator than stepping on the brakes) would prove too much for a fragile recovery to bear, leading to faltering growth in 2014. A further local concern in Europe is that after the German election in September some problems which have been shelved will re-emerge, leading to a further financial crisis in the Eurozone. Set against these worries, other central banks (notably Japan but possibly also the UK) are likelier to increase economic stimulus than to reduce it.

Although it will be a tricky balancing act, central banks seem likely to seek to reduce monetary stimulus at a pace which economies are able to absorb. Indeed, if anything it appears likelier that inflation will be allowed to rise above target than that growth will be crushed by tighter policy. Bond yields below the rate of inflation appear unsustainable beyond the near-term period of convalescence from the aftermath of the debt boom. Equities, while no longer at bargain levels, offer earnings yields that appear reasonable by historical standards and ought to reward the patient and selective investor.

For and on behalf of the Board

Harry Henderson                                              Andrew Bell

Chairman                                                          Chief Executive Officer

13 August 2013                                                 13 August 2013

Page 8 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

REGULATORY DISCLOSURES

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or performance of the Company during the period. Details of related party transactions are contained in the Company's Annual Report for the year ended 31 December 2012.

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

• the appropriateness of the corporate objective and strategy

• operational and regulatory risks.

Information on these risks is given in the Business Review and in the Notes to the Financial Statements in the Company's Annual Report for the year ended 31 December 2012.

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 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 and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

For and on behalf of the Board

Harry Henderson

Chairman

13 August 2013

Page 9 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Investment Managers:  Assets under Management and Investment Performance as at 30 June 2013

Performance For the half year ended 30 June 2013 and from inception to 30 June 2013 Investment Manager	Inception date	% of Witan's funds under management at 30.06.13*	Performance in the period 01.01.13 to 30.06.13 (%)	Benchmark Performance 01.01.13 to 30.06.13 (%)	Performance in the period since inception to 30.06.13 (%) (annualised)	Benchmark Performance since inception to 30.06.13 (%) (annualised)
Artemis Investment Management (UK)	06.05.08	9.2	+14.5	+8.5	+10.6	+4.5
Lindsell Train (UK)	01.09.10	12.4	+18.5	+8.5	+21.0	+11.1
Heronbridge (UK)	17.06.13	5.3	n/a	n/a	-0.4	-1.6
Henderson Global Investors (UK smaller)	31.08.04	1.9	+14.9	+13.2	+14.3	+12.2
Southeastern Asset Management (Global)	30.09.04	8.5	+18.9	+13.9	+7.5	+9.1
MFS International (Global)	30.09.04	8.8	+18.2	+13.9	+12.3	+9.1
Thomas White International (Global)	28.09.07	6.9	+11.8	+13.9	+6.5	+5.7
Veritas Asset Management (Global)	11.11.10	12.1	+17.0	+14.0	+13.0	+9.3
Lansdowne Partners (Global)	14.12.12	4.8	+29.6	+14.8	+29.9	+14.3
Marathon Asset Management (Pan-Europe)	23.07.10	7.7	+13.4	+9.9	+10.5	+8.3
Matthews International Capital Management  (Asia Pacific cum Japan)	20.02.13	9.5	n/a	n/a	+4.4	-1.4
Trilogy Global Advisors (Emerging Markets)	09.12.10	3.7	-5.2	-2.9	-6.4	-2.3
Witan Direct Holdings	19.03.10	7.8	+20.7	+11.4	+8.7	+7.0
Japan (open-ended funds)	21.05.13	1.4	n/a	n/a	-10.5	-7.9

Notes:

*	The figures exclude the cash balances held centrally by Witan and the unquoted investments.
Source:  The WM Company.

Page 10 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Consolidated Statement of Comprehensive Income

	(Unaudited)   Half year ended   30 June 2013			(Unaudited)   Half year ended   30 June 2012			(Audited) Year ended 31 December 2012
	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	21,556	-	21,556	19,718	-	19,718	35,583	-	35,583
Other income	810	-	810	776	-	776	1,467	-	1,467
Gains on investments    held at fair value through profit    or loss (Note 2)	-	164,627	164,627	-	37,651	37,651	-	130,213	130,213
	----------	----------	----------	----------	----------	----------	----------	----------	----------
Total income	22,366	164,627	186,993	20,494	37,651	58,145	37,050	130,213	167,263
Expenses
Management and performance    fees	(457)	(4,619)	(5,076)	(420)	(2,810)	(3,230)	(845)	(5,465)	(6,310)
Other expenses	(2,753)	(51)	(2,804)	(2,548)	(51)	(2,599)	(4,764)	(101)	(4,865)
	----------	----------	----------	----------	----------	----------	----------	----------	----------
Profit before finance costs    and taxation	19,156	159,957	179,113	17,526	34,790	52,316	31,441	124,647	156,088
Finance costs	(1,086)	(3,132)	(4,218)	(1,073)	(3,092)	(4,165)	(2,115)	(6,092)	(8,207)
	---------	---------	---------	---------	---------	---------	---------	---------	---------
Profit before taxation	18,070	156,825	174,895	16,453	31,698	48,151	29,326	118,555	147,881
Taxation	(950)	-	(950)	(840)	-	(840)	(1,603)	-	(1,603)
	----------	----------	----------	----------	----------	----------	----------	----------	----------
Profit attributable to equity holders of the parent company	17,120	156,825	173,945	15,613	31,698	47,311	27,723	118,555	146,278
	======	======	======	======	======	======	======	======	======
Earnings per ordinary share (Note 3)	9.03p	82.70p	91.73p	8.13p	16.52p	24.65p	14.50p	62.02p	76.52p
	======	======	======	======	======	======	======	======	======

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.  All items in the above statement derive from continuing operations.

The Group does not have any Other Comprehensive Income and hence the total profit for the period, as disclosed above, is the same as the Group's Total Comprehensive Income.

All income is attributable to the equity holders of Witan Investment Trust plc, the parent company.  There are no minority interests.

Page 11 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Consolidated Statement of Changes in Equity

			(Unaudited) Half year ended 30 June 2013
	Note	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2012		47,520	16,237	46,306	938,708	57,076	1,105,847
Total comprehensive income:   Profit for the period		-	-	-	156,825	17,120	173,945
Transactions with owners,   recorded directly to equity:   Ordinary dividend paid		-	-	-	-	(19,916)	(19,916)
Buy-backs of ordinary shares	5	(183)	-	183	(4,221)	-	(4,221)
		----------	-----------	----------	-------------	-----------	------------
At 30 June 2013		47,337	16,237	46,489	1,091,312	54,280	1,255,655
		======	======	======	========	======	=======

			(Unaudited) Half year ended 30 June 2012
	Note	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2011		48,092	16,237	45,734	830,930	53,356	994,349
Total comprehensive income:  Profit for the period		-	-	-	31,698	15,613	47,311
Transactions with owners,   recorded directly to equity:   Ordinary dividend paid		-	-	-	-	(12,589)	(12,589)
Buy-backs of ordinary shares	5	(370)	-	370	(6,872)	-	(6,872)
		----------	-----------	----------	-------------	-----------	------------
At 30 June 2012		47,722	16,237	46,104	855,756	56,380	1,022,199
		======	======	======	========	======	=======

			(Audited) Year ended 31 December 2012
	Note	Ordinary share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2011		48,092	16,237	45,734	830,930	53,356	994,349
Total comprehensive income:  Profit for the year		-	-	-	118,555	27,723	146,278
Transactions with owners,   recorded directly to equity:   Ordinary dividends paid		-	-	-	-	(24,003)	(24,003)
Buy-backs of ordinary shares	5	(572)	-	572	(10,777)	-	(10,777)
		------------	------------	------------	-------------	---------	------------
At 31 December 2012		47,520	16,237	46,306	938,708	57,076	1,105,847
		=======	======	=======	========	=====	=======

Page 12 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Consolidated Balance Sheet

	(Unaudited) 30 June  2013 £'000	(Unaudited) 30 June 2012 £'000	(Audited) 31 December 2012 £'000
Non current assets
Investments held at fair value through profit or loss	1,359,163	1,107,068	1,202,076
	--------------	--------------	-------------
Current assets
Other receivables	10,692	13,393	4,549
Cash and cash equivalents	55,658	38,947	36,420
	--------------	--------------	-------------
	66,350	52,340	40,969
	--------------	--------------	-------------
Total assets	1,425,513	1,159,408	1,243,045
	--------------	--------------	-------------
Current liabilities
Other payables	(17,508)	(11,910)	(5,882)
Bank loan	(42,000)	(15,000)	(21,000)
	--------------	--------------	-------------
	(59,508)	(26,910)	(26,882)
	--------------	--------------	-------------
Total assets less current liabilities	1,366,005	1,132,498	1,216,163
	--------------	--------------	--------------
Non current liabilities
At amortised cost:
8½ per cent. Debenture Stock 2016	(44,586)	(44,589)	(44,587)
6.125 per cent. Secured Bonds due 2025	(63,209)	(63,155)	(63,174)
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)
	--------------	--------------	--------------
	(110,350)	(110,299)	(110,316)
	--------------	--------------	--------------
Net assets	1,255,655	1,022,199	1,105,847
	========	========	========
Equity attributable to equity holders
Ordinary share capital (Note 5)	47,337	47,722	47,520
Share premium account	16,237	16,237	16,237
Capital redemption reserve	46,489	46,104	46,306
Retained earnings:
Other capital reserves	1,091,312	855,756	938,708
Revenue reserve	54,280	56,380	57,076
	--------------	--------------	-------------
Total equity	1,255,655	1,022,199	1,105,847
	========	========	========
Net asset value per ordinary share (Note 6)	663.2p	535.5p	581.8p
	========	========	========

Page 13 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Consolidated Cash Flow Statement

	(Unaudited) Half Year ended 30 June 2013 £'000	(Unaudited) Half Year ended 30 June 2012 £'000	(Audited) Year ended 31 December 2012 £'000
Operating activities
Profit before taxation	174,895	48,151	147,881
Interest paid	4,065	4,087	7,995
Gains on investments held at fair value through profit or loss	(164,627)	(37,651)	(130,213)
Net sales of investments held at fair value through profit or loss	13,009	12,577	10,913
(Increase)/decrease in other receivables	(682)	(780)	467
Increase in other payables	3,153	1,349	598
Scrip dividends included in investment income	(558)	(708)	(1,136)
Net (loss)/gain from futures contracts	(1,904)	(167)	2,458
	-----------	-----------	-----------
Net cash inflow from operating    activities before interest and taxation	27,351	26,858	38,963
Interest paid	(4,065)	(4,087)	(7,995)
Amortisation of debt issue costs	34	36	53
Tax on overseas income	(1,023)	(1,016)	(1,651)
	----------	----------	------------
Net cash inflow from operating activities	22,297	21,791	29,370
	----------	----------	------------
Financing activities
Equity dividends paid	(19,916)	(12,589)	(24,003)
Buy-backs of ordinary shares	(4,300)	(6,720)	(10,899)
Drawdown of bank loans	21,000	-	6,000
	-----------	-----------	------------
Net cash outflow from financing activities	(3,216)	(19,309)	(28,902)
	-----------	-----------	------------
Increase in cash and cash equivalents	19,081	2,482	468
Cash and cash equivalents at the start of the period	36,420	37,150	37,150
Effect of foreign exchange rate changes	157	(685)	(1,198)
	------------	------------	------------
Cash and cash equivalents at the end of the period	55,658	38,947	36,420
	=======	=======	=======

Page 14 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Notes to the Financial Statements

1	Basis of preparation The condensed set of financial statements for the half year ended 30 June 2013 has been prepared on the basis of the accounting policies set out in the consolidated financial statements for the year ended 31 December 2012.
2	Transaction costs The gains on investments held at fair value through profit or loss include purchase transaction costs of £1,277,000* (half year ended 30 June 2012: £515,000; year ended 31 December 2012: £865,000) and sale transaction costs of £610,000* (half year ended 30 June 2012: £196,000; year ended 31 December 2012: £411,000).  The purchase transaction costs comprise mainly stamp duty and commissions.  The sale transaction costs comprise mainly commissions. * includes manager transition costs
3	Earnings/(loss) per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of £173,945,000 (half year ended 30 June 2012: £47,311,000; year ended 31 December 2012: £146,278,000) and on 189,628,759 ordinary shares (half year ended 30 June 2012: 191,933,781; year ended 31 December 2012: 191,174,313), 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 2013 £'000	(Unaudited) Half year ended 30 June 2012 £'000	(Audited) Year ended 31 December 2012 £'000
	Net revenue profit	17,120	15,613	27,723
	Net capital profit	156,825	31,698	118,555
		--------------	--------------	--------------
	Net total profit	173,945	47,311	146,278
		========	========	========
	Weighted average number of ordinary shares in issue during the period	189,628,759	191,933,781	191,174,313
		Pence	Pence	Pence
	Revenue earnings per ordinary share	9.03	8.13	14.50
	Capital earnings per ordinary share	82.70	16.52	62.02
		--------------	--------------	--------------
	Total earnings per ordinary share	91.73	24.65	76.52
		========	========	========
4	Interim dividend The directors have declared a second interim dividend of 3.3p per ordinary share, payable on 18 September 2013 to shareholders registered on 23 August 2013.  The shares will be quoted ex-dividend on 21 August 2013.  A first interim dividend of 3.3p was paid on 18 June 2013.  In 2012, an interim dividend of 6.0p, in respect of the six months to 30 June 2012, was paid on 14 September 2012.

Page 15 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Notes to the Financial Statements (continued)

5	Ordinary share capital At 30 June 2013 there were 189,346,000 ordinary shares in issue (30 June 2012: 190,889,000; 31 December 2012: 190,079,500). During the half year ended 30 June 2013 the Company bought 733,500 of its own issued ordinary shares in the market for cancellation (half year ended 30 June 2012: 1,478,000; year ended 31 December 2012: 2,287,500). The cost of the share buy-backs, including stamp duty, amounted to £4,221,000 (half year ended 30 June 2012: £6,872,000; year ended 31 December 2012: £10,777,000).
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 £1,255,655,000 (30 June 2012: £1,022,199,000; 31 December 2012: £1,105,847,000) and on 189,346,000 (30 June 2012: 190,889,000; 31 December 2012: 190,079,500) ordinary shares, being the number of ordinary shares in issue at the period end.
7	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.
8	Segment Reporting As detailed in the Company's Annual Report for the year ended 31 December 2012, 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:  its activity as an investment trust, which is the business of the parent company, and the business of the subsidiary company, Witan Investment Services Limited, which provides management services within the United Kingdom only.  The investment trust is managed by reference to a geographical benchmark, as detailed on page 2 above; the geographical allocation of the portfolio, as at 30 June 2013, is set out on page 3 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 2013		Half year ended 30 June 2012		Year ended 31 December 2012
		Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000	Investment trust £'000	Management services £'000
	Revenue from external customers	21,735*	631	19,943*	551	35,893*	1,157
	Carrying amount of assets	1,254,649	1,006	1,021,315	884	1,104,921	926
	*The investment and other income of the parent company.
9	Half year accounts The condensed set of financial statements, forming the half year accounts, has been neither audited nor reviewed by the Company's auditors.

Page 16 of 16

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2013

Notes to the Financial Statements (continued)

10	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 2013 and 30 June 2012 has been neither audited nor reviewed by the auditors. The figures and financial information for the year ended 31 December 2012 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 2012 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 2013 The financial report for the half year ended 30 June 2013 will be filed with the UK Listing Authority by 31 August 2013 and will be made available on the Company's website.  Printed copies will be sent to shareholders in September 2013 and will be available thereafter from the Secretary at the Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA. A video interview with Andrew Bell, Chief Executive Officer of Witan Investment Trust, discussing the six months under review can be viewed on the Company's website at www.witan.com/content/witans-half-year-update-video

For further information please contact:

Andrew Bell

Chief Executive Officer

Witan Investment Trust plc

Telephone:  [phone]

James Frost

Marketing Director

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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