Interim Results

Witan Investment Trust PLC 02 August 2006 WITAN INVESTMENT TRUST PLC 2 August 2006 WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Financial Highlights % change since (Audited) (Unaudited) 31 December (Unaudited) 31 December 2005 30 June 2006 2005 30 June 2005 in pence in pence in pence Share price 416.25 +0.5 363.25 414.00 Net asset value per ordinary share (Note 1) 470.28 +2.5 405.33 458.91 Discount 11.5% 10.4% 9.8% Gearing (Note 2) 4.7% (1.6%) 4.4% (Audited) (Unaudited) % change since (Unaudited) Year ended Half year ended 30 June Half year ended 31 December 2005 30 June 2006 2005 30 June 2005 in pence in pence in pence Revenue earnings per ordinary share 5.95 +15.8 5.14 8.96 Dividends per ordinary share 3.90 +2.6 3.80 8.80 Notes: 1. The net asset value per ordinary share shown above is calculated by deducting from the net assets less current liabilities of the Group the preference shares, debenture stock and secured bonds (together 'the prior charges') at their market (or fair) values rather than at their par (or book) values, as is now regarded as best practice. The financial statements on pages 6 to 9 are prepared using their par values, in accordance with IFRS. Because in aggregate the market values of the prior charges are more than their par values, the net asset value per ordinary share shown above is less than that shown on page 8. 2. Defined here as the total market value of the investments less shareholders' funds as a percentage of shareholders' funds. WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 2 of 12 Performance Total returns to 30 June 2006 1 year 3 years 5 years % return % return % return Share price (Note 1) 17.1 59.8 7.7 Net asset value per ordinary share (Note 2) 18.0 56.3 9.1 FTSE All-Share Index (Note 1) 19.7 66.1 27.8 FTSE World (ex UK) Index 14.3 46.0 4.0 (Note 1) Capital returns to 30 June 2006 1 year 3 years 5 years % return % return % return Share price (Note 1) 14.6 47.6 (5.9) Net asset value per ordinary share (Note 2) 15.7 46.3 (2.3) FTSE All-Share Index 15.9 50.5 8.8 (Note 1) FTSE World (ex UK) Index 12.0 37.4 (5.8) (Note 1) Benchmark (Note 1) 14.0 (Note 3) (Note 3) Notes: 1. Source: Datastream. 2. The percentage returns shown above are based on figures for the net asset value per share as at the relevant dates, sourced from Fundamental Data for the Association of Investment Trust Companies. Figures calculated in accordance with IFRS are not available for the three and five year periods. 3. The benchmark comprises the FTSE All-Share Index and the FTSE World (ex UK) Index in the proportion of 50 : 50 (capital change only). The benchmark in this proportion has applied only since 1 September 2004. Dividend An interim dividend of 3.90p (2005: 3.80p) per ordinary share will be paid on 8 September 2006 to shareholders registered on 18 August 2006. The shares will be quoted ex-dividend on 16 August 2006. WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 3 of 12 Chairman's Statement The share price at 30 June 2006 stood at 416 pence, virtually unchanged since the beginning of the year and 141/2% above that of twelve months ago. The net asset value (NAV) has outperformed its benchmark, again helped by share buy-backs. Your Board's commitment to a progressive buy-back policy has meant that, despite day to day fluctuations, the shares have traded consistently around a 10% discount to NAV and this has given investors more confidence to hold Witan shares over a full cycle. It is worth dwelling for a moment on the subject of Witan's benchmark (50% FTSE All-Share Index and 50% FTSE World (ex UK) Index). Individual benchmarks are clearly necessary as yardsticks to measure the performance of our managers, each of whom has their own for that purpose. On the other hand the Witan benchmark, backed by a progressive dividend policy, represents in the Board's view the best way of expressing the Trust's objective of creating wealth through equity investment, balancing capital and income growth. The asset allocation of the Trust is not constrained by this benchmark but, at any one time, will reflect the Board's judgement as to how to achieve the long term objective. The benchmark is, therefore, a tool by which the Board and shareholders can measure progress towards achieving that goal. Since the beginning of the year UK and European markets have risen by more than 5%, Asian markets are unchanged and Japan and the US have both fallen by around 5%. Less developed markets have fallen by between 10% and 25%. Bearing in mind that the upturn in world equity markets was into its fourth year, your Board decided to reduce the Trust's gearing in February. The ensuing turmoil has proved this to be a good decision which, combined with little exposure to fringe markets, has proved to be a positive, at least in comparison to our peer group. Witan Investment Services (WIS) was appointed by the Board of Tribune Investment Trust plc to take responsibility for the marketing of the trust. We are confident that WIS will be able to grow its business in acting for third party trusts. Your Board increased the interim dividend from 3.80p per share to 3.90p per ordinary share, in line with inflation. WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 4 of 12 Chief Executive Officer's Statement The net asset value per share of the Trust rose 2.5% in the six months to 30 June 2006, reflecting the rise in world equity markets in the first four months, partially reversed by the setbacks in May and June. Over the half year the FTSE All-Share Index rose by 4.2% while the FTSE World (ex UK) Index fell by 3.0%. Since the appointment of new investment managers, the net asset value performance is 2.3% ahead of the benchmark, primarily due to the beneficial impact of share buy-backs. A breakdown of the individual managers' performance over the six months to end June is shown in the table on page 5. Given the active managers' investment styles, it was expected that there would be significant departures from their benchmark indices. In the long term your Board expects that these deviations will prove to be positive, although clearly over shorter periods that can go in both directions, as can be seen from the numbers over the six months to the end of June. The Henderson UK Smaller Companies team, your Japanese managers, Brandes, and MFS, one of the global managers, outperformed by a significant amount. The UK mainstream portfolio continues to outperform by small increments and, although the North American portfolio has in the last six months marginally underperformed, since their appointment the managers are performing in line with expectations. The performance of the managers in the Pacific (ex Japan) and in Europe along with that of Southeastern is still disappointing, but should be viewed in a longer term context. MFS's result is evidence of how quickly longer term performance of genuinely active managers can change. Your Board meets regularly with all Witan's managers, and the underperforming areas have had particular scrutiny in recent months. At this stage, we have no reason to believe that the skills of these managers or their specific approach to markets will not deliver the longer term success that has characterised their investment management in the past. Your Board remains resolute in its determination to employ only the best fund managers for Witan. Equity markets have been fairly turbulent in May and June with falls in excess of 10% commonplace. In the Annual Report both the Chairman and myself referred to the low volatility that was evident in equity markets at that time and indicated that a rise in volatility could be expected. That is what is happening now. With interest rates around the world on the increase, we can expect markets to remain nervous but nevertheless, relative to other assets, equities are still attractive. WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 5 of 12 Performance of the Investment Managers for the period 1 January 2006 to 30 June 2006 Performance Benchmark % of Witan's Performance in Benchmark in the period Performance Value of Funds Assets under the period Performance since inception since inception under Management at 01.01.06 to 01.01.06 to 30.09.04 to 30.09.04 to Investment Manager Management 30.06.06* 30.06.06 30.06.06 30.06.06 30.06.06 £m at 30.06.06 (%) (%) (% annualised) (% annualised) Henderson Global Investors (UK) 531.6 39.9 +6.3 +6.2 +20.5 +20.2 Henderson Global Investors (UK smaller) 69.1 5.2 +9.6 +6.8 +25.5 +25.7 Southeastern Asset Management 194.7 14.6 -4.0 -0.9 +10.6 +16.7 MFS International 140.4 10.5 +2.7 -0.9 +17.9 +16.7 Wellington Management Company 133.8 10.0 +4.3 +6.5 +19.5 +25.2 Henderson Global Investors (USA) 123.7 9.3 -4.6 -4.3 +10.5 +10.2 Brandes Investment Partners 71.9 5.4 -2.8 -5.3 +20.4 +21.7 APS Asset Management 67.6 5.1 -8.9 +0.8 +16.4 +25.5 * excluding cash balances and unquoted investments held centrally by Witan. Source: The WM Company WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 6 of 12 Consolidated Income Statement (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 June 2006 30 June 2005 31 December 2005 Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment income 19,818 - 19,818 20,485 - 20,485 33,463 - 33,463 Other income 3,051 - 3,051 1,958 - 1,958 5,579 - 5,579 Gains on investments held at fair value - 11,103 11,103 - 66,617 66,617 - 229,694 229,694 through profit or loss ------ ------ ------ ------ ------ ------ ------ ------ ------ Total income 22,869 11,103 33,972 22,443 66,617 89,060 39,042 229,694 268,736 ------ ------ ------ ------ ------ ------ ------ ------ ------ Expenses Management fees (233) (1,057) (1,290) (257) (539) (796) (531) (1,649) (2,180) Other expenses (2,385) - (2,385) (2,086) - (2,086) (4,208) - (4,208) ------ ------ ------ ------ ------ ------ ------ ------ ------ Profits before finance costs and taxation 20,251 10,046 30,297 20,100 66,078 86,178 34,303 228,045 262,348 Finance costs (1,316) (3,821) (5,137) (1,308) (3,800) (5,108) (2,613) (7,644) (10,257) ------ ------ ------ ------ ------ ------ ------ ------ ------ Profit before taxation 18,935 6,225 25,160 18,792 62,278 81,070 31,690 220,401 252,091 ------ ------ ------ ------ ------ ------ ------ ------ ------ Taxation (2,454) 1,055 (1,399) (2,196) 1,086 (1,110) (3,688) 1,920 (1,768) ------ ------ ------ ------ ------ ------ ------ ------ ------ Profit for the period 16,481 7,280 23,761 16,596 63,364 79,960 28,002 222,321 250,323 ====== ====== ====== ====== ====== ====== ====== ====== ====== Earnings per ordinary share (note 1) 5.95p 2.63p 8.58p 5.14p 19.61p 24.75p 8.96p 71.16p 80.12p ====== ====== ====== ====== ====== ====== ====== ====== ====== The total columns of this statement represent the Group's Income Statement, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Trust Companies. 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 minority interests. WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 7 of 12 Consolidated Statement of Changes in Equity (Unaudited) Half year ended 30 June 2006 Ordinary Capital Other share capital Share premium redemption capital Retained reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2005 73,747 16,237 20,079 1,232,310 42,544 1,384,917 Profit for the period - - - 7,280 16,481 23,761 Ordinary dividend paid - - - - (14,046) (14,046) Buy-backs of ordinary shares (note (7,780) - 7,780 (131,905) - (131,905) 2) ------------ ------------ ------------ ------------ ------------ ------------ Balance at 30 June 2006 65,967 16,237 27,859 1,107,685 44,979 1,262,727 ======= ======= ======= ======= ======= ======= (Unaudited) Half year ended 30 June 2005 Ordinary Capital Other share Share redemption capital Retained capital premium reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2004 84,736 16,237 9,090 1,170,296 42,280 1,322,639 Profit for the period - - - 63,364 16,596 79,960 Ordinary dividend paid - - - - (16,105) (16,105) Buy-backs of ordinary shares (note (6,933) - 6,933 (97,926) - (97,926) 2) ----------- ----------- ----------- ------------- ------------- ------------- Balance at 30 June 2005 77,803 16,237 16,023 1,135,734 42,771 1,288,568 ======= ======= ======= ======= ======= ======= (Audited) Year ended 31 December 2005 Ordinary Capital Other share Share redemption capital Retained capital premium reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2004 84,736 16,237 9,090 1,170,296 42,280 1,322,639 Profit for the period - - - 222,321 28,002 250,323 Ordinary dividend paid - - - - (27,738) (27,738) Buy-backs of ordinary shares (note (10,989) - 10,989 (160,307) - (160,307) 2) ----------- ----------- ----------- ----------- ----------- ----------- Balance at 31 December 2005 73,747 16,237 20,079 1,232,310 42,544 1,384,917 ======= ======= ======= ======= ======= ======= WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 8 of 12 Consolidated Balance Sheet (Unaudited) (Unaudited) (Audited) 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 1,321,933 1,268,168 1,445,566 ------------- ------------- ------------ Current assets Other receivables 8,884 38,863 4,653 Cash and cash equivalents 90,286 147,669 86,319 ------------- ------------- ------------ 99,170 186,532 90,972 ------------- ------------- ------------ Total assets 1,421,103 1,454,700 1,536,538 ------------ ------------- ------------ Current liabilities Other payables 11,588 19,423 4,873 ------------- ------------- ------------ Total assets less current liabilities 1,409,515 1,435,277 1,531,665 ------------- ------------- ------------- Non current liabilities 8 1/2 per cent Debenture Stock 2016 45,779 45,779 45,779 6.125 per cent Secured Bonds due 2025 98,454 98,375 98,414 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 ------------- ------------- ------------- 146,788 146,709 146,748 ------------- ------------- ------------- Net assets 1,262,727 1,288,568 1,384,917 ======= ======= ======= Equity attributable to equity holders Ordinary share capital 65,967 77,803 73,747 Share premium 16,237 16,237 16,237 Capital redemption reserve 27,859 16,023 20,079 Other capital reserves 1,107,685 1,135,734 1,232,310 Retained earnings 44,979 42,771 42,544 ------------ ------------ ------------ Total equity 1,262,727 1,288,568 1,384,917 ======== ======== ======== Net asset value per ordinary share (note 6) 478.5p 414.0p 469.5p ======== ======== ======== WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 9 of 12 Consolidated Cash Flow Statement (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Operating activities Profit before taxation 25,160 81,070 252,091 Interest paid 5,094 5,072 10,131 Gains on investments held at fair value through profit or (11,103) (66,617) (229,694) loss Net sales of investments held at fair value through profit 136,329 167,580 173,175 or loss Increase in other receivables (1,316) (862) (480) Increase/(decrease) in other payables 197 (477) 142 Loss on debenture buy-back - 51 51 Increase in unrealised gains on derivatives 45 11 14 Cash inflows from future contracts 1,190 841 1,315 Scrip dividends included in investment income (240) - (509) --------------- ------------ ------------ Net cash inflow from operating activities before interest and taxation 155,356 186,669 206,236 Interest paid (5,094) (5,072) (10,131) Amortisation of debt issue costs 40 40 79 Tax on overseas income (1,615) (1,316) (2,032) ------------ ------------ ------------ Net cash inflow from operating activities 148,687 180,321 194,152 ------------ ------------ ------------ Financing activities Equity dividend paid (14,046) (16,105) (27,738) Buy-backs of ordinary shares (129,720) (96,427) (160,307) Repurchase of debt - (221) (221) ------------ ------------ ------------ Net cash outflow from financing (143,766) (112,753) (188,266) ------------ ------------ ------------ Increase in cash and cash equivalents 4,921 67,568 5,886 Cash and cash equivalents at the start of the period 86,319 79,568 79,568 Effect of foreign exchange rate changes (954) 533 865 ------------ ------------ ------------ Cash and cash equivalents at the end of the period 90,286 147,669 86,319 ======= ======= ======= The gains on investments held at fair value through profit or loss include purchase transaction costs of £947,000 (half year ended 30 June 2005: £1,685,000; year ended 31 December 2005: £2,452,000) and sales transaction costs of £500,000 (half year ended 30 June 2005: £2,090,000; year ended 31 December 2005: £2,447,000). WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 10 of 12 Notes to the Accounts 1 Earnings per ordinary share The earnings per ordinary share figure is based on the net profit for the half year of 23,761,000 (half year ended 30 June 2005: £79,960,000; year ended 31 December 2005: £250,323,000) and on 276,850,937 ordinary shares (half year ended 30 June 2005: 323,011,148; year ended 31 December 2005: 312,435,597), 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) (Unaudited) Half year ended Half year ended (Audited) 30 June 30 June Year ended 2006 2005 31 December 2005 £'000 £'000 £'000 Net revenue profit 16,481 16,596 28,002 Net capital profit 7,280 63,364 222,321 ---------- --------- ----------- Net total profit 23,761 79,960 250,323 ====== ====== ====== Weighted average number of ordinary shares in issue during the period 276,850,937 323,011,148 312,435,597 pence pence pence Revenue earnings per ordinary share 5.95 5.14 8.96 Capital earnings per ordinary share 2.63 19.61 71.16 --------- --------- --------- Total earnings per ordinary share 8.58 24.75 80.12 ===== ===== ===== WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 11 of 12 Notes to the Accounts (continued) 2 Ordinary share capital At 30 June 2006 there were 263,869,887 ordinary shares in issue (30 June 2005: 311,211,679; 31 December 2005: 294,988,151). During the half year ended 30 June 2006 the Company bought 31,118,264 of its own issued ordinary shares in the market for cancellation (half year ended 30 June 2005: 27,733,106; year ended 31 December 2005: 43,956,634). The cost of the share buy-backs, including stamp duty, amounted to £131,905,000 (half year ended 30 June 2005: £97,926,000; year ended 31 December 2005: £160,307,000). 3 Interim dividend The directors have declared an interim dividend of 3.90p (2005: 3.80p) per ordinary share, payable on 8 September 2006 to shareholders registered on 18 August 2006. The shares will be quoted ex-dividend on 16 August 2006. 4 Interim accounts The interim accounts have been neither audited nor reviewed by the auditors. 5 Comparative information The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half years ended 30 June 2006 and 30 June 2005 has not been audited. The information for the year ended 31 December 2005 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 31 December 2005 have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under either section 237(2) or section 237(3) of the Companies Act 1985. 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 £1,262,727,000 (half year ended 30 June 2005: £1,288,568,000; year ended 31 December 2005: £1,384,917,000) and on 263,869,887 (half year ended 30 June 2005: 311,211,679; year ended 31 December 2005: 294,988,151) 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 and operates in the United Kingdom. 8 Interim report The interim report will be sent to shareholders in August 2006 and copies will be available thereafter from the Secretary at the Company's registered office, 4 Broadgate, London EC2M 2DA. - ENDS - WITAN INVESTMENT TRUST PLC Unaudited Interim Results for the Half Year ended 30 June 2006 Page 12 of 12 For further information please contact: Jim Horsburgh Witan Investment Trust plc Tel: 020 7227 9779 James Budden Witan Investment Trust plc Tel: 020 7227 9772 Eleanor Mitchell Quill Communications Tel: 020 7758 2240 This information is provided by RNS The company news service from the London Stock Exchange

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