Regulatory Story
Go to market news section View chart   Print
RNS
Witan Investment Trust PLC   -  WTAN   

Half-year Report

Released 07:00 13-Aug-2019

RNS Number : 7905I
Witan Investment Trust PLC
12 August 2019
 

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

HIGHLIGHTS

•     During the first half of 2019, the Company's net asset value ('NAV') total return was 13.5%, 1.4% below the benchmark return of 14.9%

•     The share price total return was 11.7%, as the discount widened from 1.3% at the end of 2018 to 2.9% at the end of June

•     A second interim quarterly dividend of 1.175p per ordinary share will be paid in September. Total dividends paid in respect of the period are 2.35p per ordinary share (2018: 2.1p)

•     10.8m shares (1.2%) were bought into treasury at an average discount of 2.8%

•     Witan has joined the Institutional Investors Group on Climate Change and £20m was invested in a specialist fund which seeks strong returns from efforts to combat or mitigate the effects of climate change

•     Witan's shares were sub-divided on 28 May to improve liquidity for regular savers, with shareholders receiving five new shares in place of each old share

•     £50m long-term debt to be issued after the period end at yield of 2.39% which is a record low for the sector.

FINANCIAL HIGHLIGHTS

 

Key data

 

 

 

(Unaudited)

30 June

 2019

(Audited)

31 December 2018 

Change since

31 December

2018

Share price(1) 

214.0p

194.2p

10.2%

Net asset value per ordinary share(1)(4) (debt at par value)

223.6p

199.0p

12.3%

Net asset value per ordinary share(1)(4) (debt at fair value)

220.4p

196.7p

12.1%

Discount (NAV including income, debt at fair value)(1)(4)

2.9%

1.3%

-

 

Total return performance

 

 

 

 

6 months

 return

%

1 year

 return

%

3 years

return

%

5 years

return

%

Total shareholder return (2)(4)

11.7

0.6

52.0

68.8

Net asset value total return (2)(4)

13.5

2.8

43.0

70.7

Witan benchmark (2)

14.9

6.3

41.2

62.3

FTSE All-Share Index(3)

13.0

0.6

29.5

35.8

FTSE All-World Index(3)

16.4

10.1

48.1

86.0

 

Dividend information

 

 

 

30 June 2019

30 June 2018

Revenue per share(1)

3.42p

3.14p

Dividend per share(1)

2.35p

2.10p

 

(1)

Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

(2)

Source: Morningstar.

(3)

Source: Morningstar.  See also FTSE International for conditions of use (www.ftse.com).

(4)

Alternative performance measures:

The financial statements (on pages 10 to 17) set out the required statutory reporting measures of the Company's financial performance.  In addition, the Board assesses the Company's performance against a range of criteria which are viewed as particularly relevant for investment trusts.  Definition of the terms used and the Witan benchmark are set out in the Half Year Report. 

 

Page 2 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2018

 

 

 

Other financial information

 

(Unaudited)

30 June

2019

(Unaudited)

30 June

2018

(Audited)

31 December

2018

Gearing(4)

11.3%

10.2%

11.6%

Ongoing charges excluding performance fees(4)

0.39%

0.38%

0.75%

Ongoing charges including performance fees (4)

0.46%

0.42%

0.83%

 

(1)

Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

(2)

Source: Morningstar

(3)

Source: Morningstar.  See also FTSE International for conditions of use (www.ftse.com).

(4)

Alternative performance measures (see page 1)

 

PORTFOLIO INFORMATION

 

Portfolio by geographical classification as at 30 June 2019

%

United Kingdom

29

Europe

21

North America

20

Asia Pacific

14

Japan

4

Other

12

 

Sector breakdown of the portfolio as at 30 June 2019(1)

%

Financials

16.7

Industrials

15.5

Consumer Services

15.1

Consumer Goods

13.2

Collective Investment Schemes

10.6

Technology

9.2

Health Care

6.1

Oil & Gas

4.5

Basic Materials

2.9

Telecommunications

1.9

Utilities

1.4

Futures

0.6

Cash

2.3

 

Company size breakdown of the portfolio as at 30 June 2019(1)

%

Large Cap

68

Mid Cap

14

Small Cap

8

Investment Companies

10

 

Source: BNP Paribas Securities Services

(1) Figures may not sum due to roundings

 

 

 

Page 3 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

INTERIM MANAGEMENT REPORT

 

Market background

Equity markets have more than reversed 2018's weakness, with first half returns led by the US (+19%) and Europe (+18%). The UK market rose 13%, despite continued uncertainty over Brexit and a changeable political backdrop, although UK smaller companies lagged with a rise of 9%, reflecting domestic concerns. Japan was a relative laggard, up just 8%, affected by worries about slower global economic growth and the unresolved trade dispute between the US and China.

One reason equity markets had been weak in 2018 was decelerating economic growth worldwide, at a time when the US Federal Reserve and other central banks were beginning to tighten monetary policy. Although there has been little improvement in growth in 2019, forecasts have stabilised at low levels, while monetary policy in the US and elsewhere is set to go into reverse. Rate cuts in the US and other centres, allied to hints of resumed quantitative easing by the European Central Bank, have acted to anaesthetise present discomfort over growth. Government bond yields have fallen sharply, often a harbinger of recession but investors have treated this as boosting the relative attractions of equities, looking beyond the downgrades seen for 2019, towards an expectation of better earnings in 2020.

The US-China tariff dispute has had a tangible impact on global trade as well as unsettling confidence in financial markets. Assumptions early in the year that a negotiated settlement was on track were rudely interrupted in May, when the US accused China of backtracking on the draft deal and imposed further tariffs on imports from China. This led to a sharp sell-off in equity markets which only came to an end as hopes rose that the US and China would resume negotiations, which they agreed to do towards the end of June.

The trade-related slowdown in Chinese growth was transmitted to lower demand for European industrial goods, spreading the ensuing weakness to Germany and other continental economies.

The first half saw a marked underperformance by economically sensitive sectors worldwide, including financial stocks whose earning capacity was felt to be compromised by the lower interest rate environment or at risk from a recession. So, despite the healthy rise in stock market indices, there was a sharp disparity between stocks offering faster or more dependable growth and lower valued, often more cyclical, sectors. Even so, the modest rate of economic growth and the disruptive influences from new technology, environmental regulation and unpredictable politics would argue for selective rather than wholesale switching into 'value' stocks away from defensive and growth stocks where valuations are high.

Investment performance

Although the direction of markets in the first half of 2019 was the reverse of the negative returns endured during the late months of 2018, an unwelcome point of similarity was that investment sentiment was changeable and, with it, the relative performance of some of our managers. At the end of June, Witan's net asset value total return year to date (with debt at fair value) was a healthily positive 13.5% and the performance of our composite benchmark was higher still, at 14.9%. Excluding the impact of lower gilt yields, which increased the fair value of our fixed rate debt securities, our net asset value total return was 13.8%. The share price total return was 11.7%, affected by a widening in our discount from 1.3% to 2.9%.

 

 

 

 

 

Page 4 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

INTERIM MANAGEMENT REPORT, continued

 

Witan underperformed during the period, despite a positive market environment in which our gearing delivered a strong positive contribution to returns. The main reason for the shortfall was that our underlying investment portfolio (before the positive contribution from gearing) underperformed the benchmark by 2.0%. Six of our ten external managers outperformed their benchmarks (with particularly strong contributions from GQG, Lindsell Train and SW Mitchell). Returns were pulled back by weak performances from two of our global managers, Lansdowne and Pzena, Matthews in the Far East and the Direct Holdings portfolio. Performance figures for all of the managers are shown in the table below.

 

Investment managers:  Assets under management and investment performance as at 30 June 2019           

 

 

Witan assets under management at 30.06.19

Performance in the half year(%)

Performance since appointment(2) (%)

 

Investment manager

Appointment date

£m

 

(%)(1)

Manager

Benchmark

 

Manager

Benchmark

Artemis (UK)

06.05.08

161.4

7.1

11.3

13.0

8.4

6.1

Heronbridge (UK)

17.06.13

142.2

6.3

16.3

13.0

9.1

7.1

Lindsell Train (UK)

01.09.10

190.7

8.4

20.5

13.0

16.2

8.6

Lansdowne (Global)

14.12.12

335.1

14.8

6.0

16.4

17.1

13.8

Pzena (Global)

02.12.13

282.0

12.4

10.7

16.4

10.1

12.6

Veritas (Global)

11.11.10

341.2

15.1

16.7

16.4

14.0

11.6

CRUX (Europe ex-UK)

26.10.17

107.5

4.7

19.3

17.5

2.6

2.9

S.W. Mitchell (Europe ex-UK)

26.10.17

106.1

4.7

25.6

17.5

(0.4)

2.9

Matthews (Asia)

20.02.13

233.5

10.3

5.4

10.8

9.5

8.7

GQG (Emerging Markets)

16.02.17

114.9

5.1

20.2

10.9

11.0

6.9

Witan Direct Holdings

19.03.10

251.6

11.1

3.3

14.9

10.9

9.1

 

Notes:

1

Percentage of Witan's investments managed, and cash balances held centrally by Witan.

2

Percentages are annualised where the appointment date was more than one year ago.

 

Source: BNP Paribas Securities Services

 

 

Although the investment approaches of the three external managers who underperformed differ substantially, a common factor was a cyclical bias to their portfolios during the period, whereas despite strong rallies in most regions the market's preference was for growth stocks and more defensive companies. Many stocks in cyclical sectors remain lowly rated, as investors have preferred to concentrate on the immediate beneficiaries of the decline in global interest rates than on the potential improvement in economic growth which the easing in monetary policy is aimed at achieving. The Direct Holdings portfolio was principally held back by a reduction in the premium to NAV of Syncona (whose price fell 17%), as well as a lack of news on portfolio realisations within the listed private equity holdings, leading to dull (though positive) returns.

Our portfolio, despite being highly diversified, differs substantially from the benchmark. The objective is to achieve superior returns in the long term, albeit at the risk of the opposite in the shorter term. We remain focused on trying to deliver good performance in the conditions that we expect, which may differ from factors preoccupying investors in the short-term.

 

 

 

 

Page 5 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

INTERIM MANAGEMENT REPORT, continued

Environmental, Social and Governance policy ('ESG')

A focus on good corporate governance has long been an element of responsible investment management, given both the civic aspects of adhering to appropriate rules and norms and the long-term association of good governance with good investment performance. This is already built into our manager monitoring and reporting to shareholders and is expected to become a greater focus in future.

In particular, an increasingly important and topical political theme is the impact of climate change upon the lives of people in different parts of the world and, consequently, on taxation policies and regulation. This has become a point of interest when assessing our investment managers and Witan's Board has received a number of specialist briefings in this area. Witan has become a member of the Institutional Investors Group on Climate Change, whose purpose is to encourage investor collaboration on climate change and act as a voice for investors in this area. In June, we made an investment of 1% of our assets in a specialist fund whose objective is to generate strong returns by investing in companies benefiting from efforts to mitigate or adapt to climate change.

Portfolio changes

There were no changes in investment managers during the period and only minor adjustments made to the allocations between them.

The Company invested in equity and bond index futures on a number of occasions during the period, to take advantage of tactical opportunities and for the purposes of efficient portfolio management.

In January, the £25m position in emerging markets futures was sold for a small gain since purchase in Q3 2018, although a significant uplift on the end 2018 level. A £7m investment was made in Japanese index futures, on the view that the market had unreasonably lagged. This was sold for a 5% gain in March, taking the opportunity to trim gearing after the first quarter rally.

In June, we invested 1% of our assets in Japanese index futures following renewed weakness in the Japanese and other equity markets. Towards the end of June, we sold short £10m of UK Gilt-edged futures in order to reduce part of the interest rate risk of a forthcoming private placement debt issue that was subsequently concluded in July 2019. There was a £2.3m realised gain on futures investment in the first half of 2019.

In June, as noted in the ESG section above, a £20m investment was made in the GMO Climate Change Fund. This was the second investment under a new initiative, to invest up to 2.5% of assets in newly-established or more specialist managers viewed as having strong potential to add value.

Investment income and expenses

Revenue earnings per share for the period were 3.4 pence per share, a rise of 9% from the 3.1 pence per share for the first half of 2018. Investment income benefited from higher company pay-outs, portfolio changes since 2018 and a weaker level of sterling against overseas currencies.

Investment management base fees paid to external delegated managers were virtually the same as those in the first half of 2018, on an average asset base that was 3% lower than in the first half of 2018, owing to the market falls during late 2018. There was also a £1.6m accrual for performance fees (2018: £0.8m). Including this, fees due to external investment managers rose by 13% to £6.5m.

Other operational expenses rose by 15%, or £0.5m. This was principally owing to the costs associated with the closure of the Witan Wisdom and Jump savings plans, other costs being little changed in the period. Finance costs fell by £0.2m, owing to improved management of cash balances.

 

Page 6 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

INTERIM MANAGEMENT REPORT, continued

The ongoing charges figure ('OCF') for the six months was 0.39% (2018: 0.38%). Including performance fees, the OCF was 0.46% for the first half of 2019 (2018: 0.42%). These figures apply for the first half and are not annualised. The OCF for the whole of 2018 was 0.75% excluding performance fees and 0.83% including performance fees.

Dividend

The Board's policy (subject to circumstances) is to grow the dividend ahead of inflation (measured by the UK CPI). The first three interim dividends of the financial year (paid in June, September and December) are, in the absence of unforeseen events, paid at the rate of one quarter of the total payment made in respect of the previous year.

Accordingly, a second interim dividend of 1.175p per ordinary share, being one quarter of the total paid in respect of 2018 (4.7p), will be paid on 18 September 2019. The ex-dividend date will be 22 August 2019. This follows the first interim dividend of 1.175p per ordinary share paid on 24 June 2019. The fourth payment (in March 2020) will be a balancing amount, reflecting the difference between the first three quarterly dividends and the payment decided for the full year. (Note: the historic dividend numbers have been adjusted for the five for one share sub-division effective 28 May 2019.)

The Company has increased its dividend every year since 1974 (a 44 year record of increases), recognising the importance for its investors of a reliable and growing income.

The full year's dividend for 2019 is expected to show a further (45th) year of growth. In the absence of unforeseen developments, a rise significantly ahead of inflation is planned, fully funded from current year revenue earnings, with a further addition to revenue reserves.

Gearing

The Company began the year with gearing of 11.6%. This was reduced to 9.3% at the end of April, following the broad rally in equity markets. Gearing was increased during June, following market weakness in May, amid clearer indications that central banks were embarking upon an easier monetary stance in order to sustain the economic recovery. Gearing contributed substantially to returns during the period, with the variation of gearing designed to respond to the changing attractions of markets as they rose and fell.

Following the period end, the Company agreed to issue £50m of long-term debt repayable in 2051, with an interest rate of 2.39%. This is the lowest issuing yield achieved in the sector in living memory, for such a long maturity. The average interest rate on the Company's fixed rate borrowings will decline from 4.3% to 3.8% following the issue. The Board believes that locking in such historically low yields will be of material benefit to shareholders in future years. The funds raised will be used to reduce the dependence upon variable rate short-term borrowings.

The Company has a £125m short-term multi-currency facility, in addition to its fixed-rate borrowings. The drawn balance at the end of June 2019 was £90m.

Discount and buybacks

One of the Company's key performance indicators is for its shares to trade at a sustainable low discount or a premium to NAV, subject to market circumstances. Witan's shares ended 2018 on a 1.3% discount, which widened to a discount of 2.9% at the end of June 2019.

During the first half of 2019, the Company has continued to buy back shares into Treasury, purchasing 10.8m shares (1.2% of the total) at an average discount of 2.8%. This added £0.5m to the net asset value but, just as importantly, showed that the Company was willing to increase the pace of share buyback activity significantly in response to a modest widening of the discount, because of the benefit for shareholders of their shares trading at or near to net asset value.

Page 7 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

INTERIM MANAGEMENT REPORT, continued

 

The long-term objective is for shareholders to enjoy sustainable liquidity in Witan's shares at or near to asset value. The Company remains prepared to buy back shares, taking account of prevailing market conditions (which are not under the Board's control), the level of the discount and the impact on the NAV per share. The Company will only issue shares at a premium to NAV.

Board Composition

As announced to the Stock Exchange in December 2018, I shall be standing down as Chairman at the AGM in April 2020. In March 2019, it was announced that Andrew Ross had been appointed as a Director with effect from 2 May 2019. Andrew recently stepped down as Global Head of Wealth Management at Schroders, after over 30 years spent in the investment management sector. It is expected that he will be appointed Chairman with effect from the AGM in 2020.

Outlook

In most cases, the significant returns enjoyed by equity markets in the first half of 2019 have done little more than reverse the falls seen in 2018. The US is a notable exception, having gained more than 20% over the 18 months since the end of 2017. Elsewhere, there looks to be greater scope for further upside, if investor faith in economic growth can be rekindled.

The prospects for the rest of 2019 and next year depend to some degree on whether the interest rate cuts and other forms of easier policy are viewed as a form of policy insurance to prolong the economic upswing or as emergency treatment for a moribund global economy. With global growth forecasts low but positive, the former looks more likely, in which case the recent fall in bond yields is probably overdone.

A number of risks to global confidence have outcomes which are currently unpredictable. The most pervasive is probably the trade policy of the current US Administration, particularly in relation to China. The consensus assumption is that a deal will be struck which maintains relatively free-flowing trade between them but this seems likely to be on terms less attractive to China than the previous status quo. This may be hard for them to accept, particularly if President Trump's re-election campaigning leads him to trumpet a 'win' over China (and, for that matter, Mexico and the European Union). Although it is hard to see any benefit for the US from a trade war, the path towards a trade 'peace' could be erratic.

The dispute between the US and Iran could become more heated, creating upward pressure on the oil price. However, unless Iran has the will and capacity to engineer a sustained interruption of tanker traffic through the Straits of Hormuz, there seem sufficient supplies to prevent a damaging spike in oil prices, the source of many past economic slowdowns.

Locally, UK politics and business plans are dominated by the question of Brexit - will the EU amend the offered deal, will Parliament approve a new deal (or the existing thrice-rejected one) or will the UK either leave without a deal or hold another in/out vote (which would require a delay in the departure date)? Each possibility would either require one group or another to change its declared views or a change in the parliamentary arithmetic. It promises to be an eventful few months but making investment decisions on the basis on a particular outcome is more than usually speculative.

 

 

 

 

 

 

Page 8 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

INTERIM MANAGEMENT REPORT, continued

 

With this global, and UK, backdrop, our managers continue to concentrate on individual companies' earnings prospects (and valuations) when selecting investments. Given the distorting effects of QE policies, the recession-signalling qualities of plunging bond yields appear less reliable than in previous cycles, particularly at a time when economic excesses are limited and forecasts for economic growth suggest anaemia rather than rigor mortis. Bond yields at record lows (even negative yields in some countries) may be trusting to chance in extrapolating current low inflation rates and monetary policy decades into the future. Despite subdued inflation in recent years, all trends have cycles and with unemployment low in many developed economies a rise in productivity looks necessary to square the circle of an improvement in economic growth without a pick-up in inflation.

 

For and on behalf of the Board

Harry Henderson

Chairman

12 August 2019

  

 

 

 

 

Page 9 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

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 2018 are contained in the Company's Annual Report for the year ended 31 December 2018.

 

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; and

• operational and regulatory risks.

 

Information on these risks and other 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 2018. 

 

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

12 August 2019

 

 

 

 

 

 

Page 10 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Consolidated Statement of Comprehensive Income

 

 

(Unaudited)

Half year ended

30 June 2019

(Unaudited)

Half year ended

30 June 2018

(Audited)

Year ended

31 December 2018

 

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

36,473

-

36,473

34,458

-

34,458

58,200

-

58,200

Other income

1,415

-

1,415

743

-

743

1,576

-

1,576

Gains/(losses) on investments held at fair value through profit or loss (Note 2)

-

219,706

219,706

-

2,410

2,410

-

(194,105)

(194,105)

Foreign exchange losses on cash and cash equivalents

-

(343)

(343)

-

(543)

(543)

-

(1,083)

(1,083)

 

----------

----------

-----------

---------

----------

-----------

---------

-----------

-----------

Total income

37,888

219,363

257,251

35,201

1,867

37,068

59,776

(195,188)

(135,412)

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Management and performance fees

(1,250)

(5,301)

(6,551)

(1,255)

(4,547)

(5,802)

(2,535)

(9,163)

(11,698)

Other expenses

(3,589)

(51)

(3,640)

(3,121)

(51)

(3,172)

(5,909)

(101)

(6,010)

 

----------

----------

-----------

---------

----------

-----------

---------

-----------

-----------

Profit/(loss) before finance costs and taxation

33,049

214,011

247,060

30,825

(2,731)

28,094

51,332

(204,452)

(153,120)

 

 

 

 

 

 

 

 

 

 

Finance costs

(1,021)

(3,046)

(4,067)

(1,087)

(3,130)

(4,217)

(2,156)

(6,217)

(8,373)

 

----------

----------

-----------

---------

----------

-----------

---------

-----------

-----------

Profit/(loss) before taxation

32,028

210,965

242,993

29,738

(5,861)

23,877

49,176

(210,669)

(161,493)

 

 

 

 

 

 

 

 

 

 

Taxation

(1,726)

-

(1,726)

(1,754)

-

(1,754)

(2,978)

-

(2,978)

 

----------

----------

-----------

---------

----------

-----------

---------

-----------

-----------

Profit/(loss) attributable to equity shareholders of the parent company

30,302

210,965

241,267

27,984

(5,861)

22,123

46,198

(210,669)

(164,471)

 

======

======

======

=====

======

======

=====

======

======

Earnings per ordinary share(1)(Note 3)

3.42p

23.80p

27.22p

3.14p

(0.66p)

2.48p

5.18p

(23.63p)

(18.45p)

 

=====

======

======

=====

======

======

=====

======

======

(1) Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

 

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 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Consolidated Statement of Changes in Equity

 

 

 

(Unaudited) Half year ended 30 June 2019

 

 

Ordinary

share

capital

£'000

Share premium

account

£'000

Capital

redemption reserve

£'000

Other

capital

reserves

£'000

 

Revenue reserve

£'000

 

 

Total

£'000

At 31 December 2018

50,018

99,251

46,498

1,498,832

78,843

1,773,442

Total comprehensive income:

  Profit for the period

-

-

-

 

210,965

 

30,302

 

241,267

Transactions with owners, recorded directly to equity:

  Ordinary dividends paid

-

-

-

-

(24,143)

(24,143)

  Buybacks of ordinary shares (held in

    treasury) (note 5)

-

-

-

(22,603)

-

(22,603)

 

-----------

-----------

-------------

-------------

-----------

-------------

At 30 June 2019

50,018

99,251

46,498

1,687,194

85,002

1,967,963

 

=======

=======

========

========

=======

========

 

 

 

(Unaudited) Half year ended 30 June 2018

 

 

Ordinary

share

capital

£'000

Share premium

account

£'000

Capital

redemption reserve

£'000

Other

capital

reserves

£'000

 

Revenue

reserve

£'000

 

 

Total

£'000

At 31 December 2017

50,018

99,251

46,498

1,712,019

72,735

1,980,521

Total comprehensive income:

  (Loss)/profit for the period

-

-

-

(5,861)

27,984

22,123

Transactions with owners, recorded directly to equity:

  Ordinary dividends paid

-

-

-

-

(21,395)

(21,395)

  Buybacks of ordinary shares (held in

    treasury) (note 5)

-

-

-

(2,272)

-

(2,272)

 

-----------

-----------

-------------

-------------

-----------

-------------

At 30 June 2018

50,018

99,251

46,498

1,703,886

79,324

1,978,977

 

=======

=======

========

========

=======

========

 

 

 

(Audited) Year ended 31 December 2018

 

 

Ordinary

share

capital

£'000

Share premium

account

£'000

Capital

redemption reserve

£'000

Other

capital

reserves

£'000

 

Revenue

reserve

£'000

 

 

Total

£'000

At 31 December 2017

50,018

99,251

46,498

1,712,019

72,735

1,980,521

Total comprehensive income:

  (Loss)/profit for the year

-

-

-

(210,669)

46,198

(164,471)

Transactions with owners, recorded directly to equity:

  Ordinary dividends paid

-

-

-

-

(40,090)

(40,090)

  Buybacks of ordinary shares (held in

    treasury) (note 5)

-

-

-

(2,518)

-

(2,518)

 

-----------

-----------

-------------

-------------

-----------

-------------

At 31 December 2018

50,018

99,251

46,498

1,498,832

78,843

1,773,442

 

=======

=======

========

========

=======

========

 

 

 

 

 

 

 

Page 12 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Consolidated Balance Sheet

 

(Unaudited)

30 June

 2019

£'000

(Unaudited)

30 June

2018

£'000

(Audited)

31 December 2018

£'000

Non current assets

 

 

 

Investments held at fair value through profit or loss

2,178,439

2,180,715

1,954,114

 

---------------

---------------

-------------

Current assets

 

 

 

Other receivables

10,772

13,117

8,198

Cash and cash equivalents

51,399

52,823

72,246

 

---------------

---------------

-------------

 

62,171

65,940

80,444

 

---------------

---------------

-------------

Total assets

2,240,610

2,246,655

2,034,558

 

 

 

 

Current liabilities

 

 

 

Other payables

(12,001)

(10,000)

(9,660)

Bank loans

(90,000)

(87,000)

(81,000)

 

---------------

---------------

-------------

 

(102,001)

(97,000)

(90,660)

 

---------------

---------------

-------------

Total assets less current liabilities

2,138,609

2,149,655

1,943,898

 

---------------

---------------

-------------

Non current liabilities

 

 

 

Other payables

(197)

(255)

(43)

At amortised cost:

 

 

 

  6.125 per cent. Secured Bonds due 2025

(63,616)

(63,581)

(63,581)

  3.29 per cent. Secured Notes due 2035

(20,875)

(20,875)

(20,873)

  3.47 per cent. Secured Notes due 2045

(53,651)

(53,659)

(53,653)

  2.74 per cent. Secured Notes due 2054

(29,752)

(29,753)

(29,751)

  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)

 

---------------

---------------

-------------

 

(170,646)

(170,678)

(170,456)

 

---------------

---------------

-------------

Net assets

1,967,963

1,978,977

1,773,442

 

=========

=========

========

 

 

 

 

Equity attributable to equity holders

 

 

 

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

1,687,194

1,703,886

1,498,832

  Revenue reserve

85,002

79,324

78,843

 

---------------

---------------

-------------

Total equity

1,967,963

1,978,977

1,773,442

 

=========

=========

========

Net asset value per ordinary share(1)  (Note 6)

223.56p

222.07p

199.03p

 

=========

=========

========

(1) Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

 

 

Page 13 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

 

Consolidated Cash Flow Statement

 

(Unaudited)

30 June

 2019

(Unaudited)

30 June

2018

(Audited)

31 December 2018

 

£'000

£'000

£'000

 

 

 

 

Cash flows from operating activities

 

 

 

Dividend income received

35,761

31,931

57,202

Interest received

98

76

203

Other income received

910

760

1,712

Operating expenses paid

(7,725)

(9,056)

(19,292)

Taxation on overseas income

(1,722)

(2,036)

(3,102)

Taxation recovered

211

258

271

 

-------------

-------------

-------------

Net cash inflow from operating activities

27,533

21,933

36,994

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

Purchases of investments

(458,195)

(395,022)

(801,410)

Sales of investments

448,503

364,108

806,173

Realised gain/(loss) on futures

2,320

437

(1,258)

 

-------------

-------------

-------------

Net cash (outflow)/inflow from investing activities

(7,372)

(30,477)

3,505

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

Equity dividends paid

(24,143)

(21,395)

(40,090)

Buybacks of ordinary shares

(21,283)

(2,318)

(2,564)

Interest paid

(4,239)

(4,172)

(8,311)

Drawdown of bank loans

9,000

14,000

8,000

 

-------------

-------------

-------------

Net cash outflow from financing activities

(40,665)

(13,885)

(42,965)

 

 

 

 

 

 

 

 

Decrease in cash and cash equivalents

(20,504)

(22,429)

(2,466)

Cash and cash equivalents at the start of the period

72,246

75,795

75,795

Effect of foreign exchange rate changes

(343)

(543)

(1,083)

 

-------------

-------------

-------------

Cash and cash equivalents at the end of the period

51,399

52,823

72,246

 

========

========

========

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 14 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Notes to the Financial Statements

1

Basis of preparation

The condensed set of financial statements for the half year ended 30 June 2019 have been prepared on a going concern basis and in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and with the Statement of Recommended Practice of Investment Trust Companies and Venture Capital Trusts ('the SORP') issued by the Association of Investment Companies ('the AIC') dated November 2014, and updated in February 2018 with consequential amendments, where the SORP is consistent with the requirements of International Financial Reporting Standards ('IFRSs').

For the period under review, the Company adopted the following accounting policy: IFRS 16 - Leases; the impact of which is not material.

These financial statements have not been either audited or reviewed by the Company's Auditor.

 

2

Transaction costs

The gains/(losses) on investments held at fair value through profit or loss include purchase transaction costs of £930,000 (half year ended 30 June 2018: £801,000; year ended 31 December 2018: £1,868,000) and sale transaction costs of £325,000 (half year ended 30 June 2018: £354,000; year ended 31 December 2018: £656,000). The purchase and sale transaction costs comprise mainly stamp duty and commissions.

 

3

Earnings per ordinary share

The earnings per ordinary share figure is based on the net profit for the half year of £241,267,000 (half year ended 30 June 2018: £22,123,000; year ended 31 December 2018: loss of £164,471,000) and on 886,389,666 ordinary shares (half year ended 30 June 2018(1): 891,509,200; year ended 31 December 2018(1): 891,325,835) 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

2019

£'000

(Unaudited)

Half year ended

30 June

2018

£'000

(Audited)

Year ended

31 December 2018

£'000

 

Net revenue profit

30,302

27,984

46,198

 

Net capital profit/(loss)

210,965

(5,861)

(210,669)

 

 

--------------

--------------

--------------

 

Net total profit/(loss)

241,267

22,123

(164,471)

 

 

========

========

========

 

 

 

 

 

 

Weighted average number of ordinary shares in issue during the period

886,389,666

891,509,200

891,325,835

 

 

 

 

 

 

 

Pence

Pence

Pence

 

Revenue earnings per ordinary share(1)

3.42

3.14

5.18

 

Capital earnings per ordinary share(1)

23.80

(0.66)

(23.63)

 

 

--------------

--------------

--------------

 

Total earnings per ordinary share(1)

                    27.22

                     2.48

(18.45)

 

 

========

========

========

 

 

 

 

 

 

(1) Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

 

 

 

 

Page 15 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Notes to the Financial Statements (continued)

4

Interim dividend

The Directors have declared a second interim dividend of 1.175p per ordinary share (2018: 1.05p(1)), payable on 18 September 2019 to shareholders registered on 23 August 2019. The shares will be quoted ex-dividend on 22 August 2019. A first interim dividend of 1.175p (2018: 1.05p(1)) was paid on 24 June 2019.

 

(1) Comparative figures have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

 

5

Ordinary share capital

At 30 June 2019 there were 880,265,283 ordinary shares in issue (30 June 2018(1): 891,168,800; 31 December 2018(1): 891,046,840) and 120,089,717 shares held in treasury (30 June 2018(1): 109,186,200; 31 December 2018(1): 109,308,160). During the half year ended 30 June 2019 the Company bought back 10,781,557 of its own ordinary shares (half year ended 30 June 2018(1): 1,079,145; year ended 31 December 2018(1): 1,201,105). The costs of the share buybacks were £22,603,000 (half year ended 30 June 2018: £2,272,000; year ended 31 December 2018: £2,518,000).

 

(1) Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

 

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 £1,967,963,000 (30 June 2018: £1,978,977,000; 31 December 2018: £1,773,442,000) and on 880,265,283 (30 June 2018(1): 891,168,800; 31 December 2018(1): 891,046,840) ordinary shares, being the number of ordinary shares in issue at the period end.

 

(1) Comparative figures for the six months ended 30 June 2018 and year ended 31 December 2018 have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 28 May 2019.

 

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 was incorporated on 28 October 2004, is registered in England and Wales, operates in the United Kingdom and is regulated by the Financial Conduct Authority.

 

8

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 using effective interest method:

Fair value

£'000

Balance Sheet amount

£'000

 

Non current liabilities

 

 

 

Preference shares

1,354

2,555

 

Secured bonds

80,297

63,616

 

Secured notes

116,877

104,278

 

 

--------------

--------------

 

 

198,528

170,449

 

 

--------------

--------------

 

 

 

Page 16 of 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Notes to the Financial Statements (continued)

8

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 2019

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

 

Investments including derivatives:

 

Equity securities designated at fair value through profit or loss

2,141,375

-

-

2,141,375

 

Investments in other funds

-

37,064

-

37,064

 

 

-------------

----------

---------

------------

 

Total financial assets carried at fair value

2,141,375

37,064

-

2,178,439

 

 

========

======

=====

=======

 

 

There were no Level 3 investments during the six months to 30 June 2019.

 

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 an active market 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 are investments in GMO Climate Change Fund and 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 17

WITAN INVESTMENT TRUST PLC

Financial Report for the Half Year ended 30 June 2019

 

Notes to the Financial Statements (continued)

9

Segment reporting

 

 

As detailed in the Company's Annual Report for the year ended 31 December 2018, 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, 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; the geographical allocation of the portfolio, as at 30 June 2019, is set out on page 2. The schedule on page 4 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.

 

 

 

(Unaudited)

Half year ended

30 June 2019

(Unaudited)

Half year ended

30 June 2018

(Audited)

Year ended

31 December 2018

 

 

 

Investment

trust

£'000

Management

services

£'000

Investment

trust

£'000

Management

services

£'000

Investment

trust

£'000

Management services

£'000

 

Revenue(1)

36,845

1,043

34,641

560

58,691

1,085

 

Interest expense

4,067

-

4,217

-

8,373

-

 

Net result

241,267

-

22,123

-

(164,471)

-

 

Carrying amount of assets

1,966,971

992

1,977,764

1,213

1,772,451

991

(1) The revenue in the investment trust column represents the investment and other income of the parent company.

 

 

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 2019 and 30 June 2018 has neither been audited nor reviewed by the auditors.

The figures and financial information for the year ended 31 December 2018 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 2018 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 2019

The financial report for the half year ended 30 June 2019 will be filed with the UK Listing Authority by 31 August 2019 and will be made available on the Company's website. Printed copies or electronic notification will be sent to shareholders in August 2019 and will be available thereafter from the Secretary at the Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA.

 

                   

 

For further information please contact:

Andrew Bell

Chief Executive Officer

Witan Investment Trust plc

Telephone:  020 7227 9770

 

Alexis Barling

Director of Marketing

Witan Investment Trust plc

Telephone:  020 7227 9770

-  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.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR SFMFWEFUSELA
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Half-year Report - RNS