REG - Witan Inv Tst PLC - Half-year Report
16/08/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220816:nRSP0918Wa&default-theme=true
RNS Number : 0918W Witan Investment Trust PLC 16 August 2022
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
SUMMARY
• Witan's NAV total return was -14.3%, 4.7% behind our composite
global benchmark
• Most of the underperformance (-4.4%) was during Q1, when the
markets began to react to the consequences of the Russian invasion of Ukraine
• The discount widened, along with others in the sector; 4.2% of our
shares were bought into treasury, at an average discount of 7.6%
• Our revenue earnings for the first half rose 39% on the
corresponding period of 2021
• A second interim quarterly dividend of 1.40p per ordinary share
will be paid in September. Total dividends paid in respect of the period are
2.80p per ordinary share (2021: 2.72p)
Key data
(Unaudited) (Audited)
30 June 2022 31 December 2021
Share price 206.0p 252.0p
Net asset value per ordinary share (debt at fair value) ((3)) 226.2p 267.4p
Discount (NAV including income, debt at fair value) ((3)) 8.9% 5.8%
(Unaudited) (Unaudited)
30 June 2022 30 June 2021
Dividend per share 2.80p 2.72p
Total return performance
6 months 1 year 5 years 10 years
return return return return
% % % %
Share price total return ((1)(3)) -17.1 -12.6 16.2 187.5
Net asset value total return ((1)(3)) -14.3 -11.7 23.5 171.3
Witan benchmark ((1)) -9.6 -2.6 42.7 169.9
MSCI ACWI Index((2)) -10.7 -3.7 53.8 214.9
MSCI UK IMI Index((2)) -2.9 3.7 17.0 90.4
(1) Source: Morningstar.
(2) Source: Morningstar. See also MSCI for conditions of use (www.msci.com).
(3) Alternative performance measures
The financial statements (on pages 11 to 19) 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.
(4) 30 June 2022 data is unaudited.
Page 2 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Percentage of total funds as at 30 June 2022 %
North America 37
United Kingdom 20
Europe 17
Asia 5
Japan 3
Other 4
Unquoted Funds 2
Investment Companies 12
Sector breakdown of the portfolio as at 30 June 2022((5)) %
Industrials 14
Information Technology 12
Healthcare 11
Consumer Staples 11
Financials 9
Communication Services 8
Consumer Discretionary 8
Materials 7
Energy 4
Other 2
Unquoted Funds 2
Investment Companies 12
Company size breakdown of the portfolio as at 30 June 2022((5)) %
Large Cap 72
Mid Cap 10
Small Cap 4
Unquoted Funds 2
Investment Companies 12
(5) Source: BNP Paribas as at 30 June 2022
Page 3 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
INTERIM MANAGEMENT REPORT
Investment backdrop and performance
The first half of 2022 was an unusually tough environment for investors, with
both equity and bond markets registering significant falls. US equities on
Wall Street exceeded the 20% fall often viewed as defining a "bear" market,
fuelled by apprehension over how far inflation and interest rates would rise,
as well as the energy crisis and geopolitical tensions following the Russian
invasion of Ukraine. In these circumstances, Witan's employment of gearing,
while historically beneficial, proved a drag on returns, while our managers'
expectations for a post-pandemic reopening of economies were also stymied by
the impact of higher inflation and interest rates.
As a result, Witan experienced a total NAV return of -14.3% and a share price
total return of -17.1% (owing to a widening of the discount), compared with a
return of -9.6% in our benchmark. For perspective, the AIC's Global Equity
sector experienced an average -19% NAV total return, or -24% weighted for the
size of the constituents (source: Morningstar).
For Witan, the underperformance was concentrated in Q1, with a 6.3% fall
compared with a 1.9% fall in Witan's benchmark. In Q2, Witan's NAV total
return performance of -8.6% was closer to the benchmark's -7.8%, with the
managers performing in line at the portfolio level, offset by the impact of
our gearing.
Economic developments
Inflation has provided an unfamiliar shock this year. The post-lockdown
bounce-back in growth created a surge in demand which a still-disrupted global
economy was unable to meet, leading to pressures that the world's central
banks were initially slow to recognise. Their suggestion that inflation was
transitory has itself proved transitory. Energy shortages were particularly
evident, as growing investment in sustainable energy has so far been
insufficient to fill the gap arising from underinvestment in oil and gas
production. The resulting rise in energy prices was a major reason inflation
hit multi-decade highs in early 2022, prompting a worldwide shift towards
monetary tightening.
Initially, this created a rotation from highly rated growth stocks towards
more lowly-valued sectors sensitive to economic recovery. However, the
invasion of Ukraine created a further surge in energy as well as food
commodity prices. This increased the urgency for interest rates to rise,
dampening recovery hopes for cyclical sectors as well as further derating
growth stocks. In this environment, energy stocks stood out with positive
returns, while losses were widespread across the rest of the equity universe,
as well as the bond markets.
Page 4 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
INTERIM MANAGEMENT REPORT continued
Investment managers: Assets under management and investment performance as
at 30 June 2022
Witan assets managed as at 30.06.22 Performance in 2022 (%) Annualised performance since appointment (%)
Investment manager Mandate Appoint-ment date £m (%)((1)) Manager Benchmark Manager Benchmark
CORE
Jennison Global 31.08.20 109.8 6.1 (30.4) (10.7) (7.9) 8.8
Lansdowne Global 14.12.12 309.4 17.1 (15.8) (10.7) 12.5 12.0
Lindsell Train Global 31.12.19 289.2 16.0 (11.8) (10.7) 1.6 8.0
Veritas Global 11.11.10 351.7 19.4 (8.1) (10.7) 12.5 10.7
WCM Global 31.08.20 195.4 10.8 (23.6) (10.7) 0.7 8.8
Artemis UK 06.05.08 115.5 6.4 (13.6) (2.9) 7.8 5.4
SPECIALIST
GMO Climate Change 05.06.19 92.3 5.1 (9.0) (10.7) 16.3 9.6
GQG Emerging Markets 16.02.17 117.7 6.5 (8.8) (8.0) 8.0 4.4
Unquoted Growth Specialist Funds 02.07.21 34.6 1.9 (8.5) (10.7) (13.2) (4.6)
Witan Direct Holdings Specialist Funds 19.03.10 202.2 11.2 (12.7) (9.6) 10.3 8.7
Notes:
1 Amount of percentage of Witan's investments managed, excluding centrally
managed cash.
Manager performance
The full table of the performance of our incumbent managers as at 30 June is
shown above. All the managers suffered falls, particularly those with a growth
investment style (Jennison and WCM). Although they had the lowest allocations
of our core global managers, the scale of underperformance proved painful. The
GMO Climate Change portfolio and Veritas's quality-focused portfolio both
outperformed. Artemis lagged the UK market return, as their actively managed
portfolio tends to overweight the mid-cap section of the market, whereas the
market index was dominated by outperformance of the energy sector. They have
outperformed by more than 2% p.a. since 2008 and we expect relative
performance to recover. GQG underperformed their emerging market benchmark but
outperformed the global market index, so the allocation to emerging markets
proved beneficial. Lansdowne's cyclically focused portfolio was ahead for much
of the period but ended behind at the mid-year point, which coincided with a
peak in recessionary fears. Lindsell Train's performance, whilst behind over
the period, showed signs of greater resilience after an uncharacteristically
poor 2021.
The Direct Holdings portfolio lagged overall, principally because of the
discount widening in the private equity sector, which offset good operational
performance across the major holdings. The BlackRock World Mining Trust
holding was reduced significantly when the price surged following the Russian
invasion, while the Schroder Real Estate Investment Trust holding was also
trimmed into strength. We added to our investment in the Victory Hill
Sustainable Energy Opportunities company, which has also performed well this
year.
Page 5 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
INTERIM MANAGEMENT REPORT continued
A new position was initiated in a specialist biotechnology ETF, giving equally
weighted exposure to companies in the S&P Biotechnology index, a sector
that has seen significant weakness over the past year and is broadly flat over
the past five years. Our longstanding holding in Syncona also gives us
exposure to this theme and the shares have recently recovered ground after a
volatile performance in the first quarter.
Environmental, Social and Governance policy ('ESG')
Our responsible investment policy is set out in detail in Witan's 2021 Annual
Report. We (and, so far, half our managers) have signed the Net Zero Asset
Managers' initiative, committing to have a zero net carbon portfolio by 2050
and to report on progress on the way. We have also committed to having a
portfolio consisting only of companies with sustainable businesses by 2030. We
are continuing to evolve our assessment of corporate sustainability and will
report on progress in the 2022 Annual Report.
In the first instance we prefer engagement to divestment when we feel a
company is departing from good practice - if we divest, we lose any influence
over the Company's direction and the buyer may be less scrupulous. We would
also forfeit the potential to benefit (financially) from improvements which
such engagement might generate. We do have an exclusion on investment in
companies engaged in the manufacture, supply, or use of controversial weapons
(such as land mines and cluster munitions).
The Russian invasion of Ukraine (albeit an ESG issue at the government, rather
than company, level) highlighted the need to attend to corporate risks that
are not purely financial. Witan has negligible direct exposure to Russian
investments, with any remaining holdings held at nil value. Whilst the
subject of future investment is currently theoretical, given the sanctions on
Russia and Russian assets, the bar will be set very high for investors,
including Witan, to consider any investment in Russia even when conditions
normalise.
Energy prices have emerged as a political hot potato in 2022. Low levels of
investment in fossil fuel capacity, the speed of the recovery from lockdowns
and the consequences of the war in Ukraine have led to shortages and high oil
and gas prices. This has, perhaps inevitably, led to debate over the pace (if
not the direction) of plans to phase out fossil fuels. Policy changes include
delays and reversals in phasing out coal generation, more investment in oil
and gas production as well as changed attitudes to nuclear power (clean in
carbon terms but controversial in other ways). Given the extraordinary events
of 2022, steps which are retrograde in climate change terms are not surprising
as stopgap measures, but we hope for a positive longer-term outcome in terms
of accelerated investment in sustainable energy.
Investment income and expenses
Revenue earnings per share for the period were 2.51 pence per share, a rise of
39% from the level of 1.80 pence per share seen in the first half of 2021. The
comparison between early 2022 and early 2021 (when there was a hangover of
dividend cuts from 2020 results) may flatter the position but we nonetheless
expect a significant rise in revenue earnings this year and further progress
towards restoring full dividend cover.
Page 6 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
INTERIM MANAGEMENT REPORT continued
General expenses rose £0.3m to £2.9m, principally due to website investment
and increased marketing costs. Investment management base fees declined 8.4%
to £4.3m, owing to lower asset levels. Overall investment management costs
(which included a performance fee accrual for one manager in 2021) fell by
12.3% to £4.3m, compared with the first half of 2021. First half total
expenses of £7.2m were down 3.5% on the comparative 2021 figure of £7.5m.
Finance costs rose £0.2m to £2.8m, due to a rise in short-term borrowing
costs.
The ongoing charges figure ('OCF'), including performance fees, was 0.42% for
the first half of 2022 (2021: 0.40%). The OCF for the whole of 2021 was 0.71%
excluding performance fees and 0.73% including performance fees.
Dividend
As already noted, the Company's revenue earnings per share for 2022 are
expected to show a significant further recovery. The Company has increased its
dividend every year since 1974 (a 47-year record of increases), recognising
the importance for investors of a reliable and growing income. The Board's
policy remains to grow the dividend each year and the full year's dividend for
2022 is expected to show another year of growth. The Board has stated its
willingness to continue to smooth dividend pay-outs using retained revenue
reserves, which amounted to £48.9m at the start of 2022.
A second interim dividend of 1.40p per ordinary share (2021: 1.36p) will be
paid on 16 September 2022. The ex-dividend date will be 25 August 2022. This
dividend is one quarter of the total paid in respect of 2021 (5.60p) and
follows the first interim dividend of 1.40p per ordinary share paid on 10 June
2022 (2021: 1.36p).
Gearing
The Company's gearing has been actively managed within a range of 10-14% this
year. Due to the falls in markets, the use of gearing has detracted from
returns so far in 2022, although it has historically benefited performance.
The Company has long-term borrowings of £155m with a blended interest rate of
3%, fixed for an average of 25 years. This provides a very low hurdle for
investment of these funds to boost shareholder returns in the future. In
addition, the Company has a £150m short-term variable rate facility (current
interest rate c 2%), of which £78m was drawn at the period end.
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. This has been difficult to achieve in 2020-22, given market
conditions. In 2021, Witan's shares traded at an average discount of 6.9%,
ending the year at a 5.8% discount. In 2022, along with others in the sector,
our discount has widened, trading at an average of 7.7% and ending the period
at 8.9%.
Page 7 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
INTERIM MANAGEMENT REPORT continued
The Company has been active (in absolute terms and relative to its peers) in
buying back shares, buying 30.7m shares (4.2% of the total) into treasury in
the period, at an average discount of 7.6%. This added £5.7m to the net asset
value which, for perspective, more than offset the Company's investment
management costs for the period.
The Company remains cognisant of the benefit to shareholders from buying back
shares, taking account of prevailing market conditions, the level of the
discount and the impact on the NAV per share. The Company will only issue
shares at a premium to NAV.
Outlook
The sustained rise in global inflation and the widespread move to higher
interest rates have radically altered the outlook for global liquidity and
economic growth. This led to extremely negative sentiment mid-year towards
bonds (whose yields were too low in real and nominal terms) and equities (due
to fears of recession, as well as a valuation squeeze on the more highly rated
or speculative sectors).
Inflation remains stubbornly high, for reasons not speedily addressable by
higher interest rates, which can do little to boost the supply of oil and
wheat, much less push Russia out of Ukraine. It will take time for higher
rates to bring supply and demand into balance, with an increased risk of
recession. This latter concern has weighed on equity sentiment in recent
months, as the central banks prioritise inflation control over responding to
financial market volatility.
There are signs that investors in the US are (possibly prematurely) reducing
their forecasts of the peak level of interest rates. High debt levels may
cause growth to slow even with interest rates at levels that remain lower than
were typical prior to 2009. There are also several drivers of both government
and private sector spending that are set to increase in coming years -
renewing infrastructure, the electrification and decarbonisation of economies
and, perhaps less positively, increased defence spending. Technology may now
be more cheaply rated in the stock market but will continue to disrupt many
sectors, reduce costs, and drive productivity. By focusing on the near-term
unfamiliarity of high inflation and rising interest rates, investors may be
overlooking the longer-term positives.
Once a peak in inflation comes into view, or there is a reduction in
international tensions, investors are likely to switch from risk aversion to
looking for the opportunities thrown up by lower valuations. Timing such
changes can be a conundrum, as nobody rings a fire alarm at the top of the
market nor does a dinner gong sound at the bottom. Notwithstanding the
frustrations of the past two years, Witan's managers will continue to select
companies with sound business strategies, resilient finances, and good
management, on the basis that companies that grow the fundamental value of
their business will eventually see their share prices follow that growth.
Page 8 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
INTERIM MANAGEMENT REPORT continued
The mid-year period end coincided with a low point in market sentiment and
performance. Between then and 12 August (the latest practicable date before
the publication of this report), the NAV rose 11.4% to 252p and the share
price by 14.1% to 235p, ahead of the benchmark's return of 9.9%. While noting
that there remains ground to make up, there is reassurance for shareholders
that absolute performance significantly recovered and the Company outperformed
during the summer rally.
For and on behalf of the Board
Andrew Ross
Chairman
15 August 2022
Page 9 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
REGULATORY DISCLOSURES
Principal risks and uncertainties
The principal risks and uncertainties associated with the Company's business
can be divided into various areas:
· market and investment portfolio (including political and
macro-economic topics such as miliary conflict);
· operational and cyber;
· compliance and regulatory change;
· accounting, taxation and legal;
· liquidity;
· COVID-19 global pandemic; and
· Environmental, social and governance factors.
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 2021.
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
Andrew Ross
Chairman
15 August 2022
Page 10 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
REGULATORY DISCLOSURES continued
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 at least the next 12 months.
The Company has at all times traded, and remains, well clear of all financial
covenants on its borrowings (which are detailed in note 13 of its 2021 Annual
Report).
Therefore, the Board has determined 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 2021
are contained in the Company's Annual Report for the year ended 31 December
2021.
Page 11 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Consolidated Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Half year ended 30 June 2022 Half year ended 30 June 2021 Year ended 31 December 2021
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 23,684 - 23,684 19,371 - 19,371 37,443 - 37,443
Other income 158 - 158 88 - 88 129 - 129
(Losses)/gains on investments held at fair value through profit or loss - (341,325) (341,325) - 198,197 - 248,107 248,107
(Note 2)
198,197
Foreign exchange gains/(losses) on cash and cash equivalents - 966 966 - (718) (718) - (1,178) (1,178)
---------- ---------- ----------- --------- ---------- ----------- --------- ----------- -----------
Total income 23,842 (340,359) (316,517) 19,459 197,479 216,938 37,572 246,929 284,501
Expenses
Management and performance fees (1,066) (3,197) (4,263) (1,164) (3,695) (4,859) (2,331) (9,714)
(7,383)
Other expenses (2,875) (51) (2,926) (2,543) (51) (2,594) (4,815) (101) (4,916)
---------- ---------- ---------- --------- ---------- ----------- --------- ----------- -----------
Profit/(loss) before finance costs and taxation 19,901 (343,607) (323,706) 15,752 193,733 209,485 30,426 239,445 269,871
Finance costs (704) (2,109) (2,813) (691) (1,946) (2,637) (1,366) (3,842) (5,208)
---------- ---------- ----------- --------- ---------- ----------- --------- ----------- -----------
Profit/(loss) before taxation 19,197 (345,716) (326,519) 15,061 191,787 206,848 29,060 235,603 264,663
Taxation (1,004) 229 (775) (969) (240) (1,209) (1,432) (488) (1,920)
---------- ---------- ----------- --------- ---------- ----------- --------- ----------- -----------
Profit/(loss) 18,193 (345,487) (327,294) 14,092 191,547 205,639 27,628 235,115 262,743
attributable to equity
shareholders of the parent company
====== ====== ====== ===== ====== ====== ===== ====== ======
Earnings per ordinary share 2.51p (47.75p) (45.24p) 1.80p 24.41p 26.21p 3.59p 30.53p 34.12p
(Note 3)
===== ====== ====== ===== ====== ====== ===== ====== ======
The total column of this statement represents the Group's Statement of
Comprehensive Income, prepared in accordance with UK-adopted International
Accounting Standards.
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 12 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Consolidated Statement of Changes in Equity
(Unaudited) Half year ended 30 June 2022
Ordinary Share premium Capital Other
share account redemption reserve capital Revenue reserve
capital £'000 £'000 reserves £'000 Total
£'000 £'000 £'000
Total equity at 31 December 2021 50,018 99,251 46,498 1,747,379 48,895 1,992,041
Total comprehensive income: - - - (345,487) 18,193 (327,294)
(Loss)/profit for the period
Transactions with owners, recorded directly to equity: - - - - (21,150) (21,150)
Ordinary dividends paid
Buybacks of ordinary shares (held in treasury) (Note 6) - - - (68,960) - (68,960)
----------- ----------- ------------- ------------- ----------- -------------
Total equity at 30 June 2022 50,018 99,251 46,498 1,332,932 45,938 1,574,637
======= ======= ======== ======== ======= ========
(Unaudited) Half year ended 30 June 2021
Ordinary Share premium Capital Other
share account redemption reserve capital Revenue
capital £'000 £'000 reserves reserve Total
£'000 £'000 £'000 £'000
Total equity at 31 December 2020 50,018 99,251 46,498 1,665,775 63,666 1,925,208
Total comprehensive income: - - - 191,547 14,092 205,639
Profit for the period
Transactions with owners, recorded directly to equity: - - - - (21,870) (21,870)
Ordinary dividends paid
Buyback of ordinary shares (held in treasury) (Note 6) - - - (76,097) - (76,097)
----------- ----------- ------------- ------------- ----------- -------------
Total equity at 30 June 2021 50,018 99,251 46,498 1,781,225 55,888 2,032,880
======= ======= ======== ======== ======= ========
(Audited) Year ended 31 December 2021
Ordinary Share premium Capital Other
share account redemption reserve capital Revenue
capital £'000 £'000 reserves reserve Total
£'000 £'000 £'000 £'000
Total equity at 31 December 2020 50,018 99,251 46,498 1,665,775 63,666 1,925,208
Total comprehensive income: - - - 235,115 27,628 262,743
Profit for the year
Transactions with owners, recorded directly to equity: - - - - (42,399) (42,399)
Ordinary dividends paid
Buyback of ordinary shares (held in treasury) (Note 6) - - - (153,511) - (153,511)
----------- ----------- ------------- ------------- ----------- -------------
Total equity at 31 December 2021 50,018 99,251 46,498 1,747,379 48,895 1,992,041
======= ======= ======== ======== ======= ========
Page 13 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Consolidated Balance Sheet
(Unaudited) (Unaudited) (Audited)
30 June 30 June 31 December 2021
2022 2021 £'000
£'000 £'000
Non current assets
Investments held at fair value through profit or loss 1,771,175 2,240,560 2,217,455
Right-of-use asset: property 215 282 249
--------------- --------------- -------------
1,771,390 2,240,842 2,217,704
Current assets
Other receivables 14,607 11,163 5,840
Cash and cash equivalents 38,493 30,060 34,590
--------------- --------------- -------------
53,100 41,223 40,430
--------------- --------------- -------------
Total assets 1,824,490 2,282,065 2,258,134
Current liabilities
Other payables (14,599) (8,574) (10,347)
Bank loans (78,000) (83,000) (98,000)
--------------- --------------- -------------
(92,599) (91,574) (108,347)
--------------- --------------- -------------
Total assets less current liabilities 1,731,891 2,190,491 2,149,787
--------------- --------------- -------------
Non current liabilities
Other payables (231) (415) (287)
Deferred tax liability on Indian capital gains (441) (638) (886)
Borrowings:
Secured debt (Note 5) (154,027) (154,003) (154,018)
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)
--------------- --------------- -------------
(157,254) (157,611) (157,746)
--------------- --------------- -------------
Net assets 1,574,637 2,032,880 1,992,041
========= ========= ========
Equity attributable to equity holders
Ordinary share capital (Note 6) 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 1,332,932 1,781,225 1,747,379
Revenue reserve 45,938 55,888 48,895
--------------- --------------- -------------
Total equity 1,574,637 2,032,880 1,992,041
========= ========= ========
Net asset value per ordinary share (Note 7) 222.64p 264.31p 269.93p
========= ========= ========
Page 14 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Consolidated Cash Flow Statement
(Unaudited) (Unaudited) (Audited)
30 June 30 June 31 December 2021
2022 2021
£'000 £'000 £'000
Cash flows from operating activities
Dividend income received 21,825 19,374 37,986
Interest received 17 31 149
Other income received 141 276 361
Operating expenses paid (6,584) (8,068) (15,430)
Taxation on overseas income (1,137) (1,033) (3,794)
Taxation recovered 2,379 61 81
------------- ------------- -------------
Net cash inflow from operating activities 16,641 10,641 19,353
Cash flows from investing activities
Purchases of investments (423,431) (578,049) (1,004,934)
Sales of investments 526,540 687,467 1,194,779
Capital gains tax on sales (178) - -
------------- ------------- -------------
Net cash inflow from investing activities 102,931 109,418 189,845
Cash flow from financing activities
Equity dividends paid (21,116) (21,858) (42,399)
Buybacks of ordinary shares (72,612) (74,934) (150,942)
Interest paid (2,840) (2,606) (5,167)
Repayment of lease liability (67) (28) (67)
Drawdown of bank loans 77,500 78,750 176,250
Repayment of bank loans (97,500) (104,750) (187,250)
------------- ------------- -------------
Net cash outflow from financing activities (116,635) (125,426) (209,575)
Increase/(decrease) in cash and cash equivalents 2,937 (5,367) (377)
Cash and cash equivalents at the start of the period 34,590 36,145 36,145
Effect of foreign exchange rate changes 966 (178) (1,178)
------------- ------------- -------------
Cash and cash equivalents at the end of the period 38,493 30,060 34,590
======== ======== ========
Page 15 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Notes to the Financial Statements
1 Basis of preparation
The condensed set of financial statements for the half year ended 30 June 2022
has been prepared on a going concern basis and in accordance with UK-adopted
International Accounting Standards ('IAS') 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') in
April 2021, where the SORP is consistent with the requirements of IAS.
In assessing going concern, the directors have considered the risks noted in
the Annual Report and Notes to the Financial Statements for the year ended 31
December 2021. The directors believe that the Company has adequate resources
to continue in operational existence for the foreseeable future and has the
ability to meet its financial obligations as they fall due for at least a
period of 12 months from the date of this report. For this reason, the Company
continues to adopt the going concern basis of accounting in preparing the
financial statements.
The condensed set of financial statements for the half year ended 30 June 2022
has been prepared on the basis of the accounting policies set out in the
audited consolidated financial statements for the year ended 31 December 2021.
These condensed financial statements have not been audited or reviewed by the
Company's Auditor.
2 Transaction costs
The (losses)/gains on investments held at fair value through profit or loss
include purchase transaction costs of £726,000 (half year ended 30 June 2021:
£1,104,000; year ended 31 December 2021: £3,246,000) and sale transaction
costs of £293,000 (half year ended 30 June 2021: £460,000; year ended 31
December 2021: £706,000). 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 loss for the half
year of £327,294,000 (half year ended 30 June 2021: profit of £205,639,000;
year ended 31 December 2021: profit of £262,743,000) and on 723,512,428
ordinary shares (half year ended 30 June 2021: 784,730,376; year ended 31
December 2021: 770,137,797) 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. The Company has no securities in issue
that could dilute the return per ordinary share. Therefore, the basic and
diluted earnings per ordinary share are the same.
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
Net revenue profit 18,193 14,092 27,628
Net capital (loss)/profit (345,487) 191,547 235,115
-------------- -------------- --------------
Net total (loss)/profit (327,294) 205,639 262,743
======== ======== ========
Weighted average number of ordinary shares in issue during the period 723,512,428 784,730,376 770,137,797
Page 16 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Notes to the Financial Statements continued
3 Earnings per ordinary share (continued)
Pence Pence Pence
Revenue earnings per ordinary share 2.51 1.80 3.59
Capital earnings per ordinary share (47.75) 24.41 30.53
-------------- -------------- --------------
Total earnings per ordinary share (45.24) 26.21 34.12
======== ======== ========
4 Interim dividend
The directors have declared a second interim dividend of 1.40p per ordinary
share (2021: 1.36p), payable on 16 September 2022 to shareholders registered
on 26 August 2022. The shares will be quoted ex-dividend on 25 August 2022. A
first interim dividend of 1.40p (2021: 1.36p) was paid on 10 June 2022.
5 Secured debt
(Unaudited) (Unaudited) (Audited)
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
3.29 per cent. secured notes due 2035 20,894 20,888 20,891
3.47 per cent. secured notes due 2045 53,679 53,671 53,677
2.39 per cent. secured notes due 2051 49,689 49,683 49,686
2.74 per cent. secured notes due 2054 29,765 29,761 29,764
-------------- -------------- --------------
154,027 154,003 154,018
======== ======== ========
6 Ordinary share capital
At 30 June 2022 there were 707,268,687 ordinary shares in issue (30 June 2021:
769,127,886; 31 December 2021: 737,975,867) and 293,086,313 shares held in
treasury (30 June 2021: 231,227,114; 31 December 2021: 262,379,133). During
the half year ended 30 June 2022, the Company bought back 30,707,180 of its
own ordinary shares (half year ended 30 June 2021: 32,585,401; year ended 31
December 2021: 63,737,420). The costs of the share buybacks were £68,960,000
(half year ended 30 June 2021: £76,097,000; year ended 31 December 2021:
£153,511,000).
7 Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets (valuing
prior charges at par) attributable to the equity shareholders of
£1,574,637,000 (30 June 2021: £2,032,880,000; 31 December 2021:
£1,992,041,000) and on 707,268,687 (30 June 2021: 769,127,886; 31 December
2021: 737,975,867) ordinary shares, being the number of ordinary shares in
issue at the period end.
8 Subsidiary undertaking
The Company has an investment in the issued ordinary share capital of its
wholly owned subsidiary undertaking, Witan Investment Services Limited, which
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.
Page 17 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Notes to the Financial Statements continued
9 Financial instruments
Balance Sheet amount versus fair value
At the period end, the carrying value of financial assets and financial
liabilities approximates their fair value, with the exception of the non
current liabilities as detailed below:
Balance Sheet amount
Financial liabilities measured using effective interest method: Fair value £'000
£'000
Non current liabilities
Preference shares 1,354 2,555
Secured notes 130,474 154,027
-------------- --------------
131,828 156,582
-------------- --------------
Fair value hierarchy
The table above analyses recurring fair value measurements for 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 financial liabilities: The Company's preference shares are actively
traded on a recognised stock exchange. Their fair value has therefore been
deemed to be Level 1.
Level 3 financial liabilities: The Company's secured notes are not traded on a
recognised stock exchange and so the fair value is calculated by using a
discount rate which reflects the yield on a UK gilt of similar maturity plus a
credit spread of 1.40%. Their fair value has therefore been deemed to be Level
3.
The table below analyses fair value measurements for financial assets.
Financial assets at fair value through profit or loss at 30 June 2022 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments including derivatives:
Equity securities designated at fair value through profit or loss 1,643,204 1,643,204
- -
Warrants - 1,117 - 1,117
Investments in other funds - 92,277 34,577 126,854
------------ ---------- --------- ------------
Total financial assets carried at fair value 1,643,204 93,394 34,577 1,771,175
======= ====== ===== =======
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 within Level 1.
Level 3: valued by reference to valuation techniques using inputs that are not
based on observable market data.
Page 18 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Notes to the Financial Statements continued
Level 2 Financial assets
Level 2 Financial assets refer to investments in GMO Climate Change Fund
(December 2021: GMO Climate Change Fund) and warrant holdings in Kweichow
Moutai (December 2021: Wulliangye Yibin and Kweichow Moutai).
Level 3
A reconciliation of fair value movements within Level 3 is set out below:
(Unaudited) Half year ended (Audited)
30 June Year ended
2022 31 December
Level 3 Investments at fair value through profit or loss £'000 2021
£'000
Opening balance 37,774 -
Acquisitions - 38,138
Total losses included in the Statement of Comprehensive Income - on assets (3,197) (364)
held at year end
-------------- --------------
Closing balance 34,577 37,774
======== ======
As in 2021, the key inputs to the valuation of the two Level 3 unquoted
investments (i.e. the unquoted growth funds with Greenoaks (Lindenwood) and
the Lansdowne Developed Markets Opportunities fund) are the fair value net
asset value statements provided by the investee entities.
10 Segment reporting
As detailed in the Company's Annual Report for the year ended 31 December
2021, 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 2022, 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.
Page 19 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2022
Notes to the Financial Statements continued
10 Segment reporting (continued)
(Unaudited) (Unaudited) (Audited)
Half year ended 30 June 2022 Half year ended 30 June 2021 Year ended 31 December 2021
Invest-ment Manage-ment Total Invest-ment Manage-ment Total Invest-ment Manage-ment services Total £'000
trust services £'000 trust services £'000 trust £'000
£'000 £'000 £'000 £'000 £'000
External revenue 23,842 - 23,842 19,459 - 19,459 37,572 - 37,572
Other revenue (340,359) - (340,359) 197,479 - 197,479 246,929 - 246,929
Segment expenses
-Management expenses
(4,263) - (4,263) (4,859) - (4,859) (9,714) - (9,714)
-Other expenses (2,670) (256) (2,926) (2,352) (242) (2,594) (4,437) (479) (4,916)
-Finance costs (2,813) - (2,813) (2,637) - (2,637) (5,208) - (5,208)
Segment (loss)/profit before taxation
(326,263) (256) (326,519) 207,090 (242) 206,848 265,142 (479) 264,663
Segment assets 1,573,486 1,151 1,574,637 2,031,747 1,133 2,032,880 1,990,925 1,116 1,992,041
11 Comparative information
The financial information contained in this half year financial report does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. The financial information for the half years ended 30 June 2022
and 30 June 2021 has not been audited or reviewed by the Auditor.
The figures and financial information for the year ended 31 December 2021 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 2021 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 2022
A copy of the financial report for the half year ended 30 June 2022 has been
submitted to the National Storage Mechanism and will shortly be available for
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
and on the Company's website, www.witan.com (http://www.witan.com) .
Printed copies or electronic notification will be sent to shareholders in
August 2022 and will be available thereafter from the Secretary at the
Company's registered office, 14 Queen Anne's Gate, London SW1H 9AA.
- ENDS -
For further information please contact:
Andrew Bell Alexis Barling
Chief Executive Officer Director of Marketing
Witan Investment Trust plc Witan Investment Trust plc
Telephone: 020 7227 9770 Telephone: 020 7227 9770
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR SFAFWIEESEDARecent news on Witan Investment Trust
See all newsREG - Official List - Removal - WITAN INVESTMENT TRUST PLC
AnnouncementREG - Stock Exch Notice Witan Inv Tst PLC - Cancellation - WITAN INVESTMENT TRUST PLC
AnnouncementREG - Witan Inv Tst PLC - Result of General Meeting and Scheme Entitlements
AnnouncementREG - Official List - Suspension - WITAN INVESTMENT TRUST PLC
AnnouncementREG - Witan Inv Tst PLC - Net Asset Value(s)
Announcement