REG - Witan Inv Tst PLC - Half-year Report
13/08/2024 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:20240813:nRSM1574Aa&default-theme=true
RNS Number : 1574A Witan Investment Trust PLC 13 August 2024
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
SUMMARY
• Proposed combination with Alliance Trust to create a leading
multi-manager trust, with lower costs, a proven investment strategy and likely
to become a member of the FTSE 100 index with c£5 billion of net assets
• Witan's NAV total return was +11.0%, which compares with the
return from our composite global benchmark of +11.7%
• The discount narrowed, resulting in a shareholder total return of
14.3%; 4.0% of our shares were bought into treasury, at an average discount of
8.9%
• A second interim dividend of 1.75 pence per ordinary share will be
paid in September
• Assuming shareholders approve the proposed combination with
Alliance Trust, total dividends for the year are expected to amount to the
equivalent of not less than 6.28 pence per share for current Witan/continuing
Alliance Witan shareholders, a 4% increase on the 6.04 pence per share paid in
respect of 2023.
Key data((4))
(Unaudited) (Audited)
30 June 2024 31 December 2023
Share price 268.0p 237.5p
Net asset value per ordinary share (debt at fair value) ((3)) 282.6p 257.6p
Discount (NAV including income, debt at fair value) ((3)) 5.2% 7.8%
Dividend per share 3.26p 2.90p
Revenue earnings per share((2)) 2.79p 2.90p
Total earnings per share 26.43p 18.51p
Net Assets (£'000) 1,642,287 1,579,729
Total return performance
6 months 1 year 5 years 10 years
return return return return
% % % %
Share price total return ((1)(3)) 14.3 21.4 42.5 140.6
Net asset value total return ((1)(3)) 11.0 15.0 44.5 146.6
Witan benchmark ((1)) 11.7 19.5 64.7 166.9
MSCI ACWI Index((2)) 12.5 20.6 71.8 219.8
MSCI UK IMI Index((2)) 7.3 13.3 29.1 74.0
(1) Source: Witan/Morningstar.
(2) Source: Witan/Morningstar. See also MSCI for conditions of use
(www.msci.com).
(3) Alternative performance measures
The financial statements (on pages 10 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 Annual Report.
(4) 30 June 2024 data is unaudited.
Page 2 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Percentage of total funds as at 30 June 2024* %
North America 40
Europe 22
United Kingdom 20
Asia ex Japan 7
Investment Companies 7
Japan 3
Other 1
Sector breakdown of the portfolio as at 30 June 2024((5)) %
Financials 18
Industrials 16
Information Technology 14
Consumer Discretionary 9
Consumer Staples 9
Healthcare 9
Communication Services 8
Investment Companies 7
Materials 6
Energy 2
Other 2
Company size breakdown of the portfolio as at 30 June 2024((5)) %
Large Cap 74
Mid Cap 15
Small Cap 5
Investment Companies 7
(5) Source: BNP Paribas as at 30 June 2024
* Figures may not sum due to rounding.
Page 3 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
INTERIM MANAGEMENT REPORT
Proposed combination with Alliance Trust to form Alliance Witan PLC
Although this report is primarily a record of Witan's performance and results
for the first half of 2024, it would be remiss not to begin by highlighting
the proposed combination with Alliance Trust to form Alliance Witan PLC, which
was announced in late June. This is clearly a highly significant event for
shareholders, in the year we mark the 100(th) anniversary of the Company's
listing on the London Stock Exchange, on 5 August 1924.
The combination will create a company with net assets of c£5 billion,
potentially joining the FTSE 100 index. It will be managed in accordance with
Alliance Trust's current proven multi-manager approach, while delivering
better liquidity and lower costs for both companies' shareholders. The details
of the scheme will be set out in documents likely to be published in early
September, seeking shareholders' approval in early October.
Investment backdrop and performance
At the end of 2023, market analysts forecast significant cuts in interest
rates starting early in 2024, particularly in the US. These hopes have
retreated, due to the resilience of US economic growth and slower than
expected progress in reducing inflation towards target. The result has been a
continued plateau in the level of US and UK interest rates since August 2023,
bearing out our prediction that the peak in rates would resemble Table
Mountain rather than the Matterhorn.
Disappointment on the interest rate front has been offset by more positive
news on corporate earnings, centred on the boom in the semiconductor sector
and linked to investment in generative artificial intelligence systems. In
addition, gradual progress in reducing inflationary pressures means that
investors view the turning point in the interest rate cycle as deferred, not
cancelled. This has been a constructive backdrop for equity markets, though
negative for government bonds and interest rate sensitive sectors such as
housing and real estate.
Global equities (measured by the MSCI AC World Index) delivered positive
returns of 12.5% led once again by the US which rose 16.3%. Other regions
delivered returns of between 6% and 9% in sterling terms.
Witan's NAV total return was +11.0%, clearly a strongly positive return in
absolute and inflation-adjusted terms. For much of the period, Witan was also
ahead of our composite equity benchmark but in June the strength in some of
the largest US technology companies reasserted itself, pushing the return on
our equity benchmark ahead to 11.7%. The share price total return was +14.3%
(owing to a narrowing of the discount since the end of 2023).
Manager performance
The full table of the performance of our incumbent managers as at 30 June is
shown on the following page. Four of our six core managers outperformed during
the period. These included Artemis in the UK, Jennison and WCM as the global
managers with greatest exposure to faster growth companies but also Lansdowne,
whose portfolio is heavily skewed towards lower rated stocks in the UK and
Europe.
Page 4 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
INTERIM MANAGEMENT REPORT continued
Although market performance continued to be unusually concentrated, the
ability of a manager with a "value" portfolio in the less fashionable markets
of the UK and Europe to outperform is a tentative sign that market leadership
may be set to broaden out. Our emerging markets portfolio, managed by GQG,
delivered another outstanding performance, ahead of the global index despite
emerging markets as a whole lagging. The two of our core managers to have
lagged have, in different ways, selected portfolios characterised by long-term
earnings-compounding companies, where healthy returns of 7-8% in the period
nonetheless lagged behind the global average.
Frustratingly, as in 2023, our portfolio of specialist investment companies
and our investment in the GMO Climate Change fund were significant drags on
the portfolio. Neither sector was in focus for investors, the former being
affected by structural selling pressures linked to legacy European regulation
on cost disclosures and the latter being viewed over-simplistically as a call
on the timing of interest rate reductions.
Investment managers: Assets under management and investment performance as
at 30 June 2024
Witan assets managed as at 30.06.24 Annualised performance since appointment((2))
Appoint-ment date Performance in 2024 (%) (%)
Investment manager Mandate
£m (%)((1)) Manager Benchmark Manager Benchmark
CORE
Jennison Global 31.08.20 164.3 9.1 22.6 12.5 9.3 12.6
Lansdowne Global 14.12.12 345.9 19.2 15.6 12.5 14.0 12.8
Lindsell Train Global 31.12.19 285.4 15.9 8.1 12.5 6.1 11.5
Veritas Global 11.11.10 303.6 16.9 7.0 12.5 12.1 11.5
WCM Global 31.08.20 238.1 13.3 17.9 12.5 10.8 12.6
Artemis UK 06.05.08 52.8 2.9 8.9 7.3 8.5 6.0
SPECIALIST
GMO Climate Change 05.06.19 64.2 3.6 (13.8) 12.5 5.9 12.1
GQG Emerging Markets 16.02.17 86.1 4.8 18.6 8.6 11.4 4.7
Unquoted Growth Specialist Funds 02.07.21 29.6 1.6 6.0 12.5 (22.5) 8.8
Witan Direct Holdings Specialist Funds 19.03.10 146.3 8.1 2.0 11.7 8.5 9.6
Notes:
1 Amount of percentage of Witan's investments managed, excluding centrally
managed cash.
2 The percentages are annualised where the date of appointment was more than one
year ago.
3 £62.2 million (3.6%) was held in a UK mid-cap ETF at the period end, having
been accumulated as liquidity was realised elsewhere.
Page 5 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
INTERIM MANAGEMENT REPORT continued
Investment income and expenses
Revenue earnings per share for the period were 2.79 pence per share, a decline
of 4% from the level of 2.90 pence seen in the first half of 2023. This was
due to an increase in "Other expenses" relating to corporate advisory costs,
the underlying trend being a small rise.
The ongoing charges figure ('OCF') for the six months was 0.43% (2023: 0.43%).
The OCF for the whole of 2023 was 0.76%. This is expected to be materially
lower in future years, assuming approval of the combination with Alliance
Trust.
Dividend
The Company has increased its dividend every year since 1974 (a 49-year record
of increases), recognising the importance for investors of a reliable and
growing income. This record is set to be extended to 50 years in 2024, as set
out below.
The Company paid a first interim dividend of 1.51 pence per share in June
(2023: 1.45 pence). A second interim dividend of 1.75 pence per ordinary share
(2023: 1.45 pence) will be paid on 13 September 2024, for which the
ex-dividend date will be 22 August 2024. The total 2024 dividends paid by
Witan ahead of its proposed combination with Alliance Trust will thus amount
to 3.26 pence per share. The final two dividends for 2024 are expected to be
paid by Alliance Witan PLC in December 2024 and March 2025, after the
combination of the two companies has taken effect. Alliance Trust has
announced that each of these payments is expected to be equivalent to not less
than 1.51 pence per share for current Witan shareholders, which will make the
total dividend for 2024 the equivalent of c6.28 pence per share, a 4% increase
on the 6.04 pence per share payment for 2023, ahead of the expected rate of
inflation for 2024. This will mark a 50(th) consecutive year of dividend rises
for Witan shareholders, while extending Alliance Trust's even longer 57-year
run of consecutive dividend rises.
Gearing
The Company's gearing has been actively managed, averaging 13% in the first
quarter and 7% in the second. Following the strong start to the year for
markets, gearing was reduced to 8% in April and reduced further to 6.1% at
mid-year. Gearing has been helpful to performance, given the rise in equity
markets, but much of the good news is now reflected in valuations, warranting
a more selective approach. The Company has long-term borrowings of £155
million with a blended interest rate of 3%, fixed for an average of 23 years.
This provides a very low hurdle for the investment of these funds to boost
shareholder returns for Witan and the future Alliance Witan. The Company
terminated its £125 million short-term variable rate facility in April as the
lower level of gearing rendered it unnecessary, saving on the commitment fee
and associated administration.
Page 6 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
INTERIM MANAGEMENT REPORT continued
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 elusive in recent years, given the successive
shocks of the pandemic, wars, rising inflation, higher interest rates and
worries about recession, all of which have subdued demand for equity
investments. Given these background uncertainties, investors appeared wary of
committing additional funds to their investment trust holdings, despite
markets rising during the first half of 2024. In addition, structural
pressures have prompted further selling by some institutions, a trend evident
across the whole investment trust sector. Our discount, having ended 2023 at
7.8%, remained undesirably wide in the early months of the year before
improving in May and ending the period at 5.2% after a positive reaction to
the Company's proposed combination with Alliance Trust.
The Company has been active in buying back shares, buying 24.8 million shares
into treasury in the period (4.0% of the total), at an average discount of
8.9%. This added £5.6 million to the net asset value which more than offset
the Company's investment management costs for the period.
Outlook
Investors have largely shrugged off disappointments in the timing of interest
rate cuts, unwelcome developments in global conflict hotspots and uncertainty
generated by 2024's wide swathe of national elections. Notwithstanding a sharp
bout of volatility in early August, equity markets as a whole seem to have
taken the view that, whatever flies there may be in their proverbial soup,
they are focused on the substance, not the swimmer.
This insouciance, complacency to some, is helped by the increased proximity of
easier monetary policy, after the prospect of rate cuts retreated for much of
early 2024. The European Central Bank, with a relatively weak continental
economy, has led the way, followed by the Bank of England in early August. The
US Federal Reserve, while holding rates steady at the end of July, indicated
that a September cut was on the cards, as long as the incoming data on
inflation and the labour market remained supportive.
Whilst politics remain in flux in some countries in Europe and ahead of the US
presidential election, resolution of the uncertainty in the UK has been
greeted by a positive initial reaction. The pre-election tendency for the news
to highlight every problem as a half-empty glass has abated, while the absence
of fiscal room for manoeuvre aligns the country's need for improved
productivity with the incoming government's need for resources to fund reforms
to public services, from health to defence. If the government lives up to its
"New New Labour" credentials the low valuation of the UK market could find the
catalyst it needs to be more positively rated.
Page 7 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
INTERIM MANAGEMENT REPORT continued
In coming weeks, Witan will be seeking its shareholders' approval for the
proposed combination with Alliance Trust, to form Alliance Witan PLC. Further
details will be sent to shareholders in early September. This offers a very
exciting future for our shareholders, retaining a multi-manager approach to
investment in global equities, with a proven investment strategy and lower
costs, in a Company with net assets post-combination of c£5 billion.
Assuming shareholders approve the proposed combination, this will be the last
time I write to you formally as Chairman of Witan. I would like to thank our
employees for their contributions to the Company and for their steadfastness
during what for them has been a short period of personal uncertainty. I would
particularly like to thank Andrew Bell who has led the Company in such an
exemplary fashion for the last fourteen years. As I mentioned above, recent
times have seen a pandemic, wars, rising inflation, higher interest rates and
worries about recession, not a helpful background for investors. Andrew has
navigated these with a cool head and sound judgement. I wish him well for his
retirement. Finally, I would like to thank the non-executive members of the
Board, including Gabrielle Boyle who stood down earlier in the year, and our
company secretary, Eleanor Cranmer of Frostrow Capital. Their support and
counsel during my time as Chairman have been invaluable, as have their hard
work and wisdom during the recent process. I believe that this rigorous
process has identified an excellent solution for the Company which will stand
shareholders in good stead for many years to come.
For and on behalf of the Board
Andrew Ross
Chairman
12 August 2024
Page 8 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
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 inflation, military conflicts, trade wars and
pandemics);
· operational and cyber;
· compliance and regulatory change;
· accounting, taxation and legal;
· liquidity; 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 2023.
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
12 August 2024
Page 9 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
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 2023 Annual
Report).
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. However, shareholders should
refer to note 1 on page 14 for more detail on this matter.
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 2023
are contained in the Company's Annual Report for the year ended 31 December
2023.
Page 10 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Consolidated Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Half year ended 30 June 2024 Half year ended 30 June 2023 Year ended 31 December 2023
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 23,259 - 23,259 24,377 - 24,377 41,251 - 41,251
Other income 633 - 633 649 - 649 1,223 - 1,223
Gains on investments held at fair value through profit or loss - 150,959 150,959 - 111,398 111,398 - 165,476 165,476
(Note 2)
Foreign exchange gains/(losses) on cash and cash equivalents - 132 132 - (915) (915) - (1,532) (1,532)
---------- ---------- ----------- --------- ---------- ----------- ----------- ----------- -----------
Total income 23,892 151,091 174,983 25,026 110,483 135,509 42,474 163,944 206,418
Expenses
Management fees (876) (2,628) (3,504) (875) (2,626) (3,501) (1,712) (5,135) (6,847)
Other expenses (4,287) (68) (4,355) (2,874) (58) (2,932) (5,390) (129) (5,519)
---------- ---------- ---------- --------- ---------- ----------- ----------- ----------- -----------
Profit before finance costs and taxation 18,729 148,395 167,124 21,277 107,799 129,076 35,372 158,680 194,052
Finance costs (1,042) (3,004) (4,046) (1,200) (3,471) (4,671) (2,528) (7,332) (9,860)
---------- ---------- ----------- --------- ---------- ----------- ----------- ----------- -----------
Profit before taxation 17,687 145,391 163,078 20,077 104,328 124,405 32,844 151,348 184,192
Taxation (562) (437) (999) (747) (437) (1,184) (1,335) (1,373) (2,708)
---------- ---------- ----------- --------- ---------- ----------- ----------- ----------- -----------
Profit 17,125 144,954 162,079 19,330 103,891 123,221 31,509 149,975 181,484
attributable to equity
shareholders of the parent company
====== ====== ====== ===== ====== ====== ====== ====== ======
Earnings per ordinary share 2.79p 23.64p 26.43p 2.90p 15.61p 18.51p 4.84p 23.02p 27.86p
(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/(loss), 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 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Consolidated Statement of Changes in Equity
(Unaudited)
Half year ended 30 June 2024
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 2023 50,018 99,251 46,498 1,330,835 35,063 1,561,665
Total comprehensive income: - - - 144,954 17,125 162,079
Profit for the period
Transactions with owners, recorded directly to equity: - - - - (19,628) (19,628)
Ordinary dividends paid
Buybacks of ordinary shares (held in - - - (61,829) - (61,829)
treasury) (Note 6)
----------- ----------- ------------- ------------- ----------- -------------
Total equity at 30 June 2024 50,018 99,251 46,498 1,413,960 32,560 1,642,287
======= ======= ======== ======== ======= ========
(Unaudited)
Half year ended 30 June 2023
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 2022 50,018 99,251 46,498 1,303,740 42,302 1,541,809
Total comprehensive income: - - - 103,891 19,330 123,221
Profit for the period
Transactions with owners, recorded directly to equity: - - - - (20,296) (20,296)
Ordinary dividends paid
Buyback of ordinary shares (held in - - - (65,005) - (65,005)
treasury) (Note 6)
----------- ----------- ------------- ------------- ----------- -------------
Total equity at 30 June 2023 50,018 99,251 46,498 1,342,626 41,336 1,579,729
======= ======= ======== ======== ======= ========
(Audited)
Year ended 31 December 2023
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 2022 50,018 99,251 46,498 1,303,740 42,302 1,541,809
Total comprehensive income: - - - 149,975 31,509 181,484
Profit for the year
Transactions with owners, recorded directly to equity: - - - - (38,748) (38,748)
Ordinary dividends paid
Buyback of ordinary shares (held in - - - (122,880) - (122,880)
treasury) (Note 6)
----------- ----------- ------------- ------------- ----------- -------------
Total equity at 31 December 2023 50,018 99,251 46,498 1,330,835 35,063 1,561,665
======= ======= ======== ======== ======= ========
Page 12 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Consolidated Balance Sheet
(Unaudited) (Unaudited) (Audited)
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Non current assets
Investments at fair value through profit or loss 1,741,715 1,820,781 1,783,822
Right-of-use asset: property 89 161 125
--------------- --------------- ---------------
1,741,804 1,820,942 1,783,947
Current assets
Other receivables 18,287 6,122 3,982
Cash and cash equivalents 51,413 20,753 22,434
--------------- --------------- ---------------
Total current assets 69,700 26,875 26,416
--------------- --------------- ---------------
Total assets 1,811,504 1,847,817 1,810,363
Current liabilities
Other payables (11,022) (6,340) (7,339)
Bank loans - (104,000) (83,000)
--------------- --------------- ---------------
Total current liabilities (11,022) (110,340) (90,339)
--------------- --------------- ---------------
Total assets less current liabilities 1,800,482 1,737,477 1,720,024
--------------- --------------- ---------------
Non current liabilities
Other payables - (157) (160)
Deferred tax liability on Indian capital gains (1,550) (984) (1,573)
Borrowings:
Secured debt (Note 5) (154,090) (154,052) (154,071)
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)
--------------- --------------- ---------------
Total non current liabilities (158,195) (157,748) (158,359)
--------------- --------------- ---------------
Net assets 1,642,287 1,579,729 1,561,665
========= ========= =========
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 1,413,960 1,342,626 1,330,835
Revenue reserve 32,560 41,336 35,063
--------------- --------------- ---------------
Total equity 1,642,287 1,579,729 1,561,665
========= ========= =========
Net asset value per ordinary share (Note 7) 273.26p 242.56p 249.57p
========= ========= ========
Page 13 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Consolidated Cash Flow Statement
(Unaudited) (Unaudited) (Audited)
30 June 30 June 31 December 2023
2024 2023
£'000 £'000 £'000
Cash flows from operating activities
Dividend income received 22,993 21,985 40,956
Interest received 520 532 1,073
Other income received 78 121 162
Operating expenses paid (6,294) (7,053) (11,235)
Taxation on overseas income (930) (917) (1,490)
Taxation recovered 225 2,806 628
------------- ------------- -------------
Net cash inflow from operating activities 16,592 17,474 30,094
Cash flows from investing activities
Purchases of investments (301,904) (307,804) (538,699)
Sales of investments 483,498 357,718 681,035
Overseas capital gains tax on sales (461) - (468)
Capital gains tax on sales - (120) -
Settlements of future contracts - 717 718
------------- ------------- -------------
Net cash inflow from investing activities 181,133 50,511 142,586
Cash flow from financing activities
Equity dividends paid (19,630) (20,298) (38,748)
Buybacks of ordinary shares (62,196) (65,153) (123,048)
Interest paid (4,018) (4,651) (9,694)
Repayment of lease liability (34) (67) (76)
Drawdown of bank loans 20,000 85,250 149,250
Repayment of bank loans (103,000) (77,750) (162,750)
------------- ------------- -------------
Net cash outflow from financing activities (168,878) (82,669) (185,066)
Increase/(decrease) in cash and cash equivalents 28,847 (14,684) (12,386)
Cash and cash equivalents at the start of the period 22,434 36,352 36,352
Effect of foreign exchange rate changes 132 (915) (1,532)
------------- ------------- -------------
Cash and cash equivalents at the end of the period 51,413 20,753 22,434
======== ======== ========
Page 14 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Notes to the Financial Statements
1 Basis of preparation
The condensed financial statements for the half year ended 30 June 2024 have
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
July 2022, where the SORP is consistent with the requirements of IAS.
On 26 June 2024, the Board announced that heads of terms had been agreed in
principle for a proposed combination of the Company with the assets of
Alliance Trust PLC (the "Proposals"). The Proposals, if approved by each
company's shareholders, will be implemented through a scheme of reconstruction
under which the Company will be placed into voluntary liquidation and part of
its cash, assets and undertaking will be transferred to Alliance Trust in
exchange for the issue of new ordinary shares in Alliance Witan PLC to
shareholders. More detail can be found in the Chairman's Statement on pages 3
and 7 and in the RNS announcement on 26 June 2024 itself.
As at the date of this report the intentions of Shareholders are not known.
Accordingly, the Board considers that this represents a material uncertainty
when assessing the prospects of the Company beyond September 2024 when
shareholders are expected to vote on the Proposals.
The Board has considered the appropriateness of continuing to prepare the
financial statements on a going concern basis given this material uncertainty
and has concluded that, until the intentions of shareholders are known, it
remains appropriate to continue to prepare the financial statements on a going
concern basis. If the directors conclude, in the future, that it is not
appropriate to prepare the financial statements on a going concern basis of
accounting then adjustments would be required to reclassify all assets as
current, and a provision for further liability, including liquidation costs,
would be made. In the directors' opinion the impact of these adjustments on
the financial statements would not be expected to be significant.
The directors are satisfied that the Company has adequate resources to
continue in operational existence for at least 12 months from the date of
approval of this document. In reaching this conclusion, the directors have
considered the liquidity of the Company's portfolio of investments as well as
its cash position, income and expense flows.
Taking the above factors into consideration, the Board has a reasonable
expectation that the Company has adequate resources to continue in operational
existence and discharge its liabilities as they fall due for a period of at
least 12 months from the date of approval of these financial statements.
The condensed set of financial statements for the half year ended 30 June 2024
has been prepared on the basis of the accounting policies set out in the
audited consolidated financial statements for the year ended 31 December 2023.
These condensed financial statements have not been audited or reviewed by the
Company's Auditor.
2 Transaction costs
The gains on investments held at fair value through profit or loss include
purchase transaction costs of £399,000 (half year ended 30 June 2023:
£471,000; year ended 31 December 2023: £957,000) and sale transaction costs
of £195,000 (half year ended 30 June 2023: £168,000; year ended 31 December
2023: £322,000). The purchase and sale transaction costs comprise mainly
stamp duty and commissions.
Page 15 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Notes to the Financial Statements continued
3 Earnings per ordinary share
The earnings per ordinary share figure is based on the net profit for the half
year of £162,079,000 (half year ended 30 June 2023: profit of £123,221,000;
year ended 31 December 2023: profit of £181,484,000) and on 613,046,983
ordinary shares (half year ended 30 June 2023: 665,704,166; year ended 31
December 2023: 651,467,218) 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 2024 30 June 2023 31 December 2023
£'000 £'000 £'000
Net revenue profit 17,125 19,330 31,509
Net capital profit 144,954 103,891 149,975
-------------- -------------- --------------
Net total profit 162,079 123,221 181,484
======== ======== ========
Weighted average number of ordinary shares in issue during the period 613,046,983 665,704,166 651,467,218
Pence Pence Pence
Revenue earnings per ordinary share 2.79 2.90 4.84
Capital earnings per ordinary share 23.64 15.61 23.02
-------------- -------------- --------------
Total earnings per ordinary share 26.43 18.51 27.86
======== ======== ========
4 Interim dividend
The directors have declared a second interim dividend of 1.75 pence per
ordinary share (2023: 1.45 pence), payable on 13 September 2024 to
shareholders registered on 23 August 2024. The shares will be quoted
ex-dividend on 22 August 2024. A first interim dividend of 1.51 pence (2023:
1.45 pence) was paid on 7 June 2024.
5 Secured debt
(Unaudited) (Unaudited) (Audited)
30 June 2024 30 June 2023 31 December 2023
£'000 £'000 £'000
3.29 per cent. secured notes due 2035 20,909 20,901 20,905
3.47 per cent. secured notes due 2045 53,700 53,687 53,693
2.39 per cent. secured notes due 2051 49,705 49,695 49,700
2.74 per cent. secured notes due 2054 29,776 29,769 29,773
-------------- -------------- --------------
154,090 154,052 154,071
======== ======== ========
Page 16 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Notes to the Financial Statements continued
6 Ordinary share capital
At 30 June 2024 there were 600,990,420 ordinary shares in issue (30 June 2023:
651,268,977; 31 December 2023: 625,750,845) and 399,364,580 shares held in
treasury (30 June 2023: 349,086,023; 31 December 2023: 374,604,155). During
the half year ended 30 June 2024, the Company bought back 24,760,425 of its
own ordinary shares (half year ended 30 June 2023: 28,554,194; year ended 31
December 2023: 54,072,326). The costs of the share buybacks were £61,829,000
(half year ended 30 June 2023: £65,005,000; year ended 31 December 2023:
£122,880,000).
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
£1,642,287,000 (30 June 2023: £1,579,729,000; 31 December 2023:
£1,561,665,000) and on 600,990,420 (30 June 2023: 651,268,977; 31 December
2023: 625,750,845) 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.
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 1,300 2,555
Secured notes 98,951 154,090
-------------- --------------
100,251 156,645
-------------- --------------
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.
Page 17 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Notes to the Financial Statements continued
9 Financial instruments (continued)
Financial assets at fair value through profit or loss at 30 June 2024 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments including derivatives:
Equity securities designated at fair value through profit or loss 1,647,901 1,647,901
- -
Investments in other funds - 64,240 29,574 93,814
------------ ---------- --------- ------------
Total financial assets carried at fair value 1,647,901 64,240 29,574 1,741,715
======= ====== ===== =======
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.
There have been no transfers between levels of the fair value hierarchy during
the period.
Level 2 Financial assets
Level 2 Financial assets refer to investments in GMO Climate Change Fund (31
December 2023: GMO Climate Change Fund).
Level 3
A reconciliation of fair value movements within Level 3 is set out below:
(Unaudited) Half year ended (Audited)
30 June Year ended
2024 31 December
Level 3 Investments at fair value through profit or loss £'000 2023
£'000
Opening balance 27,911 32,728
Acquisitions - -
Total gains/(losses) included in the Statement of Comprehensive Income - on 1,663 (4,817)
assets held at year end
-------------- --------------
Closing balance 29,574 27,911
======== ======
The key inputs to unquoted investments (i.e. the holdings in Unquoted Growth
Funds with Lindenwood and Lansdowne) included within Level 3 are net asset
value statements provided by investee entities, which represent fair value
(2023: same).
Page 18 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
Notes to the Financial Statements continued
10 Segment reporting
As detailed in the Company's Annual Report for the year ended 31 December
2023, 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, as set out in the Annual Report ; the
geographical allocation of the portfolio, as at 30 June 2024, 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) (Unaudited) (Audited)
Half year ended 30 June 2024 Half year ended 30 June 2023 Year ended 31 December 2023
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 23,892 - 23,892 25,026 - 25,026 42,474 - 42,474
Other revenue 151,091 - 151,091 110,483 - 110,483 163,944 - 163,944
Segment expenses
-Management expenses (6,847) - (6,847)
(3,504) - (3,504) (3,501) - (3,501)
-Other expenses (4,106) (249) (4,335) (2,641) (291) (2,932) (4,946) (573) (5,519)
-Finance costs (4,046) - (4,046) (4,671) - (4,671) (9,860) - (9,860)
Segment profit /(loss) before taxation
163,327 (249) 163,078 124,696 (291) 124,405 184,765 (573) 184,192
Segment assets 1,640,941 1,346 1,642,287 1,578,512 1,217 1,579,729 1,560,402 1,263 1,561,665
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 2024
and 30 June 2023 has not been audited or reviewed by the Auditor.
The figures and financial information for the year ended 31 December 2023 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 2023 have been
filed with the Registrar of Companies. The report of the independent Auditor
on those accounts contained no qualification or statement under section 498(2)
or section 498(3) of the Companies Act 2006.
Page 19 of 19
WITAN INVESTMENT TRUST PLC
Financial Report for the Half Year ended 30 June 2024
12 Potential Transactions with Alliance Trust PLC
On 26 June 2024, the boards of Alliance Trust PLC and Witan Investment Trust
entered into heads of terms for the two companies to create Alliance Witan
PLC. This follows a strategic review by the board of Witan of its investment
management arrangements, triggered by the planned retirement of Andrew Bell,
Witan's Chief Executive Officer. It is anticipated that documentation in
connection with the proposals will be posted to shareholders in early
September 2024, with a view to convening general meetings in September and
October 2024 and the transaction being completed by early October. Costs of
£1.7 million relating to the event have been accrued in the accounts for the
period to 30 June 2024.
Financial report for the half year ended 30 June 2024
A copy of the financial report for the half year ended 30 June 2024 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 2024 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 Isabella Seekings
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 SFWFWEELSEDARecent 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