⌘K
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On 13 August 2024, Witan Investment Trust PLC released its unaudited Financial Report for the Half Year ended 30 June 2024, reporting a Net Asset Value total return of +11.0% and a shareholder total return of 14.3%. The company confirmed its proposed combination with Alliance Trust, having accrued £1.7 million in related costs for the period, and declared a second interim dividend of 1.75 pence per ordinary share payable in September. During the half-year, Witan also bought 4.0% of its shares into treasury at an average discount of 8.9%.
| Date | 13 Aug 2024 |
| Time | 07:00:05 |
| Category | Results |
| ID | 1574A |
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) 30 June 2024 |
(Audited) 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 return % |
1 year return % |
5 years return % |
10 years 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 100th 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
|
Investment manager |
Mandate |
Appoint-ment date |
Witan assets managed as at 30.06.24 |
Performance in 2024 (%) |
Annualised performance since appointment(2) (%) |
|||
|
|
|
|
£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 50th 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) Half year ended 30 June 2024 |
(Unaudited) Half year ended 30 June 2023 |
(Audited) Year ended 31 December 2023 |
||||||
|
|
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 |
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 (Note 2) |
- |
150,959 |
150,959 |
- |
111,398 |
111,398 |
- |
165,476 |
165,476 |
|
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 attributable to equity shareholders of the parent company |
17,125 |
144,954 |
162,079 |
19,330 |
103,891 |
123,221 |
31,509 |
149,975 |
181,484 |
|
|
====== |
====== |
====== |
===== |
====== |
====== |
====== |
====== |
====== |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share (Note 3) |
2.79p |
23.64p |
26.43p |
2.90p |
15.61p |
18.51p |
4.84p |
23.02p |
27.86p |
|
|
===== |
====== |
====== |
===== |
====== |
====== |
===== |
====== |
====== |
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 capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
Total equity at 31 December 2023 |
50,018 |
99,251 |
46,498 |
1,330,835 |
35,063 |
1,561,665 |
|
Total comprehensive income: Profit for the period |
- |
- |
- |
144,954 |
17,125 |
162,079 |
|
Transactions with owners, recorded directly to equity: Ordinary dividends paid |
- |
- |
- |
- |
(19,628) |
(19,628) |
|
Buybacks of ordinary shares (held in treasury) (Note 6) |
- |
- |
- |
(61,829) |
- |
(61,829) |
|
|
----------- |
----------- |
------------- |
------------- |
----------- |
------------- |
|
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 capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
Total equity at 31 December 2022 |
50,018 |
99,251 |
46,498 |
1,303,740 |
42,302 |
1,541,809 |
|
Total comprehensive income: Profit for the period |
- |
- |
- |
103,891 |
19,330 |
123,221 |
|
Transactions with owners, recorded directly to equity: Ordinary dividends paid |
- |
- |
- |
- |
(20,296) |
(20,296) |
|
Buyback of ordinary shares (held in treasury) (Note 6) |
- |
- |
- |
(65,005) |
- |
(65,005) |
|
|
----------- |
----------- |
------------- |
------------- |
----------- |
------------- |
|
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 capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
Total equity at 31 December 2022 |
50,018 |
99,251 |
46,498 |
1,303,740 |
42,302 |
1,541,809 |
|
Total comprehensive income: Profit for the year |
- |
- |
- |
149,975 |
31,509 |
181,484 |
|
Transactions with owners, recorded directly to equity: Ordinary dividends paid |
- |
- |
- |
- |
(38,748) |
(38,748) |
|
Buyback of ordinary shares (held in treasury) (Note 6) |
- |
- |
- |
(122,880) |
- |
(122,880) |
|
|
----------- |
----------- |
------------- |
------------- |
----------- |
------------- |
|
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) 30 June 2024 £'000 |
(Unaudited) 30 June 2023 £'000 |
(Audited) 31 December 2023 £'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) 30 June 2024 |
(Unaudited) 30 June 2023 |
(Audited) 31 December 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) Half year ended 30 June 2024 £'000 |
(Unaudited) Half year ended 30 June 2023 £'000 |
(Audited) Year ended 31 December 2023 £'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) 30 June 2024 £'000 |
(Unaudited) 30 June 2023 £'000 |
(Audited) 31 December 2023 £'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:
|
|||
|
|
Financial liabilities measured using effective interest method: |
Fair value £'000 |
Balance Sheet amount £'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 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'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:
|
|
||||
|
|
Level 3 Investments at fair value through profit or loss |
(Unaudited) Half year ended 30 June 2024 £'000 |
(Audited) Year ended 31 December 2023 £'000 |
|||
|
|
Opening balance |
27,911 |
32,728 |
|||
|
|
Acquisitions |
- |
- |
|||
|
|
Total gains/(losses) included in the Statement of Comprehensive Income - on assets held at year end |
1,663 |
(4,817) |
|||
|
|
|
-------------- |
-------------- |
|||
|
|
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) Half year ended 30 June 2024 |
(Unaudited) Half year ended 30 June 2023 |
(Audited) Year ended 31 December 2023 |
|||||||
|
|
Invest-ment trust £'000 |
Manage-ment services £'000 |
Total £'000 |
Invest-ment trust £'000 |
Manage-ment services £'000 |
Total £'000 |
Invest-ment trust £'000 |
Manage-ment services £'000 |
Total £'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 |
(3,504) |
- |
(3,504) |
(3,501) |
- |
(3,501) |
(6,847) |
- |
(6,847) |
|
|
-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 and on the Company's website, 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 Chief Executive Officer Witan Investment Trust plc Telephone: 020 7227 9770
|
Isabella Seekings Director of Marketing Witan Investment Trust plc 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.