Annual Report 2017

Capital and income growth from active global equity investment Witan Investment Trust plc Our objective

/RQJWHUPJURZWKLQLQFRPHDQGFDSLWDOWKURXJK 4USBUFHJD
3FQPSU 01 3HUIRUPDQFHVQDSVKRW DFWLYHPXOWLPDQDJHULQYHVWPHQWLQJOREDOHTXLWLHV 02 )LQDQFLDOKLJKOLJKWV 04 &KDLUPDQpVUHSRUW 06 &KLHI([HFXWLYHpVUHSRUW 08 6WUDWHJLF5HSRUW :LWDQLVDQLQYHVWPHQWWUXVWZKLFKLVOLVWHGRQWKH 21 ,QYHVWPHQW0DQDJHUV 24 )LIW\/DUJHVW,QYHVWPHQWV /RQGRQ6WRFN([FKDQJHDQGZDVIRXQGHGLQ 25 &ODVVLßFDWLRQRI,QYHVWPHQWV

%JSFDUPSTn
3FQPSU :LWDQRIIHUVDFWLYHO\PDQDJHGH[SRVXUHWRJOREDO 26 Board of Directors 28 'LUHFWRUVp5HSRUW PDUNHWV SULQFLSDOO\HTXLWLHV XVLQJDPXOWLPDQDJHU $PSQPSBUF
(PWFSOBODF DSSURDFK7KHSRUWIROLRLVGLYHUVLßHGE\JHRJUDSKLFDO 32 &RUSRUDWH*RYHUQDQFH6WDWHPHQW 41 5HSRUWRIWKH$XGLW&RPPLWWHH UHJLRQLQGXVWULDOVHFWRUDQGDWWKHLQGLYLGXDOVWRFN 43 'LUHFWRUVp5HPXQHUDWLRQ5HSRUW OHYHO 56 6WDWHPHQWRI'LUHFWRUVp5HVSRQVLELOLWLHV 'JOBODJBM
TUBUFNFOUT 57 ,QGHSHQGHQW$XGLWRUpV5HSRUW :LWDQW\SLFDOO\XVHVEHWZHHQDQGLQYHVWPHQW 64&RQVROLGDWHG6WDWHPHQWRI &RPSUHKHQVLYH,QFRPH PDQDJHUV7KHEOHQGRIGLIIHUHQWDFWLYHDSSURDFKHV 65&RQVROLGDWHGDQG,QGLYLGXDO&RPSDQ\Statement RI&KDQJHVLQ(TXLW\ DQGVW\OHVDLPVWRGHOLYHUDGGHGYDOXHIRU 66&RQVROLGDWHGDQG,QGLYLGXDO&RPSDQ\%DODQFH VKDUHKROGHUVZKLOHVPRRWKLQJRXWWKHYRODWLOLW\ Sheets 67&RQVROLGDWHGDQG,QGLYLGXDO&RPSDQ\ QRUPDOO\DVVRFLDWHGZLWKDVLQJOHPDQDJHU &DVK)ORZ6WDWHPHQWV 68 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV

0UIFS
*OGPSNBUJPO 94 Other Information 96$OWHUQDWLYH,QYHVWPHQW)XQG0DQDJHUVp 'LUHFWLYH 97 +LVWRULFDOUHFRUG 98 +RZWRLQYHVW 99 6KDUHKROGHULQIRUPDWLRQ and AOWHUQDWLYH 5P
ßOE
PVU
NPSF
Performance Measures 7RYLHZWKHUHSRUWRQOLQH 100 Contacts DQGWRVHHYLGHRXSGDWHV *#$ 2XUUHODWLRQVKLSZLWKWKH5+6 SOHDVHYLVLWZZZZLWDQFRP

†0RUQLQJVWDU$OOULJKWVUHVHUYHG0RUQLQJVWDULVQRWUHVSRQVLEOHIRUDQ\WUDGLQJGHFLVLRQV GDPDJHVRURWKHUORVVHVUHODWHGWRWKHLQIRUPDWLRQRULWVXVH)RUPRUHLQIRUPDWLRQJRWR ZZZZLWDQFRPOHJDOLQIRUPDWLRQ )(&URZQ)XQG5DWLQJVGRQRWFRQVWLWXWHLQYHVWPHQWDGYLFHRIIHUHGE\)(DQGVKRXOGQRWEH XVHGDVWKHVROHEDVLVIRUPDNLQJDQ\LQYHVWPHQWGHFLVLRQ$OOULJKWVUHVHUYHG on page99.Areconciliation oftheNAV perordinary share (debtatparvalue) totheNAV perordinary share (debtatfair valu 1 to3andexplained ingreater detailintheStrategic Report,undertheheading‘Key Performance Indicators’ onpage 9.Defin assesses theCompany’s performance against arange ofcriteriawhichare viewed asparticularly relevant for investment trusts, The financialstatements (onpages64to93)setouttherequired statutory reporting measures of theCompany’s financialperfo Alternative Performance Measures snapshot:2017 Performance +10.5% 19.0% share (pence) value per Net asset Dividend pershare Net asset value totalreturn 2016: +11.8% 2016: 22.5% 2016 2016 939.2p 19.0p 2017 2017 1096.2p 21.0p 22.1% -1.6% Share price totalreturn Discount level price (pence) Share 2016: 18.4% 2016: -4.0%

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 2016 2016 902.0p -4.0% e) isshown in note 18onpage91. itions ofthetermsusedare setout rmance. Inaddition,theBoard whichare summarisedonpages 2017 2017 1079.0p -1.6% 01

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Financial highlights As at 31 December 2017

Key data

2017 2016 % change Share price 1079.0p 902.0p V 19.6 NAV per ordinary share (debt at par value)(4) 1109.8p 952.8p V 16.5 NAV per ordinary share (debt at fair value)(4) 1096.2p 939.2p V16.7 Discount (NAV including income, debt at fair value)(1) (4) 1.6% 4.0%

Total return performance

1yr % Return 3yrs % Return 5yrs % Return Share price total return(2) (4) 22.1 52.7 140.4 Net asset value total return(2) (4) 19.0 55.7 114.9 Witan Benchmark(2) 15.1 46.5 86.6 FTSE All-Share Index(3) 13.1 33.3 63.0 FTSE World Index(3) 13.8 53.5 106.7 UK CPI return 3.0 4.8 7.5

Notes: (1) The average discount on this basis in 2017 was 2.8% (2016: 5.8%), (Source: Morningstar). (2) Source: Morningstar. (3) Source: Morningstar. See also FTSE International for conditions of use (www.ftse.com). (4) Alternative Performance Measure (see pages 1 and 99).

Total returns since the introduction of the multi-manager structure (30.09.04) 500 450 400 350 300 250 200 150 100 50 0 20042005 20062007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Witan benchmark NAV Share price

02 Witan Investment Trust PLC Annual Report 2017 (2) (1) Notes: Other financialinformation Please notethatthedatesandamountsfor thefirst, second andthird interimdividendscould besubjecttochange. Dividend information 7My21 8Jn 08FrtItrm5.25p 5.25p 5.25p 6.75p First Interim Dividendtype Third Interim Second Interim Fourth Interim(2017) 18December 2018 18September2018 18June2018 29March 2018 Pay date Net assets 22 November 2018 23 August 2018 17 May2018 01 March 2018 Ex-dividend date 2018 Dividendschedule Revenue pershare Ongoing charges excluding performance fees Gearing Dividend pershare Number ofordinary shares inissue Ongoing charges includingperformance fees Since 2007,Witan’s dividendpershare hasrisen112%,compared with26%for theUKconsumer price index. Alternative Performance Measure (seepages1and99). Of which21,621,411(2016:18,860,261)shares are heldintreasury (seenote15,page89). > > > Key facts asat31December 2017

Ongoing charges: Gearing: Market capitalisation: £1.925bn 0.76% 9.7% (2)

(1)

(2) (2)

> > >

£1,980,521,000 Ongoing charges (incperformance fee): Active share: Net asset value pershare: 0.78% 77% 1096.2p 200,071,000 200,071,000

Annual Report 2017 Report Annual 0.76% 0.78% 23.8p 21.0p 9.7% 2017 2017

£1,726,637,000 200100 – 200,071,000 Witan Investment Trust PLC PLC Trust Investment Witan 10.3% 0.75% 0.65% 22.1p 19.0p 06%change 2016 06%change 2016

V V Dividend payable per share V

14.7 10.5 7.7 03

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Chairman’s report

Summary Witan has been operating a multi-manager approach since Highlights 2004. Over this period we have beaten the returns on our equity benchmark and raised the dividend significantly faster than the rate of inflation. We will strive to extend this record.

Global economic growth strengthened and became 19.0% more broadly based during 2017 and corporate earnings NAV total return of 19.0%, followed suit. In the UK the Brexit negotiations and political uncertainties affected corporate confidence but in Europe outperforming the benchmark’s return political developments were generally helpful to sentiment. of 15.1% by 3.9% Steady growth in the US allowed the Federal Reserve to continue gradually raising interest rates and to begin reducing its bond holdings, accumulated during the quantitative easing 115% period. 5 year NAV total return of 115%, With inflation subdued, interest rates low and corporate 28% ahead of the benchmark earnings rising, the backdrop for equity markets was generally positive. Our investment portfolio benefited from this environment, outperforming the benchmark. The net asset value (NAV) total return was 19.0%, 3.9% ahead of our 1.6% benchmark’s total return of 15.1%. The share price total return, enhanced by a narrower discount, was 22.1%. Share price discount to NAV reduced to 1.6% at year-end (2016: 4.0%) A fourth interim dividend of 6.75 pence was declared in February 2018, payable on 29 March 2018. As a result, the dividend for the year increased by 10.5% to 21.0 pence per share (2016: 19.0 pence), fully covered by revenue earnings, 2.74% with £5.5m added to the Company’s revenue reserves. This is £30m of long-term debt issued at the 43rd consecutive year of rising dividends at Witan, with the a fixed rate of 2.74% dividend more than double that paid in 2007. Taking a longer perspective, over the past 5 years Witan has achieved a NAV total return of 115%, compared with the 2.8m benchmark’s 87% return over this period. During the 10 years to the end of 2017, shareholders have had a NAV total return 2.8m shares bought back, helping to of 155%, compared with the benchmark’s return of 114%. narrow the discount to 1.6% 10.5% Dividend increased by 10.5% to 21.0p, more than double the level in 2007 and the 43rd consecutive annual rise

04 Witan Investment Trust PLC Annual Report 2017 in Witan’s shares atorneartonetasset value. It remains along-term objective tocreate sustainable liquidity at theendof2017. reduction inthediscount from 4%attheendof2016to1.6% asset value for remaining shareholders andcontributing toa at discounts between 6% and 1.5%,adding£0.9mtothenet During 2017,theCompanyboughtbackatotalof2.8mshares Witan’s shares inthemarket as at the end of 2017. as attheendof2017. the Company’s fixed-rate borrowings from 7%in2014to4.3% debt issued in2015,hasreduced theaverage interest rate on shareholder returns. Thisissue, togetherwiththelow cost Board believes thatborrowing atsuch a low rate willbenefit well below thehistorical average level ofinterest rates. The rate secured byaninvestment trust for manyyears and fixed rate of2.74%,which isthelowest long-term borrowing The Companyissued £30moflong-term (37year) debtata Issue oflong-term debt the benchmark. environment, outperforming portfolio benefitedfrom this 2017. Ourinvestment more broadly basedduring strengthened andbecame Global economic growth AGM Remuneration andNominationCommitteeChairman. the AGM, while Richard Oldfieldwillsucceed Catherineas take over asChairmanoftheAuditCommittee,following Jack Perry, whojoinedtheBoard inJanuary2017,will valued service onbehalfofWitan’s shareholders. On behalfofshareholders, Ithankthembothwarmly for their of theRemuneration andNominationCommitteesince 2009. standing down, havingserved ontheBoard andasChairman Audit Committeesince 2008.CatherineClaydonwillalsobe serving ontheBoard since 2007andasChairmanofthe Robert Boyle willbestanding down attheAGM, after Board changes 12 March 2018 Chairman Harry Henderson meet you then for theCompany’s 110thAGM. Report ispublished.We look forward totheopportunity the meetingwillbesenttoshareholders whentheAnnual Hall onWednesday 2May2018at2.30pm.Formal notice of Our AnnualGeneral MeetingwillbeheldatMerchant Taylors’

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 05

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Chief Executive’s report

Portfolio changes One measure of the portfolio’s potential to benefit from the managers’ stock picking decisions is the “active share” which The changes made over describes the proportion of the portfolio which differs from the the past year increase the benchmark (see page 10). This rose from 70% to 77% during 2017. Exposure to emerging markets was raised in February stock specific focus of the with the appointment of GQG. In May, the five global managers were consolidated into three and in October two managers portfolio, at a time when index with concentrated portfolios were appointed to increase valuations offer few European exposure. windfalls. The Strategic Report on pages 8 to 20 sets out details of the third party managers’ performance during the year as well as decisions made in the areas of gearing, the use of index futures, changes in external managers and the portfolio of directly held collective investments.

Outlook The investment markets in 2017 During 2017, some central banks began to raise interest rates Equity markets performed well during 2017, with global or to reduce (and, in the US, start to reverse) the monetary equities up 13.8% in sterling terms. After lagging significantly stimulus stemming from their purchases of financial during 2016, UK equities (+13.1%) kept pace with overseas assets (quantitative easing). Inflation remained low and less markets, despite the vicissitudes of the Brexit negotiations. responsive than expected to rising economic activity, enabling Overseas market returns of over 20% in many regions were monetary tightening to take place very gradually – more a partly offset as the pound reversed some of its 2016 losses but case of taking the foot off the accelerator than applying the in sterling terms most regions still delivered strong absolute brakes. returns, with a better performance by non-US markets, after a long period of US leadership. The strongest regions were 2018 seems set to be another year of broadly-based, steady Europe (+16.9%) and Asia (+19.5%), while North America but not especially rapid, global economic growth. Whilst this returned 11.3%. should be supportive of growth in profits, bond and equity markets may be vulnerable if currently benign inflation Witan’s multi-manager approach is to select a range of external assumptions are disappointed. There are several potential managers who have demonstrated the potential to outperform, risks. to create a portfolio targeting both capital and income growth. 2017 was a good year for active management and our external The enactment of a significant programme of tax cuts in the managers as a whole beat their benchmarks. The net asset US at the end of 2017 will potentially boost growth at a time value total return outperformance was principally driven by when there is limited spare capacity in the US economy. The this, along with the decision to maintain 10% gearing for most success of oil producers in restraining output has pushed oil of the year. Notable performances were achieved by Lindsell prices up which, unless the move is reversed, will increase Train (+21.8%), Lansdowne (+19.1%) and Veritas (+17.1%). energy costs for oil users. Increased cost pressures may These, together with the Direct Holdings portfolio (+27.2%) all reduce corporate profits, given the widespread lack of pricing materially outperformed their benchmarks. power as a result of globalisation and the disruptive effect of technological change. Central banks might react to higher than expected inflation with faster than expected rate rises. A further factor is that reducing central bank bond purchases will progressively weigh on the balance between supply and demand in government bond markets which, other things being equal, will exert upward pressure on yields.

06 Witan Investment Trust PLC Annual Report 2017 diversified portfolio. these issues, amongst others, inmanagingWitan’s globally managers willcontinue totake account oftheimplications engendered by2017’s General Election. TheBoard andits result of2016’s Brexit referendum andthepolicyuncertainty exposed UKequitiessuggests lingeringconcerns, asa On thehomefront, theunderperformance bydomestically- concerning possible inflationrisks. by realism onvaluations amidbond-market nervousness reminder oftheneedfor optimismongrowth tobetempered market conditions thatappeared inearly February were a investor optimismreflected inequity valuations. Thevolatile markets, watchfulness iscalled for given thedegree of can coincide withhealthy economic growth andrisingequity moderate risesininflation,interest rates andbondyields These developments willbemonitored carefully. Although N.B. Figures maynotsumduetorounding. after thepaymentofdividendstoshareholders. and costs, whichtogether adduptotherisefrom thestarting NAV for theyear of939.2pence totheendingNAV of1096.2penc The chartbelow shows thecontributions (inpence pershare) attributable tothevarious components ofinvestment performance Performance attributionofWitan’s growth innetasset value during2017

Pence per share 1000 1050 1100 1150 900 950 0 End 2016 939.2 NAV Gains Portfolio Costs 142.9 Gains Dividends Portfolio Income 28.1 Total use ofgearing Returns from 20.3 Buybacks Share . 0.1 0.5 12 March 2018 Chief Executive Andrew Bell offer few windfalls. specific focus oftheportfolio, atatimewhenindex valuations The changesmadeover thepast year increase thestock- historic standards, butinterest rates are extraordinarily low. offered from bondsandcash.Equity ratings are highby equity ratings continue tolook competitive withthereturns valuations. Assuming thatrisesinbondyieldsare moderate, profits tocatchupwiththeexpectation builtintoequity The improvement ineconomic growth shouldallow corporate Value ofDebt Change in

Annual Report 2017 Report Annual Expenses (inc Tax) -10.3 Finance Witan Investment Trust PLC PLC Trust Investment Witan Costs -4.2 Dividends -20.5 Paid End 2017 1096.2 NAV 07 e, e,

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Strategic Report

Strategy and business model are prescribed by EU law and the Company has no discretion over the format or content of the document. The illustrated This Strategic Report is intended to help shareholders assess performance returns in the KID cannot be guaranteed the Company’s strategy. It contains certain forward-looking and, together with the prescribed cost calculation and risk statements. These are made by the directors in good faith categorisation, may not reflect figures for the Company based on the information available to them up to the time derived using other methods. Accordingly the Board of their approval of this report. Such statements should recommends that investors also take account of information be treated with caution due to the inherent uncertainties, from other sources, including the Annual Report. including economic and business risks, underlying any such forward-looking information. 1. Performance and principal This report falls into three main sections: developments in 2017 1. Performance and principal developments in 2017 (page 8) Performance summary and attribution Witan’s NAV total return (with debt at fair value and after 2. Strategy and business model (page 15) all costs) was 19.0%, 3.9% ahead of the 15.1% return from the Company’s equity benchmark. Taking the par value of 3. Corporate and operational structure (page 17) debt, the NAV total return was 18.8%, 3.7% ahead of the benchmark. The shareholder total return was 22.1%, as the Witan is an Investment Trust, founded in 1909 and listed on discount narrowed to 1.6% (2016: 4.0%). Five out of the seven the London Stock Exchange since 1924. It is managed by the third party managers in place for the full year outperformed Executive team of its subsidiary Witan Investment Services their benchmarks. The Direct Holdings portfolio also Limited (WIS), as Alternative Investment Fund Manager significantly outperformed Witan’s benchmark. (AIFM), under the control and supervision of the Company’s Board of directors. Significant value was added by Witan’s use of gearing, which averaged 10.5% during the year. The gross contribution Special note: The European Union’s Packaged Retail from gearing of 2.2% was 1.7% after taking account of the Investment and Insurance based Products (‘PRIIP’s) Company’s borrowing costs. Share buybacks contributed Regulations cover Investment Trusts and require Boards to 0.05% (£0.9m) to NAV returns. Further details of the portfolio’s prepare a Key Information Document (‘KID’) in respect of performance attribution are shown in the table below. their Companies. Witan’s KID is available on the Company’s website. Investors should note that the processes for calculating the risks, costs and potential returns in the KID

Net asset value total return +19.0% Portfolio total return (gross) +18.2% Benchmark total return +15.1% Benchmark total return +15.1% Relative investment performance +3.2% Gearing impact +2.2% Effect of changed fair value of debt +0.0% Share buybacks +0.1% +2.2% +5.4% Borrowing costs -0.5% Operating costs and tax -1.1% -1.6% Relative performance +3.9% +3.9%

N.B. Figures may not sum, due to rounding.

08 Witan Investment Trust PLC Annual Report 2017 success over thelong termisviewed asmost important, success. Given theinherent volatility ofinvestment returns, (‘KPIs’) viewed assignificantmeasures oflonger-term Success ismonitored against Key Performance Indicators financial performance. required statutory reporting measures oftheCompany’s The financialstatements onpages64to93setoutthe Key Performance Indicators In 2017, the ongoing charges figure (‘OCF’) was 0.76% excluding performance fees (2016: 0.75%) and 0.78% including including 0.78% and 0.75%) (2016: fees performance excluding 0.76% at was discount (‘OCF’) The figure 2016. in charges discount ongoing 5.8% the average 2017, In an with compared 2017, in 2.8% of allowing E. A competitiveAfter level ofongoingcharges, balancing theneedtopayfordiscount highqualityinvestment returns. average an gross at to 2.2% traded shares The contributed which year, the details during Further 10.5% 2017. of D. A share price trading atasustainable lowgearing discount (orapremium) toNAV (including income, withdebtat December to average year the in employed 3% of rate Company The inflation the of ahead 7.5% C. Apositive contribution toinvestment returns from theuseofborrowings 10.5%, by increased was dividend The B. Annualgrowth in thedividendpershare aheadofinflation details are setoutonpage11. outperformed theirbenchmarks.Thereturns since eachmanager’s appointmentare setoutinthetable onpage11.Further In 2017,five of the seven third partymanagers inplace for thefullyear andtheinternally-managed Direct Holdingsportfolio Long-term outperformance bytheindividual managers relative totheirbenchmarks year periods. Returns over thelonger term,setoutonpage2,indicatethatthereturn objectives have alsobeenmetover thepast 3and5 the year to December 2017. return of22.1%benefitingfrom anarrowing ofthediscount. Witan’s totalreturns were alsowell aheadofinflation3%for In 2017,Witanachieved aNAV totalreturn of19.0%,3.9%aheaditsbenchmark(seepage16),withashareholder total The Companyseeksatleast 2%p.a.long-term outperformance inNAV totalreturn andshareholder totalreturn. Positive long-term real returns andoutperformance ofWitan’s equitybenchmark. A. Investment performance for the payment of interest, there was a net contribution of 1.7%. Further details are set out on page 12. page on out set are details Further 1.7%. of contribution net a was there interest, of payment the for the year-end was 1.6% (2016: 4.0%). Further details are set out on page 13. page on out set are details Further 4.0%). (2016: 1.6% was year-end the 12. page on out set are performance fees (2016: 0.65%). Further details are set out on pages 13 and 14. and 13 pages on out set are details Further 0.65%). (2016: fees performance management withkeeping thecosts ofmanagingthebusiness aslow aspossible fair value), takingaccount ofprevailing investment conditions

in theCorporate Governance Statementonpages32to40. in relation totheUKCorporate Governance Codeare setout measures, detailsoftheCompany’s policiesand compliance performance duringtheyear. Withrespect tonon-financial financial KPIsare setoutbelow, withareport ofWitan’s Aside from thestatutory accounting measures, theprincipal periods. although performance isalsomonitored over shorter

Annual Report 2017 Report Annual

. Witan Investment Trust PLC PLC Trust Investment Witan 09

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Strategic Report continued

Geographical distribution as at 31 December 2017

35% 5% 22% UK 21% Japan North America Europe 14%

Far East 3%

Other

Combined portfolio composition The sector and regional structure are summarised on Sector breakdown of the portfolio this page. The top 50 holdings are set out on page 24. They represented 46% of Witan’s portfolio at 31 December 2017 (2016: 44%). These analyses highlight the portfolio’s substantial diversification.

The portfolio’s active share Achieving outperformance requires the portfolio to differ from the benchmark. It is important that diversification does not suppress the benefits sought when selecting active managers. One measure of active management is known as “active share”. A portfolio identical to the benchmark has % an active share of 0% while one with no holdings in common Financials including investment companies 29.4 with its benchmark has an active share of 100%. Although active share is an incomplete measure of active management Consumer Services 15.5 (let alone likely success), the active share of our combined Industrials 14.7 portfolio was circa 77% at the end of 2017 (2016: 70%). This Technology 11.8 indicates that Witan’s portfolio differs markedly from the Consumer Goods 10.2 relevant indices, while remaining well-diversified across global Health Care 6.0 regions, industry sectors and at the individual company level. Other 8.4 Open-Ended Funds 0.7 Equity Index Futures 1.1 Cash/Bonds 2.2

10 Witan Investment Trust PLC Annual Report 2017 market, for stock specificandBrexit-related reasons. index. ArtemisandHeronbridge bothunderperformed theUK (+21.5%) whichperformed 1%aheadoftheAsia-Pacific significantly outperformed theirbenchmarks,andMatthews (+21.8%), Lansdowne (+19.1%)andVeritas (+17.1%),which the year. Strong returns were delivered byLindsellTrain Seven ofthethird partymanagers were inplace throughout search processes. portfolio returns and,inthecaseofnew managers, extensive were undertaken aftercareful analysis oftheimpactonoverall portfolio concentration andEuropean exposure. Thesemoves and S.W. Mitchell,astheopportunitywastaken toincrease was reallocated totwo new Europe ex-UK managers, CRUX October, thepan-European portfolio managedbyMarathon allocated between theremaining three global managers. In the assets managedbyMFS andTweedy, Browne being five global managers were consolidated intothree, with a portfolio ofEmerging Market equities.InMay,Witan’s In February, GQGPartners LLPwasappointedtomanage to 23. date ofappointmentfor eachmanagerare shown onpages21 Company. Themandate,benchmark,investment style andthe The third partymanagers follow mandatessetbythe Manager structure andperformance Thepercentages are annualisedwhere thedateofappointmentwasmore thanoneyear ago. (2) Percentage ofWitan’s investments managedandcashbalances heldcentrally byWitan. (1) Notes Witan Direct Holdings GQG Matthews S.W. Mitchell CRUX Veritas Pzena Lansdowne Partners Lindsell Train Heronbridge Artemis Investment manager Investment managers’ performance : assets managed at 31.12.17 of Witan’s 0. . 721. 2910.0 11.0 12.9 12.3 12.7 14.3 15.1 14.5 20.6 13.8 27.2 13.8 21.5 13.8 9.1 17.1 11.7 14.0 203.3 14.0 260.3 14.2 311.4 315.3 3. 491. 162. 16.1 10.1 9.0 6.8 22.7 16.8 11.2 10.1 11.6 13.1 13.1 13.1 19.1 21.8 12.0 7.7 14.9 7.9 6.2 8.3 330.6 175.6 138.1 184.8 Value 2642nana1. 16.0 (1.4) (1.4) 16.7 (1.2) 0.7 n/a n/a n/a n/a n/a n/a 4.2 4.5 4.4 92.6 99.5 98.7 £m Witan’s assets management at31.12.17 (Note1) under % of sector funds. listed private equity,life sciences and specialist regional or The maininvestments, whichare allcollective funds,are in investment portfolio attheend of2017. 10.2% ofassets atthestart oftheyear andwas9.1%ofthe the proportion of ourassets inthisarea. Theportfolio held two very strong years ofreturns, we have moderately reduced occur andthere isashortageofattractive new ideas.After to thelimitsnotedabove) andtheallocation falls whensales More capitalisinvested whenopportunities appear(subject This portfolio isactively managed,withnofixed allocation. restructured inJune, enablingWitantoexit atNAV. (+35%) andAberforth Geared Income Trust (+36%)which sciences company Syncona (+52%),Princess Private Equity were driven bystrong performances from thespecialist life compared with15.1%for Witan’s benchmark. Returns The Direct Holdingsportfolio delivered areturn of27.2%, specialised investment areas. add value, whichare more newly-established orinhighly mandates tothird partymanagers withstrong potentialto superior returns. Upto2.5%maybeallocated insmaller categories orfundsviewed aslonger-term generators of These investments mayrepresent undervalued asset investment) maybeinvested inspecialist collective funds. Witan’s equitybenchmark.Upto10%(atthetimeof by theExecutive team,withthe objective ofoutperforming Up to12.5%oftheportfolio (previously 10%)maybeinvested Directly heldinvestments Performance in 2017

Annual Report 2017 Report Annual (%) performance in Benchmark 2017 (%) Witan Investment Trust PLC PLC Trust Investment Witan Performance appointment (%) (Note2) since performance appointment Benchmark since (%) 11

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Strategic Report continued

Dividend performance in 2017 The Company pays dividends quarterly. The first three The Company’s dividend policy (subject to circumstances) is payments for 2018 (in June, September and December) will, in that the annual rate of growth in dividends per share should the absence of unforeseen circumstances, be paid at a rate of be greater than inflation, as measured by the UK Consumer 5.25 pence per share (2017: 4.75 pence), being one quarter of Price Index (‘CPI’). the full year payment for 2017. The fourth payment (in March 2019) will be a balancing amount, reflecting the difference Revenue earnings increased by 7.7% to 23.8 pence per share between the three quarterly dividends already paid and the in 2017. This was driven by an increase in portfolio dividends payment decided for the full year. and, for much of the year, favourable foreign exchange impacts on overseas currency dividends. Gearing and the use of derivatives The Policy on the use of gearing (leverage) and the use of For 2017, the Board has declared a fourth interim dividend of derivatives is detailed in Section 2 of the Strategic Report on 6.75 pence per share, to be paid to shareholders on 29 March page 16. 2018, making a total distribution for the year of 21.0 pence (2016: 19.0 pence). This represents an increase of 10.5%, 7.5% Gearing activity during 2017 ahead of the 3% rate of CPI inflation in the year to December The Company issued £30m in Private Placement Notes in 2017. This is the 43rd consecutive year of Witan dividend November, bearing interest at 2.74% and repayable in 2054. increases. The size of the Company’s short-term facility was increased to In addition to increasing the dividend, the Company has added £125m in February 2017. At the end of December, the drawn £5.5m to its revenue reserves. At £60m after allowing for balance on this facility was £73m (2016: £71m). 2017’s fourth interim payment, the reserves are equivalent to over one and a half times the annual dividend. These reserves Gearing was maintained at around 10-11% for most of the enable the Company to maintain or grow its dividends in years year, reflecting improved economic news and a positive view when revenue from the portfolio is less buoyant, or falls. Since being taken of the opportunities within global equity markets. 2007, Witan’s dividend per share has more than doubled, The calculation of gearing takes account of cash balances and rising 112% compared with 26% for the CPI. The chart below the full nominal value of any derivatives held. shows the growth in Witan’s dividend over the past 10 years. At the end of 2016, gross gearing (the total value of all investment positions, less cash) was 10.3%. This included Witan’s dividend per share compared with £21m in Emerging Markets equity index futures, equivalent the UK Consumer Price Index to 1.2% of net assets. Gearing excluding this was 9.1%. At the end of 2017, gross gearing (on the same basis) was 9.7%. This 24.0 265 included £23m in European equity index futures, equivalent to 1.2% of net assets. Gearing excluding this was 8.5%. Further details of the accounting treatment for these positions are 21.0 232 given in note 1 on page 71.

Derivatives activity during 2017 18.0 199 The holding in MSCI Emerging Markets futures at the end of 2016 was sold in the months following the appointment of an 15.0 166 emerging markets manager in February.

In April, an investment was made in European equity index 12.0 133 futures ahead of the French election, as European political risks appeared to be fading and the region’s economy was enjoying an upswing. This position was added to over the 9.0 100 summer, to increase exposure to the region while a search 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 was undertaken for new active managers. The search resulted Witan dividend in pence per share (left scale) CPI Index (right scale) in two managers being appointed in October, following which Source: Datastream the index futures position was reduced from 2.5% of assets to 1.2%. At the year-end an investment of £23m remained, equivalent to 1.2% of assets.

12 Witan Investment Trust PLC Annual Report 2017 premium. buy backshares atadiscount toNAV ortoissue shares ata account of market conditions) the Companyisprepared to control butwhere itisinshareholders’ interests, (taking Discounts are affected bymanyfactors outsidetheCompany’s remaining shareholders. 1.9%. Thishasaddedatotalof£0.9mtothenetasset value for balance repurchased since Aprilatanaverage discount of 2m early intheyear atanaverage discount of4%,withthe During 2017,Witanboughtatotalof2.8mshares intotreasury, aftermath oftheBrexit vote) hasbeenreversed during2017. during 2016(affected byaninstitutional share sale andthe chart above. Theexceptional discount wideningexperienced The discount trend since theendof2012isillustrated inthe discount. being accretive toNAV, thishastheobjective ofreducing the they have stood atanunduly widediscount. Inadditionto significant useofshare buybacks,purchasing shares when to discount-related issues andhas,over manyyears, made the principalfocus, theBoard hasalsoalways paidattention Although delivery ofsoundinvestment performance remains shareholders andpotentialinvestors. London StockExchange andonclear communications with the encouragement ofaliquidmarket inWitan’s shares onthe capitalisation of£1.9bn.TheBoard places great importance on Witan isamemberoftheFTSE250index, withamarket Witan’s shares inthemarket –liquidityanddiscounts £7.6m, asshown inthecashflow statement onpage67. The realised capitalgainonindex futures duringtheyear was -12.0 -10.0 Witan Investment Trust Discount Trend Source: Datastream -8.0 -6.0 -4.0 -2.0 0.0 2.0 Discount 0321 0521 2017 2016 2015 2014 2013 the Company,separately accounted for. for research received byinvestment managers andcharged to transactions) must eitherbeminornon-monetarybenefitsor, MiFID IIbroker-provided services (otherthantheexecution of the Company,withthosebrokers. Undertherequirements of They mayplace business, includingtransactions relating to services whichare paidfor, orprovided by,various brokers. The Company’s investment managers mayusecertain whereby theaverage fee rate reduces astheportfolio grows. pays. Amajorityofthefee structures incorporate a“taper” Witan takes care toensure thecompetitiveness ofthefees it with higherorlower fees. will vary according to theactualperformance ofmanagers comparable estimate in2016(0.64%).Theactualfees payable fee andaperformance fee of0.05%),9%lower thanthe management fee rate of0.58%(includinga0.52%base management fees, thiswould generate atotalinvestment outperformed theirbenchmarksby3%afterbase As anillustration, ifourexternal managers uniformly 0.49%). average basefee was0.52%asat31December 2017(2016: ranged from 0.25%to0.80%perannum.Theweighted The basefee rates for managers inplace attheendof2017 without performance fees. particular year. They have lower basefees thanthemanagers performance-related fees, whichare subjecttocappinginany managers, intotalmanaging16%ofWitan’s portfolio, have can beterminatedononetothree months’ notice. Two fee, basedontheassets undermanagement.Theagreements Each ofthethird partymanagers isentitled toamanagement Investment managementfees Costs whichever measure isused. Company’s investment performance isreported afterallcosts, years, tofacilitate comparison. Itisemphasisedthatthe Report onaconsistent basiswiththosepublishedinprevious to calculate theOngoingCharges Figure (‘OCF’)for theAnnual period. Inaccordance withAICguidance, Witanwillcontinue EU PRIIPs regulations, whichincludesaverage figures over a contains ameasure ofcosts calculated inaccordance with The Key Information DocumentontheCompany’s website Ongoing charges andcosts during 2017are evidence of thiscommitment. in Witan’s shares atorneartoasset value. Theactions taken It remains along-term objective tocreate sustainable liquidity

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 13

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Strategic Report continued

2017 2016 2017 % of average 2016 % of average Category of Cost £m net assets £m net assets Other expenses 6.46 0.35 5.21 0.33 (excluding investment management expenses) Less expenses relating to the subsidiary (1.45) (0.08) (0.89) (0.06) (those expenses not relating to the operation of the investment company) Investment management base fees (note 4 (page 73)) 9.02 0.49 7.62 0.48 Ongoing Charges Figure (including investment management base fees) 14.03 0.76 11.94 0.75 Investment management performance fees (note 4 (page 73)) 0.53 0.02 (1.46) (0.10) Ongoing Charges (including performance fees) 14.56 0.78 10.48 0.65 Portfolio transaction costs* 3.18 0.17 2.00 0.13 Interest costs 7.62 0.41 9.62 0.60 Costs including transaction costs and borrowing costs 25.35 1.37 22.10 1.38 Outperformance during the year (after all costs, debt at fair value) 3.9% -0.1%

Figures may not sum due to rounding * Including costs relating to manager changes

The main cost headings constituting the OCF are set out in Priorities for the year ahead the table above. As in previous years, the figure for transaction In 2018, the priorities for Witan include: costs is shown. The figure for borrowing costs is also included in the table, for easy reference. > Investment: Seek to build on the good returns achieved for shareholders in recent years. Make use of a range of active The OCF (the recurring operating and investment managers to deliver Witan’s strategic objectives. Continue management costs, as a percentage of average net assets) to deliver dividend growth ahead of inflation; was 0.76% in 2017 (2016: 0.75%). Including performance fees due to third party managers, the OCF was 0.78% in 2017 (2016: > Communication: Communicate Witan’s distinct and active 0.65%). The weighted average OCF for the AIC Global sector investment approach and achievements effectively to was 0.65% and 0.67% including performance fees (source: existing and potential shareholders; Morningstar). Investment management costs rose by more than the average level of net assets, due to the appointment > Regulatory change: Continue to operate robust risk and of an emerging market manager (replacing an index futures investment management processes, liaising closely with investment) and to manager changes during the year. Other the Company’s AIFM to ensure compliance with regulatory expenses rose owing to increased staff, regulatory and developments. overseas custody costs.

The Company exercises strict scrutiny and control over costs. The Board believes that the OCF during the year represents good value for money for shareholders, taking account of recent and longer-term performance.

14 Witan Investment Trust PLC Annual Report 2017 performance toshareholders, through thefollowing means: Board andWISare responsible for theoverall delivery of stock selection intheirindividual portfolios, the Company’s Whilst thethird party managers appointedare responsible for (CEO), whoisadirector oftheCompany. by theExecutive team,headedbytheChiefExecutive Officer corporate functions.TheCompany’s activitiesare overseen third partyportfolio managers. TheCompanyoutsources other delegates certain portfolio managementresponsibilities to the Company’s portfolio andriskmanagementprocesses. WIS Directive (‘AIFMD’). Assuch,WISisresponsible for operating its AIFMundertheAlternative Investment Fund Managers Company, WitanInvestment Services Limited(‘WIS’)as The Companyhasappointeditswholly-owned subsidiary Business model fundamental value drivers rather thanshort-termtrends. over time.Theselection process seeksmanagers focusing on which canprofit from themanagers’ abilitytooutperform approaches andgeographical mandates,creating aportfolio Witan’s approach istocombine different investment variability relative tousingasingle manager. should improve returns, while reducing performance managers toinvest intheirareas ofgreatest competence is likely toexcel inallmarket conditions andregions. Selecting This approach, adoptedin2004,recognises thatnomanager Executive team,withindelegated limitssetbytheBoard. with overall asset allocation andriskbeingmanagedbythe each investment manager,inaccordance with itsmandate, investors. Individualportfolios are actively managedby those notaccessible onthesameterms(oratall)toUK The aimistoaccess thebest available managers, including allocating fundstoselected third partyinvestment managers. The Companyusesanactive multi-managerapproach, global economic growth. institutional investors toaccess theopportunitiescreated by sectors, offering adistinctive wayfor individualaswell as a combined portfolio covering abroad range ofmarkets and and potentialshareholders. TheCompanyseekstoconstruct equity markets, while communicating effectively withexisting in listed individualcompanies across abroad spread ofglobal The Company’s strategy istoaddvalue byinvesting primarily outperforming arepresentative equitybenchmark. providing anincome that risesfaster thaninflationand for shareholders bygenerating long-term capitalgrowth, The Company’s objective istoachieve acompetitive return Objective andstrategy 2. Strategy andbusiness model >

investment opportunities. sufficient levers topulltake advantage ofawiderange of Board anditsAIFM. Inessence, theCompany seekstohave delegated parameters thatare periodically reviewed bythe as offering attractive returns. TheExecutive operates within by theuseofspecialist fundstogainexposure toareas viewed exchange-traded derivatives toaltertheasset allocation and by adjusting thelevel ofgearing,bytheselective useof the managers, theExecutive seekstoaddperformance performance. Asidefrom itsrole inselecting andoverseeing portfolios are expected tobetheprincipaldriver of The returns from thethird partyinvestment managers’ performance duringtheyear are setoutonpage11. proportion ofWitan’s assets managedbyeachandtheir managers, covering arange of investment remits. The At theendof2017,Companyhad10third partyinvestment Company’s assets are supervisedbythedepositary. operations ofthecustodian andthesafeguarding ofthe accounts, heldincustody bytheCompany’s depositary. The The overwhelming majorityoftheportfolio isinsegregated their scope toaddvalue aspartoftheoverall portfolio. Witan andWISBoards afteraselection process focused on the particularmandate.Themanagers are chosenbythe third partymanagers, subjecttoinvestment limitsreflecting The selection ofindividualinvestments islargely delegated to strategy, policyandguidelines. The Board isresponsible for settingtheCompany’s investment management The Board’s andtheExecutive’s role ininvestment > > > > > > > Setting theoverall investment objective;

shareholders andpotentialinvestors. Clear communication ofWitan’s objective andresults to portfolio management;and Selective useofexchange-traded derivatives for efficient Direct investment inspecialist funds; performance; The judicioususeofborrowings withtheaimofaddingto Adjusting asset allocation according toopportunity; risk managementcontrols; Operating appropriate portfolio, corporate governance and outperform arelevant benchmark; Selecting competent managers, whoare expected to

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 15

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Strategic Report continued

Witan’s benchmark as well as enabling the Company to borrow in currencies The Company’s benchmark is used as a transparent reference other than sterling, if deemed appropriate. Witan may either point for comparing performance. It is a combination of global invest its borrowings fully, or neutralise their effect with cash equity markets, giving access to a wide range of investment balances according to its assessment of the markets. The opportunities in the global economy, covering the investment Company’s third party managers are not permitted to borrow universe from which most of the portfolio holdings are chosen. within their portfolios but may hold cash.

The benchmark consists of 30% UK, 25% North America, 20% Use of derivatives Europe ex-UK, 20% Asia Pacific and 5% Emerging Markets. Where financial instruments are available that help with The component weightings reflect the Board’s belief that efficient portfolio management their use will be considered. returns derive from the changing opportunities as economies Witan’s policy on the use of derivatives prioritises evolve, more than market capitalisation. transparency, cost effectiveness and the minimisation of counterparty risk. In recent years, exchange-traded index The portfolio is actively managed and not designed to track futures have been the only instruments used. These give any combination of indices. Performance can be expected to exposure to a market index, are readily tradable and depend vary, sometimes considerably, from benchmark returns, while upon the creditworthiness of the exchange, not an individual aiming for long-term outperformance. firm. The value of the investments (which are traded on official exchanges) is marked to market every day. Gearing policy The purpose of using borrowings (or ‘gearing/leverage’) is to The use of index futures enables Witan to adjust its investment improve returns for shareholders, by achieving investment exposure or asset allocation quickly and flexibly. In both cases returns higher than the cost of borrowing. Attention is paid changes can be made without interfering with the objective to using a level of gearing appropriate for market conditions of our investment managers, to pick stocks that will grow in (borrowing more when markets are attractively valued and value and outperform their benchmarks over the long term. less when returns are expected to be poorer). A blend of The operation of this investment area is the responsibility of long-term and short-term borrowings is used, to balance the the CEO, acting under guidelines set and supervised by the certainty of cost from locking in fixed rates for longer periods Board. The Company’s third party managers are not permitted with the flexibility of short-term facilities which can be readily to use derivatives and may not gear their portfolios. repaid. Marketing Although the Company has the legal power under its Articles Witan and its Board place great importance in effectively of Association to borrow up to 100% of the adjusted total of communicating the Company’s strategy and operating shareholders’ funds (which is also the maximum level set results to existing and potential shareholders. The Board and by its AIFM), the Board’s longstanding policy is not to allow Witan’s Executive maintain regular contact with shareholders gearing (as defined on page 99) to rise to more than 20%, and the wider market’s participants including private and other than temporarily in exceptional circumstances. Over the professional investors, financial advisers and intermediaries. past five years it has generally varied between 5% and 15%. Clear communication of the Company’s investment objective Where appropriate the Company may hold a net cash position. and its success in implementing its strategy helps investors to decide how Witan fits with their own investment objectives. Structure of borrowings Other things being equal, this should help the shares to trade The Company has fixed-rate borrowings (see note 13 on page 79) at a narrow discount or a premium to NAV, from which all principally consisting of: shareholders benefit.

Secured Bonds 2025 6.025% £64m Information on the Company, its strategy and portfolio is Private Placement Notes 2035 3.29% £21m regularly made available via the website (www.witan.com), newsletters and videos. Important shareholder information Private Placement Notes 2045 3.47% £54m such as the Annual Report, the Key Information Document Private Placement Notes 2054 2.74% £30m and Investor Disclosure Document can be found there, as well as details of the Company’s Wisdom and Jump savings scheme operated by the Company’s subsidiary, Witan The average interest rate paid on the Company’s fixed-rate Investment Services Limited. Investors can also purchase borrowings is 4.3%. The Company also has a £125m one-year shares on a wide range of other investment platforms listed facility, providing additional flexibility over the level of gearing, on page 98. Key contact information can be found on page 100.

16 Witan Investment Trust PLC Annual Report 2017 affairs. policies inrespect ofenvironmental orsocialandcommunity small numberofdirect employees, theGroup hasnospecific Bell, whoisanemployee. Given itsoutsourced model and men andtwo women) andtheChiefExecutive Officer, Andrew 2017, theBoard consisted ofeightnon-executive directors (six direct employees, four menandthree women. Attheendof creed, colour, race or ethnicorigin.TheCompanyhasseven Witan are treated equally regardless ofsex, maritalstatus, on pages43to55.Employees andthosewhoseektowork at disclosures are setoutintheDirectors’ Remuneration Report Details oftheCompany’s remuneration policiesandrequired to managetheaffairs ofaninvestment trust company. retain staff withtheparticularskillsandexpertise required The Company’s policytowards itsemployees istoattract and commenced inOctober2015. registered office. Thecurrent lease hasa5year term,which Anne’s Gate,LondonSW1H9AA,whichistheCompany’s The Companyhasalease onoffice premises at14Queen Premises andstaffing guidelines for service required. formulated withlegal advice andstipulate clear objectives and The contracts governing theprovision ofallservices are providers are reviewed regularly bytheBoard. The service qualityandvalue received from majorservice > > > > services, including: managers, WitanandWIScontract withthird partiesfor other In additiontotheappointmentofthird partyinvestment Operational managementarrangements acts astheCompany’s AIFM. subsidiary, WitanInvestment Services Limited(‘WIS’)which the LondonStockExchange. Ithasasingle, wholly-owned Witan isanInvestment Trust withaPremium Listing on 3. Corporate andoperational structure

investment consulting, financialandtaxadvice. compliance issues and,asrequired, procures legal, The Companytakes specialist advice onregulatory of WitanWisdomandJumpSavings; DST Services Ltd(‘DST’).as thesavingsplanadministrator Frostrow CapitalLLPfor company secretarial services; accounting andadministration; (‘BNPSS’) for depositaryservices, custody, investment BNP Paribas Securities Services LondonBranch accounting obligations. advice toensure compliance withitsregulatory and schemes administrator (DST),staff costs andprofessional clients. Themaincosts incurred were fees tothesavings Manager andfor marketing services) paidbyitscorporate savings planrevenues andthefees (asAIFMorExecutive In 2017,WIShadtwo principalsources ofincome. Thesewere > > > > > WIS’s operational objectives for 2018are: Witan andPacific shares. market andtheprovision ofsavingsplansfor investors tohold communicating information aboutthecompanies tothe and WitanPacific Investment Trust plc (‘WitanPacific’), executive managementservices totheBoards ofWitan WIS’s principalactivitiesare actingasWitan’s AIFM,providing professional investors. and marketing services andtogive investment advice to act asWitan’s AIFM,toprovide investment savingsaccounts by theFinancialConductAuthority(‘FCA’). Itisauthorisedto Witan Investment Services Limitedisauthorisedandregulated Witan Investment Services (‘WIS’) Audit Committee andtheWISRiskCommittee, whichreport those risks.Itsdetailed riskmapisreviewed regularly bythe the key risks,withpoliciesandprocesses devised tomanage obligations asWitan’s AIFM.TheCompanyhasaframework of monitor compliance withitsriskmanagementandreporting control oravoid them. WIShasaRiskCommitteeinorder to It isimportanttoidentify risksandwaysto Risks are inherent ininvestment and corporate management. financial risksidentified. the nature ofandmanagementprocesses for theprincipal Financial Statementsonpages80to88setsoutinmore detail are setoutonpages18and19.Inaddition, note14tothe liquidity. Theserisks,andtheactionstaken tomitigatethem, threaten itsbusiness model,future performance, solvency or principal risksfacing theCompany,includingthosethatwould The directors have carriedoutarobust assessment ofthe Principal risksanduncertainties

value for shareholders. to seekappropriate business opportunitiesthatcanadd to reduce thenetoperating costs for Witan;and to managetheWitanWisdomandJumpSavingsPlans; clients; to provide suitable advice totheBoards ofitscorporate to fulfilitsresponsibilities asWitan’s AIFM;

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 17

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Strategic Report continued

on issues arising to their respective boards. The guiding Company’s depositary has a key responsibility for monitoring principles remain watchfulness, proper analysis, prudence such issues on behalf of the Company. DST acts as the and a clear system of risk management. Administrator for the Witan Wisdom and Jump Savings Plans so the effectiveness of their systems and controls is also key. Where appropriate, the Witan and WIS Boards meet jointly to Details of the Board’s monitoring and control processes are cover matters of common interest. The WIS Board consists explained further in the Corporate Governance Statement on of seven non-executives and one executive director who are pages 39 and 40. also directors of Witan, and one executive director who is a Company employee. Corporate governance The Board takes its regulatory responsibilities very seriously The Group’s key risks fall broadly under the following and compliance issues and potential regulatory changes are categories: regularly reviewed by the Board and its AIFM. Market and investment portfolio risks Witan invests in global equity markets on behalf of its Details of the Company’s corporate governance policies are shareholders. Equity exposure is unlikely to drop below 80% set out in the Corporate Governance Statement on pages of net assets, in normal conditions. A key risk of investing 32 to 40. The Board conducts an annual assessment of the in Witan is a general fall in equity prices, which could be effectiveness of its governance processes. There is also a exacerbated by gearing. Other risks are the portfolio’s 3-yearly independent external review, the most recent of exposure to country, currency, industrial sector and stock which was in late 2016. See page 35 for further details. specific factors. There are also risks associated with the performance of its investment managers and changes in Operational and regulatory risks are regularly reviewed by Witan’s share price rating. Witan’s Audit Committee and WIS’s Risk Committee. WIS is subject to its own operating rules and regulations and is The Board seeks to manage these risks through: regulated by the FCA. The Company has established a modus operandi for the effective coordination of its responsibilities > a broadly diversified equity benchmark; and those of WIS, as its AIFM.

> appropriate asset allocation decisions; Operationally the multi-manager structure is robust, as the > selecting competent managers and regularly monitoring investment managers, the custodian and the fund accountants performance; keep their own records which are regularly reconciled. The depositary, AIFM and the Board provide additional checks and > attention to key economic and political events; safeguards. Management monitors the activities of all third > active management of risk, whether to preserve capital or parties and reports any significant issues to the Board. capitalise on opportunities; Accounting, legal and regulatory > the application of relevant policies on gearing and liquidity; The Company must comply with sections 1158-59 of the and Corporation Tax Act 2010 (‘CTA’). A breach could result > share buybacks and issuance to respond to market supply in the Company losing investment trust status and, as a and demand. consequence, capital gains realised would be subject to Corporation Tax. The accounting criteria are monitored by During the year Andrew Bell (the CEO) managed the overall the CEO and AIFM and the Company carefully monitors business and the investment portfolio in accordance with compliance with the applicable rules. limits, determined by the Board and its AIFM, on which the CEO reports at each Board meeting. The Board also regularly The Company must comply with the provisions of the reviews investment strategy and performance, supported by Companies Act 2006 (‘Companies Act’) and with the UK Listing comprehensive management information and analysis. Authority’s Listing Rules and Disclosure Rules (‘UKLA Rules’). A breach of the Companies Act could result in the Company Operational and/or the directors being fined or becoming the subject of Many of the Group’s financial systems are outsourced to criminal proceedings. Breach of the UKLA Rules could result third parties, principally BNP Paribas Securities Services in the suspension of the Company’s shares which would itself (‘BNPSS’). Disruption to their accounting, payment systems constitute a breach of the provisions of the CTA. or custody records could prevent the accurate reporting and monitoring of the Company’s financial position. BNPSS as the

18 Witan Investment Trust PLC Annual Report 2017 These requirements offer significant protection for value of the Company’s assets. As set out in note 14 to the shareholders. The Board relies on the CEO, the AIFM, the accounts, the Board has considered price risk sensitivity Company Secretary and the Group’s professional advisers to (the sensitivity of the profit after taxation for the year and ensure compliance with all applicable rules. WIS is authorised the value of the shareholders’ funds to changes in the fair and regulated by the FCA to act as the AIFM for Witan, for value of the Group’s investments) and foreign currency the marketing and administration of savings plans and the sensitivity (the sensitivity to changes in the exchange rates provision of investment advice to professional clients. for the £/US dollar, £/Euro and £/Japanese yen);

Liquidity > In addition to its cash balances, which were £74.0m at The Company’s portfolio consists mainly of readily realisable 31 December 2017 (2016: £49.2m), the Company has a Strategic Report securities. The Company and its AIFM regularly review short-term bank facility which can be used to meet its liquidity needs (for example operational costs, loan servicing liabilities, and fixed-rate financing in the form of Secured and repayment, shareholder dividends and share buybacks) Bonds, Secured Notes and cumulative preference shares. relative to the Company’s portfolio income and the value With the exception of the short-term facility, this financing and tradability of the Company’s assets. Most of the likely will remain in place until at least 2025. Details of the liquidity requirements are foreseeable (for example timetabled Company’s non-current liabilities are set out in note 13 to loan payments and dividends) while others (such as share the accounts; buybacks) are subject to the Company’s discretion. The Board is satisfied that unexpected liquidity needs are not significant > The expenses of the Company are predictable and modest and could be readily met without compromising normal in comparison with the assets and there are no capital

portfolio management practice. commitments currently foreseen which would alter that Directors’ Report position. Viability Statement As well as considering the principal risks on pages 18 and 19 In accordance with the 2016 UK Corporate Governance Code, and the financial position of the Company, the Board has the Board has assessed the prospects of the Company over made the following assumptions in considering the Company’s a longer period than the 12 months required by the ‘Going longer-term viability: Concern’ provision. > The Company’s remit of investing in the securities of The Company’s current position and prospects are set out in global listed companies will continue to be an activity to the Chairman’s and Chief Executive’s Report and the Strategic which investors will wish to have exposure; Report. The principal risks are set out on pages 17 to 19. The Board has considered the Company’s financial position and its Governance Corporate ability to liquidate its portfolio and meet its expenses as they > Investors will continue to want to invest in closed-ended fall due and notes the following: investment trusts;

> The portfolio consists of investments traded on major > The performance of the Company will continue to be international stock exchanges and there is a spread of satisfactory. The Board is able to replace any of the current investments. In normal conditions, the current portfolio investment managers when it considers it appropriate to could be liquidated to the extent of more than 87% within do so; 5 trading days and there is no expectation that the nature of the investments held will be materially different in > The Company will continue to have access to adequate capital when required;

future; Financial Statements

> The closed-ended nature of the Company means that, > The Company will continue to be able to fund share unlike an open-ended fund, it does not need to realise buybacks when required. The Company bought back investments when shareholders wish to sell their shares; 2.8m ordinary shares in 2017 at a cost of £26.6m and experienced no issues with liquidity in doing so. It had > The Board has considered the viability of the Company shareholders’ funds in excess of £1.9bn at the end of 2017. under various scenarios and concluded that it would usually be able to take appropriate action to protect the Other InformationOther

Annual Report 2017 Witan Investment Trust PLC 19 Strategic Report continued

Based on the results of its review, and taking into account the long-term nature of the Company and its financing, the Board has a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due for the foreseeable future, taken to mean at least the next five years. The Board has chosen this figure because, whilst it has no information to suggest this judgement will need to change in the coming five years, forecasting over longer periods is imprecise. The Board’s long-term view of viability will of course be updated each year in the Annual Report.

Going concern In light of the conclusions drawn in the foregoing Liquidity and Viability Statements, the Company has adequate financial resources to continue in operational existence for at least the next 12 months. Therefore, the directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial Reporting Council.

Approval This report was approved by the Board of Directors on 12 March 2018 and is signed on its behalf by:

H M Henderson A L C Bell Chairman Chief Executive 12 March 2018

20 Witan Investment Trust PLC Annual Report 2017 Information isasat 31December 2017. Atthatdate,9.1%was managedbyWitan’s Executive team,asdescribedonpage 11. Investment Managers ecmr Ivsmn tl Inception date Investment style FTSE All-share Benchmark At 31December 2017,assets undermanagementtotalled £13.1bn. this isreflected inthesmallandsimple organisational structure. best opportunitytoachieve strong investment results for clientsand aim wastoprovide aworking environment thatwould give themthe mandates, basedontheirshared investment philosophy. Thefounders’ Train andfocuses onmanagingUK,Global andJapaneseequity Lindsell Train wasestablished in2000byMichaelLindsell andNick Lindsell Train Limited UK Inception date Investment style FTSE All-share Benchmark where muchofthereturn isdriven byinternalchange. turnaround potentialorare specialsituations,identifyingcompanies This philosophy leads toafocus onstocks thatare outoffavour, have superior long-term growth bylooking for undervalued opportunities. Situations mandatefor Witan,acontrarian strategy thataimstoachieve manages £27.8bn.Derek StuartandAndyGray manageaUKSpecial Established in1997, ArtemisInvestment ManagementLimited Artemis Investment ManagementLLP UK

brands undervalued growth from Long-term situations Recovery/ special

06.05.2008 01.09.2010 7.9% 8.3%

ecmr Ivsmn tl Inception date Investment style Benchmark own assets co-invested alongside thoseofclients. the investment programme andhave aconsiderable proportion oftheir alignment ofinterests, Heronbridge’s partners have cappedthesizeof and charityclientsintheUK,USelsewhere. To maximisethe focused, andindependent,currently managing£1.8bnfor institutional management boutique.Founded in2005,thefirmremains small, Heronbridge isalong-only, value-biased equityinvestment Heronbridge Investment ManagementLLP UK ecmr Ivsmn tl Inception date Investment style DJ Global Benchmark developed markets. analysis oftheteam,investing in+$10bnmarket capcompanies in Developed Markets Long-Only Fund leverages thefundamental stock Jonathan Regis,whohave worked togetherfor over 20years. The The Developed Markets Strategy ismanaged byPeter Daviesand philosophy isarigorous process offundamentalbottom-up research. managers and analysts. Central toLansdowne Partners’ investment investment strategies eachwithitsown dedicatedteamofportfolio Lansdowne Partners managesover £15bnacross multiple equity Lansdowne Partners (UK)LLP GLOBAL FTSE All-share Titans benchmark-

Annual Report 2017 Report Annual

developed markets investment in independent Concentrated, value growth Intrinsic Witan Investment Trust PLC PLC Trust Investment Witan

14.9% 6.2% 14.12.2012 17.06.2013 21

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Investment Managers continued

GLOBAL GLOBAL 14.2% 14.0%

Pzena Investment Management LLC Veritas Asset Management LLP Pzena is a New York-based asset manager with a strict focus on long- Veritas is an affiliate of AMG Group, managing approximately £17bn term, classic value investing. Pzena began managing assets in 1996 of assets, with the key objective of delivering long-term real returns and, by the end of 2017, managed $38.5bn for clients around the world. to its clients. Veritas aligns its interests with clients’ objectives and is Today Pzena employs 105 people, including 26 on the investment team. committed to partnership. Veritas manages both segregated portfolios Headquartered in New York, Pzena also has marketing and sales offices and funds, with either long-only or long-short real return mandates. in Melbourne, Australia and in London, United Kingdom. Their clients are largely institutions, charities and trusts. The strategy in which the Witan Investment Trust is invested is currently closed to new investors.

Benchmark Investment style Inception date Benchmark Investment style Inception date FTSE All-World Systematic 02.12.2013 FTSE All-World Fundamental 11.11.2010 value value, real return objective

EUROPE (EX-UK) EUROPE (EX-UK) 4.4% 4.5%

CRUX Asset Management S. W. Mitchell Capital LLP CRUX Asset Management is a specialist active asset management S. W. Mitchell Capital is a specialist investment management boutique house specialising in European equities. The investment approach is focused exclusively on European equities. Founded in 2005, the firm defined by an unwavering bottom-up philosophy which aims to deliver is based in London and manages $2.2bn in assets on behalf of global superior returns over the long-term by identifying and investing in the institutional clients. Stuart Mitchell’s bottom up investment philosophy best stock ideas within its universe. Independent and privately-owned, is designed to uncover unrecognised value, with a process centred on the interests of the business are closely aligned with those of its clients company meetings. Portfolios are unconstrained and concentrated, as all members of the team invest significant amounts of their own including only the investment team’s highest conviction ideas. assets in their funds.

Benchmark Investment style Inception date Benchmark Investment style Inception date FTSE Sound 26.10.2017 FTSE High conviction 26.10.2017 Europe businesses Europe portfolio of (ex-UK) with quality (ex-UK) companies which management at offer unrecognised attractive valuations value

22 Witan Investment Trust PLC Annual Report 2017 ecmr Ivsmn tl Inception date Investment style MSCI Asia Benchmark Matthews AsiahadUS$33.9bninassets undermanagement. focus onlong-term investment performance. Asof31December 2017, and employ abottom-upfundamentalinvestment philosophy witha the UnitedStates.Matthews believes inthelong-term growth ofAsia owned firm,andthelargest dedicatedAsiainvestment specialist in Based inSanFrancisco, Matthews Asia isanindependent,privately Management (Matthews Asia) Matthews InternationalCapital ASIA MARKETS aii re Companies Pacific Free

growth with dividend Quality

11.7% 20.02.2013 ecmr Ivsmn tl Inception date Investment style Benchmark reasonable price. with sustainable long-term growth prospects thatare available ata with aninvestment process focused onhigh-qualitycompanies portfolios are long-only, highconviction andbenchmark-agnostic, Jain, whobringsover 24years ofequityinvestment experience. GQG’s The Fort Lauderdale, Florida-based investment teamisled byRajiv management firmfocused onglobal andemerging markets equities. GQG Partners isamajorityemployee owned boutiqueinvestment GQG Partners LLC EMERGING MARKETS Markets attractively-priced MSCI Emerging companies with

Annual Report 2017 Report Annual

growth prospects High quality Witan Investment Trust PLC PLC Trust Investment Witan

4.2% 16.02.2017 23

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Fifty Largest Investments at 31 December 2017

Market value of holding % of Company £m portfolio Country Sector 1 Vonovia 38.8 1.81 Germany Real Estate Investment Services 2 Syncona 37.4 1.74 UK Investment Company 3 BlackRock World Mining 37.1 1.73 UK Investment Company 4 JPMorgan Chase 37.1 1.73 USA Banks 5 Apax Global Alpha 36.7 1.71 UK Investment Company 6 Taiwan Semiconductor Manufacturing 30.8 1.43 Taiwan Technology Hardware & Equipment 7 London Stock Exchange 29.7 1.38 UK Financial Services 8 Lloyds Banking 29.6 1.38 UK Banks 9 Alphabet 28.3 1.31 USA Software & Computer Services 10 Bank of America 27.9 1.30 USA Banks 11 Princess Private Equity 26.9 1.25 UK Investment Company 12 Delta Air Lines 24.3 1.13 USA Travel & Leisure 13 Diageo 24.3 1.13 UK Beverages 14 Relx 23.3 1.08 UK Media 15 Samsung Electronics 23.0 1.07 South Korea Leisure Goods 16 International Consolidated Airlines 22.0 1.03 UK Travel & Leisure 17 Comcast 20.8 0.97 USA Media 18 Schroders 20.4 0.95 UK Financial Services 19 Unilever 20.3 0.95 UK Personal Goods 20 Airbus 20.1 0.94 Netherlands Aerospace & Defense 21 Electra Private Equity 19.9 0.92 UK Investment Company 22 Citigroup 19.6 0.91 USA Banks 23 BT 18.7 0.87 UK Fixed Line Telecommunications 24 Vivendi 18.2 0.85 France Media 25 Deutsche Lufthansa 16.8 0.78 Germany Travel & Leisure Top 25 652.0 30.35 26 Somerset Emerging Markets Small Cap Fund 16.7 0.78 UK OEIC 27 American Express 16.4 0.76 USA Financial Services 28 Sage 16.1 0.75 UK Software & Computer Services 29 Hargreaves Lansdown 15.8 0.73 UK Financial Services 30 NB Distressed Debt Inv. Fund 15.7 0.73 USA Investment Company 31 Amazon 15.5 0.72 USA General Retailers 32 Tesco 15.5 0.72 UK Food & Drug Retailers 33 Daily Mail & General 14.0 0.65 UK Media 34 Minth 13.6 0.63 China Automobiles & Parts 35 Burberry 13.4 0.62 UK Personal Goods 36 Charter Communications 13.2 0.62 USA Media 37 Oracle 12.9 0.60 USA Software & Computer Services 38 Baidu 12.8 0.60 China Software & Computer Services 39 Microsoft 12.7 0.59 USA Software & Computer Services 40 HSBC Holdings 12.4 0.58 UK Banks 41 CVS Health 12.1 0.56 USA Food & Drug Retailers 42 Express Scripts 11.9 0.55 USA Health Care Equipment & Services 43 Volkswagen 11.7 0.55 Germany Automobiles & Parts 44 Travis Perkins 11.7 0.54 UK Support Services 45 Qualcomm 11.7 0.54 USA Technology Hardware & Equipment 46 Ping An Insurance 11.1 0.52 China Life Insurance 47 Rathbone Brothers 11.1 0.52 UK Financial Services 48 Rolls Royce 10.8 0.50 UK Aerospace & Defence 49 Pearson 10.5 0.49 UK Media 50 Unitedhealth 10.2 0.48 USA Health Care Equipment & Services Top 50 981.5 45.68

The top ten holdings represent 15.5% of the total portfolio (2016: 14.9%). The full portfolio is not listed because it contains more than 300 companies.

24 Witan Investment Trust PLC Annual Report 2017 Technology Oil &Gas Industrials Health Care Financials Consumer Services Total 2016 Total 2017 (see note3) Open–ended Funds Utilities Consumer Goods Telecommunications 3 Open-ended Funds relates toanEmerging Markets fund. (3) Includedintheabove are fixed interest holdings(including convertibles) of£7,940,000(2016:£29,056,000). (2) Theholdingof£23.3mequityfutures (1.2%ofnetassets) isnotincludedinthisclassification (seepage 12). (1) Notes: Basic Materials at 31December2017 Classification ofInvestments Software & Computer Services 2.1 0.6 3.7 1.0 – – – – 1.0 3.7 0.6 2.1 Software &ComputerServices i qimn evcs&Dsrbto . – . – 0.4 – – – 0.3 – – 0.1 Oil EquipmentServices &Distribution i a rdcr . . . . . – 2.3 – – 0.4 0.2 0.1 1.2 0.4 Oil &GasProducers upr evcs3412020102– 5.1 – – 0.2 0.1 0.2 1.2 3.4 Support Services nutilTasotto . . 01– . . 0.9 0.1 0.1 – 0.1 – 0.4 0.2 Industrial Transportation nutilEgneig0707030205– 2.4 – – 0.5 0.2 0.3 0.7 0.7 Industrial Engineering General Industrials 0.4 0.3 – – 0.1 – – 0.8 – – 0.1 – – 0.3 0.4 General Industrials lcrnc&Eetia qimn . . . . . – 1.9 – – 0.3 0.2 0.3 0.6 0.5 Electronic &Electrical Equipment osrcin&Mtras0403– – – 0.7 – – – – – 0.3 0.4 Construction &Materials eopc eec . . – – 3.0 – – – – – 1.6 1.4 Aerospace &Defence hraetcl itcnlg . . . – – 2.5 – – – – 1.2 0.8 0.5 Pharmaceuticals &Biotechnology elhCr qimn evcs0106280501– 4.1 – – 0.1 0.5 2.8 0.6 0.1 Health Care Equipment&Services elEtt netetTut – 01– – 0.1 – – – 0.1 – – – Real Estate Investment Trusts elEtt netetSrie . . 04– – 2.8 – – – 0.4 – 2.3 0.1 Real Estate Investment Services o–ieIsrne01– . – 010.4 0.1 – – – 0.2 – 0.1 Non–life Insurance ieIsrne06– 07– 011.4 0.1 – – 0.7 – – 0.6 Life Insurance iaca evcs37041502– . . 6.1 0.2 0.1 – 0.2 1.5 0.4 3.7 Financial Services Investment Companies 6.3 1.8 0.7 – – – – – – – – 8.8 0.7 1.8 6.3 Investment Companies ak ...... 10.7 0.1 0.2 0.5 1.4 4.1 1.7 2.7 Banks rvl&Liue1808130101– . 4.4 0.3 – 0.1 0.1 1.3 0.8 1.8 Travel &Leisure Media 3.0 1.4 2.3 – – – – – – – – 6.7 2.3 1.4 3.0 Media eea ealr 0411060401– 2.6 – 0.1 0.4 0.6 1.1 0.4 – General Retailers od&Du ealr . 0805– . 2.5 – 0.1 – 0.5 0.8 – 1.1 Food &DrugRetailers oac . . . . 1.1 – 0.1 0.3 – – 0.1 0.6 Tobacco esnlGos16– 0504– 2.5 – – 0.4 0.5 – – 1.6 Personal Goods esr od – 1101– 1.2 – – 0.1 1.1 – – – Leisure Goods a,Wtr&Mliuiiis– . – – 0.3 – – – – – 0.3 – Gas, Water &Multi-utilities oshl od oeCntuto . . . . . – 0.9 – – 0.1 0.2 0.1 0.3 0.2 Household Goods&HomeConstruction odPoues– . 04– – 0.5 – – – 0.4 – 0.1 – Food Producers Electricity – 0.2 – 0.1 – – – – 0.3 – 0.1 0.2 – Electricity Beverages 1.2 0.1 – 0.3 – – – – 1.6 0.3 – 0.1 1.2 Beverages uooie at 08– . . 012.6 0.1 – 0.5 1.2 – 0.8 – Automobiles &Parts oieTlcmuiain . . 0401– . 1.6 0.2 – 0.1 0.4 – 0.4 0.5 Mobile Telecommunications ie ieTlcmuiain . . 01– – 1.3 – – – 0.1 – 0.3 0.9 Fixed LineTelecommunications Mining 0.4 0.1 – – – – – – – – – 0.5 – 0.1 0.4 Mining nutilMtl iig– . 03– – 0.8 – – – 0.3 – 0.5 – Industrial Metals&Mining ehooyHrwr qimn . . . . . – 4.5 – – 0.7 1.7 1.5 0.5 0.1 Technology Hardware &Equipment Chemicals 0.4 0.4 – 0.4 – – – – 1.2 0.4 – 0.4 0.4 Chemicals Notes Kingdom United 552. 221. . . . 100.0 1.9 0.7 4.8 13.6 22.2 21.3 35.5 3562652805030530.3 0.5 0.3 0.5 2.8 6.5 6.2 13.5 981. 601. . . . 100.0 1.9 0.6 4.6 10.8 26.0 16.3 39.8 % 0.5 1.2 0.1 0.5 0.4 – – – – 2.7 0.4 0.5 0.1 1.2 0.5 ...... 14.8 0.1 0.1 1.1 0.6 0.8 5.1 7.0 0.6 1.4 4.0 0.5 0.1 – – – – 6.6 0.1 0.5 4.0 1.4 0.6 ...... 16.2 0.3 0.2 0.5 1.2 5.5 2.6 5.9 ...... 10.4 0.2 – 1.4 3.8 0.1 1.3 3.6 . . . . . 2.9 – 0.2 0.1 0.5 – 0.7 1.4 0.8 1.0 – 0.7 – – – – 2.5 0.7 – 1.0 0.8 ...... 12.2 0.3 – 0.7 2.7 5.2 1.1 2.2 . . . . 0.8 0.3 – 0.1 – 0.2 0.2 – . . – – – 0.6 – 0.1 – 0.5 Continental Europe %

Annual Report 2017 Report Annual America North % (ex Japan) Pacific Asia % Witan Investment Trust PLC PLC Trust Investment Witan Japan % America Latin % Other % . 7.7 0.3 Total 2017 25 %

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Board of Directors

Harry Henderson Andrew Bell Robert Boyle Chairman (A), (C), (D) Chief Executive Officer (D) Chairman of the Audit Committee (A), (B), (D) Appointed as director in 1988, Harry Appointed as director and Chief Executive Appointed as director in 2007. He is a Henderson became Chairman in March of Witan in February 2010. Previously, he Chartered Accountant and was a partner 2003. He was formerly a partner of spent 9 years at a leading wealth manager of PricewaterhouseCoopers LLP, Cazenove & Co. and subsequently a prior to which he was an equity strategist where he was responsible for multi- senior executive at Cazenove Group and Co-Head of the Investment Trusts national client accounts, specialising plc, retiring in 2002. Mr Henderson is team at BZW and Credit Suisse First in the telecoms and media sectors: he Chairman of Witan Investment Services Boston. Before working in the City, he was chairman of the PWC European Limited. He is also a director of Cadogan worked for Shell in Oman, leaving to take a Entertainment and Media Practice for Settled Estates Limited. Sloan Fellowship at the London Business twelve years, retiring in 2006. He is a School. He is a former Chairman of the non-executive director and chairman AIC, currently Chairman of Gabelli Value of the audit committee of Centaur Plus+ plc and a non-executive director of Media plc. Henderson High Income Trust plc.

Catherine Claydon Suzy Neubert Richard Oldfield Chairman of the Remuneration and Director (A), (D) Director (A), (C), (D) (A), (B), (C), (D) Nomination Committee Appointed as director in 2012. She Appointed as director in 2011. He is Appointed as director in 2009. Previously is Sales & Marketing Director at J O chairman of Oldfield Partners, an she was a Managing Director in the Hambro Capital Management, which investment management firm. He Pension Advisory Group at Goldman she joined in March 2006. She was was previously chairman of the Oxford Sachs and Lehman Brothers. She is a previously Managing Director of Equity University investment committee and non-executive director of the Dunedin Markets within the Global Markets and of Keystone Investment Trust plc. He Income Growth Investment Trust. She Investment Banking Group at Merrill is a trustee of Royal Marsden Cancer is a director of the Barclays UK Pension Lynch Securities in London. She is a Charity, Canterbury Cathedral Trust and Fund and B.S.P.S. Limited and an qualified barrister. Clore Duffield Foundation, and a director independent member of Unilever UK of Shepherd Neame Limited. Pension Fund’s Investment Committee.

26 Witan Investment Trust PLC Annual Report 2017 of Scotland. of theInstitute ofChartered Accountants and private companies andisamember the Boards ofFTSE250andotherpublic Ernst andYoung LLP. Hehasserved on Partner andRegional Industry Leaderof Enterprise andaformer Managing He wasChiefExecutive ofScottish Property DebtInvestments Limited. and ICG-Longbow SeniorSecured UK chairman ofEuropean Assets Trust NV Appointed asdirector in2017.Heis Director Jack Perry (D) Director ofWitanInvestment Services Limited. (D) Members oftheRemuneration andNominationCommitteewhichischaired byMrs Claydon. (C) Members of theAuditCommitteewhichischaired byMrBoyle. (B) Independentnon-executive directors. (A) (A), (B),(D) joining Polar CapitalinMay2003. a SeniorTechnology Managerpriorto in 1998where hespentfour years as He moved toAberdeen Fund Managers at CMI,asaGlobal Technology Analyst. begun hiscareer infundmanagement technology specialist for 20years having Global Technology Fund. Hehasbeena is alsojointManagerofPolar Capital Technology Trust plc since 2006and been Portfolio Managerof Polar Capital Appointed asdirector in2016.Hehas Director Ben Rogoff (A)

Annual Report 2017 Report Annual Hermes Fund Managers Limited. most recently asChiefExecutive of in theinvestment managementindustry, retired in2006from anexecutive career (now theInvestment Association). He the Investment ManagementAssociation Group Plc, theShareholder Executive and and anon-executive director ofVodafone Independent Director ofHammerson plc Financial ReportingCouncil,theSenior (Northern Ireland), amemberofthe the Strategic Investment Board Limited Spencer Pension Scheme,chairmanof chairman oftheTrustees oftheMarks& Banking Group plc until2017andwas Senior IndependentDirector ofLloyds Independent Director in2008.Hewasthe Appointed asdirector in2006andSenior Senior IndependentDirector Tony Watson Witan Investment Trust PLC PLC Trust Investment Witan (A), (B),(D) 27

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Report

Statutory Information Substantial share interests The directors present the Annual Report of the Group for the As at 31 December 2017, the Company had not been notified year ended 31 December 2017. of any substantial interests in the Company’s voting rights.

Activities and business review There have not been any new holdings notified between the year end and the date of this Report. A review of the business is given in the Chairman’s and Chief Executive’s reports on pages 4 to 7 and in the Strategic Report on pages 8 to 20. The directors are required by the Companies Assets Act to prepare a Strategic Report for each financial year, At 31 December 2017 the total net assets of the Group were which contains a fair review of the business of the Group £1,980.5m (2016: £1,726.6m). At this date the net asset value during the financial year ended 31 December 2017 and of the per ordinary share was 1109.8p (2016: 952.8p). position of the Group at the end of the year and a description of the principal risks and uncertainties facing the Group. This Revenue and dividend information can be found within the Strategic Report on pages The total profit for the year was £317m (2016: £327m. A profit 17 to 19. of £43m is attributable to revenue (2016: £42m). The profit for the year attributable to revenue has been applied as follows: The Corporate Governance Statement on pages 32 to 40 forms part of this Directors’ Report. £’000 Distributed as dividends: Investment policy First interim of 4.75p per ordinary share 8,509 The Company’s investment policy is set out on the inside front (paid on 16 June 2017) cover. Second interim of 4.75p per ordinary share 8,485 (paid on 18 September 2017) Status Third interim of 4.75p per ordinary share 8,478 Witan Investment Trust plc (‘the Company’) is incorporated (paid on 18 December 2017) in the United Kingdom and registered in England and Wales Fourth interim of 6.75p per ordinary share 12,038 and domiciled in the United Kingdom. It is an investment (payable on 29 March 2018) company as defined in section 833 of the Companies Act 2006 and operates as an investment trust in accordance with Added to the Company’s revenue reserve 5,515 section 1158 of the Corporation Tax Act 2010. The Company 43,025 has received confirmation from HM Revenue and Customs that it has been accepted as an approved investment trust The directors have declared a fourth interim dividend instead with effect from 1 January 2012, provided it continues to meet of a final dividend in order to ensure that, as in previous years, the eligibility conditions of section 1158 and of the ongoing the distribution is made to shareholders before 5 April . requirements for approved companies in the Investment Trust (Approved Company) (Tax) Regulations 2011. Directors Subsidiary company The current directors of the Company are shown on pages 26 and 27. The Company has one subsidiary company, Witan Investment Services Limited, which provides marketing services All the directors held office throughout the year under review. and investment products to the Company and executive Mr Bell and Ms Neubert will retire in accordance with the management and marketing services to third party investment Company’s Articles of Association and, being eligible, will seek trust clients. Witan Investment Services Limited is authorised re-election by shareholders. Mr Henderson and Mr Watson and regulated by the Financial Conduct Authority to act as the will also retire and stand for re-election, as each of them has Company’s AIFM, provide investment advice to professional served as a director for more than nine years and is eligible investors and manage savings schemes for investors. to stand for re-election. The Board considers them to be independent despite their length of service. This is explained ISAs in more detail in sections 1 and 2 of the Corporate Governance The Company intends to continue to manage its affairs so that Statement on page 33. Mr Boyle and Mrs Claydon will retire at its shares fully qualify for the stocks and shares component of the Annual General Meeting (‘AGM’) on 2 May 2018 and will not an ISA and Junior ISA. seek re-election.

28 Witan Investment Trust PLC Annual Report 2017 aware ofanynew potentialconflicts ofinterest thatneedto undertaken tonotifytheChairman assoonthey become compiled andapproved bytheBoard. Thedirectors have also to theCompany. Aregister ofconflicts ofinterest hasbeen of interest andpotentialconflicts ofinterest, ifany, applicable Each ofthedirectors hasprovided astatement ofallconflicts interest. the relevant authority required todealwithconflicts of adopted byshareholders on27April2010,give thedirectors directors. TheCompany’s Articles ofAssociation, whichwere interest orthematterhasbeenauthorisedinadvance bythe reasonably beregarded aslikely togive risetoaconflict of of interest canbepermitted:either thesituationcannot There are two circumstances in whichapotentialconflict with directors’ conflicts ofinterest toavoid abreach ofduty. Articles ofAssociation tocontain otherprovisions for dealing contain aprovision tothiseffect. TheActalsoallows the where appropriate, butonly iftheArticles ofAssociation companies toauthorise suchconflicts andpotentialconflicts, Companies Act2006(‘theAct’)allows directors ofpublic possibly could conflict, withtheCompany’s interests. The or could have, adirect orindirect interest thatconflicts, or Directors have adutytoavoid situationswhere they have, Directors’ conflicts ofinterest on page46. Company are setoutintheDirectors’ Remuneration Report The interests ofthedirectors intheshare capitalofthe Directors’ interests director hasorhadaservice contract withtheCompany. or tothedateofthisreport. Withtheexception ofMrBell,no or arrangement withtheCompanyatanytimeduringyear No director wasapartyto,orhadaninterest in,anycontract Claydon (Chairman),MrHenderson andMrOldfield. Remuneration andNominationCommitteecomprised Mrs and MrWatson. Duringtheyear themembership ofthe comprised MrBoyle (Chairman),Mrs Claydon,MrPerry During theyear themembership oftheAuditCommittee Statement. directors issetoutonpage33intheCorporate Governance The Board’s policyonthefrequency ofthere-election of contribute effectively totheleadership oftheCompany. wide, current andrelevant experience thatallows themto of themshouldcontinue toserve ontheBoard asthey bring the directors standing for re-election andconsiders thateach The Board hasreviewed theperformance andcommitment of no conflicts ofinterest. been followed byallthedirectors and thatthere are currently its procedures for theapproval ofconflicts ofinterest have of conflicts operate effectively. TheBoard alsoconfirms that The Board believes thatitsarrangements for theauthorisation directors consider thistobeappropriate. impose limitsorconditions whengivingauthorisationifthe Company’s success intakingsuchadecision.TheBoard can consider, ingoodfaith, willbemost likely topromote the a conflict ofinterest, directors willalsoactinawaythey the Board approval process. Indecidingwhethertoapprove in thematterbeingconsidered would beable toparticipatein considered bytheBoard. Only directors whohave nointerest conflict orpotentialconflict ofinterest andshouldtherefore be then determinewhethertherelevant appointmentcausesa the Actinadvance ofjoiningtheBoard. TheChairmanwill situations falling withintheconflicts ofinterest provisions of and new directors willbeasked tosubmitalist ofpotential Secretary inadvance ofanyproposed external appointment that directors willadvisetheChairmanandCompany is reviewed annually bytheBoard. Ithasalsobeenagreed be approved bytheBoard andaddedtotheregister, which under review. respect ofthedirectors andwas inplace throughout theyear Directors’ andofficers’ liabilityinsurance cover isin place in (b) (a) subject totheprovisions ofUKlegislation, to: The Company’s Articles ofAssociation allow theCompany, Directors’ indemnity Company oranyassociated company. of trust byhimorher,otherwise,inrelation tothe alleged negligence, default, breach ofdutyorbreach may incur,whetherinconnection withanyproven or against anyloss orliabilityanyexpenditure heorshe was adirector, oradirector ofanyassociated company, purchase andmaintaininsurance for anyperson whoisor to theCompanyoranyassociated company; and or breach oftrust byhimorher,otherwise,inrelation any proven oralleged negligence, default, breach ofduty against anyloss orliability,whetherinconnection with director ofanyassociated company, directly orindirectly indemnify anyperson whoisorwasadirector, ora

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 29

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Report continued

Directors’ fees The Company is also seeking to renew shareholder approval The report on the directors’ remuneration is set out on pages to issue shares, up to 10% of the starting total, provided that 43 to 55. such shares are issued at or at a premium to net asset value.

Investment managers (b) 2.7% preference shares of £1 nominal value each It is the opinion of the directors that the continuing (‘2.7% preference shares’) appointment of the investment managers listed on page 11 The 2.7% preference shareholders have no rights to attend is in the interests of the Company’s shareholders as a whole and vote at general meetings. At 31 December 2017 there and that the terms of engagement negotiated with them are were 500,000 2.7% preference shares in issue. Further details competitive and appropriate to the investment mandates. on the preference shares are given in note 17 on page 90.

The Board and the Company’s AIFM review the appointments (c) 3.4% preference shares of £1 nominal value each of the investment managers on a regular basis and make (‘3.4% preference shares’) changes as appropriate. The 3.4% preference shareholders have no rights to attend and vote at general meetings. At 31 December 2017 there Share capital were 2,055,000 3.4% preference shares in issue. Further The Company’s share capital comprises: details on the preference shares are given in note 17 on page 90. (a) ordinary shares of 25p nominal value each (‘shares’) At the AGM in April 2017 a special resolution was passed The voting rights of the shares on a poll are one vote for giving the Company authority, until the conclusion of the every four shares held (one vote per £1 of nominal value). At AGM in 2018, to make market purchases for cancellation 31 December 2016 there were 200,071,000 shares in issue. of the Company’s own 2.7% preference shares and 3.4% During the year, 2,761,150 shares were bought back and preference shares up to a maximum of all those in issue. This are held in treasury and at 31 December 2017 there were authority has not been used. Accordingly, as at 31 December 21,621,411 shares held in treasury. These shares do not carry 2017 the Company had valid authority, outstanding until the voting rights or the right to receive dividends and thus the conclusion of the AGM in 2018, to make market purchases number of voting rights was 44,612,397 on a poll. Since the for cancellation of 500,000 2.7% preference shares and year end, 161,134 shares have been bought back and at the 2,055,000 3.4% preference shares. No preference shares were date of this report there were 200,071,000 shares in issue of bought back between the year end and the date of this report. which 21,782,545 were held in treasury. Accordingly, the Company has valid authority to make market purchases for cancellation of 500,000 2.7% preference shares The Company’s Articles of Association permit the Company to and 2,055,000 3.4% preference shares. The directors intend to purchase its own shares and to fund such purchases from its seek a fresh authority at the AGM in May 2018. accumulated realised capital profits. At the AGM in April 2017 a special resolution was passed giving the Company authority, There are no restrictions concerning the transfer of securities until the conclusion of the AGM in 2018, to make market in the Company; no special rights with regard to control purchases to be held in treasury of the Company’s ordinary attached to securities; no agreements between holders shares up to a maximum of 26,860,811 shares (being 14.99% of securities regarding their transfer which are known to of the issued ordinary share capital as at 27 April 2017). The the Company; and no agreements to which the Company Company has bought back 903,085 shares since the date of is party that might affect its control following a successful the last AGM. takeover bid.

The Board is seeking to renew its powers at the forthcoming Independent auditor AGM to buy shares into treasury, for possible reissuance when Resolutions to reappoint Grant Thornton UK LLP as the the shares trade at a premium. The Company makes use of Company’s auditor and to authorise the Audit Committee share buybacks, purchasing shares to be held in treasury to determine their remuneration will be proposed at the with the objective of achieving a sustainable low discount (or forthcoming AGM. Further details are included in the Report a premium) to net asset value. Shares are not bought back of the Audit Committee on pages 41 and 42. unless the result is an increase in the net asset value per ordinary share. Shares will only be re-sold from treasury at, or at a premium to, the net asset value per ordinary share.

30 Witan Investment Trust PLC Annual Report 2017 by theInternational Tax Compliance Regulations2015.CRS Cooperation andDevelopment andincorporated intoUKlaw information commissioned by theOrganisation for Economic CRS isaglobal standard for theautomaticexchange of Common ReportingStandard (CRS) the AuditCommittee. website www.witan.com. Thepolicyisreviewed annually by facilitation oftaxevasion canbefound ontheCompany’s evasion. Acopy oftheCompany’s policyonpreventing the zero-tolerance approach tothecriminalfacilitation oftax of theCriminalFinances Act2017,theBoard adopteda During theyear andinresponse totheimplementation Prevention oftheFacilitation ofTax Evasion The policyisreviewed regularly bytheAuditCommittee. Corruption Policy canbefound onitswebsite atwww.witan.com. for theCompany. Acopy of theCompany’s Anti-Briberyand same standards toitsservice providers intheiractivities for themselves orfor theCompany. TheBoard appliesthe or private intheUKorabroad tosecure anyimproper benefit offering orpromising topayorauthoriseanypayment,public behalf oftheCompany,from accepting, soliciting,paying, prohibits anyDirector orassociated persons whenactingon instances ofbriberyandcorruption. Accordingly, itexpressly The Board hasadoptedazero-tolerance approach to Anti-Bribery andCorruptionPolicy made inrespect ofRule 9.8.4. directors confirm thatthere are nootherdisclosures tobe the Directors’ Remuneration Reportonpages52and53.The Report. DetailsofMrBell’s Long-Term Bonusare includedin information inasingle identifiable sectionoftheAnnual Listing Rule 9.8.4requires theCompanytoincludecertain Listing Rule 9.8.4 Companies Act2006. in accordance withtheprovisions ofsection418the This confirmation is given andshouldbeinterpreted (2) (1) confirms that: Each ofthedirectors atthedateofapproval ofthisreport information totheauditor Directors’ statement astothedisclosure of Company’s auditorisaware ofthatinformation. of anyrelevant auditinformation andtoestablish thatthe have taken asadirector tomake himself/herself aware the director hastaken allthesteps thathe/sheoughtto and information ofwhichtheCompany’s auditorisunaware; so far asthedirector isaware, there isnorelevant audit Securities FinancingTransactions trafficking statement undertheModernSlavery Act2015. the Companyisnotrequired tomake anyslavery orhuman not have customers. Accordingly, thedirectors consider that goods orservices inthenormalcourse ofbusiness anddoes As aninvestment vehicle, theCompanydoesnotprovide Modern Slavery Act2015 12 March 2018 Secretary Frostrow CapitalLLP By order oftheBoard explanations oftheresolutions. accompanying circular toshareholders, togetherwith EC2R 8JB.Theformal notice oftheAGM issetoutinthe at Merchant Taylors’ Hall,30Threadneedle Street, London The AGM willbeheldat2.30pmonWednesday 2May2018 Annual General Meeting including thosewithinitsunderlying investment portfolio. (Strategic ReportandDirectors’ Reports)Regulations2013, emission producing sources undertheCompaniesAct2006 own operations, nordoes it have responsibility for anyother any significantgreenhouse gasemissions toreport from its small serviced office premises. Accordingly itdoesnothave The Companyhasastaff ofseven employees, operating from Greenhouse gasemissions 31 December 2017are detailed onpages94and95. in andexposures related tosecuritieslending as at with Article 13oftheRegulation,Company’s involvement transactions and margin lending transactions). Inaccordance borrowing, buy-sellbacktransactions orsell-buyback or commodities lending andsecuritiesorcommodities transactions include repurchase transactions, securities Article 3ofRegulation(EU)2015/2365,securitiesfinancing to report onSecuritiesFinancingTransactions (asdefinedin As theCompanyundertakes securitieslending, itisrequired behalf oftheCompany. collate suchinformation andfile thereports withHMRCon Company’s registrar, Computershare, hasbeenengagedto obligation beganin2016andisanannualrequirement. The to HMRCinrelation tocertain shareholders. Thereporting requires theCompanytoprovide certain additionaldetails

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 31

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Corporate Governance Statement

Background Compliance This Statement forms part of the Directors’ Report on pages The Board has considered the principles and 28 to 31. recommendations of the AIC Code by reference to the AIC Guide. The AIC Code, as explained by the AIC Guide, addresses The UK Listing Authority’s Disclosure Guidance and all the principles set out in the Corporate Governance Code, as Transparency Rules (the ‘Disclosure Rules’) require listed well as setting out additional principles and recommendations companies to disclose how they have applied the principles on issues that are of specific relevance to the Company. and complied with the provisions of the UK Corporate Governance Code ( ‘Corporate Governance Code’), as issued The Board considers that reporting against the principles and by the Financial Reporting Council (‘FRC’). The provisions of recommendations of the AIC Code and by reference to the AIC the Corporate Governance Code, which was issued by the FRC Guide (which incorporates the Corporate Governance Code) in April 2016, were applicable in the year under review. The will provide better information to shareholders. Corporate Governance Code can be viewed at www.frc.org.uk. The Company has complied with the recommendations of the AIC Code and the best practice provisions of the Corporate The related Code of Corporate Governance (‘the AIC Code’), Governance Code throughout the year ended 31 December issued by the Association of Investment Companies (‘AIC’), 2017 except as set out below: provides specific corporate governance guidelines to investment companies. The FRC has confirmed that AIC > The Corporate Governance Code (C.3.6) includes member companies who report against the AIC Code and who provisions relating to the need for an internal audit follow the AIC’s Corporate Governance Guide for Investment function. As explained on page 40, the Company does not Companies (the ‘AIC Guide’) will be meeting their obligations have an internal audit function. in relation to the Corporate Governance Code and the associated disclosure requirements of the Disclosure Rules. > The Corporate Governance Code (B.7.1) includes The AIC Code issued in July 2016 was applicable in the year provisions relating to the annual re-election of all under review. The AIC Code can be viewed at directors. As explained on page 33, the Company considers www.theaic.co.uk. that this provision is inappropriate to the Company.

The Board is aware of the new UK Corporate Governance Code The principles of the AIC Code which was published by the FRC for consultation in December The AIC Code is made up of twenty one principles. Its three 2017. The new Code is expected to apply for financial years sections cover the Board; Board meetings and relations with beginning on or after 1 January 2019 and accordingly the the investment managers; and shareholder communications. Board will report on its compliance with the new Code in the Company’s 2019 Annual Report.

32 Witan Investment Trust PLC Annual Report 2017 The Board 1. Nomination Committeeoversees thisprocess. Further detailsare given undersection7onpage35. Every year theBoard reviews itscomposition andthecomposition ofitstwo Committees.TheBoard’s Remuneration and prominent institutional investors have shared. continue toapply Provision B.7.1asiftheCompanywere notaconstituent oftheFTSE350Index, aview whichanumberof for reasons injurioustotheinterests oftheCompany’s investors asawhole. Therefore theBoard considers itappropriate to if allthedirectors seekre-election atonce a minority oftheshareholders could engineertheremoval ofthewhole Board time; and(b)there issomedanger,because many smallandnomineeshareholders donotexercise theirvoting rights,that short termandinsufficientemphasisontheneedfor aneffective board towork together andtorefresh itscomposition over directors isinappropriate totheCompany. There are two mainreasons: (a)itappears toplace excessive emphasisonthe companies shouldbesubjecttoannualelection byshareholders. The Board considers that theannualre-election ofallthe The Board hasreviewed Provision B.7.1oftheCorporate Governance Code,whichstates thatalldirectors ofFTSE350 Mrs Claydon intendtoretire attheforthcoming AGM. service ofmore thannineyears: MrHM Henderson, theChairman,MrBoyle, Mrs ClaydonandMrWatson. MrBoyle and Directors whohave served for more thannineyears stand for re-election annually. There are currently four directors with Thereafter alldirectors stand for re-election atleast every three years, asrequired bytheCompany’s Articles ofAssociation New directors stand for election bytheshareholders attheannualgeneral meetingthatfollows theirappointment. 3. likely toaffect theirjudgement(seealsosection1above). independent incharacter andjudgementthere are norelationships orcircumstances relating totheCompanythatare are wholly independentoftheCompany’s various investment managers. IntheopinionofBoard, eachofthedirectors is (the ChiefExecutive Officer). TheBoard istherefore independentoftheCompany’s executive management.Allthedirectors At 31December 2017 theBoard wascomposed ofeightindependentnon-executive directors andoneexecutive director 2. inappropriate. of communication for shareholders intheevent thatcontact through theChairmanhasfailed toresolve concerns oris for theChairmanandserve asanintermediaryfor theotherdirectors, shouldthisprove necessary, andtoactasachannel Mr AWatson wasappointedastheSeniorIndependentDirector inFebruary 2008.Heisalsoable toactas asoundingboard continuing independence oftheChairman. directors, underthechairmanshipofSeniorIndependentDirector, review andevaluate annually theperformance and adds value tothedeliberations ofawell-balanced investment trust company board. Theotherindependentnon-executive length ofservice doesnotofitselfimpairadirector’s abilitytoactindependently; rather, adirector’s longer perspective each year andwilldosofor aslong ashecontinues toserve ontheBoard. TheBoard isfirmly oftheview, however, that judgement. Havingserved ontheBoard for more thannineyears, MrHenderson stands for re-election bytheshareholders the abilitytomake decisionsthatconflict withtheinterests ofmanagement;thisisafunctionconfidence, integrityand that MrHenderson is,andhasbeensince hisappointment,anindependentnon-executive director. Independence stems from Mr HMHenderson hasbeenChairmanoftheCompanysince March 2003;hejoinedtheBoard in1988.TheBoard considers

but bebasedondisclosed procedures andcontinued satisfactory performance. Directors shouldbesubmittedfor re-election atregular intervals. Nominationfor re-election shouldnotbeassumed A majorityoftheboard shouldbeindependentofthemanager. The chairmanshouldbeindependent.

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan . 33

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Corporate Governance Statement continued

The Board

4. The board should have a policy on tenure, which is disclosed in the annual report. New directors are appointed for an initial term ending three years from the date of their first annual general meeting after appointment, with the expectation that they will serve a minimum of two three-year terms. There is no absolute limit to the period for which a director may serve although the continuation of directors’ appointments is contingent on satisfactory performance evaluation and re-election at annual general meetings. Directors’ appointments are reviewed formally by the Board ahead of their submission for re-election. None of the non-executive directors has a contract of service and a non-executive director may resign by notice in writing to the Board at any time; there are no set notice periods. The Board’s tenure and succession policy seeks to ensure that the Board is well-balanced and refreshed regularly by the appointment of new directors with the skills and experience necessary, in particular, to replace those lost by directors’ retirements. Directors must be able to demonstrate their commitment to the Company, including in terms of time. The Board seeks to encompass past and current experience of areas relevant to the Company’s objective and operations, the most important skill-sets being investment management, finance, marketing, financial services, risk management, custody and settlement, and investment banking. Specialist firms are usually used to assist with recruitment. Whilst the roles and contributions of longer serving directors are subject to rigorous review, the Board is strongly of the view that length of service is only one factor and that shareholders benefit from having directors with a longer perspective of the Company’s history and its place in the savings market. 5. There should be full disclosure of information about the board. Details of the directors are set out on pages 26 and 27. They demonstrate a broad range of experience, gained overseas as well as in the United Kingdom. 6. The board should aim to have a balance of skills, experience, length of service and knowledge of the Company. The Board considers that it has achieved this aim. Brief biographical details of each director are set out on pages 26 and 27.

Board Diversity The Company supports the objectives of the Davies Report to improve the performance of corporate boards by encouraging the appointment of the best people from a range of differing perspectives and backgrounds. The Company recognises the benefits of diversity on the Board, including gender, and takes this into account in its Board appointments. The Company is committed to ensuring that its director search processes actively seek both men and women with the right qualifications so that appointments can be made, on the basis of merit, against objective criteria from a diverse selection of candidates. The Board will continue to consider diversity during the director search process.

34 Witan Investment Trust PLC Annual Report 2017 The Board 7. 8. The Board intendstoappointanexternal organisation tofacilitate itsevaluation in2019. identify anymaterialweaknesses orconcerns. BoardAlpha Limiteddoesnothave anyotherconnection withtheCompany. implementing thosechangesrecommended bythereport thattheBoard considered shouldbemade.Thereport didnot to carryoutanevaluation programme. TheBoard reviewed theirreport inMarch 2017andtheChairmanhasled on companies shouldbeexternally facilitated atleast every three years, in2016,theBoard appointedBoardAlpha Limited consideration ofProvision B.6.2oftheCorporate Governance Code,whichstates thatevaluation oftheboard ofFTSE350 the conclusions withhim.TheBoard’s Remuneration andNominationCommitteeoversees thisprocess. Inaddition,in commitment totheCompany. TheSeniorIndependentDirector leads theannualevaluation oftheChairmanandreviews conclusions oftheevaluation. TheChairmanreviews witheachdirector hisorherindividualperformance, contribution and seeks toassess thestrengths andweaknesses oftheBoard anditsCommittees.TheChairmanleads onapplying the The Board hasestablished aprocess toevaluate itsperformance annually. Thisprocess isbasedonopendiscussion and 9. sets outtheamountspayable. The Directors’ Remuneration Reportonpages43to55detailstheprocess for determiningthedirectors’ remuneration and 10. this, theChairmanwould notexpect tolead theprocess ofselecting hissuccessor. contribute and toconsider servingonthesub-committee appointedtodraw uptheshortlist ofcandidates.Notwithstanding firm ofnon-executive director recruitment consultants. However, alltheindependentnon-executive directors are asked to The Board’s Remuneration andNominationCommitteeoversees therecruitment process, whichincludestheuseofa 11. followed andthatapplicable rules andregulations are complied with. Secretary, through itsappointedrepresentative, whoare responsible totheBoard for ensuringthatBoard procedures are The directors have access totheadvice andservices oftheCompany’s Executive teamandAIFMoftheCompany industry events. Alog ofdirectors’ training ismaintainedandreviewed eachyear bytheAuditCommittee. and otherseminars, conferences andcourses, ifnecessary attheCompany’s expense, andtoparticipategenerally in the Company’s regulatory andstatutory obligations(andchangesthereto). Thedirectors are encouraged toattendindustry ongoing basis,key information ontheCompany’s investment portfolios, financialposition, internalcontrols anddetailsof policies andoperations, includingthoseoutsourced tothird parties.Thereafter, directors are given, onaregular and Directors newly appointedtotheBoard are provided withanintroductory programme covering theCompany’s strategy, This principle doesnotapply totheCompany,whichisalong established investment trust company.

committees andindividualdirectors. The board shouldundertake aformal andrigorous annualevaluation ofitsown performance andthatofits Director remuneration shouldreflect theirduties,responsibilities andthevalue oftheirtimespent. disclosed intheannualreport. The independentdirectors shouldtake thelead intheappointmentofnew directors andtheprocess shouldbe

Directors shouldbeoffered relevant training andinduction. The chairman(andtheboard) shouldbebrought intotheprocess ofstructuring anew launchatanearly stage.

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 35

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Corporate Governance Statement continued

Board meetings and the relationship with the manager

12. Boards and managers should operate in a supportive, co-operative and open environment. Typically, the Board meets approximately ten times each year. The Chief Executive Officer (who is a director), other representatives of the Company’s Executive team and the AIFM and a representative of the Company Secretary expect to be present at all meetings. The Board devotes two days each year to meetings with the Company’s investment managers and each investment manager sends representatives at least once a year. The Chairman seeks to encourage open debate within the Board and a supportive and co-operative relationship with the Executive team and with the Company’s investment managers, advisors and other service providers. 13. The primary focus at regular board meetings should be a review of investment performance and associated matters such as gearing, asset allocation, marketing/investor relations, peer group information and industry issues. The Chief Executive Officer and the AIFM monitor investment performance and all associated matters. The Chief Executive Officer reports to each Board meeting, at which investment performance, asset allocation, gearing, marketing and investor relations are usually key agenda items. 14. Boards should give sufficient attention to overall strategy. The Board is responsible for determining the strategic direction of the Company and for promoting its success. At least one of its meetings each year is devoted entirely to reviewing overall strategy and progress is monitored throughout the year. 15. The board should regularly review both the performance of, and contractual arrangements with, the manager (or executives of a self-managed company). The Board’s Remuneration and Nomination Committee reviews the performance of and the contractual arrangements with the Chief Executive Officer. The Chief Executive Officer is responsible to the Board for reviewing the performance and the contractual arrangements of his staff. The Board’s Remuneration and Nomination Committee oversees this process.

The Chief Executive Officer leads on the selection and monitoring of the investment managers and their terms of reference, which are approved by the Board and the AIFM. 16. The board should agree policies with the manager covering key operational issues. The Company manages its own operations through the Board and that of its AIFM, as set out on page 38. Each investment manager runs a discrete investment portfolio within the terms of their investment management contract. Further details are given on page 38. Shares are held by the Company’s custodian/depositary. 17. Boards should monitor the level of the share price discount or premium (if any) and, if desirable, take action to reduce it. The Chief Executive Officer and his team monitor the share price and the discount/premium to net asset value daily and he reports to every Board meeting.

The Board makes use where appropriate of share buybacks (at a discount) and issuance (at a premium) in order to add to the net asset value per share and achieve a sustainable low discount (or a premium) to net asset value.

18. The board should monitor and evaluate other service providers. The Chief Executive Officer and the AIFM are responsible for monitoring and evaluating the performance of the Company’s service providers. The Board’s Audit Committee oversees this process together with the WIS Risk Committee.

36 Witan Investment Trust PLC Annual Report 2017 Shareholder communications 19. increase investors’ understanding ofthesector. the Company’s website.The Companybelongs totheAssociation ofInvestment Companieswhichpublishesinformation to website (www.witan.com). AKey Information Document,prepared inaccordance withnew EUrules isalsopublishedon a factsheet monthly anditsnetasset value pershare daily. Allthisinformation isreadily accessible ontheCompany’s and nomineecompanies (orwrittennotificationissentwhenthey are publishedonline).Inaddition,theCompanypublishes hold shares through thesubsidiarycompany’s products and,where possible, toinvestors through otherproviders’ products enable thistobeachieved. CopiesoftheAnnualReportandHalfYear Reportare circulated toshareholders, tothosewho The Board places importance oneffective communication withinvestors andapproves amarketing programme eachyear to 21. major corporate issues are puttotheBoard or,iftimeisoftheessence, toaCommitteethereof. While theChiefExecutive Officer andhisteamexpect tolead onpreparing andeffecting communications withinvestors, all 20. The directors maybecontacted through theCompanySecretary attheaddress shown onpage100. available toshareholders. TheChiefExecutive Officer makes apresentation tothemeeting. questions from shareholders asappropriate. Detailsoftheproxy votes received inrespect ofeachresolution are made of theRemuneration andNominationCommitteeallexpect tobepresent attheAnnualGeneral Meetingandtoanswer days before themeeting.TheChairman,ChiefExecutive Officer, theChairmanofAuditCommitteeand shareholders. TheNotice oftheAnnualGeneral Meetingandrelated papers are senttoshareholders atleast 20working The Companyencourages attendance atitsAnnualGeneral Meetingasaforum for communication withindividual and NominationCommitteeisavailable todiscuss remuneration matters. Senior IndependentDirector, expects tobeavailable tomeetthelarger shareholders andtheChairmanofRemuneration investors andwithprivate clientstockbrokers andadvisors. InadditiontotheChiefExecutive Officer, theChairman,or place for analysing andmonitoringtheshareholder register andaprogramme for meetingorspeakingwiththeinstitutional closely withtheChiefExecutive Officer andthere isregular liaisonwiththeCompany’s stockbroker. There isaprocess in The Chairmanisresponsible for ensuringthatthere iseffective communication withtheCompany’s shareholders. Heworks

reward balance towhichthey are exposed byholdingtheshares. The board shouldensure thatshareholders are provided withsufficientinformation for themtounderstand therisk: regarding majorcorporate issues even ifthemanagerisasked toactasspokesman. The board shouldnormally take responsibility for, andhave adirect involvement in,thecontent ofcommunications shareholder views andfor communicating theboard’s views toshareholders. The board shouldregularly monitortheshareholder profile ofthecompany andputinplace asystem for canvassing

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 37

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Corporate Governance Statement continued

The Board 2.5% may be allocated to newly-established or smaller third The Board is collectively responsible for the success of the party managers that are viewed as having potential to add Company. Its role is to provide leadership within a framework value to the overall portfolio. of controls that enable risk to be assessed and managed. The Board sets the Company’s strategic aims (subject to the The Chairman is responsible for ensuring that the directors Company’s Articles of Association and to such approval of the are provided with management, regulatory and financial shareholders in general meeting as may be required from information that is timely, accurate and relevant. time to time) and ensures that the necessary resources are in place to enable the Company’s objectives to be met. Matters specifically reserved for decision by the full Board have been defined. There is an agreed procedure for directors, The Board has typically met approximately ten times a year in the furtherance of their duties, to take independent and deals with the most important aspects of the Company’s professional advice, if necessary, at the Company’s expense. affairs, including the setting of parameters for and the monitoring of investment strategy, the review of investment Board Committees performance and the extent to which borrowings may be used. The Board has established an Audit Committee and a Remuneration and Nomination Committee. The membership The Chief Executive Officer (‘CEO’) is responsible to the Board of the Audit Committee and the Remuneration and and the AIFM for the overall management of the Company Nomination Committee is set out on pages 26 and 27. The including investment performance, business development, roles and responsibilities of the Committees are described in shareholder relations, marketing, investment trust industry the Report of the Audit Committee on pages 41 and 42 and in matters, administration and unquoted investments. The the Directors’ Remuneration Report on pages 43 to 55. duties of the CEO include leading on investment strategy and asset allocation, on the selection and monitoring of the Meetings of the Board and its Committees investment managers and their terms of reference and on the The number of formal meetings during the year of the Board use of derivatives. The Board, in conjunction with the AIFM, and its Committees, and the attendance of the individual sets limits on matters such as asset allocation, gearing and directors at those meetings, is shown in the table that follows. investment in derivatives, within which the CEO has discretion.

Remuneration The CEO reports to each meeting of the Board. His report and includes confirmation that the Board’s investment limits and Audit Nomination restrictions and those which govern the Company’s tax status Board Committee Committee as an investment trust, have been adhered to. Number of meetings 10 4 2 H M Henderson 10 2* 2 The individual investment managers are each appointed to A L C Bell 10 4* 2* manage a discrete portfolio in accordance with guidelines which limit, for example, the markets in which they can R W Boyle 10 4 – invest, the maximum size of each investment and the M C Claydon 9 4 2 amount of cash that may be held in normal circumstances. S E G A Neubert 9 – – They are not allowed to invest in unquoted securities, to R J Oldfield 7 – 2 gear the portfolio, to sell stocks short or to use derivatives. J S Perry 9 4 – The investment managers take decisions on individual investments and are responsible for effecting transactions on B C Rogoff 10 – – the best available terms. The Company and the AIFM receive A Watson 10 4 – monthly confirmation from each investment manager that it has carried out its duties in accordance with their investment * Not a member of the Committee but in attendance by invitation for all or mandates. part of the meetings.

In addition to his responsibilities for the overall management All the then directors attended the Annual General Meeting in of the Company, the CEO manages the Direct Holdings April 2017 other than Mr Oldfield and the Board’s ‘Away Day’ portfolio. A maximum of 10% of the Company’s gross assets in May 2017. (at the time of purchase) may be invested in specialist funds within this portfolio and there are restrictions on the number, size and type of investments that may be made. Up to a futher

38 Witan Investment Trust PLC Annual Report 2017 contractors asrequired. and information are suppliedtotheBoard from itsother reports from theinvestment managers andadhocreports of theCompany. TheBoard receives andconsiders regular systems inoperation insofar asthey relate totheaffairs quality andcost oftheservices offered, includingthecontrol into afterfullandproper consideration bytheBoard ofthe registration services. Eachofthesecontracts was entered and certain otheradministrative requirements andthe management andfinancialaccounting, company secretarial safeguarding oftheassets), theinvestment administration, of theinvestment portfolio, global custody (whichincludesthe including thevarious investment managers, themanagement The Board hasdelegated contractually toexternal agents, to 63. The report oftheindependentauditorissetoutonpages57 accounts issetoutonpage56. The directors’ statement ofresponsibilities inrespect ofthe Accountability and audit Remuneration Reportonpages43to45. The directors’ remuneration isdetailed intheDirectors’ Directors’ remuneration internal control failures. areas ofriskandwhich report the detailsofanyknown formal reports whichdetailthesteps taken tomonitorthe meeting. TheCompanyreceives from itsmaincontractors in ariskmap,whichtheAudit Committee reviews ateach risks atleast once ayear. Theseare analysed andrecorded Governance CodetheBoard reviews theCompany’s business In accordance withprovisions C2andC3oftheCorporate against materialmisstatement orloss. and canonly provide reasonable andnotabsoluteassurance risks offailure toachieve theCompany’s business objectives a system isdesignedtomanagerather thaneliminatethe regular appraisal ofspecificareas ofrisk.However, such review tookintoaccount pointsraised duringtheyear inthe compliance controls andriskmanagementsystems. This covering allthecontrols, includingfinancial,operational and an annualreview oftheeffectiveness ofthesystem, control andhascharged theAuditCommittee withconducting remains responsible for theCompany’s system ofinternal review anduptothedateofthisAnnualReport.TheBoard Audit Committeeandwasfully inplace duringtheyear under Governance Codeguidance, issubjecttoregular review bythe the Company. Thisprocess accords withtheCorporate evaluating andmanagingthesignificantrisksfaced by The Board hasestablished anongoingprocess for identifying, Internal control with themembers oftheBoard. well known toandhave frequent formal andinformal contact seven people (includingtheChiefExecutive Officer), whoare appropriate independentinvestigation. Itsstaff comprises only whether inmatters offinancialreporting orotherwise,for confidence anyconcerns aboutpossible improprieties, The Companyhasaformal policyfor staff toraise in place. compliance monitoringprogramme, have beenduly putinto for theseactivities,includingacompliance manualanda AIFM from July 2014.Thecompliance structures required products andservices andwasappointedastheCompany’s by theFinancialConductAuthoritytoprovide investment The Company’s subsidiary, WIS,isauthorisedandregulated managers. independently measured, along withthoseofthethird party Holdings portfolio. Inaddition,theportfolio’s performance is Board ontheperformance ofand activitywithintheDirect The ChiefExecutive Officer makes regular reports tothe operation. company’s auditors onthecontrol policiesandprocedures in in most cases theseincludeareport from therelevant investment managers reports ontheirinternalcontrols; and systems. TheBoard alsoreceives eachyear from its provide detailed information ontheiroperational structures During 2017,theinvestment managers were asked to investment andcompliance matters from eachmanager. The managementteamreceives monthly reports on with thethird partymanagers. is responsible for managingandcontrolling therelationships The in-houseExecutive management teamofWitanandWIS significance. overall performance oftheCompanyandothermatters of the Board regularly oneachoftheseareas, aswell asonthe which hemayoperate. TheChiefExecutive Officer reports to has setguidelinesinrespect ofeachtheseaspectswithin allocation, gearingand investment inderivatives. TheBoard aspects ofthemanagementportfolio, includingasset delegation from theBoard andtheAIFM)for anumberof The ChiefExecutive Officer hasresponsibility (under managed bytheChiefExecutive Officer. managers aswell astheDirect Holdingsportfolio whichis around theworld. There are currently 10suchinvestment is outsourced toanumberofthird partyinvestment managers As describedelsewhere, themanagementofWitan’s portfolio

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 39

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Corporate Governance Statement continued

The Company does not have an internal audit function. The Board encourages the Company’s appointed investment Through WIS, the AIFM, it delegates to third parties the managers to engage with companies and to vote shares, management of its investments and most of its other in the best long-term interest of Witan shareholders but operations and employs only a small staff. The investment in accordance with their own investment philosophies. managers and certain other key contractors are subject to Where applicable, it monitors the policies of the investment external regulation and most have compliance and internal managers in respect of the UK Stewardship Code. Elsewhere audit functions of their own. The Company’s investments in the world it can be more difficult to vote shares as each are held on its behalf by a global custodian appointed by the country has its own rules and practices regarding shareholder depositary. A specialist firm of investment accountants and notification, voting restrictions, registration conditions and administrators is responsible for investment administration, share blocking, including, for example, dealing constraints. for maintaining accounting records and for preparing financial Therefore, whilst the Company’s investment managers are accounts, management accounts and other management apprised of the Company’s approach to the stewardship of its information. Their work is reviewed by an independent assets and the importance of sound corporate governance, accountant who also carries out some of the work that an they use their discretion according to their knowledge of the internal audit function would cover. In addition, the Board relevant circumstances. The investment managers report receives from the investment administrator an annual their compliance with the UK Stewardship Code, or equivalent report on its internal controls, including a report from its legislation, to the Audit Committee each year. auditor on the control policies and procedures in operation. The investment performance of the investment managers, In respect of the direct investments held, the Company’s both individually and collectively, is measured for Witan by a Executive management maintains regular touch with the company that is independent of all the investment managers. management of the investee holdings and engages when The corporate Company Secretary is a company with well- issues arise that are controversial or potentially prejudicial established experience in servicing investment trusts. to the interests of Witan’s shareholders. An annual report is provided to the Audit Committee in compliance with the UK The appointment of these and other professional contractors Stewardship Code. provides a clear separation of duties and a structure of internal controls that is balanced and robust. The Board and Approval the AIFM will continue to monitor its system of internal control This report was approved by the Board of directors on 12 March in order to provide assurance that it operates as intended and 2018 and is signed on its behalf by: the directors will review at least annually whether a function equivalent to an internal audit is needed. H M Henderson Chairman Stewardship and the exercise of voting powers 12 March 2018 It is the Board’s view that, in order to achieve long-term success, companies need to maintain high standards of corporate governance and corporate responsibility. Therefore Witan expects the companies in which it is invested to comply with best practice in corporate governance matters, or to provide adequate explanation of any areas in which they fail to comply, whilst recognising that a different approach may be justified in special circumstances. In respect of UK companies, current best practice in corporate governance matters is set out in the UK Corporate Governance Code.

40 Witan Investment Trust PLC Annual Report 2017 > > > > > Committee isresponsible for: the Company’s website (www.witan.com). Insummary,the request from theCompanySecretary andcanbeseenon Governance Code.Thetermsofreference are available on in itstermsofreference, whichcomply withtheUKCorporate auditor. TheCommittee’s role andresponsibilities are setout and maintaininganappropriate relationship withtheGroup’s understandable reporting, ensuringeffective internal controls protecting shareholders’ interests through fair, balanced and The role oftheCommitteeistoassist thedirectors in experience are given onpages26 and27. effect from 22February 2017.Detailsofourqualificationsand Mr Perry wasappointedasamemberoftheCommitteewith 2013, were members oftheCommitteethroughout theyear. and Mrs Claydon,whowasappointedtotheCommitteein Mr Watson, whowasappointedtotheCommitteein2006, and otherrelevant experience gainedthroughout theircareers. Committee members have acombination offinancial,investment a partnerinPricewaterhouseCoopers LLPandtheother respects: IamaChartered Accountant andwaspreviously is satisfiedthattheCommitteeproperly constituted inboth have recent andrelevant financialexperience. TheCommittee operates andthatatleast onememberoftheCommitteeshould competence relevant tothesectorinwhichCompany requirements thattheCommitteeasawhole shouldhave the Committeein2007.TheBoard hastaken noteofthe are appointedbytheBoard. IwasappointedChairmanof four non-executive directors, includingitsChairman,who During theyear underreview, theCommitteecomprised Composition andresponsibilities oftheCommittee ended 31December 2017. pleased topresent theReportofCommitteefor theyear As ChairmanoftheAuditCommittee(‘theCommittee’),Iam Committee Statement bytheChairmanof Report oftheAuditCommittee

reporting totheBoard onhow ithasdischarged itsduties. audit process; and independence andobjectivitytheeffectiveness ofthe reviewing andmonitoringtheexternal auditor’s terms ofengagementtheexternal auditor; external auditorandapproving theremuneration and the appointment,re-appointment andremoval ofthe systems usingexternal consultants where appropriate; and regulatory compliance controls andriskmanagement ensuring theapplicationofCompany’s internalfinancial accounting policiesandsignificantreporting judgements; statements, includingconsideration oftheCompany’s monitoring theintegrityofCompany’s financial General DataProtection Regulation(‘GDPR’). 2018, includingMiFIDII,theCriminal Finances Actandthe the Company’s compliance withnew legislation in2017and The Committeealsomonitored the work required toensure (‘CASS’) oftheFCA. regulations contained withintheClientAssets sourcebook topics in2017includedmonitoring Financial ConductAuthority(‘FCA’) the Company’s subsidiary, toensure WIS’compliance with the Committeeworks withtheRiskCommitteeofWIS, Following theappointmentofWISasCompany’s AIFM, > > > > > to 2017were: the meeting.Insummary,mainmatters arisinginrelation Board aftereachmeetingonthemainmatters discussed at relevant external advisers andthe auditors. Ireport tothe by theChairmanofCompany,members ofmanagement, in February 2018.Meetingsare usually attended,byinvitation, The Committeeheldfour meetingsduring2017andalsomet Meetings oftheCommittee 19) five mainareas ofpotential risk: market andinvestment Management hasidentified(Strategic Report pages18and Risk

page 40). page 40). concluded thatnointernalauditfunctionwasrequired (see compliance andadherence tointernalprocedures, itwas report directly totheCommittee,adviseonregulatory the useofindependentexternal consultants, who In lightoftherelative simplicityoftheoperations and programme ofoversight andreviews theresults. by theWISExecutive. TheCommittee approves the use ofthird partyservice providers, whoare overseen in thisReport(seepage40),theCompanymakes extensive security andbusiness continuity. Asexplained elsewhere anti-money launderingcompliance, dataandIT systems A variety ofspecificmatters includingwhistleblowing, responsibility for compliance. reporting. TheCommitteeagreed theprocess, timingand key developments for annualreports andnon-financial by theAICandFRCguidance toauditcommittees on requirements oftheCodeCorporate Governance issued Interim andyear-end reporting, inthelightof calculation ofmanagementfees. policies, revenue recognition, portfolio valuation and statements includingappropriateness ofaccounting Consideration ofothermatters inrelation tothefinancial performed. Nosignificantissues were identified. custodian/administrator and thereview oftheauditwork procedures ofexternal managers andtheexternal assessing management reports onthecontrols and valuation andliquidityofinvestments: thisincludes Assessment ofthecontrols toensure theownership,

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan the impl regulations. Particular ementation ofthe 41

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Report of the Audit Committee continued

portfolio, operational, corporate governance, accounting, legal Financial statements and regulatory, and liquidity, and has set out the actions taken The Board has requested the Committee to confirm that in to evaluate and manage these risks. its opinion the Board can make the required statement that the Annual Report taken as a whole is fair, balanced and The auditor has also detailed three key audit matters in its understandable and provides the information necessary report: valuation and existence of investments; accuracy for shareholders to assess the Company’s position and and completeness of investment income and accuracy and performance, business model and strategy. The Committee completeness of performance and management fees and has has given this confirmation on the basis of its review of the set out the work it has performed to satisfy itself that these whole document, underpinned by involvement in the planning have been properly reflected in the financial statements. for its preparation, review of the processes to assure the accuracy of factual content, and by assurances from the The Committee has monitored the controls designed to Remuneration and Nomination Committee. mitigate the risks associated with these matters during the year including reviewing management’s risk report at Non-audit services each meeting and requiring amendments to both risks and mitigating actions as appropriate. The Committee considers The Committee has adopted the new limit on non-audit that management has carried out a robust assessment of the fees that has been introduced with effect from January principal risks facing the Company, including those that would 2017, from which time non-audit fees cannot be more than threaten its business model, future performance, solvency or 70% of the average audit fees for the last three years. Any liquidity and has taken appropriate action to mitigate those new engagement with Grant Thornton for any non-audit risks. There were no significant areas of material judgement service must be approved in advance by the Committee. or unadjusted errors. The Committee assesses each service individually having considered the cost-effectiveness of the service and the impact on the auditor’s independence. Going concern and viability The Committee has assessed the information, forecasts Grant Thornton are not providing any non-audit services and assumptions underlying the Viability and Going Concern to the Company other than to provide the CASS report, for Statements on pages 19 and 20 and recommended to the which their fees are budgeted at £25,000 and compliance Board that they are appropriate. with covenants on the Secured Bonds (£4,000). The ratio of audit to non-audit work in the year was 64:36. The Committee External audit considered that it was in the interests of the Company to Grant Thornton UK LLP was appointed as statutory auditor in appoint Grant Thornton for this work as it would not be cost- 2016. In accordance with the current legislation, the Company effective to appoint another firm. will need to re-tender for new auditors at least every 10 years and will have to change its auditor after 20 years. Effectiveness of the Committee The Committee assessed its own effectiveness during The audit partner is Marcus Swales. The auditor is required to the year. The Committee considered that its approach was rotate partners every five years and it is proposed that Mr Swales comprehensive and appropriate and that it focused on the right should serve until the AGM in 2021, provided shareholders issues and was managed well. Some suggestions were made to approve the continued appointment of Grant Thornton. improve the papers provided to the Committee in order to focus the Committee’s review of issues and the risk register. Accordingly, the Committee considers that the Company has complied with the provisions of the Large Companies Market Committee changes Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 during the As you will have read elsewhere, I shall be retiring from the financial year. Board at the AGM on 2 May 2018. I am pleased to report that Mr Perry has been appointed to succeed me as Chairman The Committee reviews the scope and effectiveness of the of the Committee. As a Chartered Accountant and former audit process, including agreeing the auditor’s assessments partner of Ernst & Young, he has the right experience and of materiality, and monitors the auditor’s independence and qualifications for this role. objectivity. The Committee conducts a formal review of the performance of the auditor following the conclusion of the audit. Approval This report was approved by the Committee on 12 March 2018 In addition, Grant Thornton has been appointed to provide an and is signed on its behalf by: assurance report on client assets in accordance with the FCA’s Client Assets Sourcebook (the CASS Report) to the FCA in Robert Boyle respect of Witan Investment Services Limited, to be completed Chairman of the Audit Committee by the end of April 2018. 12 March 2018

42 Witan Investment Trust PLC Annual Report 2017 that are subjecttoauditare indicatedinthereport. Regulations. Thepartsoftheannualreport onremuneration the report have beenproperly prepared inaccordance withthe Report andtostate whether,intheiropinion,thosepartsof shareholders oncertain partsoftheDirectors’ Remuneration The CompaniesAct2006requires theauditortoreport to 2016 andtookeffect from 1January2016. a bindingshareholder vote attheAnnualGeneral Meetingin The Company’s existing remuneration policywassubjectto in May2018. be subjecttoanadvisoryvote attheAnnualGeneral Meeting 2017 andotherinformation required bytheRegulations.Itwill remuneration duringthefinancialyear ended31December report. Theannualreport onremuneration provides details of the Committee,anannualreport onremuneration andapolicy into three mainareas: thisstatement from measChairmanof the Association ofInvestment Companies. Thereport issplit Regulations 2013(the‘Regulations’) andtherequirements of Companies andGroups (Accounts andReports)(Amendment) prepared inaccordance withtheLarge andMedium-sized executive andexecutive directors oftheCompany. Ithasbeen the remuneration policyandremuneration detailsfor thenon- Committee for theyear ended31December 2017. Itsetsout This report covers theremuneration-related activitiesofthe Remuneration Reportfor theyear ended31December 2017. (the ‘Committee’),Iampleased topresent theDirectors’ As ChairmanoftheRemuneration andNominationCommittee Introduction Chairman’s statement Directors’ RemunerationReport appointed tothe Committeein2003and2011 respectively. as itsChairman, in2009.MrHenderson andMrOldfieldwere the Committee.Iwasappointed totheCommittee,andact and MrHMHenderson andMrRJOldfieldwere members of Board. During theyear Iserved asChairmanoftheCommittee directors, including itsChairman,whoare appointedby the The Committeenormally consists ofthree non-executive Company’s website (www.witan.com). request from theCompanySecretary andcanbefound onthe are setoutinitstermsofreference, whichare available on of theBoard. TheCommittee’s role andresponsibilities responsibility for reviewing theeffectiveness andcomposition Committee serves astheBoard’s nominationcommittee with remuneration ofthenon-executive directors. Inaddition,the Company’s staff. Second, theCommitteeconsiders the in determiningtheremuneration arrangements for the evaluating hisperformance, aswell asassisting the CEO remuneration oftheChiefExecutive Officer (‘CEO’)and remuneration, assisting thedirectors indetermining the essentially twofold. First, ithasarole inrespect ofexecutive The remuneration-related role oftheCommitteeis Role oftheCommittee annual rates: non-executive directors’ fees have beenpaidatthefollowing 1 April2014.Accordingly, witheffect from 1April2017,the to £5,000.Thiswasthefirst increase inthesefees since Committee andtheSeniorIndependentDirector from £4,000 that oftheChairmanRemuneration andNomination Audit Committeewasincreased from £6,000to£7,500and Chairman. Theadditionalfee payable totheChairmanof other thantheChairmanandby£3,000perannumfor the 2017 by£1,500perannumfor thenon-executive directors directors’ fees should beincreased witheffect from 1April to theBoard, andtheBoard agreed, thatnon-executive non-executive directors’ fees. TheCommitteerecommended In February 2017,theCommitteeundertookareview ofthe which itaddressed allthematters underitsremit. Committee heldtwo formal meetingsduringtheyear, during twice ayear andonsuchother occasions asrequired. The The Committee’s programme istomeetformally atleast 12 March 2018 Chairman oftheRemuneration andNominationCommittee. Catherine Claydon the Committee. Mr Oldfieldhasbeenappointedtosucceed measChairmanof at theAGM on2May2018.Iampleased toreport that As reported elsewhere, Ishallberetiring from theBoard Committee changes to £298,000perannum. The aggregate non-executive directors’ fees currently amount £350,000 perannum. aggregate fees payable tothenon-executive directors to The Company’s Articles ofAssociation currently limitthe Other non-executive Directors Senior IndependentDirector Nomination Committee Chairman oftheRemuneration and Chairman oftheAuditCommittee Chairman oftheCompany

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 31,500 36,500 36,500 39,000 60,000 £ 43

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Remuneration Report continued

Annual report on remuneration An ordinary resolution for the approval of this section of the Report (together with the Chairman’s statement on page 43) will be put to members at the forthcoming Annual General Meeting.

The following section sets out the executive director’s and the non-executive directors’ remuneration for the year ended 31 December 2017. The information provided on pages 44 to 46 of this Report (other than the Total shareholder return performance graph) has been audited by Grant Thornton UK LLP.

Single total figure table for the year (audited) Non-executive directors The following table shows the single figure of remuneration of the non-executive directors for the financial year ended 31 December 2017, together with the comparative figures for 2016:

31 December 31 December 2017 2016 Fees and total Fees and total remuneration remuneration £(1) (2) £(1) (2) JEB Bevan (retired 28 April 2016) – 10,000 R W Boyle 38,250 36,000 M C Claydon 35,875 34,000 H M Henderson 59,250 57,000 S E G A Neubert 31,125 30,000 R J Oldfield 31,125 30,000 J S Perry (appointed 1 January 2017) 31,125 – B C Rogoff 31,125 7,500 A Watson 35,875 34,000 Total 293,750 238,500

Notes: (1) The non-executive directors are not entitled to any valuable payments or benefits. No taxable benefits were paid in the year, although all reasonably incurred business expenses will be met. (2) Non-executive directors’ fees were last increased with effect from 1 April 2017.

44 Witan Investment Trust PLC Annual Report 2017 (1) Notes: Mr ALCBell shown inthelast column ofthetable. 31 December 2017for theCEO,MrALCBell,togetherwithcomparative figures for 2016.Aggregate emolumentsare The following table shows asingle totalfigure ofremuneration inrespect ofqualifyingservices for thefinancialyear ended CEO MrBell’s totalvariable remuneration inrespect oftheyear ended31December 2017is£326,257(2016: £166,345). (iii) Long-Term Bonus (ii) One-year Bonus (i) Discretionary bonus (3) (2) Gabelli Value Plus base salarysetoutabove, MrBellreceived £58,250(2016:£57,750)inrespect ofhisdirectorship ofHenderson HighIncome Tru Mr Bellisentitled toholdoutsideappointmentsandretain anyfees payable, subjecttoreceiving theBoard’s permission. D three separate elements: Mr Bell’s current service agreement provides that he iseligible toreceive abonusofupto170%hisbasicsalary. Thecash Taxable benefitsincludelife assurance andhealthinsurance. Term Bonuswere set. Bonus of£126,757ispayable inMarch 2018inaccordance withthetermswhichappliedunderprevious policyinforce whent the remaining 40%paidonadeferred basisinthree equalinstalments inMarch 2019,2020and2021,subjecttocontinued employ Payment ofthediscretionary bonusandOne-year Bonuswillbepartly deferred inaccordance withthecurrent policy,with60%p effect ofshare buybacks)andtherefore aLong-Term Bonusof£126,757willbepaidtoMrBell(2016:4.9%,£76,425). The Companyhasoutperformed itsbenchmarkover thethree financialyears to31December 2017by8.0%(netasset value debtat bonus risingonastraight linebasistoafullbonuswhere thebenchmarkisexceeded byanaverage of3%perannum. The level ofbonusisdeterminedbyreference totheperformance against thebenchmark,where performance isinlinewithbench previous three financialyears. at the2016AGM. Insummary,MrBelliseligible toreceive upto50%ofhisbasicannualsalarybyreference totheCompany’s A descriptionofthetermsLong-Term Bonus(includingtheperformance measures), wasincludedinthepolicyreport appro based ontheCompany’s financialperformance for theyear ended31December 2017(2016:underperformed, £nil). benchmark in2017by3.6%(netasset value debtatpar,excluding theeffect ofshare buybacks)andtherefore abonusof£114,0 For adescriptionofthetermsOne-year Bonus(includingtheperformance measures), please seethepolicyreport. TheCo year ended31December 2017(2016:32%,£89,920). Mr Bellshouldreceive adiscretionary bonus equalto30%(compared withthemaximum of40%)hisbasicsalary(£85,500)inr appropriate level ofthediscretionary bonusthatispayable for thatyear. Following thatreview, theCommitteerecommended, a Mr Bell’s perfomance against theperformance criteria,describedonpage52,over thepreceding year atitsmeetinginFebruary For adescriptionofthetermsdiscretionary bonus(includingtheperformance measures), please seethepolicyreport. T + Trust plc. 285,000 Base pay 0721 0721 0721 0721 0721 072016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 £ 281,000 (1)

19,149 Benefits £ (2) 18,366

199,500 Annual Bonus benefits £ 89,920 (3)

Annual Report 2017 Report Annual 126,757 Long-Term Bonus £ (3) 76,425 Witan Investment Trust PLC PLC Trust Investment Witan Pension related 28,500 benefits £ bonusarrangement consists of uring 2017,inadditiontothe 28,100 st plc andaschairmanof performance over the he Committeereviewed nd theBoard agreed, that 00 willbepaidtoMrBell 2018todeterminethe aid inMarch 2018and he termsoftheLong- espect ofthefinancial mpany outperformed its ment. TheLong-Term ved byShareholders mark generates a par, excluding the 658,906 Total £ 493,811 45

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Remuneration Report continued

Scheme interests awarded during the financial year Total shareholder return performance graph No directors were awarded any interest over shares in the The line graph below sets out the Company’s nine-year total Company during the financial year ended 31 December 2017 shareholder return performance relative to the FTSE All- (2016: nil). Share Index and the FTSE World Index (sterling adjusted). This line graph assumes a notional investment of £100 into Payments to past directors the Indices on 31 December 2008 and the reinvestment of all No payments were made to former directors of the Company income, excluding dealing expenses. during the financial year ended 31 December 2017 (2016: £nil).

400 Payments for loss of office Witan Share price total return FTSE World total return No loss of office payments were made to any person who has 350 FTSE All-Share total return previously served as a director of the Company at any time Benchmark during the financial year ended 31 December 2017 (2016: £nil). 300

250 Statement of directors’ shareholdings (audited) The interests of the CEO and the non-executive directors 200 (including connected persons) in the Company’s ordinary shares are shown in the table below. No share options or 150 other share-based awards, with or without performance measures, were awarded to the CEO or to any non-executive 100 2008 2009 2010 2011 20122013 2014 2015 2016 2017 director. There are no requirements or guidelines for the CEO or the non-executive directors to own shares in the Company. Source: Morningstar.

Shares held Shares held as at as at The Company is required to compare the Company’s share 31 December 31 December 2017 2016 price with a single broad equity market index. The Company has compared the share price total return against (i) a UK A L C Bell 140,000 140,000 market index, namely the FTSE All-Share Index because R W Boyle 57,508 55,092 the Company’s shares are listed on the UK market and also M C Claydon 50,806 49,271 (ii) a global index, namely the FTSE World Index because H M Henderson 788,232(1) 788,232(1) the Company invests across a broad spread of global equity markets. The performance of the Company’s benchmark is S E G A Neubert 9,941 9,750 also shown. R J Oldfield 21,500 21,500 J S Perry(2) 14,792 – B C Rogoff 3,248 2,300 A Watson 25,021 25,021

Notes: (1) H M Henderson is the legal and beneficial owner of 722,732 shares in the Company and 65,500 shares in the Company are owned by connected persons (2016: 722,732 and 65,500 shares). (2) Mr Perry owned 14,505 shares at the date of his appointment, 1January 2017.

Since the year end, Mr Rogoff has purchased 148 ordinary shares. There have not been any other changes in the directors’ interests.

None of the directors had an interest in the secured bonds or preference shares of the Company.

46 Witan Investment Trust PLC Annual Report 2017 2010 –MrClarke 2010 –MrBell 2011 –MrBell 2012 –MrBell 2013 –MrBell 2014 –MrBell 2015 –MrBell 2016 –MrBell 2009 –MrClarke oa 33 33 n/a 0 4 6 66 an increase intheperformance-determined Long-Term Bonus. 122 3(ii) onpage45),whereas itwasnotpaidinrespect 1 of2016, and 3 in theOne-year Bonusbeingpaidinrespect of2017(seenote the outperformance oftheCompanyin2017,whichresulted The increase intheCEO’s bonusesin2017isprimarily dueto Total Long-Term Bonus and One-year Bonus) Annual bonuses(discretionary All taxable benefits Salary andfees whole: components ofpay for theGroup’s employees taken asa compares withthepercentage increase ineachofthose CEO’s salary,benefitsandbonusbetween 2016and2017 The table below shows how thepercentage changeinthe Percentage changeinremuneration ofCEO (1) Note: 2017 –MrBell 31 December Year ended CEO remuneration table appointed. Mr REClarke wastheCEOuntil8February 2010,whenMrBellwas (1) (1) remuneration figure oftotal CEO single 5,0 7589.0 87.5 658,906 0,9 0. n/a 100.0 409,495 1,6 00n/a 40.0 314,160 0,3 6513.7 86.5 400,535 8,0 5064.2 95.0 486,802 4,1 62100.0 76.2 544,514 9,3 52100.0 95.2 593,431 9,1 0054.4 40.0 493,811 5,7 00n/a n/a 30.0 15.0 253,273 111,318 Percentage increase/(decrease) in £ remuneration in2017compared and One-year discretionary with remuneration in2016 maximum pay-out against Annual Bonus CEO % % Long-Term Employees maximum pay-out against Bonus % % Share buybacks CEO) inrespect oftheyear of theGroup (includingthe receivable byallemployees Remuneration paidtoor shareholders Total paymentsto 2017 the year ended31December shareholders inrespect of Dividends paidto directors Fees ofnon-executive Spend Relative importance ofspendonpay trust companies. the fees paidtonon-executive directors ofotherinvestment of thenon-executive directors andreviews, from timetotime, The Committeeassesses theworkload andresponsibilities remuneration payable to theCEO. of thefees payable tothenon-executive directors orthe during thefinancialyear ending31December 2017,inrespect The Committeewasnotprovided withanyadvice orservices, recommendation onthistotheBoard for itsapproval. considers theremuneration oftheCEOandmakes a to consider matters relating thereto. TheCommitteealso non-executive directors andithasappointedthe Committee The Board asawhole setsthefees thatare payable tothe directors’ remuneration Consideration bythedirectors ofmatters relating to effect from 1April2017. 2016. Thefees for non-executive directors were increased with at the2016AGM andimplemented witheffect from 1January the policysectionofreport wasagreed byshareholders The revised remuneration policyfor theCEOasdetailed in Statement ofimplementation ofremuneration policy (2) (1) Notes: during theyear (seealsocomments onpage13). Share buybackactivityreflects changesinthediscount, which narrowed with theCompany. subject toperformance beingsustained andtohiscontinued employment Includes anyaccruals for future paymentoftheCEO’s Long-Term Bonus,

Annual Report 2017 Report Annual (2) (1) Witan Investment Trust PLC PLC Trust Investment Witan 64,132 37,510 26,622 1,439 £’000 2017 294 178,210 142,918 35,292 1,020 £’000 2016 239 (114,078) (116,296) Difference 2,218 £’000 419 55 47

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Remuneration Report continued

Herbert Smith Freehills LLP provided legal advice to the Remuneration policy Company during the year. This advice was available to be The Company reports on its remuneration policy in accordance considered by the Committee. with the Regulations each year. An ordinary resolution for the approval of a revised policy was put to members at the AGM The table below sets out the members of the Committee on 28 April 2016 and passed by the members. This policy took who were present during any consideration of the CEO’s effect from 1 January 2016. remuneration, and shows the number of meetings attended by each non-executive director: All provisions of the revised policy are expected, in the Number of absence of regulatory or other reasons for change, to remain meetings in effect until the AGM in 2019 when the Company will next be Name attended required to submit its remuneration policy to its members. M C Claydon 2 H M Henderson 2 For ease of reference we have included the full policy as R J Oldfield 2 approved by shareholders, updated to reflect application of the policy in 2017, on the following pages. The unamended version of the policy as approved by shareholders may be viewed in Statement of shareholder voting the Annual Report for 2015 at www.witan.com At the Annual General Meetings held on 28 April 2017 and 28 April 2016 respectively, ordinary resolutions to approve Non-executive directors the Directors’ Remuneration Report for the year ended All the directors are non-executive, with the exception of the 31 December 2016 and to approve the Remuneration Policy CEO. New directors are appointed for an initial term ending were passed on a show of hands. The proxy votes in each case three years from the date of their first annual general meeting were as follows: after appointment and with the expectation that they will serve two three-year terms. The continuation of directors’ Total votes cast appointments is contingent on satisfactory performance Votes at (excluding evaluation and re-election at annual general meetings. Non- Votes Votes proxies’ Votes votes for against discretion withheld withheld) executive directors’ appointments are reviewed formally every three years by the Board as a whole. Each of the non-executive Approval of Directors’ Remuneration Report directors has a letter of appointment which sets out the terms 16,338,235 323,166 42,920 38,976 16,704,321 on which they provide their services. A non-executive director 97.8% 2.0% 0.2% – 100% may resign by notice in writing to the Board at any time; there Approval of Remuneration Policy are no set notice periods. 22,358,405 399,993 48,204 217,226 22,806,602 98.0% 1.8% 0.2% – 100%

The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to directors’ remuneration, the reasons for any such vote will be sought and any actions in response will be detailed in future Directors’ Remuneration Reports. There were no substantial shareholder votes against the resolutions at the Annual General Meetings in 2017 or 2016.

48 Witan Investment Trust PLC Annual Report 2017 Directors’ andofficers’ liabilityinsurance cover isheld bytheCompanyinrespect ofallthedirectors (includingtheCEO). The following table provides asummaryofthekey elements oftheremuneration ofthenon-executive directors: Remuneration policyfor non-executive directors Fees to clawbackprovisions. elements andnofees are OPERATION subject There are noperformance-related recruited. candidates ofhighcalibre tobe should besufficienttoenable to theCompany’s affairs and should reflect thetimecommitted Fees payable tothedirectors PURPOSE Meeting inApril2014. following approval byshareholders attheAnnualGeneral to non-executive directors inanyfinancialyear is£350,000 maximum amountoffees, inaggregate, thatmaybepaid All oftheabove fees are effective from 1April2017.The > > > Additional fees are payable asfollows: Each non-executive director’s annualbasefee is£31,500. recognition oftheirmore onerous roles (seebelow). paid higherfees thantheothernon-executive directors in Committees andtheSeniorIndependentDirector are The ChairmanoftheBoard, theChairmenofBoard’s and dividendpayments. inflation andintheCompany’s share price, netasset value increases infees are determinedinthelightofincreases in not necessarily result inanyincrease inthefees. Proposed The fees are reviewed eachyear, althoughsuchreview will The Committeedeterminesthelevel offee atitsdiscretion. their performance, eitherindividually orcollectively. arrangements andthefees are notspecifically related to There are nolong-term incentive schemesorpension personally ortoathird partyspecifiedbyhimorher. form offees, payable monthly inarrears, tothedirector Non-executive directors are toberemunerated inthe

Senior IndependentDirector £5,000. £5,000. Chairman ofRemuneration andNominationCommittee Chairman ofAuditCommittee£7,500.

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 49

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Remuneration Report continued

Remuneration policy for the CEO (and any future executive directors) Currently the Company operates with one executive director, the CEO. This policy applies to the CEO, but would also be applied to any other executive director appointed by the Company.

PURPOSE AND LINK OPERATION AND MAXIMUM PERFORMANCE TO STRATEGY CLAWBACK OPPORTUNITY MEASURES Base salary Base salary is set at Base salary is reviewed The Committee has Not applicable market competitive annually and fixed for agreed to increase levels in order to 12 months. the CEO’s salary, with recruit and retain an effect from 1 January executive director of a 2018, by 3% to suitably high calibre. £293,550 per annum.

The level of pay Year-on-year, salary reflects a number increases for any of factors including executive director individual experience, will not exceed 10% expertise and pay per annum other appropriate to the than in times of position. abnormal inflation or other exceptional circumstances, in which case the increase will not exceed 20%. Benefits-in- Offering market- An executive director may be The maximum benefit Not applicable kind competitive level of eligible to receive a range of that can be offered or benefits-in-kind to benefits including some or paid to an executive help recruit or retain all of: director is: an executive director > private medical insurance > private medical of a suitably high for the executive director insurance provided calibre. and their family; on a family basis; > death in service > death in service insurance; insurance of 4 times base salary; > business-related expenses. > business-related expenses. Where benefits are sourced through third party providers, the expense will reflect the cost of the provision of the benefits from time to time but will be kept under review by the Committee.

50 Witan Investment Trust PLC Annual Report 2017 Bonus One-year bonus Discretionary Pension TO STRATEGY PURPOSE ANDLINK shareholders. and itsreturn to performance the Company’s CEO tomaximise is toincentivise the bonus arrangements The purposeofthe shareholders. and itsreturn to performance the Company’s CEO tomaximise is toincentivise the bonus arrangements The purposeofthe suitably highcalibre. executive director ofa recruit orretain an earnings tohelp of guaranteed cash competitive levels Offering market- CLAWBACK OPERATION AND and clawback. operation ofdeferral, malus See note2onpage53for the the FCA Remuneration Code. future regulations, including with anyrelevant current or payable inorder to comply that would otherwisebe reduce anybonuspayment the termsofthisbonusor The Committeemaychange year. over theprevious financial performance oftheCompany salary byreference tothe a bonusofupto40%base The CEOiseligible toreceive and clawback. operation ofdeferral, malus See note2onpage53for the the FCA Remuneration Code. future regulations, including with anyrelevant current or payable inorder tocomply that would otherwisebe reduce any bonuspayment the termsofthisbonusor The Committeemaychange respect ofthepreceding year. level of bonuspayable in determine theappropriate performance criteriato performance against the will review theCEO’s salary. TheCommittee up to40%ofbasicannual a discretionary bonusof The CEOiseligible toreceive pension contributions. 10% ofbasesalary,inlieu a cashpayment,equalto The CEOcurrently receives

Annual Report 2017 Report Annual OPPORTUNITY MAXIMUM 40% ofbasesalary. executive director is bonus payable toany The maximumcash 40% ofbasesalary. executive director is bonus payable toany The maximumcash is 10%ofbasesalary. pension contributions payment inlieuof The maximumcash Witan Investment Trust PLC PLC Trust Investment Witan MEASURES PERFORMANCE Bonus. the CEO’s One-year measures subjectto of theperformance page 52for details Please seeNote1on discretionary bonus. to theCEO’s measures subject of theperformance page 52for details Please seeNote1on Not applicable. 51

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Remuneration Report continued

PURPOSE AND LINK OPERATION AND MAXIMUM PERFORMANCE TO STRATEGY CLAWBACK OPPORTUNITY MEASURES Long-Term The purpose of the The CEO is eligible (with The maximum cash Please see Note 1 Bonus bonus arrangements effect from 1 January 2016) bonus payable to any below for details of is to incentivise the to receive a bonus of up executive director is the performance CEO to maximise to 90% of base salary by 90% of base salary. measures subject to the Company’s reference to the performance the CEO’s Long-Term performance of the Company over the Bonus. and its return to previous three financial shareholders. years.

The Committee may, with shareholder approval as appropriate, change the terms of this bonus or reduce any bonus payment that would otherwise be payable in order to comply with any relevant current or future regulations, including the FCA Remuneration Code. See note 2 on page 53 for the operation of deferral, malus and clawback.

Notes: the benchmark. Relative performance of between nil and 3.0% 1. Performance measures will generate a pro rata bonus. With effect from 1 January Mr Bell’s service agreement, as amended, provides that with 2017, the benchmark is a composite of 30% FTSE All-Share effect from 1 January 2016 he is eligible to receive a bonus Index, 25% FTSE All-World North America Index, 20% FTSE of up to 170% of his basic annual salary. The cash bonus All-World Europe (ex UK) Index, 20% FTSE All-World Asia arrangement consists of three separate elements as set out Pacific Index and 5% FTSE All-World Emerging Markets Index. below: (iii) Long-Term Bonus (i) Discretionary bonus With effect from 1 January 2016 Mr Bell is eligible to receive a Each year Mr Bell is eligible to receive, at the absolute Long-Term Bonus each year of up to 90% of his basic annual discretion of the Committee, a cash bonus of up to 40% of salary by reference to the Company’s performance over the his basic annual salary. The Committee has determined previous three financial years. The Long-Term Bonus will be a number of criteria that it takes into account, including determined by reference to the Company’s net asset value per the management and administration of the Company and share total return (debt at par, excluding the effect of share reporting to the Board, shareholders and other stakeholders, buybacks or issuance) relative to its benchmark, as set out on which to judge his performance. in the Company’s audited annual accounts for the applicable financial years. Compounded average annual outperformance of the Benchmark by 2.5% per annum or more will generate (ii) One-year Bonus a bonus of the full 90%. No bonus is payable if performance Each year Mr Bell is eligible to receive an additional cash is in line with or below that of the Benchmark. Relative bonus of up to 40% of his basic annual salary. The bonus will performance of between nil and 2.5% per annum will generate be determined by the Company’s net asset value per share a pro rata bonus. total return performance over the previous financial year (debt at par, excluding the effect of share buybacks or issuance) relative to its benchmark. Outperformance of the benchmark by 3.0% or more will generate a bonus of the full 40%. No bonus is payable if performance is in line with or below that of

52 Witan Investment Trust PLC Annual Report 2017 (c) there hasbeenamaterial failure inriskmanagement; (b) (a) be appliedbytheRemuneration Committeewhere: back partorallofanybonusalready received. Clawbackmay after ithasbeenpaid,whereby theCEO willberequired topay Any bonuswillbesubjecttoaclawbackperiodoftwo years 2.3. Clawback (c) there hasbeenamaterialfailure inriskmanagement; (b) (a) may beappliedbytheRemuneration Committeewhere: Malus (where bonusesthathave yet tobepaidare forfeited) 2.2 Malus Date. instalments oneachanniversary oftheFirst BonusPayment on adeferred basisover thefollowing three years, inequal Bonus Payment Date’).40%ofanybonuseswillbepayable be paidinMarch following theperformance year end(‘First subject todeferral interms ofpayment.60%anybonuswill which termswere setpriortothispolicytakingeffect) are All bonuses(otherthanLong-Term Bonusesinrespect of 2.1 Deferral Deferral, malusandclawback 2. AGM. payable inaccordance withthepolicyapproved atthe2014 to 31December 2018.Prioryear Long-Term Bonusesare basis inrespect ofthethree-year periodfrom1 January2016 The Long-Term Bonusispayable for thefirst timeonthis share isnegative over thatperiod. financial years, the Company’s netasset value totalreturn per outperformance oftheBenchmarkover therelevant three The Long-Term Bonuswillbehalved if,despite result indismissal. there hasbeen seriousmisconduct that has orcould otherwise have beenthecase; causes anaward tovest atahigherlevel thanwould there hasbeenmaterialmisstatement orerror that result indismissal. there hasbeenseriousmisconduct thathasorcould otherwise have beenthecase; causes anaward tovest atahigherlevel thanwould there hasbeenmaterialmisstatement orerror that shareholders. to theCompany’s performance andthevalue created for variable paysothatagreater proportion ofhispayisrelated director’s remuneration ismore heavily weighted towards principally from thatfor employees inthattheexecutive The remuneration policyfor theexecutive director differs Differences intheCompany’s remuneration policy 4. remuneration. payments includetheCommitteemakingawards ofvariable becoming adirector oftheCompany. For thesepurposes, such apaymentisnotinconsideration of theindividual of theCompanyand(ii)inopinionCommittee, at atimewhentherelevant individualwasnotadirector payment were agreed before thepolicycameintoeffect or with thepolicysetoutabove (i)where thetermsofsucha payments andfor loss ofoffice thatare notinline The Committeereserves therighttomake remuneration 3. Legacy plans (1) Executive directors (4) (3) (2) (1) Non-executive directors promotion of directors Principles andapproach to recruitment andinternal for directors ascompared toemployees than isnecessary. if relevant, attract therighttalent whilst payingno more a packagethatissufficienttoretain andmotivate and, Board from withintheGroup, the Committeewilloffer When hiringanew executive director, orpromoting tothe Company forms; andtotheSeniorIndependentDirector. and totheChairmanofanyotherCommitteesthat and theRemuneration andNominationCommittees annum willbepaidtotheChairmanofeachAudit for theChairmanofCompany. Anadditionalfee per each non-executive director, withahigherfee perannum The basicnon-executive director’s fee willbepaidto Association andbyshareholder resolution. determined bytheprovisions oftheCompany’s Articles of The totalremuneration ofthenon-executive directors is benefits. bonuses, pensionbenefits,share optionsorother Non-executive directors are noteligible toreceive the affairs oftheCompany. experience andtimecommitted totheproper oversight of It shouldprovide appropriate compensation for the duties andresponsibilities ofthenon-executive directors. the specificcircumstances oftheCompanyand Remuneration ofnon-executive directors shouldreflect

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 53

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Directors’ Remuneration Report continued

(2) Ordinarily, remuneration for a new executive director will Illustration of application of remuneration policy be in line with the policy set out in the table. The chart below shows an indication of the values of the CEO’s remuneration that would be received by the CEO in (3) The maximum level of variable pay that may be awarded to accordance with this remuneration policy for the year ending a new director on recruitment or on promotion to the Board 31 December 2018 at three direct levels of performance: shall be limited to 170% of base salary (calculated at the date of grant, excluding any buy-out awards – see below). > minimum performance, i.e. fixed salary, taxable benefits (4) The Committee may, where it considers it to be in the and payment in lieu of pension contributions, with no best interests of the Company and shareholders, offer bonus pay-out; an additional cash payment to an executive director in order to replace awards which would be foregone by the > on-target performance, fixed pay plus bonus payments individual on leaving his/her previous employment (i.e. assuming a 50% pay-out of each of the discretionary, One- buy-out arrangements) which will be intended to mirror year and Long-Term Bonuses; and forfeited awards as far as possible by reflecting the value, nature, time horizons and performance measures. > maximum performance, fixed pay plus bonus payments assuming 100% pay-out of each of the discretionary, One- Letters of appointment/service contract year and Long-Term Bonuses. Non-executive directors’ letters of appointment The non-executive directors all have letters of appointment, £841,000 which may be inspected at the Company’s registered office. 850 Fixed pay 800 None of the non-executive directors is subject to any notice Discretionary bonus 750 One-year Bonus period. All continuing non-executive directors are required to 700 Long-Term Bonus 31% 650 £592,000 stand for re-election by the shareholders at least every three 600 years. The initial period of appointment is two terms of three 550 22% 14% years. All reasonably incurred expenses will be met. 500 450 10% £’000s 400 14% £342,000 10% Mr Henderson, Mr Bell, Ms Neubert and Mr Watson are 350 300 100% 58% 41% proposed for re-election at the Annual General Meeting in 250 May 2018. 200 150 100 CEO’s service contract 50 0 The CEO’s service contract with the Company may be Minimum performance On target performance Maximum performance inspected at the Company’s registered office. The CEO’s service agreement dated 3 February 2010, as amended, provided in 2017 for a salary of £285,000 (2016: £281,000) Policy on payment for loss of office per annum. The salary has been increased to £293,550 with Non-executive directors effect from 1 January 2018. Mr Bell’s appointment may be None of the non-executive directors is subject to any notice terminated by either party on the giving or receiving of not less period. It is the Company’s policy not to enter into any than nine months’ written notice. arrangement with any of the non-executive directors to entitle any of the non-executive directors to compensation for loss of Please see ‘Policy on payment for loss of office’ below for office. further details of the CEO’s service contract. CEO (and any future executive directors) The Company’s policy is to agree a notice period for the CEO which would not exceed nine months.

The Company may, in its absolute discretion and without any obligation to do so, terminate the CEO’s employment immediately by giving him written notice together with a payment of such sum as would have been payable by the Company to the CEO as salary (excluding future bonus accrual) in respect of his notice period. The Company may, at

54 Witan Investment Trust PLC Annual Report 2017 as practicable after,theCEO’s cessation of employment. determined atthetimeofchange ofcontrol on,orassoon the applicable bonusshallbecome payable totheextent > > > the CEOotherthanasaresult of: that theapplicable bonus would otherwisehave beenpaidto CEO ceases tobeemployed bytheCompanypriortodate targets have beensatisfiedonthechangeofcontrol, ifthe Committee determinesthatthepro-rated performance Committee determinesotherwise.To theextent thatthe the applicable bonusshallimmediately lapseunless the targets have notbeensatisfiedonthechangeofcontrol, If theCommitteedeterminesthatpro-rated performance been satisfiedatthattime. performance targets attachedtotheapplicable bonuseshave the Committeeshalldeterminewhetherpro-rated unless theCommitteedeterminesotherwise,inwhichcase amount ofanybonusorthedateonwhichitbecomes payable A changeofcontrol oftheCompanyshallnotaffect the absolute discretion, determinesotherwise. bonus for nilconsideration unless theCommittee,inits been paid,theCEOwillforfeit anyrighttoreceive therelevant prior tothedatethatrelevant bonuswould otherwisehave than asa‘goodleaver’, oriftheCEOgives orreceives notice that becomes payable. IftheCEOceases employment other appropriate, increase theproportion oftherelevant bonus may, however, takingintoaccount suchfactors asitconsiders shall bepro-rated for timeandperformance. TheCommittee Committee atitsdiscretion permits),anybonuspayment retirement orduetoanyothercircumstance thatthe reason (i.e.death,ill-health,injury,disability,redundancy, If theCEOceases employment asaresult ofagoodleaver the CEO. regarding paymentsfor loss ofoffice willbethesame as for If anew executive director isrecruited, theCompany’s policy reduced totake account ofmitigationbytheCEO. termination dateandontermsthatanypaymentshouldbe over aperiodofnolonger thansixmonthsfrom the its discretion, make theterminationpaymentininstalments

his resignation receiving ofnotice; or his cessation ofemployment withoutthegivingor dismissal; a reason whichwould have justified hissummary Statement ofconsideration ofshareholder views other companies. of remuneration paidtoemployees incomparable roles in remuneration oftheemployees andCEObyobtainingdetails Where possible, theCommitteebenchmarks up theremuneration policy. The Companydidnotconsult withemployees whendrawing when settingtheCEO’s remuneration. including salaryincreases, ofemployees otherthantheCEO The Committeeconsiders the employment conditions, the Company Statement ofconsideration ofconditions elsewhere in 12 March 2018 Chairman oftheRemuneration andNominationCommittee Catherine Claydon 2018 andissignedonitsbehalfby: This report wasapproved bytheBoard ofdirectors on12March Approval Remuneration. by shareholders inrelation toitspolicyonDirectors’ confirm thatitisnotaware ofnegative views beingexpressed in general attheAnnualGeneral Meetingheldin2017andcan the year ended 31December 2017andmetwithshareholders with institutional shareholders andCityanalysts throughout with itsshareholders. TheCompanyhadfrequent meetings The Companyplaces great importance oncommunication

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 55

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Statement of Directors’ Responsibilities in respect of the Annual Report, the Directors’ Remuneration Report and the financial statements

The directors are responsible for preparing the Annual Report Responsibility statement and the financial statements in accordance with applicable We confirm, to the best of our knowledge, that: law and regulations. > the financial statements, prepared in accordance with Company law requires the directors to prepare financial International Financial Reporting Standards as adopted by statements for each financial year. Under that law the the EU, give a true and fair view of the assets, liabilities, directors are required to prepare the Group financial financial position and profit or loss of the Company and statements in accordance with International Financial the undertakings included in the consolidation taken as a Reporting Standards (‘IFRSs’) as adopted by the European whole; and Union (‘EU’) and Article 4 of the EU IAS Regulation and have also chosen to prepare the parent company financial > the Strategic Report includes a fair review of the statements under IFRSs as adopted by the EU. Under development and performance of the business and the company law the directors must not approve the financial position of the Company and the undertakings included statements unless they are satisfied that they give a true and in the consolidation taken as a whole, together with a fair view of the state of affairs of the Company and of the profit description (on pages 18 and 19) of the principal risks and or loss of the Company for that period. In preparing these uncertainties that they face. financial statements, International Accounting Standard 1 requires that directors: We also confirm that the financial statements, taken as a > properly select and apply accounting policies; whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the > present information, including accounting policies, in a Company’s position, performance, business model and manner that provides relevant, reliable, comparable and strategy. understandable information; By order of the Board > provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable H M Henderson A L C Bell users to understand the impact of particular transactions, Chairman Chief Executive other events and conditions on the entity’s financial 12 March 2018 12 March 2018 position and financial performance; and

> make an assessment of the Company’s ability to continue as a going concern. Note to those who access this document by electronic means The directors are responsible for keeping adequate accounting The Annual Report for the year ended 31 December 2017 has records that are sufficient to show and explain the Company’s been approved by the Board of Witan Investment Trust plc. transactions and disclose with reasonable accuracy at any Copies of the Annual Report and the Half Year Report are time the financial position of the Company and enable them circulated to shareholders, to those who hold shares through to ensure that the financial statements comply with the Witan Investment Services Limited’s savings schemes Companies Act 2006. and, where possible, to investors through other providers’ products and nominee companies (or written notification They are also responsible for safeguarding the assets of is sent when they are published online). It is also made the Company and hence for taking reasonable steps for the available in electronic format for the convenience of readers. prevention and detection of fraud and other irregularities. Printed copies are available from the Company’s Registered Office in London. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

56 Witan Investment Trust PLC Annual Report 2017 opinion. obtained issufficientandappropriate toprovide abasis for our requirements. We believe that theauditevidence we have our otherethicalresponsibilities inaccordance withthese applied tolisted publicinterest entities,andwe have fulfilled statements intheUK,including theFRC’s EthicalStandard as requirements thatare relevant toourauditofthefinancial Group andtheparent company inaccordance withtheethical statements sectionofourreport. We are independentofthe in theAuditor’s responsibilities for theauditoffinancial responsibilities underthosestandards are furtherdescribed Standards onAuditing(UK)(ISAs(UK)) andapplicable law. Our We conducted ourauditinaccordance with International Basis for opinion > > > > In ouropinion: the CompaniesAct2006. statements, asappliedinaccordance withtheprovisions of European Unionand,asregards theparent company financial Financial ReportingStandards (IFRSs)asadoptedbythe in theirpreparation isapplicable lawandInternational The financialreporting framework thathasbeenapplied including asummaryofsignificantaccounting policies. Flow Statementsandnotestothefinancialstatements, Sheets, theConsolidatedandIndividualCompanyCash in Equity,theConsolidatedandIndividualCompanyBalance Consolidated andIndividualCompanyStatementofChanges the ConsolidatedStatementofComprehensive Income, the ‘Group’) for theyear ended31December 2017which comprise Trust plc (the‘parent company’) anditssubsidiaries(the We have auditedthefinancialstatements ofWitanInvestment unmodified Our opiniononthefinancialstatements is Investment Trust plc to themembersofWitan Independent Auditor’s Report

Regulation. regards theGroup financialstatements, Article 4oftheIAS with therequirements oftheCompaniesAct2006and,as the financialstatements have beenprepared inaccordance provisions oftheCompaniesAct2006;and the European Unionandasappliedinaccordance withthe properly prepared inaccordance withIFRSsasadoptedby the parent company financialstatements have been European Union; prepared inaccordance withIFRSsasadoptedbythe the Group financialstatements have beenproperly then ended; at 31December 2017and of theGroup’s profit for theyear state oftheGroup’s andoftheparent company’s affairs as the financialstatements give atrueandfair view ofthe > > > > > material toaddordraw attentionto: (UK) require ustoreport to information intheannualreport, inrelation towhichtheISAs We have nothingtoreport inrespect ofthefollowing concern andviabilitystatement Conclusions relating toprincipalrisks,going audit work, for thisreport, orfor theopinionswe have formed. the CompanyandCompany’s members asabody,for our do notaccept orassume responsibility toanyone otherthan no otherpurpose.To thefullest extent permittedbylaw,we we are required tostate totheminanauditor’s report andfor that we mightstate totheCompany’s members thosematters Companies Act2006.Ourauditwork hasbeenundertaken so as abody,inaccordance withChapter3ofPart 16ofthe This report ismadesolely totheCompany’s members, Who we are reporting to

attention toanynecessary qualifications orassumptions. assessment, includinganyrelated disclosures drawing its liabilitiesasthey fall dueover the periodoftheir the Group willbeable tocontinue inoperation andmeet as towhetherthey have areasonable expectation that consider thatperiodtobeappropriate, andtheir statement Group, over whatperiodthey have donesoandwhythey report astohow they have assessed theprospects ofthe the directors’ explanation, setoutonpage19oftheannual knowledge obtainedintheaudit;or Listing Rule 9.8.6R(3)ismaterially inconsistent withour required undertheListing Rules inaccordance with whether thedirectors’ statement relating togoingconcern statements; twelve monthsfrom thedateofapproval ofthefinancial ability tocontinue to dosoover aperiod ofatleast identification ofanymaterialuncertainties totheGroup’s in preparing thefinancialstatements andthedirectors’ appropriate toadoptthegoingconcern basisofaccounting statements aboutwhetherthedirectors considered it the directors’ statement, setoutonpage20ofthefinancial future performance, solvency orliquidity; including thosethatwould threaten itsbusiness model, assessment oftheprincipalrisksfacing theGroup, the annualreport thatthey have carriedoutarobust the directors’ confirmation, setoutonpage17of are beingmanagedormitigated; 19 thatdescribetheprincipalrisksandexplain how they the disclosures intheannualreport setoutonpages17to

Annual Report 2017 Report Annual you whetherwe have anything Witan Investment Trust PLC PLC Trust Investment Witan 57

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Independent Auditor’s Report to the members of Witan Investment Trust plc continued

Overview of our audit approach Key audit matters > Overall Group materiality: £19.8m, which represents 1% of Key audit matters are those matters that, in our professional the Group’s net assets; judgment, were of most significance in our audit of the financial statements of the current period and include the > Key audit matters were identified as: most significant assessed risks of material misstatement > Valuation and existence of investments measured at (whether or not due to fraud) that we identified. These matters fair value through profit or loss; included those that had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and > Accuracy, completeness and fraudulent revenue directing the efforts of the engagement team. These matters recognition of investment income; and were addressed in the context of our audit of the financial > Accuracy and completeness of performance and statements as a whole, and in forming our opinion thereon, management fees and we do not provide a separate opinion on these matters. > Our audit approach was a risk based substantive audit focused on investments at the year end and investment income recognised during the year. There was no change in our approach from prior year.

Key Audit Matter – Group and Parent How the matter was addressed in the audit – Group and parent Valuation and existence of Our audit work included, but was not restricted to: investments measured at fair value > assessing whether the Group’s accounting policy for the valuation of investments through profit or loss is in accordance with IFRS as adopted by the European Union and the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies The Group’s investment objective and Venture Capital Trusts’ (the ‘SORP’) and testing whether management have is to provide long-term income accounted for valuation in accordance with that policy; and capital growth by investing in a diversified portfolio of global > independently pricing 100% of the listed equity portfolio by obtaining the bid/last equities. prices from independent market sources and recalculating the total valuation based on the Group’s investment holdings, which was agreed to the holdings at The investment portfolio at the balance sheet date as shown in the Group’s accounting records; £2.1bn (2016: £1.8bn) is a > substantively testing a sample of additions and disposals of investments during significant material balance in the year by agreeing such transactions to trade instructions and bank statements the Consolidated balance sheet at as applicable. year end and the main driver of the Group’s performance. We therefore > testing that investments were actively traded by extracting a report of trading identified the valuation and volumes in the week before and after the year-end as per the balance sheet from existence of investments measured an independent market source for the equity investments held; and at fair value through profit or loss > confirming the existence of investments through agreeing investments held by as a significant risk, which was one the Company as at the year-end as per the balance sheet to an independent of the most significant assessed confirmation that we received directly from the Company’s custodian. risks of material misstatement. The Group’s accounting policy on investments held at fair value through profit or loss is shown in note 1(h) to the financial statements and related disclosures are included in note 10. The Audit Committee identified portfolio valuation as a significant issue in its report on pages 41 and 42. Key observations Our testing did not identify any material misstatements in the valuation of the Group’s investment portfolio as at the year-end or any issues with regard to the existence/Group’s ownership of the underlying investments at the year end.

58 Witan Investment Trust PLC Annual Report 2017 risks ofmaterialmisstatement. of themost significantassessed as asignificantrisk,whichwasone performance andmanagementfees accuracy andcompleteness of Accordingly, we identifiedthe of Comprehensive Income. in theConsolidatedStatement and asignificantmaterialbalance fees are theGroup’s main expense Performance andmanagement performance andmanagementfees Accuracy andcompleteness of Key AuditMatter –Group andPar misstatement. assessed risksofmaterial was oneofthemost significant income asasignificant risk,which and completeness ofinvestment We therefore identifiedaccuracy risk offraud in revenue recognition. statements’, there isapresumed to fraud in anauditoffinancial auditor’s responsibilities relating Standard onAuditing(UK)240‘The Further, underInternational Comprehensive Income. the ConsolidatedStatementof this performance measure in the significantcomponents of investment income isoneof on atotalreturn basisand The Group measures performance investment income fraudulent revenue recognition of Accuracy, completeness and ent How statements andrelated disclosures are includedinnote4. The Group’s accounting policyonexpenses isshown innote1(f)tothefinancial > > > > Our auditwork included,butwasnotrestricted to: recognised duringtheyear. Our testing didnotidentifyanymaterialmisstatements intheamountofrevenue Key observations performance andmanagementfees duringtheyear. Our testing didnotidentifyanymaterial misstatements intheexpenses recorded for Key observations a significantissue initsreport onpages41and42. The AuditCommitteeidentifiedaccuracy andcompleteness ofinvestment income as note 1(e)tothefinancialstatements andrelated disclosures are includedinnote2. The Group’s accounting policyonincome, includinginvestment income, isshown in > > > > > Our auditwork included,butwasnotrestricted to:

between revenue andcapitalexpenditure intheincome statement. checking thattheperformance andmanagementfees were properly allocated Investment ManagementAgreement; and recalculating theperformance andmanagement fees withreference tothe benchmarks andthebasisprovided intheagreement; performance andmanagementfees have beencalculated according tothe checking relevant investment management agreements toensure that and theSORP; management fees isinaccordance withIFRSasadoptedbytheEuropean Union assessing whethertheGroup’s accounting policyfor performance and are maintainedbytheadministrator. checking against theamountsrecorded intheGroup’s accounting records that on asample basis,recalculating theinterest income usingthecoupon rates and categorisation ofspecialdividendsaseitherrevenue orcapitalreceipts; and to thoseinvestments hasbeenproperly recognised. We checked the investments heldduringtheyear tocheck whetherdividendincome attributable performing, onasample basis,asearch for specialdividendsontheequity we agreed thereceipt ofthedividendincome tobankstatements; Group’s accounting records thatare maintained bytheadministrator. Inaddition, from independentsources andchecked against theamountsrecorded inthe selected investments we alsoobtainedtherespective dividendrate entitlements income receivable for thosequotedequitiestotheGroup’s records. For the selecting asample ofquotedinvestments andagreeing therelevant investment testing thatincome transactions were recognised inaccordance withthepolicyby in accordance withtheGroup’s stated accounting policy; obtaining anunderstanding oftheGroup’s process for recognising suchincome SORP; income isinaccordance withIFRSasadoptedbytheEuropean Unionandthe assessing whether theGroup’s accounting policyfor recognition ofinvestment the matterwasaddressed intheaudit–Group andparent

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 59

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Independent Auditor’s Report to the members of Witan Investment Trust plc continued

Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work.

Materiality was determined as follows:

Materiality measure Group Parent Financial statements as a whole £19.8m which is 1% of the Group’s net £19.7m which is 1% of the Company’s assets. This benchmark is considered net assets. This benchmark is the most appropriate because net considered the most appropriate assets, which primarily comprise because net assets, which primarily the Group’s investment portfolio, are comprise the Company’s investment considered to be the key driver of the portfolio, are considered to be the key Group’s total return performance driver of the Company’s total return and form a part of the net asset value performance and form a part of the net calculation. asset value calculation. Materiality for the current year Materiality for the current year is higher than the level that we is higher than the level that we determined for the year ended determined for the year ended 31 December 2016 to reflect the 31 December 2016 to reflect the increase in net asset value in the year increase in net asset value in the year from £1.7bn to £1.9bn. from £1.7bn to £1.9bn. Performance materiality used to drive 75% of financial statement materiality. 75% of financial statement materiality the extent of our testing

Specific materiality We also determine a lower level of We also determine a lower level of specific materiality for certain areas specific materiality for certain areas such as investment income and such as investment income and related party transactions, being related party transactions, being the management fee and directors’ the management fee and directors’ remuneration. remuneration. Communication of misstatements to £10,000 and misstatements below that £10,000 and misstatements below that the audit committee threshold that, in our view, warrant threshold that, in our view, warrant reporting on qualitative grounds. reporting on qualitative grounds.

60 Witan Investment Trust PLC Annual Report 2017 information, we are required toreport thatfact. conclude thatthere isamaterialmisstatement oftheother information. If,basedonthework we have performed, we financial statements oramaterialmisstatement oftheother determine whetherthere isamaterial misstatement inthe or apparent materialmisstatements, we are required to misstated. Ifwe identifysuchmaterialinconsistencies obtained intheauditorotherwiseappears tobematerially inconsistent withthefinancialstatements orourknowledge so, consider whethertheotherinformation ismaterially responsibility istoread theotherinformation and,indoing In connection withouraudit ofthefinancialstatements, our thereon. report, we donotexpress anyform ofassurance conclusion and, except totheextent otherwiseexplicitly stated inour the financialstatements doesnotcover theotherinformation statements andourauditor’s report thereon. Ouropinionon annual report setoutonpages1to56,otherthanthefinancial other information comprises theinformation includedinthe The directors are responsible for theotherinformation. The Other information > > included: of theGroup’s business andisriskbased,inparticular Our auditapproach wasbasedonathorough understanding An overview ofthescope ofouraudit

significant audit risk. significant auditrisk. of thedesignandimplementation ofcontrols thataddress assessment ofthecontrol environment andourevaluation of whichwasbasedonvarious factors suchasouroverall individual materialbalances anddisclosures, theextent transactions, which includedjournalentriesand performing substantive auditprocedures onspecific and administrator; and internal controls attheinvestment manager,custodian description, design,andoperating effectiveness ofthe prepared bythethird partyservice providers onthe included obtainingandreading internalcontrols reports at boththeGroup andthird partyservice providers. This obtaining anunderstanding ofrelevant internalcontrols > > > that thoseitemsmeetthefollowing conditions: misstatements oftheotherinformation where we conclude the otherinformation andtoreport asuncorrected material responsibility tospecifically address thefollowing itemsin In thiscontext, we alsohave nothingtoreport inregard toour We have nothingtoreport inthisregard.

the UKCorporate Governance Code. properly disclose adeparture from arelevant provision of auditor inaccordance withListing Rule 9.8.10R(2)donot Code containing provisions specifiedfor review bythe Company’s compliance withtheUKCorporate Governance statement required undertheListing Rules relating tothe Governance Codepage32–thepartsof directors’ Directors’ statement ofcompliance withtheUKCorporate audit committee; or appropriately address matters communicated byustothe describing thework oftheauditcommittee doesnot Audit committee reporting setoutonpage41–thesection audit; or materially inconsistent withourknowledge obtainedinthe Group’s performance, business modelandstrategy, is the information necessary for shareholders toassess the whole isfair, balanced andunderstandable andprovides the annualreport andfinancialstatements taken asa the statement given bythedirectors thatthey consider Fair, balanced andunderstandable setoutonpage56–

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 61

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Independent Auditor’s Report to the members of Witan Investment Trust plc continued

Our opinions on other matters prescribed by Matters on which we are required to report by the Companies Act 2006 are unmodified exception In our opinion, the part of the directors’ remuneration report We have nothing to report in respect of the following matters to be audited has been properly prepared in accordance with in relation to which the Companies Act 2006 requires us to the Companies Act 2006. report to you if, in our opinion:

In our opinion, based on the work undertaken in the course of > adequate accounting records have not been kept by the the audit: parent company, or returns adequate for our audit have not been received from branches not visited by us; or > the information given in the strategic report and the directors’ report for the financial year for which the > the parent company financial statements and the part of financial statements are prepared is consistent with the directors’ remuneration report to be audited are not in the financial statements and those reports have agreement with the accounting records and returns; or been prepared in accordance with applicable legal requirements; > certain disclosures of directors’ remuneration specified by law are not made; or > the information about internal control and risk management systems in relation to financial reporting > we have not received all the information and explanations processes and about share capital structures, given in we require for our audit; or compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the > a corporate governance statement has not been prepared Financial Conduct Authority (the FCA Rules), is consistent by the parent company. with the financial statements and has been prepared in accordance with applicable legal requirements; and Responsibilities of directors for the financial > information about the Company’s corporate governance statements code and practices and about its administrative, As explained more fully in the directors’ responsibilities management and supervisory bodies and their statement set out on page 56, the directors are responsible committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of for the preparation of the financial statements and for being the FCA Rules. satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to Matters on which we are required to report enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. under the Companies Act 2006 In the light of the knowledge and understanding of the Group In preparing the financial statements, the directors are and the parent company and its environment obtained in responsible for assessing the Group’s and the parent the course of the audit, we have not identified material company’s ability to continue as a going concern, disclosing, misstatements in: as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either > the strategic report or the directors’ report; or intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so. > the information about internal control and risk management systems in relation to financial reporting processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.

62 Witan Investment Trust PLC Annual Report 2017 This descriptionforms partofourauditor’s report. Council’s website at:www.frc.org.uk/auditorsresponsibilities. the financialstatements islocated ontheFinancialReporting A furtherdescriptionofourresponsibilities for theauditof audit’ sectionofourauditreport. explained more fully inthe‘An overview ofthescope ofour (UK). Ourauditapproach isarisk-basedapproach andis properly plannedandperformed inaccordance withtheISAs statements maynotbedetected,even thoughtheauditis unavoidable riskthatmaterialmisstatements of thefinancial Owing totheinherent limitationsofanaudit,there isan material misstatement, whethercausedbyfraud orerror. the financialstatements taken asawhole are free from We are responsible for obtainingreasonable assurance that users taken onthebasisofthesefinancialstatements. reasonably beexpected toinfluence theeconomic decisionsof material if,individually orintheaggregate, they could Misstatements canarisefrom fraud orerror andare considered (UK) willalways detect amaterialmisstatement whenitexists. a guarantee thatanauditconducted inaccordance withISAs Reasonable assurance is ahighlevel ofassurance, butisnot issue anauditor’s report thatincludesouropinion. material misstatement, whetherduetofraud orerror, andto whether thefinancialstatements asawhole are free from Our objectives are toobtainreasonable assurance about financial statements Auditor’s responsibilities for theauditof 12 March 2018 London Chartered Accountants Grant ThorntonUKLLPStatutoryAuditor, for andonbehalfof Senior StatutoryAuditor Marcus Swales audit committee. Our auditopinionisconsistent withtheadditionalreport tothe parent company inconducting ouraudit. company andwe remain independentoftheGroup andthe Standard were notprovided totheGroup ortheparent The non-auditservices prohibited bytheFRC’s Ethical 2017. covering theyears ending31December 2016to31December The periodoftotaluninterruptedengagementis2years, 2016 andsubsequentfinancialperiods. the financialstatements for theyear ending31December were appointedbytheauditcommittee inAugust 2016toaudit Following therecommendation oftheauditcommittee, we address Other matters whichwe are required to

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 63

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Consolidated Statement of Comprehensive Income for the year ended 31 December 2017

Year ended 31 December 2017 Year ended 31 December 2016 Revenue Capital Revenue Capital return return Total return return Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Investment income 2 54,425 – 54,425 52,452 – 52,452 Other income 3 1,318 – 1,318 1,475 – 1,475 Gains on investments held at fair value through profit or loss 10 – 289,268 289,268 – 297,032 297,032 Foreign exchange losses on cash and cash equivalents – (1,686) (1,686) – (417) (417) Total income 55,743 287,582 343,325 53,927 296,615 350,542

Expenses Management and performance fees 4 (2,255) (7,294) (9,549) (1,905) (4,252) (6,157) Other expenses 5 (6,361) (101) (6,462) (5,109) (101) (5,210)

Profit before finance costs and taxation 47,127 280,187 327,314 46,913 292,262 339,175 Finance costs 6 (1,967) (5,651) (7,618) (2,467) (7,148) (9,615) Profit before taxation 45,160 274,536 319,696 44,446 285,114 329,560 Taxation 7 (2,493) – (2,493) (2,415) – (2,415) Profit attributable to equity shareholders of the parent company 42,667 274,536 317,203 42,031 285,114 327,145 Earnings per ordinary share 9 23.82p 153.24p 177.06p 22.11p 149.95p 172.06p

The total column of this statement represents the Group’s Statement of Comprehensive Income, prepared in accordance with IFRSs as adopted by the European Union.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

The Group does not have any other comprehensive income and hence the total profit, as disclosed above, is the same as the Group’s total comprehensive income.

All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of Witan Investment Trust plc, the parent company. There are no non-controlling interests.

The notes on pages 68 to 93 form part of these financial statements.

64 Witan Investment Trust PLC Annual Report 2017 Year ended31December 2016 Group Year ended31December 2017 Company Year ended31December 2016 Company The notesonpages 68to93form partofthesefinancialstatements. Total equityat31December 2016 1,980,521 72,283 Total equityat31December 2016 1,712,471 46,498 99,251 50,018 1,980,521 72,735 Total equityat31December 2017 1,712,019 46,498 99,251 50,018 Total equityat31December 2017 hl ntesr)1,6–––(4,1)–(142,918) – (142,918) – – (142,918) – – (142,918) 15,16 – – (26,622) – (heldintreasury) – Buybacks ofordinary shares (26,622) 15,16 – – (26,622) – (heldintreasury) – Buybacksofordinary shares (26,622) 15,16 – – (heldintreasury) – Buybacksofordinary shares 15,16 (heldintreasury) Buybacksofordinary shares Ordinary dividendspaid recorded directly toequity: Transactions withowners, Ordinary dividendspaid recorded directly toequity: Transactions withowners, Ordinary dividendspaid recorded directly toequity: Transactions withowners, Ordinary dividendspaid recorded directly toequity: Transactions withowners, rftfrteya 8,1 189327,145 41,829 285,316 – – 327,145 – 42,031 285,114 – – 317,203 – 43,025 Profit for theyear Total comprehensive income: 274,178 – – 317,203 – 42,667 Profit for theyear Total comprehensive income: 274,536 – – – Profit for theyear Total comprehensive income: Profit for theyear Total comprehensive income: oa qiya 1Dcme 055,1 9214,9 ,2,1 9061,577,330 59,046 1,322,517 46,498 99,251 50,018 1,577,330 59,654 1,321,909 Total equityat31December 2015 46,498 99,251 50,018 1,726,637 65,955 Total equityat31December 2015 1,464,915 46,498 99,251 50,018 1,726,637 66,765 1,464,105 Total equityat31December 2016 46,498 99,251 50,018 Total equityat31December 2016 Year ended31December 2017 Group for theyearended31December2017 Statement ofChangesinEquity Consolidated andIndividualCompany Notes Notes Notes Notes 8–––– 8–––– 8–––– 8–––– Ordinary Ordinary Ordinary Ordinary 0089,5 648144956,5 1,726,637 65,955 1,464,915 46,498 99,251 50,018 1,726,637 66,765 1,464,105 46,498 99,251 50,018 capital capital capital capital share share share share £’000 £’000 £’000 £’000 premium premium premium premium account account account account Share Share Share Share £’000 £’000 £’000 £’000

Annual Report 2017 Report Annual redemption redemption redemption redemption reserve reserve reserve reserve Capital Capital Capital Capital £’000 £’000 £’000 £’000 reserves reserves Witan Investment Trust PLC PLC Trust Investment Witan reserves reserves capital capital capital capital Other Other Other Other £’000 £’000 £’000 £’000 3,2)(34,920) (34,920) (34,920) (34,920) (36,697) (36,697) (36,697) (36,697) Revenue Revenue Revenue Revenue reserve reserve reserve reserve £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Total Total Total Total 65

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Consolidated and Individual Company Balance Sheets as at 31 December 2017

Group Company Group Company 31 December 31 December 31 December 31 December 2017 2017 2016 2016 Notes £’000 £’000 £’000 £’000 Non current assets Investments at fair value through profit or loss 10 2,149,267 2,150,619 1,884,037 1,885,747 Current assets Other receivables 11 5,217 5,077 11,638 11,038 Cash and cash equivalents 75,795 74,031 50,556 49,155 81,012 79,108 62,194 60,193 Total assets 2,230,279 2,229,727 1,946,231 1,945,940 Current liabilities Other payables 12 (6,393) (5,841) (8,102) (7,811) Bank loans 13 (73,000) (73,000) (71,000) (71,000) (79,393) (78,841) (79,102) (78,811) Total assets less current liabilities 2,150,886 2,150,886 1,867,129 1,867,129 Non current liabilities At amortised cost: 6.125 per cent. Secured Bonds due 2025 13 (63,538) (63,538) (63,434) (63,434) 3.29 per cent. Secured Notes due 2035 13 (20,871) (20,871) (20,864) (20,864) 3.47 per cent. Secured Notes due 2045 13 (53,652) (53,652) (53,639) (53,639) 2.74 per cent. Secured Notes due 2054 13 (29,749) (29,749) -- 3.4 per cent. cumulative preference shares of £1 13,17 (2,055) (2,055) (2,055) (2,055) 2.7 per cent. cumulative preference shares of £1 13,17 (500) (500) (500) (500) (170,365) (170,365) (140,492) (140,492) Net assets 1,980,521 1,980,521 1,726,637 1,726,637

Equity attributable to equity holders Ordinary share capital 15 50,018 50,018 50,018 50,018 Share premium account 16 99,251 99,251 99,251 99,251 Capital redemption reserve 16 46,498 46,498 46,498 46,498 Retained earnings: Other capital reserves 16 1,712,019 1,712,471 1,464,105 1,464,915 Revenue reserve 16 72,735 72,283 66,765 65,955 Total equity 1,980,521 1,980,521 1,726,637 1,726,637

Net asset value per ordinary share 18 1109.85p 1109.85p 952.83p 952.83p

The financial statements of Witan Investment Trust plc (registered number 101625) were approved by directors and authorised for issue on 12 March 2018 and were signed on their behalf by: H M Henderson A L C Bell As permitted by section 408 of the Companies Act 2006, the Company has not presented its own income statement. The profit of the Company dealt with in the accounts of the Group amounted to £317,203,000 (2016: £327,145,000).

The notes on pages 68 to 93 form part of these financial statements.

66 Witan Investment Trust PLC Annual Report 2017 nrae(erae ncs n aheuvlns2,2 26,562 (39,707) (39,707) 26,925 Cash andcashequivalents atthestart oftheperiod Increase/(decrease) incashandequivalents Net cashoutflow from financingactivities The notesonpages 68to93form partofthesefinancialstatements. 74,031 75,795 Cash andcashequivalents attheendofperiod Effect offoreign exchange rate changes Buybacks ofordinary shares rwono aklas19 Drawdown ofbankloans Interest paid Repayment ofdebenture su fscrdntsnto su xess19 Issue ofsecured notesnetofissue expenses qiydvdnspi 8 Equity dividendspaid Cash flow from financingactivities e ahifo rmivsigatvte 42024,280 24,280 Net cashinflow from investing activities Realised gainonfutures Operating expenses paid Other income received e ahifo rmoeaigatvte 4,5 41,989 42,352 Purchases ofinvestments Cash flows from investing activities Net cashinflow from operating activities Taxation recovered Taxation onoverseas income Sales ofinvestments Interest received Dividend income received Cash flows from operating activities for theyearended31December2017 Company CashFlowStatements Consolidated andIndividual Notes

Annual Report 2017 Report Annual 10727 (1,097,207) (1,097,207) ,1,9 1,113,894 1,113,894 2,1)(27,413) (27,413) 3,9)(36,697) (36,697) 1,4)(11,096) (12,644) 05649,155 50,556 97829,748 29,748 54455,464 55,464 166 (1,686) (1,686) 735 (7,345) (7,345) 304 (3,014) (3,014) ,0 2,000 2,000 ,9 7,593 7,593 ,0 195 2,105 Group £’000 2017 1 412 412 928 29 –– Company Witan Investment Trust PLC PLC Trust Investment Witan £’000 2017 1404 (164,064) (164,064) 1201 (142,081) (142,081) 5557 (525,517) (525,517) 2,9 123,998 123,998 4,6 641,967 641,967 1,7)(10,474) (10,474) 4,8)(44,589) (44,589) 3,2)(34,920) (34,920) 1,8)(13,988) (14,688) 80068,000 68,000 75756,582 57,587 05649,155 50,556 34233,056 33,452 91849,178 49,178 664 (7,010) (6,614) 283 (2,883) (2,883) ,4 7,548 7,548 ,8 291 1,384 Group 47 (417) (417) £’000 7 371 371 2016 087 90 –– Company £’000 2016 67

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements for the year ended 31 December 2017

2017, the Group renewed a one-year secured multi-currency 1 Accounting policies borrowing facility for £125m, of which £73m was drawn down The financial statements of the Group have been prepared in at 31 December 2017 (2016: £71m of £75m facility). accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union and therefore the (c) Basis of consolidation Group financial statements comply with Article 4 of the EU IAS The consolidated financial statements incorporate the financial Regulation. These comprise standards and interpretations statements of the Company and the entity controlled by the approved by the International Accounting Standards Board Company (its subsidiary) made up to 31 December each year. (‘IASB’), together with interpretations of the International Accounting Standards and Standing Interpretations In accordance with IFRS10 the Company has been designated Committee approved by the International Accounting as an investment entity on the basis that: Standards Committee (‘IASC’) that remain in effect, to the > It obtains funds from investors and provides those extent that they have been adopted by the European Union. investors with investment management services; These financial statements are presented in pounds sterling > It commits to its investors that its business purpose is because that is the currency of the primary economic to invest solely for returns from capital appreciation and environment in which the Group operates. investment income; and (a) Basis of preparation > It measures and evaluates performance of substantially all The financial statements have been prepared on the historical of its investments on a fair value basis. cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are The subsidiary of the Company was established for the sole set out below. Where presentational guidance set out in the purpose of operating or supporting the investment operations Statement of Recommended Practice Financial Statements of of the Company, and is not itself an investment entity. Investment Trust Companies and Venture Capital Trusts (‘the Therefore, under the principles of IFRS 10, the Company has SORP’) issued by the Association of Investment Companies consolidated its subsidiary as it is a controlled entity that (‘the AIC’) in November 2014 and updated in January 2017 supports the investment activity of the investment entity. with consequential amendments, is consistent with the requirements of IFRSs as adopted by the European Union, the Control is achieved where the Company is exposed, or has the directors have sought to prepare the financial statements on a right, to variable returns from its investment in the subsidiary basis compliant with the recommendations of the SORP. and has the ability to affect those returns through its power to direct the relevant activities. Where necessary, adjustments Judgements and sources of estimation uncertainty are made to the financial statements of the subsidiary to bring In the application of the Group’s accounting policies, the accounting policies used by it into line with those used by management is required to make judgements, estimates and the Group. All intra-group transactions, balances, income and assumptions about carrying values of assets and liabilities expenses are eliminated on consolidation. that are not always readily apparent from other sources. The estimates and associated assumptions are based on (d) Presentation of the Statement of Comprehensive historical experience and other factors that are considered Income to be relevant. Actual results may vary from these estimates. In order to better reflect the activities of an investment trust The Directors do not consider that there are any such items in company, and in accordance with guidance issued by the AIC, these financial statements. supplementary information which analyses the Statement (b) Going concern of Comprehensive Income between items of a revenue and The financial statements have been prepared on a going capital nature has been presented alongside the Statement concern basis. The Group’s business activities, together of Comprehensive Income. In accordance with the Company’s with the factors likely to affect its future development and Articles of Association, net capital returns may not be performance, are set out in the Strategic Report on pages 8 to distributed by way of dividend. Additionally, the net revenue 20. The financial postion of the Group as at 31 December 2017 is the measure the directors believe appropriate in assessing is shown on the balance sheet on page 66. The cash flows the Group’s compliance with certain requirements set out in of the Group for the year ended 31 December 2017 are not section 1158 of the Corporation Tax Act 2010. untypical and are set out on page 67. The Company had fixed debt and preference share capital totalling £170,365,000. In

68 Witan Investment Trust PLC Annual Report 2017 tax relief istransferred tothecapital return column. column oftheStatementComprehensive Income thenno offset entirely byexpenses presented intherevenue return basis’. Underthisbasis,iftaxable income iscapable ofbeing the StatementofComprehensive Income isthe‘marginal against capitalreturns inthesupplementary information in method usedtocalculate taxrelief onexpenses presented In linewiththerecommendations oftheSORP,allocation sheet date. calculated usingtax rates thatwere applicable atthebalance taxable ordeductible. TheGroup’s liabilityfor current taxis in otheryears anditfurtherexcludes itemsthatare never items ofincome orexpense thatare taxable ordeductible Statement ofComprehensive Income becauseit excludes Taxable profit differs from netprofit asreported inthe period. The taxcurrently payable isbasedonthetaxable profit for the (g) Taxation wholly, tocapitalperformance. return basis,they are expected tobeattributable largely, ifnot reflecting thefact that,althoughthey are calculated onatotal performance fees payable are allocated wholly tocapital, Board’s expectations oflong-term investment returns. Any allocated 25%torevenue and75%tocapitalreflect the the investment managementfees andfinance costs are value of the investments canbedemonstrated. Inthisrespect a connection withthe maintenance orenhancement of the accruals basis. Expensesare presented ascapitalwhere All expenses andinterest payable are accounted for onan (f) Expenses the StatementofComprehensive Income. amount ofcashdividendforegone isrecognised asagainin revenue. Anyexcess inthevalue ofshares received over the cash, theamountofcashdividendforegone isrecognised as its dividendsintheform ofadditionalshares rather than revenue orcapital.Where theGroup haselected toreceive payment. Thiswilldeterminewhetherthey are treated as are looked atindividually toascertain thereason behind the commission are recognised as earned.Anyspecialdividends the endofperiod.Stocklending fees andunderwriting receivable from cashandshort-term depositsisaccrued to the effective yieldonthedebtsecuritiesandshares. Interest recognised onatimeapportionmentbasissoastoreflect fixed returns on debtsecuritiesandnon-equityshares are is madefor anydividendsnotexpected tobereceived. The the year endare treated asrevenue for theyear. Provision dividend dateisavailable, dividendsreceivable onorbefore revenue for theyear onanex-dividend basis.Where noex- Dividends receivable onequityshares are recognised as (e) Income deferred taxisalsodealtwithinequity. charged orcredited directly toequity,inwhichcasethe of Comprehensive Income, except whenitrelates toitems realised. Deferred taxischarged orcredited intheStatement apply intheperiodwhenliabilityissettled ortheasset is Deferred taxiscalculated atthetaxrates thatare expected to to allow allorpartoftheasset toberecovered. longer probable thatsufficienttaxable profits willbeavailable each balance sheet date andreduced totheextent thatitisno The carryingamountofdeferred taxassets isreviewed at taxation oncapitalgains. section 1158oftheCorporation Tax Act2010are notliable for utilised. Investment trusts whichhave approval assuchunder against whichdeductible temporary differences canbe extent thatitisprobable thattaxable profits willbeavailable differences anddeferred taxassets are recognised tothe Deferred taxliabilitiesare recognised for alltaxable temporary is accounted for usingthebalance sheetliabilitymethod. tax basesusedinthecomputation oftaxable profit, and liabilities inthefinancialstatements andthecorresponding on differences between thecarryingamountsofassets and Deferred taxistheexpected tobepayable orrecoverable by therelevant investment manager. price, thebidprice or the single price asappropriate, released Investments inunittrusts orOEICsare valued attheclosing convention oftheexchange onwhichtheinvestment isquoted. the bidprice orthelast traded price, dependingonthe at subsequentreporting datesatfair value, whichiseither held atfair value through profit orloss, andare measured All investments are designateduponinitialrecognition as investments. are transaction costs inrelation tothepurchase orsale of through profit orloss’. Alsoincludedwithinthisheading Income as‘Gainsorlosses oninvestments heldatfair value the capitalreturn withintheStatement ofComprehensive through profit orloss. Allgainsandlosses are allocated to by theEuropean Unionasinvestments heldatfair value All theGroup’s investments are definedbyIFRSsasadopted derecognised onthetrade date. relevant market, theinvestments concerned are recognised or terms ofwhichrequire delivery withinthetimeframe ofthe When apurchase orsale ismadeunderacontract, the Investments held atfair(h) value through profit or loss

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 69

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

1 Accounting policies continued (l) Foreign currency translation Transactions involving foreign currencies are converted at the The Group derecognises a financial asset only when the rate ruling at the date of the transaction. contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the Foreign currency monetary assets and liabilities that are risks and rewards of ownership of the asset to another entity. fair valued and denominated in foreign currencies are re- On derecognition of a financial asset, the difference between translated into sterling at the rate ruling on the balance sheet the asset’s carrying amount and the sum of the consideration date. Foreign exchange differences arising on translation are received and receivable and the cumulative gain or loss that recognised in the Statement of Comprehensive Income and had been accumulated in equity is recognised in profit or loss. allocated to the capital return. Fair values for unquoted investments, or for investments for which there is only an inactive market, are established by (m) Adoption of new and revised accounting standards using various valuation techniques. These may include recent (i) Changes in accounting policy and disclosures arm’s length market transactions, the current fair value of The accounting policies adopted are consistent with those of another instrument that is substantially the same, discounted the previous financial year. cash flow analysis, option pricing models and reference to similar quoted companies. Where there is a valuation (ii) Standards not affecting the reported results nor technique commonly used by market participants to price the financial position the instrument and that technique has been demonstrated to The following new and revised Standards and Interpretations provide reliable estimates of prices obtained in actual market have been adopted in the current year. Their adoption has not transactions, that technique is utilised. Where no reliable fair had any significant impact on the amounts reported in these value can be estimated for such instruments, they are carried financial statements. at cost, subject to any provision for impairment. IAS 12 Amendment Recognition of Deferred Tax Assets for The subsidiary company, Witan Investment Services Limited, Unrealised Losses is held at fair value in the Company balance sheet. This is considered to be the net asset value of the shareholder’s IAS 7 Amendment Disclosure Initiative funds, as shown in its balance sheet. At the date of authorisation of these financial statements, the (i) Cash and cash equivalents Standards and Interpretations listed on page 71, which have Cash comprises cash in hand and demand deposits. Cash not been applied in these financial statements, were in issue equivalents are short-term, highly liquid investments that are but not effective (and in some cases had not yet been adopted readily convertible to known amounts of cash and that are by the European Union). subject to an insignificant risk of changes in value. Impact of major new accounting standards (j) Dividends payable IFRS 9 ‘Financial Instruments’ revises the approach to Interim dividends are recognised in the period in which they financial instruments framework replacing IAS 39 ‘Financial are paid. Final dividends are not recognised until approved by instruments: Recognition and Measurement’. Financial the shareholders in general meeting. instruments are classified based on the business model and (k) Fixed borrowings cash flow characteristics determining if financial instruments are measured at either amortised cost or fair value. New All secured bonds and notes are initially recognised at cost, impairment requirements are applicable to financial being the fair value of the consideration received, less issue instruments measured at amortised cost using a forward costs where applicable. After initial recognition, all interest- looking approach under expected credit loss methodology. bearing loans and borrowings are subsequently measured Hedge accounting principles have also been revised to simplify at amortised cost using the effective interest method, with the treatment. The classification and measurement of the the interest expense recognised on an effective yield basis. Company’s financial instruments are not anticipated to be The effective interest method is a method of calculating the impacted upon adoption of IFRS 9. The Company will continue amortised cost of a financial liability and of allocating interest to apply fair value to investment assets as either the cash expense over the relevant period. The effective interest rate flows are not ‘solely payments of principal and interest’ or the is the rate that exactly discounts estimated future payments business model is to manage them on a fair value basis. The over the expected life of the financial liabilities, or, where new standard will be applied in financial statements for the appropriate, a shorter period, to the net carrying amount on year ending 31 December 2018. initial recognition.

70 Witan Investment Trust PLC Annual Report 2017 ending 31December 2019. and willbeappliedinfinancialstatements for theyear reliably measured. Thestandard isnotbeingearly adopted leases. Currently, theimpactofapplying IFRS16cannotbe lease liabilitywiththeexception ofshort-termorlow value balance sheetasarightof useasset withacorresponding required torecognise lease contracts asalessee on the accounting replacing IAS17‘Leases’. TheCompanyis IFRS 16‘Leases’ provides anew approach tolease for theyear ending31December 2018. with anyamendments,willbeappliedinfinancialstatements financial positionoftheCompany. Thenew standard, together adoption isnotanticipatedtohave amaterialimpactonthe from thescope ofIFRS15.Therefore, theimpactupon is received from financialinstruments whichare excluded services toacustomer. ThemajorityoftheCompany’s income to beentitled toreceive for thetransfer ofcontrol ofgoodsor Revenue isrecognised attheamountCompanyexpects contracts’, IAS18‘Revenue’ andvarious Interpretations. customers andreplaces IAS11‘Accounting for construction approach torevenue recognition from contracts with IFRS 15‘Revenue from Customer Contracts’ revises the FI 3Uncertainty over Income Tax Foreign Currency Transactions and IFRIC 23 IFRIC 22 (AI 2015-2017) IAS 23Amendment Leases (AI 2015-2017) IAS 12Amendment (AI 2014-16) IFRS 12Amendment Revenue from Contracts with IFRS 16 Clarifications IFRS 15Amendment Effective dateofIFRS15 FinancialInstruments IFRS 15Amendment IFRS 15 Prepayment Features withNegative IFRS 9Amendment IFRS 9 Treatments Advance Consideration capitalisation Borrowing costs eligible for classified asequity payments onfinancialinstruments Income taxconsequences of Standard Clarification ofthescope ofthe Customers Compensation Comprehensive Income. in value ispresented asacapitalitemintheStatementof as they arise.Ifcapitalinnature, theassociated change are recognised intheStatementofComprehensive Income Changes inthefair value ofderivative financialinstruments principles for theuseoffinancialderivatives. policies asapproved bytheBoard, whichhassetwritten The useoffinancialderivatives isgoverned bytheGroup’s accounting isnotused. financial instruments for speculative purposes.Hedge relevant share prices. TheGroup doesnotusederivative investment managers’ longer-term expectations for the where suchoptionsare priced attractively relative tothe also writeoptionsonshares represented intheportfolio falls inthecapitalvalues oftheholdings).TheCompanymay additional market exposure ortoprovide protection against contracts appropriate tosectionsoftheportfolio (toprovide against falls inthecapitalvalues oftheholdings)andfutures of theportfolio (thepurposeofwhichistoprovide protection held withintheportfolio, oronindices appropriate tosections the Company’s investing activities),quotedoptionsonshares purpose ofwhichistomanagecurrency risksarisingfrom may enterintocomprise forward exchange contracts (the and interest rates. Derivative transactions whichtheCompany of changesinmarket prices, foreign currency exchange rates The Group’s activitiesexpose itprimarily tothefinancialrisks Derivative financialinstruments (n) Company’s capital. shares purchased andcancelled inorder tomaintain the equivalent tothenominalvalue ofanytheCompany’s own The capitalredemption reserve isusedtorecord theamount Capital redemption reserve any equityshare capitalcomprising ordinary shares of25p. premium above nominalvalue from theproceeds onissue of The balance classified asshare premium includesthe Share premium account transfer madetothecapitalredemption reserve. shares are cancelled, eitherfrom treasury ordirectly, isa the numberofshares inissue andintreasury. Only whenthe The Ordinary share capitalonthebalance sheetrelates to Ordinary share capital (o) Nature andpurposeofreserves

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 71

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

1 Accounting policies continued Revenue reserve This reflects all income and costs which are recognised in the Capital reserves revenue column of the Statement of Comprehensive Income. Gains and losses on disposal of investments and changes The revenue reserve represents the amount of the Company’s in fair values of investments are transferred to the capital reserves distributable by way of dividend. reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. 2 Investment income 2017 2016 £’000 £’000 Franked: UK dividends from listed investments 21,117 20,878 UK stock dividends from listed investments 43 841 UK special dividends from listed investments 1,040 1,019 22,200 22,738

Unfranked: Overseas dividends from listed investments 30,161 26,433 Overseas special dividends from listed investments 683 1,041 Property income dividends 81 186 Stock dividends from listed investments 491 888 Fixed interest and convertible bonds 809 1,166 32,225 29,714 Total investment income 54,425 52,452

2017 2016 £’000 £’000 Analysis of investment income by geographical segment: United Kingdom 22,200 22,739 North America 6,260 7,464 Continental Europe 15,290 13,516 Japan 2,145 2,121 Asia Pacific (ex Japan) 7,237 5,662 Latin America 536 108 Other 757 842 Total investment income 54,425 52,452

72 Witan Investment Trust PLC Annual Report 2017 A summaryofthetermsmanagementagreements isgiven onpage13intheStrategic Report. Performance fees Total fees paid Total non-auditfees Other services –previous auditors – otherassurance services – audit-related services Other services –current auditors*: Total audit fees form ofCrest DBVs (Delivery byValues); thecontent ofCrest DBVs issubjecttoaconcentration limitof10%. of themarket value ofthesecuritieslent, wasprovided against allloans. Collateral inrespect ofUKsecuritiesisusually i £103,937,000 (2016:£147,849,000).Collateral, revalued onadaily basisatalevel equivalent toatleast 105%(110%for equit £49,311,000). Themaximumaggregate value ofsecuritiesonloan atanytimeduringtheyear ended31December 2017was At 31December 2017 thetotalvalue ofsecuritiesonloan bytheCompanyfor stock lending purposeswas £66,964,000(2016: Income from thesubsidiarycompany’s third partybusiness Stock lending income * – theauditofCompany’s subsidiary Fees payable totheCompany’s auditoranditsassociates for otherservices totheGroup: accounts Fees payable totheCompany’s auditoranditsassociates for theauditofCompany’s annual The analysis oftheauditor’s remuneration isasfollows. Thefigures exclude VAT. Auditor’s remuneration 5 Other expenses Management fees 4 Management fees Underwriting commission Deposit interest 3 Other income Secured BondsandDebenture Stock thatyear of non-audit fees alsoincludea charge of£20,000related totheCASS audit for theyear ended31December 2016 and theloan comp These fees relate totheCASS auditfor theyear ended31December 2017(£25,000)andloan compliance review fees for theSecur £4,000. The fees for thisworkwere Revenue ,5 ,9 9,549 7,294 2,255 2,255 Year ended31December 2017 £’000 2 528 528 - Capital ,6 9,021 6,766 specifically approved bytheAuditCommittee £’000

Annual Report 2017 Report Annual £’000 Total Witan Investment Trust PLC PLC Trust Investment Witan Revenue ,0 ,5 6,157 4,252 1,905 ,0 ,1 7,620 5,715 1,905 Year ended31December 2016 £’000 143 (1,463) (1,463) – liance review fees for the (seepage42). ed Bonds(£4,000). Revenue 1,318 1,093 Capital £’000 £’000 £’000 2017 2017 180 104 10 53 45 51 41 41 – 8 4

Revenue n the n the These 1,475 1,108 ies) ies) £’000 £’000 £’000 Total 242 2016 2016 10 22 11 51 11 73 34 41 91 73 –

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

5 Other expenses continued 2017 2016 Revenue Revenue £’000 £’000 Auditor’s remuneration (see page 73) 104 73 Tax advisory services 36 20 Directors’ fees (see the Directors’ Remuneration Report on page 44) 294 238 Employer’s national insurance contributions on the directors’ fees 34 26 Employee costs (including executive director’s remuneration): – salaries and bonuses 1,439 1,020 – employer’s national insurance contributions 200 151 – pension contributions (or payments in lieu thereof) 82 80 Advisory, consultancy and legal fees 158 165 Investment accounting fees 320 284 Company secretarial fees 140 135 Insurances 56 56 Occupancy costs 153 142 Bank charges and overseas safe custody fees 569 391 Depositary fees 133 124 Marketing expenses* 538 688 Savings scheme expenses (Witan Wisdom and Jump Savings) 1,112 597 Other expenses 807 749 Irrecoverable VAT 186 170 Total ** 6,361 5,109

* Includes £50,000 sponsorship paid to the Royal Horticultural Society (2016: £5,000). ** The total includes costs of £1,892,000 (2016: £1,417,000) in respect of the subsidiary company’s third party business which are partially offset (2016: fully offset) by the subsidiary company’s income from that business. The analysis relates to the revenue return column only.

Expenses included in the capital return column for 2017 were £101,000 (2016: £101,000). These related to investment advisory costs.

The average number of employees during the year was 7 (2016: 7). 6 Finance costs Year ended 31 December 2017 Year ended 31 December 2016 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Interest payable on overdrafts and loans repayable within one year 193 579 772 733 2,197 2,930 Interest payable on secured bonds and notes repayable in more than 5 years 1,691 5,072 6,763 1,651 4,951 6,602 Preference share dividends 83 – 83 83 – 83 1,967 5,651 7,618 2,467 7,148 9,615

74 Witan Investment Trust PLC Annual Report 2017 urn a hre243–2,493 – 2,493 Current taxcharge Disallowable expenses Capitalised expenses determining taxable profit Preference dividendsnotdeductible in Unused loan relationship deficitsfor theyear year Excess managementexpenses notutilisedin Realised gainsonnon-reporting offshore funds value through profit orloss Non-taxable gainsoninvestments held at fair Recovery ofprioryears’ withholdingtax Withholding taxwrittenoff Non-taxable overseas dividends sent () ,9 2,493 – 2,493 (see note7(b)) Total current taxfor theyear Non-taxable UKdividends Foreign taxrecoverable Effects of: Recovery ofprioryears’ withholdingtax Foreign taxsuffered (2016: 20.00%) Corporation taxateffective rate of19.25% UK for alarge company. Thedifference isexplained below. 20%). Thetaxassessed for theyear is lower thanthatresulting from applying theeffective standard rate ofcorporation taxi The UKcorporation taxrate was 20%until31March 2017and19%from 1April2017,givinganeffective rate of19.25%(2016: Factors affecting thecurrent taxcharge for theyear 7.2 (2016: 20.00%) UK corporation taxat effective rate of19.25% Analysis oftaxcharge for theyear 7.1 7 Taxation Profit before taxation Revenue Revenue 45,160 216 ,1 – 2,116 (2,116) 425 (4,265) – (4,265) 588 – (5,898) ,9 28861,541 52,848 8,693 ,8 – 3,389 ,9 – 2,798 ,6 – 3,269 Year ended31 December 2017 Year ended31December 2017 35 (305) – (305) 35 (305) – (305) £’000 £’000 41 – (471) 8 188 – 188 7–17 – 17 8 (8) – (8) 9 396 396 – 5,6)(55,360) (55,360) – –––

7,3 319,696 274,536 Capital Capital £’000 £’000

Annual Report 2017 Report Annual (5,898) 3,389 2,798 3,269 (471) £’000 £’000 Total Total Witan Investment Trust PLC PLC Trust Investment Witan Revenue Revenue 4462514329,560 285,114 44,446 203 ,0 – 2,003 (2,003) 575 (5,765) – (5,765) 439 (4,379) – (4,379) ,1 2,415 – 2,415 ,4 3,244 – 3,244 ,9 2,398 – 2,398 ,1 2,415 – 2,415 ,8 70365,912 57,023 8,889 ,6 3,161 – 3,161 Year ended31 December 2016 Year ended31December 2016 39 (399) – (399) 37 (347) – (347) 39 (399) – (399) £’000 £’000 7 379 – 379 4–34 – 34 7–17 – 17 9 297 297 – 5,2)(59,323) (59,323) – ––– Capital Capital £’000 £’000 n the n the £’000 £’000 Total Total 75

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

7 Taxation continued 7.3 Deferred tax Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. No provision has been made for deferred tax on income outstanding at the end of the year as this will be covered by unrelieved business charges and eligible unrelieved foreign tax (2016: £nil). 7.4 Factors that may affect future tax charges At 31 December 2017, the Company had excess expenses of £218,091,000 (2016: £197,142,000) carried forward. This sum has arisen due to cumulative deductible expenses having exceeded income over the life of the Company. It is considered too uncertain that there will be sufficient taxable profits against which these expenses can be offset and, therefore, in accordance with IAS 12, a deferred tax asset of £37,076,000 (2016: £33,542,000) in respect of unrelieved loan relationship deficit and unrelieved management expenses based on a prospective corporation tax rate of 17% (2016: 17%) has not been recognised. The reduction in the standard rate of corporation tax was substantively enacted on 15 September 2016 and will be effective 1 April 2020. Provided the Company continues to maintain its current investment profile, it is unlikely that the expenses will be utilised and that the Company will obtain any benefit from this asset. 8 Dividends 2017 2016 £’000 £’000 Amounts recognised as distributions to equity holders in the year: Fourth interim dividend for the year ended 31 December 2016 of 6.25p (2015: 5.45p) per ordinary share 11,246 10,895 First interim dividend for the year ended 31 December 2017 of 4.75p (2016: 4.25p) per ordinary share 8,509 8,490 Second interim dividend for the year ended 31 December 2017 of 4.75p (2016: 4.25p) per ordinary share 8,485 7,817 Third interim dividend for the year ended 31 December 2017 of 4.75p (2016: 4.25p) per ordinary share 8,478 7,739 Refund of unclaimed dividends (21) (21) 36,697 34,920 Fourth interim dividend for the year ended 31 December 2017 of 6.75p (2016: 6.25p) per ordinary share 12,038 11,246

Total in respect of the year: Set out below is the total dividend to be paid in respect of the year. This is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. 2017 2016 £’000 £’000 Revenue profits available for distribution (Company only) 43,025 41,829 First interim dividend for the year ended 31 December 2017 of 4.75p (2016: 4.25p) per ordinary share (8,509) (8,490) Second interim dividend for the year ended 31 December 2017 of 4.75p (2016: 4.25p) per ordinary share (8,485) (7,817) Third interim dividend for the year ended 31 December 2017 of 4.75p (2016: 4.25p) per ordinary share (8,478) (7,739) Fourth interim dividend for the year ended 31 December 2017 of 6.75p (2016: 6.25p) per ordinary share (12,038) (11,246) Revenue retained for the year (Company only) 5,515 6,537

76 Witan Investment Trust PLC Annual Report 2017 The above figures donotinclude thegains/losses onfutures positions. Other Latin America saPcfc(xJpn 0,8 6,5 0,0 27,151 104,106 164,558 204,287 Asia Pacific (ex Japan) Japan Continental Europe Investment insubsidiaryundertaking ot mrc 9,7 5,3 1,1 47,772 318,417 256,336 490,372 North America Weighted average numberofordinary shares inissue duringtheyear Listed abroad Net totalprofit United Kingdom Group changesininvestments heldatfair value through profit orloss 10.2 Listed intheUnitedKingdom Analysis ofinvestments heldatfair value through profit orloss 10.1 Investments heldatfair value through profit orloss 10 Total earningsperordinary share Capital earningsperordinary share Revenue earningsperordinary share Net capitalprofit Net revenue profit ordinary share are thesame. Company hasnosecuritesinissue thatcould dilutethereturn perordinary share. Therefore thebasicanddilutedearningsper The earningsperordinary share figure detailed above canbefurtheranalysed between revenue andcapital,asbelow. The 179,149,747 ordinary shares (2016:190,131,108),beingtheweighted average numberofordinary shares inissue duringtheyear. The earningsperordinary share figure isbasedonthenetprofit for theyear of£317,203,000(2016:£327,145,000)andon Earningsperordinary share 9 31 December ,8,3 ,9,7 ,1,0 281,565 1,112,009 1,095,674 1,884,037 306,475 750,079 Valuation 35,702 10,728 86,394 £’000 2016 Purchases 0,2 1,4 59,837 213,746 305,828 8,0 0,6 132,420 406,769 287,300 627718(3,664) 7,188 16,247 2241,6 (6,629) 11,664 22,204 3215,1 24,678 50,119 43,201 £’000

Annual Report 2017 Report Annual ,4,6 2,150,619 2,149,267 ,8,3 1,386,238 1,386,238 6,2 763,029 763,029 Group £’000 Sales £’000 2017 1,352 – gains/(losses) Investment Company Witan Investment Trust PLC PLC Trust Investment Witan £’000 £’000 179,149,747 31 December ,4,6 1,710,207 2,149,267 ,8,3 1,885,747 1,884,037 ,3,5 1,133,958 1,133,958 9,9 219,436 291,890 0,5 83,063 104,154 5,9 395,752 458,394 7,6 363,787 476,064 317,203 6,2 601,075 763,029 274,536 5,7 750,079 750,079 Valuation 177.06 10734,089 41,097 46913,005 14,639 153.24 42,667 23.82 Pence Group £’000 £’000 £’000 2017 2017 2016 1,710 –

190,131,108 31 December 327,145 285,114 Company 172.06 149.95 42,031 22.11 Pence £’000 £’000 £’000 2017 Cost 2016 77

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

10 Investments held at fair value through profit or loss continued Included in the above figures are purchase costs of £2,306,000 (2016: £1,520,000) and sales costs of £869,000 (2016: £475,000). These comprise mainly stamp duty and commission and includes £368,000 in respect of changes in portfolio managers (2016: £nil).

10.3 Gains/(losses) in investments held at fair value through profit or loss 2017 2016 £’000 £’000 Realised gains on sales of investments 289,484 80,509 Realised gain on futures 7,593 7,548 Movement in investment holding gains (7,919) 209,800 Movement in unrealised gain/(loss) on futures 110 (825) 289,268 297,032

10.4 Derivatives Open futures contracts as at year ended 31 December 2017 Position Settlement Nominal Unrealised long value exposure loss Contract £’000 £’000 £’000 £’000 Euro Stoxx50 Future 750 23,725 23,256 (469)

The realised gain on the closing of futures positions during the year was £7,593,000.

Open futures contracts as at year ended 31 December 2016 Position Settlement Nominal Unrealised long value exposure loss Contract £’000 £’000 £’000 £’000 MSCI Index Future 600 21,432 20,853 (579)

The realised gain on the closing of futures positions during the year was £7,548,000.

10.5 Substantial share interests The Company has notified interests in 3% or more of the voting rights of five of the investee companies, all of which are closed- ended investment funds. However, the Board does not consider any of the Company’s investments to be individually material in the context of these financial statements.

It is the Company’s stated policy to invest no more than 15% of its gross assets in other listed investment companies (including listed investment trusts).

78 Witan Investment Trust PLC Annual Report 2017 2,055,000 3.4percent. cumulative preference shares of£1each 2.74 percent. Secured Notesdue2054 500,000 2.7percent. cumulative preference shares of£1each 3.47 percent. Secured Notesdue2045 3.29 percent.Secured Notesdue2035 6.125 percent. Secured Bondsdue2025 Amounts falling dueaftermore thanoneyear: 1 Seenote17onpage90. (1) Bank loans Amounts falling duewithinoneyear: follows: Financial instruments redeemable otherthanininstalments are as * Accruals Outstanding buybacksofordinary shares Preference dividends profit orloss* Unrealised loss onderivatives designatedas heldatfair value through Purchases for future settlement 12 Other payables Other debtors Prepayments andaccrued income Amounts duefrom subsidiary Taxation recoverable Sales for future settlement 11 Other receivables 13 Borrowings Markets Futures, £20,853,000)(seenote10.4). The unrealised loss onderivatives related toalong positioninEuro Stoxx50 Futures, nominalvalue at31December 2017:£23,2 (1) (1)

Annual Report 2017 Report Annual 1035 170,365 170,365 4,6 243,365 243,365 97929,749 29,749 36253,652 53,652 08120,871 20,871 35863,538 63,538 30073,000 73,000 633 5,841 6,393 5,077 5,217 ,5 2,055 2,055 ,9 4,743 5,295 2,864 2,864 ,2 1,021 1,021 Group Group Group £’000 £’000 £’000 0 500 500 1 9 711 6 469 543 469 543 621 621 646 46 040 40 2017 2017 2017 562 – Company Company Company Witan Investment Trust PLC PLC Trust Investment Witan £’000 £’000 £’000 56,000 (2016:MSCIEmerging 1042 140,492 140,492 1,9 211,492 211,492 1,3 11,038 11,638 36953,639 53,639 08420,864 20,864 34463,434 63,434 10071,000 71,000 812 7,811 8,102 ,5 2,055 2,055 ,3 3,747 4,038 44 4,533 3,557 4,533 ,1 2,610 2,610 2,506 2,506 ,4 1,042 1,042 Group Group Group £’000 £’000 £’000 0 500 500 3 837 837 7 579 579 838 38 2016 2016 2016 –– 2,913 – Company Company Company £’000 £’000 £’000 79

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

13 Borrowings continued At the year end, the Company had a £125,000,000 secured and committed multi-currency borrowing facility with BNP Paribas, London Branch (expiring 5 December 2018). The terms of this loan facility contain covenants that total net borrowings do not exceed 20% of the NAV.

On 15 December 2000 the Company issued £100,000,000 (nominal) 6.125 per cent. Secured Bonds due 2025, net of discount and issue costs totalling approximately £2,000,000. The discount and the issue costs will be written back over the life of the Secured Bonds. The nominal value of the remaining Secured Bonds in issue (£64,290,000 at 31 December 2017) is redeemable on 15 December 2025.

During 2015 the Company issued £21,000,000 (nominal) 3.29 per cent. Secured Notes due 2035 and £54,000,000 (nominal) 3.47 per cent. Secured Notes due 2045 net of issue costs totalling approximately £528,000. These costs will be written back over the life of the Secured Notes.

During 2017 the Company issued £30,000,000 (nominal) 2.74 per cent. Secured Notes due 2054 net of issue costs totalling approximately £252,000. These costs will be written back over the life of the Secured Notes.

The Secured Bonds and the Secured Notes are secured by floating charges over all the undertaking and assets of the Company. The security of the charges applies pari passu to the issues. The terms of the Secured Bonds contain a convenant that the aggregate principal amount outstanding in respect of moneys borrowed by the Company should at no time exceed a sum equal to the Adjusted Total of Capital and Reserves. The terms of each of the three Secured Notes contain covenants that the NAV should at no time be less than £575,000,000 and that total net borrowings do not exceed 25% of the NAV at any time. 14 Financial instruments Risk management policies and procedures As an investment company, Witan invests in equities and other investments for the long term so as to secure its investment objective as stated on the inside front cover. In pursuing its investment objective, the Group is exposed to a variety of risks that could result in either a reduction in the Group’s net assets or a reduction in the profits available for distribution by way of dividends.

These risks, primarily market risk (comprising price risk, currency risk and interest rate risk), liquidity risk and credit risk, and the directors’ approach to the management of them, are set out below.

The objectives, policies and processes for managing the risks and the methods used to manage the risks, as set out below, have not changed from the previous accounting period, although in some instances additional resources have been allocated to some areas.

14.1 Market risk The fair value of future cash flows of a financial instrument held by the Group may fluctuate due to changes in market prices. This market risk comprises: price risk (see note 14.2), currency risk (see note 14.3) and interest rate risk (see note 14.4). The Board reviews and agrees policies for managing these risks, which policies have remained substantially unchanged from those applying in the year ended 31 December 2016. The investment managers assess the exposure to market risk when making each investment decision and monitor the overall level of market risk on the whole of their investment portfolios on an ongoing basis.

14.2 Price risk Price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of the quoted and the unquoted investments.

80 Witan Investment Trust PLC Annual Report 2017 Capital return –futures Nominal futures exposure (long position) Capital return –investments receives amonthly report on thecurrency exposures oftheentire fund. The investment managers monitortheirexposure tocurrencies aspartof theirnormalinvestment processes. TheBoard Management oftherisk those items. functional currency inwhichitreports itsresults). Asaconsequence, movements inexchange rates affect thesterling value o A proportion oftheGroup’s assets, liabilitiesandincome isdenominatedincurrencies otherthansterling (theGroup’s 14.3 Currency risk Revenue return Changes totheConsolidatedStatementofComprehensive Income given thatmost oftheGroup’s assets are equityinvestments. date, withallothervariables heldconstant. Theresults oftheseexample calculations are significantbutnotunreasonable, The sensitivityanalysis isbasedontheGroup’s equitiesandequity exposure through optionsandfutures ateachbalance sheet This level ofchangeisconsidered tobereasonably possible basedonobservation ofmarket conditions andhistorical trends. increase ordecrease of15%inthefair values oftheGroup’s equityinvestments (includingexposure through futures contracts) The following table illustrates thesensitivity oftheprofit aftertaxationfor theyear andthevalue oftheshareholders’ fu Price risksensitivity exposure totheeconomic conditions inthatcountry. of expsoure tothoseregions, althoughaninvestment’s country ofdomicile oroflisting doesnotnecessarily equatetoits companies, withsignificant exposure alsotoNorthAmerica,AsiaandContinentalEurope. Accordingly, there isaconcentration An analysis oftheGroup’s investment portfolio isshown onpage25.Thisshows thatthegreater geographical weighting istoU Concentration ofexposure to price risks Investments heldatfair value through profit orloss and investments, wasasfollows: The Group’s exposure tootherchangesinmarket prices at31December onitsquotedequityinvestments, andonindex futures When appropriate, theCompanyhasabilitytomanageitsexposure toriskthrough thecontrolled useofderivatives. Company’s objective. the managers’ compliance withtheirmandatesandalsowhethereachmandateasset allocation iscompatible withthe investment managers. TheBoard meetsregularly andateachmeetingreviews investment performance. TheBoard monitors The Board managestherisksinherent intheinvestment portfolios byregularly reviewing relevant information from the Management oftherisk

Annual Report 2017 Report Annual in fair value 3588 (325,878) 325,878 3230 (322,390) 322,390 Increase 348 (3,488) 3,488 £’000 2017 – in fair value Decrease Witan Investment Trust PLC PLC Trust Investment Witan £’000 2,149,267 in fair value 2574 (285,734) 285,734 2266 (282,606) 282,606 23,256 Increase 318 (3,128) 3,128 £’000 £’000 2017 2016 – 1,884,037 in fair value nds to an nds toan Decrease 20,853 £’000 £’000 2016 81 f . K

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

14 Financial instruments continued Income denominated in foreign currencies is converted into sterling on receipt. The Group does not normally use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt.

Foreign currency exposure The fair values of the Group’s monetary items that have foreign currency exposure at 31 December are shown below. Where the Group’s equity investments (which are not monetary items) are denominated in a foreign currency, they have been included separately in the analysis so as to show the overall level of exposure.

US$ Euro Yen Other 2017 £’000 £’000 £’000 £’000 Receivables (due from brokers, dividends and other income receivable) 520 448 206 1,141 Cash at bank and on deposit 747 4,029 – 624 Payables (due to brokers, accruals and other creditors) (947) – (72) (356) Payables (unrealised loss on derivatives held at fair value through profit or loss) – (469) – – Total foreign currency exposure on net monetary items 320 4,008 134 1,409 Investments at fair value through profit or loss that are equities 573,717 355,602 104,154 329,541 Total net foreign currency exposure 574,037 359,610 104,288 330,950

US$ Euro Yen Other 2016 £’000 £’000 £’000 £’000 Receivables (due from brokers, dividends and other income receivable) 2,966 1,444 274 1,311 Cash at bank and on deposit 3,985 912 – 167 Payables (due to brokers, accruals and other creditors) (2,822) (309) – – Payables (unrealised loss on derivatives held at fair value through profit or loss) (579)– – – Total foreign currency exposure on net monetary items 3,550 2,047 274 1,478 Investments at fair value through profit or loss that are equities 526,782 213,500 101,060 246,075 Total net foreign currency exposure 530,332 215,547 101,334 247,553

The above amounts are not necessarily representative of the exposure to risk during the year as levels of monetary foreign currency exposure change significantly throughout the year.

Foreign currency sensitivity The following table illustrates the sensitivity of the profit after tax for the year and the Group’s equity in regard to the Group’s financial assets and financial liabilities and the exchange rates for the £/US dollar, £/Euro and £/Japanese yen. The results of these example calculations are significant but not unreasonable in the context of the majority of the Group’s assets being invested overseas.

It assumes the following changes in exchange rates:

£/US dollar +/- 15% (2016: 15%) £/Euro +/- 15% (2016: 15%) £/Japanese yen +/- 15% (2016: 15%)

The sensitivity analysis is based on the Group’s foreign currency financial instruments held at the balance sheet date and takes account of any forward foreign exchange contracts that offset the effects of changes in currency exchange.

82 Witan Investment Trust PLC Annual Report 2017 If sterling hadappreciated against thecurrencies shown, thiswould have thefollowing effect: Change totheshareholders’ funds Change totheshareholders’ funds Change totheprofit aftertax Change totheprofit aftertax Capital return Capital return borrowing. The Group’s exposure tofixed interest rates onliabilitiesis£170,365,000 (2016:£140,492,000). This represents fixed rate The Group’s exposure tofixed interest rates onassets is£7,940,000(2016:£29,056,000). Thisrepresents investments inbonds. holdings minusvariable rate borrowing. The Group’s exposure tofloating interest rates onassets/(liabilities) is£2,326,000 (2016:£(20,444,000)).Thisrepresents ca > > The exposure at31December 2017offinancialassets andfinancial liabilitiestointerest rate riskisshown byreference to: Interest rate exposure bonds andnotesthatwere issued aspartoftheCompany’s plannedgearing. The Group finances partofitsactivitiesthrough preference shares thatdonothave redemption datesandthrough secured borrowings thatithasinplace. The Group holdscashbalances, partly to meetpaymentsasthey fall duebutalsowhenappropriate tooffsetthelong-term when makinginvestment decisions. The possible effects onfair value andcashflows that could ariseasaresult ofchangesininterest rates are taken intoacco Management oftherisk deposit. Interest rate movements mayaffect thelevel ofincome receivable from fixed interest securitiesandcashatbankon Interest rate risk 14.4 Revenue return Comprehensive Income Changes totheConsolidatedStatementof Revenue return Comprehensive Income Changes totheConsolidatedStatementof If sterling haddepreciated against thecurrencies shown, thiswould have thefollowing effect:

fixed interest rates: whenthefinancialinstrument isduetoberepaid. floating interest rates: whentheinterest rate isduetobere-set; and 1294 6,4 18,711 66,941 102,964 1294 6,4 18,711 66,941 102,964 1119 6,8 18,380 65,489 101,159 (614 (544 (13,830) (45,434) (76,104) (614 (544 (13,830) (45,434) (76,104) (470 (431 (13,585) (44,361) (74,770) (,3) 103 (245) (1,073) (1,334) 185 142 331 1,452 1,805 £’000 £’000 US$ US$ 2017 2017 £’000 £’000 Euro Euro

Annual Report 2017 Report Annual £’000 £’000 Yen Yen (871 (827 (13,444) (28,297) (68,751) (871 (827 (13,444) (28,297) (68,751) (732 (759 (13,182) (27,579) (67,332) 9,1 825 18,189 38,285 93,016 9,1 825 18,189 38,285 93,016 9,9 733 17,834 37,313 91,096 Witan Investment Trust PLC PLC Trust Investment Witan (,1) 78 (262) (718) (1,419) 190 92 355 972 1,920 £’000 £’000 US$ US$ 2016 2016 £’000 £’000 Euro Euro sh sh unt unt £’000 £’000 Yen Yen 83

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

14 Financial instruments continued Interest receivable and finance costs are at the following rates: > interest received on cash balances, or paid on bank overdrafts and loans, is at margin under/over LIBOR or its foreign currency equivalent (2016: same); > the finance charge on the preference shares is at a weighted average interest rate of 3.3% (2016: 3.3%); > the finance charge on the secured bonds is at a weighted average interest rate of 6.125% (2016: 6.125%); and > the finance charge on the secured notes is at a weighted average interest rate of 3.23% for an average period of 28.1 years (2016: 3.41% for an average period of 25.7 years). The above year-end amounts are not representative of the exposure to interest rates during the year, as the level of exposure changes as investments are made in fixed interest securities, long-term debt is partially redeemed and as the level of cash balances varies during the year. In the context of the Group’s balance sheet, the exposure to interest rate risk is not considered to be material.

Interest rate sensitivity Based on the Group’s monetary financial instruments at each balance sheet date, an increase or decrease of 200 basis points in interest rates would decrease or increase revenue after tax by £1,151,000 (2016: £656,000), capital return after tax by £1,095,000 (2016: £1,065,000), and total profit after tax and shareholders’ funds by £156,000 (2016: £409,000).

This level of change is considered to be reasonably possible based on observation of current market conditions. This is not representative of the year as a whole, since the exposure changes as investments are made. In the context of the Group’s balance sheet, the outcome is not considered to be material.

14.5 Liquidity risk This is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities.

Management of the risk Liquidity risk is not significant as the majority of the Group’s assets are investments in quoted equities and other quoted securities that are readily realisable. The Group has borrowed £63,174,000 by its issue in 2000 of 6.125 per cent Secured Bonds due 2025. During 2015, the Group issued 3.47% and 3.29% secured notes for £54,000,000 and £21,000,000 respectively. During 2017, the Group issued 2.74% secured notes for £30,000,000. The Group is able to draw short-term borrowings of up to the sterling equivalent of £125m from its secured and committed multi-currency borrowing facility with BNP Paribas, London Branch (expiring 5 December 2018). £73,000,000 was drawn down under the facility at 31 December 2017.

Liquidity risk exposure 2017 2016 Within Between More than Within Between More than 1 year 1 and 5 years 5 years 1 year 1 and 5 years 5 years £’000 £’000 £’000 £’000 £’000 £’000 Secured bonds* 3,938 15,751 75,931 3,938 15,751 79,868 Secured notes* 3,387 13,547 181,751 2,565 10,259 128,147 Preference shares† 83 332 2,555 83 332 2,555 Other creditors and accruals 6,200 – – 8,194 – – Bank loan and interest payable 73,069 – – 71,053 – – 86,677 29,630 260,237 85,833 26,342 210,570

* The above figures show interest payable over the remaining terms of each instrument. The figures also include the capital to be repaid. † The figures in the ‘More than 5 years’ columns do not include the ongoing annual finance cost of £83,000. The Board gives guidance to the investment managers as to the maximum amount of the Company’s resources that should be invested in any one company. The investment managers may hold cash from time to time but the Group’s overall equity exposure is unlikely to fall below 80% in normal conditions.

84 Witan Investment Trust PLC Annual Report 2017 Other debtors Accrued income Taxation recoverable Sales for future settlement Receivables: Cash Fixed interest securities The table below summarises thecredit riskexposure oftheGroup asattheyear end. Credit riskexposure None oftheGroup’s financialliabilitiesispast itsduedateorimpaired. > > > > > The riskismanagedasfollows: Management oftherisk suffering aloss. The failure ofthecounterparty toatransaction todischarge itsobligationsunderthattransaction could result intheGroup 14.6 Credit risk

cash atbankisheldonly withreputable bankswithhigh qualityexternal credit ratings. none oftheCompany’s financialassets orliabilitiesissecured bycollateral orothercredit enhancements; and reviewed periodically, andlimitsare setontheamountthatmaybesenttoany onecounterparty. Otherthanstock lending, stock lending transactions are carriedoutwithanumberofapproved counterparties, thecredit ratings ofwhichare the investment managers, andlimitsare setontheamountthatmaybeduefrom anyonebroker; investment transactions are carriedoutwithalarge numberofbrokers, whosecredit standard isreviewed periodically by so astominimisetheriskGroup ofdefault; transactions involving derivatives are entered intoonly withinvestment banks,thecredit rating ofwhichistaken intoaccoun currency equivalent; interest received oncashbalances, orpaidonbankoverdrafts andloans, isatmargin under/over LIBORoritsforeign

Annual Report 2017 Report Annual Witan Investment Trust PLC PLC Trust Investment Witan 88,952 75,795 2,864 1,021 7,940 £’000 2017 711 621

91,250 50,556 29,056 3,557 4,533 1,042 2,506 £’000 2016 85 t

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

14 Financial instruments continued 14.7 Fair values of financial assets and financial liabilities Except for those financial liabilities measured at amortised cost that are shown below, the financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments and derivatives) or the balance sheet amount is a reasonable approximation of fair value (amounts due from brokers, dividends and interest receivable, amounts due to brokers, accruals, cash at bank and bank overdrafts).

2017 2016 Balance Balance Fair sheet Fair sheet value amount value amount £’000 £’000 £’000 £’000 Financial liabilities measured at amortised cost: Non current liabilities Preference shares 1,354 2,555 1,379 2,555 Secured bonds 81,620 63,538 82,840 63,434 Secured notes 111,807 104,272 80,905 74,503 194,781 170,365 165,124 140,492

The fair values shown above are derived from the offer price at which the securities are quoted on the London Stock Exchange or, in the case of the secured notes, calculating a present value by using a discount rate which reflects the yield on a UK gilt of similar maturity plus a credit spread of 1.10%.

Level 1 Financial liabilities The Company’s preference shares, debenture stock and secured bonds are actively traded on a recognised stock exchange. Their fair value has therefore been deemed Level 1. The carrying values are disclosed in note 13.

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 1.10% (2016: 1.15%). Their fair value has therefore been deemed Level 3. The carrying values are disclosed in note 13.

Fair value hierarchy disclosures The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets and financial liabilities at fair value through profit or loss Level 1 Level 2 Level 3 Total At 31 December 2017 £’000 £’000 £’000 £’000 Equity investments 2,132,527 – – 2,132,527 Investments in other funds – 16,740 – 16,740 Derivatives (nominal exposure of £23,256,000) (469) – – (469) Total 2,132,058 16,740 – 2,148,798

86 Witan Investment Trust PLC Annual Report 2017 the year between Level 1andLevel 2. The valuation techniquesusedbytheGroup are explained intheaccounting policiesinnote1(h).There were notransfers durin Level 3–valued byreference tovaluation techniquesusinginputsthatare notbasedonobservable market data. Level 2–valued byreference tovaluation techniquesusingobservable inputsotherthanquotedprices withinLevel 1. Level 1–valued usingquoted prices inanactive market for identicalassets. measurement oftherelevant asset asfollows: Categorisation withinthehierarchy hasbeendeterminedonthebasisoflowest level inputthatissignificanttothefair oa 18907 2,4 –1,883,458 – 24,441 1,859,017 (579) – – (579) Total Derivatives (nominalexposure of£20,853,000) netet nohrfns– 2,4 – 24,441 – 24,441 – Investments inotherfunds debt (2016:£211,492,000)and£1,980,521,000ofequityshare capitalandotherreserves (2016:£1,726,637,000). The Group’s totalcapitalemployed at31December 2017was£2,223,886,000(2016:£1,938,129,000)comprising £243,365,000of 1,859,596 > – > The Group’s capitalmanagementobjectives are: – Capital management There were noLevel 3investments at31December 2017or 31December 2016. Level 3Reconciliation ofLevel 3fair value measurement offinancialassets 1,859,596 Somerset Emerging Markets SmallCapFund). Level 2Financialassets refer toinvestments inSomerset Emerging Markets SmallCapFund (2016:iShares MSCIfundand Level 2Financialassets Equity investments At 31December 2016

and debt. to maximisetheincome andcapitalreturn toitsequityshareholders through anappropriate balance ofequitycapital to ensure thatitwillbeable tocontinue asagoingconcern; and

Annual Report 2017 Report Annual Level 1 £’000 Witan Investment Trust PLC PLC Trust Investment Witan Level 2 £’000 Level 3 £’000 value £’000 Total 87 g

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

14 Financial instruments continued Gearing The Group’s policy is to manage the effective gearing in the portfolio to be below 20%, other than temporarily in exceptional circumstances. Effective gearing is defined as the difference between shareholders’ funds and the total market value of the investments (including the nominal value (effective underlying exposure) of futures positions which were £23,256,000 long at 31 December 2017 (2016: £20,853,000 long)) expressed as a percentage of shareholders’ funds. At 31 December 2017 effective gearing was 9.7% (2016: 10.3%) and the calculation is set out below:

2017 2016 £’000 £’000 Value of investments per the Balance Sheet 2,149,267 1,884,037 Add: Nominal exposure of futures 23,256 20,853 Adjusted gross value of investments (including futures nominal exposure) 2,172,523 1,904,890

Shareholders’ funds per the Balance Sheet (A) 1,980,521 1,726,637 Excess of gross value of investments over shareholders’ funds (B) 192,002 178,253 Effective gearing (B as a percentage of A) 9.7% 10.3%

The Board monitors and reviews the broad structure of the Group’s capital on an ongoing basis. This review includes: > the planned level of gearing, which takes into account the Chief Executive Officer’s view on the market; > the opportunity to buy back equity shares, which takes account of the difference between the net asset value per share and the share price (ie: the level of share price discount or premium); and > the extent to which revenue in excess of that which is required to be distributed should be retained.

The Group’s objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

The Company is subject to several externally imposed capital requirements: > the terms of issue of the Company’s secured bonds and notes require the aggregate amount outstanding in respect of borrowings, measured in accordance with the policies used to prepare the annual financial statements, not to exceed a sum equal to the Company’s capital and reserves at any time; > as a public company, the Company has a minimum issued share capital of £50,000; and > in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law.

These requirements are unchanged since the previous year end and the Company has complied with them.

88 Witan Investment Trust PLC Annual Report 2017 reserves. In accordance with theCompany’s Articles ofAssociation, dividendsmayonly bepaidout ofcurrent periodrevenue orrevenue t3 eebr21 9214,9 ,7,2 3,4 72,283 439,043 1,273,428 46,498 99,251 At 31December 2017 Ordinary dividends paid Profit for theyear Buyback ofordinary shares intotreasury relief Expenses andinterest payable charged tocapitalnetoftax Net movement onforeign exchange Net movement oninvestments At 1January2017 Company t3 eebr21 9214,9 ,7,2 3,9 72,735 438,591 1,273,428 46,498 99,251 At 31December 2017 Ordinary dividendspaid Profit for theyear Buyback ofordinary shares intotreasury relief Expenses andinterest payable charged tocapitalnetoftax Net movement onforeign exchange Net movement oninvestments for every four shares held. vote for every £1nominalvalue ofshares registered intheirname.Accordingly, onapolleachordinary shareholder hasonevo In theevent ofapollatgeneral meetingof theCompany,anordinary shareholder whoispresent inperson orbyproxy hason cost of£142,918,000).Alltheshares were placed intreasury. Shares heldintreasury donotcarryarighttoreceive adiv During theyear, 2,761,150ordinary shares were boughtbackatacost of£26,622,000(2016:18,860,261shares boughtbackata At 1January2017 Group Share premium account andreserves 16 Total 200,071,000shares (2016:200,071,000) 21,621,411 ordinary shares of25peach(2016:18,860,261) Held intreasury: 178,449,589 ordinary shares of25peach(2016:181,210,739) Called upandissued: Called upshare capital 15 premium 9214,9 ,1,0 4,1 65,955 447,210 1,017,705 46,498 99,251 9214,9 ,1,0 4,0 66,765 446,400 1,017,705 46,498 99,251 account Share £’000

Annual Report 2017 Report Annual –––– –––– 2,2)–– – (26,622) – – 1,4)–– – (13,046) – – 166 – – (1,686) – – 9,7 817 – (8,167) 297,077 – – –––– –––– 2,2)–– – (26,622) – – 1,4)–– – (13,046) – – 166 – – (1,686) – – 9,7 789 – (7,809) 297,077 – – redemption reserve Capital £’000 investments arising on Witan Investment Trust PLC PLC Trust Investment Witan reserve Capital £’000 sold investments revaluation Group and arising on Company 50,018 44,613 reserve Capital 5,405 £’000 £’000 2017 held of Group and (36,697) (36,697) Company Revenue 43,025 42,667 50,018 45,303 reserve idend. 4,715 £’000 £’000 2016 89 te te e

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

17 Preference shares Included in non current liabilities is £2,555,000 in respect of issued preference shares as follows:

Group and Group and Company Company 2017 2016 £’000 £’000 2,055,000 3.4 per cent. cumulative preference shares of £1 each 2,055 2,055 500,000 2.7 per cent. cumulative preference shares of £1 each 500 500 2,555 2,555

The 3.4 per cent. and 2.7 per cent. cumulative preference shares constitute a single class and confer the right, in priority to any other class of shares:

(i) to receive a fixed cumulative preferential dividend at the respective rates (exclusive of tax credit thereon for payments made prior to 6 April 2016) of 3.4 per cent. and 2.7 per cent. per annum, such dividend being payable half-yearly on 15 January and 15 July in each year, in respect of the 3.4 per cent. cumulative preference shares, and on 1 February and 1 August in each year in respect of the 2.7 per cent. cumulative perference shares; and

(ii) to receive repayment of capital at par in a winding up of the Company (but do not confer any further right to participate in profits or assets).

The preference shareholders are entitled to receive notices of general meetings of the Company but are not entitled to attend or vote thereat (except on a resolution for the voluntary liquidation of the Company or for any alteration to the objects of the Company set out in its Articles of Association).

In the event of a poll at a general meeting of the Company, a preference shareholder who is present in person or by proxy and who is entitled to vote thereat in the circumstances outlined above, has one vote for every £1 nominal value of shares registered in their name. Accordingly, on a poll each preference shareholder has one vote for every one share held. 18 Net asset value per ordinary share The net asset value per ordinary share of 1109.85p (2016: 952.83p) is based on the net assets attributable to the ordinary shares of £1,980,521,000 (2016: £1,726,637,000) and on the 178,449,589 ordinary shares in issue at 31 December 2017 (2016: 181,210,879).

The movements during the year of the net assets attributable to the ordinary shares were as follows:

£’000 Total net assets at 1 January 2017 1,726,637 Total profit for the year 317,203 Dividends paid in the year on the ordinary shares (see note 8) (36,697) Share buybacks (26,622) Net assets attributable to the ordinary shares at 31 December 2017 1,980,521

90 Witan Investment Trust PLC Annual Report 2017 NAV pershare lsn iblte rmfnnigatvte 7,6 300243,365 73,000 170,365 Closing liabilitiesfrom financingactivities Amortisation ofexpenses Non-cash: Ordinary shares inissue at31December Issue ofsecured notesnetofexpenses Drawdown ofbankloans Cash-flows: Liabilities atbalance sheetvalue/fair value pnn iblte rmfnnigatvte 4,9 100211,492 71,000 140,492 further five years. London SW1H9AAwhichwasrenewed for afurtherfive years inOctober2010.In 2015 thelease wasrenewed for a no underwritingliabilities.InNovember 2005theCompanytookafive year lease onoffice premises at14QueenAnne’s Gate, At 31December 2017and31December 2016there were nocapitalcommitments inrespect ofsecuritiesnotfully paidupand Capitalcommitments andcontingent liabilities 20 Opening liabilitiesfrom financingactivities Group andCompany 19 Total assets less current liabilitiesperbalance sheet 2017 calculated onthisbasisis1096.2p(2016:939.2p)assetoutbelow. book) values. Detailsofthealternative values are setoutinnote14.7.Thenetasset value perordinary share at31December the Company,preference shares andthesecured bondsandnotesattheirmarket (orfair) values rather thanat theirpar(o An alternative netasset value perordinary share canbecalculated bydeductingfrom thetotalassets less current liabilities Reconciliation ofliabilitiesarisingfrom financing activities

Annual Report 2017 Report Annual 7,4,8 178,449,589 178,449,589 balance sheet ,8,2 1,956,105 1,980,521 ,5,8 2,150,886 2,150,886 198p1096.17p 1109.85p 1035 (194,781) (170,365) amount Debt at £’000 2017 Long-term fair value 978–29,748 – 29,748 Witan Investment Trust PLC PLC Trust Investment Witan Debt at £’000 £’000 2 125 – 125 debt ,0 2,000 2,000 – 8,1,7 181,210,879 181,210,879 balance sheet ,2,3 1,702,005 1,726,637 ,6,2 1,867,129 1,867,129 Short-term 1042 (165,124) (140,492) 5.3 939.24p 952.83p amount Debt at £’000 £’000 debt 2016 fair value Debt at £’000 £’000 Total of of

91 r

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Notes to the Financial Statements continued for the year ended 31 December 2017

21 Operating lease arrangements 2017 2016 £’000 £’000 Minimum lease payments under operating leases recognised for the year 49 49

At the balance sheet date, the Group had outstanding commitments for the future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2017 2016 £’000 £’000 Within one year 73 73 In the second to fifth years inclusive 73 146

The operating lease payments represent rentals payable by the Group for its office property.

The lease was re-negotiated during 2015 for a further term of five years and to include additional office space. 22 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 and operates in the United Kingdom. 23 Related party transactions disclosures Balances and transactions between the Company and its subsidiary, which are related parties, amounting to £472,000 have been eliminated on consolidation and are not disclosed in this note.

Remuneration of key management personnel The remuneration of the directors, who are the key management personnel of the Company for each of the relevant categories specified in IAS 24 Related Party Disclosures is provided in the audited part of the Directors’ Remuneration Report on pages 44 and 45.

Directors’ transactions Dividends totalling £227,000 (2016: £262,000) were paid in the year in respect of ordinary shares held by the Company’s directors.

92 Witan Investment Trust PLC Annual Report 2017 Carrying amountofassets Net result Interest expense From 1Januaryto12March 2018,161,134ordinary shares of25pwere boughtbackfor £1,700,000. ordinary share (see alsopage4andnote8on76). Since theyear end,theBoard hasdeclared afourth interimdividendinrespect oftheyear ended31December 2017of6.75pper 25 Subsequent events * Revenue* and recorded intheaccounts ofthatcompany. and themanagementofsavingsschemes,whichisbusiness ofthesubsidiarycompany, WitanInvestment Services Limited, of thatcompany; and(ii)the provision ofalternative investment fund manager,executive andmarketing managementservices as aninvestment trust, whichisthebusiness oftheparent company, Witan Investment Trust plc, andrecorded intheaccounts Business segmentsare considered tobethesecondary reporting segment.TheGroup hastwo business segments:(i)itsactivity Business segments significant. been given aseither itisnotpossible toprepare suchinformation inameaningfulwayortheresults are notconsidered tobe segment issetoutinnote10onpage77.Analyses oftheremaining assets andliabilities bygeographical region have not have notbeengiven as itisnotpossible toprepare suchinameaningfulway. Ananalysis oftheinvestments bygeographical segment issetoutinnote2onpage72.Analyses ofexpenses bygeographical segmentandofprofit bygeographical segment Geographical segmentsare considered tobetheprimaryreporting segment.Ananalysis ofinvestment income bygeographical Geographical segments Group’s reportable segmentsdidnotchangeasaresult oftheadoptionIFRS8. Officer andthatare usedtoallocate resources tothesegmentsandassess theirperformance. Theidentificationofthe identified onthebasisofinternalreports aboutcomponents oftheGroup thatare reviewed regularly bytheChiefExecutive The Group adoptedIFRS8Operating Segmentswitheffect from 1January2009.IFRS8requires operating segmentstobe 24 Segment reporting The investment andotherincome oftheparent company. ,7,6 ,5 1,980,521 1,352 1,979,169 Investment 1,0 317,203 – 317,203 46910455,743 1,094 54,649 ,1 7,618 – 7,618 £’000 trust 31 December 2017 Management services £’000

Annual Report 2017 Report Annual £’000 Total ,2,2 ,1 1,726,637 1,710 1,724,927 Investment 2,4 327,145 – 327,145 Witan Investment Trust PLC PLC Trust Investment Witan 28611153,927 1,111 52,816 ,1 9,615 – 9,615 £’000 trust 31 December 2016 Management services £’000 £’000 Total

93

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Other Information (unaudited)

Securities Financing Transactions The Company engages in Securities Financing Transactions (as defined in Article 3 of Regulation (EU) 2015/2365, securities financing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing, buy-sell back transactions or sell-buy back transactions and margin lending transactions). In accordance with Article 13 of the Regulation, the Company’s involvement in and exposures related to securities lending as at 31 December 2017 are detailed below.

Global Data The amount of securities on loan as a proportion of total lendable assets and of the Company’s net assets at 31 December is disclosed below:

Stock lending 2017 % of lendable Market value of securities on loan assets % of AUM £66,964,000 3.12 3.11

Stock lending 2016 % of lendable Market value of securities on loan assets % of AUM £49,311,000 2.62 2.60

Concentration Data The ten largest collateral issuers across all the securities financing transactions as at 31 December are disclosed below:

2017 2016 Market value Market value of collateral of collateral received received Issuer £’000 £’000 Japan Treasury 30,609 – Network Rail 16,248 – France Treasury 5,367 839 Government of Finland 4,292 4,852 Société Générale 3,172 992 Government of Germany 1,770 1,037 General Motors 1,492 – UK Treasury 1,194 228 Fresenius 898 670 Philip Morris 842 – Other – 30,461 65,884 39,079

The top ten counterparties of each type of securities financing transactions as at 31 December are disclosed below:

2017 2016 Market value Market value of collateral of collateral received received Counterparty £’000 £’000 Abbey National 37,444 – BNP Paribas 9,463 16,939 Citigroup 6,695 7,717 Deutsche Bank 5,410 18,026 ING Bank 4,094 4,709 HSBC 2,587 1,770 J P Morgan 1,271 147 Nomura – 3 66,964 49,311

94 Witan Investment Trust PLC Annual Report 2017 2000£0002%£8,0 75% £180,000 25% 2016: Thegross amount oflending income was£323,000withdirect and indirect expenses deductedof£81,000. £240,000 £60,000 securities lending income Total gross amountof a percentage ofoverall returns are disclosed below: BNP Paribas The return andcost ofengaginginsecuritieslending bytheCompanyandsecuritieslending agentinabsolute termsandas BNP Paribas BNPParibas Triparty Return andcost Triparty Triparty The fundsdonotengageinanyre-use of collateral. BNPParibas EUR Re-use ofcollateral Gov MainMarket Listing EUR EUR Triparty BNPParibas Gov The lending andcollateral transactions are on anopenbasisandcanberecalled ondemand. MainMarket Listing Investment Grade Triparty Japan All ofthecollateral isheldwithinsegregated accounts. EUR BNP Paribas Corporate Bond MainMarket Listing US EUR Bilateral HongKong Equity Main Market Listing Nomura Netherlands Equity J PMorgan Gov EUR HongKong Netherlands MainMarket Listing ING Bank Equity Hong Government Gov Equity HSBC Germany Germany US Equity Deutsche Bank Gov Gov US Kong Citigroup France Bond France BNP Paribas Counterparty Stock lending 2016 BNPParibas Triparty EUR Investment Grade Government Bond UK Abbey National Counterparty Stock lending 2017 as at31December: The following table discloses asummaryofaggregate transaction datarelated tothecollateral received from securitiesonloa Aggregate transaction data N aia Franc BNP Paribas iiru US Citigroup etceBn Germany Deutsche Bank SCHn ogEut anMre itn U rpryBNPParibas Triparty EUR MainMarket Listing Equity HongKong HSBC N akNtelnsGov Netherlands ING Bank ognU Gov US J PMorgan onr foii yeQuality Type country oforigin Counterparty Quality Type country oforigin Counterparty rneGvrmn odIvsmn rd U iaea BNPParibas Bilateral EUR Investment Grade Government Bond France SGvrmn odIvsmn rd U rpryBNPParibas Triparty EUR Investment Grade Government Bond US emn oenetBn netetGaeERTiat BNPParibas Triparty EUR Investment Grade Government Bond Germany Hong Kong ogKn oenetBn netetGaeERTiat BNPParibas Triparty EUR Investment Grade Government Bond Hong Kong Equity e lending agent fees deductedbysecurities Direct andindirect costs and Equity Equity Corporate Bond ernment Bond ernment Bond ernment Bond ernment Bond ernment Bond ernment Bond ernment Bond ernment Bond lending agent % return ofthesecurities Investment Gr Investment Gr Investment Gr Investment Gr Investment Gr Investment Gr Investment Gr anMre itn EUR Main MarketListing anMre itn EUR Main MarketListing anMre itn EUR Main MarketListing Investment Gr Investment Gr Investment Gr d U Bilater BNPParibas Bilater Triparty BNPParibas EUR EUR Triparty ade EUR ade BNPParibas ade EUR Triparty BNPParibas ade Triparty EUR Bilater ade EUR ade EUR ade d U rpryBNPParibas Triparty EUR ade d U rpryBNPParibas Triparty EUR ade d U Bilater EUR ade

Annual Report 2017 Report Annual CCY Collateral CCY Collateral eandb h ud%return ofthefund retained by thefund Net securitieslending income ai Custodian basis Settlement Custodian basis Settlement iaea BNPParibas Bilateral rpryBNPParibas Triparty rpryBNPParibas Triparty Witan Investment Trust PLC PLC Trust Investment Witan lBNPParibas BNPParibas al al BNPParibas al lBNPParibas al Market value Market value of collateral of collateral received 10,732 17,124 received 39,321 71,087 4,922 1,169 8,600 3,674 4,650 1,667 53,485 4,432 5,912 1,163 5,929 3,044 2,780 1,672 4,303 1,410 £’000 £’000 158 198 546 292 829 39 95 n 6

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Alternative Investment Fund Managers’ Directive

Witan Investment Trust plc is an ‘alternative investment fund’ (‘AIF’) for the purposes of the EU Alternative Investment Fund Managers’ Directive (Directive 2011/61/EU) (the ‘AIFMD’) and the Company has appointed its subsidiary, Witan Investment Services Limited (‘WIS’), to act as its AIFM. WIS is authorised and regulated by the United Kingdom Financial Conduct Authority as a ‘full scope UK AIFM’.

The Company is required to make certain disclosures available to investors in accordance with the AIFMD. Those disclosures that are required to be made pre-investment are included within the Investor Disclosure Document (‘IDD’) which can be found on the Company’s website www.witan.com. There have not been any material changes to the disclosures contained within the IDD since it was last updated in December 2017.

The Company and AIFM also wish to make the following disclosures to investors: > the investment strategy, geographic and sector investment focus and principal stock exposures are included in the Strategic Report. A list of the top 50 portfolio holdings is included on page 24; > none of the Company’s assets is subject to special arrangements arising from their illiquid nature; > the Strategic Report and note 14 to the accounts set out the risk profile and risk management systems in place. There have been no changes to the risk management systems in place in the period under review and no breaches of any of the risk limits set, with no breach expected; > there are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity management systems and procedures employed by the Company; > all authorised Alternative Investment Fund Managers are required to comply with the AIFMD Remuneration Code in respect of the AIFM’s remuneration. The relevant disclosures required are within the IDD; and > information in relation to the Company’s leverage is contained within the IDD.

96 Witan Investment Trust PLC Annual Report 2017 1Dcme 06920992(4.0) 939.2 902.0 31 December 2016 1Dcme 05700712(.)784(.)1.917.00 18.49 (1.1) 788.4 (0.2) 781.2 780.0 31 December 2015 1Dcme 0473579206703(.)1.815.40 15.88 (0.9) 760.3 0.6 749.2 753.5 31 December 2014 1Dcme 03690776(.)752(.)1.414.40 15.44 (7.7) 725.2 (6.8) 717.6 669.0 31 December 2013 1Dcme 02530589(16 8. 1.)1.013.20 14.50 (13.5) 581.8 (11.6) 568.9 503.0 31 December 2012 1Dcme 01400537(07 1. 1.)1.712.00 13.27 (12.9) 516.9 (10.7) 503.7 450.0 31 December 2011 1Dcme 00565581(07 8. 1.)94 10.90 9.45 (11.6) 584.4 (10.7) 578.1 516.5 31 December 2010 1Dcme 09446470(05 0. 1.)1.310.50 10.63 (11.6) 502.7 (10.5) 497.0 444.6 31 December 2009 1Dcme 08310403(23 1. 1.)1.010.20 11.60 (14.4) 410.1 (12.3) 400.3 351.0 31 December 2008 1Dcme 0717. 062(1.6) 1096.2 1079.0 31 December 2017 1Dcme 07485579(10 4. 1.)1.89.90 11.08 (12.3) (c) 545.7 (b) (a) (11.0) 537.9 478.5 31 December 2007 Historical record Registrar atthenumbers provided onpage100. If you are inanydoubtabouttheveracity ofanunsolicited phonecall,please calleithertheCompanySecretary orthe documentation already circulated toshareholders andnever inrespect ofinvestment ‘advice’. PLC, would make unsolicited telephone callstoshareholders andthatanysuchcallswould relate only toofficial Please notethatitisvery unlikely thateithertheCompanyorCompany’s Registrar, Computershare Investor Services discount oroffers offree company reports. extremely persuasive. Shareholders are therefore advisedtobevery waryofanyunsolicitedadvice, offers tobuyshares ata sell themwhatoftenturnouttobeworthless orhighriskshares inUSorUK investments. They canbevery persistent and concerning investment matters. Theseare typically from overseas based‘brokers’ whotarget UKshareholders offering to Many companies have become aware thattheirshareholders have received unsolicitedphonecallsorcorrespondence Unsolicited approaches for shares: warningtoshareholders The average discount tothenetasset value, includingincome, withdebtatfair value, in2017was2.8%(2016:5.8%).(Source: (not theirmarket) values. Theshare price discount reflects thiscalculation. The netasset value perordinary share iscalculated bydeductingfrom thetotalassets less current liabilitiesoftheGroup t (or market) values. Theshare price discount reflects thiscalculation. The netasset value perordinary share iscalculated bydeductingfrom thetotalassets less current liabilitiesoftheGroup t share inpence Market price per ordinary ordinary share in pence eta arvleDebtatparvalue Debt atfair value Net asset value per (a) Share price (discount)/ premium

% Annual Report 2017 Report Annual (a) (c) (c) ordinary share in pence Net asset value per 198(.)2.221.00 23.82 (2.8) 1109.8 5. 53 21 19.00 22.11 (5.3) 952.8 (b) Share price Witan Investment Trust PLC PLC Trust Investment Witan discount % (b) he fixed borrowings attheirpar he fixed borrowings attheirfair Datastream). share inpence per ordinary Earnings share inpence per ordinary Dividends 97

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report How to invest

There are various ways to invest in Witan Investment Trust The Jump Child Trust Fund is, like the Junior ISA, a tax plc. Witan’s shares can be traded through any UK stockbroker efficient savings vehicle with the same annual limits as the and most share dealing services and platforms, that Junior ISA (but the annual term is measured by the child’s offer investment trusts (including Alliance Trust Savings, birthday). Each child born in the UK from 1 September 2002 up Hargreaves Lansdown, Barclays Stockbrokers, Halifax Share to and including 2 January 2012 was eligible for a CTF. You can Dealing Limited, Interactive Investor and AJ Bell), as well as transfer existing CTFs to a Jump CTF or directly into a Jump Computershare, the Company’s Registrars. Advisers who Junior ISA subject to a minimum transfer value of £1,000. wish to purchase Witan shares for their clients can do so via a stockbroker, Witan Savings Schemes or via a growing The Jump Savings Plan offers greater flexibility than the number of dedicated platforms (including Seven Investment Junior ISA or CTF in terms of the limits, access and control Management, Transact and Fidelity FundsNetwork). of the investment. It can also be opened by grandparents, relatives and other family friends. You can open a Jump Witan is available for investment through two savings Savings Plan with a lump sum investment of £250 or £50 per schemes managed by Witan Investment Services – Witan month or quarter. Wisdom and Jump Savings. NB: Given the flat rate annual fees for Wisdom and Jump, the Witan Wisdom cost is high for the minimum subscription levels to our plans Witan Wisdom offers two different savings wrappers: and investors should consider carefully the suitability for them if they do not plan to add to the account. The Witan Wisdom ISA is a stocks and shares ISA that enables investors to buy Witan shares within a tax efficient Brochures, which include terms and conditions, including wrapper. Investors have an annual ISA allowance of up to costs, and application forms for all of our products are £20,000 for the 2017/18 and 2018/19 tax years. The minimum available by calling 0800 082 81 80 or online via www.witan.com. lump sum investment with Witan Wisdom ISA is £2,000, with If you would prefer to write to request further information, the the regular savings minimum being £100 per month. Investors address details can be found on page 100. To keep up to date can also transfer existing ISAs to Witan Wisdom while on news and commentary from Witan Investment Trust plc retaining their tax efficient wrapper during and after transfer. please visit www.witan.com/stayintouch to provide us with your email address. The Witan Wisdom Share Plan is our straightforward, low- cost savings scheme. The minimum lump sum investment is Witan Investment Trust plc is an equity investment. Investors £500, and the minimum regular contribution is £50 per month are reminded that past performance is not a guide to future or quarter. There is no maximum. Accounts can also be held performance and the value of investments and the income jointly, or designated to a child. from them may go down as well as up and investors may not get back the amount originally invested. Jump Savings for children Jump gives parents, grandparents and other adults the Issued and approved by Witan Investment Services Limited. chance to invest in Witan on behalf of a child. This flexible Witan Investment Services Limited of 14 Queen Anne’s savings plan has a minimum lump sum investment set at £250 Gate, London SW1H 9AA is registered in England and Wales and regular contributions can be made from £50 per month or number 5272533. Witan Investment Services Limited provides quarter. Jump is available in three different wrappers: investment products and services and is authorised and regulated by the Financial Conduct Authority. We may record The Junior ISA is a tax efficient wrapper available to children telephone calls for our mutual protection and to improve born before 1 September 2002 or after 3 January 2012, or customer service. those who did not qualify for a Child Trust Fund (‘CTF’). The account can only be opened by a parent though others can add to it. It currently has an annual subscription limit of £4,128 for the 2017/18 tax year and £4,260 for the 2018/19 tax year. You can open a Jump Junior ISA with a minimum lump sum investment of £250 or £50 per month or quarter.

98 Witan Investment Trust PLC Annual Report 2017 appropriate. of formats, includingBraille, audiotape orlarger typeas Secretary. Ifneeded,copies canbemadeavailable inavariety Witan Investment Trust plc are available from theCompany Copies ofthisAnnualReportand otherdocumentsissued by Disability Act the Companydirectly. rather thantotheCompany’s Registrar, Computershare, orto all communications totheregistered holderoftheirshares under section146oftheCompaniesAct2006shoulddirect registered holderofthose shares toreceive information rights Beneficial owners ofshares whohave beennominatedbythe Beneficial Owners ofShares –Information Rights consequences. own taxadvisers inorder tounderstand anyapplicable tax your individualcircumstances. Investors shouldconsult their changes, andthevalue oftaxrelief (ifany)willdepend upon Please notethattaxassumptions maychangeifthelaw your professional adviser. your personal taxposition,you are recommended tocontact your personal circumstances. Ifyou are inanydoubtabout The calculation ofthetaxonchargeable gainswilldependon Capital GainsTax when calculating anytaxliability. the shareholder’s responsibility toincludealldividendincome calculating andreporting totaldividendincome received. Itis be includedwithanyotherdividendincome received when with aconfirmation ofthe dividends ithaspaidandthisshould Company willcontinue toprovide registered shareholders their income taxbracket andpersonal circumstances. The pay taxontheirdividendincome atarate dependenton with effect from April2018.Above thisamount,individuals across anindividual’s entire share portfolio, reduced to£2,000 an annual£5,000tax-free allowance ondividendincome From April2016 dividendtaxcredits have beenreplaced by Dividend Tax Allowance dividend was1March 2018(seepages4and28). dividend was2March 2018andtheex-dividend datefor the declared, payable on29March 2018.Therecord datefor the A fourth interimdividendof6.75ppershare hasbeen Dividend Official List (SEDOL)code is0974406. website (www.witan.com). TheLondonStockExchange Daily ‘Investment Companies’ andisalsoincludedontheWitan press stock exchange listings under‘Investment Trusts’ or newspapers. Witan’s share price appears daily inthenational You canfollow theprogress ofyour investment through the Points ofReference Measures Performance Shareholder informationandAlternative paid duringtherespective period’s calculation. price adjusted toincludethereinvestment ofeachdividend Share price totalreturn: net asset value pershare. the netasset value pershare expressed asapercentage ofthe per share iseitherhigher(premium) orlower (discount) than Premium/Discount: AIC. Please refer to pages13and14ofthisAnnualReport. is performed inaccordance with theguidelinesissues bythe and gainsorlosses arisingoninvestments. Thecalculation excluding thecosts ofacquisitionanddisposal,finance costs whether charged tocapitalorrevenue asacollective fund, of atypewhichare likely torecur intheforeseeable future, Ongoing Charge: period’s calculation. reinvestment ofeachdividendpaidduringtherespective value per share (debtatfair value) adjusted toincludethe Net asset value totalreturn: Treasury). Please refer tonote18onpages9091. of Ordinary Shares inissue (excluding thoseshares heldin is calculated bydividingthisamountthetotalnumber Company. TheNetAsset Value, orNAV, perOrdinary Share value): Net asset value pershare (debtatparanddebtfair shareholders’ funds. value of futures positions)expressed asapercentage of the totalmarket value oftheinvestments (includingtheface Gearing: Markets Index 5%. FTSE All-World AsiaPacific Index 20%andtheFTSEEmerging Index 25%, theFTSEAll-World Europe (ex UK)Index 20%,the FTSE All-Share Index 30%,theFTSEAll-World NorthAmerica Benchmark: Definitions ofAlternative Performance Measures operator, bydialling03707020005.Specially trained operators to contact themdirectly, withouttheneedfor anintermediate and hearingimpaired people whohave theirown telephone Services PLC, whichhasinstalled textphones toallow speech You cancontact ourRegistrar, Computershare Investor you wishtodial. Deaf People), you shoulddial18001followed bythenumber ‘typetalk’ operator (provided byTheRoyal NationalInstitute for via thisservice. Alternatively, ifyou prefer togothrough a are available duringnormalbusiness hours toanswer queries

Thisisthevalue oftotalassets less allliabilitiesofthe Annual Report 2017 Report Annual Thedifference between shareholders’ fundsand Thebenchmarkisacomposite offive indices: the Theongoingcharge reflects thoseexpenses Theamountbywhichthemarket price Themovement inordinary share Witan Investment Trust PLC PLC Trust Investment Witan Themovement inthenetasset 99

Other Information Financial Statements Corporate Governance Directors’ Report Strategic Report Contacts

Points of Contact Registrar For Witan Wisdom and Jump Savings queries: Computershare Investor Services PLC The Pavilions If you have any questions or need more information Bridgwater Road concerning Witan, you may contact us in the following ways: Bristol BS99 6ZZ Telephone: 0370 707 1408* Freephone: 0800 082 8180 From abroad: +44 1268 448646 * Calls cost no more than calls to geographic numbers (01 or 02) and must be included in inclusive minutes and discount schemes in the same way. Calls from landlines are typically charged up to 9p per minute; calls from E-mail: [email protected] mobiles typically cost between 3p and 55p per minute. Calls from landlines and mobiles are included in free call packages. Post: Witan Wisdom Auditor PO Box 10550 Grant Thornton UK LLP Chelmsford 30 Finsbury Square CM99 2BA London EC2P 2YU

Registered Office of the Company and its subsidiary, Stockbroker Witan Investment Services Limited J.P. Morgan Cazenove 14 Queen Anne’s Gate 25 Bank Street London SW1H 9AA Canary Wharf London E14 5JP The Company is a public company limited by shares. Solicitors Registered Number Herbert Smith Freehills LLP Registered as an investment company in England and Wales, Exchange House Number 101625. Primrose Street London EC2A 2HS Company Secretary Frostrow Capital LLP Dickson Minto W.S. 25 Southampton Buildings 16 Charlotte Square London WC2A 1AL Edinburgh EH2 4DF Telephone: 020 3008 4910 The Company is a member of Custodian, Investment Administrator and Depositary BNP Paribas Securities Services

10 Harewood Avenue London NW1 6AA

The Company conducts its affairs so that its shares can be recommended by independent financial advisers (‘IFAs’) to retail private investors. The shares are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are shares in a UK-listed investment trust.

100 Witan Investment Trust PLC Annual Report 2017 Our Relationship with the RHS

:LWDQ,QYHVWPHQW7UXVWSOFKDVHQMR\HGDORQJDQGIUXLWIXOUHODWLRQVKLSZLWKWKH5R\DO+RUWLFXOWXUDO6RFLHW\IRUDOPRVW \HDUV2YHUWKLVWLPH:LWDQKDVKHOSHGWRUHGHYHORSDQXPEHURIQHZJDUGHQVDW:LVOH\LQFOXGLQJWKH:DOOHG*DUGHQ:HVW WKH+HUE*DUGHQDQGWKH%RZHV/\RQ5RVH*DUGHQDQGODVW\HDUWKH*OREDO*URZWK9HJHWDEOH*DUGHQDW+\GH+DOO7KLV JDUGHQVHHQDERYHZDVGHVLJQHGE\;D7ROOHPDFKHWRJURZHYHU\GD\H[RWLFDQGRUQDPHQWDOYHJeWDEOHVIURPDURXQGWKH ZRUOG7KHFLUFXODUGHVLJQV\PEROLVHVDJOREHZLWKIRXUTXDUWHUVUHSUHVHQWLQJ(XURSHDQGWKH0LGGOH(DVW$VLD1RUWKDQG &HQWUDO$PHULFDDQG6RXWK$PHULFD:LWDQVKDUHKROGHUVZKRKROGWKHLUVKDUHVWKURXJK:LWDQ:LVGRPRU-XPS6DYLQJVRU RQWKHPDLQUHJLVWHUDUHHOLJLEOHWRDSSO\IRUDEDOORWIRUDWLFNHWWKDWZLOODOORZIUHHHQWU\IRUWZRDGXOWVWRDQ\RQHRIWKHIRXU 5+6JDUGHQVLQWKH8.

,I\RXZRXOGOLNHWRUHTXHVWDWLFNHWWKHQSOHDVHSKRQHXVRQRUHPDLOZLVGRP#LIGVJURXSFRXNFRQßUPLQJWKHIXOO QDPHRIWKHDFFRXQWKROGHU Printed by Park Communications on FSC®FHUWLßHGSDSHU 3DUNLVDQ(0$6FHUWLßHGFRPSDQ\DQGLWV(QYLURQPHQWDO0DQDJHPHQW6\VWHPLVFHUWLßHGWR ,62 RIWKHLQNVXVHGDUHYHJHWDEOHRLOEDVHGRISUHVVFKHPLFDOVDUHUHF\FOHGIRUIXUWKHU XVHDQGRQDYHUDJHRIDQ\ZDVWHDVVRFLDWHGZLWKWKLVSURGXFWLRQZLOOEHUHF\FOHG 7KLVGRFXPHQWLVSULQWHGRQ&RFRRQ6LONDQG&RFRRQ2IIVHWSDSHU7KHßEUHVDUHVRXUFHG IURPZHOOPDQDJHGUHVSRQVLEOH)6&®FHUWLßHGIRUHVWV7KHSXOSXVHGLQWKLVSURGXFWLVEOHDFKHG XVLQJDQ(OHPHQWDO&KORULQH)UHH (&) SURFHVV