WPC.L Regulatory News (WPC)

WITAN PACIFIC INVESTMENT TRUST PLC

(the "Company")

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 JANUARY 2019

Witan Pacific Investment Trust plc announces that its 2019 Annual Report and Accounts has been published. The full report can be accessed via the Company's website at www.witanpacific.com and will be circulated to shareholders shortly.

The Annual General Meeting of the Company will be held on 12 June 2019 at 2.30pm at Chandos House, 2 Queen Anne Street, Marylebone, London, W1G 9LQ.

The Directors have proposed the payment of a final dividend of 4.50p per Ordinary share which, if approved by shareholders at the forthcoming Annual General Meeting, will be payable on 18 June 2019 to shareholders whose names appear on the register at the close of business on 17 May 2019 (ex-dividend 16 May 2019).

This announcement includes certain extracts from the 2019 Annual Report and Accounts. Any references to page numbers or sections in the following text are references to pages and sections in that report.

STRATEGIC REPORT

FINANCIAL SUMMARY

for the year ended 31 January 2019

Key data

Total return

Income

Ongoing charges1

1 The financial statements set out the required statutory reporting measures of the Company's financial performance. In addition to these, the Board assesses the Company's performance against a range of non-statutory reporting criteria which are viewed as particularly relevant for investment trusts ("Alternative Performance Measures"), which are summarised above and below and explained in greater detail in the Strategic Report, under the heading 'Key Performance Indicators' below. Definitions of the terms used are set out below.

2 Source: Morningstar.

3 Source: Morningstar. The benchmark for Witan Pacific Investment Trust plc is the MSCI AC Asia Pacific Free Index.

LONG-TERM PERFORMANCE ANALYSIS

for the year ended 31 January 2019

Total returns since inception of multi-manager structure (31 May 2005)

Total returns over each of the past five financial years (twelve months to 31 January)

Total returns over three, five and ten years

1 Source: Morningstar/Witan Investment Services. Alternative Performance Measure.

2 Source: Morningstar. Alternative Performance Measure.

3 Source: Morningstar. The benchmark for Witan Pacific Investment Trust Plc is the MSCI AC Asia Pacific Free Index

CHAIR'S STATEMENT

SUMMARY

· NAV total return of -7.4% for the year, compared with benchmark -5.4%

· Share price total return of -10.3%

· Final dividend of 4.50p, making 7.00p for the year (+27.3%)

· NAV total return of 218.7% since 2005, compared with benchmark 215.7%

· Net assets £220 million (2018: £244 million)

· Dividend growth of 14.2% per annum annualised over ten years

Market background

Equity markets were volatile during the year with our benchmark, the MSCI AC Asia Pacific Free Index, down 5.4% in sterling terms. The Company's financial year began with markets displaying a sense of optimism but this quickly evaporated as macro-economic and political concerns, including tightening liquidity, rising oil prices, signs of slowing global growth and the US/China trade dispute, intensified. These factors were all seen as being particularly negative for the Asia Pacific region and resulted in our benchmark index being 11.4% lower at one stage. However, as 2018 drew to a close, sentiment started to improve with hopes of progress in US/China negotiations and a softening in US Federal Reserve policy. The oil price reversed its gains, which reduced inflation concerns, and markets rallied in the final weeks of our financial year.

Whereas in the last two years the region performed strongly, this year nearly all countries in our benchmark fell. China performed the worst, returning a negative 13% over the period as the on/off nature of trade negotiations weighed on investor sentiment and economic indicators softened. Indonesia and Thailand were the exceptions, benefiting from an improved economic environment, strengthening currencies and a rapid decline in oil prices in the latter half of the year. These economies are also considered to be less exposed to the knock-on effect of the US/Chinese trade uncertainty than many of their regional peers.

Regional technology stocks retreated on subdued demand and trade-related concerns, compounded by the arrest of Huawei's chief financial officer at the request of US authorities. Consequently, in stark contrast to last year, technology was the worst performing sector in the region, down just over 10% (having gained over 40% last year). This compared with a rise of over 12% in the best performing utilities sector which made notable gains, particularly in final three months of 2018, as investors sought shelter in this traditionally defensive sector as market volatility increased.

Four US rate hikes and the relative strength of the US economy helped boost the US dollar and, as most Asian central banks raised rates throughout the year, their currencies also appreciated against sterling which remained depressed due to Brexit uncertainty. The Japanese yen, which continues to trade at a discount to its US$ Purchasing Power Parity, was particularly strong against sterling over the period.

Performance

The Company's net asset value total return was -7.4% and the share price total return was -10.3%. The benchmark total return was -5.4%. Our two newer managers, Dalton and Robeco, appointed in September 2017, as well as Aberdeen, underperformed the benchmark whilst Matthews marginally outperformed. Our four managers each aim to outperform our benchmark index. As active managers we do not expect them to outperform every year but we do expect outperformance over the medium to long term. It is therefore disappointing to report a third consecutive year of underperformance. Manager performance is covered in detail in the Investment Review which follows my statement.

The Board believes that the Company must justify its actively managed approach and, despite good absolute performance in recent years (with a NAV total return of 42% over three years), it should demonstrate outperformance of its benchmark. Whilst it has marginally outperformed since the inception of the multi-manager approach, it has not done so more recently. Accordingly, the Board announced on 11 February 2019 that if the Company does not deliver NAV total return outperformance of its benchmark over the period from 31 January 2019 to 31 January 2021, the Board will put forward proposals which would include a full cash exit at close to NAV for all shareholders. The Board remains confident that the Company's pan-Asian focus and multi-manager investment strategy can deliver attractive returns and long-term outperformance for shareholders, however the Board believes it appropriate to offer shareholders the opportunity to realise their holding in the Company at close to NAV, in the circumstances described.

Shortly after the year end, the Board and the Executive Manager visited all four managers in their regional offices. The purpose of these visits was to carry out ongoing due diligence, engage with investment, governance and operational personnel and to receive a more thorough update on their investment processes than is possible on our regular updates with the key representatives. This biennial review helps us to understand further the culture within the firms, to acquire a deeper knowledge of how our managers implement their various strategies and what we are likely to expect from their portfolios in the years ahead. Following the visit, the Board is comfortable with the continued appointment of the portfolio managers and believes in the ability of their investment approaches to achieve outperformance over the time.

Dividend

The Board aims to increase the ordinary dividend in real terms over the long term. It has done so for each of the last fourteen years. Following the interim dividend of 2.50p paid in October 2018, the Board is proposing a final dividend of 4.50p per share. The dividend is fully covered by current year revenue earnings per share, which were 21% higher than in the previous financial year enabling us to increase the dividend and add £0.6m to revenue reserves. Whilst augmented by sterling weakness versus Asian currencies, the majority of this increase was due to increased dividends at local currency level, as portfolio companies enjoyed earnings growth and shareholders benefited from greater distribution levels. Earnings growth in the region has been slowing in recent months, but remains positive. Any impact on the Company's dividend prospects can be mitigated by the Company's sizeable revenue reserves. Subject to shareholder approval, the final dividend will be paid in June, with the shares trading ex-dividend on 16 May 2019. This will make a total dividend of 7.0p per share for the year, a rise of 27.3% on last year and a near four-fold increase on the 1.85p paid 10 years ago. This increased dividend equates to a yield of 2.1% based on the share price at the time of writing of 331.5p*.

Discount

The discount at the year end was 14%. In line with our policy, we have continued to buy back shares when the discount to NAV is at a substantial and anomalous level. During the year, we repurchased 852,346 shares at a cost of £2.7m at discounts ranging from 18% to 12%. This added approximately 0.8p per share of value. The discount narrowed following our announcement on 11 February 2019 and at the time of writing is 11%*.

Outlook

Markets have made a strong start to 2019, although ongoing macro-political concerns are likely to cause bouts of increased volatility, such as the uncertainty experienced in February and December 2018. However, many of these risks appear reasonably well recognised, with all but the worst outcomes for trade negotiations, elections (in India and Indonesia) and failure of renewed Chinese stimulus, reflected to some degree in prices. The lower oil price should be beneficial for the region and valuations are below historic norms and comparators outside the region. Our managers' portfolios appear well positioned to benefit from the steady, if unspectacular, rate of global economic growth and from any re-rating of the region, relative to western markets. The continued improvement in the underlying earnings per share and dividend payments received from our investee companies should also be beneficial to the rating of our portfolio over time.

Board composition

Diane Seymour-Williams will not be seeking re-election at the forthcoming Annual General Meeting having completed nine years of service. The Board would like to express its appreciation for her valued contribution to the Company during her tenure.

Annual General Meeting

The Annual General Meeting ("AGM") of the Company will be held at Chandos House, 2 Queen Anne Street, Marylebone, London W1G 9LQ on 12 June 2019 at 2.30pm. There will be portfolio manager presentations and my Board colleagues and I look forward to meeting you then. In the meantime, should you wish to get in touch with me please do so via the Company Secretary whose details are below.

Susan Platts-Martin

Chair

25 April 2019

* As at 23 April 2019, the latest practicable date.

Company Secretary contact details:

Link Company Matters Limited

Beaufort House, 51 New North Road, Exeter, EX4 4EP

email: WitanPacificInvestmentTrustplc@linkgroup.co.uk

INVESTMENT REVIEW

for the year ended 31 January 2019

Performance summary

Manager performance

In a market environment described in the Chair's Statement, where 'top-down', macroeconomic inputs often trump company fundamentals, stock pickers, such as our managers, tend to struggle for short-term performance. On the flip side, such dynamics can often uncover significant investment opportunities for long-term investors.

It was a disappointing year for our managers. Witan Pacific's NAV total return was -7.4%. The gross contribution from portfolio returns was -6.7%, which equates to an underperformance of 1.3% versus the benchmark total return of -5.4%. Share repurchases at a discount to NAV generated a positive contribution of 0.2% while expenses (including management fees) detracted circa 1% from the NAV total return. Three of our four managers underperformed the benchmark over the full year. Dalton and Robeco underperformed the benchmark by 7.1% and 1.8% respectively. Both endured a particularly difficult fourth quarter as markets sold-off aggressively and largely ignored the underlying fundamentals of the businesses they own, which were already attractively priced. Although both managers follow a 'value' philosophy, this was not the defining factor in their short-term underperformance, which was largely the result of a small number of stock specific factors which, in general, appear to be a market pricing issue rather than a decline in company fundamentals. Dalton has found performance since appointment to be particularly challenging. Their portfolio is highly concentrated, with approximately 25 holdings which are largely small-cap in nature. Often these companies which require some change in management strategy or investor perception for their inherent value to be fully reflected in the market price. The manager will only make a new investment if he expects the share price to double (at least) within three to five years. The nature of these investments means that it can be hard to predict when the expected returns will materialise. The Board was cognisant of this when allocating a smaller proportion of the portfolio to Dalton. The Board gained in-depth information on the portfolio on its recent visit to Dalton's office and remains confident that their strategy is an attractive one for our shareholders, even if their early tenure has not yet produced positive results. Both Dalton and Robeco consider sentiment against the companies within their portfolios to be excessively negative and are enthusiastic about the prospects for their portfolios, especially as valuations now appear to be depressed.

Aberdeen also underperformed the benchmark but by less than 1%. Their focus on quality allowed them to close the gap in performance terms since we last reported at the half-year stage, with an outperformance over the last six months of 0.6%. Aberdeen has undergone significant corporate change this year as the merger with Standard Life has been effected and we will continue to monitor how the enlarged group adjusts to its new structure.

Matthews ended the period just ahead of the benchmark having been 1.5% ahead at the half-year stage. Their performance, which was strongly positive until October, was impacted by a small number of stocks sensitive to US/China trade negotiations and by an overweight position in some defensive sectors as markets rallied sharply in January. Over the longer term, since their respective appointment dates, both Aberdeen and Matthews remain ahead of benchmark by 1.6% and 1.7% on an annualised basis. Robeco and Dalton are yet to deliver the returns we believe that they can achieve.

Portfolio manager performance for the year ended 31 January 2019 and from appointment to 31 January 2019

Details of the portfolio manager structure in place at the end of January 2019 are set out in the following table, showing the proportion of Witan Pacific's assets each managed and the performance they achieved:

Source: BNP Paribas. All performance figures are disclosed on a pre-fee basis.

Notes:

1 Excluding cash balances held centrally by the Company.

2 Since appointment.

Portfolio composition

There were 15 new entrants to the list of top 50 stocks during the year. Most were the result of additions to existing portfolio positions while others were due to good relative performance increasing their weighting in the portfolio list. There were five new purchases within the top 50 (China Resources, WH Group, Huaneng Power, Saigon Beer and HKBN), brief descriptions of these companies are below. Two of last year's top 50 holdings (Sands China and Mitsubishi UFJ Financial) were sold. Around 30 holdings, out of a total of circa 200, were fully exited during the year while approximately 40 new investments were made. Among the sales were some long-held positions, such as Singapore Tech Engineering and KDDI Corporation. New additions include Sunny Optical, Wuxi Biologics, Ricoh, Rinnai Corporation and China Education.

It is notable that a number of new positions are Chinese companies. This reflects the increase in relevance that this market has in a regional context and growth in the number of opportunities available to our managers whether listed in Hong Kong or, more recently, in China. The opening-up of the Chinese market to foreign investors is creating significant investment opportunities for our managers, although they caution that the identification of quality companies, at an attractive valuation, remains paramount.

Investors are reminded that the Company's overall portfolio is the result of the individual stock selection decisions of our four third-party investment managers and that the asset allocation referred to above is a by-product of these stock selection decisions. While the Board is comfortable that the portfolio will look quite different from the benchmark in stock-level composition as well as in asset allocation, and welcomes such characteristics, it is cognisant that these 'active' positions must be monitored to ensure that portfolio risks are understood. This task is carried out by the Executive Manager which monitors the individual and combined portfolios and reports to the Board at least four times a year. The Board can, if desired, rebalance the manager line-up to address any imbalances with which it is uncomfortable or to exploit what it considers to be the relative prospects for each manager

The Active Share, which is a commonly used measure of how similar or different a portfolio is from its benchmark (where 0 is identical and 100 bares no commonality), is 73% (2018: 72%). We also monitor how the portfolio is valued in absolute terms and how it compares to the benchmark. At the year end, the forecast Price/Earnings Ratio (a measure of how cheap or expensive a stock is) was 12.5 compared to 12.7 for the benchmark and, by way of comparison, 14.5 for global equities and 16.5 for US equities. This indicates that, at least on this measure, Asian equities are 12.5% cheaper than their global peers and 25% cheaper than US counterparts while Witan Pacific's portfolio is marginally cheaper than its own benchmark.

Investment income received by Witan Pacific has grown at an annualised rate of approximately 11% since January 2016. This has been driven by an increase in earnings and the dividend pay-out ratio of companies within the portfolio. The current dividend yield of the portfolio (on a 12 month forward forecast basis) is circa 3%. Although earnings growth expectations for the coming year are somewhat more subdued, and the impact of exchange rates or political and economic developments cannot be predicted, this does indicate that Asian equities should now be considered at least on a par with many developed markets as a source for yield as well as growth.

As noted by the Chair, the Board undertook its biennial due diligence programme in Asia in February 2019. A notable theme this year was how our fund managers and Asian corporations appear to be taking their Environmental, Social and Governance (ESG) responsibilities increasingly seriously, not because they are wanting to 'tick a box' but because there is a genuine belief that 'good' businesses provide better returns to shareholders than 'bad' businesses. All four of our managers have personnel responsible for this aspect of investment research which helps them factor in ESG issues either to filter out or help value potential investments. This should enable them to avoid companies with poor corporate governance, unacceptable employment practices and companies which are failing to adhere to generally accepted standards which could lead to their ultimate demise. This due diligence is also helping our managers engage with otherwise attractive investee companies which could improve standards so that they meet with a higher ESG threshold often required of western corporations.

Outlook

Our managers endured a number of negative influences last year. Each exerted its own pressure on global (and Asian) equities but, by the end of the year, markets appear to have shrugged off the majority of these concerns as, one by one, the threats receded or, at least, did not materialise to the extent that investors feared they might. This leaves equity markets in general, and Asian markets in particular, at relatively low valuations, with some of the risk factors priced in to some degree. This means that, barring a recession or significant policy mistake, we remain confident of the long-term prospects for Asian equities in general and our portfolio in particular. Despite the significant rally in January, 2019 has started with sentiment remaining more pessimistic than a year ago and, whilst political concerns remain, many of the known risks appear to be factored in. It seems reasonable to expect, therefore, given current equity valuations and interest rates remaining low, that markets should allow selective and patient investors, such as our managers, to thrive in the long term as company fundamentals come back to the fore and valuations begin to reflect the long-term potential of good quality businesses.

Portfolio Information

Geographical allocation

1 Source: BNP Paribas - portfolio represents investments excluding cash.

2 Source: MSCI.

Sector allocation

1 Source: BNP Paribas.

2 Source: MSCI.

Portfolio manager information

Matthews International Capital Management LLC ("Matthews Asia") is an independent, privately owned firm, and the largest dedicated Asia investment specialist in the United States. Matthews believes in the long-term growth of Asia and employs a bottom-up, fundamental investment philosophy with a focus on long-term investment performance. As at 31 December 2018, Matthews Asia had US$27.4bn in assets under management.

Strategy

The Company is invested in a segregated portfolio that is managed according to the Matthews Asia Dividend Strategy; the Lead Portfolio Manager is Yu Zhang, CFA, and the Co-Managers are Robert Horrocks, PhD, Vivek Tanneeru and Sherwood Zhang, CFA. The Asia Dividend Strategy employs a fundamental, bottom-up investment process to select dividend paying companies with sustainable long-term growth prospects, strong business models, quality management teams and reasonable valuations. The Asia Dividend Strategy is a total-return strategy focused on a balance between stable dividend yielding companies and companies with attractive dividend growth prospects, in order to provide both capital growth and a sustainable dividend yield. The strategy invests in companies of all sizes and has significant exposure to small and mid-cap stocks.

Aberdeen Asset Managers Limited ("Aberdeen") is a subsidiary of Aberdeen Asset Management PLC and part of the Standard Life Aberdeen PLC group of companies. Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. Aberdeen has delegated management of the Company's assets to Aberdeen Asset Management Asia Limited (also part of the Standard Life Aberdeen PLC group of companies) which was established in Asia in 1992 and, as at 31 December 2018, was managing £48.5bn of assets in Asia. The Asian equity team, made up of over 40 fund managers in the region, is headed up by Flavia Cheong. The team follow a fundamental investment style emphasising the identification of good quality companies on reasonable valuations relative to their growth potential.

Strategy

Aberdeen follows a stock-picking approach of investing in good quality, well-managed and soundly-financed companies trading at attractive valuations, with the expectation of holding them for extended periods in order to benefit from the compounding of those companies' growth. Corporate governance and the alignment of management with shareholders' interests are additional important factors. Aberdeen will, from time to time, use their own UCITS funds to gain cost effective exposure to certain regional markets. This is achieved by investing in 'zero fee' class units so that it does not affect Aberdeen's overall remuneration.

Robeco Institutional Asset Management B.V. ("Robeco") is an international asset management company founded in 1929. It currently has 17 offices worldwide and is headquartered in Rotterdam, the Netherlands. Robeco is owned by ORIX Corporation, a Tokyo-listed financial services group. The Asian equity team (headed by Arnout van Rijn) has been in place since 1990 and manages US$7.0bn as at 31 December 2018 out of its office in Hong Kong.

Strategy

Robeco's investment approach combines a value approach with awareness of business and price momentum with the aim of constructing portfolios of attractively-valued shares while avoiding value traps. Whilst their portfolio may have similar geographic weightings to the benchmark, it will tend to look very different from the benchmark as it has a high active share which is the result of active bottom-up stock selection. The aim is for performance to be driven by stock selection rather than country, macro-economic or political factors.

Dalton Investments LLC ("Dalton") is an independent investment boutique established in Santa Monica, California in 1999. Dalton manages US$3.6bn (as at 31 January 2019) in strategies focused on Asian, global and emerging market equities. The firm is independently owned by its founders, each of whom has over 30 years of investment experience.

Strategy

Dalton's Asia strategies are managed by James B. Rosenwald III, co-founder of Dalton Investments and noted authority on Asia equity investment. He is supported by multi-cultural, multi-lingual analyst teams located in Los Angeles and Tokyo and dedicated Asia traders based in Los Angeles. Dalton is in the process of opening up an office in Mumbai (regulatory license pending). Dalton follows a disciplined value investment process to identify good businesses trading at a significant discount to intrinsic value and whose management share an alignment of interest with shareholders.

TOP FIFTY INVESTMENTSas at 31 January 2019

The value of the fifty largest holdings represents 48.8% (31 January 2018: 51.8%) of the Company's total investments. The full portfolio listing is published monthly (with a three-month lag) on the Company's website. The country shown is the country of incorporation or, in the case of funds, the country of risk.

CORPORATE REVIEW

Witan Pacific is an investment trust, which was founded in 1907 and has been listed on the London Stock Exchange since its foundation. It operates an outsourced business model, under the direction and supervision of the Board of Directors.

Strategic Report

The Strategic Report has been prepared in accordance with the requirements of Section 414 of the Companies Act 2006 and best practice. Its purpose is to provide information to the shareholders of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company, in accordance with Section 172 of the Companies Act 2006.

Strategy and investment policy

Investment policy

The Company's investment objective is to provide shareholders with capital and income growth from a diversified portfolio of investments in the Asia Pacific region designed to outperform the MSCI AC Asia Pacific Index in sterling terms.

Since 2005, the Company has followed a multi-manager approach, using a blend of active portfolio managers with the aim of outperforming the benchmark. The investment policy includes investments in a wide range of regional markets, including the main Southeast Asian and North Asian markets as well as Japan, India and Australia. The range of investment opportunities for the portfolio managers is not limited to the constituents of the benchmark or benchmark weightings. This means that Witan Pacific's portfolio is likely to differ from the benchmark. Witan Pacific invests primarily in equities: in normal circumstances the Board expects the portfolio's equity exposure to be a minimum of 90% of net assets. Therefore, the overall performance of regional equity and currency markets and the operating performance of specific companies selected by the managers is likely to have the most significant impact on the performance of the Company's net asset value.

Investment risk is managed through:

■ the selection of at least two portfolio managers. Details of the proportion of assets managed by them are set out above;

■ the portfolio managers are required to spread their investments over a number of securities within the region;

■ monitoring of portfolio manager performance and portfolios. Portfolio manager performance against the benchmark is set out above; and

■ monitoring of sector and country allocations of the manager portfolios and of the resulting combined portfolio.

Implementation of the investment policy in the year

During the year, the Company invested its assets with a view to spreading investment risk and, in accordance with the investment objective set out above, maintained a diversified portfolio, the analysis of which is shown above.

The Directors receive regular reports on investment activity and portfolio construction at meetings of the Board, as well as periodically outside of these meetings.

The Board holds an annual strategy meeting. The Directors use the strategy day to consider, amongst other things, the relevance of the investment mandate, the multi-manager approach, the marketing of the Company and the discount. The Board continues to believe that the Company's offering of a broad Asia Pacific mandate, implemented through a carefully selected group of managers, is an attractive and distinct proposition for shareholders. It further believes that, if superior returns are achieved over the long term, the discount should narrow. As a result of its strategy discussions in February, the Board announced that it is committed to securing outperformance of the benchmark and that, if outperformance is not achieved between 1 February 2019 and 31 January 2021, proposals will be put to shareholders, including a full cash exit at close to NAV. In the meantime, the Company will maintain its marketing programme and buy-back policy.

The Company sponsors an ongoing marketing programme provided by WIS. This programme communicates with private investors and their financial advisers, as well as professional investors, to help them make informed decisions about whether investing in the Company's shares can help them to meet their investment objectives.

The unbundling of investment management from the Company's other necessary services has provided transparency of the Company's cost base as well as flexibility in case it becomes desirable to change the service provider in a particular area. The Board takes care to ensure strict monitoring and control of costs and expenses.

Please also see the Chair's Statement and the Investment Review for further commentaries on the year.

Business model

The Company is an investment trust and aims to provide shareholders with capital and income growth from a diversified portfolio of investments in the Asia Pacific region. The Board achieves this through:

■ the selection of suitable portfolio managers;

■ the choice of investment benchmark;

■ investment guidelines and limits;

■ the appointment of providers for other services required by the Company; and

■ the maintenance of an effective system of oversight, risk management and corporate governance.

The Board's role in investment management

Although the Board retains overall risk and portfolio management responsibility, it appointed the portfolio managers after a disciplined selection process focused on their scope to add value and their fit with the overall balance of the portfolio. The selection of individual investments is delegated to these external portfolio managers, subject to investment limits and guidelines which reflect the particular mandate and the specific investment approach which the Company has selected (e.g. quality, value, dividend growth etc.).

The portfolio is managed in four segregated accounts, held at the Company's custodian. This enables the Company to view the portfolio as a whole and to analyse its risks and opportunities as well as those at the level of each portfolio manager's portfolio.

Information regarding the proportion of Witan Pacific's assets managed by each and of their performance during the year is set out above.

Our selected benchmark

The Company's benchmark is a reference point for a comparison of results from an investment in Witan Pacific. The benchmark is the MSCI AC Asia Pacific Free Index in sterling terms, with gross dividends reinvested ("MSCI Index" or "benchmark").

The benchmark is a widely diversified regional index which includes the principal countries in the Asia Pacific region.

The portfolio managers select stocks which they consider attractive, wherever they are located in the region. As a result, the geographical location of the holdings differs from the benchmark. The geographical distribution of the portfolio and of the benchmark are set out above.

Priorities for the year ahead

For the year ending 31 January 2020, the key priorities for Witan Pacific include:

■ Investment. Monitor and manage the portfolio managers with the objective of delivering outperformance of the benchmark to shareholders whilst assessing the risk approach of each portfolio manager. The Board, is committed to securing outperformance of the benchmark and therefore announced that, if outperformance is not achieved between 1 February 2019 and 31 January 2021, proposals will be put to shareholders, including a full cash exit at close to NAV.

■ Governance. Ensure effective oversight of all service providers and compliance with all applicable rules and guidelines, and monitor supplier risk including cyber risk.

■ Costs. Monitor and manage costs carefully, with a view to achieving an ongoing charges ratio in line with the Company's target of 1% or less per annum.

■ Dividends. Continue to grow the dividends in real terms.

■ Marketing and Communications. Communicate Witan Pacific's active multi-manager approach, highlight the distinct pan-Asian investment remit to existing and potential shareholders and raise the profile for retail investors. The marketing programme, in combination with the buy-back policy, aims to reduce the Company's discount over time.

Dividend policy

The Company aims to grow its dividend in real terms over the long term. The Company has substantial levels of revenue reserves available to smooth the effect of temporary fluctuations in dividends from investments, where this is viewed as prudent and beneficial for shareholders. Shareholders agreed at the 2013 AGM to amend the Articles of Association ("Articles") to permit the distribution of Capital Reserves as dividends. The Company has stated that this is to confer flexibility in pursuing its investment objectives and that it would be the norm for dividend payments to be funded from revenue over the cycle.

The Company paid a final dividend for the previous year of 3.25p in June 2018 and an interim dividend of 2.50p in October 2018 for the year under review. The latter payment compared to a 2.25p interim dividend the year before. The Company has proposed a final dividend for 2018/19 of 4.50p, making a total payment for the year of 7.00p per share. This is an increase of 27.3% on the previous year, which compares with a 1.8% rise in the Consumer Price Index ("CPI") during the year.

Key performance indicators

The Board monitors success in implementing the Company's strategy against a range of Key Performance Indicators ("KPIs") which are viewed as significant measures of success over the longer term. Although performance relative to the KPIs is also monitored over shorter periods, it is success over the long term that is viewed as more important, given the inherent volatility of short-term investment returns. The principal KPIs are set out below, with a record (in italics) of the Company's performance against them during the year.

NAV total return and total shareholder return1.

Long-term outperformance of the combined portfolios compared with the benchmark is a key objective.

The NAV total return was -7.4%, underperforming the benchmark total return of -5.4%, while the share price total return was -10.3%. Since the adoption of the multi-manager strategy in 2005, the NAV total return was 218.7%, outperforming the benchmark to return of 215.7%. The share price total return was 216.6%.

Investment performance by the individual portfolio managers.

Long-term outperformance relative to the benchmark is sought.

Over the year, Aberdeen, Dalton and Robeco underperformed the benchmark, while Matthews outperformed. Aberdeen and Matthews have both outperformed the benchmark since appointment. Dalton and Robeco have both underperformed since appointment in 2017. Details are shown in the table above.

Annual growth in the dividend.

The Company's aim is to deliver increases in real terms, ahead of UK inflation.

The dividend for the year ended 31 January 2019 rose (subject to shareholder approval) by 27.3%, compared with an inflation rate (CPI) of 1.8% during the year. Since the adoption of the multi-manager strategy, dividends have grown at an annualised rate of 14.5% compared with an annualised inflation rate of 2.4%.

Discount to NAV1.

Avoid excessive fluctuations in the discount and avoid a discount which is anomalously wide compared with other trusts investing in the region by the use of share buy-backs, subject to market conditions.

The discount ended the financial year at 14.1% compared with 11.0% a year earlier. The average discount of the Company over the year was 14.6% (2018: 13.3%).

The Board recognises that this discount is wider than other Trusts investing in the region, and the Company has therefore bought back 852,346 shares during the year (1.3% of shares in issue (excluding treasury shares) at the prior year end), which both mitigated discount volatility and added 0.8p to net asset value.

Since the announcement on 11 February 2019, referred to in the Chair's Statement above, the discount has narrowed and, as at 23 April 2019, stood at 11%.

The level of ongoing charges1.

Costs are managed with the objective of delivering an ongoing charges figure of less than 1% (excluding performance fees). Where higher charges arise, these are carefully evaluated to ensure there is a net benefit for shareholders. The increasingly stringent regulatory environment has resulted in additional pressure on costs. The Board considers its level of costs remains competitive compared to similar investment opportunities.

The ongoing charges figure was 1.03% (2018: 0.99%).

The increase in the ongoing charges mainly reflects increased portfolio manager costs following the manager changes in 2017. Other expenses fell during the year (see analysis below).

1 Alternative Performance Measure not defined under UK GAAP. For definitions see Glossary.

Gearing and the use of derivatives

Borrowings and gearing

The Company has the power under its Articles to borrow up to 100% of the adjusted total of capital and reserves. However, in accordance with the Alternative Investment Fund Managers' Directive ("AIFMD"), the Company was registered by the FCA as a Small Registered UK Alternative Investment Fund Manager ("AIFM") with effect from 1 April 2014. To retain its Small Registered UK AIFM status, the Company is unable to employ gearing. It is therefore the Company's approach not to employ gearing, subject to periodic review of the costs and benefits of full AIFM authorisation.

The Company's segregated portfolio managers are not permitted to borrow within their portfolios, but may hold cash if deemed appropriate.

Use of derivatives

The Company's delegated managers are not permitted to use derivatives or to gear their portfolios, nor does the Company use derivatives itself.

Market liquidity and discount

The Board believes that it is in shareholders' interests to buy back the Company's shares when they are standing at a substantial and anomalous discount to the Company's NAV. The objective is to avoid excessive fluctuations in the discount and avoid a discount which is anomalously wide compared with other trusts investing in the region by the use of buy-backs, subject to market conditions. The purchase of shares priced at a discount to NAV per share will, all other things being equal, increase the Company's NAV per share and benefit the Company's share price. During the year, the Company bought back 852,346 shares into treasury, at times when supply and demand in the market were out of balance and the discount was particularly wide. This added 0.8p to NAV per Ordinary share.

Since the year end to 23 April 2019, the Company has repurchased a further 516,959 Ordinary shares, which have been placed into treasury. Treasury shares may only be reissued at a premium to the prevailing NAV.

Witan Pacific is an investment trust, so the purpose of "marketing" is to provide effective communication of developments at the Company to existing and potential shareholders to help sustain a liquid market in the Company's shares. Clear communication of the Company's investment objective and its success in executing its strategy make it easier for investors to decide how Witan Pacific fits in with their own investment objectives. Other things being equal, this should help the shares to trade at a narrower discount, from which all shareholders would clearly benefit.

In view of these potential benefits, the Company has felt for many years that it is beneficial to incur the limited costs of operating a marketing programme (through WIS) in order to disseminate information about our investment strategy and performance more widely. This programme communicates with private and professional investors, financial advisers and intermediaries using a range of media (including direct meetings, press interviews and advertising through traditional media and the internet). The Company also provides an informative and easy to use website (www.witanpacific.com) to enable investors to make informed decisions about including Witan Pacific shares in their investment portfolios.

Corporate and operational structure

Investment management arrangements

Each of the portfolio managers, Aberdeen, Dalton, Matthews and Robeco, is entitled to a base management fee, levied on the assets under management. The base management fee rates for managers in place at 31 January 2019 ranged from 0.2% to 0.85%. The weighted average base management fee was 0.56%. In addition, one portfolio manager (which is also entitled to the lowest base fee) is entitled to a performance fee, calculated according to investment performance relative to the benchmark. These agreements can be terminated on one month's notice. Further details on fee arrangements are set out in the full Annual Report.

The Company's external portfolio managers may use certain services which are paid for, or provided by, various brokers. In return, they may place business, including transactions relating to the Company, with those brokers.

Operational management arrangements

In addition to the appointment of external managers, Witan Pacific contracts with third parties for the supporting services it requires, including:

■ WIS for Executive Management services; WIS has experience of the issues arising in operating a multi-manager structure, and manages and monitors the outsourced structure and relationships, provides commentary on investment issues and provides marketing services. The Executive Manager reports to the Board on key aspects at all Board meetings as well as drawing attention as required to matters requiring non-routine review by the Board;

■ BNP Paribas Securities Services for investment accounting and administration;

■ JP Morgan Chase Bank, N.A. for investment custody services;

■ Link Market Services Limited for company secretarial services (through Link Company Matters Limited);

■ the Company also takes specialist advice on regulatory and compliance issues and, as required, procures legal, investment consulting, financial and tax advice;

■ as with investment management, the contracts governing the provision of these services are formulated with legal advice where necessary and stipulate clear objectives and guidelines for the level of service required; and

■ Share Savings Plan. WIS has informed the Board that it will no longer be managing the Share Savings Plan, and that holders are being offered a number of alternatives, including a transfer to Hargreaves Lansdown. The Board encourages all shareholders to subscribe to the Company's newsletters and factsheets, which can be done on the Company's website.

Premises and staffing

Witan Pacific has no premises nor employees.

Environmental, human rights, employee, social and community issues

The Company's core investment activities are undertaken by Aberdeen, Dalton, Matthews and Robeco, which consider policies relating to environmental and social matters as part of their investment process. The Company has therefore not reported on these or community issues. The Company is not within the scope of the Modern Slavery Act 2015 as it has insufficient turnover and is therefore not obliged to make a human trafficking statement. The Board reviews its portfolio managers' reports on their policies relating to environmental, social and corporate governance issues and discusses the managers' approaches with them. The portfolio managers are also prepared to use their votes in these areas as part of the proper management of the investments made on the Company's behalf and the Board periodically reviews their approaches with them.

The Board of Directors consists of two female and three male non-executive Directors. It is the Directors' policy to appoint individuals on merit whilst taking into account the balance of skills and experience required by the Board. The Board's diversity policy is set out in the full Annual Report.

Key Information Document

The European Union's Packaged Retail Investment and Insurance based Products ("PRIIP"s) Regulations cover Investment Trusts and require boards to prepare a key information document ("KID") in respect of their companies. Witan Pacific'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 are prescribed by EU law and the Company has no discretion over the format or content of the document.

The illustrated performance returns in the KID cannot be guaranteed and, together with the prescribed cost calculation and risk categorisation, may not reflect figures for the Company derived using other methods. Accordingly, the Board recommends that investors also take account of information from other sources, including the Annual Report.

Cost analysis

The Company exercises strict scrutiny and control over costs. Any negotiated savings in investment management or other fees will directly reduce the costs for shareholders. The information on costs is collated in a single table below. This indicates the main cost headings in money terms and as a percentage of net assets.

1 For a full breakdown of costs, see notes 3 and 4 below.

2 Figures inclusive of fees paid to WIS.

3 Ongoing charges exclude performance fees, if payable. No performance fees were payable in 2018/9 or 2017/8.

Principal risks and uncertainties

The Audit Committee regularly (at least annually) reviews the risks facing the Company by maintaining a detailed record of the identified risks in the form of a Risk Matrix which assesses the likelihood of such risks occurring and the severity of the potential impact of such risks. This enables the Board to take action and develop strategies in order to mitigate the effect of such risks to the extent possible. An analysis of financial risks can be found in note 16 to the financial statements.

A robust assessment of the principal risks has been carried out, including a review of those risks which would threaten the Company's business model, future performance, solvency or liquidity.

Information about the Company's internal control and risk management procedures can be found in the Audit Committee Report in the full Annual Report.

The Board has identified the following as being the principal risks and uncertainties facing the Company:

Leaving the EU. The Board has also considered the potential implications for the Company (to the extent identifiable) of the UK no longer being a member of the EU. Given the Company is invested in the Asia Pacific region, the greatest impact has been, and may continue to be, the movement of sterling against international currencies. Because the value of the Company's investments, and income received, is denominated substantially in overseas currencies, any fall in sterling will increase the value of those investments, and income received, in sterling terms. Conversely, any rise in sterling will decrease the value of those investments, and income received, in sterling terms.

Viability

In accordance with the provisions of the UK Corporate Governance Code, the Board has assessed the viability of the Company, and selected a period of five years for the assessment.

The Board considers five years to be a reasonable period for its assessment. The Board views the Company as a long-term investment vehicle, with strong financials and good liquidity in its portfolio. In selecting a five year period, the Board has balanced that view against the inherent uncertainties in equity markets.

In conducting the assessment, the Board has taken account of the following:

■ The Company is an investment trust founded in 1907, whose investment portfolio is invested in readily realisable listed securities. The portfolio is well diversified in terms of both sector and geography within its Asia Pacific remit.

■ The Company currently has no borrowings.

■ The expenses of the Company are reasonably predictable, modest in comparison to the assets and adequately covered by investment income.

The Board has also taken account of its strategy and investment policy and the principal risks and uncertainties set out above. The Company operates a robust risk control framework to manage those risks and uncertainties.

The Board's assessment assumes that there is continuing demand amongst shareholders for the investment trust structure and the mandates which the Board gives its managers.

The Board has also assessed the viability of the Company in the light of the Board's statement in February 2019 that unless NAV outperformance is delivered from 1 February 2019 to 31 January 2021, the Board will put forward proposals which would include a full cash exit, as soon as reasonably practicable after 31 January 2021. That statement, and the Chair's Statement, also indicate that the Board remains confident that the Company's strategy can deliver long-term outperformance.

Based on the above, and in particular based on the assumption that the Company can deliver sufficient outperformance such that a full cash exit is not proposed after 31 January 2021, the Board confirms that it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of this assessment.

Approval

This Strategic Report has been approved by the Board and signed on its behalf by

Susan Platts-Martin

Chair

25 April 2019

BOARD OF DIRECTORS

Susan Platts-Martin - Chair

Dermot McMeekin - Senior Independent Director, Nomination and Remuneration Committee Chairman

Chris Ralph

Andrew Robson - Audit Committee Chairman

Diane Seymour-Williams

All of the Directors are members of the Audit Committee and of the Nomination and Remuneration Committee.

EXTRACTS FROM THE DIRECTORS' REPORT

Share capital 

At 31 January 2019, there were 65,944,000 Ordinary shares of 25p each in issue (2018: 65,944,000 Ordinary shares), of which 3,560,596 were held in treasury. At the 2018 AGM, the Directors were granted authority to buy back up to a maximum of 9,467,723 Ordinary shares. At 31 January 2019, the unused authority to buy back Ordinary shares was 8,690,865 Ordinary shares. This authority will expire at the conclusion of the 2019 AGM when the Directors will seek a renewal of the authority.

During the year to 31 January 2019, the Company repurchased a total of 852,346 Ordinary shares to hold in treasury representing 1.3% of the shares in issue (excluding shares held in treasury) as at the prior year end. The nominal value of Ordinary shares repurchased during the year was £213,086. The total consideration for these repurchases was £2,694,000.

Following the year end, the Company has repurchased a further 516,959 Ordinary shares to hold in treasury (as at 23 April 2019), with a nominal value of £129,240. The total consideration for these repurchases was £1,665,000.

At 23 April 2019, there were 65,944,000 Ordinary shares of 25p each in issue. 4,077,555 Ordinary shares were held in treasury, representing 6.2% of the issued Ordinary share capital as at 31 January 2019. Each Ordinary share carries one vote, therefore, the total votes in issue were 61,866,445.

The share purchases described above were performed in accordance with the Company's stated policy of buying back shares when the Company's shares are standing at a substantial and anomalous discount to their NAV.

The impact to the NAV as a result of the buy-back activity for the year ended 31 January 2019 was an enhancement of £0.5m or 0.8p per Ordinary share.

At the 2018 AGM, the Directors were also granted authority to allot ordinary shares up to an aggregate nominal amount of £1,580,130. No shares have been issued under this authority. This authority is due to expire at the conclusion of the next AGM, when proposals for its renewal will be sought.

Results and dividend

1 Revenue reserve excludes the proposed final dividend for the year ended 31 January 2019 of £2,784,000. Subject to approval by shareholders at the AGM, this dividend will be payable on 18 June 2019 to shareholders on the register on 17 May 2019 (see Chair's Statement above).

Continued appointment of portfolio managers

The Board, in conjunction with Witan Investment Services Limited ("WIS") and consultants, as appropriate, considers the performance of, the allocations to and the appointments of each of the portfolio managers on a regular basis and may alter either allocations or appointments if considered to be in the Company's interests. The Board made significant changes to its portfolio management appointments and allocation in September 2017, introducing two new portfolio managers (Robeco and Dalton). The Board recognises that investment performance in the year to 31 January 2019 has been disappointing, but also recognises that the new portfolio managers were appointed relatively recently, and believes that all its managers are well positioned to achieve long-term outperformance.

As at the date of this Report, the Directors are of the opinion that the continuing appointment of the four portfolio managers, on the terms agreed, is in the interests of shareholders as a whole.

Going concern

The activities of the Company, together with the factors likely to affect its future development, performance, financial position, its cash flows and liquidity position are described in the Strategic Report.

In addition, the Company's policies and processes for managing its key financial risks are described in note 16 below.

The assets of the Company consist mainly of securities which are readily realisable, and, as at 31 January 2019, the Company's total assets less current liabilities were £220 million. As a consequence, the Directors believe that the Company continues to be well placed to manage its business risks successfully. After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the next year. Accordingly, they continue to adopt the going concern basis in preparing this Annual Report and Accounts.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

in respect of the Annual Report and financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the net return or loss of the Company for that year.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

The financial statements are published on www.witanpacific.com, which is a website maintained by the Company's Executive Manager, Witan Investment Services Limited. The Directors are responsible for the maintenance and integrity of the Company's website. The work carried out by the Independent Auditors does not involve consideration of the maintenance and integrity of the website and accordingly, the Independent Auditors accept no responsibility for any changes that have occurred to the Annual Report and Accounts since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

The Directors consider that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed above, confirm that, to the best of their knowledge:

· the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law), give a true and fair view of the assets, liabilities, financial position and net loss of the Company;

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Susan Platts-Martin

Chair

25 April 2019

INCOME STATEMENT

for the year ended 31 January 2019

All revenue and capital items in the above statement derive from continuing operations. The total columns of this statement represent the Income Statement of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

The notes below form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 January 2019

The notes below form an integral part of these financial statements.

BALANCE SHEET

as at 31 January 2019 

The financial statements were authorised and approved by the Board of Directors of Witan Pacific Investment Trust plc on 25 April 2019 and signed on its behalf by:

Susan Platts-Martin, Chair

The notes below form an integral part of these financial statements.

Company Registration Number 91798

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 January 2019

1 Significant accounting policies

(a) Basis of accounting

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in the UK ("UK GAAP"), including the Companies Act 2006, Financial Reporting Standard 102 ("FRS 102") and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted. The accounting policies have been applied consistently throughout the year.

The financial statements have been prepared under the historical cost basis except for the measurement of fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Sections 11 and 12 of the standard. All of the Company's operations are of a continuing nature.

As an investment fund, the Company has the option, which it has taken, not to present a cash flow statement. A cash flow statement is not required when an investment fund meets all the following conditions: substantially all of the entity's investments are highly liquid and are carried at market value; and where a Statement of Changes in Equity is provided.

(b) Valuation of investments

All investments have been designated upon initial recognition as fair value through profit or loss. This is because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis.

Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss.

Listed investments have been designated by the Board as held at fair value through profit or loss and accordingly are valued at fair value, deemed to be bid market prices for quoted investments and therefore included in Level 1 investments. Investments included in Level 2 under the Fair Value Hierarchy disclosures in note 16(g) consist of unlisted reportable funds within the portfolio, these being Aberdeen Global Indian Equity UCITS and Aberdeen Global China A Equity UCITS. These are priced daily using their net asset value, which is the fair value.

Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as "Gains or losses on investments held at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. All purchases and sales are accounted for on a trade date basis.

(c) Foreign currency

The results and financial position of the Company are expressed in pounds sterling, which is the functional and presentation currency of the Company and rounded to the nearest £'000.

The Directors, having regard to the currency of the Company's share capital and the predominant currency in which the Company operates, have determined the functional currency to be pounds sterling. The results and financial position of the Company are therefore expressed in pounds sterling.

Transactions recorded in foreign currencies during the year are translated into sterling at the appropriate daily exchange rates. Monetary assets and liabilities denominated in overseas currencies (including equity investments) at the year end date are translated into sterling at the exchange rates ruling at that date.

Any gains or losses on the translation of foreign currency balances, whether realised or unrealised, are taken to the capital or revenue return of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature.

(d) Income

Income from equity shares is brought into the revenue return of the Income Statement (except where, in the opinion of the Directors, its nature indicates it should be recognised as capital return) on the ex-dividend date, or where no ex-dividend date is quoted, when the Company's right to receive payment is established.

Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital reserve.

Any bank interest and underwriting commission is accounted for on an accruals basis.

(e) Expenses including finance costs

Finance costs are accounted for on an accruals basis. Finance costs are fully allocated to revenue.

The management fees are charged 25% to the revenue return and 75% to the capital return of the Income Statement.

In previous years, management fee rebates of the fee on Gavekal Asian Opportunities UCITS have been credited against management fees paid.

All other expenses are charged to the revenue return of the Income Statement, with the exception of the following which are charged to the capital return of the Income Statement:

· performance fees/repayments insofar as they relate to capital performance; and

· expenses incidental to the acquisition or disposal of investments.

All expenses are accounted for on an accruals basis.

(f) Taxation

The tax effect of different items of expenditure is allocated between capital and revenue on the marginal basis using the Company's effective rate of corporation taxation for the accounting period.

Deferred taxation is provided on all timing differences that have originated but not been reversed by the year end date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money.

 (g) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business.

(h) Repurchase of Ordinary shares

The cost of repurchasing Ordinary shares including related stamp duty and transaction costs is taken directly to equity and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis.

(i) Capital reserves

Capital reserve arising on investments sold

The following transactions are accounted for in this reserve:

· gains and losses on the realisation of fixed asset investments;

· realised exchange differences of a capital nature;

· costs of professional advice, including irrecoverable VAT, relating to the capital structure of the Company;

· other capital charges and credits charged or credited to this account in accordance with the above policies; and

· cost of purchasing Ordinary share capital.

Capital reserve arising on investments held

The following transactions are accounted for in this reserve:

· increase and decrease in the valuation of investments held at year end; and

· unrealised exchange differences of a capital nature.

(j) Dividends payable

In accordance with FRS 102, final dividends are not accrued in the financial statements unless they have been approved by shareholders before the year end date. Interim dividends are recorded in the financial statements when they are paid. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been approved by shareholders in the case of a final dividend, or paid in the case of an interim dividend and become a liability of the Company.

(k) Critical accounting estimates

In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not always readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may vary from these estimates. Excluding the provisions for any performance fees payable, of which there are none this year (2018: none), the Directors do not consider there are any such items in the financial statements.

Details of the performance fee and the basis for the calculation of performance fees payable at the Balance Sheet date is disclosed in note 11, including the assumptions made by the Directors in computing the provision.

2 Investment income

3 Management and performance fees

1 The management fees stated above include fees paid to Witan Investment Services Limited of £290,000 (2018: £296,000).

2 This figure relates to rebates of management fees associated with the Gavekal Asian Opportunities UCITS.

Management fees are charged 75% to capital return and 25% to revenue return respectively.

The allocation percentages approximate to the split of historic returns between capital and income and reflect the Board's expectation of the long-term split of returns in compliance with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. Performance fees, when payable, will be charged wholly to the capital account.

Further details of management fees can be found in note 17.

4 Other expenses

1 Costs in 2018 relate primarily to a Board visit to the Asia pacific region, which is conducted every two to three years to meet the portfolio managers and the other industry participants.

2 The marketing expense stated above includes fees paid to Witan Investment Services Limited of £75,000 (2018: £75,000).

3 Costs in the current year include professional fees in respect of reclaims of foreign taxes, professional fees in relation to foreign tax compliance and fees for advice on the introduction of GDPR.

Additional information concerning transactions with Directors and Directors' fees can be found in the Directors' Remuneration Report in the full Annual Report.

5 Taxation

a) Analysis of tax charge for the year

(b) Factors affecting tax charge for the year

The effective UK corporation tax rate is 19% (2018: 19.17%). The tax assessed for the year is higher (2018: lower) than the UK corporation tax rate. The differences are explained below:

1 These items are not subject to corporation tax within an investment trust company provided the Company obtains approval from HM Revenue & Customs ("HMRC") that the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 have been met.

(c) Deferred taxation

The Company has not recognised a deferred tax asset of £3,063,000 (2018: £2,637,000) arising as a result of excess management expenses and interest paid. These expenses will only be utilised if the Company has profits chargeable to corporation tax in the future. It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and deficits and therefore no deferred tax asset has been recognised.

(d) Protective claim

Witan Pacific has filed protective claims with HMRC and the UK High Court in order to seek recovery of potentially overpaid taxes from HMRC in relation to the UK's pre-2009 dividend tax rules. The claims cover historic periods in which Witan Pacific paid UK tax under Schedule D Case V. In such periods, Witan Pacific is seeking recovery of the tax paid together with interest on a compound basis. No tax or related interest recovery has been accrued or recognised as a contingent asset, as the outcome of lead cases in this area is uncertain at this time.

6 (Loss)/return per Ordinary share

The total loss per Ordinary share is based on the net loss attributable to the Ordinary shares of £18,215,000 (2018: gain of £35,858,000) and on 62,888,550 Ordinary shares (2018: 63,560,181), being the weighted average number of shares in issue during the year.

The total (loss)/return can be analysed as follows:

The Company does not have any dilutive securities.

7 Dividends

The proposed final dividend for the year ended 31 January 2019 is subject to approval by shareholders at the AGM and has not been included as a liability in these financial statements.

The total dividend payable in respect of the financial year which meets the requirements of Section 1158 of the Corporation Tax Act 2010 is set out below.

8 Investments held at fair value through profit or loss

Purchase transaction costs for the year ended 31 January 2019 were £89,000 (2018: £180,000). Sale transaction costs for the year ended 31 January 2019 were £123,000 (2017: £183,000). These comprise mainly charges and commission. The portfolio manager changes that occurred during the year ended 31 January 2018 have contributed to the uplift in transaction costs during that year.

(Losses)/gains on investments

Substantial interests

At 31 January 2019, the Company did not hold more than 3% of one class of the share capital of one of the undertakings held as investments (2018: none).

All investments are quoted on recognised stock exchanges or are UCITS Funds with published net asset values.

9 Debtors

10 Creditors: amounts falling due within one year

11 Provisions for liabilities and charges

Aberdeen Asset Managers Limited ("Aberdeen") is entitled to a performance fee based on relative outperformance against the MSCI AC Asia Pacific Index (sterling adjusted total return). The performance fee is calculated according to investment performance over a three-year rolling period and is payable at a rate of 15% of the calculated outperformance relative to the benchmark (subject to a cap).

Any provisions included in the Income Statement at 31 January 2019 are calculated on the actual performance of Aberdeen relative to the benchmark index. The provision is computed applying the following assumptions:

· that the benchmark index remains unchanged;

· Aberdeen's assets under management perform in line with the benchmark index to 31 May 2019, being the date the next performance period ends; and

· the future value of assets for performance fees purposes is the same as that at the Balance Sheet date.

In addition, provisions are made where necessary for the performance periods ending 31 May 2020 and 31 May 2021, applying the same assumptions as above. The total of all these provisions as at 31 January 2019 amounts to £nil (31 January 2018: £nil).

Changes in the level of accrual for future performance periods could arise for one of three principal reasons: a change in the degree of relative performance, the time elapsed (since this would increase the proportion of the rolling three-year performance period to which the performance calculation would be applied) or the termination of Aberdeen's contract.

12 Called up share capital

In the year ended 31 January 2019, 852,346 Ordinary shares were purchased to be held in treasury at a total cost of £2,694,000. In the year ended 31 January 2018, there were 1,796,293 shares purchased to be held in treasury at a total cost of £5,395,000.

13 Capital redemption reserve

The capital redemption reserve is used to fund amounts equivalent to the nominal value of any of the Company's own shares purchased and cancelled.

14 Reserves

* Distributable reserve.

Under the terms of the Company's Articles of Association, sums standing to the credit of Capital Reserves are available for distribution only by way of redemption, purchase of any of the Company's own shares or by way of dividend. The Company may only distribute accumulated "realised" profits.

15 Net asset value per Ordinary share

Net asset values are based on net assets of £219,929,000 (2018: £244,455,000) and on 62,383,404 (2018: 63,235,750) Ordinary shares in issue at the year end excluding shares held in treasury. The net asset value per Ordinary share the 31 January 2019 was 352.54p (2018: 386.58p).

16 Risk management policies and procedures

As an investment trust, the Company invests in equities and other investments for the long term so as to achieve its objective as stated above. In pursuing its investment objective, the Company is exposed to a variety of financial risks that could result in either a reduction in the Company's net assets or a reduction in the revenue available for distribution by way of dividends.

These financial risks: market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit risk, and the Directors' approach to the management of these risks, are set out below. The Board of Directors and the Executive Manager coordinate the Company's risk management. The overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

The Board determines the objectives, policies and processes for managing the risks that are set out below, under the relevant risk category. The policies for the management of each risk have not changed from the previous accounting period.

(a) Market risk

The fair value of an instrument held by the Company may fluctuate due to changes in market prices. Market risk comprises - market price risk (see note 16(b)), currency risk (see note 16(c)) and interest rate risk (see note 16(d)). The portfolio managers assess the exposure to market risk when making each investment decision and monitor the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(b) Market price risk

Market price risks (changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.

Management of the risk

The Board of Directors manages the risks inherent in the investment portfolios by ensuring full and timely access to relevant information from the portfolio managers and through diversification at the stock level and of management style. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the portfolio managers' compliance with the Company's objectives, and is directly responsible for oversight of the investment strategy and asset allocation.

The market value of quoted investments at 31 January 2019 was £215,797,000 (2018: £240,565,000).

Concentration of exposure to market price risk

A geographical analysis of the Company's investment portfolio is shown above. This shows the significant amounts invested in China/Hong Kong, Japan, South Korea and Singapore. Accordingly, there is a concentration of exposure to those countries, though it is recognised that an investment's country of domicile or of listing does not necessarily equate to its exposure to the economic conditions in that country.

Market price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 25% (2018: 25%) in the fair value of the Company's investments. This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Company's investments at each year end date and the investment management fees for the year ended 31 January 2019, with all other variables held constant.

(c) Currency risk

Most of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency, and in which it reports its results). As a result, movements in exchange rates may affect the sterling value of those items.

Management of the risk

The portfolio managers monitor the Company's exposure to foreign currencies and report to the Board on a regular basis. The Executive Manager monitors the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the exchange rates to which the Company's assets, liabilities, income and expenses are exposed.

Foreign currency exposure

The table below shows, by currency, the split of the Company's non-sterling monetary assets and investments that are denominated in currencies other than sterling. The exposure is shown on a direct basis and not on a look-through basis.

Foreign currency sensitivity

The sensitivity of the total return after tax for the year and the net assets in regard to the movements in the Company's foreign currency financial assets and financial liabilities and the exchange rates for the top four risk currencies are set out in the table below:

It assumes the following changes in exchange rates:

£/US$ +/- 15% (2018: 15%)

£/HK$ +/- 15% (2018: 15%)

£/Yen +/- 15% (2018: 15%)

£/KRW +/- 15% (2018: 15%)

£/Other +/- 15% (2018: 15%)

These percentages have been determined based on the average market volatility in exchange rates in the previous five years and using the Company's foreign currency financial assets and financial liabilities held at each year end date.

If sterling had strengthened against the currencies shown, this would have had the following effect:

If sterling had weakened against the currencies shown, this would have had the following effect:

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently.

(d) Interest rate risk

Interest rate movements may affect the interest payable on the Company's variable rate borrowings where applicable.

Management of the risk

The majority of the Company's financial assets are non-interest bearing. As a result, the Company's financial assets are not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions.

Interest rate exposure

The exposure at 31 January 2019 of financial assets and financial liabilities to interest rate risk is shown by reference to floating interest rates - when the interest rate is due to be reset.

The Company does not have any fixed interest rate exposure at 31 January 2019 (2018: nil). Interest receivable and finance costs are at the following rates:

· Interest received on cash balances, or paid on bank overdrafts, is at a margin under LIBOR or its foreign currency equivalent (2018: same).

Interest rate sensitivity

The Company is not materially, directly exposed to changes in interest rates as the majority of financial assets are equity shares which do not pay interest. Therefore, the Company's total return and net assets are not materially affected by changes in interest rates.

(e) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the risk

Liquidity risk is not significant as the majority of the Company's assets are investments in quoted equities that are readily realisable.

The Board gives guidance to the portfolio managers as to the maximum amount of the Company's resources that should be invested in one company.

Liquidity risk exposure

The remaining contractual maturities of the financial liabilities at 31 January 2019, based on the earliest date on which payment can be required are as follows: