Highlights
The NAV total return of 29.4% outperformed the benchmark's return of 20.7%
NAV total return over last five years of 104%, 22% ahead of the benchmark
Dividend increased by 9.1% to 14.4p, 7.1% ahead of the rate of inflation
The 39th consecutive year of increased dividends
The discount narrowed from 10.2% to 6.1%
Summary
In 2013 Witan delivered a net asset value (NAV) total return of 29.4%, 8.7% more than our benchmark's total return of 20.7% and 8.6% more than the 20.8% return on the FTSE All-Share index of UK shares. The share price total return was 36.7%, enhanced by a narrowing in our share price discount to NAV.
The total dividend for the year was 14.4 pence per share (2012: 13.2 pence), an increase of 9.1%, marking the 39th consecutive year of rising dividends at Witan. This includes the fourth interim dividend of 4.5 pence declared in February 2014 and payable on 28 March 2014.
Over the past 5 years, despite the market gloom which initially followed the collapse of Lehman Brothers in 2008, Witan has achieved an NAV total return of +104%, compared with the +82% returns from our benchmark over this period (source: Datastream). It is encouraging to be able to report a healthy level of outperformance over the longer term, alongside the strong results achieved in 2013.
The returns were driven by widespread outperformance by our investment managers as well as the benefit of employing gearing, during a year of improving investor confidence and rising stock markets. Although this recovery in confidence is welcome, it is prudent to note that the rise in equity markets has reduced the safety margin previously provided by low valuations. The forthcoming reporting season will be important in confirming whether the growth that equity investors have anticipated is being realised.
The investment markets in 2013
Equity markets performed very well in 2013, helped by the absence of the crises and persistent disappointments that had characterised the previous two years. Economic growth was weak during the first part of the year but improved, encouraging equity markets to factor in better times in 2014. In the US, the economy sustained close to 2% growth, improving during the year despite a sharp tightening of fiscal policy. The UK avoided a "triple-dip" recession (and the earlier "second dip" was revised away by more up to-date economic figures) and began to see stronger growth. Japan's economy responded positively to the devaluation of the previously overvalued yen and even Europe saw a modest recovery from the recessionary conditions experienced at the start of the year.
