Preliminary Results

RNS Number : 6518J

Pacific Assets Trust PLC

01 April 2010

 



PACIFIC ASSETS TRUST PLC

PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 JANUARY 2010 (UNAUDITED)

DATE: 1 April 2010

Financial Highlights

·     Net asset value total return of 56.8 per cent

·     Share price total return of 55.0 per cent

·     Unchanged final dividend for the year of 1.29p per share

Chairman's Statement

After a nervous start to the year, stockmarkets in the Asia Pacific region rebounded strongly finishing the year with some of the best total returns in the world.  Following the coordinated implementation of stimulus policies by the world's major governments and central banks in response to the global financial crisis of 2008, liquidity conditions and macroeconomic data began to improve, and investor sentiment recovered. 

With a robust financial sector and faster economic growth prospects, Asia performed well.  Aggressive Chinese fiscal programmes were matched almost universally across the region leading to a marked revival in domestic economic activity.  However, the path of economic recovery was not smooth, and at times extremely fragile, exacerbated by the on-going process of deleveraging so desperately required in the western world.  This made for a challenging investment environment.

As explained in the Interim Report, the Company's strategy was reappraised towards the end of 2008 in light of the sharp deterioration in economic conditions at that time and the significant concerns which existed over the health of the global financial system. This led to the Manager adopting a more defensive strategy with a clear bias towards visible growth companies. With continuing uncertainties over the prospects for economic growth and stockmarket valuations, this defensive strategy continued throughout the year.

Against this backdrop, the Company's net asset value total return (with dividends reinvested) for the year was 56.8 per cent, which compares with the MSCI All Country Asia ex Japan Index return of 54.2 per cent. Within its peer group, the Company ended the year sixth out of the eight investment trusts with similar objectives. 

As shareholders may be aware, the Company compares its performance within a peer group of eight comparable investment trusts. However, it also publishes its performance against a regional index. In previous years, the Company reported against the MSCI All Country Far East Free ex Japan Index but, during the year, the Board decided that it is more appropriate to report against the MSCI All Country Asia ex Japan Index, as this index includes India where the Company has investments. 

Shareholder value

The share price increased by 52.7 per cent during the year, to 104.25p. At 31 January 2010 this represented a discount of 8.8 per cent to the net asset value per share, compared to a discount of 8.0 per cent as at 31 January 2009.

The Company did not buy back any shares during the year. However, the Board believes that it is important to have a buy back facility in place and will therefore seek to renew the share buy back authority at the forthcoming Annual General Meeting.

Gearing

As a result of the Manager's continuing cautious view of markets, the Company did not employ any of its borrowing facilities during the year. The Company has a flexible US dollar denominated facility which has been renewed since the end of the financial year and will provide it with the ability to put gearing in place when it is considered appropriate to do so.

Earnings and Dividends

The Company's revenue earnings per share for the year were 1.15p, which compares to 1.78p for the previous year. Investment income for the year was lower as companies in general reduced the levels of their distributions in light of reduced profitability and deteriorating economic conditions. However, there are now signs that corporate earnings are improving and this should lead to a recommencement of dividend increases.

The Company's objective is to achieve capital growth and, consequently, the dividend paying prospects of investee companies are of secondary importance when making investment decisions. However, in light of the Company's significant revenue reserves and an improving dividend outlook, the Board recommends an unchanged final dividend for the year of 1.29p per share, to be paid on 30 June 2010 to those shareholders on the register on 4 June 2010.

The Board reiterates the Company's capital growth objective and will review the dividend level again at the end of the current financial year.

Outlook

A consequence of the recent period of loose monetary and fiscal policies within the region has been an accumulation of inflationary pressures. In light of this, it is possible that stockmarkets will continue to be volatile as the authorities in different countries attempt to control inflation through interest rates and reigning in fiscal stimulus measures. The Manager continues to exercise a degree of caution, targeting investments in companies with strong balance sheets, visible growth prospects and solid market positioning.

In the longer term, however, the Board continues to believe in the growth prospects for the Asia Pacific region, with its relatively stable financial sector, rising domestic consumption and international competitiveness.

David Nichol

Chairman

PACIFIC ASSETS TRUST PLC

Income Statement

For the year ended 31 January 2010

	(Unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	48,665	48,665
Gains on derivative arrangements	-	39	39
Exchange differences	-	(204)	(204)
Income	2,545	-	2,545
Investment management fee	(281)	(842)	(1,123)
Other expenses	(728)	-	(728)
Net return before finance
costs and taxation	1,536	47,658	49,194
Interest payable	-	-	-
Return on ordinary activities
before tax	1,536	47,658	49,194
Tax on ordinary activities	(173)	-	(173)
Return attributable to
equity shareholders	1,363	47,658	49,021
Return per Ordinary Share (p):	1.15	40.27	41.42

The total column of this statement represents the profit and loss account of the Company.  A statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.

All revenue and capital items in the Income Statement derive from continuing operations.

No operations were acquired or discontinued in the year.

PACIFIC ASSETS TRUST PLC

Income Statement

For the year ended 31 January 2009

	(Audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Losses on investments	-	(61,943)	(61,943)
Exchange differences	-	(2,498)	(2,498)
Income	4,026	-	4,026
Investment management fee	(314)	(942)	(1,256)
Other expenses	(673)	-	(673)
Net return before finance
costs and taxation	3,039	(65,383)	(62,344)
Interest payable	(90)	(271)	(361)
Return on ordinary activities
before tax	2,949	(65,654)	(62,705)
Tax on ordinary activities	(846)	532	(314)
Return attributable to
equity shareholders	2,103	(65,122)	(63,019)
Return per Ordinary Share (p):	1.78	(55.03)	(53.25)

PACIFIC ASSETS TRUST PLC

Reconciliation of Movements in Shareholders' Funds

For the year ended 31 January

	(Unaudited)	(Audited)
	2010	2009
	£'000	£'000
Opening shareholders' funds	87,760	152,105
Return for the year	49,021	(63,019)
Dividends paid	(1,527)	(1,326)
Closing shareholders' funds	135,254	87,760

PACIFIC ASSETS TRUST PLC
Balance sheet
As at 31 January

		(Unaudited)	(Audited)
		2010	2009
		£'000	£'000
Fixed assets
Investments		134,419	83,487
Current assets
Debtors		236	1,299
Cash at bank and on deposit		819	3,879
		1,055	5,178
Creditors: amounts falling due within one year		(220)	(905)
Net current assets		835	4,273
Net assets		135,254	87,760
Capital and reserves
Called-up share capital		14,794	14,794
Share premium account		4	4
Capital redemption reserve		1,460	1,460
Special reserve		16,222	16,222
Capital reserve		98,610	50,952
Revenue reserve		4,164	4,328
Equity shareholders' funds		135,254	87,760
Net asset value per Ordinary Share (p):		114.28	74.15

PACIFIC ASSETS TRUST PLC

Cash Flow Statement

For the year ended 31 January

	(Unaudited)	(Audited)
	2010 £'000	2009 £'000
Operating activities
Investment income received	2,339	3,675
Deposit interest received	3	100
Investment management fee paid	(851)	(1,228)
Other cash payments	(539)	(768)
Net cash inflow from operating activities	952	1,779
Servicing of finance
Interest paid on bank loans and overdrafts	-	(381)
Net cash outflow from servicing of finance	-	(381)
Capital expenditure and financial investment
Purchase of futures	(1,813)	-
Disposal of futures	1,855	-
Purchase of investments	(45,711)	(101,286)
Disposal of investments	43,388	117,662
Net cash (outflow)/inflow from investing activities	(2,281)	16,376
Equity dividends paid	(1,527)	(1,326)
Net cash (outflow)/inflow before financing	(2,856)	16,448
Financing
Loans drawn down	-	10,508
Loans repaid	-	(23,716)
Net cash outflow from financing	-	(13,208)
(Decrease)/increase in cash	(2,856)	3,240
Reconciliation of net cash flow to movement in net funds
(Decrease)/Increase in cash in the year	(2,856)	3,240
Loans drawn down	-	(10,508)
Loans repaid	-	23,716
Change in net funds resulting from cash flows	(2,856)	16,448
Currency losses	(204)	(2,498)
Movement in net funds	(3,060)	13,950
Net funds/(debt) at 1 February	3,879	(10,071)
Net funds at 31 January	819	3,879

1.         The results have been prepared in accordance with applicable accounting standards and the AIC's Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued in January 2009.

The accounting policies adopted in the preparation of the annual report and financial statements are consistent with those followed in the previous year.

2.         Return per share is stated on a weighted average number of Ordinary Shares in issue during the year of 118,348,386 (2009 - 118,348,386).

3.         The Board has proposed a final dividend of 1.29p (2009 - 1.29p) per Ordinary Share payable on 30 June 2010 to shareholders on the Register on 4 June 2010.

4.         There were 118,348,386 Ordinary Shares in issue at 31 January 2010 (2009 - 118,348,386).

5.         This announcement is not the Company's statutory accounts.  The statutory accounts for the year to 31 January 2009, which were unqualified, have been lodged with the Registrar of Companies.  The statutory accounts for the year to 31 January 2010 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

6.         The report and accounts for the year are expected to be sent to shareholders in May 2010 and will be available for inspection at the Company's registered office, 80 George Street, Edinburgh EH2 3BU and the Company's website www.pacific-assets.co.uk.

For further information contact:

Peter Dalgliesh                      ) F&C Investment Business Limited:  0207 628 8000

Gordon Hay Smith                 )

 

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