Final Results

RNS Number : 3594R

Pacific Horizon Investment Tst PLC

11 September 2014

 



RNS Announcement: Preliminary Results

Pacific Horizon Investment Trust PLC

Results for the year to 31 July 2014

The following is the unaudited preliminary statement for the year to 31 July 2014 which was approved by the Board on 10 September 2014.

Chairman's Statement

Performance

In the year to 31 July 2014, the Company's net asset value per share (NAV) rose 10.4% which compares favourably against the equivalent 4.0% increase in the comparative index, MSCI All Country Asia ex Japan Index (in sterling terms). The share price increased by 13.4% and the discount narrowed from 13.9% to 11.5%.  The Managers' Review provides a more detailed review of the Company's performance along with comment on the various markets in which the Company invests.

The Board is pleased to report a significant improvement in the Company's results.  The Board holds regular discussions with the Managers about the performance of the Company's investment portfolio: it is pleasing to note that the Managers have achieved not only positive returns, but also strong outperformance against the comparative benchmark and the majority of the peer group over the period.

Earnings per share decreased from 1.66p to 1.40p.  The Board is recommending that a final dividend of 1.40p (2013 - 1.50p) should be paid. The ongoing charges of the Company were 1.01% (2013 - 1.15%).

Ewan Markson-Brown was appointed as portfolio manager in March 2014, with Roderick Snell as deputy, when Mike Gush stepped down. The Managers' investment process, philosophy and investment style has remained unchanged. 

Share Buy-backs and Discount

At the 2013 AGM, the Company obtained shareholder approval to implement, at the Board's discretion, a bi-annual tender offer for up to 5% of the Company's shares at a 2% discount to NAV, less costs, in the event that the discount averaged more than 9% during the six month periods to 31 January and 31 July 2014.  Over the first six month period to 31 January 2014, the Company's average discount was 11.3% and the Board implemented a 5% tender offer in April.  The Company's average discount for the six month period to 31 July 2014 was 10.2% and it has been decided to implement a 5% tender offer in respect of that period, applicable to shareholders on the register on 13 August 2014.  Details of how to tender your shares in respect of this 5% tender offer are contained within the Circular accompanying this Report.

In addition to the bi-annual tender offers, the Company has authority to buy back up to 14.99% of its shares on an ad hoc basis.  The Board uses this authority opportunistically, taking into account not only the level of the discount but also the underlying liquidity and trading volumes in the Company's shares. This approach allows the Board to seek to address any imbalance between the supply and demand for the Company's shares that results in a large discount to NAV; the Board is also mindful that current and potential shareholders require ongoing liquidity.

Through the exercise of both of these authorities, the Company bought back a total of 3,845,850 ordinary shares, representing 5.2% of the issued share capital as at 31 July 2013 during the year, at a cost of £6,966,000.

Subject to receiving the necessary shareholder approval at the forthcoming AGM, the Board intends to renew the bi-annual 5% tender offers, on the same terms as approved at the 2013 AGM, for the six month periods to 31 January 2015 and 31 July 2015.  Shareholders should note that these tender offers will, however, remain at the discretion of the Board and will be subject to prevailing market conditions, so they should place no expectation on these tender offers being implemented as a matter of course.  If such a tender offer is implemented, a separate circular and tender form will be sent to shareholders which will set out the full terms and conditions of the tender offer and the procedure for tendering shares.  At the forthcoming AGM, the Board will also be asking shareholders to renew the mandate to repurchase up to 14.99% of the outstanding shares. 

Gearing

The Company utilised a modest amount of gearing towards the end of its financial year by drawing down US$7 million under its credit facility with The Bank of New York Mellon to fund investment in a basket of Korean biotech companies.  At the year end, net gearing was equal to 2% of shareholders' funds.  Gearing was last used in 2006.

Contractual Arrangements

In order to comply with the requirements of the EU Alternative Investment Fund Managers Directive, the Company has appointed Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Manager ("AIFM") and Company Secretary with effect from 1 July 2014.  The Company's existing investment management agreement with Baillie Gifford & Co has been terminated.  The new management agreement is made on the same commercial terms as the previous agreement with Baillie Gifford & Co.  Under these new arrangements, the Company's portfolio will continue to be managed by Baillie Gifford & Co by way of a delegation agreement between Baillie Gifford & Co Limited and Baillie Gifford & Co.  In addition the Company has appointed BNY Mellon Trust & Depositary (UK) Limited as its Depositary. 

Annual General Meeting

This year's AGM will take place on 30 October 2014 at the offices of Baillie Gifford & Co in Edinburgh at 3.30pm.  The Managers will make a presentation and, along with the Directors, will answer any questions from shareholders.  I hope to see as many of you as possible there.

Outlook

Asian markets continue to make progress, with a particularly strong performance from India following the election.  Stocks in many of the geographic areas in which the Company invests appear better value than in many developed markets and the Board is optimistic that the Managers can capitalise on the growth prospects in the region over the medium to long term through an unchanged strategy of selecting sound companies at attractive valuations.

Jean Matterson

Chairman

10 September 2014

Past performance is not a guide to future performance. The value of Pacific Horizon shares and any income from those shares is not guaranteed and could go down as well as up

Managers' Review

Overview

The Company performed strongly over the last twelve months; net asset value increased by 10.4% in sterling terms whilst performance relative to the comparative index, which increased by 4.0%, was also good.  Much of the outperformance occurred in the first half of the year, especially during November and December 2013. Consistent with our fundamental, bottom up investment style, it is individual investments within the portfolio rather than specific sector or geographic exposures that have driven enhanced returns for our shareholders.

In recent years, the Company's philosophy of securing investments in companies with good long term growth prospects has been out of favour. Investment in companies displaying 'earnings certainty' is seen as a particularly attractive safe haven at a time of global economic volatility. A good example of the consequences of this approach has been the outperformance of investments in the consumer staples sector - a low exposure for the Company - where companies showing healthy, albeit unexciting, growth have been re-rated as investors seek less perceived risk in an uncertain investment environment. In contrast, our approach to investment is very different; the corporate characteristics we look for include strong growth potential, sustainable competitive advantages, attractive financials and sensible management. In addition, we continue to target stocks with what we consider to be very significant long term opportunities for enhanced future profitability, where a wider range of positive potential outcomes may lead to current mispricing.

Evidence over the last twelve months suggests that the relative attraction of so-called safe haven 'steady earnings' stocks appears to be waning as the market realises that the macro-economic environment may not be as bad as previously thought. This is leading to a positive re-rating of many of the companies we hold. This move by the market to reconsider companies with greater potential for long term growth, notwithstanding a more volatile earnings outlook, comes at an opportune time, as many companies are exhibiting rapid earnings increases.

Investment Background

The last twelve months have been volatile for Asian economies. China has gone through a significant slowdown in GDP growth, leading to a stalled economy in the first quarter of 2014, before the current rebound. In India, despite slowing GDP growth, the election of Narendra Modi was viewed positively by the markets and contributed to improving expectations on reform and the future growth of its economy. In the first half of last year, talk of tapering by the Federal Reserve led to a "temper tantrum" by stock markets and a strong sell-off of equities and currencies of the so-called "fragile-five", Indonesia, Turkey, Brazil, South Africa and India.

We expect the US economy to recover gradually but at a pace that does not elicit either a strong wage response or a significant tightening cycle. We note that the US current account deficit has continued to contract within this economic upcycle, an unusual event which may indicate an economic renaissance for the US, especially in the energy and manufacturing sectors. This would affect the rest of the world in two ways; firstly, a shrinkage of dollars available to facilitate global trade and, secondly, a deceleration of US imports. This may have been the cause of the very weak export growth from Asia over the last twelve months; however, we are anticipating gradual improvement here. More importantly, from the perspective of our portfolio, we see the potential advent of a new global capital expenditure cycle, one both focused on technology investment rather than fixed assets and driven by the exponential growth in data usage due to smartphone penetration and the resultant changes in consumer behaviour.

Our technology holdings should be well-placed to benefit from such a development. Examples of our technology focussed holdings include the Taiwanese integrated circuit design company MediaTek, Chinese internet business Tencent, Indian IT services business Tech Mahindra and Taiwan Semiconductor Manufacturing (TSMC), a Taiwanese foundry which manufactures semiconductor chips.

The expected rate and composition of the economic growth of China has a significant impact on the investment environment for a large number of companies in our investment universe. Here, economic growth has slowed considerably and expectations are for this to continue for the next few years.  The Chinese government has embarked on a reform drive that we believe will, in the medium term, have profound effects on the economy and region. It seems that China's recent approach to generating economic growth, one of moving underutilised assets into more efficient production processes, i.e. farm labourers into manufacturing workers, is having less of a positive impact. There is potential for a new model of growth to develop, one of commercial and industrial transformation based on R&D, creative industries and innovation. It appears that the Chinese government recognises the necessity of these changes, although the existence of large vested interests will make the move from a state-run asset heavy growth model to a private sector innovation growth model slow and difficult. Despite these issues, many companies will benefit from such a shift in emphasis. Historically, stock markets have tended to reward companies and economic systems where it is believed pro-market reforms are being implemented.

This transition from an investment-led to an innovation-led Chinese economy significantly influences our investment approach. The Company has limited holdings in the materials sector at present, driven by a belief that weakening investment spending from China will likely have a detrimental effect on the demand for commodities in general. We are cautious on the outlook for the high-end property and luxury retail sectors.  These are areas that have benefited hugely from excess profits accruing to a narrow segment of society and current returns are unlikely to be sustained; we have seen weakness in these areas and expect more problems to come. Our preference is to invest in those areas likely to benefit from this economic shift, such as Sinopec and Towngas China in the gas industry, where State Owned Enterprise reform is already occurring, or those operating in the internet environment, such as Baidu, JD.com and Tencent.

Over the past year India has undergone the greatest change of perception in any country within our investment universe. In August 2013, the currency was in freefall as the market fretted about the deficits in the national budget and in foreign trade, and the failure of the political system to facilitate growth. Today, the currency has appreciated mildly whilst the stock market is at an all-time high following the election of India's first pro-reform majority government since independence in 1947. Here, we believe the economic and political outlook is highly favourable for companies and stock investors, both from a cyclical, given the steep declines in growth over the last two years, and a longer-term perspective. Historically, the first three years of a new government in India have tended to be highly positive for stock market returns and we believe that the current improving economic environment is conducive for such a scenario.

We see the rise of mobile communications use in Asia as an enabler in breaking down previous barriers to entry for many companies, increasing competition and forcing all companies to have a digital strategy. Given the technology and export focus of Korean and Taiwanese industry, these former 'Tiger economies' are well placed to capitalise on the regional corporate need to upgrade technology systems. Companies that should be beneficiaries of this include SK Hynix, Advantech and Phison.

The other challenge we highlighted last year was investor euphoria surrounding some of the smaller emerging ASEAN markets; as a result, the Company has low investment exposure here. We remain resolute in our view that, in the absence of social and political reform, these economies are doing little more than storing up problems for the future. Foreign investment flows have added additional 'froth' to both debt and equity valuations which, in our view, makes the better performing companies, look expensive despite specific investment attractions. We believe these countries' credit cycles are over extended and they do not seemingly benefit from the innovation led growth, which is where we believe there are fundamental investment opportunities. The Company's exposure to these markets remains limited.

Portfolio Review

Technology companies now account for over forty percent of the Company's investments by value, a function of the number of what we consider to be exciting opportunities for investment in this sector. Rather than being a homogenous group, the underlying companies benefit from a number of different commercial advantages. The largest single holding for the Company is Samsung Electronics, a company that has invested billions of dollars in successful innovation over many years. During the year we bought SK Hynix, the world's second largest producer of DRAM (memory chips) behind Samsung. Other globally competitive holdings include TSMC, the world's largest foundry business, and Hon Hai Precision Industries, the world's largest electronic manufacturing service provider. It is difficult to imagine a home anywhere in the developed world that does not contain at least one product that has passed through the facilities of one of these two companies.

A second group of technology companies comprise of the internet businesses Baidu, Tencent, JD.com, Naver, Sohu, Yukou, Just Dial and Jumei International Holdings. These make up the largest absolute industry weight within the portfolio at 16%. Internet holdings have been part of the portfolio for a number of years.  In our view, each investment demonstrates a combination of strong growth potential, excellent business models and an entrepreneurial management approach.

A new addition to the technology holdings has been JD.com, the largest Chinese B2C retailer which also has one of the strongest logistics networks within the country. In India, we have bought into Just Dial, an internet local search engine which has the potential to dominate the online market for smaller and medium sized national enterprises. Another technology company in the top ten list of holdings is MediaTek. This business is benefiting from many of the same opportunities as Samsung Electronics and TSMC, particularly the global shift to mobile computing, although its focus is on lower end customers in developing markets.

The financial sector represents the Company's second largest position although we do not hold banks in a number of the larger countries - China, Korea and Taiwan - where we feel returns are likely to be challenged or depressed for many years.  In line with our investment approach, holdings are focused on the merits of the individual companies, be it the turnaround potential that new management brings at Federal Bank or new holdings like ICICI, where we see the return of a structural growth story.  Insurance is an altogether more exciting prospect for us; the Company holds significant positions in the Korean insurers Samsung Fire & Marine and Hyundai Marine & Fire and in China Life Insurance (Taiwan).  These should all benefit from a number of fundamental social and economic changes in the coming years, such as demographics, increased financial sophistication, increasing wealth and consequent development of the insurance markets to provide mitigation for the increased risks to which a more wealthy society is exposed.

In the energy sector we sold our investment in Kunlun Energy, previously one of our largest holdings, as worries over Chinese anti-corruption investigations stymied the investment case and the shares were subsequently de-rated.

The overall shape of the portfolio has not changed greatly over the last year, although we have been increasing weightings in areas where we believe significant opportunities exist for investment outperformance, for instance in India. The largest country exposures are Hong Kong and China, followed by Korea and then Taiwan. The Company retains little exposure to the smaller ASEAN markets.  By sector, aside from the largest two sectors discussed above, there have only been minor changes; excessive valuations amongst companies in the consumer sectors have led to further reductions in this part of the portfolio.

We have also bought our first significant holdings in the healthcare market, Naturalendo in Korea which produces a patented health drug recently launched in the US market, and a number of Korea biotech companies where we see significant potential. These investments represent a higher than normal level of volatility in both their share price and future revenue and profit generation potential; the risk of short-term losses is high. These holdings were funded using a small amount of gearing, for which we used our current borrowing facilities.

Outlook

It is our view that there is significant potential for positive returns from our region over the coming years. Our focus remains on investment in individual stocks which will benefit from the economic, social and technological changes which are in evidence across the region. We believe that our philosophy, process and investment style will reward our shareholders over the medium to long term.

Past performance is not a guide to future performance.

Income Statement (unaudited)

	For the year ended 31 July 2014			For the year ended 31 July 2013 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	13,723	13,723	-	7,229	7,229
Currency losses	-	(388)	(388)	-	(51)	(51)
Income (note 2)	2,550	-	2,550	2,967	-	2,967
Investment management fee (note 3)	(1,029)	-	(1,029)	(1,246)	-	(1,246)
Other administrative expenses	(342)	-	(342)	(314)	-	(314)
Net return before finance costs and taxation	1,179	13,335	14,514	1,407	7,178	8,585
Finance costs of borrowing	(6)	-	(6)	-	-	-
Net return on ordinary activities before taxation	1,173	13,335	14,508	1,407	7,178	8,585
Tax on ordinary activities	(154)	-	(154)	(165)	-	(165)
Net return on ordinary activities after taxation	1,019	13,335	14,354	1,242	7,178	8,420
Net return per ordinary share (note 4)	1.40p	18.32p	19.72p	1.66p	9.62p	11.28p

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued during the year.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

Balance Sheet (unaudited)

	At 31 July 2014		At 31 July 2013 (audited)
	£'000	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		143,675		132,831
Current assets
Debtors	431		554
Cash and short term deposits	1,274		1,573
	1,705		2,127
Creditors
Amounts falling due within one year (note 6)	(4,463)		(320)
Net current (liabilities)/assets		(2,758)		1,807
Total net assets		140,917		134,638
Capital and reserves
Called up share capital		7,013		7,397
Share premium		3,166		3,166
Special distributable reserve		-		6,499
Capital redemption reserve		18,780		18,396
Capital reserve		106,437		93,569
Revenue reserve		5,521		5,611
Shareholders' funds		140,917		134,638
Net asset value per ordinary share		200.95p		182.01p
Ordinary shares in issue	70,126,152		75,052,002

Reconciliation of Movements in Shareholders' Funds (unaudited)

For the year ended 31 July 2014

	Called up share capital £'000	Share premium £'000	Special distributable reserve £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 August 2013	7,397	3,166	6,499	18,396	93,569	5,611	134,638
Net return on ordinary activities after taxation	-	-	-	-	13,335	1,019	14,354
Shares purchased for cancellation (note 7)	(384)	-	(6,499)	384	(467)	-	(6,966)
Dividends paid during the year (note 5)	-	-	-	-	-	(1,109)	(1,109)
Shareholders' funds at 31 July 2014	7,013	3,166	-	18,780	106,437	5,521	140,917

For the year ended 31 July 2013 (audited)

	Called up share capital £'000	Share premium £'000	Special distributable reserve £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 August 2012	7,505	3,166	8,252	18,288	86,391	5,495	129,097
Net return on ordinary activities after taxation	-	-	-	-	7,178	1,242	8,420
Shares purchased for cancellation (note 7)	(108)	-	(1,753)	108	-	-	(1,753)
Dividends paid during the year (note 5)	-	-	-	-	-	(1,126)	(1,126)
Shareholders' funds at 31 July 2013	7,397	3,166	6,499	18,396	93,569	5,611	134,638

Cash Flow Statement (unaudited)

	For the year ended 31 July 2014		For the year ended 31 July 2013 (audited)
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities		889		1,218
Financial investment
Acquisitions of investments	(38,780)		(28,464)
Disposals of investments	41,909		29,688
Net cash inflow from financial investment		3,129		1,224
Equity dividend paid (note 5)		(1,109)		(1,126)
Net cash inflow before financing		2,909		1,316
Financing
Shares bought back (note 7)	(6,966)		(1,753)
Bank loans drawn down	4,124		-
Net cash outflow from financing		(2,842)		(1,753)
Increase/(decrease) in cash		67		(437)
Reconciliation of net cash flow to movement in net (debt)/funds
Increase/(decrease) in cash in the year		67		(437)
Translation difference		(366)		(51)
Increase in bank loans		(4,124)		-
Exchange movement on bank loans		(22)		-
Movement in net (debt)/funds in the year		(4,445)		(488)
Net funds at 1 August		1,573		2,061
Net (debt)/funds at 31 July		(2,872)		1,573
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return on ordinary activities before finance costs and taxation		14,514		8,585
Gains on investments		(13,723)		(7,229)
Currency losses		388		51
(Increase)/decrease in accrued income		(157)		39
Decrease/(increase) in other debtors		12		(17)
Decrease in creditors		(9)		(48)
Overseas tax suffered		(136)		(163)
Net cash inflow from operating activities		889		1,218

Thirty Largest Holdings at 31 July 2014 (unaudited)

Name	Country	Business	Value £'000	% of total assets ‡
Tencent Holdings	HK/China	Internet business	9,039	6.2
Samsung Electronics	Korea	Electronics company	8,120	5.6
Taiwan Semiconductor Manufacturing	Taiwan	Semiconductor manufacturer	6,712	4.6
Baidu	HK/China	Internet search provider	4,568	3.1
Tech Mahindra	India	IT services provider	4,450	3.1
Hon Hai Precision Industries	Taiwan	Electronic manufacturing services company	4,129	2.9
MediaTek	Taiwan	Integrated circuit design house	3,785	2.6
Naver	Korea	Internet company	3,664	2.5
Hyundai Glovis	Korea	Logistics company	3,636	2.5
China Petroleum & Chemical Corporation	HK/China	Integrated oil and gas producer	3,593	2.5
Hiwin Technologies	Taiwan	Automation equipment manufacturer	2,904	2.0
Reliance Industries	India	Oil and gas exploration and production	2,854	2.0
SK Hynix	Korea	Electronic component and device manufacturer	2,779	1.9
Federal Bank	India	Commercial bank	2,703	1.9
CNOOC	HK/China	Oil and gas exploration and production	2,632	1.8
Samsung Fire & Marine	Korea	Non-life insurance provider	2,600	1.8
Airtac International Group	Taiwan	Automation equipment manufacturer	2,575	1.8
China Life Insurance (Taiwan)	Taiwan	Life insurance provider	2,528	1.7
Haier Electronics Group	HK/China	Washing machine and water heater manufacturer	2,520	1.7
Advantech	Taiwan	Computer manufacturer	2,451	1.7
Hyundai Marine and Fire Insurance	Korea	Non-life insurance provider	2,451	1.7
Towngas China	HK/China	Gas distributor	2,401	1.7
Hyundai Mobis	Korea	Automotive parts producer	2,307	1.6
Mahindra & Mahindra	India	Conglomerate	2,285	1.6
ASM Pacific Technology	HK/China	Semiconductor equipment manufacturer	2,279	1.6
HCL Technologies	India	IT services provider	2,234	1.5
JD.Com	HK/China	Largest online direct sales company in China	2,162	1.5
Galaxy Entertainment Group	HK/China	Casino operator	2,159	1.5
Just Dial	India	Offers a search engine to users throughout India	2,036	1.4
Mindtree	India	IT services provider	1,942	1.3
			100,498	69.3

HK/China denotes Hong Kong and China

‡ Total assets less current liabilities, before deduction of borrowings.

Distribution of Portfolio (unaudited)

		At 31 July 2014 %	At 31 July 2013 %
Equities:	Hong Kong and China	28.8	33.7
	Korea	28.0	19.5
	Taiwan	18.7	16.6
	India	15.3	9.1
	Singapore	5.2	8.7
	Thailand	1.2	3.0
	Vietnam	1.2	2.2
	Indonesia	0.6	1.9
	Malaysia	-	2.5
	Philippines	-	1.5
Total equities		99.0	98.7
Net current assets		1.0	1.3
Total assets‡		100.0	100.0

‡      Total assets less current liabilities, before deduction of borrowings.

Notes to the Condensed Financial Statements (unaudited)

There are no dilutive or potentially dilutive shares in issue.

1.	The financial information within this preliminary announcement has been extracted from the unaudited financial statements for the year to 31 July 2014 and has been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 July 2013. In accordance with The Financial Reporting Council's guidance on going concern and liquidity risk the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. In accordance with the Company's Articles of Association, shareholders have the right to vote on the continuance of the Company, every five years, the next vote being in 2016. The Directors have no reason to believe that the continuation resolution will not be passed in 2016. After making enquiries and considering the future prospects of the Company and notwithstanding the above, the financial statements have been prepared on the going concern basis as it is the Directors' opinion that the Company will continue in operational existence for the foreseeable future. The Directors consider the Company's functional currency to be sterling as the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment.
2.		2014 £'000			2013 (audited) £'000
	Income
	Income from investments	2,550			2,967
		2,550			2,967
3.	In order to comply with the Alternative Investment Fund Managers Directive, with effect from 1 July 2014 the Company has terminated its investment management agreement with Baillie Gifford & Co and has appointed Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Manager ("AIFM") and Company Secretary. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. The notice periods and management fee are unchanged under these new arrangements. The Managers may terminate the Management Agreement on six months' notice and the Company may terminate on three months' notice. With effect from 1 April 2013, the annual management fee was reduced from the flat rate of 1% of net assets to a rate of 0.95% on the first £50m of net assets and 0.65% on the balance. Management fees are calculated on a quarterly basis.
4.			2014 £'000	2013 (audited) £'000
	Net return per ordinary share
	Revenue return on ordinary activities after taxation		1,019	1,242
	Capital return on ordinary activities after taxation		13,335	7,178
	Total return		14,354	8,420
	Weighted average number of ordinary shares in issue		72,777,640	74,625,072
	The net return per ordinary share figures are based on the above totals for revenue and capital and the weighted average number of ordinary shares in issue during the year.

Notes to the Condensed Financial Statements (unaudited) (ctd)

8.    

5.	Ordinary Dividends Amounts recognised as distributions in the year:	2014	2013 (audited)	2014 £'000	2013 (audited) £'000
	Previous year's final (paid 4 November 2013)	1.50p	1.50p	1,109	1,126
	We also set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered. The revenue for the year available for distribution by way of dividend is £1,019,000 (2013 - £1,242,000).
	Ordinary Dividends Amounts paid and proposed in respect of the financial year:	2014	2013 (audited)	2014 £'000	2013 (audited) £'000
	Proposed final dividend per ordinary share (payable 5 November 2014)	1.40p	1.50p	982	1,110
	If approved, the recommended final dividend of 1.40p per ordinary share for the year ended 31 July 2014 will be paid on 5 November 2014 to shareholders on the register at the close of business on 10 October 2014. The ex-dividend date is 9 October 2014. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for elections for this dividend is 15 October 2014.
6.	The Company has a £20 million one year uncommitted floating rate revolving credit facility with The Bank of New York Mellon. During the year the Company drew down US$7 million under the facility at a rate of 1.5326%, maturing on 23 September 2014.
7.	The Company has authority to buy back up to 14.99% of its shares on an ad hoc basis and to implement bi-annual tender offers for up to 5% of its shares in the event that the discount averaged more than 9% during the six months periods to 31 January and 31 July 2014. The Board implemented a 5% tender offer in April in respect of the tender period to 31 January 2014. Through the exercise of both of these authorities the Company bought back a total of 3,845,850 (2013 - 1,080,000) ordinary shares at a total cost of £6,966,000 (2013 - 1,753,000) during the year. The nominal value of these shares was £384,000 and represented 5.2% of the issued share capital at 31 July 2013. At 31 July 2014 the Company had authority to buy back a further 10,910,168 ordinary shares. The Company also has authority to allot shares under Section 551 of the Companies Act 2006. In the years to 31 July 2014 and 31 July 2013 no shares were issued.
8.	The Company incurred transaction costs on purchases of £65,000 (2013 - £69,000) and on sales of £97,000 (2013 - £71,000), being £162,000 (2013 - £140,000) in total.
9.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 July 2014. The financial information for 2013 is derived from the statutory accounts for 2013. Those accounts have been delivered to the Registrar of Companies. The Auditors have reported on the 2013 accounts, their report was unqualified and did not contain a statement under Section 495, 496 and 497 of the Companies Act 2006. The statutory accounts for 2014 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
10.	The Report and Accounts will be available on the Company's page on the Managers' website www.pacifichorizon.co.uk‡ on or around 29 September 2014.

‡      Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Pacific Horizon Investment Trust PLC (Pacific Horizon) aims to achieve capital growth through investment in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent. The Company has total assets of £145 million.

Pacific Horizon is managed by Baillie Gifford & Co Limited, the Edinburgh based fund management group.

Past performance is not a guide to future performance. As Pacific Horizon is a listed UK company, the value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested. As Pacific Horizon invests in overseas securities, changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up. Pacific Horizon invests in emerging markets where difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment. Shareholders in Pacific Horizon have the right to vote every five years, on whether to continue Pacific Horizon, or wind it up. If the shareholders decide to wind the Company up, the assets will be sold and you will receive a cash sum in relation to your shareholding. The next vote will be held at the Annual General Meeting in 2016. Pacific Horizon is a UK public listed company and as such complies with the requirements of the UK Listing Authority. It is not authorised or regulated by the Financial Conduct Authority. You can find up to date performance information about Pacific Horizon on the Pacific Horizon page of the Managers' website at www.pacifichorizon.co.uk. Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

11 September 2014

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For further information please contact:

James Budden,

Baillie Gifford & Co                               0131 275 2000

Roland Cross

Broadgate Mainland                               020 7726 6111

 

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