Half Yearly Report

RNS Number : 4677I

Pacific Horizon Investment Tst PLC

12 March 2010

 



PACIFIC HORIZON INVESTMENT TRUST PLC

Results for the six months to 31 January 2010

In the six months to 31 January 2010, Pacific Horizon's net asset value per share rose by 10.2% whilst the MSCI All Country far East ex Japan Index in sterling terms rose by 7.5%.  The share price rose by 9.2%.

·	Performance was aided by good stock selection in Hong Kong and China and from positions in technology stocks. Some of the property and Chinese telecom holdings were the main detractors to performance. The Company remained ungeared during the period.
·	Earnings per share for the six months were 0.10p compared to 1.33p in the first half of the previous year.  As in previous years, no interim dividend will be paid and it is likely that the final dividend will be lower than the previous year.
·	With domestic consumption increasing and government spending remaining strong, the outlook for Asia remains encouraging.
·	The Managers continue to believe that valuations remain attractive given the growth prospects and quality of companies in which they can invest.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stockmarkets in which the Company invests and by the supply and demand for the Company's shares. You can find up to date performance information about Pacific Horizon Investment Trust PLC at www.pacifichorizon.co.uk.

Pacific Horizon Investment Trust PLC (Pacific Horizon) aims to achieve capital growth through investment in the stockmarkets of the Asia-Pacific region (excluding Japan) and in the stockmarkets of the Indian Sub-continent. The Company has total assets of £117 million.

Baillie Gifford & Co, the Edinburgh based fund management group with over £60 billion under management and advice, as at 11 March 2010, is appointed as investment managers and secretaries to Pacific Horizon.

12 March 2010

-     ends   -

For further information please contact:

Anzelm Cydzik

Baillie Gifford & Co                                                                              0131 275 3276

Roland Cross, Director,

Broadgate Marketing                                                                            020 7726 6111

The following is the unaudited Half-Yearly Financial Report for the six months

to 31 January 2010

 

PACIFIC HORIZON INVESTMENT TRUST PLC

Half-Yearly Financial Report 31 January 2010

Responsibility Statement

 

We confirm that to the best of our knowledge:

a)   the condensed set of financial statements has been prepared in accordance with the Accounting Standards Board's statement "Half-Yearly Financial Reports";

b)   the Half-Yearly Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (indication of important events during the first six months, their impact on the financial statements and a description of the principal risks and uncertainties for the remaining six months of the year); and

c)   the Half-Yearly Financial Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Peter Mackay

Chairman

11 March 2010

PACIFIC HORIZON INVESTMENT TRUST PLC

Half-Yearly Management Report

Results

In the six months to 31 January 2010 the net asset value per share rose 10.2% to 149.03p. Over the same period the MSCI All Country Far East ex Japan Index rose 7.5% in sterling terms.

Performance of regional markets was strong during the period with all markets benefiting from sterling weakness. The best performing markets were Indonesia, Thailand and Taiwan posting gains of 23.4%, 18.4% and 14.7% in sterling terms respectively. The weakest were China and Hong Kong with both only just posting gains in sterling terms.

Performance of the Company has been satisfactory over the period, outperforming the comparative index by 2.7 percentage points. The large position in technology stocks has worked well, with strong performance from a number of top ten holdings such as ZTE, the Chinese telecommunications equipment provider, and Hon Hai Precision Industries, the Taiwanese electronic manufacturing services business. Other notable contributors were Li & Fung, the Hong Kong based supply chain manager, and CNPC Hong Kong, the Chinese energy company and single largest holding for the Company. The main detractors to performance during the half year have been some of the property holdings and the Chinese telecom stocks.

The Asia Pacific region has staged a remarkable recovery over the past year, albeit the pace moderated recently. Over the past six months we have witnessed indications that Asia's recovery is sustainable with domestic consumption increasing and government spending remaining strong. China, the weakest performer over the interim period, has unsurprisingly been the focus of attention. Whilst the re-emergence of this nation remains one of the most significant investment themes of our time it is difficult to claim that this is not appreciated widely. With growth once again accelerating and the early signs of excess in the property market returning, the government has been fast to raise the reserve requirement for banks; a signal that the pace of lending has to slow. Despite much market commentary surrounding these developments, we believe a more measured rate of growth would be a more acceptable outcome. We continue to search for those companies exhibiting not only excellent growth prospects, but also a sustainable competitive edge, that should allow them to outperform over the longer term.

Whilst China may be grabbing the headlines, it is certainly not the only country worth talking about. India is a country with considerable potential. Over the period we have allocated more money to businesses located there. Despite a bad monsoon affecting agricultural production, economic growth has been remarkably strong with industrial activity picking up. Rural consumption remains very strong and we believe this will be a key driver of economic activity in the years ahead. Some of the strongest markets over the period have been in the ASEAN region. Economic growth in both Indonesia and Thailand has surprised on the upside and both nations have enjoyed a period of political stability over the past year. If the political background remains benign we believe the prospects for both countries could be better than most expect.

Outlook

The long term attractions of the region continue to be as bright as they have ever been. Features we have pointed to in the past, such as the many structural factors supporting growth, the low aggregate leverage levels and accommodative monetary and fiscal policies, remain in place and continue to back our optimism for future investment returns in the region. China continues to be a central topic of debate, and here, although in the short term there may be some unwelcome surprises, in the long term its re-emergence as a leading force in the global economy and the investment opportunities that this will present will surely be tremendous. We continue to believe that valuations across the region remain attractive given the excellent growth prospects and quality of companies we can invest in. The Company remains ungeared with a low cash balance and expects to be able to take advantage of opportunities as they arise.

The principal risks and uncertainties facing the Company are set out in note 9 of this report.

PACIFIC HORIZON INVESTMENT TRUST PLC

INCOME STATEMENT

(unaudited)

	for the six months ended 31 January 2010				for the six months ended 31 January 2009				for the year ended 31 July 2009
	Revenue £’000	Capital £’000	Total £’000		Revenue £’000	Capital £’000	Total £’000		Revenue £’000	Capital £’000	Total £’000
Gains/(losses) on sales of investments	-	6,640	6,640		-	(8,701)	(8,701)		-	(7,393)	(7,393)
Changes in investment holding gains/(losses)	-	5,580	5,580		-	(26,307)	(26,307)		-	6,376	6,376
Currency (losses)/gains	-	(72)	(72)		-	968	968		-	803	803
Income from investments and interest receivable	846	-	846		1,903	-	1,903		3,579	-	3,579
Investment management fee	(570)	-	(570)		(334)	-	(334)		(814)	-	(814)
Other administrative expenses	(159)	-	(159)		(125)	-	(125)		(249)	-	(249)
Net return on ordinary activities before taxation	117	12,148	12,265		1,444	(34,040)	(32,596)		2,516	(214)	2,302
Tax on ordinary activities	(39)	-	(39)		(404)	-	(404)		(601)	-	(601)
Net return on ordinary activities after taxation	78	12,148	12,226		1,040	(34,040)	(33,000)		1,915	(214)	1,701
Net return per ordinary share (note 4)	0.10p	15.52p	15.62p		1.33p	(43.48p)	(42.15p)		2.44p	(0.27p)	2.17p
Note: Dividend paid and proposed per ordinary share (note 5)	-				-				1.80p

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

    All revenue and capital items in the above 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.

  PACIFIC HORIZON INVESTMENT TRUST PLC

BALANCE SHEET

 (unaudited)

	At 31 January 2010		At 31 January 2009		At 31 July 2009
	£'000		£'000		£'000
FIXED ASSETS
Investments held at fair value through profit or loss	115,731		67,145		103,831
CURRENT ASSETS
Debtors	155		212		350
Cash and short term deposits	1,772		4,430		2,119
	1,927		4,642		2,469
CREDITORS Amounts falling due within one year (note 6)	(990)		(608)		(449)
NET CURRENT ASSETS	937		4,034		2,020
TOTAL ASSETS LESS CURRENT LIABILITIES	116,668		71,179		105,851
PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation	-		(29)		-
	116,668		71,150		105,851
CAPITAL AND RESERVES
Called-up share capital	7,829		7,829		7,829
Share premium	3,166		3,166		3,166
Special distributable reserve	13,233		13,233		13,233
Capital redemption reserve	17,964		17,964		17,964
Capital reserve	71,071		25,097		58,923
Revenue reserve	3,405		3,861		4,736
EQUITY SHAREHOLDERS' FUNDS	116,668		71,150		105,851

NET ASSET VALUE PER ORDINARY SHARE	149.03p	90.88p	135.21p
ORDINARY SHARES IN ISSUE (note 7)	78,287,002	78,287,002	78,287,002

 

  PACIFIC HORIZON INVESTMENT TRUST PLC

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited)

For the six months ended 31 January 2010

	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 2009	7,829	3,166	13,233	17,964	58,923	4,736	105,851
Net return on ordinary activities after taxation	-	-	-	-	12,148	78	12,226
Dividends paid during the period (note 5)	-	-	-	-	-	(1,409)	(1,409)
Shareholders' funds at 31 January 2010	7,829	3,166	13,233	17,964	71,071	3,405	116,668

For the six months ended 31 January 2009

 

	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 2008	7,829	3,166	13,233	17,964	59,137	3,839	105,168
Net return on ordinary activities after taxation	-	-	-	-	(34,040)	1,040	(33,000)
Dividends paid during the period (note 5)	-	-	-	-	-	(1,018)	(1,018)
Shareholders' funds at 31 January 2009	7,829	3,166	13,233	17,964	25,097	3,861	71,150

 

For the year ended 31 July 2009

	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 2008	7,829	3,166	13,233	17,964	59,137	3,839	105,168
Net return on ordinary activities after taxation	-	-	-	-	(214)	1,915	1,701
Dividends paid during the period (note 5)	-	-	-	-	-	(1,018)	(1,018)
Shareholders' funds at 31 July 2009	7,829	3,166	13,233	17,964	58,923	4,736	105,851

^{†The Capital reserve balance at 31 January 2010 includes a gain of £25,297,000 relating to the revaluation of investments (31 January 2009 - loss of £12,967,000 and 31 July 2009 - gain of £19,716,000).}

PACIFIC HORIZON INVESTMENT TRUST PLC

CONDENSED CASH FLOW STATEMENT (unaudited)
	Six months to 31 January 2010	Six months to 31 January 2009			Year to 31 July 2009
	£'000			£'000		£'000
Net cash inflow from operating activities	221			2,281		2,886
Total tax paid	(140)			(226)		(632)
Net cash inflow/(outflow) from financial investment	981			(2,316)		(4,826)
Equity dividend paid (note 5)	(1,409)			(1,018)		(1,018)
NET CASH OUTFLOW BEFORE FINANCING	(347)			(1,279)		(3,590)
Proceeds from issue of shares (note 7)	-			-		-
DECREASE IN CASH	(347)			(1,279)		(3,590)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Decrease in cash in the period	(347)			(1,279)		(3,590)
MOVEMENT IN NET FUNDS IN THE PERIOD	(347)			(1,279)		(3,590)
Net funds at start of the period	2,119			5,709		5,709
NET FUNDS AT END OF THE PERIOD	1,772			4,430		2,119
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	12,265			(32,596)		2,302
(Gains)/losses on investments - securities	(12,220)			35,008		1,017
Currency losses/(gains)	72			(968)		(803)
Amortisation of fixed interest book cost	-			(140)		(326)
Changes in debtors and creditors	226			75		33
Realised currency (loss)/gain	(72)			968		803
Overseas tax suffered	(50)			(66)		(140)
NET CASH INFLOW FROM OPERATING ACTIVITIES	221			2,281		2,886

PACIFIC HORIZON INVESTMENT TRUST PLC                                                                                                                                   

THIRTY LARGEST EQUITY HOLDINGS  at 31 January 2010 (unaudited)

Name	Country	Business	Value £'000	% of total assets†
CNPC Hong Kong	Hong Kong and China	Oil and gas exploration and production	6,022	5.2
Samsung Electronics	Korea	Semiconductor manufacturer	5,805	5.0
Taiwan Semiconductor Manufacturing	Taiwan	Semiconductor manufacturer	3,984	3.4
Li & Fung	Hong Kong and China	Supply chain management	3,088	2.6
ZTE	Hong Kong and China	Telecommunications equipment provider	3,007	2.6
ASM Pacific Technology	Hong Kong and China	Semiconductor equipment manufacturer	2,999	2.6
Singapore Exchange	Singapore	Stock exchange	2,994	2.6
Hon Hai Precision Industries	Taiwan	Electronic manufacturing services company	2,959	2.5
Parkson Holdings	Malaysia	Department store owner and operator	2,916	2.5
PT Telekomunikasi	Indonesia	Diversified telecommunications provider	2,346	2.0
CNOOC	Hong Kong and China	Oil and gas exploration and production	2,239	1.9
China Petroleum & Chemical Corporation	Hong Kong and China	Integrated oil and gas producer	1,924	1.7
Dongfang Electric	Hong Kong and China	Power equipment manufacturer	1,893	1.6
Hang Seng Bank	Hong Kong and China	Banking services	1,869	1.6
Kuala Lumpur Kepong	Malaysia	Palm oil producer and refiner	1,848	1.6
Mermaid Maritime	Thailand	Oil services	1,770	1.5
Mahindra & Mahindra	India	Indian conglomerate	1,762	1.5
Samsung Fire & Marine	Korea	Non-life insurance provider	1,729	1.5
CapitalMall Trust	Singapore	Real estate investment trust	1,667	1.4
Pacific Basin Shipping	Hong Kong and China	Shipping company	1,654	1.4
China Life Insurance	Hong Kong and China	Life insurance provider	1,646	1.4
Hidili Industry International Development	Hong Kong and China	Coal producer	1,486	1.3
Hyundai Marine and Fire Insurance	Korea	Non-life insurance provider	1,448	1.3
China Shenhua Energy	Hong Kong and China	Coal producer	1,425	1.2
China Unicom	Hong Kong and China	Diversified telecommunications provider	1,424	1.2
China National Building Material	Hong Kong and China	Building materials manufacturer	1,397	1.2
Sembcorp Marine	Singapore	Shipbuilder	1,341	1.2
MediaTek	Taiwan	Integrated circuit design house	1,331	1.1
Ju Teng International Holding	Hong Kong and China	Notebook casing manufacturer	1,323	1.1
Hong Kong Exchanges and Clearing	Hong Kong and China	Stock exchange	1,319	1.1
			68,615	58.8

All stocks are listed overseas.

^† Total assets less current liabilities and deferred tax.

 

PACIFIC HORIZON INVESTMENT TRUST PLC

 

DISTRIBUTION OF ASSETS

 (unaudited)

		At 31 January 2010 %		At 31 January 2009 %		At 31 July 2009 %
Equities:	Hong Kong and China	42.9		39.4		43.6
	Korea	13.2		11.8		11.3
	Taiwan	11.6		9.5		11.4
	Singapore	8.3		11.6		10.2
	Indonesia	5.6		3.8		5.6
	Malaysia	5.3		8.3		5.5
	Thailand	5.1		4.2		5.0
	India	5.0		2.7		3.2
	Philippines	1.1		1.5		1.3
	Vietnam	1.1		1.6		1.0
Total equities		99.2		94.4		98.1
Net liquid assets		0.8		5.6		1.9
Total assets †		100.0		100.0		100.0

^† Total assets less current liabilities and deferred tax.

PACIFIC HORIZON INVESTMENT TRUST PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)

1.   1.	The condensed financial statements for the six months to 31 January 2010 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Financial Statements at 31 July 2009 and in accordance with the ASB's Statement 'Half-Yearly Financial Reports' and have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Half-Yearly Financial Report has 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.
2.	The financial information contained within this Half-Yearly Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 31 July 2009 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain statements under the sections 498(2) or (3) of the Companies Act 2006.
3.	Related party transactions Baillie Gifford & Co are employed by the Company as investment managers and secretaries under a management agreement which can be terminated on not less than 12 months' notice, or on shorter notice in certain circumstances. The fee in respect of each quarter is 0.25% of the total assets less current liabilities of the Company on the last day of that quarter. Mr GTE Smith, who was appointed as a Director of the Company on 1 February 2009, is a partner of Baillie Gifford & Co.
		Six months to  31 January 2010 £'000		Six months to 31 January 2009 £'000		Year  to 31 July 2009 £'000
4.	Net return per ordinary share
	Revenue return on ordinary activities after taxation	78		1,040		1,915
	Capital return on ordinary activities after taxation	12,148		(34,040)		(214)
	Total net return	12,226		(33,000)		1,701
	Weighted average number of ordinary shares in issue	78,287,002		78,287,002		78,287,002
	Net return per ordinary share figures is based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.
5.	Dividends
	Amounts recognised as distributions in the      period:
	Previous year's final dividend of 1.80p (2008 - 1.30p), paid 4 November 2009	1,409		1,018		1,018
	No interim dividend will be declared.

PACIFIC HORIZON INVESTMENT TRUST PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited) (Ctd)

6.	The Company had no borrowings at 31 January 2010, 31 January 2009 or 31 July 2009.
7.	The Company has authority to allot shares under section 551 of the Companies Act 2006. In the six months to 31 January 2010, the six months to 31 January 2009 and the year to 31 July 2009 no shares were issued. The Company has authority to buy back its ordinary shares. The authority was last renewed at the Annual General Meeting in November 2009. In the six months to 31 January 2010 no ordinary shares were bought back. As a result, at 31 January 2010, the Company's authority to buy back shares remains unchanged at 11,735,221 ordinary shares.
8.	During the period, transaction costs on purchases amounted to £59,000 (31 January 2009 - £44,000; 31 July 2009 - £84,000) and transaction costs on sales amounted to £44,000 (31 January 2009 - £65,000; 31 July 2009 - £79,000).
9.	Principal Risks and Uncertainties The principal risks facing the Company relate to the Company's investment activities. These risks are market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 19 of the Company's Annual Report and Financial Statements for the year to 31 July 2009. The principal risks and uncertainties have not changed since the publication of the Annual Report which can be obtained free of charge from Baillie Gifford & Co and is available on Pacific Horizon's page of the Managers' website: www.pacifichorizon.co.uk. Other risks facing the Company include the following: the risk that the discount can widen and regulatory risk (that the loss of investment trust status or a breach of the UKLA Listing Rules could have adverse financial consequences and cause reputational damage).
10.	The Half-Yearly Financial Report is available at www.pacifichorizon.co.uk and will be posted to shareholders on or around 22 March 2010.
	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

 

END

 

 

IR SFAFMFFSSEDD