Interim Results
Pacific Horizon Investment Tst PLC
02 March 2006
PACIFIC HORIZON INVESTMENT TRUST PLC
Results for the six months to 31 January 2006
In the six months to 31 January 2006, Pacific Horizon's net asset value per
share rose by 11.1%. The MSCI All Country Far East ex Japan Index rose 13.5% in
sterling terms for the same period.
• Short term gearing was introduced in November, and performance improved towards the end of the period.
• Earnings per share for the six months were 0.56p compared to 0.54p in the first half of the previous
year. As in previous years, no interim dividend will be paid.
• Global growth remains high by the standards of the last thirty years and is showing signs of being more
broadly based than in the recent past. The Board believe that the immediate outlook for markets in the
Asia-Pacific region is favourable.
Past performance is no guarantee of 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 on the Baillie Gifford website at www.bailliegifford.com.
Pacific Horizon Investment Trust PLC (Pacific Horizon) aims to achieve capital
growth through investment in the stockmarkets of the Asia-Pacific region
(excluding Japan). The Company has total assets of £82.8 million (before
deduction of bank loans of £7.9 million).
Baillie Gifford & Co, the Edinburgh based fund management group with over £44
billion under management and advice, as at 2 March 2006, is appointed as
investment managers and secretaries to Pacific Horizon.
2 March 2006
- ends -
For further information please contact:
Gerald Smith, Manager
Pacific Horizon Investment Trust PLC 0131 275 2000
Mike Lord, Director
Broadgate Marketing 020 7726 6111
PACIFIC HORIZON INVESTMENT TRUST PLC
Interim Report
In the six months to 31 January 2006 the net asset value per share rose by 11.1%
to 97.89p. Over the same period the MSCI All Country Far East ex Japan Index
rose by 13.5% in sterling terms.
There was a marked divergence in performance among the markets in the region
during the Company's half year. The best performing market was Korea, which
rose by nearly 33%, and, at the other extreme, the Malaysian market fell by more
than 3%, both in sterling terms. Thailand and the Philippines were also among
the better performing markets while Hong Kong, Singapore and Taiwan made only
modest gains. The performance of regional currencies was also mixed. While
most regional currencies rose against sterling, the Taiwanese dollar, the Hong
Kong dollar and the Malaysian ringgit, all fell. A relatively modest weighting
in Korea and lack of exposure to Korean financial companies for most of the
period adversely affected performance, as did the Company's holdings in shipping
companies, basic materials producers and high yielding Singaporean real estate
investment trusts. Towards the end of the period a rally in Chinese and
China-related shares contributed to an improvement in performance.
Given that this was a period of high oil prices and rising interest rates in
America, which remains the most important single market for goods exported from
the Asia-Pacific region, the regional economies were remarkably strong. The
Chinese economy in particular continued to confound predictions of a 'hard
landing' brought about by efforts to curb excessive and speculative investment
in various industries and residential property. On the basis of official
statistics it did not in fact slow down at all and improved data collection
added 17% to the size of the economy by including service sector activity that
had previously been uncounted. The Hong Kong economy also continued on its
recovery track, helped by trade in services with the mainland. The situation
was a little more mixed elsewhere, especially where governments were forced by
fiscal constraints to reduce or remove subsidies on petroleum products and
central banks had to raise interest rates to prevent an inflationary spiral
developing. Thailand moved first in this respect and so experienced the
resulting slowdown in activity before those that moved later, notably Indonesia.
During the six months to 31 January, there were signs that the Thai economy
was already past the worst and even in Indonesia the impact on the economy seems
to have been rather less than feared. The performance of the Korean market
cannot be attributed to superior economic growth or better than expected
earnings for the majority of companies. The most plausible explanation is that a
shift of domestic savings into equity instalment funds combined with share
repurchases by companies resulted in a shortage of stock which squeezed prices
higher and attracted momentum investors who bid up prices further still. The
lacklustre performance of the Taiwanese and Malaysian markets can also be
attributed in large part to the attitude of domestic investors, though in these
cases sentiment towards their own equity markets was resolutely negative.
With hindsight it can be seen that the portfolio was incorrectly positioned at
the start of the half year and as events unfolded it became clear that changes
should be made. The most significant of these was the introduction of gearing
through the use of short-term borrowings in November. New purchases were made
in Korea, Taiwan and Thailand which had the effect of increasing the proportion
of the portfolio in these markets at the expense of other markets when compared
to the distribution of investments at the start of the Company's year. There
was very little change in the distribution of the portfolio by industrial
classification during the period.
Global growth remains high by the standards of the last thirty years and is
showing signs of being more broadly based than in the recent past. This should
reduce the risks associated with a heavy dependence on apparently insatiable
American consumers and their demand for imported goods from Asia as the main
driver of economic activity. While imbalances remain in the current and capital
accounts of the major nations, and there are signs of an underlying upward
pressure on inflation, there is no obvious catalyst for an immediate and sudden
adjustment in either economies or financial markets and the immediate outlook
for markets in the region appears favourable.
By Order of the Board
Baillie Gifford & Co
1 March 2006
The following is an interim statement for the six months ended 31 January 2006
which has been neither reviewed nor audited by the auditors. This statement is
being printed and will be sent to all shareholders on 10 March 2006. Copies
will be available for inspection at the Registered Office of the Company or may
be obtained on request from the Managers and Secretaries after that date.
PACIFIC HORIZON INVESTMENT TRUST PLC
INCOME STATEMENT
(unaudited)
for the six months ended for the six months ended for the year ended
31 January 2006 31 January 2005 31 July 2005
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Restated + Restated + Restated + Restated +
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised gains on - 2,277 2,277 - 607 607 - 3,819 3,819
investments
Unrealised gains on - 5,490 5,490 - 8,284 8,284 - 15,795 15,795
investments
Currency gains/
(losses) - 140 140 - (220) (220) - (464) (464)
Income (note 2) 1,119 - 1,119 939 - 939 2,384 - 2,384
Investment
management (343) - (343) (271) - (271) (580) - (580)
fee
Other administrative (102) - (102) (89) - (89) (189) - (189)
expenses
Net return before
finance costs and
taxation 674 7,907 8,581 579 8,671 9,250 1,615 19,150 20,765
Finance costs of (75) - (75) (3) - (3) (7) - (7)
borrowings
Return on ordinary
activities before
taxation 599 7,907 8,506 576 8,671 9,247 1,608 19,150 20,758
Tax on ordinary (167) - (167) (162) - (162) (485) - (485)
activities
Return on ordinary
activities after
taxation 432 7,907 8,339 414 8,671 9,085 1,123 19,150 20,273
Return per ordinary
share (note 3)
0.56p 10.34p 10.90p 0.54p 11.34p 11.88p 1.47p 25.04p 26.51p
Note:
Dividend paid per
ordinary share
(note 4) - - 1.10p
+ Various changes in accounting policies, as disclosed in note 1, have had
the cumulative effect of increasing reported net assets by £573,000 for the
year ended 31 July
2005 and reducing reported net assets by £207,000 at 31 January 2005.
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.
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
SUMMARISED BALANCE SHEET
(unaudited)
At 31 January 2006 At 31 January At 31 July
2005 2005
Restated + Restated +
£'000 £'000 £'000
FIXED ASSETS
Investments 80,796 55,624 66,739
CURRENT ASSETS
Debtors 163 142 636
Cash and short term deposits 2,682 1,182 653
2,845 1,324 1,289
CREDITORS
Amounts falling due within one year (note 5) (8,748) (745) (577)
NET CURRENT (LIABILITIES)/ASSETS (5,903) 579 712
TOTAL ASSETS LESS CURRENT LIABILITIES 74,893 56,203 67,451
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation (21) (17) (77)
74,872 56,186 67,374
CAPITAL AND RESERVES
Called-up share capital 7,649 7,649 7,649
Share premium 965 965 965
Special distributable reserve 13,233 13,233 13,233
Capital redemption reserve 17,964 17,964 17,964
Capital reserve - realised 7,590 2,308 5,276
Capital reserve - unrealised 25,277 12,173 19,684
Revenue reserve 2,194 1,894 2,603
EQUITY SHAREHOLDERS' FUNDS 74,872 56,186 67,374
NET ASSET VALUE PER ORDINARY SHARE 97.89p 73.46p 88.09p
Ordinary shares in issue (note 6) 76,487,002 76,487,002 76,487,002
+ See note 1.
PACIFIC HORIZON INVESTMENT TRUST PLC
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
(unaudited)
Six months to Six months to Year to
31 January 2006 31 January 2005 31 July 2005
Shareholders' funds at 1 August as previously stated 66,801 47,305 47,305
Prior year adjustments:
Revaluation of investments at bid prices (268) (204) (204)
Reversal of provision of final dividend 841 535 535
Shareholders' funds at 1 August - restated 67,374 47,636 47,636
Total recognised gains for the period 8,339 9,085 20,273
Dividends recognised as distributions in the (841) (535) (535)
period (note 4)
SHAREHOLDERS' FUNDS AT 31 JANUARY/ 74,872 56,186 67,374
31 JULY
DISTRIBUTION OF ASSETS
(unaudited)
At 31 January 2006 At 31 January At 31 July
2005 2005
% Restated + Restated +
% %
Equities: Hong Kong and China 33.0 27.7 37.7
Korea 19.8 15.7 15.9
Taiwan 13.2 12.5 9.0
Singapore 12.2 15.6 13.6
Thailand 6.8 4.9 4.8
Indonesia 5.8 10.6 7.5
Malaysia 5.3 10.9 8.9
Philippines 1.5 1.1 1.7
Total equities 97.6 99.0 99.1
Net liquid assets 2.4 1.0 0.9
Total assets (before deduction of bank loan) 100.0 100.0 100.0
+ See note 1.
PACIFIC HORIZON INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 January 2006 31 January 2005 31 July
2005
£'000 £'000 £'000
Net cash inflow from operating activities 809 623 1,502
Net cash outflow from servicing of finance (3) (3) (7)
Total tax paid - - (205)
Net cash (outflow)/inflow from financial investment (5,967) 650 (549)
Equity dividend paid (841) (535) (535)
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (6,002) 735 206
Net cash inflow from bank loan 8,031 - -
INCREASE IN CASH 2,029 735 206
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
(DEBT)/FUNDS
Increase in cash in the period 2,029 735 206
Net cash inflow from bank loans (8,031) - -
Exchange movement on bank loans 104 - -
MOVEMENT IN NET (DEBT)/FUNDS IN THE PERIOD (5,898) 735 206
Net funds at start of the period 653 447 447
NET (DEBT)/FUNDS AT END OF THE PERIOD (5,245) 1,182 653
RECONCILLIATION OF NET REVENUE BEFORE FINANCE COSTS AND
TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Net revenue before finance costs and taxation 8,581 9,250 20,765
Gains on investments (7,907) (8,671) (19,150)
Changes in debtors and creditors 147 82 (34)
Realised currency profit/(loss) 36 (10) 19
Overseas tax suffered (48) (28) (98)
NET CASH INFLOW FROM OPERATING ACTIVITIES
809 1,502
623
PACIFIC HORIZON INVESTMENT TRUST PLC
THIRTY LARGEST EQUITY HOLDINGS
at 31 January 2006
Market % of
value total
£'000 assets+
Name Country Business
Samsung Corporation Korea Construction and trading company 3,475 4.2
CNPC Hong Kong Hong Kong Oil and gas exploration and production 3,226 3.9
Petrochina China Integrated oil company 2,922 3.5
Hon Hai Precision Industries Taiwan Contract manufacturer 2,245 2.7
Pacific Basin Shipping Hong Kong Shipping company 2,100 2.5
Hong Kong Exchanges & Clearing Hong Kong Stock exchange 2,089 2.5
Taiwan Semiconductor
Manufacturing Taiwan Semiconductor manufacturer 2,030 2.5
Bumi Resources Indonesia Coal mining 2,024 2.4
Malaysia International Shipping
Corporation Malaysia Shipping company 2,018 2.4
China Petroleum & Chemical
Corp. (Sinopec) China Integrated oil company 1,909 2.3
Thai Union Thailand Producer and exporter of frozen and
canned seafood 1,629 2.0
MobileOne Singapore Wireless telecommunications provider 1,556 1.9
ASM Pacific Technology Hong Kong Semiconductor equipment manufacturer 1,534 1.9
Samsung Fire & Marine Korea Non-life insurance provider 1,513 1.8
Samsung Heavy Industries Korea Shipbuilder 1,488 1.8
Beijing North Star China Real estate developer 1,457 1.8
China Infrastructure Machinery
Holdings Hong Kong Infrastructure machinery manufacturer 1,405 1.7
Capitaland Singapore Real estate company 1,325 1.6
Thai Oil Thailand Oil refiner 1,302 1.6
IOI Malaysia Diversified industrial 1,266 1.5
Comfortdelgro Singapore Vehicle leasing and engineering services 1,247 1.5
Singapore Exchange Singapore Stock exchange services provider 1,219 1.5
Hysan Developments Hong Kong Property developer 1,183 1.4
Fine Tec Corp. Korea Industrial materials manufacturer 1,172 1.4
Hang Lung Properties Hong Kong Real estate developer 1,166 1.4
S1 Korea Security services provider 1,162 1.4
LG Korea Holding company 1,159 1.4
Hyundai Engineering &
Construction Korea General engineering and construction 1,138 1.4
CapitalMall Property Trust Singapore Property trust 1,113 1.4
Shanghai Electrical Group China Electronic equipment manufacturer 1,106 1.3
50,178 60.6
All stocks are listed overseas.
+ Total assets before deduction of bank loan.
PACIFIC HORIZON INVESTMENT TRUST PLC
NOTES
1. A number of new UK Financial Reporting Standards have been introduced with which the Company must comply
by its 31 July 2006 financial year end. These standards are part of the UK convergence programme with
International Accounting Standards and as such have required most UK listed companies to restate prior
year figures to reflect the new accounting treatment. The financial statements for the six months to 31
January 2006 have been prepared on the basis of the accounting policies set out in the Company's Annual
Financial Statements at 31 July 2005 except as detailed below:
a) investments have been valued at fair value through profit or loss in accordance with FRS 26, '
Financial Instruments: Measurement'. The effect is to move from a mid to a bid basis of valuation,
resulting in a reduction in the value of investments and unrealised capital reserves of £401,000 (31
January 2005 - £207,000; 31 July 2005 - £268,000);
b) in compliance with FRS 21, 'Events after the Balance Sheet Date', dividends declared after the
period end are no longer treated as a liability at the period end. The effect is to reduce creditors
and increase revenue reserves by £841,000 at 31 July 2005;
c) the implementation of FRS 21 and the 2005 SORP has resulted in changes in the presentation of
total returns. Previously dividends paid and payable in respect of a year were disclosed on the face of
the Statement of Total Return and the revenue column of that statement was deemed to be the profit and
loss account of the Company. We now present an Income Statement which does not show on its face the
distribution in respect of equity shares and whilst it still shows information on capital and revenue
returns it is the total return column which is regarded as the profit and loss account of the Company.
The overall effect of these changes on shareholders' funds is detailed below:
At 31 January At 31 January At 31 July
2006 2005 2005
£'000 £'000 £'000
Investments/Capital reserve - unrealised (401) (207) (268)
Creditors: dividends payable/Revenue reserve - - 841
(401) (207) 573
Six months to 31 Six months to Year to
January 2006 31 January 31 July
£'000 2005 2005
£'000 £'000
2. Income
Income from investments and interest receivable 1,119 939 2,384
Other income Nil Nil Nil
3. Return per ordinary share
Revenue return 432 414 1,123
Capital return 7,907 8,671+ 19,150+
Return per ordinary share is based on the above totals of revenue and capital and on 76,487,002 ordinary
shares, being the number of ordinary shares in issue during each period.
+ Restated, see note 1.
PACIFIC HORIZON INVESTMENT TRUST PLC
NOTES (Ctd)
Six months to 31 Six months to Year to
January 2006 31 January 31 July
£'000 2005 2005
£'000 £'000
4. Dividends
Amounts recognised as distributions in the
period:
Final dividend for the year ended 31 July 2005
of 1.10p (2004 - 0.70p) paid 17 October 2005 841 535 535
No interim dividend will be declared.
5. A one year £9 million multi-currency facility has been arranged with the Bank of New York which expires
on 6 December 2006. In addition the Company has a £5 million multi-currency loan facility with the
Royal Bank of Scotland plc which expires on 31 March 2006. At 31 January 2006 there were outstanding
drawings of HK$55 million (£3,989,000) and US$7 million (£3,938,000). The Company had no borrowings at
31 January 2005 or 31 July 2005.
6. At the Extraordinary General Meeting in April 2001 the Company was first granted authority to buy back
its ordinary shares (equivalent to 14.99% of its issued share capital at that date). The authority was
renewed at the Annual General Meeting in October 2005. In the six months to 31 January 2006 no ordinary
shares were bought back. As a result, at 31 January 2006, the Company's authority to buy back shares
remains unchanged at 11,465,401 ordinary shares.
7. The financial information contained within this interim report does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information for the year ended 31 July
2005 has been extracted from the statutory accounts and restated as disclosed in note 1. Those accounts
have been filed with the Registrar of Companies and contain an unqualified Auditors' Report and do not
contain a statement under sections 237(2) or (3) of the Companies Act 1985.
8. The Interim Report was approved by the Board on 1 March 2006.
None of the views expressed in this document should be construed as advice to buy or sell a particular
investment.
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