Final Results

Henderson TR Pacific Inv. Trust PLC 26 February 2008 26 February 2008 Page 1 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Henderson TR Pacific Investment Trust plc announces its preliminary results for the year ended 31 December 2007. Henderson TR Pacific Investment Trust plc seeks a high rate of total return from companies operating primarily in the Pacific region excluding Japan and Australasia. Key Points: • A year of strong performance. • Share price total return 33.6%. • The NAV total return per share rose 36.3% over the year compared with a return of 34.1% for the peer group and 38.2% for the MSCI All Country Asia ex-Japan Index (sterling adjusted). • Over two years since the Portfolio Manager, Andrew Beal, took over, the NAV total return has totalled 64.4% outstripping the peer group by 5.1 percentage points and the Index by 2.3 percentage points. • Final dividend of 2.00p per share to be paid to shareholders in April. Highlights of the Year (Unaudited) (Audited) 31 December 2007 31 December Pence 2006 Per ordinary share Pence Net asset value # 183.5 135.5 Share price # 161.3 122.0 Net revenue return 2.18 1.38 Final dividend 2.00 1.30 Gearing* 14.8% 9.5% *Defined here as borrowings, less cash balances and deposits, as a percentage of shareholders' funds. # Excluding reinvested income Total Return Performance for 12 Months to 31 December 2007 % Net asset value total return (1) 36.3 Share price total return (1) 33.6 Peer group NAV total return (2) 34.1 MSCI All Country Asia ex- Japan Index (3) 38.2 (1) Source: AIC Information Services Ltd (net income reinvested). (2) Source: AIC Information Services Ltd. The performance of a group of leading investment trust competitors (arithmetic average). (3) Source: Datastream (gross income reinvested). - MORE - Page 2 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Commenting on the results Chairman, David Robins, said: It is a pleasure to be able to report that your Company achieved another very strong performance in 2007. The share price total return was 33.6% taking the share price to new all time highs in the Company's twentieth year of existence. However, this result must be set against a market background which was both volatile and extremely challenging during certain periods of the year. As a result, although a net asset value total return of 36.3% was achieved, this compared with a total return of 38.2% for our benchmark, the MSCI All Country Asia ex-Japan Index (sterling adjusted). Nevertheless, the Company's NAV performance was 2.1 percentage points better than an average of our peer group, which also found it difficult to match the performance of the Index. Indeed, over the last two years since Andrew Beal took over management of the Company, the share price total return has been 66.6%, and the NAV total return 64.4%. These figures continue to compare very favourably with both the performance of the Index (up 62.1%) and even more favourably against the peer group, which only achieved an NAV total return of 59.3%. Outperformance against the peer group over this period has, therefore, measured 5.1 percentage points. As I noted in the Annual Report in March of last year, our Portfolio Manager and the Board were becoming increasingly concerned about the low level of risk aversion in global markets and the late stage of the credit cycle in early 2007. Thus, we were surprised that after a brief setback in March following early indications of problems in the sub-prime market in the USA, markets powered ahead until the summer. By July, our concerns had reached such a peak that our gearing was reduced to zero and our cash level raised to 10%, whilst the Portfolio Manager also took out put protection on the Index. Our fears seemed to have been justified by the market crash in August, but we have to admit that we were not prepared for the rapid rebound of markets thereafter. We remained fearful of further fall-out from the credit crunch which developed from late summer and, whilst the Company did re-invest cash relatively rapidly, we lost significant performance during this period. Since the turn of the year, our worst fears regarding the prospects for markets have been realised. While the extent of the sub-prime market problems have probably yet to be fully realised, enough bad news has been forthcoming that, allied with slowing growth in the US and Europe, market confidence has been seriously eroded. Despite significant interest rate cuts by the Fed, and some interest rate reductions in other countries, liquidity and leverage in financial markets have reduced dramatically. Asian markets have suffered significantly. For, while domestically generated rates of growth well in excess of those in the US and Europe suggest economic de-coupling, equity markets have clearly not de-coupled, and if anything have suffered from the rising risk aversion to emerging markets generally. Nevertheless, we continue to believe that the rates of economic growth in China and India, and in the region as a whole, will remain well in excess of those in the developed world, offering attractive investment opportunities. Dividends We invest for total return to shareholders and dividends may fluctuate from year to year. As a result of holding higher yielding shares during the year along with an increase in special dividends received, the amount available for dividend to shareholders this year is significantly ahead of last year. We propose therefore to pay 2.00 pence per share, compared with 1.30 pence last year. - MORE - Page 3 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Performance and Expenses Despite the underperformance against the Index in 2007, the Company outperformed over the rolling two year period since the Performance Fee was introduced. Accordingly a band 1 'top-up' fee will still be paid. This is calculated for each performance period and results in an extra 0.3% of gross assets being paid for outperformance of the Index between 0% and 2%. Given that the underperformance in 2007 alone was less than 2.5% on an annual basis, the ' clawback' provisions do not apply. With no band 2 performance fee due, the total expense ratio for the year decreased to 1.3% from 1.4% of total assets in 2006, which compares very favourably with our peer group average of 1.8%. Share Repurchases Despite our continuing strong performance, our discount has not moved much from around the 10% level over the course of the year. Whilst our discount remained either average or better than average for most of this period compared with the peer group, we repurchased and cancelled 13,386,952 shares during the year in order to keep the discount at a reasonable level. We are of the firm belief that, as Andrew Beal continues to re-build the long term track record of the Company, our discount should narrow in comparison with our peer group. Board Membership After serving on your Company's Board for fourteen years, Peter Berry has decided to retire at this year's Annual General Meeting. Peter has been a key member of the Board, acting as interim Chairman during a period when the previous Chairman was seriously ill, and fulfilling the role of Senior Independent Director for the last four years. He has made a significant contribution to the running of the Company, bringing his great experience of the Asian region, as well as his deep understanding of investment trust issues, to bear. Not only as a member of the Board, but also as a close working colleague, he will be missed. The Board would like to take this opportunity formally to thank Peter for the great service that he has given to the Board of your Company. A sub-committee of Hugh Aldous and Struan Robertson was established to take responsibility for finding a replacement, or replacements, for Peter. Following an independently undertaken search, their recommendation was to bring two new members onto the Board, namely David Brief, Chief Investment Officer of BAE Systems Pension Funds, and Christopher Keljik, a retired Director of Standard Chartered plc. Both will stand for election at the AGM. The Board considers that your Company has been very lucky to be able to attract these two highly experienced individuals, and we look forward greatly to their contributions. Finally, with Peter's departure after the AGM, Struan Robertson will take over the role of Senior Independent Director. Companies Act 2006 The Company will be seeking shareholder approval at the Annual General Meeting in April to introduce electronic communications and certain provisions of the Companies Act 2006, particularly pertaining to the Annual Report and Accounts. This will require changes to the Company's Articles of Association, details of which will be included in the Annual Report. - MORE - Page 4 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 VAT The European Court of Justice finally found in favour of the JP Morgan Claverhouse Trust and Association of Investment Companies in their case against Her Majesty's Revenue and Customs regarding the imposition of VAT on Management Fees. Although for some Trusts there could eventually be repayments of significant amounts of VAT paid over a number of years, your Company is not expected to benefit materially. This is due to the fact that as virtually all of our business is conducted outside the UK, and indeed the EU, VAT has already been reclaimed on our behalf by Henderson Global Investors Limited. There may be some small repayment to come, but for the future, the great benefit is that your Company will no longer need to go through the process of initially paying VAT, and subsequently claiming it back. Outlook At the time of writing, the prospects for 2008 remain opaque. Growth in the US and Europe is clearly slowing, though it remains questionable whether either region will slip into recession. However, there is limited scope for fiscal reflation in the developed countries, whilst it is debatable whether major interest rate reductions in the US and limited cuts elsewhere will have much of an effect immediately. It is almost inevitable, therefore, that there will be a major impact on companies' earnings and profits in the US and Europe, despite current optimistic analyst estimates. Whilst the rates of economic growth in the Asia Pacific region are also forecast to fall, the absolute levels remain high compared with the developed world. Therefore, it could be argued that de-coupling is taking place, even though equity markets are currently ignoring this development. While some slowdown in economic growth and earnings growth is, therefore, to be expected in the Asia Pacific region, we still believe that there will be opportunities for regional companies, particularly those associated with domestic demand, to prosper in the next twelve months. The risk remains that although, this will be the case, investors will seek lower ratings on local equity markets before being tempted to invest in the region again. In this environment, the Portfolio Manager and the Board are firmly of the view that, with such an uncertain background, the only way to approach regional markets is by seeking quality companies where earnings surprise is still possible, where companies are specifically benefiting from domestically generated as opposed to export generated growth, or where companies are standing on valuations which are out of line with their fundamentals and with peers in developed markets. We believe that this 'bottom-up' stock-picking approach will serve your Company well in a period of uncertainty, volatility and heightened aversion in emerging markets. David Robins Chairman 26 February 2008 - MORE - Page 5 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Income Statement For the year ended 31 December 2007 (Unaudited) (Audited) Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Gains from investments held at fair value through profit or loss (note 2) - 84,272 84,272 - 40,634 40,634 Income from investments held at fair value through profit or loss (note 3) 7,044 - 7,044 4,959 - 4,959 Other interest receivable and similar income 360 - 360 223 - 223 (note 4) ------- --------- ---------- ------- --------- ---------- Gross revenue and capital gains 7,404 84,272 91,676 5,182 40,634 45,816 Management fee (note 5) (654) (1,221) (1,875) (548) (892) (1,440) Performance fee (note 5) - (1,144) (1,144) - (1,099) (1,099) Other administrative expenses (717) - (717) (630) - (630) ------- -------- -------- ------- -------- -------- Net return on ordinary activities before finance charges and taxation 6,033 81,907 87,940 4,004 38,643 42,647 Finance charges (308) (923) (1,231) (183) (550) (733) ------- -------- -------- ------- -------- -------- Net return on ordinary activities before taxation 5,725 80,984 86,709 3,821 38,093 41,914 Taxation on net return on ordinary activities (1,821) 988 (833) (1,264) 763 (501) ------- -------- -------- ------- -------- -------- Net return on ordinary activities after taxation 3,904 81,972 85,876 2,557 38,856 41,413 ===== ===== ====== ===== ===== ====== Basic and diluted return per ordinary share 2.18p 45.87p 48.05p 1.38p 20.90p 22.28p (note 6) The total column of this statement represents the Income Statement of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. The Company had no recognised gains or losses other than those disclosed in the Income Statement and Reconciliation of Movements in Shareholders' Funds. - MORE - Page 6 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Reconciliation of Movements in Shareholders' Funds For the years ended 31 December 2007 and 31 December 2006 Called up Capital Other share redemption Special capital Revenue capital reserve reserve reserves reserve Total Year ended 31 December 2007 £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2006 9,186 6,720 83,728 140,609 8,744 248,987 Net return from ordinary activities after taxation - - - 81,972 3,904 85,876 Dividend paid in respect of year ended 31 December 2006 (paid 26 April 2007) - - - - (2,377) (2,377) Purchase of own shares (670) 670 (19,926) - - (19,926) ---------- --------- --------- --------- --------- --------- At 31 December 2007 8,516 7,390 63,802 222,581 10,271 312,560 ====== ====== ====== ====== ====== ====== Called up Capital Other share redemption Special capital Revenue capital reserve reserve reserves reserve Total Year ended 31 December 2006 £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 9,318 6,588 86,663 101,753 9,630 213,952 Net return from ordinary activities after taxation - - - 38,856 2,557 41,413 Dividend paid in respect of year ended 31 December 2005 (paid 7 April 2006) - - - - (3,448) (3,448) Write back of dividends over twelve years old - - - - 5 5 Purchase of own shares (132) 132 (2,935) - - (2,935) --------- --------- --------- ---------- --------- ---------- At 31 December 2006 9,186 6,720 83,728 140,609 8,744 248,987 ---------- ---------- ---------- ----------- --------- ----------- - MORE - Page 7 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Balance Sheet At 31 December 2007 (Unaudited) (Audited) 2007 2006 £'000 £'000 Fixed asset investments held at fair value through profit or loss Quoted at market value 361,809 274,587 ----------- ----------- Current assets Debtors 129 272 Bank balances and short term deposits 5,008 7,551 ----------- ----------- 5,137 7,823 Creditors: amounts falling due within one year (54,386) (33,423) ------------ ------------ Net current liabilities (49,249) (25,600) ------------ ------------ Total assets less current liabilities 312,560 248,987 Provisions for liabilities and charges - - ----------- ----------- Total net assets 312,560 248,987 ====== ====== Capital and reserves Called up share capital 8,516 9,186 Capital redemption reserve 7,390 6,720 Special reserve 63,802 83,728 Other capital reserves 222,581 140,609 Revenue reserve 10,271 8,744 ----------- ----------- Equity shareholders' funds 312,560 248,987 ====== ====== Net asset value per ordinary share (note 7) 183.5p 135.5p - MORE - Page 8 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Cash Flow Statement For the year ended 31 December 2007 (Unaudited) (Audited) 2007 2007 2006 2006 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 2,598 3,181 Servicing of finance Interest paid (1,216) (695) ------------ ------------ Net cash outflow from servicing of finance (1,216) (695) Taxation Withholding and corporation tax recovered/(paid) 210 (770) ------------ ------------ Net tax recovered/(paid) 210 (770) Financial investment Purchases of investments (378,020) (197,431) Sales of investments 377,981 199,796 ------------ ------------ Net cash (outflow)/inflow from financial investment (39) 2,365 Equity dividends paid (2,377) (3,443) ---------- ---------- Net cash (outflow)/inflow before financing (824) 638 Financing Repurchases of ordinary shares (19,999) (2,874) Drawdown of multi-currency loan facility 19,451 10,772 ------------ ------------ Net cash (outflow)/inflow from financing (548) 7,898 ---------- ---------- (Decrease)/increase in cash (1,372) 8,536 ====== ====== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash as above (1,372) 8,536 Cash inflow from debt financing (19,451) (10,772) -------- -------- Change in net debt resulting from cash flows (20,823) (2,236) Exchange (losses)/gains (1,744) 1,750 --------- --------- (22,567) (486) Net debt at 1 January (23,682) (23,196) ----------- ----------- Net debt at 31 December (46,249) (23,682) ====== ====== - MORE - Page 9 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Notes: 1. Accounting policies The accounts are prepared on the historical cost basis of accounting, modified to include the revaluation of fixed asset investments, and in accordance with applicable accounting standards in the United Kingdom and with the Revised Statement of Recommended Practice - 'Financial Statements of Investment Trust Companies' dated December 2005 (the Revised SORP). All of the Company's operations are of a continuing nature. 2007 2006 2. Gains from investments held at fair value through profit or loss £'000 £'000 Gains from investments held at fair value through profit or loss based on historical cost 56,789 30,674 Amounts recognised as unrealised in the previous year (28,566) (31,368) -------- -------- Realised gains/(losses) based on carrying values at previous balance sheet date 28,223 (694) Net movement in unrealised appreciation 57,793 39,578 Net (losses)/gains on foreign exchange (1,744) 1,750 ---------- ---------- Total gains from investments held at fair value though profit or loss 84,272 40,634 ====== ====== 2007 2006 3. Income from investments held at fair value through profit or loss £'000 £'000 Dividends from listed overseas equities 6,140 4,257 Taiwanese stock dividends 332 338 Special dividends from listed overseas equities 572 364 -------- --------- Total income from investments held at fair value through profit or loss 7,044 4,959 ==== ===== 2007 2006 4. Other interest receivable and similar income £'000 £'000 Bank interest 196 117 Stock lending income 164 106 ------- ------- 360 223 ==== ==== - MORE - Page 10 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Notes continued: 5. Management and performance fee Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Revenue Capital Return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 404 1,221 1,625 298 892 1,190 Accounting, secretarial and administration costs 250 - 250 250 - 250 Performance fee - 1,144 1,144 - 1,099 1,099 --------- --------- -------- ---------- --------- --------- 654 2,365 3,019 548 1,991 2,539 ===== ===== ==== ====== ===== ===== 6. Return per ordinary share The total return per ordinary share is based on the net return attributable to the ordinary shares of £85,876,000 (2006: £41,413,000) and on 178,723,079 ordinary shares (2006: 185,897,743) being the weighted average number of shares in issue during the year. The total return can be further analysed as follows: 2007 2006 £'000 £'000 Revenue return 3,904 2,557 Capital return 81,972 38,856 --------- --------- Total 85,876 41,413 ===== ===== Weighted average number of ordinary shares 178,723,079 185,897,743 Revenue return per ordinary share 2.18p 1.38p Capital return per ordinary share 45.87p 20.90p ---------- ---------- Total per ordinary share 48.05p 22.28p ====== ====== The Company does not have any dilutive securities. - MORE - Page 11 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Notes continued: 7. Net asset value per ordinary share The net asset value per ordinary share is based on net assets attributable to the ordinary shares of £312,560,000 (2006: £248,987,000) and on the 170,331,407 (2006: 183,718,359) ordinary shares in issue at 31 December 2007. The movements during the year of the Company's assets attributable to the ordinary shares were as follows: £'000 Total net assets at 1 January 2007 248,987 Net return on ordinary activities after taxation 85,876 Final dividend paid in respect of year ended 31 December 2006 (paid 26 April 2007) (2,377) Repurchase of 13,386,952 ordinary shares (19,926) ----------- Total net assets at 31 December 2007 312,560 ====== 8. Called up share capital 2007 2006 £'000 £'000 Authorised: 350,000,000 ordinary shares of 5p each 17,500 17,500 ====== ====== Allotted, issued and fully paid: 170,331,407 (2006: 183,718,359) ordinary shares of 5p each 8,516 9,186 ====== ====== During the year the Company repurchased for cancellation 13,386,952 of its own issued shares, for a total consideration of £19,926,000 (inclusive of stamp duty totalling £100,000), leaving a balance of 170,331,407 ordinary shares for the purposes of the calculation of the net asset value per ordinary share. 9. 2006 Accounts The figures and financial information for the year ended 31 December 2006 are an extract of the latest published accounts of the Company and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under Section 237(2) or 237(3) of the Companies Act 1985. 10. 2007 Accounts The preliminary figures for the year ended 31 December 2007, which do not constitute statutory accounts, are an extract from the latest draft company accounts. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 11. Dividend A final dividend of 2.00 pence per ordinary share will, if approved by shareholders, be paid on 30 April 2008 to shareholders recorded on the Register of Members on 28 March 2008. The Company's shares will be quoted ex-dividend on 26 March 2008. 12. Annual General Meeting The annual report will be posted to shareholders in March 2008 and thereafter copies will be available at the registered office at 4 Broadgate, London EC2M 2DA. The Annual General Meeting of the Company will be held at 4 Broadgate, London EC2M 2DA on Wednesday 23 April 2008 at 12.30 pm. -MORE- Page 12 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Geographical Distribution of the Investment Portfolio As at 31 December 2007 % China 28.1 Hong Kong 14.0 India 9.5 Indonesia 4.0 Korea 15.9 Malaysia 5.1 Singapore 13.2 Taiwan 7.6 Vietnam 2.6 ------- 100.0 ==== Sector Analysis of Investment Portfolio As at 31 December 2007 % Consumer Discretionary 4.1 Consumer Staples 5.4 Energy 12.4 Financials and Property 35.9 Industrials and Transport 15.6 Information Technology 11.4 Materials 4.7 Telecommunication Services 10.5 ------- 100.0 ==== - MORE - Page 13 of 13 HENDERSON TR PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Results for the Year Ended 31 December 2007 Top Twenty Investments as at 31 December 2007 Value of Investment £'000 Company Country Sector China Mobile China Telecommunications 21,738 Suntech Power Holdings China Energy 15,070 Sun Hung Kai Properties Hong Kong Financials 14,910 CNOOC China Energy 12,919 Industrial and Commercial Bank of China China Financials 12,043 Noble Group Singapore Industrials 11,205 IOI Corporation Malaysia Consumer Staples 10,651 Bank of China China Financials 10,247 DBS Group Singapore Financials 10,104 Tencent Holdings China Technology 10,063 Tata Steel India Basic Materials 10,010 SK Holdings Korea Financials 9,963 Keppel Corporation Singapore Industrials 9,920 Yanzhou Coal China Energy 9,704 Henderson Land Development Hong Kong Financials 9,693 Vietnam Enterprise Investment Fund Vietnam Financials 9,452 Kookmin Bank Korea Financials 9,365 Reliance Communication India Telecommunications 9,115 Wilmar International Singapore Consumer Staples 9,012 ICICI Bank India Financials 8,975 ------------ Total Investments 224,159 ------------ Top 20 as a percentage of total investments 62% For further information contact: Andrew Beal Portfolio Manager Tel 020 7818 4314 David Robins Chairman Tel: 020 7818 2966 David Masters Lansons Communications Tel 020 7490 8828 - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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