Final Results
Henderson TR Pacific Inv. Trust PLC
27 February 2007
Page 1 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Henderson TR Pacific Investment Trust plc announces preliminary results for the
year ended 31 December 2006.
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 can be attributed to the investment strategies of Portfolio Manager, Andrew Beal who
has completed his first financial year at the Trust.
• Share price total return 24.7%
• The NAV total return per share rose 20.6% over the year compared with a return of 17.3% for the MSCI All Country
Asia ex-Japan Index (sterling adjusted).
• The portfolio has been restructured to reflect Mr Beal's style of investing in the Asian Markets, and this has
been a major factor in turning performance results around.
• Final dividend of 1.30p per share to be paid to shareholders in April.
Key Extracts from the Preliminary Statement
Total Return Performance for 12 Months to 31 December 2006
Net Asset Value (i) 20.6%
Share price (i) 24.7%
MSCI All Country Asia ex-Japan Index
(Sterling adjusted) (ii) 17.3%
Highlights of the year
(Unaudited) (Audited)
31 December 2006 31 December
2005
Net Asset Value per Ordinary Share 135.5p 114.8p
Share price 122.0p 99.5p
Discount to NAV 10.0% 13.3%
Proposed Final Dividend per Ordinary Share 1.30p 1.85p
(i) Source: AIC Services Ltd. (net dividends reinvested)
(ii) Source: Thomson Financial, Datastream (gross dividend reinvested)
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Page 2 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Commenting on the results Chairman, David Robins, said:
I am pleased to be able to report that the Company achieved another very strong
performance in 2006. The share price total return was 24.7%, while a Net Asset
Value total return of 20.6% was achieved. This compared with a total return of
17.3% for our benchmark, the MSCI All Country Asia ex-Japan Index (sterling
adjusted). In addition, not only did the Company outperform the benchmark in
2006, but from a position of lagging our peer group at the start of the year, we
moved to being one of the leading investment trusts by the end of the year.
This impressive performance owes a great deal to the change in style brought
about by our Manager, Andrew Beal. Whilst we changed the objective of the
Company in 2005 to focus on total return rather than simply growth, and
broadened the objective for 2006 to allow investment in Pacific region stocks
quoted on markets outside the region, the successful performance has been
essentially driven by the new investment approach and the stock selection
philosophy applied. The portfolio was restructured in late 2005 and has
subsequently become a concentrated portfolio of around 50 stocks. These
companies are selected from a 'bottom up' perspective, with the Manager
supported by the Henderson Research team, seeking situations which are deemed to
be fundamentally mispriced by the market.
Macro economic fundamentals and market themes are no longer the key drivers of
the investment philosophy, as they are only considered as a final filter to the
stock selection process. Thus, whilst the attribution analysis takes account of
the underweight/overweight position in each market, and the resultant
contribution to the performance of the portfolio, these market weights are
generated from a bottom up stock selection approach rather than as a result of a
top down view on each market, and a subsequent search for exposure in that
market.
Whilst the portfolio was impacted by the decline in all markets in May, gearing
had been reduced ahead of this setback, and was subsequently increased in the
second half of the year. The investment philosophy has become much more
aggressive, and has proved extremely successful in the first year of this new
approach. Should the Manager feel it necessary to protect the capital of the
portfolio, the Board has authorised the Manager to make active use of index
futures and options for hedging purposes.
Dividends
As a result of reduced exposure to both the Korean and Taiwanese markets, where
companies traditionally provide stock dividends during the year, the dividend
per share will be somewhat lower this year than that paid last year. A dividend
of 1.30 pence per share is proposed, compared with 1.85 pence last year.
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Page 3 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Expenses
Despite paying a performance fee resulting from the outperformance of the
benchmark by 3.3%, the Total Expense Ratio has only risen from 1.2% to 1.4% of
total assets. The introduction of the performance fee has, in the Board's view,
had the desired effect of providing an incentive to the Henderson team. Needless
to say, there is a penalty for underperformance which is similarly an incentive
for the team to protect capital in a down market.
Share Repurchases
Over the year to 31 December 2006 2,635,000 shares were repurchased and
cancelled. As a result of the share price performance and the Company's
strategic buyback policy, the discount narrowed over the year from 13.3% to
10.0%. Nevertheless, it was still the case that the discount was only in line
with the peer group average at the year end, and the Board believes that this
situation should not persist given the Company's performance vis a vis the
competition.
Outlook
For much of the second half of 2006, market participants were divided in their
opinions as to the extent of the economic slowdown in the US, and the degree to
which this would impact world, and especially, Pacific Region growth. At the
same time, continued robust activity and fears of a pick up in inflation have
led to rising interest rates in the UK, Europe and Japan. Thus, the outlook is
particularly opaque, even while ample global liquidity appears to be driving
markets to all time high levels and credit spreads and risk aversion to all time
lows.
As we look forward to the year ahead, there appears to be an increasing chance
that growth in the US will pick up again. Given already growing concerns
regarding inflation elsewhere in the world, this development may well lead to
higher interest rates, a reversal in the credit cycle and a resultant rise in
risk aversion. This would almost certainly lead to a setback in our markets.
However, this risk has been offset to some extent by the recent falls in
commodity prices, particularly oil.
We firmly believe that there will continue to be ample opportunities for stock
selection to drive positive fund performance. Appreciating currencies and
falling commodity prices leave Asia relatively well positioned. Indeed, in
contrast to many economies around the world, there is scope for interest rate
reductions in some markets. The Company has started the year with a focus on
domestic demand ideas. In particular opportunities in specific financials,
property and domestic demand driven stocks have been identified, and may well
remain as the focus for much of the year.
David Robins, Chairman
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Page 4 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Income Statement
For the year ended 31 December 2006
(Unaudited) (Audited)
Year ended 31 December 2006 Year ended 31 December 2005
Revenue Capital Revenue Capital
Return Return Total Return Return Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains from investments held at fair value - 40,634 40,634 - 49,508 49,508
through profit or loss
Income from investments held at fair value
through profit or loss (note 2) 4,959 - 4,959 6,709 - 6,709
Other interest receivable and similar income 223 - 223 102 - 102
(note 2)
------- --------- ---------- ------- --------- ---------
Gross revenue and capital gains 5,182 40,634 45,816 6,811 49,508 56,319
Management fee (548) (892) (1,440) (633) (1,148) (1,781)
Performance fee - (1,099) (1,099) - - -
Other administrative expenses (630) - (630) (587) - (587)
------- -------- -------- ------- -------- --------
Net return on ordinary activities
before finance charges and taxation 4,004 38,643 42,647 5,591 48,360 53,951
Finance charges (183) (550) (733) (85) (255) (340)
------- -------- -------- ------- -------- --------
Net return on ordinary activities
before taxation 3,821 38,093 41,914 5,506 48,105 53,611
Taxation on net return on ordinary activities (1,264) 763 (501) (1,853) 421 (1,432)
------- -------- -------- -------- -------- --------
Net return on ordinary activities
after taxation 2,557 38,856 41,413 3,653 48,526 52,179
===== ===== ====== ===== ===== ======
Basic and diluted return per ordinary share 1.38p 20.90p 22.28p 1.92p 25.52p 27.44p
(note 3)
The total column of this statement represents the income statement of the company.
All revenue and capital items in the above statement derive from continuing operations.
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Page 5 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Reconciliation of Movements in Shareholders' Funds
For the years ended 31 December 2006 and 31 December 2005
Called up Capital Other
share redemption Special capital Revenue
capital reserve reserve reserve 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 - - - 38,856 2,557 41,413
tax
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
====== ====== ====== ====== ====== ======
Called up Capital Other
share redemption Special capital Revenue
capital reserve reserve reserve reserve Total
Year ended 31 December 2005 £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2004 9,660 6,246 92,410 53,913 8,682 170,911
Adjustment to bid valuation - - - (686) - (686)
Net return from ordinary activities after - - - 48,526 3,653 52,179
tax
Dividend paid in respect of year ended
31 December 2004 (paid 20 April 2005) - - - - (2,705) (2,705)
Purchase of own shares (342) 342 (5,747) - - (5,747)
--------- -------- -------- ---------- -------- ----------
At 31 December 2005 9,318 6,588 86,663 101,753 9,630 213,952
===== ===== ===== ====== ===== ======
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Page 6 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Balance Sheet
At 31 December 2006
(Unaudited) (Audited)
2006 2005
£'000 £'000
Fixed asset investments held at fair value through
profit or loss
Listed at market value - overseas 274,587 237,730
----------- -----------
Current assets
Debtors 272 200
Bank balances and short term deposits 7,551 803
----------- -----------
7,823 1,003
Creditors: amounts falling due within one year (33,423) (24,729)
------------ -----------
Net current liabilities (25,600) (23,726)
------------ -----------
Total assets less current liabilities 248,987 214,004
Provisions for liabilities and charges - (52)
----------- -----------
Total net assets 248,987 213,952
====== ======
Capital and reserves
Called up share capital 9,186 9,318
Capital redemption reserve 6,720 6,588
Special reserve 83,728 86,663
Capital reserves - realised 87,889 57,576
- unrealised 52,720 44,177
Revenue reserve 8,744 9,630
----------- -----------
Equity shareholders' funds 248,987 213,952
====== ======
Net asset value per ordinary share (note 4) 135.5p 114.8p
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Page 7 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Cash Flow Statement
For the year ended 31 December 2006
(Unaudited) (Audited)
2006 2006 2005 2005
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 3,181 3,043
Servicing of finance
Interest paid (695) (314)
------------ -------------
Net cash outflow from servicing of finance (695) (314)
Taxation
Withholding and corporation tax paid (770) (123)
------------ -------------
Net tax paid (770) (123)
Financial investment
Purchases of investments (197,431) (210,203)
Sales of investments 199,796 202,141
------------ -------------
Net cash inflow/(outflow) from financial investment 2,365 (8,062)
Equity dividends paid (3,443) (2,705)
---------- ----------
Net cash inflow/(outflow) before financing 638 (8,161)
Financing
Repurchases of ordinary shares (2,874) (5,747)
Drawdown of multi-currency loan facility 10,772 9,157
------------ -------------
Net cash inflow from financing 7,898 3,410
---------- ----------
Increase/(decrease) in cash 8,536 (4,751)
====== ======
Reconciliation of net cash flow to
movement in net debt
Increase/(decrease) in cash as above 8,536 (4,751)
Cash inflow from debt financing (10,772) (9,157)
-------- ----------
Change in net debt resulting from cash flows (2,236) (13,908)
Exchange movements 1,750 (688)
--------- ----------
(486) (14,596)
Net debt at 1 January (23,196) (8,600)
----------- ----------
Net debt at 31 December (23,682) (23,196)
====== ======
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Page 8 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Notes:
1. Accounting Policies
The accounts have been prepared under the historical cost convention, modified to include the revaluation
of investments and in accordance with applicable Accounting Standards and with the Statement of Recommended
Practice 'Financial Statements of Investment Trust Companies' ('SORP dated January 2003, revised December
2005'). All of the Company's operations are of a continuing nature.
The same accounting policies used for the year ended 31 December 2005 have been applied.
2. Income
2006 2005
£'000 £'000
Income from investments held at fair value through
profit or loss:
Dividends from listed overseas equities 4,257 5,530
Taiwanese stock dividends 338 612
Special dividends from listed overseas equities 364 567
Bank interest 117 102
Stocklending income 106 -
---------- ---------
Total income 5,182 6,811
---------- ----------
3. Return per Ordinary Share
The total return per ordinary share is based on the net return attributable to the ordinary shares of
£41,413,000 (2005: £52,179,000) and on 185,897,743 ordinary shares (2005: 190,186,373) being the weighted
average number of shares in issue during the year.
The total return can be further analysed as follows:
2006 2005
£'000 £'000
Revenue return 2,557 3,653
Capital return 38,856 48,526
--------- ---------
Total 41,413 52,179
===== =====
Weighted average number of ordinary shares 185,897,743 190,186,373
Revenue return per ordinary share 1.38p 1.92p
Capital return per ordinary share 20.90p 25.52p
------------ -----------
Total per ordinary share 22.28p 27.44p
======= =======
The Company does not have any dilutive securities
Page 9 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
4. Net Asset Value per Ordinary Share
The net asset value per ordinary share is based on net assets attributable to ordinary shares of
£248,987,000 (2005: £213,952,000) and on the 183,718,359 (2005: 186,353,359) ordinary shares in issue at 31
December 2006.
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 2006 213,952
Net return on ordinary activities after taxation 41,413
Final dividend paid in respect of year ended 31 December 2005
(paid 7 April 2006) (3,443)
Repurchase of 2,635,000 ordinary shares (2,935)
-----------
Total net assets at 31 December 2006 248,987
-----------
5. Called up share capital
2006 2005
£'000 £'000
Authorised:
350,000,000 ordinary shares of 5p each 17,500 17,500
====== ======
Allotted, issued and fully paid:
183,718,359 (2005: 186,353,359) ordinary shares of 5p each 9,186 9,318
===== =====
During the year the company repurchased for cancellation 2,635,000 of its own issued shares, for a total
consideration of £2,935,000 (inclusive of stamp duty and commissions totalling £20,000), leaving a balance
of 183,718,359 ordinary shares for the purposes of the calculation of the net asset value per ordinary
share.
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Page 10 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
6. 2005 Accounts
The figures and financial information for the year ended 31 December 2005 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.
7. 2006 Accounts
The preliminary figures for the year ended 31 December 2006, 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.
8. Dividend
A final dividend of 1.30 pence per ordinary share will, if approved by shareholders, be paid on 26 April 2007
to shareholders recorded on the Register of Members on 23 March 2007. The company's shares go ex-dividend on
21 March 2007.
9. Annual General Meeting
The annual report will be posted to shareholders in March 2007 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 Thursday 19 April 2007 at 12.30 pm.
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Page 11 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Geographical Distribution of the Investment Portfolio
As at 31 December 2006
%
South Korea 17.6
Taiwan 15.3
China 24.3
Hong Kong 10.1
Thailand 2.5
The Philippines 0.9
Malaysia 3.8
Singapore 10.8
Indonesia 5.7
Vietnam 3.3
India 5.7
-------
100.0
====
Sector Analysis of Investments
As at 31 December 2006
%
Consumer Discretionary 7.5
Consumer Staples 4.2
Energy 4.9
Financials and Property 44.8
Healthcare -
Industrials and Transport 7.3
Information Technology 22.4
Materials 4.3
Telecommunication Services 4.6
Utilities -
-------
100.0
====
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Page 12 of 12
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 December 2006
Top Twenty Investments as at 31 December 2006
Value of
Investment
£'000
Company Country Sector
Samsung Electronics South Korea Information Technology 18,123
China Construction Bank China Financial & Property 15,578
China Mobile (HK) China Telecom Services 12,511
Kookmin Bank South Korea Financial & Property 9,160
Vietnam Enterprise Investments Vietnam Financial & Property 9,069
Bank Mandiri Indonesia Financial & Property 8,755
Sinopec China Petroleum China Energy 8,717
Maanshan Iron and Steel China Materials 8,489
Esprit Holdings Hong Kong Consumer Discretionary 8,333
DBS Group Singapore Financial & Property 8,175
ICICI Bank India Financial & Property 7,655
Taiwan Semiconductor Taiwan Information Technology 7,267
Shinhan Financial South Korea Financial & Property 6,987
Hopson Holdings China Financial & Property 6,958
Astra International Indonesia Consumer Discretionary 6,913
Cheung Kong Hong Kong Financial & Property 6,912
Asustek Computer Taiwan Information Technology 6,566
Sun Hung Kai Properties Hong Kong Financial & Property 6,461
Singapore Airlines Singapore Industrials & Transport 6,374
China Mengniu Dairy China Consumer Staples 6,304
------------
Total Investments 175,307
------------
Top 20 as a percentage of total
investments 63.8%
For further information contact:
Andrew Beal
Portfolio Manager
Tel 020 7818 4314
David Robins
Chairman
020 7467 4503
David Masters
Lansons Communications
Tel 020 7490 8828
- ENDS -
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