Premier Pacific Income Fund PLC
14 October 2005
Premier Pacific Income Fund PLC
14th October 2005
RESULTS FOR THE YEAR ENDING 31ST JULY 2005
At the Board Meeting of Directors, held in Dublin on 13th October 2005, the
Directors approved the Annual Report and Accounts for the year ending 31st July
2005. This preliminary statement is not the Company's statutory accounts,
copies of which are required to be annexed to the Company's annual return. The
accounts for the years ended 31st July 2004 and 31st July 2005 received audit
reports, which were unqualified. The accounts for the year ended 31st July 2004
have been annexed to the annual return. The accounts for the year ended 31st
July 2005 have not yet been annexed to the annual return and have yet to be
signed.
ANNUAL REPORT AND ACCOUNTS
The audited annual report and accounts were approved by the directors on 13th
October 2005 and will be distributed to shareholders in November. The Annual
General Meeting has been set for 11:00 on 8th December 2005. A copy of the
report and accounts in .pdf format will be available shortly from Premier Asset
Management's Website.
REDEMPTION ON 30TH SEPTEMBER 2005
On 30th September a total of 25,251,129 shares were tendered for redemption and
10,560,346 shares were redeemed amounting to 25% of the shares in issue at that
date. Accordingly there are now 31,681,033 shares in issue. The remaining
tendered shares, 14,790,783, have been carried forward to the next dealing date,
which is 30th December 2005. In accordance with the prospectus, 7,920,783
shares, representing 25% of the outstanding shares, could be redeemed. However,
at the Board Meeting held on 13th October 2005, the directors resolved that it
would be in the best interests of all shareholders to allow all the tendered
shares to be redeemed. Accordingly 14,790,783 shares will be redeemed on 30th
December 2005.
DIVIDEND DECLARATION
At the Board Meeting of Directors held on 13th October 2005, it was resolved to
pay a quarterly dividend of 0.725 pence per share. The ex-dividend date will be
26th October 2005 and the payment date will be 21st November 2005.
CHAIRMAN'S REVIEW
For the year ended 31st July 2005
Introduction
The last twelve months have seen excellent returns from many Asia Pacific
markets. Consequently your Fund has shown a good return in capital terms and
continued to pay quarterly dividends at the level of the final quarter of last
year.
Performance
Over the twelve months to 29th July 2005, the net asset value rose from 48.24
pence per share to 65.45 pence per share. Dividends amounted to 2.90 pence per
share over the last twelve months. Consequently shareholders have seen a
capital return of 35.7% and a total return of 41.7%. Over the same period the
Fund's benchmark index, the MSCI All Country Asia Pacific (Free) ex Japan Index,
in sterling terms has produced a capital return of 39.6% and a total return of
44.1%.
Income
The growth in dividend income from Asian equities remained strong although the
return to sterling based investors was less due to a weaker average exchange
rate for many Asian currencies against sterling over the year. Income amounted
to £1.681 million compared with £1.724 million last year. Expenses were higher
at £1.969 million compared with £1.593 million last year. The costs of the open
ending of the Fund account for much of this increase. The cost of dividends
amounted to £1.225 million. After charging 75% of management fees and loan
interest to capital, revenue reserves have fallen slightly to £0.61 million
compared with last year's position of £0.93 million. However this still
represents more than two quarters of dividends at the current rate.
Result of Extraordinary General Meeting
On 26th July 2005 shareholders voted to open-end the fund with immediate effect
and to alter the investment policy to 100% Asia Pacific ex Japan equities. As a
consequence shareholders will be able to subscribe and redeem shares on a
quarterly basis at a price based on net asset value after allowing for dealing
costs. The prospectus governing this change was approved on 23rd September 2005
and the first dealings took place on 30th September 2005. Twenty five percent
of the shares outstanding at that date were redeemed. The next dealing date
will be 30th December 2005 when further redemptions will be made.
Investment and Loan Policy
In anticipation of the change in investment policy and the open ending of the
Fund, the global bond portfolio was reduced to only a couple of attractive
Australian investments in April. Further, knowing that a number of shareholders
wished to redeem shares and that as a consequence part of our loan would need to
be repaid, we took the opportunity of the cash raised by the bond sales to repay
£6.0 million of loan. This leaves us with gearing of 54.3% at the year-end.
Following the redemptions, the gearing level has risen to 70.3%
Throughout its life the Fund has had gearing in the form of a loan from the Bank
of Scotland. Initially it was thought that this loan might be exchanged for a
term loan. However the loan in its current renewable form has served
shareholders well and accordingly it has been decided to continue with the loan
in its current form.
Loan Covenant
The covenant requires shareholders' funds to be in excess of 66.7% of the loan.
At the start of the year shareholders' funds represented 97.0% and at the end of
the year were 184.3%. As at 30th September 2005 shareholders' funds were 189.6%
of the loan prior to shares being redeemed and 142.2% after the redemption.
PREMIER PACIFIC INCOME FUND PLC
CHAIRMAN'S REVIEW - continued
For the year ended 31st July 2005
Outlook
The Asia Pacific region continues to offer strong economic growth. Despite high
oil and commodity prices there has been only a modest reduction in this growth
although there has been an increase in inflation with a consequent rise in
interest rates as central banks act to ensure that prices do not rise
excessively.
Equity markets in the region are more expensive than they were twelve months ago
but are still attractive on many valuation criteria. One of the big questions
that will have to be answered in the next twelve months is whether they can
sustain these higher valuation levels or whether the risks inherent in this
region in political, economic and governance terms will reassert themselves and
reduce the valuations to previous lower levels.
The last twelve months has seen many Asian companies increase their dividends.
Some of this is a reaction to shareholder pressure but much of it is associated
with an increase in market maturity and recognition that efficient use of
capital carries higher valuations. Many companies are committed to continuing
to increase their dividend payouts. For a fund that has a dividend policy this
is good news and means that shareholders should continue to receive at least the
level of dividends paid by your Fund in previous quarters. To this end the Fund
will seek to obtain distributor status each year in the U.K. so that
shareholders can maintain all the tax benefits that the Fund has historically
provided.
BALANCE SHEET
As at 31st July 2005
Assets 2005 2004
£ £
Investments at market value (cost:£27,981,151, 2004 34,192,865 39,794,123
£43,248,410)
Cash at bank 9,222,368 1,315,885
Unrealised gain on open forward exchange contract - 448,294
Interest and dividends receivable 93,216 298,771
Funds due from broker 26,992 -
Total Assets 43,535,441 41,857,073
Liabilities
Term Loan 15,000,000 21,000,000
Funds due to broker 288,960 -
Distribution payable 306,250 306,250
Interest payable 42,251 56,776
Management fees payable 33,030 34,028
Unrealised loss on open forward exchange contracts 6,166 73,642
Custodian fees payable 3,417 3,814
Administration fees payable 5,433 5,000
Other accrued expenses payable 204,544 -
Total Liabilities 15,890,051 21,479,510
Net Assets 27,645,390 20,377,563
Net Assets Consist of:
Capital (Par value and paid in surplus) 39,741,379 39,741,379
Capital expenses (9,201,509) (8,006,256)
Undistributed net investment income 613,283 930,460
Undistributed net realised loss from investments and (9,378,608) (8,873,682)
currency transactions
Unrealised gain/(loss) from investments and foreign 5,870,845 (3,414,338)
currency transactions
Total Net Assets 27,645,390 20,377,563
Number of Shares in issue 42,241,379 42,241,379
Net Asset Value per share 0.6545 0.4824
PROFIT AND LOSS ACCOUNT
For the year ended 31st July 2005
2005 2004
£ £
Investment Income
Dividend income 891,500 785,354
Bond income 725,863 958,056
Bank interest earned 132,243 32,938
Non reclaimable withholding tax (68,219) (52,513)
1,681,387 1,723,835
Expenses
Interest paid 1,151,856 1,024,444
Management fees 441,814 433,744
Other expenses 283,899 41,063
Administration fees 34,600 30,846
Custodian fees 27,414 32,678
Directors' fees 18,196 19,872
Audit fees 11,038 10,303
1,968,817 1,592,950
Expenses Charged to Capital
Interest paid (863,892) (768,333)
Management fees (331,361) (325,308)
773,564 499,309
Net Investment Income 907,823 1,224,526
Net Realised & Unrealised Gain/(Loss) on Investments
Net realised loss from securities transactions (1,590,114) (9,683,606)
Net realised gain from foreign currency transactions 1,085,188 1,085,985
Net change in unrealised appreciation of investments 9,666,001 10,444,496
Net change in unrealised depreciation of foreign (380,818) (230,023)
currency
8,780,257 2,336,852
Net increase in assets resulting from operations 9,688,080 3,561,378
STATEMENT OF CHANGES IN NET ASSETS
For the year ended 31st July 2005
2005 2004
£ £
Operations:
Net investment income 907,823 1,224,526
Net realised loss on investments and currency (504,926) (7,887,621)
transactions
Change in unrealised net appreciation of investment 9,285,183 10,214,473
and currency transactions
Net increase in net assets resulting from operations 9,688,080 3,561,378
Capital Share Transactions
Capitalised expenses (1,195,253) (1,093,641)
Distributions (1,225,000) (1,193,320)
Net decrease from capital share transactions (2,420,253) (2,286,961)
Net Increase in Net Assets 7,267,827 1,274,417
Net Assets at the beginning of the period 20,377,563 19,103,146
Net Assets at 31st July 2005 27,645,390 20,377,563
END
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