Interim Results

Foreign & Col. Pacific Inv Tst PLC 28 September 2000 Contact: Charles Brock Andrew Waterworth/Phoebe Davison Foreign & Colonial Financial Dynamics Management Limited 020 7831 3113 020 7628 8000 FOREIGN & COLONIAL PACIFIC INVESTMENT TRUST PLC Unaudited Preliminary Statement for the half year ended 31 July 2000 HIGHLIGHTS For the six months to 31 July 2000 the net asset value per share fell by 17.8% compared to a fall in the benchmark of 6.4%. For the twelve months to 31 July 2000 the net asset value per share rose by 11.8% against a rise of 9.5% in the benchmark. 8,790,000 shares have been bought back in the market at a discount of up to 22%, thus enhancing the net asset value per share. The economic fundamentals are improving, particularly in Japan and China, the region's largest economies. The portfolio remains overweight in Japanese equities, particularly 'New Japan' and in those parts of Asia that are benefiting from the strength of the electronics sector, particularly Taiwan. SUMMARY OF RESULTS 31 July 2000 31 January 2000 % change Consolidated total assets less current liabilities (excluding loans and Yen convertible Bonds) £575.3m £675.3m -14.8 Consolidated net assets attributable to equity shareholders £425.0m £554.1m -23.3 Consolidated net asset value per share 193.3p 242.3p -20.2 Consolidated net asset value per share - diluted * 191.9p 233.5p -17.8 Share price 160.0p 204.3p -21.7 6 months to 6 months to 31 July 2000 31 July 1999 % change Consolidated earnings per share 0.68p 0.87p -21.8 * Diluted for potential conversion of the Convertible Bonds. EXTRACTS FROM CHAIRMAN'S STATEMENT The performance of your Company in the six months ended 31 July 2000 was disappointing; the share price fell by 21.7% whilst the fully diluted net asset value per share fell by 17.8% or by 20.2% on an undiluted basis. Our benchmark, which is a combination of 50% FTSE Japan and 50% MSCI AC Asia Pacific Free ex Japan, fell by 6.4%. The two major factors behind this short-term under performance were stock selection in Japan, where our portfolio suffered from the correction in 'New Japan' stocks and sectors, and the fact that the Company was geared during a period of falling markets. The fall in net asset value should be put into the context of the excellent investment performance of your managers during the last financial year. Indeed, despite this short-term under performance, the net asset value per share rose by 11.8% over the twelve months to 31 July 2000, against a rise of 9.5% by the benchmark. Markets and Investment Policy The six months under review have been a period of consolidation in regional markets and those stocks that led the markets higher last year had the hardest falls. The FTSE Japan Index fell by 6.9% in sterling terms, whilst the MSCI AC Asia-Pacific ex Japan Index fell by 5.8%. Within Japan there was widespread profit taking in those companies and sectors broadly categorised as 'New Japan', whilst the only markets in the rest of Asia that produced positive returns were Hong Kong, China and Australia. Global markets were overshadowed by rising interest rates around the world and by the correction in technology stocks in the United States. Japanese economic statistics have remained encouraging, confirming your Board's belief in the economic recovery. Whilst this recovery has signs of vulnerability, the corporate sector is already reaping the benefits. Companies other than those in the financial sector reported pre-tax profit growth of 23% in the year to March 2000. This growth should continue during the current financial year thanks to the twin benefits of sales growth and continued cost cutting. Whilst the Bank of Japan's recent move away from a zero interest rate policy has risks, it should not derail the economic recovery and may speed up the process of corporate restructuring. During the period under review, your managers continued to focus the portfolio towards those stocks that would benefit from the restructuring of the Japanese economy and of the corporate sector. This policy produced poor short-term results; but your Board is confident that it is appropriate for the medium term and decided not to change course. Within the other markets, Hong Kong performed relatively well thanks to out performance by the heavily weighted telecoms sector, whilst Australia rose on the back of corporate activity in the resources sector and improved profit expectations. The electronics-sensitive markets of Korea and Taiwan struggled, whilst the markets of South East Asia continued to slide. During the past six months your Company made an investment in the F&C New @sia fund. This investment enables us to gain diversified exposure to new markets, sectors and companies throughout Asia. The Company remained geared during the period, reflecting your Board's medium and long-term positive view on the region. At 31 July 2000, the Company was geared by 4.5%, assuming that the Yen Convertible Bonds were converted or 19.4% if they were not. Revenue Revenue in the first half of the year was materially lower than that in the corresponding period last year. This is as a result of our moving to a geared position and of the much lower dividend yield available from Asian shares compared to the return from cash or bonds, in which your Company was heavily invested early last year. As foreshadowed in the annual report there will be no interim dividend payment. Share Buy Back During the six months ended 31 July 2000 8,790,000 shares have been bought back in the market and cancelled. These shares have been bought at a discount of up to 22%, thus enhancing the net asset value per share. At the Annual General Meeting in June shareholders renewed the buy back authority which the Board will utilise when it considers that it is in the best interests of shareholders. Convertible Bonds The right to convert the Company's Yen Convertible Bonds is due to expire in November 2000. As the share price is currently standing below the exercise price of the Bonds, it is possible that they will be redeemed as debt and will not be converted into ordinary shares. If this proves to be the case, the Company has sufficient borrowing facilities to cover the repayment without necessitating investment sales and causing any disruption to the underlying portfolio of investments. Outlook The economic fundamentals continue to improve across the region. Whilst global concerns may continue to overshadow markets for a while, we believe that the prospects for Japan and Asia remain encouraging. The portfolio remains overweight in 'New Japan' and in those parts of Asia that are benefiting from the strength of the electronics sector, particularly in Taiwan. We remain optimistic about the outlook for investments in the region. Christopher Purvis September 2000 Consolidated Statement of Total Return (incorporating the Revenue Account*)for the half year ended 31 July 2000. 31 July 2000 31 July 1999 (Restated**) Revenue Capital Total Revenue Capital Total £'000's £'000's £'000s £'000's £'000's £'000s (Losses)/gains on tangible fixed assets - (20) (20) - 4 4 (Losses)/gains on investments - (106,308) (106,308) - 87,609 87,609 Exchange gains and losses (67) (5,532) (5,599) 176 (4,117) (3,941) Income 6,692 - 6,692 7,219 - 7,219 Management fee (1,466) - (1,466) (1,386) - (1,386) Other expenses (1,630) (28) (1,658) (1,898) (10) (1,908) Net return before finance costs and taxation 3,529 (111,888) (108,359) 4,111 83,486 87,597 Interest payable and similar charges (1,443) - (1,443) (1,101) - (1,101) Return on ordinary activities before taxation 2,086 (111,888) (109,802) 3,010 83,486 86,496 Taxation on ordinary activities (559) (2,875) (3,434) (1,000) - (1,000) Return attributable to equity shareholders 1,527 (114,763) (113,236) 2,010 83,486 85,496 Dividend on ordinary shares (equity) - - - (1,842) - (1,842) Amount transferred to/(from) reserves 1,527 (114,763) (113,236) 168 83,486 83,654 Return per ordinary share (basic) - pence 0.68 (51.41) (50.73) 0.87 36.25 37.12 Return per ordinary share (diluted) - pence + + + + + + * The revenue column of this statement is the profit and loss account of the Group. ** Restated to comply with FRS 16 'Current Taxation'. + There is no dilution. All revenue and capital items in the above statement derive from continuing operations. CONSOLIDATED BALANCE SHEET 31 July 31 July 1999 31 January 2000 2000 £'000s £'000s £'000s Fixed assets Tangible assets 14,354 17,426 18,035 Investments 482,591 455,720 634,257 496,945 473,146 652,292 Current assets Investments - freehold land held for resale 8,887 6,902 6,756 Debtors 41,975 12,832 6,076 Cash at bank and short- 44,987 9,777 35,710 term deposits 95,849 29,511 48,542 Current liabilities Creditors: amounts falling due within one year: Foreign currency loans (40,826) (40,341) (20,172) Yen Convertible Bonds (60,934) - (57,636) Other (17,476) (10,215) (25,553) (119,236) (50,556) (103,361) Net current liabilities (23,387) (21,045) (54,819) Total assets less current liabilities 473,558 452,101 597,473 Creditors: amounts falling due after more than one year: Foreign currency loans (45,700) - (43,227) Yen Convertible Bonds - (53,788) - Deferred tax (2,875) (144) (101) (48,575) (53,932) (43,328) Net assets 424,983 398,169 554,145 Capital and reserves Called up share capital 54,979 57,570 57,176 Capital redemption reserve 2,591 - 394 Capital reserves 353,582 326,922 484,271 Revenue reserve 13,831 13,677 12,304 Total equity shareholders' funds 424,983 398,169 554,145 Net asset value per 193.3p 172.9p 242.3p share (basic) Net asset value per 191.9p + 233.5p share (diluted) + There is no dilution. Geographical distribution of consolidated total assets less current liabilities (excluding loans and Convertible Bonds) at 31 July 2000 was Japan 57.5%, Taiwan 11.4%, South Korea 8.5%, Australia 5.7%, Hong Kong 5.7%, Other Far-East 11.8%, North America (1.1)%, United Kingdom 0.5%. Geographical distribution of currency exposure at 31 January 2000 was Japan 42.5%, Taiwan 15.3%, South Korea 11.5%, Australia 7.8%, Hong Kong 7.7%, Other Far-East 16.1%, North America (1.6)%, United Kingdom 0.7%. Consolidated Cash Flow Statement for the half year ended 31 July 2000 31 July 2000 31 July 1999 £000's £000's Net cash inflow from operating 4,759 5,248 activities Interest paid (497) (293) Tax paid (241) (1,314) Net cash inflow/(outflow) from 4,186 (32,598) financial investment Equity dividends paid (2,358) (2,418) Net cash inflow/(outflow) before use of liquid resources and 5,849 (31,375) financing Increase in short-term deposits 242 25,093 Net cash inflow from financing 2,312 - Increase/(decrease) in cash 8,403 (6,282) The Board recommends that no interim dividend payment be made (31 January 2000: 1.05p per share and 31 July 1999: 0.80p per share). The Interim Report will be posted to shareholders on or around 13 October 2000. Copies may be obtained during normal business hours from the Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY. By order of the Board Foreign & Colonial Management Limited, Secretary 27 September 2000

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