Interim Results
Pacific Horizon Investment Tst PLC
28 February 2008
PACIFIC HORIZON INVESTMENT TRUST PLC
Results for the six months to 31 January 2008
In the six month period to 31 January 2008, Pacific Horizon's net asset value
per share declined by 7.3%. The MSCI All Country Far East ex Japan Index
declined by 5.2% in sterling terms for the same period.
• Stockmarkets were volatile during the period and there was significant
divergence between the best and worst performing.
• Large holdings which had previously performed well were impacted by global
concerns associated with credit and the slowing of developed world
economies.
• The Company remained ungeared during the period. Out of the money put
options on the Hang Seng 'H' share index were bought during the period to
provide protection from significant falls in the value of Hong Kong listed
Chinese shares.
• Over the period the Company's share price declined by 15.1% moving from a
2.9% premium to net asset value to a discount of 5.8%.
• Earnings per share for the six months of 0.58p were unchanged on the same
period last year. As in previous years, no interim dividend will be paid.
• The Managers expect to be able to take advantage of opportunities arising
from any further weakness in markets.
Pacific Horizon Investment Trust PLC (Pacific Horizon) aims to achieve capital
growth through investment in the stockmarkets of the Asia-Pacific region
(excluding Japan) and in the stockmarkets of the Indian Sub-continent. The
Company has total assets of £121 million.
Baillie Gifford & Co, the Edinburgh based fund management group with around £54
billion under management and advice, as at 27 February 2008, is appointed as
investment managers and secretaries to Pacific Horizon.
28 February 2008
- ends -
For further information please contact:
Gerald Smith, Manager
Pacific Horizon Investment Trust PLC 0131 275 2000
Roland Cross, Director,
Broadgate Marketing 020 7726 6111
The following is the unaudited Half-Yearly Financial Report for the six months
to 31 January 2008
PACIFIC HORIZON INVESTMENT TRUST PLC
Half-Yearly Financial Report 31 January 2008
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared in
accordance with the Accounting Standards Board's statement 'Half-Yearly
Financial Reports';
b) the interim management report includes a fair review of the information
required by Disclosure and Transparency Rules 4.2.7R (indication of important
events during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair review of the information
required by Disclosure and Transparency Rules 4.2.8R (disclosure of related
party transactions and changes therein).
By order of the Board
Peter Mackay
Chairman
27 February 2008
PACIFIC HORIZON INVESTMENT TRUST PLC
Interim Management Report
In the six months to 31 January 2007 the net asset value per share fell by 7.3%
to 154.77p. Over the same period the MSCI All Country Far East ex Japan Index
fell by 5.2% in sterling terms.
There was significant divergence in the performance of regional markets over the
period in sterling. India, Indonesia, Malaysia and the Philippines were the best
performing markets with returns of 19.0%, 14.1%, 10.7% and 6.6% respectively.
This contrasts with falls of 16.3% and 15.6% in Korea and Taiwan which together
make up a large part of the comparative index. Although less exposed to these
markets, fund performance was impacted by stock specific issues, most notably in
Korea where previous star performers were hurt by global concerns. Chinese and
Hong Kong shares exhibited extreme volatility during the period. The Hong Kong
market rose by 3.8% whilst the Chinese focused H share index fell by 4.0%.
Singapore fell by 6.3%.
The Hong Kong economy continued to strengthen throughout the first half of the
year, as lowered interest rates at a time of improving economic strength and a
pick up in inflation led to a resurgence in retail and property spending and a
pick up in growth at the banks. The Company benefited from the strong
performance of real estate agent Midland Holdings, property conglomerate Cheung
Kong and Hang Seng Bank. The listed stock exchanges also continued their
strength of the previous year.
Chinese shares listed in Hong Kong had a very volatile six months. The
announcement that Chinese retail investors would be able to invest directly in
Hong Kong led to a strong bounce in August and the beginnings of a bubble in
terms of both sentiment and valuations. This was subsequently deflated on the
back of rising credit concerns, uncertainty over the extent and implementation
of the Chinese policy and general valuations of Chinese shares. In spite of our
having begun to raise cash through the sale of highly valued Chinese names and
having bought downside protection in the form of put options on the H share
index, performance was weakened by stock specific issues. Downside protection
remains in place as at the end of the interim period.
Taiwanese technology stocks were generally out of favour and continued to get
cheaper, whilst domestic oriented stocks showed some strength on hopes for
closer ties with China after the upcoming elections. However, the links to the
global cycle through large export markets in both Taiwan and Korea were
responsible for the poor performance of some stocks in these markets. This
included holdings in technology stocks Hon Hai and TSMC, shipbuilders such as
Samsung Heavy and Hyundai Mipo and conglomerate Samsung Corp. This was in part
offset by the stronger performance of stocks in the ASEAN region, including palm
oil plantations, Bursa Malaysia and Bakrie and Brothers.
Outlook
The outlook for the markets for the Asia-Pacific region in the short term
remains uncertain. Though the long term drivers of economies and stockmarkets
remain in place, there are continued risks of spill over effects from credit
concerns and weakening economies in the developed world. A more widespread
reduction in liquidity resulting from general de-leveraging is also likely to
provide a headwind for markets in the coming
PACIFIC HORIZON INVESTMENT TRUST PLC
Interim Management Report (Ctd)
period. The prevention of exchange rate appreciation in many Asian countries is
further adding to the volatility. Imbalances between interest rates and
inflation are likely to continue to put pressure on policy, most notably in
China where the potential for currency appreciation appears greatest. In spite
of these short term concerns, there remain areas of reasonable valuation in some
of the more out of favour markets and sectors. The Company remains ungeared and
expects to be able to take advantage of opportunities that could be thrown up by
further weakness in markets.
Risks and Uncertainties
The Company's main risk is investment risk. The risk of permanent loss of
capital can be mitigated by prudent diversification but it cannot be eliminated
altogether by this means. The Company's focus on the markets of one region of
the world imposes limits on the diversification of economic and political risk.
From time-to-time the Company may purchase options on market indices to limit
losses in the event of a large fall in markets but there is no guarantee that
this will offset losses suffered on stocks held in the portfolio. Other risk
factors that can be identified are detailed in note 10.
By Order of the Board
Baillie Gifford & Co
27 February 2008
PACIFIC HORIZON INVESTMENT TRUST PLC
INCOME STATEMENT
(unaudited)
for the six months ended for the six months ended for the year ended
31 January 2008 31 January 2007 31 July 2007
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised gains on - 13,725 13,725 - 7,853 7,853 - 12,679 12,679
investments
Unrealised (losses)/
gains on investments - (22,765) (22,765) - 5,687 5,687 - 33,917 33,917
Currency (losses)/gains - (3) (3) - 68 68 - 13 13
Income from investments
and interest receivable 1,450 - 1,450 1,302 - 1,302 3,031 3,031
Investment management (679) - (679) (459) - (459) (1,052) - (1,052)
fee
Other administrative (146) - (146) (121) - (121) (270) - (270)
expenses
Net return before
finance costs and
taxation 625 (9,043) (8,418) 722 13,608 14,330 1,709 46,609 48,318
Finance costs of - - - (103) - (103) (103) - (103)
borrowings
Net return on ordinary
activities before
taxation 625 (9,043) (8,418) 619 13,608 14,227 1,606 46,609 48,215
Tax on ordinary (176) - (176) (172) - (172) (482) - (482)
activities
Net return on ordinary
activities after
taxation 449 (9,043) (8,594) 447 13,608 14,055 1,124 46,609 47,733
Net return per ordinary
share (note 4) 0.58p (11.60p) (11.02p) 0.58p 17.68p 18.26p 1.45p 60.17p 61.62p
Note:
Dividend paid per
ordinary share (note 5) - - 1.10p
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
BALANCE SHEET
(unaudited)
At 31 January At 31 January At 31 July
2008 2007 2007
£'000 £'000 £'000
FIXED ASSETS
Investments held at fair value through profit or loss 117,282 94,863 128,845
CURRENT ASSETS
Debtors 614 834 288
Cash and short term deposits 3,597 1,534 1,718
4,211 2,368 2,006
CREDITORS
Amounts falling due within one year (note 6) (829) (806) (721)
NET CURRENT ASSETS 3,382 1,562 1,285
TOTAL ASSETS LESS CURRENT LIABILITIES 120,664 96,425 130,130
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation (38) (26) (53)
120,626 96,399 130,077
CAPITAL AND RESERVES
Called-up share capital 7,794 7,794 7,794
Share premium 2,615 2,615 2,615
Special distributable reserve 13,233 13,233 13,233
Capital redemption reserve 17,964 17,964 17,964
Capital reserves 76,223 52,265 85,266
Revenue reserve 2,797 2,528 3,205
EQUITY SHAREHOLDERS' FUNDS 120,626 96,399 130,077
NET ASSET VALUE PER ORDINARY SHARE 154.77p 123.69p 166.90p
ORDINARY SHARES IN ISSUE (note 7) 77,937,002 77,937,002 77,937,002
PACIFIC HORIZON INVESTMENT TRUST PLC
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited)
For the six months ended 31 January 2008
Called-up Share Special Capital Revenue Equity
share premium distributable reserves reserve shareholders'
capital reserve Capital funds
£'000 redemption £'000 £'000
£'000 £'000 reserve £'000
£'000
Shareholders' funds
at 1 August 2007 7,794 2,615 13,233 17,964 85,266 3,205 130,077
Net return on
ordinary activities
after taxation - - - - (9,043) 449 (8,594)
Shares issued in the
period (note 7) - - - - - - -
Dividends paid during
the period (note 5) - - - - - (857) (857)
Shareholders' funds
at 31 January 2008 7,794 2,615 13,233 17,964 76,223 2,797 120,626
For the six months ended 31 January 2007
Called-up Share Special Capital Revenue Equity
share premium distributable reserves reserve shareholders'
capital reserve Capital funds
£'000 redemption £'000 £'000
£'000 £'000 reserve £'000
£'000
Shareholders' funds at
1 August 2006 7,649 965 13,233 17,964 38,657 2,922 81,390
Net return on ordinary
activities after
taxation - - - - 13,608 447 14,055
Shares issued in the
period (note 7) 145 1,650 - - - - 1,795
Dividends paid during
the period (note 5) - - - - - (841) (841)
Shareholders' funds at
31 January 2007 7,794 2,615 13,233 17,964 52,265 2,528 96,399
For the year ended 31 July 2007
Called-up Share Special Capital Revenue Equity
share premium distributable reserves reserve shareholders'
capital reserve Capital funds
£'000 redemption £'000 £'000
£'000 £'000 reserve £'000
£'000
Shareholders' funds at
1 August 2006 7,649 965 13,233 17,964 38,657 2,922 81,390
Net return on ordinary
activities after
taxation - - - - 46,609 1,124 47,733
Shares issued in the
period (note 7) 145 1,650 - - - - 1,795
Dividends paid during
the period (note 5) - - - - - (841) (841)
Shareholders' funds at
31 July 2007 7,794 2,615 13,233 17,964 85,266 3,205 130,077
PACIFIC HORIZON INVESTMENT TRUST PLC
CONDENSED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 January 2008 31 January 31 July
2007 2007
£'000 £'000 £'000
Net cash inflow from operating activities 621 653 1,486
Net cash outflow from servicing of finance - (192) (192)
Total tax paid - - (357)
Net cash inflow from financial investment 2,115 4,567 4,275
Equity dividend paid (note 5) (857) (841) (841)
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING
1,879 4,187 (4,371)
Proceeds from issue of shares (note 7) - 1,795 1,795
Net cash outflow from bank loans - (7,408) (7,408)
INCREASE/(DECREASE) IN CASH 1,879 (1,426) (1,242)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
FUNDS/(DEBT)
Increase/(decrease) in cash in the period 1,879 (1,426) (1,242)
Net cash outflow from bank loans - 7,408 7,408
Exchange movement on bank loans - 173 173
MOVEMENT IN NET FUNDS IN THE PERIOD 1,879
6,155 6,339
Net funds/(debt) at start of the period 1,718 (4,621) (4,621)
NET FUNDS AT END OF THE PERIOD 3,597 1,534 1,718
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS
AND TAXATION TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
Net return on ordinary activities before finance
costs and taxation (8,418) 14,330 48,318
Losses/(gains) on investments - securities 9,040 (13,540) (46,596)
Currency losses/(gains) 3 (68) (13)
Changes in debtors and creditors 45 108 96
Realised currency loss (3) (105) (160)
Overseas tax suffered (46) (72) (159)
NET CASH INFLOW FROM OPERATING ACTIVITIES
621 653 1,486
PACIFIC HORIZON INVESTMENT TRUST PLC
THIRTY LARGEST EQUITY* HOLDINGS
at 31 January 2008
(unaudited)
Market % of
value total
£'000 assets+
Name Country Business
Morgan Stanley HSCEI Put Option Hong Kong Financial instrument 5,567 4.6
Bakrie and Brothers Indonesia Holding company 4,115 3.4
Pacific Basin Shipping Hong Kong Shipping company 4,019 3.3
China Infrastructure Machinery
Holdings Hong Kong Infrastructure machinery manufacturer 3,872 3.2
CNPC Hong Kong Hong Kong Oil and gas exploration and production 3,332 2.8
Samsung Corporation Korea Construction and trading company 2,973 2.5
Taiwan Semiconductor
Manufacturing Taiwan Semiconductor equipment manufacturer 2,939 2.4
SFA Engineering Korea Engineering company 2,888 2.4
Singapore Exchange Singapore Stock exchange 2,866 2.4
Li & Fung Hong Kong Supply chain management 2,860 2.4
Hang Seng Bank Hong Kong Banking services 2,508 2.1
Hon Hai Precision Industries Taiwan Electronic manufacturing services
company 2,266 1.9
Hong Kong Exchanges and Clearing Hong Kong Stock exchange 2,249 1.9
Samsung Heavy Industries Korea Shipbuilder 2,235 1.9
China Shenhua Energy China Coal producer 2,197 1.8
Thoresen Thai Agencies Thailand Shipping company 2,193 1.8
Hang Lung Properties Hong Kong Real estate developer 2,136 1.8
Sime Darby Berhad Malaysia Holding company 2,120 1.8
Reliance Industries India Petrochemical manufacturer 2,091 1.7
Daewoo Shipbuilding and Marine Korea Shipbuilder 1,893 1.6
ASM Pacific Technology Hong Kong Semiconductor equipment manufacturer 1,861 1.5
PT Telekomunikasi Indonesia Diversified telecommunications provider 1,731 1.4
Ayala Corp Philippines Holding company 1,730 1.4
IOI Malaysia Palm oil producer and refiner 1,730 1.4
Vietnam Growth Fund Vietnam Vietnam investment fund 1,719 1.4
Parkson Holdings Malaysia Department store owner and operator 1,655 1.4
Midland Holdings Hong Kong Real estate management 1,606 1.3
Gome Electrical Appliances Hong Kong Consumer electronic retailer 1,564 1.3
Shun Tak Holdings Hong Kong Diversified Macau based conglomerate 1,543 1.3
Tian An China Investment Hong Kong Property developer and manager 1,538 1.3
73,996 61.4
All stocks are listed overseas.
* Includes options on equity indices.
+ Total assets less current liabilities and deferred tax.
PACIFIC HORIZON INVESTMENT TRUST PLC
DISTRIBUTION OF ASSETS
(unaudited)
At 31 January 2008 At 31 January At 31 July
% 2007 2007
% %
Equities*: Hong Kong and China 35.4 32.6 34.8
Korea 15.2 14.0 19.1
Taiwan 11.2 14.2 11.6
Singapore 11.0 12.5 12.2
Indonesia 6.1 5.1 4.6
Malaysia 5.7 4.9 5.4
India 5.5 1.1 2.9
Thailand 3.1 8.7 4.2
Philippines 2.1 2.4 2.4
Vietnam 1.9 2.9 1.9
Total equities 97.2 98.4 99.1
Net liquid assets 2.8 1.6 0.9
Total assets + 100.0 100.0 100.0
+ Total assets less current liabilities and deferred tax.
* Includes options on equity indices.
PACIFIC HORIZON INVESTMENT TRUST PLC
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)
1. The condensed set of financial statements have been prepared on the basis
of the same accounting policies as set out in the Company's Annual
Financial Statements at 31 July 2007 and in accordance with the ASB's
Statement 'Half-Yearly Financial Reports' and have not been audited or
reviewed by the Auditors pursuant to the Auditing Practices Board Guidance
on 'Review of Interim Financial Information'.
2. The financial information contained within this half-yearly financial
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 2007 has been extracted from the statutory accounts which have been
filed with the Registrar of Companies. The Auditors' Report on those
accounts was not qualified and did not contain statements under the section
237(2) or (3) of the Companies Act 1985.
3. The management agreement is terminable on not less than 12 months' notice,
or on shorter notice in certain circumstances. The fee in respect of each
quarter is 0.25% of the total assets less current liabilities of the
Company on the last day of that quarter.
Six months to 31 Six months to Year to
January 2008 31 January 31 July
£'000 2007 2007
£'000 £'000
4. Net return per ordinary share
Revenue return on ordinary activities after 449 447 1,124
taxation
Capital return on ordinary activities after (9,043) 13,608 46,609
taxation
Total return (8,594) 14,055 47,733
Weighted average number of ordinary shares in
issue 77,937,002 76,994,339 77,461,796
Net return per ordinary share is based on the above totals of revenue and
capital and the weighted average number of ordinary shares in issue during
each period.
There are no dilutive or potentially dilutive shares in issue.
5. Dividends
Amounts recognised as distributions in the
period:
Previous year's final dividend of 1.10p (2006 -
1.10p) paid 29 October 2007 857 841 841
No interim dividend will be declared.
6. The Company had no borrowings at 31 January 2008, 31 January 2007 or
31 July 2007.
7. The Company has authority to allot shares under section 80 of the Companies
Act 1985. In the six months to 31 January 2008 no shares were issued. In
the six months to 31 January 2007 and the year to 31 July 2007 a total of
1,450,000 ordinary shares of 10p each fully paid were issued for cash
amounting to £1,795,000.
The Company has authority to buy back its ordinary shares. The authority
was last renewed at the Annual General Meeting in October 2007. In the six
months to 31 January 2008 no ordinary shares were bought back. As a result,
at 31 January 2008, the Company's authority to buy back shares remains
unchanged at 11,682,756 ordinary shares.
PACIFIC HORIZON INVESTMENT TRUST PLC
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited) (Ctd)
8. During the period, transaction costs on purchases amounted to £70,000
(31 January 2007 - £52,000; 31 July 2007 - £104,000) and transaction costs
on sales amounted to £88,000 (31 January 2007 - £58,000; 31 July 2007 -
£116,000).
9. None of the views expressed in this document should be construed as advice
to buy or sell a particular investment.
10. Risks and uncertainties
The principal risks and uncertainties facing the Company are detailed in
the Interim Management Report. Other risks facing the Company include the
following; currency risk (investments are subject to movements in exchange
rates), gearing risk (the use of borrowing can magnify the impact of
falling markets), the risk that the discount can widen and regulatory risk
(that the loss of investment trust status or a breach of the UKLA Listing
Rules could have adverse financial consequences and cause reputational
damage). These risks are monitored and assessed by the Managers and
reported on regularly to the Board and the Audit Committee.
11. The Half-Yearly Financial Report is available at www.pacifichorizon.co.uk
and will be posted to shareholders on or around 8 March 2008.
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