Final Results
Templeton Emerging Markets IT PLC
14 August 2007
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
("TEMIT") (the "Company")
YEAR TO 30 APRIL 2007
The Company today announced its annual results for the year to 30 April 2007.
FINANCIAL SUMMARY
2006-2007
Year Ended Year Ended
30 April 30 April
2007 2006
Net Assets and Shareholders' Funds (£ million) 1,925.48 1,866.20
Net Asset Value (pence per Ordinary Share) 359.24 348.18
Total Expense Ratio* 1.32% 1.41%
Number of Ordinary Shares in Issue 535,981,593 535,981,593
Movement in Net Assets and Shareholders' Funds 3.18% 75.07%
Benchmark 1
MSCI Emerging Markets Index 7.46% 71.14%
Benchmark 2
S & P/IFCI Composite Index 8.95% 73.48%
Share Price (pence) 327.25 310.25
Year - High (pence) 338.50 314.00
Year - Low (pence) 265.55 170.75
Dividend (pence per Ordinary Share)+ 2.76 2.67
Revenue Earnings (pence per Ordinary Share)++ 4.16 3.65
Total Earnings (pence per Ordinary Share)++ 13.82 151.97
Share Price Discount to Net Asset Value 8.90% 10.89%
Indices above are shown on a total return basis in GBP. Source: Franklin
Templeton Investments Datastream.
The Company has prepared its financial statements in accordance with
International Financial Reporting Standards ("IFRS") for the year ended 30 April
2007 and 30 April 2006.
* The Total Expense Ratio represents the annualised total expenses of the
Company divided by the monthly average net assets of the Company for the year.
+ Under IFRS, only dividends paid during the year are reflected in the financial
statements. The ordinary dividend of 2.76 pence is the actual dividend per share
paid to shareholders on 4 October 2006 and subsequently reflected in the results
for the year ended 30 April 2007.
++ The Revenue Earnings per Ordinary Share figure is based on the earnings shown
in the "Revenue" column in the Income Statement.
TEN YEAR RECORD
1998-2007
Year 1998 1999 2000 2001 2002 2003 2004 2005* 2006 2007
Ended
30 April
Total Net
Assets and
Shareholders'
Funds £'000 686,583 721,571 749,906 619,031 666,217 595,486 778,457 1,065,957 1,866,199 1,925,484
NAV Basic
(pence) 145.86 153.29 159.25 135.66 146.24 130.82 171.01 198.88 348.18 359.24
NAV Diluted
(pence) 143.74 149.95 154.93 135.21 144.00 N/A 164.58 N/A N/A N/A
Price -
Ordinary
(pence) 120.25 129.00 116.25 113.50 125.00 107.25 144.00 167.25 310.25 327.25
Price -
Warrants
pence) 29.50 37.00 22.00 17.00 17.50 3.75 13.25 N/A N/A N/A
Discount
(pence) 25.61 24.29 43.00 22.16 21.24 23.57 27.01 31.63 37.93 31.99
Discount (%) 17.6 15.8 27.0 16.3 14.5 18.0 15.8 15.9 10.9 8.9
Revenue
Earnings per
share
Undiluted
(pence) 1.43 1.68 1.34 1.36 1.82 1.70 2.89 3.42 3.65 4.16
Revenue
Earnings per
share
Diluted 1.19 1.40 1.12 1.13 1.51 N/A 2.88 N/A N/A N/A
(pence)
Net Dividends
per
Ordinary
Share 1.10 1.10 1.10 1.25 1.25 1.25 1.25 2.25 2.67 2.76
(pence)
* Prior to April 2005 the total net assets and shareholders funds have been
prepared in accordance with UK GAAP. The results for the year ended 30 April
2005 have been restated in accordance with IFRS.
The main differences as a result of adopting IFRS are:
•Investments are valued on a bid basis, as opposed to a mid basis; and
•Only dividends paid during the year are reflected in the Financial
Statements. A dividend of 3.13 pence on the profits of 2007 has been
proposed.
CHAIRMAN'S STATEMENT
Proposed Capital Reorganisation
At the EGM held on 27 July 2007, the proposals for the capital reorganisation
did not achieve the 75% vote required for approval, although there was a
majority (approximately 64%) in favour. Accordingly, the proposals set out in
the Circular to Shareholders dated 3 July 2007 will not be implemented.
Shareholders did however vote (approximately 94%) in favour of granting
authority to the Company to purchase up to 14.99% of the Ordinary Shares in
issue on 26 July 2007, the authority to expire no later than the Annual General
Meeting in 2008.
The Board whilst disappointed that the capital reorganisation will not now take
place welcomes the clear majority in favour of its proposals. In the
circumstances it does not intend to bring forward new proposals to Shareholders
but will continue its new share buy-back policy.
In the Circular to Shareholders proposing the capital reorganisation, the costs
were estimated at £5 million, the actual costs incurred will be under £600,000.
The difference is because the estimate included costs to completion and success
fees.
Performance
At 30 April 2007, your Company had total assets of £1,925 million, compared with
£1,866 million at 30 April 2006.
The stated objective of the Company is to provide long-term capital appreciation
for its investors. Since launch in 1989, the net asset value of the Company has
risen by 1,071.37% in sterling terms compared with a rise of 611.34% for the
MSCI Emerging Markets Index and 609.58% for the S&P/IFC Investable Composite
Index.
As explained in the Manager's Report, the first half of the current year was
particularly challenging. However performance rallied in the second half of the
year. From a low of 314.02 pence at the end of October 2006 the net asset value
per share rose by 14.4% to close at 359.24 pence. The closing net asset value
compares favourably to the 348.18 pence value at the beginning of the financial
year. The total assets at the year end were £1,925 million compared to £1,683
million at the half year. The total return for the Company for the year was
4.22%. Over the year, the MSCI Emerging Markets Index and the S&P/IFC Investable
Composite Index both increased by 7.46% and 8.95% respectively.
The share price at 30 April 2007 was 327.25 pence, compared with 310.25 pence at
the beginning of the financial year, an increase of 5.48%. The Company's share
price rose by 18.8% during the second half of the year. The Company's discount
narrowed by 18% during the year, dropping from 10.9% initially to 8.9% by the
end of the year.
The Manager's Report and Portfolio Review gives a detailed analysis of the
Company's performance over the year. The portfolio is managed using the value
style of investing. This requires a detailed research of stocks and the Manager
purchases only those trading at less than their assessed value.
Since the year end, investment performance has improved further. On 9 August
2007, the net asset value per Ordinary Share had risen by 15.1% to 413.42 pence
and the share price by 15.5% to 378.00 pence.
Asset allocation
At the year end, 98.7% of the Company's total assets were invested in equities,
with the remaining 1.3% being held in liquid assets. The general policy of the
Board is to be fully invested.
Revenue and Dividend
Gross revenue rose by 8.3% from last year. This is due, in the main, to the
increase in the size of your Company. The Board's policy is to maintain
investment trust status. To this end, the Board of Directors has proposed a cash
dividend of 3.13 pence per Ordinary Share (2006: 2.76 pence). This represents a
distribution of 90% of gross revenues. The dividend will be paid on 3 October
2007 to Shareholders on the register at the close of business on 31 August 2007,
subject to the approval of Shareholders at the Annual General Meeting, which
will be held on 27 September 2007.
Discount
During the year, the Board has kept the discount under continual review and
retained its right to buy back shares when it believed that this was in
shareholders' best interests having regard to the Company's investment
objective. No buy-backs were executed during the year. As noted above, the
discount at the year end had narrowed to 8.9% comparing favourably with a 10.9%
discount at 30 April 2006. Since the year end the Board has adopted a more
active share buy-back programme following consultation with shareholders on
discount control measures.
The Board and the AGM
The Board welcomed Neil Collins to the Board on 28 September 2006. Peter Godsoe,
Andrew Knight and Peter Smith retire by rotation and offer themselves for
re-election at the AGM. In addition, Charles Johnson and I, being over the age
of 70, retire and offer ourselves for re-election. The Board continually
evaluates its performance and following the annual Directors' appraisal process,
and on the recommendation of the Nomination Committee, the Board has approved
all these Directors standing for re-election.
Finally, I would like to invite you to the AGM which will be held in London at
the RAC Club on 27 September 2007 at 12 noon. I hope that you will be able to
attend this meeting at which the Manager will make a short presentation and,
with my fellow Directors, I look forward to the opportunity of meeting you.
Sir Ronald Hampel
14 August 2007
Indices above are shown on a total return basis in GBP. Sources: Franklin
Templeton Investments and Standard & Poors.
MANAGER'S REPORT AND PORTFOLIO REVIEW
30 APRIL 2007
OVERVIEW
Most emerging markets recorded positive performances during the reporting
period. A favourable macroeconomic environment coupled with significant
liquidity drove equity prices up. Latin American markets were the top performers
as they benefited from relatively strong commodity prices, growing foreign
reserves, lower interest rates and solid domestic demand in the region's major
economies. In Europe, however, Russia and Turkey underperformed their regional
peers. Political uncertainty led to some short-term selling in Turkey towards
the end of the period. Asian markets, on the other hand, recorded mixed
performances with strong gains seen in China while South Korea and Thailand
experienced declines. In Thailand, a military coup, capital controls, bomb
blasts and new restrictions on foreign ownership in listed companies in
selective sectors rattled investor confidence in equity investments. In South
Africa, a consumer boom, propelled by low borrowing rates and greater domestic
demand, led to higher corporate earnings in related companies. However, a weaker
Rand eroded the market's GBP gains.
While there were substantial downturns in May/June 2006 and February/March 2007,
most markets rebounded as investors used the correction as an opportunity to
build positions at more attractive prices. In a bull market that has run for
nearly four years with few interruptions, corrections such as these can be
expected.
PERFORMANCE ATTRIBUTION
The Company's performance, relative to the MSCI Emerging Market Index, benefited
from underweight positions in Taiwan and Russia as well as an overweight
exposure to Croatia. Good stock selection in Taiwan, Russia and South Korea
further enhanced relative performance. A zero weighting in Israel also supported
performance as that market underperformed the benchmark index during the period.
In Taiwan, the largest contributors to performance were the Company's absence
from stocks such as High Tech Computer and United Microelectronics and
underweight holdings in Taiwan Semiconductor. In Russia, underweight exposures
to Gazprom and Surgutneftegaz (no holdings) as well as an overweight exposure to
Norilsk Nickel contributed to relative performance. In South Korea, an
underweight position in Samsung Electronics and an overweight position in SK
Corporation helped the portfolio. By sector, underweight exposures to the
semiconductor and technology hardware and equipment industries as well as good
stock selection in automobile stocks helped performance.
As regards negative impacts on the portfolio, an overweight exposure to Hungary
and underweight position in Mexico resulted in negative attribution effects. The
Company's holdings in India and Poland also had an adverse impact on relative
performance. Overweight positions in PKN Orlen, Gedeon Richter and MOL detracted
from relative performance because the stocks underperformed the MSCI Emerging
Market Index. The Company continued to favour these stocks due to their strong
market positions and attractive valuations. In India and Mexico, zero exposure
to outperforming stocks such as America Movil, Reliance Industries and Infosys
Technologies had a negative impact on performance relative to the benchmark
index. These stocks were not held in the portfolio due to the availability of
more attractive stocks in the emerging market universe. By industry, holdings in
capital goods companies and utilities underperformed.
PORTFOLIO CHANGES & INVESTMENT STRATEGIES
During the reporting period, the Company made significant investments in Russia
and Turkey. Russian purchases included: Gazprom, the largest natural gas company
in the world by reserves and production; Norilsk Nickel, which is among the
largest platinum companies and nickel producers in the world; and Lukoil, a
major integrated oil and gas company in Russia. In Turkey, the Company added:
Turkcell, a leading provider of mobile communications services; Akbank, one of
the largest commercial banks in Turkey; and Tupras, the country's largest
industrial company with a dominant market share in oil refining. Additional
purchases were also made in Pakistan, India, Poland, Indonesia and Brazil as the
Company continued to search for companies trading at attractive valuations.
Exposure to the oil and gas, coal, aluminium, diversified metals and mining and
precious metals and minerals sectors was increased as these stocks are expected
to benefit from greater revenues and earnings as a result of relatively high
commodity prices. The interim correction in commodity prices during the period
provided the Company with an opportunity to build positions at lower prices. In
addition to the Russian and Turkish additions, the Company added Vale Do Rio
Doce, one of the world's largest iron ore producers that is also engaged in
various mining activities, Aluminum Corporation of China (Chalco), China's
leading producer of alumina and primary aluminium products, PTT, a major
integrated gas company in Thailand, and Yanzhou Coal, one of the most profitable
coal producers in China.
One of the largest sales during the year was in Pliva, a Croatian pharmaceutical
company which was the subject of a takeover battle with the price going far
higher than the Company's sell limit. This subsequently eliminated exposure to
the Croatian market. The Company also divested its holdings in LG Card, a
consumer finance company in South Korea, following a tender offer, during the
reporting period.
Because certain stocks approached their sell targets, exposure to South Korea,
South Africa and Taiwan was reduced during the period. The Company's investments
in the packaged foods and meats, chemicals and construction industries were
trimmed via the sale of CJ Corporation, a food producer in South Korea, LG
Petrochemical, a commodity chemical producer engaged in manufacturing of
ethylene and ethylene derivative products, and Daewoo Shipbuilding, a South
Korean shipbuilder. In South Africa and Taiwan, key sales included Nedbank, a
South African bank with operations in commercial banking, investment banking and
asset management, and President Chain Stores, a major retail chain operator in
Taiwan.
ASIA
China was among the strongest performing markets globally as strong fund flows
and continued investor interest in one of the world's fastest growing economies
propelled stock prices. China's Gross Domestic Product ("GDP") accelerated to
11.1% in the first quarter of 2007 heightening concerns that the Chinese
government would implement additional tightening measures. Soon after in April,
the People's Bank of China raised the reserve requirement ratio by 50 basis
points to 10.5% as efforts to curb liquidity continued. This was the sixth
increase in the last ten months. In comparison, GDP grew 10.7% in 2006. A clear
indication of China's robust trade sector and attraction to foreign investors is
its growing foreign exchange reserves. The world's largest reserves increased by
US$135.7 billion to US$1.2 trillion in the first quarter. China also signed a
free trade agreement covering 60 service industries within the ASEAN bloc. The
agreement came into effect on 1 July 2007.
The South Korean economy grew 4.0% in the first three months of the year mainly
due to strong exports, capital investment and consumer expenditure. GDP grew
5.0% in 2006 with the South Korean government expecting 2007 GDP growth to be
4.5%. Moreover, inflation remained benign in 2007, allowing the central bank to
leave interest rates unchanged during the first three months of the year. While
there have been some concerns over the strengthening Won and its impact on the
country's export competitiveness, the Free Trade Agreement (FTA) reached between
South Korea and the US could provide exporters with a competitive edge. However,
the FTA has yet to be ratified by the US Congress and the Korean National
Assembly.
The Thai economy grew 4.2% in the fourth quarter of 2006 as political
uncertainty and weak domestic demand slowed economic recovery. While GDP grew
5.0% in 2006, it is expected to slow down this year due to reduced export growth
and sluggish private investment. The Thai government also remained concerned
about the strengthening Baht which could adversely impact export demand. Japan
and Thailand signed a free trade agreement in early April 2007 which will cut
tariffs on a wide range of goods. The Thai Cabinet has ratified the deal and
approval from Japan's parliament is expected shortly. With a new, unelected
interim government, more policy surprises can be expected which could lead to
further bouts of volatility in the stock market during 2007.
LATIN AMERICA
International confidence in the region, especially Brazil, was high. A loosening
monetary policy, growing foreign reserves and implementation of fiscal
incentives aimed at boosting economic growth and investment led investors to
remain positive on the country's prospects. International reserves totalled
US$121.8 billion at the end of April 2007 due to stronger inflows in foreign
direct investment (FDI), portfolio investments and short-term accounts. The
economy grew a revised 3.7% year on year in 2006, higher than 2005's adjusted
2.9% growth. Key drivers included robust domestic demand, particularly,
household consumption and investment.
SOUTHERN/EASTERN EUROPE
In Europe, the Russian market lagged its regional counterparts as a correction
in oil prices during the period led investors to adopt a more cautious approach
and lock in gains made in the last few years. However, a recovery in oil prices
towards the end of the period provided investors with some comfort. Moreover,
the country continued to report strong economic data including a 6.7% GDP growth
in 2006 together with US$31 billion in foreign direct investment, more than
double the amount received in 2005. The benefits of this could bode well for the
stock market in the longer term.
Turkey's GDP grew 6.1% year on year in 2006 mainly due to robust external
demand. The current account and trade deficit numbers improved in 2006, evidence
of the country's successful structural reforms over the last few years. FDI
inflows totalled US$20.2 billion in 2006, more than double the US$9.8 billion in
the preceding year. In politics, given the ruling Justice and Development Party
(AKP)'s majority in parliament, it was almost a certainty that its nominated
Foreign Minister, Abdullah Gul, would emerge as the new president. However, the
opposition party's boycott of the elections, led the Constitutional Court to
annul the results. The ruling party is now pushing for a constitutional
amendment to allow the public as opposed to the parliament to elect the new
president.
OUTLOOK
Emerging market sovereign spreads have declined to near all-time lows,
reflecting investors' assessments that the fundamentals of emerging markets are
strong. In a bull market that has run for about four years with only one major
correction in 2006, fund inflows can be expected and are, in fact, healthy. The
Manager continues to monitor the markets and look to possibly increase the
Company's investments in stocks which the Manager deems to be oversold due to
poor market sentiment rather than weak fundamentals. Taking a long-term view,
emerging markets continue to offer investors with an attractive investment
destination. Moreover, these markets continue to report strong macroeconomic
growth and are implementing structural reforms. The role of emerging markets in
the global economy has grown significantly in recent years. These countries have
made fundamental improvements to their economies and these changes are here to
stay. In addition to the traditional emerging markets, the larger frontier
markets are also beginning to look interesting.
In general, the strong fundamental outlook for emerging markets remains intact.
Investors should expect volatility, as is the nature of these markets, but the
Manager expects long-term investors to be well rewarded. Finally, as value
investors the Manager continues to focus on those companies that have the best
earnings and dividends, in relation to their prices.
J Mark Mobius, Ph.D.
Templeton Asset Management Ltd.
14 August 2007
PORTFOLIO HOLDINGS BY GEOGRAPHY
Geographical analysis
(by country of incorporation)
As at 30 April 2007
FairValue (a)
Country £'000
AUSTRIA
OMV AG++ 32,518
--------
32,518
--------
BRAZIL
Banco Bradesco SA, ADR, pfd.*+ 71,456
Centrais Eletricas Brasileiras SA 31,643
Companhia Paranaense de Energia-Copel, ADR, pfd.*+ 33,903
Companhia Vale do Rio Doce, ADR, pfd., A*+ 88,011
Petroleo Brasileiro SA, ADR, pfd.*+ 52,909
Souza Cruz SA 16,516
Unibanco - Unaio de Bancos Brasileiros SA, GDR, pfd.*+ 92,250
----------
386,688
---------
CHINA
Aluminum Corp. of China Ltd., H 47,704
Brilliance China Automotive Holdings Ltd. 5,167
China International Marine Containers (Group) Co. Ltd., 5,457
China Merchants Holdings International Co. Ltd. 25,261
China Mobile (Hong Kong) Ltd. 23,247
China Petroleum and Chemical Corp., H 66,917
Cosco Pacific Ltd. 9,654
Denway Motors Ltd. 20,464
PetroChina Co. Ltd., H 60,667
Yanzhou Coal Mining Co Ltd. 19,494
----------
284,032
---------
GREECE
Titan Cement Co. 3,290
-------
3,290
-------
HUNGARY
Gedeon Richter Ltd. 45,002
MOL Magyar Olaj-es Gazipari Rt. 42,293
--------
87,295
--------
PORTFOLIO HOLDINGS BY GEOGRAPHY (Continued)
FairValue (a)
Country £'000
INDIA
Gail India Ltd. 7,373
Hindalco Industries Inc. 14,838
Indian Oil Corp. Ltd. 532
Oil & Natural Gas Corp. Ltd. 30,782
National Aluminium Co. Ltd. 12,753
--------
66,278
--------
INDONESIA
Bank International Indonesia 2,802
PT Bank Danamon Indonesia Tbk 6,825
PT Astra International Tbk 12,236
--------
21,863
--------
MALAYSIA
Maxis Communications Bhd. 32,541
Tanjong PLC 5,738
---------
38,279
--------
MEXICO
Kimberly Clark de Mexico SA de CV, A 13,831
Telefonos de Mexico SA de CV, ADR* 7,854
---------
21,685
--------
PAKISTAN
Faysal Bank. 9,521
MCB Bank Ltd. 15,937
Pakistan Telecommunications Corp PTC. 11,836
--------
37,294
--------
PHILIPPINES
San Miguel Corp., B 9,352
-------
9,352
-------
PORTFOLIO HOLDINGS BY GEOGRAPHY (Continued)
Fair Value (a)
Country £'000
POLAND
DOM Development SA 542
Grupa Lotos SA 16,265
Polski Koncern Naftowy Orlen SA 35,548
--------
52,355
--------
RUSSIA
Gazprom 50,745
LUKOIL, ADR* 48,200
Mining and Metallurgical Co. Norilsk Nickel, ADR 47,285
Mobile Telesystems, ADR* 22,495
OAO TMK 5,546
-----------
174,271
---------
SINGAPORE
Dairy Farm International Holdings Ltd. 35,038
--------
35,038
--------
SOUTH AFRICA
Anglo American PLC 23,536
Old Mutual PLC 7,562
Remgro Ltd. 24,943
Tiger Brands Ltd. 3,984
---------
60,025
--------
SOUTH KOREA
Daelim Industrial Co. 3,370
Hana Financial Group Inc. 6,724
Hyundai Development Co. 107,294
Kangwon Land Inc. 37,115
LG Card Co. Ltd. 1,582
SK Corp. 76,668
SK Telecom Co. Ltd. 6,282
-----------
239,035
---------
SWEDEN
Oriflame Cosmestics SA, ADR++ 4,499
-------
4,499
-------
PORTFOLIO HOLDINGS BY GEOGRAPHY (Continued)
FairValue (a)
Country £'000
TAIWAN
Chunghwa Telecom Co. Ltd. 5,434
Lite-On Technology Corp. 9,532
MediaTek Inc. 9,490
Tainan Enterprises Co. Ltd 4,528
Taiwan Mobile Co. Ltd. 5,852
Taiwan Semiconductor Manufacturing Co. Ltd 8,721
---------
43,557
--------
THAILAND
Bangkok Bank Public Co. Ltd. fgn. 8,697
Kasikornbank Public Co. Ltd., fgn. 23,692
Kiatnakin Bank Public Co. Ltd., fgn. 8,965
Land and Houses Public Co. Ltd., fgn. 10,259
PTT Exploration and Production Public Co. Ltd., fgn. 18,362
PTT Public Co Ltd. 18,033
Siam Cement Public Co. Ltd., fgn. 21,816
Siam Commercial Bank Public Co. Ltd., fgn. 34,275
True Corp. Public Co. Ltd., rts., 3/28/08 0
--------------
144,099
---------
TURKEY
Akbank TAS 74,121
Arcelik AS, Br. 6,942
KOC Holding AS 4,984
Migros Turk TAS 3,091
Trakya Cam Sanayii AS 2,934
Tupras-Turkiye Petrol Rafineleri AS 42,057
Turkcell Iletisim Hizmetleri 27,464
----------
161,593
---------
TOTAL INVESTMENTS 1,903,046
OTHER NET ASSETS 22,438
TOTAL NET ASSETS 1,925,484
-----------
All investments are equity shares unless otherwise indicated.
* US Listed Stocks
+ pfd: preferred shares
++ These companies have significant exposure to operations in emerging markets.
(a) Fair value represents the bid value of a security as required by
International Financial Reporting Standards.
PORTFOLIO HOLDINGS BY VALUE
Ten largest portfolio holdings
As at 30 April 2007
Number of Issuer Principal % of Issued % of Market
Shares Country Share Total Value
of Issue/ Capital Net £'000
Listing Held Assets
EQUITY INVESTMENTS
3,705,290 Hyundai South Korea 4.92 5.57 107,294
Development Co.
One of the leading
residential
property
developers
in Korea.
1,903,100 Unibanco - Uniao Brazil 1.60 4.79 92,250
de Bancos
Brasileiros SA,
GDR, pfd.
One of Brazil's
largest financial
conglomerates
Providing a full
range of banking
and financial
services.
5,164,090 Companhia Vale do Brazil 0.54 4.57 88,011
Rio Doce
ADR, pfd., A
This
Brazilian-based
Company is one
of the world's
largest iron ore
producers that is
also engaged in
various mining
activities.
1,405,990 SK Corp. South Korea 1.09 3.98 76,668
A major player in
South Korea's oil
refining industry.
19,443,465 Akbank TAS Turkey 0.84 3.85 74,121
One of Turkey's
largest privately
owned
commercial banks,
providing a full
range of
banking and
financial
services.
6,749,476 Banco Bradesco SA, Brazil 0.67 3.71 71,456
ADR, pfd.
One of Brazil's
largest financial
conglomerates,
providing a full
range of banking
and financial
services.
152,584,000 China Petroleum China 0.91 3.48 66,917
and Chemical
Corp., H
One of the largest
integrated energy
companies
in China.
106,506,000 PetroChina Co. China 0.50 3.15 60,667
Ltd., H
China's largest
oil and gas
company in terms
of
reserves. The
company is also
diversifying
into marketing and
downstream
activities.
1,186,759 Petroleo Brazil 0.06 2.75 52,909
Brasileiro SA,
ADR, pfd.*+
Brazil's national
oil and gas
company.
2,540,595 Gazprom Russia 0.01 2.64 50,745
----------
Gazprom is the
largest producer
of natural gas
in the world in
terms of reserves
and production.
Top Ten Holdings - 741,038
38.49% of Net ---------
Assets
* US listed stocks
+ pfd: preferred shares
INCOME STATEMENT OF THE COMPANY
For the year ended 30 April 2007
2007 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on
investments
and exchange
Gains on
investments
at fair value - 52,513 52,513 - 795,513 795,513
Losses on
foreign exchange - (739) (739) - (535) (535)
Revenue
Dividends 52,883 - 52,883 49,221 - 49,221
Bank Interest 1,192 - 1,192 676 - 676
---------- ------------- --------- ----------- ---------------- -------------
54,075 51,774 105,849 49,897 794,978 844,875
Expenses
Investment
Management fee (17,328) - (17,328) (15,203) - (15,203)
Other expenses (5,715) - (5,715) (6,222) - (6,222)
---------- ------------- --------- ----------- ---------------- -------------
Profit 31,032 51,774 82,806 28,472 794,978 823,450
before taxation
Tax Expense (8,727) - (8,727) (8,897) - (8,897)
---------- ------------- --------- ----------- ---------------- -------------
Profit for the
financial year 22,305 51,774 74,079 19,575 794,978 814,553
---------- ------------- --------- ----------- ---------------- -------------
Profit
attributable
to equity
holders of
the company 22,305 51,774 74,079 19,575 794,978 814,553
---------- ------------- --------- ----------- ---------------- -------------
Basic
earnings per
Ordinary
Share 13.82p 151.97p
--------- -------------
Expense Ratio 1.32% 1.41%
--------- -------------
The Total column is the Income Statement of the Company.
The supplementary revenue and capital return columns are both prepared under
guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations.
BALANCE SHEET
As at 30 April 2007
2007 2006
£'000 £'000
ASSETS
Non-current assets
Investments 1,903,046 1,851,594
----------- -----------
Current assets
Trade and other receivables 9,010 9,290
Cash and cash equivalents 25,915 25,764
------------ -------------
34,925 35,054
------------ -------------
LIABILITIES
Current Liabilities
Trade and other payables (7,853) (15,440)
Current tax payable (2,248) (3,309)
----------- -----------
(10,101) (18,749)
---------- ----------
Non-current liabilities
Deferred tax liabilities (2,386) (1,700)
------------- -------------
NET ASSETS 1,925,484 1,866,199
----------- -----------
ISSUED SHARE CAPITAL AND RESERVES
ATTRIBUTABLE TO EQUITY SHAREHOLDERS
Equity Share Capital 133,995 133,995
Share Premium Account 375,327 375,327
Capital Redemption Reserve 6,893 6,893
Capital Reserve - Realised 414,900 271,724
Capital Reserve - Unrealised 943,605 1,035,007
Revenue Reserve 50,764 43,253
------------- -------------
SHAREHOLDERS' FUNDS 1,925,484 1,866,199
----------- -----------
Net Asset Value per Ordinary Share (in pence) 359.24 348.18
These Financial Statements were approved for issue by the Board and signed on 14
August 2007.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2007
Capital Capital Capital
Share Share Redemption Reserve - Reserve - Revenue
Capital Premium Reserve Realised Unrealised Reserve Total
Ref £000 £000 £000 £000 £000 £000 £000
Balance
at 30
April
2005 133,995 375,327 6,893 183,656 328,097 37,989 1,065,957
--------- --------- ------- --------- --------- -------- -----------
Profit
for the
period - - - - - 814,553 814,553
Equity
dividends - - - - - (14,311) (14,311)
Transfer
to
capital
reserves - - - 88,068 706,910 (794,978) -
--------- --------- ------- --------- --------- -------- -----------
Balance
at 30
April
2006 133,995 375,327 6,893 271,724 1,035,007 43,253 1,866,199
--------- --------- ------- --------- --------- -------- -----------
Profit
for the
period - - - - - 74,079 74,079
Equity
Dividends a - - - - - (14,794) (14,794)
Transfer
to
capital
reserves - - - 143,176 (91,402) (51,774) -
Balance
at 30
April
2007 133,995 375,327 6,893 414,900 943,605 50,764 1,925,484
--------- --------- ------- --------- --------- -------- -----------
a. The equity dividend in respect of the year ended 30 April 2006 was
paid on 4 October 2006.
CASH FLOW STATEMENT
For the year ended 30 April 2007
2007 2006
£'000 £'000
Cash flows from operating activities
Profit before taxation 82,806 823,450
Adjustments for:
Gains on investments at fair value (52,513) (795,513)
Losses on foreign exchange 739 535
(Increase)/decrease in debtors (439) 598
(Increase)/decrease in accrued income (56) 16
(Decrease)/increase in creditors (203) 1,884
---------- ----------
Cash generated from operations 30,334 30,970
Taxation paid (8,878) (6,892)
--------- ---------
Net cash inflow from operating activities 21,456 24,078
-------- --------
Cash flows from investing activities
Purchases of non-current financial assets (371,610) (198,399)
Net proceeds from the sale of
non-current financial assets 364,806 190,402
------------ ------------
(6,804) (7,997)
------------- -------------
Cash flows from financing activities
Equity dividends paid (14,793) (14,311)
---------- ----------
(14,793) (14,311)
---------- ----------
Net (decrease)/increase in cash (141) 1,770
Cash and cash equivalents at start of year 25,764 24,294
Exchange gains/(losses) on cash 292 (300)
------------- ------------
Cash and cash equivalents at end of year 25,915 25,764
----------- ----------
This preliminary statement, which has been agreed with the Auditors, was
approved by the Board on 14 August 2007. It is not the company's statutory
accounts. The statutory accounts for the financial year ended 30 April 2006 have
been delivered to the Registrar of Companies and received an audit report which
was unqualified, did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying the report, and
did not contain statements under section 237(2) and (3) of the Companies Act
1985. The statutory accounts for the financial year ended 30 April 2007 have not
yet been approved, audited or filed.
The Annual Report and Accounts will be mailed to Shareholders shortly. Copies
may be requested during normal business hours from Client Dealer Services at
Franklin Templeton Investment Management Limited on freephone 0800 305 306.
For information please contact Client Dealer Services on freephone 0800 305 306
or Sara MacIntosh (Company Secretary) on + 44 (0) 131 242 4000, UBS (Corporate
Broker) Joe Winkley or Mark Whitfeld on + 44 (0) 20 7567 8000. No representation
or warranty is made by UBS Limited as to the accuracy or completeness of the
information contained in this announcement and no liability will be accepted for
any loss arising for its use. These figures have been prepared by Franklin
Templeton Investments and are their sole responsibility.
This information is provided by RNS
The company news service from the London Stock Exchange
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