Final Results
Templeton Emerging Markets IT PLC
22 June 2005
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
("TEMIT") ("the Company")
YEAR TO 30 APRIL 2005
The Company today announced its annual results for the year to 30 April 2005.
CHAIRMAN'S STATEMENT
At 30 April 2005, your Company had total assets of £1,056.16 million, compared
with £778.46 million at 30 April 2004. Part of the increase (£163.28 million)
reflected underlying growth in the value of investments. A further £123.12
million arose from the successful execution of the warrant redemption programme
in September 2004. 92.57 million warrants were redeemed with a value of £123.12
million.
At period-end, 98.79% of the Company's total assets were invested in equities,
with the remaining 1.21% being held in liquid assets. The general policy of the
Board is to be fully invested.
Net asset value per share at year-end was 197.05 pence, an increase of 15.23%
over the year. The share price at 30 April 2005 was 167.25 pence, compared with
144.00 pence at the beginning of the fiscal year, an increase of 16.15%. Over
the same period, the MSCI Emerging Markets Index, on a total return basis in
sterling terms, rose 15.18%, and the S&P/IFCI Composite Index increased 16.07%.
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 inception, the net asset value of
Templeton Emerging Markets Investment Trust PLC has risen by 417.29% in sterling
terms compared with a rise of 275.42% for the S&P/IFCI Composite Index and
286.80% for the MSCI Emerging Markets Index.
During the 12-month reporting period, emerging markets recorded healthy economic
and stock market performances, with their returns further boosted by a weakening
US dollar. In Asia, China's economy grew, but markets in the greater China
region did not perform as well as some of their regional counterparts because of
concerns over high commodity prices and the possibility of China's economy
overheating. Most major economies in Latin America registered strong growth and
delivered robust stock market performance. Of these, Mexico, a major oil
producer, greatly benefited from high oil prices. In Brazil, the government's
reforms and policies led to greater investor confidence. In Eastern Europe,
greater investor interest resulting from the European Union (EU) trade bloc's
expansion materialised in higher investment inflows, boosting local stock
markets. Turkey received EU approval to begin formal accession talks in October
2005, to which investors reacted favourably. In South Africa, improving economic
fundamentals supported the economy, while its market benefited from a
strengthening rand.
During the reporting period 11,812,763 shares were bought back at a cost of
£17,273,852. A close watch was kept on the discount during the summer months
having particular regard to the warrant redemption and continuation vote and all
buy-backs were carried out at prices which have enhanced shareholder value.
The Board of Directors has proposed a cash dividend of 2.67 pence per Ordinary
Share (2004: 2.25 pence). The dividend will be paid on 3 October 2005 to
Shareholders on the register at the close of business on 2 September 2005,
subject to the approval of Shareholders at the Annual General Meeting, which
will be held on 27 September 2005.
During the past two years a total restructuring of the Board and Committee
membership has been undertaken to reflect new governance rules. The new Board
has considered its primary responsibilities:
1. to keep the Company's investment strategy/philosophy under review;
2. to monitor continually the performance of the Manager;
3. to review periodically the fees paid to the Investment Manager and to the
Secretary in respect of the Company's administration; and
4. to ensure the governance of the Company is appropriate and meets all
regulatory requirements.
The new Board has, during the year examined carefully all these issues. It has
confirmed that it is wholly satisfied with the performance of the Manager and
with the investment strategy. It believes the fee paid to the investment manager
of 1% of the monthly value of the total net assets of the Company provides
appropriate reward and an incentive to perform.
Geoffrey Langlands is retiring after 11 years on the Board. He served as
Chairman for 10 months during 2003/2004 as the Board was restructuring. With his
long investment experience based in Brazil, Geoffrey brought invaluable insights
into developing markets to the Board. We shall miss his trenchant comments and
wise counsel and we thank him for his valuable service.
During the year Sir Peter Burt has joined the Board. He brings strong financial,
investment and business experience to the Board. The Board recommends his
election.
Sir Ronald Hampel and Charles Johnson, aged 73 and 72 respectively, offer
themselves for re-election. The Board also recommends their re-election.
Sir Ronald Hampel
22 June 2005
Indices above are shown on a total return basis in GBP. Sources: Franklin
Templeton Investments and Standard & Poor's.
MANAGER'S REPORT & PORTFOLIO REVIEW
DR J B MARK MOBIUS 30 APRIL 2005
This is the Annual Report for Templeton Emerging Markets Investment Trust PLC
for the year ended 30 April 2005.
Performance Attribution Explanation
In the 12-month period ended April 2005, the portfolio returned 21.26% while net
asset value per share increased 15.23%, outperforming the MSCI Emerging Markets
Index which gained 15.18%. The Company's performance was enhanced mainly by its
underweight positions, relative to the MSCI Emerging Markets Index, in South
Korea and Taiwan. An overweight position in Hungary also contributed positively
to performance as the country continued on an upward trend during the period.
However, the Company's underweight positions in South Africa and overweight
position in Croatia were negative for relative performance. In addition, the
Company's exposure in Brazil, which was roughly in line with the index, resulted
in negative attribution.
At the sector level, an overweight exposure to energy stocks and an underweight
position in the information technology sector resulted in the strongest
contribution to performance relative to the index. An overweight position in the
financial sector also contributed positively to relative performance.
Alternatively, underweight positions in the telecommunications and materials
sector resulted in the largest negative impact on relative performance.
Overview
Over the last 12 months, emerging markets recorded good stock market and
economic performances. The MSCI Emerging Markets Index ended the period up
15.18% in GBP terms. Asian markets' performance lagged other regions as the
possibility of China's economy overheating and political tension in the greater
China region affected sentiment. In Latin America, most major economies
registered strong growth. This was reflected in the strong stock market
performance of those countries. High oil prices have been a boon for Mexico
since that country is a major oil producer, while the Brazilian government's
reforms and policies have led to greater investor confidence in the country.
Greater investor interest in Eastern Europe as a result of the expansion of the
EU trade bloc saw new member countries register higher investment inflows, which
in turn boosted local stock markets. Turkey also recorded strong gains as
investors reacted favourably to approval from the EU to begin formal accession
talks for October 2005. In South Africa, the government's macroeconomic
policies, proactive black empowerment efforts and strengthening economic
fundamentals also supported the economy, the benefits of which were reflected in
the country's stock market.
Portfolio Changes & Investment Strategies
In general, the Company increased its holdings in Asia while exposure to Europe
was decreased in light of its strong appreciation over the last 12 months. Asian
markets, which saw large purchases, were Taiwan, South Korea, India and China
"Red-chip" shares. Key investments included President Chain Stores the operator
of the leading retailer 7-Eleven in Taiwan; LG Chemical, Korea's largest PVC and
ABS maker; Hindustan Petroleum Corp. Ltd., one of India's major refiners and
petroleum-based product marketing companies; and Denway Motors, an automobile
manufacturer which produces under the Honda brand name in China. Some switching
was also done in China "H" shares, with the sale of Sinopec as it reached its
sell target and purchase of PetroChina. PetroChina has a dominant market share
in upstream oil & gas businesses with huge proven reserves in China.
In Europe, the largest sales were undertaken in Greece, Denmark and Austria as
the Company divested in selective stocks, which had reached our sell target. Key
additions in the region included Provident Financial, a consumer finance company
with exposure to Central & Eastern European markets as well as Latin America via
operations in Mexico; and Pliva, one of the largest pharmaceutical companies in
Central and Eastern Europe.
In Latin America, the Company eliminated its exposure to Argentina via
divestment of Tenaris. Elsewhere in the region, selective sales were made in
Mexico, while the Company increased its holdings in Brazil. Key investments
included Petroleo Brasileiro SA, the national oil and gas company with
activities in exploration, production, refining, transportation and distribution
of oil and by-products, and Souza Cruz SA, one of the leading tobacco companies
in Brazil.
In South Africa, the significant purchases included Anglo American PLC and Sappi
Ltd. Anglo American is an international natural resources group with operations
in sixty-four countries covering eight principal product groupings, gold,
platinum, diamonds, coal, base metals, industrial minerals, paper & packaging
and ferrous metals. Sappi is a fine paper company with businesses in South
Africa, Europe and North America.
Asia
China's economy grew 9.5% year-on-year in the first quarter of 2005, unchanged
from 2004's growth rate. This high growth rate renewed concerns of possible
overheating. Strong consumer demand, trade and investment boosted the growth.
Exports jumped 35% in the first three months of the year, resulting in a trade
surplus of US$16.6 billion, more than half of 2004's US$32 billion surplus. 2004
Foreign Direct Investment ("FDI") inflows into China totalled US$60.6 billion,
exceeding 2003's US$53.5 billion as foreign investors continue to seek
investment opportunities in the country. Tension in the region increased in the
interim as China passed the anti-secession law, which allows it to use force
against Taiwan in the event that the latter demands independence from China.
South Korea's Gross Domestic Product ("GDP") grew 4.6% year-on-year in 2004,
slower than the government's 5.0% forecast but higher than the 3.1% recorded in
2003. While consumer confidence has been improving, an expected recovery in
domestic consumption has yet to fully materialise. Strong global demand for
South Korea's vehicles, chips and mobile phones led to a six-year high trade
surplus of US$29.4 billion in 2004. Exports increased 31.0% year-on-year to
US$253.8 billion, outpacing a 25.5% rise to US$224.5 billion in imports. 2004
FDI inflows into South Korea jumped 97% to US$12.8 billion, a four year high,
supported by investments in the manufacturing sector.
The Thai economy grew 6.1% year-on-year in 2004. Growth was largely driven by
domestic demand, more specifically investment and private consumption. The
central bank lowered its 2005 GDP forecast to 4.5% and 5.5% mainly due to high
oil prices, social unrest in the southern part of the country and a slowdown in
exports. In February, Prime Minister Thaksin Shinawatra won an overwhelming
victory in the elections. This should allow Thaksin to continue to push forward
with structural reforms with little opposition.
Southern / Eastern Europe
Hungary's economy grew 4.0% year-on-year in 2004 after expanding 3.7% in the
fourth quarter as fixed investment expenditure supported growth. In a bid to
strengthen regional economic relations, Hungary, Austria and Slovenia studied
the possibility of enlarging bi-lateral free trade agreements to a more regional
level to include West Balkans countries such as Albania, Croatia and Macedonia.
Hungarian Prime Minister Gyurcsany dismissed two ministers within a week in
April. Janos Veres replaced Finance Minister Tibor Draskovics due to his failure
to curb the budget deficit while Jozsef Graf took over the post of Agriculture
Minister.
In Poland, fourth quarter GDP grew 3.9% year-on-year, slightly below market
expectations, mainly due to slowing private consumption. This led to a revision
of the 2004 growth figure to 5.3% from 5.4%. Treasury Minister Socha survived a
vote of no confidence in April while the government survived a confidence vote
in November, signifying its political independence from any party in parliament.
In March, Economic Minister Jerzy Hausner resigned after leaving the ruling
Democrat Left Alliance party (SLD) for the newly established Democratic Party.
His deputy Jacek Piechota replaced him.
Turkey's GDP grew 9.9% year-on-year in 2004 as the country benefited from
economic and structural reforms. The government expected GDP growth to be 5% in
2005. Turkey agreed to extend its existing treaty with the European Union to
include the 10 newest members, including Cyprus, fulfilling a key condition for
the start of accession talks in October 2005. Moreover, the government's US$10
billion stand-by agreement with the IMF should further boost investor confidence
in the country. However, the country delayed the implementation of the new penal
code to 1 June 2005 due to "technical reasons". The government said that this
would allow for more revisions to ensure human rights and state protection.
Latin America
Brazil's economy grew 5.2% in 2004, its fastest rate since 1994. Growth was
broad-based. Industrial output increased 6.2% year-on-year, while household
spending rose 4.3%. The 2004 trade surplus almost tripled from 2003 to US$33.7
billion, bringing the current account surplus to a record US$11.7 billion. In
2005, the external balance continued to benefit from a strong trade sector with
the April surplus reaching a monthly record of US$3.9 billion. Also contributing
to the surplus have been imports, which registered a 9.8% decline in April due
to lower domestic demand as a result of the central bank's tightening monetary
policy.
South Africa
GDP grew 3.7% year-on-year in 2004. The government upgraded its GDP growth
forecast from 4.0% to 4.5% over the next three years. 2004 inflation registered
4.3% and is expected to remain between 3.0% and 6.0% over the next three years.
The government plans to boost spending and cut taxes in a bid to support the
economy. The majority of South Africa's companies continued to support the
government's "black economic empowerment" charter. A Tourism Black Economic
Empowerment Charter, which aims to raise black ownership of tourism companies to
35% by 2014, was signed during the period.
Outlook
The outlook for emerging markets remains bright and we remain positive on the
long-term future for emerging markets. The valuations of many emerging markets
securities remain relatively attractive and we continue to find bargain stocks
trading at attractive valuations. While we continue to see significant
opportunities in Asia, South America, Africa and Eastern Europe, the key is to
find undervalued companies that are well capitalised and have a unique and
competitive product range.
Thank you for your continued interest and support.
J Mark Mobius Ph.D.
22 June 2005
PORTFOLIO ANALYSIS by geography
Geographical analysis
(by country of incorporation)
As at 30 April 2005
Country Cost Market Value
£'000 £'000
South Korea
SK Corp 9,111 41,050
Hyundai Development Co. 14,909 38,595
POSCO 13,180 19,967
Kangwon Land Inc. 13,513 16,642
CJ Corp. 11,987 14,021
LG Chem Ltd. 12,291 11,739
LG Petrochemical Co. Ltd. 7,468 10,838
Hana Bank 7,281 6,516
Daewoo Shipbuilding & Marine Engineering Co. 4,203 6,135
Ltd
Hite Brewery Co. Ltd 4,380 5,154
Samsung Electronics Co. Ltd 4,461 4,934
SK Telecom Co. Ltd. 4,612 4,476
LG Household & Health Care Ltd. 2,796 3,163
Samsung Heavy Industries Co. Ltd. 2,315 2,908
Samsung Fine Chemicals Co. Ltd. 1,997 2,238
LG Corp 2,436 2,190
----------- -----------
116,940 190,566
--------- ---------
China
PetroChina Co. Ltd., H 21,161 33,512
China Petroleum & Chemical Corp.,H 18,398 31,322
China Merchants Holdings (International) Co. 8,902 19,768
Ltd.
Cosco Pacific Ltd. 5,275 12,726
China Mobile (Hong Kong) Ltd., fgn. 11,746 11,765
Huaneng Power International Inc. H 5,660 10,941
Datang International Power Generation Co. Ltd 6,205 10,791
Denway Motors Ltd. 9,845 8,116
Aluminum Corp. of China Ltd., H 7,126 6,540
Shanghai Industrial Holdings Ltd. 3,514 3,669
Chongqing Changan Automobile 3,272 3,020
Guandong Electric Power Development Co. Ltd., 4,632 2,913
B
Air China Ltd. 746 687
------------ ------------
106,482 155,770
--------- ---------
Brazil
Banco Bradesco SA, ADR, pfd.* 12,818 34,994
Unibanco Uniao de Bancos Brasileiros SA, GDR* 13,998 33,132
Companhia Paranaense de Energia-Copel, ADR, pfd* 18,426 20,715
Centrais Eletricas Brasileiras SA 18,008 18,203
Petroleo Brasileiro SA, ADR, pfd.* 10,090 10,800
Souza Cruz SA 7,037 8,693
Suzano Bahia Sul Papel e Cel, pfd., A 4,832 4,582
Caemi Mineracao e Metalurgia SA, pfd.* 4,689 3,844
Usinas Siderurgicas de Minas Gerais SA, pfd. 1,901 2,238
---------- -----------
91,799 137,201
-------- ---------
Thailand
Siam Commercial Bank Ltd., fgn. 12,913 22,520
Siam Cement Public Co. Ltd. fgn, 6,108 16,204
Kasikornbank Public Co. Ltd., fgn. 9,922 13,988
PTT Exploration & Production Public Co. Ltd. 4,319 12,572
fgn.
Shin Corp. Public Co. Ltd., fgn. 4,006 8,676
Bangkok Bank Public Co. Ltd. fgn. 4,672 7,615
Land and House Public Co. Ltd., fgn. 3,587 3,393
True Corp. PLC, rights, 28/03/08 - -
-------------- -------------
45,527 84,968
-------- --------
Turkey
Akbank 15,838 32,569
Tupras-Turkiye Petrol Rafineleri AS 23,326 25,187
Arcelik AS, Br. 4,786 4,432
KOC Holding AS 3,225 2,484
Trakya Cam Sanayii AS 1,915 2,451
Migros Turk TAS 2,338 2,405
Turk Hava Yollari Anonim Ortakligi 1,191 970
Koc Holding AS (Spin-Off) 785 638
----------- -----------
53,404 71,136
-------- --------
Taiwan
President Chain Store Corp. 12,033 13,352
Lite-on Technology Corp. 8,888 9,063
Chunghwa Telecom Co. Ltd. 7,426 7,844
Taiwan Semiconductor Manufacturing Co. 4,350 5,349
Media Tek Inc. 4,699 4,976
Delta Electronics Inc. 4,348 4,640
UNI-President Enterprises Corp. 4,415 4,185
Tainan Enterprises Co. Ltd. 4,385 3,736
Taiwan Cellular Corp. 3,508 3,430
Elan Microelectronics Corp. 4,367 2,370
Faraday Technology Corp. 1,495 1,536
Kinpo Electronics Inc. 1,203 1,142
Princeton Technology Corp. 987 671
---------- -----------
62,104 62,294
-------- --------
South Africa
Nedcor Ltd. 16,772 17,435
Remgro Ltd. 6,948 13,073
Anglo American PLC 9,898 9,431
Old Mutual PLC 4,823 5,315
Nampak Ltd. 2,932 4,430
Sappi Ltd. 5,387 3,807
Liberty Group Ltd. 2,130 2,589
Tiger Brands Ltd. 1,264 2,425
Spar Group Ltd. 973 1,212
---------- ----------
51,127 59,717
-------- --------
Hungary
MOL Magyar Olaj-Es Gazipari RT 7,996 29,804
Gedeon Richter Ltd. 17,206 28,071
-------- --------
25,202 57,875
-------- --------
Singapore
Dairy Farm International Holdings Ltd. 9,187 24,807
Fraser & Neave Ltd. 9,366 14,678
--------- --------
18,553 39,485
-------- --------
India
ITC Ltd. 3,980 7,508
Hindustan Petroleum Corp. Ltd. 7,657 7,079
Gail (India) Ltd. 4,788 5,037
Oil & Natural Gas Corp. Ltd. 3,511 4,396
Indian Petrochemicals Corp. Ltd. 3,981 4,289
Hindustan Lever Ltd. 3,800 4,118
---------- ----------
27,717 32,427
-------- --------
Poland
Polski Koncern Naftowy Orlen SA 13,098 31,063
KGHM Polska Miedz SA 748 620
---------- ----------
13,846 31,683
-------- --------
Mexico
Kimberly Clark de Mexico SA de CV, A 10,411 9,349
Fomento Economico Mexicano SA de CV Femsa, ADR* 5,214 5,901
Telefonos de Mexico SA de CV (Telmex), L, ADR* 4,370 4,090
---------- ----------
19,995 19,340
-------- --------
Austria
OMV AG 7,307 15,682
------- --------
7,307 15,682
------- --------
Greece
Coca-Cola Hellenic Bottling Co., SA 8,172 13,625
Titan Cement Co. 1,519 1,904
------- ----------
9,691 15,529
------- --------
Croatia
Pliva D D, GDR, Reg S 18,594 12,616
-------- --------
18,594 12,616
-------- --------
Egypt
Commercial International Bank Ltd. 7,385 11,815
------- --------
7,385 11,815
------- --------
Philippines
San Miguel Corp., B 10,634 10,003
-------- --------
10,634 10,003
-------- --------
Malaysia
SIME Darby Bhd. 4,788 4,768
Tanjong PLC 4,205 4,122
------- -------
8,993 8,890
------- -------
Czech Republic
Philip Morris CR AS 3,205 7,734
------- -------
3,205 7,734
------- -------
United Kingdom
Provident Financial PLC 5,543 5,802
------- -------
5,543 5,802
------- -------
Russia
Lukoil Holdings, ADR* 2,202 4,866
------- -------
2,202 4,866
------- -------
Indonesia
BK Danamon 4,108 4,275
------- -------
4,108 4,275
------- -------
Sweden
Oriflame Cosmetics, IDR 1,847 1,904
------- -------
1,847 1,904
------- -------
Peru
Credicorp Ltd.* 1,361 1,822
------- -------
1,361 1,822
------- -------
TOTAL INVESTMENTS 713,566 1,043,400
---------
OTHER NET ASSETS 12,764
-------
TOTAL SHAREHOLDERS' FUNDS 1,056,164
-----------
* US listed stocks
PORTFOLIO ANALYSIS by geography (continued)
Geographical asset distribution
As at 30 April 2005 and 30 April 2004
2005 2004
% %
South Korea 18.04 15.42
China 14.75 15.54
Brazil 12.99 9.33
Thailand 8.05 9.64
Turkey 6.74 6.65
Taiwan 5.90 3.78
South Africa 5.65 4.91
Hungary 5.48 6.28
Singapore 3.74 3.48
India 3.07 1.81
Poland 3.00 2.24
Mexico 1.83 2.96
Austria 1.49 2.17
Greece 1.47 3.75
Croatia 1.19 1.81
Egypt 1.12 1.00
Philippines 0.95 1.09
Malaysia 0.84 0.54
Czech Republic 0.73 1.75
United Kingdom 0.55 0.00
Russia 0.46 0.54
Indonesia 0.40 0.24
Sweden 0.18 0.00
Peru 0.17 0.16
Denmark 0.00 1.81
Portugal 0.00 1.41
Japan 0.00 0.19
Argentina 0.00 0.17
Liquid Assets 1.21 1.33
PORTFOLIO ANALAYSIS by industry
Industrial analysis
As at 30 April 2005
Industry Classification % of % of
Total Net Total Net
Assets Assets
2005 2004
CONSUMER DISCRETIONARY
Automobiles 1.35 -
Hotels Restaurants & Leisure 1.97 0.63
Household Durables 0.74 1.20
Multiline Retail 3.84 -
Apparel Accessories & Luxury Goods 0.35 0.52
------ ------
8.25 2.35
------ ------
CONSUMER STAPLES
Beverages 3.28 8.28
Food & Staples Retailing - 2.70
Food Products 1.96 2.06
Household Products 1.75 1.20
Tobacco 2.61 1.98
------ ---------
9.60 16.22
------ -------
ENERGY
Energy Equipment & Services 1.61 0.17
Oil & Gas 22.29 22.19
------- -------
23.90 22.36
------- -------
FINANCIALS
Commercial Banks 17.68 16.59
Consumer Finance 0.55 0.03
Diversified Financial Services 0.50 1.83
Insurance 0.25 0.22
-------- --------
18.98 18.67
------- -------
HEALTH CARE
Pharmaceuticals 3.85 4.86
------ ------
3.85 4.86
------ ------
INDUSTRIALS
Airlines 0.16 -
Construction & Engineering 3.65 2.50
Industrial Conglomerates - 4.32
Machinery 3.48 0.70
Marine 1.87 -
Trading Companies & Distributors 0.57 -
Transportation Infrastructure 1.20 1.12
-------- ------
10.93 8.64
------- ------
INFORMATION TECHNOLOGY
Communications Equipment 0.82 -
Computers & Peripherals 0.86 0.64
Electronic Equipment & Instruments - 0.47
Office Electronics 0.55 -
Semiconductors & Semiconductors Equipment 1.88 0.39
------ ------
4.11 1.50
------ ------
MATERIALS
Chemicals 3.20 1.68
Construction Materials 1.71 2.00
Containers & Packaging 0.42 0.49
Metals & Mining 4.04 2.25
Paper & Forest Products 0.79 -
--------- ---------
10.16 6.42
------- ------
TELECOMMUNICATION SERVICES
Diversified Telecommunication Services 1.13 6.13
Wireless Telecommunication Services 1.86 2.28
------ ------
2.99 8.41
------ ------
UTILITIES
Electric Utilities 6.02 9.04
Gas Utilities - 0.20
--------- ------
6.02 9.24
------ ------
OTHER NET ASSETS 1.21 1.33
---------- -----------
100.00 100.00
-------- --------
The above groupings are based on the Morgan Stanley International Perspective
Directory of Industry Classification.
PORTFOLIO ANALYSIS by value
Twenty largest portfolio holdings
As at 30 April 2005
Number of Issuer Principal % of Issued % of Cost Market
Shares EQUITY Country Share Total £'000 Value
INVESTMENTS
of Issue/ Capital Net £'000
Listing Held Assets
1,405,990 SK Corp. South 1.10 3.89 9,111 41,050
Korea
A major player
in South
Korea's
refining
industry
3,705,290 Hyundai South 4.92 3.65 14,909 38,595
Development Korea
Co.
One of the
leading
residential
property
developers in
Korea
2,159,019 Banco Bradesco Brazil 0.88 3.31 12,818 34,994
SA, ADR,
pfd.
One of
Brazil's
largest
financial
conglomerates,
providing a
full range of
banking and
financial
services
106,506,000 PetroChina Co. China 0.61 3.17 21,161 33,512
Ltd., H
One of the
largest
integrated
energy
companies in
China
1,903,100 Unibanco Uniao Brazil 1.61 3.14 13,998 33,132
de Bancos
Brasileiros
SA, GDR
One of
Brazil's
largest
financial
conglomerates,
providing a
full range of
banking and
financial
services
12,992,396 Akbank Turkey 0.87 3.08 15,838 32,569
One of
Turkey's
largest
privately
owned
commercial
banks,
providing a
full range of
banking and
financial
services
152,584,000 China China 0.91 2.97 18,398 31,322
Petroleum &
Chemical
Corp., H
One of the
largest
integrated
energy
companies in
China
4,316,933 Polski Koncern Poland 1.01 2.94 13,098 31,063
Naftowy Orlen
SA
The
overwhelming
market leader
in refining
and marketing
of oil and
products as
well as
petrochemicals
in Poland
693,042 MOL Magyar Hungary 0.64 2.82 7,996 29,804
Olaj-Es
Gazipari RT
A major
integrated
pertroleum
company in
Central
Europe
441,558 Gedeon Richter Hungary 2.37 2.66 17,206 28,071
Ltd.
Hungary's
largest
pharmaceutical
producer, with
strong
presence in
Eastern
Europe
Top Ten 144,533 334,112
Holdings - --------- ---------
31.63 % of Net
Assets
Number of Issuer Principal % of Issued % of Cost Market
Shares EQUITY Country Share Total £'000 Value
INVESTMENTS
of Issue/ Capital Net £'000
Listing Held Assets
3,818,015 Tupras-Turkiye Turkey 1.52 2.39 23,326 25,187
Petrol
Rafineleri AS
Turkey's
largest
industrial
company, with a
dominant market
share in oil
refining
17,516,151 Dairy Farm Singapore 1.30 2.35 9,187 24,807
International
Holdings Ltd.
Dairy Farm
International
and its
subsidiaries
operate retail
stores such as
supermarkets,
drugstores and
convenience
stores.
35,840,300 Siam Commercial Thailand 2.06 2.13 12,913 22,520
Bank Ltd.,
fgn.
One of
Thailand's
largest
commercial
banks
7,580,029 Companhia Brazil 0.01 1.96 18,426 20,715
Paranaense de
Energia-Copel,
ADR, pfd.
Generates,
transmits,
tranforms and
distributes
electric power
to the entire
Brazilian state
of Parana
211,450 POSCO South 0.24 1.89 13,180 19,967
Korea
One of the
world's largest
steel
producers
19,323,000 China Merchants China 0.90 1.87 8,902 19,768
Holdings
(International)
Co. Ltd.
A conglomerate
specialising in
infrastructure
with three main
businesses:
toll roads,
ports and
industrial
2,793,119,000 Centrais Brazil 0.42 1.72 18,008 18,203
Eletricas
Brasileiras
SA
The company is
involved in
electricity
generating,
providing
long-term
financing to
the Brazilian
electricity
sector, and
owns and
operates the
country's
nuclear
generating
plants and
transmission
network
2,700,144 Nedcor Ltd. South 0.68 1.65 16,772 17,435
Africa
A major South
African bank
with operations
in commercial
banking,
investment
banking and
asset
management
2,267,739 Kangwon Land South 1.06 1.58 13,513 16,642
Inc. Korea
The only casino
in the country
licensed to
allow entry to
Koreans
5,119,850 Siam Cement Thailand 0.43 1.54 6,108 16,204
Public Co.
Ltd., fgn.
The largest
producer in
ASEAN for
cement,
petrochemicals
and industrial
paper. It is
also the
largest
industrial
conglomerate in
Thailand
Top Twenty 284,868 535,560
Holdings - --------- ---------
50.71% of Net
Assets
--- ---
--- ---
ANALYSIS OF PORTFOLIO
--- ---
TOTAL VALUE OF INVESTMENT 1,043,400
PORTFOLIO (98.79%) --- -----------
OTHER NET ASSETS (1.21%) 12,764
--- ------------
1,056,164
--- -----------
STATEMENT OF TOTAL RETURN OF THE COMPANY
(INCORPORATING THE REVENUE ACCOUNT)
For the year ended 30 April 2005
2005 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on - 169,027 169,027 - 179,999 179,999
investments
Income 37,215 - 37,215 29,282 - 29,282
Investment (9,487) - (9,487) (7,469) - (7,469)
Management
fee
Other (4,863) - (4,863) (3,509) - (3,509)
expenses --------- ------------- ------------- -------------- --------------- ------------
Net return on
ordinary
activities 22,865 169,027 191,892 18,304 179,999 198,303
before
taxation
Tax on (5,718) - (5,718) (5,144) - (5,144)
ordinary ----------- ------------- ------------- -------------- --------------- ------------
activities
Return on
ordinary
activities
after
taxation
for the 17,147 169,027 186,174 13,160 179,999 193,159
financial
year
Dividend in (14,311) - (14,311) (10,242) - (10,242)
respect of ---------- ------------- ----------- ---------- --------------- ----------
equity
shares
Transfer to
reserves
(after
aggregate
dividends
paid
and proposed) 2,836 169,027 171,863 2,918 179,999 182,917
------- --------- --------- ------- --------- ---------
Basic return
per
Ordinary
Share (before 3.42p 33.67p 37.09p 2.89p 39.54p 42.43p
dividend)
Diluted
return per
Ordinary
Share
(before N/A N/A N/A 2.88p 39.40p 42.28p
dividend)* ----- ----- ----- ------- -------- --------
Annualised - - 1.50% - - 1.48%
Expenses ------------ ------------- ------- ------------- ------------- -------
Ratio
Notes:
*April 2004 return has been restated to reflect the dilutive effect of potential
ordinary shares
Final warrant exercise took place on 30 September 2004, resulting in the diluted
NAV no longer being applicable.
The revenue 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.
BALANCE SHEET
As at 30 April 2005
2005 2004
£'000 £'000
FIXED ASSETS
Investments 1,043,400 768,120
----------- ---------
CURRENT ASSETS
Debtors 8,985 15,322
Cash 24,294 17,977
-------- --------
33,279 33,299
--- ---
CREDITORS: amounts falling due within one year (18,544) (22,062)
---------- ----------
NET CURRENT ASSETS 14,735 11,237
---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,058,135 779,357
PROVISION FOR LIABILITIES AND CHARGES (1,971) (900)
------------- -----------
1,056,164 778,457
----------- ---------
CAPITAL AND RESERVES
Called-up Share Capital 133,995 113,806
Share Premium Account 375,327 275,351
Capital Redemption Reserve 6,893 3,940
Capital Reserve - Realised 186,280 197,761
Capital Reserve - Unrealised 329,991 166,757
Revenue Reserve 23,678 20,842
------------- ----------
TOTAL SHAREHOLDERS' FUNDS 1,056,164 778,457
----------- ---------
Net Asset Value per Ordinary Share (in pence)
- Basic 197.05 171.01
- Diluted* N/A 164.58
* Final warrant exercise took place on 30 September 2004, resulting in the
diluted NAV no longer being applicable.
These Financial Statements were approved by the Board on 22 June 2005.
Sir Ronald Hampel Peter Smith
Chairman Director
CASH FLOW STATEMENT
For the year ended 30 April 2005
2005 2004
£'000 £'000
Reconciliation of operating profit to net cash
inflow
from operations
Net return on ordinary activities before taxation 22,865 18,304
Increase in debtors (526) (25)
Increase in accrued income (2,512) (2,574)
Increase in creditors 1,443 323
--------- ----------
Net cash inflow from operating activities 21,270 16,028
-------- --------
Cash flow statement
Net cash inflow from operating activities 21,270 16,028
Taxation (5,777) (3,768)
Net financial investments (104,778) 4,546
----------- -------
(89,285) 16,806
Equity dividends paid (10,242) (5,690)
(99,527) 11,116
---------- --------
Financing 105,844 54
---------- -----------
Increase in cash 6,317 11,170
------------ --------
Reconciliation of net cash flow to movement in net
funds
Increase in cash in the year 6,317 11,170
Opening net funds 17,977 6,807
-------- -------
Closing net funds 24,294 17,977
-------- --------
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 22 June 2005. It is not the Company's statutory
accounts. The statutory accounts for the year ended 30 April 2004 have been
delivered to the Registrar of Companies and received an audit report which was
unqualified and did not contain statements under s237(2) or (3) of the Companies
Act 1985. The statutory accounts for the year ended 30 April 2005 have been
approved and audited and are due to be filed. They have been prepared using the
same accounting policies set out in the financial statements for the year ended
30 April 2004.
For information please contact David Bliss/Will Rogers at UBS Limited (0207 567
8000), Client Dealer Services on freephone 0800 305 306 or Sara MacIntosh
(Company Secretary) on 0207 073 8500. 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.
End of Announcement.
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