Pacific Horizon Investment Trust PLC Annual Report and Financial Statements 31 July 2012 Contents
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Pacific Horizon Investment Trust PLC Annual Report and Financial Statements 31 July 2012 Contents 1 Company Summary 23 Statement of Directors’ Responsibilities 2 Year’s Summary 24 Independent Auditor’s Report 3 Five Year Summary 25 Income Statement 4 Ten Year Record 26 Balance Sheet 5 Chairman’s Statement 27 Reconciliation of Movements 6 Managers’ Review in Shareholders’ Funds 8 Review of Investments 28 Cash Flow Statement 10 List of Investments 29 Notes to the Financial Statements 12 Distribution of Portfolio, Overlap with Comparative Index, 39 Notice of Annual General Meeting Turnover and Size Splits 42 Further Shareholder Information 13 Directors and Managers 44 Cost-effective Ways to Buy and Hold 14 Directors’ Report Shares in Pacific Horizon 21 Directors’ Remuneration Report 46 Communicating with Shareholders Excluding Japan, the Trust invests throughout the Asia-Pacific region including the Indian Sub-continent. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have sold or otherwise transferred all of your ordinary shares in Pacific Horizon Investment Trust PLC, please forward this document, together with any accompanying documents, as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was or is being effected for delivery to the purchaser or transferee. COMPANY SUMMARY Company data at 31 July 2012 Shareholders’ funds Market capitalisation £129m £112m Company Summary Pacific Horizon’s objective is to invest in the stock markets of the Asia-Pacific region (excluding Japan) and in the stock markets of the Indian Sub-continent in order to achieve capital growth. Investment Policy Savings Vehicles Pacific Horizon’s objective is to invest in the stock markets of the Pacific Horizon shares can be held through a variety of savings Asia-Pacific region (excluding Japan) and in the stock markets vehicles (see page 44). of the Indian Sub-continent in order to achieve capital growth. AIC The Company is prepared to move freely between the markets The Company is a member of the Association of Investment of the region as opportunities for growth vary. The portfolio will Companies. normally consist entirely of quoted securities. Further details of the Company’s investment policy are given Duration of the Company in the Directors’ Report. At the Annual General Meeting of the Company held on 17 October 2011, the shareholders approved the resolution postponing until the Comparative Index date of the Annual General Meeting of the Company to be held in The principal index against which performance is measured 2016 or 30 November 2016, whichever is earlier, or such later is the MSCI All Country Asia ex Japan Index (in sterling terms). date as the shareholders may resolve, the obligation of the Directors to convene an Extraordinary General Meeting at which a resolution Management Details will be proposed pursuant to section 84 of the Insolvency Act 1986 Baillie Gifford & Co are appointed as investment managers and to wind the Company up voluntarily. secretaries to the Company. The Managers may terminate the Management Agreement on six months’ notice and the Company Notes may terminate on three months’ notice. None of the views expressed in this document should be construed Management Fee as advice to buy or sell a particular investment. Baillie Gifford & Co’s annual remuneration is 1.0% of total assets Investment trusts are UK public listed companies and as such comply less current liabilities, calculated on a quarterly basis. With effect with the requirements of the UK Listing Authority. They are not from 1 August 2012 the annual management fee will be 1% of authorised or regulated by the Financial Services Authority. net assets, calculated on a quarterly basis. Capital Structure At the year end the Company’s share capital consisted of 75,052,002 ordinary shares of 10p each which are issued and fully paid. The Company currently has powers to buy back a limited number of its own ordinary shares for cancellation at a discount to net asset value per share (NAV) as well as to issue shares at a premium to NAV. The Directors are seeking to renew these authorities at the forthcoming Annual General Meeting. PACIFIC HORIZON INVESTMENT TRUST PLC 1 YEAR’S SUMMARY Year’s Summary 31 July 31 July 2012 2011 % change Shareholders’ funds £129.1m £137.3m Net asset value per ordinary share (NAV) 172.01p 178.53p (3.7) Share price 149.50p 165.00p (9.4) MSCI All Country Asia ex Japan Index (in sterling terms) 312.60 348.27 (10.2) Dividend proposed per ordinary share in respect of the financial year 1.50p 1.50p – Revenue earnings per ordinary share 1.97p 1.98p (0.5) Ongoing charges 1.26% 1.22% Discount 13.1% 7.6% Year to 31 July 2012 2012 2011 2011 Year’s high and low High Low High Low Share price 166.00p 130.00p 178.25p 144.00p Net asset value 183.22p 143.78p 192.83p 160.46p Discount 5.9% 14.1% 5.3% 12.1% 31 July 31 July 2012 2011 Net return per ordinary share Revenue return 1.97p 1.98p Capital return (7.71p) 14.23p Total return (5.74p) 16.21p One Year Performance (figures rebased to 100 at 31 July 2011) 105 Source: Thomson Reuters Datastream NAV (Cum Income) 100 Share price Comparative index* 95 * MSCI All Country Asia ex Japan Index (in sterling terms) 90 85 80 JASOND JFMAMJ J 2011 2012 Past performance is not a guide to future performance. 2 ANNUAL REPORT 2012 FIVE YEAR SUMMARY Five Year Summary The following charts indicate how Pacific Horizon has performed relative to its comparative index* and the relationship between share price and net asset value over the five year period to 31 July 2012. 5 Year Total Return Performance Annual Share Price Total Return Share Price, Net Asset Value and Index and NAV Total Return (figures rebased to 100 at 31 July 2007) 150 40% 125 20% 100 0% 75 (20%) 50 25 (40%) 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 CUMULATIVE TO 31 JULY YEARS TO 31 JULY Source: Thomson Reuters Datastream Source: Thomson Reuters Datastream Dividends are reinvested Dividends are reinvested Comparative index total return* NAV total return NAV total return Share price total return Share price total return (Discount)/Premium to Annual Share Price Total Return and NAV Total Return Net Asset Value (compared to the MSCI All Country Far East ex Japan Index total return (figures plotted on a monthly basis) (in sterling terms) for the years 2008 to 2011 and compared to the MSCI All Country Asia ex Japan Index for the year to 2012) 10% 10% 5% 5% 0% 0% (5%) (5%) (10%) (10%) (15%) (15%) (20%) (20%) 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 YEARS TO 31 JULY YEARS TO 31 JULY Source: Thomson Reuters Datastream/ Source: Thomson Reuters Datastream Baillie Gifford & Co Dividends are reinvested Pacific Horizon (discount)/premium NAV total return compared to the total return on the comparative index The (discount)/premium is the difference between Pacific Horizon’s quoted share price and its underlying Share price total return compared to the net asset value. total return on the comparative index Past performance is not a guide to future performance. *On 1 August 2011 the Company changed its comparative index from the MSCI All Country Far East ex Japan Index (in sterling terms) to the MSCI All Country Asia ex Japan Index (in sterling terms). For the purposes of the above graphs the returns on the comparative indices for their respective periods have been chain linked to form a single comparative index. PACIFIC HORIZON INVESTMENT TRUST PLC 3 TEN YEAR RECORD Ten Year Record Capital Total Bank Shareholders’ Net asset value Share Premium/ At assets * loans funds per share price (discount) † 31 July £’000 £’000 £’000 p p % 2002 38,729 – 38,729 50.63 45.50 (10.1) 2003 40,801 – 40,801 53.34 48.25 (9.5) 2004 47,305 – 47,305 61.84 56.75 (8.2) 2005# 67,374 – 67,374 88.09 85.50 (2.9) 2006 88,971 7,581 81,390 106.41 101.25 (4.8) 2007 130,077 – 130,077 166.90 171.75 (2.9) 2008 105,168 – 105,168 134.34 129.25 (3.8) 2009 105,851 – 105,851 135.21 124.75 (7.7) 2010 127,939 – 127,939 163.42 146.00 (10.7) 2011 137,350 – 137,350 178.53 165.00 (7.6) 2012 129,097 – 129,097 172.01 149.50 (13.1) * Total assets comprise total assets less current liabilities and deferred tax, before deduction of bank loans. † Premium/(discount) is the difference between Pacific Horizon’s quoted share price and its underlying net asset value expressed as a percentage of net asset value. # The figures prior to 2005 have not been restated for changes in accounting policies implemented in 2006. Revenue Gearing Ratios Available Revenue Dividend per Gross for ordinary earnings per ordinary share Ongoing Actual Potential Year to revenue shareholders ordinary share ‡ net charges ¶ gearing § gearing ^ 31 July £’000 £’000 p p % 2002 1,442 504 0.66 0.45 1.57 98 100 2003 1,263 514 0.67 0.45 1.49 98 100 2004 1,858 786 1.03 0.70 1.42 99 100 2005 2,384 1,123 1.47 1.10 1.32 99 100 2006 2,887 1,160 1.51 1.10 1.32 106 109 2007 3,031 1,124 1.45 1.10 1.26 99 100 2008 3,602 1,491 1.91 1.30 1.21 95 100 2009 3,579 1,915 2.44 1.80 1.31 98 100 2010 2,999 1,295 1.65 1.30 1.24 98 100 2011 3,441 1,546 1.98 1.50 1.22 99 100 2012 3,234 1,491 1.97 1.50 1.26 98 100 ‡ The calculation of earnings per share is based on the net revenue from ordinary activities after taxation and the weighted average number of ordinary shares (see note 7, page 31).