TIDMPAC
LONDON STOCK EXCHANGE ANNOUNCEMENT
Pacific Assets Trust plc
(the "Company" or the "Trust")
Unaudited Half Year Results For The Six Months Ended 31 July 2021
This announcement is not the Company's Half Year Report. It is an abridged
version of the Company's full Half Year Report for the six months ended 31 July
2021. The full Half Year Report, together with a copy of this announcement,
will shortly be available on the Company's website at www.pacific-assets.co.uk
where up to date information on the Company, including daily NAV, share prices
and fact sheets, can also be found.
The Company's Half Year Report for the six months ended 31 July 2021 has been
submitted to the UK Listing Authority, and will shortly be available for
inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/
nsm/nationalstoragemechanism
For further information please contact: Katherine Manson, Frostrow Capital LLP,
020 3709 8734.
Financial Highlights
Key Statistics
As at As at
31 July 31 January
2021 2021 % change
Share price 336.0p 333.0p 0.9%
Net asset value per share 359.6p 344.1p 4.5%
Discount of share price to net asset value per 6.5% 3.2%
share
Market capitalisation £406.4m £402.8m 0.9%
Shareholders' funds £435.0m £416.2m 4.5%
Six months to One year to
31 July 31 January
2021 2021
Share price (total return)*^ 1.7% 25.8%
Net asset value per share (total return)*^ 5.6% 22.3%
CPI + 6%1 5.1% 6.8%
MSCI All Country Asia ex Japan Index (total (6.6%) 30.7%
return, sterling adjusted)*
Average discount of share price to net asset 7.0% 9.1%
value per share^
Ongoing charges^ 1.1% 1.1%
*Source: Morningstar.
^Alternative Performance Measure (see Glossary).
1UK Consumer Price Index + 6% - the Company's Performance Objective (see
Glossary).
Year ended Year ended
31 January 31 January
Dividends 2021 2020
Dividend per share 2.4p 3.0p
Peer Group Performance
Performance Assessment
Pacific Assets Trust plc exists in a competitive environment and aims to be a
leader in its peer group, defined as being consistently within the top third of
that group measured by net asset value per share total return. The Company is
committed to building a long-term investment record and will assess itself by
reference to its peers on a rolling three to five-year basis. An analysis of
this performance can be found in the Chairman's Statement and the Portfolio
Manager's Review.
Peer Group Net Asset Value per Share Total Return^
1 Year 3 years 5 years
£ Rank £ Rank £ Rank
Pacific Horizon 162.1 1 222.3 1 349.3 1
Schroder Asian Total 126.0 4 144.7 2 207.1 2
Return
Schroder Asia Pacific 123.5 6 133.6 3 192.9 3
Invesco Asia 125.5 5 133.5 4 179.3 5
Asia Dragon 117.8 7 133.0 5 172.9 6
Pacific Assets Trust 126.6 3 131.4 6 166.2 7
JP Morgan Asian 116.3 8 130.9 7 190.2 4
Fidelity Asian Values 140.2 2 126.8 8 152.6 9
iShares MSCI Asia ex Jpn 111.3 9 119.6 9 159.9 8
ETF
Peer Group Average 127.7 141.8 196.7
CPI + 6%1 108.8 125.9 149.1
MSCI AC Asia ex Japan 112.4 122.3 165.8
Source: Morningstar. Figures show the value as at 31 July 2021 of £100 invested
at the start of the period.
^ Alternative Performance Measure (see Glossary).
1 The Company's Performance Objective (see Glossary).
Chairman's Statement
The interim period for the Company closed on 31st July. At that time the news
was dominated by the delayed Tokyo Olympics being held behind closed doors, and
the financial news by a series of regulations and prohibitions affecting
Chinese companies. These are just a reminder of how unpredictable things have
become, neither situation could easily have been anticipated a year or two ago.
Over the six months to 31st July 2021, the net asset value of the Company's
shares rose by 5.6%^ on a total return basis. Such a trend was in line with
most global stock markets which had risen comfortably notwithstanding the
seemingly endless economic disruption by the pandemic. The Company's annualised
net asset value total return per share has been 9.5% over three years and 10.7%
over the last five years. Over these longer periods, it is comfortably ahead of
our Performance Objective, UK CPI plus 6%, which has increased 8.0% and 8.3% on
an annual basis over these periods. We also use a peer group of Asian
investment trusts as a comparator, and while still in the lower half of the
range of returns over three and five years, your Company has shown relative
improvement over the last year. The latest figures are shown above.
Our relative returns over recent years have been affected by the Trust's
reluctance to engage fully in the powerful wave of Chinese investment themes.
This approach owed much to the lack of transparency within Chinese companies,
and the belief that the Chinese Communist Party ("CCP") could still overpower
company management for ideological or political reasons. The CCP being
synonymous with the Government meant that we could never have full confidence
that our shareholders' assets could be secure against a rapid change in
political sentiment. Where the larger Chinese companies are concerned, there
seems to be an unhealthy mixture with geopolitics, so that foreign listings
(notably New York) and special purpose vehicles used to access some (the
Variable Interest Entity structure) have been vulnerable.
All this is now widely understood and possibly discounted as prominent Chinese
shares have fallen substantially, justifying our Portfolio Manager's long held
decision to be underweight Chinese securities. However, the Trust has ventured
modestly into China, more so recently. It is invested in less high profile
companies, particularly in the fields of medicine and diagnostics. We are
encouraged that the euphoria of recent years has been punctured, and that more
opportunities will be provided in China. It is easy to be overwhelmed by the
commentary on the politics and miss the extraordinary creativity and economic
dynamism that is flourishing throughout the country.
Our Portfolio Manager is discriminating in seeking out quality franchises. Some
of these are to be found in China, and many elsewhere, notably in India. One of
the most positive contributors to return in the period has been Marico, an
Indian stock that has been held by the Trust for more than 10 years. At the
same time, in a sometimes volatile market, it is encouraging how many new names
are appearing in the portfolio, that meet the exacting standards we apply.
James Williams
Chairman
25 October 2021
^ Alternative Performance Measure (see Glossary).
Portfolio Manager's Review
Performance overview
The Company's net asset value per share total return over the half year was
5.6%. This compares to an increase in the Company's Performance Objective1 of
5.1% and a 6.6% decrease in the MSCI AC Asia ex Japan Index (measured on a
total return, sterling adjusted basis). These numbers point at a feature of the
year so far, a significant divergence in performance between countries in the
Asia Pacific region. In China, strengthening political headwinds had a chilling
impact on equities whereas, in stark contrast, equities in India proved to be
very popular. Six of the portfolio's largest detractors were companies
operating in China, while seven of the largest positive contributors were from
India. We have found that quality and sustainability transcend borders and
focusing on geography can be distracting. The Trust invests in companies and
not countries, but we do consider headwinds and tailwinds and the sheer size of
this performance differential bears examination.
What detracted from our return?
During the interim period many equities in China became less popular as
political headwinds strengthened against certain areas of the economy.
Companies falling foul of greater government scrutiny appeared to possess three
main characteristics: prominent stewards deemed capable of challenging higher
powers; franchises considered to be misaligned with social development; and
foreign investors facilitated by American Depositary Receipt ("ADR") listings
and/or corporate structures containing variable interest entities. American
listed education companies were sanctioned heavily. Here, it was decreed that
profit from the provision of private tuition was incompatible with social
development. By prohibiting these companies from making profit the government
effectively confiscated the assets. Shareholders lost more than 90% within a
few weeks. Fortunately, our focus on quality companies spared shareholders from
the worst of these tribulations, but political anxieties, particularly in China
and Hong Kong, did have a small negative impact on performance.
The biggest detractor from performance was Vitasoy, one of the largest holdings
in the portfolio. Vitasoy is a plant-based beverage manufacturer that is listed
in Hong Kong and expanding in China. Following an unpredictable debacle,
external to company purview, Vitasoy featured negatively in the national and
international press. This led to a social media outcry, a boycott of their
products by Chinese consumers and ultimately a profit warning. A recent call
with management confirmed their competence and that demand for Vitasoy's
products was rebounding. We are encouraged that the worst of this episode is in
the past and the Trust remains invested in this high-quality franchise.
Five other companies operating in China were also weak, but the cumulative
detraction was less than from Vitasoy alone. These companies were Unicharm
Corporation, Pigeon Corporation, Vinda International, Hualan Biological and AK
Medical. Rising input prices had a marginal short-term impact on manufacturers,
but there were no discernible political headwinds facing any of these
companies, save for the possibility of reduced product pricing at AK Medical.
This written, we are not complacent and we continue to evaluate any challenges
to capital preservation with a sharpened focus on political risk.
Outside China, equities in South East Asia were mostly lacklustre. The
portfolio suffered small performance detractions from Philippine Seven, a
convenience store operator headquartered in Manila; Humanica, a human resources
and accounting specialist in Thailand; and Bank OCBC Nisp in Indonesia. These
companies are particularly sensitive to local lockdown and economic challenges
and their recent weakness is understandable. The Trust remains invested in
these companies as their deep financial resilience, excellent stewardship and
strong franchises mean they are well placed to contribute to future returns as
economies recover.
1 Consumer Price Index ("CPI") + 6%. CPI data is quoted on a one month lag. See
Glossary for further information.
What contributed to our return?
Indian companies contributed positively to performance regardless of their
sector. The strongest contributor was Dr Lal Pathlabs which conducts medical
tests in radiology, pathology and cardiology. The title of their recently
released annual report, "Enabling Healthier Lives", provides a good explanation
for this strength as well as highlighting excellent sustainability credentials.
Dr Lal's supplemented their core franchise expansion with Covid testing
facilities and the value of the equity rose by nearly 60% in local terms.
Despite a pandemic induced boost, the company only tests 20 million patients a
year and we are comfortable that there is significant growth potential for this
franchise as high-quality operators continue to take market share in a
relatively unorganised market.
The second largest contributor was Tube Investments. Tube is expertly stewarded
by Mr Vellayan Subbiah, a descendant of the Murugappa family who founded a
conglomerate spanning 28 businesses across India and beyond over 120 years ago.
The company is currently one of India's leading manufacturers of metal formed
products for automotive, railway, construction and agriculture as well as a
leading manufacturer of bicycles. Since taking the reins in 2017, Velleyan has
improved the balance sheet, returns on capital and free cash flow generation.
This has set the scene for Tube's long-term ambition to evolve into a
high-quality industrial conglomerate capable of reinvesting free cash flow from
existing businesses into new growth engines. This year, we witnessed their
first major move with the acquisition of CG Power, a high-quality motor
franchise that had been severely mismanaged by previous owners. We have spent a
lot of time trying to understand how successful industrial conglomerates have
evolved globally and believe Tube has many of the right credentials for
long-term success.
The third strongest contributor was Marico. Marico is the dominant provider of
hair conditioning and healthy edible oils2 in India and is also present in
Bangladesh, Vietnam and parts of the Middle East and North Africa. Aided by the
pandemic, the company enjoyed a strong year on the back of a consumer
inclination towards better hygiene and healthier eating. After a number of
years of investment, we are now seeing their healthy foods business become a
material contributor to growth and profitability.
Only slightly less substantial, but no less important, other notable
contributors to performance were Cyient, Sundaram Finance and Elgi Equipment,
all from India. Each of these companies enjoyed a rebound in operations and
investor interest following extreme Covid related weakness in 2020. Lastly, a
relatively new investment in Tata Consumer Products performed well as the CEO,
Sunil D'Souza, showed progress removing ineffciencies from this newly created
consumer franchise.
Of course, India was not the only focus and three of the top ten contributors
were from China, South Korea and Hong Kong, namely Silergy, Naver and
Techtronic.
Silergy is listed in Taiwan, but operates in China, and designs analog
semiconductors, mostly for power management and effciency. Global demand for
integrated circuits has continued to be strong with shortages in supply
documented across countries and industries. Additionally, Silergy also benefits
from a localisation trend as China seeks semiconductor manufacturing
independence from foreign suppliers.
Naver is listed in South Korea and started in 2000 as a search engine dedicated
to Korean users. Since then, the group has prudently parlayed prodigious
cash-flows from search advertising revenues into a powerful internet ecosystem
offering financial services, media, commerce and cloud capabilities. The
steward here is Seong-sook Han and we have great admiration for the vibrant,
innovative and differentiated culture she has nurtured. Naver, like all
companies, is imperfect and we have been engaging, with some success, on
certain unwelcome employment practices. During the period Naver benefitted from
the increased need for virtual connectivity making it easier to launch and
develop new services within their expanding eco-system.
The last significant contributor to performance was Techtronic, which is listed
in Hong Kong. Techtronic is one of only three major competitors in the now
consolidated power tool manufacturing industry. During the period Techtronic
continued to benefit from buoyant demand from personal and commercial
construction activities. They also strengthened their industry position as the
marketplace continues to transition to cordless power tool technology, which is
dominated by Techtronic.
2 Marico's domestic market share of coconut oil hair conditioning and super
premium refined edible oils is 61% and 81%. Marico Investor Presentation, May
2021 https://m.marico.com/investorspdf/Investor_Presentation_May_2021.pdf
Transactions
The Trust purchased three new companies in China: Glodon, which provides
digital design and imaging services to the construction industry; Estun
Automation, a manufacturer of industrial automation; and Amoy Diagnostics,
which specialises in the early-stage detection of cancer.
Having sold the Trust's entire holding in Nippon Paint in November 2020, for
reasons of valuation only, with the share price weakening since that time and
with our confidence in the quality of its people, franchise and financials
undiminished, we reinitiated a holding in the period under review.
In India, we purchased four new franchises with strong growth opportunities: CG
Power & Industrial, which has a long history and strong franchise manufacturing
equipment for power generation, transmission and distribution; Cholamandalam
Financial Holdings (a subsidiary of the Murugappa Group), which provides
insurance and investments; Indiamart Intermesh, which digitally connects buyers
and sellers with over 72,000 mostly industrial components and goods; and
lastly, Biocon, which is a contract researcher and manufacturer of
pharmaceuticals.
The Trust sold out of four investments in the period. Two of these were banks:
OCBC in Singapore and Bank of Central Asia in Indonesia. The environment for
banks is challenging with new competitors and a diminished outlook for
profitable loan growth. We also sold Metropolis Healthcare and Indigo Paints.
Both of these were small holdings which we did not want to increase for reasons
of valuation.
Outlook
The Trust invests in companies and not in countries. When constructing the
portfolio we start with a blank sheet of paper and invest in companies with
strong sustainability positioning and high-quality franchises, people and
financials. When evaluating companies, we also consider political and economic
headwinds and tailwinds. These exacerbate weaknesses and magnify qualities.
During the interim period under review, political headwinds in China
strengthened. This exposed the legal or social frailties of many well-known but
lower quality companies. In the future, these political headwinds may wane but
the Trust will not compromise on quality and will continue to invest in the
highest quality stewards, franchises and financials to preserve and grow
shareholders' capital.
Stewart Investors
25 October 2021
Contribution by investment for the six months ended 31 July 2021
Top 10 contributors to and detractors from absolute performance (%)
Top 10 contributors to absolute performance for the 6 months ended 31 July 2021
Contribution to
Company Returns %
Dr Lal Pathlabs 1.23
Tube Investments 1.21
Marico 0.79
Silergy 0.64
Cyient 0.50
Tata Consumer Products 0.49
Sundaram Finance 0.48
NAVER 0.47
Techtronic Industries 0.47
Elgi Equipments 0.45
Top 10 detractors from absolute performance for the 6 months ended 31 July 2021
Contribution to
Company Returns %
Vitasoy International Holdings -1.63
Unicharm Corporation -0.42
Pigeon Corporation -0.37
Vinda International Holdings -0.30
Hualan Biological -0.25
Philippine Seven -0.24
Humanica -0.24
Bank OCBC -0.22
AK Medical Holdings -0.16
Kotak Mahindra Bank -0.14
Source: Stewart Investors.
Portfolio Valuation
as at 31 July 2021
Val'n % Total
Company Sector Country £'000 Assets
Hoya Corp Health Care Japan 18,374 4.2%
Tube Investments of India Consumer Discretionary India 17,847 4.1%
Mahindra & Mahindra Consumer Discretionary India 15,597 3.6%
Marico Consumer Staples India 15,257 3.5%
Unicharm Consumer Staples Japan 13,322 3.1%
Techtronic Industries Industrials Hong Kong 12,901 3.0%
Vitasoy International Consumer Staples Hong Kong 12,683 2.9%
Holdings
Voltronic Power Technology Industrials Taiwan 12,080 2.8%
Housing Development Finance Financials India 11,771 2.7%
Corporation
NAVER Communication Services South Korea 11,696 2.7%
Top 10 Investments 141,528 32.6%
Dr Lal Pathlabs Health Care India 10,910 2.5%
Koh Young Technology Information Technology South Korea 9,728 2.2%
Taiwan Semiconductor Information Technology Taiwan 9,144 2.1%
Manufacturing
Tata Consultancy Services Information Technology India 9,098 2.1%
Tata Consumer Products Consumer Staples India 8,994 2.1%
Kotak Mahindra Bank Financials India 8,844 2.0%
Delta Electronics Information Technology Taiwan 8,539 2.0%
Advantech Information Technology Taiwan 8,420 1.9%
Vinda International Consumer Staples China 8,130 1.9%
Silergy Information Technology China 7,823 1.8%
Top 20 Investments 231,158 53.2%
Info Edge Communication Services India 7,260 1.7%
Aavas Financiers Financials India 7,198 1.7%
Chroma Ate Information Technology Taiwan 7,178 1.7%
Dabur India Consumer Staples India 7,140 1.6%
Elgi Equipments Industrials India 7,027 1.6%
Dr. Reddy's Laboratories Health Care India 6,793 1.6%
PT Uni-Charm Indonesia Consumer Staples Indonesia 6,668 1.5%
CG Power & Industrial Industrials India 6,590 1.5%
Solutions
Vitrox Information Technology Malaysia 6,386 1.5%
Tech Mahindra Information Technology India 6,213 1.4%
Top 30 Investments 299,611 69.0%
Godrej Consumer Products Consumer Staples India 6,137 1.4%
Sundaram Finance Financials India 6,056 1.4%
Tata Communications Communication Services India 5,705 1.3%
Philippine Seven Consumer Staples Philippines 5,646 1.3%
Infosys Information Technology India 5,426 1.2%
Bank OCBC NISP Financials Indonesia 5,380 1.2%
Syngene International Health Care India 5,272 1.2%
Hualan Biological Engineering Health Care China 5,241 1.2%
Tokyo Electron Information Technology Japan 5,061 1.2%
PT Selamat Sempurna Consumer Discretionary Indonesia 4,871 1.1%
Top 40 Investments 354,406 81.5%
Marico Bangladesh Consumer Staples Bangladesh 4,744 1.1%
Shenzhen Inovance Technology Industrials China 4,707 1.1%
Mahindra Logistics Industrials India 4,453 1.0%
HDFC Life Insurance Financials India 4,133 1.0%
BRAC Bank Financials Bangladesh 4,107 0.9%
Shanthi Gears Industrials India 4,087 0.9%
Centre Testing International Industrials China 4,079 0.9%
Guangzhou Kingmed Diagnostics Health Care China 3,684 0.8%
Humanica Information Technology Thailand 3,644 0.8%
Glodon Information Technology China 3,031 0.7%
Top 50 Investments 395,075 90.7%
Estun Automation Industrials China 2,848 0.7%
Delta Brac Housing Finance Financials Bangladesh 2,677 0.6%
Cholamandalam Financial Financials India 2,427 0.6%
Holdings
Pigeon Corporation Consumer Staples Japan 2,401 0.6%
MediaTek Information Technology Taiwan 2,223 0.5%
Kasikornbank Financials Thailand 2,180 0.5%
Amoy Diagnostics Health Care China 2,148 0.5%
Biocon Health Care India 2,081 0.5%
Hemas Holdings Industrials Sri Lanka 2,001 0.5%
IndiaMart InterMesh Information Technology India 1,781 0.4%
AK Medical Holdings Health Care China 1,494 0.3%
Pentamaster International Information Technology Malaysia 1,371 0.3%
Cyient Information Technology India 831 0.2%
Nippon Paint Materials Japan 809 0.2%
Square Pharmaceuticals Health Care Bangladesh 156 0.0%
Total Investments 422,503 97.1%
Net current assets / 12,470 2.9%
(liabilities)
Total Shareholders Funds 434,973 100.0%
Financial Statements
Income Statement
for the six months ended 31 July 2021
(Unaudited) (Unaudited)
Six months ended Six months ended
31 July 2021 31 July 2020
Revenue Capital Total £ Revenue Capital Total
£'000 £'000 '000 £'000 £'000 £'000
Gains on investments - 24,349 24,349 - 1,966 1,966
Exchange differences on currency - (463) (463) - (87) (87)
balances
Investment Income 3,094 - 3,094 3,035 - 3,035
Portfolio Management and AIFM (514) (1,542) (2,056) (389) (1,166) (1,555)
fees (note 2)
Other expenses (344) - (344) (288) - (288)
Return before taxation 2,236 22,344 24,580 2,358 713 3,071
Taxation (415) (2,505) (2,920) (301) 1,117 816
Return after taxation 1,821 19,839 21,660 2,057 1,830 3,887
Return per ordinary share (note 3) 1.5p 16.4p 17.9p 1.7p 1.5p 3.2p
The Total column of this statement represents the Company's Income Statement.
The Revenue and Capital columns are supplementary to this and are both prepared
under guidance published by the Association of Investment Companies ("AIC").
All revenue and capital items in the Income Statement derive from continuing
operations.
The Company had no recognised gains or losses other than those declared in the
Income Statement.
All of the return and total comprehensive income for the period is attributable
to the owners of the Company.
Statement of Changes in Equity
for the six months ended 31 July 2021
(Unaudited) (Unaudited)
Six months Six months
ended ended
31 July 2021 31 July 2020
£'000 £'000
Opening shareholders' funds 416,216 345,717
Return for the period 21,660 3,887
Dividends paid (note 4) (2,903) (3,629)
Closing shareholders' funds 434,973 345,975
Statement of Financial Position
as at 31 July 2021
(Unaudited) (Audited)
As at As at
31 July 31 January
2021 2021
£'000 £'000
Fixed assets
Investments (note 5) 422,503 404,714
Current assets
Debtors 3,407 232
Cash and cash equivalents 19,501 17,823
22,908 18,055
Creditors (amounts falling due within one year) (2,718) (1,231)
Net current assets 20,190 16,824
Non-current liabilities
Provisions (note 6) (7,720) (5,322)
Net assets 434,973 416,216
Capital and reserves
Share capital 15,120 15,120
Share premium account 8,811 8,811
Capital redemption reserve 1,648 1,648
Special reserve 14,572 14,572
Capital reserve 389,114 369,275
Revenue reserve 5,708 6,790
Equity shareholders' funds 434,973 416,216
Net asset value per ordinary share (note 7) 359.6p 344.1p
Notes to the Financial Statements
1. Basis of preparation
The condensed Financial Statements for the six months to 31 July 2021 comprise
the statements set out above including the related notes below. They have been
prepared in accordance with FRS 104 'Interim Financial Reporting' and the
principles of the AIC's Statement of Recommended Practice issued in October
2019 and updated in April 2021, using the same accounting policies as set out
in the Company's Annual Report and Financial Statements for the year ended 31
January 2021.
Fair value
Under FRS 102 and FRS 104 investments have been classified using the following
fair value hierarchy:
Level 1 - Quoted prices in active markets.
Level 2 - Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data), either directly or indirectly.
Level 3 - Inputs are unobservable (i.e. for which market data is unavailable).
All of the Company's investments fall into Level 1 for the periods reported.
2. Portfolio Management and AIFM fees*
(Unaudited) (Unaudited)
Six months ended Six months ended
31 July 2021 31 July 2020
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Portfolio management fee - 456 1,369 1,825 344 1,032 1,376
Stewart Investors
AIFM fee - Frostrow 58 173 231 45 134 179
514 1,542 2,056 389 1,166 1,555
* Please refer to the most recent annual report for more details of the
management fee structure.
3. Return per ordinary share
The total return per ordinary share is based on the return attributable to
shareholders of £21,660,000 (six months ended 31 July 2020: return of £
3,887,000) and on 120,958,386 shares (six months ended 31 July 2020:
120,958,386 shares), being the weighted average number of shares in issue.
The revenue return per ordinary share is calculated by dividing the revenue
return attributable to shareholders of £1,821,000 (six months ended 31 July
2020: £2,057,000) by the weighted average number of shares in issue as above.
The capital return per ordinary share is calculated by dividing the capital
return attributable to shareholders of £19,839,000 (six months ended 31 July
2020: return of £1,830,000) by the weighted average number of shares in issue
as above.
4. Dividends
(Unaudited) (Unaudited)
Six months Six months
ended ended
31 July 2021 31 July 2020
Amounts recognised as distributions in the period:
Previous year's final dividend of 2.4p (2020: interim 2,903 3,629
dividend of 3.0p)
5. Investments
Six months to Year to
31 July 31 July 31 January
2021 2020 2021
Investments
Cost at start of period 267,140 222,736 222,736
Investment holding gains at start of 137,574 86,781 86,781
period
Valuation at start of period 404,714 309,517 309,517
Purchases at cost 37,762 63,520 110,858
Disposal proceeds (44,322) (41,245) (92,887)
Gains on investments 24,349 1,966 77,226
Valuation at end of period 422,503 333,758 404,714
Cost at end of period 275,584 252,451 267,140
Investment holding gains at end of period 146,919 81,307 137,574
Valuation at end of period 422,503 333,758 404,714
The Company received £44,322,000 (period to 31 July 2020: £41,245,000; year to
31 January 2021: £92,887,000) from investments sold in the period. The book
cost of these investments when they were purchased was £29,318,000 (period to
31 July 2020: £33,805,000; year to 31 January 2021: £66,454,000). These
investments have been revalued over time and until they were sold any
unrealised gains/losses were included in the fair value of the investments.
During the period the Company incurred transaction costs on purchases of £
63,000 (period to 31 July 2020: £76,000; year to 31 January 2021: £156,000) and
transaction costs on sales of £116,000 (period to 31 July 2020: £89,000; year
to 31 January 2021: £231,000).
6. Provisions
The provision at 31 July 2021 of £7,720,000 (31 January 2021: £5,322,000)
relates to a potential deferred tax liability for Indian capital gains tax that
may arise on the Company's Indian investments should they be sold in the
future, based on the net unrealised taxable capital gain at the period end and
on enacted Indian tax rates. The amount of any future tax amounts payable may
differ from this provision, depending on the value and timing of any future
sales of such investments and future Indian tax rates.
The capital tax charge shown in the Income Statement primarily results from the
movements on this provision.
7. Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets attributable
to shareholders of £434,973,000 (31 January 2021: £416,216,000) and on
120,958,386 shares in issue (31 January 2021: 120,958,386).
8. 2021 accounts
These are not statutory accounts in terms of Section 434 of the Companies Act
2006 and are unaudited. Statutory accounts for the year to 31 January 2021,
which received an unqualified audit report, have been lodged with the Registrar
of Companies. No statutory accounts in respect of any period after 31 January
2021 have been reported on by an auditor or delivered to the Registrar of
Companies.
Earnings for the first six months should not be taken as a guide to the results
for the full year.
Interim Management Report
Principal Risks and Uncertainties
The Company's principal area of risk relates to its investment activity and
strategy, including currency risk in respect of the markets in which it
invests. Other risks faced by the Company include financial, shareholder
relations and operational risks (including cyber-crime, corporate governance,
accounting, legal, regulatory and political risks). These risks, and the way in
which they are managed, are described in more detail under the heading Risk
Management within the Strategic Report in the Company's Annual Report for the
year ended 31 January 2021. The Company's principal risks and uncertainties
have not changed materially since the date of that report and are not expected
to change materially for the remaining six months of the Company's financial
year.
The Board, the AIFM and the Portfolio Manager continually consider emerging
risks and monitor, amongst other things, the potential for the Company's
portfolio to be a?ected by the Covid-19 pandemic and geopolitical risks.
Related Party Transactions
During the first six months of the current financial year no material
transactions with related parties have taken place which have affected the
financial position or the performance of the Company during the period.
Going Concern
The Directors believe, having considered the Company's investment objective,
risk management policies, capital management policies and procedures, and the
nature of the portfolio and its expenditure projections, that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future. For these reasons, they consider it appropriate to continue to adopt
the going concern basis in preparing the financial statements. In reviewing the
position as at the date of this report, the Board has considered the guidance
on this matter issued by the Financial Reporting Council.
Directors' Responsibilities
The Board confirms that, to the best of the Directors' knowledge:
i. the condensed set of financial statements contained within the Half Year
Report has been prepared in accordance with Financial Reporting Standard
104 (Interim Financial Reporting); and
ii. the interim management report includes a fair review of the information
required by:
a. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially affected
the financial position or performance of the entity during that period;
and any changes in the related party transactions described in the last
annual report that could do so.
This Half Year Report has not been audited or reviewed by an auditor.
This Half Year Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the date of this report and such statements should be
treated with caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking information.
For and on behalf of the Board
James Williams
Chairman
25 October 2021
Frostrow Capital LLP
Company Secretary
Glossary of Terms
AIFMD
The Alternative Investment Fund Managers Directive (the "Directive") is a
European Union Directive that entered into force on 22 July 2013. The
Directive, which was retained in UK law following the withdrawal of the UK from
the European Union, regulates fund managers that manage alternative investment
funds (including investment trusts).
Where an entity falls within the scope of the Directive, it must appoint a
single Alternative Investment Fund Manager ("AIFM"). The core functions of an
AIFM are portfolio and risk management. An AIFM can delegate one but not both
of these functions. The entity must also appoint an independent depositary
whose duties include the following: the safeguarding and verification of
ownership of assets; the monitoring of cashflows; and ensuring that appropriate
valuations are applied to the entity's assets
Alternative Performance Measures ("APMs")
Measures that are not specifically defined under International Financial
Reporting Standards, but which the Board of Directors views as particularly
relevant for investment trust companies and which it uses to assess the
Company's performance. Definitions of the terms used and the basis of
calculation are set out in this Glossary and the APMs are indicated with a
caret (^).
Average Discount
The average share price for the period divided by the average net asset value
for the period and expressed as a percentage (%).
Six months to Year to
31 July 31 January
2021 2021
pence pence
Average share price for the period 330.0 268.1
Average net asset value for the period 354.9 294.9
Average Discount 7.0% 9.1%
Net Asset Value Per Share
The value of the Company's assets, principally investments made in other
companies and cash held in the Company's bank accounts, minus any liabilities
and divided by the number of shares in issue. The net asset value is often
expressed in pence per share and it may also be described as 'shareholders'
funds' per share. The net asset value per share is unlikely to be the same as
the share price, which is the price at which the Company's shares can be bought
or sold by an investor. The share price is determined by the relationship
between the demand for and supply of the shares.
Net Asset Value Per Share Total Return^
The theoretical total return on shareholders' funds per share, reflecting the
change in net asset value assuming that dividends paid to shareholders were
reinvested at net asset value at the time the shares were quoted ex-dividend. A
way of measuring investment management performance of investment trusts which
is not affected by movements in the share price.
Six months to Year to
31 July 31 January
2021 2021
NAV Total Return pence pence
Opening net asset value per share 344.1 285.8
Increase in net asset value 17.9 61.3
Dividend paid (2.4) (3.0)
Closing Net Asset Value 359.6 344.1
% increase in net asset value 5.2% 21.4%
Impact of reinvested dividends 0.4% 0.9%
Net Asset Value Per Share Total Return 5.6% 22.3%
Ongoing Charges^
Ongoing charges are calculated by taking the Company's annualised operating
expenses excluding finance costs, taxation and exceptional items, and
expressing them as a percentage of the average daily net asset value of the
Company over the period. The costs of buying and selling investments are
excluded, as are interest costs, taxation, costs of buying back or issuing
shares and other non-recurring costs. These items are excluded because if
included, they could distort the understanding of the Company's performance for
the period and the comparability between periods.
Six months to Year to
31 July 31 January
2021 2021
£'000 £'000
Total Operating Expenses 2,400 4,010
Average Net Assets 429,540 356,104
Ongoing Charges* 1.1% 1.1%
* Annualised
Performance Objective
The Company's performance objective is to provide shareholders with a net asset
value per share total return in excess of the UK Consumer Price Index ("CPI")
plus 6 per cent. (calculated on an annual basis) measured over three to five
years. The Consumer Price Index is published by the UK Office for National
Statistics and represents inflation. The additional 6% is a fixed element to
represent what the Board considers to be a reasonable premium on investors'
capital which investing in the faster-growing Asian economies ought to provide
over time.
Company Net
Asset Value
Per Share
Total Return CPI + 6%
(annualised) (annualised)
(%) (%)
One year to 31 July 2021 26.6 8.3
Three years to 31 July 2021 9.5 8.0
Five years to 31 July 2021 10.7 8.3
Share Price Discount (or Premium) to the Net Asset Value Per Share^
A description of the difference between the share price and the net asset value
per share. The size of the discount or premium is calculated by subtracting the
share price from the net asset value per share and is usually expressed as a
percentage (%) of the net asset value per share. If the share price is higher
than the net asset value per share the result is a premium. If the share price
is lower than the net asset value per share, the shares are trading at a
discount.
Share Price Total Return^
Share price total return to a shareholder, on a last traded price to a last
traded price basis, assuming that all dividends received were reinvested,
without transaction costs, into the shares of the Company at the time the
shares were quoted ex-dividend.
Six months to Year to
31 July 31 January
2021 2021
Share Price Total Return pence pence
Opening share price 333.0 268.0
Increase in share price 5.4 68.0
Dividend Paid (2.4) (3.0)
Closing share price 336.0 333.0
% increase in share price 1.6% 25.4%
Impact of reinvested dividends 0.1% 0.4%
Share Price Total Return 1.7% 25.8%
MSCI Disclaimer
The MSCI information may only be used for your internal use, may not be
reproduced or redisseminated in any form and may not be used as a basis for or
a component of any financial instruments or products or indices. None of the
MSCI information is intended to constitute investment advice or a
recommendation to make (or refrain from making) any kind of investment decision
and may not be relied on as such. Historical data and analysis should not be
taken as an indication or guarantee of any future performance analysis,
forecast or prediction. The MSCI information is provided on an "as is" basis
and the user of this information assumes the entire risk of any use made of
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or related to compiling, computing or creating any MSCI information
(collectively, the "MSCI Parties") expressly disclaims all warranties
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A member of the Association of Investment Companies
Pacific Assets Trust plc
Address for correspondence - 25 Southampton Buildings, London WC2A 1AL
www.pacific-assets.co.uk
END
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