Half-year Report
12/10/2023 10:53
Pacific Assets Trust plc
(the “Company” or the “Trust”)
Unaudited Half Year Report
for the six months ended 31 July 2023
Financial Highlights
Key Statistics
As at As at
31 July 31 January
2023 2023 % change
Share price 369.0p 358.0p 3.1%
Net asset value per share 390.3p 391.6p (0.3%)
Discount of share price to net asset value per share 5.5% 8.6%
Market capitalisation £446.3m £433.0m 3.1%
Shareholders’ funds £472.2m £473.7m (0.3%)
Six months to One year to
31 July Six months to 31 January
2023 31 July 2022 2023
Share price (total return)*^ 3.7% (3.8%) 5.9%
Net asset value per share (total return)*^ 0.3% 0.2% 5.7%
CPI + 6%(1) 6.5% 9.0% 17.3%
MSCI All Country Asia ex Japan Index (total return, sterling adjusted)* (3.3%) (9.0%) (2.2%)
Average discount of share price to net asset value per share^ 6.5% 10.5% 10.1%
Ongoing charges^ 1.1% 1.1% 1.1%
* Source: Morningstar.
^ Alternative Performance Measure (see Glossary).
(1 )UK Consumer Price Index + 6% – the Company’s Performance Objective
(see Glossary). Figures for six month periods are calculated on a pro rata
basis.
Year ended Year ended
31 January 31 January
Dividends 2023 2022
Final Dividend per share 2.3p 1.9p
Peer Group Performance
Performance Assessment
The Company’s performance objective, against which the Portfolio Manager’s
performance is measured, is to provide shareholders with a net asset value
total return in excess of the UK Consumer Price Index (“CPI”) plus 6%,
calculated on an annual basis and measured over three to five years.
The Board also monitors the Company’s performance against its peer group. An
analysis of the Company’s performance can be found below, in the
Chairman’s Statement, and in the Portfolio Manager’s Review.
Peer Group Net Asset Value per Share (Total Return)^
6 months 1 Year 3 years 5 years
£ Rank £ Rank £ Rank £ Rank
Pacific Assets Trust 100.3 1 105.7 1 139.1 1 144.1 2
Schroder Asian Total Return 97.6 2 104.7 2 119.3 3 137.4 3
Pacific Horizon 96.1 5 96.3 5 132.9 2 182.4 1
Schroder Asia Pacific 96.5 3 102.1 3 113.8 4 122.7 4
abrdn New Dawn 89.8 6 94.5 6 105.6 5 119.3 5
iShares MSCI All Country Asia ex Jpn ETF 96.1 4 99.9 4 101.3 6 107.6 7
Asia Dragon 89.0 7 92.6 7 98.6 7 111.3 6
Peer Group Average 95.1 99.4 115.8 132.1
CPI + 6%(1) 106.5 114.6 144.8 167.4
MSCI AC Asia Ex Japan 96.7 100.4 103.3 112.4
Source: Morningstar. Figures show the value as at 31 July 2023 of £100
invested at the start of the period.
^ Alternative Performance Measure (see Glossary).
(1) The Company’s Performance Objective (see Glossary).
Chair’s Statement
Return
The net asset value (“NAV”) total return for the six months ended 31 July
was 0.3% (2022: 0.5%). The NAVs of the five other trusts in our monitored peer
group all decreased, with a collective average NAV decline of 9.7% (2022:
average decline of 7.3%).
Over longer periods we consider investment return against the UK CPI plus 6%,
in that we believe that our largely UK-based investors are seeking to protect
their capital in real terms while extracting a premium over their home markets
from the faster growing Asian economies. Over the last five years, our
annualised return of 7.5% has fallen behind the annualised CPI plus 6% figure
of 10.9%. This is of course a result of the rise in inflation in the West,
which has persisted into this year and looks likely to take some time to
reduce.
While the Board would like to see a higher rate of return from our investments
in Asia, we note the negative total return (sterling adjusted) of the MSCI All
Country Asia ex Japan Index of -3.3%, as well as the average decline in the
net asset values of the Company’s peers, during the period. We are pleased
that the Portfolio Manager has been able to protect shareholders’ capital in
a period of muted returns from Asian markets.
The Company’s high exposure to India has continued to be helpful to returns:
seven of the top ten principal contributors to the return in this six-month
period were Indian companies, including CG Power & Industrial Solutions,
Cholamandalam Financial Holdings and Tube Investments.
China missed its growth forecasts in July, weakening its economic outlook and
this lacklustre performance is reflected in the Company’s principal
detractors, which were primarily companies based in China and Hong Kong
including Vitasoy, Vinda International and Glodon.
Further analysis of the Company’s performance can be found in the Portfolio
Manager’s Review.
Share Price Performance
The Company’s shares traded at an average discount of 6.5% during the period
(2022: 10.5%). The share price total return of 3.7% exceeds the Company’s
NAV total return of 0.3%, reflecting a narrowing of the share price discount
from 8.6% at the Company’s financial year end to 5.5% at the end of July.
This improved rating reflects the good relative and absolute performance of
the Company.
The Board continues to work on improving investors’ awareness of the Company
and the attributes that distinguish it from its competitors, including the
Portfolio Manager’s long-held investment approach which focuses on
sustainability and capital preservation. Our aim is to improve demand for the
Company’s shares which will further reduce the share price discount and,
ultimately, place us in a position to grow the Company through the issue of
new shares at a premium to NAV.
The Board
During the period, James Williams retired from the Board and I succeeded him
as Chair. I would like to thank James for his excellent stewardship of the
Company during his time as Chair.
Charlotta Ginman, our Audit Committee Chair, intends to retire at the next
Annual General Meeting in 2024. The Board is in the advanced stages of
recruiting her successor and hopes to make an announcement in the near future.
The Outlook
Continued high inflation in the UK means that it will be a challenge, in the
shorter term, to achieve our objective of exceeding UK CPI plus 6%. However,
the long-term outlook for Asian markets looks promising. Asia’s constituent
economies are expected to outgrow other regions over the coming years, even if
the region remains vulnerable to the shorter-term consequences of recession in
the US, uncertainties regarding China’s economic growth and seemingly
ever-present geopolitical concerns. India and Southeast Asia have seen
stronger earnings growth in their post-Covid recovery and are expected to be
the fastest growing economies this decade. Against that backdrop, our
Portfolio Manager will continue to build the portfolio from the bottom up,
focusing on identifying and selecting companies with successful and
experienced management teams, strong balance sheets and sustainable
businesses.
Andrew Impey
Chair
12 October 2023
Portfolio Manager’s Review
Performance
Little information of value can be gleaned from short-term performance but it
has been a satisfactory period that is consistent with the medium and
longer-term performance of the Company. It is noticeable that the top ten
contributors to performance are predominantly listed in India and Indonesia
where attractive tailwinds are assisting high quality stewards and franchises
to innovate and grow.
It is also noticeable that the largest detractors are mostly listed in Hong
Kong, China or Taiwan where economic and geopolitical news has been
deteriorating, possibly at an accelerating pace. As mentioned in previous
reports we believe that news headlines tend to provide low value, short
shelf-life information. As such, articles on the economy or speculations on
global trade tensions have no influence on the transactions listed below.
Transactions
We aim to build resilient portfolios of high quality companies with
diversified streams of cash flows, which have the ability to grow in value
over the long term. High quality companies at reasonable valuations tend not
to come along too often. In the absence of such opportunities, we are very
comfortable long-term owners of investee companies. Accordingly, the turnover
figures on a new names basis tends to be in the low teens which is roughly
in-line with our investment horizon of at least five years.
Figure 1 shows the new additions and complete sales during the period.
Figure 1
New Additions Complete Sales
Hangzhou Robam (China, Consumer Discretionary) Techtronic Industries (Hong Kong, Industrials)
Cyient (India, Information Technology) Infosys (India, Information Technology)
Telekom Indonesia (Indonesia, Communication Services) Info Edge (India, Communication Services)
Triveni Turbines (India, Industrials) Public Bank (Malaysia, Financials)
New Additions
Over the period, we initiated a new holding in Telkom Indonesia (Indonesia:
Communication Services). Telkom Indonesia has a strong track record of growth
and profitability servicing as the backbone of Indonesia’s digital growth.
Telecoms is notoriously a tough industry as there is little in the way of
differentiation between what tend to be equally matched players. In Indonesia
however, Telkom has significant market leadership in a consolidated market
providing them valuable cash flows to reinvest in growth ahead of peers.
Telkom is also a unique example of a telecom company which has a robust
balance sheet: again differentiating them from most global and local peers.
Outcomes such as these do not only provide financial resilience but also
exemplify superior governance.
In India we purchased Cyient (India: Information Technology) as we believe the
company has set itself on a clear path of improvement under a new and
impressive management team. The new CEO, Karthikeyan Natarajan, is focused and
determined on building Cyient into a leading provider of outsourced
engineering services, globally. We also purchased Triveni Turbines (India:
Industrials), India’s leading steam turbine maker, again, with an eye on
global expansion. Stewarded by the Sawhney family, Triveni has ambitions to
build a simple, focused business in turbines that can compete on a global
scale. Triveni’s niche of small turbines is an area that requires long-term,
trust-based relationships with customisation of end products and a robust
aftermarket presence. These characteristics provide profitable, steady cash
generation which help to protect a net cash balance sheet.
Lastly, we purchased Hangzhou Robam (China: Consumer Discretionary). Robam
develops, manufactures and sells household electrical appliances where they
have established a powerful brand name and a loyal following. Robam’s end
markets are experiencing weak demand on the back of muted consumer confidence
and a fragile housing market. We do not believe we have any ability to
pinpoint bottoms and tops but are convinced by the quality of the stewardship,
franchise and the nearly US$1billion of net cash on the balance sheet. Longer
term, we believe Robam has the ability to transfer its acumen and brand
strength into product categories such as dishwashers where penetration levels
leave a long runway for growth.
Complete Sales
The most significant sale during the period was Techtronic Industries (Hong
Kong: Industrials). Techtronic is a major player in the power tools space
where it has curated world-class brands and led the industry’s evolution
towards battery-powered tools. However, we had grown increasingly
uncomfortable with the lack of humility and overconfidence portrayed by the
management team and how this may feed into greater fragility of earnings going
forward.
In India, we sold the Company’s marginal positions in Infosys (India:
Information Technology) and Info Edge (India: Communication Services). Both
positions were sold to fund higher conviction ideas while maintaining the
concentration of the portfolio.
The last disposal to mention was Public Bank (Malaysia: Financials). This was
an unusually short time for the Company to hold an investment but this
decision was the consequence of our ability to change our minds quickly rather
than a shortening of our time horizon. Unfortunately, we believe the economic
and competitive dynamics in the industry will provide too strong a headwind
for Public Bank to be able to protect and preserve the Company’s capital:
despite their admirable track record of conservatism and long-termism.
Other Notable Activity
We added to the Company’s holding in Tech Mahindra (India: Information
Technology). We have been long-term holders of the company and increased the
position size following the appointment of a new CEO, a 20-year veteran from
Infosys, who we believe has the ability and opportunity to drive this
franchise to the next level.
To control position sizes following a long period of strong performance and to
manage the concentration in a few names, we trimmed three of the top ten
holdings which are in India: CG Power (India: Industrials), Tube Investments
(India: Consumer Discretionary) and Mahindra & Mahindra (India: Consumer
Discretionary). These reductions should not be interpreted in any way as a
loss of confidence in the long-term prospects of these companies. Other
subtractions we made were Elgi Equipments (India: Industrials) for reasons of
valuation only and Syngene (India: Health Care) after a meeting with the
company in India prompted small concerns about the evolution of the culture.
Outlook
There is evidence that the economy in China is deteriorating and that
geopolitical headwinds are strengthening. This may cause heightened volatility
especially as we near the election in the US in 2024 which is likely to
sharpen US rhetoric and actions against China. Such volatility may provide
attractive opportunities to invest in high quality companies that are well
placed to contribute to, and benefit from, the many sustainability challenges
facing the region and the world. We believe that over the longer term
investing in companies with high quality stewards, franchises and financials
is the best way of protecting and growing shareholder capital through economic
and political cycles.
Stewart Investors
Portfolio Manager
12 October 2023
Contribution by Investment
Contribution by investment for the six months ended 31 July 2023
Top 10 contributors to and detractors from absolute performance (%)
Top 10 Contributors
CG Power & Industrial Solutions 1.6
Cholamandalam Financial Holdings 0.7
Bank OCBC NISP 0.7
Tube Investments of India 0.7
Elgi Equipments 0.7
Chroma ATE 0.6
Shanthi Gears 0.4
Tata Communications 0.3
Selamat Sempurna 0.3
Tata Consumer Products 0.3
Bottom 10 Detractors
Vitasoy International Holdings -0.9
Vinda International Holdings -0.6
Glodon -0.6
Humanica -0.5
Koh Young Technology -0.5
Techtronic Industries -0.4
Silergy -0.3
Aavas Financiers -0.3
Amoy Diagnostics -0.3
Advanced Energy Solution -0.2
Portfolio Valuation
as at 31 July 2023
Val’n % Total
Company Country Sector £’000 Assets
CG Power & Industrial Solutions India Industrials 29,137 6.3%
Mahindra & Mahindra India Consumer Discretionary 28,283 6.1%
Tube Investments of India India Consumer Discretionary 23,974 5.2%
Oversea-Chinese Banking Singapore Financials 15,057 3.3%
Unicharm Japan Consumer Staples 14,732 3.2%
Marico India Consumer Staples 14,205 3.1%
Voltronic Power Technology Taiwan Industrials 13,453 2.9%
Shenzhen Inovance Technology China Industrials 12,864 2.8%
Elgi Equipments India Industrials 12,711 2.7%
Hoya Japan Health Care 11,856 2.5%
Top 10 Investments 176,272 38.1%
Tata Consumer Products India Consumer Staples 10,519 2.3%
Cholamandalam Financial Holdings India Financials 9,694 2.1%
Chroma ATE Taiwan Information Technology 9,677 2.1%
Shanthi Gears India Industrials 9,623 2.1%
HDFC Bank India Financials 9,524 2.1%
Bank OCBC Nisp Indonesia Financials 9,370 2.0%
Taiwan Semiconductor Manufacturing Taiwan Information Technology 8,550 1.8%
Tech Mahindra India Information Technology 8,255 1.7%
Kalbe Farma Indonesia Health Care 7,891 1.7%
Selamat Sempurna Indonesia Consumer Discretionary 7,591 1.6%
Top 20 Investments 266,966 57.6%
Delta Electronics Taiwan Information Technology 7,465 1.6%
Kotak Mahindra Bank India Financials 7,329 1.6%
Advantech Taiwan Information Technology 7,210 1.6%
Sheng Siong Group Singapore Consumer Staples 7,183 1.6%
Vinda International Holdings China Consumer Staples 6,733 1.5%
Vitasoy International Holdings Hong Kong Consumer Staples 6,465 1.4%
Koh Young Technology South Korea Information Technology 6,377 1.4%
Godrej Consumer Products India Consumer Staples 6,251 1.3%
Humanica Thailand Industrials 6,116 1.3%
Aavas Financiers India Financials 6,053 1.3%
Top 30 Investments 334,148 72.2%
Tata Consultancy Services India Information Technology 6,022 1.3%
Tokyo Electron Japan Information Technology 5,997 1.3%
Tata Communications India Communication Services 5,705 1.2%
Amoy Diagnostics China Health Care 5,568 1.2%
ViTrox Malaysia Information Technology 5,394 1.2%
Philippine Seven Philippines Consumer Staples 5,253 1.1%
Advanced Energy Solution Taiwan Industrials 5,161 1.1%
Tarsons Products India Health Care 4,920 1.1%
Uni-Charm Indonesia Indonesia Consumer Staples 4,844 1.0%
Glodon China Information Technology 4,613 1.0%
Top 40 Investments 387,625 83.7%
Dr. Lal PathLabs India Health Care 4,586 1.0%
Unilever Indonesia Indonesia Consumer Staples 4,452 1.0%
IndiaMart InterMesh India Industrials 4,338 0.9%
Dabur India India Consumer Staples 4,271 0.9%
Hangzhou Robam Appliances China Consumer Discretionary 4,211 0.9%
Dr. Reddy’s Laboratories India Health Care 4,131 0.9%
Cyient India Information Technology 4,075 0.9%
Zhejiang Supor China Consumer Discretionary 3,602 0.8%
Industri Jamu Dan Farmasi Sido Muncul Indonesia Consumer Staples 3,537 0.8%
Guangzhou Kingmed Diagnostics Group China Health Care 3,482 0.7%
Top 50 Investments 428,310 92.5%
Triveni Turbine India Industrials 3,461 0.7%
Pigeon Japan Consumer Staples 3,206 0.7%
Marico Bangladesh Bangladesh Consumer Staples 3,050 0.7%
Telkom Indonesia Persero Indonesia Communication Services 3,038 0.6%
Centre Testing International Group China Industrials 2,948 0.6%
Airtac International Group Taiwan Industrials 2,835 0.6%
Yifeng Pharmacy Chain China Consumer Staples 2,786 0.6%
Kasikornbank Thailand Financials 2,758 0.6%
Syngene International India Health Care 2,629 0.6%
Foshan Haitian Flavouring & Food China Consumer Staples 2,373 0.5%
Top 60 Investments 457,394 98.7%
DBH Finance Bangladesh Financials 1,845 0.4%
Silergy China Information Technology 1,665 0.4%
Pentamaster International Malaysia Information Technology 1,377 0.3%
BRAC Bank Bangladesh Financials 804 0.2%
Total Investments 463,085 100.0%
Income Statement
for the six months ended 31 July 2023
(Unaudited) (Unaudited)
Six months ended Six months ended
31 July 2023 31 July 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Gains on investments – 3,112 3,112 – 988 988
Exchange differences on currency balances – (976) (976) – 1,175 1,175
Investment Income 5,784 – 5,784 3,384 – 3,384
Portfolio Management and AIFM fees (561) (1,682) (2,243) (531) (1,592) (2,123)
(note 2)
Other expenses (386) – (386) (353) – (353)
Return before taxation 4,837 454 5,291 2,500 571 3,071
Taxation (772) (3,243) (4,015) (470) (1,840) (2,310)
Return/(loss) after taxation 4,065 (2,789) 1,276 2,030 (1,269) 761
Return/(loss) per ordinary share (note 3) 3.4p (2.3)p 1.1p 1.7p (1.0)p 0.7p
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 shareholders of the Company.
Statement of Changes in Equity
for the six months ended 31 July 2023
Ordinary Capital
Share Share Redemption Special Capital Revenue
Capital premium reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 January 2023 15,120 8,811 1,648 14,572 426,502 7,009 473,662
(Loss)/return after taxation – – – – (2,789) 4,065 1,276
Ordinary dividends paid 4 – – – – – (2,782) (2,782)
At 31 July 2023 15,120 8,811 1,648 14,572 423,713 8,292 472,156
At 31 January 2022 15,120 8,811 1,648 14,572 404,220 6,295 450,666
(Loss)/return after taxation – – – – (1,269) 2,030 761
Ordinary dividends paid 4 – – – – – (2,298) (2,298)
At 31 July 2022 15,120 8,811 1,648 14,572 402,951 6,027 449,129
Statement of Financial Position
as at 31 July 2023
(Unaudited) (Audited)
As at As at
31 July 31 January
2023 2023
£’000 £’000
Fixed assets
Investments (note 5) 463,085 474,399
Current assets
Debtors 1,956 333
Cash and cash equivalents 19,827 10,535
21,783 10,868
Creditors (amounts falling due within one year) (1,307) (1,855)
Net current assets 20,476 9,013
Non-current liabilities
Provisions (note 6) (11,405) (9,750)
Net assets 472,156 473,662
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 423,713 426,502
Revenue reserve 8,292 7,009
Equity shareholders’ funds 472,156 473,662
Net asset value per ordinary share (note 7) 390.3p 391.6p
Notes to the Financial Statements
1. Basis of preparation
The condensed financial statements for the six months to 31 July 2023 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 published
in July 2022, using the same accounting policies as set out in the Company’s
Annual Report and Financial Statements for the year ended 31 January 2023.
Going Concern
The Board has considered a detailed assessment of the Company’s ability to
meets its liabilities as they fall due, including modelling the effects of
substantial falls in markets and significant reductions in market liquidity on
the Company’s assets and liabilities. In light of the results of these
tests, the Company’s cash balances, the liquidity of the Company’s
investments and the absence of any gearing, the Directors are satisfied that
the Company has adequate financial resources to continue in operation for at
least the next 12 months from the date of approval of these financial
statements and that, accordingly, it is appropriate to adopt the going concern
basis in preparing these financial statements.
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 2023 31 July 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Portfolio management fee – Stewart Investors 498 1,493 1,991 468 1,404 1,872
AIFM fee – Frostrow 63 189 252 63 188 251
561 1,682 2,243 531 1,592 2,123
* 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 £1,276,000 (six months ended 31 July 2022: £761,000) and on
120,958,386 shares (six months ended 31 July 2022: 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 £4,065,000 (six months ended 31 July
2022: £2,030,000) by the weighted average number of shares in issue as above.
The capital loss per ordinary share is calculated by dividing the capital loss
attributable to shareholders of £2,789,000 (six months ended 31 July 2022:
loss of £1,269,000) by the weighted average number of shares in issue as
above.
4. Dividends
(Unaudited) (Unaudited)
Six months Six months
ended ended
31 July 31 July
2023 2022
Amounts recognised as distributions in the period:
Previous year’s final dividend of 2.3p (2022: final dividend of 1.9p) 2,782 2,298
5. Investments
Six months to Year to
31 July 31 July 31 January
2023 2022 2023
Investments
Cost at start of period 320,883 290,337 290,337
Investment holding gains at start of period 153,516 146,646 146,646
Valuation at start of period 474,399 436,983 436,983
Purchases at cost 28,800 24,096 77,305
Disposal proceeds (43,226) (40,306) (67,323)
Gains on investments 3,112 988 27,434
Valuation at end of period 463,085 421,761 474,399
Cost at end of period 322,473 289,771 320,883
Investment holdings gains at end of period 140,612 131,990 153,516
Valuation at end of period 463,085 421,761 474,399
The Company received £43,226,000 (period to 31 July 2022: £ 40,306,000; year
to 31 January 2023: £67,323,000) from investments sold in the period. The
book cost of these investments when they were purchased was £27,210,000
(period to 31 July 2022: £24,662,000; year to 31 January 2023: £46,759,000).
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
£46,000 (period to 31 July 2022: £30,000; year to 31 January 2023: £87,000)
and transaction costs on sales of £86,000 (period to 31 July 2022: £80,000;
year to 31 January 2023: £142,000).
6. Provision
As an investment trust, the Company is generally not subject to UK tax on
capital gains. However, Indian capital gains tax arises on capital gains on
the sale of Indian securities at a rate of 15% on short-term capital gains
(defined as those where the security was held for less than a year) and 10% on
long-term capital gains. The provision at 31 July 2023 of £11,405,000 (31
January 2023: £9,750,000) relates to the 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. The provision is calculated on the net
unrealised taxable capital gain at the period end and on the enacted Indian
long-term capital gain tax rate. 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 results primarily 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 £472,156,000 (31 January 2023: £473,662,000) and on
120,958,386 shares in issue (31 January 2023: 120,958,386).
8. 2023 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 2023,
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 2023 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, strategic and
operational 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 2023. The Company’s principal risks and uncertainties have not
changed materially since the date of that report and are not currently
expected to change materially for the remaining six months of the Company’s
financial year.
The Board, the AIFM and the Portfolio Manager discuss and identify emerging
risks as part of the risk identification process and have considered, amongst
other things, the potential effects of global supply chain disruption on the
Company’s performance.
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 (including its liquidity) 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. In addition, there are no
material uncertainties pertaining to the Company that would prevent its
continued operational existence for at least 12 months from the date of the
approval of this half-yearly report. For these reasons, the Directors consider
it appropriate to continue to adopt the going concern basis in preparing the
financial statements.
Directors’ Responsibilities
The Board confirms that, to the best of the Directors’ knowledge:
1. 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
2. the Half Year Report includes a fair review of the information required by:
1. 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
2. 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
Andrew Impey
Chair
12 October 2023
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 Six months to Year to
31 July 2023 31 July 2022 31 January 2023
pence pence pence
Average share price for the period 362.9 322.8 335.9
Average net asset value for the period 388.1 360.5 373.8
Average Discount 6.5% 10.5% 10.1%
Bottom Up Approach
An investment approach that focuses on the analysis of individual stocks
rather than the significance of macroeconomic factors.
Net Asset Value (“NAV”) 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.
NAV 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 Six months to Year to
31 July 2023 31 July 2022 31 January 2023
NAV Total Return pence pence pence
Opening NAV per share 391.6 372.6 372.6
Increase in NAV 1.0 0.6 20.9
Dividend paid (2.3) (1.9) (1.9)
Closing NAV 390.3 371.3 391.6
% Increase in NAV 0.3% 0.2% 5.6%
Impact of reinvested dividends 0.0% 0.0% 0.1%
NAV Per Share 0.3% 0.2% 5.7%
Total Return
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.
Year to
Six months to Six months to 31 January
31 July 2023 31 July 2022 2023
£’000 £’000 £’000
Total Operating Expenses 2,629 2,476 5,190
Average Net Assets 469,886 435,376 452,081
Ongoing Charges 1.1%* 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.
CompanyNAVPer ShareTotal Return(annualised)(%) CPI + 6%(annualised)(%)
One year to 31 July 2023 5.8% 14.6%
Three years to 31 July 2023 11.6% 13.1%
Five years to 31 July 2023 7.5% 10.9%
Ten years to 31 July 2023 9.9% 9.3%
Share Price Discount (or Premium) to the NAV 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.
Year to
Six months to Six months to 31 January
31 July 2023 31 July 2022 2023
Share Price Total Return pence pence pence
Opening share price 358.0 340.0 340.0
Increase /(Decrease) in share price 13.3 (13.1) 19.9
Dividend paid (2.3) (1.9) (1.9)
Closing share price 369.0 325.0 358.0
Increase in share price 3.7% (3.9%) 5.8%
Impact of reinvested dividends 0.0% 0.1% 0.1%
Share Price Total Return 3.7% (3.8%) 5.9%
Volatility
A measure of the range of possible returns for a given security or market
index.
A copy of the Half Year Report has been submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanismThe Half Year Report
will also shortly be available on the Company's website at
www.pacific-assets.co.uk where up to date information on the Company,
including NAV, share prices and fact sheets, can also be found.ENDS For
further information please contact:Frostrow Capital LLPCompany Secretary020
3709 8734 Neither the contents of the Company's website nor the contents of
any website accessible from hyperlinks on the Company's website (or any other
website) is incorporated into or forms part of this announcement.
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