TIDMMCP
RNS Number : 2085O
Martin Currie Pacific Trust PLC
26 May 2015
MARTIN CURRIE PACIFIC TRUST PLC (the "company")
Annual Financial Results
Year to 31 March 2015
The financial information set out below does not constitute the
company's statutory accounts for the year ended 31 March 2015 or
financial period ended 31 March 2014 but is derived from those
accounts. Statutory accounts for 2014 have been delivered to the
Registrar of Companies and those for 2015 will be delivered
following the company's annual general meeting.
The auditor's have reported on those accounts; their report was
unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under s498(2) or (3) Companies Act 2006.
A copy of the annual report and accounts has also been submitted
to the National Storage Mechanism and will shortly be available for
inspection at: www.Hemscott.com/nsm.do
The annual general meeting of the company will be held at the
offices of Martin Currie, 1 Bartholomew Lane, London, EC2N 2AX on 6
July 2015 at 12.30pm. Full notice of the meeting can be found
within the annual report and accounts.
The unedited full text of those parts of the annual report and
accounts for the year ended 31 March 2015, which are required to be
published are set out on the following pages.
Financial summary
Key data
As at As at % change
31 March 2015 31 March
2014
--------------------------- -------------- --------- --------
Net asset value per share
(cum income) 361.2p 313.4p 15.2
--------------------------- -------------- --------- --------
Net asset value per share
(ex income) 358.7p 307.6p 16.6
--------------------------- -------------- --------- --------
Share price 320.8p 263.8p 21.6
--------------------------- -------------- --------- --------
Discount(++) 11.2% 15.8%
--------------------------- -------------- --------- --------
Total returns+
Year ended 13 month period ended
31 March 2015 31 March 2014*
----------------- -------------- ---------------------
Net asset value
per share(#) 19.3% (10.7%)
----------------- -------------- ---------------------
Share price 24.8% (8.8%)
----------------- -------------- ---------------------
Income
Year ended 13 month period % change
31 March ended
2015 31 March 2014**
-------------------- ----------- ----------------- ---------
Revenue return per
share 4.82p 8.31p (42.0)
-------------------- ----------- ----------------- ---------
Dividend per share 7.50p 7.50p 0.0
-------------------- ----------- ----------------- ---------
Ongoing charges(*)
Year ended 13 month period
31 March ended 31 March
2015 2014*
----------------- ----------- ----------------
Ongoing charges 1.2% 1.3%
----------------- ----------- ----------------
Source: Martin Currie Investment Management Limited.
The combined effect of the rise or fall in the net asset value
or share price, together with any dividends paid.
++Figures are inclusive of income in line with the Association
of Investment Companies ('AIC') guidance.
(#) The net asset value is exclusive of income with dividends
re-invested.
* The company changed its year end to 31 March effective 31
March 2014.
** Ongoing charges are calculated as a percentage of
shareholders' funds using average net assets over the year and, for
the 13 month period ended 31 March 2014, are annualised figures,
calculated in line with the AIC's recommended methodology.
Chairman's statement
Performance
Asian markets performed positively over the year to 31 March
2015 and this was reflected in better results for your company. The
net asset value ('NAV') increased by 15.2% over the year while the
share price rose by 21.6%. Expressed as total return including
income, the NAV increased 19.3% and the share price rose 24.8%. To
put this into context, the total return of the MSCI Asia ex Japan
Index was up 24.7% in sterling terms for the year to 31 March 2015.
Furthermore, these results have been achieved in a year of
important change with the rebranding of the company to the new
investment mandate in July 2014.
The fall in oil and commodity prices have benefitted Asian
consumption across the region. With no consequent pressure on
inflation, Asian central banks have been able to cut interest
rates, while the Chinese authorities have embarked on aggressive
monetary easing to combat fiscal retrenchment, stimulate the real
estate and stock markets to head off mounting pressures on economic
growth, which stalled to almost zero in real terms according to
some commentators. After a period of underperformance, Asian stock
markets picked up from July 2014 both on a relative and absolute
basis. Shareholders have also benefitted from the weakness of
sterling. The overall tone in stock markets continues to be set by
the major central banks and is particularly affected by US monetary
policy. An improving US economy appears insufficiently robust to
suggest any urgency for a hike in interest rates by the Federal
Open Markets Committee. Although the backdrop is still dogged by
geopolitical turbulence and uncertainties - including potential
confrontations in North Korea and the South China Sea, Asian stock
valuations have moved closer to historical averages but remain
attractive given secular growth trends.
New investment mandate - Asia Long-Term Unconstrained
('ALTU')
Shareholders overwhelmingly voted to adopt the Asia Long-Term
Unconstrained or 'ALTU' strategy proposed by the board at a General
Meeting on 10 July 2014. The full rationale for the change is laid
out in the UK Listing Authority ('UKLA') circular sent to
shareholders in May 2014. Martin Currie introduced ALTU in
open-ended form in 2008 and has achieved high double digit annual
returns since then. Your company now offers shareholders access to
this strategy in closed-end form with the attraction of a discount
to net assets and daily dealing unlike the open-ended product. Of
course, the disadvantage remains the relative lack of liquidity -
although daily volume in the company's shares has picked up by
nearly 20% to an average of 50,737 in the calendar year to date
compared to 42,436 for the same period in 2014.
As previously reported in detail to shareholders, we now have an
absolute rather than relative investment objective - abandoning the
customised MSCI Asia including Japan index previously used as a
benchmark and removing the requirement to invest in Japan and
Australasia. Consequently, the company has been reclassified as an
Asia ex Japan peer group as defined by the AIC. The new mandate
allows the manager a high degree of flexibility to invest with
conviction in a concentrated portfolio, currently comprising 28
stocks. The investment process involves rigorous stock selection
and a long-term approach to fulfil the objective of achieving
returns commensurate with Asian region nominal GDP growth rates. We
have seen an encouraging start. Since 1 August 2014, the NAV has
risen by 12.3% and the share price by 14.9% in the period to 31
March 2015. Furthermore, the discount to NAV has narrowed over that
period from 12.9% to 11.2%, broadly in line with our peers in the
AIC Asia ex Japan sector.
Continuation vote
We will hold a continuation vote at the Annual General Meeting
('AGM') this July to confirm that shareholders want the company to
continue in its present form. The board commends confirmation of
the ALTU strategy to shareholders and accordingly recommends that
shareholders vote in favour of the resolution for continuation.
However, the board believes it is also in the best interests of
shareholders to have the opportunity to vote for continuation on a
more frequent basis. Therefore, a resolution is being put to the
AGM to amend the company's articles of association so that a
continuation vote is held every three years rather than every five
years. If this resolution is passed along with the continuation
resolution, it will result in the next continuation vote of the
company being held in 2018.
Name change
A proposal will also be put to shareholders at the AGM, seeking
approval to change the name of the company to the Martin Currie
Asia Unconstrained Trust plc. Your board believes the proposed new
name reflects the company's investment mandate and geographical
positioning.
Revenue and dividends
Subject to shareholders' approval, the board recommends a final
dividend of 5.00p to be paid on 7 August 2015 to shareholders on
the register on 17 July. Together with the interim dividend a total
dividend for the year of 7.50p is unchanged from last year.
Earnings per share at 4.82p fell from the previous year, which
actually represented a 13-month period because of the change in
year end from February to March in 2014 and because of the
transition to the new mandate. In future, shareholders cannot
expect the same level of dividend increases as over the last five
years partly because of the utilisation and consequent run down of
revenue reserves and partly because of the new mandate investing in
companies positioned for growth. Nevertheless, the board is
cognisant of the importance of income to shareholders within the
total return equation and will be exploring options to grow the
level of dividend.
Board
John Scott will retire from the board following the conclusion
of the AGM after 13 years of service. On behalf of shareholders and
fellow directors both past and present, I would like to extend
gratitude and appreciation for his most valuable contributions over
this period. Anja Balfour will take over as chairman of the audit
committee.
Regulation
Under the Alternative Investment Fund Managers Directive
('AIFMD') the company was required to appoint an external
depositary and an external AIFM which is supervised by the
Financial Conduct Authority. As disclosed in the interim report,
the company appointed Martin Currie Fund Management Limited on 22
July 2014 as its AIFM, an associated company of Martin Currie
Investment Management Limited. References to Martin Currie or
investment manager within this report refer to the services
provided by Martin Currie Investment Management Limited or Martin
Currie Fund Management Limited. No changes are proposed to the way
the company's assets are invested as a result of AIFMD.
Investment manager
As reported previously to shareholders, Martin Currie is now an
independently managed investment affiliate of Legg Mason, one of
the world's largest asset management groups with more than US$700
billion under management. The board welcomes this development and
Legg Mason's support of Martin Currie's investment trust
business.
Outlook
Liquidity always drives stock markets and a change in monetary
tailwinds could create an ebb tide squeezing US dollar funding in
Asian and emerging markets. Equally, black swans are fledging with
geopolitical tensions evident both in the region and elsewhere;
certainly, black flags threaten to destabilise the Middle East.
However, Asia retains its inexorable attractions for equity
investors. The gap from weak global demand is being superseded by
stronger intra regional trade as the ASEAN Economic Community
becomes a single market. While the consumption story is well known,
less so is the remarkable growth in spending on social media.
Infrastructure spending around the region is forecast to be as high
as US$3.5 trillion by 2020 with the new 'Silk Road' and as India
emerges as a powerhouse. Asia is no longer just about a
mercantilist export led growth model and remains a fertile hunting
ground of investment opportunity for Andrew Graham and his team.
The current portfolio appears well positioned to capture these
trends.
The board will also continue to monitor political and regulatory
developments both with the Scottish Government's agenda and the
introduction of MIFID II proposals that investment trusts should be
categorised as 'complex instruments' which could confuse retail
investors over the merits of the sector so recently promoted by the
Retail Distribution Review.
Harry Wells
26 May 2015
Manager's review
Market review
It has been an eventful financial year, both for your company
and the markets in which we invest. In the 12 month period to the
end of March 2015, Asian equities returned 24.7% in sterling terms,
as measured by the MSCI AC Asia ex Japan Index.
Political change was a significant driver of Asian markets
during the 12 months. At the start of the reporting period,
Narendra Modi won an emphatic victory in India's General Election,
securing the country's first majority government for 30 years. This
led to renewed optimism on the outlook for India, quickly reflected
in share prices which were bid higher through the year. Meanwhile,
expectations for Chinese growth were reduced as the impact of
reforms and a far-reaching anti-corruption drive negatively
impacted spending, while a soft European economy dampened activity
in the export sector. This all changed in the second half of the
year, as signs of a recovery in export momentum, particularly to
the US, combined with more supportive domestic policy steps to
reignite interest in Chinese stocks. When the central bank reduced
interest rates in November, the Shanghai Composite Index surged, as
local investors buying on margin poured into the market.
In Thailand, the stock market ground higher in the immediate
months after the military coup d'état in May. But as it became
clear that outside the tourism sector there were few signs of
improving activity, this momentum faded. In Indonesia early
enthusiasm stemming from the election of Joko Widodo as president
faded as it became apparent that his reliance on a coalition for
power was already creating challenges for his policy agenda.
Adjusted for a weaker rupiah, the Indonesian stock market made
little headway over the period under review.
From a policy perspective, interest rates were cut in China,
Korea, Indonesia, India and Thailand. There are a number of factors
at play here - not least disappointing growth - but falling
commodity prices, especially oil, have the potential to remove
inflation risk in the short term raising the prospect of further
accommodative measures, especially given that real interest rates
are at post-global financial crisis highs in several countries.
Earnings expectations were, in general, revised down as the year
progressed; this partly reflects a tendency among analysts and
companies to have optimistic forecasts that are typically lowered
as the year progresses. Overall, the scale of downgrades moderated
as the year played out and, more recently, earnings expectations
have stabilised. 2014 ended up being a subdued year for earnings,
with overall reported net profit growth of 4%. Unsurprisingly, 2014
earnings growth was particularly weak in the energy and materials
sectors. On the positive side, financials, healthcare and utilities
all recorded double-digit earnings gains, while in
quarter-on-quarter terms, the standout positive performer in the
final quarter of the year was the technology sector.
Against a backdrop of moderating growth expectations globally,
thematic interest in Asian markets was confined to a few areas
only. Aside from enthusiasm for an Indian recovery and an
eleventh-hour revival of interest in Chinese shares, stability or
growth in earnings and dividends, or improving return on equity,
were much in demand and stocks offering any of these re-rated
through the year. The decline in bond yields also supported real
asset stocks, such as REITs, as well as higher yielding low-growth
stocks. Shares of companies in the Apple supply chain also
performed well in anticipation of strong demand for the iPhone 6
series and launch of the Apple Watch. The portfolio benefitted from
some of these themes.
Performance and activity
The 12 months under review encompass a period of substantial
change in the company's investment policy. This change was executed
in the first half of the fiscal year and the interim report for the
six months to the end of September 2014 covers this in some detail.
The full-year performance therefore includes a period of slightly
more than three months when the portfolio was managed under the old
investment mandate (a relative return Asia Pacific strategy that
included Japan and Australia in its benchmark), and a transition
month during which the portfolio was repositioned along the lines
of Martin Currie's Asia Long Term Unconstrained ('ALTU') investment
strategy. From August, the investment mandate formally moved to the
ALTU strategy, subject to the investment guidelines of the company,
with a view to providing returns commensurate with Asia ex Japan
nominal GDP growth measured on a three-year rolling basis.
The NAV expanded by 19.3% in sterling terms in the year to the
end of March 2015, helped by good performance of a number of
portfolio holdings and a positive currency tailwind. Given the
transition discussed above, this is a satisfactory result and
reflects particularly strong gains from our investments in the
telecom, financial, technology and consumer staples sectors. From a
country perspective, our holdings listed in India, Hong Kong, China
and Singapore were the main contributors to performance. Our
exposure to the gaming sector was the principal detractor.
Positive contributors
AIA Group. Life insurer AIA Group performed well through the
year on the back of a strong operating performance. This was
reflected in good financial year 2014 results released at the end
of February. The company has continued to deliver attractive growth
and margin improvement. In keeping with the management goal of a
progressive dividend, the company's dividend-per-share growth was
17.5% year on year ('yoy').
Infosys. The shares of this Indian IT service company have
benefitted from improved expectations about the new business
pipeline, with more business verticals indicating healthy demand.
At the same time, analysts believe that Infosys has the greatest
potential among peers to return excess cash to shareholders -
although there are no imminent decisions likely on this matter. In
our view, while the direction of travel is positive in terms of
growth, we expect it to be lumpy on a quarterly basis.
Samsonite. Luggage maker Samsonite also performed well. The
market has warmed to the new CEO's long-term vision for the
company, despite results that were, at best, only in line with
expectations. After an initial fall on the back of results, the
stock has risen on positive guidance for 2015. We expect the
company to begin to benefit from lower raw material costs from the
second half of the year, although some of the cost savings will be
reinvested in marketing.
China Mobile. China Mobile moved higher as the company continued
its improved performance in the 4G era. Finally moving away from
its uncompetitive home-grown 3G technology and poor handset line
up, China Mobile has continued with the turnaround story we had
been patiently waiting for. While the stable dividend payout ratio
remains a source of frustration to some, we are encouraged by
management's efforts on marketing costs and handset subsidies. The
increasing percentage of data traffic being handled on China
Mobile's WiFi network underlines its improvement in network
quality.
Detractors
SJM Holdings. The Macau gaming sector performed poorly due to
continuing concerns about falling mass-market table yields and
rising labour costs squeezing margins across the sector. We believe
these issues are at least, in part, cyclical and are manageable. In
our view, the long-term potential for SJM, as well as the gaming
sector in Macau, is attractive, as the market becomes accessible to
a greater number of people, the product offering broadens and
additional capacity is added to the market. Valuations are becoming
increasingly appealing. With an attractive dividend - albeit
pressured somewhat by capex commitments - and a strong brand, we
believe SJM is well positioned to weather this turbulent
period.
Genting. A sharp decline in VIP gaming revenues at Genting's
Singapore gaming and leisure asset Resorts World Sentosa in the
second half due to a combination of weak Chinese VIP demand and an
adverse win ratio underpinned a 12% yoy earnings decline. While VIP
demand is likely to remain sluggish, especially as the Singapore
operation scales back credit provision, resilient mass market and
normalising win ratio should see earnings improve. In Malaysia,
capacity additions are underway at Genting's Malaysian casino
resort via the company's Genting Integrated Tourism Plan, with
investment of approximately MYR5 billion (approximately GBP900
million), encompassing new hotel, retail, gaming and theme-park
facilities which will progressively open in the second half of
2016. Genting continues to expand its global gaming franchise, with
new resorts in the pipeline for Jeju (South Korea) and Las Vegas.
We expect the market to gradually focus its attention on these
developments as 2015 progresses. The company is attractively valued
and offers interesting growth angles, a strong balance sheet and
improving free cash flow potential.
ENN Energy. Chinese gas distributor ENN Energy sold off after
the company agreed to buy its chairman's North American liquid
natural gas refuelling station business. While we are not
enthusiastic about these assets in the near term, we believe the
stock market overreacted, with the share price falling
significantly more than the value of the deal. Some extra decline
was warranted, as ENN has jeopardised its solid reputation for
capital allocation, but the sell-off seemed excessive. ENN still
has a good long-term future and we have retained our position in
the stock. We believe the period of heavy investment at ENN has
reached its peak and anticipate rising free cash flow over the next
several years which should also translate into an increase in ENN's
dividend-payout ratio.
Activity
In the interim report, we gave details on the portfolio's
mandate transition and the trading activity this entailed. We
confine our comments below to post-transition activity in the
portfolio through to the end of March 2015.
Bought - LG Household & Health care ('LG H&H'). The
company is transitioning from a Korean home, personal care and
beverage company into a global cosmetics house. Having increased
margins impressively over the last five years, we believe there is
more scope to raise profitability, both from product mix shifts and
within categories. Latterly, there have been two major concerns
driving the company's valuation down and creating this buying
opportunity. First was concern over a possible acquisition of
Elizabeth Arden in the US. LG H&H's later withdrawal from this
process shows a good degree of discipline, in our opinion. Second,
there has been some concern over the CEO's intentions to leave the
business. We believe the team behind him is capable and responsible
for large amounts of the improvement we have seen over the
years.
Bought - Tata Consultancy Services ('TCS'). TCS is our second
holding in the Indian IT sector after Infosys. The business drivers
for TCS are numerous: the increased use of outsourcing; expansion
into new countries; market-share gains by Indian companies; the
natural advantages of size that favour participation in the biggest
and hardest projects; and the continual changes in IT technology.
Of course there will be cyclical upswings and downswings, but
behind this is a long-term structural growth opportunity.
Sold - Hindustan Unilever. We sold our position in Indian
consumer-goods company Hindustan Unilever on valuation grounds.
Hindustan Unilever remains an excellent operator with an enviable
market position, but the valuation had skewed the risk/reward
balance against us. We believe that the market has prematurely
priced in a sales recovery and a full gain to former margins from
lower commodity prices. We will monitor the stock for any
disappointment on either issue and will be happy to buy back at a
lower price.
Outlook
In 2015, Asian earnings (ex Japan and ex Australia) growth is
currently forecast to be 9% yoy and, for 2016 10% yoy. These are
the most conservative set of earnings growth forecasts that we have
seen for five years, and give us some comfort that expectations are
reasonably well grounded. We are still seeing modest downward
revisions to growth overall, although the earnings picture appears
to be relatively attractive when compared with the rest of the
world. According to data released in early March, MSCI Asia ex
Japan earnings-per-share ('EPS') revisions beat MSCI World EPS
revisions in seven of the past eight months; meanwhile, 2014 ended
with return on equity at 12.3%, up slightly from 2013's 12% and
ending a declining trend in place since 2010.
Earnings growth for Asia (ex Japan) in 2015 is now forecast to
be better than the US and Europe, which is interesting given that
Asian stocks collectively trade on lower multiples of earnings and
book value than their US and European counterparts (for example,
forward price-to-earnings ratio of 13x for Asia (ex Japan) versus
over 17x for the US and over 16x for Europe); Asia ex Japan
valuations are however slightly above their five-year averages and
approximately in line with their 10-year averages.
With the decline of energy prices and inflationary pressure in
general, real interest rates have not come down much in Asia (ex
Japan), which, in combination with subdued growth of current
account surpluses in the region, has meant that financial
conditions have tightened somewhat since the summer. While this is
a constraint on growth, it also means that central banks have
policy levers at their disposal should growth falter. We have
already seen some easing of policy in the region and expect to see
more in the months ahead.
Asia is currently enjoying a windfall from lower energy and
other commodity prices - we think it is unlikely to provide much of
a direct stimulus for consumption spending in the region but it has
given a number of governments the opportunity to roll back
fuel-price subsidies in a politically acceptable way, freeing up
funding for much-needed investment in other areas such as
infrastructure, education and health. It is impossible to say how
long lower energy prices will persist, but we are hopeful that at
least some of this subsidy elimination is intended to be
permanent.
From a risk perspective, we are monitoring the possible fallout
from the extended rally by the US dollar on countries with
persistent deficits and weak foreign-exchange reserve positions,
especially relative to their external funding requirements.
We remain optimistic about the growth of trade within the Asian
region. At the end of 2015, the 10 members of ASEAN will become a
single market, supporting the free flow of goods and services
across the ASEAN economic community ('AEC'). The prospects are
encouraging. With a population of some 620 million (larger than the
European Union or North America), this could be an economic
powerhouse in the making. The AEC will have the third-largest
labour force in the world behind China and India, as well as a
growing consumer class. Taken together as an integrated regional
economy, the member states of the AEC comprise the world's
seventh-largest economy. The possibilities are sufficiently
encouraging that far-sighted corporations are already in the
process of positioning themselves to take advantage.
Although only two new stocks were added to the portfolio in the
second half of the year, this belies the considerable amount of
effort expended on looking at new candidates for inclusion. In some
cases we were put off by the deeper understanding we gained through
our forensic accounting work of the liability profile of a
business, or the structure of its returns. In other cases we found
well-run companies but concluded that evolutions in the competitive
environments in which they operated seriously challenged their
chances of sustaining an attractive level of return. For other
stocks the valuations were not sufficiently compelling upon final
analysis and we have deferred purchase to a later date and at a
lower price. In the meantime, the seven-strong team involved in
researching new investment ideas for your company continue to see
much that is of interest and we look forward to researching these
and building future returns.
Andrew Graham
26 May 2015
PORTFOLIO SUMMARY
Portfolio distribution as at 31 March 2015 (%)
China & Hong India Singapore Malaysia UK Taiwan
Kong
-------------------- ------------- ------ ---------- --------- ---- -------
Financials 12.1 - 7.4 - - -
Consumer goods 6.9 6.2 - 1.7 - -
Utilities 5.3 - - - - -
Consumer services 8.1 - 1.8 3.7 - -
Industrials 4.1 - 4.4 - - -
Telecommunications 5.8 - 6.6 - - -
Technology - 10.3 - - - 5.5
-------------------- ------------- ------ ---------- --------- ---- -------
Total portfolio 42.3 16.5 20.2 5.4 - 5.5
-------------------- ------------- ------ ---------- --------- ---- -------
Total portfolio
(31.03.2014) 24.9 3.9 5.0 2.7 3.1 7.6
-------------------- ------------- ------ ---------- --------- ---- -------
Korea Thailand Japan Australia Indonesia Total
-------------------- ------ --------- ------ ---------- ---------- ------
Financials - 4.0 - - - 23.5
Consumer goods 6.1 - - - - 20.9
Utilities - - - - - 5.3
Consumer services - - - - - 13.6
Industrials - - - - - 8.5
Telecommunications - - - - - 12.4
Technology - - - - - 15.8
-------------------- ------ --------- ------ ---------- ---------- ------
Total portfolio 6.1 4.0 - - - 100.0
-------------------- ------ --------- ------ ---------- ---------- ------
Total portfolio
(31.03.2014) 10.0 5.6 24.4 11.9 0.9 100.0
-------------------- ------ --------- ------ ---------- ---------- ------
By asset class (including 31 March 2015 31 March 2014
cash and borrowings)
--------------------------- -------------- --------------
Equities 94.0% 101.7%
Cash 6.0% 1.3%
Borrowings 0.0% (3.0)%
--------------------------- -------------- --------------
100.0% 100.0%
--------------------------- -------------- --------------
Largest holdings 31 March 2015 31 March 2015 31 March 2014 31 March 2014
Market value % of total Market value % of total
portfolio portfolio
GBP000 GBP000
------------------------- ----------------------- -------------- ----------------------- --------------
AIA Group 9,960 7.7 4,222 3.1
China Mobile 7,529 5.8 3,009 2.2
Taiwan Semiconductor 7,134 5.5 5,333 3.9
Infosys 7,127 5.5 2,240 1.7
Samsung Electronics 6,231 4.8 6,088 4.5
------------------------- ----------------------- -------------- ----------------------- --------------
Tata Consultancy
Services 6,166 4.8 - -
Samsonite International 5,672 4.4 1,726 1.3
Jardine Matheson
Holdings 5,672 4.4 - -
HSBC Holdings 5,633 4.4 2,296 1.7
Singtel 5,597 4.3 - -
------------------------- ----------------------- -------------- ----------------------- --------------
United Overseas
Bank 5,333 4.1 2,607 1.9
Television Broadcasts 5,269 4.1 1,863 1.4
Johnson Electric
Holdings 5,243 4.1 1,281 1.0
Siam Commercial
Bank 5,128 4.0 - -
Genting Berhad 4,773 3.7 2,138 1.6
------------------------- ----------------------- -------------- ----------------------- --------------
Hero Motocorp 4,284 3.3 583 0.4
Global Logistic
Properties 4,276 3.3 2,842 2.1
ENN Energy 4,139 3.2 1,372 1.0
Maruti Suzuki India 3,736 2.9 1,542 1.1
Tsingtao Brewery 3,204 2.5 - -
------------------------- ----------------------- -------------- ----------------------- --------------
Portfolio holdings
Portfolio holdings Market value % of total portfolio
GBP000
----------------------------------- ------------- ---------------------
China & Hong Kong 54,465 42.3
----------------------------------- ------------- ---------------------
AIA Group 9,960 7.7
China Mobile 7,529 5.8
Samsonite International 5,672 4.4
HSBC Holdings 5,633 4.4
Television Broadcasts 5,269 4.1
Johnson Electric Holdings 5,243 4.1
ENN Energy 4,139 3.2
Tsingtao Brewery 3,204 2.5
SJM Holdings 2,829 2.2
Hong Kong & China Gas 2,695 2.1
Café de Coral Holdings 2,292 1.8
----------------------------------- ------------- ---------------------
Singapore 26,118 20.2
----------------------------------- ------------- ---------------------
Jardine Matheson Holdings 5,672 4.4
Singtel 5,597 4.3
United Overseas Bank 5,333 4.1
Global Logistic Properties 4,276 3.3
M1 2,944 2.3
Dairy Farm International Holdings 2,296 1.8
----------------------------------- ------------- ---------------------
India 21,313 16.5
----------------------------------- ------------- ---------------------
Infosys 7,127 5.5
Tata Consultancy Services 6,166 4.8
Hero Motocorp 4,284 3.3
Maruti Suzuki India 3,736 2.9
----------------------------------- ------------- ---------------------
Korea 7,945 6.1
----------------------------------- ------------- ---------------------
Samsung Electronics 6,231 4.8
LG Household & Health Care 1,714 1.3
----------------------------------- ------------- ---------------------
Taiwan 7,134 5.5
----------------------------------- ------------- ---------------------
Taiwan Semiconductor 7,134 5.5
Malaysia 6,991 5.4
----------------------------------- ------------- ---------------------
Genting Berhad 4,773 3.7
British American Tobacco 2,218 1.7
----------------------------------- ------------- ---------------------
Thailand 5,128 4.0
----------------------------------- ------------- ---------------------
Siam Commercial Bank 5,128 4.0
----------------------------------- ------------- ---------------------
Total portfolio 129,094 100.0
----------------------------------- ------------- ---------------------
Principal risks and uncertainties
Risk and mitigation
The company's business model is longstanding and resilient to
most of the short term uncertainties that it faces, which the board
believes are effectively mitigated by its internal controls and the
oversight of the investment manager, as described in the table
below. The principal risks and uncertainties are therefore largely
longer term and driven by the inherent uncertainties of investing
in equity markets. The board believes that it is able to respond to
these longer term risks and uncertainties with effective mitigation
so that both the potential impact and the likelihood of these
seriously affecting shareholders' interests are materially
reduced.
One new uncertainty is the political landscape in the United
Kingdom where the board is closely monitoring the Scottish
Government's agenda and developments which might have an effect on
economic, legislative and regulatory implications for the
company.
Risks are regularly monitored at board meetings and the board's
planned mitigation measures are described in the table below.
The board has identified the following principal risks to the
company:
Risk Mitigation
--------------------------- ---------------------------------------------------
Loss of S1158-9 tax Loss of S1158-9 tax status would have serious
status consequences for the attractiveness of the
company's shares. The board considers that,
given the regular oversight of this risk
carried out by the investment manager and
reviewed by them, the likelihood of this
risk occurring is minimal.
--------------------------- ---------------------------------------------------
Failure to manage The board recognises the importance of managing
shareholder relations shareholder relations. At each meeting, the
board reviews the list of key shareholders.
The board also receives feedback from the
investment manager based on the outcome of
its meetings with shareholders. Shareholders
are encouraged to give their views by using
the email address noted on the back page
of the annual report.
--------------------------- ---------------------------------------------------
The investment manager The board reviews the performance and continued
ceases effectively appointment of the investment manager on
to manage investment a regular basis, via the management engagement
trusts or its reputation committee.
fails
The board is independent of the investment
manager and so, if the continued appointment
of Martin Currie was not in the best interest
of shareholders, a new investment manager
would be appointed.
--------------------------- ---------------------------------------------------
Investment underperformance The board manages the risk of investment
underperformance by relying on the integrity
of the investment manager's investment process.
The board monitors the implementation and
results of the investment process with the
investment manager, which attends all board
meetings, and reviews data that show statistical
measures of the company's risk profile. Please
see the chairman's statement and manager's
review for further details on investment
performance, processes and risks.
--------------------------- ---------------------------------------------------
Gearing/interest rate From time to time the company finances its
risk operations through bank borrowings. The board
monitors such borrowings (gearing) closely.
Details are provided in note 11 to the financial
statements. There were no borrowings as at
31 March 2015. There were no fixed income
securities held at 31 March 2015 and the
company's investment portfolio is only indirectly
exposed to interest rate risk.
--------------------------- ---------------------------------------------------
Foreign currency risk Although the company is based in the UK,
its portfolio of investments principally
consists of overseas stocks. As a result,
the company's sterling balance sheet and
income statement can be significantly affected
by movements in the local currencies of these
stocks.
In addition to the overseas investments,
during the year the company also had non-sterling
cash deposits and a multi-currency loan facility.
At 31 March 2015 the company held a balance
of GBP13,000 in Taiwanese dollars (31 March
2014 of GBP57,000 in Singapore dollars, GBP53,000
in Japanese yen and GBP2,000 in Taiwanese
dollars). While historically the company
has not hedged the risk of sterling against
the currencies in which investments it holds
are denominated, it reserves the right to
do so if it feels it is appropriate.
--------------------------- ---------------------------------------------------
Operational risk The company has outsourced its entire operational
infrastructure to third party providers.
Please see annual report for a list of the
company's advisers. Contracts and service
level agreements have been defined to ensure
that the service provided by each third party
provider is of a sufficiently professional
and technically high standard. The board
carries out an annual evaluation of the investment
manager and gives feedback to the investment
manager through the management engagement
committee. Periodically the board requests
that representatives from other third party
service providers also attend board meetings
to give the board the opportunity to ensure
controls are in place so that service standards
are delivered to meet the company's requirements.
--------------------------- ---------------------------------------------------
Counterparty risk Most transactions are made delivery versus
payment on recognised exchanges. The risk
to the company of default is therefore minimised.
Investment transactions are only carried
out with approved brokers. Counterparty risk
indicators are regularly reviewed by the
investment manager and appropriate action
taken, including, if necessary, removing
brokers from the approved list.
Cash is held only with approved counterparties.
--------------------------- ---------------------------------------------------
Directors' Responsibilities
Statement of directors' responsibilities
The directors of the company are responsible for preparing the
strategic report, the report of the directors, the corporate
governance statement, the directors' remuneration statement and the
financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (UK
Accounting Standards and applicable law). Under company law, the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the company and of the profit or loss of the company for
that year. In preparing those financial statements, the directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping proper accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Each of the directors confirms that, to the best of their
knowledge:
-- the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (UK Accounting Standards and applicable law), give a true
and fair view of the assets, liabilities, financial position and
profit of the company; and
-- the strategic review, the report of the directors and
managers, review includes a fair review of the development and
performance of the business and the position of the company,
together with a description of the principal risks and
uncertainties that it faces.
Going concern status
The company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the chairman's statement, manager's review,
strategic report and the report of the directors.
The financial position of the company as at 31 March 2015 is
shown on the balance sheet. The cash flows of the company, and the
income statement are also set out below.
Note 16 below sets out the company's risk management policies,
including those covering market risk, liquidity risk and credit
risk.
In accordance with the Financial Reporting Council's guidance on
going concern and liquidity risk issued in October 2009, the
directors have undertaken a rigorous review of the company's
ability to continue as a going concern. The company's assets
consist of a diversified portfolio of listed equity shares which,
in most circumstances, are realisable within a very short
timescale.
The directors are mindful of the principal risks and
uncertainties and have reviewed revenue forecasts and they believe
that the company has adequate financial resources to continue its
operational existence for the foreseeable future and at least one
year from the date of this annual report. As required by the
company's articles of association, an ordinary resolution will be
proposed at this year's AGM for the continuation of the company.
The directors recommend that shareholders vote in favour of the
continuation resolution and, based on initial discussions with
shareholders, believe that the resolution is likely to be carried.
Accordingly, the directors continue to use the going concern basis
in the preparation of the accounts.
Income statement
Year ended 31 March 13 month period to 31
2015 March 2014
----------------------------- ------ -------------------------------------- ----------------------------------
Notes Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ------ -------------- ----------- --------- -------- ----------- -----------
Net gains/(losses)
on investments 8 - 19,997 19,997 - (18,375) (18,375)
Net currency gains/(losses) (54) 60 6 - 214 214
Income 2 2,999 - 2,999 4,874 - 4,874
Investment management
fee (328) (657) (985) (481) (962) (1,443)
Other expenses 4 (549) - (549) (551) - (551)
----------------------------- ------ -------------- ----------- --------- -------- ----------- -----------
Net return on ordinary
activities before
finance costs and
taxation 2,068 19,400 21,468 3,842 (19,123) (15,281)
Interest payable
and similar charges 3 (34) (68) (102) (26) (52) (78)
----------------------------- ------ -------------- ----------- --------- -------- ----------- -----------
Net return on ordinary
activities before
taxation 2,034 19,332 21,366 3,816 (19,175) (15,359)
Taxation on ordinary
activities 5 (138) - (138) (304) - (304)
----------------------------- ------ -------------- ----------- --------- -------- ----------- -----------
Transfer to/(from)
reserves 13 1,896 19,332 21,228 3,512 (19,175) (15,663)
Returns per ordinary
share 7 4.82p 49.15p 53.97p 8.31p (45.38p) (37.07p)
----------------------------- ------ -------------- ----------- --------- -------- ----------- -----------
The total columns of this statement are the profit and loss
accounts of the company.
The revenue and capital items are presented in accordance with
the Association of Investment Companies (AIC) Statement of
Recommended Practice ('SORP') 2009.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued in the year.
The notes form part of these financial statements.
A statement of total recognised gains and losses is not required
as all gains and losses of the company have been reflected in the
above statement.
Balance sheet
As at 31 March As at 31 March
2015 2014
Note GBP000 GBP000 GBP000 GBP000
---------------------------------------- ----- -------- ---------- -------- ----------
Non-current assets
Investments at fair value through
profit or loss
Listed on stock exchanges abroad 129,094 131,396
Listed on the stock exchange
in the UK - 4,221
---------------------------------------- ----- -------- ---------- -------- ----------
8 129,094 135,617
Current assets
Debtors 9 371 1,155
Cash at bank 10 8,278 1,725
---------------------------------------- ----- -------- ---------- -------- ----------
8,649 2,880
Creditors
Amounts falling due within one
year 11 (403) (6,076)
---------------------------------------- ----- -------- ---------- -------- ----------
Net current assets (8,246) (3,196)
---------------------------------------- ----- -------- ---------- -------- ----------
Total assets less current liabilities 137,340 132,421
Capital and reserves
Called-up share capital 12 19,753 21,865
Share premium 6,084 6,084
Capital redemption reserve 13 3,428 1,316
Capital reserve 13 105,400 99,525
Revenue reserve 13 2,675 3,631
---------------------------------------- ----- -------- ---------- -------- ----------
Total shareholders' funds 137,340 132,421
Net asset value per ordinary
share of 50p 7 361.2p 313.4p
---------------------------------------- ----- -------- ---------- -------- ----------
Martin Currie Pacific Trust plc is registered in Scotland,
company number SCO92391.
The financial statements were approved by the board of directors
on 26 May 2015 and signed on its behalf by Harry Wells,
Chairman
Reconciliation of movement in shareholders funds
Note Year ended 31 13 month period
March 2015 31 March 2014
GBP000 GBP000
--------------------------------------- ----- -------------- ----------------
Revenue in the year available for
distribution 1,896 3,512
Dividends paid 6 (2,852) (3,802)
--------------------------------------- ----- -------------- ----------------
(956) (290)
Other recognised gains/(losses) 19,332 (19,175)
--------------------------------------- ----- -------------- ----------------
Net increase/(decrease) in reserves 18,376 (19,465)
Cost of ordinary shares bought back (13,457) (113)
Opening shareholders' funds 132,421 151,999
--------------------------------------- ----- -------------- ----------------
Closing shareholders' funds 137,340 132,421
--------------------------------------- ----- -------------- ----------------
Statement of cash flow
Note Year ended 31 March 13 month period
2015 to 31 March 2014
GBP000 GBP000 GBP000 GBP000
------------------------------------ ----- ----------- --------- ---------- --------
Net cash inflow from operating
activities 14 1,701 2,164
Servicing of finance
Interest Paid (103) (67)
------------------------------------ ----- ----------- --------- ---------- --------
Net cash outflow from servicing
of finance (103) (67)
Capital expenditure and financial
investment
Purchase of investments (102,936) (49,643)
Proceeds from sales of investments 128,201 46,973
------------------------------------ ----- ----------- --------- ---------- --------
Net cash inflow/(outflow)
from capital expenditure and
financial investment 25,265 (2,670)
Equity dividends paid (2,852) (3,802)
------------------------------------ ----- ----------- --------- ---------- --------
Net cash inflow/(outflow)
before financing 24,011 (4,375)
Financing
Purchase of ordinary share
capital (13,457) (113)
Net movement in short- term
borrowings (3,972) 4,278
------------------------------------ ----- ----------- --------- ---------- --------
Net cash inflow/(outflow)
from financing (17,429) 4,165
------------------------------------ ----- ----------- --------- ---------- --------
Increase/(decrease) in cash
for the year 15 6,582 (210)
------------------------------------ ----- ----------- --------- ---------- --------
Reconciliation of net cash
flow to movements in net funds
Increase in cash 6,582 (210)
Exchange movements (29) (57)
------------------------------------ ----- ----------- --------- ---------- --------
Movement in net funds in the
period 6,553 (267)
Opening net cash 1,725 1,992
------------------------------------ ----- ----------- --------- ---------- --------
Closing net cash 8,278 1,725
------------------------------------ ----- ----------- --------- ---------- --------
1. Accounting policies
(a) Basis of preparation - The financial statements have been
prepared on a going concern basis and in accordance with applicable
UK company law and Accounting Standards and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued in January 2009. They
have also been prepared on the assumption that approval as an
investment trust will continue to be granted.
(b) Income from investments (other than special dividends),
including taxes deducted at source, is included in revenue by
reference to the date on which the investment is quoted
ex-dividend, or where no ex-dividend date is quoted, when the
company's right to receive payment is established. Franked
investment income is stated net of the relevant tax credit. Other
income includes any taxes deducted at source. Special dividends are
credited to capital or revenue, according to the circumstances.
Scrip dividends are treated as unfranked investment income; any
excess in value of the shares received over the amount of the cash
dividend is recognised as a capital item in the income
statement.
(c) The management fee and finance costs in relation to debt are
recognised two-thirds as a capital item and one-third as a revenue
item in the income statement in accordance with the board's
expected long-term split of returns in the form of capital gains
and income, respectively. Interest receivable and payable and
management expenses are treated on an accruals basis. All expenses
are charged to revenue except where they directly relate to the
acquisition or disposal of an investment, in which case, they are
added to the cost of the investment or deducted from the sale
proceeds.
(d) Investments - Investments have been designated upon initial
recognition as at fair value through profit or loss. Investments
are recognised and de-recognised at trade date where a purchase or
sale is under a contract whose terms require delivery within the
time frame established by the market concerned, and are initially
measured at fair value. Subsequent to initial recognition,
investments are valued at fair value. Movements in the fair value
of investments and gains/losses on the sale of investments are
taken to the income statement as a capital item. The company's
listed investments are valued at bid price.
(e) Transaction costs incurred on the purchase and disposal of
investments are recognised as a capital item in the income
statement.
(f) Foreign currencies are translated at the rates of exchange
ruling on the balance sheet date. Most investors are resident in
the UK therefore sterling is believed to be the functional currency
as it is the reporting currency. Revenue received and interest paid
in foreign currencies are translated at the rates of exchange
ruling at the transaction date.
(g) All financial assets and liabilities are recognised in the
financial statements at fair value.
(h) Dividends payable - Interim and final dividends are
recognised in the period in which they are paid.
(i) Capital reserve - Gains or losses on realisation of
investments and changes in fair values of investments which are
readily convertible to cash, without accepting adverse terms, are
transferred to the capital reserve. Share buybacks are funded
through the capital reserve.
(j) Taxation - The tax effect of different items of income/gains
and expenditure/losses is allocated between revenue and capital on
the same basis as the particular item to which it relates, under
the marginal method, using the company's effective rate of tax.
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date where transactions of events that result in an
obligation to pay more or a right to pay less tax in future have
occurred at the balance sheet date measured on an undiscounted
basis and based on enacted tax rates. This is subject to deferred
tax assets only being recognised if it is considered more likely
than not that there will be suitable profits from which the future
reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the company's
taxable profits and its results as stated in the accounts which are
capable of reversal in one or more subsequent periods.
(k) Year end - In 2014, the board changed the company's year end
from February to March in order to align it better with normal
reporting periods. Accordingly, the 12-month reporting period ended
on 28 February 2014 was extended to a 13-month accounting period
ended on 31 March 2014.
2.
Income Year ended 13 month period
31 March 2015 to
GBP000 31 March 2014
GBP000
------------------------- --------------- ----------------
Income from investments
From listed investments
UK equities - 164
Overseas equities 2,969 4,692
Stock dividends 14 15
------------------------- --------------- ----------------
2,983 4,871
Other income
Interest on deposits 16 3
------------------------- --------------- ----------------
2,999 4,874
------------------------- --------------- ----------------
Total income comprises:
Dividends 2,983 4,871
Interest 16 3
------------------------- --------------- ----------------
2,999 4,874
3.
Year ended 13 month period
31 March 2015 to
GBP000 31 March 2014
GBP000
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ -------- -------- -------- -------- -------- --------
Interest payable and similar
charges
Interest payable on bank
loans and overdrafts 34 68 102 26 52 78
------------------------------ -------- -------- -------- -------- -------- --------
4.
Year ended 13 month period
31 March to
2015 31 March 2014
GBP000 GBP000
--------------------------------------------- ----------- ----------------
Other expenses
Bank charges 72 54
Directors' fees 119 137
Employer's national insurance contributions 11 12
Legal and professional fees 69 82
Printing and postage 15 14
Public relations 53 10
Registration fees 27 28
Secretarial fee 101 106
Miscellaneous 58 86
--------------------------------------------- ----------- ----------------
525 529
Auditors remuneration
Payable to Ernst & Young LLP for the
audit of the company's annual financial
statements 21 18
Payable to Ernst & Young LLP for non-audit
services 3 4
--------------------------------------------- ----------- ----------------
549 551
--------------------------------------------- ----------- ----------------
Details of the contract between the company and Martin Currie
for provision of investment management and secretarial services are
given in the report of the directors.
The non-audit services relate to the assessment of 'ready to
tag' accounts and design process for IXBRL purposes.
5.
Year ended 13 month period
31 March 2015 to
GBP000 31 March 2014
GBP000
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------- -------- -------- -------- --------
Taxation on ordinary
activities
Irrecoverable overseas
tax 138 - 138 304 - 304
As at 31 March 2015, the company had unutilised management
expenses of GBP9,089,160 (31.03.2014: GBP7,556,000) and a
non-trading loan relationship deficit of GBP41,087 (31.03.2014:
GBPNil) carried forward.
The effective UK corporation tax rate was 21% (31.03.2014: 23%).
The tax charge for the year differs from the charge resulting from
applying the standard rate of corporation tax in the UK for an
investment trust company. The differences are explained below.
Year ended 13 month period
31 March ended
2015 31 March 2014
GBP000 GBP000
----------------------------------------- ----------- ----------------
Net return before taxation 21,366 (15,359)
----------------------------------------- ----------- ----------------
UK Corporation tax at effective
rate of 21% (31.03.2014: 23%) 4,486 (3,545)
Adjustments:
Franked investment income (3) (39)
Currency gains not taxable (1) (49)
Non taxable stock dividends (3) (3)
Gains / (losses) on investments
not taxable (4,199) 4,241
Non taxable overseas dividends (614) (1,052)
Overseas tax suffered 138 304
Excess management expenses not utilised 344 478
Revenue taxable in different periods (10) (31)
----------------------------------------- ----------- ----------------
Total current year tax charge 138 304
----------------------------------------- ----------- ----------------
The company has an unrecognised deferred tax asset of
GBP1,826,048 (31.03.2014: GBP1,587,000). This deferred tax asset
arose as a result of excess management expenses and non-trading
deficits on loan relationships. A non-trading loan relationship
deficit is the amount of interest and similar charges on bank loans
payable by the company, that has not been used to offset taxable
profits.
Management expenses and non trading loan deficits are used to
offset taxable revenue in order to calculate the company's UK
corporation tax charge. In years where expenses exceed taxable
income these expenses can be carried forward to be utilised against
future taxable profits. From 1 July 2009, most overseas dividends
received by investment trusts are exempt from corporation tax. As a
result these balances have arisen when management expenses have
exceeded taxable income.
From 1 April 2014 the main rate of corporation tax reduced from
23% to 21% and, from 1 April 2015, from 21% to 20%. There is no
impact on the financial statements following this change in the
rate of UK corporation tax.
6.
Year ended 13 month period
31 March 2015 ended 31 March
GBP000 2014
GBP000
--------------------------------------------- --------------- ----------------
Equity dividends
Year ended 31 March 2015 - interim dividend 951 -
of 2.50p
13-month period ended 31 March 2014 1,901 -
- final dividend of 5.00p
13-month period ended 31 March 2014
- interim dividend of 2.50p - 1,056
Year ended 28 February 2013 - final
dividend of 6.50p - 2,746
--------------------------------------------- --------------- ----------------
2,852 3,802
--------------------------------------------- --------------- ----------------
Set out below are the total dividends payable in respect of the
financial period which forms the basis on which the requirements of
s1158-9 of the Corporation Taxes Act 2010 are considered.
Year to 13 month period
31 March 2015 ended 28 February
GBP000 2014
GBP000
-------------------------------------------- --------------- -------------------
Proposed final dividend of 5.00p for 1,901 -
the year ended 31 March 2015
Interim dividend of 2.50p for the year 951 -
ended 31 March 2015
Final dividend of 5.00p for the 13-month
ended 31 March 2014 - 1,901
Interim dividend of 2.50p for the 13-month
ended 31 March 2014 - 1,056
-------------------------------------------- --------------- -------------------
2,852 2,957
-------------------------------------------- --------------- -------------------
There have been no share buybacks since the year end; therefore
the final dividend for 2015 is based on 38,025,087 ordinary shares
in issue.
7.
Year ended 13 month period
31 March 2015 ended 31 March
2014
--------------------------------------------- --------------- ----------------
Return and net asset value
The return and net asset value per ordinary
share are calculated with reference
to the following figures:
Revenue Return
Revenue return attributable to ordinary GBP1,896,000 GBP3,512,000
shareholders
--------------------------------------------- --------------- ----------------
Weighted average number of shares in
issue during year* 39,333,104 42,252,547
Return per ordinary share 4.82p 8.31p
--------------------------------------------- --------------- ----------------
Capital return
Capital return attributable to ordinary GBP19,332,000 (GBP19,175,000)
shareholders
--------------------------------------------- --------------- ----------------
Weighted average number of shares in
issue during year* 39,333,104 42,252,547
Return per ordinary share 49.15p (45.38p)
--------------------------------------------- --------------- ----------------
Total return
Total return per ordinary share 53.97p (37.07p)
As at 31 March As at 31 March
2015 2014
---------------------------- --------------- ---------------
Net asset value per share
Net assets attributable to GBP137,340,000 GBP132,421,000
shareholders
Number of shares in issue
at the year end* 38,025,087 42,250,097
Net asset value per share 361.2p 313.4p
---------------------------- --------------- ---------------
*Calculated excluding shares held in treasury.
8.
As at As at
31 March 2015 31 March 2014
GBP000 GBP000
----------------------------------- --------------- ---------------
Investments at fair value through
profit and loss
Opening valuation 135,617 149,993
Opening investment holding gains (10,838) (34,391)
----------------------------------- --------------- ---------------
Opening cost 124,779 115,602
Add: additions at cost 101,306 51,258
----------------------------------- --------------- ---------------
226,085 166,860
Less: disposals at cost (120,483) (42,081)
----------------------------------- --------------- ---------------
Closing cost 105,602 124,779
Closing investment holding gains 23,492 10,838
----------------------------------- --------------- ---------------
Closing valuation 129,094 135,617
----------------------------------- --------------- ---------------
Further details of the portfolio holdings are set out above.
Interest rate and currency risk analyses are set out below. The
valuation of listed investments is at bid value and this represents
fair value.
As at 13 month period
31 March ended 31 March
2015 2014
GBP000 GBP000
----------------------------------------------- ---------- ----------------
Gains/(losses) on investments
Realised gains for the current year 7,343 5,178
Movement in investment holding gains/(losses) 12,654 (23,553)
----------------------------------------------- ---------- ----------------
Gains/(losses) on investments 19,997 (18,375)
----------------------------------------------- ---------- ----------------
Transaction costs
During the year expenses were incurred in acquiring or disposing
of investments classified as at fair value through profit or loss.
These have been expensed through capital and are included within
gains on investments in the income statement. The total costs were
as follows:
As at 13 month period
31 March ended 31 March
2015 2014
GBP000 GBP000
----------- ---------- ----------------
Purchases 140 116
Sales 262 102
----------- ---------- ----------------
Total 402 218
----------- ---------- ----------------
9.
As at As at
31 March 2015 31 March 2014
GBP000 GBP000
------------------------------------- --------------- ---------------
Debtors: amounts falling due within
one year
Dividends receivable 340 768
Amount due from brokers - 375
Taxation recoverable - 2
Other debtors 31 10
------------------------------------- --------------- ---------------
371 1,155
------------------------------------- --------------- ---------------
10.
As at As at
31 March 2015 31 March 2014
GBP000 GBP000
------------------ --------------- ---------------
Cash at bank
Sterling 8,264 1,613
Singapore dollar - 57
Japanese yen - 53
Taiwanese Dollar 14 2
------------------ --------------- ---------------
8,278 1,725
------------------ --------------- ---------------
11.
As at As at
31 March 2015 31 March 2014
GBP000 GBP000
--------------------------------------- --------------- ---------------
Creditors: amounts falling due within
one year
Interest payable and similar charges 14 15
Due to brokers - 1,630
Due to Martin Currie Investment
Management Ltd 255 363
Revolving bank loan - 4,007
Other creditors 134 61
--------------------------------------- --------------- ---------------
403 6,076
--------------------------------------- --------------- ---------------
With the exception of management fees, directors' fees,
directors' shareholdings and secretarial fees, there were no
related party transactions to report throughout the financial year.
For interest rate risk analysis in respect of debtors and creditors
refer to note 16.
The company has a GBP20,000,000 (31 March 2014: GBP20,000,000)
loan facility with Royal Bank of Scotland, which expires on 31
October 2015. Under this agreement, there were no draw downs as at
31 March 2015 (31.03.2014: JPY 688,000,000 (GBP4,007,176)). There
have been no draw downs between 1 April and 21 May 2015. All
creditors are payable within three months.
12.
As at As at
31 March 31 March
2015 2014
GBP000 GBP000
----------------------------------------- ---------- ----------
Called up share capital
Authorised:
66,000,000 (2014 - 66,000,000) Ordinary
shares of 50p each - equity 33,000 33,000
----------------------------------------- ---------- ----------
Allotted, called up and fully paid:
38,025,087 (2014 - 42,250,097) Ordinary
shares of 50p each - equity 19,013 21,125
----------------------------------------- ---------- ----------
Treasury shares:
1,480,785 (2014 - 1,480,785) Ordinary
shares of 50p each - equity 740 740
----------------------------------------- ---------- ----------
Total 19,753 21,865
----------------------------------------- ---------- ----------
The company has bought back 4,225,010 (31.03.2014: 37,591)
shares of 50p each during the year to 31 March 2015 at a cost of
GBP13,457,000 (31.03.2014: GBP113,000). The shares repurchased
during the year to 31 March 2015 have been cancelled in accordance
with the terms of the tender offer.
13.
Year ended 31 March 2015 13 Month period ended 31 March
2014
Realised Investment Total Realised Investment Total
Capital holdings GBP000 Capital holdings GBP000
GBP000 gains /(losses) GBP000 gains /(losses)
GBP000 GBP000
---------------------------- ------------ ----------------- ---------- --------- ----------------- -----------
Movement in reserves
Capital reserve
At 1 April 88,687 10,838 99,525 84,422 34,391 118,813
Gains on realisation
of investments
at fair value 7,343 - 7,343 5,178 - 5,178
Movement in unrealised
fair value gains/(losses)
of investments - 12,654 12,654 - (23,553) (23,553)
Realised currency
gains during the
year 60 - 60 214 - 214
Capitalised expenses (725) - (725) (1,014) - (1,014)
Ordinary shares
bought back (13,457) - (13,457) (113) - (113)
---------------------------- ------------ ----------------- ---------- --------- ----------------- -----------
At 31 March 81,908 23,492 105,400 88,687 10,838 99,525
---------------------------- ------------ ----------------- ---------- --------- ----------------- -----------
The above split in capital reserve is shown in accordance with
provisions of the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts'.
The figure for capitalised expenses includes two-thirds of the
total management fee and finance costs which are allocated to
capital reserve, net of the associated tax relief.
Year ended 31 13 Month period
March 2015 ended 31 March
2014
------------------------------------ -------------- ----------------
Capital redemption reserve
Capital redemption reserve at
1 April 1,316 1,316
Ordinary shares bought back for 2,112 -
cancellation
------------------------------------ -------------- ----------------
Closing capital redemption reserve
at 31 March 3,428 1,316
------------------------------------ -------------- ----------------
Revenue reserve
Revenue reserve at 1 April 3,631 3,921
Transfer to revenue reserve for
period 1,896 3,512
Dividends paid (2,852) (3,802)
------------------------------------ -------------- ----------------
Closing revenue reserve at 31
March 2,675 3,631
------------------------------------ -------------- ----------------
The capital redemption reserve is created when the company buys
back shares for cancellation; this reserve is not distributable to
shareholders.
14.
Year ended 13 Month period
31 March ended
2015 31 March 2014
GBP000 GBP000
Reconciliation of net return before
finance costs and taxation to net cash
inflow from operating activities
Net return before finance costs and
taxation 21,468 (15,281)
Adjustments for:
(Gains)/losses on investments (19,997) 18,375
Currency gains (6) (214)
Decrease/(increase) in operating debtors 409 (355)
Decrease in operating creditors (35) (57)
Taxation withheld from income on investments (138) (304)
---------------------------------------------- ----------- ----------------
Net cash inflow from operating activities 1,701 2,164
---------------------------------------------- ----------- ----------------
15.
At 1 April Cash flow Exchange At 31 March
2014 GBP000 movements 2015
GBP000 GBP000 GBP000
----------------------- ----------- ---------- ----------- ------------
Analysis of net debt
Cash at bank and in
hand 1,725 6,582 (29) 8,278
Revolving bank and in
hand (4,007) 3,972 35 -
----------------------- ----------- ---------- ----------- ------------
(2,282) 10,554 6 8,278
----------------------- ----------- ---------- ----------- ------------
For interest rate risk and currency risk analyses refer to note
16.
16. Derivatives and other financial instruments
The company's financial instruments comprise securities and
other investments, cash balances, loans and debtors and creditors
that arise directly from its operations; for example, in respect of
sales and purchases awaiting settlement, and debtors for accrued
income. The company also has the ability to enter into derivative
transactions in the form of forward foreign currency contracts,
futures and options, for the purpose of managing currency and
market risks arising from the company's activities. No derivatives
transactions were undertaken during the year. As at the year end
the company held no derivatives (31.03.2014: none held).
The main risks the company faces from its financial instruments
are (i) market price risk (comprising interest rate risk, foreign
currency risk and other price risk), (ii) liquidity risk and (iii)
credit risk.
The board regularly reviews and agrees policies for managing
each of these risks. The investment manager's policies for managing
these risks are summarised below and have been applied throughout
the year. The numerical disclosures exclude short-term debtors and
creditors, other than for currency disclosures.
(i) Market price risk
The fair value of future cash flows of a financial instrument
held by the company may fluctuate because of changes in market
prices. This market risk comprises three elements - interest rate
risk, currency risk and other price risk.
Interest rate risk
Interest rate movements may affect the level of income
receivable on cash deposits/payable on short term borrowings
The possible effects on fair value and cash flows that could
arise as a result of changes in interest rates are taken into
account when making investment and borrowing decisions.
Interest risk profile
The interest rate risk profile of the portfolio of financial
assets and liabilities at the balance sheet date was as
follows:
As at 31 March Interest Local currency Foreign exchange Sterling equivalent
2015 rate % '000 rate GBP000
------------------ --------- --------------- ----------------- --------------------
Assets
Sterling 0.25 8,264 1.000 8,264
Taiwanese dollar n/a 627 46.450 14
------------------ --------- --------------- ----------------- --------------------
8,278
------------------ --------- --------------- ----------------- --------------------
Liabilities n/a n/a n/a n/a
Loan
------------------ --------- --------------- ----------------- --------------------
As at 31 March Interest Local currency Foreign exchange Sterling equivalent
2014 rate % '000 rate GBP000
------------------ --------- --------------- ----------------- --------------------
Assets
Sterling 0.34 1,613 1.000 1,613
Singapore dollar n/a 120 2.097 57
Japanese yen n/a 9,091 171.691 53
Taiwanese dollar n/a 78 50.769 2
------------------ --------- --------------- ----------------- --------------------
1,725
------------------ --------- --------------- ----------------- --------------------
Liabilities
Loan - Japanese
yen 1.19 688,000 171.691 4,007
------------------ --------- --------------- ----------------- --------------------
Interest rate sensitivity
The sensitivity analyses below have been determined based on the
exposure to interest rates for both derivative and non-derivative
instruments at the balance sheet date and the stipulated change
taking place at the beginning of the financial year and held
constant throughout the reporting period in the case of instruments
that have floating rates.
If interest rates had been 100 basis points higher or lower and
all other variables were held constant, the company's profit for
the year to 31 March 2015 would increase / decrease by GBP83,000
(31.03.2014: increase / decrease by GBP17,000). This is mainly
attributable to the company's exposure to interest rates on its
floating rate cash balances.
Foreign currency risk
The company's investment portfolio is invested in overseas
securities and the balance sheet can be significantly affected by
movements in foreign exchange rates. It is not the company's policy
to hedge this risk on a continuing basis but the company may, from
time to time, match specific overseas investment with foreign
currency borrowings.
The revenue account is subject to currency fluctuation arising
on overseas income. Foreign currency risk exposure by currency of
denomination:
As at 31 March 2015 13 month period ended 31
March 2014
Investments Net monetary Total currency Investments Net monetary Total currency
GBP000 assets exposure GBP000 assets exposure
GBP000 GBP000 GBP000 GBP000
------------- ------------------- ------------- ------------------- ------------ ------------- ---------------
Australian
dollar - - - 16,017 (169) 15,848
Hong Kong
dollar 54,466 - 54,466 33,661 31 33,692
Indian
rupee 21,312 - 21,312 5,329 1 5,330
Indonesian
rupiah - - - 1,201 - 1,201
Japanese
yen - - - 33,144 (3,842) 29,302
Korean
won 7,945 72 8,017 13,651 107 13,758
Malaysian
ringgit 6,991 - 6,991 3,670 (105) 3,565
Singaporean
dollar 18,150 - 18,150 5,449 - 5,449
Taiwanese
dollar 7,134 14 7,148 10,333 2 10,335
Thai baht 5,128 1 5,129 7,658 96 7,754
US dollar 7,968 267 8,235 1,283 41 1,324
------------- ------------------- ------------- ------------------- ------------ ------------- ---------------
Total 129,094 354 129,448 131,396 (3,838) 127,558
------------- ------------------- ------------- ------------------- ------------ ------------- ---------------
The asset allocation between specific markets can vary from time
to time based on the investment manager's opinion of the
attractiveness of the individual markets.
Foreign currency sensitivity
The following table details the company's sensitivity to a 10%
increase and decrease in sterling against the relevant foreign
currencies and the resultant impact that any such increase or
decrease would have on net return before tax and equity
shareholders' funds. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the year end for a 10% change in foreign
currency rates.
2015 2014
GBP000 GBP000
------------------ -------- --------
Singapore dollar - 6
Japanese yen - 5
Taiwanese Dollar 1 -
------------------ -------- --------
Total 1 11
------------------ -------- --------
Other price risk
Other price risks (i.e. changes in market prices other than
those arising from interest rate or currency risk) may affect the
value of the quoted investments.
It is the board's policy to hold an appropriate spread of
investments in the portfolio in order to reduce the risk arising
from factors specific to a particular country or sector. Both the
allocation of assets to international markets, and the stock
selection process act to reduce market risk. The manager actively
monitors market prices throughout the year and reports to the
board, which meets regularly in order to review investment
strategy. The investments held by the company are listed on various
stock exchanges worldwide.
Other price risk sensitivity
If market prices at the balance sheet date had been 15% higher
or lower while all other variables remained constant, the return
attributable to ordinary shareholders at the year to 31 March 2015
would have increased / decreased by GBP19,364,000 (31.03.2014:
increase / decrease of GBP20,343,000 and equity reserves would have
increased / decreased by the same amount). The calculations are
based on the portfolio valuations, as at the respective balance
sheet dates, and are not representative of the year as a whole.
(ii) Liquidity risk
This is the risk that the company will encounter difficulty in
meeting obligations associated with financial liabilities. All
creditors are payable within three months.
Liquidity risk is not considered to be significant as the
company's assets mainly comprise readily realisable securities,
which can be sold to meet funding commitments if necessary.
(iii) Credit risk
This is the risk of failure of the counterparty to a transaction
to discharge its obligations under that transaction that could
result in the company suffering a loss.
The risk is managed as follows.
-- Investment transactions are carried out with a large number
of brokers, whose credit ratings are reviewed periodically by the
portfolio manager. Limits are set on the exposure to any one
broker. The risk to the company of default is therefore
minimized.
-- Most transactions are made delivery versus payment on recognised exchanges.
-- Cash is held only with reputable banks.
None of the company's financial assets are secured by collateral
or other credit enhancements.
The maximum credit risk exposure as at 31 March 2015 was
GBP8,649,000 (31.03.2014: GBP2,880,000). This was due to debtors
and cash as per notes 9 and 10.
Fair values of financial assets and financial liabilities
All assets and liabilities are included in the balance sheet at
fair value.
17. Capital management policies and procedures
The company's capital management objectives are:
-- to ensure that the company will be able to continue as a going concern; and
-- to maximise the income and capital return to its equity
shareholders through an appropriate balance of equity capital and
debt.
The company's capital as at 31 March comprised:
2015 2014
GBP000 GBP000
-------------------------------------- -------- --------
Equity share capital 19,753 21,865
Retained earnings and other reserves 117,587 110,556
Total 137,340 132,421
-------------------------------------- -------- --------
The Board, with the assistance of the Manager and the AIFM,
monitors and reviews the broad structure of the company's capital
on an ongoing basis. These reviews include:
-- the planned level of gearing, which takes account of the manager's views on the market;
-- the need to buy back equity shares for cancellation or to
hold in treasury, which takes account of the difference between the
net
-- asset value per share and the share price (i.e. the level of
share price discount or premium);
-- the need for new issues of equity shares; and
-- the extent to which revenue in excess of that which is
required to be distributed should be retained.
--
The Company's objectives, policies and processes for managing
capital are unchanged from the preceding accounting period.
The Company had no net gearing at the year end (31.03.14:
102%).
18. Fair value hierarchy
The company adopted the amendments to FRS 29 'Financial
instruments: Disclosures' effective from 1 January 2009. These
amendments require an entity to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
input in making the measurements. The fair value hierarchy shall
have the following levels:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The financial assets and liabilities measured at fair value in
the balance sheet are grouped into the fair value hierarchy as at
31 March 2015 as follows:
At 31 March 2015 Note Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
--------------------- ------ -------- -------- -------- --------
Financial assets at fair
value
through profit or loss
Quoted Equities (a) 129,094 - - 129,094
--------------------- ------ -------- -------- -------- --------
Net fair value 129,094 - - 129,094
----------------------------- -------- -------- -------- --------
At 31 March 2014 Note Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
--------------------- ------ -------- -------- -------- --------
Financial assets at fair
value
through profit or loss
Quoted Equities (a) 135,617 - - 135,617
--------------------- ------ -------- -------- -------- --------
Net fair value 135,617 - - 135,617
----------------------------- -------- -------- -------- --------
(a) Quoted equities
The fair value of the company's investments in quoted equities
has been determined by reference to their quoted bid prices at the
reporting date. Quoted equities included in Fair Value Level 1 are
actively traded on recognised stock exchanges.
The company's holding in Martin Currie China 'A' share fund S2
Shares has been determined using observable market inputs other
than quoted prices and is therefore categorised as level 2, this
holding has been valued at GBPnil as at 31 March 2014 and 31 March
2015.
19. Post balance sheet event
There were no post balance sheet events.
20. Alternative Investment Fund Managers ('AIFM') Directive
In accordance with the AIFM Directive, information in relation
to the company's leverage and the remuneration of the company's
AIFM, Martin Currie Fund Management ('MCFM'), is required to be
made available to investors. In accordance with the Directive, the
AIFM's remuneration policy is available from MCFM on request. The
numerical remuneration disclosures in relation to the AIFM's first
relevant accounting period (year ended 31 March 2016) will be made
available in due course.
The company's maximum and actual leverage levels at 31 March
2015 are shown below:
Leverage Exposure Gross method Commitment method
------------------------- ------------- ------------------------------
Maximum permitted limit 275% 175%
Actual 94% 100%
------------------------- ------------- ------------------------------
The Leverage limits are set by the AIFM and approved by the
board and are in line with the maximum leverage levels permitted in
the company's articles of association. The AIFM is also required to
comply with the gearing parameters set by the board in relation to
borrowings.
Website
Martin Currie Pacific Trust has its own dedicated website at
www.martincurriepacific.com. This offers shareholders, prospective
investors and their advisers a wealth of information about the
company. Updated daily, it includes the following: latest prices,
performance data, portfolio information, the investment manager's
latest views, latest monthly update, research, press releases and
articles, and annual and half yearly reports
This information is provided by RNS
The company news service from the London Stock Exchange
END
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