TIDMPHI
RNS Number : 7410Z
Pacific Horizon Investment Tst PLC
16 September 2022
RNS Announcement: PHI Results
-----------------------------
Pacific Horizon Investment Trust PLC ('PHI')
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Legal Entity Identifier: VLGEI9B8R0REWKB0LN95
Regulated Information Classification: Notice of results.
Results for the year to 31 July 2022
The following is the results announcement for the year to 31
July 2022 which was approved by the Board on 15 September 2022.
Chairman's Statement
====================
Performance
I commented in my report last year that investors should expect
that neither the Company's absolute, nor relative, returns would be
consistent. Sadly, this cautionary note proved more prescient than
I might have wished. In the year to 31 July 2022, the Company's net
asset value per share (NAV) declined by 14.5% compared to a
negative total return of 8.2% (*) from the MSCI All Country Asia ex
Japan Index in sterling terms. The share price total return for the
year was a negative 19.3%, resulting in the shares ending the
period at a 2.7% discount to the NAV per share having been at a
3.2% premium a year earlier.
While this loss is disappointing, the causes of the weakness of
Asian markets are well understood: inflation, US dollar interest
rate increases and continued lockdowns in China have all led to
market weakness. This does not however explain the significant
relative underperformance of the portfolio.
Your Board believes the interests of shareholders are best
served through having an actively managed portfolio. We believe the
performance of the Company supports this view. The underperformance
of the Company in the short term is significantly less than its
outperformance in the longer term. The volatility of performance,
like the management fees, is a price to be paid for the Company
being managed on an active basis. Over the course of the last ten
years, shareholders have enjoyed approximately 6.7 percentage
points a year of excess returns above the comparative index . Over
the full period, this equates to an aggregate of 174 percentage
points of excess total return over a passive investment strategy
represented by the comparative index .
The strategy that has achieved this outperformance is investment
in high growth companies that have the potential to make
exceptional returns over the long term. Growth investing has not
been rewarded recently, in part because of higher interest rates
which growth companies can be particularly sensitive to.
Volatility may continue and further significant losses cannot be
ruled out; only an optimist would consider we are out of the woods
yet. As you will see in the Managers' Report below, it is their
intention to continue to focus on growth companies in the future.
The Board believes that this strategy has the potential to continue
to serve shareholders well and that the Managers have clearly
demonstrated their ability as a growth investor in both the period
under review and over the long term.
Gearing
The Board continues to set and regularly review the gearing
parameters within which the portfolio manager is permitted to
operate. At present, the agreed range of equity gearing is minus
15% (holding net cash) to plus 15%. As at 31 July 2022, invested
gearing was minus 1% compared to 4% at the start of the Company's
financial year, reflecting Mr Snell's current caution.
Gearing is achieved through the use of bank borrowings. At
present the Company has a three year multi-currency revolving
credit facility with The Royal Bank of Scotland International
Limited for up to GBP100 million, which provides at present for
potential invested gearing of 15.5%.
Earnings and Dividend
Earnings per share increased to a positive 4.21p per share
compared to a deficit of 0.51p per share last year, resulting in
the Company being in a position to pay a final dividend. The Board
is therefore recommending that a final dividend of 3.00p should be
paid, subject to shareholder approval at the Annual General Meeting
('AGM'). As highlighted in past reports, investors should not
consider investing in this Company if they require income from
their investment as the Company typically invests in high growth
stocks with little or no yield.
Issuance, Share Buy-backs and Treasury
Over the twelve months to 31 July 2022, the Company issued
3,645,257 shares at a premium to NAV, being 4.1% of the shares in
issue at the start of the Company's financial year, and also bought
back for treasury a total of 214,000 shares. All of the issuance
occurred in 2021 and all of the buy-backs in 2022.
At the forthcoming AGM in November, the Board will be seeking
10% non pre-emptive issuance authority. Issuance will continue to
be undertaken only at a premium to the NAV per share, thereby
avoiding dilution for existing investors. When the authority is
utilised in this manner, it enhances NAV per share, improving
liquidity in the Company's shares and spreading the operating
expenses of the Company across a wider base, thus reducing costs to
each shareholder; ongoing charges for the year were 0.74% compared
to 0.78% in the prior year.
As part of this year's AGM business, the Board will also be
asking shareholders to renew the authority to repurchase up to
14.99% of the outstanding shares on an ad hoc basis, either for
cancellation or to be held in treasury, and also to permit the
re-issuance of any shares held in treasury at a premium to the NAV
per share. The Board intends to use the buy-back authority
opportunistically, taking into consideration not only the level of
any discount but also the underlying liquidity and trading volumes
in the Company's shares. This allows the Board to address any
imbalance between the supply and demand in the Company's shares
that results in a large discount to the NAV per share. The Board
remains cognisant that current and potential shareholders have
expressed a desire for continuing liquidity.
The Board believes that the Company benefits from holding any
shares that are bought back in treasury, so that it has the ability
to re-issue these shares in the circumstances described above;
431,726 shares are held in treasury at present.
Private Company Investments
Last year, shareholders approved a change in the Company's
Investment Policy which increased the maximum permissible
investment in private companies from 10% to 15% (such percentage
being measured at the point of initial investment). As at 31 July
2022, the Company had 6.1% of its total assets invested in 5
private companies compared to 7.2% and 7 private companies a year
earlier, Star Health & Allied Insurance Co having listed in
December 2021 and Delhivery in May 2022.
Details on the process and quantum of private company valuations
undertaken over the year can be found immediately after the
Managers' Review.
Governance and Stewardship
The Board has agreed with the Managers that they will consider
Environmental, Social and Governance ('ESG') factors as part of the
investment process. Baillie Gifford advised the Board that it aims
to adopt a position of supportive and constructive engagement
without prescriptive policies or rules, assessing matters on a
case-by-case basis. Although Baillie Gifford has clearly
articulated ESG principles and a detailed policy framework, the
Board accepts that their application, particularly in some of the
developing nations of Asia, and in often quite complex situations,
is necessarily subjective. Some examples of such engagement can be
found below. The Board reviews and challenges the Managers'
performance in meeting this ESG objective at each Board meeting and
also covers ESG matters with the Managers as part of an annual
strategy session.
A document outlining Baillie Gifford's Governance and
Sustainability principles can be found on the Baillie Gifford
website at bailliegifford.com and the Company's voting record can
be found at page 37 of the Annual Report and Financial Statements.
Details of the Company's policy on socially responsible investment
can be found under Corporate Governance and Stewardship on page 17
of the Annual Report and Financial Statements.
Annual General Meeting
This year's AGM will take place on 24 November 2022 at the
offices of Baillie Gifford & Co in Edinburgh at 11.00am and
shareholders are encouraged to attend. If doing so, please
endeavour to arrive by 10.50am to allow time to register. There
will be a presentation from Mr Snell who, along with the Directors,
will answer questions from shareholders. I hope to see many of you
there.
Should the situation change, further information will be made
available through the Company's website at pacifichorizon.co.uk and
the London Stock Exchange regulatory news service.
Outlook
This is not an easy investment environment. The immediate future
is one of elevated inflation levels, higher borrowing costs and
likely tempered consumption. It is therefore important that the
Managers remain alert to new investment opportunities, threats to
existing holdings and maintain a close scrutiny of firms'
operational performance and financial resilience.
Further underperformance cannot be ruled out. However, a
portfolio containing both structural and cyclical growth companies
seems prudent at present. Patient investors could be rewarded with
significant returns once stock specific fundamentals reassert
themselves.
Angus Macpherson
Chairman
15 September 2022
(*) Calculated on a total return basis. Source: Baillie
Gifford/Refinitiv and relevant underlying index providers.
The MSCI All Country Asia ex Japan Index (in sterling terms) is
the principal index against which performance is measured. See
Disclaimer at the end of this announcement.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Managers' Review
==================
Overview
Over the coming decades we believe Asia will be one of the
world's fastest growing regions and we strive to be invested in its
fastest growing companies. It is growth multiplied by growth or, as
we like to call it, 'Growth(2)'.
Our investment philosophy has added significant value for
shareholders over the long term. However, by running a
differentiated, high conviction portfolio, there will inevitably be
short periods of time when we are out of favour with the market,
and this has been one such year.
Surging global inflation, exacerbated by events such as war in
Ukraine and continued lockdowns in China, led to rising interest
rates, significantly tighter global monetary conditions and
volatile markets. Such an environment has been a headwind for our
growth-oriented investment style.
Consequently, after several years of extremely strong
performance, this year saw the Company's NAV and share price
decreasing by 14.5% and 19.3% respectively. This is compared to the
comparative index, the MSCI All Country Asia ex Japan Index, in
sterling terms, which had a negative total return of 8.2%. Longer
term performance remains strong; the Company's NAV having
outperformed the comparative index by 12.8 percentage points per
annum over the past 5 years.
Although the shorter-term outlook for Asian markets is
uncertain, we remain optimistic. Following the significant falls in
share prices across the region, valuations appear even more
attractive, and we continue to have confidence in the outlook for
the companies in the portfolio. It is noteworthy that over the next
year our holdings on average are valued at nearly the same price to
earnings multiple as that of the comparative index (12.6 vs. 12.2),
yet they are expected to grow their earnings at a faster rate
(14.7% vs. 9.1%).
The broad overall shape of the portfolio remains similar to last
year, with significant exposure to both cyclical growth,
particularly materials and energy, and secular growth, including
technology and consumer, companies. However, notable changes have
included a significant reduction in India, which funded increases
in exposure to China, where we have been significantly underweight
for some time, and Indonesia.
Gearing was reduced from 4% to zero over the period, and the
unlisted portion of the portfolio decreased from 7.2% to 6.1% as
two of our private companies listed on public markets.
Our long-term enthusiasm for the region remains strong. The
risks and opportunities from increased disruption are here to stay.
In our view, the market's focus on geopolitics and capital flows
misses the bigger picture: that of a global rise in digital
penetration, technological change and the growth of the Asian
middle class. These fundamentals will underpin development in the
region for decades to come. We believe that the best way to invest
in this rapidly changing growth market is to find its best
long-term growth companies.
Philosophy
We are growth investors endeavouring to invest in the top twenty
percent of the fastest growing companies in the region. We are
patient and seek out companies whose business models and management
teams are likely to fulfil their ambitions. We look for areas where
our ideas give us an edge over the market over a long
timeframe.
Across the region we have found the most persistent source of
outperformance to be those companies that can grow their profits
faster than the market, in hard currency terms, over the long term.
This trend persists irrespective of starting valuations.
Consequently, our research is singularly focused on finding those
companies whose share prices can at least double, in sterling
terms, on a five-year view and we expect most of this doubling to
come from earnings growth.
We are particularly interested in three specific and persistent
inefficiencies:
1) Underappreciated growth duration
We believe one of the greatest investment inefficiencies in Asia
(excluding Japan) is to be found in companies with excellent
long-term earnings growth where profits are volatile from one
quarter to the next. The market typically shows an aversion to such
companies, preferring the predictability of smooth profit
generation even if the long-term growth rate turns out to be a
fraction of that achieved by firms more willing to reinvest in
their business and with greater ambition. This presents us with
exciting investment opportunities, but it requires an approach that
allows near-term volatility to be ignored.
2) Underappreciated growth pace
The market consistently underestimates the likelihood of rapid
growth. The evidence shows that most investors cluster around a
narrow range of earnings growth predictions, which can in turn lead
to significant mispricing of those companies with the potential to
grow very rapidly. Our process is focused on finding these
companies. By looking further out and searching for low probability
but high impact growth opportunities, we endeavour to outperform
the broader market. This requires us to think carefully about
probabilities and possibilities, to spend more time thinking about
what can go right rather than what can go wrong in any
investment.
3) Underappreciated growth surprise
The final significant inefficiency in Asia (excluding Japan)
lies in the interaction between top-down and bottom-up investing.
Asia (excluding Japan) investors do not have the luxury of ignoring
macroeconomics. Purely bottom-up investment is a path to ruin in a
universe where industrial and economic cycles can dominate
investment returns over multi-year periods. The long-term earnings
for a vast number of companies - notably in the financial,
materials and industrial sectors - are determined by exogenous
macro factors beyond their control. This also provides
opportunities.
Our analysis shows that while it may pay to invest in those
companies that display consistently high levels of profitability,
the strongest returns are to be found in those companies that
transition from poor levels of profitability to high - a 'growth
surprise'.
This may seem obvious - rising levels of profitability are
normally accompanied by a re-rating, thereby providing a two-fold
kicker to share price performance - but identifying the drivers
behind this change is the key and has been a significant source of
outperformance for Pacific Horizon. We accept that timing these
inflection points perfectly is impossible, but when you have an
investment horizon measured over many years, successfully
anticipating the future direction of travel is hugely valuable.
Importantly, we are agnostic as to the type of growth
inefficiency we are exploiting and will invest wherever we are
finding the best opportunities. At times this will lead to a
concentration in particular sectors or countries, and at others to
a much broader, flatter portfolio, but growth will always be the
common theme.
Pacific MSCI AC Asia
Horizon ex Japan Index
===================================== ========= ================
Historic earnings growth (5 years
trailing compound annual growth
to 31 July 2022) 20.1% 10.5%
One year forecast earnings growth
(to 31 July 2023) 14.7% 9.1%
Estimated p/e ratio for the current
year (to 31 July 2022) 12.6x 12.2x
Percentage in under GBP1bn market
cap companies 16.1% 0.1%
Percentage in under GBP5bn market
cap companies 48.8% 10.7%
Active share 83.3% n/a
Portfolio turnover 16.0% n/a
===================================== ========= ================
Data as at 31 July 2022, source: Baillie Gifford, UBS PAS, APT,
MSCI (see disclaimer at the end of this announcement).
As highlighted in the table above, the growth characteristics of
the current portfolio remain strong, with historic earnings growth
and one-year forecast earnings growth higher than the comparative
index equivalents. The portfolio's estimated price-to-earnings
ratio for the current year is 12.6 versus 12.2 for the comparative
index. Over the longer term, we believe the higher growth potential
of our holdings more than justifies this multiple.
Portfolio Overview
By sector, the shape of the portfolio remains similar to the
start of the period. In absolute terms, our largest exposures
remain focused on the key themes of the rising middle class,
technology and innovation. However, we also have significant
exposures to more cyclical industries including materials,
industrials and energy that respectively make up the first, second
and fourth largest relative positions, versus the comparative
index, within the portfolio. The portfolio's distribution of assets
by geography and sector are shown below.
There have, however, been notable reductions to some of our
cyclical holdings, in particular materials. Our exposure here can
be divided into two - those materials that are exposed to the green
transition, such as nickel and copper, and those that are not. It
is in the latter where we have been reducing most significantly
with complete sales of companies including Tata Steel and Jindal
Steel & Power (both India steel companies), Vedanta (iron ore,
zinc, aluminium) and RUSAL (aluminium). Most of these positions
were taken during the Covid-19 pandemic when valuations reached
extremely depressed levels despite sound and growing operations.
However, with share prices of companies such as Vedanta having
peaked at more than 500% from its Covid trough, we struggle to make
a case for doubling our money over the next five years.
Our remaining materials exposure is predominantly to those
metals at the core of the green revolution, copper and nickel.
Copper, as the most cost-effective conductive material, is critical
to capturing, storing and transporting new energy sources, and
demand from green sources could easily grow ten-fold by 2030. To
put that into perspective, green demand could match and quickly
surpass the incremental demand China generated during the 2000s
which created the last commodity super cycle. Nickel is a critical
material in electric vehicle batteries, and demand will likely
significantly outstrip supply as electric vehicle demand continues
to grow exponentially.
By country there have been three noticeable changes.
The first is a reduction to our Indian exposure from a 28.9%
absolute position to 24.2% being a 10 percentage point relative
overweight position to the 14.2% of the comparative index. This
reflects a mixture of macroeconomic factors and valuations, albeit
we remain enthused by the country's long-term prospects as
demonstrated by India still being the largest country overweight in
the portfolio.
The key issue for the country is rising energy prices. India is
arguably the most sensitive, large Asian country to high oil prices
which will increasingly strain the current account, currency and
growth. This is against a backdrop of rising domestic inflation,
slowing domestic growth and already high valuations.
Fortunately, this is unlikely to lead to a crisis of old, as
India enters this challenging period in reasonably sound financial
strength with foreign exchange reserves of nearly $600bn (roughly
double 2012 when the country last faced similar headwinds), decent
import cover and a domestically focused economy less exposed to the
slowing global economy.
Sales were predominantly in 'old economy' sectors including, as
mentioned, materials and also housing (DLF) and banking (IDFC
Bank). We are increasingly enthused by the 'new economy', in which
4G mobile networks have brought the internet to the masses and are
catalysing the emergence of a new and exciting breed of innovative
technology focused companies. Our largest holding in this new
economy is Delhivery, the country's leading enabler of pan Indian
e-commerce logistics. This was a privately held investment that
listed over the period and now accounts for 5.5% of the portfolio.
Other notable new economy companies include Dailyhunt (private
company, 4.1%) and Zomato (1.3%).
As noted earlier, reductions in India were used to fund
opportunities in both Indonesia and China. The macro-economic
situation in Indonesia looks increasingly favourable. The country
is one of the biggest beneficiaries of rising raw material prices
across the region with significant exports of coal, palm oil and
nickel (the latter potentially making Indonesia a regional hub for
electric vehicle components). These exports will support a strong
current account, (which is likely to be in a surplus of c.$50bn by
the end the of the year), and the rupiah. Combined with an
underleveraged banking system we believe the domestic economy looks
better placed than it has for many years. During the period we
purchased PT Astra International, Indonesia's leading automotive
distributor and Bank Rakyat, arguably the best micro finance
company in Asia.
Looking to North Asia, it has been a torrid time for investors
in China. Regulatory clampdowns on the private sector, increasing
geopolitical tensions, Covid-19 lockdowns and problems in the
property market have led to a collapse in investor sentiment: the
MSCI China index is down nearly 50% since its 2021 peak, while many
Chinese companies listed in the USA have fallen more than 70%.
Whilst we acknowledge many of these issues are serious, we
believe investors have become too pessimistic and significant
long-term value may be emerging. In the technology space in
particular, valuations appear extremely compelling (the core
e-commerce business of Alibaba Group for instance trades on <5x
P/E multiples), and in the long term many of the technology
regulations, such as those combating monopoly practices in the
internet sector, appear broadly sensible and arguably put China at
the forefront of internet regulations globally.
We made significant additions to China taking it from a 18.1%
position to 24.7%, making it the largest absolute country exposure
in the portfolio (albeit still a 5.2 percentage point relative
underweight). The most notable purchases were in the internet
sector where new purchases were made in Baidu.com, Meituan and
Alibaba Group, whilst we also added to a number of existing
holdings including JD.com. Exposure to the Chinese consumer was
increased with new holdings in Midea and Zhejiang Supor Co, and we
added to our green technology holdings including LONGi Green Energy
and Wuxi Lead Intelligent Equipment Co.
Finally, we have been watching geopolitical developments in
Taiwan extremely closely, and it is perhaps here where the biggest
risks to the region and our portfolio lie. It seems inevitable that
China's position on Taiwan will become an ever more divisive topic
with the West. China's ambitions for Taiwan are clear -
reunification by 2049, but president Xi desires it much sooner.
Whilst military action is likely unviable within the next five
years, increased non-military coercion appears likely to ratchet
over the coming years. This comes at a time of already increased
tensions between China and the West, and it is notable that an
increasingly hawkish stance against China is the one topic American
politicians appear to agree on. The result is likely to be rising
Chinese and American tensions, and the world increasingly splitting
into two spheres of political, technological and economic
influences. We are considering the implications of such an
eventuality carefully.
Performance
We are long-term investors, running a high conviction growth
portfolio that is index agnostic. Performance will be volatile and
there will be short term periods when we underperform. It is
pleasing that over the past 5 years, the timescale on which we
believe our performance should be judged, the portfolio has
generated significant value for shareholders. However, against an
extremely challenging global backdrop, performance over the past
year, both in absolute and relative terms, was weak.
Soaring inflation and rising interest rates were major headwinds
for our growth-oriented investment style. This was particularly
pronounced in many of our higher growth companies, where the net
present value of the businesses lies in cash flows far into the
future and is greatly diminished by rising discount rates.
In the previous year our performance was helped significantly by
our broadening of the portfolio into more cyclical growth
companies. Unfortunately, as the likelihood of a global recession
increased during the year, compounded by numerous world events
including war in Ukraine, a European energy crisis, Chinese
lockdowns and increasing tensions over Taiwan, our cyclical
holdings were unable to offset the weakness elsewhere in the
portfolio.
By sector, the largest positive contributors to performance were
Consumer Discretionary, Energy and Industrials in that order.
Consumer Discretionary was led by Tata Motors (Indian automotive
company that owns the Jaguar Land Rover Brand) which was also the
single largest stock contributor to returns. The company continues
to see a strong turnaround in its domestic automotive business,
with passenger vehicle market shares now nearing 15%, and
commercial vehicles sales improving. Longer term, it is the
company's investment in electric vehicles that could be most
valuable. The company has approximately 90% market share of the
domestic electric passenger car market, a strong EV pipeline and is
working with other Tata Group companies, including Tata Power, Tata
Chemicals, Tata Auto Components, to build an EV ecosystem called
the 'Tata UniEVerse'.
Elsewhere in the Consumer Discretionary sector, it was what we
did not own that had the most positive impact on our relative
performance. In particular, a significant underweight position in
Alibaba Group and not holding Tencent were both top five stock
contributors relative to the index. These companies continued to be
impacted in the first half of the period by the continued
regulatory clampdowns in China and broader negative investor
sentiment towards the country. After a very challenging few years,
we are starting to see opportunities emerge in China, and towards
the end of the period started to buy back into the Chinese internet
companies.
Energy was our second-best performing sector, led by the oil and
gas company, Jadestone Energy, which benefitted significantly from
the rising oil price while continuing to operate its assets
extremely efficiently. Industrials were led by Delhivery, which
listed at a premium to its unlisted valuation.
By country, Indonesia was our best performing market, led by our
material holdings including Merdeka Copper Gold and Nickel Mines.
This was followed by Russia, where our sole exposure was RUSAL, the
aluminium producer listed in Hong Kong (now sold), and South
Korea.
By some margin Singapore was our largest detractor. This was
almost entirely due to the poor performance of Sea Limited, which
fell 75.5% over the period and accounted for roughly half of the
portfolio's entire underperformance. Operationally there were some
moderate setbacks. The company's hit game, Free Fire, appears to be
reaching peak user numbers, and the company exited India (having
launched its e-commerce operations in August 2021) as it focused
more on profitability.
However, Sea Limited appears to be part of a broader trend of
sentiment turning against rapidly growing, loss making technology
companies, especially those in emerging markets listed in the
United States. While many of these share price corrections may be
warranted, we believe the indiscriminate selling across the sector
has failed to discriminate between genuinely strong long term
business models and weaker players. With continued market share
gains across its key ASEAN markets and weakened competition, we
continue to believe Sea Limited is the best consumer play across
the south east Asian region.
China was the other key detractor to performance led by
technology companies Dada Nexus and Kingsoft Cloud. Unlike Sea
Limited, operational deterioration was more prominent, especially
at Kingsoft Cloud Holdings where the company has been losing market
share and moves by the government to establish its own cloud
infrastructure suggest the market will become significantly more
competitive. This led to the holding being sold.
Our Korea and Taiwan exposure also underperformed, the former as
a number of our industrial cyclicals came under pressure, such as
Koh Young Technology, while Taiwan was the result of our
underweight in TSMC.
By sector, the biggest detractor to our performance was
Financials, which was the best performing sector in the index (and
along with Utilities the only sector to produce positive absolute
returns), but the largest underweight position in the portfolio.
There was also notable weakness in the Information Technology and
Communication Services for reasons already discussed.
Environmental, Social and Governance Considerations
As growth investors, we are attracted to companies whose
products will benefit from strong future demand. These companies
not only have to produce better and cheaper products and services
than their competitors, but they must also be alert for changes in
the outlooks and attitudes of the societies of which they are
part.
Companies that fail to keep pace in this way tend to fail,
either because of falling consumer demand for their products or
because of government intervention in their activities. When taking
investment decisions, we consider the potential positive and
negative impact on society that companies may have, and how their
commercial activities may be perceived by external stakeholders in
the future.
For our long-term investments to be successful, the companies in
which we invest must add value to society. This can be achieved in
various ways. For example, the products of our regenerative biotech
company, L&C Bio, may allow many to benefit from otherwise
unachievable medical cures, our internet companies provide goods
and services at prices and in quantities previously beyond the
reach of many, while our technology holdings are enabling the
fastest increase in human connectivity and information on
record.
Lastly, it is very important to us that the interests of
minority shareholders are upheld. We remain careful to make sure
our investments are aligned with those of majority shareholders and
owners.
Outlook
We remain extremely positive on the long-term outlook for the
region. The rise of the Asian middle class, accelerated by
technology and innovation, continues to be one of the most powerful
investment opportunities of the coming decade. We are enthused by
the number of exciting growth companies we can buy that are exposed
to these themes, many of which are now trading on historically low
valuations.
Against this long-term positive backdrop for Asia, we would
however note that shorter term there are many challenges facing
global markets and rarely has it been harder to predict outcomes.
Our advantage in such a scenario is our long-term investment
approach, ignoring volatility and focusing on finding great
companies that will be winners in Asia over the coming decades.
We also see reasons for optimism. Many of the inflationary
causes effecting the world are likely to subside with the ending of
lockdowns and related monetary stimulus. Such a scenario would be
extremely beneficial to the global economy and very supportive to
growth companies more generally. Asia itself looks well placed,
having run far more prudent fiscal and monetary policies over the
Covid crisis compared to the profligacy of many developed
countries. Over the coming years, the decent growth rates, sensible
interest rates and limited balance sheet expansion across much of
Asia, is likely to compare very favourably to other markets. The
future is to the east.
(*) Source: Baillie Gifford/Refinitiv and relevant underlying
index providers. See disclaimer at the end of this
announcement.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Valuing Private Companies
We aim to hold our private company investments at 'fair value'
i.e., the price that would be paid in an open -market transaction.
Valuations are adjusted both during regular valuation cycles and on
an ad hoc basis in response to 'trigger events'. Our valuation
process ensures that private companies are valued in both a fair
and timely manner.
The valuation process is overseen by a valuations committee at
Baillie Gifford which takes advice from an independent third party
(S&P Global). The portfolio managers feed into the process, but
the valuations committee owns the process and the portfolio
managers only receive final valuation notifications once they have
been applied.
We revalue the private holdings on a three-month rolling cycle,
with one-third of the holdings reassessed each month. For
investment trusts, the prices are also reviewed twice per year by
the respective investment trust boards and are subject to the
scrutiny of external auditors in the annual audit process.
Beyond the regular cycle, the valuations committee also monitors
the portfolio for certain 'trigger events'. These may include:
changes in fundamentals; a takeover approach; an intention to carry
out an Initial Public Offering (IPO); or changes to the valuation
of comparable public companies. Any ad hoc change to the fair
valuation of any holding is implemented swiftly and reflected in
the next published NAV. There is no delay.
The valuations committee also monitors relevant market indices
on a weekly basis and update valuations in a manner consistent with
our external valuer's (S&P Global) most recent valuation report
where appropriate. When market volatility is particularly
pronounced the team undertake these checks daily.
Recent market volatility has meant that recent pricing has moved
much more frequently than would have been the case with the
quarterly valuations cycle.
Pacific Horizon Investment Trust
Instruments (lines of stock reviewed)
* 6
Quantum of individual (lines of
stock) reviewed 27
Quantum of revaluations post review 25
Percentage of portfolio revalued
2+ times 100%
Percentage of portfolio revalued
5+ times 50%
* Excludes Delhivery and Star Health & Allied
Insurance Co which listed in the period
=================================================
Year to date, most revaluations have been decreases. A handful
of companies have raised capital at an increased valuation. The
average movement in both valuation and share price for those which
have decreased in value is shown below.
Average movement Average movement
in company valuation in share price
*
Pacific Horizon (14.70%) (19.31%)
* Excludes Dailyhunt (VerSe Innovation) following fund
raise at a notably higher valuation. Average movement
in company value including Dailyhunt results in (2%)
compared to (14.7%) shown in table.
Data reflecting period 1 August 2021 - 31 July 2022
to align with the Trust's reporting period end
==============================================================
Share prices have decreased less than headline valuations
because Baillie Gifford typically holds preference stock, which
provides downside protection.
The share price movement reflects a probability weighted average
of both the regular valuation, which would be realised in an IPO,
and the downside protected valuation, which would be normally be
triggered in the event of a corporate sale or liquidation.
Baillie Gifford Statement on Stewardship
Baillie Gifford's over-arching ethos is that we are 'actual'
investors. We have a responsibility to behave as supportive and
constructively engaged long-term investors. We invest in companies
at different stages in their evolution, across vastly different
industries and geographies and we celebrate their uniqueness.
Consequently, we are wary of prescriptive policies and rules,
believing that these often run counter to thoughtful and beneficial
corporate stewardship. Our approach favours a small number of
simple principles which help shape our interactions with
companies.
Our Stewardship Principles
Prioritisation of Long-term Value Creation
We encourage our holdings to be ambitious and focus their
investments on long-term value creation. We understand that it is
easy to be influenced by short-sighted demands for profit
maximisation but believe these often lead to sub-optimal long-term
outcomes. We regard it as our responsibility to steer holdings away
from destructive financial engineering towards activities that
create genuine economic and stakeholder value over the long run. We
are happy that our value will often be in supporting management
when others don't.
A Constructive and Purposeful Board
We believe that boards play a key role in supporting corporate
success and representing the interests of all capital providers.
There is no fixed formula, but it is our expectation that boards
have the resources, information, cognitive and experiential
diversity they need to fulfil these responsibilities. We believe
that good governance works best when there are diverse skillsets
and perspectives, paired with an inclusive culture and strong
independent representation able to assist, advise and
constructively challenge the thinking of management.
Long-term Focused Remuneration with Stretching Targets
We look for remuneration policies that are simple, transparent
and reward superior strategic and operational endeavour. We believe
incentive schemes can be important in driving behaviour, and we
encourage policies which create genuine long-term alignment with
external capital providers. We are accepting of significant payouts
to executives if these are commensurate with outstanding long-run
value creation, but plans should not reward mediocre outcomes. We
think that performance hurdles should be skewed towards long-term
results and that remuneration plans should be subject to
shareholder approval.
Fair Treatment of Stakeholders
We believe it is in the long-term interests of all enterprises
to maintain strong relationships with all stakeholders - employees,
customers, suppliers, regulators and the communities they exist
within. We do not believe in one-size-fits-all policies and
recognise that operating policies, governance and ownership
structures may need to vary according to circumstance. Nonetheless,
we believe the principles of fairness, transparency and respect
should be prioritised at all times.
Sustainable Business Practices
We believe an entity's long-term success is dependent on
maintaining its social licence to operate and look for holdings to
work within the spirit and not just the letter of the laws and
regulations that govern them. We expect all holdings to consider
how their actions impact society, both directly and indirectly, and
encourage the development of thoughtful environmental practices and
'net-zero' aligned climate strategies as a matter of priority.
Climate change, environmental impact, social inclusion, tax and
fair treatment of employees should be addressed at board level,
with appropriately stretching policies and targets focused on the
relevant material dimensions. Boards and senior management should
understand, regularly review and disclose information relevant to
such targets publicly, alongside plans for ongoing improvement.
Environmental, Social and Governance Engagement
By engaging with companies, we seek to build constructive
relationships with them, to better inform our investment activities
and, where necessary, effect change within our holdings, ultimately
with the goal of achieving better returns for our shareholders. The
three examples below demonstrate our stewardship approach through
constructive, ongoing engagement.
LONGi Green Energy
LONGi Green Energy is a China-based semi-conductor company
mainly engaged in the production of solar panels.
We engaged with LONGi Green Energy to address specific aspects
of its supply chain oversight process. The supply chain for LONGi
Green Energy is complex and extends into higher-risk countries and
regions where monitoring can be restricted. Our direct engagement
with company management provided the answers we required on on-site
inspection, auditing and ongoing monitoring and mitigation steps if
breaches are discovered.
We also engaged with LONGi Green Energy to understand the
company's efforts on recycling and what factors hinder LONGi Green
Energy from embracing a carbon neutrality goal at present. From the
conversation, we know that LONGi Green Energy has recently formed a
specialised team for recycling nearly retired solar modules. LONGi
Green Energy's latest ESG report and White Paper on Climate Action
detail the company's emission reduction targets. Based on a 2020
baseline, by 2030 carbon emissions within the scope of operations
will be reduced by 60 per cent and the carbon emissions intensity
per ton of silicon material, per watt of cell and per ton of glass
will be reduced by 20 per cent.
The company is a pioneer in setting a concrete fi rm-wide
climate action plan, joining various climate-related initiatives,
and constructing its first net-zero factory. We value the efforts
and contributions of LONGi Green Energy to China's wider
decarbonisation and green transition.
Samsung Electronics
Samsung Electronics Co Ltd is a Korea-based company principally
engaged in the manufacture and distribution of memory chips, phones
and electronic components.
While Samsung discloses its carbon emissions, it is yet to
disclose updated carbon reduction targets. Through discussion with
the company's sustainability team, they recognised the importance
of having carbon reduction targets and explained that the process
of defining and setting targets is under w ay. We strongly
encouraged these targets to be set in line with science-based
projections.
Following up on the progress Samsung Electronics was making
towards implementing its ESG strategy, we heard that Samsung has
become a signatory to the United Nations Global Compact earlier
this year. In addition, the number of employees working in the
central ESG team has quadrupled in the past 12 months and is
continuing to grow - emphasising the investment Samsung is making
to embed its sustainability strategy.
Li Ning
Li Ning is the leading domestic branded sportswear retailer in
China. It is in the midst of a turnaround where the company's sales
are playing catch-up to its strong brand image. The Chinese brand
is attracting the younger market and is driving a significant
increase in sales.
In April, we met with the CEO on a range of issues. One of the
areas we wanted to learn more about was its approach to upholding
international labour standards in its sourcing practices and supply
chains. Li Ning confirmed that it does not use forced labour and
provided more details on its supply chain due diligence. Li Ning
reaffirmed its commitment to zero forced labour and supplier
sourcing practices. We have encouraged further transparency in this
area and are following up with the company to learn more about its
plans.
Review of Investments
A review of the Company's ten largest investments as at 31 July
2022 is given below.
Delhivery
Delhivery is an Indian logistics company, and the leading
independent provider of end-to-end delivery services, with a
national network used by all ecommerce players. The scale and
modernity of its network has allowed it to deliver both the lowest
costs and a reliable delivery experience, making it one of the
best-placed operators to benefit from the continued growth of
Indian ecommerce. This was previously a private company
investment.
Geography India
Valuation GBP33,717,000
% of total assets * 5.5%
(Valuation at 31 July 2021 GBP19,501,000)
(% of total assets at 31 July 2021 2.6%)
(Net purchases in year to 31 July 2022 nil)
Samsung Electronics
Samsung is a global leader in semiconductors and electronics.
Its core business is highly cash-generative, and the group has the
financial and human capital that permits it to invest and innovate
at scale.
Geography Korea
Valuation GBP33,653,000
% of total assets * 5.5%
(Valuation at 31 July 2021 GBP1,981,000)
(% of total assets at 31 July 2021 0.3%)
(Net purchases in year to 31 July 2022 GBP37,671,000)
Dailyhunt (VerSe Innovation)
A private company investment, Dailyhunt is an Indian consumer
media company. Its short form video and news aggregator apps are
popular across the country. Its localised and user-generated
content ensures engagement, which is valued by advertisers looking
to reach the Indian mass-market.
Geography India
Valuation GBP25,235,000
% of total assets * 4.1%
(Valuation at 31 July 2021 GBP14,412,000)
(% of total assets at 31 July 2021 2.0%)
(Net purchases in year to 31 July 2022 GBP6,373,000)
Jadestone Energy
Jadestone Energy is an exploration and production company with
oil and gas fi elds across Asia-Pacific. They acquire smaller
assets from the energy majors, as well as bringing expertise to
previously state-owned fields, investing to boost production and
extend their useful life.
Geography Singapore
Valuation GBP21,754,000
% of total assets * 3.6%
(Valuation at 31 July 2021 GBP16,920,000)
(% of total assets at 31 July 2021 2.3%)
(Net purchases in year to 31 July 2022 nil)
JD.com
JD.com is the largest Chinese retailer, via its dominant share
in the online ecommerce 3C market, and it is the second-largest
player in overall Chinese ecommerce. It has a strong logistics
network and a focus on customer service, which is driving increased
revenue and market share.
Geography Hong Kong and China
Valuation GBP20,167,000
% of total assets * 3.3%
(Valuation at 31 July 2021 GBP14,885,000)
(% of total assets at 31 July 2021 2.0%)
(Net purchases in year to 31 July 2022 GBP6,345,000)
Merdeka Copper Gold
An Indonesian copper miner, with the rights to the country's
second-largest copper and gold deposits. Operationally, it has an
attractive combination of management with a track record, as well
as supportive local shareholders.
Geography Indonesia
Valuation GBP17,027,000
% of total assets * 2.8%
(Valuation at 31 July 2021 GBP12,447,000)
(% of total assets at 31 July 2021 1.7%)
(Net purchases in year to 31 July 2022 GBP1,233,000)
Li Ning
Li Ning is the leading domestic branded sportswear retailer in
China. It is in the midst of a positive turnaround where the
company's sales are playing catch-up to its strong brand image. The
Chinese brand is attracting the younger market and is driving a
significant increase in sales.
Geography Hong Kong and China
Valuation GBP16,368,000
% of total assets * 2.7%
(Valuation at 31 July 2021 GBP18,613,000)
(% of total assets at 31 July 2021 2.5%)
(Net purchases in year to 31 July 2022 nil)
Sea Limited
Sea Limited is one of the leading players in South East Asia
within the gaming markets and online ecommerce. It is an
independent company with significant backing from Tencent. Its
markets have the potential to grow exponentially over the next
decade.
Geography Singapore
Valuation GBP13,839,000
% of total assets * 2.3%
(Valuation at 31 July 2021 GBP56,394,000)
(% of total assets at 31 July 2021 7.5%)
(Net purchases in year to 31 July 2022 GBP665,000)
Reliance Industries
The leading conglomerate in India, Reliance's interests span
three industries but all show ambitious long-term growth,
characteristic of Mukesh Ambani's leadership. Heavy investment into
renewable energy and modern retail sit alongside its Jio mobile
network and long-standing petrochemicals business.
Geography India
Valuation GBP13,839,000
% of total assets * 2.2%
(Valuation at 31 July 2021 GBP7,015,000)
(% of total assets at 31 July 2021 1.0%)
(Net purchases in year to 31 July 2022 nil)
MMG
MMG is a Hong Kong listed mid-tier global resources company
which explores, develops and mines base metal projects around the
world. Among its portfolio holdings are world class copper assets
in Peru.
Geography Hong Kong and China
Valuation GBP13,330,000
% of total assets * 2.2%
(Valuation at 31 July 2021 GBP20,152,000)
(% of total assets at 31 July 2021 2.7%)
(Net purchases in year to 31 July 2022 nil)
* For a definition of terms see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement
List of Investments as at 31 July 2022
======================================
Value
Name Geography Business GBP'000 % of total assets ++
----------------------------------- ------------ ----------------------------------- -------- --------------------
Logistics and courier services
Delhivery (p) # India provider 33,717 5.5
Memory, phones and electronic
Samsung Electronics Korea components manufacturer 33,653 5.5
Dailyhunt (VerSe Innovation) Series Indian news aggregator
I Preferred (u) India application 18,902 3.1
Dailyhunt (VerSe Innovation) Series
Equity (u) India Indian news aggregator application 3,774 0.6
Dailyhunt (VerSe Innovation) Series
J Preferred (u) India Indian news aggregator application 2,559 0.4
-------- --------------------
25,235 4.1
Jadestone Energy Singapore Oil and gas explorer and producer 21,754 3.6
JD.com HK/China Online mobile commerce 20,167 3.3
Merdeka Copper Gold Indonesia Indonesian miner 17,027 2.8
Li Ning HK/China Sportswear apparel supplier 16,368 2.7
Sea Limited ADR Singapore Internet gaming and ecommerce 13,839 2.3
Reliance Industries India Indian petrochemical company 13,389 2.2
MMG HK/China Chinese copper miner 13,330 2.2
Tata Motors ADR India Indian automobile manufacturer 13,230 2.2
Zijin Mining Group Co H Shares HK/China Gold and copper miner 12,014 2.0
Samsung SDI Korea Electrical equipment manufacturer 11,911 2.0
ByteDance series E-1 Preferred (u) HK/China Social media 11,731 1.9
Bank Rakyat Indonesia Consumer bank 11,325 1.9
LONGi Green Energy HK/China Chinese semiconductor manufacturer 11,220 1.8
HDBank Vietnam Consumer bank 9,922 1.6
Alibaba Group HK/China Online and mobile commerce 9,888 1.6
Samsung Engineering Korea Korean construction 8,979 1.5
Hyundai Mipo Dockyard Korea Korean shipbuilder 8,918 1.5
Star Health & Allied Insurance Co
(p) ++ India Health insurance company 8,769 1.4
PT Astra International Indonesia Automobile distributor 8,717 1.4
Owner and operator of a chain of
Indian
Lemon Tree Hotels India hotels and resorts 8,415 1.4
Dragon Capital Vietnam Enterprise
Investments Vietnam Vietnam investment fund 8,308 1.4
Midea A Shares HK/China Household appliance manufacturer 8,254 1.4
Metiuan HK/China Local services aggregator 8,093 1.3
Phoenix Mills India Commercial property manager 8,059 1.3
Online restaurant search, ordering
and
Zomato (p) India discovery platform 7,939 1.3
Nickel Mines Indonesia Base metals miner 7,096 1.2
Value
Name Geography Business GBP'000 % of total assets ++
=================================== ============ =================================== ======== ====================
Jiangxi Copper Co HK/China Chinese copper miner 7,047 1.2
Domestic and commercial real estate
Indiabulls Real Estate India provider 6,998 1.1
Ramkrishna Forgings India Auto parts manufacturer 6,966 1.1
China Oilfield Services H Shares HK/China Oilfield services 6,921 1.1
Taiwanese electronic component
MediaTek Taiwan manufacturer 6,701 1.1
Steel and related products
Hoa Phat Group Vietnam manufacturer 6,680 1.1
Chinese manufacturer of cookware
and
Zhejiang Supor Co HK/China home appliance products 6,571 1.1
TSMC Taiwan Semiconductor manufacturer 6,455 1.1
Owner and operator of residential
real
Prestige Estate Projects India estate properties 6,398 1.0
Ping An Insurance H Shares HK/China Life insurance provider 6,372 1.0
Geely Automobile HK/China Automobile manufacturer 6,187 1.0
Server network equipment
Accton Technology Taiwan manufacturer 6,134 1.0
Military Commercial Joint Stock
Bank Vietnam Retail and corporate bank 5,749 0.9
Coupang Korea Ecommerce business 5,526 0.9
Enterprise management software
Kingdee International Software HK/China distributor 5,490 0.9
Koh Young Technology Korea 3D inspection machine manufacturer 5,471 0.9
Baidu.com HK/China Internet provider 5,452 0.9
PT Vale Indonesia Indonesia Nickel miner 5,224 0.9
Stationery and lead frames for
SDI Corporation Taiwan semiconductors manufacturer 5,209 0.9
Ningbo Peacebird Fashion A Shares HK/China Chinese fashion 5,166 0.8
Electronic component and device
KH Vatec Company Korea manufacturer 5,089 0.8
Manufacturer and distributor of
EO Technics Korea semiconductor laser markers 5,001 0.8
Manufacturer of electronic
capacitors,
Wuxi Lead Intelligent Equipment Co solar energy and lithium battery
A Shares HK/China equipment 4,875 0.8
HDFC India Indian mortgage provider 4,581 0.8
Flitto Korea Internet based service provider 4,479 0.7
PT Aneka Tambang Indonesia Nickel miner 4,215 0.7
Chinese ecommerce distributor of
online
Dada Nexus ADR HK/China consumer products 4,142 0.7
Non-ferrous metals smelter and
Korea Zinc Korea manufacturer 3,785 0.6
PropertyGuru Singapore Real-estate platform 3,706 0.6
S-Fuelcell Korea Fuel cell manufacturer 3,314 0.5
Han's Laser Technology A Shares HK/China Electronic equipment manufacturer 3,203 0.5
Tsugami Precision HK/China Industrial machinery manufacturer 3,151 0.5
KE Holdings HK/China Chinese real-estate platform 2,559 0.4
KE Holdings ADR HK/China Chinese real-estate platform 560 0.1
-------- --------------------
3,119 0.5
L&C Bio Korea Medical equipment manufacturer 3,111 0.5
Value
Name Geography Business GBP'000 % of total assets ++
=================================== ============ =================================== ======== ====================
LG Chem Korea Producer of EV batteries 3,088 0.5
Chalice Mining HK/China Miner 2,899 0.5
Ping An Bank A Shares HK/China Consumer bank 2,783 0.5
CIMC Vehicles H Shares HK/China Manufacturer of trailers and trucks 2,767 0.5
SK IE Technology Korea Refining and chemical company 2,623 0.4
Policybazaar India Online financial services platform 2,616 0.4
Kaspi Kz JSX GDR Kazakhstan Kazakh fintech 2,582 0.4
Transmission and distribution structures
Skipper India provider 2,429 0.4
Hypebeast HK/China Digital media and ecommerce company 2,287 0.4
AirTac International Group Taiwan Pneumatic components manufacturer 2,180 0.4
Techtronic Industries HK/China Power tool manufacturer 2,168 0.3
Vinh Hoan Corporation Vietnam Food producer 2,027 0.3
Provider of environmentally-friendly
China Conch Venture HK/China building materials and solutions 1,933 0.3
Enterprise resource planning software
Douzone Bizon Korea developer 1,681 0.3
Nexteer Automotive HK/China Producer of automotive components 1,285 0.2
Huayu Automotive Systems A Shares HK/China Auto parts manufacturer 1,069 0.2
Binh Minh Plastics Joint Stock
Company Vietnam Plastic piping manufacturer 807 0.1
Provider of environmentally-friendly
China Conch Environment Protection HK/China building materials and solutions 788 0.1
Minibus and automotive components
Brilliance China Automotive (s) HK/China manufacturer 495 0.1
Chime Biologics (u) HK/China Biopharmaceutical company 139 0.1
Eden Biologics (u) Taiwan Biopharmaceutical company 138 0.0
Philtown Properties (u) Philippines Property developer 0 0.0
Total Investments 608,539 99.7
Net Liquid Assets ++ 2,011 0.3
============================================================================================ ======= =====
Total Assets 610,550 1.00
============================================================================================ ======= =====
HK/China denotes Hong Kong and China.
Details of the ten largest investments are given above along
with comparative valuations.
++ For a definition of terms see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
(u) Denotes private company (unlisted) investment.
(p) Denotes listed security previously held in the portfolio as
an unlisted security.
(s) Denotes suspended investment.
# In line with the conditions of the IPO, investors with
holdings prior to the listing are subject to a lock in period
preventing trading of the holding. This expires on 24 November
2022.
++ In line with the conditions of the IPO, investors with
holdings prior to the listing are subject to a lock in period
preventing trading of the holding. This expires on 10 December
2022.
Listed Unlisted Net liquid Total
equities (private assets assets
% company) % %
securities
%
============== =========== ============ ============ =========
31 July 2022 93.6 6.1 0.3 100.0
----------- ------------ ------------ ---------
31 July 2021 89.7 7.2 3.1 100.0
-------------- ----------- ------------ ------------ ---------
Figures represent percentage of total assets.
Includes holdings in ordinary shares and preference shares.
Distribution of Total Assets ++
===============================
Geographical Analysis
At 31 July At 31 July
2022 2021
% %
========== ==================== =========================== =========================
32.4 29.9
Equities: Hong Kong and China (inc. 7.1 A Shares (++) ) (inc 2.9 A Shares (++) )
Korea 17.4 14.5
Taiwan 4.5 3.5
Vietnam 5.4 5.6
India 24.2 28.9
Singapore 6.5 9.8
Indonesia 8.9 5.5
Other 0.4 2.1
Total equities 99.7 96.9
Net liquid assets 0.3 3.1
================================ =========================== =========================
Total assets 100.0 100.0
================================ =========================== =========================
Sectoral Analysis
At 31 July At 31 July
2022 2021
% %
========== ======================= ========== ==========
Equities: Consumer Discretionary 20.2 13.8
Communication Services 9.6 13.3
Consumer Staples 0.3 0.1
Energy 6.9 4.0
Financials 9.9 8.6
Healthcare 0.6 4.0
Industrials 13.5 10.1
Information Technology 19.5 17.5
Materials 14.6 21.0
Real Estate 4.6 4.5
Total equities 99.7 96.9
Net liquid assets 0.3 3.1
=================================== ========== ==========
Total assets 100.0 100.0
=================================== ========== ==========
++ For a definition of terms see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
Income Statement
================
For the year ended For the year ended
31 July 2022 31 July 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================================= ======== ========= ========= ======== ======== ========
(Losses)/gains on investments - (118,594) (118,594) - 208,671 208,671
Currency gains - 1,292 1,292 - 35 35
Income (note 2) 11,067 - 11,067 3,561 - 3,561
Investment management fee (note 3) (4,036) - (4,036) (3,475) - (3,475)
Other administrative expenses (1,093) - (1,093) (729) - (729)
============================================= ======== ========= ========= ======== ======== ========
Net return before finance costs and taxation 5,938 (117,302) (111,364) (643) 208,706 208,063
Finance costs of borrowings (756) - (756) (465) - (465)
Net return before taxation 5,182 (117,302) (112,120) (1,108) 208,706 207,598
--------------------------------------------- -------- --------- --------- -------- -------- --------
Tax (1,352) 5,288 3,936 706 (9,137) (8,431)
============================================= ======== ========= ========= ======== ======== ========
Net return after taxation 3,830 (112,014) (108,184) (402) 199,569 199,167
============================================= ======== ========= ========= ======== ======== ========
Net return per ordinary share (note 4) 4.21p (123.01p) (118.80p) (0.51p) 253.70p 253.19p
============================================= ======== ========= ========= ======== ======== ========
The total column of this Statement represents the profit and
loss account of the Company. The supplementary revenue and capital
columns are prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in this Statement derive from
continuing operations.
A Statement of Comprehensive Income is not required as the
Company does not have any other comprehensive income and the net
return after taxation is both the profit and comprehensive income
for the year.
Balance Sheet
=============
At 31 July 2022 At 31 July 2021
GBP'000 GBP'000 GBP'000 GBP'000
=============================================================== ======== ======= ======== ========
Fixed assets
Investments held at fair value through profit or loss (note 6) 608,539 725,122
--------------------------------------------------------------- -------- ------- -------- --------
Current assets
Debtors 1,248 1,387
Cash and cash equivalents 5,399 31,766
=============================================================== ======== ======= ======== ========
6,647 33,153
=============================================================== ======== ======= ======== ========
Creditors
Amounts falling due within one year (note 8) (1,620) (61,966)
=============================================================== ======== ======= ======== ========
Net current assets/(liabilities) 5,027 (28,813)
=============================================================== ======== ======= ======== ========
Total assets less current liabilities 613,566 696,309
=============================================================== ======== ======= ======== ========
Creditors
Amounts falling due after more than one year:
Provision for tax liability (note 10) (3,016) (9,078)
=============================================================== ======== ======= ======== ========
Net assets 610,550 687,231
=============================================================== ======== ======= ======== ========
Capital and reserves
Share capital 9,208 8,843
Share premium account 253,946 221,354
Capital redemption reserve 20,367 20,367
Capital reserve 319,573 433,041
Revenue reserve 7,456 3,626
=============================================================== ======== ======= ======== ========
Shareholders' funds 610,550 687,231
=============================================================== ======== ======= ======== ========
Net asset value per ordinary share* 664.55p 777.15p
--------------------------------------------------------------- -------- ------- -------- --------
Ordinary shares in issue (note 11) 91,860,961 88,429,704
--------------------------------------------------------------- ----------------- ------------------
* See Glossary of Terms and Alternative Performance Measures at
the end of this announcement.
Statement of Changes in Equity
==============================
For the year ended 31 July 2022
Share Share Capital redemption Shareholders'
capital premium account reserve Capital reserve Revenue reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ======== ================ ================== =============== =============== =============
Shareholders' funds
at 1 August 2021 8,843 221,354 20,367 433,041 3,626 687,231
Net return after
taxation - - - (112,014) 3,830 (108,184)
Ordinary shares
bought back into
treasury (note 11) - - - (1,454) - (1,454)
Ordinary shares sold - - - - - -
from treasury (note
11)
Ordinary shares
issued (note 11) 365 32,592 - - - 32,957
Dividends - - - - - -
appropriated in the
year (note 5)
Shareholders' funds
at 31 July 2022 9,208 253,946 20,367 319,573 7,456 610,550
===================== ======== ================ ================== =============== =============== =============
For the year ended 31 July 2021
Share Share Capital redemption Shareholders'
capital premium account reserve Capital reserve Revenue reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ======== ================ ================== =============== =============== =============
Shareholders' funds
at 1 August 2020 6,317 40,048 20,367 233,472 4,199 304,403
Net return after
taxation - - - 199,569 (402) 199,167
Ordinary shares
bought back into
treasury (note 11) - - - (2,132) - (2,132)
Ordinary shares sold
from treasury (note
11) - 442 - 2,132 - 2,574
Ordinary shares
issued (note 11) 2,526 180,864 - - - 183,390
Dividends
appropriated in the
year (note 5) - - - - (171) (171)
--------------------- -------- ---------------- ------------------ --------------- --------------- -------------
Shareholders' funds
at 31 July 2021 8,843 221,354 20,367 433,041 3,626 687,231
===================== ======== ================ ================== =============== =============== =============
The Capital Reserve balance at 31 July 2022 includes investment
holding gains of GBP119,695,000 (31 July 2021 - gains of
GBP287,279,000).
Cash Flow Statement
===================
For the year ended For the year ended
31 July 2022 31 July 2021
GBP'000 GBP'000 GBP'000 GBP'000
==================================================== ========= ============= ============= =========
Cash flows from operating activities
Net return before taxation (112,120) 207,598
Net losses/(gains) on investments 118,594 (208,671)
Currency gains (1,292) (35)
Finance costs of borrowings 756 465
Overseas withholding tax (1,288) (304)
Indian CGT paid on transactions (774) (135)
Corporation tax refunded - 992
Changes in debtors and creditors (589) 916
==================================================== ========= ============= ============= =========
Cash from operations (++) 3,287 826
Interest paid (765) (430)
Net cash inflow from operating activities 2,522 396
==================================================== ========= ============= ============= =========
Cash flows from investing activities
Acquisitions of investments (197,017) (298,606)
Disposals of investments 196,116 98,014
==================================================== ========= ============= ============= =========
Net cash outflow from investing activities (901) (200,592)
==================================================== ========= ============= ============= =========
Cash flows from financing activities
Ordinary shares bought back into treasury (note 11) (1,454) (2,132)
Ordinary shares sold from treasury (note 11) - 2,574
Proceeds from Ordinary shares issued (note 11) 32,957 183,368
Borrowings drawn down 119,372 210,000 *
Borrowings repaid (182,957) (172,471) *
Equity dividends paid - (171)
Net cash (outflow)/inflow from financing activities (32,082) 221,168
==================================================== ========= ============= ============= =========
(Decrease)/increase in cash and cash equivalents (30,461) 20,972
Exchange movements 4,094 (1,352)
Cash and cash equivalents at 1 August 31,766 12,146
Cash and cash equivalents at 31 July 5,399 31,766
==================================================== ========= ============= ============= =========
++ Cash from operations includes dividends received of
GBP10,279,000 (2021 - GBP3,858,000) and interest received of
GBP6,000 (2021 - GBP66,000).
* In the year to 31 July 2021, the Company had separate drawdown
and repayment of borrowings. However, these separate cash flows had
been netted off in the cash flow statement rather than being
presented gross. Adjustment has been made to the prior year cash
flow statement to gross up the cash flows of the drawdown and
repayment of borrowings. This adjustment does not impact the net
cash (outflow)/inflow from financing activities, the overall cash
flow position, the result or the net assets of the Company.
Notes to the Financial Statements
=================================
1. Principal accounting policies
The Financial Statements for the year to 31 July 2022 have been
prepared in accordance with FRS 102 'The Financial Reporting
Standard applicable in the UK and Republic of Ireland' and on the
basis of the accounting policies set out in the Annual Report and
Financial Statements which are unchanged from the prior year and
have been applied consistently.
2. Income
2022 2021
GBP'000 GBP'000
======================== ======== ========
Income from Investments
Overseas dividends 11,060 3,495
Other income
Deposit interest 7 66
======================== ======== ========
Total income 11,067 3,561
======================== ======== ========
3. Investment management fee
The Company has appointed Baillie Gifford & Co Limited, a
wholly owned subsidiary of Baillie Gifford & Co, as its
Alternative Investment Fund Manager (AIFM) and Company Secretaries.
Baillie Gifford & Co Limited has delegated portfolio management
services to Baillie Gifford & Co. Dealing activity and
transaction reporting have been further sub-delegated to Baillie
Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong)
Limited. The Managers may terminate the Management Agreement on six
months' notice and the Company may terminate on three months'
notice.
The annual management fee is 0.75% on the first GBP50 million of
net assets, 0.65% on the next GBP200 million of net assets and
0.55% on the remaining net assets. Management fees are calculated
and payable on a quarterly basis.
4. Net return per ordinary share
2022 2021
GBP'000 GBP'000
=================================================================== ============= ============
Revenue return after taxation 3,830 (402)
Capital return after taxation (112,014) 199,569
=================================================================== ============= ============
Total return (108,184) 199,167
=================================================================== ============= ============
Weighted average number of ordinary shares in issue 91,063,205 78,661,987
=================================================================== ============= ============
The figures for net return per ordinary share are based on the above totals for revenue and
capital and the weighted average number of ordinary shares (excluding treasury shares) in
issue during the year.
There are no dilutive or potentially dilutive shares in issue.
5. Ordinary dividends
2022 2021 2022 2021
GBP'000 GBP'000
Amounts recognised as distributions in the year:
Previous year's final - 0.25p - 171
======================================================================== ===== ===== ======== ========
We set out below the total dividends proposed in respect of the financial year, which is the
basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered.
There is a revenue surplus for the year to 31 July 2022 of GBP3,830,000 which is available
for distribution by way of a dividend payment (2021- a revenue deficit of GBP402,000).
2022 2021 2022 2021
GBP'000 GBP'000
Amounts paid and payable in respect of the financial year:
Proposed final dividend per ordinary share (payable 29 November 2022) 3.00p - 2,756 -
======================================================================== ===== ===== ======== ========
6. Fair value hierarchy
As at Level 1 Level 2 Level 3 Total
31 July 2022 GBP'000 GBP'000 GBP'000 GBP'000
================================== ======== ======== ======== ========
Listed equities 570,801 495 - 571,296
Unlisted equities - - 4,051 4,051
Unlisted preference shares* - - 33,192 33,192
================================== ======== ======== ======== ========
Total financial asset investments 570,801 495 37,243 608,539
================================== ======== ======== ======== ========
As at Level 1 Level 2 Level 3 Total
31 July 2021 GBP'000 GBP'000 GBP'000 GBP'000
================================== ======== ======== ======== ========
Listed equities 670,144 877 - 671,021
Unlisted equities - - 6,298 6,298
Unlisted preference shares* - - 47,803 47,803
================================== ======== ======== ======== --------
Total financial asset investments 670,144 877 54,101 725,122
================================== ======== ======== ======== ========
* The investments in preference shares are not classified as
equity holdings as they include liquidation preference rights that
determine the repayment (or multiple thereof) of the original
investment in the event of a liquidation event such as a
take-over.
During the year to 31 July 2022 investments with a book cost of
GBP23,341,000 (31 July 2021 - GBP8,167,000) were transferred from
Level 3 to Level 1 on becoming listed.
Investments in securities are financial assets held at fair
value through profit or loss. In accordance with Financial
Reporting Standard 102, the tables above provide an analysis of
these investments based on the fair value hierarchy described
below, which reflects the reliability and significance of the
information used to measure their fair value.
Fair Value Hierarchy
The fair value hierarchy used to analyse the fair values of
financial assets is described below. The levels are determined by
the lowest (that is the least reliable or least independently
observable) level of input that is significant to the fair value
measurement for the individual investment in its entirety as
follows:
Level 1 - using unadjusted quoted prices for identical
instruments in an active market;
Level 2 - using inputs, other than quoted prices included within
Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market
data is unavailable).
The Company's unlisted ordinary share investments at 31 July
2022 were valued using a variety of techniques. These include using
comparable company performance, comparable scenario analysis, and
assessment of milestone achievement at investee companies. The
determinations of fair value included assumptions that the
comparable companies and scenarios chosen for the performance
assessment provide a reasonable basis for the determination of fair
value. In some cases the latest dealing price is considered to be
the most appropriate valuation basis, but only following assessment
using the techniques described above.
7. Transaction costs
The purchases and sales proceeds figures include transaction
costs of GBP225,000 (2021 - GBP344,000) and GBP308,000 (2021 -
GBP164,000) respectively, total transaction costs being GBP533,000
(2021 - GBP508,000).
8. Borrowing facilities
During the year, the Company repaid its one year GBP60 million
multi-currency revolving credit facility with Royal Bank of
Scotland International Limited and obtained a new three year
multi-currency revolving credit facility of up to GBP100 million
with Royal Bank of Scotland International Limited which expires on
14 March 2025. At 31 July 2022 there were no outstanding drawings
(31 July 2021 - GBP20,000,000 and US$56,704,000 at interest rates
of 0.65977% and 0.74975% respectively). The main covenants relating
to the loan are that borrowings should not exceed 30% of the
Company's adjusted net asset value and the Company's net asset
value should be at least GBP300 million.
There were no breaches in the loan covenants during the
year.
9. Analysis of change in net debt
At 1 August Cash Exchange At 31 July
2021 flows movement 2022
GBP'000 GBP'000 GBP'000 GBP'000
========================== =========== ======== ======== ==========
Cash and cash equivalents 31,766 (30,461) 4,094 5,399
Loans due within one year (60,783) 63,585 (2,802) -
(29,017) 33,124 1,292 5,399
========================== =========== ======== ======== ==========
10. Provision for deferred tax liability
The tax liability provision at 31 July 2022 of GBP3,016,000 (31
July 2021 - GBP9,078,000) relates to a potential liability for
Indian capital gains tax that may arise on the Company's Indian
investments should they be sold in the future, based on the net
unrealised taxable capital gain at the period end and on enacted
Indian tax rates (long term capital gains are taxed at 10% and
short term capital gains are taxed at 15%). 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 gains tax is
calculated based on how long an asset is held for.
11. Share capital
2022 2021
Number of Number of
shares shares
=============================================================== ===================== ===========================
Allotted, called up and fully paid ordinary shares of 10p each 91,860,961 88,429,704
Treasury shares of 10p each 214,000 -
=============================================================== ===================== ===========================
92,074,961 88,429,704
=============================================================== ===================== ===========================
In the year to 31 July 2022, the Company issued 3,645,257
ordinary shares with a nominal value of GBP365,000, representing
4.1% of the issued share capital at 31 July 2021, at a premium to
net asset value, raising net proceeds of GBP32,957,000 (2021 -
25,264,422 ordinary shares with a nominal value of GBP2,526,000,
raising net proceeds of GBP183,832,000).
In the year to 31 July 2022, 214,000 ordinary shares
(representing 0.2% of the issued share capital at 31 July 2021,
were bought back at a total cost of GBP1,454,000 and are held in
treasury ,2021 - 325,134 shares (representing 1% of the issued
share capital at 31 July 2020, were bought back during the year and
subsequently reissued from treasury). At 31 July 2022 the Company
had authority to allot or sell from treasury 8,127,970 ordinary
shares without application of pre-emption rights and to buy back
13,041,612 ordinary shares on an ad hoc basis. Under the provisions
of the Company's Articles of Association share buy-backs are funded
from the capital reserve.
Between 1 August 2022 and 14 September 2022, no further shares
were issued and 217,726 shares were bought back.
12. The financial information set out above does not constitute
the Company's statutory accounts for the year ended 31 July 2022 or
2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the Registrar of Companies, and those
for 2022 will be delivered in due course. The auditor has reported
on these accounts; the reports were unqualified, did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying the report and did not contain a
statement under sections 498 (2) or 498(3) of the Companies Act
2006.
13. Transactions with Related Parties and the Managers and
Secretaries
No Director has a contract of service with the Company. During
the year no Director was interested in any contract or other matter
requiring disclosure under section 412 of the Companies Act
2006.
Details of the management fee arrangements are included in note
3 above.
14. The Annual Report and Financial Statements will be available
on the Company's page on the Managers' website pacifichorizon.co.uk
++ on or around 30 September 2022.
++ Neither the contents of the Managers' website nor the
contents of any website accessible from hyperlinks on the Managers'
website (or any other website) is incorporated into, or forms part
of, this announcement.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
Glossary of Terms and Alternative Performance Measures
('APM')
Total Assets
The total value of all assets held less all liabilities (other
than liabilities in the form of borrowings).
Shareholders' Funds and Net Asset Value
Also described as shareholders' funds, Net Asset Value ('NAV')
is the value of all assets held less all liabilities (including
borrowings). The NAV per share is calculated by dividing this
amount by the number of ordinary shares (excluding treasury shares)
in issue.
Net Liquid Assets
Net liquid assets comprise current assets less current
liabilities (excluding borrowings) and provisions for deferred
liabilities.
Discount/Premium (APM)
As stock markets and share prices vary, an investment trust's
share price is rarely the same as its NAV. When the share price is
lower than the NAV per share it is said to be trading at a
discount. The size of the discount is calculated by subtracting the
share price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than
the NAV per share, this situation is called a premium.
2022 2021
--------------------------- -------- --------
Net asset value per share
(a) 664.65p 777.15p
Share price (b) 647.00p 802.00p
--------------------------- -------- --------
(Discount)/premium ((b)
- (a)) ÷ (a) (2.7%) 3.2%
--------------------------- -------- --------
Total Return (APM)
The total return is the return to shareholders after reinvesting
the net dividend on the date that the share price goes
ex-dividend.
Ongoing Charges (APM)
The total recurring expenses (excluding the Company's cost of
dealing in investments and borrowing costs) incurred by the Company
as a percentage of the daily average net asset value, as detailed
below.
2022 2021
GBP'000 GBP'000
------------------------- --------- ---------
Investment management
fee 4,036 3,475
Other administrative
expenses 1,093 729
------------------------- --------- ---------
Total Expenses 5,129 4,204
------------------------- --------- ---------
Average net asset value 691,596 538,343
------------------------- --------- ---------
Ongoing charges 0.74% 0.78%
------------------------- --------- ---------
China 'A' Shares
'A' Shares are shares of mainland China-based companies that
trade on the Shanghai Stock Exchange and the Shenzhen Stock
Exchange. Since 2003, select foreign institutions have been able to
purchase them through the Qualified Foreign Institutional Investor
system.
Treasury Shares
The Company has the authority to make market purchases of its
ordinary shares for retention as Treasury Shares for future
reissue, resale, transfer, or for cancellation. Treasury Shares do
not receive distributions and the Company is not entitled to
exercise the voting rights attaching to them.
Unlisted (Private) Company
An unlisted or private company means a company whose shares are
not available to the general public for trading and are not listed
on a stock exchange .
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other
public company, an investment trust can borrow money to invest in
additional investments for its portfolio. The effect of the
borrowing on the shareholders' assets is called 'gearing'. If the
Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the
value of the Company's assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can
adversely impact performance in falling markets.
Invested gearing is borrowings at par less cash and brokers'
balances expressed as a percentage of shareholders' funds.
2022 2021
GBP'000 GBP'000
========================================== ========= =========
Borrowings (at book cost) (a) - 60,783
Less: cash and cash equivalents (5,399) (31,766)
Less: sales for subsequent settlement (402) (1,066)
Add: purchases for subsequent settlement 466 -
========================================== ========= =========
Adjusted borrowings (b) (5,355) 27,951
========================================== ========= =========
Shareholders' funds (c) 610,550 687,231
========================================== ========= =========
Gearing: (b) as a percentage of (c) (1%) 4%
========================================== ========= =========
Potential gearing is the Company's borrowings expressed as a
percentage of shareholders' funds;
2022 2021
GBP'000 GBP'000
======================================= ========= =========
Borrowings (at book cost) (a) - 60,783
Shareholders' funds (b) 610,550 687,231
======================================= ========= =========
Potential gearing (a) as a percentage
of (b) - 9%
======================================= ========= =========
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers
Regulations leverage is any method which increases the Company's
exposure, including the borrowing of cash and the use of
derivatives. It is expressed as a ratio between the Company's
exposure and its net asset value and can be calculated on a gross
and a commitment method. Under the gross method, exposure
represents the sum of the Company's positions after the deduction
of sterling cash balances, without taking into account any hedging
and netting arrangements. Under the commitment method, exposure is
calculated without the deduction of sterling cash balances and
after certain hedging and netting positions are offset against each
other.
Active Share (APM)
Active share, a measure of how actively a portfolio is managed,
is the percentage of the portfolio that differs from its
comparative index. It is calculated by deducting from 100 the
percentage of the portfolio that overlaps with the comparative
index. An active share of 100 indicates no overlap with the index
and an active share of zero indicates a portfolio that tracks the
index.
Compound Annual Return (APM)
The compound annual return converts the return over a period of
longer than one year to a constant annual rate of return applied to
the compound value at the start of each year.
Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation (`SFDR') does not have a direct impact in
the UK due to Brexit, however, it applies to third-country products marketed in the EU. As
Pacific Horizon Investment Trust PLC is marketed in the EU by the AIFM, Baillie Gifford &
Co Limited, via the National Private Placement Regime (NPPR) the following disclosures have
been provided to comply with the high-level requirements of SFDR. The AIFM has adopted Baillie
Gifford & Co's Governance and Sustainable Principles and Guidelines as its policy on integration
of sustainability risks in investment decisions. Baillie Gifford & Co's approach to investment
is based on identifying and holding high quality growth businesses that enjoy sustainable
competitive advantages in their marketplace. To do this it looks beyond current financial
performance, undertaking proprietary research to build an in-depth knowledge of an individual
company and a view on its long-term prospects. This includes the consideration of sustainability
factors (environmental, social and/or governance matters) which it believes will positively
or negatively influence the financial returns of an investment. More detail on the Managers'
approach to sustainability can be found in the Governance and Sustainability Principles and
Guidelines document, available publicly on the Baillie Gifford website bailliegifford.com.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework of criteria for environmentally sustainable
economic activities in respect of six environmental objectives. It builds on the disclosure
requirements under SFDR by introducing additional disclosure obligations in respect of alternative
investment funds that invest in an economic activity that contributes to an environmental
objective. The Company does not commit to make sustainable investments as defined under SFDR.
As such, the underlying investments do not take into account the EU criteria for environmentally
sustainable economic activities.
Third Party Data Provider Disclaimer
No third party data provider ('Provider') makes any warranty, express or implied, as to the
accuracy, completeness or timeliness of the data contained herewith nor as to the results
to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient
of the data for any inaccuracies, errors or omissions in the index data included in this document,
regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.
No Provider has any obligation to update, modify or amend the data or to otherwise notify
a recipient thereof in the event that any matter stated herein changes or subsequently becomes
inaccurate.
Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether
in contract (including under an indemnity), in tort (including negligence), under a warranty,
under statute or otherwise, in respect of any loss or damage suffered by you as a result of
or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions,
or any course of action determined, by you or any third party, whether or not based on the
content, information or materials contained herein.
MSCI Index Data
Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced
or redisseminated in any form and may not be used as a basis for or a component of any financial
instruments or products or indices. None of the MSCI information is intended to constitute
investment advice or a recommendation to make (or refrain from making) any kind of investment
decision and may not be relied on as such.
Historical data and analysis should not be taken as an indication or guarantee of any future
performance analysis, forecast or prediction. The MSCI information is provided on an 'as is'
basis and the user of this information assumes the entire risk of any use made of this information.
MSCI, each of its affiliates and each other person involved in or related to compiling, computing
or creating any MSCI information (collectively, the 'MSCI Parties') expressly disclaims all
warranties (including, without limitation, any warranties of originality, accuracy, completeness,
timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect
to this information. Without limiting any of the foregoing, in no event shall any MSCI Party
have any liability for any direct, indirect, special, incidental, punitive, consequential
(including, without limitation, lost profits) or any other damages. (msci.com).
Pacific Horizon Investment Trust PLC (Pacific Horizon) aims to
achieve capital growth through investment in the Asia-Pacific
region (excluding Japan) and in the Indian subcontinent. The
Company has total assets of GBP610.6 million (before deduction of
loans of nil) at 31 July 2022.
Pacific Horizon is managed by Baillie Gifford & Co Limited,
the Edinburgh based fund management group.
Past performance is not a guide to future performance. Pacific
Horizon is a public listed c ompany and is not authorised or
regulated by the Financial Conduct Authority. The value of its
shares and any income from those shares can fall as well as rise
and you may not get back the amount invested. Pacific Horizon
invests in overseas securities, changes in the rates of exchange
may also cause the value of your investment (and any income it may
pay) to go down or up. Pacific Horizon invests in emerging markets
where difficulties in dealing, settlement and custody could arise,
resulting in a negative impact on the value of your investment.
Shareholders in Pacific Horizon have the right to vote every five
years, on whether to continue Pacific Horizon, or wind it up. If
the shareholders decide to wind the Company up, the assets will be
sold and you will receive a cash sum in relation to your
shareholding. The next vote will be held at the Annual General
Meeting in 2026. You can find up to date performance information
about Pacific Horizon on the Pacific Horizon page of the Managers'
website at pacifichorizon.co.uk .
Neither the contents of the Managers' website nor the contents
of any website accessible from hyperlinks on the Managers' website
(or any other website) is incorporated into, or forms part of, this
announcement.
16 September 2022
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
- ends -
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