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| Name | Symbol | Market | Type |
|---|---|---|---|
| Axs Astoria Inflation Sensitive ETF | AMEX:PPI | AMEX | Exchange Traded Fund |
| Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| -0.1808 | -1.18% | 15.1342 | 15.28 | 15.14 | 15.28 | 7,859 | 21:15:02 |
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Premium
RNS Number:0229K
Premier Pacific Income Fund PLC
14 April 2003
Premier Pacific Income Fund PLC
14 APRIL 2003
Semi-Annual Report (unaudited)
For the period from 31st July 2002 to 31st January 2003
Chairman's Review
Introduction
Geared investment funds have continued to face difficult times. Equity markets
have fallen, eroded their capital bases and resulted in loan covenants being in
danger of being broken. On top of this liquidity has disappeared from certain
sectors of the market. This has made it difficult for those who needed to raise
cash to do so and resulted in even greater market falls than might otherwise
have occurred.
Performance
Over the last six months the net asset value of the fund has fallen by 22.3%
from 45.3 pence to 35.2 pence. Dividends amounting to 2.0 pence have been paid
and, taking these into account, give a total return of -15.2%. For the same
period, the MSCI All Countries (Free) Asia Pacific ex Japan Index gave a total
return of -8.1%. This poor relative performance is accounted for by the
negative effect of gearing and the impact it has had on our high yield
portfolio. Further details are given in the Investment Manager's Review.
Income
In the annual report, I indicated that the board hoped to be able to maintain a
quarterly dividend of 1.0 pence subject to no deterioration in market
conditions. Regrettably as the Investment Manager's Review outlines markets
have got worse. In addition, falling markets have meant that part of the loan
has had to be repaid reducing the fund's ability to generate income. For the
present there are sufficient revenue reserves to allow the fund to maintain the
dividend at the current level but, in the absence of a market rally,
consideration will have to be given to reducing the quarterly dividend.
Loan and Loan Covenants
The annual report covered the repayment of #7.0 million of the original loan
between 1st August and 15th October 2002. During the remainder of the six month
period being reported on, a further #3.5 million was repaid reducing the loan
outstanding to #22.0 million. No costs were incurred in repaying the loans as
they have remained on a short-term rolling basis rather than being fixed for the
longer term as was originally proposed. The current rate of interest on the
loan is 4.581%, which compares favourably with the original assumption of 7.25%.
As at 31st January 2003, shareholders' funds were 67.6% of the amount of the
loan outstanding compared with the minimum permitted of 66.7%. Whilst the fund
is not in breach of its covenant, the position is monitored on a weekly basis to
ensure that no breach occurs. Due to further weakness in Asia Pacific equity
markets, #1.0 million of loan was repaid on 7th March, reducing the outstanding
loan to #21.0 million.
Outlook
Worldwide economic growth is fragile. The threat of war in the Middle East and
nuclear activity in the Far East do not help. Consumer confidence is at a low
ebb but there is little that is likely to improve it short-term. On top of
this, having come to terms with the accounting scandals, markets now have to
deal with the impact that equity bear markets have on pension and insurance
funds. Markets are very depressed and there is no obvious catalyst to rally
them near term.
Bond markets remain in favour and for good reasons in light of the performances
of the last six months, which the charts below show. However many quality
companies are now trading on earnings yields well in excess of long bond yields.
The risk premium would appear therefore to be much reduced. Consequently,
once the political issues subside, a recovery in equity markets should occur and
the fund is well positioned to benefit from this.
Investment Manager's Review
Over the six months to 31st January the Global Bond portfolio made a positive
return of 8.0% whist both the Asia Pacific ex Japan equity and High Yield
portfolios produced negative returns of 11.4% and 75.6% respectively. This
resulted in an overall negative return on gross assets of 9.3%. As a
consequence of the gearing the net asset value fell 22.3%. The MSCI AC (Free)
Asia Pacific ex Japan Index gave a negative total return of 8.2%.
Asia Pacific
Only India and New Zealand made positive returns in both local and sterling
terms, whilst Taiwan was the only other market to produce a positive local
return and none produced positive sterling returns only. The table below
details the returns.
Market returns, capital only Local Return Sterling Return
Australia (3.2) (0.6)
New Zealand 1.2 12.6
China 'B' (13.7) (18.0)
Hong Kong (9.8) (14.4)
India 8.8 5.3
Indonesia (16.2) (18.6)
Malaysia (7.9) (12.6)
Philippines (5.9) (14.8)
Singapore (14.4) (17.4)
South Korea (18.3) (22.5)
Taiwan 1.6 (6.6)
Thailand (1.6) (8.0)
MSCI AC (Free) Asia Pacific ex Japan($) (4.6) (9.3)
MSCI AC (Free) Asia ex Japan ($) (9.0) (13.5)
The portfolio's performance was hurt by being under weighted to Australia and
New Zealand and over weighted to Hong Kong and China. Over half of the under
performance is accounted for by the Australian under weighting, whilst half of
the remainder comes from the Hong Kong and China overweight. Poor stock
performances in Korea account for most of the balance with some of our strong
performing stocks of last year giving back much of their gains.
Global Bond
The portfolio modestly under performed primarily due to one or two credit risks
deteriorating. This is not a surprise given the weakness in equity markets and
the general concerns about the strength of many economies. The original
decision to hedge this portfolio against currency movements has proved very
beneficial given the weakness of the dollar in the last six months. Profits
were booked in January and new hedges established.
High Yield
These investments have not performed well. By their very nature they were
vulnerable to falling markets and leverage has taken its toll. Whilst those
with zero preference structures are able to keep going despite negative
shareholder equity, those with bank debt have found themselves using all
available income and asset realisations to pay off this debt. Consequently the
board's decision to write down the value of many holdings at the time of the
annual report has proved regrettably to be prudent. Nevertheless the capital
value of many others has fallen in line with market performances. However many
of these investments continue to pay dividends and consequently no further
write-offs are proposed at this time as the value of future dividends equates to
their current market value in a number of cases. The portfolio now represents
only 1.1% of gross assets.
Outlook
Asia Pacific ex Japan markets have been unable to avoid the turmoil that has
beset the major markets. Many have suffered more dramatic falls than the major
markets due to the impact of foreign selling and a lack of domestic buyers to
replace them. Thus they are now trading on very attractive long-term
valuations. However, without new investors to drive prices higher, they could
remain attractive for some time.
The possibility of war hangs over the world, as do concerns about events in
North Korea. Currently there is more worry in the west about North Korea than
on the peninsula itself, where it is believed that the new South Korean
president will improve diplomatic and economic ties with North Korea and broker
an acceptable solution. Thus events in the Middle East would appear to be more
important. Indeed high oil prices are already beginning to reduce economic
growth and have severely dented trade surpluses for both Korea and Taiwan.
Without an early resolution to the tensions and consequently a lower oil price,
the short-term outlook remains unexciting.
Domestic activity in many economies remains strong. In addition prudent
management last year will allow reflation to occur this year if world events
lead to lower growth in the developed economies. Thus the outlook for Asian
markets remains positive and we would expect better returns to emerge through
the second half of the year.
Capital returns from bonds will be more difficult to achieve going forward as
short-term interest rates are at historically low levels whilst inflation
remains modest and under control. Long bonds, however, face supply issues as
governments raise their issuance to fund budget deficits. In this scenario it
is difficult to see corporate bonds making much headway as spreads have already
narrowed. Emerging market debt remains one area where gains are possible
especially if economic stability can be re-established.
Premier Fund Managers Ltd, January 2003.
Balance Sheet as at 31st January 2003
2003 2002
Assets Notes # #
Investments at Value (cost: #53,316,040, 2 34,283,950 59,166,347
2002: #62,636,236)
Cash at bank 9 1,974,016 4,847,099
Security sales receivable 580,842 -
Unrealised gain on open forward foreign 489,746 350,592
currency contracts
Interest & dividends receivable 331,164 694,956
Other receivables 386,488 26,717
Total Assets 38,046,206 65,085,711
Liabilities
Term Loan 17 22,000,000 32,500,000
Security purchases payable 658,220 451,960
Distribution payable 422,414 975,776
Interest payable - 455,658
Management fees payable 3 31,985 53,616
Custodian fees payable 32,099 29,282
Administration fees payable 16,604 10,103
Other accrued expenses payable 14,098 34,724
Total Liabilities 23,175,420 34,511,119
Net Assets 14,870,786 30,574,592
Net Assets Consist of:
Capital (Par value and paid in surplus) 39,741,379 39,741,379
Capitalised expenses (6,520,421) (4,668,067)
Undistributed net investment income 868,758 625,612
Undistributed net realised loss from (2,888,101) (1,773,947)
investments and currency transactions
Unrealised loss from investments and (16,330,829) (3,350,385)
foreign currency transactions
Total Net Assets 14,870,786 30,574,592
Number of Shares in issue 42,241,379 42,241,379
Net Asset Value per share 0.3520 0.7238
Signed on behalf of the board.
Hugh Ward, Director Mike O'Shea, Director
26th March 2003
The accompanying notes form an integral part of the financial statements.
Profit and Loss Account
for the period ended 31st January 2003
2003 2002
Investment Income Notes # #
Income from securities 851,033 1,641,221
Bank interest earned 24,786 341,026
Non reclaimable withholding tax (19,595) (67,824)
856,224 1,914,423
Expenses
Interest paid 677,686 958,837
Management fees 3 206,787 318,181
Custodian fees 5 31,903 16,817
Administration fees 6 18,000 17,700
Directors fees 9,000 13,000
Audit fees 4,500 2,500
Other expenses 18,043 42,151
965,919 1,369,186
Expenses Charged to Capital
Interest paid (508,265) (958,837)
Management fees (155,090) (318,181)
302,564 92,168
Net Investment Income 553,660 1,822,255
Net realised and unrealised gain/(loss) on
investments:
Net realised loss from securities (1,108,637) (1,150,277)
transactions
Net realised gain from foreign 40,756 253,034
currency transactions
Net change in unrealised (depreciation) (3,119,124) 472,220
/appreciation of investments
Net change in unrealised appreciation 876,570 350,592
of foreign currency (3,310,435) (74,431)
Net (decrease)/increase in net assets (2,756,775) 1,747,824
resulting from operations
There are no recognised gains or losses for the period other than those set out
in the above profit and loss account. Net investment income arose solely from
continuing operations.
Signed on behalf of the board.
Hugh Ward, Director Mike O'Shea, Director
26th March 2003
The accompanying notes form an integral part of the financial statements.
Statement of Changes in Net Assets
for the period ended 31st January 2003
2003 2002
Operations: # #
Net investment income 553,660 1,822,255
Net realised loss on investments
and currency transactions (1,067,881) (897,243)
Change in unrealised net (depreciation)
/appreciation of investments and
currency transactions (2,242,554) 822,812
Net (decrease)/increase in net assets
resulting from operations (2,756,775) 1,747,824
Capital Share Transactions:
Shares issued - -
Capitalised expenses (663,355) (1,277,018)
Distributions (see note 12) (844,828) (1,951,552)
Net Decrease from
Capital Share Transactions (1,508,183) (3,228,570)
Net Decrease in Net Assets (4,264,958) (1,480,746)
Net Assets at the beginning of the period 19,135,744 32,055,338
Net Assets at the end of the period 14,870,786 30,574,592
Schedule of Investments
as at 31st January 2003
Mid-Mkt Total Net
Description Holding Value # Assets %
Bonds
Sterling
Smiths Industries 7.25% 30/06/16 650,000 737,588 4.96%
737,588 4.96%
US Dollar
Allied Waste North America
7.625% 01/01/06 250,000 152,476 1.03%
American Standard 7.375% 15/04/05 300,000 191,185 1.29%
Banco Itau 10% 15/08/11 250,000 144,111 0.97%
Brazil 10.25% 11/01/06 250,000 132,803 0.89%
British Sky Broadcasting
7.3% 15/10/06 250,000 158,332 1.06%
Celelosa Arauco Y Constitucion
6.75% 15/12/03 410,000 256,090 1.72%
Celelosa Arauco Y Constitucion
8.625% 15/08/10 500,000 343,343 2.31%
Chesapeake Energy
8.125% 01/04/11 175,000 111,258 0.75%
Chile 5.625% 23/07/07 250,000 160,256 1.08%
CIA Brasil De Bebidas
10.5% 15/12/11 250,000 138,534 0.93%
CIA de Telecom de Chile
7.625% 15/07/06 250,000 159,503 1.07%
Citizens Communications
8.5% 15/05/06 177,000 118,676 0.80%
Coca Cola 8.95% 01/11/06 500,000 345,258 2.32%
Comtel Brasileira 10.75% 26/09/04 500,000 283,811 1.91%
Dean Foods 6.75% 15/06/05 350,000 216,128 1.45%
Federal Express 6.72% 15/01/22 500,000 305,593 2.05%
Goldman Sachs 6.65% 15/05/09 600,000 403,705 2.71%
Gruma 7.625% 15/10/07 125,000 73,436 0.49%
Gruma 144A 7.625% 15/10/07 125,000 76,048 0.51%
Grupo Televisa 8% 13/09/11 850,000 528,761 3.56%
HQI Transelectric Chile
7.875% 15/04/11 1,000,000 663,213 4.47%
Hurricane Hydrocarbons
12% 04/08/06 250,000 155,898 1.05%
IBP Finance 7.45% 01/06/07 350,000 233,370 1.57%
Indiantown Cogeneration
9.26% 15/12/10 750,000 406,399 2.73%
Key Energy Services
8.375% 01/03/08 500,000 320,922 2.16%
McKesson 7.75% 01/02/12 500,000 350,935 2.36%
Mexico 10.375% 17/02/09 400,000 299,763 2.02%
MRS Logistica 10.625% 15/08/05 250,000 117,350 0.79%
National Rural Utilities 3% 15/02/06 250,000 152,014 1.02%
News America 8.5% 15/02/05 350,000 229,467 1.54%
Panama FRN 17/07/16 400,000 228,152 1.53%
Pemex Master Trust 8% 15/11/11 300,000 193,487 1.30%
Petronas Capital Ltd 7% 22/05/12 500,000 330,885 2.23%
Pulte Homes 8.125% 01/03/11 500,000 340,802 2.29%
Quebecor World 6.5% 01/08/27 325,000 203,791 1.37%
Raytheon 6.3% 15/03/05 250,000 161,793 1.09%
Royal Caribbean 8.125% 28/07/04 250,000 153,237 1.03%
Russian Federation Ministry
Step Up 31/03/30 1,000,000 498,874 3.36%
Sing Telecommunications
6.375% 01/12/11 500,000 328,679 2.21%
Sonat 6.875% 01/06/05 250,000 124,033 0.83%
Sprint Capital 6% 15/01/07 150,000 83,501 0.56%
Star Choice 13% 15/12/05 500,000 288,982 1.94%
Susa Partnership 8.2% 01/06/17 85,000 64,918 0.44%
Telefonos de Mexico
8.25% 26/01/06 250,000 166,545 1.12%
Tenaga Nasional Berhad
7.625% 01/04/11 250,000 167,347 1.13%
Tenet Healthcare 6.375% 01/12/11 500,000 288,982 1.94%
Terex 8.875% 01/04/08 250,000 139,928 0.94%
Time Warner 7.75% 15/06/05 600,000 386,476 2.61%
Transocean Sedco Forex
9.5% 15/12/08 250,000 190,029 1.28%
TXU 6.375% 15/06/06 250,000 147,665 0.99%
Tyco 6.375% 15/02/06 250,000 150,195 1.01%
Unibanco- Uniao de Banco
9.375% 30/04/12 250,000 122,392 0.82%
Unisys Corporation
7.875% 01/04/08 350,000 220,387 1.48%
Vale Overseas 8.625% 08/03/07 250,000 154,758 1.04%
Verizon 6.75% 01/12/05 250,000 167,815 1.13%
Vodafone 6.35% 01/06/05 250,000 163,740 1.10%
Waste Management
6.65% 15/05/05 200,000 129,758 0.87%
Watson Pharmaceutical
7.125% 15/05/08 400,000 253,090 1.70%
WMX Technologies 7% 15/10/06 300,000 194,700 1.31%
13,273,579 89.26%
TOTAL BONDS 14,011,167 94.22%
Australian Dollar
Alumina 90,000 151,498 1.02%
Amcor 150,000 442,671 2.98%
Brambles Industries 70,000 114,212 0.77%
Commonwealth Bank of Australia 80,000 739,515 4.96%
Lend Lease 150,000 484,397 3.26%
News Corporation 100,000 402,817 2.71%
Tabcorp 140,000 502,282 3.38%
WMC Limited 90,000 127,265 0.86%
2,964,657 19.94%
Hong Kong Dollar
Anhui Conch Cement H 1,200,000 273,778 1.84%
Cheung Kong 110,000 436,505 2.94%
China Mobile 150,000 214,986 1.45%
China Resources Land 2,870,000 202,592 1.36%
China Shipping Development 2,350,000 325,355 2.19%
CLP Holdings 300,000 734,755 4.94%
Giordano International 1,000,000 215,474 1.45%
Global Bio-Chem Technology 780,000 143,734 0.97%
Great Eagle 800,000 282,358 1.90%
Henderson Land Development 150,000 262,078 1.76%
Hong Kong & China Gas 1,210,000 922,558 6.20%
Hopewell Holdings 650,000 302,930 2.04%
HSBC 120,000 768,685 5.17%
Hutchinson Whampoa 125,000 477,259 3.21%
PCCW 101,200 49,532 0.33%
Swire Pacific 142,000 360,521 2.42%
Techtronic Industries 1,100,000 684,250 4.60%
6,657,350 44.77%
Indonesian Rupiah
Telekomunikasi Indonesia 1,500,000 345,945 2.33%
345,945 2.33%
Korean Won
Kookmin Bank 37,669 787,040 5.29%
KT Freetel 12,000 164,169 1.10%
Lg Home Shopping 6,850 260,464 1.75%
Samsung Fire & Marine 11,000 349,272 2.35%
Samsung Electro Mechanics 14,000 278,241 1.87%
Samsung Electronics 7,000 1,065,586 7.17%
Shinsegae Department Store 5,000 430,546 2.90%
3,335,318 22.43%
Singapore Dollar
DBS Group 60,000 215,125 1.45%
Digiland International 2,000,000 71,708 0.48%
Haw Par 180,000 215,965 1.45%
Keppel Land 605,000 221,150 1.49%
Singapore Dollar (Continued)
Singapore Airlines 55,000 185,174 1.25%
Singapore Telecom 350,000 160,994 1.08%
1,070,116 7.20%
Taiwan Dollars
China Development Financial 746,532 211,370 1.42%
CTCI Corporation 800,000 358,347 2.40%
Fareast Textile 1,092,535 322,744 2.17%
Gold Circuit Electronics 735,000 103,408 0.70%
Hon Hai Precision 103,500 216,382 1.46%
Ritek 625,000 191,205 1.29%
Sinopac Holdings 7,624,898 199,513 1.34%
United Micro Electronics 805,000 304,135 2.04%
Winbond Electronic GDR 500,000 133,241 0.90%
2,040,345 13.72%
Thai Baht
BEC World 55,000 170,552 1.15%
Siam Cement 25,000 498,925 3.35%
Siam Commercial Bank 400,000 192,742 1.29%
Thai Union Frozen Products 1,000,000 258,175 1.74%
1,120,394 7.53%
US Dollars
Hong Kong Land 970,000 817,333 5.49%
Ranbaxy Laboratories 80,000 731,277 4.91%
Winbond Electronic 63,631 164,526 1.11%
1,713,136 11.51%
TOTAL EQUITIES 19,247,261 129.43%
UNIT & INVESTMENT TRUSTS
Aberdeen Preferred Income Trust 675,000 0 0.00%
Aberdeen Preferred Income Trust-
Stepped Preferred Shares 1,500,000 0 0.00%
Aberdeen High Income Trust 1,724,580 0 0.00%
Asia Pacific Fund 3,040 16,978 0.11%
BFS Absolute Zero Return 470,000 27,025 0.18%
BFS Asian Assets Trust 266,045 27,935 0.19%
BFS Equity Income & Bond Trust 335,295 6,706 0.05%
BFS Managed Properties 250,000 31,250 0.21%
BFS Special Opportunities 100,000 12,500 0.08%
Britannic Global 650,000 0 0.00%
Central European Growth Fund 150,948 11,623 0.08%
East European Development 9,635 105,512 0.72%
Edinburgh Dragon Trust 150,000 76,875 0.52%
Edinburgh Pacific & Income Trust 470,000 5,311 0.04%
European Monthly Income Trust 155,000 1,938 0.01%
Exeter Enhanced - Preferred Shares 100,000 0 0.00%
Exeter Enhanced 647,750 0 0.00%
F&C Emerging Markets
Investment Trust 125,000 56,563 0.38%
F&C Latin American Trust 83,500 58,420 0.39%
Fidelity Asian Values 50,000 22,250 0.15%
Fleming Emerging Markets
Investment Trust 65,000 59,963 0.40%
Framlington Split 125,000 0 0.00%
Gartmore Distribution Trust 472,700 0 0.00%
Govett Asian Income & Growth 428,163 53,520 0.36%
Govett High Income Trust 1,500,000 22,500 0.15%
Indocam Himalayan Fund 7,590 36,018 0.24%
Invesco Asia Trust 157,000 60,053 0.40%
Investec High Income Trust 100,000 18,500 0.12%
Investec European Growth &
Income Trust 500,000 6,250 0.04%
Investment Trust of Investment Trusts 333,333 0 0.00%
Jersey Phoenix Trust 500,000 65,000 0.44%
Leggmason Investors
Income & Growth Redeemable 1,316,667 0 0.00%
Leveraged Income Fund 316,000 0 0.00%
Leveraged Income Fund
Unsec Sub 10% Loan Stock 956,562 0 0.00%
LMI Income & Growth Trust 1,323,600 0 0.00%
Morley Absolute Growth 66,000 7,920 0.05%
Murray Emerging Growth &
Income Trust 1,213,782 48,551 0.33%
Pacific Assets Trust 50,000 19,250 0.13%
Property Income & Growth 440,000 79,200 0.54%
Quarterly High Income Trust 440,000 0 0.00%
Taiwan Roc Fund 17,000 41,680 0.28%
Thai Euro Fund 10,200 46,231 0.31%
Investment Trust of Investment Trusts
Preferred Income Shares 1,250,000 0 0.00%
TOTAL UNIT & INVESTMENT TRUSTS 1,025,522 6.90%
TOTAL INVESTMENTS 34,283,950 230.55%
OTHER NET ASSETS 2,586,836 17.39%
LESS: TERM LOAN (22,000,000) (147.94%)
TOTAL NET ASSETS 14,870,786 100.00%
Significant Purchases and Sales
For the period ended 31st January 2003
Value
PURCHASES #
Coca Cola 8.95% 01/11/06 359,266
Grupo Televisa 8% 13/09/11 316,384
Comtel Brasileira 10.75% 26/09/04 315,340
Celelosa Arauco Y Constitucion 6.75% 15/12/03 266,285
Quebecor World 6.5% 01/08/27 213,918
WMX Technologies 7% 15/10/06 200,101
Telefonos de Mexico 8.25% 26/01/06 177,454
CIA de Telecom de Chile 7.625% 15/07/06 173,308
Tenaga Nasional Berhad 7.625% 01/04/11 170,700
HQI Transelectric Chile 7.875% 15/04/11 169,751
Verizon 6.75% 01/12/05 169,539
British Sky Broadcasting 7.3% 15/10/06 166,416
Vodafone 6.35% 01/06/05 165,955
Vale Overseas 8.625% 08/03/07 165,643
Raytheon 6.3% 15/03/05 165,003
Tyco 6.375% 15/02/06 160,265
Chile 5.625% 23/07/07 160,212
Royal Caribbean 8.125% 28/07/04 158,882
Gruma 7.625% 15/10/07 157,983
Banco Itau 10% 15/08/11 154,470
National Rural Utilities 3% 15/02/06 151,690
CIA Brasil De Bebidas 10.5% 15/12/11 150,078
TXU 6.375% 15/06/06 147,308
Brazil 10.25% 11/01/06 142,321
MRS Logistica 10.625% 15/08/05 134,257
Waste Management 6.65% 15/05/05 130,746
Unibanco- Uniao de Banco 9.375% 30/04/12 129,132
Sonat 6.875% 01/06/05 123,721
Citizens Communications 8.5% 15/05/06 97,504
Sprint Capital 6% 15/01/07 76,353
Dean Foods 6.75% 15/06/05 65,938
Allied Waste North America 7.625% 01/01/06 63,576
Value
Sales #
Israel Electric 8.25% 15/10/09 512,019
AT & T 6.375% 15/03/04 488,804
Endesa-Chile Overseas 8.5% 01/04/09 482,345
Pemex Master Trust 7.75% 02/08/07 362,505
Norske Skogindustrier 7.625% 15/10/11 358,344
Toronto Dominion Bank 6.45% 15/01/09 357,174
Centex Corp 7.5% 15/01/12 352,552
Grupo Televisa 8.625% 08/08/05 344,293
Colombia 10% 23/01/12 331,058
Philippines 9.375% 18/01/17 330,751
Ford Motor Credit 7.375% 01/02/11 314,123
TPSA Finance 7.75% 10/12/08 307,273
Safeway 7.5% 15/09/09 295,115
Malaysia 8.75% 01/06/09 280,973
Spieker Properties 7.35% 01/12/17 264,168
Dominician Republic 9.5% 27/09/06 255,659
SK Telecom 249,748
Santa Fe Gold 8.375% 01/07/05 246,821
CIA Brasil De Bebidas 10.5% 15/12/11 242,678
France Telecom 7.75% 01/03/11 234,037
Vestel Electronics 11.5% 14/05/07 215,284
Levi Strauss 11.625% 15/01/08 203,024
Vicap 11.375% 15/05/07 202,388
Grupo Elektra 12% 01/04/08 173,113
Kappa Beheer 10.625% 15/07/09 163,023
General Motors Accept Corp 6.875% 15/09/11 156,518
Thomas & Betts Corp 6.5% 15/01/06 153,039
Calpine 8.5% 15/02/11 127,560
Telus Corp 8% 01/06/11 126,166
Corp Durango 13.125% 01/08/06 106,501
CMS Energy 8.9% 15/07/08 90,809
Schroder Asia Pacific Fund 89,071
Notes to the Financial Statements
As at 31st January 2003
1. GENERAL
Premier Pacific Income Fund plc was incorporated on 8th June 2000 under the laws
of the Republic of Ireland as a closed ended investment company with variable
capital. The Company commenced trading on 20th July 2000 and is listed on the
Irish Stock Exchange and the London Stock Exchange. The accounts are denominated
in Sterling.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared on the basis of accounting principles
generally accepted in Ireland. The significant accounting policies adopted by
the Company are as follows:
i) Historical Cost Convention
The financial statements are prepared under the historical cost convention as
modified to include investments at valuation.
ii) Valuation of Investment Securities
Investments listed on recognised stock exchanges are carried at quoted
mid-market value; investments dealt in Over the Counter Markets are carried at
the last available price. Interest bearing securities are carried using prices
which exclude accrued income. However, if the valuation of any security is not
considered representative of the fair market value, the value will be determined
based on foreseeable sales prices determined prudently in good faith.
iii) Gains and Losses on Sales of Investments
The computation of realised gains and losses on sales of investments is made on
the basis of average cost. The net gain or loss (both realised and unrealised)
from trading financial assets is shown in the Profit & Loss Account.
iv) Investment Income
Interest on fixed income securities and bank interest on time deposits is
recognised on an accruals basis. Other bank interest is recognised on receipt.
Dividend income is credited to the profit and loss account on the dates on which
the relevant securities are listed as 'ex-dividend'.
v) Designated Currencies
The books of the Company are kept in Sterling.
Foreign currency assets and liabilities are translated into the base currency at
the exchange rate ruling at the period end. The resulting gain or loss arising
on translation of securities and other assets and liabilities is included in
unrealised gains and losses on securities and currencies.
vi) Financial Instruments
The Manager's policies and approach to managing the associated risks of
financial instruments are included in note 17. The Company has taken advantage
of the exemption allowed under FRS 13, "Derivatives and other Financial
Instruments", and excluded short-term debtors and creditors from disclosures
under financial instruments.
The unrealised gain or loss on open forward foreign exchange contracts is
calculated by reference to the difference between the contracted rate and the
rate to close out the contract. Realised gains or losses include net gains on
contracts, which have been settled or offset by other contracts.
vii) Basis of Presentation of Financial Statements
The format and certain wordings of the financial statements has been adapted
from those contained in the Companies (Amendment) Act 1986 and FRS 3 so that, in
the opinion of the Directors, they more appropriately reflect the nature of the
Company's business as an Investment Fund.
3. MANAGEMENT FEE
The Company has appointed as Manager, Premier Fund Managers Limited, a company
incorporated in the UK. The Manager, who is responsible to the Company and to
the Directors of the Company for the day to day management, is entitled to
receive an annual management fee of 1% per annum of the value of Net Asset Value
adjusted so as to add back the principal amount drawn down under the bank
facility and deduct investments in any fund managed by the Investment Manager or
any Associate. The fee is accrued daily and is paid monthly in arrears. The fee
for the period is disclosed in the Profit and Loss Account. At 31st January
2003, the total fees outstanding and due to the Manager were #31,985.
4. DIRECTORS' FEES AND EXPENSES
The Directors of the Company for the time being are entitled to such
remuneration as may be approved by the Company in general meeting and may be
reimbursed for all reasonable travel and other incidental expenses incurred in
connection with the business of the Company. The aggregate emoluments of all
directors in any twelve month period shall not exceed #75,000.
5. CUSTODIAN FEES
Custodian fees are 0.03% per annum of the net asset value. Sub-Custodian and
overseas transaction fees are charged on a transaction basis. The fees for the
period are disclosed separately in the Profit and Loss Account.
6. ADMINISTRATION FEES
Administration fees are 0.1% per annum of the net asset value and are subject to
a minimum charge of #15,000 per annum. The fees for the period are disclosed
separately in the Profit and Loss Account.
7. CAPITALISED EXPENSES
The initial organisation costs of the Company were included as capitalised in
the period 31st July 2001. With effect from 1st August 2002 there was a change
to the accounting basis in respect of capitalising fund management and interest
loan charges. Previously both were charged 100% to capital, but are now charged
75% to capital and 25% to income.
8. TAXATION
The Company is not liable to any Irish Taxes on income or on realised and
unrealised capital gains, nor to any Irish withholding tax on dividends
distributed by the Company.
Capital gains, dividends and interest received by the Company may be subject to
withholding taxes imposed by the country of origin and such taxes may not be
recoverable by the Company or its shareholders.
The Company is not a close company under the provisions of the Irish Corporation
Tax Act 1976.
9. CASH BALANCES
As at 31st January 2003, 13% of the net asset value was held in cash with JP
Morgan Bank (Ireland) plc, Dublin.
10. SHARE CAPITAL
The authorised share capital of the Company is 500,000,000,002 divided into 2
Subscriber Shares and 500,000,000,000 shares of no par value. On 20th July 2000,
there was an initial placing of 25,000,000 shares at 100p. An additional placing
of 17,241,379 shares was made on 5th July 2001 at a price of 85.5p. No shares
were redeemed during the year. The number of shares of no par value in issue at
31st January 2003 is noted at the foot of the Balance Sheet.
11. NET ASSET VALUE PER SHARE
The net asset value per share is determined by dividing the value of the net
assets by the total number of shares in issue at that time. The launch price per
share was 100p as at 20th July 2000 and 85.5p for the additional placing.
12. DISTRIBUTION POLICY
The directors intend to pay interim dividends quarterly in January, April, July
and October in each year. #844,828 was distributed during the period, which was
distributed as follows:
Ex Date Pay Date Amount Rate per
# Share
23rd Oct 2002 12th Nov 2002 422,414 1p
29th Jan 2003 20th Feb 2003 422,414 1p
13. EXCHANGE RATES
The principal exchange rates to Sterling at 31st January 2003 used in the
preparation of the Financial Statements were:
EUR 1.5312 USD 1.6437 DKK 11.388 SGD 2.8588
AUD 2.8040 HKD 12.8206 WON 1913.2669 THB 70.3011
TWD 57.0397 CAD 2.5175 IDR 14579.62
14. PURCHASES AND SALES OF TRANSFERABLE SECURITIES
2003 Total purchases of securities: #5,003,412
2003 Total sales of securities: #9,198,086
2002 Total purchase of securities: #20,248,632
2002 Total sales of securities: #9,266,515
15. SOFT COMMISSION AGREEMENTS
There are no agreements for the provision of any services by means of soft
commission.
16. RELATED PARTY TRANSACTIONS
The Manager is considered by the Directors to be a related party as defined by
FRS 8 "Related Party Transactions". Transactions and balances with the Manager
are disclosed in the Profit and Loss account and in Note 3, and have been
entered into in the ordinary course of business and on the terms set out in the
agreements with those parties described in the Prospectus.
17. RISK PROFILE
Risk profile of financial assets and financial liabilities
The Company's financial instruments comprise:
* Equity and non-equity shares and bonds that are held in accordance with the
Company's investment objectives which are set out at the beginning of the
Investment Review;
* Cash and liquid resources that arise directly from the Company's
operations.
In pursing their investment objectives the Company holds a number of financial
instruments. The main risks arising from financial instruments are interest rate
risk, credit risk, foreign currency risk and market price risk.
The Board reguarly reviews and agrees policies for managing each of these risks
and they are summarised below.
Interest Rate Risk
Bond and preference share yields (and as a consequence their prices) are
determined by market perception as to the appropriate level of yields given the
economic background. Key determinants include economic growth prospects,
inflation, Governments' fiscal positions, short-term interest rates and
international market comparisons.
Returns from bonds and preference shares are fixed; at the time of purchase, the
fixed coupon payments are known, as are the final redemption proceeds. This
means that if a bond is held until its redemption date, the total return
achieved is unaltered from its purchase date. However, over the life of a bond,
the yield (and hence market price) at any given time will depend on the market
environment at that time. Therefore, a bond sold before its redemption date is
likely to have a different price to its purchase level and a profit or loss may
be incurred.
The Company owns a substantial number of bonds and preference shares. Cash
balances or overdrafts incur interest at variable market rates. The interest
rate profile, based on redemption yields, of the financial assets of the Company
are as set out below:
Weighted Weighted
Average Average
Total Interest Rate Period
Currency # % Years
US Dollar 13,273,579 7.75% 7.18
Sterling 737,588 7.25% 13.42
Total 14,011,167
Included in the above total of US Dollar bonds is one security on which interest
is paid at a floating rate; the investment above being, Panama FRN 17/07/16 with
a value of #228,152. In addition to the above investments, the Company has the
following further financial assets. These comprise shares, on which no interest
is paid, and cash balances.
Currency Total
#
Australian Dollar 2,964,657
Hong Kong Dollar 6,657,350
Indonesian Rupiah 345,945
Korean Won 3,335,318
Singapore Dollar 1,070,116
Sterling 1,763,110
Taiwan Dollar 2,040,345
Thai Baht 1,120,394
US Dollar 14,986,715
Total 34,283,950
Cash Total
#
Australian Dollar 27
Danish Kroner 60
Euro (66)
Hong Kong Dollar 134
Singapore Dollar 19
Sterling 100,466
Taiwan Dollar 147,484
Thai Baht 44
US Dollar 1,725,848
Total 1,974,016
Market Price Risk
Market price risk arises mainly from the uncertainty about future prices of
financial instruments held. It represents the potential loss the Company may
suffer through holding market positions in the face of price movements. To
mitigate the risk the Manager's investment strategy is to select investments for
their fundamental value. Stock selection is therefore based on disciplined
accounting, market and sector analysis, with the emphasis on long-term
investments. Monthly asset allocation committees are also held to aid the
Investment Adviser determine the weightings to be given to certain sectors or
markets within the Company's portfolio.
Liquidity Risk
The Company's assets comprise mainly readily realisable securities. The main
liquidity exposure is the redemption of its shares by shareholders.
Foreign Currency Risk
The Company has mitigated the foreign currency risk inherent in the above
investments by entering into forward foreign currency contracts. The amounts
outstanding at period-end are as follows:
Bought Sold
# #
Bought Sterling 15,000,000 15,000,000 15,000,000
Sold US Dollar 23,712,711 23,712,711 14,426,424
15,000,000 14,426,424
Loan Disclosure
Financial Liabilities
The interest rate profile of the Company's financial liabilities other than
short term creditors such as trade creditors and accruals as at 31st January
2003 was:
2003 2002
# #
Floating Rate Term Loan 22,000,000 32,500,000
The repayment date of the term loan is 31st July 2007. Early repayment is
permitted but any loan repaid may not be drawn down again.
Fair values of financial assets and financial liabilities
All financial assets are held at fair value.
All risks are mitigated by adherence to the investment restrictions set out in
the Prospectus which are monitored constantly by the Manager.
18. APPROVAL OF THE FINANCIAL STATEMENTS
The Financial Statements were approved by the Directors on 26th March 2003.
This note does not form part of the Financial Statements.
Risk Factors
Investors attention is drawn to the following risk factors that were contained
in the prospectus relating to the issue of shares in July 2001.
Investment in the Pacific Basin ex Japan Equities, Global Fixed Interest
Investments and Investment Trust Investments carries greater risks than
investment in ordinary shares in U.K. or Irish companies. In particular, but not
exclusively, Pacific Basin investments are subject to political, economic,
currency and stock market risks that are greater than in the U.K. and Ireland
due to the less developed nature of Pacific Basin countries (excluding Japan);
the less well regulated economies and markets; dependency on commodity prices,
International Monetary Fund ("IMF") and development agency funding; foreign
capital investment and trade. Additionally, corporate governance in certain
markets is weak, the rules of law governing company reporting and management are
very different to those applying in the U.K. and Ireland and minority
shareholders can be disadvantaged.
The Global Fixed Interest Investments provide investors with higher annual
returns on account of their lower credit rating. This lower credit rating arises
from a number of risk factors. In the case of a country it relates to the
country's economic growth prospects, balance of payments, foreign currency
reserves, drawing facilities with the World Bank or IMF, outstanding local debt,
outstanding foreign currency debt, budget surplus/deficit and risk of default.
In the case of companies, it includes their country of incorporation, the debt's
ranking as a creditor, the industry or sector in which the company predominantly
operates, whether it is secured or unsecured and the degree to which the
interest costs are covered by the companies' earnings. Other factors that can
affect bond yields are marketability and tax treatment.
Split capital and geared investment trusts have capital structures which highly
influence the returns that investors will receive from holding a particular
class of share. In particular, returns are influenced by the level, derivation
and allocation of interest and dividends; the level and allocation of
management, administration and interest expenses; currency movements; and the
return on the invested capital. Falls in market values are a particular risk
since they affect both capital returns and the cover on debt, which is likely to
be subject to covenants.
In certain circumstances, including breach of financial covenants, the Bank
Facilities may be repayable prior to the date on which it would otherwise fall
due for repayment. In such circumstances, assets of the Company may have to be
sold at depressed prices to repay borrowings. In addition, termination costs may
be incurred under any related interest rate swap agreement.
The market prices of the Global Fixed Interest Investments and, to a lesser
extent, the Investment Trust Investments and the Pacific Basin ex Japan Equities
may be affected by changes in interest rates.
Shareholders should recognise that the market value of the Shares can fluctuate
and may not always reflect their underlying value. Investors should also note
that income derived from the Shares might also fluctuate. The performance of the
Company's underlying investments and the dividends and interest paid by
constituent investee companies in any future period may not reflect their past
rates of return.
The investments of the Company are subject to normal market fluctuations and
other risks inherent in investing in securities and there can be no assurance
that any appreciation in value will occur. The value of investments and the
income from them, and therefore, the value of the Shares, can fall as well as
rise and investors may not realise the full amount of their investment in the
Shares.
Investors should also be aware that any default by an issuer of any debt
securities held by the Company or the insolvency of a counterparty will
adversely affect the ability of the Company to pay dividends and may adversely
affect the amount available for distribution to Shareholders on the Winding-Up
Date or the Extended Winding-Up Date as the case may be. Although the Directors
have appointed market makers to facilitate transfer of Shares, they do not
guarantee that an active secondary market will exist in the Shares.
The use of gearing in the form of the Bank Facilities will lead to greater
volatility in the Net Asset Value of the Shares in that a relatively small
movement in underlying assets will result in a magnified movement, in the same
direction, in the Net Asset Value per Share. The gearing effect will be
increased by the Company's investment in geared shares of other investment
entities.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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