REG - Aberdeen Stand. Asia - Half-year Report
ABERDEEN STANDARD ASIA FOCUS PLC
Legal Entity Identifier (LEI): 5493000FBZP1J92OQY70
ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS
for the six months ended 31 January 2020
INTERIM BOARD REPORT
Background
Since the period under review, which was for the six months ended 31 January 2020, the pandemic caused by the coronavirus ("Covid-19") has swept around the globe upending the commercial world in which your Company operates. This Statement should, therefore, be read in two parts. The first is a commentary on the period under review and the second, under "Outlook", an attempt to summarise where your Board, with very considerable input from Hugh Young and the team at Aberdeen Standard Investments Asia, sees the future, both for the region and for the portfolio of investments that the Company holds.
Some of you will have seen on the Company's website www.asia-focus.co.uk that we have recently introduced a podcast. The first was published on 13 March 2020 and featured Hugh Young discussing the current crisis, commenting on the fact that companies continue to operate and stressing once again that the principle that we have espoused for the last 25 years, of only investing in companies with good prospects, excellent management and strong balance sheets, should see us weather this storm and emerge strongly at the other end. We intend to publish a podcast on a regular basis. I would strongly recommend that shareholders who wish to be kept abreast of the Company's progress access them via the internet.
Even before the onset of the virus, global stock markets, Asia included, had a rollercoaster ride for the half year to 31 January 2020. Markets began on the back foot as US-China trade friction compounded worries about slowing global growth. Optimism returned after both sides resumed talks and reached a partial pact eventually. This was further helped by monetary policy easing worldwide, while we saw additional stimulus in Asia to shore up growth. However, sentiment soured again after the viral outbreak in Wuhan, China, which, as we know, spread across the region, before going wider.
Against this challenging backdrop, over the six month period to 31 January 2020 your Company's net asset value and share price fell by 8.3% and 6.2% respectively, compared to the MSCI Asia (ex-Japan) Smaller Companies Index decline of 6.8%.
With continued focus on investing in quality companies, we saw this as a temporary dip. The portfolio is concentrated in financially robust companies which are often leaders within their sectors. Hugh Young and the team in Asia believe that these companies should be more resilient and better-positioned to ride through these difficult times. This remains evident in the Company's track record of delivering value to shareholders over several cycles. Notably, over the past 10 years to 31 January 2020, the Company's NAV total return was 210.8% compared to the return of 74.5% of the MSCI Asia (ex-Japan) Smaller Companies Index.
Overview for the period under review
Shares of Asian smaller companies fell more than their large-cap peers, in volatile trading, over the review period. Mounting recessionary fears hurt smaller companies in view of their greater domestic focus and the perception that they are higher risk. This was cast against slowing global trade, as China and the US continued to bicker. In particular, consumer demand suffered, while companies deferred their investment and expansion plans. Slowing consumption, coupled with benign inflation, allowed policymakers to lower interest rates, while governments attempted to pump prime their economies. After a prolonged lag, shares of Asian smaller companies rose in December. This proved short-lived, however, as the Covid-19 outbreak in Wuhan spread rapidly across Asia. Investors braced themselves for the worst, as the epidemic threatened to derail the nascent global growth recovery. Appetite for riskier assets waned, while oil and metal prices declined on worries about the impact on demand for such commodities.
What we have done in the portfolio and how it has performed
Although India faces the challenges of financial sector woes and softening growth, interest rate and corporate tax rate cuts have been supporting the corporate sector and the country remains home to some of the best-quality companies in the region. As a result, your Manager took the opportunity to invest in the initial public offering of Affle India, in which your Company participated as a cornerstone investor. The stock more than doubled in value until the virus spread to India. Affle is a consumer technology business, operating a data platform that helps direct digital advertising. It is a dominant player in India and is also well-placed to grow profitably in other emerging markets. Notably, the company has filed for new patents in the US and Singapore and continues to evolve the business to help support clients via several channels, be they online or offline. Other Indian holdings fared well too, such as property developer Prestige Estates after its successful fund raise and expectations over a potential REIT listing, and agri-business Godrej Agrovet which was boosted by good quarterly results.
Your Company's holdings within the technology sector were also resilient despite the present challenges. Thai electric component maker Hana Microelectronics and Singapore chip-making equipment maker AEM Holdings were among the top performers. Both continued to track semiconductor stocks higher on growing optimism about prospects for a demand recovery. Meanwhile, Korea's software company Douzone Bizon advanced amid positive trends such as cloud migration and cybersecurity. Similarly, the largest online retailer in Taiwan, momo.com also rose. Where possible, your Manager took profits from shares that have done well, reinvesting the proceeds in other high-conviction stocks at compelling valuations. Given the digital transformations that are leading the way into the next decade, your Manager has been diligent in seeking out these niche companies, pleasingly with some success. Notably, this included Korea's Koh Young Technology. A global leader in 3D inspection for circuit boards, Koh Young is set to benefit from the growing penetration of its 3D-testing technology. Its potential is further underpinned by the increasing complexity of chip-making, driven by structural trends, such as 5G telecommunications, vehicle electrification, and artificial intelligence. In addition, the company is dominant in its niche market, has a broad customer base, and is highly profitable, with a net-cash balance sheet.
In contrast, your Company's holdings in Thailand were hurt by sluggish domestic conditions, weaker than expected economic data and concerns over the Covid-19 outbreak. That said, some of these companies, such as Aeon Thana and Tisco Financial, were among the better performers earlier in the review period and your Manager capitalised on the gains. The subsequent weakening in the stock market enabled your Manager to add to those that looked particularly compelling, such as Mega Lifesciences. Your Manager also participated in the public offering of bio-waste energy producer Absolute Clean Energy. The company has a good track record in operating 13 power plants, with 20 more in the pipeline. The conducive regulatory backdrop supports its ambitious growth plans, and your Manager was impressed by management's focus and technical know-how.
At the same time, your Manager continued to exit both smaller holdings at the tail-end of the portfolio that had a dimmer growth outlook, and more sizeable positions where valuations appeared full. To this end, your Manager completed the divestment of Sri Lankan conglomerate Aitken Spence and also sold Asia Satellite Telecom after accepting a takeover offer to take the company private. Other sales included Australian software developer Citadel Group and automobile parts and accessories manufacturer ARB Corp, as well as retailer Giordano and South India's Ramco Cements.
How businesses have been faring over recent months
With everything changing rapidly since the end of the review period, it is important to keep our shareholders as well informed as possible. We will be giving regular updates on our website www.asia-focus.co.uk. At the time of writing there is considerable stress across businesses worldwide. It has notably affected the hotel, restaurant and entertainment sectors, where much traffic has ceased. We have various holdings in the hotel sector notably in New Zealand via CDL Investments and Millennium & Copthorne, as well as in Malaysia via Shangri-la. Thankfully these companies are well established, with strong parentage and not in an investment phase; so whilst the pain on the profit and loss account will be felt sharply, the balance sheets should be resilient. Your Company also owns shares in Lemon Tree in India, a more nascent hotel chain undergoing rapid expansion with consequently more leverage. Given the uncertain environment and the difficulty in predicting how long Covid-19 may impact travel in India, we have decided to reduce the position.
The strain obviously goes deep and no business is unaffected. Banks, financial institutions and landlords face the prospect of higher bad debts. Our holdings in these sectors will not escape unscathed but again are typically the strongest and most conservative in their peer group. On a brighter note, albeit within a very dark cloud, the falling price of energy is a benefit to most of the economies in which we invest. It has of course fallen in large part because of the recessionary impact of Covid-19 but will be a welcome mitigating factor. It is worth stressing that within the portfolio we have minimal exposure to energy.
Electronic Communications for Registered Shareholders
The Board is moving to more electronic-based forms of communication with its registered shareholders. Increased use of electronic communications should be a more cost-effective, faster and more environmentally friendly way of providing information to shareholders. Registered shareholders will therefore find enclosed with this Half Yearly Report a letter containing our electronic communications proposals and an opportunity to supply an email address to the Registrars. Registered shareholders who wish to continue to receive hard copies of documents and communications by post are encouraged to send back their replies as soon as possible but in any event by 31 July 2020. Shareholders are free to amend their mailing preferences at any time in the future simply by contacting the Company's registrar.
Shareholders who hold their shares through the Aberdeen Standard Investment Trust Share Plan, ISA and Children's Plan (Planholders) will continue to receive all documentation by post in hard copy for the time being. The Plan Manager is currently assessing how to adopt more electronically based communications within these savings plans and Planholders will be contacted directly with more detail in due course.
Share Capital Management and Gearing
During the period 918,256 Ordinary shares were purchased in the market at a discount to the prevailing ex-income NAV and transferred to treasury. After the period end a further 292,500 Ordinary shares have been purchased into treasury. Your Board continues to use share buy backs in periods of market uncertainty to both reduce the volatility of any discount and to modestly enhance the NAV for shareholders. Conversely, in times of market optimism, shares have been issued to the market at a premium to NAV.
The Company's net gearing at 31 January 2020 was 11.3%. The majority of the gearing is provided by the Convertible Unsecured Loan Stock redeemable in 2025, of which approximately £36.7m million remains outstanding. The Company also has a three-year multicurrency revolving loan facility and a term loan facility in an aggregate amount of $25 million with The Royal Bank of Scotland International Limited ("RBSI"). Under the term loan facility $12.5 million has been drawn down and fixed until June 2020 at an all-in rate of 2.506%. A further $10 million has been drawn down under the $12.5m revolving credit facility. In the current volatile market conditions, the Board and Manager are monitoring the level of gearing closely. On 25 March 2020 the Company announced that it had amended its loan facility to reduce the Company's minimum Net Asset Value covenant from £300m to £250m with immediate effect. At 3 April 2020, the latest practicable date, the net gearing stood at 15.8%.
Outlook
With events unfolding rapidly, it is more difficult than ever to make firm predictions. Governments across the world are now focusing on the health and safety of their citizens, while also introducing a variety of measures to mitigate the economic fallout. Typically, such measures have so far been a combination of a further lowering of interest rates, which we have seen across many countries, and targeted relief to particularly affected sectors. Clearly, as what short-term evidence is available demonstrates, economies have slowed dramatically as end demand has fallen sharply. Restrictions on travel and public assembly have notably hit tourism, consumption and retail. Although the consequences are often felt most acutely by small and medium enterprises (SMEs), the companies in which we invest are not in as precarious a position as SMEs in general, being to a large extent helped by their strong balance sheets and industry-leading positions.
Although it is impossible to predict timelines, the case of China does suggest how countries can tackle the problem and start to normalise. Rigorous measures imposed early on appear now to mean that daily life in China is returning to normal, with restaurants and factories reopening. Clearly, international travel restrictions still apply, and these are likely to apply for a while, to prevent re-importation of the virus. With other Asian countries taking similar measures, notably Singapore and South Korea, we see this as being the pattern emerging across the region as the year progresses.
Despite having seen stock markets fall rapidly and precipitately, we maintain our long-term confidence in the companies we hold. Their balance sheets are resilient and the services or products they furnish are the future in what is the world's most dynamic region. We believe that the structural argument for investment in smaller companies in Asia is as strong as ever.
At close on 3 April 2020, the latest practicable date, the net asset value per Ordinary share was 891.5p and the share price was 752.0p, representing falls of 24.1% and 29.1% respectively since the period end.
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Company are set out in detail on pages 8 and 9 of the Annual Report and Financial Statements for the year ended 31 July 2019 and these have not changed. They can be summarised under the following headings:
- Investment Strategy and Objectives;
- Investment Portfolio and Investment Management Risks;
- Financial Obligations;
- Financial and Regulatory;
- Operational;
- Investment in Unlisted Securities; and
- Market and F/X Risks.
Although the uncertainty surrounding Brexit has temporarily abated there may remain potential issues surrounding the certainty and/or timing of future withholding tax repayments following the expiry of transitional arrangements in January 2021.
The Board notes that there are a number of contingent risks stemming from the Covid-19 pandemic that may impact the operation of the Company. These include investment risks surrounding the companies in the portfolio such as employee absence, reduced demand, reduced turnover and supply chain breakdowns. The Manager will continue to review carefully the composition of the Company's portfolio and to be pro-active in taking investment decisions where necessary. Operationally, Covid-19 is also affecting the suppliers of services to the Company including the Manager and other key third parties. To date these services have continued to be supplied seamlessly and the Board will continue to monitor arrangements in the form of regular updates from the Manager.
In all other respects, the Company's principal risks and uncertainties have not changed materially since the date of the 2019 Annual Report.
Going Concern
The Company's assets consist of a diverse portfolio of listed equities which in most circumstances are realisable within a short timescale. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the next 12 months. Accordingly, we continue to adopt the going concern basis in preparing the financial statements.
The Company has a USD$25 million loan facility with RBSI which is due to mature in June 2020. At the time of writing, $22.5m (£18.2m) remains drawn down under the loan. In advance of the maturity the Directors will review options to replace the facility. At this stage, it is too early to confirm that the facility will be renewed. If acceptable terms are available, the Company expects to continue to access a similarly sized level of gearing. Should the Board decide not to replace the facility, any maturing debt would be repaid through the proceeds of equity sales. Based upon the latest liquidity analysis of the portfolio the loans can be repaid in full subject to usual exchange settlement timeframes.
The Directors have carefully considered the financial position of the Company with particular attention to the economic and social impacts of the Covid-19 pandemic. As indicated above and in the Chairman's Statement, Covid-19 presents significant challenges to all of the countries within the investment region as well as the rest of the world. It is too early to be able to assess the longer term impacts on the individual companies in the portfolio, however, the Board takes comfort from the resilience of the balance sheets of those companies.
Directors' Responsibility Statement
The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);
- the Interim Board Report (constituting the interim management report) includes a fair review of the information required by rule 4.2.7R of the UK Listing Authority Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related-party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).
Nigel Cayzer,
Chairman
7 April 2020
FINANCIAL HIGHLIGHTS
31 January 2020
31 July 2019
% change
Total assets{A}
£439,893,000
£496,916,000
-11.5
Net asset value per Ordinary share
1,173.81p
1,300.56p
-9.7
Share price per Ordinary share (mid)
1,060.00p
1,150.00p
-7.8
Discount to net asset value per Ordinary share{B}
9.7%
11.6%
Net gearing{B}
11.3%
9.9%
Ongoing charges ratio{B}
1.14%
1.16%
{A} Total assets less current liabilities (excluding prior charges such as bank loans) as per the Statement of Financial Position.
{B} Considered to be an Alternative Performance Measure as defined below.
PERFORMANCE
Net asset value total return per Ordinary share{A}
Share price total return per Ordinary share{A}
MSCI AC Asia Pacific ex Japan Index total return
Six months ended 31 January 2020
Six months ended 31 January 2020
Six months ended 31 January 2020
-8.3%
-6.2%
-3.7%
Year ended 31 July 2019
+7.1%
Year ended 31 July 2019
+11.4%
Year ended 31 July 2019
+5.7%
MSCI AC Asia Pacific ex Japan Small Cap Index total return
Discount to net asset value{A}
Ongoing charges ratio{A}
Six months ended 31 January 2020
As at 31 January 2020
As at 31 January 2020
-6.8%
9.7%
1.14%
Year ended 31 July 2019
-0.5%
As at 31 July 2019
11.6%
As at 31 July 2019
1.16%
{A} Considered to be an Alternative Performance Measure as defined below.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months ended
Six months ended
31 January 2020
31 January 2019
Revenue
Capital
Total
Revenue
Capital
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
Losses on investments
-
(38,530)
(38,530)
-
(21,136)
(21,136)
Income
2
4,441
-
4,441
4,912
-
4,912
Exchange gains/(losses)
-
864
864
-
(91)
(91)
Investment management fees
(1,715)
-
(1,715)
(1,941)
-
(1,941)
Administrative expenses
(576)
-
(576)
(539)
-
(539)
______
______
______
______
______
______
Net return/(loss) before finance costs and taxation
2,150
(37,666)
(35,516)
2,432
(21,227)
(18,795)
Finance costs
(792)
-
(792)
(776)
-
(776)
______
______
______
______
______
______
Net return/(loss) before taxation
1,358
(37,666)
(36,308)
1,656
(21,227)
(19,571)
Taxation
3
(229)
(980)
(1,209)
(249)
(529)
(778)
______
______
______
______
______
______
Return/(loss) attributable to equity shareholders
1,129
(38,646)
(37,517)
1,407
(21,756)
(20,349)
______
______
______
______
______
______
Return/(loss) per share (pence)
4
Basic
3.37
(115.48)
(112.11)
4.05
(62.67)
(58.62)
______
______
______
______
______
______
Diluted
n/a
n/a
n/a
n/a
n/a
n/a
______
______
______
______
______
______
The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company.
There is no other comprehensive income and therefore the return attributable to equity shareholders is also the total comprehensive income for the period.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the condensed financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at
As at
31 January 2020
31 July 2019
Notes
£'000
£'000
Non-current assets
Investments at fair value through profit or loss
432,899
484,709
_________
_________
Current assets
Debtors and prepayments
991
3,617
Cash and short-term deposits
8,138
10,239
_________
_________
9,129
13,856
_________
_________
Creditors: amounts falling due within one year
Bank loans
6
(17,064)
(20,407)
Other creditors
(2,135)
(1,649)
_________
_________
(19,199)
(22,056)
_________
_________
Net current liabilities
(10,070)
(8,200)
_________
_________
Total assets less current liabilities
422,829
476,509
Non-current liabilities
2.25% Convertible Unsecured Loan Stock 2025
7
(35,385)
(35,499)
_________
_________
Net assets
387,444
441,010
_________
_________
Capital and reserves
Called-up share capital
8
10,434
10,430
Capital redemption reserve
2,062
2,062
Share premium account
60,365
60,130
Equity component of 2.25% Convertible Unsecured Loan Stock 2025
7
1,057
1,057
Capital reserve
9
303,214
351,781
Revenue reserve
10,312
15,550
_________
_________
Equity shareholders' funds
387,444
441,010
_________
_________
Net asset value per share (pence)
Basic
10
1,173.81
1,300.56
_________
_________
Diluted
10
n/a
n/a
_________
_________
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Six months ended 31 January 2020
Capital
Share
Equity
Share
redemption
premium
component
Capital
Revenue
capital
reserve
account
CULS 2025
reserve
reserve
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 July 2019
10,430
2,062
60,130
1,057
351,781
15,550
441,010
Purchase of own shares to treasury
-
-
-
-
(9,913)
-
(9,913)
Conversion of 2.25% Convertible Unsecured Loan Stock 2025 (note 7)
4
-
235
-
-
-
239
Issue costs of 2.25% Convertible Unsecured Loan Stock 2025
-
-
-
(8)
-
(8)
(Loss)/return after taxation
-
-
-
-
(38,646)
1,129
(37,517)
Dividends paid (note 5)
-
-
-
-
-
(6,367)
(6,367)
_____
_____
_____
_____
_____
_____
_____
Balance at 31 January 2020
10,434
2,062
60,365
1,057
303,214
10,312
387,444
_____
_____
_____
_____
_____
_____
_____
Six months ended 31 January 2019
Capital
Share
Equity
Share
redemption
premium
component
Capital
Revenue
capital
reserve
account
CULS 2025
reserve
reserve
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 July 2018
10,429
2,062
60,076
1,054
346,123
13,962
433,706
Purchase of own shares to treasury
-
-
-
-
(6,817)
-
(6,817)
Conversion of 2.25% Convertible Unsecured Loan Stock 2025 (note 7)
-
-
34
-
-
-
34
Issue costs of 2.25% Convertible Unsecured Loan Stock 2025
-
-
-
(17)
-
(17)
(Loss)/return after taxation
-
-
-
-
(21,756)
1,407
(20,349)
Dividends paid (note 5)
-
-
-
-
-
(5,879)
(5,879)
_____
_____
_____
_____
_____
_____
_____
Balance at 31 January 2019
10,429
2,062
60,110
1,054
317,533
9,490
400,678
_____
_____
_____
_____
_____
_____
_____
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
31 January 2020
31 January 2019
£'000
£'000
Operating activities
Net loss before finance costs and taxation
(35,516)
(18,795)
Adjustments for:
Dividend income
(4,421)
(4,884)
Interest income
(19)
(25)
Other income
(1)
(3)
Dividends received
5,141
5,371
Interest received
20
22
Other income received
1
3
Interest paid
(668)
(673)
Losses on investments
38,530
21,136
Currency (gains)/losses
(864)
91
Increase in prepayments
(24)
(15)
(Increase)/decrease in other debtors
(8)
52
Decrease in accruals
(1)
(124)
Stock dividends included in investment income
(160)
(152)
Withholding tax suffered
(272)
(288)
__________
__________
Net cash flow from operating activities
1,738
1,716
Investing activities
Purchases of investments
(38,145)
(79,021)
Sales of investments
53,129
93,708
Capital Gains Tax on sales
(44)
(339)
__________
__________
Net cash flow from investing activities
14,940
14,348
Financing activities
Purchase of own shares to treasury
(9,999)
(6,817)
Issue costs refunded/(paid) on 2.25% Convertible Unsecured Loan Stock 2025
65
(17)
(Repayment)/drawdown of loan
(2,037)
1,966
Equity dividends paid
(6,367)
(5,883)
__________
__________
Net cash flow used in financing activities
(18,338)
(10,751)
__________
__________
Increase in cash and cash equivalents
(1,660)
5,313
__________
__________
Analysis of changes in cash and cash equivalents during the period
Opening balance
10,239
9,398
Increase in cash and cash equivalents as above
(1,660)
5,313
Effect of exchange rate fluctuations on cash held
(441)
(204)
__________
__________
Closing balance
8,138
14,507
__________
__________
Notes to the Financial Statements
For the period ended 31 January 2020
1.
Accounting policies
Basis of accounting. The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice (SORP) for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts', issued in October 2019 (The AIC SORP). They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.
The interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements.
2.
Income
Six months ended
Six months ended
31 January 2020
31 January 2019
£'000
£'000
Income from investments
Overseas dividends
4,162
4,407
Overseas interest
15
192
REIT income
-
49
Stock dividends
160
152
UK dividend income
84
84
__________
__________
4,421
4,884
__________
__________
Other income
Other income
1
3
Deposit interest
19
25
__________
__________
20
28
__________
__________
Total income
4,441
4,912
__________
__________
3.
Taxation. The taxation charge for the period within revenue represents withholding tax suffered on overseas dividend income. The taxation charge for the period within capital represents capital gains tax on Indian equity sales.
4.
Return/(loss) per Ordinary share
Six months ended
Six months ended
31 January 2020
31 January 2019
p
p
Basic
Revenue return
3.37
4.05
Capital loss
(115.48)
(62.67)
__________
__________
Total return
(112.11)
(58.62)
__________
__________
The figures above are based on the following:
Six months ended
Six months ended
31 January 2020
31 January 2019
£'000
£'000
Revenue return
1,129
1,407
Capital loss
(38,646)
(21,756)
__________
__________
Total return
(37,517)
(20,349)
__________
__________
Weighted average number of shares in issue{A}
33,466,971
34,715,441
__________
__________
Six months ended
Six months ended
31 January 2020
31 January 2019
Diluted{B}
p
p
Revenue return
n/a
n/a
Capital return
n/a
n/a
__________
__________
Total return
n/a
n/a
__________
__________
The figures above are based on the following:
£'000
£'000
Revenue return
1,123
1,965
Capital loss
(37,709)
(21,756)
__________
__________
Total return
(36,586)
(19,791)
__________
__________
Number of dilutive shares
2,517,515
2,524,983
__________
__________
Diluted shares in issue{AB}
35,984,486
37,240,424
__________
__________
{A} Calculated excluding shares held in treasury.
{B} The calculation of the diluted total, revenue and capital returns per Ordinary share is carried out in accordance with IAS 33, "Earnings per Share". For the purpose of calculating total, revenue and capital returns per Ordinary share, the number of Ordinary shares used is the weighted average number used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all 2.25% Convertible Unsecured Loan Stock 2025 (CULS). The calculations indicate that the exercise of CULS would result in an increase in the weighted average number of Ordinary shares of 2,517,515 (31 January 2019 - 2,524,983) to 35,984,486 (31 January 2019 - 37,240,424) Ordinary shares.
For the six months ended 31 January 2020 the assumed conversion for potential Ordinary shares was dilutive to the revenue return per Ordinary share (31 January 2019 - non-dilutive) and non-dilutive to the capital return per Ordinary share (31 January 2019 - no difference). Where dilution occurs, the net returns are adjusted for items relating to the CULS. Accrued CULS finance costs for the period and unamortised issue expenses are added back. Total earnings for the period are tested for dilution. Once dilution has been determined individual revenue and capital earnings are adjusted.
5.
Dividends
Six months ended
Six months ended
31 January 2020
31 January 2019
£'000
£'000
Final dividend for 2019 - 14.00p (2018 - 13.00p)
4,691
4,499
Special dividend for 2019 - 5.00p (2018 - 4.00p)
1,676
1,384
Overpaid dividends
-
(4)
__________
__________
6,367
5,879
__________
__________
6.
Bank loans. The Company currently has a $25,000,000 revolving facility agreement with The Royal Bank of Scotland International Limited. At the period end, $12,500,000 (31 July 2019 - $12,500,000) was drawn down from the term loan facility at a fixed interest rate of 2.506% until 8 June 2020. As at 31 January 2020 $10,000,000 (31 July 2019 - $12,500,000) was drawn down from the revolving facility at a rate of 2.493% and matured on 21 February 2020. The terms of the loan facilities contain covenants that the minimum net assets of the Company are £300,000,000, the percentage of borrowings against net assets is less than 20%, and the portfolio contains a minimum of forty five eligible investments (investments made in accordance with the Company's investment policy). All covenants were met during the period. On 25 March 2020 the Company announced that it had amended its three-year multi currency revolving credit facility with the Royal Bank of Scotland International ("Loan Facility") to reduce the Company's minimum net assets covenant from £300,000,000 to £250,000,000 with immediate effect.
7.
Non-current liabilities - 2.25% Convertible Unsecured Loan Stock 2025 ("CULS")
Liability
Equity
Nominal
component
component
£'000
£'000
£'000
Balance at beginning of period
36,945
35,499
1,057
Conversion of CULS into Ordinary shares
(239)
(239)
-
Notional interest on CULS
-
77
-
Amortisation of issue expenses
-
48
-
__________
__________
__________
Balance at end of period
36,706
35,385
1,057
__________
__________
__________
The 2.25% Convertible Unsecured Loan Stock 2025 ("CULS") can be converted at the election of holders into Ordinary shares during the months of May and November each year throughout its life until 31 May 2025 at a rate of one Ordinary share for every 1,465.0p nominal of CULS. Interest is paid on the CULS on 31 May and 30 November each year. 100% of the interest is charged to revenue in line with the Board's expected long-term split of returns from the investment portfolio of the Company.
In the event of a winding-up of the Company the rights and claims of the Trustee and CULS holders would be subordinate to the claims of all creditors in respect of the Company's secured and unsecured borrowings, under the terms of the Trust Deed.
During the period ended 31 January 2020 the holders of £238,951 of 2.25% CULS 2025 exercised their right to convert their holdings into Ordinary shares. Following the receipt of the exercise instructions, the Company converted £238,951 (31 July 2019 - £54,768) nominal amount of CULS into 16,302 (31 July 2019 - 3,727) Ordinary shares.
As at 31 January 2020, there was £36,706,281 (31 July 2019 - £36,965,232) nominal amount of CULS in issue.
8.
Called-up share capital. During the six months ended 31 January 2020 918,256 (31 January 2019 - 652,000) Ordinary shares were bought back to be held in treasury at a total cost of £9,913,000 (31 January 2019 - £6,821,000). During the six months ended 31 January 2020 an additional 16,302 (31 July 2019 - 3,727) Ordinary shares were issued after £238,951 nominal amount of 2.25% Convertible Unsecured Loan Stock 2025 were converted at 1465.0p each (31 July 2019 - £54,768). The total consideration received was £nil (31 July 2019 - £nil). At the end of the period there were 41,735,313 (31 July 2019 - 41,719,011) Ordinary shares in issue, of which 8,727,918 (31 July 2019 - 7,809,662) were held in treasury.
Subsequent to the period end, a further 292,500 Ordinary shares were bought back to be held in treasury at a total cost of £3,063,000.
9.
Capital reserve. The capital reserve reflected in the Condensed Statement of Financial Position at 31 January 2020 includes gains of £117,542,000 (31 July 2019 - gains £169,910,000), which relate to the revaluation of investments held at the reporting date.
10.
Net asset value per equity share
As at
As at
31 January 2020
31 July 2019
Basic
Net assets attributable
£387,444,000
£441,010,000
Number of Ordinary shares in issue{A}
33,007,395
33,909,349
Net asset value per Ordinary share
1,173.81p
1,300.56p
__________
__________
Diluted{B}
Net assets attributable
£422,829,000
£476,509,000
Number of Ordinary shares
35,512,943
36,431,208
Net asset value per Ordinary share
n/a
n/a
__________
__________
{A} Excludes shares in issue held in treasury.
{B} The diluted net asset value per Ordinary share has been calculated on the assumption that £36,706,281 (31 July 2019 - 36,945,232) 2.25% Convertible Unsecured Loan Stock 2025 ("CULS") are converted at 1,465.0p per share, giving a total of 35,512,943 (31 July 2019 - 36,431,208) Ordinary shares. Where dilution occurs, the net assets are adjusted for items relating to the CULS.
Net asset value per share - debt converted. In accordance with the Company's understanding of the current methodology adopted by the AIC, convertible bond instruments are deemed to be 'in the money' if the cum income (debt at fair value) net asset value ("NAV") exceeds the conversion price of 1,465.0p per share. In such circumstances a net asset value is produced and disclosed assuming the convertible debt is fully converted. At 31 January 2020 the NAV was 1,173.81p and thus the CULS were not 'in the money' (31 July 2019 - 1,300.56p, not 'in the money').
11.
Transaction costs. During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:
Six months ended
Six months ended
31 January 2020
31 January 2019
£'000
£'000
Purchases
86
171
Sales
43
261
__________
__________
129
432
__________
__________
12.
Analysis of changes in net debt
At
At
31 July
Currency
Cash
Non-cash
31 January
2019
differences
flows
movements
2020
£'000
£'000
£'000
£'000
£'000
Cash and short-term deposits
10,239
(441)
(1,660)
-
8,138
Debt due within one year
(20,407)
1,312
2,037
(6)
(17,064)
Debt due after more than one year
(35,499)
-
-
114
(35,385)
_________
_________
_________
_________
_________
(45,667)
871
377
108
(44,311)
_________
_________
_________
_________
_________
At
At
31 July
Currency
Cash
Non-cash
31 January
2018
differences
flows
movements
2019
£'000
£'000
£'000
£'000
£'000
Cash and short-term deposits
9,398
(204)
5,313
-
14,507
Debt due within one year
(7,623)
86
(1,966)
-
(9,503)
Debt due after more than one year
(44,715)
27
-
(103)
(44,791)
_________
_________
_________
_________
_________
(42,940)
(91)
3,347
(103)
(39,787)
_________
_________
_________
_________
_________
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.
13.
Fair value hierarchy. FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications:
Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:
Level 1
Level 2
Level 3
Total
As at 31 January 2020
£'000
£'000
£'000
£'000
Financial assets/(liabilities) at fair value through profit or loss
Quoted equities
432,899
-
-
432,899
________
________
________
________
Net fair value
432,899
-
-
432,899
________
________
________
________
Level 1
Level 2
Level 3
Total
As at 31 July 2019
£'000
£'000
£'000
£'000
Financial assets/(liabilities) at fair value through profit or loss
Quoted equities
484,709
-
-
484,709
________
________
________
________
Net fair value
484,709
-
-
484,709
________
________
________
________
Quoted equities. The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
14.
Related party disclosures. Mr Gilbert is a director of Standard Life Aberdeen plc. Both Mr Gilbert and his alternate, Mr Young are directors of its subsidiary ASI Asia which has been delegated, under an agreement with ASFML, to provide management services to the Company. Neither Mr Gilbert nor Mr Young are directors of ASFML.
Mr Yea is chairman of Equiniti Group plc which acts as Registrar and Receiving Agent to the Company. Mr Yea is excluded from participation in all discussions relating to the appointment of Equiniti.
Transactions with the Manager. From 1 August 2018 until 31 October 2018 the investment management fee was payable monthly in arrears based on an annual amount of 1.0% calculated on the average net asset value of the Company over a 24-month period, valued monthly. The fee was calculated by reference to the value of the Company's net assets (gross assets less liabilities excluding the amount of any loan facilities or overdraft facilities drawn down). With effect from 1 November 2018 the investment management fee has been payable monthly in arrears at 0.08% based on the market capitalisation of the company multiplied by the number of shares in issue (less those held in Treasury) at the month end. During the period £1,715,000 (31 January 2019 - £1,941,000) of investment management fees were charged, with a balance of £564,000 (31 January 2019 - £565,000) being payable to ASFML at the period end. Investment management fees are charged 100% to revenue.
The Company also has a management agreement with ASFML for, inter alia, the provision of both administration and promotional activities services which are, in turn, delegated to AAM and Aberdeen Asset Managers Limited ('AAML') respectively. The administration fee is payable quarterly in advance and is adjusted annually to reflect the movement in the Retail Price Index. It is based on a current annual amount of £98,000 (31 January 2019 - £95,000). During the period £48,000 (31 January 2019 - £47,000) of fees were charged, with a balance of £24,000 (31 January 2019 - £24,000) payable to AAM at the period end. The promotional activities costs are based on a current annual amount of £219,000 (31 January 2019 - £219,000), payable quarterly in arrears. During the period £110,000 (31 January 2019 - £110,000) of fees were charged, with a balance of £128,000 (31 January 2019 - £73,000) being payable to AAML at the period end.
15.
Segmental information. The Company is engaged in a single segment of business, which is to invest in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.
16.
Subsequent events. Subsequent to the period end, the Company's NAV has suffered as a result of a decline in stockmarket values resulting from the COVID-19 pandemic. At the date of this Report the latest NAV per share was 891.49p as at the close of business on 3 April 2020, a decline of 24.1% compared the NAV per share of 1,173.81p at the period end.
The Chairman's Statement above of the notes future uncertainties and risks resulting from COVID-19. The Directors have carefully considered the financial position of the Company with particular attention to the economic and social impacts of the Covid-19 pandemic. As indicated above and in the Chairman's Statement, Covid-19 presents significant challenges to all of the countries within the investment region as well as the rest of the world. It is too early to be able to assess the longer term impacts on the individual companies in the portfolio.
17.
Half-Yearly Report. The financial information in this Report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 July 2019 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.
Ernst & Young LLP has reviewed the financial information for the six months ended 31 January 2020 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.
18.
This Half-Yearly Report was approved by the Board and authorised for issue on 7 April 2020.
Copies of the Company's Half Yearly Report for the six months ended 31 January 2020 will be posted to shareholders in April 2020 and will be available thereafter on the Company's website:
asia-focus.co.uk*.
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.
* Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
Aberdeen Asset Management PLC
Secretaries
7 April 2020
ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures ("APMs") are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Total return. NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves a calculation that invests the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves a calculation that invests the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the six months ended 31 January 2020 and the year ended 31 January 2019 and total return for the periods.
Dividend
Share
31 January 2020
rate
NAV
price
31 July 2019
N/A
1,300.56p
1,150.00p
14 November 2019
19.00p
1,206.37p
1,055.00p
31 January 2020
N/A
1,173.81p
1,060.00p
________
________
Total return
-8.3%
-6.2%
________
________
Dividend
Share
31 July 2019
rate
NAV
price
31 July 2018
N/A
1,231.90p
1,050.00p
20 December 2018
17.00p
1,159.30p
1,000.00p
31 July 2019
N/A
1,300.56p
1,150.00p
________
________
Total return
+7.1%
+11.4%
________
________
Discount to net asset value per Ordinary share. The difference between the share price of 1060.00p (31 July 2019 - 1,150.00p) and the net asset value per Ordinary share of 1,173.81p (31 July 2019 - 1,300.56p) expressed as a percentage of the net asset value per Ordinary share.
Net gearing. Net gearing measures the total borrowings of £52,449,000 (31 July 2019 - £55,906,000) less cash and cash equivalents of £8,669,000 (31 July 2019 - £12,306,000) divided by shareholders' funds of £387,444,000 (31 July 2019 - £441,010,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due to brokers at the period end of £531,000 (31 July 2019 - £2,067,000) as well as cash and cash equivalents of £8,138,000 (31 July 2019 - £10,239,000).
Ongoing charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair value throughout the year. The ratio as at 31 January 2020 is based on forecast ongoing charges for the year ending 31 July 2020.
31 January 2020
31 July 2019
Investment management fees (£'000)
3,394
3,711
Administrative expenses (£'000)
1,154
1,091
Less: non-recurring charges (£'000)
-
(3)
________
________
Ongoing charges (£'000)
4,548
4,799
________
________
Average net assets (£'000)
398,060
412,437
________
________
Ongoing charges ratio
1.14%
1.16%
________
________
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which include finance costs and transaction charges.
INVESTMENT PORTFOLIO
As at 31 January 2020
Total
Valuation
assets
Company
Industry
Country
£'000
%
Bank OCBC NISP
Banks
Indonesia
17,716
4.0
John Keells Holdings
Industrial Conglomerates
Sri Lanka
15,370
3.5
Asian Terminals
Transportation Infrastructure
Philippines
13,489
3.1
Cebu Holdings
Real Estate Management & Development
Philippines
12,901
2.9
Oriental Holdings
Automobiles
Malaysia
12,087
2.8
Ultrajaya Milk Industry & Trading
Food Products
Indonesia
11,881
2.7
Hana Microelectronics (Foreign)
Electronic Equipment, Instruments & Components
Thailand
11,780
2.7
AEM Holdings
Semiconductors & Semiconductor Equipment
Singapore
11,767
2.7
M.P. Evans Group
Food Products
United Kingdom
11,762
2.7
Millennium & Copthorne Hotels New Zealand{A}
Hotels, Restaurants & Leisure
New Zealand
11,428
2.6
Top ten investments
130,181
29.7
Sanofi India
Pharmaceuticals
India
11,091
2.5
Dah Sing Financial Holdings
Banks
Hong Kong
10,766
2.5
Aegis Logistics
Oil, Gas & Consumable Fuels
India
10,763
2.4
Godrej Agrovet
Food Products
India
10,706
2.4
Convenience Retail Asia
Food & Staples Retailing
Hong Kong
10,595
2.4
MOMO.com
Internet & Direct Marketing Retail
Taiwan
10,480
2.4
First Sponsor Group{A}
Real Estate Management & Development
Singapore
10,059
2.3
City Union Bank
Banks
India
9,499
2.2
Yoma Strategic Holdings
Real Estate Management & Development
Myanmar
9,216
2.1
AEON Credit Service (M)
Consumer Finance
Malaysia
8,903
2.0
Top twenty investments
232,259
52.9
Tisco Financial Group (Foreign)
Banks
Thailand
8,691
2.0
Park Systems Corporation
Electronic Equipment, Instruments & Components
South Korea
8,593
2.0
Nam Long Invst Corporation
Real Estate Management & Development
Vietnam
8,572
1.9
Lemon Tree Hotels
Hotels, Restaurants & Leisure
India
8,493
1.9
Mega Lifesciences (Foreign)
Pharmaceuticals
Thailand
8,476
1.9
Shangri-La Hotels Malaysia
Hotels, Restaurants & Leisure
Malaysia
8,277
1.9
Eastern Water Resources Development & Management (Foreign)
Water Utilities
Thailand
7,991
1.8
United International Enterprises
Food Products
Denmark
7,967
1.8
Bukit Sembawang Estates
Real Estate Management & Development
Singapore
7,878
1.8
Precision Tsugami China Corporation
Machinery
China
7,417
1.7
Top thirty investments
314,614
71.6
Thai Stanley Electric (Foreign)
Auto Components
Thailand
7,226
1.6
Kansai Nerolac Paints
Chemicals
India
7,150
1.6
AEON Thana Sinsap Thailand (Foreign)
Consumer Finance
Thailand
6,873
1.6
Sporton International
Professional Services
Taiwan
6,863
1.6
United Plantations
Food Products
Malaysia
6,535
1.5
Affle India
Media
India
6,164
1.4
Sunonwealth Electric Machinery Industry
Machinery
Taiwan
5,747
1.3
FPT Corporation
Electronic Equipment, Instruments & Components
Vietnam
5,623
1.3
AEON Credit Service (Asia)
Consumer Finance
Hong Kong
5,515
1.3
SBS Transit
Road & Rail
Singapore
5,418
1.2
Top forty investments
377,728
86.0
AKR Corporindo
Trading Companies & Distributors
Indonesia
5,181
1.2
Public Financial Holdings
Banks
Hong Kong
4,611
1.0
Douzone Bizon
Software
South Korea
4,560
1.0
Pacific Basin Shipping
Marine
Hong Kong
4,503
1.0
Koh Young Technology
Semiconductors & Semiconductor Equipment
South Korea
4,496
1.0
AEON Co (M)
Multiline Retail
Malaysia
4,039
0.9
Prestige Estates Projects
Real Estate Management & Development
India
3,834
0.9
NZX
Capital Markets
New Zealand
3,801
0.9
Cyient
Software
India
3,556
0.8
Absolute Clean Energy (ACE)
Independent Power and Renewables
Thailand
3,431
0.8
Top fifty investments
419,740
95.5
Kingmaker Footwear Holdings
Textiles, Apparel & Luxury Goods
Hong Kong
1,994
0.5
Manulife Holdings
Insurance
Malaysia
1,905
0.4
DFCC Bank
Banks
Sri Lanka
1,816
0.4
AEON Stores Hong Kong
Multiline Retail
Hong Kong
1,452
0.3
Goodyear Thailand (Foreign)
Auto Components
Thailand
1,253
0.3
Thaire Life Assurance (Foreign)
Insurance
Thailand
1,238
0.3
ORIX Leasing Pakistan
Consumer Finance
Pakistan
1,076
0.2
Straits Trading Company
Metals & Mining
Singapore
868
0.2
CDL Investments New Zealand
Real Estate Management & Development
New Zealand
705
0.2
YNH Property
Real Estate Management & Development
Malaysia
516
0.1
Top sixty investments
432,563
98.4
G3 Exploration
Oil, Gas & Consumable Fuels
China
131
-
Mustika Ratu
Personal Products
Indonesia
120
-
Wintermar Offshore Marine
Energy Equipment & Services
Indonesia
85
-
Total investments
432,899
98.4
Net current assets excluding bank loans
6,994
1.6
Total assets{B}
439,893
100.0
{A} Holding includes investment in both common and preference lines.
{B} Total assets less current liabilities excluding bank loans.
INDEPENDENT REVIEW REPORT TO ABERDEEN STANDARD ASIA FOCUS PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2020 which comprises a Condensed Statement of Comprehensive Income, Condensed Statement of Financial Position, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and the related Notes 1 to 18. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. As disclosed in note 1, the annual financial statements of the company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Financial Reporting Standard (FRS)104 'Interim Financial Reporting'.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Emphasis of matter - Effects of COVID-19
We draw attention to Note 16 of the financial statements, which describes the economic consequences the company is facing as a result of the financial markets impacts of Covid-19. Our opinion is not modified in respect of this matter.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2020 is not prepared, in all material respects, in accordance with FRS 104 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Services Conduct Authority.
Ernst & Young LLP,
London
7 April 2020
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR BCGDSBUGDGGR
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