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REG - Aberdeen New Dawn IT - Annual Financial Report










RNS Number : 7177D
Aberdeen New Dawn Invest Trust PLC
28 June 2019
 

ABERDEEN NEW DAWN INVESTMENT TRUST PLC

 

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 APRIL 2019

 

Legal Entity Identifier (LEI): 5493002K00AHWEME3J36

 

 

Investment Objective

To provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.

 

Benchmark

MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted).

 

Management

The Company's Manager is Aberdeen Standard Fund Managers Limited ("ASFML", the "AIFM" or the "Manager") which has delegated the investment management of the Company to Aberdeen Standard Investments (Asia) Limited ("ASI Asia" or the "Investment Manager"). Both companies are wholly owned subsidiaries of Standard Life Aberdeen plc, which was formed by the merger of Aberdeen Asset Management PLC and Standard Life plc in August 2017. Aberdeen Standard Investments is a brand of the investment businesses of the merged entity.

 

Website

Up to date information can be found on the Company's website: www.newdawn-trust.co.uk 

 

 

COMPANY OVERVIEW - FINANCIAL HIGHLIGHTS

 

Share price total returnAB

 

 

Net asset value total returnAB

 

2019

+8.0%

 

2019

+4.9%

2018

+13.3%

 

2018

+12.9%

 

 

 

 

 

Benchmark total returnB

 

 

Ongoing chargesA

 

2019

+3.0%

 

2019

1.13%

2018

+13.0%

 

2018

1.10%

 

 

 

 

 

Revenue return per share

 

 

Dividend per Ordinary share

 

2019

4.30p

 

2019

4.30p

2018

4.47p

 

2018

4.30p

A           Alternative Performance Measure

B           Total return represents capital return plus dividends reinvested.

 

For further information, please contact:

 

Scott Anderson

Aberdeen Standard Fund Managers Limited       

0131 222 1863

 

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.  Investors may not get back the amount they originally invested.

 

 

 

COMPANY OVERVIEW - CHAIRMAN'S STATEMENT

 

Results and Dividend

In a year when the Company celebrates its 30th anniversary, it is pleasing to report that it delivered resilient returns in a challenging period for Asian equities. In addition to good stock selection by your Investment Manager, the Company also benefitted from the Brexit-related weakness in Sterling, which amplified foreign-currency denominated returns.

 

The net asset value ("NAV") total return for the year was 4.9%, which compares to a total return of 3.0% from the benchmark, the MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted). The share price total return was 8.0%, following a narrowing of the discount at which the Ordinary shares trade to the NAV. The share price at the end of the year was 250.0p, representing a discount of 11.1% (2018: 13.4%) to the NAV per share of 281.12p.

 

The Board is pleased to announce a final dividend of 3.3p per share (2018: 3.3p), making a total dividend for the year of 4.3p per share, unchanged from the previous year. If approved by Shareholders at the Annual General Meeting, the final dividend will be paid on 13 September 2019 to Shareholders on the register on 16 August 2019.

 

30th Anniversary

On 12 May 2019, the Company celebrated its 30th anniversary since launch. As at 30 April 2019, the Company returned almost 2,000% to shareholders in NAV total return terms since that date, significantly outperforming the benchmark, which over the same period returned 1,311%. £1,000 invested at launch would have been worth £17,412 at the year end.

 

Over the past 30 years, the Asia Pacific region has experienced the Asian Financial Crisis, the Global Financial Crisis as well as multiple periods of political turmoil in individual countries. However, over the period there has also been huge economic expansion in the region. The Company has weathered these challenges as well as capitalising on the opportunities available across the region.

 

Overview for the Year

Despite volatile conditions, equity markets in the Asia Pacific region ended the period under review in positive territory. Markets and investor appetite were impacted by a confluence of risks throughout 2018. These included higher interest rates and fears about shrinking global liquidity, worsening trade tensions and slowing global growth. However, sentiment improved in the New Year as receding trade and monetary policy worries fuelled a broad-based rebound.

 

The period was one of political significance for Asia, with key elections across several countries. In both India and Indonesia, reform-minded incumbents were re-elected with clear majorities, although in Thailand, the outcome remains inconclusive. On the whole, the results bode well for structural reforms and future economic growth across the region.

 

China was a key driver of sentiment during the period as trade friction with the US compounded fears about its slowing economy. While this had an impact on equities markets for most of 2018, there was a rebound from January 2019 on an apparent easing of trade tensions and fresh fiscal support from Beijing.

 

Despite the volatility, the Company's exposure to China bolstered performance which was attributable to the quality of the portfolio's mainland holdings with a number making impressive contributions. Among them was financial services group Ping An Insurance, which is benefiting from a growing domestic insurance market driven by rapidly rising income levels.

 

The Company's exposure to Chinese stocks continued to increase during the year. While corporate governance is still a concern, your Investment Manager has seen signs of progress, with more companies adopting better practices. More broadly, China's longer-term potential remains bright given the expanding consumer class and massive domestic market. Your Investment Manager introduced several more Chinese holdings that are well-placed to access the structural growth of sectors including health care, tourism and technology. Some of these new additions, such as online car-buying portal Autohome, have already proved beneficial to performance.

 

Apart from trade, monetary policy also swayed markets over the period. Initially, major central banks, led by the Federal Reserve, seemed set to end a decade of easy money policies. With the US Dollar also strengthening, most Asian central banks raised their own interest rates to combat inflation and defend their currencies. However, mounting signs of faltering growth in the US and Europe forced a re-think. Notably, the Federal Reserve turned dovish, though the supportive impact of looser monetary conditions may have been thwarted by the trade dispute with China. While the gloomier economic outlook weighed on banking stocks, Indonesia's Bank Central Asia ("BCA") bucked the trend and was a notable outperformer. BCA had benefited from rising interest rates earlier in the year, but its consistently impressive financial performance was also rewarded by the market.

 

Meanwhile, technology stocks lagged the market after a sustained period of strength. Escalating trade tensions hurt consumer sentiment, with fears of slowing demand for chips and smartphones. This hampered the technology-heavy, export-oriented Korean market, along with sluggish economic growth and corporate earnings. Given the portfolio's underweight exposure to South Korea, this was positive for performance. Your Investment Manager also refined the portfolio's South Korean exposures, selling holdings that faced challenging prospects while adding to those with brighter prospects. Elsewhere, your Investment Manager also introduced some Australian holdings with the aim of providing more varied exposure to the portfolio in sectors with good growth prospects.

 

The Investment Manager's Review provides more insight on how regional markets and specific holdings performed, and more detail on key portfolio changes.

 

Gearing

As disclosed in the Half Yearly Report, in December 2018 the Company cancelled its £30 million multi-currency revolving loan facility and entered into a new loan agreement with The Royal Bank of Scotland, extending until December 2023, comprising a five year fixed rate loan of £20 million, with an interest rate of 2.626%, and a £15 million three year multi-currency revolving loan facility. Together with the previous £5 million fixed rate loan, this temporarily increases the Company's borrowing facilities to £40 million until the £5 million loan matures in October 2019, at which point the value of the Company's borrowing facilities will return to £35 million.

 

An aggregate Sterling equivalent of £33.2 million was drawn down at the year end and gearing (net of cash) was 9.3% as at 30 April 2019 compared to 7.6% at the start of the year.

 

The Board considers that gearing is one of the key benefits of an investment trust structure and that it was appropriate to re-finance the loan ahead of its original maturity in October 2019.

 

Full details of the Company's loans are provided in note 12 to the financial statements.

 

Share Buybacks and Treasury Shares

In common with other investment trusts, the Company has bought back shares with the aim of providing a degree of liquidity to the market at times when the discount to the NAV has widened in normal market conditions. It is the view of the Board that this policy is in the interests of all Shareholders. The Board closely monitors the discount and we review the operation of the share buy back policy at each Board meeting as well as considering other options for managing the discount. The Board will seek to renew the Company's share buyback authority at the Annual General Meeting.

 

As stated above, the discount narrowed from 13.4% to 11.1% during the year.

 

During the year, the Company bought back 2.6 million shares, representing 2.3% of the issued share capital. These shares were bought back and held in treasury. The Company's stated policy on treasury shares is that these can only be re-issued to the market at a premium to the NAV per share at that time. Shares held in treasury do not qualify to receive dividends. Ordinary shares can be reissued out of treasury more efficiently than new Ordinary shares can be issued. The Board therefore believes that it is appropriate for shares bought back to be held in treasury.

 

In accordance with its stated policy the Company cancelled 2.8 million treasury shares.

 

Annual General Meeting

The Annual General Meeting will be held on Wednesday 4 September 2019 at 12 noon at the offices of Aberdeen Standard Investments, Bow Bells House, 1 Bread Street, London EC4M 9HH.

 

Board Succession

As previously announced, having been a Director of the Company since 2007 and Chairman since 2012 I will stand down from the Board at the Annual General Meeting on 4 September. I will be succeeded as Chairman by Donald Workman who was appointed as an independent non-executive Director on 1 October 2018. Donald has a wealth of commercial experience, including significant involvement in businesses throughout the Asia Pacific region and I wish him and my Board colleagues good fortune in the future.

 

John Lorimer has indicated that he intends to step down from the Board on conclusion of the Annual General Meeting in 2020 by which time he will have been a Director of the Company for 10 years including 8 years as Chairman of the Audit and Risk and Management Engagement Committees. We are currently running a process to recruit a replacement for these roles and would intend to have a new Director appointed to ensure a smooth transition ahead of that date.

 

Outlook

It is clear that the direction of US-China trade talks will be crucial for sentiment in the Asia Pacific region. Markets could remain volatile for some time if the conflict continues. Already, companies seem to be becoming more cautious by delaying spending and investment. A full-blown trade war could significantly hurt regional economies and corporate earnings, although this remains the worst-case scenario amid continuing talks. In addition to this, there are other geopolitical worries, such as a rekindling of US tensions with both Iran and North Korea. However, amid this uncertainty, governments in the region are pragmatic. Most of them are ensuring that fiscal and monetary policies remain broadly supportive of growth and liquidity.

 

In this environment, your Investment Manager continues to focus on the fundamentals, with the portfolio invested in businesses with resilient sources of earnings that should protect them in tougher times. At the same time, recent changes to increase the portfolio's exposure to certain key growth sectors position the Company to access Asia's huge potential where a growing and increasingly affluent middle class should bolster demand for a greater variety of products, services and technologies. The Board remains confident that your Investment Manager's investment approach will ensure that the portfolio has the requisite quality to deliver sustainable returns for the Company over the long term.

 

David Shearer

Chairman

27 June 2019

 

 

 

STRATEGIC REPORT - OVERVIEW OF STRATEGY

 

Business Model

The business of the Company is that of an investment company which seeks to qualify as an investment trust for tax purposes.  The Directors do not envisage any change in this activity in the foreseeable future.

 

Investment Objective

The Company's investment objective is to provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.

 

Investment Policy

The Company's assets are invested in a diversified portfolio of securities in quoted companies spread across a range of industries and economies in the Asia Pacific region excluding Japan. Investments may also be made through collective investment schemes and in companies traded on stock markets outside the Asia Pacific region provided that over 75% of their consolidated revenue is earned from trading in the Asia Pacific region or they hold more than 75% of their consolidated net assets in the Asia Pacific region.

 

Gearing

The Board is responsible for determining the gearing strategy for the Company. Gearing is used selectively to leverage the Company's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so. At the year end the Company had net gearing of 9.32% which compares with a current maximum limit set by the Board of 25%. Borrowings are short to medium term and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy.

 

Investment in Other Listed Investment Companies

In addition, it is the investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including investment trusts). As at 30 April 2019, 2.5% of the Company's gross assets were invested in listed investment companies.

 

Delivering the Investment Policy

The Directors are responsible for determining the Company's investment objective and investment policy. Day-to-day management of the Company's assets has been delegated, via the AIFM, to the Investment Manager.

 

Benchmark

The Company compares its performance to the MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted). 

 

Promoting the Company

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Standard Life Aberdeen Group on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by the Standard Life Aberdeen Group.  The Manager's promotional and investor relations teams report to the Board giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make up of that register.

 

The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key and therefore the Company also supports the Manager's investor relations programme which involves regional roadshows, promotional and public relations campaigns together with certain Company-specific initiatives.  

 

Board Diversity

The Board recognises the importance of having a range of skilled and experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins or disability in considering the appointment of its Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and the Board does not therefore consider it appropriate to set measurable objectives in relation to its diversity.   

 

At 30 April 2019, there were four male Directors and two female Directors.

 

 

 

 

 

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The risks and uncertainties faced by the Company are reviewed by the Audit and Risk Committee in the form of a risk matrix, and the principal risks and uncertainties facing the Company at the current time, together with a description of the mitigating actions the Board has taken, are set out in the table below. The Board has carried out a robust assessment of these risks, which include those that would threaten its business model, future performance, solvency or liquidity. The principal risks associated with an investment in the Company's shares are published monthly on the Company's factsheet and they can also be found in the pre-investment disclosure document ("PIDD") published by the Manager, both of which are available on the Company's website.

 

Risk

Mitigating Action

Investment strategy and objectives - the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for its shares and a widening discount.

 

The Board keeps the level of discount at which the Company's shares trade, as well as the investment objective and policy under review and holds an annual strategy meeting where it reviews investor relations reports and updates from the Investment Manager and the Company's broker.

 

The Directors are updated at each Board meeting on the composition of, and any movements in, the shareholder register. 

Investment management - poor stock selection or investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and an inability to meet the Company's objectives, as well as a widening discount.

 

The Board meets the Manager on a regular basis and keeps investment performance under close review. Representatives of the Investment Manager attend all Board meetings and a detailed formal appraisal of the Standard Life Aberdeen Group is carried out annually by the Management Engagement Committee.

 

The Board sets, and monitors, the investment restrictions and guidelines, and receives regular reports which include performance reporting on the implementation of the investment policy, the investment process and application of the guidelines. The Board also monitors the Company's share price relative to the NAV per share.

 

Investment limits

In addition to the limits set out in the investment policy, the Investment Manager is authorised by the Board to invest up to 15% of the Company's gross assets in any single stock, calculated at the time an investment is made.

 

Income/dividends - the level of the Company's dividends and future dividend growth will depend on the performance of the underlying portfolio. Any change in the tax treatment of dividends or interest received by the Company may reduce the level of net income available for the payment of dividends to shareholders.

 

The Directors review detailed income forecasts at each Board meeting. The Company has built up significant revenue reserves which can be drawn upon if required should there be a shortfall in revenue returns.

 

 

Financial - the financial risks associated with the portfolio could result in losses to the Company.

The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are mitigated, to some extent, by the Investment Manager. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in note 16 to the financial statements.

Gearing - a fall in the value of the Company's investment portfolio could be exacerbated by the impact of gearing. It could also result in a breach of loan covenants.

 

The Board sets the gearing limits within which the Investment Manager can operate. Gearing levels and compliance with loan covenants are monitored on an ongoing basis by the Manager and at regular Board meetings. In the event of a possible impending covenant breach, appropriate action would be taken to reduce borrowing levels.

 

In addition, ASFML, as alternative investment fund manager, has set overall leverage limits.

 

Regulatory - failure to comply with relevant laws and regulations (including the Companies Act, The Financial Services and Markets Act, The Alternative Investment Fund Managers Directive, accounting standards, investment trust regulations, the Listing Rules, Disclosure Guidance and Transparency Rules, Prospectus Rules and corporate governance regulations) could result in fines, loss of reputation and potentially loss of an advantageous tax regime.

 

The Board and Manager monitor changes in government policy and legislation which may have an impact on the Company, and the Audit and Risk Committee monitors compliance with regulations by reviewing internal control reports from the Manager. From time to time the Board employs external advisers to advise on specific matters.

Operational - the Company is dependent on third parties for the provision of all systems and services (in particular, those of the Standard Life Aberdeen Group) and any control failures and gaps in their systems and services could result in fraudulent activities or a loss or damage to the Company.

Written agreements are in place with all third party service providers.

 

The Board receives reports from the Manager on its internal controls and risk management throughout the year and receives assurances from all its other significant service providers on at least an annual basis.

 

The Manager monitors closely the control environments and quality of services provided by third parties, including those of the Depositary, through service level agreements, regular meetings and key performance indicators.

 

 

 

Key Performance Indicators ("KPIs")

The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determining the progress of the Company in pursuing its investment policy.  The main KPIs, which are considered at each Board meeting, are shown in the following table.

 

Performance of net asset value ("NAV")

The Board considers the Company's NAV total return figures to be the best indicator of performance over time.

 

Performance against benchmark index

The Board measures performance against the benchmark index - the currency-adjusted MSCI All Countries Asia Pacific ex Japan Index.

Revenue return per Ordinary share

The Board monitors the Company's net revenue return.

Dividends per share

The Board monitors the Company's annual dividends per Ordinary share.

Share price performance

The Board monitors the performance of the Company's share price on a total return basis.

 

Discount/premium to NAV

The discount/premium of the share price relative to the NAV per share is closely monitored by the Board.

Ongoing charges

 

The Board regularly monitors the Company's operating costs.

 

Environmental, Social and Human Rights Issues

The Company has no employees as the Board has delegated the day-to-day management and administrative functions to the Manager. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is set out below.

 

Socially Responsible Investment Policy

The Directors, through the Investment Manager, encourage companies in which investments are made to adhere to best practice in the area of corporate governance and socially responsible investing. The Investment Manager believes that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies in both areas.

 

The Investment Manager's ultimate objective, however, is to deliver superior investment returns for its clients. Accordingly, whilst the Investment Manager will seek to favour companies which pursue best practice in these areas, this must not be to the detriment of the overall return on the investment portfolio.

 

UK Stewardship Code and Proxy Voting as an Institutional Shareholder

Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager.

 

The full text of the Company's response to the Stewardship Code may be found on its website.

 

Modern Slavery Act

Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

 

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

 

Duration

The Company does not have a fixed life. However, under its Articles of Association, if, in the 90 days preceding the Company's financial year end (30 April), the Ordinary shares have been trading, on average, at a discount in excess of 15% to the underlying NAV (excluding current year income, and with borrowings stated at market value) over the same period, notice will be given of an ordinary resolution to be proposed at the following Annual General Meeting to approve the continuation of the Company.  If the resolution for the continuation of the Company is not passed at that Annual General Meeting or any adjournment thereof, the Directors will convene a general meeting to be held not more than three months after the Annual General Meeting at which a special resolution for the winding-up of the Company will be proposed.  In the 90 days to 30 April 2019 the average discount to the underlying NAV (excluding current year income, and with borrowings stated at market value) of the Ordinary shares was 11.1% and therefore no continuation resolution will be put to the Company's shareholders at this year's Annual General Meeting.

 

Viability Statement

The Board considers the Company, with no fixed life, to be a long term investment vehicle and it intends to maintain the current mandate. For the purposes of this viability statement, the Board has decided that three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.

 

In assessing the viability of the Company over the review period, the Directors have focused upon the following factors:

 

•   The principal risks and uncertainties and the steps taken to mitigate these risks.

•   The role of the Audit and Risk Committee in reviewing and monitoring the Company's internal control and risk management systems.

•   The ongoing relevance of the Company's investment objective.

•   The liquidity of the Company's portfolio. All of the Company's investments are in quoted equities actively traded on recognised stock exchanges.

•   The closed-ended nature of the Company which means that it is not subject to redemptions.

•   The use of the Company's share buy back and share issuance policies to help address any imbalance of supply and demand for the Company's shares.

•   The current and maximum levels of gearing, compliance with loan covenants and level of headroom within the financial covenants (see note 12 to the financial statements for details of loan covenants).

•   The ability of the Company to refinance its loan facilities, on or before maturity.

•   The potential requirement of the Board to propose a resolution to approve the continuation of the Company at future Annual General Meetings. As explained above, this is dependent upon the level of discount in the 90 days preceding the Company's financial year end and there is no requirement for such a resolution to be proposed at the forthcoming Annual General Meeting. 

 

In making its assessment, the Board has considered that there are other matters that could have an impact on the Company's prospects or viability in the future, including a large economic shock, significant stock market volatility, and changes in regulation or investor sentiment.

 

Taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report.

 

Outlook

The Board's view on the general outlook for the Company can be found in the Chairman's Statement whilst the Investment Manager's views on the outlook for the portfolio are included in its statement below.  

 

On behalf of the Board

David Shearer

Chairman

27 June 2019

 

 

 

STRATEGIC REPORT - RESULTS

 

Financial Highlights (capital return)

 

 

30 April 2019

30 April 2018

% change

Total assets

£347,660,000

£339,874,000

+2.3

Total equity shareholders' funds (net assets)

£314,411,000

£311,816,000

+0.8

Market capitalisation

£279,603,000

£270,135,000

 

 

 

 

 

Net asset value per Ordinary share (including current year income)

281.12p

272.41p

+3.2

Net asset value per Ordinary share (excluding current year income)AB

277.79p

268.90p

+3.3

Share price (mid market)

250.00p

236.00p

+5.9

Discount to net asset value per Ordinary share (including current year income)

11.1%

13.4%

 

Discount to net asset value per Ordinary share (excluding current year income)AB

10.0%

12.2%

 

 

 

 

 

MSCI AC Asia Pacific ex Japan Index (currency adjusted, capital gains basis)

772.65

773.05

-0.1

 

 

 

 

Net gearing B

9.32%

7.59%

 

 

 

 

 

Dividend and earnings

 

 

 

Revenue return per shareC

4.30p

4.47p

-3.8

Dividends per shareD

4.30p

4.30p

-

Dividend cover

1.00

1.04

 

Revenue reservesE

£13,104,000

£13,118,000

 

 

 

 

 

Operating costs

 

 

 

Ongoing charges ratioB

1.13%

1.10%

 

 

A            Based on capital only NAV.

B            Considered to be an Alternative Performance Measure

C           Measures the total earnings for the year divided by the weighted average number of Ordinary shares in issue (see Statement of Comprehensive Income).

D           The figures for dividends reflect the years in which they were earned (see note 8) and assume approval of the final dividend.

E            Prior to payment of proposed final dividend.

 

 

 

STRATEGIC REPORT - PERFORMANCE

 

 

Performance (total return)

 

 

1 year return

3 year return

5 year return

 

%

%

%

Net asset valueA

+4.9

+64.7

+63.0

Share priceA

+8.0

+69.8

+64.7

MSCI AC Asia Pacific ex Japan Index (currency adjusted)

+3.0

+58.8

+71.1

A Alternative Performance Measure.

 

 

 

 

 

Dividends

 

 

Rate

xd date

Record date

Payment date

Interim 2019

1.00p

3 January 2019

4 January 2019

25 January 2019

Proposed final 2019

3.30p

15 August 2019

16 August 2019

13 September 2019

 

_______

 

 

 

Total 2019

4.30p

 

 

 

 

_______

 

 

 

Interim 2018

1.00p

4 January 2018

5 January 2018

26 January 2018

Final 2018

3.30p

16 August 2018

17 August 2018

14 September 2018

 

_______

 

 

 

Total 2018

4.30p

 

 

 

 

_______

 

 

 

 

 

Ten Year Financial Record

 

Year to 30 April

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Total revenue (£'000)

4,372

5,752

6,799

6,562

6,819

7,412

7,004

6,922

7,481

7,442

 

______

______

______

______

______

______

______

______

______

______

Per share (p)A

 

 

 

 

 

 

 

 

 

 

Net revenue return

2.37

3.17

3.97

3.89

3.79

4.18

4.06

4.05

4.47

4.30

Total return

66.34

26.44

(2.72)

33.49

(18.68)

31.74

(34.72)

68.66

30.97

11.88

Net dividends paid/proposed

2.00

2.50

3.30

3.40

3.60

3.80

3.90

4.00

4.30

4.30

Net asset value

162.16

186.60

181.38

210.57

188.49

216.67

179.43

244.90

272.41

281.12

 

______

______

______

______

______

______

______

______

______

______

Shareholders' funds (£'000)

201,969

232,406

225,908

262,263

234,762

269,398

216,243

286,191

311,816

314,411

 

______

______

______

______

______

______

______

______

______

______

 

 

 

 

 

 

 

 

 

 

 

A Figures for 2010-2013 have been restated to reflect the 5:1 sub-division on 3 September 2013.

 

 

 

STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW

 

Portfolio Review

The Company's net asset value ("NAV") for the year ended 30 April 2019 rose by 4.9% on a total return basis, compared to a total return of 3.0% from the MSCI All Countries Asia Pacific ex Japan Index.  The main factor driving returns was stock selection in China, Indonesia and the Philippines. Also, the Company's holdings in the financial and material sector made a positive contribution to performance.

 

During the period, US-China trade tensions unexpectedly worsened with retaliatory tariffs weighing on Asian markets. While China bore the brunt of the volatility, other open economies, such as Singapore, Taiwan and Korea, also came under pressure. The US Federal Reserve's monetary policy also steered market direction, with a reversal of its tightening stance in the New Year allowing markets to recover some initial losses. In addition general elections in India, Indonesia and Thailand added to the uncertainty, although all three markets ended the year higher.

 

Despite the trade-related turmoil, the Chinese holdings were among the strongest contributors to performance notably the position in the Aberdeen Standard - China A Share Equity Fund. The fund's holdings are high-quality stocks with solid balance sheets, healthy cash flows and good earnings visibility. They are also domestically focused companies in sectors such as consumer, travel and healthcare that have been more insulated from trade-related pressures. It has been this focus on resilient locally-based holdings that has enabled the Company to outperform in China, amid slowing growth and heightened trade tensions.

 

One such holding is Ping An Insurance, which has exposure to China's growing middle class and increasing sophistication of its consumers.  It was one of the best performing holdings in the portfolio as its 2018 profits beat forecasts on robust growth from its core life and health-insurance businesses. We like Ping An given the  growth potential from the underpenetrated life-insurance business, its sound risk management practices and innovative use of technology. Chinese retail mall and residential property developer China Resources Land also performed well following robust results and earnings upgrades, defying the slowdown in consumer spending and continued march of e-commerce.

 

While our view on Chinese companies has evolved over recent years, our long-term preference for Indian companies remains undiminished. The portfolio's holding of the Aberdeen Standard - Indian Equity Fund was among the best performers in the portfolio for the year. This fund holds companies with dominant market positions and good growth potential, such as Hindustan Unilever, UltraTech Cement and Housing Development Finance Corporation ("HDFC"). These companies have competent managements and proven history of achieving above-industry returns almost irrespective of the macroeconomic and political conditions in the country. While the Indian market performed well over the period, it was a rollercoaster ride as a strengthening US Dollar and rising oil prices put pressure on the currency and current account. A liquidity crunch in the non-bank financial sector and a dispute between Pakistan and India further exacerbated concerns. Pressures eventually eased, however, as geopolitical tensions receded and the central bank intervened to cut interest rates and inject liquidity. Positive momentum for the incumbent Bharatiya Jain Party ("BJP") in the run up to the general election lifted markets. At the time of writing, the BJP had won a landslide victory, paving the way for Prime Minister Narendra Modi to push through further reforms in his second term that should bode well for the market and economy over the longer term.

 

Another key market in the portfolio is Singapore, which lagged the region on concerns over trade tensions and weak global growth. Companies turned cautious, opting to conserve cash rather than boost dividends. In addition, the property sector corrected following the imposition of further measures to limit demand. This restricted returns for real estate developer City Developments and conglomerate Keppel Corp, whose earnings from property trading were similarly hampered. Elsewhere in the property sector, the holding in the Philippine company, Ayala Land, contributed substantially to performance. It produced solid results, as residential pre-sales registered double-digit growth and office occupancy rates improved. 

 

In terms of sectors, the Company's exposure to the financial sector was positive for performance. Besides Ping An Insurance, Hong-Kong listed insurer AIA Group's shares rose on news that the Chinese government has given approval for it to operate in two more mainland cities. The portfolio's best performer was Indonesia's Bank Central Asia, as its margins continued to expand owing to its superior liquidity and lower cost of funds. In contrast,  OCBC, Standard Chartered and HSBC were weak as these were viewed as being more exposed to China's slowing economy. The Federal Reserve's pivot to a more cautious policy stance further affected these banks, which had been set to gain from higher interest rates. Despite the short-term weakness, we believe their long-term fundamentals remain intact.

 

In the materials sector, the exposure to Australian miners Rio Tinto and BHP Group supported performance as they benefited from a rise in iron ore prices, following another Brazilian mining dam disaster. We continue to look for opportunities in Australia that could offer sustainable returns. The biotech company CSL has been a core Australian holding which has added to returns consistently as it benefitted from its exposure to global markets. Last year, we introduced another Australian healthcare stock, Cochlear, a global leader in implants for hearing loss. The Company boasts cutting edge technology, a healthy balance sheet, a well-established distribution network as well as a commitment towards research and development that should  maintain its competitive advantage. We also initiated oil and gas producer Woodside Petroleum, a well-run private sector oil and gas company with strengths in LNG supply.

 

Meanwhile, we continued to reposition the portfolio in line with our long-term quality style, reinforcing our high-conviction views and better managing the risk of lower-conviction positions. Aside from those mentioned above, we also introduced three holdings in China. Online car-dealership platform Autohome and hotel chain Huazhu Group are both market leaders in their respective fields. Sunny Optical Technology is a key lens supplier for smartphone cameras. It is also well positioned for the trend towards autonomous driving, which would generate new demand for cameras and lenses in cars.

 

We funded these positions by divesting the holding in ST Engineering, the Singapore defense and aerospace company, given its high valuation and low earnings growth; and Indocement, following consolidation of Indonesia's cement industry as competitor Semen Indonesia gained more than half of the domestic market via an acquisition. We also sold Hong Kong landlord and Chinese shopping mall developer Hang Lung Group, but  retained some exposure through its subsidiary, Hang Lung Properties. Elsewhere, South Korea has been a challenging market and it has served the portfolio well to have limited exposure there. The technology and consumer sectors in particular came under pressure from trade tensions and negative currency effects. We exited Naver, Amorepacific Group and E-Mart.

 

Outlook

We remain cautious in view of the prevailing uncertainties, although heightened risk aversion is likely to make investors more discerning and refocus on fundamentals. The US-China trade war could drag on for some time, and we would need to consider the repercussions of extended tariffs on investor sentiment, stock markets and the region's economic growth, aside from the broader impact on global supply chains. However, Asia's underlying fundamentals and longer-term prospects remain sound. Economic growth in Asia should still exceed other regions, with improved governance and healthy structural trends, such as a growing workforce, greater affluence and technological advancement. At the corporate level, valuations appear to be fair and at a significant discount to developed markets, especially the US. Earnings growth is likely to be in the high single-digit range.

 

We will continue to focus on high-quality companies with solid balance sheets and proven track records that can weather the volatility. Beyond the short-term noise, we are well positioned to identify new investments given our focus on stock selection and extensive presence across the region. We have been moving towards direct investments in markets, such as China, Indonesia and Vietnam, whereas previously we had sought exposure via safe-haven markets such as Hong Kong and Singapore. We also continue to engage with, and monitor, our holdings closely and we believe that our deep research and quality focus will continue to deliver sustainable long-term returns for your Company.

 

Aberdeen Standard Investments (Asia) Limited

27 June 2019

 

 

 

 

 

PORTFOLIO - TEN LARGEST INVESTMENTS

As at 30 April 2019

 

 

 

 

Valuation

Total

Valuation

 

 

 

2019

assetsA

2018

Company

Industry

Country

£'000

%

£'000

Aberdeen Standard - Indian Equity FundB

 

 

 

 

 

A tax-efficient pooled India fund with a long-term investment approach managed by the same team managing the Company.

Collective Investment Scheme

India

40,673

11.7

37,897

Aberdeen Standard - China A Share Equity FundB

 

 

 

 

 

The fund offers a selection of Chinese companies that benefit from rising consumption and incomes of a growing middle class. However, investing directly in the A-share market remains challenging and the Manager believes it is more prudent to do so via a pooled vehicle offering diversification with lower stock-specific risk and volatility.

Collective Investment Scheme

China

22,406

6.5

22,579

Tencent Holdings

 

 

 

 

 

The internet giant continues to strengthen its ecosystem, and the Manager sees tremendous potential in Tencent's advertising business as it starts monetising its social media and payment platforms.

Interactive Media & Services

China

19,884

5.7

11,484

Samsung Electronics Pref

 

 

 

 

 

A leading semiconductor manufacturer which is also a major player in mobile phones and TFT-LCDs. The Company owns the preferred shares, which trade at a discount to the ordinary shares.

Technology Hardware Storage & Peripherals

South Korea

16,385

4.8

19,056

Taiwan Semiconductor Manufacturing Company

 

 

 

 

 

The world's largest dedicated semiconductor foundry, it provides wafer manufacturing, wafer probing, assembly and testing, mask production and design services.

Semiconductors & Semiconductor Equipment

Taiwan

14,968

4.3

13,257

Jardine Strategic Holdings

 

 

 

 

 

A Hong Kong conglomerate with regional interests in retail, property, hotels and auto distribution. It provides the Company with a diversified exposure to the Asian consumer, backed by good distribution networks, established franchises and a decent valuation.

Industrial Conglomerates

Hong Kong

11,984

3.5

13,122

AIA Group

 

 

 

 

 

A leading pan-Asian life insurance company, it is poised to take advantage of Asia's growing affluence, backed by an effective agency force and solid fundamentals.

Insurance

Hong Kong

10,575

3.0

10,543

Ayala Land

 

 

 

 

 

A leading property developer in the Philippines with an attractive land bank, well-respected brand and expertise across residential, commercial and retail sectors.

Real Estate Management & Development

Philippines

10,412

3.0

9,890

Bank Central Asia

 

 

 

 

 

Among the largest local private banks in Indonesia, it is well capitalised and has a big and stable base of low-cost deposits that funds its lending, while asset quality remains solid.

Banks

Indonesia

9,740

2.8

8,348

Oversea-Chinese Banking Corporation

 

 

 

 

 

A well-managed Singapore bank with a solid capital base and good cost-to-income ratio. It is diversified by both geography and service offerings, with interests spanning South East Asia, North Asia, wealth management and life assurance as well as its core banking activities.

Banks

Singapore

9,486

2.7

12,772

Top ten investments

 

 

166,513

48.0

 

 

 

 

PORTFOLIO - OTHER INVESTMENTS  

As at 30 April 2019

 

 

 

 

Valuation

Total

Valuation

 

 

 

2019

assetsA

2018

Company

Industry

Country

£'000

%

£'000

Ping An Insurance H Shares

Insurance

China

9,345

2.7

2,550

China Resources Land

Real Estate Management & Development

China

7,602

2.2

3,143

BHP Group (London listing)

Metals & Mining

Australia

7,018

2.0

6,637

CSL

Biotechnology

Australia

6,988

2.0

7,991

Rio Tinto (London Listing)

Metals & Mining

Australia

6,700

1.9

8,292

HSBC Holdings

Banks

Hong Kong

6,697

1.9

6,639

Siam Cement (Foreign)

Construction Materials

Thailand

6,586

1.9

7,281

Hong Kong Exchanges & Clearing

Capital Markets

Hong Kong

6,419

1.9

6,976

Aberdeen New India Investment Trust{B}

Investment Trusts

India

6,414

1.8

6,029

Swire Properties

Real Estate Management & Development

Hong Kong

5,907

1.7

4,887

Top twenty investments

 

 

236,189

68.0

 

DBS Group Holdings

Banks

Singapore

5,404

1.6

5,741

Keppel Corporation

Industrial Conglomerates

Singapore

5,133

1.5

6,840

City Developments

Real Estate Management & Development

Singapore

4,930

1.4

7,758

Autohome ADR

Internet Software & Services

China

4,651

1.3

-

Astra International

Automobiles

Indonesia

4,592

1.3

1,390

Yum China Holdings

Hotels, Restaurants & Leisure

China

4,415

1.3

4,904

LG Chem

Chemicals

South Korea

4,101

1.2

1,564

M.P. Evans Group

Food Products

United Kingdom

4,017

1.2

4,281

John Keells Holdings

Industrial Conglomerates

Sri Lanka

3,839

1.1

2,864

Kerry Logistics Network

Air Freight & Logistics

Hong Kong

3,667

1.1

1,428

Top thirty investments

 

 

280,938

81.0

 

Standard Chartered (London listing)

Banks

United Kingdom

3,652

1.1

4,835

United Overseas Bank

Banks

Singapore

3,629

1.0

3,828

Cochlear

Health Care Providers & Services

Australia

3,625

1.0

-

China Mobile

Wireless Telecommunication Services

China

3,535

1.0

6,153

Vietnam Dairy Products

Food Products

Vietnam

3,477

1.0

3,998

Wuxi Biologics (Cayman)

Life Sciences Tools & Services

China

3,460

1.0

-

Venture Corp

Electronic Equipment, Instruments & Components

Singapore

3,348

1.0

4,422

Anhui Conch Cement H Shares

Construction Materials

China

3,329

1.0

5,017

Singapore Telecommunication

Diversified Telecommunication Services

Singapore

3,244

0.9

6,394

Public Bank Berhad

Banks

Malaysia

3,013

0.9

3,179

Top forty investments

 

 

315,250

90.9

 

Taiwan Mobile

Wireless Telecommunication Services

Taiwan

2,976

0.9

3,414

Huazhu Group ADR

Hotels, Restaurants & Leisure

China

2,894

0.8

-

ASM Pacific Technology

Semiconductors & Semiconductor Equipment

Hong Kong

2,690

0.8

3,025

Aberdeen Standard Asia FocusB

Investment Trusts

Other Asia

2,570

0.7

2,546

Unilever Indonesia

Household Products

Indonesia

2,371

0.7

2,732

Bangkok Dusit Medical Services (Foreign)

Health Care Providers & Services

Thailand

1,909

0.5

1,613

Mobile World

Specialty Retail

Vietnam

1,862

0.5

-

Sunny Optical Technology

Electronic Equipment, Instruments & Components

China

1,743

0.5

-

Raffles Medical

Health Care Providers & Services

Singapore

1,725

0.5

1,757

Woodside Petroleum

Oil, Gas & Consumable Fuels

Australia

1,533

0.4

-

Top fifty investments

 

 

337,523

97.2

 

Swire Pacific B Shares

Real Estate Management & Development

Hong Kong

1,265

0.4

4,250

Yoma Strategic Holdings

Real Estate Management & Development

Myanmar

1,134

0.3

1,445

Amorepacific Corporation

Personal Goods

South Korea

975

0.3

2,431

Hang Lung Properties

Real Estate Management & Development

Hong Kong

923

0.3

882

DFCC Bank

Banks

Sri Lanka

628

0.2

2,925

E-Mart

Food & Staples Retailing

South Korea

521

0.2

776

Total investments

 

 

342,969

98.9

 

Net current assetsC

 

 

4,241

1.2

 

Total assetsA

 

 

347,210

100.1

 

A       As defined.

B       Holding also managed by the Standard Life Aberdeen Group but not subject to double charging of management fees.

C       Excluding short-term bank loans of £13,311,000.

Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings.

 

 

 

PORTFOLIO - CHANGES IN ASSET DISTRIBUTIONS

 

 

Value at

 

Appreciation/

Value at

 

30 April 2018

Purchases

(depreciation)

30 April 2019

Country

£'000

£'000

£'000

£'000

£'000

Australia

22,920

5,108

(2,362)

198

25,864

China

55,830

26,940

(8,554)

9,045

83,261

Hong Kong

53,685

2,564

(10,582)

4,460

50,127

India

43,926

5,950

(4,385)

1,596

47,087

Indonesia

15,409

3,490

(5,019)

2,823

16,703

Malaysia

3,179

-

-

(166)

3,013

Myanmar

1,445

-

-

(310)

1,135

Other Asia

2,546

-

-

25

2,571

Philippines

9,890

-

(1,746)

2,268

10,412

Singapore

52,773

857

(10,426)

(6,304)

36,900

South Korea

30,721

3,413

(6,250)

(5,452)

22,432

Sri Lanka

3,640

1,615

(180)

(608)

4,467

Taiwan

16,671

2,113

(3,345)

2,505

17,944

Thailand

8,894

-

(949)

550

8,495

United Kingdom

9,116

-

(4,386)

2,939

7,669

Vietnam

3,998

5,681

(2,399)

(1,941)

5,339

 

________

________

________

________

________

Total investments

334,643

57,731

(60,583)

11,628

343,419

Net current assetsA

5,231

-

(990)

4,241

 

________

________

________

________

________

Total assets less current liabilities

339,874

57,731

(60,583)

10,638

347,660

 

________

________

________

________

________

 

 

 

 

 

 

A Excluding short-term bank loans of £13,311,000 (2018 - £23,058,000). 

 

 

 

DIRECTORS' REPORT (EXTRACT)

 

The Directors present their report and the audited financial statements for the year ended 30 April 2019.

 

Results and Dividends

The financial statements for the year ended 30 April 2019 are contained below. An interim dividend of 1.0p per Ordinary share was paid on 25 January 2019 and the Board recommends a final dividend of 3.3p per Ordinary share, payable on 13 September 2019 to shareholders on the register on 16 August 2019. The relevant ex-dividend date is 15 August 2019. A resolution in respect of the final dividend will be proposed at the forthcoming Annual General Meeting.

 

Investment Trust Status

The Company is registered as a public limited company (registered in England and Wales No. 02377879) and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as an investment trust subject to it continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 May 2012. The Directors are of the opinion that the Company has conducted its affairs for the year ended 30 April 2019 so as to enable it to comply with the ongoing requirements for investment trust status.

 

Individual Savings Accounts

The Company has conducted its affairs in such a way as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.

 

Capital Structure

The issued Ordinary share capital at 30 April 2019 consisted of 111,841,348 Ordinary shares of 5p and 8,388,101 shares held in treasury. During the year the Company purchased 2,622,500 Ordinary shares to be held in treasury and it cancelled 2,819,187 of its shares held in treasury. Since the end of the year, it has purchased a further 80,000 Ordinary shares to be held in treasury. At the date of approval of this Report there were 111,761,348 Ordinary shares of 5p in issue and 8,468,101 shares held in treasury.

 

Voting Rights

Each Ordinary shareholder is entitled to one vote on a show of hands at general meetings of the Company and, on a poll, to one vote for every share held. The Ordinary shares, excluding treasury shares, carry a right to receive dividends.  On a winding up or other return of capital, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.

 

There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may from time to time be imposed by law.

 

Management Agreement

The Company has appointed Aberdeen Standard Fund Managers Limited ("ASFML"), a wholly owned subsidiary of Standard Life Aberdeen plc, as its alternative investment fund manager. ASFML has been appointed to provide investment management, risk management, administration and company secretarial services and promotional activities to the Company.  The Company's portfolio is managed by Aberdeen Standard Investments (Asia) Limited ("ASI Asia") by way of a group delegation agreement in place between ASFML and ASI Asia.  In addition, ASFML has sub-delegated promotional activities to Aberdeen Asset Managers Limited and administrative and secretarial services to Aberdeen Asset Management PLC. Details of the management fee and fees payable for promotional activities are shown in notes 4 and 5 to the financial statements.

 

The management agreement is terminable on not less than 12 months' notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

 

Substantial Interests

At 30 April 2019 the following interests in the issued Ordinary share capital of the Company had been disclosed in accordance with the requirements of the FCA's Disclosure Guidance and Transparency Rules ("DTR"):

 

Shareholder

Number of Ordinary shares held

% heldB

City of London Investment Management Company

14,737,592

13.2

Wells Capital Management

9,169,108

8.2

Aberdeen Standard Investment Trust Share PlansA

8,990,811

8.0

Derbyshire County Council

7,780,000

7.0

Funds managed by Rathbones

7,262,140

6.5

Quilter Cheviot Investment Management

5,436,921

4.9

1607 Capital Partners LLC

4,770,786

4.3

A Non-beneficial interest

B Based on 111,841,348 Ordinary shares in issue as at 30 April 2019

 

There have been no changes notified to the Company since the year.

 

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code (the "UK Code"), as published in April 2016, which is available on the Financial Reporting Council's website: frc.org.uk.

 

The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance as published in July 2016 (the "AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies (the "AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment trusts. The AIC Code and AIC Guide are available on the AIC's website: theaic.co.uk. The Board considers that reporting in accordance with the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), will provide better information to shareholders.

 

The Board confirms that, during the year, the Company complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.

 

The UK Code includes provisions relating to:

 

1.  the role of the chief executive (A.1.2);

2.  executive directors' remuneration (D.1.1 and D.1.2); and

3.  the need for an internal audit function (C.3.6).

 

For the reasons set out in the AIC Guide, and as explained in the UK Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

 

The Company is also non-compliant with Provision A.4.1 of the UK Code which states that the Board should appoint a Senior Independent Director. The Board has considered whether a Senior Independent Director should be appointed and has concluded that, given the current size of the Board and the fact that it is comprised entirely of non-executive Directors, this is unnecessary at the present time.

 

The full text of the Company's Corporate Governance Statement will be available on its website.

 

The Board notes the content of the new UK Code of Corporate Governance published by the FRC in July 2018 (the "2018 UK Code"), which is applicable for accounting periods beginning on or after 1 January 2019, and the new AIC Code of Corporate Governance published in February 2019 (the "2019 AIC Code"). The Board expects the Company to be compliant with the relevant provisions of the new codes for the year ending 30 April 2020 and will report its compliance in next year's Annual Report.

 

Directors

Mr Workman was appointed as a Director on 1 October 2018 and at the year end the Board comprised six Directors, consisting of a non-executive Chairman and five non-executive Directors. All Directors, with the exception of Mr Young, are considered by the Board to be independent and free of any material relationship with the Standard Life Aberdeen Group. Mr Young is a director of various entities connected with, or within, the Standard Life Aberdeen Group and, as such, is not considered to be independent.

 

Directors attended scheduled Board and Committee meetings during the year ended 30 April 2019 as shown in the table below (with their eligibility to attend the relevant meeting in brackets).

 



 

Director



Board

Meetings

Audit
and Risk
Committee
Meetings


Nomination
Committee

Meetings

Management Engagement  Committee
Meetings

D ShearerA

6 (6)

2 (2)

2 (2)

1 (1)

J Lorimer

6 (6)

2 (2)

2 (2)

1 (1)

S Rippingall

6 (6)

2 (2)

2 (2)

1 (1)

M Sears

6 (6)

2 (2)

2 (2)

1 (1)

D Workman

4 (4)

1 (1)

1 (1)

- (-)

H YoungB

6 (6)

- (-)

2 (2)

- (-)

A Mr Shearer is not a member of the Audit and Risk Committee, although he attends by invitation.

B Mr Young is not a member of the Audit and Risk or Management Engagement Committees.

 

The Board meets more frequently when business needs require.

 

Directors' and Officers' Liability Insurance

The Company's Articles of Association indemnify each of the Directors out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. In addition, the Directors have been granted qualifying indemnity provisions by the Company which are currently in force. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

 

Management of Conflicts of Interest

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, each Director prepares a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his or her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential or actual conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

 

No Director has a service contract with the Company although all Directors are issued with letters of appointment.

 

The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company's circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager's anti-bribery and corruption policies are available on its website.

 

In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.

 

Going Concern

The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances are realisable within a short timescale.  The Board has set limits for borrowing and regularly reviews cash flow projections and compliance with banking covenants. The Directors believe that, after making enquiries, the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report.  Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.

 

Accountability and Audit

Each Director confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and they have taken all the steps that they could reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

 

Independent Auditor

The Company's Auditor, Ernst & Young LLP, has indicated its willingness to remain in office. The Board will place resolutions before the Annual General Meeting to re-appoint Ernst & Young LLP as Auditor for the ensuing year and to authorise the Directors to determine its remuneration.

 

Relations with Shareholders

The Directors place a great deal of importance on communication with shareholders. Shareholders and investors may obtain up to date information on the Company through its website and the Manager's Customer Services Department. 

 

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (including the Company Secretary or the Manager) in situations where direct communication is required, and representatives from the Board meet with major shareholders on an annual basis in order to gauge their views.

 

In addition, the Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds personally as appropriate.

 

The Notice of the Annual General Meeting is sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Manager at the meeting.

 

Electronic Communications

The Company's Articles of Association allow shareholders to elect to receive communications from the Company and allow voting in electronic format. If shareholders would like to receive future communications in electronic format they should contact the Company's registrar, Equiniti Limited. If shareholders wish to continue to receive Annual Reports and other communications in hard copy format only they need take no further action.

 

Annual General Meeting

The Annual General Meeting will be held at the offices of Standard Life Aberdeen plc, Bow Bells House, 1 Bread Street, London EC4M 9HH on 4 September 2019 at 12 noon.

 

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

27 June 2019

 

 

 

STATEMENT OF COMPREHENSIVE INCOME

 

 

 

Year ended 30 April 2019

Year ended 30 April 2018

 

 

Revenue

Capital

Total

Revenue

Capital

Total

 

Notes

£'000

£'000

£'000

£'000

£'000

£'000

Gains on investments held at fair value through profit or loss

10

11,628

11,628

30,425

30,425

Income

3

7,442

7,442

7,481

7,481

Management fee

4

(902)

(902)

(1,804)

(924)

(924)

(1,848)

Administrative expenses

5

(839)

(839)

(739)

(739)

Exchange (losses)/gains

 

(1,745)

(1,745)

1,443

1,443

 

 

_______

_______

______

_______

______

_______

Net return before finance costs and taxation

 

5,701

8,981

14,682

5,818

30,944

36,762

 

 

 

 

 

 

 

 

Finance costs

6

(422)

(422)

(844)

(296)

(296)

(592)

 

 

_______

_______

______

_______

______

_______

Return before taxation

 

5,279

8,559

13,838

5,522

30,648

36,170

 

 

 

 

 

 

 

 

Taxation

7

(429)

(429)

(346)

(346)

 

 

_______

_______

______

_______

______

_______

Return after taxation

 

4,850

8,559

13,409

5,176

30,648

35,824

 

 

_______

_______

______

_______

______

_______

 

 

 

 

 

 

 

 

Return per Ordinary share (pence)

9

4.30

7.58

11.88

4.47

26.50

30.97

 

 

_______

_______

______

_______

______

_______

 

 

 

 

 

 

 

 

The total column of this statement represents the profit and loss account of the Company.

The Company does not have any income or expense that is not included in "Return after taxation" and therefore this represents the "Total comprehensive income for the year".

All revenue and capital items are derived from continuing operations.

The accompanying notes are an integral part of the financial statements.

 

 

 

STATEMENT OF FINANCIAL POSITION

 

 

 

As at

As at

 

 

30 April 2019

30 April 2018

 

Notes

£'000

£'000

Fixed assets

 

 

 

Investments at fair value through profit or loss

10

343,419

334,643

 

 

_________

_________

Current assets

 

 

 

Debtors

11

926

1,127

Cash at bank and in hand

 

3,853

4,507

 

 

_________

_________

 

 

4,779

5,634

 

 

_________

_________

Creditors: amounts falling due within one year

12

 

 

Loans

 

(13,311)

(23,058)

Other creditors

 

(538)

(403)

 

 

_________

_________

 

 

(13,849)

(23,461)

 

 

_________

_________

Net current liabilities

 

(9,070)

(17,827)

 

 

_________

_________

Total assets less current liabilities

 

334,349

316,816

 

 

 

 

Non-current creditors

12

 

 

Loans

 

(19,938)

(5,000)

 

 

_________

_________

Net assets

 

314,411

311,816

 

 

_________

_________

 

 

 

 

Share capital and reserves

 

 

 

Called-up share capital

13

6,011

6,152

Share premium account

 

17,955

17,955

Capital redemption reserve

 

10,543

10,402

Capital reserve

14

266,798

264,189

Revenue reserve

 

13,104

13,118

 

 

_________

_________

Equity shareholders' funds

 

314,411

311,816

 

 

_________

_________

 

 

 

 

Net asset value per Ordinary share (pence)

15

281.12

272.41

 

 

_________

_________

 

The accompanying notes are an integral part of the financial statements.

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

For the year ended 30 April 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share

Capital

 

 

 

 

Share

premium

redemption

Capital

Revenue

 

 

capital

account

reserve

reserve

reserve

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 30 April 2018

6,152

17,955

10,402

264,189

13,118

311,816

Buy back of Ordinary shares for treasury

-

-

-

(5,950)

-

(5,950)

Cancellation of Ordinary shares held in treasury

(141)

-

141

-

-

-

Return after taxation

-

-

-

8,559

4,850

13,409

Dividends paid (see note 8)

-

-

-

-

(4,864)

(4,864)

 

________

_________

_________

________

________

________

Balance at 30 April 2019

6,011

17,955

10,543

266,798

13,104

314,411

 

________

_________

_________

________

________

________

 

 

 

 

 

 

 

For the year ended 30 April 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share

Capital

 

 

 

 

Share

premium

redemption

Capital

Revenue

 

 

capital

account

reserve

reserve

reserve

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 30 April 2017

6,347

17,955

10,207

239,100

12,582

286,191

Buy back of Ordinary shares for treasury

-

-

-

(5,559)

-

(5,559)

Cancellation of Ordinary shares held in treasury

(195)

-

195

-

-

-

Return after taxation

-

-

-

30,648

5,176

35,824

Dividends paid (see note 8)

-

-

-

-

(4,640)

(4,640)

 

________

_________

_________

________

________

________

Balance at 30 April 2018

6,152

17,955

10,402

264,189

13,118

311,816

 

________

_________

_________

________

________

________

 

 

 

 

 

 

 

The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.

The accompanying notes are an integral part of the financial statements.

 

 

 

STATEMENT OF CASHFLOWS

 

 

 

Year ended

Year ended

 

 

30 April 2019

30 April 2018

 

Notes

£'000

£'000

Operating activities

 

 

 

Net return before finance costs and taxation

 

14,682

36,762

Adjustment for:

 

 

 

Gains on investments

 

(11,628)

(30,425)

Currency losses/(gains)

 

1,745

(1,443)

Dividend income

 

(7,433)

(7,478)

Dividend income received

 

7,796

7,396

Interest income

 

(9)

(3)

Interest income received

 

9

3

Increase in other debtors

 

(13)

(12)

Increase/(decrease) in other creditors

 

181

(177)

Stock dividends included in investment income

 

(358)

(341)

Overseas withholding tax

 

(487)

(328)

 

 

_________

_________

Net cash flow from operating activities

 

4,485

3,954

 

 

 

 

Investing activities

 

 

 

Purchases of investments

 

(57,373)

(42,057)

Sales of investments

 

60,492

51,710

 

 

_________

_________

Net cash from investing activities

 

3,119

9,653

 

 

 

 

Financing activities

 

 

 

Equity dividends paid

8

(4,864)

(4,640)

Interest paid

 

(778)

(586)

Buy back of Ordinary shares for treasury

 

(6,056)

(5,570)

Loan repayment

 

(28,074)

-

Loan drawdown

 

32,032

-

 

 

_________

_________

Net cash used in financing activities

 

(7,740)

(10,796)

 

 

_________

_________

(Decrease)/increase in cash

 

(136)

2,811

 

 

_________

_________

Analysis of changes in cash during the year

 

 

 

Opening balance

 

4,507

1,719

Effect of exchange rate fluctuations on cash held

 

(518)

(23)

(Decrease)/increase in cash as above

 

(136)

2,811

 

 

_________

_________

Closing balances

 

3,853

4,507

 

 

_________

_________

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

 

NOTES TO THE FINANCIAL STATEMENTS:

For the year ended 30 April 2019

 

1.

Principal activity

 

The Company is a closed-end investment company, registered in England & Wales No 02377879, with its Ordinary shares being listed on the London Stock Exchange.

 

2.

Accounting policies

 

(a)

Basis of accounting

 

 

The financial statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in February 2018 with consequential updates. The financial statements are prepared in sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on the assumption that approval as an investment trust will continue to be granted by HMRC.

 

 

 

 

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Directors' Report (unaudited).

 

 

 

 

 

The Company's investments and borrowings are made in a number of currencies, however the Board considers the Company's functional currency to be Sterling. In arriving at this conclusion, the Board considered that the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom, principally having its shareholder base in the United Kingdom, pays dividends and expenses in Sterling. Consequently, the Board also considers the Company's presentational currency to be Sterling.

 

 

 

 

 

Significant accounting judgements, estimates and assumptions

 

 

The preparation of financial statements requires the use of certain significant accounting judgements, estimates and assumptions which requires management to exercise its judgement in the process of applying the accounting policies and are continually evaluated. The Directors do not consider there to be any significant estimates within the financial statements. Special dividends are assessed and credited to capital or revenue according to their circumstances.

 

 

 

 

(b)

Valuation of investments

 

 

Listed investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised on the trade date at cost. Subsequent to initial recognition, investments are valued at fair value which for listed investments is deemed to be bid market prices. The fair value of the Company's investments in collective investment schemes has been determined by reference to their quoted net asset values. Gains and losses arising from changes in fair value are included as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.

 

 

 

 

(c)

Income  

 

 

Dividends, including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time apportioned basis so as to reflect the effective yield on shares. Other returns on non-equity shares are recognised when the right to return is established. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the scrip dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.

 

 

 

 

(d)

Expenses

 

 

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of Comprehensive Income except as follows:

 

 

-       expenses directly relating to the acquisition or disposal of an investment, which are charged to the capital column of the Statement of Comprehensive Income and are separately identified and disclosed in note 10; and

 

 

-       the Company charges 50% of investment management fees and finance costs to the capital column of the Statement of Comprehensive Income, in accordance with the Board's expected long term return in the form of capital gains and income respectively from the investment portfolio of the Company.

 

 

 

 

(e)

Taxation

 

 

The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the  Statement of Comprehensive Income because it excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are never taxable or deductible (see note 7 for a more detailed explanation).

 

 

 

 

 

Deferred taxation is provided on all timing differences, that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

 

 

 

 

(f)

Foreign currencies

 

 

Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Statement of Financial Position date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Statement of Comprehensive Income as capital or revenue, depending upon their nature.

 

 

 

 

(g)

Dividends payable

 

 

Final dividends are recognised from the date on which they are declared and approved by shareholders. Interim dividends are recognised when paid.

 

 

 

 

(h)

Nature and purpose of reserves

 

 

Called up share capital

 

 

The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve.

 

 

 

 

 

Share premium account

 

 

The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 5p. This is not a distributable reserve.

 

 

 

 

 

Capital redemption reserve

 

 

The capital redemption reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to maintain the Company's capital. This is not a distributable reserve.

 

 

 

 

 

Capital reserve

 

 

Gains or losses on disposal of investments and changes in fair values of investments are transferred to the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The costs of share buybacks to be held in treasury have also been deducted from this reserve.

 

 

 

 

 

Revenue reserve

 

 

This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.

 

 

 

 

(i)

Borrowings

 

 

Bank loans are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. Subsequently, they are measured at amortised cost using the effective interest method.  Finance charges are accounted for on an accruals basis using the effective interest rate method and are charged 50% to revenue and 50% to capital.

 

 

 

2019

2018

3.

Income

£'000

£'000

 

Income from investments

 

 

 

UK dividend income

1,350

1,284

 

Overseas dividends

5,725

5,853

 

Scrip dividends

358

341

 

 

_________

_________

 

 

7,433

7,478

 

 

_________

_________

 

Other income

 

 

 

Deposit interest

9

3

 

 

_________

_________

 

Total income

7,442

7,481

 

 

_________

_________

 

 

 

2019

2018

 

 

Revenue

Capital

Total

Revenue

Capital

Total

4.

Management fee

£'000

£'000

£'000

£'000

£'000

£'000

 

Management fee

902

902

1,804

924

924

1,848

 

 

_______

_______

______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Management and secretarial services are provided by Aberdeen Standard Fund Managers Limited ("ASFML").

 

 

 

The management fee is payable monthly in arrears based on an annual rate of 0.85% of the net asset value of the Company valued monthly, with the following provisions for commonly managed funds:

 

-      the Company's investments in Aberdeen Standard - Indian Equity Fund, Aberdeen Standard Asia Focus Investment Trust PLC and Aberdeen New India Investment Trust PLC are excluded from the calculation of the investment management fee. The Company's investment in Aberdeen Standard - China A Share Equity Fund is held in a share class not subject to management charges at a fund level and the Manager is therefore entitled to a fee on the value of the Company's investment. The total value of such commonly managed funds, on a bid price basis (basis on which management fee is calculated), at the year end was £72,063,000 (2018 - bid basis - £69,051,000).

 

-      the Company receives a rebate from the Manager for the amount of fees in excess of 0.85% of net assets charged by the Manager for any commonly managed fund.

 

 

 

The balance due to ASFML at the year end, net of any rebates was £311,000 (2018 - £159,000).

 

 

 

The agreement is terminable by either party on not less than twelve months' notice to the other. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

 

 

 

2019

2018

5.

Administrative expenses

£'000

£'000

 

Promotional activities

152

158

 

Directors' fees

132

141

 

Safe custody fees

132

121

 

Auditor's remuneration:

 

 

 

-       fees payable to the Company's Auditor for the audit of the Company's annual financial statements

20

15

 

-       fees payable to the Company's Auditor for the review of the Company's half yearly financial statements

5

4

 

-       fees payable to the Company's auditor and its associates for iXBRL tagging services

2

2

 

Other administration expenses

396

298

 

 

_________

_________

 

 

839

739

 

 

_________

_________

 

 

 

 

 

The Company has an agreement with ASFML for the provision of promotional activities. The total fees payable during the year were £152,000 (2018 - £158,000) and the sum due to ASFML at the year end was £47,000 (2018 - £13,000).

 

 

 

No pension contributions were made in respect of any of the Directors.

 

 

 

The Company does not have any employees.

 

 

 

2019

2018

 

 

Revenue

Capital

Total

Revenue

Capital

Total

6.

Finance costs

£'000

£'000

£'000

£'000

£'000

£'000

 

Interest on bank loans

422

422

844

296

296

592

 

 

_______

_______

_______

_______

_______

_______

 

 

 

2019

2018

 

 

Revenue

Capital

Total

Revenue

Capital

Total

7.

Taxation

£'000

£'000

£'000

£'000

£'000

£'000

 

(a)

Analysis of charge for the year

 

 

 

 

 

 

 

 

Overseas tax

501

501

413

413

 

 

Overseas tax reclaimable

(72)

(72)

(67)

(67)

 

 

 

_______

_______

_______

_______

_______

_______

 

 

Total tax charge for the year

429

429

346

346

 

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

(b)

Factors affecting the tax charge for the year

 

 

The tax assessed for the year is lower than the current standard rate of corporation tax in the UK.

 

 

 

 

 

 

 

 

2019

2018

 

 

 

Revenue

Capital

Total

Revenue

Capital

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

Net return before taxation

5,279

8,559

13,838

5,522

30,648

36,170

 

 

 

_______

_______

_______

_______

_______

_______

 

 

Net return multiplied by standard rate of corporation tax in the UK of 19%

1,003

1,626

2,629

1,049

5,823

6,872

 

 

Effects of:

 

 

 

 

 

 

 

 

Non-taxable UK dividend income

(256)

(256)

(244)

(244)

 

 

Non-taxable overseas dividends

(1,156)

(1,156)

(1,177)

(1,177)

 

 

Overseas tax suffered

429

429

346

346

 

 

Surplus management expenses and loan relationship deficits not relieved

409

251

660

372

232

604

 

 

Non-taxable exchange losses/(gains)

332

332

(274)

(274)

 

 

Non-taxable gains

(2,209)

(2,209)

(5,781)

(5,781)

 

 

 

_______

_______

_______

_______

_______

_______

 

 

Total tax charge

429

429

346

346

 

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

(c)

Provision for deferred taxation

 

 

No provision for deferred taxation has been made in the current year or in the prior year.

 

 

 

 

 

The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company.

 

 

 

 

(d)

Factors that may affect future tax charges

 

 

At the year end, the Company has an unrecognised deferred tax asset of £4,577,000 (2018 - £3,986,000) arising as a result of excess management expenses and non-trade loan relationship deficits. These expenses will only be utilised if the Company has profits chargeable to corporation tax in the future.

 

 

 

2019

2018

8.

Dividends

£'000

£'000

 

Amounts recognised as distributions to equity holders in the period:

 

 

 

Final dividend for 2018 - 3.3p (2017 - 3.0p)

3,741

3,486

 

Interim dividend for 2019 - 1.0p (2018 - 1.0p)

1,123

1,154

 

 

_______

_______

 

 

4,864

4,640

 

 

_______

_______

 

 

 

 

 

The proposed final dividend in respect of the year ended 30 April 2019 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 

 

 

The table below sets out the proposed final dividend, together with the interim dividend paid, in respect of the financial year, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £4,850,000 (2018 - £5,176,000).

 

 

 

 

 

 

2019

2018

 

 

£'000

£'000

 

Interim dividend for 2019 - 1.0p (2018 - 1.0p)

1,123

1,154

 

Proposed final dividend for 2019 - 3.3p (2018 - 3.3p)

-

3,741

 

 

_______

_______

 

 

1,123

4,895

 

 

_______

_______

 

 

 

 

 

Subsequent to the year end the Company has purchased for treasury a further 80,000 Ordinary shares. Therefore the amounts reflected above for the cost of the proposed final dividend for 2019 are based on 111,761,348 Ordinary shares, being the number of Ordinary shares in issue excluding those held in treasury at the date of this Report.

 

 

 

2019

2018

9.

Return per Ordinary share

£'000

p

£'000

p

 

Revenue return

4,850

4.30

5,176

4.47

 

Capital return

8,559

7.58

30,648

26.50

 

 

_______

_______

_______

_______

 

Total return

13,409

11.88

35,824

30.97

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

Weighted average number of Ordinary shares in issue{A}

112,843,126

 

115,681,655

 

 

__________

 

__________

 

{A} Calculated excluding shares held in treasury.

 

 

 

 

 

 

Listed

Listed

 

 

 

overseas

in UK

Total

10.

Investments

£'000

£'000

£'000

 

Fair value through profit or loss:

 

 

 

 

Opening book cost

153,385

21,029

174,414

 

Opening fair value gains on investments held

148,638

11,591

160,229

 

 

_______

_______

_______

 

Opening valuation

302,023

32,620

334,643

 

Movements in the year:

 

 

 

 

Purchases at cost

57,731

57,731

 

Sales - proceeds

(56,196)

(4,387)

(60,583)

 

Sales - realised gains

21,577

680

22,257

 

Current year fair value (losses)/gains on investments held

(12,088)

1,459

(10,629)

 

 

_______

_______

_______

 

Closing valuation

313,047

30,372

343,419

 

 

_______

_______

_______

 

Closing book cost

176,497

17,322

193,819

 

Closing fair value gains on investments held

136,550

13,050

149,600

 

 

_______

_______

_______

 

 

313,047

30,372

343,419

 

 

_______

_______

_______

 

 

 

 

 

 

 

 

2019

2018

 

 

 

£'000

£'000

 

Investments listed on an overseas investment exchange

 

313,047

302,023

 

Investments listed on the UK investment exchange

 

30,372

32,620

 

 

 

_______

_______

 

 

 

343,419

334,643

 

 

 

_______

_______

 

 

 

 

 

 

 

 

2019

2018

 

Gains on investments held at fair value through profit or loss

 

£'000

£'000

 

Realised gains on sales

 

22,257

26,293

 

(Decrease)/increase in fair value gains on investments held

 

(10,629)

4,132

 

 

 

_______

_______

 

 

 

11,628

30,425

 

 

 

_______

_______

 

 

 

Transaction costs

 

During the year 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 held at fair value through profit or loss in the Statement of Comprehensive Income. The total costs were as follows:

 

 

 

 

 

 

2019

2018

 

 

£'000

£'000

 

Purchases

91

42

 

Sales

107

78

 

 

_______

_______

 

 

198

120

 

 

_______

_______

 

 

 

 

 

The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.

           

 

 

 

2019

2018

11.

Debtors

£'000

£'000

 

Prepayments and accrued income

691

1,048

 

Amounts due from brokers

91

 

Other loans and receivables

144

79

 

 

_______

_______

 

 

926

1,127

 

 

_______

_______

 

 

 

 

2019

2018

12.

Creditors

£'000

£'000

 

 

Amounts falling due within one year:

 

 

 

 

a)

Loans

 

 

 

 

 

Foreign currency loans

8,311

20,558

 

 

 

Sterling loan

5,000

2,500

 

 

 

 

_______

_______

 

 

 

 

13,311

23,058

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

2019

2018

 

 

b)

Other

£'000

£'000

 

 

 

Amounts due to brokers

106

 

 

 

Other creditors

538

297

 

 

 

 

_______

_______

 

 

 

 

538

403

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

2019

2018

 

 

Non-current creditors:

£'000

£'000

 

 

Sterling loan

19,938

5,000

 

 

 

_______

_______

 

 

 

 

 

During the year the Company increased its loan facility with The Royal Bank of Scotland International Limited to £40,000,000. On 14 December 2018 the Company repaid its US$8,680,000 and £6,000,000 loans and a new £20,000,000 bank loan, at a fixed rate of 2.626%, maturing on 14 December 2023 was drawn down incurring an arrangement fee of £67,500. This expense will be amortised over the life of the loan.

 

 

 

 

 

In addition to the above, the Company had a floating rate bank loan of HK$85,000,000 (2018 - HK$154,100,000), equivalent to £8,311,000 (2018 - £14,256,000), with a maturity date of 15 May 2019 (2018 - 23 May 2018) and a fixed rate bank loan of £5,000,000 (2018 - £5,000,000) drawn down from the £40,000,000 facility with The Royal Bank of Scotland International Limited at interest rates of 2.38429% and 2.75% (2018 - 1.95% and 2.75%) respectively.

 

 

 

 

 

As of the latest date prior to the signing of this Report the HK$85,000,000 loan had been drawn down to 15 July 2019 at interest rate of 3.37286%.

 

 

 

 

 

The terms of the bank loan with The Royal Bank of Scotland International Limited state that:

 

 

-       the net tangible assets of the Company must be not less than £125 million at all times;

 

 

-       the ratio of gross borrowings to adjusted assets must be less than 25% at all times (adjusted assets are total gross assets less (i) the value of any unlisted investment; (ii) the value in excess of 10% of total gross assets invested in the largest single security or asset; (iii) the value of any single security or asset (other than the largest security or asset referred to above) exceeds 5% of gross assets; (iv) the value in excess of 60% of total gross assets invested in the top twenty largest investments; (v) the extent to which the value of securities in collective investment schemes exceeds 30% of gross assets; and (vi) the extent to which the aggregated value of securities or assets in countries with a Standard and Poor's foreign sovereign debt rating lower than BBB exceeds 30% of gross assets.); and

 

 

-       the facility, under which the loans are made, is split into three tranches, a £5,000,000 fixed rate facility which will expire on 7 October 2019, a £20,000,000 fixed rate facility which will expire on 14 December 2023 and a £15,000,000 floating rate facility which will expire on 14 December 2021.

 

 

 

 

 

The Company has met all financial covenants throughout the period and up to the date of this Report.

 

             

 

 

 

2019

2018

13.

Called-up share capital

£'000

£'000

 

Allotted, called up and fully paid:

 

 

 

111,841,348 (2018 - 114,463,848) Ordinary shares of 5p each

5,592

5,723

 

 

 

 

 

Held in treasury:

 

 

 

8,388,101 (2018 - 8,584,788) Ordinary shares of 5p each

419

429

 

 

_______

_______

 

 

6,011

6,152

 

 

_______

_______

 

 

 

 

 

During the year 2,622,500 (2018 - 2,398,250) Ordinary shares of 5p each were repurchased by the Company at a total cost, including transaction costs, of £5,950,000 (2018 - £5,559,000). All of the shares were placed in treasury. On 30 April 2019 2,819,187 (2018 - 3,887,029) Ordinary shares held in treasury were cancelled. Shares held in treasury represent 7.50% of the Company's total issued share capital at 30 April 2019. Shares held in treasury do not carry a right to receive dividends.

 

 

 

Subsequent to the year end the Company bought back for treasury a further 80,000 Ordinary shares for a total consideration of £196,000.

 

 

 

2019

2018

14.

Capital reserve

£'000

£'000

 

At 1 May 2018

264,189

239,100

 

Movement in fair value gains

11,628

30,425

 

Foreign exchange movement

(1,745)

1,443

 

Buy back of Ordinary shares for treasury

(5,950)

(5,559)

 

Expenses allocated to capital

(1,324)

(1,220)

 

 

_______

_______

 

At 30 April 2019

266,798

264,189

 

 

_______

_______

 

 

 

 

 

The capital reserve includes investment holding gains amounting to £149,600,000 (2018 - £160,229,000), as disclosed in note 10.

 

15.

Net asset value per share

 

The net asset value per share and the net asset values attributable to Ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows:

 

 

 

 

 

 

2019

2018

 

Net assets attributable

£314,411,000

£311,816,000

 

Number of Ordinary shares in issue (excluding shares held in treasury)

111,841,348

114,463,848

 

Net asset value per share

281.12p

272.41p

 

16.

Financial instruments

 

Risk management

 

The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.

 

 

 

The Board has delegated the risk management function to ASFML under the terms of its management agreement with ASFML (further details of which are included under note 4). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such approach has been applied throughout the year and has not changed since the previous accounting period.

 

 

 

Risk management framework

 

The directors of Aberdeen Standard Fund Managers Limited collectively assume responsibility for ASFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.

 

 

 

ASFML is a fully integrated member of the Standard Life Aberdeen Group ("the Group"), which provides a variety of services and support to ASFML in the conduct of its business activities, including the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to Aberdeen Standard Investments Asia Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.

 

 

 

The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the Group CEO. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD").

 

 

 

The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group CEO and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.

 

 

 

The Group's corporate governance structure is supported by several committees to assist the board of directors, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described on the committees' terms of reference.

 

 

 

Risk management

 

The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.

 

 

 

(i) Market risk

 

The fair value of, or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other price risk. 

 

 

 

Interest rate risk

 

Interest rate movements may affect:

 

- the level of income receivable on cash deposits; and,

 

- interest payable on the Company's variable rate borrowings.

 

 

 

Management of the risk

 

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

 

 

 

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current bank covenant guidelines state that the total borrowings will not exceed 25% of the adjusted net assets of the Company as defined in note 12.

 

 

 

Interest risk profile

 

The interest rate risk profile of the portfolio of the Company's financial assets and liabilities, excluding equity holdings which are all non-interest bearing, at the Statement of Financial Position date was as follows:

 

 

 

 

Weighted average

Weighted

 

 

 

 

period for which

average

Fixed

Floating

 

 

rate is fixed

interest rate

rate

rate

 

At 30 April 2019

Years

%

£'000

£'000

 

Assets

 

 

 

 

 

Indonesia Rupiah

-

-

-

69

 

Sterling

-

0.47

-

1,383

 

Taiwan Dollar

-

-

-

1

 

Vietnam Dong

-

-

-

2,400

 

 

 

 

_______

_______

 

 

 

 

-

3,853

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

Weighted average

Weighted

 

 

 

 

period for which

average

Fixed

Floating

 

 

rate is fixed

interest rate

rate

rate

 

 

Years

%

£'000

£'000

 

Liabilities

 

 

 

 

 

Bank loan - £20,000,000

4.55

2.63

19,938

-

 

Bank loan - £5,000,000

0.44

2.75

5,000

-

 

Bank loan - HK$85,000,000

0.08

2.38

8,311

-

 

 

 

 

_______

_______

 

 

 

 

33,249

-

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

Weighted average

Weighted

 

 

 

 

period for which

average

Fixed

Floating

 

 

rate is fixed

interest rate

rate

rate

 

At 30 April 2018

Years

%

£'000

£'000

 

Assets

 

 

 

 

 

Indonesia Rupiah

-

-

-

53

 

Sterling

-

-

-

2,804

 

Taiwan Dollar

-

-

-

70

 

Vietnam Dong

-

-

-

1,580

 

 

 

 

_______

_______

 

 

 

 

-

4,507

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

Weighted average

Weighted

 

 

 

 

period for which

average

Fixed

Floating

 

 

rate is fixed

interest rate

rate

rate

 

 

Years

%

£'000

£'000

 

Liabilities

 

 

 

 

 

Bank loan - £2,500,000

0.08

1.53

2,500

-

 

Bank loan - £5,000,000

1.44

2.75

5,000

-

 

Bank loan - HK$154,100,000

0.08

1.95

14,256

-

 

Bank loan - US$8,680,000

0.08

2.90

6,302

-

 

 

 

 

_______

_______

 

 

 

 

28,058

-

 

 

 

 

_______

_______

 

 

 

 

 

 

 

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity date of the Company's loans are shown in note 12.

 

The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.

 

The Company's equity portfolio and short-term debtors and creditors (excluding bank loans) have been excluded from the above tables.

 

 

 

Interest rate sensitivity

 

Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit.

 

 

 

Foreign currency risk

 

All of the Company's investment portfolio is invested in overseas securities and the Statement of Financial Position, therefore, can be significantly affected by movements in foreign exchange rates.

 

 

 

Management of the risk

 

It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. The Company's borrowings, as detailed in note 12, are predominantly in sterling.

 

 

 

The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.

 

 

 

Foreign currency exposure by currency of denomination:

 

 

 

 

30 April 2019

30 April 2018

 

 

 

Net

Total

 

Net

Total

 

 

 

monetary

currency

 

monetary

currency

 

 

Investments

assets

exposure

Investments

assets

exposure

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

Australian Dollar

12,146

-

12,146

7,991

-

7,991

 

Hong Kong Dollar

87,041

(8,311)

78,730

68,912

(14,256)

54,656

 

Indonesian Rupiah

16,703

69

16,772

15,408

53

15,461

 

Malaysian Ringgit

3,013

-

3,013

3,179

-

3,179

 

Philippine Peso

10,412

-

10,412

9,890

-

9,890

 

Singapore Dollar

38,036

-

38,036

54,217

-

54,217

 

South Korean Won

22,431

91

22,522

30,720

-

30,720

 

Sri Lankan Rupee

4,467

-

4,467

3,640

-

3,640

 

Taiwanese Dollar

17,944

1

17,945

16,671

70

16,741

 

Thai Baht

8,495

-

8,495

8,894

-

8,894

 

US Dollar

46,349

-

46,349

40,605

(6,302)

34,303

 

Vietnam Dong

5,339

2,400

7,739

3,998

1,580

5,578

 

 

 

_______

_______

_______

_______

_______

_______

 

Total

 

272,376

(5,750)

266,626

264,125

(18,855)

245,270

 

 

 

_______

_______

_______

_______

_______

_______

 

 

 

Foreign currency sensitivity

 

The following table details the Company's sensitivity to a 10% increase and decrease in sterling against the foreign currencies in which the Company has exposure. The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

 

 

 

 

 

 

2019

2018

 

 

£'000

£'000

 

Australian Dollar

1,215

799

 

Hong Kong Dollar

7,873

5,466

 

Indonesian Rupiah

1,677

1,546

 

Malaysian Ringgit

301

318

 

Philippine Peso

1,041

989

 

Singapore Dollar

3,804

5,422

 

South Korean Won

2,252

3,072

 

Sri Lankan Rupee

447

364

 

Taiwanese Dollar

1,795

1,674

 

Thai Baht

850

889

 

US Dollar

4,635

3,430

 

Vietnam Dong

774

558

 

 

_______

_______

 

 

26,664

24,527

 

 

_______

_______

 

 

 

 

 

Price risk

 

Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.

 

 

 

Management of the risk

 

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.

 

 

 

Price risk sensitivity

 

If market prices at the Statement of Financial Position date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 30 April 2019 would have increased/(decreased) by £34,342,000 (2018 - increased/(decreased) by £33,464,000) and equity reserves would have increased/(decreased) by the same amount.

 

 

 

(ii) Liquidity risk

 

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities as they fall due in line with the maturity profile analysed below.

 

 

 

 

Within

Within

Within

Within

Within

 

 

 

1 year

1-2 years

2-3 years

3-4 years

4-5 years

Total

 

At 30 April 2019

£'000

£'000

£'000

£'000

£'000

£'000

 

Bank loans

13,311

-

-

-

19,938

33,249

 

Interest cash flows on bank loans

615

524

524

525

396

2,584

 

Cash flows on other creditors

538

-

-

-

-

538

 

 

_______

_______

_______

_______

_______

_______

 

 

14,464

524

524

525

20,334

36,371

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Within

Within

Within

Within

Within

 

 

 

1 year

1-2 years

2-3 years

3-4 years

4-5 years

Total

 

At 30 April 2018

£'000

£'000

£'000

£'000

£'000

£'000

 

Bank loans

23,058

5,000

-

-

-

28,058

 

Interest cash flows on bank loans

178

69

-

-

-

247

 

Cash flows on other creditors

403

-

-

-

-

403

 

 

_______

_______

_______

_______

_______

_______

 

 

23,639

5,069

-

-

-

28,708

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Management of the risk

 

 

 

 

 

 

 

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise a £5,000,000 fixed rate credit facility, which expires on 7 October 2019, a £20,000,000 fixed rate credit facility, which expires on 14 December 2023 and revolving multi-currency credit facility, which expires on 14 December 2021. The Board has imposed a maximum gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of 25%. Details of borrowings at 30 April 2019 are shown in note 12.

 

 

 

Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of the loan facility, details of which can be found in note 12. Under the terms of the loan facility, the Manager provides the lender with loan covenant reports on a monthly basis, to provide the lender with assurance that the terms of the facility are not being breached. The Manager will also review the credit rating of a lender on a regular basis. Details of the Board's policy on gearing are shown in the interest rate risk section of this note.

 

 

 

(iii) Credit risk

 

This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.

 

 

 

Management of the risk

 

Investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker. Cash is held only with reputable banks with high quality external credit enhancements.

 

 

 

Credit risk exposure

 

In summary, compared to the amounts in the Statement of Financial Position, the maximum exposure to credit risk at 30 April was as follows:

 

 

 

 

2019

2018

 

 

Statement of

 

Statement of

 

 

 

Financial

Maximum

Financial

Maximum

 

 

Position

exposure

Position

exposure

 

 

£'000

£'000

£'000

£'000

 

Current assets

 

 

 

 

 

Loans and receivables

926

926

1,127

1,127

 

Cash at bank and in hand

3,853

3,853

4,507

4,507

 

 

_______

_______

_______

_______

 

 

4,779

4,779

5,634

5,634

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Fair values of financial assets and financial liabilities

 

The carrying values of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. For all other short-term debtors and creditors, their book values approximate to fair values because of their short-term maturity. Bank loans are valued at amortised cost in accordance with the Company's stated accounting policy.

                                   

 

17.

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 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 30 April 2019

£'000

£'000

£'000

£'000

 

Financial assets at fair value through profit or loss

 

 

 

 

 

Quoted equities

280,340

-

-

280,340

 

Collective investment schemes

-

63,079

-

63,079

 

 

_______

_______

_______

_______

 

Total fair value

280,340

63,079

-

343,419

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Level 1

Level 2

Level 3

Total

 

As at 30 April 2018

£'000

£'000

£'000

£'000

 

Financial assets at fair value through profit or loss

 

 

 

 

 

Quoted equities

274,167

-

-

274,167

 

Collective investment schemes

-

60,476

-

60,476

 

 

_______

_______

_______

_______

 

Total fair value

274,167

60,476

-

334,643

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

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.

 

 

 

Collective investment schemes

 

The fair value of the Company's investments in collective investment schemes has been determined by reference to their quoted net asset values at the reporting date and hence are categorised in Fair Value Level 2.

                   

 

18.

Related party transactions and transactions with the Manager

 

Mr Young is also a director of the Company's Investment Manager, Aberdeen Standard Investments (Asia) Limited, which is a wholly-owned subsidiary of Standard Life Aberdeen plc. Management, promotional activities and secretarial and administration services are provided to the Company by Aberdeen Standard Fund Managers Limited. Details of transactions during the year and balances outstanding at the year end disclosed in notes 4 and 5.

 

19.

Capital management policies and procedures

 

The investment objective of the Company is to provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.

 

 

 

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

 

 

 

The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:   

 

- the planned level of gearing which takes account of the Manager's views on the market;

 

- the level of equity shares in issue; and

 

- the extent to which revenue in excess of that which is required to be distributed should be retained.

 

 

 

The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

 

 

 

The Company does not have any externally imposed capital requirements.

 

 

 

ALTERNATIVE PERFORMANCE MEASURES

Alternative performance measures 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.

 

Total return is considered to be an alternative performance measure. 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 investing 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 reinvesting 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 years ended 30 April 2019 and 30 April 2018.

 

 

 

 

 

Dividend

 

Share

2019

rate

NAV

price

30 April 2018

N/A

272.41p

236.00p

16 August 2018

3.30p

262.91p

227.00p

3 January 2019

1.00p

246.21p

215.00p

30 April 2019

N/A

281.12p

250.00p

 

 

_________

_________

Total return

 

4.9%

8.0%

 

 

_________

_________

 

 

 

 

 

Dividend

 

Share

2018

rate

NAV

price

30 April 2017

N/A

244.90p

212.00p

3 August 2017

3.00p

258.50p

226.00p

4 January 2018

1.00p

277.22p

243.00p

30 April 2018

N/A

272.41p

236.00p

 

 

_________

_________

Total return

 

12.9%

13.3%

 

 

_________

_________

 

 

 

 

Dividend cover

 

 

 

Revenue return per share of 4.30p (2018 - 4.47p) divided by dividends per share of 4.30p (2018 - 4.30p) expressed as a ratio.

 

Discount to net asset value

The amount by which the market price per Ordinary share of 250.00p (2018 - 236.00p) is lower than the net asset value per Ordinary share (including income 281.12p (2018 - 272.41p); excluding income 277.79p (2018 - 268.90p)), expressed as a percentage of the adjusted net asset value per Ordinary share.

 

Net asset value per Ordinary share (ex income) 

The Company also uses net asset value (ex income) per share as an alternative performance measure. This is calculated as follows:

 

 

 

 

2019

2018

Net assets attributable

£314,411,000

£311,816,000

Less: Revenue for the year

£(4,850,000)

£(5,176,000)

Add: Dividends paid during the year

£1,123,000

£1,154,000

 

_________

_________

Net assets (ex income)

£310,684,000

£307,794,000

Number of Ordinary shares in issue

111,841,348

114,463,848

 

_________

_________

NAV (ex income) per Ordinary share

277.79p

268.90p

 

_________

_________

 

 

 

Net gearing 

Net gearing measures the total borrowings of £33,249,000 (30 April 2018 - £29,524,000) less cash and cash equivalents of £3,944,000 (30 April 2018 - £4,401,000) divided by shareholders' funds of £314,411,000 (30 April 2018 - £311,816,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due and to brokers at the year end as well as cash.

 

Ongoing charges 

Ongoing charges is considered to be an alternative performance measure. 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 throughout the year.

 

 

 

 

2019

2018

Investment management fees (£'000)

1,803

1,848

Administrative expenses (£'000)

839

739

Less: non-recurring charges (£'000)

(89)

(13)

 

_________

_________

Ongoing charges (£'000)

2,553

2,574

 

_________

_________

Average net assets (£'000)

294,966

306,307

 

_________

_________

Ongoing charges ratio (excluding look-through costs)

0.87%

0.84%

 

_________

_________

Look-through costsA

0.26%

0.26%

 

_________

_________

Ongoing charges ratio (including look-through costs)

1.13%

1.10%

 

_________

_________

 

 

 

A         Costs associated with holdings in collective investment schemes as defined by the Committee of European Securities Regulators' guidelines on the methodology for the calculation of the ongoing charges figure, issued on 1 July 2010.

B       During both years net asset values with debt at fair value equated to net asset value with debt at amortised cost due to the short-term nature of the bank loans.

 

The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations.

           

 

 

Additional Notes to the Annual Financial Report

The Annual General Meeting will be held at 12 noon on 4 September 2019 at Bow Bells House, 1 Bread Street, London EC4M 9HH.

 

If approved at the Annual General Meeting, the final dividend of 3.3p per share will be paid on 13 September 2019 to holders of Ordinary shares on the register at the close of business on 16 August 2019. The relevant ex-dividend date is 15 August 2019.

 

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2019 have been agreed with the auditor and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2017 and 2018 statutory accounts received unqualified reports from the Company's auditor and did not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006.  The financial information for 2018 is derived from the statutory accounts for 2018 which have been delivered to the Registrar of Companies. The 2019 accounts will be filed with the Registrar of Companies in due course.

 

The Annual Report and Accounts will be posted to shareholders in July 2019. Copies will be available during normal business hours from the Secretary, Aberdeen Asset Management PLC, 1 George Street, Edinburgh EH2 2LL or from the Company's website, www.newdawn-trust.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.

 

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

27 June 2019

 

 

* Neither the Company's website nor the content of any website accessible from hyperlinks on it (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.


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.
 
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