REG - Aberdeen New Dawn IT - Half Yearly Results
ABERDEEN NEW DAWN INVESTMENT TRUST PLC
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 2020
Legal Entity Identifier: 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)
PERFORMANCE HIGHLIGHTS
Share price total return AB
Net asset value total return AB
Benchmark total return B
Six months ended
31 October 2020+26.3%
Six months ended
31 October 2020+21.4%
Six months ended
31 October 2020+18.1%
Year ended
30 April 2020-8.4%
Year ended
30 April 2020-5.5%
Year ended
30 April 2020-5.2%
Ongoing charges A
Revenue return per share
Interim dividend per Ordinary share
Six months ended
31 October 20201.12%
Six months ended
31 October 20202.38p
Six months ended
31 October 20201.00p
Year ended
30 April 20201.10%
Six months ended
31 October 20193.28p
Six months ended
31 October 20191.00p
A Considered to be an Alternative Performance Measure.
B Total return represents capital return plus dividends reinvested
FINANCIAL HIGHLIGHTS
31 October 2020
30 April 2020
% change
Total assets including current year income A
£370,644,000
£322,929,000
+14.8
Total equity shareholders' funds
£343,591,000
£289,285,000
+18.8
Share price (mid-market) B
280.50p
225.00p
+24.7
Net asset value per share (including current year income) B
314.24p
261.63p
+20.1
Net asset value per share (excluding current year income) B C
311.85p
258.00p
+20.9
Discount to net asset value (including current year income) B C
10.7%
14.0%
Discount to net asset value (excluding current year income) B C
10.1%
12.8%
MSCI AC Asia Pacific ex Japan Index (currency adjusted) B
825.43
710.41
+16.2
Net gearing C
5.50%
10.33%
Interim dividend per share D
1.0p
1.0p
-
Ongoing charges ratio C
1.12%
1.10%
A Total assets which includes current year income, less current liabilities, before deducting any prior charges.
B Percentage change figures are on a capital return basis.
C Considered to be an Alternative Performance Measure.
D Interim dividend relating to the first six months of the financial year.
For further information, please contact:
Stephanie Hocking
Aberdeen Standard Investments 0207 463 6403
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.
INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT
Results and Dividends
As shareholders will be well aware, this has been an extraordinary six months, as the world battled the pandemic spread of the COVID-19 virus. After initially imposing draconian restrictions on movement, governments are gradually relaxing social-distancing measures and, supported by unprecedented monetary and fiscal stimulus, a global economic recovery appears to be underway. Asian markets were surprisingly positive against such a challenging backdrop, with the benchmark MSCI All Countries Asia Pacific ex Japan Index rising by 18.1% in total return terms over the half year to 31 October 2020. In comparison, the Company's net asset value ("NAV") total return was 21.4%, pleasingly ahead of the benchmark, a testament to the quality and resilience of the portfolio's holdings.
The Company's share price total return was 26.3% and the share price at the end of the period was 280.5p, representing a discount to the NAV of 10.1% (excluding current year income) compared to 12.8% discount at the beginning of the period.
The Board has declared an unchanged interim dividend for the year of 1.0p per Ordinary share, which will be paid on 29 January 2021 to shareholders on the register on 8 January 2021 (the relevant ex-dividend date being 7 January 2021). Shareholders should be aware that, as in previous years, the level of future dividends will depend on the level of income from the portfolio.
Overview
Asian markets made steady gains over the summer and autumn despite the challenging economic backdrop. Much of the region managed to bring the virus to heel through stringent lockdowns, and comprehensive test and trace procedures. With infection numbers reducing, governments eased restrictions cautiously as they sought to revive their economies. Companies also acted swiftly to cut costs and bolster their balance sheets, with many scaling back capital spending and reducing dividends. The combined effect of these actions supported corporate earnings, which exceeded expectations but remained lower than for the same period last year. This steadily improving outlook, along with extensive monetary policy easing and, more recently, positive news on vaccine development, gratified investors. Arguably this has propelled share prices to levels that seem somewhat disconnected with the harsh reality still facing the world economy.
Notably, Asian stocks outpaced their global counterparts for most of the period. They remained resilient even as global markets turned volatile in October amid further outbreaks of the virus in the US and Europe. The best performing markets were in Northeast Asia - China, South Korea and Taiwan - which were among the first to bring the virus under control. In contrast, Southeast Asia lagged. In particular, Thailand was negatively affected by the student demonstrations in Bangkok and its dependence on tourism. Singapore, a small open economy, was also hampered by the decline in tourist numbers and global trade flows.
Geopolitical tensions that had continued to rise during the period also blunted progress. US-China relations worsened, with the US sanctioning a number of Chinese technology companies on national security concerns. In contrast, Beijing exercised more restraint in its retaliation, although Hong Kong was caught in the crossfire. The mainland government pushed through a national security law in the territory that criminalises challenges to its authority, including demonstrations. Nevertheless, protestors returned to the streets in defiance of the law.
Gratifyingly, the portfolio performed better than the benchmark over the period. This underscores the value of your Manager's stock-picking process, and the quality and resilience of the portfolio's underlying holdings. In particular, holdings in Taiwan, South Korea and China performed well. Chinese contract research organisation Wuxi Biologics was a key contributor, thanks to the continued solid structural growth in the biologics outsourcing services segment. Your Manager has since initiated two more names in this sector: Chinese peer Hangzhou Tigermed Consulting, which conducts clinical trials, and South Korea's Samsung Biologics, the world's largest biopharmaceutical contract manufacturer. They complement Wuxi Biologics' drug discovery activities and together, the three span the sector's value chain. Unsurprisingly, these companies have benefited from the pandemic, as clients required support in developing COVID-19 treatments. In the healthcare sector, your Manager also established a position in New Zealand's Fisher & Paykel Healthcare. As a market-leading maker of respiratory-care devices used in hospitals' intensive care units, it has experienced strong demand for its products in the wake of the pandemic.
Through the market turmoil, your Manager has focused on quality companies that are exposed to structural growth drivers, such as the development of 5G networks, data centres, artificial intelligence and the 'Internet of Things'. These have fuelled demand for semiconductor chips resulting in strong returns for Samsung Electronics and Taiwan Semiconductor Manufacturing Company. Similarly, internet companies, such as Tencent and Alibaba, rallied on the back of strong demand for digital entertainment and e-commerce, stimulated by consumers forced to spend more time at home. Previously, your Manager had avoided Alibaba, the Chinese e-commerce giant, due to corporate governance concerns. However, there is evidence of improvements in its governance structure, and continued professionalisation of, and access to, senior management. This, combined with a strengthening of its underlying business, has resulted in your Manager feeling sufficiently comfortable to initiate a small position in the company.
Elsewhere, your Manager took a contrarian view, investing in companies that they judged to have faced undue selling pressure amid the COVID-19 panic. For example, the Macau casino operator Sands China has been severely affected by travel restrictions. However, given its market-leading position and the strength of its balance sheet, your Manager believes the company is now attractively valued and the share price will rebound once conditions normalise.
On a less positive note, the portfolio's heavier exposure to the underperforming Southeast Asian markets was a detractor to performance. This led your Manager to reduce exposure to the region, including the sale of Thai healthcare provider Bangkok Dusit Medical Services and Myanmar-based conglomerate Yoma Strategic Holdings. Nonetheless, certain Southeast Asian markets, such as Vietnam, remain appealing given their young and expanding populations which should support growth in consumer demand over the longer term. Singapore's reputation as a defensive market offering decent yield also remains intact.
Meanwhile, your Manager was disciplined in selling other lower-conviction holdings whose prospects are no longer as attractive during this period of elevated uncertainty and economic strain. These included Chinese hotel operator Huazhu Group and telecoms company Taiwan Mobile.
Gearing
The Company's borrowing facilities total £35 million and comprise a fixed rate loan of £20 million, which matures in December 2023 (with an interest rate of 2.626%), and a £15 million multi-currency revolving loan facility which matures in December 2021. As at 31 October 2020, an aggregate Sterling equivalent of £27.1 million was drawn down and gearing (net of cash) was 5.5%, compared to 10.3% at the beginning of the period.
During the period, the amount drawn down under the multi-currency revolving loan facility was reduced by approximately £6.5 million as the Manager adopted a more cautious approach in light of the disruption caused by the COVID-19 pandemic.
Share Buy Backs
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. 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.
During the period, the Company bought back 1.2 million shares, representing 1.1% 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.
Board Composition
Having served as a Director since 2014, Susie Rippingall has informed us that she wishes to step down from the Board due to a potential conflict of interest with another Board position. Accordingly, Susie will retire as a Director on 31 December 2020. On behalf of the Board, I would like to thank Susie for her invaluable contribution during her time as a Director, and in particular her significant knowledge of Asian markets. We wish her well for the future.
We have recently conducted an independent search and are pleased to announce the appointment of Nicole Yuen as an independent non-executive Director with effect from 1 January 2021. Nicole is a Hong Kong national and a graduate of the University of Hong Kong and Harvard Law School. She had an executive career initially in law and subsequently in equities with UBS and latterly Credit Suisse (Hong Kong) where she was Chief Operating Officer for the Greater China region and subsequently Managing Director, Head of Equities, North Asia until 2018. Nicole is currently a non-executive director of Interactive Brokers Group, Inc. She will bring a relevant and current perspective of the Asian markets and economies and we look forward to welcoming her to the Board.
Nicole will stand for election at the Annual General Meeting to be held in September 2021.
There are no other disclosures required under Section 9.6.13 of the Listing Rules in relation to this appointment.
Outlook
After a tumultuous six months dealing with the impact of both COVID-19 and resurgent geopolitical tensions, there is now the prospect of a resolution to both in the medium term. The advent of potentially viable vaccines has already proven positive for share prices. There are expectations that these new drugs will enable a return to normality by this time next year, although challenges related to manufacturing and distribution could surface in the interim. Meanwhile, Joe Biden's victory in the US presidential elections augurs well for geopolitics. Many observers expect him to adopt a more multilateral approach on the world stage, while taking a less confrontational approach towards China. The strategic rivalry between the two countries will likely persist but a more constructive dialogue is anticipated which should hopefully reduce market instability.
In addition, central banks in the region remain extremely accommodative, providing support for share prices. In the longer term, structural growth drivers such as rising wealth and consumption levels, growing adoption of cloud computing, 5G and artificial intelligence offer promising prospects for companies in the region. Furthermore, in the Manager's view, many equity valuations are reasonable despite the market rally and remain at a steep discount to global equities, providing good investment opportunities across the region. Your Manager remains focused on selecting quality stocks with good fundamentals, including strong environmental, social and governance ("ESG") credentials, that should help your Company to continue to thrive in tandem with the long-term growth prospects in Asia.
Donald Workman,
Chairman
16 December 2020
INTERIM BOARD REPORT - OTHER MATTERS
Directors' Responsibility Statement
The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with applicable laws and regulations. The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements within the Half-Yearly Financial Report has been prepared in accordance with Financial Reporting Standard 104 'Interim Financial Reporting';
- the Interim Board Report (constituting the Interim Management Report) includes a fair review of the information required by rule 4.2.7R of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period, and any changes in the related party transactions described in the last Annual Report that could do so).
Principal Risks and Uncertainties
The Board regularly reviews the principal risks and uncertainties faced by the Company together with the mitigating actions it has established to manage the risks. These are set out within the Strategic Report contained within the Annual Report for the year ended 30 April 2020 and comprise the following risk headings:
- Investment strategy and objectives
- Investment management
- Income/dividends
- Financial
- Gearing
- Regulatory
- Operational
- Exogenous risks
In addition to these risks, the Board is conscious of the recent impact on financial markets caused by the outbreak of the COVID-19 virus around the world since the beginning of 2020. The Board considers that this is a risk that could have further implications for global financial markets, economies and on the operating environment of the Company, the impact of which is difficult to predict at the current juncture. The Board is also conscious of the uncertainties relating to the ongoing Brexit negotiations between the UK and the EU. Apart from these matters, the Company's principal risks and uncertainties have not changed materially since the date of the Annual Report and are not expected to change materially for the remaining six months of the Company's financial year.
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 regularly reviews income and expenditure projections, has set limits for borrowing and reviews compliance with banking covenants, including the headroom available. The Company has two loan facilities which expire in December 2021 and December 2023 respectively.
Having taking these factors into account, as well as the impact on the Company of the spread of the COVID-19 virus, 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.
On behalf of the Board
Donald Workman,
Chairman
16 December 2020
INVESTMENT PORTFOLIO
As at 31 October 2020
Valuation
Total assets
Company
Country
£'000
%
Tencent Holdings
China
38,544
10.4
Aberdeen Standard SICAV - China A Share Equity Fund A
China
35,821
9.7
Taiwan Semiconductor Manufacturing Company
Taiwan
32,076
8.7
Samsung Electronics Pref
South Korea
30,499
8.2
Aberdeen Standard SICAV - Indian Equity Fund A
India
28,511
7.7
CSL
Australia
13,389
3.6
Ping An Insurance H Shares
China
10,398
2.8
AIA Group
Hong Kong
10,251
2.8
Ayala Land
Philippines
7,808
2.1
Bank Central Asia
Indonesia
7,571
2.0
Top ten investments
214,868
58.0
Cochlear
Australia
7,553
2.0
China Resources Land
China
7,163
1.9
Hong Kong Exchanges & Clearing
Hong Kong
7,083
1.9
Wuxi Biologics (Cayman)
China
7,040
1.9
Oversea-Chinese Banking Corporation
Singapore
6,617
1.8
Aberdeen New India Investment Trust A B
India
6,082
1.6
Meituan Dianping B
China
5,865
1.6
BHP Group B
Australia
5,743
1.6
Alibaba Group
China
5,608
1.5
LG Chem
South Korea
4,518
1.2
Top twenty investments
278,140
75.0
Kerry Logistics Network
Hong Kong
4,325
1.2
Aristocrat Leisure
Australia
4,220
1.1
ASML
Netherlands
4,035
1.1
DBS Group Holdings
Singapore
3,914
1.1
Siam Cement (Foreign)
Thailand
3,578
1.0
Auckland International Airport
New Zealand
3,542
1.0
Fisher & Paykel Healthcare C
New Zealand
3,524
0.9
Vietnam Dairy Products
Vietnam
3,480
0.9
M.P. Evans Group B
United Kingdom
3,401
0.9
Sands China
China
3,277
0.9
Top thirty investments
315,436
85.1
John Keells Holdings
Sri Lanka
3,236
0.9
Astra International
Indonesia
3,220
0.9
Rio Tinto B
Australia
3,193
0.9
GDS ADS
China
3,033
0.8
Xero
New Zealand
2,982
0.8
Budweiser Brewing
Hong Kong
2,907
0.8
Singapore Telecommunication
Singapore
2,804
0.7
Venture Corp
Singapore
2,696
0.7
Aberdeen Standard Asia Focus A B
Other Asia
2,449
0.7
Anhui Conch Cement H Shares
China
2,442
0.6
Top forty investments
344,398
92.9
Mobile World
Vietnam
2,302
0.6
Hangzhou Tigermed Consulting C
China
2,233
0.6
Raffles Medical
Singapore
2,203
0.6
Altium
Australia
2,086
0.6
Swire Properties
Hong Kong
1,779
0.5
City Developments
Singapore
1,773
0.5
Jardine Strategic Holdings
Hong Kong
1,694
0.5
Samsung Biologics
South Korea
1,669
0.4
China Conch Venture Holdings
China
1,473
0.4
CapitaLand
Singapore
1,318
0.3
Total investments
362,928
97.9
Net current assets D
7,716
2.1
Total assets E
370,644
100.0
A Holding also managed by the Standard Life Aberdeen Group but not subject to double charging of management fees.
B London Stock Exchange listing.
C Holding comprises of A & H shares.
D Excluding short-term bank loans of £7,095,000.
E Total assets which includes current year income, less current liabilities, before deducting any prior charges.
Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings.
INDEPENDENT REVIEW REPORT TO ABERDEEN NEW DAWN INVESTMENT TRUST PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the Half Yearly Financial Report for the six months ended 31 October 2020 which comprises a Condensed Statement of Comprehensive Income, Condensed Statement of Financial Position, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and the related notes 1 to 14. We have read the other information contained in the Half Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The Half Yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this Half Yearly Financial Report has been prepared in accordance with the Financial Reporting Standard ("FRS")104 'Interim Financial Reporting'.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half Yearly Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half Yearly Financial Report for the six months ended 31 October 2020 is not prepared, in all material respects, in accordance with FRS 104 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP,
Edinburgh
16 December 2020
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months ended
Six months ended
31 October 2020
31 October 2019
Revenue
Capital
Total
Revenue
Capital
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
Gains/(losses) on investments
-
59,251
59,251
-
(792)
(792)
Income
2
3,953
-
3,953
5,050
-
5,050
Management fee
(550)
(550)
(1,100)
(466)
(466)
(932)
Administrative expenses
(383)
-
(383)
(434)
-
(434)
Exchange losses
-
(15)
(15)
-
(54)
(54)
_______
_______
_______
_______
_______
_______
Net return before finance costs and taxation
3,020
58,686
61,706
4,150
(1,312)
2,838
Finance costs
(173)
(173)
(346)
(246)
(246)
(492)
_______
_______
_______
_______
_______
_______
Return before taxation
2,847
58,513
61,360
3,904
(1,558)
2,346
Taxation
3
(233)
-
(233)
(247)
-
(247)
_______
_______
_______
_______
_______
_______
Return after taxation
2,614
58,513
61,127
3,657
(1,558)
2,099
_______
_______
_______
_______
_______
_______
Return per Ordinary share (pence)
5
2.38
53.17
55.55
3.28
(1.40)
1.88
_______
_______
_______
_______
_______
_______
The total column of the Condensed Statement of Comprehensive Income represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these condensed set of interim financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at
As at
31 October 2020
30 April 2020
Notes
£'000
£'000
Fixed assets
Investments at fair value through profit or loss
9
362,928
318,887
__________
__________
Current assets
Debtors
2,968
1,221
Cash at bank and in hand
6,533
3,647
__________
__________
9,501
4,868
__________
__________
Creditors: amounts falling due within one year
Loans
(7,095)
(13,693)
Other creditors
(1,785)
(826)
__________
__________
(8,880)
(14,519)
__________
__________
Net current assets/(liabilities)
621
(9,651)
__________
__________
Total assets less current liabilities
363,549
309,236
Non-current creditors
Loans
(19,958)
(19,951)
__________
__________
Net assets
343,591
289,285
__________
__________
Share capital and reserves
Called-up share capital
6,011
6,011
Share premium account
17,955
17,955
Capital redemption reserve
10,543
10,543
Capital reserve
296,657
241,342
Revenue reserve
12,425
13,434
__________
__________
Equity shareholders' funds
343,591
289,285
__________
__________
Net asset value per Ordinary share (pence)
6
314.24
261.63
__________
__________
The accompanying notes are an integral part of these condensed set of interim financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Six months ended 31 October 2020
Share
Capital
Share
premium
redemption
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 30 April 2020
6,011
17,955
10,543
241,342
13,434
289,285
Buy back of Ordinary shares for treasury
-
-
-
(3,198)
-
(3,198)
Return after taxation
-
-
-
58,513
2,614
61,127
Dividend paid
4
-
-
-
-
(3,623)
(3,623)
______
______
_______
______
______
_______
Balance at 31 October 2020
6,011
17,955
10,543
296,657
12,425
343,591
______
______
_______
______
______
_______
Six months ended 31 October 2019
Share
Capital
Share
premium
redemption
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 30 April 2019
6,011
17,955
10,543
266,798
13,104
314,411
Buy back of Ordinary shares for treasury
-
-
-
(1,574)
-
(1,574)
Return after taxation
-
-
-
(1,558)
3,657
2,099
Dividend paid
4
-
-
-
-
(3,686)
(3,686)
______
______
_______
______
______
_______
Balance at 31 October 2019
6,011
17,955
10,543
263,666
13,075
311,250
______
______
_______
______
______
_______
The accompanying notes are an integral part of these condensed set of interim financial statements.
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months ended
Six months ended
31 October 2020
31 October 2019
Notes
£'000
£'000
Operating activities
Net return before finance costs and taxation
61,706
2,838
Adjustment for:
(Gains)/losses on investments
(59,251)
792
Currency losses
15
54
Dividend income
(3,953)
(5,041)
Dividend income received
4,320
5,515
Interest income
-
(9)
Interest income received
-
8
Increase in other debtors
(23)
(1)
Increase in other creditors
459
13
Stock dividends included in investment income
(237)
(483)
Overseas withholding tax
(316)
(340)
__________
__________
Net cash flow from operating activities
2,720
3,346
Investing activities
Purchases of investments
(31,472)
(18,728)
Sales of investments
45,408
22,190
__________
__________
Net cash from investing activities
13,936
3,462
Financing activities
Interest paid
(336)
(490)
Equity dividend paid
4
(3,623)
(3,686)
Buyback of Ordinary shares for treasury
(3,198)
(1,512)
Loan repayment
(8,665)
-
Loan drawdown
2,182
-
__________
__________
Net cash used in financing activities
(13,640)
(5,688)
__________
__________
Increase in cash
3,016
1,120
__________
__________
Analysis of changes in cash during the period
Opening balance
3,647
3,853
Effect of exchange rate fluctuations on cash held
(130)
17
Increase in cash as above
3,016
1,120
__________
__________
Closing balances
6,533
4,990
__________
__________
The accompanying notes are an integral part of these condensed set of interim financial statements.
NOTES TO THE FINANCIALSTATEMENTS
For the period ended 31 October 2020
1.
Accounting policies
Basis of accounting. The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 'Interim Financial Reporting' and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.
The interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements.
2.
Income
Six months ended
Six months ended
31 October 2020
31 October 2019
£'000
£'000
Income from investments
UK dividend income
307
589
Overseas dividends
3,409
3,969
Stock dividends
237
483
__________
__________
3,953
5,041
__________
__________
Other income
Deposit interest
-
9
__________
__________
Total income
3,953
5,050
__________
__________
3.
Taxation. The taxation charge for the period represents withholding tax suffered on overseas dividend income (31 October 2019 - same).
4.
Dividends. Ordinary dividends on equity shares deducted from reserves are analysed below:
Six months ended
Six months ended
31 October 2020
31 October 2019
£'000
£'000
2020 final dividend - 3.30p (2019 - 3.30p)
3,623
3,686
__________
__________
An interim dividend of 1.00p (31 October 2019 - 1.00p) per share will be paid on 29 January 2021 to shareholders on the register on 8 January 2021. The ex-dividend date will be 7 January 2021.
5.
Return per Ordinary share
Six months ended
Six months ended
31 October 2020
31 October 2019
p
p
Revenue return
2.38
3.28
Capital return
53.17
(1.40)
__________
__________
Total return
55.55
1.88
__________
__________
The figures above are based on the following attributable returns:
£'000
£'000
Revenue return
2,614
3,657
Capital return
58,513
(1,558)
__________
__________
Total return
61,127
2,099
__________
__________
Weighted average number of Ordinary shares in issue
110,041,027
111,625,750
__________
__________
6.
Net asset value per share
As at
As at
31 October 2020
30 April 2020
Net assets per Condensed Statement of Financial Position
£343,591,000
£289,285,000
Number of Ordinary shares in issue A
109,339,348
110,571,348
Net asset value per Ordinary share
314.24p
261.63p
A Excluding shares held in treasury.
7.
Transaction costs. During the six months ended 31 October 2020 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/(losses) on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:
Six months ended
Six months ended
31 October 2020
31 October 2019
£'000
£'000
Purchases
39
38
Sales
60
30
__________
__________
99
68
__________
__________
8.
Analysis of changes in net debt
At
At
30 April
Currency
Cash
Non-cash
31 October
2020
differences
flows
movements
2020
£'000
£'000
£'000
£'000
£'000
Cash and short term deposits
3,647
(130)
3,016
-
6,533
Debt due within one year
(13,693)
115
6,483
-
(7,095)
Debt due after more than one year
(19,951)
-
-
(7)
(19,958)
_________
_________
_________
________
________
(29,997)
(15)
9,499
(7)
(20,520)
__________
_________
_________
_________
_________
At
At
30 April
Currency
Cash
Non-cash
31 October
2019
differences
flows
movements
2019
£'000
£'000
£'000
£'000
£'000
Cash and short term deposits
3,853
17
1,120
-
4,990
Debt due within one year
(13,311)
(70)
-
-
(13,381)
Debt due after more than one year
(19,938)
-
-
(7)
(19,945)
__________
_________
_________
_________
_________
(29,396)
(53)
1,120
(7)
(28,336)
__________
_________
_________
_________
_________
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.
9.
Fair value hierarchy. FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications:
Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:
Level 1
Level 2
Level 3
Total
As at 31 October 2020
£'000
£'000
£'000
£'000
Financial assets at fair value through profit or loss
Quoted equities
298,596
-
-
298,596
Collective investment schemes
-
64,332
-
64,332
_________
________
________
________
Total fair value
298,596
64,332
-
362,928
_________
________
_________
________
Level 1
Level 2
Level 3
Total
As at 30 April 2020
£'000
£'000
£'000
£'000
Financial assets at fair value through profit or loss
Quoted equities
262,106
-
-
262,106
Collective investment schemes
-
56,781
-
56,781
_________
________
_________
________
Total fair value
262,106
56,781
-
318,887
__________
________
________
________
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.
10.
Called-up share capital. During the six months ended 31 October 2020 the Company purchased 1,232,000 (31 October 2019 - 630,000) Ordinary shares for treasury at a cost of £3,198,000 (31 October 2019 - £1,574,000).
Between the period 1 November 2020 and the date of approval of this Report, the Company bought back for treasury a further 45,000 Ordinary shares at a cost of £129,000.
11.
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 ("ASFML").
The management fee is payable monthly in arrears based on an annual amount 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 SICAV - Indian Equity Fund, Aberdeen Standard Asia Focus 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 SICAV - 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 at the period end was £72,863,000 (31 October 2019 - £74,961,000).
- 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.
During the period £1,100,000 (31 October 2019 - £932,000) of management fees were payable, with a balance of £755,000 (31 October 2019 - £305,000) being due to ASFML at the period end. Management fees are charged 50% to revenue and 50% to capital.
The promotional activities fee is based on a current annual amount of £157,000 (31 October 2019 - £140,000), payable quarterly in arrears. During the period £79,000 (31 October 2019 - £70,000) of fees were payable, with a balance of £52,000 (31 October 2019 - £47,000) being due to ASFML at the period end.
12.
Segmental information. The Company is engaged in a single segment of business, which is to invest in equity securities. Accordingly, all significant operating decisions are based on the Company as one segment.
13.
The financial information contained in this Half-Yearly Report does not constitute statutory accounts as defined in Sections 434-436 of the Companies Act 2006. The financial information for the six months ended 31 October 2020 and 31 October 2019 has not been audited by the Company's external auditor.
The financial information for the year ended 30 April 2020 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the Independent Auditor on those accounts contained no qualification or statement under Section 498 (2), (3) or (4) of the Companies Act 2006.
14.
This Half-Yearly Financial Report was approved by the Board on 16 December 2020.
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. 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 six months ended 31 October 2020 and year end 30 April 2020.
Dividend
Share
Six months ended 31 October 2020
rate
NAV
price
30 April 2020
N/A
261.63p
225.00p
6 August 2020
3.30p
299.84p
255.00p
31 October 2020
N/A
314.24p
280.50p
__________
__________
Total return
+21.4%
+26.3%
__________
__________
Dividend
Share
Year ended 30 April 2020
rate
NAV
price
30 April 2019
N/A
281.12p
250.00p
15 August 2019
3.30p
277.07p
241.00p
2 January 2020
1.00p
292.08p
258.00p
30 April 2020
N/A
261.63p
225.00p
__________
__________
Total return
-5.5%
-8.4%
__________
__________
Discount to net asset value. The amount by which the market price per Ordinary share of 280.50p (30 April 2020 - 225.00p) is lower than the net asset value per Ordinary share (including income 314.24p (30 April 2020 - 261.63p); excluding income 311.85p (30 April 2020 - 258.00p)), expressed as a percentage of the 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:
31 October 2020
30 April 2020
Net assets attributable (£'000)
343,591
289,285
Less: Revenue for the year (£'000)
(2,614)
(5,125)
Add: Dividends paid during the year (£'000)
-
1,109
Net assets (ex income) (£'000)
340,977
285,269
__________
__________
Number of Ordinary shares in issue
109,339,348
110,571,348
__________
__________
NAV (ex income) per Ordinary share
311.85p
258.00p
__________
__________
Net gearing. Net gearing measures the total borrowings of £27,053,000 (30 April 2020 - £33,644,000) less cash and cash equivalents of £8,155,000 (30 April 2020 - £3,759,000) divided by shareholders' funds of £343,591,000 (30 April 2020 - £289,285,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due from brokers £1,622,000 (30 April 2020 - due from brokers of £112,000) at the period end as well as cash at bank and in hand of £6,533,000 (30 April 2020 - £3,647,000).
Ongoing charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values throughout the year. The ratio for 31 October 2020 is based on forecast ongoing charges for the year ending 30 April 2021.
31 October 2020
30 April 2020
Investment management fees (£'000)
2,271
1,854
Administrative expenses (£'000)
762
763
Less: non-recurring charges (£'000)
(35)
(54)
__________
__________
Ongoing charges (£'000)
2,998
2,563
__________
__________
Average net assets (£'000)
333,704
310,182
__________
__________
Ongoing charges ratio (excluding look-through costs)
0.90%
0.83%
Look-through costs A
0.22%
0.27%
__________
__________
Ongoing charges ratio (including look-through costs)
1.12%
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.
During both periods net asset values with debt at fair value equate 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.
The Half-yearly Report and Accounts will be posted to shareholders. Copies may be obtained 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*.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
16 December 2020
* 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.
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