Annual Financial Report
12/10/2023 07:00
FIDELITY ASIAN VALUES PLC
Final Results for the year ended 31 July 2023
Financial Highlights:
* The Board of Fidelity Asian Values PLC (the “Company”) recommends an
annual dividend of 14.50 pence per share.
* The net asset value (NAV) total return increased by 11.4% for the year ended
31 July 2023, outperforming the Company’s Comparative Index (MSCI All
Countries ex Japan Small Cap Index) which rose by 7.5% over the same period.
* The ordinary share price total return for the reporting year was an increase
of 17.3%.
* The Company maintains net gearing of approximately 4.9%, reflecting
opportunities found across the region.
Contacts
For further information, please contact:
Nira Mistry
Company Secretary
FIL Investments International
07778 354517
Chairman’s Statement
This is my last Annual Report for the Company, having served as your Chairman
for nine years this December. During that time, your Company has gone through
significant changes. Having begun as a large-cap Asia fund, it now operates in
a very different area, primarily investing in smaller companies with a focus
on value stocks. As I prepare to retire from the Board, I have taken the
opportunity to look back at the impact of these changes, beginning with the
selection of Nitin Bajaj as your Portfolio Manager in April 2015. From
Nitin’s appointment until 31 July 2023, your Company has produced a Net
Asset Value (“NAV”) total return of 112.6% and a share price total return
of 129.0%, outperforming the Comparative Index (MSCI All Countries Asia ex
Japan Small Cap Index (net) total return (in sterling terms)) of 72.9% and
also the peer group average total returns of 87.5% (NAV) and 117.1% (share
price). During this time, the discount to NAV has narrowed from the mid-teens
to low single digits (occasionally trading at a premium, which is testament to
a very clear and well-supported investment proposition), and we have also been
able to deliver a significant increase in the dividend, both of which have
been to the long-term benefit of shareholders.
Coming back to the year just ended, it is pleasing to report a year of strong
performance, in which your Portfolio Manager’s strong stock selection has
been complemented by a market environment that has favoured the Company’s
quality and value-focused investment approach. In the year to 31 July 2023,
the NAV total return was 11.4%, while the Comparative Index total return was
7.5% over the same period. After experiencing negative performance in the last
financial year, the share price has rebounded strongly, producing a total
return of 17.3% as the discount to NAV has narrowed from 9.8% at the start of
the year to 5.3% at the end. This is particularly notable given the general
widening in investment trust discounts during the year. Nitin talks more on
the drivers for the positive performance in his Portfolio Manager’s Review
below.
Due Diligence 2023
In March 2023, your Board took an in-person due diligence trip to Asia for the
first time since 2018. We travelled first to Singapore, where the portfolio
management team is based, and spent time with Nitin, Ajinkya Dhavale, who has
now been the Assistant Portfolio Manager of the Company for three years, and
colleagues, including Fidelity’s Head of Equities for the Asia Pacific
region. We also met with some locally based companies to see how Fidelity’s
meetings with them are run and how they form part of the stock picking
process. We then went to South Korea for three days of company visits. What
stood out to us as a Board was the quality of the management teams we met in
Korea and the depth and calibre of the businesses; although these companies
are not the largest, their global presence was really startling. One example
was Hankook Tire, a provider of e-vehicle tyres and a growing contributor to
profits. It has recently taken over from Michelin as the official supplier for
the Formula E motor racing competition. It was most interesting to observe
Nitin and Ajinkya as they interviewed companies, and to see during a process
of incisive questioning, the very obvious mutual respect in which they hold
both management and each other. This really underpins our continued confidence
in the team that manages your – and our – investment in the Company.
Discount management and share repurchases
After the spike in market volatility seen in the first half of 2022 when
Russia invaded Ukraine, conditions continued to be unsettled into the first
half of the Company’s financial year ended 31 July 2023. Between August and
November 2022, the Board approved the repurchase of 569,000 ordinary shares
(0.8% of the issued share capital) for holding in Treasury, at a cost of
£2,618,000. Since then and up to the date of this report, no shares have been
repurchased, given an encouraging narrowing of the Company’s discount even
as peers’ and broader investment trust average discounts have widened.
Your Board closely monitors the Company’s share price discount to NAV and
will undertake active discount management where necessary, the primary purpose
of which is to limit discount volatility. Repurchases of ordinary shares are
made at the discretion of the Board, within guidelines set by it and
considering prevailing market conditions. Shares will only be repurchased in
the market at prices below the prevailing NAV per ordinary share, thereby
resulting in an enhancement to the NAV per ordinary share. In order to assist
in managing the discount, the Board has shareholder approval to hold in
Treasury any ordinary shares repurchased by the Company, rather than
cancelling them. Any shares held in Treasury would only be reissued at NAV per
ordinary share or at a premium to NAV per ordinary share.
Dividend
Your Portfolio Manager invests principally for capital growth, but his
value-oriented investment style tends to lead him towards unleveraged,
cash-generative businesses that may themselves be able to pay rising
dividends. As such, the Company’s revenue return was 15.17 pence per
ordinary share (an increase of 6.8% from the prior year revenue return of
14.21 pence per ordinary share). Last year your Board declared a substantially
increased dividend of 14.00 pence per share (2021: 8.80 pence). While we noted
at the time that shareholders should not assume that such dividends would
continue in the future, we are very pleased to be able to recommend another
increase in the dividend for 2023, to 14.50 pence per share which will be paid
to shareholders on 6 December 2023. The Board is again recommending that
almost all of the income earned be paid out as a dividend. We would reiterate,
however, that income is an output rather than an aim of the investment
process, and that no guarantees can be offered as to the level of any future
dividends.
Gearing
As I noted in last year’s Annual Report, the Company’s level of gross
gearing is directly proportional to the investment opportunities that your
Portfolio Manager sees. When Nitin is optimistic about opportunities and he
and his team generate ideas in response to market conditions, then the Company
will be more geared. As such, it is notable that gearing during the year
reached the highest level we have seen during Nitin’s tenure, ending the
year with gross gearing at 11.7%, up from 4.4% as at 31 July 2022; net gearing
was 4.9% (2022: nil). As Nitin notes in his review below, gearing has been
increased largely in response to a number of particularly interesting
investment opportunities in China, which have been out of favour with
investors. The Company’s gearing is achieved using contracts for difference
(“CFDs”); we have no bank borrowings or structural long-term debt. We
regularly review the use of CFDs and have again concluded that they remain a
more efficient and flexible form of financing than either secured or unsecured
debt, as well as enabling your Portfolio Manager to be fleet of foot in the
deployment of gearing. We are fortunate that Fidelity has the infrastructure
and capability to allow the use of CFDs in the portfolio; few other management
groups can offer this.
Use of Short positions
A few years ago, the Board approved giving your Portfolio Manager the ability
to ‘short’ stocks, and we are pleased to report that this approach is
adding value and has been a positive contributor during the year. A short
position is taken on the view that the price of a stock or the value of an
index will go down rather than up. Ajinkya has extensive experience in
shorting, and Nitin is encouraged by the availability of such opportunities in
the market today, given a real disparity between the prospects of the smaller
value stocks that he favours and some of the large and mega-cap stocks in Asia
that he thinks are vulnerable. Short positions are limited to a maximum of 10%
of the portfolio and do not usually exceed ten stocks. While there is no
intention to increase the limit, the combination of Ajinkya’s (and
Fidelity’s) competence and the current market environment means that Nitin
may maintain and even opportunistically increase the short exposure, within
the investment limits. Total short exposure as at 31 July 2023 was 3.4% (2022:
2.2%).
Environmental, Social & Governance (ESG)
There has been something of an ESG backlash in recent times. Your Company is
not an ‘ESG fund’, but good governance and social behaviour and a strong
regard for the environment have always been fundamental to the way Nitin
invests. Assessing ESG in Asia can be quite different from that in developed
economies. Smaller Asian companies may not have the resources to report on ESG
as companies do in the West, so the strength and depth of Fidelity’s large
analyst team in the region is invaluable in making properly thought-through
assessments in the process, both on a fundamental and an ESG basis.
In the Portfolio Manager’s Review, Nitin shares the example of Shriram
Finance as a position that has not only added value to the portfolio, but is
also a well-governed company doing social good as well as mitigating
environmental impact. Shriram Finance was formed from the merger of two
companies offering affordable finance on used commercial vehicles and
two-wheelers. It serves communities and micro, small and medium enterprises
that would otherwise face high interest costs from unregulated lending,
enabling them to grow their businesses without the unaffordable expense or the
environmental impact of scrapping old vehicles and building new ones.
Board of Directors and Board Succession
Grahame Stott, having served nine years on the Board, retired as a
non-executive Director and Chairman of the Audit Committee at the Company’s
AGM in November 2022. At the same time, we welcomed Hussein Barma as a new
non-executive Director and Chairman of the Audit Committee. Hussein is both a
qualified lawyer and a chartered accountant and has considerable experience in
the listed company sector in the UK and long familiarity with Asia, as well as
a good eye for detail. Clare Brady will be stepping up as Chairman as I step
down and will continue to bring her invaluable experience and skills to the
Board. She will be replaced as Senior Independent Director by Matthew
Sutherland.
As noted in last year’s Annual Report, Michael Warren will shortly have
served nine years on the Board, but as part of the Board’s succession plan,
he has agreed to stay on until the 2024 AGM in order to ensure a good handover
of the institutional and historical knowledge of the Company. We have already
begun the process of selecting his replacement and will make a further
announcement in due course. We will continue to maintain a Board with a
diversity of backgrounds and an appropriate mix of skills to ensure the
Company’s continued good governance.
Market outlook
The outlook for financial markets globally remains uncertain in light of the
ongoing war in Ukraine and US/China tensions. However, while the Western world
continues to struggle with the highest levels of inflation and interest rates
in nearly a generation, in many Asian markets, the economic environment is
very different, and on a relative basis there are particularly good
opportunities compared to the West. The structural case for investing in
developing economies remains extremely strong: attractive demographics, a
burgeoning middle class providing new markets for goods and services, and
economies that can grow more rapidly. This is the backdrop against which your
Portfolio Manager looks to buy companies, but it is not what drives the
investment process, which is fundamentally to buy good companies, run by good
people and at attractive valuations. As we enter our new financial year, Nitin
continues to find good companies he wants to buy and I am therefore optimistic
that this, combined with a positive market backdrop in Asia will continue to
provide opportunities for investors in the coming year.
I wish him, the team and the Board every success for the future and would also
like to thank all our shareholders for their continued support.
Annual General Meeting
The AGM of the Company will be held at 11.00 am on Wednesday, 29 November 2023
at 4 Cannon Street, London EC4M 5AB (nearest tube stations are St Paul’s or
Mansion House) and virtually via the online Lumi AGM meeting platform. Full
details of the meeting are given in the Notice of Meeting in the Annual
Report.
For those shareholders who are unable to attend in person, we will live-stream
the formal business and presentations of the meeting online.
Nitin Bajaj, the Portfolio Manager, will be making a presentation to
shareholders highlighting the achievements and challenges of the year past and
the prospects for the year to come. He and the Board will be very happy to
answer any questions that shareholders may have. Copies of his presentation
can be requested by email at investmenttrusts@fil.com or in writing to the
Secretary at FIL Investments International, Beech Gate, Millfield Lane, Lower
Kingswood, Tadworth, Surrey KT20 6RP.
Properly registered shareholders joining the AGM virtually, will be able to
vote on the proposed resolutions. Please see Note 9 to the Notes to the Notice
of Meeting in the Annual Report for details on how to vote virtually.
Investors viewing the AGM online will be able to submit live written questions
to the Board and the Portfolio Manager and we will answer as many of these as
possible at an appropriate juncture during the meeting.
Further information and links to the Lumi platform may be found on the
Company’s website at www.fidelity.co.uk/asianvalues. On the day of the AGM,
in order to join electronically and ask questions via the Lumi platform,
shareholders will need to connect to the website https://web.lumiagm.com.
Please note that investors on platforms, such as Fidelity Personal Investing,
Hargreaves Lansdown, Interactive Investor or AJ Bell Youinvest, will need to
request attendance at the AGM in accordance with the policies of your chosen
platform. They may request that you submit electronic votes in advance of the
meeting. If you are unable to obtain a unique IVC and PIN from your nominee or
platform, we would welcome your online participation as a guest. Once you have
accessed https://web. lumiagm.com from your web browser on a tablet or
computer, you will need to enter the Lumi Meeting ID which is 109-975-634. You
should then select the ‘Guest Access’ option before entering your name and
who you are representing, if applicable. This will allow you to view the
meeting and ask questions, but you will not be able to vote.
Kate Bolsover
Chairman
11 October 2023
Portfolio Manager’s Review
Question
How has the investment Company performed in the year to 31 July 2023?
Answer
Over the year ended 31 July 2023, the Company’s net asset value (“NAV”)
total return was +11.4%, outperforming the Comparative Index, the MSCI All
Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms)
which rose by +7.5%. The share price total return for the year was +17.3% due
to a narrowing of the Company’s discount.
Performance for the reporting year can be attributed primarily to stock
picking, with our country allocation being a headwind to performance.
Our investment process is driven by owning good businesses which are run by
management teams whom we trust and investing in them only when we have ample
margin of safety. This often leads us to take contrarian positions as it is
easier to find undervalued businesses in countries which are out of favour
with investors. Following this philosophy, we have a significant percentage of
the Company’s portfolio in China and are underweight in Taiwan and India
compared to the Index. Accordingly, while country selection would be a
headwind to performance, this was more than offset by good stock selection in
line with our investment philosophy, especially in our three key markets of
China, India and Indonesia.
Over the longer-term (since 2015 when the Board changed the strategy of the
Company to invest more in smaller companies), the NAV (post fees) has risen by
+112.6% versus the MSCI All Countries Asia ex Japan Small Cap Index’s (net)
total return of +72.9% and the MSCI Asia ex Japan Large Cap Index’s total
return of +62.2%, both in sterling terms.
Question
China’s reopening from COVID lockdowns has had a significant impact on the
performance of global markets this year. How do you feel about China and the
economic recovery?
Answer
When China reopened, there was a lot of optimism in the market, but it turned
out that the recovery has been uneven and softer than expected in many areas.
The property downcycle, geopolitics, the reining in of local government
spending and increasing centralisation of political power has resulted in
China being one of the few markets where profitability has not recovered post
COVID. Consequently, there is a heightened perception of risks around Chinese
companies, leading to a decline in stock prices. We agree with some of the
reasons for negative sentiment around China and understand that it is
difficult to predict when the economy will turn around.
However, we should also be cognisant of the strengths of the country’s
economy, its people and its businesses. It is the second largest economy in
the world and consumption is expanding as a share of its GDP. It houses a
significant part of the global supply chains of most products we use in our
daily lives. Hence, we feel that these negative macro factors are transitory
(as they were in the US post the housing crises of 2007-10 or in India post
the policy paralysis of 2012-13). Good businesses will not only survive but
are likely to be in a stronger competitive position post this downturn and by
taking market share from their weaker peers. This is probably the best time to
be investing in China as we are able to buy good businesses when both
expectations and valuations are low.
Thus, there are good opportunities in China at the moment, which in turn has
seen our combined exposure to China and Hong Kong increase to about 38%.
Question
Looking beyond China, where do you see value in stocks in the Asian region and
how are you reflecting this in the Company’s portfolio?
Answer
Our investments are based on our bottom-up fundamental analysis of companies
and their businesses and our exposure to countries is primarily a result of
our stock selection.
Looking at the portfolio beyond China, we are excited about the opportunities
we see in Indonesia (around 14% exposure). Our holdings there are a mix of
banks and consumer-facing companies which are best-in-class operators with
high Returns on Equity (“ROEs”) and reasonable valuations. For example, we
own shares in two banks - Bank Mandiri (Persero) and Bank Negara Indonesia
(Persero). The former has seen a sustained improvement in asset quality
through better underwriting and risk management since 2016 under a new
management, while the latter is going through restructuring with the same team
of people who turned around Bank Mandiri (Persero). The portfolio is invested
in the country’s leading ceramic tiles manufacturer Arwana Citramulia, a
business with long-term growth potential and a strong management team. Among a
few other positions, we also have exposure to the country’s KFC master
franchisee, Fastfood Indonesia, which again has structural growth opportunity
to expand as well as enhance operational efficiencies.
In India, while it has not been easy to find businesses with a suitable margin
of safety, we are still able to identify specific stocks that fit our
criteria. Our positions in India centre around financial sector companies as
they are growing more quickly, have strong balance sheets and are available at
prices which offer a good margin of safety. We have studied these businesses
for over 15 years and trust the management teams who have delivered
substantial shareholder value over time.
Question
Your mandate is to look for smaller companies to invest in. Can you give some
examples of how smaller companies outperform?
Answer
We invest in a subset of these smaller companies – in what are popularly
called ‘value’ stocks. Value stocks are classified as companies that are
currently trading below what they are worth and are thus expected to provide
superior returns. Almost 80% of the portfolio is invested in companies which
fit this description.
As shown in the charts in the Annual Report, over the long-term, this has been
an attractive place to invest as small value stocks have grown earnings faster
than the market and hence have delivered superior returns.
Despite this performance, the cohort of small value companies continues to
trade at a significant discount to the rest of the market and looks very
attractive today.
Question
How has the Company’s portfolio’s exposure to unlisted companies changed
during the year under review?
Answer
We have not added or sold any unlisted securities in the past year. It
continues to be a small part of the portfolio at less than 0.5% of the
Company’s invested assets. We believe that there are sufficient
opportunities in the listed space in Asia and, therefore, would only want to
invest in an unlisted company in exceptional circumstances.
Question
You have increased gearing within the Company’s portfolio in the reporting
year. What is the reason behind this?
Answer
We have always maintained that gearing is a function of the number of
investment ideas we find. The level of gearing increases when we find more
ideas to invest in than we have money and it reduces (or we keep a higher cash
balance) when we do not find as many ideas.
Over the past year, gearing has increased as we have found particularly
interesting investments in China given the market has fallen out of favour. At
the year end, gross gearing was 11.7% (2022: 4.4%) and net gearing was 4.9%
(2022: nil). See the charts in the Annual Report on the Company’s gearing
history over my tenure.
Question
The rising cost of living continues to pressure consumers. How has higher
inflation and rising interest rates impacted Asian markets?
Answer
Inflation dynamics are different from country to country in Asia. China is now
in deflation whilst some of the South East Asian countries have seen a
moderate rise in inflation (albeit lower than that observed in Europe or the
US). This has led to higher interest rates and weakening consumption as
governments have behaved responsibly and not expanded fiscal spending (unlike
the US).
We believe, therefore, that while there has been some consumer price inflation
in Asia, it is not as big an issue as it is in the West.
Question
Can you give an example of how your active management has added value to the
Company’s portfolio this year?
Answer
As discussed earlier, our process is focused on finding misunderstood
situations where we can own a good business with a margin of safety. Shriram
Finance is a good example of this. It has become the largest retail
non-banking financial company (NBFC) in India caused by the merger of Shriram
Transport Finance Company, the largest financier of used commercial vehicles,
and Shriram City Union Finance, the largest financier of two-wheelers and the
underserved micro, small, and medium enterprises (MSME).
We have owned Shriram Transport Finance Company since late 2016 when we bought
it at an attractive valuation when Indian non-banking financials saw
short-term pressures due to tight liquidity. Over several decades, the company
created its niche in a segment where banks did not compete due to difficulty
in valuing and underwriting loans for second-hand trucks. It owned a quarter
of the market share in the segment while the rest of the market was dominated
by local money lenders, outside of the banking system, charging very high
interest rates. We also owned Shriram City Union Finance for its strong track
record in segments that have semi-formal and irregular sources of income and
hence were credit starved.
The merger last year has created a lender with a more diversified book while
also bringing benefits from synergies between the two businesses. The stock
rerated as a result.
Question
Can you explain to us how you integrate ESG considerations into the
Company’s portfolio?
Answer
The Company’s primary objective for shareholders is to achieve capital
growth. In order to achieve the best possible returns, we have always looked
to invest in good businesses, managed by efficient management teams and
available at reasonable valuations. Good businesses are those that solve a
problem for their consumers, and which are managed by efficient teams who are
competent and which respect laws, their employees, customers, the environment
and shareholders, as well as managing their businesses responsibly. ESG
considerations have, therefore, always been at the heart of our investment
thinking, and well before it became a buzz word.
Investing in smaller companies in Asia using the strength of Fidelity’s
research team has always offered us the opportunity to identify quality
companies on fundamentals and ESG considerations ahead of other investors.
Regulations are constantly evolving and ESG is no exception to this. We
believe this presents us with opportunities. The development of ESG ratings
covered by the external rating agencies has not yet evolved to cover many of
the smaller companies in which we invest. This provides an exciting
opportunity as the ESG credentials of many of the smaller companies are best
in class. They are in fact ‘double gems’: companies with good prospects,
strong management and well-priced alongside their strong ESG credentials.
Additionally, Fidelity as a firm is committed to principles that are
consistent with the stage of economic development of countries. As part of
this process, we have regular engagements with companies in the portfolio.
Examples of our ESG case studies are in the Annual Report.
Question
What do you view as the biggest risks and opportunities for the next twelve
months?
Answer
We think macro risks will eventually pass, especially if we own a diversified
set of leading businesses and own them at valuations which are below intrinsic
value. However, this does not mean that these stocks cannot decline in value
– to the contrary, forecasting price movements is impossible. But we believe
that the quality of our portfolio gives us holding power to go through head
winds as they emerge and come out stronger on the other side.
As can be seen from the chart in the Annual Report, the ROE of our portfolio
is at a premium to the market while the Price to Earnings ratio of our
holdings is at a significant discount. We own businesses which are of a better
quality and at cheaper market valuations. This has been the bedrock of our
investment process for over a decade and has served us well.
Our skills lie in business analysis, finding best in class management teams
and mispriced stocks. We are known to repeat the phrase below often and it is
fair to say that it has become known as something of a mantra for the Company:
Find good businesses run by good management and buy them at prices with a good
margin of safety.
We continue to focus on this.
NITIN BAJAJ AJINKYA DHAVALE
Portfolio Manager Assistant Portfolio Manager
11 October 2023
PRINCIPAL RISKS AND UNCERTAINTIES AND RISK MANAGEMENT
As required by provisions 28 and 29 of the 2018 UK Corporate Governance Code,
the Board has a robust ongoing process for identifying, evaluating and
managing the principal risks and uncertainties faced by the Company, including
those that could threaten its business model, future performance, solvency and
liquidity. The Board, with the assistance of the Alternative Investment Fund
Manager (FIL Investment Services (UK) Limited/ the “Manager”), has
developed a risk matrix which, as part of the risk management and internal
controls process, identifies the key existing and emerging risks and
uncertainties that the Company faces. The Audit Committee continues to
identify any new emerging risks and take any action necessary to mitigate
their potential impact. The risks identified are placed on the Company’s
risk matrix and appropriately graded. This process, together with the policies
and procedures for the mitigation of existing and emerging risks, is updated
and reviewed regularly in the form of comprehensive reports by the Audit
Committee. The Board determines the nature and extent of any risks it is
willing to take in order to achieve its strategic objectives.
Climate change, which refers to a large scale shift in the planet’s weather
patterns and average temperatures, continues to be a key emerging issue as
well as a principal risk confronting asset managers and their investors. The
Board notes that the Manager has integrated ESG considerations, including
climate change, into the Company’s investment process. Further details are
in the Annual Report. The Board will continue to monitor how this may impact
the Company as a risk to investment valuations and potentially to shareholder
returns.
The Manager also has responsibility for risk management for the Company. It
works with the Board to identify and manage the principal and emerging risks
and uncertainties and to ensure that the Board can continue to meet its UK
corporate governance obligations.
The Board considers the risks listed below as the principal risks and
uncertainties faced by the Company.
Principal Risks Description and Risk Mitigation
Economic, Political and Market Risks The Company and its assets may be affected by economic and market risks. These are market downturns, interest rate movements, deflation/inflation, exchange rate movements and market shocks, such as the post pandemic economic recovery and volatility from
the war in Ukraine. Inflation remains elevated across most economies driven by a combination of increased demand following pandemic restrictions being lifted, global labour shortages in some sectors and supply chain shortages, including energy and food
security. The Company is exposed to a number of geopolitical risks. The fast-changing global geopolitical landscape is largely shaped by the Russia and Ukraine war effects, deglobalisation trends and significant supply disruption, as well as fears of
global recession amid inflationary pressures and financial distress. Russia and Ukraine are both significant net exporters of oil, natural gas and a variety of soft commodities and supply limitations fuelled global inflation and economic instability,
specifically within Western nations. Whilst the direct impact of the war to APAC markets has been less severe than European counterparts, the prolonged cost-of-living crisis risks continue to impact Western investment appetite. China’s economy remains
vulnerable to risks related to the global outlook and geopolitical tensions including US-China trade war, South China sea dispute and implications of China-Taiwan relations. Most of the Company’s assets and income are denominated in currencies other than
sterling which is the Company’s functional and presentation currency. As a result, movements in exchange rates may affect the sterling value of its assets and income. The Company’s portfolio is made up mainly of listed securities. The Portfolio Manager’s
success or failure to protect and increase the Company’s assets against the above background is core to the Company’s continued success. His investment philosophy of stock-picking and investing in attractively valued companies aims to outperform the
Comparative Index over time. The Board is provided with a detailed investment review which covers material economic, political and market risks and legislative changes at each Board meeting. Risks to which the Company is exposed to in the market and
currency risk category are included in Note 17 to the Financial Statements below together with summaries of the policies for managing these risks.
Investment Performance Risk (including the use of Derivatives and Gearing) The achievement of the Company’s investment performance objective relative to the market requires the taking of risk, such as investment strategy, asset allocation and stock selection, and may lead to NAV and share price underperformance compared to the
Comparative Index and/or peer group companies. Continued underperformance could lead to the Company and its objective becoming unattractive to investors. The Investment Manager is responsible for actively monitoring the portfolio selected in accordance
with the asset allocation parameters and seeks to ensure that individual stocks meet an acceptable risk/reward profile. In order to manage this risk, the Board reviews Fidelity’s compliance with agreed investment restrictions; investment performance and
risk; relative performance; the portfolio’s risk profile; and whether appropriate strategies are employed to mitigate any negative impact of substantial changes in the markets. The Board also regularly canvasses major shareholders for their views with
respect to company matters. Derivative instruments are used to protect and enhance investment returns. There is a risk that the use of derivatives may lead to higher volatility in the NAV and the share price than might otherwise be the case. The Board has
put in place policies and limits to control the Company’s use of derivatives and exposures. These are monitored on a daily basis by the Manager’s Compliance team and regular reports are provided to the Board. Further detail on derivative instruments risk
is included in Note 17 to the Financial Statements below. The Company gears through the use of long CFDs which provide greater flexibility and are generally cheaper than bank loans. The principal risk is that the Portfolio Manager fails to use gearing
effectively, resulting in a failure to outperform in a rising market or to underperform in a falling market. The Board regularly considers the level of gearing and gearing risk and sets limits within which the Manager must operate.
Cybercrime and Information Security Risks The operational risk from cybercrime is significant. Cybercrime threats evolve rapidly and consequently the risk is regularly re-assessed and the Board receives regular updates from the Manager in respect of the type and possible scale of cyberattacks. The
Manager’s technology team has developed a number of initiatives and controls in order to provide enhanced mitigating protection to this ever-increasing threat. The risk is frequently re-assessed by Fidelity’s information security teams and has resulted in
the implementation of new tools and processes, as well as improvements to existing ones. Fidelity has a dedicated cybersecurity team which provides regular awareness updates and best practice guidance. Risks are increased due to the Russia/Ukraine conflict
and the trend to more working from home following the pandemic. These primarily relate to phishing, remote access threats, extortion and denial of services attacks. The Manager has dedicated detect and respond resources specifically to monitor the cyber
threats associated within the workplace and increased cyber activity following Russia’s invasion of Ukraine. There are a number of mitigating actions in place including, control strengthening, geo-blocking and phishing mitigants, combined with enhanced
resilience and recovery options. The Company’s third-party service providers also have similar measures in place.
Level of Discount to the Net Asset Value Due to the nature of investment companies, the price of the Company’s shares and its discount to NAV are factors which are not totally within the Company’s control. The Board has a discount management policy in place and some short-term influence over the
discount may be exercised by the use of share repurchases at acceptable prices and within the parameters set by the Board. In considering the risk that the discount to NAV poses to shareholder value and returns, both the absolute level of the discount and
the amount relative to the Company’s peer group and the wider market are considered. The Company’s share price, NAV and discount volatility are monitored daily by the Manager and the Company’s Broker and considered by the Board on a regular basis. The
demand for shares can be influenced through good performance and an active investor relations programme.
Key Person Risk The Portfolio Manager, Nitin Bajaj, has a differentiated style in relation to his peers. This style is intrinsically linked with the Company’s investment philosophy and strategy and, therefore, the Company has a key person dependency on him. The Company
has an Assistant Portfolio Manager, Ajinka Dhavale, who supports the Portfolio Manager, and has extensive experience in the Asian markets and companies and shares a common investment approach and complementary investment experience with the Portfolio
Manager. The Portfolio Manager is also supported by an Investment Director, Catherine Yeung, as a primary spokesperson for the Company. This helps strengthen the investment process. There is also a risk that the Manager has inadequate succession plans for
other key operational individuals. The Manager identifies key dependencies which are then addressed through succession plans, particularly for portfolio managers.
Environmental, Social and Governance (“ESG”) Risks There is a risk that the value of the assets of the Company are negatively impacted by ESG related risks, including climate change risk. ESG risks include investor expectations and how the Company is positioned from a marketing perspective and whether it
is compliant with its ESG disclosure requirements. Fidelity has embedded ESG factors in its investment decision- making process. ESG integration is carried out at the fundamental research analyst level within its investment teams, primarily through
Fidelity’s Proprietary Sustainability Rating which is designed to generate a forward-looking and holistic assessment of a company’s ESG risks and opportunities based on sector-specific key performance indicators across 127 individual and unique sub
-sectors. The Portfolio Manager is also active in analysing the effects of ESG when making investment decisions. The Board continues to monitor developments in this area and reviews the positioning of the portfolio considering ESG factors. ESG ratings and
carbon emissions of the companies within the Company’s portfolio compared to the Index are provided in the Annual Report. Further detail on ESG considerations in the investment process and sustainable investing is set out in the Annual Report.
Business Continuity and Operational Risks There continues to be increased focus from financial services regulators around the world on the contingency plans of regulated financial firms. The top risks globally are cybersecurity and geopolitical events. There are also ongoing risks following
Russia’s invasion into Ukraine, specifically regarding the potential loss of power and/or broadband services. Variants of COVID continue to evolve and some risks remain. The Manager continues to take all reasonable steps to meet its regulatory obligations,
assess its ability to continue operating and the steps it needs to take to support its clients, including the Board and has an appropriate control environment in place. The Manager has provided the Board with assurance that the Company has appropriate
business continuity plans and the provision of services has continued to be supplied without interruption. Specific risks posed by the pandemic continue to ease with increasing levels of staff returning to routine office-based working, albeit under hybrid
working arrangements which allows greater flexibility on remote working as part of the new operating model. The Company relies on a number of third-party service providers, principally the Registrar, Custodian and Depositary. They are all subject to a risk
-based programme of internal audits by the Manager and their own internal controls reports are received by the Manager on behalf of the Board on an annual basis and any concerns are investigated. The third-party service providers have also confirmed the
implementation of appropriate measures to ensure no business disruption. Risks associated with these services are generally rated as low, but the financial consequences could be serious, including reputational damage to the Company.
Shareholder Relationships There is a risk that the Board has insufficient access to shareholders or that the Portfolio Manager’s investment style is not appealing for investors. There is also a risk that continued weak investment performance may potentially make the Company less
attractive to retail and wealth managers. The shareholder register and shareholder activity are reviewed at each Board meeting and regular shareholder meetings are organised by the Broker with the Board and Fidelity, including the Portfolio Manager and
Investment Director. Fidelity has an investment companies’ website which has dedicated pages for the Company and regular updates are provided for investors.
Other risks facing the Company include:
TAX AND REGULATORY RISKS
There is a risk of the Company not complying with tax and regulatory
requirements. A breach of Section 1158 of the Corporation Tax Act 2010 could
lead to a loss of investment trust status resulting in the Company being
subject to tax on capital gains.
The Board monitors tax and regulatory changes at each Board meeting and
through active engagement by the Manager with regulators and trade bodies.
The Company has a full risk register which includes less material risks which
the Board reviews at least annually.
GOING CONCERN STATEMENT
The Directors have considered the Company’s investment objective, risk
management policies, liquidity risk, credit risk, capital management policies
and procedures, the nature of its portfolio and its expenditure and cash flow
projections. The Directors, having considered the liquidity of the Company’s
portfolio of investments (being mainly securities which are readily
realisable) and the projected income and expenditure, are satisfied that the
Company is financially sound and has adequate resources to meet all of its
liabilities and ongoing expenses and continue in operational existence for the
foreseeable future. The Board has, therefore, concluded that the Company has
adequate resources to continue to adopt the going concern basis for the period
to 31 October 2024 which is at least twelve months from the date of approval
of the Financial Statements. This conclusion also takes into account the
Board’s assessment of the ongoing risks from the war in Ukraine, China’s
tensions with the US and Taiwan and significant market events.
Accordingly, the Financial Statements of the Company have been prepared on a
going concern basis.
The prospects of the Company over a period longer than twelve months can be
found in the Viability Statement below.
VIABILITY STATEMENT
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the
Directors have assessed the prospects of the Company over a longer period than
the twelve month period required by the “Going Concern” basis above. The
Company is an investment trust with the objective of achieving long-term
capital growth. The Board considers long-term to be at least five years, and
accordingly, the Directors believe that five years is an appropriate
investment horizon to assess the viability of the Company, although the life
of the Company is not intended to be limited to this or any other period.
In making an assessment on the viability of the Company, the Board has
considered the following:
- The ongoing relevance of the investment objective in prevailing market
conditions;
- The Company’s level of gearing;
- The Company’s NAV and share price performance versus its Comparative
Index;
- The principal and emerging risks and uncertainties facing the Company and
their potential impact as set out above;
- The future demand for the Company’s shares;
- The Company’s share price discount to the NAV;
- The liquidity of the Company’s portfolio;
- The level of income generated by the Company; and
- Future income and expenditure forecasts.
The Company’s performance for the five year reporting period to 31 July 2023
lagged the Comparative Index, with a NAV total return of +45.4%, a share price
total return of +41.1% compared to the Comparative Index total return of
+50.7%. The Board regularly reviews the investment policy and considers it
remains appropriate. The Board has concluded that there is a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the next five years based on the
following considerations:
- The Investment Manager’s compliance with the Company’s investment
objective and policy, its investment strategy and asset allocation;
- The Company’s portfolio mainly comprises readily realisable securities
which can be sold to meet funding requirements if necessary;
- The Board’s discount management policy; and
- The ongoing processes for monitoring operating costs and income which are
considered to be reasonable in comparison to the Company’s total assets.
In preparing the Financial Statements, the Directors have considered the
impact of climate change, as detailed above. The Board has also considered the
impact of regulatory changes, continuing tensions between the US and China,
tensions with Taiwan and the ongoing global implications of the Ukraine and
Russia war, and how this may affect the Company.
In addition, the Directors’ assessment of the Company’s ability to operate
in the foreseeable future is included in the Going Concern Statement above.
A continuation vote takes place every five years. There is a risk that
shareholders do not vote in favour of the continuation of the Company during
periods when performance of the Company’s NAV and share price is poor. The
last continuation vote was at the Company’s AGM held on 3 December 2021. The
next continuation vote will take place at the AGM in 2026.
PROMOTING THE SUCCESS OF THE COMPANY
Under Section 172(1) of the Companies Act 2006, the Directors of a company
must act in a way they consider, in good faith, would be most likely to
promote the success of the Company for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to the likely consequences
of any decision in the long-term; the need to foster relationships with the
Company’s suppliers, customers and others; the impact of the Company’s
operations on the community and the environment; the desirability of the
Company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the Company.
As an externally managed Investment Trust, the Company has no employees or
physical assets, and a number of the Company’s functions are outsourced to
third parties. The key outsourced function is the provision of investment
management services by the Manager, but other professional service providers
support the Company by providing administration, custodial, banking and audit
services. The Board considers the Company’s key stakeholders to be the
existing and potential shareholders, the external appointed Manager and other
third-party professional service providers. The Board considers that the
interest of these stakeholders is aligned with the Company’s objective of
delivering long-term capital growth to investors, in line with the Company’s
stated investment objective and strategy, while providing the highest
standards of legal, regulatory and commercial conduct.
The Board, with the Portfolio Manager, sets the overall investment strategy
and reviews this at an annual strategy day which is separate from the regular
cycle of board meetings. In order to ensure good governance of the Company,
the Board has set various limits on the investments in the portfolio, whether
in the maximum size of individual holdings, the use of derivatives, the level
of gearing and others. These limits and guidelines are regularly monitored and
reviewed and are set out in the Annual Report.
The Board places great importance on communication with shareholders. The
Annual General Meeting (“AGM”) provides the key forum for the Board and
the Portfolio Manager to present to the shareholders on the Company’s
performance and future plans and the Board encourages all shareholders to
attend either in person or virtually and raise any questions or concerns. The
Chairman and other Board members are available to meet shareholders as
appropriate. Shareholders may also communicate with Board members at any time
by writing to them at the Company’s registered office at FIL Investments
International, Beech Gate, Millfield Lane, Tadworth, Surrey KT20 6RP or via
the Company Secretary in writing at the same address or by email at
investmenttrusts@fil.com. The Portfolio Manager meets with major shareholders,
potential investors, stock market analysts, journalists and other commentators
during the year. These communication opportunities help inform the Board in
considering how best to promote the success of the company over the long-term.
The Board seeks to engage with the Manager and other service providers and
advisers in a constructive and collaborative way, promoting a culture of
strong governance, while encouraging open and constructive debate, in order to
ensure appropriate and regular challenge and evaluation. This aims to enhance
service levels and strengthen relationships with service providers, with a
view to ensuring shareholders’ interests are best served, by maintaining the
highest standards of commercial conduct while keeping cost levels competitive.
Whilst the Company’s direct operations are limited, the Board recognises the
importance of considering the impact of the Company’s investment strategy on
the wider community and environment. The Board believes that a proper
consideration of ESG issues aligns with the investment objective to deliver
long-term capital growth, and the Board’s review of the Manager includes an
assessment of their ESG approach, which is set out in detail in the Annual
Report.
In addition to ensuring that the Company’s investment objective was being
pursued, key decisions and actions taken by the Directors during the reporting
year, and up to the date of this report, have included:
- As part of the Board’s succession plans:
– The appointment of Hussein Barma to the Board as Chairman of the Audit
Committee and non-executive Director with effect from 24 November 2022;
– The decision to appoint Clare Brady as Chairman of the Board when the
current Chairman, Kate Bolsover, steps down at the conclusion of the AGM on 29
November 2023; and
– The decision to appoint Matthew Sutherland as Senior Independent Director
with effect from 29 November 2023 from the change in Clare Brady’s role from
Senior Independent Director to Chairman.
- Authorising the repurchase of 569,000 ordinary shares up to the date of
this Annual Report when the Company’s discount widened, in line with the
Board’s discount management policy;
- The decision to recommend the payment of a final dividend of 14.50 pence
per ordinary share; and
- The decision to once again hold a hybrid AGM in 2023 in order to make it
more accessible to those investors who are unable to or prefer not to attend
in person.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial period. Under that law they have elected to prepare the Financial
Statements in accordance with UK Generally Accepted Accounting Practice (UK
Accounting Standards and applicable law), including Financial Reporting
Standard FRS 102: The Financial Reporting Standard applicable in the UK and
Republic of Ireland (“FRS 102”). Under company law, the Directors must not
approve the Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of the profit or
loss for the reporting period.
In preparing these Financial Statements, the Directors are required to:
- Select suitable accounting policies in accordance with Section 10 of FRS
102 and then apply them consistently;
- Make judgements and accounting estimates that are reasonable and prudent;
- Present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
- State whether applicable UK Accounting Standards, including FRS 102, have
been followed, subject to any material departures disclosed and explained in
the Financial Statements; and
- Prepare the Financial Statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time, the financial position of the Company and to
enable them to ensure that the Company and the Financial Statements comply
with the Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, a Directors’ Report, a Corporate Governance
Statement and a Directors’ Remuneration Report that comply with that law and
those regulations.
The Directors have delegated to the Manager the responsibility for the
maintenance and integrity of the corporate and financial information included
on the Company’s pages of the Manager’s website at
www.fidelity.co.uk/asianvalues. Visitors to the website need to be aware that
legislation in the UK governing the preparation and dissemination of the
Financial Statements may differ from legislation in their own jurisdictions.
The Directors confirm that to the best of their knowledge:
- The Financial Statements, prepared in accordance with UK Generally Accepted
Accounting Practice, including FRS 102, give a true and fair view of the
assets, liabilities, financial position and profit of the Company;
- The Annual Report, including the Strategic Report, includes a fair review
of the development and performance of the business and the position of the
Company, together with a description of the principal risks and uncertainties
it faces; and
- The Annual Report and Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company’s performance, business model and
strategy.
The Statement of Directors’ Responsibilities was approved by the Board on 11
October 2023 and signed on its behalf by:
KATE BOLSOVER
Chairman
FINANCIAL STATEMENTS
Income Statement for the year ended 31 July 2023
Year ended 31 July 2023 Year ended 31 July 2022
Notes Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 10 – 29,025 29,025 – 2,708 2,708
Gains/(losses) on derivative instruments 11 – 1,781 1,781 – (1,815) (1,815)
Income 3 17,773 – 17,773 15,256 – 15,256
Investment management fees 4 (2,644) (281) (2,925) (2,564) 732 (1,832)
Other expenses 5 (988) – (988) (905) – (905)
Foreign exchange gains – 1,089 1,089 – 2,609 2,609
--------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities before finance costs and taxation 14,141 31,614 45,755 11,787 4,234 16,021
Finance costs 6 (1,997) – (1,997) (331) – (331)
--------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities before taxation 12,144 31,614 43,758 11,456 4,234 15,690
Taxation on return on ordinary activities 7 (1,238) (2,882) (4,120) (1,079) (1,085) (2,164)
--------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities after taxation for the year 10,906 28,732 39,638 10,377 3,149 13,526
========= ========= ========= ========= ========= =========
Return per ordinary share 8 15.17p 39.95p 55.12p 14.21p 4.31p 18.52p
========= ========= ========= ========= ========= =========
The Company does not have any other comprehensive income. Accordingly, the net
return on ordinary activities after taxation for the year is also the total
comprehensive income for the year and no separate Statement of Comprehensive
Income has been presented.
The total column of this statement represents the Income Statement of the
Company. The revenue and capital columns are supplementary and presented for
information purposes as recommended by the Statement of Recommended Practice
issued by the AIC.
No operations were acquired or discontinued in the year and all items in the
above statement derive from continuing operations.
The Notes below form an integral part of these Financial Statements.
Statement of Changes in Equity for the year ended 31 July 2023
Notes Share Share Capital Other non- Other Capital Revenue Total
capital premium redemption distributable reserve reserve reserve shareholders’
£’000 account reserve reserve £’000 £’000 £’000 funds
£’000 £’000 £’000 £’000
Total shareholders’ funds at 31 July 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
Net return on ordinary activities after taxation for the year – – – – – 28,732 10,906 39,638
Repurchase of ordinary shares 14 – – – – – (2,618) – (2,618)
Dividend paid to shareholders 9 – – – – – – (10,066) (10,066)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 July 2023 18,895 50,501 3,197 7,367 – 299,562 15,055 394,577
========= ========= ========= ========= ========= ========= ========= =========
Total shareholders’ funds at 31 July 2021 18,895 50,501 3,197 7,367 719 273,107 10,278 364,064
Net return on ordinary activities after taxation for the year – – – – – 3,149 10,377 13,526
Repurchase of ordinary shares 14 – – – – (719) (2,808) – (3,527)
Dividend paid to shareholders 9 – – – – – – (6,440) (6,440)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 July 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
========= ========= ========= ========= ========= ========= ========= =========
The Notes below form an integral part of these Financial Statements.
Balance Sheet as at 31 July 2023
Company number 3183919
Notes 2023 2022
£’000 £’000
Fixed assets
Investments 10 377,631 338,845
--------------- ---------------
Current assets
Derivative instruments 11 1,758 972
Debtors 12 3,556 4,568
Amounts held at futures clearing houses and brokers 3,820 2,997
Cash at bank 13,029 25,368
--------------- ---------------
22,163 33,905
========= =========
Current liabilities
Derivative instruments 11 (1,665) (1,302)
Other creditors 13 (3,552) (3,825)
--------------- ---------------
(5,217) (5,127)
========= =========
Net current assets 16,946 28,778
========= =========
Net assets 394,577 367,623
========= =========
Capital and reserves
Share capital 14 18,895 18,895
Share premium account 15 50,501 50,501
Capital redemption reserve 15 3,197 3,197
Other non-distributable reserve 15 7,367 7,367
Other reserve 15 – –
Capital reserve 15 299,562 273,448
Revenue reserve 15 15,055 14,215
--------------- ---------------
Total shareholders’ funds 394,577 367,623
========= =========
Net asset value per ordinary share 16 549.33p 507.78p
========= =========
The Financial Statements above and below were approved by the Board of
Directors on 11 October 2023 and were signed on its behalf by:
KATE BOLSOVER
Chairman
The Notes below form an integral part of these Financial Statements.
Notes to the Financial Statements
1 Principal Activity
Fidelity Asian Values PLC is an Investment Company incorporated in England and
Wales with a premium listing on the London Stock Exchange. The Company’s
registration number is 3183919, and its registered office is Beech Gate,
Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. The Company has
been approved by HM Revenue & Customs as an Investment Trust under Section
1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as
to continue to be approved.
2 Accounting Policies
The Company has prepared its Financial Statements in accordance with UK
Generally Accepted Accounting Practice (“UK GAAP”), including FRS 102
“The Financial Reporting Standard applicable in the UK and Republic of
Ireland”, issued by the Financial Reporting Council (“FRC”). The
Financial Statements have also been prepared in accordance with the Statement
of Recommended Practice: Financial Statements of Investment Trust Companies
and Venture Capital Trusts (“SORP”) issued by the Association of
Investment Companies (“AIC”), in July 2022. The Company is exempt from
presenting a Cash Flow Statement as a Statement of Changes in Equity is
presented and substantially all of the Company’s investments are highly
liquid and are carried at market value.
a) Basis of accounting – The Financial Statements have been prepared on a
going concern basis and under the historical cost convention, except for the
measurement at fair value of investments and derivative instruments. The
Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence up to 31 October 2024 which is
at least twelve months from the date of approval of these Financial
Statements. In making their assessment the Directors have reviewed income and
expense projections, reviewed the liquidity of the investment portfolio and
considered the Company’s ability to meet liabilities as they fall due. This
conclusion also takes into account the Director’s assessment of the risks
faced by the Company as detailed in the Going Concern Statement above.
In preparing these Financial Statements the Directors have considered the
impact of climate change risk as a principal and an emerging risk as set out
above, and have concluded that there was no further impact of climate change
to be taken into account as the investments are valued based on market
pricing. In line with FRS 102 investments are valued at fair value, which for
the Company are quoted bid prices for investments in active markets at the
balance sheet date. Investments which are unlisted are priced using
market-based valuation approaches. All investments, therefore, reflect the
market participants’ view of climate change risk on the investments held by
the Company.
The Company’s Going Concern Statement above takes account of all events and
conditions up to 31 October 2024 which is at least twelve months from the date
of approval of these Financial Statements.
b) Significant accounting estimates and judgements – The preparation of the
Financial Statements requires the use of estimates and judgements. These
estimates and judgements affect the reported amounts of assets and liabilities
at the reporting date. While estimates are based on best judgement using
information and financial data available, the actual outcome may differ from
these estimates.
The key sources of estimation and uncertainty relate to the fair value of the
unlisted investments.
Judgements
The Directors consider whether each fair value is appropriate following
detailed review and challenge of the pricing methodology. The judgement
applied in the selection of the methodology used (see Note 2 (k) below) for
determining the fair value of each unlisted investment can have a significant
impact upon the valuation.
Estimates
The key estimate in the Financial Statements is the determination of the fair
value of the unlisted investments by the Manager’s Fair Value Committee
(“FVC”), with support from an external valuer and Fidelity’s unlisted
investments specialist, for detailed review and appropriate challenge by the
Directors. This estimate is key as it significantly impacts the valuation of
the unlisted investments at the Balance Sheet date. When no recent primary or
secondary transaction in the company’s shares have taken place, the fair
valuation process involves estimation using subjective inputs that are
unobservable (for which market data is unavailable). The estimates involved in
the valuation process may include the following:
(i) the selection of appropriate comparable companies. Comparable companies
are chosen on the basis of their business characteristics and growth patterns;
(ii) the selection of a revenue metric (either historical or forecast);
(iii) the selection of an appropriate illiquidity discount factor to reflect
the reduced liquidity of unlisted companies versus their listed peers;
(iv) the estimation of the likelihood of a future exit of the position
through an initial public offering (“IPO”) or a company sale;
(v) the selection of an appropriate industry benchmark index to assist with
the valuation; and
(vi) the calculation of valuation adjustments derived from milestone analysis
and future cash flows (i.e. incorporating operational success against the
plans/forecasts of the business into the valuation).
As the valuation outcomes may differ from the fair value estimates a price
sensitivity analysis is provided in Other Price Risk Sensitivity in Note 17
below to illustrate the effect on the Financial Statements of an over or under
estimation of fair value.
The risk of an over or under estimation of fair value is greater when
methodologies are applied using more subjective inputs.
c) Segmental reporting – The Company is engaged in a single segment business
and, therefore, no segmental reporting is provided.
d) Presentation of the Income Statement – In order to reflect better the
activities of an investment company and in accordance with guidance issued by
the AIC, supplementary information which analyses the Income Statement between
items of a revenue and capital nature has been prepared alongside the Income
Statement. The net revenue return after taxation for the year is the measure
the Directors believe appropriate in assessing the Company’s compliance with
certain requirements set out in Section 1159 of the Corporation Tax Act 2010.
e) Income – Income from equity investments is accounted for on the date on
which the right to receive the payment is established, normally the
ex-dividend date. Overseas dividends are accounted for gross of any tax
deducted at source. Amounts are credited to the revenue column of the Income
Statement. Where the Company has elected to receive its dividends in the form
of additional shares rather than cash, the amount of the cash dividend
foregone is recognised in the revenue column of the Income Statement. Any
excess in the value of the shares received over the amount of the cash
dividend is recognised in the capital column of the Income Statement. Special
dividends are treated as a revenue receipt or a capital receipt depending on
the facts and circumstances of each particular case.
Derivative instrument income received from dividends on long contracts for
difference (“CFDs”) are accounted for on the date on which the right to
receive the payment is established, normally the ex-dividend date. The amount
net of tax is credited to the revenue column of the Income Statement.
Interest received on CFDs, collateral and bank deposits are accounted for on
an accruals basis and credited to the revenue column of the Income Statement.
Interest received on CFDs represent the finance costs calculated by reference
to the notional value of the CFDs.
f) Investment management fees and other expenses – Investment management
fees and other expenses are accounted for on an accruals basis and are charged
as follows:
- The base investment management fee is allocated in full to revenue;
- The variable investment management fee, is charged/credited to capital as
it is based on the performance of the net asset value per share relative to
the Benchmark Index; and
- All other expenses are allocated in full to revenue with the exception of
those directly attributable to share issues or other capital events.
g) Functional currency and foreign exchange – The functional and reporting
currency of the Company is UK sterling, which is the currency of the primary
economic environment in which the Company operates. Transactions denominated
in foreign currencies are reported in UK sterling at the rate of exchange
ruling at the date of the transaction. Assets and liabilities in foreign
currencies are translated in the rates of exchange ruling at the Balance Sheet
date. Foreign exchange gains and losses arising on the translation are
recognised in the Income Statement as a revenue or a capital item depending on
the nature of the underlying item to which they relate.
h) Finance costs – Finance costs comprise interest on bank overdrafts and
collateral and finance costs paid on CFDs, which are accounted for on an
accruals basis, and dividends paid on short CFDs, which are accounted for on
the date on which the obligation to incur the cost is established, normally
the ex-dividend date. Finance costs are charged in full to the revenue column
of the Income Statement.
i) Taxation – The taxation charge represents the sum of current taxation and
deferred taxation.
Current taxation is taxation suffered at source on overseas income less
amounts recoverable under taxation treaties. Taxation is charged or credited
to the revenue column of the Income Statement, except where it relates to
items of a capital nature, in which case it is charged or credited to the
capital column of the Income Statement. Where expenses are allocated between
revenue and capital any tax relief in respect of the expenses is allocated
between revenue and capital returns on the marginal basis using the
Company’s effective rate of corporation tax for the accounting period. The
Company is an approved Investment Trust under Section 1158 of the Corporation
Tax Act 2010 and is not liable for UK taxation on capital gains.
Deferred taxation is the taxation expected to be payable or recoverable on
timing differences between the treatment of certain items for accounting
purposes and their treatment for the purposes of computing taxable profits.
Deferred taxation is based on tax rates that have been enacted or
substantively enacted when the taxation is expected to be payable or
recoverable. Deferred tax assets are only recognised if it is considered more
likely than not that there will be sufficient future taxable profits to
utilise them.
j) Dividend paid – Dividends payable to equity shareholders are recognised
when the Company’s obligation to make payment is established.
k) Investments – The Company’s business is investing in financial
instruments with a view to profiting from their total return in the form of
income and capital growth. This portfolio of investments is managed and its
performance evaluated on a fair value basis, in accordance with a documented
investment strategy, and information about the portfolio is provided on that
basis to the Company’s Board of Directors. Investments are measured at fair
value with changes in fair value recognised in profit or loss, in accordance
with the provisions of both Section 11 and Section 12 of FRS 102. The fair
value of investments is initially taken to be their cost and is subsequently
measured as follows:
- Listed investments are valued at bid prices, or last market prices,
depending on the convention of the exchange on which they are listed; and
- Unlisted investments are not quoted, or are not frequently traded, and are
stated at the best estimate of fair value. The Manager’s Fair Value
Committee (“FVC”), which is independent of the Portfolio Manager’s team,
meets quarterly to determine the fair value of unlisted investments. These are
based on the principles outlined in Note 2 (b) above.
The unlisted investments are valued at fair value following a detailed review
and appropriate challenge by the Directors of the pricing methodology proposed
by the FVC.
The FVC provide a recommendation of fair values to the Directors based on
recognised valuation techniques that take account of the cost of the
investment, recent arm’s length transactions in the same or similar
investments and financial performance of the investment since purchase.
Consideration is given to the input received from the Fidelity International
analyst that covers the company, the external valuer and Fidelity’s unlisted
investments specialist.
In accordance with the AIC SORP, the Company includes transaction costs,
incidental to the purchase or sale of investments, within gains on investments
in the capital column of the Income Statement and has disclosed these costs in
Note 10 below.
l) Derivative instruments – When appropriate, permitted transactions in
derivative instruments are used. Derivative transactions into which the
Company may enter include long and short CFDs, futures, options and forward
currency contracts. Derivatives are classified as other financial instruments
and are initially accounted and measured at fair value on the date the
derivative contract is entered into and subsequently measured at fair value as
follows:
- Long and short CFDs – the difference between the strike price and the
value of the underlying shares in the contract;
- Futures – the difference between the contract price and the quoted trade
price;
- Forward currency contracts – valued at the appropriate quoted forward
foreign exchange rate ruling at the Balance Sheet date; and
- Options – the quoted trade price for the contract.
Where transactions are used to protect or enhance income, if the circumstances
support this, the income and expenses derived are included in net income in
the revenue column of the Income Statement. Where such transactions are used
to protect or enhance capital, if the circumstances support this, the income
and expenses derived are included in gains on derivative instruments in the
capital column of the Income Statement. Any positions on such transactions
open at the year end are reflected on the Balance Sheet at their fair value
within current assets or current liabilities.
m) Debtors – Debtors include securities sold for future settlement, amounts
receivable on the settlement of derivatives, accrued income, taxation
recoverable and other debtors and prepayments incurred in the ordinary course
of business. If collection is expected in one year or less (or in the normal
operating cycle of the business, if longer) they are classified as current
assets. If not, they are presented as non-current assets. They are recognised
initially at fair value and, where applicable, subsequently measured at
amortised cost using the effective interest rate method.
n) Amounts held at futures clearing houses and brokers – These are amounts
held in segregated accounts as collateral on behalf of brokers and are carried
at amortised cost.
o) Other creditors – Other creditors include securities purchased for future
settlement, amounts payable on share repurchases, capital gains tax payable,
investment management fees, secretarial and administration fees and other
creditors and expenses accrued in the ordinary course of business. If payment
is due within one year or less (or in the normal operating cycle of the
business, if longer) they are classified as current liabilities. If not, they
are presented as non-current liabilities. They are recognised initially at
fair value and, where applicable, subsequently measured at amortised cost
using the effective interest rate method.
p) Capital reserve – The following are accounted for in the capital reserve:
- Gains and losses on the disposal of investments and derivative instruments;
- Changes in the fair value of investments and derivative instruments held at
the year end;
- Foreign exchange gains and losses of a capital nature;
- Variable investment management fees;
- Dividends receivable which are capital in nature;
- Other expenses which are capital in nature; and
- Taxation charged or credited relating to items which are capital in nature.
Technical guidance issued by the Institute of Chartered Accountants in England
and Wales in TECH 02/17BL, guidance on the determination of realised profits
and losses in the context of distributions under the Companies Act 2006,
states that changes in the fair value of investments which are readily
convertible to cash, without accepting adverse terms at the Balance Sheet
date, can be treated as realised. Capital reserves realised and unrealised are
shown in aggregate as capital reserve in the Statement of Changes in Equity
and the Balance Sheet. At the Balance Sheet date, the portfolio of the Company
consisted of investments listed on a recognised stock exchange and derivative
instruments contracted with counterparties having an adequate credit rating,
and the portfolio was considered to be readily convertible to cash, with the
exception of the level 3 investments which had unrealised investment holding
losses of £899,000 (2022: losses of £188,000). See Note 17 below for further
details on the level 3 investments.
3. Income
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Investment income
Overseas dividends 14,847 13,905
Overseas scrip dividends 266 114
Interest on securities 164 –
--------------- ---------------
15,277 14,019
========= =========
Derivative income
Dividends received on long CFDs 1,743 1,200
Interest received on CFDs 258 20
--------------- ---------------
2,001 1,220
========= =========
Other interest
Interest received on collateral and bank deposits 495 17
--------------- ---------------
Total income 17,773 15,256
========= =========
A special dividend of £420,000 has been recognised in capital during the year
(2022: £97,000).
4 INVESTMENT MANAGEMENT FEES
Year ended 31 July 2023 Year ended 31 July 2022
Revenue Capital 1 Total Revenue Capital 1 Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fees 2,644 281 2,925 2,564 (732) 1,832
========= ========= ========= ========= ========= =========
1 For the calculation of the variable management fee, the Company’s NAV
return was compared to the Benchmark Index return on a rolling three year
basis.
FIL Investment Services (UK) Limited is the Company’s Alternative Investment
Fund Manager and has delegated portfolio management to FIL Investments
International (“FII”). Both companies are Fidelity group companies.
The Company charges base investment management fees to revenue at an annual
rate of 0.70% of net assets. In addition, there is +/-0.20% variation fee
based on the Company’s NAV per ordinary share performance relative to the
Company’s Benchmark Index which is charged/credited to capital. Fees are
payable monthly in arrears and are calculated on a daily basis.
5 Other Expenses
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Allocated to revenue:
AIC fees 21 20
Custody fees 85 148
Depositary fees 30 31
Directors’ expenses 35 23
Directors’ fees 1 193 162
Legal and professional fees 161 109
Marketing expenses 195 157
Printing and publication expenses 86 79
Registrars’ fees 38 37
Secretarial and administration fees payable to the Investment Manager 75 75
Sundry other expenses 21 19
Fees payable to the Company's Independent Auditor for the audit of the Financial Statements 48 45
--------------- ---------------
988 905
========= =========
1 Details of the breakdown of Directors’ fees are disclosed in the
Directors’ Remuneration Report in the Annual Report.
6 FINANCE COSTS
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Interest on bank overdrafts and collateral 2 5
Interest paid on CFDs 1 1,788 255
Dividends paid on short CFDs 207 71
--------------- ---------------
1,997 331
========= =========
1 Increased compared to prior year due to an increase in both exposure to
CFDs and interest rates.
7 Taxation on Return on Ordinary Activities
Year ended 31 July 2023 Year ended 31 July 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
a) Analysis of the taxation charge for the year
Overseas taxation 1,238 – 1,238 1,079 – 1,079
Indian capital gains tax – 2,882 2,882 – 1,085 1,085
--------------- --------------- --------------- --------------- --------------- ---------------
Taxation charge for the year (see Note 7b) 1,238 2,882 4,120 1,079 1,085 2,164
========= ========= ========= ========= ========= =========
b) Factors affecting the taxation charge for the year
The taxation charge for the year is lower than the standard rate of UK
corporation tax for an investment trust company of 25.00% (2022: 19.00%). A
reconciliation of the standard rate of UK corporation tax to the taxation
charge for the year is shown below:
Year ended 31 July 2023 Year ended 31 July 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return on ordinary activities before taxation 12,144 31,614 43,758 11,456 4,234 15,690
Net return on ordinary activities before taxation multiplied by the blended rate of UK corporation tax of 21.01% (2022:19.00%) 2,551 6,642 9,193 2,177 804 2,981
Effects of:
Capital gains not taxable 1 – (6,701) (6,701) – (665) (665)
Income not taxable (3,137) – (3,137) (2,617) – (2,617)
Excess management expenses 586 59 645 441 – 441
Excess interest paid – – – – (139) (139)
Expense relief for overseas taxation – – – (1) – (1)
Overseas taxation 1,238 – 1,238 1,079 – 1,079
Indian capital gains tax – 2,882 2,882 – 1,085 1,085
--------------- --------------- --------------- --------------- --------------- ---------------
Taxation charge for the year (see Note 7a) 1,238 2,882 4,120 1,079 1,085 2,164
========= ========= ========= ========= ========= =========
1 The Company is exempt from UK corporation tax on capital gains as it meets
the HM Revenue & Customs criteria for an investment company set out in Section
1159 of the Corporation Tax Act 2010.
c) Deferred taxation
A deferred tax asset of £8,626,000 (2022: £7,858,000), in respect of excess
management expenses of £32,235,000 (2022: £29,162,000) and excess interest
paid of £2,271,000 (2022: £2,271,000), has not been recognised as it is
unlikely that there will be sufficient future taxable profits to utilise these
expenses.
The UK corporation tax rate increased from 19.00% to 25.00% from 1 April 2023.
The rate of 25.00% has been applied to calculate the unrecognised deferred tax
asset for the current year (2022: 25.00%).
8 Return per Ordinary Share
Year ended Year ended
31.07.23 31.07.22
Revenue return per ordinary share 15.17p 14.21p
Capital return per ordinary share 39.95p 4.31p
--------------- ---------------
Total return per ordinary share 55.12p 18.52p
========= =========
The return per ordinary share is based on the net return on ordinary
activities after taxation for the year divided by the weighted average number
of ordinary shares in issue during the year, as shown below:
£’000 £’000
Net revenue return on ordinary activities after taxation 10,906 10,377
Net capital return on ordinary activities after taxation 28,732 3,149
Net total return on ordinary activities after taxation 39,638 13,526
========= =========
Number Number
Weighted average number of ordinary shares held outside of Treasury 71,912,335 73,039,011
========= =========
9 Dividends Paid to Shareholders
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Dividend paid
Dividend of 14.00 pence per ordinary share paid for the year ended 31 July 2022 10,066 –
Dividend of 8.80 pence per ordinary share paid for the year ended 31 July 2021 – 6,440
--------------- ---------------
10,066 6,440
========= =========
Dividend proposed
Dividend proposed of 14.50 pence per ordinary share for the year ended 31 July 2023 10,415 –
Dividend proposed of 14.00 pence per ordinary share for the year ended 31 July 2022 – 10,086
--------------- ---------------
10,415 10,086
========= =========
The Directors have proposed the payment of a dividend for the year ended 31
July 2023 of 14.50 pence per ordinary share which is subject to approval by
shareholders at the Annual General Meeting on 29 November 2023 and has not
been included as a liability in these Financial Statements. The dividend will
be paid on 6 December 2023 to shareholders on the register at the close of
business on 3 November 2023 (ex-dividend date 2 November 2023).
10 Investments at Fair Value through Profit or Loss
2023 2022
£’000 £’000
Listed investments 376,751 337,254
Unlisted investments 880 1,591
--------------- ---------------
Investments at fair value 377,631 338,845
========= =========
Opening book cost 336,727 321,813
Opening investment holding gains 2,118 28,412
--------------- ---------------
Opening fair value 338,845 350,225
========= =========
Movements in the year
Purchases at cost 209,419 165,463
Sales – proceeds (199,658) (179,551)
Gains on investments 29,025 2,708
--------------- ---------------
Closing fair value 377,631 338,845
========= =========
Closing book cost 374,514 336,727
Closing investment holding gains 3,117 2,118
--------------- ---------------
Closing fair value 377,631 338,845
========= =========
The Company received £199,658,000 (2022: £179,551,000) from investments sold
in the year. The book cost of these investments when they were purchased was
£171,632,000 (2022: £150,549,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the
fair value of the investments.
Investment transaction costs
Transaction costs incurred in the acquisition and disposal of investments,
which are included in the gains on the investments above, were as follows:
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Purchases transaction costs 311 245
Sales transaction costs 416 390
--------------- ---------------
727 635
========= =========
The portfolio turnover rate of the year was 56.6% (2022: 49.6%).
11 Derivative Instruments
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Gains/(losses) on derivative instruments
Realised gains/(losses) on long CFD positions closed 393 (3,796)
Realised (losses)/gains on short CFD positions closed (876) 2,584
Realised losses on futures contracts closed (109) (1,222)
Realised gains on options contracts closed 951 193
Realised gains on forward currency contracts 118 126
Movement in investment holding gains on long CFDs 1,016 464
Movement in investment holding losses on short CFDs (261) (451)
Movement in investment holding gains on futures 270 184
Movement in investment holding gains on options 233 49
Movement in investment holding gains on forward currency contracts 46 54
--------------- ---------------
1,781 (1,815)
========= =========
2023 2022
Fair value Fair value
£’000 £’000
Derivative instruments recognised on the Balance Sheet
Derivative instrument assets 1,758 972
Derivative instrument liabilities (1,665) (1,302)
--------------- ---------------
93 (330)
========= =========
2023 2022
Fair value Asset Fair value Asset
£’000 exposure £’000 exposure
£’000 £’000
At the year end the Company held the following derivative instruments:
Long CFDs 798 44,089 (218) 29,861
Long future 172 4,061 (88) 3,997
Put options (156) 1,466 – –
Short CFDs (536) 10,586 (275) 7,277
Short future (10) 1,292 (20) 682
Call options (175) 1,705 317 3,034
Forward currency contracts – – (46) –
--------------- --------------- --------------- ---------------
93 63,199 (330) 44,851
========= ========= ========= =========
12 Debtors
2023 2022
£’000 £’000
Securities sold for future settlement 1,366 1,848
Amounts receivable on settlement of derivatives 162 –
Accrued income 1,572 1,991
Taxation recoverable 315 640
Other debtors and prepayments 141 89
--------------- ---------------
3,556 4,568
========= =========
13 Other Creditors
2023 2022
£’000 £’000
Securities purchased for future settlement 598 948
Amount payable on share repurchases – 276
Indian capital gains tax payable 2,355 2,170
Creditors and accruals 599 431
--------------- ---------------
3,552 3,825
========= =========
14 Share Capital
2023 2022
Number of £’000 Number of £’000
shares shares
Issued, allotted and fully paid
Ordinary shares of 25 pence each held outside of Treasury
Beginning of the year 72,398,336 18,100 73,178,879 18,295
Ordinary shares repurchased into Treasury (569,000) (142) (780,543) (195)
--------------- --------------- --------------- ---------------
End of the year 71,829,336 17,958 72,398,336 18,100
========= ========= ========= =========
Ordinary shares of 25 pence each held in Treasury 1
Beginning of the year 3,182,553 795 2,402,010 600
Ordinary shares repurchased into Treasury 569,000 142 780,543 195
--------------- --------------- --------------- ---------------
End of the year 3,751,553 937 3,182,553 795
========= ========= ========= =========
Total share capital 18,895 18,895
========= =========
1 Ordinary shares held in Treasury carry no rights to vote, to receive a
dividend or to participate in a winding up of the Company.
The cost of ordinary shares repurchased into Treasury during the year was
£2,618,000 (2022: £3,527,000).
15 Capital and Reserves
Share Share Capital Other non- Other Capital Revenue Total
capital premium redemption distributable reserve reserve reserve shareholders’
£’000 account reserve reserve £’000 £’000 £’000 funds
£’000 £’000 £’000 £’000
At 1 August 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
Gains on investments (see Note 10) – – – – – 29,025 – 29,025
Gains on derivative instruments (see Note 11) – – – – – 1,781 – 1,781
Foreign exchange gains – – – – – 1,089 – 1,089
Investment management fees (see Note 4) – – – – – (281) – (281)
Indian capital gains tax (see Note 7) – – – – – (2,882) – (2,882)
Revenue return on ordinary activities after taxation for the year – – – – – – 10,906 10,906
Dividend paid to shareholders (see Note 9) – – – – – – (10,066) (10,066)
Repurchase of ordinary shares (see Note 14) – – – – – (2,618) – (2,618)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 July 2023 18,895 50,501 3,197 7,367 – 299,562 15,055 394,577
========= ========= ========= ========= ========= ========= ========= =========
At 1 August 2021 18,895 50,501 3,197 7,367 719 273,107 10,278 364,064
Gains on investments (see Note 10) – – – – – 2,708 – 2,708
Losses on derivative instruments (see Note 11) – – – – – (1,815) – (1,815)
Foreign exchange gains – – – – – 2,609 – 2,609
Investment management fees (see Note 4) – – – – – 732 – 732
Indian capital gains tax (see Note 7) – – – – – (1,085) – (1,085)
Revenue return on ordinary activities after taxation for the year – – – – – – 10,377 10,377
Dividend paid to shareholders (see Note 9) – – – – – – (6,440) (6,440)
Repurchase of ordinary shares (see Note 14) – – – – (719) (2,808) – (3,527)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 July 2022 18,895 50,501 3,197 7,367 – 273,448 14,215 367,623
========= ========= ========= ========= ========= ========= ========= =========
The capital reserve balance at 31 July 2023 includes investment holding gains
of £3,117,000 (2022: gains of £2,118,000) as detailed in Note 10 above. See
Note 2 (p) above for further details. The revenue and capital reserves are
distributable by way of dividend.
16 Net Asset Value per Ordinary Share
The calculation of the net asset value per ordinary share is based on the
total shareholders’ funds divided by the number of ordinary shares held
outside of Treasury.
2023 2022
Total shareholders’ funds £394,577,000 £367,623,000
Ordinary shares held outside of Treasury at the year end 71,829,336 72,398,336
Net asset value per ordinary share 549.33p 507.78p
=========== ===========
It is the Company’s policy that shares held in Treasury will only be
reissued at net asset value per ordinary share or at a premium to net asset
value per ordinary share and, therefore, shares held in Treasury have no
dilutive effect.
17 Financial Instruments
Management of risk
The Company’s investing activities in pursuit of its investment objective
involve certain inherent risks. The Board confirms that there is an ongoing
process for identifying, evaluating and managing the risks faced by the
Company. The Board with the assistance of the Manager, has developed a risk
matrix which, as part of the internal control process, identifies the risks
that the Company faces. Principal risks identified are: economic, political
and market; investment performance (including the use of derivatives and
gearing); cybercrime and information security; discount management; key
person; environmental, social and governance (“ESG”); business continuity
and operational; and shareholder relationships. Other risks identified are tax
and regulatory risks. Risks are identified and graded in this process,
together with steps taken in mitigation, and are updated and reviewed on an
ongoing basis. These risks and how they are identified, evaluated and managed
are shown above.
This Note refers to the identification, measurement and management of risks
potentially affecting the value of financial instruments. The Company’s
financial instruments comprise:
- Equity shares (listed and unlisted), equity linked notes and corporate
bonds held in accordance with the Company’s investment objective and
policies;
- Derivative instruments which comprise CFDs, forward currency contracts,
futures and options on listed stocks and equity indices; and
- Cash, liquid resources and short-term debtors and creditors that arise from
its operations.
The risks identified arising from the Company’s financial instruments are
market price risk (which comprises interest rate risk, foreign currency risk
and other price risk), liquidity risk, counterparty risk, credit risk and
derivative instruments risk. The Board reviews and agrees policies for
managing each of these risks, which are summarised below. These policies are
consistent with those followed last year.
Market price risk
Interest rate risk
The Company finances its operations through its share capital and reserves. In
addition, the Company has gearing through the use of derivative instruments.
The level of gearing is reviewed regularly by the Board and the Portfolio
Manager. The Company is exposed to a financial risk arising as a result of any
increases in interest rates associated with the funding of the derivative
instruments.
Interest rate risk exposure
The values of the Company’s financial instruments that are exposed to
movements in interest rates are shown below:
2023 2022
£’000 £’000
Exposure to financial instruments that bear interest
Long CFDs – exposure less fair value 43,291 30,079
--------------- ---------------
Exposure to financial instruments that earn interest
Cash at bank 13,029 25,368
Short CFDs – exposure plus fair value 10,050 7,002
Amounts held at futures clearing houses and brokers 3,820 2,997
--------------- ---------------
26,899 35,367
========= =========
Net exposure to financial instruments that (bear)/earn interest (16,392) 5,288
========= =========
Foreign currency risk
The Company’s net return on ordinary activities after taxation for the year
and its net assets can be affected by foreign exchange rate movements because
the Company has income, assets and liabilities which are denominated in
currencies other than the Company’s functional currency which is UK
sterling. The Portfolio Manager may seek to manage exposure to currency
movements by using forward and spot foreign exchange contracts. The Company
can also be subject to short-term exposure to exchange rate movements, for
example, between the date when an investment is purchased or sold and the date
when settlement of the transaction occurs.
Three principal areas have been identified where foreign currency risk could
impact the Company:
- Movements in currency exchange rates affecting the value of investments and
derivative instruments;
- Movements in currency exchange rates affecting short-term timing
differences; and
- Movements in currency exchange rates affecting income received.
Currency exposure of financial assets
The currency exposure profile of the Company’s financial assets is shown
below:
2023
Currency Investments Long Debtors 2 Cash at Total
at fair value exposure to £’000 bank £’000
£’000 derivative £’000
instruments 1
£’000
Hong Kong dollar 105,426 28,575 1,517 89 135,607
Indian rupee 82,090 – 3,260 1,351 86,701
US dollar 27,358 14,980 2,077 11,289 55,704
Indonesian rupiah 51,868 – – – 51,868
South Korean won 33,540 12 7 – 33,559
Australian dollar 19,017 3,303 – 213 22,533
Singapore dollar 12,934 2,746 – – 15,680
Taiwan dollar 14,861 – 377 – 15,238
Chinese renminbi 14,109 – – 87 14,196
Philippine peso 4,361 – – – 4,361
Malaysian ringgit 3,832 – – – 3,832
Sri Lankan rupee 3,423 – – – 3,423
Other overseas currencies 4,812 – 11 – 4,823
UK sterling – – 127 – 127
--------------- --------------- --------------- --------------- ---------------
377,631 49,616 7,376 13,029 447,652
========= ========= ========= ========= =========
1 The exposure to the market of long CFDs, long futures and put options.
2 Debtors include amounts held at futures clearing houses and brokers.
2022
Currency Investments Long Debtors 2 Cash at Total
at fair value exposure to £’000 bank £’000
£’000 derivative £’000
instruments 1
£’000
Hong Kong dollar 90,764 25,443 1,318 287 117,812
Indian rupee 87,206 – 3,783 620 91,609
US dollar 12,367 9,783 1,063 23,801 47,014
Indonesian rupiah 41,649 – 4 – 41,653
South Korean won 31,895 – 68 6 31,969
Taiwan dollar 19,940 – 1,059 64 21,063
Australian dollar 19,035 – – – 19,035
Chinese renminbi 13,063 – – 97 13,160
Singapore dollar 11,149 1,666 – – 12,815
Philippine peso 4,810 (46) 33 – 4,797
Sri Lankan rupee 3,109 – 148 – 3,257
Vietnamese dong 1,173 – – 493 1,666
Other overseas currencies 2,685 – – – 2,685
UK sterling – – 89 – 89
--------------- --------------- --------------- --------------- ---------------
338,845 36,846 7,565 25,368 408,624
========= ========= ========= ========= =========
1 The exposure to the market of long CFDs, long futures and call option after
the netting of the forward currency contract.
2 Debtors include amounts held at futures clearing houses and brokers.
Currency exposure of financial liabilities
The Company finances its investment activities principally through its
ordinary share capital and reserves. The Company’s financial liabilities
comprise short positions on derivative instruments and other payables. The
currency profile of these financial liabilities is shown below:
2023
Currency Short Other Total
exposure to creditors £’000
derivative £’000
instruments 1
£’000
US dollar 12,957 233 13,190
Indian rupee – 2,355 2,355
Hong Kong dollar 626 41 667
Korean won – 326 326
Indonesian rupiah – 64 64
Singapore dollar – 1 1
UK sterling – 532 532
--------------- --------------- ---------------
13,583 3,552 17,135
========= ========= =========
1 The exposure to the market of short CFDs, short futures and call options.
2022
Currency Short Other Total
exposure to creditors £’000
derivative £’000
instruments 1
£’000
US dollar 5,091 7 5,098
Indian rupee 682 2,744 3,426
Hong Kong dollar 2,186 311 2,497
Philippine peso – 27 27
Malaysian ringgit – 25 25
Taiwan dollar – 18 18
UK sterling – 693 693
--------------- --------------- ---------------
7,959 3,825 11,784
========= ========= =========
1 The exposure to the market of short CFDs and short futures.
Other price risk
Other price risk arises mainly from uncertainty about future prices of
financial instruments used in the Company’s business. It represents the
potential loss the Company might suffer through holding market positions in
the face of price movements.
The Board meets quarterly to consider the asset allocation of the portfolio
and the risk associated with particular industry sectors within the parameters
of the investment objective.
The Portfolio Manager is responsible for actively monitoring the existing
portfolio selected in accordance with the overall asset allocation parameters
described above and seeks to ensure that individual stocks also meet an
acceptable risk/reward profile. Other price risks arising from derivative
positions, mainly due to the underlying exposures, are estimated using Value
at Risk and Stress Tests as set out in the Company’s internal Risk
Management Process Document.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in
meeting obligations associated with financial liabilities. The Company’s
assets mainly comprise readily realisable securities and derivative
instruments which can be sold easily to meet funding commitments if necessary.
Short-term flexibility, if required, is achieved by the use of a bank
overdraft.
Liquidity risk exposure
At 31 July 2023, the undiscounted gross cash outflows of the financial
liabilities were all repayable within one year and consisted of derivative
instrument liabilities of £1,665,000 (2022: £1,302,000) and other creditors
of £3,552,000 (2022: £3,825,000).
Counterparty risk
Certain derivative instruments in which the Company may invest are not traded
on an exchange but instead will be traded between counterparties based on
contractual relationships, under the terms outlined in the International Swaps
and Derivatives Association’s (“ISDA”) market standard derivative legal
documentation. These are known as Over the Counter (“OTC”) trades. As a
result, the Company is subject to the risk that a counterparty may not perform
its obligations under the related contract. In accordance with the risk
management process which the Manager employs, the Manager will seek to
minimise such risk by only entering into transactions with counterparties
which are believed to have an adequate credit rating at the time the
transaction is entered into, by ensuring that formal legal agreements covering
the terms of the contract are entered into in advance, and through adopting a
counterparty risk framework which measures, monitors and manages counterparty
risk by the use of internal and external credit agency ratings and by
evaluating derivative instrument credit risk exposure.
For OTC and exchange traded derivative transactions, collateral is used to
reduce the risk of both parties to the contract. Collateral is managed on a
daily basis for all relevant transactions. At 31 July 2023, £793,000 (2022:
£254,000) was held by the brokers in cash denominated in US dollars in a
segregated collateral account on behalf of the Company, to reduce the credit
risk exposure of the Company. This collateral comprised: J.P. Morgan
Securities plc £436,000 (2022: £213,000), Goldman Sachs International
£233,000 (2022: £nil), HSBC Bank plc £124,000 (2022: £nil) and Morgan
Stanley & Co International plc £nil (2022: £41,000). £3,820,000 (2022:
£2,997,000), shown as amounts held at futures clearing houses and brokers on
the Balance Sheet, was held by the Company in a segregated collateral account,
on behalf of the brokers, to reduce the credit risk exposure of the brokers.
This collateral is comprised of: UBS AG £3,346,000 (2022: £2,574,000) in
cash, Morgan Stanley & Co International plc £474,000 (2022: £nil) in cash
and HSBC Bank Plc £nil (2022: £423,000) in cash.
Credit risk
Financial instruments may be adversely affected if any of the institutions
with which money is deposited suffer insolvency or other financial
difficulties. All transactions are carried out with brokers that have been
approved by the Manager and are settled on a delivery versus payment basis.
Limits are set on the amount that may be due from any one broker and are kept
under review by the Manager. Exposure to credit risk arises on unsettled
security transactions and derivative instrument contracts and cash at bank.
Derivative instruments risk
The risks and risk management processes which result from the use of
derivative instruments, are set out in a documented Risk Management Process
Document. Derivative instruments are used by the Manager for the following
purposes:
- to gain unfunded long exposure to equity markets, sectors or single stocks.
Unfunded exposure is exposure gained without an initial flow of capital;
- to hedge equity market risk using derivatives with the intention of at
least partially mitigating losses in the exposures of the Company’s
portfolio as a result of falls in the equity market; and
- to position short exposures in the Company’s portfolio. These uncovered
exposures benefit from falls in the prices of shares which the Portfolio
Manager believes to be over valued. These positions, therefore, distinguish
themselves from other short exposures held for hedging purposes since they are
expected to add risk to the portfolio.
RISK SENSITIVITY ANALYSIS
Interest rate risk sensitivity analysis
Based on the financial instruments held and interest rates at 31 July 2023, an
increase of 1.00% in interest rates throughout the year, with all other
variables held constant, would have decreased the net return on ordinary
activities after taxation for the year and decreased the net assets of the
Company by £164,000 (2022: increased the net return and increased the net
assets by £53,000). A decrease of 1.00% in interest rates throughout the year
would have had an equal but opposite effect.
Foreign currency risk sensitivity analysis
Based on the financial instruments held and currency exchange rates as at the
Balance Sheet date, with all other variables held constant, a 10%
strengthening of the UK sterling exchange rate against other currencies would
have decreased the Company’s net return on ordinary activities after
taxation for the year and decreased the net assets (2022: decreased the net
return and decreased the net assets) by the following amounts:
Currency 2023 2022
£’000 £’000
Hong Kong dollar 12,267 10,483
Indian rupee 7,668 8,017
Indonesian rupiah 4,709 3,787
US dollar 3,865 3,811
South Korean won 3,021 2,906
Australian dollar 2,048 1,730
Singapore dollar 1,425 1,165
Taiwan dollar 1,385 1,913
Chinese renminbi 1,291 1,196
Philippine peso 396 434
Malaysian ringgit 348 70
Sri Lankan rupee 311 296
Other overseas currencies 438 322
--------------- ---------------
39,172 36,130
========= =========
Based on the financial instruments held and currency exchange rates as at the
Balance Sheet date, with all other variables held constant, a 10% weakening of
the UK sterling exchange rate against other currencies would have increased
the Company’s net return on ordinary activities after taxation for the year
and increased the net assets (2022: increased the net return and increased the
net assets) by the following amounts:
Currency 2023 2022
£’000 £’000
Hong Kong dollar 14,993 12,813
Indian rupee 9,372 9,798
Indonesian rupiah 5,756 4,628
US dollar 4,724 4,657
South Korean won 3,693 3,552
Australian dollar 2,504 2,115
Singapore dollar 1,742 1,424
Taiwan dollar 1,693 2,338
Chinese renminbi 1,577 1,462
Philippine peso 485 530
Malaysian ringgit 426 86
Sri Lankan rupee 380 362
Other overseas currencies 535 395
--------------- ---------------
47,880 44,160
========= =========
Other price risk – exposure to investments sensitivity analysis
Based on the listed investments held and share prices at 31 July 2023, an
increase of 10% in share prices, with all other variables held constant, would
have increased the Company’s net return on ordinary activities after
taxation for the year and increased the net assets of the Company by
£37,675,000 (2022: increased the net return and increased the net assets by
£33,725,000). A decrease of 10% in share prices would have had an equal and
opposite effect.
An increase of 10% in the valuation of unlisted investments held at 31 July
2023 would have increased the Company’s net return on ordinary activities
after taxation for the year and increased the net assets of the Company by
£88,000 (2022: increased the net return and increased the net assets by
£159,000). A decrease of 10% in the valuation would have had an equal and
opposite effect.
Other price risk – net exposure to derivative instruments sensitivity
analysis
Based on the derivative instruments held and share prices at 31 July 2023, an
increase of 10% in the share prices underlying the derivative instruments,
with all other variables held constant, would have increased the Company’s
net return on ordinary activities after taxation for the year and increased
the net assets of the Company by £3,603,000 (2022: increased the net return
and increased the net assets by £2,893,000). A decrease of 10% in share
prices would have had an equal and opposite effect.
Fair Value of Financial Assets and Liabilities
Financial assets and liabilities are stated in the Balance Sheet at values
which are not materially different to their fair values. As explained in Notes
2 (k) and (l) above, investments and derivative instruments are shown at fair
value. In the case of cash at bank, book value approximates to fair value due
to the short maturity of the instruments.
Fair Value Hierarchy
The Company is required to disclose the fair value hierarchy that classifies
its financial instruments measured at fair value at one of three levels,
according to the relative reliability of the inputs used to estimate the fair
values.
Classification Input
Level 1 Valued using quoted prices in active markets for identical assets
Level 2 Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly
Level 3 Valued by reference to valuation techniques using inputs that are not based on observable market data
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset. The valuation techniques used by the Company are explained in
Notes 2 (k) and (l) above. The table below sets out the Company’s fair value
hierarchy:
2023
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 367,312 9,439 880 377,631
Derivative instrument assets 172 1,586 – 1,758
--------------- --------------- --------------- ---------------
367,484 11,025 880 379,389
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (341) (1,324) – (1,665)
========= ========= ========= =========
2022
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 330,119 7,135 1,591 338,845
Derivative instrument assets 317 655 – 972
--------------- --------------- --------------- ---------------
330,436 7,790 1,591 339,817
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (108) (1,194) – (1,302)
========= ========= ========= =========
The table below sets out the movements in level 3 financial instruments during
the year:
Year ended Year ended
31.07.23 31.07.22
£’000 £’000
Beginning of the year 1,591 1,722
Movement in investment holding losses (711) (131)
--------------- ---------------
End of the year 880 1,591
========= =========
Below are details of the four investments which fall into level 3 of which the
first three investments are unlisted and the last investment is suspended from
trading.
Eden Biologics
Eden Biologics develops biosimilars and is also engaged in providing process
development and contract manufacturing solutions to the biopharmaceutical
industry and is an unlisted company. On 26 February 2018, the company
voluntarily delisted from the Taipei Exchange. The valuation at 31 July 2023
is based on the company’s financial information, the macro-environment and a
weighted average following a scenario-based approach. As at 31 July 2023, its
fair value was £40,000 (2022: £317,000).
Chime Biologics
Chime Biologics is a China-based Contract Development and Manufacturing
Organization (CDMO) that provides a solution supporting customers from
early-stage biopharmaceutical development through to late-stage clinical and
commercial manufacturing and is an unlisted company. The valuation at 31 July
2023 is based on the company’s financial information, the macro-environment
and the Probability-Weighted Expected Return Model (PWERM). As at 31 July
2023, its fair value was £69,000 (2022: £73,000).
Tuhu Car
Tuhu Car is an online retailer of auto spare parts and is an unlisted company.
The valuation at 31 July 2023 is based on the company’s financial
information, the macro-environment and benchmarking the position to a range of
comparable market data. As at 31 July 2023, its fair value was £771,000
(2022: £1,201,000).
Salt Lake Potash
Salt Lake Potash is a mineral exploration company. The company was suspended
from trading on the Australian Stock Exchange on 27 July 2021 and in October
2021 it announced that it would be entering voluntary administration. As at 31
July 2023, its fair value was £nil (2022: £nil).
18 Capital Resources and Gearing
The Company does not have any externally imposed capital requirements. The
financial resources of the Company comprise its share capital and reserves, as
disclosed in the Balance Sheet above and any gearing, which is managed by the
use of derivative instruments. Financial resources are managed in accordance
with the Company’s investment policy and in pursuit of its investment
objective, both of which are detailed in the in the Annual Report. The
principal risks and their management are disclosed above and in Note 17 above.
The Company’s gross and net gearing at the year end is set out below:
2023
Gross gearing Net gearing
Asset % 1 Asset % 1
exposure exposure
£’000 £’000
Investments 377,631 95.7 377,631 95.7
Long CFDs 44,089 11.2 44,089 11.2
Long future 4,061 1.0 4,061 1.0
Put options 1,466 0.4 1,466 0.4
--------------- --------------- --------------- ---------------
Total long exposures 427,247 108.3 427,247 108.3
========= ========= ========= =========
Short CFDs 10,586 2.7 (10,586) (2.7)
Call options 1,705 0.4 (1,705) (0.4)
Short future 1,292 0.3 (1,292) (0.3)
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 440,830 111.7 413,664 104.9
========= ========= ========= =========
Shareholders’ funds 394,577 394,577
========= =========
Gearing 2 11.7% 4.9%
========= =========
1 Asset exposure to the market expressed as a percentage of shareholders’
funds.
2 Gearing is the amount by which gross asset exposure/net market exposure
exceeds shareholders’ funds expressed as a percentage of shareholders’
funds.
2022
Gross gearing Net gearing
Asset % 1 Asset % 1
exposure exposure
£’000 £’000
Investments 338,845 92.2 338,845 92.2
Long CFDs 29,861 8.1 29,861 8.1
Long future 3,997 1.1 3,997 1.1
Put options 3,034 0.8 3,034 0.8
--------------- --------------- --------------- ---------------
Total long exposures 375,737 102.2 375,737 102.2
========= ========= ========= =========
Short CFDs 7,277 2.0 (7,277) (2.0)
Short future 682 0.2 (682) (0.2)
--------------- --------------- --------------- ---------------
Gross asset exposure/net market exposure 383,696 104.4 367,778 100.0
========= ========= ========= =========
Shareholders’ funds 367,623 367,623
========= =========
Gearing 2 4.4% –
========= =========
1 Asset exposure to the market expressed as a percentage of shareholders’
funds.
2 Gearing is the amount by which gross asset exposure/net market exposure
exceeds shareholders’ funds expressed as a percentage of shareholders’
funds.
19 Transactions with the Manager and Related Parties
FIL Investment Services (UK) Limited is the Company’s Alternative Investment
Fund Manager and has delegated portfolio management and the role of company
secretary to FIL Investments International (“FII”). Both companies are
Fidelity group companies.
Details of the current fee arrangements are given in the Directors’ Report
in the Annual Report. During the year, management fees of £2,925,000 (2022:
£1,832,000), and secretarial and administration fees of £75,000 (2022:
£75,000) were payable to FII. At the Balance Sheet date, management fees of
£292,000 (2022: £156,000), and secretarial and administration fees of
£25,000 (2022: £25,000) were accrued and included in other creditors. FII
also provides the Company with marketing services. The total amount payable
for these services during the year was £195,000 (2022: £157,000). At the
Balance Sheet date, marketing services of £nil (2022: £20,000) were accrued
and included in other creditors.
Disclosures of the Directors’ interests in the ordinary shares of the
Company and Director’s fees and taxable expenses relating to reasonable
travel expenses payable to the Directors are given in the Directors’
Remuneration Report in the Annual Report. In addition to the fees and taxable
expenses disclosed in the Directors’ Remuneration Report, £20,000 (2022:
£18,000) of employers’ National Insurance contributions were paid by the
Company. At the Balance Sheet date, Directors’ fees of £16,000 (2022:
£15,000) were accrued and payable.
20 post balance sheet event
On 26 September 2023 following an initial public offering, Tuhu Car, which was
classified as a Level 3 investment as at 31 July 2023 as set out in Note 17
above, was listed on the Hong Kong Stock Exchange at a 2% premium to the
Balance Sheet valuation.
Alternative Performance Measures
Discount/Premium
The discount/premium is considered to be an Alternative Performance Measure.
It is the difference between the NAV per ordinary share of the Company and the
ordinary share price and is expressed as a percentage of the NAV per ordinary
share. Details of the Company’s discount/premium are on the Financial
Highlights section in the Annual Report and are both defined in the Glossary
of Terms in the Annual Report.
Gearing
Gearing (both Gross and Net) is considered to be an Alternative Performance
Measure. See Note 18 above for details of the Company’s gearing.
Net Asset Value (“NAV”) per Ordinary Share
The NAV per ordinary share is considered to be an Alternative Performance
Measure. See the Balance Sheet and Note 16 above for further details.
Ongoing Charges Ratio
The ongoing charges ratio 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 management fees and other expenses
expressed as a percentage of the average net assets throughout the year.
2023 2022
£’000 £’000
Investment management fees (£’000) 2,644 2,564
Other expenses (£’000) 988 905
--------------- ---------------
Ongoing charges (£’000) 3,632 3,469
========= =========
Variable management fees (£’000) 281 (732)
Average net assets (£’000) 377,729 366,346
Ongoing charges ratio 0.96% 0.95%
Ongoing charges ratio including variable management fees 1.03% 0.75%
========= =========
Revenue, Capital and Total Returns per Share
Revenue, capital and total returns per share are considered to be Alternative
Performance Measures. See the Income Statement and Note 8 above for further
details.
Total Return Performance
Total return performance is considered to be an Alternative Performance
Measure. The NAV per ordinary share total return includes reinvestment of the
dividend in the NAV of the Company on the ex-dividend date. The ordinary share
price total return includes the reinvestment of the net dividend in the month
that the ordinary share price goes ex-dividend.
The tables below provide information relating to the NAV per ordinary share
and the ordinary share price of the Company and the impact of the dividend
reinvestments and the total returns for the years ended 31 July 2023 and 31
July 2022.
2023 Net asset Ordinary
value per share
ordinary price
share
31 July 2022 507.78p 458.00p
31 July 2023 549.33p 520.00p
Change in year +8.2% +13.5%
Impact of dividend reinvestment +3.2% +3.8%
--------------- ---------------
Total return for the year +11.4% +17.3%
========= =========
2022 Net asset Ordinary
value per share
ordinary price
share
31 July 2021 497.50p 483.00p
31 July 2022 507.78p 458.00p
Change in year +2.1% -5.2%
Impact of dividend reinvestment +1.8% +1.8%
--------------- ---------------
Total return for the year +3.9% -3.4%
========= =========
The Annual Financial Report Announcement is not the Company's statutory
accounts. The above results for the year ended 31 July 2023 are an abridged
version of the Company's full Annual Report and Financial Statements, which
have been approved and audited with an unqualified report. The 2022 and 2023
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 of the Companies Act 2006. The financial information for
2022 is derived from the statutory accounts for 2022 which have been delivered
to the Registrar of Companies. The 2023 Financial Statements will be filed
with the Registrar of Companies in due course.
A copy of the above results announcement will be available on the Company's
website at www.fidelity.co.uk/asianvalues within two working days.
A copy of the Annual Report will shortly be submitted to the National Storage
Mechanism and will be available for inspection at:
www.morningstar.co.uk/uk/NSM
The Annual Report will be posted to shareholders later this month and
additional copies will be available from the registered office of the Company
and on the Company's website: www.fidelity.co.uk/asianvalues where up to
date information on the Company, including daily NAV and
share prices, factsheets and other information can also be found.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
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