Final Results
30/09/2013 13:13
Fidelity Asian Values PLC
Preliminary Announcement of Audited Results
For the year ended 31 July 2013
Chairman's Statement
PERFORMANCE
In the year to 31 July 2013, the Net Asset Value ("NAV") per share of the
Company increased by 18.4%, compared to a rise of 12.0% in the Benchmark Index
(the MSCI All Countries Far East ex Japan Index (net)). The ordinary share
price of the Company rose by 16.8% over the year, with the discount widening
from 9.9% to 11.2%. (All figures in UK sterling terms and on a total return
basis.)
INVESTMENT BACKGROUND
Rising confidence about growth in the US, easing concerns about the sovereign
debt crisis in Europe and the smooth political transition in China boosted
global equities over the review period. Developed markets recovered sharply and
global growth expectations were boosted by a series of positive data releases,
mainly in the US. Meanwhile, the new government in Japan unveiled a series of
fiscal and monetary stimulus measures, which fuelled investor optimism. As a
result, Far East excluding Japan equities advanced over the year but lagged
their developed market peers. From a sector perspective, defensively positioned
utilities and health care stocks surged as investors sought protection from a
rise in volatility. The financials and information technology sectors also
gained. Consumer discretionary also performed well, mainly on the back of
healthy earnings growth and an optimistic outlook. On the other hand, concerns
about a slowdown in China and the resulting lack of growth in demand hurt the
energy and materials sectors.
On the economic front, growth expectations for countries in the Asia Pacific
region have moderated as uncertain macro-economic environment continues to
weigh on exports. Besides weak global demand, measures to rein in government
spending and rising property prices led to slower-than-expected growth in
China. Premier Li Keqiang set a 7.0% growth floor to achieve long term goals,
raising hopes that authorities may intervene to support the economy. China also
unveiled fiscal stimulus measures, including tax breaks for small companies,
reduced fees for exporters and opening up of railway construction. Furthermore,
the People's Bank of China removed controls on lending rates in a step towards
interest rate liberalisation.
OUTLOOK
Asian economies are not immune to the economic crisis in developed markets.
However, with the increased role played by domestic consumption, economies
across the Far East excluding Japan region are poised to deliver stronger
growth relative to the rest of the world. This is likely to be fuelled by
rising wages and institutional reforms that encourage consumption such as
pension and tax reforms. China's economy seems to have lost some momentum. But
the country's new leadership is likely to focus on expanding domestic demand,
revitalising private sectors and speeding up the transformation of the
country's economic growth model. Authorities have already started addressing
income inequality, promoting wage growth and improving the social security net
since the start of the 12th Five Year Plan in 2011. The impact of these reforms
is likely to be felt in a broad range of sectors. The policy environment in the
rest of the region remains supportive. Moreover, factors driving structural
growth, such as favourable demographics, a focus on infrastructure building and
stable government finances are likely to fuel a multi-year expansion cycle.
Against this backdrop, Asia continues to offer compelling investment
opportunities in quality companies at attractive valuations.
SUBSCRIPTION SHARES
The right of subscription shareholders to subscribe for ordinary shares expired
on 31 May 2013. All of the 11.5m subscription shares outstanding at the
beginning of the year were either exercised prior to the final subscription
date or subsequently by a trustee. Since their issue in 2010, the subscription
shares have raised a total of 23.3m for the Company. Further details on the
subscription shares may be found in the Directors' Report section of the Annual
Report.
SHARE REPURCHASES
Purchases of ordinary shares for cancellation are made at the discretion of the
Board and within guidelines set from time to time by the Board in light of
prevailing market conditions. Share repurchases will only be made when they
will result in an enhancement to the net asset value of ordinary shares for
remaining shareholders. Details of ordinary shares repurchased for cancellation
during the year are outlined in the Annual Report. In the year under review a
total of 3,693,000 ordinary shares were repurchased for cancellation.
DIVIDEND
Subject to shareholders' approval at the forthcoming Annual General Meeting,
the Directors recommend a final dividend of 1.10 pence per ordinary share
(2012: one penny). This dividend will be payable on 6 December 2013 to
shareholders on the register at close of business on 4 October 2013
(ex-dividend date 2 October 2013). As the Company's objective is long term
capital growth, any revenue surplus is a function of a particular year's
business and it should not be assumed that dividends will continue to be paid
in future.
GEARING
At the General Meeting held on 28 November 2012, shareholders approved a change
to the Company's investment policy to permit the use of Contracts For
Difference ("CFDs"). The ability to use CFDs has increased gearing flexibility
and adds to the range of options available to the Board and the Manager in
changing market conditions.
The costs of using CFDs in the manner proposed by the Board and the Manager are
currently lower than the costs involved in traditional gearing. Accordingly the
Company repaid and cancelled the US$15,000,000 loan facility with Scotiabank
Europe PLC on 28 February 2013. Under the investment policy the level of
borrowing, whether through bank loans or CFDs, will not exceed 30% of the value
of net assets at the time it was incurred. At 31 July 2013 the level of gearing
was 7.4% (2012: 5.7%).
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
The Alternative Investment Fund Managers Directive (or "AIFMD") is a European
Directive that affects many investment funds, including the Company, which are
managed or promoted within the European Union. The AIFMD was implemented with
effect from 22 July 2013, although it has been confirmed that the Financial
Conduct Authority will permit a transitional period of one year. The AIFMD will
require the manager of an investment trust to be authorised as an Alternative
Investment Fund Manager ("AIFM") and to appoint a Depositary. Notwithstanding
these changes, the Board has been advised that the AIFMD is unlikely to have
any material effect on the services provided by, or to, the Company. Whilst the
Company will incur additional expenses in order to comply with the AIFMD,
current indications are that these are unlikely to be material.
THE BOARD
In line with the policy of periodically refreshing the composition of the
Board, Kathryn Matthews will step down from the Board at the Annual General
Meeting to be held on 29 November 2013. Kathryn has made an outstanding
contribution to the Company during her tenure. The depth of her knowledge of
both Asia and the investment industry has proved invaluable and I am sure you
would wish to join me in expressing our gratitude for her service to the
Company.
The Board is pleased to welcome Grahame Stott as a new member of the Board with
effect from 24 September 2013. Mr Stott is a qualified actuary and brings a
wealth of consultancy experience gained from developing professional services
firms. He has spent 20 years at Watson Wyatt in Hong Kong and became the
regional director for 12 countries across Asia Pacific.
CONTINUATION VOTE
In accordance with the Articles of Association of the Company, the Company is
subject to a continuation vote every five years. The next continuation will
take place at the Annual General Meeting in 2016.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on Friday, 29 November 2013 at
Fidelity's offices at 25 Cannon Street, London EC4M 5TA (St Paul's or Mansion
House tube stations) commencing at 11.00 am. All shareholders and Fidelity
Savings Plan and ISA Scheme investors are invited to attend. The Portfolio
Manager will be making a presentation on the year under review and the
immediate prospects for the Company.
Mr Hugh Bolland
Chairman
30 September 2013
Enquiries:
Glenn Williamson - Head of Investment Trusts, FIL Investments International -
01732 777 577
Keren Holland - Corporate Communications, FIL Investments International - 020
7074 5262
David Fallon - Company Secretary, FIL Investment International, - 01737 836 883
Income Statement for the year ended 31 July 2013
2013 2012
revenue capital total revenue capital total
'000 '000 '000 '000 '000 '000
Gains/(losses) on - 24,955 24,955 - (21,037) (21,037)
investments designated
at fair value through
profit or loss
Losses on derivative - (1,140) (1,140) - - -
instruments held at
fair value through
profit or loss
Income* 2,981 - 2,981 2,999 - 2,999
Investment management (1,485) - (1,485) (1,267) - (1,267)
fee
Other expenses (592) - (592) (515) - (515)
Exchange (losses)/gains (35) 299 264 (10) 217 207
on other net assets
Exchange losses on bank - (312) (312) - (447) (447)
loans
Net return/(loss) on 869 23,802 24,671 1,207 (21,267) (20,060)
ordinary activities
before finance costs
and taxation
Finance costs (135) - (135) (204) - (204)
Net return/(loss) on 734 23,802 24,536 1,003 (21,267) (20,264)
ordinary activities
before taxation
Taxation on return/ (109) - (109) (123) - (123)
(loss) on ordinary
activities
Net return/(loss) on 625 23,802 24,427 880 (21,267) (20,387)
ordinary activities
after taxation for the
year
Return/(loss) per
ordinary share
Undiluted 1.05p 40.01p 41.06p 1.45p (34.99p) (33.54p)
Diluted 1.05p 39.99p 41.04p n/a n/a n/a
A Statement of Total Recognised Gains and Losses has not been prepared as there
are no gains and losses other than those reported in this Income Statement.
The total column of the Income Statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year
* Income
2013 2012
'000 '000
Income from investments designated at fair value
through profit or loss
Overseas dividends 2,703 2,784
Overseas scrip dividends 234 215
2,937 2,999
Income from derivative instruments held at fair value
through profit and loss
Dividends from long CFDs 44 -
Total income 2,981 2,999
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 July 2013
share share capital other non- other capital revenue total
capital premium redemption distributable reserve reserve reserve equity
'000 account reserve reserve '000 '000 '000 '000
'000 '000 '000
Opening sh 15,408 1,140 1,785 7,367 19,238 95,259 1,060 141,257
areholders'
funds: 1
August 2011
Issue of 12 78 - - - - - 90
ordinary
shares on
exercise of
rights
attached to
subscription
shares
Repurchase of (439) - 439 - (3,261) - - (3,261)
ordinary
shares
Net (loss)/ - - - - - (21,267) 880 (20,387)
return on
ordinary
activities
after
taxation for
the year
Dividend paid - - - - - - (615) (615)
to
shareholders
Closing 14,981 1,218 2,224 7,367 15,977 73,992 1,325 117,084
shareholders'
funds: 31
July 2012
Exercise of (1) - 1 - - - - -
rights
attached to
subscription
shares and
conversion
into ordinary
shares
Issue of 2,864 19,014 - - - - - 21,878
ordinary
shares on
exercise of
rights
attached to
subscription
shares
Repurchase of (924) - 924 - (6,964)) - - (6,964)
ordinary
shares
Net return on - - - - - 23,802 625 24,427
ordinary
activities
after
taxation for
the year
Dividend paid - - - - - - (596) (596)
to
shareholders
Closing 16,920 20,232 3,149 7,367 9,013 97,794 1,354 155,829
shareholders'
funds: 31
July 2013
Balance Sheet as at 31 July 2013
Company No. 3183919
2013 2012
'000 '000
Fixed assets
Investments designated at fair value through 151,273 123,758
profit or loss
Current assets
Derivative assets held at fair value through 736 -
profit or loss
Debtors 1,217 206
Amounts held in margin accounts 856 -
Cash at bank 4,220 3,769
7,029 3,975
Creditors
Derivative liabilities held at fair value (1,604) -
through profit or loss
Bank loans - (9,563)
Other creditors (869) (1,086)
(2,473) (10,649)
Net current assets/(liabilities) 4,556 (6,674)
Total net assets 155,829 117,084
Capital and reserves
Share capital 16,920 14,981
Share premium account 20,232 1,218
Capital redemption reserve 3,149 2,224
Other non-distributable reserve 7,367 7,367
Other reserve 9,013 15,977
Capital reserve 97,794 73,992
Revenue reserve 1,354 1,325
Total equity shareholders' funds 155,829 117,084
Net asset value per ordinary share
Undiluted 230.24p 195.40p
Diluted n/a 194.70p
Cash Flow Statement for the year ended 31 July 2013
year year
ended ended
31.07.13 31.07.12
'000 '000
Operating activities
Investment income received 2,293 3,032
Income received from long CFDs 44 -
Investment management fees paid (1,451) (1,663)
Directors' fees paid (128) (123)
Other cash payments (457) (594)
Net cash inflow from operating activities 301 652
Servicing of finance
Interest paid on long CFDs and bank loans (166) (219)
Net cash outflow from servicing of finance (166) (219)
Financial investments
Purchase of investments (113,823) (108,698)
Disposal of investments 110,751 110,939
Net cash (outflow)/inflow from financial (3,072) 2,241
investments
Derivative activities
Payments on long CFD positions closed (272) -
Movements on amounts held in margin accounts (856) -
Net cash outflow from derivative activities (1,128) -
Dividend paid to shareholders (596) (615)
Net cash (outflow)/inflow before financing (4,661) 2,059
Financing
Repurchase of ordinary shares (7,190) (3,035)
Exercise of rights attached to subscription 21,878 105
shares
Net cash outflow from bank loans repaid (9,875) -
Net cash inflow/(outflow) from financing 4,813 (2,930)
Increase/(decrease) in cash 152 (871)
The above statements have been prepared on the basis of the accounting policies
as set out in the annual financial statements to 31 July 2013. This preliminary
statement, which has been agreed with the Auditor, was approved by the Board on
30 September 2013. It is not the Company's statutory financial statements. The
statutory financial statements for the financial year ended 31 July 2012 have
been delivered to the Registrar of Companies. The statutory financial
statements for the financial year ended 31 July 2013 have been approved and
audited but have not yet been filed. The statutory financial statements for the
financial years ended 31 July 2012 and 31 July 2013 received unqualified audit
reports, did not include a reference to any matters to which the Auditor drew
attention by way of emphasis without qualifying the report and did not contain
statements under section 498(2) and (3) of the Companies Act 2006. The annual
report and financial statements will be posted to shareholders as soon as is
practicable and in any event no later than 1 November 2013.
END