REG-Fidelity Asian Values Plc: Half-year Report
09/04/2024 07:15
Fidelity Asian Values PLC
Half-Yearly Results for the six months ended 31 January 2024
Financial Highlights
* During the six months ended 31 January 2024, Fidelity Asian Values PLC
reported a Net Asset Value (NAV) total return of -2.4% and an Ordinary Share
Price total return of -2.5%.
* The Comparative Index, the MSCI All Countries ex Japan Small Cap Index,
returned +3.6%.
* The Portfolio Managers remain focused on investing in good business, run by
good management teams, available at a suitable margin of safety.
Contacts
For further information please contact:
George Bayer
Company Secretary
0207 961 4240
FIL Investments International
PORTFOLIO MANAGERS’ HALF-YEARLY REVIEW
PERFORMANCE REVIEW
Over the six month period ended 31 January 2024, the net asset value
(“NAV”) total return of Fidelity Asian Values PLC was -2.4%,
underperforming the Comparative Index, the MSCI All Countries Asia ex Japan
Small Cap Index (net) total return (in sterling terms), which was +3.6%. Over
the same period, the Company’s share price total return was -2.5%. Whilst
the Company's discount was 5.7% at the reporting period end, it widened to
around 10% at the end of March, however, it was trading narrower than its peer
group.
COMPANY’S NAV, SHARE PRICE AND COMPARATIVE INDEX TOTAL RETURNS (AS AT 31
JANUARY 2024)
NAV Share Price Comparative
total return total return Index total
(%) (%) return (%)
Tenure (since 1 April 2015) +107.4 +123.2 +118.5
5 Years +46.0 +33.1 +63.6
3 Years +28.5 +27.5 +21.9
1 Year -1.5 -2.5 +7.5
6 Months -2.4 -2.5 +3.6
3 Months +0.2 +5.4 +6.0
========= ========= =========
Source: Fidelity International, 31 January 2024. Total returns include net
income reinvested. Comparative Index: MSCI All countries Asia ex Japan Small
Cap Index (net) total return (in sterling terms).
Our stock selection continued to contribute positively to the Company’s
relative performance versus the Comparative Index. However, our market
selection was a drag against a backdrop of continued divergence in country
performance (see table below on country attribution). Small cap stocks in
India rose by 26.7% and those in Taiwan gained by 9.6% during the six month
review period. In contrast, small cap stocks in China and Hong Kong fell by
28.2% and 18.4% respectively. Since our investment process can lead us to take
contrarian positions in undervalued businesses, our combined exposure to China
and Hong Kong was close to its historical high (six month average of 40.6%
versus the Index average weight of 13.0%). China and Hong Kong continue to
underperform and have dragged down the Company’s relative returns compared
to the Index in the period under review. However, stock selection has been
positive, and valuations remain attractive.
COUNTRY ATTRIBUTION OVER 6 MONTHS TO 31 JANUARY 2024
Average weight (%) Contribution to relative returns (%)
Company Index Relative Stock Market Total
(%) (%) (%) selection selection
Korea (South) +7.8 +16.1 -8.3 +1.4 +1.2 +2.6
ASEAN +20.7 +15.1 +5.6 +1.8 -1.2 +0.6
Others +12.2 0.0 +12.2 -0.4 0.0 -0.4
Taiwan +1.8 +25.3 -23.5 +0.4 -1.3 -0.9
India +20.0 +30.5 -10.5 -0.6 -2.1 -2.7
China & Hong Kong +40.6 +13.0 +27.6 +4.5 -9.0 -4.5
--------------- --------------- --------------- --------------- --------------- ---------------
Total Primary Assets +103.1 +100.0 +3.1 +7.1 -12.4 -5.3
Cash & others -3.1 0.0 -3.1 -0.7
--------------- --------------- --------------- ---------------
Total 100.0 100.0 0.0 -6.0
========= ========= ========= =========
Source: Fidelity International, 31 January 2024. Index: MSCI All countries
Asia ex Japan Small Cap Index (net) total return (in sterling terms).
In contrast to China and Hong Kong, small cap stocks in India and Taiwan
continued to perform well despite their exuberant valuations. As a result,
four of our five top contributors were Indian companies and four out of five
of our top detractors were from China as can be seen from the tables below.
KEY CONTRIBUTORS OVER SIX MONTHS (AS AT 31 JANUARY 2024)
Order Security Average Gain/Loss Contribution
Active Weight (%) to Portfolio
(%) Returns (%)
Top 5
1 PTC India +2.1 +113.2 +1.5
2 LIC Housing Finance +1.1 +49.5 +0.5
3 Bank Negara Indonesia (Persero) +2.7 +24.0 +0.5
4 Granules India +2.1 +28.8 +0.5
5 Axis Bank +3.7 +11.9 +0.3
--------------- --------------- ---------------
Total +3.3
=========
Source: Fidelity International, 31 January 2024.
KEY DETRACTORS OVER SIX MONTHS (AS AT 31 JANUARY 2024)
Order Security Average Gain/Loss Contribution
Active Weight (%) to Portfolio
(%) Returns (%)
Top 5
1 China Overseas Grand Oceans Group +1.2 -53.4 -1.0
2 China Yongda Automobiles Services +1.1 -41.2 -0.5
3 Zhongsheng Group +0.7 -51.9 -0.5
4 Focus Media Information Technology +1.8 -23.8 -0.5
5 Arwana Citramulia +1.7 -22.9 -0.5
--------------- --------------- ---------------
Total -3.0
=========
Source: Fidelity International, 31 January 2024.
The detractors were essentially Chinese consumer-related companies (China
Yongda Automobile Services, Zhongsheng Group and Focus Media Information
Technology) and the real estate company China Overseas Grand Oceans Group,
which fell due to weak demand and negative investor sentiment. Indonesia’s
largest ceramic tiles maker Arwana Citramulia also suffered weak demand due to
project delays ahead of the country’s elections. We believe these to be
temporary losses and continue to own the businesses for their longer-term
growth prospects and attractive valuations.
On the other hand, our holdings in India (PTC India, Granules India, LIC
Housing Finance and Axis Bank) and Bank Negara Indonesia (Persero) contributed
the most to the Company’s relative performance. We continue to have a
positive outlook on most of these stocks as they still offer a sufficient
margin of safety. We trimmed our exposure to PTC India and Granules India as a
result of strong performance and a reduced margin of safety.
India’s fourth largest mortgage financier LIC Housing Finance was the second
largest contributor to returns and is one of the top 10 positions in the
Company. As it is promoted by Life Insurance Corporation, India’s largest
and 100% government owned insurance company, it has access to low-cost funds,
helping it to focus mainly on prime borrowers and maintain high returns on
equity and strong asset quality. This sustainable low to mid-teen return on
equity generator and book value compounder is currently trading at par with
its one year forward book value and seven times its one year forward earnings.
INVESTMENT STRATEGY
Our investment strategy is to continue to focus on investing in good
businesses, run by good management teams and available at a suitable margin of
safety. Our investment process leads us to high quality undervalued businesses
and a consistent value tilt.
We believe our approach to investing helps to generate sustainable performance
for the Company in the long-term. Although our value style has underperformed
the growth style in recent years, we believe this headwind should, at some
point, become a tailwind. Small cap value stocks are currently trading at
close to all-time high discounts relative to both their large cap and (as can
be seen from the chart in the Half-Yearly Report) their small cap growth
counterparts. Value stocks also generate superior earnings growth over time
compared to growth stocks and provide better cash returns, in terms of
dividends.
Macro-economic trends are difficult to forecast for anyone and building a
portfolio of stocks based on such views is even more challenging. However, we
do believe macro risks are more short-term in nature and owning businesses
which are better quality than the market at attractive valuations has been the
bedrock of our investment process for over a decade.
It has served us well in the last ten years and should continue to reward us
well for the future. As can be seen from the charts in the Half-Yearly Report,
the Return on Equity of our portfolio has frequently been at a premium to the
market while the Price to Earnings ratio of our holdings is at a significant
discount.
OUTLOOK
We are comfortable with the Company’s portfolio as it stands today. We
continue to have an overweight exposure to China since we are finding a
significant margin of safety in owning several well-financed and well-run
businesses. As the world’s second largest economy, where consumption is
expanding as a share of GDP, we believe that both earnings and multiples of
our Chinese holdings will re-rate favourably from depressed levels.
Conversely, our relative exposure to India is close to our historical low as
the small cap index in India is now 40% more expensive than Asian small caps
and 30% more expensive than Indian large caps. In India and Indonesia, we have
focused on well-run financial companies which have attractive valuations.
These are good long-term compounders as credit is under-penetrated and the
well managed banks have significant industry tail winds. Meanwhile, we
continue to avoid areas that most investors find fashionable, such as
AI-driven technology hardware in Taiwan and Korea. The sector has seen a capex
boom post COVID due to higher-than-average demand. We are seeing earnings
downgrades as new supplies come in and demand falls back, as the AI hype
subsides. This strategy has served us well in the past ten years and we
believe it will continue to reward us well over the future.
NITIN BAJAJ AJINKYA DHAVALE
Portfolio Manager Co-Portfolio Manager
8 April 2024 8 April 2024
TWENTY LARGEST HOLDINGS AS AT 31 JANUARY 2024
The Asset Exposures shown below measure exposure to market price movements as
a result of owning shares, corporate bonds, equity linked notes and derivative
instruments. The Fair Value is the actual value of the portfolio as reported
on the Balance Sheet. Where a contract for difference (“CFD”) is held, the
Fair Value reflects the profit or loss on the contract since it was opened and
is based on how much the price of the underlying share has moved.
Fair
Value
£’000
Asset Exposure
£’000 % 1
Long Exposures – shares unless otherwise stated
Axis Bank
Private sector bank 15,781 4.2 15,781
Bank Negara Indonesia (Persero) (shares and corporate bond)
Banking institution 13,801 3.7 13,801
HDFC Bank
Private sector bank 12,623 3.4 12,623
Genpact (shares and long CFD)
Global professional services firm delivering digital transformation for businesses 11,120 3.0 7,110
Indofood CBP Sukses Makmur
Producer of packaged food products 10,753 2.9 10,753
Bank Mandiri (Persero)
Banking institution 10,495 2.8 10,495
PTC India
Provider of power trading solutions in India 9,855 2.6 9,855
LIC Housing Finance
Housing finance company 9,377 2.5 9,377
BOC Aviation (long CFDs)
Global aircraft operating leasing company 8,880 2.4 100
Granules India
Pharmaceutical manufacturing company 8,349 2.2 8,349
Galaxy Entertainment Group (long CFD)
Developer and operator of integrated entertainment and resort facilities 7,964 2.1 59
CapitaLand India Trust (shares and long CFD)
Property trust 7,029 1.9 6,284
Chow Sang Sang Holdings International (shares and long CFD)
Jewellery retailer 6,992 1.9 6,311
Gold Road Resources
Gold production and exploration company 6,273 1.7 6,273
Taiwan Semiconductor Manufacturing Company (long CFDs)
Developer, manufacturer and distributor of semiconductor related products 6,243 1.7 606
Focus Media Information Technology (shares and equity linked notes)
Advertising solution provider 6,223 1.7 6,223
Ciputra Development
Property developer 6,127 1.6 6,127
Arwana Citramulia
Ceramics manufacturer 5,845 1.5 5,845
Crystal International Group (shares and long CFD)
Manufacturer of clothing 5,702 1.5 5,453
Federal Bank
Private sector bank 5,500 1.5 5,500
--------------- --------------- ---------------
Twenty largest long exposures 174,932 46.8 146,925
Other long exposures 242,569 64.9 220,268
--------------- --------------- ---------------
Total long exposures before futures (142 holdings) 417,501 111.7 367,193
========= ========= =========
Add: long futures
MSCI All Countries Asia ex Japan Index Future 15/03/2024 3,773 1.0 (49)
Hang Seng China Enterprises Index Future 27/09/2024 (call option) 1,621 0.4 260
--------------- --------------- ---------------
Total long exposures 422,895 113.1 367,404
========= ========= =========
Short exposures
Short CFDs (11 holdings) 12,440 3.3 649
Short future (1 holding) 1,538 0.4 (98)
Call option (1 holding) 16 – –
--------------- --------------- ---------------
Total short exposures 13,994 3.7 551
========= ========= =========
Gross Asset Exposure 2 436,889 116.8
========= =========
Portfolio Fair Value 3 367,955
Net current assets (excluding derivative assets and liabilities) 6,023
---------------
Total Shareholders’ Funds/Net Assets 373,978
=========
1 Asset Exposure (as defined in the Glossary of Terms in the Half-Yearly
Report) is expressed as a percentage of Total Shareholders’ Funds.
2 Gross Asset Exposure comprises market exposure to investments of
£368,002,000 plus market exposure to derivative instruments of £68,887,000.
3 Portfolio Fair Value comprises investments of £368,002,000 plus derivative
assets of £1,872,000 less derivative liabilities of £1,919,000.
INTERIM MANAGEMENT REPORT AND DIRECTORS’ RESPONSIBILITY STATEMENT
BOARD CHANGES AND SUCCESSION
The Board has a careful succession plan in place. As part of this plan, Kate
Bolsover stepped down from the Board at the conclusion of the Annual General
Meeting (“AGM”) on 29 November 2023. On the same date, Clare Brady
succeeded her as Chairman. Matthew Sutherland succeeded Mrs Brady as the
Senior Independent Director. Sally Macdonald took over from Michael Warren as
the Chairman of the Management Engagement Committee from 3 April 2024.
As was reported in the Annual Report for the year ended 31 July 2023, Mr
Warren agreed to stay on the Board for an additional year beyond his nine year
tenure to ensure that institutional and historical knowledge of the Company,
as well as his marketing expertise, was not lost. He will retire from the
Board at the conclusion of the AGM in November 2024.
A recruitment process has been conducted for his replacement as a
non-executive Director using the services of Cornforth Consulting, an external
consultant that has no association with the Company. As a result of this
process, Lucy Costa Duarte will be appointed to the Board with effect from 1
June 2024. This will ensure a smooth handover before Mr Warren steps down from
the Board. Mrs Costa Duarte is a specialist in marketing strategy and
investment relations in the investment trust sector. She is a Marketing
Ambassador for the Association of Investment Companies, a non-executive
Director of MIGO Opportunities Trust plc and a part-time Director of Investor
Relations for Schroders – International Biotechnology Trust plc. She is a
past director at Citigroup where she headed the emerging markets Equity
Capital Markets team in London.
APPOINTMENT OF CO-PORTFOLIO MANAGER
Ajinkya Dhavale has been appointed as the Company’s Co-Portfolio Manager to
support and closely work alongside the Portfolio Manager, Nitin Bajaj. He has
extensive experience in Asian markets and companies and shares a common
investment approach and complementary investment experience with the Portfolio
Manager. Mr Dhavale’s appointment helps to strengthen the investment process
and manage key person risk.
DISCOUNT MANAGEMENT AND SHARE REPURCHASES
The Board closely monitors the Company’s share price discount to its 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.
There has been market volatility in the reporting period, and at times the
Company’s discount has widened in reaction to this. The Board, therefore,
approved the repurchase of 137,825 ordinary shares into Treasury during the
six month reporting period. Since then and up to the latest practicable date
of this report, a further 337,980 ordinary shares have been repurchased into
Treasury.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board, with the assistance of the Manager (FIL Investment Services (UK)
Limited), 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 faced by the Company.
The Board considers that the principal risks and uncertainties faced by the
Company continue to fall into the following categories: economic, political
and market; investment performance (including the use of derivatives and
gearing); cybercrime and information security; level of discount to net asset
value; key person; environmental, social and governance (ESG); business
continuity and operational (including third-party service providers); and
shareholder relationship risks. Other risks facing the Company are tax and
regulatory risks. Information on each of these risks is given on pages 28 to
32 in the Strategic Report section of the Annual Report for the year ended 31
July 2023 which can be found on the Company’s pages of the Manager’s
website at www.fidelity.co.uk/asianvalues.
Whilst the principal risks and uncertainties remain the same as at the last
year end, the magnitude of their uncertainty continues to grow with the
ongoing conflicts in Ukraine and the Middle East. Geopolitical tensions, such
as those between the US and China, and China and Taiwan, are exacerbating
economic headwinds, such as the cost of living crisis; inflation; high
interest rates; food supply crisis; and the threat of cyberattacks on critical
infrastructure. The Board remains vigilant about the changing scale of such
risks.
Climate change continues to be a key principal risk confronting asset managers
and their investors. Globally, climate change effects are already being
experienced in the form of changing weather patterns. Climate change can
potentially impact the operations of investee companies, their supply chains
and their customers. Additional risks may also arise from increased
regulations, costs and net-zero programmes which can all impact investment
returns. The Board notes that the Manager has integrated ESG considerations,
including climate change, into the Company’s investment process. The Board
will continue to monitor how this may impact the Company as a risk, the main
risk being the impact on investment valuations and potentially shareholder
returns.
Investors should be prepared for market fluctuations and remember that holding
shares in the Company should be considered to be a long-term investment. The
Investment Company structure means that the Portfolio Managers are not
required to trade to meet investor redemptions and so they are able to hold
investments for a longer period.
The Manager has appropriate business continuity and operational resilience
plans in place to ensure the continued provision of services. This includes
investment team key activities, which also covers portfolio managers, analysts
and trading/support functions. The Manager reviews its operational resilience
strategies on an ongoing basis and continues to take all reasonable steps in
meeting its regulatory obligations, assess its ability to continue operating
and the steps it needs to take to serve and support its clients, including the
Board. It has an appropriate control environment in place.
The Company’s other third-party service providers also have similar measures
in place to ensure that business disruption is kept to a minimum.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company’s portfolio management of assets and
company secretariat services to FIL Investments International. Transactions
with the Manager and related party transactions with the Directors are
disclosed in Note 13 to the Financial Statements below.
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, 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 can continue in operational existence for
a period of at least twelve months from the date of this Half-Yearly Report.
This conclusion also takes into account the Board’s assessment of the
ongoing risks as outlined above.
Accordingly, the Financial Statements of the Company have been prepared on a
going concern basis.
Continuation votes are held every five years and the next continuation vote
will be put to shareholders at the AGM in 2026.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules (“DTR”) of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
a) the condensed set of Financial Statements contained within the Half-Yearly
Report has been prepared in accordance with the Financial Reporting
Council’s Standard FRS 104: Interim Financial Reporting; and
b) the Portfolio Managers’ Half-Yearly Review and the Interim Management
Report above include a fair review of the information required by DTR 4.2.7R
and 4.2.8R.
The Half-Yearly Report has not been audited or reviewed by the Company’s
Independent Auditor.
The Half-Yearly Report was approved by the Board on 8 April 2024 and the above
responsibility statement was signed on its behalf by Clare Brady, Chairman.
BY ORDER OF THE BOARD
FIL INVESTMENTS INTERNATIONAL
8 April 2024
FINANCIAL STATEMENTS
INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2024
Six months ended 31 January 2024 Six months ended 31 January 2023 Year ended 31 July 2023
unaudited unaudited audited
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments – (4,905) (4,905) – 26,445 26,445 – 29,025 29,025
(Losses)/gains on derivative instruments – (6,058) (6,058) – 5,111 5,111 – 1,781 1,781
Income 4 6,960 – 6,960 7,032 – 7,032 17,773 – 17,773
Investment management fees 5 (1,362) (389) (1,751) (1,316) 77 (1,239) (2,644) (281) (2,925)
Other expenses (522) – (522) (484) – (484) (988) – (988)
Foreign exchange gains – 327 327 – 1,386 1,386 – 1,089 1,089
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return/(loss) on ordinary activities before finance costs and taxation 5,076 (11,025) (5,949) 5,232 33,019 38,251 14,141 31,614 45,755
Finance costs 6 (1,220) – (1,220) (829) – (829) (1,997) – (1,997)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return/(loss) on ordinary activities before taxation 3,856 (11,025) (7,169) 4,403 33,019 37,422 12,144 31,614 43,758
Taxation on return/(loss) on ordinary activities 7 (409) (1,945) (2,354) (437) (1,059) (1,496) (1,238) (2,882) (4,120)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return/(loss) on ordinary activities after taxation for the period 3,447 (12,970) (9,523) 3,966 31,960 35,926 10,906 28,732 39,638
========= ========= ========= ========= ========= ========= ========= ========= =========
Return/(loss) per ordinary share 8 4.80p (18.07p) (13.27p) 5.51p 44.39p 49.90p 15.17p 39.95p 55.12p
========= ========= ========= ========= ========= ========= ========= ========= =========
The Company does not have any other comprehensive income. Accordingly, the net
return/(loss) on ordinary activities after taxation for the period is also the
total comprehensive income for the period 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 period and all items in the
above statement derive from continuing operations.
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 JANUARY 2024
Notes Share Share Capital Other non- Capital Revenue Total
capital premium redemption distributable reserve reserve shareholders’
£’000 account reserve reserve £’000 £’000 funds
£’000 £’000 £’000 £’000
Six months ended 31 January 2024 (unaudited)
Total shareholders’ funds at 31 July 2023 18,895 50,501 3,197 7,367 299,562 15,055 394,577
Net (loss)/return on ordinary activities after taxation for the period – – – – (12,970) 3,447 (9,523)
Repurchase of ordinary shares 11 – – – – (677) – (677)
Dividend paid to shareholders 9 – – – – – (10,399) (10,399)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 January 2024 18,895 50,501 3,197 7,367 285,915 8,103 373,978
========= ========= ========= ========= ========= ========= =========
Six months ended 31 January 2023 (unaudited)
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 period – – – – 31,960 3,966 35,926
Repurchase of ordinary shares 11 – – – – (2,603) – (2,603)
Dividend paid to shareholders 9 – – – – – (10,066) (10,066)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 January 2023 18,895 50,501 3,197 7,367 302,805 8,115 390,880
========= ========= ========= ========= ========= ========= =========
Year ended 31 July 2023 (audited)
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 11 – – – – (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
========= ========= ========= ========= ========= ========= =========
BALANCE SHEET AS AT 31 JANUARY 2024
Company number 3183919
Notes 31.01.24 31.07.23 31.01.23
unaudited audited unaudited
£’000 £’000 £’000
Fixed assets
Investments 10 368,002 377,631 368,054
--------------- --------------- ---------------
Current assets
Derivative instruments 10 1,872 1,758 1,988
Debtors 3,054 3,556 2,638
Amounts held at futures clearing houses and brokers 2,882 3,820 2,220
Cash at bank 5,877 13,029 21,799
--------------- --------------- ---------------
13,685 22,163 28,645
--------------- --------------- ---------------
Current liabilities
Derivative instruments 10 (1,919) (1,665) (872)
Other creditors (5,790) (3,552) (4,947)
--------------- --------------- ---------------
(7,709) (5,217) (5,819)
--------------- --------------- ---------------
Net current assets 5,976 16,946 22,826
========= ========= =========
Net assets 373,978 394,577 390,880
========= ========= =========
Capital and reserves
Share capital 11 18,895 18,895 18,895
Share premium account 50,501 50,501 50,501
Capital redemption reserve 3,197 3,197 3,197
Other non-distributable reserve 7,367 7,367 7,367
Capital reserve 285,915 299,562 302,805
Revenue reserve 8,103 15,055 8,115
--------------- --------------- ---------------
Total shareholders’ funds 373,978 394,577 390,880
========= ========= =========
Net asset value per ordinary share 12 521.65p 549.33p 544.18p
========= ========= =========
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 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this Half-Yearly Report have not been audited by
the Company’s Independent Auditor and do not constitute statutory accounts
as defined in section 434 of the Companies Act 2006 (the “Act”). The
financial information for the year ended 31 July 2023 is extracted from the
latest published Financial Statements of the Company. Those Financial
Statements were delivered to the Registrar of Companies and included the
Independent Auditor’s Report which was unqualified and did not contain a
statement under either section 498(2) or 498(3) of the Act.
3 ACCOUNTING POLICIES
(i) Basis of Preparation
The Company prepares its Financial Statements on a going concern basis and in
accordance with UK Generally Accepted Accounting Practice (“UK GAAP”) and
FRS 102: The Financial Reporting Standard applicable in the UK and Republic of
Ireland, issued by the Financial Reporting Council. The Financial Statements
are also 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. FRS 104: Interim Financial Reporting has also been applied in
preparing this condensed set of Financial Statements. The accounting policies
followed are consistent with those disclosed in the Company’s Annual Report
and Financial Statements for the year ended 31 July 2023.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for a period of at least twelve
months from the date of approval of these Financial Statements. Accordingly,
the Directors consider it appropriate to adopt the going concern basis of
accounting in preparing these Financial Statements. This conclusion also takes
into account the Directors’ assessment of the risks faced by the Company as
detailed in the Interim Management Report above.
4 INCOME
Six months Six months Year
ended ended ended
31.01.24 31.01.23 31.07.23
unaudited unaudited audited
£’000 £’000 £’000
Investment income
Overseas dividends 5,501 5,953 14,847
Overseas scrip dividends 50 244 266
Interest on securities 227 35 164
--------------- --------------- ---------------
5,778 6,232 15,277
--------------- --------------- ---------------
Derivative income
Dividends received on long CFDs 580 487 1,743
Interest received on CFDs 236 106 258
--------------- --------------- ---------------
816 593 2,001
--------------- --------------- ---------------
Other interest
Interest received on collateral and deposits 366 207 495
--------------- --------------- ---------------
Total income 6,960 7,032 17,773
========= ========= =========
No special dividends have been recognised in capital during the period (six
months ended 31 January 2023: £nil and year ended 31 July 2023: £420,000).
5 INVESTMENT MANAGEMENT FEES
Six months Six months Year
ended ended ended
31.01.24 31.01.23 31.07.23
unaudited unaudited audited
£’000 £’000 £’000
Investment management fees – base (charged to revenue) 1,362 1,316 2,644
Investment management fees – variable (charged/(credited) to capital) 1 389 (77) 281
--------------- --------------- ---------------
1,751 1,239 2,925
========= ========= =========
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. 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.
6 FINANCE COSTS
Six months Six months Year
ended ended ended
31.01.24 31.01.23 31.07.23
unaudited unaudited audited
£’000 £’000 £’000
Interest on bank overdrafts 1 1 2
Interest paid on CFDs 1 1,140 703 1,788
Dividends paid on short CFDs 79 125 207
--------------- --------------- ---------------
1,220 829 1,997
========= ========= =========
1 Increased compared to the prior six months due to an increase in both
exposure to CFDs and interest rates.
7 TAXATION ON RETURN/(LOSS) ON ORDINARY ACTIVITIES
Six months Six months Year
ended ended ended
31.01.24 31.01.23 31.07.23
unaudited unaudited audited
£’000 £’000 £’000
Revenue – taxation on overseas dividends 409 437 1,238
Capital – Indian capital gains tax 1,945 1,059 2,882
--------------- --------------- ---------------
Total taxation charge for the period 2,354 1,496 4,120
========= ========= =========
8 RETURN/(LOSS) PER ORDINARY SHARE
Six months Six months Year
ended ended ended
31.01.24 31.01.23 31.07.23
unaudited unaudited audited
Revenue return per ordinary share 4.80p 5.51p 15.17p
Capital (loss)/return per ordinary share (18.07p) 44.39p 39.95p
--------------- --------------- ---------------
Total (loss)/return per ordinary share (13.27p) 49.90p 55.12p
========= ========= =========
The return/(loss) per ordinary share is based on the net return/(loss) on
ordinary activities after taxation for the period divided by the weighted
average number of ordinary shares in issue during the period, as shown below:
£’000 £’000 £’000
Net revenue return on ordinary activities after taxation 3,447 3,966 10,906
Net capital (loss)/return on ordinary activities after taxation (12,970) 31,960 28,732
--------------- --------------- ---------------
Net total (loss)/return on ordinary activities after taxation (9,523) 35,926 39,638
========= ========= =========
Number Number Number
Weighted average number of ordinary shares held outside Treasury during the period 71,752,985 71,993,981 71,912,335
========= ========= =========
9 DIVIDENDS PAID TO SHAREHOLDERS
Six months Six months Year
ended ended ended
31.01.24 31.01.23 31.07.23
unaudited unaudited audited
£’000 £’000 £’000
Dividend of 14.50 pence per ordinary share paid for the year ended 31 July 2023 10,399 – –
Dividend of 14.00 pence per ordinary share paid for the year ended 31 July 2022 – 10,066 10,066
--------------- --------------- ---------------
10,399 10,066 10,066
========= ========= =========
No dividend has been declared in respect of the six months ended 31 January
2024 (six months ended 31 January 2023: £nil).
10 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 as disclosed
in the Company’s Annual Report for the year ended 31 July 2023 (Accounting
Policies Notes 2 (k) and 2 (l) on pages 59 and 60). The table below sets out
the Company’s fair value hierarchy:
31 January 2024 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 345,128 22,139 735 368,002
Derivative instrument assets 260 1,612 – 1,872
--------------- --------------- --------------- ---------------
345,388 23,751 735 369,874
--------------- --------------- --------------- ---------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities (691) (1,228) – (1,919)
========= ========= ========= =========
31 July 2023 (audited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
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)
========= ========= ========= =========
31 January 2023 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 360,555 6,135 1,364 368,054
Derivative instrument assets 729 1,259 – 1,988
--------------- --------------- --------------- ---------------
361,284 7,394 1,364 370,042
--------------- --------------- --------------- ---------------
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (872) – (872)
========= ========= ========= =========
11 SHARE CAPITAL
31 January 2024 31 July 2023 31 January 2023
unaudited audited unaudited
Number of Nominal Number of Nominal Number of Nominal
shares value shares value shares value
£’000 £’000 £’000
Issued, allotted and fully paid
Ordinary shares of 25 pence each held outside of Treasury
Beginning of the period 71,829,336 17,958 72,398,336 18,100 72,398,336 18,100
Ordinary shares repurchased into Treasury (137,825) (34) (569,000) (142) (569,000) (142)
--------------- --------------- --------------- --------------- --------------- ---------------
End of the period 71,691,511 17,924 71,829,336 17,958 71,829,336 17,958
========= ========= ========= ========= ========= =========
Ordinary shares of 25 pence each held in Treasury 1
Beginning of the period 3,751,553 937 3,182,553 795 3,182,553 795
Ordinary shares repurchased into Treasury 137,825 34 569,000 142 569,000 142
--------------- --------------- --------------- --------------- --------------- ---------------
End of the period 3,889,378 971 3,751,553 937 3,751,553 937
========= ========= ========= ========= ========= =========
Total share capital 18,895 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 period was
£677,000 (year ended 31 July 2023: £2,618,000 and six months ended 31
January 2023: £2,603,000).
12 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.
31.01.24 31.07.23 31.01.23
unaudited audited unaudited
Total shareholders’ funds £373,978,000 £394,577,000 £390,880,000
Ordinary shares held outside of Treasury at the period end 71,691,511 71,829,336 71,829,336
------------------ ------------------ ------------------
Net asset value per ordinary share 521.65p 549.33p 544.18p
=========== =========== ===========
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.
13 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 fee arrangements are given in Note 5. During the period,
management fees of £1,751,000 (six months ended 31 January 2023: £1,239,000
and year ended 31 July 2023: £2,925,000) and secretarial and administration
fees of £38,000 (six months ended 31 January 2023: £38,000 and year ended 31
July 2023: £75,000) were payable to FII. At the Balance Sheet date, net
management fees of £291,000 (31 January 2023: £296,000 and 31 July 2023:
£292,000) and secretarial and administration fees of £25,000 (31 January
2023: £25,000 and 31 July 2023: £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 period was £94,000 (six months
ended 31 January 2023: £86,000 and year ended 31 July 2023: £195,000). At
the Balance Sheet date, marketing services of £58,000 (31 January 2023: £nil
and 31 July 2023: £nil) were accrued and included in other creditors.
As at 31 January 2024, the Board consisted of five non-executive Directors (as
shown in the Directory in the Half-Yearly Report), all of whom are considered
to be independent by the Board. None of the Directors have a service contract
with the Company. The Chairman receives an annual fee of £44,100, the Audit
Committee Chairman an annual fee of £36,750, the Senior Independent Director
an annual fee of £32,500 and each other Director an annual fee of £30,500.
The following members of the Board held shares in the Company: Hussein Barma
2,500 ordinary shares, Clare Brady 2,500 ordinary shares, Sally Macdonald
2,734 ordinary shares, Matthew Sutherland 27,859 ordinary shares and Michael
Warren 10,000 ordinary shares. Since the end of the reporting period, Clare
Brady has purchased 8,089 shares in the Company.
The financial information contained in this Half-Yearly Results Announcement
does not constitute statutory accounts as defined in section 435 of the
Companies Act 2006. The financial information for the six months ended 31
January 2024 and 31 January 2023 has not been audited or reviewed by the
Company’s Independent Auditor.
The information for the year ended 31 July 2023 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies, unless otherwise stated. The report of the Auditor on
those financial statements contained no qualification or statement under
sections 498(2) or (3) of the Companies Act 2006.
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.
A copy of the Half-Yearly Report will shortly be submitted to the National
Storage Mechanism and will be available for inspection at
www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's website at
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.
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