Half-yearly Report
INVESCO ASIA TRUST PLC
HALF-YEARLY FINANCIAL REPORT
For the Six Months to 31 October 2014
KEY FACTS
Invesco Asia Trust plc (the `Company') is an investment trust listed on the
London Stock Exchange.
Investment Objective
The Company's objective is to provide long-term capital growth by investing in
a diversified portfolio of Asian and Australasian companies. The Company aims
to achieve growth in its net asset value in excess of the MSCI All Countries
Asia Pacific ex Japan Index (total return), expressed in sterling.
Investment Policy
Invesco Asia Trust plc invests primarily in the equity securities of companies
listed on the stockmarkets of Asia (ex Japan) including Australasia. It may
also invest in unquoted securities up to 10% of the value of the Company's
gross assets, and in warrants and options when it is considered the most
economical means of achieving exposure to an asset.
The Company is actively managed and the Manager has broad discretion to invest
the Company's assets to achieve its investment objective. The Manager seeks to
ensure that the portfolio is appropriately diversified having regard to the
nature and type of securities (such as performance and liquidity) and the
geographic and sector composition of the portfolio.
Full details of the Company's investment limits are on page 6 of the 2014
annual financial report.
Performance Statistics
The Benchmark Index of the Company is the MSCI All Countries Asia Pacific ex
Japan Index (total return), expressed in sterling.
SIX MONTHS
ENDED
31 OCTOBER
2014
Total Return Statistics(1):
- Net asset value +17.6%
- Share Price +16.6%
- Benchmark index +10.3%
Capital Statistics AT 31 OCT AT 30 APR %
2014 2014 CHANGE
Net assets (£'000) 186,560 162,969 +14.5
Gearing:
- gross 2.7% 3.3%
- net 2.2% 2.4%
Net asset value per share 210.2p 183.4p +14.6
Benchmark index(1) 303.6 280.9 +8.1
Share price 187.5p 164.0p +14.3
Discount(2) per ordinary share:
- cum income 10.8% 10.6%
- ex income 9.8% 8.8%
Average discount over the
six months/year (ex income) 9.4% 9.8%
(1) Source: Thomson Reuters Datastream.
(2) The discount is the percentage amount by which the share price is less than
the net asset value per share.
INTERIM MANAGEMENT REPORT INCORPORATING THE
CHAIRMAN'S STATEMENT
CHAIRMAN'S STATEMENT
Performance
The past six months have seen Asian equity markets deliver strong returns for
investors as sentiment towards emerging markets has improved. Macroeconomic
concerns have eased, while earnings growth expectations have been maintained,
avoiding the downward revisions we have seen in recent years. Markets were hit
by a period of volatility amid fears that US interest rates could rise sooner
than previously anticipated, but share prices have since steadied while holding
on to gains from earlier in the period. China's economy continues to
decelerate, but is showing signs of stabilising at what are still relatively
high levels of growth, although concerns remain over a slowdown in the property
market. Against this background, it is pleasing to report that the Company has
delivered strong positive returns, comfortably outperforming the benchmark.
During the six months to 31 October 2014 the Company's Net Asset Value (NAV) on
a total return basis rose by 17.6% which compares favourably with the index
increase of 10.3%. The Company's share price also increased 14.3%, rising from
164p at the start of the period to 187.5p, and the ex-income discount to NAV at
which the shares traded ended the period at 9.8%.
Portfolio Manager and Benchmark
The Board of Directors reviews the progress and outlook for the Company on a
regular basis. One outcome of our most recent strategic review is that we
believe Ian Hargreaves should now be recognised as the principal portfolio
manager. Ian has been co-manager with Stuart Parks for the last three years and
over this period has increasingly taken the lead, not only in managing the
portfolio, but also in communicating with the Board and the Shareholders.
Stuart remains head of Invesco Perpetual's Asia Team and will continue to
support Ian in managing the portfolio. The Company has consistently
outperformed its benchmark during the period Ian has been involved and we have
full confidence in his ability to continue to produce good returns. The
effective date for this change will be 1 January 2015.
The Board also reviewed the Company's performance against its peers and against
the benchmark, currently the MSCI All Countries Asia Pacific ex-Japan index.
The majority of our peers use the MSCI AC Asia ex-Japan index, the key
differentiation being that the former includes Australia while the latter
excludes Australia. Over the years, the Company has most usually been
significantly underweight Australian stocks. In recognition of this, the Board,
in consultation with the Manager, considered it would be more appropriate to
change the benchmark to MSCI AC Asia ex-Japan index. The portfolio manager will
continue to have the freedom to invest in Australia where he sees value as
before, but the benchmark will be more in line with our peers. There is no
performance fee so the change will not affect the fund in any material way.
Furthermore, the performance of the two indices has not differed significantly
in recent years. We plan to implement this change at the beginning of the next
financial year, 1 May 2015.
Gearing
As part of its review, the Board also agreed that it would be helpful if we
clarified how the Company uses gearing. The Manager has the freedom to borrow
within a working range set by the Board within the overall limit of the
Company's investment policy which permits gearing up to 25% of net assets. In
practice, although borrowings have typically been in the range of 5-10% of net
assets, the Board has currently set a working range which permits the Manager
to use gearing up to 15% of net assets. As at 31 October 2014, gearing amounted
to 2.2% of net assets.
Discount Control and Cancellation of Share Premium Account
The Board considers it desirable that the Company's shares do not trade at a
significant discount to NAV and believes that in normal market conditions the
shares should trade at a price which on average represents a discount of less
than 10% to the ex-income NAV. In the six months to 31 October 2014 the shares
traded at an average discount of 9.4%.
At the Annual General Meeting (AGM) the Company renewed its authority to
purchase its own shares and this is used to assist in maintaining the discount
within the 10% limit. During the period 111,110 shares were bought back and
cancelled at an average price of 179.12p per share, excluding costs. This
enhanced the NAV by £22,000 or 0.01%. At the period end the share capital
consisted of 92,025,483 ordinary shares including 3,277,224 shares held in
treasury. Subsequent to the period end, the Company bought back and cancelled a
further 40,555 shares at a price of 188p per share.
Following shareholder approval at the AGM, the cancellation of the share
premium account was approved on 3 September 2014. The special reserve that
arose will be used to fund any future tender offers, as well as share buy backs
further to the filing of these accounts.
Dividend
For the six months to 31 October 2014, the revenue per share decreased slightly
from 2.4p to 2.3p. As has been the case in previous years, the Board does not
intend to pay an interim dividend. At the last AGM, a final dividend of 3.45p
per share was approved and paid to shareholders on 12 August 2014.
Alternative Investment Fund Managers Directive (AIFMD)
As previously announced by the Company on 22 July 2014, the Board has appointed
Invesco Fund Managers Limited (IFML) as the Company's Alternative Investment
Fund Manager and BNY Mellon Trust & Depositary (UK) Limited to act as the
Company's depositary. These arrangements were necessary to ensure compliance
with the AIFMD and it is not expected or intended that these new arrangements
will result in any change to the way the Company's assets are invested.
Outlook
Asian economic growth has continued to decelerate, with muted growth in exports
reflecting a lacklustre global economic recovery. However, while growth may
have slowed, it continues to compare favourably with that found in developed
markets. Asia stands to benefit from recent commodity price weakness as the
region is a net importer, particularly of crude oil. With the exception of
Malaysia, lower oil prices will improve Asia's trade balances. This in turn will lead to
more buoyant liquidity conditions. Moreover, given that a number of Asian
countries subsidise prices at the pump, their fiscal accounts also stand to
benefit from cheaper oil. At a corporate level, lower commodity prices may
also provide some benefit to the margins of manufacturing companies. Meanwhile,
it is encouraging to see genuine signs of economic reform across the region,
not just in China and India, but in countries such as Indonesia and South
Korea. While we do not expect reform progress to be smooth, these forces for
change could be positive for Asian equity markets.
Recent market volatility has served to remind investors that Asian equity
markets remain sensitive to changes in the global liquidity environment, with
increasing attention given to the effects of a swift rise in US interest rates, although this is not a scenario we consider likely. However, we are mindful that an
acceleration in US economic growth ahead of expectations, which could justify
such policy tightening, would likely be positive for Asian exports growth, a
traditional driver of Asian equity market performance. We believe that there
are attractive investment opportunities in our universe and that valuation
levels across Asian equity markets appear reasonable, relative to history and
compared to developed equity markets.
Carol Ferguson
Chairman
11 December 2014
PORTFOLIO MANAGERS' REPORT
Market and Economic Review
Asian equity markets have generated solid positive returns over the past six
months, buoyed by signs of stabilisation in China's economy and improved
sentiment towards emerging markets generally. However, equity and currency
markets were hit by a bout of volatility in September as expectations grew that
US interest rates will rise sooner than previously anticipated, with
pro-democracy protests in Hong Kong adding to market uncertainty. The current
benchmark MSCI Asia Pacific ex Japan index has since stabilised to end the
period higher.
India's equity market has performed best, rallying strongly after Narenda
Modi's BJP achieved a decisive victory in India's parliamentary elections. This
has raised expectations that they will be able to deliver on economic and
policy reform, with initial measures being well received. There is also growing
confidence that India's economy will strengthen next year, particularly as it
should benefit from recent oil price weakness given its dependence on imported
oil.
China's equity market has also made strong gains, benefiting from some
better-than-expected economic data and targeted monetary stimulus measures,
although the property market slowdown remains an area of concern for investors.
China Q3 GDP growth slowed to 7.3% year-on-year from 7.5% in Q2; this was
better-than-expected and helped ease concerns of further deterioration in the
economic outlook. While recent monthly economic indicators have been mixed,
manufacturing surveys for October continue to indicate moderate economic
expansion.
In the ASEAN region, Thailand's equity market has made the strongest returns on
improving macroeconomic data and renewed political stability, with improved
consumer and businesses confidence lending further support. The Philippines
equity market also outperformed, benefiting from its relatively strong economic
outlook, notwithstanding the central bank twice hiking policy rates by 0.25% to
keep a lid on inflation. Indonesia's equity market rallied ahead of Joko
Widodo's presidential election win, although it has underperformed recently
with the market expecting his presidency to be challenged without a majority in
parliament and a coalition of opposing parties determined to safeguard vested
interests.
Australia's equity market has been the biggest laggard, with iron-ore prices
touching two-year lows and further earnings downgrades for retail stocks. South
Korea's equity market has also lagged notably due to some disappointing
earnings results, particularly amongst exporters. The Bank of Korea has twice
cut interest rates by 0.25% with the government committed to a comprehensive
agenda to stimulate the economy.
Company Performance
In the six months to the end of October 2014, the Company's net asset value
grew by 17.6% (total return, £), compared with the current benchmark, MSCI All
Countries Asia Pacific ex-Japan index, which returned 10.3% (total return, £).
The Company's strong performance has been driven by good stock selection in a
number of sectors, particularly IT, materials and industrials. The two biggest
contributors have been holdings in Chinese internet stocks. Baidu, the search
engine operator, benefited from growing confidence in its mobile monetisation
strategy and new product offerings, as reflected in its better-than-expected
quarterly earnings results. Online gaming company NetEase also continued to
grow its earnings above expectations thanks to its resilient PC gaming revenues
and strong growth in mobile games, advertising and e-commerce channels.
Our overweight position in India has continued to add value as this market
rallied following the election, with stock selection also contributing
positively. UPL has continued to generate positive returns, with the
agrochemical company's earnings benefiting from rupee depreciation and strong
operational growth in India and Latin America. Management remains upbeat in
their guidance for the year ahead. Holdings in more economically sensitive
areas of the Indian market have also outperformed. Our underweight position in
Australia proved beneficial, particularly our limited exposure to its banks and
retailers, while stock selection added value as outsourcing company Transfield
Services reported a stronger than expected earnings recovery, with its
undervalued share price delivering strong gains.
Conversely, our holding in Standard Chartered was the biggest detractor, with
its valuation falling to a discount relative to its peers on the back of
continued negative earnings surprises and concerns over growth and asset
quality. The valuation of the shares does not appear to reflect any potential
for recovery, which we view as too pessimistic. Our exposure in Hyundai Motor
and Hyundai Mobis also detracted after it appeared the Hyundai Motor Company
had overpaid for a plot of land on which to build its new HQ, dashing hopes
that it increasingly valued minority shareholders' interests. The companies'
fundamental operations were unaffected by the decision and we believe the
valuation of their shares is now particularly attractive. Finally, department
store operator Shinsegae has seen its share price underperform in recent months
as confidence on the pace of the domestic consumption recovery in South Korea
has weakened.
Outlook for Asian Economies and Markets
Asian economic growth has decelerated over the past few years as exports growth
has remained muted, in line with weak global economic growth. However, the
region's growth profile continues to compare favourably to that of developed
markets with recent commodity price weakness being increasingly supportive
given Asia is largely a net importer. For example, the weakening oil price is
allowing India to remove costly diesel subsidies, helping reduce its budget
deficit. At a corporate level, lower commodity prices and a slowdown in wage
inflation is helping to stabilise margins, which is supportive for the region's
earnings growth outlook. Consensus earnings growth forecasts for Asia Pacific
ex Japan have been stable so far this year, and are currently around 9-10% per
annum for both 2014 and 2015, bringing valuation levels for the region to 12.0
times 2014 expected earnings, which remains reasonable relative to history and
against developed equity markets.
There also appears to be growing acceptance of China's gradual transition
towards a slower, more sustainable growth environment. Recent Q3 GDP growth may
have been slightly ahead of expectations, but it was still the lowest recorded
since 2009 and was met with a muted reaction. Employment levels have remained
robust, largely thanks to the growing contribution of the tertiary, or services
sector, which is key in rebalancing the economy away from capital investment
towards domestic consumption. Meanwhile, as in much of the region, we are
seeing genuine signs of economic reform in China. While we do not expect
progress to be smooth, these forces for change could be positive for Asian
equity markets, particularly given the more moderate growth outlook.
Company Strategy
We have made a few changes to the structure of the portfolio over the period,
reflecting the continued adjustments that we are seeing in the region's
institutional, business and macroeconomic environment. We continue to have a
significant level of exposure in Hong Kong and China, where we hold HK-listed
conglomerates, financial groups and US-listed Chinese internet companies. We
have taken some profits from recent outperformers, selling Cheung Kong and
reducing exposure in Greatview Aseptic, as share prices were closer to our
estimate of fair value. We also sold Mindray Medical as we felt that a
deceleration in sales growth and increasing costs would negatively affect
margins in the near term. In turn, we took the opportunity to add to a
selection of Chinese internet companies after their underperformance in Q1 as
we believed that some companies in the sector remain attractive, benefitting
from strong profitability and cash flow generation. We also added to our
holding in Industrial and Commercial Bank of China as we believe its valuation
is unduly pessimistic given its ability to benefit from market reforms.
Elsewhere, we introduced a holding in 51 Job, an integrated Chinese HR services
company which we believe is attractively valued relative to its long-term
growth potential and that of the industry in which it operates.
We continue to have significant exposure to Korea's equity market, in both
exporters and domestically-focussed companies, and have seen a number of
opportunities in that market given its relative underperformance. We added to
our recently initiated holding in Shinsegae and switched some of our exposure
in Hyundai Motor preference shares into the ordinary share class as the
discount they trade at narrowed to record levels. The ordinary shares are
trading at a particularly undemanding 5.0 times 2014 expected earnings which
more than discounts the current challenges facing the company in our view. We
introduced a new holding in Samsung SDI, with the current share price not appearing
to reflect the company's long-term earnings growth prospects from the
successful development of its energy storage system and electric vehicle
battery businesses. We also added a position in Hyundai Home Shopping Network,
which we believe is undervalued given its strong financial position and
earnings growth potential, particularly if domestic consumption picks up, as
intended by the new Korean finance minister. We significantly reduced our
overweight position in Samsung Electronics given lower earnings visibility and
sold recent outperformers LF Corp and Kepco.
Elsewhere, we added a holding in Silicon Motion Technology, which offers
semiconductor solutions for mobile storage and communications to clients such
as Samsung Electronics and Hynix. The company is highly competitive in terms of
cost/quality and is a beneficiary of the growth in mobile devices and the
increasing penetration of solid state drives in the computer market. We sold
Goodpack and Charm Communications, with both companies having been the target
of successful acquisitions, while also selling Treasury Wine Estates which was
subject to an unwelcome takeover bid. We have also taken some profits from
Indian agrochemical company UPL and sold LT Group and Far Eastern New Century
as we moved to reduce exposure in areas where the outlook for earnings has
become less certain.
We remain underweight in Australia and its banks, relative to the benchmark
index, preferring to hold what we consider to be good quality banks that appear
well placed to grow their loan books profitably in countries where credit
penetration is low. However, as the Australian dollar has continued to weaken
we have become more positive on the Australian equity market, gradually
reducing the portfolio's underweight position by looking for stock specific
opportunities such as the recently introduced engineering services contractor
Transfield Services.
In addition to the above, the portfolio continues to have selective exposure to
smaller companies (with market cap of less than US$ 1 billion), which offer the
opportunity to deliver superior returns being at an earlier stage in their
growth cycle.
Stuart Parks/Ian Hargreaves
Portfolio Managers
11 December 2014
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risk factors relating to the Company can be summarised as
follows:
- Investment objective - there can be no guarantee that the Company will meet
its investment objective;
- Investment process - core to the process is that risks taken are not
incidental but are understood and taken with conviction;
- Market risk - a fall in the stock markets and/or a prolonged period of
decline in the stock markets relative to other forms of investment will affect
the performance of the portfolio;
- Investment risk - the risk of poor performance of individual investments.
This is mitigated by diversification and ongoing monitoring of investment
guidelines;
- Foreign exchange risk - foreign exchange currency movements will affect the
non-sterling assets and liabilities of the Company and could have a detrimental
impact on performance;
- Ordinary shares - the market value of the ordinary shares may not reflect
their underlying NAV and may trade at a discount to it. The Company has a
discount monitoring mechanism to help the management of this;
- Borrowings - the use of borrowings will amplify the effect on shareholders'
funds of portfolio gains and losses;
- Derivatives - derivative returns that do not exactly match the returns of the
underlying assets or liabilities being hedged may expose the Company to greater
loss than if derivative contracts had not been entered into;
- Reliance on Third Party Service Providers - failure by any service provider
to carry out its obligations to the Company could have a materially detrimental
impact on the operation of the Company and affect the ability of the Company to
successfully pursue its investment policy; and
- Regulatory - consequences of a serious breach of regulatory rules could
include, but are not limited to, the Company being subject to capital gains on
its investments; suspension from the London Stock Exchange; fines; a qualified
audit report; reputational problems and a loss of assets through fraud.
A detailed explanation of these principal risks and uncertainties can be found
on pages 8 to 10 of the Company's 2014 annual financial report, which is
available on the Manager's website www.invescoperpetual.co.uk/investmenttrusts.
In the view of the Board these principal risks and uncertainties are as much
applicable to the remaining six months of the financial year as they were to
the six months under review.
RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH INVESCO
Under United Kingdom Generally Accepted Accounting Practice (UK Accounting
Standards and applicable law), the Company has identified the Directors as
related parties. No other related parties or related party transactions have
been identified during the period.
With effect from 22 July 2014, Invesco Fund Managers Limited (IFML), a wholly
owned subsidiary of Invesco Limited and associate company of Invesco Asset
Management Limited (IAML), was appointed as AIFM. Prior to 22 July 2014, IAML
was the Manager and continues to carry out its previous functions under
delegated authority of IFML. The fee arrangements with the AIFM are unchanged
and are as disclosed in the 2014 annual financial report.
GOING CONCERN
The financial statements have been prepared on a going concern basis. The
Directors consider this is the appropriate basis as they have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future, being at least 12 months after the
approval of this half-yearly financial report. In considering this, the
Directors took into account the diversified portfolio of readily realisable
securities which can be used to meet short-term funding commitments, the
ability of the Company to meet all of its liabilities and ongoing expenses from
its assets, and revenue forecasts for the coming year.
DIRECTORS' RESPONSIBILITY STATEMENT
in respect of the preparation of the half-yearly financial report
The Directors are responsible for preparing the half-yearly financial report
using accounting policies consistent with applicable law and UK Accounting
Standards.
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements contained within the half-yearly
financial report have been prepared in accordance with the Accounting Standards
Board's Statement `Half-Yearly Financial Reports';
- the interim management report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules;
and
- the interim management report includes a fair review of the information
required on related party transactions.
The half-yearly financial report has not been audited or reviewed by the
Company's auditor.
Signed on behalf of the Board of Directors.
Carol Ferguson
Chairman
11 December 2014
TWENTY-FIVE LARGEST HOLDINGS AT 31 OCTOBER 2014
Ordinary shares unless otherwise stated
MARKET
VALUE % of
COMPANY INDUSTRY GROUP†COUNTRY £'000 PORTFOLIO
Hutchison Whampoa Capital Goods Hong Kong 8,324 4.4
Baidu - ADR Software & Services China 7,747 4.1
Samsung Electronics Technology Hardware & South Korea
- Ordinary Shares Equipment 4,077 3.8
- Preference Shares 3,161
NetEase - ADR Software & Services China 7,091 3.7
UPL Materials India 5,844 3.1
Taiwan Semiconductor Semiconductors & Taiwan 5,505 2.9
Manufacturing Semiconductor Equipment
ICICI Banks India 5,342 2.8
Shinhan Financial Banks South Korea 5,007 2.6
Industrial & Commercial Banks China 4,948 2.6
Bank Of ChinaH
HSBC Banks United 4,668 2.5
Kingdom
Tata Consultancy Software & Services India 4,569 2.4
Transfield Services Commercial & Australia 4,402 2.3
Professional Services
POSCO Materials South Korea 4,305 2.3
AIA Insurance Hong Kong 4,278 2.2
HDFC Bank Banks India 4,056 2.1
Hyundai Motor - Ordinary Automobiles & Components South Korea 2,786 2.1
Shares
- Preference Shares 1,177
Bank Negara Indonesia Banks Indonesia 3,866 2.0
Persero
Samsonite International Consumer Durables & Hong Kong 3,810 2.0
Apparel
Hon Hai Precision Technology Hardware & Taiwan 3,676 1.9
Industry Equipment
Petrochina - ADR Energy China 3,582 1.9
Korea Electric Power Utilities South Korea 3,565 1.9
Corporation
BHP Billiton Materials United 3,506 1.8
Kingdom
Shinsegae Retailing South Korea 3,457 1.8
China Life Insurance - Insurance Taiwan 3,396 1.8
Taiwan
E.Sun Financial Banks Taiwan 3,314 1.7
119,459 62.7
Other investments 70,917 37.3
Total investments 190,376 100.0
†MSCI and Standard & Poor's Global Industry Classification Standard.
ADR: American Depositary Receipts - are certificates that represent shares in
the relevant stock and are issued by a US bank. They are denominated and pay
dividends in US dollars.
H: H-Shares - shares issued by companies incorporated in the People's Republic
of China (PRC) and listed on the Hong Kong Stock Exchange.
CONDENSED INCOME STATEMENT
YEAR TO
SIX MONTHS TO SIX MONTHS TO 30
APRIL
31 OCTOBER 2014 31 OCTOBER 2013 2014
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL
RETURN RETURN RETURN RETURN RETURN RETURN RETURN
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on - 25,252 25,252 - 1,275 1,275 (2,281)
investments
(Losses)/gains on - (513) (513) - (188) (188) 41
foreign currency
revaluation
Income
Overseas dividends 2,289 - 2,289 2,531 - 2,531 3,753
Special dividends - 93 573 666 35 - 35 107
overseas
Scrip dividends 287 - 287 255 - 255 306
UK dividends 120 - 120 246 - 246 381
Gross return 2,789 25,312 28,101 3,067 1,087 4,154 2,307
Investment management (173) (519) (692) (164) (492) (656) (1,244)
fee - note 2
Other expenses (328) (2) (330) (266) (3) (269) (545)
Return before finance 2,288 24,791 27,079 2,637 592 3,229 518
costs and taxation
Finance costs - note 2 (11) (35) (46) (11) (31) (42) (85)
Return on ordinary 2,277 24,756 27,033 2,626 561 3,187 433
activities before tax
Tax on ordinary (178) - (178) (182) - (182) (344)
activities
Net return on ordinary 2,099 24,756 26,855 2,444 561 3,005 89
activities after
tax for the period
Return per ordinary
share - note 3
Basic 2.3p 27.9p 30.2p 2.4p 0.6p 3.0p 0.1p
The total column of this statement represents the Company's profit and loss
account. The supplementary revenue and capital columns are presented for
information purposes in accordance with the Statement of Recommended Practice
issued by the Association of Investment Companies. All items in the above
statement derive from continuing operations and the Company has no other gains
or losses, therefore no statement of total recognised gains and losses is
presented. No operations were acquired or discontinued in the period.
CONDENSED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
CAPITAL
SHARE SHARE REDEMPTION SPECIAL CAPITAL REVENUE
CAPITAL PREMIUM RESERVE RESERVE RESERVE RESERVE TOTAL
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the year ended 30
April 2014
At 30 April 2013 10,919 95,911 2,205 2,449 78,369 5,675 195,528
Final dividend for - - - - - (3,389) (3,389)
2013
Net return from - - - - (3,243) 3,332 89
ordinary activities
Tender offer (1,589) - 1,589 (2,449) (24,952) - (27,401)
Shares bought back and (116) - 116 - (1,858) - (1,858)
held in treasury/
cancelled
At 30 April 2014 9,214 95,911 3,910 - 48,316 5,618 162,969
For the six months
ended 31 October 2014
At 30 April 2014 9,214 95,911 3,910 - 48,316 5,618 162,969
Final dividend for - - - - - (3,066) (3,066)
2014
Unclaimed dividends - - - - - 2 2
Net return from - - - - 24,756 2,099 26,855
ordinary activities
Transfer to special - (95,911) - 95,911 - - -
reserve - note 6
Shares bought back and (11) - 11 - (200) - (200)
cancelled
At 31 October 2014 9,203 - 3,921 95,911 72,872 4,653 186,560
For the six months
ended 31 October 2013
At 30 April 2013 10,919 95,911 2,205 2,449 78,369 5,675 195,528
Final dividend for - - - - - (3,389) (3,389)
2013
Net return from - - - - 561 2,444 3,005
ordinary activities
Tender offer (1,589) - 1,589 (2,449) (24,952) - (27,401)
Shares bought back and (64) - 64 - (1,020) - (1,020)
cancelled
At 31 October 2013 9,266 95,911 3,858 - 52,958 4,730 166,723
CONDENSED BALANCE SHEET
Registered Number 03011768
AT AT AT
31 OCTOBER 31 OCTOBER 30 APRIL
2014 2013 2014
£'000 £'000 £'000
Fixed assets
Investments designated at fair value 190,376 163,853 166,158
Current assets
Amounts due from brokers 1,566 - 841
Taxation 157 255 128
VAT recoverable 16 38 22
Prepayments and accrued income 88 80 399
Cash at bank 857 3,070 1,348
2,684 3,443 2,738
Creditors: amounts falling due within
one year
Bank overdraft (6) (39) -
Bank loans (5,002) - (5,331)
Amounts due to brokers (932) - (138)
Accruals and deferred income (560) (534) (458)
(6,500) (573) (5,927)
Net current (liabilities)/assets (3,816) 2,870 (3,189)
Total net assets 186,560 166,723 162,969
Capital and reserves
Share capital 9,203 9,266 9,214
Share premium - note 6 - 95,911 95,911
Capital redemption reserve 3,921 3,858 3,910
Special reserve - note 6 95,911 - -
Capital reserve 72,872 52,958 48,316
Revenue reserve 4,653 4,730 5,618
186,560 166,723 162,969
Net asset value per share - note 4
Basic 210.2p 186.5p 183.4p
CONDENSED CASH FLOW STATEMENT
SIX MONTHS SIX MONTHS YEAR TO
TO TO
31 OCTOBER 31 OCTOBER 30 APRIL
2014 2013 2014
£'000 £'000 £'000
Return before finance costs and taxation 27,079 3,229 518
Adjustment for:
(gains)/losses on investments (25,252) (1,275) 2,281
losses/(gains) on currency revaluation 513 188 (41)
Scrip dividends received as income (287) (255) (306)
Decrease in debtors 288 647 471
Increase/(decrease) in creditors 102 (52) (34)
Tax on unfranked investment income (178) (182) (344)
Cash inflow from operating activities 2,265 2,300 2,545
Servicing of finance
Interest paid on bank loans and overdraft (45) (41) (85)
Taxation - - -
Capital expenditure and financial
investment
Purchase of investments (37,314) (32,044) (68,752)
Sale of investments 38,705 74,716 104,911
Dividends paid (3,066) (3,389) (3,389)
Net cash inflow before financing 545 41,542 35,230
Management of liquid resources - (2,804) -
Financing
Decrease in bank debt (869) (11,007) (5,558)
Tender offer, including costs - (27,401) (27,401)
Shares bought back (200) (927) (1,858)
(Decrease)/increase in cash in the period (524) (597) 413
Cash outflow from movement in debt 869 11,007 5,558
Cashflow from movement of liquid - 2,804 -
resources
(Losses)/gains on currency revaluation (513) (188) 41
Movement in net (debt)/funds in the (168) 13,026 6,012
period
Net debt at beginning of period (3,983) (9,995) (9,995)
Net (debt)/funds at end of period (4,151) 3,031 (3,983)
Analysis of changes in net (debt)/funds
Brought forward:
Cash at bank 1,348 944 944
Debt due within one year (5,331) (10,939) (10,939)
Net debt brought forward (3,983) (9,995) (9,995)
Movements in the period:
Cash (outflow)/inflow from bank and (524) 2,207 413
cash funds
Movement on currency revaluation (513) (188) 41
Debt due within one year 869 11,007 5,558
Net (debt)/funds at end of period (4,151) 3,031 (3,983)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Accounting Policy
The condensed financial statements have been prepared using the same accounting
policies as those adopted in the 2014 annual financial report, which were
prepared under the historical cost convention and are consistent with
applicable UK Accounting Standards and with the Statement of Recommended
Practice `Financial Statements of Investment Trust Companies and Venture
Capital Trusts'.
2. Management Fee and Finance Costs
Investment management fees and finance costs of borrowings are charged 75% to
capital and 25% to revenue.
3. Basis of Returns
SIX MONTHS SIX MONTHS YEAR TO
TO TO
31 OCT 2014 31 OCT 2013 30 APR 2014
Basic returns after tax:
Revenue £2,099,000 £2,444,000 £3,332,000
Capital £24,756,000 £561,000 £(3,243,000)
Total £26,855,000 £3,005,000 £89,000
Weighted average number of ordinary
shares in issue during the period:
- basic 88,811,664 98,615,025 93,873,305
4. Basis of Net Asset Value (NAV) per Ordinary Share
AT 31 OCT AT 31 OCT AT 30 APR
2014 2013 2014
Total shareholders' funds £186,560,000 £166,723,000 £162,969,000
Number of ordinary shares in issue 88,748,259 89,384,677 88,859,369
5. Share Capital
(a) Ordinary Shares of 10p each
SIX MONTHS TO SIX MONTHS TO YEAR TO
31 OCT 2014 31 OCT 2013 30 APR 2014
Number of ordinary shares:
Brought forward 88,859,369 105,911,686 105,911,686
Tender offer - (15,886,669) (15,886,669)
Shares bought back and cancelled (111,110) (640,340) (1,165,648)
In issue at period end 88,748,259 89,384,677 88,859,369
(b)Treasury Shares
SIX MONTHS TO SIX MONTHS TO YEAR TO
31 OCT 2014 31 OCT 2013 30 APR 2014
Number of treasury shares:
Brought forward 3,277,224 3,277,224 3,277,224
In issue at period end 3,277,224 3,277,224 3,277,224
Ordinary shares in issue (including 92,025,483 92,661,901 92,136,593
treasury)
During the period a total of 111,110 ordinary shares were repurchased and
cancelled for a price of 180.39p per share including costs.
Since the period end a further 40,555 ordinary shares have been repurchased and
cancelled for an average price of 188.0p per share.
6. Special Reserve
A court order to cancel the share premium account and transfer its balance of £
95,911,000 to the special reserve was granted on 3 September 2014.
7. Dividends
The Company paid a final dividend of 3.45p per ordinary share for the year
ended 30 April 2014 on 12 August 2014 to shareholders on the register on 18
July 2014.
8. Investment Trust Status
It is the intention of the Directors to conduct the affairs of the Company so
that it satisfies the conditions for approval as an investment trust company.
9. Status of Half-Yearly Financial Report
The financial information contained in this half-yearly report, which has not
been reviewed or audited by the independent auditors, does not constitute
statutory accounts within the meaning of section 434 of the Companies Act 2006.
The financial information for the half years ended 31 October 2014 and 31
October 2013 have not been audited. The figures and financial information for
the year ended 30 April 2014 are extracted and abridged from the latest
published accounts and do not constitute the statutory accounts for that year.
Those accounts have been delivered to the Registrar of Companies and include
the Report of the Independent Auditor, which was unqualified and did not
include a statement under section 498 of the Companies Act 2006.
By order of the Board
Invesco Asset Management Limited
Company Secretary
11 December 2014
Friday, 22nd November 2024
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