Half-year Report

abrdn Asia Focus plc

28 March 2024

 

abrdn Asia Focus plc

Legal Entity Identifier (LEI): 5493000FBZP1J92OQY70

ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS

for the six months ended 31 January 2024

Performance Highlights

Net asset value total return (diluted)AB ​			Net Asset Value per share (diluted) ​
Six months ended 31 January 2024			As at 31 January 2024
-0.7% ​			301.2p ​
Year ended 31 July 2023	+7.6%		As at 31 July 2023	308.9p
Share price total returnA			Share price
Six months ended 31 January 2024			As at 31 January 2024
-0.2% ​			258.0p ​
Year ended 31 July 2023	+7.3%		As at 31 July 2023	264.0p
MSCI AC Asia ex Japan Small Cap Index total returnC ​			Total assets
Six months ended 31 January 2024			As at 31 January 2024
+4.5% ​			£538.5m ​
Year ended 31 July 2023	+8.0%		As at 31 July 2023	£556.5m
Net asset value total return since inception (diluted)ABD			Discount to net asset valueAB
To 31 January 2024			As at 31 January 2024
+2278.7% ​			14.3% ​
To 31 July 2023	+2283.6%		As at 31 July 2023	14.5%
A Considered to be an Alternative Performance Measure (see below). ​ ​ ​ ​
B Presented on a diluted basis as the Convertible Unsecured Loan Stock (CULS) is "in the money". ​ ​ ​ ​
C Currency adjusted, capital gains basis. ​ ​ ​ ​
D Inception being 19 October 1995. ​ ​ ​ ​

Financial Highlights

Capital values	31 January 2024	31 July 2023	% change
Total assets less current liabilitiesA	£538,536,000	£556,466,000	-3.2
Net asset value per share (basic)	302.05p	310.49p	-2.7
Net asset value per share (diluted)	301.18p	308.93p	-2.5
Share price (mid market)	258.00p	264.00p	-2.3
Discount to net asset value (basic)B	14.6%	15.0%
Discount to net asset value (diluted)B	14.3%	14.5%
Net gearingB	10.3%	12.1%
Ongoing charges ratioB	0.91%	0.92%
A Total assets less current liabilities (excluding prior charges such as bank loans) as per the Statement of Financial Position. ​ ​ ​
B Considered to be an Alternative Performance Measure. ​ ​ ​

Chair's Statement

I am once again pleased to present to shareholders the half-yearly results for abrdn Asia Focus plc (the "Company"). Asian small-caps showed considerable resilience over the period despite continued worries over a potential global recession, with the MSCI AC Asia Pacific ex Japan Small Cap index delivering a total return of 4.5% compared to the wider MSCI AC Asia ex Japan index, which fell 7.3%. This extends the material outperformance of smaller companies in the region over their larger counterparts which over a 5 year period to the end of January 2024, has returned around 53% compared to the large cap index's 11% in total return terms. It is evidence of the inherent potential of the asset class.

Investment Performance

Over the period, the Company's net asset value (NAV) total return per share fell 0.7% in sterling terms, thereby lagging its closest comparator benchmark.  In the short term, the active nature of the portfolio can often lead to divergence from the index.  The share price total return was down 0.2%, with the discount to NAV narrowing over the period to 14.3% from 14.5% at end December 2023. 

The Board is firm in its conviction around Asia's long-term growth story, particularly within the small-cap universe. Your Manager's disciplined, bottom-up stock picking approach, focused on identifying businesses with durable competitive advantages, healthy balance sheets and significant earnings growth should enable them to compound returns at an attractive rate over the long-term. 

This is a differentiated portfolio made up of interesting, less well-known companies, often under researched in the market.  The active share of the portfolio is 97.5% and the long-term performance of the Company remains impressive.  According to the Association of Investment Companies (AIC), as the 25^th anniversary of the inception of the Individual Savings Account (ISA) approaches, the Company is ranked third best performing investment trust. Based upon a single investment of the full £7,000 ISA allowance on 6 April 1999, the day ISAs came into existence, with dividends reinvested until 5 March 2024, an investment in the Company's shares would have generated a tax free pot of £273,758.

Revenue and Dividends

The Board recognises the importance of the Company's dividend income for many shareholders.  The Ordinary share dividend has been maintained or raised every year since 1998, and your Board is firmly committed to the enhanced and progressive dividend policy which was approved by shareholders in 2022. Underlying earnings per share for the period amounted to 3.4p (2023: 4.3p) and revenue from the portfolio continues to comfortably cover the Ordinary dividend, with the shares yielding 2.5%, as of 31 January 2024 (3.5% including special dividends).

Two interim dividends have been paid in the first six months of the Company's financial year. These interim dividends of 1.6p per Ordinary share were paid on 20 December 2023 and 21 March 2024.  The Board has set a target dividend of at least 6.41p per Ordinary Share for the financial year ending 31 July 2024. The Board plans to maintain the progressive policy of the last 28 years in order to provide shareholders with a regular dividend and dependable level of income alongside capital growth prospects.

Share Capital Management and Gearing

The Board is pleased to note the current abrdn initiative to reinvest six months' worth of its management fees back into the Company by purchasing shares in the market, in an effort to further align itself with the shareholder base and to demonstrate the significant on-going commitment to its listed closed end funds business which currently ranks third globally.

The Board is conscious that the discount to NAV remains wide and has stepped up share buybacks during the period, in the belief that this is in the best interest of shareholders. During the period the Ordinary shares have traded at an average discount of 15.75% and we have bought back 2,022,500 Ordinary shares in the market at a discount to the prevailing NAV per share (six months to 31 January 2023: nil).  The Board will continue to consider the judicious use of share buybacks to both reduce the volatility of any discount and to modestly enhance the NAV per share for shareholders.

The Company's net gearing at 31 January 2024 was 10.3% with the debt provided by the £30 million unsecured Loan Notes 2035 and the £36.6m Convertible Unsecured Loan Stock.  The Board is very aware of the 31 May 2025 maturity date for the CULS and is actively considering available options for replacing or retiring that debt.  As at 27 March 2024, the latest practicable date, the Company's net gearing stood at 13.4%.

Your Investment Manager

The Board would like to thank Hugh Young for his long service to the Company, which he leaves in good hands:  Flavia Cheong, abrdn's Head of Equities, Asia Pacific, Gabriel Sacks and Xin-Yao Ng.  Your Manager's extensive on-the-ground coverage, experienced management team, and commitment to delivering long-term value amid the dynamic and varied Asian small-cap universe should lend confidence in the continued long-term prospects for the Company.   Indeed, at a time when many asset managers are making cuts, the Board is very pleased that abrdn has strengthened the investment team in Asia during the reporting period with the recruitment of four new research analysts.

Responsible Investing

While the Company's investment objective does not specifically include environmental, social and governance ("ESG") and the investment process does not exclude exposure to certain industries, your Manager firmly believes that the best companies are also sustainable companies, and hence it integrates a comprehensive assessment of ESG factors into its bottom-up stock picking investment process. Informed and constructive engagement also helps foster better companies, protecting and enhancing the value of the Company's investments.

This is clearly reflected in the carbon footprint of the Company's portfolio, for example, which compares favourably against that of the benchmark. The portfolio's relative carbon intensity (as at 31 December 2023, including scope 1 and 2 emissions) was only 23.3% of the benchmark. Further detailed information can be found in the 31 December 2023 Taskforce on Climate-related Financial Disclosures (TCFD) Report in the Literature section of the Company's website.

Board Composition

I would like to re-iterate my thanks to Randal McDonnell, the Earl of Antrim, who stepped down from the Board at the last AGM and has been a great asset to us with his wise contributions over the last nine years. We also welcome two new Board members, Lucy Macdonald who replaces Randal, and Davina Curling who joined with effect from 1 March 2024 as Senior Independent Director. Both bring considerable investment management experience to the Board.

Outlook

Asia's distinct growth story, with so much untapped potential for long-term investors, remains intact. Asia is projected to contribute more than two thirds of global growth, underscoring its undeniable economic might. Although there may be political uncertainty, with 2024 being a significant year for elections in Asia, you are likely to see relative stability and calm in the largest democracies potentially in stark contrast to the upcoming US presidential elections. 

In India, renewed capex, real estate and credit cycles are driving strong economic growth. Should Prime Minister Modi win the upcoming elections in India, he is likely to continue to proceed with his vision for India as a leading global economy. China's post-Covid recovery has not been as smooth nor as fast as hoped, but there are signs of positive momentum including official policy shifts towards domestic demand, while the country's huge consumer base and advances in technology remain pillars of its long-term potential.

South East Asia is often overlooked as a rich source of quality smaller companies. Your Manager continues to regard these countries as beneficiaries of shifting global supply chains with supportive government policies and favourable cost structures, and they also represent a large consumer market of about 700 million people on a combined basis. Vietnam is an emerging powerhouse in apparel and electronics manufacturing and is seeing rapid urbanisation, while Indonesia is gaining traction in areas of the commodity supply chain that creates increasing value for the local economy.

Asia's rising middle classes and advancing technology provide fertile ground for innovative small-cap companies, offering substantial potential for value creation. As ever, your Company is focused on high-quality companies with excellent long-term track records and strong fundamentals, exploring thematic opportunities in structural growth trends like domestic consumption, digitisation and the green energy transition. The future is bright for smaller companies in Asia and we expect that shareholders will benefit from this via their investment in abrdn Asia Focus.

Krishna Shanmuganathan
Chair
27 March 2024

Investment Manager's Review

Overview

Asian small caps posted  positive returns over the six month review period whilst proving more resilient than their large-cap peers to a volatile backdrop of concerns around the global economy, geopolitical tensions and US monetary policy developments

Indian small-caps were the best performers by a large margin, boosted by a positive domestic economic backdrop, a buoyant property sector and state election outcomes that strengthened Modi's ruling government. Taiwanese small caps also performed remarkably well, leveraging off the strength of the US technology giants and rising momentum around the development of artificial intelligence (AI).  In contrast, small caps in China and Hong Kong were among the heaviest losers, bearing the brunt of consumer and property concerns, together with regulatory noise both domestically and externally, with newsflow around more US trade curbs on its biotech and tech sectors. This was despite targeted policy and liquidity support from the central bank and government. 

Portfolio Review

The portfolio underperformed its closest reference benchmark over the review period by 5.2% partly due to the strength of the Indian rally. India is the biggest country position in the portfolio at 19%, though this is less than its weight in the benchmark.

The Indian market is home to many attractive companies with competitive business models, high returns and fantastic long-term growth prospects. We have high conviction in our holdings, which overall performed better than the market average, but we intend to maintain valuation discipline in our purchases.  Prestige Estates posted solid earnings results with pre-sales growth in its residential projects more than doubling year-on-year. We see the business continuing to cement its position as one of the country's most prominent developers amid a clear trend towards industry consolidation. Engineering and IT services provider Cyient continued to execute well with its operating margins expanding on the back of productivity improvements and utilisation gains, along with healthy order flows. Healthcare diagnostics group Vijaya Diagnostics Centre also added to relative performance, given its superior delivery against peers both in terms of revenue and profit growth.

Elsewhere, with Chinese consumption recovering slower than expected, sentiment towards local equity markets deteriorated further and valuations de-rated. Electric Vehicle (EV) gear maker Zhejiang Shuanghuan Driveline sold-off on concerns over slowing demand for EVs, as did Sinoma Science & Technology Co, an advanced materials business involved in the broader renewable energy supply chain. We remain positive on both companies' prospects as we expect Shuanghuan to be a key beneficiary of the trends towards electrification, with customer diversification and potential overseas expansion likely to offset any domestic slowdown in sales. Sinoma, on the other hand, is well-placed to benefit from the growth of wind energy capacity globally, supported by the company's strong technology and research and development capabilities. Renewable energy is a key area of development for the Chinese government and Sinoma has a diversified business that caters to this demand. Some of our other mainland holdings in other sectors also lagged on the back of broader industry concerns. Joinn Laboratories, a company that specialises in drug safety evaluation for the pharmaceutical industry, fell alongside the broader healthcare sector. While we are positive on Joinn's leading position in the pre-clinical drug assessment space and its solid financial position, the company has been affected by policy uncertainty and the softer domestic funding environment which has led to slower growth in its order book. It is fair to say that investors are now incorporating a higher risk premium for Chinese equities given uncertainty over the broad direction of government policy and the role of the private sector in the economy.  Overall, including companies listed in Hong Kong, our Chinese holdings performed marginally better than the local market.  Meanwhile, from a sectoral perspective, technology was among the best performing sectors through the review period, driven by optimism over AI and a turnaround in the semiconductor cycle. This lifted the tech-heavy market of Taiwan, and our lighter exposure there detracted from portfolio returns. While the market is home to several interesting businesses, particularly in IT, we have been highly selective in our approach and focused on owning only the best-quality small-cap companies that we can find. We are optimistic about the future of technology in Asia and the portfolio is well-positioned to exploit opportunities emerging from the advancement of AI. This includes one of our technology hardware holdings, Taiwan Union Technology, which is among the leading suppliers of high-speed copper clad laminates, a core material used for printed circuit boards. The company is seeing a pick-up in orders from AI-related customers which in turn is driving a change in their sales mix towards higher-margin products. Elsewhere in Singapore, on the other hand, semiconductor equipment maker AEM Holdings' share price fell after the company indicated that it would adjust its inventory and pre-tax profit downwards for the fourth quarter of 2023. We immediately engaged with the company on this issue and believe it is a one-off incident.

ASEAN is an often overlooked part of the region amid the significant attention given to China and India. But it is nevertheless a rich source of good-quality small-caps. Some of our ASEAN holdings were among the key contributors to performance over the review period. In Indonesia, logistics and supply chain company AKR Corporindo, a main player in industrial fuel, was boosted by greater clarity around potential acceleration in land sales in the Java Integrated Industrial and Ports Estate. Elsewhere, our Vietnamese holding, FPT Corp, a software services company, continued to deliver impressive earnings. We feature a deeper case study on FPT Corp below.

Since 2022, we no longer have a market cap restriction on new additions to the portfolio though we remain focused on finding smaller companies that are at the bottom quartile of our investible universe. Our intention is to invest in a diversified portfolio of around 50 companies that have an exceptional industry position. To this end, we continue to refresh the portfolio by reducing smaller, legacy positions to those with better growth prospects and clearer earnings visibility.

In the technology sector, for instance, we switched from Korea's Koh Young Technology to Taiwan-based Chroma ATE, a strong player that excels in the core power testing industry with high entry barriers, growing exposure to exciting industries like electric vehicles, 3D testing and semiconductors. Similarly, we sold our holding in Taiwan-based manufacturer of bicycle and motorcycle chains KMC Kuei Meng International in favour of better opportunities elsewhere.

Meanwhile, we refined our India positioning by selling out of healthcare company Sanofi India and taking profits on other Indian holdings that have performed well. In their place, we introduced three new holdings with attractive growth prospects. Aptus Value Housing Finance offers loans in the affordable housing segment, a growing market with a strong foothold in south India. It fares well against peers in asset quality, loan yields and return ratios, supported by a conservative management team. We also participated in a share placement offered at a considerable discount by Apar Industries. Apar produces conductors, specialty oil lubricants and cables primarily to the power industry. We view Apar as a play on the electrification of the Indian economy and rising investment in transmission and renewables globally, with half of its revenues from India and the rest from exports to the US, Europe and Australia. Finally, we invested in KFin Technologies, a registrar and transfer agent for local mutual funds that should benefit from deepening capital markets in India. As a duopoly, the industry structure is highly attractive with high barriers to entry and significant growth potential.  Elsewhere, in Vietnam we initiated a new holding in Military Commercial Joint Stock Bank (MBB), given its strong profitability metrics, excellent track record in managing asset quality and robust outlook for loan growth. MBB is one of the leading domestic banks in Vietnam and we regard it as well-managed with its prudent culture stemming from its military background, but dynamic enough to innovate and capitalise on opportunities. The bank enjoys a key competitive edge with its lower funding cost, which is a result of its strong brand and quasi state-owned enterprise status. The share prices of banks in Vietnam have generally been weak as a result of an anti-corruption probe in the property sector, which gave us the opportunity to buy a quality franchise at an attractive valuation.

Outlook

The investment climate remains one of sluggish global economic growth, inflationary risks and concerns over the impact of policy moves by major central banks. China continues to be a key source of worry, amid a slow-moving recovery. Against this prevailing uncertain backdrop, the portfolio is well-positioned, exhibiting strong fundamentals and a return profile that should stand it in good stead. Dividend yield, growth and return on equity metrics are higher than the reference benchmark, while the debt-to-equity ratio is comparatively lower also. Our stock-specific insights are derived from our rigorous bottom-up due diligence, backed by our in-house research capabilities and well-resourced team across Asia. The profile of the portfolio also reflects our belief that quality small-cap companies with solid balance sheets and sustainable earnings prospects will emerge stronger in tougher times.  More broadly, we are finding the best opportunities around key structural drivers of growth across Asia. Domestic consumption, especially in the premium segment, is set to grow in line with rising affluence. Infrastructure spending and urbanisation will boost real estate and financials. The rapid advance of all things tech, including AI, means a bright future for both direct and ancillary plays on gaming, internet, fintech, semiconductors and tech services like the cloud and software-as-a-service. ASEAN, meanwhile, has been a winner of the China-plus-one strategy, in which multinationals are moving their supply chains away from China due to geopolitical tensions. Asia is also at the forefront of the green transition with plays on renewable energy, batteries, EVs, its related infrastructure and environmental management. In this context , we see smaller companies as  the more direct beneficiaries of some of these key trends, with the portfolio well placed to deliver sustainable returns for shareholders over the long run.

Gabriel Sacks, Flavia Cheong &
Xin Yao Ng

abrdn Asia Limited
27 March 2024

Ten Largest Investments

As at 31 January 2024

4.4% Total assets	Park Systems Corporation		4.4% Total assets	Bank OCBC NISP
	The Korean company is the leading developer of atomic force microscopes, a nascent technology that could have broad industrial application in sectors such as chip-making and biotechnology.			An Indonesian listed banking and financial services company, which is a steady consistent performer backed by healthy asset quality.
3.7% Total assets	AKR Corporindo		3.6% Total assets	Cyient
	AKR is one of the main players in industrial fuel in Indonesia, which has a high entry barrier. Its key strength is its extensive infrastructure and logistic facilities throughout the country.			The Indian company provides engineering and IT services to clients in developed markets, competing primarily on quality of service and cost of delivery.
3.4% Total assets	FPT Corporation		3.1% Total assets	Aegis Logistics
	FPT is a diversified technology group with a fast-growing software outsourcing business. It also owns a telecoms unit, an electronics retailing company, and has interests in other sectors, such as education.			A strong and conservative player in India's gas and liquids logistics sector, with a first mover advantage in key ports and a fair amount of capacity expansion to come. The government's push for the adoption of cleaner energy is also boosting its liquefied natural gas business.
3.0% Total assets	John Keells Holdings		2.9% Total assets	Prestige Estates Projects
	A respected and reputable Sri Lanka conglomerate with a healthy balance sheet and good execution, John Keells has a hotels and leisure segment that includes properties in the Maldives. It has other interests in consumer, transportation and financial services.			Prestige is one of the leading property developers in India with a significant land bank and benefitting from a positive residential upcycle that should still have some years to run. It has a stronghold in Bangalore, India's leading IT hub, but it has also been successful expanding into other top-tier cities.
2.8% Total assets	Mega Lifesciences		2.7% Total assets	Taiwan Union Taiwan Union Technology Corp is a leading maker of copper clad laminate (CCL), a key base material used to make printed circuit boards. With a strong commitment to R&D, it has moved up the value chain through the years.
	The Thai group produces, sells and distributes health supplements and pharmaceutical products, mostly in the under-penetrated but fast-growing frontier and emerging markets.

Portfolio

As at 31 January 2024 ​ ​ ​ ​
				Total
			Valuation	assets
Company	Industry	Country	£'000	%
Park Systems Corporation	Electronic Equipment, Instruments & Components	South Korea	23,911	4.4
Bank OCBC NISP	Banks	Indonesia	23,520	4.4
AKR Corporindo	Oil, Gas & Consumable Fuels	Indonesia	19,726	3.7
Cyient	IT services	India	19,452	3.6
FPT Corporation	IT Services	Vietnam	18,568	3.4
Aegis Logistics	Oil, Gas & Consumable Fuels	India	16,707	3.1
John Keells Holdings	Industrial Conglomerates	Sri Lanka	16,286	3.0
Prestige Estates Projects	Real Estate Management & Development	India	15,651	2.9
Mega Lifesciences (Foreign)	Pharmaceuticals	Thailand	14,845	2.8
Taiwan Union	Electronic Equipment, Instruments & Components	Taiwan	14,717	2.7
Top ten investments			183,383	34.0
Nam Long Invest Corporation	Real Estate Management & Development	Vietnam	13,515	2.5
M.P. Evans Group	Food Products	United Kingdom	13,392	2.5
LEENO Industrial	Semiconductors & Semiconductor Equipment	South Korea	13,224	2.5
Sporton International	Professional Services	Taiwan	13,022	2.4
Affle India	Media	India	12,276	2.3
Cebu	Real Estate Management & Development	Philippines	12,209	2.3
Asian Terminals	Transportation Infrastructure	Philippines	11,601	2.2
Precision Tsugami China	Machinery	China	11,477	2.1
AEM Holdings	Semiconductors & Semiconductor Equipment	Singapore	10,926	2.0
Medikaloka Hermina	Health Care Providers & Services	Indonesia	10,763	2.0
Top twenty investments			305,788	56.8
Autohome - ADR	Interactive Media & Services	China	10,270	1.9
Dah Sing Financial	Banks	Hong Kong	10,106	1.9
Ultrajaya Milk Industry & Trading	Food Products	Indonesia	9,510	1.8
Oriental Holdings	Automobiles	Malaysia	9,107	1.7
Hana Microelectronics (Foreign)	Electronic Equipment, Instruments & Components	Thailand	9,043	1.7
Vijaya Diagnostic Centre	Health Care Providers & Services	India	9,037	1.7
UIE	Food Products	Denmark	8,857	1.6
ChaCha Food - A	Food Products	China	8,761	1.6
Sinoma Science & Technology - A	Chemicals	China	8,608	1.6
Apar Industries	Industrial Conglomerates	India	8,541	1.5
Top thirty investments			397,628	73.8
Zhejiang Shuanghuan Driveline - A	Auto Components	China	7,888	1.5
Chroma ATE	Electronic Equipment, Instruments & Components	Taiwan	7,883	1.5
Sunonwealth Electric Machinery Industry	Machinery	Taiwan	7,776	1.4
Millenium & Copthorne Hotels New Zealand (A)	Hotels, Restaurants & Leisure	New Zealand	7,445	1.4
AEON Credit Service (M)	Consumer Finance	Malaysia	7,246	1.4
United Plantations	Food Products	Malaysia	7,227	1.3
Joinn Laboratories China - H	Life Sciences Tools & Services	China	6,685	1.2
CE Info Systems	Software	India	6,271	1.2
MOMO.com	Broadline Retail	Taiwan	6,107	1.1
Pentamaster International	Semiconductors & Semiconductor Equipment	Malaysia	6,061	1.1
Top forty investments			468,217	86.9
Syngene International	Life Sciences Tools & Services	India	5,914	1.1
KFin Technologies	Capital Markets	India	5,744	1.1
SINBON Electronics	Electronic Equipment, Instruments & Components	Taiwan	5,298	1.0
Andes Technology	Semiconductors & Semiconductor Equipment	Taiwan	4,938	0.9
Kerry Logistics	Air Freight & Logistics	Hong Kong	4,146	0.8
Thai Stanley Electric (Foreign)	Auto Components	Thailand	3,503	0.7
Shangri-La Hotels Malaysia	Hotels, Restaurants & Leisure	Malaysia	2,989	0.6
Convenience Retail Asia	Consumer Staples Distribution	Hong Kong	2,963	0.5
Aptus Value Housing Finance	Financial Services	India	2,941	0.5
Credit Bureau Asia	Professional Services	Singapore	2,851	0.5
Top fifty investments			509,504	94.6
Bukit Sembawang Estates	Real Estate Management & Development	Singapore	2,812	0.5
Tisco Financial (Foreign)	Banks	Thailand	2,765	0.5
Yoma Strategic	Real Estate Management & Development	Myanmar	2,719	0.5
Manulife	Insurance	Malaysia	1,320	0.3
Humanica (Foreign)	Professional Services	Thailand	794	0.2
First Sponsor Group (Warrants 21/03/2029)	Real Estate Management & Development	Singapore	223	-
Military Commercial Joint Stock Bank	Banks	Vietnam	123	-
AEON Stores Hong Kong	Multiline Retail	Hong Kong	98	-
First Sponsor Group (Warrants 30/05/2024)	Real Estate Management & Development	Singapore	-	-
G3 Exploration	Oil, Gas & Consumable Fuels	China	-	-
Total investments			520,358	96.6
Net current assets			18,178	3.4
Total assetsB			538,536	100.0
A Holding includes investment in both common and preference lines. ​ ​ ​ ​
B Total assets less current liabilities. ​ ​ ​ ​

Investment Case Studies

Prestige Estates (India)

In which year did we first invest?

April, 2019

How has Prestige Estates done since we invested in it?

Since we invested in it on April 2019, the share price of Prestige Estates has risen close to about 340% in GBP terms (total returns), compared to the MSCI AC Asia ex Japan Small Cap Index's gain of about 47%.

% Holding:

2.92%

Where is their head office?

Bengaluru, Karnataka, India

What is their web address?

prestigeconstructions.com

What does the company do?

It is a leading South Indian developer with a good reputation for executing and completing projects, covering segments such as residential, commercial, retail, hospitality and property management.

Why do we like the company?

We regard Prestige Estates as a quality developer with a strong track record of residential housing development and a growing investment property portfolio. Founded in 1986, the group has completed more than 290 projects through the years. It has continued to show decent growth in pre-sales, completions, launches and rental income. Having been a leading player in South India, Prestige is looking to drive growth by diversifying from its base in Bangalore to other parts of India, such as Mumbai and New Delhi. Its expansion strategy has been sensible, as it is opting to add new projects through tie-ups with developers in other regions. 

Prestige has more than 150 million sq ft of real estate space in its pipeline and around a quarter of this is in locations outside south India. Its most recent updates have highlighted a new asset creation cycle as the company is planning an aggressive scaling up across all its business segments over the next five years, including the rebuilding of its office and shopping mall pipeline. Capital discipline is key and we closely monitor how the company has been executing its plans so that it does not compromise its balance sheet, albeit operating cash flows have been strong and pre-sales momentum remains positive. There is also support from a substantial improvement in the company's liquidity position, following a spin-off of assets to Blackstone and a stake sale in one of its office blocks.

More broadly, the government's bold housing programme is taking shape with affordable homes being built across the country, while sector reform such as the Real Estate (Regulation and Development) Act (RERA) has triggered large-scale consolidation in the industry, with the strongest impact on the residential segment. We expect good quality developers with strong balance sheets and brands, such as Prestige Estates, to benefit the most. The consolidation theme is happening at pace with Prestige getting good land deals from banks offloading their assets. We also see urbanisation and population growth, combined with increasing disposable income and the increase in nuclear families, as fuelling the overall demand for housing over the longer term.

When did we last engage Prestige on ESG?

We last met Prestige in June 2023.

What were the key areas of engagement?

We have been engaging Prestige on its environmental impact, including efforts in green building and water management. We also continue to engage with management around its board composition and gaps in skillsets, as well as employee welfare and improvements
in disclosure.

What is the result of our engagement?

Prestige Estates has yet to have an MSCI ESG rating, but we are encouraged by the company's efforts towards a greener planet. The company is committed to designing and delivering assets with "green building" certification, while also incorporating water conservation and waste recycling. For instance, the company has installed rainwater harvesting mechanisms at all its project locations. Compared with conventional buildings, overall Prestige has conserved more than 30% of water in its portfolio of green buildings. Its freshwater consumption also fell by 19% in FY2022. The company also recycled 22% of its overall waste in FY2023.

As for the social aspect, in terms of talent management, Prestige uses online learning resources to enhance the skills of its workforce, with a learning platform that has videos, articles, podcasts and TED Talks on various topics and interests. In addition, it has in place an employee well-being policy and Prevention of Sexual Harassment policy that applies to all employees. We have also seen some progress in corporate governance. Independent representation on the board of directors is about 56%, while Prestige increased the number of female directors on the nine-member board to two in FY2020 from one previously.

When do we next meet the company and what will be on the ESG agenda?

We plan to meet Prestige in mid-2024 for a business update and to check on progress on the material ESG issues highlighted above.

FPT Corporation

In which year did we first invest?

2019

How has FPT Corp done since we invested in it?

Since we invested in it on 5 April 2019, the share price of FPT Corp has risen close to 350% in GBP terms (total returns), compared to the MSCI AC Asia Pacific ex Japan Small Cap Index's gain of about 44%.  

% Holding:

3.44%

Where is their head office?

Hanoi, Vietnam

What is their web address?

FPT.com

What does the company do?

FPT is the biggest technology and IT services group in Vietnam with three core businesses in IT services, telecommunications, as well as education and investment.

Why do we like the company?

FPT exemplifies the type of company that we like. Despite operating in what is still deemed to be a frontier market, FPT has been entrepreneurial in capitalising on growth opportunities while at the same time demonstrating prudence in building diversified revenue streams without compromising its  balance sheet. A number of the company's original founders remain core shareholders and are highly involved in the business and we believe they deserve credit for their vision, execution and transparency with investors. We also like the governance structure that has been put in place where key management personnel rotate across the different divisions and develop a deep understanding of each business before joining the board.

FPT's technology arm is the key driver of its revenue and profits. Their IT services division has become a global business and saw its revenue top US$1 billion for the first time in 2023 on the back of rising demand for digital transformation. FPT originally found its niche in serving Japanese multinationals but has been successful in growing its client base elsewhere in the Asia-Pacific, US and European Union. The company aims to be in the top 50 global leading digital transformation (DX) solutions and services providers by 2030, with a revenue target of US$5 billion, and it has been instrumental in putting Vietnam on the map for technology outsourcing services.
The industry is attractive with structural growth tailwinds and a huge market. FPT believes demand growth will ride on new technologies, such as cloud, AI, big data analytics and robotic process automation. Most recently, it acquired an 80% stake in AOSIS, a French IT consulting firm, that will increase its customer base and improve its capabilities in offering solutions to the aerospace, aviation and logistics sectors. It also launched its automotive technology subsidiary FPT Automotive in Texas in the US, in view of rising global demand for software-defined
vehicles (SDVs).

Across its other businesses, the education segment is the most profitable and management expects this division to continue to deliver consistently strong revenue growth. Most of the software engineers in Vietnam hail from FPT's university, which also offers synergies with its broader IT business. Elsewhere, its telecom business is stable and defensive, supported by growth in broadband services.

This should provide a good buffer and healthy cash-flows in times of weak macroeconomic conditions.

The group is generally well aligned with the growth story of Vietnam. Investments are flowing into higher-tech sectors, while the population is becoming more educated and productive. The country is also gaining in importance as an alternative production base amid the diversification of global supply chains on the back of geopolitics. It is emerging as a manufacturing powerhouse, especially in textiles, electronics, and footwear, with competitive labour costs among its key competitive advantages. As one of the country's leading conglomerates and most forward-thinking enterprises, FPT is well-placed to benefit from these trends and capitalise on emerging business opportunities, such as the development of local datacentre capabilities or semiconductor manufacturing.

When did we last engage FPT on ESG?

We last met FPT in May 2023.

What were the key areas of engagement?

We view cybersecurity, talent management and the company's broader environmental impact as some of the material risks for the company. As such, we continue to engage with management around better disclosure on data privacy, employee welfare - given the stiff competition for tech talent - as well as the setting of targets to track its progress around its carbon footprint and renewable energy mix.

What is the result of our engagement?

Although FPT has yet to set up an ESG board committee, the company has implemented ESG initiatives for its business sustainability. It has also started to embed its ESG reporting within its annual reports from 2021. The board approves ESG policies, with specific goals established and then cascaded down to the subsidiary level. It also oversees the implementation of sustainable goals.

FPT's environmental record is clean. FPT has fully complied with waste and emissions management regulations, with no related violations recorded in the 30 years since its establishment. However, FPT has not set any trackable carbon emissions reduction or renewable energy targets. That said, it is working to increase the use of renewable energy, such as solar, as well as ground water and rain water in its buildings. FPT Complex Danang, for instance, has been awarded the EDGE by the World Bank for reducing energy, water and material usage by 20%. We are also urging the company to track its carbon footprint better.

Meanwhile, cybersecurity and talent management are key areas of focus. Given that cybersecurity is a major operating risk, FPT has developed cybersecurity products such as CyRadar and FPT. EagleEye to supplement outsourced systems. However, disclosures about data privacy and cybersecurity are limited, and we continue to engage with the company on better transparency.

In talent management, we think the company has done a good job in managing employee welfare so far. FPT also maintains good diversity in its workforce. Female employees accounted for 38.1% in 2022 vs 36.1% in 2017. At the executive level, women made up 34.6%.

FPT has one of the most developed board structures in Vietnam. Its seven-member board has three independent directors and one female. Inside shareholders and major shareholders hold only 17.8% and 12.8% stake respectively. In response to shareholders' feedback, FPT changed auditor to PwC from Deloitte in 2021.

While MSCI has yet to rate FPT Corp for its ESG standards, overall we regard the company as a good ESG stewardship example in Vietnam.

When do we next meet the company and what will be on the ESG agenda?

We plan to meet FPT in the first half of 2024 to discuss its business and progress on the material ESG issues highlighted above.

Condensed Statement of Comprehensive Income (unaudited)

		Six months ended ​ ​			Six months ended ​ ​
		31 January 2024 ​ ​			31 January 2023 ​ ​
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments		-	(5,499)	(5,499)	-	9,989	9,989
Income	2	6,989	-	6,989	8,162	-	8,162
Exchange losses		-	(337)	(337)	-	(181)	(181)
Investment management fees		(377)	(1,131)	(1,508)	(376)	(1,128)	(1,504)
Administrative expenses		(714)	-	(714)	(601)	(16)	(617)
Net return before finance costs and taxation		5,898	(6,967)	(1,069)	7,185	8,664	15,849
Finance costs		(249)	(746)	(995)	(252)	(755)	(1,007)
Net return before taxation		5,649	(7,713)	(2,064)	6,933	7,909	14,842
Taxation	3	(362)	(3,118)	(3,480)	(249)	(588)	(837)
Net return after taxation		5,287	(10,831)	(5,544)	6,684	7,321	14,005
Return per share (pence)	4
Basic		3.40	(6.96)	(3.56)	4.26	4.66	8.92
Diluted		3.20	(6.28)	(3.08)	3.99	4.44	8.43
The total column of this statement represents the profit and loss account of the Company. ​ ​ ​ ​ ​ ​ ​
There is no other comprehensive income and therefore the net return after taxation is also the total comprehensive income for the period. ​ ​ ​ ​ ​ ​ ​
All revenue and capital items in the above statement derive from continuing operations. ​ ​ ​ ​ ​ ​ ​
The accompanying notes are an integral part of the condensed financial statements. ​ ​ ​ ​ ​ ​ ​

Condensed Statement of Financial Position (unaudited)

		As at	As at
		31 January 2024	31 July 2023
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss		520,358	549,672
Current assets
Debtors and prepayments		2,133	2,237
Cash and cash equivalents		17,812	5,807
		19,945	8,044
Creditors: amounts falling due within one year
Other creditors		(1,767)	(1,250)
Net current assets		18,178	6,794
Total assets less current liabilities		538,536	556,466
Non-current liabilities
2.25% Convertible Unsecured Loan Stock 2025	7	(36,276)	(36,175)
3.05% Senior Unsecured Loan Note 2035	6	(29,902)	(29,898)
Deferred tax liability on Indian capital gains		(5,857)	(4,609)
		(72,035)	(70,682)
Net assets		466,501	485,784
Capital and reserves
Called up share capital	8	10,436	10,435
Capital redemption reserve		2,062	2,062
Share premium account		60,464	60,441
Equity component of 2.25% Convertible Unsecured Loan Stock 2025	7	1,057	1,057
Capital reserve		377,145	393,238
Revenue reserve		15,337	18,551
Equity shareholders' funds		466,501	485,784
Net asset value per share (pence)	9
Basic		302.05	310.49
Diluted		301.18	308.93
The accompanying notes are an integral part of the condensed financial statements. ​ ​ ​

Condensed Statement of Changes in Equity (unaudited)

Six months ended 31 January 2024 ​ ​ ​ ​ ​ ​ ​ ​
			Capital	Share	Equity
		Share	redemption	premium	component	Capital	Revenue
		capital	reserve	account	CULS 2025	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2023		10,435	2,062	60,441	1,057	393,238	18,551	485,784
Conversion of 2.25% Convertible Unsecured Loan Stock 2025	8	1	-	23	-	-	-	24
Return after taxation		-	-	-	-	(10,831)	5,287	(5,544)
Return of Ordinary shares for treasury	8	-	-	-	-	(5,262)	-	(5,262)
Dividends paid	5	-	-	-	-	-	(8,501)	(8,501)
Balance at 31 January 2024		10,436	2,062	60,464	1,057	377,145	15,337	466,501
Six months ended 31 January 2023 ​ ​ ​ ​ ​ ​ ​ ​
			Capital	Share	Equity
		Share	redemption	premium	component	Capital	Revenue
		capital	reserve	account	CULS 2025	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2022		10,435	2,062	60,428	1,057	375,450	14,964	464,396
Conversion of 2.25% Convertible Unsecured Loan Stock 2025	8	-	-	6	-	-	-	6
Return after taxation		-	-	-	-	7,321	6,684	14,005
Dividends paid	5	-	-	-	-	-	(7,533)	(7,533)
Balance at 31 January 2023		10,435	2,062	60,434	1,057	382,771	14,115	470,874
The accompanying notes are an integral part of the condensed financial statements. ​ ​ ​ ​ ​ ​ ​ ​

Condensed Statement of Cash Flows (unaudited)

	Six months ended	Six months ended
	31 January 2024	31 January 2023
	£'000	£'000
Cash flows from operating activities
Return before finance costs and tax	(1,069)	15,849
Adjustments for:
Dividend income	(6,735)	(8,125)
Interest income	(109)	(37)
Dividends received	6,075	8,260
Interest received	121	37
Interest paid	(870)	(871)
Losses/(gains) on investments	5,499	(9,989)
Foreign exchange movements	337	181
Increase in prepayments	(2)	(8)
Decrease in other debtors	20	10
Increase/(decrease) in other creditors	74	(975)
Overseas withholding tax suffered	(2,258)	(297)
Net cash inflow from operating activities	1,083	4,035
Cash flows from investing activities
Purchase of investments	(46,982)	(28,361)
Sales of investments	71,833	24,739
Net cash inflow/(outflow) from investing activities	24,851	(3,622)
Cash flows from financing activities
Equity dividends paid	(8,501)	(7,533)
Buyback of Ordinary shares	(5,091)	-
Net cash outflow from financing activities	(13,592)	(7,533)
Increase/(decrease) in cash and cash equivalents	12,342	(7,120)
Analysis of changes in cash and short term deposits
Opening balance	5,807	9,471
Increase/(decrease) in cash and cash equivalents	12,342	(7,120)
Foreign exchange movements	(337)	(181)
Closing balance	17,812	2,170
Represented by:
Money market funds	11,432	-
Cash and short term deposits	6,380	2,170
	17,812	2,170
The accompanying notes are an integral part of the condensed financial statements. ​ ​

Notes to the Financial Statements

For the six months ended 31 January 2024

1.

Accounting policies

Basis of accounting. The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice (SORP) for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts', issued in July 2022 (The AIC SORP). They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.

2.	Income
		Six months ended	Six months ended
		31 January 2024	31 January 2023
		£'000	£'000
	Income from investments
	Overseas dividends	6,514	7,914
	UK dividend income	221	211
		6,735	8,125
	Other income
	Deposit interest	111	37
	Interest from money market funds	143	-
		254	37
	Total income	6,989	8,162

3.	Taxation
	The taxation charge for the period allocated to revenue represents withholding tax suffered on overseas dividend income. The taxation charge for the period allocated to capital represents capital gains tax arising on the sale of Indian equity investments.

4.	Return per share
		Six months ended	Six months ended
		31 January 2024	31 January 2023
		p	p
	Basic
	Revenue return	3.40	4.26
	Capital return	(6.96)	4.66
	Total return	(3.56)	8.92
	The figures above are based on the following:
		£'000	£'000
	Revenue return	5,287	6,684
	Capital return	(10,831)	7,321
	Total return	(5,544)	14,005
	Weighted average number of shares in issueA	155,633,556	156,954,206
		Six months ended	Six months ended
		31 January 2024	31 January 2023
	DilutedB	p	p
	Revenue return	3.20	3.99
	Capital return	(6.28)	4.44
	Total return	(3.08)	8.43
	The figures above are based on the following:
		£'000	£'000
	Revenue return	5,376	6,753
	Capital return	(10,563)	7,529
	Total return	(5,187)	14,282
	Number of dilutive shares	12,499,408	12,505,379
	Diluted shares in issueAB	168,132,964	169,459,585
	A Calculated excluding shares held in treasury.
	B The calculation of the diluted total, revenue and capital returns per Ordinary share is carried out in accordance with IAS 33, "Earnings per Share". For the purpose of calculating total, revenue and capital returns per Ordinary share, the number of Ordinary shares used is the weighted average number used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all 2.25% Convertible Unsecured Loan Stock 2025 (CULS). The calculations indicate that the exercise of CULS would result in an increase in the weighted average number of Ordinary shares of 12,499,408 (31 January 2023  - 12,505,379) to 168,132,964 (31 January 2023 - 169,459,585) Ordinary shares. ​ ​
	For the six months ended 31 January 2024 the assumed conversion for potential Ordinary shares was dilutive to the revenue return per Ordinary share (31 January 2023 - dilutive) and non-dilutive to the capital return per Ordinary share (31 January 2023 - dilutive). Where dilution occurs, the net returns are adjusted for interest charges and issue expenses relating to the CULS (31 January 2024 - £357,000; 31 January 2023 - £277,000). Total earnings for the period are tested for dilution. Once dilution has been determined individual revenue and capital earnings are adjusted. ​ ​

5.	Dividends
		Six months ended	Six months ended
		31 January 2024	31 January 2023
		£'000	£'000
	Special dividend for 2023 - 2.25p (2022 - 1.6p)	3,498	2,511
	Interim dividend for 2023 - 1.61p (2022 - 1.6p)	2,515	2,511
	Interim dividend for 2024 - 1.6p (2023 - 1.6p)	2,488	2,511
		8,501	7,533

6.	Senior Unsecured Loan Note
	On 1 December 2020 the Company issued a £30,000,000 15 year Loan Note at a fixed rate of 3.05%. Interest is payable in half yearly instalments in June and December and the Loan Note is due to be redeemed at par on 1 December 2035. The issue costs of £118,000 will be amortised over the life of the loan note. The Company has complied with the Note Purchase Agreement that the ratio of total borrowings to adjusted net assets will not exceed 0.20 to 1.00, that the ratio of total borrowings to adjusted net liquid assets will not exceed 0.60 to 1.00, that net tangible assets will not be less than £225,000,000 and that the minimum number of listed assets will not be less than 40.
	The fair value of the Senior Unsecured Loan Note as at 31 January 2024 was £27,070,000, the value being based on a comparable quoted debt security.

7.	2.25% Convertible Unsecured Loan Stock 2025 ("CULS") ​ ​ ​
			Liability	Equity
		Nominal	component	component
		£'000	£'000	£'000
	Balance at beginning of period	36,629	36,175	1,057
	Conversion of CULS into Ordinary shares	(24)	(24)	-
	Notional interest on CULS	-	77	-
	Amortisation of issue expenses	-	48	-
	Balance at end of period	36,605	36,276	1,057
	The 2.25% Convertible Unsecured Loan Stock 2025 ("CULS") can be converted at the election of holders into Ordinary shares during the months of May and November each year throughout its life until 31 May 2025 at a rate of 1 Ordinary share for every 293.0p nominal of CULS. Interest is paid on the CULS on 31 May and 30 November each year.  ​ ​ ​
	In the event of a winding-up of the Company the rights and claims of the Trustee and CULS holders would be subordinate to the claims of all creditors in respect of the Company's secured and unsecured borrowings, under the terms of the Trust Deed. ​ ​ ​
	During the period ended 31 January 2024 the holders of £24,012 of 2.25% CULS 2025 exercised their right to convert their holdings into Ordinary shares. Following the receipt of the exercise instructions, the Company converted £24,012 (31 July 2023 - £12,753) nominal amount of CULS into 8,191 (31 July 2023 - 4,347) Ordinary shares. ​ ​ ​
	As at 31 January 2024, there was £36,605,647 (31 July 2023 - £36,629,659) nominal amount of CULS in issue. ​ ​ ​

8.	Called-up share capital
	During the six months ended 31 January 2024 2,022,500 Ordinary shares were bought back to be held in treasury at a total cost of £5,262,000 (31 January 2023 - £nil). During the six months ended 31 January 2024 an additional 8,191 (31 July 2023 - 4,347) Ordinary shares were issued after £24,012 nominal amount of 2.25% Convertible Unsecured Loan Stock 2025 were converted at 293.0p each (31 July 2023 - £12,753). The total consideration received was £nil (31 July 2023 - £nil). At the end of the period there were 208,710,759 (31 July 2023 - 208,702,568) Ordinary shares in issue, of which 54,267,090 (31 July 2023 - 52,244,590) were held in treasury.
	Subsequent to the period end, 495,000 Ordinary shares have been bought back to be held in treasury at a cost of £1,297,000.

9.	Net asset value per share
		As at	As at
		31 January 2024	31 July 2023
	Basic
	Net assets attributable	£466,501,000	£485,784,000
	Number of shares in issueA	154,443,669	156,457,978
	Net asset value per share	302.05p	310.49p
	DilutedB
	Net assets attributable	£502,776,000	£521,959,000
	Number of shares	166,937,064	168,959,568
	Net asset value per share	301.18p	308.93p
	A Excludes shares in issue held in treasury.
	B The diluted net asset value per Ordinary share has been calculated on the assumption that £36,605,647  (31 July 2023 - £36,629,659)  2.25% Convertible Unsecured Loan Stock 2025 ("CULS") are converted at 293.0p per share, giving a total of 166,937,064 (31 July 2023 - 168,959,568) Ordinary shares. Where dilution occurs, the net assets are adjusted for items relating to the CULS. ​ ​
	Net asset value per share - debt converted. In accordance with the Company's understanding of the current methodology adopted by the AIC, convertible financial instruments are deemed to be 'in the money' if the cum income net asset value ("NAV") exceeds the conversion price of 293.0p per share. In such circumstances a net asset value is produced and disclosed assuming the convertible debt is fully converted. At 31 January 2024 the cum income NAV was 302.07p and thus the CULS were  'in the money' (31 July 2023 - same). ​ ​

10.	Transaction costs
	During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows: ​ ​
		Six months ended	Six months ended
		31 January 2024	31 January 2023
		£'000	£'000
	Purchases	49	49
	Sales	131	61
		180	110

11.	Analysis of changes in net debt ​ ​ ​ ​ ​
		At				At
		31 July	Currency	Cash	Non-cash	31 January
		2023	differences	flows	movements	2024
		£'000	£'000	£'000	£'000	£'000
	Cash and cash equivalents	5,807	(337)	12,342	-	17,812
	Debt due after more than one year	(70,682)	-	-	(1,353)	(72,035)
		(64,875)	(337)	12,342	(1,353)	(54,223)
		At				At
		31 July	Currency	Cash	Non-cash	31 January
		2022	differences	flows	movements	2023
		£'000	£'000	£'000	£'000	£'000
	Cash and cash equivalents	9,471	(181)	(7,120)	-	2,170
	Debt due within one year	(68,516)	-	-	(662)	(69,178)
		(59,045)	(181)	(7,120)	(662)	(67,008)
	A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis. ​ ​ ​ ​ ​

12.	Fair value hierarchy
	FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications: ​ ​ ​ ​
	Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date. ​ ​ ​ ​
	Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly. ​ ​ ​ ​
	Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability. ​ ​ ​ ​
	The financial assets measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows: ​ ​ ​ ​
		Level 1			Level 2	Level 3		Total
	As at 31 January 2024	£'000			£'000	£'000		£'000
	Financial assets at fair value through profit or loss
	Quoted equities	505,249			-	12,209		517,458
	Quoted preference shares	-			-	2,677		2,677
	Quoted warrants	-			223	-		223
	Net fair value	505,249			223	14,886		520,358
		Level 1			Level 2	Level 3		Total
	As at 31 July 2023	£'000			£'000	£'000		£'000
	Financial assets at fair value through profit or loss
	Quoted equities	536,515			-	9,958		546,473
	Quoted preference shares	-			-	2,835		2,835
	Quoted warrants	-			247	117		364
	Net fair value	536,515			247	12,910		549,672
	Quoted equities. The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges. ​ ​ ​ ​
	Quoted preference shares and quoted warrants. The fair value of the Company's investments in quoted preference shares and quoted warrants has been determined by reference to their quoted bid prices at the reporting date. Investments categorised as Level 2 are not considered to trade as actively as Level 1 assets. ​ ​ ​ ​
				Six months ended			Year ended
				31 January 2024			31 July 2023
	Level 3 Financial assets at fair value through profit or loss			£'000			£'000
	Opening fair value			12,910			9,664
	Transfer from level 2			-			2,952
	Total gains or losses included in losses on investments in the Statement of Comprehensive Income:
	- assets held at the end of the year			1,976			294
	Closing balance			14,886			12,910
	At the period end, the Company's investee, CEBU Holdings was awaiting final regulatory approval to merge with another company, Ayala Land, and new shares are expected to be issued in Ayala Land in due course to satisfy the transaction by a share conversion. The valuation methodology employed is based on the underlying quoted price of Ayala Land and the implied conversion ratio providing a value of £12,209,000 (31 July 2023 - £9,958,000). Subsequent to the period, final regulatory approval was received and the Company's holding in CEBU merged into Ayala Land, which is classified as a Level 1 asset. ​ ​ ​ ​

13.	Related party disclosures
	Transactions with the Manager.  The investment management fee is payable monthly in arrears based on the market capitalisation of the Company multiplied by the number of shares in issue (less those held in treasury) at the month end. The annual management fee has been charged at 0.85% for the first £250,000,000, 0.60% for the next £500,000,000 and 0.50% over £750,000,000 . During the period £1,508,000 (31 January 2023 - £1,504,000) of investment management fees were charged, with a balance of £510,000 (31 January 2023 - £990,000) being payable to aFML at the period end. Investment management fees are charged 25% to revenue and 75% to capital.
	The Company also has a management agreement with aFML for the provision of both administration and promotional activities services. The administration fee is payable quarterly in advance and is adjusted annually to reflect the movement in the Retail Price Index. It is based on a current annual amount of £119,000 (31 January 2023 - £105,000). During the period £60,000 (31 January 2023 - £52,000) of fees were charged, with a balance of £60,000 (31 January 2023 - £52,000) payable to aFML at the period end. The promotional activities costs are based on a current annual amount of £219,000 (31 January 2023 - £219,000), payable quarterly in arrears. During the period £110,000 (31 January 2023 - £128,000) of fees were charged, with a balance of £128,000 (31 January 2023 - £128,000) being payable to aFML at the period end.

14.	Segmental information
	The Company is engaged in a single segment of business, which is to invest in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

15.

Half-Yearly Report

The financial information in this Report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 July 2023 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The condensed interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements.

16.	This Half-Yearly Report was approved by the Board and authorised for issue on 27 March 2024.

Alternative Performance Measures ("APMs")

Alternative Performance Measures ("APMs") are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.  ​ ​ ​
Discount to net asset value per Ordinary share ​ ​ ​
The difference between the share price and the net asset value per Ordinary share expressed as a percentage of the net asset value per Ordinary share. This has been presented on a diluted basis as the Convertible Unsecured Loan Stock ("CULS") is "in the money". ​ ​ ​
		31 January 2024	31 July 2023
NAV per Ordinary share (p)	a	301.18	308.93
Share price (p)	b	258.00	264.00
Discount	(a-b)/a	14.3%	14.5%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents divided by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due from and to brokers at the period end as well as cash and short term deposits. ​ ​ ​
		31 January 2024	31 July 2023
Borrowings (£'000)	a	66,178	66,073
Cash and cash equivalents (£'000)	b	17,812	5,807
Amounts due to brokers (£'000)	c	445	-
Amounts due from brokers (£'000)	d	583	1,343
Shareholders' funds (£'000)	e	466,501	485,784
Net gearing	(a-b+c-d)/e	10.3%	12.1%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average published daily net asset values with debt at fair value throughout the year. The ratio as at 31 January 2024 is based on forecast ongoing charges for the year ending 31 July 2024. ​ ​ ​
		31 January 2024	31 July 2023
Investment management fees (£'000)		3,016	3,012
Administrative expenses (£'000)		1,324	1,328
Less: non-recurring charges (£'000)A		(23)	(67)
Ongoing charges (£'000)		4,317	4,273
Average net assets (£'000)		472,964	462,127
Ongoing charges ratio		0.91%	0.92%
A Professional fees comprising corporate and legal fees considered unlikely to recur. ​ ​ ​
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes finance costs and transaction charges. ​ ​ ​
Total return
NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV and share price total returns are monitored against open-ended and closed-ended competitors, and the Reference Index, respectively.  ​ ​ ​
			Share
Six months ended 31 January 2024		NAV	Price
Opening at 1 August 2023	a	308.93p	264.00p
Closing at 31 January 2024	b	301.18p	258.00p
Price movements	c=(b/a)-1	-2.5%	-2.3%
Dividend reinvestmentA	d	1.8%	2.1%
Total return	c+d	-0.7%	-0.2%
			Share
Year ended 31 July 2023		NAV	Price
Opening at 1 August 2022	a	295.25p	254.00p
Closing at 31 July 2023	b	308.93p	264.00p
Price movements	c=(b/a)-1	4.6%	3.9%
Dividend reinvestmentA	d	3.0%	3.4%
Total return	c+d	+7.6%	+7.3%
NAV total return from inception (19 October 1995) to		31 January 2024	31 July 2023
Opening NAV	a	20.00p	20.00p
Closing NAV	b	301.18p	308.93p
Price movements	c=(b/a)-1	1405.9%	1444.7%
Dividend reinvestmentA	d	872.8%	838.9%
Total return	c+d	+2278.7%	+2283.6%
A NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.  ​ ​ ​

Copies of the Company's Half Yearly Report for the six months ended 31 January 2024 will be posted to shareholders in April 2024 and will be available thereafter on the Company's website: asia-focus.co.uk *.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements.  Investors may not get back the amount they originally invested.

* Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

abrdn Holdings Limited

Secretaries

27 March 2024

 

END