Annual Financial Report
ABERDEEN NEW DAWN INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 APRIL 2018
Legal Entity Identifier (LEI): 5493002K00AHWEME3J36
Investment Objective
To provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.
Benchmark
MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted).
Management
The Company's Manager is Aberdeen Fund Managers Limited ("AIFML", the "AIFM" or the "Manager") which has delegated the investment management of the Company to Aberdeen Asset Management Asia Limited ("AAM Asia" or the "Investment Manager"). Both companies are wholly owned subsidiaries of Standard Life Aberdeen plc, which was formed by the merger of Aberdeen Asset Management PLC and Standard Life plc on 14 August 2017. Aberdeen Standard Investments is a brand of the investment businesses of the merged entity.
Website
Up to date information can be found on the Company's website: www.newdawn-trust.co.uk
COMPANY OVERVIEW - FINANCIAL HIGHLIGHTS
|
Share price total returnAB |
|
|
Net asset value total returnAB |
|
|
2018 |
+13.3% |
|
2018 |
+12.9% |
|
2017 |
+38.8% |
|
2017 |
+39.0% |
|
|
|
|
|
|
|
Index total returnB |
|
|
Ongoing chargesA |
|
|
2018 |
+13.0% |
|
2018 |
0.8% |
|
2017 |
+36.4% |
|
2017 |
0.9% |
|
|
|
|
|
|
|
Revenue return per share |
|
|
Dividend per Ordinary share |
|
|
2018 |
4.47p |
|
2018 |
4.30p |
|
2017 |
4.05p |
|
2017 |
4.00p |
|
A Alternative Performance Measure |
||||
|
B Total return represents capital return plus dividends reinvested |
||||
For further information, please contact:
Andrew Leigh
Aberdeen Asset Managers Limited 0207 463 6312
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. Investors may not get back the amount they originally invested.
COMPANY OVERVIEW - CHAIRMAN'S STATEMENT
Results and Dividend
I am pleased to report that your Company delivered a robust performance during a challenging period for Asian equity markets, with the net asset value ("NAV") rising by 12.9% on a total return basis which was broadly in line with the total return of 13.0% from the MSCI All Countries Asia Pacific ex Japan Index. The share price appreciation for the year slightly exceeded this, rising by 13.3%. This performance was despite heightened market volatility in the second half of the year, driven by concerns over a faster than expected rise in interest rates, the impact of a stronger US Dollar on emerging markets, an escalation of trade disputes and a shifting sentiment in the technology sector. The share price at the end of the period was 236p, representing a discount of 13.4% to the NAV per share of 272.4p.
The Board is pleased to announce a final dividend of 3.3p per share (2017: 3.0p), making a total dividend for the year of 4.3p per share (2017: 4.0p), and an increase of 7.5% on last year. If approved by Shareholders at the Annual General Meeting, the final dividend will be paid on 14 September 2018 to Shareholders on the register on 17 August 2018.
Overview
Asian equities performed well over the reporting period notwithstanding a volatile second half of the year. Improving corporate earnings led to positive sentiment, while higher prices of commodities benefited exporters of raw materials in the region. The positive returns that Asian equity markets achieved in the latter half of 2017 were curtailed in 2018 owing to a number of issues. One of these was the rise in US interest rates as resilient economic data prompted the new US Federal Reserve chief, Jay Powell, to tighten its monetary policy. In the UK, the Bank of England raised rates for the first time in over a decade. One result of this was an appreciation in Sterling that trimmed the returns of foreign currency-denominated assets such as those held by your Company.
Higher US interest rates also fueled the prospect of a rising US Dollar and renewed concerns about capital outflows from emerging markets. Meanwhile, relations between China and the US soured, as both engaged in an escalating fight over trade. A number of Chinese technology companies were targeted by the US, blunting the share price appreciation achieved by the sector earlier in the period, while disappointing results and concerns over margin pressures further pared returns.
In spite of this, your Company's portfolio performed well. A key reason was the substantial contribution from the bank holdings, particularly in the second half of the period. These included the Singapore-based lenders as well as HSBC, all of which benefited from the synchronised global economic expansion, credit-cycle recovery and higher net interest margins resulting from a rising interest rate environment. This combination resulted in strong share price returns for the banks. The lack of exposure to Australian banks proved advantageous, as they were affected by intense regulatory scrutiny following widespread misconduct in the sector.
The Company's relatively light exposure to technology stocks had a negative impact on performance, given the sector's strong rally over the year. However, as previously mentioned, the sell-off in this sector towards the end of the year mitigated the impact and also provided your Manager with opportunities to increase exposure to its technology holdings.
It is worth mentioning a number of recent changes to the portfolio. Your Manager has been responding to the rapidly evolving markets in Asia, seeking opportunities in challenging sectors and regions that had in the past offered few quality investment prospects. During the year, your Manager increased the portfolio's exposure to its long-time holdings in Taiwan Semiconductor Manufacturing Company and Korea's Samsung Electronics, given how well these companies are capitalising on positive industry changes that are supportive of memory chips and components. Meanwhile, the introduction of Chinese internet giant Tencent Holdings reflects your Manager's growing confidence in its business and corporate governance. Its ecosystem, encompassing not only its social networking platforms but also gaming, financial services and retail should provide significant opportunities for future profits in one of the world's largest consumer markets.
The introduction of Tencent underscores the Company's growing exposure to China, which reflects your Manager's increasing comfort with corporate governance standards among mainland companies. Your Manager also raised exposure to the Aberdeen Global - China A-Share Fund, which performed well over the period, taking advantage of the rising domestic consumption and related services in the mainland. In addition, your Manager has been exploring high-growth markets such as Vietnam, and has identified a number of well-run companies with good growth prospects as potential opportunities.
The Investment Manager's Review gives a detailed insight into performance and portfolio changes.
Gearing
The Company has a £35 million multi-currency loan facility, of which a Sterling equivalent of £28.1 million was drawn down at the year end (2017: £29.5 million), mostly denominated in US and Hong Kong Dollars. Gearing (net of cash) at the end of the year was 7.6% (2017: 9.7%). The facility is due to mature in October 2019 and the Board has begun to consider the options for renewal of this funding.
Full details of the Company's loans are provided in note 12 to the financial statements.
Share Buybacks and Treasury Shares
In line with other investment trusts, the Company has bought back shares with the aim of providing a degree of liquidity to the market at times when the discount to the NAV has widened in normal market conditions. It is the view of the Board that this policy is in the interests of all Shareholders and we review its operation at each Board meeting. The Board will seek to renew the Company's share buyback authority at the Annual General Meeting.
During the year, the Company bought back 2.4 million shares, representing 2.1% of the issued share capital. These shares were bought back and held in treasury. The Company's stated policy on treasury shares is that these can only be re-issued to the market at a premium to the NAV per share at that time. Shares held in treasury do not qualify to receive dividends. Ordinary shares can be re-issued out of treasury more efficiently than new Ordinary shares can be issued. The Board therefore believes that it is appropriate for shares bought back to be held in treasury.
In the Annual Report last year I reported that the Board had introduced a policy that, at the end of any financial year, in the event that the number of treasury shares represents more than 10% of the Company's issued share capital (excluding treasury shares), the Company will cancel a proportion of its treasury shares such that the remaining balance will equal 7.5% of the issued share capital. The Board believes that, given the annual 10% share issuance authority, this is a prudent way of managing the Company's capital base. On 29 April 2018, the number of shares held in treasury represented 10.9% of the Company's issued share capital. Accordingly, the Company cancelled 3.9 million treasury shares leaving a year-end balance of 8.6 million treasury shares representing 7.5% of the issued share capital (excluding treasury shares).
Annual General Meeting
The Annual General Meeting will be held on Wednesday 5 September 2018 at 12 noon at the offices of Aberdeen Standard Investments, Bow Bells House, 1 Bread Street, London EC4M 9HH.
Appointment of New Auditor
The Company undertook an audit tender process during the year and, following consideration of the tenders received, the Board decided to appoint Ernst & Young LLP as the Company's auditor for the year ending 30 April 2019. KPMG LLP will therefore not be seeking re-appointment at the Annual General Meeting and are expected to issue a statutory statement pursuant to Section 519 of the Companies Act 2006 which will be included separately with the Annual Report. A resolution to appoint Ernst & Young LLP as the Company's auditor will be proposed at the Annual General Meeting.
Outlook
Having gone through a period of rising equity markets with low volatility, there are a number of reasons for adopting a cautious outlook for markets in the year ahead.
However, the fundamental reasons for investing in Asia remain strong. Intra-regional trade continues to develop, supported by expanding populations and higher disposable incomes. This should help offset the impact on the region from any deterioration in demand for its exports. In India there are encouraging signs of a recovery in consumer demand following the impact of demonetisation and the goods and services tax rollout. More importantly, the government has shown a willingness to take hard decisions that will benefit the economy over the longer term. In China, recent data suggests the authorities are managing the fine balance between maintaining growth and reducing financial risk.
Overall, corporate earnings in Asia remain strong and this should be positive for your Company's outlook. The underlying holdings are fundamentally sound, with robust businesses that are run by prudent management and backed by healthy balance sheets, thereby enabling them to continue to capitalise on Asia's longer-term growth potential.
David Shearer
Chairman
27 June 2018
STRATEGIC REPORT - OVERVIEW OF STRATEGY
Business Model
The business of the Company is that of an investment company which seeks to qualify as an investment trust for tax purposes. The Directors do not envisage any change in this activity in the foreseeable future.
Investment Objective
The Company's investment objective is to provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.
Investment Policy
The Company's assets are invested in a diversified portfolio of securities in quoted companies spread across a range of industries and economies in the Asia Pacific region excluding Japan. Investments may also be made through collective investment schemes and in companies traded on stock markets outside the Asia Pacific region provided that over 75% of their consolidated revenue is earned from trading in the Asia Pacific region or they hold more than 75% of their consolidated net assets in the Asia Pacific region.
Gearing
The Board is responsible for determining the gearing strategy for the Company. Gearing is used selectively to leverage the Company's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so. At the year end the Company had net gearing of 7.6% which compares with a current maximum limit set by the Board of 25%. Borrowings are short to medium term and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy.
Investment in Other Listed Investment Companies
In addition, it is the investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including investment trusts). As at 30 April 2018, 2.5% of the Company's gross assets were invested in listed investment companies.
Delivering the Investment Policy
The Directors are responsible for determining the Company's investment objective and investment policy. Day-to-day management of the Company's assets has been delegated, via the AIFM, to the Investment Manager.
Investment Process
The Investment Manager invests in a diversified range of companies throughout the Asia Pacific region in accordance with the investment policy. The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers. Stock selection is the major source of added value. No stock is bought without the fund managers having first met management. The Investment Manager estimates a company's worth in two stages: quality then price. Quality is defined by reference to management, business focus, the balance sheet and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Top-down investment factors are secondary in the Investment Manager's portfolio construction, with diversification rather than formal controls guiding stock and sector weights. Little attention is paid to market capitalisation.
Benchmark
The Company compares its performance to the MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted).
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determining the progress of the Company in pursuing its investment policy. The main KPIs, which are considered at each Board meeting, are shown in the following table:
|
Performance of net asset value ("NAV") |
The Board considers the Company's NAV total return figures to be the best indicator of performance over time. |
|
Performance against benchmark index |
The Board measures performance against the benchmark index - the currency-adjusted MSCI All Countries Asia Pacific ex Japan Index. |
|
Revenue return per Ordinary share |
The Board monitors the Company's net revenue return. |
|
Dividends per share |
The Board monitors the Company's annual dividends per Ordinary share. |
|
Share price performance |
The Board monitors the performance of the Company's share price on a total return basis. |
|
Discount/premium to NAV |
The discount/premium of the share price relative to the NAV per share is closely monitored by the Board. |
|
Ongoing charges |
The Board regularly monitors the Company's operating costs. |
Principal Risks and Uncertainties
The Company's principal risks and uncertainties form part of this Overview of Strategy and are included below.
Promoting the Company
The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Standard Life Aberdeen Group on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by the Standard Life Aberdeen Group. The Manager's promotional and investor relations teams report to the Board giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make up of that register.
The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key and therefore the Company also supports the Manager's investor relations programme which involves regional roadshows, promotional and public relations campaigns together with certain Company-specific initiatives.
Board Diversity
The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins or disability in considering the appointment of its Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and the Board does not therefore consider it appropriate to set measurable objectives in relation to its diversity.
At 30 April 2018, there were three male Directors and two female Directors.
Environmental, Social and Human Rights Issues
The Company has no employees as the Board has delegated the day-to-day management and administrative functions to the Manager. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is set out below.
Socially Responsible Investment Policy
The Directors, through the Manager, encourage companies in which investments are made to adhere to best practice in the area of corporate governance and socially responsible investing. They believe that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies in both areas.
The Manager's ultimate objective, however, is to deliver superior investment returns for its clients. Accordingly, whilst the Manager will seek to favour companies which pursue best practice in these areas, this must not be to the detriment of the overall return on the investment portfolio.
UK Stewardship Code and Proxy Voting as an Institutional Shareholder
Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager.
The full text of the Company's response to the Stewardship Code may be found on its website.
Modern Slavery Act
Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.
Duration
The Company does not have a fixed life. However, under its Articles of Association, if, in the 90 days preceding the Company's financial year end (30 April), the Ordinary shares have been trading, on average, at a discount in excess of 15% to the underlying NAV (excluding current year income, and with borrowings stated at market value) over the same period, notice will be given of an ordinary resolution to be proposed at the following Annual General Meeting to approve the continuation of the Company. If the resolution for the continuation of the Company is not passed at that Annual General Meeting or any adjournment thereof, the Directors will convene a general meeting to be held not more than three months after the Annual General Meeting at which a special resolution for the winding-up of the Company will be proposed. In the 90 days to 30 April 2018 the average discount to underlying NAV (excluding current year income, and with borrowings stated at market value) of the Ordinary shares was 12.1% and therefore no continuation resolution will be put to the Company's shareholders at this year's Annual General Meeting.
Viability Statement
The Board considers the Company, with no fixed life, to be a long term investment vehicle and it intends to maintain the current mandate. For the purposes of this viability statement, the Board has decided that three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.
In assessing the viability of the Company over the review period, the Directors have focused upon the following factors:
- The principal risks and uncertainties detailed below in the section entitled "Strategic Report - Principal Risks and Uncertainties" and the steps taken to mitigate these risks.
- The role of the Audit and Risk Committee in reviewing and monitoring the Company's internal control and risk management systems.
- The ongoing relevance of the Company's investment objective.
- The liquidity of the Company's portfolio. All of the Company's investments are in quoted equities actively traded on recognised stock exchanges.
- The closed-ended nature of the Company which means that it is not subject to redemptions.
- The use of the Company's share buy back and share issuance policies to help address any imbalance of supply and demand for the Company's shares.
- The current and maximum levels of gearing, compliance with loan covenants and level of headroom within the financial covenants (see note 12 to the financial statements for details of loan covenants).
- The ability of the Company to repay or refinance its £35 million loan facility on, or before, its maturity in October 2019.
- The potential requirement of the Board to propose a resolution to approve the continuation of the Company at future Annual General Meetings. As explained above, this is dependent upon the level of discount in the 90 days preceding the Company's financial year end and there is no requirement for such a resolution to be proposed at the forthcoming Annual General Meeting.
In making its assessment, the Board has considered that there are other matters that could have an impact on the Company's prospects or viability in the future, including a large economic shock, significant stock market volatility, and changes in regulation or investor sentiment.
Taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report.
Outlook
The Board's view on the general outlook for the Company can be found in the Chairman's Statement whilst the Investment Manager's views on the outlook for the portfolio are included in its Statement contained below under the heading "Strategic Report - Investment Manager's Review".
On behalf of the Board
David Shearer
Chairman
27 June 2018
STRATEGIC REPORT - RESULTS
Financial Highlights (capital return)
|
|
30 April 2018 |
30 April 2017 |
% change |
|
Total assets |
£339,874,000 |
£315,715,000 |
+7.7 |
|
Total equity shareholders' funds (net assets) |
£311,816,000 |
£286,191,000 |
+9.0 |
|
Market capitalisation |
£270,135,000 |
£247,748,000 |
|
|
|
|
|
|
|
Net asset value per share (including current year income) |
272.41p |
244.90p |
+11.2 |
|
Net asset value per share (excluding current year income)A |
268.90p |
241.79p |
+11.2 |
|
Share price (mid market) |
236.00p |
212.00p |
+11.3 |
|
Discount to net asset value (including current year income) |
13.4% |
13.4% |
|
|
Discount to net asset value (excluding current year income)A |
12.2% |
12.3% |
|
|
|
|
|
|
|
MSCI AC Asia Pacific ex Japan Index (currency adjusted, capital gains basis) |
773.05 |
703.67 |
+9.9 |
|
|
|
|
|
|
Net gearingB |
7.55% |
9.72% |
|
|
|
|
|
|
|
Dividend and earnings |
|
|
|
|
Revenue return per shareC |
4.47p |
4.05p |
+10.4 |
|
Dividends per shareD |
4.30p |
4.00p |
+7.5 |
|
Dividend cover |
1.04 |
1.01 |
|
|
Revenue reservesE |
£13,118,000 |
£12,582,000 |
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
Ongoing charges ratioF |
0.84% |
0.91% |
|
|
A Based on capital only NAV |
|||
|
B Calculated in accordance with AIC guidance "Gearing Disclosures post RDR". |
|||
|
C Measures the total earnings for the year divided by the weighted average number of Ordinary shares in issue (see Statement of Comprehensive Income). |
|||
|
D The figures for dividends reflect the years in which they were earned (see note 8) and assume approval of the final dividend. |
|||
|
E Prior to payment of proposed final dividend. |
|||
|
F Considered to be an Alternative Performance Measure. Ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of the management fee and administrative expenses divided by the average fair value cum income net asset value throughout the year. |
|||
STRATEGIC REPORT - PERFORMANCE
Performance (total return)
|
|
1 year return |
3 year return |
5 year return |
|
|
% |
% |
% |
|
Net asset valueA |
+12.9 |
+32.7 |
+41.5 |
|
Share priceA |
+13.3 |
+33.4 |
+31.2 |
|
MSCI AC Asia Pacific ex Japan Index (currency adjusted) |
+13.0 |
+35.4 |
+54.9 |
|
A Alternative Performance Measure |
|
|
|
Dividends
|
|
Rate |
xd date |
Record date |
Payment date |
|
Interim 2018 |
1.00p |
4 January 2018 |
5 January 2018 |
26 January 2018 |
|
Proposed final 2018 |
3.30p |
16 August 2018 |
17 August 2018 |
14 September 2018 |
|
|
_______ |
|
|
|
|
Total 2018 |
4.30p |
|
|
|
|
|
_______ |
|
|
|
|
Interim 2017 |
1.00p |
5 January 2017 |
6 January 2017 |
27 January 2017 |
|
Final 2017 |
3.00p |
3 August 2017 |
4 August 2017 |
1 September 2017 |
|
|
_______ |
|
|
|
|
Total 2017 |
4.00p |
|
|
|
|
|
_______ |
|
|
|
Ten Year Financial Record
|
Year to 30 April |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
|
Total revenue (£'000) |
4,734 |
4,372 |
5,752 |
6,799 |
6,562 |
6,819 |
7,412 |
7,004 |
6,922 |
7,481 |
|
Per share (p)A |
|
|
|
|
|
|
|
|
|
|
|
Net revenue return |
2.10 |
2.37 |
3.17 |
3.97 |
3.89 |
3.79 |
4.18 |
4.06 |
4.05 |
4.47 |
|
Total return |
(30.64) |
66.34 |
26.44 |
(2.72) |
33.49 |
(18.68) |
31.74 |
(34.72) |
68.66 |
30.97 |
|
Net dividends paid/proposed |
1.60 |
2.00 |
2.50 |
3.30 |
3.40 |
3.60 |
3.80 |
3.90 |
4.00 |
4.30 |
|
Net asset value |
97.42 |
162.16 |
186.60 |
181.38 |
210.57 |
188.49 |
216.67 |
179.43 |
244.90 |
272.41 |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
Shareholders' funds (£'000) |
121,339 |
201,969 |
232,406 |
225,908 |
262,263 |
234,762 |
269,398 |
216,243 |
286,191 |
311,816 |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
|
|
|
|
|
|
|
|
|
|
|
|
A Figures for 2009-2013 have been restated to reflect the 5:1 sub-division on 3 September 2013. |
||||||||||
STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW
Portfolio Review
The Company's net asset value total return for the year was 12.9%, compared to a total return of 13.0% from the MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted). Overall, stock selection had a positive impact on performance, specifically in Australia, Singapore, and the financial sector, although this was partly offset by the portfolio's underweight position in the Chinese technology companies.
Our conviction that banks would benefit from stronger economic growth and higher interest rates proved well founded, with a number of the portfolio's larger positons providing significant returns. Notably, Singapore-headquartered banks such as OCBC, DBS and UOB performed well in response to better-than-expected results due to higher net interest and fee income as well as improving asset quality. Indonesia's Bank Central Asia as well as Public Bank and CIMB in Malaysia also outperformed. The position in CIMB has since been sold as the company had fallen short of its ambition to become a Southeast Asian lender which had formed the basis of our investment thesis. In contrast, share prices of Australian banks fell in response to greater regulatory scrutiny and the Australian Government's Royal Commission inquiry into misconduct in the Banking, Superannuation and Financial Services industry. As a result, the portfolio's relative performance was enhanced by not holding Australian banks.
Conversely, the portfolio's relatively light exposure to the Chinese internet sector hurt performance as shares of these firms ended the review period higher. This was despite a pull-back in the sector in early 2018, as concerns grew over margin pressures and falling returns. Investors also worried about tighter regulatory scrutiny over the dominant US internet companies which weighed on their Asian counterparts. We took advantage of the interim volatility to build on the position in Chinese technology firm Tencent that we had initiated in late 2017. This reflects our growing conviction in its sustainable earnings growth, as well as comfort with its corporate structure and fair treatment of minority shareholders.
Shares of semiconductor firms also corrected in early 2018, as a slowdown in global demand for a number of end products, including smartphones, prompted investors to re-evaluate the outlook for chipmakers' profits. We took advantage of the correction to add to our core holdings in this sector taking the view that the long term demand remains healthy, buoyed by the rise of new technologies and applications. Core holding Samsung Electronics achieved record profits and continued to invest into its core businesses whilst also returning more capital to shareholders. Taiwan Semiconductor Manufacturing Company ("TSMC"), meanwhile, benefited from broadening its revenue base by increasing its exposure to the high-performance computing segment. Elsewhere in the sector, Singapore's Venture Corporation continued to exceed investors' expectations with stellar results, making it a key contributor to the portfolio's performance over the period. We also took the decision to initiate a position in LG Chem. The Korean chemical company commands a leading position in the electric-vehicle battery market and provides exposure to the growth momentum in the electric-vehicle sector. It has a unique business mix and a valuation that is attractive relative to its growth prospects.
Beyond the technology sector, we continued to review opportunities in markets that traditionally have been more challenging. For example, we increased the portfolio's exposure to China, which had a positive impact on performance in the second half of the period, through the Aberdeen Global - China A Share Fund. This holding provides a diversified exposure to a range of mainland companies which meet our investment criteria. In addition, we invested in a number of new companies with businesses in China. These are attractively valued, quality-focused companies which reflect the mainland's maturing financial markets as well as greater focus on corporate governance. We introduced China Resources Land, a Hong Kong-listed mainland developer with significant exposure to the mainland property market. We also initiated a position in Ping An Insurance, one of China's leading life-insurance franchises, with a progressive management that has been adopting and investing in the latest technologies.
We have also considered investment opportunities in frontier markets given the availability of profitable, well-managed companies that are trading at attractive valuations. We purchased a position in Yoma Strategic, a Singapore-listed small-cap company with exposure to Myanmar. This company has interests in the real-estate, consumer (including the KFC franchise for Myanmar) as well as automotive and heavy equipment sectors. Yoma recently raised capital to fund investments in each of its core businesses which should support earnings growth over the longer term. Vietnam Dairy Products also performed well, supported by robust sales of its range of milk products. Conversely, the position in Sri Lankan conglomerate Aitken Spence was sold as management failed to address the increased competition in its domestic and international markets. The Company continues to retain exposure to Sri Lanka through John Keells, whose fundamentals remain robust.
There was a reduction in the portfolio's Hong Kong holdings with the sale of MTR Corporation, Hong Kong's subway operator, as valuations reflected the medium term upside from its existing business. The retailer Dairy Farm International ("DFI") was also sold as expectations of margin improvement and a completion of a turnaround in its business segments were fully reflected in its share price. The Company has retained an indirect exposure to DFI through its holding in Jardine Strategic.
Portfolio Outlook
While the global economy continues to expand at a steady pace, the risks to inflation from the imposition of trade tariffs, higher interest rates, and rising commodity prices are creating uncertainties for Asian markets in the near term. In addition, the forthcoming general elections in India and Indonesia could have ramifications for the region given the significance of these two economies. However, the underlying fundamentals and longer-term prospects for the region remain undiminished. Asia's growth still exceeds all other regions', with India as Asia's fastest-growing economy. Although growth in China is expected to moderate this year, it remains well above those achieved by other developing economies and its government has been prudent in limiting debt levels and strengthening its legislative framework. At the corporate level, earnings continue to rebound across the region, and forecasts for the coming months point to continued momentum. Valuations, as a whole, still appear reasonable in view of projected earnings growth. Such supportive corporate fundamentals bolster our confidence in our stock selection.
Amid the near-term volatility, our focus on stock selection continues to provide an important framework from which to navigate the uncertainty. Our concentration on the fundamental characteristics of our existing and potential investments means we can remain focused on their long-term prospects and not get distracted by short-term movements in markets. Our broad and deep presence on the ground across the region affords us good understanding of the competitiveness of companies, while keeping us close to facilitate frequent engagement with them. Our long-standing relationships with the management of our investee companies provide us with insights into their underlying businesses, as well as the opportunity to share our thoughts on corporate best practices, particularly with regard to the treatment of minority interests. With good corporate stewardship, this can better align their interests with those of your Company.
Aberdeen Asset Management Asia Limited
27 June 2018
STRATEGIC REPORT - PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The risks and uncertainties faced by the Company are reviewed by the Audit and Risk Committee in the form of a risk matrix, and the principal risks and uncertainties facing the Company at the current time, together with a description of the mitigating actions the Board has taken, are set out in the table below. The Board has carried out a robust assessment of these risks, which include those that would threaten its business model, future performance, solvency or liquidity. The principal risks associated with an investment in the Company's shares are published monthly on the Company's factsheet and they can be found in the pre-investment disclosure document ("PIDD") published by the Manager, both of which are available on the Company's website.
|
Risk |
Mitigating Action |
|
Investment strategy and objectives - the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for its shares and a widening discount.
|
The Board keeps the level of discount at which the Company's shares trade, as well as the investment objective and policy under review and holds an annual strategy meeting where it reviews investor relations reports and updates from the Investment Manager and the Company's broker.
The Directors are updated at each Board meeting on the composition of, and any movements in, the shareholder register. |
|
Investment management - poor stock selection or investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and an inability to meet the Company's objectives, as well as a widening discount.
|
The Board meets the Manager on a regular basis and keeps investment performance under close review. Representatives of the Investment Manager attend all Board meetings and a detailed formal appraisal of the Standard Life Aberdeen Group is carried out annually by the Management Engagement Committee.
The Board sets, and monitors, the investment restrictions and guidelines, and receives regular reports which include performance reporting on the implementation of the investment policy, the investment process and application of the guidelines. The Board also monitors the Company's share price relative to the net asset value per share.
Investment limits In addition to the limits set out in the investment policy, the Investment Manager is authorised by the Board to invest up to 15% of the Company's gross assets in any single stock, calculated at the time an investment is made.
|
|
Income/dividends - the level of the Company's dividends and future dividend growth will depend on the performance of the underlying portfolio. Any change in the tax treatment of dividends or interest received by the Company may reduce the level of net income available for the payment of dividends to shareholders.
|
The Directors review detailed income forecasts at each Board meeting. The Company has built up significant revenue reserves which can be drawn upon if required should there be a shortfall in revenue returns.
|
|
Financial - the financial risks associated with the portfolio could result in losses to the Company. |
The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are mitigated, to some extent, by the Investment Manager. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in note 16 to the financial statements. |
|
Gearing - a fall in the value of the Company's investment portfolio could be exacerbated by the impact of gearing. It could also result in a breach of loan covenants.
|
The Board sets the gearing limits within which the Investment Manager can operate. Gearing levels and compliance with loan covenants are monitored on an ongoing basis by the Manager and at regular Board meetings. In the event of a possible impending covenant breach, appropriate action would be taken to reduce borrowing levels.
In addition, AFML, as alternative investment fund manager, has set overall leverage limits. |
|
Regulatory - failure to comply with relevant laws and regulations (including the Companies Act, The Financial Services and Markets Act, The Alternative Investment Fund Managers Directive, accounting standards, investment trust regulations, the Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules) could result in fines, loss of reputation and potentially loss of an advantageous tax regime.
|
The Board and Manager monitor changes in government policy and legislation which may have an impact on the Company, and the Audit and Risk Committee monitors compliance with regulations by reviewing internal control reports from the Manager. From time to time the Board employs external advisers to advise on specific matters. |
|
Operational - the Company is dependent on third parties for the provision of all systems and services (in particular, those of the Standard Life Aberdeen Group) and any control failures and gaps in their systems and services could result in fraudulent activities or a loss or damage to the Company. |
Written agreements are in place with all third party service providers.
The Board receives reports from the Manager on its internal controls and risk management throughout the year and receives assurances from all its other significant service providers on at least an annual basis.
The Manager monitors closely the control environments and quality of services provided by third parties, including those of the Depositary, through service level agreements, regular meetings and key performance indicators.
|
PORTFOLIO - TEN LARGEST INVESTMENTS
As at 30 April 2018
|
|
|
|
|
Total |
|
|
|
|
|
Valuation |
assetsA |
Valuation |
|
|
|
|
2018 |
2018 |
2017 |
|
Company |
Industry |
Country |
£'000 |
% |
£'000 |
|
Aberdeen Global - Indian Equity FundB |
|
|
|
|
|
|
A tax-efficient pooled India fund with a long-term investment approach managed by the same team managing the Company. |
Collective Investment Scheme |
India |
37,897 |
11.1 |
39,165 |
|
Aberdeen Global - China A Share Equity FundB |
|
|
|
|
|
|
The fund offers a selection of Chinese companies that benefit from rising consumption and incomes of a growing middle class. However, investing in the A-share market remains challenging and we believe it is more prudent to do so via a pooled vehicle offering diversification with lower stock-specific risk and volatility. |
Collective Investment Scheme |
China |
22,579 |
6.6 |
11,354 |
|
Samsung Electronics Pref |
|
|
|
|
|
|
A leading semiconductor manufacturer which is also a major player in mobile phones and TFT-LCDs. The Company owns the preferred shares, which trade at a discount to the ordinary shares. |
Technology Hardware Storage & Peripherals |
South Korea |
19,056 |
5.6 |
16,151 |
|
Taiwan Semiconductor Manufacturing Company |
|
|
|
|
|
|
The world's largest dedicated semiconductor foundry, it provides wafer manufacturing, wafer probing, assembly and testing, mask production and design services. |
Semiconductors & Semiconductor Equipment |
Taiwan |
13,257 |
3.9 |
11,660 |
|
Jardine Strategic Holdings |
|
|
|
|
|
|
A Hong Kong conglomerate with regional interests in retail, property, hotels and auto distribution. It provides the Company with a diversified exposure to the Asian consumer, backed by good distribution networks, established franchises and a decent valuation. |
Industrial Conglomerates |
Hong Kong |
13,122 |
3.9 |
16,379 |
|
Oversea-Chinese Banking Corporation |
|
|
|
|
|
|
A Singapore bank that is evolving into a regional financial services firm, with a meaningful presence in Southeast Asia. Its acquisition of Wing Hang Bank, subject to regulatory approval, will also give it access to greater China and the offshore yuan market, augmented by its stake in Bank of Ningbo. |
Banks |
Singapore |
12,772 |
3.8 |
13,325 |
|
Tencent Holdings |
|
|
|
|
|
|
The internet giant continues to strengthen its ecosystem, and we see tremendous potential in Tencent's advertising business as it starts monetising its social media and payment platforms. |
Internet Software & Services |
China |
11,484 |
3.4 |
- |
|
AIA Group |
|
|
|
|
|
|
A leading pan-Asian life insurance company, it is poised to take advantage of Asia's growing affluence, backed by an effective agency force and solid fundamentals. |
Insurance |
Hong Kong |
10,543 |
3.1 |
10,604 |
|
Ayala Land |
|
|
|
|
|
|
A leading property developer in the Philippines with an attractive land bank, well-respected brand and expertise across residential, commercial and retail sectors. |
Real Estate Management & Development |
Philippines |
9,890 |
2.9 |
9,447 |
|
Bank Central Asia |
|
|
|
|
|
|
Among the largest local private banks in Indonesia, it is well capitalised, has a big and stable base of low-cost deposits that funds its lending, while asset quality has remained solid. |
Banks |
Indonesia |
8,348 |
2.5 |
6,752 |
|
Top ten investments |
|
|
158,948 |
46.8 |
|
PORTFOLIO - OTHER INVESTMENTS
As at 30 April 2018
|
|
|
|
|
Total |
|
|
|
|
|
Valuation |
assetsA |
Valuation |
|
|
|
|
2018 |
2018 |
2017 |
|
Company |
Industry |
Country |
£'000 |
% |
£'000 |
|
Rio Tinto (London listing) |
Metals & Mining |
Australia |
8,292 |
2.4 |
7,935 |
|
CSL |
Biotechnology |
Australia |
7,991 |
2.3 |
9,173 |
|
City Developments |
Real Estate Management & Development |
Singapore |
7,758 |
2.3 |
9,294 |
|
Siam Cement (Foreign) |
Construction Materials |
Thailand |
7,281 |
2.1 |
8,100 |
|
Hong Kong Exchanges & Clearing |
Capital Markets |
Hong Kong |
6,976 |
2.0 |
3,990 |
|
Keppel Corporation |
Industrial Conglomerates |
Singapore |
6,840 |
2.0 |
5,481 |
|
HSBC Holdings |
Banks |
Hong Kong |
6,639 |
2.0 |
6,371 |
|
BHP Billiton (London listing) |
Metals & Mining |
Australia |
6,637 |
2.0 |
5,051 |
|
Singapore Telecommunication |
Diversified Telecommunication Services |
Singapore |
6,394 |
1.9 |
7,342 |
|
China Mobile |
Wireless Telecommunication Services |
China |
6,153 |
1.8 |
7,296 |
|
Top twenty investments |
|
|
229,909 |
67.6 |
|
|
Aberdeen New India Investment TrustB |
Investment Trusts |
India |
6,029 |
1.8 |
5,730 |
|
DBS Group Holdings |
Banks |
Singapore |
5,741 |
1.7 |
3,581 |
|
Anhui Conch Cement H Shares |
Construction Materials |
China |
5,017 |
1.5 |
2,976 |
|
Yum China Holdings |
Hotels, Restaurants & Leisure |
China |
4,904 |
1.4 |
3,612 |
|
Swire Properties |
Real Estate Management & Development |
Hong Kong |
4,887 |
1.4 |
4,882 |
|
Standard Chartered (London listing) |
Banks |
United Kingdom |
4,835 |
1.4 |
5,527 |
|
Naver Corporation |
Internet Software & Services |
South Korea |
4,745 |
1.4 |
5,291 |
|
Venture Corp |
Electronic Equipment, Instruments & Components |
Singapore |
4,422 |
1.3 |
4,116 |
|
M.P. Evans Group |
Food Products |
United Kingdom |
4,281 |
1.3 |
4,212 |
|
Swire Pacific B Shares |
Real Estate Management & Development |
Hong Kong |
4,250 |
1.3 |
6,278 |
|
Top thirty investments |
|
|
279,020 |
82.1 |
|
|
Vietnam Dairy Products |
Food Products |
Vietnam |
3,998 |
1.2 |
3,406 |
|
United Overseas Bank |
Banks |
Singapore |
3,828 |
1.1 |
3,799 |
|
Taiwan Mobile |
Wireless Telecommunication Services |
Taiwan |
3,414 |
1.0 |
4,727 |
|
Singapore Technologies Engineering |
Aerospace & Defence |
Singapore |
3,261 |
1.0 |
6,400 |
|
Public Bank Berhad |
Banks |
Malaysia |
3,179 |
0.9 |
2,562 |
|
China Resources Land |
Real Estate Management & Development |
China |
3,143 |
0.9 |
- |
|
ASM Pacific Technology |
Semiconductors & Semiconductor Equipment |
Hong Kong |
3,025 |
0.9 |
3,482 |
|
Indocement Tunggal Prakarsa |
Construction Materials |
Indonesia |
2,939 |
0.9 |
- |
|
E-Mart |
Food & Staples Retailing |
South Korea |
2,925 |
0.9 |
2,963 |
|
John Keells Holdings |
Industrial Conglomerates |
Sri Lanka |
2,864 |
0.8 |
3,095 |
|
Top forty investments |
|
|
311,596 |
91.7 |
|
|
Unilever Indonesia |
Household Products |
Indonesia |
2,732 |
0.8 |
3,159 |
|
Ping An Insurance |
Insurance |
China |
2,550 |
0.8 |
- |
|
Aberdeen Asian Smaller Companies Inv. TrustB |
Investment Trusts |
Other Asia |
2,546 |
0.7 |
2,786 |
|
Amorepacific CorporationC |
Personal Goods |
South Korea |
2,431 |
0.7 |
2,521 |
|
Hang Lung Group |
Real Estate Management & Development |
Hong Kong |
1,933 |
0.6 |
2,838 |
|
Raffles Medical |
Health Care Providers & Services |
Singapore |
1,757 |
0.5 |
1,543 |
|
Bangkok Dusit Medical Services (Foreign) |
Health Care Providers & Services |
Thailand |
1,613 |
0.5 |
351 |
|
LG Chem |
Chemicals |
South Korea |
1,564 |
0.5 |
- |
|
Yoma Strategic Holdings |
Construction Materials |
Singapore |
1,445 |
0.4 |
- |
|
Kerry Logistics Network |
Air Freight & Logistics |
Hong Kong |
1,428 |
0.4 |
1,406 |
|
Top fifty investments |
|
|
331,595 |
97.6 |
|
|
Astra International |
Automobiles |
Indonesia |
1,390 |
0.4 |
1,928 |
|
Hang Lung Properties |
Real Estate Management & Development |
Hong Kong |
882 |
0.3 |
2,665 |
|
DFCC Bank |
Banks |
Sri Lanka |
776 |
0.2 |
1,113 |
|
Total investments |
|
|
334,643 |
98.5 |
|
|
Net current assetsD |
|
|
5,231 |
1.5 |
|
|
Total assetsA |
|
|
339,874 |
100.0 |
|
|
A Total assets less current liabilities |
|||||
|
B No double-charging of management fees by the Manager. |
|||||
|
C Holding merges two equity holdings with values split as follows: Ordinary shares £326,000 (2017 - £299,000) and Preference shares £2,105,000 (2017 - £2,222,000). |
|||||
|
D Excluding bank loans of £23,058,000. |
|||||
|
Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings. |
|||||
PORTFOLIO - CHANGES IN ASSET DISTRIBUTIONS
|
|
Value at |
|
Sales |
Appreciation/ |
Value at |
|
|
30 April 2017 |
Purchases |
proceeds |
(depreciation) |
30 April 2018 |
|
Country |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Australia |
22,159 |
- |
(4,501) |
5,262 |
22,920 |
|
China |
27,721 |
25,303 |
(2,926) |
5,732 |
55,830 |
|
Hong Kong |
63,698 |
3,046 |
(12,391) |
(668) |
53,685 |
|
India |
44,895 |
- |
(3,400) |
2,431 |
43,926 |
|
Indonesia |
11,839 |
4,851 |
(1,048) |
(233) |
15,409 |
|
Malaysia |
5,726 |
73 |
(3,892) |
1,272 |
3,179 |
|
Other Asia |
2,786 |
- |
(346) |
106 |
2,546 |
|
Philippines |
9,447 |
- |
- |
443 |
9,890 |
|
Singapore |
54,881 |
2,431 |
(14,935) |
11,841 |
54,218 |
|
South Korea |
26,926 |
4,678 |
(4,003) |
3,120 |
30,721 |
|
Sri Lanka |
5,469 |
- |
(1,237) |
(592) |
3,640 |
|
Taiwan |
16,387 |
1,008 |
(1,858) |
1,134 |
16,671 |
|
Thailand |
8,451 |
1,008 |
- |
(565) |
8,894 |
|
United Kingdom |
9,739 |
- |
(1,173) |
550 |
9,116 |
|
Vietnam |
3,406 |
- |
- |
592 |
3,998 |
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
|
Total investments |
313,530 |
42,398 |
(51,710) |
30,425 |
334,643 |
|
Net current assetsA |
2,185 |
- |
- |
3,046 |
5,231 |
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
|
Total assets less current liabilities |
315,715 |
42,398 |
(51,710) |
33,471 |
339,874 |
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
|
|
|
|
|
|
|
|
A Excluding bank loans of £23,058,000 (2017 - £24,524,000). |
|
|
|
||
DIRECTORS' REPORT (EXTRACT)
The Directors present their report and the financial statements for the year ended 30 April 2018.
Results and Dividends
The financial statements for the year ended 30 April 2018 are contained below. An interim dividend of 1.0p per Ordinary share was paid on 26 January 2018 and the Board recommends a final dividend of 3.3p per Ordinary share, payable on 14 September 2018 to shareholders on the register on 17 August 2018. The relevant ex-dividend date is 16 August 2018. A resolution in respect of the final dividend will be proposed at the forthcoming Annual General Meeting.
Investment Trust Status
The Company is registered as a public limited company (registered in England and Wales No. 02377879) and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as an investment trust subject to it continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 May 2012. The Directors are of the opinion that the Company has conducted its affairs for the year ended 30 April 2018 so as to enable it to comply with the ongoing requirements for investment trust status.
Individual Savings Accounts
The Company has conducted its affairs in such a way as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.
Capital Structure
The issued Ordinary share capital at 30 April 2018 consisted of 114,463,848 Ordinary shares of 5p and 8,584,788 shares held in treasury. During the year the Company purchased 2,398,250 Ordinary shares to be held in treasury and it cancelled 3,887,029 of its shares held in treasury. Since the end of the year, it has purchased a further 685,000 Ordinary shares to be held in treasury. At the date of approval of this Report there were 113,778,848 Ordinary shares of 5p in issue and 9,269,788 shares held in treasury.
Voting Rights
Each Ordinary shareholder is entitled to one vote on a show of hands at general meetings of the Company and, on a poll, to one vote for every share held. The Ordinary shares, excluding treasury shares, carry a right to receive dividends. On a winding up or other return of capital, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.
There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may from time to time be imposed by law.
Management Agreement
The Company has appointed Aberdeen Fund Managers Limited ("AFML"), a wholly owned subsidiary of Standard Life Aberdeen plc, as its alternative investment fund manager. AFML has been appointed to provide investment management, risk management, administration and company secretarial services and promotional activities to the Company. The Company's portfolio is managed by Aberdeen Asset Management Asia Limited ("AAM Asia") by way of a group delegation agreement in place between AFML and AAM Asia. In addition, AFML has sub-delegated promotional activities to Aberdeen Asset Managers Limited and administrative and secretarial services to Aberdeen Asset Management PLC. Details of the management fee and fees payable for promotional activities are shown in notes 4 and 5 to the financial statements.
The management agreement is terminable on not less than 12 months' notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.
Substantial Interests
At 30 April 2018 the following interests in the issued Ordinary share capital of the Company had been disclosed in accordance with the requirements of the FCA's Disclosure Guidance and Transparency Rules ("DTR"):
|
Shareholder |
Number of Ordinary shares held |
% heldB |
|
City of London Investment Management Company Ltd |
11,502,093 |
10.0 |
|
Aberdeen Investment Trust Share PlansA |
9,340,058 |
8.2 |
|
Wells Capital Management Inc |
8,591,009 |
7.5 |
|
Funds managed by Rathbones |
8,443,851 |
7.4 |
|
Quilter |
6,848,084 |
6.0 |
|
Derbyshire County Council |
6,350,000 |
5.5 |
A Non-beneficial interest
B Based on 114,463,848 Ordinary shares in issue as at 30 April 2018
Since the year end City of London Investment Management Company Limited has disclosed a holding of 12,583,165 Ordinary shares (11.0%) and Quilter has disclosed that it has a non-notifiable holding. There have been no other changes notified to the Company since the year end in accordance with the DTR as at the date of approval of this Report.
Corporate Governance
The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code (the "UK Code"), as published in April 2016 and effective for financial years commencing on or after 17 June 2016, which is available on the Financial Reporting Council's website: frc.org.uk.
The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance as published in July 2016 (the "AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies (the "AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment trusts. The AIC Code and AIC Guide are available on the AIC's website: theaic.co.uk.
The Board considers that reporting in accordance with the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), will provide better information to shareholders. The Board confirms that, during the year, the Company complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
- the role of the chief executive (A.1.2);
- executive directors' remuneration (D.1.1 and D.1.2); and
- the need for an internal audit function (C.3.6).
For the reasons set out in the AIC Guide, and as explained in the UK Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. The Company is also non-compliant with Provision A.4.1 of the UK Code which states that the Board should appoint a Senior Independent Director. The Board has considered whether a Senior Independent Director should be appointed and has concluded that, given the current size of the Board and the fact that it is comprised entirely of non-executive Directors, this is unnecessary at the present time.
The full text of the Company's Corporate Governance Statement can be found on its website.
Directors
The Board comprises five Directors, consisting of an independent non-executive Chairman and four non-executive Directors. All Directors, with the exception of Mr Young, are considered by the Board to be independent and free of any material relationship with the Standard Life Aberdeen Group. Mr Young is a director of various entities connected with, or within, the Standard Life Aberdeen Group and, as such, is not considered to be independent.
Directors' and Officers' Liability Insurance
The Company's Articles of Association indemnify each of the Directors out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. In addition, the Directors have been granted qualifying indemnity provisions by the Company which are currently in force. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, each Director prepares a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his or her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential or actual conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although all Directors are issued with letters of appointment.
The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company's circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager's anti-bribery and corruption policies are available on its website.
In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.
Going Concern
The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews cash flow projections and compliance with banking covenants. The Directors believe that, after making enquiries, the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.
Accountability and Audit
Each Director confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and they have taken all the steps that they could reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.
Independent Auditor
Following a formal tender process conducted during the year, the Board decided to appoint Ernst & Young LLP as the Company's auditor, in place of KPMG LLP, for the audit of the financial statements for the year ending 30 April 2019. The Board will therefore propose resolutions at the Annual General Meeting to appoint Ernst & Young LLP as auditor for the ensuing year and to authorise the Directors to determine its remuneration.
Relations with Shareholders
The Directors place a great deal of importance on communication with shareholders. Shareholders and investors may obtain up to date information on the Company through its website and the Manager's Customer Services Department.
The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (including the Company Secretary or the Manager) in situations where direct communication is required, and representatives from the Board meet with major shareholders on an annual basis in order to gauge their views.
In addition, the Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds personally as appropriate.
The Notice of the Annual General Meeting is sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Manager at the meeting.
The Company has adopted a nominee code, which ensures that, when shares in the Company are held in the name of nominee companies and notification has been received in advance, nominee companies will be provided with copies of shareholder communications for distribution to their investors. Nominee investors may attend and speak at general meetings.
Participants in the Aberdeen Investment Trust Share Plan and ISA, whose shares are held in the nominee name of the plan administrator, are given the opportunity to vote at the Annual General Meeting by means of a Letter of Direction enclosed with the Annual Report. When forwarded to the plan administrator, the voting instructions given in the Letter of Direction will in turn be reflected in the proxy votes lodged by the plan administrator.
Electronic Communications
The Company's Articles of Association allow shareholders to elect to receive communications from the Company and allow voting in electronic format. If shareholders would like to receive future communications in electronic format they should contact the Company's registrar, Equiniti Limited. If shareholders wish to continue to receive Annual Reports and other communications in hard copy format only they need take no further action.
Annual General Meeting
The Annual General Meeting will be held at the offices of Standard Life Aberdeen plc, Bow Bells House, 1 Bread Street, London EC4M 9HH on 5 September 2018 at 12 noon.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
27 June 2018
STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Year ended 30 April 2018 |
Year ended 30 April 2017 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Gains on investments held at fair value through profit or loss |
10 |
- |
30,425 |
30,425 |
- |
80,202 |
80,202 |
|
Income |
3 |
7,481 |
- |
7,481 |
6,922 |
- |
6,922 |
|
Management fee |
4 |
(924) |
(924) |
(1,848) |
(810) |
(810) |
(1,620) |
|
Administrative expenses |
5 |
(739) |
- |
(739) |
(766) |
- |
(766) |
|
Exchange gains/(losses) |
|
- |
1,443 |
1,443 |
- |
(2,477) |
(2,477) |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
Net return before finance costs and taxation |
|
5,818 |
30,944 |
36,762 |
5,346 |
76,915 |
82,261 |
|
|
|
|
|
|
|
|
|
|
Interest payable and similar charges |
6 |
(296) |
(296) |
(592) |
(257) |
(257) |
(514) |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
Return before taxation |
|
5,522 |
30,648 |
36,170 |
5,089 |
76,658 |
81,747 |
|
|
|
|
|
|
|
|
|
|
Taxation |
7 |
(346) |
- |
(346) |
(279) |
- |
(279) |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
Return after taxation |
|
5,176 |
30,648 |
35,824 |
4,810 |
76,658 |
81,468 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Return per Ordinary share (pence) |
9 |
4.47 |
26.50 |
30.97 |
4.05 |
64.61 |
68.66 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
|
|
|
|
|
|
|
|
|
The total column of this statement represents the profit and loss account of the Company. |
|||||||
|
The Company does not have any income or expense that is not included in "Return after taxation" and therefore this represents the "Total comprehensive income for the year". |
|||||||
|
All revenue and capital items are derived from continuing operations. |
|||||||
|
The accompanying notes are an integral part of the financial statements. |
|||||||
STATEMENT OF FINANCIAL POSITION
|
|
|
As at |
As at |
|
|
|
30 April 2018 |
30 April 2017 |
|
|
Notes |
£'000 |
£'000 |
|
Fixed assets |
|
|
|
|
Investments at fair value through profit or loss |
10 |
334,643 |
313,530 |
|
|
|
_________ |
_________ |
|
Current assets |
|
|
|
|
Debtors |
11 |
1,127 |
1,052 |
|
Cash at bank and in hand |
|
4,507 |
1,719 |
|
|
|
_________ |
_________ |
|
|
|
5,634 |
2,771 |
|
|
|
_________ |
_________ |
|
Creditors: amounts falling due within one year |
12 |
|
|
|
Loans |
|
(23,058) |
(24,524) |
|
Other creditors |
|
(403) |
(586) |
|
|
|
_________ |
_________ |
|
|
|
(23,461) |
(25,110) |
|
|
|
_________ |
_________ |
|
Net current liabilities |
|
(17,827) |
(22,339) |
|
|
|
_________ |
_________ |
|
Total assets less current liabilities |
|
316,816 |
291,191 |
|
|
|
|
|
|
Non-current creditors |
12 |
|
|
|
Loans |
|
(5,000) |
(5,000) |
|
|
|
_________ |
_________ |
|
Net assets |
|
311,816 |
286,191 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
Share capital and reserves |
|
|
|
|
Called-up share capital |
13 |
6,152 |
6,347 |
|
Share premium account |
|
17,955 |
17,955 |
|
Capital redemption reserve |
|
10,402 |
10,207 |
|
Capital reserve |
14 |
264,189 |
239,100 |
|
Revenue reserve |
|
13,118 |
12,582 |
|
|
|
_________ |
_________ |
|
Equity shareholders' funds |
|
311,816 |
286,191 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
Net asset value per Ordinary share (pence) |
15 |
272.41p |
244.90p |
|
|
|
_________ |
_________ |
The accompanying notes are an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
|
For the year ended 30 April 2018 |
|
|
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 30 April 2017 |
|
6,347 |
17,955 |
10,207 |
239,100 |
12,582 |
286,191 |
|
Buy back of Ordinary shares for treasury |
|
- |
- |
- |
(5,559) |
- |
(5,559) |
|
Cancellation of Ordinary shares held in treasury |
|
(195) |
- |
195 |
- |
- |
- |
|
Return after taxation |
|
- |
- |
- |
30,648 |
5,176 |
35,824 |
|
Dividends paid (see note 8) |
|
- |
- |
- |
- |
(4,640) |
(4,640) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 30 April 2018 |
|
6,152 |
17,955 |
10,402 |
264,189 |
13,118 |
311,816 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
For the year ended 30 April 2017 |
|
|
|
|
|
|
|
|
|
|
Share |
|
Capital |
|
|
|
|
|
Share |
premium |
Special |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 30 April 2016 |
6,347 |
17,955 |
5,411 |
10,207 |
163,906 |
12,417 |
216,243 |
|
Buy back of Ordinary shares for treasury |
- |
- |
(5,411) |
- |
(1,464) |
- |
(6,875) |
|
Return after taxation |
- |
- |
- |
- |
76,658 |
4,810 |
81,468 |
|
Dividends paid (see note 8) |
- |
- |
- |
- |
- |
(4,645) |
(4,645) |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 30 April 2017 |
6,347 |
17,955 |
- |
10,207 |
239,100 |
12,582 |
286,191 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. |
|||||||
|
The accompanying notes are an integral part of the financial statements. |
|||||||
STATEMENT OF CASHFLOWS
|
|
|
Year ended |
Year ended |
|
|
|
30 April 2018 |
30 April 2017 |
|
|
Notes |
£'000 |
£'000 |
|
Operating activities |
|
|
|
|
Net return before finance costs and taxation |
|
36,762 |
82,261 |
|
Adjustment for: |
|
|
|
|
Gains on investments |
|
(30,425) |
(80,202) |
|
Currency (gains)/losses |
|
(1,443) |
2,477 |
|
(Increase)/decrease in accrued dividend income |
|
(82) |
244 |
|
(Increase)/decrease in other debtors |
|
(12) |
16 |
|
(Decrease)/increase in other creditors |
|
(177) |
160 |
|
Stock dividends included in investment income |
|
(341) |
(871) |
|
Overseas withholding tax |
|
(328) |
(271) |
|
|
|
_______ |
_______ |
|
Net cash flow from operating activities |
|
3,954 |
3,814 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Purchases of investments |
|
(42,057) |
(40,574) |
|
Sales of investments |
|
51,710 |
48,026 |
|
|
|
_______ |
_______ |
|
Net cash from investing activities |
|
9,653 |
7,452 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Equity dividends paid |
8 |
(4,640) |
(4,645) |
|
Interest paid |
|
(586) |
(509) |
|
Buy back of Ordinary shares for treasury |
13 |
(5,570) |
(6,821) |
|
|
|
_______ |
_______ |
|
Net cash used in financing activities |
|
(10,796) |
(11,975) |
|
|
|
_______ |
_______ |
|
Increase/(decrease) in cash |
|
2,811 |
(709) |
|
|
|
_______ |
_______ |
|
Analysis of changes in cash during the year |
|
|
|
|
Opening balance |
|
1,719 |
2,369 |
|
Effect of exchange rate fluctuations on cash held |
|
(23) |
59 |
|
Increase/(decrease) in cash as above |
|
2,811 |
(709) |
|
|
|
_______ |
_______ |
|
Closing balances |
|
4,507 |
1,719 |
|
|
|
_______ |
_______ |
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS:
For the year ended 30 April 2018
|
1. |
Principal activity |
|
|
The Company is a closed-end investment company, registered in England & Wales No 02377879, with its Ordinary shares being listed on the London Stock Exchange. |
|
2. |
Accounting policies |
|
|
|
(a) |
Basis of accounting |
|
|
|
The financial statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in February 2018 with consequential amendments (applicable for accounting periods beginning on or after 1 January 2019 but adopted early). The financial statements are prepared in sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on the assumption that approval as an investment trust will continue to be granted by HMRC. |
|
|
|
|
|
|
|
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. |
|
|
|
|
|
|
(b) |
Valuation of investments |
|
|
|
Listed investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised on the trade date at cost. Subsequent to initial recognition, investments are valued at fair value which for listed investments is deemed to be bid market prices. The fair value of the Company's investments in collective investment schemes has been determined by reference to their quoted net asset values. Gains and losses arising from changes in fair value are included as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve. |
|
|
|
|
|
|
(c) |
Income |
|
|
|
Dividends, including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time apportioned basis so as to reflect the effective yield on shares. Other returns on non-equity shares are recognised when the right to return is established. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the scrip dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis. |
|
|
|
|
|
|
(d) |
Expenses |
|
|
|
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of Comprehensive Income except as follows: |
|
|
|
- expenses directly relating to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds. Such transaction costs are disclosed in accordance with the SORP. These expenses are charged to the capital column of the Statement of Comprehensive Income and are separately identified and disclosed in note 10; and |
|
|
|
- the Company charges 50% of investment management fees and finance costs to the capital column of the Statement of Comprehensive Income, in accordance with the Board's expected long term return in the form of capital gains and income respectively from the investment portfolio of the Company. |
|
|
|
|
|
|
(e) |
Taxation |
|
|
|
The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are never taxable or deductible (see note 7 for a more detailed explanation). The Company has no liability for current tax. |
|
|
|
|
|
|
|
Deferred taxation is provided on all timing differences, that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. |
|
|
|
|
|
|
(f) |
Foreign currencies |
|
|
|
Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Statement of Financial Position date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Statement of Comprehensive Income and are then transferred to the capital reserve. |
|
|
|
|
|
|
|
The Company's investments and borrowings are made in a number of currencies, however the Board considers the Company's functional currency to be Sterling. In arriving at this conclusion, the Board considered that the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom, principally having its shareholder base in the United Kingdom, pays dividends and expenses in Sterling. Consequently, the Board also considers the Company's presentational currency to be Sterling. |
|
|
|
|
|
|
(g) |
Dividends payable |
|
|
|
Dividends are recognised from the date on which they are declared and approved by shareholders. Interim dividends are recognised when paid. |
|
|
|
|
|
|
(h) |
Nature and purpose of reserves |
|
|
|
Called up share capital |
|
|
|
The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. |
|
|
|
|
|
|
|
Share premium account |
|
|
|
The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 5p. |
|
|
|
|
|
|
|
Capital redemption reserve |
|
|
|
The capital redemption reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to maintain the Company's capital. |
|
|
|
|
|
|
|
Capital reserve |
|
|
|
Gains or losses on disposal of investments and changes in fair values of investments are transferred to the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The costs of share buybacks to be held in treasury have also been deducted from this reserve. |
|
|
|
|
|
|
|
Revenue reserve |
|
|
|
This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. |
|
|
|
|
|
|
(i) |
Borrowings |
|
|
|
Bank loans are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. Subsequently, they are measured at amortised cost using the effective interest method. Finance charges are accounted for on an accruals basis using the effective interest rate method and are charged 50% to revenue and 50% to capital. |
|
|
|
2018 |
2017 |
|
3. |
Income |
£'000 |
£'000 |
|
|
Income from investments |
|
|
|
|
UK dividend income |
1,284 |
877 |
|
|
UK investment income |
- |
8 |
|
|
Overseas dividends |
5,853 |
5,164 |
|
|
Scrip dividends |
341 |
871 |
|
|
|
_______ |
_______ |
|
|
|
7,478 |
6,920 |
|
|
|
_______ |
_______ |
|
|
Other income |
|
|
|
|
Deposit interest |
3 |
2 |
|
|
|
_______ |
_______ |
|
|
Total income |
7,481 |
6,922 |
|
|
|
_______ |
_______ |
|
|
|
2018 |
2017 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
4. |
Management fee |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Management fee |
924 |
924 |
1,848 |
810 |
810 |
1,620 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Management and secretarial services are provided by Aberdeen Fund Managers Limited ("AFML"). |
||||||
|
|
|
||||||
|
|
The management fee is payable monthly in arrears based on an annual rate of 0.85% of the net asset value of the Company valued monthly, with the following provisions for commonly managed funds: |
||||||
|
|
- the Company's investments in Aberdeen Global - Indian Equity Fund, Aberdeen Asian Smaller Companies Investment Trust PLC and Aberdeen New India Investment Trust PLC are excluded from the calculation of the investment management fee. The Company's investment in Aberdeen Global - China A Share Equity Fund is held in a share class not subject to management charges at a fund level and the Manager is therefore entitled to a fee on the value of the Company's investment. The total value of such commonly managed funds, on a bid price basis (basis on which management fee is calculated), at the year end was £69,051,000 (2017 - bid basis - £59,035,000). |
||||||
|
|
- the Company receives a rebate from the Manager for the amount of fees in excess of 0.85% of net assets charged by the Manager for any commonly managed fund. |
||||||
|
|
|
||||||
|
|
The balance due to AFML at the year end, net of any rebates was £159,000 (2017 - £278,000). |
||||||
|
|
|
||||||
|
|
The agreement is terminable by either party on not less than twelve months' notice to the other. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period. |
||||||
|
|
|
2018 |
2017 |
|
5. |
Administrative expenses |
£'000 |
£'000 |
|
|
Promotional activities |
158 |
158 |
|
|
Directors' fees |
141 |
131 |
|
|
Safe custody fees |
121 |
130 |
|
|
Auditor's remuneration: |
|
|
|
|
fees payable to the Company's Auditor for the audit of the Company's annual accounts |
15 |
15 |
|
|
fees payable to the Company's Auditor for the review of the Company's half yearly accounts |
4 |
4 |
|
|
Other administration expenses |
300 |
328 |
|
|
|
_______ |
_______ |
|
|
|
739 |
766 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The Company has an agreement with AFML for the provision of promotional activities. The total fees payable during the year were £158,000 (2017 - £158,000) and the sum due to AFML at the year end was £13,000 (2017 - £53,000). |
||
|
|
|
||
|
|
No pension contributions were made in respect of any of the Directors. |
||
|
|
|
||
|
|
The Company does not have any employees. |
||
|
|
|
2018 |
2017 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
6. |
Interest payable and similar charges |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
On bank loans |
296 |
296 |
592 |
257 |
257 |
514 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
2018 |
2017 |
|||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
7. |
Taxation |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
|
(a) |
Analysis of charge for the year |
|
|
|
|
|
|
|
|
|
|
Overseas tax |
413 |
- |
413 |
339 |
- |
339 |
|
|
|
|
Overseas tax reclaimable |
(67) |
- |
(67) |
(60) |
- |
(60) |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
Total tax charge for the year |
346 |
- |
346 |
279 |
- |
279 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Factors affecting the tax charge for the year |
|||||||
|
|
|
The tax assessed for the year is lower than the current standard rate of corporation tax in the UK. |
|||||||
|
|
|
|
|||||||
|
|
|
|
2018 |
2017 |
|||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
Net return before taxation |
5,522 |
30,648 |
36,170 |
5,089 |
76,658 |
81,747 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
Net return multiplied by effective standard rate of corporation tax in the UK of 19% (2017 - 19.92%) |
1,049 |
5,823 |
6,872 |
1,014 |
15,270 |
16,284 |
|
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
|
Non-taxable UK dividend income |
(244) |
- |
(244) |
(253) |
- |
(253) |
|
|
|
|
Non-taxable overseas dividends |
(1,177) |
- |
(1,177) |
(1,103) |
- |
(1,103) |
|
|
|
|
Overseas tax suffered |
346 |
- |
346 |
279 |
- |
279 |
|
|
|
|
Surplus management expenses and loan relationship deficits not relieved |
372 |
232 |
604 |
342 |
213 |
555 |
|
|
|
|
Non-taxable exchange (gains)/losses |
- |
(274) |
(274) |
- |
493 |
493 |
|
|
|
|
Non-taxable gains |
- |
(5,781) |
(5,781) |
- |
(15,976) |
(15,976) |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
Total tax charge |
346 |
- |
346 |
279 |
- |
279 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Provision for deferred taxation |
|||||||
|
|
|
No provision for deferred taxation has been made in the current year or in the prior year. |
|||||||
|
|
|
|
|||||||
|
|
|
The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company. |
|||||||
|
|
|
|
|||||||
|
|
(d) |
Factors that may affect future tax charges |
|||||||
|
|
|
At the year end, the Company has an unrecognised deferred tax asset of £3,986,000 (2017 - £3,429,000) arising as a result of excess management expenses and non-trade loan relationship deficits. These expenses will only be utilised if the Company has profits chargeable to corporation tax in the future. |
|||||||
|
|
|
2018 |
2017 |
|
8. |
Dividends |
£'000 |
£'000 |
|
|
Amounts recognised as distributions to equity holders in the period: |
|
|
|
|
Final dividend for 2017 - 3.0p (2016 - 2.9p) |
3,486 |
3,464 |
|
|
Interim dividend for 2018 - 1.0p (2017 - 1.0p) |
1,154 |
1,181 |
|
|
|
_______ |
_______ |
|
|
|
4,640 |
4,645 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The proposed final dividend in respect of the year ended 30 April 2018 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. |
||
|
|
|
||
|
|
The table below sets out the proposed final dividend, together with the interim dividend paid, in respect of the financial year, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £5,176,000 (2017 - £4,810,000). |
||
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
|
£'000 |
£'000 |
|
|
Interim dividend for 2018 - 1.0p (2017 - 1.0p) |
1,154 |
1,181 |
|
|
Proposed final dividend for 2018 - 3.3p (2017 - 3.0p) |
3,755 |
3,486 |
|
|
|
_______ |
_______ |
|
|
|
4,909 |
4,667 |
|
|
|
_______ |
_______ |
|
|
|
||
|
|
Subsequent to the year end the Company has purchased for treasury a further 685,000 Ordinary shares. Therefore the amounts reflected above for the cost of the proposed final dividend for 2018 are based on 113,778,848 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report. |
||
|
|
|
2018 |
2017 |
||
|
9. |
Return per Ordinary share |
£'000 |
p |
£'000 |
p |
|
|
Revenue return |
5,176 |
4.47 |
4,810 |
4.05 |
|
|
Capital return |
30,648 |
26.50 |
76,658 |
64.61 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Total return |
35,824 |
30.97 |
81,468 |
68.66 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
Weighted average number of Ordinary shares in issueA |
115,681,655 |
|
118,657,145 |
|
|
|
|
|
__________ |
|
__________ |
|
|
|
|
|
|
|
|
|
A Calculated excluding shares held in treasury. |
||||
|
|
|
Listed |
Listed |
|
|
|
|
overseas |
in UK |
Total |
|
10. |
Investments |
£'000 |
£'000 |
£'000 |
|
|
Fair value through profit or loss: |
|
|
|
|
|
Opening book cost |
133,772 |
23,661 |
157,433 |
|
|
Opening fair value gains on investments held |
148,516 |
7,581 |
156,097 |
|
|
|
_______ |
_______ |
_______ |
|
|
Opening valuation |
282,288 |
31,242 |
313,530 |
|
|
Movements in the year: |
|
|
|
|
|
Purchases at cost |
42,398 |
- |
42,398 |
|
|
Sales - proceeds |
(48,277) |
(3,433) |
(51,710) |
|
|
Sales - realised gains |
25,492 |
801 |
26,293 |
|
|
Current year fair value gains on investments held |
122 |
4,010 |
4,132 |
|
|
|
_______ |
_______ |
_______ |
|
|
Closing valuation |
302,023 |
32,620 |
334,643 |
|
|
|
_______ |
_______ |
_______ |
|
|
Closing book cost |
153,385 |
21,029 |
174,414 |
|
|
Closing fair value gains on investments held |
148,638 |
11,591 |
160,229 |
|
|
|
_______ |
_______ |
_______ |
|
|
|
302,023 |
32,620 |
334,643 |
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
|
|
£'000 |
£'000 |
|
|
Investments listed on an overseas investment exchange |
|
302,023 |
282,288 |
|
|
Investments listed on the UK investment exchange |
|
32,620 |
31,242 |
|
|
|
|
_______ |
_______ |
|
|
|
|
334,643 |
313,530 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
Gains on investments held at fair value through profit or loss |
|
£'000 |
£'000 |
|
|
Realised gains on sales |
|
26,293 |
14,141 |
|
|
Increase in fair value gains on investments held |
|
4,132 |
66,061 |
|
|
|
|
_______ |
_______ |
|
|
|
|
30,425 |
80,202 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
Transaction costs |
|
|
|
|
|
During the year 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 held at fair value through profit or loss in the Statement of Comprehensive Income. The total costs were as follows: |
|||
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
|
|
£'000 |
£'000 |
|
|
Purchases |
|
42 |
46 |
|
|
Sales |
|
78 |
85 |
|
|
|
|
_______ |
_______ |
|
|
|
|
120 |
131 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations. |
|||
|
|
|
2018 |
2017 |
|
11. |
Debtors |
£'000 |
£'000 |
|
|
Prepayments and accrued income |
1,048 |
980 |
|
|
Other loans and receivables |
79 |
72 |
|
|
|
_______ |
_______ |
|
|
|
1,127 |
1,052 |
|
|
|
_______ |
_______ |
|
|
|
2018 |
2017 |
|
|
12. |
Creditors |
£'000 |
£'000 |
|
|
|
Amounts falling due within one year: |
|
|
|
|
|
a) |
Loans |
|
|
|
|
|
Foreign currency loans |
20,558 |
22,024 |
|
|
|
Sterling loan |
2,500 |
2,500 |
|
|
|
|
_______ |
_______ |
|
|
|
|
23,058 |
24,524 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
b) |
Other |
£'000 |
£'000 |
|
|
|
Amounts due to brokers |
106 |
117 |
|
|
|
Other creditors |
297 |
469 |
|
|
|
|
_______ |
_______ |
|
|
|
|
403 |
586 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
Non-current creditors: |
£'000 |
£'000 |
|
|
|
Sterling loan |
5,000 |
5,000 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|||
|
|
At the year end the Company's secured floating rate bank loans of HK$154,100,000 (2017 - HK$154,100,000), equivalent to £14,256,000 (2017 - £15,315,000), US$8,680,000 (2017 - US$8,680,000), equivalent to £6,302,000 (2017 - £6,709,000), £2,500,000 (2017 - £2,500,000), with a maturity date of 23 May 2018 (2017 - 24 May 2017), and fixed rate bank loan of £5,000,000 (2017 - £5,000,000), were drawn down from the £35,000,000 facility with The Royal Bank of Scotland at interest rates of 1.95%, 2.90%, 1.53% and 2.75% (2017 - 1.41%, 1.99%, 1.26% and 2.75%) respectively. |
|||
|
|
|
|||
|
|
As of the latest date prior to the signing of this Report the HK$154,100,000, US$8,680,000 and £2,500,000 loans had been drawn down to 22 July 2018 at interest rates of 2.77822%, 3.08363% and 1.49863% respectively. |
|||
|
|
|
|||
|
|
The terms of the bank loan with The Royal Bank of Scotland state that: |
|||
|
|
- the net tangible assets of the Company must be not less than £125 million at all times; |
|||
|
|
- the ratio of gross borrowings to adjusted assets must be less than 25% at all times (adjusted assets are total gross assets less (i) the value of any unlisted investment; (ii) the value in excess of 10% of total gross assets invested in the largest single security or asset; (iii) the value of any single security or asset (other than the largest security or asset referred to above) exceeds 5% of gross assets; (iv) the value in excess of 60% of total gross assets invested in the top twenty largest investments; (v) the extent to which the value of securities in collective investment schemes exceeds 30% of gross assets; and (vi) the extent to which the aggregated value of securities or assets in countries with a Standard and Poor's foreign sovereign debt rating lower than BBB exceeds 30% of gross assets.); and |
|||
|
|
- the facility, under which the loans are made, will expire on 7 October 2019. |
|||
|
|
|
|||
|
|
The Company has met all financial covenants throughout the period and up to the date of this Report. |
|||
|
|
|
2018 |
2017 |
|
13. |
Called-up share capital |
£'000 |
£'000 |
|
|
Allotted, called up and fully paid: |
|
|
|
|
114,463,848 (2017 - 116,862,098) Ordinary shares of 5p each |
5,723 |
5,843 |
|
|
|
|
|
|
|
Held in treasury: |
|
|
|
|
8,584,788 (2017 - 10,073,567) Ordinary shares of 5p each |
429 |
504 |
|
|
|
_______ |
_______ |
|
|
|
6,152 |
6,347 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
During the year 2,398,250 (2017 - 3,656,912) Ordinary shares of 5p each were repurchased by the Company at a total cost, including transaction costs, of £5,559,000 (2017 - £6,875,000). All of the shares were placed in treasury. On 30 April 2018 3,887,029 Ordinary shares held in treasury were cancelled. Shares held in treasury represent 7.50% of the Company's total issued share capital at 30 April 2018. Shares held in treasury do not carry a right to receive dividends. |
||
|
|
|
||
|
|
Subsequent to the year end the Company bought back for treasury a further 685,000 Ordinary shares for a total consideration of £1,631,000. |
||
|
|
|
||
|
|
The investment objective of the Company is to provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan. |
||
|
|
|
||
|
|
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. |
||
|
|
|
||
|
|
The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes: |
||
|
|
- the planned level of gearing which takes account of the Manager's views on the market; |
||
|
|
- the level of equity shares in issue; and
|
||
|
|
- the extent to which revenue in excess of that which is required to be distributed should be retained. |
||
|
|
|
||
|
|
The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. |
||
|
|
|
||
|
|
The Company does not have any externally imposed capital requirements. |
||
|
|
|
2018 |
2017 |
|
14. |
Capital reserve |
£'000 |
£'000 |
|
|
At 1 May 2017 |
239,100 |
163,906 |
|
|
Movement in fair value gains |
30,425 |
80,202 |
|
|
Foreign exchange movement |
1,443 |
(2,477) |
|
|
Buy back of Ordinary shares for treasury |
(5,559) |
(1,464) |
|
|
Expenses allocated to capital |
(1,220) |
(1,067) |
|
|
|
_______ |
_______ |
|
|
At 30 April 2018 |
264,189 |
239,100 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The capital reserve includes investment holding gains amounting to £160,229,000 (2017 - £156,097,000), as disclosed in note 10. |
||
|
15. |
Net asset value per share |
|
|
|
|
|
The net asset value per share and the net asset values attributable to Ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows: |
|||
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
|
Net assets attributable |
£311,816,000 |
£286,191,000 |
|
|
|
Number of Ordinary shares in issue (excluding shares held in treasury) |
114,463,848 |
116,862,098 |
|
|
|
Net asset value per share |
272.41p |
244.90p |
|
|
16. |
Financial instruments |
|
|||||||||||||||
|
|
Risk management |
|
|||||||||||||||
|
|
The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
The Board has delegated the risk management function to AFML under the terms of its management agreement with AFML (further details of which are included under note 4). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such approach has been applied throughout the year and has not changed since the previous accounting period. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
Risk management framework |
|
|||||||||||||||
|
|
The directors of Aberdeen Fund Managers Limited collectively assume responsibility for AFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
AFML is a fully integrated member of the Standard Life Aberdeen Group ("the Group"), which provides a variety of services and support to AFML in the conduct of its business activities, including the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to Aberdeen Asset Management Asia Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the co-CEOs of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SWORD"). |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group co-CEOs and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
The Group's corporate governance structure is supported by several committees to assist the board of directors, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described on the committees' terms of reference. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
Risk management |
|
|||||||||||||||
|
|
The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
(i) Market risk |
|
|||||||||||||||
|
|
The fair value of, or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other price risk. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
Interest rate risk |
|
|||||||||||||||
|
|
Interest rate movements may affect: |
|
|||||||||||||||
|
|
- the level of income receivable on cash deposits; and, |
|
|||||||||||||||
|
|
- interest payable on the Company's variable rate borrowings. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
Management of the risk |
|
|||||||||||||||
|
|
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current bank covenant guidelines state that the total borrowings will not exceed 25% of the adjusted net assets of the Company as defined in note 12. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
Interest risk profile |
|
|||||||||||||||
|
|
The interest rate risk profile of the portfolio of the Company's financial assets and liabilities, excluding equity holdings which are all non-interest bearing, at the Statement of Financial Position date was as follows: |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
Weighted |
|
|
|
|
|||||||||||
|
|
|
period for which |
average |
Fixed |
Floating |
|
|||||||||||
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|
|||||||||||
|
|
At 30 April 2018 |
Years |
% |
£'000 |
£'000 |
|
|||||||||||
|
|
Assets |
|
|
|
|
|
|||||||||||
|
|
Indonesia Rupiah |
- |
- |
- |
53 |
|
|||||||||||
|
|
Sterling |
- |
- |
- |
2,804 |
|
|||||||||||
|
|
Taiwan Dollar |
- |
- |
- |
70 |
|
|||||||||||
|
|
Vietnam Dong |
- |
- |
- |
1,580 |
|
|||||||||||
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|||||||||||
|
|
|
|
|
- |
4,507 |
|
|||||||||||
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
Weighted |
|
|
|
|
|||||||||||
|
|
|
period for which |
average |
Fixed |
Floating |
|
|||||||||||
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|
|||||||||||
|
|
|
Years |
% |
£'000 |
£'000 |
|
|||||||||||
|
|
Liabilities |
|
|
|
|
|
|||||||||||
|
|
Bank loan - £2,500,000 |
0.08 |
1.53 |
2,500 |
- |
|
|||||||||||
|
|
Bank loan - £5,000,000 |
1.44 |
2.75 |
5,000 |
- |
||||||||||||
|
|
Bank loan - HK$154,100,000 |
0.08 |
1.95 |
14,256 |
- |
||||||||||||
|
|
Bank loan - US$8,680,000 |
0.08 |
2.90 |
6,302 |
- |
||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
28,058 |
- |
|||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
Weighted |
|
|
|
|||||||||||
|
|
|
|
period for which |
average |
Fixed |
Floating |
|||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|||||||||||
|
|
At 30 April 2017 |
Years |
% |
£'000 |
£'000 |
||||||||||||
|
|
Assets |
|
|
|
|
||||||||||||
|
|
Sterling |
- |
- |
- |
1,652 |
||||||||||||
|
|
Taiwan Dollar |
- |
- |
- |
5 |
||||||||||||
|
|
US Dollar |
- |
- |
- |
56 |
||||||||||||
|
|
Vietnam Dong |
- |
- |
- |
6 |
||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
- |
1,719 |
|||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
Weighted average |
Weighted |
|
|
|||||||||||
|
|
|
|
period for which |
average |
Fixed |
Floating |
|||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|||||||||||
|
|
|
|
Years |
% |
£'000 |
£'000 |
|||||||||||
|
|
Liabilities |
|
|
|
|
||||||||||||
|
|
Bank loan - £2,500,000 |
0.08 |
1.26 |
2,500 |
- |
||||||||||||
|
|
Bank loan - £5,000,000 |
2.44 |
2.75 |
5,000 |
- |
||||||||||||
|
|
Bank loan - HK$154,100,000 |
0.08 |
1.41 |
15,315 |
- |
||||||||||||
|
|
Bank loan - US$8,680,000 |
0.08 |
1.99 |
6,709 |
- |
||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
29,524 |
- |
|||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity date of the Company's loans are shown in note 12. |
|
|||||||||||||||
|
|
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates. |
|
|||||||||||||||
|
|
The Company's equity portfolio and short-term debtors and creditors (excluding bank loans) have been excluded from the above tables. |
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
Interest rate sensitivity |
|
|||||||||||||||
|
|
Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit. |
|
|||||||||||||||
|
|
|
||||||||||||||||
|
|
Foreign currency risk |
||||||||||||||||
|
|
All of the Company's investment portfolio is invested in overseas securities and the Statement of Financial Position, therefore, can be significantly affected by movements in foreign exchange rates. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Management of the risk |
||||||||||||||||
|
|
It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. The Company's borrowings, as detailed in note 12, are predominantly in foreign currency. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Foreign currency exposure by currency of denomination: |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
|
30 April 2018 |
30 April 2017 |
||||||||||||||
|
|
|
|
Net |
Total |
|
Net |
Total |
||||||||||
|
|
|
|
monetary |
currency |
|
monetary |
currency |
||||||||||
|
|
|
Investments |
assets |
exposure |
Investments |
assets |
exposure |
||||||||||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||
|
|
Australian Dollar |
7,991 |
- |
7,991 |
9,173 |
- |
9,173 |
||||||||||
|
|
Hong Kong Dollar |
68,912 |
(14,256) |
54,656 |
57,463 |
(15,315) |
42,148 |
||||||||||
|
|
Indonesian Rupiah |
15,408 |
53 |
15,461 |
11,839 |
- |
11,839 |
||||||||||
|
|
Malaysian Ringgit |
3,179 |
- |
3,179 |
5,726 |
- |
5,726 |
||||||||||
|
|
Philippine Peso |
9,890 |
- |
9,890 |
9,447 |
- |
9,447 |
||||||||||
|
|
Singapore Dollar |
54,217 |
- |
54,217 |
54,882 |
- |
54,882 |
||||||||||
|
|
South Korean Won |
30,720 |
- |
30,720 |
26,925 |
- |
26,925 |
||||||||||
|
|
Sri Lankan Rupee |
3,640 |
- |
3,640 |
5,469 |
- |
5,469 |
||||||||||
|
|
Taiwanese Dollar |
16,671 |
70 |
16,741 |
16,387 |
5 |
16,392 |
||||||||||
|
|
Thai Baht |
8,894 |
- |
8,894 |
8,451 |
- |
8,451 |
||||||||||
|
|
US Dollar |
40,605 |
(6,302) |
34,303 |
33,956 |
(6,653) |
27,303 |
||||||||||
|
|
Vietnam Dong |
3,998 |
1,580 |
5,578 |
3,406 |
6 |
3,412 |
||||||||||
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||
|
|
Total |
264,125 |
(18,855) |
245,270 |
243,124 |
(21,957) |
221,167 |
||||||||||
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Foreign currency sensitivity |
||||||||||||||||
|
|
The following table details the Company's sensitivity to a 10% increase and decrease in sterling against the foreign currencies in which the Company has exposure. The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. |
||||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
|
2018 |
2017 |
||||||||||||||
|
|
|
£'000 |
£'000 |
||||||||||||||
|
|
Australian Dollar |
799 |
917 |
||||||||||||||
|
|
Hong Kong Dollar |
5,466 |
4,215 |
||||||||||||||
|
|
Indonesian Rupiah |
1,546 |
1,184 |
||||||||||||||
|
|
Malaysian Ringgit |
318 |
573 |
||||||||||||||
|
|
Philippine Peso |
989 |
945 |
||||||||||||||
|
|
Singapore Dollar |
5,422 |
5,488 |
||||||||||||||
|
|
South Korean Won |
3,072 |
2,693 |
||||||||||||||
|
|
Sri Lankan Rupee |
364 |
547 |
||||||||||||||
|
|
Taiwanese Dollar |
1,674 |
1,639 |
||||||||||||||
|
|
Thai Baht |
889 |
845 |
||||||||||||||
|
|
US Dollar |
3,430 |
2,730 |
||||||||||||||
|
|
Vietnam Dong |
558 |
341 |
||||||||||||||
|
|
|
_______ |
_______ |
||||||||||||||
|
|
|
24,527 |
22,117 |
||||||||||||||
|
|
|
_______ |
_______ |
||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
Price risk |
||||||||||||||||
|
|
Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Management of the risk |
||||||||||||||||
|
|
It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Price risk sensitivity |
||||||||||||||||
|
|
If market prices at the Statement of Financial Position date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 30 April 2018 would have increased/(decreased) by £33,464,000 (2017 - increased/(decreased) by £31,353,000) and equity reserves would have increased/(decreased) by the same amount. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
(ii) Liquidity risk |
||||||||||||||||
|
|
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Management of the risk |
||||||||||||||||
|
|
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise a fixed rate and revolving multi-currency credit facility, which expires on 7 October 2019. The Board has imposed a maximum gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of 25%. Details of borrowings at 30 April 2018 are shown in note 12. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of the loan facility, details of which can be found in note 12. Under the terms of the loan facility, the Manager provides the lender with loan covenant reports on a monthly basis, to provide the lender with assurance that the terms of the facility are not being breached. The Manager will also review the credit rating of a lender on a regular basis. Details of the Board's policy on gearing are shown in the interest rate risk section of this note. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Liquidity risk exposure |
||||||||||||||||
|
|
At 30 April 2018, the Company had a long term bank loan of £5,000,000 (2017 - £5,000,000) which is due to mature on 7 October 2019 with interest due on the principal every 3 months. The Company also had a rolling facility of £23,058,000 (2017 - £24,524,000) which matured on 23 May 2018 with interest payable at maturity. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
(iii) Credit risk |
||||||||||||||||
|
|
This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Management of the risk |
||||||||||||||||
|
|
Investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker. Cash is held only with reputable banks with high quality external credit enhancements. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Credit risk exposure |
||||||||||||||||
|
|
In summary, compared to the amounts in the Statement of Financial Position, the maximum exposure to credit risk at 30 April was as follows: |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
|
2018 |
|
2017 |
|
||||||||||||
|
|
|
Statement of |
|
Statement of |
|
||||||||||||
|
|
|
Financial |
Maximum |
Financial |
Maximum |
||||||||||||
|
|
|
Position |
exposure |
Position |
exposure |
||||||||||||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||
|
|
Current assets |
|
|
|
|
||||||||||||
|
|
Loans and receivables |
1,127 |
1,127 |
1,052 |
1,052 |
||||||||||||
|
|
Cash at bank and in hand |
4,507 |
4,507 |
1,719 |
1,719 |
||||||||||||
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||||||
|
|
|
5,634 |
5,634 |
2,771 |
2,771 |
||||||||||||
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
None of the Company's financial assets is past due or impaired. |
||||||||||||||||
|
|
|
||||||||||||||||
|
|
Fair values of financial assets and financial liabilities |
||||||||||||||||
|
|
The fair value of the bank loans are presented in the table below; |
||||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
|
2018 |
2017 |
||||||||||||||
|
|
|
£'000 |
£'000 |
||||||||||||||
|
|
Bank loan - £2,500,000 |
2,500 |
2,500 |
||||||||||||||
|
|
Bank loan - £5,000,000 |
5,075 |
5,163 |
||||||||||||||
|
|
Bank loan - HK$154,100,000 |
14,249 |
15,311 |
||||||||||||||
|
|
Bank loan - US$8,680,000 |
6,303 |
6,710 |
||||||||||||||
|
|
|
_______ |
_______ |
||||||||||||||
|
|
|
28,127 |
29,684 |
||||||||||||||
|
|
|
_______ |
_______ |
||||||||||||||
|
|
|
||||||||||||||||
|
|
The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. The carrying values of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. For all other short-term debtors and creditors, their book values approximate to fair values because of their short-term maturity. |
||||||||||||||||
|
17. |
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 and liabilities measured at fair value in the 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 30 April 2018 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
274,167 |
- |
- |
274,167 |
|
|
|
Collective investment schemes |
- |
60,476 |
- |
60,476 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Total fair value |
274,167 |
60,476 |
- |
334,643 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 30 April 2017 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
263,011 |
- |
- |
263,011 |
|
|
|
Collective investment schemes |
- |
50,519 |
- |
50,519 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Total fair value |
263,011 |
50,519 |
- |
313,530 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
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. |
|||||
|
|
|
|||||
|
|
Collective investment schemes |
|||||
|
|
The fair value of the Company's investments in collective investment schemes has been determined by reference to their quoted net asset values at the reporting date and hence are categorised in Fair Value Level 2. |
|||||
|
18. |
Related party transactions and transactions with the Manager |
|
|
Mr Young is also a director of the Company's Investment Manager, Aberdeen Asset Management Asia Limited, which is a wholly-owned subsidiary of Standard Life Aberdeen plc. Management, promotional activities and secretarial and administration services are provided to the Company by Aberdeen Fund Managers Limited. Details of transactions during the year and balances outstanding at the year end disclosed in notes 4 and 5. |
Additional Notes to the Annual Financial Report
The Annual General Meeting will be held at 12 noon on 5 September 2018 at Bow Bells House, 1 Bread Street, London EC4M 9HH.
If approved at the Annual General Meeting, the final dividend of 3.3p per share will be paid on 14 September 2018 to holders of Ordinary shares on the register at the close of business on 17 August 2018. The relevant ex-dividend date is 16 August 2018.
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2018 have been agreed with the auditor and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2017 and 2018 statutory accounts received unqualified reports from the Company's auditor and did not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006. The financial information for 2017 is derived from the statutory accounts for 2017 which have been delivered to the Registrar of Companies. The 2018 accounts will be filed with the Registrar of Companies in due course.
The Annual Report and Accounts will be posted to shareholders in July 2018. Copies will be available during normal business hours from the Secretary, Aberdeen Asset Management PLC, 40 Princes Street, Edinburgh EH2 2BY or from the Company's website, www.newdawn-trust.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.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
27 June 2018
* Neither the Company's website nor the content of any website accessible from hyperlinks on it (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
Latest directors dealings
- 8 minutes ago Manchester & London Investment Trust
- 25 minutes ago Associated British Foods
- 47 minutes ago Centaur Media
- 1 hour ago Wizz Air Holdings
- 1 hour ago Trifast