Annual Financial Report
ABERDEEN NEW DAWN INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 APRIL 2020
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 Standard Fund Managers Limited ("ASFML", the "AIFM" or the "Manager") which has delegated the investment management of the Company to Aberdeen Standard Investments (Asia) Limited ("ASI Asia" or the "Investment Manager"). Both companies are wholly owned subsidiaries of Standard Life Aberdeen plc.
Website
Up to date information can be found on the Company's website: www.newdawn-trust.co.uk
COMPANY OVERVIEW - FINANCIAL HIGHLIGHTS
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Share price total return A B |
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Net asset value total return A B |
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Benchmark total return B |
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2020 |
-8.4% |
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2020 |
-5.5% |
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2020 |
-5.2% |
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2019 |
+8.0% |
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2019 |
+4.9% |
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2019 |
+3.0% |
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Ongoing charges A |
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Revenue return per share |
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Dividend per Ordinary share |
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2020 |
1.10% |
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2020 |
4.61p |
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2020 |
4.30p |
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2019 |
1.13% |
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2019 |
4.30p |
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2019 |
4.30p |
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A Alternative Performance Measure |
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B Total return represents capital return plus dividends reinvested. |
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For further information, please contact:
Stephanie Hocking
Aberdeen Standard Fund Managers Limited
0207 463 6403
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 writing this statement against the backdrop of significant market volatility, resulting from the global spread of the COVID-19 virus. The pandemic has brought entire economies close to a standstill. Governments the world over have been compelled to impose draconian lockdowns in an attempt to contain the disease and prevent it from overwhelming their healthcare systems.
Against this backdrop, the Company's net asset value ("NAV") fell by 5.5% on a total return basis for the year ended 30 April 2020. This compares to a fall of 5.2% in the MSCI All Countries Asia Pacific ex Japan Index. The share price declined by 8.4% in total return terms and, as a result of poor investor sentiment in the final few months of the period, the share price at the end of the year of 225p represented a discount of 12.8% (excluding current year income) to the NAV compared to 10.0% at the start of the year.
The Board is pleased to announce a final dividend of 3.3 p per share (2019: 3.3p), making a total dividend for the year of 4.3 p per share, unchanged from the previous year. If approved by shareholders at the Annual General Meeting, the final dividend will be paid on 11 September 2020 to shareholders on the register on 7 August 2020.
Overview for the Year
Most Asia Pacific stocks did not progress in 2019, having been frequently impacted by the ebb and flow of US-China relations. At the start of 2020 the "Phase One" accord between both countries was announced, which lifted investor sentiment. However, markets were soon overtaken by news of a new and deadly strain of virus originating from central China. Though at first discounted as just another localised event, as we know, by early spring it had spread to most parts of the globe, and was declared a pandemic, so causing stock markets to slump in unison. Exacerbating the loss in investor confidence was the collapse in the oil price. Demand was expected to drop sharply from the raft of travel bans as governments closed their borders, whilst in addition oil producers, led by Opec, could not agree on supply reductions. As a response to the threat of deep recessions and spiralling job losses, governments and central banks around the world initiated varying degrees of fiscal and monetary stimulus. Drawing some comfort from these supportive policies coupled with cheaper imported oil, investors regained some confidence. As a result, by the end of April most regional markets had rebounded somewhat.
During the year, market performance was uneven across the region, reflecting the relative success each country had in containing COVID-19. East Asian countries, which were the first to contend with the virus and now have infections largely under control, gained the most. Southeast Asia, on the other hand, lagged as it continued to struggle with the outbreak. Some markets faced additional challenges of their own. Hong Kong was shaken by prolonged protests before the pandemic emptied its streets, while India was weighed down by ongoing financial sector stress and disappointment over the limited scale of the government's stimulus package.
It was positive to see the Company's technology and healthcare holdings, which are a core part of the portfolio and less vulnerable to the crisis, deliver strong returns during the period. Conversely, holdings in automobile-related businesses and in other consumer discretionary sectors such as travel and leisure bore the brunt of the selling.
The recent indiscriminate sell-off provided the Investment Manager with opportunities to fine-tune, and add to, the portfolio, whilst also adopting a more defensive footing to weather the pandemic. This led to an unusually active year in portfolio management. Specifically, the Investment Manager has sought to invest in quality companies, with a focus on those with strong balance sheets and healthy cash flows as well as good environmental, social and governance ("ESG") practices. At the same time, the Investment Manager has disposed of holdings where it had lower conviction and which it felt would be less resilient during this period of economic distress. The Investment Manager also took the opportunity arising from cheaper valuations to initiate new quality stocks into the portfolio. Selecting these companies from a bottom-up perspective led to a rise in the Company's exposure to markets such as China and Australia, as well as to sectors including technology and healthcare. More detailed information is included in the Investment Manager's Review.
Gearing
At the end of the year, the Company's borrowing facilities comprised a fixed rate loan of £20 million, which matures in December 2023 (with an interest rate of 2.626%), and a £15 million multi-currency revolving loan facility which matures in December 2021. During the period, the Company also had a £5 million fixed rate loan which matured, and was repaid, in October 2019. Total borrowing facilities have therefore reduced to £35 million compared to £40 million at the start of the year. An aggregate Sterling equivalent of £33.6 million was drawn down at the year end and gearing (net of cash) was 10.3% as at 30 April 2020, compared to 9.3% at the beginning of the year.
Although gearing had a negative impact on the NAV total return for the year, the Board is comfortable with maintaining the current level and views it as a structural advantage that the Company has over its open-ended equivalents. As the market eventually recovers and structural growth trends in the Asia Pacific region are re-established, the gearing would be expected to work in the opposite direction, helping to boost returns over the long term.
Share Buybacks
In common 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. The Board closely monitors the discount and we review the operation of the share buy back policy at each Board meeting as well as considering other options for managing the discount.
During the year, the Company bought back 1.3 million shares, representing 1.1% 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.
The Board will seek to renew the Company's share buyback authority at the Annual General Meeting.
Board Composition
As previously announced, John Lorimer will retire from the Board at the conclusion of the forthcoming Annual General Meeting. John has been a Director of the Company for 10 years including 8 years as Chairman of the Audit and Risk and Management Engagement Committees. On behalf of the Board, I would like to thank John for his significant contributions throughout this period. We shall miss his wise counsel.
Following John's retirement, Stephen Souchon will be appointed as Chairman of the Audit and Risk Committee, I will take over as Chairman of the Management Engagement Committee and Marion Sears will be appointed as the Senior Independent Director.
Annual General Meeting
The Annual General Meeting ("AGM") will be held at 12 noon on Wednesday 2 September 2020 at the offices of Aberdeen Standard Investments, Bow Bells House, 1 Bread Street, London EC4M 9HH.
The Board has been considering how best to deal with the potential impact of the COVID-19 pandemic on arrangements for the AGM. Taking account of developing Government guidance, and including evolving rules on staying at home, social distancing and avoiding public gatherings ("COVID-19 Measures") and given the likelihood that some level of restriction on public gatherings and maintaining social distancing will remain in place beyond September, the Board has also resolved to amend the format of the AGM for this year. Therefore, whilst the formal business of the AGM will be considered, the meeting will be functional only, and will follow the minimum legal requirements for an AGM. Should COVID-19 Measures remain in place in September, shareholders are strongly discouraged from attending the meeting and indeed, pursuant to the Company's Articles of Association, entry may be refused if the law and/or Government guidance so requires. In such circumstances, arrangements will be made by the Company to ensure that the minimum number of shareholders required to form a quorum will attend the meeting in order that the meeting may proceed and the business concluded.
The Board considers these revised arrangements to be in the best interests of shareholders in the current circumstances. In light of the outbreak and evolving Government guidance, the Company will continue to keep arrangements for the AGM under review and it is possible the arrangements will need to change. We will keep shareholders updated of any changes through the Company's website (newdawn-trust.co.uk) and announcements to the London Stock Exchange. We trust that shareholders will be understanding of this approach and we hope that 'normal service' can be resumed next year.
A presentation from the Investment Manager, along with the AGM results, will be made available to shareholders on the Company's website shortly after the AGM.
In light of the developing situation and the revised format of this year's meeting, shareholders are encouraged to raise any questions in advance of the AGM with the Company Secretary at new.dawn@aberdeenstandard.com (please include 'NEW DAWN AGM' in the subject heading). Questions must be received by 5.00pm on 31 August 2020. Any questions received will be replied to by either the Manager or Board via the Company Secretary either before or after the AGM.
In taking these steps, the Board is trying to balance the requirement under company law to hold an AGM so that the matters that it needs to seek shareholder approval for can be considered, whilst operating in a rapidly changing environment where public gatherings are restricted. The Board strongly encourages all shareholders to exercise their votes in respect of the meeting in advance by completing the enclosed form of proxy, or letter of direction for those who hold shares through the Aberdeen Standard Investments savings plans. This should ensure that your votes are registered in the event that physical attendance at the AGM is not possible or restricted.
Outlook
Asia Pacific stocks have recovered some losses since markets reached a four-year low in mid-March. Investors turned hopeful as COVID-19 infections appeared to peak in many countries, economies started tentatively to re-open and governments added more stimulus. However, the Board and Manager take a more cautious perspective, given the risk of secondary waves of infections as economies re-open, particularly in some of the densely populated emerging markets in Asia. Whilst it is difficult to say when the pandemic will be over, it will most likely come only when an effective vaccine becomes widely available. The timescale for this is highly uncertain. With countries easing lockdown restrictions slowly and at different times, a 'V-shaped' recovery seems increasingly unlikely. In addition, the state of US-China relations is likely to add to volatility. Tensions are already escalating, and are likely to worsen as we approach the US presidential elections in November.
On a more positive note, the current low oil price benefits Asia Pacific, which is a net importer of the commodity. This reduces imported inflation, providing central banks greater elbow room for monetary easing and, for governments providing oil subsidies, more leeway for fiscal stimulus. In the longer term, Asia remains the world's most economically vibrant region. Its structural attractions, such as a growing middle-class that is also becoming more affluent, as well as deep expertise in technology manufacturing and innovation, remain unchanged. Its companies have also taken the lessons from past crises to heart, and this has ensured that their balance sheets are not overstretched during these difficult times. Governments, meanwhile, have learnt the lessons from past virus outbreaks in the region and, as a result, are arguably among the best equipped to respond to the current pandemic. Once it is behind us, the region should be among the first to benefit. The Board is confident that the Company's portfolio, repositioned around the more resilient sectors, can continue to benefit from these long-term growth trends.
Donald Workman
Chairman
1 July 2020
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
Asset Allocation
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 10.3% 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 the investment policy.
Risk Diversification
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 2020, 2.2% of the Company's gross assets were invested in listed investment companies.
The Company may invest in derivatives, financial instruments, money market instruments and currencies for the purposes of efficient portfolio management (ie for the purpose of reducing, transferring or eliminating investment risk in the Company's investments, including any technique or instrument used to provide protection against foreign exchange and credit risks).
The Company may only make material changes to its investment policy with the approval of shareholders in the form of an ordinary resolution. In addition, any material changes to the Company's investment policy will require the prior approval of the Financial Conduct Authority.
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.
Board 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.
Benchmark
The Company compares its performance to the MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted).
Promoting the Success of the Company
The Board's statement below describes how the Directors have discharged their duties and responsibilities over the course of the financial year under section 172 (1) of the Companies Act 2006 and how they have promoted the success of the Company. That statement forms part of the Strategic Report.
Board Diversity
The Board recognises the importance of having a range of skilled and 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 2020, there were four male Directors and two female Directors. Following the retirement of John Lorimer from the Board at the Annual General Meeting on 2 September 2020, there will be three male Directors and two female Directors.
Principal Risks and Uncertainties
The Company's statement of principal risks and uncertainties form part of the Strategic Report and is included below.
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 table below.
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KPI |
Description |
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Performance of net asset |
The Board considers the Company's NAV total return figures to be the best indicator of performance over time. |
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Performance against |
The Board measures performance against the benchmark index - the currency-adjusted MSCI All Countries Asia Pacific ex Japan Index. |
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Revenue return per |
The Board monitors the Company's net revenue return. |
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Dividends per share |
The Board monitors the Company's annual dividends per Ordinary share. |
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Share price performance |
The Board monitors the performance of the Company's share price on a total return basis. |
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Discount/premium to NAV |
The discount/premium of the share price relative to the NAV per share is closely monitored by the Board. |
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Ongoing charges |
The Board regularly monitors the Company's operating costs. |
Promotional Activities
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 one effective way to achieve this is through subscription to, and participation in, the promotional programme run by Aberdeen Standard Investments on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by Aberdeen Standard Investments. The Company also supports Aberdeen Standard Investments' investor relations programme which involves regional roadshows, promotional and public relations campaigns. Aberdeen Standard Investments' promotional and investor relations teams report to the Board on a quarterly basis 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 promotional and investor relations programmes 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. Part of the promotional programme includes commissioning independent paid for research on the Company, most recently from Marten & Co. A copy of the latest Marten & Co research note is available from the Latest News section of the Company's website, newdawn-trust.co.uk.
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.
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.
Environmental, Social and Governance ("ESG") Investing
Whilst the management of the Company's investments is not undertaken with any specific instructions to exclude or include certain asset types or classes, the Investment Manager embeds ESG considerations into the research and analysis of each asset class as part of the investment decision-making process. Where applicable, active engagement and other stewardship activities such as voting in line with best practices, with the goal of improving the performance of assets held around the world, is also an important part of the Investment Manager's approach.
The Investment Manager aims to make the best possible investments for the Company, by understanding the whole picture of the investments - before, during and after an investment is made. That includes understanding the ESG risks and opportunities they present, and how these could affect longer-term performance. ESG considerations underpin all investment activities. With more than 1,000 investment professionals, the Investment Manager is able to take account of ESG factors in its company research, stock selection and portfolio construction, supported by more than 50 asset class specific ESG specialists around the world.
Responsible Investment
The Board is aware of its duty to act in the interests of the Company. The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and has noted the Investment Manager's policy on social responsibility. The Investment Manager considers social, environmental and ethical factors which may affect the performance or value of the Company's investments as part of its investment process. In particular, the Investment Manager encourages companies in which investments are made to adhere to best practice in the areas of ESG stewardship. The Investment Manager believes that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies.
The Company's ultimate objective is to deliver long term growth on its investments for its shareholders which the Board and Investment Manager believes will be produced on a sustainable basis by investments in companies which adhere to best practice in ESG. Accordingly, the Investment Manager will seek to favour companies which pursue best practice.
Active Engagement
Through engagement and exercising voting rights, the Investment Manager actively works with companies to improve corporate standards, transparency and accountability. By making ESG central to its investment capabilities, the Investment Manager looks to deliver robust outcomes as well as actively contributing to a fairer, more sustainable world.
The primary goal of the Investment Manager is to generate the best long-term outcomes for the Company in order to fulfil fiduciary responsibilities to shareholders and this fits with one of the Investment Manager's core principles as a business in how it evaluates investments. The Investment Manager sees ESG factors as being financially material and impacting corporate performance. The Investment Manager focuses on understanding the ESG risks and opportunities of investments alongside other financial metrics to make better investment decisions.
The Investment Manager aims for better risk-adjusted returns by actively undertaking informed and constructive engagement and asset management to generate better performance from its investments. Comprehensive assessment of ESG factors, combined with constructive company engagement, should lead to better client outcomes.
Stewardship
The Company supports the UK's Stewardship Code, and seeks to play its role in supporting good stewardship of the companies in which it invests. 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. Standard Life Aberdeen plc is a tier 1 signatory of the UK Stewardship Code which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment returns to shareholders. While delivery of stewardship activities has been delegated to the Manager and its group, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company's behalf.
The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues.
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 at 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 2020 the average discount to the underlying NAV (excluding current year income, and with borrowings stated at market value) of the Ordinary shares was 12.8% 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 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 (see the Audit and Risk Committee's Report).
- 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 securities in active markets or in collective investment schemes, and are considered to be liquid.
- 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 refinance its loan facilities, on or before maturity.
- 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.
- Regulatory or market changes.
- The level of the Company's ongoing charges.
- The robustness of the operations of the Company's third party suppliers, which have been subject to rigorous testing and application, particularly during the COVID-19 pandemic.
- Exogenous risks such as those currently impacting global economies and stock markets.
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 greater than anticipated economic impact of the COVID-19 pandemic, economic shocks, 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 and emerging risks, 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 approval 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 the Investment Manager's Review.
On behalf of the Board
Donald Workman
Chairman
1 July 2020
STRATEGIC REPORT - PROMOTING THE SUCCESS OF THE COMPANY
How the Board Meets its Obligations under Section 172 of the Companies Act
The Board is required to describe to the Company's shareholders how the Directors have discharged their duties and responsibilities over the course of the financial year under section 172 (1) of the Companies Act 2006 (the "Section 172 Statement"). This statement provides an explanation of how the Directors have promoted the success of the Company for the benefit of its members as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with all stakeholders and the impact of the Company's operations on the environment.
The Purpose of the Company and Role of the Board
The purpose of the Company is to act as a vehicle to provide, over time, financial returns (both income and capital) to its shareholders. Investment trusts, such as the Company, are long-term investment vehicles and are typically externally managed, have no employees, and are overseen by an independent non-executive board of directors.
The Board, which at the end of the year comprised six non-executive Directors, five of whom are independent of the Manager, has a broad range of skills and experience across all major functions that affect the Company. The Board retains responsibility for taking all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's service providers.
The Board's philosophy is that the Company should operate in a transparent culture where all parties are treated with respect and provided with the opportunity to offer practical challenge and participate in positive debate which is focused on the aim of achieving the expectations of shareholders and other stakeholders alike. The Board reviews the culture and manner in which the Manager and Investment Manager operate at its meetings and receives regular reporting and feedback from the other key service providers. The Board is very conscious of the ways it promotes the Company's culture and ensures as part of its regular oversight that the integrity of the Company's affairs is foremost in the way that the activities are managed and promoted. The Board works very closely with the Manager and Investment Manager in reviewing how stakeholder issues are handled, ensuring good governance and responsibility in managing the Company's affairs, as well as visibility and openness in how the affairs are conducted.
The Company's main stakeholders are shareholders (who are also the Company's 'customers'), the Manager (and Investment Manager), investee companies, service providers, debt providers and, more broadly, the community at large and the environment.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings and receives feedback on the Manager's interactions with them.
Stakeholder |
How We Engage |
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Shareholders |
Shareholders are key stakeholders and the Board places great importance on communication with them. The Board welcomes all shareholders' views and aims to act fairly to all shareholders. The Manager and Company's broker regularly meet with current and prospective shareholders to discuss performance and shareholder feedback is discussed by the Directors at Board meetings. In addition, Directors attend meetings with the Company's largest shareholders and meet other shareholders at the Annual General Meeting. The Company subscribes to Aberdeen Standard Investments' investor relations programme in order to maintain communication channels with the Company's shareholder base.
Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, Company announcements, including daily net asset value announcements, and the Company's website.
The Company's Annual General Meeting usually provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Manager. Typically, the Board encourages as many shareholders as possible to attend the Company's Annual General and to provide feedback on the Company. This year, due to the uncertainties caused by the COVID-19 pandemic and, in particular, the restrictions on public gatherings and requirement to socially distance, it is likely that the Annual General Meeting will be held on a functional only basis, satisfying the minimum legal requirements. Instead, shareholders are encouraged to submit questions to the Board and the Manager. Further details can be found in the Chairman's Statement. |
|
Manager (and Investment Manager) |
The Investment Manager's Review details the key investment decisions taken during the year. The Investment Manager has continued to manage the Company's assets in accordance with the mandate provided by shareholders, with oversight provided by the Board.
The Board regularly reviews the Company's performance against its investment objective and the Board undertakes an annual strategy review meeting to ensure that the Company is positioned well for the future delivery of its objective for its stakeholders.
The Board receives presentations from the Investment Manager at every Board meeting to help it to exercise effective oversight of the Investment Manager and the Company's strategy.
The Board, through the Management Engagement Committee, formally reviews the performance of the Manager at least annually. |
|
Investee Companies |
Responsibility for 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 Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues.
Through engagement and exercising voting rights, the Investment Manager actively works with companies to improve corporate standards, transparency and accountability. |
|
Service Providers |
The Board seeks to maintain constructive relationships with the Company's suppliers either directly or through the Manager with regular communications and meetings.
The Management Engagement Committee conducts an annual review of the performance, terms and conditions of the Company's main service providers to ensure they are performing in line with Board expectations and providing value for money. |
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Debt Providers |
On behalf of the Board, the Manager maintains a positive working relationship with The Royal Bank of Scotland International Limited, the provider of the Company's loan facilities, and provides regular updates on business activity and compliance with its loan covenants. |
|
Environment and Community |
The Board and Manager are committed to investing in a responsible manner and the Investment Manager embeds Environmental, Social and Governance ("ESG") considerations into the research and analysis as part of the investment decision-making process. |
Specific Examples of Stakeholder Consideration During the Year
While the importance of giving due consideration to the Company's stakeholders is not a new requirement, and is considered during every Board decision, the Directors were particularly mindful of stakeholder considerations during the following decisions undertaken during the year ended 30 April 2020:
Portfolio
The Investment Manager's Review details the key investment decisions taken during the year. In the opinion of the Board, the performance of the investment portfolio is the key factor in determining the long term success of the Company. Accordingly, at each Board meeting the Directors discuss performance in detail with the Investment Manager. In addition, during the year, the Board considered in detail how the Investment Manager incorporates ESG issues into its research and analysis work that forms part of the investment decision process.
During the year the Management Engagement Committee decided that the continuing appointment of the Manager was in the best interests of shareholders.
Dividend
Following the payment of the final dividend for the year, of 3.3p per Ordinary share, total dividends for the year will amount to 4.3p per Ordinary share, unchanged from the previous year.
Share Buy Backs
During the year the Company bought back 1,270,000 Ordinary shares to be held in treasury, providing a small accretion to the NAV per share and a degree of liquidity to the market at times when the discount to the NAV per share has widened in normal market conditions. It is the view of the Board that this policy is in the interest of all shareholders.
Directorate
The Board has continued to progress its succession plans during the year resulting in the decision to appoint Stephen Souchon as an independent non-executive Director on 1 October 2019. Mr Souchon will succeed Mr Lorimer as Chairman of the Audit and Risk Committee upon Mr Lorimer's retirement from the Board at the Annual General Meeting on 2 September 2020. Further details are provided in the Chairman's Statement. Shareholders' interests are best served by ensuring a smooth and orderly refreshment of the Board which serves to provide continuity and maintain the Board's open and collegiate style.
STRATEGIC REPORT - RESULTS
Financial Highlights
|
|
30 April 2020 |
30 April 2019 |
% change |
|
Total assets |
£322,929,000 |
£347,660,000 |
-7.1 |
|
Total equity shareholders' funds (net assets) |
£289,285,000 |
£314,411,000 |
-8.0 |
|
Market capitalisation |
£248,786,000 |
£279,603,000 |
|
|
Net asset value per Ordinary share (including current year income) |
261.63p |
281.12p |
-6.9 |
|
Net asset value per Ordinary share (excluding current year income) A B |
258.00p |
277.79p |
-7.1 |
|
Share price (mid market) |
225.00p |
250.00p |
-10.0 |
|
Discount to net asset value per Ordinary share (including current year income) B |
14.0% |
11.1% |
|
|
Discount to net asset value per Ordinary share (excluding current year income) A B |
12.8% |
10.0% |
|
|
MSCI AC Asia Pacific ex Japan Index (currency adjusted, capital gains basis) |
710.41 |
772.65 |
-8.1 |
|
Net gearingB |
10.33% |
9.32% |
|
|
Dividend and earnings |
|
|
|
|
Revenue return per share C |
4.61p |
4.30p |
+7.2 |
|
Dividends per share D |
4.30p |
4.30p |
- |
|
Dividend cover |
1.07 |
1.00 |
|
|
Revenue reserves E |
£13,434,000 |
£13,104,000 |
|
|
Operating costs |
|
|
|
|
Ongoing charges ratio B |
1.10% |
1.13% |
|
|
|
|
|
|
|
A Based on capital only NAV. |
|||
|
B Considered to be an Alternative Performance Measure. |
|||
|
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. |
|||
STRATEGIC REPORT - PERFORMANCE
Performance (total return)
|
|
1 year return |
3 year return |
5 year return |
|
|
% |
% |
% |
|
Net asset value A |
-5.5 |
+12.0 |
+31.6 |
|
Share price A |
-8.4 |
+12.0 |
+31.9 |
|
MSCI AC Asia Pacific ex Japan Index (currency adjusted) |
-5.2 |
+10.4 |
+32.2 |
|
|
|
|
|
|
A Alternative Performance Measure. |
|
|
|
Dividends
|
|
Rate |
xd date |
Record date |
Payment date |
|
Interim 2020 |
1.00p |
2 January 2020 |
3 January 2020 |
31 January 2020 |
|
Proposed final 2020 |
3.30p |
6 August 2020 |
7 August 2020 |
11 September 2020 |
|
|
_______ |
|
|
|
|
Total 2020 |
4.30p |
|
|
|
|
|
_______ |
|
|
|
|
Interim 2019 |
1.00p |
3 January 2019 |
4 January 2019 |
25 January 2019 |
|
Final 2019 |
3.30p |
15 August 2019 |
16 August 2019 |
13 September 2019 |
|
|
_______ |
|
|
|
|
Total 2019 |
4.30p |
|
|
|
|
|
_______ |
|
|
|
Ten Year Financial Record
|
Year to 30 April |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
Total revenue (£'000) |
5,752 |
6,799 |
6,562 |
6,819 |
7,412 |
7,004 |
6,922 |
7,481 |
7,442 |
7,738 |
|
Per share (p) A |
|
|
|
|
|
|
|
|
|
|
|
Net revenue return |
3.17 |
3.97 |
3.89 |
3.79 |
4.18 |
4.06 |
4.05 |
4.47 |
4.30 |
4.61 |
|
Total return |
26.44 |
(2.72) |
33.49 |
(18.68) |
31.74 |
(34.72) |
68.66 |
30.97 |
11.88 |
(15.45) |
|
Net dividends paid/proposed |
2.50 |
3.30 |
3.40 |
3.60 |
3.80 |
3.90 |
4.00 |
4.30 |
4.30 |
4.30 |
|
Net asset value |
186.60 |
181.38 |
210.57 |
188.49 |
216.67 |
179.43 |
244.90 |
272.41 |
281.12 |
261.63 |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
Shareholders' funds (£'000) |
232,406 |
225,908 |
262,263 |
234,762 |
269,398 |
216,243 |
286,191 |
311,816 |
314,411 |
289,285 |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
|
|
|
|
|
|
|
|
|
|
|
|
A Figures for 2011-2013 have been restated to reflect the 5:1 sub-division on 3 September 2013. |
||||||||||
STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW
Portfolio Review
Despite decent performance in the first nine months, a precipitous sell-off across global markets in the New Year dragged Asia Pacific equities lower over the full year. Share prices fell as the massive human, social and economic toll of the COVID-19 pandemic became apparent. Against this backdrop, the Company's net asset value ("NAV") decreased by 5.5% in total return terms, compared with a fall of 5.2% in the MSCI All Countries Asia Pacific ex Japan Index.
The period was volatile. Sentiment was upbeat before Christmas as the US and China overcame setbacks to reach a truce in their trade dispute. But almost all other issues took a back seat once the COVID-19 virus took hold. Of particular concern to investors was the impact on growth after countries effectively shut down their economies to contain the outbreak. With recessions looming, governments and central banks reached for their fiscal and monetary levers, unleashing relief packages and cutting interest rates. Collapsing oil prices, gloomy economic data and fears of a resurgence of infections tempered optimism over slowing case numbers and re-opening of essential sectors.
In such troubled times, we believe a quality-focused strategy remains the best way to mitigate risk. Hence, we adopted a two-pronged approach to face the uncertainty ahead. First, we sought to enhance the portfolio's defensive positioning. This involved thoroughly assessing the portfolio to ensure that its holdings comprised companies with healthy balance sheets and cash flows, backed by experienced management. Second, we took advantage of share-price gyrations to add to higher-conviction holdings. We also used the market swings to initiate names that we like but had previously put off buying due to expensive valuations.
Australia was a prime example. Commodity price weakness dampened the resource-heavy market, but the holdings in the portfolio contributed positively to performance, helped by the excellent returns of biotech major CSL, reflecting its dominance in the blood-plasma segment. Furthermore, the company reaffirmed its full-year earnings forecasts in contrast to many of its peers that withdrew theirs.
With valuations at appealing levels, we added several new names to the portfolio. Among these were two technology holdings. Altium develops electronic design software for printed circuit boards, a key component in electronic devices. Xero makes cloud-based accounting software for small and medium-sized businesses. It is cash-generative and has built a good position in its home markets. Its expansion abroad and the structural shift towards the cloud support its long-term outlook. In addition, we established positions in New Zealand-based Auckland International Airport, a tourism-linked stock, and in gaming-machine maker Aristocrat Leisure. While COVID-19 will have a negative impact on Auckland International's near-term prospects, we believe that the share price has fallen by more than their fundamentals warrant. The airport still holds a near-monopoly position, while passenger traffic will eventually recover. In the meantime, its balance sheet will enable it to weather this tough period. For Aristocrat Leisure, management has invested to help the company maintain its competitive advantage. We think its digital-gaming business is under-appreciated, with several games nearing profitability.
The Company's core holdings in China and the technology sector delivered noticeable contributions. China was among the most resilient markets in the year, being one of the first to restart economic activity after bearing the initial brunt of the disease. As a result, the Company's underweight exposure, along with the lack of exposure to Alibaba, proved costly. However, good performance from other mainland holdings offset the negative impact. The Aberdeen Standard SICAV - China A Share Equity Fund, the portfolio's largest position, was the best performing holding. The A Share Fund holds high-quality, largely domestic-oriented market leaders, which we believe are well-positioned to benefit as the mainland recovers from the virus outbreak. Internet giant Tencent Holdings also outperformed as stay-at-home policies boosted its games and social media offerings. Pharmaceutical contract-research group Wuxi Biologics also fared well as investors gained greater confidence about its business model.
In the technology sector, heavyweights Taiwan Semiconductor Manufacturing Company ("TSMC") and Samsung Electronics were among the best performing holdings. The pair rallied on a brighter outlook for memory chips, thanks to the faster than expected deployment of 5G networks. They further benefited from a surge in online activity during the lockdowns, which lifted demand for chips used to power laptops and servers. While both flagged weaker earnings ahead, their healthy financial positions offer ample cushions. Their longer-term prospects remain promising, on the back of trends, such as 5G networks and cloud computing. Both companies made progress on environmental, social and governance ("ESG") issues which further strengthens our investment cases. TSMC's efforts to improve its water management reflect a commitment to more sustainable production processes. We were also heartened by Samsung's appointment of its first independent chairman given our engagement on such issues.
Volatile markets provided opportunities to add to the portfolio's exposure to industry leaders with clear competitive strengths and viable growth drivers. Notably, we are positive about the long-term potential of premium consumption in China, given its more affluent middle class. Meituan Dianping, a new addition, is uniquely placed to exploit this trend. The online services platform's "super app" caters to a broad range of lifestyle needs. Quicker adoption of e-commerce during the pandemic further buoys its prospects.
At the same time, we like technology and internet companies that are dominant in niche segments. Here, we introduced GDS, one of the top internet data centre providers in China. The expansion of online payments and cloud services should bolster demand for its services, while management is upbeat about boosting capacity. The policy environment looks supportive as well, with Beijing earmarking data centres as a strategic investment.
Outside China, another new technology holding was ASML. It is the world's sole supplier of extreme ultraviolet lithography machines, which are essential for making the smallest microchips while keeping costs low. The company is Netherlands-based, but generates the bulk of its revenues in Asia, counting Samsung and TSMC among its customers.
In contrast, Hong Kong was a significant area of weakness for the Company. The COVID-19 outbreak further strained an economy that was already reeling from months of political unrest. This had a negative impact on Jardine Strategic Holdings, which was also negatively affected by the challenging conditions facing several of its consumption-oriented regional units, including Indonesia's Astra International. Amid concerns about the potential for more political and economic instability, we further reduced the Company's Hong Kong exposure, divesting Hang Lung Properties and Swire Pacific.
Apart from the adjustments above, we reduced other holdings with less certain prospects. Given the evolving crisis, we are sensitive to the shifting dynamics at a macro level that could drag on the Company's performance. This supported our decision to pare the position in the Aberdeen Standard SICAV - Indian Equity Fund. We were concerned about the outlook for India, given that the virus outbreak was still at an early stage. In the energy sector, we sold Woodside Petroleum on fears that the fall in the oil price would derail its expansion plans. We also reduced the Company's exposure to banks, exiting HSBC, Public Bank, Standard Chartered and United Overseas Bank. We felt that lower interest rates, weak growth and rising defaults would cast a shadow over the sector.
Outlook
With COVID-19 infections reaching an inflection point in many parts of the world, governments now face an unenviable task of undoing the economic damage. It is clear that this shock is likely to be both severe and prolonged. While more businesses have tentatively resumed operations, there is a lack of clarity on earnings prospects. End-demand remains lacklustre, constrained by rising unemployment, while social-distancing measures remain in place. A vaccine may be a game-changer, but it could be months before one becomes widely available. Meanwhile, the spectre of US-China tensions has returned. Early salvos, such as US curbs on telecommunications giant Huawei, bode trouble ahead.
With markets prone to bouts of volatility in these trying conditions, we remain disciplined in the way we invest. As ever, the focus is on quality companies, but with increased scrutiny on balance sheet strength, cash generation and debt levels. These defensive traits should ensure that the holdings in the Company's portfolio will cope with unforeseen problems, while protecting shareholder returns, although we do still anticipate that companies will reduce dividend payouts this year as earnings come under pressure and management teams seek to conserve cash. We continue to actively engage with the underlying holdings' management, obtaining first-hand perspectives on how they are responding to the crisis. These regular check-ins also enable us to inculcate ESG improvements, a cornerstone of our due-diligence process.
Despite the daunting challenges ahead, we think the Asia Pacific region is still a compelling investment destination in the long run. It is home to many high-quality companies, while the structural trends that underpin the region's growth are intact. Notably, we believe that technology, healthcare and domestic consumption are all areas that will grow in both the medium and longer term. Our goal remains to invest in the best companies at attractive valuations, ensuring the portfolio has exposure to these promising themes. This, in turn, will position your Company to continue delivering sustainable returns.
James Thom and Gabriel Sacks
Aberdeen Standard Investments (Asia) Limited
1 July 2020
STRATEGIC REPORT - PRINCIPAL RISKS AND UNCERTAINTIES
The Board carries out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks. The Board also identifies emerging risks which might affect the Company. During the year, the most significant risk was the emergence of the COVID-19 virus during the first part of 2020 which has impacted dramatically on public health and mobility, but has also had a significant adverse influence on global financial markets and the future economic outlook.
There are a number of other risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. 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 and uncertainties faced by the Company are reviewed by the Audit and Risk Committee in the form of a risk matrix and the Committee also gives consideration to the emerging risks facing the Company.
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 principal risks associated with an investment in the Company's shares are published monthly on the Company's factsheet and they can also 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 NAV per share. |
|
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 17 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, ASFML, as the 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 Packaged Retail and Insurance-based Investment Products Regulations, the Listing Rules, Disclosure Guidance and Transparency Rules, Prospectus Rules and corporate governance regulations) 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, including those relating to cyber crime, 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.
The operational requirements of the Company have been subject to rigorous testing and application during the COVID-19 pandemic, including increased use of online communication and out of office working and reporting, which to date have proved to be robust.
Further details of the internal controls which are in place are set out in the Audit and Risk Committee's Report. |
|
Exogenous risks such as health, social, financial, economic and geo-political - the financial impact of such risks, associated with the portfolio or the Company itself, could result in losses to the Company. Political risks include the UK's impending exit from the European Union, any regulatory changes resulting from a different political environment, and wider geo-political issues. |
Exogenous risks over which the Company has no control are always a risk. The Company does what it can to address these risks where possible, not least operationally and to try and meet the Company's investment objectives.
The Board is conscious of the recent impact on financial markets caused by the outbreak of the COVID-19 virus around the world since the beginning of 2020. The Board considers that this is a risk that could have further implications for global financial markets, economies and on the operating environment of the Company, the impact of which is difficult to predict at the current juncture. During this period, the Board has been liaising closely with the Manager to receive updates on performance and to seek assurances that the operations of the Manager and those of other third party service providers are operating effectively. |
PORTFOLIO - TEN LARGEST INVESTMENTS
As at 30 April 2020
|
Aberdeen Standard SICAV - China A Share Equity Fund |
|
Tencent Holdings |
|
The fund invests in a selection of Chinese companies that benefit from rising disposable incomes of a growing middle class. The Investment Manager believes it is prudent to invest via a pooled vehicle offering greater stock diversification and lower volatility than directly in the A share market. |
|
The internet giant continues to strengthen its ecosystem, and the Investment Manager sees tremendous potential in Tencent's advertising business as it starts monetising its social media and payment platforms. |
|
|
|
|
|
Aberdeen Standard SICAV - Indian Equity Fund |
|
Taiwan Semiconductor Manufacturing Company ("TSMC") |
|
A tax-efficient pooled India fund with a long-term investment approach managed by the same team managing the Company. |
|
As the world's largest pure-play semiconductor manufacturer, TSMC provides a full range of integrated services for its clients, along with a robust balance sheet and good cash generation that enables ongoing investments in cutting-edge technology and innovation. |
|
|
|
|
|
Samsung Electronics Pref |
|
CSL |
|
A global leader in the memory chips segment, and a major player in smartphones and display panels. It has a vertically-integrated business model and robust balance sheet, alongside good free cash flow generation. The Company owns preferred shares, which trade at a discount to the ordinary shares. |
|
An Australia-listed biopharmaceutical company that is a leader in the global plasma products market. The company enjoys superior growth and returns because of its highly-efficient collection and processing system, coupled with its commitment to research and development. |
|
|
|
|
|
Ping An Insurance |
|
AIA Group |
|
A conglomerate with one of the best life-insurance franchises in China. Its progressive management has demonstrated an ability to deliver decent financial performance within an ecosystem that is currently unrivalled. |
|
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 a strong balance sheet. |
|
|
|
|
|
Bank Central Asia |
|
Ayala Land |
|
Among the largest local private banks in Indonesia, it is well capitalised with a large stable base of low-cost deposits that funds its lending, while asset quality remains solid. |
|
A leading property developer in the Philippines with an attractive land bank, well-respected brand and expertise across residential, commercial and retail sectors. |
PORTFOLIO - OTHER INVESTMENTS
As at 30 April 2020
|
|
|
|
Valuation |
Total |
Valuation |
|
|
|
|
2020 |
assetsA |
2019 |
|
Company |
Industry |
Country |
£'000 |
% |
£'000 |
|
Aberdeen Standard SICAV - China A Share Equity Fund B |
Collective Investment Scheme |
China |
29,901 |
9.3 |
22,406 |
|
Tencent Holdings |
Interactive Media & Services |
China |
28,836 |
8.9 |
19,884 |
|
Aberdeen Standard SICAV - Indian Equity Fund B |
Collective Investment Scheme |
India |
26,880 |
8.3 |
40,673 |
|
Taiwan Semiconductor Manufacturing Company |
Semiconductors & Semiconductor Equipment |
Taiwan |
23,649 |
7.3 |
14,968 |
|
Samsung Electronics Pref |
Technology Hardware Storage & Peripherals |
South Korea |
22,920 |
7.1 |
16,385 |
|
CSL |
Biotechnology |
Australia |
10,909 |
3.4 |
6,988 |
|
Ping An Insurance H Shares |
Insurance |
China |
10,453 |
3.2 |
9,345 |
|
AIA Group |
Insurance |
Hong Kong |
8,631 |
2.7 |
10,575 |
|
Bank Central Asia |
Banks |
Indonesia |
8,210 |
2.5 |
9,740 |
|
Ayala Land |
Real Estate Management & Development |
Philippines |
7,463 |
2.3 |
10,412 |
|
Top ten investments |
|
|
177,852 |
55.0 |
|
|
China Resources Land |
Real Estate Management & Development |
China |
7,403 |
2.3 |
7,602 |
|
Oversea-Chinese Banking Corporation |
Banks |
Singapore |
6,924 |
2.1 |
9,486 |
|
Wuxi Biologics (Cayman) |
Life Sciences Tools & Services |
China |
6,407 |
2.0 |
3,460 |
|
Cochlear |
Health Care Equipment & Supplies |
Australia |
6,265 |
1.9 |
3,625 |
|
BHP Group (London listing) |
Metals & Mining |
Australia |
5,683 |
1.8 |
7,018 |
|
Hong Kong Exchanges & Clearing |
Capital Markets |
Hong Kong |
5,527 |
1.7 |
6,419 |
|
Jardine Strategic Holdings |
Industrial Conglomerates |
Hong Kong |
5,464 |
1.7 |
11,984 |
|
Aberdeen New India Investment Trust B |
Investment Trusts |
India |
5,033 |
1.6 |
6,414 |
|
Anhui Conch Cement H Shares |
Construction Materials |
China |
4,435 |
1.4 |
3,329 |
|
Swire Properties |
Real Estate Management & Development |
Hong Kong |
4,219 |
1.3 |
5,907 |
|
Top twenty investments |
|
|
235,212 |
72.8 |
|
|
ASML |
Semiconductors & Semiconductor |
Netherlands |
3,962 |
1.2 |
- |
|
Singapore Telecommunication |
Diversified Telecommunication Services |
Singapore |
3,892 |
1.2 |
3,244 |
|
DBS Group Holdings |
Banks |
Singapore |
3,817 |
1.2 |
5,404 |
|
Siam Cement (Foreign) |
Construction Materials |
Thailand |
3,628 |
1.1 |
6,586 |
|
LG Chem |
Chemicals |
South Korea |
3,584 |
1.1 |
4,101 |
|
M.P. Evans Group |
Food Products |
United Kingdom |
3,519 |
1.1 |
4,017 |
|
Yum China Holdings |
Hotels, Restaurants & Leisure |
China |
3,248 |
1.0 |
4,415 |
|
Keppel Corporation |
Industrial Conglomerates |
Singapore |
3,148 |
1.0 |
5,133 |
|
Rio Tinto (London Listing) |
Metals & Mining |
Australia |
3,126 |
1.0 |
6,700 |
|
Venture Corp |
Electronic Equipment, Instruments & Components |
Singapore |
3,115 |
1.0 |
3,348 |
|
Top thirty investments |
|
|
270,251 |
83.7 |
|
|
Aukland International Airport |
Transportation Infrastructure |
New Zealand |
2,978 |
0.9 |
- |
|
Kerry Logistics Network |
Air Freight & Logistics |
Hong Kong |
2,906 |
0.9 |
3,667 |
|
John Keells Holdings |
Industrial Conglomerates |
Sri Lanka |
2,783 |
0.9 |
3,839 |
|
Budweiser Brewing |
Beverages |
Hong Kong |
2,764 |
0.9 |
- |
|
Vietnam Dairy Products |
Food Products |
Vietnam |
2,724 |
0.8 |
3,477 |
|
Meituan Dianping B |
Internet & Direct Marketing Retail |
China |
2,559 |
0.8 |
- |
|
Aristocrat Leisure |
Hotels, Restaurants & Leisure |
Australia |
2,544 |
0.8 |
- |
|
Taiwan Mobile |
Wireless Telecommunication Services |
Taiwan |
2,498 |
0.8 |
2,976 |
|
Astra International |
Automobiles |
Indonesia |
2,297 |
0.7 |
4,592 |
|
58.com ADR |
Interactive Media & Services |
China |
2,293 |
0.7 |
- |
|
Top forty investments |
|
|
296,597 |
91.9 |
|
|
City Developments |
Real Estate Management & Development |
Singapore |
2,213 |
0.7 |
4,930 |
|
Xero |
Software |
New Zealand |
2,047 |
0.6 |
- |
|
Aberdeen Standard Asia Focus B |
Investment Trusts |
Other Asia |
2,023 |
0.6 |
2,570 |
|
Mobile World |
Speciality Retail |
Vietnam |
1,841 |
0.6 |
1,862 |
|
Altium |
Software |
Australia |
1,829 |
0.6 |
- |
|
China Mobile |
Wireless Telecommunication Services |
China |
1,780 |
0.6 |
3,535 |
|
Huazhu Group ADR |
Hotels, Restaurants & Leisure |
China |
1,736 |
0.5 |
2,894 |
|
GDS ADS |
IT Services |
China |
1,617 |
0.5 |
- |
|
Bangkok Dusit Medical Services (Foreign) |
Health Care Providers & Services |
Thailand |
1,580 |
0.5 |
1,909 |
|
ASM Pacific Technology |
Semiconductors & Semiconductor Equipment |
Hong Kong |
1,545 |
0.5 |
2,690 |
|
Top fifty investments |
|
|
314,808 |
97.6 |
|
|
CapitaLand |
Real Estate Management & Development |
Singapore |
1,477 |
0.5 |
- |
|
Raffles Medical |
Health Care Providers & Services |
Singapore |
1,432 |
0.4 |
1,725 |
|
Yoma Strategic Holdings |
Real Estate Management & Development |
Myanmar |
691 |
0.2 |
1,134 |
|
DFCC Bank |
Banks |
Sri Lanka |
479 |
0.1 |
628 |
|
Total investments |
|
|
318,887 |
98.8 |
|
|
Net current assetsC |
|
|
4,042 |
1.2 |
|
|
Total assetsA |
|
|
322,929 |
100.0 |
|
|
|
|||||
|
A Alternative Performance Measure. |
|||||
|
B Holding also managed by the Standard Life Aberdeen Group but not subject to double charging of management fees. |
|||||
|
C Excluding short-term bank loans of £13,693,000. |
|||||
|
|
|||||
|
Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings. |
|||||
PORTFOLIO - CHANGES IN ASSET DISTRIBUTIONS
|
|
Value at |
|
|
|
Value at |
|
|
30 April 2019 |
|
Sales |
Appreciation/ |
30 April 2020 |
|
Country |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Australia |
25,864 |
8,521 |
(4,394) |
365 |
30,356 |
|
China |
83,261 |
23,620 |
(11,868) |
5,655 |
100,668 |
|
Hong Kong |
50,127 |
4,298 |
(13,862) |
(9,507) |
31,056 |
|
India |
47,087 |
- |
(8,350) |
(6,824) |
31,913 |
|
Indonesia |
16,703 |
- |
(2,489) |
(3,707) |
10,507 |
|
Malaysia |
3,013 |
- |
(2,807) |
(206) |
- |
|
Myanmar |
1,135 |
- |
- |
(444) |
691 |
|
Netherlands |
- |
3,133 |
- |
829 |
3,962 |
|
New Zealand |
- |
4,003 |
- |
1,022 |
5,025 |
|
Other Asia |
2,571 |
- |
- |
(548) |
2,023 |
|
Philippines |
10,412 |
755 |
(709) |
(2,995) |
7,463 |
|
Singapore |
36,900 |
3,200 |
(8,357) |
(5,725) |
26,018 |
|
South Korea |
22,432 |
5,238 |
(3,350) |
2,184 |
26,504 |
|
Sri Lanka |
4,467 |
- |
(53) |
(1,152) |
3,262 |
|
Taiwan |
17,944 |
4,413 |
(531) |
4,321 |
26,147 |
|
Thailand |
8,495 |
- |
(1,338) |
(1,949) |
5,208 |
|
United Kingdom |
7,669 |
- |
(3,152) |
(998) |
3,519 |
|
Vietnam |
5,339 |
- |
- |
(774) |
4,565 |
|
|
________ |
________ |
________ |
________ |
________ |
|
Total investments |
343,419 |
57,181 |
(61,260) |
(20,453) |
318,887 |
|
Net current assets A |
4,241 |
- |
- |
(199) |
4,042 |
|
|
________ |
________ |
________ |
________ |
________ |
|
Total assets less current liabilities |
347,660 |
57,181 |
(61,260) |
(20,652) |
322,929 |
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
A Excluding short-term bank loans of £13,693,000 (2019 - £13,311,000). |
|||||
DIRECTORS' REPORT (EXTRACT)
The Directors present their report and the audited financial statements for the year ended 30 April 2020.
Results and Dividends
The financial statements for the year ended 30 April 2020 are contained below. An interim dividend of 1.0p per Ordinary share was paid on 31 January 2020 and the Board recommends a final dividend of 3.3p per Ordinary share, payable on 11 September 2020 to shareholders on the register on 7 August 2020. The relevant ex-dividend date is 6 August 2020. 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 2020 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 2020 consisted of 110,571,348 Ordinary shares of 5p and 9,658,101 shares held in treasury. During the year the Company purchased 1,270,000 Ordinary shares to be held in treasury. Since the end of the year, it has purchased a further • Ordinary shares to be held in treasury. At the date of approval of this Report there were • Ordinary shares of 5p in issue and • shares held in treasury.
Voting Rights
Each Ordinary shareholder is entitled to one vote on a show of hands at a general meeting 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 Standard Fund Managers Limited ("ASFML"), a wholly owned subsidiary of Standard Life Aberdeen plc, as its alternative investment fund manager. ASFML 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 Standard Investments (Asia) Limited ("ASI Asia") by way of a group delegation agreement in place between ASFML and ASI Asia. In addition, ASFML has sub-delegated promotional activities to Aberdeen Asset Managers Limited and administration and company 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 2020 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 |
% heldB |
|
City of London Investment Management Company |
18,542,266 |
16.8 |
|
Aberdeen Standard Investment Trust Share PlansA |
8,825,726 |
8.0 |
|
Derbyshire County Council |
7,780,000 |
7.0 |
|
Wells Capital Management |
7,779,095 |
7.0 |
|
Quilter Cheviot Investment Management |
5,436,921 |
4.9 |
|
1607 Capital Partners LLC |
4,770,786 |
4.3 |
A Non-beneficial interest
B Based on 110,571,348 Ordinary shares in issue as at 30 April 2020
Since the year end the following changes have been notified to the Company: City of London Investment Management 19,978,983 Ordinary shares (18.1%); Wells Capital Management 8,513,933 Ordinary shares (7.7%); Derbyshire County Council 6,426,000 Ordinary shares (5.8%). There have been no other changes notified to the Company 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 as published in July 2018 (the "UK Code"), which is available on the Financial Reporting Council's (the "FRC") website: frc.org.uk.
The Board has also considered the principles and provisions of the AIC Code of Corporate Governance as published in February 2019 (the "AIC Code"). The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company. The AIC Code is available on the AIC's website: theaic.co.uk.
The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the FRC, provides more relevant information to shareholders.
The Board confirms that, during the year, the Company complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
- interaction with the workforce (provisions 2, 5 and 6);
- the role and responsibility of the chief executive (provisions 9 and 14);
- the need for the Company to have its own internal audit function (provision 25);
- previous experience of the chairman of a remuneration committee (provision 32); and
- executive directors' remuneration (provisions 33 and 36 to 40).
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 has also been non-compliant with Provision 12 of the UK Code which states that the Board should appoint a Senior Independent Director ("SID"). The Board had previously considered whether a SID should be appointed and had concluded that, given the size of the Board and the fact that it is comprised entirely of non-executive Directors, the appointment of a SID was unnecessary. During the year, the main functions of the SID were conducted by Mr Lorimer, as Chairman of the Audit and Risk Committee.
Since the appointment of the new Chairman and the implementation of the UK Code, the Board has reviewed the balance of responsibilities within the Board and, in particular, the requirement to appoint a SID. As a result of that review and in light of the Company's desire to adhere as closely as possible with the principles of corporate governance, the Board has resolved to appoint Ms Sears as the SID with effect from the close of the Annual General Meeting on 2 September 2020.
Full details of the Company's compliance with the AIC Code can be found on its website.
Directors
Mr Souchon was appointed a Director on 1 October 2019 and at the year end the Board comprised six Directors, consisting of a non-executive Chairman and five 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. Mr Shearer retired as a Director on 4 September 2019.
Directors attended scheduled Board and Committee meetings during the year ended 30 April 2020 as shown in the table below (with their eligibility to attend the relevant meeting in brackets).
|
Director |
Board Meetings |
Audit |
Nomination Committee Meetings |
Management |
|
D WorkmanA |
6 (6) |
1 (1) |
2 (2) |
1 (1) |
|
J Lorimer |
6 (6) |
2 (2) |
2 (2) |
1 (1) |
|
S Rippingall |
6 (6) |
2 (2) |
2 (2) |
1 (1) |
|
M Sears |
6 (6) |
2 (2) |
2 (2) |
1 (1) |
|
D Shearer |
2 (2) |
1 (1) |
1 (1) |
1 (1) |
|
S Souchon |
4 (4) |
1 (1) |
1 (1) |
- (-) |
|
H YoungB |
6 (6) |
- (-) |
2 (2) |
- (-) |
A Mr Workman is not a member of the Audit and Risk Committee, although he attends by invitation.
B Mr Young is not a member of the Audit and Risk or Management Engagement Committees.
The Board meets more frequently when business needs require.
The Company's Articles of Association require that Directors must retire and be subject to election at the first Annual General Meeting after their appointment, and that one third of the Directors retire by rotation at each Annual General Meeting, and that any Director who was not elected or re-elected at one of the preceding two Annual General Meetings also retires by rotation at the Annual General Meeting. However, the Board has decided that, notwithstanding the provisions of the Articles of Association, all Directors will retire at each Annual General Meeting and, if eligible, may seek re-election. Accordingly, Mr Souchon will stand for election at the Annual General Meeting and each of Mr Workman and Mr Young, Ms Rippingall and Ms Sears will retire and seek re-election. As explained in the Chairman's Statement, Mr Lorimer will retire as a Director at the Annual General Meeting and is not seeking re-election.
The Board believes that, except for Mr Young, all the Directors seeking election/re-election remain independent of the Manager and free from any relationship which could materially interfere with the exercise of their judgement on issues of strategy, performance, resources and standards of conduct. The Board believes that each Director has the requisite high level and range of business, investment and financial experience which enables the Board to provide clear and effective leadership and proper governance of the Company. Following formal performance evaluations, each Director's performance continues to be effective and demonstrates commitment to the role, and their individual performances contribute to the long-term sustainable success of the Company. The Board therefore recommends the election/re-election of each of the Directors at the Annual General Meeting.
Board's Policy on Tenure
In normal circumstances, it is the Board's expectation that Directors will not serve beyond the Annual General Meeting following the ninth anniversary of their appointment. However, the Board takes the view that independence of individual Directors is not necessarily compromised by length of tenure on the Board and that continuity and experience can add significantly to the Board's strength. The Board believes that recommendation for re-election should be on an individual basis following a rigorous review which assesses the contribution made by the Director concerned, but also taking into account the need for regular refreshment and diversity.
It is the Board's policy that the Chairman of the Board will not serve as a Director beyond the Annual General Meeting following the ninth anniversary of his appointment to the Board. However, this may be extended in certain circumstances or to facilitate effective succession planning and the development of a diverse Board. In such a situation the reasons for the extension will be fully explained to shareholders and a timetable for the departure of the Chairman clearly set out.
The Role of the Chairman and Senior Independent Director
The Chairman is responsible for providing effective leadership to the Board, by setting the tone of the Company, demonstrating objective judgement and promoting a culture of openness and debate. The Chairman facilitates the effective contribution and encourages active engagement by each Director. In conjunction with the Company Secretary, the Chairman ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chairman acts upon the results of the Board evaluation process by recognising strengths and addressing any weaknesses and also ensures that the Board engages with major shareholders and that all Directors understand shareholder views.
The Senior Independent Director acts as a sounding board for the Chairman and acts as an intermediary for other Directors, when necessary. Working closely with the Nomination Committee, the Senior Independent Director takes responsibility for an orderly succession process for the Chairman, and leads the annual appraisal of the Chairman's performance. The Senior Independent Director is also available to shareholders to discuss any concerns they may have.
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.
Board Committees
The Board has appointed a number of Committees, as set out below. Copies of their terms of reference, which clearly define the responsibilities and duties of each Committee, are available on the Company's website, or upon request from the Company Secretary. The terms of reference of each of the Committees are reviewed and re-assessed by the Board for their adequacy on an ongoing basis.
Management Engagement Committee
The Management Engagement Committee comprises five independent Directors: Mr Lorimer (Chairman), Ms Rippingall, Ms Sears, Mr Souchon and Mr Workman. The Committee reviews the performance of the Manager and the terms of the management agreement, including the management fee, at least once a year. The Committee also keeps the resources of the Standard Life Aberdeen Group under review, together with its commitment to the Company and its investment trust business. In addition, the Committee conducts an annual review of the performance, terms and conditions of the Company's main third party suppliers.
Following the retirement of Mr Lorimer at the Annual General Meeting on 2 September 2020, Mr Workman will be appointed as Chairman of the Management Engagement Committee.
The Board remains satisfied that the continuing appointment of the Manager on the terms agreed is in the interests of shareholders as a whole. The key factors taken into account in reaching this decision are the long-term performance of the portfolio and the investment skills and experience of the Manager, together with the quality of other services provided, including marketing and investor relations, company secretarial and administration, and the commitment of the Manager to its investment trust business.
Nomination Committee
The Nomination Committee comprises the entire Board and is chaired by Mr Workman. The Committee conducts Board evaluations, reviews the structure of the Board and gives consideration to succession planning.
During the year, the Committee undertook an annual appraisal of the Chairman of the Board, individual Directors and the performance of Committees and the Board as a whole . This process involved the completion of questionnaires by each Director and follow-on discussions between the Chairman and each Director. The appraisal of the Chairman was undertaken by the Chairman of the Audit and Risk Committee . The results of the process were discussed by the Board following its completion, with appropriate action points made.
The Committee considers succession planning on at least an annual basis. Potential new Directors are identified against the requirements of the Company's business and the need to have a balance of skills, experience, independence, diversity and knowledge of the Company within the Board.
As stated above, Mr Souchon was appointed as a Director on 1 October 2019. The Board engaged the services of an independent search consultant, Ridgeway Partners, for the purposes of this appointment. Ridgeway Partners does not have any other connections with the Company or individual Directors.
Going Concern
The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances, including in the current market environment, are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews cash flow projections and compliance with banking covenants, including the headroom available. The Company has two loan facilities which expire in December 2021 and December 2023 respectively.
Having taking these factors into account, as well as the impact on the Company of the spread of the COVID-19 virus, 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
The Company's Auditor, Ernst & Young LLP, has indicated its willingness to remain in office. The Board will place resolutions before the Annual General Meeting to re-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 and Manager meet with major shareholders on at least 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 This year, there is also the opportunity to email questions to the Board and the Manager in advance of the Annual General Meeting at: new.dawn@aberdeenstandard.com .
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 Standard Investments Children's Plan, 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.
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 2 September 2020 at 12 noon. This year, due to the uncertainties caused by the COVID-19 pandemic and, in particular, the restrictions on public gatherings and requirement to socially distance, it is likely that the Annual General Meeting will be held on a functional only basis, satisfying the minimum legal requirements. Instead, shareholders are encouraged to submit questions to the Board and the Manager. Further details can be found in the Chairman's Statement.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
1 July 2020
STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Year ended 30 April 2020 |
Year ended 30 April 2019 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
(Losses)/gains on investments |
10 |
- |
(20,453) |
(20,453) |
- |
11,628 |
11,628 |
|
Income |
3 |
7,738 |
- |
7,738 |
7,442 |
- |
7,442 |
|
Management fee |
4 |
(927) |
(927) |
(1,854) |
(902) |
(902) |
(1,804) |
|
Administrative expenses |
5 |
(763) |
- |
(763) |
(839) |
- |
(839) |
|
Exchange losses |
|
- |
(477) |
(477) |
- |
(1,745) |
(1,745) |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
Net return before finance costs and taxation |
|
6,048 |
(21,857) |
(15,809) |
5,701 |
8,981 |
14,682 |
|
|
|
|
|
|
|
|
|
|
Finance costs |
6 |
(460) |
(460) |
(920) |
(422) |
(422) |
(844) |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
Return before taxation |
|
5,588 |
(22,317) |
(16,729) |
5,279 |
8,559 |
13,838 |
|
|
|
|
|
|
|
|
|
|
Taxation |
7 |
(463) |
- |
(463) |
(429) |
- |
(429) |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
Return after taxation |
|
5,125 |
(22,317) |
(17,192) |
4,850 |
8,559 |
13,409 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Return per Ordinary share (pence) |
9 |
4.61 |
(20.06) |
(15.45) |
4.30 |
7.58 |
11.88 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
_______ |
|
|
|
|
|
|
|
|
|
|
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 2020 |
30 April 2019 |
|
|
Notes |
£'000 |
£'000 |
|
Fixed assets |
|
|
|
|
Investments at fair value through profit or loss |
10 |
318,887 |
343,419 |
|
|
|
_________ |
_________ |
|
Current assets |
|
|
|
|
Debtors |
11 |
1,221 |
926 |
|
Cash at bank and in hand |
|
3,647 |
3,853 |
|
|
|
_________ |
_________ |
|
|
|
4,868 |
4,779 |
|
|
|
_________ |
_________ |
|
Creditors: amounts falling due within one year |
12 |
|
|
|
Loans |
|
(13,693) |
(13,311) |
|
Other creditors |
|
(826) |
(538) |
|
|
|
_________ |
_________ |
|
|
|
(14,519) |
(13,849) |
|
|
|
_________ |
_________ |
|
Net current liabilities |
|
(9,651) |
(9,070) |
|
|
|
_________ |
_________ |
|
Total assets less current liabilities |
|
309,236 |
334,349 |
|
|
|
|
|
|
Non-current creditors |
12 |
|
|
|
Loans |
|
(19,951) |
(19,938) |
|
|
|
_________ |
_________ |
|
Net assets |
|
289,285 |
314,411 |
|
|
|
_________ |
_________ |
|
Share capital and reserves |
|
|
|
|
Called-up share capital |
13 |
6,011 |
6,011 |
|
Share premium account |
|
17,955 |
17,955 |
|
Capital redemption reserve |
|
10,543 |
10,543 |
|
Capital reserve |
14 |
241,342 |
266,798 |
|
Revenue reserve |
|
13,434 |
13,104 |
|
|
|
_________ |
_________ |
|
Equity shareholders' funds |
|
289,285 |
314,411 |
|
|
|
_________ |
_________ |
|
Net asset value per Ordinary share (pence) |
15 |
261.63 |
281.12 |
|
|
|
_________ |
_________ |
The accompanying notes are an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
|
For the year ended 30 April 2020 |
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 30 April 2019 |
6,011 |
17,955 |
10,543 |
266,798 |
13,104 |
314,411 |
|
Buy back of Ordinary shares for treasury |
- |
- |
- |
(3,139) |
- |
(3,139) |
|
Return after taxation |
- |
- |
- |
(22,317) |
5,125 |
(17,192) |
|
Dividends paid (see note 8) |
- |
- |
- |
- |
(4,795) |
(4,795) |
|
|
________ |
_________ |
_________ |
________ |
________ |
________ |
|
Balance at 30 April 2020 |
6,011 |
17,955 |
10,543 |
241,342 |
13,434 |
289,285 |
|
|
________ |
_________ |
_________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
For the year ended 30 April 2019 |
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 30 April 2018 |
6,152 |
17,955 |
10,402 |
264,189 |
13,118 |
311,816 |
|
Buy back of Ordinary shares for treasury |
- |
- |
- |
(5,950) |
- |
(5,950) |
|
Cancellation of Ordinary shares held in treasury |
(141) |
- |
141 |
- |
- |
- |
|
Return after taxation |
- |
- |
- |
8,559 |
4,850 |
13,409 |
|
Dividends paid (see note 8) |
- |
- |
- |
- |
(4,864) |
(4,864) |
|
|
________ |
_________ |
_________ |
________ |
________ |
________ |
|
Balance at 30 April 2019 |
6,011 |
17,955 |
10,543 |
266,798 |
13,104 |
314,411 |
|
|
________ |
_________ |
_________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
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 2020 |
30 April 2019 |
|
|
Notes |
£'000 |
£'000 |
|
Operating activities |
|
|
|
|
Net return before finance costs and taxation |
|
(15,809) |
14,682 |
|
Adjustment for: |
|
|
|
|
Losses/(gains) on investments |
|
20,453 |
(11,628) |
|
Currency losses |
|
477 |
1,745 |
|
Dividend income |
|
(7,722) |
(7,433) |
|
Dividend income received |
|
7,814 |
7,796 |
|
Interest income |
|
(16) |
(9) |
|
Interest income received |
|
17 |
9 |
|
Decrease/(increase) in other debtors |
|
17 |
(13) |
|
Increase in other creditors |
|
20 |
181 |
|
Stock dividends included in investment income |
|
(548) |
(358) |
|
Overseas withholding tax |
|
(573) |
(487) |
|
|
|
_________ |
_________ |
|
Net cash flow from operating activities |
|
4,130 |
4,485 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Purchases of investments |
|
(56,360) |
(57,373) |
|
Sales of investments |
|
60,966 |
60,492 |
|
|
|
_________ |
_________ |
|
Net cash from investing activities |
|
4,606 |
3,119 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Equity dividends paid |
8 |
(4,795) |
(4,864) |
|
Interest paid |
|
(913) |
(778) |
|
Buy back of Ordinary shares for treasury |
|
(3,139) |
(6,056) |
|
Loan repayment |
|
(5,000) |
(28,074) |
|
Loan drawdown |
|
5,000 |
32,032 |
|
|
|
_________ |
_________ |
|
Net cash used in financing activities |
|
(8,847) |
(7,740) |
|
|
|
_________ |
_________ |
|
Decrease in cash |
|
(111) |
(136) |
|
|
|
_________ |
_________ |
|
Analysis of changes in cash during the year |
|
|
|
|
Opening balance |
|
3,853 |
4,507 |
|
Effect of exchange rate fluctuations on cash held |
|
(95) |
(518) |
|
Decrease in cash as above |
|
(111) |
(136) |
|
|
|
_________ |
_________ |
|
Closing balances |
|
3,647 |
3,853 |
|
|
|
_________ |
_________ |
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS:
For the year ended 30 April 2020
|
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' (the "SORP") issued in October 2019. 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 Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances, including in the current market environment, are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews cash flow projections and compliance with banking covenants, including the headroom available. The Company has two loan facilities which expire in December 2021 and December 2023. Having taking these factors into account, as well as the impact of Covid-19 and having assessed the principal risks and other matters set out in the Viability Statement, 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. |
|
|
|
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. |
|
|
|
Significant accounting judgements, estimates and assumptions. The preparation of financial statements requires the use of certain significant accounting judgements, estimates and assumptions which requires management to exercise its judgement in the process of applying the accounting policies and are continually evaluated. The Directors do not consider there to be any significant estimates within 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 cash dividend is recognised as revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised as capital. 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, which 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). |
|
|
|
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 as capital or revenue, depending upon their nature. |
|
|
(g) |
Dividends payable. Final 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. This is not a distributable reserve. |
|
|
|
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. This is not a distributable reserve. |
|
|
|
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. |
|
3. |
Income |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Income from investments |
|
|
|
|
UK dividend income |
1,054 |
1,350 |
|
|
Overseas dividends |
6,120 |
5,725 |
|
|
Scrip dividends |
548 |
358 |
|
|
|
________ |
________ |
|
|
|
7,722 |
7,433 |
|
|
|
________ |
________ |
|
|
Other income |
|
|
|
|
Deposit interest |
16 |
9 |
|
|
|
________ |
________ |
|
|
Total income |
7,738 |
7,442 |
|
|
|
________ |
________ |
|
4. |
Management fee |
|
|
||||
|
|
|
2020 |
2019 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Management fee |
927 |
927 |
1,854 |
902 |
902 |
1,804 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
Management services are provided by Aberdeen Standard Fund Managers Limited ("ASFML"). |
||||||
|
|
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 Standard SICAV - Indian Equity Fund, Aberdeen Standard Asia Focus 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 Standard SICAV - 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 £63,837,000 (2019 - bid basis - £72,063,000). |
||||||
|
|
- 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 ASFML at the year end, net of any rebates was £306,000 (2019 - £311,000). |
||||||
|
|
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. |
||||||
|
5. |
Administrative expenses |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Promotional activities |
146 |
152 |
|
|
Directors' fees |
143 |
132 |
|
|
Safe custody fees |
136 |
132 |
|
|
Auditor's remuneration: |
|
|
|
|
- fees payable to the Company's Auditor for the audit of the Company's annual financial statements |
22 |
20 |
|
|
- fees payable to the Company's Auditor for the review of the Company's half yearly financial statements |
6 |
5 |
|
|
- fees payable to the Company's Auditor for iXBRL tagging services |
- |
2 |
|
|
Other administration expenses |
310 |
396 |
|
|
|
________ |
________ |
|
|
|
763 |
839 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
The Company has an agreement with ASFML for the provision of promotional activities. The total fees payable during the year were £146,000 (2019 - £152,000) and the sum due to ASFML at the year end was £52,000 (2019 - £47,000). |
||
|
|
The Company does not have any employees and no pension contributions were made in respect of any of the Directors. |
||
|
|
With the exception of Auditor's remuneration, all of the expenses above include irrecoverable VAT where applicable. |
||
|
6. |
Finance costs |
|
|||||
|
|
|
2020 |
2019 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Interest on bank loans |
460 |
460 |
920 |
422 |
422 |
844 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
7. |
Taxation |
|
|||||||
|
|
|
|
2020 |
2019 |
|||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
(a) |
Analysis of charge for the year |
|
|
|
|
|
|
|
|
|
|
Overseas tax |
587 |
- |
587 |
501 |
- |
501 |
|
|
|
|
Overseas tax reclaimable |
(124) |
- |
(124) |
(72) |
- |
(72) |
|
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
Total tax charge for the year |
463 |
- |
463 |
429 |
- |
429 |
|
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2019 - 19%).The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are explained below: |
|||||||
|
|
|
|
|
||||||
|
|
|
|
2020 |
2019 |
|||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
Net return before taxation |
5,588 |
(22,317) |
(16,729) |
5,279 |
8,559 |
13,838 |
|
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
Corporation tax at standard rate of 19% (2019 - 19%) |
1,062 |
(4,240) |
(3,178) |
1,003 |
1,626 |
2,629 |
|
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
|
Non-taxable UK dividend income |
(200) |
- |
(200) |
(256) |
- |
(256) |
|
|
|
|
Non-taxable overseas dividends |
(1,257) |
- |
(1,257) |
(1,156) |
- |
(1,156) |
|
|
|
|
Overseas tax suffered |
463 |
- |
463 |
429 |
- |
429 |
|
|
|
|
Expenses not deductible for tax purposes |
4 |
- |
4 |
- |
- |
- |
|
|
|
|
Surplus management expenses and loan relationship deficits not relieved |
391 |
263 |
654 |
409 |
251 |
660 |
|
|
|
|
Non-taxable exchange losses |
- |
91 |
91 |
- |
332 |
332 |
|
|
|
|
Non-deductible losses/(non-taxable gains) |
- |
3,886 |
3,886 |
- |
(2,209) |
(2,209) |
|
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
Total tax charge |
463 |
- |
463 |
429 |
- |
429 |
|
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Provision for deferred taxation. No provision for deferred taxation has been made in the current year or in the prior year. At 30 April 2020 the Company had surplus management expenses and loan relationship debits with a tax value of £5,768,000 (2019 - £4,577,000) in respect of which a deferred tax asset has not been recognised. This is because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses. |
|||||||
|
8. |
Dividends |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Amounts recognised as distributions to equity holders in the period: |
|
|
|
|
Final dividend for 2019 - 3.3p (2018 - 3.3p) |
3,686 |
3,741 |
|
|
Interim dividend for 2020 - 1.0p (2019 - 1.0p) |
1,109 |
1,123 |
|
|
|
________ |
________ |
|
|
|
4,795 |
4,864 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
The proposed final dividend in respect of the year ended 30 April 2020 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 £5,125,000 (2019 - £4,850,000). |
||
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Interim dividend for 2020 - 1.0p (2019 - 1.0p) |
1,109 |
1,123 |
|
|
Proposed final dividend for 2020 - 3.3p (2019 - 3.3p) |
3,647 |
3,686 |
|
|
|
________ |
________ |
|
|
|
4,756 |
4,809 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
Subsequent to the year end the Company has purchased for treasury a further 62,000 Ordinary shares. Therefore the amounts reflected above for the cost of the proposed final dividend for 2020 are based on 110,509,348 Ordinary shares, being the number of Ordinary shares in issue excluding those held in treasury at the date of this Report. |
||
|
9. |
Return per Ordinary share |
|
|
||
|
|
|
2020 |
2019 |
||
|
|
|
£'000 |
p |
£'000 |
p |
|
|
Revenue return |
5,125 |
4.61 |
4,850 |
4.30 |
|
|
Capital return |
(22,317) |
(20.06) |
8,559 |
7.58 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Total return |
(17,192) |
(15.45) |
13,409 |
11.88 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Weighted average number of Ordinary shares in issue A |
111,235,296 |
|
112,843,126 |
|
|
|
A Calculated excluding shares held in treasury. |
__________ |
|
__________ |
|
|
10. |
Investments at fair value through profit or loss |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Opening book cost |
193,819 |
174,414 |
|
|
Opening investment holding gains |
149,600 |
160,229 |
|
|
|
________ |
________ |
|
|
Opening fair value |
343,419 |
334,643 |
|
|
|
|
|
|
|
Analysis of transactions made during the year |
|
|
|
|
Purchases at cost |
57,181 |
57,731 |
|
|
Sales proceeds received |
(61,260) |
(60,583) |
|
|
(Losses)/gains on investments |
(20,453) |
11,628 |
|
|
|
________ |
________ |
|
|
Closing fair value |
318,887 |
343,419 |
|
|
|
________ |
________ |
|
|
Closing book cost |
208,338 |
193,819 |
|
|
Closing investment gains |
110,549 |
149,600 |
|
|
|
________ |
________ |
|
|
Closing fair value |
318,887 |
343,419 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Investments listed on an overseas investment exchange |
299,503 |
313,047 |
|
|
Investments listed on the UK investment exchange |
19,384 |
30,372 |
|
|
|
________ |
________ |
|
|
|
318,887 |
343,419 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
The Company received £61,260,000 (2019 - £60,583,000) from investments sold in the period. The book cost of these investments when they were purchased was £42,660,000 (2019 - £38,326,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. |
||
|
|
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 losses on investments in the Statement of Comprehensive Income. The total costs were as follows: |
||
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Purchases |
61 |
91 |
|
|
Sales |
68 |
107 |
|
|
|
________ |
________ |
|
|
|
129 |
198 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
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. |
||
|
11. |
Debtors |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Prepayments and accrued income |
558 |
691 |
|
|
Amounts due from brokers |
385 |
91 |
|
|
Other loans and receivables |
278 |
144 |
|
|
|
________ |
________ |
|
|
|
1,221 |
926 |
|
|
|
________ |
________ |
|
12. |
Creditors |
|
|
|
|
|
Amounts falling due within one year: |
2020 |
2019 |
|
|
|
a) |
Loans |
£'000 |
£'000 |
|
|
|
Foreign currency loans |
8,693 |
8,311 |
|
|
|
Sterling loan |
5,000 |
5,000 |
|
|
|
|
________ |
________ |
|
|
|
|
13,693 |
13,311 |
|
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
b) |
Other |
£'000 |
£'000 |
|
|
|
Amounts due to brokers |
273 |
- |
|
|
|
Other creditors |
553 |
538 |
|
|
|
________ |
________ |
|
|
|
|
826 |
538 |
|
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
|
Non-current creditors: |
£'000 |
£'000 |
|
|
|
Sterling loan |
19,951 |
19,938 |
|
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
|
At the year end the Company's secured floating rate bank loans of HK$85,000,000 (2019 - HK$85,00,000), equivalent to £8,693,000 (2019 - £8,311,000), with a maturity date of 14 May 2020 (2019 - 15 May 2019) and £5,000,000 (2019 - £nil), with a maturity date of 7 May 2020, and fixed rate bank loan of £20,000,000 (2019: £20,000,000 and £5,000,000), were drawn down from the £35,000,000 facility with The Royal Bank of Scotland International Limited at interest rates of 2.62994%, 1.17015% and 2.626% (2019 - 2.38429%, 2.626% and 2.75%) respectively. |
|||
|
|
As of the latest date prior to the signing of this Report the HK$85,000,000 loan had been reduced by HK$64,000,000 to HK$21,000,000 and drawn down to 22 July 2020 at an interest rate of 1.38506% and the £5,000,000 loan had been drawn down to 8 July 2020 at an interest rate of 1.04125%. |
|||
|
|
The terms of the bank loan with The Royal Bank of Scotland International Limited 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, is split into two tranches, a £20,000,000 fixed rate facility which will expire on 14 December 2023 and a £15,000,000 floating rate facility which will expire on 14 December 2021. |
|||
|
|
The Company has met all financial covenants throughout the period and up to the date of this Report. |
|||
|
13. |
Called-up share capital |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
Allotted, called up and fully paid: |
|
|
|
|
110,571,348 (2019 - 111,841,348) Ordinary shares of 5p each |
5,528 |
5,592 |
|
|
|
|
|
|
|
Held in treasury: |
|
|
|
|
9,658,101 (2019 - 8,388,101) Ordinary shares of 5p each |
483 |
419 |
|
|
|
________ |
________ |
|
|
|
6,011 |
6,011 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
During the year 1,270,000 (2019 - 2,622,500) Ordinary shares of 5p each were repurchased by the Company at a total cost, including transaction costs, of £3,139,000 (2019 - £5,950,000). All of the shares were placed in treasury. Shares held in treasury represent 8.73% of the Company's total issued share capital at 30 April 2020. 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 62,000 Ordinary shares for a total consideration of £141,000. |
||
|
14. |
Capital reserve |
|
|
|
|
|
2020 |
2019 |
|
|
|
£'000 |
£'000 |
|
|
At 1 May 2019 |
266,798 |
264,189 |
|
|
Movement in fair value gains |
(20,453) |
11,628 |
|
|
Foreign exchange movement |
(477) |
(1,745) |
|
|
Buy back of Ordinary shares for treasury |
(3,139) |
(5,950) |
|
|
Expenses allocated to capital |
(1,387) |
(1,324) |
|
|
|
________ |
________ |
|
|
At 30 April 2020 |
241,342 |
266,798 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
The capital reserve includes investment holding gains amounting to £110,549,000 (2019 - £149,600,000), 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: |
||
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
Net assets attributable |
£289,285,000 |
£314,411,000 |
|
|
Number of Ordinary shares in issue (excluding shares held in treasury) |
110,571,348 |
111,841,348 |
|
|
Net asset value per share |
261.63p |
281.12p |
|
16. |
Analysis of changes in net debt |
|
|
|
|
|
|
|
|
At |
|
|
|
At |
|
|
|
30 April |
Currency |
Cash |
Non-cash |
30 April |
|
|
|
2019 |
differences |
flows |
movements |
2020 |
|
|
|
'000 |
'000 |
'000 |
'000 |
'000 |
|
|
Cash and short term deposits |
3,853 |
(95) |
(111) |
- |
3,647 |
|
|
Debt due within one year |
(13,311) |
(382) |
- |
- |
(13,693) |
|
|
Debt due after more than one year |
(19,938) |
- |
- |
(13) |
(19,951) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
(29,396) |
(477) |
(111) |
(13) |
(29,997) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
At |
|
|
|
At |
|
|
|
30 April |
Currency |
Cash |
Non-cash |
30 April |
|
|
|
2018 |
differences |
flows |
movements |
2019 |
|
|
|
'000 |
'000 |
'000 |
'000 |
'000 |
|
|
Cash and short term deposits |
4,507 |
(518) |
(136) |
- |
3,853 |
|
|
Debt due within one year |
(23,058) |
(1,227) |
10,974 |
- |
(13,311) |
|
|
Debt due after more than one year |
(5,000) |
- |
(15,000) |
62 |
(19,938) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
(23,551) |
(1,745) |
(4,162) |
62 |
(29,396) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis. |
|||||
|
17. |
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 ASFML under the terms of its management agreement with ASFML (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 Standard Fund Managers Limited collectively assume responsibility for ASFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year. |
|||||||||||||||||
|
|
ASFML is a fully integrated member of the Standard Life Aberdeen Group ("the Group"), which provides a variety of services and support to ASFML 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 Standard Investments 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 and Risk Management. The team is headed up by the Group's Head of Risk, who reports to the Group CEO. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD"). |
|||||||||||||||||
|
|
The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group CFO 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 average |
|
|
|
|||||||||||||
|
|
|
period for which |
Weighted |
|
|
|||||||||||||
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|||||||||||||
|
|
At 30 April 2020 |
Years |
% |
£'000 |
£'000 |
|||||||||||||
|
|
Assets: |
|
|
|
|
|||||||||||||
|
|
Singapore Dollar |
- |
- |
- |
273 |
|||||||||||||
|
|
Sterling |
- |
- |
- |
3,342 |
|||||||||||||
|
|
Taiwan Dollar |
- |
- |
- |
1 |
|||||||||||||
|
|
Vietnam Dong |
- |
- |
- |
31 |
|||||||||||||
|
|
|
________ |
________ |
________ |
________ |
|||||||||||||
|
|
|
|
|
- |
3,647 |
|||||||||||||
|
|
|
|
|
|
________ |
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
|
Weighted average |
|
|
|
|||||||||||||
|
|
|
period for which |
Weighted |
|
|
|||||||||||||
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|||||||||||||
|
|
|
Years |
% |
£'000 |
£'000 |
|||||||||||||
|
|
Liabilities: |
|
|
|
|
|||||||||||||
|
|
Bank loan - £20,000,000 |
4.55 |
2.63 |
19,951 |
- |
|||||||||||||
|
|
Bank loan - £5,000,000 |
0.08 |
1.17 |
5,000 |
- |
|||||||||||||
|
|
Bank loan - HK$85,000,000 |
0.08 |
2.63 |
8,693 |
- |
|||||||||||||
|
|
|
________ |
________ |
________ |
________ |
|||||||||||||
|
|
|
|
|
33,644 |
- |
|||||||||||||
|
|
|
|
|
________ |
|
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
|
Weighted average |
|
|
|
|||||||||||||
|
|
|
period for which |
Weighted |
|
|
|||||||||||||
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|||||||||||||
|
|
At 30 April 2019 |
Years |
% |
£'000 |
£'000 |
|||||||||||||
|
|
Assets: |
|
|
|
|
|||||||||||||
|
|
Indonesia Rupiah |
- |
- |
- |
69 |
|||||||||||||
|
|
Sterling |
- |
0.47 |
- |
1,383 |
|||||||||||||
|
|
Taiwan Dollar |
- |
- |
- |
1 |
|||||||||||||
|
|
Vietnam Dong |
- |
- |
- |
2,400 |
|||||||||||||
|
|
|
________ |
________ |
________ |
________ |
|||||||||||||
|
|
|
|
|
- |
3,853 |
|||||||||||||
|
|
|
|
|
|
________ |
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
|
Weighted average |
|
|
|
|||||||||||||
|
|
|
period for which |
Weighted |
|
|
|||||||||||||
|
|
|
rate is fixed |
interest rate |
rate |
rate |
|||||||||||||
|
|
|
Years |
% |
£'000 |
£'000 |
|||||||||||||
|
|
Liabilities: |
|
|
|
|
|||||||||||||
|
|
Bank loan - £20,000,000 |
4.55 |
2.63 |
19,938 |
- |
|||||||||||||
|
|
Bank loan - £5,000,000 |
0.44 |
2.75 |
5,000 |
- |
|||||||||||||
|
|
Bank loan - HK$85,000,000 |
0.08 |
2.38 |
8,311 |
- |
|||||||||||||
|
|
|
________ |
________ |
________ |
________ |
|||||||||||||
|
|
|
|
|
33,249 |
- |
|||||||||||||
|
|
|
|
|
________ |
|
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
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 sterling. |
|||||||||||||||||
|
|
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 2020 |
30 April 2019 |
|||||||||||||||
|
|
|
|
Net |
Total |
|
Net |
Total |
|||||||||||
|
|
|
|
monetary |
currency |
|
monetary |
currency |
|||||||||||
|
|
|
Investments |
assets |
exposure |
Investments |
assets |
exposure |
|||||||||||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||
|
|
Australian Dollar |
26,572 |
- |
26,572 |
12,146 |
- |
12,146 |
|||||||||||
|
|
Euro |
3,962 |
- |
3,962 |
- |
- |
- |
|||||||||||
|
|
Hong Kong Dollar |
87,465 |
(8,308) |
79,157 |
87,041 |
(8,311) |
78,730 |
|||||||||||
|
|
Indonesian Rupiah |
10,507 |
- |
10,507 |
16,703 |
69 |
16,772 |
|||||||||||
|
|
Malaysian Ringgit |
- |
- |
- |
3,013 |
- |
3,013 |
|||||||||||
|
|
Philippine Peso |
7,463 |
- |
7,463 |
10,412 |
- |
10,412 |
|||||||||||
|
|
Singapore Dollar |
26,710 |
- |
26,710 |
38,036 |
- |
38,036 |
|||||||||||
|
|
South Korean Won |
26,504 |
- |
26,504 |
22,431 |
91 |
22,522 |
|||||||||||
|
|
Sri Lankan Rupee |
3,262 |
- |
3,262 |
4,467 |
- |
4,467 |
|||||||||||
|
|
Taiwanese Dollar |
26,147 |
1 |
26,148 |
17,944 |
1 |
17,945 |
|||||||||||
|
|
Thai Baht |
5,208 |
- |
5,208 |
8,495 |
- |
8,495 |
|||||||||||
|
|
US Dollar |
44,260 |
- |
44,260 |
46,349 |
- |
46,349 |
|||||||||||
|
|
Vietnam Dong |
4,565 |
31 |
4,596 |
5,339 |
2,400 |
7,739 |
|||||||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
________ |
|||||||||||
|
|
Total |
272,625 |
(8,276) |
264,349 |
272,376 |
(5,750) |
266,626 |
|||||||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
________ |
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
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. |
|||||||||||||||||
|
|
|
|
|
|||||||||||||||
|
|
|
2020 |
2019 |
|||||||||||||||
|
|
|
£'000 |
£'000 |
|||||||||||||||
|
|
Australian Dollar |
2,657 |
1,215 |
|||||||||||||||
|
|
Euro |
396 |
- |
|||||||||||||||
|
|
Hong Kong Dollar |
7,916 |
7,873 |
|||||||||||||||
|
|
Indonesian Rupiah |
1,051 |
1,677 |
|||||||||||||||
|
|
Malaysian Ringgit |
- |
301 |
|||||||||||||||
|
|
Philippine Peso |
746 |
1,041 |
|||||||||||||||
|
|
Singapore Dollar |
2,671 |
3,804 |
|||||||||||||||
|
|
South Korean Won |
2,650 |
2,252 |
|||||||||||||||
|
|
Sri Lankan Rupee |
326 |
447 |
|||||||||||||||
|
|
Taiwanese Dollar |
2,615 |
1,795 |
|||||||||||||||
|
|
Thai Baht |
521 |
850 |
|||||||||||||||
|
|
US Dollar |
4,426 |
4,635 |
|||||||||||||||
|
|
Vietnam Dong |
460 |
774 |
|||||||||||||||
|
|
|
________ |
________ |
|||||||||||||||
|
|
|
26,435 |
26,664 |
|||||||||||||||
|
|
|
________ |
________ |
|||||||||||||||
|
|
|
|
|
|||||||||||||||
|
|
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 2020 would have increased/(decreased) by £31,889,000 (2019 - increased/(decreased) by £34,342,000) 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 as they fall due in line with the maturity profile analysed below. |
|||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
Within |
Within |
Within |
Within |
|
||||||||||||
|
|
|
1 year |
1-2 years |
2-3 years |
3-4 years |
Total |
||||||||||||
|
|
At 30 April 2020
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||
|
|
Bank loans |
13,693 |
- |
- |
20,000 |
33,693 |
||||||||||||
|
|
Interest cash flows on bank loans |
547 |
524 |
525 |
396 |
1,992 |
||||||||||||
|
|
Cash flows on other creditors |
826 |
- |
- |
- |
826 |
||||||||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
||||||||||||
|
|
|
15,066 |
524 |
525 |
20,396 |
36,511 |
||||||||||||
|
|
|
|
________ |
________ |
________ |
________ |
________ |
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
Within |
Within |
Within |
Within |
Within |
|
|||||||||||
|
|
|
1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
Total |
|||||||||||
|
|
At 30 April 2019 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||
|
|
Bank loans |
13,311 |
- |
- |
- |
20,000 |
33,311 |
|||||||||||
|
|
Interest cash flows on bank loans |
615 |
524 |
524 |
525 |
396 |
2,584 |
|||||||||||
|
|
Cash flows on other creditors |
538 |
- |
- |
- |
- |
538 |
|||||||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
________ |
|||||||||||
|
|
|
14,464 |
524 |
524 |
525 |
20,396 |
36,433 |
|||||||||||
|
|
|
________ |
________ |
________ |
________ |
________ |
________ |
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
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 £20,000,000 fixed rate credit facility, which expires on 14 December 2023 and revolving multi-currency credit facility, which expires on 14 December 2021. 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 2020 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. |
|||||||||||||||||
|
|
(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: |
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
|
2020 |
|
2019 |
|
|||||||||||||
|
|
|
Statement of |
|
Statement of |
|
|||||||||||||
|
|
|
Financial |
Maximum |
Financial |
Maximum |
|||||||||||||
|
|
|
Position |
exposure |
Position |
exposure |
|||||||||||||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||
|
|
Current assets |
|
|
|
|
|||||||||||||
|
|
Loans and receivables |
1,221 |
1,221 |
926 |
926 |
|||||||||||||
|
|
Cash at bank and in hand |
3,647 |
3,647 |
3,853 |
3,853 |
|||||||||||||
|
|
|
________ |
________ |
________ |
________ |
|||||||||||||
|
|
|
4,868 |
4,868 |
4,779 |
4,779 |
|||||||||||||
|
|
|
________ |
________ |
________ |
________ |
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
None of the Company's financial assets is past due or impaired. |
|||||||||||||||||
|
|
Fair values of financial assets and financial liabilities. 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. Bank loans are valued at amortised cost in accordance with the Company's stated accounting policy. |
|||||||||||||||||
|
18. |
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 2020 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
262,106 |
- |
- |
262,106 |
|
|
|
Collective investment schemes |
- |
56,781 |
- |
56,781 |
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
Total fair value |
262,106 |
56,781 |
- |
318,887 |
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 30 April 2019 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
280,340 |
- |
- |
280,340 |
|
|
|
Collective investment schemes |
- |
63,079 |
- |
63,079 |
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
Total fair value |
280,340 |
63,079 |
- |
343,419 |
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
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. |
|||||
|
19. |
Related party transactions and transactions with the Manager. Fees payable during the period to the Directors and their interests in shares of the Company are disclosed within the Directors' Remuneration Report. |
|
|
Mr Young is also a director of the Company's Investment Manager, Aberdeen Standard Investments (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 Standard Fund Managers Limited. Details of transactions during the year and balances outstanding at the year end disclosed in notes 4 and 5. |
|
20. |
Capital management policies and procedures. 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. |
|
21. |
Subsequent events. Subsequent to the period end, the Company's NAV has increased following a recovery in stockmarket values from lows caused by the Covid-19 pandemic. At the date of this Report the latest NAVs per share were 291.33p including income and 286.33p excluding income as at the close of business on 29 June 2020, representing increases of 11.4% and 11.0% respectively, compared with the NAV per share of 261.63p including income and 258.00p excluding income at the period end. |
|
ALTERNATIVE PERFORMANCE MEASURES |
|||
|
|
|||
|
Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP.
|
|||
|
Total return. NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
|
|||
|
The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the years ended 30 April 2020 and 30 April 2019. |
|||
|
|
|
|
|
|
|
Dividend |
|
Share |
|
2020 |
rate |
NAV |
price |
|
30 April 2019 |
N/A |
281.12p |
250.00p |
|
15 August 2019 |
3.30p |
277.07p |
241.00p |
|
2 January 2020 |
1.00p |
292.08p |
258.00p |
|
30 April 2020 |
N/A |
261.63p |
225.00p |
|
|
|
_________ |
_________ |
|
Total return |
|
-5.5% |
-8.4% |
|
|
|
_________ |
_________ |
|
|
Dividend |
|
Share |
|
2019 |
rate |
NAV |
price |
|
30 April 2018 |
N/A |
272.41p |
236.00p |
|
16 August 2018 |
3.30p |
262.91p |
227.00p |
|
3 January 2019 |
1.00p |
246.21p |
215.00p |
|
30 April 2019 |
N/A |
281.12p |
250.00p |
|
|
|
_________ |
_________ |
|
Total return |
|
4.9% |
8.0% |
|
|
|
_________ |
_________ |
|
|
|||
|
Dividend cover. Revenue return per share of 4.61p (2019 - 4.30p) divided by dividends per share of 4.30p (2019 - 4.30p) expressed as a ratio. |
|||
|
Discount to net asset value. The amount by which the market price per Ordinary share of 225.00p (2019 - 250.00p) is lower than the net asset value per Ordinary share (including income 261.63p (2019 - 281.12p); excluding income 258.00p (2019 - 277.79p)), expressed as a percentage of the net asset value per Ordinary share. |
|||
|
Net asset value per Ordinary share (ex income). The Company also uses net asset value (ex income) per share as an alternative performance measure. This is calculated as follows: |
|||
|
|
|
|
|
|
|
2020 |
2019 |
|
|
Net assets attributable (£'000) |
289,285 |
314,411 |
|
|
Less: Revenue for the year (£'000) |
(5,125) |
(4,850) |
|
|
Add: Dividends paid during the year (£'000) |
1,109 |
1,123 |
|
|
|
_________ |
_________ |
|
|
Net assets (ex income) (£'000) |
285,269 |
310,684 |
|
|
|
_________ |
_________ |
|
|
Number of Ordinary shares in issue |
110,571,348 |
111,841,348 |
|
|
|
_________ |
_________ |
|
|
NAV (ex income) per Ordinary share |
258.00p |
277.79p |
|
|
|
_________ |
_________ |
|
|
Net gearing. Net gearing measures the total borrowings of £33,644,000 (30 April 2019 - £33,249,000) less cash and cash equivalents of £3,944,000 (30 April 2019 - £4,401,000) divided by shareholders' funds of £314,411,000 (30 April 2019 - £311,816,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due from brokers at the year end of £112,000 (2019 - £91,000) as well as cash at bank and in hand of £3,647,000 (2019 - £3,853,000). These balances can be found in notes 11 and 12. |
|||
|
Ongoing charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values throughout the year. |
|||
|
|
|
|
|
|
|
2020 |
2019 |
|
|
Investment management fees (£'000) |
1,854 |
1,803 |
|
|
Administrative expenses (£'000) |
763 |
839 |
|
|
Less: non-recurring charges (£'000) |
(54) |
(89) |
|
|
|
_________ |
_________ |
|
|
Ongoing charges (£'000) |
2,563 |
2,553 |
|
|
|
_________ |
_________ |
|
|
Average net assets (£'000) |
310,182 |
294,966 |
|
|
|
_________ |
_________ |
|
|
Ongoing charges ratio (excluding look-through costs) |
0.83% |
0.87% |
|
|
Look-through costs A |
0.27% |
0.26% |
|
|
|
_________ |
_________ |
|
|
Ongoing charges ratio (including look-through costs) |
1.10% |
1.13% |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
A Costs associated with holdings in collective investment schemes as defined by the Committee of European Securities Regulators' guidelines on the methodology for the calculation of the ongoing charges figure, issued on 1 July 2010. |
|||
|
B During both years net asset values with debt at fair value equated to net asset value with debt at amortised cost due to the short-term nature of the bank loans. |
|||
|
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes amongst other things, the cost of borrowings and transaction costs. |
|||
Additional Notes to the Annual Financial Report
The Annual General Meeting will be held at 12 noon on 2 September 2020 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 11 September 2020 to holders of Ordinary shares on the register at the close of business on 7 August 2020. The relevant ex-dividend date is 6 August 2020.
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2020 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 2019 and 2020 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 2019 is derived from the statutory accounts for 2019 which have been delivered to the Registrar of Companies. The 2020 accounts will be filed with the Registrar of Companies in due course.
The Annual Report and Accounts will be posted to shareholders in July 2020. Copies will be available during normal business hours from the Secretary, Aberdeen Asset Management PLC, 1 George Street, Edinburgh EH2 2LL 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
1 July 2020
* 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.
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