Annual Financial Report
ABRDN NEW DAWN INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 APRIL 2022
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).
Website
Up to date information can be found on the Company's website: www.newdawn-trust.co.uk
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.
Performance Highlights for the Year Ended 30 April 2022
|
Share price total returnAB |
Net asset value total returnAB |
|||
|
-11.8% |
-11.0% |
|||
|
2021 |
+48.3% |
2021 |
+43.4% |
|
|
Benchmark total returnB |
Ongoing chargesA |
|||
|
-9.2% |
1.13% |
|||
|
2021 |
+35.7% |
2021 |
1.09% |
|
|
Revenue return per share |
Dividend per Ordinary share |
|||
|
3.71p |
4.30p |
|||
|
2021 |
4.24p |
2021 |
4.30p |
|
|
A Alternative Performance Measure. |
||||
|
B Total return represents capital return plus dividends reinvested. |
||||
Financial Calendar and Highlights
Financial Calendar
|
Online Shareholder Presentation |
22 August 2022 |
|
Annual General Meeting |
6 September 2022 |
|
Final dividend payable |
9 September 2022 |
|
Half year end |
31 October 2022 |
|
Expected announcement of results for |
December 2022 |
|
Interim dividend payable |
10 February 2023 |
|
Financial year end |
30 April 2023 |
|
Expected announcement of results for |
July 2023 |
Highlights
|
30 April 2022 |
30 April 2021 |
% change |
|
|
Total assets |
£380,434,000 |
£435,701,000 |
-12.7 |
|
Total equity shareholders' funds (net assets) |
£346,952,000 |
£403,005,000 |
-13.9 |
|
Market capitalisation |
£305,154,000 |
£357,833,000 |
|
|
Net asset value per Ordinary share (including current year income) |
325.17p |
369.97p |
-12.1 |
|
Net asset value per Ordinary share (excluding current year income)AB |
322.43p |
366.71p |
-12.1 |
|
Share price (mid market) |
286.00p |
328.50p |
-12.9 |
|
Discount to net asset value per Ordinary share (including current year income)B |
12.0% |
11.2% |
|
|
Discount to net asset value per Ordinary share (excluding current year income)AB |
11.3% |
10.4% |
|
|
MSCI AC Asia Pacific ex Japan Index (currency adjusted, capital gains basis) |
834.02 |
941.03 |
-11.4 |
|
Net gearingB |
7.7% |
7.2% |
|
|
Dividend and earnings |
|||
|
Revenue return per share |
3.71p |
4.24p |
-12.5 |
|
Dividends per shareC |
4.30p |
4.30p |
- |
|
Dividend coverB |
0.86 |
0.99 |
|
|
Revenue reservesD |
£12,705,000 |
£13,362,000 |
|
|
Operating costs |
|||
|
Ongoing charges ratioB |
1.13% |
1.09% |
|
|
A Based on capital only NAV. |
|||
|
B Considered to be an Alternative Performance Measure. |
|||
|
C The figures for dividends reflect the years in which they were earned and assume approval of the final dividend. |
|||
|
D Prior to payment of proposed final dividend. |
|||
Strategic Report
Chairman's Statement
Overview of the Year
It was a challenging year for your company, as Asia experienced a resurgence of infections from more transmissible Covid-19 strains, amid the pandemic that is now into its third year. In contrast to many Western countries, which moved towards living with Covid-19 and re-opened their economies, mobility curbs and lockdowns remained a feature across Asia. In China, for instance, the government's "zero-Covid" policy led to severe lockdowns in major cities including Shanghai following a spike in infection rates. Some officials have talked about providing support for the economy and promised that GDP growth targets would be met. However, few concrete measures have been announced so far. Pandemic related disruption continues to impinge on global supply chains. With global demand starting to recover, commodity prices were already rising when the Russian invasion of Ukraine in February added to the pressure. Evident growing inflation risks led major central banks to shift their policy stance, with the US Federal Reserve leading the way in interest rate increases.
The Company's performance reflected this testing environment, with the share price and net asset values falling by 11.8% and 11.0% respectively on a total return basis. This compared with a fall of 9.2% in the benchmark MSCI All Countries Asia Pacific ex Japan Index. Notably, China and parts of Southeast Asia were key contributors to relative returns, as compared to weakness in Australia, India and South Korea. A more detailed explanation of performance is contained in the Investment Manager's Review. While the performance for the year is disappointing, it is reassuring to note the Company's longer-term performance record with both the NAV and share price total returns outperforming the benchmark over three and five years. This underlines the benefit of investing in high quality companies with a real competitive advantage, sound financial management and good corporate governance.
In such times, perspective matters. Over the past year, economic growth and corporate earnings have been resilient in important markets such as India. Other countries in the region, including Singapore, Malaysia and Vietnam, are re-opening gradually. As vaccination rates have steadily risen, up to around 70% in India for example, governments are increasingly viewing the disease as endemic. That is bringing an end to many restrictions and puts the region on a path back to normality, as people are once again able to travel across borders. That should provide an economic boost this year as sectors which have been heavily affected by lockdowns, such as tourism, begin to revive.
The Russian invasion of Ukraine caused more volatility, especially in commodity prices, but Asia has few trade or banking links with Ukraine, so the direct economic effects of the war have been limited so far. However, the indirect impact of inflation and slowing global growth are being felt. Saying that, inflation levels in the region remain relatively benign so while central banks in many developed countries have already raised interest rates, the same has not yet happened widely across Asia.
Another challenge for investors was an increase in regulatory risk in China as the central government laid out plans to increase rules and supervision in several sectors, most notably for technology companies. In anticipation of this and taking into account the potential impact of the zero-Covid measures, the Investment Manager reduced exposure to the sectors most affected, which helped mitigate the portfolio's decline.
Fears about rising interest rates have led some investors to move away from growth stocks and towards a more value-orientated strategy. However, the Investment Manager remains focused on quality and seeking out companies with sound fundamentals. The benefits of an active investment approach are clear when there is increased market volatility. It can throw up opportunities as well as enable investors to sidestep parts of the market that are most exposed to risks and uncertainties.
Environmental, Social and Governance ("ESG") issues remain a key part of this active investment approach and one of the better moments during the year was when the global community came together in Glasgow for the COP26 climate change summit. Amid a growing sense of urgency about taking action to reduce emissions there was overall agreement, for the first time, that the world should reduce its use of coal as a source of energy. Many Asian countries announced major new commitments, including a pledge by India's Prime Minister, Narendra Modi, that his country would achieve net zero by 2070 and source 50% of its energy requirements from renewable sources by 2030. China did not move much beyond its previous commitments but did pledge to look at reducing methane emissions. This has given fresh impetus to the renewable energy sector, which is also a strategic focus for Beijing. The Company is well positioned for this, with the portfolio's underlying carbon footprint being well below that of the broader benchmark. The Investment Manager's Review includes further information on the adoption of ESG factors within the investment process and examples of engagement with investee companies during the year.
Earnings and Dividend
Revenue earnings per share for the year were 3.71p, a fall of 12.5% compared to the previous year. This was largely attributable to the absence this year of the large special dividend paid out by Samsung Electronics last year. Underlying revenues, adjusting for this, were broadly flat year-on-year, but supported by higher distributions from the large Australian miners, Rio Tinto and BHP.
The Board is pleased to announce a final dividend of 3.3p per share (2021: 3.3p), making a total dividend for the year of 4.3p per share, unchanged from the previous year. If approved by shareholders at the Annual General Meeting, the final dividend will be paid on 9 September 2022 to shareholders on the register on 5 August 2022.
This will be the second consecutive year that the Company has paid an uncovered dividend, The Company does, however, have significant distributable revenue reserves. At the year end, the Revenue Reserve amounted to 201% of the current annual dividend cost (after the payment of the final dividend).
Gearing
At the end of the year, the Company's borrowing facilities amounted to £40 million, comprising a fixed rate loan of £20 million, which matures in December 2023 (with an interest rate of 2.626%), and a £20 million multi-currency revolving loan facility maturing in June 2024. An aggregate Sterling equivalent of £33.5 million was drawn down at the year-end and gearing (net of cash) was 7.7% as at 30 April 2022, compared to 7.2% at the beginning of the year.
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. 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 2.2 million shares, representing 2.0% 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.
Management Fee Arrangements
The Company has agreed an amended management fee with the Manager, introducing a new, lower tier of fee on any net assets above £350 million. At that level, the fee will fall from 0.85% p.a. to 0.50% p.a. This change has been backdated to take effect from 1 May 2022.
Changes to Articles of Association
As many shareholders will be aware, and as set out in the Overview of Strategy, the Company does not have a fixed life but, under its Articles of Association, if, in the 90 days preceding the Company's financial year end, 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, 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 2022, the average discount to the underlying NAV (excluding current year income, and with borrowings stated at market value) of the Ordinary shares was 11.1% and therefore no continuation resolution will be put to the Company's shareholders at this year's Annual General Meeting.
During the year, the Board reviewed this mechanism and decided that it would be more appropriate if the trigger for a continuation vote was in future based on the NAV including current year income, rather than excluding income as it is at present. The Board believes that this is a more appropriate measure of the discount.
For the 90 days to 30 April 2022, the average discount to the underlying NAV (including current year income, and with borrowings stated at market value) of the Ordinary shares was 11.7%. Therefore, on this basis, there still would have been no requirement this year for the Board to put a continuation resolution to shareholders.
This and other minor changes will be put to shareholders at the AGM by way of a special resolution.
Change of Company Name
As stated at the interim stage, following the change of the name of the Company's Manager to abrdn plc, the Board decided that there were benefits in aligning the Company's name to the name and branding of the management company. Consequently, with effect from 31 May 2022, the Company's name was changed to abrdn New Dawn Investment Trust plc .
In accordance with the Company's Articles of Association, the name of the Company was changed by a resolution of the Directors. Shareholder approval was not required.
The Company's identifier remains as 'ABD'. The Company's SEDOL and ISIN are also unchanged.
Annual General Meeting ("AGM") and Online Shareholder Presentation
The Company's AGM will be held at 12 noon on Tuesday 6 September 2022 at the offices of abrdn plc, Bow Bells House, 1 Bread Street, London EC4M 9HH, and will be followed by lunch.
We are delighted to be able to finally meet with shareholders in person this year and hope to see many of you there.
We encourage all shareholders to complete and return the Proxy Form enclosed with the Annual Report so as to ensure that your votes are represented at the meeting. If you hold your shares in the Company via a share plan or a platform and would like to attend and / or vote at the AGM, then you will need to make arrangements with the administrator of your share plan or platform. For this purpose, investors who hold their shares in the Company via the abrdn Investment Plan for Children, Share Plan or ISA will find a Letter of Direction enclosed. Shareholders are encouraged to complete and return their Proxy Forms / Letters of Direction in accordance with the instructions.
As shareholders may recall, in the absence of a physical AGM last year, we held an Online Shareholder Presentation at which a presentation was given by the Investment Manager and attendees had the opportunity to ask questions of the Manager and the Chairman.
As this event proved popular, we have decided to hold another Online Shareholder Presentation this year, on Monday 22 August 2022 at 10:00am. This is being held in addition to the AGM.
Full details on how to register for the Online Shareholder Presentation can be found at: www.workcast.com/register?cpak=1400521669912718
Details are also contained on the Company's website. Should you be unable to attend the online event, the Investment Manager's presentation will be made available on the Company's website shortly after the presentation.
You will be able to ask questions during the presentation, but you are also able to submit questions in advance at the following email address: new.dawn@abrdn.com . We hope that for those unable to attend the AGM, this will be a useful way of communicating with the Manager and the Board.
Outlook
While Covid-19 may be receding in most places, other concerns have emerged in the form of the slowdown in global economic growth and the rise in both inflation and interest rates. Problems with supply chains and logistics also remain, but these should ease in the second half of 2022. On a more positive note, there is room for monetary and fiscal policy to support growth in Asia, and the Chinese government has already indicated a willingness to take further measures. Some of the regulatory changes could even help growth by shifting more power away from the giant technology groups and into the hands of consumers. There are clear signs of economic resilience in the region as demonstrated by the markets in India and the Philippines, which remain on course to deliver double-digit earnings growth in 2022.
Amidst all of this it is important for investors not to lose sight of the long-term benefits and opportunities of investing in the region - the fundamental drivers of growing internal demand from consumers, driven by economic development and the rise of the middle classes. These factors fuel a wide range of activities, from infrastructure development to solar panel production to the development of batteries for electric vehicles and online payment services. The current environment is certainly a challenging one for investors, but the Investment Manager is continuing to focus on being invested in quality companies with market leading positions and the potential for good long term returns.
Donald Workman
Chairman
6 July 2022
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. As at 30 April 2022, the Company had net gearing of 7.7% 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 2022, 2.8% 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 (i.e. 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.
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 2022, there were three male Directors and two female Directors. Two of the Directors, Nicole Yuen and Hugh Young, are resident in the Asia Pacific region. At the year end the Company met the diversity targets set out in Listing Rule 9.8.6R (9a).
Principal Risks and Uncertainties
The Company's statement of principal risks and uncertainties forms part of the Strategic Report and is included further 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.
|
KPI |
Description |
|
Performance of net asset value ("NAV") |
The Board considers the Company's NAV total return figures to be the best indicator of performance over time. |
|
Performance against benchmark index |
The Board measures performance against the benchmark index - the Sterling -adjusted MSCI All Countries Asia Pacific ex Japan Index. |
|
Revenue return per Ordinary share |
The Board monitors the Company's net revenue return. |
|
Dividends per share |
The Board monitors the Company's annual dividends per Ordinary share. |
|
Share price performance |
The Board monitors the performance of the Company's share price on a total return basis. |
|
Discount/premium to NAV |
The discount/premium of the share price relative to the NAV per share is closely monitored by the Board. |
|
Ongoing charges |
The Board regularly monitors the Company's operating costs. |
Promotional Activities
The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the 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 the abrdn Group on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by the abrdn Group. The Company also supports the Manager's investments' investor relations programme which involves regional roadshows to existing and potential shareholders, promotional and public relations campaigns. During the Covid-19 pandemic, a number of events that are usually held physically were substituted with virtual events. The Manager's 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. The promotional programme includes commissioning independent paid for research on the Company, most recently from Marten & Co. A copy of the latest research note is available from the Company's website.
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.
Modern Slavery Act
Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015. 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.
The UK Stewardship Code and Proxy Voting
The Company supports the UK 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. abrdn 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 return to shareholders. While delivery of stewardship activities has been delegated to the Manager, 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 2022 the average discount to the underlying NAV (excluding current year income, and with borrowings stated at market value) of the Ordinary shares was 11.1% and therefore no continuation resolution will be put to the Company's shareholders at this year's Annual General Meeting.
Viability Statement
The Board considers the Company, with no fixed life, to be a long term investment vehicle and it intends to maintain the current mandate. For the purposes of this viability statement, the Board has decided that three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.
In assessing the viability of the Company over the review period, the Directors have focused upon the following factors:
- The principal risks and uncertainties detailed below and the steps taken to mitigate these risks.
- The role of the Audit and Risk Committee in reviewing and monitoring the Company's internal control and risk management systems.
- The ongoing relevance of the Company's investment objective.
- The liquidity of the Company's portfolio. All of the Company's investments are in quoted 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 service providers.
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 the current events in Ukraine, 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 its report.
On behalf of the Board
Donald Workman
Chairman
6 July 2022
Promoting the Success of the Company
Introduction
Section 172 (1) of the Companies Act 2006 (the "Act") requires each Director to act in the way he/she considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole.
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 that provision of the Act (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 Company's investment objective and investment policy are contained within the Overview of Strategy.
The Board, which at the end of the year comprised five non-executive Directors, four 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 mind 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), service providers, investee companies, the debt provider and, more broadly, the environment and community.
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 |
|
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 Stockbroker 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. In addition to the Annual General Meeting, there will be an Online Shareholder Presentation again this year following a favourable response last year. The Company also supports the Manager's investor relations programme which involves regional roadshows, promotional and public relations campaigns. During the Covid-19 pandemic, a number of events that are usually held physically were substituted with virtual events. 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. |
|
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. |
|
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. |
|
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. The Manager reports regularly to the Board on investment and engagement activity. |
|
Debt Provider |
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 2022. Each of these decisions was made after taking into account the short and long terms benefits for stakeholders.
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, the Board considers 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
The Board is recommending payment of a final dividend for the year of 3.3p per Ordinary share. Following payment of the final dividend, total dividends for the year will amount to 4.3p per Ordinary share, unchanged from the previous year.
Extension of Loan Facility
During the year, the Company announced that it had renewed its £20 million multi-currency revolving loan facility, extending the maturity date to 28 June 2024. The Company has borrowing facilities amounting in aggregate to £40 million, comprising a fixed rate loan of £20 million (with an interest rate of 2.626%), which matures in December 2023, and the £20 million multi-currency revolving loan facility.
The Board believes that one of the benefits of an investment trust is its ability use gearing, and the extension of the term of the £20 million facility provides certainty as to the availability of the loan beyond the previous maturity date in December 2021.
Share Buy Backs
During the year the Company bought back 2,232,000 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.
Appointment of New Auditor
During the year ended 30 April 2021, the Audit and Risk Committee reviewed the trend of audit fees for UK listed companies, including investment companies, and considered the impact to the Company of the cost of the external audit. Following this review, the Committee decided to conduct a competitive tender process. The Committee invited a number of audit firms to submit proposals and, following a thorough process which involved a presentation to the Audit and Risk Committee, it was agreed to recommend to the Board the appointment of Johnston Carmichael LLP as the Company's Auditor for the year ending 30 April 2022.
Johnston Carmichael LLP was appointed as the Company's Auditor by shareholders at the Annual General Meeting on 1 September 2021.
Online Shareholder Presentation
As explained in the Chairman's Statement, to encourage and promote interaction and engagement with the Company's shareholders, the Board has again decided to hold an interactive Online Shareholder Presentation which will be held at 10.00am on Monday 22 August 2022. At the presentation, shareholders will receive updates from the Chairman and Investment Manager and there will be an interactive question and answer session. The online presentation is being held ahead of the AGM in order to allow shareholders to submit their proxy votes prior to the meeting.
Management Fee
Following the year end, the Company agreed an amended management fee with the Manager, introducing a new, lower tier of fee on any net assets above £350 million. At that level, the fee will fall from 0.85% p.a. to 0.50% p.a. This change has been backdated to take effect from 1 May 2022.
The new management fee arrangement is more competitive and the Board believes that it is in the interests of shareholders.
Articles of Association
As explained in detail in the Chairman's Statement, the Board is proposing changes to the Articles of Association at the AGM. This includes a proposed change to the Company's discount monitoring mechanism that is conducted during the 90 days prior to each financial year end. The Board believes that the revised discount monitoring mechanism is more appropriate than the current measure and that this and the other changes proposed to the Articles of Association are in the interests of shareholders.
On behalf of the Board
Donald Workman
Chairman
6 July 2022
Performance
Performance (total return)
|
1 year return |
3 year return |
5 year return |
|
|
% |
% |
% |
|
|
Net asset valueA |
-11.0 |
+20.5 |
+42.8 |
|
Share priceA |
-11.8 |
+19.9 |
+46.6 |
|
MSCI AC Asia Pacific ex Japan Index (currency adjusted) |
-9.2 |
+16.7 |
+36.0 |
|
A Alternative Performance Measure. |
Ten Year Financial Record
|
Year to 30 April |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
|
Total revenue (£'000) |
6,562 |
6,819 |
7,412 |
7,004 |
6,922 |
7,481 |
7,442 |
7,738 |
7,558 |
6,670 |
|
Per share (p) |
||||||||||
|
Net revenue return |
3.89 |
3.79 |
4.18 |
4.06 |
4.05 |
4.47 |
4.30 |
4.61 |
4.24 |
3.71 |
|
Total return |
33.49 |
(18.68) |
31.74 |
(34.72) |
68.66 |
30.97 |
11.88 |
(15.45) |
112.18 |
(41.10) |
|
Net dividends paid/proposed |
3.40 |
3.60 |
3.80 |
3.90 |
4.00 |
4.30 |
4.30 |
4.30 |
4.30 |
4.30 |
|
Net asset value |
210.57 |
188.49 |
216.67 |
179.43 |
244.90 |
272.41 |
281.12 |
261.63 |
369.97 |
325.17 |
|
Shareholders' funds (£'000) |
262,263 |
234,762 |
269,398 |
216,243 |
286,191 |
311,816 |
314,411 |
289,285 |
403,005 |
346,952 |
Dividends
|
Rate per share |
XD date |
Record date |
Payment date |
|
|
Interim 2022 |
1.00p |
6 January 2022 |
7 January 2022 |
11 February 2022 |
|
Proposed final 2022 |
3.30p |
4 August 2022 |
5 August 2022 |
9 September 2022 |
|
Total 2022 |
4.30p |
|||
|
Interim 2021 |
1.00p |
7 January 2021 |
8 January 2021 |
29 January 2021 |
|
Final 2021 |
3.30p |
5 August 2021 |
6 August 2021 |
10 September 2021 |
|
Total 2021 |
4.30p |
Investment Manager's Review
Market and Portfolio Review
Asia Pacific equities retreated over the year ended 30 April 2022, with a marked rise in volatility in the second half of the year. This was amid the emergence of the Covid-19 Omicron variant and rising expectations for monetary tightening to combat inflation. Price pressures mounted further when the tensions on the Ukrainian border unfolded into a full-scale invasion by Russia. Commodity prices soared on concerns over supply disruptions, further fuelling inflation and putting more pressure on central banks to curb price pressures. The US Federal Reserve lifted its benchmark interest rate for the first time since 2018.
China was the main market laggard, down almost 30%, owing to multiple headwinds. These concerns included regulatory upheaval, property and energy woes, a resurgence of Covid-19 outbreaks and the potential delisting of US-listed Chinese companies over auditing requirements. Towards the end of the period, the People's Bank of China ("PBOC") lowered key lending rates to shore up growth. Elsewhere, South Korea's technology-heavy market suffered from the rotation to the more value-orientated parts of the market. On the other hand, the best-performing markets included India and Indonesia as their economies re-opened after the removal of Covid-related restrictions. Being a resource-rich country, Indonesia also benefited from the spike in commodity prices.
Against a backdrop of spiking commodity prices, rising interest rates and slowing growth, there was a sharp rotation from growth to value, which weighed on performance. This was clear to see in the energy sector, where our decision to have no exposure due to a lack of quality companies hurt returns. Similarly, several of the Company's growth stocks succumbed to profit taking after prolonged outperformance. Over the 12 months, the MSCI All Counties Asia Pacific ex Japan Index fell by 9.2% in total return terms, whereas the Company's net asset value ("NAV") and share price declined by 11.0% and 11.8% respectively, also in total return terms. Despite this, our overarching focus remains on holding quality companies that have held up well over longer time periods. The Company's NAV and share price total returns have both outpaced the benchmark index over three and five years.
In terms of performance drivers, China was a notable contributor to relative returns. Our selective approach to the internet segment, in the uncertain regulatory environment, reaped some reward. In particular, not holding e-commerce companies Meituan and Pinduoduo benefited the Company, as did the relatively small position in Alibaba . The companies we favour are those that benefit from policy tailwinds. To this end, Yunnan Energy New Material , the global leader in lithium-ion battery separators, and power-automation product specialist NARI Technology both performed well as policymakers continued to call for development of green and renewable technologies. However, another holding in this segment, clean-energy solutions provider Sungrow Power Supply , retreated after announcing a soft full-year result. Despite this, we retain our conviction in the company given Beijing's ambitious long-term renewable-energy agenda.
The relative gains above more than offset unfavourable moves in other mainland holdings. Tencent , for instance, was affected by the regulatory clampdown on the mainland internet sector. Current operating conditions remain challenging, but the company's continued dominance of Chinese internet-user engagement, as well as the shifting policy tone towards regulation, platform internet companies and support for the economy, all help to provide confidence in the company's longer-term growth outlook. The shift in the regulatory landscape also weighed down the holding in Chinese data-centre company GDS . Elsewhere, shares of China Tourism Group Duty Free lost ground due to renewed outbreaks of Covid-19 and the resulting lockdowns.
We remain highly selective in China, having reduced exposure to the mainland over the course of the year. This included selling several holdings we regarded as adversely susceptible to regulatory pressure, including Ping An Insurance , Meituan and JD Health . But at the same time, we also introduced some new holdings, including Zhongsheng , the country's leading automotive dealer. The company has a strong portfolio of premium cars, a scale advantage and a very cash-generative aftersales business.
Elsewhere in Southeast Asia, several of the Company's bank holdings contributed positively to performance. Indonesian lender Bank Central Asia and Singapore's DBS Group and Oversea-Chinese Banking Corporation all delivered gains on the back of the economic recovery sparked by the removal of Covid-related restrictions and rising interest rates. In neighbouring Vietnam, the country's leading retailer, Mobile World , continues to see healthy growth supported by extension of its store network and the rapid expansion in online sales.
We continue to be positive on the longer-term outlook for domestic consumption in Southeast Asia. To this end, we subscribed to the initial public offer of Indonesia's Cisarua Mountain Dairy ("Cimory"), a leader in the domestic yoghurt segment. Cimory has a proactive management team, and its understanding of local consumer preferences and modern trade has enabled the company to gain market share quickly in other segments. We also purchased FPT , a diversified technology group in Vietnam with a fast-growing software outsourcing business. On the other side, we divested two of the Company's Singaporean holdings, Raffles Medical and City Developments , to fund purchases in higher conviction holdings.
Meanwhile, key areas of relative performance weakness were in Australia, India and South Korea. In Australia, the lighter exposure versus the benchmark proved costly as the market was among the strongest in the region as Covid restrictions eased and commodity prices rose. In particular, the Company's lack of exposure to the large Australian banks was a detractor, but we continue to favour other, higher growth regional lenders. The losses were partially mitigated by the holding in mining giant BHP , which was a key beneficiary of the current high commodity-price environment.
Moving to India, the performance of the Company's holding in the Aberdeen Standard SICAV - Indian Equity Fund lagged the local market, largely due to the lack of underlying exposure to the energy and metals and mining sectors in India which performed strongly amid the global boom in commodity prices. Meanwhile, the same commodity price inflation eroded margins for some of the portfolio's holdings in the consumer staples and materials sectors.
Other detractors included South Korea's Samsung Electronics ("SEC") and LG Chem . SEC was caught up in the wider technology sell-off at the start of the calendar year, despite recently announcing better than expected numbers in its memory division and another quarter's double-digit growth in its foundry business. LG Chem underperformed due to General Motors' model recall, for which it is the sole battery supplier. This was compounded by the subsequent demerger of the battery business and concern over rising input costs.
Environmental, Social and Governance ("ESG")
ESG has long been an integral part of our investment process with the belief that ESG factors, like any other quality criteria, are financially important and directly affect the performance of the assets in which we invest. We have found over the years that those companies that take their ESG responsibilities seriously tend to outperform those that do not. To this end, we have sought to further enhance our ESG capabilities over the year, equipping our fund managers and analysts with new tools and data sources to enable them to better assess ESG risks and opportunities.
Engagement with the companies we invest in remains a cornerstone of our investment process, helping to protect and enhance the value of the investments we make. ESG issues often dominate these discussions. For example, during the year we actively engaged with China's GDS , which operates large scale data centres, about its renewable energy strategy and power efficiency initiatives. We found that its strategy was sensible and achievable and were encouraged to hear that targets around its renewable energy use and power efficiency are included in the key performance indicators for senior personnel. Separately, in a recent meeting with Australian gaming group Aristocrat Leisure , we noted improvements in its remuneration disclosures, as well as its diversity and inclusion targets, which were among the areas that we had engaged the company on previously.
Outlook
We expect Asian markets to remain volatile in the shorter term given the prevailing stress points of high inflation, the war in Ukraine and monetary-policy normalisation. Further, although most of Asia is moving towards living with Covid , importantly China continues to pursue its zero-Covid policy with significant implications for its economy. It remains to be seen when China eventually reverses this policy, but in the meantime the economy is going to need continued policy support in order to achieve the 5.5% GDP growth target for 2022 . The PBOC has made an initial move on monetary policy and there have been supportive comments from the central government regarding economic stimulus, but the market appears to be waiting for more substantial and concrete announcements. In contrast, the economic recovery in Southeast Asia continues to gain momentum as countries such as Singapore and Thailand re-open after the removal of restrictions.
Asian markets currently face outsized macroeconomic and geopolitical pressures, but we believe that there has not been a significant deterioration of fundamentals across the region. Some of the companies we have invested in have warned about the challenges posed by higher input costs and rising interest rates but, encouragingly, the earnings of many of the holdings have either met or exceeded our expectations in the latest results reporting season. Furthermore, the turbulence in certain markets has resulted in much more palatable valuations. This creates opportunities for investors who are there for the long term, both through identifying new ideas and increasing the weighting to quality long-term holdings.
We remain positioned around structural growth themes such as domestic consumption, technology and green energy. Indeed, many of the Company's holdings in these areas now look even more attractive given the recent sharp rotation away from growth stocks. As always, our focus is on quality companies with strong balance sheets and sustainable earnings prospects that can emerge stronger in tough times.
James Thom and Xin-Yao Ng
abrdn Asia Limited
6 July 2022
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 considers emerging risks which might affect the Company. During the year, the most significant emerging risks were the events in Ukraine, which have created geopolitical uncertainty, as well as inflation and the resultant volatility that it has created in global stock markets.
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 the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation.
The principal and emerging risks and uncertainties faced by the Company are reviewed by the Audit and Risk Committee in the form of risk matrices.
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 in the Company's factsheet and they can be found in the pre-investment disclosure document ("PIDD") published by the Manager, both of which are available on the Company's website.
|
Risk |
|
Mitigating Action |
|
Investment strategy and objectives - the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for its shares and a widening discount. |
|
The Board keeps the level of discount at which the Company's shares trade, as well as the investment objective and policy, under review and holds an annual strategy meeting where it reviews investor relations reports and updates from the Investment Manager and the Company's Stockbroker. 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 abrdn 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, Aberdeen Standard Fund Managers Limited, 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 abrdn Group) and any control failures and gaps in their systems and services, including in relation to cyber security, 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, including its service providers, were subject to rigorous testing during the Covid-19 pandemic, including increased use of online communication and out of office working and reporting. 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. |
|
Exogenous risks over which the Company has no control are always a risk. This includes the Covid-19 pandemic and current events in Ukraine. The Company does what it can to address these risks where possible and to try and meet the Company's investment objectives. In relation to the recent events in Ukraine, the Board has liaised closely with the Manager to establish the impact on the Company, including the performance of individual holdings within the portfolio. |
Investment Portfolio
|
As at 30 April 2022 |
|||||
|
Valuation |
Total |
Valuation |
|||
|
2022 |
assetsA |
2021 |
|||
|
Company |
Industry |
Country |
£'000 |
% |
£'000 |
|
Aberdeen Standard SICAV - Indian Equity FundB |
Collective Investment Scheme |
India |
48,696 |
12.8 |
38,666 |
|
Taiwan Semiconductor Manufacturing Company |
Semiconductors & Semiconductor Equipment |
Taiwan |
32,261 |
8.5 |
38,848 |
|
Samsung Electronics Pref |
Technology Hardware, Storage & Peripherals |
South Korea |
27,893 |
7.3 |
39,995 |
|
AIA Group |
Insurance |
Hong Kong |
19,372 |
5.1 |
18,695 |
|
Tencent Holdings |
Interactive Media & Services |
China |
16,844 |
4.4 |
37,888 |
|
BHP Group (London Listing) |
Metals & Mining |
Australia |
12,401 |
3.3 |
10,341 |
|
CSL |
Biotechnology |
Australia |
11,785 |
3.1 |
12,910 |
|
DBS Group Holdings |
Banks |
Singapore |
10,871 |
2.9 |
5,556 |
|
Bank Central Asia |
Banks |
Indonesia |
9,921 |
2.6 |
8,078 |
|
Oversea-Chinese Banking Corporation |
Banks |
Singapore |
9,261 |
2.4 |
8,547 |
|
Top ten investments |
199,305 |
52.4 |
|||
|
ASML |
Semiconductors & Semiconductor Equipment |
Netherlands |
7,828 |
2.1 |
7,510 |
|
Aberdeen New India Investment TrustB |
Closed End Investments |
India |
7,384 |
1.9 |
6,932 |
|
Cochlear |
Health Care Equipment & Supplies |
Australia |
7,097 |
1.9 |
8,865 |
|
Hong Kong Exchanges & Clearing |
Capital Markets |
Hong Kong |
6,462 |
1.7 |
8,998 |
|
Ayala Land |
Real Estate Management & Development |
Philippines |
6,270 |
1.7 |
6,642 |
|
China Tourism Group Duty Free - A shares |
Specialty Retail |
China |
6,120 |
1.6 |
4,781 |
|
Wuxi Biologics (Cayman) |
Life Sciences Tools & Services |
China |
6,019 |
1.6 |
9,965 |
|
China Merchants Bank - A shares |
Banks |
China |
5,893 |
1.5 |
4,146 |
|
Alibaba Group |
Internet & Direct Marketing Retail |
China |
5,801 |
1.5 |
12,922 |
|
LG Chem |
Chemicals |
South Korea |
5,654 |
1.5 |
8,433 |
|
Top twenty investments |
263,833 |
69.4 |
|||
|
M.P. Evans Group |
Food Products |
United Kingdom |
5,512 |
1.5 |
4,304 |
|
Budweiser Brewing |
Beverages |
Hong Kong |
5,320 |
1.4 |
4,417 |
|
Mobile World |
Specialty Retail |
Vietnam |
5,175 |
1.4 |
2,941 |
|
Oz Minerals |
Metals & Mining |
Australia |
5,019 |
1.3 |
- |
|
Samsung Biologics |
Life Sciences Tools & Services |
South Korea |
5,013 |
1.3 |
3,025 |
|
Yunnan Energy New Material - A shares |
Containers & Packaging |
China |
4,998 |
1.3 |
5,492 |
|
Aristocrat Leisure |
Hotels, Restaurants & Leisure |
Australia |
4,703 |
1.2 |
5,596 |
|
LONGi Green Energy Technology - A shares |
Semiconductors & Semiconductor Equipment |
China |
4,644 |
1.2 |
5,170 |
|
Shenzhen Mindray Bio-Medical Electronics - A shares |
Health Care Equipment & Supplies |
China |
4,271 |
1.1 |
- |
|
Techtronic Industries |
Machinery |
Hong Kong |
4,235 |
1.1 |
- |
|
Top thirty investments |
312,723 |
82.2 |
|||
|
Kweichow Moutai - A shares |
Beverages |
China |
4,210 |
1.1 |
4,302 |
|
Rio Tinto (London Listing) |
Metals & Mining |
Australia |
4,182 |
1.1 |
4,453 |
|
FPT Group |
IT Services |
Vietnam |
3,970 |
1.0 |
- |
|
NARI Technology - A shares |
Electrical Equipment |
China |
3,869 |
1.0 |
2,244 |
|
Sungrow Power Supply - A shares |
Electrical Equipment |
China |
3,597 |
0.9 |
- |
|
China Resources Land |
Real Estate Management & Development |
China |
3,435 |
0.9 |
7,118 |
|
abrdn Asia Focus (formerly Aberdeen Standard Asia Focus)B |
Closed End Investments |
Other Asia |
3,310 |
0.9 |
3,116 |
|
Kakao |
Interactive Media & Services |
South Korea |
3,286 |
0.9 |
- |
|
GDS - A shares |
IT Services |
China |
3,114 |
0.8 |
191 |
|
Cisarua Mountain Dairy |
Food Products |
Indonesia |
2,900 |
0.8 |
- |
|
Top forty investments |
348,596 |
91.6 |
|||
|
Siam Cement (Foreign) |
Construction & Materials |
Thailand |
2,703 |
0.7 |
4,598 |
|
Xero |
Software |
New Zealand |
2,699 |
0.7 |
3,913 |
|
Sands China |
Hotels, Restaurants & Leisure |
Hong Kong |
2,649 |
0.7 |
4,155 |
|
Vietnam Dairy Products |
Food Products |
Vietnam |
2,511 |
0.7 |
2,849 |
|
Venture Corp |
Electronic Equipment, Instruments & Components |
Singapore |
2,444 |
0.7 |
2,703 |
|
Zhongsheng Group |
Specialty Retail |
China |
2,318 |
0.6 |
- |
|
Centre Testing International Group - A shares |
Professional Services |
China |
2,251 |
0.6 |
2,556 |
|
Shenzhen Inovance Technology - A shares |
Machinery |
China |
1,973 |
0.5 |
- |
|
Yonyou Network Technology - A shares |
Software |
China |
1,664 |
0.4 |
- |
|
John Keells Holdings |
Industrial Conglomerates |
Sri Lanka |
1,624 |
0.4 |
3,041 |
|
Top fifty investments |
371,432 |
97.6 |
|||
|
JD.com |
Internet & Direct Marketing Retail |
China |
1,258 |
0.3 |
- |
|
Hangzhou Tigermed ConsultingC |
Life Sciences Tools & Services |
China |
1,007 |
0.3 |
2,676 |
|
Total investments |
373,697 |
98.2 |
|||
|
Net current assetsD |
6,737 |
1.8 |
|||
|
Total assetsA |
380,434 |
100.0 |
|||
|
A As defined. |
|||||
|
B Holding also managed by the abrdn Group but not subject to double charging of management fees. |
|||||
|
C Holding comprises of A & H shares. |
|||||
|
D Excluding short-term bank loans of £13,504,000. |
|||||
|
|
|||||
|
Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings. |
|||||
Changes in Asset Distribution
|
Value at |
Sales |
Appreciation/ |
Value at |
||
|
30 April 2021 |
Purchases |
proceeds |
(depreciation) |
30 April 2022 |
|
|
Country |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Australia |
43,900 |
8,683 |
(8,990) |
1,594 |
45,187 |
|
China |
130,522 |
37,832 |
(46,189) |
(38,879) |
83,286 |
|
Hong Kong |
38,510 |
10,789 |
(8,389) |
(2,872) |
38,038 |
|
India |
45,598 |
4,200 |
- |
6,282 |
56,080 |
|
Indonesia |
8,078 |
2,204 |
(1,151) |
3,690 |
12,821 |
|
Netherlands |
7,510 |
1,446 |
(919) |
(209) |
7,828 |
|
New Zealand |
11,408 |
- |
(5,876) |
(2,833) |
2,699 |
|
Other Asia |
3,116 |
- |
- |
194 |
3,310 |
|
Philippines |
6,642 |
- |
(446) |
74 |
6,270 |
|
Singapore |
26,215 |
4,396 |
(9,758) |
1,723 |
22,576 |
|
South Korea |
53,406 |
9,742 |
(7,307) |
(13,995) |
41,846 |
|
Sri Lanka |
3,041 |
- |
- |
(1,417) |
1,624 |
|
Taiwan |
38,848 |
- |
(4,538) |
(2,049) |
32,261 |
|
Thailand |
4,598 |
- |
(982) |
(913) |
2,703 |
|
United Kingdom |
4,304 |
- |
(29) |
1,237 |
5,512 |
|
Vietnam |
5,790 |
3,665 |
- |
2,201 |
11,656 |
|
Total investments |
431,486 |
82,957 |
(94,574) |
(46,172) |
373,697 |
|
Net current assetsA |
4,215 |
- |
- |
2,522 |
6,737 |
|
Total assets less current liabilities |
435,701 |
82,957 |
(94,574) |
(43,650) |
380,434 |
|
A Excluding short-term bank loans of £13,504,000 (2021 - £12,731,000). |
|||||
Directors' Report (extract)
The Directors present their report and the audited financial statements for the year ended 30 April 2022.
Results and Dividends
The financial statements for the year ended 30 April 2022 are contained below. An interim dividend of 1.0p per Ordinary share was paid on 11 February 2022 and the Board recommends a final dividend of 3.3p per Ordinary share, payable on 9 September 2022 to shareholders on the register on 5 August 2022. The relevant ex-dividend date is 4 August 2022. 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 2022 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 2022 consisted of 106,697,348 Ordinary shares of 5p and 10,401,701 shares held in treasury. During the year the Company purchased 2,232,000 Ordinary shares to be held in treasury. Since the end of the year, the Company has purchased a further 308,000 Ordinary shares to be held in treasury. At the date of approval of this Report there were 106,389,348 Ordinary shares of 5p in issue and 10,709,701 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 abrdn 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 abrdn Asia Limited ("abrdn Asia") by way of a group delegation agreement in place between ASFML and abrdn 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 during the year and fees payable for promotional activities are shown in notes 4 and 5 to the financial statements.
As explained in the Chairman's Statement, the Board has agreed a revised management fee with the Manager, to take effect from 1 May 2022.
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 2022 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.
|
Shareholder |
Number of Ordinary shares held |
% heldB |
|
City of London Investment Management Company Limited |
24,671,041 |
23.1 |
|
abrdn Investment Trust Share PlansA |
8,347,536 |
7.8 |
|
Allspring Global Investments Holdings LLC |
9,104,141 |
8.5 |
|
Close Asset Management Limited |
5,330,904 |
5.0 |
|
1607 Capital Partners LLC |
4,026,274 |
3.8 |
A Non-beneficial interest
B Based on 106,697,348 Ordinary shares in issue as at 30 April 2022
Since the end of the year, Lazard Asset Management LLC has notified the Company of a holding of 5,334,637 Ordinary shares (5.0%), and Close Asset Management Limited has notified the Company of a holding of 5,268,846 Ordinary shares (5.0%). 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);
- 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.
Full details of the Company's compliance with the AIC Code can be found on its website.
Directors
Throughout the year, the Board comprised five Directors, consisting of a non-executive Chairman and four non-executive Directors. All Directors, with the exception of Mr Young, are considered by the Board to be independent and free of any material relationship with the abrdn Group. Mr Young is a director of various entities connected with, or within, the abrdn Group and, as such, is not considered to be independent.
The Directors attended scheduled Board and Committee meetings during the year ended 30 April 2022 as shown in the table below (with their eligibility to attend the relevant meeting in brackets).
|
Director |
Board Meetings |
Audit and Risk Committee Meetings |
Nomination Committee Meetings |
Management Engagement Committee Meetings |
|
D WorkmanA |
6 (6) |
- (-) |
1 (1) |
1 (1) |
|
M Sears |
6 (6) |
2 (2) |
1 (1) |
1 (1) |
|
S Souchon |
6 (6) |
2 (2) |
1 (1) |
1 (1) |
|
H YoungB |
6 (6) |
- (-) |
1 (1) |
- (-) |
|
N Yuen |
6 (6) |
2 (2) |
1 (1) |
1 (1) |
A Mr Workman is not a member of the Audit and Risk Committee.
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, each of Mr Workman, Mr Young, Ms Sears, Ms Yuen and Mr Souchon will retire and seek re-election at the Annual General Meeting.
The Board believes that, except for Mr Young, all the Directors seeking 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 re-election of each of the Directors at the Annual General Meeting.
Mr Young was appointed as a Director in May 1989 and, as stated above, is not independent due to his involvement with various entities within the abrdn Group. Mr Young has significant experience of markets in the Asia Pacific region and provides invaluable input to Board discussions. The Board therefore believes that it is appropriate for Mr Young to remain a Director notwithstanding his tenure.
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/her 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 Company has entered into separate deeds of indemnity with each of the Directors, reflecting the scope of the indemnity in the Articles. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, each Director prepares a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his or her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential or actual conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although all Directors are issued with letters of appointment.
The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company's circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager's anti-bribery and corruption policies are available on its website.
In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.
Going Concern
The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances, including in the current market environment, are realisable within a short timescale. The Board regularly reviews income and expenditure projections and has set limits for borrowing and reviews compliance with banking covenants, including the headroom available.
At the year end, the Company's borrowing facilities amounted to £40 million, comprising a fixed rate loan of £20 million, which matures in December 2023, and a £20 million multi-currency revolving loan facility maturing in June 2024.
In considering the going concern basis of accounting, the Directors have also taken into account the potential requirement of the Board to propose a resolution to approve the continuation of the Company at future Annual General Meetings. 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.
Having taking these factors into account, 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 the period to 31 July 2023, which is at least twelve months from the date of approval of this Report. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.
Accountability and Audit
Each Director confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and they have taken all the steps that they could reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.
Independent Auditor
Following a competitive tender process conducted during the previous year, the Board decided to appoint Johnston Carmichael LLP as the Company's Auditor, in place of Ernst & Young LLP, for the audit of the financial statements for the year ending 30 April 2022. Johnston Carmichael LLP was appointed as the Company's Auditor by shareholders at the Annual General Meeting on 1 September 2021.
The Board will propose resolutions at the Annual General Meeting to re-appoint Johnston Carmichael LLP as the Company's Auditor for the ensuing year and to authorise the Directors to determine its remuneration.
Financial Instruments
The financial risk management objectives and policies arising from financial instruments and the exposure of the Company to risk are disclosed in note 17 to the financial statements.
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 (see Contact Addresses).
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.
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 abrdn Investment Plan for Children, Investment Trust Share Plan and Investment Trust Stocks and Shares 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 abrdn plc, Bow Bells House, 1 Bread Street, London EC4M 9HH on 6 September 2022 at 12 noon.
Should circumstances change significantly before the time of the Annual General Meeting, the Company will notify shareholders of any changes to the arrangements by updating the Company's website and through a stock exchange announcement, where appropriate, as early as is possible before the date of the meeting. Shareholders should note that if law or Government guidance so requires at the time of the meeting, the Chairman of the meeting will limit, in his or her sole discretion, the number of individuals in attendance at the meeting and may be required to impose entry restrictions on certain persons wishing to attend the meeting in order to ensure the safety of those attending.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
6 July 2022
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements in accordance with UK accounting standards, including FRS 102 'The Financial Reporting Standard Applicable in the UK and Republic
of Ireland'.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- assess the Company's ability to continue as a going concern disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Board confirms that to the best of its knowledge:
- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
- the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and
- the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
On behalf of the Board
Donald Workman
Chairman
6 July 2022
Statement of Comprehensive Income
|
Year ended 30 April 2022 |
Year ended 30 April 2021 |
||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
||
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
(Losses)/gains on investments |
10 |
- |
(46,172) |
(46,172) |
- |
119,702 |
119,702 |
|
Income |
3 |
6,670 |
- |
6,670 |
7,558 |
- |
7,558 |
|
Management fee |
4 |
(1,170) |
(1,170) |
(2,340) |
(1,196) |
(1,196) |
(2,392) |
|
Administrative expenses |
5 |
(723) |
- |
(723) |
(754) |
- |
(754) |
|
Exchange (losses)/gains |
- |
(640) |
(640) |
- |
154 |
154 |
|
|
Net return before finance costs and taxation |
4,777 |
(47,982) |
(43,205) |
5,608 |
118,660 |
124,268 |
|
|
Finance costs |
6 |
(406) |
(406) |
(812) |
(343) |
(343) |
(686) |
|
Return before taxation |
4,371 |
(48,388) |
(44,017) |
5,265 |
118,317 |
123,582 |
|
|
Taxation |
7 |
(366) |
- |
(366) |
(621) |
- |
(621) |
|
Return after taxation |
4,005 |
(48,388) |
(44,383) |
4,644 |
118,317 |
122,961 |
|
|
Return per Ordinary share (pence) |
9 |
3.71 |
(44.81) |
(41.10) |
4.24 |
107.94 |
112.18 |
|
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 2022 |
30 April 2021 |
||
|
Notes |
£'000 |
£'000 |
|
|
Fixed assets |
|||
|
Investments at fair value through profit or loss |
10 |
373,697 |
431,486 |
|
Current assets |
|||
|
Debtors |
11 |
1,907 |
3,418 |
|
Cash and short-term deposits |
7,824 |
2,364 |
|
|
9,731 |
5,782 |
||
|
Creditors: amounts falling due within one year |
12 |
||
|
Loans |
(13,504) |
(12,731) |
|
|
Other creditors |
(2,994) |
(1,567) |
|
|
(16,498) |
(14,298) |
||
|
Net current liabilities |
(6,767) |
(8,516) |
|
|
Total assets less current liabilities |
366,930 |
422,970 |
|
|
Non-current creditors |
12 |
||
|
Loans |
(19,978) |
(19,965) |
|
|
Net assets |
346,952 |
403,005 |
|
|
Share capital and reserves |
|||
|
Share capital |
13 |
5,855 |
5,855 |
|
Share premium account |
17,955 |
17,955 |
|
|
Capital redemption reserve |
10,699 |
10,699 |
|
|
Capital reserve |
14 |
299,738 |
355,134 |
|
Revenue reserve |
12,705 |
13,362 |
|
|
Equity shareholders' funds |
346,952 |
403,005 |
|
|
Net asset value per Ordinary share (pence) |
15 |
325.17 |
369.97 |
|
The financial statements were approved by the Board of Directors and authorised for issue on 6 July 2022 and were signed on its behalf by: |
|||
|
Donald Workman |
|||
|
Chairman |
|||
|
The accompanying notes are an integral part of the financial statements. |
|||
Statement of Changes in Equity
|
For the year ended 30 April 2022 |
|||||||||||||
|
Share |
Capital |
|
|||||||||||
|
Share |
premium |
redemption |
Capital |
Revenue |
|
||||||||
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|||||||
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
||||||
|
Balance at 30 April 2021 |
5,855 |
17,955 |
10,699 |
355,134 |
13,362 |
403,005 |
|
||||||
|
Buy back of Ordinary shares for treasury |
- |
- |
- |
(7,008) |
- |
(7,008) |
|
||||||
|
Return after taxation |
- |
- |
- |
(48,388) |
4,005 |
(44,383) |
|
||||||
|
Dividends paid |
8 |
- |
- |
- |
- |
(4,662) |
(4,662) |
|
|||||
|
Balance at 30 April 2022 |
5,855 |
17,955 |
10,699 |
299,738 |
12,705 |
346,952 |
|
||||||
|
For the year ended 30 April 2021 |
|||||||||||||
|
Share |
Capital |
|
|||||||||||
|
Share |
premium |
redemption |
Capital |
Revenue |
|
||||||||
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|||||||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|||||||
|
Balance at 30 April 2020 |
6,011 |
17,955 |
10,543 |
241,342 |
13,434 |
289,285 |
|
||||||
|
Buy back of Ordinary shares for treasury |
- |
- |
- |
(4,525) |
- |
(4,525) |
|
||||||
|
Cancellation of Ordinary shares held in treasury |
(156) |
- |
156 |
- |
- |
- |
|
||||||
|
Return after taxation |
- |
- |
- |
118,317 |
4,644 |
122,961 |
|
||||||
|
Dividends paid |
8 |
- |
- |
- |
- |
(4,716) |
(4,716) |
|
|||||
|
Balance at 30 April 2021 |
5,855 |
17,955 |
10,699 |
355,134 |
13,362 |
403,005 |
|
||||||
|
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 Cash Flows
|
Year ended |
Year ended |
||
|
30 April 2022 |
30 April 2021 |
||
|
Notes |
£'000 |
£'000 |
|
|
Operating activities |
|||
|
Net return before finance costs and taxation |
(43,205) |
124,268 |
|
|
Adjustment for: |
|||
|
Losses/(gains) on investments |
46,172 |
(119,702) |
|
|
Currency losses/(gains) |
640 |
(154) |
|
|
Dividend income |
(6,667) |
(7,558) |
|
|
Dividend income received |
7,112 |
7,404 |
|
|
Interest income |
(3) |
- |
|
|
Interest income received |
2 |
- |
|
|
Increase in other debtors |
(9) |
- |
|
|
(Decrease)/increase in other creditors |
(30) |
118 |
|
|
Stock dividends included in investment income |
(152) |
(271) |
|
|
Overseas withholding tax |
(484) |
(714) |
|
|
Net cash flow from operating activities |
3,376 |
3,391 |
|
|
Investing activities |
|||
|
Purchases of investments |
(81,473) |
(100,747) |
|
|
Sales of investments |
95,767 |
106,804 |
|
|
Net cash from investing activities |
14,294 |
6,057 |
|
|
Financing activities |
|||
|
Equity dividends paid |
8 |
(4,662) |
(4,716) |
|
Interest paid |
(799) |
(682) |
|
|
Buy back of Ordinary shares for treasury |
(6,882) |
(4,525) |
|
|
Loan repayment |
- |
(6,483) |
|
|
Loan drawdown |
- |
5,970 |
|
|
Net cash used in financing activities |
(12,343) |
(10,436) |
|
|
Increase/(decrease) in cash |
5,327 |
(988) |
|
|
Analysis of changes in cash during the year |
|||
|
Opening balance |
2,364 |
3,647 |
|
|
Effect of exchange rate fluctuations on cash held |
133 |
(295) |
|
|
Increase/(decrease) in cash as above |
5,327 |
(988) |
|
|
Closing balances |
7,824 |
2,364 |
|
|
The accompanying notes are an integral part of the financial statements. |
Notes to the Financial Statements
For the year ended 30 April 2022
|
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 April 2021. 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 regularly reviews income and expenditure projections and has set limits for borrowing and reviews compliance with banking covenants, including the headroom available. In considering the going concern basis of accounting, the Directors have also taken into account the potential requirement of the Board to propose a resolution to approve the continuation of the Company at future Annual General Meetings. 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. Having taking these factors into account, 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 the period to 31 July 2023, which is 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. At the year end, the Company's borrowing facilities amounted to £40 million, comprising a fixed rate loan of £20 million, which matures in December 2023, and a £20 million multi-currency revolving loan facility maturing in June 2024. |
||
|
Significant accounting judgements, estimates and assumptions. The preparation of financial statements requires the consideration of certain significant accounting judgements, estimates and assumptions when management may need to exercise its judgement in the process of applying the accounting policies and these are continually evaluated. The Directors do not consider there to be any significant estimates within the financial statements. |
||
|
(b) |
Valuation of investments. The Company has chosen to apply the recognition and measurement provisions of IAS 39 Financial Instruments: Recognition and Measurement and investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis. Listed investments have been measured 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 are 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. 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 is distributable, including 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 |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Income from investments |
|||
|
UK dividend income |
1,973 |
918 |
|
|
Overseas dividends |
4,542 |
6,369 |
|
|
Stock dividends |
152 |
271 |
|
|
6,667 |
7,558 |
||
|
Other income |
|||
|
Deposit interest |
3 |
- |
|
|
Total income |
6,670 |
7,558 |
|
4. |
Management fee |
||||||
|
2022 |
2021 |
||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Management fee |
1,170 |
1,170 |
2,340 |
1,196 |
1,196 |
2,392 |
|
|
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, abrdn Asia Focus PLC and Aberdeen New India Investment Trust PLC are excluded from the calculation of the investment management fee. 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 £59,390,000 (2021 - bid basis - £52,630,000). |
|||||||
|
- 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 £344,000 (2021 - £432,000). |
|||||||
|
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 |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Promotional activities |
177 |
161 |
|
|
Directors' fees |
122 |
129 |
|
|
Safe custody fees |
129 |
134 |
|
|
Depositary fees |
39 |
42 |
|
|
Auditor's remuneration: |
|||
|
- fees payable for the audit of the Company's annual financial statements |
29 |
23 |
|
|
- fees payable for the review of the Company's half yearly financial statements |
- |
6 |
|
|
Registrar's fees |
67 |
45 |
|
|
Legal and professional fees |
28 |
87 |
|
|
Other expenses |
132 |
127 |
|
|
723 |
754 |
||
|
The Company has an agreement with ASFML for the provision of promotional activities. The total fees payable during the year were £177,000 (2021 - £161,000) and the sum due to ASFML at the year end was £65,000 (2021 - £56,000). |
|||
|
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 |
||||||
|
2022 |
2021 |
||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Bank loans and overdraft interest |
406 |
406 |
812 |
343 |
343 |
686 |
|
|
7. |
Taxation |
|||||||
|
2022 |
2021 |
|||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
(a) |
Analysis of charge for the year |
|||||||
|
Overseas tax |
444 |
- |
444 |
712 |
- |
712 |
||
|
Overseas tax reclaimable |
(78) |
- |
(78) |
(91) |
- |
(91) |
||
|
Total tax charge for the year |
366 |
- |
366 |
621 |
- |
621 |
||
|
(b) |
Factors affecting the tax charge for the year . The UK corporation tax rate is 19% (2021 - 19%).The tax assessed for the year is higher (2021 -lower) than the standard rate of corporation tax in the UK. The differences are explained below: |
|||||||
|
2022 |
2021 |
|||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
Net return before taxation |
4,371 |
(48,388) |
(44,017) |
5,265 |
118,317 |
123,582 |
||
|
Corporation tax at standard rate of 19% (2021 - 19%) |
830 |
(9,194) |
(8,364) |
1,000 |
22,480 |
23,480 |
||
|
Effects of: |
- |
|||||||
|
Non-taxable UK dividend income |
(375) |
- |
(375) |
(174) |
- |
(174) |
||
|
Non-taxable overseas dividends |
(892) |
- |
(892) |
(1,262) |
- |
(1,262) |
||
|
Overseas tax suffered |
366 |
- |
366 |
621 |
- |
621 |
||
|
Expenses not deductible for tax purposes |
4 |
- |
4 |
2 |
- |
2 |
||
|
Surplus management expenses and loan relationship deficits not relieved |
433 |
299 |
732 |
434 |
292 |
726 |
||
|
Non-taxable exchange losses/(gains) |
- |
122 |
122 |
- |
(29) |
(29) |
||
|
Non-deductible losses/(non-taxable gains) |
- |
8,773 |
8,773 |
- |
(22,743) |
(22,743) |
||
|
Total tax charge |
366 |
- |
366 |
621 |
- |
621 |
||
|
(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 2022 the Company had surplus management expenses and loan relationship debits with a tax value of £9,522,000 (2021 - £6,494,000) 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 |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Amounts recognised as distributions to equity holders in the period: |
|||
|
Final dividend for 2021 - 3.3p (2020 - 3.3p) |
3,587 |
3,623 |
|
|
Interim dividend for 2022 - 1.0p (2021 - 1.0p) |
1,075 |
1,093 |
|
|
4,662 |
4,716 |
||
|
The proposed final dividend in respect of the year ended 30 April 2022 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 £4,005,000 (2021 - £4,644,000). |
|||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Interim dividend for 2022 - 1.0p (2021 - 1.0p) |
1,075 |
1,093 |
|
|
Proposed final dividend for 2022 - 3.3p (2021 - 3.3p) |
- |
3,591 |
|
|
1,075 |
4,684 |
||
|
Subsequent to the year end the Company has purchased for treasury a further 308,000 Ordinary shares. Therefore the amounts reflected above for the cost of the proposed final dividend for 2022 are based on 106,389,348 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 |
||||
|
2022 |
2021 |
||||
|
£'000 |
p |
£'000 |
p |
||
|
Revenue return |
4,005 |
3.71 |
4,644 |
4.24 |
|
|
Capital return |
(48,388) |
(44.81) |
118,317 |
107.94 |
|
|
Total return |
(44,383) |
(41.10) |
122,961 |
112.18 |
|
|
Weighted average number of Ordinary shares in issueA |
107,976,263 |
109,608,345 |
|||
|
A Calculated excluding shares held in treasury. |
|||||
|
10. |
Investments at fair value through profit or loss |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Opening book cost |
243,269 |
208,338 |
|
|
Opening investment holding gains |
188,217 |
110,549 |
|
|
Opening fair value |
431,486 |
318,887 |
|
|
Analysis of transactions made during the year |
|||
|
Purchases at cost |
82,957 |
101,650 |
|
|
Sales proceeds received |
(94,574) |
(108,753) |
|
|
(Losses)/gains on investments |
(46,172) |
119,702 |
|
|
Closing fair value |
373,697 |
431,486 |
|
|
Closing book cost |
253,386 |
243,269 |
|
|
Closing investment gains |
120,311 |
188,217 |
|
|
Closing fair value |
373,697 |
431,486 |
|
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Investments listed on an overseas investment exchange |
340,908 |
402,340 |
|
|
Investments listed on the UK investment exchange |
32,789 |
29,146 |
|
|
373,697 |
431,486 |
||
|
The Company received £94,574,000 (2021 - £108,753,000) from investments sold in the period. The book cost of these investments when they were purchased was £72,840,000 (2021 - £66,719,000). 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)/gains on investments in the Statement of Comprehensive Income. The total costs were as follows: |
|||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Purchases |
91 |
126 |
|
|
Sales |
140 |
110 |
|
|
231 |
236 |
||
|
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 |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Prepayments and accrued income |
308 |
724 |
|
|
Amounts due from brokers |
1,141 |
2,334 |
|
|
Other loans and receivables |
458 |
360 |
|
|
1,907 |
3,418 |
|
12. |
Creditors |
|||
|
Amounts falling due within one year: |
2022 |
2021 |
||
|
a) |
Loans |
£'000 |
£'000 |
|
|
Foreign currency loans |
8,504 |
7,731 |
||
|
Sterling loan |
5,000 |
5,000 |
||
|
13,504 |
12,731 |
|||
|
2022 |
2021 |
|||
|
b) |
Other |
£'000 |
£'000 |
|
|
Amounts due to brokers |
2,363 |
905 |
||
|
Other creditors |
631 |
662 |
||
|
2,994 |
1,567 |
|||
|
2022 |
2021 |
|||
|
Non-current creditors: |
£'000 |
£'000 |
||
|
Sterling loan |
19,978 |
19,965 |
||
|
At the year end the Company had drawn down HK$21,000,000 (2021 - HK$21,00,000), equivalent to £2,132,000 (2021 - £1,953,000), with a maturity date of 25 May 2022 (2021 - 21 May 2021), US$8,000,000 (2021 - US$8,000,000), equivalent to £6,372,000 (2021 - £5,778,000), with a maturity date of 25 May 2022 (2021 - 21 May 2021) and £5,000,000 (2021 - £5,000,000), with a maturity date of 25 May 2022 (2021 - 7 May 2021), and a fixed rate bank loan of £20,000,000 (2021 - £20,000,000), under the £40,000,000 multi-currency credit facility with The Royal Bank of Scotland International Limited at interest rates of 1.58839%, 2.06786%, 2.0905% and 2.626% (2021 - 1.04122%, 1.05485%, 0.997% and 2.626%) respectively. |
||||
|
As of the latest date prior to the signing of this Report the HK$21,000,000 loan had been drawn down to 25 July 2022 at an interest rate of 2.10625%, the US$8,000,000 loan had been drawn down to 25 July 2022 at an interest rate of 3.03271% and the £5,000,000 loan had been drawn down to 25 July 2022 at an estimated interest rate of 2.30371%. |
||||
|
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 £20,000,000 revolving credit facility which will expire on 28 June 2024. |
||||
|
The Company has met all financial covenants throughout the period and up to the date of this Report. |
||||
|
13. |
Share capital |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
Allotted, called up and fully paid: |
|||
|
106,697,348 (2021 - 108,929,348) Ordinary shares of 5p each |
5,335 |
5,447 |
|
|
Held in treasury: |
|||
|
10,401,701 (2021 - 8,169,701) Ordinary shares of 5p each |
520 |
408 |
|
|
5,855 |
5,855 |
||
|
During the year 2,232,000 (2021 - 1,642,000) Ordinary shares of 5p each were repurchased by the Company at a total cost, including transaction costs, of £7,008,000 (2021 - £4,525,000). All of the shares were placed in treasury. On 30 April 2021 3,130,400 Ordinary shares held in treasury were cancelled. Shares held in treasury represent 8.9% (2021 - 7.0%) of the Company's total issued share capital of 117,099,049 Ordinary shares of 5p each at 30 April 2022. 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 308,000 Ordinary shares for a total consideration of £870,000. |
|||
|
14. |
Capital reserve |
||
|
2022 |
2021 |
||
|
£'000 |
£'000 |
||
|
At 1 May 2021 |
355,134 |
241,342 |
|
|
Movement in fair value gains |
(46,172) |
119,702 |
|
|
Foreign exchange movement |
(640) |
154 |
|
|
Buy back of Ordinary shares for treasury |
(7,008) |
(4,525) |
|
|
Expenses allocated to capital |
(1,576) |
(1,539) |
|
|
At 30 April 2022 |
299,738 |
355,134 |
|
|
The capital reserve includes investment holding gains amounting to £120,311,000 (2021 - £188,217,000), 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: |
|||
|
2022 |
2021 |
||
|
Net assets attributable |
£346,952,000 |
£403,005,000 |
|
|
Number of Ordinary shares in issue (excluding shares held in treasury) |
106,697,348 |
108,929,348 |
|
|
Net asset value per share |
325.17p |
369.97p |
|
|
16. |
Analysis of changes in net debt |
|||||
|
At |
At |
|||||
|
30 April |
Currency |
Cash |
Non-cash |
30 April |
||
|
2021 |
differences |
flows |
movements |
2022 |
||
|
'000 |
'000 |
'000 |
'000 |
'000 |
||
|
Cash and short term deposits |
2,364 |
133 |
5,327 |
- |
7,824 |
|
|
Debt due within one year |
(12,731) |
(773) |
- |
- |
(13,504) |
|
|
Debt due after more than one year |
(19,965) |
- |
- |
(13) |
(19,978) |
|
|
(30,332) |
(640) |
5,327 |
(13) |
(25,658) |
||
|
At |
At |
|||||
|
30 April |
Currency |
Cash |
Non-cash |
30 April |
||
|
2020 |
differences |
flows |
movements |
2021 |
||
|
'000 |
'000 |
'000 |
'000 |
'000 |
||
|
Cash and short term deposits |
3,647 |
(295) |
(988) |
- |
2,364 |
|
|
Debt due within one year |
(13,693) |
449 |
513 |
- |
(12,731) |
|
|
Debt due after more than one year |
(19,951) |
- |
- |
(14) |
(19,965) |
|
|
(29,997) |
154 |
(475) |
(14) |
(30,332) |
||
|
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 Aberdeen Standard Fund Managers Limited ("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 ASFML 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 abrdn 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 abrdn 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 Chief Risk Officer, 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 CEO 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 |
Weighted |
||||
|
period for which |
average |
Fixed |
Floating |
||
|
rate is fixed |
interest rate |
rate |
rate |
||
|
At 30 April 2022 |
Years |
% |
£'000 |
£'000 |
|
|
Assets: |
|||||
|
China Yuan Renminbi |
- |
- |
- |
3 |
|
|
Euro |
- |
- |
- |
1 |
|
|
Sri Lankan Rupee |
- |
- |
- |
7 |
|
|
Sterling |
- |
- |
- |
7,798 |
|
|
Taiwan Dollar |
- |
- |
- |
1 |
|
|
Vietnam Dong |
- |
- |
- |
14 |
|
|
- |
- |
- |
7,824 |
||
|
Weighted average |
Weighted |
||||
|
period for which |
average |
Fixed |
Floating |
||
|
rate is fixed |
interest rate |
rate |
rate |
||
|
Years |
% |
£'000 |
£'000 |
||
|
Liabilities: |
|||||
|
Bank loan - £20,000,000 |
1.62 |
2.63 |
19,978 |
- |
|
|
Bank loan - £5,000,000 |
0.07 |
2.09 |
5,000 |
- |
|
|
Bank loan - HK$21,000,000 |
0.07 |
1.59 |
2,132 |
- |
|
|
Bank loan - US$8,000,000 |
0.07 |
2.07 |
6,372 |
- |
|
|
33,482 |
- |
||||
|
Weighted average |
Weighted |
||||
|
period for which |
average |
Fixed |
Floating |
||
|
rate is fixed |
interest rate |
rate |
rate |
||
|
At 30 April 2021 |
Years |
% |
£'000 |
£'000 |
|
|
Assets: |
|||||
|
Sterling |
- |
- |
- |
2,183 |
|
|
Taiwan Dollar |
- |
- |
- |
1 |
|
|
Vietnam Dong |
- |
- |
- |
180 |
|
|
- |
2,364 |
||||
|
Weighted average |
Weighted |
||||
|
period for which |
average |
Fixed |
Floating |
||
|
rate is fixed |
interest rate |
rate |
rate |
||
|
Years |
% |
£'000 |
£'000 |
||
|
Liabilities: |
|||||
|
Bank loan - £20,000,000 |
2.62 |
2.63 |
19,965 |
- |
|
|
Bank loan - £5,000,000 |
0.02 |
1.00 |
5,000 |
- |
|
|
Bank loan - HK$21,000,000 |
0.06 |
1.04 |
1,953 |
- |
|
|
Bank loan - US$8,000,000 |
0.06 |
1.05 |
5,778 |
- |
|
|
32,696 |
- |
||||
|
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 . The Company's investment portfolio is primarily 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 2022 |
30 April 2021 |
||||||||||
|
Net |
Total |
Net |
Total |
||||||||
|
monetary |
currency |
monetary |
currency |
||||||||
|
Investments |
assets |
exposure |
Investments |
assets |
exposure |
||||||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||
|
Australian Dollar |
31,303 |
157 |
31,460 |
40,514 |
- |
40,514 |
|||||
|
China Yuan Renminbi |
44,103 |
(747) |
43,356 |
30,649 |
(710) |
29,939 |
|||||
|
Euro |
7,828 |
1 |
7,829 |
7,510 |
- |
7,510 |
|||||
|
Hong Kong Dollar |
77,221 |
(2,132) |
75,089 |
131,670 |
(2,148) |
129,522 |
|||||
|
Indonesian Rupiah |
12,821 |
- |
12,821 |
8,078 |
- |
8,078 |
|||||
|
Philippine Peso |
6,270 |
- |
6,270 |
6,642 |
- |
6,642 |
|||||
|
Singapore Dollar |
22,576 |
(838) |
21,738 |
26,215 |
239 |
26,454 |
|||||
|
South Korean Won |
41,846 |
336 |
42,182 |
53,406 |
- |
53,406 |
|||||
|
Sri Lankan Rupee |
1,624 |
7 |
1,631 |
3,041 |
- |
3,041 |
|||||
|
Taiwan Dollar |
32,261 |
1 |
32,262 |
38,848 |
1 |
38,849 |
|||||
|
Thailand Baht |
2,703 |
- |
2,703 |
4,598 |
- |
4,598 |
|||||
|
US Dollar |
- |
(6,372) |
(6,372) |
6,713 |
(3,684) |
3,029 |
|||||
|
Vietnam Dong |
11,656 |
14 |
11,670 |
5,790 |
180 |
5,970 |
|||||
|
Total |
292,212 |
(9,573) |
282,639 |
363,674 |
(6,122) |
357,552 |
|||||
|
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. |
|||||||||||
|
2022 |
2021 |
||||||||||
|
£'000 |
£'000 |
||||||||||
|
Australian Dollar |
3,146 |
4,051 |
|||||||||
|
China Yuan Renminbi |
4,336 |
2,994 |
|||||||||
|
Euro |
783 |
751 |
|||||||||
|
Hong Kong Dollar |
7,509 |
12,952 |
|||||||||
|
Indonesian Rupiah |
1,282 |
808 |
|||||||||
|
Philippine Peso |
627 |
664 |
|||||||||
|
Singapore Dollar |
2,174 |
2,645 |
|||||||||
|
South Korean Won |
4,218 |
5,341 |
|||||||||
|
Sri Lankan Rupee |
163 |
304 |
|||||||||
|
Taiwan Dollar |
3,226 |
3,885 |
|||||||||
|
Thailand Baht |
270 |
460 |
|||||||||
|
US Dollar |
(637) |
303 |
|||||||||
|
Vietnam Dong |
1,167 |
597 |
|||||||||
|
28,264 |
35,755 |
||||||||||
|
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 2022 would have increased/(decreased) by £37,370,000 (2021 - increased/(decreased) by £43,149,000) 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 |
|||||||
|
1 year |
1-2 years |
Total |
||||||
|
At 30 April 2022 |
£'000 |
£'000 |
£'000 |
|||||
|
Bank loans |
13,504 |
20,000 |
33,504 |
|||||
|
Interest cash flows on bank loans |
548 |
396 |
944 |
|||||
|
Cash flows on other creditors |
2,994 |
- |
2,994 |
|||||
|
17,046 |
20,396 |
37,442 |
||||||
|
Within |
Within |
Within |
||||||
|
1 year |
1-2 years |
2-3 years |
Total |
|||||
|
At 30 April 2021 |
£'000 |
£'000 |
£'000 |
£'000 |
||||
|
Bank loans |
12,731 |
- |
20,000 |
32,731 |
||||
|
Interest cash flows on bank loans |
535 |
525 |
396 |
1,456 |
||||
|
Cash flows on other creditors |
1,567 |
- |
- |
1,567 |
||||
|
14,833 |
525 |
20,396 |
35,754 |
|||||
|
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 £20,000,000 revolving multi-currency credit facility, which expires on 28 June 2024. 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 2022 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: |
||||||||
|
2022 |
2021 |
|||||||
|
Statement of |
Statement of |
|||||||
|
Financial |
Maximum |
Financial |
Maximum |
|||||
|
Position |
exposure |
Position |
exposure |
|||||
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||
|
Current assets |
||||||||
|
Loans and receivables |
1,907 |
1,907 |
3,418 |
3,418 |
||||
|
Cash at bank and in hand |
7,824 |
7,824 |
2,364 |
2,364 |
||||
|
9,731 |
9,731 |
5,782 |
5,782 |
|||||
|
None of the Company's financial assets are 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 2022 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Financial assets at fair value through profit or loss |
||||||
|
Quoted equities |
325,001 |
- |
- |
325,001 |
||
|
Collective investment schemes |
- |
48,696 |
- |
48,696 |
||
|
Total fair value |
325,001 |
48,696 |
- |
373,697 |
||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|||
|
As at 30 April 2021 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Financial assets at fair value through profit or loss |
||||||
|
Quoted equities |
388,904 |
- |
- |
388,904 |
||
|
Collective investment schemes |
- |
42,582 |
- |
42,582 |
||
|
Total fair value |
388,904 |
42,582 |
- |
431,486 |
||
|
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, abrdn Asia Limited, which is a wholly-owned subsidiary of abrdn 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. As at 30 April 2022, the Company had net gearing of 7.7% which compares with a current maximum limit set by the Board of 25%. |
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. |
|||
|
Dividend cover |
|||
|
Dividend cover is the revenue return per share divided by dividends per share expressed as a ratio. |
|||
|
2022 |
2021 |
||
|
Revenue return per share |
a |
3.71p |
4.24p |
|
Dividends per share |
b |
4.30p |
4.30p |
|
Dividend cover |
a/b |
0.86 |
0.99 |
|
Discount to net asset value per Ordinary share (including current year income) |
|||
|
The amount by which the market price per Ordinary share is lower than the net asset value per Ordinary share (including current year income), expressed as a percentage of the net asset value per Ordinary share. |
|||
|
2022 |
2021 |
||
|
NAV per Ordinary share (p) |
a |
325.17 |
369.97 |
|
Share price (p) |
b |
286.00 |
328.50 |
|
Discount |
(b-a)/a |
12.0% |
11.2% |
|
Discount to net asset value per Ordinary share (excluding current year income) |
|||
|
The amount by which the market price per Ordinary share is lower than the net asset value per Ordinary share (excluding current year income), expressed as a percentage of the net asset value per Ordinary share. |
|||
|
2022 |
2021 |
||
|
Net asset value per Ordinary share (p) |
a |
322.43 |
366.71 |
|
Share price (p) |
b |
286.00 |
328.50 |
|
Discount |
(a-b)/a |
11.3% |
10.4% |
|
Net asset value per Ordinary share (excluding current year income) |
|||
|
The Company also uses net asset value (excluding current year income) per share as an alternative performance measure. This is calculated as follows: |
|||
|
2022 |
2021 |
||
|
Net assets attributable (£'000) |
346,952 |
403,005 |
|
|
Less: Revenue return after taxation for the year (£'000) |
(4,005) |
(4,644) |
|
|
Add: Dividends paid during the year (£'000) |
1,075 |
1,093 |
|
|
Net assets (ex income) (£'000) |
344,022 |
399,454 |
|
|
Number of Ordinary shares in issue |
106,697,348 |
108,929,348 |
|
|
NAV (ex income) per Ordinary share |
322.43p |
366.71p |
|
|
Net gearing |
|||
|
Net gearing measures total borrowings less cash and cash equivalents divided by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due to and from brokers at the period end as well as cash and short-term deposits. |
|||
|
2022 |
2021 |
||
|
Borrowings (£'000) |
a |
33,482 |
32,696 |
|
Cash (£'000) |
b |
7,824 |
2,364 |
|
Amounts due to brokers (£'000) |
c |
2,363 |
905 |
|
Amounts due from brokers (£'000) |
d |
1,141 |
2,334 |
|
Shareholders' funds (£'000) |
e |
346,952 |
403,005 |
|
Net gearing |
(a-b+c-d)/e |
7.7% |
7.2% |
|
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 daily net asset values published throughout the year. |
|||
|
2022 |
2021 |
||
|
Management fees (£'000) |
2,339 |
2,392 |
|
|
Administrative expenses (£'000) |
723 |
754 |
|
|
Less: non-recurring chargesA (£'000) |
- |
(56) |
|
|
Ongoing charges (£'000) |
3,062 |
3,090 |
|
|
Average net assets (£'000) |
383,039 |
359,529 |
|
|
Ongoing charges ratio (excluding look-through costs) |
0.80% |
0.86% |
|
|
Look-through costsB |
0.33% |
0.23% |
|
|
Ongoing charges ratio (including look-through costs) |
1.13% |
1.09% |
|
|
A Legal and professional fees considered unlikely to recur. |
|||
|
B Calculated in accordance with AIC guidance issued in October 2020 to include the Company's share of costs of holdings in investment companies on a look-through basis. |
|||
|
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. |
|||
|
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. Share price and NAV total returns are monitored against open-ended and closed-ended competitors, and the benchmark index respectively. |
|||
|
Share |
|||
|
Year ended 30 April 2022 |
NAV |
Price |
|
|
Opening at 1 May 2021 |
a |
369.97p |
328.50p |
|
Closing at 30 April 2022 |
b |
325.17p |
286.00p |
|
Price movements |
c=(b/a)-1 |
-12.1% |
-12.9% |
|
Dividend reinvestmentA |
d |
1.1% |
1.1% |
|
Total return |
c+d |
-11.0% |
-11.8% |
|
Share |
|||
|
Year ended 30 April 2021 |
NAV |
Price |
|
|
Opening at 1 May 2020 |
a |
261.63p |
225.00p |
|
Closing at 30 April 2021 |
b |
369.97p |
328.50p |
|
Price movements |
c=(b/a)-1 |
+41.4% |
+46.0% |
|
Dividend reinvestmentA |
d |
2.0% |
2.3% |
|
Total return |
c+d |
+43.4% |
+48.3% |
|
A NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend. |
|||
Additional Notes to the Annual Financial Report
The Annual General Meeting will be held at 12 noon on 6 September 2022 at Bow Bells House, 1 Bread Street, London EC4M 9HH.
Should circumstances change significantly before the time of the Annual General Meeting, the Company will notify shareholders of any changes to the arrangements by updating the Company's website and through a stock exchange announcement, where appropriate, as early as is possible before the date of the meeting. Shareholders should note that if law or Government guidance so requires at the time of the meeting, the Chairman of the meeting will limit, in his or her sole discretion, the number of individuals in attendance at the meeting and may be required to impose entry restrictions on certain persons wishing to attend the meeting in order to ensure the safety of those attending.
If approved at the Annual General Meeting, the final dividend of 3.3 p per share will be paid on 9 September 2022 to holders of Ordinary shares on the register at the close of business on 5 August 2022. The relevant ex-dividend date is 4 August 2022.
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2022 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 2021 and 2022 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 2021 is derived from the statutory accounts for 2020 which have been delivered to the Registrar of Companies. The 2022 accounts will be filed with the Registrar of Companies in due course.
The Annual Report and Accounts will be posted to shareholders in July 2022. 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
6 July 2022
* 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.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
COMPANIES COVERED:
Latest directors dealings
- 21 hours ago Legal & General Group
- 21 hours ago BlackRock Sustainable American Income Trust
- 21 hours ago Sage Group
- 22 hours ago Barclays
- 22 hours ago Shell