Annual Financial Report
NEW INDIA INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT
For the year ended 31 March 2014
STRATEGIC REPORT - COMPANY SUMMARY AND FINANCIAL HIGHLIGHTS
The Company
The Company is an investment trust and its Ordinary shares are listed on the London Stock Exchange. The Company aims to attract long term private and institutional investors wanting to benefit from the growth prospects of Indian companies.
What is an Investment Trust?
Investment trusts are a way to make a single investment that gives you a share in a much larger portfolio. A type of collective investment, they let you spread your risk and access investment opportunities you might not find on your own.
Investment Objective
The investment objective of the Company is to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.
Company Benchmark
MSCI India Index (Sterling-adjusted).
Manager
The Company is managed by Aberdeen Asset Management Asia Limited ("AAM" or the "Manager").
Website
Up-to-date information can be found on the Company's website - www.newindia-trust.co.uk
Financial Highlights
|
|
2014 |
2013 |
|
Share price total return |
-5.1% |
+6.8% |
|
Net asset value total return |
-1.9% |
+10.1% |
|
Benchmark total return |
-2.8% |
+7.6% |
|
Source: Aberdeen Asset Managers Limited, Fundamental Data, Factset. |
||
STRATEGIC REPORT - OVERVIEW OF STRATEGY
Introduction
The Company aims to attract long term private and institutional investors wanting to benefit from the growth prospects of Indian companies.
The business of the Company is that of an investment trust and the Directors do not envisage any change in this activity in the foreseeable future. The Company's overall objective and financial highlights are shown as above. A review of the Company's activities is given in the Chairman's Statement and in the Manager's Report. This includes a review of the business of the Company and its principal activities, likely future developments of the business and details of any acquisition of its own shares by the Company.
Key Performance Indicators (KPIs)
At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives. The KPIs identified for the Company are the performance of both the Net Asset Value and the Share Price as compared to the performance of the MSCI India Index return (Sterling-adjusted). A record of these measures is disclosed in Results.
Business Model and Investment Policy
The Company is overseen by a Board of non-executive directors and its present business model is to outsource the majority of its activities as opposed to employing personnel directly. The Company has engaged Aberdeen Asset Management Asia Limited ("the Manager") to undertake investment management and other key functions.
The Company (either directly or through its Mauritian subsidiary, New India Investment Company (Mauritius) Limited (the "Subsidiary")) primarily invests in Indian equity securities.
The Company's investment policy is flexible, enabling it to invest in all types of securities, including equities, debt and convertible securities in companies listed on the Indian stock exchanges or which are listed on other international exchanges and which derive significant revenue or profit from India, and Indian securities listed on other international stock exchanges. The Company may also, where appropriate, invest in open-ended collective investment schemes and closed-end funds which invest in India and are listed on the Indian stock exchanges. The Company is free to invest in any particular market segment or geographical region of India or in small-, mid- or large-capitalisation companies.
The Manager continues to expect the portfolio to comprise in the region of 25 to 30 holdings (but without restricting the Company from holding a more or less concentrated portfolio) but with due consideration given to spreading investment risk.
Borrowing policy
The Company is permitted to borrow up to 25 per cent of its net assets (measured when new borrowings are incurred). It is intended that this power should be used to leverage the Company's portfolio in order to enhance returns where and to the extent that it is considered appropriate to do so.
Gearing will be used in relation to specific opportunities or circumstances. The Directors will take care to ensure that borrowing covenants will permit flexibility of investment policy. As at 31 March 2014, the Company had no borrowing facility in place.
Currency and Hedging Policy
The Company's financial statements are maintained in Sterling while, because of its investment focus, many of the Company's investments are denominated and quoted in currencies other than Sterling, including in particular, the Indian Rupee. Although it is not the Company's present intention to do so, the Company may, where appropriate and economic to do so, employ a policy of hedging against fluctuations in the rate of exchange between Sterling and other currencies in which its investments are denominated. Cash balances are held in such currency or currencies as the Manager considers it to be appropriate, although it is expected that this would primarily be the Indian Rupee.
Investment Restrictions
It is the investment policy of the Company to invest no more than 15 per cent of its gross assets in other listed investment companies (including listed investment trusts). The Company does not have any investments in other listed investment companies at 31 March 2014.
Principal Risks and Uncertainties
The Board has identified the principal risks and uncertainties affecting its business. The Board is aware that, apart from those issues it can identify, there are likely to be matters about which it does not or cannot know which may also affect the Company.
With that reservation, the Board believes that the factors which could have the most significant adverse impact on shareholders would be likely to include:
- falls in the prices of securities in Indian companies, which may be themselves determined by local and international economic, political and financial factors and management actions;
- adverse movements in the exchange rate between Sterling and the Rupee as well as between other currencies affecting the overall value of the portfolio;
- a lack of appropriate stock selection by the Company's Manager;
- factors which affect the discount to net asset value at which the Ordinary shares of the Company trade. These may include the popularity of the investment objective of the Company, the popularity of investment trust shares in general and the ease with which the Company's Ordinary shares can be traded on the London Stock Exchange;
- insolvency of a custodian or sub-custodian combined with a shortfall in the assets held by that custodian or sub-custodian arising from fraud, operational errors or settlement difficulties resulting in a loss of assets owned by the Company; and
- changes in or breaches of the complicated set of statutory, tax and regulatory rules within which the Company seeks to conduct its business.
Some of these risks can be mitigated or managed to a greater or lesser extent by the actions of the Board in appointing competent investment managers and custodians. In addition, the Board seeks to put in place, through its contractual arrangements and through various monitoring processes, controls which should avert (but do not guarantee the avoidance of) what might be regarded as operational mistakes. However, investment tends to involve both risk and opportunity regarding future prospects, and the Board cannot avoid either in the Company's search for returns.
Other financial risks are detailed in note 16 to the Financial Statements.
Alternative Investment Fund Managers Directive
Shareholders may be aware of the Alternative Investment Fund Managers Directive (the "AIFMD"), which creates a European-wide framework for regulating managers of alternative investment funds ("AIF"s). The AIFMD is intended to reduce systemic risk created by the financial sector and aims to improve regulation, enhance transparency and investor protection, develop a single EU market for AIFs and implement effective mechanisms for micro- and macroprudential oversight. The AIFMD came into force in July 2013 but a transitional period means that investment companies have until July 2014 to comply with the relevant regulations.
Listed investment companies such as New India Investment Trust PLC fall within the definition of an AIF. After consideration, the Board has agreed in principle to appoint a subsidiary of Aberdeen Asset Management PLC as the Company's AIFM.
The Board is currently in the process of finalising the appointment of a depositary as well as revising the investment management agreement, both consequences of implementing the AIFMD, and expects to be able to conclude these agreements prior to July 2014.
Board Diversity
The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge in order to allow the Board to fulfill its obligations. At 31 March 2014, there were four male Directors and one female Director.
Environmental, Social and Human Rights Issues
The Company has no employees as it is managed by Aberdeen Asset Managers Limited. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined in the Statement of Corporate Governance in the Annual Report.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from the operations of its Company, 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 but an Ordinary resolution to continue the Company is put to shareholders at each AGM.
William Salomon
Chairman
30 May 2014
STRATEGIC REPORT - CHAIRMAN'S STATEMENT
Highlights
- Share Price Total Return -5.1%
- Net Asset Value Total Return -1.9%
- Benchmark Total Return -2.8%
During the year ended 31 March 2014, your Company's net asset value fell by 1.9% to 263.55p. The Ordinary share price fell by 5.1% to 225.0p. The discount to net asset value rose from 11.8% to 14.6%. By comparison, the benchmark MSCI India Index declined 2.8%.
In local currency terms, Indian equities made healthy gains over the review period; however, your Company's absolute returns were hampered by the weak Indian Rupee which fell 21% against Sterling over the year ended 31 March 2014. Nevertheless, your Company outperformed the benchmark, benefiting from a disciplined, long-term approach to stock-picking.
At first, investors were undeterred by India's lumbering economy, which was beset by slowing growth, current account and fiscal deficits, and persistently high inflation. However, when the US Federal Reserve (Fed) hinted it would begin to trim asset purchases because of an improving economy, emerging markets quickly shed their lustre, with India proving more vulnerable than most. Its equities and currency tumbled on the back of a capital flight, leaving authorities scrambling for short-term fixes, such as restricting gold imports, to support markets and improve its trade balance.
Economist Raghuram Rajan's appointment as the head of the Reserve Bank of India (RBI) in September heralded a turning point in sentiment. He moved quickly to shore up the beleaguered Rupee and announced a raft of reforms to liberalise the financial sector and encourage capital inflows. Investors were cheered by his decisiveness and sense of urgency; characteristics that India's policy-makers had been sorely lacking. However, the three interest rate hikes under his watch proved more contentious, as the RBI's unwavering focus on fighting inflation appeared unsupportive of economic growth. Markets also wobbled on the news that the Fed would finally begin winding up its asset purchases in January, after months of speculation.
More recently, pre-election exuberance had propelled equities to new heights. Many Indians lost patience with the incumbent Congress Party which had lost its way, prioritising grand and expensive populist policies over growth-generating reforms and much-needed investment in infrastructure development. A sizeable chunk of the population have pinned their hopes on the pro-business Bharatiya Janata Party (BJP), helmed by Narendra Modi. The BJP and its allies have won 330 seats giving them a clear victory the likes of which has not been seen in India in several decades. Such was the extent of Modi's landslide win that he will be able to govern without the impediments of a coalition partner. The hope now is that the BJP will begin implementing decisive change and start an investment cycle which will improve domestic infrastructure and create new jobs for the growing workforce.
For most of the year under review, investors favoured defensive businesses, such as pharmaceuticals, and those with offshore earnings, including many in the IT sector, unencumbered by the sluggish local economy and currency weakness. Meanwhile, the recent pre-election run-up has particularly favoured cyclical stocks, on expectations of increased infrastructure spending under a new government. This has seen the beginnings of a rebound in the materials and industrials sectors. Your Company's outperformance was particularly helped by its exposure to the IT and healthcare sectors. It also benefited from its financial holdings. Private-sector lenders, such as ICICI Bank, held up well, while state-owned banks, none of which your Company owns (with exception of Jammu and Kashmir Bank) suffered on the back of questionable asset quality. A more thorough discussion follows in the Manager's Report.
As testament to India's array of compelling investment opportunities, the number of stocks in the portfolio has more than doubled from 18 to 37 in the decade since your Company moved to the current India mandate from its previous Latin America focus. Among the most notable additions were ICICI Bank, Infosys and ITC as well as ACC, Ambuja Cements, Bharti Airtel, Castrol, Gruh Finance, HDFC Bank, Hindustan Unilever, ING Vysya, Jammu & Kashmir Bank, Kansai Nerolac Paints, Linde India, Lupin, Mphasis, Nestle India, Piramal Enterprises, and Ultratech Cement.
The portfolio's composition has also evolved: exposure to cement stocks doubled to 9%, reflecting their excellent long-term growth drivers, while the weighting to oil and gas stocks shrank from 14% to less than 2% given the challenging operating environment, in which these businesses are required to subsidise energy prices. We held Bharat Petroleum and Oil & Natural Gas Corporation for a period. However, the regulator often required these companies to work for the national interest at the expense of minority shareholders, which eventually persuaded us to sell. Elsewhere, the portfolio's exposure to government-linked corporations fell from 20% to under 5% due to their divided interests, which diminished the focus on shareholder value.
Several holdings have performed exceptionally well over the last ten years, rewarding your Company with excellent returns. Godrej Consumer Products rose over 750% as its M&A strategy, emerging markets focus and investment in new products and brand building paid off handsomely. ITC gained 350%, supported by its dominance in the domestic market and consistent investment in its core markets throughout the economic cycle. Bosch also rose 350%, a reflection of its robust product portfolio and profitable returns to capital, while Tata Consultancy Services benefited from its world-class management team and successful global expansion.
Unsurprisingly, some holdings fared less well over the period. Bharti Airtel struggled in the highly-regulated and intensely competitive domestic telecommunications market, while its expansion into Africa added further pressure. Meanwhile, ING Vysya Bank failed to keep pace with its larger Pan-Indian competitors. That said, your Manager remains confident that both firms will turn around in the long term and believes their valuations are reasonable.
From a sectoral perspective, our IT and FMCG holdings did particularly well over the decade, benefiting from an operating environment relatively free from government interference. On the other hand, our energy stocks performed poorly principally as a result of price controls.
Our Manager also fell victim to the fraud at Satyam, a company which had, until then, demonstrated consistent profitability, operational cash flow with a balance sheet backed by cash. Ironically, it was the strength of the business and its accumulated cash pile that led to the fraud as its cash was illegally syphoned off to heavily indebted sister companies controlled by the key shareholder and his family. A timely and humbling reminder that there can be no guarantee against fraud.
Continuation of Company and Manager
Your Board has carefully considered the continued appointment of your Manager. The Manager's recent performance and long-term track record as well as their expertise and well-understood investment style make a good case for their continued appointment. Accordingly, your Board recommends that Shareholders vote in favour of resolution 12 at the Annual General Meeting, to allow the Company to continue as an investment trust.
Alternative Investment Fund Managers Directive
Listed investment companies such as New India Investment Trust PLC are considered alternative investment funds under the Alternative Investment Fund Managers Directive. The Board has agreed in principle to appoint a subsidiary of Aberdeen Asset Management PLC as the Company's Alternative Investment Fund Manager and expects to be able to finalise arrangements prior to the final implementation date of July 2014.
Annual General Meeting
The Annual General Meeting ("AGM") will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Thursday 11 September 2014 at 11.30 a.m.
I shall be retiring from the Board at the AGM. Hasan Askari succeeds me as Chairman of the Company while Stephen White takes over from Hasan as Chairman of the Audit Committee.
Rachel Beagles and Stephen White, who were appointed Directors on 26 September 2013, retire and are seeking formal election to the Board at the AGM. Professor Bulmer-Thomas retires as a Director and seeks re-election at the AGM further to the AIC guidance for Directors with tenure in excess of 9 years to retire and seek annual re-election. The Company has decided that, with effect from the next AGM, all Directors shall retire and seek annual re-election and Hasan Askari therefore also retires and seeks re-election. Your Board, having reviewed the reasons for the elections of each of Rachel Beagles and Stephen White and the re-elections of Professor Bulmer-Thomas and Hasan Askari, strongly recommends Shareholders to vote in favour of the relevant resolutions.
In addition, Shareholders will be asked to authorise the Board:- to buy back up to 14.99% of the Company's issued share capital; issue new shares representing up to 5% of the present issued share capital; issue new shares representing up to 5% of the present issued share capital otherwise than by a pro-rata issue to existing Shareholders (i.e., pre-emption); and approve the continuation of the Company as an investment trust. The Board would only expect to issue new Ordinary shares, or sell Ordinary shares from treasury, at a price per Ordinary share above the prevailing net asset value per Ordinary share. Your Board recommends that Shareholders vote in favour of these resolutions, and intends to do so in respect of its own shareholdings. There will be a presentation by the Manager at the AGM as well as an opportunity to meet the Directors informally following the meeting.
As in previous years, the Company is not paying a dividend for the year ended 31 March 2014.
Outlook
The last few months have seen Indian business distracted by electioneering. Buoyed by pre-election zeal, the markets anticipated a victory for the BJP, but not on the scale which has unfolded which will likely extend the celebratory mood. However, the new administration faces the same challenges as the departing Congress party. Growth is anaemic, the key industrial sector lacks momentum and the potential for a drier-than-usual monsoon season could put pressure on food prices. A revival in much-needed infrastructure spending would certainly help and expectations are that this will be high on the new government's agenda. Expectations of an economic recovery are high but the challenges remain given the Congress party remain in control of the Upper House for at least another year and as there is no guarantee that Modi's success in his home state of Gujarat can be replicated on a national level. Change in a country as large and diverse as India must necessarily take place over many years.
Indian equities are at all-time highs this calendar year, on the back of election euphoria while, at 28 May 2014, the Company's net asset value per share and share price were 278.80p and 241.75p, respectively, up 5.8% and 7.4% as compared to the year end while the Rupee was also 1.3% higher against Sterling.
At the corporate level, many companies are beginning to look expensive following the rally. While the IT sector has suffered some profit-taking after a long run-up, it still looks costly, and the same goes for many consumer stocks. As such, there is potential for some volatility ahead. However, a revival in economic growth would likely support earnings in cyclical sectors, which should underpin valuations there.
Regardless, India's long-term attraction as an investment destination remains undiminished. With excellent demographics and a multitude of well-run, shareholder-friendly companies, disciplined stock-pickers with a longer investment horizon should be well rewarded.
William Salomon
Chairman
30 May 2014
STRATEGIC REPORT - MANAGER'S REPORT
Portfolio Overview
The Company's net asset value fell by 1.9% in Sterling terms in the 12 months ended 31 March 2014, compared to the benchmark MSCI India Index's decline of 2.8%, in total return terms.
Adverse currency fluctuations had a twofold impact on the absolute performance of the portfolio. In the year under review, the Rupee fell more than 20% against Sterling, overshadowing the decent advance by the market. In addition, the falling Rupee aggravated inflation, as imports became costlier. This affected local companies that relied on foreign imports and in general, eroded profit margins, a common theme in corporate results across the economy.
For stock selection, financials were the largest contributor to performance overall. State-owned banks, such as the State Bank of India, were sold off due to concerns over deteriorating asset quality, in the context of higher interest rates and a slowing economy. Our holding ICICI Bank outperformed as its loan book is seen as relatively more resilient with 70% provisioning coverage and over 12% tier one capital. Not holding Axis Bank also benefited the Company, as the government sold half of its stake, which weighed on the share price. We do not own the state-owned banks (other than Jammu and Kashmir Bank) due to concerns over credit-lending policies and interests of minority shareholders potentially being sacrificed for that of the state. Also, we see private banks as better managed, with stricter quality controls over lending.
In the consumer sector, Hero Motocorp and GlaxoSmithKline Pharmaceuticals (GSK India) performed particularly well for us. Hero Motocorp saw robust demand for its motorcycles, and since it split with Honda a few years ago, our continuing confidence in the firm has been well rewarded. Meanwhile, GSK India rose as its parent made an offer at an attractive premium. We tendered most of our shares, but retain a reduced position in light of the underlying growth that supports GSK India's business model longer term.
In comparison, our holding in IT stocks proved costly. Overall, the sector did well, earning most of its revenues in US dollars, as it mostly provides services to overseas firms. However, not holding HCL Technologies cost the Company, as we prefer Infosys, which remains a core holding as it continues to aim for market leadership and is reporting improving margins on the back of stricter cost controls, despite the senior management changes. Mphasis also detracted, as its parent Hewlett-Packard (HP), continued to wean the firm from depending on its business and encouraged it to further diversify its customer base. We see this as a transition phase and feel reassured by Mphasis' new client wins.
Our cement holdings, in particular Grasim Industries, suffered from margin pressures as the cost of imports rose, and the reduction in fuel subsidies bloated transportation costs. We remain confident in our cement holdings, as we see long-term demand from India's continued urbanisation and infrastructure development, plus they have capable management and resilient balance sheets to withstand near-term pressures. Furthermore, the proposed consolidation of ACC and Ambuja by their Swiss parent Holcim, will bring raw material and logistics savings to support margins in a highly competitive industry.
Our underweight position to the infrastructure and power generation sector helped performance. For instance, our lack of exposure to the lender IDFC, which fell on worries over its infrastructure-related assets, and the electricity utility firm NTPC, which was hit by rising input costs. The slowing economy exacerbated concerns over its profitability, as revenue growth was subdued.
In contrast, some infrastructure-related stocks with government ownership were buoyed by election euphoria, with hopes that the new leadership will invest heavily to upgrade India's energy and transportation network. Our holding Container Corp of India, which provides railway cargo transportation services and is controlled by the government, was among the top contributors to performance as a result. Not holding another infrastructure group Larsen & Toubro, however cost the Company. We do not hold the conglomerate, which derives the bulk of its revenues from engineering and construction. Instead, we prefer ABB India and our cement holdings, which we believe are more focused and have better balance sheets.
Economic News
Over the period, economic growth slowed and this combined with external headwinds, exposed longer-term structural flaws that need to be addressed. Twin deficits of the government budget and current account meant that the local currency was prone to weakness. Hence, the panic outflow of funds from emerging markets, triggered by the US Fed's impending taper, saw the Rupee bear the brunt of the sell-off. Investors who had borrowed US dollars to invest in higher-yielding assets overseas in the 'carry trade', feared rising borrowing costs and a strengthening US dollar. A negative feedback cycle ensued as the Rupee fell, pushing up import costs and inflation, further widening the current account deficit, and leading to greater depreciation of the currency.
The central bank intervened by raising interest rates, purchasing government bonds and also sold US dollars to local oil companies. The government also limited gold imports. Furthermore, the introduction of the former IMF chief economist Raghuram Rajan as the new Reserve Bank of India governor, helped to shore up investor confidence. He raised interest rates aggressively soon after taking the helm, and established from the outset that he would not compromise the Rupee for growth. Furthermore, Rajan announced reforms to open up the financial sector to be friendlier to foreign capital.
Stability in the local market later in the period due to policy intervention, gave way to exuberance as, Narendra Modi, who is seen as business friendly and preferred by international investors, was declared as the main opposition's prime ministerial candidate for elections to commence in April 2014. His party also performed well in state elections towards the end of 2013, further developing the narrative that India was heading down a more progressive path.
Sector Views
Information Technology
We continue to like the sector despite the relative weakness in software outsourcing growth, which has been an unsurprising outcome of the uncertainty in the global macroeconomic environment. The major Indian IT outsourcing companies are leaders in their field; they have attractive cost structures, qualified management and competitive software engineering skills. Our core positions are in Infosys and Tata Consultancy Services, both of which generate healthy cash flows and have diversified global presences; complemented by smaller holdings in CMC and MphasiS.
Infosys saw the return of its co-founder and ex-CEO Narayana Murthy as chairman, with a mandate to renew the organisation, after lagging the pace of growth set by TCS. As part of Murthy's restructuring plans, we have seen a number of senior level exits, including V. Balakrishnan, who was widely expected to take over as CEO. A search has been initiated to ensure a credible succession strategy is in place at the company. In quarterly results, Infosys and TCS delivered robust revenues and profits, but Infosys remained a lower-margin player. We have taken profits off Infosys and retain our large position in the IT companies albeit underweight the benchmark given the strength of the sector over the year.
Energy
Over the past decade, India has failed to meet the challenge of providing its public reliable and reasonably priced energy. From April, natural gas prices will rise, which ended speculation about the introduction of caps on gas prices. The price was set using a published, albeit complex, formula in an effort to make price adjustments more transparent and predictable. We do not plan to invest in this sector until there is a comprehensive and transparent regulatory framework that will allow companies (and their investors) to project earnings with a reasonable amount of certainty.
We do not have exposure to index heavyweight Reliance Industries as we are uncomfortable with its aggressive expansion plans into upstream resource exploration, telecommunications and possibly financial services. These often require extensive capital outlay in areas where the company has neither a proven track record nor a clear competitive advantage. We also continue to remain absent from the public sector energy companies who still have to absorb the surge in input prices, which has worsened in tandem with the Rupee weakness.
Financials
Although fragmented and competitive, we have a substantial position in the banking sector, which is poised to benefit in the long term from wealth expansion in the middle class. The environment is increasingly challenging, as loan growth slows and levels of restructured loans rise. Our holdings are among the most resilient in the local banking system. We like banks that can manage risks throughout the credit cycle and have a strong deposit-collecting franchise.
HDFC Bank's loan book and profits grew, supported by operational efficiency and solid asset quality which has remained steady. Our most aggressively managed bank investment is ICICI Bank, where despite delivering good loan and profit growth, asset quality has deteriorated. We will continue to scrutinise its financials for signs of distress, as the insight from our recent trip to India was that the corporate credit cycle would lag the macroeconomic cycle by up to two quarters, and as such, we expect more loans to turn bad over the coming months.
Consumer Discretionary
We like the automotive story in India, as the sector also stands to benefit from rising disposable incomes. We especially favour the two-wheeler segment due to its relative affordability. Since motorcycles are seen as a necessity rather than a luxury, the segment is more resilient in difficult times compared to four-wheelers. We are shareholders in the re-branded Hero MotoCorp, the biggest domestic motorcycle maker as well as Bosch Ltd. The automotive market has been weak for some time and this is reflected in the results and cautious outlook of Bosch.
Hero MotoCorp's growth outpaced the industry but its operating margin was squeezed by cost inflation. However, we are hopeful that its new pipeline will boost sales, while it pursues its cost reduction programme. Furthermore, the firm announced a joint venture with Italian auto-components manufacturer, Magneti Marelli, which marks the fourth technology partnership for Hero since its split with Honda two and a half years ago.
Consumer Staples
We hold both local and multinational brands in the competitive fast-moving consumer goods landscape. Home-grown brands have the advantage in catering to local tastes and regional preferences, while the multinationals have strong brands and more aspirational products. We select the best from both worlds - Hindustan Unilever has the widest portfolio of household and personal products; ITC, an associate of British American Tobacco, has a thriving tobacco business; and Godrej Consumer Products is a leader in the personal care, hair, and household segments both locally and in emerging markets.
We saw some moderation in growth at Hindustan Unilever, Nestle India and ITC, but these companies still enjoyed decent revenue and earnings growth in a challenging business environment. Hindustan Unilever benefited from festive-season buying and increasing rural sales. Consumer staples conglomerate ITC saw earnings resilience as cigarette sales remained strong, while the group continued to narrow its losses in fast-moving consumer goods. Godrej Consumer Products maintained its growth momentum as earnings still rose at a healthy pace with new launches in hair colouring, boosting domestic sales while international sales were driven by Africa.
Materials
The most attractive businesses in this sector are cement companies. We hold Grasim Industries, the flagship company of the Aditya Birla Group, and complement this with its pure cement subsidiary UltraTech Cement, as well as Ambuja Cements and ACC Ltd, which are owned by Swiss group Holcim. We continue to hold a sizable position in cement companies despite short-term pressures arising from weak demand and pricing, as we believe our companies are poised for long-term growth that will be underpinned by the country's increasing housing needs and infrastructure spending. In December, independent shareholders of Ambuja Cements and ACC Ltd voted to approve organisational restructuring that will strengthen both companies within the competitive cement industry. Overall, we took the opportunity of share price weakness to build up our positions in the sector.
We are also invested in well-run and financially stable companies such as the paint maker, Kansai Nerolac, and more recently the industrial gases and engineering firm Linde India, given its good pedigree as part of the Linde Group and its diversified customer base, will benefit when the investment cycle starts again. In other results, automotive and industrial lubricant producer Castrol India managed its margins well with good cost controls, enabling it to reduce capital, on top of its dividend payment that will further enhance shareholder returns.
Healthcare
India has a vibrant healthcare industry given the operational strength of its pharmaceutical companies and access to a substantial scientific talent pool. Our holdings include a mix of multinational subsidiaries (GlaxoSmithKline Pharmaceuticals and Sanofi India, previously Aventis Pharma India) that channel their product pipelines into the Indian market, as well as a local company, Piramal Enterprises, which takes advantage of its low-cost manufacturing base to penetrate overseas markets.
GlaxoSmithKline Pharmaceuticals surged on the announcement of its parent GlaxoSmithKline Plc's offer to increase its stake in the Indian subsidiary to 75%, at a 26% premium to the pre-announcement price. We took advantage of the offer, which valued the company at more than 40 times price-to-earnings. The news coincided with the parent company's decision to increase investments in India by setting up a manufacturing facility that will double its existing capacity.
Industrials
The sector remains dogged by challenges, including a slowdown in industrial activity and infrastructure bottlenecks ranging from the state electricity boards, land acquisition issues and coal shortages. Our exposure in this sector is limited to ABB India, a manufacturer and distributor of power and automation equipment, and Container Corporation, a rail-freight operator.
December earnings showed that ABB is strengthening its cost competitiveness to combat delays in large infrastructure and industrial projects, while Container Corp's results met expectations, showing modest earnings growth despite aggressive pricing to win market share. Overall, capital expenditure remained soft in India, held back by a combination of restrictive regulation and bureaucracy, as well as slowing growth coupled with persistent inflation.
Utilities
This sector, made up of power and gas utilities, has also been hamstrung by shortages of key inputs, as well as regulatory uncertainty. Some progress has been made in the power sector, with tariff hikes across most of the financially troubled states, which should help improve the financial position of the state electricity boards. However, coal shortages remain difficult to resolve. Although the government has agreed to gas-price hikes, it is being protested by the power and fertiliser companies, who are the largest consumers. There is also the uncertainty of who will bear the cost of new subsidies. We have limited our exposure to companies with well-positioned assets and run by credible management, but returns remained constrained by regulations and an ineffective policy framework.
Gujarat Gas announced that its board has been given in-principle approval to merge with its sister company GSPC Gas. While details have not yet been announced, we believe this will be part of the broader strategic plan when GSPC acquired British Gas' stake in Gujarat Gas last June, and we expect synergies from merging these two businesses together. Meanwhile, Tata Power was granted a full pass-through of fuel costs by the regulator for its struggling Mundra power plant, retrospective till the start of the project. This is positive for Tata Power's earnings, although we remain cautious as the ruling may yet be challenged by the state electricity boards in court.
Telecommunication Services
The local telecommunications market is one of the most competitive in the world, and the large players such as our holding Bharti Airtel, and non-holdings Reliance Communications, Vodafone and Idea, continue to battle hard for market share. The latest spectrum auction in February generated lots of interest and raised close to US$10 billion, which exceeded the government's expectations. Bharti Airtel paid US$3 billion to strengthen its data footprint in the premium 900MHz band. Vodafone bought a similar amount, while cash-rich Reliance Industries also participated, but in the less efficient 1800 MHz spectrum band. The government will receive US$3 billion upfront, which will help the budget deficit, while the remainder will have to be paid by 2026.
The Indian government approved a new M&A policy for the telecoms sector which is intended to encourage industry consolidation, currently suffering from fragmentation and aggressive tariff pricing. Bharti Airtel raised US$1 billion in euro-denominated bonds in December to refinance its debt, as well as support the spectrum auction and potential domestic acquisitions. Its India mobile business continued to improve thanks to higher traffic and strong data usage, which offset weaker numbers out of Africa. At the end of February, Bharti Airtel announced the acquisition of Loop Mobile for an undisclosed sum that is subject to regulatory approvals. With 3 million subscribers in Mumbai, this deal would put Bharti Airtel ahead of the current leader Vodafone, within this lucrative market. However, Bharti remains one of the most highly-geared holdings in the portfolio with foreign currency debt exposure. Hence, we will continue to monitor it closely.
Strategy
After the turbulent last 12 months, there are signs that the domestic economy is picking up but recovery is likely to be slow. The rupee has rebounded and the trade deficit has narrowed, but is driven by a steep fall in imports, masking a more concerning decline in exports. With the elections now concluded, it remains unclear if new prime minister Modi will be able to implement reform effectively. Meanwhile, the US and European recoveries remain tepid, and the threat of bad debts in China will cast a pall on growth.
Within the context of a challenging operating environment, we will continue to focus on the quality and long-term growth potential of the companies we meet. As a market, we believe India remains an attractive investment location with favourable demographics, and an abundance of well-managed companies - with solid balance sheets and healthy cash-flow profiles. Our holdings have the ability to withstand near-term cost pressures and are well positioned for growth. If volatility picks up again, we see good opportunities as disciplined stock pickers to capture attractive value.
Aberdeen Asset Management Asia Limited
Manager
30 May 2014
STRATEGIC REPORT - RESULTS
Financial Highlights
|
|
31 March 2014 |
31 March 2013 |
% change |
|
Total equity shareholders' funds (net assets) |
£155,680,000 |
£158,726,000 |
-1.9 |
|
Market capitalisation |
£132,907,815 |
£139,996,232 |
-5.1 |
|
Share price (mid market) |
225.00p |
237.00p |
-5.1 |
|
Net asset value per share |
263.55p |
268.71p |
-1.9 |
|
Discount to net asset value |
14.6% |
11.8% |
|
|
|
|
|
|
|
Total (loss)/return per share |
(5.16p) |
24.75p |
|
|
Revenue return per share |
0.05p |
0.20p |
|
|
Revenue reserves per share |
2.43p |
2.37p |
|
|
Prospective gross portfolio yield{A} |
1.5% |
1.5% |
|
|
MSCI India portfolio yield{A} |
1.5% |
1.4% |
|
|
Prospective portfolio P/E ratio{B} |
20.3x |
19.6x |
|
|
|
|
|
|
|
Ongoing charges |
|
|
|
|
Ongoing charges ratio{C} |
1.60% |
1.56% |
|
|
{A} Source - AAM Asia (estimated information)/Factset. |
|||
|
{B} Consensus broker views. |
|||
|
{C} Ongoing charges ratio is calculated in accordance with recent guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year. |
|||
Performance (total return)
|
|
1 year |
3 year |
5 year |
|
|
% return |
% return |
% return |
|
Share price |
-5.1 |
-7.6 |
+100.4 |
|
Net asset value per Ordinary share |
-1.9 |
-2.0 |
+103.8 |
|
MSCI India Index (sterling adjusted) |
-2.8 |
-16.6 |
+76.3 |
Ten Year Financial Record
|
Year to 31 March |
2005{A} |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|
Total income (£'000) |
1,857 |
1,175 |
1,212 |
1,073 |
1,347 |
1,335 |
2,338 |
2,702 |
2,414 |
2,420 |
|
Per share (p) |
|
|
|
|
|
|
|
|
|
|
|
Net revenue return |
0.84 |
(0.03) |
0.04 |
(0.89) |
0.18 |
(0.63) |
0.15 |
0.61 |
0.20 |
0.05 |
|
Total return |
9.29 |
65.47 |
(5.75) |
24.85 |
(41.03) |
139.19 |
31.71 |
(24.95) |
24.75 |
(5.16) |
|
Net dividends paid/proposed{B} |
0.70 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Net asset value per share (p) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
93.70 |
158.47 |
152.71 |
177.52 |
137.45 |
275.42 |
268.90 |
243.96 |
268.71 |
263.55 |
|
Diluted |
n/a |
146.12 |
141.58 |
161.18 |
129.36 |
239.44 |
n/a |
n/a |
n/a |
n/a |
|
Shareholders' funds (£'000) |
44,800 |
75,797 |
73,054 |
84,968 |
63,653 |
129,320 |
158,842 |
144,105 |
158,726 |
155,680 |
|
The figures for 2005 are for the year to 28 February. The figures for 2006 are for the period 1 March 2005 to 31 March 2006. The figures for 2007 onwards are for the year to 31 March. |
||||||||||
|
The management and investment policy changed with effect from 9 December 2004. Prior to this date the Company invested in Latin American securities. |
||||||||||
|
{A} 2005 figures restated following the introduction of International Financial Reporting Standards (IFRS). |
||||||||||
|
{B} Following the introduction of IFRS, it should be noted that dividends are the amounts payable in respect of the associated financial year or period. |
||||||||||
Investment Portfolio - Ten Largest Investments
As at 31 March 2014
|
|
|
Valuation |
Net assets |
Valuation |
|
|
|
2014 |
2014 |
2013 |
|
Company |
Sector |
£'000 |
% |
£'000 |
|
Housing Development Finance Corporation |
|
|
|
|
|
Leading domestic mortgage provider with a leading distribution network, cost structure and balance sheet quality. |
Financials |
13,434 |
8.6 |
15,447 |
|
Tata Consultancy Services |
|
|
|
|
|
A major information technology and software service provider. |
Information Technology |
12,749 |
8.2 |
15,034 |
|
Infosys{A} |
|
|
|
|
|
One of the leading information technology companies in India. |
Information Technology |
12,592 |
8.1 |
15,152 |
|
ICICI Bank |
|
|
|
|
|
Leading commercial bank group with a strong presence in insurance, brokerage and asset management activities. |
Financials |
11,280 |
7.2 |
12,470 |
|
Hero MotoCorp |
|
|
|
|
|
A former joint venture between Honda of Japan and the local Munjal family, it is the world's largest producer of motorcycles. |
Consumer Discretionary |
6,390 |
4.1 |
5,228 |
|
ITC |
|
|
|
|
|
The leading manufacturer and distributor of cigarettes in India. It supplements this by selling other consumer products through its extensive distribution network. An associate of British American Tobacco. |
Consumer Staples |
6,324 |
4.1 |
7,241 |
|
Ambuja Cements{A} |
|
|
|
|
|
A manufacturer of cement and owner of specially designed ships and terminals built for transportation of its goods. |
Materials |
6,140 |
3.9 |
5,103 |
|
Bosch |
|
|
|
|
|
The listed subsidiary of Bosch in India, it manufacturers and supplies automotive components for passenger vehicles and trucks. |
Consumer Discretionary |
5,610 |
3.6 |
5,707 |
|
Godrej Consumer Products |
|
|
|
|
|
A leader among India's Fast Moving Consumer Goods (FMCG) companies, with leading Household and Personal Care products. |
Consumer Staples |
5,599 |
3.6 |
7,324 |
|
HDFC Bank |
|
|
|
|
|
An associate of HDFC, this is the largest private sector bank in India with a strong retail franchise and asset quality track record. |
Financials |
5,488 |
3.4 |
5,319 |
|
Top ten investments |
|
85,606 |
54.8 |
|
|
{A} Comprises equity and listed or tradeable ADR and GDR holdings. |
|
|
|
|
Investment Portfolio - Other Investments
As at 31 March 2014
|
|
|
Valuation |
Net assets |
Valuation |
|
|
|
2014 |
2014 |
2013 |
|
Company |
Sector |
£'000 |
% |
£'000 |
|
Hindustan Unilever |
Consumer Staples |
5,050 |
3.2 |
5,988 |
|
Grasim Industries{A} |
Materials |
4,665 |
3.0 |
5,469 |
|
Container Corporation of India |
Industrials |
4,533 |
2.9 |
3,872 |
|
MphasiS |
Information Technology |
4,303 |
2.8 |
5,044 |
|
Nestlé India |
Consumer Staples |
4,038 |
2.6 |
3,810 |
|
Ultratech Cement{A} |
Materials |
3,559 |
2.3 |
2,400 |
|
Kansai Nerolac Paints |
Materials |
3,214 |
2.1 |
4,074 |
|
Jammu & Kashmir Bank |
Financials |
3,103 |
2.0 |
2,869 |
|
Piramal Enterprises |
Healthcare |
3,051 |
2.0 |
4,787 |
|
ACC |
Materials |
2,951 |
1.9 |
1,684 |
|
Top twenty investments |
|
124,073 |
79.6 |
|
|
Sanofi India |
Healthcare |
2,934 |
1.9 |
3,648 |
|
GAIL (India) GDR |
Utilities |
2,530 |
1.7 |
2,635 |
|
Gujarat Gas |
Utilities |
2,413 |
1.5 |
2,656 |
|
ABB |
Industrials |
2,394 |
1.5 |
1,632 |
|
Linde India |
Materials |
2,358 |
1.5 |
- |
|
Lupin |
Healthcare |
2,336 |
1.5 |
- |
|
Bharti Airtel |
Telecommunication Services |
2,286 |
1.5 |
2,547 |
|
ING Vysya Bank |
Financials |
1,761 |
1.1 |
- |
|
Tata Power |
Utilities |
1,733 |
1.1 |
2,268 |
|
Gruh Finance |
Financials |
1,695 |
1.1 |
- |
|
Top thirty investments |
|
146,513 |
94.0 |
|
|
CMC |
Information Technology |
1,661 |
1.1 |
1,974 |
|
GlaxoSmithKline Pharmaceuticals |
Healthcare |
1,388 |
0.9 |
4,720 |
|
Castrol India |
Materials |
1,211 |
0.8 |
1,494 |
|
Total investments |
|
150,773 |
96.8 |
|
|
Net current assets |
|
4,907 |
3.2 |
|
|
Net assets |
|
155,680 |
100.0 |
|
|
Unless otherwise stated, investments are in common stock. |
|
|
|
|
|
{A} Comprises equity and listed or tradeable ADR and GDR holdings. |
|
|
|
|
DIRECTORS' REPORT
Status
The Company is registered as a public limited company in England & Wales under company number 02902424. The Company is an investment company as defined by Section 833 of the Companies Act 2006 and is a member of the Association of Investment Companies.
The Company has been approved by HM Revenue and Customs as an investment trust under Sections 1158 - 1159 of Corporation Tax Act 2010 and Part 2 Chapter 1 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 April 2012, subject to the Company continuing to meet the relevant eligibility criteria.
The Company intends to manage its affairs so as to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account and it is the Directors' intention that the Company should continue to qualify.
Results and Dividend
The Company's results and performance for the year are detailed in Results. The Company is not paying a dividend for the year ended 31 March 2014 (2013 - nil).
Strategic Report
The Strategic Report, including the Chairman's Statement and the Manager's Report, is intended to provide shareholders with the information and measures that the Directors use to assess, direct and oversee the Manager in the management of the Company's portfolio.
The Company's investment objective and investment policy are detailed in Company Summary and Highlights.
The portfolio at the year end, which contained 33 companies, is set out above.
Performance
During the year ended 31 March 2014, the Company's net asset value per share fell by 1.9%, which was marginally ahead of the benchmark, the MSCI India (Sterling-adjusted), which fell 2.8% over the same period (all figures in Sterling total return terms).
Oversight and Review of Performance
The Board meets at least four times a year to review performance with the Manager. As well as carrying out the matters set out in the Statement of Corporate Governance, the Board receives, for each meeting, a detailed portfolio report and an analysis of economic indicators. The Board discusses performance and strategy, including economic conditions, and using such measures as attribution analysis against the benchmark to assess the Company's success in achieving its objectives.
Capital Structure
There have been no changes to the Company's issued share capital during the year. The issued Ordinary share capital at 31 March 2014, and at the date of approval of this Report, consisted of 59,070,140 Ordinary shares of 25p. Each Ordinary share of the Company carries one vote at a general meeting of the Company.
Directors
The Articles of Association require that Directors retire and are subject to election at the first AGM following their appointment and thereafter at the AGM held in the third calendar year following the year in which the Director was elected or last re-elected, and, (except in the case of the Chairman) at each AGM following the ninth anniversary of the date on which the Director was first elected (as opposed to re-elected). Rachel Beagles and Stephen White, who were appointed as non-executive Directors on 26 September 2013, will both stand for election at the forthcoming AGM. William Salomon has indicated that he will retire as a Director and not seek re-election at the AGM. With effect from the year ended 31 March 2014, the Board has adopted a policy that all Directors will normally retire at each AGM and stand for re-election, commencing with the AGM on 11 September 2014.
The elections of Rachel Beagles and Stephen White as Directors and the re-elections of Hasan Askari and Victor Bulmer-Thomas as Directors were considered and approved by the Board, with each relevant Director abstaining. The reasons for the Board's recommendations for their respective elections and re-elections are set out in the Statement of Corporate Governance in the Annual Report.
Directors' Insurances and Indemnities
The Company purchases and maintains liability insurance covering the Directors and Officers of the Company. The Directors also have the benefit of the indemnity provision contained in the Company's Articles of Association. The Directors of the Company have been granted a qualifying third party indemnity provision, which remains in force. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.
Corporate Governance
The Statement of Corporate Governance, which forms part of the Directors' Report, may be found in the Annual Report.
Manager and Company Secretary
The Company has entered into an Investment Management Agreement ("IMA") with AAM Asia, a wholly owned subsidiary of Aberdeen Asset Management PLC, for the provision of investment management and other services.
Under the terms of the IMA, investment management fees payable to the Manager have been calculated and charged on the following basis:
- a monthly fee, payable in arrears, calculated on an annual rate of 1.0% of total assets less current liabilities, with a rebate to the Company for any fees received in respect of any investments by the Company in investment vehicles managed by the Aberdeen group; and
- a performance fee, payable in arrears, calculated in respect of each financial year to 31 March (the "measurement period"). The fee is 10% of the amount by which the net asset value per share of the Company (adjusted to add back any performance fees paid or accrued during the measurement period, calculated on a consolidated basis for the Group and diluted by the exercise of the Warrants in August 2010), exceeds the Company's net asset value per share on either the first business day of the current measurement period, or at the end of the most recent measurement period in respect of which a performance fee has been paid, whichever is higher, this net asset value per share to be increased by the percentage (if any) by which the Company's benchmark index has increased over the current measurement period, multiplied by the number of Ordinary shares in issue at the start of the measurement period. When aggregated, the management fee and performance fee, for any financial year, are capped at 1.75% of the gross assets of the Company as at the end of the relevant measurement period.
Further details may be found in note 4 to the Financial Statements.
In accordance with the basis of calculation described above, no performance fee was payable to the Manager in respect of the year ended 31 March 2014 (2013 - nil) as the achieved net asset value for the year is less than the benchmark net asset value per share, currently 271.2p, as at 31 March 2011.
The investment management fees are chargeable 100% to revenue and details of payments made to the Manager during the period ended 31 March 2014 are shown in note 4 to the Financial Statements.
In monitoring the performance of the Manager, the Board considers the investment approach and investment record of the Manager over shorter and longer-term periods, taking into account the Company's performance against the benchmark index and peer group funds. The Board also reviews the management processes, risk control mechanisms and marketing activities of the Manager and, as a result of this review, considers that the continuing appointment of the Manager, on the terms agreed, to be in the interests of the shareholders because the Aberdeen Group has the investment management, marketing and associated secretarial and administrative skills required for the effective operation of the Company.
Going Concern
In accordance with the Financial Reporting Council's 2012 guidance on Going Concern and Liquidity Risk, the Directors have reviewed the Company's ability to continue as a going concern. The Company's assets consist of a diverse portfolio of listed equity shares which in most circumstances are realisable within a short timescale. The Directors are mindful of the principal risks and uncertainties disclosed in Overview of Strategy and in note 16 to the financial statements and have reviewed cashflow forecasts detailing revenue and liabilities; accordingly, the Directors believe that the Company has adequate financial resources to continue in operational existence for the foreseeable future and for at least 12 months from the date of this Report.
This is also based on the assumption that Ordinary resolution 12, that the Company continues as an investment trust, which will be proposed at the AGM of the Company on 11 September 2014, is passed as it has been in the years since it was put in place. The Directors consult annually with major shareholders and, as at the date of approval of this Report, had no reason to believe that this assumption was incorrect.
Substantial Interests
The Company was aware of the following share interests in the Company, above 3%, as at 31 March 2014:
|
Shareholder |
Number of shares held |
% held |
|
Lazard Asset Management |
14,452,205 |
24.5 |
|
Clients of Aberdeen Asset Management |
11,144,178 |
18.9 |
|
City of London Investment Management |
6,497,386 |
11.0 |
|
Aberdeen Investment Trusts - ISA and Share plans |
2,405,257 |
4.1 |
|
Legal & General |
1,794,790 |
3.1 |
Accountability and Audit
The Directors who held office at the date of this Report each confirm that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and he or she has taken all the steps that he or she could reasonably be expected to have taken as a Director in order to make him or her aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.
Independent Auditor
EY (formerly Ernst & Young LLP) have expressed their willingness to continue in office. Resolution 8 to re-appoint EY as Independent Auditor of the Company for the ensuing year and to authorise the Directors to fix their remuneration, will be put to shareholders at the forthcoming AGM.
Special Business at the AGM
Share Repurchases
At the AGM held on 20 September 2013, shareholders approved the renewal of the authority for the Company to repurchase its Ordinary shares, which was unused at the date of approval of this Report.
The principal aim of a share buy-back facility is to enhance shareholder value by acquiring shares at a discount to net asset value as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to net asset value per share, should result in an increase in the net asset value per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the net asset value per share for the remaining shareholders, and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the AGM. Under the current Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of: (i) 105% of the average of the middle market quotations for the shares over the five business days immediately preceding the date of purchase; and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share. Shares which are purchased under this authority will either be cancelled or held as treasury shares.
Special resolution 9 in the Notice of AGM will, if passed, renew the authority to purchase in the market a maximum of 14.99 per cent of shares in issue on 30 May 2014, being the nearest practicable date to the approval of this Report (equivalent to approximately 8.8m Ordinary shares). Such authority will expire on the date of the next AGM or on 30 September 2015, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM or earlier if the authority has been exhausted. The Directors recommend that shareholders vote in favour of resolution 9.
Issue of Shares
Ordinary resolution 10 in the Notice of AGM will, if passed, renew the authority to allot unissued share capital up to an aggregate nominal amount of £738,376 (equivalent to approximately 3.0 million Ordinary shares, or 5 per cent of the Company's existing issued share capital on 30 May 2014, being the nearest practicable date to the approval of this Report). Such authority will expire on the date of the next AGM or on 30 September 2015, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, if earlier, if the authority has been exhausted.
When shares are to be allotted for cash, the Companies Act 2006 (the "Act") provides that existing shareholders have pre-emption rights and that the new shares must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares otherwise than by a pro rata issue to existing shareholders. Special resolution 11 will, if passed, give the Directors power to allot for cash equity securities up to an aggregate nominal amount of £738,376 (equivalent to approximately 3.0 million Ordinary shares, or 5 per cent of the Company's existing issued share capital at 30 May 2014, being the nearest practicable date to the approval of this Report), as if Section 561(1) of the Act did not apply. This is the same nominal amount of share capital which the Directors are seeking the authority to allot pursuant to resolution 11. This authority will expire on the date of the next AGM or on 30 September 2015, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, if earlier, if the authority has been exhausted. This authority will not be used in connection with a rights issue by the Company.
The Directors intend to use the authorities given by resolutions 10 and 11 to allot shares and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for investment in line with the Company's investment policy. No issue of shares will be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting.
Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (as amended) (the "Treasury Share Regulations") the Company is permitted to buy back and hold shares in treasury and then sell them at a later date for cash, rather than cancelling them. The Treasury Share Regulations require such sale to be on a pre-emptive, pro rata, basis to existing shareholders unless shareholders agree by special resolution to disapply such pre-emption rights. Accordingly, in addition to giving the Directors power to allot unissued Ordinary share capital on a non pre-emptive basis, resolution 11, if passed, will give the Directors authority to sell Ordinary shares held in treasury on a non pre-emptive basis. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares.
The benefit of the ability to hold treasury shares is that such shares may be resold. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares. The Board would only expect to issue new Ordinary shares or sell Ordinary shares from treasury at a price per Ordinary share which represented a premium to the net asset value per share. It is also the intention of the Board that sales from treasury would only take place when the Board believes that to do so would assist in the provision of liquidity to the market. The Directors recommend that shareholders vote in favour of resolutions 10 and 11.
Continuance of the Company
In accordance with Article 160 of the Articles of Association of the Company adopted on 22 September 2011, the Directors are required to propose an Ordinary resolution at each AGM of the Company that the Company continue as an investment trust. Accordingly, the Directors are proposing Ordinary resolution 12, that the Company continues as an investment trust. The Directors recommend that shareholders support the continuance of the Company by voting in favour of resolution 12.
Additional Information
Where not provided elsewhere in the Directors' Report, the following provides the additional information required to be disclosed by The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
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 (for example, insider trading law). The Company is not aware of any agreements between shareholders that may result in a transfer of securities and/or voting rights.
The rules governing the appointment of Directors are set out in the Statement of Corporate Governance. The Company's Articles of Association may only be amended by a special resolution at a general meeting of shareholders.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards (''IFRSs'') as adopted by the European Union.
Under Company Law the Directors must not approve the Group financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Group for that period. In preparing the Group financial statements the Directors are required to:
- select suitable accounting policies in accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", and then apply them consistently;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance;
- state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; and
- make judgments and estimates that are reasonable and prudent.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The maintenance and integrity of the website maintained for the Group is the responsibility of the Directors; the work carried out by the Auditor does not involve consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and
- that in the opinion of the Directors, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Group's performance, business model and strategy; and
- the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that the Group faces.
On behalf of the Board
William Salomon
Chairman
30 May 2014
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NEW INDIA INVESTMENT TRUST PLC
We have audited the financial statements of New India Investment Trust PLC for the year ended 31 March 2014 which comprise the Consolidated Statement of Comprehensive Income, Consolidated and Parent Company Balance Sheets, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated and Parent Company Cash Flow Statement and the related notes 1 to 19. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors' Responsibilities set out above, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
- the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 March 2014 and of the Group's loss for the year then ended;
- the Group's financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
- the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
Our assessment of risks of material misstatement
We identified the following risks of material misstatement that had the greatest effect on the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team:
- Incorrect valuation and ownership of the investment portfolio; and
- Management and performance fees are not calculated correctly in accordance with the investment management agreement.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of misstatements on the audit and of uncorrected misstatements, if any, on financial statements and in forming our audit opinion.
We determined materiality for the Group to be £1.56 million, which is 1% of total Equity Shareholders' funds. This provided a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures.
On the basis of our risk assessments, together with our assessment of the Group's overall control environment, our judgment was that overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group should be 75% of materiality, namely £1.17 million. Our objective in adopting this approach was to ensure that total uncorrected and undetected audit differences in all accounts did not exceed our materiality level.
We have reported to the Audit Committee any audit differences in excess of £0.08 million, as well as differences below that threshold that, in our view, warrant reporting on qualitative grounds.
An overview of the scope of our audit
The group audit performed a full scope audit on 100% of the Group equity. Our response to the risks identified above was as follows:
- We agreed the year end prices to an independent source and the investment holdings to the independent custodian report; and
- We independently recalculated management fee and performance fee calculations for the year with reference to contractual arrangements and agreed the calculation inputs to source data.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion:
- the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
- materially inconsistent with the information in the audited financial statements; or
- apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or
- is otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
- the Parent Company financial statements and the part of the Directors Remuneration Report to be audited are not in agreement with the accounting records and returns; or
- certain disclosures of Directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
- the Directors' statement in relation to going concern; and
- the part of the Corporate Governance Statement relating to the Group's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.
Susan Dawe (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh
30 May 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Year ended |
Year ended |
||||
|
|
|
31 March 2014 |
31 March 2013 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
|
return |
return |
Total |
return |
return |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue |
|
|
|
|
|
|
|
|
Income |
3 |
2,420 |
- |
2,420 |
2,414 |
- |
2,414 |
|
(Losses)/gains on investments held at fair value through profit or loss |
9(a) |
- |
(3,093) |
(3,093) |
- |
14,494 |
14,494 |
|
Currency gains |
|
- |
16 |
16 |
- |
10 |
10 |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Total revenue |
|
2,420 |
(3,077) |
(657) |
2,414 |
14,504 |
16,918 |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Investment management fees |
4 |
(1,452) |
- |
(1,452) |
(1,446) |
- |
(1,446) |
|
Other administrative expenses |
5 |
(879) |
- |
(879) |
(791) |
- |
(791) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Profit/(loss) before tax |
|
89 |
(3,077) |
(2,988) |
177 |
14,504 |
14,681 |
|
|
|
|
|
|
|
|
|
|
Taxation |
6 |
(58) |
- |
(58) |
(60) |
- |
(60) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Profit/(loss) for the year |
|
31 |
(3,077) |
(3,046) |
117 |
14,504 |
14,621 |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
Return/(loss) per Ordinary share (pence) |
8 |
0.05 |
(5.21) |
(5.16) |
0.20 |
24.55 |
24.75 |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
|
|||||||
|
The Group does not have any income or expense that is not included in profit/(loss) for the year, and therefore the "Profit/(loss) for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised). |
|||||||
|
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company. There are no minority interests. |
|||||||
|
The total column of this statement represents the Statement of Comprehensive Income of the Group, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. |
|||||||
|
All items in the above statement derive from continuing operations. |
|||||||
|
The accompanying notes are an integral part of these financial statements. |
|||||||
CONSOLIDATED AND COMPANY BALANCE SHEETS
|
|
|
Group |
Company |
Group |
Company |
|
|
|
As at |
As at |
As at |
As at |
|
|
|
31 March |
31 March |
31 March |
31 March |
|
|
|
2014 |
2014 |
2013 |
2013 |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
Investments held at fair value through profit or loss |
9 |
150,773 |
155,440 |
157,596 |
158,273 |
|
|
|
________ |
_________ |
________ |
________ |
|
Current assets |
|
|
|
|
|
|
Cash at bank |
10 |
4,700 |
354 |
1,183 |
558 |
|
Receivables |
11 |
591 |
52 |
612 |
60 |
|
|
|
________ |
_________ |
________ |
________ |
|
Total current assets |
|
5,291 |
406 |
1,795 |
618 |
|
|
|
________ |
_________ |
________ |
________ |
|
Total assets |
|
156,064 |
155,846 |
159,391 |
158,891 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Payables |
12 |
(384) |
(166) |
(665) |
(165) |
|
|
|
________ |
_________ |
________ |
________ |
|
Total current liabilities |
|
(384) |
(166) |
(665) |
(165) |
|
|
|
________ |
_________ |
________ |
________ |
|
Net assets |
|
155,680 |
155,680 |
158,726 |
158,726 |
|
|
|
________ |
_________ |
________ |
________ |
|
Share capital and reserves |
|
|
|
|
|
|
Ordinary share capital |
13 |
14,768 |
14,768 |
14,768 |
14,768 |
|
Share premium account |
|
25,406 |
25,406 |
25,406 |
25,406 |
|
Special reserve |
|
15,778 |
15,778 |
15,778 |
15,778 |
|
Capital redemption reserve |
|
4,484 |
4,484 |
4,484 |
4,484 |
|
Capital reserve |
14 |
93,811 |
94,695 |
96,888 |
97,528 |
|
Revenue reserve |
|
1,433 |
549 |
1,402 |
762 |
|
|
|
________ |
_________ |
________ |
________ |
|
Equity shareholders' funds |
|
155,680 |
155,680 |
158,726 |
158,726 |
|
|
|
________ |
_________ |
________ |
________ |
|
|
|
|
|
|
|
|
Net asset value per Ordinary share (pence) |
15 |
263.55 |
263.55 |
268.71 |
268.71 |
|
|
|
________ |
_________ |
________ |
________ |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Year ended 31 March 2014 |
|
|
|
|
|
|
|
|
|
|
Share |
|
Capital |
|
|
|
|
|
Share |
premium |
Special |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 April 2013 |
14,768 |
25,406 |
15,778 |
4,484 |
96,888 |
1,402 |
158,726 |
|
Net (loss)/profit on ordinary activities after taxation |
- |
- |
- |
- |
(3,077) |
31 |
(3,046) |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
|
Balance at 31 March 2014 |
14,768 |
25,406 |
15,778 |
4,484 |
93,811 |
1,433 |
155,680 |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2013 |
|
|
|
|
|
|
|
|
|
|
Share |
|
Capital |
|
|
|
|
|
Share |
premium |
Special |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 April 2012 |
14,768 |
25,406 |
15,778 |
4,484 |
82,384 |
1,285 |
144,105 |
|
Net profit on ordinary activities after taxation |
- |
- |
- |
- |
14,504 |
117 |
14,621 |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
|
Balance at 31 March 2013 |
14,768 |
25,406 |
15,778 |
4,484 |
96,888 |
1,402 |
158,726 |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
COMPANY STATEMENT OF CHANGES IN EQUITY
|
Year ended 31 March 2014 |
|
|
|
|
|
|
|
|
|
|
Share |
|
Capital |
|
|
|
|
|
Share |
premium |
Special |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 April 2013 |
14,768 |
25,406 |
15,778 |
4,484 |
97,528 |
762 |
158,726 |
|
Net (loss)/profit on ordinary activities after taxation |
- |
- |
- |
- |
(2,833) |
(213) |
(3,046) |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
|
Balance at 31 March 2014 |
14,768 |
25,406 |
15,778 |
4,484 |
94,695 |
549 |
155,680 |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2013 |
|
|
|
|
|
|
|
|
|
|
Share |
|
Capital |
|
|
|
|
|
Share |
premium |
Special |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 April 2012 |
14,768 |
25,406 |
15,778 |
4,484 |
82,988 |
681 |
144,105 |
|
Net profit on ordinary activities after taxation |
- |
- |
- |
- |
14,540 |
81 |
14,621 |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
|
Balance at 31 March 2013 |
14,768 |
25,406 |
15,778 |
4,484 |
97,528 |
762 |
158,726 |
|
|
________ |
_________ |
________ |
________ |
________ |
_________ |
________ |
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
|
|
|
Year ended |
Year ended |
||
|
|
|
31 March 2014 |
31 March 2013 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Operating activities |
|
|
|
|
|
|
(Loss)/profit before tax |
|
(2,988) |
(3,046) |
14,681 |
14,621 |
|
Loss/(gain) on investments held at fair value through profit or loss |
|
3,093 |
2,833 |
(14,494) |
(14,540) |
|
Net gains on foreign exchange |
|
(16) |
- |
(10) |
- |
|
Purchases of investments held at fair value through profit or loss |
|
(12,968) |
- |
(6,086) |
- |
|
Sales of investments held at fair value through profit or loss |
|
16,586 |
- |
5,123 |
- |
|
(Increase)/decrease in other receivables |
|
(25) |
8 |
233 |
(5) |
|
(Decrease)/increase in other payables |
|
(126) |
1 |
240 |
67 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net cash inflow/(outflow) from operating activities before tax |
|
3,556 |
(204) |
(313) |
143 |
|
|
|
|
|
|
|
|
Taxation paid |
|
(55) |
- |
(89) |
- |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net cash inflow/(outflow) from operating activities |
|
3,501 |
(204) |
(402) |
143 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at the start of the year |
|
1,183 |
558 |
1,575 |
415 |
|
Effect of foreign exchange rate changes |
|
16 |
- |
10 |
- |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Cash and cash equivalents at the end of the year |
10 |
4,700 |
354 |
1,183 |
558 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|||||
Notes to the Financial Statements
For the year ended 31 March 2014
|
|
|
|
1. |
Principal activity |
|
|
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010 ("s1158"). |
|
|
|
|
|
The principal activity of its active foreign subsidiary is similar in all relevant respects to that of its United Kingdom parent. |
|
2. |
Accounting policies |
|
|
|
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB ("IFRIC"). |
|
|
|
|
|
|
|
(a) |
Basis of preparation |
|
|
|
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2014. There are no differences between the accounting policies applied with respect to the Group and those applied with respect to the Company. |
|
|
|
|
|
|
|
The Company has taken advantage of the exemption provided under Section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes. |
|
|
|
|
|
|
|
The Group and Company financial statements are presented in Sterling, which is also the functional currency as it is the basis upon which shareholders operate and expenses are generally paid. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated. |
|
|
|
|
|
|
|
Where presentational guidance set out in the Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ("AIC"), is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. |
|
|
|
|
|
|
|
At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: |
|
|
|
- IFRS 9 Financial Instruments (effective 1 January 2015); - Investment Entities - Amendments to IFRS 10, IFRS 12 & IAS 27 - (effective 1 January 2014). - Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 - (effective 1 January 2014). |
|
|
|
|
|
|
|
The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Company's financial results in the period of initial application although there will be revised presentations to the Primary Financial Statements and additional disclosures. The Company intends to adopt the standards in the reporting period when they become effective. |
|
|
|
|
|
|
(b) |
Group accounts |
|
|
|
The Group financial statements consolidate the financial statements of the Company and its subsidiary, New India Investment Company (Mauritius) Limited. |
|
|
|
|
|
|
|
The Subsidiary has been fully consolidated from the date of its inception, being the date on which the Group obtained control, and will continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. |
|
|
|
|
|
|
(c) |
Presentation of Consolidated Statement of Comprehensive Income |
|
|
|
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of revenue and capital nature has been presented in the Consolidated Statement of Comprehensive Income. |
|
|
|
|
|
|
(d) |
Segmental reporting |
|
|
|
The Board has considered the requirements of IFRS 8 'Operating Segments' and is of the view that the Group is engaged in a single segment business, of investing in Indian quoted equities and that therefore the Group has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Group. The key measure of performance used by the Board to assess the Group's performance is the total return on the Group's net asset value, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements. |
|
|
|
|
|
|
(e) |
Income |
|
|
|
Dividends receivable on equity shares are recognised in the Consolidated Statement of Comprehensive Income on the ex-dividend date, and gross of any applicable withholding tax. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. Special dividends are credited to capital or revenue, according to their circumstances. Where a Group company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in the Consolidated Statement of Comprehensive Income. Provision is made for any dividends not expected to be received. Interest receivable from cash and short-term deposits is accrued to the end of the financial year. |
|
|
|
|
|
|
(f) |
Expenses and interest payable |
|
|
|
All expenses, with the exception of interest expenses, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Consolidated Statement of Comprehensive Income except as follows: |
|
|
|
- expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Consolidated Statement of Comprehensive Income and separately identified and disclosed in note 9 (c); and - expenses are charged to the capital column of the Consolidated Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. |
|
|
|
|
|
|
(g) |
Taxation |
|
|
|
The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date. |
|
|
|
|
|
|
|
Deferred tax |
|
|
|
Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. 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 temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise, using tax rates that are expected to apply at the date the deferred tax position is unwound. |
|
|
|
|
|
|
(h) |
Investments |
|
|
|
All 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 Group's documented investment strategy, and information about the investments is provided internally on that basis. Purchases of investments are recognised on a trade date basis at the value of the consideration payable excluding transaction costs and designated upon initial recognition as held at fair value through profit or loss. Sales of assets are also recognised on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. |
|
|
|
|
|
|
|
The fair value of the financial instruments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. Any unquoted investments would be held at fair value, as measured by the Directors using appropriate valuation methodologies such as earnings multiples, recent transactions and net assets. In the case of the Company's investment in the subsidiary, of which the Company owns 100% of its Ordinary share capital, this has been measured at fair value, which is deemed to be its net asset value. |
|
|
|
|
|
|
|
Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as "Gains/(losses) on investments at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. |
|
|
|
|
|
|
(i) |
Cash and cash equivalents |
|
|
|
Cash comprises cash in hand and at banks and short-term deposits. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash, and that are subject to an insignificant risk of changes in value. |
|
|
|
|
|
|
(j) |
Receivables and payables |
|
|
|
Other receivables and prepayments do not carry any interest and are short-term in nature, and are, accordingly, stated at their recoverable amount. Payables are non-interest bearing and are stated at their payable amount. |
|
|
|
|
|
|
(k) |
Dividends payable |
|
|
|
Dividends are recognised from the date on which they are declared and approved by shareholders. |
|
|
|
|
|
|
(l) |
Nature and purpose of reserves |
|
|
|
Special reserve |
|
|
|
The special reserve arose following Court approval in 1998 to transfer £30m from the share premium account. This reserve is distributable and its function is to fund any share buy-backs by the Company. |
|
|
|
|
|
|
|
Capital redemption reserve |
|
|
|
The capital redemption reserve arose when Ordinary shares were redeemed, and subsequently cancelled by the Company, at which point an amount equal to the par value of the Ordinary share capital was transferred from the Ordinary share capital to the capital redemption reserve. |
|
|
|
|
|
|
|
Capital reserve |
|
|
|
This reserve reflects any gains or losses on investments realised in the period along with any increases and decreases in the fair value of investments held that have been recognised in the Statement of Comprehensive Income. |
|
|
|
|
|
|
|
Revenue reserve |
|
|
|
This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. |
|
|
|
|
|
|
(m) |
Foreign currency |
|
|
|
Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Group Statement of Comprehensive Income. |
|
|
|
Year ended 31 March 2014 |
Year ended 31 March 2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
3. |
Income |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Income from investments |
|
|
|
|
|
|
|
|
Overseas dividends |
2,419 |
- |
2,419 |
2,412 |
- |
2,412 |
|
|
|
|
|
|
|
|
|
|
|
Other operating income |
|
|
|
|
|
|
|
|
Deposit interest |
1 |
- |
1 |
2 |
- |
2 |
|
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
_________ |
|
|
|
2,420 |
- |
2,420 |
2,414 |
- |
2,414 |
|
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
_________ |
|
|
|
Year ended 31 March 2014 |
Year ended 31 March 2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
4. |
Investment management fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Investment management fees |
1,452 |
- |
1,452 |
1,446 |
- |
1,446 |
|
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
_________ |
|
|
|
||||||
|
|
The Company has an agreement with AAM Asia for the provision of management services. |
||||||
|
|
|
||||||
|
|
During the year, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the net asset value of the Group, valued monthly. The management agreement is terminable by either the Company or AAM Asia on 12 months' notice. The balance due to AAM Asia at the year end was £132,000 (2013 - £256,000). All investment management fees are charged 100% to the revenue column of the Consolidated Statement of Comprehensive Income. |
||||||
|
|
|
||||||
|
|
Additionally, the Manager is entitled to a performance-related investment management fee calculated in respect of each financial year to 31 March (the "measurement period") and payable in arrears. The fee is 10% of the amount by which the net asset value per share of the Company (adjusted to add back any performance fees paid or accrued during the measurement period, calculated on a consolidated basis for the Group), exceeds the Company's net asset value per share on either the first business day of the current measurement period, or at the end of the most recent measurement period in respect of which a performance fee has been paid, whichever is higher, this net asset value per share to be increased by the percentage (if any) by which the Company's benchmark index has increased over the current measurement period, multiplied by the number of Ordinary shares in issue at the start of the measurement period. When aggregated, the management fee and performance fee, for any financial year, are capped at 1.75% of the gross assets of the Company as at the end of the relevant measurement period. |
||||||
|
|
|
||||||
|
|
In accordance with the basis of calculation described above, no performance fee was payable to the Manager in respect of the year ended 31 March 2014 (2013 - nil) as the achieved net asset value for the year is less than the benchmark net asset value. |
||||||
|
|
|
Year ended |
Year ended |
|
|
|
31 March 2014 |
31 March 2013 |
|
5. |
Other administrative expenses - revenue |
£'000 |
£'000 |
|
|
Directors' fees |
129 |
94 |
|
|
Marketing contribution |
99 |
95 |
|
|
Auditor's remuneration: |
|
|
|
|
- fees payable to the Group's auditor for the audit of the Group's annual accounts |
27 |
27 |
|
|
- fees payable to the Group's auditor for the audit of the Company's subsidiary annual accounts |
7 |
7 |
|
|
- for other services relating to taxation provided to the Group |
21 |
15 |
|
|
Legal and advisory fees |
40 |
86 |
|
|
Custodian and overseas agents' charges |
311 |
304 |
|
|
Other |
245 |
163 |
|
|
|
_________ |
_________ |
|
|
|
879 |
791 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
Directors' fees include £12,000 (2013 - £6,000) paid in respect of the Directors of New India Investment Company (Mauritius) Limited. |
||
|
|
|
||
|
|
During the year under review, £21,000 (2013 - £15,000) was paid to the external auditor for other services relating to taxation; the majority of these fees consist of tax advice provided by EY in relation to the Company's Mauritian subsidiary. EY also advised the Company at the time of its restructuring in November 2004 when the Mauritian Subsidiary was created. The amounts disclosed above for Auditor's remuneration are all shown net of VAT. |
||
|
|
|
||
|
|
The Company has an agreement with Aberdeen Asset Management PLC ('AAM PLC') for the provision of marketing services in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the year were £99,000 (2013 - £95,000) and £26,000 (2013 - £24,000) was due to AAM PLC at the year end. |
||
|
|
|
|
Year ended 31 March 2014 |
Year ended 31 March 2013 |
|||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
6. |
(a) |
Tax on ordinary activities |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
Current tax: |
|
|
|
|
|
|
|
|
|
|
Overseas taxation |
58 |
- |
58 |
60 |
- |
60 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Factors affecting the tax charge for the year |
|||||||
|
|
|
The tax charged for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows: |
|||||||
|
|
|
|
|
|
|||||
|
|
|
|
Year ended 31 March 2014 |
Year ended 31 March 2013 |
|||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
Profit/(loss) before tax |
89 |
(3,077) |
(2,988) |
177 |
14,504 |
14,681 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
Corporation tax on profit/(loss) at the standard rate of 23% (2013 - 24%) |
21 |
(708) |
(687) |
42 |
3,481 |
3,523 |
|
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
|
Losses/(gains) on investments held at fair value through profit or loss not taxable (see note below) |
- |
711 |
711 |
- |
(3,479) |
(3,479) |
|
|
|
|
Currency gains not taxable |
- |
(3) |
(3) |
- |
(2) |
(2) |
|
|
|
|
Movement in excess expenses |
135 |
- |
135 |
121 |
- |
121 |
|
|
|
|
Income not taxable in the UK |
(70) |
- |
(70) |
(23) |
- |
(23) |
|
|
|
|
Non-taxable dividend income |
(86) |
- |
(86) |
(140) |
- |
(140) |
|
|
|
|
Overseas tax |
58 |
- |
58 |
46 |
- |
46 |
|
|
|
|
Prior year adjustment |
- |
- |
- |
14 |
- |
14 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
Total tax charge |
58 |
- |
58 |
60 |
- |
60 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|||||||
|
|
|
The prior year disclosure has been amended to accord with current year disclosures. |
|||||||
|
|
|
|
|||||||
|
|
|
The Company has excess expenses of £3,134,000 (2013 - £2,545,000) carried forward. This sum has arisen due to cumulative deductible expenses having exceeded taxable income over the life of the Company. It is considered too uncertain that there will be sufficient taxable profits against which these expenses can be offset and, therefore, in accordance with IAS 12, a deferred tax asset of £627,000 (2013 - £585,000) has not been recognised, based on the current tax rate of 20% (2013 - 23%). Any excess management expenses will be utilised against any taxable income that may arise in the future. |
|||||||
|
|
|
|
|||||||
|
|
|
The Company is exempt from corporation tax on capital gains provided it obtains agreement from HM Revenue & Customs that the tests within Section 1158 and 1159 of the Corporation Tax Act 2010 have been met. Under Mauritian taxation laws, no Mauritian capital gains tax is payable on profits arising from the sale of securities. |
|||||||
|
7. |
Dividends on equity shares |
|
|
No final dividend is being proposed for the year ended 31 March 2014 (2013 - £nil). |
|
|
|
|
|
During the year, the subsidiary company made a dividend payment of £215,000 (2013 - £400,000) to the parent company, and the net amount due to the parent company at the year end was £nil (2013 - £nil). |
|
8. |
Return/(loss) per Ordinary share |
||||||
|
|
The basic earnings per Ordinary share is based on the net loss after taxation of £3,046,000 (2013 - profit of £14,621,000) and on 59,070,140 (2013 - 59,070,140) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. |
||||||
|
|
|
||||||
|
|
The earnings per Ordinary share detailed above can be further analysed between revenue return and capital return as follows: |
||||||
|
|
|
||||||
|
|
|
Year ended |
Year ended |
||||
|
|
|
31 March 2014 |
31 March 2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Net profit/(loss) (£'000) |
31 |
(3,077) |
(3,046) |
117 |
14,504 |
14,621 |
|
|
Weighted average number of Ordinary shares in issue |
|
|
59,070,140 |
|
|
59,070,140 |
|
|
Return/(loss) per Ordinary share (pence) |
0.05 |
(5.21) |
(5.16) |
0.20 |
24.55 |
24.75 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
Year ended |
Year ended |
|
|||||||||||
|
|
|
31 March 2014 |
31 March 2013 |
|
|||||||||||
|
9. |
Investments held at fair value through profit or loss |
£'000 |
£'000 |
|
|||||||||||
|
|
(a) |
Group |
|
|
|
||||||||||
|
|
|
Opening book cost |
85,022 |
81,246 |
|
||||||||||
|
|
|
Opening investment holdings fair value gains |
72,574 |
61,418 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
Opening valuation |
157,596 |
142,664 |
|
||||||||||
|
|
|
Movements in the year: |
|
|
|
||||||||||
|
|
|
Purchases at cost |
12,810 |
6,077 |
|
||||||||||
|
|
|
Sales - proceeds |
(16,540) |
(5,639) |
|
||||||||||
|
|
|
Sales - realised net gains |
9,565 |
3,338 |
|
||||||||||
|
|
|
(Decrease)/increase in investment holdings gains |
(12,658) |
11,156 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
Closing valuation |
150,773 |
157,596 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
|
|
£'000 |
£'000 |
|
||||||||||
|
|
|
Closing book cost |
90,857 |
85,022 |
|
||||||||||
|
|
|
Closing investment holdings fair value gains |
59,916 |
72,574 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
Closing valuation |
150,773 |
157,596 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
|
(Losses)/gains on investments |
£'000 |
£'000 |
|
||||||||||
|
|
|
Realised gains on sales of investments |
9,565 |
3,338 |
|
||||||||||
|
|
|
(Decrease)/increase in investment holdings gains |
(12,658) |
11,156 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
|
(3,093) |
14,494 |
|
||||||||||
|
|
|
|
_______ |
_______ |
|
||||||||||
|
|
|
|
|
||||||||||||
|
|
|
|
Year ended 31 March 2014 |
Year ended 31 March 2013 |
|||||||||||
|
|
|
|
Investments |
Investments |
|||||||||||
|
|
|
|
In subsidiary |
Overseas |
Total |
In subsidiary |
Overseas |
Total |
|||||||
|
|
(b) |
Company |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||
|
|
|
Opening book cost |
50,150 |
6,717 |
56,867 |
50,150 |
6,717 |
56,867 |
|||||||
|
|
|
Opening investment holdings fair value gains |
99,010 |
2,396 |
101,406 |
84,044 |
2,822 |
86,866 |
|||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||
|
|
|
Opening valuation |
149,160 |
9,113 |
158,273 |
134,194 |
9,539 |
143,733 |
|||||||
|
|
|
Movements in the year: |
|
|
|
|
|
|
|||||||
|
|
|
(Decrease)/increase in investment holdings fair value gains |
(2,298) |
(535) |
(2,833) |
14,966 |
(426) |
14,540 |
|||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||
|
|
|
Closing valuation |
146,862 |
8,578 |
155,440 |
149,160 |
9,113 |
158,273 |
|||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
Year ended 31 March 2014 |
Year ended 31 March 2013 |
|||||||||||
|
|
|
|
Investments |
Investments |
|||||||||||
|
|
|
|
In subsidiary |
Overseas |
Total |
In subsidiary |
Overseas |
Total |
|||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||
|
|
|
Closing book cost |
50,150 |
6,717 |
56,867 |
50,150 |
6,717 |
56,867 |
|||||||
|
|
|
Closing investment holdings fair value gains |
96,712 |
1,861 |
98,573 |
99,010 |
2,396 |
101,406 |
|||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||
|
|
|
Closing valuation |
146,862 |
8,578 |
155,440 |
149,160 |
9,113 |
158,273 |
|||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
As at |
As at |
|||||||||||
|
|
|
|
31 March 2014 |
31 March 2013 |
|||||||||||
|
|
|
(Losses)/gains on investments |
£'000 |
£'000 |
|||||||||||
|
|
|
(Decrease)/increase in investment holdings fair value gains |
(2,833) |
14,540 |
|||||||||||
|
|
|
|
_______ |
_______ |
|||||||||||
|
|
|
|
|
|
|||||||||||
|
|
|
As at 31 March 2014, all of the overseas investments held are in listed stocks (2013 - same). |
|||||||||||||
|
|
|
|
|||||||||||||
|
|
|
The Company owns 100% of the Ordinary share capital of its subsidiary, New India Investment Company (Mauritius) Limited, an investment holding company registered in Mauritius. |
|||||||||||||
|
|
|
|
|||||||||||||
|
|
(c) |
Transaction costs |
|||||||||||||
|
|
|
During the year, expenses were incurred in acquiring or disposing of investments classified as fair value though profit or loss. These have been expensed through the capital column of the Statement of Comprehensive Income, and are included within (losses)/gains on investments at fair value through profit or loss in the Statement of Comprehensive Income. The total costs were as follows: |
|||||||||||||
|
|
|
|
|||||||||||||
|
|
|
|
Year ended |
Year ended |
|||||||||||
|
|
|
|
31 March 2014 |
31 March 2013 |
|||||||||||
|
|
|
|
Group |
Company |
Group |
Company |
|||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||
|
|
|
Purchases |
27 |
- |
21 |
- |
|||||||||
|
|
|
Sales |
27 |
- |
16 |
- |
|||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||
|
|
|
|
54 |
- |
37 |
- |
|||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
2014 |
2014 |
2013 |
2013 |
|
10. |
Cash and cash equivalents |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash at bank |
4,700 |
354 |
1,183 |
558 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Group |
Company |
Group |
Company |
|
|
|
2014 |
2014 |
2013 |
2013 |
|
11. |
Receivables |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Prepayments and accrued income |
121 |
52 |
96 |
60 |
|
|
Other receivables |
470 |
- |
516 |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
591 |
52 |
612 |
60 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
Included in other receivables is an amount of USD783,000, equivalent to £470,000 (2013 - £516,000), being the estimated recovery of funds following the settlement between Aberdeen Asset Managers Limited and Satyam Computer Services in relation to a claim made following the discovery of a financial fraud, which led to the sale of the stock at a weakened price. |
||||
|
|
|
||||
|
|
None of the above amounts are past their due date or impaired (2013 - nil). |
||||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
2014 |
2014 |
2013 |
2013 |
|
12. |
Payables |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Amounts due to brokers |
- |
- |
158 |
- |
|
|
Other payables |
372 |
166 |
498 |
165 |
|
|
Current tax |
12 |
- |
9 |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
384 |
166 |
665 |
165 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
2014 |
2013 |
||
|
13. |
Ordinary share capital |
Number |
£'000 |
Number |
£'000 |
|
|
Issued and fully paid |
|
|
|
|
|
|
Ordinary shares of 25p each |
59,070,140 |
14,768 |
59,070,140 |
14,768 |
|
|
|
__________ |
_______ |
__________ |
_______ |
|
|
|
|
|
|
|
|
|
The Ordinary shares give shareholders voting rights, the entitlement to all of the capital growth in the Group's assets, and to all the income from the Group that is resolved to be distributed. |
||||
|
|
|
||||
|
|
Ownership of Subsidiaries |
||||
|
|
At the year end, the Company's wholly-owned Subsidiary, New India Investment Company (Mauritius) Limited ('the Subsidiary') had share capital of 4,275,000 (2013 - 4,275,000) Redeemable Participating Preference shares of £0.10 each ('Preference shares') and 50 Management shares of £1 each. The Company holds 100% of the share capital of the Subsidiary. |
||||
|
|
|
||||
|
|
In January 2005 the Subsidiary issued a Warrant instrument to the Company, giving the Company the right to purchase up to 38,350,900 Preference shares, at an exercise price per share of £20 per share ('the 2015 Warrant'). The 2015 Warrant is exercisable for 10 years from 14 January 2005. |
||||
|
|
|
||||
|
|
In August 2010, the Subsidiary issued a further Warrant instrument to the Company for a consideration of £9,000,000, giving the Company the right to purchase up to 1,321,417 Preference shares, at an exercise price per share of £40 per share ('the 2020 Warrant'). The 2020 Warrant is exercisable for 10 years from 26 August 2010. |
||||
|
|
|
||||
|
|
Following the above, there are two separate Warrants issued by the Subsidiary. The Subsidiary has the right to repurchase both Warrants in part or in whole. |
||||
|
|
|
||||
|
|
The Company incorporated a wholly-owned subsidiary, registered in Singapore, on 27 November 2013 which is considered by the Directors to be dormant as at the year end. |
||||
|
|
|
||||
|
|
Partial repurchase of Subsidiary Warrant |
||||
|
|
On 15 May 2008, the Subsidiary repurchased part of the 2015 Warrant, in relation to 405,900 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £3,004,000 were received by the Company in the form of a partial capital redemption. These proceeds were credited to the capital reserve of the Company. |
||||
|
|
|
||||
|
|
At the year end there were two (2013 - two) Warrants in issue carrying the right for the Company to subscribe for 37,945,000 (2013 - 37,945,000) and 1,321,417 (2013 - 1,321,417) new Preference shares of 10p in the Subsidiary at £20 and £40 per share respectively. |
||||
|
|
|
2014 |
2013 |
|
14. |
Capital reserves |
£'000 |
£'000 |
|
|
Group |
|
|
|
|
At 1 April 2013 |
96,888 |
82,384 |
|
|
Currency gains |
16 |
10 |
|
|
Movement in investment holdings fair value gains |
(12,658) |
11,156 |
|
|
Gains on sales of investments |
9,565 |
3,338 |
|
|
|
_______ |
_______ |
|
|
At 31 March 2014 |
93,811 |
96,888 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The capital reserve includes gains of £59,916,000 (2013 - gains of £72,574,000) which relate to the revaluation of investments held at the reporting date. |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
Company |
£'000 |
£'000 |
|
|
At 1 April 2013 |
97,528 |
82,988 |
|
|
Movement in investment holdings fair value gains |
(2,833) |
14,540 |
|
|
|
_______ |
_______ |
|
|
At 31 March 2014 |
94,695 |
97,528 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The capital reserve includes gains of £98,573,000 (2013 - gains of £101,406,000) which relate to the revaluation of investments held at the reporting date. |
||
|
15. |
Net asset value per Ordinary share |
|
|
The net asset value per Ordinary share is based on a net asset value of £155,680,000 (2013 - £158,726,000) and on 59,070,140 (2013 - 59,070,140) Ordinary shares, being the number of Ordinary shares in issue at the year end. |
|
16. |
Financial instruments |
|||||||||||||
|
|
The Group's financial instruments comprise securities and other investments, cash balances 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 Manager has a dedicated investment management process, which ensures that the investment policy is followed. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Manager's Investment Committee. |
|||||||||||||
|
|
|
|||||||||||||
|
|
The Manager has an independent Investment Risk department for reviewing the investment risk parameters of the Group's portfolio on a regular basis. The department reports to the Manager's Performance & Investment Risk Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor predicted portfolio risk and style characteristics using best practice, industry standard multi-factor models. |
|||||||||||||
|
|
|
|||||||||||||
|
|
Additionally, the Manager's Compliance department continually monitors the Group's investment and borrowing powers and reports its findings to the Manager's Risk Management Committee and to the Board of the Company. |
|||||||||||||
|
|
|
|||||||||||||
|
|
The main financial risks arising from the Group's financial instruments are: (i) market risk; (ii) liquidity risk; and (iii) credit risk. |
|||||||||||||
|
|
|
|||||||||||||
|
|
The Board regularly reviews and agrees policies for managing each of these risks, and these are summarised below. These policies have remained unchanged since the inception of the Group. |
|||||||||||||
|
|
|
|||||||||||||
|
|
The Board considers that the carrying amount of all disclosed receivables and payables approximates to their fair values. |
|||||||||||||
|
|
|
|||||||||||||
|
|
(i) |
Market risk |
||||||||||||
|
|
|
The fair value or future cash flows of 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. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
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. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Financial assets |
||||||||||||
|
|
|
The interest rate risk profile of the Group's financial assets, excluding equity shares and short-term debtors which are non-interest bearing, as at 31 March 2014 and 31 March 2013 was as follows: |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
|
Total |
|
||||||||||
|
|
|
|
(per Balance Sheet) |
Floating rate |
||||||||||
|
|
|
|
2014 |
2013 |
2014 |
2013 |
||||||||
|
|
|
Type |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||
|
|
|
Cash at bank - Sterling |
4,700 |
1,183 |
4,700 |
1,183 |
||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates, and are classified as having maturity dates of less than one year. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Financial liabilities |
||||||||||||
|
|
|
The Group had no financial liabilities as at 31 March 2014 and 31 March 2013 which were exposed to interest rate risk. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Interest rate sensitivity |
||||||||||||
|
|
|
Movements in interest rates would not significantly affect net assets and total profit attributable to the Group's shareholders. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Foreign currency risk |
||||||||||||
|
|
|
The Group's total return and net assets can be significantly affected by currency translation movements as the majority of the Group's assets and income are denominated in currencies other than Sterling, which is the Group's functional currency. It is not the Group's policy to hedge this risk but it reserves the right to do so, to the extent possible. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Foreign currency exposure by currency of denomination: |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
|
31 March 2014 |
31 March 2013 |
||||||||||
|
|
|
|
|
Net |
Total |
|
Net |
Total |
||||||
|
|
|
|
Overseas |
monetary |
currency |
Overseas |
monetary |
currency |
||||||
|
|
|
|
investments |
assets |
exposure |
investments |
assets |
exposure |
||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||
|
|
|
US Dollar |
8,578 |
470 |
9,048 |
9,113 |
516 |
9,629 |
||||||
|
|
|
Indian Rupee |
142,195 |
- |
142,195 |
148,483 |
(158) |
148,325 |
||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
||||||
|
|
|
|
150,773 |
470 |
151,243 |
157,596 |
358 |
157,954 |
||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
At 31 March 2014, the exchange rate of the Indian Rupee against the reporting currency Sterling was £1: INR 99.566 compared with an exchange rate of £1: INR 82.528 at 31 March 2013. Based on continuing to hold the same investments in the same quantities from 1 April 2013 to 31 March 2014, all other things being equal, the impact of the exchange rate movement over the year would be to decrease the value of the investments by £25,409,000 (2013 - £1,824,000). |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
At 31 March 2014, the exchange rate of the US Dollar against the reporting currency Sterling was £1: US$1.6672 compared with an exchange rate of £1: US$1.5185 at 31 March 2013. Based on continuing to hold the same investments in the same quantities from 1 April 2013 to 31 March 2014, all other things being equal, the impact of the exchange rate movement over the year would be to decrease the value of the investments by £813,000 (2013 - increase by £488,000). |
||||||||||||
|
|
|
The exposure noted in the above table is representative of the exposure across the year as a whole.
|
||||||||||||
|
|
|
Foreign currency sensitivity |
||||||||||||
|
|
|
There is no sensitivity analysis included as the Group's significant foreign currency financial instruments are in the form of equity investments. The exposure to market risk, from movements in the value of equity investments has been included within the other price risk sensitivity analysis so as to show the overall level of exposure. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Other 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. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
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 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 Group are all listed on the Bombay (Mumbai) Stock Exchange and/or The Indian National Stock Exchange, with the exception of the Gail (India) GDR, whose primary exchange is London, Grasim Industries GDR, Ultratech Cement GDR and Ambuja Cements GDR, whose primary exchange is Luxembourg and Infosys Technologies ADR, whose primary exchange is the NASDAQ GS. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Other price risk sensitivity |
||||||||||||
|
|
|
If market prices at the Balance Sheet date had been 15% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 March 2014 would have increased /(decreased) by £22,616,000 (2013 - increased/(decreased) by £23,639,000) and equity reserves would have increased /(decreased) by the same amount. |
||||||||||||
|
|
|
|
||||||||||||
|
|
(ii) |
Liquidity risk |
||||||||||||
|
|
|
This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. All liabilities are payable on demand for a cash consideration equivalent to the balances shown in note 12, and therefore liquidity risk is not considered to be significant, as the Group's assets mainly comprise readily realisable securities which can, in normal circumstances, be sold to meet funding requirements, if necessary. |
||||||||||||
|
|
|
|
||||||||||||
|
|
(iii) |
Credit risk |
||||||||||||
|
|
|
This is failure of the counterparty to a transaction to discharge its obligations under that transaction, which could result in the Group suffering a loss. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
The risk is not considered to be significant, and is managed as follows: |
||||||||||||
|
|
|
- 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; |
||||||||||||
|
|
|
- the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports by the Manager on a daily basis. In addition, both stock and cash reconciliations to custodians' records are performed on a daily basis by the Manager to ensure discrepancies are investigated on a timely basis. The Manager's Compliance department carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's Risk Management Committee and to the Board of the Company. This review will also include checks on the maintenance and security of investments held; and |
||||||||||||
|
|
|
- cash is held only with reputable banks whose credit ratings are monitored on a regular basis. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
None of the Group's financial assets are secured by collateral or other credit enhancements. |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Credit risk exposure |
||||||||||||
|
|
|
In summary, compared to the amounts included in the Balance Sheet, the maximum exposure to credit risk at 31 March was as follows: |
||||||||||||
|
|
|
|
|
|
||||||||||
|
|
|
|
2014 |
2013 |
||||||||||
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
||||||||
|
|
|
|
Sheet |
exposure |
Sheet |
exposure |
||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||||||
|
|
|
Non-current assets |
|
|
|
|
||||||||
|
|
|
Investments designated at fair value through profit or loss |
150,773 |
- |
157,596 |
- |
||||||||
|
|
|
Current assets{A} |
|
|
|
|
||||||||
|
|
|
Cash at bank |
4,700 |
4,700 |
1,183 |
1,183 |
||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||
|
|
|
|
155,473 |
4,700 |
158,779 |
1,183 |
||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||
|
|
|
{A} Excluding short-term debtors. |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
None of the Company's financial assets are past due or impaired (2013 - same). |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
Fair values of financial assets and financial liabilities |
||||||||||||
|
|
|
Investments held at fair value through profit or loss are valued at their quoted bid prices which equate to their fair values. The Directors are of the opinion that the other financial assets and liabilities are stated at fair value in the Balance Sheet and considered that this is equal to the carrying amount. |
||||||||||||
|
17. |
Capital management policies and procedures |
||
|
|
The Company's capital management objectives are: |
||
|
|
- to ensure that the Company will be able to continue as a going concern; and |
||
|
|
- to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that debt should not exceed 25% of net assets. |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
|
£'000 |
£'000 |
|
|
Debt |
- |
- |
|
|
|
_______ |
_______ |
|
|
Equity |
|
|
|
|
Equity share capital |
14,768 |
14,768 |
|
|
Retained earnings and other reserves |
140,912 |
143,958 |
|
|
|
_______ |
_______ |
|
|
|
155,680 |
158,726 |
|
|
|
_______ |
_______ |
|
|
Debt as a % of net assets |
0.0% |
0.0% |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The Board, with the assistance of the Manager 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 need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (ie the level of share price discount or premium); |
||
|
|
- the need for new issues of equity shares; 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 had no loan gearing at the year end (2013 - nil). |
||
|
18. |
Fair value hierarchy |
||||||
|
|
IFRS 7 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making measurements. The fair value hierarchy has the following levels: |
||||||
|
|
|
||||||
|
|
Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities; |
||||||
|
|
Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and |
||||||
|
|
Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. |
||||||
|
|
|
||||||
|
|
The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at the Balance Sheet date are as follows: |
||||||
|
|
|
||||||
|
|
Group |
|
|||||
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 31 March 2014 |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Quoted equities |
a) |
150,773 |
- |
- |
150,773 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Net fair value |
|
150,773 |
- |
- |
150,773 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 31 March 2013 |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Quoted equities |
a) |
157,596 |
- |
- |
157,596 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Net fair value |
|
157,596 |
- |
- |
157,596 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 31 March 2014 |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Quoted equities |
a) |
8,578 |
- |
- |
8,578 |
|
|
|
Investment in Subsidiary |
b) |
- |
146,862 |
- |
146,862 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Net fair value |
|
8,578 |
146,862 |
- |
155,440 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 31 March 2013 |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Quoted equities |
a) |
9,113 |
- |
- |
9,113 |
|
|
|
Investment in Subsidiary |
b) |
- |
149,160 |
- |
149,160 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
Net fair value |
|
9,113 |
149,160 |
- |
158,273 |
|
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
a) |
Quoted equities |
|||||
|
|
|
The fair value of the Group'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. |
|||||
|
|
b) |
Investment in Subsidiary |
|||||
|
|
|
The Company's investment in its Subsidiary is categorised in Fair Value Level 2 as its fair value has been determined by reference to the Subsidiary company's net asset value at the reporting date. The net asset value is predominantly made up of quoted equities traded on recognised stock exchanges. |
|||||
|
19. |
Controlling party |
|
|
In the opinion of the Directors on the basis of shareholdings advised to them, the Company has no immediate or ultimate controlling party. |
|
This Annual Financial Report announcement is not the Company's statutory accounts. The above results for the year ended 31 March 2014 are an abridged version of the Company's full accounts. The 2014 and 2013 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 of the Companies Act 2006. The financial information for 2013 is derived from the statutory accounts for 2013 which have been delivered to the Registrar of Companies. The 2014 statutory accounts will be filed with the Registrar of Companies in due course. |
|
|
|
The Annual Report will be posted to shareholders in June 2014. Further copies may be obtained from the registered office, Bow Bells House, 1 Bread Street, London EC4M 9HH or from the Company's website, www.newindia-trust.co.uk. |
|
|
|
The Annual General Meeting will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH at 11.30 a.m. on 11 September 2014. |
|
|
|
By Order of the Board Aberdeen Asset Management PLCSecretaries
30 May 2014 |
This information is provided by RNS
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