Half Yearly Report

RNS Number : 9728X

New India Investment Trust PLC

25 November 2014

 



NEW INDIA INVESTMENT TRUST PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014

FINANCIAL SUMMARY AND PERFORMANCE

Financial Summary	30 September 2014	31 March 2014	% change
Total shareholders' funds (£'000)	189,103	155,680	+ 21.5
Share price (mid-market)	285.00p	225.00p	+ 26.7
Net asset value per share	320.13p	263.55p	+ 21.5
Discount to net asset value	11.0%	14.6%
Rupee to Sterling exchange rate	100.1	99.6	- 0.5

Performance (total return)	Six months ended 30 September 2014 %	Year ended 31 March 2014 %
Share price	+ 26.7	- 5.1
Net asset value	+ 21.5	- 1.9
MSCI India Index (Sterling adjusted)	+ 18.6	- 2.8

CHAIRMAN'S STATEMENT

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.

Investment Policy

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. 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.

Performance and Overview

I am pleased to report an increase of 21.5% in the Company's net asset value ('NAV') over the six months ended 30 September 2014 which compares favourably to a rise in the benchmark MSCI India Index (Sterling-adjusted) of 18.6% in total return terms. The Company's Ordinary share price rose by 26.7% to 285.0p, which was reflected in a narrowing of the discount to NAV, from 14.6% to 11.0% over the period. At the time of writing, the discount was 6.3%.

The half-year under review was marked by a distinctly celebratory mood that drove the Indian equity market to new heights. An emphatic win by the opposition Bharatiya Janata Party ('BJP') in the May 2014 general election was warmly welcomed, as investors hoped the new leadership would possess the resolve lacking in the previous administration, which had failed to enact long-overdue restructuring to revitalise the economy. Indeed, the new government led by Prime Minister Narendra Modi immediately announced a series of reforms no doubt taking advantage of the political capital accorded by his win. This is the reason why Indian stocks probably retain most of their lustre even at the time of writing.

The new Government's inaugural budget was keenly awaited as an indication of Modi's intent. Key plans included lifting GDP growth to 8% within three years, easing foreign investment restrictions, overhauling subsidies and taxes, as well as introducing a nationwide goods and services tax. There was some disappointment among investors who had expected more hard-hitting measures, but one could argue that these plans moved the nation in the right direction and did not overpromise or pander to populist demands. Meanwhile, economic data, including industrial production and GDP growth, started to improve. However with inflation staying elevated throughout most of the period under review, the Reserve Bank of India has taken a conservative stance and has kept rates unchanged.

The market's smooth run wobbled slightly towards the end of the period under review. The Supreme Court's cancellation of more than 200 coal-mining licences held by the private sector hindered the reform agenda and dampened sentiment. Improving US data renewed expectations of a sooner-than-expected hike in Federal Reserve rates, which also reduced risk appetite in Asian markets. 

Change in Investment Management arrangements

The Alternative Investment Fund Managers Directive (the "Directive"), proposed by the EU to enhance shareholder protection, was fully implemented in the UK on 22 July 2014. This Directive required the Company to appoint an authorised Alternative Investment Fund Manager and a depositary, the latter overlaying the previous custody arrangements.

The Company appointed Aberdeen Fund Managers Limited ("AFML"), following AFML's authorisation by the FCA, to act as the Company's Alternative Investment Fund Manager, entering a new management agreement with AFML on 15 July 2014. Under this agreement AFML delegates portfolio management services to Aberdeen Asset Management Asia Limited, which continues to act as the Company's Investment Manager. There is no change in the commercial arrangements from the previous investment management agreement which was in place up to 14 July 2014, other than, with effect from 21 November 2014, the Manager also agreed to forego any current and future entitlement to a performance fee from the Company.

The Company entered into a depositary agreement with AFML and BNP Securities Services on 15 July 2014 for the provision of depositary services (including custody of assets).

Outlook

Whether the economy has stabilised and is poised for a recovery remains to be seen. Much hinges on the Government's resolve. At the time of writing, the BJP has consolidated its power by securing victories in two crucial state elections, which should reduce policy hurdles. Any doubts over the Government's desire for reform have also been partially allayed by the removal of diesel subsidies, a prickly issue that should alleviate fiscal imbalances in the longer term. Certainly, the fall in global oil prices provided the latitude to do so. Meanwhile, the coal ministry has demonstrated its determination by allowing the private sector to continue to mine commercially, in a riposte to the Supreme Court's earlier decision.

These are encouraging developments that should further support the market. Yet, easing infrastructural bottlenecks, removing red tape and addressing other structural flaws may take months to implement and years to bear fruit against India's fractious political backdrop. The immediate danger is that the Government loses momentum or the will for continuing reform. Nevertheless, the long-term appeal of the market remains. India's best companies thrive in spite of uncertain policy-making. Well-tested management with both ambition and execution, as well as a shareholder-friendly culture, stand them in good stead. It may take several more quarters to see a broad-based recovery in earnings, but cost cuts and restructuring are starting to pay off.

Board

William Salomon retired as Chairman and as a Director at the conclusion of the Annual General Meeting on 11 September 2014. I should like to record the Board's considerable appreciation for William's leadership of the Company since its reconstruction in 2004.

Hasan Askari

Chairman

25 November 2014

INTERIM BOARD REPORT

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 depositary or sub-custodian combined with a shortfall in the assets held by that depositary 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 in India, Mauritius and the United Kingdom (including any changes in how these rules are interpreted and applied).

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 in the Company's Annual Report for the year ended 31 March 2014.

Going Concern

In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk, the Directors have undertaken a review of 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 above and have reviewed 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 at least 12 months from the date of this Report.

This belief is also based on the assumption that the Ordinary resolution, that the Company continues as an investment trust, which will be proposed at the next Annual General Meeting of the Company, is passed as it has been in the years since it was put in place.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Half-Yearly Financial Report, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:

-         the condensed set of financial statements within the Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and

-         the Chairman's Statement and Interim Board Report (together constituting the interim management report) includes a fair review of the information required by 4.2.7R (indication of important events during the first six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the UKLA's Disclosure and Transparency Rules.

The Half-Yearly Financial Report for the six months ended 30 September 2014 comprises the Chairman's Statement, Interim Board Report, the Statement of Directors' Responsibilities and a condensed set of financial statements, and has not been audited or reviewed by the Independent Auditor pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

For and on behalf of the Board

Hasan Askari

Chairman

25 November 2014

INVESTMENT MANAGER'S REPORT

Overview

Indian equities climbed over the six months in review, largely on the back of election-fuelled optimism. Early speculation that a leadership change was imminent sparked an enthusiasm for Indian stocks that swiftly turned euphoric following the landslide election victory of the Bharatiya Janata Party (BJP), led by Narendra Modi. Equities rose sharply in a protracted rally, driven by expectations that Modi would usher in a new investment cycle and overhaul the country's crucial yet dismal infrastructure. However, the eventual realisation that not even Modi could fix India overnight doused the market's infatuation toward the end of the period. By then, investors had also become more attuned to global signals, as escalating tensions in the Middle East and the prospect of higher US interest rates rattled nerves. Nevertheless, signs that the domestic economy could be on the verge of a comeback provided some support.

Economic growth in the fiscal first quarter was surprisingly robust at 5.7%, a welcome shot in the arm after almost two years of sub-5% growth. The auto industry was one of the beneficiaries of the rebound, raising hopes of a sustainable upswing in demand, while cement production grew at its fastest pace in more than two years in July. The healthier backdrop did not go unnoticed, with S&P upgrading its outlook on the country's credit rating to stable from negative. The Reserve Bank of India's tough stance on monetary policy, combined with the government's efforts to contain rising food costs, helped keep a lid on inflation too. The RBI remained wary of lingering risks that could push prices higher again and kept interest rates on hold.

Mere weeks into its administration, the BJP delivered its maiden budget, which aimed to lift GDP growth back to 7-8% within the next three years, while also curbing borrowing. The proposed measures to accelerate growth included easier access for foreign investors and moves to bolster manufacturing. On the fiscal front, the government proposed a more streamlined tax regime, together with the introduction of a goods and services tax. While some found it disappointingly devoid of big-bang reforms and fundamental policy shifts, in many ways it signalled an encouraging shift away from costly populist policies toward a more growth-friendly environment that should be sustainable over the longer term.

Meanwhile, the government showed its determination by taking decisive, and potentially unpopular, action on a number of politically-sensitive issues. This included hiking rail fares, scrapping plans to impose price controls on a range of branded generic drugs made by both Western and domestic manufacturers, and approving the sale of a larger than expected slice of state-owned Coal India. However, it was wrong-footed by the Supreme Court's decision to revoke more than 200 coal-mining licenses, and impose US$1.2 billion in fines on the private-sector holders. This was contrary to the government's wishes and made investors nervous.

Performance

The portfolio's net asset value rose by 21.5%, compared to the benchmark MSCI India Index's 18.6% gain. While all sectors advanced over the period on the back of the rally, the energy sector lagged the most. Hence, our zero exposure was a key contributor to relative returns. Reliance Industries suffered from poor performance in its business division, while the government's decision to defer gas price hikes further weighed on sentiment. Meanwhile, the Supreme Court's revocation of coal-mining licenses unsettled power companies, which rely on a stable coal supply. As such, the share price of sector heavyweight Jindal Steel & Power faced considerable pressure. It is this kind of regulatory uncertainty that makes us avoid the sector.

Auto-related stocks were buoyant on expectations of a pick-up in consumer demand and industrial growth, which lifted our holdings Kansai Nerolac Paints, Bosch and Hero Motocorp. Kansai further benefited from expectations that rising domestic consumption would spur double-digit growth in the paint industry. Meanwhile, the election-linked euphoria especially favoured cyclical stocks, on hopes of a revival in infrastructure spending, which supported our holdings, such as Container Corp of India (Concor) and ABB India. Concor also gained on hopes that a dedicated freight corridor between Mumbai and Delhi would significantly boost its business.

At the stock level, Gujarat Gas contributed on the back of decent results and reports that it would merge with Gujarat State Petroleum Corporation, while the broader IT sector rebound supported CMC. Piramal Enterprises benefited from selling its stake in Vodafone back to the group for a more than 50% return.

Conversely, our stock selection and underweight position in the pharmaceutical industry was a prominent detractor as it was the best-performing sector over the quarter. Improving US-demand fed into robust earnings sector-wide, while the government's reversal on price controls further buoyed sentiment. Not holding Sun Pharmaceuticals, Cipla, Dr Reddy's Lab, Ranbaxy and Aurobindo Pharma weighed on relative returns. However, our holding of Lupin was a top contributor following excellent fiscal first-quarter earnings and new partnerships that should extend its global reach. Elsewhere, Jammu & Kashmir Bank weighed on returns after revealing a sharp jump in non-performing loans.

Portfolio Activity

In the period under review, we participated in Tata Power's rights issue, increasing our holding at an attractive discount. The company will strengthen its balance sheet and fund ongoing expansion, given its healthy growth profile and project pipeline. We also initiated Kotak Mahindra Bank. Its management has navigated the financial cycles well. It has consistently avoided major financial pitfalls, while maintaining one of the sector's highest rates of asset and loan growth over the last decade.

Outlook

The wave of positive sentiment generated by Narendra Modi's landslide election victory seems to have given way to a realisation of just how complex and colossal the task of overhauling India is. However, markets still have support, particularly given the cautious optimism on the economy, with business and fiscal conditions looking more stable than they have in some time. With the latest inflation readings falling to a five-year low, helped in part by the sharp decline in global crude oil prices, there might be scope for the Reserve Bank of India to soften its stance on monetary policy, providing some momentum to the burgeoning recovery. Meanwhile, the BJP's wins in the two most recent state elections have hopefully provided the impetus it requires to hasten reforms. Its ensuing announcements on diesel deregulation, gas pricing and coal sector reforms were particularly encouraging.

As is true for most emerging markets, India's wellbeing also hinges, in part, on the global economy. Any sudden movements from the US Federal Reserve on interest rates, or a protracted slowdown in Europe, could unsettle domestic markets. That said, the backdrop of soft commodity prices is distinctly to India's advantage, because these account for more than half of the nation's imports.

Aberdeen Asset Management Asia Limited

Investment Manager

25 November 2014

INVESTMENT PORTFOLIO - CONSOLIDATED

		Valuation	Net assets
Company	Sector	£'000	%
Tata Consultancy Services	Information Technology	16,188	8.6
Housing Development Finance Corporation	Financials	15,994	8.5
Infosys{A}	Information Technology	14,789	7.8
ICICI Bank	Financials	11,747	6.2
ITC	Consumer Staples	7,930	4.2
Hero MotoCorp	Consumer Discretionary	7,917	4.2
Bosch	Consumer Discretionary	7,404	3.9
Ambuja Cements{A}	Materials	6,777	3.6
Container Corporation of India	Industrials	6,298	3.3
Godrej Consumer Products	Consumer Staples	6,242	3.3
Top ten investments		101,286	53.6
Hindustan Unilever	Consumer Staples	6,174	3.3
HDFC Bank	Financials	5,833	3.1
Grasim Industries{A}	Materials	5,703	3.0
Lupin	Healthcare	5,532	2.9
Nestlé India	Consumer Staples	5,439	2.9
Kansai Nerolac Paints	Materials	5,105	2.7
Gujarat Gas	Utilities	4,625	2.5
MphasiS	Information Technology	4,585	2.4
Ultratech Cement{A}	Materials	4,242	2.2
Piramal Enterprises	Healthcare	4,226	2.2
Top twenty investments		152,750	80.8
ACC	Materials	3,284	1.7
ABB India	Industrials	3,190	1.7
Sanofi India	Healthcare	3,067	1.6
Bharti Airtel	Telecommunication Services	2,915	1.5
Linde India	Materials	2,880	1.5
Jammu & Kashmir Bank	Financials	2,816	1.5
CMC	Information Technology	2,656	1.4
GAIL (India) GDR	Utilities	2,608	1.4
Gruh Finance	Financials	2,180	1.2
GlaxoSmithKline Pharmaceuticals	Healthcare	1,943	1.0
Top thirty investments		180,289	95.3
Tata Power	Utilities	1,841	1.0
Castrol India	Materials	1,682	0.9
ING Vysya Bank	Financials	1,635	0.9
Kotak Mahindra Bank	Financials	1,309	0.7
Total investments		186,756	98.8
Net current assets		2,347	1.2
Net assets		189,103	100.0
{A} Comprises equity and listed or tradeable ADR and GDR holdings.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Six months ended			Six months ended
		30 September 2014			30 September 2013
		(unaudited)			(unaudited)
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Total revenue	3	2,436	-	2,436	1,793	-	1,793
Gains/(losses) on investments held at fair value		-	32,402	32,402	-	(23,510)	(23,510)
Currency (losses)/gains		-	(24)	(24)	-	(3)	(3)
		_______	_______	_______	_______	_______	_______
		2,436	32,378	34,814	1,793	(23,513)	(21,720)
		_______	_______	_______	_______	_______	_______
Expenses
Investment management fees		(861)	-	(861)	(732)	-	(732)
Other administrative expenses		(481)	-	(481)	(393)	-	(393)
		_______	_______	_______	_______	_______	_______
Profit/(loss) before taxation		1,094	32,378	33,472	668	(23,513)	(22,845)
Taxation	4	(49)	-	(49)	(45)	-	(45)
		_______	_______	_______	_______	_______	_______
Profit/(loss) for the period		1,045	32,378	33,423	623	(23,513)	(22,890)
		_______	_______	_______	_______	_______	_______
Return per Ordinary share (pence)	5	1.77	54.81	56.58	1.05	(39.80)	(38.75)
		_______	_______	_______	_______	_______	_______

The Group does not have any income or expense that is not included in profit/(loss) for the period, and therefore the "Profit/(loss) for the period" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised).

The total column of this statement represents the Statement of Comprehensive Income of the Group, prepared in accordance with International Financial Reporting Standards ("IFRS"). The revenue return and capital return 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.

All income is attributable to the equity holders of New India Investment Trust PLC. There are no minority interests.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(Cont'd)

		Year ended
		31 March 2014
		(audited)
		Revenue	Capital
		return	return	Total
	Notes	£'000	£'000	£'000
Total revenue	3	2,420	-	2,420
Gains/(losses) on investments held at fair value		-	(3,093)	(3,093)
Currency (losses)/gains		-	16	16
		_______	_______	_______
		2,420	(3,077)	(657)
		_______	_______	_______
Expenses
Investment management fees		(1,452)	-	(1,452)
Other administrative expenses		(879)	-	(879)
		_______	_______	_______
Profit/(loss) before taxation		89	(3,077)	(2,988)
Taxation	4	(58)	-	(58)
		_______	_______	_______
Profit/(loss) for the period		31	(3,077)	(3,046)
		_______	_______	_______
Return per Ordinary share (pence)	5	0.05	(5.21)	(5.16)
		_______	_______	_______
All items in the above statement derive from continuing operations.

CONSOLIDATED BALANCE SHEET

		As at	As at	As at
		30 September	30 September	31 March
		2014	2013	2014
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		186,756	134,906	150,773
		_______	_______	_______
Current assets
Cash at bank		2,249	795	4,700
Other receivables		567	540	591
		_______	_______	_______
Total current assets		2,816	1,335	5,291
		_______	_______	_______
Total assets		189,572	136,241	156,064
Current liabilities
Other payables		(469)	(405)	(384)
		_______	_______	_______
Total current liabilities		(469)	(405)	(384)
		_______	_______	_______
Net assets		189,103	135,836	155,680
		_______	_______	_______
Capital and reserves
Ordinary share capital	8	14,768	14,768	14,768
Share premium account		25,406	25,406	25,406
Special reserve		15,778	15,778	15,778
Capital redemption reserve		4,484	4,484	4,484
Capital reserve	9	126,189	73,375	93,811
Revenue reserve		2,478	2,025	1,433
		_______	_______	_______
Equity shareholders' funds		189,103	135,836	155,680
		_______	_______	_______
Net asset value per Ordinary share (pence)	10	320.13	229.96	263.55
		_______	_______	_______

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2014 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2014	14,768	25,406	15,778	4,484	93,811	1,433	155,680
Net gain on ordinary activities after taxation	-	-	-	-	32,378	1,045	33,423
	______	______	______	______	______	______	_______
Balance at 30 September 2014	14,768	25,406	15,778	4,484	126,189	2,478	189,103
	______	______	______	______	______	______	_______
Six months ended 30 September 2013 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2013	14,768	25,406	15,778	4,484	96,888	1,402	158,726
Net (loss)/gain on ordinary activities after taxation	-	-	-	-	(23,513)	623	(22,890)
	______	______	______	______	______	______	_______
Balance at 30 September 2013	14,768	25,406	15,778	4,484	73,375	2,025	135,836
	______	______	______	______	______	______	_______
Year ended 31 March 2014 (audited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2013	14,768	25,406	15,778	4,484	96,888	1,402	158,726
Net (loss)/gain 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
	______	______	______	______	______	______	_______

CONSOLIDATED CASH FLOW STATEMENT

	Six months ended	Six months ended	Year ended
	30 September	30 September	31 March
	2014	2013	2014
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Profit/(loss) before taxation	33,472	(22,845)	(2,988)
(Gains)/losses on investments held at fair value through profit or loss	(32,402)	23,510	3,093
Net losses/(gains) on foreign exchange	24	3	(16)
Net purchases of investments held at fair value through profit or loss	(3,580)	(977)	3,618
Decrease/(increase) in other receivables	25	78	(25)
Increase/(decrease) in other payables	64	(112)	(126)
	__________	__________	__________
Net cash (outflow)/inflow from operating activities	(2,397)	(343)	3,556
Taxation paid	(30)	(42)	(55)
	__________	__________	__________
Net (decrease)/increase in cash and cash equivalents	(2,427)	(385)	3,501
Cash and cash equivalents at the start of the period	4,700	1,183	1,183
Effect of foreign exchange rate changes	(24)	(3)	16
	__________	__________	__________
Cash and cash equivalents at the end of the period	2,249	795	4,700
	__________	__________	__________

Notes to the Half-Yearly Financial Report

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.
	The principal activity of its foreign subsidiary is similar in all relevant respects to that of its United Kingdom parent.

2.

Accounting policies

The Group's financial statements have been prepared in accordance with International Accounting Standard ('IAS') 34 - 'Interim Financial Reporting', as adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Reporting Interpretations Committee of the IASB (IFRIC). The Group's financial statements have been prepared using the same accounting policies applied for the year ended 31 March 2014 financial statements, which received an unqualified audit report.

		Six months ended	Six months ended	Year ended
		30 September 2014	30 September 2013	31 March 2014
3.	Income	£'000	£'000	£'000
	Income from investments
	Overseas dividends	2,435	1,792	2,419
	Other operating income
	Deposit & other interest	1	1	1
		__________	__________	__________
	Total income	2,436	1,793	2,420
		__________	__________	__________

			Six months ended	Six months ended	Year ended
			30 September 2014	30 September 2013	31 March 2014
4.	Tax on ordinary activities		£'000	£'000	£'000
	(a)	Current tax:
		Overseas tax	49	45	58
			__________	__________	__________
	(b)	Factors affecting the tax charge for the year or period
		The tax charged for the period can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:
			Six months ended	Six months ended	Year ended
			30 September 2014	30 September 2013	31 March 2014
			£'000	£'000	£'000
		Profit/(loss) before tax	33,472	(22,845)	(2,988)
			__________	__________	__________
		Corporation tax on profit/(loss) at the standard rate of 22% (30 September 2013 23% and 31 March 2014 - 23%)	7,364	(5,254)	(687)
		Effects of:
		(Gains)/losses on investments held at fair value through profit or loss not taxable	(7,128)	5,407	711
		Currency losses/(gains) not taxable	5	1	(3)
		Movement in excess expenses	295	258	135
		Income not taxable in the UK	-	-	(70)
		Non-taxable dividend income	(536)	(412)	(86)
		Overseas tax	49	45	58
			__________	__________	__________
		Current tax charge	49	45	58
			__________	__________	__________
		The Company is exempt from corporation tax on capital gains provided it obtains agreement from HM Revenue & Customs that the tests within Sections 1158-1159 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.

5.	Return per Ordinary share
	The basic earnings per Ordinary share is based on the net gain after taxation of £33,423,000 (30 September 2013 - net loss of £22,890,000; 31 March 2014 - net loss of £3,046,000), and on 59,070,140 (30 September 2013 - 59,070,140; 31 March 2014 - 59,070,140) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.
	The earnings per Ordinary share can be further analysed between revenue and capital as follows:
		Six months ended	Six months ended	Year ended
		30 September 2014	30 September 2013	31 March 2014
		p	p	p
	Revenue return per share	1.77	1.05	0.05
	Capital return per share	54.81	(39.80)	(5.21)
		__________	__________	__________
	Total	56.58	(38.75)	(5.16)
		__________	__________	__________
		Six months ended	Six months ended	Year ended
		30 September 2014	30 September 2013	31 March 2014
		£'000	£'000	£'000
	Revenue return total	1,045	623	31
	Capital return total	32,378	(23,513)	(3,077)
		__________	__________	__________
	Total	33,423	(22,890)	(3,046)
		__________	__________	__________
	Weighted average number of Ordinary shares in issue	59,070,140	59,070,140	59,070,140
		__________	__________	__________

6.	Dividends on equity shares
	No interim dividend has been declared in respect of either the six months ended 30 September 2014 or 30 September 2013.
	During the year ended 31 March 2014, a dividend of £215,000 (31 March 2013 - £400,000) was paid up from the subsidiary company to the parent company.

7.	Transaction costs
	During the period expenses were incurred in acquiring or disposing of investments classified as fair value though profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Consolidated Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		30 September 2014	30 September 2013	31 March 2014
		£'000	£'000	£'000
	Purchases	14	20	27
	Sales	5	23	27
		__________	__________	__________
		19	43	54
		__________	__________	__________

8.	Ordinary share capital
	As at 30 September 2014 there were 59,070,140 (30 September 2013 and 31 March 2014 - 59,070,140) Ordinary shares in issue.

9.	Capital reserve
	The capital reserve reflected in the Consolidated Balance Sheet at 30 September 2014 includes gains of £91,049,000 (30 September 2013 - gains of £43,169,000; 31 March 2014 - gains of £59,916,000) which relate to the revaluation of investments held at the reporting date.

10.	Net asset value per Ordinary share
	The basic net asset value per Ordinary share is based on a net asset value of £189,103,000 (30 September 2013 - £135,836,000; 31 March 2014 - £155,680,000) and on 59,070,140 (30 September 2013 and 31 March 2014 - 59,070,140) Ordinary shares, being the number of Ordinary shares in issue at the period end.

11.	Related party disclosures
	There were no related party transactions during the period.

12.	Half-Yearly Report
	The financial information contained in this Half-Yearly Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2014 and 30 September 2013 has not been audited.
	The information for the year ended 31 March 2014 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the Independent Auditor on those accounts contained no qualification or statement under Section 237 (2), (3) or (4) of the Companies Act 2006.
	The Half-Yearly Report has not been reviewed or audited by the Company's Independent Auditor.

13.	Approval
	The Half-Yearly Report was approved by the Board on 25 November 2014.

Aberdeen Asset Management PLC

Secretaries

25 November 2014

 

END

 

 

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