Annual Financial Report

RNS Number : 0278W
Edinburgh Dragon Trust plc
04 November 2014
 



4 November 2014

 

 

EDINBURGH DRAGON TRUST plc

ANNUAL FINANCIAL REPORT FOR THE YEAR TO 31 AUGUST 2014

 

 

Edinburgh Dragon Trust's objective is long-term capital growth through investment in the Far East (excluding Japan and Australasia).  Investments are made mainly in stock markets in the region, with the exception of Japan and Australasia, principally in large companies. When appropriate, the Company will utilise gearing to maximise long term returns.

 

The Company's benchmark is the MSCI All Country Asia (ex Japan) Index.

 

-         For the year to 31 August 2014, theCompany's net asset value rose 10.4% on a total return basiscompared to a rise of 13.2%, in sterling terms, in the MSCI All Country Asia (ex Japan) Index. 

-         Whilst the under-performance was largely due to the Trusts' exposure to a small number of its underlying holdings, particularly Standard Chartered and City Developments, the Manager remains optimistic about the longer term prospects for both these companies. 

-         Although the Trust underperformed over the year, the second half of the period saw a vindication of the Manager's investment strategy with the NAV outpacing the index by 1.9%. 

-         While sentiment is currently very fragile across all global markets, Asian economic growth is likely to remain relatively strong in comparison to other regions over the longer term. Improving demand from the US should benefit regional exporters, while the recent elections in India and Indonesia have buoyed business sentiment. The portfolio's holdings, which include some of the best companies in the region, should be able to maintain focus on growth and cost discipline amid the macroeconomic uncertainty, and remain well-positioned for the future.

 

 

For further information please contact:-

 

Adrian Lim, Senior Investment Manager,

Aberdeen Asset Management Asia                                                                       0065 6395 2700

 

Kenny Harper, Manager - Investment Trust Investor Relations,                                  0131 528 4000

Aberdeen Asset Management

 

 

STRATEGIC REPORT 

 

1.       COMPANY SUMMARY

The Company

The Company is an investment trust and its Ordinary shares and Convertible Unsecured Loan Stock ("CULS") are listed on the premium segment of the London Stock Exchange.  The Company aims to attract long term private and institutional investors wanting to benefit from the growth prospects of Asian 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

To achieve long-term capital growth through investment in the Far East. Investments are made mainly in stock markets in the region, with the exception of Japan and Australasia, principally in large companies. When appropriate, the Company will utilise gearing to maximise long term returns.

 

Company Benchmark

MSCI All Country Asia (ex Japan) Index

 

Alternative Investment Fund Manager*

Aberdeen Fund Managers Limited ("AFML" or the "Manager")

Authorised and regulated by the Financial Conduct Authority

(* appointed as required by EU Directive 2011/61/EU).

 

The Company's portfolio is managed on a day-to-day basis by Aberdeen Asset Managers Asia Ltd ("AAM" or the "Investment Manager") by way of a delegation agreement in place between AFML and AAM.

 

Website

Up-to-date information can be found on the Company's website - www.edinburghdragon.co.uk

 

Pre-investment Disclosure Document (PIDD)

The Alternative Investment Fund Manager Directive ("AIFMD") requires Aberdeen Fund Managers Limited, as the alternative investment fund manager of Edinburgh Dragon Trust plc, to make available to investors certain information prior to such investors' investment in the Company. The AIFMD is intended to offer increased protection to investors in investment products that do not fall under the existing European Union regime for regulation of investment products known as "UCITS".

 

The Company's PIDD is available for viewing at:

http://www.invtrusts.co.uk/doc.nsf/Lit/PressReleaseUKCloseddragonalternativeinvestmentfundmanagersdirectivepidd

 

 

2.       OVERVIEW OF STRATEGY

Introduction

The purpose of this report is to provide shareholders with details of the Company's strategy and business model as well as the principal risks and uncertainties it faces.

 

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. 

 

Investment Policy

The Company's assets are invested in a diversified portfolio of securities in quoted companies spread across a range of industries and economies in the Asia Pacific region, excluding Japan and Australasia. The shares that make up the portfolio are selected from companies that have proven management and whose shares are considered to be attractively priced. The Company invests in a diversified range of sectors and countries. Investments are not limited as to market capitalisation, sector or country weightings within the region.

 

The Company's policy is to invest no more than 15% of gross assets in other listed investment companies (including listed investment trusts).

 

The Company complies with Chapter 4 of Part 24 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 and does not invest more than 15% of its assets in the shares of any one company.

 

When appropriate the Company will utilise gearing to maximise long-term returns, subject to a maximum gearing level of 20% imposed by the Board.

 

The Company does not currently utilise derivatives but keeps this under review.

 

Achieving the Investment Policy

The Directors are responsible for determining the investment policy and the investment objective of the Company. Day-to-day management of the Company's assets has been delegated to the Investment Manager who invests in a diversified range of companies throughout the Asia Pacific investment region in accordance with the investment policy. The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct contact by its fund managers. Stock selection is the major source of added value. No stock is bought without the Investment Manager having first met management. The Investment Manager evaluates a company's worth in two stages; quality then price. Quality is defined by reference to management, business focus, the balance sheet and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Stock selection is key in constructing a diversified portfolio of companies with top-down investment approach and benchmark weightings being secondary factors. The Investment Manager is authorised to invest up to 15% of the Company's gross assets in any single stock, calculated at the time an investment is made.

 

A detailed description of the investment process and risk controls employed by the Investment Manager is disclosed on page 53 of the 2014 Annual Report and Accounts¹. 

 

A comprehensive analysis of the Company's portfolio by country and by sector is disclosed below and on pages 13 to 17 of the 2014 Annual Report and Accounts¹, including a description of the ten largest investments, the full investment portfolio by value, sector/geographical analysis and currency/market performance. At 31 August 2014, the Company's portfolio consisted of 47 holdings.

 

Gearing is used to leverage the Company's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so. At 31 August 2014, the Company's net gearing was 7.3%.

 

Principal Risks and Uncertainties

The Board regularly reviews the principal risks and uncertainties which it has identified together with the delegated controls it has effected to manage the risks and address the uncertainties.  The major risks are:

 

Resource risk

The Company is an investment trust and has no employees. The responsibility for the provision of investment management, marketing and administration services for the Company has been delegated to Aberdeen Fund Managers Limited ('AFML') under the management agreement. The terms of the management agreement cover the necessary duties and conditions expected of the Manager. The Board reviews the performance of the Manager on a regular basis and their compliance with the management contract formally on an annual basis. As part of that review, the Board assesses the Manager's succession plans, risk management framework and marketing activities.  In addition, the Board visits the Manager's Singapore office, where the day-to-day investment management is undertaken, on a biennial basis.  

 

Investment and market risk

The Company is exposed to the effect of variations in share prices due to the nature of its business. Investment in Asian equities involves a greater degree of risk than that usually associated with investment in the major securities markets, including the risk of social, political and economic instability including changes in government which may restrict investment opportunities and have an adverse effect on economic reform. Changes in legal, regulatory and accounting policies, currency fluctuations and high interest rates may affect the value of the Company's investments and the income derived therefrom.

 

The Board continually monitors the investment policy of the Company, taking account of stockmarket factors, and reviews the Company's performance compared to its benchmark index and peer group. Further details on other risks relating to the Company's investment activities, including market price, liquidity and foreign currency risks, are provided in note 18 to the financial statements.

 

Concentration risk

Trading volumes in certain securities of emerging markets can be low. The Investment Manager may accumulate investment positions across all its managed funds that represent a significant multiple of the normal trading volumes of an investment which may result in lack of liquidity and price volatility. Accordingly, the Company will not necessarily be able to realise, within a short period of time, an illiquid investment and any such realisation that may be achieved may be at considerably lower prices than the Company's valuation of that investment for the purpose of calculating the NAV per Ordinary Share.

 

Gearing risk

As at 31 August 2014 the Company had £59.8 million nominal of 3.5% Convertible Unsecured Loan Stock 2018 (CULS). Gearing has the effect of exacerbating market falls and gains. In order to manage the level of gearing, the Board has set a maximum gearing ratio of 20%.

 

Regulatory risk

The Company operates in a complex regulatory environment and faces a number of regulatory risks. Serious breaches of regulations, such as the tax rules for investment companies, the UKLA Listing Rules and the Companies Act, could lead to a number of detrimental outcomes and reputational damage. The Audit Committee monitors compliance with regulations by reviewing internal control reports from the Manager.

 

Discount volatility

The Company's share price can trade at a discount to its underlying net asset value. The Board monitors the discount level of the Company's shares and has in place a buyback mechanism whereby the Manager is authorised to buy back shares within certain limits.

 

Reliance on Third Party Service Providers

The Company has entered into a number of contracts with third party providers including share registrar and depositary services.  Failure by any service provider to carry out its contractual obligations could have a detrimental impact on the Company operations.  The performance of third party providers is reviewed on an annual basis. 

 

Monitoring Performance - Key Performance Indicators

At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives. The key performance indicators (KPIs) are established industry measures, and are as follows:

 

-     Net asset value (total return)

-     Share price (total return)

-     Performance against benchmark

-     Discount to net asset value

 

An analysis of these measures is disclosed on pages 11 to 12 of the 2014 Annual Report and Accounts¹. Performance is measured against the Company's benchmark, the MSCI All Country Asia (ex Japan) Index and the Board also considers peer group comparative performance.

 

Performance and Outlook

At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives.  The Board also considers the marketing and promotion of the Company, including effective communications with shareholders, which is explained in more detail on page 54 of the 2014 Annual Report and Accounts¹. The future strategic direction and development of the Company is regularly discussed as part of Board meeting agendas.

 

A review of the Company's activities and performance during the year to 31 August 2014 and future developments is detailed in the Chairman's Statement and the Investment Manager's Review. This covers market background, investment activity, portfolio strategy, dividend and gearing policy and investment outlook. A comprehensive analysis of the portfolio is provided in the Portfolio of Investments and Geographical and Sector Analyses on pages 13 to 17 of the 2014 Annual Report and Accounts¹.

 

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 August 2014, there were four male Directors and one female Director. The Company has no employees. The Board's statement on diversity is set out in the Statement of Corporate Governance.

 

Environmental, Social and Human Rights Issues

The Company has no employees as the assets are managed by Aberdeen Fund Managers Limited. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined on page 28 of the 2014 Annual Report and Accounts¹.

 

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.

 

The Manager's corporate socially responsible policy including environmental policy can be found on http://www.aberdeen-asset.com/aam.nsf/groupCsr/home.

 

Duration

The Company does not have a fixed life. Shareholders are given the opportunity to vote on the continuation of the Company at every third Annual General Meeting. The next continuation vote will be held at the Annual General Meeting in December 2015.

 

Allan McKenzie

Chairman

3    November 2014

 

(¹ the 2014 Annual Report and Accounts will shortly be available on the Company's website).

 

 

3.       CHAIRMAN'S STATEMENT

Background

Asian equities had an interesting year to 31 August 2014, with losses in the first half being more than recovered in the second.  The background to global equity markets was one of volatility, with US Federal Reserve tapering, an emerging market sell-off and geopolitical tensions all driving investor sentiment. Your Company's net asset value rose 10.4% on a total return basis but trailed the benchmark MSCI All Country Asia ex Japan Index's gain of 13.2%. The share price rose by 7.0% to 272.5p, resulting in a widening in the discount from 9.1% at the beginning of the period to 11.3% at 31 August 2014.

 

Overview

The year under review could be divided into two distinct halves. The first half was one in which most Asian markets were beset by worries about the US Federal Reserve's plans to begin scaling back its asset purchases. The prospect of a resultant reduction in liquidity sparked outflows from Asia and the broader emerging markets, which had been key beneficiaries of the relaxed monetary policies of major central banks. In China, there were concerns over asset quality in the banking sector, as well as the health of the property sector. Generally investors were concerned whether China would be able to maintain its pace of growth, and, by extension, its voracious appetite for the resources of its Asian neighbours.

 

However, the second half saw a vindication of your Manager's strategy of investing in companies with good prospects, solid finances and proven management, which has served the Company well over the long term. In the second half your Company's net asset value outpaced the benchmark by 1.9%, albeit this was not sufficient to make up for the underperformance in the first half.

 

Your Manager believed that the sell-off during the first half was excessive. This appeared to be borne out by the subsequent recovery. The measured pace of Fed tapering brought relative calm to markets. The European Central Bank also maintained loose monetary policy by implementing a negative interest rate on commercial bank deposits to encourage lending. Concerns about China's slowing growth were soothed by a series of mini-stimulus measures that led to better-than-expected second-quarter GDP growth.

 

Politics was also key in shaping market sentiment. India, which already far outstripped its regional counterparts on the back of pre-election euphoria, hit new highs after Narendra Modi's Bharatiya Janata Party swept into power with an unprecedented mandate. The market was anticipating that Modi would revive reforms and ramp up sorely-needed infrastructure investment. In Indonesia, Joko Widodo's narrow victory was not as clear cut, marred by his opponent's legal challenge over the results. However, optimism that he would reduce fuel subsidies and free up funds for welfare and infrastructure helped the stockmarket and currency to mitigate their earlier losses.

 

While Indian and Indonesian citizens voted in new governments, Thailand experienced a military coup. The bloodless takeover was the culmination of months of political gridlock following mass protests against the incumbent Yingluck administration's attempt to push through a contentious amnesty bill. The relative stability under the military junta, as well as the resumption of stalled capital investment, helped the local market rebound towards the end of the period under review. Gains across the region were capped, however, by external turmoil in the Middle East and the escalating tension caused by Russia's incursion into Ukraine. 

 

Your Company's relative underperformance over the year was attributable largely to a small number of its underlying holdings. Of note was UK-listed Standard Chartered, which posted earnings reflecting the more challenging operating conditions in emerging markets, after having enjoyed a decade of profit growth. Singapore's City Developments, which was hampered by government measures aimed at cooling the local property market, was another detractor. However, your Investment Manager is convinced that both holdings remain central to the portfolio: Standard Chartered's challenges have been reflected in its valuation at less than one time book value, and your Investment Manager remains optimistic about its longer-term prospects. City Developments is well-placed for growth given its prudent balance sheet. Moreover, little attention has been given to management's strategy to diversify geographically. A more in-depth discussion of performance can be found within the Investment Manager's review.  

 

Discount

The discount at which the Company's shares trade relative to their net asset value, as at 31 August 2014, was 11.6%.  The Board monitors closely the discount level of the Company's shares and has in place a buyback mechanism whereby the Manager is authorised to buy back shares at certain levels. There were no buy-backs of shares during the financial year and there have been no buy-backs subsequent to the year end.  As at 31 October 2014 the Company's shares were trading at a discount of 11.3%.

 

Shareholder authority will be sought at the Annual General Meeting to purchase the Company's shares to provide the Company with the flexibility to hold any shares that have been repurchased in treasury before either cancelling those shares or selling them back to the market at a later date.  Repurchased shares would only be resold at a price above the NAV at the relevant date.   The share buyback authority would only be exercised if to do so would increase the net asset value per Ordinary share for the remaining shareholders and would be in the best interests of shareholders generally.

 

Revenue Account and Dividend

The revenue return per share was 3.4p for the year to 31 August 2004 (2013 - 3.4p).  It remains the Board's policy to pay a final dividend marginally in excess of the minimum required to maintain investment trust status, which may, of course, lead to some volatility in the level of dividend paid.  The Board recommends the payment of a final dividend of 2.2p per Ordinary share (2013 - 2.2p) which, if approved by shareholders at the Annual General Meeting, will be paid on 19 December 2014.

 

The Board

In accordance with the provisions of the UK Corporate Governance Code, the Board has endorsed corporate governance procedures whereby all Directors will retire from the Board and submit themselves for re-election on an annual basis. The Board recommends that shareholders vote in favour of the re-election of all Directors at the Annual General Meeting. 

 

Gearing

The Company has no bank borrowings but, at the year end, had £59.8 million nominal of 3.5% Convertible Unsecured Loan Stock 2018 (CULS) in issue, representing actual gearing of 9.6%.  The CULS provides the company with long-term structural gearing at an acceptable cost and is in line with the Manager's long-term investment philosophy.  The CULS provides holders with an attractive yield of 3.5% per annum, as well as capital protection (with the liability comfortably covered by the gross assets of the Company of £607 million).  Holders of CULS may convert part, or all, of their holdings into Ordinary shares on 31 January and 31 July each year up to January 2018 at a fixed price of 310.1528p nominal of CULS for one Ordinary share. 

 

Annual General Meeting

The Annual General Meeting will be held at Aberdeen's London office on Tuesday 16 December 2014 at 12.00 noon followed by a lunch for shareholders.  This will give shareholders the opportunity to meet the Directors and Manager after the formal AGM business has concluded and we welcome all shareholders to attend. The AGM will continue to be alternated between Edinburgh and London.

 

Scottish Referendum

As a result of the "No" vote in the Scottish referendum held on 18 September 2014, the immediate uncertainties and risk factors relating to Scottish independence have been removed.  The Board does not expect any direct impact upon the Company from the devolution of more powers to the Scottish Government but will continue to monitor developments in this area closely.

 

Alternative Investment Fund Managers (AIFM) Directive

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 ("AIFM) and a depositary, the latter overlaying the previous custody arrangements.

 

The Company appointed Aberdeen Fund Managers Limited ("AFML") as its AIFM, following its authorisation by the FCA, to act as the Company's AIFM 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 15 July 2014.

 

In addition, 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), resulting in slightly increased costs compared with the previous custody arrangements.

 

Retail Investors

The Company currently conducts its affairs so that the Ordinary shares issued by Edinburgh Dragon Trust plc can be recommended by Financial Advisers to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future.

 

The Ordinary shares are excluded from the FCA's restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

 

Outlook

As I write there is considerable volatility in global markets caused by geopolitical uncertainty in the Middle East and Eastern Europe.  In Hong Kong "pro democracy" protests have raised uncomfortable questions for the Chinese government. Uncertainty has also been exacerbated by fears on the impact of the Ebola virus globally.  In Europe concerns are being expressed on the sustainability of what is an anaemic economic recovery.  The latest forecasts from the IMF were generally pessimistic. Asian markets are not immune to external events. Chief among these is the timing of a Fed interest rate hike, given the steadily-improving US economy. A sooner-than-expected increase is expected to cause renewed outflows from riskier assets, but the view of your Manager is that this is likely to be more of a short-term jolt than a sustained slowdown. The hope is that such a normalisation of monetary policy could help shift investor focus towards corporate earnings and companies with good and improving fundamental prospects

 

While sentiment is currently very fragile across all global markets, Asian economic growth is likely to remain relatively strong in comparison to other regions over the long term. Improving demand from the US should benefit regional exporters, while the recent elections in India and Indonesia have buoyed business sentiment. The portfolio's holdings, which include some of the best companies in the region, should be able to maintain focus on growth and cost discipline amid the macroeconomic uncertainty, and remain well-positioned for the future.

 

For Edinburgh Dragon Trust plc

Allan McKenzie

Chairman

 

3 November 2014

 

 

4.       INVESTMENT MANAGER'S REVIEW

Background/Portfolio Review

Asian equities saw a significant increase in volatility over the last twelve months, mainly owing to uncertainty over the US Federal Reserve's monetary policy stance, and political changes in the region. Early in the review period, stocks were bolstered by the US Fed's postponement in tapering its asset purchases, and the resolution of the US debt ceiling crisis. However in 2014, cuts to quantitative easing spread contagion fears, causing funds to flow towards developed markets. Subsequently, swift policy action by Asian countries deemed 'fragile' on account of their current account and fiscal deficits, calmed the panic and sentiment soon recovered. This was especially apparent in India and Indonesia, where stocks were buoyed by election euphoria, as old regimes were replaced with pro-reform candidates. Towards the end of the period, Asian markets continued, with major central banks keeping monetary policy loose.

 

The Company's net asset value (NAV) gained 10.4%, compared to the 13.2% rise in the MSCI All Country Asia ex Japan Index, but sterling strength against most Asian currencies moderated gains. Both asset allocation and stock selection detracted from relative performance.

 

Whilst the Company underperformed over the 12-month period, the portfolio outpaced the index in the second half, as the market made a V-shaped recovery to finish the period at a higher level.

 

The biggest contributors to performance were the holdings in India, where local stocks rose as the Bharatiya Janata Party swept to victory, boosting investor sentiment. Among the top performers were the two largest financial firms within the private sector, Housing Development Finance Corp (HDFC), a mortgage and life insurance conglomerate, and ICICI Bank, a leading commercial bank. We are encouraged that both have grown their loan books steadily in recent years, without compromising asset quality, despite the sluggish economy. With capable management, they have potential to grow further. In contrast, the lack of exposure to the state-owned banks is due to concerns over credit-lending policies and interests of minority shareholders potentially being sacrificed for that of the state. Meanwhile, our building materials and cement makers Grasim Industries and its subsidiary, UltraTech cement, were buoyed by expectations that the new government will upgrade the country's inadequate infrastructure. Previously beset by overcapacity, demand in the domestic cement market is now expected to pick up. Another holding that did well was Hero MotoCorp, the largest producer of motorcycles in the world. Improved sentiment over discretionary consumption lifted the stock.       

 

Korea's Samsung Electronics added to performance. The consumer electronics giant achieved record operating profits early in 2014, but intensifying rivalries in the mobile phone market weighed on its results of late. We continue to like the company as it produces innovative and high-quality products, backed by a solid research and development team, while boasting a prominent market position. 

 

Conversely, the exposure to Standard Chartered Bank cost performance. The bank's share price was punished by investors as earnings reflected slowing economic growth and tough trading conditions in emerging markets, while senior level departures also hurt sentiment. However, we continue to believe in its ongoing efforts to steady the ship for a recovery. Cost cuts and reorganisation during the slowdown should position it for growth in emerging markets over the longer term, backed by its solid franchise. Meanwhile, our lack of exposure to Chinese internet firm Tencent detracted as its share price rose on good results, and its aim to set up a private bank. We do not hold the stock as it fails our quality criteria. It has a complex ownership structure that gets around China's restrictions on foreign ownership for internet companies. Elsewhere, Taiwan Mobile underperformed the index as investors were worried about the need for increased capital outlays for investment in its 4G network. The company however, is very well run and has a strong market position.

 

In Singapore, lender OCBC's takeover of Wing Hang Bank in Hong Kong raised concerns over its need to raise capital, which weighed on the stock. After successfully acquiring and de-listing Wing Hang, OCBC launched a rights issue to raise S$3.37 billion to fund the acquisition. Looking ahead, we are positive about OCBC's expansion into the Greater China region and Wing Hang's role in this. The offer drove up Wing Hang's share price. We subsequently tendered the Wing Hang shares held by the portfolio to OCBC.

 

Meanwhile, the property market in Singapore dampened owing to government measures aimed at curbing household debt levels and making homes more affordable for locals. Our holding in property firm City Developments, cost the portfolio as investor sentiment waned. This was despite the company posting robust earnings growth towards the end of the review period, led by its hotel and property development segments. The company plans to tap overseas growth with more foreign projects, to compensate for the domestic weakness. Another holding, ST Engineering detracted on subdued investor interest, but the firm, which mainly manufactures defense equipment, has delivered steady growth over the years, which we expect to continue. It also boasts stable cashflows and a solid balance sheet, driven by effective management.

 

Portfolio Activity

During the period, we introduced Indian conglomerate ITC, which has a dominant position in the consumer goods sector. The company has been using robust cashflows from its cigarettes business to invest in other opportunities within the fast-moving consumer goods segment such as food, and also in the hospitality sector with ITC Hotels. Against this, we sold Singapore Airlines as the operating environment remains challenging and is not expected to improve in the medium-term.

 

Amid the heightened volatility in stock prices, we also took opportunities to trim holdings where valuations were expensive, and added to those which became attractive. We pared Samsung Electronics and Indian holdings, such as Hero MotoCorp and Infosys, after their share prices rose sharply. With the proceeds we added to Standard Chartered and conglomerate Jardine Strategic. The latter's stock price faced pressure from a slowdown in Indonesia, one of its key markets. Over the longer term, however, it provides the fund with a diversified exposure to the Asian consumer, through its regional interests in retail, property, hotels and auto distribution.

 

Outlook

With the rebound in global stockmarkets in the second-half of the period, it is worth noting that Asian shares are still trading at a significant discount in valuation terms to developed markets. Asian companies also have much lower debt levels measured against global peers. At the same time, the region boasts higher economic growth rates, and hence, we continue to see attractive opportunities despite rising markets. Into next year, the US Fed's plan to raise interest rates would raise corporate borrowing costs, but the portfolio's balance sheet strength would put it at a relative advantage in this respect. Any rate hikes would also be dependent upon better US economic data, which should mean improved demand for Asian goods and services. Elsewhere, in terms of China's slowdown and Europe's apparent stagnation, continued selective stimulus in China and additional quantitative easing in Europe could help support demand. Several of the Company's holdings were buoyed by progressive election outcomes, but expectations are high and the actual pace of reforms may disappoint. The need for their governments to cut subsidies and balance budgets also means cost increases for businesses. However, our holdings have capable management and pricing power, with a focus on controlling expenditures and improving margins. Furthermore, we take comfort in our investment process and the quality of our investee companies, that have the strength to weather downturns and deliver robust returns over the long run.

 

Aberdeen Asset Management Asia Limited*

3 November 2014

 

* on behalf of Aberdeen Fund Managers Limited

Both companies are subsidiaries of Aberdeen Asset Management PLC.

 

 

RESULTS AND PERFORMANCE

 

31 August 2014

31 August 2013

%
change

Performance




Equity shareholders' funds (£'000)

603,077

550,346

+9.6

Net asset value per share (including net revenue) (p)

307.10

280.26

+9.6

Share price (p)

272.50

254.70

+7.0

Market capitalisation (£'000)

535,127

500,151

+7.0

MSCI AC Asia (ex Japan) Index (in sterling terms; capital return basis)

677.25

614.29

+10.2

Revenue return per share (p)

3.43

3.42


Total return per share (p)

29.04

17.76






Gearing




Net gearing (%){A}

7.3

9.6






Discount




Level of discount at which the shares traded (%)

11.3

9.1






Operating costs




Ongoing charges ratio{B}

1.23

1.23





{A}      Calculated in accordance with AIC guidance "Gearing Disclosures post RDR".

{B}      Ongoing charges ratio is calculated in accordance with guidance issued by the AIC as the total of the investment management fee and ongoing administrative expenses divided by the average undiluted net asset value in the year.

 

 

Performance (total return)





1 year return

3 year return

5 year return


%

%

%

Share price

+7.9

+22.3

+70.7

Net asset value

+10.4

+25.7

+78.9

MSCI AC Asia (ex Japan) Index (in sterling terms)

+13.2

+24.3

+60.1

 

 

PORTFOLIO

 

1.       CHANGES IN ASSET DISTRIBUTION

YEAR ENDED 31 AUGUST 2014

 

Value at




Value at


31 August 2013


Purchases

Sales
proceeds

Gains/
(losses)

31 August 2014

Country

£'000

£'000

£'000

£'000

£'000

China

44,815

3,683

2,763

3,379

49,114

Hong Kong

164,946

17,173

11,904

(989)

169,226

India

67,517

3,296

8,317

27,607

90,103

Indonesia

6,446

-

1,173

(763)

4,510

Malaysia

22,058

753

736

1,555

23,630

Philippines

25,544

776

1,369

2,438

27,389

Singapore

134,802

7,137

8,540

4,534

137,933

South Korea

52,961

1,770

8,857

8,193

54,067

Sri Lanka

14,719

1,394

-

3,503

19,616

Taiwan

37,221

1,462

-

1,569

40,252

Thailand

32,376

4,324

5,183

(685)

30,832


_________

_________

_________

_________

_________

Total investments

603,405

41,768

48,842

50,341

646,672

Net current assets

3,931

-

-

10,088

14,019


_________

_________

_________

_________

_________

Total assets less current liabilities

607,336

41,768

48,842

60,429

660,691


_________

_________

_________

_________

_________

 

 

2.       INVESTMENT PORTFOLIO - TEN LARGEST INVESTMENTS

 

As at 31 August 2014









Valuation

Total

Valuation




2014

assets

2013

Company

Industry

Country

£'000

%

£'000

Samsung Electronics Pref



34,442

5.2

33,837

A leading semiconductor company which is also a major player in mobile phones and consumer electronics.

Technology Hardware, Storage & Peripherals

South Korea




Oversea-Chinese Banking Corporation



32,182

4.9

30,381

A leading, well-run Singaporean banking group with assets and operations in South East Asia and China.

Banks

Singapore




Taiwan Semiconductor Manufacturing Company



28,016

4.2

24,229

The leading semiconductor foundry in Taiwan.

Semiconductors & Semiconductor Equipment

Taiwan




Jardine Strategic Holdings



27,204

4.1

25,230

A Singapore-listed conglomerate with interests across the region spanning property, hotels and consumer-related businesses.

Industrial Conglomerates

Hong Kong




Housing Development Finance Corp



25,746

3.9

18,218

Leading domestic mortgage provider with a leading distribution network, cost structure and balance sheet quality.

Thrifts & Mortgage Finance

India




China Mobile



24,962

3.8

20,985

The number one mobile operator in China.

Wireless Telecommunication Services

China




AIA Group



24,509

3.7

21,126

The Group offers life insurance, accident insurance, health insurance and wealth management solutions to individuals and businesses in the Asia Pacific region.

Insurance

Hong Kong




HSBC Holdings



23,789

3.6

21,297

HSBC group is one of the world's largest banking and financial services institutions.

Banks

Hong Kong




United Overseas Bank



23,183

3.5

20,575

Singapore's second largest bank, primarily focused on SMEs and consumers, with its core market in Singapore and the balance predominantly in southeast Asia.

Banks

Singapore




Infosys Ltd



22,634

3.4

20,060

One of the leading information technology companies in India.

IT Services

India




Top ten investments



266,667

40.3


 

 

3.       INVESTMENT PORTFOLIO - OTHER INVESTMENTS

 



Valuation

Total

Valuation




2014

assets

2013

Company

Sector

Country

£'000

%

£'000

Standard Chartered{A}

Banks

United Kingdom

21,488

3.3

24,159

Swire Pacific 'B'

Real Estate Management & Development

Hong Kong

20,320

3.1

20,079

Siam Cement (Alien)

Construction Materials

Thailand

19,858

3.0

16,362

Singapore Telecommunications

Diversified Telecommunication Services

Singapore

19,198

2.9

18,177

Singapore Technologies Engineering

Aerospace & Defence

Singapore

18,163

2.7

21,741

City Developments

Real Estate Management & Development

Singapore

18,013

2.7

16,602

Ayala Land

Real Estate Management & Development

Philippines

15,461

2.4

14,683

John Keells Holdings{B}

Industrial Conglomerates

Sri Lanka

14,808

2.2

11,384

CNOOC

Oil, Gas & Consumable Fuels

China

13,858

2.1

14,717

Grasim Industries

Construction Materials

India

13,118

2.0

8,472

Top twenty investments



440,952

66.7


Dairy Farm International

Food & Staples Retailing

Hong Kong

12,918

2.0

12,534

Keppel Corp

Industrial Conglomerates

Singapore

12,901

2.0

8,454

Taiwan Mobile

Wireless Telecommunication Services

Taiwan

12,236

2.0

12,992

Bank of Philippine Islands

Banks

Philippines

11,928

1.9

10,861

PTT Exploration & Production (Alien)

Oil, Gas & Consumable Fuels

Thailand

10,974

1.8

16,014

Hero Motocorp

Automobiles

India

10,418

1.6

12,810

PetroChina 'H'

Oil, Gas & Consumable Fuels

China

10,269

1.5

9,113

Hang Lung Group

Real Estate Management & Development

Hong Kong

9,769

1.4

8,002

E-Mart Co

Food & Staples Retailing

South Korea

9,052

1.3

7,494

Hang Lung Properties

Real Estate Management & Development

Hong Kong

8,953

1.3

8,002

Top thirty investments



550,370

83.5


CIMB Group Holdings

Banks

Malaysia

8,666

1.3

8,558

ICICI Bank

Banks

India

8,623

1.3

4,487

DBS Group

Banks

Singapore

8,581

1.3

                7,808

Public Bank

Banks

Malaysia

7,811

1.2

6,480

British American Tobacco Malaysia

Tobacco

Malaysia

7,152

1.2

7,020

Li & Fung

Textiles, Apparel & Luxury Goods

Hong Kong

7,092

1.1

9,027

ASM Pacific Technology

Semiconductors & Semiconductor Equipment

Hong Kong

6,851

1.0

9,270

Ultratech Cement

Construction Materials

India

6,036

0.9

3,470

Venture Corp

Electronic Equipment Instruments & Components

Singapore

5,737

0.9

5,734

Swire Properties

Real Estate Management & Development

Hong Kong

5,019

0.7

3,230

Top forty investments



621,938

94.4


DFCC Bank

Banks

Sri Lanka

4,808

0.7

3,335

Unilever Indonesia

Household Products

Indonesia

4,510

0.7

6,446

DGB Financial Group

Banks

South Korea

4,465

0.7

5,071

BS Financial Group

Banks

South Korea

4,195

0.6

4,944

ITC

Tobacco

India

3,528

0.5

-

Shinsegae Company

Multiline Retail

South Korea

1,914

0.3

1,615

Global Brands Group

Textiles, Apparel & Luxury Goods

Hong Kong

1,314

0.2

-

Total investments



646,672

98.1


Net current assets



14,019

1.9


Total assets{C}



660,691

100.0



{A}      Valuation amalgamates both UK (£16,833,000; 2013 - £18,773,000) and Hong Kong (£4,655,000; 2013 - £1,158,000) listed equity holdings.

{B}      Valuation amalgamates both warrants (£385,000; 2013 - £181,000) and listed equity holdings (£14,423,000; 2013 - £14,784,000).

{C}      See definition on page 57 of the 2014 Annual Report and Accounts¹.

Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings.

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Accounts and the financial statements, in accordance with applicable law and regulations. 

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with UK Accounting Standards. 

 

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.  In preparing these financial statements, the Directors are required to: 

 

-         select suitable accounting policies and then apply them consistently; 

-         make judgments and estimates that are reasonable and prudent;

-         state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 

-         prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.  

 

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

 

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations. 

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

The Directors 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 Company; and

-         the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company'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 Company, together with a description of the principal risks and uncertainties that the Company faces.

 

For Edinburgh Dragon Trust plc

Allan McKenzie

Chairman

 

3 November 2014

 

 

GOING CONCERN

The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances are realisable within a short timescale. 

 

The Directors believe that it is appropriate to continue to adopt the going concern basis in the preparation of the accounts, and they consider that the Company has adequate resources to continue in operational existence for the foreseeable future.

 

Shareholders are given the opportunity to vote on the continuation of the Company every three years.  The last continuation vote was in December 2012 when shareholders voted in favour of continuation. 

 

 

FINANCIAL STATEMENTS

 

INCOME STATEMENT

 


Year ended 31 August 2014

Year ended 31 August 2013



Revenue

Capital

Total

Revenue

Capital

Total


Notes

£'000

£'000

£'000

£'000

£'000

£'000

Gains on investments held at fair value through profit or loss

9

-

50,341

50,341

-

28,264

28,264

Currency losses


-

(43)

(43)

-

(111)

(111)

Income

2

17,010

-

17,010

16,546

-

16,546

Investment management fee

3

(5,597)

-

(5,597)

(5,889)

-

(5,889)

Administrative expenses

4

(1,203)

-

(1,203)

(1,273)

-

(1,273)



_______

_______

_______

_______

_______

_______

Net return before finance costs and taxation


10,210

50,298

60,508

9,384

28,153

37,537









Interest payable and similar charges

5

(2,741)

-

(2,741)

(2,742)

-

(2,742)



_______

_______

_______

_______

_______

_______

Return on ordinary activities before taxation


7,469

50,298

57,767

6,642

28,153

34,795









Taxation on ordinary activities

6

(732)

(6)

(738)

83

(2)

81



_______

_______

_______

_______

_______

_______

Return on ordinary activities after taxation


6,737

50,292

57,029

6,725

28,151

34,876



_______

_______

_______

_______

_______

_______









Return per share (pence)

8







Basic


3.43

25.61

29.04

3.42

14.34

17.76



_______

_______

_______

_______

_______

_______

Diluted


n/a

23.32

27.59

n/a

13.05

17.29



_______

_______

_______

_______

_______

_______









The total column of this statement represents the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.

The accompanying notes are an integral part of the financial statements. 

 

 

BALANCE SHEET (audited)

 

 

 

 

RECONCILIATION OF MOVEMENT IN SHAREHOLDERS FUNDS (audited)

 

For the year ended 31 August 2014

 

For the year ended 31 August 2014











Share


Equity

Capital





Share

premium

Special

component

redemption

Capital

Revenue



capital

account

reserve

CULS 2018

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 August 2013

39,274

4,452

6,726

2,572

16,945

460,820

19,557

550,346

Return on ordinary activities after taxation

-

-

-

-

-

50,292

6,737

57,029

Issue of new Ordinary shares from conversion of 3.5% Convertible Unsecured Loan Stock 2018

1

23

-

(2)

-

-

-

22

Dividend paid

-

-

-

-

-

-

(4,320)

(4,320)

Transfer of notional interest element on 3.5% Convertible Unsecured Loan Stock 2018

-

-

-

(589)

-

-

589

-


______

______

______

______

______

______

______

______

Balance at 31 August 2014

39,275

4,475

6,726

1,981

16,945

511,112

22,563

603,077


______

______

______

______

______

______

______

______










For the year ended 31 August 2013











Share


Equity

Capital





Share

premium

Special

component

redemption

Capital

Revenue



capital

account

reserve

CULS 2018

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 August 2012

39,272

4,427

6,726

3,163

16,945

432,669

16,563

519,765

Return on ordinary activities after taxation

-

-

-

-

-

28,151

6,725

34,876

Issue of new Ordinary shares from conversion of 3.5% Convertible Unsecured Loan Stock 2018

2

25

-

(2)

-

-

-

25

Dividend paid

-

-

-

-

-

-

(4,320)

(4,320)

Transfer of notional interest element on 3.5% Convertible Unsecured Loan Stock 2018

-

-

-

(589)

-

-

589

-


______

______

______

______

______

______

______

______

Balance at 31 August 2013

39,274

4,452

6,726

2,572

16,945

460,820

19,557

550,346


______

______

______

______

______

______

______

______










The capital reserve includes investment holding gains amounting to £270,246,000 (2013 - £243,428,000), as disclosed in note 9. 

The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. 

The accompanying notes are an integral part of the financial statements.

 

 

CASHFLOW STATEMENT (audited)

 


Year ended

Year ended



31 August 2014

  31 August 2013


Notes

£'000

£'000

£'000

£'000

Net cash inflow from operating activities

15


10,082


9,593







Servicing of finance






Bank and CULS interest paid



(2,094)


(2,094)







Taxation






Net tax paid



(374)


(414)







Financial investment






Purchases of investments


(42,569)


(32,028)


Sales of investments


48,303


30,947




_______


_______


Net cash inflow/(outflow) from financial investment



5,734


(1,081)







Equity dividend paid



(4,320)


(4,320)







Management of liquid resources






Purchase of money market funds



(7,000)


-










_______


_______

Increase in cash

16


2,028


1,684




_______


_______







Reconciliation of net cash flow to movements in net debt






Increase in cash as above



2,028


1,684

Net change in liquid resources



7,000


-

Other non-cash movements



(624)


(624)

Exchange movements



(43)


(111)




_______


_______

Movement in net debt in the year



8,361


949

Net debt at 1 September



(52,766)


(53,715)




_______


_______

Net debt at 31 August



(44,405)


(52,766)




_______


_______

 

 

NOTES TO THE ACCOUNTS (audited)

 

1.

Accounting policies


(a)

Basis of accounting



The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of investments and in accordance with the applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.






The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Statement of Corporate Governance (unaudited) on page 27 of the 2014 Annual Report and Accounts¹.






The financial statements, and the net asset value per share figures, have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP').





(b)

Investments



Listed investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised on the trade date at fair value, which is generally deemed to be the cost of the investment at that point. Subsequent to initial recognition, investments are valued at fair value, which for listed investments is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included as a capital item in the Income Statement and are ultimately recognised in the capital reserve.





(c)

Income



Dividends (other than special dividends), including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time-apportioned basis so as to reflect the effective yield on shares. Other returns on non-equity shares are recognised when the right to return is established. The fixed return on a debt security, if material, is recognised on a time apportioned basis so as to reflect the effective yield on each security. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the foregone cash dividend is recognised as income. Any excess in the value of the shares received over the amount of cash dividend foregone is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.





(d)

Expenses



All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement with the exception of expenses directly relating to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds. Such transaction costs are disclosed in accordance with the SORP. These expenses are charged to the capital column of the Income Statement and are separately identified and disclosed in note 9.





(e)

Deferred taxation



Deferred taxation is provided on all timing differences, that have originated but not reversed at the Balance Sheet date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Balance Sheet date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.





(f)

Capital reserves



Gains and losses on investments and changes in fair values of investments which are readily convertible to cash, without accepting adverse terms, are transferred to the capital reserve.





(g)

Foreign currency



Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Balance Sheet date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Income Statement and are then transferred to the capital reserve.





(h)

Dividends payable



Final dividends are dealt with in the period in which they are paid.





(i)

3.5% Convertible Unsecured Loan Stock 2018



Convertible Unsecured Loan Stock ("CULS") issued by the Company is regarded as a compound instrument, comprising of a liability component and an equity component. At the date of issue, the fair value of the liability component was estimated by assuming that an equivalent non-convertible obligation of the Company would have a coupon rate of 4.662%. The notional uplift in interest from 3.5% to 4.662% is shown in note 5. The fair value of the equity component, representing the option to convert liability into equity, is derived from the difference between the issue proceeds of the CULS and the fair value assigned to the liability. The liability component is subsequently measured at amortised cost using the effective interest rate.






Direct expenses associated with the CULS issue are allocated to the liability and equity components in proportion to the split of the proceeds of the issue. Expenses allocated to the liability component are amortised over the life of the instrument.






The interest expense on the CULS is calculated according to the effective interest rate method by applying the assumed rate of 4.662% at initial recognition to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying liability of the CULS.






On conversion of CULS, equity is issued and the liability component is derecognised. The original equity component recognised at inception remains in equity. No gain or loss is recognised on conversion.









In the event of a winding-up of the Company the rights and claims of the Trustee and CULS holders would be subordinate to the claims of all creditors in respect of the Company's secured and unsecured borrowings, under the terms of the Trust Deed.

 


2014

2013

2.

Income

£'000

£'000


Income from investments




UK dividend income

903

1,812


Overseas dividend income

13,714

14,361


Scrip dividends

2,381

367



______

______



16,998

16,540



______

______







2014

2013


Other income

£'000

£'000


Deposit interest

4

6


Interest from money market funds

8

-



______

______



12

6



______

______


Total income

17,010

16,546



______

______







2014

2013


Income from investments

£'000

£'000


Listed UK

692

712


Listed overseas

16,306

15,828



______

______



16,998

16,540



______

______

 


2014

2013



Revenue

Capital

Total

Revenue

Capital

Total

3.

Investment management fee

£'000

£'000

£'000

£'000

£'000

£'000


Investment management fee

5,597

- 

5,597

5,889

- 

5,889



______

______

______

______

______

______


The basis of the management fee paid to Aberdeen Asset Managers ("the Manager") was changed during the year. With effect from 1 January 2014 management fees are calculated at 1.0% on net assets up to £600,000,000, 0.9% on net assets between £600,000,000 and £1,000,000,000 and 0.8% on net assets over £1,000,000,000. Management fees are calculated and billed on a quarterly basis. Prior to 1 January 2014 management fees were calculated at 0.25% per quarter of net assets.




Net assets exclude long term borrowings less (i) the value of any investment funds managed by the Manager and (ii) 50% of the value of any investment funds managed or advised by investment managers other than the Manager.




The management agreement is terminable by the Company on three months' notice or in the event of a change of control in the ownership of the Manager. The notice period required by the Manager is six months.

 


2014

2013

4.

Administrative expenses

£'000

£'000


Share Plan marketing contribution

200

192


Directors' fees

153

165


Safe custody fees

429

447


Auditor's remuneration:




Fees payable to the Company's auditor for the audit of the Company's annual accounts

17

16


Fees payable to the Company's auditor for the review of the Company's half yearly accounts

5

5


Secretarial fee

36

107


Other expenses

363

341



______

______



1,203

1,273



______

______






The secretarial fee paid to the Manager ceased with effect from 1 January 2014. In previous periods this was adjusted annually in line with the Retail Prices Index.

 

The contribution to Share Plan Marketing was paid to the Manager in respect of marketing and promotion of the Company.




No pension contributions were made in respect of any of the Directors.




The Company does not have any employees.

 


2014

2013

5.

Interest payable and similar charges

£'000

£'000


Interest on 3.5% Convertible Unsecured Loan Stock 2018

2,094

2,094


Notional interest on 3.5% Convertible Unsecured Loan Stock 2018

589

589


Amortisation of 3.5% Convertible Unsecured Loan Stock 2018 issue expenses

58

59



______

______



2,741

2,742



______

______

 


2014

2013



Revenue

Capital

Total

Revenue

Capital

Total

6.

Taxation

£'000

£'000

£'000

£'000

£'000

£'000


(a)

Analysis of charge for the year









Overseas tax suffered

732

6

738

605

2

607



Overseas tax reclaimable

-

-

-

(688)

-

(688)




______

______

______

______

______

______



Taxation on ordinary activities

732

6

738

(83)

2

(81)




______

______

______

______

______

______











(b)

Factors affecting the tax charge for the year



The tax assessed for the year is lower than the effective rate of corporation tax in the UK.













2014

2013




Revenue

Capital

Total

Revenue

Capital

Total




£'000

£'000

£'000

£'000

£'000

£'000



Return on ordinary activities before taxation

7,469

50,298

57,767

6,642

28,153

34,795




______

______

______

______

______

______












Effective rate of corporation tax at 22.17% (2013 - 23.58%)

1,656

11,151

12,807

1,566

6,639

8,205



Effects of:









UK dividend income

(200)

-

(200)

(427)

-

(427)



Gains on investments not taxable

-

(11,161)

(11,161)

-

(6,665)

(6,665)



Currency losses not taxable

-

10

10

-

26

26



Other non-taxable income

(3,568)

-

(3,568)

(3,473)

-

(3,473)



Increase in excess expenses and loan relationship deficit

2,112

-

2,112

2,334

-

2,334



Net overseas tax suffered

732

6

738

(83)

2

(81)




______

______

______

______

______

______



Current tax charge for year

732

6

738

(83)

2

(81)




______

______

______

______

______

______











(c)

Provision for deferred taxation



No provision for deferred taxation has been made in the current year or in the prior year.






The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company.





(d)

Factors that may affect future tax charges



The Company has not recognised a deferred tax asset £8,464,000 (2013 - £6,887,000) arising as a result of excess management expenses and non-trading loan relationship deficits (CULS interest). These expenses will only be utilised if the Company has profits chargeable to corporation tax in the future.

 

7.

Dividends


In order to comply with the requirements of Sections 1158 -1159 of the Corporation Tax Act 2010 and with company law, the Company is required to make a final dividend distribution.




The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.




The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158 - 1159 are considered. The revenue available for distribution by way of dividend for the year is £6,737,000 (2013 - £6,725,000).



2014

2013



£'000

£'000


Proposed final dividend for 2014 - 2.20p per Ordinary share (2013 - 2.20p)

4,320

4,320



______

______






The amounts reflected above for the cost of the proposed final dividend for 2014 is based on 196,368,689 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report.




The final dividend will be paid on 19 December 2014 to shareholders on the register at the close of business on 21 November 2014.

 


2014

2013

8.

Return per Ordinary share

£'000

pence

£'000

pence


Basic






Revenue return

6,737

3.43

6,725

3.42


Capital return

50,292

25.61

28,151

14.34



______

______

______

______


Total return

57,029

29.04

34,876

17.76



______

______

______

______








Weighted average Ordinary shares in issue


196,371,896


196,363,142




__________


__________









2014

2013


Diluted

£'000

pence

£'000

pence


Revenue return

9,218

n/a

9,148

n/a


Capital return

50,292

23.32

28,151

13.05



______

______

______

______


Total return

59,510

27.59

37,299

17.29



______

______

______

______








Weighted average Ordinary shares in issue{A}


215,656,495


215,656,504




__________


__________








{A} The calculation of the diluted total, revenue and capital returns per Ordinary share are carried out in accordance with Financial Reporting Standard 22, "Earnings per Share". For the purpose of calculating total, revenue and capital returns per Ordinary share, the number of Ordinary shares used is the weighted average number used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all 3.5% Convertible Unsecured Loan Stock 2018 (CULS). The calculations indicate that the exercise of CULS would result in an increase in the weighted average number of Ordinary shares of 19,284,599 (2013 - 19,293,362) to 215,656,495 (2013 - 215,656,504) Ordinary shares.




For the years ended 31 August 2014 and 31 August 2013 there was no dilution to the revenue return per Ordinary share. Where dilution occurs, the net returns are adjusted for items relating to the CULS. Total earnings for the period are tested for dilution. Once dilution has been determined individual revenue and capital earnings are adjusted. Accrued CULS finance costs for the period and unamortised issues expenses are reversed.

 


Listed

Listed




overseas

 in UK

Total

9.

Investments

£'000

£'000

£'000


Fair value through profit or loss:





Opening book cost

341,450

18,527

359,977


Opening fair value gains on investments held

243,182

246

243,428



__________

__________

__________


Opening fair value

584,632

18,773

603,405


Movements in year:





Purchases at cost

40,704

1,064

41,768


Sales - proceeds

(48,842)

-

(48,842)


Sales - gains on sales

23,523

-

23,523


Current year fair value gains/(losses) on investments held

29,821

(3,003)

26,818



__________

__________

__________


Closing fair value

629,838

16,834

646,672



__________

__________

__________








Listed

Listed




overseas

 in UK

Total



£'000

£'000

£'000


Closing book cost

356,835

19,591

376,426


Closing fair value gains/(losses) on investments held

273,003

(2,757)

270,246



__________

__________

__________


Closing fair value

629,838

16,834

646,672



__________

__________

__________









2014

2013




£'000

£'000


Listed on a recognised overseas investment exchange


629,838

584,632


Listed in the UK


16,834

18,773




__________

__________




646,672

603,405




__________

__________









2014

2013


Gains on investments held at fair value through profit or loss


£'000

 £'000


Realised gains on sales


23,523

17,717


Increase in fair value gains on investments held


26,818

10,547




__________

__________




50,341

28,264









__________

__________







Transaction costs


During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Income Statement. The total costs were as follows:







2014

2013



£'000

£'000


Purchases

58

68


Sales

101

103



__________

__________



159

171



__________

__________

 


2014

2013

10.

Debtors and prepayments

£'000

£'000


Accrued income

1,710

1,447


Overseas withholding tax recoverable

130

496


Amounts due from brokers

539

 -


Other debtors and prepayments

471

495



__________

__________



2,850

2,438



__________

__________






Included in other debtors and prepayments is an amount of USD696,000, equivalent to £405,000 (2013 - USD696,000, £449,000), 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.

 


2014

2013

11.

Creditors: amounts falling due within one year

£'000

£'000


Amounts due to brokers

117

918


Other creditors

1,923

1,813



__________

__________



2,040

2,731



__________

__________

 

12.

Non-current liabilities - 3.5% Convertible Unsecured Loan Stock 2018








Number

Liability

Equity



of units

component

component


Year ended 31 August 2014

£'000

£'000

£'000


Balance at 31 August 2013

59,822

56,990

2,572


Conversion of 3.5% Convertible Unsecured Loan Stock 2018 into Ordinary shares

(25)

(23)

(2)


Notional interest on 3.5% Convertible Unsecured Loan Stock 2018

-

589

-


Notional interest on 3.5% Convertible Unsecured Loan Stock 2018 transferred to revenue reserve

-

-

(589)


Amortisation of issue expenses (see note 1(i))

-

58

-



________

_________

_________


Balance at 31 August 2014

59,797

57,614

1,981



________

_________

_________








Number

Liability

Equity



of units

component

component


Year ended 31 August 2013

£'000

£'000

£'000


Balance at 31 August 2012

59,848

56,366

3,163


Conversion of 3.5% Convertible Unsecured Loan Stock 2018 into Ordinary shares

(26)

(24)

(2)


Notional interest on 3.5% Convertible Unsecured Loan Stock 2018

-

589

-


Notional interest on 3.5% Convertible Unsecured Loan Stock 2018 transferred to revenue reserve

-

-

(589)


Amortisation of issue expenses (see note 1(i))

-

59

-



________

_________

_________


Balance at 31 August 2013

59,822

56,990

2,572



________

_________

_________







On 12, 26 and 27 January 2011, the Company issued a total of £60,000,000 nominal amount of 3.5% Convertible Unsecured Loan Stock 2018 ("CULS"). The CULS can be converted at the election of holders into Ordinary Shares during the months of January and July each year throughout their life, to January 2018 at a rate of 1 Ordinary share for every 310.1528p nominal of CULS. Once 80% of the CULS issued have been converted the Company is allowed to request that holders redeem or convert the remainder. Interest is paid on the CULS on 31 January and 31 July each year, of which 100% is charged to revenue in line with the Board's expected long-term split of returns from the investment portfolio of the Company.




The Company has decided to make an annual transfer between the equity component of the CULS and the revenue reserve so that the revenue reserve reflects distributable reserves as defined by company law.




During the year ended 31 August 2014 the Company converted £25,056 (2013 - £26,173) nominal amount of CULS into 8,070 (2013 - 8,430) Ordinary shares.




As at 31 August 2014, there was £59,796,624 (2013 - £59,821,680) nominal amount of CULS in issue.

 


2014

2013

13.

Called-up share capital

£'000

£'000


Allotted, called-up and fully paid:




Ordinary shares of 20p




Opening balance of 196,368,689 (2013 - 196,360,259) shares

39,274

39,272


Issue of 8,070 (2013 - 8,430) Ordinary shares on conversion of £25,056 (2013 - £26,173) nominal 3.5% Convertible Unsecured Loan Stock 2018

1

2



_________

_________


Closing balance of 196,376,759 (2013 - 196,368,689) shares

39,275

39,274



_________

_________

 

14.

Net asset value per share 


The net asset value per share and the net asset values attributable to the Ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows:







2014

2013


Net assets attributable (£'000)

603,077

550,346


Number of Ordinary shares in issue

196,376,759

196,368,689


Net asset value per share (p)

307.10

280.26






The impact of the 3.5% Convertible Unsecured Loan Stock 2018 on the net asset value per share was anti-dilutive for the year ended 31 August 2014 and 31 August 2013.

 

15.

Reconciliation of net return before finance costs and

2014

2013


taxation to net cash inflow from operating activities

£'000

£'000


Net return before finance costs and taxation

60,508

37,537


Adjustments for:




Gains on investments held at fair value through profit or loss

(50,341)

(28,264)


Exchange losses charged to capital

43

111


(Increase)/decrease in accrued income

(263)

81


Decrease in other debtors

25

24


Increase in sundry creditors including management fee due

110

104



_________

_________


Net cash inflow from operating activities

10,082

9,593



_________

_________

 



1 September


Cash


Currency

Other
non-cash


31 August



2013

flow

movements

movements

2014

16.

Analysis of changes in net debt

£'000

£'000

£'000

£'000

£'000


Cash and short term deposits

4,224

2,028

(43)

-

6,209


Money market funds

-

7,000

-

-

7,000


Debt falling due in more than one year

(56,990)

-

-

(624)

(57,614)



________

_____

________

________

_______


Net debt

(52,766)

9,028

(43)

(624)

(44,405)



_________

_____

________

________

_______

 

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 capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board has imposed a maximum gearing level of 20% of net assets.




The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market, and the extent to which revenue in excess of that which is required to be distributed should be retained.




The Company has no externally imposed capital requirements.

 

18.

Financial instruments


Risk management


The Company's financial instruments comprise securities and other investments, cash balances, Convertible Unsecured Loan Stock 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 aims to ensure that the investment policy explained above 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 Company's Manager has an independent Investment Risk department for reviewing the investment risk parameters of the Company's portfolio on a regular basis. The department reports to the Manager's Performance Review Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor ex-ante (predicted) portfolio risk and style characteristics using best practice, industry standard multi-factor models.




Additionally, the Manager's Compliance department continually monitors the Company's investment and borrowing powers and reports to the Manager's Risk Management Committee.




The main financial risks that the Company faces from its financial instruments are market risk (comprising interest rate risk, currency risk and other price risk), liquidity risk and credit risk.




The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors.




Market risk


The fair value of or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, 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.




Interest risk profile


The interest rate risk profile of the portfolio of the Company's financial assets and liabilities, excluding equity holdings which are all non-interest bearing, at the Balance Sheet date was as follows:









Weighted average






period for which

Weighted
average


Fixed


Floating



rate is fixed

interest rate

rate

rate


At 31 August 2014

Years

%

£'000

£'000


Assets






Indian Rupee

-

-

-

125


Korean Won

-

-

-

14


Malaysian Ringgit

-

-

-

77


Sterling

-

0.10

-

5,236


Taiwanese Dollar

-

-

-

755


US Dollar

-

-

-

2



_________

_________

_______

_______


Total assets

n/a

n/a

-

6,209



_________

_________

_______

_______








Liabilities






3.5% Convertible Unsecured Loan Stock 2018

3.42

3.50

57,614

-









Weighted average

 Weighted





period for which

average

Fixed

Floating



rate is fixed

interest rate

rate

rate


At 31 August 2013

Years

%

£'000

£'000


Assets






Hong Kong Dollar

-

-

-

809


Indian Rupee

-

-

-

113


Singapore Dollar

-

-

-

19


Sterling

-

0.13

-

3,251


Taiwanese Dollar

-

-

-

6


Thailand Baht

-

-

-

20


US Dollar

-

-

-

6



_________

_________

_______

_______


Total assets

n/a

n/a

-

4,224



_________

_________

_______

_______








Liabilities






3.5% Convertible Unsecured Loan Stock 2018

4.42

3.50

56,990

-



_________

_________

_______

_______








The weighted average interest rate is based on the current yield of each asset, weighted by its market value.


The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.


The Company's equity portfolio and short-term debtors and creditors have been excluded from the above tables.




Interest rate sensitivity


Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit.




Foreign currency risk


The majority of the Company's investment portfolio is invested in overseas securities and the Balance Sheet, therefore, can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investments with foreign currency borrowings.




The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.




Foreign currency risk exposure by currency of denomination:





31 August 2014

 31 August 2013




Net

Total


Net

Total



Overseas

monetary

currency

Overseas

monetary

currency



investments

assets

exposure

investments

assets

exposure



£'000

£'000

£'000

£'000

£'000

£'000


Hong Kong Dollar

161,360

-

161,360

153,223

809

154,032


Indian Rupee

90,103

125

90,228

67,518

113

67,631


Indonesian Rupiah

4,510

-

4,510

6,446

-

6,446


Korean Won

54,067

14

54,081

52,961

-

52,961


Malaysian Ringgit

23,630

77

23,707

22,058

-

22,058


Philippine Peso

27,389

-

27,389

25,544

-

25,544


Singapore Dollar

137,957

-

137,957

134,802

19

134,821


Sri Lankan Rupee

19,616

-

19,616

14,719

-

14,719


Taiwanese Dollar

40,252

755

41,007

37,221

6

37,227


Thailand Baht

30,832

-

30,832

32,376

20

32,396


US Dollar

40,122

2

40,124

37,764

6

37,770



_________

_______

_______

_________

_______

_______



629,838

973

630,811

584,632

973

585,605


Sterling

16,834

5,236

22,070

18,773

3,251

22,024



_________

_______

_______

_________

_______

_______


Total

646,672

6,209

652,881

603,405

4,224

607,629



_________

_______

_______

_________

_______

_______










Foreign currency sensitivity


There is no sensitivity analysis included, as the Company's significant foreign currency financial instruments are in the form of equity investments, which have 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 particular country or sector. Both the allocation of assets and the stock selection process, as detailed on page 53 of the 2014 Annual Report and Accounts¹ act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.




Other price risk sensitivity


If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 August 2014 would have increased/decreased by £64,667,000 (2013 - increased/decreased by £60,341,000) and equity reserves would have increased/decreased by the same amount.




Liquidity risk


This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered to be significant, as the Company's assets mainly comprise readily realisable securities which can be sold to meet funding requirements if necessary. In order to monitor the concentration of Dragon's investee companies with Aberdeen, the total percentage holdings of those securities owned by Aberdeen-managed funds is reviewed by the Board.




The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions, and reviews these on a regular basis. The Board has imposed a maximum gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of 20%.




Short-term flexibility can be achieved through the use of loan and overdraft facilities. At 31 August 2013 and 2014 the Company had no loan or overdraft facility in place. Details of the Board's policy on gearing are shown in the interest rate risk section of this note.




Liquidity risk exposure


At 31 August 2014 the Company had borrowings in the form of the £59,796,624 (2013 - £59,821,680) nominal of 3.5% Convertible Unsecured Loan Stock 2018.




Credit risk


This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.




The risk is not considered to be significant, and is actively 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, including the custodian, exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a daily basis. In addition, the third party administrators' carries out a stock reconciliation to the Custodian's records on a daily basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the Custodian's operations and reports its finding to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held;


cash is held only with reputable banks with high quality external credit enhancements.




None of the Company's financial assets are secured by collateral or other credit enhancements.




Credit risk exposure


In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 August was as follows:





2014

2013



Balance

Maximum

Balance

Maximum



Sheet

exposure

Sheet

exposure


Current assets

£'000

£'000

£'000

£'000


Loans and receivables

2,850

2,850

2,438

2,438


Cash at bank and in hand

6,209

6,209

4,224

4,224



_________

_________

_________

_________



9,059

9,059

6,662

6,662



_________

_________

_________

_________








None of the Company's financial assets is past due or impaired.




Maturity of financial liabilities


The maturity profile of the Company's financial liabilities at 31 August was as follows:





2014

2013



£'000

£'000



_________

_________


In more than one year

57,614

56,990



_________

_________






At 31 August 2014 the full contractual liability for the CULS assuming no further conversions was £67,122,000 (2013 - £69,076,000).

 

19.

Fair value hierarchy


FRS 29 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:





Level 1:

quoted prices (unadjusted) in active markets for identical assets or liabilities;


Level 2:

inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and


Level 3:

inputs for the asset or liability that are not based on observable market data (unobservable inputs).





All of the Company's investments are in quoted equities (2013 - same) actively traded on recognised stock exchanges, with their fair value being determined by reference to their quoted bid prices at the reporting date. The total value of the investments (2014 - £646,672,000; 2013 - £603,405,000) have therefore been deemed as Level 1.

 

20.

Alternative Investment Fund Managers (AIFM) Directive


In accordance with the AIFM Directive, information in relation to the Company's leverage and the remuneration of the Company's AIFM, Aberdeen Fund Managers Limited, is required to be made available to investors. In accordance with the Directive, the AIFM remuneration policy is available from the Company's Secretaries, Aberdeen Asset Management PLC on request (see contact details on page 62 of the 2014 Annual Report and Accounts¹) and the numerical remuneration disclosures in respect of the AIFM's first relevant reporting period (year ended 30 September 2015) will be made available in due course.




The Company's maximum and actual leverage (see Glossary of Terms on page 57 of the 2014 Annual Report and Accounts¹) levels at 31 August 2014 are shown below:






Leverage exposure

Gross
method

Commitment method


Maximum limit

2.50:1

2.00:1


Actual

1.12:1

1.14:1





 

21.     The Annual General Meeting will be held on xx December 2014 at 40 Princes Street, Edinburgh.

 

22.     The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 August 2014 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2014 and 2013 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006. The financial information for 2013 is derived from the statutory accounts for 2012 which have been delivered to the Registrar of Companies. The 2013 accounts will be filed with the Registrar of Companies in due course.

 

          The annual results are circulated to shareholders in the form of an Annual Report, copies of which will be available at the Company's registered office, 40 Princes Street, Edinburgh EH2 2BY or on the Company's website www.edinburghdragon.co.uk.

 

          Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

 

By Order of the Board

Aberdeen Asset Managers Limited, Secretary


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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