Annual Financial Report
FIDELITY ASIAN VALUES PLC
ANNUAL FINANCIAL REPORT, PROXY FORM AND ADDITIONAL DISCLOSURES
TO THE PRELIMINARY RESULTS FOR THE PERIOD TO 31 JULY 2011
Further to the voluntary disclosure of the Company's annual results for the
period ended 31 July 2011 by way of a preliminary announcement dated 27
September 2011, in accordance with the Disclosure and Transparency Rules ("the
Rules") 4.1.3 and 6.3.5(2) this announcement contains the text of the
preliminary announcement dated 27 September 2011 together with the additional
text in compliance with the Rules.
The Company's annual report and financial statements for the period ended 31
July 2011 together with the accompanying proxy form have been submitted to the
UK Listing Authority, and are available for inspection on the National Storage
Mechanism (NSM): www.hemscott.com/nsm.do
The annual report and financial statements is available on the Company's
website at https://www.fidelity.co.uk/static/pdf/common/investment-trusts/asia/asian-value-plc-2011.pdf
Christopher Pirnie, FIL Investments International, Company Secretary - 01737 837929
21 November 2011
Preliminary Announcement of Audited Results
For the year ended 31 July 2011
Chairman's Statement
PERFORMANCE
In the year to 31 July 2011, the Net Asset Value (NAV) per share of the Company
increased by 19.3% whereas its benchmark, the MSCI All Countries (Combined) Far
East ex Japan Index (Benchmark Index), rose by 16.3% (All figures in UK
sterling terms and on a total return basis). Although the ordinary share price
increased by 15.3% over the year, the discount widened from 8.6% to 11.6%.
MARKETS
Asia Pacific equities advanced over the year under review, although markets
turned increasingly volatile in 2011. Consumer discretionary stocks led the
advance across the region as rising income levels boosted corporate earnings
and raised growth expectations. Consumer staples stocks also advanced,
particularly benefiting from rising risk aversion during the last quarter of
the year. South Korean automobile manufacturers and Chinese retailers were
among the best performers. Materials and energy stocks advanced in line with
rising international prices. Both these sectors gave up some of their gains
during the last quarter of the review period as Chinese policymakers
intensified efforts to contain the rise in inflation and asset prices. In
contrast, information technology, utilities, and telecommunications stocks
underperformed the Benchmark Index.
The latter half of the period was characterised by increased volatility as the
sovereign debt crisis in the European Union, political unrest in the
Middle-East and North Africa, the devastating effects of the earthquake and
tsunami in Japan and rising concerns about global economic growth dampened
investor sentiment. Furthermore, weakening economic data in the US, the end of
the second round of quantitative easing and an increasingly polarised debate
about the US sovereign debt limit towards the end of the period contributed to
risk aversion. Meanwhile, the rise in inflationary pressures across Asia
resulted in a number of Central Banks raising interest rates, which adversely
impacted share prices. Nevertheless, optimism driven by the changing
composition of growth in Asia - from export led to domestic demand driven -
together with healthy corporate earnings growth, contributed to positive stock
market performance.
OUTLOOK
Asian markets have dropped sharply in response to recent developments in the US
and in the European Union, as they remain correlated to the West, but the
region's economy is significantly less reliant on the West than in the past.
Relative to the rest of the world, Asia has better potential for sustainable
earnings growth, making it a favoured market for investors. Most Asian central
banks have been tightening their monetary policies in the last few quarters.
They will have the flexibility to relax interest rates and credit policy to
offset a potential marginal downward revision in OECD growth. The Board
continues to believe that Asia's healthy financial system, robust domestic
demand, low debt levels and high savings rates will continue to support a
multiyear growth cycle.
SUBSCRIPTION SHARES
On 4 March 2010 the Company allotted a total of 12,188,212 subscriptions shares
to qualifying shareholders and dealings in these shares commenced on 8 March
2010 with an exercise price of 191.00 pence per share. Details of the
subscription shares exercised during the year are outlined in Note 13 on page
43.
GEARING
On 3 February 2011 the Company renewed its one year revolving credit facility
for US$15 million with ING Bank N.V. The facility is fully drawn down at
present and the Board continues to review the gearing position on a regular
basis.
Up to 31 July 2011, the Company issued a total of 686,469 ordinary shares on
the exercise of the rights attaching to subscription shares leaving 11,501,743
subscription shares remaining to be exercised before 31 May 2013.
DIVIDEND
Subject to shareholders' approval at the forthcoming Annual General Meeting,
the Directors recommend a final dividend of one penny per ordinary share (2010:
nil). This dividend will be payable on 8 December 2011 to shareholders on the
register at close of business on 7 October 2011 (ex-dividend date 5 October
2011). As the Company's objective is long term capital growth, any revenue
surplus is a function of a particular year's business and it should not be
assumed that dividends will continue to be paid in future.
CONTINUATION VOTE
In accordance with the Articles of Association of the Company, an ordinary
resolution that the Company continue as an investment trust for a further two
years was passed at the 2009 Annual General Meeting. A further continuation
vote will take place at this year's Annual General Meeting. The Company's
performance record has been excellent since launch with a NAV increase of
145.2% compared to an increase in the Benchmark Index of 69.4%. During the past
12 months the Company's NAV has outperformed the Benchmark Index by 3.0% and is
also ahead of the Benchmark Index over 3, 5 and 10 years. Therefore your Board
recommends that shareholders vote in favour of the continuation vote. A further
continuation vote will take place at the Annual General Meeting in 2013.
ANNUAL GENERAL MEETING
The 2011 Annual General Meeting will be held on Wednesday, 23 November 2011 at
Fidelity's Cannon Street office commencing at 11.00 am. All shareholders and
Fidelity Saving Plan and ISA Scheme investors are invited to attend. The
Portfolio Manager will be making a presentation on the year under review and
the immediate prospects for the Company.
Mr Hugh Bolland
Chairman
26 September 2011
Enquiries:
Chris Davies - Head of Investment Trusts, FIL Investments International - 01737 837 723
Anne Read - Corporate Communications, FIL Investments International - 0207 961 4409
Christopher Pirnie - Company Secretary, FIL Investment International, - 01737 837 929
MANAGER'S REVIEW
MARKETS
Stock markets in Far East ex Japan rose over the 12-month review period,
underpinned by gains made in the early half of the year which was driven by
expectations of sustained global economic recovery. The latter half of the year
saw a return to volatility due to a number of geopolitical events, along with
rising inflation in Asia. These factors, combined with tightening monetary
policies throughout the Asia Pacific ex-Japan region, contributed to
uncertainty. Nevertheless, strong economic growth in Asia characterised by
rising income levels and strong consumption growth, boosted confidence.
Meanwhile corporate earnings were largely in line with expectations.
Thailand was the best performing market in the region, boosted by strong
economic activity and return of political stability in the country. Korean
equities advanced mainly on account of strong performance by shipbuilding and
engineering firms, and also due to robust performance by its leading automobile
manufacturers. Indonesian and Malaysian equities also advanced strongly in view
of strong growth expectations as the former received a boost to its sovereign
rating and the latter's government announced an economic transformation plan.
Meanwhile, China delivered lacklustre growth as a rapid rise in inflation and
fears about overheating in the economy prompted the People's Bank of China to
raise interest rates and reserve requirements, and regulators were forced to
tighten property markets. Notwithstanding the overall lacklustre performance,
consumer discretionary and internet firms were leading contributors to positive
growth in Chinese equities. Consumer staples names also advanced, particularly
benefiting from rising risk aversion during the last quarter of the year.
Materials and energy names advanced in-line with rising international commodity
and energy prices. Information technology, utilities, and telecommunication
names delivered positive returns but underperformed the Benchmark Index.
On the economic front, inflationary pressure rose throughout the region and a
number of Central Banks raised interest rates. Industrial Production and
Purchasing Managers' indices showed signs of softening and the pace of export
growth somewhat moderated. China's Purchasing Managers' Index (PMI) eased
modestly in July to 50.7, whilst exports slipped by 0.6% from a month ago. The
inflation rate increased further to a new high of 6.4 % in June, forcing the
People's Bank of China to raise interest rates by 0.25% to 6.56% in July.
PORTFOLIO REVIEW
The Company outperformed its Benchmark Index over the review period, with the
NAV rising by 19.3% against the index return of 16.3%. The strong performance
could largely be attributed to favourable stock selection in South Korea and
Malaysia. Selected holdings in Hong Kong and Philippines also enhanced returns.
The Company's exposure to consumer discretionary names contributed strongly. I
favour the sector due to the rapid consumption growth, particularly in China.
For instance, an overweight holding in Macau-based casino operator SJM Holdings
benefited from strong earnings growth, driven by a rise in VIP gaming. I remain
optimistic about growth due to the firm's leadership position in Macau, and its
strong cash holdings which will allow the firm to fund expansion projects.
Holdings in South Korea-based KIA Motors and automobile component manufacturer
Hyundai Mobis also boosted performance in view of strong earnings growth. In
particular, the former gained from rising global brand recognition and strong
sales growth. Korean automobile and component producers benefited due to a
disruption in Japanese automobile production following the catastrophic
earthquake in March 2011. Additionally, share prices in South Korea based
internet and catalogue retailer CJO Shopping surged, particularly in the last
quarter of the review period on expectations that the firm will receive a
business license to expand into all parts of China.
In addition, selected positions in the industrials space enhanced performance.
A holding in Sarin Technologies, which manufactures machinery for the diamond
industry advanced on account of a rise in demand. The overweight stance in
construction equipment manufacturer Doosan Infracore and industrial plant
construction firm Samsung Engineering also contributed to outperformance.
Elsewhere, not having a stake in China Life Insurance added to relative
performance as its share price declined due to slower growth in insurance
premiums and falling investment returns.
Whilst the overall contribution from consumer discretionary names was positive,
selected holdings disappointed. The holding in China-based automobile producer
BYD Company weighed on performance as sales and earnings declined sharply. A
stake in retail supply chain manager Li & Fung declined in line with a fall in
US growth expectations and also due to expectations of a rise in the company's
costs. Within financials, the overweight stance in China Merchants Bank eroded
value as it gave up initial gains amidst rising interest rates, and increasing
fund raising pressure due to capital constraints.
I have maintained a focus on companies that are leaders in their fields. This
is reflected in their high and growing market shares and pricing power. The
portfolio favours companies with management who have a proven track record of
managing through extreme cycles. Typically these companies tend to outperform
during downturns and are likely to emerge stronger after. Within the
information technology space, a holding in mobile handset manufacturer HTC and
real estate investment portal operator SouFun were significant new additions.
Whilst the former leads in the smartphone handset market, the latter will
benefit from a rise in advertising spending by property developers in an
uncertain property market. Both these companies benefit from strong brand
recognition in their respective markets. Exposure to industrials was raised to
an overweight position. This was done by purchasing a position in diversified
industrial conglomerate Hutchison Whampoa, which contributed to the
outperformance, and buying a stake in Samsung Engineering. These purchases were
funded by selling the stake in South Korea-based construction equipment
manufacturer Doosan Infracore, which is likely to be impacted by slower growth
in Chinese fixed asset investments, and in Malaysia-based Gamuda Berhad which
reached our valuation.
New holdings in Taiwan-based Nan Ya Plastics and South Korea-based Honam
Petrochemical were added in view of strong earnings growth potential given
limited capacity expansion in the industry and a favourable pricing
environment. Elsewhere, consumer staples firms namely, LG Household &
Healthcare, Shenguan Holdings and President Chain Store in Taiwan were added.
Over the period, the underweight in financials was increased by selling
companies which reached target valuations or were likely to be adversely
impacted by rising interest rates, such as real estate firms. For instance, I
sold the exposure to Hong Kong-based Swire Pacific, Singapore based real estate
firm CapitaLand and Parkway Life, which is a health care real estate investment
trust, for better opportunities elsewhere. Instead, I initiated a holding in
Cheung Kong Holdings in view of its strong balance sheet which enhances the
company's positioning in an uncertain market environment. I also made changes
in the exposure to banking names by trimming the stake in China Merchants Bank,
whilst retaining an overweight exposure, and selling the stake in India-based
Punjab National Bank. Whilst the former remains positioned for growth, the
latter may suffer due to falling margins and a rise in non-performing assets. I
also took profits by selling shares in Hang Seng Bank as share prices were
likely to be impacted by regulatory changes.
OUTLOOK FOR THE REGION
Activity across Asia remains upbeat, however the region's underlying economic
momentum is slowing. The consensus outlook is for regional growth to moderate
over the rest of the year against a backdrop of high inflation and tighter
monetary conditions. However there is less pressure on both of these given the
weakening growth outlook in developed markets. Furthermore, fiscal
sustainability problems continue to cloud the outlook for developed economies,
which are the region's key trading partners. Nevertheless, Asian economies are
less indebted and far better positioned in terms of savings and currency
reserves than most of their western counterparts. Fundamental secular growth
drivers in Asia remain in place, hence compelling investment opportunities
remain. I maintain consistency in my investment process and continue to focus
on companies with high and growing market shares and pricing power.
John Lo
Portfolio Manager
26 September 2011
PRINCIPAL RISKS AND UNCERTAINTIES
The Board confirms that there is an ongoing process for identifying, evaluating
and managing the principal risks faced by the Company. The Board, with the
assistance of the Manager, has developed a risk matrix which, as part of the
internal controls process, identifies the key risks that the Company faces. The
matrix has identified strategic, marketing, investment management, company
secretarial and other support function risks. The Board reviews and agrees
policies for managing these risks. The process is regularly reviewed by the
Board. During this review, risks are identified, introduced and graded. This
process, together with the policies and procedures for the mitigation of risks,
is updated and reviewed regularly in the form of comprehensive internal
controls reports which are considered by the Audit Committee. The Board also
determines the nature and extent of any risks it is willing to take in order to
achieve its strategic objectives.
The Board considers the following to be the major specific risks facing the
Company:
Top risks Risk Mitigations
Poor management of assets or under The Company has a clearly defined
performance for several years in strategy and investment remit.
succession Performance is reviewed at each Board
meeting, including performance
attribution and income forecasts. There
is a clearly defined management
agreement, and borrowing limits are
also set by the Board. The Company is
managed by a highly experienced
Portfolio Manager. The Asia Pacific
Investment Management team supports the
Portfolio Manager, and the Asia Pacific
Chief Investment Officer and Board
reviews performance regularly.
Loss of reputation in the market place Reputational risks are often the
consequence of risk events in another
category, such as investment
performance, corporate governance rules
or regulatory issues. The Board
performs reviews of such risks on a
periodic basis.
Hostile takeover The Board reviews the Company's
performance, including performance
attribution, at each Board meeting. A
premium/discount policy is in place and
regular dialogue is undertaken with
major shareholders through the Manager.
Unauthorised use of the Company's There is an effective and appropriate
assets segregation of duties in place. The
Portfolio Manager is able to authorise,
but not place, trades on behalf of the
Company and does not have access to
trading systems. Fidelity's trading
desk deals only with approved
counterparties, but does not settle
trades or have contact with the
Custodian. These are handled by the
Investment Services department. The
independent Custodian safeguards the
Company's assets, including cash, which
are held in the name of the nominee of
the Custodian and segregated from the
Manager's assets.
Breaches of investment restrictions The Portfolio Manager is aware of the
Company's investment restrictions.
Fidelity's Investment Compliance group
independently performs time of trade
and end of day checks to ensure all
investment restrictions are complied
with.
Breaches of S.1159 regulations of the Compliance with all investment
Corporation Tax Act 2010 restrictions including taxation rules
imposed by Section 1159 is monitored on
a daily basis by Fidelity's Investment
Compliance group. Escalation procedures
are in place to notify the Board of any
breaches.
Breaches of UK Bribery Act 2010 The Bribery Act came into force on 1
July 2011, and the Board has adopted
Fidelity's policies and controls in
place to support ethical, non corrupt
practices. The Board will be receiving
reporting from Fidelity with respect to
Bribery Act compliance.
Further risks identified within the matrix on page 16 are:
Market risks
The Company's assets consist mainly of listed securities and the principal
risks are therefore market related such as market recessions, interest rate
movements, deflation/inflation, terrorism and protectionism.
Risks to which the Company is exposed and which form part of the market risks
category are included in Note 17 to the financial statements on pages 45 to 49
together with summaries of the policies for managing these risks. These
comprise: market price risk (which comprises other price risk, interest rate
risk and foreign currency exposure); liquidity risk, counterparty risk and
credit risk.
Loan risk
The Company has a one year revolving credit facility in place with ING Bank
N.V. The extent to which any loan facilities are retained or renewed is always
kept under the most careful scrutiny.
The impact of limited finance from counterparties including suppliers has not
impacted the Company to date, however there are alternative suppliers available
in the market place should the need arise.
Counterparty risk
The Company relies on a number of main counterparties, namely the Manager,
Registrar, Custodian and Auditor. The Manager is the member of a privately
owned group of companies on which a regular report is provided to the Board.
The Manager, Registrar and Custodian are subject to regular audits by
Fidelity's internal controls team and the counterparties' own internal controls
reports are received by the Board and any concerns investigated.
Performance risks
The achievement of the Company's performance objective relative to the market
involves risk. Strategy, asset allocation and stock selection might lead to
under performance of the Benchmark Index and target. Monitoring of these risks
is carried out by the Board which, at each Board meeting, considers the asset
allocation of the portfolio and the risks associated with particular countries
and industry sectors within the parameters of the investment objective. The
Portfolio Manager is responsible for actively managing and monitoring the
portfolio selected in accordance with the asset allocation parameters and seeks
to ensure that individual stocks meet an acceptable risk-reward profile. The
NAV of the Company is published each working day
Top Risks Risk Mitigation
Income - dividends risks
The Company's objective of long term capital growth relies less on income to
support dividends than investment trust companies with a more income oriented
target. Nevertheless, generating income to meet expenses and provide adequate
reserves is subject to the risk that income generation from its investments
fails to meet the level required. The Board monitors this risk through the
receipt of detailed income reports and forecasts which are considered at each
meeting.
Share price risks
The price of the Company's shares relative to the Benchmark Index and in
absolute terms, as well as its discount to NAV, are not factors the Company is
able to control. Some short term influence over the discount may be exercised
by the use of share repurchases at acceptable prices.
The Company's ordinary share price, subscription share price, NAV and discount
volatility are monitored daily by the Manager and considered by the Board at
each of its meetings.
Gearing risks
The Company has the option to invest up to the total of its loan facilities in
equities. In a rising market the Company would benefit but in a falling market
the impact would be detrimental.
In order to manage the level of gearing the Board regularly considers this item
and sets gearing limits accordingly. The Portfolio Manager follows the Board
approved guidelines and may invest part of the loan facility in Fidelity
Institutional Liquidity Fund plc and short term cash deposits to control the
level of net gearing.
Control systems risks
The Company is dependent on the Manager's control systems and those of its
Custodian and Registrar both of which are monitored and managed by the Manager
in the context of the Company's assets and interests on behalf of the Board.
The security of the Company's assets, dealing procedures and the maintenance of
investment trust status under s1159 of the Corporation Tax Act 2010, among
other things, rely on the effective operation of such systems. These are
regularly tested and a programme of internal audits is carried out by the
Manager to maintain standards.
Other risks
Other risks monitored on a regular basis include loan covenants, which are
subject to daily monitoring, together with the Company's cash position, and the
continuation vote (at a time of poor performance).
RELATED PARTIES
All of the Directors are considered by the Board to be independent of
management with the exception of Kathryn Matthews due to her recent
relationship with the manager.
No Director is under a contract of service with the Company and no contracts
existed during or at the end of the financial period in which any Director was
materially interested and which was significant in relation to the Company's
business. There have been no other related party transactions requiring
disclosure under Financial Reporting Standard ("FRS") 8.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report 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 they have elected to prepare the financial statements in
accordance with UK Generally Accepted Accounting Practice.
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 for the period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the financial statements;
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 ensuring that adequate accounting records are
kept which disclose with reasonable accuracy at any time the financial position
of the Company and to enable them to ensure that its financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, including a Business Review, a Directors'
Remuneration Report and a Corporate Governance Statement that comply with that
law and those regulations.
The Directors have delegated the responsibility for the maintenance and
integrity of the corporate and financial information included on the Company's
section of the Manager's website www.fidelity.co.uk/its to the Manager.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge: the financial statements,
prepared in accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or
loss of the Company; and the Directors' Report includes 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 it faces.
Approved by the Board on 26 September 2011 and signed on its behalf by
Hugh Bolland
Chairman
Income Statement for the year ended 31 July 2011
2011 2010
revenue capital total revenue capital total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments
designated at fair value
through profit or loss 9 - 22,068 22,068 - 25,432 25,432
Income 2 3,070 - 3,070 2,446 - 2,446
Investment management fee 3 (1,509) - (1,509) (1,161) - (1,161)
Other expenses 4 (522) - (522) (799) - (799)
Exchange gains/(losses) on
other net assets 7 (54) (47) 9 181 190
Exchange gains/(losses) on
loans - 287 287 - (178) (178)
Net return before finance
costs and taxation 1,046 22,301 23,347 495 25,435 25,930
Finance costs 5 (214) - (214) (131) - (131)
Net return on ordinary
activities before taxation 832 22,301 23,133 364 25,435 25,799
Taxation on return on
ordinary activities 6 (312) - (312) (200) - (200)
Net return on ordinary
activities after taxation
for the year 520 22,301 22,821 164 25,435 25,599
Return per ordinary share
Undiluted 7 0.85p 36.35p 37.20p 0.27p 41.73p 42.00p
Diluted 7 0.84p 36.10p 36.94p n/a n/a n/a
A Statement of Total Recognised Gains and Losses has not been prepared as there
are no gains and losses other than those reported in this Income Statement.
The total column of the Income Statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 July 2011
share capital other non-
share premium redemption distributable other capital revenue total
capital account reserve reserve reserve reserve reserve equity
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening
shareholders' funds:
1 August 2009 15,235 - 1,785 7,367 19,239 47,523 985 92,134
Bonus issue of
subscription shares* 1 - - - (1) - - -
Exercise of rights
attached to
subscription shares
and conversion into
ordinary shares* - - - - - - - -
Issue of ordinary
shares on exercise
of rights attached
to subscription
shares 9 60 - - - - - 69
Net return on
ordinary activities
after taxation for
the year - - - - - 25,435 164 25,599
Dividend paid to
shareholders 8 - - - - - - (609) (609)
Closing
shareholders' funds:
31 July 2010 15,245 60 1,785 7,367 19,238 72,958 540 117,193
Exercise of rights
attached to
subscription shares
and conversion into
ordinary shares 13 - - - - - - - -
Issue of ordinary
shares on exercise
of rights attached
to subscription
shares 13 163 1,080 - - - - - 1,243
Net return on
ordinary activities
after taxation for
the year - - - - - 22,301 520 22,821
Closing
shareholders' funds:
31 July 2011 15,408 1,140 1,785 7,367 19,238 95,259 1,060 141,257
* Restated from 5 pence last year to reflect that the nominal value of the
subscription shares is 0.01 pence.
Balance Sheet as at 31 July 2011
2011 2010
Notes £'000 £'000
Fixed assets
Investments designated at fair value
through profit or loss 9 146,156 121,786
Current assets
Debtors 10 738 1,187
Cash at bank 4,423 1,272
5,161 2,459
Creditors
Bank loans 11 (9,116) (5,729)
Other creditors 12 (944) (1,323)
(10,060) (7,052)
Net current liabilities (4,899) (4,593)
Total net assets 141,257 117,193
Capital and reserves
Share capital 13 15,408 15,245
Share premium account 1,140 60
Capital redemption reserve 1,785 1,785
Other non-distributable reserve 7,367 7,367
Other reserve 19,238 19,238
Capital reserve 95,259 72,958
Revenue reserve 1,060 540
Total equity shareholders' funds 141,257 117,193
Net asset value per ordinary share
Undiluted 14 229.21p 192.19p
Diluted 14 223.20p 191.99p
Cash Flow Statement for the year ended 31 July 2011
2011 2010
Notes £'000 £'000
Operating activities
Investment income received 2,410 2,257
Investment management fee paid (1,105) (1,145)
Directors' fees paid (78) (93)
Other cash payments (322) (720)
Net cash inflow from operating activities 15 905 299
Servicing of finance
Interest paid on bank loans (215) (215)
Net cash outflow from servicing of finance (215) (215)
Financial investment
Purchase of investments (142,254) (91,819)
Disposal of investments 139,813 94,199
Net cash (outflow)/inflow from financial (2,441) 2,380
investment
Dividend paid to shareholders 8 - (609)
Net cash (outflow)/inflow before financing (1,751) 1,855
Financing
Exercise of rights attached to subscription 1,244 52
shares
Unsecured loan drawn down 22,028 5,857
Unsecured loan repaid (18,354) (6,890)
Net cash inflow/(outflow) from financing 4,918 (981)
Increase in cash 16 3,167 874
The above statements have been prepared on the basis of the accounting policies
as set out in the annual financial statements to 31 July 2011. This preliminary
statement, which has been agreed with the Auditor, was approved by the Board on
26 September 2011. It is not the Company's statutory financial statements. The
statutory financial statements for the financial year ended 31 July 2010 have
been delivered to the Registrar of Companies. The statutory financial
statements for the financial year ended 31 July 2011 have been approved and
audited but have not yet been filed. The statutory financial statements for
the financial years ended 31 July 2010 and 31 July 2011 received unqualified
audit reports, did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying the report and did not
contain statements under section 498(2) and (3) of the Companies Act 2006. The
annual report and financial statements will be posted to shareholders as soon
as is practicable and in any event no later than 24 October 2011.
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