Annual Financial Report
NEW INDIA INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT
for the period ended 31 March 2010
1. Chairman's Statement
The financial year under review witnessed a dramatic recovery in share prices around the world and India was no exception. The Company's fully diluted net asset value rose by 85.1% in sterling terms and the basic (undiluted) net asset value rose by 100.4%, compared to the MSCI India Index's rise of 104.0% (all figures on a total return basis). The Company's share price gained by 95.3% (on a total return basis), reflecting a narrowing of the discount to net asset value from 13.2% to 8.4%. While it is always disappointing to underperform the benchmark, I have on previous occasions highlighted your Manager's style and process, which is to lag in liquidity-driven rallies such as that of last year because of a concentration on sound businesses with robust financial positions. Conversely, in weak stock markets when investors focus on fundamentals, your Manager's style tends to result in resilient performance. The table below compares the total return of the benchmark MSCI India Index to the performance of the Manager by reference to the basic net asset value total return which most accurately reflects the nature of the underlying investment portfolio
|
|
1 year %
|
3 years %
|
5 years %
|
|
Net asset value per ordinary share (basic) (total return)
|
+100.4 |
+80.3 |
+204.4 |
|
MSCI India Index (sterling adjusted)
|
+104.0 |
+74.2 |
+245.1 |
The investment case for India remains as strong as ever. Income levels are rising, thanks to an increasingly skilled workforce and robust domestic demand. The economy continued to grow throughout the global recession, with GDP rising by more than 6% year-on-year in the first three quarters of the fiscal year. What is even more remarkable is that its economic performance has been achieved in spite of bureaucracy and a relatively weak fiscal position, which hampered much needed investment in rail, road and power.
The Congress party's sweeping win in the May 2009 elections means that it is no longer beholden to the communist elements or the vagaries of coalition politics, although factions and power bases remain constraints. Under prime minister Manmohan Singh, who as financial minister in 1991 unleashed historic economic reforms, India has an opportunity to implement structural reforms, including an overhaul of its tax code that will help reduce the budget deficit and accelerate infrastructure spending.
Most crucially, the government has vowed to reduce the deficit to 5.5% of GDP this year by cutting costly subsidies on fuel and fertiliser. Significantly, it will no longer be able to keep petroleum subsidies off the balance sheet through the issuance of oil bonds.
This has also spurred the long-delayed auction of licences for the third generation (3G) mobile phone spectrum, which is expected to bring in more than US$7 billion that will be crucial in funding India's extensive social welfare programmes. Also commendable is the Reserve Bank of India's ("RBI") proactive role in balancing the economy. As with elsewhere in Asia, the tightening cycle is occurring even as the West persists with record low rates. The RBI's interest rates were raised in March 2010, and again in April, to head off inflation. In an effort to broaden the financial sector, the central bank also started issuing commercial banking licences to foreign operators, with Australia's ANZ Bank and Swiss lender Credit Suisse among the first recipients.
What this means for companies is that they are likely to gain confidence in India's regulatory environment. Those in which your Company invests should be particularly adroit at adapting to the changing environment, given their solid balance sheets and robust cashflow. Information about the portfolio's holdings can be found in the Manager's Report.
Warrants
The final subscription date of the Company's warrants in issue is 2 August 2010. The exercise of the outstanding warrants will result in the issue of an additional 12.1m Ordinary shares, representing an increase of approximately 26% in the Company's issued share capital.
Continuation of Company and Manager
Your Board has carefully considered the reappointment of your Manager in light of the performance of your Company, not only in the year under review, but also in previous periods. The Manager's recent performance, long-term track record and well-understood investment style make a good case for their continued appointment.
Accordingly, your Board recommends that Shareholders vote in favour of resolution No. 8, to allow the Company to continue as an investment trust.
Annual General Meeting
The Annual General Meeting ("AGM") will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Thursday, 23 September 2010 at 11.00 a.m.
Ambassador Rozental will be retiring at the AGM. He originally joined the Board in 1997 and has served with great distinction, but has decided that, after 12 years, it is appropriate to step down. The Board thanks him for all his hard work and insight.
As required by the Company's Articles of Association, Professor Bulmer-Thomas will retire and seek re-election at the AGM. Your Board, having reviewed Professor Bulmer-Thomas' proposed re-election, strongly recommends shareholders to vote in favour of his reappointment.
In addition to the ordinary business of the meeting, shareholders will be asked to approve the continuation of the Company as an investment trust; authorise the Board to buy back up to 14.99% of the Company's issued share capital; authorise the issue of new shares representing 5% of the present issued share capital; authorise the issue for cash of shares representing up to 5% of the present issued share capital otherwise than by a pro rata issue to existing shareholders (i.e., pre-emption); and to authorise the Board to sell shares held as treasury shares. In respect of the issue of shares from treasury, the Board's policy is kept under review but remains broadly unchanged from last year. The Board would only expect to sell shares from treasury at a maximum discount of 3% to the prevailing diluted NAV at the time of issue. Your Board recommends that shareholders vote in favour of these resolutions, and intends to do so in respect of its own shareholdings.
As at previous AGMs, there will be a presentation by the Manager and an opportunity to meet the Directors over coffee following the meeting.
Outlook
Following sharp gains in share prices over the past year, Indian companies are sadly no longer cheap. Valuations are at a premium to their long-run average and to their regional peers. But earnings are well supported by positive long-term growth prospects, which should still reward the long-term investor.
Most importantly, we continue to be impressed by the professionalism and focus of the managements of the companies we hold, which gives us confidence in the future.
William Salomon
Chairman
14 June 2010
2. Manager's Report
Overview
In the 12 months ended 31 March 2010, the portfolio's fully diluted net asset value rose by 85.1% in sterling terms while the basic net asset value rose by 100.4%, compared with a gain in the benchmark, the MSCI India Index, of 104.0%.
Our investments in IT firms such as Infosys Technologies, Tata Consultancy Services and MphasiS served us particularly well as they rebounded sharply on higher global IT spending. Another source of positive relative performance was our financial holding, Housing Development Finance Corporation, which registered solid profit growth thanks to rising loan demand.
On the other hand, Bharti Airtel was the key laggard. Its shares were depressed by concerns about domestic competition, its failed bid for MTN and its takeover of Zain Telecommunications' African operations. Nonetheless, there are reasons for optimism. Bharti's expansion plans have been focused on emerging markets, where it is able to compete and add value. Its purchase of Zain's infrastructure assets in Africa also gives the mobile phone operator an opportunity to complement its strong position in the domestic market where, despite competition, it is generating profits and positive operational cash flow. The portfolio's zero weighting in the energy sector, which significantly underperformed the overall market, contributed considerably to relative out-performance. Specifically, we do not hold index heavyweight Reliance Industries, which lagged the broader market amid a gas-pricing dispute between the Ambani brothers as well as an uncertain outlook for the company's refining margins. As bottom-up stock pickers with a stringent emphasis on quality, we remain unconvinced by Reliance's aggressive expansion into non-core businesses.
Our large exposure to the defensive consumer staples sector, however, detracted from our relative return as it underperformed in the wake of rising risk appetite. Still, from our perspective, consumer-focused companies remain appealing because of the potential for growth in domestic demand and our conviction in the quality of their business franchises. It should also be noted that, despite lagging the overall market, the portfolio's consumer staples holdings outperformed that sector.
In aggregate, the year under review was exceptional. The Indian stockmarket staged a spectacular rebound after a dismal 2008, one of the worst years in global financial markets. Domestic equities regained favour with investors and attracted robust fund inflows from abroad. Economically, the downturn in India was relatively shallow and brief as the economy, which is driven largely by its domestic market, is still fairly well shielded from the volatility of global markets - unlike many of its Asian counterparts.
In line with the strength in the economy, most businesses reported excellent corporate earnings for both the September and December quarters and, for those so far released, for the March quarter too.
Despite the outstanding market gains over the past 12 months, our long-term views have not changed. We remain comfortable with the portfolio's current positioning and are committed to investing in quality companies run by competent, shareholder-friendly management. We are confident that this strategy, which has steered us through different business and market cycles, will yield good results over the longer term.
Economic News
India largely sidestepped the global recession and maintained its growth trajectory on account of strong policy support and its relatively small export sector. The government's targeted stimulus measures and the Reserve Bank of India's ("the RBI") interest rate cuts proved pivotal in underpinning domestic demand throughout the crisis.
GDP expanded by a remarkable 7.9% year-on-year in the July-September quarter, even as other major world economies remained weak. Although growth slowed to 6.0% in October-December as poor rains hurt agricultural output, manufacturing activity remained robust. Exports also picked up towards the end of 2009 as the global economic recovery gained traction. The improved backdrop led the government to upgrade its GDP forecast for the fiscal year ending March 2010 to almost 8%.
Meanwhile inflation, originally fed by a weak monsoon and elevated agricultural prices, started spreading to other sectors. The wholesale price index witnessed a rise of almost 10% year-on-year in February 2010. The higher cost of food, commodities and manufactured goods, coupled with the economic turnaround, compelled the RBI to alter its policy stance - from nurturing growth to managing inflation. Apart from increasing banks' reserve requirements to 5.75%, the RBI also raised both its short-term lending and borrowing rates by 0.25 percentage points, to 5.00% and 3.50% respectively. At the time of writing, RBI had hiked all three policy rates by another 0.25%.
Turning to politics, the Congress party returned to power with a strong mandate, allowing it to govern without stubborn coalition members and their conflicting interests. Expectations that the re-elected government would pursue extensive reforms were high, but the 2009 budget dashed these hopes. The government, however, did not disappoint in 2010, as it unveiled a pro-growth budget in February.
Not only was spending on priority areas such as infrastructure and the rural sector maintained, the government also committed to reducing the fiscal deficit, which is now projected to reach almost 7% of GDP in the fiscal year ending March 2010.
The shift towards greater fiscal prudence was particularly promising, given concerns that its high public spending and borrowing programme could jeopardise the country's longterm credit rating. However, India's economic resilience during the global downturn and its high growth potential saw Moody's and Standard & Poor's raise the country's outlook towards the period-end, on hopes that healthy growth will improve public finances.
Indian equities performed extremely well over the year under review and were among the best performers in Asia. The MSCI India Index gained 104.0% in sterling terms, compared to a 67.5% rise in the MSCI Asia Pacific (ex Japan) Index. Much of the marked upswing can be traced to a revival in foreign buying on the back of reduced risk aversion, supported by better economic and corporate fundamentals.
Sector Views
Information Technology
Software and IT services are areas in which India has significant competitive advantage, given its well-educated, English-speaking, inexpensive workforce and a flourishing scientific culture. Over the year, the sector made substantial gains as domestic software companies posted increasingly solid results. Margins improved and demand picked up as their customers in the US and Europe resumed spending.
We remain major investors in leading software outsourcing companies Infosys Technologies and Tata Consultancy Services. Both delivered good March year-end financials. Infosys also restarted its campus hiring efforts after temporarily suspending recruitment last year in view of the global economic downturn.
In addition, we hold shares in software developer MphasiS, which posted robust quarterly sales and earnings growth. Not only has MphasiS gained from the synergy with its parent EDS, it has also benefited from the working relationship with its shareholder Hewlett-Packard, which is both the company's largest customer as well as a project partner. We added to the stock during the period as valuations remained attractive.
Energy
The ongoing challenge of providing the public with a reliable, reasonably-priced energy supply remains unfulfilled and politicised.
The government increased prices for selected energy products and provided one-off relief to oil marketing companies that have had to absorb the upsurge in energy prices, but the subsidy burden remains heavy on downstream companies such as Bharat Petroleum and Hindustan Petroleum. There have been no commitments to reform the energy market. On a positive note, however, this is one of the areas that Manmohan Singh's government is keen to address.
In view of the industry challenges and a lack of transparency and predictability, we have chosen not to have an exposure to the sector. We reiterate our reservations about holding index heavyweight Reliance Industries because its expansion into untested oil and gas exploration and forays into retail and industrial park activities are, to our mind, overly ambitious. These are areas that require extensive capital outlay and ones in which the company has neither a proven track record nor a competitive advantage.
Financials
We have a large exposure to the financial sector, as we see the banks playing a central role in providing finance for consumer spending. Our core holdings are ICICI Bank, a leading lender whose strength is in the urban retail segment, and Housing Development Finance Corporation ("HDFC"), the largest and most proficient domestic mortgage company. Overall, HDFC, as the more conservative of the two banks, has weathered the liquidity crunch better. As such, we maintain a larger weight in HDFC than in ICICI Bank. During the year, we introduced HDFC's associate holding HDFC Bank, a commercial lender with a well-established retail and corporate banking franchise. It is led by one of the best management teams in Indian banking and has high net interest margins as well as low non-performing loan ratios.
HDFC's sound capital position has enabled it to manage growth across its many businesses. Over the period, HDFC raised close to US$1 billion through a mix of zero coupon non-convertible debentures and warrants placed to domestic
institutions, which it will use to capitalise its associate holding HDFC Bank and fund growth.
ICICI Bank has been strengthening its balance sheet, consolidating its capital and slowing the expansion of its loan
book. Furthermore, it reined in risk by trimming its overseas exposure. The new CEO, Chanda Kochhar, is committed to bolstering its deposit base before pursuing further loan growth. March year-end results showed the lender continuing to strengthen its capital base.
Consumer Discretionary
The consumer discretionary sector has huge growth potential in view of India's expanding middle class and rising disposable incomes.
However, the automotive sector has been experiencing a fall in demand following a period of unprecedented expansion. Most companies also face tighter margins amid increasingly intense competition. Comparatively, the motorcycle market has been more resilient - motorcycles are relatively affordable and often seen as a necessity rather than a luxury.
We hold Hero Honda, the country's biggest two-wheeler manufacturer. Hero Honda has continued to grow, winning back market share from rival Bajaj Auto, by utilising its superior rural distribution network and introducing a more attractive range of models. During the year, we pared our holding in the company following strong share price appreciation.
Consumer Staples
We have three holdings in the fast-moving consumer goods sector. Hindustan Unilever is the locally listed subsidiary of Unilever which makes and distributes brands such as Lux, Fair & Lovely, Pepsodent and Lifebuoy. ITC, an associate of British American Tobacco, has a thriving core business in tobacco and a diversified portfolio of businesses that includes packaged food and confectionery products as well as paper, packaging and hotels. Both these companies have strong brands and broad, effective distribution networks across India. We also hold Godrej Consumer Products, a leader in the personal, hair, household and fabric care segments.
These consumer staples companies have managed their cost structures well even as demand remained at healthy levels.
Their steadfast March-quarter results attest to the continued strength of their businesses.
Materials
Grasim Industries, the flagship company of the Birla Group, remains our core holding in this sector. The leading cement group in India and the world's eighth largest in terms of capacity, Grasim is well positioned to benefit from firm housing demand and infrastructure spending. We took advantage of the rally to topslice our position in the stock during the year.
We complemented our position in Grasim with Ambuja Cements, which we introduced during the period. Owned and controlled by the Swiss cement group Holcim, Ambuja Cements has a substantial network of production and distribution facilities. Holcim recently increased its stake in the company and expects to use it as a channel to access India's long-term demand for cement. Both Grasim and Ambuja Cements enjoyed good volume growth on the back of stable demand and pricing. Additionally, we established a position in Castrol India, a globally recognised brand which has proved resilient in the downturn. Our other investments in this sector are Akzo Nobel India, which produces and markets paints, and Kansai Nerolac Paints, a subsidiary of Japan's Kansai Paint.
Healthcare
Despite the increasingly challenging regulatory environment in the US, a major export market, India has a considerable competitive advantage in the pharmaceutical sector, given its relatively low costs and access to talent.
Our holdings include a mix of subsidiaries of multinationals (GlaxoSmithKline Pharmaceuticals, Aventis Pharma) that seek to sell to the local market, and domestic companies (Sun Pharmaceutical, Piramal Healthcare) which leverage on their low-cost manufacturing strengths to penetrate overseas markets.
Sun Pharmaceutical's bid to acquire Israeli generic drugmaker Taro Pharmaceutical remains unresolved. Taro's promoters have been reluctant to proceed with an earlier agreement tosell the company, while independent minority shareholders voted against Taro's management that had backed Sun's bid.
Separately, Caraco, Sun's listed subsidiary in the US, had its manufacturing operations suspended for failing to meet good manufacturing practices promulgated by the US Food and Drug Administration. Sun has since replaced the senior management team at Caraco and has been working towards compliance. We are cautiously optimistic that the new team will be able to turn operations around. The impact on earnings is not expected to exceed 15% of the consolidated profit after tax.
Industrials
We hold ABB India and Container Corporation in this sector. ABB is the listed subsidiary of Swiss group Asea Brown Boveri and a beneficiary of the government's infrastructure investment plan. Part-owned by Indian Rails, Container Corporation is a near-monopolistic provider of rail freight and logistics.
Utilities
We are investors in Gas Authority of India (GAIL), the country's largest gas distribution company. GAIL has a sound balance sheet and is poised to benefit from the country's growing industrialisation and rising consumption. The company aims to achieve Rs450 billion in revenue by 2011. GAIL won government approval to lay 5,000km of new pipeline and plans to invest Rs5 billion in its gas business as well as look to overseas petrochemical projects. Additionally, its board approved over Rs80 billion for the extension of the country's gas pipeline network from Uttar Pradesh to West Bengal. We trimmed our position in GAIL during the review period on relative price strength.
We are also investors in Tata Power, a power generator and distributor; and Gujarat Gas, a gas distributor in which British Gas holds a majority stake.
Telecommunication Services
Despite their dominance, or perhaps because of it, large telecommunications players such as Bharti Airtel, Reliance Communications, Vodafone and Idea continue to battle fiercely to maintain market share. Some regulatory developments have proved beneficial. For example, in order to minimise red tape, the government is mulling a single telecom licence in place of 17 service-specific ones. It has also allowed industry players to share tower infrastructure and reduce capex requirements. Third-generation (3G) licensing and infrastructure requirements continue to cast a pall of uncertainty over the industry. The Ministry of Communications and Information Technology postponed the introduction of mobile number portability, but the 3G spectrum auction had begun at the time of writing after several delays.
We do not hold Reliance Communications, preferring to invest in Bharti Airtel, a leading integrated telecom services provider with a nationwide presence. Bharti has maintained impressive growth momentum and benefited from its strategic tie-ups with Singapore Telecommunications (now the largest shareholder) and Vodafone. We are confident that the company's focus on the growing rural segment and competent leadership will help it retain its dominant position in the local cellular market and we took advantage of price weakness to add to our holding during the period.
Strategy
Looking ahead, economic newsflow is likely to remain on the whole positive, although authorities are facing new headwinds. The leading areas of concern are the large fiscal deficit and inflationary pressures - both politically sensitive issues. Encouragingly, the government seems keen to improve its weak fiscal position, and already, the RBI has increased rates even as the major economies in the West maintain very loose monetary conditions. Raising interest rates, however, presents fresh dilemmas. On the one hand, it could attract a large inflow of hot money, inflating asset price bubbles. On the other, higher borrowing costs could impede the rise in consumer spending and compromise India's growth. The critical priority is for policymakers to contain inflationary trends without suffocating growth or threatening market stability.
Yet, India still offers great investment opportunities, with its abundance of strong home-grown companies and listed subsidiaries of multinationals. Also working in the country's favour are its excellent demographics, entrepreneurial talent and dynamic long-term growth prospects. While remaining watchful over our holdings in the portfolio, we will continue to be disciplined and consistent in applying our proven investment philosophy and approach.
Aberdeen Asset Management Asia Limited
Manager
14 June 2010
3. Business Review
A review of the Company's activities is given in the Chairman's Statement and the Manager's Report. This includes a review of the business of the Company and its principal activities and likely future developments of the business.
Principal Risks and Uncertainties
The Board seeks to set out below its view of the principal key risks affecting its business. The Board is aware that, apart from those issues it can identify, there are likely to be matters about which it does not or cannot know which may also affect New India Investment Trust.
With that reservation, the Board believes that the factors which could have the most significant adverse impact on shareholders would be likely to include:
- falls in the prices of securities in Indian companies, which may be themselves determined by local and international economic, political and financial factors and management actions;
- adverse movements in the exchange rate between sterling and the rupee as well as between other currencies affecting the fortunes of the companies in which we invest;
- a lack of skill in New India's investment management team;
- factors which affect the discount to net asset value at which the Ordinary shares of New India trade. These may include the popularity of the investment objective of the Company, the popularity of investment trust shares in general and the ease with which the Ordinary shares and warrants of New India may be traded on the London Stock Exchange;
- changes in or breaches of the complicated set of statutory, tax and regulatory rules within which New India seeks to conduct its business, as highlighted by the EU proposals regarding the regulation of Alternative Investment Funds (meaning any fund which is not regulated as a UCITS fund, and which, therefore, includes investment trusts); and
- a challenge to the security of the assets of the Company.
Some of these risks can be mitigated or managed to a greater or lesser extent by the actions of the Board in appointing competent Managers and custodians. In addition, the Board seeks to put in place, through its contractual arrangements and through various monitoring processes, controls which should avert (but do not guarantee the avoidance of) what might be regarded as operational mistakes.
However, investment tends to involve both risk and opportunity regarding future prospects, and the Board cannot avoid either in the Company's search for returns.
4. Corporate Summary
New India Investment Trust PLC ("New India" or the "Company") is an investment trust and its Ordinary shares and warrants are listed on the London Stock Exchange. The Company is a member of the Association of Investment Companies.
Investment Manager
Aberdeen Asset Management Asia Limited, 21 Church Street, #01-01 Capital Square Two, Singapore 049480 (the "Manager" or "AAM Asia").
Investment Objective
The investment objective of the Company is to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India or which derive significant revenue or profit from India, with dividend yield from the company being of secondary importance.
Investment Policy
The Company (either directly or through its Mauritian subsidiary, New India Investment Company (Mauritius) Limited (the "Subsidiary")) primarily invests in Indian equity securities. The Company and Subsidiary are collectively referred to as the "Group".
The Group's investment policy is flexible, enabling it to invest in all types of securities, including equities, debt and convertible securities in companies listed on the Indian stock exchanges or which are listed on other international exchanges and which derive significant revenue or profit from India, and Indian securities listed on other international stock exchanges. The Group may also, where appropriate, invest in open-ended collective investment schemes and closed-end funds that invest in India and are listed on the Mumbai Stock Exchange and/or the Indian National Stock Exchange. The Group is free to invest in any particular market segment or geographical region of India. The Group may also invest in small, mid- or large capitalisation companies.
The Manager continues to expect the portfolio to comprise in the region of 25 to 30 holdings (but without restricting the Group from holding a more or less concentrated portfolio).
Currency and Hedging Policy
The Company's financial statements are maintained in sterling while, because of its investment focus, many of the Group's investments are denominated and quoted in currencies other than sterling, in particular, the Indian rupee. Although it is not the Group's present intention to do so, the Group may, where appropriate and economic to do so, employ a policy of hedging against fluctuations in the rate of exchange between sterling and other currencies in which its investments are denominated. Cash balances are held in such currency or currencies as the Manager considers to be appropriate, although it is expected that this would generally be the Indian rupee.
Borrowing Policy and Gearing
The Group is permitted to borrow up to 25 per cent of its net assets (measured when new borrowings are incurred). It is intended that this power should be used to leverage the Group's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so.
Gearing will be used in relation to specific opportunities or circumstances. The Directors will take care to ensure that borrowing covenants will permit maximum flexibility of investment policy.
Investment Restrictions
It is the investment policy of the Group to invest no more than 15 per cent of its gross assets in other listed investment companies (including listed investment trusts). The Group does not have any investments in other listed investment companies at 31 March 2010.
Benchmark
The Company compares its performance to the MSCI India Index (sterling adjusted). However, the Company's portfolio is constructed without reference to the composition of any stockmarket index or benchmark. It is likely, therefore, that there will be periods when its performance may vary significantly from the benchmark.
Capital Structure
At 31 March 2010 the Company had a capital structure comprising 46,954,143 Ordinary shares of 25p and 12,115,997 Warrants to subscribe for Ordinary shares at 100p per share on 2 August 2010. As at the latest practicable date before the signing of this Report, this capital structure remained unchanged.
Net Asset Value
The Company had total assets of £129.3m, a basic (undiluted) net asset value of 275.4 pence per Ordinary share and a diluted net asset value of 239.4 pence per Ordinary share at 31 March 2010.
Websites
www.newindia-trust.co.uk
www.aberdeen-asset.com
Company Secretary
Aberdeen Asset Management PLC, Bow Bells House, 1 Bread Street, London EC4M 9HH
Email: company.secretary@invtrusts.co.uk
Customer Services
Freephone: 0500 00 00 40
(Open from Monday - Friday, 9am - 5pm)
Email: inv.trusts@aberdeen-asset.com
Duration
The Company does not have a fixed life. However, the Articles of Association of the Company provide for an annual continuation vote.
Management Agreement
The Company has an agreement with AAM Asia for the provision of investment management services, details of which are shown in note 4.
5. Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards ("IFRS") as adopted by the European Union.
Under company law, the Directors must not approve the Group financial statements unless they are satisfied that they present fairly the financial position of the Group, the financial performance and cash flows of the Group for that period. In preparing the Group financial statements, the Directors are required to:
- select suitable accounting policies in accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", and then apply them consistently;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance;
- state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; and
- make judgments and estimates that are reasonable and prudent.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's financial transactions and disclose with reasonable accuracy at any time the financial position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement 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.
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and Group; and
- the Directors' Report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.
Sarah Bates
Chairman of the Audit and Management Engagement Committee
14 June 2010
GROUP STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Year ended |
Year ended |
||||
|
|
|
31 March 2010 |
31 March 2009 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
|
return |
return |
Total |
return |
return |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Investment income |
3 |
|
|
|
|
|
|
|
Dividend income |
|
1,330 |
- |
1,330 |
1,322 |
- |
1,322 |
|
Interest income |
|
5 |
- |
5 |
25 |
- |
25 |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Total revenue |
|
1,335 |
- |
1,335 |
1,347 |
- |
1,347 |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Gains/(losses) on investments held at fair value through profit or loss |
10(a) |
- |
65,516 |
65,516 |
- |
(19,157) |
(19,157) |
|
Currency losses |
|
- |
(200) |
(200) |
- |
(61) |
(61) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
|
|
1,335 |
65,316 |
66,651 |
1,347 |
(19,218) |
(17,871) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Expenses |
|
|
|
|
|
|
|
|
Investment management fees |
4 |
(996) |
- |
(996) |
(718) |
- |
(718) |
|
VAT recoverable on investment management fees |
20 |
- |
- |
- |
33 |
- |
33 |
|
Other administrative expenses |
5 |
(633) |
- |
(633) |
(563) |
(2) |
(565) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
(Loss)/profit before tax and finance charges |
|
(294) |
65,316 |
65,022 |
99 |
(19,220) |
(19,121) |
|
|
|
|
|
|
|
|
|
|
Finance costs |
6 |
- |
- |
- |
(6) |
- |
(6) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
(Loss)/profit before tax |
|
(294) |
65,316 |
65,022 |
93 |
(19,220) |
(19,127) |
|
|
|
|
|
|
|
|
|
|
Taxation |
7 |
(1) |
- |
(1) |
(8) |
- |
(8) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
(Loss)/profit for the year |
|
(295) |
65,316 |
65,021 |
85 |
(19,220) |
(19,135) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Return per Ordinary share (pence) |
9 |
|
|
|
|
|
|
|
Basic |
|
(0.63) |
139.82 |
139.19 |
0.18 |
(41.21) |
(41.03) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
Diluted |
|
(0.57) |
126.06 |
125.49 |
0.17 |
(39.18) |
(39.01) |
|
|
|
________ |
_________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
The Group does not have any income or expense that is not included in (loss)/profit for the year, and therefore the "(Loss)/profit for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised). |
|||||||
|
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company. There are no minority interests. |
|||||||
|
The total column of this statement represents the Statement of Comprehensive Income of the Group, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. |
|||||||
|
All items in the above statement derive from continuing operations. |
|||||||
|
The accompanying notes are an integral part of these financial statements. |
|||||||
GROUP AND COMPANYBALANCE SHEETS
|
|
|
Group |
Company |
Group |
Company |
|
|
|
As at |
As at |
As at |
As at |
|
|
|
31 March |
31 March |
31 March |
31 March |
|
|
|
2010 |
2010 |
2009 |
2009 |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
Investments held at fair value through profit or loss |
10 |
129,110 |
129,269 |
62,215 |
62,874 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Current assets |
|
|
|
|
|
|
Cash at bank |
11 |
289 |
82 |
2,090 |
803 |
|
Other receivables |
12 |
220 |
40 |
190 |
42 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Total current assets |
|
509 |
122 |
2,280 |
845 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Total assets |
|
129,619 |
129,391 |
64,495 |
63,719 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Bank overdraft |
11 |
- |
- |
(623) |
- |
|
Other payables |
13 |
(299) |
(71) |
(219) |
(66) |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Total current liabilities |
|
(299) |
(71) |
(842) |
(66) |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net assets |
|
129,320 |
129,320 |
63,653 |
63,653 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Share capital and reserves |
|
|
|
|
|
|
Ordinary share capital |
14 |
11,739 |
11,739 |
11,577 |
11,577 |
|
Share premium account |
|
12,290 |
12,290 |
11,807 |
11,807 |
|
Special reserve |
|
15,778 |
15,778 |
15,778 |
15,778 |
|
Warrant reserve |
|
3,801 |
3,801 |
4,003 |
4,003 |
|
Warrant exercise reserve |
|
228 |
228 |
26 |
26 |
|
Capital redemption reserve |
|
4,484 |
4,484 |
4,484 |
4,484 |
|
Capital reserve |
15 |
80,160 |
80,182 |
14,844 |
14,840 |
|
Revenue reserve |
|
840 |
818 |
1,134 |
1,138 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Equity shareholders' funds |
|
129,320 |
129,320 |
63,653 |
63,653 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net asset value per Ordinary share (pence): |
16 |
|
|
|
|
|
Basic |
|
275.42 |
275.42 |
137.45 |
137.45 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Diluted |
|
239.44 |
239.44 |
129.36 |
129.36 |
|
|
|
__________ |
__________ |
__________ |
__________ |
GROUP STATEMENT OF CHANGES IN EQUITY
|
Year ended 31 March 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Warrant |
Capital |
|
|
|
|
|
Share |
premium |
Special |
Warrant |
exercise |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 March 2009 |
11,577 |
11,807 |
15,778 |
4,003 |
26 |
4,484 |
14,844 |
1,134 |
63,653 |
|
Net gain/(loss) on ordinary activities after taxation |
- |
- |
- |
- |
- |
- |
65,316 |
(295) |
65,021 |
|
Return of unclaimed dividends |
- |
- |
- |
- |
- |
- |
- |
1 |
1 |
|
Issue of share capital upon exercise of warrants |
162 |
483 |
- |
(202) |
202 |
- |
- |
- |
645 |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
|
Balance at 31 March 2010 |
11,739 |
12,290 |
15,778 |
3,801 |
228 |
4,484 |
80,160 |
840 |
129,320 |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Warrant |
Capital |
|
|
|
|
|
Share |
premium |
Special |
Warrant |
exercise |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 March 2008 |
11,966 |
11,790 |
17,981 |
4,010 |
19 |
4,089 |
34,064 |
1,049 |
84,968 |
|
Net (loss)/gain on ordinary activities after taxation |
- |
- |
- |
- |
- |
- |
(19,220) |
85 |
(19,135) |
|
Issue of share capital upon exercise of warrants |
6 |
17 |
- |
(7) |
7 |
- |
- |
- |
23 |
|
Purchase of own shares |
(395) |
- |
(2,192) |
- |
- |
395 |
- |
- |
(2,192) |
|
Expenses of repurchase |
- |
- |
(11) |
- |
- |
- |
- |
- |
(11) |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
|
Balance at 31 March 2009 |
11,577 |
11,807 |
15,778 |
4,003 |
26 |
4,484 |
14,844 |
1,134 |
63,653 |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
COMPANY STATEMENT OF CHANGES IN EQUITY
|
Year ended 31 March 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Warrant |
Capital |
|
|
|
|
|
Share |
premium |
Special |
Warrant |
exercise |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 March 2009 |
11,577 |
11,807 |
15,778 |
4,003 |
26 |
4,484 |
14,840 |
1,138 |
63,653 |
|
Net gain/(loss) on ordinary activities after taxation |
- |
- |
- |
- |
- |
- |
65,342 |
(321) |
65,021 |
|
Return of unclaimed dividends |
- |
- |
- |
- |
- |
- |
- |
1 |
1 |
|
Issue of share capital upon exercise of warrants |
162 |
483 |
- |
(202) |
202 |
- |
- |
- |
645 |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
|
Balance at 31 March 2010 |
11,739 |
12,290 |
15,778 |
3,801 |
228 |
4,484 |
80,182 |
818 |
129,320 |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Warrant |
Capital |
|
|
|
|
|
Share |
premium |
Special |
Warrant |
exercise |
redemption |
Capital |
Revenue |
|
|
|
capital |
account |
Reserve |
reserve |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 March 2008 |
11,966 |
11,790 |
17,981 |
4,010 |
19 |
4,089 |
33,904 |
1,209 |
84,968 |
|
Net loss on ordinary activities after taxation |
- |
- |
- |
- |
- |
- |
(19,064) |
(71) |
(19,135) |
|
Issue of share capital upon exercise of warrants |
6 |
17 |
- |
(7) |
7 |
- |
- |
- |
23 |
|
Purchase of own shares |
(395) |
- |
(2,192) |
- |
- |
395 |
- |
- |
(2,192) |
|
Expenses of repurchase |
- |
- |
(11) |
- |
- |
- |
- |
- |
(11) |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
|
Balance at 31 March 2009 |
11,577 |
11,807 |
15,778 |
4,003 |
26 |
4,484 |
14,840 |
1,138 |
63,653 |
|
|
______ |
________ |
________ |
________ |
________ |
________ |
________ |
_______ |
_______ |
GROUP AND COMPANY CASH FLOW STATEMENTS
|
|
|
Year ended |
Year ended |
||
|
|
|
31 March 2010 |
31 March 2009 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Operating activities |
|
|
|
|
|
|
Profit/(loss) before tax |
|
65,022 |
65,021 |
(19,127) |
(19,135) |
|
(Gains)/losses on investments held at fair value through profit or loss |
|
(65,516) |
(65,389) |
19,157 |
19,042 |
|
Net losses on foreign exchange |
|
200 |
47 |
61 |
20 |
|
Net (purchases)/sales of investments held at fair value through profit or loss |
|
(1,379) |
(1,006) |
3,454 |
2,860 |
|
Decrease in amounts due from brokers |
|
- |
- |
113 |
- |
|
(Increase)/decrease in other receivables |
|
(31) |
2 |
(95) |
(18) |
|
Decrease in amounts due to brokers |
|
(11) |
- |
(446) |
- |
|
Increase/(decrease) in other payables |
|
91 |
5 |
(135) |
(43) |
|
Finance costs |
|
- |
- |
6 |
6 |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net cash (outflow)/inflow from operating activities before interest and corporation tax |
|
(1,624) |
(1,320) |
2,988 |
2,732 |
|
|
|
|
|
|
|
|
Corporation tax paid |
|
- |
- |
(46) |
- |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net cash (outflow)/inflow from operating activities |
|
(1,624) |
(1,320) |
2,942 |
2,732 |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Exercise of warrants |
|
645 |
645 |
23 |
23 |
|
Return of unclaimed dividends |
|
1 |
1 |
- |
- |
|
Purchase of own shares |
|
- |
- |
(2,203) |
(2,203) |
|
Finance costs |
|
- |
- |
(6) |
(6) |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Net (decrease)/increase in cash and cash equivalents |
|
(978) |
(674) |
756 |
546 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at the start of the year |
|
1,467 |
803 |
772 |
277 |
|
Effect of foreign exchange rate changes |
|
(200) |
(47) |
(61) |
(20) |
|
|
|
__________ |
__________ |
__________ |
__________ |
|
Cash and cash equivalents at the end of the year |
11 |
289 |
82 |
1,467 |
803 |
|
|
|
__________ |
__________ |
__________ |
__________ |
Notes to the Financial Statement:
|
1. |
Principal activity |
|
|
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010 ("s1158") (formerly Section 842 of the Income and Corporation Taxes Act 1988). |
|
|
|
|
|
The principal activity of its foreign subsidiary is similar in all relevant respects to that of its United Kingdom parent. |
|
2. |
Accounting policies |
|||
|
|
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and interpretations issued by the International Reporting Interpretations Committee of the IASB (IFRIC). |
|||
|
|
|
|||
|
|
(a) |
Basis of preparation |
||
|
|
|
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2010. There are no differences between the accounting policies applied in the Group and the Company. |
||
|
|
|
|
||
|
|
|
The Group and Company financial statements are presented in Sterling, which is the currency of the primary environment in which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated. |
||
|
|
|
|
||
|
|
|
Where presentational guidance set out in the Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ("AIC") in January 2009 is consistent with the requirements of IFRS, the financial statements have been prepared in accordance with the SORP. |
||
|
|
|
|
||
|
|
|
The Company has adopted IAS 1 (revised) during the year. |
||
|
|
|
|
||
|
|
|
The Company adopted the extended disclosure requirements within IFRS 7 for accounting periods beginning on or after 1 January 2009. The extended disclosure requirements introduced a fair value hierarchy and this is disclosed in note 19. |
||
|
|
|
|
||
|
|
|
At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: |
||
|
|
|
- |
IFRS 9 - Financial Instruments: Classification and Measurement (effective for annual periods beginning on or after 1 January 2013). This standard has not yet been adopted by the EU. |
|
|
|
|
- |
Amendments to IFRS 1 - First-time Adoption of IFRSs and Additional Exemptions for First-time Adopters (effective for annual periods beginning on or after 1 July 2009 and 1 January 2010 respectively). |
|
|
|
|
- |
Amendments to IFRS 2 - Group Cash-settled Share-based Payments (effective for annual periods beginning on or after 1 January 2010). |
|
|
|
|
- |
Amendments to IFRS 3 & IAS 27 - Business Combinations (effective for annual periods beginning on or after 1 July 2009). |
|
|
|
|
- |
Amendments to IAS 24 - Related Party Disclosures (effective for annual periods beginning on or after 1 January 2011). |
|
|
|
|
- |
Amendments to IAS 32 - Classification of Rights Issues (effective for annual periods beginning on or after 1 February 2010). |
|
|
|
|
- |
Amendments to IAS 39 - Eligible Hedged Items (effective for annual periods beginning on or after 1 July 2010). |
|
|
|
|
- |
IFRIC 17 - Distributions of Non-cash Assets to Owners (effective for annual periods beginning on or after 1 July 2009). |
|
|
|
|
- |
IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after 1 July 2009). |
|
|
|
|
- |
Amendments to IFRIC 14 - Prepayments of a Minimum Funding Requirement (effective for annual periods beginning on or after 1 January 2011). |
|
|
|
|
|
||
|
|
|
The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Company's financial results in the period of initial application although there will be revised presentations to the Primary Financial Statements and additional disclosures. The Company intends to adopt the standards in the reporting period when they become effective. |
||
|
|
|
|
||
|
|
(b) |
Group accounts |
||
|
|
|
The Group financial statements consolidate the financial statements of the Company and its subsidiary, New India Investment Company (Mauritius) Limited. |
||
|
|
|
|
||
|
|
|
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. |
||
|
|
|
|
||
|
|
(c) |
Presentation of Group Statement of Comprehensive Income |
||
|
|
|
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Group Statement of Comprehensive Income between items of revenue and capital nature has been presented in the Group Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under Section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. |
||
|
|
|
|
||
|
|
(d) |
Segmental reporting |
||
|
|
|
The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. |
||
|
|
|
|
||
|
|
(e) |
Income |
||
|
|
|
Dividends receivable on equity shares are recognised in the Group Statement of Comprehensive Income on the ex-dividend date. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. Where a Group company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend is recognised in the Group Statement of Comprehensive Income. Provision is made for any dividends not expected to be received. Interest receivable from cash and short-term deposits is accrued to the end of the financial year. |
||
|
|
|
|
||
|
|
(f) |
Expenses and interest payable |
||
|
|
|
All expenses, with the exception of interest expenses, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Group Statement of Comprehensive Income except as follows: |
||
|
|
|
- |
expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Group Statement of Comprehensive Income and separately identified and disclosed in note 10 (c); and |
|
|
|
|
- |
expenses are charged to the capital column of the Group Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. |
|
|
|
|
|
||
|
|
(g) |
Taxation |
||
|
|
|
The charge for taxation is based on the revenue return for the financial year. |
||
|
|
|
|
||
|
|
|
Deferred tax |
||
|
|
|
Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise. |
||
|
|
|
|
||
|
|
(h) |
Investments |
||
|
|
|
All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Group's documented investment strategy, and information about the grouping is provided internally on that basis. Purchases of investments are recognised on a trade date basis and designated upon initial recognition as held at fair value through profit or loss. Sales of assets are also recognised on a trade date basis. Proceeds as measured at fair value, which is regarded as the proceeds of sale less any transaction costs. |
||
|
|
|
|
||
|
|
|
The fair value of the financial instruments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. Any unquoted investments would be held at fair value, as measured by the Directors using appropriate valuation methodologies such as earnings multiples, recent transactions and net assets. In the case of the Company's investment in the subsidiary, of which the Company owns 100% of its ordinary share capital, this has been measured at fair value, which is deemed to be its net asset value. |
||
|
|
|
|
||
|
|
|
Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Group Statement of Comprehensive Income as "Gains/(losses) on investments at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. |
||
|
|
|
|
||
|
|
(i) |
Cash and cash equivalents |
||
|
|
|
Cash comprises cash in hand and banks and short-term deposits. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash, and that are subject to an insignificant risk of changes in value. |
||
|
|
|
|
||
|
|
(j) |
Other receivables and payables |
||
|
|
|
Other receivables do not carry any interest and are short-term in nature, and are, accordingly, stated at their nominal value. Other payables are non-interest bearing and are stated at their nominal value. |
||
|
|
|
|
||
|
|
(k) |
Dividends payable |
||
|
|
|
Final dividends are recognised from the date on which they are declared and approved by shareholders. |
||
|
|
|
|
||
|
|
(l) |
Foreign currency |
||
|
|
|
Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Group Statement of Comprehensive Income. |
||
|
|
|
Year ended |
Year ended |
|
|
|
31 March 2010 |
31 March 2009 |
|
3. |
Income |
£'000 |
£'000 |
|
|
Income from investments |
|
|
|
|
Overseas dividends |
1,330 |
1,322 |
|
|
Bond interest |
- |
2 |
|
|
|
___________ |
___________ |
|
|
|
1,330 |
1,324 |
|
|
|
___________ |
___________ |
|
|
Other operating income |
|
|
|
|
Deposit interest |
5 |
23 |
|
|
|
___________ |
___________ |
|
|
Total income |
1,335 |
1,347 |
|
|
|
___________ |
___________ |
|
|
|
Year ended |
Year ended |
|
|
|
31 March 2010 |
31 March 2009 |
|
4. |
Investment management fees |
£'000 |
£'000 |
|
|
Investment management fees |
996 |
718 |
|
|
|
___________ |
___________ |
|
|
|
|
|
|
|
The Company has an agreement with AAM Asia for the provision of management services. |
||
|
|
|
||
|
|
During the year, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the net asset value of the Group, valued monthly. The agreement is terminable on one year's notice. The balance due to AAM Asia at the year end was £200,000 (2009 - £100,000). All investment management fees are charged 100% to the revenue column of the Group Statement of Comprehensive Income. |
||
|
|
|
||
|
|
There was no performance fee due to the Manager for the year (2009 - £nil). |
||
|
|
|
Year ended |
Year ended |
|
|
|
|
31 March 2010 |
31 March 2009 |
|
|
5. |
Other administrative expenses - revenue |
£'000 |
£'000 |
|
|
|
Directors' fees |
87 |
88 |
|
|
|
Marketing contribution |
64 |
58 |
|
|
|
Auditors' remuneration |
|
|
|
|
|
- |
fees payable to the Group's auditors for the audit of the Group's annual accounts |
25 |
25 |
|
|
- |
fees payable to the Group's auditors for the audit of the Company's subsidiary annual accounts |
6 |
5 |
|
|
- |
fees payable to the Group's auditors for the audit of the Group's prior year annual accounts under accrued |
- |
4 |
|
|
- |
fees payable to the Group's auditors for the audit of the Group's subsidiaries prior year annual accounts under accrued |
- |
1 |
|
|
Legal and advisory fees |
53 |
35 |
|
|
|
Custodian and overseas agents' charges |
220 |
168 |
|
|
|
Other |
178 |
179 |
|
|
|
|
___________ |
___________ |
|
|
|
|
633 |
563 |
|
|
|
|
___________ |
___________ |
|
|
|
|
|
|
|
|
|
Directors' fees include US$7,815 (2009 - US$7,875) paid in respect of the Directors of New India Investment Company (Mauritius) Limited. |
|||
|
|
|
|||
|
|
The Company has an agreement with Aberdeen Asset Management PLC ('AAM PLC') for the provision of marketing services in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the year were £64,000 (2009 - £58,000) and no amount was due to AAM PLC at the year end (2009 - £nil). |
|||
|
|
|
Year ended |
Year ended |
|
|
|
|
31 March 2010 |
31 March 2009 |
|
|
|
Other administrative expenses - capital |
£'000 |
£'000 |
|
|
|
Issuance fee relating to a bonus issue on holding in Gail (India) GDR |
- |
2 |
|
|
|
|
___________ |
___________ |
|
|
|
|
Year ended |
Year ended |
|
|
|
31 March 2010 |
31 March 2009 |
|
6. |
Finance costs |
£'000 |
£'000 |
|
|
Bank overdraft interest |
- |
6 |
|
|
|
___________ |
___________ |
|
|
|
|
Year ended |
Year ended |
|
|
|
|
31 March 2010 |
31 March 2009 |
|
7. |
(a) |
Tax on ordinary activities |
£'000 |
£'000 |
|
|
|
Current tax: |
|
|
|
|
|
Overseas taxation |
1 |
8 |
|
|
|
|
___________ |
___________ |
|
|
(b) |
Factors affecting the tax charge for the year |
|
|
|
|
|
The tax charged for the year can be reconciled to the profit/(loss) per the Group Statement of Comprehensive Income as follows: |
||
|
|
|
|
|
|
|
|
|
|
Year ended |
Year ended |
|
|
|
|
31 March 2010 |
31 March 2009 |
|
|
|
|
£'000 |
£'000 |
|
|
|
Profit/(loss) before tax |
65,022 |
(19,127) |
|
|
|
|
___________ |
___________ |
|
|
|
Corporation tax on profit/(loss) at the standard rate of 28% (2009 - 28%) |
18,206 |
(5,356) |
|
|
|
Effects of: |
|
|
|
|
|
(Gains)/losses on investments held at fair value through profit or loss not taxable (see note below) |
(18,344) |
5,365 |
|
|
|
Currency losses not taxable |
56 |
17 |
|
|
|
Effect on subsidiary of different tax rate levied in another jurisdiction |
83 |
(18) |
|
|
|
|
___________ |
___________ |
|
|
|
Total tax charge |
1 |
8 |
|
|
|
|
___________ |
___________ |
|
|
|
|
|
|
|
|
|
The Company is exempt from corporation tax on capital gains provided it obtains agreement from HM Revenue & Customs that the tests within Section 1158 of the Corporation Tax Act 2010 have been met. Under Mauritian taxation laws, no Mauritian capital gains tax is payable on profits arising from the sale of securities. |
||
|
8. |
Dividends on equity shares |
|
|
No final dividend is being proposed for the year ended 31 March 2010 (2009 - £nil) as no distributable profit was generated by the Parent Company. |
|
|
|
|
|
During the year, the subsidiary Company made no dividend payment (2009 - £135,000) to the parent Company, and the net amount due to the parent Company at the year end was £nil (2009 - £nil). |
|
|
|
|
|
During the year an amount of £1,000 (2009 - £nil) was refunded in respect of unclaimed dividends from previous years. |
|
9. |
Return per Ordinary share |
|
||||||
|
|
The basic earnings per Ordinary share is based on the net profit after taxation of £65,021,000 (2009 - net loss after taxation of £19,135,000) and on 46,713,932 (2009 - 46,640,119) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. |
|
||||||
|
|
|
|
||||||
|
|
The calculation of the diluted returns per Ordinary share is carried out in accordance with IAS 33, "Earnings per Share". For the purposes of calculating diluted returns per Ordinary share, the number of Ordinary shares is the weighted average used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all Warrants by reference to the average share price of the Ordinary shares during the year. The calculations indicate that the exercise of Warrants would result in an increase in the weighted average number of Ordinary shares of 5,099,802 (2009 - 2,417,518), to a total of 51,813,734 (2009 - 49,057,637) Ordinary shares. |
|
||||||
|
|
|
|
||||||
|
|
The basic and diluted earnings per Ordinary share detailed above can be further analysed between revenue return and capital return as follows: |
|
||||||
|
|
|
Year ended |
Year ended |
|
||||
|
|
|
31 March 2010 |
31 March 2009 |
|
||||
|
|
Basic |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
Net (loss)/profit (£'000) |
(295) |
65,316 |
65,021 |
85 |
(19,220) |
(19,135) |
|
|
|
Weighted average number of Ordinary shares in issue |
|
|
46,713,932 |
|
|
46,640,119 |
|
|
|
Return per Ordinary share (pence) |
(0.63) |
139.82 |
139.19 |
0.18 |
(41.21) |
(41.03) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
Year ended |
|
||||
|
|
|
31 March 2010 |
31 March 2009 |
|
||||
|
|
Diluted |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
Net (loss)/profit (£'000) |
(295) |
65,316 |
65,021 |
85 |
(19,220) |
(19,135) |
|
|
|
Weighted average number of Ordinary shares in issue |
|
|
51,813,734 |
|
|
49,057,637 |
|
|
|
Return per Ordinary share (pence) |
(0.57) |
126.06 |
125.49 |
0.17 |
(39.18) |
(39.01) |
|
|
|
|
Year ended |
Year ended |
|
|||||||||||||
|
|
|
31 March 2010 |
31 March 2009 |
|
|||||||||||||
|
10. |
Investments held at fair value through profit or loss |
£'000 |
£'000 |
|
|||||||||||||
|
|
(a) |
Group |
|
|
|
||||||||||||
|
|
|
Opening book cost |
50,515 |
57,850 |
|
||||||||||||
|
|
|
Opening investment holdings fair value gains |
11,700 |
26,976 |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
Opening valuation |
62,215 |
84,826 |
|
||||||||||||
|
|
|
Movements in the year: |
|
|
|
||||||||||||
|
|
|
Purchases at cost (see section (c) below) |
11,513 |
12,632 |
|
||||||||||||
|
|
|
Sales |
- proceeds |
(10,134) |
(16,086) |
|
|||||||||||
|
|
|
|
- realised net gains/(losses) |
5,853 |
(3,881) |
|
|||||||||||
|
|
|
Increase/(decrease) in investment holdings gains |
59,663 |
(15,276) |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
Closing valuation |
129,110 |
62,215 |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
£'000 |
£'000 |
|
||||||||||||
|
|
|
Closing book cost |
57,747 |
50,515 |
|
||||||||||||
|
|
|
Closing investment holdings fair value gains |
71,363 |
11,700 |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
Closing valuation |
129,110 |
62,215 |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
Gains/(losses) on investments |
£'000 |
£'000 |
|
||||||||||||
|
|
|
Realised gains/(losses) on sales of investments |
5,853 |
(3,881) |
|
||||||||||||
|
|
|
Increase/(decrease) in investment holdings gains |
59,663 |
(15,276) |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
|
65,516 |
(19,157) |
|
||||||||||||
|
|
|
|
___________ |
___________ |
|
||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
|
Year ended 31 March 2010 |
Year ended 31 March 2009 |
|||||||||||||
|
|
|
|
Investment in subsidiary |
Listed |
Total |
Investment in subsidiary |
Listed |
|
|||||||||
|
|
(b) |
Company |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||
|
|
|
Opening book cost |
41,150 |
2,169 |
43,319 |
41,545 |
1,714 |
43,259 |
|||||||||
|
|
|
Opening investment holdings fair value gains |
18,583 |
972 |
19,555 |
39,948 |
1,569 |
41,517 |
|||||||||
|
|
|
Opening valuation |
59,733 |
3,141 |
62,874 |
81,493 |
3,283 |
84,776 |
|||||||||
|
|
|
Movements in the year: |
|
|
|
|
|
|
|||||||||
|
|
|
Purchases |
- |
1,853 |
1,853 |
- |
2,932 |
2,932 |
|||||||||
|
|
|
Sales |
- proceeds |
- |
(847) |
(847) |
(3,004) |
(2,788) |
(5,792) |
||||||||
|
|
|
|
- realised net gains |
- |
514 |
514 |
2,609 |
311 |
2,920 |
||||||||
|
|
|
Increase/(decrease) in investment holdings fair value gains |
62,330 |
2,545 |
64,875 |
(21,365) |
(597) |
(21,962) |
|||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||
|
|
|
Closing valuation |
122,063 |
7,206 |
129,269 |
59,733 |
3,141 |
62,874 |
|||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
Year ended 31 March 2010 |
Year ended 31 March 2009 |
|||||||||||||
|
|
|
|
Investment in subsidiary |
Listed |
|
Investment in subsidiary |
Listed |
|
|||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||
|
|
|
Closing book cost |
41,150 |
3,689 |
44,839 |
41,150 |
2,169 |
43,319 |
|||||||||
|
|
|
Closing investment holdings fair value gains |
80,913 |
3,517 |
84,430 |
18,583 |
972 |
19,555 |
|||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||
|
|
|
Closing valuation |
122,063 |
7,206 |
129,269 |
59,733 |
3,141 |
62,874 |
|||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
As at |
As at |
|||||||||||||
|
|
|
|
31 March 2010 |
31 March 2009 |
|||||||||||||
|
|
|
Gains/(losses) on investments |
£'000 |
£'000 |
|||||||||||||
|
|
|
Realised gains on sales of investments |
514 |
2,920 |
|||||||||||||
|
|
|
Increase/(decrease) in investment holdings gains |
64,875 |
(21,962) |
|||||||||||||
|
|
|
|
_____________ |
_____________ |
|||||||||||||
|
|
|
|
65,389 |
(19,042) |
|||||||||||||
|
|
|
|
_____________ |
_____________ |
|||||||||||||
|
|
|
|
|
|
|||||||||||||
|
|
|
The Company owns 100% of the Ordinary share capital of its subsidiary, New India Investment Company (Mauritius) Limited, an investment holding company registered in Mauritius. |
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
The investment in the subsidiary is valued at fair value, which is deemed to be its underlying net asset value. |
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
All investments are categorised at held at fair value through profit or loss, and were designated as such upon initial recognition. |
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
(c) |
Transaction costs |
|||||||||||||||
|
|
|
During the year, expenses were incurred in acquiring or disposing of investments classified as fair value though profit or loss. These have been expensed through the capital column of the Statement of Comprehensive Income, and are included within gains/(losses) on investments at fair value through profit or loss in the Statement of Comprehensive Income. The total costs were as follows: |
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
|
Year ended |
Year ended |
|||||||||||||
|
|
|
|
31 March 2010 |
31 March 2009 |
|||||||||||||
|
|
|
|
Group |
Company |
Group |
Company |
|||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||
|
|
|
Purchases |
39 |
- |
40 |
3 |
|||||||||||
|
|
|
Sales |
40 |
- |
51 |
1 |
|||||||||||
|
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|||||||||||
|
|
|
|
79 |
- |
91 |
4 |
|||||||||||
|
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|||||||||||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
2010 |
2010 |
2009 |
2009 |
|
11. |
Cash and cash equivalents |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash at bank |
289 |
82 |
2,090 |
803 |
|
|
Bank overdraft |
- |
- |
(623) |
- |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
289 |
82 |
1,467 |
803 |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
Group |
Company |
Group |
Company |
|
|
|
2010 |
2010 |
2009 |
2009 |
|
12. |
Other receivables |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Prepayments and accrued income |
209 |
40 |
145 |
9 |
|
|
VAT recoverable on investment management fees |
- |
- |
33 |
33 |
|
|
Current tax recoverable |
11 |
- |
12 |
- |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
220 |
40 |
190 |
42 |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
|
|
|
|
|
|
None of the above amounts are past their due date or impaired. |
||||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
2010 |
2010 |
2009 |
2009 |
|
13. |
Other payables |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Amounts due to brokers |
- |
- |
11 |
- |
|
|
Other payables |
299 |
71 |
208 |
66 |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
299 |
71 |
219 |
66 |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
2010 |
2009 |
||
|
14. |
Ordinary share capital |
Number |
£'000 |
Number |
£'000 |
|
|
Authorised |
|
|
|
|
|
|
Ordinary shares of 25p each |
200,000,000 |
50,000 |
200,000,000 |
50,000 |
|
|
|
|
|
|
|
|
|
Issued and fully paid |
|
|
|
|
|
|
Ordinary shares of 25p each : |
|
|
|
|
|
|
Balance brought forward |
46,309,458 |
11,577 |
47,862,750 |
11,966 |
|
|
Warrants exercised during the year |
644,685 |
162 |
21,708 |
6 |
|
|
Purchase of own shares |
- |
- |
(1,575,000) |
(395) |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
Balance carried forward |
46,954,143 |
11,739 |
46,309,458 |
11,577 |
|
|
|
_____________ |
_____________ |
_____________ |
_____________ |
|
|
|
|
|
|
|
|
|
The Ordinary shares give shareholders the entitlement to all of the capital growth in the Group's assets, and to all the income from the Group that is resolved to be distributed. |
||||
|
|
|
||||
|
|
As at 31 March 2010, there were 12,115,997 Warrants in issue (31 March 2009 - 12,760,682), each Warrant carrying the right to subscribe for one new Ordinary share of 25p in the Company on 2 August 2010. |
||||
|
|
|
||||
|
|
During the year, 644,685 (2009 - 21,708) Warrants were exercised at a price of 100p each, creating 644,685 (2009 - 21,708) new Ordinary shares which were issued for a total consideration of £644,685 (2009 - £21,708). As a result of this, £202,251 (2009 - £6,810) was transferred from the Warrant Reserve to the Warrant Exercise Reserve. |
||||
|
|
|
||||
|
|
Ownership of Subsidiary |
||||
|
|
At the year end, the Company's wholly-owned subsidiary, New India Investment Company (Mauritius) Limited ('the subsidiary') had share capital of 4,275,000 Redeemable Participating Preference shares of £0.10 each ('Preference shares') and 50 Management shares of £1 each. The Company holds 100% of the share capital of the subsidiary. |
||||
|
|
|
||||
|
|
In January 2005 the subsidiary issued a warrant instrument to the Company, giving the Company the right to purchase up to 38,350,900 Preference shares, at an exercise price per share of £20 per share ('the Warrant'). The Warrant is exercisable for 10 years from 14 January 2005. The subsidiary also has the right to repurchase the Warrant in part or in whole. |
||||
|
|
|
||||
|
|
Partial redemption of Subsidiary Warrant |
||||
|
|
On 15 May 2008, the subsidiary purchased part of the Warrant, in relation to 405,900 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £3,004,000 were received by the Company in the form of a partial capital redemption. These proceeds were credited to the capital reserve of the Company. |
||||
|
|
|
||||
|
|
As at 31 March 2010, there was one warrant in issue (2009 - 1) carrying the right for the Company to subscribe for 37,945,000 (2009 - 37,945,000) new Ordinary shares of 10p in the subsidiary at £20 per share. |
||||
|
|
|
||||
|
|
Capital management |
||||
|
|
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders. |
||||
|
|
|
||||
|
|
The capital structure of the Company consists of cash, cash equivalents and equity, comprising issued capital, reserves and retained earnings. |
||||
|
|
|
||||
|
|
The Group's overall strategy remains unchanged from 2009. |
||||
|
|
|
2010 |
2009 |
|
15. |
Capital reserves |
£'000 |
£'000 |
|
|
Group |
|
|
|
|
At 1 April 2009 |
14,844 |
34,064 |
|
|
Currency loss |
(200) |
(61) |
|
|
Movement in investment holdings fair value gains/(losses) |
59,663 |
(15,276) |
|
|
Gain/(loss) on sales of investments |
5,853 |
(3,881) |
|
|
Issuance fee relating to a bonus issue |
- |
(2) |
|
|
|
_____________ |
_____________ |
|
|
At 31 March 2010 |
80,160 |
14,844 |
|
|
|
_____________ |
_____________ |
|
|
|
|
|
|
|
The capital reserve includes gains of £71,363,000 (31 March 2009 - £11,700,000) which relate to the revaluation of investments held at the reporting date. |
||
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
Company |
£'000 |
£'000 |
|
|
At 1 April 2009 |
14,840 |
33,904 |
|
|
Currency loss |
(47) |
(20) |
|
|
Movement in investment holdings fair value gains/(losses) |
64,875 |
(21,962) |
|
|
Gain on sales of investments |
514 |
311 |
|
|
Gain on redemption of Warrant |
- |
2,609 |
|
|
Issuance fee relating to a bonus issue |
- |
(2) |
|
|
|
_____________ |
_____________ |
|
|
At 31 March 2010 |
80,182 |
14,840 |
|
|
|
_____________ |
_____________ |
|
|
|
|
|
|
|
The capital reserve includes gains of £84,430,000 (31 March 2009 - £19,555,000) which relate to the revaluation of investments held at the reporting date. |
||
|
16. |
Net asset value per Ordinary share |
|
|
The basic net asset value per Ordinary share is based on a net asset value of £129,320,000 (2009 - £63,653,000) and on 46,954,143 (2009 - 46,309,458) Ordinary shares, being the number of Ordinary shares in issue at the year end. |
|
|
|
|
|
The diluted net asset value per Ordinary share has been calculated by reference to the total number of Ordinary shares in issue at the year end and on the assumption that those Warrants which are not exercised at the year end, amounting to 12,115,997 (2009 - 12,760,682) Warrants, were exercised on the first day of the financial year at 100p per share, giving a total of 59,070,140 (2009 - 59,070,140) Ordinary shares. |
|
17. |
Financial instruments |
|
|||||||||||
|
|
The Group's financial instruments comprise securities and other investments, cash balances and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement and debtors for accrued income, short-term debtors and creditors. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
The Manager has a dedicated investment management process, which ensures that the investment policy is followed. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Manager's Investment Committee. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
The Manager has an independent Investment Risk department for reviewing the investment risk parameters of the Group's portfolio on a regular basis. The department reports to the Manager's Performance Review Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor predicted portfolio risk and style characteristics using best practice, industry standard multi-factor models. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
Additionally, the Manager's Compliance department continually monitors the Group's investment and borrowing powers and reports to the Manager's Risk Management Committee. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
The main risks arising from the Group's financial instruments are: (i) market price risk; (ii) liquidity risk; and (iii) credit risk. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
The Board regularly reviews and agrees policies for managing each of these risks, and these are summarised below. These policies have remained unchanged since the inception of the Group. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
The Board considers that the carrying amount of all disclosed receivables approximates to their fair values. |
|
|||||||||||
|
|
|
|
|||||||||||
|
|
(i) |
Market price risk |
|
||||||||||
|
|
|
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other price risk. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Interest rate risk |
|
||||||||||
|
|
|
Interest rate movements may affect the level of income receivable on cash deposits. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Financial assets |
|
||||||||||
|
|
|
The interest rate risk profile of the Group's financial assets, excluding equity shares which are non-interest bearing and short-term debtors, as at 31 March 2010 and 31 March 2009 was as follows: |
|
||||||||||
|
|
|
|
|
|
|
||||||||
|
|
|
|
Total |
|
|
||||||||
|
|
|
|
(per Balance Sheet) |
Floating rate |
|
||||||||
|
|
|
|
2010 |
2009 |
2010 |
2009 |
|
||||||
|
|
|
Type |
£'000 |
£'000 |
£'000 |
£'000 |
|
||||||
|
|
|
Cash at bank - Sterling |
288 |
314 |
288 |
314 |
|
||||||
|
|
|
Cash at bank - US Dollar |
1 |
489 |
1 |
489 |
|
||||||
|
|
|
Cash at bank - Indian Rupee |
- |
1,287 |
- |
1,287 |
|
||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
||||||
|
|
|
Total |
289 |
2,090 |
289 |
2,090 |
|
||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates, and are classified as having maturity dates of less than one year. |
|
||||||||||
|
|
|
|
|||||||||||
|
|
|
Financial liabilities |
|||||||||||
|
|
|
The interest rate risk profile of the Group's financial liabilities, excluding short-term creditors, as at 31 March 2010 and 31 March 2009 was as follows: |
|
||||||||||
|
|
|
|
|
|
|
||||||||
|
|
|
|
Total |
|
|
||||||||
|
|
|
|
(per Balance Sheet) |
Floating rate |
|
||||||||
|
|
|
|
2010 |
2009 |
2010 |
2009 |
|
||||||
|
|
|
Type |
£'000 |
£'000 |
£'000 |
£'000 |
|
||||||
|
|
|
Bank overdraft - Sterling |
- |
(623) |
- |
(623) |
|
||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
The floating rate liabilities consist of cash overdraft paying interest at prevailing market rates, and are classified as having maturity dates of less than one year. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Interest rate sensitivity |
|
||||||||||
|
|
|
Movements in interest rates would not significantly affect net assets attributable to the Group's shareholders and total profit. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Foreign currency risk |
|
||||||||||
|
|
|
The Group's total return and net assets can be significantly affected by currency translation movements as the majority of the Group's assets and income are denominated in currencies other than Sterling, which is the Group's functional currency. It is not the Group's policy to hedge this risk but it reserves the right to do so, to the extent possible. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Foreign currency exposure by currency of denomination: |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
|
31 March 2010 |
31 March 2009 |
|
||||||||
|
|
|
|
|
Net |
Total |
|
Net |
Total |
|
||||
|
|
|
|
Overseas |
monetary |
currency |
Overseas |
monetary |
currency |
|
||||
|
|
|
|
investments |
assets |
exposure |
investments |
assets |
exposure |
|
||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
||||
|
|
|
US Dollar |
7,206 |
1 |
7,207 |
3,141 |
489 |
3,630 |
|
||||
|
|
|
Indian Rupee |
121,904 |
- |
121,904 |
59,074 |
1,407 |
60,481 |
|
||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
||||
|
|
|
|
129,110 |
1 |
129,111 |
62,215 |
1,896 |
64,111 |
|
||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
||||
|
|
|
|
|
||||||||||
|
|
|
At 31 March 2010, the exchange rate of the Indian Rupee against the reporting currency Sterling was £1: INR 68.101 compared with an exchange rate of £1: INR 72.721 at 31 March 2009. Based on continuing to hold the same investments in the same quantities from 1 April 2009 to 31 March 2010, all other things being equal, the impact of the exchange rate movement over the year would be to increase the value of the investments by £4,007,000 (2009 - £7,869,000). |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Foreign currency sensitivity |
|
||||||||||
|
|
|
There is no sensitivity analysis included, as the Group's significant foreign currency financial instruments are in the form of equity investments, 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 sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Group are all listed on the Bombay (Mumbai) Stock Exchange and/or The Indian National Stock Exchange, with the exception of the Gail (India) GDR, whose primary exchange is London, and Grasim Industries GDR and Ambuja Cements GDR, whose primary exchange is Luxembourg. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Other price risk sensitivity |
|
||||||||||
|
|
|
If market prices at the Balance Sheet date had been 25% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 March 2010 would have increased /(decreased) by £32,278,000 (2009 - increased/(decreased) by £15,554,000) and equity reserves would have increased /(decreased) by the same amount. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
(ii) |
Liquidity risk |
|
||||||||||
|
|
|
This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered to be significant, as the Group's assets mainly comprise readily realisable securities which can be sold to meet funding requirements, if necessary. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
(iii) |
Credit risk |
|
||||||||||
|
|
|
This is failure of the counterparty to a transaction to discharge its obligations under that transaction, which could result in the Group suffering a loss. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
The risk is not considered to be significant, and is managed as follows: |
|
||||||||||
|
|
|
- |
investment transactions are carried out with a large number of brokers, whose credit standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker; |
|
|||||||||
|
|
|
- |
the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a monthly basis. In addition, the Custodian carries out a stock reconciliation to the Administrators' records on a monthly 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 findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held; and |
|
|||||||||
|
|
|
- |
cash is held only with reputable banks whose credit ratings are monitored on a regular basis. |
|
|||||||||
|
|
|
|
|
||||||||||
|
|
|
None of the Group's financial assets are secured by collateral or other credit enhancements. |
|
||||||||||
|
|
|
|
|
||||||||||
|
|
|
Fair values of financial assets and financial liabilities |
|
||||||||||
|
|
|
Investments held at fair value through profit or loss are valued at their quoted bid prices which equate to their fair values. The Directors are of the opinion that the other financial assets and liabilities are stated at fair value in the Balance Sheet and considered that this is equal to the carrying amount. |
|
||||||||||
|
18. |
Capital management policies and procedures |
|
|||
|
|
The Company's capital management objectives are: |
|
|||
|
|
- |
to ensure that the Company will be able to continue as a going concern; and |
|
||
|
|
- |
to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that debt should not exceed 25% of net assets. |
|
||
|
|
|
|
|
|
|
|
|
The Company's capital at 31 March comprised: |
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
Debt |
|
|
|
|
|
|
Bank overdraft |
- |
623 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
Equity |
|
|
|
|
|
|
Equity share capital |
11,739 |
11,577 |
|
|
|
|
Retained earnings and other reserves |
117,581 |
52,076 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
129,320 |
63,653 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
Debt as a % of net assets |
0.0% |
1.0% |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
The Board, with the assistance of the Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes: |
|
|||
|
|
- |
the planned level of gearing, which takes account of the Manager's views on the market; |
|
||
|
|
- |
the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (ie the level of share price discount or premium); |
|
||
|
|
- |
the need for new issues of equity shares; and |
|
||
|
|
- |
the extent to which revenue in excess of that which is required to be distributed should be retained. |
|
||
|
|
|
|
|
||
|
|
The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. |
|
|||
|
|
|
||||
|
|
The Company had no loan gearing at the year end (2009 - nil). |
|
|||
|
19. |
Fair value hierarchy |
|||||
|
|
The Company adopted the amendments to IFRS 7 'Financial Instruments: Disclosures' effective from 1 January 2009. These amendments require 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 shall have 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). |
|||||
|
|
|
|||||
|
|
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy at 31 March 2010 as follows: |
|||||
|
|
|
|||||
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
Group |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
a) |
129,110 |
- |
- |
129,110 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Net fair value |
|
129,110 |
- |
- |
129,110 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
Company |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
a) |
7,206 |
- |
- |
7,206 |
|
|
Investment in Subsidiary |
b) |
- |
122,063 |
- |
122,063 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Net fair value |
|
7,206 |
122,063 |
- |
129,269 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
a) Quoted equities |
|
|
|
|
|
|
|
The fair value of the Group's investments in quoted equities have been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges. |
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b) Investment in Subsidiary |
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The fair value of the Company's investment in its Subsidiary has been determined by reference to the Subsidiary company's net asset value at the reporting date and hence are categorised in Fair Value Level 2. |
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20. |
VAT recoverable |
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On 5 November 2007, the European Court of Justice ruled that management fees on investment trusts should be exempt from VAT. HMRC has announced its intention not to appeal against this ruling to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company will be processed by HMRC in due course. The Company has not been charged VAT on its investment management fees from 9 December 2004. |
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In 2009 the Company's former Manager, DWS Investment Trust Managers Limited, refunded £33,251 to the Company for VAT charged on investment management fees for the period of their tenure and this has been included in these financial statements. This repayment has been allocated to revenue in line with the accounting policy of the Company for the periods in which the VAT was charged. The reclaim has now been received. |
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This Annual Financial Report announcement is not the Company's statutory accounts. The above results for the year ended 31 March 2010 are an abridged version of the Company's full accounts. The 2009 and 2010 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 s.498 of the Companies Act 2006. The financial information for 2009 is derived from the statutory accounts for 2009 which have been delivered to the Registrar of Companies. The 2010 statutory accounts will be filed with the Registrar of Companies in due course. |
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The Annual Report will be posted to shareholders in due course. Further copies may be obtained from the registered office, Bow Bells House, One Bread Street, London EC4M 9HH or from the Company's website, www.newindia-trust.co.uk. |
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The Annual General Meeting will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH at 11.00 a.m. on 23 September 2010. |
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By Order of the Board Aberdeen Asset Management PLCSecretaries
14 June 2010 |
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This information is provided by RNS
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