TIDMAAIF
RNS Number : 3609I
Aberdeen Asian Income Fund Limited
25 March 2015
ABERDEEN ASIAN INCOME FUND LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2014
STRATEGIC REPORT - COMPANY SUMMARY AND FINANCIAL HIGHLIGHTS
The Company
Aberdeen Asian Income Fund Limited (the "Company") is a
Jersey-incorporated, closed-end investment company and its Ordinary
shares of No Par Value ("Ordinary Shares") are listed on the London
Stock Exchange. The Company is a member of the Association of
Investment Companies.
Investment Objective
The investment objective of the Company is to provide investors
with a total return primarily through investing in Asian Pacific
securities, including those with an above average yield. Within its
overall investment objective, the Company aims to grow its
dividends over time.
Portfolio Management
The investment management of the Company has been delegated by
Aberdeen Private Wealth Management Limited (the "Manager", the
"Alternative Investment Fund Manager" or "AIFM") to Aberdeen Asset
Management Asia Limited ("AAM Asia" or the "Investment Manager").
AAM Asia is based in Singapore and is a wholly-owned subsidiary,
and the Asia Pacific headquarters, of Aberdeen Asset Management PLC
(the "Aberdeen Group"), a publicly-quoted company on the London
Stock Exchange.
Website
Up-to-date information can be found on the Company's website
www.asian-income.co.uk.
Financial Highlights
2014 2013
Ordinary share price total return{A} +6.7% -9.2%
Net asset value total return{A} +7.6% -2.6%
MSCI AC Asia Pacific ex Japan Index
(currency adjusted){A} +9.5% +1.7%
Earnings per Ordinary share - basic
(revenue) 8.24p 8.23p
Dividends per Ordinary share 8.00p 7.90p
Premium to net asset value per Ordinary
share 1.0% 1.8%
Ongoing charges 1.25% 1.24%
{A} 1 year return
STRATEGIC REPORT - OVERVIEW OF STRATEGY
Introduction
The Company aims to attract long term private and institutional
investors wanting to benefit from the growth prospects of Asian
companies including those with above average yields.
The business of the Company is that of an investment company and
the Directors do not envisage any change in this activity in the
foreseeable future. The Company's investment objective and key
results are shown under Financial Highlights below. A review of the
Company's activities is given in the Chairman's Statement and the
Investment Manager's Review. This includes a review of the business
of the Company and its principal activities, likely future
developments of the business and details of any changes in the
issued Ordinary Share capital.
Duration
The Company does not have a fixed life.
MSCI AC Asia Pacific (ex Japan) Index
The Company compares its performance against the
currency-adjusted MSCI AC Asia Pacific (ex Japan) Index. The
Company's portfolio is constructed without reference to any
stockmarket index. It is likely, therefore, that there will be
periods when the Company's performance will be quite unlike that of
any index and there can be no assurance that such divergence will
be wholly or even primarily to the Company's advantage.
Key Performance Indicators (KPIs)
At each Board meeting, the Directors consider a number of
performance measures to assess the Company's success in achieving
its objectives. Below are the main KPIs which have been identified
by the Board for determining the progress of the Company and a
record of these measures is also disclosed under Financial
Highlights below:
-- Net Asset Value Per Ordinary Share
-- Share Price Ordinary Share (mid market)
-- Discount/Premium to NAV per Ordinary Share
-- Dividend Payments per Ordinary Share
-- Ongoing Charges Ratio
Business Model - Investment Policy
The Company primarily invests in the Asia Pacific region through
investment in:
-- companies listed on stock exchanges in the Asia Pacific region;
-- Asia Pacific securities, such as global depositary receipts (GDRs), listed on other international stock
exchanges;
-- companies listed on other international exchanges that derive significant revenues or profits from the
Asia Pacific region; and
-- debt issued by governments or companies in the Asia Pacific region or denominated in Asian Pacific
currencies.
The Company's investment policy is flexible, enabling it to
invest in all types of securities, including equity shares,
preference shares, debt, convertible securities, warrants and other
equity-related securities.
The Company is free to invest in any particular market segments
or any particular countries in the Asia Pacific region.
The Company invests in small, mid and large capitalisation
companies. The Company's policy is not to acquire securities that
are unquoted or unlisted at the time of investment (with the
exception of securities which are about to be listed or traded on a
stock exchange). However, the Company may continue to hold
securities that cease to be quoted or listed if the Investment
Manager considers this to be appropriate.
Typically, the portfolio will comprise 30 to 50 holdings (but
without restricting the Company from holding a more or less
concentrated portfolio in the future). At 31 December 2014 there
were 58 holdings in the portfolio.
The Company will not invest more than 10%, in aggregate, of the
value of its Total Assets in other investment trusts or investment
companies admitted to the Official List, provided that this
restriction does not apply to investments in any such investment
trusts or investment companies which themselves have stated
investment policies to invest no more than 15% of their Total
Assets in other investment trusts or investment companies admitted
to the Official List. In any event, the Company will not invest
more than 15%
of its Total Assets in other investment trusts or investment
companies admitted to the Official List.
In addition, the Company will not:
-- invest, either directly or indirectly, or lend more than 20% of its Total Assets to any single underlying
issuer (including the underlying issuer's subsidiaries or affiliates), provided that this restriction does
not apply to cash deposits awaiting investment;
-- invest more than 20% of its Total Assets in other collective investment undertakings (open-ended or
closed- ended);
-- expose more than 20% of its Total Assets to the creditworthiness or solvency of any one counterparty
(including the counterparty's subsidiaries or affiliates);
-- invest in physical commodities;
-- enter into derivative transactions for speculative purposes;
-- take legal or management control of any of its investee companies; or
-- conduct any significant trading activity.
The Company may invest in derivatives, financial instruments,
money market instruments and currencies solely for the purpose of
efficient portfolio management (i.e. solely for the purpose of
reducing, transferring or eliminating investment risk in the
Company's investments, including any technique or instrument used
to provide protection against exchange and credit risks).
The Investment Manager expects the Company's assets will
normally be fully invested. However, during periods in which
changes in economic conditions or other factors so warrant, the
Company may reduce its exposure to securities and increase its
position in cash and money market instruments.
The Board is responsible for determining the gearing strategy
for the Company. The Board has restricted the maximum level of
gearing to 25% of net assets although, in normal market conditions,
the Company is unlikely to take out gearing in excess of 15% of net
assets. Gearing is used selectively to leverage the Company's
portfolio in order to enhance returns where and to the extent this
is considered appropriate to do so. Borrowings are generally short
term, but the Board may from time to time determine to incur longer
term borrowings where it is believed to be in the Company's best
interests to do so. Particular care is taken to ensure that any
bank covenants permit maximum flexibility of investment policy.
The percentage investment and gearing limits set out under this
sub-heading "Investment Policy" are only applied at the time of the
relevant investment is made or borrowing is incurred.
In the event of any breach of the Company's investment policy,
shareholders will be informed of the actions to be taken by the
Investment Manager by an announcement issued through a Regulatory
Information Service or a notice sent to shareholders at their
registered addresses in accordance with the Articles.
The Company may only make material changes to its investment
policy (including the level of gearing set by the Board) with the
approval of shareholders (in the form of an ordinary resolution).
In addition, any changes to the Company's investment objective or
policy will require the prior consent of the Jersey Financial
Services Commission ("JFSC") to the extent that they materially
affect the import of the information previously supplied in
connection with its approval under Jersey Funds Law or are contrary
to the terms of the Jersey Collective Investment Funds laws.
Principal Risks and Uncertainties
An investment in the Ordinary Shares is only suitable for
investors capable of evaluating the risks (including the potential
risk of capital loss) and merits of such investment and who have
sufficient resources to bear any loss which may result from such
investment. Furthermore, an investment in the Ordinary Shares
should constitute part of a diversified investment portfolio.
The risks described below are those risks that the Directors
considered at the date of this Annual Report to be material but are
not the only risks relating to the Company or its Ordinary Shares.
If any of the adverse events described below actually occur, the
Company's financial condition, performance and prospects and the
price of its Ordinary Shares could be materially adversely affected
and shareholders may lose all or part of their investment.
Additional risks which were not known to the Directors at the date
of this Annual Report, or that the Directors considered at the date
of this Annual Report to be immaterial, may also have an effect on
the Company's financial condition, performance and prospects and
the price of the Ordinary Shares.
-- Investment risk
The Company's investment strategy requires investment in Asia
Pacific equity and bond markets, which involves a greater degree of
risk than that associated with investment in more developed markets
which may lead to a loss of capital. Separately, inappropriate
asset allocation or level of gearing, as part of the investment
strategy adopted by the Company, may result in underperformance
against either the Company's comparative index and/or its peer
group, which may in turn lead to a widening of the discount at
which the Company's shares trade.
Stockmarket movements and changes in economic conditions
(including, for example, interest rates, foreign exchange rates and
rates of inflation), changes in industry conditions, competition,
political and diplomatic events, natural disasters, changes in laws
(including taxation and regulation), investors' perceptions and
other factors beyond the control of either the Company or the
Investment Manager can substantially (either adversely or
favourably) affect the value of the securities in which the Company
invests and, therefore, the Company's financial condition,
performance and prospects.
The Board seeks to manage these risks by diversifying its
investments, as set out in the investment restrictions and
guidelines agreed with the Manager, and on which the Company
receives regular monitoring reports from the Manager. At each Board
meeting, the Directors review the effectiveness of the investment
process with the Manager by assessing relevant management
information including revenue forecasts, absolute/relative
performance data, attribution analysis and liquidity/risk
reports.
Income and dividend risk
There is a risk that the Company fails to generate sufficient
income from its investment portfolio, particularly in periods of
weak equity and bond markets, to meet its operational expenses
which results in it drawing upon, rather than replenishing, its
revenue reserves. This might hamper the Board's capacity to
maintain dividends to shareholders. The Board monitors this risk
through the review of income forecasts, provided by the Manager, at
each Board meeting.
-- Discount volatility
Investment company shares can trade at discounts to their
underlying net asset values, although they can also trade at
premia. Discounts and premia can fluctuate considerably. In order
to seek to minimise the impact of such fluctuations, where the
shares are trading at a significant discount, the Company has
operated a share buy-back programme for a number of years. If the
shares trade at a premium, the Company has the authority to issue
new shares or re-issue shares from treasury. Whilst these measures
seek to minimise volatility, it cannot be guaranteed that they will
do so.
-- Foreign exchange risk
The Company accounts for its activities, reports it NAV and
declares dividends in sterling whilst its investments may be made
and realised in other currencies. The value of the Company's
investments and the income derived from them can, therefore, be
affected by movements in foreign exchange rates. In addition, the
earnings of the Company's investments may also be affected by
currency movements which, indirectly, could have an impact on the
Company's performance. The Company does not currently hedge its
foreign currency exposure.
-- Operational risk
In common with most other investment companies, the Company has
no employees. The Company therefore relies on services provided by
third parties, particularly the Manager, to whom responsibility for
the management of the Company has been delegated under a management
agreement (the "Agreement") (further details of which are set out
in the Directors' Report). The terms of the Agreement cover the
necessary duties and responsibilities expected of the Manager. The
Board reviews the overall performance of the Manager on a regular
basis and their compliance with the Agreement is reviewed formally
on an annual basis.
Contracts with other third party providers, including share
registrar and custodial services, are entered into after
appropriate due diligence. Thereafter, each contract, and the
performance of the provider, is subject to regular formal review.
The security of the Company's assets is the responsibility of the
custodian, BNP Paribas. The effectiveness of the internal controls
at the custodian is subject to review and regular reporting to the
Audit Committee.
-- Regulatory risk
The Company operates in a complex regulatory environment and
faces a number of related risks. A breach of applicable laws and
regulations, such as the UKLA Listing Rules, Jersey Company law or
Accounting Standards, could lead to suspension from the London
Stock Exchange and reputational damage. The Board receives frequent
compliance reports from the Manager to monitor compliance with
regulations.
An explanation of other risks relating to the Company's
investment activities, specifically market price, liquidity and
credit risk, and a note of how these risks are managed, are
contained in note 16 to the Financial Statements.
Alternative Investment Fund Managers Directive ("AIFMD")
In accordance with the Alternative Investment Funds (Jersey)
Regulations 2012, the Jersey Financial Services Commission ("JFSC")
has granted its permission for the Company to be marketed within
any EU Member State or other EU State to which the Directive
applies. The Company's registration certificate with the JFSC is
now conditioned such that the Company "must comply with the
applicable sections of the Codes of Practice for Alternative
Investment Funds and AIF Services Business".
Aberdeen Private Wealth Management Limited ("APWM"), as the
Company's non-EEA alternative investment fund manager, has notified
the UK Financial Conduct Authority in accordance with the
requirements of the UK National Private Placement Regime of its
intention to market the Company (as a non-EEA AIF under the
Directive) in the UK.
In addition, in accordance with Article 23 of the AIFMD and Rule
3.2.2 of the Financial Conduct Authority ("FCA") Fund Sourcebook,
APWM is required to make available certain disclosures for
potential investors in the Company. These disclosures, in the form
of a Pre-Investment Disclosure Document ("PIDD"), are available on
the Company's website: www.asian-income.co.uk.
Foreign Account Tax Compliance Act ("FATCA")
The States of Jersey signed an Intergovernmental Agreement
("IGA") with the United States on 13 December 2013 in a bid to
improve tax compliance and implement FATCA. Jersey also signed an
IGA with the UK on 22 October 2013. Companies that are classified
as Financial Institutions will have an obligation to report on any
UK or US Specified persons identified during their due diligence.
As a result of the IGAs, Jersey companies must report to the
Comptroller of Taxes at the Jersey Taxes Office, and not directly
to the IRS. Jersey companies have to report relevant information
for the previous calendar year to the Comptroller by 30 June. The
Comptroller has until September 2015 to forward information
relating to the 2014 calendar year to the competent authority in
the US. Under US FATCA, Companies may suffer a withholding tax at
an effective rate of 30% as a result of non-compliance.
Board Diversity
The Board recognises the importance of having a range of
skilled, experienced individuals with the right knowledge in order
to allow the Board to fulfill its obligations. At 31 December 2014,
in respect of gender diversity specifically there were five male
Directors and one female Director. The Company has no employees.
The Board's statement on diversity more generally is set out in the
Annual Report.
Environmental, Social and Human Rights Issues
The Company has no employees as it is managed by Aberdeen
Private Wealth Management Limited. There are therefore no
disclosures to be made in respect of employees. The Company's
socially responsible investment policy is outlined in the Statement
of Corporate Governance contained in the Annual Report.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from the
operations of its business, nor does it have direct responsibility
for any other emissions producing sources.
Peter Arthur
Chairman
24 March 2015
STRATEGIC REPORT - CHAIRMAN'S STATEMENT
Background and Overview
Your Company's net asset value total return was 7.6% for the
year ended 31 December 2014, trailing the 9.5% gain in the MSCI All
Country Asia Pacific ex-Japan Index. On a total return basis the
share price rose by 6.7% to 199.9p. Despite this relatively
disappointing recent performance, the longer term track record
remains highly creditable, with the NAV total return being 76.6%
compared to 36.0% for the Index for the five years to 31 December
2014. The premium over net asset value contracted marginally from
1.8% to 1.0% at year end, whereas at the time of writing they are
trading at a discount of 3.1% Total dividends for the year amounted
to 8.0p (2013: 7.9p) representing a slight increase of 1.2% over
2013.
Last year was eventful for higher-yielding stocks, which
returned to favour after their poor performance in 2013. Continued
low interest rates, together with uncertainty surrounding an
increasingly divergent policy landscape among key central banks,
drove demand for dividend-paying stocks. While the US Federal
Reserve terminated its asset purchase programme, pressure mounted
on Europe, China and Japan to turn on their stimulus taps. At the
time of writing, the European Central Bank has now started to
implement the purchase of EUR60 billion in bonds every month until
September 2016. Japan, too, has expanded its monetary base in an
attempt to ward off the spectre of deflation.
Although falling shy of the double-digit returns of the US,
Asian equities outperformed most of their emerging and developed
market counterparts. Headlines were dominated by landmark political
developments, notably in India, Indonesia and Thailand. In India
and Indonesia, the prospect of sweeping policy change after the
elections led both indices to gain over 30% in sterling terms,
although your Company has little direct exposure to their equity
markets due to the generally low yields on offer. Conversely, the
exposure to Thailand added to performance: the stockmarket rallied
after the military seized power following months of political
unrest. Investors were cheered by the prospect of relative
stability and the resumption of stalled infrastructure
investments.
In the second half of the year, plummeting oil prices threw
markets into disarray. Amid lacklustre demand and OPEC's decision
to maintain production levels, crude prices ended the year at half
their summer levels. While oil exporters such as Malaysia have been
pressured by the prospect of lower government revenues, the rest of
Asia, which is a net importer, seems likely to benefit. Cheaper oil
has also given greater policy flexibility to lawmakers, some of
whom have taken the opportunity to dismantle expensive fuel
subsidies, freeing up resources for more productive uses, such as
investment in infrastructure and healthcare.
Your Company's small exposure to China hampered returns in the
fourth quarter. The market far outstripped its regional peers
towards the end of the year, despite recurring concerns over a
potential property bubble and disappointing growth figures. Stocks
were buoyed by the central bank's move to reduce interest rates and
inject liquidity into the banking system. Hong Kong posted
comparatively subdued returns, as pro-democracy protests towards
the year-end weighed on sentiment.
Dividends
Four quarterly dividends were declared over 2014. The first
three were paid at the rate of 1.8p totalling 5.4p which, when
added to the fourth dividend of 2.6p, represented an overall
increase of 1.2% for the year to stand at 8.0p. In the year to 31
December 2014, after deducting the payment of the fourth interim
dividend, approximately GBP0.45 million has been transferred to the
Company's revenue reserves which now amount to GBP7.25 million
(approximately 3.7p per share).
Looking ahead, your Investment Manager does not anticipate a
substantial increase in absolute dividends in the current year.
While the balance sheets of your Company's holdings remain
resilient, your Investment Manager expects market volatility to
persist well into 2015. Given the challenging operating
environment, earnings growth is likely to remain muted.
Ordinary Share Issuance and Gearing
During the year, there was further demand for your Company's
Ordinary shares and 800,000 new Ordinary Shares were issued at a
premium to the prevailing NAV. Such issues enhance the NAV (albeit
marginally) for existing shareholders.
Your Company entered into a new unsecured three year GBP30
million multi currency facility with Scotiabank (Ireland) Limited
which replaced a GBP15 million secured facility that matured in
April 2014. At the period end approximately GBP29.7 million was
drawn down under the facility (USD11.0 million, HKD252.8 million
and GBP1.7 million) representing a gearing level of 6.8% of net
assets which overall has been beneficial to the net asset value
performance over the period under review. Subsequent to the period
end the Company has agreed an extra facility with Scotiabank Europe
PLC in the form of a GBP10.0 million term loan facility. On 4 March
2015 GBP10 million was drawn down under the new facility for a
fixed three year period at an all-in interest rate of 2.2175%. At
the time of writing the equivalent of GBP39.4 million has been
drawn down in sterling, Hong Kong and US dollars under the
facilities, representing a gearing level of 9.7% of net assets.
Directorate
As part of the Board's succession planning, Dr Armstrong has
indicated her intention to retire at the forthcoming Annual General
Meeting and not to seek re-election to the Board. I would like to
take this opportunity to thank Ana for her considerable
contribution to the Company since its launch in 2005 and to wish
her well for the future.
The Directors, through the Nomination Committee, have initiated
a search for a new Director by preparing a specification of the
skills and experience required and a detailed search has been
undertaken using the services of an independent external
recruitment company. The process is well advanced and the Board
expects to be able to update shareholders in due course.
Outlook
Asian stock markets will be steered by some of the same issues
that drove sentiment last year. The evolving expectations
surrounding the timing of a US interest rate hike will continue to
foment volatility. At the time of writing, most signs point to an
environment of looser monetary policy in the near term, given
falling oil prices and still-anaemic levels of growth in most
developed markets apart from the US. Even with the relatively
upbeat backdrop, economic data from the US has been patchy, while
still-low inflation could ease pressure on the Fed to raise its
benchmark rate within the first half of the year. A looser policy
environment might prove positive for most asset classes, including
equities, but one feels that this only delays the crucial
realignment between company fundamentals and share price
performance. Meanwhile, risk appetite continues to be vulnerable to
further shocks in both the oil and currency markets.
We expect Asia to be the fastest growing region of the world in
2015 albeit muted by its own high historic standards. Notably,
while Chinese authorities will undoubtedly cushion the impact of a
slowdown with targeted easing measures, its growth forecasts this
year are still hovering at the decade-low level of 7%. The rest of
the region, previously buoyed by China's insatiable appetite for
their exports, will similarly have to adjust to lower levels of
expansion.
That said, the investment case for Asia remains attractive for
an investor with a long-term horizon. Young populations with rising
wealth, coupled with relatively stable political environments and
proactive central banks, will continue to underpin growth in the
decades ahead. On the corporate front, investment flows into
high-yielding stocks are likely to be dictated in the near term by
the vacillating expectations regarding US interest rates. But your
Company's holdings continue to warrant confidence. Selected for
their defensiveness and solid fundamentals, they are
well-positioned to produce healthy dividend growth in the
longer-term despite the challenging macroeconomic environment.
Annual General Meeting
Your Company's Annual General Meeting ("AGM") will be held at
10.30 a.m. on Thursday 7 May 2015 at the Company's registered
office, 1st Floor, Sir Walter Raleigh House, 48 - 50 Esplanade, St
Helier JE2 3QB. Your Board looks forward to meeting as many
shareholders as possible. If you are unable to attend the AGM, I
would encourage you to vote by returning your proxy (or letter of
directions if you invest via the Aberdeen Savings Plans) which is
enclosed with the Annual Report and financial statements. If you
intend to attend the AGM, I would also be grateful if you would
tick the relevant box when voting.
I look forward to reporting to you again with the Half Yearly
Report to 30 June 2015, which will be issued to shareholders around
the end of August 2015. Those shareholders who wish to keep up to
date with developments between formal reports may wish to view the
monthly factsheet and other useful information relating to the
Company at www.asian-income.co.uk.
Peter Arthur
Chairman
24 March 2015
STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW
Overview
Asian equities rose in 2014, a year marked by political change
and the start of monetary policy divergence. Asia outperformed most
peers in emerging markets and advanced counterparts in Europe but
lagged the double-digit gains in the US. Sentiment was influenced
by major central banks' policy decisions, including the Bank of
Japan's plan to expand its monetary base to stave off deflation and
the state pension fund's reallocation towards equities. In China,
the government continued to announce targeted easing measures and
the central bank cut interest rates to boost growth. Juxtaposed
against this was the US Federal Reserve's decision to end
quantitative easing. Expectations of a rate hike some time in 2015
strengthened the US dollar and pared market gains in Asia. This was
exacerbated by the plunge in global oil prices, which heightened
risk aversion. On a positive note, inflation eased because of
cheaper oil, allowing various authorities to cut fuel subsidies
that were a significant strain on budgets.
Performance Review
During the review period, the Company's net asset value rose by
7.6% and the share price rose by 6.7%, compared to the MSCI AC Asia
Pacific ex Japan Index's gain of 9.5% (on a total return basis).
Volatility was heightened in 2014, with a refocus on the search for
yield, as expectations of a US rate hike were pushed out, and
long-term interest rates continued to decline on weakening
inflation. Overall, your Company's underlying portfolio provided
steady dividends, backed by decent earnings growth and cash
generation. Furthermore, balance sheets remained robust.
The Company's outperformance, which lasted until the end of
September, was eroded in the fourth quarter, primarily by the small
exposure to China and the Company's holdings in Hong Kong. Its
portfolio does not hold Chinese banks, a large part of the
comparative index, and they rebounded on the back of looser
monetary policy to help boost economic growth. Among these policy
moves were a cut in interest rates, lower bank loan-to-deposit
ratios and a liquidity injection, all of which helped to mask
concerns over local banks' asset quality and potential losses.
However, unless there are substantial market reforms that inspire
greater confidence in the banks' ability to operate commercially,
it is unlikely that we would change our stance on introducing them
to the portfolio. Similarly, this goes for Chinese insurance firms,
even though they benefited from the stimulus measures.
Over the full year, your Company's banking sector holdings were
a considerable drag on performance. In particular, HSBC in Hong
Kong detracted. Weak economic sentiment in the bank's core markets
continued to weigh on earnings. Its profits were also hampered by
higher compliance costs and provisions for various fines. The bank
has a big global retail presence, with over US$1 trillion in
deposits. As it restructures, earnings could face more near-term
pressure, but looking ahead, it should benefit from the
normalisation of interest rates and an economic recovery in its
core markets. Meanwhile, Standard Chartered, also a holding,
continued to face headwinds. The lender warned that profits would
be hurt by unexpected commodities-related provisions, and there is
the possibility of fresh probes by US regulators into alleged
sanction violations. Some of its problems are cyclical and should
be resolved in the medium term. More structural ones will require
management to reprioritise investments, divest non-core businesses
and streamline riskier portfolios. We think Standard Chartered's
advantage lies in its peerless focus on emerging markets, replete
with banking licences and long-term customer relationships,
something that cannot be easily replicated, and it is still an
exciting franchise. In recent top management changes Bill Winters
will replace Peter Sands as CEO in June. Meanwhile, group executive
director Jaspal Bindra will step down this year and chairman John
Peace will follow suit in 2016. New independent directors will also
be appointed. These changes are no surprise and we believe they are
important steps in strengthening the bank and positioning it for an
emerging markets recovery.
Elsewhere in Hong Kong, Giordano suffered from a difficult
operating environment, particularly in China. However, the clothing
retailer is revamping its cost base and closing unprofitable shops.
Notably, it still has a very strong balance sheet. The dividend was
cut but the yield still remains attractive. Retail sales in the US
were also subdued, and this weighed on Li & Fung. However, we
are positive about the firm's renewed focus on global supply-chain
management, after it spun off its brands management business in the
form of Global Brands Group.
India and Indonesia were among the top performing markets as
they rode on a wave of elections euphoria. Pro-reform candidates in
both countries were elected into power and made some headway in
keeping their promises to cut corruption and bureaucracy, while
boosting infrastructure spending. However, the portfolio does not
have exposure to India, as companies there generally do not pay out
much of their earnings in dividends, preferring to reinvest cash.
The Indonesian holding in coal producer, Indo Tambangraya Mega, was
weighed down by falling coal prices owing to slower demand from
China. However, the firm is still cash generative and profitable
due to its low cost base.
The Malaysian stockmarket fell mainly owing to the sharp fall in
oil prices, as the country is a net oil exporter. The stock price
of our holding in brewer Guinness Anchor was affected by fears of a
weaker outlook for consumer spending and by speculation of a hike
in excise duties on alcohol to help the government compensate for
the growing budget deficit. We think that the firm's robust cash
generation and strong balance sheet will continue to support its
attractive dividend payments over the longer term. Management has
also embarked on cost cutting and improving productivity.
On a positive note, the portfolio's significant exposure to
Thailand benefited performance as investors reacted positively to
the military coup, which, outwardly at least, restored the
semblance of stability and allowed the resumption of government
spending on infrastructure. Our holdings of local utility,
Electricity Generating, and Hana Microelectronics posted solid
results and the share price of our investment in Advanced Info
Service rose on hopes that the new government would restart the
auction process for 3G spectrum licenses. The firm's results were
underpinned by robust non-voice revenues and stable margins. It
also maintained its 100% dividend payout policy.
Conversely, the lack of exposure to Korea aided performance as
growth slowed and export demand weakened. Consumer sentiment was
also subdued. The portfolio does not hold Korean stocks as dividend
yields tend to be low.
Singapore rose in line with the benchmark and Singapore Post was
a key contributor. The firm continues to invest in regional
e-commerce capabilities and Chinese industry giant Alibaba bought a
strategic stake. We welcome this development and think that
Singapore Post should be well-positioned to benefit from the
fast-growing e-commerce opportunities in the region.
We also invest in bonds when we know the underlying issuer well,
and see attractive yields. The exposure to fixed income benefited
performance, in particular the bond issued by Sri Lankan DFCC Bank.
The bond was priced with a good yield, and rallied in line with the
local stockmarket on improved growth sentiment.
Portfolio Activity
Over the year, we sold Singapore Press Holdings, Takeda
Pharmaceutical and Global Brands Group. Singapore Press Holdings'
core newspaper business has been in gradual decline. In addition,
the hidden value in the property business was largely realised
after it was spun off and cash was returned to shareholders in the
form of a special dividend. For Takeda Pharmaceutical, we were
concerned over its ongoing lawsuits involving its diabetes drug
Actos and threats to its current portfolio from generic drug
manufacturers. With Global Brands Group, we had received our shares
through the holding in Li & Fung, but found its dividend yield
not sufficiently attractive.
Against this, we introduced Indonesia-based coal miner Indo
Tambangraya Megah, mining giant Rio Tinto and emerging
markets-focused lender Standard Chartered. Indo Tambangraya Megah
has a robust balance sheet to support its dividend policy, and its
largest shareholder Thai-listed Banpu would welcome the dividend
income. With Rio Tinto, we remain confident that management will
improve capital management, while Standard Chartered was also
trading at attractive valuations at the time. Furthermore, we
subscribed to OCBC's rights issue, as the core holding has a solid
track record of being conservatively managed, plus the Wing Hang
acquisition in Hong Kong will enable the bank to extend its
business in North Asia effectively.
In fixed income, we subscribed to Green Dragon Gas' bond issue
in view of its attractive yield. We have followed the Chinese gas
producer for some time and hence understand the business and
underlying risks.
Outlook
We expect the overall business environment in Asia to remain
challenging as global growth remains sluggish. Earnings growth for
2015 will likely be in the single-digits, amid continued volatility
spurred by central bank action. At the time of writing a series of
interest rate cuts and stimulus measures by central banks,
including, Australia, Canada, China and Europe, are likely to
intensify the search for yield. This should favour companies that
continue to pay out attractive dividends. In terms of the
portfolio, valuations look reasonable versus regional benchmarks
and developed markets, with a price-to-earnings ratio of 14.4 times
for 2014, and a forecast of 14 times for 2015. Overall, the
Company's holdings are relatively defensive with robust cash
generation and solid balance sheets to support dividend
payments.
Aberdeen Asset Management Asia Limited
24 March 2015
STRATEGIC REPORT - RESULTS
Financial Highlights
31 December 31 December % change
2014 2013
Total assets GBP414,538,000 GBP384,136,000 +7.9
Total equity shareholders'
funds (net assets) GBP384,868,000 GBP371,117,000 +3.7
Market capitalisation GBP388,824,000 GBP377,780,000
Share price Ordinary share
(mid market) 199.88p 195.00p +2.5
Net asset value per Ordinary
share 197.84p 191.56p +3.3
Premium to net asset value
per Ordinary share 1.0% 1.8%
MSCI AC Asia Pacific ex Japan
Index (currency adjusted, capital
gains basis) 560.65 528.87 +6.0
Net gearing{A} 6.8% 2.6%
Dividend and earnings
Total return per Ordinary share{B} 14.17p (6.69p)
Revenue return per Ordinary
share{B} 8.24p 8.23p +0.1
Dividends per Ordinary share{C} 8.00p 7.90p +1.3
Dividend cover per Ordinary
share 1.03 1.04
Revenue reserves{D} GBP7.25m GBP6.81m
Ongoing charges{E}
Ongoing charges ratio 1.25% 1.24%
{A} Calculated in accordance with AIC guidance
"Gearing Disclosures post RDR"
{B} Measures the relevant earnings for the year
divided by the weighted average number of Ordinary
shares in issue (see Statement of Comprehensive
Income).
{C} The figure for dividends reflects the years
in which they were earned (see note 8 to the financial
statements).
{D} The revenue reserves figure takes account of
the fourth interim dividend amounting to GBP5,058,000
(2013 - fourth interim amounting to GBP4,843,000).
{E} Ongoing charges have been calculated in accordance
with guidance issued by the AIC as the total of
investment management fees (excluding performance
fees) and administrative expenses divided by the
average cum income net asset value throughout the
year.
Performance (total return)
Since
1 year 3 year 5 year launch{A}
% return % return % return % return
Share price (Ordinary) +6.7 +33.0 +78.6 +175.8
Net asset value (diluted) +7.6 +34.7 +76.6 +178.7
MSCI AC Asia Pacific ex
Japan Index (currency adjusted) +9.5 +30.6 +36.0 +127.5
All figures are for total return and assume re-investment
of net dividends.
{A} Launch being 20 December 2005.
Dividends per Ordinary Share
Rate xd date Record date Payment date
First interim 1.80p 30 April 2 May 2014 16 May 2014
2014 2014
Second interim 1.80p 16 July 18 July 2014 22 August
2014 2014 2014
Third interim 1.80p 23 October 24 October 17 November
2014 2014 2014 2014
Fourth interim 2.60p 22 January 23 January 18 February
2014 2015 2015 2015
______
2014 8.00p
______
First interim 1.80p 24 April 26 April 17 May 2013
2013 2013 2013
Second interim 1.80p 17 July 19 July 2013 23 August
2013 2013 2013
Third interim 1.80p 23 October 25 October 15 November
2013 2013 2013 2013
Fourth interim 2.50p 15 January 17 January 18 February
2013 2014 2014 2014
______
2013 7.90p
______
DIRECTORS' REPORT
Introduction
The Directors present their Report and the audited financial
statements for the year ended 31 December 2014.
The current Directors, Messrs Peter Arthur, Duncan Baxter,
Andrey Berzins, Charles Clarke, Hugh Young and Dr Ana Armstrong
held office throughout the year and were the only Directors in
office during the year.
The Company and its Investment Policy
The business of the Company is that of an investment company
investing in the Asia Pacific region. The investment policy and
objective of the Company is set out in the Strategic Report. The
primary aim of the Company is to provide investors with a total
return primarily through investing in Asian Pacific securities,
including those with an above average yield. Within its overall
investment objective, the Company aims to grow its dividends over
time.
A review of the Company's activities is given in the Strategic
Report. This includes the overall strategy of the Company and its
principal activities, main risks faced by the Company, likely
future developments of the business and the details of any issues
of Ordinary Shares for cash by the Company.
Status
The Company is registered with limited liability in Jersey as a
closed-end investment company under the Companies (Jersey) Law 1991
with registered number 91671. In addition, the Company constitutes
and is regulated as a collective investment fund under the
Collective Investment Funds (Jersey) Law 1988 and is an Alternative
Investment Fund (within the meaning of Regulation 3 of the
Alternative Investment Fund Regulations). The Company has no
employees and the Company makes no political donations. The
Ordinary Shares are admitted to the Official List in the premium
segment and are traded on the London Stock Exchange's Main
Market.
The Company is a member of the Association of Investment
Companies ("AIC").
The Company intends to manage its affairs so as to be a
qualifying investment for inclusion in the stocks and shares
component of an Individual Savings Account ('ISA') and it is the
Directors' intention that the Company should continue to be
equivalent to a qualifying trust.
Results and Dividends
Details of the Company's results and dividends are shown under
Financial Highlights above and in note 8 to the Financial
Statements. Interim dividends were paid on a quarterly basis in
May, August, November 2014 and February 2015. The Board believes
that it is preferable for shareholders to receive regular interim
dividend payments on a quarterly basis and accordingly no final
dividend is declared and shareholders are not required to wait
until approval is given at the AGM for any payments. Dividends are
paid to the extent that they are covered by the Company's revenue
reserves. As at 31 December 2014 the Company's revenue reserves
(adjusted for the payment of the fourth interim dividend) amounted
to GBP7.25 million (approximately 3.7p per Ordinary Share).
Management Arrangements
The Company has an agreement with Aberdeen Private Wealth
Management Limited, subject to six months' notice, for the
provision of management services, details of which are shown in
note 5 to the financial statements. The Directors review the terms
of the Management Agreement on a regular basis and have confirmed
that, due to the investment skills, experience and commitment of
the Investment Manager, in their opinion the continuing appointment
of Aberdeen Private Wealth Management Limited, on the terms agreed,
is in the interests of shareholders as a whole.
Ordinary Share Capital
As at 31 December 2014 there were 194,533,389 Ordinary Shares in
issue. During the year the Company issued a total of 800,000 new
Ordinary Shares for cash at a premium to the prevailing NAV at the
time of issue.
Directors
The Directors' beneficial holdings are disclosed in the
Directors' Remuneration Report. No Director has a service contract
with the Company. The Directors' interests in contractual
arrangements with the Company are as shown in note 18 to the
financial statements. No other Directors were interested in
contracts with the Company. Details of the Directors retiring by
rotation at the Annual General Meeting are disclosed in the
Statement of Corporate Governance.
Directors' Authority to Allot Relevant Securities
There are no provisions under Jersey law which confer rights of
pre-emption upon the issue or sale of any class of shares in the
Company. However, the Company has a premium listing on the London
Stock Exchange and is required to offer pre-emption rights to its
shareholders. Accordingly, the Articles of Association contain
pre-emption provisions similar to those found under UK law in
satisfaction of the Listing Rules requirements. Ordinary Shares
will only be issued at a premium to the prevailing net asset value
per Ordinary Share and, therefore, will not be disadvantageous to
existing shareholders. Any future issues of Ordinary Shares will be
carried out in accordance with the Listing Rules.
Unless previously disapplied by special resolution, in
accordance with the Listing Rules, the Company is required to first
offer any new Ordinary Shares or securities (or rights to subscribe
for, or to convert or exchange into, Ordinary Shares) proposed to
be issued for cash to shareholders in proportion to their holdings
in the Company. In order to continue with such Ordinary Share
issues, as in previous years, your Board is also proposing that its
annual disapplication of the pre-emption rights is renewed so that
the Company may continue to issue Ordinary Shares as and when
appropriate. Accordingly, Resolution 10, a Special Resolution,
proposes a disapplication of the pre-emption rights in respect of
10% of the Ordinary Shares in issue, set to expire on the earlier
of eighteen months from the date of the resolution or at the
conclusion of the Annual General Meeting to be held in 2016.
Purchase of the Company's Securities
The Directors aim to operate an active discount management
policy through the use of Ordinary Share buy backs, should the
Company's shares trade at a significant discount. The objective
being to maintain the price at which the Ordinary Shares trade
relative to their underlying net asset value at a discount of no
more than 5%. Purchases of Ordinary Shares will only be made
through the market for cash at prices below the prevailing net
asset value per Ordinary Share (which, subject to shareholder
approval at the AGM will be the latest estimated net asset value
per Ordinary Share) where the Directors believe such purchases will
enhance shareholder value and are likely to assist in narrowing any
discount to net asset value at which the Ordinary Shares may
trade.
Resolution 9, a Special Resolution, will be proposed to renew
the Directors' authority to make market purchases of the Company's
Ordinary Shares in accordance with the provisions of the Listing
Rules of the Financial Conduct Authority. Accordingly, the Company
will seek authority to purchase up to a maximum of 29,160,555
Ordinary Shares (representing 14.99% of the current issued Ordinary
Share capital). The authority being sought will expire at the
conclusion of the Annual General Meeting in 2016 unless such
authority is renewed prior to such time. Any Ordinary Shares
purchased in this way will be cancelled and the number of Ordinary
Shares will be reduced accordingly, or the Ordinary Shares will be
held in treasury. During the year and subsequent to the period end
no Ordinary Shares have been purchased in the market for
cancellation or treasury.
Under Jersey company law, Jersey companies can either cancel
shares or hold them in treasury following a buy-back of shares.
Repurchased shares will only be held in treasury if the Board
considers that it will be in the interest of the Company and for
the benefit of all shareholders. Any future sales of Ordinary
Shares from treasury will only be undertaken at a premium to the
prevailing net asset value per Ordinary Shares.
Amendment to Articles Re: Offshore Board Meetings
Following a recent relaxation in approach by the UK government
to the holding of board meetings in the UK by non-UK incorporated
alternative investment funds for the purpose of determining tax
residency, your Board is seeking to remove current restrictions on
the location of its Board meetings contained in the Company's
articles of association. Previously, holding a Board meeting in the
UK gave rise to the risk that the Company would be regarded as tax
resident in the UK. However, changes introduced in the UK during
2014 mean that this is no longer the case. Whilst the Directors
have no current plans to change their practice of holding their
Board meetings offshore, the Board believes it is in shareholders'
best interests for the Board to have maximum flexibility regarding
the location of its Board meetings. As a consequence, the Directors
are proposing that all restrictions on the location of Board
meetings, and the non-validity of Board resolutions passed at
meetings held in the UK or Ireland, are removed from the articles
of association. Accordingly, Resolution 11, a Special Resolution to
adopt new articles of association containing such amendments, is
being proposed at the AGM. No other changes are being proposed to
the articles of association at this time and therefore the new
articles of association proposed to be adopted are the same as the
existing articles of association in all other respects.
A copy of the new articles of association, together with a
blacklined version showing the proposed changes, will be available
for inspection at the offices of Aberdeen Asset Management PLC, Bow
Bells House, 1 Bread Street, London EC 4M 9HH from the date of the
Annual Report until the close of the AGM.
Recommendation
Your Board considers Resolutions 9 to 11 to be in the best
interests of the Company and its members as a whole. Accordingly,
your Board recommends that shareholders should vote in favour of
Resolutions 9 to 11 to be proposed at the Annual General Meeting,
as they intend to do in respect of their own beneficial
shareholdings which amount to 217,837 Ordinary Shares.
Directors' & Officers' Liability Insurance
The Company maintains insurance in respect of Directors' &
Officers' liabilities in relation to their acts on behalf of the
Company. Furthermore, each Director of the Company shall be
entitled to be indemnified out of the assets of the Company to the
extent permitted by law against all costs, charges, losses,
expenses and liabilities incurred by him or her in the actual or
purported execution and/or discharge of his or her duties and/or
the exercise or purported exercise of his or her powers and/or
otherwise in relation to or in connection with his or her duties,
powers or office. These rights are included in the Articles of
Association of the Company and the Company has granted indemnities
to the Directors on this basis.
Additional Information
There are no restrictions on the transfer of Ordinary Shares in
the Company other than certain restrictions which may from time to
time be imposed by law (for example, insider trading and market
abuse restrictions).
The Company is not aware of any agreements between shareholders
that may result in restriction on the transfer of securities and/or
voting rights.
The rules governing the appointment of Directors are set out in
the Statement of Corporate Governance. The Company's Articles of
Association may only be amended by a special resolution at a
general meeting of shareholders.
The Company is not aware of any significant agreements to which
it is a party that take effect, alter or terminate upon a change of
control of the Company following a takeover.
Other than the management and administration contracts with the
Investment Manager, set out earlier in the report, the Company is
not aware of any contractual or other agreements which are
essential to its business which ought to be disclosed in the
Directors' Report.
Corporate Governance
The Statement of Corporate Governance forms part of this
Directors' Report and covers the Company's compliance with the UK
Corporate Governance Code.
Going Concern
The Directors have undertaken a rigorous review of the Company's
ability to continue as a going concern. The Company's assets
consist primarily of a diverse portfolio of listed equity shares
which in most circumstances are realisable within a very short
timescale.
The Directors are mindful of the principal risks and
uncertainties disclosed in the strategic Report and have reviewed
forecasts detailing revenue and liabilities and the Directors
believe that the Company has adequate financial resources to
continue its operational existence for the foreseeable future and
at least 12 months from the date of this Annual Report.
Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
Accountability and Audit
The respective responsibilities of the Directors and the Auditor
in connection with the financial statements are set out in the
Annual Report.
Each Director confirms that, so far as he or she is aware, there
is no relevant audit information of which the Company's Auditor is
unaware, and he or she has taken all reasonable steps that they
ought to have taken as a Director in order to make themselves aware
of any relevant audit information and to establish that the
Company's Auditor is aware of that information. Additionally there
are no important events since the year end other than as disclosed
in the notes to the financial statements.
Independent Auditor
Our Auditor, Ernst & Young LLP, has indicated its
willingness to remain in office. The Directors will place a
Resolution before the Annual General Meeting to re-appoint them as
independent Auditor for the ensuing year, and to authorise the
Directors to determine their remuneration.
Peter Arthur
Chairman
24 March 2015
1(st) Floor, Sir Walter Raleigh House
48 - 50 Esplanade, Jersey JE2 3QB
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Jersey Company law requires the Directors to prepare financial
statements for each financial period in accordance with any
generally accepted accounting principles. The financial statements
of the Company are required by law to give a true and fair view of
the state of affairs of the Company and of the profit or loss of
the Company for that period. In preparing these financial
statements, the Directors should:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- specify which generally accepted accounting principles have
been adopted in their preparation;
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business. and,
- assess whether the Annual Report and financial statements,
taken as a whole, is 'fair, balanced and understandable'.
The Directors are responsible for keeping accounting records
which are sufficient to show and explain its transactions and are
such as to disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements prepared by the Company comply with the
requirements of the Companies (Jersey) Law 1991. They are also
responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors listed in the Annual Report, being the persons
responsible, hereby confirm to the best of their knowledge:
- that the financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), as
adopted by the International Accounting Standards Board
("IASB"),and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company;
- that in the opinion of the Directors, the Annual Report and
financial statements taken as a whole, is fair, balanced and
understandable and it provides the information necessary to assess
the Company's performance, business model and strategy; and
- the Strategic Report, including the Chairman's Statement and
the Investment Manager's Review, include a fair review of the
development and performance of the business and the position of the
Company together with a description of the principal risks and
uncertainties that the Company faces.
For and on behalf of the Board
Peter Arthur
Chairman
24 March 2015
1(st) Floor, Sir Walter Raleigh House
48 - 50 Esplanade
Jersey JE2 3QB
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in Jersey governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions
STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 2014 31 December 2013
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 4
Dividend income 17,254 - 17,254 17,544 - 17,544
Interest income 2,079 - 2,079 1,192 - 1,192
_______ _______ _______ _______ _______ ______
Total revenue 19,333 - 19,333 18,736 - 18,736
Gains/(losses) on
investments designated
at fair value through
profit or loss 10 - 15,582 15,582 - (23,927) (23,927)
Net currency (losses)/gains - (1,631) (1,631) - 98 98
_______ _______ _______ _______ _______ ______
19,333 13,951 33,284 18,736 (23,829) (5,093)
_______ _______ _______ _______ _______ ______
Expenses
Investment management
fee 5 (1,506) (2,259) (3,765) (1,578) (2,368) (3,946)
Other operating expenses 6 (994) - (994) (995) - (995)
_______ _______ _______ _______ _______ ______
Profit/(loss) before
finance costs and
tax 16,833 11,692 28,525 16,163 (26,197) (10,034)
_______ _______ _______ _______ _______ ______
Finance costs 7 (112) (169) (281) (88) (133) (221)
_______ _______ _______ _______ _______ ______
Profit/(loss) before
tax 16,721 11,523 28,244 16,075 (26,330) (10,255)
Tax expense 2(d) (737) (17) (754) (805) (2) (807)
_______ _______ _______ _______ _______ ______
Profit/(loss) for
the year 15,984 11,506 27,490 15,270 (26,332) (11,062)
_______ _______ _______ _______ _______ ______
Profit/(loss) for
the year analysed
as follows:
Attributable to equity
shareholders 15,984 11,506 27,490 15,270 (27,696) (12,426)
Attributable to C
shares - - - - 1,364 1,364
_______ _______ _______ _______ _______ ______
Total 15,984 11,506 27,490 15,270 (26,332) (11,062)
_______ _______ _______ _______ _______ ______
Earnings per Ordinary
share (pence): 9
Basic 8.24 5.93 14.17 8.23 (14.92) (6.69)
_______ _______ _______ _______ _______ ______
Earnings per C share
(pence): 9
Basic and diluted n/a n/a n/a n/a 2.27 2.27
_______ _______ _______ _______ _______ ______
The Company does not have any income or expense that
is not included in profit/(loss) for the year, and therefore
the "Profit/(loss) for the year" is also the "Total
comprehensive income for the year", as defined in IAS
1 (revised).
All of the profit/(loss) and total comprehensive income
is attributable to the equity holders of Aberdeen Asian
Income Fund Limited. There are no non-controlling interests.
The total column of this statement represents the Statement
of Comprehensive Income of the Company, 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 the financial
statements.
BALANCE SHEET
As at As at
31 December 31 December
2014 2013
Notes GBP'000 GBP'000
Non-current assets
Investments designated at
fair value through profit
or loss 10 410,259 380,554
Current assets
Cash and cash equivalents 3,671 3,463
Other receivables 11 1,196 983
_________ _________
4,867 4,446
_________ _________
Current liabilities
Bank loans 12 (29,670) (13,019)
Other payables 12 (588) (864)
_________ _________
(30,258) (13,883)
_________ _________
Net current liabilities (25,391) (9,437)
_________ _________
Net assets 384,868 371,117
_________ _________
Stated capital and reserves
Stated capital 13 194,533 193,733
Capital redemption reserve 1,560 1,560
Capital reserve 14 176,463 164,176
Revenue reserve 14 12,312 11,648
_________ _________
Equity shareholders' funds 384,868 371,117
_________ _________
Net asset value per Ordinary
share (pence): 15 197.84 191.56
_________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended
31 December 2014
Capital
Stated redemption Capital Revenue Retained
capital reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 193,733 1,560 164,176 11,648 - 371,117
Issue of Ordinary
shares 800 - 781 - - 1,581
Profit for the
year - - - - 27,490 27,490
Transferred from
retained earnings
to capital reserve{A} - - 11,506 - (11,506) -
Transferred from
retained earnings
to revenue reserve - - - 15,984 (15,984) -
Dividends paid - - - (15,320) - (15,320)
______ ______ ______ _______ ______ ______
Balance at 31 December
2014 194,533 1,560 176,463 12,312 - 384,868
______ ______ ______ _______ ______ ______
For the year ended
31 December 2013
Capital
Stated Warrant redemption Capital Revenue Retained
capital reserve reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 151,182 357 1,560 147,830 10,358 - 311,287
Issue of Ordinary
shares via conversion
of C shares 30,552 - - 32,453 - - 63,005
Issue of Ordinary
shares 8,425 - - 10,517 - - 18,942
Exercise of warrants 3,574 (357) - 1,072 - - 4,289
Loss for the year - - - - - (12,426) (12,426)
Transferred from
retained earnings
to capital reserve{A} - - - (27,696) - 27,696 -
Transferred from
retained earnings
to revenue reserve - - - - 15,270 (15,270) -
Dividends paid - - - - (13,980) - (13,980)
______ ______ ______ _______ ______ ______ ______
Balance at 31 December
2013 193,733 - 1,560 164,176 11,648 - 371,117
______ ______ ______ _______ ______ ______ ______
{A} Represents the capital profit attributable to equity
shareholders per the Statement of Comprehensive Income.
The revenue reserve represents the amount of the Company's
reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial
statements.
The stated capital in accordance with Companies (Jersey)
Law 1991 Article 39A is GBP259,877,000 (2013 - GBP258,296,000).
CASH FLOW STATEMENT
Year ended Year ended
31 December 31 December
2014 2013
Notes GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) for the year 27,490 (11,062)
Add back finance costs 7 281 221
Add back taxation suffered 754 807
Non cash stock dividends (1,643) -
(Gains)/losses on investments
held at fair value through
profit or loss 10 (15,582) 23,927
Net currency losses/(gains) 14 1,631 (98)
Increase in other receivables (228) (84)
(Decrease)/increase in other
payables (263) 303
_______ _______
Net cash inflow from operating
activities before finance
costs and tax 12,440 14,014
Bank and loan interest paid (294) (220)
Overseas taxation suffered (739) (822)
_______ _______
Net cash inflow from operating
activities 11,407 12,972
Investing activities
Purchases of investments (56,266) (41,544)
Sales of investments 43,786 18,404
_______ _______
Net cash outflow from investing
activities (12,480) (23,140)
_______ _______
Financing activities
Proceeds from issue of Ordinary
shares 13 1,581 18,942
Proceeds from exercise of
warrants 13 - 4,289
Dividends paid 8 (15,320) (13,980)
Loans drawn down 14,927 -
_______ _______
Net cash inflow from financing
activities 1,188 9,251
_______ _______
Net increase/(decrease) in
cash and cash equivalents 115 (917)
Cash and cash equivalents
of the start of the year 3,463 4,532
Effect of foreign exchange
rate changes 93 (152)
_______ _______
Cash and cash equivalents
at the end of the year 2,16 3,671 3,463
_______ _______
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2014
1. Principal activity
The Company is a closed-end investment company incorporated
in Jersey, with its Ordinary shares being listed
on the London Stock Exchange.
2. Accounting policies
(a) Basis of preparation
The financial statements have been prepared in
accordance with International Financial Reporting
Standards ("IFRS"), as adopted by the International
Accounting Standards Board ("IASB"), and interpretations
issued by the International Reporting Interpretations
Committee of the IASB ("IFRIC"). All of the IFRS
which took effect during the year were adopted
by the Company and did not have a material impact
on the financial results.
The Company's assets consist substantially of
equity shares in companies listed on recognised
stock exchanges and in most circumstances are
realisable within a short timescale. The Board
has set limits for borrowing and regularly reviews
actual exposures, cash flow projections and compliance
with banking covenants. The Directors believe
that the Company has adequate resources to continue
in operational existence for the foreseeable
future and, for the above reasons, they continue
to adopt the going concern basis in preparing
the financial statements.
The preparation of financial statements in conformity
with IFRS requires the use of certain critical
accounting estimates which requires management
to exercise its judgement in the process of applying
the accounting policies. These judgements and
estimates include but are not limited to the
assessment of the Company's ability to continue
as a going concern, the measurement of fair value
of financial instruments and the corresponding
classification in the fair value hierarchy as
well as the impairment of assets and the recognition
and measurement of provisions and contingent
liabilities under IAS 37. Actual results may
differ from these estimates.
The financial statements are prepared on a historical
cost basis, except for investments that have
been measured at fair value through profit or
loss and financial liabilities that have been
measured at amortised cost.
The accounting policies which follow set out
those policies which apply in preparing the financial
statements for the year ended 31 December 2014.
The financial statements are presented in sterling
and all values are rounded to the nearest thousand
(GBP'000) except when otherwise indicated.
Where guidance set out in the Statement of Recommended
Practice ("SORP") for investment trusts issued
by the Association of Investment Companies ("AIC")
is consistent with the requirement of IFRS, the
Directors have sought to prepare the financial
statements on a basis compliant with the recommendations
of the SORP.
Changes in accounting policy and disclosures
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 (revised, early
adoption permitted) (effective for annual periods
beginning on or after 1 January 2018).
The following amendments to Standards are all
effective for annual periods beginning on or
after 1 January 2016.
- IFRS 10 and IAS 28 - Sale or Contribution of
Assets between an Investor and its Associate
or Joint Venture
- IFRS 15 - Revenue from Contracts with Customers
- IAS 1 - Disclosure Initiative
- IAS 16 and IAS 38 - Clarification of Acceptable
Methods of Depreciation and Amortisation
- IAS 27 - Investment Entities: Applying the
Consolidation Exception
In addition, under the Annual Improvements to
IFRSs 2010 -2012 and 2011 - 2013 Cycles, a number
of Standards are included for annual periods
beginning on or after 1 July 2014.
Under the Annual Improvements to IFRSs 2012 -
2014 Cycle, a number of Standards are included
for annual periods beginning on or after 1 January
2016.
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 Financial Statements and additional disclosures.
The Company intends to adopt the Standards in
the reporting period when they become effective.
(b) Income
Dividends receivable on equity shares are brought
into account on the ex-dividend date. Dividends
receivable on equity shares where no ex-dividend
date is quoted are brought into account when
the Company's right to receive payment is established.
Where the Company has elected to receive dividends
in the form of additional shares rather than
in cash, the amount of the cash dividend foregone
is recognised as income. Special dividends are
credited to capital or revenue according to their
circumstances. Dividend revenue is presented
gross of any non-recoverable withholding taxes,
which are disclosed separately in the Statement
of Comprehensive Income.
The fixed returns on debt securities and non-equity
shares are recognised using the effective interest
rate method.
Interest receivable from cash and short-term
deposits is recognised on an accruals basis.
(c) Expenses
All expenses, with the exception of interest
expenses, which are recognised using the effective
interest method, are accounted for on an accruals
basis. Expenses are charged through the revenue
column of the Statement of Comprehensive Income
except as follows:
- expenses which are incidental to the acquisition
or disposal of an investment are treated as
capital and separately identified and disclosed
in note 10;
- expenses (including share issue costs) are
treated as capital where a connection with
the maintenance or enhancement of the value
of the investments can be demonstrated; and
- the Company charges 60% of investment management
fees and finance costs to capital, in accordance
with the Board's expected long term return
in the form of capital gains and income respectively
from the investment portfolio of the Company.
(d) Taxation
Profits arising in the Company for the year ended
31 December 2014 will be subject to Jersey income
tax at the rate of 0% (2013 - 0%).
However, in some jurisdictions, investment income
and capital gains are subject to withholding
tax deducted at the source of the income. The
Company presents the withholding tax separately
from the gross investment income in the Statement
of Comprehensive Income. For the purpose of the
Cash Flow Statement, cash inflows from investments
are presented net of withholding taxes, when
applicable.
(e) 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 Company's documented investment strategy.
Purchases and sales of investments are recognised
on a trade date basis. Proceeds are measured
at fair value, which are regarded as the proceeds
of sale less any transaction costs.
The fair value of the financial assets is based
on their quoted bid price at the reporting date,
without deduction for any estimated future selling
costs.
Changes in the value of investments held at fair
value through profit or loss and gains and losses
on disposal are recognised in the Statement of
Comprehensive Income as "Gains/(losses) on investments
designated 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.
(f) Cash and cash equivalents
Cash comprises cash held at banks. 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 values.
For the purposes of the Cash Flow Statement,
cash and cash equivalents comprise cash at bank
net of any outstanding bank overdrafts.
(g) Other receivables and payables
Other receivables do not carry any interest and
are short-term in nature and are accordingly
stated at their recoverable amount. Other payables
are non-interest bearing and are stated at their
payable amount.
(h) Dividends payable
Dividends are recognised in the financial statements
in the period in which they are paid.
(i) Nature and purpose of reserves
Capital redemption reserve
The capital redemption reserve arose when Ordinary
shares were redeemed, at which point an amount
equal to the par value of the Ordinary share
capital was transferred from the Statement of
Comprehensive Income to the capital redemption
reserve. Following a law amendment in 2008, the
Company is no longer required to transfer the
par value of the Ordinary share capital. Although
the transfer from the Statement of Comprehensive
Income is no longer required, the amount remaining
in the capital redemption reserve is not distributable
in accordance with the undertaking provided by
the Board in the launch Prospectus.
Capital reserve
This reserve reflects any gains or losses on
investments realised in the period along with
any increases and decreases in the fair value
of investments held that have been recognised
in the Statement of Comprehensive Income.
Revenue reserve
This reserve reflects all income and costs which
are recognised in the revenue column of the Statement
of Comprehensive Income. The revenue reserve
represents the amount of the Company's reserves
distributable by way of dividend.
(j) Foreign currency
Monetary assets and liabilities denominated in
foreign currencies are converted into sterling
at the rate of exchange ruling at the reporting
date. The financial statements are presented
in sterling, which is the Company's functional
and presentation currency. The Company's performance
is evaluated and its liquidity is managed in
sterling. Therefore sterling is considered as
the currency that most faithfully represents
the economic effects of the underlying transactions,
events and conditions. Transactions during the
year involving foreign currencies are converted
at the rate of exchange ruling at the transaction
date. Gains or losses arising from a change in
exchange rates subsequent to the date of a transaction
are included as an exchange gain or loss in revenue
or capital in the Statement of Comprehensive
Income, depending on whether the gain or loss
is of a revenue or capital nature.
(k) Borrowings
Borrowings are stated at the amount of the net
proceeds immediately after draw down plus cumulative
finance costs less cumulative payments. The finance
cost of borrowings is allocated to years over
the term of the debt at a constant rate on the
carrying amount and charged 40% to revenue and
60% to capital to reflect the Company's investment
policy and prospective revenue and capital growth.
Borrowings are measured at amortised cost using
the effective interest rate method.
(l) Share capital
The Company's Ordinary shares are classified
as equity as the Company has full discretion
on repurchasing the Ordinary shares and on dividend
distributions.
Issuance, acquisition and resale of Ordinary
shares are accounted for as equity transactions.
Upon issuance of Ordinary shares, the consideration
received is included in equity.
Transaction costs incurred by the Company in
acquiring or selling its own equity instruments
are accounted for as a deduction from equity
to the extent that they are incremental costs
directly attributable to the equity transaction
that otherwise would have been avoided.
Own equity instruments which are acquired (treasury
shares) are deducted from equity and accounted
for at amounts equal to the consideration paid,
including any directly attributable incremental
costs.
No gain or loss is recognised in the Statement
of Comprehensive Income on the purchase, sale,
issuance or cancellation of the Company's own
instruments.
3. Segment information
For management purposes, the Company is organised
into one main operating segment, which invests in
equity securities and debt instruments. All of the
Company's activities are interrelated, and each
activity is dependent on the others. Accordingly,
all significant operating decisions are based upon
analysis of the Company as one segment. The financial
results from this segment are equivalent to the
financial statements of the Company as a whole.
The following table analyses the Company's operating
income per geographical location. The basis for
attributing the operating income is the place of
incorporation of the instrument's counterparty.
Year ended Year ended
31 December 31 December
2014 2013
GBP'000 GBP'000
Asia Pacific region 18,261 17,650
United Kingdom 1,072 1,086
_______ _______
19,333 18,736
_______ _______
Year ended Year ended
31 December 31 December
2014 2013
4. Income GBP'000 GBP'000
Income from investments
Overseas dividends 14,772 16,466
Franked income 839 1,078
Stock dividends 1,643 -
_______ _______
17,254 17,544
_______ _______
Interest income
Bond interest 2,072 1,184
Deposit interest 7 8
_______ _______
2,079 1,192
_______ _______
Total income 19,333 18,736
_______ _______
Year ended Year ended
31 December 2014 31 December 2013
Revenue Capital Total Revenue Capital Total
5. Investment management GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
fee
Investment management
fee 1,506 2,259 3,765 1,578 2,368 3,946
______ ______ ______ ______ ______ ______
The Company has an agreement with Aberdeen Private
Wealth Management Limited ("APWM") for the provision
of management services. This agreement has been
sub-delegated to Aberdeen Asset Management Asia
Limited ("AAM Asia").
During the year the investment management fee was
payable monthly in arrears and was based on an annual
amount of 1% of the net asset value of the Company
valued monthly. The balance due to APWM at the year
end was GBP322,000 (2013 - GBP636,000). The investment
management fees are charged 40% to revenue and 60%
to capital in line with the Board's expected long
term returns.
Year ended Year ended
31 December 2014 31 December 2013
Revenue Capital Total Revenue Capital Total
6. Other operating expenses GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Directors' fees 160 - 160 160 - 160
Promotional activities 224 - 224 239 - 239
Auditor's remuneration:
- statutory audit 29 - 29 25 - 25
- interim accounts
review 5 - 5 6 - 6
Custodian charges 125 - 125 134 - 134
Secretarial and administration
fee 131 - 131 127 - 127
Other 320 - 320 304 - 304
______ ______ ______ ______ ______ ______
994 - 994 995 - 995
______ ______ ______ ______ ______ ______
The Company has an agreement with Aberdeen Asset
Managers Limited ("AAM") for the provision of promotional
activities in relation to the Company's participation
in the Aberdeen Investment Trust share plan and ISA.
The total fees paid are based on an annual rate of
GBP215,000 (2013 - GBP250,000). A balance of GBP108,000
(2013 - GBP63,000) was payable to AAM at the year
end.
In addition, APWM is entitled to an annual company
secretarial and administration fee of GBP131,000
(2013 - GBP127,000), which increases annually in
line with any increases in the Retail Price Index.
A balance of GBP33,000 (2013 - GBP32,000) was payable
to APWM at the year end.
No fees have been paid to Ernst & Young LLP during
the period other than those reflected in the table
above.
Year ended Year ended
31 December 2014 31 December 2013
Revenue Capital Total Revenue Capital Total
7. Finance costs GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On bank loans 112 169 281 88 133 221
______ ______ ______ ______ ______ ______
Finance costs are charged 40% to revenue and 60%
to capital as disclosed in the accounting policies.
Year ended Year ended
31 December 31 December
2014 2013
8. Dividends on Ordinary equity shares GBP'000 GBP'000
Amounts recognised as distributions
to equity holders in the year:
Fourth interim dividend for 2013
- 2.50p per Ordinary share (2012
- 2.50p) 4,843 3,780
First interim dividend for 2014
- 1.80p per Ordinary share (2013
- 1.80p) 3,487 3,319
Second interim dividend for 2014
- 1.80p per Ordinary share (2013
- 1.80p) 3,495 3,434
Third interim dividend for 2014
- 1.80p per Ordinary share (2013
- 1.80p) 3,495 3,447
______ ______
15,320 13,980
______ ______
The table below sets out the total dividends declared
in respect of the financial year. The revenue available
for distribution by way of dividend for the year
is GBP15,984,000 (2013 - GBP15,270,000).
2014 2013
GBP'000 GBP'000
First interim dividend for 2014
- 1.80p per Ordinary share (2013
- 1.80p) 3,487 3,319
Second interim dividend for 2014
- 1.80p per Ordinary share (2013
- 1.80p) 3,495 3,434
Third interim dividend for 2014
- 1.80p per Ordinary share (2013
- 1.80p) 3,495 3,447
Fourth interim dividend for 2014
- 2.60p per Ordinary share (2013
- 2.50p) 5,058 4,843
______ ______
15,535 15,043
______ ______
The fourth interim dividend for 2014, amounting to
GBP5,058,000 (2013 - fourth interim dividend of GBP4,843,000),
has not been included as a liability in these financial
statements as it was announced and paid after 31
December 2014.
9. Earnings per share
Ordinary shares
The earnings per Ordinary share is based on the net
profit after taxation of GBP27,490,000 (2013 - loss
of GBP12,426,000) and on 194,024,759 (2013 - 185,624,584)
Ordinary shares, being the weighted average number
of Ordinary shares in issue during the year.
The earnings per Ordinary share detailed above can
be further analysed between revenue and capital as
follows:
Year ended Year ended
31 December 2014 31 December 2013
Basic Revenue Capital Total Revenue Capital Total
Net profit/(loss)
(GBP'000) 15,984 11,506 27,490 15,270 (27,696) (12,426)
Weighted average
number of Ordinary
shares in issue 194,024,759 185,624,584
Return per Ordinary
share (pence) 8.24 5.93 14.17 8.23 (14.92) (6.69)
______ ______ ______ ______ ______ ______
Year ended Year ended
31 December 2014 31 December 2013
C shares Revenue Capital Total Revenue Capital Total
Net profit (GBP'000) n/a n/a n/a n/a 1,364 1,364
Weighted average
number of C shares
in issue - 60,000,000
Return per C share
(pence) n/a n/a n/a n/a 2.27 2.27
______ ______ ______ ______ ______ ______
All of the 60,000,000 C shares were converted into
Ordinary shares on 4 February 2013.
Year ended Year ended
31 December 31 December
2014 2013
10. Investments designated at fair GBP'000 GBP'000
value through profit or loss
Opening valuation 380,554 381,705
Movements in the year:
Purchases at cost 57,909 41,180
Sales - proceeds (43,786) (18,404)
Sales - realised gains 10,567 7,124
Increase/(decrease) in investment
holdings fair value 5,015 (31,051)
______ ______
Closing valuation at 31 December
2014 410,259 380,554
______ ______
GBP'000 GBP'000
Closing book cost 341,350 316,660
Closing investment holdings fair
value gains 68,909 63,894
______ ______
410,259 380,554
______ ______
The portfolio valuation GBP'000 GBP'000
Listed on recognised stock exchanges
at market valuation:
Equities - UK 19,617 11,046
Equities - overseas 365,355 350,248
Bonds - overseas 25,287 19,260
______ ______
Total 410,259 380,554
______ ______
Year ended Year ended
31 December 31 December
2014 2013
Gains/(losses) on investments GBP'000 GBP'000
designated at fair value through
profit or loss
Realised gains on sales of investments 10,567 7,124
Increase/(decrease) in investment
holdings fair value 5,015 (31,051)
______ ______
15,582 (23,927)
______ ______
All investments are categorised as held at fair value
through profit or loss.
Transaction costs
During the year expenses were incurred in acquiring
or disposing of investments classified as fair value
through profit or loss. These have been expensed
through capital and are included within gains/(losses)
on financial assets designated at fair value through
profit or loss in the Statement of Comprehensive
Income. The total costs were as follows:
Year ended Year ended
31 December 31 December
2014 2013
GBP'000 GBP'000
Purchases 122 71
Sales 66 21
______ ______
188 92
______ ______
2014 2013
11. Debtors: amounts falling due within GBP'000 GBP'000
one year
Prepayments and accrued income 1,196 968
Overseas withholding tax recoverable - 15
______ ______
1,196 983
______ ______
None of the above assets are past their due date
or impaired.
12. Creditors: amounts falling due within one year
(a) Bank loans
At the year end, the Company had the following
unsecured bank loans:
2014 2013
Local Local
currency Carrying currency Carrying
Interest principal amount Interest principal amount
rate amount GBP'000 rate amount GBP'000
Hong Kong Dollar 1.189 252,842,000 20,910 1.670 81,842,000 6,373
United States
Dollar 1.115 11,008,000 7,060 1.559 11,008,000 6,646
Sterling 1.454 1,700,000 1,700 - - -
______ ______
29,670 13,019
______ ______
The bank loans outstanding at 31 December 2014
are carried at the closing exchange rate at the
year end, resulting in a cumulative foreign exchange
loss of GBP81,000 (2013 - gain of GBP336,000) against
the original book cost of these loans. The fair
value of borrowings is deemed to be the same as
the carrying value due to their short term nature.
At the date of signing this report, loans of HK$252,842,000,
US$11,008,000 were rolled forward to 23 April 2015
at fixed interest rates of 1.18643% and 1.12325%
respectively. Subsequent to the year end the GBP1,700,000
loan was reduced to GBP250,000 and rolled forward
to 23 April 2015 at a fixed interest rate of 1.45319%.
2014 2013
(b) Other payables GBP'000 GBP'000
Other amounts due 588 864
______ ______
2014 2013
13. Stated capital and C shares Number GBP'000 Number GBP'000
Ordinary shares of no par
value
Authorised Unlimited Unlimited Unlimited Unlimited
Issued and fully paid
Balance brought forward 193,733,389 193,733 151,182,346 151,182
Ordinary shares issue via
conversion of C shares - - 30,552,000 30,552
Ordinary shares issued
in the year 800,000 800 8,425,000 8,425
Warrants exercised - - 3,574,043 3,574
_________ _________ _________ _________
At 31 December 194,533,389 194,533 193,733,389 193,733
_________ _________ _________ _________
During the year 800,000 (2013 - 8,425,000) Ordinary
shares were issued by the Company at a total consideration
received, including transaction costs, of GBP1,581,000
(2013 - receipt of GBP18,942,000).
For each Ordinary share issued GBP1 is allocated
to stated capital, with the balance taken to the
capital reserve.
The Ordinary shares give shareholders the entitlement
to all of the capital growth in the Company's assets
and to all the income from the Company that is resolved
to be distributed.
During the year ended 31 December 2013 all remaining
warrants were exercised into Ordinary shares at a
total consideration of GBP4,289,000.
Following the issue of Ordinary shares during the
year 194,533,389 (2013 - 193,733,389) Ordinary shares
remain in issue. Further details of the Ordinary
share issues are contained in the Directors' Report.
2014 2013
C shares Number GBP'000 Number GBP'000
Issued and fully paid
Balance brought forward - - 60,000,000 59,073
Converted into Ordinary
shares - - (60,000,000) (59,073)
______ ______ ______ ______
At 31 December - - - -
______ ______ ______ ______
Following a Placing and Offer for Subscription of
C shares, the Company issued 60,000,000 C shares
which were admitted to the Official List, and commenced
trading on the main market of the London Stock Exchange
on 16 November 2012.
Under the terms of the C share prospectus, issued
on 22 October 2012, the C shares would be converted
to Ordinary shares once 80% of the issue proceeds
had been invested. The Directors determined that
the conversion ratio would be calculated on 11 January
2013 with the conversion date of 4 February 2013.
On 4 February 2013, the Company converted 60,000,000
C shares into 30,552,000 Ordinary shares at a conversion
ratio of 0.5092 Ordinary shares to every 1.0000 C
share held. The calculation ratio was based on the
respective net asset values of the C shares and the
Ordinary shares at close of business on the calculation
date, 11 January 2013, and on this date the financial
liability in respect of the C shares was deemed to
have been extinguished. The premium of GBP32,453,000
arising on the issue of Ordinary shares has been
allocated to the capital reserve. The C shares were
permanently removed from trading on 4 February 2013.
Voting and other rights
In accordance with the Articles of Association of
the Company, on a show of hands, every member (or
duly appointed proxy) present at a general meeting
of the Company has one vote; and, on a poll, every
member present in person or by proxy shall have one
vote for each Ordinary share held.
The Ordinary shares carry the right to receive all
dividends declared by the Company or the Directors.
On a winding-up, provided the Company has satisfied
all of its liabilities, holders of Ordinary shares
are entitled to all of the surplus assets of the
Company.
2014 2013
14. Retained earnings GBP'000 GBP'000
Capital reserve
At 1 January 2014 164,176 147,830
Unrealised currency movement on loans (417) 77
Currency (loss)/gain (1,214) 21
Movement in unrealised fair value 5,015 (32,415)
Gain on realisation of investments 10,567 7,124
Conversion of C shares - 32,453
Costs charged to capital (2,445) (2,503)
Issue of Ordinary shares 781 10,517
Warrant exercise - 1,072
______ ______
At 31 December 2014 176,463 164,176
______ ______
Revenue reserve
At 1 January 2014 11,648 10,358
Revenue profit for the year 15,984 15,270
Dividends paid (15,320) (13,980)
______ ______
At 31 December 2014 12,312 11,648
______ ______
15. Net asset value per share
Ordinary shares
The net asset value per Ordinary share and the net
asset values attributable to Ordinary shareholders
at the year end calculated in accordance with the
Articles of Association were as follows:
Net asset Net asset Net asset Net asset
value values value values
per share attributable per share attributable
2014 2014 2013 2013
p GBP'000 p GBP'000
Ordinary shares 197.84 384,868 191.56 371,117
______ ______ ______ ______
The net asset value per Ordinary share is based on
194,533,389 (2013 - 193,733,389) Ordinary shares,
being the number of Ordinary shares in issue at the
year end.
16. Financial instruments
The Company's financial instruments comprise securities,
other investments, cash balances and bank loans.
The main risks arising from the Company's financial
instruments are (i) market risk (comprising interest
rate risk, currency risk and equity price risk),
(ii) liquidity risk, (iii) credit risk and (iv) gearing
risk.
The Board regularly reviews and agrees policies for
managing each of these risks. The Manager's policies
for managing each of these risks are summarised below
and have been applied throughout the year. The numerical
disclosures exclude short-term debtors and creditors.
(i) Market risk
The fair value or future cash flows of a financial
instrument held by the Company may fluctuate because
of changes in market prices. This market risk comprises
three elements - interest rate risk, currency risk
and equity price risk.
Interest rate risk
Interest rate risk is the risk that interest rate
movements may affect:
* the fair value of the investments in fixed interest
rate securities;
* the level of income receivable on cash deposits;
* interest payable on the Company's variable rate
borrowings.
Management of the risk
Financial assets
Although the majority of the Company's financial
assets comprise equity shares which neither pay interest
nor have a stated maturity date, at the year end
the Company had five holdings in fixed rate overseas
corporate bonds, Yanlord Land Group, of GBP8,478,000,
Yingde Gases, of GBP2,119,000, DFCC Bank, of GBP6,271,000,
Green Dragon Gas of GBP4,690,000 and ICICI Bank of
GBP3,729,000 (2013 - Yanlord Land Group of GBP8,302,000;
Yingde Gases of GBP2,261,000 and DFCC Bank of GBP8,697,000).
Bond prices are determined by market perception as
to the appropriate level of yields given the economic
background. Key determinants include economic growth
prospects, inflation, the Government's fiscal position,
short-term interest rates and international market
comparisons. The Investment Manager takes all these
factors into account when making any investment decisions
as well as considering the financial standing of
the potential investee entity.
Returns from bonds are fixed at the time of purchase,
as the fixed coupon payments are known, as are the
final redemption proceeds. This means that if a bond
is held until its redemption date, the total return
achieved is unaltered from its purchase date. However,
over the life of a bond the market price at any given
time will depend on the market environment at that
time. Therefore, a bond sold before its redemption
date is likely to have a different price to its purchase
level and a profit or loss may be incurred.
Financial liabilities
The Company primarily finances its operations through
use of equity, retained profits and bank borrowings.
On 17 April 2014 the Company entered into a new unsecured
three year GBP30 million multi currency revolving
facility with Scotiabank (Ireland) Limited and details
of the terms and conditions of the loan are disclosed
in note 12. Interest is due on all tranches at the
maturity date, being 22 January 2015. The loans are
included in creditors falling due within one year.
The Board actively monitors its bank borrowings.
A decision on whether to roll over its existing borrowings
will be made prior to their maturity dates, taking
into account the Company's ability to draw down fixed,
long-term borrowings.
The interest rate profile of the Company (excluding
short term debtors and creditors as stated previously)
was as follows:
Weighted
average
period Weighted Floating Fixed
for which average
rate is interest rate rate
fixed rate
At 31 December 2014 Years % GBP'000 GBP'000
Assets
Chinese Overseas Corporate
Bond 3.14 10.09 - 15,287
Indian Overseas Corporate
Bond 9.61 9.15 - 3,729
Sri Lankan Overseas Corporate
Bond 3.84 9.63 - 6,271
Cash at bank - Sterling - - 2,471 -
Cash at bank - US Dollar - - 701 -
Cash at bank - Malaysian - - 284 -
Ringitt
Cash at bank - Taiwan - - 166 -
Dollar
Cash at bank - Singapore - - 48 -
Dollar
Cash at bank - Australian - - 1 -
Dollar
______ ______
3,671 25,287
______ ______
Weighted
average
period Weighted Floating Fixed
for which average
rate is interest rate rate
fixed rate
Years % GBP'000 GBP'000
Liabilities
Bank loan - Hong Kong
Dollar 0.06 1.19 - (20,910)
Bank loan - US Dollar 0.06 1.12 - (7,060)
Bank loan - Sterling 0.06 1.45 - (1,700)
______ ______
- (29,670)
______ ______
Weighted
average
period Weighted Floating Fixed
for which average
rate is interest rate rate
fixed rate
At 31 December 2013 Years % GBP'000 GBP'000
Assets
Chinese Overseas Corporate
Bond 4.26 10.09 - 10,563
Sri Lankan Overseas Corporate
Bond 4.83 9.63 - 8,697
Cash at bank - Sterling - - 3,369 -
Cash at bank - Singapore - - 84 -
Dollar
Cash at bank - Taiwan - - 10 -
Dollar
______ ______
3,463 19,260
______ ______
Weighted
average
period Weighted Floating Fixed
for which average
rate is interest rate rate
fixed rate
Years % GBP'000 GBP'000
Liabilities
Bank loan - Hong Kong
Dollar 0.07 1.67 - (6,373)
Bank loan - US Dollar 0.07 1.56 - (6,646)
______ ______
- (13,019)
______ ______
The weighted average interest rate is based on the
current yield of each asset, weighted by its market
value. The weighted average interest rate on bank
loans is based on the interest rate payable, weighted
by the total value of the loans.
The floating rate assets consist of cash deposits
on call earning interest at prevailing market rates.
All financial liabilities are measured at amortised
cost using the effective interest rate method.
Interest rate sensitivity
The sensitivity analyses demonstrate the sensitivity
of the Company's profit/(loss) for the year to a
reasonably possible change in interest rates, with
all other variables held constant.
The sensitivity of the profit/(loss) for the year
is the effect of the assumed change in interest rates
on:
* the net interest income for one year, based on the
floating rate financial assets held at the Balance
Sheet date; and
* changes in fair value of investments for the year,
based on revaluing fixed rate financial assets at the
Balance Sheet date.
The Directors have considered the potential impact
of a 100 basis point movement in interest rates and
concluded that it would not be material in the current
year (2013 - increase/decrease by GBP97,000). This
consideration is based on the Company's exposure
to interest rates on its floating rate cash balances,
fixed interest securities and bank loans.
The Company holds no financial instruments that will
have an equity reserve impact.
In the opinion of the Directors, the above sensitivity
analyses are not representative of the year as a
whole, since the level of exposure changes frequently
as part of the interest rate risk management process
used to meet the Company's objectives.
Foreign currency risk
A significant proportion of the Company's investment
portfolio is invested in overseas securities and
the Balance Sheet can be significantly affected by
movements in foreign exchange rates. It is not the
Company's policy to hedge this risk on a continuing
basis. A significant proportion of the Company's
borrowings, as detailed in note 12, is in foreign
currency as at 31 December 2014.
Management of the risk
The revenue account is subject to currency fluctuation
arising on overseas income. The Company does not
hedge this currency risk on a continuing basis but
the Company may, from time to time, match specific
overseas investment with foreign currency borrowings.
The fair values of the Company's monetary items that
have foreign currency exposure at 31 December are
shown below. Where the Company's equity investments
(which are non monetary items) are priced in a foreign
currency, they have been included within the equity
price risk sensitivity analysis so as to show the
overall level of exposure.
31 December 2014 31 December
2013
Net Net
monetary Total monetary Total
Equity assets currency Equity assets currency
investments /(liabilities) exposure investments /(liabilities) exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Australian
Dollar 73,297 1 73,298 68,435 - 68,435
Hong Kong
Dollar 57,721 (20,910) 36,811 51,182 (6,373) 44,809
Indian Rupee - 3,729 3,729 - - -
Indonesian
Rupiah 3,304 - 3,304 - - -
Japanese
Yen 12,856 - 12,856 19,102 - 19,102
Malaysian
Ringgit 31,310 284 31,594 36,800 - 36,800
Singapore
Dollar 119,704 48 119,752 114,805 84 114,889
Taiwanese
Dollar 19,834 166 20,000 23,048 10 23,058
Thailand
Baht 47,329 - 47,329 36,876 - 36,876
US Dollar - 15,199 15,199 - 12,614 12,614
______ ______ ______ ______ ______ ______
Total 365,355 (1,483) 363,872 350,248 6,335 356,583
______ ______ ______ ______ ______ ______
The above year end amounts are not representative
of the exposure to risk during the year, because
the levels of monetary foreign currency exposure
change significantly throughout the year.
Foreign currency sensitivity
The following table details the Company's sensitivity
to a 10% decrease (in the context of a 10% increase
the figures below should all be read as negative)
in sterling against the foreign currencies in which
the Company has exposure. The sensitivity analysis
includes foreign currency denominated monetary items
and adjusts their translation at the period end for
a 10% change in foreign currency rates.
2014 2013
GBP'000 GBP'000
Australian Dollar 7,330 6,844
Hong Kong Dollar 3,681 4,481
Indian Rupee 373 -
Indonesian Rupiah 330 -
Japanese Yen 1,286 1,910
Malaysian Ringgit 3,159 3,680
Singapore Dollar 11,975 11,489
Taiwanese Dollar 2,000 2,306
Thailand Baht 4,733 3,688
US Dollar 1,520 1,261
______ ______
Total 36,387 35,659
______ ______
Equity price risk
Equity price risk (ie changes in market prices other
than those arising from interest rate or currency
risk) may affect the value of the Company's quoted
equity investments.
Management of the risk
It is the Board's policy to hold an appropriate spread
of investments in the portfolio in order to reduce
the risk arising from factors specific to a particular
country or sector. The allocation of assets to international
markets and the stock selection process, as detailed
in the Annual Report respectively, both act to reduce
market risk. The Manager actively monitors market
prices throughout the year and reports to the Board,
which meets regularly in order to review investment
strategy. The investments held by the Company are
listed on various stock exchanges worldwide.
Concentration of exposure to equity price risks
A geographic analysis of the Company's investment
portfolio is shown below, which shows that the majority
of the investments' value is in the Asia Pacific
region. It should be recognised that an investment's
country of domicile or of listing does not necessarily
equate to its exposure to the economic conditions
in that country.
Equity price risk sensitivity
The following table illustrates the sensitivity of
the profit after taxation for the year and the equity
to an increase or decrease of 10% in the fair values
of the Company's equities. This level of change is
considered to be reasonably possible based on observation
of current market conditions. The sensitivity analysis
is based on the Company's overseas equities at each
Balance Sheet date, with all other variables held
constant.
2014 2013
Increase Decrease Increase Decrease
in in in in
fair value fair value fair value fair
value
GBP'000 GBP'000 GBP'000 GBP'000
Statement of
Comprehensive
Income - profit after
taxation
Revenue return - increase - - - -
/(decrease)
Capital return - increase
/(decrease) 36,536 (36,536) 35,025 (35,025)
______ ______ ______ ______
Total profit after taxation
- increase /(decrease) 36,536 (36,536) 35,025 (35,025)
______ ______ ______ ______
Equity 36,536 (36,536) 35,025 (35,025)
______ ______ ______ ______
(ii) Liquidity risk
This is the risk that the Company will encounter
difficulty in meeting obligations associated with
financial liabilities, which stood at GBP30,258,000
(2013 - GBP13,883,000).
Management of the risk
Liquidity risk is not considered to be significant
as the Company's assets comprise mainly cash and
readily realisable securities, which can be sold
to meet funding commitments if necessary and these
amounted to GBP3,671,000 and GBP410,259,000 (2013
- GBP3,463,000 and GBP380,554,000) at the year end
respectively. Short-term flexibility is achieved
through the use of loan facilities.
Maturity profile
The following table sets out the carrying amount,
by maturity, of the Company's financial instruments
at the Balance Sheet date:
Within Within Within More
than
1 year 2-3 4-5 years 5 years Total
years
At 31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed rate
Bonds - 4,690 16,868 3,729 25,287
Bank loans (29,679) - - - (29,679)
______ ______ ______ ______ ______
(29,679) 4,690 16,868 3,729 (4,392)
______ ______ ______ ______ ______
Floating rate
Cash 3,671 - - - 3,671
______ ______ ______ ______ ______
Within Within Within More
than
1 year 2-3 4-5 years 5 years Total
years
At 31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed rate
Bonds - - 19,260 - 19,260
Bank loans (13,041) - - - (13,041)
______ ______ ______ ______ ______
(13,041) - 19,260 - 6,219
______ ______ ______ ______ ______
Floating rate
Cash 3,463 - - - 3,463
______ ______ ______ ______ ______
(iii) Credit risk
This is failure of the counter party to a transaction
to discharge its obligations under that transaction
that could result in the Company suffering a loss.
Management of the risk
Where the investment manager makes an investment
in a bond, corporate or otherwise, the credit rating
of the issuer is taken into account so as to minimise
the risk to the Company of default. The Company has
the following holdings:
* a Chinese overseas corporate bond issued by Yanlord
Land Group. The issuers current credit rating at
Moody's is Ba3;
* a Chinese overseas corporate bond issued by Yingde
Gases. The issuers current credit rating at S&P is B;
and
* a Chinese overseas corporate bond issued by Green
Dragon Gas. The issuers current credit rating at S&P
is B; and
* an Indian overseas corporate bond issued by ICICI
Bank. The issuers current credit rating at S&P is B;
and
* a Sri Lankan overseas corporate bond issued by DFCC
Bank. The issuers current credit rating at Moody's is
Ba3.
investment transactions are carried out with a large
number of brokers, whose credit rating of which is
taken into account so as to minimise the risk to
the Company of default;
the risk of counterparty exposure due to failed trades
causing a loss to the Company is mitigated by the
review of failed trade reports on a daily basis.
In addition, both stock and cash reconciliations
to the custodian's records are performed on a daily
basis to ensure discrepancies are investigated on
a timely basis. The Manager's Compliance department
carries out periodic reviews of the custodian's operations
and reports its finding to the Manager's Risk Management
Committee. It is the Manager's policy to trade only
with A- and above (Long Term rated) and A-1/P-1 (Short
Term rated) counterparties;
cash is held only with reputable banks with high
quality external credit ratings.
None of the Company's financial assets are secured
by collateral or other credit enhancements.
Credit risk exposure
In summary, compared to the amounts included in the
Balance Sheet, the maximum exposure to credit risk
at 31 December was as follows:
2014 2013
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments designated
at fair value through
profit or loss 410,259 25,287 380,554 19,260
Current assets
Cash at bank 3,671 3,671 3,463 3,463
Other receivables 1,196 1,196 983 983
______ ______ ______ ______
415,126 30,154 385,000 23,706
______ ______ ______ ______
None of the Company's financial assets are past due
or impaired.
(iv) Gearing risk
The Company's policy is to increase its exposure
to equity markets through the judicious use of borrowings.
When borrowings are invested in such markets, the
effect is to magnify the impact on shareholders'
funds of changes, both positive and negative, in
the value of the portfolio. During the year the Company's
borrowings were short-term loans, details of which
can be found in note 12. The loans are carried at
amortised cost, using the effective interest rate
method in the financial statements.
Management of the risk
The Board imposes borrowing limits to ensure gearing
levels are appropriate to market conditions and reviews
these on a regular basis. Borrowings comprise fixed
rate, revolving, and uncommitted facilities. The
fixed rate facilities are used to finance opportunities
at low rates and, the revolving and uncommitted facilities
to provide flexibility in the short-term.
17. Capital management policies and procedures
The Company's capital management objectives are:
- to ensure that the Company will be able to continue
as a going concern; and
- to maximise the income and capital return to its
equity shareholders through an appropriate balance
of equity capital and debt. The policy is that debt
should not exceed 25% of net assets.
The Company's capital at 31 December
comprises:
2014 2013
GBP'000 GBP'000
Debt
Borrowings under the multi-currency
loan facility 29,670 13,019
______ ______
2014 2013
GBP'000 GBP'000
Equity
Equity share capital 194,533 193,733
Retained earnings and other reserves 190,335 177,384
______ ______
384,868 371,117
______ ______
Debt as a % of net assets{A} 7.71 3.51
______ ______
{A} The calculation above differs from the AIC recommended
methodology, where debt levels are shown net of cash
and cash equivalents held.
The Board, with the assistance of the Investment
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 Ordinary share and the Ordinary share
price (ie the level of share price discount);
* the need for new issues of equity shares; and
* he 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.
18. Related party transactions and transactions with
the Manager
Fees payable during the year to the Directors are
disclosed within the Directors' Remuneration Report
in the Annual Report.
Mr H Young is a director of Aberdeen Asset Management
PLC, of which Aberdeen Private Wealth Management
Limited ("APWM") is a subsidiary. Management, promotional
activities and secretarial and administration services
are provided by APWM with details of transactions
during the year and balances outstanding at the year
end disclosed in notes 5 and 6.
19. Controlling party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no immediate or
ultimate controlling party.
20. Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires an entity
to classify fair value measurements using a fair
value hierarchy that reflects the significance of
the inputs used in making measurements. The fair
value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities;
Level 2: inputs other than quoted prices included
within Level 1 that are observable for the assets
or liability, either directly (ie as prices) or indirectly
(ie derived from prices); and
Level 3: inputs for the asset or liability that are
not based on observable market data (unobservable
inputs).
The financial assets and liabilities measured at
fair value in the Balance Sheet are grouped into
the fair value hierarchy as follows:
Level Level Level Total
1 2 3
At 31 December 2014 Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through profit
or loss
Quoted equities a) 384,972 - - 384,972
Quoted bonds b) 25,287 - - 25,287
______ ______ ______ ______
Net fair value 410,259 - - 410,259
______ ______ ______ ______
Level Level Level Total
1 2 3
At 31 December 2013 Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through profit
or loss
Quoted equities a) 361,294 - - 361,294
Quoted bonds b) 19,260 - - 19,260
______ ______ ______ ______
Net fair value 380,554 - - 380,554
______ ______ ______ ______
a) Quoted equities
The fair value of the Company'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.
b) Quoted bonds
The fair value of the Company's investments in corporate
quoted bonds have been determined by reference to
their quoted bid prices at the reporting date.
Fair value of financial assets
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 financial assets are stated
at fair value in the Balance Sheet and considers
that this is equal to the carrying amounts disclosed
above.
Fair values of financial liabilities
The fair value of borrowings as at the 31 December
2014 has been estimated at GBP29,670,000 which is
the same as the carrying value due to their short
term nature. At 31 December 2013 the fair value was
GBP13,019,000 which was the same as the carrying
value. Under the fair value hierarchy in accordance
with IFRS 13, these borrowings can be classified
as Level 2 inputs.
21. Events after the reporting period
On 3 March 2015 the Company agreed an extra facility
with Scotiabank Europe in the form of a GBP10 million
loan. On 3 March 2015 GBP10 million was drawn down
under the new facility for a fixed three year period
at an all-in interest rate of 2.2175%.
Additional Notes:
The Annual Financial Report Announcement is not the Company's
statutory accounts. The above results for the year ended 31
December 2014 are an abridged version of the Company's full
financial statements, which have been approved and audited with an
unqualified report. The 2013 and 2014 statutory accounts received
unqualified reports from the Company's auditor and did not include
any reference to matters to which the auditors drew attention by
way of emphasis without qualifying the reports. The financial
information for 2013 is derived from the statutory accounts for
2013 which have been Lodged with the JFSC. The 2014 accounts will
be filed with the JFSC in due course.
The Annual Report will be posted to Shareholders in April and
further copies may be obtained from the registered office, 1(st)
Floor, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier,
Jersey JE2 3QB and on the Company's website*
www.asian-income.co.uk.
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise and may be affected by exchange rate
movements. Investors may not get back the amount they originally
invested.
* Neither the content of the Company's website nor the content
of any website accessible from hyperlinks on the Company's website
(or any other website) is (or is deemed to be) incorporated into,
or forms (or is deemed to form) part of this announcement.
Aberdeen Private Wealth Management Limited
Secretary
24 March 2015
INVESTMENT PORTFOLIO - TEN LARGEST INVESTMENTS
As at 31 December 2014
Valuation Total Valuation
2014 assets{A} 2013{B}
Company Industry Country GBP'000 % GBP'000
Oversea-Chinese Banking
Corporation
A well-managed Singapore
bank with a strong capital
base and impressive
cost-to-income ratio,
which has recently acquired
a mid-sized bank in
Hong Kong. In addition
to its core banking
activities it has sizeable
wealth management and
life assurance divisions. Banks Singapore 15,159 3.7 11,661
HSBC Holdings
One of the world's largest
banking and financial
services institutions
with global operations.
Its roots and the majority
of its earnings derive
from Asia and, after
several poor acquisitions
in Europe and the USA,
it has been refocusing Hong
back to its origins. Banks Kong 13,545 3.3 12,964
Singapore Telecommunications
A regional telecommunications
company, with a combined
mobile subscriber base
of more than 285 million
customers from its own
operations in Singapore
and Australia, and regional
associates in India,
Philippines, Thailand, Diversified
Indonesia, Pakistan Telecommunication
and Bangladesh. Services Singapore 12,835 3.1 11,869
Venture Corporation
Provides contract manufacturing
services to electronic
companies. The company's
major segments include
Printing & Imaging and
Networking & Communications
and it has been increasing Electronic
its revenue contribution Equipment,
from Original Design Instruments
Manufacturing. & Components Singapore 12,268 2.9 10,238
Swire Pacific (Class
A and Class B shares)
A long-established Hong
Kong based conglomerate
with operations spanning
real estate, aviation
(Cathay Pacific), beverages Real Estate
(Coca-Cola bottling) Management Hong
and marine services. & Development Kong 11,523 2.8 9,353
United Overseas Bank
Singapore's second largest
bank, primarily focused
on SMEs and consumers,
with its core market
in Singapore and a regional
network incuding Indonesia,
Malaysia and Thailand. Banks Singapore 11,431 2.7 9,547
China Mobile
The number one operator
in China providing cellular
telecommunication services,
boasting both a strong Wireless
balance sheet and healthy Telecommunication
cash flows. Services China 11,101 2.7 9,811
Telstra
Australia's domestic
and international telecommunications
provider including telephone
exchange lines to homes
and businesses, supply
of local, long distance
and international telephone
calls and supplying Diversified
mobile telecommunication Telecommunication
services. Services Australia 10,653 2.6 9,623
British American Tobacco
Malaysia
Manufacturer & marketer
of tobacco products
in Malaysia through
BAT's international
brands such as Dunhill
and Lucky Strike. Tobacco Malaysia 10,501 2.5 10,399
Taiwan Mobile
The leading provider
of cellular telecommunications
services in Taiwan.
Although predominantly
a wireless network operator,
the company also sells Wireless
and leases cellular Telecommunication
telephony equipment. Services Taiwan 10,488 2.5 9,695
Top ten investments 119,504 28.8
CONSOLIDATED INVESTMENT PORTFOLIO - OTHER INVESTMENTS
As at 31 December
2014
Valuation Total Valuation
2014 assets{A} 2013{B}
Company Industry Country GBP'000 % GBP'000
Ausnet Services Electric Utilities Australia 10,148 2.4 9,254
Technology
Hardware Storage
Canon & Peripherals Japan 9,962 2.4 9,264
Jardine Cycle &
Carriage Distributors Singapore 9,764 2.3 8,149
Singapore Technologies Aerospace
Engineering & Defence Singapore 9,352 2.3 9,603
Semiconductors
Taiwan Semiconductor & Semiconductor
Manufacturing Corporation Equipment Taiwan 9,346 2.3 13,353
DBS Group Banks Singapore 9,129 2.2 7,338
Independent
Power and
Renewable
Electricity
Electricity Generating Producers Thailand 8,974 2.2 7,090
Commonwealth Bank Commercial
of Australia Banks Australia 8,616 2.1 8,064
Industrial
Keppel Corporation Conglomerates Singapore 8,557 2.1 10,683
Real Estate
Management
& Development
(Corporate
Yanlord Land Group Bond) China 8,478 2.0 8,302
Top twenty investments 211,830 51.1
BEC World Media Thailand 8,466 2.0 5,860
Real Estate
Tesco Lotus Retail Investment
Growth Trusts Thailand 8,392 2.0 7,974
Food & Staples
Woolworths Retailing Australia 8,274 2.0 9,370
BHP Billiton Metals & Mining Australia{C} 8,206 2.0 11,046
Australia & New
Zealand Bank Group Banks Australia 7,961 1.9 8,227
Guinness Anchor Beverages Malaysia 7,846 1.9 10,103
Diversified
Telecommunication
Spark New Zealand Services New Zealand 7,621 1.8 5,796
Advanced Information Wireless Telecommunication
Services Services Thailand 7,339 1.8 5,498
Real Estate
Far East Hospitality Investment
Trust Trusts Singapore 7,311 1.8 4,374
Real Estate
CDL Hospitality Investment
Trust Trusts Singapore 6,426 1.6 6,001
Top thirty investments 289,672 69.9
QBE Insurance Group Insurance Australia 6,325 1.5 6,732
Banks (Corporate
DFCC Bank Bond) Sri Lanka 6,271 1.5 8,697
Textiles,
Apparel & Hong
Li & Fung Luxury Goods Kong 5,852 1.4 4,984
United
Standard Chartered Banks Kingdom 5,711 1.4 -
Rio Tinto Metals & Mining Australia{C} 5,700 1.4 -
Real Estate
Investment
Scentre Group Trusts Australia 5,371 1.3 3,187
Construction
Siam Cement{D} Materials Thailand 5,309 1.3 4,485
Speciality Hong
Giordano International Retail Kong 5,255 1.3 7,373
Air Freight
Pos Malaysia & Logistics Malaysia 5,223 1.3 9,243
Air Freight
Singapore Post & Logistics Singapore 5,173 1.2 10,062
Top forty investments 345,862 83.5
Oil, Gas &
Consumable
PetroChina Fuels China 4,967 1.2 4,628
Electronic
Equipment,
Instruments
Hana Microelectronics & Components Thailand 4,955 1.2 2,923
Oil, Gas &
Consumable
Fuels (Corporate
Green Dragon Gas Bond) China 4,690 1.1 -
Star Publications Media Malaysia 4,625 1.1 4,312
Real Estate
Ascendas Hospitality Investment
Trust Trusts Singapore 4,455 1.1 4,660
Real Estate
Shopping Centres Investment
Australasia Trusts Australia 4,167 1.0 3,424
Real Estate
Investment
Westfield Corporation Trusts Australia 4,161 1.0 4,758
Real Estate
Investment
Keppel REIT Trusts Singapore 3,981 1.0 1,390
Independent
Power and
Renewable
Electricity
Ratchaburi Electricity Producers Thailand 3,894 0.9 3,046
Hong Leong Finance Consumer Finance Singapore 3,863 0.9 4,022
Top fifty investments 389,620 94.0
Banks (Corporate
ICICI Bank Bond) India 3,729 0.9 -
Oil, Gas &
China National Offshore Consumable
Oil Corporation Fuels China 3,540 0.8 -
Oil, Gas &
Indo Tambangraya Consumable
Megah Fuels Indonesia 3,304 0.8 -
Construction
Lafarge Malaysia Materials Malaysia 3,115 0.8 2,743
Okinawa Cellular Wireless Telecommunication
Telephone Services Japan 2,894 0.7 2,639
Chemicals
(Corporate
Yingde Gases Bond) China 2,119 0.5 2,261
Textiles,
Apparel & Hong
Kingmaker Footwear Luxury Goods Kong 1,182 0.3 1,203
Textiles,
Apparel & Hong
Texwinca Holdings Luxury Goods Kong 756 0.2 866
Total value of investments 410,259 99.0
Net current assets{E} 4,279 1.0
Total assets{A} 414,538 100.0
{A} Total Assets less current liabilities (before deducting
prior charges).
{B} Purchases and/or sales effected during the year
will result in 2013 and 2014 values not being directly
comparable.
{C} Incorporated in and listing held in United Kingdom.
{D} Holding includes investment in common and non-voting
depositary receipt lines
{E} Excluding bank loans of GBP29,670,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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