Fidelity Asian Values PLC
Half-Yearly Report for the 6 months ended 31 January 2019
Financial Highlights:
- The Company recorded a net asset value (“NAV”) per share total
return of -2.8% in the six months to 31
January 2019, while the Comparative Index, the MSCI AC Asia
ex Japan Index, returned -4.6%
- The Company’s Share Price total return for the six month period
was +3.3%. Shares have traded at a sustained premium since
December 2018 and the company
continues to issue new shares.
- The Company has outperformed the Comparative Index over the
last six months and one year, as well as from the commencement of
the Portfolio Manager’s tenure.
Contacts
For further information, please
contact:
Natalia de Sousa - Company
Secretary
01737 837846
Portfolio Manager’s Half-Yearly
Review
PERFORMANCE REVIEW
Over the six month period ended 31 January
2019, the net asset value (“NAV”) of Fidelity Asian Values
PLC (“the Company”) fell by 2.8%, compared with a decline of 4.6%
for the MSCI All Countries Asia ex Japan Index in Sterling terms
(the Company’s “Comparative Index”). The Company’s share price
increased by 3.3% over the review period (all figures are on a
total return basis). It is pleasing to report that there have been
periods where the Company’s shares have been trading at a
significant premium and therefore, since 31
January 2019 and up to the date of this report, the Company
has issued 1,025,000 ordinary shares.
The Company has outperformed the Comparative Index over the last
6 months and one year, as well as since I took over the management
of the portfolio when the investment strategy was changed to focus
more on small cap companies. However, the Company’s returns have
lagged the Comparative Index over the two and three year reporting
periods (see table below). I believe that while the overall
economic cycle has helped, a shift in favour of large cap growth
stocks versus value stocks detracted somewhat. A central pillar of
my investment process is to minimise losses by investing in good
businesses that have strong balance sheets and buying them at a
price that leaves enough margin of safety. These kinds of companies
can lag the market in big upswings in investors’ sentiment. My
belief is that this is all part of the market cycle and should even
out over time.
|
Fidelity Asian
Values PLC
NAV total return
(%) |
Comparative
Index
total return
(%) |
Tenure (since 1 April
2015) |
+53.9 |
+40.2 |
3 Years |
+53.7 |
+60.3 |
2 Years |
+7.6 |
+17.3 |
1 Year |
-1.6 |
-7.7 |
6 Months |
-2.8 |
-4.6 |
|
============ |
============ |
Sources: Fidelity International and Datastream, 31 January 2019.
KEY CONTRIBUTORS AND DETRACTORS OVER
THE SIX MONTHS TO 31 JANUARY 2019
|
|
Average
Active Weight
(%) |
Gain/Loss
(%) |
Contribution
to Relative
Returns (%) |
Top 5
Contributors |
|
|
|
1 |
BOC Aviation |
+2.4 |
+36.1 |
+0.9 |
2 |
Energy Development Corp |
+0.7 |
+43.3 |
+0.5 |
3 |
China Mobile |
+1.4 |
+18.5 |
+0.4 |
4 |
Bank Rakyat Indonesia |
+1.2 |
+29.1 |
+0.4 |
5 |
Baidu |
-1.3 |
-30.4 |
+0.4 |
|
|
|
|
-------------------- |
|
Total |
|
|
+2.6 |
|
|
|
============ |
Bottom 5
Detractors |
|
|
|
1 |
Indiabulls Housing Finance |
+1.0 |
-49.6 |
-0.6 |
2 |
Redington India |
+1.2 |
-33.2 |
-0.4 |
3 |
Tianneng Power International |
+0.9 |
-29.8 |
-0.3 |
4 |
Samsung Electronics |
-4.9 |
+1.2 |
-0.3 |
5 |
Interojo |
+0.7 |
-33.3 |
-0.2 |
|
|
|
|
-------------------- |
|
Total |
|
|
-1.8 |
|
|
|
|
============ |
Source: Fidelity International, 31
January 2019
There are two primary sources of error in investing – errors of
omission, that is to say stocks that we do not own which go up in
value (such as Samsung Electronics in the table above), and errors
of commission, or stocks we do in fact own that go down in value
(such as Indiabulls Housing Finance and Redington India). As our
objective is to compound absolute returns over time, my primary
focus remains on minimising errors of commission over the medium
term. We try hard to avoid businesses where we could lose
significant amounts of money (such as those with high debt, high
multiples, unsustainable earnings, poor management teams and
fragile business models), but sometimes the market environment
suddenly becomes unfavourable or indeed our analysis might on
occasion be inaccurate. In such situations, we try our best to stay
objective, and if the facts change, we are ready to change our
minds and act accordingly.
In the past six months, the main losses we suffered were from
Indiabulls Housing Finance, Redington India and Tianneng Power
International as these stocks lagged the broader market. I regard
these as temporary losses and I have therefore maintained the
Company’s holdings in these companies given their attractive
valuations, strong underlying businesses and high quality
management teams.
INVESTMENT STRATEGY AND OUTLOOK
Since the 2008 financial crisis, we have had an extended period of
economic growth and we may see a business cycle downturn in the
next three years. As well as the challenging global political
climate, this will most likely create headwinds for equity market
returns.
Having said that, the recent pull-back in equity markets created
some interesting stock-specific opportunities, and over the last
six months, I have added companies to the portfolio that are market
leaders and which are available at attractive valuations.
Broadly, the Company is managed from an absolute return
perspective. Each security is owned for what it might contribute to
returns, rather than its inclusion in an index.
As mentioned earlier, I look for companies with strong
competitive advantages, good management, and try to buy them at a
reasonable price. The core to my investment philosophy is the idea
that if we lose less money during market downturns, we should be
able to compound money at higher rates in the longer term. Given
that Asia has more than 18,000
listed companies, the opportunity to find hidden gems continues to
be immense and I, together with the analyst teams at Fidelity,
remain vigilant for new opportunities.
NITIN BAJAJ
Portfolio Manager
15 April 2019
Interim Management Report
MANAGEMENT FEE ARRANGEMENTS
As reported in the Annual Report for the year ended 31 July 2018, the Company has had a new fee
arrangement in place since 1 August
2018 which provides an overall reduction from the previous
fee. The new fee replaced the Company’s previous tiered fee
structure (0.90% of gross assets up to £200 million; and 0.85% on
gross assets over £200 million) and reduced the headline base
management fee of 0.90%/0.85% of gross assets to 0.70% of
net assets per annum with a +/- 0.20% variation based on
performance relative to the Comparative Index. The variable element
of the fee was effective from 1 November
2018. The maximum fee that the Company will pay under this
revised arrangement is 0.90% of net assets. However, if the Company
underperforms against the Comparative Index, then the overall fee
can fall as low as 0.50% of net assets. There is no change to the
investment process as a result of the new fee arrangement.
BONUS ISSUE OF SUBSCRIPTION SHARES
The Company issued 1,213,003 ordinary shares of 25 pence on 30 November
2018 following the second exercise date of the conversion
rights attached to the subscription shares. The bonus issue of
subscription shares on the basis of one subscription share for
every five ordinary shares held by qualifying investors was
approved at the Company’s Annual General Meeting on 2 December 2016. As at the date of this
Half-Yearly Report, there are 11,103,030 subscription shares
remaining which can be exercised in the 25 business days preceding
the last business day in November
2019 which is the final exercise date. The exercise price is
equal to the published NAV of 366.88
pence per ordinary share on 2
December 2016 plus a premium of 7% which equates to an
exercise price of 392.75 pence per
share.
SHARE ISSUES
The Company’s shares have been trading at a sustained level of
premium since December 2018,
therefore the Board applied for a block listing authority for
6,866,940 ordinary shares which is the maximum allowed under the
Company’s current authority as approved by shareholders at the
Annual General Meeting on 13 December
2018. The block listing was effective on 8 February 2019. Since 11 February and the date
of this report, 1,025,000 shares have been issued from this block
listing.
SHARE REPURCHASES AND TREASURY SHARES
Repurchases of ordinary shares and subscription shares are made at
the discretion of the Board and within guidelines set by it from
time to time and in light of prevailing market conditions. Shares
will only be repurchased when it results in an enhancement to the
NAV of the ordinary shares for the remaining shareholders. In order
to assist in managing the discount, the Board has shareholder
approval to hold in Treasury any ordinary shares repurchased by the
Company, rather than cancelling them. Any shares held in Treasury
would only be re-issued at NAV per share or at a premium to NAV per
share. Any subscription shares repurchased would be cancelled.
In the six months to 31 January
2019, no ordinary shares were repurchased for cancellation
or for holding in Treasury and no subscription shares were
repurchased for cancellation. Since the end of the reporting period
and as at the date of this report no shares have been
repurchased.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board, with the assistance of the Alternative Investment Fund
Manager (FIL Investment Services (UK) Limited/the “Manager”), has
developed a risk matrix which, as part of the risk management and
internal controls process, identifies the key risks that the
Company faces.
The Board considers that the principal risks and uncertainties
faced by the Company continue to fall in the following categories:
market risk; performance risk; discount control risk; gearing risk;
derivatives risk; and currency risk. Other risks facing the Company
include cybercrime; tax and regulatory; and operational (service
providers) risk. The Company is subject to a continuation vote
every five years and there is a risk that the vote, when due, may
not be approved. Information on each of these risks can be found in
the Strategic Report section of the Annual Report for the year
ended 31 July 2018 and can be found
on the Company’s pages of the Manager’s website at
www.fidelityinvestmenttrusts.com.
These principal risks and uncertainties have not materially
changed in the six months to 31 January
2019 and are equally applicable to the remaining six months
of the Company’s financial year.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company’s portfolio management and
the role of Company Secretary to FIL Investments International.
Transactions with the Manager and related party transactions with
the Directors are disclosed in Note 12.
GOING CONCERN
The Directors have considered the Company’s investment objective,
risk management policies, liquidity risk, credit risk, capital
management policies and procedures, the nature of its portfolio
(being mainly securities which are readily realisable) and its
expenditure and cash flow projections, and have concluded that the
Company has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing these Financial
Statements.
Continuation votes are held every five years and the next
continuation vote will be put to shareholders at the Annual General
Meeting in 2021.
By order of the Board.
FIL Investments International
15 April 2019
Directors’ Responsibility
Statement
The Disclosure and Transparency Rules (“DTR”) of the UK Listing
Authority require the Directors to confirm their responsibilities
in relation to the preparation and publication of the Interim
Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
a) the condensed set of Financial Statements
contained within the Half-Yearly Report has been prepared in
accordance with the Financial Reporting Council’s Standard, FRS
104: Interim Financial Reporting; and
b) the Interim Management Report, together with the
Portfolio Manager’s Half-Yearly Review, includes a fair review of
the information required by DTR 4.2.7R and 4.2.8R.
The Half-Yearly Report has not been audited or reviewed by the
Company’s Independent Auditor.
The Half-Yearly Report was approved by the Board on 15 April 2019 and the above responsibility
statement was signed on its behalf by Kate
Bolsover, Chairman.
Twenty Largest Holdings
as at 31 January 2019
The Gross Asset Exposures shown below measure exposure to market
price movements as a result of owning shares and derivative
instruments. The Balance Sheet Value is the actual value of the
portfolio. Where a contract for difference (“CFD”) is held, the
Balance Sheet Value reflects the profit or loss on the contract
since it was opened and is based on how much the share price of the
underlying share has moved.
|
Gross
Asset Exposure |
Balance Sheet
Value |
|
£’000
|
%1 |
£’000 |
Long Exposures – shares unless
otherwise stated |
|
|
|
Power Grid Corporation of
India |
|
|
|
Operator of the Indian national
electricity grid |
8,241 |
2.9 |
8,241 |
Cognizant Technology Solutions
(shares and written put options) |
|
|
|
Provider of IT, digital and
technology services |
7,098 |
2.5 |
5,855 |
Fufeng Group |
|
|
|
Bio-fermentation products
manufacturer |
6,156 |
2.2 |
6,156 |
China Mobile (long CFD) |
|
|
|
Provider of telecommunication
services in China |
5,933 |
2.1 |
336 |
BOC Aviation |
|
|
|
Global aircraft operating leasing
company |
5,811 |
2.1 |
5,811 |
LIC Housing Finance |
|
|
|
Provider of long term finance for
construction & renovation of houses & flats for residential
purposes |
5,794 |
2.0 |
5,794 |
Housing Development Finance
Corporation |
|
|
|
Provider of housing finance to
individual households and corporates in India |
5,193 |
1.9 |
5,193 |
SK Hynix |
|
|
|
Memory semiconductor supplier of
dynamic random-access memory chips and flash memory chips |
4,983 |
1.8 |
4,983 |
PTC India |
|
|
|
Provider of power trading solutions
in India |
4,480 |
1.6 |
4,480 |
Sebang Global Battery |
|
|
|
Battery manufacturer |
4,376 |
1.6 |
4,376 |
WPG Holdings |
|
|
|
Distributor of semiconductor and
core components |
4,285 |
1.5 |
4,285 |
Cromwell European Real Estate
Investment Trust |
|
|
|
Real estate investment company |
4,213 |
1.5 |
4,213 |
Xingda International
Holdings |
|
|
|
Manufacturer and trader of radial
tire cords, bead wires and other wires |
4,200 |
1.5 |
4,200 |
LT Group |
|
|
|
Banking, beverages, spirits, tobacco
and property development group |
4,088 |
1.5 |
4,088 |
Taiwan Semiconductor
Manufacturing Company |
|
|
|
Developer, manufacturer and
distributor of semiconductor related products |
3,975 |
1.4 |
3,975 |
Redington India |
|
|
|
Distributor of information
technology products, mobile handsets and accessories |
3,749 |
1.3 |
3,749 |
Convenience Retail Asia |
|
|
|
Convenience store chain
operator |
3,700 |
1.3 |
3,700 |
Cebu Air |
|
|
|
Airline operator |
3,593 |
1.3 |
3,593 |
Arwana Citramulia |
|
|
|
Ceramics manufacturer |
3,329 |
1.2 |
3,329 |
First Resources |
|
|
|
Palm oil producer |
3,257 |
1.2 |
3,257 |
|
=========== |
=========== |
=========== |
Twenty largest long
exposures |
96,454 |
34.4 |
89,614 |
|
=========== |
=========== |
=========== |
Other long exposures |
182,935 |
65.2 |
180,857 |
|
=========== |
=========== |
=========== |
Total long exposures before
hedges (154 holdings) |
279,389 |
99.6 |
270,471 |
|
=========== |
=========== |
=========== |
Less: hedging exposures |
|
|
|
S&P CNX Nifty Index 10800 June
2019 (put option) |
(5,344) |
(1.9) |
329 |
S&P CNX Nifty Index 10200 June
2019 (put option) |
(1,753) |
(0.7) |
66 |
Forward Currency Contracts |
(93) |
– |
(93) |
|
=========== |
=========== |
=========== |
Total hedging exposures |
(7,190) |
(2.6) |
302 |
|
=========== |
=========== |
=========== |
Total long exposures after the
netting of hedges |
272,199 |
97.0 |
270,773 |
Add: short exposures |
|
|
|
Short CFDs (15 holdings) |
12,228 |
4.4 |
705 |
|
=========== |
=========== |
=========== |
Gross Asset
Exposure2 |
284,427 |
101.4 |
|
|
=========== |
=========== |
|
Portfolio Fair
Value3 |
|
|
271,478 |
Net current assets (excluding
derivative assets and liabilities) |
|
|
9,104 |
|
|
|
=========== |
Total Shareholders’ Funds/Net
assets |
|
|
280,582 |
|
|
|
=========== |
1 Gross Asset Exposure is expressed as a percentage
of Total Shareholders’ Funds.
2 Gross Asset Exposure comprises market exposure to
investments of £270,518,000 plus market exposure to derivative
instruments of £13,909,000.
3 Portfolio Fair Value comprises investments of
£270,518,000 plus derivative assets of £1,846,000 less derivative
liabilities of £886,000 (per the Balance Sheet).
Financial Statements
Income Statement for the six months
ended 31 January 2019
|
|
six
months ended 31 January 2019 unaudited |
six
months ended 31 January 2018 unaudited |
year
ended 31 July 2018 audited |
|
|
revenue |
capital |
total |
revenue |
capital |
total |
revenue |
capital |
total |
|
Notes |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
(Losses)/gains on investments |
|
– |
(10,742) |
(10,742) |
– |
5,213 |
5,213 |
– |
4,084 |
4,084 |
Gains/(losses) on derivative
instruments |
|
– |
1,159 |
1,159 |
– |
(2,279) |
(2,279) |
– |
(1,907) |
(1,907) |
Income |
4 |
3,350 |
– |
3,350 |
3,466 |
– |
3,466 |
8,747 |
– |
8,747 |
Investment management fees |
5 |
(982) |
(97) |
(1,079) |
(1,314) |
– |
(1,314) |
(2,626) |
– |
(2,626) |
Other expenses |
|
(363) |
– |
(363) |
(362) |
– |
(362) |
(696) |
– |
(696) |
Foreign exchange gains/(losses) on
cash and cash equivalents |
|
– |
51 |
51 |
– |
(1,037) |
(1,037) |
– |
568 |
568 |
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
Net return/(loss) on ordinary
activities before finance costs and taxation |
|
2,005 |
(9,629) |
(7,624) |
1,790 |
1,897 |
3,687 |
5,425 |
2,745 |
8,170 |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Finance costs |
|
(349) |
– |
(349) |
(289) |
– |
(289) |
(779) |
– |
(779) |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Net return/(loss) on ordinary
activities before taxation |
|
1,656 |
(9,629) |
(7,973) |
1,501 |
1,897 |
3,398 |
4,646 |
2,745 |
7,391 |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Taxation on return/(loss) on
ordinary activities |
6 |
(272) |
– |
(272) |
(343) |
11 |
(332) |
(754) |
141 |
(613) |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Net return/(loss) on ordinary
activities after taxation for the period |
|
1,384 |
(9,629) |
(8,245) |
1,158 |
1,908 |
3,066 |
3,892 |
2,886 |
6,778 |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Basic return/(loss) per ordinary
share |
7 |
2.00p |
(13.94p) |
(11.94p) |
1.71p |
2.81p |
4.52p |
5.70p |
4.23p |
9.93p |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Diluted return/(loss) per
ordinary share |
7 |
1.99p |
(13.84p) |
(11.85p) |
1.70p |
2.80p |
4.50p |
5.67p |
4.20p |
9.87p |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
The Company does not have any other comprehensive income.
Accordingly the net return/(loss) on ordinary activities after
taxation for the period is also the total comprehensive income for
the period and no separate Statement of Comprehensive Income has
been presented.
The total column of this statement represents the Income
Statement of the Company. The revenue and capital columns are
supplementary and presented for information purposes as recommended
by the Statement of Recommended Practice issued by the AIC.
No operations were acquired or discontinued in the period and
all items in the above statement derive from continuing
operations.
Statement of Changes in Equity for the
six months ended 31 January 2019
|
|
|
share |
capital |
other
non- |
|
|
|
total |
|
|
share |
premium |
redemption |
distributable |
other |
capital |
revenue |
shareholders’ |
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
reserve |
funds |
|
Notes |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Six months ended 31 January 2019
(unaudited) |
|
|
|
|
|
|
|
|
|
Total shareholders’ funds at 31
July 2018 |
|
17,167 |
24,316 |
3,197 |
7,367 |
8,613 |
221,309 |
6,005 |
287,974 |
Net (loss)/return on ordinary
activities after taxation for the period |
|
– |
– |
– |
– |
– |
(9,629) |
1,384 |
(8,245) |
Issue of ordinary shares on the
exercise of rights attached to subscription shares |
10 |
303 |
4,327 |
– |
– |
– |
– |
– |
4,630 |
Dividend paid to shareholders |
8 |
– |
– |
– |
– |
– |
– |
(3,777) |
(3,777) |
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
Total shareholders’ funds at 31
January 2019 |
|
17,470 |
28,643 |
3,197 |
7,367 |
8,613 |
211,680 |
3,612 |
280,582 |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Six months ended 31 January 2018
(unaudited) |
|
|
|
|
|
|
|
|
|
Total shareholders’ funds at 31
July 2017 |
|
16,872 |
20,232 |
3,197 |
7,367 |
8,613 |
218,423 |
5,487 |
280,191 |
Net return on ordinary activities
after taxation for the period |
|
– |
– |
– |
– |
– |
1,908 |
1,158 |
3,066 |
Issue of ordinary shares on the
exercise of rights attached to subscription shares |
10 |
295 |
4,084 |
– |
– |
– |
– |
– |
4,379 |
Dividend paid to shareholders |
8 |
– |
– |
– |
– |
– |
– |
(3,374) |
(3,374) |
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
Total shareholders’ funds at 31
January 2018 |
|
17,167 |
24,316 |
3,197 |
7,367 |
8,613 |
220,331 |
3,271 |
284,262 |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Year ended 31 July 2018
(audited) |
|
|
|
|
|
|
|
|
|
Total shareholders’ funds at 31
July 2017 |
|
16,872 |
20,232 |
3,197 |
7,367 |
8,613 |
218,423 |
5,487 |
280,191 |
Net return on ordinary activities
after taxation for the year |
|
– |
– |
– |
– |
– |
2,886 |
3,892 |
6,778 |
Issue of ordinary shares on the
exercise of rights attached to subscription shares |
10 |
295 |
4,084 |
– |
– |
– |
– |
– |
4,379 |
Dividend paid to shareholders |
8 |
– |
– |
– |
– |
– |
– |
(3,374) |
(3,374) |
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
Total shareholders' funds at 31
July 2018 |
|
17,167 |
24,316 |
3,197 |
7,367 |
8,613 |
221,309 |
6,005 |
287,974 |
|
|
============ |
============ |
============ |
============ |
============ |
============ |
============ |
============ |
Balance Sheet as at 31 January 2019
Company number 3183919
|
|
31.01.19 |
31.07.18 |
31.01.18 |
|
|
unaudited |
audited |
unaudited |
|
Notes |
£’000 |
£’000 |
£’000 |
Fixed assets |
|
|
|
|
Investments |
9 |
270,518 |
273,714 |
271,760 |
|
|
-------------------- |
-------------------- |
-------------------- |
Current assets |
|
|
|
|
Derivative instruments |
9 |
1,846 |
1,529 |
2,312 |
Debtors |
|
2,427 |
2,307 |
2,097 |
Amounts held at futures clearing
houses and brokers |
|
1,944 |
2,363 |
2,645 |
Cash at bank |
|
5,537 |
11,468 |
11,395 |
|
|
-------------------- |
-------------------- |
-------------------- |
|
|
11,754 |
17,667 |
18,449 |
|
|
============ |
============ |
============ |
Creditors |
|
|
|
|
Derivative instruments |
9 |
(886) |
(960) |
(2,014) |
Other creditors |
|
(804) |
(2,447) |
(3,933) |
|
|
-------------------- |
-------------------- |
-------------------- |
|
|
(1,690) |
(3,407) |
(5,947) |
|
|
============ |
============ |
============ |
Net current assets |
|
10,064 |
14,260 |
12,502 |
|
|
============ |
============ |
============ |
Net assets |
|
280,582 |
287,974 |
284,262 |
|
|
============ |
============ |
============ |
Capital and reserves |
|
|
|
|
Share capital |
10 |
17,470 |
17,167 |
17,167 |
Share premium account |
|
28,643 |
24,316 |
24,316 |
Capital redemption reserve |
|
3,197 |
3,197 |
3,197 |
Other non-distributable reserve |
|
7,367 |
7,367 |
7,367 |
Other reserve |
|
8,613 |
8,613 |
8,613 |
Capital reserve |
|
211,680 |
221,309 |
220,331 |
Revenue reserve |
|
3,612 |
6,005 |
3,271 |
|
|
-------------------- |
-------------------- |
-------------------- |
Total shareholders'
funds |
|
280,582 |
287,974 |
284,262 |
|
|
============ |
============ |
============ |
Net asset value per ordinary
share |
11 |
401.51p |
419.36p |
413.96p |
|
|
============ |
============ |
============ |
Diluted net asset value per
ordinary share |
11 |
400.31p |
413.64p |
409.06p |
|
|
============ |
============ |
============ |
Notes to the Financial Statements
1 PRINCIPAL ACTIVITY
Fidelity Asian Values PLC is an Investment Company incorporated in
England and Wales with a premium listing on the London
Stock Exchange. The Company’s registration number is 3183919, and
its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth,
Surrey, KT20 6RP. The Company has been approved by HM Revenue
& Customs as an Investment Trust under Section 1158 of the
Corporation Tax Act 2010 and intends to conduct its affairs so as
to continue to be approved.
2 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this half-yearly financial report have
not been audited by the Company’s Independent Auditor and do not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006 (the “Act”). The financial information for the
year ended 31 July 2018 is extracted
from the latest published Financial Statements of the Company.
Those Financial Statements were delivered to the Registrar of
Companies and included the Independent Auditor’s Report which was
unqualified and did not contain a statement under either section
498(2) or 498(3) of the Act.
3 BASIS OF PREPARATION
The Company prepares its Financial Statements on a going concern
basis and in accordance with UK Generally Accepted Accounting
Practice (“UK GAAP”) and FRS 102: The Financial Reporting Standard
applicable in the UK and Republic of
Ireland, issued by the Financial Reporting Council. The
Financial Statements are also prepared in accordance with the
Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts (“SORP”)
issued by the Association of Investment Companies (“AIC”), in
November 2014 and updated in
February 2018 with consequential
amendments. FRS 104: Interim Financial Reporting has also been
applied in preparing this condensed set of Financial Statements.
The accounting policies followed are consistent with those
disclosed in the Company’s Annual Report and Financial Statements
for the year ended 31 July 2018.
Investment management fees and other expenses are accounted for
on an accruals basis. The base management fee and other expenses
are charged in full to revenue. The variable investment management
fee, effective 1 November 2018, is
charged to capital as it is based on the performance of the net
asset value per share relative to the Comparative Index.
4 INCOME
|
six
months |
six months |
year |
|
ended |
ended |
ended |
|
31.01.19 |
31.01.18 |
31.07.18 |
|
unaudited |
unaudited |
audited |
|
£’000 |
£’000 |
£’000 |
Investment income |
|
|
|
Overseas dividends |
3,243 |
3,277 |
8,242 |
Overseas scrip dividends |
– |
130 |
299 |
|
-------------------- |
-------------------- |
-------------------- |
|
3,243 |
3,407 |
8,541 |
|
============ |
============ |
============ |
Derivative income |
|
|
|
Dividends on long CFDs |
16 |
– |
51 |
Interest on short CFDs |
55 |
38 |
90 |
|
-------------------- |
-------------------- |
-------------------- |
|
71 |
38 |
141 |
|
============ |
============ |
============ |
Other income |
|
|
|
Deposit interest |
36 |
21 |
65 |
|
-------------------- |
-------------------- |
-------------------- |
Total income |
3,350 |
3,466 |
8,747 |
|
============ |
============ |
============ |
5 INVESTMENT MANAGEMENT FEES
|
six
months |
six months |
year |
|
ended |
ended |
ended |
|
31.01.19 |
31.01.18 |
31.07.18 |
|
unaudited |
unaudited |
audited |
|
£’000 |
£’000 |
£’000 |
Investment management fees – base
(charged to revenue) |
982 |
1,314 |
2,626 |
Investment management fees –
variable (charged to capital) |
97 |
– |
– |
|
-------------------- |
-------------------- |
-------------------- |
|
1,079 |
1,314 |
2,626 |
|
============ |
============ |
============ |
FIL Investment Services (UK) Limited is the Company’s
Alternative Investment Fund Manager and has delegated portfolio
management to FIL Investments International (“FII”). Both companies
are Fidelity group companies.
From 1 August 2018, the Company
adopted a new fee arrangement which reduced the base management fee
from 0.90%/0.85% of gross assets to 0.70% of net assets per annum.
In addition, with effect from 1 November
2018, there is a +/- 0.20% variation based on performance
relative to the Comparative Index. Fees are payable monthly in
arrears and are calculated on a daily basis.
Prior to this date, FII charged portfolio management service
fees at an annual rate of 0.90% on the first £200 million of gross
assets and 0.85% on gross assets over £200 million. Fees were paid
quarterly in arrears and calculated on the last business day of
March, June, September and December.
Further details of the Management Fee Agreement are given in the
Interim Management Report.
6 TAXATION ON ORDINARY ACTIVITIES
|
six
months |
six months |
year |
|
ended |
ended |
ended |
|
31.01.19 |
31.01.18 |
31.07.18 |
|
unaudited |
unaudited |
audited |
|
£’000 |
£’000 |
£’000 |
Revenue – taxation on overseas
dividends |
272 |
343 |
754 |
Capital – Indian capital gains tax
received in the period |
– |
(11) |
(141) |
|
-------------------- |
-------------------- |
-------------------- |
Total taxation charge for the
period |
272 |
332 |
613 |
|
============ |
============ |
============ |
7 RETURN/(LOSS) PER ORDINARY SHARE
|
six
months |
six months |
year |
|
ended |
ended |
ended |
|
31.01.19 |
31.01.18 |
31.07.18 |
|
unaudited |
unaudited |
audited |
Revenue return per ordinary share –
basic |
2.00p |
1.71p |
5.70p |
Capital (loss)/return per ordinary
share – basic |
(13.94p) |
2.81p |
4.23p |
|
-------------------- |
-------------------- |
-------------------- |
Total (loss)/return per ordinary
share – basic |
(11.94p) |
4.52p |
9.93p |
|
============ |
============ |
============ |
Revenue return per ordinary share –
diluted |
1.99p |
1.70p |
5.67p |
Capital (loss)/return per ordinary
share – diluted |
(13.84p) |
2.80p |
4.20p |
|
-------------------- |
-------------------- |
-------------------- |
Total (loss)/return per ordinary
share – diluted |
(11.85p) |
4.50p |
9.87p |
|
============ |
============ |
============ |
The basic return/(loss) per ordinary share is based on the net
return/(loss) on ordinary activities after taxation for the period
divided by the weighted average number of ordinary shares held
outside of Treasury during the period.
|
£’000 |
£’000 |
£’000 |
Net revenue return on ordinary
activities after taxation for the period |
1,384 |
1,158 |
3,892 |
Net capital (loss)/return on
ordinary activities after taxation for the period |
(9,629) |
1,908 |
2,886 |
|
-------------------- |
-------------------- |
-------------------- |
Net total (loss)/return on ordinary
activities after taxation for the period |
(8,245) |
3,066 |
6,778 |
|
============ |
============ |
============ |
|
|
|
|
|
number |
number |
number |
Weighted average number of ordinary
shares in issue during the period |
69,084,724 |
67,892,642 |
68,277,830 |
|
============ |
============ |
============ |
The diluted return/(loss) per ordinary share reflect the
notional dilutive effect that would have occurred if the rights
attached to subscription shares had been exercised and additional
ordinary shares had been issued. The net return/(loss) on ordinary
activities after taxation for the period used in the diluted
calculation are the same as those for the basic return/(loss)
above. These returns/(losses) are divided by the notional weighted
average number of ordinary shares in issue during the period of
69,592,203 (31 January 2018:
68,222,167, 31 July 2018:
68,654,259). This number of shares reflects the additional number
of ordinary shares that could have been purchased at the average
ordinary share price for the period with the proceeds from the
excess of the subscription share rights exercise price over the
average ordinary share price.
8 DIVIDENDS PAID TO SHAREHOLDERS
|
six
months |
six
months |
year |
|
ended |
ended |
ended |
|
31.01.19 |
31.01.18 |
31.07.18 |
|
unaudited |
unaudited |
audited |
Dividend of 5.50 pence per ordinary
share paid for the year ended 31 July 2018 |
3,777 |
– |
– |
Dividend of 5.00 pence per ordinary
share paid for the year ended 31 July 2017 |
– |
3,374 |
3,374 |
|
-------------------- |
-------------------- |
-------------------- |
|
3,777 |
3,374 |
3,374 |
|
============ |
============ |
============ |
No dividend has been declared in respect of the six months ended
31 January 2019.
9 FAIR VALUE HIERARCHY
The Company is required to disclose the fair value hierarchy that
classifies its financial instruments measured at fair value at one
of three levels, according to the relative reliability of the
inputs used to estimate the fair values.
Classification |
Input |
Level 1 |
Valued using quoted prices in
active markets for identical assets |
Level 2 |
Valued by reference to valuation
techniques using observable inputs other than quoted prices
included within level 1 |
Level 3 |
Valued by reference to valuation
techniques using inputs that are not based on observable market
data |
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant asset. The table below sets out
the Company’s fair value hierarchy:
|
31
January 2019
unaudited |
|
|
|
level
1 |
level
2 |
level
3 |
total |
|
|
|
|
|
£’000 |
£’000 |
£’000 |
£’000 |
|
|
|
|
Financial assets at fair value
through profit or loss |
|
|
|
|
|
|
|
|
Investments |
270,063 |
51 |
404 |
270,518 |
|
|
|
|
Derivative instrument assets |
395 |
1,451 |
– |
1,846 |
|
|
|
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|
|
|
|
|
270,458 |
1,502 |
404 |
272,364 |
|
|
|
|
|
============ |
============ |
============ |
============ |
|
|
|
|
Financial liabilities at fair
value through profit or loss |
|
|
|
|
|
|
|
|
Derivative instrument
liabilities |
(186) |
(700) |
– |
(886) |
|
|
|
|
|
============ |
============ |
============ |
============ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 July
2018
audited |
|
|
|
level 1 |
level 2 |
level 3 |
Total
£’000 |
|
|
|
|
|
£’000 |
£’000 |
£’000 |
|
|
|
|
|
Investments |
273,248 |
59 |
407 |
273,714 |
|
|
|
|
Derivative instrument assets |
466 |
1,063 |
– |
1,529 |
|
|
|
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|
|
|
|
|
273,714 |
1,122 |
407 |
275,243 |
|
|
|
|
|
============ |
============ |
============ |
============ |
|
|
|
|
Financial liabilities at fair
value through profit or loss |
|
|
|
|
|
|
|
|
Derivative instrument
liabilities |
– |
(960) |
– |
(960) |
|
|
|
|
|
============ |
============ |
============ |
============ |
|
|
|
|
|
31
January 2018
unaudited |
|
|
level 1 |
level 2 |
level 3 |
Total
£’000 |
|
|
£’000 |
£’000 |
£’000 |
|
|
Financial assets at fair value
through profit or loss |
|
|
|
|
|
Investments |
265,905 |
5,855 |
– |
271,760 |
|
Derivative instrument assets |
353 |
1,954 |
– |
2,312 |
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|
|
266,263 |
7,809 |
- |
274,072 |
|
|
============ |
============ |
============ |
============ |
|
Financial liabilities at fair
value through profit or loss |
|
|
|
|
|
Derivative instrument
liabilities |
(6) |
(2,008) |
– |
(2,014) |
|
|
============ |
============ |
============ |
============ |
|
|
|
|
|
|
|
|
|
|
|
10 SHARE CAPITAL
|
31
January 2019
unaudited |
31 July
2018
audited |
31
January 2018
unaudited |
|
number
of |
|
number of |
|
number of |
|
|
shares |
£’000 |
shares |
£’000 |
shares |
£’000 |
Issued, allotted and fully
paid |
|
|
|
|
|
|
Ordinary shares of 25 pence each
held outside Treasury |
|
|
|
|
|
|
Beginning of the period |
68,669,402 |
17,167 |
67,488,213 |
16,872 |
67,488,213 |
16,872 |
Ordinary shares issued |
1,213,003 |
303 |
1,181,189 |
295 |
1,181,189 |
295 |
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
End of the period |
69,882,405 |
17,470 |
68,669,402 |
17,167 |
68,669,402 |
17,167 |
|
============ |
============ |
============ |
============ |
============ |
============ |
Issued, allotted and fully
paid |
|
|
|
|
|
|
Subscription shares of 0.001
pence |
|
|
|
|
|
|
Beginning of the period |
12,316,033 |
– |
13,497,222 |
– |
13,497,222 |
– |
Cancellation of subscription shares
on the exercise of rights |
(1,213,003) |
– |
(1,181,189) |
– |
(1,181,189) |
– |
End of the period |
11,103,030 |
– |
12,316,033 |
– |
12,316,033 |
– |
|
============ |
============ |
============ |
============ |
============ |
============ |
Total share capital |
|
17,470 |
|
17,167 |
|
17,167 |
|
|
============ |
|
============ |
|
============ |
A bonus issue of subscription shares to ordinary shareholders on
the basis of one subscription share for every five ordinary shares
held took place on 5 December 2016.
Each subscription share gives the holder the right, but not the
obligation, to subscribe for one ordinary share upon payment of the
subscription price. The subscription price is based on the
published unaudited NAV per ordinary share at 2 December 2016, plus a premium depending upon
the year in which the right is exercised. The subscription share
rights can be exercised annually in the 25 business days prior to
the relevant subscription date (on which the exercise would take
effect). The subscription dates, subscription prices and premiuma
are as follows:
|
Subscription date |
Subscription price |
Premium |
First subscription date |
30 November 2017 |
370.75p |
1% |
Second subscription date |
30 November 2018 |
381.75p |
4% |
Final subscription date |
29 November 2019 |
392.75p |
7% |
|
==================== |
==================== |
==================== |
After the final subscription date of 29
November 2019, the Company will appoint a trustee who will
exercise any rights remaining that have not been exercised by
shareholders, providing that by doing so a profit can be realised.
To realise a profit the sale proceeds from selling the resulting
ordinary shares in the market would need to be in excess of the
392.75 pence per share price of
exercising the rights, plus any related expenses and fees. Any
resulting profit will be paid to the holders of those outstanding
subscription shares, unless the amount payable to an individual
holder is less than £5, in which case such sum shall be retained
for the benefit of the Company.
Subscription shares carry no rights to vote, to receive a
dividend or to participate in the winding up of the Company.
During the period the Company issued 1,213,003 ordinary shares
(year ended 31 July 2018 and six
months ended 31 January 2018:
1,181,189 shares) on the exercise of rights attached to
subscription shares. The subscription share price of 381.75 pence per ordinary share issued
represented a premium of 356.75 pence
per share over the 25 pence nominal
value of each share. The total premium received in the period on
the issue of ordinary shares of £4,327,000 (year ended 31 July 2018 and six months ended 31 January 2018: £4,084,000) was credited to the
share premium account.
11 NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of
£280,582,000 (31 July 2018:
£287,974,000 and 31 January 2018:
£284,262,000) and on 69,882,405 (31 July
2018: 68,669,402 and 31 January
2018: 68,669,402) ordinary shares, being the number of
ordinary shares of 25 pence each held
outside Treasury at the end of the period.
The diluted net asset value per ordinary share reflects the
potential dilution in the net asset value per ordinary share if the
rights of the 11,103,030 subscription shares in issue had been
exercised on 31 January 2019 at the
next subscription date price of 392.75
pence per share. The basis of the calculation is in
accordance with the guidelines laid down by the AIC.
The net asset value per ordinary share and the diluted net asset
value per ordinary share are published by the London Stock Exchange
on a daily basis.
12 TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company’s Alternative
Investment Fund Manager and has delegated portfolio management and
the role of Company Secretary to FIL Investments International
(“FII”). Both companies are Fidelity group companies.
Details of the fee arrangements are given in Note 5 above.
During the period, management fees of £1,079,000 (six months ended
31 January 2018: £1,314,000 and year
ended 31 July 2018: £2,626,000) and
secretarial and administration fees of £38,000 (six months ended
31 January 2018: £38,000 and year ended 31 July 2018: £75,000) were payable to FII. At
the Balance Sheet date, management fees of £202,000 (31 January 2018: £197,000 and 31 July 2018: £222,000) and secretarial and
administration fees of £6,000 (31 January
2018: £6,000 and 31 July 2018:
£6,000) were accrued and included in other creditors. FII also
provides the Company with marketing services. The total amount
payable for these services during the period was £64,000 (six
months ended 31 January 2018: £65,000
and year ended 31 July 2018:
£108,000). At the Balance Sheet date marketing services of £8,000
(31 January 2018: £32,000 and
31 July 2018: £11,000) were accrued
and included in other creditors.
As at 31 January 2019, the Board
consisted of five non-executive Directors (as shown in the
Directory), all of whom are considered to be independent by the
Board. None of the Directors have a service contract with the
Company. The Chairman receives an annual fee of £34,000, the Audit
Committee Chairman an annual fee of £28,000 and each other Director
an annual fee of £25,000. The following members of the Board held
shares in the Company: Kate Bolsover
12,919 ordinary shares and 3,050 subscription shares, Timothy Scholefield 10,000 ordinary shares and
2,000 subscription shares, Philip
Smiley 2,500 ordinary shares and 500 subscription shares,
Grahame Stott 20,000 ordinary shares
and 11,000 subscription shares and Michael
Warren, 6,000 ordinary shares and 800 subscription
shares.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
ENDS
A copy of the Half-Yearly Report will shortly be submitted to
the National Storage Mechanism and will be available for inspection
at www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's
website at www.fidelityinvestmenttrusts.com where up to date
information on the Company, including daily NAV and share prices,
factsheets and other information can also be found.