TIDMABD
RNS Number : 5490J
abrdn New Dawn Invest Trust plc
17 August 2023
ABRDN NEW DAWN INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEARED 30 APRIL 2023
Legal Entity Identifier (LEI): 5493002K00AHWEME3J36
Investment Objective
To provide shareholders with a high level of capital growth
through equity investment in the Asia Pacific countries ex
Japan.
Benchmark
MSCI All Countries Asia Pacific ex Japan Index (Sterling
adjusted).
Website
Up to date information can be found on the Company's website:
www.newdawn-trust.co.uk
For further information, please contact:
Stephanie Hocking
abrdn Fund Managers Limited
0207 463 6403
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. Investors may not get back the
amount they originally invested.
Performance Highlights
Net asset value total return(AB) Share price total return(AB)
-6.8% -7.3%
2022 -11.0% 2022 -11.8%
Benchmark total return(BC) Ongoing charges(A)
-5.2% 1.13%
2022 -9.2% 2022 1.13%
Revenue return per share Dividend per Ordinary share
4.82p 4.30p
2022 3.71p 2022 4.30p
(A) Alternative Performance Measure.
(B) Total return represents capital return plus dividends reinvested.
(C) MSCI AC Asia Pacific ex Japan Index
Financial Highlights
30 April 2023 30 April 2022
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Total assets GBP342,765,000 GBP380,434,000
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Total equity shareholders' funds (net assets) GBP314,133,000 GBP346,952,000
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Market capitalisation GBP274,027,000 GBP305,154,000
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Net asset value per Ordinary share (including
current year income) 299.20p 325.17p
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Net asset value per Ordinary share (excluding
current year income)(AB) 295.34p 322.43p
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Share price (mid market) 261.00p 286.00p
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Discount to net asset value per Ordinary share
(including current year income)(B) 12.8% 12.0%
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Discount to net asset value per Ordinary share
(excluding current year income)(AB) 11.6% 11.3%
================================================ ============== ==============
MSCI AC Asia Pacific ex Japan Index (currency
adjusted, capital gains basis) 765.99 834.02
================================================ ============== ==============
Net gearing(B) 8.5% 7.7%
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Dividend and earnings
================================================ ============== ==============
Revenue return per share 4.82p 3.71p
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Dividends per share(C) 4.30p 4.30p
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Dividend cover(B) 1.12 0.86
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Revenue reserves(D) GBP13,245,000 GBP12,705,000
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Operating costs
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Ongoing charges ratio(B) 1.13% 1.13%
------------------------------------------------ -------------- --------------
(A) Based on capital only NAV.
(B) Considered to be an Alternative Performance
Measure.
(C) The figures for dividends reflect the years in which they were
earned (see note 8).
(D) Prior to payment of the second interim
dividend.
Chairman's Statement
Introduction
Before setting out my usual statement on the Company's annual
results, I must draw your attention to an important announcement
made by the Company since the year end. On 21 July 2023 the Board
announced that it had agreed heads of terms with the board of Asia
Dragon Trust plc ("Asia Dragon") in respect of a proposed
combination of the Company with Asia Dragon. The combination, if
approved by each company's shareholders, will be effected by way of
a scheme of reconstruction and winding up of the Company under
section 110 of the Insolvency Act 1986 with the associated transfer
of part of the assets and undertaking of the Company to Asia Dragon
in exchange for the issue of new ordinary shares in Asia Dragon
(the "Scheme"). Under the terms of the Scheme an up to 25% cash
exit opportunity will be offered to the Company's shareholders to
realise part of their investment in the Company at a 2% discount to
the formula asset value ("FAV") (less the costs of realigning the
portfolio).
abrdn Fund Managers Limited ("aFML"), will, following
implementation of the Scheme, continue to manage the enlarged Asia
Dragon. The Asia Dragon board will propose certain amendments to
Asia Dragon's investment policy to its shareholders which will
principally align Asia Dragon's policy with the Company's current
investment policy in order to permit investment into Australasia
and provide the Investment Manager with equivalent geographic
flexibility. Asia Dragon's existing benchmark comparative index
(MSCI AC Asia (ex-Japan) Index) will be retained. The portfolio
managers of the enlarged Asia Dragon will be James Thom and Pruksa
Iamthongthong, part of the same team that currently manages the
Company's portfolio. aFML has agreed that the management fee
payable by the enlarged Asia Dragon to aFML will be reduced to
0.75% (currently 0.85%) on the initial GBP350 million of Asia
Dragon's net assets and 0.5% on Asia Dragon's net assets in excess
of GBP350 million.
Asia Dragon offers a five-yearly performance-related conditional
tender with the current performance period running from 1 September
2021 to 31 August 2026 ("2026 CTO"). It is proposed that, in the
light of the proposals and conditional on the Scheme being
implemented, the 2026 CTO will be amended such that, in the event
Asia Dragon underperforms its benchmark over the performance
period, Asia Dragon will offer shareholders the opportunity to
tender up to a maximum of 15% of their shares; a reduction from the
maximum of 25% previously proposed. This reflects the revised
conditional tender being of broadly a similar size to that
previously proposed for the 2026 CTO, given the greater scale of
the enlarged Asia Dragon. In addition to this, Asia Dragon's
shareholders will have the opportunity to vote on the continuation
of Asia Dragon at every fifth AGM with the next continuation vote
to be put forward at the AGM in December 2026.
Both the Company and Asia Dragon invest in the Asia Pacific
(ex-Japan) region, and both are managed by aFML with a high level
of commonality across their shareholder bases. In light of these
similarities, the Board believes a combination of the companies
will create an enlarged vehicle that offers similar investment
exposure for each set of shareholders while offering shareholders
in the enlarged Asia Dragon (and therefore to Shareholders who roll
into Asia Dragon) benefits that include greater secondary liquidity
in Asia Dragon shares and cost efficiencies, including as result of
the reduction in the management fee as referred to above.
The Company and Asia Dragon have received irrevocable
undertakings to support the proposals from shareholders
representing 27.0% of the Company's issued share capital and 29.7%
of Asia Dragon's issued share capital (as at
20 July 2023).
A circular to shareholders of the Company, providing details of
the Scheme and convening general meetings to approve the Scheme,
together with a prospectus published by Asia Dragon in respect of
the issue of New Asia Dragon Shares in connection with the Scheme
are expected to be published in September 2023. If approved, the
proposals are anticipated to become effective in October 2023.
The Board believes that the proposals are in the best interests
of shareholders as a whole. In the event that the Scheme does not
go ahead, then the Company will make a separate announcement to
shareholders in respect of the future of the Company.
Overview of the Year
Over the 12 months to 30 April 2023, the performance of the
Company reflected a challenging environment for both Asian and
global equity markets. The net asset value ("NAV") declined by 6.8%
on a total return basis, compared to a fall of 5.2% in the
benchmark, the MSCI All Countries Asia Pacific ex Japan Index (in
Sterling terms). The share price fell by 7.3% on a total return
basis, while the discount of the share price to the NAV was 12.8%
at the year end.
Despite the underperformance for the year, it is worth noting
that, over the longer term three and five year periods both the NAV
and share price total returns have outperformed the benchmark
index.
Globally, concerns over the impact of monetary tightening, the
threat of recession and the ongoing conflict in Ukraine weighed
heavily on markets. The Company was not immune to this. But, while
the Company's performance for the 12 months was challenging, it
outperformed the more 'growth-centric' funds that were heavily
impacted by the growth-to-value rotation, triggered by the abrupt
shift in global monetary policy. This underlines the benefit of the
Company's focus on quality, investing in companies with real
competitive advantages, sound financial management and good
corporate governance. It is these sorts of companies that tend to
be more resilient in a tougher environment.
In the first half of the year, markets were unsettled by
monetary tightening in response to high inflation, with several
major central banks raising interest rates. Inflationary pressures
in Asia have not been as acute as elsewhere, but investors are
alert to the possibility of price increases in the region.
Market attention shifted to China in the second half of the
year, with the country's sudden decision to reverse its strict
Covid-19 restrictions towards the end of 2022. This move prompted
hopes that a re-opening economy would stimulate domestic consumer
demand and benefit export-oriented markets such as Taiwan and South
Korea. Many Chinese stocks, including consumer discretionary and
information technology companies, benefited. Yet, despite the
pent-up domestic consumer demand, the potential positive effects
have not yet fully translated into earnings growth for many
companies. Other factors, such as worries over the health of the
property sector and the regulatory crackdown on technology
companies, have made China a tricky market for investors to
navigate. Geopolitical tensions between the US and China have added
to share-price volatility, especially for several Chinese
technology and biotech companies. Against this backdrop, the
Company's performance in China lagged the benchmark over the
period. However, the Board is confident in the approach adopted by
the Investment Manager, focusing on the long-term benefits of
quality companies in China and other countries in the region.
Detailed information on performance and portfolio activity for
the year is contained in the Investment Manager's Review.
Earnings and Dividend
Revenue earnings per share for the year were 4.82p (2022:
3.71p), an increase of 29.9% compared to the previous year. The
Company benefited from a small number of special dividends from
companies that had su stained strong earnings, as well as higher
distributions from the large Australian miners, Rio Tinto and BHP
following the spike in commodity prices.
A first interim dividend of 1.0p per share was paid on 10
February 2023. As explained below, it is anticipated that the
Company will convene an AGM to be held in October at the same time
as the first general meeting in relation to the Scheme. Because of
this, and in order to ensure that the Company's normal dividend
paying cycle is maintained, rather than proposing a final dividend
as we have done in previous years, the Board decided to declare a
second interim dividend. Accordingly, a second interim dividend of
3.3p per share was declared on 31 July 2023 (2022: final dividend
of 3.3p), making a total dividend for the year of 4.3p per share,
unchanged from the previous year. The second interim dividend will
be paid on 8 September 2023 to shareholders on the register on 11
August 2023.
Gearing
At the end of the year, the Company's borrowing facilities
amounted to GBP40 million, comprising a fixed rate loan of GBP20
million, which matures in December 2023 (with an interest rate of
2.626%), and a GBP20 million multi-currency revolving loan facility
maturing in June 2024. An aggregate Sterling equivalent of GBP28.6
million was drawn down at the year-end and gearing (net of cash)
was 8.5%, compared to 7.7% at the beginning of the year.
Share Buybacks
In common with other investment trusts, the Company has
continued to buy back shares with the aim of providing a degree of
liquidity to the market at times when the discount to the NAV has
widened. It is the view of the Board that this policy is in the
interests of all shareholders. The Board closely monitors the
discount and reviews the operation of the share buy-back policy at
each Board meeting.
During the year, the Company bought back 1.7 million shares,
representing 1.6% of the issued share capital. These shares were
bought back at a discount to NAV and were accretive to the Company,
and are held in treasury. The Company's stated policy on treasury
shares is that they can only be re-issued to the market at a
premium to the NAV per share at that time.
Annual General Meeting ("AGM")
As a result of the proposal for the Company to merge with Asia
Dragon, it is anticipated that the Company will convene an AGM to
be held in October at the same time as the first general meeting in
relation to the Scheme. The notice of the AGM will be contained in
the Scheme circular.
For those shareholders who roll their holdings into Asia Dragon,
the Directors of abrdn New Dawn who join the Board of Asia Dragon
very much look forward to meeting you at Asia Dragon's AGM later
this year.
Outlook
Growth forecasts in the Asia-Pacific region are ahead of many
other parts of the world, as domestic demand has remained robust in
a tighter global monetary environment. What lingers in investors'
minds is whether these forecasts will hold, in an environment that
is becoming increasingly uncertain, with rising geopolitical
tensions, recessionary fears and higher interest rates slowly
making more of an impact.
In times like these, where markets are volatile and unsettled,
an investment process focused on quality can provide resilience.
The benefits of an active investment approach can bring
opportunities and enable investors to sidestep parts of the market
that are most exposed to risks and uncertainties. The Company has
maintained a diverse portfolio of high-quality investments, well
positioned to navigate turbulent market conditions and take
advantage of the strong structural secular trends across Asia.
These long-term regional drivers include the aspirations of a
growing middle class, urbanisation, clean energy, and
digitalisation, which are likely to reward patient investors in a
region where individual countries typically have different
outlooks. Despite short-term ebbs and flows, China and India, the
two most populous nations worldwide, offer attractive long-term
growth opportunities with the likelihood of positive effects on the
other countries in Asia.
Many of the challenges in the market over the past year
undoubtedly remain, but the Board continues to believe that the
Investment Manager's focus on quality and seeking out companies
with sound fundamentals is the best approach to ensure that the
Company meets its stated investment objective, and that
shareholders will continue to benefit from this approach under the
merger proposals.
Donald Workman
Chairman
16 August 2023
Overview of Strategy
Business Model
The business of the Company is that of an investment company
which seeks to qualify as an investment trust for tax purposes.
Investment Objective
The Company's investment objective is to provide shareholders
with a high level of capital growth through equity investment in
the Asia Pacific countries ex Japan.
Investment Policy
Asset Allocation
The Company's assets are invested in a diversified portfolio of
securities in quoted companies spread across a range of industries
and economies in the Asia Pacific region excluding Japan.
Investments may also be made through collective investment schemes
and in companies traded on stock markets outside the Asia Pacific
region provided that over 75% of their consolidated revenue is
earned from trading in the Asia Pacific region or they hold more
than 75% of their consolidated net assets in the Asia Pacific
region.
Gearing
The Board is responsible for determining the gearing strategy
for the Company. 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. As at 30 April
2023, the Company had net gearing of 8.5% which compares with a
current maximum limit set by the Board of 25%. Borrowings are short
to medium term and particular care is taken to ensure that any bank
covenants permit maximum flexibility of the investment policy.
Risk Diversification
It is the investment policy of the Company to invest no more
than 15% of its gross assets in other listed investment companies
(including investment trusts). As at 30 April 2023, 2.8% of the
Company's gross assets were invested in listed investment
companies.
The Company may invest in derivatives, financial instruments,
money market instruments and currencies for the purposes of
efficient portfolio management (i.e. 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 foreign exchange and credit risks).
The Company may only make material changes to its investment
policy with the approval of shareholders in the form of an ordinary
resolution. In addition, any material changes to the Company's
investment policy will require the prior approval of the Financial
Conduct Authority.
Delivering the Investment Policy
The Directors are responsible for determining the Company's
investment objective and investment policy. Day-to-day management
of the Company's assets has been delegated, via the AIFM, to the
Investment Manager.
Board Investment Limits
In addition to the limits set out in the investment policy, the
Investment Manager is authorised by the Board to invest up to 15%
of the Company's gross assets in any single stock, calculated at
the time an investment is made.
Benchmark
The Company compares its performance to the MSCI All Countries
Asia Pacific ex Japan Index (Sterling adjusted).
Promoting the Success of the Company
The Board's statement below describes how the Directors have
discharged their duties and responsibilities over the course of the
financial year under section 172 (1) of the Companies Act 2006 and
how they have promoted the success of the Company for the benefit
of the members as a whole.
Principal Risks and Uncertainties
The Company's statement of principal risks and uncertainties
forms part of the Strategic Report and is included beloe.
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to
assess the Company's success in achieving its objective and
determining the progress of the Company in pursuing its investment
policy. The main KPIs, which are considered at each Board meeting,
are shown in the table below and further commentary on the
performance for the year is provided in the Chairman's
Statement.
KPI Description
============================== ==================================================
Performance against benchmark The Board measures performance against the
index benchmark index - the Sterling -adjusted MSCI
All Countries Asia Pacific ex Japan Index.
============================== ==================================================
Revenue return per Ordinary The Board monitors the Company's net revenue
share return.
============================== ==================================================
Dividends per share The Board monitors the Company's annual dividends
per Ordinary share.
============================== ==================================================
Share price performance The Board monitors the performance of the
Company's share price on a total return basis.
============================== ==================================================
Discount/premium to NAV The discount/premium of the share price relative
to the NAV per share is closely monitored
by the Board, including the potential annual
requirement to hold a continuation vote at
the Annual General Meeting, as set out under
"Duration. The discount at the year end is
disclosed above.
============================== ==================================================
Ongoing charges The Board regularly monitors the Company's
operating costs. Ongoing charges for the year
and the previous year are disclosed above.
============================== ==================================================
Promotional Activities
The Board recognises the importance of promoting the Company to
prospective investors both for improving liquidity and enhancing
the rating of the Company's shares. The Board believes one
effective way to achieve this is through subscription to, and
participation in, the promotional programme run by the abrdn Group
on behalf of a number of investment trusts under its management.
The Company's financial contribution to the programme is matched by
the abrdn Group. The Company also supports the Manager's
investments' investor relations programme which involves regional
roadshows to existing and potential shareholders, promotional and
public relations campaigns. The Manager's promotional and investor
relations teams report to the Board on a quarterly basis giving
analysis of the promotional activities as well as updates on the
shareholder register and any changes in the make-up of that
register.
The purpose of the promotional and investor relations programmes
is both to communicate effectively with existing shareholders and
to gain new shareholders, with the aim of improving liquidity and
enhancing the value and rating of the Company's shares.
Communicating the long-term attractions of the Company is key. The
promotional programme includes commissioning independent paid for
research on the Company, most recently from Marten & Co. A copy
of the latest research note is available from the Company's
website.
Environmental, Social and Human Rights Issues
The Company has no employees as the Board has delegated the
day-to-day management and administrative functions to the Manager.
There are therefore no disclosures to be made in respect of
employees.
Modern Slavery Act
Due to the nature of its business, being a company that does not
offer goods and services to customers, the Board considers that the
Company is not within the scope of the Modern Slavery Act 2015. The
Company is therefore not required to make a slavery and human
trafficking statement. In any event, the Board considers the
Company's supply chains, dealing predominantly with professional
advisers and service providers in the financial services industry,
to be low risk in relation to this matter.
The UK Stewardship Code and Proxy Voting
The Company supports the UK Stewardship Code, and seeks to play
its role in supporting good stewardship of the companies in which
it invests. Responsibility for actively monitoring the activities
of portfolio companies has been delegated by the Board to the
Manager which has sub-delegated that authority to the Investment
Manager. abrdn plc is a tier 1 signatory of the UK Stewardship Code
which aims to enhance the quality of engagement by investors with
investee companies in order to improve their socially responsible
performance and the long term investment return to shareholders.
While delivery of stewardship activities has been delegated to the
Manager, the Board acknowledges its role in setting the tone for
the effective delivery of stewardship on the Company's behalf.
The Board has also given discretionary powers to the Manager to
exercise voting rights on resolutions proposed by the investee
companies within the Company's portfolio. The Manager reports on a
quarterly basis on stewardship (including voting) issues.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions
producing sources under the Companies Act 2006 (Strategic Report
and Directors' Reports) Regulations 2013.
Under Listing Rule 15.4.29(R), the Company, as a closed ended
investment company, is exempt from complying with the Task Force on
Climate-related Financial Disclosures.
Duration
The Company does not have a fixed life. However, under its
Articles of Association, if, in the 90 days preceding the Company's
financial year end (30 April), the Ordinary shares have been
trading, on average, at a discount in excess of 15% to the
underlying NAV (including current year income, and with borrowings
stated at market value) over the same period, notice will be given
of an ordinary resolution to be proposed at the following Annual
General Meeting to approve the continuation of the Company. If the
resolution for the continuation of the Company is not passed at
that Annual General Meeting or at any adjournment thereof, the
Directors will convene a general meeting to be held not more than
three months after the Annual General Meeting at which a special
resolution for the winding-up of the Company will be proposed. In
the 90 days to 30 April 2023 the average discount to the underlying
NAV (including current year income, and with borrowings stated at
market value) of the Ordinary shares was 12.6% and therefore no
continuation resolution will be put to the Company's shareholders
at this year's Annual General Meeting.
Viability Statement
As set out in more detail in the Charman's Statement, it is
proposed that the Company combines with Asia Dragon Trust plc
("Asia Dragon"). The combination, if approved by each company's
shareholders, will be effected by way of a scheme of reconstruction
and winding up of the Company under section 110 of the Insolvency
Act 1986 and the associated transfer of part of the assets and
undertaking of the Company to Asia Dragon in exchange for the issue
of new ordinary shares in Asia Dragon (the "Scheme"). The outcome
of the general meetings to make the Scheme effective represents a
material uncertainty in the context of the preparation of these
financial statements on a going concern basis.
Notwithstanding this material uncertainty, f or the purposes of
this viability statement, the Board has decided that three years is
an appropriate period over which to report. The Board considers
that this period reflects a balance between looking out over a long
term horizon and the inherent uncertainties of looking out further
than three years.
In assessing the viability of the Company over the review
period, the Directors have also focused upon the following
factors:
- The principal risks and uncertainties detailed below and the
steps taken to mitigate these risks.
- The role of the Audit and Risk Committee in reviewing and
monitoring the Company's internal control and risk management
systems.
- The ongoing relevance of the Company's investment objective.
- The liquidity of the Company's portfolio. All of the Company's
investments are in quoted securities in active markets or in
collective investment schemes, and are considered to be liquid.
- The closed-ended nature of the Company which means that it is not subject to redemptions.
- The use of the Company's share buy back and share issuance
policies to help address any imbalance of supply and demand for the
Company's shares.
- The current and maximum levels of gearing, compliance with
loan covenants and level of headroom within the financial covenants
(see note 12 to the financial statements for details of loan
covenants).
- The ability of the Company to refinance its loan facilities, on or before maturity.
- The potential requirement of the Board to propose a resolution
to approve the continuation of the Company at future Annual General
Meetings. As explained above, this is dependent upon the level of
discount in the 90 days preceding the Company's financial year end
and there is no requirement for such a resolution to be proposed at
the Annual General Meeting.
- Regulatory or market changes.
- The level of the Company's ongoing charges.
- The robustness of the operations of the Company's third party service providers.
In making its assessment, the Board has considered that there
are other matters that could have an impact on the Company's
prospects or viability in the future, including the current
conflict in Ukraine, economic shocks, significant stock market
volatility, and changes in regulation or investor sentiment.
Outlook
The Board's view on the general outlook for the Company can be
found in the Chairman's Statement whilst the Investment Manager's
views on the outlook for the portfolio are included in its
statement.
On behalf of the Board
Donald Workman
Chairman
16 August 2023
Promoting the Success of the Company
Introduction
Section 172 (1) of the Companies Act 2006 (the "Act") requires
each Director to act in the way he/she considers, in good faith,
would be most likely to promote the success of the Company for the
benefit of its members as a whole.
The Board is required to describe to the Company's shareholders
how the Directors have discharged their duties and responsibilities
over the course of the financial year under that provision of the
Act (the "Section 172 Statement"). This statement provides an
explanation of how the Directors have promoted the success of the
Company for the benefit of its members as a whole, taking into
account, amongst other things, the likely long term consequences of
decisions, the need to foster relationships with all stakeholders
and the impact of the Company's operations on the environment.
The Purpose of the Company and Role of the Board
The purpose of the Company is to act as a vehicle to provide,
over time, financial returns (both income and capital) to its
shareholders. Investment trusts, such as the Company, are long-term
investment vehicles and are typically externally managed, have no
employees, and are overseen by an independent non-executive board
of directors. The Company's investment objective and investment
policy are contained within the Overview of Strategy.
The Board, which at the end of the year comprised five
non-executive Directors, four of whom are independent of the
Manager, has a broad range of skills and experience across all
major functions that affect the Company. The Board retains
responsibility for taking all decisions relating to the Company's
investment objective and policy, gearing, corporate governance and
strategy, and for monitoring the performance of the Company's
service providers.
The Board's philosophy is that the Company should operate in a
transparent culture where all parties are treated with respect and
provided with the opportunity to offer practical challenge and
participate in positive debate which is focused on the aim of
achieving the expectations of shareholders and other stakeholders
alike. The Board reviews the culture and manner in which the
Manager and Investment Manager operate at its meetings and receives
regular reporting and feedback from the other key service
providers. The Board is very conscious of the ways it promotes the
Company's culture and ensures as part of its regular oversight that
the integrity of the Company's affairs is foremost in mind in the
way that the activities are managed and promoted. The Board works
very closely with the Manager and Investment Manager in reviewing
how stakeholder issues are handled, ensuring good governance and
responsibility in managing the Company's affairs, as well as
visibility and openness in how the affairs are conducted.
The Company's main stakeholders are shareholders (who are also
the Company's 'customers'), the Manager (and Investment Manager),
service providers, investee companies, the debt provider and, more
broadly, the environment and community.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings and
receives feedback on the Manager's interactions with them.
Stakeholder How We Engage
=================== ============================================================
Shareholders Shareholders are key stakeholders and the Board places
great importance on communication with them. The
Board welcomes all shareholders' views and aims to
act fairly to all shareholders. The Manager and Company's
Stockbroker regularly meet with current and prospective
shareholders to discuss performance and shareholder
feedback is discussed by the Directors at Board meetings.
In addition, Directors attend meetings with the Company's
largest shareholders and meet other shareholders
at the Annual General Meeting.
The Company also supports the Manager's investor
relations programme which involves regional roadshows,
promotional and public relations campaigns.
Regular updates are provided to shareholders through
the Annual Report, Half Yearly Report, monthly factsheets,
Company announcements, including daily net asset
value announcements, and the Company's website.
=================== ============================================================
Manager The Investment Manager's Review details the key investment
(and Investment decisions taken during the year. The Investment Manager
Manager) has continued to manage the Company's assets in accordance
with the mandate provided by shareholders, with oversight
provided by the Board.
The Board regularly reviews the Company's performance
against its investment objective and the Board undertakes
an annual strategy review meeting to ensure that
the Company is positioned well for the future delivery
of its objective for its stakeholders.
The Board receives presentations from the Investment
Manager at every Board meeting to help it to exercise
effective oversight of the Investment Manager and
the Company's strategy.
The Board, through the Management Engagement Committee,
formally reviews the performance of the Manager at
least annually.
=================== ============================================================
Service Providers The Board seeks to maintain constructive relationships
with the Company's suppliers either directly or through
the Manager with regular communications and meetings.
The Management Engagement Committee conducts an annual
review of the performance, terms and conditions of
the Company's main service providers to ensure they
are performing in line with Board expectations and
providing value for money.
=================== ============================================================
Investee Companies Responsibility for monitoring the activities of portfolio
companies has been delegated by the Board to the
Manager which has sub-delegated that authority to
the Investment Manager.
The Board has also given discretionary powers to
the Manager to exercise voting rights on resolutions
proposed by the investee companies within the Company's
portfolio. The Manager reports on a quarterly basis
on stewardship (including voting) issues.
Through engagement and exercising voting rights,
the Investment Manager actively works with companies
to improve corporate standards, transparency and
accountability.
The Manager reports regularly to the Board on investment
and engagement activity.
=================== ============================================================
Debt Provider On behalf of the Board, the Manager maintains a positive
working relationship with The Royal Bank of Scotland
International Limited, the provider of the Company's
loan facilities, and provides regular updates on
business activity and compliance with its loan covenants.
=================== ============================================================
Environment and The Board and Manager are committed to investing
Community in a responsible manner and the Investment Manager
embeds Environmental, Social and Governance ("ESG")
considerations into the research and analysis as
part of the investment decision-making process.
=================== ============================================================
Specific Examples of Stakeholder Consideration During the
Year
While the importance of giving due consideration to the
Company's stakeholders is not a new requirement, and is considered
during every Board decision, the Directors were particularly
mindful of stakeholder considerations during the following
decisions undertaken during the year ended 30 April 2023. Each of
these decisions was made after taking into account the short and
long terms benefits for stakeholders.
Portfolio
The Investment Manager's Review details the key investment
decisions taken during the year. In the opinion of the Board, the
performance of the investment portfolio is the key factor in
determining the long term success of the Company. Accordingly, at
each Board meeting the Directors discuss performance in detail with
the Investment Manager. In addition, the Board considers how the
Investment Manager incorporates ESG issues into its research and
analysis work that forms part of the investment decision
process.
During the year the Management Engagement Committee decided that
the continuing appointment of the Manager was in the best interests
of shareholders.
Dividend
Since the year end, the Board has declared a second interim
dividend in respect of the year ended 30 April 2023, of 3.3p per
Ordinary share. Following payment of the second interim dividend on
8 September 2023, total dividends for the year will amount to 4.3p
per Ordinary share, unchanged compared to the previous year.
Share Buy Backs
During the year the Company bought back 1,706,000 Ordinary
shares to be held in treasury, providing a small accretion to the
NAV per share and a degree of liquidity to the market at times when
the discount to the NAV per share had widened in normal market
conditions. It is the view of the Board that this policy is in the
interest of all shareholders.
Proposed Combination with Asia Dragon plc
As set out in more detail in the Charman's Statement, following
the year end, on 21 July 2023, the Company announced a proposal for
the Company to combine with Asia Dragon Trust plc ("Asia Dragon").
The combination, if approved by each company's shareholders, will
be effected by way of a scheme of reconstruction and winding up of
the Company under section 110 of the Insolvency Act 1986 and the
associated transfer of part of the assets and undertaking of the
Company to Asia Dragon in exchange for the issue of new ordinary
shares in Asia Dragon (the "Scheme").
The Board believes a combination of the companies will create an
enlarged vehicle that offers similar investment exposure for each
set of shareholders while offering shareholders in the enlarged
Asia Dragon (and therefore to Shareholders who roll into Asia
Dragon) benefits that include greater secondary liquidity in Asia
Dragon shares and cost efficiencies.
On behalf of the Board
Donald Workman
Chairman
16 August 2023
Performance
Performance (total return)
1 year return 3 year return 5 year return
% % %
==================================== ============= ============= =============
Net asset value(A) -6.8 +18.9 +17.9
==================================== ============= ============= =============
Share price(A) -7.3 +21.3 +19.9
==================================== ============= ============= =============
MSCI AC Asia Pacific ex Japan Index
(currency adjusted) -5.2 +16.7 +14.0
------------------------------------ ------------- ------------- -------------
(A) Alternative Performance Measure.
Ten Year Financial Record
Year to 30 April 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
============================ ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total revenue (GBP'000) 6,819 7,412 7,004 6,922 7,481 7,442 7,738 7,558 6,670 7,612
---------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Per share (p)
============================ ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Net revenue return 3.79 4.18 4.06 4.05 4.47 4.30 4.61 4.24 3.71 4.82
============================ ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return (18.68) 31.74 (34.72) 68.66 30.97 11.88 (15.45) 112.18 (41.10) (22.18)
============================ ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Net dividends paid/proposed 3.60 3.80 3.90 4.00 4.30 4.30 4.30 4.30 4.30 4.30
============================ ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Net asset value 188.49 216.67 179.43 244.90 272.41 281.12 261.63 369.97 325.17 299.20
---------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Shareholders' funds
(GBP'000) 234,762 269,398 216,243 286,191 311,816 314,411 289,285 403,005 346,952 314,133
---------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Dividends
Rate per share XD date Record date Payment date
=============== ============== ============== ============== ============
First interim 1.00p 5 January 2023 6 January 2023 10 February
2023 2023
=============== ============== ============== ============== ============
Second interim 3.30p 10 August 2023 11 August 2023 8 September
2023 2023
--------------- -------------- -------------- -------------- ------------
Total 2023 4.30p
--------------- -------------- -------------- -------------- ------------
Interim 2022 1.00p 6 January 2022 7 January 2022 11 February
2022
=============== ============== ============== ============== ============
Final 2022 3.30p 4 August 2022 5 August 2022 9 September
2022
--------------- -------------- -------------- -------------- ------------
Total 2022 4.30p
--------------- -------------- -------------- -------------- ------------
Investment Manager's Review
Market and Portfolio Review
Asia Pacific equities declined over the 12 months to 30 April
2023, amid the uncertainty that weighed on markets globally. A
combination of higher inflation, accelerated by the ongoing
conflict in Ukraine, tightening monetary policies, rising input
costs and recent banking sector events in the West have sparked
fears of a global economic recession. Against this backdrop, the
Company's net asset value ("NAV") and share price, both in total
returns terms, declined 6.8% and 7.3%, respectively, and lagged the
benchmark, which declined by 5.2%. However, over the past three and
five years, the Company's NAV and share price total returns have
done better than the benchmark, highlighting the support from our
high-quality holdings.
In terms of performance, the portfolio's direct exposure to
China was the main detractor, which was partly offset by the
position in Hong Kong. Chinese authorities announced an unexpected
U-turn from their "zero-Covid" policy to a complete re-opening in
late 2022. However, the negative impacts from prolonged lockdowns
and regulatory pressures, especially on the property sector, could
not be quickly undone. While many of the holdings in the portfolio,
especially in the technology and consumer discretionary sectors,
stand to benefit from the re-opening, we have yet to see corporate
earnings increase meaningfully. To this end, gaming company Sands
China was a key performer, being a direct beneficiary of the
re-opening and easing travel restrictions. Its recent quarterly
results were ahead of the market's expectations. Insurer AIA Group
and beer company Budweiser Brewing added to returns amid a recovery
in the Hong Kong market. We view both as high-quality exposures to
China's growth.
The exposure to Chinese renewable energy companies was not
beneficial to performance, with poor share price performances from
Yunnan Energy New Material and LONGi Green Energy Technology,
partly as investors chased opportunities from the re-opening.
Yunnan's shares were volatile after an announcement of a probe into
its chairman and vice chairman. We subsequently sold the position
as our conviction in the company diminished. Having said that, on a
positive note, the holding in Sungrow Power Supply was beneficial
following robust results, especially in the most recent quarter.
China's strained relations with the US was another aspect over the
period that affected investor sentiment. Pharmaceutical company
Wuxi Biologics, a company that has fundamentally performed well,
detracted due to a series of regulatory hurdles where two of its
subsidiaries were temporarily added by the US to a trade
restriction list before being removed by the end of December.
Meanwhile, the Chinese government announced further supportive
measures to help the property sector recovery and appears to be
easing its regulatory scrutiny into technology companies. These
changes, together with investors moving towards value, benefited
technology companies later in the financial year. However, while
technology companies, including Tencent, have started to benefit
from the re-opening, online retailer JD.com underperformed due to
concerns around slowing growth and high competition.
In terms of portfolio positioning and strategy, we added more
positions in China over the year as we remain confident in the
holdings and the turnaround potential post the re-opening,
especially in the technology sector. We therefore added to several
internet and consumer holdings such as Tencent and Kweichow Moutai
that should benefit from an increase in consumer confidence and
spending. In the healthcare sector, we initiated Aier Eye Hospital,
China's largest domestic private eyecare hospital chain. Its demand
is supported by the ageing population, rising living standards, and
government policies to improve the accessibility and standards of
drugs and healthcare. We also bought Chinese food delivery and
local services app company Meituan Dianping, which we regard as a
long-term growth story which should benefit from China's shift
towards a service-driven economy and increasing online penetration.
Against these additions to the portfolio, we exited the industrial
automation business Shenzhen Inovance Technology. It is a highly
cyclical business and felt the impact of a sharp drop in property
construction, while rising raw material and freight costs weighed
on its margins.
The portfolio's exposure to India, through the Aberdeen Standard
SICAV I - Indian Equity Fund, did not do well this year, as the
market was dominated by one conglomerate throughout the period -
Adani Group. The Indian Equity Fund does not hold any Adani
companies as we consider the group to be low quality, but this
event had an impact on the market as a whole.
Elsewhere, in Vietnam, the holding in Mobile World lagged the
benchmark. In South Korea, LG Chem performed well as markets expect
increased demand for its petrochemical business after China's
re-opening. We think the momentum of its electric vehicle batteries
business is attractive. The Australian holdings also benefited
performance as mining companies such as BHP p erformed well,
benefiting from the spike in commodity prices. During the year, we
also received shares in the oil and gas company Woodside Energy
from a corporate action.
The Company's holdings in the information technology ("IT")
sector weighed on performance, driven in part by the market's
negative sentiment towards the sector. The portfolio's positions in
Taiwan Semiconductor Manufacturing Company ("TSMC") and Samsung
Electronics lagged the benchmark, while the holding in ASML was
beneficial. While ASML's shares rose in value due to a gradual
improvement of the macroeconomic outlook and better visibility of
the semiconductor cycle, an escalation of US-China tensions partly
weighed on the share price performance. Over the year, we responded
to the looming fears of a global recession and soft demand outlook
for IT by reducing exposure to internet companies. We remain
optimistic for a sector-wide turnaround within the next financial
year and continue to gradually add back to the semi-conductor and
hardware positions. Elsewhere, the consumer discretionary sector
also weighed on performance due to relative weakness in consumer
confidence and spending. However, as mentioned above, we expect a
turnaround in consumption, especially with the re-opening in
China.
Meanwhile, in the banking sector, the collapse of two US
regional banks and the takeover of Credit Suisse by UBS in Europe
raised concerns of contagion effects. However, the Company's
holdings in Asians banks were not directly impacted by these events
and remain well insulated, with strong balance sheets, while also
benefiting from increasing net interest margins. On that note,
Indonesia's Bank Central Asia and Oversea-Chinese Banking
Corporation and DBS Group Holdings in Singapore contributed
positively to performance. Meanwhile, we maintain the overweight
and well-diversified exposure to the healthcare sector as we expect
a turnaround in consumer spending to benefit those holdings.
Environmental, Social and Governance ("ESG")
ESG remains a core focus area as we continue to invest in
high-quality companies. We are convinced that companies with strong
ESG practices are more resilient, especially during turbulent
times. To that end, we have invested in our resources to ensure we
continue to identify strong stewards of ESG. For instance, when
investing in Woodside Energy, we considered the effect of its
decarbonisation strategy.
We frequently engage with investee companies to review their
progress in ESG matters and ensure they meet our standards. For
example, during the year we engaged with Tencent to better
understand its policies and progresses around data security and
privacy. Tencent provided a comprehensive multi-vector analysis of
its data security and privacy management and noted the limited
instances where data might be shared with the government and its
protection policies around this process. Subsequently, we noted it
had published several privacy and data security policies on its
website, following our suggestions to improve disclosure. Tencent
had also applied to become a United Nations Global Compact
signatory, highlighting its commitment to ESG. Furthermore, it has
removed the mandate to re-issue repurchased shares and reduced its
general issuance mandate from 20% to 10%. It is also committed to
achieving 30% female representation on its board by 2030, which we
are monitoring.
Meanwhile, we continued our long-standing engagement with
Samsung Electronics by attending its annual general meeting ("AGM")
in person in Suwon, South Korea. While we had a one-to-one
discussion with management ahead of the AGM to engage on agenda
items and enhanced disclosures, the AGM provided an opportunity to
meet the directors and show our support for the company's ongoing
efforts to make progress on governance and disclosure.
Outlook
Investors continue to navigate uncertain times due to global
macroeconomic challenges and geopolitical volatility. That said,
inflation is more benign in Asia, especially in China, providing
support to the region's economic health. Furthermore, Asian banks
have not had any direct impact from the banking sector events in
the US and Europe. While China remains a challenging market, we
expect its re-opening to increase consumer confidence and
consumption, as well as support Southeast Asian economies.
The technology sector would benefit from re-opening tailwinds
and an increase in consumer spending. We think the technology cycle
will bottom out in the near future and see the potential for a
meaningful recovery in this calendar year. While there has been a
lag of re-opening tailwinds translating into earnings growth,
markets expect technology companies to produce higher earnings in
the next financial year. Therefore, we are confident of the
portfolio's sizable exposure to the sector and continue to add to
companies with strong fundamentals and potential for
outperformance. Elsewhere, we are optimistic that a surge in
consumption would support the holdings in the consumer
discretionary and healthcare sectors.
Within India, we expect the holdings in the commodities and
financials sectors to benefit from cyclical tailwinds and policy
support. In Australia, the inflationary effects on commodity prices
should continue to help mining and energy companies, despite a
challenging macroeconomic backdrop.
Amid the ongoing uncertainty, we believe our focus on investing
in quality companies with solid fundamentals will prove beneficial
over the long term and help your Company navigate challenging
market conditions.
James Thom and Xin-Yao Ng
abrdn Asia Limited
16 August 2023
Principal Risks and Uncertainties
The Board carries out a regular review of the risk environment
in which the Company operates, changes to the environment and
individual risks. The Board also considers emerging risks which
might affect the Company. During the year, the most significant
emerging risks were inflation and rising interest rates and the
resultant volatility that these factors created in global stock
markets. In addition, the conflict in Ukraine and continued
tensions between China and the USA have created geo-political
uncertainties which have further increased market risk and
volatility (see exogenous risks below) .
There are a number of other risks which, if realised, could have
a material adverse effect on the Company and its financial
condition, performance and prospects. The Board has carried out a
robust assessment of the Company's principal and emerging risks,
which include those that would threaten its business model, future
performance, solvency, liquidity or reputation.
The principal and emerging risks and uncertainties faced by the
Company are reviewed by the Audit and Risk Committee in the form of
risk matrices. The principal risks and uncertainties facing the
Company at the current time, together with a description of the
mitigating actions the Board has taken, are set out in the table
below.
The principal risks associated with an investment in the
Company's shares are published monthly in the Company's factsheet
and they can be found in the pre-investment disclosure document
("PIDD") published by the Manager, both of which are available on
the Company's website.
Risk Mitigating Action
======================================== ===========================================
Investment strategy and objectives The Board keeps the level of discount
- the setting of an unattractive at which the Company's shares trade,
strategic proposition to the as well as the investment objective
market and the failure to adapt and policy, under review and holds
to changes in investor demand an annual strategy meeting where
may lead to the Company becoming it reviews investor relations reports
unattractive to investors, and updates from the Investment
a decreased demand for its Manager and the Company's Stockbroker.
shares and a widening discount. The Directors are updated at each
Board meeting on the composition
of, and any movements in, the shareholder
register.
======================================== ===========================================
Investment management - poor The Board meets the Manager on a
stock selection or investing regular basis and keeps investment
outside of the investment restrictions performance under close review.
and guidelines set by the Board Representatives of the Investment
could result in poor performance Manager attend all Board meetings
and an inability to meet the and a detailed formal appraisal
Company's objectives, as well of the abrdn Group is carried out
as a widening discount. annually by the Management Engagement
Committee.
The Board sets, and monitors, the
investment restrictions and guidelines,
and receives regular reports which
include performance reporting on
the implementation of the investment
policy, the investment process and
application of the guidelines. The
Board also monitors the Company's
share price relative to the NAV
per share.
======================================== ===========================================
Income/dividends - the level The Directors review detailed income
of the Company's dividends forecasts at each Board meeting.
and future dividend growth The Company has built up significant
will depend on the performance revenue reserves which can be drawn
of the underlying portfolio. upon if required should there be
Any change in the tax treatment a shortfall in revenue returns.
of dividends or interest received
by the Company may reduce the
level of
net income available for the
payment of dividends
to shareholders.
======================================== ===========================================
Financial - the financial risks The financial risks associated with
associated with the portfolio the Company include market risk,
could result in losses to the liquidity risk and credit risk,
Company. all of which are mitigated, to some
extent, by the Investment Manager.
Further details of the steps taken
to mitigate the financial risks
associated with the portfolio are
set out in note 17 to the financial
statements.
======================================== ===========================================
Gearing - a fall in the value The Board sets the gearing limits
of the Company's investment within which the Investment Manager
portfolio could be exacerbated can operate. Gearing levels and
by the impact of gearing. It compliance with loan covenants are
could also result in a breach monitored on an ongoing basis by
of loan covenants. the Manager and at regular Board
meetings. In the event of a possible
impending covenant breach, appropriate
action would be taken to reduce
borrowing levels.
In addition, abrdn Fund Managers
Limited, as the Alternative Investment
Fund Manager, has set overall leverage
limits.
======================================== ===========================================
Regulatory - failure to comply The Board and Manager monitor changes
with relevant laws and regulations in government policy and legislation
(including the Companies Act, which may have an impact on the
The Financial Services and Company, and the Audit and Risk
Markets Act, The Alternative Committee monitors compliance with
Investment Fund Managers Directive, regulations by reviewing internal
accounting standards, investment control reports from the Manager.
trust regulations, the Packaged From time to time the Board employs
Retail and Insurance-based external advisers to advise on specific
Investment Products Regulations, matters.
the Listing Rules, Disclosure
Guidance and Transparency Rules,
Prospectus Rules and corporate
governance regulations) could
result in fines, loss of reputation
and potentially loss of an
advantageous tax regime.
======================================== ===========================================
Operational - the Company is The Board receives reports from
dependent on third parties the Manager on its internal controls
for the provision of all systems and risk management throughout the
and services (in particular, year, including those relating to
those of the abrdn Group) and cyber crime, and receives assurances
any control failures and gaps from all its other significant service
in their systems and services, providers on at least an annual
including in relation to cyber basis.
security, could result The Manager monitors closely the
in fraudulent activities or control environments and quality
a loss or damage to of services provided by third parties,
the Company. including those of the Depositary,
Written agreements are in place through service level agreements,
with all third party service regular meetings and key performance
providers. indicators.
======================================== ===========================================
Exogenous risks such as health, Exogenous risks over which the Company
social, financial, economic has no control are always a risk.
and geo-political - the financial The diversified nature of the portfolio
impact of such risks, associated and a managed level of gearing all
with the portfolio or the Company serve to provide a degree of protection
itself, could result in losses in times of volatile markets.
to the Company.
======================================== ===========================================
Investment Portfolio
As at 30 April 2023
===========================================================================================================
Valuation Total Valuation
2023 assets(A) 2022
Company Industry Country GBP'000 % GBP'000
============================= ========================== =============== ========= ========= =========
abrdn SICAV I - Indian Collective Investment
Equity Fund(B) Scheme India 48,348 14.1 48,696
============================= ========================== =============== ========= ========= =========
Taiwan Semiconductor Semiconductors &
Manufacturing Company Semiconductor Equipment Taiwan 27,125 7.9 32,261
============================= ========================== =============== ========= ========= =========
AIA Group Insurance Hong Kong 21,690 6.3 19,372
============================= ========================== =============== ========= ========= =========
Interactive Media
Tencent Holdings & Services China 18,908 5.5 16,844
============================= ========================== =============== ========= ========= =========
Samsung Electronics Technology Hardware,
Pref Storage & Peripherals South Korea 16,637 4.8 27,893
============================= ========================== =============== ========= ========= =========
BHP Group Metals & Mining Australia 12,892 3.8 12,401
============================= ========================== =============== ========= ========= =========
CSL Biotechnology Australia 10,574 3.1 11,785
============================= ========================== =============== ========= ========= =========
Budweiser Brewing Beverages Hong Kong 9,894 2.9 5,320
============================= ========================== =============== ========= ========= =========
Semiconductors &
ASML Semiconductor Equipment Netherlands 8,798 2.6 7,828
============================= ========================== =============== ========= ========= =========
LG Chem Chemicals South Korea 7,766 2.3 5,654
----------------------------- -------------------------- --------------- --------- --------- ---------
Top ten investments 182,632 53.3
-------------------------------------------------------------------------- --------- --------- ---------
Bank Central Asia Banks Indonesia 7,759 2.3 9,921
============================= ========================== =============== ========= ========= =========
Alibaba Group Broadline Retail China 7,671 2.2 5,801
============================= ========================== =============== ========= ========= =========
Oversea-Chinese Banking
Corporation Banks Singapore 7,380 2.2 9,261
============================= ========================== =============== ========= ========= =========
abrdn New India Investment
Trust(B) Closed End Investments India 6,985 2.0 7,384
============================= ========================== =============== ========= ========= =========
DBS Group Holdings Banks Singapore 6,833 2.0 10,871
============================= ========================== =============== ========= ========= =========
Oil, Gas & Consumable
Woodside Energy Fuels Australia 6,665 2.0 -
============================= ========================== =============== ========= ========= =========
Health Care Equipment
Cochlear & Supplies Australia 6,373 1.9 7,097
============================= ========================== =============== ========= ========= =========
Kweichow Moutai -
A shares Beverages China 5,966 1.7 4,210
============================= ========================== =============== ========= ========= =========
M.P. Evans Group Food Products United Kingdom 4,949 1.4 5,512
============================= ========================== =============== ========= ========= =========
China Tourism Group
Duty Free(C) Specialty Retail China 4,942 1.4 6,120
----------------------------- -------------------------- --------------- --------- --------- ---------
Top twenty investments 248,155 72.4
-------------------------------------------------------------------------- --------- --------- ---------
Real Estate Management
Ayala Land & Development Philippines 4,909 1.4 6,270
============================= ========================== =============== ========= ========= =========
Meituan Dianping Hotels, Restaurants
- Class B & Leisure China 4,902 1.4 -
============================= ========================== =============== ========= ========= =========
Hong Kong Exchanges
& Clearing Capital Markets Hong Kong 4,859 1.4 6,462
============================= ========================== =============== ========= ========= =========
Shenzhen Mindray
Bio-Medical Electronics Health Care Equipment
- A shares & Supplies China 4,836 1.4 4,271
============================= ========================== =============== ========= ========= =========
Telecommunications
Telekom Indonesia Service Providers Indonesia 4,748 1.4 -
============================= ========================== =============== ========= ========= =========
Life Sciences Tools
Samsung Biologics & Services South Korea 4,379 1.3 5,013
============================= ========================== =============== ========= ========= =========
China Merchants Bank
- A shares Banks China 4,228 1.2 5,893
============================= ========================== =============== ========= ========= =========
Hotels, Restaurants
Sands China & Leisure Hong Kong 4,175 1.2 2,649
============================= ========================== =============== ========= ========= =========
Life Sciences Tools
Wuxi Biologics (Cayman) & Services China 4,021 1.2 6,019
============================= ========================== =============== ========= ========= =========
FPT Group IT Services Vietnam 3,920 1.2 3,970
----------------------------- -------------------------- --------------- --------- --------- ---------
Top thirty investments 293,132 85.5
-------------------------------------------------------------------------- --------- --------- ---------
Rio Tinto (London
Listing) Metals & Mining Australia 3,699 1.1 4,182
============================= ========================== =============== ========= ========= =========
JD.com Broadline Retail China 3,399 1.0 1,258
============================= ========================== =============== ========= ========= =========
Cisarua Mountain
Dairy Food Products Indonesia 3,284 0.9 2,900
============================= ========================== =============== ========= ========= =========
Yonyou Network Technology
-
A shares Software China 3,113 0.9 1,664
============================= ========================== =============== ========= ========= =========
Aier Eye Hospital Health Care Providers
Group - A shares & Services China 3,073 0.9 -
============================= ========================== =============== ========= ========= =========
LONGi Green Energy Semiconductors &
Technology - A shares Semiconductor Equipment China 3,036 0.9 4,644
============================= ========================== =============== ========= ========= =========
Sungrow Power Supply
- A shares Electrical Equipment China 3,033 0.9 3,597
============================= ========================== =============== ========= ========= =========
Real Estate Management
China Resources Land & Development China 2,996 0.9 3,435
============================= ========================== =============== ========= ========= =========
Mobile World Specialty Retail Vietnam 2,977 0.9 5,175
============================= ========================== =============== ========= ========= =========
abrdn Asia Focus
(B) Closed End Investments Other Asia 2,959 0.8 3,310
----------------------------- -------------------------- --------------- --------- --------- ---------
Top forty investments 324,701 94.7
-------------------------------------------------------------------------- --------- --------- ---------
Foshan Haitan Flavouring
& Food Co - A shares Food Products China 2,648 0.8 -
============================= ========================== =============== ========= ========= =========
NARI Technology -
A shares Electrical Equipment China 2,576 0.8 3,869
============================= ========================== =============== ========= ========= =========
Electronic Equipment,
Venture Corp Instruments & Components Singapore 2,501 0.7 2,444
============================= ========================== =============== ========= ========= =========
Zhongsheng Group Specialty Retail China 2,407 0.7 2,318
============================= ========================== =============== ========= ========= =========
John Keells Holdings Industrial Conglomerates Sri Lanka 2,011 0.6 1,624
============================= ========================== =============== ========= ========= =========
Centre Testing International
Group - A shares Professional Services China 1,902 0.6 2,251
============================= ========================== =============== ========= ========= =========
GDS - A shares IT Services China 1,853 0.5 3,114
----------------------------- -------------------------- --------------- --------- --------- ---------
Total investments 340,599 99.4
-------------------------------------------------------------------------- --------- --------- ---------
Net current assets(D) 2,166 0.6
-------------------------------------------------------------------------- --------- --------- ---------
Total assets(A) 342,765 100.0
-------------------------------------------------------------------------- --------- --------- ---------
(B) Holding also managed by the abrdn Group but not subject to double
charging of management fees.
(C) Holding comprises of A & H shares.
(D) Excluding short-term bank loans of GBP28,632,000
Note: Unless otherwise stated, foreign stock is held and all investments
are equity holdings.
Changes in Asset Distribution
Value at Sales Appreciation/ Value at
30 April Purchases proceeds (depreciation) 30 April
2022 2023
Country GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ========= ========== ======== ============== ========
Australia 45,187 10,903 (15,530) (357) 40,203
============================ ========= ========== ======== ============== ========
China 83,286 36,026 (18,519) (15,283) 85,510
============================ ========= ========== ======== ============== ========
Hong Kong 38,038 5,417 (6,172) 3,335 40,618
============================ ========= ========== ======== ============== ========
India 56,080 4,250 - (4,997) 55,333
============================ ========= ========== ======== ============== ========
Indonesia 12,821 5,410 (3,587) 1,147 15,791
============================ ========= ========== ======== ============== ========
Netherlands 7,828 1,804 (1,249) 415 8,798
============================ ========= ========== ======== ============== ========
New Zealand 2,699 - (2,432) (267) -
============================ ========= ========== ======== ============== ========
Other Asia 3,310 - - (351) 2,959
============================ ========= ========== ======== ============== ========
Philippines 6,270 - - (1,361) 4,909
============================ ========= ========== ======== ============== ========
Singapore 22,576 653 (7,384) 869 16,714
============================ ========= ========== ======== ============== ========
South Korea 41,846 851 (10,960) (2,955) 28,782
============================ ========= ========== ======== ============== ========
Sri Lanka 1,624 - - 387 2,011
============================ ========= ========== ======== ============== ========
Taiwan 32,261 3,341 (5,015) (3,462) 27,125
============================ ========= ========== ======== ============== ========
Thailand 2,703 - (2,463) (240) -
============================ ========= ========== ======== ============== ========
United Kingdom 5,512 - - (563) 4,949
============================ ========= ========== ======== ============== ========
Vietnam 11,656 1,073 (2,469) (3,363) 6,897
---------------------------- --------- ---------- -------- -------------- --------
Total investments 373,697 69,728 (75,780) (27,046) 340,599
---------------------------- --------- ---------- -------- -------------- --------
Net current assets(A) 6,737 - - (4,571) 2,166
---------------------------- --------- ---------- -------- -------------- --------
Total assets less current
liabilities 380,434 69,728 (75,780) (31,617) 342,765
---------------------------- --------- ---------- -------- -------------- --------
(A) Excluding short-term bank loans of GBP28,632,000 (2022 - GBP13,504,000).
Directors' Report (extract)
The Directors present their report and the audited financial
statements for the year ended 30 April 2023.
Results and Dividends
The financial statements for the year ended 30 April 2023 are
contained below. A first interim dividend of 1.0p per Ordinary
share was paid on 10 February 2023 and the Board has declared a
second interim dividend in respect of the year ended 30 April 2023,
of 3.3p per Ordinary share, payable on 8 September 2023 to
shareholders on the register on 11 August 2023. The relevant
ex-dividend date is 10 August 2023.
Investment Trust Status
The Company is registered as a public limited company
(registered in England and Wales No. 02377879) and is an investment
company within the meaning of Section 833 of the Companies Act
2006. The Company has been approved by HM Revenue & Customs as
an investment trust subject to it continuing to meet the relevant
eligibility conditions of Section 1158 of the Corporation Tax Act
2010 and the ongoing requirements of Part 2 Chapter 3 Statutory
Instrument 2011/2999 for all financial years commencing on or after
1 May 2012. The Directors are of the opinion that the Company has
conducted its affairs for the year ended 30 April 2023 so as to
enable it to comply with the ongoing requirements for investment
trust status.
Individual Savings Accounts
The Company has conducted its affairs in such a way as to
satisfy the requirements as a qualifying security for Individual
Savings Accounts. The Directors intend that the Company will
continue to conduct its affairs in this manner.
Capital Structure
The issued Ordinary share capital at 30 April 2023 consisted of
104,991,348 Ordinary shares of 5p and 7,874,351 shares held in
treasury. During the year the Company purchased 1,706,000 Ordinary
shares to be held in treasury and it cancelled 4,233,350 treasury
shares. Since the end of the year, the Company has purchased a
further 420,000 Ordinary shares to be held in treasury. At the date
of approval of this Report there were 104,571,348 Ordinary shares
of 5p in issue and 8,294,351 shares held in treasury.
Voting Rights
Each Ordinary shareholder is entitled to one vote on a show of
hands at a general meeting of the Company and, on a poll, to one
vote for every share held. The Ordinary shares, excluding treasury
shares, carry a right to receive dividends. On a winding up or
other return of capital, after meeting the liabilities of the
Company, the surplus assets will be paid to Ordinary shareholders
in proportion to their shareholdings.
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.
Management Agreement
The Company has appointed abrdn Fund Managers Limited ("aFML"),
a wholly owned subsidiary of abrdn plc, as its alternative
investment fund manager. aFML has been appointed to provide
investment management, risk management, administration and company
secretarial services and promotional activities to the Company. The
Company's portfolio is managed by abrdn Asia Limited ("abrdn Asia")
by way of a group delegation agreement in place between aFML and
abrdn Asia. In addition, aFML has sub-delegated promotional
activities to abrdn Investments Limited and administration and
company secretarial services to abrdn Holdings Limited. Details of
the management fee during the year and fees payable for promotional
activities are shown in notes 4 and 5 to the financial
statements.
The management agreement is terminable on not less than 12
months' notice. In the event of termination by the Company on less
than the agreed notice period, compensation is payable to the
Manager in lieu of the unexpired notice period.
Substantial Interests
At 30 April 2023 the following interests in the issued Ordinary
share capital of the Company had been disclosed in accordance with
the requirements of the FCA's Disclosure Guidance and Transparency
Rules.
Number of Ordinary
Shareholder shares held % held(B)
====================================== =================== ==========
City of London Investment Management
Company Limited 27,354,703 26.1
====================================== =================== ==========
Allspring Global Investments
Holdings LLC 11,663,340 11.1
====================================== =================== ==========
abrdn Investment Trust
Share Plans(A) 7,944,812 7.6
====================================== =================== ==========
Close Asset Management Limited 5,305,699 5.1
====================================== =================== ==========
Lazard Asset Management LLC 5,182,427 4.9
====================================== =================== ==========
1607 Capital Partners LLC 4,026,274 3.8
====================================== =================== ==========
(A) Non-beneficial interest
(B) Based on 104,991,348 Ordinary shares in issue as at 30 April
2023
Since the end of the year, City of London Investment Management
Company Limited has notified the Company of a holding of 28,258,791
Ordinary shares (27.0%). There have been no other changes notified
to the Company as at the date of approval of this Report.
Corporate Governance
The Company is committed to high standards of corporate
governance. The Board is accountable to the Company's shareholders
for good governance and this statement describes how the Company
has applied the principles identified in the UK Corporate
Governance Code as published in July 2018 (the "UK Code"), which is
available on the Financial Reporting Council's (the "FRC") website:
frc.org.uk.
The Board has also considered the principles and provisions of
the AIC Code of Corporate Governance as published in February 2019
(the "AIC Code"). The AIC Code addresses the principles and
provisions set out in the UK Code, as well as setting out
additional provisions on issues that are of specific relevance to
the Company. The AIC Code is available on the AIC's website:
theaic.co.uk.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the FRC,
provides more relevant information to shareholders.
The Board confirms that, during the year, the Company complied
with the principles and provisions of the AIC Code and the relevant
provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
- interaction with the workforce (provisions 2, 5 and 6);
- the role and responsibility of the chief executive (provisions 9 and 14);
- previous experience of the chairman of a remuneration committee (provision 32); and
- executive directors' remuneration (provisions 33 and 36 to 40).
The Board considers that these provisions are not relevant to
the position of the Company, being an externally managed investment
company. In particular, all of the Company's day-to-day management
and administrative functions are outsourced to third parties. As a
result, the Company has no executive directors, employees or
internal operations. The Company has therefore not reported further
in respect of these provisions.
Full details of the Company's compliance with the AIC Code can
be found on its website.
Directors
Throughout the year, the Board comprised five Directors,
consisting of a non-executive Chairman and four non-executive
Directors. All Directors, with the exception of Mr Young, are
considered by the Board to be independent and free of any material
relationship with the abrdn Group. Mr Young is a director of
various entities connected with, or within, the abrdn Group and, as
such, is not considered to be independent.
The Directors attended scheduled Board and Committee meetings
during the year ended 30 April 2023 as shown in the table below
(with their eligibility to attend the relevant meeting in
brackets).
Director Board Audit and Nomination Management
Meetings Risk Committee Committee Engagement
Meetings Meetings Committee Meetings
================ =========== ================= =========== ======================
D Workman(A) 6 (6) - (-) 1 (1) 1 (1)
================ =========== ================= =========== ======================
M Sears 6 (6) 2 (2) 1 (1) 1 (1)
================ =========== ================= =========== ======================
S Souchon 6 (6) 2 (2) 1 (1) 1 (1)
================ =========== ================= =========== ======================
H Young(B) 6 (6) - (-) 1 (1) - (-)
================ =========== ================= =========== ======================
N Yuen 6 (6) 2 (2) 1 (1) 1 (1)
---------------- ----------- ----------------- ----------- ----------------------
(A) Mr Workman is not a member of the Audit and Risk Committee.
(B) Mr Young is not a member of the Audit and Risk or Management Engagement
Committees.
The Board meets more frequently when business needs require.
There were four such additional Board and Board Committee meetings
held during the year.
The Company's Articles of Association require that Directors
must retire and be subject to election at the first Annual General
Meeting after their appointment, and that one third of the
Directors retire by rotation at each Annual General Meeting, and
that any Director who was not elected or re-elected at one of the
preceding two Annual General Meetings also retires by rotation at
the Annual General Meeting. However, the Board has decided that,
notwithstanding the provisions of the Articles of Association, all
Directors will retire at each Annual General Meeting and, if
eligible, may seek re-election.
The Board believes that all the Directors, other than Mr Young,
remain independent of the Manager and free from any relationship
which could materially interfere with the exercise of their
judgement on issues of strategy, performance, resources and
standards of conduct. The Board believes that each Director has the
requisite high level and range of business, investment and
financial experience which enables the Board to provide clear and
effective leadership and proper governance of the Company.
Following formal performance evaluations, each Director's
performance continues to be effective and demonstrates commitment
to the role, and their individual performances contribute to the
long-term sustainable success of the Company.
Mr Young was appointed as a Director in May 1989 and, as stated
above, is not independent due to his involvement with various
entities within the abrdn Group. Mr Young has significant
experience of markets in the Asia Pacific region and provides
invaluable input to Board discussions.
Board's Policy on Tenure
In normal circumstances, it is the Board's expectation that
Directors will not serve beyond the Annual General Meeting
following the ninth anniversary of their appointment. However, the
Board takes the view that independence of individual Directors is
not necessarily compromised by length of tenure on the Board and
that continuity and experience can add significantly to the Board's
strength. The Board believes that recommendation for re-election
should be on an individual basis following a rigorous review which
assesses the contribution made by the Director concerned, but also
taking into account the need for regular refreshment and
diversity.
It is the Board's policy that the Chairman of the Board will not
serve as a Director beyond the Annual General Meeting following the
ninth anniversary of his/her appointment to the Board. However,
this may be extended in certain circumstances or to facilitate
effective succession planning and the development of a diverse
Board. In such a situation the reasons for the extension will be
fully explained to shareholders and a timetable for the departure
of the Chairman clearly set out.
The Role of the Chairman and Senior Independent Director
The Chairman is responsible for providing effective leadership
to the Board, by setting the tone of the Company, demonstrating
objective judgement and promoting a culture of openness and debate.
The Chairman facilitates the effective contribution and encourages
active engagement by each Director. In conjunction with the Company
Secretary, the Chairman ensures that Directors receive accurate,
timely and clear information to assist them with effective
decision-making. The Chairman acts upon the results of the Board
evaluation process by recognising strengths and addressing any
weaknesses and also ensures that the Board engages with major
shareholders and that all Directors understand shareholder
views.
The Senior Independent Director acts as a sounding board for the
Chairman and acts as an intermediary for other Directors, when
necessary. Working closely with the Nomination Committee, the
Senior Independent Director takes responsibility for an orderly
succession process for the Chairman, and leads the annual appraisal
of the Chairman's performance. The Senior Independent Director is
also available to shareholders to discuss any concerns they may
have.
Directors' and Officers' Liability Insurance
The Company's Articles of Association indemnify each of the
Directors out of the assets of the Company against any liabilities
incurred by them as a Director of the Company in defending
proceedings, or in connection with any application to the Court in
which relief is granted. In addition, the Company has entered into
separate deeds of indemnity with each of the Directors, reflecting
the scope of the indemnity in the Articles. Directors' and
Officers' liability insurance cover has been maintained throughout
the year at the expense of the Company.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation
where a Director has a conflict of interest. As part of this
process, each Director prepares a list of other positions held and
all other conflict situations that may need to be authorised either
in relation to the Director concerned or his or her connected
persons. The Board considers each Director's situation and decides
whether to approve any conflict, taking into consideration what is
in the best interests of the Company and whether the Director's
ability to act in accordance with his or her wider duties is
affected. Each Director is required to notify the Company Secretary
of any potential or actual conflict situations that will need
authorising by the Board. Authorisations given by the Board are
reviewed at each Board meeting.
No Director has a service contract with the Company although all
Directors are issued with letters of appointment. Other than Mr
Young, and the deeds of indemnity referred to above, t here were no
contracts during, or at the end of the year, in which any Director
was interested.
The Company has a policy of conducting its business in an honest
and ethical manner. The Company takes a zero-tolerance approach to
bribery and corruption and has procedures in place that are
proportionate to the Company's circumstances to prevent them. The
Manager also adopts a group-wide zero-tolerance approach and has
its own detailed policy and procedures in place to prevent bribery
and corruption. Copies of the Manager's anti-bribery and corruption
policies are available on its website.
In relation to the corporate offence of failing to prevent tax
evasion, it is the Company's policy to conduct all business in an
honest and ethical manner. The Company takes a zero-tolerance
approach to facilitation of tax evasion whether under UK law or
under the law of any foreign country and is committed to acting
professionally, fairly and with integrity in all its business
dealings and relationships.
Board Diversity
The Board recognises the importance of having a range of skilled
and experienced individuals with the right knowledge represented on
the Board in order to allow it to fulfil its obligations. The Board
also recognises the benefits and is supportive of the principle of
diversity in its recruitment of new Board members. The Board will
not display any bias for age, gender, race, sexual orientation,
socio-economic background, religion, ethnic or national origins or
disability in considering the appointment of its Directors. In view
of its size, the Board will continue to ensure that all
appointments are made on the basis of merit against the
specification prepared for each appointment. In doing so, the Board
will take account of the targets set out in the FCA's Listing
Rules, which are set out in the tables below.
The Board has resolved that the Company's year end date is the
most appropriate date for disclosure purposes. The following
information has been provided by each Director through the
completion of questionnaires. There have been no changes since the
year end .
Board Gender as at 30 April 2023
Number of
senior positions
on the Board
Percentage (CEO, CFO, Number in Percentage
Number of of the Chairman executive of executive
Board members Board and SID) management management
===================== ============== ========== ================= =========== =============
n/a
Men 3 60% (note 3) n/a n/a
===================== ============== ========== ================= =========== =============
Women 2 40%
(note 1)
===================== ============== ========== ================= =========== =============
Not specified/prefer - -
not to say
===================== ============== ========== ================= =========== =============
Board Ethnic Background as at 30 April 2023
Number of
senior positions
on the Board
Percentage (CEO, CFO, Number in Percentage
Number of of the Chairman executive of executive
Board members Board and SID) management management
=========================== ============== ========== ================= =========== =============
White British or other
White
(including minority-white n/a
groups) 4 80% (note 3) n/a n/a
=========================== ============== ========== ================= =========== =============
Asian 1 20%
(note 2)
=========================== ============== ========== ================= =========== =============
Other ethnic group - -
=========================== ============== ==========
Not specified/prefer - -
not to say
=========================== ============== ========== ================= =========== =============
Notes :
1. Meets target of at least 40% as set out in LR 9.8.6R (9)(a)(i)
2. Meets target of at least 1 as set out in LR 9.8.6R (9)(a)(iii)
3. This column is inapplicable as the Company is externally
managed and does not have executive management functions,
specifically it does not have a CEO or CFO. The Company considers
that the role of Chairman, Senior Independent Director ("SID"), and
the chairmen of the Audit and Risk Committee, Nomination Committee
and Management Engagement Committee are senior positions. Of these
five senior roles, four are performed by men and one by a women,
and all five are held by Directors classified as 'White British or
other White (including minority-white groups)'.
Going Concern
As set out in more detail in the Charman's Statement, it is
proposed that the Company combines with Asia Dragon Trust plc
("Asia Dragon"). The combination, if approved by each company's
shareholders, will be effected by way of a scheme of reconstruction
and winding up of the Company under section 110 of the Insolvency
Act 1986 and the associated transfer of part of the assets and
undertaking of the Company to Asia Dragon in exchange for the issue
of new ordinary shares in Asia Dragon (the "Scheme"). The outcome
of the general meetings to make the Scheme effective represents a
material uncertainty which may cast significant doubt on the
Company's ability to continue as a going concern .
Notwithstanding this material uncertainty, the Board has
concluded that it remains appropriate to continue to prepare the
financial statements on a going concern basis. In reaching this
conclusion, the Board has come to the view that, as the Scheme is
contingent on shareholder approval and the Company is considered
solvent in all other regards, there is no irrevocable path to
liquidation and thus going concern remains the most appropriate
basis for preparation. In reaching this conclusion, the Board has
also given due consideration to the risks associated with the
Scheme.
The Board has also given consideration to the liquidity of the
investment portfolio. 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 regularly reviews income and expenditure projections and has
set limits for borrowing and reviews compliance with banking
covenants, including the headroom available.
At the year end, the Company's borrowing facilities amounted to
GBP40 million, comprising a fixed rate loan of GBP20 million, which
matures in December 2023, and a GBP20 million multi-currency
revolving loan facility maturing in June 2024. In the event of the
Company being unable to renew the facilities on their maturity, it
is anticipated that they would be repaid from proceeds of
investment sales.
In considering the going concern basis of accounting, the
Directors have also taken into account the potential requirement of
the Board to propose a resolution to approve the continuation of
the Company at future Annual General Meetings. As explained under
"Duration" above, this is dependent upon the level of discount in
the 90 days preceding the Company's financial year end and there is
no requirement for such a resolution to be proposed at the Annual
General Meeting .
Accountability and Audit
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 they have taken all the steps that they could
reasonably be expected to have taken as Directors in order to make
themselves aware of any relevant audit information and to establish
that the Company's Auditor is aware of that information.
Financial Instruments
The financial risk management objectives and policies arising
from financial instruments and the exposure of the Company to risk
are disclosed in note 17 to the financial statements.
Relations with Shareholders
The Directors place a great deal of importance on communication
with shareholders. Shareholders and investors may obtain up to date
information on the Company through its website and the Manager's
Customer Services Department (see Contact Addresses).
The Board's policy is to communicate directly with shareholders
and their representative bodies without the involvement of the
management group (including the Company Secretary or the Manager)
in situations where direct communication is required, and
representatives from the Board and Manager meet with major
shareholders on at least an annual basis in order to gauge their
views. In addition, the Company Secretary only acts on behalf of
the Board, not the Manager, and there is no filtering of
communication.
At each Board meeting the Board receives full details of any
communication from shareholders to which the Chairman responds
personally as appropriate.
The Company has adopted a nominee code which ensures that, when
shares in the Company are held in the name of nominee companies and
notification has been received in advance, nominee companies will
be provided with copies of shareholder communications for
distribution to their investors. Nominee investors may attend and
speak at general meetings.
Participants in the abrdn Investment Plan for Children,
Investment Trust Share Plan and Investment Trust ISA, whose shares
are held in the nominee name of the plan administrator, are given
the opportunity to vote at general meetings of the Company by means
of a Letter of Direction provided to them. When forwarded to the
plan administrator, the voting instructions given in the Letter of
Direction will in turn be reflected in the proxy votes lodged by
the plan administrator.
Share Buy Backs
The Company bought back 1,706,000 Ordinary shares during the
year ended 30 April 2023, representing 1.6% of the issued share
capital, with the aim of providing a degree of liquidity to the
market at times when the discount to the net asset value per share
has widened in normal market conditions. It is the view of the
Board that the Company's share buy back policy is in the interests
of all shareholders. The Board closely monitors the discount and
reviews the operation of the share buy back policy at each Board
meeting as well as considering other options for managing the
discount.
Treasury Shares
As part of its liquidity management policy, the Company
currently has powers to buy back its own shares at a discount to
the net asset value per share and to hold them in treasury (instead
of cancelling them) as well as to sell treasury shares at a premium
to the net asset value
per share.
It is the Company's policy that, in the event that the number of
treasury shares represents more than 10% of the Company's issued
share capital (excluding treasury shares) at the end of any
financial year, the Company will cancel a proportion of its
treasury shares such that the remaining balance will equal 7.5% of
the issued share capital (excluding treasury shares). Accordingly,
4,233,350 treasury shares were cancelled on 30 April 2023. Shares
remaining in treasury may be held indefinitely. No dividends will
be paid on treasury shares, and no voting rights attach to them. No
treasury shares were cancelled during the year.
By order of the Board
abrdn Holdings Limited
Company Secretary
16 August 2023
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors are required to prepare the financial statements in
accordance with UK accounting standards, including FRS 102 'The
Financial Reporting Standard Applicable in the UK and Republic
of Ireland'.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of its profit or
loss for that period.
In preparing these financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
- assess the Company's ability to continue as a going concern
disclosing, as applicable, matters related to going concern;
and
- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Statement of Corporate
Governance that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website, but not for the content of any information
included on the website that has been prepared or issued by third
parties. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
The Board confirms that to the best of its knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company;
- the Strategic Report and Directors' Report include a fair
review of the development and performance of the business and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces; and
- the Annual Report and financial statements taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy.
On behalf of the Board
Donald Workman
Chairman
16 August 2023
Statement of Comprehensive Income
Year ended 30 April Year ended 30 April
2023 2022
========================== ===== =========================== ===========================
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ===== ======= ======== ======== ======= ======== ========
Losses on investments 10 - (27,046) (27,046) - (46,172) (46,172)
========================== ===== ======= ======== ======== ======= ======== ========
Income 3 7,612 - 7,612 6,670 - 6,670
========================== ===== ======= ======== ======== ======= ======== ========
Management fee 4 (945) (945) (1,890) (1,170) (1,170) (2,340)
========================== ===== ======= ======== ======== ======= ======== ========
Administrative expenses 5 (747) - (747) (723) - (723)
========================== ===== ======= ======== ======== ======= ======== ========
Exchange losses - (139) (139) - (640) (640)
-------------------------- ----- ------- -------- -------- ------- -------- --------
Net return before finance
costs and taxation 5,920 (28,130) (22,210) 4,777 (47,982) (43,205)
========================== ===== ======= ======== ======== ======= ======== ========
Finance costs 6 (473) (473) (946) (406) (406) (812)
-------------------------- ----- ------- -------- -------- ------- -------- --------
Return before taxation 5,447 (28,603) (23,156) 4,371 (48,388) (44,017)
========================== ===== ======= ======== ======== ======= ======== ========
Taxation 7 (342) - (342) (366) - (366)
-------------------------- ----- ------- -------- -------- ------- -------- --------
Return after taxation 5,105 (28,603) (23,498) 4,005 (48,388) (44,383)
-------------------------- ----- ------- -------- -------- ------- -------- --------
Return per Ordinary share
(pence) 9 4.82 (27.00) (22.18) 3.71 (44.81) (41.10)
-------------------------- ----- ------- -------- -------- ------- -------- --------
The total column of this statement represents the profit and loss account
of the Company.
The Company does not have any income or expense that is not included
in "Return after taxation" and therefore this represents the "Total
comprehensive income for the year".
All revenue and capital items are derived from continuing operations.
The accompanying notes are an integral part of the financial statements.
Statement of Financial Position
As at As at
30 April 2023 30 April 2022
Notes GBP'000 GBP'000
=========================================== ===== ============= =============
Fixed assets
=========================================== ===== ============= =============
Investments at fair value through profit
or loss 10 340,599 373,697
=========================================== ===== ============= =============
Current assets
=========================================== ===== ============= =============
Debtors 11 729 1,907
=========================================== ===== ============= =============
Cash and short-term deposits 2,166 7,824
------------------------------------------- ----- ------------- -------------
2,895 9,731
------------------------------------------- ----- ------------- -------------
Creditors: amounts falling due within
one year 12
=========================================== ===== ============= =============
Loans (28,632) (13,504)
=========================================== ===== ============= =============
Other creditors (729) (2,994)
=========================================== ===== ============= =============
(29,361) (16,498)
------------------------------------------- ----- ------------- -------------
Net current liabilities (26,466) (6,767)
------------------------------------------- ----- ------------- -------------
Total assets less current liabilities 314,133 366,930
=========================================== ===== ============= =============
Non-current creditors 12
=========================================== ===== ============= =============
Loans - (19,978)
------------------------------------------- ----- ------------- -------------
Net assets 314,133 346,952
------------------------------------------- ----- ------------- -------------
Share capital and reserves
=========================================== ===== ============= =============
Share capital 13 5,643 5,855
=========================================== ===== ============= =============
Share premium account 17,955 17,955
=========================================== ===== ============= =============
Capital redemption reserve 10,911 10,699
=========================================== ===== ============= =============
Capital reserve 14 266,379 299,738
=========================================== ===== ============= =============
Revenue reserve 13,245 12,705
------------------------------------------- ----- ------------- -------------
Equity shareholders' funds 314,133 346,952
------------------------------------------- ----- ------------- -------------
Net asset value per Ordinary share (pence) 15 299.20 325.17
------------------------------------------- ----- ------------- -------------
The financial statements were approved by the Board of Directors and
authorised for issue on 16 August 2023 and were signed on its behalf
by:
Donald Workman
Chairman
The accompanying notes are an integral
part of the financial statements.
Statement of Changes in Equity
For the year ended 30 April 2023
==============================================================================================
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ===== ======= ======= ========== ======== ======= ========
Balance at 30 April 2022 5,855 17,955 10,699 299,738 12,705 346,952
============================ ===== ======= ======= ========== ======== ======= ========
Buy back of Ordinary shares
for treasury - - - (4,756) - (4,756)
============================ ===== ======= ======= ========== ======== ======= ========
Cancellation of Ordinary
shares held in treasury (212) - 212 - - -
============================ ===== ======= ======= ========== ======== ======= ========
Return after taxation - - - (28,603) 5,105 (23,498)
============================ ===== ======= ======= ========== ======== ======= ========
Dividends paid 8 - - - - (4,565) (4,565)
---------------------------- ----- ------- ------- ---------- -------- ------- --------
Balance at 30 April 2023 5,643 17,955 10,911 266,379 13,245 314,133
---------------------------- ----- ------- ------- ---------- -------- ------- --------
For the year ended 30 April 2022
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ===== ======= ======= ========== ======== ======= ========
Balance at 30 April 2021 5,855 17,955 10,699 355,134 13,362 403,005
============================ ===== ======= ======= ========== ======== ======= ========
Buy back of Ordinary shares
for treasury - - - (7,008) - (7,008)
============================ ===== ======= ======= ========== ======== ======= ========
Return after taxation - - - (48,388) 4,005 (44,383)
============================ ===== ======= ======= ========== ======== ======= ========
Dividends paid 8 - - - - (4,662) (4,662)
---------------------------- ----- ------- ------- ---------- -------- ------- --------
Balance at 30 April 2022 5,855 17,955 10,699 299,738 12,705 346,952
---------------------------- ----- ------- ------- ---------- -------- ------- --------
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.
Statement of Cash Flows
Year ended Year ended
30 April 2023 30 April 2022
Notes GBP'000 GBP'000
========================================= ============ ============= =============
Operating activities
========================================= ============ ============= =============
Net return before finance costs and
taxation (22,210) (43,205)
========================================= ============ ============= =============
Adjustment for:
========================================= ============ ============= =============
Losses on investments 27,046 46,172
========================================= ============ ============= =============
Currency losses 139 640
========================================= ============ ============= =============
Dividend income (7,540) (6,667)
========================================= ============ ============= =============
Dividend income received 7,502 7,112
========================================= ============ ============= =============
Interest income (72) (3)
========================================= ============ ============= =============
Interest income received 64 2
========================================= ============ ============= =============
Increase in other debtors (5) (9)
========================================= ============ ============= =============
Decrease in other creditors (12) (30)
========================================= ============ ============= =============
Stock dividends included in investment
income - (152)
========================================= ============ ============= =============
Overseas withholding tax (253) (484)
----------------------------------------- ------------ ------------- -------------
Net cash flow from operating activities 4,659 3,376
========================================= ============ ============= =============
Investing activities
========================================= ============ ============= =============
Purchases of investments (71,965) (81,473)
========================================= ============ ============= =============
Sales of investments 76,921 95,767
----------------------------------------- ------------ ------------- -------------
Net cash from investing activities 4,956 14,294
========================================= ============ ============= =============
Financing activities
========================================= ============ ============= =============
Equity dividends paid 8 (4,565) (4,662)
========================================= ============ ============= =============
Interest paid (915) (799)
========================================= ============ ============= =============
Buy back of Ordinary shares for treasury (4,790) (6,882)
========================================= ============ ============= =============
Loan repayment (4,814) -
----------------------------------------- ------------ ------------- -------------
Net cash used in financing activities (15,084) (12,343)
----------------------------------------- ------------ ------------- -------------
(Decrease)/increase in cash (5,469) 5,327
----------------------------------------- ------------ ------------- -------------
Analysis of changes in cash during
the year
========================================= ============ ============= =============
Opening balance 7,824 2,364
========================================= ============ ============= =============
Effect of exchange rate fluctuations
on cash held (189) 133
========================================= ============ ============= =============
(Decrease)/increase in cash as above (5,469) 5,327
----------------------------------------- ------------ ------------- -------------
Closing balance 2,166 7,824
----------------------------------------- ------------ ------------- -------------
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
For the year ended 30 April 2023
1. Principal activity
The Company is a closed-end investment company, registered in England
& Wales No 02377879, with its Ordinary shares being listed on the
London Stock Exchange.
2. Accounting policies
(a) Basis of accounting. The financial statements have been prepared
in accordance with Financial Reporting Standard 102 and with
the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (the "SORP")
issued in July 2022. The financial statements are prepared in
Sterling which is the functional currency of the Company and
rounded to the nearest GBP'000. They have also been prepared
on the assumption that approval as an investment trust will continue
to be granted by HMRC.
Going concern with a Material Uncertainty . As set out in more
detail in the Charman's Statement, it is proposed that the Company
combines with Asia Dragon Trust plc ("Asia Dragon"). The combination,
if approved by each company's shareholders, will be effected
by way of a scheme of reconstruction and winding up of the Company
under section 110 of the Insolvency Act 1986 and the associated
transfer of part of the assets and undertaking of the Company
to Asia Dragon in exchange for the issue of new ordinary shares
in Asia Dragon (the "Scheme"). The outcome of the general meetings
to make the Scheme effective represents a material uncertainty
which may cast significant doubt on the Company's ability to
continue as a going concern.
Notwithstanding this material uncertainty, the Board has concluded
that it remains appropriate to continue to prepare the financial
statements on a going concern basis. In reaching this conclusion,
the Board has come to the view that, as the Scheme is contingent
on shareholder approval and the Company is considered solvent
in all other regards, there is no irrevocable path to liquidation
and thus going concern remains the most appropriate basis for
preparation. In reaching this conclusion, the Board has also
given due consideration to the risks associated with the Scheme.
The Board has also given consideration to the liquidity of the
investment portfolio. 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 regularly reviews income and expenditure projections
and has set limits for borrowing and reviews compliance with
banking covenants, including the headroom available.
At the year end, the Company's borrowing facilities amounted
to GBP40 million, comprising a fixed rate loan of GBP20 million,
which matures in December 2023, and a GBP20 million multi-currency
revolving loan facility maturing in June 2024. In the event of
the Company being unable to renew the facilities on their maturity,
it is anticipated that they would be repaid from proceeds of
investment sales.
In considering the going concern basis of accounting, the Directors
have also taken into account the potential requirement of the
Board to propose a resolution to approve the continuation of
the Company at future Annual General Meetings. As explained under
"Duration" above, this is dependent upon the level of discount
in the 90 days preceding the Company's financial year end and
there is no requirement for such a resolution to be proposed
at the Annual General Meeting.
The Company's investments and borrowings are made in a number
of currencies, however the Board considers the Company's functional
currency to be Sterling. In arriving at this conclusion, the
Board considered that the shares of the Company are listed on
the London Stock Exchange, it is regulated in the United Kingdom,
principally having its shareholder base in the United Kingdom,
pays dividends and expenses in Sterling. Consequently, the Board
also considers the Company's presentational currency to be Sterling.
At the year end, the Company's borrowing facilities amounted
to GBP40 million, comprising a fixed rate loan of GBP20 million,
which matures in December 2023, and a GBP20 million multi-currency
revolving loan facility maturing in June 2024.
Significant accounting judgements, estimates and assumptions.
The preparation of financial statements requires the consideration
of certain significant accounting judgements, estimates and assumptions
when management may need to exercise its judgement in the process
of applying the accounting policies and these are continually
evaluated. The Directors consider the material uncertainty present
for the Company to continue as a going concern and the use of
Sterling as its functional currency to be significant accounting
judgements.
(b) Valuation of investments. The Company has applied the recognition
and measurement provisions of FRS 102 and 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, and information about the grouping is provided
internally on that basis. Listed investments have been measured
upon initial recognition as fair value through profit or loss.
Investments are recognised and de-recognised on the trade date
at cost. Subsequent to initial recognition, investments are valued
at fair value which for listed investments is deemed to be bid
market prices. The fair value of the Company's investments in
collective investment schemes has been determined by reference
to their quoted net asset values. Gains and losses arising from
changes in fair value are included as a capital item in the Statement
of Comprehensive Income and are ultimately recognised in the
capital reserve.
(c) Income. Dividends, including taxes deducted at source, are included
in revenue by reference to the date on which the investment is
quoted ex-dividend. Special dividends are reviewed on a case-by-case
basis and are credited to capital, if circumstances dictate.
Dividends receivable on equity shares where no ex-dividend date
is quoted are brought into account when the Company's right to
receive payment is established. Other returns on non-equity shares
are recognised when the right to return is established. Where
the Company has elected to receive its dividends in the form
of additional shares rather than cash, the amount of the cash
dividend is recognised as revenue. Any excess in the value of
the shares received over the amount of the cash dividend is recognised
as capital. Interest receivable on bank balances is dealt with
on an accruals basis.
(d) Expenses. All expenses are accounted for on an accruals basis.
Expenses are charged through the revenue column of the Statement
of Comprehensive Income except as follows:
- expenses directly relating to the acquisition or disposal of
an investment, which are charged to the capital column of the
Statement of Comprehensive Income and are separately identified
and disclosed in note 10; and
- the Company charges 50% of investment management fees and finance
costs to the capital column of the Statement of Comprehensive
Income, 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.
(e) Taxation. The tax payable is based on the taxable profit for
the year. Taxable profit differs from net profit as reported
in the Statement of Comprehensive Income because it excludes
items of income or expenditure that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible (see note 7 for a more detailed explanation).
Deferred taxation is provided on all timing differences, that
have originated but not reversed at the Statement of Financial
Position date, where transactions or events that result in an
obligation to pay more or a right to pay less tax in future have
occurred at the Statement of Financial Position date, measured
on an undiscounted basis and based on enacted tax rates. This
is subject to deferred tax assets only being recognised if it
is considered more likely than not that there will be suitable
profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences
arising between the Company's taxable profits and its results
as stated in the accounts which are capable of reversal in one
or more subsequent periods. Due to the Company's status as an
investment trust company, and the intention to continue to meet
the conditions required to obtain approval for the foreseeable
future, the Company has not provided deferred tax on any capital
gains and losses arising on the revaluation or disposal of investments.
(f) Foreign currencies. Assets and liabilities in foreign currencies
are translated at the rates of exchange ruling on the Statement
of Financial Position date. Transactions involving foreign currencies
are converted at the rate ruling on the date of the transaction.
Gains and losses on the realisation of foreign currencies are
recognised in the Statement of Comprehensive Income as capital
or revenue, depending upon their nature.
(g) Dividends payable. Final dividends are recognised from the date
on which they are declared and approved by shareholders. Interim
dividends are recognised when paid.
(h) Nature and purpose of capital and reserves
Called up share capital. The Ordinary share capital on the Statement
of Financial Position relates to the number of shares in issue
and in treasury. Only when the shares are cancelled, either from
treasury or directly, is a transfer made to the capital redemption
reserve.
Share premium account. The balance classified as share premium
includes the premium above nominal value from the proceeds on
issue of any equity share capital comprising Ordinary shares
of 5p. This reserve is not distributable.
Capital redemption reserve . The capital redemption reserve is
used to record the amount equivalent to the nominal value of
any of the Company's own shares purchased and cancelled in order
to maintain the Company's capital. This reserve is not distributable.
Capital reserve . Gains or losses on disposal of investments
and changes in fair values of investments are transferred to
the capital reserve. The capital element of the management fee
and relevant finance costs are charged to this reserve. Any associated
tax relief is also credited to this reserve. The costs of share
buybacks to be held in treasury have also been deducted from
this reserve. This reserve is not distributable.
Revenue reserve. This reserve reflects all income and costs which
are recognised in the revenue column of the Statement of Comprehensive
Income. The revenue is distributable, including by way of dividend.
(i) Borrowings . Bank loans are initially recognised at cost, being
the fair value of the consideration received, net of any issue
expenses. Subsequently, they are measured at amortised cost using
the effective interest method. Finance charges are accounted
for on an accruals basis using the effective interest rate method
and are charged 50% to revenue and
50% to capital.
3. Income
======================== ======= =======
2023 2022
GBP'000 GBP'000
======================== ======= =======
Income from investments
======================== ======= =======
UK dividend income 729 1,973
============================ ======= =======
Overseas dividends 6,811 4,542
============================ ======= =======
Stock dividends - 152
---------------------------- ------- -------
7,540 6,667
---------------------------- ------- -------
Other income
======================== ======= =======
Deposit interest 72 3
---------------------------- ------- -------
Total income 7,612 6,670
---------------------------- ------- -------
4. Management fee
======================================================================================
2023 2022
==================== ========= ========= ========= ========= ========= =========
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- --------- --------- --------- --------- ---------
Management fee 945 945 1,890 1,170 1,170 2,340
------------------------ --------- --------- --------- --------- --------- ---------
Management services are provided by abrdn Fund Managers Limited
("aFML").
With effect from 1 May 2022, the management fee has been payable
monthly in arrears based on an annual amount of 0.85% up to GBP350
million and 0.50% thereafter of the net asset value of the Company
valued monthly, previously 0.85% of net assets, with the following
provisions for commonly managed funds:
- the Company's investments in Aberdeen Standard SICAV - Indian
Equity Fund, abrdn Asia Focus PLC and abrdn New India Investment
Trust PLC are excluded from the calculation of the investment management
fee. The total value of such commonly managed funds, on a bid price
basis (basis on which the management fee is calculated), at the
year end was GBP58,292,000 (2022 - bid basis - GBP59,390,000).
- the Company receives a rebate from the Manager for the amount
of fees in excess of the above rates charged by the Manager for
any commonly managed fund.
The balance due to aFML at the year end, net of any rebates, was
GBP303,000 (2022 - GBP344,000).
The agreement is terminable by either party on not less than twelve
months' notice to the other. In the event of termination
by the Company on less than the agreed notice period, compensation
is payable to the Manager in lieu of the unexpired
notice period.
5. Administrative expenses
======================================================== ======== ========
2023 2022
GBP'000 GBP'000
======================================================== ======== ========
Promotional activities 185 177
============================================================ ======== ========
Directors' fees 126 122
============================================================ ======== ========
Safe custody fees 111 129
============================================================ ======== ========
Depositary fees 34 39
============================================================ ======== ========
Auditor's remuneration:
======================================================== ======== ========
- fees payable for the audit of the Company's
annual financial statements 30 29
============================================================ ======== ========
Registrar's fees 62 67
============================================================ ======== ========
Legal and professional fees 55 28
============================================================ ======== ========
Other expenses 144 132
------------------------------------------------------------ -------- --------
747 723
------------------------------------------------------------ -------- --------
The Company has an agreement with aFML for the provision of promotional
activities. The total fees payable during the year were GBP185,000
(2022 - GBP177,000) and the sum due to aFML at the year end was
GBP54,000 (2022 - GBP65,000).
The Company does not have any employees and no pension contributions
were made in respect of any of the Directors.
With the exception of Auditor's remuneration, all of the expenses
above include irrecoverable VAT where applicable.
6. Finance costs
========================= ======= ======= ======= ======= ======= =======
2023 2022
========================= ======= ======= ======= ======= ======= =======
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------- ------- ------- ------- ------- -------
Bank loans and overdraft
interest 473 473 946 406 406 812
----------------------------- ------- ------- ------- ------- ------- -------
7. Taxation
2023 2022
=============================== =========================== ===========================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================== ======= ======== ======== ======= ======== ========
(a) Analysis of charge for
the year
=============================== ======= ======== ======== ======= ======== ========
Overseas tax 416 - 416 444 - 444
======================================== ======= ======== ======== ======= ======== ========
Overseas tax reclaimable (74) - (74) (78) - (78)
---------------------------------------- ------- -------- -------- ------- -------- --------
Total tax charge for the
year 342 - 342 366 - 366
---------------------------------------- ------- -------- -------- ------- -------- --------
(b) Factors affecting the tax charge for the year . The UK corporation
tax rate is 25% (2022 - 19%).The tax assessed for the year is
higher (2022 -higher) than the standard rate of corporation tax
in the UK. The differences are explained below:
2023 2022
=============================== =========================== ===========================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================== ======= ======== ======== ======= ======== ========
Net return before taxation 5,447 (28,603) (23,156) 4,371 (48,388) (44,017)
======================================== ======= ======== ======== ======= ======== ========
Corporation tax at effective
rate of 19.5% (2022 -
standard rate of 19%) 1,062 (5,578) (4,516) 830 (9,194) (8,364)
======================================== ======= ======== ======== ======= ======== ========
Effects of: -
=============================== ======= ======== ======== ======= ======== ========
Non-taxable UK dividend
income (142) - (142) (375) - (375)
======================================== ======= ======== ======== ======= ======== ========
Non-taxable overseas dividends (1,328) - (1,328) (892) - (892)
======================================== ======= ======== ======== ======= ======== ========
Overseas tax suffered 342 - 342 366 - 366
======================================== ======= ======== ======== ======= ======== ========
Expenses not deductible
for tax purposes 3 - 3 4 - 4
======================================== ======= ======== ======== ======= ======== ========
Surplus management expenses
and loan relationship
deficits not relieved 405 277 682 433 299 732
======================================== ======= ======== ======== ======= ======== ========
Non-taxable exchange losses - 27 27 - 122 122
======================================== ======= ======== ======== ======= ======== ========
Non-deductible losses - 5,274 5,274 - 8,773 8,773
---------------------------------------- ------- -------- -------- ------- -------- --------
Total tax charge 342 - 342 366 - 366
---------------------------------------- ------- -------- -------- ------- -------- --------
(c) Provision for deferred taxation . No provision for deferred taxation
has been made in the current year or in the prior year. At 30
April 2023 the Company had surplus management expenses and loan
relationship debits with a tax value of GBP10,395,000 (2022 -
GBP9,522,000) in respect of which a deferred tax asset has not
been recognised. This is because the Company is not expected
to generate taxable income in a future period in excess of the
deductible expenses of that future period and, accordingly, it
is unlikely that the Company will be able to reduce future tax
liabilities through the use of existing surplus expenses.
8. Dividends
======================================================= ========== =========
2023 2022
GBP'000 GBP'000
======================================================= ========== =========
Amounts recognised as distributions to
equity holders in the period:
======================================================= ========== =========
Final dividend for 2022 - 3.3p (2021 -
3.3p) 3,507 3,587
=========================================================== ========== =========
Interim dividend for 2023 - 1.0p (2022
- 1.0p) 1,058 1,075
----------------------------------------------------------- ---------- ---------
4,565 4,662
----------------------------------------------------------- ---------- ---------
The second interim dividend in respect of the year ended 30 April
2023 has not been included as a liability in these financial statements.
The table below sets out the dividends in respect of the financial
year, which is the basis on which the requirements of Section 1158
of the Corporation Tax Act 2010 are considered. The revenue available
for distribution by way of dividend for the year is GBP5,105,000
(2022 - GBP4,005,000).
2023 2022
GBP'000 GBP'000
======================================================= ========== =========
First interim dividend for 2023 - 1.0p 1,058 -
=========================================================== ========== =========
Second interim dividend for 2023 - 3.3p 3,451 -
=========================================================== ========== =========
Interim dividend for 2022 - 1.0p - 1,075
=========================================================== ========== =========
Final dividend for 2022 - 3.3p - 3,511
----------------------------------------------------------- ---------- ---------
4,509 4,586
----------------------------------------------------------- ---------- ---------
Subsequent to the year end the Company and up to the record date
of the second interim dividend for 2023 a further 420,000 Ordinary
shares were purchased for treasury. Therefore the amounts reflected
above for the cost of the second interim dividend for 2023 are based
on 104,571,348 Ordinary shares, being the number of Ordinary shares
in issue excluding those held in treasury at the date of this Report.
9. Return per Ordinary share
2023 2022
==================================== ===================== =====================
GBP'000 p GBP'000 p
==================================== ======== =========== ======== ===========
Revenue return 5,105 4.82 4,005 3.71
======================================== ======== =========== ======== ===========
Capital return (28,603) (27.00) (48,388) (44.81)
---------------------------------------- -------- ----------- -------- -----------
Total return (23,498) (22.18) (44,383) (41.10)
---------------------------------------- -------- ----------- -------- -----------
Weighted average number of Ordinary
shares in issue(A) 105,932,290 107,976,263
---------------------------------------- -------- ----------- -------- -----------
(A) Calculated excluding shares held in treasury.
10. Investments at fair value through profit
or loss
======================================================== ========== ==========
2023 2022
GBP'000 GBP'000
======================================================== ========== ==========
Opening book cost 253,386 243,269
============================================================= ========== ==========
Opening investment holding gains 120,311 188,217
------------------------------------------------------------- ---------- ----------
Opening fair value 373,697 431,486
============================================================= ========== ==========
Analysis of transactions made during the
year
======================================================== ========== ==========
Purchases at cost 69,728 82,957
============================================================= ========== ==========
Sales proceeds received (75,780) (94,574)
============================================================= ========== ==========
Losses on investments (27,046) (46,172)
------------------------------------------------------------- ---------- ----------
Closing fair value 340,599 373,697
------------------------------------------------------------- ---------- ----------
Closing book cost 264,474 253,386
============================================================= ========== ==========
Closing investment gains 76,125 120,311
------------------------------------------------------------- ---------- ----------
Closing fair value 340,599 373,697
------------------------------------------------------------- ---------- ----------
2023 2022
GBP'000 GBP'000
======================================================== ========== ==========
Investments listed on an overseas investment
exchange 322,007 340,908
============================================================= ========== ==========
Investments listed on the UK investment
exchange 18,592 32,789
------------------------------------------------------------- ---------- ----------
340,599 373,697
------------------------------------------------------------- ---------- ----------
The Company received GBP75,780,000 (2022 - GBP94,574,000) from investments
sold in the period. The book cost of these investments when they
were purchased was GBP58,640,000 (2022 - GBP72,840,000). These investments
have been revalued over time and until they were sold any unrealised
gains/(losses) were included in the fair value of the investments.
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 losses on investments in the Statement of Comprehensive Income.
The total costs were as follows:
2023 2022
GBP'000 GBP'000
======================================================== ========== ==========
Purchases 86 91
============================================================= ========== ==========
Sales 119 140
------------------------------------------------------------- ---------- ----------
205 231
------------------------------------------------------------- ---------- ----------
The above transaction costs are calculated in line with the AIC
SORP. The transaction costs in the Company's Key Information Document
are calculated on a different basis and in line with the PRIIPs
regulations.
11. Debtors
=============================== ======= =======
2023 2022
GBP'000 GBP'000
=============================== ======= =======
Prepayments and accrued income 348 308
==================================== ======= =======
Amounts due from brokers - 1,141
==================================== ======= =======
Other loans and receivables 381 458
------------------------------------ ------- -------
729 1,907
------------------------------------ ------- -------
12. Creditors
Amounts falling due within one year: 2023 2022
a) Loans GBP'000 GBP'000
=================================================== ========== ==========
Foreign currency loans 3,640 8,504
=============================================================== ========== ==========
Sterling loans 24,992 5,000
--------------------------------------------------------------- ---------- ----------
28,632 13,504
--------------------------------------------------------------- ---------- ----------
2023 2022
b) Other GBP'000 GBP'000
=================================================== ========== ==========
Amounts due to brokers 92 2,363
=============================================================== ========== ==========
Other creditors 637 631
--------------------------------------------------------------- ---------- ----------
729 2,994
--------------------------------------------------------------- ---------- ----------
2023 2022
Non-current creditors: GBP'000 GBP'000
=========================================================== ========== ==========
Sterling loan - 19,978
----------------------------------------------------------- ---------- ----------
At the year end the Company had drawn down HK$21,000,000 (2022 -
HK$21,00,000), equivalent to GBP2,128,000 (2022 - GBP2,132,000),
with a maturity date of 19 May 2023 (2022 - 25 May 2022), US$1,900,000
(2022 - US$8,000,000), equivalent to GBP1,512,000 (2022 - GBP6,372,000),
with a maturity date of 19 May 2023 (2022 - 25 May 2022) and GBP5,000,000
(2022 - GBP5,000,000), with a maturity date of 19 May 2023 (2022
- 25 May 2022), and a fixed rate bank loan of GBP20,000,000 (2022
- GBP20,000,000), under the GBP40,000,000 multi-currency credit
facility with The Royal Bank of Scotland International Limited at
interest rates of 2.760%, 6.216%, 5.577% and 2.626% (2022 - 1.58839%,
2.06786%, 2.0905% and 2.626%) respectively.
As of the latest date prior to the signing of this Report the HK$21,000,000
loan had been drawn down to 18 August 2023 at an interest rate of
6.359%, the US$1,900,000 loan had been drawn down to 18 August 2023
at an interest rate of 6.45% and the GBP5,000,000 loan had been
drawn down to 18 August 2023 at an estimated interest rate of 6.33%.
The terms of the bank loan with The Royal Bank of Scotland International
Limited state that:
- the net tangible assets of the Company must be not less than GBP125
million at all times;
- the ratio of gross borrowings to adjusted assets must be less
than 25% at all times (adjusted assets are total gross assets less
(i) the value of any unlisted investment; (ii) the value in excess
of 10% of total gross assets invested in the largest single security
or asset; (iii) the value of any single security or asset (other
than the largest security or asset referred to above) exceeds 5%
of gross assets; (iv) the value in excess of 60% of total gross
assets invested in the top twenty largest investments; (v) the extent
to which the value of securities in collective investment schemes
exceeds 30% of gross assets; and (vi) the extent to which the aggregated
value of securities or assets in countries with a Standard and Poor's
foreign sovereign debt rating lower than BBB exceeds 30% of gross
assets.); and
- the facility, under which the loans are made, is split into two
tranches, a GBP20,000,000 fixed rate facility which will expire
on 14 December 2023 and a GBP20,000,000 revolving credit facility
which will expire on 28 June 2024.
The Company has met all financial covenants throughout the period
and up to the date of this Report.
13. Share capital
=========================================================== ========== =========
2023 2022
GBP'000 GBP'000
=========================================================== ========== =========
Allotted, called up and fully paid:
=========================================================== ========== =========
104,991,348 (2022 - 106,697,348) Ordinary
shares of 5p each 5,249 5,335
================================================================ ========== =========
Held in treasury:
=========================================================== ========== =========
7,874,351 (2022 - 10,401,701) Ordinary
shares of 5p each 394 520
---------------------------------------------------------------- ---------- ---------
5,643 5,855
---------------------------------------------------------------- ---------- ---------
During the year 1,706,000 (2022 - 2,232,000) Ordinary shares of
5p each were repurchased by the Company at a total cost, including
transaction costs, of GBP4,756,000 (2022 - GBP7,008,000). All of
the shares were placed in treasury. On 30 April 2023 4,233,350 Ordinary
shares held in treasury were cancelled. Shares held in treasury
represent 7.0% (2022 - 8.9%) of the Company's total issued share
capital of 112,865,699 Ordinary shares of 5p each at 30 April 2023.
Shares held in treasury do not carry a right to receive dividends.
Subsequent to the year end the Company bought back for treasury
a further 420,000 Ordinary shares for a total consideration of GBP1,253,000.
14. Capital reserve
================================================= ========== =========
2023 2022
GBP'000 GBP'000
================================================= ========== =========
At 1 May 2022 299,738 355,134
====================================================== ========== =========
Movement in fair value gains (27,046) (46,172)
====================================================== ========== =========
Foreign exchange movement (139) (640)
====================================================== ========== =========
Buy back of Ordinary shares for treasury (4,756) (7,008)
====================================================== ========== =========
Expenses allocated to capital (1,418) (1,576)
------------------------------------------------------ ---------- ---------
At 30 April 2023 266,379 299,738
------------------------------------------------------ ---------- ---------
The capital reserve includes investment holding gains amounting
to GBP76,125,000 (2022 - GBP120,311,000), as disclosed in note 10.
15. Net asset value per share
The net asset value per 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:
2023 2022
============================================== ============== ==============
Net assets attributable GBP314,133,000 GBP346,952,000
============================================== ============== ==============
Number of Ordinary shares in issue (excluding
shares held in treasury) 104,991,348 106,697,348
--------------------------------------------------- -------------- --------------
Net asset value per share 299.20p 325.17p
--------------------------------------------------- -------------- --------------
16. Analysis of changes in net debt
==================================================================================
At At
30 April Currency Cash Non-cash 30 April
2022 differences flows movements 2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== =========== ======= ========= ========
Cash and short term deposits 7,824 (189) (5,469) - 2,166
================================== ======== =========== ======= ========= ========
Debt due within one year (13,504) 50 4,814 (19,992) (28,632)
================================== ======== =========== ======= ========= ========
Debt due after more than one
year (19,978) - - 19,978 -
---------------------------------- -------- ----------- ------- --------- --------
(25,658) (139) (655) (14) (26,466)
---------------------------------- -------- ----------- ------- --------- --------
At At
30 April Currency Cash Non-cash 30 April
2021 differences flows movements 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== =========== ======= ========= ========
Cash and short term deposits 2,364 133 5,327 - 7,824
================================== ======== =========== ======= ========= ========
Debt due within one year (12,731) (773) - - (13,504)
================================== ======== =========== ======= ========= ========
Debt due after more than one
year (19,965) - - (13) (19,978)
---------------------------------- -------- ----------- ------- --------- --------
(30,332) (640) 5,327 (13) (25,658)
---------------------------------- -------- ----------- ------- --------- --------
A statement reconciling the movement in net funds to the net cash
flow has not been presented as there are no differences from the
above analysis.
17. Financial instruments
Risk management. The Company's investment activities expose it to
various types of financial risk associated with the financial instruments
and markets in which it invests. The Company's financial instruments
comprise securities and other investments, cash balances, loans
and debtors and creditors that arise directly from its operations;
for example, in respect of sales and purchases awaiting settlement,
and debtors for accrued income.
The Board has delegated the risk management function to abrdn Fund
Managers Limited ("aFML") under the terms of its management agreement
with aFML (further details of which are included under note 4).
The Board regularly reviews and agrees policies for managing each
of the key financial risks identified with the Manager. The types
of risk and the Manager's approach to the management of each type
of risk, are summarised below. Such approach has been applied throughout
the year and has not changed since the previous accounting period.
Risk management framework. The directors of aFML collectively assume
responsibility for aFML's obligations under the AIFMD including
reviewing investment performance and monitoring the Company's risk
profile during the year.
aFML is a fully integrated member of the abrdn Group ("the Group"),
which provides a variety of services and support to aFML in the
conduct of its business activities, including the oversight of the
risk management framework for the Company. The AIFM has delegated
the day to day administration of the investment policy to abrdn
Asia Limited, which is responsible for ensuring that the Company
is managed within the terms of its investment guidelines and the
limits set out in its pre-investment disclosures to investors (details
of which can be found on the Company's website). The AIFM has retained
responsibility for monitoring and oversight of investment performance,
product risk and regulatory and operational risk for the Company.
The Manager conducts its risk oversight function through the operation
of the Group's risk management processes and systems which are embedded
within the Group's operations. The Group's Risk Division supports
management in the identification and mitigation of risks and provides
independent monitoring of the business. The Division includes Compliance,
Business Risk, Market Risk and Risk Management. The team is headed
up by the Group's Chief Risk Officer, who reports to the Group CEO.
The Risk Division achieves its objective through embedding the Risk
Management Framework throughout the organisation using the Group's
operational risk management system ("SHIELD").
The Group's Internal Audit Department is independent of the Risk
Division and reports directly to the Group CEO and to the Audit
Committee of the Group's Board of Directors. The Internal Audit
Department is responsible for providing an independent assessment
of the Group's control environment.
The Group's corporate governance structure is supported by several
committees to assist the board of directors, its subsidiaries and
the Company to fulfil their roles and responsibilities. The Group's
Risk Division is represented on all committees, with the exception
of those committees that deal with investment recommendations. The
specific goals and guidelines on the functioning of those committees
are described on the committees' terms of reference.
Risk management. The main risks the Company faces from its financial
instruments are (i) market risk (comprising interest rate risk,
currency risk and price risk), (ii) liquidity risk and (iii) credit
risk.
(i) Market risk. The fair value of, or future cash flows from a
financial instrument held by the Company may fluctuate because of
changes in market prices. This market risk comprises three elements
- interest rate risk, foreign currency risk and other price risk.
Interest rate risk. Interest rate movements may affect:
- the level of income receivable on cash deposits; and,
- interest payable on the Company's variable rate borrowings.
Management of the risk. The possible effects on fair value and cash
flows that could arise as a result of changes in interest rates
are taken into account when making investment and borrowing decisions.
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. Current bank covenant guidelines
state that the total borrowings will not exceed 25% of the adjusted
net assets of the Company as defined in note 12.
Interest risk profile. The interest rate risk profile of the portfolio
of the Company's financial assets and liabilities, excluding equity
holdings which are all non-interest bearing, at the Statement of
Financial Position date was as follows:
Weighted average Weighted
period for average Fixed Floating
which
rate is fixed interest rate rate rate
At 30 April 2023 Years % GBP'000 GBP'000
============================= ================== ============== ======= ========
Assets:
============================= ================== ============== ======= ========
China Yuan Renminbi - - - 3
============================= ================== ============== ======= ========
Sterling - 3.18 - 2,134
============================= ================== ============== ======= ========
Vietnam Dong - - - 29
----------------------------- ------------------ -------------- ------- --------
- 2,166
----------------------------- ------------------ -------------- ------- --------
Weighted average Weighted
period for average Fixed Floating
which
rate is fixed interest rate rate rate
Years % GBP'000 GBP'000
============================= ================== ============== ======= ========
Liabilities:
============================= ================== ============== ======= ========
Bank loan - GBP20,000,000 0.62 2.63 19,992 -
============================= ================== ============== ======= ========
Bank loan - GBP5,000,000 0.05 5.58 5,000 -
============================= ================== ============== ======= ========
Bank loan - HK$21,000,000 0.05 2.76 2,128 -
============================= ================== ============== ======= ========
Bank loan - US$1,900,000 0.05 6.22 1,512 -
----------------------------- ------------------ -------------- ------- --------
28,632 -
----------------------------- ------------------ -------------- ------- --------
Weighted average Weighted
period for average Fixed Floating
which
rate is fixed interest rate rate rate
At 30 April 2022 Years % GBP'000 GBP'000
============================= ================== ============== ======= ========
Assets:
============================= ================== ============== ======= ========
China Yuan Renminbi - - - 3
============================= ================== ============== ======= ========
Euro - - - 1
============================= ================== ============== ======= ========
Sri Lankan Rupee - - - 7
============================= ================== ============== ======= ========
Sterling - - - 7,798
============================= ================== ============== ======= ========
Taiwan Dollar - - - 1
============================= ================== ============== ======= ========
Vietnam Dong - - - 14
----------------------------- ------------------ -------------- ------- --------
- 7,824
----------------------------- ------------------ -------------- ------- --------
Weighted average Weighted
period for average Fixed Floating
which
rate is fixed interest rate rate rate
Years % GBP'000 GBP'000
============================= ================== ============== ======= ========
Liabilities:
============================= ================== ============== ======= ========
Bank loan - GBP20,000,000 1.62 2.63 19,978 -
============================= ================== ============== ======= ========
Bank loan - GBP5,000,000 0.07 2.09 5,000 -
============================= ================== ============== ======= ========
Bank loan - HK$21,000,000 0.07 1.59 2,132 -
============================= ================== ============== ======= ========
Bank loan - US$8,000,000 0.07 2.07 6,372 -
----------------------------- ------------------ -------------- ------- --------
33,482 -
----------------------------- ------------------ -------------- ------- --------
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 maturity date of the
Company's loans are shown in note 12.
The floating rate assets consist of cash deposits on call earning
interest at prevailing market rates.
The Company's equity portfolio and short-term debtors and creditors
(excluding bank loans) have been excluded from the above tables.
Interest rate sensitivity. Movements in interest rates would not
significantly affect net assets attributable to the Company's shareholders
and total profit.
Foreign currency risk. The Company's investment portfolio is primarily
invested in overseas securities and the Statement of Financial Position,
therefore, can be significantly affected by movements in foreign
exchange rates.
Management of the risk. It is not the Company's policy to hedge
this risk on a continuing basis but the Company may, from time to
time, match specific overseas investment with foreign currency borrowings.
The Company's borrowings, as detailed in note 12, are predominantly
in sterling.
The revenue account is subject to currency fluctuation arising on
dividends paid in foreign currencies. The Company does not hedge
this currency risk.
Foreign currency exposure by currency of denomination:
30 April 2023 30 April 2022
=================== ================================== ===============================
Net Total Net Total
monetary currency monetary currency
Investments assets exposure Investments assets exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== ============ ========= ========= =========== ======== ========
Australian
Dollar 36,504 - 36,504 31,303 157 31,460
==================== ============ ========= ========= =========== ======== ========
China Yuan
Renminbi 37,738 3 37,741 44,103 (747) 43,356
==================== ============ ========= ========= =========== ======== ========
Euro 8,798 - 8,798 7,828 1 7,829
==================== ============ ========= ========= =========== ======== ========
Hong Kong Dollar 88,390 (2,128) 86,262 77,221 (2,132) 75,089
==================== ============ ========= ========= =========== ======== ========
Indonesian
Rupiah 15,791 - 15,791 12,821 - 12,821
==================== ============ ========= ========= =========== ======== ========
Philippine
Peso 4,909 - 4,909 6,270 - 6,270
==================== ============ ========= ========= =========== ======== ========
Singapore Dollar 16,714 - 16,714 22,576 (838) 21,738
==================== ============ ========= ========= =========== ======== ========
South Korean
Won 28,782 - 28,782 41,846 336 42,182
==================== ============ ========= ========= =========== ======== ========
Sri Lankan
Rupee 2,011 - 2,011 1,624 7 1,631
==================== ============ ========= ========= =========== ======== ========
Taiwan Dollar 27,125 - 27,125 32,261 1 32,262
==================== ============ ========= ========= =========== ======== ========
Thailand Baht - - - 2,703 - 2,703
==================== ============ ========= ========= =========== ======== ========
US Dollar - (1,512) (1,512) - (6,372) (6,372)
==================== ============ ========= ========= =========== ======== ========
Vietnam Dong 6,897 29 6,926 11,656 14 11,670
-------------------- ------------ --------- --------- ----------- -------- --------
Total 273,659 (3,608) 270,051 292,212 (9,573) 282,639
-------------------- ------------ --------- --------- ----------- -------- --------
Foreign currency sensitivity. The following table details the Company's
sensitivity to a 10% increase and decrease 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.
2023 2022
GBP'000 GBP'000
======================================== ================= ================
Australian
Dollar 3,650 3,146
============================================= ================= ================
China Yuan
Renminbi 3,774 4,336
============================================= ================= ================
Euro 880 783
============================================= ================= ================
Hong Kong Dollar 8,626 7,509
============================================= ================= ================
Indonesian
Rupiah 1,579 1,282
============================================= ================= ================
Philippine
Peso 491 627
============================================= ================= ================
Singapore Dollar 1,671 2,174
============================================= ================= ================
South Korean
Won 2,878 4,218
============================================= ================= ================
Sri Lankan
Rupee 201 163
============================================= ================= ================
Taiwan Dollar 2,713 3,226
============================================= ================= ================
Thailand Baht - 270
============================================= ================= ================
US Dollar (151) (637)
============================================= ================= ================
Vietnam Dong 693 1,167
--------------------------------------------- ----------------- ----------------
27,005 28,264
---------------------------------------- ----------------- ----------------
Price risk. Other price risks (ie changes in market prices other
than those arising from interest rate or currency risk) may affect
the value of the quoted investments.
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. Both the allocation of assets and the stock selection
process act to reduce market risk. The Manager actively monitors
market prices throughout the year and reports to the Board, which
meets regularly in order to review investment strategy. The investments
held by the Company are listed on various stock exchanges worldwide.
Price risk sensitivity. If market prices at the Statement of Financial
Position date had been 10% higher or lower while all other variables
remained constant, the return attributable to Ordinary shareholders
for the year ended 30 April 2023 would have increased/(decreased)
by GBP34,060,000 (2022 - increased/(decreased) by GBP37,370,000)
and equity reserves would have increased/(decreased) by the same
amount.
(ii) Liquidity risk. T his is the risk that the Company will encounter
difficulty in meeting obligations associated with financial liabilities
as they fall due in line with the maturity profile analysed below.
Within
1 year Total
At 30 April GBP'000 GBP'000
2023
==================================== =========== ========== =========== =========
Bank loans 28,632 28,632
======================================= =========== ========== =========== =========
Interest cash flows on bank
loans 430 430
====================================== =========== ========== =========== =========
Cash flows on other creditors 649 649
-------------------------------------- ----------- ---------- ----------- ---------
29,711 29,711
------------------------------------ ----------- ---------- ----------- ---------
Within Within
1 year 1-2 years Total
At 30 April GBP'000 GBP'000 GBP'000
2022
==================================== =========== ========== =========== =========
Bank loans 13,504 20,000 33,504
======================================= =========== ========== =========== =========
Interest cash flows on bank
loans 548 396 944
====================================== =========== ========== =========== =========
Cash flows on other creditors 2,994 - 2,994
====================================== ----------- ---------- ----------- ---------
17,046 20,396 37,442
------------------------------------ ----------- ---------- ----------- ---------
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 a GBP20,000,000 fixed
rate credit facility, which expires on 14 December 2023 and GBP20,000,000
revolving multi-currency credit facility, which expires on 28 June
2024. The Board has imposed a maximum gearing level, measured on
the most stringent basis of calculation after netting off cash equivalents,
of 25%. Details of borrowings at 30 April 2023 are shown in note
12.
Liquidity risk is not considered to be significant as the Company's
assets comprise mainly readily realisable securities, which can
be sold to meet funding commitments if necessary. Short-term flexibility
is achieved through the use of the loan facility, details of which
can be found in note 12. Under the terms of the loan facility, the
Manager provides the lender with loan covenant reports on a monthly
basis, to provide the lender with assurance that the terms of the
facility are not being breached. The Manager will also review the
credit rating of a lender on a regular basis. Details of the Board's
policy on gearing are shown in the interest rate risk section of
this note.
(iii) Credit risk. This is the risk of failure of the counterparty
to a transaction to discharge its obligations under that transaction
that could result in the Company suffering a loss.
Management of the risk. Investment transactions are carried out
with a large number of brokers, whose credit-standing is reviewed
periodically by the Manager, and limits are set on the amount that
may be due from any one broker. Cash is held only with reputable
banks with high quality external credit enhancements.
Credit risk exposure. In summary, compared to the amounts in the
Statement of Financial Position, the maximum exposure to credit
risk at 30 April was as follows:
2023 2022
==================================== ======================= ======================
Statement Statement
of of
Financial Maximum Financial Maximum
Position exposure Position exposure
GBP'000 GBP'000 GBP'000 GBP'000
==================================== =========== ========== =========== =========
Current assets
==================================== =========== ========== =========== =========
Loans and receivables 729 729 1,907 1,907
======================================= =========== ========== =========== =========
Cash at bank and in hand 2,166 2,166 7,824 7,824
====================================== ----------- ---------- ----------- ---------
2,895 2,895 9,731 9,731
------------------------------------ ----------- ---------- ----------- ---------
None of the Company's financial assets are past due or impaired.
Fair values of financial assets and financial liabilities. T he
carrying values of fixed asset investments are stated at their fair
values, which have been determined with reference to quoted market
prices. For all other short-term debtors and creditors, their book
values approximate to fair values because of their short-term maturity.
Bank loans are valued at amortised cost in accordance with the Company's
stated accounting policy.
18. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurements using
a fair value hierarchy that reflects the significance of the inputs
used in making the measurements. The fair value hierarchy has the
following classifications:
Level 1: unadjusted quoted prices in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
Level 2: inputs other than quoted prices included within Level 1
that are observable (ie developed using market data) for the asset
or liability, either directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable)
for the asset or liability.
The financial assets and liabilities measured at fair value in the
Statement of Financial Position are grouped into the fair value
hierarchy at the reporting date as follows:
Level Level Level Total
1 2 3
As at 30 April 2023 GBP'000 GBP'000 GBP'000 GBP'000
======================================== ========= ========= ========= ========
Financial assets at fair value
through profit or loss
======================================== ========= ========= ========= ========
Quoted equities 292,251 - - 292,251
========================================= === ========= ========= ========= ========
Collective investment schemes - 48,348 - 48,348
----------------------------------------- --- --------- --------- --------- --------
Total fair value 292,251 48,348 - 340,599
----------------------------------------- --- --------- --------- --------- --------
Level Level Level Total
1 2 3
As at 30 April 2022 GBP'000 GBP'000 GBP'000 GBP'000
======================================== ========= ========= ========= ========
Financial assets at fair value
through profit or loss
======================================== ========= ========= ========= ========
Quoted equities 325,001 - - 325,001
========================================= === ========= ========= ========= ========
Collective investment schemes - 48,696 - 48,696
----------------------------------------- --- --------- --------- --------- --------
Total fair value 325,001 48,696 - 373,697
----------------------------------------- --- --------- --------- --------- --------
Quoted equities. The fair value of the Company's investments in
quoted equities has 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.
Collective investment schemes. The fair value of the Company's investments
in collective investment schemes has been determined by reference
to their quoted net asset values at the reporting date and hence
are categorised in Fair Value Level 2.
19. Related party transactions and transactions with the Manager
Fees payable during the period to the Directors and their interests
in shares of the Company are disclosed within the Directors' Remuneration
Report.
Mr Young is also a director of the Company's Investment Manager,
abrdn Asia Limited, which is a wholly-owned subsidiary of abrdn
plc. Management, promotional activities and secretarial and administration
services are provided to the Company by abrdn Fund Managers Limited.
Details of transactions during the year and balances outstanding
at the year end disclosed in notes 4 and 5.
20. Capital management policies and procedures
The investment objective of the Company is to provide shareholders
with a high level of capital growth through equity investment in
the Asia Pacific countries ex Japan.
The Company manages its capital to ensure that it will be able to
continue as a going concern while maximising the return to shareholders
through the optimisation of the debt and equity balance.
The Board 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 level of equity shares in issue; and
- the extent to which revenue in excess of that which is required
to be distributed should be retained.
The Company's objectives, policies and processes for managing capital
are unchanged from the preceding accounting period.
The Company does not have any externally imposed capital requirements.
As at 30 April 2023, the Company had net gearing of 8.5% which compares
with a current maximum limit set by the Board of 25%.
21. Subsequent events
On 21 July 2023 the Board announced that it had agreed heads of
terms with the board of Asia Dragon Trust plc ("Asia Dragon") in
respect of a proposed combination of the Company with Asia Dragon.
The combination, if approved by each company's shareholders, will
be effected by way of a scheme of reconstruction and winding up
of the Company under section 110 of the Insolvency Act 1986 with
the associated transfer of part of the assets and undertaking of
the Company to Asia Dragon in exchange for the issue of new ordinary
shares in Asia Dragon (the "Scheme"). Under the terms of the Scheme
an up to 25% cash exit opportunity will be offered to the Company's
shareholders to realise part of their investment in the Company
at a 2% discount to the adjusted net asset value.
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The Company's applicable financial framework includes
FRS 102 and the AIC SORP.
Dividend cover
Dividend cover is the revenue return per share divided by dividends
per share expressed as a ratio.
2023 2022
================================================ ============ =========== ===========
Revenue return per share a 4.82p 3.71p
================================================ ============ =========== ===========
Dividends per share b 4.30p 4.30p
================================================ ============ =========== ===========
Dividend cover a/b 1.12 0.86
------------------------------------------------ ------------ ----------- -----------
Discount to net asset value per Ordinary share (including current year
income)
The amount by which the market price per Ordinary share is lower than
the net asset value per Ordinary share (including current year income),
expressed as a percentage of the net asset value per Ordinary share.
2023 2022
================================================ ============ =========== ===========
NAV per Ordinary share (p) a 299.20 325.17
================================================ ============ =========== ===========
Share price (p) b 261.00 286.00
================================================ ============ =========== ===========
Discount (a-b)/a 12.8% 12.0%
------------------------------------------------ ------------ ----------- -----------
Discount to net asset value per Ordinary share (excluding current year
income)
The amount by which the market price per Ordinary share is lower than
the net asset value per Ordinary share (excluding current year income),
expressed as a percentage of the net asset value per Ordinary share.
2023 2022
================================================ ============ =========== ===========
Net asset value per Ordinary share
(p) a 295.34 322.43
================================================ ============ =========== ===========
Share price (p) b 261.00 286.00
================================================ ============ =========== ===========
Discount (a-b)/a 11.6% 11.3%
------------------------------------------------ ------------ ----------- -----------
Net asset value per Ordinary share (excluding current year income)
The Company also uses net asset value (excluding current year income)
per share as an alternative performance measure. This is calculated
as follows:
2023 2022
================================================ ============ =========== ===========
Net assets attributable (GBP'000) 314,133 346,952
============================================================== =========== ===========
Less: Revenue return after taxation
for the year (GBP'000) (5,105) (4,005)
============================================================== =========== ===========
Add: Dividends paid during the year
(GBP'000) 1,058 1,075
-------------------------------------------------------------- ----------- -----------
Net assets (ex income) (GBP'000) 310,086 344,022
-------------------------------------------------------------- ----------- -----------
Number of Ordinary shares in issue 104,991,348 106,697,348
-------------------------------------------------------------- ----------- -----------
NAV (ex income) per Ordinary share 295.34p 322.43p
-------------------------------------------------------------- ----------- -----------
Net gearing
Net gearing measures total borrowings less cash and cash equivalents
divided by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes net amounts due
to and from brokers at the period end as well as cash and short-term
deposits.
2023 2022
================================================ ============ =========== ===========
Borrowings (GBP'000) a 28,632 33,482
================================================ ============ =========== ===========
Cash (GBP'000) b 2,166 7,824
================================================ ============ =========== ===========
Amounts due to brokers (GBP'000) c 92 2,363
================================================ ============ =========== ===========
Amounts due from brokers (GBP'000) d - 1,141
================================================ ============ =========== ===========
Shareholders' funds (GBP'000) e 314,133 346,952
------------------------------------------------ ------------ ----------- -----------
Net gearing (a-b+c-d)/e 8.5% 7.7%
------------------------------------------------ ------------ ----------- -----------
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and administrative
expenses and expressed as a percentage of the average daily net asset
values published throughout the year.
2023 2022
================================================ ============ =========== ===========
Management fees (GBP'000) 1,890 2,340
============================================================== =========== ===========
Administrative expenses (GBP'000) 747 723
============================================================== =========== ===========
Less: non-recurring charges(A) (GBP'000) (14) -
-------------------------------------------------------------- ----------- -----------
Ongoing charges (GBP'000) 2,623 3,063
-------------------------------------------------------------- ----------- -----------
Average net assets (GBP'000) 336,444 383,039
-------------------------------------------------------------- ----------- -----------
Ongoing charges ratio (excluding look-through
costs) 0.78% 0.80%
============================================================== =========== ===========
Look-through costs(B) 0.35% 0.33%
-------------------------------------------------------------- ----------- -----------
Ongoing charges ratio (including look-through
costs) 1.13% 1.13%
-------------------------------------------------------------- ----------- -----------
(A) Legal and professional fees considered
unlikely to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020
to include the Company's share of costs of holdings in investment companies
on a look-through basis.
The ongoing charges ratio provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations, which includes
amongst other things, the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price
has performed over a period of time in percentage terms, taking into
account both capital returns and dividends paid to shareholders. Share
price and NAV total returns are monitored against open-ended and closed-ended
competitors, and the Benchmark Index, respectively.
Share
Year ended 30 April 2023 NAV Price
================================================ ============ =========== ===========
Opening at 1 May 2022 a 325.17p 286.00p
================================================ ============ =========== ===========
Closing at 30 April 2023 b 299.20p 261.00p
================================================ ============ =========== ===========
Price movements c=(b/a)-1 -8.0% -8.7%
================================================ ============ =========== ===========
Dividend reinvestment(A) d 1.2% 1.4%
------------------------------------------------ ------------ ----------- -----------
Total return c+d -6.8% -7.3%
------------------------------------------------ ------------ ----------- -----------
Share
Year ended 30 April 2022 NAV Price
================================================ ============ =========== ===========
Opening at 1 May 2021 a 369.97p 328.50p
================================================ ============ =========== ===========
Closing at 30 April 2022 b 325.17p 286.00p
================================================ ============ =========== ===========
Price movements c=(b/a)-1 -12.1% -12.9%
================================================ ============ =========== ===========
Dividend reinvestment(A) d 1.1% 1.1%
------------------------------------------------ ------------ ----------- -----------
Total return c+d -11.0% -11.8%
------------------------------------------------ ------------ ----------- -----------
(A) NAV total return involves investing the net dividend in the NAV
of the Company with debt at fair value on the date on which that dividend
goes ex-dividend. Share price total return involves reinvesting the
net dividend in the share price of the Company on the date on which
that dividend goes ex-dividend.
Additional Notes to the Annual Financial Report
The Annual Financial Report Announcement is not the Company's
statutory accounts. The above results for the year ended 30 April
2023 have been agreed with the auditor and are an abridged version
of the Company's full accounts, which have been approved and
audited with an unqualified report. The 2022 and 2023 statutory
accounts received unqualified reports from the Company's auditor
and did not include any reference to matters to which the auditor
drew attention by way of emphasis without qualifying the reports,
and did not contain a statement under s.498(2) or 498(3) of the
Companies Act 2006. The financial information for 2022 is derived
from the statutory accounts for 2021 which have been delivered to
the Registrar of Companies. The 2023 accounts will be filed with
the Registrar of Companies in due course.
The Annual Report and Accounts will be posted to shareholders in
August 2023. Copies will be available during normal business hours
from the Secretary, abrdn Holdings Limited, 1 George Street,
Edinburgh EH2 2LL or from the Company's website,
www.newdawn-trust.co.uk* .
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise and may be affected by exchange rate
movements. Investors may not get back the amount they originally
invested.
By order of the Board
abrdn Holdings Limited
Company Secretary
16 August 2023
* Neither the Company's website nor the content of any website
accessible from hyperlinks on it (or any other website) is (or is
deemed to be) incorporated into, or forms (or is deemed to form)
part of this announcement.
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END
ACSPFMATMTIBBFJ
(END) Dow Jones Newswires
August 17, 2023 02:00 ET (06:00 GMT)
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