Annual Financial Report

FIDELITY ASIAN VALUES PLC

 

Preliminary Announcement of Results

 

For the year ended 31 July 2009

 

Chairman's Statement

 

Performance

Over the 12 months to 31 July 2009, the net asset value per share of Fidelity
Asian Values PLCincreased by 15.7% compared with an increase in the benchmark
MSCI All Countries (Combined) Far Eastex Japan Index of 11.0%.  The share price
increased by 20.6% over the period.  (All figures in sterling terms and on a
total return basis.)  Over the three and five years to 31 July 2009the
Company's net asset value rose by 43.9% and 136.5% respectively against rises
of 40.1% and 115.9% by the benchmark.  The discount at which ordinary shares
traded to the net asset value of the Company widened slightly to 5.91% at the
end of the period from 5.42% six months ago.

 

Markets

Equities in the Far Eastex Japanregion registered double-digit gains in
sterling terms over the 12 month review period. The collapse of Lehman Brothers
precipitated the ongoing global financial turmoil leading to a steep decline in
world markets in October. Dismal economic data and subdued earnings results
drove share prices lower. Subsequently, governments across the region took
several policy measures aimed at increasing liquidity and promoting growth. 
These provided some support to equities. In particular, Chinaannounced a RMB 4
trillion stimulus package and supplemented the move by lowering its cash
reserve ratio and interest rates. Mid-March onwards, investors started to
respond positively to growing evidence of an economic rebound in China, an
improvement in global credit markets and expansionary fiscal and monetary
policies. Foreign investors returned to the region encouraged by optimism about
an overall recovery underpinned by tentative signs of firmer industrial
activity in some areas. Earnings expectations, which had been cut sharply at
the end of 2008, were revised upwards, boosting share prices. Consequently, Far
Eastex Japanequities outperformed their developed as well as emerging markets
peers over the review period. In this environment, information technology
stocks benefited the most as confidence among US consumers improved. Consumer
discretionary companies, particularly automobile manufacturers, advanced.
Non-bank financials including insurance, property and diversified financials
were other beneficiaries of an improvement in investor sentiment. Healthcare
and industrials were the only two sectors that retreated. In particular,
shipping companies suffered due to a drop in cargo rates. The export-oriented
markets of Koreaand Singaporefell behind the regional benchmark. On the
economic front, interest rates were reduced in countries across the region to
spur domestic demand. However, towards the end of the period, most central
banks opted to keep rates unchanged in light of deflationary pressures. Real
GDPgrowth in China, Korea, Taiwan, Indonesiaand Singaporein the second quarter
of 2009 exceeded expectations. In July, the Purchasing Managers' Index in
China, an indicator of the health of the manufacturing sector remained above
the expansionary threshold of 50 for a fifth consecutive month. Property and
automobile sales growth were better than expected and industrial production
expanded on a month-on-month basis in many economies in the region.  Although
regional exports failed to recover, they appeared to stabilise in Korea,
Taiwanand Singapore.

 

Outlook

In recent months, signs of stabilisation have emerged in many Asian countries,
suggesting that the economic downturn may be past its worst and the recession
is starting to ease. However, overseas demand for the region's products remains
subdued and in particular continues to weigh on export-driven economies such as
Korea, Malaysia, Singaporeand Taiwan.  A lower than expected rise in
unemployment, coupled with sustained industrial activity indicates that
domestic demand is helping to compensate for a decline in exports and there is
growing evidence of an economic recovery.  Asian equity markets have
outperformed the global indices since the beginning of 2009; analysts have been
raising their corporate earnings forecasts for many companies in the region
resulting in a recovery in stock valuations.  Although it may still be early to
talk of green shoots, investor confidence is improving and the increasing
evidence of a recovery in the Far Eastregion, ex Japan, should continue to
drive stockmarkets.

 

Dividend

Subject to shareholders' approval at the 2009 Annual General Meeting the
Directors recommend that a final dividend in respect of the year to 31 July
2009 of 1.00p pence per share (2008:0.81p) be paid to shareholders on the
register at close of business on 16 October 2009 (ex dividend date 14 October
2009) on 16 December 2009.  As the Company's objective is long term capital
growth any revenue surplus is a function of a particular year's business and it
should not be assumed that dividends will continue to be paid in future.

 

Tender Offer and Reduction in Capital

During the year under review, a tender offer was made for up to 40% of the
Company's issued share capital.  The Board took this action to avoid the
potentially destabilising effect on the share price of certain shareholders
wishing to realise their holdings.  Following shareholders' approval at an
Extraordinary General Meeting of the Company held on 5 September 2008and
completion of the Tender offer a total of 41,262,764 ordinary shares were
cancelled from the Register of Members.  This equated to 40% of the issued
share capital immediately prior to the offer being made.   Exiting shareholders
bore the costs involved and the remaining shareholders received the benefit of
an uplift in the net asset value of some 2% on the day the Tender offer was
completed.

 

Gearing

The Lloyds TSB Bank PLCloan of US$11 million was repaid on 25 September 2009. 
The current net gearing parameters set by the Board are between 0% and 10%.

 

Directorate

This year three Directors will retire, two of whom, will offer themselves for
re-election.  As detailed in the biographies in the Annual Report the Directors
have a wide range of appropriate skills and experience to make up a balanced
Board for your Company.

 

I am subject to annual re-election due to my tenure on the Board exceeding nine
years and Miss Matthews is subject to annual re-election under the Listing
Rules due to her recent employment relationship with the Manager.  Miss
Matthews will retire from employment with the Manager in October 2009.   

 

Sir Robin McLaren will retire from the Board after the Annual General Meeting. 
He has served as a Director since 1997 and I would like to thank Sir Robin for
his contribution to the Company and personally for the quality and independence
of advice that he has given me over the years.  His experience in Asiaand his
work as Senior Independent Director have been extremely valuable.  A successor
for the role of Senior Independent Director will be appointed in due course.

 

A selection process for a new member of the Board is currently underway.

 

Annual General Meeting

The 2009 Annual General Meeting will be held on Monday 7 December 2009at
Fidelity's Cannon Streetoffice commencing at 11.00 am. All shareholders and
Fidelity Savings Plan and ISA Scheme investors are invited to attend. The
Portfolio Manager will be making a presentation on the year under review and
immediate prospects for the Company.

 

Sir Victor Garland

Chairman

28 September 2009

 

 

Enquiries:

Chris Davies - Head of Investment Trusts, FIL Investments International - 01737
837 723

Anne Read - Corporate Communications, FIL Investments International - 0207 961
4409

Rebecca Burtonwood, Company Secretary, FIL Investments International - 01737
836 869

Rebecca Tyerman - Company Secretariat, FIL Investments International - 01737
837 758

 

 

FIDELITY ASIAN VALUES PLC

 

Income Statement

- for the year ended 31 July 2009

 

                                           2009                     2008         
                                                                                 
                                revenue capital   total revenue  capital    total
                                                                                 
                                  £'000   £'000   £'000   £'000    £'000    £'000
                                                                                 
                                                                                 
                                                                                 
Gains/(losses) on investments         -   9,210   9,210       - (26,390) (26,390)
                                                                                 
Income                                                                           
                                                                                 
- overseas dividends              2,626       -   2,626   4,188        -    4,188
                                                                                 
- overseas scrip dividends           84       -      84     241        -      241
                                                                                 
- deposit interest                   55       -      55     150        -      150
                                                                                 
- interest on VAT recovered on        2       -       2       -        -        -
investment management fees*                                                      
                                                                                 
Investment management fee         (861)       -   (861) (1,688)        -  (1,688)
                                                                                 
Other expenses                    (402)       -   (402)   (474)        -    (474)
                                                                                 
Exchange gains/(losses) on          153   1,972   2,125    (14)     (26)     (40)
other net assets                                                                 
                                                                                 
Exchange losses on loans              - (1,409) (1,409)       -    (247)    (247)
                                                                                 
Net return/(loss) before          1,657   9,773  11,430   2,403 (26,663) (24,260)
finance costs and taxation                                                       
                                                                                 
Interest payable                  (444)       -   (444)   (516)        -    (516)
                                                                                 
Net return/(loss) on ordinary     1,213   9,773  10,986   1,887 (26,663) (24.776)
activities before taxation                                                       
                                                                                 
Taxation on return on ordinary    (233)       -   (233)   (398)        -    (398)
activities**                                                                     
                                                                                 
Net return/(loss) on ordinary       980   9,773  10,753   1,489 (26,663) (25,174)
activities after taxation for                                                    
the year                                                                         
                                                                                 
Return/(loss) per ordinary        1.49p  14.85p  16.34p   1.43p (25.57p) (24.14p)
share                                                                            
                                                                                 

 

A Statement of Total Recognised Gains and Losses has not been prepared as there
are no gains and losses other than those reported in this Income Statement. The
total column of the Income Statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the year.

 

*   This is interest received on VAT on investment management fees reclaimed
following the decision of    the European Court of Justice in the JPMorgan
Claverhouse Investment Trust/AIC case (C-363/05)

** This relates to overseas taxation only.           


FIDELITY ASIAN VALUES PLC

 

Reconciliation of Movements in Shareholders' Funds - for the year ended 31 July
2009

 

                called    share    capital             other   other  capital revenue    total
              up share  premium redemption non-distributable reserve  reserve reserve   equity
               capital  account    reserve           reserve                                  
                                                                                              
                                                                                              
                                                                                              
                                                                                              
                 £'000    £'000      £'000             £'000   £'000    £'000   £'000    £'000
                                                                                              
                                                                                              
                                                                                              
Opening         27,336   15,359      3,487             7,367  53,749   64,413   (990)  170,721
shareholders'                                                                                 
funds:  1                                                                                     
August 2007                                                                                   
                                                                                              
Net                  -        -          -                 -       - (26,663)       - (26,663)
recognised                                                                                    
capital                                                                                       
losses for                                                                                    
the year                                                                                      
                                                                                              
Repurchase of  (1,547)        -      1,547                 - (9,606)        -       -  (9,606)
ordinary                                                                                      
shares                                                                                        
                                                                                              
Revenue after        -        -          -                 -       -        -   1,489    1,489
taxation for                                                                                  
the year                                                                                      
                                                                                              
Closing         25,789   15,359      5,034             7,367  44,143   37,750     499  135,941
shareholders'                                                                                 
funds: 31                                                                                     
July 2008                                                                                     
                                                                                              
Net                  -        -          -                 -       -    9,773       -    9,773
recognised                                                                                    
capital gains                                                                                 
for the year                                                                                  
                                                                                              
Share premium        - (15,359)          -                 -  15,359        -       -        -
account                                                                                       
cancelled                                                                                     
                                                                                              
Capital              -        -   (13,803)                 -  13,803        -       -        -
redemption                                                                                    
reserve                                                                                       
cancelled                                                                                     
                                                                                              
Repurchase of    (238)        -        238                 -   (988)        -       -    (988)
ordinary                                                                                      
shares                                                                                        
                                                                                              
Ordinary      (10,316)        -     10,316                 - (52,153        -       - (52,153)
shares                                                                                        
cancelled on                                                                                  
completion of                                                                                 
the Tender                                                                                    
offer                                                                                         
                                                                                              
Costs                -        -          -                 -   (842)        -       -    (842)
associated                                                                                    
with the                                                                                      
Tender offer                                                                                  
                                                                                              
Loan                 -        -          -                 -    (83)        -       -     (83)
redemption                                                                                    
costs                                                                                         
                                                                                              
Net revenue          -        -          -                 -       -        -     980      980
after                                                                                         
taxation for                                                                                  
the year                                                                                      
                                                                                              
Dividend paid        -        -          -                 -       -        -   (494)    (494)
to                                                                                            
shareholders                                                                                  
                                                                                              
Closing         15,235        -      1,785             7,367  19,239   47,523     985   92,134
shareholders'                                                                                 
funds: 31                                                                                     
July 2009                                                                                     
                                                                                              

 


FIDELITY ASIAN VALUES PLC

 

Balance Sheet

- as at 31 July 2009

 

                                                               2009    2008
                                                                           
                                                              £'000   £'000
                                                                           
Fixed assets                                                               
                                                                           
Investments at fair value through profit or loss             98,131 136,356
                                                                           
Current assets                                                             
                                                                           
Debtors                                                       1,161     634
                                                                           
Cash at bank                                                    425   8,954
                                                                           
                                                              1,586   9,588
                                                                           
Creditors - amounts falling due within one year                            
                                                                           
Fixed rate unsecured loan                                   (6,584)       -
                                                                           
Other creditors                                               (999)   (916)
                                                                           
                                                            (7,583)   (916)
                                                                           
Net current (liabilities)/assets                            (5,997)   8,672
                                                                           
Total assets less current liabilities                        92,134 145,028
                                                                           
Creditors - amounts falling due after more than one year                   
                                                                           
Fixed rate unsecured loan                                         - (9,087)
                                                                           
Total net assets                                             92,134 135,941
                                                                           
Capital and reserves                                                       
                                                                           
Called up share capital                                      15,235  25,789
                                                                           
Share premium account                                             -  15,359
                                                                           
Capital redemption reserve                                    1,785   5,034
                                                                           
Other non-distributable reserve                               7,367   7,367
                                                                           
Other reserve                                                19,239  44,143
                                                                           
Capital reserve                                              47,523  37,750
                                                                           
Revenue reserve                                                 985     499
                                                                           
Total equity shareholders' funds                             92,134 135,941
                                                                           
Net asset value per ordinary share                          151.18p 131.78p
                                                                           

 

 


FIDELITY ASIAN VALUES PLC

 

Cash Flow Statement

- for the year ended 31 July 2009

 

                                                                      2009     2008
                                                                                   
                                                                         £    £'000
                                                                      '000         
                                                                                   
Operating activities                                                               
                                                                                   
Investment income received                                           2,655    3,546
                                                                                   
Deposit interest received                                               68      154
                                                                                   
Investment management fee paid                                     (1,268)  (1,272)
                                                                                   
Directors' fees paid                                                  (93)     (60)
                                                                                   
Other cash payments                                                  (337)    (566)
                                                                                   
Net cash inflow from operating activities                            1,025    1,802
                                                                                   
Returns on investments and servicing of finance                                    
                                                                                   
Interest paid                                                        (495)    (511)
                                                                                   
                                                                                   
                                                                                   
Net cash outflow from returns on investments and servicing           (495)    (511)
of finance                                                                         
                                                                                   
Financial investment                                                               
                                                                                   
Purchase of investments                                           (47,992) (84,344)
                                                                                   
Disposal of investments                                             97,560   96,901
                                                                                   
Net cash inflow from financial investment                           49,568   12,557
                                                                                   
Dividend paid to shareholders                                        (494)        -
                                                                                   
Net cash inflow before financing                                    49,604   13,848
                                                                                   
Financing                                                                          
                                                                                   
Repurchase of ordinary shares                                        (988)  (9,606)
                                                                                   
Ordinary shares cancelled on completion of the Tender             (52,995)        -
offer                                                                              
                                                                                   
Loan redemption costs on completion of the Tender offer               (83)        -
                                                                                   
5.60% fixed rate unsecured loan part repaid                        (3,912)        -
                                                                                   
Net cash outflow from financing                                   (57,978)  (9,606)
                                                                                   
(Decrease)/increase in cash                                        (8,374)    4,242
                                                                                   

 

 

Returns/ (losses) per ordinary share are based on the net revenue return on
ordinary activities after taxation of £980,000 (2008: £1,489,000), the capital
return in the year of £9,773,000 (2008: capital loss £26,663,000) and the total
return in the year of £10,753,000 (2008: loss £25,174,000) and on 65,827,251
ordinary shares (2008: 104,262,596) being the weighted average number of
ordinary shares in issue during the year.

 

The above statements have been prepared on the basis of the accounting policies
as set out in annual financial statements to 31 July 2009. This preliminary
statement, which has been agreed with the auditor, was approved by the Board on
28 September 2009. It is not the Company's statutory financial statements.  The
statutory financial statements for the financial year ended 31 July 2008have
been delivered to the Registrar of Companies. The statutory financial
statements for the financial year ended 31 July 2009have been approved and
audited but have not yet been filed.  The statutory financial statements for
the financial years ended 31 July 2008 and 31 July 2009 received unqualified
audit reports, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying the report and did not
contain statements under section 498 (2) and (3) of the Companies Act 2006. 
The annual report and financial statements will be posted to shareholders as
soon as is practicable and in any event no later than 9 November 2009.