Annual Financial Report
FIDELITY ASIAN VALUES PLC
ANNUAL FINANCIAL REPORT, PROXY FORM AND ADDITIONAL DISCLOSURES
TO THE PRELIMINARY RESULTS FOR THE YEAR TO 31 JULY 2012
Further to the voluntary disclosure of the Company's annual results for the
year ended 31 July 2012 by way of a preliminary announcement dated 28 September
2012, in accordance with the Disclosure and Transparency Rules ("the Rules")
4.1.3 and 6.3.5(2) this announcement contains the text of the preliminary
announcement dated 28 September 2012 together with the additional text in
compliance with the Rules.
The Company's annual report and financial statements for the year ended 31 July
2012 together with the accompanying proxy form have been submitted to the UK
Listing Authority, and will shortly be available for inspection on the National
Storage Mechanism (NSM):
www.hemscott.com/nsm.do
(Documents will usually be available for inspection within two business days of
this notice being given)
The annual report and financial statements will shortly be available on the
Company's website at
www.fidelity.co.uk/static/pdf/common/investment-trusts/annual/annualannual-2012.pdf
Christopher Pirnie, FIL Investments International, Company Secretary - 01737 837 929
22 October 2012
Fidelity Asian Values PLC
Preliminary Announcement of Audited Results
For the year ended 31 July 2012
Chairman's Statement
PERFORMANCE
In the year to 31 July 2012, the undiluted Net Asset Value ("NAV") per share of
the Company decreased by 14.3% whereas its Benchmark Index, the MSCI All
Countries (Combined) Far East ex Japan Index (net), decreased by 6.6%. The
ordinary share price of the Company decreased by 12.6% over the year and the
discount narrowed from 11.6% to 9.9%. (All figures in UK sterling terms and on
a total return basis.)
These results are disappointing against a background of continuing high
volatility as described in further detail in the Manager's Review section of
the annual report.
OUTLOOK
Asian economies have not been immune from the economic crisis affecting
developed markets, although they have played an increasingly important role in
the domestic consumption story, fuelled by rising wages and institutional
reforms that encourage consumption, such as pension and tax reforms. This being
the case, economies across the Far East ex Japan region are poised to deliver
stronger growth relative to the rest of the world.
China's economy seems to have lost some momentum in the second quarter of 2012.
This is likely to be an outcome of the slowdown in external demand led by the
European crisis as well as China's over-tightening in 2010-11, rather than a
deterioration of the country's fundamentals. Policy easing in recent months,
including stepped-up project approval and reductions in the required reserve
ratio and interest rates are encouraging signs.
The policy environment in the rest of the region remains supportive and factors
driving structural growth, such as favourable demographics, a focus on
infrastructure building and stable government finances are likely to fuel a
multi-year expansion cycle. Against this backdrop, Asia continues to offer
compelling investment opportunities in quality companies at attractive
valuations. The Asia Pacific region remains within the fast lane of a two-speed
global economy; the region also offers up a wide array of equity dividend
opportunities.
In the face of these challenging markets, the Manager has increased his focus
on fewer and higher quality stock names with clearer long-term visibility of
earnings.
SUBSCRIPTION SHARES
The final date for exercising the rights attached to the subscription shares is
31 May 2013. Further details on the subscription shares may be found in the
Directors' Report in the annual report. Details of the subscription shares
exercised during the year are outlined in the notes section of the annual
report.
SHARE REPURCHASES
Purchases of ordinary and subscription shares for cancellation are made at the
discretion of the Board and within guidelines set from time to time by the
Board in light of prevailing market conditions. Share repurchases will only be
made when they will result in an enhancement to the net asset value of ordinary
shares for remaining shareholders. Details of ordinary shares repurchased for
cancellation during the year are outlined in the notes section of the annual
report. No subscription shares were repurchased for cancellation during the
reporting year.
DIVIDEND
Subject to shareholders' approval at the forthcoming Annual General Meeting,
the Directors recommend a final dividend of one penny per ordinary share (2011:
one penny). This dividend will be payable on 6 December 2012 to shareholders on
the register at close of business on 5 October 2012 (ex-dividend date 3 October
2012). 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 the future.
GEARING
The Company entered into a two year revolving loan facility with Scotiabank
Europe PLC for up to US$15,000,000 on 28 February 2012. The full amount was
drawn down on 29 February 2012.
INVESTMENT POLICY
The broad thrust of investment policy continues without significant change.
This being said, the Board is always looking for new ways of enhancing the way
in which your Company operates.
Shareholders will have received a circular with the Annual Report detailing the
Board's recommendation to change the Company's investment policy to permit the
use of Contracts for Difference ("CFDs") for gearing purposes. A full
explanation is provided in the circular.
The Board believes that it is in the best interests of shareholders for the
Company to continue to have the ability to employ gearing. The ability to use
CFDs for gearing purposes will increase flexibility and add to the range of
gearing options available to the Board. The costs of using CFDs in the manner
proposed are currently lower than the costs involved in traditional bank
borrowing.
We continue to monitor and review the Company's gearing level. Currently it has
net gearing of 4.9%.
CONTINUATION VOTE
In accordance with the Articles of Association of the Company, the Company is
subject to a continuation vote every five years. The next continuation vote
will therefore take place at the Annual General Meeting in 2016 rather than
2013 as stated in last year's annual report.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on Wednesday, 28 November 2012 at
Fidelity's offices at 25 Cannon Street, London EC4M 5TA (St Paul's or Mansion
House tube stations) 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 the
immediate prospects for the Company.
Mr Hugh Bolland
Chairman
28 September 2012
MARKETS
Stockmarkets in Far East ex Japan retreated over the twelve month review period
as share prices were weighed down by increased risk aversion due to the
continuing uncertainty surrounding the Eurozone debt crisis, and later on due
to slowing growth in the US and China. Better than expected economic data from
the US in the fourth quarter of 2011 and first quarter of 2012 boosted investor
sentiment but fears about a potential break-up of the Eurozone and moderating
growth in China and the US in the second quarter of 2012 resulted in a flight
to safety. Materials producers declined the most as commodity prices fell.
Elsewhere, the energy and industrials sectors retreated in the face of
weakening global growth prospects. Consumer discretionary stocks also came
under pressure, primarily due to concerns about deteriorating consumer
sentiment. Defensively positioned sectors such as utilities, consumer staples
and telecommunications services, as well as the information technology ("IT")
sector outperformed the regional index and high yielding telecommunications
stocks ended the period with double digit gains.
Thailand remained the best performing market in the region, buoyed by strong
growth in reconstruction following the devastating floods that hurt industrial
activity. Malaysia was also strongly underpinned by expectations of growth and
further supported by new government plans to boost infrastructure investment.
Indonesia lagged its regional peers despite a robust outlook for growth and a
sovereign ratings upgrade that fuelled investor confidence. Taiwan was the
worst performing market, mainly due to weak earnings growth potential in the
IT sector. The high level of dependence on exports and falling domestic
consumer confidence hurt South Korean equities, even as the Bank of Korea
lowered its benchmark rate of interest. Shares in China also performed poorly,
despite the central bank's decision to ease monetary policy constraints.
On the economic front, inflationary pressures eased substantially, particularly
in China, and central banks across the region cut their benchmark rates of
interest to stimulate growth. Industrial production and purchasing managers
indices continued to show signs of weakness and the pace of exports growth
moderated somewhat.
PORTFOLIO REVIEW
The Company underperformed its benchmark index over the review period, with the
undiluted net asset value falling by 14.3% against the benchmark index return
of -6.6% (on a total return basis). This was attributed to adverse security
selection in the consumer discretionary sector and the underweight position in
telecommunications. At a country level, the overweight stance in China, Hong
Kong and Singapore detracted from performance as growth indicators showed signs
of moderation and consumer spending weakened.
The overweight holding in the consumer discretionary sector reflected growing
confidence in rapid consumption growth, particularly in China, whilst some
positions were held for their attractive valuations and to benefit from a
potential turnaround in their earnings. A stake in Anta Sports Products weighed
on returns given a difficult environment in sports products retailing, high
inventory and increased competitive pressure. The allocation to retailer
Emperor Watch & Jewellery succumbed to a fall in store sales growth in China
and Macau, even as Hong Kong store sales continued to expand. Elsewhere, GOME
Electrical Appliances hurt returns and the position was sold at the beginning
of 2012 in view of sluggish sales growth following the end of rural subsidy
programmes. An unexpected change in top management led to a sharp decline in
the share price of Esprit Holdings, which was bought in for its compelling
valuation and an attractive turnaround strategy. Chinese American Depositary
Receipts ("ADRs") were hurt overall as concerns regarding Variable Interest
Entity structures were being reviewed - these however were not related to
company fundamentals rather to company structuring. Exposure to Ctrip.com
International and SouFun Holdings were notable ADRs that were negatively
impacted.
Non-exposure to China Mobile was the single largest detractor from relative
performance. Share prices surged reflecting the firm's defensive positioning
given its dominant market share and strong balance sheet, however, the stock
was not held mainly because of its unattractive valuations. A holding in
Telstra Corp added value due to attractive dividend yields and an end to
regulatory uncertainty.
Within the IT sector, a high-conviction stake in SouFun Holdings, which
provides marketing, listing, technology and information consultancy services to
the real estate and home furnishing sectors in China, retreated against the
backdrop of a challenging property market environment. This holding is retained
due to its leadership position; attractive business model; high-quality
management; balanced revenue mix
based on marketing and listing services; and robust growth in the cards
business, a service that helps consumers negotiate cheaper deals. Shares in
China Resources Cement Holdings in the materials sector and Hong Kong Exchanges
& Clearing in the financials sector were also among the leading detractors from
performance.
On a positive note, whilst the overall contribution from both the IT and
consumer discretionary sectors disappointed, selected positions helped contain
losses. For instance, South Korea-based SM Entertainment surged on the back of
growing album and ticket sales. Shares in South Korean duty free shop operator
Hotel Shilla also added value on the back of an increase in earnings given
rising passenger traffic. Within IT, an overweight stance in Tencent Holdings,
the online gaming and instant messaging firm, and a stake in Samsung
Electronics, proved highly rewarding. In the industrials sector, the
high-conviction exposure to Sarin Technologies, a machinery producer for the
diamond processing industry, also enhanced performance
in light of its robust earnings growth and dominant market position. The firm
is also expected to introduce new products, which are expected to further
bolster its competitive position. China Overseas Land & Investment delivered
strong sales growth, whilst Bank of China Hong Kong advanced in light of the
potential benefits of renminbi internationalisation, however, the position has
since been closed for better opportunities elsewhere.
Positioning
The portfolio maintained a focus on companies that are leaders in their fields,
a trait that is reflected by their high and growing market shares and pricing
power. The portfolio favours companies with management teams that have a proven
track record of managing the business through extreme cycles. Typically, these
companies tend to outperform during downturns and are likely to emerge in a
stronger position once markets and economies normalise. Within the IT sector,
the portfolio continues to maintain a position in SouFun Holdings in
anticipation of growth driven by its strength in managing relationships.
Furthermore, a number of new holdings, such as South Korea based online games
producer NCSoft given its attractive valuations and strong demand for its newly
released games. In addition, exposure to Tencent Holdings was increased, as was
the case with Taiwan Semiconductor Manufacturing, off the back of its defensive
earnings and high dividend yields. These purchases were funded by selling the
position in HTC in light of an unfavourable outlook and in Unimicron Technology
in view of high order volatility and pricing pressures.
New holdings were also purchased in the financials sector, taking advantage of
a fall in prices to boost the stake in insurance provider AIA Group given its
regional presence, strong growth in new business and a high quality management
team with a track record of delivering shareholder value. A new position in
Bank Mandiri was opened in light of improved earnings expectations, driven by
strong loan growth, stable margins, low credit cost and higher cost efficiency
as the bank slows its network expansion to focus on productivity. Stock in
China Overseas Land & Investment was also purchased. These positions were
funded by selling the stakes in DBS Group Holdings, Hong Kong Exchanges &
Clearing and Shinhan Financial Group.
Over the period, positioning in the consumer discretionary segment was
realigned and exposure to the materials and industrials sectors was reduced. In
case of the former, a holding in Emperor Watch & Jewellery was sold along with
a position in Ctrip.com International but a stake in outdoor advertising firm
Focus Media Holdings was introduced as it is likely to report strong earnings
growth. A new position was purchased in Techtronic Industries, a power tools
and floor care appliances manufacturer, given attractive valuations, strong
market presence and likely growth driven by geographic expansion. Within
materials, a position in Honam Petrochemical was sold in light of strong
macroeconomic headwinds and increased pricing pressure. Elsewhere, positions in
Hutchison Whampoa and in Samsung Engineering were sold given more rewarding
stock opportunities elsewhere and slowing growth in new order flows
respectively.
OUTLOOK FOR THE REGION
The outlook for the global economy remains divergent, with expectations of an
improvement in the US balanced by concerns about Europe. Despite the slowing
pace of expansion in China, growth in Asia is likely to be strong given falling
inflation, healthy government balance sheets and the availability of multiple
policy tools to boost growth and the continued domestic demand supporting
economic activity in the region. Driven by powerful demographic factors and
rising per capita income, growth in intra-regional trade is likely to be
strong, with Asian economies losing their historical dependency on the West.
These factors should also continue to support corporate earnings despite a
challenging external environment. Meanwhile, central banks across the region,
including in China and South Korea, lowered their benchmark interest rates to
protect their economies from the weakening external environment. With inflation
coming down, central banks have more room to manoeuvre and ease their monetary
policies to encourage growth with many Asian firms having large cash reserves
and low leverage, which provide a buffer in the event of a global economic
downturn. Firms that can take advantage of the robust domestic demand in Asia
are a compelling investment opportunity given sluggish global growth
projections.
UPDATE TO 31 AUGUST 2012
The Company strongly outperformed the index in August, with its net asset value
rising 0.44% in sterling terms, compared with a negative 2.02% return for the
index and a 1.99% fall in its share price.
The Company's relative returns were driven by robust stock selection in the
consumer discretionary and IT sectors, whilst in the consumer discretionary
space, a holding in China-based outdoor media firm Focus Media Holdings was the
top contributor to performance following the announcement of a plan to
privatise the firm. A holding in South Korea-based SM Entertainment rose after
delivering better than expected earnings and a position in tools manufacturer
Techtronic Industries was also a notable contributor to overall gains.
Elsewhere in the IT space, a stake in SouFun Holdings added value as its
earnings were in line with expectations, demonstrating the firm's underlying
strength. Meanwhile, a disappointing second quarter earnings report did not
dent confidence in online games producer NCSoft as newly released games
registered brisk sales and the firm rationalised its cost structure. In
contrast, shares in retail supply chain manager Li & Fung hampered performance
due to weaker than expected earnings and automobile producer KIA Motors also
disappointed. KIA Motors retreated after earnings fell marginally below market
expectations and due to labour strikes.
The outlook for Asia remains positive given benign inflation, healthy
government balance sheets and the availability of multiple policy tools to
boost economic growth. Although growth is expected to moderate, the pace of
growth would still remain very attractive compared with the developed world.
Moreover, domestic demand in Asia would support economic activity in the region
driven by powerful demographic factors and rising per capita income and growth
in intra-regional trade.
John Lo
Portfolio Manager
28 September 2012
PRINCIPAL RISKS AND UNCERTAINTIES
The Board confirms that there is an ongoing process for identifying, evaluating
and managing the principal risks faced by the Company. The Board, with the
assistance of the Manager, has developed a risk matrix which, as part of the
internal controls process, identifies the key risks that the Company faces. The
matrix has identified strategic, marketing, investment management, company
secretarial and other support function risks. The Board reviews and agrees
policies for managing these risks. The process is regularly reviewed by the
Board in accordance with the Financial Reporting Council's ("FRC's") "Internal
Control: Revised Guidance for Directors". During this review, risks are
identified, introduced and graded. This process, together with the policies and
procedures for the mitigation of risks, is updated and reviewed regularly in
the form of comprehensive internal controls reports which are considered by the
Audit Committee. The Board also determines the nature and extent of any risks
it is willing to take in order to achieve its strategic objectives.
Risks identified in the matrix are:
Market risk
The Company's assets consist mainly of listed securities and the principal
risks are therefore market related such as market downturn, interest rate
movements, deflation/inflation, terrorism and protectionism.
Risks to which the Company is exposed and which form part of the market risk
category are included in Note 17 to the financial statements on pages 44 to 49
together with summaries of the policies for managing these risks. These are:
market price risk (which comprises other price risk, interest rate risk and
foreign currency risk); liquidity risk, counterparty risk and credit risk.
Performance risk
The achievement of the Company's performance objective relative to the market
involves risk. Strategy, asset allocation and stock selection might lead to
under performance of the Benchmark Index and target. Monitoring of these risks
is carried out by the Board which, at each Board meeting, considers the asset
allocation of the portfolio and the risks associated with particular countries
and industry sectors within the parameters of the investment objective. The
Portfolio Manager is responsible for actively managing and monitoring the
portfolio selected in accordance with the asset allocation parameters and seeks
to ensure that individual stocks meet an acceptable risk/reward profile. The
NAV of the Company is published each working day.
Loan risk
The Company has a two year revolving loan facility in place with Scotiabank
Europe PLC. The extent to which any loan facilities are retained or renewed is
always kept under the most careful scrutiny.
The impact of limited finance from counterparties including suppliers has not
impacted the Company to date. However there are alternative suppliers and
options available in the market place should the need arise.
Gearing risk
The Company has the option to invest up to the total of its loan facilities in
equities. In a rising market the Company would benefit but in a falling market
the impact would be detrimental.
In order to manage the level of gearing the Board regularly considers this item
and sets gearing limits accordingly. The Portfolio Manager follows the Board
approved guidelines and may invest part of the loan facility in Fidelity
Institutional Liquidity Fund plc and short term cash deposits to control the
level of net gearing.
Currency risk
The functional currency of the Company in which it reports its results, is UK
sterling, however, most of its assets and its
income are denominated in other currencies. Consequently, it is subject to
currency risk on exchange rate movements between UK sterling and these other
currencies. It is the Company's policy not to hedge against currency risks.
Borrowings are denominated in US dollars and, therefore, the effect of US
dollar exchange rate movements on assets denominated in US dollars will be
offset by the effect on these loans. Further details can be found in Note 17 to
the Financial Statements on pages 44 to 49.
Financial and financial instrument risks
The financial instrument risks faced by the Company are shown in Note 17 to the
Financial Statements on pages 44 to 49.
Income - dividends risk
The Company's objective of long term capital growth relies less on income to
support dividends than investment trust companies with a more income oriented
target. Nevertheless, generating income to meet expenses and provide adequate
reserves is subject to the risk that income generation from its investments
fails to meet the level required. The Board monitors this risk through the
receipt of detailed income reports and forecasts which are considered at each
meeting.
Share price, NAV and discount volatility risk
The price of the Company's shares relative to the Benchmark Index and in
absolute terms, as well as its discount to NAV, are factors which are not
within the Company's total control. Some short term influence over the discount
may be exercised by the use of share repurchases at acceptable prices. Details
of repurchases during the year are included in Note 13 on page 42. The
Company's ordinary share price, subscription share price, NAV and discount
volatility are monitored daily by the Manager and considered by the Board at
each of its meetings.
Counterparty risk
The Company relies on a number of main counterparties, namely the Manager,
Registrar and Custodian. The Manager is the member of a privately owned group
of companies on which a regular internal controls report is provided to the
Board. The Manager, Registrar and Custodian are subject to regular audits by
Fidelity's internal audit team and the counterparties' own internal controls
reports are received by the Board and any concerns investigated.
Governance, operational, financial, compliance, administration etc
While it is believed that the likelihood of poor governance, compliance and
operational administration by other third party service providers is low, the
financial consequences could be serious, including the associated reputational
damage to the Company. Your Board is responsible for the Company's system of
internal control and for reviewing its effectiveness. Details
of this process are provided in the Corporate Governance Statement within this
Annual Report.
Other risks
Other risks monitored on a regular basis include loan covenants, which are
subject to daily monitoring, together with the Company's gearing and cash
positions, and the continuation vote (at a time of poor performance). Regular
reports are provided to the Board.
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 they have elected to prepare the financial statements in
accordance with UK Generally Accepted Accounting Practice.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Company and of the profit or loss for the 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; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for ensuring that adequate accounting records are
kept which disclose with reasonable accuracy at any time the financial position
of the Company and to enable them to ensure that its financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, including a Business Review, a Directors'
Remuneration Report and a Corporate Governance Statement that comply with that
law and those regulations.
The Directors have delegated the responsibility for the maintenance and
integrity of the corporate and financial information included on the Company's
section of the Manager's website www.fidelity.co.uk/its to the Manager.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge: the financial statements,
prepared in accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or
loss of the
Company; and the Directors' Report includes 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 it faces.
Approved by the Board on 28 September 2012 and signed on its behalf by
Hugh Bolland
Chairman
Enquiries:
Susan Platts-Martin - Head of Investment Trusts, FIL Investments International
- 01737 836 916
Anne Read - Corporate Communications, FIL Investments International - 0207 961 4409
Christopher Pirnie - Company Secretary, FIL Investment International, - 01737 837 929
Income Statement for the year ended 31 July 2012
revenue 2012 total revenue 2011 total
£'000 capital £'000 £'000 capital £'000
£'000 £'000
(Losses)/gains on - (21,037) (21,037) - 22,068 22,068
investments designated
at fair value through
profit or loss
Income* 2,999 - 2,999 3,070 - 3,070
Investment management (1,267) - (1,267) (1,509) - (1,509)
fee
Other expenses (515) - (515) (522) - (522)
Exchange (losses)/ (10) 217 207 7 (54) (47)
gains on other net
assets
Exchange (losses)/ - (447) (447) - 287 287
gains on bank loans
Net return/(loss) 1,207 (21,267) (20,060) 1,046 22,301 23,347
before finance costs
and taxation
Finance costs (204) - (204) (214) - (214)
Net return/(loss) on 1,003 (21,267) (20,264) 832 22,301 23,133
ordinary activities
before taxation
Taxation on return/ (123) - (123) (312) - (312)
(loss) on ordinary
activities**
Net return/(loss) on 880 (21,267) (20,387) 520 22,301 22,821
ordinary activities
after taxation for the
year
Return/(loss) per
ordinary share
Undiluted 1.45p (34.99p) (33.54p) 0.85p 36.35p 37.20p
Diluted n/a n/a n/a 0.84p 36.10p 36.94p
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.
* INCOME
2012 2011
£'000 £'000
Income from investments designated at fair value
through profit or loss
Overseas dividends 2,784 2,926
Overseas scrip dividends 215 144
Total income 2,999 3,070
**Relates to overseas taxation only
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 July 2012
share share capital other non- other capital revenue total
capital premium redemption distributable reserve reserve reserve equity
£'000 account reserve reserve £'000 £'000 £'000 £'000
£'000 £'000 £'000
Opening 15,245 60 1,785 7,367 19,238 72,958 540 117,193
shareholders'
funds: 1
August 2010
Exercise of - - - - - - - -
rights
attached to
subscription
shares and
conversion
into ordinary
shares
Issue of 163 1,080 - - - - - 1,243
ordinary
shares on the
exercise of
rights
attached to
subscription
shares
Net return on - - - - - 22,301 520 22,821
ordinary
activities
after
taxation for
the year
Closing 15,408 1,140 1,785 7,367 19,238 95,259 1,060 141,257
shareholders'
funds: 31
July 2011
Exercise of - - - - - - - -
rights
attached to
subscription
shares and
conversion
into ordinary
shares
Issue of 12 78 - - - - - 90
ordinary
shares on the
exercise of
rights
attached to
subscription
shares
Repurchase of (439) - 439 - (3,261) - - (3,261)
ordinary
shares
Net (loss)/ - - - - - (21,267) 880 (20,387)
return on
ordinary
activities
after
taxation for
the year
Dividend paid - - - - - - (615) (615)
to
shareholders
Closing 14,981 1,218 2,224 7,367 15,977 73,992 1,325 117,084
shareholders'
funds: 31
July 2012
Balance Sheet as at 31 July 2012
2012 2011
£'000 £'000
Fixed assets
Investments designated at fair value through 123,758 146,156
profit or loss
Current assets
Debtors 206 738
Cash at bank 3,769 4,423
3,975 5,161
Creditors
Bank loans (9,563) (9,116)
Other creditors (1,086) (944)
(10,649) (10,060)
Net current liabilities (6,674) (4,899)
Total net assets 117,084 141,257
Capital and reserves
Share capital 14,981 15,408
Share premium account 1,218 1,140
Capital redemption reserve 2,224 1,785
Other non-distributable reserve 7,367 7,367
Other reserve 15,977 19,238
Capital reserve 73,992 95,259
Revenue reserve 1,325 1,060
Total equity shareholders' funds 117,084 141,257
Net asset value per ordinary share
Basic 195.40p 229.21p
Diluted 194.70p 223.20p
Cash Flow Statement for the year ended 31 July 2012
2012 2011
£'000 £'000
Operating activities
Investment income received 3,032 2,410
Investment management fee paid (1,663) (1,105)
Directors' fees paid (123) (78)
Other cash payments (594) (322)
Net cash inflow from operating activities 652 905
Servicing of finance
Interest paid on bank loans (219) (215)
Net cash outflow from servicing of finance (219) (215)
Financial investment
Purchase of investments (108,698) (142,254)
Disposal of investments 110,939 139,813
Net cash inflow/(outflow) from financial 2,241 (2,441)
investment
Dividend paid to shareholders (615) -
Net cash inflow/(outflow) before financing 2,059 (1,751)
Financing
Repurchase of ordinary shares (3,035) -
Exercise of rights attached to 105 1,244
subscription shares
Net cash inflow from bank loans - 3,674
Net cash (outflow)/inflow from financing (2,930) 4,918
(Decrease)/increase in cash (871) 3,167
The above statements have been prepared on the basis of the accounting policies
as set out in the annual financial statements to 31 July 2012. This preliminary
statement, which has been agreed with the Auditor, was approved by the Board on
28 September 2012. It is not the Company's statutory financial statements. The
statutory financial statements for the financial year ended 31 July 2011 have
been delivered to the Registrar of Companies. The statutory financial
statements for the financial year ended 31 July 2012 have been approved and
audited but have not yet been filed. The statutory financial statements for the
financial years ended 31 July 2011 and 31 July 2012 received unqualified audit
reports, did not include a reference to any matters to which the Auditor 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 26 October 2012.
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