Interim Results
FIDELITY ASIAN VALUES PLC
Preliminary Announcement of Unaudited Interim Results for the six months ended
31 January 2007
PERFORMANCE
For the six months to 31 January 2007, Fidelity Asian Values PLC's net asset
value per share rose by 16.6%, outperforming the benchmark MSCI All Countries
(Combined) Far East ex Japan Index which gained 15.0%. (All figures in sterling
terms and on a total return basis.)
The discount at which the ordinary shares traded to the net asset value of the
Company was 10.4% at the period end compared with 8.2% six months ago.
The portfolio has produced strong returns over the longer term. Since launching
in June 1996, the portfolio has returned 30.4%, significantly outperforming its
benchmark fall of 0.1%.
MARKETS
Over the six months to 31 January 2007 Asian stock markets provided positive
returns, with some markets such as Singapore reaching new historical highs.
An improving macro economic environment, falling oil prices, strong corporate
earnings and buoyant investor sentiment (reflecting strong foreign and domestic
inflows) drove the market upwards.
Amongst the developed markets, Singaporean equities were supported by its solid
infrastructure, an appreciating property sector and a 1% cut in corporation
tax. Whilst GDP growth was slower during the second half of the six month
period, the Singaporean economy is still expected to expand by around 4% to 6%
in 2007. The slowing in growth was offset by signs of a tight labour market and
the Monetary Authority's success in keeping inflation under control.
The Hong Kong stock market continued to benefit from the economic growth
momentum in China and the active fund raising of Chinese companies. Like that
of Singapore, the Hong Kong property sector performed well, helped by the
convergence of the Chinese renminbi and the Hong Kong dollar for the first time
since 1994 and expectations that the mainland currency will appreciate faster
this year.
Chinese equities strengthened as a result of continued investor demand, a
strong pipeline of Initial Public Offerings and a robust macro economic
environment. The Taiwan market was supported by solid corporate earnings, a
pick-up in exports and a spate of merger and acquisition activity. Once again,
foreign investors were attracted to the Taiwanese technology sector.
By contrast, Korean equities underperformed their regional peers. The Korean
market was weighed down by signs of a slowing domestic economy, large foreign
investor outflows, domestic earnings downgrades, corporate governance issues
and an appreciation in the Korean won. More recently, the geopolitical risks
associated with the North Korean nuclear test had a negative impact. On a
positive note, the market was underpinned by the return of domestic funds
flowing into the local market.
With the exception of Thailand, adversely affected by political developments,
the region's smaller exchanges produced strong returns for the six month period
and outperformed their larger peers in aggregate terms. The Indonesian stock
market was supported by economic expansion due to higher contributions from
exports and lower borrowing costs, which in turn boosted consumer spending.
Falling interest rates helped the construction and real estate sectors.
Malaysian growth dropped slightly lower at the end of the six month period but
its trade surplus remained significant.
PORTFOLIO REVIEW
In Hong Kong an active exposure to selected retailers delivered useful gains.
Li & Fung, an exporting trader of consumer goods, was a top contributor. The
Manager remains attracted to Li & Fung owing to its competitive advantage,
diversified network and established supplier relations.
In Taiwan investments in the technology sector such as Hon Hai Precision, which
is primarily engaged in the production and sale of electronic products, proved
rewarding as these companies gained from strong growth and increasing market
share.
Singaporean stock selection also contributed to overall performance, with Midas
Holdings doing particularly well. The company, a manufacturer of aluminium
alloy extrusion products, benefited from improving growth in the region,
especially in China. In Korea, an underweight exposure to the underperforming
Samsung Electronics helped returns. In addition, an overweight position in a
Korean specialist in household and cosmetic products was a top contributor.
An underweight allocation to China and stock selection hampered relative
performance in that market.
Among the region's smaller markets, rewarding stock selection in Malaysia, in
particular the industrials sector, aided performance. The Company's investments
in other smaller markets had a neutral impact on performance.
The portfolio maintains a significant overweight exposure to Singapore, given
its robust corporate governance environment and the general high quality of its
listed companies.
During the period property companies in Hong Kong, which focus on investing in
China, were added to the portfolio as the Manager intends to take advantage of
the strong appreciation of property prices in the region.
From a sector perspective, some energy and consumer discretionary holdings were
trimmed back. In particular, an exposure to CNOOC, a Hong Kong based company
engaged in the exploration and production of crude oil and natural gas in
China, was reduced amid expectations of lower oil prices and a drop in
production levels. Exposure to a Korean car manufacturer and exporter was
lowered in anticipation of lower earnings due to the appreciation of the Korean
won.
OUTLOOK FOR THE REGION
Given last year's strong performance market returns will probably be lower this
year. Recent volatility could recur. While regional markets could weaken if US
consumer spending slows more than expected or the US rate of inflation
significantly rises, it is unlikely that this will completely derail Asian
growth given the high level of domestic demand. The region's high return on
equity ratios and strong corporate balance sheets should add a further degree
of protection.
China will continue to be a key driver of regional growth in 2007. But there
could also be an upturn in domestic consumer and business spending in other
Asian economies due to above trend global growth, improving labour markets,
strong corporate earnings and supportive macro economic policies.
Domestic strength is expected to underpin the region's property sector.
Increased infrastructure spending should support the fixed investment cycle and
the continuation of private equity driven merger and acquisition deals.
EXERCISES OF WARRANTS
The final annual date by which holders were entitled to exercise their warrants
was 30 November 2006. Following exercises by a number of warrant holders by
that date the Company issued and allotted some 8.3 million ordinary shares. On
14 December 2006 the trustee appointed to act for warrant holders who had not
exercised their warrants exercised the remaining warrants after taking advice
from the Company's brokers. Shares resulting from this action were sold in the
market and the proceeds, net of the subscription price and the costs of the
exercise, were passed to the remaining warrant holders. The exercises of all
outstanding warrants in issue prior to 30 November 2006 raised £20.46 million
for the Company.
SHARE REPURCHASES
Since 31 January 2007 the Company has repurchased 2,117,000 ordinary shares for
cancellation. These share repurchases have resulted in an increase in the net
asset value per remaining share of approximately 0.24 pence.
By order of the Board
Fidelity Investments International
30 March 2007
Enquiries:
Stephen Westwood - Head of Investment Trusts, Fidelity Investments
International - 020 7961 4477
Graham Symonds - Fidelity Investments International, Company Secretary - 01737
837345
CB30741/na
FIDELITY ASIAN VALUES PLC
Income Statement - for the six months ended 31 January 2007
for the six months for the year ended for the six months
ended ended
31.01.07 31.07.06 31.01.06
unaudited audited unaudited
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on
Investments 20,744 20,744 10,253 10,253 17,850 17,850
Income (1) 1,687 1,687 2,446 - 2,446 1,170 - 1,170
Investment
management fee (767) (767) (1,125) - (1,125) (559) - (559)
Other expenses (258) - (258) (457) - (457) (219) - (219)
Exchange (losses) - (70) (70) 12 (208) (196) (5) (13) (18)
/gains
Exchange gains on - 477 477 - 597 597 - 90 90
loans
Net return before
finance costs
and taxation 662 21,151 21,813 876 10,642 11,518 387 17,927 18,314
Interest payable (272) - (272) (637) - (637) (324) - (324)
Net return on
ordinary
activities before 390 21,151 21,541 239 10,642 10,881 63 17,927 17,990
taxation
Taxation on (246) - (246) (299) - (299) (156) - (156)
ordinary
activities (2)
Net return/(loss)
on ordinary
activities after
taxation for the
period 144 21,151 21,295 (60) 10,642 10,582 (93) 17,927 17,834
Return/(loss) per
ordinary
share (3)
Basic 0.15p 21.35p 21.50p (0.06p) 11.38p 11.32p (0.10p) 19.17p 19.07p
Diluted - - - (0.06p) 11.38p 11.32p (0.10p) 18.86p 18.76p
FIDELITY ASIAN VALUES PLC
Reconciliation of Movements in Shareholders' funds
Called Share Capital Other Warrant Capital Capital Revenue Total
up premium redemption reserve reserve reserve reserve reserve equity
share account reserve realised unrealised
capital
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening 23,376 7 2,330 59,282 7,369 (25,545) 23,473 (1,588) 88,704
shareholders'
funds: 1
August 2005
Effect of - - - - - - (215) - (215)
changing
prices from
middle market
to bid market
at 1 August
2005
Net - - - - - 12,619 5,308 - 17,927
recognised
gains for the
period
Net revenue - - - - - - - (93) (93)
loss after
taxation for
the period
Exercise of 1 5 - 2 (2) - - - 6
warrants
Closing 23,377 12 2,330 59,284 7,367 (12,926) 28,566 (1,681) 106,329
shareholders'
funds: 31 J
anuary 2006
Opening 23,376 7 2,330 59,282 7,369 (25,545) 23,473 (1,588) 88,704
shareholders'
funds: 1
August 2005
Effect of - - - - - - (215) - (215)
changing
prices from
middle market
to bid market
at 1 August
2005
Net - - - - - 16,435 (5,793) - 10,642
recognised
gains/
(losses) for
the year
Net - - - - - - - (60) (60)
recognised
loss after
taxation for
the year
Exercise of 1 5 - 2 (2) - - - 6
warrants
Closing 23,377 12 2,330 59,284 7,367 (9,110) 17,465 (1,648) 99,077
shareholders'
funds: 31
July 2006
Net - - - - - 5,417 15,734 - 21,151
recognised
gains for the
period
Net revenue - - - - - - - 144 144
loss after
taxation for
the period
Exercise of 5,116 15,347 - 7,367 (7,367) - - - 20,463
warrants(8)
Closing 28,493 15,359 2,330 66,651 - (3,693) 33,199 (1,504) 140,835
shareholders'
funds: 31
January 2007
FIDELITY ASIAN VALUES PLC
Balance Sheet
as at 31 January 2007
31.01.07 31.07.06 31.01.06
unaudited audited unaudited
£'000 £'000 £'000
Fixed assets
Investments at fair value through 148,424 107,538 115,807
profit or loss
Current assets
Debtors 441 4,111 1,258
Cash at bank 2,119 1,313 902
2,560 5,424 2,160
Creditors - amounts falling due within
one year
Fixed rate unsecured loan (5) - (9,655) (10,162)
Other creditors (971) (4,230) (1,476)
(971) (13,885) (11,638)
Net current assets/(liabilities) 1,589 (8,461) (9,478)
Total assets less current liabilities 150,013 99,077 106,329
Creditors - amounts falling due after
more than one year
Fixed rate unsecured loan (5) (9,178) - -
Total net assets 140,835 99,077 106,329
Capital and reserves
Called up share capital 28,493 23,377 23,377
Share premium account 15,359 12 12
Capital redemption reserve 2,330 2,330 2,330
Other reserve 66,651 59,284 59,284
Warrant reserve - 7,367 7,367
Capital reserve - realised (3,693) (9,110) (12,926)
Capital reserve - unrealised 33,199 17,465 28,566
Revenue reserve (1,504) (1,648) (1,681)
Total equity shareholders' funds 140,835 99,077 106,329
Net asset value per ordinary share: (4)
Basic 123.57p 105.95p 113.71p
Diluted - 104.88p 111.25p
FIDELITY ASIAN VALUES PLC
Cash Flow Statement
for the six months ended 31 January 2007
31.01.07 31.07.06 31.01.06
unaudited audited unaudited
£'000 £'000 £'000
Operating activities
Investment income received 943 2,310 904
Interest received 66 56 23
Investment management fee paid (632) (1,445) (487)
Directors' fees paid (36) (79) (18)
Other cash payments (247) (288) (164)
Net cash inflow from operating
activities 94 554 258
Returns on investments and
servicing of finance
Interest paid (150) (641) (325)
Net cash outflow from returns
on
servicing of finance (150) (641) (325)
Financial investment
Purchase of investments (64,151) (90,518) (49,701)
Disposals of investments 44,419 91,013 49,731
Net cash (outflow)/inflow from
financial
investment (19,732) 495 30
Net cash (outflow)/inflow (19,788) 408 (37)
before financing
Financing
Exercise of warrants (6) 20,463 6 6
5.60% fixed rate unsecured 9,541 - -
loan drawn down
6.28% fixed rate unsecured (9,541) - -
loan repaid
Net cash inflow from financing 20,463 6 6
Increase/(decrease) in cash 675 414 (31)
Notes
1. Income
31.01.07 31.07.06 31.01.06
unaudited audited unaudited
£000 £000 £000
Overseas dividends 1,471 2,155 928
Overseas scrip 155 230 215
dividends
Overseas interest 11 19 10
Deposit interest 50 42 17
Total 1,687 2,446 1,170
2. Taxation on return on ordinary activities
31.01.07 31.07.06 31.01.06
unaudited audited unaudited
£000 £000 £000
Overseas taxation (215) (253) (113)
suffered
Overseas taxation (31) (46) (43)
on Taiwan scrip
dividends
Total (246) (299) (156)
3. Return/(loss) per ordinary share
31.1.07 31.7.06 31.1.06
unaudited audited unaudited
revenue capital total revenue capital total revenue capital total
Basic 0.15p 21.35p 21.50p (0.06p) 11.38p 11.32p (0.10p) 19.17p 19.07p
return
per
ordinary
share
Diluted - - - (0.06p) 11.38p 11.32p (0.10p) 18.86p 18.76p
return
per
ordinary
share
Basic returns per ordinary share are based on the revenue return on ordinary
activities after taxation of £144,000 (31.07.06: loss £60,000; 31.01.06: loss £
93,000), the capital return in the period of £21,151,000 (31.07.06: £
10,642,000; 31.01.06: £17,927,000) and the total return of £21,295,000
(31.07.06: £10,582,000; 31.01.06: £17,834,000) and on 99,050,696 ordinary
shares (31.07.06: 93,509,538; 31.01.06: 93,508,000) being the weighted average
number of shares in issue during the period.
In accordance with the provisions of Financial Reporting Standard ("FRS") 22,
the diluted return for the period ended 31 January 2006 were calculated on the
assumption that the warrants in issue were converted on the first day of the
financial period on a weighted average basis for the period over which they
were outstanding and that the proceeds from the conversion were used by the
Company to purchase its own shares at a fair market price.
As at 31 July 2006 the effect of the warrants outstanding on the first day of
the accounting period was not dilutive and hence they were not included in the
diluted returns.
4. Net Asset Value per ordinary share
The basic net asset value per ordinary share is based on net assets of £
140,835,000 (31.07.06: £99,077,000; 31.01.06: £106,329,000) and on 113,974,200
ordinary shares (31.07.06: 93,511,465; 31.01.06: 93,511,465), being the number
of ordinary shares in issue at the period end.
The diluted net asset value per ordinary share for the periods ended 31 July
2006 and 31 January 2006 were calculated on the assumption that the outstanding
warrants of 20,462,735 were exercised on these dates. This basis of calculation
is considered to be more appropriate than the basis given in FRS22 as it is
consistent with the calculation of fully diluted net asset value which is
prepared in accordance with the guidelines laid down by the Association of
Investment Companies. Shares of 8,272,224 and 12,190,511 were issued and
allotted on 12 and 14 December 2006 respectively.
5. Loan Facilities
A fixed rate unsecured loan from Lloyds TSB Bank PLC of US$18,000,000 was drawn
down on 27 September 2006 for a period of three years at an interest rate of
5.60% per annum. The loan is repayable on 25 September 2009.
The proceeds from the above loan were used to repay the loan from HSBC Bank plc
which matured on 27 September 2006.
6. Exercises of Warrants
On 12 and 14 December 2006, an aggregate of 20,462,735 ordinary shares of 25p
per share were issued and allotted, fully paid at a price of 100p, following
exercises of warrants in November and December 2006. The number of warrants in
issue as at 31 January 2007 was nil (31.07.06: 20,462,735; 31.01.06:
20,462,735).
7. Accounting Policies
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Company's annual report and financial
statements dated 31 July 2006.
8. Unaudited Financial Statements
The results for the six months to 31 January 2006 and 31 January 2007, which
are unaudited, constitute non-statutory accounts within the meaning of s240 of
the Companies Act 1985. The figures and financial information for the year
ended 31 July 2006 are extracted from the latest published financial
statements. These financial statements, on which the auditors gave an
unqualified report, have been delivered to the Registrar of Companies.
Copies of the interim report will be posted to shareholders as soon as
practicable. Copies will also be available to the public from the Company's
registered office, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth,
Surrey KT20 6RP.
Tuesday, 14th May 2024
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