Half-year Report

RNS Number : 1339J
Aberdeen Standard Asia Focus PLC
08 April 2020
 

ABERDEEN STANDARD ASIA FOCUS PLC

Legal Entity Identifier (LEI): 5493000FBZP1J92OQY70

 

ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS

for the six months ended 31 January 2020

 

INTERIM BOARD REPORT

 

Background

Since the period under review, which was for the six months ended 31 January 2020, the pandemic caused by the coronavirus ("Covid-19") has swept around the globe upending the commercial world in which your Company operates. This Statement should, therefore, be read in two parts. The first is a commentary on the period under review and the second, under "Outlook", an attempt to summarise where your Board, with very considerable input from Hugh Young and the team at Aberdeen Standard Investments Asia, sees the future, both for the region and for the portfolio of investments that the Company holds.

 

Some of you will have seen on the Company's website www.asia-focus.co.uk that we have recently introduced a podcast. The first was published on 13 March 2020 and featured Hugh Young discussing the current crisis, commenting on the fact that companies continue to operate and stressing once again that the principle that we have espoused for the last 25 years, of only investing in companies with good prospects, excellent management and strong balance sheets, should see us weather this storm and emerge strongly at the other end. We intend to publish a podcast on a regular basis. I would strongly recommend that shareholders who wish to be kept abreast of the Company's progress access them via the internet.

 

Even before the onset of the virus, global stock markets, Asia included, had a rollercoaster ride for the half year to 31 January 2020. Markets began on the back foot as US-China trade friction compounded worries about slowing global growth. Optimism returned after both sides resumed talks and reached a partial pact eventually. This was further helped by monetary policy easing worldwide, while we saw additional stimulus in Asia to shore up growth. However, sentiment soured again after the viral outbreak in Wuhan, China, which, as we know, spread across the region, before going wider.

 

Against this challenging backdrop, over the six month period to 31 January 2020 your Company's net asset value and share price fell by 8.3% and 6.2% respectively, compared to the MSCI Asia (ex-Japan) Smaller Companies Index decline of 6.8%. 

 

With continued focus on investing in quality companies, we saw this as a temporary dip. The portfolio is concentrated in financially robust companies which are often leaders within their sectors. Hugh Young and the team in Asia believe that these companies should be more resilient and better-positioned to ride through these difficult times. This remains evident in the Company's track record of delivering value to shareholders over several cycles. Notably, over the past 10 years to 31 January 2020, the Company's NAV total return was 210.8% compared to the return of 74.5% of the MSCI Asia (ex-Japan) Smaller Companies Index.

 

Overview for the period under review

Shares of Asian smaller companies fell more than their large-cap peers, in volatile trading, over the review period. Mounting recessionary fears hurt smaller companies in view of their greater domestic focus and the perception that they are higher risk. This was cast against slowing global trade, as China and the US continued to bicker. In particular, consumer demand suffered, while companies deferred their investment and expansion plans. Slowing consumption, coupled with benign inflation, allowed policymakers to lower interest rates, while governments attempted to pump prime their economies. After a prolonged lag, shares of Asian smaller companies rose in December. This proved short-lived, however, as the Covid-19 outbreak in Wuhan spread rapidly across Asia. Investors braced themselves for the worst, as the epidemic threatened to derail the nascent global growth recovery. Appetite for riskier assets waned, while oil and metal prices declined on worries about the impact on demand for such commodities.

 

What we have done in the portfolio and how it has performed

Although India faces the challenges of financial sector woes and softening growth, interest rate and corporate tax rate cuts have been supporting the corporate sector and the country remains home to some of the best-quality companies in the region. As a result, your Manager took the opportunity to invest in the initial public offering of Affle India, in which your Company participated as a cornerstone investor. The stock more than doubled in value until the virus spread to India. Affle is a consumer technology business, operating a data platform that helps direct digital advertising. It is a dominant player in India and is also well-placed to grow profitably in other emerging markets. Notably, the company has filed for new patents in the US and Singapore and continues to evolve the business to help support clients via several channels, be they online or offline. Other Indian holdings fared well too, such as property developer Prestige Estates after its successful fund raise and expectations over a potential REIT listing, and agri-business Godrej Agrovet which was boosted by good quarterly results. 

 

Your Company's holdings within the technology sector were also resilient despite the present challenges. Thai electric component maker Hana Microelectronics and Singapore chip-making equipment maker AEM Holdings were among the top performers. Both continued to track semiconductor stocks higher on growing optimism about prospects for a demand recovery. Meanwhile, Korea's software company Douzone Bizon advanced amid positive trends such as cloud migration and cybersecurity. Similarly, the largest online retailer in Taiwan, momo.com also rose. Where possible, your Manager took profits from shares that have done well, reinvesting the proceeds in other high-conviction stocks at compelling valuations. Given the digital transformations that are leading the way into the next decade, your Manager has been diligent in seeking out these niche companies, pleasingly with some success. Notably, this included Korea's Koh Young Technology. A global leader in 3D inspection for circuit boards, Koh Young is set to benefit from the growing penetration of its 3D-testing technology. Its potential is further underpinned by the increasing complexity of chip-making, driven by structural trends, such as 5G telecommunications, vehicle electrification, and artificial intelligence. In addition, the company is dominant in its niche market, has a broad customer base, and is highly profitable, with a net-cash balance sheet.

 

In contrast, your Company's holdings in Thailand were hurt by sluggish domestic conditions, weaker than expected economic data and concerns over the Covid-19 outbreak. That said, some of these companies, such as Aeon Thana and Tisco Financial, were among the better performers earlier in the review period and your Manager capitalised on the gains. The subsequent weakening in the stock market enabled your Manager to add to those that looked particularly compelling, such as Mega Lifesciences. Your Manager also participated in the public offering of bio-waste energy producer Absolute Clean Energy. The company has a good track record in operating 13 power plants, with 20 more in the pipeline. The conducive regulatory backdrop supports its ambitious growth plans, and your Manager was impressed by management's focus and technical know-how.

 

At the same time, your Manager continued to exit both smaller holdings at the tail-end of the portfolio that had a dimmer growth outlook, and more sizeable positions where valuations appeared full. To this end, your Manager completed the divestment of Sri Lankan conglomerate Aitken Spence and also sold Asia Satellite Telecom after accepting a takeover offer to take the company private. Other sales included Australian software developer Citadel Group and automobile parts and accessories manufacturer ARB Corp, as well as retailer Giordano and South India's Ramco Cements.

 

How businesses have been faring over recent months

With everything changing rapidly since the end of the review period, it is important to keep our shareholders as well informed as possible. We will be giving regular updates on our website www.asia-focus.co.uk. At the time of writing there is considerable stress across businesses worldwide. It has notably affected the hotel, restaurant and entertainment sectors, where much traffic has ceased. We have various holdings in the hotel sector notably in New Zealand via CDL Investments and Millennium & Copthorne, as well as in Malaysia via Shangri-la. Thankfully these companies are well established, with strong parentage and not in an investment phase; so whilst the pain on the profit and loss account will be felt sharply, the balance sheets should be resilient. Your Company also owns shares in Lemon Tree in India, a more nascent hotel chain undergoing rapid expansion with consequently more leverage. Given the uncertain environment and the difficulty in predicting how long Covid-19 may impact travel in India, we have decided to reduce the position.

 

The strain obviously goes deep and no business is unaffected. Banks, financial institutions and landlords face the prospect of higher bad debts. Our holdings in these sectors will not escape unscathed but again are typically the strongest and most conservative in their peer group. On a brighter note, albeit within a very dark cloud, the falling price of energy is a benefit to most of the economies in which we invest. It has of course fallen in large part because of the recessionary impact of Covid-19 but will be a welcome mitigating factor. It is worth stressing that within the portfolio we have minimal exposure to energy.

 

Electronic Communications for Registered Shareholders

The Board is moving to more electronic-based forms of communication with its registered shareholders. Increased use of electronic communications should be a more cost-effective, faster and more environmentally friendly way of providing information to shareholders. Registered shareholders will therefore find enclosed with this Half Yearly Report a letter containing our electronic communications proposals and an opportunity to supply an email address to the Registrars. Registered shareholders who wish to continue to receive hard copies of documents and communications by post are encouraged to send back their replies as soon as possible but in any event by 31 July 2020.  Shareholders are free to amend their mailing preferences at any time in the future simply by contacting the Company's registrar.

 

Shareholders who hold their shares through the Aberdeen Standard Investment Trust Share Plan, ISA and Children's Plan (Planholders) will continue to receive all documentation by post in hard copy for the time being. The Plan Manager is currently assessing how to adopt more electronically based communications within these savings plans and Planholders will be contacted directly with more detail in due course.

 

Share Capital Management and Gearing

During the period 918,256 Ordinary shares were purchased in the market at a discount to the prevailing ex-income NAV and transferred to treasury. After the period end a further 292,500 Ordinary shares have been purchased into treasury.  Your Board continues to use share buy backs in periods of market uncertainty to both reduce the volatility of any discount and to modestly enhance the NAV for shareholders. Conversely, in times of market optimism, shares have been issued to the market at a premium to NAV. 

 

The Company's net gearing at 31 January 2020 was 11.3%. The majority of the gearing is provided by the Convertible Unsecured Loan Stock redeemable in 2025, of which approximately £36.7m million remains outstanding.  The Company also has a three-year multicurrency revolving loan facility and a term loan facility in an aggregate amount of $25 million with The Royal Bank of Scotland International Limited ("RBSI"). Under the term loan facility $12.5 million has been drawn down and fixed until June 2020 at an all-in rate of 2.506%. A further $10 million has been drawn down under the $12.5m revolving credit facility.  In the current volatile market conditions, the Board and Manager are monitoring the level of gearing closely.  On 25 March 2020 the Company announced that it had amended its loan facility to reduce the Company's minimum Net Asset Value covenant from £300m to £250m with immediate effect. At 3 April 2020, the latest practicable date, the net gearing stood at 15.8%.

 

Outlook

With events unfolding rapidly, it is more difficult than ever to make firm predictions.  Governments across the world are now focusing on the health and safety of their citizens, while also introducing a variety of measures to mitigate the economic fallout.  Typically, such measures have so far been a combination of a further lowering of interest rates, which we have seen across many countries, and targeted relief to particularly affected sectors.  Clearly, as what short-term evidence is available demonstrates, economies have slowed dramatically as end demand has fallen sharply. Restrictions on travel and public assembly have notably hit tourism, consumption and retail.  Although the consequences are often felt most acutely by small and medium enterprises (SMEs), the companies in which we invest are not in as precarious a position as SMEs in general, being to a large extent helped by their strong balance sheets and industry-leading positions.

 

Although it is impossible to predict timelines, the case of China does suggest how countries can tackle the problem and start to normalise. Rigorous measures imposed early on appear now to mean that daily life in China is returning to normal, with restaurants and factories reopening. Clearly, international travel restrictions still apply, and these are likely to apply for a while, to prevent re-importation of the virus. With other Asian countries taking similar measures, notably Singapore and South Korea, we see this as being the pattern emerging across the region as the year progresses.

 

Despite having seen stock markets fall rapidly and precipitately, we maintain our long-term confidence in the companies we hold. Their balance sheets are resilient and the services or products they furnish are the future in what is the world's most dynamic region. We believe that the structural argument for investment in smaller companies in Asia is as strong as ever.

 

At close on 3 April 2020, the latest practicable date, the net asset value per Ordinary share was 891.5p and the share price was 752.0p, representing falls of 24.1% and 29.1% respectively since the period end.

 

Principal Risks and Uncertainties

The principal risks and uncertainties affecting the Company are set out in detail on pages 8 and 9 of the Annual Report and Financial Statements for the year ended 31 July 2019 and these have not changed. They can be summarised under the following headings:

 

-  Investment Strategy and Objectives;

-  Investment Portfolio and Investment Management Risks;

-  Financial Obligations;

-  Financial and Regulatory;

-  Operational;

-  Investment in Unlisted Securities; and

-  Market and F/X Risks.

 

Although the uncertainty surrounding Brexit has temporarily abated there may remain potential issues surrounding the certainty and/or timing of future withholding tax repayments following the expiry of transitional arrangements in January 2021.

 

The Board notes that there are a number of contingent risks stemming from the Covid-19 pandemic that may impact the operation of the Company. These include investment risks surrounding the companies in the portfolio such as employee absence, reduced demand, reduced turnover and supply chain breakdowns. The Manager will continue to review carefully the composition of the Company's portfolio and to be pro-active in taking investment decisions where necessary. Operationally, Covid-19 is also affecting the suppliers of services to the Company including the Manager and other key third parties. To date these services have continued to be supplied seamlessly and the Board will continue to monitor arrangements in the form of regular updates from the Manager.

 

In all other respects, the Company's principal risks and uncertainties have not changed materially since the date of the 2019 Annual Report.

 

Going Concern

The Company's assets consist of a diverse portfolio of listed equities which in most circumstances are realisable within a short timescale. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the next 12 months. Accordingly, we continue to adopt the going concern basis in preparing the financial statements.

 

The Company has a USD$25 million loan facility with RBSI which is due to mature in June 2020.  At the time of writing, $22.5m (£18.2m) remains drawn down under the loan.  In advance of the maturity the Directors will review options to replace the facility. At this stage, it is too early to confirm that the facility will be renewed. If acceptable terms are available, the Company expects to continue to access a similarly sized level of gearing. Should the Board decide not to replace the facility, any maturing debt would be repaid through the proceeds of equity sales. Based upon the latest liquidity analysis of the portfolio the loans can be repaid in full subject to usual exchange settlement timeframes.

 

The Directors have carefully considered the financial position of the Company with particular attention to the economic and social impacts of the Covid-19 pandemic.  As indicated above and in the Chairman's Statement, Covid-19 presents significant challenges to all of the countries within the investment region as well as the rest of the world.  It is too early to be able to assess the longer term impacts on the individual companies in the portfolio, however, the Board takes comfort from the resilience of the balance sheets of those companies.

 

Directors' Responsibility Statement

The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

 

-  the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);

-  the Interim Board Report (constituting the interim management report) includes a fair review of the information required by rule 4.2.7R of the UK Listing Authority Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related-party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).

 

 

Nigel Cayzer,

Chairman

7 April 2020

 

 

 

 

FINANCIAL HIGHLIGHTS

 


31 January 2020

31 July 2019

% change

Total assets{A}

£439,893,000

£496,916,000

-11.5

Net asset value per Ordinary share

1,173.81p

1,300.56p

-9.7

Share price per Ordinary share (mid)

1,060.00p

1,150.00p

-7.8

Discount to net asset value per Ordinary share{B}

9.7%

11.6%


Net gearing{B}

11.3%

9.9%


Ongoing charges ratio{B}

1.14%

1.16%



{A}   Total assets less current liabilities (excluding prior charges such as bank loans) as per the Statement of Financial Position.

{B}   Considered to be an Alternative Performance Measure as defined below.

 

 

PERFORMANCE

 

Net asset value total return per Ordinary share{A}

Share price total return per Ordinary share{A}

MSCI AC Asia Pacific ex Japan Index total return

Six months ended 31 January 2020


Six months ended 31 January 2020

Six months ended 31 January 2020

-8.3%


-6.2%


-3.7%


Year ended 31 July 2019

+7.1%

Year ended 31 July 2019

+11.4%

Year ended 31 July 2019

+5.7%







MSCI AC Asia Pacific ex Japan Small Cap Index total return


Discount to net asset value{A}

Ongoing charges ratio{A}

Six months ended 31 January 2020

As at 31 January 2020


As at 31 January 2020


-6.8%


9.7%


1.14%


Year ended 31 July 2019

-0.5%

As at 31 July 2019

11.6%

As at 31 July 2019

1.16%


{A} Considered to be an Alternative Performance Measure as defined below.

 

 



CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 



Six months ended

Six months ended



 31 January 2020

 31 January 2019



Revenue

Capital

Total

Revenue

Capital

Total


Notes

£'000

£'000

£'000

£'000

£'000

£'000

Losses on investments


-

(38,530)

(38,530)

-

(21,136)

(21,136)

Income

2

4,441

-

4,441

4,912

-

4,912

Exchange gains/(losses)


-

864

(91)

Investment management fees


(1,715)

-

(1,715)

(1,941)

-

(1,941)

Administrative expenses


(576)

-

(576)

(539)

-

(539)



______

______

______

______

______

______

Net return/(loss) before finance costs and taxation


2,150

(37,666)

(35,516)

2,432

(21,227)

(18,795)









Finance costs


(792)

-

(792)

(776)

-

(776)



______

______

______

______

______

______

Net return/(loss) before taxation


1,358

(37,666)

(36,308)

1,656

(21,227)

(19,571)









Taxation

3

(229)

(980)

(1,209)

(249)

(529)

(778)



______

______

______

______

______

______

Return/(loss) attributable to equity shareholders


1,129

(38,646)

(37,517)

1,407

(21,756)

(20,349)



______

______

______

______

______

______

Return/(loss) per share (pence)

4







Basic


3.37

(115.48)

(112.11)

4.05

(62.67)

(58.62)



______

______

______

______

______

______

Diluted


n/a

n/a

n/a

n/a

n/a

n/a



______

______

______

______

______

______









The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company.

There is no other comprehensive income and therefore the return attributable to equity shareholders is also the total comprehensive income for the period.

All revenue and capital items in the above statement derive from continuing operations.

The accompanying notes are an integral part of the condensed financial statements.

 

 



CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

 



As at

As at



31 January 2020

31 July 2019


Notes

£'000

£'000

Non-current assets




Investments at fair value through profit or loss


432,899

484,709



_________

_________

Current assets




Debtors and prepayments


991

3,617

Cash and short-term deposits


8,138

10,239



_________

_________



9,129

13,856



_________

_________

Creditors: amounts falling due within one year




Bank loans

6

(17,064)

(20,407)

Other creditors


(2,135)

(1,649)



_________

_________



(19,199)

(22,056)



_________

_________

Net current liabilities


(10,070)

(8,200)



_________

_________

Total assets less current liabilities


422,829

476,509





Non-current liabilities




2.25% Convertible Unsecured Loan Stock 2025

7

(35,385)

(35,499)



_________

_________

Net assets


387,444

441,010



_________

_________

Capital and reserves




Called-up share capital

8

10,434

10,430

Capital redemption reserve


2,062

2,062

Share premium account


60,365

60,130

Equity component of 2.25% Convertible Unsecured Loan Stock 2025

7

1,057

1,057

Capital reserve

9

303,214

351,781

Revenue reserve


10,312

15,550



_________

_________

Equity shareholders' funds


387,444

441,010



_________

_________

Net asset value per share (pence)




Basic

10

1,173.81

1,300.56



_________

_________

Diluted

10

n/a

n/a



_________

_________

 

 



CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

 

Six months ended 31 January 2020










Capital

Share

Equity





Share

redemption

premium

component

Capital

Revenue



capital

reserve

account

CULS 2025

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 July 2019

10,430

2,062

60,130

1,057

351,781

15,550

441,010

Purchase of own shares to treasury

-

-

-

-

(9,913)

-

(9,913)

Conversion of 2.25% Convertible Unsecured Loan Stock 2025 (note 7)

4

-

235

-

-

-

239

Issue costs of 2.25% Convertible Unsecured Loan Stock 2025

-


-

-

(8)

-

(8)

(Loss)/return after taxation

-

-

-

-

(38,646)

1,129

(37,517)

Dividends paid (note 5)

-

-

-

-

-

(6,367)

(6,367)


_____

_____

_____

_____

_____

_____

_____

Balance at 31 January 2020

10,434

2,062

60,365

1,057

303,214

10,312

387,444


_____

_____

_____

_____

_____

_____

_____









Six months ended 31 January 2019










Capital

Share

Equity





Share

redemption

premium

component

Capital

Revenue



capital

reserve

account

CULS 2025

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 July 2018

10,429

2,062

60,076

1,054

346,123

13,962

433,706

Purchase of own shares to treasury

-

-

-

-

(6,817)

-

(6,817)

Conversion of 2.25% Convertible Unsecured Loan Stock 2025 (note 7)

-

-

34

-

-

-

34

Issue costs of 2.25% Convertible Unsecured Loan Stock 2025

-


-

-

(17)

-

(17)

(Loss)/return after taxation

-

-

-

-

(21,756)

1,407

(20,349)

Dividends paid (note 5)

-

-

-

-

-

(5,879)

(5,879)


_____

_____

_____

_____

_____

_____

_____

Balance at 31 January 2019

10,429

2,062

60,110

1,054

317,533

9,490

400,678


_____

_____

_____

_____

_____

_____

_____

 

 



CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)

 


31 January 2020

31 January 2019


£'000

£'000

Operating activities



Net loss before finance costs and taxation

(35,516)

(18,795)

Adjustments for:



Dividend income

(4,421)

(4,884)

Interest income

(19)

(25)

Other income

(1)

(3)

Dividends received

5,141

5,371

Interest received

20

22

Other income received

1

3

Interest paid

(668)

(673)

Losses on investments

38,530

21,136

Currency (gains)/losses

(864)

91

Increase in prepayments

(24)

(15)

(Increase)/decrease in other debtors

(8)

52

Decrease in accruals

(1)

(124)

Stock dividends included in investment income

(160)

(152)

Withholding tax suffered

(272)

(288)


__________

__________

Net cash flow from operating activities

1,738

1,716




Investing activities



Purchases of investments

(38,145)

(79,021)

Sales of investments

53,129

93,708

Capital Gains Tax on sales

(44)

(339)


__________

__________

Net cash flow from investing activities

14,940

14,348




Financing activities



Purchase of own shares to treasury

(9,999)

(6,817)

Issue costs refunded/(paid) on 2.25% Convertible Unsecured Loan Stock 2025

65

(17)

(Repayment)/drawdown of loan

(2,037)

1,966

Equity dividends paid

(6,367)

(5,883)


__________

__________

Net cash flow used in financing activities

(18,338)

(10,751)


__________

__________

Increase in cash and cash equivalents

(1,660)

5,313


__________

__________

Analysis of changes in cash and cash equivalents during the period



Opening balance

10,239

9,398

Increase in cash and cash equivalents as above

(1,660)

5,313

Effect of exchange rate fluctuations on cash held

(441)

(204)


__________

__________

Closing balance

8,138

14,507


__________

__________

 

 

Notes to the Financial Statements

For the period ended 31 January 2020

 

1.

Accounting policies


Basis of accounting. The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice (SORP) for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts', issued in October 2019 (The AIC SORP). They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.


The interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements.

 

2.

Income





Six months ended

Six months ended



31 January 2020

31 January 2019



£'000

£'000


Income from investments




Overseas dividends

4,162

4,407


Overseas interest

15

192


REIT income

-

49


Stock dividends

160

152


UK dividend income

84

84



__________

__________



4,421

4,884



__________

__________


Other income




Other income

1

3


Deposit interest

19

25



__________

__________



20

28



__________

__________


Total income

4,441

4,912



__________

__________

 

3.

Taxation. The taxation charge for the period within revenue represents withholding tax suffered on overseas dividend income. The taxation charge for the period within capital represents capital gains tax on Indian equity sales.

 

4.

Return/(loss) per Ordinary share





Six months ended

Six months ended



 31 January 2020

 31 January 2019



p

p


Basic




Revenue return

3.37

4.05


Capital loss

(115.48)

(62.67)



__________

__________


Total return

(112.11)

(58.62)



__________

__________






The figures above are based on the following:





Six months ended

Six months ended



 31 January 2020

 31 January 2019



£'000

£'000


Revenue return

1,129

1,407


Capital loss

(38,646)

(21,756)



__________

__________


Total return

(37,517)

(20,349)



__________

__________


Weighted average number of shares in issue{A}

33,466,971

34,715,441



__________

__________







Six months ended

Six months ended



 31 January 2020

 31 January 2019


Diluted{B}

p

p


Revenue return

n/a

n/a


Capital return

n/a

n/a



__________

__________


Total return

n/a

n/a



__________

__________


The figures above are based on the following:





£'000

£'000


Revenue return

1,123

1,965


Capital loss

(37,709)

(21,756)



__________

__________


Total return

(36,586)

(19,791)



__________

__________


Number of dilutive shares

2,517,515

2,524,983



__________

__________


Diluted shares in issue{AB}

35,984,486

37,240,424



__________

__________






{A}   Calculated excluding shares held in treasury.


{B}   The calculation of the diluted total, revenue and capital returns per Ordinary share is carried out in accordance with IAS 33, "Earnings per Share". For the purpose of calculating total, revenue and capital returns per Ordinary share, the number of Ordinary shares used is the weighted average number used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all 2.25% Convertible Unsecured Loan Stock 2025 (CULS). The calculations indicate that the exercise of CULS would result in an increase in the weighted average number of Ordinary shares of 2,517,515 (31 January 2019 - 2,524,983) to 35,984,486 (31 January 2019 - 37,240,424) Ordinary shares.




For the six months ended 31 January 2020 the assumed conversion for potential Ordinary shares was dilutive to the revenue return per Ordinary share (31 January 2019 - non-dilutive) and non-dilutive to the capital return per Ordinary share (31 January 2019 - no difference). Where dilution occurs, the net returns are adjusted for items relating to the CULS. Accrued CULS finance costs for the period and unamortised issue expenses are added back. Total earnings for the period are tested for dilution. Once dilution has been determined individual revenue and capital earnings are adjusted.

 

5.

Dividends





Six months ended

Six months ended



31 January 2020

31 January 2019



£'000

£'000


Final dividend for 2019 - 14.00p (2018 - 13.00p)

4,691

4,499


Special dividend for 2019 - 5.00p (2018 - 4.00p)

1,676

1,384


Overpaid dividends

-

(4)



__________

__________



6,367

5,879



__________

__________

 

6.

Bank loans. The Company currently has a $25,000,000 revolving facility agreement with The Royal Bank of Scotland International Limited.  At the period end, $12,500,000 (31 July 2019 - $12,500,000) was drawn down from the term loan facility at a fixed interest rate of 2.506% until 8 June 2020. As at 31 January 2020 $10,000,000 (31 July 2019 - $12,500,000) was drawn down from the revolving facility at a rate of 2.493% and matured on 21 February 2020. The terms of the loan facilities contain covenants that the minimum net assets of the Company are £300,000,000, the percentage of borrowings against net assets is less than 20%, and the portfolio contains a minimum of forty five eligible investments (investments made in accordance with the Company's investment policy). All covenants were met during the period. On 25 March 2020 the Company announced that it had amended its three-year multi currency revolving credit facility with the Royal Bank of Scotland International ("Loan Facility") to reduce the Company's minimum net assets covenant from £300,000,000 to £250,000,000 with immediate effect.

 

7.

Non-current liabilities - 2.25% Convertible Unsecured Loan Stock 2025 ("CULS")







Liability

Equity



Nominal

 component

 component



£'000

£'000

£'000


Balance at beginning of period

36,945

35,499

1,057


Conversion of CULS into Ordinary shares

(239)

(239)

-


Notional interest on CULS

-

77

-


Amortisation of issue expenses

-

48

-



__________

__________

__________


Balance at end of period

36,706

35,385

1,057



__________

__________

__________







The 2.25% Convertible Unsecured Loan Stock 2025 ("CULS") can be converted at the election of holders into Ordinary shares during the months of May and November each year throughout its life until 31 May 2025 at a rate of one Ordinary share for every 1,465.0p nominal of CULS. Interest is paid on the CULS on 31 May and 30 November each year. 100% of the interest is charged to revenue in line with the Board's expected long-term split of returns from the investment portfolio of the Company.


In the event of a winding-up of the Company the rights and claims of the Trustee and CULS holders would be subordinate to the claims of all creditors in respect of the Company's secured and unsecured borrowings, under the terms of the Trust Deed.


During the period ended 31 January 2020 the holders of £238,951 of 2.25% CULS 2025 exercised their right to convert their holdings into Ordinary shares. Following the receipt of the exercise instructions, the Company converted £238,951 (31 July 2019 - £54,768) nominal amount of CULS into 16,302 (31 July 2019 - 3,727) Ordinary shares.


As at 31 January 2020, there was £36,706,281 (31 July 2019 - £36,965,232) nominal amount of CULS in issue.

 

8.

Called-up share capital. During the six months ended 31 January 2020 918,256 (31 January 2019 - 652,000) Ordinary shares were bought back to be held in treasury at a total cost of £9,913,000 (31 January 2019 - £6,821,000). During the six months ended 31 January 2020 an additional 16,302 (31 July 2019 - 3,727) Ordinary shares were issued after £238,951 nominal amount of 2.25% Convertible Unsecured Loan Stock 2025 were converted at 1465.0p each (31 July 2019 - £54,768). The total consideration received was £nil (31 July 2019 - £nil). At the end of the period there were 41,735,313 (31 July 2019 - 41,719,011) Ordinary shares in issue, of which 8,727,918 (31 July 2019 - 7,809,662) were held in treasury.


Subsequent to the period end, a further 292,500 Ordinary shares were bought back to be held in treasury at a total cost of £3,063,000.

 

9.

Capital reserve. The capital reserve reflected in the Condensed Statement of Financial Position at 31 January 2020 includes gains of £117,542,000 (31 July 2019 - gains £169,910,000), which relate to the revaluation of investments held at the reporting date.

 

10.

Net asset value per equity share





As at

As at



31 January 2020

31 July 2019


Basic




Net assets attributable

£387,444,000

£441,010,000


Number of Ordinary shares in issue{A}

33,007,395

33,909,349


Net asset value per Ordinary share

1,173.81p

1,300.56p



__________

__________


Diluted{B}




Net assets attributable

£422,829,000

£476,509,000


Number of Ordinary shares

35,512,943

36,431,208


Net asset value per Ordinary share

n/a

n/a



__________

__________






{A}   Excludes shares in issue held in treasury.




{B}   The diluted net asset value per Ordinary share has been calculated on the assumption that £36,706,281 (31 July 2019 - 36,945,232)  2.25% Convertible Unsecured Loan Stock 2025 ("CULS") are converted at 1,465.0p per share, giving a total of 35,512,943 (31 July 2019 - 36,431,208) Ordinary shares. Where dilution occurs, the net assets are adjusted for items relating to the CULS.


Net asset value per share - debt converted. In accordance with the Company's understanding of the current methodology adopted by the AIC, convertible bond instruments are deemed to be 'in the money' if the cum income (debt at fair value) net asset value ("NAV") exceeds the conversion price of 1,465.0p per share. In such circumstances a net asset value is produced and disclosed assuming the convertible debt is fully converted. At 31 January 2020 the NAV was 1,173.81p and thus the CULS were not 'in the money' (31 July 2019 - 1,300.56p, not 'in the money').

 

11.

Transaction costs. During the period 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 gains on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:







Six months ended

Six months ended



31 January 2020

31 January 2019



£'000

£'000


Purchases

86

171


Sales

43

261



__________

__________



129

432



__________

__________

 

12.

Analysis of changes in net debt








At




At



31 July

Currency

Cash

Non-cash

31 January



2019

differences

flows

movements

2020



£'000

£'000

£'000

£'000

£'000


Cash and short-term deposits

10,239

(441)

(1,660)

-

8,138


Debt due within one year

(20,407)

1,312

2,037

(6)

(17,064)


Debt due after more than one year

(35,499)

-

-

114

(35,385)



_________

_________

_________

_________

_________



(45,667)

871

377

108

(44,311)



_________

_________

_________

_________

_________



At




At



31 July

Currency

Cash

Non-cash

31 January



2018

differences

flows

movements

2019



£'000

£'000

£'000

£'000

£'000


Cash and short-term deposits

9,398

(204)

5,313

-

14,507


Debt due within one year

(7,623)

86

(1,966)

-

(9,503)


Debt due after more than one year

(44,715)

27

-

(103)

(44,791)



_________

_________

_________

_________

_________



(42,940)

(91)

3,347

(103)

(39,787)



_________

_________

_________

_________

_________




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.

 

13.

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 Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:









Level 1

Level 2

Level 3

Total


As at 31 January 2020

£'000

£'000

£'000

£'000


Financial assets/(liabilities) at fair value through profit or loss






Quoted equities

432,899

-

-

432,899



________

________

________

________


Net fair value

432,899

-

-

432,899



________

________

________

________









Level 1

Level 2

Level 3

Total


As at 31 July 2019

£'000

£'000

£'000

£'000


Financial assets/(liabilities) at fair value through profit or loss






Quoted equities

484,709

-

-

484,709



________

________

________

________


Net fair value

484,709

-

-

484,709



________

________

________

________








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.

 

14.

Related party disclosures. Mr Gilbert is a director of Standard Life Aberdeen plc. Both Mr Gilbert and his alternate, Mr Young are directors of its subsidiary ASI Asia which has been delegated, under an agreement with ASFML, to provide management services to the Company. Neither Mr Gilbert nor Mr Young are directors of ASFML.


Mr Yea is chairman of Equiniti Group plc which acts as Registrar and Receiving Agent to the Company. Mr Yea is excluded from participation in all discussions relating to the appointment of Equiniti.


Transactions with the Manager. From 1 August 2018 until 31 October 2018 the investment management fee was payable monthly in arrears based on an annual amount of 1.0% calculated on the average net asset value of the Company over a 24-month period, valued monthly. The fee was calculated by reference to the value of the Company's net assets (gross assets less liabilities excluding the amount of any loan facilities or overdraft facilities drawn down). With effect from 1 November 2018 the investment management fee has been payable monthly in arrears at 0.08% based on the market capitalisation of the company multiplied by the number of shares in issue (less those held in Treasury) at the month end. During the period £1,715,000 (31 January 2019 - £1,941,000) of investment management fees were charged, with a balance of £564,000 (31 January 2019 - £565,000) being payable to ASFML at the period end.  Investment management fees are charged 100% to revenue.


The Company also has a management agreement with ASFML for, inter alia, the provision of both administration and promotional activities services which are, in turn, delegated to AAM and Aberdeen Asset Managers Limited ('AAML') respectively. The administration fee is payable quarterly in advance and is adjusted annually to reflect the movement in the Retail Price Index. It is based on a current annual amount of £98,000 (31 January 2019 - £95,000). During the period £48,000 (31 January 2019 - £47,000) of fees were charged, with a balance of £24,000 (31 January 2019 - £24,000) payable to AAM at the period end. The promotional activities costs are based on a current annual amount of £219,000 (31 January 2019 - £219,000), payable quarterly in arrears. During the period £110,000 (31 January 2019 - £110,000) of fees were charged, with a balance of £128,000 (31 January 2019 - £73,000) being payable to AAML at the period end.

 

15.

Segmental information. The Company is engaged in a single segment of business, which is to invest in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

 

16.

Subsequent events. Subsequent to the period end, the Company's NAV has suffered as a result of a decline in stockmarket values resulting from the COVID-19 pandemic. At the date of this Report the latest NAV per share was 891.49p as at the close of business on 3 April 2020, a decline of 24.1% compared the NAV per share of 1,173.81p at the period end.


The Chairman's Statement above of the notes future uncertainties and risks resulting from COVID-19. The Directors have carefully considered the financial position of the Company with particular attention to the economic and social impacts of the Covid-19 pandemic. As indicated above and in the Chairman's Statement, Covid-19 presents significant challenges to all of the countries within the investment region as well as the rest of the world. It is too early to be able to assess the longer term impacts on the individual companies in the portfolio.

 

17.

Half-Yearly Report. The financial information in this Report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 July 2019 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.


Ernst & Young LLP has reviewed the financial information for the six months ended 31 January 2020 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

 

18.

This Half-Yearly Report was approved by the Board and authorised for issue on 7 April 2020.

 

Copies of the Company's Half Yearly Report for the six months ended 31 January 2020 will be posted to shareholders in April 2020 and will be available thereafter on the Company's website:
asia-focus.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.

 

* Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

 

Aberdeen Asset Management PLC

Secretaries

7 April 2020

 

 

ALTERNATIVE PERFORMANCE MEASURES

Alternative Performance Measures ("APMs") 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. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.

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. NAV total return involves a calculation that invests 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 a calculation that invests the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.

The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the six months ended 31 January 2020 and the year ended 31 January 2019 and total return for the periods.






Dividend


Share

31 January 2020

rate

NAV

price

31 July 2019

N/A

1,300.56p

1,150.00p

14 November 2019

19.00p

1,206.37p

1,055.00p

31 January 2020

N/A

1,173.81p

1,060.00p



________

________

Total return


-8.3%

-6.2%



________

________






Dividend


Share

31 July 2019

rate

NAV

price

31 July 2018

N/A

1,231.90p

1,050.00p

20 December 2018

17.00p

1,159.30p

1,000.00p

31 July 2019

N/A

1,300.56p

1,150.00p



________

________

Total return


+7.1%

+11.4%



________

________





Discount to net asset value per Ordinary share. The difference between the share price of 1060.00p (31 July 2019 - 1,150.00p) and the net asset value per Ordinary share of 1,173.81p (31 July 2019 - 1,300.56p) expressed as a percentage of the net asset value per Ordinary share.

Net gearing. Net gearing measures the total borrowings of £52,449,000 (31 July 2019 - £55,906,000) less cash and cash equivalents of £8,669,000 (31 July 2019 - £12,306,000) divided by shareholders' funds of £387,444,000 (31 July 2019 - £441,010,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due to brokers at the period end of £531,000 (31 July 2019 - £2,067,000) as well as cash and cash equivalents of £8,138,000 (31 July 2019 - £10,239,000).

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 net asset values with debt at fair value throughout the year. The ratio as at 31 January 2020 is based on forecast ongoing charges for the year ending 31 July 2020.





31 January 2020

31 July 2019

Investment management fees (£'000)

3,394

3,711

Administrative expenses (£'000)

1,154

1,091

Less: non-recurring charges (£'000)

-

(3)


________

________

Ongoing charges (£'000)

4,548

4,799


________

________

Average net assets (£'000)

398,060

412,437


________

________

Ongoing charges ratio

1.14%

1.16%


________

________


The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which include finance costs and transaction charges.

 



 

INVESTMENT PORTFOLIO





As at 31 January 2020














Total




Valuation

assets

Company

Industry

Country

£'000

%

Bank OCBC NISP

Banks

Indonesia

17,716

4.0

John Keells Holdings

Industrial Conglomerates

Sri Lanka

15,370

3.5

Asian Terminals

Transportation Infrastructure

Philippines

13,489

3.1

Cebu Holdings

Real Estate Management & Development

Philippines

12,901

2.9

Oriental Holdings

Automobiles

Malaysia

12,087

2.8

Ultrajaya Milk Industry & Trading

Food Products

Indonesia

11,881

2.7

Hana Microelectronics (Foreign)

Electronic Equipment, Instruments & Components

Thailand

11,780

2.7

AEM Holdings

Semiconductors & Semiconductor Equipment

Singapore

11,767

2.7

M.P. Evans Group

Food Products

United Kingdom

11,762

2.7

Millennium & Copthorne Hotels New Zealand{A}

Hotels, Restaurants & Leisure

New Zealand

11,428

2.6

Top ten investments



130,181

29.7

Sanofi India

Pharmaceuticals

India

11,091

2.5

Dah Sing Financial Holdings

Banks

Hong Kong

10,766

2.5

Aegis Logistics

Oil, Gas & Consumable Fuels

India

10,763

2.4

Godrej Agrovet

Food Products

India

10,706

2.4

Convenience Retail Asia

Food & Staples Retailing

Hong Kong

10,595

2.4

MOMO.com

Internet & Direct Marketing Retail

Taiwan

10,480

2.4

First Sponsor Group{A}

Real Estate Management & Development

Singapore

10,059

2.3

City Union Bank

Banks

India

9,499

2.2

Yoma Strategic Holdings

Real Estate Management & Development

Myanmar

9,216

2.1

AEON Credit Service (M)

Consumer Finance

Malaysia

8,903

2.0

Top twenty investments



232,259

52.9

Tisco Financial Group (Foreign)

Banks

Thailand

8,691

2.0

Park Systems Corporation

Electronic Equipment, Instruments & Components

South Korea

8,593

2.0

Nam Long Invst Corporation

Real Estate Management & Development

Vietnam

8,572

1.9

Lemon Tree Hotels

Hotels, Restaurants & Leisure

India

8,493

1.9

Mega Lifesciences (Foreign)

Pharmaceuticals

Thailand

8,476

1.9

Shangri-La Hotels Malaysia

Hotels, Restaurants & Leisure

Malaysia

8,277

1.9

Eastern Water Resources Development & Management (Foreign)

Water Utilities

Thailand

7,991

1.8

United International Enterprises

Food Products

Denmark

7,967

1.8

Bukit Sembawang Estates

Real Estate Management & Development

Singapore

7,878

1.8

Precision Tsugami China Corporation

Machinery

China

7,417

1.7

Top thirty investments



314,614

71.6

Thai Stanley Electric (Foreign)

Auto Components

Thailand

7,226

1.6

Kansai Nerolac Paints

Chemicals

India

7,150

1.6

AEON Thana Sinsap Thailand (Foreign)

Consumer Finance

Thailand

6,873

1.6

Sporton International

Professional Services

Taiwan

6,863

1.6

United Plantations

Food Products

Malaysia

6,535

1.5

Affle India

Media

India

6,164

1.4

Sunonwealth Electric Machinery Industry

Machinery

Taiwan

5,747

1.3

FPT Corporation

Electronic Equipment, Instruments & Components

Vietnam

5,623

1.3

AEON Credit Service (Asia)

Consumer Finance

Hong Kong

5,515

1.3

SBS Transit

Road & Rail

Singapore

5,418

1.2

Top forty investments



377,728

86.0

AKR Corporindo

Trading Companies & Distributors

Indonesia

5,181

1.2

Public Financial Holdings

Banks

Hong Kong

4,611

1.0

Douzone Bizon

Software

South Korea

4,560

1.0

Pacific Basin Shipping

Marine

Hong Kong

4,503

1.0

Koh Young Technology

Semiconductors & Semiconductor Equipment

South Korea

4,496

1.0

AEON Co (M)

Multiline Retail

Malaysia

4,039

0.9

Prestige Estates Projects

Real Estate Management & Development

India

3,834

0.9

NZX

Capital Markets

New Zealand

3,801

0.9

Cyient

Software

India

3,556

0.8

Absolute Clean Energy (ACE)

Independent Power and Renewables

Thailand

3,431

0.8

Top fifty investments



419,740

95.5

Kingmaker Footwear Holdings

Textiles, Apparel & Luxury Goods

Hong Kong

1,994

0.5

Manulife Holdings

Insurance

Malaysia

1,905

0.4

DFCC Bank

Banks

Sri Lanka

1,816

0.4

AEON Stores Hong Kong

Multiline Retail

Hong Kong

1,452

0.3

Goodyear Thailand (Foreign)

Auto Components

Thailand

1,253

0.3

Thaire Life Assurance (Foreign)

Insurance

Thailand

1,238

0.3

ORIX Leasing Pakistan

Consumer Finance

Pakistan

1,076

0.2

Straits Trading Company

Metals & Mining

Singapore

868

0.2

CDL Investments New Zealand

Real Estate Management & Development

New Zealand

705

0.2

YNH Property

Real Estate Management & Development

Malaysia

516

0.1

Top sixty investments



432,563

98.4

G3 Exploration

Oil, Gas & Consumable Fuels

China

131

-

Mustika Ratu

Personal Products

Indonesia

120

-

Wintermar Offshore Marine

Energy Equipment & Services

Indonesia

85

-

Total investments



432,899

98.4

Net current assets excluding bank loans



6,994

1.6

Total assets{B}



439,893

100.0






{A} Holding includes investment in both common and preference lines.

{B} Total assets less current liabilities excluding bank loans.

 

 

INDEPENDENT REVIEW REPORT TO ABERDEEN STANDARD ASIA FOCUS PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2020 which comprises a Condensed Statement of Comprehensive Income, Condensed Statement of Financial Position, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and the related Notes 1 to 18.  We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. As disclosed in note 1, the annual financial statements of the company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Financial Reporting Standard (FRS)104 'Interim Financial Reporting'.

 

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Emphasis of matter - Effects of COVID-19

We draw attention to Note 16 of the financial statements, which describes the economic consequences the company is facing as a result of the financial markets impacts of Covid-19. Our opinion is not modified in respect of this matter.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2020 is not prepared, in all material respects, in accordance with FRS 104 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Services Conduct Authority.

 

Ernst & Young LLP,

London

7 April 2020


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