Half-year Report

RNS Number : 7719X

Aberdeen New India Invest Trust PLC

29 November 2017

 

ABERDEEN NEW INDIA INVESTMENT TRUST PLC

Legal Entity Identifier (LEI): 549300D2AW66WYEVKF02

UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

FINANCIAL SUMMARY AND PERFORMANCE

	30 September 2017	30 September 2016	% change
Total shareholders' funds (£'000)	290,129	259,897	+ 11.6
Share price (mid-market)	444.75p	380.75p	+ 16.8
Net asset value per share	491.16p	439.98p	+ 11.6
Discount to net asset value	9.4%	13.5%
Ongoing charges ratio {A}	1.25%	1.36%
Rupee to Sterling exchange rate	87.6	86.5	- 1.3
{A} Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses (annualised) divided by the average cum income net asset value throughout the year. The ratio for 30 September 2017 is based on forecast ongoing charges for the year ending 31 March 2018.

Performance (total return)	Six months ended	Year ended
	30 September 2017	31 March 2017
	%	%
Share price	+ 0.7	+ 40.9
Net asset value	+ 0.7	+ 34.7
MSCI India Index (Sterling adjusted)	- 1.3	+ 36.1

CHAIRMAN'S STATEMENT

Dear Shareholder

Performance

During the six months ended 30 September 2017, the Company's net asset value per Ordinary share ("NAV") increased by 0.7% to 491.16p while the Ordinary share price also gained by 0.7% to reach 444.75p. By comparison, the benchmark MSCI India Index fell by 1.3% over the same period.

Overview

Indian equities were relatively muted over the review period, after having outperformed their Asian counterparts for a period of time. The shine appeared to come off the asset class a little, as the implementation of the goods and services tax (GST), following on from the demonetisation exercise, proved a little onerous. Although we applaud the reasons for these ambitious reform programs, both proved disruptive in the short term, exacerbating ongoing softness in corporate earnings and a marked slowdown in economic growth. Nonetheless, India remains among the world's fastest-growing economies, posting 5.7% growth in the latest quarter ending 30 September 2017.

Domestic capital flows into the stockmarket were robust, encouraged by declining interest rates and demonetisation, despite foreign investors turning shy of Indian stocks during the period. The stockmarket saw a raft of new listings, with capital raised through IPO activity expected to far exceed last year's total of US$4 billion.

At the policy level, the Modi government's willingness to confront structural issues in the economy provided further reason to invest in India. With both the demonetisation drive and later GST, Mr Modi proved his mettle in not succumbing to a quick fix but instead, was politically ready to absorb short-term pain for the longer-term good. In particular, GST was lauded as pivotal in improving India's business environment, but many also worried it would present its own set of challenges when first executed. No such reform had been administered across a country with such complexity and on such a large scale. Implementation problems did in fact arise, including technical glitches with the online platform. Some of these issues are apparent as this Report was being compiled with the government amending some aspects of GST to make it more palatable. The government was active in raising awareness and conducting training and outreach programmes, but much more needs to be done. Most corporates expect the process to stabilise and demand to normalise in the medium term.

Stress in the credit markets continued to plague the stockmarket, with credit quality concerns most acute among the public-sector lenders (which your Company does not hold). This is another area where the government has faced the challenge head on. During the review period, the Reserve Bank of India issued lists of defaulting companies that make up the largest proportion of bad loans in the system, pressuring lenders to refer them for insolvency proceedings.

Change to Investment Management Fee

As announced by the Company on 5 September 2017,an amendment to the management fee has been agreed with Aberdeen Fund Managers Limited (the "Manager") which will become effective on 1 April 2018. From that date the Manager will be entitled to a management fee payable monthly in arrears based on an annual amount of 0.9% (previously 1.0%) of the Company's net assets, valued monthly, up to £350m, and 0.75% above £350m. In addition, the notice period for the Manager's appointment was reduced from twelve months to six months.

Aberdeen Asset Management

The merger on 14 August 2017 between Aberdeen Asset Management PLC and Standard Life plc has resulted in a new investment division under the banner of Aberdeen Standard Investments. Both entities have set up a highly experienced and dedicated integration team, to ensure that our Manager remains focused on the best interests of the Company and its shareholders.  The Board will monitor developments closely and ensure that excellent client service is maintained. The Board do not expect these developments to have any material impact on the management of your Company's investment portfolio.

Outlook

While Indian equities appear to be treading water with foreign investors holding back over the last few months, your Manager's view is broadly supportive of the government's policies. For example the fiscal benefits, in the long term, of the demonetisation exercise should not be overlooked. In a country where cash is king and few pay taxes, the opening up of more bank accounts and expansion of the tax net are positive steps towards further formalisation of India's economic structures.

One challenge that Mr Modi's government has yet to grapple with is labour reform. Flexibility in the labour market is critical to new investment, especially in support of the 'Make in India' initiative which is a cornerstone of the Indian government's efforts to reform and expand the economy.

In the meantime, the Indian consumer remains resilient, helped in rural areas by the first normal monsoon in three years, and consumer demand is steady. The country remains one of the more politically stable emerging markets with good potential for sustainable development. While domestic equities have been consolidating their gains recently, your Manager is sensitive to valuations. Nevertheless, one of the great advantages of the Indian market is that it boasts a diverse range of companies with good fundamentals and experienced management. I am confident in your Manager's ability to seek out and hold those stocks in your portfolio that will perform well in spite of current challenges.

Hasan Askari

Chairman

28 November 2017

INTERIM BOARD REPORT

Investment Objective

The investment objective of the Company is to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.

Investment Policy

The Company primarily invests in Indian equity securities.

Principal Risks and Uncertainties

Management of Risk

Investment in Indian equities involves a greater degree of risk than that usually associated with investment in major securities markets. The securities which the Company owns may be considered speculative because of the higher degree of risk.

The principal risks and uncertainties associated with the Company are set out in detail on pages 8 and 9 of the Annual Report for the year ended 31 March 2017, which is published on the Company's website, and these are applicable for the remaining 6 months of the Company's financial year ended 31 March 2018 as they have been for the period under review.

The risks may be summarised under the following headings:

-     Market risk

-     Foreign Exchange risk

-     Discount risk

-     Depositary risk

-     Regulatory risk

Other financial risks are detailed in note 15 to the Financial Statements in the Company's Annual Report for the year ended 31 March 2017.

Going Concern

In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk, the Directors have reviewed the Company's ability to continue as a going concern. The Company's assets consist of a diverse portfolio of listed equity shares which in most circumstances are realisable within a short timescale. The Directors are mindful of the principal risks and uncertainties disclosed on pages 8 and 9 and in Note 15 to the financial statements for the year ended 31 March 2017, and have reviewed cashflow forecasts detailing revenue and liabilities; accordingly, the Directors believe that the Company has adequate financial resources to continue in operational existence for the foreseeable future and for at least 12 months from the date of this Report.

This view is also based on the assumption that the Ordinary resolution, that the Company continues as an investment trust, which will be proposed at the next AGM of the Company in September 2018, is passed by shareholders as it has been in the years since it was put in place. The Directors consult annually with major shareholders and, as at the date of approval of this Report, had no reason to believe that this assumption was incorrect.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the 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 within the Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and

-     the Chairman's Statement and Interim Board Report (together constituting the interim management report) include a fair review of the information required by 4.2.7R (indication of important events during the first six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the UKLA's Disclosure and Transparency Rules.

The Half-Yearly Financial Report for the six months ended 30 September 2017 comprises the Chairman's Statement, Interim Board Report, the Statement of Directors' Responsibilities and a condensed set of Financial Statements.

For and on behalf of the Board

Hasan Askari

Chairman

28 November 2017

INVESTMENT MANAGER'S REPORT

Overview

Indian equities fell in the six months under review. They were initially supported by good corporate earnings and the arrival of a better monsoon season that buoyed India's large agricultural sector, but then concerns over a proposed nationwide rollout of the goods and services tax (GST) regime, and slower economic growth weighed heavily on sentiment.

Corporate earnings were buoyant at the start of the review period, with Indian equities chalking up a ten-month rally as economic activity whirred back to life after the demonetisation-induced cash crunch. But earnings later slid on slower economic growth. Lower inflation allowed the Reserve Bank of India to cut its key lending rate to encourage private investment.

Performance

For the six months under review, the portfolio's net asset value rose by 0.7%, beating the benchmark MSCI India Index's fall of 1.3%.

Stock-picking was the main reason for the portfolio's solid performance, and we were rewarded for our conviction that private-sector banks are in better shape than their state-run counterparts. The portfolio's private-sector lenders were the largest contributors to the fund's performance. This came as the government stepped up its scrutiny of banks' provisioning levels, and it became clear that private-sector banks' healthy loan growth and good asset quality, in particular for our holdings in HDFC Bank, Kotak Mahindra Bank, and Gruh Finance, kept them relatively insulated from the riskier parts of the credit market. In contrast, the State Bank of India, a public-sector bank which is not held by the portfolio, suffered from tighter regulations, and its share-price slump weighed on the benchmark heavily. We view the regulations as positive developments as they show that the country's efforts at reining in the bad-loan problems are gaining traction, and the financial sector should emerge more resilient as a whole.

Piramal Enterprises was the portfolio's top-performing stock. Even though it is classified as a healthcare stock in the benchmark, Piramal's share-price rally was driven by the value that investors saw in its financial division. It raised new equity to fund the double-digit growth opportunity it sees in consumer financing and to support its bolt-on acquisition strategy in pharmaceuticals where valuations are looking attractive again. There are talks too of spinning off the finance business down the line which will likely unlock more value. This has further fueled investor optimism in Piramal's shares.

The portfolio has large exposure to the materials sector which has been beneficial to performance. Shareholders supported Grasim Industries' strategy to simplify its holding structure, improve efficiency, and find new growth drivers. This included the spinoff of its finance arm Aditya Birla Capital that was subsequently listed on the stock exchanges. The distribution of its shares, which the portfolio now holds, gives the new entity more flexibility to access capital markets. Overall, we are confident that Grasim's restructuring is a net positive for the business. Separately, another materials holding Kansai Nerolac Paints was also one of the portfolio's top performers. With a strong foothold in the industrial paints market - thanks to their long standing relationships with Japanese car-makers in particular - Kansai Nerolac is riding on India's domestic consumption growth and demand for motorbikes and cars.

While performance has been pleasing over the past six months, there were areas that did not perform as well. Excluding Piramal, which we have discussed earlier, our healthcare holdings suffered amid tighter regulatory standards and increased price pressures in the US market. Elsewhere, we missed out on gains in the energy sector as the oil-and-gas names rebounded along with a rising oil price. One of the largest companies in the Indian benchmark is the energy conglomerate Reliance Industries, and our decision not to hold this company was detrimental during this period. Although it operates a good refining business, capital allocation decisions are not focused on returns, and have historically been detrimental to minority shareholders. Reliance has thrown more than £20 billion into starting up its new telecoms business which will take years to produce returns, given that it is also investing in enticing customers away from the incumbents.

Portfolio Activity

During the review period, we added to information-technology companies Tata Consultancy Services and Cognizant on attractive valuations. Both companies responded to shareholder pressure to release some cash from their net-cash balance sheets. They also conducted share buybacks which were well received by investors. We also topped up Sun Pharmaceutical and Lupin, as ongoing worries in the pharmaceuticals sector pulled down their share prices. We think they have strong franchises which will emerge stronger in the long run.

As shareholders in Grasim Industries, we received shares in Aditya Birla Capital (ABC), which is a well-run diversified financial services group owned by Grasim, and trimmed other positions where share prices had been strong to build on our position in ABC. The distribution of its shares gives ABC greater financial flexibility to access capital markets in its own name. We also remain confident that the Grasim restructure is an overall positive for the business, as it consolidates operations and streamlines efficiencies.

Against this, we reduced our exposure to Infosys by half, after careful consideration. We engaged with management when they called for shareholder feedback. While the dust appears to have settled from recent acrimonious developments, we think that Infosys could continue to face uncertainty on several fronts - strategy, management, board and leadership. Nandan Nilekani, the widely respected Infosys alumnus, has returned as non-executive chairman following Vishal Sikka's resignation as chief executive officer in August. While we welcome Nilekani's appointment, the selection of a new CEO will take time. That said, Infosys is still among India's best software developers. It continues to generate steady cash flow, backed by a solid balance sheet, and is moving in the right direction in addressing the issues that confront it.

We took profits from engineering company ABB India, Ambuja Cement, Grasim Industries, Gujarat Gas, HDFC Bank, and consumer-goods company Hindustan Unilever, as their share prices gained on supportive policies that bode well for their toplines.

Outlook

Indian equities have taken a breather in recent months, which provided some relief given they are trading at a premium to their Asian counterparts, but are still in positive territory year-to-date. Although Prime Minister Modi is facing some scrutiny recently for his handling of the more controversial reforms, the changes should result in more benefits in the long term. However, he may need the expected further reforms to reignite confidence in his ability to steer the economy onto a more sustainable path.

There remain some key areas of concern. Investment is lacklustre, private-capital spending has stalled, and the country's purported demographic dividend could well prove to be a thorn in its side instead if jobs growth is not forthcoming. With rural demand not pulling its weight as was earlier expected, increased urbanisation may be the answer, but that hinges on how well it is executed. Still, one of the major appeals of India is that there is no dearth of quality companies run by experienced management who are agile and innovative enough to generate profits in spite of the present constraints. Our holdings continue to focus on making their operations efficient and maintaining robust balance sheets. This should hold them in good stead in the long term.

Aberdeen Asset Management Asia Limited

Investment Manager

28 November 2017

INVESTMENT PORTFOLIO

As at 30 September 2017

		Valuation	Net assets
Company	Sector	£'000	%
Housing Development Finance Corporation	Financials	27,559	9.5
Tata Consultancy Services	Information Technology	23,629	8.1
ITC	Consumer Staples	13,740	4.7
Piramal Enterprises	Healthcare	13,623	4.7
Kotak Mahindra Bank	Financials	13,027	4.5
Container Corporation of India	Industrials	11,492	4.0
Hindustan Unilever	Consumer Staples	11,489	4.0
Grasim Industries{A}	Materials	11,222	3.9
Hero MotoCorp	Consumer Discretionary	10,356	3.6
Sun Pharmaceutical Industries	Healthcare	9,962	3.4
Top ten investments		146,099	50.4
Kansai Nerolac Paints	Materials	9,722	3.3
HDFC Bank	Financials	9,425	3.2
Godrej Consumer Products	Consumer Staples	9,335	3.2
Bosch	Consumer Discretionary	8,378	2.9
Ambuja Cements{A}	Materials	8,314	2.9
Infosys	Information Technology	7,729	2.7
MphasiS	Information Technology	7,696	2.7
Nestlé India	Consumer Staples	7,537	2.6
Ultratech Cement{A}	Materials	7,122	2.5
Gruh Finance	Financials	6,329	2.2
Top twenty investments		227,686	78.6
ICICI Bank	Financials	5,484	1.9
Gujarat Gas	Utilities	4,701	1.6
Cognizant Technology Solutions	Information Technology	4,649	1.6
Lupin	Healthcare	4,577	1.6
ABB India	Industrials	4,104	1.4
Sanofi India	Healthcare	4,045	1.4
Jyothy Laboratories	Consumer Staples	3,065	1.1
ACC	Materials	2,917	1.0
Emami	Consumer Staples	2,912	1.0
Aditya Birla Capital{A}	Financials	2,887	1.0
Top thirty investments		267,027	92.2
Bharti Infratel	Telecommunication Services	2,866	1.0
Biocon	Healthcare	2,732	0.9
Aegis Logistics	Energy	2,682	0.9
Castrol India	Materials	2,162	0.7
Bharti Airtel	Telecommunication Services	2,089	0.7
GlaxoSmithKline Pharmaceuticals	Healthcare	2,009	0.7
Asian Paints	Materials	1,549	0.5
Thermax	Industrials	1,355	0.5
Total portfolio investments		284,471	98.1
Other net current assets held in subsidiaries		35	-
Total investments		284,506	98.1
Net current assets		5,623	1.9
Net assets		290,129	100.0
{A} Comprises equity and listed or tradeable GDR holdings.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

		Six months ended			Six months ended
		30 September 2017			30 September 2016
		(unaudited)			(unaudited)
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income
Income from investments and other income	3	2,606	-	2,606	1,999	-	1,999
Gains on investments held at fair value through profit or loss		-	1,235	1,235	-	46,025	46,025
Currency (losses)/gains		-	(17)	(17)	-	59	59
		_______	_______	_______	_______	_______	_______
		2,606	1,218	3,824	1,999	46,084	48,083
		_______	_______	_______	_______	_______	_______
Expenses
Investment management fees		(1,498)	-	(1,498)	(1,212)	-	(1,212)
Administrative expenses		(384)	-	(384)	(376)	-	(376)
		_______	_______	_______	_______	_______	_______
Profit/(loss) before taxation		724	1,218	1,942	411	46,084	46,495
Taxation	4	(3)	-	(3)	-	(472)	(472)
		_______	_______	_______	_______	_______	_______
Profit/(loss) for the period		721	1,218	1,939	411	45,612	46,023
		_______	_______	_______	_______	_______	_______
Return/(loss) per Ordinary share (pence)	5	1.22	2.06	3.28	0.70	77.21	77.91
		_______	_______	_______	_______	_______	_______
The Company does not have any income or expense that is not included in profit/(loss) for the period, and therefore the "Profit/(loss) for the period" is also the "Total comprehensive income for the period".
The total columns of this statement represent the Condensed Statement of Comprehensive Income, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of Aberdeen New India Investment Trust PLC. There are no non-controlling interests.
The accompanying notes are an integral part of these financial statements.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Cont'd)

		Year ended
		31 March 2017
		(audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments and other income	3	3,104	-	3,104
Gains on investments held at fair value through profit or loss		-	75,183	75,183
Currency (losses)/gains		-	54	54
		_______	_______	_______
		3,104	75,237	78,341
		_______	_______	_______
Expenses
Investment management fees		(2,520)	-	(2,520)
Administrative expenses		(750)	-	(750)
		_______	_______	_______
Profit/(loss) before taxation		(166)	75,237	75,071
Taxation	4	-	(755)	(755)
		_______	_______	_______
Profit/(loss) for the period		(166)	74,482	74,316
		_______	_______	_______
Return/(loss) per Ordinary share (pence)	5	(0.28)	126.09	125.81
		_______	_______	_______
The accompanying notes are an integral part of these financial statements.

CONDENSED BALANCE SHEET

		As at	As at	As at
		30 September 2017	30 September 2016	31 March 2017
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		284,471	258,714	284,946
Subsidiary held at fair value through profit or loss		35	923	53
		_______	_______	_______
		284,506	259,637	284,999
Current assets
Cash at bank		5,070	2,259	3,425
Receivables		984	468	181
		_______	_______	_______
Total current assets		6,054	2,727	3,606
		_______	_______	_______
Current liabilities
Payables		(431)	(2,467)	(415)
		_______	_______	_______
Total current liabilities		(431)	(2,467)	(415)
		_______	_______	_______
Net current assets		5,623	260	3,191
		_______	_______	_______
Net assets		290,129	259,897	288,190
		_______	_______	_______
Capital and reserves
Ordinary share capital	8	14,768	14,768	14,768
Share premium account		25,406	25,406	25,406
Special reserve		15,778	15,778	15,778
Capital redemption reserve		4,484	4,484	4,484
Capital reserve	9	229,443	199,355	228,225
Revenue reserve		250	106	(471)
		_______	_______	_______
Equity shareholders' funds		290,129	259,897	288,190
		_______	_______	_______
Net asset value per Ordinary share (pence)	10	491.16	439.98	487.88
		_______	_______	_______

CONDENSED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2017 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2017	14,768	25,406	15,778	4,484	228,225	(471)	288,190
Profit for the period	-	-	-	-	1,218	721	1,939
	______	______	______	______	______	______	_______
Balance at 30 September 2017	14,768	25,406	15,778	4,484	229,443	250	290,129
	______	______	______	______	______	______	_______
Six months ended 30 September 2016 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2016	14,768	25,406	15,778	4,484	153,743	(305)	213,874
Profit for the period	-	-	-	-	45,612	411	46,023
	______	______	______	______	______	______	_______
Balance at 30 September 2016	14,768	25,406	15,778	4,484	199,355	106	259,897
	______	______	______	______	______	______	_______
Year ended 31 March 2017 (audited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2016	14,768	25,406	15,778	4,484	153,743	(305)	213,874
Profit/(loss) for the year	-	-	-	-	74,482	(166)	74,316
	______	______	______	______	______	______	_______
Balance at 31 March 2017	14,768	25,406	15,778	4,484	228,225	(471)	288,190
	______	______	______	______	______	______	_______

CONDENSED CASH FLOW STATEMENT

	Six months ended	Six months ended	Year ended
	30 September 2017	30 September 2016	31 March 2017
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received	2,657	2,036	3,020
Interest income received	-	2	2
Investment management fee paid	(1,505)	(1,181)	(2,456)
Overseas withholding tax	(3)	-	-
Other cash expenses	(375)	(362)	(740)
	__________	__________	__________
Net cash inflow/(outflow) from operating activities	774	495	(174)
Purchase of investments	(21,392)	(21,088)	(32,720)
Sales of investments	22,280	22,284	36,039
Capital Gains Tax on sales	-	(472)	(755)
	__________	__________	__________
Net cash flow from investing activities	888	724	2,564
	__________	__________	__________
Net increase in cash and cash equivalents	1,662	1,219	2,390
Cash and cash equivalents at the start of the period	3,425	981	981
Effect of foreign exchange rate changes	(17)	59	54
	__________	__________	__________
Cash and cash equivalents at the end of the period	5,070	2,259	3,425
	__________	__________	__________

NOTES TO THE FINANCIAL STATEMENTS

1.	Principal activity
	The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010.
	The principal activity of the foreign subsidiary, New India Investment Company (Mauritius) Limited (the "Subsidiary") which has not been consolidated, was similar in all relevant respects to that of its United Kingdom parent. The Company has entered into warrant repurchase agreements with the Subsidiary to acquire its equity and securities. The Subsidiary held no investments at the period end. The Subsidiary's registered address is 33 Edith Cavell Street, Port Louis, Mauritius.
	The Company has adopted IFRS 10 'Consolidated Financial Statements - Consolidation relief for Investment Entities'; as such the Company has not consolidated the results of the Subsidiary.

2.	Accounting policies
	The Company's financial statements have been prepared in accordance with International Accounting Standard ('IAS') 34 - 'Interim Financial Reporting', as adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Reporting Interpretations Committee of the IASB (IFRIC). The Company's financial statements have been prepared using the same accounting policies applied for the year ended 31 March 2017 financial statements, which received an unqualified audit report.
	The financial statements have been prepared on a going concern basis. In accordance with the Financial Reporting Council's guidance on 'Going Concern and Liquidity Risk' the Directors have undertaken a review of the Company's assets which primarily consist of a diverse portfolio of listed equity shares which, in most circumstances, are realisable within a short timescale.
	During the period the Company adopted the following amendments to standards;
	IAS  7 Amendment - Disclosure Initiative
	IAS 12 Amendment - Recognition of Deferred Tax Assets for Unrealised Losses
	IFRS 12 Amendment (AI 2014-16) - Clarification of the scope of the Standard

		Six months ended	Six months ended	Year ended
		30 September 2017	30 September 2016	31 March 2017
3.	Income	£'000	£'000	£'000
	Income from investments
	Overseas dividends	2,606	1,998	3,103
	Other operating income
	Deposit interest	-	1	1
		__________	__________	__________
	Total income	2,606	1,999	3,104
		__________	__________	__________

			Six months ended			Six months ended			Year ended
			30 September 2017			30 September 2016			31 March 2017
			Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
4.	Tax on ordinary activities		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Current tax:
		Irrecoverable overseas tax suffered	3	-	3	-	-	-	-	-	-
		Short-term capital gains tax on sales	-	-	-	-	472	472	-	755	755
			______	______	______	______	______	______	______	______	______
		Total tax charge	3	-	3	-	472	472	-	755	755
			______	______	______	______	______	______	______	______	______
	(b)	Factors affecting the tax charge for the year or period
		The tax charged for the period can be reconciled to the profit per the Statement of Comprehensive Income as follows:
			Six months ended			Six months ended			Year ended
			30 September 2017			30 September 2016			31 March 2017
			Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
		Profit before tax	724	1,218	1,942	411	46,084	46,495	(166)	75,237	75,071
		Corporation tax on profit at the standard rate of 19% (30 September 2016 and 31 March 2017 - 20%)	138	231	369	82	9,217	9,299	(33)	15,047	15,014
		Effects of:
		Gains on investments held at fair value through profit or loss not taxable	-	(234)	(234)	-	(9,205)	(9,205)	-	(15,036)	(15,036)
		Currency losses/(gains) not taxable	-	3	3	-	(12)	(12)	-	(11)	(11)
		Movement in excess expenses	357	-	357	318		318	654	-	654
		Capital gains charge	-	-	-	-	472	472	-	755	755
		Non-taxable dividend income	(495)	-	(495)	(400)	-	(400)	(621)	-	(621)
		Irrecoverable overseas tax suffered	3	-	3	-	-	-	-	-	-
			______	______	______	______	______	______	______	______	______
		Total tax charge	3	-	3	-	472	472	-	755	755
			______	______	______	______	______	______	______	______	______
		The Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961, and following the disposal of certain securities within twelve months of their transfer from the Subsidiary to the Parent Company during the six months ended 30 September 2016 and year ended 31 March 2017, a charge has been allocated to capital as detailed above.

		Six months ended	Six months ended	Year ended
		30 September 2017	30 September 2016	31 March 2017
5.	Return per Ordinary share	£'000	£'000	£'000
	Based on the following figures:
	Revenue return	721	411	(166)
	Capital return	1,218	45,612	74,482
		_________	_________	_________
	Total return	1,939	46,023	74,316
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	59,070,140	59,070,140	59,070,140
		_________	_________	_________

6.	Dividends on equity shares
	No interim dividend has been declared in respect of either the six months ended 30 September 2017 or 30 September 2016.
	During the year ended 31 March 2017, a dividend of £nil (2016 - £nil) was paid from the subsidiary company to the parent company.

7.	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 Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		30 September 2017	30 September 2016	31 March 2017
		£'000	£'000	£'000
	Purchases	34	47	65
	Sales	46	52	75
		_________	_________	_________
		80	99	140
		_________	_________	_________

8.	Ordinary share capital
	As at 30 September 2017 there were 59,070,140 (30 September 2016 and 31 March 2017 - 59,070,140) Ordinary 25p shares in issue.

9.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 30 September 2017 includes gains of £64,784,000 (30 September 2016 - £42,209,000; 31 March 2017 - £68,283,000) which relate to the revaluation of investments held at the reporting date.

10.	Net asset value per Ordinary share
	The net asset value per Ordinary share is based on a net asset value of £290,129,000 (30 September 2016 - £259,897,000; 31 March 2017 - £288,190,000) and on 59,070,140 (30 September 2016 and 31 March 2017 - 59,070,140) Ordinary shares, being the number of Ordinary shares in issue at the period end.

11.	Fair value hierarchy
	IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making measurements. The fair value hierarchy has the following levels:
	Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities;
	Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
	Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
	The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at the Balance Sheet date as follows:
				Level 1	Level 2	Level 3	Total
	As at 30 September 2017		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	284,471	-	-	284,471
	Investment in Subsidiary		b)	-	35	-	35
				_________	_________	_________	_________
	Net fair value			284,471	35	-	284,506
				_________	_________	_________	_________
				Level 1	Level 2	Level 3	Total
	As at 30 September 2016		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	258,714	-	-	258,714
	Investment in Subsidiary		b)	-	923	-	923
				_________	_________	_________	_________
	Net fair value			258,714	923	-	259,637
				_________	_________	_________	_________
				Level 1	Level 2	Level 3	Total
	As at 31 March 2017		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	284,946	-	-	284,946
	Investment in Subsidiary		b)	-	53	-	53
				_________	_________	_________	_________
	Net fair value			284,946	53	-	284,999
				_________	_________	_________	_________
	a)	Quoted equities
		The fair value of the Group'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.
	b)	Investment in Subsidiary
		The Company's investment in its Subsidiary was categorised in Fair Value Level 2 as its fair value was determined by reference to the Subsidiary company's net asset value at the reporting date. The net asset value is predominantly made up of cash and receivables.

12.	Related party disclosures
	The Company has agreements with Aberdeen Fund Managers Limited ("AFML" or the "Manager") for the provision of investment management, secretarial, accounting and administration services and with Aberdeen Asset Managers Limited for the provision of promotional activity services.
	During the period, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the total assets of the Company less current liabilities, excluding the fair value of the subsidiary, New India Investment Company (Mauritius) Limited, valued monthly. The management agreement is terminable by either the Company or AFML on 12 months' notice. The amount payable in respect of the Company for the period was £1,498,000 (six months ended 30 September 2016 - £1,212,000; year ended 31 March 2017 - £2,520,000) and the balance due to AFML at the period end was £238,000 (period end 30 September 2016 - £212,000; year end 31 March 2017 - £245,000).  All investment management fees are charged 100% to the revenue column of the Statement of Comprehensive Income.
	New India Investment Company (Mauritius) Limited also has an agreement with AFML to receive management services based on an annual amount of 1% of its net asset value. The amount payable during the year was £nil (six months ended 30 September 2016 - £2,000; year ended 31 March 2017 - £6,000) which was expensed through its own profit and loss account. The balance due to AFML at the period end was £nil (30 September 2016 - £nil; year ended 31 March 2017 - £nil).
	Accordingly, the aggregate amount payable in respect of management services provided to the Company and its Subsidiary for the year was £1,498,000 (30 September 2016 - £1,214,000; 31 March 2017 - £2,526,000) and the balance due to AFML at the period end was £238,000 (period ended 30 September 2016 - £212,000; year ended 31 March 2017 - £245,000).
	The Company has an agreement with Aberdeen Fund Managers Limited for the provision of promotional activities in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the period were £71,000 (six months ended 30 September 2016 - £71,000; year ended 31 March 2017 - £142,000) and the balance due to AAM at the period end was £35,000 (period ended 30 September 2016 - £35,000; year ended 31 March 2017 - £35,000).

13.

Segmental Information

For management purposes, the Company is organised into one main operating segment, which invests in equity securities. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Company as a whole.

14.	Subsequent Events
	On 15 November 2017, the Directors of the Company's Subidiary, New India Investment Company (Mauritius) Limited appointed ENSafrica Mauritius as liquidator to wind up the affairs of the company.

15.	Half-Yearly Report
	The financial information contained in this Half-Yearly Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2017 and 30 September 2016 has not been audited.
	The information for the year ended 31 March 2017 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the Independent Auditor on those accounts contained no qualification or statement under Section 237 (2), (3) or (4) of the Companies Act 2006.
	The Half-Yearly Report has not been reviewed or audited by the Company's Independent Auditor.

16.	Approval
	This Half-Yearly Report was approved by the Board on 28 November 2017.

Aberdeen Asset Management PLC

Secretaries

28 November 2017

 

END

 

 

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