Half Yearly Financial Report

RNS Number : 5252G

Aberdeen New India Invest Trust PLC

26 November 2020

 

ABERDEEN NEW INDIA INVESTMENT TRUST PLC

Legal Entity Identifier (LEI): 549300D2AW66WYEVKF02

UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020

FINANCIAL SUMMARY AND PERFORMANCE

	30 September 2020	31 March 2020	% change
Total shareholders' funds (£'000)	303,171	241,583	+ 25.5
Share price (mid-market)	435.00p	328.00p	+ 32.6
Net asset value per share	517.73p	411.41p	+ 25.8
Discount to net asset value {A}	16.0%	20.3%
Net gearing {A}	6.7%	9.3%
Ongoing charges ratio {A}	1.19%	1.14%
Rupee to Sterling exchange rate	95.4	93.8	- 1.7
{A} Considered to be an Alternative Performance Measure.

Performance (total return)	Six months ended	Year ended
	30 September 2020	31 March 2020
	%	%
Share price{A}	+ 32.6	- 28.9
Net asset value{A}	+ 25.8	- 22.7
MSCI India Index (Sterling adjusted)	+ 33.2	- 27.3
{A} Considered to be an Alternative Performance Measure.
Source: Aberdeen Standard Fund Managers Limited, Morningstar and Lipper.

CHAIRMAN'S STATEMENT

Dear Shareholder

Overview

Over the six months ended 30 September 2020, your Company's net asset value ("NAV") increased by 25.8% to 517.73p in total return terms. The ordinary share price gained 32.6% to 435.00p, reflecting a narrowing of the discount to NAV from 20.3% to 16.0%. The MSCI India Index (sterling adjusted) (the "Index"), however, increased by 33.2% in sterling terms.

Your Company's NAV grew consistently over a period in which Indian equities staged a remarkable recovery following a steep sell-off in March due to the Covid-19 pandemic. In such a rapidly evolving market, your Company's NAV slightly lagged the Index, having outperformed on the way down. Set in the context of a longer time frame of ten years, your Company's NAV and share price have increased by 87.9% and 69.8%, respectively, comfortably outpacing the return of 43.8% for the Index.

During the six months, your Company's IT services and biopharmaceutical holdings performed well, reflecting the broader strength in the technology and healthcare sectors as global clients continued with their digital investments and spending on healthcare-related research and development. The Company's under-performance against the Index over the period was due substantially to not owning Reliance Industries and the Investment Manager sets out the reasons for this decision in their Report.

Throughout the period under review, there was unprecedented monetary easing and fiscal stimulus domestically and around the world as governments and central banks acted promptly to limit the economic damage caused by Covid-19 and the associated social mobility restrictions and lockdowns.

In India, Covid-19 relief measures focused on rural areas comprising cash disbursements for low-income households, a credit support scheme for small and medium-sized enterprises, infrastructure spending and incentives to improve the liquidity of the banking system. Abundant monsoon rains also helped and the effort was rewarded by a recovery in the rural economy.

All this boosted market sentiment, triggering a strong rally in spite of considerable challenges that were carried over from the preceding period. These difficulties included an already slowing economy, lingering problems in the non-bank financial sector and a reduction in government revenues.

Covid-19 infections in India have spiralled rapidly into one of the worst outbreaks in the world. Covid-19 laid bare the inadequate health-care infrastructure, notably insufficient testing capacity, while overcrowded living quarters in densely populated urban centres facilitated the swift spread of the virus.

The economy suffered a deep contraction in the June quarter, although there is now increased activity as Covid-19 cases continue to decline from their peak in mid-September. However, at the time of writing, infection rates were starting to stabilise with the number of active cases falling from the peak in September .

Amid the challenging conditions, the government continued to undertake reforms, which is an important step towards enhancing the structural foundation and global competitiveness of the country. India's legislature passed two landmark bills that encouraged investment in agriculture. Other reforms included labour law changes, incentives for manufacturing and the proposed privatisation of the railways.

Optimism over the reforms also supported the stock market which maintained its momentum through to the end of the period under review. Meanwhile, your Manager has used episodes of market volatility to buy quality companies at attractive valuations. Further information may be found in the Investment Manager's Report.

Gearing

The Company announced on 7 July 2020 that it had entered into a new two year multi-currency revolving credit facility of £30m with Natwest Markets plc which replaced the facility, also with Natwest Markets plc, that had been due to expire on 24 July 2020. As at 30 September 2020, £24 million had been drawn of the total available facility, which resulted in net gearing of 6.7%, as compared to 9.3% as at 31 March 2020. The ability to gear is one of the advantages of the closed ended company structure and your Manager continues to seek opportunities to deploy this facility.

Earnings and dividend

In order for the Company to continue to maintain its investment trust status, the Board declared, on 24 September 2020, an interim dividend of 1.00p per Ordinary share in respect of the year ended 31 March 2020, payable on 30 October 2020. The ex-dividend date was 1 October 2020 and the record date was 2 October 2020. This arose in relation to tax legislation which requires the distribution to shareholders of at least 85% of investment income, after allowing for revenue losses brought forward. The minimum required net revenue distribution of approximately 0.22 pence per Ordinary share was supplemented by capital reserves in accordance with the flexibility afforded by the Company's revised Articles of Association which were approved by shareholders at the AGM on 23 September 2020.

This was to ensure a more meaningful amount for those shareholders receiving cheques. This likely one-off exceptional payment, due to higher dividend income than normal, and the use of capital reserves is not expected to set any precedent for the future.

Board

Rebecca Donaldson joined the Board on 1 September 2020 and her election as a Director was approved by shareholders at the AGM. Rachel Beagles stepped down as Director at the conclusion of the AGM. Michael Hughes succeeded Rachel both as Senior Independent Director and Chairman of the Management Engagement Committee.

Shareholder Communications

Within my Statement in the Annual Report I explained that it was unlikely, as a result of UK government advice on Covid-19 at that time, for shareholders to be able to attend our AGM.  Accordingly, the Board anticipated holding an in-person event for shareholders later in 2020, but the announcement by the UK Government of additional restrictions in effect from 5 November 2020 means that this is no longer possible. 

The Board encourages shareholders to visit the Company's website ( www.aberdeen-newindia.co.uk ) or other virtual channels for the latest information and access to regular podcasts and monthly factsheets.

Discount

The Board continues to actively monitor the discount of the Ordinary share price to the NAV per Ordinary share (including income) and pursues a policy of selective buybacks of shares where to do so, in the opinion of the Board, is in the best interests of shareholders, whilst also having regard to the overall size of the Company.

During the period under review, the discount to NAV narrowed from 20.3% to 16.0% as at 30 September 2020 following the Company buying back into treasury 163,277 Ordinary shares at a total cost of £669,000. Between the period end and the date of this Report a further 86,614 shares were bought back into treasury resulting in 58,471,090 shares in issue with voting shares and 599,050 shares held in treasury.

The Board believes that a combination of strong long-term performance and effective marketing should increase demand for the Company's shares and reduce the discount to NAV at which they trade, over time.

Outlook

The seeming disconnect between the stock market's strong performance and the reality facing India and its companies gives cause for caution over the short term. Prevailing issues, be it the credit stress in the financial system or the flagging economy, remain unresolved. The government is still grappling with containing Covid-19 and saving lives while at the same time ensuring that the cost from tackling the pandemic will not prove too much for the economy to bear. In addition, government stimulus support has a limit, given the countervailing need to protect India's debt rating and maintain fiscal discipline.

On a brighter note, there is emerging resilience in the rural sector, helped by a good monsoon and better cash flows due to high crop output and prices. More broadly, key activity indicators are also improving, such as auto sales, vehicle registrations, power consumption and rail freight as well as record digital transactions. With the festive year-end season approaching, there may be a further fillip to consumption in the coming months, given an element of pent-up demand.

The recent reforms in agriculture and labour also appear promising. These changes should help address poverty, whether it is caused by fragmented landholdings, a lack of storage infrastructure or high indebtedness. Allowing small companies greater flexibility around their workforce should also improve labour productivity and overall competitiveness over the longer term. It is encouraging to note the government's resolve on reform despite the difficult macroeconomic environment.

More importantly, the country continues to possess attractive structural advantages, such as a large domestic market, a sizeable young working population, and some of the best-quality companies in Asia.

Against this backdrop, selecting the correct stocks is crucial and your Manager has continued to do so diligently. Your Company's holdings are supported by sound fundamentals and are led by experienced management teams who have steered their respective businesses through past crises. These holdings also possess pricing power, enjoy significant barriers to entry, demonstrate clear growth prospects, and adhere to stringent governance standards. These are all qualities that will position them well for a world after Covid-19.

Although I would expect it to be tough going for some time, India will recover and I remain optimistic that the Company will continue to deliver steady returns for shareholders in the long term, supported by your Manager's prudent investing philosophy.

Hasan Askari

Chairman

25 November 2020

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

The principal risks and uncertainties associated with the Company are set out in detail on pages 14 to 16 of the Annual Report for the year ended 31 March 2020, which is published on the Company's website. These are not expected to change materially for the remaining six months of the Company's financial year ended 31 March 2021 as they have not done for the period under review.

The risks may be summarised under the following headings:

· Covid-19

· Foreign Exchange risk

· Discount risk

· Depositary risk

· Market risk

· Regulatory risk

The Board continued to assess the ongoing implications for the Company of the spread of Covid-19, including the resilience of the reporting and control systems in place for both the Manager and other key service providers. The Board is also mindful of the ongoing negotiations regarding the end of the transition period on 31 December 2020 related to the UK's departure from the EU.

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 conscious of the principal risks and uncertainties disclosed on pages 14 to 16 and in Note 16 to the financial statements for the year ended 31 March 2020.

The Company has a two year, £30 million revolving credit facility with Natwest Markets Plc (the "Facility") of which £24 million was drawn down at 30 September 2020. The Board has set limits for borrowing and regularly reviews the level of any gearing and compliance with banking covenants.

In advance of expiry of the Facility in July 2022, the Company will enter into negotiations with its bankers. If acceptable terms are available from the existing bankers, or any alternative, the Company would expect to continue to access a Facility. However, should these terms not be forthcoming, any outstanding borrowing would be repaid through the proceeds of equity sales.

The Directors' assessment of going concern also assumes that the Ordinary resolution for the Company's continuation is passed by shareholders at the next AGM of the Company in September 2021, 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.

After making enquiries, including a review of revenue forecasts, the Directors have a reasonable expectation that the Company possesses adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.

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 has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);

· the Half Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the 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

· the Half Yearly Board Report includes a fair review of the information required by 4.2.8R of the Disclosure Guidance and Transparency Rules (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 do so).

The Half Yearly Financial Report for the six months ended 30 September 2020 comprises the Interim Board Report, including the Statement of Directors' Responsibilities, and a condensed set of Financial Statements.

For and on behalf of the Board

Hasan Askari
Chairman
25 November 2020

INVESTMENT MANAGER'S REPORT

Performance

Indian equities advanced over the six months ended 30 September 2020, reversing the steep sell off in March after Covid-19 spread worldwide. The resumption of economic activity, continued fiscal and monetary support at home and abroad, and reports of progress on Covid-19 vaccines drove the rebound. This was despite daunting challenges for the domestic economy and capital markets. Chief among these was Covid-19, with India having, to date, the world's second-highest number of infections after the US. Efforts to curb the virus' spread resulted in further damage to an already slowing economy. Although a nationwide lockdown was lifted in May, localised restrictions continued to constrain consumption and business activity. Rising border tensions added further uncertainty with China which boiled over into a fatal skirmish.

Nonetheless, the market appeared to take all of this in its stride. For the six months under review, the MSCI India Index (sterling-adjusted) rose by 33.2%. In comparison, your Company's net asset value rose by 25.8% and the share price climbed by 32.6%.

While the Company's robust absolute return was encouraging, it did not keep pace with the benchmark. Leading the rally were "recovery plays" alongside those that benefited from Covid-19 related disruptions. Holdings in your Company's portfolio exposed to these themes performed solidly but other more defensive positions fared less well. We remain confident about the portfolio holdings, which are quality businesses with healthy fundamentals and intact growth drivers that should position them well for long-term growth in a post-Covid-19 world.

Portfolio

Turning to the portfolio's performance, technology-related stocks were among the biggest winners over the period. Here, the portfolio's software services holdings, including MphasiS and TechMahindra, contributed significantly to positive returns. Their share prices were initially weak on fears of delivery delays due to Covid-19 but subsequently rebounded on record contract wins by value as demand for IT services accelerated with clients working from home amid the pandemic. Moreover, their global customer bases largely insulated them from the domestic downturn and enabled them to benefit from a weaker rupee that boosted overseas revenues.

These same forces, however, also buoyed benchmark heavyweight Reliance Industries, and your Company's lack of exposure to this stock was the biggest source of underperformance. Historically, the conglomerate has been known for its lucrative oil refining and petrochemical businesses, but more recently it has ramped up efforts to transform its telecoms unit Jio into an internet and e-commerce platform. Notably, new deals totalling over US$20 billion, including partnerships with US giants Google and Facebook, excited investors which drove a near-doubling of its share price. We note that these moves will position Reliance well but prefer to remain on the side-lines for now. We continue to monitor developments for tangible improvements in returns, gearing, free cash flow and corporate governance.

We believe the prospects for India's technology sector remain bright, underpinned by structural trends such as 5G networks, cloud computing and the Internet of Things. The market's keen interest in Reliance also means that some of the smaller companies that operate in interesting niches may have become overlooked and under-appreciated. We have undertaken extensive research in the internet sector. Many segments hold promise but profitability remains elusive due to the early stage of adoption and intense competition. This led us to invest in InfoEdge, one of the best internet companies domestically. The company stands out for its market-leading online classifieds business, with dominant positions in job openings, real estate search and matrimonial services. Its business is profitable and cash-flow positive which sets it apart from rivals and has helped it incubate tech-based start-ups such as the better-known food delivery service Zomato and online insurance marketplace Policybazaar. We like the financial discipline exhibited by Info Edge's management, backed by substantial cash reserves that support a steady dividend, coupled with deep access to external funding from high-profile co-investors. We also introduced AffleIndia into the portfolio which provides consumer intelligence to help enterprises with their digital advertising. Their management has executed its strategy well and we believe that expansion into the services and consulting business should drive better margins and earnings.

Another sector that enjoyed buoyant momentum was healthcare, which bolstered portfolio performance. The Company owns drug research services company SyngeneInternational and its parent, Biocon, which proved beneficial to diversification. Syngene outperformed as spending on drug research stayed resilient. Meanwhile, Biocon rose after American regulators approved its insulin plant in Malaysia allowing the launch of biosimilars in the US. News flow on potential coronavirus treatments also aided both companies' shares. Biocon launched a new biologic drug, Itolizumab, to treat Covid-19 patients, while Syngene reached a deal to manufacture and distribute potential treatment Remdesivir.

By contrast, real estate stocks lagged the domestic market, but the Company's selection of holdings was rewarding. Both GodrejProperties and PrestigeEstates were viewed as likely beneficiaries of the current uncertainty thanks to their healthy balance sheets and well-established brands. For instance, Godrej's pre-sales of residential properties improved by 70% in the June quarter, as compared with a sector-wide decline. This good performance reflected our preference for companies with solid franchises and robust fundamentals.

Elsewhere, the exposure to the consumer sector detracted from performance, with core holdings NestleIndia and HindustanUnilever among the major laggards. Nonetheless, we are not unduly concerned as these stocks had been relatively resilient in the earlier sell offs. Moreover, both companies remained positive contributors over the year-to-date period. More recently, Nestle India's share price retreated as weakness in its noodles business held back quarterly earnings, but this was due to supply disruptions rather than receding demand. Similarly, mixed results affected Hindustan Unilever, but the company has strengthened its market position, while its digital initiatives should help enhance product innovation and sales.

 

More broadly, as India's middle class expands, we expect rising demand for better quality products and services. Therefore, against the backdrop of a rising market, we capitalised on pockets of volatility to initiate another two consumer holdings. One was VarunBeverages, the second-largest franchisee bottler of Pepsi outside the US. Its deep relationship with franchise holder PepsiCo also allowed it to gain rights to the US group's cash cow, Tropicana. Its strategy for growth involves buying out underperforming PepsiCo franchisees and leveraging on its deep relationships and logistics capabilities to turn around those businesses. The other addition was well-run homewares retailer Crompton Greaves Consumer Electric which operates in an under-penetrated segment of the industry and enjoys high returns and cash flow.

Meanwhile, banking stocks underperformed after the Reserve Bank of India ("RBI") extended a moratorium on loan repayments which raised concerns about underlying asset quality. The Company holds private-sector lenders that have better access to deposit funding which should enable them to manage their credit risks, and help gain market share from weaker rivals in such times. We took part in the share placements of Bandhan Bank and Kotak Mahindra Bank, which they undertook to comply with the RBI's cap on the stakes of controlling shareholders. We also participated in the capital raising by Axis Bank and mortgage provider Housing Development Finance Corp. All these placements came at attractive discounts to both market price and valuation.

We also introduced ICICI Prudential, India's third largest private life insurer, which broadened the portfolio's exposure to financials beyond just banks. It has a robust bancassurance channel and a solid agency force. These strengths, coupled with an asset-light balance sheet, has supported a shift towards higher-margin protection products while its customer retention through the current crisis was also steady, reflecting its focus on more affluent clients.

Conversely, we sold Lemon Tree Hotels, given the challenging outlook for hospitality and tourism. We also exited Grasim Industries, preferring to sharpen our focus on its cement unit, Ultratech Cement. Separately, we divested lower conviction holdings in ABB Power Products and Kansai Nerolac Paints.

Outlook

The Covid-19 situation appears to be improving, but the near-term outlook for India remains tough. The economy is still feeling the effects of the pandemic, which have been hampered by localised lockdowns. Also, the central government has less room to expand stimulus given its already strained fiscal position. That said, green shoots are emerging. Recent data, including exports, factory output and car sales, hint at a tentative rebound, albeit these gains need to be sustained, and consumption remains weak. Encouragingly, downgrades to earnings forecasts from companies seem to be moderating.

It is in these difficult conditions that your Company's quality portfolio shines through with optimal underlying holdings that are equipped to ride through protracted shocks. This was reflected in the resilient June-quarter results of many of the portfolio's holdings. Most are industry leaders with clear competitive advantages and are backed by robust balance sheets. They also possess clear drivers of earnings and growth, pivoted towards long-term structural trends. For instance, a rising middle class should drive demand for a variety of products and services across consumer, financial and infrastructure-linked sectors. Technology names and drug makers are also well positioned, supporting the global push for digital adoption and vaccine development. Therefore, we will remain disciplined, seeking out mispricing opportunities to add to favoured picks while reducing those with more challenged outlooks. Our focus continues on building a high conviction portfolio of quality holdings to ensure that the Company can continue to deliver sustainable returns over time.

Aberdeen Standard Investments (Asia) Limited
Investment Manager
25 November 2020

INVESTMENT PORTFOLIO

As at 30 September 2020

			Valuation	Net assets
Company	Sector		£'000	%
Housing Development Finance Corporation	Financials		30,484	9.2
Infosys	Information Technology		28,862	8.7
Tata Consultancy Services	Information Technology		28,350	8.5
Hindustan Unilever	Consumer Staples		21,581	6.5
Kotak Mahindra Bank	Financials		14,842	4.5
Asian Paints	Materials		12,357	3.6
Ultratech Cement	Materials		12,224	3.7
ITC	Consumer Staples		11,978	3.6
MphasiS	Information Technology		11,596	3.5
Nestlé India	Consumer Staples		11,176	3.4
Top ten investments			183,450	55.2
SBI Life Insurance	Financials		11,005	3.3
Syngene International	Health Care		8,835	2.7
Godrej Properties	Real Estate		8,244	2.5
HDFC Bank	Financials		7,566	2.3
Gujarat Gas	Utilities		7,561	2.3
Sanofi India	Health Care		7,023	2.1
Biocon	Health Care		6,881	2.1
Tech Mahindra	Information Technology		6,498	2.1
Godrej Consumer Products	Consumer Staples		6,369	1.9
Prestige Estate Projects	Real Estate		5,807	1.7
Top twenty investments			259,239	78.2
Aegis Logistics	Energy		5,433	1.5
Container Corporation of India	Industrials		5,389	1.6
Jyothy Laboratories	Consumer Staples		5,228	1.6
Maruti Suzuki India	Consumer Discretionary		5,177	1.5
Power Grid Corporation of India	Utilities		4,772	1.3
Axis Bank	Financials		4,453	1.3
Bandhan Bank	Financials		4,399	1.3
Godrej Agrovet	Consumer Staples		4,105	1.2
Fortis Healthcare	Health Care		4,053	1.2
Hero Motocorp	Consumer Discretionary		3,683	1.2
Top thirty investments			305,931	91.9
Shree Cement	Materials		3,546	1.1
Info Edge	Communication Services		3,515	1.1
Affle India	Communication Services		3,267	1.0
ICICI Prudential Life Insurance	Financials		3,211	1.0
Bosch	Consumer Discretionary		3,181	1.0
Piramal Enterprises	Health Care		2,897	0.9
Varun Beverages	Consumer Staples		1,686	0.5
Crompton Greaves Consumer Electricals	Consumer Discretionary		1,549	0.5
ABB India	Industrials		186	0.1
Total portfolio investments			328,969	99.1
Net current assets (before deducting prior charges){A}			3,121	0.9
Total assets{B}			332,090	100.0
{A} Excluding loan balances.
{B} Total assets per the Balance Sheet less current liabilities excluding bank loans. Excludes non-current liabilities.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

				Six months ended								Six months ended
				30 September 2020								30 September 2019
				(unaudited)								(unaudited)
				Revenue				Capital		Total		Revenue	Capital	Total
	Notes			'000				'000		'000		'000	'000	'000
Income
Income from investments and other income	3			2,946				-		2,946		3,496	-	3,496
Gains/(losses) on investments held at fair value through profit or loss				-				66,671		66,671		-	20,599	20,599
Currency losses				-				(236)		(236)		-	(121)	(121)
				2,946				66,435		69,381		3,496	20,478	23,974
Expenses
Investment management fees				(1,275)				-		(1,275)		(1,485)	-	(1,485)
Administrative expenses				(439)				-		(439)		(396)	-	(396)
Profit/(loss) before finance costs and taxation				1,232				66,435		67,667		1,615	20,478	22,093
Finance costs				(215)				-		(215)		(145)	-	(145)
Profit/(loss) before taxation				1,017				66,435		67,452		1,470	20,478	21,948
Taxation	4			(295)				(4,900)		(5,195)		(2)	(2,672)	(2,674)
Profit/(loss) for the period				722				61,535		62,257		1,468	17,806	19,274
Return/(loss) per Ordinary share (pence)	5			1.23				104.86		106.09		2.49	30.14	32.63
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 2020
		(audited)
		Revenue	Capital	Total
	Notes	'000	'000	'000
Income
Income from investments and other income	3	5,185	-	5,185
Gains/(losses) on investments held at fair value through profit or loss		-	(74,343)	(74,343)
Currency losses		-	(133)	(133)
		5,185	(74,476)	(69,291)
Expenses
Investment management fees		(2,866)	-	(2,866)
Administrative expenses		(787)	-	(787)
Profit/(loss) before finance costs and taxation		1,532	(74,476)	(72,944)
Finance costs		(304)	-	(304)
Profit/(loss) before taxation		1,228	(74,476)	(73,248)
Taxation	4	(2)	2,276	2,274
Profit/(loss) for the period		1,226	(72,200)	(70,974)
Return/(loss) per Ordinary share (pence)	5	2.08	(122.42)	(120.34)

CONDENSED BALANCE SHEET

		As at	As at	As at
		30 September	30 September	31 March
		2020	2019	2020
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		328,969	352,921	264,644
Current assets
Cash at bank		3,948	4,760	8,578
Receivables		557	265	33
Total current assets		4,505	5,025	8,611
Current liabilities
Bank loan	8	(24,000)	(19,000)	(30,000)
Other payables		(1,384)	(705)	(1,672)
Total current liabilities		(25,384)	(19,705)	(31,672)
Net current liabilities		(20,879)	(14,680)	(23,061)
Non-current liabilities
Deferred tax liability on Indian capital gains	4	(4,919)	(4,948)	-
Net assets		303,171	333,293	241,583
Share capital and reserves
Ordinary share capital	9	14,768	14,768	14,768
Share premium account		25,406	25,406	25,406
Special reserve		13,470	15,601	14,139
Capital redemption reserve		4,484	4,484	4,484
Capital reserve		244,191	272,662	182,656
Revenue reserve		852	372	130
Equity shareholders' funds		303,171	333,293	241,583
Net asset value per Ordinary share (pence)	11	517.73	564.59	411.41
The accompanying notes are an integral part of these financial statements.

CONDENSED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2020 (unaudited)
		Share  premium  account		Capital  redemption  reserve
	Share capital		Special  reserve		Capital  reserve	Revenue  reserve
							Total
	'000	'000	'000	'000	'000	'000	'000
Balance at 31 March 2020	14,768	25,406	14,139	4,484	182,656	130	241,583
Profit for the period	-	-	-	-	61,535	722	62,257
Purchase of Ordinary shares to be held in treasury	-	-	(669)	-	-	-	(669)
Balance at 30 September 2020	14,768	25,406	13,470	4,484	244,191	852	303,171
Six months ended 30 September 2019 (unaudited)
		Share premium account		Capital redemption reserve
	Share capital		Special reserve		Capital reserve	Revenue reserve
							Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2019	14,768	25,406	15,778	4,484	254,856	(1,096)	314,196
Profit for the period	-	-	-	-	17,806	1,468	19,274
Purchase of Ordinary shares to be held in treasury	-	-	(177)	-	-	-	(177)
Balance at 30 September 2019	14,768	25,406	15,601	4,484	272,662	372	333,293
Year ended 31 March 2020 (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 2019	14,768	25,406	15,778	4,484	254,856	(1,096)	314,196
(Loss)/profit for the year	-	-	-	-	(72,200)	1,226	(70,974)
Purchase of Ordinary shares to be held in treasury	-	-	(1,639)	-	-	-	(1,639)
Balance at 31 March 2020	14,768	25,406	14,139	4,484	182,656	130	241,583
The Special reserve and the Revenue reserve represent the amount of the Company's distributable reserves.

CONDENSED CASH FLOW STATEMENT

	Six months ended	Six months ended	Year ended
	30 September 2020	30 September 2019	31 March 2020
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received	2,772	3,453	5,199
Interest income received	-	9	15
Investment management fee paid	(1,013)	(1,228)	(2,704)
Overseas withholding tax	(295)	(2)	(2)
Other cash expenses	(707)	(393)	(773)
Cash inflow from operations	757	1,839	1,735
Interest paid	(190)	(149)	(315)
Net cash inflow from operating activities	567	1,690	1,420
Cash flows from investing activities
Purchase of investments	(36,055)	(33,428)	(65,653)
Sales of investments	37,744	28,643	55,430
Indian capital gains tax on sales	-	(74)	(74)
Indian capital gains tax on sales refunded	19	-	-
Net cash inflow/(outflow) from investing activities	1,708	(4,859)	(10,297)
Cash flows from financing activities
Share buy backs	(669)	(177)	(1,639)
Drawdown of loan	(6,000)	4,000	15,000
Net cash (outflow)/inflow from financing activities	(6,669)	3,823	13,361
Net (decrease)/increase in cash and cash equivalents	(4,394)	654	4,484
Cash and cash equivalents at the start of the period	8,578	4,227	4,227
Effect of foreign exchange rate changes	(236)	(121)	(133)
Cash and cash equivalents at the end of the period	3,948	4,760	8,578
There were no non-cash transactions during the period (six months ended 30 September 2019 - £nil; year ended 31 March 2020 - £nil).

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.

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 2020 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.
3.	Income
		Six months ended	Six months ended	Year ended
		30 September 2020	30 September 2019	31 March 2020
		'000	'000	'000
	Income from investments
	Overseas dividends	2,946	3,487	5,171
	Other operating income
	Deposit interest	-	9	14
	Total income	2,946	3,496	5,185

4.	Taxation
				Six months ended						Six months ended					Year ended
				30 September 2020						30 September 2019					31 March 2020
				Revenue		Capital		Total		Revenue		Capital		Total	Revenue	Capital		Total
				£'000		£'000		£'000		£'000		£'000		£'000	£'000	£'000		£'000
	(a)	Analysis of charge for the period
		Indian capital gains tax charge on sales		-		-		-		-		74		74	-	74		74
		Indian capital gains tax charge on sales refunded		-		(19)		(19)		-		-		-	-	-		-
		Overseas withholding tax incurred		600		-		600		2		-		2	2	-		2
		Overseas withholding tax recoverable		(305)		-		(305)		-		-		-	-	-		-
		Total current tax charge for the period		295		(19)		276		2		74		76	2	74		76
		Deferred tax liability on Indian capital gains		-		4,919		4,919		-		2,598		2,598	-	(2,350)		(2,350)
		Total tax charge for the period		295		4,900		5,195		2		2,672		2,674	2	(2,276)		(2,274)
		The Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Taxes Act 1961.
		On 1 April 2018, the Indian Government withdrew an exemption from capital gains tax on disposals of investments held for twelve months or longer. Accordingly, the Company has recognised a deferred tax liability of £4,919,000 (30 September 2019 - £4,948,000; 31 March 2020 - £nil) on capital gains which may arise if the Company's Indian investments are sold. The Company has also recognised an asset of £342,000 (30 September 2019 - £nil; 31 March 2020 - £nil) relating to recoverable overseas withholding tax.
		At 30 September 2020 the Company had surplus management expenses and net interest deficits with a tax value of £4,035,000 (30 September 2019 - £2,959,000; 31 March 2020  - £3,673,000) in respect of which a deferred tax asset has not been recognised. This is due to the Company having sufficient excess management expenses available to cover the potential liability and the Company is not expected to generate taxable income in the future in excess of deductible expenses.
	(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 2020						30 September 2019						31 March 2020
			Revenue		Capital		Total		Revenue		Capital		Total		Revenue	Capital		Total
			£'000		£'000		£'000		£'000		£'000		£'000		£'000	£'000		'000
		Profit/(loss) before tax	1,017		66,435		67,452		1,470		20,478		21,948		1,228	(74,476)		(73,248)
		UK corporation tax on profit/(loss) at the standard rate of 19%	193		12,623		12,816		279		3,891		4,170		233	(14,150)		(13,917)
		Effects of:
		(Gains)/losses on investments held at fair value through profit or loss not taxable	-		(12,667)		(12,667)		-		(3,914)		(3,914)		-	14,125		14,125
		Currency losses not taxable	-		44		44		-		23		23		-	25		25
		Movement in excess expenses	362		-		362		381		-		381		747	-		747
		Expenses not deductible for tax purposes	5		-		5		3		-		3		3	-		3
		Indian capital gains tax charge on sales	-		-		-		-		74		74		-	74		74
		Indian capital gains tax charge on sales refunded	-		(19)		(19)		-		-		-		-	-		-
		Movement in deferred tax liability on Indian capital gains	-		4,919		4,919		-		2,598		2,598		-	(2,350)		(2,350)
		Irrecoverable overseas withholding tax	600		-		600		2		-		2		2	-		2
		Overseas withholding tax recoverable	(305)		-		(305)		-		-		-		-	-		-
		Non-taxable dividend income	(560)		-		(560)		(663)		-		(663)		(983)	-		(983)
		Total tax charge	295		4,900		5,195		2		2,672		2,674		2	(2,276)		(2,274)

5.	Return per Ordinary share
		Six months ended	Six months ended	Year ended
		30 September 2020	30 September 2019	31 March 2020
		'000	'000	'000
	Based on the following figures:
	Revenue return	722	1,468	1,226
	Capital return	61,535	17,806	(72,200)
	Total return	62,257	19,274	(70,974)
	Weighted average number of Ordinary shares in issue	58,680,999	59,063,872	58,978,796

6.

Dividends on equity shares. On 24 September 2020, the Board of Aberdeen New India Investment Trust PLC (the "Company") announced an interim dividend in respect of the year ended 31 March 2020 of 1.00 pence per share on the Company's Ordinary shares. This interim dividend, which was paid on 30 October 2020 to shareholders on the register on 2 October 2020, has been declared, on an exceptional basis, to enable the Company to maintain its investment trust status in accordance with HMRC requirements. The minimum required net revenue distribution of approximately 0.22p per Ordinary share has been supplemented by capital reserves in accordance with the Company's revised Articles of Association, which was approved by shareholders at the Annual General Meeting on 23 September 2020.

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/(losses) on investments in the Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		30 September 2020	30 September 2019	31 March 2020
		'000	'000	'000
	Purchases	61	68	127
	Sales	64	38	86
		125	106	213
	The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document, provided by the Manager, are calculated on a different basis and in line with the PRIIPs regulations.

8.

Bank loan. In July 2020, the Company entered into a new two year £30 million multi-currency revolving credit facility with Natwest Markets Plc. At 30 September 2020 £24 million (30 September 2019 - £19 million and 31 March 2020 - £30 million) had been drawn down at an all-in interest rate of 0.94925%, which rolled over on 14 October 2020. At the date of this report the company had drawn down £24,000,000 at an all-in interest rate of 0.94604%.

9.

Ordinary share capital. During the period 163,277 (six months ended 30 September 2019 - 37,500; year ended 31 March 2020 - 349,159) Ordinary shares were bought back by the Company for holding in treasury , at a cost of £669,000 (30 September 2019 - £177,000; 31 March 2020 - £1,639,000). As at 30 September 2020 there were 58,557,704 (30 September 2019 - 59,032,540 and 31 March 2020 - 58,720,981) Ordinary shares in issue, excluding 512,436 (30 September 2019 - 37,500 and 31 March 2020 - 349,159) Ordinary shares held in treasury.

Following the period end, a further 86,614 Ordinary shares were bought back for treasury by the Company at a cost of £407,000, resulting in there being 58,471,090 Ordinary shares in issue, excluding 599,050 Ordinary shares held in treasury at the date this Report was approved.

10.	Analysis of changes in net debt
		At			At
		31 March	Currency	Cash	30 September
		2020	differences	flows	2020
		'000	'000	'000	'000
	Cash and short term deposits	8,578	(332)	(4,298)	3,948
	Debt due within one year	(30,000)	-	6,000	(24,000)
		(21,422)	(332)	1,702	(20,052)
		At			At
		31 March	Currency	Cash	31 March
		2019	differences	flows	2020
		'000	'000	'000	'000
	Cash and short term deposits	4,227	(133)	4,484	8,578
	Debt due within one year	(15,000)	-	(15,000)	(30,000)
		(10,773)	(133)	(10,516)	(21,422)
	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.

11.

Net asset value per Ordinary share. The net asset value per Ordinary share is based on a net asset value of £303,171,000 (30 September 2019 - £333,293,000; 31 March 2020 - £241,583,000) and on 58,557,704 (30 September 2019 - 59,032,640; 31 March 2020 - 58,720,981) Ordinary shares, being the number of Ordinary shares in issue at the period end.

12.	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 2020		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	328,969	-	-	328,969
	Net fair value			328,969	-	-	328,969
				Level 1	Level 2	Level 3	Total
	As at 30 September 2019		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	349,722	3,199	-	352,921
	Net fair value			349,722	3,199	-	352,921
				Level 1	Level 2	Level 3	Total
	As at 31 March 2020		Note	£'000	£'000	£'000	Total
	Financial assets at fair value through profit or loss
	Quoted equities		a)	264,156	488	-	264,644
	Net fair value			264,156	488	-	264,644
	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. Quoted entities included in Fair Value Level 2 in prior periods were GDR holdings in Ultratech Cement and Ambuja Cements, which were not considered to trade actively on recognised stock exchanges and have subsequently been sold.

13.	Related party transactions. The Company has an agreement with Aberdeen Standard Fund Managers Limited (the "Manager") for the provision of management, secretarial, accounting and administration services and for carrying out promotional activity services in relation to the Company.
	During the period, the management fee was payable monthly in arrears and was based on 0.9% per annum up to £350 million and 0.75% per annum thereafter of the net assets of the Company. The management agreement is terminable by either the Company or the Manager on six months' notice. The amount payable in respect of the Company for the period was £1,275,000 (six months ended 30 September 2019 - £1,485,000; year ended 31 March 2020 - £2,866,000) and the balance due to the Manager at the period end was £664,000 (period end 30 September 2019 - £498,000; year end 31 March 2020 - £403,000). All investment management fees are charged 100% to the revenue column of the Statement of Comprehensive Income.
	The Company has an agreement with the Manager for the provision of promotional activities in relation to the Company's participation in the Aberdeen Standard Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the period were £83,000 (six months ended 30 September 2019 - £78,000; year ended 31 March 2020 - £161,000) and the balance due to the Manager at the period end was £83,000 (period ended 30 September 2019 - £39,000; year ended 31 March 2020 - £42,000).

14.

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.

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 2020 and 30 September 2019 has not been audited.
	The information for the year ended 31 March 2020 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 25 November 2020.

ALTERNATIVE PERFORMANCE MEASURES

Alternative performance measures 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 IFRS 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 investing 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 reinvesting 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 30 September 2020 and the year ended 31 March 2020. No dividends went ex-dividend during these periods.
			Share
Six months ended 30 September 2020		NAV	price
31 March 2020		411.41p	328.00p
30 September 2020		517.73p	435.00p
Total return		+25.8%	+32.6%
			Share
Year ended 31 March 2020		NAV	price
31 March 2019		531.90p	461.00p
31 March 2020		411.41p	328.00p
Total return		-22.7%	-28.9%
Discount to net asset value. The discount is the amount by which the share price of 435.00p (31 March 2020 - 328.00p) is lower than the net asset value per share of 517.73p (31 March 2020 - 411.41p), expressed as a percentage of the net asset value.
Net gearing. Net gearing measures the total borrowings of £24,000,000 (31 March 2020 - £30,000,000) less cash and cash equivalents of £3,546,000 (31 March 2020 - £8,578,000) divided by shareholders' funds of £303,171,000 (31 March 2020 - £241,583,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due to brokers at the period end of £402,000 (31 March 2020 - due to brokers of £1,061,000) as well as cash at bank of £3,948,000 (31 March 2020 - £8,578,000).
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 throughout the year. The ratio for 30 September 2020 is based on forecast ongoing charges for the year ending 31 March 2021.
	30 September 2020		31 March 2020
Investment management fees (£'000)	2,632		2,866
Administrative expenses (£'000)	835		787
Less: non-recurring charges (£'000)	(6)		-
Ongoing charges (£'000)	3,461		3,653
Average net assets (£'000)	291,349		319,144
Ongoing charges ratio	1.19%		1.14%
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which amongst other things, includes the cost of borrowings and transaction costs.

Stuart Reid

Aberdeen Asset Management PLC

Secretaries

Tel. [phone]

25 November 2020

END

 

END

 

 

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