Fidelity Asian Values Plc - Half-year Report
PR Newswire
London, April 26
Fidelity Asian Values PLC
Half-Yearly Results for the six months ended 31 January 2021
Financial Highlights:
- The Company's NAV rose by +22.5% over the six-month period.
- The Company's share price increased by +27.7% compared with a +20.0% return of the Comparative Index.
Contacts
For further information please contact:
Anna-Marie Davis
Company Secretary
01737 834798
FIL Investments International
PORTFOLIO MANAGER'S HALF-YEARLY REVIEW
PERFORMANCE REVIEW
Over the six month period ended 31 January 2021, the net asset value ("NAV") of Fidelity Asian Values PLC rose by 22.5% and the share price by 27.7%, compared with a 20.0% return of the Comparative Index. While these numbers are encouraging, longer-term performance is not as strong as I would have hoped for.
In Asia, there was an expectation that investors would rotate out of growth stocks and into value names in the last quarter of 2020 in the hope that value would benefit from an economic recovery. However, this trend has not played out to the extent we expected and stock selection was the key driver of the Company's relative performance.
I continue to believe that fundamental analysis and owning good businesses which are run by competent management teams at attractive prices leaving sufficient margin of safety is the most time-tested way to make money in the stock market. I remain committed to my investment process.
In the last six months, the holdings in BFI Finance Indonesia, Shriram Transport Finance, Axis Bank, Redington India and Nickel Mines performed well and helped the Company's performance relative to the Comparative Index. I continue to own these stocks for their longer-term growth prospects and attractive valuations.
Meanwhile, the main losses we suffered were from Chaowei Power, Sinopec Kantons, China Overseas Land & Investment and Gold Road Resources, which lagged the broader market. GCL Poly Energy, which was not held in the Company's portfolio, performed extremely well and its absence detracted somewhat from performance relative to the Comparative Index.
COVID-19
The COVID-19 pandemic has caused considerable suffering across the world.
To date, the economic impact has been cushioned somewhat by large scale government interventions in the Western world, which has led to robust demand for goods being exported from Asia. So far, Asian countries have weathered the pandemic better than the West, likely the result of their demographic profile, high compliance with government restrictions and the early use of technology in the detection of cases.
Consequently, in my opinion, Asian countries will exit the pandemic in much better economic health than the USA or Europe given that governments in Asia have generally refrained from large scale fiscal stimulus.
As vaccines are rolled out, we are probably 9 to 12 months away from returning to normal unless we see something dramatically change with the virus.
INVESTMENT STRATEGY
The last few months in the markets have been unprecedented, pivoting from crisis to euphoria as the world started to anticipate normalisation following the pandemic. This, in addition to record levels of margin lending participation and speculative activity, has resulted in a two-speed market where stocks can be found at both valuation extremes.
Despite a brief recovery, smaller value companies are now trading at a 61% discount to large cap growth companies. This compares to a 65% discount seen during the peak of the tech bubble in 1999-2000, which was the height of the previous growth cycle. Similarly, smaller value companies are trading at a 48% discount to small cap growth companies.
As a fundamental investor, my primary anchor for valuing any business is earnings and cash flows. I feel the current trend of using revenues or non-GAAP measures to value companies will be a passing trend - this has happened in the past and I do not believe this time will be any different.
Despite the outsized performance of growth stocks, the most interesting fact for me is that over time, value companies, especially in Asia, grow earnings faster than growth companies. I believe value stocks not only offer a higher margin of safety, but they are also able to grow earnings faster. As a result, it has paid off to be invested in small-cap value stocks in the longer-term. They have outperformed growth companies by a significant margin over the last 20 years.
I am excited by our holdings today. We own a portfolio of businesses which are dominant in their industries, earn good returns on capital and are available at attractive valuations.
· Price to Earnings: 10.7x versus 15.5x for the Comparative Index.
· Return on Equity at 15.5% versus 11.3% for the Comparative Index.
· Dividend yield at 2.9% versus 2.2% for the Comparative Index.
· Balance Sheets better than the Comparative Index.
My team and I are working harder than ever to find quality businesses and then test every assumption we are making about the company fundamentals going forward. A sound investment process, diligence, discipline and patience have always been - and will always be - important for success in investing.
NITIN BAJAJ
Portfolio Manager
26 April 2021
TWENTY LARGEST HOLDINGS AS AT 31 JANUARY 2021
The Gross Asset Exposures shown below measure exposure to market price movements as a result of owning shares and derivative instruments. The Balance Sheet Value is the actual value of the portfolio. Where a contract for difference ("CFD") is held, the Balance Sheet Value reflects the profit or loss on the contract since it was opened and is based on how much the share price of the underlying share has moved.
Gross Asset £'000 | Exposure %1 | Balance Sheet Value £'000 | |
| Long Exposures - shares unless otherwise stated | |||
| Axis Bank | |||
| Private sector bank | 10,092 | 3.2 | 10,092 |
| HDFC Bank | |||
| Private sector bank | 7,992 | 2.5 | 7,992 |
| Granules India | |||
| Pharmaceutical manufacturing company | 7,445 | 2.3 | 7,445 |
| China Yongda Automobiles Services Holdings (shares and long CFD) | |||
| Investment holding company engaged in the sale of passenger vehicles and provision of related services | 6,942 | 2.2 | 4,767 |
| Power Grid Corporation of India | |||
| Operator of the Indian national electricity grid | 6,038 | 1.9 | 6,038 |
| Arwana Citramulia | |||
| Ceramics manufacturer | 5,963 | 1.9 | 5,963 |
| Taiwan Semiconductor Manufacturing Company | |||
| Developer, manufacturer and distributor of semiconductor related products | 5,752 | 1.8 | 5,752 |
| Shriram Transport Finance | |||
| Provider of hire purchase and lease finance for medium and heavy commercial vehicles | 5,305 | 1.7 | 5,305 |
| Fufeng Group (shares and long CFD) | |||
| Bio-fermentation products manufacturer | 5,284 | 1.6 | 5,131 |
| Redington India | |||
| Distributor of information technology products, mobile handsets and accessories | 4,680 | 1.5 | 4,680 |
| SK Hynix | |||
| Memory semiconductor supplier of dynamic random-access memory chips and flash memory chips | 4,580 | 1.4 | 4,580 |
| Chaowei Power | |||
| Manufacturer and seller of lead-acid motive batteries | 4,247 | 1.3 | 4,247 |
| Hinduja Global Solutions | |||
| Provider of business process management services | 4,243 | 1.3 | 4,243 |
| China Foods | |||
| Processor and distributor of food and beverages | 4,205 | 1.3 | 4,205 |
| Xingda International Holdings | |||
| Manufacturer and producer of radical tire cords, bead wires and other wires | 4,178 | 1.3 | 4,178 |
| Powertech Technology | |||
| Provider of turnkey services for chip probing, packaging and testing | 4,074 | 1.3 | 4,074 |
| Taiwan Union Technology | |||
| Provider of professional support, value-added materials and advanced mass lamination service to the global electronics industry | 3,943 | 1.2 | 3,943 |
| Texwinca Holdings | |||
| Production and sales of dyed yarns and knitted fabrics | 3,763 | 1.2 | 3,763 |
| Japfa | |||
| Industrial agri-food company | 3,667 | 1.1 | 3,667 |
| Chow Sang Holdings International (shares and long CFD) | |||
| Jewellery retailer | 3,662 | 1.1 | 3,394 |
| -------------- | -------------- | -------------- | |
| Twenty largest long exposures | 106,055 | 33.1 | 103,459 |
| ======== | ======== | ======== | |
| Other long exposures | 203,375 | 63.6 | 183,331 |
| -------------- | -------------- | -------------- | |
| Other long exposures before futures and hedges (157 holdings) | 309,430 | 96.7 | 286,790 |
| Add: long futures | ======== | ======== | ======== |
| MSCI All Countries Asia ex Japan Index Future March 2021 | 4,701 | 1.5 | 340 |
| Add: hedging exposures | |||
| Forward Currency Contracts | 3 | - | 3 |
| -------------- | -------------- | -------------- | |
| Total long exposures after the netting of hedges | 314,134 | 98.2 | 287,133 |
| ======== | ======== | ======== | |
| Add: short exposures | |||
| Short CFDs (7 holdings) | 5,679 | 1.8 | (218) |
| Short Futures (1 holding) | 1,213 | 0.4 | 66 |
| -------------- | -------------- | -------------- | |
| Gross Asset Exposure2 | 321,026 | 100.4 | |
| ======== | ======== | ======== | |
| Portfolio Fair Value3 | 286,981 | ||
| ======== | |||
| Net current assets (excluding derivative assets and liabilities) | 32,915 | ||
| -------------- | |||
| Total Shareholders' Funds/Net Assets | 319,896 | ||
| ======== |
1 Gross Asset Exposure is expressed as a percentage of Total Shareholders' Funds.
2 Gross Asset Exposure comprises market exposure to investments of £287,675,000 plus market exposure to derivative instruments of £33,351,000.
3 Portfolio Fair Value comprises investments of £287,675,000 plus derivative assets of £633,000 less derivative liabilities of £1,327,000 (per the Balance Sheet below).
INTERIM MANAGEMENT REPORT
BOARD CHANGES
Following the announcement of the proposed merger on 1 March 2021 between Invesco Enhanced Income Limited (Chaired by Kate Bolsover) and City Merchants High Yield Trust Limited (Chaired by Timothy Scholefield), Timothy Scholefield stood down as the Senior Independent Director of Fidelity Asian Values PLC on 22 April 2021. He will not be standing for re-election at the Annual General Meeting later this year.
Clare Brady took over as Senior Independent Director from 22 April and Michael Warren succeeded Timothy Scholefield as Chairman of the Management Engagement Committee.
DISCOUNT MANAGEMENT AND SHARE REPURCHASES
The Board operates an active discount management policy, the primary purpose of which is to reduce discount volatility. Repurchases of ordinary shares are made at the discretion of the Board and within guidelines set by it and in light of prevailing market conditions. Shares will only be repurchased when it results in an enhancement to the NAV of the ordinary shares. In order to assist in managing the discount, the Board has shareholder approval to hold in Treasury any ordinary shares repurchased by the Company, rather than cancelling them. Any shares held in Treasury would only be re-issued at NAV per share or at a premium to NAV per share.
There continues to be turmoil in the world's financial markets and at times the Company's discount has been volatile in reaction to such market conditions. The Board has therefore approved the repurchase of 742,273 ordinary shares for holding in Treasury in the six months to 31 January 2021. Since then and as at the date of this report, 10,955 further shares have been repurchased into Treasury.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board, with the assistance of the Alternative Investment Fund Manager (FIL Investment Services (UK) Limited/the "Manager"), has developed a risk matrix which, as part of the risk management and internal controls process, has identified the key risks and uncertainties faced by the Company. These principal risks and uncertainties fall to the following categories: market, economic and political risk; investment performance risk; key person risk; discount control risk; gearing risk; derivatives risk; currency risk; cybercrime risk and pandemic risk. Other risks facing the Company include tax and regulatory risks and operational (service providers) risks. Information on each of these risks can be found in the Strategic Report section of the Annual Report for the year ended 31 July 2020 which is published on the Company's pages of the Manager's website at www.fidelity.co.uk/asianvalues.
These principal risks and uncertainties have not materially changed during the six months to 31 January 2021, and are equally applicable to the remaining six months of the Company's financial year.
CORONAVIRUS (COVID-19)
With the pandemic continuing to evolve and variants of COVID-19 appearing, it is evident that although COVID-19 is being tackled by the arrival of vaccines, risks remain. The risks are being kept under constant review by the Board and the Manager. Investors should be prepared for market fluctuations and remember that holding shares in the Company should be considered a long-term investment. These risks are somewhat mitigated by the investment trust structure of the Company which means that no forced sales will need to take place to deal with any redemptions. Therefore, investments in the Company's portfolio can be held over a longer time horizon.
The Manager carries on reviewing its business continuity plans and operational resilience strategies on an ongoing basis and continues to take all reasonable steps in meeting its regulatory obligations and to assess operational risks, the ability to continue operating and the steps it needs to take to serve and support its clients, including the Board. For example, to enhance its resilience and to look after the safety of employees, the Manager has mandated that all staff work from home and has implemented split team working for those whose work is deemed necessary to be carried out in an office. The Manager follows the self-isolation and lock-down arrangements on staff in line with Government recommendations and guidance.
Investment team key activities are performing well despite the operational challenges posed by portfolio managers, analysts and trading/support functions working from home or in split team arrangements.
The Company's other third party service providers have also implemented similar measures to ensure business disruption can be kept to a minimum.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company's portfolio management and company secretariat services to FIL Investments International. Transactions with the Manager and related party transactions with the Directors are disclosed in Note 12 to the Financial Statements below.
GOING CONCERN STATEMENT
The Directors have considered the Company's investment objective, risk management policies, liquidity risk, credit risk, capital management policies and procedures, the nature of its portfolio (being mainly securities which are readily realisable) and its expenditure and cash flow projections and have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing these Financial Statements.
This conclusion also takes into account the Board's assessment of the continuing risks arising from COVID-19 as set out above.
Continuation votes are held every five years and the next continuation vote will be put to shareholders at the Annual General Meeting later this year.
BY ORDER OF THE BOARD.
FIL INVESTMENTS INTERNATIONAL
26 April 2021
DIRECTORS' RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
a) the condensed set of Financial Statements contained within the Half-Yearly Report has been prepared in accordance with the Financial Reporting Council's Standard, FRS 104: Interim Financial Reporting; and
b) the Portfolio Manager's Half-Yearly Review and Interim Management Report above, includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.
The Half-Yearly Report has not been audited or reviewed by the Company's Independent Auditor.
The Half-Yearly Report was approved by the Board on 26 April 2021 and the above responsibility statement was signed on its behalf by Kate Bolsover, Chairman.
FINANCIAL STATEMENTS
INCOME STATEMENTFOR THE SIX MONTHS ENDED 31 JANUARY 2021
| six months ended 31 January 2021 unaudited | six months ended 31 January 2020 unaudited | year ended 31 July 2020 audited | ||||||||
Notes | revenue £'000 | capital £'000 | total £'000 | revenue £'000 | capital £'000 | total £'000 | revenue £'000 | capital £'000 | total £'000 | |
| Gains/(losses) on investments | - | 54,689 | 54,689 | - | (46,281) | (46,281) | - | (66,743) | (66,743) | |
| Gains on derivative instruments | - | 3,675 | 3,675 | - | 1,786 | 1,786 | - | 6,285 | 6,285 | |
| Income | 4 | 4,017 | - | 4,017 | 4,206 | - | 4,206 | 10,602 | - | 10,602 |
| Investment management fees | 5 | (1,052) | 292 | (760) | (1,063) | 55 | (1,008) | (1,967) | 312 | (1,655) |
| Other expenses | (389) | - | (389) | (440) | - | (440) | (797) | - | (797) | |
| Foreign exchange losses | - | (1,095) | (1,095) | - | (528) | (528) | - | (1,532) | (1,532) | |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Net return/(loss) on ordinary activities before finance costs and taxation | 2,576 | 57,561 | 60,137 | 2,703 | (44,968) | (42,265) | 7,838 | (61,678) | (53,840) | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Finance costs | (143) | - | (143) | (358) | - | (358) | (686) | - | (686) | |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Net return/(loss) on ordinary activities before taxation | 2,433 | 57,561 | 59,994 | 2,345 | (44,968) | (42,623) | 7,152 | (61,678) | (54,526) | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Taxation on return/(loss) on ordinary activities | 6 | (548) | (134) | (682) | (324) | 8 | (316) | (731) | 7 | (724) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Net return/(loss) on ordinary activities after taxation for the period | 1,885 | 57,427 | 59,312 | 2,021 | (44,960) | (42,939) | 6,421 | (61,671) | (55,250) | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Return/(loss) per ordinary share | 7 | 2.57p | 78.21p | 80.78p | 2.75p | (61.15p) | (58.40p) | 8.64p | (82.95p) | (74.31p) |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
The Company does not have any other comprehensive income. Accordingly the net return/(loss) on ordinary activities after taxation for the period is also the total comprehensive income for the period and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Income Statement of the Company. The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.
No operations were acquired or discontinued in the period and all items in the above statement derive from continuing operations.
STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 31 JANUARY 2021
Notes | share capital £'000 | share premium account £'000 | capital redemption reserve £'000 | other non- distributable reserve £'000 | other reserve £'000 | capital reserve £'000 | revenue reserve £'000 | total shareholders' funds £'000 | |
| Six months ended 31 January 2021 (unaudited) | |||||||||
| Total shareholders' funds at 31 July 2020 | 18,895 | 50,501 | 3,197 | 7,367 | 3,379 | 176,283 | 9,778 | 269,400 | |
| Net return on ordinary activities after taxation for the period | - | - | - | - | - | 57,427 | 1,885 | 59,312 | |
| Repurchase of ordinary shares | 10 | - | - | - | - | (2,575) | - | - | (2,575) |
| Dividend paid to shareholders | 8 | - | - | - | - | - | - | (6,241) | (6,241) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Total shareholders' funds at 31 January 2021 | 18,895 | 50,501 | 3,197 | 7,367 | 804 | 233,710 | 5,422 | 319,896 | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Six months ended 31 January 2020 (unaudited) | |||||||||
| Total shareholders' funds at 31 July 2019 | 18,058 | 38,073 | 3,197 | 7,367 | 8,613 | 237,954 | 9,737 | 322,999 | |
| Net (loss)/return on ordinary activities after taxation for the period | - | - | - | - | - | (44,960) | 2,021 | (42,939) | |
| Issue of ordinary shares on the exercise of rights attached to subscription shares | 10 | 770 | 11,332 | - | - | - | - | - | 12,102 |
| Issue of new ordinary shares | 10 | 67 | 1,096 | - | - | - | - | - | 1,163 |
| Dividend paid to shareholders | 8 | - | - | - | - | - | - | (6,380) | (6,380) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Total shareholders' funds at 31 January 2020 | 18,895 | 50,501 | 3,197 | 7,367 | 8,613 | 192,994 | 5,378 | 286,945 | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Year ended 31 July 2020 (audited) | |||||||||
| Total shareholders' funds at 31 July 2019 | 18,058 | 38,073 | 3,197 | 7,367 | 8,613 | 237,954 | 9,737 | 322,999 | |
| Net (loss)/return on ordinary activities after taxation for the year | - | - | - | - | - | (61,671) | 6,421 | (55,250) | |
| Repurchase of ordinary shares | 10 | - | - | - | - | (5,234) | - | - | (5,234) |
| Issue of ordinary shares on the exercise of rights attached to subscription shares | 10 | 770 | 11,332 | - | - | - | - | - | 12,102 |
| Issue of new ordinary shares | 10 | 67 | 1,096 | - | - | - | - | - | 1,163 |
| Dividend paid to shareholders | 8 | - | - | - | - | - | - | (6,380) | (6,380) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Total shareholders' funds at 31 July 2020 | 18,895 | 50,501 | 3,197 | 7,367 | 3,379 | 176,283 | 9,778 | 269,400 | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== |
BALANCE SHEETAS AT 31 JANUARY 2021
Company Number 3183919
Notes | 31.01.21 unaudited £'000 | 31.07.20 audited £'000 | 31.01.20 unaudited £'000 | |
| Fixed assets | ||||
| Investments | 9 | 287,675 | 241,271 | 272,307 |
| Current assets | ||||
| Derivative instruments | 9 | 633 | 7,299 | 2,230 |
| Debtors | 3,446 | 1,886 | 718 | |
| Amounts held at futures clearing houses and brokers | 1,113 | 1,115 | 1,670 | |
| Cash at bank | 30,161 | 21,262 | 13,286 | |
| -------------- | -------------- | -------------- | ||
| 35,353 | 31,562 | 17,904 | ||
| ======== | ======== | ======== | ||
| Current liabilities | ||||
| Derivative instruments | 9 | (1,327) | (1,149) | (1,763) |
| Other creditors | (1,805) | (2,284) | (1,503) | |
| -------------- | -------------- | -------------- | ||
| (3,132) | (3,433) | (3,266) | ||
| ======== | ======== | ======== | ||
| Net current assets | 32,221 | 28,129 | 14,638 | |
| ======== | ======== | ======== | ||
| Net assets | 319,896 | 269,400 | 286,945 | |
| ======== | ======== | ======== | ||
| Capital and reserves | ||||
| Share capital | 10 | 18,895 | 18,895 | 18,895 |
| Share premium account | 50,501 | 50,501 | 50,501 | |
| Capital redemption reserve | 3,197 | 3,197 | 3,197 | |
| Other non-distributable reserve | 7,367 | 7,367 | 7,367 | |
| Other reserve | 804 | 3,379 | 8,613 | |
| Capital reserve | 233,710 | 176,283 | 192,994 | |
| Revenue reserve | 5,422 | 9,778 | 5,378 | |
| -------------- | -------------- | -------------- | ||
| Total shareholders' funds | 319,896 | 269,400 | 286,945 | |
| ======== | ======== | ======== | ||
| Net asset value per ordinary share | 11 | 437.08p | 364.39p | 379.65p |
| ======== | ======== | ======== |
NOTES TO THE FINANCIAL STATEMENTS
1 PRINCIPAL ACTIVITY
Fidelity Asian Values PLC is an Investment Company incorporated in England and Wales with a premium listing on the London Stock Exchange. The Company's registration number is 3183919, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP. The Company has been approved by HM Revenue & Customs as an Investment Trust under Section 1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as to continue to be approved.
2 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this Half-Yearly Report have not been audited by the Company's Independent Auditor and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 (the "Act"). The financial information for the year ended 31 July 2020 is extracted from the latest published Financial Statements of the Company. Those Financial Statements were delivered to the Registrar of Companies and included the Independent Auditor's Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Act.
3 ACCOUNTING POLICIES
(i) Basis of Preparation
The Company prepares its Financial Statements on a going concern basis and in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") and FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council. The Financial Statements are also prepared in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts ("SORP") issued by the Association of Investment Companies ("AIC") in October 2019. FRS 104: Interim Financial Reporting has also been applied in preparing this condensed set of Financial Statements. The accounting policies followed are consistent with those disclosed in the Company's Annual Report and Financial Statements for the year ended 31 July 2020.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements. This conclusion also takes into account the Board's assessment of the continuing risks arising from COVID-19.
4 INCOME
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Investment income | |||
| Overseas dividends | 3,382 | 3,889 | 9,817 |
| Overseas scrip dividends | 310 | 45 | 45 |
| -------------- | -------------- | -------------- | |
| 3,692 | 3,934 | 9,862 | |
| ======== | ======== | ======== | |
| Derivative income | |||
| Dividends received on long CFDs | 320 | 143 | 536 |
| Interest received on CFDs | 5 | 97 | 154 |
| -------------- | -------------- | -------------- | |
| 325 | 240 | 690 | |
| ======== | ======== | ======== | |
| Other interest | |||
| Interest received on collateral and deposits | - | 32 | 50 |
| -------------- | -------------- | -------------- | |
| Total income | 4,017 | 4,206 | 10,602 |
| ======== | ======== | ======== |
Special dividends of £3,676,000 have been recognised in capital (six months ended 31 January 2020 and year ended 31 July 2020: £nil).
5 INVESTMENT MANAGEMENT FEES
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Investment management fees - base (charged to revenue) | 1,052 | 1,063 | 1,967 |
| Investment management fees - variable (credited to capital) | (292) | (55) | (312) |
| -------------- | -------------- | -------------- | |
| 760 | 1,008 | 1,655 | |
| ======== | ======== | ======== |
FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International ("FII"). Both companies are Fidelity group companies.
The Company charges base investment management fees at an annual rate of 0.70% of net assets. In addition, there is +/- 0.20% variation fee based on the Company's NAV per share performance relative to the Company's Comparative Index. Fees are payable monthly in arrears and are calculated on a daily basis.
6 TAXATION ON RETURN/(LOSS) ON ORDINARY ACTIVITIES
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Revenue - taxation on overseas dividends | 548 | 324 | 731 |
| Capital - Indian capital gains tax charged/(credited) in the period | 134 | (8) | (7) |
| -------------- | -------------- | -------------- | |
| Total taxation charge for the period | 682 | 316 | 724 |
| ======== | ======== | ======== |
7 RETURN/(LOSS) PER ORDINARY SHARE
| six months ended 31.01.21 unaudited | six months ended 31.01.20 unaudited | year ended 31.07.20 audited | |
| Revenue return per ordinary share | 2.57p | 2.75p | 8.64p |
| Capital return/(loss) per ordinary share | 78.21p | (61.15p) | (82.95p) |
| -------------- | -------------- | -------------- | |
| Total return/(loss) per ordinary share | 80.78p | (58.40p) | (74.31p) |
| ======== | ======== | ======== |
The return/(loss) per ordinary share is based on the net return/(loss) on ordinary activities after taxation for the period divided by the weighted average number of ordinary shares in issue during the period, as shown below:
| £'000 | £'000 | £'000 | |
| Net revenue return on ordinary activities after taxation | 1,885 | 2,021 | 6,421 |
| Net capital return/(loss) on ordinary activities after taxation | 57,427 | (44,960) | (61,671) |
| -------------- | -------------- | -------------- | |
| Net total return/(loss) on ordinary activities after taxation | 59,312 | (42,939) | (55,250) |
| ======== | ======== | ======== |
| number | number | number | |
| Weighted average number of ordinary shares held outside of Treasury during the period | 73,428,741 | 73,529,470 | 74,348,836 |
| ======== | ======== | ======== |
8 DIVIDENDS PAID TO SHAREHOLDERS
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Dividend of 8.50 pence per ordinary share paid for the year ended 31 July 2020 | 6,241 | - | - |
| Dividend of 8.80 pence per ordinary share paid for the year ended 31 July 2019 | - | 6,380 | 6,380 |
| -------------- | -------------- | -------------- | |
| 6,241 | 6,380 | 6,380 | |
| ======== | ======== | ======== |
No dividend has been declared in respect of the six months ended 31 January 2021.
9 FAIR VALUE HIERARCHY
The Company is required to disclose the fair value hierarchy that classifies its financial instruments measured at fair value at one of three levels, according to the relative reliability of the inputs used to estimate the fair values.
| Classification | Input |
| Level 1 | Valued using quoted prices in active markets for identical assets |
| Level 2 | Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly |
| Level 3 | Valued by reference to valuation techniques using inputs that are not based on observable market data |
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset. The table below sets out the Company's fair value hierarchy:
31 January 2021 (unaudited) | level 1 £'000 | level 2 £'000 | level 3 £'000 | total £'000 |
| Financial assets at fair value through profit or loss | ||||
| Investments | 284,357 | 2,157 | 1,161 | 287,675 |
| Derivative instrument assets | 406 | 227 | - | 633 |
| -------------- | -------------- | -------------- | -------------- | |
| 284,763 | 2,384 | 1,161 | 288,308 | |
| ======== | ======== | ======== | ======== | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | - | (1,327) | - | (1,327) |
| ======== | ======== | ======== | ======== |
31 July 2020 (audited) | level 1 £'000 | level 2 £'000 | level 3 £'000 | total £'000 |
| Financial assets at fair value through profit or loss | ||||
| Investments | 238,836 | 2,096 | 339 | 241,271 |
| Derivative instrument assets | 487 | 6,812 | - | 7,299 |
| -------------- | -------------- | -------------- | -------------- | |
| 239,323 | 8,908 | 339 | 248,570 | |
| ======== | ======== | ======== | ======== | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | - | (1,149) | - | (1,149) |
| ======== | ======== | ======== | ======== |
31 January 2020 (unaudited) | level 1 £'000 | level 2 £'000 | level 3 £'000 | total £'000 |
| Financial assets at fair value through profit or loss | ||||
| Investments | 270,739 | 1,052 | 516 | 272,307 |
| Derivative instrument assets | - | 2,230 | - | 2,230 |
| -------------- | -------------- | -------------- | -------------- | |
| 270,739 | 3,282 | 516 | 274,537 | |
| ======== | ======== | ======== | ======== | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | (511) | (1,252) | - | (1,763) |
| ======== | ======== | ======== | ======== |
10 SHARE CAPITAL
| 31 January 2021 unaudited | 31 July 2020 audited | 31 January 2020 unaudited | ||||
| number of shares | £'000 | number of shares | £'000 | number of shares | £'000 | |
| Issued, allotted and fully paid | ||||||
| Ordinary shares of 25 pence each held outside of Treasury | ||||||
| Beginning of the period | 73,932,107 | 18,483 | 72,233,453 | 18,058 | 72,233,453 | 18,058 |
| Ordinary shares issued on the exercise of rights | - | - | 3,081,455 | 770 | 3,081,455 | 770 |
| New ordinary shares issued | - | - | 265,981 | 67 | 265,981 | 67 |
| Ordinary shares repurchased into Treasury | (742,273) | (186) | (1,648,782) | (412) | - | - |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| End of the period | 73,189,834 | 18,297 | 73,932,107 | 18,483 | 75,580,889 | 18,895 |
| ======== | ======== | ======== | ======== | ======== | ======== | |
| Ordinary shares of 25 pence each held in Treasury1 | ||||||
| Beginning of the period | 1,648,782 | 412 | - | - | - | - |
| Ordinary shares repurchased into Treasury | 742,273 | 186 | 1,648,782 | 412 | - | - |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| End of the period | 2,391,055 | 598 | 1,648,782 | 412 | - | - |
| ======== | ======== | ======== | ======== | ======== | ======== | |
1 Ordinary shares held in Treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company.
| 31 January 2021 unaudited | 31 July 2020 audited | 31 January 2020 unaudited | ||||||
| number of shares | £'000 | number of shares | £'000 | number of shares | £'000 | |||
| Issued, allotted and fully paid | ||||||||
| Subscription shares of 0.001 pence | ||||||||
| Beginning of the period | - | - | 11,103,030 | - | 11,103,030 | - | ||
| Cancellation of subscription shares on the exercise of rights | - | - | (3,081,455) | - | (3,081,455) | - | ||
| Cancellation of subscription shares | - | - | (8,021,575) | - | (8,021,575) | - | ||
| End of the period | - | - | - | - | - | - | ||
| -------------- | -------------- | -------------- | ||||||
| Total share capital | 18,895 | 18,895 | 18,895 | |||||
| ======== | ======== | ======== | ||||||
The cost of ordinary shares repurchased into Treasury during the year was £2,575,000 (year ended 31 July 2020: £5,234,000 and six months ended 31 January 2020: £nil).
A bonus issue of subscription shares to ordinary shareholders on the basis of one subscription share for every five ordinary shares held took place on 5 December 2016. Each subscription share gives the holder the right, but not the obligation, to subscribe for one ordinary share upon payment of the subscription price. The subscription price is based on the published unaudited NAV per ordinary share at 2 December 2016, plus a premium depending upon the year in which the right is exercised. The subscription share rights can be exercised annually in the 25 business days prior to the relevant subscription date (on which the exercise would take effect). The subscription dates, subscription prices and premia are as follows:
| Subscription date | Subscription price | Premium | |
| First subscription date | 30 November 2017 | 370.75p | 1% |
| Second subscription date | 30 November 2018 | 381.75p | 4% |
| Final subscription date | 29 November 2019 | 392.75p | 7% |
After the final subscription date of 29 November 2019, the Company appointed a trustee to exercise any rights remaining that were not exercised by shareholders, providing that by doing so a profit could be realised. To realise a profit the sale proceeds from selling the resulting ordinary shares in the market would need to be in excess of the 392.75 pence per share price of exercising the rights, plus any related expenses and fees. On 13 December 2019, the Board of the Company announced the Trustee did not exercise any of the unexercised subscription rights of the 8,021,575 outstanding subscription shares. The Trustee determined the net proceeds of sale after deduction of all costs and expenses, would not have exceeded the costs of exercising the subscription share rights. Therefore, all subscription share rights for the outstanding subscription shares lapsed with nil value.
In the prior period, the Company issued 3,081,455 ordinary shares on the exercise of rights attached to subscription shares. The subscription share price of 392.75 pence per ordinary share issued represented a premium of 367.75 pence per share over the 25 pence nominal value of each share. The total premium received on the issue of ordinary shares of £11,332,000 was credited to the share premium account.
The Company issued no new ordinary shares during the period (year ended 31 July 2020 and six months ended 31 January 2020: 265,981 shares). In the prior period, the total premium received on the issue of new ordinary shares of £1,096,000 was credited to the share premium account.
11 NET ASSET VALUE PER ORDINARY SHARE
| 31.01.21 unaudited | 31.07.20 audited | 31.01.20 unaudited | |
| Total shareholders' funds | £319,896,000 | £269,400,000 | £286,945,000 |
| Ordinary shares held outside of Treasury at period end | 73,189,834 | 73,932,107 | 75,580,889 |
| Net asset value per ordinary share | 437.08p | 364.39p | 379.65p |
| ========== | ========== | ========== |
It is the Company's policy that shares held in Treasury will only be reissued at net asset value per ordinary share or at a premium to net asset value per ordinary share and, therefore, shares held in Treasury have no dilutive effect.
12 TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management and the role of Company Secretary to FIL Investments International ("FII"). Both companies are Fidelity group companies.
Details of the fee arrangements are given in Note 5 above. During the period, management fees of £760,000 (six months ended 31 January 2020: £1,008,000 and year ended 31 July 2020: £1,655,000) and secretarial and administration fees of £38,000 (six months ended 31 January 2020: £38,000 and year ended 31 July 2020: £75,000) were payable to FII. At the Balance Sheet date, management fees of £143,000 (31 January 2020: £130,000 and 31 July 2020: £117,000) and secretarial and administration fees of £6,000 (31 January 2020: £6,000 and 31 July 2020: £6,000) were accrued and included in other creditors. FII also provides the Company with marketing services. The total amount payable for these services during the period was £66,000 (six months ended 31 January 2020: £64,000 and year ended 31 July 2020: £118,000). At the Balance Sheet date, marketing services of £13,000 (31 January 2020: £24,000 and 31 July 2020: £25,000) were accrued and included in other creditors.
As at 31 January 2021, the Board consisted of five non-executive Directors (as shown in the Half-Yearly Report), all of whom are considered to be independent by the Board. None of the Directors have a service contract with the Company. The Chairman receives an annual fee of £36,000, the Audit Committee Chairman an annual fee of £30,000 and each other Director an annual fee of £26,000. The following members of the Board held shares in the Company: Kate Bolsover 15,452 ordinary shares, Clare Brady 2,500 ordinary shares, Timothy Scholefield 12,000 ordinary shares, Grahame Stott 25,000 ordinary shares and Michael Warren 10,000 ordinary shares.
The financial information contained in this Half-Yearly Results Announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 January 2021 and 31 January 2020 has not been audited or reviewed by the Company's Independent Auditor.
The information for the year ended 31 July 2020 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
A copy of the Half-Yearly Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's website at www.fidelity.co.uk/asianvalues where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.
Fidelity Asian Values PLC
Half-Yearly Results for the six months ended 31 January 2021
Financial Highlights:
- The Company's NAV rose by +22.5% over the six-month period.
- The Company's share price increased by +27.7% compared with a +20.0% return of the Comparative Index.
Contacts
For further information please contact:
Anna-Marie Davis
Company Secretary
01737 834798
FIL Investments International
PORTFOLIO MANAGER'S HALF-YEARLY REVIEW
PERFORMANCE REVIEW
Over the six month period ended 31 January 2021, the net asset value ("NAV") of Fidelity Asian Values PLC rose by 22.5% and the share price by 27.7%, compared with a 20.0% return of the Comparative Index. While these numbers are encouraging, longer-term performance is not as strong as I would have hoped for.
In Asia, there was an expectation that investors would rotate out of growth stocks and into value names in the last quarter of 2020 in the hope that value would benefit from an economic recovery. However, this trend has not played out to the extent we expected and stock selection was the key driver of the Company's relative performance.
I continue to believe that fundamental analysis and owning good businesses which are run by competent management teams at attractive prices leaving sufficient margin of safety is the most time-tested way to make money in the stock market. I remain committed to my investment process.
In the last six months, the holdings in BFI Finance Indonesia, Shriram Transport Finance, Axis Bank, Redington India and Nickel Mines performed well and helped the Company's performance relative to the Comparative Index. I continue to own these stocks for their longer-term growth prospects and attractive valuations.
Meanwhile, the main losses we suffered were from Chaowei Power, Sinopec Kantons, China Overseas Land & Investment and Gold Road Resources, which lagged the broader market. GCL Poly Energy, which was not held in the Company's portfolio, performed extremely well and its absence detracted somewhat from performance relative to the Comparative Index.
COVID-19
The COVID-19 pandemic has caused considerable suffering across the world.
To date, the economic impact has been cushioned somewhat by large scale government interventions in the Western world, which has led to robust demand for goods being exported from Asia. So far, Asian countries have weathered the pandemic better than the West, likely the result of their demographic profile, high compliance with government restrictions and the early use of technology in the detection of cases.
Consequently, in my opinion, Asian countries will exit the pandemic in much better economic health than the USA or Europe given that governments in Asia have generally refrained from large scale fiscal stimulus.
As vaccines are rolled out, we are probably 9 to 12 months away from returning to normal unless we see something dramatically change with the virus.
INVESTMENT STRATEGY
The last few months in the markets have been unprecedented, pivoting from crisis to euphoria as the world started to anticipate normalisation following the pandemic. This, in addition to record levels of margin lending participation and speculative activity, has resulted in a two-speed market where stocks can be found at both valuation extremes.
Despite a brief recovery, smaller value companies are now trading at a 61% discount to large cap growth companies. This compares to a 65% discount seen during the peak of the tech bubble in 1999-2000, which was the height of the previous growth cycle. Similarly, smaller value companies are trading at a 48% discount to small cap growth companies.
As a fundamental investor, my primary anchor for valuing any business is earnings and cash flows. I feel the current trend of using revenues or non-GAAP measures to value companies will be a passing trend - this has happened in the past and I do not believe this time will be any different.
Despite the outsized performance of growth stocks, the most interesting fact for me is that over time, value companies, especially in Asia, grow earnings faster than growth companies. I believe value stocks not only offer a higher margin of safety, but they are also able to grow earnings faster. As a result, it has paid off to be invested in small-cap value stocks in the longer-term. They have outperformed growth companies by a significant margin over the last 20 years.
I am excited by our holdings today. We own a portfolio of businesses which are dominant in their industries, earn good returns on capital and are available at attractive valuations.
· Price to Earnings: 10.7x versus 15.5x for the Comparative Index.
· Return on Equity at 15.5% versus 11.3% for the Comparative Index.
· Dividend yield at 2.9% versus 2.2% for the Comparative Index.
· Balance Sheets better than the Comparative Index.
My team and I are working harder than ever to find quality businesses and then test every assumption we are making about the company fundamentals going forward. A sound investment process, diligence, discipline and patience have always been - and will always be - important for success in investing.
NITIN BAJAJ
Portfolio Manager
26 April 2021
TWENTY LARGEST HOLDINGS AS AT 31 JANUARY 2021
The Gross Asset Exposures shown below measure exposure to market price movements as a result of owning shares and derivative instruments. The Balance Sheet Value is the actual value of the portfolio. Where a contract for difference ("CFD") is held, the Balance Sheet Value reflects the profit or loss on the contract since it was opened and is based on how much the share price of the underlying share has moved.
Gross Asset £'000 | Exposure %1 | Balance Sheet Value £'000 | |
| Long Exposures - shares unless otherwise stated | |||
| Axis Bank | |||
| Private sector bank | 10,092 | 3.2 | 10,092 |
| HDFC Bank | |||
| Private sector bank | 7,992 | 2.5 | 7,992 |
| Granules India | |||
| Pharmaceutical manufacturing company | 7,445 | 2.3 | 7,445 |
| China Yongda Automobiles Services Holdings (shares and long CFD) | |||
| Investment holding company engaged in the sale of passenger vehicles and provision of related services | 6,942 | 2.2 | 4,767 |
| Power Grid Corporation of India | |||
| Operator of the Indian national electricity grid | 6,038 | 1.9 | 6,038 |
| Arwana Citramulia | |||
| Ceramics manufacturer | 5,963 | 1.9 | 5,963 |
| Taiwan Semiconductor Manufacturing Company | |||
| Developer, manufacturer and distributor of semiconductor related products | 5,752 | 1.8 | 5,752 |
| Shriram Transport Finance | |||
| Provider of hire purchase and lease finance for medium and heavy commercial vehicles | 5,305 | 1.7 | 5,305 |
| Fufeng Group (shares and long CFD) | |||
| Bio-fermentation products manufacturer | 5,284 | 1.6 | 5,131 |
| Redington India | |||
| Distributor of information technology products, mobile handsets and accessories | 4,680 | 1.5 | 4,680 |
| SK Hynix | |||
| Memory semiconductor supplier of dynamic random-access memory chips and flash memory chips | 4,580 | 1.4 | 4,580 |
| Chaowei Power | |||
| Manufacturer and seller of lead-acid motive batteries | 4,247 | 1.3 | 4,247 |
| Hinduja Global Solutions | |||
| Provider of business process management services | 4,243 | 1.3 | 4,243 |
| China Foods | |||
| Processor and distributor of food and beverages | 4,205 | 1.3 | 4,205 |
| Xingda International Holdings | |||
| Manufacturer and producer of radical tire cords, bead wires and other wires | 4,178 | 1.3 | 4,178 |
| Powertech Technology | |||
| Provider of turnkey services for chip probing, packaging and testing | 4,074 | 1.3 | 4,074 |
| Taiwan Union Technology | |||
| Provider of professional support, value-added materials and advanced mass lamination service to the global electronics industry | 3,943 | 1.2 | 3,943 |
| Texwinca Holdings | |||
| Production and sales of dyed yarns and knitted fabrics | 3,763 | 1.2 | 3,763 |
| Japfa | |||
| Industrial agri-food company | 3,667 | 1.1 | 3,667 |
| Chow Sang Holdings International (shares and long CFD) | |||
| Jewellery retailer | 3,662 | 1.1 | 3,394 |
| -------------- | -------------- | -------------- | |
| Twenty largest long exposures | 106,055 | 33.1 | 103,459 |
| ======== | ======== | ======== | |
| Other long exposures | 203,375 | 63.6 | 183,331 |
| -------------- | -------------- | -------------- | |
| Other long exposures before futures and hedges (157 holdings) | 309,430 | 96.7 | 286,790 |
| Add: long futures | ======== | ======== | ======== |
| MSCI All Countries Asia ex Japan Index Future March 2021 | 4,701 | 1.5 | 340 |
| Add: hedging exposures | |||
| Forward Currency Contracts | 3 | - | 3 |
| -------------- | -------------- | -------------- | |
| Total long exposures after the netting of hedges | 314,134 | 98.2 | 287,133 |
| ======== | ======== | ======== | |
| Add: short exposures | |||
| Short CFDs (7 holdings) | 5,679 | 1.8 | (218) |
| Short Futures (1 holding) | 1,213 | 0.4 | 66 |
| -------------- | -------------- | -------------- | |
| Gross Asset Exposure2 | 321,026 | 100.4 | |
| ======== | ======== | ======== | |
| Portfolio Fair Value3 | 286,981 | ||
| ======== | |||
| Net current assets (excluding derivative assets and liabilities) | 32,915 | ||
| -------------- | |||
| Total Shareholders' Funds/Net Assets | 319,896 | ||
| ======== |
1 Gross Asset Exposure is expressed as a percentage of Total Shareholders' Funds.
2 Gross Asset Exposure comprises market exposure to investments of £287,675,000 plus market exposure to derivative instruments of £33,351,000.
3 Portfolio Fair Value comprises investments of £287,675,000 plus derivative assets of £633,000 less derivative liabilities of £1,327,000 (per the Balance Sheet below).
INTERIM MANAGEMENT REPORT
BOARD CHANGES
Following the announcement of the proposed merger on 1 March 2021 between Invesco Enhanced Income Limited (Chaired by Kate Bolsover) and City Merchants High Yield Trust Limited (Chaired by Timothy Scholefield), Timothy Scholefield stood down as the Senior Independent Director of Fidelity Asian Values PLC on 22 April 2021. He will not be standing for re-election at the Annual General Meeting later this year.
Clare Brady took over as Senior Independent Director from 22 April and Michael Warren succeeded Timothy Scholefield as Chairman of the Management Engagement Committee.
DISCOUNT MANAGEMENT AND SHARE REPURCHASES
The Board operates an active discount management policy, the primary purpose of which is to reduce discount volatility. Repurchases of ordinary shares are made at the discretion of the Board and within guidelines set by it and in light of prevailing market conditions. Shares will only be repurchased when it results in an enhancement to the NAV of the ordinary shares. In order to assist in managing the discount, the Board has shareholder approval to hold in Treasury any ordinary shares repurchased by the Company, rather than cancelling them. Any shares held in Treasury would only be re-issued at NAV per share or at a premium to NAV per share.
There continues to be turmoil in the world's financial markets and at times the Company's discount has been volatile in reaction to such market conditions. The Board has therefore approved the repurchase of 742,273 ordinary shares for holding in Treasury in the six months to 31 January 2021. Since then and as at the date of this report, 10,955 further shares have been repurchased into Treasury.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board, with the assistance of the Alternative Investment Fund Manager (FIL Investment Services (UK) Limited/the "Manager"), has developed a risk matrix which, as part of the risk management and internal controls process, has identified the key risks and uncertainties faced by the Company. These principal risks and uncertainties fall to the following categories: market, economic and political risk; investment performance risk; key person risk; discount control risk; gearing risk; derivatives risk; currency risk; cybercrime risk and pandemic risk. Other risks facing the Company include tax and regulatory risks and operational (service providers) risks. Information on each of these risks can be found in the Strategic Report section of the Annual Report for the year ended 31 July 2020 which is published on the Company's pages of the Manager's website at www.fidelity.co.uk/asianvalues.
These principal risks and uncertainties have not materially changed during the six months to 31 January 2021, and are equally applicable to the remaining six months of the Company's financial year.
CORONAVIRUS (COVID-19)
With the pandemic continuing to evolve and variants of COVID-19 appearing, it is evident that although COVID-19 is being tackled by the arrival of vaccines, risks remain. The risks are being kept under constant review by the Board and the Manager. Investors should be prepared for market fluctuations and remember that holding shares in the Company should be considered a long-term investment. These risks are somewhat mitigated by the investment trust structure of the Company which means that no forced sales will need to take place to deal with any redemptions. Therefore, investments in the Company's portfolio can be held over a longer time horizon.
The Manager carries on reviewing its business continuity plans and operational resilience strategies on an ongoing basis and continues to take all reasonable steps in meeting its regulatory obligations and to assess operational risks, the ability to continue operating and the steps it needs to take to serve and support its clients, including the Board. For example, to enhance its resilience and to look after the safety of employees, the Manager has mandated that all staff work from home and has implemented split team working for those whose work is deemed necessary to be carried out in an office. The Manager follows the self-isolation and lock-down arrangements on staff in line with Government recommendations and guidance.
Investment team key activities are performing well despite the operational challenges posed by portfolio managers, analysts and trading/support functions working from home or in split team arrangements.
The Company's other third party service providers have also implemented similar measures to ensure business disruption can be kept to a minimum.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company's portfolio management and company secretariat services to FIL Investments International. Transactions with the Manager and related party transactions with the Directors are disclosed in Note 12 to the Financial Statements below.
GOING CONCERN STATEMENT
The Directors have considered the Company's investment objective, risk management policies, liquidity risk, credit risk, capital management policies and procedures, the nature of its portfolio (being mainly securities which are readily realisable) and its expenditure and cash flow projections and have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing these Financial Statements.
This conclusion also takes into account the Board's assessment of the continuing risks arising from COVID-19 as set out above.
Continuation votes are held every five years and the next continuation vote will be put to shareholders at the Annual General Meeting later this year.
BY ORDER OF THE BOARD.
FIL INVESTMENTS INTERNATIONAL
26 April 2021
DIRECTORS' RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
a) the condensed set of Financial Statements contained within the Half-Yearly Report has been prepared in accordance with the Financial Reporting Council's Standard, FRS 104: Interim Financial Reporting; and
b) the Portfolio Manager's Half-Yearly Review and Interim Management Report above, includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.
The Half-Yearly Report has not been audited or reviewed by the Company's Independent Auditor.
The Half-Yearly Report was approved by the Board on 26 April 2021 and the above responsibility statement was signed on its behalf by Kate Bolsover, Chairman.
FINANCIAL STATEMENTS
INCOME STATEMENTFOR THE SIX MONTHS ENDED 31 JANUARY 2021
| six months ended 31 January 2021 unaudited | six months ended 31 January 2020 unaudited | year ended 31 July 2020 audited | ||||||||
Notes | revenue £'000 | capital £'000 | total £'000 | revenue £'000 | capital £'000 | total £'000 | revenue £'000 | capital £'000 | total £'000 | |
| Gains/(losses) on investments | - | 54,689 | 54,689 | - | (46,281) | (46,281) | - | (66,743) | (66,743) | |
| Gains on derivative instruments | - | 3,675 | 3,675 | - | 1,786 | 1,786 | - | 6,285 | 6,285 | |
| Income | 4 | 4,017 | - | 4,017 | 4,206 | - | 4,206 | 10,602 | - | 10,602 |
| Investment management fees | 5 | (1,052) | 292 | (760) | (1,063) | 55 | (1,008) | (1,967) | 312 | (1,655) |
| Other expenses | (389) | - | (389) | (440) | - | (440) | (797) | - | (797) | |
| Foreign exchange losses | - | (1,095) | (1,095) | - | (528) | (528) | - | (1,532) | (1,532) | |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Net return/(loss) on ordinary activities before finance costs and taxation | 2,576 | 57,561 | 60,137 | 2,703 | (44,968) | (42,265) | 7,838 | (61,678) | (53,840) | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Finance costs | (143) | - | (143) | (358) | - | (358) | (686) | - | (686) | |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Net return/(loss) on ordinary activities before taxation | 2,433 | 57,561 | 59,994 | 2,345 | (44,968) | (42,623) | 7,152 | (61,678) | (54,526) | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Taxation on return/(loss) on ordinary activities | 6 | (548) | (134) | (682) | (324) | 8 | (316) | (731) | 7 | (724) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Net return/(loss) on ordinary activities after taxation for the period | 1,885 | 57,427 | 59,312 | 2,021 | (44,960) | (42,939) | 6,421 | (61,671) | (55,250) | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Return/(loss) per ordinary share | 7 | 2.57p | 78.21p | 80.78p | 2.75p | (61.15p) | (58.40p) | 8.64p | (82.95p) | (74.31p) |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
The Company does not have any other comprehensive income. Accordingly the net return/(loss) on ordinary activities after taxation for the period is also the total comprehensive income for the period and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Income Statement of the Company. The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.
No operations were acquired or discontinued in the period and all items in the above statement derive from continuing operations.
STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 31 JANUARY 2021
Notes | share capital £'000 | share premium account £'000 | capital redemption reserve £'000 | other non- distributable reserve £'000 | other reserve £'000 | capital reserve £'000 | revenue reserve £'000 | total shareholders' funds £'000 | |
| Six months ended 31 January 2021 (unaudited) | |||||||||
| Total shareholders' funds at 31 July 2020 | 18,895 | 50,501 | 3,197 | 7,367 | 3,379 | 176,283 | 9,778 | 269,400 | |
| Net return on ordinary activities after taxation for the period | - | - | - | - | - | 57,427 | 1,885 | 59,312 | |
| Repurchase of ordinary shares | 10 | - | - | - | - | (2,575) | - | - | (2,575) |
| Dividend paid to shareholders | 8 | - | - | - | - | - | - | (6,241) | (6,241) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Total shareholders' funds at 31 January 2021 | 18,895 | 50,501 | 3,197 | 7,367 | 804 | 233,710 | 5,422 | 319,896 | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Six months ended 31 January 2020 (unaudited) | |||||||||
| Total shareholders' funds at 31 July 2019 | 18,058 | 38,073 | 3,197 | 7,367 | 8,613 | 237,954 | 9,737 | 322,999 | |
| Net (loss)/return on ordinary activities after taxation for the period | - | - | - | - | - | (44,960) | 2,021 | (42,939) | |
| Issue of ordinary shares on the exercise of rights attached to subscription shares | 10 | 770 | 11,332 | - | - | - | - | - | 12,102 |
| Issue of new ordinary shares | 10 | 67 | 1,096 | - | - | - | - | - | 1,163 |
| Dividend paid to shareholders | 8 | - | - | - | - | - | - | (6,380) | (6,380) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Total shareholders' funds at 31 January 2020 | 18,895 | 50,501 | 3,197 | 7,367 | 8,613 | 192,994 | 5,378 | 286,945 | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== | ||
| Year ended 31 July 2020 (audited) | |||||||||
| Total shareholders' funds at 31 July 2019 | 18,058 | 38,073 | 3,197 | 7,367 | 8,613 | 237,954 | 9,737 | 322,999 | |
| Net (loss)/return on ordinary activities after taxation for the year | - | - | - | - | - | (61,671) | 6,421 | (55,250) | |
| Repurchase of ordinary shares | 10 | - | - | - | - | (5,234) | - | - | (5,234) |
| Issue of ordinary shares on the exercise of rights attached to subscription shares | 10 | 770 | 11,332 | - | - | - | - | - | 12,102 |
| Issue of new ordinary shares | 10 | 67 | 1,096 | - | - | - | - | - | 1,163 |
| Dividend paid to shareholders | 8 | - | - | - | - | - | - | (6,380) | (6,380) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | ||
| Total shareholders' funds at 31 July 2020 | 18,895 | 50,501 | 3,197 | 7,367 | 3,379 | 176,283 | 9,778 | 269,400 | |
| ======== | ======== | ======== | ======== | ======== | ======== | ======== | ======== |
BALANCE SHEETAS AT 31 JANUARY 2021
Company Number 3183919
Notes | 31.01.21 unaudited £'000 | 31.07.20 audited £'000 | 31.01.20 unaudited £'000 | |
| Fixed assets | ||||
| Investments | 9 | 287,675 | 241,271 | 272,307 |
| Current assets | ||||
| Derivative instruments | 9 | 633 | 7,299 | 2,230 |
| Debtors | 3,446 | 1,886 | 718 | |
| Amounts held at futures clearing houses and brokers | 1,113 | 1,115 | 1,670 | |
| Cash at bank | 30,161 | 21,262 | 13,286 | |
| -------------- | -------------- | -------------- | ||
| 35,353 | 31,562 | 17,904 | ||
| ======== | ======== | ======== | ||
| Current liabilities | ||||
| Derivative instruments | 9 | (1,327) | (1,149) | (1,763) |
| Other creditors | (1,805) | (2,284) | (1,503) | |
| -------------- | -------------- | -------------- | ||
| (3,132) | (3,433) | (3,266) | ||
| ======== | ======== | ======== | ||
| Net current assets | 32,221 | 28,129 | 14,638 | |
| ======== | ======== | ======== | ||
| Net assets | 319,896 | 269,400 | 286,945 | |
| ======== | ======== | ======== | ||
| Capital and reserves | ||||
| Share capital | 10 | 18,895 | 18,895 | 18,895 |
| Share premium account | 50,501 | 50,501 | 50,501 | |
| Capital redemption reserve | 3,197 | 3,197 | 3,197 | |
| Other non-distributable reserve | 7,367 | 7,367 | 7,367 | |
| Other reserve | 804 | 3,379 | 8,613 | |
| Capital reserve | 233,710 | 176,283 | 192,994 | |
| Revenue reserve | 5,422 | 9,778 | 5,378 | |
| -------------- | -------------- | -------------- | ||
| Total shareholders' funds | 319,896 | 269,400 | 286,945 | |
| ======== | ======== | ======== | ||
| Net asset value per ordinary share | 11 | 437.08p | 364.39p | 379.65p |
| ======== | ======== | ======== |
NOTES TO THE FINANCIAL STATEMENTS
1 PRINCIPAL ACTIVITY
Fidelity Asian Values PLC is an Investment Company incorporated in England and Wales with a premium listing on the London Stock Exchange. The Company's registration number is 3183919, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP. The Company has been approved by HM Revenue & Customs as an Investment Trust under Section 1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as to continue to be approved.
2 PUBLICATION OF NON-STATUTORY ACCOUNTS
The Financial Statements in this Half-Yearly Report have not been audited by the Company's Independent Auditor and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 (the "Act"). The financial information for the year ended 31 July 2020 is extracted from the latest published Financial Statements of the Company. Those Financial Statements were delivered to the Registrar of Companies and included the Independent Auditor's Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Act.
3 ACCOUNTING POLICIES
(i) Basis of Preparation
The Company prepares its Financial Statements on a going concern basis and in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") and FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council. The Financial Statements are also prepared in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts ("SORP") issued by the Association of Investment Companies ("AIC") in October 2019. FRS 104: Interim Financial Reporting has also been applied in preparing this condensed set of Financial Statements. The accounting policies followed are consistent with those disclosed in the Company's Annual Report and Financial Statements for the year ended 31 July 2020.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements. This conclusion also takes into account the Board's assessment of the continuing risks arising from COVID-19.
4 INCOME
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Investment income | |||
| Overseas dividends | 3,382 | 3,889 | 9,817 |
| Overseas scrip dividends | 310 | 45 | 45 |
| -------------- | -------------- | -------------- | |
| 3,692 | 3,934 | 9,862 | |
| ======== | ======== | ======== | |
| Derivative income | |||
| Dividends received on long CFDs | 320 | 143 | 536 |
| Interest received on CFDs | 5 | 97 | 154 |
| -------------- | -------------- | -------------- | |
| 325 | 240 | 690 | |
| ======== | ======== | ======== | |
| Other interest | |||
| Interest received on collateral and deposits | - | 32 | 50 |
| -------------- | -------------- | -------------- | |
| Total income | 4,017 | 4,206 | 10,602 |
| ======== | ======== | ======== |
Special dividends of £3,676,000 have been recognised in capital (six months ended 31 January 2020 and year ended 31 July 2020: £nil).
5 INVESTMENT MANAGEMENT FEES
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Investment management fees - base (charged to revenue) | 1,052 | 1,063 | 1,967 |
| Investment management fees - variable (credited to capital) | (292) | (55) | (312) |
| -------------- | -------------- | -------------- | |
| 760 | 1,008 | 1,655 | |
| ======== | ======== | ======== |
FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International ("FII"). Both companies are Fidelity group companies.
The Company charges base investment management fees at an annual rate of 0.70% of net assets. In addition, there is +/- 0.20% variation fee based on the Company's NAV per share performance relative to the Company's Comparative Index. Fees are payable monthly in arrears and are calculated on a daily basis.
6 TAXATION ON RETURN/(LOSS) ON ORDINARY ACTIVITIES
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Revenue - taxation on overseas dividends | 548 | 324 | 731 |
| Capital - Indian capital gains tax charged/(credited) in the period | 134 | (8) | (7) |
| -------------- | -------------- | -------------- | |
| Total taxation charge for the period | 682 | 316 | 724 |
| ======== | ======== | ======== |
7 RETURN/(LOSS) PER ORDINARY SHARE
| six months ended 31.01.21 unaudited | six months ended 31.01.20 unaudited | year ended 31.07.20 audited | |
| Revenue return per ordinary share | 2.57p | 2.75p | 8.64p |
| Capital return/(loss) per ordinary share | 78.21p | (61.15p) | (82.95p) |
| -------------- | -------------- | -------------- | |
| Total return/(loss) per ordinary share | 80.78p | (58.40p) | (74.31p) |
| ======== | ======== | ======== |
The return/(loss) per ordinary share is based on the net return/(loss) on ordinary activities after taxation for the period divided by the weighted average number of ordinary shares in issue during the period, as shown below:
| £'000 | £'000 | £'000 | |
| Net revenue return on ordinary activities after taxation | 1,885 | 2,021 | 6,421 |
| Net capital return/(loss) on ordinary activities after taxation | 57,427 | (44,960) | (61,671) |
| -------------- | -------------- | -------------- | |
| Net total return/(loss) on ordinary activities after taxation | 59,312 | (42,939) | (55,250) |
| ======== | ======== | ======== |
| number | number | number | |
| Weighted average number of ordinary shares held outside of Treasury during the period | 73,428,741 | 73,529,470 | 74,348,836 |
| ======== | ======== | ======== |
8 DIVIDENDS PAID TO SHAREHOLDERS
| six months ended 31.01.21 unaudited £'000 | six months ended 31.01.20 unaudited £'000 | year ended 31.07.20 audited £'000 | |
| Dividend of 8.50 pence per ordinary share paid for the year ended 31 July 2020 | 6,241 | - | - |
| Dividend of 8.80 pence per ordinary share paid for the year ended 31 July 2019 | - | 6,380 | 6,380 |
| -------------- | -------------- | -------------- | |
| 6,241 | 6,380 | 6,380 | |
| ======== | ======== | ======== |
No dividend has been declared in respect of the six months ended 31 January 2021.
9 FAIR VALUE HIERARCHY
The Company is required to disclose the fair value hierarchy that classifies its financial instruments measured at fair value at one of three levels, according to the relative reliability of the inputs used to estimate the fair values.
| Classification | Input |
| Level 1 | Valued using quoted prices in active markets for identical assets |
| Level 2 | Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly |
| Level 3 | Valued by reference to valuation techniques using inputs that are not based on observable market data |
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset. The table below sets out the Company's fair value hierarchy:
31 January 2021 (unaudited) | level 1 £'000 | level 2 £'000 | level 3 £'000 | total £'000 |
| Financial assets at fair value through profit or loss | ||||
| Investments | 284,357 | 2,157 | 1,161 | 287,675 |
| Derivative instrument assets | 406 | 227 | - | 633 |
| -------------- | -------------- | -------------- | -------------- | |
| 284,763 | 2,384 | 1,161 | 288,308 | |
| ======== | ======== | ======== | ======== | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | - | (1,327) | - | (1,327) |
| ======== | ======== | ======== | ======== |
31 July 2020 (audited) | level 1 £'000 | level 2 £'000 | level 3 £'000 | total £'000 |
| Financial assets at fair value through profit or loss | ||||
| Investments | 238,836 | 2,096 | 339 | 241,271 |
| Derivative instrument assets | 487 | 6,812 | - | 7,299 |
| -------------- | -------------- | -------------- | -------------- | |
| 239,323 | 8,908 | 339 | 248,570 | |
| ======== | ======== | ======== | ======== | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | - | (1,149) | - | (1,149) |
| ======== | ======== | ======== | ======== |
31 January 2020 (unaudited) | level 1 £'000 | level 2 £'000 | level 3 £'000 | total £'000 |
| Financial assets at fair value through profit or loss | ||||
| Investments | 270,739 | 1,052 | 516 | 272,307 |
| Derivative instrument assets | - | 2,230 | - | 2,230 |
| -------------- | -------------- | -------------- | -------------- | |
| 270,739 | 3,282 | 516 | 274,537 | |
| ======== | ======== | ======== | ======== | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | (511) | (1,252) | - | (1,763) |
| ======== | ======== | ======== | ======== |
10 SHARE CAPITAL
| 31 January 2021 unaudited | 31 July 2020 audited | 31 January 2020 unaudited | ||||
| number of shares | £'000 | number of shares | £'000 | number of shares | £'000 | |
| Issued, allotted and fully paid | ||||||
| Ordinary shares of 25 pence each held outside of Treasury | ||||||
| Beginning of the period | 73,932,107 | 18,483 | 72,233,453 | 18,058 | 72,233,453 | 18,058 |
| Ordinary shares issued on the exercise of rights | - | - | 3,081,455 | 770 | 3,081,455 | 770 |
| New ordinary shares issued | - | - | 265,981 | 67 | 265,981 | 67 |
| Ordinary shares repurchased into Treasury | (742,273) | (186) | (1,648,782) | (412) | - | - |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| End of the period | 73,189,834 | 18,297 | 73,932,107 | 18,483 | 75,580,889 | 18,895 |
| ======== | ======== | ======== | ======== | ======== | ======== | |
| Ordinary shares of 25 pence each held in Treasury1 | ||||||
| Beginning of the period | 1,648,782 | 412 | - | - | - | - |
| Ordinary shares repurchased into Treasury | 742,273 | 186 | 1,648,782 | 412 | - | - |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| End of the period | 2,391,055 | 598 | 1,648,782 | 412 | - | - |
| ======== | ======== | ======== | ======== | ======== | ======== | |
1 Ordinary shares held in Treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company.
| 31 January 2021 unaudited | 31 July 2020 audited | 31 January 2020 unaudited | ||||||
| number of shares | £'000 | number of shares | £'000 | number of shares | £'000 | |||
| Issued, allotted and fully paid | ||||||||
| Subscription shares of 0.001 pence | ||||||||
| Beginning of the period | - | - | 11,103,030 | - | 11,103,030 | - | ||
| Cancellation of subscription shares on the exercise of rights | - | - | (3,081,455) | - | (3,081,455) | - | ||
| Cancellation of subscription shares | - | - | (8,021,575) | - | (8,021,575) | - | ||
| End of the period | - | - | - | - | - | - | ||
| -------------- | -------------- | -------------- | ||||||
| Total share capital | 18,895 | 18,895 | 18,895 | |||||
| ======== | ======== | ======== | ||||||
The cost of ordinary shares repurchased into Treasury during the year was £2,575,000 (year ended 31 July 2020: £5,234,000 and six months ended 31 January 2020: £nil).
A bonus issue of subscription shares to ordinary shareholders on the basis of one subscription share for every five ordinary shares held took place on 5 December 2016. Each subscription share gives the holder the right, but not the obligation, to subscribe for one ordinary share upon payment of the subscription price. The subscription price is based on the published unaudited NAV per ordinary share at 2 December 2016, plus a premium depending upon the year in which the right is exercised. The subscription share rights can be exercised annually in the 25 business days prior to the relevant subscription date (on which the exercise would take effect). The subscription dates, subscription prices and premia are as follows:
| Subscription date | Subscription price | Premium | |
| First subscription date | 30 November 2017 | 370.75p | 1% |
| Second subscription date | 30 November 2018 | 381.75p | 4% |
| Final subscription date | 29 November 2019 | 392.75p | 7% |
After the final subscription date of 29 November 2019, the Company appointed a trustee to exercise any rights remaining that were not exercised by shareholders, providing that by doing so a profit could be realised. To realise a profit the sale proceeds from selling the resulting ordinary shares in the market would need to be in excess of the 392.75 pence per share price of exercising the rights, plus any related expenses and fees. On 13 December 2019, the Board of the Company announced the Trustee did not exercise any of the unexercised subscription rights of the 8,021,575 outstanding subscription shares. The Trustee determined the net proceeds of sale after deduction of all costs and expenses, would not have exceeded the costs of exercising the subscription share rights. Therefore, all subscription share rights for the outstanding subscription shares lapsed with nil value.
In the prior period, the Company issued 3,081,455 ordinary shares on the exercise of rights attached to subscription shares. The subscription share price of 392.75 pence per ordinary share issued represented a premium of 367.75 pence per share over the 25 pence nominal value of each share. The total premium received on the issue of ordinary shares of £11,332,000 was credited to the share premium account.
The Company issued no new ordinary shares during the period (year ended 31 July 2020 and six months ended 31 January 2020: 265,981 shares). In the prior period, the total premium received on the issue of new ordinary shares of £1,096,000 was credited to the share premium account.
11 NET ASSET VALUE PER ORDINARY SHARE
| 31.01.21 unaudited | 31.07.20 audited | 31.01.20 unaudited | |
| Total shareholders' funds | £319,896,000 | £269,400,000 | £286,945,000 |
| Ordinary shares held outside of Treasury at period end | 73,189,834 | 73,932,107 | 75,580,889 |
| Net asset value per ordinary share | 437.08p | 364.39p | 379.65p |
| ========== | ========== | ========== |
It is the Company's policy that shares held in Treasury will only be reissued at net asset value per ordinary share or at a premium to net asset value per ordinary share and, therefore, shares held in Treasury have no dilutive effect.
12 TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management and the role of Company Secretary to FIL Investments International ("FII"). Both companies are Fidelity group companies.
Details of the fee arrangements are given in Note 5 above. During the period, management fees of £760,000 (six months ended 31 January 2020: £1,008,000 and year ended 31 July 2020: £1,655,000) and secretarial and administration fees of £38,000 (six months ended 31 January 2020: £38,000 and year ended 31 July 2020: £75,000) were payable to FII. At the Balance Sheet date, management fees of £143,000 (31 January 2020: £130,000 and 31 July 2020: £117,000) and secretarial and administration fees of £6,000 (31 January 2020: £6,000 and 31 July 2020: £6,000) were accrued and included in other creditors. FII also provides the Company with marketing services. The total amount payable for these services during the period was £66,000 (six months ended 31 January 2020: £64,000 and year ended 31 July 2020: £118,000). At the Balance Sheet date, marketing services of £13,000 (31 January 2020: £24,000 and 31 July 2020: £25,000) were accrued and included in other creditors.
As at 31 January 2021, the Board consisted of five non-executive Directors (as shown in the Half-Yearly Report), all of whom are considered to be independent by the Board. None of the Directors have a service contract with the Company. The Chairman receives an annual fee of £36,000, the Audit Committee Chairman an annual fee of £30,000 and each other Director an annual fee of £26,000. The following members of the Board held shares in the Company: Kate Bolsover 15,452 ordinary shares, Clare Brady 2,500 ordinary shares, Timothy Scholefield 12,000 ordinary shares, Grahame Stott 25,000 ordinary shares and Michael Warren 10,000 ordinary shares.
The financial information contained in this Half-Yearly Results Announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 January 2021 and 31 January 2020 has not been audited or reviewed by the Company's Independent Auditor.
The information for the year ended 31 July 2020 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
A copy of the Half-Yearly Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM
The Half-Yearly Report will also be available on the Company's website at www.fidelity.co.uk/asianvalues where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.
