Fidelity Asian Values PLC

Transcription

1 7442_1_COVER_Asian Int 07.qxd 26/2/07 12:56 Page 2 Fidelity Asian Values PLC Interim Report For the 6 months ended 31 January 2007 Managed by

2 7442_1_COVER_Asian Int 07.qxd 26/2/07 12:56 Page 3 Contents The Investment Objective 1 Summary of Results 2 Interim Report 3 Top 20 Holdings 5 Financial Statements 6 Investor Information 15 Directory 16

3 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 1 The Investment Objective The investment objective of the Company is to achieve long-term capital growth through investment principally in the stockmarkets of the Asian Region (excluding Japan). Performance total return (includes reinvested income) From launch Six months to 13 June 1996 to 31 January January 2007 Net asset value ( NAV ) +16.6% +30.4% Share price +13.9% +19.6% MSCI All Countries (Combined) Far East Free ex Japan Index ( ) +15.0% -0.1% Standardised performance NAV per share Year Year Year Year Year to to to to to 31/01/03 31/01/04 31/01/05 31/01/06 31/01/07 Undiluted -30.1% +39.3% +9.2% +43.5% +8.7% Diluted -30.1% +39.3% +9.2% +40.4% n/a Share price -27.5% +41.4% +15.1% +44.5% +6.7% Sources: Fidelity and Datastream (Past performance is not a guide to future returns. The value of your investment can go down as well as up.) Fidelity Asian Values PLC Interim Report 2007 Page 1

4 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 2 Summary of Results 31 January 31 July % change Assets Total assets employed m m Shareholders funds m 99.08m Borrowings as % of shareholders funds 6.5% 9.7% Borrowings less cash as % of shareholders funds 1 4.7% 8.0% Undiluted net asset value per share ( NAV ) p p Diluted NAV n/a p Stockmarket Data 2 MSCI AC (Combined) Far East Free ex Japan Share price period end p 97.25p high p p low 94.00p 83.25p Discount to undiluted NAV period end 10.4% 8.2% high 11.8% 11.7% low 7.3% 3.4% Warrant price period end n/a 4.50p Returns for the six months to 31 January Capital return per ordinary share 21.35p 18.86p Capital + revenue return per ordinary share 21.50p 18.76p Total Return for the six months to 31 January NAV undiluted +16.6% +19.9% Share price +13.9% +19.3% MSCI AC (Combined) Far East Free ex Japan % +14.6% 1 cash includes investment in Fidelity Institutional Cash Fund plc 2 for 6 month period to 31 January 2007 and year to 31 July price index, sterling adjusted 4 with net dividends (after tax) reinvested, expressed in sterling Page 2 Fidelity Asian Values PLC Interim Report 2007

5 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 3 Interim Report PERFORMANCE For the six months to 31 January 2007, Fidelity Asian Values PLC s net asset value per share rose by 16.6%, outperforming the benchmark MSCI All Countries (Combined) Far East ex Japan Index which gained 15.0%. (All figures in sterling terms and on a total return basis.) The discount at which the ordinary shares traded to the net asset value of the Company was 10.4% at the period end compared with 8.2% six months ago. The portfolio has produced strong returns over the longer term. Since launching in June 1996, the portfolio has returned 30.4%, significantly outperforming its benchmark fall of 0.1%. MARKETS Over the six months to 31 January 2007 Asian stock markets provided positive returns, with some markets such as Singapore reaching new historical highs. An improving macro economic environment, falling oil prices, strong corporate earnings and buoyant investor sentiment (reflecting strong foreign and domestic inflows) drove the market upwards. Amongst the developed markets, Singaporean equities were supported by its solid infrastructure, an appreciating property sector and a 1% cut in corporation tax. Whilst GDP growth was slower during the second half of the six month period, the Singaporean economy is still expected to expand by around 4% to 6% in The slowing in growth was offset by signs of a tight labour market and the Monetary Authority s success in keeping inflation under control. The Hong Kong stock market continued to benefit from the economic growth momentum in China and the active fund raising of Chinese companies. Like that of Singapore, the Hong Kong property sector performed well, helped by the convergence of the Chinese renminbi and the Hong Kong dollar for the first time since 1994 and expectations that the mainland currency will appreciate faster this year. Chinese equities strengthened as a result of continued investor demand, a strong pipeline of Initial Public Offerings and a robust macro economic environment. The Taiwan market was supported by solid corporate earnings, a pick-up in exports and a spate of merger and acquisition activity. Once again, foreign investors were attracted to the Taiwanese technology sector. By contrast, Korean equities underperformed their regional peers. The Korean market was weighed down by signs of a slowing domestic economy, large foreign investor outflows, domestic earnings downgrades, corporate governance issues and an appreciation in the Korean won. More recently, the geopolitical risks associated with the North Korean nuclear test had a negative impact. On a positive note, the market was underpinned by the return of domestic funds flowing into the local market. With the exception of Thailand, adversely affected by political developments, the region s smaller exchanges produced strong returns for the six month period and outperformed their larger peers in aggregate terms. The Indonesian stock market was supported by economic expansion due to higher contributions from exports and lower borrowing costs, which in turn boosted consumer spending. Falling interest rates helped the construction and real estate sectors. Malaysian growth dropped slightly lower at the end of the six month period but its trade surplus remained significant. PORTFOLIO REVIEW In Hong Kong an active exposure to selected retailers delivered useful gains. Li & Fung, an exporting trader of consumer goods, was a top contributor. The Manager remains attracted to Li & Fung owing to its competitive advantage, diversified network and established supplier relations. In Taiwan investments in the technology sector such as Hon Hai Precision, which is primarily engaged in the production and sale of electronic products, proved rewarding as these companies gained from strong growth and increasing market share. Singaporean stock selection also contributed to overall performance, with Fidelity Asian Values PLC Interim Report 2007 Page 3

6 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 4 Interim Report Midas Holdings doing particularly well. The company, a manufacturer of aluminium alloy extrusion products, benefited from improving growth in the region, especially in China. In Korea, an underweight exposure to the underperforming Samsung Electronics helped returns. In addition, an overweight position in a Korean specialist in household and cosmetic products was a top contributor. An underweight allocation to China and stock selection hampered relative performance in that market. Among the region s smaller markets, rewarding stock selection in Malaysia, in particular the industrials sector, aided performance. The Company s investments in other smaller markets had a neutral impact on performance. The portfolio maintains a significant overweight exposure to Singapore, given its robust corporate governance environment and the general high quality of its listed companies. During the period property companies in Hong Kong, which focus on investing in China, were added to the portfolio as the Manager intends to take advantage of the strong appreciation of property prices in the region. From a sector perspective, some energy and consumer discretionary holdings were trimmed back. In particular, an exposure to CNOOC, a Hong Kong based company engaged in the exploration and production of crude oil and natural gas in China, was reduced amid expectations of lower oil prices and a drop in production levels. Exposure to a Korean car manufacturer and exporter was lowered in anticipation of lower earnings due to the appreciation of the Korean won. OUTLOOK FOR THE REGION Given last year s strong performance market returns will probably be lower this year. Recent volatility could recur. While regional markets could weaken if US consumer spending slows more than expected or the US rate of inflation significantly rises, it is unlikely that this will completely derail Asian growth given the high level of domestic demand. The region s high return on equity ratios and strong corporate balance sheets should add a further degree of protection. China will continue to be a key driver of regional growth in But there could also be an upturn in domestic consumer and business spending in other Asian economies due to above trend global growth, improving labour markets, strong corporate earnings and supportive macro economic policies. Domestic strength is expected to underpin the region s property sector. Increased infrastructure spending should support the fixed investment cycle and the continuation of private equity driven merger and acquisition deals. EXERCISES OF WARRANTS The final annual date by which holders were entitled to exercise their warrants was 30 November Following exercises by a number of warrant holders by that date the Company issued and allotted some 8.3 million ordinary shares. On 14 December 2006 the trustee appointed to act for warrant holders who had not exercised their warrants exercised the remaining warrants after taking advice from the Company s brokers. Shares resulting from this action were sold in the market and the proceeds, net of the subscription price and the costs of the exercise, were passed to the remaining warrant holders. The exercises of all outstanding warrants in issue prior to 30 November 2006 raised million for the Company. SHARE REPURCHASES Since 31 January 2007 the Company has repurchased 2,117,000 ordinary shares for cancellation. These share repurchases have resulted in an increase in the net asset value per remaining share of approximately 0.24 pence. By order of the Board Fidelity Investments International 30 March 2007 Page 4 Fidelity Asian Values PLC Interim Report 2007

7 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 5 Top 20 Holdings as at 31 January 2007 Market Value Holding 000 % 1 Li & Fung Operates an export trading business in Hong Kong 6, China Mobile Provides cellular telecommunication services in China 6, Taiwan Semiconductor Manufacturing Manufactures and markets computer products in Taiwan 6, Hon Hai Precision Taiwanese company producing and selling electronic products under the brand name of Foxconn 5, Samsung Electronics Korean integrated electronics manufacturer 4, Midas Holdings Manufactures aluminium alloy extrusion products and polyethylene pipes for the infrastructure and transportation industries in China 4, NHN Provides internet sites with web portal services and marketing services through test and banner advertisement in Korea 4, China Merchants Bank Commercial bank providing corporate and retail banking in China 3, Hang Seng Bank Provides banking and related financial services in Hong Kong 3, Gamuda Malaysian company engaged in investment holding and civil engineering construction 3, Chinatrust Financial Holdings Provides banking and financial services in Taiwan 3, Kookmin Bank Provides various commercial banking and internet banking services in Korea 3, Sun Hung Kai Properties Hong Kong company engaged in the development of properties for sale and investment 3, Shinsegae Department Stores Operates department stores in Korea 3, Advanced Semiconductor Engineering Manufactures and markets computer products in Taiwan 3, LG Household and Healthcare Korea based company providing household and cosmetic products 3, DBS Group Singapore based financial service provider 3, Shin Kong Financial Taiwan based company providing banking, credit card, trust, insurance, securities, option and venture capital investment services 3, Catcher Technology Taiwan based company specialising in the manufacture, development and sale of cellular phone shells, components and consumer electronic products 2, China Life Insurance Insurance company in China with products and services including individual and group life insurance, accident and health insurance 2, Top 20 holdings 82, % total assets less liabilities, excluding loan liability Fidelity Asian Values PLC Interim Report 2007 Page 5

8 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 6 Income Statement for the six months ended unaudited revenue capital total notes Gains on investments 20,744 20,744 Income 2 1,687 1,687 Investment management fee (767) (767) Other expenses (258) (258) Exchange (losses)/gains (70) (70) Exchange gains on loans Net return before finance costs and taxation ,151 21,813 Interest payable (272) (272) Net return on ordinary activities before taxation ,151 21,541 Taxation on ordinary activities 3 (246) (246) Net return/(loss) on ordinary activities after taxation for the period ,151 21,295 Return/(loss) per ordinary share 4 Basic 0.15p 21.35p 21.50p Diluted A Statement of Total Recognised Gains and Losses has not been prepared as there are no gains and losses other than those reported in this Income Statement. The total column of the Income Statement is the profit and loss account of the Company. These financial statements have been prepared in accordance with the AIC Statement of Recommended Practice ( SORP ) issued in January 2003 and revised in December Page 6 Fidelity Asian Values PLC Interim Report 2007

9 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 7 for the year ended for the six months ended audited unaudited revenue capital total revenue capital total ,253 10,253 17,850 17,850 2,446 2,446 1,170 1,170 (1,125) (1,125) (559) (559) (457) (457) (219) (219) 12 (208) (196) (5) (13) (18) ,642 11, ,927 18,314 (637) (637) (324) (324) ,642 10, ,927 17,990 (299) (299) (156) (156) (60) 10,642 10,582 (93) 17,927 17,834 (0.06p) 11.38p 11.32p (0.10p) 19.17p 19.07p (0.06p) 11.38p 11.32p (0.10p) 18.86p 18.76p Fidelity Asian Values PLC Interim Report 2007 Page 7

10 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 8 Reconciliation of Movement in Shareholders Funds called up share share premium capital account notes Opening shareholders funds: 1 August ,376 7 Effect of changing prices from middle market to bid market at 1 August 2005 Net recognised gains for the period Net revenue loss after taxation for the period Exercise of warrants 1 5 Closing shareholders funds: 31 January , Opening shareholders funds: 1 August ,376 7 Effect of changing prices from middle market to bid market at 1 August 2005 Net recognised gains/(losses) for the year Net return after taxation for the year Exercise of warrants 1 5 Closing shareholders funds: 31 July , Net recognised gains for the period Net return after taxation for the period Exercise of warrants 8 5,116 15,347 Closing shareholders funds: 31 January ,493 15,359 Page 8 Fidelity Asian Values PLC Interim Report 2007

11 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 9 capital capital capital redemption other warrant reserve reserve revenue total reserve reserve reserve realised unrealised reserve equity ,330 59,282 7,369 (25,545) 23,473 (1,588) 88,704 (215) (215) 12,619 5,308 17,927 (93) (93) 2 (2) 6 2,330 59,284 7,367 (12,926) 28,566 (1,681) 106,329 2,330 59,282 7,369 (25,545) 23,473 (1,588) 88,704 (215) (215) 16,435 (5,793) 10,642 (60) (60) 2 (2) 6 2,330 59,284 7,367 (9,110) 17,465 (1,648) 99,077 5,417 15,734 21, ,367 (7,367) 20,463 2,330 66,651 (3,693) 33,199 (1,504) 140,835 Fidelity Asian Values PLC Interim Report 2007 Page 9

12 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 10 Balance Sheet unaudited audited unaudited notes Fixed assets Investments at fair value through profit or loss 148, , ,807 Current assets Debtors 441 4,111 1,258 Cash at bank 2,119 1, ,560 5,424 2,160 Creditors amounts falling due within one year Fixed rate unsecured loan 7 (9,655) (10,162) Other creditors (971) (4,230) (1,476) (971) (13,885) (11,638) Net current assets/(liabilities) 1,589 (8,461) (9,478) Total assets less current liabilities 150,013 99, ,329 Creditors amounts falling due after more than one year Fixed rate unsecured loan 7 (9,178) Total net assets 140,835 99, ,329 Capital and reserves Called up share capital 28,493 23,377 23,377 Share premium account 15, Capital redemption reserve 2,330 2,330 2,330 Other reserve 66,651 59,284 59,284 Warrant reserve 7,367 7,367 Capital reserve realised (3,693) (9,110) (12,926) Capital reserve unrealised 33,199 17,465 28,566 Revenue reserve (1,504) (1,648) (1,681) Total equity shareholders funds 140,835 99, ,329 Net asset value per ordinary share 5 Basic p p p Diluted p p Page 10 Fidelity Asian Values PLC Interim Report 2007

13 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 11 Cash Flow Statement unaudited audited unaudited notes Operating activities Investment income received 943 2, Interest received Investment management fee paid (632) (1,445) (487) Directors fees paid (36) (79) (18) Other cash payments (247) (288) (164) Net cash inflow from operating activities Returns on investments and servicing of finance Interest paid (150) (641) (325) Net cash outflow from returns on servicing of finance (150) (641) (325) Financial investment Purchase of investments (64,151) (90,518) (49,701) Disposal of investments 44,419 91,013 49,731 Net cash (outflow)/inflow from financial investment (19,732) Net cash (outflow)/inflow before financing (19,788) 408 (37) Financing Exercise of warrants 8 20, % fixed rate unsecured loan drawn down 9, % fixed rate unsecured loan repaid (9,541) Net cash inflow from financing 20, Increase/(decrease) in cash (31) Fidelity Asian Values PLC Interim Report 2007 Page 11

14 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 12 Notes to the Financial Statements 1. ACCOUNTING POLICIES The interim financial statements have been prepared on the basis of the accounting policies set out in the Company s annual report and financial statements dated 31 July INCOME unaudited audited unaudited Overseas dividends 1,471 2, Overseas scrip dividends Overseas interest Deposit interest ,687 2,446 1, TAXATION ON ORDINARY ACTIVITIES unaudited audited unaudited Overseas taxation suffered (215) (253) (113) Overseas taxation on Taiwanese scrip dividends (31) (46) (43) (246) (299) (156) 4. RETURN/(LOSS) PER ORDINARY SHARE unaudited audited unaudited revenue capital total revenue capital total revenue capital total Basic return per ordinary share 0.15p 21.35p 21.50p (0.06p) 11.38p 11.32p (0.10p) 19.17p 19.07p Diluted return per ordinary share (0.06p) 11.38p 11.32p (0.10p) 18.86p 18.76p Basic returns per ordinary share are based on the revenue return on ordinary activities after taxation of 144,000 ( : loss 60,000; : loss 93,000), the capital return in the period of 21,151,000 ( : 10,642,000; : 17,927,000) and the total return of 21,295,000 ( : 10,582,000; : 17,834,000) and on 99,050,696 ordinary shares ( : 93,509,538; : 93,508,000) being the weighted average number of shares in issue during the period. Page 12 Fidelity Asian Values PLC Interim Report 2007

15 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 13 Notes to the Financial Statements In accordance with the provisions of Financial Reporting Standard 22, the diluted returns for the period ended 31 January 2006 were calculated on the assumption that the warrants in issue were converted on the first day of the financial period on a weighted average basis for the period over which they were outstanding and that the proceeds from the conversion were used by the Company to purchase its own shares at a fair market price. As at 31 July 2006 the effect of the warrants outstanding on the first day of the accounting period was not dilutive and hence they were not included in the diluted returns. 5. NET ASSET VALUE PER ORDINARY SHARE The basic net asset value per ordinary share is based on net assets of 140,835,000 ( : 99,077,000; : 106,329,000) and on 113,974,200 ordinary shares ( : 93,511,465; : 93,511,465), being the number of ordinary shares in issue at the period end. The diluted net asset value per ordinary share for the periods ended 31 July 2006 and 31 January 2006 were calculated on the assumption that the outstanding warrants of 20,462,735 were exercised on these dates. This basis of calculation is considered to be more appropriate than the basis given in FRS22 as it is consistent with the calculation of fully diluted net asset value which is prepared in accordance with the guidelines laid down by the Association of Investment Companies. Shares of 8,272,224 and 12,190,511 were issued and allotted on 12 and 14 December 2006 respectively. 6. COSTS OF INVESTMENT TRANSACTIONS unaudited audited unaudited Included in the gains on investments are the following costs of investment transactions: Purchases expenses Sales expenses LOAN FACILITIES A fixed rate unsecured loan from Lloyds TSB Bank PLC of US$18,000,000 was drawn down on 27 September 2006 for a period of three years at an interest rate of 5.60% per annum. The loan is repayable on 25 September The proceeds from the above loan were used to repay the loan from HSBC Bank plc which matured on 27 September Fidelity Asian Values PLC Interim Report 2007 Page 13

16 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 14 Notes to the Financial Statements 8. EXERCISES OF WARRANTS On 12 and 14 December 2006, an aggregate of 20,462,735 ordinary shares of 25p per share were issued and allotted, fully paid at a price of 100p, following exercises of warrants in November and December The number of warrants in issue as at 31 January 2007 was nil ( : 20,462,735; : 20,462,735). 9. UNAUDITED FINANCIAL STATEMENTS The results for the six months to 31 January 2007 and 31 January 2006, which are unaudited, constitute non-statutory accounts within the meaning of s240 of the Companies Act The figures and financial information for the year ended 31 July 2006 are extracted from the latest published financial statements. These accounts, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies. Page 14 Fidelity Asian Values PLC Interim Report 2007

17 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 15 Investor Information CONTACT INFORMATION Private investors can call free on am to 6pm, seven days a week. Financial advisers can call free on am to 6pm, Monday to Friday. Existing investors who have specific queries regarding their holding should contact the appropriate administrator: Holders of ordinary shares Capita Registrars (Registrars of Fidelity Asian Values PLC) The Registry 34 Beckenham Road, Beckenham Kent BR3 4TU Telephone: Details of individual shareholdings and other information can also be obtained from the Registrars website: Fidelity Share Plan investors Fidelity Investment Trust Share Plan Lloyds TSB Registrars Scotland The Causeway, Worthing West Sussex BN99 6DA Telephone: Fidelity PEP/ISA investors Financial Administration Services Limited Oakhill House, 130 Tonbridge Road Hildenborough, Tonbridge Kent TN11 9DZ Telephone: General enquiries should be made to Fidelity Investments International, the Investment Manager and Secretary, at the Company s registered office: Fidelity Investments International, Investment Trusts, Beech Gate Millfield Lane, Lower Kingswood Tadworth, Surrey KT20 6RP Telephone: Fax: FINANCIAL CALENDAR January interim period end 30 March announcement of interim results to 31 January 13 April publication of interim report 31 July financial year end October publication of annual report December Annual General Meeting Fidelity Asian Values PLC Interim Report 2007 Page 15

18 7442_11a_TEXT_Fidelity Asian Int 07:Fidelity Asian Int 07 5/4/07 18:05 Page 16 Directory BOARD OF DIRECTORS The Hon Sir Victor Garland, KBE (Chairman) Hugh Bolland (Audit Committee Chairman) William Knight Kathryn Matthews Sir Robin McLaren, KCMG (Senior Independent Director) MANAGER, SECRETARY AND REGISTERED OFFICE Fidelity Investments International Beech Gate, Millfield Lane Lower Kingswood Tadworth Surrey KT20 6RP FINANCIAL ADVISERS AND STOCKBROKERS Dresdner Kleinwort 20 Fenchurch Street London EC3P 3DB BANKERS AND CUSTODIAN JPMorgan Chase Bank (London Branch) 125 London Wall London EC2Y 5AJ REGISTRARS Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU LAWYERS Slaughter and May One Bunhill Row London EC1Y 8YY INDEPENDENT AUDITORS RSM Robson Rhodes LLP Chartered Accountants & Registered Auditors 30 Finsbury Square London EC2P 2YU The Fidelity Individual Savings Account ( ISA ) is offered and managed by Financial Administration Services Limited. The Fidelity Investment Trust Share Plan is managed by Fidelity Investments International, administered by Lloyds TSB Registrars with shares held in the name of Lloyds TSB Registrars Savings Nominees Limited. The value of tax savings and eligibility to invest in an ISA will depend on individual circumstances and all tax rules may change in the future. Fidelity investment trusts are managed by Fidelity Investments International. Fidelity only gives information about its own products and services and does not provide investment advice based on individual circumstances. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of your investment. Investments in small and emerging markets can be more volatile than other more developed markets. Should you wish to seek advice please contact a Financial Adviser. Issued by Fidelity Investments International, authorised and regulated in the UK by the Financial Services Authority. CB30491/na Page 16 Fidelity Asian Values PLC Interim Report 2007

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