Fidelity Asian Values PLC

Transcription

1 Fidelity Asian Values PLC Interim Report For the 6 months ended 31 January 2006 Managed by

2 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 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) Net asset value ( NAV ) From launch Six months to 13 June 1996 to 31 January January 2006 Undiluted +19.9% +19.6% Diluted +17.3% +17.1% Share price +19.3% +12.7% MSCI All Countries (Combined) Far East Free ex Japan Index ( ) +14.6% -8.8% Standardised performance NAV per share Year Year Year Year Year to to to to to 31/01/02 31/01/03 31/01/04 31/01/05 31/01/06 Undiluted -12.6% -30.1% +39.3% +9.2% +43.5% Diluted -12.6% -30.1% +39.3% +9.2% +40.4% Share price -16.1% -27.5% +41.4% +15.1% +44.5% (Sources: Fidelity and Datastream) (Past performance is not a guide to future returns. The value of investments can go down as well as up.) Fidelity Asian Values PLC Interim Report 2006 Page 1

4 Summary of Results 31 January 31 July % change Assets Total assets employed m 98.96m Shareholders funds m 88.70m Borrowings as % of shareholders funds 9.6% 11.6% Borrowings less cash as % of shareholders funds 1 8.3% 10.1% Undiluted NAV per share p 94.86p Diluted NAV p 94.86p Stockmarket Data 2 MSCI AC (Combined) Far East Free ex Japan Share price period end p 87.00p high p 87.00p low 83.25p 53.75p Discount: diluted NAV period end 6.7% 8.3% high 11.2% 16.7% low 3.4% 7.8% Warrant price period end 14.62p 6.37p high 16.12p 6.37p low 3.75p 2.12p Returns for the six months to 31 January Capital return per ordinary share (diluted) 18.86p 14.78p Capital + revenue return per ordinary share (diluted) 18.76p 14.63p Total Return for the six months to 31 January NAV diluted +17.3% +22.6% Share price +19.3% +31.4% MSCI AC (Combined) Far East Free ex Japan % +18.5% 1 cash includes investment in Fidelity Institutional Cash Fund plc 2 for 6 month period to 31 January and year to 31 July 3 price index, sterling adjusted 4 with net dividends (after tax) reinvested, expressed in sterling Page 2 Fidelity Asian Values PLC Interim Report 2006

5 Interim Report PERFORMANCE For the six months to 31 January 2006, Fidelity Asian Values undiluted net asset value per share rose by 19.9% and the diluted net asset value per share rose by 17.3%. In comparison, the benchmark MSCI All Countries (Combined) Far East Free ex Japan Index gained 14.6%. (All figures in sterling and on a total return basis.) The discount at which the ordinary shares traded to the diluted net asset value of the Company narrowed to 6.7% at the period end from 8.3% six months ago. The diluted net asset value is included in this report as, for the first time, the net asset value of each of the Company s shares exceeds the subscription price of one of its warrants. Hence on exercise of the outstanding warrants, permitted on 30 November 2006, the net asset value per share in issue will be diluted. MARKETS Asian stockmarkets performed well relative to the majority of their global peers over the six months to 31 January Investor sentiment remained buoyant despite the significant increase in oil prices and the rising interest rate environment in most markets across the region. Amongst the larger markets, Korea proved to be one of the region s strongest performers, benefiting from the clear recovery in the country s domestic economy, improving asset quality in the banking sector, robust export activity and turnaround in corporate investment. The return of the domestic Korean investor to the local equity market has been an important driver of that market s performance. China s performance varied over the review period but finished on a positive note. This was due to continued economic growth momentum and improvements in its macro visibility. Taiwan was lifted by foreign investor buying attracted by a positive news flow from the technology sector and relatively inexpensive valuations. In Hong Kong, concern over a moderation in property prices due to the rising interest rate environment in the United States dampened the market s performance. However, Hong Kong still posted positive returns. The Singapore market reported muted returns during the review period, although bank stocks and the technology sector performed well. The region s smaller exchanges produced strong returns for the six month period, but underperformed their larger peers in aggregate terms. Both Thailand and Indonesia posted variable performance. Equity prices in Malaysia ended the period on a weak note. PORTFOLIO REVIEW Rewarding stock selection in Korea, in particular selected overweight positions amongst capital goods and software and services, contributed to performance. Specifically, the Company s overweight position in Korea s top internet search engine and a holding in a Korean engineering, construction and procurement company had a positive impact. Stock selection in Singapore also proved rewarding. In the Hong Kong market overweight positions in certain retailing and clothing companies dampened performance. Telecommunication services and consumer durables in Taiwan also detracted from performance. Finally, the effects of stock selection in the region s smaller markets varied. A holding in Thailand s largest oil refiner contributed to the Company s performance whilst Malaysia continued to underperform the broader regional index and detracted from relative returns. Over the six month review period, the Company increased exposure to Korea to take advantage of attractively valued opportunities in the export market as well as domestically-driven sectors benefiting from the recovery in consumption. Fidelity Asian Values PLC Interim Report 2006 Page 3

6 Interim Report Exposure to China was also raised, the Manager having identified strong earnings potential across a variety of sectors including upstream oil companies, insurance and property companies and mobile telephone companies. OUTLOOK FOR THE REGION The Asian region continues to attract investor interest given the positive long term growth drivers and the opportunities available for both export and domesticoriented investments amongst the region s markets. However, consensus forecasts suggest that the resilience of the Asian economies may be put to the test in 2006, with consumer spending widely expected to moderate. A rising interest rate environment, a recurring phenomenon affecting many Asian countries, is expected to be a major trend throughout the region in the near term. Many Asia Pacific central banks have taken their lead from the US Federal Reserve and are likely to continue to increase interest rates. This results in higher borrowing costs, potentially moderating economic growth rates and curbing inflation levels. Domestic consumption could be affected in the short term with a particular negative impact on those sectors that are interest rate sensitive, such as property, banks and retailers. More positively, the currency appreciation which is a potential byproduct of higher interest rates could help bring down the cost of imports. The region s increasing demand for energy will be another area of focus in Reflecting the concerns of some regional governments, the Asian Development Bank has expressed anxiety over the ongoing impact of inflated fuel prices. The political backdrop remained benign in the latter stages of 2005 but further developments could have a bearing on the direction of individual equity markets in the months ahead. The snap election called in Thailand in response to anti-thaksin demonstrations and the declaration of a state of emergency in the Philippines by President Arroyo to thwart alleged preparations for a military coup have caused some local nervousness but are unlikely to affect wider regional stability. Taken together, the outlook for equitybased investment in the Asian region appears to be broadly positive. While valuations across the region have risen they still remain compelling in comparison to those of their international counterparts. Given the robust growth being generated by a number of Asia s economies and the positive impact on corporate earnings in the region, Asian equities should continue to benefit from the support of overseas investors. By order of the Board Fidelity Investments International 29 March 2006 Page 4 Fidelity Asian Values PLC Interim Report 2006

7 Top 20 Holdings as at 31 January 2006 Market Value Holding 000 % 1 Samsung Electronics Korean integrated electronics manufacturer 6, CNOOC Hong Kong company which explores, develops, produces and sells crude oil and natural gas 5, Hyundai Motor Korean company - manufactures, sells and exports cars, trucks and commercial vehicles 4, Hutchison Whampoa Operates ports, telecommunications and e-commerce, property, hotels, retail, manufacturing, energy, finance and investments from its Hong Kong base 4, Asia Optical Taiwanese company which manufactures and markets electro-optical products 3, Far Eastern Telecom Provides mobile communication and internet access services in Taiwan 3, Advanced Semiconductor Engineering Manufactures and markets computer products in Taiwan 3, China Mobile Provides cellular telecommunication services in China 3, Shinsegae Department Store Operates department stores in Korea 3, Asustek Computer Manufactures and markets computer products in Taiwan 3, Kookmin Bank Provides various commercial banking and internet banking services in Korea 2, NHN Provides internet sites with web portal services and marketing services through test and banner advertisement in Korea 2, China Telecom Provides wireline telephone, data and internet and leased line services in China 2, Acer Taiwanese company which manufactures and distributes semiconductor products, personal computers, computer peripherals, multimedia products and computer software 2, Taiwan Semiconductor Manufacturing Manufactures and markets computer products in Taiwan 2, Bumiputra-Commerce Provides commercial banking and related financial services in Malaysia 2, Li & Fung Operates an export trading business in Hong Kong 2, Samsung Korean trading company which imports and exports electronics, chemicals, metals and semiconductors and operates construction and home building businesses 2, Keppel Provides offshore and marine infrastructure in Singapore 2, Shinhan Financial Provides consumer and commercial banking-related financial services in Korea 1, Top 20 Holdings 63, total assets less liabilities, excluding loan liability Fidelity Asian Values PLC Interim Report 2006 Page 5

8 Income Statement 1 for the six months ended unaudited total revenue capital return Notes Gains on investments 17,850 17,850 Income 2 1,170 1,170 Investment management fee (559) (559) Other expenses (219) (219) Exchange losses (5) (13) (18) Exchange gains/(losses) on loans NET RETURN BEFORE FINANCE COSTS AND TAXATION ,927 18,314 Interest payable (324) (324) Loan redemption costs NET RETURN/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 63 17,927 17,990 Taxation on return on ordinary activities 3 (156) (156) NET (LOSS)/RETURN ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE PERIOD ATTRIBUTABLE TO EQUITY SHAREHOLDERS (93) 17,927 17,834 (LOSS)/RETURN PER ORDINARY SHARE 4 Basic (0.10p) 19.17p 19.07p Diluted (0.10p) 18.86p 18.76p 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. These financial statements have been prepared in accordance with the AITC Statement of Recommended Practice ( SORP ) issued in January 2003 and revised in December 2005 and the changes to the accounting policies as set out in Note 1. Page 6 Fidelity Asian Values PLC Interim Report 2006

9 for the year ended for the six months ended audited unaudited total total revenue capital return revenue capital return ,065 28,065 13,283 13,283 3,079 3,079 1,068 1,068 (900) (900) (442) (442) (391) (391) (166) (166) (10) (85) (95) (91) (91) (89) (89) ,778 27,891 29, ,825 14,285 (924) (924) (539) (539) (168) (168) ,723 28,577 (79) 13,825 13,746 (308) (308) (66) (66) ,723 28,269 (145) 13,825 13, p 29.65p 30.23p (0.15p) 14.78p 14.63p 0.58p 29.65p 30.23p (0.15p) 14.78p 14.63p Fidelity Asian Values PLC Interim Report 2006 Page 7

10 Reconciliation of Movements in Shareholders Funds Called up Share Capital share premium redemption capital account reserve Opening shareholders funds: 1 August , ,330 Net recognised gains for the period Net revenue for the period Closing shareholders funds: 31 July , ,330 Effect of changing prices from middle market to bid market at 1 August 2005 Net recognised gains for the period Net revenue loss for the period Exercise of warrants 1 5 Closing shareholders funds: 31 January , ,330 Page 8 Fidelity Asian Values PLC Interim Report 2006

11 Capital Capital Other Warrant reserve reserve Revenue Total reserve reserve realised unrealised reserve equity ,282 7,369 (35,263) 5,468 (2,134) 60,435 9,718 18,005 27, ,282 7,369 (25,545) 23,473 (1,588) 88,704 (215) (215) 12,619 5,308 17,927 (93) (93) 2 (2) 6 59,284 7,367 (12,926) 28,566 (1,681) 106,329 Fidelity Asian Values PLC Interim Report 2006 Page 9

12 Balance Sheet unaudited audited unaudited Notes FIXED ASSETS Investments at fair value through profit or loss 115,807 97,779 88,848 CURRENT ASSETS Debtors 1,258 2, Cash at bank ,695 2,160 3,244 3,262 CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR Fixed rate unsecured loan 7 (10,162) Other creditors (1,476) (2,067) (1,008) (11,638) (2,067) (1,008) NET CURRENT (LIABILITIES)/ASSETS (9,478) 1,177 2,254 TOTAL ASSETS LESS CURRENT LIABILITIES 106,329 98,956 91,102 CREDITORS AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Fixed rate unsecured loan 7 (10,252) (16,987) TOTAL NET ASSETS 106,329 88,704 74,115 CAPITAL AND RESERVES Called up share capital 23,377 23,376 23,376 Share premium account Capital redemption reserve 2,330 2,330 2,330 Other reserve 59,284 59,282 59,282 Warrant reserve 7,367 7,369 7,369 Capital reserve - realised (12,926) (25,545) (34,425) Capital reserve - unrealised 28,566 23,473 18,455 Revenue reserve (1,681) (1,588) (2,279) TOTAL EQUITY SHAREHOLDERS FUNDS 106,329 88,704 74,115 NET ASSET VALUE PER ORDINARY SHARE 5 Basic p 94.86p 79.26p Diluted p 94.86p 79.26p Page 10 Fidelity Asian Values PLC Interim Report 2006

13 Cash Flow Statement unaudited audited unaudited Note OPERATING ACTIVITIES Investment income received 904 2, Interest received Investment management fee paid (487) (848) (405) Directors fees paid (18) (51) (21) Other cash payments (164) (338) (79) NET CASH INFLOW FROM OPERATING ACTIVITIES 258 1, RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (325) (966) (543) Loan redemption costs (168) NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (325) (1,134) (543) FINANCIAL INVESTMENT Purchase of investments (49,701) (73,315) (26,750) Disposal of investments 49,731 75,555 23,329 NET CASH INFLOW/(OUTFLOW) FROM FINANCIAL INVESTMENT 30 2,240 (3,421) NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (37) 2,286 (3,384) FINANCING Exercise of warrants % fixed rate unsecured loan part repaid (7,457) NET CASH INFLOW/(OUTFLOW) FROM FINANCING 6 (7,457) DECREASE IN CASH (31) (5,171) (3,384) Fidelity Asian Values PLC Interim Report 2006 Page 11

14 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 accounts dated 31 July 2005 except as stated below: UK Generally Accepted Accounting Practice is converging with International Financial Reporting Standards ( IFRS ) and the following changes were made as a result of the introduction of Financial Reporting Standard ( FRS ) 26 Financial Instruments: Measurement. FRS26 requires that quoted investments are measured at fair value, which is deemed to be bid price. The Company s investments have accordingly been revalued to bid price but no adjustments have been made to the prior period s results as the Company has taken advantage of paragraph 108D of the Standard and disclosed the effect of valuing the investments at bid price as shown in the Reconciliation of Movements in Shareholders Funds on pages 8 and 9. Presentation: The revised SORP has given rise to the following changes in the presentation of the financial statements: (i) the Statement of Total Return is now called the Income Statement and the total column, as opposed to the revenue column, is now the profit and loss account of the Company; (ii) a new primary statement, the Reconciliation of Movements in Shareholders Funds, has been introduced. The issue of ordinary shares from the exercise of warrants is reported through this statement. 2. INCOME unaudited audited unaudited UK dividends 22 5 UK scrip dividends 6 6 Overseas dividends 928 2, Overseas scrip dividends Overseas interest Deposit interest ,170 3,079 1,068 Page 12 Fidelity Asian Values PLC Interim Report 2006

15 Notes to the Financial Statements unaudited audited unaudited TAXATION ON RETURN ON ORDINARY ACTIVITIES Overseas taxation suffered (113) (280) (66) Overseas taxation on Taiwan scrip dividends (43) (28) (156) (308) (66) 4. (LOSS)/RETURN PER ORDINARY SHARE unaudited audited unaudited basic diluted basic diluted basic diluted Revenue (0.10p) (0.10p) 0.58p 0.58p (0.15p) (0.15p) Capital 19.17p 18.86p 29.65p 29.65p 14.78p 14.78p beingtheweightedaveragenumber 13,825,0) 93,505,653) 27,723,0; taxationof 93,0( : andon93,508,0ordi 17,712,0( : : 93,505,653; shares iodof ordi returninthepertal return 546,0; tiesafternaryactivilosonordi revenue arebasedonthenet of andthecapi Returnsper los 145,0) : Total 19.07p 18.76p 30.23p 30.23p 14.63p 14.63p inisueduringtheperiod.returns per ordinary share are based on the net revenue loss on ordinary activities after taxation of 93,000 ( : return 546,000; : loss 145,000) and the capital return in the period of 17,927,000 ( : 27,723,000; : 13,825,000) and on 93,508,000 ordinary shares ( : 93,505,653; : 93,505,653) being the weighted average number of shares in issue during the period. In accordance with the provisions of FRS14, the diluted returns have been 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 have been used by the Company to purchase its own shares at a fair market price. 5. NET ASSET VALUE PER ORDINARY SHARE The basic net asset value per ordinary share is based on net assets of 106,329,000 ( : 88,704,000; : 74,115,000) and on 93,511,465 ordinary shares ( : 93,505,653; : 93,505,653), being the number of ordinary shares in issue at the period end. The diluted net asset value per ordinary share has been calculated on the assumption that the outstanding warrants of 20,462,735 at 31 January 2006 ( : 20,468,547; : 20,468,547) were exercised on that date. This basis of calculation is considered to be more appropriate than the basis given in FRS14 as it is consistent with the calculation of diluted net asset value which is prepared in accordance with the guidelines laid down by the Association of Investment Trust Companies and is provided to the London Stock Exchange on an ongoing basis. Fidelity Asian Values PLC Interim Report 2006 Page 13

16 Notes to the Financial Statements 6. COSTS OF INVESTMENT TRANSACTIONS unaudited audited unaudited Purchases expenses Sales expenses LOAN FACILITY The fixed rate loan from HSBC Bank plc of US$32,000,000 was drawn down on 27 September 2001 at an interest rate of 6.28% per annum for a period of five years. US$14,000,000 of the loan was repaid on 29 March The balance of the US$18,000,000 loan is due to be repaid on 27 September The sterling value of the loan as at 31 January 2006 was 10,162,000 ( : 10,252,000; : 16,987,000). 8. EXERCISE OF WARRANTS On 30 November 2005, 5,812 ordinary shares of 25p per share were issued and allotted, fully paid at a price of 100p, following an exercise of warrants. The number of warrants in issue as at 31 January 2006 was 20,462,735 ( : 20,468,547; : 20,468,547). 9. UNAUDITED FINANCIAL STATEMENTS The results for the six months to 31 January 2006 and 31 January 2005, 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 2005 are extracted from the latest published financial statements. These financial statements, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies. Page 14 Fidelity Asian Values PLC Interim Report 2006

17 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 shareholders who have specific queries regarding their holding should contact the appropriate administrator: Holders of ordinary shares or warrants 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: Fidelity ShareNetwork FINANCIAL CALENDAR January interim period end 29 March announcement of interim results to 31 January 6 April publication of interim report 31 July financial year end October publication of annual report November Annual General Meeting 30 November warrant exercise date Fidelity Asian Values PLC Interim Report 2006 Page 15

18 Directory Board of Directors The Hon Sir Victor Garland, KBE (Chairman) Hugh Bolland William Knight Kathryn Matthews Sir Robin McLaren, KCMG Manager, Secretary & Registered Office Fidelity Investments International Beech Gate, Millfield Lane Lower Kingswood Tadworth Surrey KT20 6RP Financial Advisers & Stockbrokers Dresdner Kleinwort Wasserstein 20 Fenchurch Street London EC3P 3DB Independent Auditors PricewaterhouseCoopers LLP Chartered Accountants & Registered Auditors Southwark Towers 32 London Bridge Street London SE1 9SY Bankers & 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 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 and 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. Should you wish to seek advice please contact a Financial Adviser. Issued by Fidelity Investments International, authorised and regulated by the Financial Services Authority. CB26435 Page 16 Fidelity Asian Values PLC Interim Report 2006

19

20