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Pacific Horizon Investment Trust PLC
Legal Entity Identifier: VLGEI9B8R0REWKB0LN95
Regulated Information Classification: Annual Financial and Audit Reports
Annual Financial Report
This is the Annual Financial Report of Pacific Horizon Investment Trust PLC as required to be published under DTR 4 of the UKLA Listing Rules.
The financial information set out in this Annual Financial Report does not constitute the Company's statutory accounts for the years ended 31 July 2016 or 31 July 2017 but is derived from those accounts. The Company's Auditors have reported on the Annual Report and Financial Statements for 2016 and 2017; their reports were unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under sections 498(2), (3) or (4) of the Companies Act 2006. Statutory accounts for the year ended 31 July 2016 have been filed with the Registrar of Companies and the statutory accounts for the year ended 31 July 2017 will be delivered to the Registrar in due course.
The Annual Report and Financial Statements for the year ended 31 July 2017, including the Notice of Annual General Meeting, has been submitted electronically to the National Storage Mechanism and will shortly be available for inspection http://www.morningstar.co.uk/uk/NSM and is also available on Pacific Horizon's page of the Baillie Gifford website at: www.pacifichorizon.co.uk.
Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.
Baillie Gifford & Co Limited
Company Secretaries
5 October 2017
Chairman's Statement
Performance
In the year to 31 July 2017, the Company's net asset value per share (NAV) total return was 38.5%. During the same period, the total return of the Company's comparative index, the MSCI All Country Asia ex Japan Index*, was 28.6% in sterling terms. The share price total return was 42.5%, and the discount narrowed from 10.1% to 7.5%. The Board is encouraged by the performance of the invested portfolio.
The strong relative and absolute performance over the course of the year was largely a consequence of good stock selection, particularly in Hong Kong and China where exposure to certain Consumer Discretionary and Information Technology names proved beneficial. Three of the Company's holdings more than doubled their share price over the period: Sunny Optical Technology, which specialises in optical lenses and has a leading market share in the fast growing car camera market; Geely Automobile, whose parent owns Volvo, a Chinese car manufacturer targeting the mass-market sedan and Sports Utility Vehicle markets; and JD.com, one of the leading e-commerce companies in China. The shares of a further ten holdings appreciated by more than 50%. The use of gearing also helped performance.
Over the five years to 31 July 2017 the Company's NAV and share price have returned 84.6% and 97.2% respectively; over the same period the Company's comparative index, the MSCI All Country Asia ex Japan Index, has returned 81.5% in sterling terms. The Managers' Review on pages 10 to 12 of the Annual Report and Financial Statements provides a more detailed review of the Company's performance along with thoughts on the outlook and areas the Managers are finding of interest.
Earnings and Dividend
The Company's objective is to invest for capital growth rather than income, and all expenses, including borrowing costs, are charged to revenue. As highlighted in my report last year, any dividend payable in future would be determined as being the minimum permissible in order to maintain investment trust status. This year, revenue earnings per share were in deficit of 0.38p (0.30p in 2016) as a result of costs exceeding the income received. As a consequence, no final dividend is being proposed. The Board recommends that investors should not consider investing in this Company if they require income.
Gearing
The Board sets the gearing parameters within which the portfolio managers are permitted to operate and these are reviewed at each Board meeting. At present, the agreed range of equity gearing is minus 15% (i.e. holding net cash) to plus 10%. At the year end, equity gearing was 7.1%, having started the year at 2.9%; it varied between a positive of 1.0% and 8.1% over the year. Gearing is achieved through the use of bank borrowings. At present the Company has a Royal Bank of Scotland £15 million multi-currency revolving credit facility, of which £15 million by value had been drawn in GBP and USD at 31 July 2017.
Management Fee
During the year an amendment was made to the management agreement with the introduction of a reduced third tier of charges of 0.55% at £250m of net assets. The annual management fee payable by the Company is now charged at a rate of 0.95% on the first £50m of net assets, at 0.65% on the next £200m of net assets and at 0.55% on the remaining net assets. The fee will continue to be calculated and paid on a quarterly basis. Although not having an immediate impact on costs, the Board welcomes the Managers' aspirations to grow the Company and to share the benefits of scale with investors.
Annual General Meeting
This year's AGM will take place on 15 November 2017 at the offices of Baillie Gifford & Co in Edinburgh at 11.00am. I would encourage shareholders to arrive by 10.50am to allow time to register. The Managers will make a presentation and, along with the Directors, will answer any questions from shareholders. I hope to see as many of you as possible there.
Tender Mechanism
As highlighted in my report last year, should the Company's NAV total return performance fail to beat the Company's comparative index by at least 1% per annum over a three year period to 31 July 2019 on a cumulative basis, the Board will propose a 25% tender of the Company's issued share capital at the time of calculation. The tender would be at a 2% discount to NAV less costs and subject to receiving shareholder authority. At present the Company is 8.9 percentage points ahead of the required hurdle. If the tender is triggered, and authority is obtained, a separate circular and tender form will be sent to shareholders which will set out the full terms and conditions of the tender offer and the procedure for tendering shares.
Any future tender offer will remain subject to the discretion of the Board. The Board intends to consult as many shareholders as is practical in advance of any action; a tender will only be carried out where the Board considers the tender offer to be in the best interests of the Company and shareholders as a whole.
Share Buy-backs and Issuance from Treasury
At the forthcoming AGM, the Board will be asking shareholders to renew the mandate to repurchase up to 14.99% of the outstanding shares on an ad hoc basis and to also permit the re-issuance of any shares held in Treasury. The Board uses the buyback authority opportunistically, taking into account not only the level of the discount but also the underlying liquidity and trading volumes in the Company's shares. This approach allows the Board to seek to address any imbalance between the supply and demand for the Company's shares that results in a large discount to NAV whilst being cognisant that current and potential shareholders require continuing liquidity.
The Board also believes that the Company would benefit from the flexibility of being able to re-issue any shares that might be held in Treasury. In order to avoid dilution to existing investors, shares held in Treasury would only be re-issued at a premium to net asset value and after associated costs. Any re-issuance would therefore be asset enhancing and help dilute the Company's costs across a larger asset base, reducing the ongoing charges.
Changes to the Board
Douglas McDougall will be retiring from the Board at the conclusion of this year's AGM. On behalf of myself and his fellow Directors, I would like to thank him for his long service and wise counsel to the Company as Director and former Chairman.
I am pleased to welcome one new Director to the Board. Angus Macpherson, who is Chief Executive of Noble and Company (UK) Limited, an independent Scottish corporate finance business, joined us in February. His addition strengthens the breadth and depth of the Board and he has already contributed to our deliberations. I invite shareholders to ratify his appointment at the AGM.
Outlook
Over the year, the markets of Hong Kong, Korea, Taiwan and India were amongst the strongest in local currency and sterling adjusted terms. These markets are where the majority of our holdings are listed or have economic exposure. It should also be noted that, as evidenced in particular by our US listed Chinese holdings, the jurisdiction of listing is becoming less relevant when assessing a company's underlying economic exposure. We have a number of high conviction, high growth companies in the portfolio which are exhibiting new ways of doing business, many of these being internet related. These companies are setting the trend for disrupting existing business models, wherever they may be in the world, and generating good earnings growth through their momentum. Many of the businesses are 'capital light' and 'ideas rich' and their recent performance has demonstrated the credibility of the Managers' investment strategy. The Managers continue to find new substantial investment opportunities. The Board is confident that there remains encouraging scope for the Company to grow in capital terms over the coming years, both on a comparative and an overall basis.
Jean Matterson
Chairman
18 September 2017
* See disclaimer at the end of this announcement.
For a definition of terms see Glossary of Terms, note 8.
Past performance is not a guide to future performance.
Managers' Review
Overview
There was a significant improvement in the Company's performance during the year to 31 July 2017 with the share price appreciating 42.5% and the NAV increasing by 38.5%, representing a favourable comparison to the Company's comparative index, the MSCI AC Asia ex Japan index* (in sterling terms), which rose by 28.6% (all total returns).
Two factors in particular underpinned this improvement. First, the increased penetration and disruption that technology is bringing to society and the consequent increased focus by investors on the growing technology companies; second, the fall in the US Dollar ('USD'), particularly in the latter half of the Company's financial year, which provided focus to the improving economic fundamentals across the Asia Pacific region, especially in China. The Company's entire relative returns, and most of its absolute gains, occurred from December 2016, when the USD peaked and the market gradually realised that China's economy was recovering rather than being exposed to the threat of a hard landing, as many commentators, especially those in the USA, were predicting.
We believe that the rapid development of technology is creating a tectonic shift in society, with digitalisation driving profound changes in economic and political systems, businesses, consumer habits and behaviours. Many winners and losers are emerging and there is a growing awareness of these changes. Artificial Intelligence ('AI') is now taken for granted and the concept of electric rather than gasoline powered cars is considered to be an inevitable commercial development rather than a vision of the future.
Nevertheless, the cascade of these potential ground-breaking changes into broader society is only just being felt and negativity still abounds: Brexit, Trump, low productivity concerns, anti-globalisation, anti-capitalist sentiments, environmental risks, to name but a few. It is our belief, however, that the underlying global economy is improving and societies in aggregate are getting richer at a much greater pace than people realise. In retrospect, this era may well be seen as generating the largest improvement in living standards for the greatest number of people in history. The majority of those people live in the Asia Ex-Japan region.
The number of sectors and industries that are becoming digitalised and connected is increasing rapidly. Previously, when a customer went into a shop to buy an item and paid with cash, there would have been no digital imprint of this purchase; the data inherent in this transaction would only have been available to the shopkeeper. Today, every transaction online and its place in the entire supply chain leaves a data imprint which can be used to improve customer service and efficiency. In the retail industry, e-commerce continues to grow rapidly and has led to an explosion of data which captures what people buy and when, and how choices change over time. This results in both better targeted sales and an improvement in logistics, in products and in customer service; as well as an overall fall in cost for the consumer. In the US, this trend is leading to the rapid closure of shopping malls and offline businesses. In China, it is fuelling the growth of two large retail platforms, Alibaba and JD.com, with a resulting fall in more traditional offline activity.
When an industry moves towards a digital model, the resultant explosion in the quantum of data leads to a profound change to that industry's dynamics: traditional competition theory breaks down. Rather than encouraging the involvement of many firms and a form of perfect competition, digitalisation tends to produce increasing, rather than decreasing, returns for scale. We have witnessed this in the chip and software industries for two decades, with the dominance of Intel and Microsoft, and now Samsung Electronics and Taiwan Semiconductor Manufacturing ('TSMC'). As a more immediate example, JD.com is today the largest retailer in China, with no offline stores; a marginal cost of every additional order through its platform that is close to zero; no shops, no salesmen and fixed overheads. JD.com has recently announced its first 100% automated sorting warehouse and is testing the use of drones to deliver parcels, replacing delivery workers with machines and software. Scale leads to marginal cost being below average cost and thus, importantly for shareholders, to significant financial returns. In a world of digitalisation and increasing returns based on scale, we may expect more oligopolies and monopolies to be sustainable in the longer term. The competitive threats to these new monopolies are not to be found within their industries but without, from adjacent sectors, or from totally new disruptive technologies.
In China, the use of mobile phones and the acceptance of new technology are leading to a faster rate of adoption of online shopping than in the developed world. An example of this is online grocery shopping. This is a market worth more than $1 trillion and ripe for disruption by the likes of JD.com and Alibaba. These two companies account for 12.3% of our portfolio† and were significant contributors to returns last year. JD.com rose 109% and Alibaba 88%, as the market took note of the longevity of their growth profiles. We believe that both stocks remain significantly undervalued.
Humans are intensely visual. Sight is the leading sense by which we analyse and interact with the world. Our contention is that machines, as they increasingly take over human tasks, will initially use reproduction of the visual 'sense' to help them understand the world. Sunny Optical Technology is China's leading camera module maker, the second largest producer of camera lenses for mobile phones globally and the largest producer of lenses for the automotive market. The stock rose over 200% in the year, making it the second best performing holding in the portfolio. It is set to deliver an estimated 80% increase in earnings per share ('EPS') for 2017 after a 60% increase in 2016. With the company's leading position and technological research and development ('R&D') in module assembly and design, it is gaining increased traction in the nascent camera market for cars. Whereas a new car used to have on average less than one camera, a modern advanced driver assistance system ('ADAS') enabled car has 8 to 12 cameras; and, in future, a fully autonomous car may need up to 20 cameras or more. Sunny Optical has an approximate 40% market share in this rapidly evolving market. It also has emerging businesses in camera production for drones, optical instruments and robots. Given its products are at the forefront of delivering digitalisation to a large portion of the world's economy, we believe the company is still at an early stage in its growth cycle. It currently represents 5.4% of the portfolio.
The global automobile sector is an area where we see significant disruption occurring in the medium term. We believe that the end of the gasoline engine is in sight and that electric vehicles will increasingly dominate new car sales of the future; especially in China as the government tackles the problem of pollution, which has become the most pressing social issue for the emerging middle class. Samsung SDI, in South Korea, up 60% year-on-year, is one of the world's leading makers of electric vehicle ('EV') batteries, a business where we believe that volumes could grow five to ten fold over the next decade. In China, our investment in Geely Automobile, a company that we have held for many years on the basis that we thought its investments in R&D would eventually propel it from a low-end domestic car manufacturer to a global original equipment manufacturer ('OEM'), has started to pay off. The stock rose 250% in the year, after delivering a 78% increase in sales in 2016 and consequent 112% EPS growth. It also expects 62% revenue growth and 73% profit growth in 2017. Through improvement in products, brand image and scale, Geely is positioning itself to become a leading domestic brand OEM, in the first instance in China and then globally. The management team, led by a visionary founder, is launching the new Lynck and Co brand later this year in a tie-up with Volvo. We believe that Geely has the potential to become one of the leading EV manufacturing OEMs globally in the next decade.
The growth in the amount of data being produced by social media, commerce, gaming and machines requires a significant jump in both computing power and the associated hardware capabilities in order to run, manipulate and take full advantage of the data generated. This is leading to a rise in technology prices and what we would characterise as the largest technology hardware cycle since the 1990s boom. Companies such as SK Hynix and Samsung Electronics, which produce the majority of the world's memory chips in South Korea, and TSMC (which has the largest global foundry) and Hon Hai Precision Industries (the largest global technology manufacturer) have all benefited from this trend. We believe that these stocks are still under-priced and do not fully reflect the potential growth opportunities ahead.
In the first half of the year, markets worried over Brexit, Trump and a potential reduction in world trade. This supported the USD and hid the nascent recovery in Chinese economic growth which, having slowed sequentially since 2011, reached its nadir in 2015; since then, it has been recovering. It is likely that 2016 will prove to be the second year of a Chinese cyclical economic expansion; we are seeing this in the rising Chinese Producer Price Index ('PPI'), increasing imports, rising commodity prices and a stabilisation in the exchange rate. Over the 12 months to 31 July 2017, the Chinese MSCI Index rose 38% in sterling terms and our Chinese holdings appreciated 72%, in aggregate. Free cash flow, the money left after costs and capital expenditure, is, on average, increasing for Chinese companies, and we would therefore expect growth and probably earnings to continue to surprise on the upside.
Outside China, Vietnam was a strong contributor to the portfolio's performance. Dragon Capital Vietnam Enterprise Investments rose 43% during the year. In addition, our first direct holding in Vietnam, Military Commercial Joint Stock Bank, rose 59%, as the company's turnaround from a sleepy corporate bank to a retail lender gradually continues. We still see the Vietnamese economy as a whole as an underappreciated growth story.
On the negative side, stock selection in South Korea was the largest detractor to the portfolio's relative performance. Not owning enough of Samsung Electronics had a negative impact as the stock rose 57% over the year. Our holding in SK Hynix, also a manufacturer of memory chips, was up 92% and mitigated some of the negative attribution. A number of our smaller companies fell, including some of the biotech holdings, although there was a significant divergence in returns. For example, Medy-Tox, the leading Botox innovator, rose 36%, whilst Bioneer, a biotech company, fell 62%. In this specialist sector, it is our intention to continue with our overall philosophy of supporting our winners and being circumspect about adding to our losers.
Philosophy
Pacific Horizon's portfolio is focused on finding and investing in some of the most attractive growth companies within the Asia ex-Japan region. We believe that investing for the long term in companies that can deliver significantly faster growth than the market will, over time, deliver rewards. When thinking about growth, we are looking for companies that can potentially increase their revenue and earnings at around 15% per year for the next five years or longer, and where we feel this growth has not been fully recognised by the market. Depending upon the macro outlook for different countries and sectors, this strategy may lead to significant concentration in certain areas of the market.
We invest in companies where we believe that there are good long term growth prospects. The corporate characteristics we look for include strong growth potential, sustainable competitive advantages, attractive financials and sensible management. In addition, we target stocks with what we consider to be very significant long term opportunities for enhanced future profitability, where a wider range of positive potential outcomes may not be recognised by the market at present.
The growth characteristics of the portfolio remain strong, with historic earnings growth at 17% and one year forecast earnings growth of 33%, both double the respective rates for the comparative index. The portfolio's estimated price to earnings ratio ('P/E') for the current year is 31x versus 17x for the comparative index. Over the longer term, we believe the higher growth potential of our holdings more than justifies this additional multiple. The portfolio now includes a slightly greater proportion of larger capitalised stocks compared to last year, due mostly to their outperformance compared with the more subdued performance of mid to smaller companies. This still leaves the portfolio with 20% of its investments in companies capitalised below £1 billion and a further 17% in companies with a market capitalisation of less than £5 billion, compared with 0.1% and 12.7%, respectively, in the comparative index. Active share is 79% and turnover for the year was 27.6%.
Portfolio Review
Technology companies now account for 48.9% of the portfolio, down from 50.9% a year ago. We reduced our holding in Tencent, reflecting our enthusiasm for other holdings. Elsewhere, performance from JD.com and Sunny Optical significantly increased these stocks' comparative weightings. Samsung SDI was bought and is now among the top 10 holdings in the portfolio; we believe that the organic light emitting diode ('OLED') and battery businesses are the fastest growing parts of the Samsung Electronics empire. We initiated a position in Macronix, the world's leading designer and manufacturer of NOR memory processors as we are of the view that many electronic functions in ADAS enabled cars will need a NOR chip, which is bringing life back to what was considered an ex-growth market. Our holdings in Infosys and Mindtree were sold as we believe the trend to outsource technological development is slowing globally.
The consumer discretionary sector is our second largest sector exposure at 19.8%, up from 16.9%. As economic growth within the region recovers, the focus on the Asian consumer and the consequent growth opportunities should generate increased investor interest. JD.com and Geely are our two top holdings in this sector.
The financial sector weighting in the portfolio has increased from 11.0% to 17.2%. We have made a number of new additions, especially in India, where we see domestic banking and insurance as potentially highly attractive and rapidly growing business sectors. We took stakes in AU Small Finance Bank, a newly licenced bank, growing at a compound annual growth rate of 40%; ICICI Prudential Life Insurance and Max Financial Services, life insurance companies; and LIC Housing Finance, the leading housing finance company in India.
Our healthcare weighting has almost halved to 5.0%. This was a function of poor performance and also the sale of Viromed and Seegene. On a fundamental basis, the remaining healthcare companies in the portfolio continue to deliver good performance and we believe that the market will refocus on the longer term outlook rather than short term price movements.
Our China weighting increased from 28.1% to 35.1%, driven mostly by outperformance by our holdings. It is now the largest country weighting in the portfolio, followed by South Korea at 24.9%. The reduction in the South Korean exposure from 29.9% was mostly on the back of reductions in our biotech holdings. Elsewhere, in Taiwan, we sold a number of our smaller positions, Himax Technologies, MediaTek, Phison Electronics, Eclat Textile, Delta Electronics and Hermes Micro Vision, mostly to fund purchases in China and Vietnam.
Vietnamese investments have grown from 4.8% to 7.0% of the portfolio. During the year, we purchased two steel companies, Hoa Phat and Hao Sen, both of which have high returns on capital and strong growth prospects as a result of the rising domestic economy. We continue to have a zero weighting in ASEAN outside of Vietnam and believe that the Vietnam market is far more attractive than the others in this geographical region.
Environmental, Social and Governance
As growth investors, we are looking for companies whose products will benefit from strong future demand. These companies not only have to produce better and cheaper products and services than their competitors, but also have to be alert to the changing nature and views of the societies in which they are part. Companies which do not change within and alongside the societies they serve tend to fail, either due to falling demand for their product or as a result of government intervention. When we invest, we take into account the potential positive and negative impact these companies have on the world today and how their commercial activities will be perceived in the future.
For our long term investments to be successful, the companies in which we invest must add value to society. We see this being achieved in a variety of ways: our regenerative biotech companies, whose products may allow many people to gain otherwise unachievable medical benefits, our internet companies which provide goods and services to people at prices and in quantities previously unobtainable, and our technology holdings that are helping to enable the greatest and most rapid increase in human connectivity and information availability in human history.
Lastly, the interests of minority shareholders must be upheld; we remain careful to make sure our investments are aligned with those of majority shareholders and owners.
Outlook
It is our view that there is significant potential for positive returns from the region over the coming years. Our focus remains on investment in individual stocks which will benefit from the economic, social and technological changes in evidence across the region. The portfolio is fully invested, with gearing of 7%. We believe that our philosophy, process and investment style should reward the Company's shareholders over the medium to long term.
* See disclaimer at the end of this announcement.
For a definition of terms see Glossary of Terms, note 8.
†The portfolio figures throughout the report are based on total assets.
|
List of Investments as at 31 July 2017 |
|
Name |
Country |
Business |
Value £'000 |
% of total assets ‡ |
|
Tencent Holdings |
HK/China |
Online gaming and social networking |
12,824 |
7.0 |
|
Alibaba Group ADR |
HK/China |
Online and mobile commerce |
12,571 |
6.9 |
|
JD.com ADR |
HK/China |
Online mobile commerce |
9,941 |
5.4 |
|
Sunny Optical Technology |
HK/China |
Small optical lenses manufacturer |
9,818 |
5.4 |
|
Geely Automobile |
HK/China |
Automobile manufacturer |
6,955 |
3.8 |
|
NAVER |
Korea |
Online search and messaging |
5,976 |
3.3 |
|
Hon Hai Precision Industries |
Taiwan |
Electronic manufacturer |
5,809 |
3.2 |
|
Dragon Capital Vietnam Enterprise Investments |
Vietnam |
Vietnam investment fund |
5,121 |
2.8 |
|
SK Hynix |
Korea |
Electronic component and device manufacturer |
4,884 |
2.7 |
|
Samsung SDI |
Korea |
Lithium-ion batteries manufacturer |
4,278 |
2.3 |
|
Koh Young Technology |
Korea |
3D inspection machine manufacturer |
3,941 |
2.2 |
|
Baidu ADR |
HK/China |
Internet search engine |
3,922 |
2.2 |
|
IndusInd Bank |
India |
Commercial bank focusing on consumer lending |
3,888 |
2.1 |
|
AU Small Finance Bank |
India |
Small consumer finance bank |
3,779 |
2.1 |
|
China Life Insurance (Taiwan) |
Taiwan |
Life insurance provider |
3,456 |
1.9 |
|
Ctrip.com International ADR |
HK/China |
Chinese online travel agency |
3,110 |
1.7 |
|
Taiwan Semiconductor Manufacturing |
Taiwan |
Semiconductor foundry |
3,046 |
1.7 |
|
Samsung Electronics |
Korea |
Memory, phones and electronic components manufacturer |
2,996 |
1.6 |
|
ICICI Bank |
India |
Retail and corporate bank |
2,917 |
1.6 |
|
Advantech |
Taiwan |
Computer manufacturer |
2,743 |
1.5 |
|
Cox & Kings India |
India |
Travel agent |
2,419 |
1.3 |
|
Medy-Tox |
Korea |
Global pharmaceutical company |
2,259 |
1.2 |
|
WH Group |
HK/China |
Pork processor and distributor |
2,169 |
1.2 |
|
Kingdee International Software |
HK/China |
Enterprise management software distributor |
2,151 |
1.2 |
|
Mahindra & Mahindra |
India |
Tractor and SUV manufacturer |
2,132 |
1.2 |
|
Samsung Fire & Marine Insurance |
Korea |
Non-life insurance provider |
2,128 |
1.2 |
|
CJ E&M |
Korea |
Media and entertainment creator and supplier |
2,041 |
1.1 |
|
NCSOFT |
Korea |
Online games developer |
2,031 |
1.1 |
|
Military Commercial Joint Stock Bank |
Vietnam |
Retail and corporate bank |
2,015 |
1.1 |
|
Hoa Sen Group |
Vietnam |
Manufacturer of steel and plastic building products |
1,917 |
1.1 |
|
Arvind |
India |
Consumer textile brand owner and manufacturer |
1,913 |
1.1 |
|
Mitac Holdings |
Taiwan |
Distributor of GPS and server products |
1,885 |
1.0 |
|
Macronix |
Taiwan |
NOR/ROM memory semiconductor manufacturer |
1,815 |
1.0 |
|
Duzonbizon |
Korea |
Enterprise resource planning software developer |
1,778 |
1.0 |
|
Kansai Nerolac Paints |
India |
Paint manufacturer |
1,594 |
0.9 |
|
China Rapid Finance ADR |
HK/China |
P2P consumer lending platform |
1,579 |
0.9 |
|
Name |
Country |
Business |
Value £'000 |
% of total assets ‡ |
|
|
Info Edge |
India |
Jobseekers, housing sales and restaurant online review provider |
1,575 |
0.9 |
|
|
Haier Electronics Group |
HK/China |
Washing machine and water heater manufacturer |
1,573 |
0.9 |
|
|
Samsung C&T |
Korea |
Korean conglomerate |
1,565 |
0.9 |
|
|
Container Corporation of India |
India |
Transportation services provider |
1,543 |
0.8 |
|
|
Mahindra CIE Automotive |
India |
Truck parts manufacturer |
1,537 |
0.8 |
|
|
Vingroup |
Vietnam |
Property developer |
1,502 |
0.8 |
|
|
Hoa Phat Group |
Vietnam |
Multi-disciplinary manufacturer of steel and related products |
1,429 |
0.8 |
|
|
Bosch |
India |
Manufacturer of automotive parts |
1,348 |
0.7 |
|
|
LIC Housing Finance |
India |
Provider of mortgage finance |
1,339 |
0.7 |
|
|
ICICI Prudential Life Insurance |
India |
Life insurance provider |
1,324 |
0.7 |
|
|
Genexine |
Korea |
Therapeutic vaccine researcher and developer |
1,273 |
0.7 |
|
|
Persistent Systems |
India |
Outsourced software product developer |
1,247 |
0.7 |
|
|
Finetex EnE |
Korea |
Nano-technology material manufacturer |
1,175 |
0.6 |
|
|
Ping An Insurance |
HK/China |
Life insurance provider |
1,163 |
0.6 |
|
|
EO Technics |
Korea |
Laser equipment manufacturer and distributor |
1,151 |
0.6 |
|
|
Max Financial Services |
India |
Life insurance provider |
1,117 |
0.6 |
|
|
Netmarble Games |
Korea |
Mobile computer games designer |
1,110 |
0.6 |
|
|
Hansol Technics |
Korea |
Electrical components manufacturer |
1,058 |
0.6 |
|
|
Bioneer |
Korea |
Drug researcher and development |
942 |
0.5 |
|
|
Intron Biotechnology |
Korea |
Antibiotics drug researcher |
919 |
0.5 |
|
|
Global Brands Group |
HK/China |
Owner and licensor of consumer brands |
917 |
0.5 |
|
|
Saigon Securities |
Vietnam |
Brokerage and securities |
849 |
0.5 |
|
|
Techtronic Industries |
HK/China |
Power tool manufacturer |
802 |
0.4 |
|
|
Interpark |
Korea |
Internet-based shopping mall |
798 |
0.4 |
|
|
Hyundai Marine and Fire Insurance |
Korea |
Non-life insurance provider |
749 |
0.4 |
|
|
Sarine Technologies |
Singapore |
Diamond grading measurement systems developer |
748 |
0.4 |
|
|
HTC |
Taiwan |
Smartphone and virtual reality manufacturer |
666 |
0.4 |
|
|
Crystalgenomics |
Korea |
Proteomic drug discovery investigator |
657 |
0.4 |
|
|
ST Pharm |
Korea |
Manufacturer of specialist pharmaceutical ingredients |
656 |
0.4 |
|
|
TTY Biopharm |
Taiwan |
Manufacturer of specialist genetics |
621 |
0.3 |
|
|
Basso Industries |
Taiwan |
Powerdrills manufacturer |
617 |
0.3 |
|
|
Qurient |
Korea |
Antibiotics and cancer drug researcher |
559 |
0.3 |
|
|
JHL Biotech |
Taiwan |
Biologics manufacturer |
532 |
0.3 |
|
|
Theragen Etex |
Korea |
Genetics researcher and developer |
519 |
0.3 |
|
|
Asian Pharmaceuticals |
Taiwan |
Biosimilar drug developer |
142 |
0.1 |
|
|
Philtown Properties* |
Philippines |
Property developer |
0 |
0.0 |
|
|
Total Investments |
|
|
179,5233 |
98.4 |
|
|
Net Liquid Assets |
|
|
3,0000 |
1.6 |
|
|
Total Assets |
|
|
182,523 |
100.0 |
|
HK/China denotes Hong Kong and China
‡ Total assets less current liabilities, before deduction of borrowings.
* Denotes unlisted investment.
Distribution of Total Assets‡
Geographical Analysis
|
|
|
At 31 July 2017 % |
At 31 July 2016 % |
|
Equities: |
Hong Kong and China |
38.1 |
32.9 |
|
|
Korea |
24.9 |
29.9 |
|
|
India |
16.3 |
14.3 |
|
|
Taiwan |
11.7 |
16.4 |
|
|
Vietnam |
7.0 |
4.8 |
|
|
Singapore |
0.4 |
0.7 |
|
Total equities |
98.4 |
99.0 |
|
|
Net liquid assets |
1.6 |
1.0 |
|
|
Total assets‡ |
100.0 |
100.0 |
|
Sectoral Analysis
|
|
|
At 31 July 2017 % |
At 31 July 2016 % |
|
Equities: |
Consumer Discretionary |
19.8 |
16.9 |
|
|
Consumer Staples |
1.2 |
2.3 |
|
|
Energy |
- |
2.0 |
|
|
Financials |
17.2 |
11.0 |
|
|
Health Care |
5.0 |
9.2 |
|
|
Industrials |
2.8 |
4.8 |
|
|
Information Technology |
48.9 |
50.9 |
|
|
Materials |
2.7 |
- |
|
|
Telecommunication Services |
- |
0.9 |
|
|
Real Estate |
0.8 |
1.0 |
|
Total equities |
98.4 |
99.0 |
|
|
Net liquid assets |
1.6 |
1.0 |
|
|
Total assets |
100.0 |
100.0 |
|
‡ Total assets less current liabilities, before deduction of borrowings.
Key Performance Indicators
The key performance indicators (KPIs) used to measure the progress and performance of the Company over time are established industry measures and are as follows:
¾ the movement in net asset value per ordinary share;
¾ the movement in the share price;
¾ the premium/(discount) of the share price to the net asset value per share;
¾ the movement in the comparative index (MSCI All Country Asia ex Japan Index (in sterling terms)); and
¾ the ongoing charges.
An explanation of these measures can be found in the Glossary of Terms in note 8.
The one, five and ten year records for the KPIs can be found on pages 4, 5 and 6 of the Annual Report and Financial Statements respectively.
Future Developments of the Company
The outlook for the Company is set out in the Chairman's Statement and the Managers' Review above.
Buy-backs into Treasury, Issuances and Share Tenders
The Company currently has powers to buy back up to 14.99% of its own ordinary shares for cancellation at a discount to net asset value per share (NAV) on an ad hoc basis as well as to issue shares at a premium to NAV. During the year to 31 July 2017 no shares were bought back under the buy-back authority and no shares were issued. At 31 July 2017 the Company had authority to buy back a further 8,133,916 ordinary shares. At the forthcoming Annual General Meeting, the Directors are seeking to renew these authorities. Details of these resolutions are set out on pages 20 and 21 of the Annual Report and Financial Statements.
The Company also previously had authority to implement, at the Board's discretion, bi-annual tender offers for up to 5% of its shares at a 2% discount to net asset value, less costs, in the event that the discount averaged more than 9% during the six month periods to 31 January and 31 July in the years 2014, 2015 and 2016. The Board implemented a 5% tender offer in October 2016 in respect of the tender period to 31 July 2016. Through the exercise of this tender the Company bought back a total of 2,855,909 (2016 - 6,170,662) ordinary shares at a total cost of £7,213,000 (2016 - £11,618,000). The nominal value of these shares was £286,000 and represented 5.0% of the issued share capital at 31 July 2016. The Board did not seek shareholder authority to renew the bi-annual 5% tenders but it is the intention that the Directors will propose a 25% tender to be triggered if the Company's NAV (calculated at fair value cum-income) total return fails to exceed the Company's comparative index by at least 1% per annum over a three year period to 31 July 2019 on a cumulative basis. This would be subject to shareholder approval of the tender authority that will be put to shareholders at the 2018 Annual General Meeting.
Related Party Transactions
Details of the management contract are set out in the Directors' Report on page 19 of the Annual Report and Financial Statements. The management fee payable to the Manager by the Company for the year, as disclosed in note 3 in the Annual Report and Financial Statements, was £1,095,000 (2016 - £899,000) of which £310,000 (2016 - £245,000) was outstanding at the year end, as disclosed in note 11 in the Annual Report and Financial Statements.
The Directors' fees for the year are detailed in the Directors' Remuneration Report on page 28 of the Annual Report and Financial Statements. No Director has a contract of service with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006
Management Fee Arrangements
Details of the Investment Management Agreement are set out on page 19 of the Annual Report and Financial Statements. With effect from 1 January 2017 the annual management fee is 0.95% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remaining net assets. Prior to 1 January 2017 the fee was 0.95% on the first £50m of net assets and 0.65% on the remaining net assets. Management fees are calculated and payable quarterly.
|
|
2017 £'000 |
|
2016 £'000 |
|
Investment management fee |
1,095 |
|
899 |
Principal Risks
As explained on pages 24 and 25 of the Annual Report and Financial Statements there is a process for identifying, evaluating and managing the risks faced by the Company on a regular basis. The Directors have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. A description of these risks and how they are being managed or mitigated is set out below:
Financial Risk - the Company's assets consist mainly of listed securities and its principal financial risks are therefore market related and include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. An explanation of those risks and how they are managed is contained in note 16 to the Financial Statements on pages 44 to 48 of the Annual Report and Financial Statements. As oversight of this risk, the Board considers at each meeting various metrics including regional and industrial sector weightings, top and bottom stock contributors to performance along with sales and purchases of investments. Individual investments are discussed with the portfolio managers together with their general views on the various investment markets and sectors. A strategy meeting is held annually.
Investment Strategy Risk - pursuing an investment strategy to fulfil the Company's objective which the market perceives to be unattractive or inappropriate, or the ineffective implementation of an attractive or appropriate strategy, may lead to reduced returns for shareholders and, as a result, a decreased demand for the Company's shares. This may lead to the Company's shares trading at a widening discount to their net asset value. To mitigate this risk, the Board regularly reviews and monitors the Company's objective and investment policy and strategy, the investment portfolio and its performance, the level of discount/premium to net asset value at which the shares trade and movements in the share register.
Discount Risk - the discount/premium at which the Company's shares trade relative to its net asset value can change. The risk of a widening discount is that it may undermine investor confidence in the Company. The Board monitors the level of discount/premium at which the shares trade and the Company has authority to buy back its existing shares, when deemed by the Board to be in the best interests of the Company and its shareholders.
Regulatory Risk - failure to comply with applicable legal and regulatory requirements such as the tax rules for investment trust companies, the UKLA Listing Rules and the Companies Act could lead to suspension of the Company's Stock Exchange listing, financial penalties, a qualified audit report or the Company being subject to tax on capital gains. To mitigate this risk, Baillie Gifford's Business Risk, Internal Audit and Compliance Departments provide regular reports to the Audit Committee on Baillie Gifford's monitoring programmes. Major regulatory change could impose disproportionate compliance burdens on the Company. In such circumstances representation is made to ensure that the special circumstances of investment trusts are recognised. Shareholder documents and announcements, including the Company's published Interim and Annual Report and Financial Statements, are subject to stringent review processes and procedures are in place to ensure adherence to the Transparency Directive and the Market Abuse Directive with reference to inside information.
Custody and Depositary Risk - safe custody of the Company's assets may be compromised through control failures by the Depositary, including breaches of cyber security. To monitor potential risk, the Audit Committee receives six monthly reports from the Depositary confirming safe custody of the Company's assets held by the Custodian. Cash and portfolio holdings are independently reconciled to the Custodian's records by the Managers. The Custodian's audited internal controls reports are reviewed by Baillie Gifford's Internal Audit Department and a summary of the key points is reported to the Audit Committee and any concerns investigated. In addition, the existence of assets is subject to annual external audit.
Operational Risk - failure of Baillie Gifford's systems or those of other third party service providers could lead to an inability to provide accurate reporting and monitoring or a misappropriation of assets. To mitigate this risk, Baillie Gifford has a comprehensive business continuity plan which facilitates continued operation of the business in the event of a service disruption or major disaster. The Audit Committee reviews Baillie Gifford's Report on Internal Controls and the reports by other key third party providers are reviewed by Baillie Gifford on behalf of the Board.
Leverage Risk - the Company may borrow money for investment purposes. If the investments fall in value, any borrowings will magnify the impact of this loss. If borrowing facilities are not renewed, the Company may have to sell investments to repay borrowings. The Company can also make use of derivative contracts. All borrowings require the prior approval of the Board and leverage levels are discussed by the Board and Managers at every meeting. Covenant levels are monitored regularly. The majority of the Company's investments are in quoted securities that are readily realisable. Further information on leverage can be found in note 17 on page 48 and the Glossary of Terms on page 57 of the Annual Report and Financial Statements.
.
Political and Associated Economic Risk - the Board is of the view that political change in areas in which the Company invests or may invest may have practical consequences for the Company. Political developments are closely monitored and considered by the Board. The Board has noted the results of the UK referendum on continuing membership of the European Union. Whilst there is considerable uncertainty at present, the Board will continue to monitor developments as they occur and assess the potential consequences for the Company's future activities.
Viability Statement
Notwithstanding that the continuation of the Company is subject to approval of shareholders every five years, with the next vote at the Annual General Meeting in 2021, the Directors have, in accordance with provision C.2.2 of the 2016 UK Corporate Governance Code, published by the Financial Reporting Council, assessed the prospects of the Company over a three year period. The Directors continue to believe this period to be appropriate as it is reflective of the Company's investment approach. In the absence of any adverse change to the regulatory environment and the favourable tax treatment afforded to UK investment trusts, such a period is one over which they do not expect there to be any significant change to the current principal risks and to the adequacy of the mitigating controls in place. The Directors do not envisage any change in the Company's strategy or objectives nor do they foresee any events that would prevent the Company from continuing in existence over that period. As noted in the Chairman's Statement above, it is the intention that the Directors will propose a 25% tender to be triggered if the Company's net asset value (calculated at fair value cum-income) total return fails to exceed the Company's comparative index by at least 1% per annum over a three year period to 31 July 2019 on a cumulative basis.
In making this assessment regarding viability, the Directors have taken into account the Company's current position and have conducted a robust assessment of the Company's principal risks and uncertainties (as detailed above), in particular the impact of market risk where a significant fall in the Asia-Pacific (excluding Japan) and the Indian Sub-continent equity markets would adversely impact the value of the investment portfolio. The Directors have also considered the Company's investment objective and policy, the level of demand for the Company's shares, the nature of its assets, its liabilities and its projected income and expenditure. The vast majority of the Company's investments are readily realisable and can be sold to meet its liabilities as they fall due, the main liability currently being the short term bank borrowings. In addition, substantially all of the essential services required by the Company are outsourced to third party service providers; this allows key service providers to be replaced at relatively short notice where necessary.
Based on the Company's processes for monitoring revenue projections, share price discount/premium, the Managers' compliance with the investment objective, asset allocation, the portfolio risk profile, leverage, counterparty exposure, liquidity risk and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three years.
Going Concern
In accordance with the Financial Reporting Council's guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's principal risks are market related and include market risk, liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 16 to the Financial Statements.
The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and the level of gearing as well as compliance with borrowing covenants. In accordance with the Company's Articles of Association, shareholders have the right to vote on the continuation of the Company every five years, the next vote being in 2021. After making enquiries and considering the future prospects of the Company and notwithstanding the above, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements.
Financial Instruments
As an Investment Trust, the Company invests in equities and makes other investments so as to achieve its investment objective of maximising capital appreciation from a focused and actively managed portfolio of investments from the Asia-Pacific region including the Indian Sub-continent. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests.
These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company's exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise short term volatility. Risk provides the potential for both losses and gains. In assessing risk, the Board encourages the Managers to exploit the opportunities that risk affords.
The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period.
Market Risk
The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company's Managers both assess the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis.
Details of the Company's investment portfolios are shown in note 9 of the Annual Report and Financial Statements. The Company may, from time to time, enter into derivative transactions to hedge specific market, currency or interest rate risk. During the years to 31 July 2016 and 31 July 2017 no such transactions were entered into.
The Company's Managers may not enter into derivative transactions without the prior approval of the Board.
Currency Risk
The majority of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items.
The Managers monitor the Company's exposure to foreign currencies and report to the Board on a regular basis. The Managers assess the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed. However, the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company's valuation than a simple translation of the currency in which the company is quoted.
Foreign currency borrowings can limit the Company's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments.
Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below.
|
At 31 July 2017 |
Investments £'000 |
Cash and deposits £'000 |
Loans £'000 |
Other debtors and creditors* £'000 |
Net exposure £'000 |
|
Korean won |
45,443 |
- |
- |
7 |
45,450 |
|
Hong Kong dollar |
38,372 |
- |
- |
25 |
38,397 |
|
Indian rupee |
29,672 |
- |
- |
60 |
29,732 |
|
US dollar |
31,123 |
2,852 |
(7,273) |
(23) |
26,679 |
|
Taiwan dollar |
21,332 |
4 |
- |
402 |
21,738 |
|
Vietnam dong |
7,712 |
- |
- |
- |
7,712 |
|
Singapore dollar |
748 |
- |
- |
- |
748 |
|
Total exposure to currency risk |
174,402 |
2,856 |
(7,273) |
471 |
170,456 |
|
Sterling |
5,121 |
26 |
(7,500) |
(353) |
(2,706) |
|
|
179,523 |
2,882 |
(14,773) |
(118) |
167,750 |
* Includes net non-monetary assets of £14,000.
|
At 31 July 2016 |
Investments £'000 |
Cash and deposits £'000 |
Loans £'000 |
Other debtors and creditors* £'000 |
Net exposure £'000 |
|
Korean won |
39,676 |
- |
- |
5 |
39,681 |
|
Hong Kong dollar |
28,699 |
83 |
- |
(59) |
28,723 |
|
Indian rupee |
18,971 |
- |
- |
31 |
19,002 |
|
US dollar |
16,611 |
1,220 |
- |
12 |
17,843 |
|
Taiwan dollar |
20,136 |
- |
- |
260 |
20,396 |
|
Vietnam dong |
2,696 |
- |
- |
- |
2,696 |
|
Singapore dollar |
921 |
- |
- |
- |
921 |
|
Total exposure to currency risk |
127,710 |
1,303 |
- |
249 |
129,262 |
|
Sterling |
3,707 |
20 |
(5,000) |
(287) |
(1,560) |
|
|
131,417 |
1,323 |
(5,000) |
(38) |
127,702 |
* Includes net non-monetary assets of £14,000.
Currency Risk Sensitivity
At 31 July 2017, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return on ordinary activities would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the financial statement amounts. The analysis is performed on the same basis for 2016.
|
|
2017 £'000 |
|
2016 £'000 |
|
Korean won |
2,272 |
|
1,984 |
|
Hong Kong dollar |
1,920 |
|
1,436 |
|
Indian rupee |
1,487 |
|
1,020 |
|
US dollar |
1,334 |
|
950 |
|
Taiwan dollar |
1,087 |
|
892 |
|
Vietnam dong |
386 |
|
135 |
|
Singapore dollar |
37 |
|
46 |
|
|
8,523 |
|
6,463 |
Interest Rate Risk
Interest rate movements may affect directly:
¾ the fair value of any investments in fixed interest rate securities;
¾ the level of income receivable on cash deposits;
¾ the fair value of any fixed-rate borrowings; and
¾ the interest payable on any variable rate borrowings.
Interest rate movements may also impact upon the market value of investments outwith fixed income securities. The effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company's equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on cash deposits, floating rate notes and other similar investments.
The Company may finance part of its activities through borrowings at approved levels. The amount of any such borrowings and the approved levels are monitored and reviewed regularly by the Board. Movements in interest rates, to the extent that they affect the market value of the Company's fixed rate borrowings, may also affect the amount by which the Company's share price is at a discount or a premium to the net asset value (assuming that the Company's share price is unaffected by movements in interest rates).
The interest rate risk profile of the Company's financial assets and liabilities at 31 July is shown below.
Financial Assets
The Company's interest rate risk exposure on its financial assets at 31 July 2017 amounted to £2,882,000 (2016 - £1,323,000), comprising of its cash and short term deposits.
The cash deposits generally comprise call or short term money market deposits of less than one month which are repayable on demand. The benchmark rate which determines the interest payments received on cash balances is the bank base rate.
Financial Liabilities
The interest rate risk profile of the Company's financial liabilities and the maturity profile of the undiscounted future cash flows in respect of the Company's contractual financial liabilities at 31 July are shown below.
Interest Rate Risk Profile
|
|
2017 £'000 |
|
2016 £'000 |
|
Floating rate bank loan - sterling denominated - US$ denominated |
7,500 7,273 |
|
5,000 - |
|
|
14,773 |
|
5,000 |
Maturity Profile
|
|
2017 Within 1 year £'000 |
|
2016 Within 1 year £'000 |
|
Repayment of loans |
14,773 |
|
5,000 |
|
Interest on loans |
158 |
|
56 |
|
|
14,931 |
|
5,056 |
Interest Rate Risk Sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
An increase of 100 basis points in interest rates, with all other variables being held constant, would have decreased the Company's total net assets and total return on ordinary activities for the year ended 31 July 2017 by £119,000 (2016 - decrease of £37,000). This is mainly due to the Company's exposure to interest rates on its floating rate bank loan and cash balances. A decrease of 100 basis points would have had an equal but opposite effect.
Other Price Risk
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company's net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Managers. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company's objectives and investment policies. The portfolio does not seek to reproduce the index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from the comparative index.
Other Price Risk Sensitivity
Fixed asset investments are valued at bid prices which equate to their fair value. A full list of the Company's investments is given above. In addition, a geographical analysis of the portfolio and an analysis of the investment portfolio by broad industrial or commercial sector are contained in the Strategic Report of the Annual Report and Financial Statements.
107.0% (2016 - 102.9%) of the Company's net assets are invested in quoted equities. A 5% (2016 - 5%) increase in quoted equity valuations at 31 July 2017 would have increased total assets and total return on ordinary activities by £8,976,000 (2016 - £6,571,000). A decrease of 5% would have had an equal but opposite effect.
Liquidity Risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not significant as the majority of the Company's assets are investments in quoted securities that are readily realisable. The Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum aggregate exposure to substantial holdings.
The Company has the power to take out borrowings, which give it access to additional funding when required. The Company's current borrowing facility is detailed in note 11 of the Annual Report and Financial Statements and the maturity profile of its borrowings are set out above. Under the terms of the borrowing facility, borrowings are repayable on demand at their current carrying value.
Borrowings Falling Due Within One Year
|
|
2017 £'000 |
|
2016 £'000 |
|
Bank loan |
14,773 |
|
5,000 |
Borrowing Facilities
The Company has a one year £15 million multi-currency revolving credit facility with The Royal Bank of Scotland plc (31 July 2016 - one year £10 million multi-currency revolving credit facility with The Royal Bank of Scotland plc and a £10 million one year uncommitted, unsecured floating rate revolving credit facility with The Bank of New York Mellon). At 31 July 2017 there were outstanding drawings of £7,500,000 and US$9,588,750 at interest rates of 0.74318% and 1.69586% under The Royal Bank of Scotland facility (31 July 2016 - £5,000,000 at an interest rate of 1.02906% and there were no drawings under The Bank of New York Mellon facility). The main covenant relating to the loan is that borrowings should not exceed 20% of the Company's net asset value. There were no breaches in the loan covenants during the year.
Credit Risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss.
This risk is managed as follows:
¾ where the Managers make an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question;
¾ the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets of the Company. The Depositary has delegated the custody function to Bank of New York Mellon SA/NV London Branch. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed. The Managers monitor the Company's risk by reviewing the custodian's internal control reports and reporting its findings to the Board;
¾ investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed;
¾ the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Managers; and
¾ cash is only held at banks that are regularly reviewed by the Managers.
Credit Risk Exposure
The exposure to credit risk at 31 July was:
|
|
2017 £'000 |
2016 £'000 |
|
Cash and short term deposits |
2,882 |
1,323 |
|
Debtors and prepayments |
508 |
359 |
|
|
3,390 |
1,682 |
The maximum exposure in cash during the year was £8,814,000 (2016 - £23,434,000) and the minimum £227,000 (2016 - £1,323,000). None of the Company's financial assets are past due or impaired (2016 - none).
Fair Value of Financial Assets and Financial Liabilities
The Directors are of the opinion that the carrying amount of financial assets and liabilities of the Company in the Balance Sheet approximates their fair value.
Capital Management
The capital of the Company is its share capital and reserves as set out in note 13 of the Annual Report and Financial Statements together with its borrowings (see note 11 of the Annual Report and Financial Statements). The objective of the Company is to invest in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. The Company's investment policy is set out on page 7 of the Annual Report and Financial Statements. In pursuit of the Company's objective, the Board has a responsibility for ensuring the Company's ability to continue as a going concern and details of the related risks and how they are managed are set out on page 21, pages 7 and 8 and pages 24 and 25, respectively of the Annual Report and Financial Statements. The Company has the ability to buy back its shares (see page 21 of the Annual Report and Financial Statements) and changes to the share capital during the year are set out in note 12 of the Annual Report and Financial Statements. The Company does not have any externally imposed capital requirements other than the covenants on its loan which are detailed in note 11 of the Annual Report and Financial Statements.
Investments
|
As at 31 July 2017 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
Listed equities |
179,523 |
- |
- |
179,523 |
|
Unlisted equity |
- |
- |
- |
- |
|
Total financial asset investments |
179,523 |
- |
- |
179,523 |
|
As at 31 July 2016 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
Listed equities |
131,417 |
- |
- |
131,417 |
|
Unlisted equity |
- |
- |
- |
- |
|
Total financial asset investments |
131,417 |
- |
- |
131,417 |
Investments in securities are financial assets held at fair value through profit or loss. In accordance with Financial Reporting Standard 102, the tables above provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value.
Fair Value Hierarchy
The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:
Level 1 - using unadjusted quoted prices for identical instruments in an active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly
observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is unavailable).
The valuation techniques used by the Company are explained in the accounting policies on page 39 of the Annual Report and Financial Statements.
Alternative Investment Fund Managers (AIFM) Directive
In accordance with the Alternative Investment Fund Managers Directive, information in relation to the Company's leverage and the remuneration of the Company's AIFM, Baillie Gifford & Co Limited, is required to be made available to investors. In accordance with the Directive, the AIFM's remuneration policy is available on the Managers' website at www.bailliegifford.com or on request (see contact details on the back cover of the Annual Report and Financial Statements). The numerical remuneration disclosures in respect of the AIFM's relevant reporting period (year ended 31 March 2017) are also available at www.bailliegifford.com.
The Company's maximum and actual leverage (see Glossary of Terms at the end of this announcement) levels at 31 July 2017 are shown below:
Leverage Exposure
|
|
Gross Method |
Commitment Method |
|
Maximum limit |
2.50:1 |
2.00:1 |
|
Actual |
1.09:1 |
1.09:1 |
Statement of Directors' Responsibilities in Respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Financial Statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial Statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and
- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable laws and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, a Directors' Remuneration Report and a Corporate Governance Statement that comply with that law and those regulations.
The Directors have delegated responsibility to the Managers for the maintenance and integrity of the Company's page of the Managers' website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
The work carried out by the Auditor does not involve any consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website.
Each of the Directors, whose names and functions are listed within the Directors and Managers section of the Annual Report and Financial Statements confirm that, to the best of their knowledge:
- the Financial Statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' give a true and fair view of the assets, liabilities, financial position and net return of the Company;
- the Annual Report and Financial Statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy; and
- the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Jean Matterson
Chairman
18 September 2017
Income Statement
|
|
For the year ended 31 July 2017 |
For the year ended 31 July 2016 |
||||
|
|
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
Gains on investments |
- |
47,480 |
47,480 |
- |
13,414 |
13,414 |
|
Currency gains |
- |
192 |
192 |
- |
1,140 |
1,140 |
|
Income (note 2) |
1,559 |
- |
1,559 |
1,331 |
- |
1,331 |
|
Investment management fee |
(1,095) |
- |
(1,095) |
(899) |
- |
(899) |
|
Other administrative expenses |
(425) |
- |
(425) |
(389) |
- |
(389) |
|
Net return before finance costs and taxation |
39 |
47,672 |
47,711 |
43 |
14,554 |
14,597 |
|
Finance costs of borrowing |
(119) |
- |
(119) |
(127) |
- |
(127) |
|
Net return on ordinary activities before taxation |
(80) |
47,672 |
47,592 |
(84) |
14,554 |
14,470 |
|
Tax on ordinary activities |
(131) |
- |
(131) |
(98) |
- |
(98) |
|
Net return on ordinary activities after taxation |
(211) |
47,672 |
47,461 |
(182) |
14,554 |
14,372 |
|
Net return per ordinary share (note 4) |
(0.38p) |
86.74p |
86.36p |
(0.30p) |
24.25p |
23.95p |
The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Comprehensive Income is not required as there is no other comprehensive income.
Balance Sheet
|
|
At 31 July 2017 |
At 31 July 2016 |
||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Fixed assets |
|
|
|
|
|
Investments held at fair value through profit or loss |
|
179,523 |
|
131,417 |
|
Current assets |
|
|
|
|
|
Debtors |
508 |
|
359 |
|
|
Cash and cash equivalents |
2,882 |
|
1,323 |
|
|
|
3,390 |
|
1,682 |
|
|
Creditors |
|
|
|
|
|
Amounts falling due within one year |
(15,163) |
|
(5,397) |
|
|
Net current liabilities |
|
(11,773) |
|
(3,715) |
|
Net assets |
|
167,750 |
|
127,702 |
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
Called up share capital |
|
5,426 |
|
5,712 |
|
Share premium account |
|
3,166 |
|
3,166 |
|
Capital redemption reserve |
|
20,367 |
|
20,081 |
|
Capital reserve |
|
134,836 |
|
94,377 |
|
Revenue reserve |
|
3,955 |
|
4,366 |
|
Shareholders' funds |
|
167,750 |
|
127,702 |
|
Net asset value per ordinary share |
|
309.15p |
|
223.58p |
|
Ordinary shares in issue (note 6) |
|
54,262,282 |
|
57,118,191 |
Statement of Changes in Equity
For the year ended 31 July 2017
|
|
Called up share £'000 |
Share £'000 |
Capital redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Shareholders' £'000 |
|
Shareholders' funds at 1 August 2016 |
5,712 |
3,166 |
20,081 |
94,377 |
4,366 |
127,702 |
|
Net return on ordinary activities after taxation |
- |
- |
- |
47,672 |
(211) |
47,461 |
|
Shares purchased for cancellation (note 6) |
(286) |
- |
286 |
(7,213) |
- |
(7,213) |
|
Dividends paid during the year (note 5) |
- |
- |
- |
- |
(200) |
(200) |
|
Shareholders' funds at 31 July 2017 |
5,426 |
3,166 |
20,367 |
134,836 |
3,955 |
167,750 |
For the year ended 31 July 2016
|
|
Called up share £'000 |
Share £'000 |
Capital redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Shareholders' £'000 |
|||||
|
Shareholders' funds at 1 August 2015 |
6,329 |
3,166 |
19,464 |
91,441 |
4,770 |
125,170 |
|||||
|
Net return on ordinary activities after taxation |
- |
- |
- |
14,554 |
(182) |
14,372 |
|||||
|
Shares purchased for cancellation (note 6) |
(617) |
- |
617 |
(11,618) |
- |
(11,618) |
|||||
|
Dividends paid during the year (note 5) |
- |
- |
- |
- |
(222) |
(222) |
|||||
|
Shareholders' funds at 31 July 2016 |
5,712 |
3,166 |
20,081 |
94,377 |
4,366 |
127,702 |
|||||
Cash Flow Statement
|
|
For the year ended 31 July 2017 |
For the year ended 31 July 2016 |
||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
Net return on ordinary activities before taxation ‡ |
|
47,592 |
|
14,470 |
|
Net gains on investments |
|
(47,480) |
|
(13,414) |
|
Currency gains |
|
(192) |
|
(1,140) |
|
Finance costs of borrowings |
|
119 |
|
127 |
|
Overseas tax incurred |
|
(114) |
|
(84) |
|
Changes in debtors and creditors |
|
(105) |
|
(86) |
|
Cash from operations |
|
(180) |
|
(127) |
|
Interest paid |
|
(104) |
|
(134) |
|
Net cash outflow from operating activities |
|
(284) |
|
(261) |
|
Cash flows from investing activities |
|
|
|
|
|
Acquisitions of investments |
(43,667) |
|
(29,853) |
|
|
Disposals of investments |
42,958 |
|
47,072 |
|
|
Net cash (outflow)/inflow from investing activities |
|
(709) |
|
17,219 |
|
Cash flows from financing activities |
|
|
|
|
|
Equity dividends paid (note 5) |
(200) |
|
(222) |
|
|
Shares purchased for cancellation (note 6) |
(7,213) |
|
(11,618) |
|
|
Borrowings drawn down/(repaid) |
9,901 |
|
(9,369) |
|
|
Net cash inflow/(outflow) from financing activities |
|
2,488 |
|
(21,209) |
|
Increase/(decrease) in cash and cash equivalents |
|
1,495 |
|
(4,251) |
|
Exchange movements |
|
64 |
|
1,513 |
|
Cash and cash equivalents at 1 August |
|
1,323 |
|
4,061 |
|
Cash and cash equivalents at 31 July |
|
2,882 |
|
1,323 |
‡ Dividends received in the year amounted to £1,390,000 (2016 - £1,220,000).
|
Notes to the Financial Statements |
|
1. |
The Financial Statements for the year to 31 July 2017 have been prepared in accordance with FRS102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' The accounting policies adopted are consistent with those of the previous financial year. The Company has already adopted the amendments to Section 34 of FRS 102 regarding fair value hierarchy disclosures. The Directors consider the Company's functional currency to be sterling as the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment. |
||||||||
|
|
|
31 July 2017 £'000 |
31 July 2016 £'000 |
||||||
|
2. |
Income from financial assets designated at fair value through profit or loss |
|
|
||||||
|
|
Listed overseas dividends |
1,556 |
1,331 |
||||||
|
|
|
1,556 |
1,331 |
||||||
|
|
Other income |
|
|
||||||
|
|
Deposit interest |
3 |
- |
||||||
|
|
Total income |
1,559 |
1,331 |
||||||
|
3. |
The Company has appointed Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Manager (AIFM) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. The Managers may terminate the Management Agreement on six months' notice and the Company may terminate on three months' notice. |
||||||||
|
4. |
|
31 July 2017 £'000 |
31 July 2016 £'000 |
||||||
| Net return per ordinary share |
|
|
|||||||
| Revenue return on ordinary activities after taxation |
(211) |
(182) |
|||||||
| Capital return on ordinary activities after taxation |
47,672 |
14,554 |
|||||||
| Total return |
47,461 |
14,372 |
|||||||
| Weighted average number of ordinary shares in issue |
54,958,654 |
60,007,258 |
|||||||
|
The figures for net return per ordinary share are based on the above totals for revenue and capital and the weighted average number of ordinary shares in issue during the year. There are no dilutive or potentially dilutive shares in issue.
|
|||||||||
|
5. |
Ordinary Dividends
|
31 July 2017 |
31 July 2016
|
31 July 2017 £'000 |
31 July 2016 £'000 |
||||
| Amounts recognised as distributions in the year: Previous year's final (paid 11 November 2016)
|
0.35p |
0.35p |
200 |
222 |
|||||
|
|
Also set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. There is no revenue available for distribution by way of dividend for the year (2017 - revenue loss of £211,000; 2016 - revenue loss of £182,000). |
||||||||
|
|
Ordinary Dividends
|
31 July 2017 |
31 July 2016
|
31 July 2017 £'000 |
31 July 2016 £'000 |
||||
|
|
Amounts paid and proposed in respect of the financial year: Proposed final dividend per ordinary share |
Nil |
0.35p |
Nil |
200 |
||||
Notes to the Financial Statements
|
6. |
The Company has authority to buy back up to 14.99% of its shares on an ad hoc basis and previously had authority to implement, at the Board's discretion, bi-annual tender offers for up to 5% of its shares at a 2% discount to net asset value, less costs, in the event that the discount averaged more than 9% during the six month periods to 31 January and 31 July in the years 2014, 2015 and 2016. In the year to 31 July 2017 the Company bought back a total of 2,855,909 ordinary shares at a total cost of £7,213,000 through the exercise of the last tender offer in October 2016 (31 July 2016 - 6,170,662 ordinary shares at a total cost of £11,618,000). The nominal value of these shares was £286,000 and represented 5.0% of the issued share capital at 31 July 2016. At 31 January 2017 the Company had authority to buy back a further 8,133,916 ordinary shares. Following consultation with a number of shareholders, the Board did not seek authority at the Annual General Meeting on 9 November 2016 to renew the bi-annual 5% tenders. Instead, the Board proposed a tender that will be triggered if the Company's net asset value (calculated at fair value cum income) total return fails to exceed the Company's comparative index by at least 1% per annum over a three year period to 31 July 2019 on a cumulative basis. If this performance target is not met, it is the intention that the Directors will propose a 25% tender of the Company's issued share capital at the time of calculation. The tender would be at a 2% discount to net asset value less costs. This would be subject to shareholders' approval of the tender authority that will be put to shareholders at the 2018 Annual General Meeting. The Company also has authority to allot shares under section 551 of the Companies Act 2006. The Board has authorised use of this authority to issue new shares at a premium to net asset value in order to enhance the net asset value per share for existing shareholders and improve the liquidity of the Company's shares. In the years to 31 July 2016 and 31 July 2017 no shares were issued. |
|
7. |
The Company incurred transaction costs on purchases of £69,000 (2016 - £46,000) and on sales of £102,000 (2016 - £133,000), being £171,000 (2016 - £179,000) in total. |
|
8. |
Glossary of Terms Total Assets Total assets less current liabilities, before deduction of all borrowings.
Net Asset Value Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue.
Net Liquid Assets Net liquid assets comprise current assets less current liabilities, excluding borrowings.
Discount/Premium As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.
Total Return The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.
Ongoing Charges The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value).
|
Notes to the Financial Statements
|
8. |
Glossary of Terms (Ctd) Gearing At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. Gearing represents borrowings at par less cash and cash equivalents expressed as a percentage of shareholders' funds. Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds. Equity gearing is the Company's borrowings adjusted for cash and bonds expressed as a percentage of shareholders' funds. Leverage For the purposes of the Alternative Investment Fund Managers Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other. Active Share Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index. |
‡ Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.
None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
Third Party Data Provider Disclaimer
No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.
No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgments, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.
MSCI Index Data
Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the 'MSCI Parties') expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)
- ends -
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