ASHOKA INDIA EQUITY INVESTMENT TRUST PLC
HALF-YEARLY FINANCIAL REPORT
FOR
THE SIX MONTHS ENDED 31 DECEMBER 2023
INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND PERFORMANCE
SUMMARY
Investment Objective
The investment objective of the
Ashoka India Equity Investment Trust PLC (the "Company") is to
achieve long-term capital appreciation, mainly through investment
in securities listed in India and listed securities of companies
with a significant presence in India.
Financial Information
|
As at
31 December 2023
|
As at
30 June 2023
|
|
(unaudited)
|
(audited)
|
Net asset value ("NAV") per Ordinary
Share (cum income)
|
238.6p
|
206.2p
|
Ordinary Share price
|
243.0p
|
209.0p
|
Ordinary Share price premium to
NAV1
|
1.8%
|
1.4%
|
Net assets
|
£298.1 million
|
£232.6 million
|
Performance Summary
|
For
the
six
months ended
31
December 2023
|
For
the
six
months ended
31
December 2022
|
|
(unaudited)
%
change2,3
|
(unaudited)
%
change2,3
|
Share price total return per
Ordinary Share1
|
16.3%
|
9.7%
|
NAV total return per Ordinary
Share1
|
15.7%
|
10.0%
|
MSCI India IMI Index (sterling
terms)
|
16.4%
|
9.9%
|
1 These are Alternative Performance
Measures.
2 Total returns in sterling for the six month
period.
3 Source: White Oak Capital.
|
Alternative Performance Measures ('APMS')
The items in the Financial
information and the Performance summary indicated in the footnote
above, are considered to represent APMs of the Company. Definitions
of these APMs together with how these measures have been calculated
can be found in the half-yearly report.
Chairman's Statement
Re-reading my comments from this time
last year, I note with dismay that the world's geopolitical
problems mentioned then remain unresolved. Worse, the more recent
outbreak of war between Israel and Hamas in Palestine has no
obvious long-term solution in sight and the attendant flare-up in
the Red Sea is not only a threat to life but also to international
trade, with the potential to add supply chain issues and cost
pressures to all nations. l really wish to start my statement one
year with the words "All is well in the world" but that seems a
distant dream.
Meanwhile, as I have said before, we
must carry on and deal with global difficulties as best we can and,
in the case of Ashoka India, I am delighted to announce another
positive year for the Company.
This is the Company's half-year
financial report for the period 1 July 2023 to 31 December 2023
and, regardless of worldwide tensions, the investment team has
produced outstanding returns whilst marginally underperforming the
Company's benchmark index, the MSCI India IMI, which enjoyed a
particularly strong period as the market powered ahead.
Performance
In the period under review, the
Company's share price and NAV have recorded total returns in
sterling terms of 16.3% and 15.7% respectively, compared to 16.4%
for the benchmark index. This performance has been generated from a
broad and diverse number of positions held within the Company's
portfolio, helped considerably by a small number of exciting,
privately-owned companies nearing an IPO (Initial Public Offering)
and a wider selection of quoted large, medium and smaller companies
across the market spectrum. As all shareholders are aware, India is
a nation full of entrepreneurs and the Company's broad investment
remit allows its investment team flexibility to identify and invest
in India's best companies regardless of size or sector. As ever,
the Investment Manager's report that follows goes into more
detail.
The Company's shares traded at a
premium to NAV (cum income) of 1.8% at the end of the
period.
Performance Fee
A performance fee is currently being
accrued for the current three-year period, the measurement of which
runs from 1 July 2021 to 30 June 2024, as a result of
outperformance of the Company's benchmark index. As at 31 December
2023, this amounted to £3.738 million and is fully reflected and
accrued in the Company's daily net asset value
announcements.
Share Issuance
The Company issued a record number of
new shares during the period under review reflecting continued
confidence from existing shareholders and growing belief from new
investors both in the Indian economy as a whole and in this
Company's investment team's ability to outperform over the longer
term. This resulted in the issuance of 12.1 million new shares
raising gross proceeds of £27.6 million. New shares are issued at a
small premium to the prevailing net asset value to ensure no
dilution to existing shareholders. The Company's net asset value
and market capitalization at the calendar year-end were £298.1
million and £303.6 million respectively. As at the date of this
report, a further 11.4 million shares have been issued and the
Company's total assets stood at £338.1 million.
Revenue and Dividends
The Company's principal objective is
to provide returns through long-term capital appreciation, with
income being a secondary consideration. Therefore, shareholders
should not expect that the Company will pay an annual dividend
under normal circumstances. Whilst the portfolio does generate a
small amount of income, this is used to defray running costs.
However, the Company may declare an annual dividend to maintain UK
investment trust status if there is a sufficient surplus. In the
period under review, no interim dividend has been
declared.
Redemption Facility
The Company has a redemption facility
through which shareholders are entitled to request the redemption
of all or part of their holding of Ordinary Shares on an annual
basis. The fifth Redemption Point for the Ordinary Shares was on 30
September 2023. I am pleased to report that redemption requests for
just 547,339 shares were received and that these redeemed shares
were matched with demand from other shareholders in the stock
market by the Company's corporate broker, Peel Hunt. The Board has
absolute discretion to operate the annual redemption facility on
any given Redemption Point and to accept or decline in whole or in
part any redemption request.
Shareholders are reminded that
investment in a Company of this nature should only be considered if
it is understood that the significant growth potential of the
Indian equity market is likely to be achieved over the medium to
longer term, a minimum of five years.
Consolidation Opportunities
The Board is well aware of demand
from investors for larger, more liquid vehicles in the investment
company sector. Ashoka India has grown considerably since launch
and continues to perform strongly, leading the Board to believe it
is in a good position to act as a consolidator in this regard. As
part of its strategic considerations, the Board regularly monitors
the closed-ended sector for opportunities that would enhance value
for the Company's shareholders whose long-term interests are
paramount should any future transaction be considered.
Outlook
Geopolitical conflict and tensions
notwithstanding, there have been more reassuring movements in
important world metrics over the last few months, notably with
regard to inflation and interest rates. Both were sparked upwards
when Russia invaded Ukraine two years ago prompting sharp increases
in energy and commodity prices. Whilst India did not fare as badly
as western economies in this respect, inflation has a knock-on
effect to global demand and trade so it has been a relief for all
to see both inflation and interest rates fall to more long-term
average levels.
There is an unprecedented number of
elections this year in democracies around the world and India is no
exception. It is widely anticipated that the incumbent Prime
Minister, Narendra Modi, will be comfortably re-elected, an outcome
that will add political stability to a fast-growing nation that is
in direct competition with autocracies like China as a first-choice
base for global manufacturing companies. Export growth is
continuing and the economy as a whole is bolstered by strong
domestic demand from an increasingly dynamic population thus
creating greatly increased job opportunities and possibilities of a
prosperous future for coming generations. India's GDP growth of
7.3% in 2023 was the highest in the world making its economy now
the fifth largest.
As ever, your Investment Managers and
Advisers focus on appropriate and proportionate corporate
governance standards before each stock is selected for the
portfolio, an approach strongly supported by the Board and one that
continues to produce excellent results. The portfolio's
constituents are selected for their superior future growth
prospects and avoidance of misgovernance, wherever possible, is
highly desirable.
Both Acorn and White Oak remain
focused on delivering outstanding returns from a broadly
diversified portfolio of investments from across the market cap
spectrum. Your Board has great confidence in their abilities to
outperform and produce superior returns from one of the world's
most dynamic and fastest-growing markets.
As ever, I thank you for your
continued support as a shareholder of this Company.
ANDREW WATKINS
Chairman
11 March 2024
Investment Manager's Report
During the latter half of 2023, the
Company's total NAV return underperformed the index by 0.7%
delivering 15.7%, compared to 16.4% for the MSCI India IMI (in
sterling terms)*. Since 31 July 2018 (the date post IPO when the
Company was fully invested), the Company has delivered 65.9% of net
cumulative outperformance, with a 140.2% absolute return compared
to the benchmark return of 74.3%, both in sterling terms. Strong
stock selection especially in mid and small caps has been a
tailwind.
Key
contributors
Kaynes Technology is a fully
integrated electronics manufacturing services company with
end-to-end operations delivering component assemblies and box-build
solutions. It provides value-added electronics manufacturing
services and original design manufacturing solutions. The company
holds long-term relationships with multiple customers diversified
across verticals like automotive, industrial, and railways, thereby
limiting the impact of any downturn associated with a particular
vertical. The stock's outperformance was led by continued strong
operating results driven by new customer additions across verticals
and increased wallet share with existing customers.
Gokaldas Exports is one of the
leading garment manufacturers in India and one of the top garment
exporters in the region. India is emerging as an alternative
destination for global brands looking to de-risk their supply chain
from China, and companies such as Gokaldas are considered a partner
of choice, given the long-standing relationship with top
international brands and improved execution capabilities. The
company is expanding within India to take advantage of the
incentives offered by the government while exploring options beyond
India to create manufacturing capacities (both organically and
through acquisitions) in low-cost regions and countries which have
favourable trade terms with large importers in the US, UK, European
Union, etc. The management has created a robust system to ensure
operational excellence and high-quality customer service, which
could lead to industry-leading growth and financial performance.
The stock outperformed because of strong order visibility from key
customers.
Electronics Mart India Limited (EMIL)
is India's fourth-largest consumer durables and
electronics retailer. The company offers a diversified range of
products focusing on large appliances (AC, TV, washing machines,
etc.). EMIL is the most significant player in the Southern states
of Andhra Pradesh (AP) & Telangana and has recently ventured
into the fast-growing Delhi-NCR market. The company has displayed a
strong track record of execution, focusing on driving operational
efficiencies and improving customer experience. The stock has
performed well on the back of better-than-expected performance in
the Delhi-NCR market and continued operational excellence in AP
& Telangana.
Key
Detractors
Navin Fluorine (NFIL) is a
specialty chemicals company focusing on fluorine chemistry. It is
present across the fluorine value chain, from inorganic fluorides
to specialty chemicals and Contract Research and Manufacturing
Services (CRAMS). The company is now focusing on high-end
sustainable segments like CRAMS and specialty chemicals while
simultaneously leveraging its other segments captively to achieve
full integration. The company works closely with innovators and has
a robust pipeline of molecules. The total contribution from the
high value-added segment increased from 35% in FY13 to 60% in FY22.
The company has also been focusing on new value-added segments to
cater to high-end customers with highly complex product needs. The
stock's underperformance can be explained by the global slowdown in
the agro-chem industry due to overstocking. Further, the Managing
Director of NFIL, who was instrumental in driving growth over the
past few years, tendered his resignation for personal reasons in
September 2023. The company is expected to induct a senior
professional to head the organization in due course.
Aether Industries, based in
Surat (Gujarat, India), manufactures advanced intermediates and
specialty chemicals involving complex and differentiated chemistry.
The company's products find numerous applications across the
pharmaceuticals, agrochemicals, material science, coating,
high-performance photography, additive, and oil and gas segments of
the chemical industry. The near-term performance of the business
has been sluggish owing to a slowdown in global markets, which
resulted in the stock's underperformance. However, we remain
optimistic about its long-term fundamentals, which remain
strong.
Brookfield REIT is a leading
Real Estate Investment Trusts (REIT) involved in the leasing of
commercial office spaces in Mumbai, NCR and Kolkata, with a
portfolio of 20.6 Mn Sq.ft of operational area and 4.6 Mn Sq ft
with potential for development. Brookfield recently acquired two
assets from its parent entity, where the REIT will own 50% of the
assets. The parent, Brookfield India, has >25 Mn sq. ft of
additional projects, which, over time, are likely to be acquired by
the REIT. Recovery in commercial leasing post the COVID-related
decline, strong mark-to-market opportunity in the existing leased
portfolio, as well as the high contractual escalations already
built into the lease agreements place Brookfield in a favourable
position over the next 2-3 years. ~70% of Brookfield's portfolio
constitutes special economic zones (SEZ), which witnessed weak
demand in CY23, leading to the stock's underperformance. We believe
the recent SEZ regulatory amendments will accelerate the leasing of
properties in the coming quarters.
Investment Outlook
Over the last few quarters, the
global macro environment has been characterised by unfavourable
inflation dynamics, higher for longer interest rates, persistently
high geopolitical risks, and higher climate costs. Despite these
economic and geopolitical challenges, global growth in 2023 was
more resilient than anticipated by several economists at the start
of the year. At the headline level, developing economies like India
reaped the benefits of maintaining healthy macro-fundamentals and
garnered strong domestic as well as foreign inflows.
Continuing this trend, India's
economy is expected to deliver a solid GDP growth of over 7% in
CY24. The macro-fundamentals are healthy, with resilient corporate
earnings and promising growth prospects. A redeeming feature of
India Inc. since the pandemic has been the sharp improvement in its
earnings profile, marked not only by a trajectory that has reset
higher but also by uncharacteristic stability, which was missing
for most of the last decade. The emergence of value-added exports,
led by upskilled labour and the government's thrust on ease of
doing business, is adding to the tailwinds.
Supply chain disruptions have
accelerated the relocation of manufacturing out of China, with
India emerging as a credible alternative. Policy support in the
form of Product Linked Incentive ("PLI") schemes for key sectors
and measures to improve the 'ease of doing business' have emerged
as critical enablers. India has a marginal market share in many
manufacturing industries, and even a 1-2% incremental market share
gain from China could result in a high-teens growth rate for
exports.
Meanwhile, the services sector, led
by the IT companies, stand to benefit from the accelerated digital
transformation of global enterprises and cloud adoption. Enhanced
by the business continuity showcased during COVID-19 lockdowns,
global customers have preferred Indian IT & engineering
services providers due to their exceptional talent pool and depth
of competencies across service lines. This favourable dynamic is
helping India boost its foreign exchange reserves, thereby
increasing the cushion against external shocks.
The ingredients of a revival in the
investment cycle are also in place. The twin balance sheet problem
(overleveraged corporates' balance sheet and high bad loans of
banks), which held back private investments in the last decade,
seems to be behind us. Public sector capex, which grew at a brisk
pace in the recent past, could continue, though at a slower pace,
with the government committed to building infrastructure, thereby
crowding in private investments. The uptick in demand for housing
and real estate and the emergence of opportunities in green energy
are other supportive factors. The recently announced interim budget
too lays stress on capital expenditure while laying emphasis on
fiscal rectitude.
The Investment Manager believes that
India is at the cusp of realizing its true economic potential while
benefitting from several secular tailwinds, the most important
being its favourable demographics and rising income levels, thereby
allowing domestic consumption to flourish - with the demand for
discretionary goods, travel and leisure, financial and healthcare
services on the rise. The country is experiencing rapid
digitalisation of services, supported by increasing internet
penetration and formalization on the back of ongoing structural
reforms. We believe all these factors place India as one of the
most promising economies over the medium term and make for a highly
compelling investment proposition.
From a potential risk perspective, an
absence of consistent improvement in external (global) demand and
any further escalation in geopolitical tensions pose risks to
near-term growth. However, we believe the ingredients of an uptick
in domestic investment cycle remain skewed towards the positive
side.
General elections in India are likely
to be held in April or May 2024. Though the current Prime
Minister's popularity remains strong and the risk of regime change
appears low, such an event or a weak coalition central government
could be a negative surprise for the markets, which would like to
see policy continuity.
We claim no great skill in
forecasting elections, nor do we believe it's something many
analysts demonstrate great aptitude for. What we do know is that
many of the changes PM Modi's government has overseen would be very
difficult to undo. Nor would it be in interest of a new government
to hinder them - given the aspirations and expectations of a young,
intellectual and vibrant population.
The Investment Manager believes the
most attractive aspect of investing in India is the outsized alpha
opportunity the market presents compared to any other equity market
globally given that the Indian market is still relatively
under-researched. Such alpha opportunities are present across the
large, mid, and small cap spectrum. In particular, the SMID (small
& mid) cap segment of the Indian equity market has a large, and
expanding, number of listed businesses to choose from. Besides the
large number of listings, the SMID-cap segment also tends to have
very heterogeneous business models which makes it fertile hunting
ground for bottom-up stock pickers.
What cannot be denied is that India
is among the very few economies in the world that possess the full
complement of appropriate market conditions backed by pro-progress
government policies that aim to deliver sustainable growth over the
long term. Backed by the well-resourced team of the Investment
Adviser, Ashoka India Equity Trust is well-positioned to capitalise
on the investment opportunities, from a bottom-up perspective, on
offer within the Indian equities space.
Acorn Asset Management Ltd
Investment Manager
11 March 2024
*Shareholders
should note that the MSCI India IMI Index (sterling terms)
does not deduct taxes, unlike active and passive
funds, such as the Company.
Top
Ten Holdings
As at 31 December 2023
|
Sector
|
% of net
asset
|
ICICI Bank
|
Financials
|
6.9
|
Infosys
|
Information
Technology
|
5.8
|
Cholamandalam Investment and Finance
Company
|
Financials
|
3.9
|
Maruti Suzuki India
|
Consumer
Discretionary
|
3.4
|
Titan
|
Consumer
Discretionary
|
3.1
|
Asian Paints
|
Materials
|
3.0
|
Nestlé India
|
Consumer
Staples
|
2.6
|
HDFC Bank
|
Financial
|
2.6
|
Cipla/india
|
Healthcare
|
2.6
|
Persistent Systems
|
Information
Technology
|
2.5
|
Top
ten holdings
|
|
36.4
|
Other holdings
|
|
61.5
|
Total holdings in companies
|
|
97.9
|
Capital gains tax provisions plus
cash and other assets/liabilities
|
|
2.1
|
Total
|
|
100.0
|
Interim Management Report
The Directors are required to
provide an Interim Management Report in accordance with the
Financial Conduct Authority's ("FCA") Disclosure Guidance and
Transparency Rules ("DTR"). The Directors consider that the
Chairman's Statement and the Investment Manager's Report shown
above provide details of the important events which have occurred
during the period and their impact on the financial statements. The
following statement on related party transactions and the
Directors' Responsibility Statement below, the Chairman's Statement
and Investment Manager's Report together constitute the Interim
Management Report of the Company for the six months ended 31
December 2023. The outlook for the Company for the remaining six
months of the year ending 30 June 2024 is discussed in the
Chairman's Statement and the Investment Manager's
Report.
Principal and Emerging Risks and
Uncertainties
The principal and emerging risks and
uncertainties to the Company are detailed on pages 14 to 17 of the
Company's most recent Annual Report and Audited Financial
Statements for the year ended 30 June 2023 which can be found on
the Company's website at https://www.ashokaindiaequity.com. The
principal and emerging risks and uncertainties facing the Company
remain unchanged from those disclosed in the Annual Report for the
year ended 30 June 2023 and the Board are of the opinion that they
will continue to remain unchanged for the forthcoming six-month
period. The principal and emerging risks and uncertainties facing
the Company are as follows:
(i) market risks
(economic conditions and sectorial diversification);
(ii) corporate governance and
internal control risks (including cyber security);
(iii) regulatory risks;
(iv) financial risks; and
(v) Emerging risks (ESG, Climate
Change and Impact of war/sanctions).
Related Party Transactions
Details of the amounts paid to the
Company's Investment Adviser and the Directors during the period
are detailed in the notes to the Half-Yearly Report and unaudited
condensed financial statements (the "Financial
Statements").
Going Concern
The Half-Yearly Report has been
prepared on a going concern basis. The Board considers this the
appropriate basis as they have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for at least the following twelve-month period from the date of
this report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments
as well as its cash position, income and expense flows. As at 31
December 2023 the Company held £287.4 million (30 June 2023: £233.3
million) in quoted investments and had cash of £22 million (30 June
2023: £6.5 million).
Unaudited
These Condensed Financial Statements
have not been audited or reviewed by auditors pursuant to the
Financial Reporting Council guidance on the Review of Interim
Financial Information.
Directors' Statement of Responsibility for the Half-Yearly
Report
The Directors confirm to the best of
their knowledge that:
● these condensed
set of financial statements contained within the Half-Yearly
Financial Report has been prepared in accordance with IAS 34
Interim Financial Reporting; and
● the Interim
Management Report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA's DTR.
Signed on behalf of the Board
by
ANDREW WATKINS
Chairman
11 March 2024
Financial Statements
Condensed Unaudited Statement of
Comprehensive Income
For
the six months ended 31 December 2023
|
|
Six months
ended
31 December
2023
(unaudited)
|
Six months
ended
31 December
2022
(unaudited)
|
|
Note
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Gains on investments
|
3
|
-
|
45,416
|
45,416
|
-
|
21,460
|
21,460
|
Losses on currency
movements
|
|
-
|
(163)
|
(163)
|
-
|
(346)
|
(346)
|
Net
investment gains
|
|
-
|
45,253
|
45,253
|
-
|
21,114
|
21,114
|
Income
|
5
|
959
|
-
|
959
|
799
|
-
|
799
|
Total income
|
|
959
|
45,253
|
46,212
|
799
|
21,114
|
21,913
|
Performance fees
|
7
|
-
|
(1,274)
|
(1,274)
|
-
|
-
|
-
|
Operating expenses
|
8
|
(553)
|
-
|
(553)
|
(376)
|
-
|
(376)
|
Operating profit before taxation
|
|
406
|
43,979
|
44,385
|
423
|
21,114
|
21,537
|
Taxation
|
9
|
(93)
|
(6,160)
|
(6,253)
|
(88)
|
(3,255)
|
(3,343)
|
Profit for the period
|
|
313
|
37,819
|
38,132
|
335
|
17,859
|
18,194
|
Earnings per Ordinary Share
|
10
|
0.27p
|
32.10p
|
32.37p
|
0.31p
|
16.31p
|
16.62p
|
There is no other comprehensive
income and therefore the 'Profit for the period' is the total
comprehensive income for the period.
The total column of the above
statement is the statement of comprehensive income of the Company.
The supplementary revenue and capital columns, including the
earnings per Ordinary Share, are prepared under guidance from the
Association of Investment Companies ("AIC").
All revenue and capital items in the
above statement derive from continuing operations.
The notes below form an integral
part of these financial statements.
Condensed Unaudited Statement of Financial
Position
As
at 31 December 2023
|
Note
|
31
December 2023
|
30
June 2023
|
|
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
Non-current assets
|
|
|
|
Investments held at fair value
through profit or loss
|
3
|
290,013
|
236,764
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
21,999
|
6,489
|
Dividend receivable
|
|
-
|
229
|
Other receivables
|
|
214
|
225
|
|
|
22,213
|
6,943
|
Total assets
|
|
312,226
|
243,707
|
Current liabilities
|
|
|
|
Purchase for future
settlement
|
|
-
|
(459)
|
Other payables
|
6
|
(604)
|
(520)
|
Performance fees payable
|
|
(3,738)
|
(2,464)
|
Non-Current liabilities
|
|
|
|
Capital gains tax
provision
|
|
(9,830)
|
(7,713)
|
Total liabilities
|
|
(14,172)
|
(11,159)
|
Net
assets
|
|
298,054
|
232,551
|
Equity
|
|
|
|
Share capital
|
12
|
1,249
|
1,128
|
Share premium account
|
|
128,253
|
101,003
|
Special distributable
reserve
|
13
|
44,276
|
44,276
|
Capital reserve
|
|
123,955
|
86,136
|
Revenue reserve
|
|
321
|
8
|
Total equity
|
|
298,054
|
232,551
|
Net
asset value per Ordinary Share
|
14
|
238.6p
|
206.2p
|
The notes below form an integral
part of these financial statements.
Condensed Unaudited Statement of Changes in
Equity
For
the six months ended 31 December 2023 (Unaudited)
|
Note
|
Share
Capital
|
Share
premium
account
|
Special
distributable
reserve
|
Capital
reserve
|
Revenue
reserve
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Opening balance as at 1 July 2023
|
|
1,128
|
101,003
|
44,276
|
86,136
|
8
|
232,551
|
Profit for the period
|
|
-
|
-
|
-
|
37,819
|
313
|
38,132
|
Issue of Ordinary Shares*
|
12
|
121
|
27,471
|
-
|
-
|
-
|
27,592
|
Share issue cost
|
|
-
|
(221)
|
-
|
-
|
-
|
(221)
|
Closing balance as at 31 December 2023
|
|
1,249
|
128,253
|
44,276
|
123,955
|
321
|
298,054
|
For
the six months ended 31 December 2022 (Unaudited)
|
Note
|
Share
Capital
|
Share
premium
account
|
Special
distributable
reserve
|
Capital
reserve
|
Revenue
reserve
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Opening balance as at 1 July 2022
|
|
1,076
|
90,470
|
44,276
|
51,684
|
(120)
|
187,386
|
Profit for the period
|
|
-
|
-
|
-
|
17,859
|
335
|
18,194
|
Issue of Ordinary Shares*
|
12
|
50
|
10,349
|
-
|
-
|
-
|
10,399
|
Share issue costs
|
|
-
|
(123)
|
-
|
-
|
-
|
(123)
|
Closing balance as at 31 December 2022
|
|
1,126
|
100,696
|
44,276
|
69,543
|
215
|
215,856
|
*During the period, the Company
issued 12,132,135 new Ordinary Shares with gross aggregate proceeds
of £27.6 million (2022: £10.4 million).
|
The Company's distributable reserves
consist of the special distributable reserve, revenue reserve and
capital reserve attributable to realised profit.
The notes below form an integral
part of these financial statements.
Condensed Unaudited Statement of Cash Flows
For
the six months ended 31 December 2023
|
Note
|
For
the six months
ended
31
December
2023
|
For
the six months
ended
31
December
2022
|
|
|
(unaudited)
|
(unaudited)
|
|
|
£'000
|
£'000
|
Cash flows from operating activities
|
|
|
|
Operating profit before
taxation
|
|
44,385
|
21,537
|
Taxation paid
|
|
(4,136)
|
(1,524)
|
Decrease in receivables
|
|
240
|
75
|
Increase/(decrease) in
payables
|
|
1,358
|
(38)
|
Gains on investments
|
3
|
(45,416)
|
(21,460)
|
Net
cash flow used in operating activities
|
|
(3,569)
|
(1,410)
|
Cash flows from investing activities
|
|
|
|
Purchase of investments
|
|
(117,358)
|
(52,018)
|
Sale of investments
|
|
109,066
|
42,177
|
Net
cash flow used in investing activities
|
|
(8,292)
|
(9,841)
|
Cash flows from financing activities
|
|
|
|
Proceeds from issue of
shares
|
12
|
27,592
|
10,399
|
Share issue costs
|
|
(221)
|
(123)
|
Net
cash flow generated from financing activities
|
|
27,371
|
10,276
|
Increase/(decrease) in cash and cash
equivalents
|
|
15,510
|
(975)
|
Cash and cash equivalents at start
of period
|
|
6,489
|
7,027
|
Cash and cash equivalents at end of period
|
|
21,999
|
6,052
|
The notes below form an integral
part of these financial statements.
Notes to the Financial Statements
1. Reporting Entity
Ashoka India Equity Investment Trust
plc is a closed-ended investment company, registered in England and
Wales on 11 May 2018. The Company's registered office is 6th Floor
125 London Wall, London, England, EC2Y 5AS. Business operations
commenced on 6 July 2018 when the Company's Ordinary Shares were
admitted to trading on the London Stock Exchange ("LSE"). The
financial statements of the Company are presented for the period
from 1 July 2023 to 31 December 2023.
The Company primarily invests in
securities listed on any stock exchange in India and can invest in
the securities of companies with a significant presence in India
that are listed on stock exchanges outside India.
2. Basis of Preparation and Statement of
Compliance
These Condensed Unaudited Financial
Statements have been prepared in accordance with International
Accounting Standard ("IAS") 34 as required by DTR 4.2.4R, the
Listing Rules of the LSE and applicable legal and regulatory
requirements. They do not include all the information and
disclosures required in Annual Financial Statements and should be
read in conjunction with the Company's last Annual Audited
Financial Statements for the year ended 30 June 2023.
The accounting policies applied in
these Financial Statements are consistent with those applied in the
last Annual Audited Financial Statements for the year ended 30 June
2023, which were prepared in accordance with UK-adopted
international accounting standards. Having reassessed the principal
risks, the Directors considered it appropriate to adopt the going
concern basis of accounting in preparing these Financial
Statements.
Going concern
The Directors have adopted the going
concern basis in preparing the financial statements.
Details of the Directors' assessment
of the going concern status of the Company, which considered the
adequacy of the Company's resources, are shown above. The Directors
have a reasonable expectation that the Company has adequate
operational resources to continue in operational existence for at
least twelve months from the date of approval of these financial
statements.
Significant judgements and estimates
There have been no changes to the
significant accounting judgements, estimates and assumptions from
those applied in the Company's Audited Annual Financial Statements
for the year ended 30 June 2023.
The Indian capital gains tax
provision represents an estimate of the amount of tax payable by
the Company. Tax amounts payable may differ from this provision
depending when the Company disposes of investments. The current
provision on Indian capital gains tax is calculated based on the
long-term or short-term nature of the investments and the
applicable tax rate at the period end. The short-term tax rates are
15% and the long-term tax rates are 10%. The estimated tax charge
is subject to regular review including a consideration of the
likely period of ownership, tax rates and market valuation
movements.
As disclosed in the statement of
financial position, the Company made a capital gains tax provision
of £9,830,000 (30 June 2023: £7,713,000) in respect of unrealised
gains on investments held.
Adoption of new IFRS standards
A number of new standards, amendments
to standards and interpretations are effective for the annual
periods beginning after 1 January 2023. None of these are
expected to have a material impact on the measurement of the
amounts recognised in the financial statements of the
Company.
3.
Investment held at Fair Value through Profit or
Loss
a)
Investments held at fair value through profit or
loss
|
As
at
31
December
2023
|
As
at
30
June
2023
|
|
(unaudited)
|
(audited)
|
|
£'000
|
£'000
|
Quoted investments in
India
|
287,394
|
233,303
|
Unquoted investments in
India
|
2,619
|
3,461
|
Closing valuation
|
290,013
|
236,764
|
b)
Movements in valuation
|
For
the
six
months ended
31
December
2023
|
For
the
year ended
30
June
2023
|
|
(unaudited)
|
(audited)
|
|
£'000
|
£'000
|
Opening valuation
|
236,764
|
183,361
|
Opening unrealised gains on
investments
|
56,724
|
29,059
|
Opening book cost
|
180,040
|
154,302
|
Additions, at cost
|
116,729
|
120,803
|
Disposals, at cost
|
(77,811)
|
(95,065)
|
Closing book cost
|
218,958
|
180,040
|
Revaluation of
investments
|
71,055
|
56,724
|
Closing valuation
|
290,013
|
236,764
|
Transaction costs on investment
purchases for the six months ended 31 December 2023 amounted to
£170,000 (31 December 2022: £89,000) and on investment sales for
the six months to 31 December 2023 amounted to £209,000 (31
December 2022: £86,000).
c)
Gains on investments
|
For
the
six
months ended
31
December
2023
|
For
the
year ended
30
June
2023
|
|
(unaudited)
|
(audited)
|
|
£'000
|
£'000
|
Realised gains on disposal of
investments
|
31,464
|
16,484
|
Transaction costs
|
(379)
|
(344)
|
Movement in unrealised gains on
investments held
|
14,331
|
27,665
|
Total gains on investments
|
45,416
|
43,805
|
Under IFRS 13 'Fair Value
Measurement', an entity is required to classify investments using a
fair value hierarchy that reflects the significance of the inputs
used in making the measurement decision.
The following shows the analysis of
financial assets recognised at fair value based on:
- Level 1: quoted prices (unadjusted) in
active markets for identical assets or liabilities that the entity
can access at the measurement date;
- Level 2: inputs other than quoted
prices included within level 1 that are observable for the asset or
liability, either directly or indirectly; and
- Level 3: inputs other than quoted
prices included within level 1 that are observable for the asset or
liability, either directly or indirectly.
The classification of the Company's
investments held at fair value is detailed in the table
below:
|
As
at 31 December 2023 (unaudited)
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Investments at fair value through
profit and loss:
|
|
|
|
|
Quoted investments in
India
|
287,394
|
-
|
-
|
287,394
|
Unquoted investments in
India
|
-
|
-
|
2,619
|
2,619
|
|
287,394
|
-
|
2,619
|
290,013
|
|
As
at 30 June 2023 (audited)
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Investments at fair value through
profit and loss:
|
|
|
|
|
Quoted investments in
India
|
233,303
|
-
|
-
|
233,303
|
Unquoted investments in
India
|
-
|
-
|
3,461
|
3,461
|
|
233,303
|
-
|
3,461
|
236,764
|
The movement on the Level 3 unquoted
investments during the period is shown below:
|
As
at
31
December
2023
|
As
at
30
June
2023
|
|
(unaudited)
|
(audited)
|
|
£'000
|
£'000
|
Opening balance
|
3,461
|
5,363
|
Additions during the
period/year
|
-
|
1,199
|
Disposals during the
period/year
|
(1,427)
|
-
|
Conversion from level 3 to level 1
investments
|
-
|
(2,916)
|
Valuation adjustments
|
585
|
(185)
|
Closing balance
|
2,619
|
3,461
|
As at period end, the Company had two
unquoted investments. These are investment in Ideaforge Technology
Ltd for a total of 178,464 shares and investment in Veeda Clinical
Research Ltd for a total of 680,790 shares.
4. Financial Risk Management
At 31 December 2023, the Company's
financial risk management objectives and policies are consistent
with those disclosed in the Company's last Annual Report and
Audited Financial Statements for the year ended 30 June
2023.
5. Income
|
For the
six months ended
31 December
2023
|
For the
six months ended
31 December
2022
|
|
(unaudited)
|
(unaudited)
|
|
£'000
|
£'000
|
Income from investments
|
|
|
Overseas dividends
|
959
|
799
|
Total income
|
959
|
799
|
6. Other Payables
|
As at
31 December
2023
|
As at
30 June
2023
|
|
(unaudited)
|
(audited)
|
|
£'000
|
£'000
|
Accrued expenses
|
604
|
520
|
Total other payables
|
604
|
520
|
7.
Performance Fees
The Investment Manager does not
receive a fixed management fee in respect of its portfolio
management services to the Company. The Investment Manager will
become entitled to a performance fee subject to the Company
delivering excess returns versus the MSCI India IMI Index in the
medium term. The performance fee is measured over periods of three
years (Performance Period). The first Performance Period ended on
30 June 2021 (approximately three years from the Company's IPO).
The Investment Manager's second Performance Period commenced on 1
July 2021 and will end in June 2024. The performance fee in any
Performance Period shall be capped at 12% of the time weighted
average adjusted net assets during the relevant Performance
Period.
The performance fee is calculated at
a rate of 30% of the excess returns between adjusted NAV per share
on the last day of the performance period and the MSCI India IMI
Index (sterling) over the performance period, adjusted for the
weighted average number of Ordinary Shares in issue during the
performance period. The Performance Fee in respect of each
Performance Period will be paid at the end of the three-year
period.
As at 31 December 2023, £3,738,000
was accrued in respect of the performance fee due to the Investment
Manager (30 June 2023: £2,464,000).
8. Operating Expenses
|
For the
six months ended
31 December 2023
|
For the
six months ended
31 December 2022
|
|
(unaudited)
|
(unaudited)
|
|
£'000
|
£'000
|
Administration & secretarial
fees
|
87
|
73
|
Auditor's remuneration - Statutory
audit fee*
|
27
|
24
|
Broker fees
|
15
|
17
|
Custody services
|
17
|
14
|
Directors' fees
|
64
|
64
|
Board trip to India costs
|
8
|
5
|
Tax compliance and advice
|
38
|
14
|
Printing and public
relations
|
61
|
83
|
Registrar fees
|
18
|
15
|
Research fees
|
66
|
-
|
Legal Fees
|
75
|
15
|
UKLA and other regulatory
fees
|
8
|
6
|
Other expenses**
|
69
|
46
|
Total
|
553
|
376
|
*Auditor's remuneration excludes
VAT.
**other expenses include LSE, KIID
fees, Distribution fees, other license fees, bank charges and other
miscellaneous fees.
|
9. Taxation
a) Analysis of charge in the
period
|
For the six months ended
31 December 2023
(unaudited)
|
For the six months ended
31 December 2022
(unaudited)
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Capital gains tax
provision
|
-
|
2,117
|
2,117
|
-
|
-
|
-
|
Capital gains expense
|
-
|
4,043
|
4,043
|
-
|
3,255
|
3,255
|
Indian withholding tax
|
93
|
-
|
93
|
88
|
-
|
88
|
Total tax charge for the six months
|
93
|
6,160
|
6,253
|
88
|
3,255
|
3,343
|
The Company is liable to Indian
capital gains tax under Section 115 AD of the Indian Income Tax Act
1961. A tax provision on Indian capital gains is calculated based
on the long term (securities held more than one year) or short term
(securities held less than one year) nature of the investments and
the applicable tax rate at the period end. The short-term tax rates
are 15% and the long-term tax rates are 10%.
The Company's dividends are received
net of 20% withholding tax. Of this 20% withholding tax charge, 10%
is irrecoverable with the remainder being shown in the Statement of
Financial Position as an asset due for reclaim.
b) Factors affecting the tax charge for the
period
The effective UK corporation tax rate
for the period is 25%. The tax charge differs from the charge
resulting from applying the standard rate of UK corporation tax for
an investment trust company. The differences are explained
below:
|
For
the
six
months ended
31
December 2023
|
For
the
six
months ended
31
December 2022
|
|
(unaudited)
|
(unaudited)
|
|
£'000
|
£'000
|
Operating profit before
taxation
|
44,385
|
21,537
|
UK Corporation tax at 25% (2022:
19%)
|
11,096
|
4,092
|
Effects of:
|
|
|
Indian capital gains tax provision
not taxable
|
6,160
|
3,255
|
Gains on investments not
taxable
|
(11,313)
|
(4,012)
|
Overseas dividends not
taxable
|
(240)
|
(152)
|
Unutilised management
expenses
|
457
|
72
|
Indian withholding tax
|
93
|
88
|
Total tax charge for the six months
|
6,253
|
3,343
|
10. Earnings per Ordinary Share
|
For
the six months ended
31
December 2023 (unaudited)
|
For
the six months ended
31
December 2022 (unaudited)
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
Profit for the period
(£'000)
|
313
|
37,819
|
38,132
|
335
|
17,859
|
18,194
|
Return per Ordinary Share
|
0.27p
|
32.10p
|
32.37p
|
0.31p
|
16.31p
|
16.62p
|
Earnings per Ordinary Share is based
on the profit for the period of £38,132,000 (31 December 2022:
£18,194,000) attributable to the weighted average number of
Ordinary Shares in issue during the six months ended 31 December
2023 of 117,824,892 (31 December 2022:
109,501,337).
11. Dividend
The Company's objective is to provide
shareholder returns through capital growth with income being a
secondary consideration. Therefore, it is unlikely that the Company
will pay a dividend under normal circumstances.
12. Share Capital
|
As at 31 December 2023
(unaudited)
|
As at 30 June 2023
(audited)
|
|
No. of
shares
|
£'000
|
No. of
shares
|
£'000
|
Allotted, issued and fully
paid:
|
|
|
|
|
Redeemable Ordinary Shares of 1p
each ('Ordinary Shares')
|
124,939,947
|
1,249
|
112,807,812
|
1,128
|
Total
|
124,939,947
|
1,249
|
112,807,812
|
1,128
|
Ordinary Shares
The Ordinary Shares have attached to
them full voting, dividend and capital distribution rights and
confer rights of redemption.
Between 1 July 2023 and 31 December
2023, 12,132,000 Ordinary Shares (30 June 2023: 5,240,140 Ordinary
Shares issued) have been issued; raising aggregate gross proceeds
of £27,592,000 (30 June 2023: £10,735,000).
Since 31 December 2023, 11,370,000
Ordinary Shares have been issued, raising aggregate gross proceeds
of £28,413,175. As at the date of this Half-Yearly Report, the
total number of Ordinary Shares in issue was
136,309,947.
The Ordinary Shares have attached to
them full voting, dividend and capital distribution rights. They
confer rights of redemption. The Company's special distributable
reserve may also be used for share repurchases, both into treasury
or for cancellation.
Management shares
In addition to the above, on
incorporation the Company issued 50,000 Management Shares of
nominal value of £1.00 each.
The holder of the Management Shares
undertook to pay or procure payment of one quarter of the nominal
value of each Management share on or before the fifth anniversary
of the date of issue of the Management Shares. The Management
Shares are held by an associate of the Investment
Manager.
The Management Shares do not carry a
right to attend or vote at general meetings of the Company unless
no other shares are in issue at that time. The Management Shares
have been treated as equity in accordance with IFRS.
13. Special Distributable
Reserve
As indicated in the Company's
prospectus dated 19 June 2018, following admission of the Company's
Ordinary Shares to trading on the LSE, the Directors applied to the
Court and obtained a judgement on 4 December 2018 to cancel the
amount standing to the credit of the share premium account of the
Company. The amount of the share premium account cancelled and
credited to a special distributable reserve was £44,275,898. This
reserve may also be used to fund dividend payments.
14. Net Asset Value ("NAV") per Ordinary
Share
Net assets per Ordinary Share as at
31 December 2023 is based on £298,054,000 (30 June 2023:
£232,551,000) of net assets of the Company attributable to the
124,939,947 (30 June 2023: 112,807,812) Ordinary Shares in issue as
at 31 December 2023.
15. Related Party Transactions
The amount accrued in respect of the
Performance fee due to the Investment Manager for the two and a
half years' Performance period is disclosed in Note 7.
White Oak Capital Partners provides
investment advisory services to the Investment Manager and no fees
are paid to them from the Company.
The annual remuneration of the Board
is £40,000 to the Chairman, £32,500 to the Chair of the Audit
Committee, and £27,500 to the other Directors. The Directors have
the option to receive their fees in cash or in shares in the
Company.
The Directors had the following
shareholdings in the Company, all of which are beneficially
owned.
|
As at
31 December
2023
|
As at
30 June
2023
|
|
(unaudited)
|
(audited)
|
Andrew Watkins
|
94,425
|
94,425
|
Jamie Skinner
|
97,438
|
94,200
|
Rita Dhut
|
81,733
|
81,733
|
Dr. Jerome Booth
|
81,971
|
77,623
|
16. Subsequent Events
There have been no significant events
since the period end which would require revision of the figures or
disclosure in the Financial Statements.
17. Status of
this Report
These interim financial statements
are not the Company's statutory accounts for the purposes of
section 434 of the Companies Act 2006. They are unaudited. The
unaudited Interim Financial Report will be made available to the
public at the Companyʼs registered office. The report will also be
available in electronic format on the Company's website,
https://www.ashokaindiaequity.com.
The information for the year ended 30
June 2023 has been extracted from the last published audited
financial statements, unless otherwise stated. The audited
financial statements have been delivered to the Registrar of
Companies. Ernst & Young LLP reported on those accounts and
their report was unqualified, did not draw attention to any matters
by way of emphasis and did not contain a statement under sections
498(2) or 498(3) of the Companies Act 2006.
The Interim Financial Report was approved by the
Board on 11 March 2024.
LEI: 213800KX5ZS1NGAR2J89