TIDMMCP
RNS Number : 7251W
Martin Currie Asia Uncnst Trust PLC
16 November 2017
Martin Currie Asia Unconstrained Trust plc
Half year financial report
Six months to 30 September 2017
A copy of the half year financial report to 30 September 2017
can be downloaded at www.martincurrieasia.com. A copy of the half
year financial report has also been submitted to the National
Storage Mechanism and will shortly be available for inspection at:
www.Hemscott.com/nsm.do
Financial Highlights
Key data
As at As at % change
30 September 31 March
2017 2017
------------------------ -------------- ---------- ---------
Net asset value
per share (cum
income) 429.3p 427.0p 0.5
------------------------ -------------- ---------- ---------
Net asset value
per share (ex income) 422.2p 421.5p 0.2
------------------------ -------------- ---------- ---------
Share price 376.1p 364.5p 3.2
------------------------ -------------- ---------- ---------
Discount++ 12.4% 14.6%
------------------------ -------------- ---------- ---------
Total returns
Six months Six months ended
ended 30 September
30 September 2016
2017
----------------- -------------- -----------------
Net asset value
per share (cum
income) 3.6% 19.5%
----------------- -------------- -----------------
Share price 6.8% 18.5%
----------------- -------------- -----------------
Income
Six months Six months
ended ended % change
30 September 30 September
2017 2016
------------------ -------------- ---------------- ------------
Revenue return
per share 7.06p 6.48p 8.9
------------------ -------------- ---------------- ------------
Interim dividend
per share 2.70p 2.60p 3.8
------------------ -------------- ---------------- ------------
Ongoing charges(*)
Six months Six months
ended ended
30 September 30 September
2017 2016
----------------- -------------- --------------
Ongoing charges 1.0% 1.2%
----------------- -------------- --------------
Source: Martin Currie Investment Management Limited
('MCIM').
++ Figures are inclusive of income in line with Association of
Investment Companies ('AIC') guidance.
The combined effect of the rise or fall in the net asset value
or share price, including dividends paid.
* Ongoing charges are calculated as a percentage of
shareholders' funds using average net assets over the period and
calculated in line with AIC's recommended methodology.
Interim Management Report
Chairman's statement
Performance
On the face of it, the results for the six month period to the
30 September 2017 were broadly flat. When adjusted for total
returns, the share price rose 6.8% while the net asset value (NAV)
increased by 3.6%. This reflects the payment of a final dividend of
13.68p during the period, including a contribution from capital.
The capital element, representing 2% of ex income NAV, was approved
by Shareholders at the annual general meeting (AGM) in July 2017,
authorising an enduring change to the dividend policy and is
intended to create an attractive level of income for investors.
Currency movement continues to impact NAV and some recovery in
cable rates (sterling vs the US dollar) has dampened performance on
translation to sterling. Asian markets have been on an upward
trajectory, reflecting strong economic and corporate prospects -
particularly a more confident assessment of China's economy. The
MSCI Asia ex Japan rose by 7.8% over the period and is up 20.9%
calendar year to date. Many of the bigger positions in the
portfolio, including Tencent, Samsung Electronics, AIA and Taiwan
Semiconductor (representing 28% of the portfolio at 30 September
2017) have performed strongly over the six-month period, up on
average 18.7%. Regional stock gains continue to be polarised in
large-cap, index-weighted stocks, in part as a result of inflows
into passive products - exchange traded funds (ETFs) - particularly
reflecting the anticipated upward reweighting of China in the MSCI
indices from May 2018.
It is over three years since the mandate was changed from an
index-benchmarked cum Japan strategy to unconstrained ex Japan, by
the implementation of the Asia Long-term Unconstrained (ALTU)
strategy on 1 August 2014. I am pleased to report that the managers
have broadly met the investment target, by delivering a 42.0% total
return to shareholders over the period to 30 September 2017,
against a collective growth in nominal regional Asian GDP of 45.1%,
as calculated in sterling.
Over the 12 months to 30 September 2017, ALTU has delivered a
commendable 15.3% total return, compared with a 12.3% increase in
sterling-based Asian nominal GDP. For reference the MSCI Asia ex
Japan was up 53.0% over the three years, and 19.1% over 12 months
to 30 September 2017. While these are positive results, endorsing
the long-term nature of the strategy, the Board is cognisant that
the trust's performance tends to compare less favourably with the
results of some of the Asia ex Japan investment-trust peer group.
Partly, this is due to the strong performance of stocks with
cyclical attributes, whereas our managers seek investments, and
position the portfolio, in strong companies offering more secular
growth and value criteria, whose shares have been out of favour but
offer good prospects.
Revenue and dividends
The revenue account grew 8.9% year on year (yoy). The bulk of
dividends received tend to fall in the first half of the financial
year, although some special dividends (notably from China Mobile)
have been a welcome supplement. An interim dividend of 2.7p (2.6p)
will be paid on 22 December 2017 to shareholders on the register as
at 1 December 2017. This represents a 3.8% increase on last year's
interim dividend
Outlook
A decade on from the global financial crisis, the combined
effect of multiple quantitative-easing programmes are at last
beginning to propel a sustained global economic recovery. While
central banks continue to support accommodative monetary policy in
the absence of inflation, the US Federal Reserve (Fed) is now
committed to modest increases in interest rates and some trimming
of its US$4 trillion-plus balance sheet. Despite naysayers
predicting the collapse of the Chinese economy, through endemic
credit problems and capital outflow, the Chinese authorities have
successfully stabilised the situation by cracking down on shadow
banking, corruption and ushering in important and effective supply
side reforms drastically reducing steel, coal and aluminium output
and capacity. Commitment to vast infrastructure programmes remains
key policy but the Chinese economy is becoming much more consumer
based reflecting a real rise in disposable incomes. Retail spending
is up over 60% year on year. A tenet of the 15th Plenum in 2012 was
to double the size of the economy and disposable incomes by 2020.
This is on track. While India is quietly growing at more than 6%
per annum and digesting an impressive array of market-friendly
reforms, China's position is crucial in terms of both world trade
and inflation. The world has enjoyed a long period of low
inflation, thanks partly to China exporting deflation. We should be
alert to potential changes in this trend, if input and commodity
prices rise in response to reductions in industrial capacity or
perhaps tightening oil supplies given the growing risk for Middle
Eastern conflict.
There is no disguising the risk over North Korea and perhaps an
accident leading to conflict on the Korean peninsula - or indeed
spreading further afield. To remind shareholders, we have
approximately 11.8% of the portfolio invested in South Korea at the
period end and the exposure is unhedged. Nevertheless, oblivious to
sabre rattling the KOSPI has been one of the better regional
performers, gaining 18.5% for the year to 30 September 2017.
Policy direction from the Federal Reserve in America is always
crucial given that the supply of liquidity ultimately determines
the level of stock markets. Jerome Powell 's confirmation as the
new Governor of the Federal Reserve effectively endorses the
"dovish" policies pursued by the incumbent, Janet Yellen. A more
hawkish position could cause renewed 'taper tantrums' and a
strengthening US dollar has historically been a headwind for Asian
markets.
The base case for investing in Asia remains compelling, with
strong consumption, inter-regional trade and infrastructure
programmes driving growth at the company level. Valuations are not
particularly demanding and, with a general improvement in corporate
governance resulting in improved capital management, we should see
better returns flowing through to shareholders. The portfolio
appears well positioned to capture these trends.
Since the announcement of the change of dividend policy, the
discount to NAV has narrowed. In the Board's opinion, it is still
too large given the prospects for a continued premium income yield
accompanied by the potential for capital growth. The Board has
renewed the authority to buy back shares into treasury, although no
shares have been bought back in the current financial year.
Keeping in touch
Please visit the company's website at www.martincurrieasia.com
that gives you all recent announcements, performance information,
besides interactive feature articles on Asian markets and the
monthly factsheet. You can also register for the monthly email
bulletin that will keep you abreast of the latest information
relating to your company. I would like to thank you again for your
continued support. Please contact me or representatives of the
investment manager if you have any questions regarding the
company.
Harry Wells Chairman,
Martin Currie Asia Unconstrained Trust plc
16 November 2017
Interim Management Report
Manager's review
Watching the international news in recent months, one could be
forgiven for anticipating that markets - particularly in Asia -
would have suffered during the period under review. However,
despite escalating tension over North Korea's unrelenting pursuit
of a long-range nuclear missile capability, and continued signals
from US president Donald Trump of his eroding commitment to key
international institutions and agreements, stockmarkets in Asia
have moved higher. While geopolitical developments inhabit a zone
somewhere between highly confusing and deeply concerning,
underlying economic data from across the globe has been generally
positive. Investor sentiment has been further nourished by good
corporate results.
Last year's interim report highlighted improving business
conditions and tentative signs of better quarterly earnings data
from corporate Asia. This had led to heightened earnings
expectations. The point was made that the improving economic
backdrop had not at that stage prompted the world's central banks,
particularly the US Federal Reserve (Fed), to back away from their
highly accommodative monetary policy stance.
This earnings optimism was not misplaced. With analysts now
having adjusted up their forecasts, following the latest round of
corporate earnings releases, the consensus earnings growth
expectation for 2017 is a rise of 22% year on year (yoy) and
another 11% growth in 2018. As the time of writing this review in
mid-October, there should be little downside risk to the 2017
number. Growth has been much greater in North Asian markets, which
have benefited more from the revival of global economic activity
and continued strong growth in the technology sector, as well as
from better earnings in the banking and real estate sectors.
The ASEAN region and India have not seen this earnings growth
revival to the same extent. The latter is only gradually moving
away from the lingering effect of last year's demonetisation and is
now having to adjust to some far-reaching tax reform, with the
introduction of the goods and- service tax (or GST) in the most
recent quarter. The GST should simplify operations and costs for
many companies, by enabling them to optimise goods production and
distribution across the country, although in the short term there
have been supply chain disruptions.
Meanwhile, in ASEAN countries, the demand environment remains
subdued for a variety of country-specific reasons. Policymakers are
stepping up efforts to encourage growth; the Indonesian central
bank has recently cut interest rates, while in Thailand some
important large infrastructure projects have passed through the
approvals stage, to the point where contractors are now being
appointed. We think this will feed into bank-sector loan growth in
2018. Singapore is showing signs of economic improvement, with
industrial production data indicating a strong recovery in export
industries - although this has not yet fed through to the domestic
economy. Retail sales and loan growth remain muted, although the
property market has shown some sign of life, especially in
residential transaction volumes.
Despite policy tightening, aimed at cooling activity in some
sectors, China's GDP growth has remained robust, with real GDP
growth running at 6.9% yoy. GDP data for the third quarter suggests
that monthly data on fixed-asset investment, retail sales and
exports growth is likely to have peaked mid-year - in line with
expectations. The 19th National Congress took place in October and
set out long term political, economic and social strategies for a
'beautiful China' with commitment to raising living standards and
quality of life.
Performance
The company's NAV total return was a rise of 3.6% over the first
six months of the fiscal year, helped by a strong performance from
some holdings in the IT sector, particularly Tencent and Samsung
Electronics. There were also positive contributions from stocks in
financials (AIA Group and HSBC Holdings), real estate (Global
Logistic Properties) and utilities (ENN Energy). These were
partially offset by the poor share-price performance of some of our
consumer cyclical stocks (Matahari Department Store and Television
Broadcasts), as well as technology stock Infosys and consumer
staple company Dairy Farm International.
Chinese IT giant Tencent, Korean tech firm Samsung Electronics
and pan-Asian life insurer AIA have been delivering strong business
results for several quarters now, and the recent share-price
performances reflect a continuation of this. These are, of course,
very different businesses but the confluence of their good
operating results serves to underline the range of growth
opportunities in the region. Tencent is benefitting from high
growth in its mobile game division, but also seeing rapid expansion
of its online advertising business. In the case of Samsung, while
its mobile-handset division is performing well, the real driver at
present is its memory-chip business. AIA continues to see very
healthy demand for its life insurance and related products, and is
generating significant free cash flow. Some of this is being
ploughed back into new business growth but it is also supporting
higher dividends. The share price of Global Logistic Properties,
Asia's largest warehouse owner and operator, rebounded from a
depressed level as the company conducted a strategic review, which
culminated in it receiving a takeover bid from a consortium of
Chinese institutional investors. The shares of global bank HSBC
have also recovered well. We have been attracted by the strength of
the company's core business franchise, the value of which has been
obscured by a series of regulatory issues, all of which are either
nearing completion or have already been resolved. We felt the
stock's attractive dividend yield would in time be augmented by
further dividend increases or share buybacks, after the already
strong capital position was elevated to watertight levels and
revenue growth resumed. Recent interim results confirmed this is on
track, with revenue growth now outstripping costs as loan growth
returned. HSBC is also a significant beneficiary of rising interest
rates.
The review period was not without its disappointments. During
the period we added Indonesia's Matahari Department Store to the
portfolio. This is a well-run company and we have been patiently
waiting for a chance to buy for about three years. This year, a
soft patch in the Indonesian economy, which has depressed retail
sales, presented us with an opportunity to buy at attractive
prices. However, second-quarter results were weak, coming in below
expectations which hurt the stock further. While in the near term,
this is our worst performing stock, we think the underlying
business is sound and will return to growth in the coming quarters.
Our second-largest detractor was the Indian IT-services firm,
Infosys. This has been a tough year for this sector, due to
concerns about the demand outlook, the transition of some services
to a cloud solution and potential restrictions on US temporary
work-visa applications affecting share prices. At Infosys, these
have been amplified by a very public campaign by one of the
company's founding shareholders, which has resulted in the
departure of the CEO and some board members. This is frustrating.
The CEO has actually done a good job in improving the business
growth profile. The share-price weakness has reduced the market
valuation to a level that falls far short of the firm's potential
and we are not inclined to sell. Hong Kong broadcaster Television
Broadcasts also negatively impacted performance. We are at the
bottom of the advertising cycle in Hong Kong and while latest
results reflected ongoing pressures, more recently there have been
clear signs of an improving environment. At the same time, there
are concerns that a proposed conditional cash offer to repurchase
27% of the company might not proceed for regulatory reasons. A
recent court ruling may have increased the chances of this deal
going ahead and lends the stock additional upside potential.
During the period under review we added one new holding,
Guangdong Investment (GDI), to the portfolio. GDI provides water to
Hong Kong, Shenzhen and Dongguan, giving it a stable core business,
with the Hong Kong supply contract being the dominant source of
income. This stock has modest growth but healthy cashflow and we
expect a continued increase in the dividend pay out ratio. A strong
balance sheet gives plenty of scope for acquisitions, primarily in
water, wastewater treatment and real estate. We expect the business
to deliver mid-high single-digit profit growth over the next few
years, coupled with a rising dividend payout ratio, giving an
annualised low double-digit total return which will be augmented by
occasional bolt-on acquisitions.
The investment in GDI was mainly funded by the sale of Hong Kong
and China Gas (HK&CG). While shares in the latter have
performed well, the valuation left little room for error and we see
far better value in GDI. The Chinese city gas sector still remains
attractive and we continue to have exposure to it through the
investment in ENN Energy. We also sold Macau gaming operator SJM.
The gaming sector in the region has been recovering over the last
year, which has been reflected in SJM's performance. However,
although the broader regulatory tone has been more positive, the
sector remains susceptible to swings in Chinese central government
actions around capital outflows. Exacerbating these concerns, is
the impending license renewal process as the deadline approaches.
At the company level, SJM faces competitive headwinds for the next
12-18 months, as a combination of infrastructure completion and new
competitor openings are likely to continue to take market
share.
Outlook
We are now in the early stages of a notable change in the global
monetary environment. Quantitative easing (QE) worldwide has been
running at record levels, but has essentially peaked. While central
banks collectively will remain net suppliers of substantial amounts
of liquidity, we are now on a trajectory that will see the absolute
amount of this contract over the coming years. The Fed is leading
this process. It plans to shrink its balance sheet over the next
two years by tapering reinvestment in treasury bonds and
mortgage-backed securities as they mature. Other major central
banks seem to be moving in this direction; the European Central
Bank, for example, while not abandoning QE, may also scale back its
programme of financial asset purchases in 2018. Given that
central-bank balance-sheet expansion since the global financial
crisis of 2008/9 has been unprecedented in its scale, the market
reaction to a reversal is hard to predict. Banks will ultimately
have to compete harder for deposits while individuals, businesses
and governments will see borrowing costs rise, although perhaps not
by too much to begin with. Companies that are highly cash
generative and have strong balance sheets should be able to
navigate this environment with relative ease and continue to build
the value of their businesses.
Although share prices are on the up and we have seen a valuation
re-rating of Asian equities over the interim period, the rise has
largely matched the growth of earnings so that, while not cheap
relative to their own history, Asian stockmarket valuation metrics
are in line with, or a little above, long-term averages. Relative
to other regions, valuations still appear attractive.
One note of caution is that, over the summer months, while
earnings growth has exceeded expectations and prompted positive
revisions to analyst earnings forecasts, this growth has been
confined to only a few sectors, particularly a handful of large
technology and internet stocks, as well as the Chinese real estate
sector. This is a factor also reflected in the 'market breadth'
which is the proportion of stocks that have outperformed the
market. Data on the latter reveals quite narrow market leadership,
towards the low end of historical experience. For now, this is
merely something to be aware of rather than a major concern. It
means earnings growth and market performance have been dependent on
a relatively narrow list of stocks - we would like to see this
broaden out and will be watching the approaching third-quarter
earnings season with great interest.
The geopolitical backdrop is obviously creating unwelcome noise.
However, as the experience of the period under review attests,
investors still invest and stock prices can move higher, if
supported by positive underlying fundamentals, particularly if
earnings are growing and valuations are palatable. We therefore
find ourselves repeating last year's message that earnings growth
remains key to the market outlook. Given the current macro
backdrop, low double-digit earnings growth expectations for 2018
might not look like a stretch, but are nonetheless above the
long-term average for the region (which is about 6%). However, it
is also true that we are currently only about a year into the
earnings recovery phase; it would be highly unusual for it to
falter so soon. While we remain cautiously optimistic, we are also
mindful of history.
The portfolio of businesses in which your company is invested
should do well in the current environment. While each has its own
business cycle to contend with, conditions are broadly supportive
and we expect continued earnings growth and ongoing return of
capital, either through dividends or share buybacks. Our businesses
operate with conservative balance sheets, much more so than the
broader market, but despite this, the portfolio return on equity
(ROE) is estimated to be 15% for the current year. This return is
superior to the 'market' ROE of 13%*, even though much more
financial leverage is employed to achieve the latter's level. We
therefore believe the portfolio is well positioned to create value
for long-term and patient shareholders.
Andrew Graham
16 November 2017
Principal risks and uncertainties
Risk and mitigation
The company's business model is longstanding and tested to be
resilient to most short term uncertainties. The risks are also
mitigated by its internal controls and the oversight of the board
and investment manager, as described in the latest annual report.
The principal risks and uncertainties are therefore largely longer
term and driven by the inherent uncertainties of investing in
equity markets. The board believes that it is able to respond to
these longer term risks and uncertainties with effective mitigation
so that both the potential impact and the likelihood of these
seriously affecting shareholders' interests are materially
reduced.
Risks are regularly monitored at board meetings and the board's
planned mitigation measures are described in the latest annual
report. The board has identified the following principal risks to
the company:
-- Loss of investment trust status (s1158-9)
-- Long term investment underperformance
-- Gearing risk
-- Market, financial and interest rate risk
-- Outsourcing risk
-- Counterparty risk
-- Failure to manage shareholder relations
-- Major external marketwide disruption
Further details of these risks and how the board manages them
can be found in the 2017 annual report and on the company's website
www.martincurrieasia.com.
Directors' responsibility
In accordance with Chapter 4 of the Disclosure and Transparency
Rules, and to the best of their knowledge, each director of the
company confirms that the financial statements have been prepared
in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom accounting standards and applicable law)
and with the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts' issued in November 2014. The directors are satisfied that
the financial statements give a true and fair view of the assets,
liabilities, financial position and profit of the company.
Furthermore, each director certifies that the interim management
report includes an indication of important events that have
occurred during the first six months of the financial year, and
their impact on the financial statements, together with a
description of the principal risks and uncertainties that the
company faces. In addition, each director of the company confirms
that with the exception of management fees, directors' fees,
director's shareholdings and secretarial fees there have been no
related party transactions during the first six months of the
financial year.
Going concern status
The company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the chairman's statement and manager's review. The
financial position of the company as at 30 September 2017 is shown
on the unaudited condensed statement of financial position. The
unaudited condensed statement of cash flow of the company is set
out below.
In accordance with the Financial Reporting Council's guidance on
going concern and liquidity risk, issued in October 2009, the
directors have undertaken a rigorous review of the company's
ability to continue as a going concern. The company's assets
consist of a diverse portfolio of listed equity shares which, in
most circumstances, are realisable within a short timescale. The
directors are mindful of the principal risks disclosed above and
have reviewed the revenue forecasts. They believe that the company
has adequate financial resources to continue its operational
existence for the foreseeable future and for at least one year from
the date of signing of these financial statements. Accordingly, the
directors continue to adopt the going concern basis in preparing
these financial statements.
By order of the board
Harry Wells Chairman
16 November 2017
Portfolio Summary
Portfolio distribution as at 30 September 2017 (%)
China South
& Hong India Singapore Korea Taiwan Malaysia Thailand Indonesia Total
Kong
--------------------- ------- ------- ----------- ------- -------- ---------- ---------- ----------- --------
Financials 12.7 - 8.3 - - - 3.3 - 24.3
Consumer
goods 3.6 7.0 - 11.8 - - - - 22.4
Technology 7.5 8.2 - - 5.7 - - - 21.4
Consumer
services 5.6 - - - - 3.5 - 1.9 11.0
Telecommunications 4.3 - 3.5 - - - - - 7.8
Utilities 7.8 - - - - - - - 7.8
Industrials 2.4 - 2.9 - - - - - 5.3
Total portfolio 43.9 15.2 14.7 11.8 5.7 3.5 3.3 1.9 100.0
Total
Portfolio(31.03.17) 44.6 16.2 15.4 9.4 5.7 3.6 3.5 1.6 100.0
--------------------- ------- ------- ----------- ------- -------- ---------- ---------- ----------- --------
By asset class (%) (Unaudited) (Audited)
30 September 31 March
2017 % 2017 %
-------------------- -------------- ----------
Equities 101.0 102.1
Cash 2.1 2.3
Borrowings (3.1) (4.4)
100.0 100.0
-------------------- -------------- ----------
Top ten holdings
(Unaudited) (Unaudited) (Audited) (Audited)
30 September 30 September 31 March 31 March
2017 Market 2017 2017 Market 2017 %
Value GBP000 value of total
GBP000 portfolio
% of total
portfolio
---------------------------- --------------- -------------- -------------- ------------
Samsung Electronics 11,830 7.5 10,665 6.8
Tencent Holdings 11,720 7.5 9,026 5.7
AIA Group 11,434 7.3 11,079 7.0
Taiwan Semiconductor
Manufacturing Company 8,889 5.7 8,948 5.7
HSBC Holdings 8,460 5.4 7,682 4.9
Global Logistic Properties 7,474 4.8 6,721 4.3
Tata Consultancy Services 6,917 4.4 7,581 4.8
China Mobile 6,718 4.3 7,955 5.0
ENN Energy 6,593 4.2 5,610 3.6
Hero Motocorp 6,013 3.8 6,145 3.9
Total 86,048 54.9 81,412 51.7
---------------------------- --------------- -------------- -------------- ------------
Unaudited Condensed Statement of Comprehensive Income
(Unaudited) Six (Unaudited) Six
months to 30 months to 30
September 2017 September 2016
Note Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
Dividend income 2 3,218 - 3,218 2,864 - 2,864
Net gains on investments 4 - 3,358 3,358 - 21,613 21,613
Net currency gains/(losses) (10) 276 266 22 (504) (482)
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
3,208 3,634 6,842 2,886 21,109 23,995
Investment management
fee (196) (392) (588) (167) (334) (501)
Other expenses (279) - (279) (240) - (240)
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
Net return on ordinary
activities before
finance costs and
taxation 2,733 3,242 5,975 2,479 20,775 23,254
Interest payable
and similar charges (18) (36) (54) (20) (38) (58)
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
Net return on ordinary
activities before
taxation 2,715 3,206 5,921 2,459 20,737 23,196
Taxation on ordinary
activities 3 (166) - (166) (108) - (108)
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
Net returns attributable
to shareholders 2,549 3,206 5,755 2,351 20,737 23,088
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
Net return per ordinary
share 8 7.06p 8.87p 15.93p 6.48p 57.19p 63.67p
----------------------------- ----- -------- ------------ -------- -------- --------- -------------
Note (Audited) Year
ended 31 March
2017
Revenue Capital Total
GBP000 GBP000 GBP000
----------------------------- ----- -------- -------- --------
Dividend income 2 3,927 - 3,927
Net gains on investments 4 - 37,301 37,301
Net currency gains/(losses) 31 (684) (653)
3,958 36,617 40,575
Investment management
fee (348) (696) (1,044)
Other expenses (506) (5) (511)
----------------------------- ----- -------- -------- --------
Net return on ordinary
activities before
finance costs and
taxation 3,104 35,916 39,020
----------------------------- ----- -------- -------- --------
Interest payable
and similar charges (37) (75) (112)
----------------------------- ----- -------- -------- --------
Net return on ordinary
activities before
taxation 3,067 35,841 38,908
Taxation on ordinary
activities 3 (134) - (134)
----------------------------- ----- -------- -------- --------
Net returns attributable
to shareholders 2,933 35,841 38,774
----------------------------- ----- -------- -------- --------
Net return per ordinary
share 8 8.10p 99.03p 107.13p
----------------------------- ----- -------- -------- --------
The total columns of this statement are the profit and loss
accounts of the company.
The revenue and capital items are presented in accordance with
the Association of Investment Companies ('AIC') Statement of
Recommended Practice (SORP) 2014.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued in the six months to
30 September 2017.
The net return attributable to shareholders is the profit/(loss)
for the financial period and there was no other comprehensive
income.
The notes below form part of these financial statements.
Unaudited Condensed Statement of Financial Position
(Unaudited) (Unaudited) (Audited)
As at 30 As at 30 As at 31
September September March 2017
2017 2016
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ----- -------- -------- ------------- -------- -------- --------
Fixed assets
Investments at fair
value through profit
and loss
Current assets 4 157,072 142,108 157,537
Receivables 5 161 187 509
Cash at bank 6 3,333 3,303 3,575
------------------------- ----- -------- -------- ------------- -------- -------- --------
3,494 3,490 4,084
Current liabilities
Payables 7 (5,490) (6,068) (7,358)
------------------------- ----- -------- -------- ------------- -------- -------- --------
Net current liabilities (1,996) (2,578) (3,274)
Total assets less
current liabilities 155,076 139,530 154,263
------------------------- ----- -------- -------- ------------- -------- -------- --------
Share capital and
reserves
Called up share capital 9 19,753 19,753 19,753
Share premium account 6,084 6,084 6,084
Capital redemption
reserve 3,428 3,428 3,428
Capital reserve* 122,699 107,440 112,538
Revenue reserve* 3,112 2,825 2,460
------------------------- ----- -------- -------- ------------- -------- -------- --------
Total shareholders'
funds 155,076 139,530 154,263
Net asset value per
ordinary share of
50p 8 429.3p 386.2p 427.0p
------------------------- ----- -------- -------- ------------- -------- -------- --------
*These reserves are distributable.
The notes below form part of these condensed financial
statements.
Martin Currie Asia Unconstrained Trust plc is registered in
Scotland, company number SC092391.
The condensed financial statements were approved by the board of
directors on 16 November 2017 and signed on its
behalf by Harry Wells, Chairman
Unaudited Condensed Statement of Changes in Equity
Six months to 30 Called-up Share Capital
September 2017 share premium Redemption Capital Revenue
(Unaudited) capital reserve reserve reserve* reserve* Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------ ----------------- --------- ------------------- ---------- ---------- --------
At 1 April 2017 19,753 6,084 3,428 112,538 2,460 154,263
Net return attributable
to shareholders** - - - 3,206 2,549 5,755
Ordinary shares 9 - - - - - -
bought back into
treasury
Dividends paid from
revenue - - - - (1,897) (1,897)
Dividends paid from
capital*** - - - (3,045) - (3,045)
--------------------------------- ----------------- --------- ------------------- ---------- ---------- --------
At 30 September
2017 19,753 6,084 3,428 122,699 3,112 155,076
--------------------------------- ----------------- --------- ------------------- ---------- ---------- --------
Called-up Share Capital
Six months to 30 share premium Redemption Capital Revenue
September 2016 (Unaudited) Note capital account reserve reserve* reserve* Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ------- ------------------ --------- ------------ ---------- ---------- --------
At 1 April 2016 19,753 6,084 3,428 88,130 2,363 119,758
Net return attributable
to shareholders** - - - 20,737 2,351 23,088
Ordinary shares
bought back into
treasury 9 - - - (1,427) - (1,427)
Dividends paid from
revenue - - - - (1,889) (1,889)
Dividends paid from - - - - - -
capital
At 30 September
2016 19,753 6,084 3,428 107,440 2,825 139,530
----------------------------- ------- ------------------ --------- ------------ ---------- ---------- --------
Called-up Share Capital
Year to 31 March share premium redemption Capital Revenue
2017 (Audited) Note capital account reserve reserve* reserve* Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------- ------------------ --------- ------------ ---------- ---------- --------
At 1 April 2016 19,753 6,084 3,428 88,130 2,363 119,758
Net return attributable
to shareholders** - - - 35,841 2,933 38,774
Ordinary shares
bought back into
treasury 9 - - - (1,433) - (1,433)
Dividends paid from
revenue - - - - (2,836) (2,836)
Dividends paid from - - - - - -
capital
At 31 March 2017 19,753 6,084 3,428 112,538 2,460 154,263
------------------------- ------- ------------------ --------- ------------ ---------- ---------- --------
* These reserves are distributable.
**The Company does not have any other income or expenses that
are not included in the 'Net return attributable to shareholders'
as disclosed in the Statement of comprehensive income and therefore
is also the 'Total comprehensive income for the year'.
***On the 5 July 2017 the Board announced a final dividend for
the financial year ended 31 March 2017 of 13.68p per ordinary share
including 8.43p to be paid out of capital.
The notes below form part of these financial statements.
Unaudited Condensed Statement of Cash Flow
(Unaudited) (Unaudited) (Audited)
Note Six months Six months Year ended
to 30 September to 30 September 31 March 2017
2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
Cash flows
from operating
activities
Profit before
tax 5,921 23,196 38,908
Adjustments
for:
Gains on investments 4 (3,358) (21,613) (37,301)
Purchases
of investments* (11,281) (5,500) (11,143)
Sales of investments* 15,132 8,607 14,636
Finance costs 54 - 112
Dividend revenue 2 (3,218) (2,864) (3,927)
Dividend received 3,571 3,077 3,817
(Increase)/decrease
in receivables (5) 27 28
Increase in
other payables 2 8 47
Overseas withholding
tax suffered 3 (166) (108) (134)
731 (18,366) (33,865)
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
Net cash flows
from operating
activities 6,652 4,830 5,043
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
Cash flow
from financing
activities
Repurchase
of ordinary
share capital - (1,693) (1,699)
Net movement
in short-term
borrowings (1,862) 679 1,923
Exchange movement
in short term
borrowings (34) (103) (217)
Movement in
interest expense
and similar
charges (56) - (118)
Equity dividends
paid (1,897) (1,889) (2,836)
Capital dividends (3,045) - -
paid
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
Net cash flows
from financing
activities (6,894) (3,006) (2,096)
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
Net (decrease)
increase in
cash and cash
equivalents (242) (1,824) (2,096)
Cash and cash
equivalents
at the start
of the period 3,575 1,479 1,479
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
Closing cash
and cash equivalents
at the end
of the period 3,333 3,303 3,575
----------------------- ------- ---------- ----------- ------------- --------- ------------------ ---------
* Receipts from the sale of, and payments to acquire, investment
securities have been classified as components of cash flows from
operating activities because they form part of the company's
dealing operations.
The notes below form part of these financial statements.
Notes to the Condensed Financial Statements
Note 1: Accounting policies
Basis of preparation - For the periods ended 30 September 2016
and 2017 (and the year ended 31 March 2017), the Company is
applying FRS 104 - Interim Financial Reporting and FRS 102 - the
Financial Reporting Standard applicable in the UK and Republic of
Ireland, which forms part of the revised Generally Accepted
Accounting Practice ('UK GAAP') issued by the Financial Reporting
Council (FRC) in 2015.
These condensed financial statements have been prepared on a
going concern basis in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority, FRS102
issued by the FRC in 2015 and the revised Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" ('SORP') issued by the AIC in November
2014.
The accounting policies applied for the condensed set of
financial statements are set out in the company's annual report for
the year ended 31 March 2017. However, the references to prior year
individual FRSs should now be taken to reference FRS 102.
Statement of estimation uncertainty - In the application of the
Company's accounting policies, the board is required to make
judgements, estimates and assumptions about carrying values of
assets and liabilities that are not always readily apparent from
other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to
be relevant. Actual results may vary from these estimates. There
have been no significant judgements, estimates or assumptions for
the period.
Note 2: Revenue from investments
(Unaudited) (Unaudited) (Audited)
Six months Six months Year to
to 30 September to 30 September 31 March
2017 GBP000 2016 GBP000 2017
GBP000
------------------- ----------------- ----------------- ----------
From listed
investments
Overseas equities 3,218 2,864 3,927
Total 3,218 2,864 3,927
------------------- ----------------- ----------------- ----------
Total revenue
comprises:
Dividends 3,218 2,864 3,927
Total 3,218 2,864 3,927
------------------- ----------------- ----------------- ----------
The company received no capital dividends during the six month
period ended 30 September 2017 (30.09.16: GBPNil and 31.03.17:
GBPNil).
Note 3: Taxation on ordinary activities
(Unaudited) (Unaudited) (Audited) Year
Six months to Six months to ended to 31
30 September 30 September March 2017
2017 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Overseas
tax suffered 166 - 166 108 - 108 134 - 134
--------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Note 4: Investments at fair value through profit or loss
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 September 30 September 31 March
2017 GBP000 2016 GBP000 2017
GBP000
---------------------- -------------- ----------------- ----------
Opening valuation 157,537 123,602 123,602
Opening unrealised
fair value gains
on investments (45,928) (10,740) (10,740)
---------------------- -------------- ----------------- ----------
Opening cost 111,609 112,862 112,862
Add: additions
at cost 11,309 5,500 11,270
---------------------- -------------- ----------------- ----------
122,918 118,362 124,132
Less: disposals
at cost (12,066) (8,515) (12,523)
---------------------- -------------- ----------------- ----------
Closing cost 110,852 109,847 111,609
Closing unrealised
fair value gains
on investments 46,220 32,261 45,928
---------------------- -------------- ----------------- ----------
Closing valuation 157,072 142,108 157,537
---------------------- -------------- ----------------- ----------
(Unaudited) (Unaudited) (Audited)
Six months Six months Year to
to to 30 September 31 March
30 September 2016 GBP000 2017
2017 GBP000 GBP000
---------------------- -------------- ----------------- ----------
Gains on investments
Realised gains
for the current
period Movement
in the unrealised
fair value gains
on investments 3,066 92 2,113
292 21,521 35,188
---------------------- -------------- ----------------- ----------
Gains on investments 3,358 21,613 37,301
---------------------- -------------- ----------------- ----------
Transaction costs
During the period expenses were incurred in acquiring or
disposing of investments classified as fair value through profit or
loss. These have been expensed through capital and are within net
gains/(losses) on investments in the Statement of Comprehensive
Income. The total costs were as follows:
(Unaudited) (Unaudited) (Audited)
As at 30 As at 30 As at
September September 31 March
2017 2016 2017
GBP000 GBP000 GBP000
----------- ------------ ------------ ----------
Purchases 23 17 31
Sales 30 24 48
53 41 79
----------- ------------ ------------ ----------
Note 5: Receivables: amounts falling due within one year
(Unaudited) (Unaudited) (Audited)
As at 30 As at 30 As at
September September 31 March
2017 2016 2017
GBP000 GBP000 GBP000
---------------------- ------------ ------------ ----------
Dividends receivable 144 174 497
Other receivables 17 13 12
161 187 509
---------------------- ------------ ------------ ----------
Note 6: Cash at Bank
(Unaudited) (Unaudited) (Audited)
As at 30 As at 30 As at
September September 31 March
2017 2016 2017
GBP000 GBP000 GBP000
------------------- ------------ ------------ ----------
Sterling 3,205 3,205 3,536
Singapore dollar 83 93 -
Taiwanese dollar - 5 -
Malaysian Ringgit - - 39
------------------- ------------ ------------ ----------
3,333 3,303 3,575
------------------- ------------ ------------ ----------
Note 7: Payables - amounts falling due within one year
(Unaudited) (Unaudited) (Audited)
As at 30 As at 30 As at
September September 31 March
2017 2016 2017
GBP000 GBP000 GBP000
---------------------- ------------ ------------ ----------
Interest expense
and similar charges 8 16 10
Due to brokers
for open trades 155 - 127
Due to MCIM for
management and
secretarial fees 292 264 284
Revolving bank
loan 4,929 5,695 6,825
Other payables 106 93 112
---------------------- ------------ ------------ ----------
5,490 6,068 7,358
---------------------- ------------ ------------ ----------
The company has a GBP15,000,000 (30.09.16: GBP10,000,000;
31.03.17: GBP15,000,000) loan facility with The Royal Bank of
Scotland plc, which expires on 31 August 2018.
As at 30 September 2017, 30 September 2016 and 31 March 2017,
the drawdowns were as shown below, with a maturity date of 7
December 2017 (31.03.17: 7 June 2017; 30.09.16: 7 November
2016).
(Unaudited) As (Unaudited) As (Audited) As at
at 30 September At 31 March 2016 31 March 2017
2017
Interest Interest Interest
Currency GBP rate Currency GBP rate Currency GBP rate
------------- --------------- --------- ----------- -------------- --------- ----------- -------------- ---------
GDP GDP
GBP* - - 1,400,000 GBP1,400,000 1.16% 1,400,000 GBP1,400,000 1.11%
HKD HKD HKD
25,657,070 GBP2,448,000 1.51% 23,618,070 GBP2,574,000 1.31% 25,657,070 GBP2,640,000 1.69%
SGD SGD SGD
4,520,400** GBP2,448,000 1.87% 3,096,900 GBP1,748,000 1.62% 4,864,800 GBP2,785,000 1.69%
------------- --------------- --------- ----------- -------------- --------- ----------- -------------- ---------
GBP4,929,000 GBP6,695,000 GBP6,825,000
----------------------------- --------- ----------- -------------- --------- ----------- -------------- ---------
*On 16 May 2017 the company paid back GBP1,000,000 and on 2 June
2017 a further GBP400,000.
**On 5 June 2017 the company paid back SGD 344,400.
All payables are due within three months.
Note 8: Returns and net asset value
The return and net (Unaudited) (Unaudited) (Audited)
asset value per ordinary Six months Six months Year ended
share are calculated to to 31 March
with reference to 30 September 30 September 2017
the following figures: 2017 2016
----------------------------- --------------- --------------- ---------------
Revenue return
Revenue return attributable GBP2,549,000 GBP2,351,000 GBP2,933,000
to ordinary shareholders
----------------------------- --------------- --------------- ---------------
Weighted average
number of shares
in issue during period* 36,124,496 36,258,116 36,191,490
Return per ordinary
share 7.06p 6.48p 8.10p
Capital return
Capital return attributable GBP3,206,000 GBP20,737,000 GBP35,841,000
to ordinary shareholders
----------------------------- --------------- --------------- ---------------
Weighted average
number of shares
in issue during period* 36,124,496 36,258,116 36,191,490
Return per ordinary
share 8.87p 57.19p 99.03p
----------------------------- --------------- --------------- ---------------
Total return
Total return per
ordinary share 15.93p 63.67p 107.13p
----------------------------- --------------- --------------- ---------------
(Unaudited) (Unaudited) (Audited)
As at 30 As at As at
September 30 September 31 March
2017 2016 2017
Net asset value per
share
Net assets attributable GBP155,076,000 GBP139,530,000 GBP154,263,000
to shareholders
Number of shares
in issue at the period
end* 36,124,496 36,124,496 36,124,496
Net asset value per
share 429.3p 386.2p 427.0p
----------------------------- --------------- --------------- ---------------
*Weighted average number of shares in issue during period is
calculated excluding shares held in treasury.
Note 9: Called up share capital
(Unaudited) (Unaudited) (Audited)
As at 30 As at 30 As at
September September 31 March
2017 2016 2017
GBP000 GBP000 GBP000
---------------------------- ------------ ------------ ----------
Authorised:
66,000,000 (30.9.16
- 66,000,000 and 31.03.17
- 66,000,000) ordinary
shares of 50p each
- equity 33,000 33,000 33,000
Allotted, called up
and fully paid:
36,124,496 (30.9.16
- 36,124,496 and 31.03.17
- 36,124,496) ordinary
shares of 50p each
- equity 18,062 18,062 18,062
Treasury shares:
3,381,376 (30.9.16
- 3,381,376 and 31.03.17
- 3,881,376) ordinary
shares of 50p each
- equity 1,691 1,691 1,691
---------------------------- ------------ ------------ ----------
Total 19,753 19,753 19,753
---------------------------- ------------ ------------ ----------
The company bought back no shares during the period to 30
September 2017 to be held in treasury (30.09.16: 519,683 and
31.03.17: 519,683) and incurred no cost (30.09.16: GBP1,427,000 and
31.03.17: GBP1,433,000).
Note 10: Analysis of net debt
As at Cash flows Exchange As at
1 April GBP000 movements 30 September
2017 GBP000 2017
GBP000
----------------------- --------- ----------- ----------- --------------
Cash at bank 3,575 (508) 266 3,333
Bank overdraft - - - -
Bank borrowings
- sterling revolving
loan (6,825) 1,862 34 (4,929)
----------------------- --------- ----------- ----------- --------------
Net debt (3,250) 1,354 300 (1,596)
----------------------- --------- ----------- ----------- --------------
Note 11: Fair value hierarchy
The company has adopted the amendments to FRS 102 'The Financial
Reporting Standard applicable in the UK and Republic of Ireland',
where an entity is required to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
shall have the following levels:
- Level 1: The unadjusted quoted price in an active market 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 (i.e. developed using market data) for the
asset or liability, either directly or indirectly.
- Level 3: Inputs are unobservable (i.e. for which market data
is unavailable) for the asset or liability.
The financial assets measured at fair value through profit and
loss are grouped into the fair value hierarchy as follows:
As at 30 September 2017 (Unaudited)
Level Level Level Total
1 2 3 GBP000
GBP000 GBP000 GBP000
Financial assets
at fair value through
profit or loss
Quoted Equities 157,072 - - 157,072
------------------------ --------- --------- --------- ---------
Net fair value 157,072 - - 157,072
------------------------ --------- --------- --------- ---------
As at 30 September 2016 (Unaudited)
Level Level Level Total
1 2 3 GBP000
GBP000 GBP000 GBP000
Financial assets
at fair value through
profit or loss
Quoted Equities 142,108 - - 142,108
------------------------ --------- --------- --------- ---------
Net fair value 142,108 - - 142,108
------------------------ --------- --------- --------- ---------
As at 31 March 2017 (Audited)
Level Level Level Total
1 2 3 GBP000
GBP000 GBP000 GBP000
Financial assets
at fair value through
profit or loss
Quoted Equities 157,537 - - 157,537
------------------------ -------- -------- -------- --------
Net fair value 157,537 - - 157,537
------------------------ -------- -------- -------- --------
Note 12: Interim report
The financial information contained in this half yearly
financial report does not constitute statutory accounts as defined
in s434-436 of the Companies Act 2006. The financial information
for the six months ended 30 September 2017 and the comparative six
months to 30 September 2016 have not been audited.
The information for the year ended 31 March 2017 has been
extracted from the latest published audited financial statements
which have been filed with the Registrar of Companies. The report
of the auditors on those accounts contained no qualification or
statement under s498 (2), (3) or (4) of the Companies Act 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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