TIDMNII
RNS Number : 1825G
New India Investment Trust PLC
18 November 2015
NEW INDIA INVESTMENT TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
FINANCIAL SUMMARY AND PERFORMANCE
Financial Summary 30 September 30 September % change
2015 2014
Total shareholders'
funds (GBP'000) 202,855 189,103 + 7.3
Share price (mid-market) 306.00p 285.00p + 7.4
Net asset value per
share 343.41p 320.13p + 7.3
Discount to net asset
value 10.9% 11.0%
Rupee to Sterling
exchange rate 99.4 100.1 + 0.7
Performance (total Six months ended Year ended
return)
30 September 31 March 2015
2015
% %
Share price - 13.1 + 56.4
Net asset value - 10.9 + 46.3
MSCI India Index (Sterling
adjusted) - 11.9 + 35.6
CHAIRMAN'S STATEMENT
Performance
During the six months to 30 September 2015, the Company's net
asset value fell by 10.9% to 343.4p, which compared to a fall of
11.9% in the benchmark MSCI India Index. The ordinary share price
fell by 13.1% to 306.0p.
Overview
Indian equities slipped lower in the period under review as
investors' risk appetites waned, especially for emerging markets,
while the challenging state of the global economy steadily became
more apparent. Headlines were largely discouraging, dominated by
global commodity prices, China's deepening economic malaise, and
conflicting signals from the US Federal Reserve (the "Fed") on the
likely path of US monetary policy. Investors were further
discouraged by domestic events, with regulatory uncertainty,
political wrangling and the perceived leisurely progress of reforms
all weighing on sentiment.
Plans unveiled in April 2015 to retroactively tax foreign fund
managers operating in India were met with concerted protests by a
number of fund managers. Authorities were eventually compelled to
rescind the demands, but the effect of this aborted attempt was a
reminder of India's still opaque regulatory backdrop. Meanwhile,
Prime Minister Narendra Modi celebrated his first full year in
power, chalking up a number of policy successes. However, the 'Modi
effect', which had propelled markets to record highs following his
election in 2014, began to dissipate on the realisation that there
was no quick-fix for the country's structural issues. Discontent
was particularly rife over the fate of two pivotal reforms, as the
unified goods and services bill was sent back to the drawing board,
while the proposed land acquisition act was abandoned. Prime
Minister Modi's unwillingness to expend further political capital
on his landmark land acquisition legislation highlighted the
considerable obstacles to progress posed by the
opposition-controlled Upper House.
For all this, though, India held up well compared to its
emerging market peers. Declining oil prices were a blessing for the
net energy importer, helping to narrow the current account deficit
and temper previously high levels of inflation. This provided the
Reserve Bank of India with room to manoeuvre, which it did, cutting
interest rates twice. The domestic economy, while not hurtling
forward at full-steam, was sturdier than most in the region, with
economic growth hovering around 7%. Moody's was encouraged enough
to upgrade the country's credit rating from stable to positive.
Outlook
India's stock markets should remain resilient, at least when
compared to others in the region. Nonetheless, increases in equity
prices are likely to be constrained as long as investors feel
uneasy about the global economic climate. Emerging markets, India
included, seem to be stuck between a rock and a hard place when it
comes to the Fed. The longer the Fed holds off raising interest
rates, the more uncertain, and risk averse, investors become.
However, the immediate aftermath of a rate increase is likely to
induce more capital outflows from the developing world before
sentiment stabilises. Meanwhile, the wider implications of China's
deceleration could provide a continued source of concern, although
India is less of a hostage to Chinese economic fortunes than its
commodity-exporting peers.
On the domestic front, the criticism that Mr Modi has faced for
failing to make headway with key reforms ignores the considerable
progress he has made elsewhere. There is a sense that 'high-level'
corruption has reduced and a number of moribund projects revived
through accelerated approvals. And, it seems the government has
found a viable alternative to a federal land acquisition bill, by
enabling local authorities to follow the spirit of the legislation
at state level. Meanwhile, the economy is continuing to grow.
Private investment is still weak, credit conditions tight and
demand muted. However, there are early indications the cycle might
be turning, with industrial production showing signs of life. The
government has also stepped up spending on infrastructure
development, with buoyant tax revenues providing a welcome fiscal
cushion. India still has its fair share of challenges to surmount,
but the future looks increasingly bright.
Hasan Askari
Chairman
18 November 2015
INTERIM BOARD REPORT
Investment Objective
The investment objective of the Company is to provide
shareholders with long-term capital appreciation by investment in
companies which are incorporated in India, or which derive
significant revenue or profit from India, with dividend yield from
the Company being of secondary importance.
Investment Policy
The Company's investment policy is flexible, enabling it to
invest in all types of securities, including equities, debt and
convertible securities in companies listed on the Indian stock
exchanges or which are listed on other international exchanges and
which derive significant revenue or profit from India. The Company
may also, where appropriate, invest in open-ended collective
investment schemes and closed-end funds which invest in India and
are listed on the Indian stock exchanges. The Company is free to
invest in any particular market segment or geographical region of
India or in small, mid or large capitalisation companies.
Principal Risks and Uncertainties
The Directors have identified the principal risks and
uncertainties affecting its business. The Directors are aware that,
apart from those issues it can identify, there are likely to be
matters about which they do not, nor cannot know, which may also
affect the Company.
With that reservation, the Directors believe that the factors
which could have the most significant adverse impact on
shareholders would be likely to include:
- falls in the prices of securities in Indian companies, which
may be themselves determined by local and international economic,
political and financial factors and management actions;
- adverse movements in the exchange rate between Sterling and
the Rupee as well as between other currencies affecting the overall
value of the portfolio;
- a lack of appropriate stock selection by the Company's Manager;
- factors which affect the discount to net asset value at which
the Ordinary shares of the Company trade. These may include the
popularity of the investment objective of the Company, the
popularity of investment trust shares in general and the ease with
which the Company's Ordinary shares may be traded on the London
Stock Exchange;
- insolvency of the depositary, custodian or sub-custodian
combined with a shortfall in the assets held by that depositary,
custodian or sub-custodian arising from fraud, operational errors
or settlement difficulties resulting in a loss of assets owned by
the Company; and
- changes in or breaches of the complicated set of statutory,
tax and regulatory rules within which the Company seeks to conduct
its business in India, Mauritius and the United Kingdom (including
any changes in how these rules are interpreted and applied).
Some of these risks can be mitigated or managed to a greater or
lesser extent by the actions of the Directors in appointing
competent investment managers and depositaries. In addition, the
Directors seek to put in place, through the Company's contractual
arrangements and through various monitoring processes, controls
which should avert (but do not guarantee the avoidance of) what
might be regarded as operational mistakes. However, investment
tends to involve both risk and opportunity regarding future
prospects, and the Directors cannot avoid either in the Company's
search for returns.
Other financial risks are detailed in note 15 to the Financial
Statements in the Company's Annual Report for the year ended 31
March 2015.
Going Concern
In accordance with the Financial Reporting Council's Guidance on
Risk Management, Internal Control and Related Financial and
Business Reporting issued in September 2014, the Directors have
undertaken a rigorous review and consider both that there are no
material uncertainties and that the adoption of the going concern
basis of accounting is appropriate. The Company's assets currently
consist entirely of equity shares in companies listed on recognised
Stock Exchanges in India, the majority of which are normally
realisable within a short timescale.
(MORE TO FOLLOW) Dow Jones Newswires
November 18, 2015 09:20 ET (14:20 GMT)
The Directors are mindful of the principal risks and
uncertainties set out above. After making enquiries, including a
review of forecasts detailing revenue and liabilities, the
Directors have a reasonable expectation that the Company possesses
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis of accounting in preparing the Financial
Statements.
This belief is also based on the assumption that the Ordinary
resolution, that the Company continues as an investment trust,
which will be proposed at the next Annual General Meeting of the
Company, is passed as it has been in the years since it was put in
place.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Half-Yearly
Financial Report, in accordance with applicable law and
regulations. The Directors confirm that, to the best of their
knowledge:
- the condensed set of Financial Statements within the
Half-Yearly Financial Report has been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting';
and
- the Chairman's Statement and Interim Board Report (together
constituting the interim management report) includes a fair review
of the information required by 4.2.7R (indication of important
events during the first six months of the year) and 4.2.8R
(disclosure of related party transactions and changes therein) of
the UKLA's Disclosure and Transparency Rules.
The Half-Yearly Financial Report for the six months ended 30
September 2015 comprises the Chairman's Statement, Interim Board
Report, the Statement of Directors' Responsibilities and a
condensed set of Financial Statements.
For and on behalf of the Board
Hasan Askari
Chairman
18 November 2015
INVESTMENT MANAGER'S REPORT
Overview
Indian equities fell in the six months under review, hampered by
both domestic and external events. After an extremely good run,
share prices corrected as corporate earnings disappointed amid
expectations that the economy was on the cusp of a recovery led by
Prime Minister Narendra Modi. Also, investors recoiled at the
government's plans to tax foreign fund managers operating in India
retroactively. Whether from weak Chinese data or doubts over the US
interest rate policy, ongoing uncertainty surrounding global
equities further dampened risk appetites and sent markets lower.
Despite that, losses were mitigated by a late rally in June on the
back of bargain-hunting.
It proved to be a brief reprieve, however, as share prices fell
again in mid-August in the wake of volatility in Chinese equities.
Beijing's surprise move to devalue its currency, and failed
attempts to stabilise the markets, rattled investors' nerves across
the globe. The Fed's decision to leave rates unchanged in September
sent mixed signals and its perceived indecisiveness fuelled
uncertainty. Meanwhile, German carmaker Volkswagen's revelations
that it had cheated on emissions tests reverberated through
domestic markets, given that India houses several of the world's
leading automotive parts suppliers. At the period end, the central
bank cut rates by a higher-than-expected 50 basis points to 6.75%
which drove a late recovery in the market.
For our holdings, corporate earnings were mixed over the six
months. The demand environment has been fairly lacklustre,
particularly for the cyclical and industrial sectors. Consumer
demand has been more resilient though there were also pockets of
weakness in the rural sectors of the economy. On a positive note,
falling oil and commodity prices generally lifted profit
margins.
Performance
For the six months under review, the portfolio's net asset value
fell by 10.9%, compared to a decline of 11.9% in the benchmark MSCI
India Index. Positive stock selection in materials was the biggest
contributor to relative performance. In particular, Kansai Nerolac
Paints did well, benefiting from robust volumes and improved
margins. At the same time, the lack of exposure to metals and
mining stocks within the sector, such as Sesa Goa, Jindal Steel
& Power and Tata Steel, also contributed positively.
The underweight positions in industrials and telco services also
aided relative performance. The lack of exposure to Tata Motors was
the top contributor as the carmaker continued to suffer from
deteriorating demand in China, one of its key markets. Meanwhile,
Bosch, our main auto-sector holding succumbed to profit-taking
following a lengthy period of good performance. Prior to this, we
had top-sliced our position in the holding on price strength.
At the stock level, Godrej Consumer Products was a key
contributor on the back of decent results and its commitment to
improving profitability. Among our financial holdings, HDFC Bank
largely avoided the sell-off after reporting healthy loan and
margin growth, while maintaining decent asset quality. However, the
same could not be said of ICICI Bank, which was beset by asset
quality concerns. That said, its retail business remains relatively
resilient and management expects non-performing loan growth to
remain largely stable.
Among the detractors, not holding benchmark heavyweight Reliance
Industries negatively affected the portfolio as the market reacted
positively to its strategy update, while anticipation over the
expected launch of Reliance Jio (involving the proposed pan-India
roll-out of 4G broadband) further supported sentiment. However, its
share price has come off since June on concerns over weaker margins
and lower oil prices. We remain comfortable with our lack of
exposure as we believe that we can find higher-quality alternatives
that focus on returns for minority shareholders.
Although the lack of exposure to Dr Reddys Laboratories also
hurt performance, this was offset by the Company's non-benchmark
holding in Sanofi India which delivered similar returns over the
period. The underweight to Infosys detracted as the stock re-rated
on better-than-expected results and hopes that that CEO, Vishal
Sikka, could return the company to its dominant position in the
industry. Despite that, the IT services sector is still the
Company's second-largest exposure, with Infosys one of the
portfolio's core holdings.
Portfolio Activity
Over the review period, we sold GAIL India given our
disappointment with its performance amid challenging operating
conditions and regulatory uncertainty. We also trimmed Bharti
Airtel following good performance. Conversely, we topped up ICICI
and ITC on price weakness as we believe their fundamentals remain
compelling over the long term. In addition, we participated in Sun
Pharmaceuticals' share placement at an attractive discount, topping
up the position.
Outlook
Indian equities are likely to face ongoing volatility in the
near term, especially as market participants await the Federal
Reserve's normalisation of its interest rate policy. Tepid rural
demand remains a concern. However, the central bank's ongoing
monetary easing, coupled with its determination to see banks pass
on lower borrowing costs, should support consumption. While
valuations are still not cheap at the moment, companies have the
capability to increase their earnings as a result of the huge and
growing middle class.
Still-low commodity prices, which have been keeping import costs
down for a while, could further bolster margins. Prime Minister
Modi's reforms have also made headway in cultivating a more
business-friendly environment that values transparency, which is
likely to be beneficial in the longer term. While corporate
earnings may not show significant improvements in the near term, we
remain optimistic about the medium to long-term potential of the
portfolio's holdings. Current fluctuations aside, India remains one
of the most compelling investment destinations in the region as it
offers a wide selection of fundamentally sound and well managed
companies.
Aberdeen Asset Management Asia Limited
Investment Manager
18 November 2015
INVESTMENT PORTFOLIO - CONSOLIDATED
As at 30 September 2015
Valuation Net assets
Company Sector GBP'000 %
Housing Development
Finance Corporation Financials 17,913 8.8
Infosys Information Technology 15,486 7.6
Tata Consultancy Services Information Technology 15,074 7.4
ICICI Bank Financials 11,677 5.8
ITC Consumer Staples 10,384 5.1
Bosch Consumer Discretionary 8,337 4.1
Godrej Consumer Products Consumer Staples 7,374 3.6
Grasim Industries{A} Materials 7,331 3.6
Ambuja Cements{A} Materials 7,321 3.6
Hero MotoCorp Consumer Discretionary 7,070 3.5
Top ten investments 107,967 53.1
Hindustan Unilever Consumer Staples 6,822 3.4
Lupin Healthcare 6,645 3.3
Container Corporation
of India Industrials 6,312 3.1
Kansai Nerolac Paints Materials 6,180 3.0
Nestlé India Consumer Staples 5,851 2.9
HDFC Bank Financials 5,359 2.6
Ultratech Cement{A} Materials 4,983 2.5
Kotak Mahindra Bank Financials 4,891 2.4
Piramal Enterprises Healthcare 4,863 2.4
Gujarat Gas Utilities 4,459 2.2
(MORE TO FOLLOW) Dow Jones Newswires
November 18, 2015 09:20 ET (14:20 GMT)
Top twenty investments 164,332 80.9
MphasiS Information Technology 4,423 2.2
Sanofi India Healthcare 3,777 1.9
ACC Materials 3,182 1.6
Gruh Finance Financials 3,050 1.5
ABB India Industrials 2,962 1.5
Sun Pharmaceutical
Industries Healthcare 2,805 1.4
Telecommunication
Bharti Airtel Services 2,648 1.3
CMC Information Technology 2,449 1.2
GlaxoSmithKline Pharmaceuticals Healthcare 2,339 1.2
Linde India Materials 2,257 1.1
Top thirty investments 194,224 95.8
Jammu & Kashmir Bank Financials 1,743 0.9
Castrol India Materials 1,736 0.9
Tata Power Utilities 1,454 0.7
Biocon Healthcare 1,072 0.5
Telecommunication
Bharti Infratel Services 1,002 0.5
Total portfolio investments 201,231 99.3
Other net current
assets held in subsidiaries 917 0.4
Total investments 202,148 99.7
Net current assets 707 0.3
Net assets 202,855 100.0
{A} Comprises equity and listed or tradeable
GDR holdings.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended
30 September 2015 30 September 2014
(restated)
(unaudited) (unaudited)
Revenue Capital Revenue Capital
return return Total return return Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 3 54 - 54 97 - 97
(Losses)/gains
on investments
held at fair value - (24,602) (24,602) - 33,638 33,638
Currency gains - 3 3 - 1 1
_______ _______ _______ _______ _______ _______
54 (24,599) (24,545) 97 33,639 33,736
_______ _______ _______ _______ _______ _______
Expenses
Investment management
fees (48) - (48) (47) - (47)
Other administrative
expenses (260) - (260) (266) - (266)
_______ _______ _______ _______ _______ _______
(Loss)/profit before
taxation (254) (24,599) (24,853) (216) 33,639 33,423
_______ _______ _______ _______ _______ _______
Taxation 4 - - - - - -
_______ _______ _______ _______ _______ _______
(Loss)/profit for
the period (254) (24,599) (24,853) (216) 33,639 33,423
_______ _______ _______ _______ _______ _______
Return per Ordinary
share (pence) 5 (0.43) (41.64) (42.07) (0.37) 56.95 56.58
_______ _______ _______ _______ _______ _______
The Company does not have any income or expense that
is not included in (loss)/profit for the period, and
therefore the "(loss)/profit for the period" is also
the "Total comprehensive income for the period", as
defined in International Accounting Standard 1 (revised).
All of the (loss)/profit and total comprehensive income
is attributable to the equity holders of the parent
company. There are no minority interests.
The total column of this statement represents the Statement
of Comprehensive Income of the Company, prepared in
accordance with International Financial Reporting Standards
("IFRS"). The revenue return and capital return columns
are supplementary to this and are prepared under guidance
published by the Association of Investment Companies.
All items in the above statement derive from continuing
operations.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Cont'd)
Year ended
31 March 2015
(audited)
Revenue Capital
return return Total
Notes GBP'000 GBP'000 GBP'000
Total revenue 3 341 - 341
Gains on investments held
at fair value - 72,254 72,254
Currency gains - 4 4
_______ _______ _______
341 72,258 72,599
_______ _______ _______
Expenses
Investment management fees (100) - (100)
Other administrative expenses (471) - (471)
_______ _______ _______
(Loss)/profit before taxation (230) 72,258 72,028
_______ _______ _______
Taxation 4 - - -
_______ _______ _______
(Loss)/profit for the period (230) 72,258 72,028
_______ _______ _______
Return per Ordinary share
(pence) 5 (0.39) 122.33 121.94
_______ _______ _______
All items in the above statement
derive from continuing operations.
CONDENSED BALANCE SHEET
As at As at As at
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
(restated)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at
fair value through profit
or loss 202,148 188,659 225,698
_______ _______ _______
Current assets
Cash at bank 796 558 2,017
Other receivables 48 50 127
_______ _______ _______
Total current assets 844 608 2,144
_______ _______ _______
Total assets 202,992 189,267 227,842
Current liabilities
Other payables (137) (164) (134)
_______ _______ _______
Total current liabilities (137) (164) (134)
_______ _______ _______
Net assets 202,855 189,103 227,708
_______ _______ _______
Capital and reserves
Ordinary share capital 8 14,768 14,768 14,768
Share premium account 25,406 25,406 25,406
Special reserve 15,778 15,778 15,778
Capital redemption reserve 4,484 4,484 4,484
Capital reserve 9 142,354 128,334 166,953
Revenue reserve 65 333 319
_______ _______ _______
Equity shareholders'
funds 202,855 189,103 227,708
_______ _______ _______
Net asset value per
Ordinary share (pence) 10 343.41 320.13 385.49
_______ _______ _______
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CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended
30 September 2015
(unaudited)
Share Capital
Share premium Special redemption Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2015 14,768 25,406 15,778 4,484 166,953 319 227,708
Net loss on ordinary
activities after
taxation - - - - (24,599) (254) (24,853)
______ ______ ______ ______ ______ ______ _______
Balance at 30 September
2015 14,768 25,406 15,778 4,484 142,354 65 202,855
______ ______ ______ ______ ______ ______ _______
Six months ended
30 September 2014
(unaudited)
(restated) Share Capital
Share premium Special redemption Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2014 14,768 25,406 15,778 4,484 94,695 549 155,680
Net gain/(loss)
on ordinary activities
after taxation - - - - 33,639 (216) 33,423
______ ______ ______ ______ ______ ______ _______
Balance at 30 September
2014 14,768 25,406 15,778 4,484 128,334 333 189,103
______ ______ ______ ______ ______ ______ _______
Year ended 31 March
2015 (audited)
Share Capital
Share premium Special redemption Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2014 14,768 25,406 15,778 4,484 94,695 549 155,680
Net gain/(loss)
on ordinary activities
after taxation - - - - 72,258 (230) 72,028
______ ______ ______ ______ ______ ______ _______
Balance at 31 March
2015 14,768 25,406 15,778 4,484 166,953 319 227,708
______ ______ ______ ______ ______ ______ _______
CONDENSED CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2015 2014 2015
(restated)
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating activities
(Loss)/profit before taxation (24,853) 33,423 72,028
Losses/(gains) on investments
held at fair value through
profit or loss 24,602 (33,638) (72,254)
Net gains on foreign exchange (3) (1) (4)
Net purchases of investments
held at fair value through
profit or loss (1,052) 420 1,996
Decrease/(increase) in other
receivables 79 3 (75)
Increase/(decrease) in other
payables 3 (4) (32)
__________ __________ __________
Net cash (outflow)/inflow
from operating activities (1,224) 203 1,659
Taxation paid - - -
__________ __________ __________
Net (decrease)/increase in
cash and cash equivalents (1,224) 203 1,659
Cash and cash equivalents
at the start of the period 2,017 354 354
Effect of foreign exchange
rate changes 3 1 4
__________ __________ __________
Cash and cash equivalents
at the end of the period 796 558 2,017
__________ __________ __________
NOTES TO THE FINANCIAL STATEMENTS
1. Principal activity
The principal activity of the Company is that of
an investment trust company within the meaning of
Section 1158 of the Corporation Tax Act 2010.
The principal activity of its foreign subsidiary
is similar in all relevant respects to that of its
United Kingdom parent. The Company has adopted IFRS
10 'Consolidated Financial Statements - Consolidation
relief for Investment Entities'; as such the Company
has not consolidated the results of its active subsidiaries.
2. Accounting policies
The Company's financial statements have been prepared
in accordance with International Accounting Standard
('IAS') 34 - 'Interim Financial Reporting', as adopted
by the International Accounting Standards Board
(IASB), and interpretations issued by the International
Reporting Interpretations Committee of the IASB
(IFRIC). The Company's financial statements have
been prepared using the same accounting policies
applied for the year ended 31 March 2015 financial
statements, which received an unqualified audit
report.
IFRS 10 Consolidated Financial Statements - Consolidation
relief for Investment Entities
The preparation of financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates which requires management to exercise
its judgement in the process of applying the accounting
policies. One of the key areas for consideration
has been the application of IFRS 10 'Consolidated
Financial Statements' including the Amendments,
'Investment entities (Amendments to IFRS 10, IFRS
12 and IAS 27) (Investment Entity Amendments). The
amendments require entities that meet the definition
of an investment entity to fair value certain subsidiaries
through profit or loss in accordance with IAS 39
Financial Instruments: Recognition and Measurement,
rather than consolidate their results. However,
entities which are not themselves investment entities
and provide investment related services to the Company
will continue to be consolidated.
Assessment as investment entity
Entities which meet the definition of an investment
entity are required to fair value subsidiaries through
profit or loss rather than consolidate them. To
determine whether an entity meets the definition
of an investment entity it is required to meet the
following three criteria:
(i) an entity obtains funds from one or more investors
for the purpose of providing those investors with
investment services; the Company provides investment
services and has several investors who pool funds
to gain access to these services and investment
opportunities which they might not be able to as
individuals.
(ii) an entity commits to its investors that its
business purpose is to invest funds solely from
capital appreciation, investment income, or both;
the Company's investment objective is to provide
shareholders with long-term capital appreciation
by investment in companies which are incorporated
in India, or which derive significant revenue or
profit from India, with dividend yield from the
Company being of secondary importance.
(iii) an entity measures and evaluates the performance
of substantially all of its investments on a fair
value basis; the Company has elected to measure
and evaluate the performance of all of its investments
on a fair value basis with the exception of its
Singapore subsidiary which is dormant. The fair
value basis is used to present the Company's performance
in its communication with the market and the primary
measurement attribute to evaluate performance of
all of its investments and to make investment decisions.
The Board is of the opinion that the Company meets
the definition of an investment entity, and, therefore,
all investments are recognised at fair value through
profit or loss. This has changed the treatment for
the Company's investment in New India Investment
Company (Mauritius) Limited and New India Investment
Company (Singapore) Pte Ltd, which were previously
consolidated.
The change is first applicable to the Company for
the year ended 31 March 2015. Under the transitional
provisions of IFRS 10 this change in accounting
policy is required to be accounted for retrospectively.
Therefore, the relevant comparative figures for
30 September 2014 have been restated.
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The impact of these changes on the Company's Balance
Sheet is to increase the value of the investment
in the subsidiaries at 30 September 2014 by GBP1,903,000,
to decrease cash by GBP1,691,000, to decrease receivables
by GBP517,000 and to decrease payables by GBP305,000.
The impact of these changes on the Company's Condensed
Statement of Comprehensive Income is to decrease
income by GBP2,339,000, to increase gains/losses
on investments held at fair value through profit
or loss by GBP1,236,000, to increase currency gains
by GBP25,000, to decrease investment management
fees by GBP814,000, to decrease other administrative
expenses by GBP215,000 and to decrease taxation
by GBP49,000.
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2015 2014 2015
(restated)
3. Income GBP'000 GBP'000 GBP'000
Income from investments
Overseas dividends 52 97 190
Dividend from subsidiary - - 150
Other operating income
Deposit & other interest 2 - 1
__________ __________ __________
Total income 54 97 341
__________ __________ __________
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2015 2014 2015
(restated)
4. Tax on ordinary activities GBP'000 GBP'000 GBP'000
(a) Current tax:
Overseas tax - - -
__________ __________ __________
(b) Factors affecting the tax charge for the year
or period
The tax charged for the period can be reconciled
to the profit per the Condensed Statement of Comprehensive
Income as follows:
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2015 2014 2015
(restated)
GBP'000 GBP'000 GBP'000
(Loss)/profit before
tax (24,853) 33,423 72,028
__________ __________ __________
Corporation tax
on (loss)/profit
at the standard
rate of 20% (30
September 2014
22% and 31 March
2015 - 21%) (4,971) 7,353 15,126
Effects of:
Losses/(gains)
on investments
held at fair value
through profit
or loss not taxable 4,920 (7,400) (15,173)
Currency gains
not taxable (1) - (1)
Movement in excess
expenses 62 68 119
Non-taxable dividend
income (10) (21) (71)
__________ __________ __________
Current tax charge - - -
__________ __________ __________
The Company is exempt from corporation tax on
capital gains provided it obtains agreement from
HM Revenue & Customs that the tests within Sections
1158-1159 of the Corporation Tax Act 2010 have
been met. Under Mauritian taxation laws, no Mauritian
capital gains tax is payable on profits arising
from the sale of securities.
5. Return per Ordinary share
The basic earnings per Ordinary share is based on
the net loss after taxation of GBP24,853,000 (30
September 2014 (restated) - net gain of GBP33,423,000;
31 March 2015 - net gain of GBP72,028,000), and
on 59,070,140 (30 September 2014 - 59,070,140; 31
March 2015 - 59,070,140) Ordinary shares, being
the weighted average number of Ordinary shares in
issue during the period.
The earnings per Ordinary share can be further analysed
between revenue and capital as follows:
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2015 2014 2015
(restated)
p p p
Revenue return per
share (0.43) (0.37) (0.39)
Capital return per
share (41.64) 56.95 122.33
__________ __________ __________
Total (42.07) 56.58 121.94
__________ __________ __________
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2015 2014 2015
(restated)
GBP'000 GBP'000 GBP'000
Revenue return total (254) (216) (230)
Capital return total (24,599) 33,639 72,258
__________ __________ __________
Total (24,853) 33,423 72,028
__________ __________ __________
Weighted average number
of Ordinary shares
in issue 59,070,140 59,070,140 59,070,140
__________ __________ __________
6. Dividends on equity shares
No interim dividend has been declared in respect
of either the six months ended 30 September 2015
or 30 September 2014.
During the year ended 31 March 2015, a dividend
of GBP150,000 (2014 - GBP215,000) was paid up from
the subsidiary company to the parent company.
7. Transaction costs
During the period no expenses (30 September 2014
- GBPnil; 31 March 2015 - GBP1,000) were incurred
in acquiring and disposing of investments classified
as fair value though profit or loss. These costs
are expensed through capital and are included within
(losses)/gains on investments in the Condensed Statement
of Comprehensive Income.
8. Ordinary share capital
As at 30 September 2015 there were 59,070,140 (30
September 2014 and 31 March 2015 - 59,070,140) Ordinary
shares in issue.
9. Capital reserve
The capital reserve reflected in the Balance Sheet
at 30 September 2015 includes losses of GBP24,988,000
(30 September 2014 (restated) - gains of GBP33,474,000;
31 March 2015 - gains of GBP71,935,000) which relate
to the revaluation of investments held at the reporting
date.
10. Net asset value per Ordinary share
The basic net asset value per Ordinary share is
based on a net asset value of GBP202,855,000 (30
September 2014 - GBP189,103,000; 31 March 2015 -
GBP227,708,000) and on 59,070,140 (30 September
2014 and 31 March 2015 - 59,070,140) Ordinary shares,
being the number of Ordinary shares in issue at
the period end.
11. Transactions with the Manager
The Company has agreements with Aberdeen Fund Managers
Limited ("AFML" or the "Manager") for the provision
of investment management, secretarial, accounting
and administration and promotional activity services.
During the period, the management fee was payable
monthly in arrears and was based on an annual amount
of 1% of the net asset value of the Company excluding
the fair value of the subsidiary, New India Investment
Company (Mauritius) Limited, valued monthly. The
management agreement is terminable by either the
Company or AFML on 12 months' notice. The amount
payable in respect of the Company for the period
was GBP48,000 (30 September 2014 - GBP47,000; 31
March 2015 - GBP100,000) and the balance due to
AFML at the period end was GBP7,000 (30 September
2014 - GBP8,000; 31 March 2015 - GBP9,000). All
investment management fees are charged 100% to the
revenue column of the Condensed Statement of Comprehensive
Income.
New India Investment Company (Mauritius) Limited
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