Final Results
October 24 2000 - 1:02PM
UK Regulatory
RNS Number:0018T
Asian Technology Trust PLC
24 October 2000
CHAIRMAN'S STATEMENT
I am pleased to present the Annual Report of The Asian Technology Trust PLC
for the year ended 31 August 2000. At that date your Company's net assets per
ordinary share stood at 67.3 cents, a decline of 15.6% over the last twelve
months. This compares to declines of 25.2% in the HSBC SE Asian Smaller
Companies Index and 8.5% in the MSCI AC Far East Free (ex Japan) Index.
This has been a particularly eventful year for the Company. On 21 June 2000
shareholders approved the change of name, investment objectives and policy.
Until this date the Company had invested in Asian companies with market
capitalisations of less than US$500 million and was called the Hambros Smaller
Asian Companies Trust PLC.
The reason for the change was the continued underperformance of Asian smaller
companies compared to the broader Asian stock markets. Shareholders will have
received the documents in May 2000 setting out the Board's reasons. For the
period from 31 August 1999 until 31 May 2000 the HSBC SE Asian Smaller
Companies Index fell by 21.9% compared to a 7.8% drop in the MSCI AC Far East
Free (ex Japan) Index, an index of larger capitalisation companies. Although
the Managers had performed well compared to the smaller companies benchmark,
with the Company's net assets per ordinary share falling by 8.6%, your Board
of Directors were concerned whether smaller companies, as an asset class were
likely to deliver value in the future for the Company's shareholders.
On 21 June 2000 the shareholders approved the revised investment objectives
and policies and the change of the Company's name to The Asian Technology
Trust PLC. By the end of July, the restructuring of the Company into a
portfolio of Asian technology shares was completed. The costs of switching
the underlying holdings were not insignificant and are estimated at
approximately 0.6 cents per share. Further information on these restructuring
costs is contained in the Accounts. Although Asian stock markets have
continued to deteriorate since the change in investment objectives, your Board
believes that the Company is now in an enhanced position to benefit from a
recovery in these markets.
Asian markets generally, and the technology sector in particular, have
experienced periods of both extreme optimism and pessimism during the last
twelve months. The global frenzy of enthusiasm for technology related stocks
at the beginning of the year led to unsustainable valuation levels,
particularly in the Internet sector. Eventually, concerns about the high
levels of financing required by newly formed Internet companies dampened
investor enthusiasm and their share prices fell heavily in March and April
2000, not only in Asia but worldwide. In the more general technology related
sector, share prices initially fell in sympathy, but then quickly recovered as
the underlying demand conditions remained very favourable. In Asia, earnings
expectations remained intact for most hardware manufacturers and telecoms
companies and the interim earnings reports have been very strong, leading to a
consequent recovery in Asian share prices.
However, several recent announcements from leading technology companies
worldwide have caused investors to worry whether the current strong demand
conditions in the technology sector are sustainable. Nokia, the leading
manufacturer of mobile phones, announced that its third quarter results would
not meet analysts' expectations. Subsequently Intel, the leading U.S.
semiconductor company, made a similar announcement. Asian share prices were
badly hit by these reports, as the region is a significant manufacturer of
hardware and components. However both Nokia and Intel have expressed optimism
that the disappointing results will be temporary and that fourth quarter
profits will show an improvement.
In the longer term, Asian hardware manufacturers are likely to benefit from
global outsourcing as the region is a low cost provider with a track record in
delivering quality electronic products. But Asia is not just an assembler of
products, it is also the leading edge manufacturer for several stages of the
manufacturing process, which has made technology the fastest growing sector of
most Asian economies.
The Managers have concentrated The Asian Technology Trust investments in
higher value added manufacturers within the technology sector and also in
wireless service providers. This sector offers enormous potential as the
number of wireless subscribers is growing rapidly and 3G (third generation)
technology is expected to allow for the fast transmission of data to mobile
handsets in addition to traditional voice services.
With this background your Directors are optimistic that Asian markets will
recover and that technology related stocks should outperform the general
market over the longer term.
David Lewis
24th October 2000
STATEMENT OF TOTAL RETURN (incorporating the Revenue Account*)
for the year ended 31 August 2000
Year to 31 August 2000 Year to 31 August 1999
(audited) (audited and re-stated)
Revenue Capital Total Revenue Capital Total
US $'000 US $'000 US $'000 US $'000 US $'000 US $'000
(Losses)/Gains
on investments - (7,375) (7,375) - 21,637 21,637
Currency
gains/(losses) 37 (136) (99) (36) (180) (216)
Income 1,142 - 1,142 1,319 - 1,319
Investment
management
fee (209) (487) (696) (164) (382) (546)
Other
administrative
expenses (652) - (652) (289) - (289)
----- ------- ------- -------- ------ ------
Return before
finance costs
and
taxation 318 (7,998) (7,680) 830 21,075 21,905
Interest
payable (165) (385) (550) (3) (7) (10)
----- ------- ------- ------ ------ ------
Return on
ordinary
activities
before
taxation 153 (8,383) (8,230) 827 21,068 21,895
Taxation on
ordinary
activities (200) 180 (20) (340) 104 (236)
------ ------- ------- ----- ----- ------
Return on
ordinary
activities
after
taxation (47) (8,203) (8,250) 487 21,172 21,659
Dividends
on ordinary
shares - - - (198) - (198)
------ ------- ------- ---- ------ ------
(47) (8,203) (8,250) 289 21,172 21,461
====== ======= ======= ==== ====== ======
Return per
ordinary
share
- cents (0.07) (12.40) (12.47) 0.74 32.00 32.74
* The revenue column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations.
BALANCE SHEET
As at 31 August 2000
31 August 2000 31 August 1999
US $'000 US $'000
(re-stated)
Fixed Assets:
Investments 50,616 55,633
Current Assets:
Debtors 219 704
Cash at bank 2,153 2,431
------ ------
2,372 3,135
Creditors:
Amounts falling due within one year (8,439) (5,927)
------ ------
Net current liabilities (6,067) (2,792)
Provision for liabilities and charges - (42)
------ ------
Net assets 44,549 52,799
====== ======
Capital and reserves:
Called up share capital 6,636 6,636
Share premium - 33,251
Special reserve 33,251 -
Warrant reserve 3,197 3,197
Capital redemption reserve 25,584 25,584
Capital reserve - realised (23,274) (25,285)
Capital reserve - unrealised (1,352) 8,862
Revenue reserve 507 554
------ -------
Total shareholders' funds 44,549 52,799
====== =======
31 Aug 31 Aug 31 Aug 31 Aug
2000 1999 2000 1999
US$'000 US$'000 Per share Per Share
cents cents
Net asset value - Equity
Shareholders: Ordinary shares 44,531 52,779 67.3c 79.8c
Net asset value - Non-equity
shareholders: Preference Shares 18 20 n/a n/a
------ ------
44,549 52,799
====== ======
CASH FLOW STATEMENT
For the year ended 31 August 2000
Year to Year to
31 August 2000 31 August 1999
US$'000 US$'000 US$'000 US$'000
Net cash (outflow)/inflow
from operating activities (218) 435
Returns on investments and
servicing of finance:
Interest paid (535) -
Taxation:
UK tax recovered 277 338
Capital expenditure and
financial investment:
Purchases of investments (85,248) (36,953)
Sales of investments 81,780 33,405
------ ------
(3,468) (3,548)
----- -----
(3,944) (2,775)
Equity dividends paid (198) (198)
----- -----
Net cash outflow before liquid
resources and financing (4,142) (2,973)
Management of liquid resources:
Cash drawn down under loan facility 4,000 4,000
----- -----
(Decrease)/increase in cash during
the year (142) 1,027
====== ======
Reconciliation of net cash flow to
movement in net debt:
(Decrease)/increase in cash as above (142) 1,027
Cash inflow from increase in bank loan (4,000) (4,000)
Exchange movements (136) (180)
----- -----
Movement in net debt (4,278) (3,153)
Net (debt)/funds at start of year (1,569) 1,584
----- -----
Net debt at end of year (5,847) (1,569)
======= =======
Approved by the Board of Directors on 24 October 2000
No dividend is proposed in respect of the year ended 31 August 2000 (year to
31 August 1999: 0.30c per US$0.10 Ordinary share).
Prior year comparatives have been re-stated to reflect the change in
accounting policy to charging 70% of management fee and finance costs to
capital reserves, formerly both the management fee and finance costs were
charged entirely to capital.
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