Semi-Annual Report (2202N)
August 30 2011 - 5:47AM
UK Regulatory
TIDMHYF
RNS Number : 2202N
Himalayan Fund N.V.
30 August 2011
http://www.himalayanfund.nl/annual-reports/
Directors' Report
The Fund
The Net Asset Value (NAV) per share of your Fund was USD 50.97 on June 30th 2011, 10.9% lower than the closing
NAV per share on
December 31st 2010. Over the same period, the CNX S&P Nifty Index, the Fund's benchmark, fell by 7.8% in U.S.
Dollar terms. Thus
your Fund under-performed its benchmark by 3.1% during a period of acute volatility in global markets. On
the first Execution Day of
the year, January 7th, the Transaction Price for the Fund's shares was USD 55.48 and on the last Execution
Day on June 24th, it was
USD 48.16, a fall of 13.2%, compared with a fall of 6.4% in the Fund's benchmark between the same two dates.
We have been
concerned about the relative performance of the Fund but are pleased to report that in the second quarter
it recovered, as the portfolio
generated outperformance of
1%.
The number of Ordinary Shares held by third parties at the start of this year was 392,187; the number declined
by small amounts
through the end of June, when it stood at 346,405. The net turnover in the Fund's Ordinary Shares in the first
half-year was 11.8%.
Again your board was concerned by the steady erosion of the number of shares outstanding by the need to re-purchase
small amounts
every week because of the potential impact on our total expense ratio. We are pleased to advise, therefore,
that the end of June
signalled a low -point: as a consequence of a new distribution agreement with BanqueMorval of Switzerland,
we have experienced
significant inflows in the current quarter.
The Market
The MSCI World Index gained 4% in the first half of 2011, with stand-out performance of 5.2% in the US and
10% in the Eurozone
offsetting a loss of 5.8% in natural-disaster hit Japan. The US markets were driven by sustained earnings
growth from major
corporations, especially those with substantial export and overseas businesses. These results overcame a strong
undercurrent of
concern about the fundamental strength of the US economy. Eurozone performance defied the gravity of its spiralling
debt crisis but by
the end of June this was still confined to the peripheral countries. The MSCI Emerging Markets Index lost
just 0.5% in the first half: a
number of markets showed strong returns but the major players, China and India, were in the red as persistent
inflation sustained
monetary tightening cycles of varying intensity. By the end of June, the Reserve bank of India had increased
policy rates nine times to
7.5% in an attempt to get ahead of inflationary expectations in the face of stubborn supply-side inflation.
As time passed, however, the
object of the exercise shifted to demand-management as the Central Bank struggled to forestall the spread
of inflationary pressures to
the demand side. Eventually, its hawkish determination has brought it to the point where it is willing to
sacrifice some degree of growth
to suppress the risks.
Inflation has been a recurring theme in India this past half-year and much of it could be said to be policy-driven
and hence not really
amenable to monetary action. The government has started to undertake reform of administered fuel prices, in
the first instance by
liberalizing petrol prices. This should lead to reduction of a major source of risk to the central fiscal
deficit, which in the fiscal year
ended March 31st 2011 (FY11) benefitted significantly from non-revenue items such as wireless spectrum sales
and disinvestment
proceeds. In order to meet its FY12 target of 4.7%, the government is going to need to get lucky with oil
prices or continue with fiscal
consolidation by way of further fuel-price reform. Meanwhile, its broad policy of spreading the benefits of
growth through central fiscal
stimulus such as the National Rural Employment Guarantee Scheme (NREGA) and rising Minimum Support Prices
(MSPs) for crops,
sustains aggregate consumer demand through boosting rural incomes. While boosting these programmes in the
Union Budget, the
government succeeded once again in pleasing the market by doing nothing
particularly bad.
This means that sustaining overall GDP growth remains a matter for the private sector in terms of generating
investment and consumer
demand. In FY11, overall GDP growth was 8.7% but it was slowing in the last two quarters, under two main
influences: uncertainty
about overall global economic recovery and tight fiscal liquidity which had slowed the execution of major
public sector investment
programmes. The first of these remains an issue as debt problems in the US and Eurozone appear to have deteriorated
in the second
half. The second has definitely eased and there has been a pick-up in major investment projects, especially
in highway development.
Acceleration in the execution of power projects is also evident, so that private investment may recover in
spite of high interest costs.
Recent data for industrial production suggest that this was happening in June but will need confirmation over
a couple more months at
least.
Financial statements
Himalayan Fund N.V.
Semi Annual Report 2011
Balance sheet
(before profit appropriation)
30-06-2011 31-12-2010
USD Notes USD
Investments
Securities 17.609.037 4 21.851.061
Other assets
Cash at banks 234.969 5 775.892
Current liabilities (due within one year)
Due to redemptions - 6,1 22.006
Other liabilities, accruals and deferred
income 191.354 6,2 160.086
Total current liabilities 191.354 182.092
Total of receivables and other assets
less current liabilities 62.518 593.800
Total assets less current
liabilities 17.671.555 22.444.861
-------------- ------------------
Shareholders' equity
Issued capital 19.252 7,1 19.490
Share premium 23.267.895 7,2 24.656.811
General reserve -3.214.556 7,3 -5.559.902
Undistributed result current
year -2.401.036 7,4 3.328.462
Total shareholders'equity 17.671.555 22.444.861
-------------- ------------------
Net Asset Value per share 50,97 57,19
Profit & Loss account
01-01-2011 01-01-2010
30-06-2011 30-06-2010
USD Notes USD
Income from investments
Dividends 44.165 8,1 114.903
Interest income - 8,2 65
Other income 8.648 8,3 4.579
52.813 119.547
Capital gains/losses
Unrealised price gains/losses on investments -3.951.737 4 1.621.483
Unrealised currency gains/losses on investments 29.147 4 313.794
Realised price gains/losses on investments 1.901.961 4 -991.322
Realised currency gains/losses on investments -40.505 4 -266.830
Other exchange differences -19.702 -507
-2.080.836 676.618
Expenses
Investment advisory fees 144.192 9,1 159.857
Other expenses 228.821 9,2 224.045
373.013 383.902
-------------- ------------------
Total investment result -2.401.036 412.263
-------------- ------------------
Total investment result per ordinary share -6,93 1,01
Statement of Cash Flows
01-01-2011 01-01-2010
30-06-2011 30-06-2010
USD notes USD
Cash flow from investing activities
Income from investments 52.813 8 119.547
Expenses -373.013 9 -383.902
-------------- ------------------
Result of
operations -320.200 -264.355
Purchases of investments -1.307.347 4 -1.272.355
Sales of investments 3.488.237 4 2.000.600
2.180.890 728.245
Change in short term receivables -18.903 -16.622
Change in current liabilities 9.258 6 47.379
-------------- ------------------
-9.645 30.757
-------------- ------------------
Cash flow from investing activities 1.851.045 494.647
Cash flow from financing activities
Received on shares issued 67.633 7 608.664
Paid on shares purchased -2.439.899 7 -709.496
-------------- ------------------
Cash flow from financing activities -2.372.266 -100.832
Other exchange differences -19.702 -507
-------------- ------------------
Change in cash and cash equivalents -540.923 393.308
Cash and cash equivalents as at 1 January 775.892 128.995
-------------- ------------------
Cash and cash equivalents as at 30 June 234.969 522.303
-------------- ------------------
Notes
1 General
Himalayan Fund N.V. ('the Fund') is an open-end investment company (in Dutch: beleggingsmaatschappij
met veranderlijk
kapitaal) incorporated under Dutch law and has its statutory seat in Amsterdam. The Fund is listed
both on NYSE Euronext
Amsterdam and on The London Stock Exchange.
This semi annual report is prepared in accordance with Part 9 Book 2 of the Dutch Civil Code and
the Act on the Financial
Supervision (AFS) ("Wet op het financieel toezicht"). Since December 1991 the Fund is licensed to
undertake investment
activities according to the Act on the Financial
Supervision.
2. Principles of valuation
2.1 Investments
The investments are valued based on the following principles:
- listed securities are valued at the most recent stockmarket price as at the end of the accounting
period which can be
considered fair value;
- non or low marketable securities are, according to the judgement of the Investment Advisor, valued
at the best effort
estimated price, taking into account the standards which the Investment Advisor thinks fit for the
valuation of such investments.
Expenses related to the purchase of investments are included in the cost
of investments.
Sales charges, if any, are deducted from gross proceeds and will be expressed in the capital gains/losses.
2.2 Foreign currency translation
Assets and liabilities in foreign currencies are translated into US dollars at the rate of exchange
as at the balance sheet date.
All exchange differences are taken to the profit and loss account. Income and expenses in foreign
currencies are translated
at the exchange rate as per transaction
date.
Rates of exchange as at 30 June 2011, equivalent of 1
US dollar:
----------------------------------------------------------------------------------- -------------- --------- ------------------
Srilanka
Euro 0,68973 Rupee 109,50002
Indian Rupee 44,70252 Bangladesh Taka 74,21999
---------------------------- ------------------------- ----------- ------------ ------------------ --------- ------------------
2.3 Other assets and liabilities
Other assets and liabilities are stated at nominal value. If required, provisions have been taken
for irrecoverable receivables.
2.4 Income recognition principles
The result is determined by deducting expenses from the proceeds of dividend, interest and other
income in the period under
review. The realized revaluations of investments are determined by deducting the purchase price from
the sale proceeds.
The unrealized revaluations of investments are determined by deducting the purchase price or the
balance sheet value
at the start of the period under review from the balance sheet value at the end of the period under
review.
Brokerage fees payable on the acquisition of investments, if any, are considered to be part of the
investments costs,
and as a result, are not taken to the profit and loss
account.
2.5 Cash flow statement
The Cash Flow statement has been prepared according to the indirect method.
3. Risk Management
Investing in emerging and developing markets carries risks that are greater than those associated
with investment in
securities in developed markets. In particular, prospective investors should consider the following:
3.1 Currency Fluctuations
The Fund invests primarily in securities denominated in local currencies whereas the Ordinary Shares
are quoted in US
dollars. The US dollar price at which the Ordinary Shares are valued is therefore subject to fluctuations
in the US dollar/ local
currency exchange rate.
3.2 Counterparty Risk
The Fund deals principally in listed stocks traded on the BSE and the
NSE in India.
All transactions are book-entry and settlement is fully automated. In the event of non-delivery by
either side, the
transaction fails. In this case recovery can be achieved by delivery against payment or the transaction
abandoned.
3.3 Concentration Risk
The investment restrictions for the Fund in section IX INVESTMENT POLICIES of the Prospectus, limit
the possibility
for concentration of risk by stock and sector. Investors should note that the portfolio will be
concentrated in the Indian
sub-continent.
3.4 Market
Volatility
Securities exchanges in emerging markets are smaller and subject to greater volatility than those
in developed markets.
The Indian market has in the past experienced significant volatility and there is no assurance that
such volatility will not
occur in the
future.
3.5 Market
Liquidity
A substantial proportion of market capitalization and trading value in emerging markets can be represented
by a relatively
small number of issuers. Also, there is a lower level of regulation and monitoring of the activities
of investors, brokers and
other market participants than in most developed markets. Disclosure requirements may be less stringent
and there may
be less public information available about corporate activity. As a result, liquidity may be impaired
at times of high volatility.
The Indian markets have withstood high volatility in the recent past and recovered momentum because
of excellent corporate
results. This has shown that the liquidity in the shares of the top companies is strong, as further
emphasized by demand for
those shares through Depository Receipts in overseas markets. Furthermore, standards of governance
and transparency are
improving dramatically under the impetus of the regulatory bodies. Other contiguous markets are not
necessarily the same
and the Fund only invests in them with
the utmost care.
3.6 Fund Liquidity
The Fund's rules allow weekly purchases and sales of Ordinary Shares but in order to allow orderly
management of the
portfolio in the interest of continuing shareholders, the value of purchases may be limited to 5%
of the net asset value of
the Fund on any one Execution
Day.
3.7 Political Economy
The Fund's portfolio may be adversely affected by changes in exchange rates and controls, interest
rates, government
policies, inflation, taxation, social and religious instability and regional geo-political
developments.
3.8 Legal and Regulatory Compliance
The Fund is responsible for ensuring that no action taken by it or by any contracted service provider
might cause a breach
of any legal or regulatory requirement. The Fund and all of its service providers maintain adequate
control procedures to
guard against any such occurrence and these procedures are subject to regular review. Should such
a breach occur
inadvertently, control procedures should detect it and institute corrective
action without delay.
3.9 Financial
Crisis
Almost uniquely amongst financial markets, the Indian financial sector was insulated against any
consequences of the
recent financial crisis by the tight control exercised by the RBI. Bank balance sheets were free
of toxic assets and capital
ratios were maintained. Ratios of non-performing assets remained within
historic norms.
3.10 Credit
risk
The principal credit risk is counterparty default (i.e., failure by the counterparty to perform as
specified in the contract) due to
financial impairment or for other reasons. Credit risk is generally higher when a nonexchange-traded
or foreign
exchange-traded financial instrument is involved. Credit risk is reduced by dealing with
reputable counterparties. The Fund
manages credit risk by monitoring its aggregate exposure
to counterparties.
Notes to the Balance sheet
30-06-2011 31-12-2010
4. Investments USD USD
4.1 Statement of changes in securities
Position as at 1 January 21.851.061 20.125.806
Purchases 1.307.347 2.665.932
Sales -3.488.237 -4.707.407
Unrealised price gains/losses on investments -3.951.737 3.488.913
Unrealised currency gains/losses on investments 29.147 740.121
Realised price gains/losses on investments 1.901.961 -134.222
Realised currency gains/losses on investments -40.505 -328.082
Position as at 30 June 17.609.037 21.851.061
---------------- --------------
Historical cost 8.792.774 9.112.208
The portfolio comprises of shares, mainly
listed.
The total unlisted shares held directly by the Fund amounted to USD 166,409 (31 December 2010 : USD 156,463).
The portfolio breakdown as at 30 June 2011 is specified on pages 18 to 19 of this report.
4.2 Transaction costs
The transaction costs for the purchase of investments are capitalized within the historical cost price and for sales the
transaction costs are discounted from the sales price. Transaction costs in 2011 are : USD 19,770 (2010: USD
33,426).
5. Cash at banks
This includes immediately due demand deposits at banks.
6. Current liabilities (due within one year)
6.1 Due to redemptions
These include the debts in respect of the redemptions of shares Himalayan still unsettled as at the balance
sheet date.
6.2 Other liabilities, accruals and deferred
income
Payable investment advisory fee 66.061 84.811
Payable administration fee 12.379 5.757
Payable auditors fee 20.333 36.499
Other expenses payable 92.581 33.019
---------------- --------------
191.354 160.086
---------------- --------------
7. Shareholders' equity
The authorised share capital of the Fund is EUR 60,000 (31 December 2010: EUR 60,000) and consists of:
- Ordinary shares of EUR 0.01 each 5.000.100
- Priority shares of EUR 0.20 each 49.995
30-06-2011 31-12-2010
7.1 Issued capital number USD USD
Ordinary shares:
Position as at 1 January 392.187 5.260 5.894
Sold 1.360 14 140
Purchased -47.142 -471 -327
Revaluation 219 -447
----------------------- ---------------- --------------
Position as at 30 June 346.405 5.022 5.260
----------------------- ---------------- --------------
Priority shares:
Position as at 1 January 49.995 14.230 14.230
Sold - - -
Revaluation - -
----------------------- ---------------- --------------
Position as at 30 June 49.995 14.230 14.230
----------------------- ---------------- --------------
Total issued capital 19.252 19.490
---------------- --------------
As at 30 June 2011 the issued and subscribed share capital amounts to: EUR EUR
Ordinary shares, par value EUR 0.01 (31 December 2010: EUR
0.01) 4.450.005 44.500 44.500
Priority shares, par value EUR 0.20 (31 December 2010: EUR
0.20) 49.995 9.999 9.999
54.499 54.499
---------------- --------------
The Fund became open-ended on 7 April 2000. As at 30 June 2011 a total of 4,103,600 Ordinary Shares have
been purchased, meaning that 346,405 Ordinary Shares are still outstanding as at 30 June 2011. Ordinary Shares
purchased by the Fund are directly charged against capital and share premium.
7.2 Share premium USD USD
Position as at 1 January 25.639.923 25.639.923
Received on shares sold 67.619 706.688
Paid on shares purchased -2.439.428 -1.690.247
Revaluation of outstanding capital -219 447
Position as at 30 June 23.267.895 24.656.811
---------------- --------------
30-06-2011 31-12-2010
USD USD
7.3 General reserve
Position as at 1 January -16.323.605 -16.323.605
Transferred from undistributed result 13.109.049 10.763.703
Position as at 30 June -3.214.556 -5.559.902
---------------- --------------
7.4 Undistributed result
Position as at 1 January 13.109.049 10.763.703
Transferred to/from general reserve -13.109.049 -10.763.703
Total investment result -2.401.036 3.328.462
Position as at 30 June -2.401.036 3.328.462
---------------- --------------
Three years Himalayan Fund N.V.
30-06-2011 31-12-2010 31-12-2009
Net Asset Value (USD x 1,000)
Net Asset Value according to balance
sheet 17.672 22.445 20.100
Less: value priority shares 14 14 14
----------------------- ---------------- --------------
17.658 22.431 20.086
----------------------- ---------------- --------------
Number of Ordinary Shares
outstanding 346.405 392.187 410.804
Per Ordinary Share
Net Asset Value
share (USD) 50,97 57,19 48,89
Notes to the Profit & Loss account
8. Income from investments
8.1 Dividends
This refers to net cash dividends including withholding tax. Stock dividends are considered to be cost free
shares.
Therefore stockdividends are not presented as income.
8.2 Interest income
Most of this amount was received on outstanding cash balances.
8.3 Other income
From March 6, 2009 this refers to the charges of 0.35% received on shares issued and repurchased.
These costs are to cover transaction costs in relation with the purchase and sale of Ordinary Shares and are
booked as an
income for the Fund.
01-01-2011 01-01-2010
9. Expenses 30-06-2011 30-06-2010
USD USD
9.1 Investment advisory fees
Advisory fee 134.498 152.953
Custody Fee and Charges 9.694 6.904
144.192 159.857
---------------- --------------
Expenses directly related to the management of investments, like custody fees and transfer charges as well as
other paying
agent fees, are deducted from the result. These expenses are included in other investment management fees with the exception
of the transfer charges. Transfer charges are accounted for in the investment revaluation
reserve.
9.2 Other expenses
Administration Fees and Charges 36.705 35.728
Company Secretarial and Domiciliation Fees 20.933 19.662
Bank Expenses 6.211 14.398
Regulatory Fees and Charges 13.729 8.080
Legal Expenses 5.149 7.500
Listing Expenses 38.329 10.000
Audit Fees 19.780 15.597
Fiscal Advisory Fees 1.762 9.660
Advertising and Promotion 17.162 28.507
Directors Fees 31.208 31.208
Board Expenses 29.891 40.041
Depreciation and Amortization - -
Miscellaneous 7.963 3.664
228.821 224.045
---------------- --------------
Expense ratio
The expense ratio (cost ratio) is calculated as follows: the total expenses of the Fund divided by the average NAV*.
The expense ratio of the Fund for the reporting period is equal to: 3.87 % (2010: 3.75 %).
Turnover ratio
The turnover ratio is calculated as follows: the total sum of purchases plus sales minus subscriptions minus
redemptions
divided by the average NAV *.
The turnover ratio of the Fund for the reporting period is equal to: 23.73 % (2010: 19.08 %).
* - The average Net Asset Value of the Company for reporting period is calculated as the sum of the Net Asset
Value as
per 31 December 2010, 31 March 2011 and 30 June 2011 in the proportion 0.5 : 1 : 0.5, divided by the weighted
number
of observations.
Comparison of real cost with cost according to Prospectus*
According to
Prospectus Actual costs
USD USD
Management fee (1) 134.498 134.498
Administration fee (2) 36.705 36.705
Secretarial and Domiciliation fees (3) 20.933 20.933
Costs for the Board (4) 100.000 61.098
*- As per the Prospectus of 7 June 2010.
1) The Investment Advisor receives an annual fee of 1.5 per cent (calculated on a daily basis) of the Net Asset Value of
the Fund.
2) Fastnet NL is paid a fixed fee of EUR 50,000 per year for administration
services.
3) Inviqta has been appointed to provide domicile and company secretarial services to the Fund for a fixed fee of
EUR 25,000 (exclusive VAT) per year.
4) The Prospectus states that the remuneration of the Directors is subject to a limit of USD 100,000 in aggregate per year.
In 2011 the remuneration of the Directors was USD 31,208 (inclusive VAT) in total so far. Directors fees per person are as
follows: Ian McEvatt*: USD 5,000 (2010: USD 10,000); Dwight Makins: USD 9,250 (2010: USD 18,500); Robert Meijer:
USD 11,008 (2010: USD 22,015); Karin van der Ploeg*: USD 5,950 (2010: USD 11,900). Board expenses (exclusive
remuneration of the Directors) amount to USD 29,891 in 2011.
* Ian McEvatt is also a director of the Investment Advisor of the Fund and Karin van der Ploeg is a partner of Inviqta. It has
been agreed that members of the Board who are also directors/partners of the service providers of the Fund receive a fixed
annual management fee of US$ 10,000.
Employees
The Fund has no employees.
Amsterdam, August 25, 2011
Board of Directors
Ian McEvatt, Chairman
Dwight Makins
Robert Meijer
Karin van der Ploeg
This information is provided by RNS
The company news service from the London Stock Exchange
END
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