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Name | Symbol | Market | Type |
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Genesis Maly.Pf | LSE:BB40 | London | Preference Share |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 32.50 | 0 | 01:00:00 |
TIDMBB40 GENESIS MALAYSIA MAJU FUND LIMITED STOCK EXCHANGE ANNOUNCEMENT ANNOUNCEMENT OF RESTRUCTURING OF THE COMPANY AND RESULTS FOR YEAR TO 31ST DECEMBER 2008 Reorganisation At its meeting in Kuala Lumpur the Board of Genesis Malaysia Maju Fund Ltd ("Fund") instructed Genesis Asset Managers, LLP ("Manager") to examine in detail the practicality of reorganising the Fund's structure. The purpose of this reorganisation is to create increased liquidity for shareholders. The Board stressed that this decision did not result from any failing by the Manager or poor investment performance. The current conditions in the market for specialised closed ended funds do not provide a sufficiently deep pool of potential investors to allow either a ready exit for existing shareholders or opportunities for investors wishing to increase their interest to acquire shares and so a reorganization of the Fund needs to be undertaken to provide liquidity. The Board wishes the Manager to examine in particular a proposal to wind up the existing Guernsey investment company and transfer the assets of eligible electing shareholders in Maju in specie into a newly formed open ended umbrella fund resident and listed in Dublin. Results for the year Chairman's Statement 2008 2007 US$ US$ Total net assets* 53,524,159 117,358,661 Net assets per Participating Share* 35.58 77.15 Total (deficit)/return per Participating Share (41.97) 24.70 *Published Net Asset Value Commenting on the results the Chairman has made the following statement: As a consequence of the reorganisation proposal (announced with this Preliminary Statement), the Directors will shortly be sending shareholders a circular describing in detail a proposal to offer shareholders the opportunity to convert their shares in the Fund into shares in an open-ended investment company registered and listed in Dublin carrying a broader investment mandate than the current fund by permitting investments in all of the ASEAN countries. Shareholders should therefore be aware that these financial statements have been prepared on the assumption that the proposal will be approved and so the "going concern" basis is not appropriate. For the purposes of these financial statements all performance measures are expressed using figures before charging the costs of winding up the Fund. In investment terms, it has been a very difficult year for your Fund, operating as it has within the context of rapidly declining stock markets reflecting a severe global economic downturn. In my statement accompanying the Fund's Interim Report six months ago, I noted that the first half of 2008 was an uncomfortable period for investors in Malaysian mid- and smaller capitalised companies. Unfortunately the remainder of the year proved to be even more difficult as the scale of the financial crisis became more apparent. Consequently the Fund's holdings suffered alongside other emerging markets and indeed world markets. During the year, the Fund's published net asset value per share (before winding up costs) fell from US$77.15 to US$35.58, representing a decline of 53.9%. The Kuala Lumpur Stock Exchange index declined by less, at 43.1%, reflecting the fact that larger capitalised stocks tend to hold up better than the smaller capitalised stocks in declining markets. The immediate economic outlook is of course rather negative: the IMF is forecasting overall global growth to fall to 0.5% in 2009, a significant downward revision from the 3.9% growth estimate for the period it made in the middle of 2008. As has been widely publicised, this would be the lowest growth rate since World War II. The world economy is expected to recover only gradually in 2010. With this economic background in mind, your board recognises that 2009 will be a challenging year. We do though believe in the long-term merits of investing in Malaysia and the ASEAN region and support the Manager's positive long-term view as articulated in the report in the following pages of this Report and Accounts. The Malaysian economy, and the companies operating within it, is in better shape than many of its peers. Corporate valuations appear as attractively low now as they have been for some years. Despite the dramatic market declines of 2008 (which have so far continued into 2009), the Directors are of the view that the ongoing structural changes taking place in Malaysia - when combined with the prudent stock selection approach of the Manager - should provide good long-term opportunities.. In accordance with recent past practice, the Directors do not recommend the payment of a dividend. There were also no changes in the composition of your board during the year. Gordon Young Chairman March 2009 Manager's Report Commenting on the results the Manager has made the following statement: It says a lot about the environment for emerging market equities that Malaysia put in one of the better performances in 2008, despite a 41.8% fall in the KLSE Index in US dollars. The Malaysian market seems to have suffered less than some from foreign equity withdrawal because foreign investors had a relatively low exposure to begin with. However smaller company equities performed worse than those of larger companies - in both Malaysia and elsewhere - and this held back the Fund's performance; the Fund's NAV fell 53.9% in US dollars, before winding up costs. Malaysia has one of the world's most open economies, with trade around 200% of GDP. Weak global demand has thus shown up very quickly in the trade data: exports fell nearly 15% year-on-year in December. While this will affect the outlook for employment, luckily it is not a disaster for the balance of payments or the currency because imports fell even more than exports, so the trade balance was stable. This import compression is likely to persist because electronic and electrical goods, which together constitute around half of Malaysia's total exports, have a very high import content. The issues facing the corporate sector are two-fold, and are exactly what companies everywhere are experiencing, that is, demand has shrunk and credit has dried up. Fortunately the local banks are among the most liquid in the world (loans to deposits around 75%) so a good business should still be able to find ringgit funding even if dollars are less forthcoming. It helps that the Malaysian banking system entered the credit squeeze from a strong position. Credit has been steadily shrinking as a proportion of GDP since 1998, a result of corporate sector deleveraging after the currency turmoil in 1997 and a reluctance to borrow much ever since. By and large the companies know what to do, having survived the slump of the late 1990s. Thus they are delaying expansion plans, cutting nonessential spending and letting go some contract labour. As a result, it is possible that some companies could even emerge from the downturn stronger than many of their international competitors, notably in the more specialised areas of construction and manufacturing and in banking. The very testing environment has brought down our expectations for earnings and cash flow generation for many of the Fund's holdings, and this inevitably reduces our estimates of what these businesses are worth. However in most cases share prices have more than reflected these reductions. The challenge is to look through the cycle to the eventual recovery and ensure the Fund is exposed to a good spread of companies that will benefit when the capital markets start to thaw. In trying to establish firm value in a volatile environment, it also pays to use a range of valuation techniques - for example book value can be a useful tool when earnings and cash flow are, for whatever reason, not representative of the company's long run potential. Domestic political upheaval took a temporary break in September with the Prime Minister's announcement that he will retire as UMNO President in March 2009. The leadership will fall to Deputy Prime Minister Najib, who seems fully aware that his administration's survival will depend on its performance. Najib has said it is time to adjust the long-standing policies of positive affirmation (put in place in 1971 by his father when he was Prime Minister), and that failure to do so will lose UMNO the next election. It seems Malaysia may be entering an interesting period of political reform, and if successfully executed it might help to open the country further in terms of human capital and could stem the brain drain among non-Malays. In the near term however, the incoming Najib administration is likely to focus on the economy. Growth is likely to be in the very low single digits at best in 2009 and it speaks volumes about the gravity of the situation that the government is already working on a second stimulus package just months after delivering its first one. It is unclear how effective the multiplier of this fiscal spending can be, given the low level of consumer confidence and relatively high level of personal debt, but at least a coordinated plan should provide a degree of support that is currently missing. Longer term the damage is not expected to be crippling. Malaysia has a broad and competitive industrial base and a stable macro policy, which give some protection from extreme volatility. In addition the incoming administration appears to have an eye on international competitiveness and attractiveness to foreign direct investment. Malaysia's export orientation and economic diversity are likely to perk up with any international recovery and it is a fair bet that its entrepreneurial and flexible corporate sector will not stay in the doldrums for long. Genesis Asset Managers, LLP March 2009 Principal Risks and Uncertainties The principal risks and uncertainties faced by the Company fall into five broad categories: investment and strategy; accounting, legal and regulatory; corporate governance and shareholder relations; operational and financial. Information on each of these areas is given in the Directors Report within the Annual Report and Audited Financial Statements for the year ended 31st December, 2008. Related Party Transactions During the financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period. Directors' Responsibilities The Board of Directors confirms that, to the best of its knowledge that: (i)the financial statements have been prepared in accordance with applicable International Financial Reporting Standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and (ii)the Annual Report, to be published shortly, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face. For and on behalf of the Board Gordon Young Chairman 20th March 2009 GENESIS MALAYSIA MAJU FUND LIMITED BALANCE SHEET as at 31st December, 2008 2008 2007 $ $ ASSETS Financial assets at fair value through profit or loss53,242,341116,882,779 Amounts due from brokers 38,403 1,366,338 Trade and other receivables 124,973 135,156 Cash and cash equivalents 965,441 572,793 TOTAL ASSETS 54,371,158118,957,066 LIABILITIES Amounts due to brokers - 1,235,665 Bank overdraft - 21,140 Trade and other payables 846,999 341,600 TOTAL LIABILITIES 846,999 1,598,405 TOTAL NET ASSETS53,524,159117,358,661 EQUITY Called-up share capital 26,000 26,000 Share premium 13,736,332 13,736,332 Retained earnings39,761,827103,596,329 TOTAL EQUITY 53,524,159117,358,661 EQUITY PER PARTICIPATING PREFERENCE SHARE $35.18 $77.15 INCOME STATEMENT for the year ended 31st December, 2008 2008 2007 $ $ INCOME Net (losses)/gains from designated financial assets at fair value through profit or loss (63,611,156) 37,706,937 Net exchange losses (141,990) (36,616) Dividend income 3,016,693 2,759,070 Deposit interest 5,357 61,824 TOTAL NET (LOSS)/INCOME (60,731,096) 40,491,215 TOTAL OPERATING EXPENSES (2,434,711) (2,262,798) OPERATING (LOSS)/PROFIT (63,165,807) 38,228,417 FINANCE COSTS Bank charges (572) (183) Interest expense (6,009) (7,291) Overdraft expenses (5,000) - TOTAL FINANCE COSTS (11,581) (7,474) (LOSS)/PROFIT FOR THE YEAR BEFORE TAX (63,177,388) 38,220,943 Taxation (657,114) (654,667) (LOSS)/PROFIT FOR THE YEAR (63,834,502) 37,566,276 (DEFICIT)/RETURN PER PARTICIPATING PREFERENCE SHARE * $(41.968) $24.698 * Calculated on an average number of 1,521,022 Participating Preference Shares outstanding(2007: 1,521,022) STATEMENT OF CHANGES IN EQUITY For the year ended 31st December, 2008 31st December, 2008 Share CapitalShare PremiumRetained Earnings Total $ $ $ $ Net assets at the beginning of the year 26,000 13,736,332 103,596,329 117,358,661 Loss for the year - - (63,834,502) (63,834,502) Net assets at the end of the year 26,000 13,736,332 39,761,827 53,524,159 31st December, 2007 Share CapitalShare PremiumRetained Earnings Total $ $ $ $ Net assets at the beginning of the year 26,000 13,736,332 66,030,053 79,792,385 Profit for the year - - 37,566,276 37,566,276 Net assets at the end of the year 26,000 13,736,332 103,596,329 117,358,661 STATEMENT OF CASH FLOWS for the year ended 31st December, 2008 2008 2007 $ $ OPERATING ACTIVITIES Investment income received 3,018,840 2,099,685 Taxation paid (657,114) (654,667) Interest received 13,845 65,015 Interest paid (6,232) (7,068) Operating expenses paid (1,935,113) (1,741,801) Purchase of investments (16,226,692) (24,776,236) Proceeds from sale of investments 16,348,244 24,845,311 Exchange losses (141,990) (36,616) NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 413,788 (206,377) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 413,788 (206,377) Cash and cash equivalents at the beginning of the year 551,653 758,030 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 965,441 551,653 RECONCILIATION OF PUBLISHED NET ASSET VALUE ATTRIBUTABLE TO EQUITY SHAREHOLDERS TO THE IFRS EQUIVALENT 31st December, 2008Per Participating Total Preference Share $ $ Published Net Asset Value, Participating Preference Shares 54,113,369 35.58 Accrual for winding up costs (600,000) (0.40) Net Asset Value under IFRS, 53,513,369 35.18 Participating Preference Shares Equity share capital 10,790 0.01 Net Asset Value under IFRS 53,524,159 35.19 31st December, 2007Per Participating Total Preference Share $ $ Published Net Asset Value, Participating Preference Shares 117,347,871 77.15 Equity share capital 10,790 0.01 Net Asset Value under IFRS 117,358,661 77.16 Notes 1. Accounting policies The Fund financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). 2. Status of preliminary announcement The financial information set out in this preliminary announcement does not constitute the Fund's statutory financial statements for the years ended 31st December 2008 or 2007. The financial information for the year ended 31st December 2008 is derived from the statutory financial statements for that year. Given the pending wind up of the Fund following the year end (as discussed above), the going concern basis of accounting is no longer appropriate. Adjustments have been made in the statutory financial statements to reduce assets to their realisable values, to provide for liabilities arising from the decision, and to reclassify fixed assets and long-term liabilities as current assets and liabilities. The auditors will report on those financial statements; their opinion is not expected to be qualified in this respect, but will emphasise these issues. The statutory financial statements for the year ended 31st December 2008 will be finalised on the basis of the information presented by the Directors in this preliminary announcement following the approval of the financial statements by the Board of Directors. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not in itself contain sufficient information to comply with IFRS. The Fund expects to publish full financial statements that comply with IFRS following the approval of the financial statements by the Board of Directors. For Genesis Malaysia Maju Fund Limited HSBC Securities Services (Guernsey) Limited, Secretary 20th March, 2009
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