Share Name Share Symbol Market Type Share ISIN Share Description
Himalayan Fd LSE:HYF London Ordinary Share NL0000464154 ORD EUR0.01
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +$0.00 +0.00% $35.50 $0.00 $0.00 - - - 0 05:30:43
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Nonequity Investment Instruments 0.0 2.7 20.0 177.4 14.32

Himalayan Fund N.V. Annual Report

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Himalayan Fund N.V.

02 May 2017

HIMALAYAN FUND N.V.

Extract of the Annual Report 2016

The complete version may be found on

http://www.himalayanfund.nl/annual-reports/

Chairman's Letter 2016

Dear Shareholders,

Two major geo-political surprises framed the performance of global equity markets in 2016. In June, British voters voted to leave the EU, wrong-footing professional investors and throwing markets into confusion. Then, in November, US voters decided they wanted a political outsider intent on disrupting the Washington status quo as President. This unleashed a surge in the value of the US Dollar, as well as US equity markets as investors bought into the idea of "Trump reflation" turbo charging US growth. These events provided the background for the MSCI All Countries World Index to add 5.3% for the year. The US contributed 9.2%, while Europe limited the Global advance by losing 3.4%. The Far East Index barely moved while Asian Emerging markets added 3.8%. Global Emerging markets gained 8.6% for the year, as investors tentatively recovered their risk appetites late in the year.

In India, following the previous year's outperformance, the Net Asset Value per share of your Fund fell by

$1.98 from $50.64 to $48.66 in 2016, a decrease of 3.9%. Our benchmark, the Nifty 50 Index in USD gained 0.6%, including a

2.6% depreciation of the Rupee against the US Dollar. I regret therefore to have to report

underperformance of the Fund by 4.5 percentage points relative to benchmark for the year.

Indian equity performance disappointed for the second year in succession in 2016 against a background of major geopolitical shocks, significant domestic reforms and the effects of global liquidity flows. The year opened with widespread concern about a hard landing in China and equity markets broadly in retreat. In the US, the Fed maintained a policy of conditioning markets to the prospect of removing extreme monetary stimulus with a progressive series of

rate increases. Meanwhile, commodity prices remained benign, moderating inflationary pressures and global economic growth improved slowly.

Donald J. Trump's unexpected victory in the US Presidential election brought uncertainty about economic policy but his "America first" rhetoric prompted a surge of optimism about everything American. The Dollar drew liquidity from all other currencies and the funds bought were poured into US equities. Again, we saw money being drained from emerging markets, as well as developed markets as investor enthusiasm drove the Dollar and US equities to record valuation levels by year-end.

Meanwhile, the domestic demand driven Indian economy enjoyed strong support from consumption and government expenditure. This supported GDP growth in the 7% plus range and enabled Indian equities to move steadily upwards through the middle two quarters. On the political front, the long-awaited tax reform brought by the adoption of nationwide GST finally got political approval. To some surprise, the incumbent governor of the Reserve Bank of India declined another term and left in September. Investors took the appointment of his successor to manage a reformed monetary policy framework which had been adopted by agreement with the government, as a positive. By this time, Indian equity markets had marked six months of steady upward progress and were ahead by nearly eight percent.

The year had not seen the last of turmoil though: the Indian government had one more reform move up its sleeve. Coinciding with Election Day in the US, the government announced the withdrawal of the 500 and 1,000 Rupee notes with a short timeframe for people to cash them in. These notes represented some 86% of the Rupee notes in circulation. The primary motivation was to curtail the black economy of which the cancelled notes were the mainstay. Also, the government wanted to boost the organised economy and non-cash transactions as well as "financialize" savings. Furthermore, Mr. Modi was determined to make a strike against corruption and money laundering: the cancelled notes were commonly used to buy votes in election campaigns. A new design of 5 00 Rupee note has been introduced as well as a new denomination of 2,000 Rupee note. Demonetization, as it was labelled, caused sharp revisions of growth expectations and uncertainty about companies' earnings prospects. GDP growth forecasts were cut to the low 6% range.

The effect of liquidity flows in 2016 is worthy of comment in an Indian context. Foreign investors were net sellers of

$3.2bn of Indian investments during the year: Early concerns about the Chinese economy drained equity markets of liquidity and brought a bear market in US equities in February. Emerging markets generally suffered liquidity outflows and India suffered a sharp sell-off. Then risk appetite returned, driving market momentum upwards towards mid-year.

The Brexit vote in the UK brought another wave of risk aversion and flight to safe haven investments. This time, Indian markets held their nerves and domestic appetite started to mop up foreign selling. Through the summer and into autumn, a favourable monsoon supported consumer demand and the enactment of GST legislation boosted investor sentiment. By autumn, Indian equities were nearly eight percent ahead for the year. The great liquidity drain caused by the US election brought heavy selling in India which was accentuated by demonetization. Share buying "on the dips" by domestic mutual funds provided a floor to some extent but the weight of selling in cash-orientated stocks brought a sharp retreat overall. It now appears that the sell-off was exaggerated and the evolution of a strong domestic source of liquidity in the equity markets is a significant development for the future.

Throughout 2016, we still held overweight positions in the Healthcare and Consumer Goods sectors. In Healthcare, we

took profits in Lupin and Torrent Pharma and diversified our exposure to the sector by adding Aurobindo Pharma late in the year.

Overall, we cut our exposure to the sector as it failed to meet our expectations. In Consumer Goods, we maintained our exposure at 22.8% of the portfolio but Agro Tech Foods, in particular, suffered in the aftermath of demonetization, losing 18% for the year. We reduced our Financial Sector exposure to just two holdings as asset

quality issues continue to dog the sector. We continue to steer clear of three sectors: Telecoms, where consolidation may prompt us

to look again this year, Metals and Mining, where we do not yet see a compelling reason to invest and

Transport, which may also deserve another look this year.

Some of our non-index stocks made the biggest contributions to returns in 2016. Indraprashtha Gas returned 70.2% and Heidelberg Cement 57.8%. Supreme Industries returned 30.6%, Shemaroo Entertainment 28.4% and VIP Industries 15.1%. Our best-performing index stock was HDFC Bank, which returned 14.7% for the year. We had an interest in twenty five stocks in total during the year, of which twelve generated positive returns and thirteen negative. On average, the portfolio held about twenty-one positions.

We continue to pursue our long-term strategic objective of generating outperformance by selecting stocks with visible earnings growth potential over the medium term, while demonstrating high governance standards. By year-end we had reduced our most concentrated positions to disperse risk more widely.

At the time of writing, investors may have decided that the Dollar and US equities have become severely overvalued and Emerging Markets have started to draw attention again. India has a number of reasons to deserve more than its fair share of liquidity. First, the government has stabilized its reputation with a sustained commitment to fiscal consolidation. Second, it has burnished its reputation for reform with the introduction of nationwide GST as well as demonetization, which is showing signs of achieving the objective of increasing the size of the organized economy. Third, competition surrounding the introduction of 4G internet services looks like accelerating the spread of high-speed internet services; there are more than one billion mobile connections in India. Fourth, the take- up of biometric ID cards to almost all adult Indians and the linking of hundreds of millions of accounts provide an efficient basis for the rollout of social services and underpin consumer demand. Fifth, the boost to the organised economy from demonetization will reinforce the financialization of savings and underpin equity markets with sustained growth in domestic liquidity. We

believe that against such a background the return prospects for Indian equities are excellent.

Once again, I thank our long-standing shareholders for their continued commitment and our friends and associates at Indasia Fund Advisors in Mumbai, whose support has again been invaluable. We continue to look for new promoters for the Fund and at the time of writing have discussions under way with a number of parties.

Ian McEvatt 11 April 2017

Directors' Report 2016

The Fund

In the Financial Year ended December 31st 2016, the Net Asset Value (NAV) per share of the Fund fell from $50.64 to

$48.66, a difference of -3.9%. The first Execution Day on NYSE Euronext Amsterdam in 2016 was January 4th, when the Transaction Price for the Fund's Ordinary Shares was $50.21; the last Execution Day was December 30th, when the transaction Price was $48.49. The difference of $1.72 represented a decline of 3.4%. Between the same two dates, the Nifty 50USD Index rose from 4062 to 4174, a difference of 2.8%. Thus the Transaction Price underperformed the Fund's performance benchmark by 6.2% in the holding period in question.

At the start of 2016, there were 207,748 Ordinary Shares of the Fund in the hands of shareholders. By the end of the year, the number had fallen to 162,323, a drop of 21.9%. In the face of volatile liquidity flows and performance in the Indian markets we experienced a steady flow of small redemptions through the year.

The Portfolio

We started the year with twenty-four holdings in the portfolio; the top ten holdings represented 68.3% of the portfolio and 49% of the total value was invested in stocks which are components of the Nifty Index. The largest sectoral concentrations were Financials, with 26.7% of the portfolio, Consumer Goods, with 20.9%, Healthcare with 14.7% and IT with 13.9%. We had no exposure to Metals and Mining, Telecom or Transportation stocks.

Portfolio turnover during the year was 18.2% as we held a total of 25 stocks for some period during the year and ended with 21 holdings. At year-end, our sectoral distribution was dominated by the same sectors, though the weightings reflected evolving strategy and the degree of relative performance. Consumer Goods comprised 22.8% of the portfolio, Financials 14.1%, IT 13.1% and Healthcare 11.9%. Our Auto Sector exposure appreciated to 6.4% and the Construction Sector to 10.1%. We built exposure to the Media sector with two holdings representing 4.5% of the portfolio.

At year-end, the top four holdings had an aggregate weight of 29.2% the largest holding being Pidilite Industries at 8.8%. There were 21 holdings; the top ten represented 59.8% of the portfolio and 37.6% of the portfolio comprised stocks which were components of the benchmark index.

The percentages were calculated based on the total Net Asset Value of the fund.

Administration

The legal structure of the Fund did not change in 2016. The Board is still in direct control of investment management through the Investment Committee, which is convened by the Chairman, who also acts as record-keeper. CACEIS Bank, Netherlands Branch continues as the Administrator and AIFMD Depository of the Fund and calculates the Net Asset Value on a weekly basis. Citiban k Mumbai is the local Custodian of the Fund. During the year under review and so far as The Board is aware, the Fund has effectively operated in conformity with the Administrative Organization and Internal Control procedures.

In 2016, The Board held four formal Board Meetings and conducted one Annual General Meeting.

The Investment Committee continued to receive research services from the Chairman of the Fund and from Indasia Fund Advisers Pte. Limited, of Mumbai. The Board is satisfied that it has the substance and procedures to carry out these responsibilities in a suitable manner and that the Fund's portfolio is consistent with the long-term investment objective.

The Board reviews the conduct of the administration of the Fund by the Administrator at regular management meetings. The Directors believe that the Administrator is capable of exercising the appropriate level of control over the operations of the Fund and has done so during the year under review.

Investment in Emerging Markets was subject to severe liquidity swings in 2016 and India suffered net outflows of foreign portfolio investment amounting to over $3 billions by comparison to inflows of more than $10bn the previous year. As a result, attempts at raising new money for the Fund were not successful.

The Directors continue to manage expenditure tightly though further significant cost reduction is difficult. The TER increased in 2016, substantially due to reduction in the value of total assets, the denominator in the calculation and in spite of tight expense control. We are actively working to generate new inflows to the Fund and believe that renewed prospects for attractive returns from investing in India will help with the effort. Any success in doing so will lead to a steady reduction in the TER.

Compliance

In preparation for each quarterly Board meeting, the Fund's Reporting Entity (Inviqta) prepared a checklist of compliance with corporate governance policy for the Oversight Entity (Mr. Dwight Makins) and the Board which was discussed during each Board meeting. There have been no breaches of the corporate governance policy during the year 2016.

The Fund is a long only equity fund and as such does not use leverage or derivatives in its portfolio. Thus the portfolio is exposed fully to the market price movements in its holdings of Indian stocks. There were no holdings of debt instruments in the portfolio, so there is no exposure to credit risk. The Fund does not engage in securities' lending and has confirmed with its custodian that its stocks have not been used for securities' lending. As a matter of policy, the Fund does not hedge currency exposure in the portfolio. In 2016, the Rupee depreciated by 2.6% against the US dollar and this affected the portfolio valuation. This depreciation happened in spite of favourable data on GDP growth and inflation as well as a clear government commitment to fiscal consolidation and government reform. The principal negative influences were volatile foreign portfolio investment flows arising from external factors as well as the impact of demonetization towards year-end. There were no instances during the year when market liquidity suffered disruptive events which might have prevented orderly execution of orders.

The Investment Committee also monitors the performance of market counterparties, notable stock brokers and custodians. We monitor the performance of brokers on a regular basis, taking account of execution, price, research and sales support. Transactions are allocated equally between brokers, though volumes can vary depending on specialist skills demonstrated, such as execution in particular market segments or sectors. We experienced no problems due to market disruption of execution failures during 2016.

Payment of commission rebates is not a normal practice in Indian markets and the Fund does not maintain soft-dollar arrangements, nor has it any intention of doing so. We confirm for the record, that our Ordinary Shares are not "rebate shares" and that no rebates are paid to intermediaries involved in their sale or promotion.

We continue to receive excellent service from our local market custodian and had no operational problems or failures in reporting during the year.

Risk management

Board Member Mr. Robert Meijer is responsible for oversight of risk management and reports accordingly to the Board. The key risk management guidelines concern concentration in the portfolio and dispersion of risk. We monitor the aggregate value of the top four holdings against a guideline of 40%. We further observe a 10% limit on the value of any stock holding. If the value of a hol ding exceeds this limit due to appreciation, the holding is reviewed regularly by the Investment Committee and adjusted where appropriate. Finally, in order to ensure our stock holdings can contribute to performance, we generally apply a minimum target weight of 2.5% although for tactical reasons an initial purchase may be smaller.

During the year, the upper concentration limits have been exceeded due to market appreciation; the positions concerned have been

monitored by the Investment Committee and appropriate action taken when necessary.

In terms of risk analysis, the Board monitors the Synthetic Risk and Reward Indicator (SRRI) prescribed in Article 8 and Annex I of the KII implementing Regulation on a monthly basis. According to the SRRI calculation over a five-year timespan, your Fund is in category 5 for risk evaluation purposes and this is reflected in the KID statement on the Fund's

website. This risk rating is due to a sustained period of stable returns over the timespan of the analysis. This is not typical for an

emerging markets fund and the Directors feel the indicator does not adequately reflect the risk of higher

levels of return fluctuation than in developed markets. There are additional risks involved in emerging markets investing,

including exchange rate risk, market risk arising from liquidity flows, operational risk from weaknesses in local systems and process failure and focused strategy risk where concentrated investment strategy may lose the

benefits of   diversification. 

The following quantitative risk data cover sixty four valuation periods which ended on an NAV calculation date during 2016. The mean return for the portfolio over the sixty four periods was -0.03% per period; the comparable figure for the benchmark was 0.04%, reflecting mean portfolio underperformance of 7 basis points per period. The standard deviation of returns was 2.4 for the portfolio and 2.4 for the benchmark, showing similar dispersion of returns around the mean for the portfolio as for the benchmark.

The highest loss in any period was 7.1% for the portfolio and 8.4% for the benchmark and during the year, the portfolio had 35 out of sixty four periods of positive return by comparison with 31 for the benchmark.

Relative to the benchmark, the portfolio had a Tracking Error of 1.1 and an Information Ratio of -2 for the year. These two ratios

demonstrate that the risk and portfolio management decisions taken during the year were inconsistent in

adding value in portfolio returns relative to the benchmark. This mainly reflects the fact that some of our holdings were perceived to be negatively affected by the impact of demonetization late in the year.

The Outlook

The Directors would like to thank our shareholders for their continuing support of the Fund. Indian markets have started 2017 very strongly as it appears that the negative effects of demonetization had been exaggerated. At the time of writing, sentiment in India has improved markedly with sustained improvement in foreign portfolio investment flows. The Indian economy remains largely domestic demand driven and thus significantly insulated against global economic surprises. Government reform efforts have enjoyed considerable success in 2016. The implementation of GST in July this year, though fraught with administrative risks, should eventually boost economic efficiency and, eventually GDP. We await initial monsoon forecasts as an indicator of prospects for aggregate demand growth but at the moment, it looks like India will lead global growth this year. Fund policy is to invest in companies from a broad market universe selected for visible earnings growth potential and high governance standards The Directors believe that Fund's portfolio is well positioned to benefit from India's world leading growth prospects and favourable domestic and foreign liquidity support for Indian equities.

Amsterdam, 25 April 2017

Board of Directors

Ian McEvatt, Chairman

Dwight Makins

Robert Meijer

Karin van der Ploeg

 
   Financial statements 
 
     Himalayan Fund N.V. 
 
     Annual Report 2016 
 
 
   Balance sheet 
   (before profit appropriation) 
 
                                                31-12-2016                     31-12-2015 
                                                       USD            Notes           USD 
 
     Investments 
   Securities                                    7,298,399             4.1     10,108,751 
 
     Other assets 
   Cash at banks                                   670,109         5              465,306 
 
     Receivables 
   Receivable on security transactions                   -             6.1         94,841 
   Other receivables                                     -             6.2              - 
 
                                                         -                         94,841 
 
     Current liabilities (due within one 
     year) 
   Payable on security transactions                      -             7.1         77,498 
   Due to redemptions                               12,080             7.2              - 
   Other liabilities, accruals and deferred 
    income                                          44,160             7.3         56,570 
 
     Total current liabilities                      56,240                        134,068 
 
     Total of receivables and other assets 
   less current liabilities                        613,869                        426,079 
   Total assets less current liabilities         7,912,268                     10,534,830 
                                              ------------                   ------------ 
 
 
 
 
     Shareholders' equity 
   Issued capital                                   17,171             8.1         17,752 
   Share premium                                16,261,438             8.2     18,504,968 
   General reserve                              -7,987,889             8.3     -7,942,782 
   Undistributed result current year              -378,452             8.4        -45,108 
   Total shareholders'equity                     7,912,268                     10,534,830 
                                              ------------                   ------------ 
 
 
 
     Net Asset Value per share                       48.66                          50.64 
 
 
   Profit & Loss account 
 
                                               01-01-2016           01-01-2015 
                                               31-12-2016           31-12-2015 
                                                      USD  Notes           USD 
 
     Income from investments 
   Dividends                                       91,814    9.1        99,956 
   Interest income                                      -    9.2            40 
   Other income                                     7,410    9.3           483 
 
                                                   99,224              100,479 
 
     Capital gains/losses 
   Unrealised gains on investments                545,633    4         275,208 
   Unrealised losses on investments            -1,690,172    4      -2,224,393 
   Realised price gains on investments          1,629,156    4       2,843,600 
   Realised price losses on investments          -126,585    4         -74,221 
   Realised currency gains on investments               -    4               - 
   Realised currency losses on investments       -365,252    4        -438,088 
   Other exchange differences                     -11,554              -36,614 
 
                                                  -18,774              345,492 
 
     Expenses 
   Investment research fees                       165,145   10.1       191,179 
   Other expenses                                 293,757   10.2       299,900 
 
                                                  458,902              491,079 
   Total investment result                       -378,452              -45,108 
                                             ------------         ------------ 
 
 
 
     Total investment result per ordinary 
     share                                          -2.33                -0.22 
 
 
   Statement of Cash Flows 
 
                                             01-01-2016                     01-01-2015 
                                             31-12-2016                     31-12-2015 
                                                    USD            notes           USD 
 
     Cash flow from investing activities 
   Income from investments                       99,224         9              100,479 
   Expenses                                    -458,902             10        -491,079 
 
     Result of operations                      -359,678                       -390,600 
 
     Purchases of investments                  -537,921          4          -2,827,529 
   Sales of investments                       3,341,053         4            5,008,125 
 
                                              2,803,132                      2,180,596 
 
     Change in short term receivables            94,841          6             -89,897 
   Change in current liabilities                -77,827         7               45,426 
 
                                                 17,014                        -44,471 
 
     Cash flow from investing activities      2,460,468                      1,745,525 
 
     Cash flow from financing activities 
   Received on shares issued                      3,629         8              236,378 
   Paid on shares purchased                  -2,247,740         8           -1,680,099 
 
     Cash flow from financing activities     -2,244,111                     -1,443,721 
 
     Other exchange differences                 -11,554                        -36,614 
 
     Change in cash and cash equivalents        204,803                        265,190 
 
     Cash and cash equivalents as at 1 
     January                                    465,306                        200,116 
                                           ------------                   ------------ 
 
     Cash and cash equivalents as at 31 
     December                                   670,109                        465,306 
                                           ------------                   ------------ 
 
 
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 annual report is prepared in accordance with Part 
  9 of 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 31 December 2016, equivalent of 
 1 US dollar: 
---------------------------------------------------------------------------------- 
Euro                        0.94809                  Srilanka Rupee      149.80005 
Indian Rupee               67.87002                  Bangladesh Taka      78.60005 
------------------------  ---------  ----------------------------------  --------- 
 
  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 
                                                              31-12-2016   31-12-2015 
   4. Investments                                                    USD          USD 
   4.1 Statement of changes in securities 
   Position as at 1 January                                   10,108,751   11,907,241 
   Purchases                                                     537,921    2,827,529 
   Sales                                                      -3,341,053   -5,008,125 
   Unrealised gains on investments                               545,633      275,208 
   Unrealised losses on investments                           -1,690,172   -2,224,393 
   Realised price gains on investments                         1,629,156    2,843,600 
   Realised price losses on investments                         -126,585      -74,221 
   Realised currency gains on investments                              -            - 
   Realised currency losses on investments                      -365,252     -438,088 
   Position as at 31 December                                  7,298,399   10,108,751 
                                                             -----------  ----------- 
 
     Historical cost                                           4,854,850    6,520,663 
 
     The portfolio comprises of shares, mainly 
     listed. 
   No unlisted shares were held directly by the Fund at the 
    year end of 2016 (2015: USD 123,163). 
   The portfolio breakdown as at 31 December 2016 is specified 
    on page 22 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 2016 are USD 11,998 (2015: USD 26,103). 
 
     5. Cash at banks 
   This includes immediately due demand deposits 
    at banks. 
 
     6. Receivables 
   6.1 Receivable on security transactions 
   These include transactions still unsettled 
    as at the balance sheet date. 
 
     6.2 Other receivables 
   These include other transactions still unsettled as at 
    the balance sheet date. 
 
     7. Current liabilities (due within one year) 
   7.1 Payable on security transactions 
   These include transactions still unsettled 
    as at the balance sheet date. 
 
     7.2 Due to redemptions 
   These include the debts in respect of the redemptions of 
    shares Himalayan still unsettled as at the balance sheet 
    date. 
 
     7.3 Other liabilities, accruals and deferred 
     income 
   Payable investment research fee                                12,246       12,511 
   Payable administration fee                                      3,931        4,363 
   Payable auditors fee                                           15,707       19,954 
   Other expenses payable                                         12,276       19,742 
                                                                  44,160       56,570 
                                                             -----------  ----------- 
   8. Shareholders' equity 
   The authorised share capital of the Fund is EUR 60,000 
    (2015: 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 
                                                              31-12-2016   31-12-2015 
   8.1 Issued capital                                number          USD          USD 
   Ordinary shares: 
   Position as at 1 January                         207,748        3,522        4,258 
   Sold                                                  70            1           44 
   Purchased                                        -45,495         -455         -321 
   Revaluation                                                      -127         -459 
 
     Position as at 31 December                     162,323        2,941        3,522 
                                         ------------------  -----------  ----------- 
 
     Priority shares: 
   Position as at 1 January                          49,995       14,230       14,230 
   Sold                                                   -            -            - 
   Revaluation                                                         -            - 
 
     Position as at 31 December                      49,995       14,230       14,230 
                                         ------------------  -----------  ----------- 
 
     Total issued capital                                         17,171       17,752 
                                                             -----------  ----------- 
 
 
 
     As at 31 December 2016 the issued and subscribed                EUR          EUR 
     share capital amounts to: 
   (Ordinary shares, par value 
    EUR 0.01 (2015: EUR 0.01)                     4,450,005       44,500       44,500 
   (Priority shares, par value 
    EUR 0.20 (2015: EUR 0.20)                        49,995        9,999        9,999 
                                                                  54,499       54,499 
                                                             -----------  ----------- 
 
     The Fund became open-ended on 7 April 2000. As at 31 December 
     2016 a total of 4,287,682 Ordinary Shares have been 
   purchased, meaning that 162,323 Ordinary Shares are still 
    outstanding as at 31 December 2016. Ordinary Shares 
   purchased by the Fund are directly charged against capital 
    and share premium. 
 
     8.2 Share premium                                               USD          USD 
   Position as at 1 January                                   18,504,968   19,947,953 
   Received on shares sold                                         3,628      236,334 
   Paid on shares purchased                                   -2,247,285   -1,679,778 
   Revaluation of outstanding 
    capital                                                          127          459 
   Position as at 31 December                                 16,261,438   18,504,968 
                                                             -----------  ----------- 
 
 
                                                                     31-12-2016   31-12-2015 
                                                                            USD          USD 
   8.3 General reserve 
   Position as at 1 January                                          -7,942,782  -11,914,402 
   Transferred to undistributed result                               -45,107       3,971,620 
   Position as at 31 December                                        -7,987,889   -7,942,782 
                                                              -----------------  ----------- 
 
 
 
     8.4 Undistributed result 
   Position as at 1 January                                             -45,107    3,971,620 
   Transferred from general reserve                                      45,107   -3,971,620 
   Total investment result                                           -378,452        -45,108 
   Position as at 31 December                                          -378,452      -45,108 
                                                              -----------------  ----------- 
 
     Three years Himalayan Fund N.V. 
                                                  31-12-2016         31-12-2015   31-12-2014 
   Net Asset Value (USD x 1,000) 
   Net Asset Value according to balance 
   sheet                                               7,912             10,535       12,024 
   Less: value priority shares                            14                 14           14 
                                                       7,898             10,521       12,010 
                                          ------------------  -----------------  ----------- 
 
     Number of Ordinary Shares 
   outstanding                                       162,323            207,748      235,416 
   Per Ordinary Share (USD) 
   Net Asset Value share                               48.66              50.64        51.01 
 

Notes to the Profit & Loss account

9. Income from investments

9.1 Dividends

This refers to net cash dividends including withholding tax. Stock dividends are considered to be cost free shares. Therefore, stock dividends are not presented as income.

9.2 Interest income

Most of this amount was received on outstanding cash balances.

9.3 Other income

From 6 March 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.

 
                                  01-01-2016  01-01-2015 
10. Expenses                      31-12-2016  31-12-2015 
                                         USD         USD 
  10.1 Investment research fees 
Research Fee                         162,000     162,271 
Custody Fee and Charges                3,145      28,908 
                                  ----------  ---------- 
 
                                     165,145     191,179 
                                  ----------  ---------- 
 

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.

 
10.2 Other expenses 
Administration Fees and Charges                 57,725     59,282 
Company Secretarial and Domiciliation Fees      33,471     33,509 
Bank Expenses                                      224      2,563 
Regulatory Fees and Charges                     26,672     19,938 
Listing Expenses                                14,500     19,000 
Audit Fees                                      19,916     29,441 
Fiscal Advisory Fees                            17,262     14,500 
Advertising and Promotion                       15,047      8,287 
Listing Agent Fees                              36,678     36,720 
Directors Fees                                  63,400     62,150 
Board Expenses                                  20,406     25,370 
Correspondent Bank fees                          8,612      2,981 
Miscellaneous                                    3,619      2,667 
VAT Reclaims previous years                    -23,775    -16,508 
                                             ---------  --------- 
 
                                               293,757    299,900 
                                             ---------  --------- 
 

Audit fees include the audit of the financial statements by the external auditor Mazars amounting to USD 23,773 (2015: USD 16,838).

 
   Ongoing Charges Ratio 
   The Ongoing Charges Ratio (cost ratio) is calculated 
    as follows: the total expenses of the Fund divided by 
    the average NAV*. 
   The Ongoing Charges Ratio of the Fund for the reporting 
    period is equal to: 5.12 % (2015: 4.28 %). 
   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: 18.16 % (2015: 51.62 %). 
 
     * - The average Net Asset Value of the Company for reporting 
     period is calculated as the sum of every available Net 
     Asset 
   Value in the current year divided by the number of observations. 
   Comparison of real cost with cost according to Prospectus** 
                                    According to Prospectus  Actual costs 
                                                        USD           USD 
   Investment Research fee (1)                      144,000       162,000 
   Administration fee (2)                            57,725        57,725 
   Secretarial and Domiciliation 
    fees (3)                                         33,471        33,471 
   Costs for the Board (4)                          100,000        83,806 
 
     **- As per the Prospectus 
     of 7 June 2010. 
   1) Ian McEvatt receives an annual fee of USD 114,000 
    for investment research and IndAsia Fund Advisors Pvt 
    Ltd receives 
   an annual fee of USD 42,000. According to the Prospectus 
    the research investment fees amount USD 144,000. However, 
   actual costs in 2016 amount USD 162,000. The difference 
    is caused by increased research fees of Indasia Fund 
    Advisors 
   Pvt.Ltd. 
   2) CACEIS Bank, Netherlands Branch 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 2016 the remuneration of the Directors was USD 62,985 
    (inclusive VAT) in total so far. Directors fees per 
    person are as 
   follows: Ian McEvatt: USD 10,000 (2015: USD 10,000); 
    Dwight Makins: USD 18,500 (2015: USD 18,500); Robert 
    Meijer: 
   USD 22,453 (2015: USD 22,385); Karin van der Ploeg***: 
    USD 12,476 (2015: USD 12,100). Board expenses (exclusive 
   remuneration of the Directors) 
    amount to USD 20,406 in 2016. 
   *** 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 USD 10,000. 
   Employees 
   The Fund has no employees. 
 
     Amsterdam, 25 April 2017 
 
     Board of Directors 
   Ian McEvatt, Chairman 
   Dwight Makins 
   Robert Meijer 
   Karin van der Ploeg 
 
 
   Portfolio breakdown 
   As per 31 December 2016 
                                                                       percentage 
                                                                         of total 
                                                                              Net 
                                                        Market value  Asset Value 
   India                                                         USD            % 
 
         Auto Ancilliary                                     504,178          6.4 
                  13,000  Bajaj Auto                         504,178 
 
            Construction                                     802,982         10.1 
                 190,000  HeidelbergCement                   307,241 
                 135,369  Kalpataru Power Transmission       495,741 
 
            Consumer discretionary                           607,624          7.7 
                 240,000  Indian Hotels                      348,489 
                 150,000  VIP Industries                     259,135 
 
            Consumer goods                                 1,193,800         15.1 
                  28,000  Agro Tech Foods                    187,712 
                   3,500  Nestle India                       310,877 
                  80,000  Pidilite                           695,211 
 
            Energy                                           405,886          5.1 
                  30,000  Indraprastha Gas                   405,886 
 
            Financials                                     1,116,096         14.1 
                  27,000  HDFC Bank                          479,850 
                  60,000  Kotak Mahindra Bank                636,246 
 
            Healthcare                                       945,309         11.9 
                  20,000  Aurobindo Pharma                   197,230 
                  12,000  Lupin                              262,905 
                  25,000  Torrent Pharmaceuticals            485,174 
 
             Industrials                                     334,076          4.2 
                  25,000  Supreme Industries                 334,076 
 
            Media                                            353,502          4.5 
                 250,000  IBN18 Broadcast                    134,080 
                  38,000  Shemaroo Entertainment             219,422 
 
            Technology                                     1,034,946         13.1 
                 250,000  Firstsource Solutions              139,237 
                  18,000  HCL Technologies                   219,583 
                  22,000  Infosys                            327,585 
                  10,000  Tata Consultancy                   348,541 
 
     Total Equity                                          7,298,399         92.2 
 
     Cash and cash equivalents                               613,869          7.8 
 
     NAV:                                                  7,912,268        100.0 
 
 
   Other information 
 
     Personal interest 
   Mr. McEvatt is the beneficial owner of 15,000 Ordinary 
    Shares of Himalayan Fund N.V. at the year end of 2016; 
    the shares 
   are held in a Self-Invested Pension Plan administered 
    by Curtis Banks Ltd. under discretionary management 
    at Charles 
   Stanley Ltd. None of the other directors hold any shares 
    in the Fund. 
 
     Special controlling rights 
   Special rights are assigned to holders of Priority 
    Shares. The most important rights are: 
 -   to submit a binding nomination for the appointment 
      of the Directors 
 -   to give their approval in advance of amendments in 
      the Articles of Association, legal merger, legal 
      split and dissolving 
     the Fund. 
   The Priority Shares are all held in the name of Iceman 
    Capital Ltd. 
 
     Priority Shares 
   During 2015 & 2016 49.995 Priority Shares were held 
    by Iceman Capital Ltd. At the beginning of 2009 the 
    nominal 
   value of the Priority Shares was Eur 0.01 each. On 
    26 August 2009 the Articles of Association were amended 
    and the 
   nominal value of the Priority Shares was increased 
    to Eur 0.20 each. 
 
     The directors of Iceman Capital Ltd. are Messrs. I. 
     McEvatt, M.T. Cordwell, J.W. Owen, E.H. Jostrom. 
 
     Appropriation of result 
   In accordance with the Fund's Articles of Association 
    the Board will propose to the Annual General Meeting 
    of Shareholders 
   that the result will be added to the general reserve 
    and that no dividend will be distributed. 
 
     Independent Auditor's report 
   Reference is made to the independent auditor's report 
    included hereafter. 
 
     Post balance sheet events 
   There have occurred no significant events after balance 
    sheet date which will have an impact on the Fund. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR OKFDPNBKDOQB

(END) Dow Jones Newswires

May 02, 2017 02:00 ET (06:00 GMT)

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