LEGAL
ENTITY IDENTIFIER: 549300YM9USHRKIET173
Invesco Asia Trust plc
Annual Financial Report Announcement for the Year Ended
30 April 2023
The
following text is extracted from the Annual Financial Report of the
Company for the year ended 30 April
2023. All page numbers below refer to the Annual Financial
Report which will be made available on the Company's
website.
This
announcement contains regulated information.
Investment
Objective
The
Company’s objective is to provide long-term capital growth and
income by investing in a diversified portfolio of Asian and
Australasian companies. The Company aims to achieve growth in its
net asset value (NAV) total return in excess of the Benchmark
Index, the MSCI AC Asia ex Japan Index (total return, net of
withholding tax, in sterling terms).
Financial
Information and Performance Statistics
The
benchmark index of the Company is the MSCI AC Asia ex Japan Index
(total return, net of withholding tax, in sterling
terms)
Total Return Statistics(1)
with dividends reinvested
Change for the year (%)
|
2023
|
2022
|
Net asset value (NAV) total return(2)
|
1.3
|
-6.7
|
Share price total return(2)
|
1.2
|
-10.0
|
Benchmark index total return(3)
|
-6.0
|
-12.9
|
Capital
Statistics
At
30 April
|
2023
|
2022
|
change
%
|
Net assets
(£’000)
|
245,004
|
252,176
|
–2.8
|
NAV per
share
|
366.48p
|
377.21p
|
–2.8
|
Share
price(1)
|
321.00p
|
332.50p
|
–3.5
|
Benchmark
index (capital)
|
938.42
|
1,023.11
|
–8.3
|
Discount(2)
per
ordinary share:
|
(12.4)%
|
(11.9)%
|
|
Average
discount over the year(1)(2)
|
(11.6)%
|
(9.5)%
|
|
Gearing(2):
|
|
|
|
–
gross
|
5.9%
|
2.2%
|
|
–
net
|
5.3%
|
1.6%
|
|
Revenue
Statistics
Year
Ended 30 April
|
2023
|
2022
|
change
%
|
Income
(£’000)
|
7,601
|
6,228
|
+22.0
|
Net revenue
available for ordinary shares (£’000)
|
5,596
|
4,469
|
+25.2
|
Revenue
return per ordinary share
|
8.37p
|
6.68p
|
+25.3
|
Dividends
per share(4):
|
|
|
|
–
first interim
|
7.20p
|
7.70p
|
|
–
second interim
|
7.60p
|
7.60p
|
|
Total
dividends
|
14.80p
|
15.30p
|
–3.3
|
Ongoing
charges ratio(2)
|
0.99%
|
0.97%
|
|
(1) Source:
Refinitiv.
(2) Alternative
Performance Measure (APM). See Glossary of Terms and Alternative
Performance Measures on pages 78 to 80 of the financial report for
details of the explanation and reconciliations of APMs.
(3)
Index
returns are shown on a total return basis, with dividends
reinvested net of withholding taxes.
(4)
The
Company's dividend policy aims to pay a regular six-monthly
dividend calculated at 2% of the Company’s NAV on the last business
day of September and February. Dividends are paid from a
combination of the Company’s revenue reserves and capital reserves,
as required.
Chairman’s
Statement
Highlights
• Strong
relative performance over 1, 3, 5 and 10 years.
• Investment
Style: “Valuation not value”.
• The
next period is quite likely to prove to be a very
attractive long-term opportunity for shareholders. We have not been
buying back shares recently because we do not want to stand in
their way.
I
am pleased to report a strong second half to the Company’s year
both in absolute and relative terms. NAV total return was +16.6%
over the six months to 30 April
2023, your share price total return was +19.7% whereas the
MSCI AC Asia ex-Japan Index total return was +11.0% (all figures in
Sterling terms).
For
the full year to 30 April 2023, this
brings NAV total return back into positive territory at +1.3% with
the share price total return at +1.2%, both outperforming the Index
total return of -6.0%.
Attribution
numbers show that the year’s outperformance came once again mainly
from stock selection. Ian Hargreaves
and Fiona Yang review performance in
more detail in their Portfolio Managers’ Report.
Shareholders
will know that we believe that the discount is determined by a
combination of demand for Asian equity investment vehicles, the
Investment Case for Invesco Asia Trust and the Corporate
Proposition that we offer. In order to stimulate more demand for
the Company’s shares, we aim to provide a compelling investment
case and a strong corporate proposition at the same
time.
The
Investment Case
The
Investment Case rests on accessing the attractions of Asian equity
markets through the institutional expertise of
Ian Hargreaves’
team at Invesco. The Co-Portfolio Managers, supported by a
well-resourced Asian dedicated team, work very closely on our
portfolio and engage with our shareholders and potential investors.
Their investment process can be summarised as “valuation not value”
and has been very successful with institutional clients such as
pension funds and sovereign wealth investors. In times like these
of great change, we would argue that this forward-looking active
approach (as opposed to a backward-looking index or passive style)
is exactly what is needed. The team have delivered very strong
performance relative to the benchmark for shareholders over 1, 3, 5
and 10 years, as shown in the table below.
Like many
professional consultants and shareholders, we, as fully independent
non-executive directors, look for talented stock pickers, a robust
process and consistent outperformance in our investment manager. We
believe we have all three in Ian, Fiona and the team at
Invesco.
Annualised
Total Return in Sterling Terms to 30 April
2023(1)(2)
|
1
|
3
|
5
|
10
|
|
year
|
years
|
years
|
years
|
Net Asset
Value %
|
1.3
|
13.9
|
6.0
|
10.0
|
Benchmark
%
|
–6.0
|
3.3
|
1.3
|
5.2
|
(1) Source:
Refinitiv.
(2) The
benchmark index of the Company was changed on 1 May 2015 to the MSCI AC Asia ex Japan Index
from the MSCI AC
Asia Pacific ex Japan Index (both
indices total return, net of withholding tax, in sterling terms).
The benchmark performance used throughout this report uses the
former index for periods prior to 1 May
2015.
The
Corporate Proposition
The
Company’s Corporate Proposition was first introduced in the
Half-Yearly Financial Report to 31 October
2018. Since then, the Board has continued to review and
adopt measures intended to create additional demand for the
Company’s shares, both from existing and new shareholders, and to
reduce the discount. We have been careful to ensure that the
measures chosen are in the best interests of shareholders as a
whole. The intention is that the gains from each will combine to
make the Corporate Proposition as compelling as the Investment
Case.
There are
multiple elements to our Corporate Proposition,
including:
1. Continuation
Vote: Every
three years the future of the Company is subject to a continuation
vote. The next one is due in 2025.
2. Enhanced
dividend policy: The Board
introduced a new enhanced dividend policy in August 2020 which aims to pay, in the absence of
unforeseen circumstances, a regular six-monthly dividend equivalent
to 2.0% of the Company’s NAV, calculated on the last business day
of September and February. The dividends will be paid to
shareholders in November and April. This means that the two interim
dividends will not be subject to a resolution at the Annual General
Meeting (AGM) but that the distribution policy as a whole will be
put to shareholders at each AGM. For the year ended 30 April 2023, the first interim dividend of
7.20p was paid to shareholders on 24
November 2022 and a second interim dividend of 7.60p was
paid to shareholders on 25 April
2023. This gave a total distribution of approximately 4.0%
of NAV over the year and represents a 4.6% dividend yield on the
closing share price on 30 April 2023.
Please note that the policy of paying out approximately 4.0% of NAV
means that dividend payments will not necessarily increase every
year.
3. Performance
Conditional Tender: We
introduced a performance conditional tender offer in August 2020 through which the Board has
undertaken to effect a tender offer for up to 25.0% of the
Company’s issued share capital at a discount of 2.0% to the
prevailing NAV per share (after deduction of tender costs), in the
event that the Company’s NAV cum-income total return performance
over the five year period to 30 April
2025 fails to exceed the Company’s comparator index, the
MSCI AC Asia ex Japan Index (total return, net of withholding tax,
in sterling terms) by 0.5% per annum over the five years on a
cumulative basis. Shareholders already have the opportunity to vote
on the continuation of the Company every three years, but the Board
believes that also providing shareholders with the option to tender
a proportion of their shares for a cash price close to NAV if the
Company underperforms, constitutes a pragmatic and attractive
initiative, particularly if the shares were to be trading at a
material discount at the time.
We are now
three years through this five-year period over which the
performance of the Company will be assessed: On an annualised
basis, the Company’s NAV is up by 13.9% per
annum (p.a.) over the three years while the index is up by
3.3% p.a.
4. Environmental,
Social and Governance Matters (ESG): The Board
recognises the importance of ESG considerations in delivering value
to shareholders and the Manager’s approach is explained in detail
later in this report. We continue to monitor closely developments
in this space and, noting the growing public discourse on climate
change, we have asked the Manager to highlight examples of holdings
in companies that are helping facilitate the journey towards Net
Zero Alignment (NZA). The Manager has the resources to assess the
risks and opportunities which may result from accelerating
ESG-driven change. Invesco’s Global ESG function, based in Henley,
inputs into the research process and provides a formal ESG
oversight process including meetings with the portfolio managers
and analysts to review the portfolio from an ESG perspective. The
Manager is a signatory of the Financial Reporting Council’s
Stewardship Code and is an active member of the UK Sustainable
Investment and Finance Association which guides the Portfolio
Managers’ investment approach for the portfolio. In addition, the
Manager scored four stars for its Investment & Stewardship
Policy under new scoring
methodology produced by United Nations Principles for Responsible
Investment (PRI). This followed five consecutive
years of achieving an A+ rating for responsible investment
(Strategy & Governance) under the previous methodology. The
Manager is a supporter of the Task Force for Climate Related
Financial Disclosure (TCFD) since 2019 and published its third
iteration of its TCFD-aligned Climate Change Report in
2022.
As well as
monitoring at each board meeting the Manager’s assessment of ESG
considerations on individual stock decisions, the Board looks at
various indicators of overall ESG progress. We do not expect every
indicator to travel in the favoured direction in every period: the
portfolio will change as will the measurements. Some factors will
have their priorities reassessed over time, for example products
with a military use may have been negatively assessed in the past
but when reconsidering the social factor of security in the light
of the Russian invasion of Ukraine, will now be assessed more favourably.
Despite these challenges, we should be able to see progress for
many indicators over longer time periods. For example, in the year
just ended the Manager engaged with 54 of the 56 portfolio
holdings, voting against management resolutions for 38 of them. The
Manager met a total of 342 companies
over the year, engaging with ESG issues on 255 of them. A year ago,
the Company held 28 companies
that had not yet set a net zero target. Now that number is down to
23 which is due in part to active engagement with these companies
by Invesco. Finally, the number of women on investee company boards
has been increasing.
5. Access
to Invesco Expertise:
Ian Hargreaves is Invesco’s lead
portfolio manager of Asian accounts for institutional investors and
manages over £4 billion of institutional assets (as at 30 June 2023). Fiona
Yang is proving to be a rising star in the Invesco Team
contributing from her base in Singapore. Invesco Asia Trust plc is the only
vehicle available to UK retail investors who wish to access their
track record. They manage it with a high degree of commonality to
their institutional portfolios although they also add the best
smaller company opportunities.
6. Engaging
more individual shareholders: We are
encouraged that an increasing proportion of our shareholders are
individuals, with the proportion of investors who hold shares of
Invesco Asia Trust plc via execution-only platforms once again
increasing. The Board aims to engage more directly with individual
investors. Working closely with the Manager, we continue to raise
the profile of the Company through new direct investor information,
commentary and events, which provide access to the thoughts and
views of Ian and Fiona, their team and the Directors. These
activities complement the ongoing engagement with a broad range
of professional
investors. Please visit our homepage www.invesco.co.uk/invescoasia
where you can also find presentations, read updates or register to
receive printed copies of the Half-Yearly and Annual Financial
Reports. You can
also see third party research (by Kepler Partners) and monthly
factsheets on the Company’s website. Shareholders can also contact
us by email at investmenttrusts@invesco.com.
7. Meeting
the Directors and Portfolio Managers: One of
the main attractions of owning an investment trust over a unit
trust or open-ended investment company (OEIC) is that all
shareholders have the opportunity of meeting the Directors and the
Portfolio Managers every year at the AGM. This year’s meeting will
be held in person at Invesco’s London office at 12pm
on Thursday 21 September 2023.
As well as the Company’s formal business, there will be a
presentation from Ian and Fiona, the opportunity to ask questions
to the Portfolio Managers and Directors and then to chat informally
with all of us afterwards over lunch. Shareholders may bring a
guest to these meetings. For me this is one of the highlights of
being Chairman and I look forward to meeting as many of you as
possible. For those unable to make it in person, we will record a
special version of the presentation and post it onto our website
after the AGM. Shareholders wishing to lodge questions in advance
of the AGM should do so by email to the Company Secretary at
investmenttrusts@invesco.com or, by letter, to
43-45 Portman
Square, London W1H
6LY.
8. Ongoing
Charges and Fees: As a
Board we are responsible for managing the level of charges to
shareholders. Our intention is to seek to reduce gradually the
level of ongoing charges over time. The main component of the
0.99% p.a.
ongoing charge is the investment management fee paid to Invesco.
The investment management fee is 0.75% on assets up to £250 million
reducing to 0.65% on net assets over this amount.
9. Gearing:
The Company intends to use gearing (or borrowings) actively to take
advantage of its closed-end structure. At the year end the Company
had net gearing of 5.3% having started the year at 1.6%.
10. Directors’
Shareholdings:
Institutional investors often follow and ask for information on
Directors’ holdings of shares in the Company. These are shown in
the Directors’ Remuneration Report in the Annual Financial Report
and we are required to notify any changes to the stock market by
regulatory announcement. Additionally, our Portfolio Managers, Ian
and Fiona, are both shareholders in the Company and we can confirm
that their remuneration by the Manager is partly determined by the
performance of the Company.
11. Buyback
Authority: The Board
has a stated average discount target of less than 10% of NAV
calculated on a cum-income basis (formerly ex-income) over the
Company’s financial year, although the Directors are cognisant of
the fact that the Company’s share rating at any particular time
will reflect a combination of various factors, a number of which
are beyond the Board’s control. Share buybacks will occur where and
when we consider (in conjunction with our broker) that such
buybacks will be effective, taking into account market factors and
the discounts of comparable funds.
Update
As at the
latest practicable date prior to the publication of this report,
being 24 July 2023, the NAV total
return was -0.2%, underperforming the index total return of 0.8%.
The share price total return was 4.1%, with the discount narrowing
to 8.7%.
Outlook
After a big
fall in the first half of the Company’s financial year and a big
rise in the second half, we are back to where we were a year ago.
Some concerns remain: relations between China and the US have been strained and are
still adjusting to a new normal. US interest rates have risen and
are expected to rise further. Yet some factors have improved:
Asia and China in particular seem to have escaped
Covid-19 without the pain that was expected at the beginning of
last winter. Asian economies have proved robust in the absence of
the inflation problems that have plagued the West and the UK in
particular. Corporate earnings have rebounded which means that
markets today are trading at valuations that are much more
attractive than a year ago. As Ian and Fiona argue, valuations such
as these have historically proven to be attractive entry points,
even when geopolitical or macroeconomic conditions might have
suggested otherwise.
This is one
of the main reasons why the Company has not undertaken any share
buybacks in the last year even though the average discount of the
share price to net asset value was higher than the Board’s
tolerance at 11.6%. We believe that the Investment Case for the
Company is strong and so too is the combination of policies
enshrined in our Corporate Proposition. The next period is quite
likely to prove to be a very attractive long-term opportunity for
shareholders. We simply do not want to stand in their
way.
Neil Rogan
Chairman
25 July 2023
Portfolio
Managers’ Report Q&A
Portfolio
Manager
Ian Hargreaves is Co-Head of the Asian & Emerging
Markets Equities team which manages pan-Asian portfolios and covers
the entire Asian region. He has led this team as Co-Head since
2018. He started his investment career with Invesco Asia Pacific in
Hong Kong in 1994 as an investment
analyst where he was responsible for coverage of Indonesia, South
Korea and the Indian sub-continent, as well as managing
several regional institutional client accounts. Ian returned to the
UK to join Invesco’s Asian Equities team in 2005, working on the
portfolio as part of the investment team. He was appointed as joint
Portfolio Manager in 2011 and became the sole Portfolio Manager on
1 January 2015, up until the
appointment of Fiona Yang as
Co-Portfolio Manager in January
2022.
Portfolio
Manager
Fiona Yang was appointed Co-Portfolio Manager of Invesco
Asia Trust plc in January 2022 and is
a member of the Henley-based Asian & Emerging Markets Equities
team. In February 2022, Fiona moved
to Invesco’s Singapore office and
remains an integral part of the Henley-based team. Fiona started
her career with Goldman Sachs in July
2012 and became a member of their Asian Equity sales team as
a China product specialist. She
joined Invesco in August 2017. Fiona
is also the fund manager on the Invesco Asian Equity Income Fund
(UK) and provides stock and sector research covering
the wider Asia ex-Japan region with a focus on China H and A
share markets.
Q How
has the Company performed in the year under
review?
A The
Company’s net asset value grew
by 1.3% (total return, in sterling terms) over the twelve months to
30 April 2023, which compares to the
benchmark MSCI AC Asia ex Japan
index return of –6.0%.
A small
positive return for the portfolio over the year feels like a good
result. Markets have been volatile, and although they have
rebounded strongly from their October lows, buoyed by some
admittedly short-lived optimism surrounding China’s reopening, the
benchmark index against which we measure performance has
not recovered
its lost ground and evidences the changing market conditions.
Continued outperformance can be attributed to strong stock
selection across different countries and sectors. Having a balanced
portfolio has also helped, and we have remained active, seeking out
new opportunities to invest in companies that are worth more than
the market believes.
Geopolitical
uncertainty remains a significant overhang, with the ongoing
Russia-Ukraine conflict and resurfacing US-China
tensions. Markets have also had to contend with the collapse of
Credit Suisse and the failure of some US regional banks, who were
caught off guard by the pace of Federal Reserve tightening. The
risk of developed markets entering recession lingers, but China’s
reopening is a potential offset and domestic macro conditions in
Asia remain largely
stable.
Q What
have been the biggest contributors?
A India’s
economy is enjoying a broad-based
recovery, and holdings
in ICICI
Bank and
Housing
Development Finance Corporation (HDFC) made a
significant contribution, supported by a benign credit cycle and a
pick-up in growth across business lines. Engineering and
construction conglomerate Larsen
& Toubro and
Mahindra
& Mahindra (auto
manufacturer) also made strong gains.
Stock
selection in financials elsewhere added value, with
United
Overseas Bank in
Singapore and PT
Bank Negara Indonesia Persero outperforming,
as did insurers, particularly QBE
Insurance which is
enjoying a turnaround in profitability.
China reopening acted as a positive catalyst for
consumer-related stocks such as Gree
Electrical Appliances, Sands China, Beijing Capital International
Airport and
Samsonite
International. In Korea,
steel manufacturer POSCO
was buoyed
by the China reopening trade and
the improved outlook for battery supply chain companies (given its
lithium business), which also benefitted LG
Chemical.
Q And
detractors?
A JD.com
was the
biggest single detractor
amidst concerns over competitive
pressures in e-commerce as revenue growth slows.
Alibaba has been
similarly impacted, with valuations for both having derated to such
an extent that the market does not appear to share our belief that
earnings will start to show signs of improvement.
Property-related
companies in China underperformed,
with China
Overseas Land and Investment and
A-Living
Smart City Services
lagging the
broader market rebound.
Dongfeng
Motor also
disappointed, although we have now sold this position, with the car
company’s outlook challenged by the strength of competition in
China’s electric vehicle (EV) market, an area of the market they
are losing ground in with joint venture partners Nissan and
Honda.
Finally,
Kasikornbank
a leading
Thai bank, has underperformed due to asset quality concerns, but
the bank has been cleaning-up its balance sheet and is well
positioned to benefit from a recovery in tourism, which should help
improve the outlook for growth and core bank
profitability.
Q Has
your view on China changed at
all?
A China’s
reopening has resulted in a robust recovery in consumer demand, but
economic data has been mixed as expansion in the services sector is
not yet feeding through into other areas. Lingering concern over
the strength of a cyclical recovery appears to be feeding back into
markets, which continue to struggle with US/China tensions. Recent suggestions that
regular direct communication between the US and China might be resumed would be constructive
and help markets better price the equity risk premium for
China. Policy settings remain
supportive and although this is not a typical cycle, we would
expect confidence to return to more cyclical areas of the economy
in due course.
We believe
the current mix of macro, regulatory and geopolitical concerns
leave valuations at overly discounted levels, providing attractive
opportunities to add exposure to quality growth names that appear
cheap relative to their history. As well as adding to existing
holdings that we like, we have introduced: dairy producer
Yili,
which has an improving branding and consumer service capability
that is likely to drive sales growth and support a recovery in
earnings over the medium term; and Will
Semiconductor, a company
which principally engages in the research and development, design
and sales of semiconductor devices. The company was impacted by a
downturn in the Chinese smartphone cycle, but has a more positive
growth outlook further out which is supported by drivers such as
auto contact image sensor (CIS) where it has 40% market
share.
Q Are
you more positive on tech?
A In
our half-year report, we noted that valuations appeared more
reasonable, particularly in the memory semiconductor market that is
going through a sharp downturn. Given that these downcycles tend to
be relatively short in duration, we feel that an inflexion point is
inevitable at some stage in our investment horizon, with capital
expenditure (capex) cuts from weak players an encouraging signal on
that front.
Having
already added to Samsung
Electronics, we
introduced SK
Hynix, the
second biggest memory company globally. We also added slightly to
other existing semiconductor and tech hardware names on weakness,
with the portfolio now having a slight overweight position in the
IT sector.
Sector
performance has picked up year-to-date, benefitting from some
excitement around the launch of generative AI models such as
ChatGPT, which are likely to be revolutionary for the tech
industry, allowing machines to understand natural language and
converse with us like humans. Strong demand for additional
computing power and AI servers makes us increasingly confident on
the structural outlook of several portfolio companies,
particularly Taiwan
Semiconductor Manufacturing (TSMC) as
the main fabricator of AI chips.
Q How
are geopolitics and supply-chain changes affecting the
sector?
A What
some call ‘de-globalisation’, and the Chinese call ‘dual
circulation’ is already underway, and these trends are likely to
continue as multinational companies around the world seek greater
supply chain resilience, with support from governments looking to
shield their economies from global volatility and promote
self-reliance. The US CHIPS and Science Act is likely to see
greater semiconductor capacity based out of the US and its
associated ecosystem. Meanwhile, US export controls seek to curtail
China’s access to advanced semiconductor technology, slowing its
development in quantum computing and artificial intelligence.
However, China continues to invest
heavily in these fields, in the hope that domestic innovation helps
them remain competitive.
These
trends have already caused disruption, but policy is unlikely to
challenge the systemic importance of key semiconductor technology
providers like Samsung Electronics and TSMC. While China’s
semiconductor industry faces increasing technology constraints, a
company like SK Hynix could benefit as competitive pressures from
China ease. It is important to
stress that this remains a fluid situation, which we continue to
monitor closely. Further risks lie ahead, as do opportunities,
making stock picking imperative.
Q Is
increased exposure to Korea solely
tech-related?
A South
Korea continues to be the cheapest market in Asia, even after a strong start to the year.
We increasingly feel that the ‘Korea discount’ overstates corporate
governance concerns, geopolitical risk and the cyclical nature of
its economy. We believe that this is an opportunity to own
operationally solid companies, with good balance sheets, and an
ability and desire to improve shareholder returns over time – a
trend we already see evidence of (see chart in the Annual Financial
Report).
This
biggest driver of position changes is conviction in the
undervaluation of the stocks we are adding to. As well as the
memory chip companies mentioned above, we have added to existing
holdings such as: LG Chemical, the largest maker of EV batteries
outside China; and
LG
Household & Health Care, a
consumer goods company that manages cosmetics, household products
and beverages brands. The portfolio also has exposure to leading
franchises across a variety of sectors including an insurer, and
manufacturers of autos and steel products.
Q What
opportunities have you found in Vietnam?
A Historically,
low levels of liquidity and relatively expensive valuations have
deterred us from investing in Vietnam. The market had a tough year in 2022
and the near-term outlook is challenging. The property market has
been hit by a liquidity crunch, which has ramifications for the
banks. Consumer spending has been impacted by faltering exports
growth, high mortgage rates and losses for investors in domestics
stocks and bonds. Finally, the near-term outlook for earnings is
lacklustre as the domestic economy appears to be in a period of
consolidation. However, with valuations having fallen to trough
levels, we felt the market was reflecting an overly pessimistic
outlook and that there were likely to be some attractive
opportunities.
Vietnam’s
structural growth drivers remain intact. Foreign direct investment
in 2022 was a record US$22.5 billion
(5.5% of GDP), with multinationals such as Apple and Boeing
following Samsung Electronics, which already produces most of its
handsets in the country. As others follow, the improved
infrastructure, logistics and clustering of supply-chains should
help to create a virtuous cycle. Meanwhile, 37 million people are
expected to join the middle class by 2030, which in turn is
supporting rapid urbanisation.
We have
introduced two new holdings. Vinamilk,
the market-leading dairy company generates strong free cash flow
and offers a stable 5-6% dividend yield. While near-term margins
have been under pressure given milk powder price increases, we
expect to see a recovery in margins in 2023 as milk prices
stabilise.
Hoa Phat is the
largest steel producer in Vietnam,
which has a significant cost and scale advantage over smaller local
competitors. Cyclical concerns are ultimately less important than
the potential for long-term steel demand growth, driven by both
property and infrastructure.
Q Has
your exposure to financials changed at all?
A The
portfolio continues to have significant exposure to financials, but
we have reduced position sizes in recent months, taking some
profits from outperformers such as PT Bank Negara Indonesia
Persero, ICICI Bank, United Overseas Bank and QBE Insurance. With
portfolio performance having benefitted from a sensitivity to
rising interest rates, we have started to consider more closely
areas of the market that might benefit from an eventual easing of
policy, such as real estate.
The
portfolio retains an underweight position in banks, with no
holdings in Chinese or Australian banks. We remain comfortable with
exposure to banking markets such as India and Indonesia, which have already undergone
significant credit downcycles in the last 5+ years. In our view
this means greatly reduced credit risk and importantly for the
investment case the potential for good credit growth ahead. This
was demonstrated through Covid where bad debts were low despite
economic dislocations. The banks we own also feature high capital
ratios, low loan-to-deposit ratios and strong retail low-cost
deposit bases.
Other
significant themes within financials include long-term positive
prospects for the life insurance industry in China (AIA
and
Ping
An Insurance), and a
turnaround in profitability for general insurers such as QBE
Insurance and Samsung
Fire & Marine.
Q Final
thoughts?
A China’s
economy is reopening, with a robust recovery in consumer demand,
but its equity market continues to trade at a discount, even as
fundamental improvement in the outlook for corporate earnings mean
there is scope for positive surprises that would validate a
re-rating. The rest of Asia should
be a relative beneficiary of China’s reopening and as such may see
less earnings vulnerability from the global slowdown compared to
many advanced economies, with revisions beginning to
improve.
Asian
markets continue to trade at a significant discount to developed
markets, particularly the US. We believe there is scope for this to
narrow, with US dollar strength challenged by a potential recession
in the US as the Fed seeks to root out inflation. Inflationary
pressures in Asia are less of a
concern, suggesting greater policy flexibility, which should also
be supportive for markets. Looking further ahead, US inflation
might be stickier than expected, but it is declining from a high
base which could lead to an easing of financial conditions at a
time when Asia is enjoying a
favourable growth differential. Combined, we feel
this makes
Asia an attractive place to be
investing over the medium-term, with divergence between countries
and sectors providing good opportunities for lucrative stock
picking.
Ian Hargreaves & Fiona
Yang
Portfolio
Managers
25 July 2023
Principal
and Emerging Risks and Uncertainties
The Board
has carried out a robust assessment of the principal and emerging
risks facing the Company. These include those that would threaten
its business model, future performance, solvency and liquidity. In
carrying out this assessment, the Board together with the Manager
have considered emerging risks such as geopolitical risks, evolving
cyber threats and climate related risks. These risks also form part
of the principal risks identified and the mitigating actions are
detailed below.
Category
and Principal Risk Description
|
Mitigating
Procedures and Controls
|
Risk
trend during the year
|
Strategic
Risk
|
Market
Risk
The
Company’s investments are mainly traded on Asian and Australasian
stock markets as well as the UK. The principal risk for investors
in the Company is a significant fall and/or a prolonged period of
decline in these markets. This could be triggered by unfavourable
developments within the region or events outside it.
|
The Company
has a diversified investment portfolio by country, sector and
stock. Due to its investment trust structure, no forced sales need
to take place and investments can be held over a longer term
horizon. However, there are few ways to mitigate absolute market
risk because it is engendered by factors which are outside the
control of the Board and the Manager. These factors include the
general health of the world economy, interest rates, inflation,
government policies, industry conditions, and changing investor
demand and sentiment. Such factors may give rise to high levels of
volatility in the prices of investments held by the
Company.
|
►
Unchanged
|
Geopolitical
Risk
Political
risk has always been a feature of investing in stock markets and it
is particularly so in Asia. Wider political developments in
geographies beyond Asia, such as the US and Ukraine, can create
risks to the value of the Company’s assets. Asia encompasses a
variety of political systems. There are many examples of diplomatic
skirmishes and military tensions and sometimes these resort to
military engagement. Moreover, the involvement in Asian politics of
the US and European countries can reduce or raise
tensions.
|
The Manager
evaluates and assesses political risk as part of the stock
selection and asset allocation policy which is monitored at every
Board meeting. This includes political, military and diplomatic
events and changes to legislation. Balancing political risk and
reward is an essential part of the active management
process.
|
▲
Increased
|
Investment
Objectives and Strategy
The
Company’s investment objectives and strategy are no longer meeting
investors’ demands.
|
The Board
receives regular reports reviewing the Company’s investment
performance against its stated objectives and peer group, and
reports from discussions with its brokers and major shareholders.
The Board also has a separate annual strategy meeting.
|
►
Unchanged
|
Widening
Discount
A lack of
liquidity and/or lack of investor interest in the Company’s shares
leads to a depressed share price and a widening discount to its
NAV.
A
persistently high discount may lead to buybacks of the Company’s
shares and result in the shrinkage of the Company.
|
The Board
receives regular reports from both the Manager and the Company’s
broker on the Company’s share price performance, level of share
price discount to NAV and recent trading activity in the Company’s
shares. The Board has introduced initiatives to help address the
Company’s share rating including a performance conditional tender
in 2025 and the enhanced dividend policy. It may seek to reduce the
volatility and absolute level of the share price discount to NAV
for shareholders through buying back shares within the stated
limit. The Board also receives regular reports on investor relation
meetings with shareholders and prospective investors and works to
ensure that the Company’s investment proposition is actively
marketed through relevant messaging across many distribution
channels.
|
▲
Increased
|
Performance
That the
Portfolio Managers consistently underperform the benchmark and/or
peer group over 3-5 years.
|
The Board
regularly compares the Company’s NAV performance over both the
short and long term to that of the benchmark and peer group as well
as reviewing the portfolio’s performance against benchmark
(attribution) and risk adjusted performance (volatility, beta,
tracking error, Sharpe ratio) of the Company and its
peers.
|
►
Unchanged
|
ESG
including climate risk
Risks
associated with climate change and ESG considerations could affect
the valuation of the Company’s holdings.
|
ESG
considerations are integrated as part of the investment
decision-making in constructing the portfolio. Such investment
decisions include the transactions undertaken in the year, the
review of active portfolio positions and consideration of the
gearing position and, if applicable, hedging. The Manager’s process
around ESG is described in the ESG Monitoring and Engagement
section on pages 14 to 17.
|
▲
Increased
|
Key
Person Dependency
Either or
both of the Portfolio Managers (Ian Hargreaves and Fiona Yang)
ceases to be Portfolio Manager or are incapacitated or otherwise
unavailable.
|
The
appointment of Fiona Yang as Co-Portfolio Manager has mitigated the
risk of key person dependency. Also, the Portfolio Managers work
within and are supported by the wider Invesco Asian and Emerging
Markets Equities team, with Ian Hargreaves and William Lam as
Co-Heads of this team.
|
►
Unchanged
|
Currency
Fluctuation Risk
Exposure to
currency fluctuation risk negatively impacts the Company’s NAV. The
movement of exchange rates may have an unfavourable or favourable
impact on returns as nearly all of the Company’s assets are
non-sterling denominated.
|
With the
exception of borrowings in foreign currency, the Company does not
normally hedge its currency positions but may do so should the
Portfolio Managers or the Board feel this to be appropriate.
Contracts are limited to currencies and amounts commensurate with
the asset exposure. The foreign currency exposure of the Company is
reviewed at Board meetings.
|
►
Unchanged
|
Third
Party Service Providers Risk
|
Unsatisfactory
Performance of Third Party Service Providers
Failure by
any Third Party Service Provider (TPP) to carry out its obligations
to the Company in accordance with the terms of its appointment
could have a materially detrimental impact on the operations of the
Company and could affect the ability of the Company to successfully
pursue its investment policy and expose the Company to reputational
risk. Disruption to the accounting, payment systems or custody
records could prevent the accurate reporting and monitoring of the
Company’s financial position.
|
The Audit
Committee closely monitors the services provided by the Manager and
other TPPs. The details of how effective internal control is
assured are set out in the internal control and risk management
section on page 41.
|
►
Unchanged
|
Information
Technology Resilience and Security
The
Company’s operational structure means that all cyber risk
(information and physical security) arises at its TPP. This cyber
risk includes fraud, sabotage or crime perpetrated against the
Company or any of its TPPs.
|
The Audit
Committee receives regular updates on the Manager’s information and
cyber security. This includes updates on the cyber security
framework, staff resource and training, and the testing of its
security systems designed to protect against a cyber security
attack.
As well as
conducting a regular review of TPPs audited service organisation
control reports, the Audit Committee monitors TPPs’ business
continuity plans and testing including the TPPs’ and Manager’s
regular ‘live’ testing of workplace recovery arrangements should a
cyber event occur.
|
►
Unchanged
|
Operational
Resilience
The
Company’s operational capability relies upon the ability of its
TPPs to continue working throughout the disruption caused by a
major event such as the Covid-19 pandemic.
|
The
Manager’s business continuity plans are reviewed on an ongoing
basis and the Directors are satisfied that the Manager has in place
robust plans and infrastructure to minimise the impact on its
operations so that the Company can continue to trade, meet
regulatory obligations, report and meet shareholder
requirements.
The Manager
has arrangements and prioritises between work deemed necessary to
be carried out on business premises and work from home arrangements
should it be necessary, for instance due to further restrictions.
Any meetings are held in person, virtually or via conference calls.
Other similar working arrangements are in place for the Company’s
TPPs. The Audit Committee receives regular update reports from the
Manager and TPPs on business continuity processes.
|
►
Unchanged
|
Viability
Statement
The Company
is a collective investment vehicle rather than a commercial
business venture and is designed and managed for long term
investment. The Company’s investment objective clearly sets out the
long-term nature of the returns from the portfolio and this is the
view taken by both the Directors and the Portfolio Managers in the
running of the portfolio. The Company is required by its Articles
to have a vote on its future every three years,
the next vote being at the Annual General Meeting in 2025. The
Directors remain confident in the Company’s Investment Case and
Corporate Proposition, as detailed on pages 7
to 9, to deliver against the Company’s investment objectives. On
this basis and notwithstanding the continuation vote in 2025, the
Directors consider that ‘long term’ for the purpose of this
viability statement is three years, albeit that the life of the
Company is not intended to be limited to this period.
In their
assessment of the Company’s viability, the Directors have performed
a robust assessment of the emerging and principal risks. The
Directors considered the risks to which it is exposed, as set out
on pages 23
to 25, together with mitigating factors. Their assessment
considered these risks, as well as the Company’s investment
objective, investment policy and strategy, the investment
capabilities of the Manager and the business model of the Company,
which has withstood several major market downcycles since the
Company’s inception in 1995. Their assessment also covered the
current outlook for the Asian economies and equity markets, the
ongoing conflict in Ukraine; the
demand for and buybacks of the Company’s shares; the Company’s
borrowing structure and level of gearing; the liquidity of the
portfolio; and the Company’s future income and annual operating
costs, including stressed scenario testing for both income and loan
covenants. Although the current outlook for Asian markets is
challenging, the Directors and the Manager are cautiously
optimistic that Asia remains a
region with sound economic and corporate fundamentals. Lastly,
whilst past performance may not be indicative of performance in the
future, the sustainability of the Company can be demonstrated to
date by there having been no material change in the Company’s
investment objective since its launch in 1995.
The
Directors confirm that they have a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due for the three year period from the
signing of the balance sheet.
Investments
in Order of Valuation
at 30 April
2023
Ordinary shares unless stated otherwise
† The
sector group is based on MSCI and Standard & Poor’s Global
Industry Classification Standard.
|
|
|
Market
|
|
|
|
|
Value
|
% of
|
Company
|
Sector†
|
Country
|
£’000
|
Portfolio
|
Taiwan Semiconductor Manufacturing
|
Semiconductors and Semiconductor Equipment
|
Taiwan
|
22,073
|
8.5
|
Samsung Electronics
|
Technology Hardware and Equipment
|
South Korea
|
16,551
|
6.4
|
TencentR
|
Media and Entertainment
|
China
|
16,385
|
6.3
|
AlibabaR
|
Consumer Discretionary Distribution and Retail
|
China
|
10,344
|
4.0
|
Housing Development Finance Corporation
|
Financial Services
|
India
|
9,877
|
3.8
|
AIA
|
Insurance
|
Hong Kong
|
9,373
|
3.6
|
Gree Electrical AppliancesA
|
Consumer Durables and Apparel
|
China
|
7,045
|
2.7
|
KasikornbankF
|
Banks
|
Thailand
|
6,680
|
2.6
|
Astra International
|
Capital Goods
|
Indonesia
|
6,606
|
2.6
|
Ping An InsuranceH
|
Insurance
|
China
|
6,353
|
2.5
|
Top Ten Holdings
|
|
|
111,287
|
43.0
|
LG Chemical
|
Materials
|
South Korea
|
6,313
|
2.5
|
SK Hynix
|
Semiconductors and Semiconductor Equipment
|
South Korea
|
6,123
|
2.4
|
MINTH
|
Automobiles and Components
|
Hong Kong
|
5,357
|
2.1
|
YiliA
|
Food, Beverage and Tobacco
|
China
|
5,114
|
2.0
|
Aurobindo Pharma
|
Pharmaceuticals, Biotechnology and Life Sciences
|
India
|
4,995
|
1.9
|
JD.comR
|
Consumer Discretionary Distribution and Retail
|
China
|
4,575
|
1.8
|
Shriram Transport Finance
|
Financial Services
|
India
|
4,529
|
1.7
|
MingYang Smart EnergyA
|
Capital Goods
|
China
|
4,521
|
1.7
|
Hyundai Motor –
preference shares
|
Automobiles and Components
|
South Korea
|
4,346
|
1.7
|
CK Asset
|
Real Estate Management and Development
|
Hong Kong
|
4,283
|
1.7
|
Top Twenty Holdings
|
|
|
161,443
|
62.5
|
Beijing Capital International AirportH
|
Transportation
|
China
|
4,258
|
1.6
|
China Overseas Land and Investment
|
Real Estate Management and Development
|
Hong Kong
|
4,085
|
1.6
|
Yue Yuen Industrial
|
Consumer Durables and Apparel
|
Hong Kong
|
3,886
|
1.5
|
Samsung Fire & Marine
|
Insurance
|
South Korea
|
3,883
|
1.5
|
Will SemiconductorA
|
Semiconductors and Semiconductor Equipment
|
China
|
3,773
|
1.5
|
Newcrest Mining
|
Materials
|
Australia
|
3,702
|
1.4
|
ICICI Bank –
ADR
|
Banks
|
India
|
3,622
|
1.4
|
NetEaseR
|
Media and Entertainment
|
China
|
3,608
|
1.4
|
LG Household & Health Care
|
Household and Personal Products
|
South Korea
|
3,503
|
1.4
|
Largan Precision
|
Technology Hardware and Equipment
|
Taiwan
|
3,473
|
1.4
|
Top Thirty Holdings
|
|
|
199,236
|
77.2
|
China MeiDong AutoR
|
Consumer Discretionary Distribution and Retail
|
China
|
3,422
|
1.3
|
Suofeiya Home CollectionA
|
Consumer Durables and Apparel
|
China
|
3,369
|
1.3
|
Vinamilk
|
Food, Beverage and Tobacco
|
Vietnam
|
3,356
|
1.3
|
Uni-President
|
Food, Beverage and Tobacco
|
Taiwan
|
3,273
|
1.3
|
Hansoh PharmaceuticalR
|
Pharmaceuticals, Biotechnology and Life Sciences
|
China
|
3,227
|
1.2
|
Larsen & Toubro
|
Capital Goods
|
India
|
3,212
|
1.2
|
ENN EnergyR
|
Utilities
|
China
|
3,123
|
1.2
|
Autohome –
ADS
|
Media and Entertainment
|
China
|
3,080
|
1.2
|
Chroma ATE
|
Technology Hardware and Equipment
|
Taiwan
|
2,815
|
1.1
|
Semen Indonesia
|
Materials
|
Indonesia
|
2,707
|
1.0
|
Top Forty Holdings
|
|
|
230,820
|
89.3
|
TingyiR
|
Food, Beverage and Tobacco
|
China
|
2,559
|
1.0
|
Hoa Phat
|
Materials
|
Vietnam
|
2,399
|
0.9
|
QBE Insurance
|
Insurance
|
Australia
|
2,380
|
0.9
|
Worley
|
Capital Goods
|
Australia
|
2,345
|
0.9
|
POSCO
|
Materials
|
South Korea
|
2,274
|
0.9
|
China Communications ServicesH
|
Capital Goods
|
China
|
2,171
|
0.8
|
United Overseas Bank
|
Banks
|
Singapore
|
2,167
|
0.8
|
JiumaojiuR
|
Consumer Services
|
China
|
2,040
|
0.8
|
MediaTek
|
Semiconductors and Semiconductor Equipment
|
Taiwan
|
2,012
|
0.8
|
Mahindra & Mahindra
|
Automobiles and Components
|
India
|
1,656
|
0.6
|
Top Fifty Holdings
|
|
|
252,823
|
97.7
|
China BlueChemicalH
|
Materials
|
China
|
1,593
|
0.6
|
PT Bank Negara Indonesia Persero
|
Banks
|
Indonesia
|
1,314
|
0.5
|
Sands China
|
Consumer Services
|
Hong Kong
|
1,234
|
0.5
|
HKR International
|
Real Estate Management and Development
|
Hong Kong
|
840
|
0.3
|
MeituanR
|
Consumer Services
|
China
|
633
|
0.2
|
A-Living Smart City ServicesH
|
Real Estate Management and Development
|
China
|
487
|
0.2
|
Lime CoUQ
|
Capital Goods
|
South Korea
|
38
|
–
|
Total Holdings 57 (2022: 57)
|
|
|
258,962
|
100.0
|
UQ: Unquoted
investment.
ADR/ADS: American
Depositary Receipts/Shares – are certificates that represent shares
in the relevant stock and are issued by a US bank. They are
denominated and pay dividends in US dollars.
H: H-Shares
– shares issued by companies incorporated in the People’s
Republic of China (PRC) and listed
on the Hong Kong Stock Exchange.
R:
Red
Chip Holdings – holdings in companies incorporated outside the PRC,
listed on the Hong Kong Stock Exchange, and controlled by PRC
entities by way of direct or indirect shareholding and/or
representation on the board.
A:
A-shares
– shares that are denominated in Renminbi and traded on the
Shanghai and Shenzhen stock exchanges.
F:
F-Shares
– shares issued by companies incorporated in Thailand that are available to foreign
investors only. Thai laws have imposed restrictions on foreign
ownership of Thai companies so there is a pre-determined limit of
these shares. Voting rights are retained with these
shares.
Classification
of Investments by Country/Sector
at 30 April
|
2023
|
20221
|
|
Market Value
|
% of
|
Market
Value
|
% of
|
|
£’000
|
Portfolio
|
£’000
|
Portfolio
|
Australia
|
|
|
|
|
Capital Goods
|
2,345
|
0.9
|
3,157
|
1.2
|
Insurance
|
2,380
|
0.9
|
5,702
|
2.2
|
Materials
|
3,702
|
1.4
|
2,082
|
0.8
|
|
8,427
|
3.2
|
10,941
|
4.2
|
China
|
|
|
|
|
Automobiles and Components
|
-
|
-
|
3,525
|
1.4
|
Capital Goods
|
6,692
|
2.5
|
6,004
|
2.3
|
Consumer Discretionary Distribution and Retail
|
18,341
|
7.1
|
20,604
|
8.1
|
Consumer Durables and Apparel
|
10,414
|
4.0
|
8,986
|
3.5
|
Consumer Services
|
2,673
|
1.0
|
-
|
-
|
Food, Beverage and Tobacco
|
7,673
|
3.0
|
1,884
|
0.7
|
Insurance
|
6,353
|
2.5
|
5,374
|
2.1
|
Materials
|
1,593
|
0.6
|
2,531
|
1.0
|
Media and Entertainment
|
23,073
|
8.9
|
23,803
|
9.2
|
Pharmaceuticals, Biotechnology and Life Sciences
|
3,227
|
1.2
|
1,801
|
0.7
|
Real Estate Management and Development
|
487
|
0.2
|
976
|
0.4
|
Semiconductors and Semiconductor Equipment
|
3,773
|
1.5
|
-
|
-
|
Transportation
|
4,258
|
1.6
|
1,726
|
0.7
|
Utilities
|
3,123
|
1.2
|
2,561
|
1.0
|
|
91,680
|
35.3
|
79,775
|
31.1
|
Hong Kong
|
|
|
|
|
Automobiles and Components
|
5,357
|
2.1
|
2,126
|
0.8
|
Capital Goods
|
-
|
-
|
3,771
|
1.5
|
Consumer Durables and Apparel
|
3,886
|
1.5
|
5,262
|
2.0
|
Consumer Services
|
1,234
|
0.5
|
2,371
|
0.9
|
Insurance
|
9,373
|
3.6
|
7,693
|
3.0
|
Real Estate Management and Development
|
9,208
|
3.6
|
10,977
|
4.3
|
Transportation
|
-
|
-
|
1,409
|
0.5
|
|
29,058
|
11.3
|
33,609
|
13.0
|
India
|
|
|
|
|
Automobiles and Components
|
1,656
|
0.6
|
3,528
|
1.4
|
Banks
|
3,622
|
1.4
|
8,622
|
3.4
|
Capital Goods
|
3,212
|
1.2
|
4,229
|
1.6
|
Financial Services
|
14,406
|
5.5
|
13,215
|
5.1
|
Pharmaceuticals, Biotechnology and Life Sciences
|
4,995
|
1.9
|
4,830
|
1.9
|
|
27,891
|
10.6
|
34,424
|
13.4
|
Indonesia
|
|
|
|
|
Banks
|
1,314
|
0.5
|
6,278
|
2.4
|
Capital Goods
|
6,606
|
2.6
|
10,848
|
4.3
|
Materials
|
2,707
|
1.0
|
-
|
-
|
|
10,627
|
4.1
|
17,126
|
6.7
|
Ireland
|
|
|
|
|
Money Market Fund
|
-
|
-
|
846
|
0.3
|
|
-
|
-
|
846
|
0.3
|
Singapore
|
|
|
|
|
Banks
|
2,167
|
0.8
|
5,661
|
2.2
|
Consumer Services
|
-
|
-
|
1,237
|
0.5
|
|
2,167
|
0.8
|
6,898
|
2.7
|
South Korea
|
|
|
|
|
Automobiles and Components
|
4,346
|
1.7
|
4,578
|
1.8
|
Banks
|
-
|
-
|
1,710
|
0.7
|
Capital Goods
|
38
|
-
|
101
|
-
|
Energy
|
-
|
-
|
2,964
|
1.2
|
Household and Personal Products
|
3,503
|
1.4
|
-
|
-
|
Insurance
|
3,883
|
1.5
|
3,364
|
1.3
|
Materials
|
8,587
|
3.4
|
6,495
|
2.5
|
Semiconductors and Semiconductor Equipment
|
6,123
|
2.4
|
-
|
-
|
Technology Hardware and Equipment
|
16,551
|
6.4
|
15,242
|
6.0
|
|
43,031
|
16.8
|
34,454
|
13.5
|
Taiwan
|
|
|
|
|
Food, Beverage and Tobacco
|
3,273
|
1.3
|
4,416
|
1.7
|
Semiconductors and Semiconductor Equipment
|
24,085
|
9.3
|
19,499
|
7.7
|
Technology Hardware and Equipment
|
6,288
|
2.5
|
9,707
|
3.8
|
|
33,646
|
13.1
|
33,622
|
13.2
|
Thailand
|
|
|
|
|
Banks
|
6,680
|
2.6
|
4,991
|
1.9
|
|
6,680
|
2.6
|
4,991
|
1.9
|
Vietnam
|
|
|
|
|
Food, Beverage and Tobacco
|
3,356
|
1.3
|
-
|
-
|
Materials
|
2,399
|
0.9
|
-
|
-
|
|
5,755
|
2.2
|
-
|
-
|
Total
|
258,962
|
100.0
|
256,686
|
100.0
|
1
Restated to reflect 2023 MSCI Global Industry Classification
Standard (GICS) sector structure changes.
Statement of Directors’
Responsibilities
IN RESPECT OF THE PREPARATION OF THE ANNUAL FINANCIAL
REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Financial
Report and financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law they have elected to
prepare the financial statements in accordance with UK accounting
standards, and applicable law, including FRS 102
The Financial Reporting Standard applicable in the UK and
Republic of
Ireland.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of its profit or
loss for that period.
In preparing these financial statements, the Directors are required
to:
– select
suitable accounting policies and then apply them
consistently;
– make
judgements and estimates that are reasonable and
prudent;
– state
whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
– assess
the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and
– use
the going concern basis of accounting unless they either intend to
liquidate the Company or to cease operations or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies
Act 2006.
They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website, which is maintained by the Company’s Manager. Legislation
in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
Responsibility Statement of the Directors in Respect of the
Annual Financial Report
We confirm that to the best of our knowledge:
– the
financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
– the
Strategic Report includes a fair review of the development and
performance of the business and the position of the issuer,
together with a description of the principal risks and
uncertainties that they face.
We consider the Annual Financial Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company’s position and performance,
business model and strategy.
Signed on behalf of the Board of Directors
Neil
Rogan
Chairman
25 July 2023
Income Statement
|
|
For
the Year ended 30 April 2023
|
For
the Year ended 30 April 2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Notes
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
Losses on investments held at fair value
|
9
|
-
|
(1,309)
|
(1,309)
|
-
|
(20,854)
|
(20,854)
|
Gains/(losses) on foreign exchange
|
|
-
|
625
|
625
|
-
|
(178)
|
(178)
|
Income
|
2
|
7,601
|
51
|
7,652
|
6,228
|
62
|
6,290
|
Investment management fee
|
3
|
(460)
|
(1,381)
|
(1,841)
|
(484)
|
(1,453)
|
(1,937)
|
Other expenses
|
4
|
(681)
|
(3)
|
(684)
|
(612)
|
(5)
|
(617)
|
Net return before finance costs and
taxation
|
|
6,460
|
(2,017)
|
4,443
|
5,132
|
(22,428)
|
(17,296)
|
Finance costs
|
5
|
(108)
|
(325)
|
(433)
|
(11)
|
(33)
|
(44)
|
Return on ordinary activities before
taxation
|
|
6,352
|
(2,342)
|
4,010
|
5,121
|
(22,461)
|
(17,340)
|
Tax on ordinary activities
|
6
|
(756)
|
(532)
|
(1,288)
|
(652)
|
(855)
|
(1,507)
|
Return on ordinary activities after taxation for the
financial year
|
|
5,596
|
(2,874)
|
2,722
|
4,469
|
(23,316)
|
(18,847)
|
Return per ordinary share
Basic
|
7
|
8.37p
|
(4.30)p
|
4.07p
|
6.68p
|
(34.87)p
|
(28.19)p
|
The total column of this statement represents the Company’s profit
and loss account, prepared in accordance with UK Accounting
Standards. The return on ordinary activities after taxation is the
total comprehensive income and therefore no additional statement of
other comprehensive income is presented. The supplementary revenue
and capital columns are presented for information purposes in
accordance with the Statement of Recommended Practice issued by the
Association of Investment Companies. All items in the above
statement derive from continuing operations of the Company. No
operations were acquired or discontinued in the year.
Statement of Changes in Equity
|
|
|
Capital
|
|
|
|
|
|
|
Share
|
Redemption
|
Special
|
Capital
|
Revenue
|
|
|
|
Capital
|
Reserve
|
Reserve
|
Reserve(1)
|
Reserve(1)
|
Total
|
|
Notes
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
At Year ended 30 April 2021
|
|
7,500
|
5,624
|
34,827
|
229,438
|
3,863
|
281,252
|
Return on ordinary activities
|
|
-
|
-
|
-
|
(23,316)
|
4,469
|
(18,847)
|
Dividends paid
|
8
|
-
|
-
|
-
|
(3,308)
|
(6,921)
|
(10,229)
|
At Year ended 30 April 2022
|
|
7,500
|
5,624
|
34,827
|
202,814
|
1,411
|
252,176
|
Return on ordinary activities
|
|
-
|
-
|
-
|
(2,874)
|
5,596
|
2,722
|
Dividends paid
|
8
|
-
|
-
|
-
|
(4,227)
|
(5,667)
|
(9,894)
|
At Year ended 30 April 2023
|
|
7,500
|
5,624
|
34,827
|
195,713
|
1,340
|
245,004
|
|
|
|
|
|
|
|
|
|
(1)
These reserves form the distributable reserves of the Company and
may be used to fund distributions by way of dividends.
Balance Sheet
|
|
At 30 April 2023
|
At 30 April 2022
|
|
Notes
|
£’000
|
£’000
|
Fixed assets
|
|
|
|
Investments held at fair value through profit or loss
|
9
|
258,962
|
256,686
|
Current assets
|
|
|
|
Debtors
|
10
|
522
|
2,492
|
Cash
and cash equivalents
|
|
1,337
|
738
|
|
|
1,859
|
3,230
|
Creditors: amounts falling due within one
year
|
|
|
|
Bank overdraft
|
|
(740)
|
-
|
Other Creditors
|
11
|
(14,261)
|
(7,047)
|
|
|
(15,001)
|
(7,047)
|
Net current liabilities
|
|
(13,142)
|
(3,817)
|
Total assets less current liabilities
|
|
245,820
|
252,869
|
Provision for deferred tax liabilities
|
12
|
(816)
|
(693)
|
Net assets
|
|
245,004
|
252,176
|
Capital and reserves
|
|
|
|
Share capital
|
13
|
7,500
|
7,500
|
Other reserves:
|
|
|
|
Capital
redemption reserve
|
14
|
5,624
|
5,624
|
Special
reserve
|
14
|
34,827
|
34,827
|
Capital
reserve
|
14
|
195,713
|
202,814
|
Revenue
reserve
|
14
|
1,340
|
1,411
|
Total shareholders’ funds
|
|
245,004
|
252,176
|
Net asset value per ordinary share
|
|
|
|
Basic
|
15
|
366.48p
|
377.21p
|
The financial statements were approved and authorised for issue by
the Board of Directors on 25 July
2023.
Signed on behalf of the Board of Directors
Neil
Rogan
Chairman
Notes to the Financial Statements
1. Accounting
Policies
Accounting policies describe the Company’s approach to
recognising and measuring transactions during the year and the
position of the Company at the year end.
A summary of the principal accounting policies, all of which have
been consistently applied throughout this and the preceding year is
set out below:
(a) Basis
of Preparation
(i) Accounting
Standards applied
The financial statements have been prepared in accordance with
applicable United Kingdom Accounting Standards and applicable law
(UK Generally Accepted Accounting Practice (‘UK GAAP’)), including
FRS 102, and with the Statement of Recommended Practice Financial
Statements of Investment Trust Companies and Venture Capital
Trusts, updated by the Association of Investment Companies in
July 2022 (‘SORP’). The financial
statements are prepared on a going concern basis.
As an investment fund the Company has the option, which it has
taken, not to present a cash flow statement as the following
conditions have been met:
• substantially
all investments are highly liquid;
• substantially
all investments are carried at market value; and
• a
statement of changes in equity is provided.
(ii) Going
concern
The financial statements have been prepared on a going concern
basis. The Directors performed an assessment of the Company’s
ability to meet its liabilities as they fall due. In performing
this assessment, the Directors took into consideration the
continuing uncertain economic outlook and other geopolitical events
including:
• the
level of borrowings, cash balances and the diversified portfolio of
readily realisable securities which can be used to meet short-term
funding commitments, including repayment of the bank
facility;
• the
net current liability position of the Company, after the deduction
of drawn-down borrowings, which will be met through the renewal of
the existing credit facility or the sale of investments in order to
repay any borrowings;
• the
ability of the Company to meet all of its liabilities and ongoing
expenses from its assets;
• revenue
and operating cost forecasts for the forthcoming year;
• the
ability of third-party service providers to continue to provide
services; and
• potential
downside scenarios including a fall in the valuation of the
investment portfolio or levels of investment income.
Based on this assessment, the Directors are satisfied that the
Company has adequate resources to continue in operational existence
for at least 12 months after signing the balance sheet and the
financial statements have therefore been prepared on a going
concern basis.
(iii) Significant
Accounting Estimates and Judgements
The preparation of the financial statements may require the
Directors to make estimates where uncertainty exists. It also
requires the Directors to make judgements, estimates and
assumptions, in the process of applying the accounting policies.
Except for the functional and presentation currency as noted below,
there have been no other significant judgements, estimates or
assumptions for the current or preceding year.
(b) Foreign
Currency
(i) Functional
and presentation currency
The Company’s investments are made in several currencies, however,
the financial statements are presented in sterling, which is the
Company’s functional and presentational currency. In arriving at
this conclusion, the Directors considered that the Company’s shares
are listed and traded on the London Stock Exchange, the shareholder
base is predominantly in the United
Kingdom and the Company pays dividends and expenses in
sterling.
(ii) Transactions
and balances
Transactions in foreign currency, whether of a revenue or capital
nature, are translated to sterling at the rates of exchange ruling
on the dates of such transactions. Foreign currency assets and
liabilities are translated to sterling at the rates of exchange
ruling at the balance sheet date. Any gains or losses, whether
realised or unrealised, are taken to the capital reserve or to the
revenue account, depending on whether the gain or loss is of a
capital or revenue nature. All gains and losses are recognised in
the income statement.
(c) Financial
Instruments
The Company has chosen to apply the provisions of Sections 11 and
12 of FRS 102 in full in respect of the financial instruments,
which is explained below.
(i) Recognition
of financial
assets and financial liabilities
The Company recognises financial assets and financial liabilities
when the Company becomes a party to the contractual provisions of
the instrument. The Company offsets financial assets and financial
liabilities in the financial statements if the Company has a
legally enforceable right to set off the recognised amounts and
interests and intends to settle on a net basis.
(ii) Derecognition
of financial assets
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire or it transfers the
right to receive the contractual cash flows on the financial asset
in a transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred. Any interest
in the transferred financial asset that is created or retained by
the Company is recognised as an asset.
(iii) Derecognition
of financial liabilities
The Company derecognises financial liabilities when its obligations
are discharged, cancelled or expired.
(iv) Trade
date accounting
Purchases and sales of financial assets are recognised on trade
date, being the date on which the Company commits to purchase or
sell the assets.
(v) Classification
and measurement of financial assets and financial
liabilities
Financial
assets
The Company’s investments are held at fair value through profit or
loss as the investments are managed and their performance evaluated
on a fair value basis in accordance with documented investment
strategy and this is also the basis on which information about the
investments is provided internally to the Board. Financial assets
held at fair value through profit or loss are initially recognised
at fair value, which is taken to be their cost, with transaction
costs expensed in the income statement, and are subsequently valued
at fair value.
Financial assets measured at amortised cost include cash, debtors
and prepayments.
Fair value for investments that are actively traded in organised
financial markets, is determined by reference to stock exchange
quoted bid prices at the balance sheet date. For investments that
are not actively traded and where active stock exchange quoted bid
prices are not available, fair value is determined by reference to
a variety of valuation techniques including last traded price,
broker quotes and price modelling.
Financial
liabilities
Financial liabilities, including borrowings, are initially measured
at fair value, net of transaction costs and are subsequently
measured at amortised cost using the effective interest
method.
(d) Cash
and Cash Equivalents
Cash and cash equivalents may comprise short term deposits which
are readily convertible to a known amount of cash and are subject
to an insignificant risk of change in value. Investments are
regarded as cash equivalents if they meet all of the following
criteria: highly liquid investments held in the Company’s base
currency that are readily convertible to a known amount of cash,
are subject to an insignificant risk of change in value and have a
maturity of no more than three months. There were no cash
equivalents at the balance sheet date.
(e) Income
All dividends are taken into account on the date investments are
marked ex-dividend, and UK dividends are shown net of any
associated tax credit. Where the Company elects to receive
dividends in the form of additional shares rather than cash, the
equivalent of the cash dividend is recognised as income in the
revenue account and any excess in value of the shares received over
the amount of the cash dividend is recognised in capital. Special
dividends representing a return of capital are allocated to capital
in the Income Statement and then taken to capital reserves.
Dividends will generally be recognised as revenue however all
special dividends will be reviewed, with consideration given to the
facts and circumstances of each case, including the reasons for the
underlying distribution, before a decision over whether allocation
is to revenue or capital is made. Interest income and expenses are
accounted for on an accruals basis. Other income from investments
is accounted for on an accruals basis. Deposit interest receivable
is accounted for on an accruals basis.
(f) Expenses
and Finance Costs
Expenses are recognised on an accruals basis and finance costs are
recognised using the effective interest method in the income
statement.
The investment management fee and finance costs are allocated 75%
to capital and 25% to revenue. This is in accordance with the
Board’s expected long-term split of returns, in the form of capital
gains and income respectively, from the portfolio.
Investment transaction costs are recognised in capital in the
income statement. All other expenses are allocated to revenue in
the income statement.
(g) Dividends
Dividends are not recognised in the accounts unless there is an
obligation to pay at the balance sheet date. Proposed final
dividends are recognised in the period in which they are either
approved by or paid to shareholders.
(h) Taxation
The liability to corporation tax is based on taxable profit for the
period. Taxable profit differs from profit before tax as reported
in the income statement because it excludes items of income or
expenses that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
tax charge is allocated between the revenue and capital accounts on
the marginal basis whereby revenue expenses are matched first
against taxable income in the revenue account.
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date where transactions or events that result in an
obligation to pay more tax or a right to pay less tax in the future
have occurred. Timing differences are differences between the
Company’s taxable profits and its results as stated in the
financial statements. Deferred taxation assets are recognised
where, in the opinion of the Directors, it is more likely than not
that these amounts will be realised in future periods.
A deferred tax asset has not been recognised in respect of surplus
management expenses and the non-trade loan relationship deficit as
the Company is unlikely to have sufficient future taxable revenue
to offset against these.
Gains and losses on sale of investments purchased and sold in
India are liable to capital gains
tax in India.
At each year end date, a provision for Indian capital gains tax is
calculated based upon the Company’s realised and unrealised gains
and losses. There are two rates of tax: short-term and long-term.
The short-term rate of tax is applicable to investments held for
less than 12 months and the long-term rate of tax is applicable to
investments held for more than 12 months.
The provision for the Indian capital gains tax is recognised in the
balance sheet and the year-on-year movement in the deferred tax
provision is recognised in the income statement.
2. Income
This note shows the income generated from the portfolio
(investment assets) of the Company and income received from any
other source.
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Income from investments:
|
|
|
|
Overseas dividends
|
7,116
|
5,848
|
|
Overseas special dividends
|
470
|
380
|
|
Total dividend income
|
7,586
|
6,228
|
|
Other income:
|
|
|
|
Deposit interest
|
15
|
-
|
|
|
15
|
-
|
|
Total income
|
7,601
|
6,228
|
Special dividends of £51,000 were recognised in capital during the
year (2022: £62,000).
3. Investment
Management Fee
This note shows the investment management fee due to the
Manager which is calculated and paid quarterly.
|
|
2023
|
2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Investment management fee
|
460
|
1,381
|
1,841
|
484
|
1,453
|
1,937
|
Details of the investment management and secretarial agreement are
given on page 35 in the Directors’ Report.
At 30 April 2023, £448,000 (2022:
£461,000) was accrued in respect of the investment management
fee.
4. Other
Expenses
The other expenses, including those paid to Directors and
the auditor, of the Company are presented below; those paid to the
Directors and the auditor are separately
identified.
|
2023
|
2022
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
Directors’ remuneration (i)
|
134
|
-
|
134
|
137
|
-
|
137
|
Auditor’s fees (ii):
|
|
|
|
|
|
|
– for
audit of the Company’s Annual Financial Statements
|
50
|
-
|
50
|
40
|
-
|
40
|
Other administration expenses (iii)
|
497
|
3
|
500
|
435
|
5
|
440
|
|
681
|
3
|
684
|
612
|
5
|
617
|
(i)
Directors’
fees authorised by the Articles of Association are £200,000 per
annum. The Director’s Remuneration Report provides further
information on Directors’ fees.
(ii) Auditor’s
fees include out of pocket expenses but excludes VAT. The VAT is
included in other administration expenses.
(iii) Other
administration expenses include:
• £12,000
(2022: £13,000) of employer’s National Insurance payable on
Directors’ remuneration. As at 30 April
2023, the amounts outstanding on Directors’ remuneration was
£10,000 (2022: £12,000); and the amount outstanding in respect of
employer’s National Insurance was £1,000 (2022: £1,000).
• custodian
transaction charges of £3,000 (2022: £5,000). These are charged to
capital.
• a
separate fee paid to the Manager for secretarial and administrative
services which is subject to annual adjustment in line with the UK
Retail Price Index. During the year the Company paid £118,000
(2022: £102,000) for these services.
5. Finance
Costs
Finance costs arise on any borrowing the Company has
utilised in the year. The Company has a committed £20 million
revolving credit facility (the ‘bank facility’) (see note 11 for
further details).
|
|
2023
|
2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Commitment fees due on bank facility
|
5
|
17
|
22
|
10
|
31
|
41
|
|
Interest on bank facility
|
99
|
298
|
397
|
1
|
2
|
3
|
|
Overdraft interest
|
4
|
10
|
14
|
-
|
-
|
-
|
|
|
108
|
325
|
433
|
11
|
33
|
44
|
6. Taxation
As an investment trust the Company pays no UK corporation
tax on capital gains. The Company suffers no UK corporation tax on
income arising on UK and certain overseas dividends. The Company’s
tax charge arises from irrecoverable tax on overseas (generally
non-EU) dividends and Indian capital gains tax paid and provided
for.
(a) Tax
charge
|
|
2023
|
2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Overseas tax
|
756
|
-
|
756
|
652
|
-
|
652
|
|
Indian capital gains tax - paid – note 6(d)
|
-
|
409
|
409
|
-
|
162
|
162
|
|
Indian capital gains tax - provision – note 6(d)
|
-
|
123
|
123
|
-
|
693
|
693
|
|
Tax charge for the year
|
756
|
532
|
1,288
|
652
|
855
|
1,507
|
The overseas tax charge consists of irrecoverable withholding
tax.
(b) Reconciliation
of total tax charge
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Return on ordinary activities before taxation
|
4,010
|
(17,340)
|
|
Theoretical tax at the current UK Corporation Tax rate of 19.5%
(2022: 19%)
|
782
|
(3,295)
|
|
Effects of:
|
|
|
|
–
Non-taxable overseas dividends
|
(1,425)
|
(1,109)
|
|
–
Non-taxable overseas special dividends
|
(64)
|
(84)
|
|
–
Losses on investments not subject to UK corporation tax
|
255
|
3,962
|
|
–
Non-taxable (gains)/losses on foreign exchange
|
(122)
|
34
|
|
–
Excess of allowable expenses over taxable income
|
573
|
491
|
|
–
Disallowable expenses
|
1
|
1
|
|
–
Overseas taxation
|
756
|
652
|
|
–
Indian capital gains tax - paid
|
409
|
162
|
|
–
Indian capital gains tax – provision – see (d) below
|
123
|
693
|
|
Tax charge for the year
|
1,288
|
1,507
|
Given the Company’s status as an investment trust, and the
intention to continue meeting the conditions required to obtain the
necessary approval in the foreseeable future, the Company has not
provided any UK corporation tax on any realised or unrealised
capital gains or losses arising on investments.
(c) Factors
that may affect future tax changes
The Company has cumulative excess management expenses of
£28,016,000 (2022: £25,486,000) and a non-trade loan relationship
deficit of £1,220,000 (2022: £803,000) giving total unutilised
losses of £29,236,000 (2022: £26,289,000) that are available to
offset future taxable revenue.
A deferred tax asset of £7,309,000 (2022: £6,572,000) at 25% (2022:
25%) has not been recognised in respect of these expenses since the
Directors believe that there will be no taxable profits in the
future against which the deferred tax assets can be
offset.
The UK corporation tax rate increased from 19% to 25% from
1 April 2023. Deferred tax assets and
liabilities on balance sheets prepared after the enactment of the
new tax rate must therefore be re-measured accordingly, so as a
result the deferred tax asset has been calculated at
25%.
(d) Indian
capital gains tax
Capital gains arising from equity investments in Indian companies
are subject to Indian Capital Gains Tax Regulations. Consequently,
the Company is subject to both short and long term capital gains
tax in India on the growth in
value of its Indian equities.
Although this capital gains tax only becomes payable at the point
at which the underlying investments are sold and profits
crystallised, the Company has made a provision for this tax
liability for the year ended 30 April
2023 of £816,000 (2022: £693,000).
See note 12
for further details.
7. Return
per Ordinary Share
Return per share is the amount of gain or loss generated
for the financial year divided by the weighted average number of
ordinary shares in issue.
|
|
2023
|
2022
|
|
|
Pence
|
£’000
|
Pence
|
£’000
|
|
Return per ordinary share is based on the following:
|
|
|
|
|
|
Revenue return after taxation
|
8.37
|
5,596
|
6.68
|
4,469
|
|
Capital return after taxation
|
(4.30)
|
(2,874)
|
(34.87)
|
(23,316)
|
|
Total return after taxation
|
4.07
|
2,722
|
(28.19)
|
(18,847)
|
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Weighted average number of ordinary shares in issue during the
year
|
66,853,287
|
66,853,287
|
8. Dividends
on Ordinary Shares
Dividends represent a return of income to shareholders for
investing in the Company’s shares. These are determined by the
Directors and paid twice a year.
|
|
2023
|
2022
|
|
|
Pence
|
£’000
|
Pence
|
£’000
|
|
Dividends paid and recognised in the year:
|
|
|
|
|
|
First interim dividend paid
|
7.20
|
4,813
|
7.70
|
5,148
|
|
Second interim dividend paid
|
7.60
|
5,081
|
7.60
|
5,081
|
|
|
14.80
|
9,894
|
15.30
|
10,229
|
Set out above are the total dividends paid in respect of the
financial year, which is the basis on which the requirements of
Section 1158–1159 of the Corporation Tax Act 2010 are considered.
The revenue available for distribution by way of dividend for the
year is £5,596,000 (2022: £4,469,000).
9. Investments
at Fair Value
The portfolio comprises investments which are predominantly
listed and traded on regulated stock exchanges. The investments of
the Company are registered in the name of the Company or in the
name of nominees and held to the order of the
Company.
Gains and losses are either:
• realised,
usually arising when investments are sold; or
• unrealised,
being the difference from cost on those investments still held at
the year end.
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Opening valuation
|
256,686
|
279,058
|
|
Movements in the year:
|
|
|
|
Purchases
at cost
|
90,297
|
85,110
|
|
Sales
|
(86,712)
|
(86,628)
|
|
Losses
on investments in the year
|
(1,309)
|
(20,854)
|
|
Closing valuation
|
258,962
|
256,686
|
|
Closing book cost
|
234,875
|
211,699
|
|
Closing investment holding gains
|
24,087
|
44,987
|
|
Closing valuation
|
258,962
|
256,686
|
The Company received £86,712,000 (2022: £86,628,000) from
investments sold in the year. The book cost of these investments
when they were purchased was £67,122,000 (2022: £71,069,000)
realising a profit of £19,590,000 (2022: £15,559,000) which when
offset against the movement in closing investment holding gains
results in net losses on investments in the year of £1,309,000
(2022: net losses of £20,854,000). These investments have been
revalued over time and until they were sold any unrealised
profits/losses were included in the fair value of the
investments.
The transaction costs included in gains on investments amount to
£79,000 (2022: £65,000) on purchases and £134,000 (2022: £119,000)
for sales.
10. Debtors
Debtors are amounts which are due to the Company, such as
monies due from brokers for investments sold, income which has been
earned (accrued) but not yet received and any taxes that are
recoverable.
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Amounts due from brokers
|
-
|
1,746
|
|
Overseas withholding tax recoverable
|
145
|
163
|
|
VAT recoverable
|
19
|
16
|
|
Prepayments and accrued income
|
358
|
567
|
|
|
522
|
2,492
|
11. Creditors:
amounts falling due within one year
Creditors are amounts which must be paid by the Company and
they are all due within 12 months of the balance sheet
date.
The bank facility provides a specific amount of capital, up
to £20 million, over a specified period of time (364 days). Unlike
a term loan, the revolving nature of the bank facility allows the
Company to drawdown, repay and re-draw loans.
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Bank facility
|
13,593
|
5,610
|
|
Amounts due to brokers
|
-
|
780
|
|
Accruals
|
668
|
657
|
|
|
14,261
|
7,047
|
The committed unsecured 364 day multi-currency revolving credit
facility (the ‘bank facility’) with The Bank of New York Mellon,
has an interest payable based on the Adjusted Reference Rate
(principally SOFR and SONIA respectively in respect of loans drawn
in USD and GBP) plus a margin for amounts drawn. Any undrawn
amounts under the bank facility attract a commitment fee of 0.2%
(2022: 0.2%). The bank facility covenants are based on the lower of
25% of net asset value and £20 million, renewable on 28 July 2023, and require total assets to not
fall below £80 million. At the year end, the bank facility drawn
down was in US dollars with a sterling equivalent of £13,593,000
(2022: £5,610,000).
12. Provision
for deferred tax liabilities
The Company makes a deferred tax provision when a potential
obligation exists that will probably have to settle in cash, but
the amount is estimated and only becomes payable at the point at
which the underlying investments are sold and profits
crystallised.
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Provision for deferred Indian capital gains tax
|
816
|
693
|
|
|
816
|
693
|
13. Share
Capital
Share capital represents the total number of shares in
issue. Any dividends declared will be paid on the shares in issue
on the record date.
The Directors’ Report on page 36 sets out the share capital
structure, restrictions and voting rights.
Share capital represents the total number of shares in issue,
including treasury shares.
(a) Allotted,
called-up and fully paid
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Share capital:
|
|
|
|
Ordinary shares of 10p each
|
6,685
|
6,685
|
|
Treasury shares of 10p each
|
815
|
815
|
|
|
7,500
|
7,500
|
(b) Share
movements
|
|
2023
|
2022
|
|
|
Ordinary
|
Treasury
|
Ordinary
|
Treasury
|
|
|
number
|
number
|
number
|
number
|
|
Number at start of year
|
66,853,287
|
8,146,594
|
66,853,287
|
8,146,594
|
|
Number at the end of the year
|
66,853,287
|
8,146,594
|
66,853,287
|
8,146,594
|
During the year the Company has not bought back any shares into
treasury (2022: nil shares bought back into treasury).
Since the year end and to the date of this annual financial report,
no shares have been bought back or re-issued.
14. Reserves
This note explains the different reserves attributable to
shareholders. The aggregate of the reserves and share capital (see
previous note) make up total shareholders’
funds.
The capital redemption reserve maintains the equity share capital
arising from the buy-back and cancellation of shares and is
non-distributable. The special reserve arose from the cancellation
of the share premium account and is available as a distributable
reserve to fund any future tender offers and share
buybacks.
The capital reserve includes investment gains and losses, expenses
allocated to capital and special dividends received that are
classified as capital in nature. The revenue reserve reflects the
income and expenses as shown in the revenue column of the Income
Statement. The capital and revenue reserves are distributable by
way of dividend. Dividends are first funded from available revenue
reserves and then funded from capital reserves at the date of the
dividend payment.
15. Net
Asset Value
The Company’s total net assets (total assets less total
liabilities) are often termed shareholders’ funds and are converted
into net asset value per ordinary share by dividing by the number
of shares in issue as at the reporting date.
The net asset values attributable to each share in accordance with
the Company's Articles are set out below.
|
|
2023
|
2022
|
|
Ordinary shareholders’ funds
|
£245,004,000
|
£252,176,000
|
|
Number of ordinary shares in issue, excluding treasury
shares
|
66,853,287
|
66,853,287
|
|
Net asset value per ordinary share
|
366.48p
|
377.21p
|
There is no dilution in this or the prior year and therefore no
diluted net asset value per ordinary share has been
disclosed.
16. Financial
Instruments
Financial instruments comprise the Company’s investment
portfolio, derivative financial instruments (if the Company had
any), as well as any cash, borrowings, debtors and creditors. This
note sets out the risks arising from the Company’s financial
instruments in terms of the Company’s exposure and sensitivity, and
any mitigation that the Manager or Board can
take.
Risk Management Policies and Procedures
The Company’s portfolio is managed in accordance with its
investment objective, which is set out in the Strategic Report on
page 20.
The Strategic Report then proceeds to set out the Manager’s
investment process and the Company’s internal control and risk
management systems as well as the Company’s principal and emerging
risks and uncertainties. Risk management is an integral part of the
investment management process, and this note expands on certain of
those risks in relation to the Company’s financial instruments,
including market risk.
The accounting policies in note 1 include criteria for the
recognition and the basis of measurement applied for financial
instruments. Note 1 also includes the basis on which income and
expenses arising from financial assets and liabilities are
recognised and measured. The Directors have delegated to the
Manager the responsibility for the day-to-day investment activities
of the Company as more fully described in the Strategic
Report.
As an investment trust the Company invests in equities and other
investments for the long-term so as to
meet its investment objective and policies. In pursuing its
investment objective, the Company is exposed to a variety of risks
that could result in either a reduction in the Company’s net assets
or a reduction
of the profits available for dividends. The risks applicable to the
Company and the policies the Company used to manage these are
summarised below and have remained substantially unchanged for the
two years under review.
16.1 Market
Risk
Market risk arises from changes in the fair value or future cash
flows of a financial instrument because of movements in market
prices. Market risk comprises three types of risk: currency risk
(16.1.1), interest rate risk (16.1.2) and other price risk
(16.1.3).
The Company’s Manager assesses the Company’s exposure when making
each investment decision, and monitors the overall level of market
risk on the whole of the investment portfolio on an ongoing basis.
The Board meets at least quarterly to assess risk and review
investment performance, as disclosed in the Board Responsibilities
on page 41.
Borrowing is used to enhance returns; however, this will also
increase the Company’s exposure to market risk and
volatility.
16.1.1
Currency Risk
As nearly all of the Company’s assets, liabilities and income are
denominated in currencies other than sterling, movements in
exchange rates will affect the sterling value of those
items.
Management of the Currency Risk
The Manager monitors the Company’s exposure to foreign currencies
on a daily basis and reports to the Board on a regular basis. With
the exception of borrowings in foreign currency, the Company does
not normally hedge its currency positions but may do so should the
Portfolio Managers or the Board feel this was appropriate.
Contracts are limited to currencies and amounts commensurate with
the asset exposure.
Income denominated in foreign currencies is converted to sterling
on receipt. The Company does not use financial instruments to
mitigate the currency exposure in the period between the time that
income is accrued and received.
Foreign Currency Exposure
The fair values of the Company’s monetary items that have currency
exposure at 30 April are shown below. Where the Company's
investments (which are not monetary items) are priced in a foreign
currency they have been included separately in the analysis so as
to show the overall level of exposure.
Year ended 30 April
2023
|
|
|
|
|
Foreign
|
Investments
|
|
|
Debtors
|
|
|
Creditors
|
currency
|
at fair
|
|
|
(due from
|
|
|
(due to
|
exposure
|
value
|
Total net
|
|
brokers
|
Cash and
|
Overdrafts
|
brokers
|
on net
|
through
|
foreign
|
|
and
|
cash
|
and bank
|
and
|
monetary
|
profit
|
currency
|
|
dividends)
|
equivalents
|
facility
|
accruals)
|
items
|
or loss
|
exposure
|
Currency
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
Australian dollar
|
-
|
-
|
-
|
-
|
-
|
8,427
|
8,427
|
Chinese yuan
|
-
|
-
|
-
|
-
|
-
|
23,822
|
23,822
|
Hong Kong dollar
|
-
|
-
|
-
|
-
|
-
|
93,836
|
93,836
|
Indian rupee
|
-
|
-
|
-
|
-
|
-
|
24,269
|
24,269
|
Indonesian rupiah
|
-
|
-
|
-
|
-
|
-
|
10,627
|
10,627
|
Singapore dollar
|
58
|
-
|
-
|
-
|
58
|
2,167
|
2,225
|
South Korean won
|
124
|
-
|
-
|
-
|
124
|
43,031
|
43,155
|
Taiwan dollar
|
145
|
345
|
-
|
-
|
490
|
33,646
|
34,136
|
Thai baht
|
151
|
-
|
-
|
-
|
151
|
6,680
|
6,831
|
US dollar
|
-
|
845
|
(14,333)
|
-
|
(13,488)
|
6,702
|
(6,786)
|
Vietnamese Dong
|
-
|
-
|
-
|
-
|
-
|
5,755
|
5,755
|
|
478
|
1,190
|
(14,333)
|
-
|
(12,665)
|
258,962
|
246,297
|
|
|
|
|
|
|
|
|
|
Year ended 30 April
2022
|
|
|
|
|
Foreign
|
Investments
|
|
|
Debtors
|
|
|
Creditors
|
currency
|
at fair
|
|
|
(due from
|
|
|
(due to
|
exposure
|
value
|
Total net
|
|
brokers
|
Cash and
|
Overdrafts
|
brokers
|
on net
|
through
|
foreign
|
|
and
|
cash
|
and bank
|
and
|
monetary
|
profit
|
currency
|
|
dividends)
|
equivalents
|
facility
|
accruals)
|
items
|
or loss
|
exposure
|
Currency
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
Australian dollar
|
-
|
-
|
-
|
-
|
-
|
10,941
|
10,941
|
Chinese yuan
|
-
|
-
|
-
|
-
|
-
|
14,990
|
14,990
|
Hong Kong dollar
|
239
|
-
|
-
|
(7)
|
232
|
93,178
|
93,410
|
Indian rupee
|
-
|
-
|
-
|
-
|
-
|
25,802
|
25,802
|
Indonesian rupiah
|
697
|
-
|
-
|
-
|
697
|
17,126
|
17,823
|
Singapore dollar
|
423
|
-
|
-
|
-
|
423
|
6,898
|
7,321
|
South Korean won
|
859
|
-
|
-
|
(773)
|
86
|
34,453
|
34,539
|
Taiwan dollar
|
163
|
227
|
-
|
-
|
390
|
33,622
|
34,012
|
Thai baht
|
81
|
-
|
-
|
-
|
81
|
4,991
|
5,072
|
US dollar
|
-
|
488
|
(5,610)
|
-
|
(5,122)
|
14,685
|
9,563
|
|
2,462
|
715
|
(5,610)
|
(780)
|
(3,213)
|
256,686
|
253,473
|
|
|
|
|
|
|
|
|
|
The amounts shown are not representative of the exposure to risk
during the year, because the levels of foreign currency exposure
change significantly throughout the year.
Foreign Currency Sensitivity
The following table illustrates the sensitivity of the returns
after taxation for the year with respect to the Company’s financial
assets and liabilities.
If sterling had strengthened by the amounts shown in the second
table below, the effect on the assets and liabilities held in
non-sterling currency would have been as follows:
|
|
2023
|
2022
|
|
|
|
|
Total
|
|
|
Total
|
|
|
Revenue
|
Capital
|
loss
|
Revenue
|
Capital
|
loss
|
|
|
return
|
return
|
after tax
|
return
|
return
|
after tax
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Australian dollar
|
(9)
|
(219)
|
(228)
|
(4)
|
(263)
|
(267)
|
|
Chinese yuan
|
(25)
|
(572)
|
(597)
|
(22)
|
(435)
|
(457)
|
|
Hong Kong dollar
|
(62)
|
(3,097)
|
(3,159)
|
(32)
|
(2,143)
|
(2,175)
|
|
Indian rupee
|
19
|
(849)
|
(830)
|
7
|
(387)
|
(380)
|
|
Indonesian rupiah
|
(11)
|
(340)
|
(351)
|
(6)
|
(446)
|
(452)
|
|
Singapore dollar
|
(5)
|
(52)
|
(57)
|
(6)
|
(137)
|
(143)
|
|
South Korean won
|
(24)
|
(990)
|
(1,014)
|
(14)
|
(447)
|
(461)
|
|
Taiwan dollar
|
(24)
|
(748)
|
(772)
|
(22)
|
(643)
|
(665)
|
|
Thai baht
|
(4)
|
(147)
|
(151)
|
(2)
|
(95)
|
(97)
|
|
US dollar
|
434
|
(225)
|
209
|
(3)
|
(239)
|
(242)
|
|
Vietnamese Dong
|
-
|
(161)
|
(161)
|
-
|
-
|
-
|
|
|
289
|
(7,400)
|
(7,111)
|
(104)
|
(5,235)
|
(5,339)
|
If sterling had weakened by the same amounts, the effect would have
been the converse.
The following movements in the assumed exchange rates are used in
the above sensitivity analysis:
|
|
2023
|
2022
|
|
|
%
|
%
|
|
£/Australian dollar
|
+/–2.6
|
+/–2.4
|
|
£/Chinese yuan
|
+/–2.4
|
+/–2.9
|
|
£/Hong Kong dollar
|
+/–3.3
|
+/–2.3
|
|
£/Indian rupee
|
+/–3.5
|
+/–1.5
|
|
£/Indonesian rupiah
|
+/–3.2
|
+/–2.5
|
|
£/Singapore dollar
|
+/–2.4
|
+/–1.9
|
|
£/South Korean won
|
+/–2.3
|
+/–1.3
|
|
£/Taiwan dollar
|
+/–2.2
|
+/–1.9
|
|
£/Thai baht
|
+/–2.2
|
+/–1.9
|
|
£/US dollar
|
+/–3.3
|
+/–2.5
|
|
£/Vietnamese Dong
|
+/–2.8
|
-
|
These percentages have been determined based on the market
volatility in exchange rates during the year. The sensitivity
analysis is based on the Company’s foreign currency financial
instruments held at each balance sheet date and takes account of
forward foreign exchange contracts that offset the effects of
changes in currency exchange rates. The effect of the strengthening
or weakening of sterling against foreign currencies is calculated
by reference to the volatility of exchange rates during the year
using one standard deviation of currency fluctuations from the
average exchange rate.
In the opinion of the Directors, the above sensitivity analyses are
not representative of the year as a whole since the level of
foreign currency exposure varies.
16.1.2
Interest Rate Risk
The Company is exposed to interest rate risk through income
receivable on cash deposits and interest payable on variable rate
borrowings. When the Company has cash balances, they are held in
variable rate bank accounts yielding rates of interest dependent on
the base rate of the custodian, Bank of New York Mellon
(International) Limited.
The Company has a revolving credit facility (the ‘bank facility’)
for which details and year end drawn down amounts are shown in note
11. The Company uses the facility when required at levels approved
and monitored by the Board. At the maximum possible gearing of £20
million, the effect of a 1% increase/decrease in the interest rate
would result in a decrease/increase to the Company’s total income
of £200,000. At the year end, US dollars with a sterling equivalent
of £13,593,000 of the bank facility was drawn down (2022:
£5,610,000).
The Company also has available an uncommitted bank overdraft
arrangement with the custodian for settlement purposes. At the year
end, there was a US dollar overdraft with a sterling equivalent of
£740,000 (2022: £nil). Interest on the bank overdraft is payable at
the custodian’s variable rate.
The Company’s portfolio is not directly exposed to interest rate
risk.
16.1.3
Other Price Risk
Other price risks (i.e. changes in market prices other than those
arising from interest rate risk or currency risk) may affect the
value of the equity investments, but it is the business of the
Manager to manage the portfolio to achieve the best possible
return.
The Directors manage the market price risks inherent in the
investment portfolio by meeting regularly to monitor on a formal
basis the Manager’s compliance with the Company’s stated objectives
and policies and to review investment performance.
The Company’s portfolio is the result of the Manager’s investment
process and as a result is not wholly correlated with the Company’s
benchmark or the markets in which the Company invests. The value of
the portfolio will not move in line with the markets but will move
as a result of the performance of the shares within the
portfolio.
If the value of the portfolio rose or fell by 10% at the balance
sheet date, the profit after tax for the year would increase or
decrease by £25.9 million (2022: £25.7 million)
respectively.
16.2 Liquidity
Risk
This is the risk that the Company may encounter difficulty in
meeting its obligations associated with financial liabilities i.e.
when realising assets or raising finance to meet financial
commitments.
A lack of liquidity in the portfolio may make it difficult for the
Company to realise assets at or near their purported value in the
event of a forced sale. This is minimised as the majority of the
Company’s investments comprise a diversified portfolio of readily
realisable securities which can be sold to meet funding commitments
as necessary, cash held and the bank facility provides for
additional funding flexibility. The financial liabilities of the
Company at the balance sheet date are shown in note 11.
16.3 Credit
Risk
Credit risk comprises the potential failure by counterparties to
deliver securities which the Company has paid for, or to pay for
securities which the Company has delivered; it includes but is not
limited to: lost principal and interest, disruption to cash flows
or the failure to pay interest.
Credit risk is minimised by using:
(a) only
approved counterparties, covering both brokers and deposit
takers;
(b) a
custodian that operates under BASEL III guidelines. The Board reviews the
custodian’s annual, externally audited, service organisation
controls report and the Manager’s management of the relationship
with the custodian. Following the appointment of a depositary,
assets held at the custodian are covered by the depositary’s
restitution obligation, accordingly the risk of loss is remote;
and
(c) the
Invesco Liquidity Funds plc – US Dollar, a money market fund, which
is rated AAAm by Standard & Poor’s and AAAmmf by
Fitch.
Cash balances are limited to a maximum of 5% of net assets with the
custodian, 2.5% of net assets with any other deposit taker and a
maximum of 6% of net assets in the Invesco Liquidity Funds plc.
These limits are at the discretion of the Board and are reviewed on
a regular basis. As at the year end, the sterling equivalent of
£1,337,000 (2022: £738,000) was held at the custodian, in addition
a balance had been held in Invesco Liquidity Funds plc during the
year and the balance was £nil at the year end (2022:
£846,000).
17. Fair
Value of Financial Assets and Financial
Liabilities
‘Fair value’ in accounting terms is the amount at which an
asset can be bought or sold in a transaction
between willing parties, i.e. a market-based, independent measure
of value. Under accounting standards there are three levels of fair
value based on whether there is an active market (Level 1) or, if
not, Levels 2 and 3 where other methods have been employed to
establish a fair value. This note sets out the aggregate amount of
the portfolio in each level, and why.
Financial assets and financial liabilities are either carried at
their fair value (investments), or at a reasonable
approximation of their fair value. The valuation techniques used by
the Company are explained in the accounting policy note. FRS 102
sets out three fair value levels for the fair value for the
hierarchy disclosures. Categorisation into a level is determined on
the basis of the lowest level input that is significant to the fair
value measurement of each relevant asset/liability.
The investments held by the Company at the year end are shown on
pages 29
and 30. Except for one Level 2 and one Level 3 investments
described below, all of the Company’s investments at the year end
were deemed to be Level 1 with fair values for all based on
unadjusted quoted prices in active markets for identical assets
totalling £252,244,000 (2022: £250,748,000).
Level 2 investments are investments for which inputs are other than
quoted prices included within Level 1 that are observable (i.e.
developed using market data). At the year end there was one Level 2
investment held with a total fair value of £6,680,000
(2022: £5,837,000),
comprising of Kasikornbank, valued at £6,680,000 (2022: £4,991,000)
and in the prior year, Invesco Liquidity Funds – US Dollar money
market fund, valued at £nil (2022: £846,000).
There have been no other transfers or movements between fair value
categories during the year.
Level 3 investments are investments for which inputs are
unobservable (i.e. for which market data is unavailable). Lime Co.
was the only Level 3 investment in the portfolio at the year end
and was valued at £38,000 using a price which was in line with
trades in the OTC market (2022: one investment: Lime Co. valued at
£101,000 based on prices of trades in the OTC market).
18. Capital
Management
This note is designed to set out the Company’s objectives,
policies and processes for managing its capital. This capital being
funded by monies invested in the Company by shareholders (both
initial investment and retained amount) and any borrowings by the
Company.
The Company’s total capital employed at 30
April 2023 was £258,597,000 (2022: £257,786,000) comprising
borrowings of £13,593,000 (2022: £5,610,000) and equity share
capital and other reserves of £245,004,000 (2022:
£252,176,000).
The Company’s total capital employed is managed to achieve the
Company’s investment objective and investment policy as set out on
page 20.
Borrowings may be used to provide gearing up to the lower of £20
million or 25% of net asset value. The Company’s policies and
processes for managing capital were unchanged throughout the year
and the preceding year.
The main risks to the Company’s investments are shown in the
Directors’ Report under the ‘Principal and Emerging Risks and
Uncertainties’ section on pages 23
to 25. These also explain that the Company is able to gear and that
gearing will amplify the effect on equity of changes in the value
of the portfolio.
The Board can also manage the capital structure directly since it
has taken the powers, which it is seeking to renew, to issue and
buy-back shares and it also determines dividend
payments.
The Company is subject to externally imposed capital requirements
with respect to the obligation and ability to pay dividends by
section 1158 Corporation Tax Act 2010 and by the Companies Act
2006, respectively, and with respect to the availability of the
bank facility, by the terms imposed by the lender, details of which
are given in note 11. The Board regularly monitors, and the Company
has complied with, these externally imposed capital
requirements.
19. Contingencies,
Guarantees and Financial Commitments
Any liabilities the Company is committed to honour, and
which are dependent on future circumstances or events occurring,
would be disclosed in this note if any existed.
There were no contingencies, guarantees or other financial
commitments of the Company as at 30 April
2023 (2021: nil).
20. Related
Party Transactions and Transactions with the
Manager
A related party is a company or individual who has direct
or indirect control or who has significant influence over the
Company. Under accounting standards, the Manager is not a related
party.
Under UK GAAP, the Company has identified the Directors and their
dependents as related parties. The Directors’ remuneration and
interests have been disclosed on page 46
with additional disclosure in note 4. No other related parties have
been identified.
Details of the Manager’s services and fees are disclosed in the
Director’s Report on page 35,
note 3
and note 4(iii) to the financial statements.
21. Post
Balance Sheet Events
Any significant events that occurred after the balance
sheet date but before the signing of the balance sheet will be
shown here.
There are no significant events after the end of the reporting
period requiring disclosure.
22. 2023
Financial Information
The figures and financial information for the year ended
30 April 2023 are extracted from the
Company's annual financial statements for that year and do not
constitute statutory accounts. The Company's annual financial
statements for the year to 30 April
2023 have been audited but have not yet been delivered to
the Registrar of Companies. The Auditor's report on the 2023 annual
financial statements was i) unqualified, ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
23. 2022
Financial Information
The figures and financial information for the year ended
30 April 2022 are compiled from an
extract of the published accounts for that year and do not
constitute statutory accounts.
Those accounts have been delivered to the Registrar of
Companies.
The Auditor's report on the 2022 annual financial statements was
(i) unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
24. Annual
Financial Report
The Annual Report for the year-ended 30
April 2023 will be posted to shareholders in August 2023 and will be available thereafter
at
www.invesco.co.uk/invescoasia
or from the Corporate Secretary at the Company's correspondence
address, 43-45 Portman Square, London W1H 6LY. A copy of the Annual Financial
Report will be submitted shortly to the National Storage Mechanism
("NSM") and will be available for inspection at the NSM, which is
situated at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Notice of Annual General Meeting
THIS NOTICE
OF ANNUAL GENERAL MEETING IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION. If you are in any doubt as to what action to take, you
should consult your stockbroker, solicitor, accountant or other
appropriate independent professional adviser authorised under the
Financial Services and Markets Act 2000. If you have sold or
otherwise transferred all your shares in Invesco Asia Trust plc,
please forward this document and the accompanying Form of Proxy to
the person through whom the sale or transfer was effected, for
transmission to the purchaser or transferee.
Notice is given that the Annual General Meeting of Invesco Asia
Trust plc will be held at 43-45 Portman Square, London W1H 6LY,
on 21 September
2023 at 12pm for the following
purposes:
Ordinary Business
To consider and, if thought fit, to pass the following resolutions
all of which will be proposed as ordinary resolutions:
1. To
receive and consider the Annual Financial Report for the year ended
30 April 2023.
2. To
approve the Company’s Dividend Payment Policy. This is an advisory
vote.
3. To
approve the Directors’ Remuneration Policy.
4. To
approve the Annual Statement and Report on Remuneration for the
year ended 30 April 2023.
5. To
re-elect Neil Rogan as a Director of
the Company.
6. To
re-elect Vanessa Donegan as a
Director of the Company.
7. To
re-elect Myriam Madden as a Director
of the Company.
8. To
re-elect Sonya Rogerson as a
Director of the Company.
9. To
re-appoint KPMG LLP as auditor of the Company.
10. To
authorise the Audit Committee to determine the remuneration of the
auditor.
Special Business
To consider and, if thought fit, pass the following resolutions of
which resolution 11 will be proposed as an ordinary resolution and
resolutions 12 to 14 as special resolutions:
Authority to Allot Shares
11. That:
in
substitution for any existing authority under section 551 of the
Companies Act 2006 (the ‘Act’) but without prejudice to the
exercise of any such authority prior to the date of this resolution
the Directors of the Company be generally and unconditionally
authorised in accordance with section 551 of the Act as amended
from time to time prior to the date of the passing of this
resolution, to exercise all powers of the Company to allot shares
and grant rights to subscribe for, or convert any securities into,
shares up to an aggregate nominal amount (within the meaning of
sections 551(3) and (6)
of the Act) of £668,532, this being 10% of the Company’s issued
ordinary share capital as at 25 July
2023, such authority to expire at the conclusion of the next
Annual General Meeting of the Company or the date
15 months
after the passing of this resolution, whichever is the earlier
unless the authority is renewed or revoked at any other general
meeting prior to such time, but so that this authority shall allow
the Company to make offers or agreements before the expiry of this
authority which would or might require shares to be allotted, or
rights to be granted, after such expiry as if the authority
conferred by this resolution had not expired.
Disapplication of Pre-emption Rights
12. That:
subject to the passing of resolution number 11 set out in the
notice of this meeting (the ‘Section 551 Resolution’) and in
substitution for any existing authority under sections 570
and 573
of the Companies Act 2006 (the ‘Act’) but without prejudice to the
exercise of any such authority prior to the date of this
resolution, the Directors be and are hereby empowered, in
accordance with sections 570 and 573 of the Act as amended from
time to time prior to the date of the passing of this resolution to
allot equity securities (within the meaning of section 560(1), (2)
and (3) of the Act) for cash, either pursuant to the authority
given by the Section 551 Resolution or (if such allotment
constitutes the sale of relevant shares which, immediately before
the sale, were held by the Company as treasury shares) otherwise,
as if section 561 of the Act did not apply to any such allotment,
provided that this power shall be limited:
(a) to
the allotment of equity securities in connection with a rights
issue in favour of all holders of a class of equity securities
where the equity securities attributable respectively to the
interests of all holders of securities of such class are either
proportionate (as nearly as may be) to the respective numbers of
relevant equity securities held by them or are otherwise allotted
in accordance with the rights attaching to such equity securities
(subject in either case to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation to
fractional entitlements or legal, regulatory or practical problems
under the laws of, or the requirements of, any regulatory body or
any stock exchange in any territory or otherwise); and
(b) to
the allotment (otherwise than pursuant to a rights issue) of equity
securities up to an aggregate nominal amount of £334,266, this
being 5% of the Company’s issued share capital as at 25 July 2023 and this power shall expire at the
conclusion of the next Annual General Meeting of the Company or the
date 15 months after the passing of this resolution, whichever is
the earlier unless the authority is renewed or revoked at any other
general meeting prior to such time, but so that this power shall
allow the Company to make offers or agreements before the expiry of
this power which would or might require equity securities to be
allotted after such expiry as if the power conferred by this
Resolution had not expired; and so that words and expressions
defined in or for the purposes of Part 17 of the Act shall bear the
same meanings in this resolution.
Authority to Make Market Purchases of
Shares
13. That:
the Company
be generally and subject as hereinafter appears unconditionally
authorised in accordance with Section 701 of the Companies Act 2006
as amended from time to time prior to the date of the passing of
this resolution (the ‘Act’) to make market purchases (within the
meaning of Section 693(4) of the Act) of its issued ordinary shares
of 10p each in the capital of the Company (‘Shares’).
PROVIDED
ALWAYS THAT:
(i) the
maximum number of Shares hereby authorised to be purchased shall be
10,021,307 or 14.99% of shares in issue as at 25 July 2023;
(ii) the
minimum price which may be paid for a Share shall be
10p;
(iii) the
maximum price which may be paid for a Share must not be more than
the higher of: (i) 5%
above the average of the mid-market values of the Shares for the
five business days before the purchase is made; and
(ii) the
higher of the price of the last independent trade in the Shares and
the highest then current independent bid for the Shares on the
London Stock Exchange;
(iv) any
purchase of Shares will be made in the market for cash at prices
below the prevailing net asset value per Share (as determined by
the Directors);
(v) the
authority hereby conferred shall expire at the conclusion of the
next Annual General Meeting of the Company, or the date 15 months
after the passing of this resolution, whichever is the earlier,
unless the authority is renewed or revoked at any other general
meeting prior to such time;
(vi) the
Company may make a contract to purchase Shares under the authority
hereby conferred prior to the expiry of such authority which will
be executed wholly or partly after the expiration of such authority
and may make a purchase of Shares pursuant to any such contract;
and
(vii) any
shares so purchased shall be cancelled or, if the Directors so
determine and subject to the provisions of Sections 724 to 731 of
the Act and any applicable regulations of the United Kingdom
Listing Authority, be held (or otherwise dealt with in accordance
with Section 727 or 729 of the Act) as treasury shares.
Period of Notice Required for General
Meetings
14. That:
the
period of notice required for general meetings of the Company
(other than AGMs) shall be not less than 14 days.
Dated this 25 July 2023
By order of the Board
Invesco Asset Management Limited
Corporate Company Secretary