LEGAL ENTITY IDENTIFIER:
549300YM9USHRKIET173
INVESCO
ASIA TRUST PLC
Half-Yearly
Financial Report for the Six Months to 31
October 2021
Investment Objective
The Company’s objective is to provide long-term capital growth
by investing in a diversified portfolio of Asian and
Australasian companies. The Company aims to achieve growth in its
net asset value (NAV) 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)
(dividends reinvested)
|
Six Months
to |
Year ended |
|
|
31 October |
30 April |
|
|
2021 |
2021 |
|
| Net asset value
(NAV)(1)(2) |
–5.5% |
56.4% |
|
| Share
price(1) |
–4.9% |
58.5% |
|
| Benchmark
index)(1)(2) |
–6.2% |
34.8% |
|
Capital Statistics |
|
|
|
|
At |
At |
|
|
31 October |
30 April |
|
|
2021 |
2021 |
change %
|
|
|
|
|
| Net assets (£’000) |
265,649 |
281,252 |
–5.5% |
| NAV per
share(2) |
397.36p |
420.70p |
–5.5% |
| Share
price(1) |
367.00p |
386.00p |
–4.9% |
| Benchmark index
(capital)(1)(2) |
1,107.98 |
1,195.23 |
–7.3% |
|
|
|
|
| Discount(2)
per ordinary share |
(7.6)% |
(8.2)% |
|
| Average discount over
six months/year(1)(2) |
(9.3)% |
(10.7)% |
|
|
|
|
|
|
Gearing(2): |
|
|
|
| – gross |
nil |
0.7% |
|
| – net |
nil |
nil |
|
| – net
cash |
(4.8)% |
(0.9)% |
|
|
|
|
|
|
|
|
(1)
Source: Refinitiv.
(2) Alternative Performance Measures (APM), see pages 15
and 16 for the explanation and reconciliations of APMs. Further
details are provided in the Glossary of Terms and Alternative
Performance Measures in the Company’s 2021 Annual Financial
Report.
Chairman’s Statement
Highlights:
•
Share price total return –4.9% and NAV total return of –5.5%, both
outperformed the benchmark index total return of –6.2%;
•
Discount narrowed to 7.6%;
•
Fiona Yang, appointed Co-Manager,
working closely with Ian Hargreaves;
and
•
Normal format AGM held on 2 September 2021, post pandemic.
After spectacular performance in the Company’s year to
30 April 2021 (NAV up 56.4% vs the
MSCI AC Asia ex Japan Index up 34.8%), it is no surprise to record
a period of consolidation. In the subsequent six months it is
encouraging that both our NAV and share price have slightly
outperformed the index, even though all three were down a little in
absolute terms. Over the six months to 31
October 2021, the NAV per share total return was –5.5%, the
share price total return was –4.9% and the benchmark index total
return was –6.2%.
The discount narrowed slightly from 8.2% to 7.6% over the
period, trading in a range of 5.9% to 14.1% with an average of
9.3%.
The other highlight of the period was that we were able to hold
our Annual General Meeting (AGM) in its normal format on
2 September 2021 with the formal AGM,
a presentation from manager Ian
Hargreaves and then further informal discussion with
shareholders over drinks and nibbles.
We appointed Myriam Madden to the
Board on 4 November 2021 with the
intention of her taking over from Fleur
Meijs as Audit Chair in early 2022. Fleur will take on
additional responsibilities at UWC (United World College), an international network of
schools, and has indicated she wishes to step down from our Board
after serving six years. She has served the Company strongly and we
wish her well in her new, time-consuming role. September 2022 will mark the AGM after the ninth
anniversary of Owen Jonathan joining
the Board, the point at which Directors usually retire. So we will
shortly commence a search to find a replacement for Owen and the
Board will settle back to its normal number of four Directors after
Owen retires.
Shareholders will know that, in order to stimulate more demand
for the Company’s shares, we try to provide a strong 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 Asian team is strong and
well-resourced and we are pleased to have just announced that
Fiona Yang, a key member of the team
since 2017, is stepping up to become our Co-Manager and will be
working even more closely with Ian both on our portfolio and
meeting shareholders and potential investors. Their investment
process can be summarised as “valuation not value” and has been
very successful with what are called institutional clients such as
pension funds and sovereign wealth investors.
Cumulative Total Return (dividends
reinvested) to 31 October
2021(1)
|
One |
Three |
Five |
Ten |
|
Year |
Years |
Years |
Years |
| Net asset value (NAV) |
19.1% |
49.3% |
61.5% |
197.2% |
| Share price |
25.7% |
61.2% |
69.4% |
215.7% |
| Benchmark index(2) |
6.4% |
38.0% |
48.5% |
134.8% |
(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, sterling terms).
The Corporate Proposition
We strengthened our corporate proposition a year ago by
introducing an enhanced dividend policy by which we pay a dividend
of approximately 2% of NAV every six months, using our revenue and
capital reserves to supplement portfolio income when necessary. We
also announced a performance conditional tender offer through which
the Board undertakes to effect a tender offer for up to 25% of the
Company’s issued share capital at a 2% discount to 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
years to 30 April 2025 fails to beat
the MSCI AC Asia ex Japan Index (net of withholding tax, total
return in GBP) by 0.5% per annum over the five years on a
cumulative basis.
The other aspects of our Corporate Proposition are listed in the
2021 Annual Financial Report’s Chairman’s Statement and include a
three-yearly continuation vote (the next one being due in
September 2022), engaging more
individual shareholders, active use of gearing, “skin in the game”
of Directors’ and managers’ shareholdings and a new, lower tiered
management fee.
Update
From 31 October 2021 to
20 January 2022, the NAV total return
has been +2.3%, outperforming the index return of -0.6%. The share
price total return has been +1.3%, with the discount widening to
8.7%.
Outlook
It is fairly easy to identify the issues dominating the
investment outlook for Asian equities but very difficult to predict
which way they will go. Not surprisingly, Covid-19 has dominated
the news everywhere over the last two years. If the worst is behind
us and the world is starting to return to normal then that should
be positive for global equity markets including Asia. Asia is
seen as having had a relatively good crisis, with lockdowns and
travel restrictions keeping confirmed cases to relatively low
levels. But what if their populations are still vulnerable to the
latest variants, especially if levels of vaccination and
vaccination efficacy are relatively low?
Covid-19 also demonstrated how dependent the world had become on
just-in-time supply chain management and has led to widespread
disruption of both production and transportation of key components
and products. Asian companies that can help reduce this dependence
will be in strong demand but there is also the risk that Western
companies will turn to more locally sourced suppliers.
ESG is another area that can be seen as both a risk and
opportunity for Asian companies. As a whole, ESG standards are
perceived as higher amongst European and American companies than in
Asia. That is one of the reasons
why Asian companies typically trade at cheaper valuations and there
is a risk that the gap gets wider. But there is also the
opportunity for the valuation gap to narrow as Asian companies
embrace ESG. The emphasis of the Glasgow COP-26 summit in November on net zero (companies
and countries giving target dates by which they intend to be net
zero producers of CO2) brings extra focus and clarity to all. Ian
and Fiona discuss our portfolio through a net zero lens in a
special section of their portfolio managers’ report.
The recovery from 2020’s lockdowns plus the disruptions to
supply chains in 2021 have led to a resurgence of inflation in the
Western economies. Again this provides risks and opportunities to
companies, depending upon how quickly their input costs and wage
bills are rising and what ability they have to raise prices to
their customers. It is interesting that there has not been much
inflationary pressure within Asian countries. Perhaps that is due
to them being less affected by Covid-19; it is too early to
tell.
Political considerations also provide substantial risks and
opportunities. That has always been true of investing in
Asia, with surprise events such as
missile firings, army-led coups and violent crackdowns affecting
market valuations sharply at various times over the last forty
years, along with the current heightened geo-political risk. One
approach was to ignore politics, reckoning that such events would
only have a temporary impact; but the cumulative effect has been to
widen the valuation discount between Asian and Western markets. If
you have a tolerance towards political risk then you would consider
a widening political discount to be an investment opportunity but
you would need to remember that we do not know how China’s approach
to Taiwan will develop nor how
stable will North Korea be, to
name just two such considerations.
All of these issues and others will take time to resolve. There
will be companies, sectors and countries that are winners and
losers and there will probably be a wide dispersion in their stock
market returns. These are certainly interesting times for an active
Asian equity investor.
Neil
Rogan
Chairman
24 January 2022
Portfolio Manager’s Report
Portfolio Manager
Ian Hargreaves was promoted to
Co-Head of the Asian & Emerging Markets Equities team in
September 2018. Ian manages pan-Asian
portfolios and covers the entire Asian region in his remit. 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-Manager in January 2022.
Portfolio Manager
Fiona Yang joined Invesco in
August 2017 and is a member of the
Henley-based Asian & Emerging Markets Equities team. Currently,
Fiona is the lead fund manager on the Invesco Asian Equity Income
Fund and provides stock and sector research covering the wider
Asia ex-Japan region with a focus on China H and
A share markets. She started her career with Goldman Sachs in
July 2012, initially within their
graduate programme, before becoming a member of their Asian Equity
sales team, where she was a China
product specialist. Fiona will relocate to Invesco’s Singapore office in February, whilst still
remaining an integral part of the Henley-based team. In recognition
of her skill, growing experience and achievements, Fiona was
appointed Co-Manager of the Invesco Asia Trust plc in January 2022.
How has the Company performed in the
period under review?
The Company’s net asset value return was –5.5% (total return, in
sterling terms) over the six months to 31
October 2021, which compares to the benchmark MSCI AC Asia
ex Japan Index total return of –6.2%.
Having recovered strongly from last year’s lows, Asian markets
have struggled for direction over the last six months. China concerns have dominated, more than
offsetting positive re-opening momentum from markets such as
India and Indonesia, where Covid-19 concerns have
started to ease as infection rates fall back and vaccination
programs accelerate after a slow start.
Given that the authorities in China had already started to tighten credit
since 2020, signs of moderating growth were to be expected. The
tightening rules on debt in the property sector impacted the most
leveraged developers but it was the extent of regulatory tightening
on the ‘new economy’ sectors which surprised markets leading to a
fall in valuations from over-extended levels.
Against this backdrop, portfolio performance has proved to be
relatively resilient, outperforming its benchmark index. Having an
underweight position in China has
helped, with stock selection in Hong
Kong and Indonesia also
contributing positively. Exposure to more cyclical and ‘old
economy’ sectors has also added value.
Although valuations are now broadly more ‘normal’, beneath the
surface we continue to see significant divergence not just between,
but within different sectors, with scope to lean into areas of
excessive pessimism, while avoiding frothy areas of the market. We
are wary of investment narratives which rely on a cyclical recovery
being extrapolated too far forward, as we saw with some of last
year’s Covid-beneficiaries and the Chinese stock markets.
Exuberance towards China has given
way to disappointment and pessimism, and a much more favourable
risk premium is now being offered to investors as we enter 2022.
Meanwhile, South East Asian markets have been relatively weak,
which we feel underappreciates their re-opening
potential.
What have been the biggest
contributors?
There have been strong returns from stocks in more cyclical
areas, which have outperformed supported by reflation/ reopening
trends, while previously favoured technology/internet stocks have
lagged.
Pacific Basin Shipping was one of the best performers,
benefiting from materially improved freight rates as strong demand
for minor bulk and grains broadened out from China to the rest of the world. Earnings
expectations for 2021 have been raised by nearly 200% over the last
6 months, reflecting the short supply of cargo ships after a long
downcycle for bulk shipping. Some analysts see supply/demand
imbalances persisting into 2023, in part because society’s
decarbonisation agenda disincentivises additional supply, a
tailwind for freight prices and profitability.
India was the best performing
market in the region, with ICICI Bank, Housing Development Finance
Corporation (HDFC) and Shriram Transport Finance significant
contributors, as asset quality and earnings proved less sensitive
to the pandemic than first feared. Larsen & Toubro (‘L&T’)
also made strong gains, with the Indian government placing greater
emphasis on public investment to kick-start the economic cycle,
while L&T management appear bullish on the prospects for a
recovery in private capex, with its bid pipeline improving
domestically and internationally. The portfolio’s exposure to
Indonesia has also added value,
with the reopening of the economy seeing strong share price gains
for PT Bank Negara Indonesia Persero, auto conglomerate Astra
International and Telkom Indonesia.
While China was a source of
weakness, it was also home to some of the portfolio’s best
performing stocks, including MingYang Smart Energy. The Chinese
wind turbine manufacturer is an expected beneficiary of the
authorities’ big plans to reduce carbon emissions, targeting peak
carbon emissions by 2030 and carbon neutrality by 2060. With wind
power having reached grid parity in China, subsidies for both onshore and offshore
wind projects are to be removed. We believe that this will help
quash the perception that the sector is dependent on government
support, allowing investors to focus more clearly on the long-term
growth opportunity available, with the valuation gap to European
peers still significant, even after the recent rally.
And detractors?
Several of the biggest detractors were from China, although our underweight position
compensated for this on a relative basis. We cover below those
stocks impacted by regulatory tightening and property-related
concerns separately, given how much attention these topics have
drawn. Elsewhere, Aurobindo Pharma underperformed due to relatively
weak results and the market’s reaction to a small, misjudged (then
cancelled) acquisition. LG has been weak amidst expectations that
3Q earnings (at LG Chem and LG Electronics) would be impacted by
provisions related to the GM EV battery recall. Meanwhile,
Covid-related chip and component shortages have disrupted supply
chains, with miniature lens manufacturer Largan Precision and
Hyundai Motor both impacted by the slower than expected recovery,
although the medium-term outlook for both remains bright, in our
view.
The biggest single detractor was Autohome, the leading internet
content provider for autos in China and a relatively new holding for the
trust. The market has been quick to discount the threat of
intensifying competition, but having reappraised the investment
case, we believe that Autohome’s competitive advantages are being
underappreciated. The greater quality of their traffic, still more
than the next two players combined, gets better conversion rates,
which should be sustainable given investment in hard to replicate
value-added services. The company’s net cash balance sheet (over
50% of market cap) and free cash flow generation are additional
sources of comfort.
What are the regulatory headwinds in
China?
The portfolio continues to have selective exposure to Chinese
internet companies, which as a group has been struggling with
regulatory tightening and concerns over a broader economic
slowdown. There are multiple strands to recent policy action,
although the emphasis is on the need for more inclusive economic
growth and ‘common prosperity’. New measures introduced have been
focused on combating anti-trust practices, ensuring data security
as well as safeguarding employees and families.
When we examine the absolute earnings impact from these changes,
it appears small relative to the market reaction. We added exposure
to some of our holdings when the fall in share prices appeared to
be excessive during peak negativity. This proved judicious given
the subsequent rebound but the bigger issue for earnings is not the
direct impact of regulation, but the prospect that company
management will restrain profit growth in the hope of avoiding
additional regulatory scrutiny. We would distinguish between
companies with a corporate culture vulnerable to attracting
scrutiny versus those with a more prudent approach to doing
business, better aligned to the government’s goals and regulatory
trends.
Longer-term, the regulatory tightening may prove positive if it
leads to healthier competition. The abundance of capital available
to loss-making ventures allowed them to take market share from
businesses relying on organic growth. However, it seems far-fetched
to expect the government to permanently undermine one of the more
vibrant sectors of the economy, particularly one so potentially
instrumental in narrowing the technology gap with the US (a key
government aim). The sector remains an interesting opportunity set
with the levelling of the playing field.
Portfolio activity in this area included adding to NetEase and
Tencent on weakness, which reflected
our longer-term conviction. We did sell Tencent Music Entertainment, finding it harder to
see how it can overcome the extent of the regulatory change on its
business. We knew that its exclusivity agreements with major record
labels would soon be ending, allowing competitors (like NetEase) to
offer the same content. However, increased regulation of social
entertainment and live streaming has led the company to lower its
revenue guidance, a development that fundamentally undermined the
original investment thesis.
Evergrande: China’s Lehman moment?
The market has had to contend with concerns surrounding the
over-leveraged property developer China Evergrande Group, and the
potential for collateral damage in other areas of the economy. This
caused weakness in holdings such as Ping An Insurance and Suofeiya
Home Collection, although the one Chinese real estate developer we
do own – China Overseas Land and Investment – proved more
resilient.
Evergrande’s liquidity issue is the consequence of
government-led rules to reduce leverage in the sector. Given the
size of the property sector in China it is unsurprising that this slowdown is
having ramifications for economic growth more widely. Implementing
such measures during a global recovery appeared sensible and we
would disagree with the parallels being made with the US mortgage
crisis. These are unfounded because China has been reducing financial risks by
deleveraging for well over 5 years now while keeping credit growth
below nominal GDP growth. Although Tier One cities such as
Shanghai or Beijing remain unaffordable on average income,
as in most other major cities across the world, affordability rates
at the national level have improved over the last few years as
incomes have continued to rise. Also, home buyers in China still require large down payments
(around 40%) in contrast to the debt fuelled purchases in the US
prior to the global financial crisis. A policy misjudgment by
tightening too much is a risk but the authorities appear to be
already easing at the margins, selectively loosening restrictions
on mortgage lending for example. We expect an easing of financial
conditions but would not expect a major shift in their dual
objective to de-risk the economy while maintaining an acceptable
level of growth.
What about the property-related
exposure: Ping An and Suofeiya?
Ping An Insurance, one of China’s largest insurance companies,
has been undergoing a period of agency reform. When combined with a
period of weak demand for insurance products and fears about its
exposure to the property market, has dampened sentiment towards the
stock.
However, with no exposure to Evergrande and less than 5% of
insurance funds invested in property, the risk here is contained.
While agency reform is unsettling in the short-term, a better
agency force will ultimately improve the quality of its earnings.
It is comforting that Ping An has
capital ratios well in excess of regulatory limits and recently
increased its dividend, demonstrating confidence in its capital
position. We are happy to hold and have been adding.
Suofeiya Home Collection is a fitted furniture designer and
manufacturer. Evergrande was one of its customers although only
representing around 5% of its 2021 revenues. Its exposure to
developers is generally limited because it prefers to sell directly
to end-consumers (c. 80% of revenues). Although the stock was also
weak, the business managed to mitigate the property issues and saw
double-digit profit growth quarter-over-quarter in the 3rd quarter
of 2021, well ahead of expectations. Our approach is to value
conservatively the revenue contribution and outstanding receivables
from Evergrande at zero going forward. Suofeiya’s long-term growth
prospects remain intact, with its superior brand and product
quality leaving it well placed to gain further market share in what
remains a highly fragmented and under-penetrated market. We have
added on weakness.
Other changes in positioning?
We invest in companies that we believe are worth more than the
market believes. The portfolio continues to have a balance between
tech/internet and ‘virus-sensitive’ stocks in more cyclical areas.
While the tilt towards cyclicals has increased over the last
twelve months, we are still able to find undervalued growth
opportunities in companies with sustainable growth prospects and
believe that a balanced portfolio with multiple sources of alpha is
warranted.
The negative headlines and market volatility in China mean that this has been an area of
focus. As can be seen in the chart below, we have been gradually
reducing our underweight position in Hong
Kong and China.
Policymakers remain committed to improving the quality, rather than
quantity, of growth and reducing financial risk, while monetary
policy in China appears relatively
orthodox in comparison with that in developed markets.
Invesco Asia Trust plc – active weight
in Hong Kong/China
As well as adding to existing holdings that we like on weakness,
we have introduced three new holdings. Market contagion in
China has negatively affected Gree
Electric Appliances and A-Living Smart City Services, and it is our
view that their growth prospects and strong balance sheets are not
being reflected in their valuation. Gree is the world’s largest
manufacturer of air conditioners and home appliances, which is
expected to be a beneficiary of rising demand for smart technology
and energy-saving appliances in the home devices space. Penetration
rates for such products remains low in China. A-Living is a property management
company trading at a significant discount to its peers, despite
consistently generating positive free cash flow and having a decent
growth outlook. Thirdly, we introduced Tingyi, a leading producer
of instant noodles, beverages and convenience food.
Elsewhere, we introduced Newcrest Mining, which despite a more
gold-friendly environment is trading at a significant discount to
its net asset value. Furthermore, the market does not seem to have
given Newcrest much credit for its relatively significant copper
exposure, which should reduce the cyclicality of earnings. In turn,
we’ve continued to reduce exposure to Taiwanese tech companies
after a period of strong performance, with a risk of mean reversion
in earnings. We’ve also continued to add exposure to existing
holdings in Indonesia, where
near-term uncertainty is starting to lift, and valuations still
appear attractive.
What is Invesco’s Approach to ‘Net
Zero’?
For Invesco as Manager, climate change is a strategic priority.
As a result of our commitment to the Net Zero Asset Managers
initiative, implementing a Net Zero Alignment (NZA) and engagement
strategy will take on growing importance for the Manager.
Although NZA is not yet a target for Invesco Asia Trust plc,
companies’ climate transition plans were the most common topic of
our targeted ESG engagements in 2021. As can be seen from the chart
below, the portfolio’s carbon intensity has already started to
trend lower, and is below that of the benchmark index. For that
trend to continue, we need to see more net zero commitments from
Asian companies.
As at 31 October 2021, the
portfolio had investments in 54 different companies, of which 24
have already made a net zero commitment (representing c.37% of the
portfolio). For those companies yet to commit, we have been
enquiring as to their plans, encouraging them to make a commitment
and adopt a NZA target.
This process is still at a relatively early stage, but all these
30 companies already have sustainability reports that cover carbon
emissions reduction plans, so it feels like a commitment to NZA is
the next logical step. Given the level of engagement that these
companies are having with investors such as ourselves, we think it
likely that the proportion of companies with a net zero commitment
will increase significantly over the next 3-5 years. However,
different countries are at different stages in moving towards NZA,
and we do not expect progress to be smooth.
For the portfolio’s more mature holdings, it is critically
important to understand plans for transition to NZA and any
associated costs that may be incurred pursuing them. The Korean
steel manufacturer POSCO – one of the world’s largest – makes for a
good example in this regard. Currently, the company has a high
level of carbon emissions, but as pledged by the Korean government
it aims to be carbon neutral by 2050. Its pathway to achieving this
is largely through hydrogen-based steelmaking, which may have
fundamental implications on cash flow, profitability and valuations
if capex rises materially. Although POSCO is one of the sector’s
most efficient producers, with seemingly good governance practices,
it is clear that we need to closely monitor capex levels,
progress on hydrogen-based steelmaking and overall climate policy,
as well as focusing on other ESG issues in scope, such as gender
diversity and corporate governance.
Are there grounds for optimism?
At headline level the valuations of Asian markets have pulled
back from what we considered to be unsustainable levels at the turn
of the year (see chart below). We do not believe that this is the
end of the cycle, more of a pause as earnings and growth of book
value catch-up.
Markets are pricing in a continued improvement in earnings,
which feels logical to us given that the recovery from the
Covid-pandemic is still at a tentative stage in some parts of
world, with a tailwind from stimulus measures and relatively low
inventories on a global basis. The financial system is also in a
much better place than investors initially feared, a marked
difference to the backdrop in the recovery from the global
financial crisis.
However, it is reasonable to expect a more gradual uptrend in
earnings from here, still positive but with the rate of change
likely to have peaked. On one hand, supply chain disruptions remain
a feature of the post-Covid backdrop, with unmet demand spilling
well into 2022. On the other, inflationary pressures are likely to
depress the operating margins of price takers. As markets digest
these complexities and potential policy changes, there is much
scope for active stock pickers to capitalise on misunderstood,
idiosyncratic opportunities, especially given that valuation
discrepancies within markets and sectors remain wide.
As conditions gradually normalise, with travel restrictions
lifted on the back of higher vaccination rates, we find scope for
optimism towards re-opening plays in areas such as Thailand and Indonesia. Consumption has generally been
weak, which contrasts with strong demand seen in developed markets,
but we would caution extrapolating recent trends too far into the
future.
Although the initial benefit of massive monetary and fiscal
stimulus measures has been realised and is likely to remain a
tailwind to economic activity for a while longer, a riskier point
for markets lies ahead as governments in developed markets are
forced to start charting a course back to policy orthodoxy. This
contrasts with Asia’s conventional policy stance.
Finally, inflationary pressures are likely to remain a focus for
investors. We feel that the best way to insure our portfolio
against a more adverse inflation outcome is to avoid stocks whose
current market valuations cannot be justified by their future
cashflows even at current low interest rates. We believe this is an
environment that suits our investment approach, with a laser focus
on valuation, seeking to find opportunities where the market has
failed to correctly price the multi speed nature of the
recovery.
Ian
Hargreaves
Fiona
Yang
Portfolio Managers
24 January 2022
Principal Risks and Uncertainties
The Board has carried out a robust assessment of the risks
facing the Company, including emerging risks. These include those
that would threaten its business model, future performance,
solvency and liquidity. The principal risks that follow are those
identified by the Board after consideration of mitigating factors.
In the view of the Board, these principal risks and uncertainties
are as much applicable to the remaining six months of the financial
year as they were to the six months under review.
| Category and Principal Risk
Description |
Mitigating Procedures and
Controls |
| Strategic Risk |
|
Market and Political
Risk
The Company’s investments are 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 extreme
volatility experienced in March 2020 from the market reaction to
the Covid-19 virus exemplifies this risk, which had a marked effect
on both the valuation of the Company’s portfolio of investments and
the discount to net asset value at which the Company’s shares
trade.
Political developments can also create risks to the value of the
Company’s assets, such as US-China trade tensions and unrest in
Hong Kong, or impact on the GBP foreign exchange rate. Political
risk has always been a feature of investing in stock markets and it
is particularly so in Asia. Asia encompasses a variety of political
systems and there are many examples of diplomatic skirmishes and
military tensions, and sometimes these resort to military
engagement. Moreover, the involvement in Asia of the United States
and European countries can reduce or raise tensions. |
The Company has a
diversified investment portfolio by country and by stock. Its
investment trust structure means no forced sales need to take place
and investments can be held over a longer term horizon. The Manager
evaluates and assesses political risk as part of the stock
selection and asset allocation policy which is monitored at every
Board meeting.
However, there are few ways to mitigate absolute market and
political 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, political,
military and diplomatic events, changes to legislation, 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. |
Investment
Objectives
The Company’s investment objectives and structure 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. |
Wide
Discount
Lack of liquidity and lack of marketability of the Company’s shares
leading to stagnant share price and wide discount.
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 marketing 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. |
| Investment Management
Risk |
|
Performance
Portfolio Manager consistently underperforms 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. The Board also receives
reports on and reviews: the portfolio and ESG considerations that
are integrated as part of investment decision-making, transactions
in the period, active positions, gearing position and, if
applicable, hedging. |
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-Manager has mitigated the risk of key person dependency. Also,
the Portfolio Managers work within Invesco’s Asian & Emerging
Markets team. Ian Hargreaves and William Lam are Co-Heads of this
team. The Portfolio Managers are supported by the wider team. |
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 Manager 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. |
| Third Party Service Providers
Risk |
|
Unsatisfactory
Performance of Third Party Service Providers
Failure by any third-party service provider 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. |
Details of how the
Board monitors the services provided by the Manager and other
third-party service providers, and the key elements designed to
provide effective internal control, are included in the internal
control and risk management section in the 2021 Annual Financial
Report on pages 20 and 21. |
Information
Technology Resilience and Security
The Company’s operational structure means that all cyber risk
(information and physical security) arises at its third party
service providers (TPPs). This cyber risk includes fraud, sabotage
or crime perpetrated against the Company or any of its TPPs. |
As well as regular
review of TPPs’ audited service organisation control reports by the
Audit Committee, the Board receives regular updates on the
Manager’s information and cyber security. The Board monitors TPPs’
business continuity plans and testing – including the TPPs and
Manager’s regular ‘live’ testing of workplace recovery
arrangements. |
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.
As the impact of Covid-19 continues, the Manager has mandated work
from home arrangements and implemented split team working for those
whose work is deemed necessary to be carried out on business
premises. Any meetings are held virtually or via conference calls.
Other similar working arrangements are in place for the Company’s
third-party service providers. The Board receives regular update
reports from the Manager and TPPs on business continuity
processes. |
Twenty-five Largest Holdings
AT 31 OCTOBER
2021
Ordinary shares unless stated otherwise
† The industry group is based on
MSCI and Standard & Poor’s Global Industry Classification
Standard.
|
|
|
At Market |
|
|
|
|
Value |
% of |
| Company |
Industry
group† |
Country |
£’000 |
Portfolio |
| Taiwan Semiconductor
Manufacturing |
Semiconductors and
Semiconductor Equipment |
Taiwan |
18,012 |
6.8 |
| TencentR |
Media And
Entertainment |
China |
16,516 |
6.2 |
| Samsung Electronics |
Technology Hardware
and Equipment |
South Korea |
15,578 |
5.9 |
| Alibaba |
Retailing |
China |
11,341 |
4.3 |
| Invesco Liquidity Funds – US
Dollar |
Money Market Fund |
Ireland |
10,371 |
3.9 |
| Housing Development Finance |
Banks |
India |
9,891 |
3.7 |
| Corporation |
|
|
|
|
| ICICI Bank – ADR |
Banks |
India |
9,451 |
3.6 |
| MingYang Smart
EnergyA |
Capital Goods |
China |
8,331 |
3.1 |
| JD.com – ADR |
Retailing |
China |
7,868 |
3.0 |
| AIA |
Insurance |
Hong Kong |
7,784 |
2.9 |
| Larsen & Toubro |
Capital Goods |
India |
6,472 |
2.5 |
| NetEase – ADR |
Media and
Entertainment |
China |
6,168 |
2.3 |
| United Overseas Bank |
Banks |
Singapore |
6,109 |
2.3 |
| Ping An InsuranceH |
Insurance |
China |
5,418 |
2.1 |
| POSCO |
Materials |
South Korea |
5,366 |
2.0 |
| Hon Hai Precision Industry |
Technology Hardware
and Equipment |
Taiwan |
5,268 |
2.0 |
| Astra International |
Automobiles and
Components |
Indonesia |
5,207 |
2.0 |
| Shriram Transport Finance |
Diversified
Financials |
India |
5,149 |
1.9 |
| CK Asset |
Real Estate |
Hong Kong |
4,973 |
1.9 |
| PT Bank Negara Indonesia
Persero |
Banks |
Indonesia |
4,966 |
1.9 |
| QBE Insurance |
Insurance |
Australia |
4,828 |
1.8 |
| China Overseas Land and
Investment |
Real Estate |
Hong Kong |
4,752 |
1.8 |
| Hyundai Motor – preference
shares |
Automobiles and
Components |
South Korea |
4,646 |
1.8 |
| Mahindra & Mahindra |
Automobiles and
Components |
India |
4,588 |
1.7 |
| Dongfeng MotorH |
Automobiles and
Components |
China |
3,852 |
1.5 |
|
|
|
192,905 |
72.9 |
| Other Investments (30) |
|
|
71,671 |
27.1 |
| Total Holdings (55) |
|
|
264,576 |
100.0 |
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 are shares that denominated in Renminbi and traded on the
Shanghai and Shenzhen stock exchanges.
Governance
Going Concern
The financial statements have been prepared on a going concern
basis.
The Directors took into consideration the uncertain economic
outlook in the wake of the Covid-19 pandemic and the operational
implications and consider the preparation of the financial
statements on a going concern basis to be the appropriate basis.
The Directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence for a
period of at least 12 months after signing the balance sheet,
for the same reasons as set out in the Viability Statement in the
Company’s 2021 Annual Financial Report. In considering this, the
Directors took into account:
•
the diversified portfolio of readily realisable securities which
can be used to meet short-term funding commitments;
•
the ability of the Company to meet all of its liabilities and
ongoing expenses from its assets; and
•
revenue forecasts for the forthcoming year.
As discussed in Principal Risks and Uncertainties, the Company’s
operations and those of its core service providers have been
adapted to deal with the restrictions imposed in the UK as a result
of the Covid-19 pandemic.
Related Party Transactions
Under United Kingdom Generally Accepted Accounting Practice (UK
Accounting Standards and applicable law), the Company has
identified the Directors and their dependents as related parties.
No other related parties have been identified. No transactions with
related parties have taken place which have materially affected the
financial position or the performance of the Company.
Directors’ Responsibility Statement in
respect of the preparation of the half-yearly financial report
The Directors are responsible for preparing the half-yearly
financial report using accounting policies consistent with
applicable law and UK Accounting Standards.
The Directors confirm that to the best of their knowledge:
— the condensed set of financial
statements contained within the half-yearly financial report have
been prepared in accordance with the FRC’s FRS 104 Interim
Financial Reporting;
— the interim management report includes
a fair review of the information required by 4.2.7R and 4.2.8R of
the FCA’s Disclosure Guidance and Transparency Rules; and
— the interim management report includes
a fair review of the information required on related party
transactions.
The half-yearly financial report has not been audited or
reviewed by the Company’s auditor.
Signed on behalf of the Board of Directors.
Neil
Rogan
Chairman
24 January 2022
Condensed Income Statement
FOR THE SIX MONTHS ENDED 31
OCTOBER
|
2021 |
2020 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
return |
return |
return |
return |
return |
return |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
| (Losses)/gains on investments held
at fair value |
— |
(17,938) |
(17,938) |
— |
42,366 |
42,366 |
| (Losses)/gains on foreign
exchange |
— |
(27) |
(27) |
— |
163 |
163 |
| Income - note 2 |
3,981 |
62 |
4,043 |
3,753 |
— |
3,753 |
| Investment management fee - note
3 |
(247) |
(740) |
(987) |
(210) |
(629) |
(839) |
| Other expenses |
(326) |
(3) |
(329) |
(286) |
(3) |
(289) |
| Net return before finance costs
and |
|
|
|
|
|
|
| taxation |
3,408 |
(18,646) |
(15,238) |
3,257 |
41,897 |
45,154 |
| Finance costs – note 3 |
(5) |
(15) |
(20) |
(13) |
(39) |
(52) |
| Return on ordinary activities |
|
|
|
|
|
|
| before taxation |
3,403 |
(18,661) |
(15,258) |
3,244 |
41,858 |
45,102 |
| Tax on ordinary activities – note
4 |
(345) |
— |
(345) |
(321) |
— |
(321) |
| Return on ordinary activities
after |
|
|
|
|
|
|
| taxation for the
financial period |
3,058 |
(18,661) |
(15,603) |
2,923 |
41,858 |
44,781 |
| Return per ordinary share |
|
|
|
|
|
|
| Basic |
4.57p |
(27.91)p |
(23.34)p |
4.37p |
62.61p |
66.98p |
| Weighted average number of ordinary
shares |
|
|
|
|
|
|
| in issue during the
period |
|
|
66,853,287 |
|
|
66,853,287 |
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 period.
Condensed Statement of Changes in
Equity
FOR THE SIX MONTHS ENDED 31
OCTOBER
|
|
Capital |
|
|
|
|
|
Share |
Redemption |
Special |
Capital |
Revenue |
|
|
Capital |
Reserve |
Reserve |
Reserve |
Reserve |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
| For the six months ended 31 October
2021 |
|
|
|
|
|
|
| At 30 April 2021 |
7,500 |
5,624 |
34,827 |
229,438 |
3,863 |
281,252 |
| Return on ordinary activities |
— |
— |
— |
(18,661) |
3,058 |
(15,603) |
| At 31 October 2021 |
7,500 |
5,624 |
34,827 |
210,777 |
6,921 |
265,649 |
| For the six months ended 31 October
2020 |
|
|
|
|
|
|
| At 30 April 2020 |
7,500 |
5,624 |
34,827 |
134,968 |
4,029 |
186,948 |
| Return on ordinary activities |
— |
— |
— |
41,858 |
2,923 |
44,781 |
| At 31 October 2020 |
7,500 |
5,624 |
34,827 |
176,826 |
6,952 |
231,729 |
Condensed Balance Sheet
Registered Number 3011768
|
At 31
October |
At 30
April |
|
2021 |
2021 |
|
£’000 |
£’000 |
| Fixed assets |
|
|
| Investments held at fair value
through profit or loss – note 7 |
264,576 |
279,058 |
| Current assets |
|
|
| Tax recoverable |
162 |
237 |
| VAT recoverable |
26 |
21 |
| Prepayments and accrued income |
119 |
292 |
| Cash and cash equivalents |
2,373 |
4,584 |
|
2,680 |
5,134 |
| Creditors: amounts falling due
within one year |
|
|
| Bank facility |
— |
(2,096) |
| Amounts due to brokers |
(867) |
(136) |
| Accruals |
(740) |
(708) |
|
(1,607) |
(2,940) |
| Net current assets |
1,073 |
2,194 |
| Net assets |
265,649 |
281,252 |
| Capital and reserves |
|
|
| Share capital |
7,500 |
7,500 |
| Other reserves: |
|
|
| Capital redemption
reserve |
5,624 |
5,624 |
| Special reserve |
34,827 |
34,827 |
| Capital reserve |
210,777 |
229,438 |
| Revenue reserve |
6,921 |
3,863 |
| Total shareholders’ funds |
265,649 |
281,252 |
| Net asset value per ordinary
share |
|
|
| Basic |
397.36p |
420.70p |
| Number of 10p ordinary shares in
issue at the period end – note 6 |
66,853,287 |
66,853,287 |
Notes to the Financial Condensed
Statements
1. Accounting
Policies
The condensed financial statements have been prepared in
accordance with applicable United Kingdom Accounting Standards and
applicable law (UK Generally Accepted Accounting Practice),
including FRS 102 The Financial Reporting Standard applicable in
the UK and Republic of Ireland,
FRS 104 Interim Financial Reporting and the Statement of
Recommended Practice Financial Statements of Investment Trust
Companies and Venture Capital Trusts, issued by the Association of
Investment Companies in April 2021.
The financial statements are issued on a going concern basis.
The accounting policies applied to these condensed financial
statements are consistent with those applied in the Company’s 2021
Annual Financial Report.
2. Income
|
Six months
to |
Six months
to |
|
31 October |
31
October |
|
2021 |
2020 |
|
£’000 |
£’000 |
| Income from investments: |
|
|
| Overseas dividends –
ordinary |
3,689 |
3,605 |
|
– special |
292 |
148 |
| Total income |
3,981 |
3,753 |
Special dividends of £62,000 were recognised in capital during
the period (31 October 2020:
£nil)
3. Management
Fee, Performance Fees and Finance Costs
Investment management fee and finance costs on any borrowings
are charged 75% to capital and 25% to revenue. A management fee is
payable quarterly in arrears and is equal to 0.75% per annum of the
value of the Company’s total assets less current liabilities
(including any short-term borrowings) under management at the end
of the relevant quarter and 0.65% per annum for any net assets over
£250 million.
4. Taxation
and Investment Trust Status
It is the intention of the Directors to conduct the affairs of
the Company so that it satisfies the conditions for approval as an
investment trust company. As such, no tax liability arises on
capital gains. The tax charge represents withholding tax suffered
on overseas income.
5. Dividends
paid on Ordinary Shares
As noted in the Chairman’s Statement, an interim dividend of
7.70p per share was paid on 25 November
2021 to shareholders on the register on 5 November 2021. Shares were marked ex-dividend
on 4 November 2021.
In accordance with accounting standards, dividends payable after
the period end have not been recognised as a liability.
6. Share
Capital, including Movements
Share capital represents the total number of shares in issue,
including treasury shares.
(a) Ordinary Shares of
10p each
|
Six months
to |
Year to |
|
31 October |
30
April |
|
2021 |
2021 |
| Number of ordinary shares in
issue: |
|
|
| Brought forward |
66,853,287 |
66,853,287 |
| Shares bought back into
treasury |
– |
– |
| Carried forward |
66,853,287 |
66,853,287 |
(b) Treasury Shares
|
Six months
to |
Year to |
|
31 October |
30
April |
|
2021 |
2021 |
| Number of treasury shares held: |
|
|
| Brought forward |
8,146,594 |
8,146,594 |
| Shares bought back into
treasury |
– |
– |
| Carried forward |
8,146,594 |
8,146,594 |
| Total ordinary shares |
74,999,881 |
74,999,881 |
During the period the Company has not bought back or re-issued
any shares into or from treasury (30 April
2021: nil).
Subsequent to the period end no ordinary shares were bought back
into treasury or cancelled.
7.
Classification Under Fair Value Hierarchy
FRS 102 sets out three fair value levels. These are:
Level 1 – The unadjusted quoted price in an active market for
identical assets that the entity can access at the measurement
date.
Level 2 – Inputs other than quoted prices included within Level
1 that are observable (i.e. developed using market data) for the
asset or liability, either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
The fair value hierarchy analysis for investments held at fair
value at the period end is as follows:
|
31 October |
30 April |
|
2021 |
2021 |
|
£’000 |
£’000 |
| Financial assets designated at fair
value |
|
|
| Level 1 |
254,106 |
278,955 |
| Level 2 |
10,371 |
– |
| Level 3 |
99 |
103 |
| Total for financial assets |
264,576 |
279,058 |
The Level 2 investment consists of one holding in the Invesco
Liquidity Funds – US Dollar money market fund (30 April 2021: £nil).
The Level 3 investment consists of one holding in Lime Co.
(30 April 2021: Lime Co.).
8. Status of
Half-Yearly Financial Report
The financial information contained in this half-yearly report
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. The financial information for the half
years ended 31 October 2021 and
31 October 2020 has not been audited.
The figures and financial information for the year ended
30 April 2021 are extracted and
abridged from the latest audited accounts and do not constitute the
statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and included the Report of
the Independent Auditor, which was unqualified and did not include
a statement under section 498 of the Companies Act 2006.
By order of the Board
Invesco Asset Management Limited
Company Secretary
24 January 2022
Glossary of Terms and Alternative
Performance Measures
Alternative Performance Measure
(APM)
An APM is a measure of performance or financial position that is
not defined in applicable accounting standards and cannot be
directly derived from the financial statements. The calculations
shown in the corresponding tables are for the six months ended
31 October 2021 and the year ended
30 April 2021. The APMs listed here
are widely used in reporting within the investment company sector
and consequently aid comparability.
Benchmark (or Benchmark Index)
A standard against which performance can be measured, usually an
index that averages the performance of companies in a stock market
or a segment of the market. The benchmark used in these accounts is
the MSCI AC Asia ex Japan Index (total return, net of withholding
tax, in sterling terms). This benchmark index does not include
Australia and New Zealand.
Discount/Premium (APM)
Discount is a measure of the amount by which the mid-market
price of an investment company share is lower than the underlying
net asset value (NAV) of that share. Conversely, Premium is a
measure of the amount by which the mid-market price of an
investment company share is higher than the underlying net asset
value of that share. In this interim financial report the discount
is expressed as a percentage of the net asset value per share and
is calculated according to the formula set out below. If the shares
are trading at a premium the result of the below calculation will
be positive and if they are trading at a discount it will be
negative.
|
|
|
At 31
October |
At 30 April |
|
Page |
|
2021 |
2021 |
| Share price |
1 |
a |
367.00p |
386.00p |
| Net asset value per share |
12 |
b |
397.36p |
420.70p |
| Discount |
|
c = (a-b)/b |
(7.6)% |
(8.2)% |
The average discount for the period/year is the arithmetic
average, over a period/year, of the daily discount calculated on
the same basis as shown above.
Gearing
The gearing percentage reflects the amount of borrowings that a
company has invested. This figure indicates the extra amount by
which net assets, or shareholders’ funds, would move if the value
of a company’s investments were to rise or fall. A positive
percentage indicates the extent to which net assets are geared; a
nil gearing percentage, or ‘nil’, shows a company is ungeared. A
negative percentage indicates that a company is not fully invested
and is holding net cash as described below.
There are several methods of calculating gearing and the
following has been used in this report:
Gross Gearing (APM)
This reflects the amount of gross borrowings in use by a company
and takes no account of any cash balances. It is based on gross
borrowings as a percentage of net assets.
|
|
|
At 31
October |
At 30 April |
|
|
|
2021 |
2021 |
|
Page |
|
£’000 |
£’000 |
| Bank facility |
12 |
|
– |
2,096 |
| Gross borrowings |
|
a |
– |
2,096 |
| Net asset value |
12 |
b |
265,649 |
281,252 |
| Gross gearing |
|
c = a/b |
nil |
0.7% |
Net Gearing or Net Cash (APM)
Net gearing reflects the amount of net borrowings invested, i.e.
borrowings less cash and cash equivalents (incl. investments in
money market funds). It is based on net borrowings as a percentage
of net assets. Net cash reflects the net exposure to cash and cash
equivalents, as a percentage of net assets, after any offset
against total borrowings.
|
|
|
At 31
October |
At 30 April |
|
|
|
2021 |
2021 |
|
Page |
|
£’000 |
£’000 |
| Bank facility |
12 |
|
– |
2,096 |
| Less: cash and cash equivalents |
12 |
|
(2,373) |
(4,584) |
| Less: Invesco Liquidity Fund – US
Dollar (money market fund) |
|
|
(10,371) |
– |
| Net cash |
|
a |
(12,744) |
(2,488) |
| Net asset value |
12 |
b |
265,649 |
281,252 |
| Net gearing/(net cash) |
|
c = a/b |
(4.8)% |
(0.9)% |
Net Asset Value (NAV)
Also described as shareholder’s funds the NAV is the value of
total assets less liabilities. Liabilities for this purpose include
current and long-term liabilities. The NAV per ordinary share is
calculated by dividing the net assets by the number of ordinary
shares in issue. For accounting purposes assets are valued at fair
(usually market) value and liabilities are valued at par (their
repayment – often nominal – value).
Total Return
Total return is the theoretical return to shareholders that
measures the combined effect of any dividends paid, together with
the rise or fall in the share price or NAV. In this half-yearly
financial report these return figures have been sourced from
Refinitiv who calculate returns on an industry comparative
basis.
Net Asset Value Total Return (APM)
Total return on net asset value per share, assuming dividends
paid by the Company were reinvested into the shares of the Company
at the NAV per share at the time the shares were quoted
ex-dividend.
Share Price Total Return (APM)
Total return to shareholders, on a mid-market price basis,
assuming all dividends received were reinvested, without
transaction costs, into the shares of the Company at the time the
shares were quoted ex-dividend.
|
|
|
Net Asset |
Share |
| Six Months Ended 31 October
2021 |
Page |
|
Value |
Price |
| As at 31 October 2021 |
1 |
|
397.36p |
367.00p |
| As at 30 April 2021 |
1 |
|
420.70p |
386.00p |
| Change in period |
|
a |
–5.5% |
–4.9% |
| Impact of dividend
reinvestments(1) |
|
b |
0.0% |
0.0% |
| Total return for the
period |
|
c = a+b |
–5.5% |
–4.9% |
|
|
|
Net Asset |
Share |
| Year Ended at 30 April
2021 |
Page |
|
Value |
Price |
| As at 30 April 2021 |
1 |
|
420.70p |
386.00p |
| As at 30 April 2020 |
1 |
|
279.64p |
254.00p |
| Change in year |
|
a |
50.4% |
52.0% |
| Impact of dividend
reinvestments(1) |
|
b |
6.0% |
6.5% |
| Total return for the
year |
|
c = a+b |
56.4% |
58.5% |
(1) No dividends have been paid during six months to
31 October 2021 (year to 30 April 2021: 15.10p). NAV or share price falls
subsequent to the reinvestment date consequently further reduce the
returns, vice versa if NAV or share price rises.
Benchmark
Total return on the benchmark is on a mid-market value basis,
assuming all dividends received were reinvested, without
transaction costs, into the shares of the underlying companies at
the time the shares were quoted ex-dividend.
Directors, Investment Manager and
Administration
Directors
Neil Rogan (Chairman of the
Board, Management Engagement and
Nomination Committees)
Fleur Meijs (Chairman of the
Audit and Remuneration Committees)†
Owen Jonathan (Senior Independent
Director)†
Vanessa Donegan†
Myriam Madden (appointed
4 November 2021)†
All Directors are members of the Management Engagement,
Remuneration and Nomination Committees
†
Member of the Audit Committee
Registered Office and Company
Number
Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH
Registered in England and
Wales: No. 3011768
Alternative Investment Fund Manager
(Manager)
Invesco Fund Managers Limited
Company Secretary
Invesco Asset Management Limited
Company Secretarial contact: Andrea
Davidson
Correspondence Address
43-45 Portman Square, London
W1H 6LY
020 3753 1000
Email: IAT@invesco.com
Depositary and Custodian
The Bank of New York Mellon (International) Limited
1 Canada Square, London E14
5AL
Corporate Broker
Investec Bank plc
30 Gresham Street, London EC2V
7QP
General Data Protection Regulation
The Company’s privacy notice can be found at
www.invesco.co.uk/invescoasia
Invesco Client Services
Invesco has a Client Services Team, available to assist you from
8.30am to 6pm Monday to Friday
(excluding UK Bank Holidays). Please note no investment advice can
be given. Phone: 0800 085 8677.
www.invesco.co.uk/investmenttrusts
Registrar
Link Group
Central Square, 29 Wellington Street, Leeds, LS1 4DL
If you hold shares directly and have queries relating to your
shareholding, you should contact the Registrar on
0371 664 0300. Calls are charged at the standard
geographic rate and will vary by provider.
From outside the UK: +44 (0)371 664 0300. Calls from outside the
UK will be charged at the applicable international rate. Lines are
open from 9am to 5.30pm, Monday to
Friday (excluding Bank Holidays in England and Wales).
Shareholders can also access their holding details via Link’s
website www.signalshares.com
Link Group provides on-line and telephone share dealing services
to existing shareholders who are not seeking advice on buying or
selling. This service is available at www.linksharedeal.com or 0371
664 0445. Calls are charged at the standard geographic rate and
will vary by provider. Calls from outside the UK will be charged at
the applicable international rate. Lines are open 9.00am to 5.30pm Monday to Friday (excluding Bank
Holidays in England and
Wales).
Link Group is the business name of Link Market Services Trustees
Limited.
Investor Warning
The Company, Invesco and the Registrar would never contact
members of the public to offer services or require any type of
upfront payment. If you suspect you have been approached by
fraudsters, please contact the FCA consumer helpline on
0800 111 6768 and Action Fraud on 0300 123 2040. Further
details for reporting frauds, or attempted frauds, can be found on
page 79 of the Company’s 2021 Annual Financial Report.
The Association of Investment
Companies
The Company is a member of the Association of Investment
Companies. Contact details are as follows:
Phone: 020 7282 5555
Email: enquiries@theaic.co.uk
Website: www.theaic.co.uk
Website
Information relating to the Company can be found on the
Company’s section of the Manager’s website at
www.invesco.co.uk/invescoasia
The contents of websites referred to in this document, or
accessible from links within those websites, are not incorporated
into, nor do they form part of, this document.
The Company’s ordinary shares qualify
to be considered as a mainstream investment product suitable for
promotion to retail investors.