Annual Financial Report

Invesco Asia Trust plc Annual Financial Report Announcement for the Financial Year Ended 30 April 2011 FINANCIAL INFORMATION AND PERFORMANCE STATISTICS The benchmark index of the Company is the MSCI All Countries Asia Pacific ex Japan Index (adjusted for sterling) Performance Statistics At At 30 April 30 April % 2011 2010 change Total Returns(i): - Diluted NAV +17.2 - Benchmark Index +11.8 Net assets (£'000) 176,856 150,934 +17.2 Gross gearing 4.1% 3.4% Net gearing 3.9% 2.5% Net asset value (`NAV') per ordinary share: - basic 187.7p 160.6p +16.9 - diluted 177.6p 154.9p +14.7 Benchmark Index(i) - capital 303.5 279.5 +8.6 return Mid-market price per ordinary 166.1p 138.3p +20.1 share Subscription shares 41.1p 26.0p +58.1 Discount per ordinary share on diluted NAV - cum income 6.5% 10.7% - ex income 4.9% 9.6% (i) Source: Thomson Reuters. Revenue YEAR YEAR ENDED ENDED 30 April 30 April % 2011 2010 change Gross income (£'000) 4,104 3,066 +33.9 Net revenue available for 2,983 2,184 +36.6 ordinary shares (£'000) Dividend per share 2.90p 2.25p +28.9 Total expense ratio 1.1% 1.1% Return per Ordinary Share Diluted revenue return 3.1p 2.3p Diluted capital return 25.5p 54.9p Total return 28.6p 57.2p Chairman's Statement Investment Managers The Board has appointed Ian Hargreaves as co-manager of the Company's portfolio alongside Stuart Parks. He has broad experience having worked at Invesco Perpetual for over 16 years, 10 of which were in Hong Kong and he has worked with Stuart on this Company's portfolio since 2005. The Board is very pleased to welcome Ian as co-manager of Invesco Asia Trust plc. Performance and Prospects Over the last twelve months, the global economic recovery has steadily progressed with many markets surpassing levels last seen before the recent global financial crisis. A number of macroeconomic headwinds and external events have threatened that recovery but Asian economies have continued to demonstrate strong economic growth while corporate earnings have continued to impress. Inflationary pressures are of concern and have clouded the near-term outlook but governments throughout the region have in general demonstrated a willingness to implement policy tightening measures to control the rate of inflation and the pace of economic growth. Asia also continues to benefit from increasing levels of domestic demand and relatively low levels of government debt that reflect the solid fundamentals underpinning the region's strong levels of economic growth. These factors have helped the Company deliver another year of good performance. Over the year under review, the diluted net asset value (total return) per ordinary share rose by 17.2%, compared to the benchmark, the MSCI All Countries Asia Pacific ex-Japan index (total return), which added 11.8%, in sterling terms. The Company's share price rose from 138.3p to 166.1p, while the discount to diluted net asset value (ex income) at which the shares trade narrowed to 4.9% from 9.6% at the start of the period. Dividend The Board is recommending a final dividend of 2.9p per ordinary share (2010: 2.25p), an increase of nearly 29%. The dividend, which is subject to the approval of shareholders at the Annual General Meeting, will be payable on 12 August 2011 to shareholders on the register on 15 July 2011. Discount Control In the Company's 2010 Annual Financial Report, the Board stated that it had decided, in the interests of shareholders, to propose a tender offer at the end of the Company's 2010-11 financial year (subject to receiving necessary shareholder approval) for up to 15% of the Company's issued share capital, at a 2% discount to NAV less the costs of the tender, if the Company's shares have traded over the year to 30 April 2011 at an average discount of more than 10% to NAV (fully diluted, ex income). The Board confirms that a tender offer will not be proposed. This is because the Company's average discount in the year was 8.6%. However, the Board has concluded that it would be in shareholders' interests to extend the discount control arrangements to the financial year ending 30 April 2012. On a continuing basis, the Board considers it desirable that the Company's shares do not trade at a significant discount to NAV and believes that, in normal market conditions, the shares should trade at a price which on average represents a discount of less than 10% to NAV. To enable the Board to take action to deal with any material overhang of shares in the market it seeks authority from shareholders annually to buy back shares. Shares may be repurchased when, in the opinion of the Board, the discount is higher than desired and shares are available in the market. The Board is of the view that the principal purpose of share repurchases is to enhance net asset value for remaining shareholders although it may also assist in addressing the imbalance between the supply of and demand for the Company's shares and thereby reduce the scale and volatility of the discount at which the shares trade in relation to the underlying net asset value. Outlook Asia's contribution to global economic growth is expected to become more important in the years ahead and we are very positive on the long-term economic outlook for the region. This reflects the robust fundamentals supporting growth in Asia, as well as the fact that developed markets, while continuing their recovery from the recent global financial crisis, are faced with a deleveraging cycle and the need for greater fiscal austerity. However, the recent underperformance of Asian markets relative to their developed market counterparts highlights the importance of Asia addressing its own risks which, at the present time, are inflation and the management of the Chinese economic cycle. Inflationary pressures have been felt throughout the region due to rising food and energy prices but there are signs that inflation is peaking. We are also encouraged by the proactive approach China has taken to tackling inflation, as well attempting to manage its own economic cycle, by taking the necessary fiscal and monetary policy tightening measures. Until inflation has peaked, and we believe we are close to that point, it is unlikely that Asian equity markets will significantly re-rate. However, Asian equities continue to offer good long-term investment opportunities based on current valuations, which are reasonable, with robust corporate earnings growth likely to be supportive of share prices in the near-term. Asia continues to be an attractive place to invest, with its companies delivering higher returns than in the past, while being well placed to benefit from the strong economic growth being generated by its dynamic and diverse economies. Bryan Lenygon It was with great sadness that the Board announced in November that Bryan Lenygon passed away on 25 November 2010. Bryan, who had served as a director since the inception of the Company in 1995, made a very valuable contribution to the business, particularly in his role as Chairman of the Audit Committee, a position he held since 1995. He will be sorely missed by his family, colleagues and many friends. David Hinde Chairman 24 June 2011 Investment Managers' Report Market & Economic Review Asian equity markets have dealt with a number of extraordinary events over the past twelve months. Several natural disasters struck the region, including floods on the east coast of Australia, and the devastating earthquake and tsunami that hit the Tohoku region of Japan. The recent political tensions in the Middle East and North Africa, and subsequent rise in oil prices have also presented difficulties for the region as a net importer of oil. Notwithstanding these exogenous events, Asian equity markets have mostly generated positive returns over the year, supported by impressive economic growth and robust corporate earnings. Economic growth in Asia remains strong, with China, Asia's dominant economy, recording stronger than expected growth of 9.8% year-on-year in the final quarter of 2010, and 9.7% in the first quarter of 2011. The last twelve months have seen the Chinese authorities implement a number of policy measures designed to cool the rate of expansion and dampen rising inflationary pressures. While CPI inflation has risen from 2.8% in April 2010 to 5.3% in April 2011, driven initially by rising food prices and then by rising energy prices, interest rates have risen from 5.31% to 6.31% over the same period. New restrictions have been introduced into the property market, while the country's leading banks have had their reserve requirement ratios raised from 16.5% to 20.5% over the period. China also announced that it will target a more sustainable growth rate of 7% over the period of its twelfth five-year plan which starts in 2011, marking a discernible shift in economic policy towards a more balanced approach that will focus on fostering domestic demand and the narrowing of social inequality. Economic data from elsewhere in the region has also impressed, with growth rates in Taiwan, Korea, Indonesia and Hong Kong all exceeding expectations. Central banks throughout the region have been cautiously raising interest rates, with inflationary pressures being monitored closely, especially in India where wholesale price inflation is at nearly 9%. In corporate news, Taiwan Semiconductor Manufacturing and Samsung Electronics announced results ahead of expectations, helped by the gradual ongoing economic recovery in developed markets. Chinese banks have also impressed recently, with earnings for the recent quarter in line with or better than expectations. Company Performance In the twelve months to the end of April 2011, the Company's net asset value increased by 17.2% (total return, £), which was ahead of the benchmark, the MSCI All Countries Asia Pacific ex-Japan index, which gained 11.8% (total return, £). During the period the Company benefited from good stock selection in the materials sector, which more than compensated for our being underweight in the sector during a period of relative outperformance. The contribution of Iluka Resources was notable, with earnings continuing to grow, strengthened by robust commodity prices, especially for its core asset, zircon. Our holdings in industrial conglomerates contributed positively with strong earnings performances from SK Holdings and Hutchison Whampoa. Our overweight position in financials also benefited the Company's operating performance, with holdings in the real estate and capital markets sectors contributing positively. Our exposure to the chemicals sector weighed on overall performance, especially our holding in Yingde Gases and United Phosphorus as earnings disappointed. In the consumer discretionary sector Daphne International also detracted after a period of relative outperformance, while our holding in China Taiping Insurance disappointed over the period as Chinese insurers in general have been impacted negatively by intensifying competition and a more difficult regulatory environment. Outlook for Asian Economies and Markets The outlook for Asian equity markets has been clouded in recent months by a number of negative factors. These include the end of the second round of quantitative easing in the US and ongoing sovereign debt concerns in Europe. Furthermore, inflationary pressures continue to be a focus for investors, with food and energy price increases threatening to impact economic growth throughout the region. Although economic growth remains healthy, markets may not renew their upward trend until investors believe central bank monetary tightening policies are sufficient, and that inflation is peaking. We believe we are close to that point. Given the current inflationary environment, a significant re-rating of Asian markets on a price/earnings basis is unlikely. However, we believe that Asian equities offer good long term investment opportunities, based on current valuations. Earnings growth in the region is forecast to rise by 10% to 15% in 2011. In our view, this is achievable and leads to a forecast average valuation for Asia ex Japan companies of 12.5 times 2011 earnings, which in our opinion is a reasonable level. With Asia's contribution to global economic growth expected to remain dominant in the years ahead, we are confident that many Asian businesses can turn that economic growth into earnings growth, and continue delivering higher returns than in the past, making the region an attractive investment destination in the medium to long term. Strategy The portfolio is positioned to capitalise upon the gradual shift in emphasis within Asian economies. This is seeing domestic consumption become increasingly important, helping to reduce the region's reliance on overseas demand. This process is moving ahead in China, where the shift to urbanisation brings a number of opportunities. These include greater demand for housing, and the real estate sector is represented in the portfolio. In our view, affordability levels in general remain reasonable, supported by high savings rates and rising incomes. Higher disposable incomes are also positive for consumer demand and while valuations in some consumer related areas look reasonably full, we are finding value in companies indirectly exposed to the consumer theme. We remain overweight in financials, and have recently added exposure to well managed banks that are undervalued. We also continue to hold high quality information technology companies that have come through the downturn with stronger, competitive advantages and lower cost bases, enhancing their profitability as the demand outlook remains strong in many areas of the sector. The portfolio also continues to have exposure to a number of smaller companies (with market cap of less than US$1 billion), which offer the opportunity to deliver superior returns being at an earlier stage in their growth cycle. In country terms, we continue to favour China and Hong Kong, believing that companies there can take advantage of the favourable economic backdrop, while China has de-rated to such an extent that it is now the second cheapest market in the region, a discount we do not believe is sustainable. We also have significant exposure to select Korean companies which are valued at a discount relative to the region and have significant growth opportunities. We are underweight in Australia as we believe it is at a later stage in the credit cycle and has a lower growth profile compared to other economies in the region, while we are also concerned about the high valuation of the Australian dollar. We are also modestly underweight in India, where valuations in some areas are relatively full and we also have limited exposure to some of the smaller, more export dependent, regional economies. Stuart Parks and Ian Hargreaves Investment Managers 24 June 2011 INVESTMENTS IN ORDER OF VALUATION at 30 April 2011 Ordinary shares unless stated otherwise R:Red Chip Holdings H:H-Shares at market % of Value Port- company industry group† country £'000 folio Samsung Semiconductors South Korea 9,234 5.0 Electronics Jardine Matheson Capital Goods Hong Kong 8,018 4.4 Taiwan Semiconductors Taiwan 6,136 3.3 Semiconductor Manufacturing HSBC Banking UK 5,572 3.0 Industrial & Banking China 5,248 2.9 Commercial Bank of ChinaH Hutchison Whampoa Capital Goods Hong Kong 4,740 2.6 Shinhan Financial Banking South Korea 4,587 2.5 United Phosphorus Materials India 4,141 2.3 Daegu Bank Banking South Korea 4,030 2.2 PetrochinaH Energy China 3,750 2.0 Top Ten Holdings 55,456 30.2 Hyundai Motor Automobiles & South Korea 3,692 2.0 Components China Banking China 3,350 1.8 Construction BankH BHP Billiton Materials Australia 3,261 1.8 China MobileR Telecommunication Hong Kong 3,094 1.7 Services Posco Materials South Korea 3,082 1.7 QBE Insurance Insurance Australia 2,905 1.6 China Life Insurance Taiwan 2,875 1.6 Insurance Newcrest Mining Materials Australia 2,828 1.5 Daphne Consumer Durables and Hong Kong 2,790 1.5 International Apparel Infosys Software & Services India 2,773 1.5 Top Twenty 86,106 46.9 Holdings Metro Bank & Banking Philippines 2,705 1.5 Trust Hyundai Mobis Automobiles & South Korea 2,688 1.5 Components Wharf Real Estate Hong Kong 2,681 1.5 HKR International Real Estate Hong Kong 2,636 1.4 Iluka Resources Materials Australia 2,615 1.4 LG Fashion Consumer Durables and South Korea 2,591 1.4 Apparel China Taiping Insurance Hong Kong 2,574 1.4 InsuranceR BK Rakyat Banking Indonesia 2,559 1.4 Charm Media Hong Kong 2,507 1.4 Communications Lumax Technology Hardware & Taiwan 2,496 1.4 International Equipment Top Thirty 112,158 61.2 Holdings SK Capital Goods South Korea 2,479 1.4 KCC Corporation Capital Goods South Korea 2,466 1.4 Korean Insurance South Korea 2,457 1.3 Reinsurance Yageo Technology Hardware & Taiwan 2,426 1.3 Equipment Cheung Kong Real Estate Hong Kong 2,420 1.3 Petronas Materials Malaysia 2,413 1.3 Chemicals Filinvest Land Real Estate Philippines 2,382 1.3 Polaris Diversified Financials Taiwan 2,340 1.3 Securities Australia & New Banking Australia 2,219 1.2 Zealand Bank Hon Hai Precision Technology Hardware Taiwan 2,206 1.2 Equipment Top Forty 135,966 74.2 Holdings Westpac Bank Banking Australia 2,183 1.2 China Shenhua Energy China 2,143 1.2 EnergyH Standard Banking UK 2,097 1.1 Chartered Delta Electronics Technology Hardware Taiwan 2,061 1.1 Equipment Fosters Food, Beverages & Australia 2,059 1.1 Tobacco Cimb Banking Malaysia 2,049 1.1 West China Cement Materials Hong Kong 2,044 1.1 Bank of Baroda Banking India 2,041 1.1 Venture Technology Hardware Singapore 2,028 1.1 Equipment Shanda Software & Services Hong Kong 1,983 1.1 Interactive Top Fifty 156,654 85.4 Holdings Wumart StoresH Food & Staples China 1,942 1.1 Retailing Housing Banking India 1,929 1.1 Development Finance Perusahaan Gas Utilities Indonesia 1,900 1.0 Korea Investment Diversified Financials South Korea 1,887 1.0 Zhejiang Transportation China 1,705 0.9 ExpresswayH PTT Exploration & Energy Thailand 1,547 0.8 Production Beijing Capital Goods Hong Kong 1,500 0.8 EnterpriseR KWG Property Real Estate Hong Kong 1,440 0.8 Noble Capital Goods Singapore 1,413 0.8 Shinsegae Food & Staples South Korea 1,375 0.8 Retailing Top Sixty 173,292 94.5 Holdings CPN Retail Growth Real Estate Thailand 1,234 0.7 Powertech Semiconductors Taiwan 1,220 0.7 Technology Shandong Materials China 1,162 0.6 ChenmingH Metro Pacific Diversified Financials Philippines 1,095 0.6 Invesments E-House China Real Estate China 948 0.5 Kasikornbank Banking Thailand 938 0.5 Treasury China Real Estate Hong Kong 825 0.5 Trust (formerly China Real Estate Opportunities) SPG LandR Real Estate China 814 0.4 Petra Foods Food, Beverages & Singapore 624 0.3 Tobacco Dart Energy Energy Australia - Ords 479 0.2 - Placement 107 0.1 Top Seventy 182,738 99.6 Holdings Dabur India Household & Personal India 373 0.2 Products Yingde Gases Materials Hong Kong 257 0.1 Krisassets Real Estate Malaysia 159 0.1 Jain Irrigation Capital Goods India 37 - Total 183,564 100.0 †MSCI and Standard & Poor's Global Industry Classification Standard. Classification of Investments by Country/Sector AT 30 April 2011 2010 AT % OF AT % OF VALUATION PORTFOLIO VALUATION PORTFOLIO £'000 £'000 Australia Energy 586 0.3 - - Consumer Staples 2,059 1.1 1,158 0.8 Materials 8,704 4.7 6,565 4.2 Industrials - - 2,473 1.6 Financials 7,306 4.0 4,561 3.0 18,655 10.1 14,757 9.6 China Energy 5,893 3.2 2,847 1.9 Consumer Staples 1,942 1.1 2,137 1.4 Materials 1,162 0.6 - - Industrials 1,705 0.9 2,137 1.4 Consumer Discretionary - - - - Financials 10,360 5.6 8,444 5.4 Information Technology - - 3,695 2.4 21,062 11.4 19,260 12.5 Hong Kong Consumer Staples - - 2,045 1.3 Materials 2,301 1.3 1,543 1.0 Industrials 14,258 7.8 14,965 9.7 Consumer Discretionary 5,296 2.9 2,957 1.9 Financials 12,576 6.9 14,623 9.5 Information Technology 1,983 1.1 - - Telecommunication 3,094 1.7 2,822 1.8 Services 39,508 21.7 38,955 25.2 India Consumer Staples 373 0.2 360 0.2 Materials 4,141 2.3 3,386 2.3 Industrials 37 - 2,849 1.8 Financials 3,970 2.2 2,650 1.7 Information Technology 2,773 1.5 - - Telecommunication - - 2,847 1.8 Services 11,294 6.2 12,092 7.8 Indonesia Consumer Staples - - 1,741 1.1 Financials 2,559 1.4 831 0.6 Utilities 1,900 1.0 2,018 1.3 4,459 2.4 4,590 3.0 Malaysia Materials 2,413 1.3 - - Industrials - - 111 0.1 Financials 2,208 1.2 2,666 1.7 4,621 2.5 2,777 1.8 Philippines Financials 6,182 3.4 4,572 3.0 6,182 3.4 4,572 3.0 Singapore Consumer Staples 624 0.3 832 0.6 Industrials 1,413 0.8 - - Financials - - 1,249 0.8 Telecommunication - - 2,025 1.3 Services Information Technology 2,028 1.1 - - 4,065 2.2 4,106 2.7 South Korea Consumer Staples 1,375 0.7 1,573 1.0 Materials 3,082 1.7 2,319 1.5 Industrials 4,945 2.7 1,207 0.8 Consumer Discretionary 8,971 4.9 4,438 2.9 Financials 12,962 7.1 7,989 5.2 Information Technology 9,234 5.0 8,874 5.7 40,569 22.1 26,400 17.1 Taiwan Industrials - - 2,311 1.5 Financials 5,214 2.8 3,861 2.5 Information Technology 16,546 9.0 10,866 7.1 Telecommunication - - 1,136 0.7 Services 21,760 11.8 18,174 11.8 Thailand Energy 1,548 0.8 - - Financials 2,172 1.2 995 0.6 3,720 2.0 995 0.6 Other Consumer Staples - - 922 0.6 Materials - - 4,031 2.6 Financials 7,669 4.2 2,714 1.7 7,669 4.2 7,667 4.9 Total 183,564 100.0 154,345 100.0 Principal Risks and Uncertainties The principal risk factors relating to the Company can be divided into the following areas: Investment Objective The Company's investment objective is described in the Annual Financial Report. There is no guarantee that the Company's investment objective will be achieved or will provide the returns sought by the Company. Investment Process At the core of the Manager's philosophy is a belief in active investment management. Fundamental principles drive a genuinely unconstrained investment approach, which aims to deliver attractive total returns over the long term. The investment process emphasises pragmatism and flexibility, active management, a focus on valuation and the combination of top-down and bottom-up fundamental analysis. Bottom-up analysis forms the basis of the investment process. It is the key driver of stock selection and is expected to be the main contributor to alpha generation within the portfolio. Portfolio construction at sector level is largely determined by this bottom-up process but is also influenced by top-down macro economic views. Research is structured to provide a detailed understanding of a company's key historical and future business drivers, such as demand for its products, pricing power, market share trends, cash flow and management strategy. This allows the Manager to form an opinion on a company's competitive position, its strategic advantages/disadvantages and the quality of its management. Each member of the investment management team travels to the region between three and four times per year. In total the team has contact with around 700 companies a year. The Manager will also use valuation models selectively in order to understand the assumptions that brokers/analysts have incorporated into their valuation conclusions and as a structure into which the Manager can input its own scenarios. Risk management is an integral part of the investment management process. Core to the process is that risks taken are not incidental but are understood and taken with conviction. The Manager controls stock-specific risk effectively by ensuring that portfolios are always appropriately diversified. Also, in-depth and constant fundamental analysis of the portfolio's holdings provide the Manager with a thorough understanding of the individual stock risk taken. The internal Performance & Risk Team, an independent team, ensures that the Manager adheres to the portfolio's investment objectives, guidelines and parameters. There is also a culture of challenge and debate between managers regarding portfolio construction and risk. Portfolio performance is substantially dependent on the performance of Asian and Australasian equities. Stocks are influenced by the general health of the economies in the Far Eastern region. The Board recognises that market conditions will affect portfolio performance. For a fuller discussion of the economic and market conditions facing the Company and the prospects for future performance, please see the Chairman's Statement and the Manager's Report in the Annual Financial Report. Market Movement and Portfolio Performance The Company's investments are traded on the Far Eastern, Indian and Australasian stockmarkets. The principal risk for investors in the Company is of a significant fall and/or a prolonged period of decline in the markets. This could be triggered by unfavourable developments within the region or events outside it. Additionally, performance can be geared by bank borrowings which may accentuate any decline in performance. Other significant risks include consistent underperformance by the Manager, or the market rating of the Company failing to reflect good performance. The value of investments held within the portfolio is influenced by many factors including the general health of the world economy, interest rates, inflation, government policies, industry conditions, political and diplomatic events, tax laws, environmental laws, and by changing investor demand. The Manager strives to maximise the return from the investments held, but these investments are influenced by market conditions and the Board acknowledges the external influences on portfolio performance. While the Board obviously cannot influence market movements, it is vigilant in monitoring and taking steps to mitigate the effects of falls in markets when they occur. As has been indicated, the Manager's performance is carefully monitored by the Board, and the continuation of the Manager's mandate is revisited annually. The Board has established guidelines to ensure that the investment policy that it has approved is pursued by the Manager. The Board and the Manager maintain an active dialogue with the aim of ensuring that the market rating of the Company's shares reflects the underlying net asset value, and buy-back facilities are in place to assist in the management of this process. The past performance of the Company, and all of the investments in the portfolio, are not necessarily indicative of future performance. Foreign Exchange Risks The Company will account for its activities and report its results in sterling, while investments will be made and realised in other currencies. The NAV of the Company will be reported in sterling. It is not generally the Company's policy to engage in currency hedging. Accordingly, the movement of exchange rates between sterling and the other currencies in which the Company's investments are denominated or its borrowings are drawn down may have a material effect, unfavourable or favourable, on the returns otherwise experienced on the investments made by the Company. The Ordinary Shares The market value of, and the income derived from, the Company's ordinary shares can fluctuate and may go down as well as up. The market value may not always reflect the NAV per ordinary share. The market price of an ordinary share may therefore trade at a discount to its NAV. As at 30 April 2011, an ordinary share of the Company traded at a discount to the diluted NAV (ex income) of 4.9%. The market value of the ordinary shares will be affected by a number of factors, including the dividend yield from time to time of the ordinary shares, prevailing interest rates and supply and demand for those ordinary shares, along with wider economic factors and changes in the law, including tax law and political factors. The market value of an ordinary share may therefore vary considerably from its underlying value. There can be no guarantee that any appreciation in the value of the Company's investments will occur and investors may not get back the full value of their investment. Although the ordinary shares are listed on the Official List and admitted to trading on the London Stock Exchange's main market for listed securities, it is possible that there may not be a liquid market in the ordinary shares and shareholders may have difficulties in selling them. The Chairman's Statement explains that proposals for a tender offer will be put to shareholders at the next AGM if the Company's shares have traded over the previous financial year at an average discount of more than 10% to the fully diluted, ex income NAV. A tender offer would result in a decrease in the size of the Company's shares which could potentially affect both the liquidity of the Company as well as requiring the disposal of assets to fund the tender. As the average discount for the year ended 30 April 2011 was 8.6%, no tender offer will be proposed at the 2011 AGM. Derivatives The Company may enter into derivative transactions approved by the Board for efficient portfolio management. Derivative instruments can be highly volatile and expose investors to a high risk of loss. There is a risk that the returns on the derivative do not exactly correlate to the returns on the underlying investment, obligation or market sector being hedged against. If there is an imperfect correlation, the Company may be exposed to greater loss than if the derivative had not been entered into. Gearing Performance may be geared by way of an unsecured £15 million multi-currency credit facility with its Custodian, the Bank of New York Mellon. In current market conditions, there is no guarantee that the Company's loan facility would be renewable at maturity or on terms acceptable to the Company. If it were not possible to renew this facility or replace it with another lender, the amounts owing by the Company would need to be funded by the sale of securities. Gearing levels may change from time to time in accordance with the Manager's assessment of risk and reward. As a consequence of gearing, any reduction in the value of the Company's investments would lead to a correspondingly greater reduction in its NAV (which is likely to affect the Company's share price adversely). Any reduction in the number of shares in issue (for example as a result of buy-backs) will, in the absence of a corresponding reduction in borrowings, result in an increase in the Company's gearing. Regulatory and Tax Related The Company is subject to various laws and regulations by virtue of its status as an investment trust and its listing on the London Stock Exchange. A breach of s1158-1165 CTA could lead to the Company being subject to capital gains tax on the profits arising from the sale of its investments. A serious breach of other regulatory rules might lead to suspension from the Stock Exchange or to a qualified Audit Report. Other control failures, either by the Manager or any other of the Company's service providers, might result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations. The Manager reviews the level of compliance with s1158-1165 CTA and other financial regulatory requirements on a regular basis. All transactions, income and expenditure are reported to the Board. The Board regularly considers all perceived risks and the measures in place to control them. The Board ensures that satisfactory assurances are received from service providers. The Manager's Compliance and Internal Audit Officers produce regular reports for review by the Company's Audit Committee. Risks and risk management policies are also detailed in the notes to the financial statements in the Annual Financial Report. Reliance on Third Party Providers The Company's most significant contract is with the Manager, to whom responsibility both for the management of the Company's portfolio and for the provision of company secretarial and administrative services are delegated. The Company also has contractual arrangements with third parties to act as Custodian and Registrars. Failure by any service provider to carry out its obligations in accordance with the terms of its appointment could have a materially detrimental impact on the effective operation of the Company and on the ability of the Company to pursue its investment policy successfully. Such failure could also expose the Company to reputational risk. In particular, the Manager may be exposed to the risk that litigation, misconduct, operational failures, negative publicity and press speculation, whether valid or not, will harm its reputation. Any damage to the reputation of the Manager could result in potential counterparties and third parties being unwilling to deal with the Manager and by extension the Company. That could also have an adverse impact on the ability of the Company to pursue its investment policy successfully. The Board seeks to manage these risks in a number of ways. In particular the Board reviews the performance of the Manager formally at every board meeting and otherwise as appropriate. The day to-day management of the portfolio is the responsibility of the portfolio managers to whom the Board has given discretion to operate within set guidelines. Any proposed variation outside those guidelines is referred to the Board and the guidelines themselves are reviewed at every board meeting. The risk that the portfolio managers might be incapacitated or otherwise unavailable is mitigated by the fact that they work within and are supported by the wider Invesco Perpetual Asia team. The Board has power to replace the Manager and reviews the management contract formally once a year. The Manager reviews the performance of all other third party providers regularly through formal and informal meetings, the results of which are reported to and reviewed by the Board. The contractual arrangements which govern relationships with third party providers, including the Registrars and the Custodian, and with the Corporate Broker are also reviewed by the Board in relation to agreed service standards on a regular basis and, more formally, on an annual basis. DIRECTORS' RESPONSIBILITY STATEMENT in respect of the preparation of the annual financial report The Directors are responsible for preparing the annual financial report in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under the law the Directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law, the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records which 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 which enable them to ensure that the financial statements comply with the Companies Act 2006 (`CA 2006'). They 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 Directors' Report, a Directors' Remuneration Report and a Corporate Governance Statement that comply with that law and those regulations. In so far as each of the Directors is aware: • there is no relevant audit information of which the Company's Auditors are unaware; and • the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Auditors are aware of that information. This information is given and should be interpreted in accordance with provision s418 of CA 2006. The Directors of the Company each confirm to the best of their knowledge that: • the financial statements, prepared in accordance with UK Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and • this annual financial report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. David Hinde Chairman Signed on behalf of the Board of Directors 24 June 2011 Income Statement for the year ended 30 April 2011 2010 Revenue Capital Total Revenue Capital Total return return return return return return £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments - 25,303 25,303 - 52,680 52,680 Gains/(losses) on foreign - 368 368 - (195) (195) currency revaluation Income - note 2 4,104 - 4,104 3,066 - 3,066 Investment management fee - (303) (909) (1,212) (251) (754) (1,005) note 3 Other expenses (526) (11) (537) (466) (12) (478) Return before finance costs 3,275 24,751 28,026 2,349 51,719 54,068 and taxation Finance costs (25) (75) (100) (17) (51) (68) Return on ordinary 3,250 24,676 27,926 2,332 51,668 54,000 activities before tax Tax on ordinary activities (267) - (267) (148) 64 (84) Net return on ordinary 2,983 24,676 27,659 2,184 51,732 53,916 activities after tax for the financial year Return per ordinary share: Basic - note 4 3.2p 26.2p 29.4p 2.4p 55.1p 57.5p Diluted - note 4 3.1p 25.5p 28.5p 2.3p 54.9p 57.2p The total return column of this statement represents the Company's profit and loss account prepared in accordance with the accounting polices detailed in note 1 to the financial statements contained in the Annual Financial Report. The supplementary revenue and capital columns are prepared 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 and the Company has no other gains or losses, therefore no statement of total recognised gains and losses is presented. No operations were acquired or discontinued in the year. reconciliation of movements in shareholders' funds for the year ended 30 April Capital Share Share Redemption Special Capital Revenue Capital Premium Reserve Reserve Reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 30 April 2009 9,383 74,588 1,863 11,798 (1,775) 2,810 98,667 Final dividend - - - - - - (1,408) (1,408) note 5 Net return for the - - - - 51,732 2,184 53,916 year Capitalise share 188 (188) - - - - - premium for payment in full of subscription shares Cost of - (241) - - - - (241) subscription share issue At 30 April 2010 9,571 74,159 1,863 11,798 49,957 3,586 150,934 Final dividend - - - - - - (2,111) (2,111) note 5 Net return for the - - - - 24,676 2,983 27,659 year Exercise of (3) 3 - - - - - subscription shares into ordinary shares Issue of ordinary 30 344 - - - - 374 shares on conversion of subscription shares At 30 April 2011 9,598 74,506 1,863 11,798 74,633 4,458 176,856 BALANCE SHEET at 30 April 2011 2010 £'000 £'000 Fixed assets Investments designated at fair value 183,564 154,345 Current assets Debtors 837 752 Cash at bank 370 1,246 1,207 1,998 Creditors: amounts falling due within one year (7,915) (5,409) Net current liabilities (6,708) (3,411) Total net assets 176,856 150,934 Capital and reserves Share capital - note 6 9,598 9,571 Share premium 74,506 74,159 Other reserves: Capital redemption reserve 1,863 1,863 Special reserve 11,798 11,798 Capital reserve 74,633 49,957 Revenue reserve 4,458 3,586 Total Shareholders' funds 176,856 150,934 Net asset value per ordinary share - note 7 Basic 187.7p 160.6p Diluted 177.6p 154.9p These financial statements were approved and authorised for issue by the Board of Directors on 24 June 2011. David Hinde Chairman Signed on behalf of the Board of Directors Cash Flow Statement for the year ended 30 April 2011 2010 £'000 £'000 Cash inflow from operating activities 1,466 1,203 Servicing of finance (103) (70) Taxation 5 (336) Capital expenditure and financial investment (3,176) (3,275) Dividends paid - note 5 (2,111) (1,408) Net cash outflow before management of liquid resources (3,919) (3,886) and financing Financing 2,073 4,759 (Decrease)/increase in cash in the year (1,846) 873 Reconciliation of cash flow to movement in net Debt for the year ended 30 April 2011 2010 £'000 £'000 (Decrease)/increase in cash in the year (1,846) 873 Cash inflow from movement in debt (1,699) (5,000) Change in net debt resulting from cash flows (3,545) (4,127) Exchange differences 368 (195) Movement in net debt in the year (3,177) (4,322) Net (debt)/funds at beginning of year (3,754) 568 Net debt at end of year (6,931) (3,754) NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 April 2011 1. Basis of Preparation Accounting Standards Applied The financial statements have been prepared under the historical cost convention, except for the measurement at fair value of investments, and in accordance with applicable United Kingdom Accounting Standards and with the Statement of Recommended Practice (`SORP') `Financial Statements of investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies in January 2009. 2. Income 2011 2010 £'000 £'000 Income from investments Overseas dividends 3,462 2,839 Scrip dividends 564 207 UK dividends 75 19 Total dividend income 4,101 3,065 Other income Interest 3 1 Total income 4,104 3,066 3. Investment management fee 2011 2010 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 303 909 1,212 251 754 1,005 303 909 1,212 251 754 1,005 At 30 April 2011, £324,000 was due for payment in respect of the management fee (2010: £295,000). 4. Return per ordinary share 2011 2010 £'000 £'000 Return per ordinary share is based on the following: Revenue return 2,983 2,184 Capital return 24,676 51,732 Total return 27,659 53,916 2011 2010 Weighted average number of ordinary shares in issue during the year: - basic 94,025,950 93,837,425 - diluted 96,912,161 94,261,260 The subscription shares are dilutive for the purpose of return per share when they would result in the issue of ordinary shares. This occurs when the average market price of the ordinary shares during the period is greater than the exercise price of 125p. The average market price for the year ended 30 April 2011 was 147.99p (30 April 2010: 127.89p) and was dilutive. 5. Dividends on ordinary shares Dividends on shares paid in the year: 2011 2010 pence £'000 pence £'000 Final dividend in respect of previous year 2.25 2,111 1.5 1,408 Dividend on shares payable in respect of the current year: 2011 2010 pence £'000 pence £'000 Final dividend proposed 2.90 2,730 2.25 2,111 6. Share capital 2011 2010 £'000 £'000 Authorised: 150,000,000 (2010: 150,000,000) ordinary shares of 10p each 15,000 15,000 20,000,000 (2010: 20,000,000) subscription shares of 1p each 200 200 15,200 15,200 Allotted, called-up and fully paid: 94,136,605 (2010: 93,837,425) ordinary shares of 10p each 9,413 9,383 18,468,305 (2010: 18,767,485) subscription shares of 1p each 185 188 9,598 9,571 Subscription shares Each subscription share confers the right to subscribe for one ordinary share on or around 31 August for each of the years 2010 to 2012 at an exercise price of 125p per share. During the year 299,180 subscription shares were converted into 299,180 ordinary shares. 7. Net asset value The net asset values attributable to each share in accordance with the Company's Articles are set out below. 2011 2010 Basic: Ordinary shareholders' funds £ £ 176,671,000 150,746,000 Subscription shareholders' funds of 1p each £185,000 £188,000 Total shareholders' funds £ £ 176,856,000 150,934,000 Number of ordinary shares in issue 94,136,605 93,837,425 Net asset value per ordinary share 187.7p 160.6p Diluted: Ordinary shareholders' funds £ £ 199,941,000 174,394,000 Number of ordinary shares in issue 112,604,910 112,604,910 Net asset value per ordinary share 177.6p 154.9p When the basic NAV is greater than the exercise price of 125p, the subscription shares are dilutive. However, subscription shareholders are not likely to exercise their option unless the market price is greater than the exercise price as this would dilute their holdings. 8. This Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2011 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2010 and 2011 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s498 of the Companies Act 2006. The financial information for 2009 is derived from the statutory accounts for 2010 which have been delivered to the Registrar of Companies. The 2011 accounts will be filed with the Registrar of Companies in due course. 9. The Audited Annual Financial Report will be posted to shareholders shortly Copies may be obtained during normal business hours from the Company's registered office, 30 Finsbury Square, London, EC2A 1AG. A copy of the Annual Financial Report will be available from Invesco Perpetual on the following website: http://itinvestor.invescoperpetual.co.uk/portal/site/ipitinvestor/investmentrange/investmenttrusts/asiatrust/ 10. The Annual General Meeting of the Company will be held at 12.00 noon on 5 August 2011 at 30 Finsbury Square, London EC2A 1AG. By order of the Board Invesco Asset Management Limited - Company Secretary 24 June 2011

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