Annual Financial Report

LEGAL ENTITY IDENTIFIER: 549300YM9USHRKIET173

Invesco Asia Trust plc

Annual Financial Report Announcement for the Year Ended 30 April 2024

The following text is extracted from the Annual Financial Report of the Company for the year ended 30 April 2024. All page numbers below refer to the Annual Financial Report which will be made available on the Company's website.

This announcement contains regulated information.

Investment Objective

The Company’s objective is to provide long-term capital growth and income by investing in a diversified portfolio of Asian and Australasian companies. The Company aims to achieve growth in its net asset value (NAV) total return in excess of the Benchmark Index, the MSCI AC Asia ex Japan Index (total return, net of withholding tax, in sterling terms).

Financial Information and Performance Statistics

The benchmark index of the Company is the MSCI AC Asia ex Japan Index (total return, net of withholding tax, in sterling terms)

Total Return Statistics(1) with dividends reinvested

Change for the year (%)	2024	2023
Net asset value (NAV) total return(2)	2.7	1.3
Share price total return(2)	2.2	1.2
Benchmark index total return(3)	7.9	-6.0

Capital Statistics

At 30 April	2024	2023	change %
Net assets (£’000)	238,266	245,004	–2.8
NAV per share	361.51p	366.48p	–1.4
Share price(1)	313.00p	321.00p	–2.5
Benchmark index (capital)	989.35	938.42	+5.4
Discount(2) per ordinary share:	(13.4)%	(12.4)%
Average discount over the year(1)(2)	(11.3)%	(11.6)%
Gearing(2):
– gross	5.3%	5.9%
– net	4.5%	5.3%
Revenue Statistics
Year Ended 30 April	2024	2023	change %
Income (£’000)	7,375	7,601	–3.0
Net revenue available for ordinary shares (£’000)	5,422	5,596	–3.1
Revenue return per ordinary share	8.12p	8.37p	–3.0
Dividends per share(4):
– first interim	7.20p	7.20p
– second interim	6.90p	7.60p
Total dividends	14.10p	14.80p	–4.7
Ongoing charges ratio(2)	1.03%	0.99%

(1) Source: LSEG Data & Analytics.

(2) Alternative Performance Measure (‘APM’). See Glossary of Terms and Alternative Performance Measures on pages 78 to 80 of the financial report for details of the explanation and reconciliations of APMs.

(3)  Index returns are shown on a total return basis, with dividends reinvested net of withholding taxes.

(4)  The Company’s dividend policy aims to pay a regular six-monthly dividend calculated at 2% of the Company’s NAV on the last business day of September and February. Dividends are paid from a combination of the Company’s revenue reserves and capital reserves, as required. The Board are proposing a minor change to the dividend policy. Further details can be found in the Chairman’s Statement on page 8.

Chairman’s Statement

Highlights

• NAV total return performance behind benchmark over 1 year; strong relative performance over 3, 5 and 10 years.

• Asian economies are forecast to grow faster than the West yet their stockmarkets are at unusually attractive valuation levels. There is then a double discount of the share price trading at below net asset value.

• On top of this comes a 4.5% annual dividend yield based on the share price as at 30 April 2024, approximately half of which is effectively a return of capital at net asset value.

This is the first time in four years that your Company’s NAV has underperformed the benchmark index over the Company’s year to 30 April. The year saw a net asset value total return of 2.7%, behind the benchmark index’s total return of 7.9%. The share price total return was 2.2% with the discount widening a little from 12.4% at 30 April 2023 to 13.4% at 30 April 2024 and averaging 11.3% over the year. Attribution numbers show that the year’s underperformance came mainly from stock selection within China and the underweight allocation to India. Fiona Yang and Ian Hargreaves review performance in more detail in their Portfolio Managers’ Report.

Despite an underperforming year, the Company’s long term performance record remains strong with outperformance over three, five and ten years as shown in the table below. The table also shows performance over four years from 30 April 2020, which is relevant to our performance conditional tender offer which will be assessed on five-year performance from 30 April 2020. In the first four years, NAV total return of 11.0% annualised is comfortably ahead of the benchmark’s 4.5%. Indeed our longer-term performance record has been recognised in the industry through us winning the Citywire Winners award at the publication’s Investment Trust Awards 2023 for best risk-adjusted performance for the Asia Pacific Equities Sector. We were also awarded the “Kepler Income & Growth Rating 2024” by Kepler Partners and an A-rating by Square Mile Investment Consulting & Research.

Shareholders will know that we believe that the discount is determined by a combination of demand for Asian equity investment vehicles, the Investment Case for Invesco Asia Trust plc and the Corporate Proposition that we offer. In order to stimulate more demand for the Company’s shares, we aim 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 Fiona Yang and Ian Hargreaves’ team at Invesco. The team is unchanged and remains strong. We were delighted to announce that from 1 May 2024, our Co-Portfolio Managers have swapped roles with Fiona Yang taking the lead from Ian Hargreaves, with both continuing to work very closely together on the Company’s portfolio. Ian will remain closely involved for years to come. The Directors have been impressed by Fiona’s contribution over the past five years and are pleased to support her promotion.

Their investment process can be summarised as “valuation not value” and has been very successful with institutional clients such as pension funds and sovereign wealth investors. In these times of great change, we would argue that this forward-looking active approach (as opposed to a backward-looking index tracking style) is exactly what is needed. The team have delivered very strong relative performance for shareholders over three, five and ten years, as shown in the table on the below. Like many professional consultants and shareholders we, as fully independent directors, look for talented stock pickers, a robust process and consistent outperformance in our investment manager. We believe we have all three in Fiona, Ian and the team at Invesco.

Annualised Total Return in Sterling Terms to 30 April 2024(1)(2)

	1	3	4	5	10
	year	years	years	years	years
Net Asset Value %(3)	2.7	–1.0	11.0	6.4	10.1
Benchmark %	7.9	–4.1	4.5	2.6	6.8

(1) Source: LSEG Data & Analytics.

(2) The benchmark index of the Company was changed on 1 May 2015 to the MSCI AC Asia ex Japan Index from the MSCI AC Asia Pacific ex Japan Index (both indices total return, net of withholding tax, in sterling terms). The benchmark performance used throughout this report uses the former index for periods prior to 1 May 2015.

(3) Alternative Performance Measure (‘APM’). See Glossary of Terms and Alternative Performance Measures on pages 78 to 80 of the financial report for details of the explanation and reconciliations of APMs.

The Corporate Proposition

The Company’s Corporate Proposition was first introduced in 2018. Since then the Board has continued to review and adopt measures intended to create additional demand for the Company’s shares, both from existing and new shareholders, and to reduce the discount. We have been careful to ensure that the measures chosen are in the best interests of all shareholders. The intention is that the gains from each will combine to make the Corporate Proposition as compelling as the Investment Case.

There are multiple elements to our Corporate Proposition, including:

1. Continuation Vote: Every three years the future of the Company is subject to a continuation vote. The next one is due in September 2025.

2. Enhanced dividend policy: The Board introduced an enhanced dividend policy in 2020 which aimed to pay in two instalments, in the absence of unforeseen circumstances, a regular dividend equivalent to approximately 4.0% of the Company’s NAV, calculated by reference to the Company’s NAV on the last business days of September and February. The dividend instalments are paid to shareholders in November and April. This year the first interim dividend of 7.20p was paid to shareholders on 23 November 2023 and a second interim dividend of 6.90p was paid to shareholders on 23 April 2024. This gave a total distribution of approximately 4.0% of NAV over the year and represents a 4.5% dividend yield on the closing share price on 30 April 2024.

 Following feedback from shareholders, the Board will be making a minor change to the dividend policy. The Company will aim to pay in two instalments, in the absence of unforeseen circumstances, a regular dividend equivalent to approximately 4.0% of the Company’s NAV on the last business day of September. The dividends will continue to be paid to shareholders in November and April. The change will take effect from 1 May 2024. Please note that the policy of paying out approximately 4.0% of NAV means that dividend payments will not necessarily increase every year. This distribution policy as a whole is put to shareholders at each AGM.

3. Performance Conditional Tender: We introduced a performance conditional tender offer in 2020 through which the Board has undertaken to effect a tender offer for up to 25.0% of the Company’s issued share capital at a discount of 2.0% to the prevailing NAV per share (after deduction of tender costs) in the event that the Company’s NAV cum-income total return performance over the five year period to 30 April 2025 fails to exceed the Company’s comparator index, the MSCI AC Asia ex Japan Index (net of withholding tax, total return in sterling terms) by 0.5% per annum over the five years on a cumulative basis. Shareholders already have the opportunity to vote on the continuation of the Company every three years, but the Board believes that also providing shareholders with the option to tender a proportion of their shares for a cash price close to NAV, if the Company underperforms, constitutes a pragmatic and attractive initiative, particularly if the shares were to be trading at a material discount at the time.

4. Minimising Ongoing Charges and Fees: Fair and accurate cost disclosure for investment trust companies has been making headlines over the past year. As a Board we believe that all costs and charges should be clearly disclosed but also that it is important to remember that these costs are the ordinary costs of doing business and that they are already deducted from the net asset value by which we judge performance net of these costs against our index benchmark.

 The Board is responsible for managing the level of charges to shareholders. Our intention is to seek to reduce gradually the level of ongoing charges over time. The main component of the ongoing charge of 1.03% p.a. in 2024 is the investment management fee paid to Invesco. The investment management fee is 0.75% on assets up to £250 million reducing to 0.65% on net assets over this amount. Other components within the ongoing charges calculation include company secretarial (£119,000), external auditor (£70,000), directors’ fees (£143,000), custody fees and miscellaneous others (£360,000). Outside the ongoing charges calculation are the costs of gearing and transaction charges (the incidental costs of buying and selling shares within the portfolio) which taken together amounted to £800,000 over the year. All of these costs have always been included within the net asset value calculation.

5.  Buyback Authority: The Board has a stated average discount target of less than 10% of NAV calculated on a cum-income basis (formerly ex-income) over the Company’s financial year, although the Directors are cognisant of the fact that the Company’s share rating at any particular time will reflect a combination of various factors, a number of which are beyond the Board’s control. Share buybacks will occur where and when we consider (in conjunction with our broker) that such buybacks will be effective, taking into account market factors and the discounts of comparable funds. As previously flagged, we are more likely to buy back shares when performance is behind the index. During the financial year we have bought back 945,000 shares into Treasury at a total cost of £2,915,000, representing 1.26% of the starting number of shares in issue and which has been accretive to NAV by 0.16%. Discounts across the whole investment trust sector, not just Asian trusts, remain elevated and we shall continue to be proactive in our efforts to reduce ours.

6. Environmental, Social and Governance Matters (ESG): The Board recognises the importance of ESG considerations in delivering value to shareholders and our approach and that of the Manager is explained in detail later in this report. We continue to monitor closely developments in this space. We have asked the Manager to highlight examples of holdings in companies where improved ESG initiatives that have increased the fair value of companies and an update on the number of portfolio companies committing to net zero alignment (‘NZA’). The Manager has sufficient expertise to assess the risks and opportunities which may result from accelerating ESG-driven change. Their Global ESG function, based in Henley, inputs into the research process and provides a formal ESG oversight process including meetings with the Portfolio Managers and analysts to review the portfolio formally from an ESG perspective. The Manager is a signatory to the Financial Reporting Council’s Stewardship Code and is an active member of the UK Sustainable Investment and Finance Association. In addition, the Manager scored four out of five stars for its Investment & Stewardship Policy under new scoring methodology produced by United Nations Principles for Responsible Investment (‘PRI’). This followed five consecutive years of achieving an A+ rating for responsible investment (Strategy & Governance) under the previous methodology. The Manager received an AA ESG rating from MSCI and as a signatory and discloser to the Carbon Disclosure Project, the Manager supports enhanced, market-wide environmental disclosure and reports annually on its climate change management and performance, including comprehensive emissions accounting.

 The Board reviews at each board meeting the Manager’s assessment of ESG considerations on individual stock decisions, and various indicators of overall ESG progress. We do not expect every indicator to travel in the favoured direction in every period: the portfolio will change as will the measurements. Some factors will have their priorities reassessed over time, for example products with a military use may have been negatively assessed in the past but when reconsidering the social factor of security in the light of the Russian invasion of Ukraine, will now be assessed more favourably. Despite this, we should be able to see progress for many indicators over longer time periods. Some examples: in the year to 30 April 2024, the Manager engaged with 54 of the 58 portfolio holdings, voting against resolutions for 29 of them. The Manager met a total of 322 companies over the year, engaging with ESG issues on 199 of them. A year ago, the Company held 23 companies that had not yet set a net zero target date. Now that number has risen to 24. Finally, where data is available, the number of women on investee company boards has been increasing.

7. Access to Invesco Expertise: Invesco Asia Trust plc is the only vehicle available to UK retail investors who wish to access the track record of Fiona and Ian. They manage it with a high degree of commonality to their institutional portfolios and also add the best smaller company opportunities. Ian is Invesco’s lead portfolio manager of Asian accounts for institutional investors and as at 30 June 2024 manages over £5 billion of institutional assets with Fiona, a key member of the team and a rising star in our opinion.

8. Engaging more individual shareholders: We are encouraged that an increasing proportion of our shareholders are individuals, with the proportion of investors who hold shares of Invesco Asia Trust plc via investment platforms once again increasing. The Board aims to engage more directly with individual investors. Working closely with the Manager, we continue to raise the profile of the Company through new direct investor information, commentary and events, which will provide access to the thoughts and views of Fiona and Ian, their team and the Directors. These activities complement the ongoing engagement with a broad range of professional investors. Please visit our homepage www.invesco.co.uk/invescoasia where you can also find presentations, read updates or register to receive printed copies of the Half-Yearly and Annual Financial Reports. You can also see third party research (by Edison Group and Kepler Partners) and monthly factsheets on the Company’s website. Shareholders can also contact us by email at [e-mail].

9. Meeting the Directors and Managers: One of the main attractions of owning an investment trust over a unit trust or OEIC is that all shareholders have the opportunity of meeting the Directors and the Managers every year at the AGM. This year’s meeting will be held in person at Invesco’s London office at 12pm on 12 September 2024. As well as the Company’s formal business, there will be a presentation, the opportunity to ask questions of Fiona, who will be joining the meeting remotely, Ian and the Directors and then to chat informally with all of us afterwards over lunch. Shareholders may bring a guest to these meetings. For me this is one of the highlights of being Chairman, and I look forward to meeting as many of you as possible. For those unable to make it in person, we will record a special version of the presentation and post it onto our website after the AGM. Shareholders wishing to lodge questions in advance of the AGM should do so by email to the Company Secretary at [e-mail] or, by letter, to 43-45 Portman Square, London W1H 6LY.

10. Gearing: The Company intends to use gearing (or borrowings) actively to take advantage of its closed-end structure. At the year end the Company had net gearing of 4.5% having started the year at 5.3%.

11. Directors’ Shareholdings: Institutional investors often follow and ask for information on Directors’ holdings of shares in the Company. These are shown in the Directors’ Remuneration Report in the Annual Financial Report and we are required to notify any changes to the stock market by regulatory announcement. Additionally, our Portfolio Managers, Fiona and Ian are both shareholders in the Company and we can confirm that their remuneration by the Manager is partly determined by the performance of the Company.

Update

In view of increases in audit fees, the Company recently completed a tender process and has appointed Ernst & Young LLP (‘EY’) to the role of external auditor for the financial year ending 30 April 2025. Further details of the process can be found in the Audit Committee report on page 44.

Since 30 April 2024, the NAV total return has been -0.2%, underperforming the index return of 2.3%. The share price has returned 2.9% with the discount narrowing to 10.8%.

Outlook

First thoughts writing this outlook are that not much has changed over the last six months. Trade friction between the US and China remains, with the US Presidential election adding noise and uncertainty. China has taken further steps to stabilise its residential property sector, where overdevelopment has led to a loss of consumer confidence and also some bank instability. Asian technology companies such as Taiwan Semiconductor Manufacturing and Samsung Electronics have performed well on the coattails of the “Magnificent Seven” tech stocks that have led the US stockmarket rally. India’s economy has continued to grow without so far threatening the high rating of its stockmarket. Domestic consumer spending growth is healthy across Asia; for example 4.8% in China, 5.7% in India, 5.1% in Indonesia and 2.2% in Taiwan (Morgan Stanley 2024 forecasts). And with overall forecast 2024 economic growth rates including 4.8% in China, 6.8% in India, 2.7% in South Korea, 5.1% in Indonesia, 3.7% in Taiwan and 2.2% in Singapore comparing favourably with the US at 2.2% and the Eurozone at 1.3%, there continues to be grounds for optimism.

On top of this, Asian stock market valuations are cheap relative to the world and cheap relative to their own history. Experience proves that this would normally be a good time to invest. There may be no obvious immediate catalyst for a sudden recovery but as a long-term investor in Invesco Asia Trust plc we would argue that you are paid to wait, especially as you currently benefit from the double discount of the share price relative to the net asset value. On top of this comes a 4.5% annual dividend yield based on the share price as at 30 April 2024, approximately half of which is effectively a return of capital at net asset value.

Neil Rogan

Chairman

25 July 2024

Portfolio Managers’ Report Q&A

Q How has the Company performed in the year under review?

A The Company’s net asset value grew by 2.7% (total return, in sterling terms) over the twelve months to 30 April 2024, which compares to the benchmark MSCI AC Asia ex Japan Index return of 7.9%.

The year began with a degree of optimism surrounding the prospects for Asian markets as China’s economy reopened post-Covid. However, the strength of China’s recovery has disappointed while markets have also had to contend with shifting expectations around the trajectory of US interest rates. Against this backdrop, the portfolio has benefitted from the positive impact of our stock selection in markets such as South Korea, Taiwan, Singapore and Thailand, with enthusiasm for AI having generated strong returns for chip stocks in particular. This has helped offset the impact of stock selection in China, where consumer-related stocks that rallied strongly in the prior period gave back some of that outperformance. Looking at markets more broadly, performance over the last twelve months has been mixed (as can be seen from the chart below), and it is frustrating to report that the impact of being underweight India and overweight markets such as China, Hong Kong and Indonesia has also counted against us.

What gives us grounds for optimism is that the degree of divergence we have seen in terms of performance and valuation between the best and worst performing markets is extreme. This is the kind of backdrop that usually presents us with great opportunities. Conditions can change, sometimes rapidly, and although recent performance has disappointed, we are increasingly confident in the prospects for the portfolio over our investment time horizon.

Q What have been the biggest detractors?

A Chinese consumer stocks were amongst the best performers in the prior reporting period, amidst optimism surrounding post-Covid reopening. However, some of those gains have been reversed as the strength of China’s recovery has disappointed. China Meidong Auto was the biggest single detractor, with weak demand and increased competition from the electric vehicle (‘EV’) segment being headwinds for the luxury auto dealership, although business operations appear to be faring better than feared. Beijing Capital International Airport has struggled as international routes have been slow to re-start, especially from the US, while restaurant operator Jiumaojiu faces pricing pressures in a slower-than-expected recovery. Ming Yang Smart Energy has also faced competitive pressures, leading to concern over the wind turbine manufacturers decision to move into wind farm development, a more capital-intensive business – a development that prompted us to sell. Exposure to life insurers Ping An Insurance and AIA also detracted, as did auto parts manufacturer MINTH.

Elsewhere, LG Chemical felt the effect of slowing EV sales as government subsidies have been reduced in several key markets. Indonesia’s economy has also been going through a softer patch of growth, which negatively impacted cement manufacturer Semen Indonesia and auto conglomerate Astra International.

Q And contributors?

A Shriram Transport Finance was the biggest single contributor, as India’s leading lender for buyers of second-hand commercial vehicles, it continued to deliver strong earnings growth and improved margins, with evidence of its extensive branch network being used to good effect with growth in cross-selling products. Aurobindo Pharma has also added significant value on the back of an improvement in generics pricing in the US (their largest market) and strong execution in their injectables business, but we have taken profits and sold, with the stock appearing fully valued, in our view.

Tech stocks with exposure to the AI server supply-chain have been strong contributors, with the likes of South Korean chip manufacturer SK Hynix, Taiwan Semiconductor Manufacturing (‘TSMC’) and Chroma ATE in Taiwan all making strong gains. More broadly speaking, stock selection in South Korea has added value, with some excitement over the unveiling of a ‘Corporate Value-Up’ programme, intended to drive improvements in shareholder returns and corporate governance. Samsung Fire & Marine is already setting a good example in this regard, with the insurer’s strong operating performance being matched by a more progressive dividend policy. Hyundai Motor also advanced with sales in the US, Europe and India complementing increased distribution of higher margin vehicles.

Other notable contributions came from South-East Asian gaming and e-commerce company Sea and Anglo American, after the mining group received a takeover bid from BHP. We have also started to see selected Chinese companies, like Tencent Music Entertainment and the digital freight platform Full Truck Alliance, being well rewarded for demonstrating an ability to grow.

Q Are you able to find any pockets of value in India?

A India appears to be in a macro sweet spot, with a bull market supported by a strong capital expenditure cycle and robust domestic demand. Our Indian holdings have generally performed very well, but we have now sold outperformers like Aurobindo Pharma, Larsen & Toubro and Mahindra & Mahindra, with valuations appearing increasingly full, implying long term growth rates we struggle to justify.

The challenge has been to find new ideas that appear undervalued, with the market trading at 4.0x Price-to-book ratio (‘P/B’), a level last breached nearly two decades ago (see chart above), at a time when other Asian markets attracted a similar premium. As the increased underweight position in India suggests, we have been finding more attractive opportunities elsewhere.

That said, we still have some exposure and have been adding to HDFC Bank, which has recently merged with its parent, a bumpier journey than the market expected. Looking through the near-term issues, we have no concerns on their ability to integrate the two businesses and have been happy to add at trough valuations. We have also introduced: Delhivery, which is India’s largest third-party logistics company, making it well positioned to benefit from growth in e-commerce; and Power Grid of India, the nation’s central transmission utility, a company with what we consider to be stable, long-term growth potential and an attractive dividend yield.

Q Has your positioning in Hong Kong/China changed, are green shoots emerging?

A The portfolio continues to have a small overweight position in China and Hong Kong. Market sentiment for much of the year has been weak, reflecting concerns over escalating geopolitical tensions, poor consumer confidence and a troubled property market. We witnessed a degree of capitulation towards the end of 2023, with indiscriminate markets weakness suggesting little hope for a recovery and a feeling that the policy response was underwhelming. Our view has not changed, with a belief that coordinated measures have been put in place to support the economy, with valuations still deeply discounted, and equities likely to prove sensitive to signs of improvement in the fundamentals, which we have started to see.

Against a challenging backdrop, we have been thoroughly reviewing the portfolio, seeking to upgrade on quality where possible. As already discussed, we sold wind turbine manufacturer Ming Yang Smart Energy given a change in strategy that compromised our original investment thesis. We also sold China BlueChemical and Will Semiconductor, which have performed well in a weak market, and looked to consolidate the portfolio, exiting some smaller holdings. In turn, we have sought to introduce or add to stocks that offered what we consider to be better quality, stable growth potential at discounted valuations. Names introduced include digital freight platform Full Truck Alliance, baijiu distiller Wuliangye, China Resources Beer and Tencent Music Entertainment.

Meanwhile, markets have rebounded nicely from their January lows. Geopolitical tensions linger, but we have seen signs of stabilisation in the economy and policy support measures that signal a more determined attempt to support the property market.

Q What are your thoughts on AI developments and related opportunities?

A There has been a bit of a buying frenzy around any company in NVIDIA’s supply chain, given how they have raised their guidance on AI-related chip growth, with their new AI chips being multiple times more powerful than the previous generation, enabling the launch of awe-inspiring AI applications such as Sora from OpenAI.

What we have noticed is that AI enthusiasm has started to move into nascent or niche adopters and beneficiaries. For example, MediaTek, which is a portfolio holding, announced the launch of a new mobile chip in November 2023 which facilitates the use of generative AI on smartphones. This is part of a trend known as ‘edge-AI’ with other high-end Android smartphones having adopted the chip.

For the tech companies we hold, the current contribution to earnings from new AI components or devices is negligible, but the market has been placing higher multiples on these new earnings with the expectation of significant, structural growth from these products in future years. While these AI beneficiaries are clearly in-favour, arguably the biggest and most important change in their fundamentals has been an improvement in the cycle for legacy semiconductors that go into everyday PCs, smartphones and servers, with inventory being drawn down and shipments starting to grow, which is helping drive earnings and margin improvement. We do not need to place high multiples on AI-related earnings to justify double-digit expected returns for these stocks.

Q Are you convinced by South Korea’s ‘Corporate Value-Up’ programme?

A It is great to see politicians and regulators co-ordinating on measures to help narrow the ‘Korea discount’, but this is not a new trend. Initiatives introduced in 2014 promised similar improvement, since when we have identified signs of gradual improvement in corporate governance, particularly in the growth of dividends from South Korean companies.

The recent measures target companies trading on a low P/B, suggesting management should be accountable for improving governance, that boards should measure P/B and return-on-equity (‘ROE’) and actively explain to investors why they are underperforming. Publishing these metrics and creating premium indices of companies succeeding on that basis (tracked by ETFs) follows the approach taken in Japan, where the strategy has enjoyed success and continues to build momentum.

Other reasons for optimism include: the support of South Korea’s National Pension Service, the world’s third-largest pension fund; and retail share ownership that continues to climb. There has also been recognition that the tax system has been hindering stock market development and is in need of reform, albeit that the election result in April 2024 makes progressive reform less likely.

Lastly, we should add that our overweight position in South Korea reflects the strength of the bottom-up opportunities that we can find, rather than any top-down view or belief in ‘Value-Up’ being a catalyst. That said, we expect more announcements in the coming months, and that South Korean corporates will start making more of an effort to improve appearances when it comes to dividend pay-outs and balance sheets.

Q Are there any other significant portfolio changes to report?

A We have introduced two Singapore listed internet companies, both of which have market leading positions in the Association of Southeast Asian Nations (‘ASEAN’) markets they focus on: Sea, the region’s largest e-commerce company that also owns a gaming studio; and Grab, which is focussed on ride hailing and food delivery. Both had seen big de-ratings with bearish consensus narratives, but have compelling long-term fundamentals, strong balance sheets and underappreciated hidden value.

Overall exposure to financials has increased as we introduced KB Financial in South Korea and added to ASEAN financials such as Singapore-listed United Overseas Bank (‘UOB’), PT Bank Negara Indonesia Persero and Thai lender Kasikornbank. We also introduced Telkom Indonesia, with recent share price weakness on competition concerns being overdone, in our view.

Lastly there are a few off benchmark-introductions to flag. Anglo American (‘AA’) is global diversified miner of copper, diamonds, iron ore, platinum group metals (‘PGMs’), nickel, manganese and met coal. After a near death experience during the commodity slump of 2015, AA has been through a cycle of selling high-cost assets, moving down the cost curve, and strengthening the balance sheet. With the share price down by more than 40% from its 2022 peak, we felt the balance sheet was in good shape while the valuation was the cheapest of its peer group on a P/B basis.

Swatch is a Swiss luxury goods company, but more than 50% of sales (and a higher proportion of profits) are to countries in Asia, led by China. We believe the shares are excessively discounted, with the company having a very strong balance sheet and encouraging growth initiatives involving brand collaborations. Incitec Pivot is an Australian company with two main businesses, explosives, which has high barriers to entry and intellectual property protection; and fertilisers, which have low margins and low barriers to entry, and recently faced profitability pressure due to rising costs and falling revenues. We believe these issues are reflected in the price and that the underlying business is strong, with a A$1.4 billion shareholder return policy giving us further confidence.

Q Final thoughts?

A Since peaking in early 2021, Asian equity markets have struggled amidst a liquidity tightening cycle and a crescendo of negativity surrounding China. Valuations for regional indices trade below long-term historic averages, both in terms of price earnings and price to book ratios, and at a significant discount to developed markets, particularly the US. We believe there is scope for this to narrow, with continued divergence in performance and valuations between different countries and sectors also providing opportunity.

Asian equities are also well placed to benefit from an improvement in liquidity conditions, as we approach the peak in rate expectations, with US dollar strength likely to cease being a headwind. Furthermore, inflation in Asia is less of a concern than in developed markets and economies enjoy relatively solid fundamentals, suggesting greater monetary policy flexibility should growth headwinds start to build.

Finally, consensus earnings growth expectations for 2024 are around 20% and we believe that Asian corporates may see less earnings vulnerability from a global slowdown relative to what is being implied in valuations, although India appears to be the exception given elevated expectations.

Fiona Yang & Ian Hargreaves

Portfolio Managers

25 July 2024

Principal and Emerging Risks and Uncertainties

The Board has carried out a robust assessment of the principal and emerging risks facing the Company. These include those that would threaten its business model, future performance, solvency and liquidity. In carrying out this assessment, the Board together with the Manager have considered emerging risks such as geopolitical risks, evolving cyber threats including AI and climate related risks. These risks also form part of the principal risks identified and the mitigating actions are detailed below.

Category and Principal Risk Description	Mitigating Procedures and Controls	Risk trend during the year
Strategic Risk
Market Risk The Company’s investments are mainly traded on Asian and Australasian stock markets as well as the UK. The principal risk for investors in the Company is a significant fall and/or a prolonged period of decline in these markets. This could be triggered by unfavourable developments within the region or events outside it.	The Company has a diversified investment portfolio by country, sector and stock. Due to its investment trust structure, no forced sales need to take place and investments can be held over a longer term horizon. However, there are few ways to mitigate absolute market risk because it is engendered by factors which are outside the control of the Board and the Manager. These factors include the general health of the world economy, interest rates, inflation, government policies, industry conditions, and changing investor demand and sentiment. Such factors may give rise to high levels of volatility in the prices of investments held by the Company.	► Unchanged
Geopolitical Risk Political risk has always been a feature of investing in stock markets and it is particularly so in Asia. Wider political developments in geographies beyond Asia, such as the US, Ukraine and the Middle East, can create risks to the value of the Company’s assets. Asia encompasses a variety of political systems. There are many examples of diplomatic skirmishes and military tensions and sometimes these resort to military engagement. Moreover, the involvement in Asian politics of the US and European countries can reduce or raise tensions. There is also the risk of increased trade sanctions and the challenging regulatory environment that could adversely affect imports and Foreign Direct Investment (‘FDI’) into China and financial decoupling could cause significant disruption to global markets.	The Manager evaluates and assesses political risk as part of the stock selection and asset allocation policy which is monitored at every Board meeting. This includes political, military and diplomatic events and changes to legislation. Balancing political risk and reward is an essential part of the active management process.	▲ Increased
Investment Objectives and Strategy The Company’s investment objectives and strategy are no longer meeting investors’ demands.	The Board receives regular reports reviewing the Company’s investment performance against its stated objectives and peer group, and reports from discussions with its brokers and major shareholders. The Board also has a separate annual strategy meeting.	► Unchanged
Widening Discount A lack of liquidity and/or lack of investor interest in the Company’s shares leads to a depressed share price and a widening discount to its NAV. A persistently high discount may lead to buybacks of the Company’s shares and result in the shrinkage of the Company to unsustainable levels.	The Board receives regular reports from both the Manager and the Company’s broker on the Company’s share price performance, level of share price discount to NAV and recent trading activity in the Company’s shares. The Board has introduced initiatives to help address the Company’s share rating including a performance conditional tender in 2025 and the enhanced dividend policy. It may seek to reduce the volatility and absolute level of the share price discount to NAV for shareholders through buying back shares within the stated limit. The Board also receives regular reports on investor relation meetings with shareholders and prospective investors and works to ensure that the Company’s investment proposition is actively marketed through relevant messaging across many distribution channels.	▲ Increased
Performance That the Portfolio Managers consistently underperform the benchmark and/or peer group over 3-5 years.	The Board regularly compares the Company’s NAV performance over both the short and long term to that of the benchmark and peer group as well as reviewing the portfolio’s performance against benchmark (attribution) and risk adjusted performance (volatility, beta, tracking error, Sharpe ratio) of the Company and its peers.	► Unchanged
ESG including climate risk Risks associated with climate change and ESG considerations could affect the valuation of the Company’s holdings.	ESG considerations are integrated as part of the investment decision-making in constructing the portfolio. Such investment decisions include the transactions undertaken in the year, the review of active portfolio positions and consideration of the gearing position and, if applicable, hedging. The Manager’s process around ESG is described in the ESG Monitoring and Engagement section on pages 14 to 17.	► Unchanged
Currency Fluctuation Risk Exposure to currency fluctuation risk negatively impacts the Company’s NAV. The movement of exchange rates may have an unfavourable or favourable impact on returns as nearly all of the Company’s assets are non-sterling denominated.	With the exception of borrowings in foreign currency, the Company does not normally hedge its currency positions but may do so should the Portfolio Managers or the Board feel this to be appropriate. Contracts are limited to currencies and amounts commensurate with the asset exposure. The foreign currency exposure of the Company is reviewed at Board meetings.	► Unchanged
Third Party Service Providers Risk
Information Technology Resilience and Security The Company’s operational structure means that all cyber risk (integrity or availability of data or information control systems and physical security) arises at its Third Party Providers (‘TPP’). This cyber risk could result in adverse impacts including fraud, sabotage or crime perpetrated against the Company or any of its TPPs.	The Audit Committee receives regular updates on the Manager’s information and cyber security. This includes updates on the cyber security framework, staff resource and training, and the testing of its security systems designed to protect against a cyber security attack. As well as conducting a regular review of TPPs audited service organisation control reports, the Audit Committee monitors TPPs’ business continuity plans and testing including the TPPs’ and Manager’s regular ‘live’ testing of workplace recovery arrangements should a cyber event occur.	▲ Increased
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, global technology incidents and emerging cyber threats.	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.	► Unchanged

Viability Statement

The Company is a collective investment vehicle rather than a commercial business venture and is designed and managed for long term investment. The Company’s investment objective clearly sets out the long-term nature of the returns from the portfolio and this is the view taken by both the Directors and the Portfolio Managers in the running of the portfolio. The Company is required by its Articles to have a vote on its future every three years, the next vote being at the Annual General Meeting in 2025. The Directors remain confident in the Company’s Investment Case and Corporate Proposition, as detailed on pages 7 to 9, to deliver against the Company’s investment objectives. On this basis and notwithstanding the continuation vote in 2025, the Directors consider that ‘long term’ for the purpose of this viability statement is three years, albeit that the life of the Company is not intended to be limited to this period.

In their assessment of the Company’s viability, the Directors have performed a robust assessment of the emerging and principal risks. The Directors considered the risks to which it is exposed, as set out on pages 23 and 24, together with mitigating factors. Their assessment considered these risks, as well as the Company’s investment objective, investment policy and strategy, the investment capabilities of the Manager and the business model of the Company, which has withstood several major market downcycles since the Company’s inception in 1995. Their assessment also covered the current outlook for the Asian economies and equity markets, the ongoing conflicts in Ukraine, the Middle East and US-China relations; the demand for and buybacks of the Company’s shares; the Company’s borrowing structure and level of gearing; the liquidity of the portfolio; and the Company’s future income and annual operating costs, including stressed scenario testing for both income and loan covenants. Although the current outlook for Asian markets is challenging, the Directors and the Manager are cautiously optimistic that Asia remains a region with sound economic and corporate fundamentals. Lastly, whilst past performance may not be indicative of performance in the future, the sustainability of the Company can be demonstrated to date by there having been no material change in the Company’s investment objective since its launch in 1995.

The Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for the three year period from the signing of the balance sheet.

Investments in Order of Valuation

at 30 April 2024

Ordinary shares unless stated otherwise

† The sector group is based on MSCI and Standard & Poor’s Global Industry Classification Standard.

			Market
			Value	% of
Company	Sector†	Country	£’000	Portfolio
Taiwan Semiconductor Manufacturing	Semiconductors and Semiconductor Equipment	Taiwan	23,983	9.5
Samsung Electronics	Technology Hardware and Equipment	South Korea
– ordinary shares			12,617	5.0
– ADS			6,404	2.6
			19,021	7.6
TencentR	Media and Entertainment	China	17,947	7.1
HDFC Bank	Banks	India	11,736	4.7
AIA	Insurance	Hong Kong	9,600	3.8
AlibabaR	Consumer Discretionary Distribution and Retail	China	7,944	3.2
KasikornbankF	Banks	Thailand	6,994	2.8
Anglo American	Materials	United Kingdom	6,171	2.5
SK Hynix	Semiconductors and Semiconductor Equipment	South Korea	6,045	2.4
Shriram Transport Finance	Financial Services	India	5,760	2.3
Top Ten Holdings			115,201	45.9
United Overseas Bank	Banks	Singapore	5,407	2.2
Samsung Fire & Marine	Insurance	South Korea	5,399	2.1
YiliA	Food, Beverage and Tobacco	China	5,120	2.0
JD.comR	Consumer Discretionary Distribution and Retail	China	4,814	1.9
Yageo	Technology Hardware and Equipment	Taiwan	4,326	1.7
Largan Precision	Technology Hardware and Equipment	Taiwan	4,236	1.7
NetEaseR	Media & Entertainment	China	3,989	1.6
Full Truck Alliance – ADS	Transportation	China	3,933	1.6
ICICI Bank – ADR	Banks	India	3,862	1.5
Grab	Transportation	Singapore	3,810	1.5
Top Twenty Holdings			160,097	63.7
LG Chemical	Materials	South Korea	3,776	1.5
Delhivery	Transportation	India	3,751	1.5
Link REIT	Equity Real Estate Investment Trusts (REITs)	Hong Kong	3,469	1.4
CK Asset	Real Estate Management and Development	Hong Kong	3,463	1.4
Hansoh PharmaceuticalR	Pharmaceuticals, Biotechnology and Life Sciences	China	3,371	1.3
MINTH	Automobiles and Components	Hong Kong	3,337	1.3
WuliangyeA	Food, Beverage and Tobacco	China	3,320	1.3
Gree Electrical AppliancesA	Consumer Durables and Apparel	China	3,198	1.3
PT Bank Negara Indonesia Persero	Banks	Indonesia	3,154	1.3
Beijing Capital International AirportH	Transportation	China	3,060	1.2
Top Thirty Holdings			193,996	77.2
ENN EnergyR	Utilities	China	2,981	1.2
Astra International	Capital Goods	Indonesia	2,942	1.2
Vinamilk	Food, Beverage and Tobacco	Vietnam	2,908	1.2
Swatch	Consumer Durables and Apparel	Switzerland	2,845	1.1
Sea – ADS	Media and Entertainment	Singapore	2,756	1.1
Suofeiya Home CollectionA	Consumer Durables and Apparel	China	2,714	1.1
KB Financial	Banks	South Korea	2,631	1.0
Hyundai Motor – preference shares	Automobiles and Components	South Korea	2,532	1.0
TingyiR	Food, Beverage and Tobacco	China	2,505	1.0
Semen Indonesia	Materials	Indonesia	2,320	0.9
Top Forty Holdings			221,130	88.0
MediaTek	Semiconductors and Semiconductor Equipment	Taiwan	2,215	0.9
Hoa Phat	Materials	Vietnam	2,211	0.9
Yue Yuen Industrial	Consumer Durables and Apparel	Hong Kong	2,186	0.9
Chroma ATE	Technology Hardware and Equipment	Taiwan	2,106	0.8
Ping An InsuranceH	Insurance	China	2,070	0.8
QBE Insurance	Insurance	Australia	1,970	0.8
Telkom Indonesia	Telecommunication Services	Indonesia	1,916	0.7
Power Grid	Utilities	India	1,737	0.7
China Resources Beer	Food, Beverage and Tobacco	Hong Kong	1,735	0.7
Uni-President	Food, Beverage and Tobacco	Taiwan	1,724	0.7
Top Fifty Holdings			241,000	95.9
Incitec Pivot	Materials	Australia	1,721	0.7
Tencent Music Entertainment – ADS	Media and Entertainment	China	1,588	0.6
LG Household & Health Care	Household and Personal Products	South Korea	1,572	0.6
Invesco Liquidity Funds – US Dollar	Money Market Fund	Ireland	1,494	0.6
China MeiDong AutoR	Consumer Discretionary Distribution and Retail	China	1,353	0.6
China Overseas Land and Investment	Real Estate Management and Development	Hong Kong	1,283	0.5
JiumaojiuR	Consumer Services	China	1,199	0.5
Lime CoUQ	Capital Goods	South Korea	37	–
Total Holdings 58 (2023: 57)			251,247	100.0

A:  A-shares – shares that are denominated in Renminbi and traded on the Shanghai and Shenzhen stock exchanges.

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.

F: F-Shares – shares issued by companies incorporated in Thailand that are available to foreign investors only. Thai laws have imposed restrictions on foreign ownership of Thai companies so there is a pre-determined limit of these shares. Voting rights are retained with these shares.

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.

UQ: Unquoted investment.

Classification of Investments by Country/Sector

at 30 April

	2024		2023
	Market Value	% of	Market Value	% of
	£’000	Portfolio	£’000	Portfolio
Australia
Capital Goods	–	–	2,345	0.9
Insurance	1,970	0.8	2,380	0.9
Materials	1,721	0.7	3,702	1.4
	3,691	1.5	8,427	3.2
China
Capital Goods	–	–	6,692	2.5
Consumer Discretionary Distribution and Retail	14,111	5.7	18,341	7.1
Consumer Durables and Apparel	5,912	2.4	10,414	4.0
Consumer Services	1,199	0.5	2,673	1.0
Food, Beverage and Tobacco	10,945	4.3	7,673	3.0
Insurance	2,070	0.8	6,353	2.5
Materials	–	–	1,593	0.6
Media and Entertainment	23,524	9.3	23,073	8.9
Pharmaceuticals, Biotechnology and Life Sciences	3,371	1.3	3,227	1.2
Real Estate Management and Development	–	–	487	0.2
Semiconductors and Semiconductor Equipment	–	–	3,773	1.5
Transportation	6,993	2.8	4,258	1.6
Utilities	2,981	1.2	3,123	1.2
	71,106	28.3	91,680	35.3
Hong Kong
Automobiles and Components	3,337	1.3	5,357	2.1
Consumer Durables and Apparel	2,186	0.9	3,886	1.5
Consumer Services	–	–	1,234	0.5
Equity Real Estate Investment Trusts (REITs)	3,469	1.4	–	–
Food, Beverage and Tobacco	1,735	0.7	–	–
Insurance	9,600	3.8	9,373	3.6
Real Estate Management and Development	4,746	1.9	9,208	3.6
	25,073	10.0	29,058	11.3
India
Automobiles and Components	–	–	1,656	0.6
Banks	15,598	6.2	3,622	1.4
Capital Goods	–	–	3,212	1.2
Financial Services	5,760	2.3	14,406	5.5
Pharmaceuticals, Biotechnology and Life Sciences	–	–	4,995	1.9
Transportation	3,751	1.5	–	–
Utilities	1,737	0.7	–	–
	26,846	10.7	27,891	10.6
Indonesia
Banks	3,154	1.3	1,314	0.5
Capital Goods	2,942	1.2	6,606	2.6
Materials	2,320	0.9	2,707	1.0
Telecommunication Services	1,916	0.7	–	–
	10,332	4.1	10,627	4.1
Ireland
Money Market Fund	1,494	0.6	–	–
	1,494	0.6	–	–
Singapore
Banks	5,407	2.2	2,167	0.8
Media and Entertainment	2,756	1.1	–	–
Transportation	3,810	1.5	–	–
	11,973	4.8	2,167	0.8
South Korea
Automobiles and Components	2,532	1.0	4,346	1.7
Banks	2,631	1.0	–	–
Capital Goods	37	–	38	–
Household and Personal Products	1,572	0.6	3,503	1.4
Insurance	5,399	2.1	3,883	1.5
Materials	3,776	1.5	8,587	3.4
Semiconductors and Semiconductor Equipment	6,045	2.4	6,123	2.4
Technology Hardware and Equipment	19,021	7.6	16,551	6.4
	41,013	16.2	43,031	16.8
Switzerland
Consumer Durables & Apparel	2,845	1.1	–	–
	2,845	1.1	–	–
Taiwan
Food, Beverage and Tobacco	1,724	0.7	3,273	1.3
Semiconductors and Semiconductor Equipment	26,198	10.4	24,085	9.3
Technology Hardware and Equipment	10,668	4.2	6,288	2.5
	38,590	15.3	33,646	13.1
Thailand
Banks	6,994	2.8	6,680	2.6
	6,994	2.8	6,680	2.6
United Kingdom
Materials	6,171	2.5	–	–
	6,171	2.5	–	–
Vietnam
Food, Beverage and Tobacco	2,908	1.2	3,356	1.3
Materials	2,211	0.9	2,399	0.9
	5,119	2.1	5,755	2.2
Total	251,247	100.0	258,962	100.0

Statement of Directors’ Responsibilities

IN RESPECT OF THE PREPARATION OF THE ANNUAL FINANCIAL REPORT AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Financial Report and financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK accounting standards, and applicable law, including FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period.

In preparing these financial statements, the Directors are required to:

– select suitable accounting policies and then apply them consistently;

– make judgements and estimates that are reasonable and prudent;

– state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

– assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

– use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, which is maintained by the Company’s Manager. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in Respect of the Annual Financial Report

We confirm that to the best of our knowledge:

– the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

– the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Financial Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

Signed on behalf of the Board of Directors

Neil Rogan

Chairman

25 July 2024

Income Statement

		Year ended 30 April 2024			Year ended 30 April 2023
		Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
	Notes
Gains/(losses) on investments held at
fair value	9	—	2,420	2,420	—	(1,309)	(1,309)
(Losses)/gains on foreign exchange		–	(30)	(30)	—	625	625
Income	2	7,375	79	7,454	7,601	51	7,652
Investment management fee	3	(441)	(1,322)	(1,763)	(460)	(1,381)	(1,841)
Other expenses	4	(692)	(4)	(696)	(681)	(3)	(684)
Net return before finance costs and taxation		6,242	1,143	7,385	6,460	(2,017)	4,443
Finance costs	5	(126)	(375)	(501)	(108)	(325)	(433)
Net return on ordinary activities before
taxation		6,116	768	6,884	6,352	(2,342)	4,010
Tax on ordinary activities	6	(694)	(626)	(1,320)	(756)	(532)	(1,288)
Net return on ordinary activities after
taxation for the financial year		5,422	142	5,564	5,596	(2,874)	2,722
Net return per ordinary share:
Basic	7	8.12p	0.22p	8.34p	8.37p	(4.30)p	4.07p

The total columns of this statement represent the Company’s profit and loss account, prepared in accordance with UK Accounting Standards. The return on ordinary activities after taxation is the total comprehensive income and therefore no additional statement of other comprehensive income is presented. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year.

Statement of Changes in Equity

			Capital
		Share	Redemption	Special	Capital	Revenue
		Capital	Reserve	Reserve	Reserve(1)	Reserve(1)	Total
	Notes	£’000	£’000	£’000	£’000	£’000	£’000
At Year ended 30 April 2022		7,500	5,624	34,827	202,814	1,411	252,176
Net return on ordinary activities		—	—	—	(2,874)	5,596	2,722
Dividends paid	8	—	—	—	(4,227)	(5,667)	(9,894)
At Year ended 30 April 2023		7,500	5,624	34,827	195,713	1,340	245,004
Net return on ordinary activities		–	–	–	142	5,422	5,564
Dividends paid	8	–	–	–	(4,491)	(4,896)	(9,387)
Shares bought back and held in treasury	13	–	–	(2,915)	–	–	(2,915)
At Year ended 30 April 2024		7,500	5,624	31,912	191,364	1,866	238,266

(1) These reserves form the distributable reserves of the Company and may be used to fund distributions by way of dividends.

The accompanying accounting policies and notes are an integral part of these financial statements.

Balance Sheet

		At 30 April	At 30 April
		2024	2023
	Notes	£’000	£’000
Fixed assets
Investments held at fair value through profit or loss	9	251,247	258,962
Current assets
Debtors	10	927	522
Cash and cash equivalents		537	1,337
		1,464	1,859
Creditors: amounts falling due within one year
Bank overdraft		(50)	(740)
Other Creditors	11	(13,625)	(14,261)
		(13,675)	(15,001)
Net current liabilities		(12,211)	(13,142)
Total assets less current liabilities		239,036	245,820
Provision for deferred tax liabilities	12	(770)	(816)
Net assets		238,266	245,004
Capital and reserves
Share capital	13	7,500	7,500
Other reserves:
Capital redemption reserve	14	5,624	5,624
Special reserve	14	31,912	34,827
Capital reserve	14	191,364	195,713
Revenue reserve	14	1,866	1,340
Total shareholders’ funds		238,266	245,004
Net asset value per ordinary share
Basic	15	361.51p	366.48p

The financial statements were approved and authorised for issue by the Board of Directors on 25 July 2024.

Signed on behalf of the Board of Directors

Neil Rogan

Chairman

Notes to the Financial Statements

1. Accounting Policies

Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end.

A summary of the principal accounting policies, all of which have been consistently applied throughout this and the preceding year is set out below:

(a) Basis of Preparation

 (i) Accounting Standards applied

The financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards and applicable law (UK Generally Accepted Accounting Practice (‘UK GAAP’)), including FRS 102, and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture Capital Trusts, updated by the Association of Investment Companies in July 2022 (‘SORP’). The financial statements are prepared on a going concern basis.

As an investment fund the Company has the option, which it has taken, not to present a cash flow statement as the following conditions have been met:

• substantially all investments are highly liquid;

• substantially all investments are carried at market value; and

• a statement of changes in equity is provided.

 (ii) Going concern

The financial statements have been prepared on a going concern basis. The Directors performed an assessment of the Company’s ability to meet its liabilities as they fall due. In performing this assessment, the Directors took into consideration the continuing uncertain economic outlook and other geopolitical events including:

• the level of borrowings, cash balances and the diversified portfolio of readily realisable securities which can be used to meet short-term funding commitments, including repayment of the bank facility;

• the net current liability position of the Company, after the deduction of drawn-down borrowings, which will be met through the renewal of the existing credit facility or the sale of investments in order to repay any borrowings;

• the ability of the Company to meet all of its liabilities and ongoing expenses from its assets;

• revenue and operating cost forecasts for the forthcoming year;

• the ability of third-party service providers to continue to provide services; and

• potential downside scenarios including a fall in the valuation of the investment portfolio or levels of investment income.

Based on this assessment, the Directors are satisfied that the Company has adequate resources to continue in operational existence for at least 12 months after signing the balance sheet and the financial statements have therefore been prepared on a going concern basis.

 (iii) Significant Accounting Estimates and Judgements

The preparation of the financial statements may require the Directors to make estimates where uncertainty exists. It also requires the Directors to make judgements, estimates and assumptions, in the process of applying the accounting policies. Except for the functional and presentation currency as noted below, there have been no other significant judgements, estimates or assumptions for the current or preceding year.

(b) Foreign Currency

 (i) Functional and presentation currency

The Company’s investments are made in several currencies, however, the financial statements are presented in sterling, which is the Company’s functional and presentational currency. In arriving at this conclusion, the Directors considered that the Company’s shares are listed and traded on the London Stock Exchange, the shareholder base is predominantly in the United Kingdom and the Company pays dividends and expenses in sterling.

 (ii) Transactions and balances

Transactions in foreign currency, whether of a revenue or capital nature, are translated to sterling at the rates of exchange ruling on the dates of such transactions. Foreign currency assets and liabilities are translated to sterling at the rates of exchange ruling at the balance sheet date. Any gains or losses, whether realised or unrealised, are taken to the capital reserve or to the revenue account, depending on whether the gain or loss is of a capital or revenue nature. All gains and losses are recognised in the income statement.

(c) Financial Instruments

The Company has chosen to apply the provisions of Sections 11 and 12 of FRS 102 in full in respect of the financial instruments, which is explained below.

 (i) Recognition of financial assets and financial liabilities

The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual provisions of the instrument. The Company offsets financial assets and financial liabilities in the financial statements if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.

 (ii) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Company is recognised as an asset.

 (iii) Derecognition of financial liabilities

The Company derecognises financial liabilities when its obligations are discharged, cancelled or expired.

 (iv) Trade date accounting

Purchases and sales of financial assets are recognised on trade date, being the date on which the Company commits to purchase or sell the assets.

 (v) Classification and measurement of financial assets and financial liabilities

  Financial assets

The Company’s investments are held at fair value through profit or loss as the investments are managed and their performance evaluated on a fair value basis in accordance with documented investment strategy and this is also the basis on which information about the investments is provided internally to the Board. Financial assets held at fair value through profit or loss are initially recognised at fair value, which is taken to be their cost, with transaction costs expensed in the income statement, and are subsequently valued at fair value.

Financial assets measured at amortised cost include cash, debtors and prepayments.

Fair value for investments that are actively traded in organised financial markets, is determined by reference to stock exchange quoted bid prices at the balance sheet date. For investments that are not actively traded and where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques including last traded price, broker quotes and price modelling.

  Financial liabilities

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method.

(d) Cash and Cash Equivalents

Cash and cash equivalents may comprise short term deposits which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Investments are regarded as cash equivalents if they meet all of the following criteria: highly liquid investments held in the Company’s base currency that are readily convertible to a known amount of cash, are subject to an insignificant risk of change in value and have a maturity of no more than three months. There were no cash equivalents at the balance sheet date.

(e) Income

All dividends are taken into account on the date investments are marked ex-dividend, and UK dividends are shown net of any associated tax credit. Where the Company elects to receive dividends in the form of additional shares rather than cash, the equivalent of the cash dividend is recognised as income in the revenue account and any excess in value of the shares received over the amount of the cash dividend is recognised in capital. Special dividends representing a return of capital are allocated to capital in the Income Statement and then taken to capital reserves. Dividends will generally be recognised as revenue however all special dividends will be reviewed, with consideration given to the facts and circumstances of each case, including the reasons for the underlying distribution, before a decision over whether allocation is to revenue or capital is made. Interest income and expenses are accounted for on an accruals basis. Other income from investments is accounted for on an accruals basis. Deposit interest receivable is accounted for on an accruals basis.

(f) Expenses and Finance Costs

Expenses are recognised on an accruals basis and finance costs are recognised using the effective interest method in the income statement.

The investment management fee and finance costs are allocated 75% to capital and 25% to revenue. This is in accordance with the Board’s expected long-term split of returns, in the form of capital gains and income respectively, from the portfolio.

Investment transaction costs are recognised in capital in the income statement. All other expenses are allocated to revenue in the income statement.

(g) Dividends

Dividends are not recognised in the accounts unless there is an obligation to pay at the balance sheet date. Proposed final dividends are recognised in the period in which they are either approved by or paid to shareholders.

(h) Taxation

The liability to corporation tax is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The tax charge is allocated between the revenue and capital accounts on the marginal basis whereby revenue expenses are matched first against taxable income in the revenue account.

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements. Deferred taxation assets are recognised where, in the opinion of the Directors, it is more likely than not that these amounts will be realised in future periods.

A deferred tax asset has not been recognised in respect of surplus management expenses and the non-trade loan relationship deficit as the Company is unlikely to have sufficient future taxable revenue to offset against these.

Gains and losses on sale of investments purchased and sold in India are liable to capital gains tax in India.

At each year end date, a provision for Indian capital gains tax is calculated based upon the Company’s realised and unrealised gains and losses. There are two rates of tax: short-term and long-term. The short-term rate of tax is applicable to investments held for less than 12 months and the long-term rate of tax is applicable to investments held for more than 12 months.

The provision for the Indian capital gains tax is recognised in the balance sheet and the year-on-year movement in the deferred tax provision is recognised in the income statement.

2. Income

This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source.

	2024 £’000	2023 £’000
Income from investments:
UK dividends	77	–
Overseas dividends	7,208	7,116
Overseas special dividends	51	470
Total dividend income	7,336	7,586
Other income:
Deposit interest	39	15
	39	15
Total income	7,375	7,601

Special dividends of £79,000 were recognised in capital during the year (At 30 April 2023: £51,000). 

3. Investment Management Fee

This note shows the investment management fee due to the Manager which is calculated and paid quarterly.

	2024			2023
	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
Investment management fee	441	1,322	1,763	460	1,381	1,841

Details of the investment management and secretarial agreement are given on page 35 in the Directors’ Report.

At 30 April 2024, £440,000 (At 30 April 2023: £448,000) was accrued in respect of the investment management fee.

4. Other Expenses

The other expenses, including those paid to Directors and the auditor, of the Company are presented below; those paid to the Directors and the auditor are separately identified.

	2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Directors’ remuneration (i)	143	–	143	134	—	134
Auditor’s fees (ii):
– for audit of the Company’s Annual
Financial Statements	70	–	70	50	—	50
Other administration expenses (iii)	479	4	483	497	3	500
	692	4	696	681	3	684

(i)  Directors’ fees authorised by the Articles of Association are £200,000 per annum. The Director’s Remuneration Report provides further information on Directors’ fees.

(ii) Auditor’s fees include out of pocket expenses but excludes VAT. The VAT is included in other administration expenses.

(iii) Other administration expenses include:

• £14,000 (2023: £12,000) of employer’s National Insurance payable on Directors’ remuneration. As at 30 April 2024, the amounts outstanding on Directors’ remuneration was £11,000 (2023: £10,000); and the amount outstanding in respect of employer’s National Insurance was £1,000 (2023: £1,000).
• custodian transaction charges of £4,000 (2023: £3,000). These are charged to capital. 
• a separate fee paid to the Manager for secretarial and administrative services which is subject to annual adjustment in line with the UK Retail Price Index. During the year the Company paid £119,000 (2023: £118,000) for these services.

5. Finance Costs

Finance costs arise on any borrowing the Company has utilised in the year. The Company has a committed £20 million revolving credit facility (the ‘bank facility’) (see note 11 for further details).

	2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Commitment fees due on bank facility	7	19	26	5	17	22
Interest on bank facility	115	344	459	99	298	397
Overdraft interest	4	12	16	4	10	14
	126	375	501	108	325	433

6. Taxation

As an investment trust the Company pays no UK corporation tax on capital gains. The Company suffers no UK corporation tax on income arising on UK and certain overseas dividends. The Company’s tax charge arises from irrecoverable tax on overseas (generally non-EU) dividends and Indian capital gains tax paid and provided for.

(a) Tax charge

	2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Overseas tax	694	4	698	756	—	756
Indian capital gains tax – paid – note 6(d)	–	668	668	—	409	409
Total current tax charge	694	672	1,366	756	409	1,165
Indian capital gains tax – movement in
provision – note 6(d)	–	(46)	(46)	—	123	123
Total tax charge for the year	694	626	1,320	756	532	1,288

The overseas tax charge consists of irrecoverable withholding tax.

(b) Reconciliation of total tax charge

	2024	2023
	£’000	£’000
Net return on ordinary activities before taxation	6,884	4,010
Theoretical tax at the current UK Corporation Tax rate of 25%
(At 30 April 2023: 19.5%)	1,721	782
Effects of:
– Non-taxable UK dividends	(19)	–
– Non-taxable overseas dividends	(1,754)	(1,425)
– Non-taxable overseas special dividends	(33)	(64)
– (Gains)/losses on investments not subject to UK corporation tax	(605)	255
– Non-taxable losses/(gains) on foreign exchange	8	(122)
– Excess of allowable expenses over taxable income	681	573
– Disallowable expenses	1	1
– Overseas taxation	698	756
– Indian capital gains tax - paid	668	409
– Indian capital gains tax – provision – see (d) below	(46)	123
Tax charge for the year	1,320	1,288

Given the Company’s status as an investment trust, and the intention to continue meeting the conditions required to obtain the necessary approval in the foreseeable future, the Company has not provided any UK corporation tax on any realised or unrealised capital gains or losses arising on investments.

(c) Factors that may affect future tax changes

The Company has cumulative excess management expenses of £30,278,000 (2023: £28,007,000) and a non-trade loan relationship deficit of £1,675,000 (2023: £1,220,000) giving total unutilised losses of £31,953,000 (2023: £29,227,000) that are available to offset future taxable revenue.

A deferred tax asset of £7,988,000 (2023: £7,307,000) at 25% (2023: 25%) has not been recognised in respect of these expenses since the Directors believe that there will be no taxable profits in the future against which the deferred tax assets can be offset.

The UK corporation tax rate increased from 19% to 25% from 1 April 2023. Deferred tax assets and liabilities on balance sheets prepared after the enactment of the new tax rate must therefore be re-measured accordingly, so as a result the deferred tax asset has been calculated at 25%.

(d) Indian capital gains tax

Capital gains arising from equity investments in Indian companies are subject to Indian Capital Gains Tax Regulations. Consequently, the Company is subject to both short and long term capital gains tax in India on the growth in value of its Indian equities.

Although this capital gains tax only becomes payable at the point at which the underlying investments are sold and profits crystallised, the Company has made a provision for this tax liability for the year ended 30 April 2024 of £770,000 (2023: £816,000). See note 12 for further details.

7. Net return per Ordinary Share

Net return per share is the amount of gain or loss generated for the financial year divided by the weighted average number of ordinary shares in issue.

	2024		2023
	Pence	£’000	Pence	£’000
Net return per ordinary share is based on the following:
Revenue return after taxation	8.12	5,422	8.37	5,596
Capital return after taxation	0.22	142	(4.30)	(2,874)
Total return after taxation	8.34	5,564	4.07	2,722
	2024			2023
	£’000			£’000
Weighted average number of ordinary shares in issue during the year	66,752,781			66,853,287

8. Dividends on Ordinary Shares

Dividends represent a return of income to shareholders for investing in the Company’s shares. These are determined by the Directors and paid twice a year.

	2024		2023
	Pence	£’000	Pence	£’000
Dividends paid and recognised in the year:
First interim dividend paid	7.20	4,813	7.20	4,813
Second interim dividend paid	6.90	4,574	7.60	5,081
	14.10	9,387	14.80	9,894

Set out above are the total dividends paid in respect of the financial year, which is the basis on which the requirements of Section 1158–1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £5,422,000 (2023: £5,596,000).

9. Investments at Fair Value

The portfolio comprises investments which are predominantly listed and traded on regulated stock exchanges. The investments of the Company are registered in the name of the Company or in the name of nominees and held to the order of the Company.

Gains and losses are either:

• realised, usually arising when investments are sold; or

• unrealised, being the difference from cost on those investments still held at the year end.

	2024	2023
	£’000	£’000
Opening valuation	258,962	256,686
Movements in the year:
Purchases at cost	104,378	90,297
Sales	(114,513)	(86,712)
Gains/(losses) on investments in the year	2,420	(1,309)
Closing valuation	251,247	258,962
Closing book cost	232,074	234,875
Closing investment holding gains	19,173	24,087
Closing valuation	251,247	258,962

The Company received £114,513,000 (2023: £86,712,000) from investments sold in the year. The book cost of these investments when they were purchased was £107,179,000 (2023: £67,122,000) realising a profit of £7,334,000 (2023: £19,590,000) which when offset against the movement in closing investment holding gains results in net gain on investments in the year of £2,420,000 (2023: net losses of £1,309,000). These investments have been revalued over time and until they were sold any unrealised profits/losses were included in the fair value of the investments.

The transaction costs included in gains on investments amount to £114,000 (2023: £79,000) on purchases and £185,000 (2023: £134,000) for sales.

10. Debtors

Debtors are amounts which are due to the Company, such as monies due from brokers for investments sold, income which has been earned (accrued) but not yet received and any taxes that are recoverable.

	2024	2023
	£’000	£’000
Overseas withholding tax recoverable	227	145
VAT recoverable	14	19
Prepayments and accrued income	686	358
	927	522

11. Creditors: amounts falling due within one year

Creditors are amounts which must be paid by the Company and they are all due within 12 months of the balance sheet date.

The bank facility provides a specific amount of capital, up to £20 million, over a specified period of time (364 days). Unlike a term loan, the revolving nature of the bank facility allows the Company to drawdown, repay and re-draw loans.

	2024	2023
	£’000	£’000
Bank facility	12,626	13,593
Share buybacks awaiting settlement	320	—
Accruals	679	668
	13,625	14,261

The committed unsecured 364 day multi-currency revolving credit facility (the ‘bank facility’) with The Bank of New York Mellon, has an interest payable based on the Adjusted Reference Rate (principally SOFR and SONIA respectively in respect of loans drawn in USD and GBP) plus a margin for amounts drawn. Any undrawn amounts under the bank facility attract a commitment fee of 0.2% (2023: 0.2%). The bank facility covenants are based on the lower of 25% of net asset value and £20 million, renewable on 26 July 2024, and require total assets to not fall below £80 million. At the year end, the bank facility drawn down was in US dollars with a sterling equivalent of £12,626,000 (2023: £13,593,000).

12. Provision for deferred tax liabilities

The Company makes a deferred tax provision when a potential obligation exists that will probably have to settle in cash, but the amount is estimated and only becomes payable at the point at which the underlying investments are sold and profits crystallised.

	2024	2023
	£’000	£’000
Provision for deferred Indian capital gains tax	770	816
	770	816

13. Share Capital

Share capital represents the total number of shares in issue. Any dividends declared will be paid on the shares in issue on the record date.

The Directors’ Report on page 36 sets out the share capital structure, restrictions and voting rights.

Share capital represents the total number of shares in issue, including treasury shares.

(a) Allotted, called-up and fully paid

	2024	2023
	£’000	£’000
Share capital:
Ordinary shares of 10p each	6,591	6,685
Treasury shares of 10p each	909	815
	7,500	7,500

(b) Share movements

	2024		2023
	Ordinary	Treasury	Ordinary	Treasury
	number	number	number	number
Number at start of year	66,853,287	8,146,594	66,853,287	8,146,594
Shares bought back and held in treasury	(945,000)	945,000	–	–
Number at the end of the year	65,908,287	9,091,594	66,853,287	8,146,594

During the year the Company bought back, into treasury, 945,000 ordinary shares at a total cost of £2,915,000.

A further 290,000 shares have been bought back into treasury, at an average price of 321.3p, since 30 April 2024.

As explained in the Chairman’s Statement on page 8, the Company introduced a performance conditional tender offer in 2020 whereby the Board has undertaken to effect a tender offer for up to 25.0% of the Company’s issued share capital in the event that certain conditions are met relating to performance of the net asset value compared to the benchmark index.

14. Reserves

This note explains the different reserves attributable to shareholders. The aggregate of the reserves and share capital (see previous note) make up total shareholders’ funds.

The capital redemption reserve maintains the equity share capital arising from the buy-back and cancellation of shares and is non-distributable. The special reserve arose from the cancellation of the share premium account and is available as a distributable reserve to fund any future tender offers and share buybacks.

The capital reserve includes investment gains and losses, expenses allocated to capital and special dividends received that are classified as capital in nature. The revenue reserve reflects the income and expenses as shown in the revenue column of the Income Statement. The capital and revenue reserves are distributable by way of dividend. Dividends are first funded from available revenue reserves and then funded from capital reserves at the date of the dividend payment.

15. Net Asset Value

The Company’s total net assets (total assets less total liabilities) are often termed shareholders’ funds and are converted into net asset value per ordinary share by dividing by the number of shares in issue as at the reporting date.

The net asset values attributable to each share in accordance with the Company’s Articles are set out below.

	2024	2023
Ordinary shareholders’ funds	£238,266,000	£245,004,000
Number of ordinary shares in issue, excluding treasury shares	65,908,287	66,853,287
Net asset value per ordinary share	361.51p	366.48p

There is no dilution in this or the prior year and therefore no diluted net asset value per ordinary share has been disclosed.

16. Financial Instruments

Financial instruments comprise the Company’s investment portfolio, derivative financial instruments (if the Company had any), as well as any cash, borrowings, debtors and creditors. This note sets out the risks arising from the Company’s financial instruments in terms of the Company’s exposure and sensitivity, and any mitigation that the Manager or Board can take.

Risk Management Policies and Procedures

The Company’s portfolio is managed in accordance with its investment objective, which is set out in the Strategic Report on page 20. The Strategic Report then proceeds to set out the Manager’s investment process and the Company’s internal control and risk management systems as well as the Company’s principal and emerging risks and uncertainties. Risk management is an integral part of the investment management process and this note expands on certain of those risks in relation to the Company’s financial instruments, including market risk.

The accounting policies in note 1 include criteria for the recognition and the basis of measurement applied for financial instruments. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised and measured. The Directors have delegated to the Manager the responsibility for the day-to-day investment activities of the Company as more fully described in the Strategic Report.

As an investment trust the Company invests in equities and other investments for the long-term so as to meet its investment objective and policies. In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company’s net assets or a reduction of the profits available for dividends. The risks applicable to the Company and the policies the Company used to manage these are summarised below and have remained substantially unchanged for the two years under review.

16.1 Market Risk

Market risk arises from changes in the fair value or future cash flows of a financial instrument because of movements in market prices. Market risk comprises three types of risk: currency risk (16.1.1), interest rate risk (16.1.2) and other price risk (16.1.3).

The Company’s Manager assesses the Company’s exposure when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. The Board meets at least quarterly to assess risk and review investment performance, as disclosed in the Board Responsibilities on page 41. Borrowing is used to enhance returns; however, this will also increase the Company’s exposure to market risk and volatility.

16.1.1 Currency Risk

As nearly all of the Company’s assets, liabilities and income are denominated in currencies other than sterling, movements in exchange rates will affect the sterling value of those items.

Management of the Currency Risk

The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board on a regular basis. With the exception of borrowings in foreign currency, the Company does not normally hedge its currency positions but may do so should the Portfolio Managers or the Board feel this was appropriate. Contracts are limited to currencies and amounts commensurate with the asset exposure.

Income denominated in foreign currencies is converted to sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is accrued and received.

Foreign Currency Exposure

The fair values of the Company’s monetary items that have currency exposure at 30 April are shown below. Where the Company’s investments (which are not monetary items) are priced in a foreign currency they have been included separately in the analysis so as to show the overall level of exposure.

Year ended 30 April 2024

						Foreign	Investments
		Debtors			Creditors	currency	at fair
		(due from			(due to	exposure	value	Total net
		brokers	Cash and	Overdrafts	brokers	on net	through	foreign
		and	cash	and bank	and	monetary	profit	currency
		dividends)	equivalents	facility	accruals)	items	or loss	exposure
	Currency	£’000	£’000	£’000	£’000	£’000	£’000	£’000
	Australian dollar	–	–	–	–	–	3,691	3,691
	Chinese yuan	–	–	–	–	–	14,352	14,352
	Hong Kong dollar	–	–	–	–	–	76,308	76,308
	Indian rupee	–	–	–	–	–	22,984	22,984
	Indonesian rupiah	–	–	–	–	–	10,331	10,331
	Singapore dollar	151	–	–	–	151	5,407	5,558
	South Korean won	139	–	–	–	139	41,011	41,150
	Swiss franc	–	–	–	–	–	2,845	2,845
	Taiwan dollar	227	16	–	–	243	38,590	38,833
	Thai baht	289	–	–	–	289	6,994	7,283
	US dollar	78	521	(12,626)	–	(12,027)	17,444	5,417
	Vietnamese dong	–	–	–	–	–	5,119	5,119
		884	537	(12,626)	–	(11,205)	245,076	233,871

Year ended 30 April 2023

						Foreign	Investments
		Debtors			Creditors	currency	at fair
		(due from			(due to	exposure	value	Total net
		brokers	Cash and	Overdrafts	brokers	on net	through	foreign
		and	cash	and bank	and	monetary	profit	currency
		dividends)	equivalents	facility	accruals)	items	or loss	exposure
	Currency	£’000	£’000	£’000	£’000	£’000	£’000	£’000
	Australian dollar	—	—	—	—	—	8,427	8,427
	Chinese yuan	—	—	—	—	—	23,822	23,822
	Hong Kong dollar	—	—	—	—	—	93,836	93,836
	Indian rupee	—	—	—	—	—	24,269	24,269
	Indonesian rupiah	—	—	—	—	—	10,627	10,627
	Singapore dollar	58	—	—	—	58	2,167	2,225
	South Korean won	124	—	—	—	124	43,031	43,155
	Taiwan dollar	145	345	—	—	490	33,646	34,136
	Thai baht	151	—	—	—	151	6,680	6,831
	US dollar	—	845	(14,333)	—	(13,488)	6,702	(6,786)
	Vietnamese dong	—	—	—	—	—	5,755	5,755
		478	1,190	(14,333)	—	(12,665)	258,962	246,297

The amounts shown are not representative of the exposure to risk during the year, because the levels of foreign currency exposure change significantly throughout the year.

Foreign Currency Sensitivity

The following table illustrates the sensitivity of the returns after taxation for the year with respect to the Company’s financial assets and liabilities.

If sterling had strengthened by the amounts shown in the second table below, the effect on the assets and liabilities held in non-sterling currency would have been as follows:

		2024			2023
				Total			Total
		Revenue	Capital	loss	Revenue	Capital	loss
		return	return	after tax	return	return	after tax
		£’000	£’000	£’000	£’000	£’000	£’000
	Australian dollar	(2)	(52)	(54)	(9)	(219)	(228)
	Chinese yuan	(15)	(244)	(259)	(25)	(572)	(597)
	Hong Kong dollar	(26)	(1,221)	(1,247)	(62)	(3,097)	(3,159)
	Indian rupee	(5)	(345)	(350)	19	(849)	(830)
	Indonesian rupiah	(16)	(248)	(264)	(11)	(340)	(351)
	Singapore dollar	(2)	(59)	(61)	(5)	(52)	(57)
	South Korean won	(18)	(700)	(718)	(24)	(990)	(1,014)
	Taiwan dollar	(15)	(656)	(671)	(24)	(748)	(772)
	Thai baht	(7)	(147)	(154)	(4)	(147)	(151)
	US dollar	208	(305)	(97)	434	(225)	209
	Vietnamese dong	(4)	(118)	(122)	—	(161)	(161)
		98	(4,095)	(3,997)	289	(7,400)	(7,111)

If sterling had weakened by the same amounts, the effect would have been the converse.

The following movements in the assumed exchange rates are used in the above sensitivity analysis:

		2024	2023
		%	%
	£/Australian dollar	+/–1.4	+/–2.6
	£/Chinese yuan	+/–1.7	+/–2.4
	£/Hong Kong dollar	+/–1.6	+/–3.3
	£/Indian rupee	+/–1.5	+/–3.5
	£/Indonesian rupiah	+/–2.4	+/–3.2
	£/Singapore dollar	+/–1.1	+/–2.4
	£/South Korean won	+/–1.7	+/–2.3
	£/Taiwan dollar	+/–1.7	+/–2.2
	£/Thai baht	+/–2.1	+/–2.2
	£/US dollar	+/–1.7	+/–3.3
	£/Vietnamese dong	+/–2.3	+/–2.8

These percentages have been determined based on the market volatility in exchange rates during the year. The sensitivity analysis is based on the Company’s foreign currency financial instruments held at each balance sheet date and takes account of forward foreign exchange contracts that offset the effects of changes in currency exchange rates. The effect of the strengthening or weakening of sterling against foreign currencies is calculated by reference to the volatility of exchange rates during the year using one standard deviation of currency fluctuations from the average exchange rate.

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole since the level of foreign currency exposure varies.

16.1.2 Interest Rate Risk

The Company is exposed to interest rate risk through income receivable on cash deposits and interest payable on variable rate borrowings. When the Company has cash balances, they are held in variable rate bank accounts yielding rates of interest dependent on the base rate of the custodian, Bank of New York Mellon (International) Limited.

The Company has a revolving credit facility (the ‘bank facility’) for which details and year end drawn down amounts are shown in note 11. The Company uses the facility when required at levels approved and monitored by the Board. At the maximum possible gearing of £20 million, the effect of a 1% increase/decrease in the interest rate would result in a decrease/increase to the Company’s total income of £200,000. At the year end, US dollars with a sterling equivalent of £12,626,000 of the bank facility was drawn down (2023: £13,593,000).

The Company also has available an uncommitted bank overdraft arrangement with the custodian for settlement purposes. At the year end, there was a sterling overdraft of £50,000 (2023: US dollar overdraft with a sterling equivalent of £740,000). Interest on the bank overdraft is payable at the custodian’s variable rate.

The Company’s portfolio is not directly exposed to interest rate risk.

16.1.3 Other Price Risk

Other price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of the equity investments, but it is the business of the Manager to manage the portfolio to achieve the best possible return.

The Directors manage the market price risks inherent in the investment portfolio by meeting regularly to monitor on a formal basis the Manager’s compliance with the Company’s stated objectives and policies and to review investment performance.

The Company’s portfolio is the result of the Manager’s investment process and as a result is not wholly correlated with the Company’s benchmark or the markets in which the Company invests. The value of the portfolio will not move in line with the markets but will move as a result of the performance of the shares within the portfolio.

If the value of the portfolio rose or fell by 10% at the balance sheet date, the profit after tax for the year would increase or decrease by £25.1 million (2023: £25.9 million) respectively.

16.2 Liquidity Risk

This is the risk that the Company may encounter difficulty in meeting its obligations associated with financial liabilities i.e. when realising assets or raising finance to meet financial commitments.

A lack of liquidity in the portfolio may make it difficult for the Company to realise assets at or near their purported value in the event of a forced sale. This is minimised as the majority of the Company’s investments comprise a diversified portfolio of readily realisable securities which can be sold to meet funding commitments as necessary, cash held and the bank facility provides for additional funding flexibility. The financial liabilities of the Company at the balance sheet date are shown in note 11.

16.3 Credit Risk

Credit risk comprises the potential failure by counterparties to deliver securities which the Company has paid for, or to pay for securities which the Company has delivered; it includes but is not limited to: lost principal and interest, disruption to cash flows or the failure to pay interest.

Credit risk is minimised by using:

(a) only approved counterparties, covering both brokers and deposit takers;

(b) a custodian that operates under BASEL III guidelines. The Board reviews the custodian’s annual, externally audited, service organisation controls report and the Manager’s management of the relationship with the custodian. Following the appointment of a depositary, assets held at the custodian are covered by the depositary’s restitution obligation, accordingly the risk of loss is remote; and

(c) the Invesco Liquidity Funds plc – US Dollar, a money market fund, which is rated AAAm by Standard & Poor’s and AAAmmf by Fitch.

Cash balances are limited to a maximum of 5% of net assets with the custodian, 2.5% of net assets with any other deposit taker and a maximum of 6% of net assets in the Invesco Liquidity Funds plc. These limits are at the discretion of the Board and are reviewed on a regular basis. As at the year end, the sterling equivalent of £537,000 (2023: £1,337,000) was held at the custodian, in addition a balance had been held in Invesco Liquidity Funds plc during the year and the balance was £1,494,000 at the year end (2023: £nil).

17. Fair Value of Financial Assets and Financial Liabilities

‘Fair value’ in accounting terms is the amount at which an asset can be bought or sold in a transaction between willing parties, i.e. a market-based, independent measure of value. Under accounting standards there are three levels of fair value based on whether there is an active market (Level 1) or, if not, Levels 2 and 3 where other methods have been employed to establish a fair value. This note sets out the aggregate amount of the portfolio in each level, and why.

Financial assets and financial liabilities are either carried at their fair value (investments), or at a reasonable approximation of their fair value. The valuation techniques used by the Company are explained in the accounting policy note. FRS 102 sets out three fair value levels for the fair value for the hierarchy disclosures. Categorisation into a level is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability.

The investments held by the Company at the year end are shown on pages 29 and 30. Except for two Level 2 and one Level 3 investments described below, all of the Company’s investments at the year end were deemed to be Level 1 with fair values for all based on unadjusted quoted prices in active markets for identical assets totalling £242,722,000 (2023: £252,244,000).

Level 2 investments are investments for which inputs are other than quoted prices included within Level 1 that are observable (i.e. developed using market data). At the year end there were two Level 2 investments held with a total fair value of £8,488,000 (2023: £6,680,000), comprising of Kasikornbank, valued at £6,994,000 (2023: £6,880,000) and Invesco Liquidity Funds – US Dollar money market fund, valued at £1,494,000 (2023: £nil).

There have been no other transfers or movements between fair value categories during the year.

Level 3 investments are investments for which inputs are unobservable (i.e. for which market data is unavailable). Lime Co. was the only Level 3 investment in the portfolio at the year end and was valued at £37,000 using a price which was in line with trades in the OTC market (2023: one investment: Lime Co. valued at £38,000 based on prices of trades in the OTC market).

18. Capital Management

This note is designed to set out the Company’s objectives, policies and processes for managing its capital. This capital being funded by monies invested in the Company by shareholders (both initial investment and retained amount) and any borrowings by the Company.

The Company’s total capital employed at 30 April 2024 was £250,892,000 (2023: £258,597,000) comprising borrowings of £12,626,000 (2023: £13,593,000) and equity share capital and other reserves of £238,266,000 (2023: £245,004,000).

The Company’s total capital employed is managed to achieve the Company’s investment objective and investment policy as set out on page 20. Borrowings may be used to provide gearing up to the lower of £20 million or 25% of net asset value. The Company’s policies and processes for managing capital were unchanged throughout the year and the preceding year.

The main risks to the Company’s investments are shown in the Directors’ Report under the ‘Principal and Emerging Risks and Uncertainties’ section on pages 23 and 24. These also explain that the Company is able to gear and that gearing will amplify the effect on equity of changes in the value of the portfolio.

The Board can also manage the capital structure directly since it has taken the powers, which it is seeking to renew, to issue and buy-back shares and it also determines dividend payments.

The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by section 1158 Corporation Tax Act 2010 and by the Companies Act 2006, respectively, and with respect to the availability of the bank facility, by the terms imposed by the lender, details of which are given in note 11. The Board regularly monitors, and the Company has complied with, these externally imposed capital requirements.

19. Contingencies, Guarantees and Financial Commitments

Any liabilities the Company is committed to honour, and which are dependent on future circumstances or events occurring, would be disclosed in this note if any existed.

There were no contingencies, guarantees or other financial commitments of the Company as at 30 April 2024 (2023: nil).

20. Related Party Transactions and Transactions with the Manager

A related party is a company or individual who has direct or indirect control or who has significant influence over the Company. Under accounting standards, the Manager is not a related party.

Under UK GAAP, the Company has identified the Directors and their dependents as related parties. The Directors’ remuneration and interests have been disclosed on page 46 with additional disclosure in note 4. No other related parties have been identified.

Details of the Manager’s services and fees are disclosed in the Director’s Report on page 35, note 3 and note 4(iii) to the financial statements.

21. Post Balance Sheet Events

Any significant events that occurred after the balance sheet date but before the signing of the balance sheet will be shown here.

There are no significant events after the end of the reporting period requiring disclosure.

22. 2024 Financial Information

The figures and financial information for the year ended 30 April 2024 are extracted from the Company's annual financial statements for that year and do not constitute statutory accounts. The Company's annual financial statements for the year to 30 April 2024 have been audited but have not yet been delivered to the Registrar of Companies. The Auditor's report on the 2024 annual financial statements was i) unqualified, ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

23. 2023 Financial Information

The figures and financial information for the year ended 30 April 2023 are compiled from an extract of the published accounts for that year and do not constitute statutory accounts.  Those accounts have been delivered to the Registrar of Companies. The Auditor's report on the 2023 annual financial statements was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

24. Annual Financial Report

The Annual Report for the year-ended 30 April 2024 will be posted to shareholders in August 2024 and will be available at www.invesco.co.uk/invescoasia or from the Corporate Secretary at the Company's correspondence address, 43-45 Portman Square, London W1H 6LY. A copy of the Annual Financial Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Notice of Annual General Meeting

THIS NOTICE OF ANNUAL GENERAL MEETING IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action to take, you should consult your stockbroker, solicitor, accountant or other appropriate independent professional adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all your shares in Invesco Asia Trust plc, please forward this document and the accompanying Form of Proxy to the person through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

Notice is given that the Annual General Meeting of Invesco Asia Trust plc will be held at 43-45 Portman Square, London W1H 6LY, on 12 September 2024 at 12pm for the following purposes:

Ordinary Business

To consider and, if thought fit, to pass the following resolutions all of which will be proposed as ordinary resolutions:

1. To receive and consider the Annual Financial Report for the year ended 30 April 2024.

2. To approve the Company’s Dividend Payment Policy. This is an advisory vote.

3. To approve the Annual Statement and Report on Remuneration for the year ended 30 April 2024.

4. To re-elect Neil Rogan as a Director of the Company.

5. To re-elect Vanessa Donegan as a Director of the Company.

6. To re-elect Myriam Madden as a Director of the Company.

7. To re-elect Sonya Rogerson as a Director of the Company.

8. To appoint Ernst & Young LLP as auditor of the Company.

9. To authorise the Audit Committee to determine the remuneration of the auditor.

Special Business

To consider and, if thought fit, pass the following resolutions of which resolution 10 will be proposed as an ordinary resolution and resolutions 11 to 13 as special resolutions:

Authority to Allot Shares

10. That:

in substitution for any existing authority under section 551 of the Companies Act 2006 (the ‘Act’) but without prejudice to the exercise of any such authority prior to the date of this resolution the Directors of the Company be generally and unconditionally authorised in accordance with section 551 of the Act as amended from time to time prior to the date of the passing of this resolution, to exercise all powers of the Company to allot shares and grant rights to subscribe for, or convert any securities into, shares up to an aggregate nominal amount (within the meaning of sections 551(3) and (6) of the Act) of £6,561,828, this being 10% of the Company’s issued ordinary share capital as at 25 July 2024, such authority to expire at the conclusion of the next Annual General Meeting of the Company or the date 15 months after the passing of this resolution, whichever is the earlier unless the authority is renewed or revoked at any other general meeting prior to such time, but so that this authority shall allow the Company to make offers or agreements before the expiry of this authority which would or might require shares to be allotted, or rights to be granted, after such expiry as if the authority conferred by this resolution had not expired.

Disapplication of Pre-emption Rights

11. That:

subject to the passing of resolution number 10 set out in the notice of this meeting (the ‘Section 551 Resolution’) and in substitution for any existing authority under sections 570 and 573 of the Companies Act 2006 (the ‘Act’) but without prejudice to the exercise of any such authority prior to the date of this resolution, the Directors be and are hereby empowered, in accordance with sections 570 and 573 of the Act as amended from time to time prior to the date of the passing of this resolution to allot equity securities (within the meaning of section 560(1), (2) and (3) of the Act) for cash, either pursuant to the authority given by the Section 551 Resolution or (if such allotment constitutes the sale of relevant shares which, immediately before the sale, were held by the Company as treasury shares) otherwise, as if section 561 of the Act did not apply to any such allotment, provided that this power shall be limited:

(a) to the allotment of equity securities in connection with a rights issue in favour of all holders of a class of equity securities where the equity securities attributable respectively to the interests of all holders of securities of such class are either proportionate (as nearly as may be) to the respective numbers of relevant equity securities held by them or are otherwise allotted in accordance with the rights attaching to such equity securities (subject in either case to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal, regulatory or practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any territory or otherwise); and

(b) to the allotment (otherwise than pursuant to a rights issue) of equity securities up to an aggregate nominal amount of £3,280,914, this being 5% of the Company’s issued share capital as at 25 July 2024 and this power shall expire at the conclusion of the next Annual General Meeting of the Company or the date 15 months after the passing of this resolution, whichever is the earlier unless the authority is renewed or revoked at any other general meeting prior to such time, but so that this power shall allow the Company to make offers or agreements before the expiry of this power which would or might require equity securities to be allotted after such expiry as if the power conferred by this Resolution had not expired; and so that words and expressions defined in or for the purposes of Part 17 of the Act shall bear the same meanings in this resolution.

Authority to Make Market Purchases of Shares

12. That:

the Company be generally and subject as hereinafter appears unconditionally authorised in accordance with Section 701 of the Companies Act 2006 as amended from time to time prior to the date of the passing of this resolution (the ‘Act’) to make market purchases (within the meaning of Section 693(4) of the Act) of its issued ordinary shares of 10p each in the capital of the Company (‘Shares’).

PROVIDED ALWAYS THAT:

(i) the maximum number of Shares hereby authorised to be purchased shall be 9,836,181 or 14.99% of shares in issue as at 25 July 2024;

(ii) the minimum price which may be paid for a Share shall be 10p;

(iii) the maximum price which may be paid for a Share must not be more than the higher of: (i) 5% above the average of the mid-market values of the Shares for the five business days before the purchase is made; and (ii) the higher of the price of the last independent trade in the Shares and the highest then current independent bid for the Shares on the London Stock Exchange;

(iv) any purchase of Shares will be made in the market for cash at prices below the prevailing net asset value per Share (as determined by the Directors);

(v) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company, or the date 15 months after the passing of this resolution, whichever is the earlier, unless the authority is renewed or revoked at any other general meeting prior to such time;

(vi) the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract; and

(vii) any shares so purchased shall be cancelled or, if the Directors so determine and subject to the provisions of Sections 724 to 731 of the Act and any applicable regulations of the United Kingdom Listing Authority, be held (or otherwise dealt with in accordance with Section 727 or 729 of the Act) as treasury shares.

Period of Notice Required for General Meetings

13. That:

  the period of notice required for general meetings of the Company (other than AGMs) shall be not less than 14 days.

Dated this 25 July 2024

By order of the Board

Invesco Asset Management Limited

Corporate Company Secretary

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