Annual Financial Report

RNS Number : 7935E

Asia Dragon Trust PLC

01 November 2022

 

ASIA DRAGON TRUST PLC

LEI: 549300W4KB0D75D1N730

Capturing growth from world-class Asian companies

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 AUGUST 2022

Performance Highlights

Net asset value total returnA				Net asset value per share
(8.4)%				513.3p
2021	+20.5%			2021		566.6p
Share price total returnA				Share price
(11.8)%				446.0p
2021		+24.3%		2021	512.0p
Benchmark total return (in sterling terms)				Ongoing chargesA
(7.1)%				0.84%
2021	+14.7%			2021		0.83%
Earnings per share (revenue)				Dividend per share
6.38p				6.50p
2021	7.36p			2021		6.50p
A Considered to be an Alternative Performance Measure. Further details can be found in the below

Financial Calendar, Dividends and Highlights

Financial Calendar

Pre-AGM Investor Presentation	21 November 2022
Annual General Meeting	9 December 2022
Payment of Final Dividend	16 December 2022
Half year end	28 February 2023
Expected announcement of results for the six months ending 28 February 2023	April 2023
Financial year end	31 August 2023
Expected announcement of results for the year ending 31 August 2023	November 2023

Dividends

	Rate	xd date	Record date	Payment date
Proposed final 2022	6.50p	10 November 2022	11 November 2022	16 December 2022
Final 2021	6.50p	18 November 2021	19 November 2021	17 December 2021

Highlights

31 August 2022

31 August 2021

% change

Performance
Total shareholders' funds (£'000)	614,369	706,929	-13.1
Net asset value per share (capital return basis) (p)	513.32	566.60	-9.4
Net asset value per share (total return basis) (%)	-8.4	+20.5
Share price (capital return basis) (p)	446.00	512.00	-12.9
Market capitalisation (£'000)	533,800	638,804	-16.4
MSCI AC Asia (ex Japan) Index (in sterling terms; capital return basis)	1,030.48	1,138.78	-9.5
MSCI AC Asia (ex Japan) Index (in sterling terms; total return basis) (%)	-7.1	+14.7
Revenue return per share (p)	6.38	7.36	-13.3
Total return per share (p)	(49.53)	96.60	-151.3
Dividend
Dividend per share (p)	6.50	6.50	-
Gearing
Net gearing (%)A	9.0	7.9
Discount
Discount to net asset value (%)A	13.1	9.6
Operating costs
Ongoing charges ratioA	0.84	0.83
A Considered to be an Alternative Performance Measure. Further details can be found below.

Chairman's Statement

 

Overview

As Shareholders are more than aware, the last 12 months have been another challenging and, at times, turbulent period for investors, with macroeconomic and geopolitical risks coming to the fore. While Asian markets have proven more resilient than those of other emerging markets, the region could not entirely avoid the global concerns of rising inflation, recession risk and conflict in Europe. Against this backdrop, the MSCI AC Asia ex Japan fell 7.1% over the 12 months, while the Company's net asset value (NAV) also declined, down 8.4%, on a total return basis. 

The Company's long term performance record remains intact, outperforming its benchmark and recording a gain, in NAV terms, of just under 30% in the five years to 31 August 2022.

Covid-19 again dominated the early part of the period under review, as further lockdown measures hampered recovery. However, as 2022 has progressed, most economies have begun to reopen, as governments ramped up vaccinations and loosened Covid restrictions. As a result, improving tourism and increasing consumer spending, due to the release of pent-up demand, have aided economic recovery. This has particularly benefited the Company's holdings in the ASEAN region, with positions in Indonesia, Singapore, and off-benchmark holdings in Vietnam among the strongest performers. In China, however, the 'zero-Covid' policy has continued, dampening domestic activity and impacting global supply chains. This has also put further pressure on an economy already struggling with a weak property market and tighter regulatory conditions. As a result, China was among the market's worst performers, albeit your Company's holdings have fared better in such a difficult landscape, reflecting your Manager's focus on quality and opportunities with long-term structural growth prospects.

At the time of writing, China's 20th Party Congress has just ended with a new seven-strong CPC Politburo Standing Committee being established. Xi Jinping has clearly cemented his control of the party and the extent of this has surprised the market.  The Manager discusses this more in their Review.

Russia's invasion of Ukraine also contributed to global inflationary pressures through the disruption of oil supplies, driving Brent crude above US$100 per barrel at one point. Supply fears boosted share prices and made Asia's energy sector one of the top performers over the period. This was negative for the Company's relative returns, as we have no exposure to the sector. With the global transition to renewables and growing need for new energy sources, abrdn (Asia) Limited (the Manager) favours pockets of opportunity within this segment, especially the various parts of the supply chains for solar and auto electrification, including the hardware required for developing renewable energy.

One of the key themes impacting Asia has been tightening US monetary policy, exacerbated by the build-up of global inflationary pressures. The US Federal Reserve implemented four interest rate increases over 2022, which continued to drive a de-rating of expensive growth stocks and a rotation to value for much of the period. While inflation is lower in most Asian countries than elsewhere, many central banks, including those in Indonesia, India, and Korea, have also begun to raise interest rates. The notable exception here is the People's Bank of China, which cut several key lending rates to support the economy amid significant domestic growth challenges. As I said in this year's interim report, prudent policies mean that most Asian policymakers have monetary and fiscal room for manoeuvre, which mean they are better able to mitigate any serious slowdown in growth.

Given the global backdrop, your Manager has assessed the portfolio to ensure that it includes high-quality stocks that should prove more resilient to volatile markets, consolidating exposure into companies that are best able to withstand tougher operating conditions and seize long-term structural growth opportunities.  E nvironmental, social and governance (ESG) factors are also considered in all investment decisions, and also at Board level, where ESG integration has become an increasingly important part of our discussions over the course of the year. The Trust's portfolio is ESG AA rated by MSCI, which is higher than the benchmark rating of A.

You can find more detail on performance and portfolio activity in the Investment Manager's Review, and our approach to ESG in the ESG report.

Gearing

The Board believes that the sensible use of modest financial gearing should enhance returns to shareholders over the longer term. At the beginning of the financial year the Company had in place a £75 million three-year loan facility with Scotiabank Europe plc, of which £25 million was fixed and fully drawn down with a further £40 million of the revolving £50 million facility drawn down.  The facility expired in July 2022 and the Board was pleased to announce that it had entered into loan facilities totalling a commitment of £60 million with The Royal Bank of Scotland International Limited, London Branch.  The facilities, which are unsecured, consist of a two-year fixed facility of £25m, which is fully drawn, and a two year £35m multi-currency revolving credit facility which has also been fully drawn. 

At 31 August 2022, the Company's net gearing position was 9.0%, compared to 7.9% at the end of August 2021.

The Investment Manager continues to monitor closely gearing levels and bank covenants.  As at 28 October 2022, the Company's net assets stood at £490m and net gearing was 11.3%.  These levels remain comfortably within the covenant limits. 

Discounts and Share Buybacks

The discount level of the Company's shares is closely monitored by the Board and the Investment Manager and share buybacks are undertaken when appropriate. During the year ended 31 August 2022, 5.1 million shares were bought back into treasury at a cost of £24.0 million (2021: 1.6 million shares were bought back into treasury at a cost of £7.7 million). Since 31 August 2022, a further 651,351 shares have been bought back into treasury at a cost of £2.7 million. The discount at the financial year end was 13.1% (2021: 9.6%). As at 28 October 2022, the discount was 13.3% .

Revenue Account

The Company's revenue return per share was 6.38p for the year to 31 August 2022 (2021 - 7.36p). As reported in the last annual report, the Company adopted a new policy for the allocation of management fees and finance costs during the financial year to 31 August 2021.  The new policy, to allocate 25% to revenue and 75% to capital, continues to apply to the Company. 

The Board has declared a final dividend of 6.5p per Ordinary share (2021 - 6.5p). The Board has taken the decision to draw on revenue reserves in order to maintain the level of dividend to be paid to shareholders.  The dividend, if approved by shareholders at the Annual General Meeting, will be paid on 16 December 2022 to shareholders on the register on 11 November 2022.

The Board

The Board regularly undertakes a review of its performance and structure to ensure that it has the appropriate mix of relevant skills, diversity and experience for the effective operation of the Company's business.  Having served nine years on the Board, the Board was sorry to see Kathryn Langridge retire at the AGM in December 2021.  However, we were delighted to welcome Matthew Dobbs as a non-executive Director with effect from 1 February 2022.  Mr Dobbs is a renowned Asian and Small Companies investment expert and brings a wealth of knowledge and experience to the Board.

Annual General Meeting

In a return to the familiar format before the onset of Covid-19, the AGM will, once again, be held in person. The AGM in 2021 was held in Edinburgh and the Board has agreed that the AGM in 2022 should be held in London.

The AGM will take place on Friday, 9 December 2022 at 12.00pm at the offices of abrdn plc, in Bow Bells House, 1 Bread Street, London EC4M 9HH.

The AGM provides shareholders with an opportunity to ask any questions that they may have of either the Board or the Manager. I look forward to meeting as many of you as possible over refreshments which will follow the AGM. Shareholders, whether attending the AGM or not, are encouraged to submit questions for the Board and/or the Manager, in advance, by email to [e-mail].

Online Shareholder Presentation

In order to encourage as much interaction as possible with our shareholders, we will be hosting an Online Shareholder Presentation, which will be held at 11:00am on 21 November 2022. At this event there will be a presentation from the Investment Manager followed by an opportunity to ask live questions of the Chairman, Senior Independent Director and the Investment Manager. The online presentation is being held ahead of the AGM to allow shareholders time to submit their proxy votes after the presentation but prior to the deadline for submitting proxies for the AGM should they so wish. Full details on how to register for the online event can be found at https://www.workcast.com/register?cpak=3501849254509496.

Outlook

Given the background I referred to above, the macroeconomic position and geopolitical turbulence are unlikely to make the overall investment backdrop less volatile. Asia, however, is still less vulnerable than other emerging markets, given better economic and corporate fundamentals. It also has yet to experience the surge in inflation on the scale seen in the more developed markets like Europe and the US.

Furthermore, the region is home to companies aligned with strong long-term structural growth themes, among them the move to decarbonisation as policy makers globally commit to a greener future.  Other themes include rising affluence in Asia, increased urbanisation and an infrastructure boom, and the growth in 5G, big data and digital interconnectivity.

While it cannot be immune to the global picture or to geopolitical pressures, the Board remains convinced of the long-term outlook for Asia and the types of businesses favoured by your Manager; we support the Manager's view that the current environment should see companies with strong balance sheets and sustainable earnings prospects well positioned to emerge from the current difficult period.

James Will

Chairman
31 October 2022

Investment Manager's Review

Portfolio review

It has been a year beset by multiple crises for Asian equities, including the coronavirus resurgence, war in the heart of Europe and recession risk. China experienced localised lockdowns under Beijing's zero-Covid policy, which disrupted international supply chains and constrained domestic growth. China's stance was in stark contrast to that of other countries in Asia, where loosened Covid measures led to a gradual re-opening of their economies.

Meanwhile, Russia's invasion of Ukraine triggered a commodity price shock, pushing up already-high inflation and hastening the reversal of accommodative monetary policies globally as evidenced by rising interest rates. This, in turn, deepened concerns over a global recession.  In market terms, rising interest rates resulted in significant rotation away from growth stocks towards value across the globe

Against this background the MSCI Asia ex Japan Index fell by 7.1% on a total return basis. In comparison, your Company's net asset value (NAV) fell by 8.4%.  We continue to take a longer-term view with regard to investment and our longer-term investment record remains positive when compared to the benchmark index.

Given the volatile markets it is perhaps unsurprising that performance was impacted, both positively and negatively, by more factors than usual.  China remains the Company's largest individual exposure and, because of our strong stock selection in the country, it had the largest positive impact in relative performance terms when compared to our benchmark.  The largest detractor from performance, again in country terms, was India.  In sector terms, the largest positive contributor was the Food and Beverages sector and the largest detractor, where we had no exposure, was the Energy sector. We have sought to provide more colour on each of these below:

China & Hong Kong

The mainland Chinese market was amongst the worst regional performers over the period. Strict Covid controls, regulatory tightening, liquidity concerns around the real estate sector and continued tensions with the US weighed on investor confidence, even while extensive policy support dispelled some of the gloom. Our average portfolio exposure was somewhat below the benchmark's 36% China weighting and this, helped by our overweight to more domestically orientated stocks, aided returns relative to the index.

This portfolio positioning reflects our focus on key investment themes such as aspirational spending, digitalisation, renewable energy, health and wealth. Although Covid and a slowing economy have placed short-term pressure on aspirational spending, we believe the consumption upgrade is a generational shift and one supported by the government to increase self-sufficiency.

Over the year our stock selection in China contributed positively to our performance, helped by our bias towards high-quality companies and an emphasis on these structural growth opportunities. Among the portfolio's standout performers in China were holdings that reflected our core themes of green energy and aspiration, where rising affluence spurs demand for premium goods and services.Nari Technologywas buoyed by policy supporting the development of renewable energy in China. This grid automation provider, an indirect play on clean energy, is well placed to benefit from power-grid reform. Liquor makerKweichou Moutaidefied the market slump thanks to its pricing power and earnings resilience. The liquor maker's brand value gives it significant competitive advantage in the domestic Chinese market, and we believe that it is well placed as demand for premium products and services grow alongside rising incomes from a growing middle class in China. Other names that outperformed included Hong Kong companiesBudweiser APAC,which fared well from a share price and demand perspective, notwithstanding Covid-related disruptions, andAIA Groupwhich benefited from the economic reopening outside of China and anticipation of better investment yields. AIA Group's premium market position and diversified pan-Asian revenue sources give it notable defensive characteristics in the current environment.

The performance of these stocks offset the negative impact of a period of regulatory uncertainty around the Chinese internet sector where we had a number of holdings.  We have consolidated these into our core holdings, including Alibaba Group, Tencent Holdings and Meituan . We also built on the small position in JD.com, after receiving its shares from Tencent Holdings through an in-specie distribution. JD.com directly procures inventory which it sells to consumers and delivers primarily via its in-house logistics network. The company has built up significant scale and differentiates itself through superior customer experience. Valuations are attractive, while the sector's long-term outlook remains promising. Although policy changes are disruptive, they could help to create a better functioning market and more sustainable growth, which should drive re-ratings for e-commerce companies over the longer term.

We have been increasing our China A-share exposure where we see unique longer-term opportunities not available offshore, particularly those aligned with Beijing's strategic objectives. Localisation of supply chains, for example, has accelerated as a result of China's pursuit of self-reliance in critical industries. Battery maker Contemporary Amperex Technology (CATL), an earlier initiation highlighted in the interim report, is well positioned, given its economies of scale and know-how, to gain from China's push towards electric vehicle (EV) adoption. More reasonable valuations also allowed us to add to Mindray, another beneficiary of China's self-sufficiency drive. The medical equipment maker's high-quality diversified portfolio of products reflects its heavy focus on research and development. Other noteworthy top-ups include well-established snack producer Chacha Food, where we see considerable growth potential given the highly fragmented industry.

With the recently ended Party Congress in China we believe that the overall direction remains broadly unchanged.  The main focus remains on the continued drive for Common Prosperity and technology localisation efforts to improve resilience and self-sufficiency. Following the Congress, both onshore and offshore Chinese stock markets saw a sell-off on the back of concerns that President Xi could sacrifice economic growth for policies driven by ideology. In particular, the market was disappointed at the lack of a specified timeline for bringing an end to the zero-Covid policy and also the fact that no detailed stimulus plans were laid out. Taking a step back and reviewing the economic policies and reform initiatives of the government over the last few years, these measures have largely been positive and aimed at better positioning China for future growth and increasing the country's long-term competitiveness. For example, the deleveraging of the property sector and channelling of capital to more productive and strategic areas have been correct, directionally at least.  However, these good policy intentions have at times been plagued by poor execution which has led to underwhelming outcomes, to say the least. With a more aligned new leadership team, we believe execution should be more efficient and effective going forward but the jury is clearly out at this stage and geo-political tension has increased, at least in the short term.  The themes that are driving our investments in China have not been impacted as a result of these political changes.

India

In India, several of our financial sector holdings added value. SBI Life Insurance , mortgage lender Housing Development Finance Corp (HDFC) and Kotak Mahindra Bank all outperformed, helped by higher interest rates and the economic reopening. Separately, we believe HDFC's merger with subsidiary HDFC Bank will drive scale efficiencies and create new growth opportunities for the group over the medium term. These contributions, however, failed to offset the overall negative impact of our India exposure on portfolio performance.  Stock selection in India - notably the lack of exposure to Reliance Industries - was the key driver of underperformance. The conglomerate rallied on higher oil prices and expectations of stronger refining margins. Additionally, our small position in online insurance platform PB Fintech suffered due to the rotation away from growth stocks, referred to above.

We remain sanguine about India which is home to many quality companies underpinned by structural tailwinds. A salient introduction over the year was Power Grid Corporation of India. The power transmission company will play a prominent role in the growth of renewable energy delivery to the grid in the decades ahead as India shifts to clean energy. We also added Infosys , a leading software developer backed by strong management, solid financials and a sustainable business model. We view both firms' openness to engaging with us on ESG matters favourably.  With regard to the portfolio, as a whole, we have a strong conviction that sound ESG credentials can both complement a company's quality and reduce portfolio risks while improving long-term returns. A comprehensive report of our active engagement with the Trust's underlying companies can be found below.

Energy

The Trust's zero exposure to energy detracted from performance as energy prices surged following the outbreak of war in the Ukraine. We are wary of the cyclical nature of earnings that typifies the sector, as well as the significant State interference in many national oil companies. The Ukraine war has also highlighted the vulnerability of an over-dependence on fossil fuels and accelerated the global adoption of renewable energy, which is a clear structural trend over the medium to long term. Hence, our preferred exposure to energy is through the renewables space via investments in renewable energy, batteries, the EV supply chain and related infrastructure; these do not feature in the MSCI's Energy sector.  The global green-energy transition is well underway, and Asia is dominant in the clean energy supply chain. In addition to the aforementioned CATL and Nari, we are positive on China-based Longi Green Energy Technology, the world's largest solar wafer maker, and Sungrow, a global supplier of solar inverters. We added to both of the latter two over the year as their many strengths include a formidable cost advantage and superior product quality .

Financials

Financial stocks are traditionally among the beneficiaries of a rising interest rate environment.  As well as in India, the Trust's exposure in this area was positive in Southeast Asia, as the region's belated relaxation of Covid restrictions resulted in growth during the year. Our long-held conviction in Indonesia and Singapore was especially rewarding. Indonesia's Bank Central Asia and Singapore lenders DBS Group and OCBC advanced on higher interest rates and improving economic growth. We added to them over the period as rising interest rates should boost net interest margins. They are already seeing improving asset quality metrics and increased demand for loans as restrictions ease.

Other Portfolio Activity

The growth company sell-off impacted our holdings in South Korean internet application provider Kakao Corp and Taiwan-listed integrated circuit maker Silergy Corp.

Meanwhile, market turmoil led to opportunities to add some new names to the portfolio. Apart from Thailand's Kasikornbank, which we detailed in the interim report, more recent additions included Astra International and Singtel. Astra is a well-managed conglomerate; as well as being the industry leader in cars and motorcycles, it is also a strong player in auto financing, mining services, plantations and infrastructure. Telecom operator Singtel has steady operations in Singapore and Australia, while its regional franchises are exposed to growth in Asia's emerging markets. The company offers a healthy dividend yield, buttressed by sound financials and cash flow, with new leadership executing well on more efficient capital allocation and management. 

To help to navigate the near-term challenges we took a number of other actions. We trimmed our technology exposure as recession risks clouded the demand outlook, especially for the semiconductor hardware segment, with sales of ASM Pacific Technology, Accton Technology and GlobalWafers.  We are also monitoring the broader cost inflation picture and its subsequent impact upon corporate profitability. We have scrutinised our holdings, ascertaining their ability to pass on cost pressures and protect their margins. Accordingly, we trimmed and exited positions in companies that could be more vulnerable in the rising cost environment, with Midea and Wanhua Chemical among the divestments.

Outlook

Volatility has been a feature of global stock markets in recent years. That appears unlikely to change any time soon. Markets continue to face a daunting set of challenges: rising interest rates to stem inflation, geopolitical risk, energy and food crises, and an increasingly fragile world economy .

Asia will not be immune to global developments. The good news is that the region is likely to be in a better position than developed economies in the West. The pace at which consumer prices are rising across most parts of Asia is still relatively slow; this has allowed central banks to adopt a more gradual stance in raising interest rates to stem inflationary pressures.

On a related point, this difference in the pace of interest rate increases between the developed West and Asia is also resulting in US dollar strength, with US dollar assets yielding more, and relative Asian currency weakness. We have seen some Asian central banks intervene in the foreign exchange market to support their domestic currencies, some of which have fallen to multi-year lows against the US dollar.

On the ground, we are receiving more reports from our holdings of  rising input costs and the pressure on margins but, encouragingly, the earnings of many of our holdings have met our expectations in the latest results reporting season. This environment reinforces the importance of innovation, a premiumisation strategy, brand equity and/or channel control.

We should also not forget that many economies, particularly those in South-East Asia, are still recovering following their post-Covid reopening, and this should help to support earnings.

China continues to be a cause of market angst, with Beijing's zero-Covid policy a key overhang. However, we are cautiously upbeat about its outlook. The country remains an outlier in the global tightening cycle thanks to benign inflation. We expect a continued recovery in economic activity as monetary easing and stimulus measures take effect. The next few months should also provide greater clarity on the policy front, and we think the central government will continue with measures to support and stabilise the economy.

More broadly, we would highlight that valuations of Asian stocks are attractive, below the long-term average and below the valuations of US and global markets.

Against this backdrop, we have sought to position the portfolio to weather near-term risks while keeping in mind Asia's long-term structural trends. Our focus remains on quality companies with sustainable business models, robust finances and access to structural growth drivers. We continue to favour fundamental themes like consumption, technology and green energy, which we believe will deliver positive results for Shareholders over the long run.

Adrian Lim and Pruksa Iamthongthong
abrdn (Asia) Limited
31 October 2022

Overview of Strategy

Business Model

The business model of the Company is to operate as an investment trust for UK capital gains tax purposes in line with its investment objective.  The Directors are of the opinion that the Company has conducted its affairs for the year ended 31 August 2022 so as to enable it to comply with the relevant eligibility conditions for investment trust status as defined by Section 1158 of the Corporation Tax Act 2010.

Investment Policy

The Company's assets are invested in a diversified portfolio of securities in quoted companies spread across a range of industries and economies in the Asia Pacific region, excluding Japan and Australasia. The shares that make up the portfolio are selected from companies that have proven management and whose shares are considered to be attractively priced. The Company invests in a diversified range of sectors and countries. Investments are not limited as to market capitalisation, sector or country weightings within the region.

The Company's policy is to invest no more than 15% of gross assets in other listed investment companies (including listed investment trusts).

The Company complies with Chapter 4 of Part 24 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 and does not invest more than 15% of its assets in the shares of any one company.

When appropriate the Company will utilise gearing to maximise long-term returns, subject to a maximum gearing level of 20% of net assets imposed by the Board.

The Company does not currently utilise derivatives but keeps this under review.

Company Benchmark

The total return of the MSCI All Country Asia (ex Japan) Index (sterling adjusted).

Alternative Investment Fund Manager ("AIFM")

The AIFM is abrdn Fund Managers Limited, called Aberdeen Standard Fund Managers Limited until 31 July 2022, (aFML or the "Manager") which is authorised and regulated by the Financial Conduct Authority.

The Company's portfolio is managed on a day-to-day basis by abrdn (Asia) Limited ("abrdn Asia" or the "Investment Manager") by way of a delegation agreement. abrdn Asia and aFML are both wholly owned subsidiaries of abrdn plc.

Achieving the Investment Policy and Objective

The Directors are responsible for determining the investment policy and the investment objective of the Company. Day-to-day management of the Company's assets has been delegated to the Investment Manager.  The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct contact by its fund managers and analysts. Stock selection is the major source of added value. No stock is bought without the Investment Manager having first met management, either in person, where possible, or virtually. The Investment Manager evaluates a company's worth in two stages: quality then price. Quality is defined by reference to management, business focus, the balance sheet and corporate governance. Price is evaluated by reference to key financial ratios, the market, the peer group and business prospects. Stock selection is key in constructing a diversified portfolio of companies. 

For the purposes of achieving the Investment Policy and Objective, the Investment Manager is permitted to invest up to 30% of the portfolio in companies which are not listed in the Asia Pacific region but which generate more than 50% of annual turnover or revenue in the region.

A comprehensive analysis of the Company's portfolio by country and by sector is disclosed below, including a description of the ten largest investments, the full investment portfolio by value and sector/geographical analysis. At 31 August 2022, the Company's portfolio consisted of 61 holdings.

Gearing is used to leverage the Company's portfolio in order to enhance returns when this is considered appropriate to do so. At  31 August 2022, the Company's net gearing was 9.0%.

Principal and Emerging Risks and Uncertainties

The Board carries out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks.  There are a number of other risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has considered the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation.

The Company's risks are regularly assessed by the Audit & Risk Committee and managed by the Board through the adoption of a risk matrix which identifies the key risks for the Company, including emerging risks, and covers strategy, investment management, operations, shareholders, regulatory and financial obligations and third-party service providers.

The principal risks and uncertainties facing the Company, which have been identified by the Board, are described in the table below, together with the mitigating actions.

The Board notes that there are a number of contingent risks stemming from the global geo-political environment that may impact the operation of the Company.

Inflation and the resultant volatility that it created in global stock markets was a key risk during the financial year, as well as the ongoing tensions between China and Taiwan, China and the West, and the Russian invasion of Ukraine, all of which created geo-political uncertainty which further increased market risk and volatility.  The impact of the global pandemic and the risk of its return remain, not least in China where a zero-covid policy continues to stifle economic activity.

The Board is also very conscious of the risks resulting from the increased ESG challenges. The recent scrutiny of human rights violations in China by Western governments is one example of the need for continued vigilance and engagement regarding supply chains and the fair treatment of workers. Likewise, as climate change pressures increase, the Board continues to monitor, through its Manager, the potential risk that investee companies may fail to maintain acceptable standards.

In all other respects, the Company's principal risks and uncertainties have not changed materially since the date of this Annual Report and are not expected to change materially for the current financial year.

Risk	Mitigating Action
Major market event or geo-political risk The Company is exposed to stockmarket volatility or illiquidity as a result of a major market shock due to a national or global crisis.  The impact of such risks, associated with the portfolio or the Company itself, could result in disruption of the operations of the Company and losses. Risk Increased during the year	Exogenous risks over which the Company has no control are always a risk. The Company does what it can to address these risks where possible, not least operationally and to try and meet the Company's investment objectives. As part of its investment processes, the Manager regularly assesses the Company's portfolio as a whole, and each constituent part, and, during the financial year, remained in close communication with the underlying investee companies in order to navigate and guide the Company through macroeconomic and geopolitical challenges. The Manager's focus on quality companies with sustainable business models and robust finances, the diversified nature of the portfolio and a managed level of gearing all serve to provide a degree of protection in times of market volatility.
Unacceptable Discount Volatility Failure to manage the discount effectively or an inappropriate marketing strategy could result in the Company's share price trading at a discount to its underlying net asset value and reduced investor sentiment.  Risk Increased during the year	The Board monitors the discount level of the Company's shares and has in place a buyback mechanism whereby the Manager is authorised to buy back shares within certain limits.  The macroeconomic and geopolitical challenges during the year led to volatility in equity markets and a widening of the Company's share price discount to NAV.  As a result, the Company bought back 5.1 million shares into treasury.  The Board and Manager communicate with major shareholders regularly to gauge their views on the Company, including discount volatility.
Investment Performance The Company's investment performance is the most critical factor to the Company's long-term success. Sustained underperformance may result in reduced demand for the Company's shares and loss of investor confidence. Risk Unchanged during the year	The Board continually monitors the investment performance of the Company, taking account of stockmarket factors, and reviews the Company's performance compared to its benchmark index and peer group at every Board Meeting.  A formal annual review is undertaken by the Management Engagement Committee.  In addition to its own due diligence, the Board has previously used consultants to provide an independent perspective on the Manager's process and performance.  The Board and Manager communicates with major shareholders regularly to gauge their views on the Company, including performance.  At the AGM in 2021, shareholders voted in favour of the introduction of a performance-related conditional tender offer, which will take place every five years.  The first performance-related period runs from 1 September 2021 to 31 August 2026.
Concentration Risk Trading volumes in certain securities of emerging markets can be low. The Investment Manager may accumulate investment positions across all its managed funds that represent a significant multiple of the daily trading volumes of an investment which may result in a lack of liquidity and price volatility. Accordingly, the Company will not necessarily be able to realise, within a short period of time, an illiquid investment and any such realisation that may be achieved may be at considerably lower prices than the Company's valuation of that investment for the purpose of calculating the NAV per Ordinary share. Risk Unchanged during the year	The Board reviews, on a regular basis, the Manager's total holdings for each stock within the Company's portfolio and the liquidity of these stocks.  The Board also considers the portfolio's stock, sector and country concentration to ensure that the portfolio is suitably diversified and exposure is not overly concentrated in any particular region or sector.
Resource The Company is an investment trust and has no employees. The responsibility for the provision of investment management, marketing and administration services for the Company has been delegated to the AIFM, abrdn Fund Managers Limited, under the management agreement. The terms of the management agreement cover the necessary duties and conditions expected of the Manager. As a result, the Company is dependent on the performance of the AIFM. Risk Unchanged during the year	The Board reviews the performance of the Manager on a regular basis and its compliance with the management contract formally on an annual basis. As part of that review, the Board assesses the Manager's succession plans, risk management framework and marketing activities.
Operational The Company is dependent on a number of third-party providers, in particular those of the Manager, depositary and registrar.  Failure by any service provider to carry out its contractual obligations could have a detrimental impact or disruption on the Company operations, including that caused by information technology breakdown or other cyber-related issues. Risk Unchanged during the year	The Audit & Risk Committee reviews reports from the Manager on its internal controls and risk management (including an annual ISAE Report) and considers assurances from all its other significant service providers on at least an annual basis, including on matters relating to business continuity and cyber security. The Audit & Risk Committee meets representatives from the Manager's Compliance and Internal Audit teams on at least an annual basis and discusses any findings and recommendations relevant to the Company. Written agreements are in place with all third-party service providers. The Manager monitors closely the control environments and quality of services provided by third parties, including those of the Depositary, through service level agreements, regular meetings and key performance indicators. A formal appraisal of the Company's main third-party service providers is carried out by the Management Engagement Committee on an annual basis. The operational requirements of the Company, including its service providers, were subject to rigorous testing during the Covid-19 pandemic, including increased use of online communication and out of office working and reporting.
Gearing As at 31 August 2022 the Company had £60 million of bank borrowings. Gearing has the effect of exacerbating market falls and gains. Risk Unchanged during the year	In order to manage the level of gearing, the Board has set a maximum gearing ratio of 20% of net assets and receives regular updates from the Manager on the actual gearing levels the Company has reached together with the assets and liabilities of the Company and reviews these at each Board meeting.
Regulatory The Company operates in a complex regulatory environment and faces a number of regulatory risks. Serious breaches of regulations, such as the tax rules for investment companies, the UKLA Listing Rules and the Companies Act. Risk Unchanged during the year	The Board receives updates on relevant changes in regulation from the Manager, industry bodies and external advisers and the Board and Audit & Risk Committee monitor compliance with regulations by review of internal control reports from the Manager. Directors are encouraged to attend relevant external training courses.

The principal risks associated with an investment in the Company's shares can be found in the pre-investment disclosure document ("PIDD") published by the Manager, which is available from the Company's website: www.asiadragontrust.co.uk .

Performance

Key Performance Indicators

At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives. The key performance indicators ("KPIs") are established industry measures and are as follows.

KPI	Description
Net asset value and share price (total return)	The Board monitors the NAV and share price performance of the Company over different time periods.  Performance figures for one, three and five years are provided in the Annual Report.
Performance against benchmark	Performance is measured against the Company's benchmark, the MSCI All Country Asia (ex Japan) Index (in sterling terms), on a total return basis.  Charts showing the Company's performance against benchmark by quarter during the financial year, and over one, three and five years, and  are shown in the Annual Report. The Board also considers peer group comparative performance over a range of time periods, taking into consideration the differing investment policies and objectives employed by those companies.
Discount/Premium to net asset value	The discount/premium relative to the NAV represented by the share price is closely monitored by the Board. The objective is to avoid large fluctuations in the discount relative to similar investment companies investing in the region by the use of share buy backs subject to market conditions.  A graph showing the share price discount relative to the NAV is shown in the Annual Report.

Further analysis of the above KPIs is provided in the Chairman's Statement.

Promoting the Success of the Company

The Board is required to report on how it has discharged its duties and responsibilities under section 172 of the Companies Act 2006 (the "s172 Statement").  Under section 172, the Directors have a duty to promote the success of the Company for the benefit of its members as a whole, taking into account the likely long-term consequences of decisions, the need to foster relationships with the Company's stakeholders and the impact of the Company's operations on the environment.

The Company consists of five Directors and has no employees or customers in the traditional sense. As the Company has no employees, the culture of the Company is embodied in the Board of Directors.  The Board seeks to promote a culture of strong governance, high standards of business conduct and to challenge, in a constructive and respectful way, the Company's third-party service providers and advisers, whilst considering the impact on the Company and other stakeholders.

The Board's principal concern has been, and continues to be, the interests of the Company's shareholders and potential investors and the need to act fairly between shareholders. The Manager undertakes an annual programme of meetings with the largest shareholders and investors and reports back to the Board on issues raised at these meetings.  The Investment Manager, who is based in Singapore, will attend such meetings, where possible. The Board encourages all shareholders to attend and participate in the Company's AGM and Pre-AGM Investor Event and shareholders can contact the Directors via the Company Secretary  Shareholders and investors can obtain up-to-date information on the Company through its website and the Manager's information services and have direct access to the Company through the Manager's customer services team or the Company Secretary.

As an investment trust, a number of the Company's functions are outsourced to third parties.  The key outsourced function is the provision of investment management services to the Manager and other third-party providers support the Company by providing secretarial, administration, depositary, custodial, banking and audit services.

The Board undertakes a robust evaluation of the Manager, including investment performance and responsible ownership, to ensure that the Company's objective of providing capital growth for its investors is met, whilst taking ESG factors into account.  The Board typically visits the Manager's offices in Singapore on an annual basis.  This enables the Board to conduct due diligence of the fund management and research teams. Due to the travel restrictions arising from the Covid-19 pandemic during the financial year, the Board undertook a virtual visit to the region to conduct due diligence on the fund management and research teams.  The Board met with the senior management team and the fund management team and attended virtual investee company meetings alongside the Manager.

The portfolio activities undertaken by the Manager on behalf of the Company can be found in the Investment Manager's Review and details of the Board's relationship with the Manager and other third-party providers, including oversight, is provided in the Statement of Corporate Governance.

During the year, the Board focused on the performance of the Manager in achieving the Company's investment objective within an appropriate risk framework.  In addition to ensuring that the Company's investment objective was being pursued, a number of key decisions and actions were undertaken by the Directors as follows:

· The Board has declared a final dividend of 6.5p per Ordinary share (2021 - 6.5p) which, if approved by shareholders at the Annual General Meeting, will be paid on 16 December 2022.

· The Board has continued to consider Board succession planning, as it recognises the benefits of regular Board refreshment, and appointed Matthew Dobbs as a new non-executive director on 1 February 2022, following the retirement of Kathryn Langridge at the Company's AGM in December 2021. 

· To continue the Board's discount control policy through the buyback of shares which provides a degree of liquidity to the market at times when the discount widens.

· The Board continues to believe that the sensible use of modest financial gearing should enhance returns to shareholders over the longer term. The Company has in place loan facilities totalling a commitment of £60 million with The Royal Bank of Scotland International Limited, London Branch.  The facilities, which are unsecured, consist of a two-year fixed facility of £25m, which is fully drawn, and a two year £35m multi-currency revolving credit facility which has also been fully drawn.

· The Board continues to alternate the location of its AGM between Edinburgh and London to allow the Board to physically meet with shareholders in different locations.  In order to encourage as much interaction as possible with shareholders, the Board has agreed to host an Online Shareholder Presentation, in advance of the AGM, to allow as many shareholders as possible to engage with, and ask questions of, the Board.

In summary, the Directors are cognisant of their duties under section 172 and decisions made by the Board take into account the interests of all the Company's key stakeholders and reflect the Board's belief that the long-term sustainable success of the Company is linked directly to its key stakeholders.

Duration

The Company does not have a fixed life, but shareholders are given the opportunity to vote on the continuation of the Company at every fifth Annual General Meeting.  The last continuation vote was passed at the AGM on 15 December 2021.  The frequency of continuation votes was extended from triennial continuation votes to five-yearly continuation votes at the AGM in 2021 in order to align them with the assessment period for performance-related conditional tender offers approved by shareholders at the AGM in 2021.  The next performance related conditional tender offer will cover the period from 1 September 2021 to 31 August 2026 and the continuation vote is due to take place at the AGM in December 2026. 

Board Diversity

The Board's statement on diversity is set out in the Statement of Corporate Governance.  At 31 August 2022 there were three male Directors and two female Directors. 

Environmental, Social and Human Rights Issues

The Company has no employees and therefore no disclosures are required to be made in respect of employees.

More information on socially responsible investment is set out below.

Viability Statement

In accordance with the provisions of the Listing Rules and UK Corporate Governance Code the Board has assessed the viability of the Company. The Company is a long-term investor, and the Board believes it is appropriate to assess the Company's viability over a five year horizon which reflects the Investment Manager's long-term approach.  The Directors believe this period reflects a proper balance between the long-term horizon and the inherent uncertainties of looking to the future. This conclusion is consistent with Going Concern Assessment.

In assessing the viability of the Company, the Directors have carried out a robust assessment of the following factors:

· the principal risks set out in the Strategic Report and the steps available to mitigate these risks;

· the liquidity and diversity (in both sector and geography) of the Company's investment portfolio.  The Company is invested in readily realisable listed securities in normal market conditions and there is a spread of investments held.  Stress testing has confirmed that shares can be easily liquidated, despite the more uncertain and volatile economic environment;

· the level of revenue surplus generated by the Company;

· the level of gearing is closely monitored by the Board. Covenants are actively monitored and there is adequate headroom in place. The Company has a fixed term loan facility of £25 million and a multi-currency revolving loan facility of £35 million in place until July 2024. The Company has the ability to repay its gearing through proceeds from equity sales or renew the facility, depending on market conditions and requirements at that time; and

· the successful passing of the continuation vote at the Company's AGM in 2021, the change of frequency of continuation vote from every three years to every five years (with the next continuation vote due to take place at the AGM in 2026), and the introduction of the five-yearly performance-related conditional tender.

Taking into account all of these factors, the Company's current position and the potential impact of the principal risks and uncertainties faced by the Company, the Board has concluded that it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of this assessment to 31 August 2027.

In making its assessment, the Board has considered that there are other matters that could have an impact on the Company's prospects or viability in the future, including the current rising inflation, recession risk, a further increase in geo-political tension in the Asian region, war in Ukraine, economic shocks or significant stock market volatility caused by other factors, and changes in regulation or investor sentiment.

The Strategic Report has been approved by the Board and signed on its behalf by:

James Will,
Chairman
31 October 2022

Our Manager's Approach to ESG

 

The Company aims to outperform whilst maintaining a better ESG profile and a lower carbon footprint than the benchmark.  In response to a number of questions, the Board has expanded the "Our Manager's Approach to ESG" in the Annual Report to present more information on the Investment Manager's approach to integrating ESG into its investment decision-making and the implications for the Trust.

ESG Highlights for Asia Dragon

· We have been actively integrating ESG into our investment decision-making process for 30 years and believe that ESG factors are financially material and can meaningfully affect a company's performance

· Deep, on the ground ESG resources and expertise enable us to glean insights from company visits and obtain an ESG information advantage

· The Trust's portfolio is ESG AA rated by MSCI

· The Trust's carbon footprint is 48% of its benchmark

What is ESG?

· Environmental factors relate to how a company conducts itself with regard to environmental impact and sustainability. Types of environmental risks and opportunities may include a company's energy and water consumption, waste disposal, land use and development and its carbon footprint.

· Social factors pertain to a company's relationship with its employees, vendors, and a broad set of societal stakeholders. Risks and opportunities include conditions and rates of pay, the company's initiatives on employee attraction and retention, gender discrimination and how a company is managing its supply chain, including for example the risk of forced and child labour.

· Corporate Governance factors may include the corporate decision-making structure, the independence of board members, treatment of minority shareholders, executive compensation and political contributions, capital allocation and the risk of bribery and corruption.

ESG at abrdn in Asia

The abrdn Sustainability Institute, in Asia Pacific, was launched in September 2021.  Bringing together sustainability experts from across the firm, the Institute's objectives are to deliver Asia Pacific-centric sustainability solutions and insights, build an Asia Pacific sustainable investing knowledge community and contribute to progress in regional sustainable investing.

Over the past year, we have ramped up our sustainable investing capabilities in Asia Pacific, doubling our dedicated sustainability resources from five to 10 colleagues across various teams. In addition, under our 'Grow Sustainably' learning & development program, we hired 10 interns for sustainability-focused roles across investment desks, research, marketing and compliance teams in Singapore, Malaysia and Australia and are supporting them through external qualifications. In addition, two scholarships were granted for colleagues to attend online courses.

In May 2022, we held our first ever abrdn Sustainability Week, also celebrating our 30 years of investing in Asia Pacific. The week culminated with the abrdn Sustainability Summit, a one-day hybrid conference bringing together colleagues, clients and partners from Singapore and across the region. Insights from the conference were shared with the broader public in our regular Thinking Aloud articles. We also held our first leadership roundtable in Singapore, to discuss climate change and net-zero alignment in Asia Pacific with key clients and our subject-matter experts. Going forward, we will seek to replicate this roundtable across our key regional markets.

Our Investment Process

Our investment process considers both macro and micro ESG issues.

· Macro ESG factors are broad thematic issues that impact companies and the products and services they provide. These include issues like climate change, access to finance or access to healthcare. These are secular, industry-impacting trends that may present a clear risk or opportunity for a company.

· Micro ESG factors are company/industry specific issues that relate to how a company's products or services are made or delivered.

Our five stages of ESG integration:

· Idea generation: Understanding themes and dynamics inherent in sectors, countries, and companies, we are able to use ESG as a lens to generate new investment ideas for the portfolio. This could include companies that are well placed to help in climate transition or companies that are managing their supply chain in a way that makes them more attractive to global clients.

· Research: ESG disclosure by companies in Asia tends to be lower quality than might be observed in Europe or North America but while such disclosure means it may be challenging to collect information, it also means that extensive company due diligence by us can create investment opportunities.

· Buy / sell: At this stage we must weigh the decision to buy (or sell) a company.  We have a quality threshold for investment and ESG is a fundamental and non-negotiable part of this.

· Portfolio Construction: Whilst a simplification, the better quality a company, and the more conviction we have in the company, the more of that company we might elect to buy (whilst being sensitive to valuations). ESG is a key part of the discussion around 'position sizing', or just how much of a company to buy.

· Engagement: We continue discussing ESG issues with senior management over the course of the investment, both to protect and to enhance the value of investments through constructive challenge and debate around strategy and execution, with the mutual aim of fostering sustainable shareholder returns.

The Importance of Engagement

We believe that informed and constructive engagement helps to foster better companies, enhancing the value of the Trust's investments. We are committed to regular, ongoing engagement with companies to help maintain and enhance their ESG standards into the future. These meetings provide an opportunity to discuss various relevant ESG issues including board composition, remuneration, audit, climate change, labour issues, human rights, bribery and corruption. Companies are strongly encouraged to set clear targets or key performance indicators on all material ESG risks so as to enable performance monitoring. Discussions cover both risk and opportunities; we constructively challenge management teams on issues relating to strategy and execution, as well as capital allocation and return.

Moreover, and since ESG disclosure by Asian companies is often poor, these engagements give us an opportunity to source additional information and potentially to:

· Exploit an information gap: if a company does not disclose ESG information and the market is unable to form a robust view of its quality, its shares may be priced inefficiently. Using our research capabilities including on-site, face to face visits, we are able to develop an informed view of every company and to exploit any pricing inefficiency that we judge may exist.

· Close the information gap: if we own a company that is misunderstood by the market, we can work constructively with the company's management team to encourage improved and enhanced disclosure, allowing the market to better understand, and hence better price, the company's securities.

Considering Trust specific examples, the Trust owns shares in Budweiser Brewing Company APAC Ltd ., a company which listed in Hong Kong in 2019. Whilst we viewed the company as high quality, MSCI had awarded the company a BB rating, an overly negative view of the company in our view (and well below our internal rating). Since listing in 2019 we have engaged with the company to better understand it's approach to issues including water stress management, encouraged the company to disclose more information, and spoken with MSCI to encourage them to recognise the quality of the group. These efforts resulted in a series of upgrades by MSCI, from BB to BBB in October 2020, from BBB to A in December 2021, and from A to AA in June 2022 .

The same is true of China Resources Land , recently upgraded MSCI from BBB to A, continuing a series of upgrades which saw the firm upgraded from B to BB (October 2020), from BB to BBB (August 2021), and from BBB to A (August 2022). This is very pleasing given we had been engaging with the group to improve their disclosure - and hence receive scores that reflected the ESG quality of the firm - for a number of years now.

ESG engagements are conducted with consideration of the 10 principles of the United Nations Global Compact and companies are expected to meet fundamental responsibilities in the areas of human rights, labour, the environment and anti-corruption.

Engagement is not limited to a company's management team. It can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company's customers and clients.  During the period under review the breadth of issues covered in ESG specific company engagements for the Trust covered Climate Change (including air quality and energy management), Environment (including waste and waste management, and supply chain management), Labour Management (including health and safety), Human Risk & Stakeholders, Corporate Behaviour (including Practices and Processes) and Corporate Governance.  :

Measurement of ESG, including our Proprietary ESG Scoring System

Some ESG issues can be quantified, for example the diversity of a board, the carbon footprint of a company, and the level of employee turnover. But not everything that matters can be measured. While diversity can be monitored, measuring inclusion is more of a challenge. Although it is possible to measure the level of staff turnover, it is more challenging to quantify corporate culture. Nevertheless, after researching and analysing a company, and after meeting senior management, we allocate a company an ESG score of between one and five.  This score of one to five is applied across every stock covered globally. Examples of each category and a small sample of the criteria used are detailed below:

1. Best in class	2. Leader	3. Average	4. Below average	5. Laggard
ESG considerations are material part of the company's core business strategy Excellent disclosure Makes opportunities from strong ESG risk management	ESG considerations not market leading Disclosure is good, but not best in class Governance is generally very good	ESG risks are considered as a part of principal business Disclosure in line with regulatory requirements Governance is generally good but some minor concerns	Evidence of some financially material controversies Poor governance or limited oversight of key ESG issues Some issues in treating minority shareholders poorly	Many financially material controversies Severe governance concerns Poor treatment of minority shareholders

We also make use of third party ESG data for two primary reasons:

· To help build a view of a company: third party ESG data provides insights into a company based on that company's disclosure. Whilst that disclosure may have limits there is still merit in reading research from a speciality researcher. We buy in research as a "sense check" against internal analysis to ensure that issues or developments are not missed or weighted incorrectly.

· To provide a proxy for market perspective: We use third party data and scoring as a proxy for market perception and make use of these scores to compare with internal assessments. If the market views a company as low quality and we see the company as not only higher quality but also on a positive trajectory, it may be appropriate to exploit this information asymmetry. The market may react and change perceptions over time as performance and disclosure on ESG issues improves, but we are interested in the journey as much as arrival.

Taking an independent view on ESG allows us to anticipate upgrades and drive change through our engagement. External research agencies primarily use backward looking data to create ESG ratings and in doing so form the market view of a company's ESG credentials. Through our fundamental research we form a forward-looking view of company's ESG credentials and anticipate changes, attempting to take advantage of this inefficiency.

Climate Change

Climate change is one of the most significant challenges of the 21st century and has big implications for investors. The energy transition is underway in many parts of the world, and policy changes, falling costs of renewable energy, and a change in public perception are happening at a rapid pace. Assessing the risks and opportunities of climate change is a core part of the investment process. In particular, we consider:

· Transition risks and opportunities. Governments can take robust climate change mitigation action to reduce emissions and transition to a low-carbon economy. This is reflected in targets, policies and regulation and can have a considerable impact on high-emitting companies.

· Physical risks and opportunities. Insufficient climate change mitigation action will lead to more severe and frequent physical damage. This results in financial implications, including damage to crops and infrastructure and the need for physical adaptation such as flood defences.

We are a signatory to the UN supported Principles for Responsible Investment (PRI) and has aligned our approach to that advocated by the PRI agenda. This aims to promote responsible investment as a way of enhancing returns and better managing risk.

PRI provides an intellectual framework to steer the massive transition of financial capital towards low-carbon opportunities. It also encourages fund managers to demonstrate climate action across four areas: investments; corporate engagement; investor disclosure; and policy advocacy.

Climate scenario analysis proprietary tool - We believe that Climate scenario analysis provides a forward looking, quantitative assessment of the financial impact of climate risks and opportunities on the value of assets under different climate pathways. As a result, we work in partnership with Planetrics to quantify the impact of climate scenarios where a probability weighted view based on a range of off the shelf and bespoke scenarios is taken. This allows us to model a quantitative financial impact under 15 different climate risk scenarios at both the stock level and at the Trust level.

We joined the Net Zero Asset Management (NZAM) initiative to demonstrate our strong support for the global net zero 2050 goal. The core commitment is to support the goal of net zero greenhouse gas ('GHG') emissions by 2050, in line with global efforts to limit warming to 1.5°C ('net zero emissions by 2050 or sooner'). It also commits to support investing aligned with net zero emissions by 2050 or sooner.

The Trust is focused on real-world decarbonisation by investing in transition leaders and climate solutions rather than the fast removal of carbon intensive companies from our portfolios. We engage with the highest carbon-emitting companies across the portfolio through a focused priority watchlist, with a focus on clear expectations and outcomes combined with time-bound milestones.

How does the Asia Dragon portfolio measure up?

Whilst we note above the many qualitative assessments of ESG undertaken, as well as the limitations of external third-party data, there is merit in demonstrating the ESG "quality" of the portfolio versus the reference benchmark. We track the score of the portfolio within MSCI's ESG framework and compare this to a benchmark score. We also track the carbon intensity of the portfolio versus the reference benchmark. 

The Trust's portfolio is ESG AA rated by MSCI. This is higher than the benchmark rating of A, and is an improvement against the equivalent score one year ago, when the Trust was rated A.  The improvement in the Trust's ESG MSCI rating is a result of a mixture of changes in the portfolio as well as MSCI upgrades on the ESG scores of a number of investee companies.

The portfolio contains more ESG "Leaders," and fewer laggards, than the benchmark.

The Trust's carbon footprint is 48% of its benchmark (2021: 66%).  The improvement in the Trust's carbon intensity, versus the prior year, is also driven by changes in the underlying portfolio.

Important Note

The Company does not specifically exclude any sectors from its investment universe. All investments have to pass a quality test and ESG issues are only part of the investment analysis.

We may, for example, invest in, and vigorously engage with, a well-managed, capitalised and valued fossil fuel company that is able to deploy a sizeable balance sheet and lower cost of capital to that of a renewables-only alternative.

It is also important to recognise that there may be periods in the future where it is impossible for us to make sequential annual improvements in some ESG factors like carbon intensity. We intend to maintain a lower carbon footprint relative to the benchmark but there may be times when we invest in companies that currently have a higher footprint but have a commitment to improve this over time. We will monitor and assess their commitment on a regular basis.

abrdn (asia) Limited
31 October 2022

Results

Year's Highs/Lows

	High	Low
Share price (p)	534.0	409.0
Net asset value (p)	589.7	456.9
Discount (%)A	-10.4	-14.8
A Considered to be an Alternative Performance Measure.

Performance (total return)

	1 year return	3 year return	5 year return
	%	%	%
Share priceA	-11.8	+14.7	+30.5
Net asset valueAB	-8.4	+15.6	+29.8
MSCI AC Asia (ex Japan) Index (in sterling terms)	-7.1	+18.2	+21.1
A Considered to be an Alternative Performance Measure. Further details can be found below.
B 1 year and 3 year returns are presented on an undiluted basis; 5 year return presented on a diluted basis as CULS in issue during those periods were "in the money".

Ten Year Financial Record

	Equity	Net asset	Revenue				Expenses as a
	shareholders'	value per	return per	Ordinary	Share price	Dividend per	% of average
	interest	Ordinary share	Ordinary share	share price	discount	Ordinary share	shareholders'
Year ended 31 August	£'000	p	p	p	%	p	funds
2013	550,346	280.26	3.42	254.70	9.1	2.20	1.23
2014	603,077	307.10	3.43	272.50	11.3	2.20	1.23
2015	518,635	267.22	4.13	235.75	11.8	3.00	1.15
2016	664,159	348.62	4.50	302.00	13.4	3.20	1.14
2017	807,330	423.26	4.68	361.00	13.1	3.30	1.03
2018	788,019	421.54	5.03	370.00	12.2	4.00	0.80
2019	589,708	458.03	4.87	402.50	12.1	4.75	0.83
2020	599,431	474.39	5.01	416.00	12.3	4.75	0.89
2021	706,929	566.60	7.36	512.00	9.6	6.50	0.83
2022	614,369	513.32	6.38	446.00	13.1	6.50	0.84

Portfolio

Ten Largest Investments

As at 31 August 2022

	Taiwan Semiconductor Manufacturing Company			Samsung Electronics (Pref)
	As the world's largest pure-play semiconductor manufacturer, TSMC provides a full range of integrated foundry services, along with a robust balance sheet and good cash generation that enables it to keep investing in cutting-edge technology and innovation.			One of the global leaders in the memory chips segment, and a major player in smartphones and display panels as well. It has a vertically integrated business model and robust balance sheet, alongside good free cash flow generation.
	Tencent Holdings			AIA Group
	The internet giant continues to strengthen its ecosystem and we see great potential in its ability to balance its multiple revenue streams and monetise its social media and payment platforms whilst navigating the regulatory landscape.			A leading pan-Asian life insurance company, it is poised to take advantage of Asia's growing affluence, backed by an effective agency force and a strong balance sheet.
	Housing Development Finance Corp			Bank Central Asia
	A steady, well-managed financial services conglomerate with leading positions in mortgage finance, retail banking, life insurance and asset management, supported by a broad distribution network, efficient cost structure and balance sheet quality.			Among the largest non state owned banks in Indonesia, it is well capitalised and has a big and stable base of low-cost deposits that funds its lending, while asset quality has remained solid.
	Alibaba Group			DBS Group
	The Chinese internet group is a leading global e-commerce company with many impressive businesses, including the Taobao and Tmall online platforms in China. It also has interests in logistics, media as well as cloud computing platforms and payments.			The largest Singapore bank, DBS Group is also the best managed with a clear strategy. It is backed by good digital infrastructure, and operates with a strong focus on efficiency of returns, as shown in the distinctively better return on equity than local peers.
	Kweichow Moutai 'A'			Oversea-Chinese Banking Corporation
	Kweichow Moutai is a leading hard liquor (baijiu) producer that boasts a dominant brand and a cash generative business. Its brand value stems from a long history and its rich heritage, which account for its wide domestic business moat.			A well-managed Singapore bank with a solid capital base and good cost-to-income ratio. It is diversified by both geography and service offerings, with interests spanning Southeast Asia, North Asia, wealth management and life assurance as well as its core banking activities.

At 31 August 2022
			Valuation	Total	Valuation
			2022	assets	2021
Company	Industry	Country	£'000	%	£'000
Taiwan Semiconductor Manufacturing Company	Semiconductors & Semiconductor Equipment	Taiwan	59,819	8.8	80,788
Samsung Electronics (Pref)	Technology Hardware, Storage & Peripherals	South Korea	40,687	6.0	66,610
Tencent Holdings	Interactive Media & Services	China	32,211	4.8	53,993
AIA Group	Insurance	Hong Kong	31,254	4.6	39,446
Housing Development Finance Corp	Diversified Financial Services	India	30,440	4.5	32,093
Bank Central Asia	Banks	Indonesia	23,282	3.5	16,968
Alibaba Group	Internet & Direct Marketing Retail	China	19,547	2.9	30,664
DBS Group	Banks	Singapore	18,721	2.8	12,076
Kweichow Moutai 'A'	Beverages	China	16,405	2.4	13,627
Oversea-Chinese Banking Corporation	Banks	Singapore	15,832	2.3	15,494
Top ten investments			288,198	42.6
JD.com 'H'	Internet & Direct Marketing Retail	China	14,640	2.2	-
SBI Life Insurance	Insurance	India	12,894	1.9	10,124
China Tourism Group Duty Free Corp A	Speciality Retail	China	12,816	1.9	12,809
China Merchants Bank A	Banks	China	12,759	1.9	13,077
Hong Kong Exchanges & Clearing	Capital Markets	Hong Kong	11,605	1.7	13,009
Hon Hai Precision Industry	Electronic Equipment, Instruments & Components	Taiwan	11,387	1.7	15,856
Power Grid Corporation	Electric Utilities	India	11,274	1.7	-
Kasikornbank 'F'	Banks	Thailand	10,836	1.6	-
Wuxi Biologics (Cayman)	Life Sciences Tools & Services	China	10,429	1.5	11,531
Ayala Land	Real Estate Management & Development	Philippines	10,392	1.5	8,728
Twenty largest investments			407,230	60.2
Kotak Mahindra Bank	Banks	India	9,895	1.5	10,573
Tata Consultancy Services	IT Services	India	9,832	1.4	17,679
Hindustan Unilever	Personal Products	India	9,429	1.4	6,713
Budweiser Brewing	Beverages	Hong Kong	9,188	1.4	6,463
Yunnan Energy New Material A	Chemicals	China	8,938	1.3	9,417
Astra International	Automobiles	Indonesia	8,873	1.3	-
China Resources Land	Real Estate Management & Development	China	8,779	1.3	10,897
LG Chem	Chemicals	South Korea	8,293	1.2	10,459
Delta Electronic	Electronic Equipment, Instruments & Components	Taiwan	8,183	1.2	9,004
Maruti Suzuki India	Automobiles	India	8,119	1.2	-
Thirty largest investments			496,759	73.4
ShenZhen Mindray Bio-Medical Electronics - A	Health Care Equipment & Supplies	China	7,963	1.2	3,948
Nari Technology	Electrical Equipment	China	7,939	1.2	11,144
Kakao Corp	Interactive Media & Services	South Korea	7,931	1.2	6,370
Contemporary Amperex Technology - A	Electrical Equipment	China	7,623	1.1	-
Longi Green Energy Technology - A	Semiconductors & Semiconductor Equipment	China	7,420	1.1	7,986
Bank of Philippine Islands	Banks	Philippines	6,918	1.0	5,765
Techtronic Industries	Machinery	Hong Kong	6,909	1.0	-
Samsung Biologics	Life Sciences Tools & Services	South Korea	6,766	1.0	6,564
Chacha Food - A	Food Products	China	6,607	1.0	3,805
Ultratech Cement	Construction Materials	India	6,591	1.0	7,959
Forty largest investments			569,426	84.2
Info Edge (India)	Interactive Media & Services	India	6,495	1.0	8,527
Singapore Telecommunications	Diversified Telecommunication	Singapore	6,461	1.0	-
China Vanke 'H'	Real Estate Management & Development	China	6,296	0.9	6,788
Mobile World Investment Corporation	Speciality Retail	Vietnam	6,236	0.9	4,129
Meituan-Dianping Class B	Internet & Direct Marketing Retail	China	6,180	0.9	6,915
Silergy Corp	Semiconductors & Semiconductor Equipment	Taiwan	6,080	0.9	7,702
Sungrow Power Supply Co - A	Electrical Equipment	China	6,056	0.8	4,243
Zhongsheng Group Holdings	Speciality Retail	China	5,356	0.8	-
Vietnam Technological & Commercial Bank	Banks	Vietnam	5,256	0.8	5,507
Tongcheng Elong Holdings	Hotels, Restaurants & Leisure	China	5,255	0.8	3,632
Fifty largest investments			629,097	93.0
Andes Technology	Semiconductors & Semiconductor Equipment	Taiwan	4,657	0.7	-
Siam Cement 'F'	Construction Materials	Thailand	4,621	0.7	5,598
GDS Holdings Class A	IT Services	China	4,610	0.7	3,512
Delhivery	Air Freight & Logistics	India	4,172	0.6	-
ShenZhen Inovance Technology - A	Machinery	China	3,860	0.6	-
Yonyou Network Technology - A	Software	China	3,785	0.6	-
Hangzhou Tigermed Consulting Co A	Life Sciences Tools & Services	China	3,796	0.5	4,378
Glodon Co -A	Software	China	3,779	0.5	4,021
Infosys	IT Services	India	3,402	0.5	-
FSN E-Commerce Ventures	Internet & Direct Marketing Retail	India	3,363	0.5	-
Sixty largest investments			669,142	98.9
PB Fintech	Insurance	India	3,237	0.5	-
			672,379	99.4
Net current assetsB			4,374	0.6
Total assets less current liabilitiesB			676,753	100.0
A Holding includes investment in both 'A' and 'H' shares.
B Excluding bank loan of £35,000,000.
Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings. Values for 2022 and 2021 may not be directly comparable due to purchases and sales made during the year.

Changes in Asset Distribution

	Value at		Sales	Gains/	Value at
	1 September 2021	Purchases	proceeds	(losses)	31 August 2022
Country	£'000	£'000	£'000	£'000	£'000
China	278,083	100,197	110,703	(44,529)	223,048
Hong Kong	73,302	11,293	32,696	7,057	58,956
India	101,770	40,859	22,344	(1,142)	119,143
Indonesia	16,968	8,851	1,517	7,853	32,155
Philippines	14,493	2,357	-	461	17,311
Singapore	34,146	9,522	2,378	(276)	41,014
South Korea	100,336	13,902	28,506	(22,054)	63,678
Sri Lanka	57	-	56	(1)	-
Taiwan	128,184	10,900	38,520	(10,439)	90,125
Thailand	5,598	12,134	2,435	160	15,457
Vietnam	13,857	166	56	(2,475)	11,492
Total investments	766,794	210,181	239,211	(65,385)	672,379
Net current assets	8,942	-	-	(4,568)	4,374
Total assets less current liabilities	775,736	210,181	239,211	(69,953)	676,753

 

Investment Case Studies

Singtel (Singapore)

What does the company do?

Singtel is a telecom operator that has strong market positions in its core markets of Singapore and Australia, and in selective Southeast Asian and Asian emerging markets via its regional investments.

Why do we like the investment?

Singtel operates in a competitive industry, but it is well positioned across all of its markets, where it is often among the top players. We believe it has sustainable competitive advantage. Aside from technical operational know-how and astute financial management, Singtel has a premium brand, economies of scale and a healthy balance sheet. The group is seeing growth from monetising data demand, as its revenue mix migrates from traditional sources to data. We are impressed by the new management, which has been strong in executing strategy, with a focus on profitability and return on invested capital. Management has also been effective at funding capex and investment by re-cycling capital from its balance sheet. Despite a challenging macroeconomic backdrop, Singtel's share price has matched the steady recovery of its core operations where earnings have been resilient and dividend payouts have been improving. We remain positive on Singtel's prospects as it capitalises on new growth opportunities and unlocks value from assets, amid a recovery of demand in the post-Covid economic re-opening.

What is our key area of engagement?

Capital allocation and management because we see a lot of value in the recycling of assets and reallocating capital more effectively towards more productive uses.

What is the result?

Singtel's management has responded positively to our engagement. Broadly, the group has actively recycled its capital by monetising assets that do not align to its vision, and re-investing the proceeds into higher growth areas. With this, Singtel aims to deliver earnings growth and narrow its significant holding company discount. Through 2022, the group has been rebalancing and optimising its portfolio of associate companies, unlocking S$6 billion in capital that will fund mainly 5G capex and growth initiatives. These transactions included the divestment of partial stakes in Australia Tower Network and Airtel Africa; the full disposal of subsidiary Amobee; the sale of a 3.3% direct stake in Bharti Airtel to Bharti Telecom, a JV between Bharti Enterprises and Singtel; and the transfer of 6,000 towers from its Indonesian associate Telkomsel to Mitratel. Singtel also appointed Lendlease to jointly redevelop its Comcentre headquarters into a S$3 billion sustainable workplace. Singtel will hold 51% after a joint-venture company is formed with Lendlease.

China Tourism Group Duty Free Corp (China)

What does the company do?

China Tourism Group Duty Free Corp (CTG) is the
world's biggest travel retail operator, focused on the
duty-free market.

Why do we like the investment?

We think CTG is a good proxy for the rising demand for duty-free cosmetics and skincare in mainland China. It has four major business lines: airport duty free, offshore duty free (Hainan), downtown duty free (pre-departure) and wholesale. The group has benefited from China's decision to loosen restrictions on its lucrative duty-free industry, particularly in the popular tourist island of Hainan, amid a broader supportive policy trend of the government to bring overseas spending back to China. In addition, CTG's growth via acquisitions is likely to result in greater scale and stronger bargaining power with the potential for a margin uplift versus new competition. In the Covid environment, CTG's online business has evolved rapidly, accounting for close to half of overall sales. The pandemic has changed the way consumers shop, and the online business has complemented the traditional shopping model. CTG's ongoing focus on developing its online and digitalisation businesses should also help the company to compete more effectively with other cross-border e-commerce operators. As China re-opens, and over the longer term, we see CTG as well positioned for growth, given its product portfolio, procurement capability and prime store locations.

What is our key area of engagement?

Sustainability and ESG awareness, including carbon emissions, data security, labour practices and supply-chain management.

What is the result?

The group has been responsive to our engagement. It has indicated to us that its suppliers are also taking ESG issues seriously.  It is working with brands to promote sustainability and awareness. CTG is also focusing on customer and stakeholder engagement, and collecting feedback from stakeholders. It aims to raise its MSCI ESG rating from BB to A and ultimately AAA over the next two to three years. CTG has established an ESG management framework and leadership group with the board as the highest decision-making authority for its ESG efforts. Management has been proactively communicating with external ESG rating agencies and we are seeing this bear fruit. MSCI upgraded CTG from BB to BBB, citing its improved data privacy programme and corporate governance practices as driving the upgrade.

Directors' Report

Capital Structure

At 31 August 2022, the Company had 119,686,001 fully paid Ordinary shares of 20p each in issue (2021: 124,766,350) with a further 39,925,676 Ordinary shares of 20p held in treasury (2021: 34,845,327).  During the year to 31 August 2022 5,080,349 Ordinary Shares were bought back and held in treasury (2021: 1,592,103).  Further details on the changes to the capital structure during the year ended 31 August 2022 are provided in the Annual Report. Subsequent to the period end a further 651,351 Ordinary shares have been purchased in the market for treasury. 

The Ordinary shares carry a right to receive dividends which are declared from time to time by an ordinary resolution of the Company (up to the amount recommended by the Board) and to receive any interim dividends which the Directors may resolve the Company should pay. On a winding-up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings. On a show of hands, every Ordinary shareholder present in person, or by proxy, has one vote and, on a poll, every Ordinary shareholder present in person has one vote for each share held and a proxy has one vote for every share represented. 

There are no restrictions concerning the holding or transfer of the Ordinary shares and there are no special rights attached to any of the shares. The Company is not aware of any agreements between shareholders which may result in any restriction on the transfer of shares or the voting rights.

In the event of a winding-up of the Company, the Ordinary shares will rank behind any creditors or prior ranking capital of the Company.

Directors

The Directors of the Company who were in office during the year and up to the date of signing the financial statements were James Will, Gaynor Coley, Matthew Dobbs, Susan Sternglass Noble and Charlie Ricketts.  Biographies of the Directors of the Company are shown in the Annual Report and on the Company's website. 

Directors' and Officers' Liability Insurance

The Company's articles of association indemnify each of the Directors out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. In addition, the Directors have been granted qualifying indemnity provisions by the Company which are currently in force. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

Dividends

The Directors recommend that a final dividend of 6.5p per Ordinary share (2021: 6.5p) be paid on 16 December 2022 to shareholders on the register on 11 November 2022. The ex-dividend date is 10 November 2022.

Management Agreement

The Company has appointed abrdn Fund Managers Limited, a wholly owned subsidiary of abrdn plc, as its alternative investment fund manager. By way of group delegation agreements within the abrdn Group the management of the Company's investment portfolio is delegated to abrdn (Asia) Limited and company secretarial services and administrative services are provided by Aberdeen Asset Managers Limited.

Details of the management agreement, including the notice period and fees paid to the abrdn Group companies during the year ended 31 August 2022, are shown in note 4 to the financial statements. 

Borrowings

The Company has a £35 million multicurrency revolving facility with The Royal Bank of Scotland International Limited, London Branch. The agreement was entered into on 29 July 2022 with a termination date of 29 July 2024.  At the year end this facility had been fully drawn down at a rate of 2. 690%. At the date of this Report the Company had drawn down £25 million at a rate of 3.558 %.  Under the terms of the revolving credit facility, the Company has the option to increase the level of the commitment from £35 million to £50 million at any time.

On 29 July 2022, the Company also entered into a new fixed loan facility agreement of £25 million at an interest rate of 3.5575% with The Royal Bank of Scotland International Limited, London Branch, with a termination date of 29 July 2024. The agreement of this facility incurred an arrangement fee of £7,500, which will be amortised over the life of the loan.

Corporate Governance

The Statement of Corporate Governance, which forms part of the Directors' Report, is contained in the Annual Report.

Going Concern

The Directors have undertaken a rigorous review and believe that it is appropriate to continue to adopt the going concern basis in the preparation of the financial statements.  This conclusion is consistent with the longer term Viability Statement.

The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in normal circumstances are realisable within a short timescale.  The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking and loan covenants. 

The Directors are mindful of the principal risks and uncertainties disclosed above, and have reviewed forecasts detailing revenues and liabilities and undertaken sensitivity analysis.  The Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report.  They have arrived at this conclusion having confirmed that the Company's diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term funding requirements were they to arise. The Directors have also reviewed the revenue and ongoing expenses forecasts for the coming year and considered the Company's Statement of Financial Position as at 31 August 2022 which shows net current liabilities of £30.6million at that date.  The Directors believe that adopting a going concern basis of accounting remains appropriate.

Substantial Share Interests

At 31 August 2022 the Company had been notified or
was aware of the following substantial interests in the Ordinary shares:

Shareholder	Number of Ordinary shares held	% held
City of London Investment Management	34,878,552	29.0
Allspring Global Investments	13,729,896	11.4
Lazard Asset Management	13,199,892	11.0
abrdn Retail Plans	4,941,374	4.1
Rathbones	4,498,286	3.7
Evelyn Partners	4,297,501	3.6

Subsequent to the year end the Company was notified of the following changes:

· On 14 September 2022, City of London Investment Management reduced its holding to 34,625,304 Ordinary Shares (representing 29.0% of the issued share capital of the Company).

· On 23 September 2022, City of London Investment Management increased its holding to 34,670,304 Ordinary Shares (representing 29.0% of the issued share capital of the Company).

· On 12 October 2022, City of London Investment Management reduced its holding to 34,531,922 Ordinary Shares (representing 29.0% of the issued share capital of the Company).

As at the date of this Report, no other changes to the above interests had been notified to the Company.

Independent Auditors

The respective responsibilities of the Directors and the independent auditors in connection with the financial statements appear in the Annual Report.

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditors is unaware and each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditors is aware of that information.

Annual General Meeting

Among the resolutions being put at the Annual General Meeting of the Company to be held on 9 December 2022, the following resolutions will be proposed:

(i)  Section 551 Authority to Allot Shares

Resolution 11, which is an ordinary resolution, will, if approved, give the Directors a general authority to allot new securities up to 33.33% of the Company's issued Ordinary share capital (excluding treasury shares) as at the date of the passing of this resolution (up to a maximum nominal amount of £7.86 million based on the Company's issued share capital as at the date of this Report). Such authority will expire on 29 February 2024 or, if earlier, at the conclusion of the next Annual General Meeting of the Company (unless previously revoked, varied or extended by the Company in general meeting).

(ii)  Limited Disapplication of Pre-emption Rights

Resolution 12, which is a special resolution, seeks to give the Directors power, conditional on Resolution 11 being passed, to allot Ordinary shares and to sell Ordinary shares held in treasury for cash, without first offering them to existing shareholders in proportion to their existing holdings, up to an aggregate nominal value representing 5% of the Company's issued Ordinary share capital as at the date of passing of this resolution (up to a maximum nominal amount of £1.19 million based on the Company's issued share capital as at the date of this Report). 

This authority will expire on 29 February 2024 or, if earlier, at the conclusion of the next Annual General Meeting of the Company (unless previously revoked, varied or extended by the Company in general meeting).

Pursuant to this power, Ordinary shares would only be issued for cash and treasury shares would only be sold for cash at a premium to the net asset value per share (calculated after the deduction of prior charges at market value).

The Directors consider that the powers proposed to be granted by the above resolutions are necessary to provide flexibility to issue shares should they deem it to be in the best interests of shareholders as a whole.

(iii) Purchase of the Company's own Ordinary shares

Since the Company's last AGM the Company has undertaken share buybacks, the details of which are set out in the Annual Report.  Resolution 13, which will be proposed as a special resolution, will renew the Company's authority to make market purchases of its own shares. Shares so repurchased will be cancelled or held "in treasury". In respect of the Company's Ordinary shares which it buys back and does not immediately cancel but, instead, holds in treasury it may sell such shares (or any of them) for cash (or its equivalent); or ultimately cancel the shares (or any of them).

No dividends will be paid on treasury shares, and no voting rights attach to them.

The maximum number of Ordinary shares which may be purchased pursuant to this authority shall be 14.99% of the issued share capital of the Company as at the date of the passing of the resolution (approximately 17.8 million Ordinary shares based on the Company's issued share capital as at the date of this Report). The minimum price which may be paid for an Ordinary share (exclusive of expenses) shall be 20p (being an amount equal to the nominal value of an Ordinary share). The maximum price for an Ordinary share (again exclusive of expenses) shall be an amount being not more than the higher of (i) 105% of the average of the middle market quotations for the Company's Ordinary shares for the five business days immediately preceding the date of purchase and (ii) the higher of the price of the last independent trade and the highest current independent bid relating to an Ordinary share on the trading venue where the purchase is carried out.

This authority, if conferred, will only be exercised if to do so would enhance the net asset value per share and is in the best interests of shareholders generally. This authority will expire on 29 February 2024 or, if earlier, at the conclusion of the next Annual General Meeting of the Company (unless previously revoked, varied or extended by the Company in general meeting). 

(iv)  Notice Period for General Meetings

Resolution 14, which will be proposed as a special resolution, seeks the authority from shareholders for the Company to be able to hold general meetings (other than AGMs) on 14 clear days' notice. The approval will be effective until the conclusion of the Company's next Annual General Meeting, when it is intended that a similar resolution will be proposed. The Company will also need to meet the requirements for electronic voting under the Companies Act 2006 (as amended by the Shareholders' Rights Regulations) before it can call a general meeting on 14 clear days' notice.

Recommendation

The Directors believe that the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and its shareholders as a whole, and recommend that shareholders vote in favour of the resolutions, as the Directors intend to do in respect of their own beneficial shareholdings totalling, in aggregate, 39,114 Ordinary shares, and representing 0.033% of the existing issued Ordinary share capital of the Company.

Greenhouse Gas Emissions

The Company can report that it has no greenhouse gas emissions or other emissions producing sources from its operations. 

Other Information

The rules concerning the appointment and replacement of Directors, amendments to the articles of association and powers to issue or buy back the Company's shares are contained in the articles of association of the Company and the Companies Act 2006. There are no agreements which the Company is party to that might affect its control following a takeover bid; and there are no agreements between the Company and its Directors concerning compensation for loss of office. Other than the management agreement with the Manager, further details of which are set out above, the Company is not aware of any contractual or other agreements which are essential to its business which ought to be disclosed in the Directors' Report.

The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 18 to the Financial Statements.

By order of the Board,
Aberdeen Asset Managers Limited
Secretary
Edinburgh
31 October 2022

Registered office:
1 George Street
Edinburgh EH2 2LL
Company Registration Number: SC106049

Statement of Corporate Governance

Compliance

The Company is committed to high standards of corporate governance. The Board is responsible for good governance, and this statement describes how the Company applies the principles identified in the UK Corporate Governance Code published in 2018 (the "UK Code"), which is available on the Financial Reporting Council's website: www.frc.org.uk , throughout the financial year.

The Company is a member of the Association of Investment Companies ("AIC"), which has published its own Code of Corporate Governance to recognise the special circumstances of investment trusts ( www.theaic.co.uk ) and approved by the FRC.

The Board confirms that, during the year to 31 August 2022, the Company complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below:

1.  the role of the chief executive (A.1.2);

2.  executive Directors' remuneration (D.1.1 and D.1.2); and

3.  the need for an internal audit function (C.3.6).

For the reasons set out in the AIC Code, and as explained in the UK Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. 

The Board

The Board consists of five non-executive Directors. Each Director has the requisite range of business and financial experience to enable the Board to provide clear and effective leadership and proper stewardship of the Company. Charlie Ricketts is the Senior Independent Director ("SID") and is available to shareholders in the event that there are concerns that cannot be resolved through discussion with the Chairman.

Biographical details for each of the Directors, including their significant external appointments, can be found in the Annual Report and on the Company's website.

All Directors are considered to be independent of the Manager and to be free of any material relationship with the Manager which could interfere with the exercise of their independent judgement. Subject both to annual re-election and renewal of the appointment every three years, a Director's tenure of office (including that of the Chairman) will normally be for up to nine years. When making a recommendation for re-electing a Director, the Board will take into account the on-going requirements of the UK Code.

Role and Operation of the Board

The Board normally meets at least five times each year, and more frequently where business needs require. In addition, there is regular contact between the Directors and the Manager throughout the year. The table below sets out the number of routine Board and Committee meetings attended by each Director during the year compared to the number of meetings that each Director was eligible to attend.  Directors also have additional discussions when required to address administrative matters and ad hoc issues between scheduled Board meetings.

Director	Board Meetings	Audit & Risk Committee Meetings¹	Remuneration Committee Meetings	Nomination Committee Meetings	Management Engagement Committee Meetings
James Will	5 (5)	n/a	1 (1)	1 (1)	1 (1)
Gay Coley	5 (5)	3 (3)	1 (1)	1 (1)	1 (1)
Matthew Dobbs2	3 (3)	2 (2)	1 (1)	n/a	n/a
Kathryn Langridge3	1 (2)	0 (1)	n/a	0 (1)	0 (1)
Susan Sternglass Noble	5 (5)	3 (3)	1 (1)	1 (1)	1 (1)
Charlie Ricketts	5 (5)	3 (3)	1 (1)	1 (1)	1 (1)
¹ All Directors are members of the four Committees of the Board with the exception of James Will who can, upon invitation, attend Audit & Risk Committee meetings as an observer. 2 Appointed to the Board on 1 February 2022. 3 Retired from the Board on 15 December 2021.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of, and will give due regard to, the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, socio-economic background, religion, ethnic or national origins or disability in considering the appointment of Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. In doing so, the Board will seek to meet the targets set out in the FCA's Listing Rule 9.8.6R (9)(a), which are set out below.

Although the Company is not required to report against these targets until the 2023 Annual Report, the Board has resolved to do so on a voluntary basis for the year ended 31 August 2022. In accordance with the LR 9.8.6R (9), (10) and (11) the Board has provided the following information in relation to its diversity.

Board Gender as at 31 August 2022

	Number of Board members	Percentage of the Board	Number of senior positions on the Board	Number in executive management	Percentage of executive management
Men	3	60%	2 B	n/a	n/a
Women	2	40% A	1 CD	n/a	n/a

^A meets target of 40% as set out in LR 9.8.6R (9)(a)(i)

^B the positions of Chair of the Board and Senior Independent Director are held by men

^C the positions of Chair of the Audit & Risk Committee is held by a woman

^D meets target of 1 as set out in LR 9.8.6R (9)(a)(ii)

Board Ethnic Background as at 31 August 2022

	Number of Board members	Percentage of the Board	Number of senior positions on the Board	Number in executive management	Percentage of executive management
White British or other White (including minority-white groups)	5	100%	3	n/a	n/a
Minority ethnic	0 A	0%	0	n/a	n/a

^A is less than the target of 1 as asset out in LR 9.8.6R (9)(a)(iii)

As shown in the above table, the Company has not as yet met the target set out in LR 9.8.6R (9)(a)(iii), which formally comes into effect for the financial year ending 31 August 2023, in relation to the ethnic background of the Board. It is the Board's intention that achieving the target as set out in LR 9.8.6R (9)(a)(iii) continues to be a priority during the Board's next succession appointments.

The information included above in relation to the gender and ethnic background of the Board has been obtained following confirmation from the individual Directors.  Although not required to be disclosed under the FCA's Listing Rules, the Board notes that the Company's lead portfolio managers are one male and one female, both of whom are Asian and based in Singapore.

There have been no changes since the year end that have affected the Company's ability to meet the targets set in LR 9.8.6R (9)(a).

Role of the Board

The Board has overall responsibility for the Company's affairs. It delegates, through a management agreement and specific instructions, the day-to-day management of the Company to the Manager, abrdn Fund Managers Limited. The Board has a schedule of matters reserved to it for decision, and the requirement for Board approval on these matters is communicated directly to the senior staff of the Manager.

Such matters include overall strategy, review of investment policy, performance, gearing policy, treasury, corporate governance policy, promotional activities and communications with shareholders.

Full and timely information is provided to the Board to enable the Directors to function effectively and to discharge their responsibilities. At each meeting the Board reviews the following:

· Reports from the Manager covering stockmarket environment, portfolio activities, performance and investment outlook;

· Company financial information including revenue forecasts, balance sheet and gearing position;

· Shareholder analysis and relations;

· Regulatory issues and industry matters;

· Reports from other service providers such as brokers and registrars.

No contract or arrangement subsisted during the period in which any of the Directors was materially interested. The Board monitors, on a regular basis, the direct and indirect interests of each Director and has concluded that there were no situations which gave rise to an interest of a Director which conflicted with the interests of the Company. The Board adopts a zero-tolerance approach to bribery and corruption and has implemented appropriate procedures designed to prevent bribery.

It is the Company's policy to conduct all of its business in an honest and ethical manner.  The Board takes a zero-tolerance approach to facilitation of tax evasion, whether under UK law or under the law of any foreign country.

Directors' Time Commitments

The Company has a policy of ensuring that all non-executive directors of the Company have sufficient time to commit to the respective duties and responsibilities applicable to their particular Board roles.

When making new appointments, the Board takes into account other demands on potential candidates' time and prior to appointment any significant commitments are disclosed with an indication of the time involved.  In the year under review the Board assessed the time commitment of each individual Director on external appointments. Each Director's aggregate time commitment is discussed with him or her as part of the annual appraisal process.

In the year under review, all Directors were considered to have sufficient time to commit to their respective roles on the Board, taking account of their external appointments.

If at any time any Director wishes to accept an additional significant external appointment, the prior approval of the Board is first required. In considering whether to grant such approval, the Board will in particular consider the Director's other time commitments and any potential conflicts of interest.

Board Committees

The Board has appointed four Committees with specific operations as set out below.  The terms of reference, which clearly define the responsibilities of each Committee are available on the Company's website.  The terms of reference of each of the Committees are renewed and re-assessed by the Board for their adequacy on an ongoing basis.

Audit & Risk Committee

The Audit & Risk Committee Report is set out in the Annual Report.

Remuneration Committee

The Remuneration Committee, which comprises all directors and is chaired by Charlie Ricketts, is responsible for determining the level of Directors' fees, having regard to external sources. The terms of reference are available on request and on the Company's website.  Further information may be found in the Directors' Remuneration Report in the Annual Report.

Management Engagement Committee

The Management Engagement Committee, which comprises all the Directors and is chaired by James Will, reviews the performance of the Manager and its compliance with the management agreement.

The Committee keeps the resources of the Manager under constant review, conducts an annual review of the terms and conditions of the management agreement ("Agreement") and undertakes an evaluation of the Manager's performance under this Agreement. In monitoring the performance of the Manager, the Board reviews the investment performance, management processes, risk control mechanisms and promotional activities of the Manager. 

As a result of these reviews, the Board concluded that the Manager has the investment management, promotional, secretarial and administrative skills required for the effective operation of the Company. The Board believes that the Manager has satisfactorily met the terms of the management agreement with the Company, and considers that the continuing appointment of the Manager is in the interests of the Company and its shareholders.  The performance of the Manager remains under close review.

Nomination Committee

A Nomination Committee was established in January 2020, which comprises all Directors and is chaired by James Will, and has responsibility for Board evaluation, succession planning, new appointments and training.

Performance evaluation

An appraisal of each Director, including the Chairman, and of the operation of the Board and its Committees, was undertaken during the year. The Chairman's performance assessment was led by the Senior Independent Director. The Board also reviewed the Chairman's and Directors' other commitments. The Board is satisfied that each Director's performance continues to be effective, and that each remains fully committed to the Company.  The Company has not been a constituent of the FTSE 350 and, as such, an external evaluation of the Board was not undertaken during the financial year. 

Succession planning

In line with the Company's strong commitment to its corporate governance responsibilities, the Board regularly reviews its performance and structure to ensure it has the correct mix of relevant skills, diversity and experience for the effective conduct of the Company's business to complement the existing composition of the Board whilst having due regard for the benefits of diversity, including gender and ethnicity, on the Board.

New Board appointments are identified against the requirements of the Company's business and the need to have a balanced Board and are routinely facilitated by an external search consultant to ensure that a wide range of candidates can be considered.  Following a review of its composition and, taking into account succession plans, the Board engaged Trust Associates to identify potential candidates for a new Board appointment.  This resulted in the appointment of Matthew Dobbs on 1 February 2022.  Trust Associates has previously been engaged by the Company as an external search consultant to identify potential candidates for Board appointments.  Trust Associates has no other connection with the Company or any of the Directors. 

The Board has implemented the provisions of the UK Code whereby all Directors of the Company will stand for re-election on an annual basis. The Board has reviewed the skills and experience of each Director, and supports their re-election.  Matthew Dobbs, who was appointed during the financial year, will stand for election.

New Directors are given appropriate induction from the Manager covering legal responsibilities, the Manager's operations and investment trust industry matters. All Directors are entitled to receive appropriate and relevant training. If necessary, there is a procedure for a Director
to take independent professional advice at the Company's expense.

Relations with Shareholders

The Directors place great importance on communication with shareholders. Besides shareholders, the report and financial statements are widely distributed to other parties who have an interest in the Company's performance. Shareholders and potential investors may obtain up-to-date information on the Company through the Manager's freephone information service, and the Company responds to letters from shareholders on a wide range of issues. The Company's annual and half-yearly reports and other publications can be downloaded from the Company's website, www.asiadragontrust.co.uk .

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (either the Company Secretary or the Manager) in situations where direct communication is required. The Chairman meets with representatives of the major shareholders during the financial year on an annual basis in order to gauge their views. The Manager maintains regular contact with institutional shareholders and feeds back shareholder views to the Board.  

As set out in the Chairman's Statement, the Board will be hosting an Online Shareholder Presentation at 11:00am on 21 November 2022 in order to encourage as much interaction as possible with the Company's shareholders.  Full details on how to register for the online event can be found on the Company's website at www.asiadragontrust.co.uk .

It is the intention of the Board that, in the ordinary course, the notice of the Annual General Meeting included within the annual report and financial statements is normally sent out at least 20 working days in advance of the meeting. The Board encourages shareholders to attend and participate at the Company's AGM. At the AGM, the Investment Manager provides a presentation at the meeting outlining the key investment issues that affect the Company and all shareholders have the opportunity to raise questions. Proxy voting figures for each resolution are announced to the meeting after voting on a show of hands and details are available on the Company's website.

Environmental, Social and Governance ("ESG") Investing

Our Investment Manager's approach to ESG matters is included above.

The UK Stewardship Code and Proxy Voting

The Company supports the UK Stewardship Code, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. abrdn plc is a tier 1 signatory of the UK Stewardship Code which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment return to shareholders. While delivery of stewardship activities has been delegated to the Manager, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company's behalf.

The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual 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 are required to prepare the financial statements in accordance with UK accounting standards, 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.  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 /Director's report include 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 report and financial statements, 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. 

For Asia Dragon Trust plc
James Will,
Chairman
31 October 2022

Statement of Comprehensive Income

			Year ended 31 August 2022					Year ended 31 August 2021
			Revenue	Capital		Total		Revenue	Capital		Total
		Notes	£'000	£'000		£'000		£'000	£'000		£'000
(Losses)/gains on investments held at fair value through profit or loss		10	-	(65,385)		(65,385)		-	119,603		119,603
Currency gains/(losses)			-	455		455		-	(573)		(573)
Income		3	11,127	-		11,127		13,074	-		13,074
Investment management fee		4	(1,097)	(3,290)		(4,387)		(1,194)	(3,580)		(4,774)
Administrative expenses		5	(1,007)	-		(1,007)		(1,102)	-		(1,102)
Net return/(loss) before finance costs and taxation			9,023	(68,220)		(59,197)		10,778	115,450		126,228
Interest payable and similar charges		6	(266)	(798)		(1,064)		(189)	(567)		(756)
Return/(loss) before taxation			8,757	(69,018)		(60,261)		10,589	114,883		125,472
Taxation		7	(967)	707		(260)		(1,349)	(2,942)		(4,291)
Return/(loss) after taxation			7,790	(68,311)		(60,521)		9,240	111,941		121,181
Return per share (pence)		9	6.38	(55.91)		(49.53)		7.36	89.24		96.60
The total column of this statement represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the financial statements. Statement of Financial Position
							As at			As at
							31 August 2022			31 August 2021
					Notes		£'000			£'000
	Non-current assets
	Investments at fair value through profit or loss				10		672,379			766,794
	Current assets
	Debtors and prepayments				11		2,693			5,782
	Cash and cash equivalents				12		5,094			5,000
							7,787			10,782
	Creditors: amounts falling due within one year
	Bank loan				13(a)		(35,000)			(64,998)
	Other creditors				13(b)		(3,413)			(1,840)
							(38,413)			(66,838)
	Net current liabilities						(30,626)			(56,056)
	Creditors: amounts falling due after more than one year
	Bank loan				13(a)		(24,983)			-
	Deferred tax liability on Indian capital gains				13(c)		(2,401)			(3,809)
							(27,384)			(3,809)
	Net assets						614,369			706,929
	Share capital and reserves
	Called-up share capital				14		31,922			31,922
	Share premium account						60,416			60,416
	Capital redemption reserve						28,154			28,154
	Capital reserve				15		453,273			545,582
	Revenue reserve						40,604			40,855
	Total shareholders' funds						614,369			706,929
	Net asset value per Ordinary share (pence)				16		513.32			566.60
	The financial statements were approved by the Board of Directors and authorised for issue on 31 October 2022 and were signed on its behalf by:
	James Will
	Chairman
	The accompanying notes are an integral part of the financial statements.

Statement of Changes in Equity

For the year ended 31 August 2022
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 September 2021		31,922	60,416	28,154	545,582	40,855	706,929
Return after taxation		-	-	-	(68,311)	7,790	(60,521)
Buyback of Ordinary shares for treasury	14	-	-	-	(23,998)	-	(23,998)
Dividend paid	8	-	-	-	-	(8,041)	(8,041)
Balance at 31 August 2022		31,922	60,416	28,154	453,273	40,604	614,369
For the year ended 31 August 2021
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 September 2020		31,922	60,416	28,154	441,359	37,580	599,431
Return after taxation		-	-	-	111,941	9,240	121,181
Buyback of Ordinary shares for treasury	14	-	-	-	(7,718)	-	(7,718)
Dividend paid	8	-	-	-	-	(5,965)	(5,965)
Balance at 31 August 2021		31,922	60,416	28,154	545,582	40,855	706,929
The capital reserve includes investment holding gains amounting to £144,902,000 (2021 - £241,988,000), as disclosed in note 10.
The Revenue reserve and the part of the Capital reserve represented by realised capital gains represent the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.

Statement of Cash Flows
				Year ended	Year ended
				31 August 2022	31 August 2021
			Notes	£'000	£'000
	Operating activities
	Net return before taxation			(60,261)	125,472
	Adjustment for:
	Losses/(gains) on investments			65,385	(119,603)
	Currency (gains)/losses			(455)	573
	(Increase)/decrease in accrued dividend income			(232)	568
	(Increase)/decrease in other debtors			(466)	14
	Increase in other creditors			1,473	176
	Interest payable and similar charges		6	1,064	756
	Scrip dividends included in investment income			-	(587)
	Overseas withholding tax			(1,323)	(1,767)
	Cash from operations			5,185	5,602
	Interest paid			(1,013)	(749)
	Net cash inflow from operating activities			4,172	4,853
	Investing activities
	Purchases of investments			(210,345)	(259,733)
	Sales of investments			243,361	229,021
	Capital gains tax on sales			(701)	(187)
	Net cash inflow/(outflow) from investing activities			32,315	(30,899)
	Financing activities
	Equity dividends paid		8	(8,041)	(5,965)
	Buyback of Ordinary shares			(23,807)	(7,806)
	Repayment of bank loans			(65,000)	-
	Drawdown of bank loans			60,000	34,000
	Net cash (used in)/from financing activities			(36,848)	20,229
	Decrease in cash and cash equivalents			(361)	(5,817)
	Analysis of changes in cash and cash equivalents during the year
	Opening balance			5,000	11,390
	Effect of exchange rate fluctuations on cash held			455	(573)
	Decrease in cash and cash equivalents as above			(361)	(5,817)
	Closing cash and cash equivalents			5,094	5,000
	Represented by:
	Money market funds			1,000	500
	Cash and short term deposits			4,094	4,500
				5,094	5,000
	The accompanying notes are an integral part of the financial statements. Notes to the Financial Statements For the year ended 31 August 2022
	1.	Principal activity
		The Company is a closed-end investment company, registered in Scotland No SC106049, with its Ordinary shares being listed on the London Stock Exchange.

2.	Accounting policies
	(a)	Basis of preparation . The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Companies Act 2006 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'  issued in April 2021. The financial statements are prepared in Sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The accounting policies applied are unchanged from the prior year and have been applied consistently.
		The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in normal circumstances are realisable within a short timescale. The Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report. The revenue forecast for the coming year demonstrates that the Company has the ability to cover its expenses. The Company has a two year loan facility of £35 million multicurrency revolving facility in place until July 2024. The Company also has in place a fixed loan facility of £25 million in place until July 2024. The Board has set limits for borrowing and regularly reviews the Company's gearing levels and its compliance with bank covenants. A replacement option would be sought in advance of the expiry of the facility in July 2024, or, should the Board decide not to renew this facility, any outstanding borrowing would be repaid through the proceeds of equity sales as required. Shareholders are given the opportunity to vote on the continuation of the Company every five years. The last continuation vote held in December 2021 was passed, and the next continuation vote is due to be held in December 2026.  The Board has considered the ongoing impact of Covid-19 on the Company and its underlying portfolio and believes that it will continue to have a limited financial impact on the Company's operational resources and existence. Given that the Company's portfolio comprises primarily "Level One" assets (listed on a recognisable exchange and realisable within a short timescale), and the Company's relatively low level of gearing, the Directors believe that adopting a going concern basis of accounting remains appropriate.
		The Company's investments and borrowings are made in a number of currencies, however the Board considers the Company's functional currency to be Sterling. In arriving at this conclusion, the Board considered that the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom, principally having its shareholder base in the United Kingdom, pays dividends and expenses in Sterling. Consequently, the Board also considers the Company's presentational currency to be Sterling.
		Significant accounting judgements, estimates and assumptions. The preparation of financial statements requires the consideration of certain significant accounting judgements, estimates and assumptions when management may need to exercise its judgement in the process of applying the accounting policies and these are continually evaluated. The Directors do not consider there to be any significant estimates within the financial statements.

	(b)	Investments. Listed investments have been designated upon initial recognition as held at fair value through profit or loss. Investments are recognised and de-recognised on the trade date at fair value, which is generally deemed to be the cost of the investment at that point. Subsequent to initial recognition, investments are valued at fair value, which for listed investments is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included as a capital item in the Income Statement and are ultimately recognised in the capital reserve.
	(c)	Income. Dividends (other than special dividends), including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the foregone cash dividend is recognised as income. Any excess in the value of the shares received over the amount of cash dividend foregone is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.
	(d)	Expenses. All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of Comprehensive Income except as follows:
		- expenses directly relating to the acquisition or disposal of an investment, which are charged to the capital column of the Statement of Comprehensive Income and are separately identified and disclosed in note 10; and
		- the Company charges 75% of investment management fees and finance costs to the capital column and 25% to the revenue column of the Statement of Comprehensive Income, in accordance with the Board's expected long term return in the form of capital gains and income respectively from the investment portfolio of the Company.
	(e)	Taxation. The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
		Deferred tax is recognised in respect of all temporary differences at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Statement of Financial Position date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise, using enacted tax rates that are expected to apply at the date the deferred tax position is unwound.

	(f)	Nature and purpose of reserves
		Called-up share capital. The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. This reserve is not distributable.
		Share premium account . The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 20p. This reserve is not distributable.
		Capital redemption reserve. The capital redemption reserve arose when Ordinary shares were redeemed, and subsequently cancelled by the Company, at which point an amount equal to the par value of the Ordinary share capital was transferred from the Ordinary share capital to the capital redemption reserve. This reserve is not distributable.
		Capital reserve . This reserve reflects any gains or losses on investments realised in the period along with any increases and decreases in the fair value of investments held that have been recognised in the Statement of Comprehensive Income. The realised gains part of reserve is distributable for the purpose of funding share buybacks and dividends.
		Revenue reserve. This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. The amount of the revenue reserve as at 31 August 2022 may not be available at the time of any future distribution due to movements between 31 August 2022 and the date of distribution.
		When making a distribution to shareholders, the Directors determine profits available for distribution by reference to Guidance on realised and distributable profits under the Companies Act 2006 issued by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those dividends meeting the definition of qualifying consideration within the guidance and on available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to any future restrictions or limitations at the time such distribution is made.

	(g)	Foreign currency. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the reporting date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Statement of Comprehensive Income and are then transferred to the capital reserve. Unrealised and realised gains and losses on foreign currency movements on investments held through profit or loss are recognised in the capital column of the Statement of Comprehensive Income.
	(h)	Dividends payable. Final dividends are recognised in the financial statements in the period in which Shareholders approve them.
	(i)	Treasury shares. When the Company purchases its Ordinary shares to be held in treasury, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction from the capital reserve. When these shares are sold subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is transferred to the share premium account and any resulting deficit is transferred from the capital reserve.
	(j)	Cash and cash equivalents. Cash comprises cash at bank and in hand. Cash equivalents are short-term, comprising money market funds and highly-liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value.
	(k)	Borrowings. Bank loans are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. Subsequently, they are measured at amortised cost using the effective interest method. Finance charges are accounted for on an accruals basis using the effective interest rate method and are charged 25% to revenue and 75% to capital.

3.	Income
		2022	2021
		£'000	£'000
	Income from investments
	Overseas dividend income	11,098	12,474
	Scrip dividends	-	587
		11,098	13,061
	Other income
	Deposit interest	12	-
	Interest from money market funds	17	3
	Other income	-	10
		29	13
	Total income	11,127	13,074

4.	Investment management fee
		2022			2021
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	1,097	3,290	4,387	1,194	3,580	4,774
	Management fees paid to abrdn Fund Managers Limited ("aFML" or "the Manager") are calculated at 0.85% per annum on net assets up to £350 million and 0.50% per annum thereafter. Management fees are calculated and payable on a quarterly basis.
	Net assets, per the management agreement, and for the purposes of the management fee calculation exclude long term borrowings less (i) the value of any investment funds managed by the Manager and (ii) 50% of the value of any investment funds managed or advised by investment managers other than the Manager. During the year and at the year end, the Company held £1,000,000 (2021 - £500,000) in Aberdeen Standard Liquidity Fund (Lux) - Sterling Fund which is managed and administered by abrdn. The Company pays a management fee on the value of these holdings but no fee is chargeable at the underlying fund level.
	The balance due to the Manager at the year end was £2,125,000 (2021 - £1,190,000).
	The management agreement is terminable by the Company on three months' notice or in the event of a change of control in the ownership of the Manager. The notice period required to be given by the Manager is six months.

5.	Administrative expenses
		2022	2021
		£'000	£'000
	Promotional activities	214	200
	Directors' fees	171	176
	Custody fees	261	289
	Depositary fees	61	69
	Auditors remuneration: Fees payable to the Company's auditor for
	- audit of the Company's annual report	35	30
	Legal and professional fees	(6)	61
	Other expenses	271	277
		1,007	1,102
	The Company has an agreement with abrdn Fund Managers Limited for the provision of promotional activities. The total fees paid and payable under the agreement were £214,000 (2021 - £200,000) and the sum due to the Manager at the year end was £133,000 (2021 - £34,000).
	No pension contributions were made in respect of any of the Directors.
	The Company does not have any employees.

6.	Interest payable and similar charges
		2022			2021
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Interest on bank loans	266	798	1,064	189	567	756

7.	Taxation
			2022			2021
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Indian capital gains tax charge on sales	-	701	701	-	187	187
		Overseas tax suffered	967	-	967	1,349	-	1,349
		Total current tax charge for the year	967	701	1,668	1,349	187	1,536
		Movement of deferred tax liability on Indian capital gains	-	(1,408)	(1,408)	-	2,755	2,755
		Total tax charge for the year	967	(707)	260	1,349	2,942	4,291
		On 1 April 2018, the Indian Government withdrew an exemption from capital gains tax on investments held for twelve months or longer. Accordingly, the Company has recognised a deferred tax liability of £2,401,000 (2021 - £3,809,000) on capital gains which may arise if Indian investments are sold.
		The Company has not recognised a deferred tax asset of £25,673,000 (2021 - £24,071,000) arising as a result of excess management expenses and non-trading loan relationship deficits. These expenses will only be utilised if the Company has profits chargeable to UK corporation tax in the future. The Finance Act 2021 received Royal Assent on 10 June 2021 and the rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset.
	(b)	Factors affecting the tax charge for the year . The tax assessed for the year is lower (2021 - lower) than the effective rate of corporation tax in the UK.
				2022			2021
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Return before taxation	8,757	(69,018)	(60,261)	10,589	114,883	125,472
		Effective rate of corporation tax at 19.00% (2021 - 19.00%)	1,664	(13,113)	(11,449)	2,012	21,828	23,840
		Effects of:
		Losses/(gains) on investments not taxable	-	12,423	12,423	-	(22,725)	(22,725)
		Currency (gains)/losses not taxable	-	(86)	(86)	-	109	109
		Other non-taxable income	(2,109)	-	(2,109)	(2,482)	-	(2,482)
		Expenses not deductible for tax purposes	4	-	4	3	-	3
		Increase in excess expenses and loan relationship deficit	441	776	1,217	467	788	1,255
		Indian capital gains tax charge on sales	-	701	701	-	187	187
		Movement in deferred tax liability on Indian capital gains	-	(1,408)	(1,408)	-	2,755	2,755
		Net overseas tax suffered	967	-	967	1,349	-	1,349
		Total tax charge for year	967	(707)	260	1,349	2,942	4,291

8.	Dividends
	In order to comply with the requirements of Sections 1158 -1159 of the Corporation Tax Act 2010 and with company law, the Company is required to make a final dividend distribution.
	The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
	The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158 - 1159 are considered. The revenue available for distribution by way of dividend for the year is £7,790,000 (2021 - £9,240,000).
		2022	2021
		£'000	£'000
	Proposed final dividend for 2022 - 6.50p per Ordinary share (2021 - 6.50p)	7,737	8,041
	The amounts reflected above for the cost of the proposed final dividend for 2022 is based on 119,034,650 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report.
	The final dividend will be paid on 16 December 2022 to shareholders on the register at the close of business on 11 November 2022.

9.	Return per share
		2022		2021
		£'000	pence	£'000	pence
	Revenue return	7,790	6.38	9,240	7.36
	Capital return	(68,311)	(55.91)	111,941	89.24
	Total return	(60,521)	(49.53)	121,181	96.60
	Weighted average Ordinary shares in issue		122,191,909		125,442,821

10.	Investments at fair value through profit or loss
		2022	2021
		£'000	£'000
	Opening book cost	524,806	441,336
	Opening investment holding gains	241,988	179,491
	Opening fair value	766,794	620,827
	Analysis of transactions made during the year
	Purchases at cost	210,181	257,402
	Sales - proceeds	(239,211)	(231,038)
	(Losses)/gains on investments	(65,385)	119,603
	Closing fair value	672,379	766,794
	Closing book cost	527,477	524,806
	Closing investment gains	144,902	241,988
	Closing fair value	672,379	766,794
		2022	2021
		£'000	£'000
	Investments listed on an overseas investment exchange	672,379	766,794
	The Company received £239,211,000 (2021 - £231,038,000) from investments sold in the period. The book cost of these investments when they were purchased was £207,510,000 (2021 - £173,932,000). These investments have been revalued over time and until they were sold any unrealised (losses)/gains were included in the fair value of investments.
	Transaction costs . During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Statement of Comprehensive Income. The total costs were as follows:
		2022	2021
		£'000	£'000
	Purchases	273	313
	Sales	495	466
		768	779
	The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.

11.	Debtors and prepayments
		2022	2021
		£'000	£'000
	Accrued income	339	137
	Overseas withholding tax recoverable	1,455	1,062
	Amounts due from brokers	-	4,150
	Other debtors and prepayments	899	433
		2,693	5,782

12.	Cash and cash equivalents
		2022	2021
		£'000	£'000
	Cash at bank and in hand	4,094	4,500
	Money market funds	1,000	500
		5,094	5,000

13.	Creditors
			2022	2021
	(a)	Bank loans	£'000	£'000
		Falling due within one year	35,000	65,000
		Falling due in more than one year	25,000	-
		Unamortised expenses	(17)	(2)
			59,983	64,998
		The Company has a £50,000,000 multi-currency revolving facility with The Royal Bank of Scotland International Limited, London Branch. The agreement was entered into on 29 July 2022 with a termination date of 29 July 2024. At the year end £35,000,000 of this facility had been drawn down at a rate of 2.690% which matured on 26 September 2022. At the date of this Report the Company had drawn down £25,000,000 at a rate of 3.558%.
		On 29 July 2022, the Company entered into a new fixed loan facility agreement of £25,000,000 at an interest rate of 3.5575% with The Royal Bank of Scotland International Limited, London Branch, with a termination date of 29 July 2024. The facility has been drawn down in full. The agreement of this facility incurred an arrangement fee of £18,140, which will be amortised over the life of the loan.
		The agreements contains the following covenants:
		- the net asset value of the Company shall not at any time be less than £375 million.
		- consolidated gross borrowings expressed as a percentage of adjusted portfolio value shall not exceed 25% at any time.
		- the number of eligible investments shall not be less than 30 at any time.
		All covenants have been complied with throughout the year.
			2022	2021
	(b)	Other creditors - falling due within one year	£'000	£'000
		Amounts due to brokers	17	181
		Amounts due for the purchase of own shares to treasury	270	79
		Other amounts due	3,126	1,580
			3,413	1,840
			2022	2021
			£'000	£'000
	(c)	Deferred tax liability on Indian capital gains	2,401	3,809

14.	Called-up share capital
			2022	2021
			£'000	£'000
	Allotted, called-up and fully paid:
	Ordinary shares of 20p (2021: 20p)		23,937	24,953
	Treasury shares		7,985	6,969
			31,922	31,922
		Ordinary	Treasury	Total
		shares	shares	shares
		Number	Number	Number
	At 31 August 2021	124,766,350	34,845,327	159,611,677
	Buyback of own shares	(5,080,349)	5,080,349	-
	At 31 August 2022	119,686,001	39,925,676	159,611,677
	During the year 5,080,349 Ordinary shares of 20p each were purchased to be held in treasury by the Company (2021 - 1,592,103) at a total cost of £23,998,000 (2021 - £7,718,000). At the year end 39,925,676 (2021 - 34,845,327) Ordinary shares of 20p each were held in treasury, which represents 25% (2021 - 21.8%) of the Company's total issued share capital at 31 August 2022.
	Since the year end a further 651,351 Ordinary shares of 20p each have been purchased by the Company at a total cost of £2,724,000 all of which were held in treasury.

15.	Capital reserve
		2022	2021
		£'000	£'000
	At 1 September 2021	545,582	441,359
	Movement in fair value gains	(65,385)	119,603
	Foreign exchange movement	455	(573)
	Buyback of Ordinary shares for treasury	(23,998)	(7,718)
	Expenses allocated to capital	(4,088)	(4,147)
	Movement in capital gains tax charge	707	(2,942)
	As at 31 August 2022	453,273	545,582
	The capital reserve includes investment holding gains amounting to £144,902,000 (2021 - £241,988,000), as disclosed in note 10.

16.	Net asset value per share
	The net asset value per share and the net asset values attributable to the Ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows:
		2022	2021
	Net assets attributable to the Ordinary shareholders (£'000)	614,369	706,929
	Number of Ordinary shares in issueA	119,686,001	124,766,350
	Net asset value per share (p)	513.32	566.60
	A Excluding shares held in treasury.

17.	Analysis of changes in net debt
		At	Currency		Non-cash	At
		1 September 2021	differences	Cash flows	movements	31 August 2022
		£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	5,000	455	(361)	-	5,094
	Debt due within one year	(64,998)	-	30,000	(2)	(35,000)
	Debt due after one year	-	-	(25,000)	17	(24,983)
		(59,998)	455	4,639	15	(54,889)
		At	Currency		Non-cash	At
		1 September 2020	differences	Cash flows	movements	31 August 2021
		£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	11,390	(573)	(5,817)	-	5,000
	Debt due within one year	(6,000)	-	(34,000)	(24,998)	(64,998)
	Debt due after one year	(24,995)	-	-	24,995	-
		(19,605)	(573)	(39,817)	(3)	(59,998)
	A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.

18.	Financial instruments
	Risk management . The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments comprise securities and other investments, cash balances, bank loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.
	The Board has delegated the risk management function to aFML under the terms of its management agreement with aFML (further details of which are included under note 4). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such approach has been applied throughout the year and has not changed since the previous accounting period. The numerical disclosures exclude short-term debtors and creditors.
	Risk management framework . The directors of aFML collectively assume responsibility for aFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.
	aFML is a fully integrated member of the abrdn Group (the "Group"), which provides a variety of services and support to aFML in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to abrdn (Asia) Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.
	The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Chief Risk Officer, who reports to the Group's Chief Executive Officer. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD").
	The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group's Chief Executive Officer and to the Audit and Risk Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.
	The Group's corporate governance structure is supported by several committees to assist the board of directors of abrdn Group, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described on the committees' terms of reference.
	Risk management . The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.
	Market risk . The fair value of, or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, currency risk and other price risk. The Company is exposed to gearing risk which has the effect of exacerbating market falls and gains. The level of net gearing is shown above. Details of the loan facilities the Company has in place can be found in note 13.

	Interest rate risk . Interest rate movements may affect the level of income receivable on cash deposits.
	Management of the risk . The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
	I nterest risk profile. The interest rate risk profile of the portfolio of the Company's financial assets and liabilities, excluding equity holdings which are all non-interest bearing, at the reporting date was as follows:
		Weighted average	Weighted
		period for which	average	Fixed	Floating
		rate is fixed	interest rate	rate	rate
	At 31 August 2022	Years	%	£'000	£'000
	Assets
	Sterling	-	0.40	-	3,852
	Hong Kong Dollars	-	-	-	5
	Indian Rupee	-	-	-	4
	Sri Lanka Rupee	-	-	-	-
	Taiwanese Dollar	-	-	-	-
	Thailand Baht	-	-	-	-
	US Dollar	-	-	-	9
	Vietnamese Dong	-	-	-	1,224
	Total assets	n/a	n/a	-	5,094
	Liabilities
	Short-term loan - £35,000,000	0.07	2.69	35,000	-
	Long-term loan - £25,000,000	1.91	3.56	24,983	-
		-	-	59,983	-
		Weighted average	Weighted
		period for which	average	Fixed	Floating
		rate is fixed	interest rate	rate	rate
	At 31 August 2021	Years	%	£'000	£'000
	Assets
	Sterling	-	0.04	-	2,991
	Hong Kong Dollars	-	-	-	224
	Indian Rupee	-	-	-	24
	Sri Lanka Rupee	-	-	-	1,553
	Taiwanese Dollar	-	-	-	97
	Thailand Baht	-	-	-	100
	US Dollar	-	-	-	9
	Vietnamese Dong	-	-	-	2
	Total assets	n/a	n/a	-	5,000
	Liabilities
	Short-term loan - £35,000,000	0.07	1.00	40,000	-
	Long-term loan - £25,000,000	0.91	1.61	24,998	-
		-	-	64,998	-
	The weighted average interest rate is based on the current yield of each asset, weighted by its market value.
	The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.
	The Company's equity portfolio and short-term debtors and creditors have been excluded from the above tables.
	Interest rate sensitivity. Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit.

	Foreign currency risk . The majority of the Company's investment portfolio is invested in overseas securities and the Statement of Financial Position, therefore, can be significantly affected by movements in foreign exchange rates.
	Management of the risk . It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investments with foreign currency borrowings.
	The Statement of Comprehensive Income is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.
	Foreign currency risk exposure by currency of listing of incorporation is as follows:
		31 August 2022			31 August 2021
			Net	Total		Net	Total
		Overseas	monetary	currency	Overseas	monetary	currency
		investments	assets	exposure	investments	assets	exposure
		£'000	£'000	£'000	£'000	£'000	£'000
	Chinese YuanA	223,048	-	223,048	278,083	-	278,083
	Hong Kong DollarA	58,956	(12)	58,944	73,302	43	73,345
	Indian Rupee	119,143	4	119,147	101,770	24	101,794
	Indonesian Rupiah	32,155	-	32,155	16,968	1,415	18,383
	Korean Won	63,678	-	63,678	100,336	2,735	103,071
	Philippine Peso	17,311	-	17,311	14,493	-	14,493
	Singapore Dollar	41,014	-	41,014	34,146	-	34,146
	Sri Lankan Rupee	-	-	-	57	1,553	1,610
	Taiwanese Dollar	90,125	-	90,125	128,184	97	128,281
	Thailand Baht	15,457	-	15,457	5,598	100	5,698
	US DollarA	-	9	9	-	9	9
	Vietnamese Dong	11,492	1,224	12,716	13,857	2	13,859
		672,379	1,225	673,604	766,794	5,978	772,772
	Sterling	-	3,582	3,582	-	2,912	2,912
	Total	672,379	4,807	677,186	766,794	8,890	775,684
	A If currency denomination of overseas investments is used then exposure for Chinese Yuan is £97,032,000 (2021 - £91,958,000), for Hong Kong Dollar £184,972,000 (2021 - £255,915,000) and for US Dollar £nil (2021 - £10,088,000).
	Foreign currency sensitivity . The following table details the Company's sensitivity to a 10% increase and decrease in sterling against the foreign currencies in which the Company has exposure as set out in the foreign currency risk table above.
						2022	2021
						£'000	£'000
	Chinese Yuan					22,305	27,808
	Hong Kong Dollar					5,894	7,335
	Indian Rupee					11,915	10,179
	Indonesian Rupiah					3,215	1,838
	Korean Won					6,368	10,307
	Philippine Peso					1,731	1,449
	Singapore Dollar					4,101	3,415
	Sri Lankan Rupee					-	161
	Taiwanese Dollar					9,012	12,828
	Thailand Baht					1,546	570
	US Dollar					1	1
	Vietnamese Dong					1,272	1,386
						67,360	77,277
	Other price risk . Other price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
	Management of the risk . It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.
	Other price risk sensitivity. If market prices at the reporting date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 August 2022 would have increased/decreased by £67,238,000 (2021 - increased/decreased by £76,679,000) and equity reserves would have increased/decreased by the same amount.

	Liquidity risk . This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
	Management of the risk . The Company's assets mainly comprise readily realisable securities which can be sold to meet funding requirements if necessary. In order to monitor the concentration of Dragon's investee companies with abrdn, the total percentage holdings of those securities owned by abrdn-managed funds is reviewed by the Board.
	The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions, and reviews these on a regular basis. The Board has imposed a maximum gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of 20%. Short-term flexibility can be achieved through the use of loan and overdraft facilities.
	Liquidity risk exposure . At 31 August 2022, the Company had drawn down £35,000,000 from a £50,000,000 Revolving Facility Agreement with The Royal Bank of Scotland International Limited, London Branch, which matured on 26 September 2022. At the date of this Report the Company had drawn down £25,000,000 at a rate of 3.558%. There was a further facility of £25,000,000 with The Royal Bank of Scotland International Limited, London Branch due for repayment on 29 July 2024, details of which are disclosed in note 13.
	Management of the risk
	- investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker;
	- the risk of counterparty, including the Depositary, exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a daily basis. In addition, the third party administrators' carries out a stock reconciliation to the Depositary's records on a daily basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the Depositary's operations and reports its finding to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held;
	- cash is held only with reputable banks with high quality external credit enhancements.
	None of the Company's financial assets are secured by collateral or other credit enhancements.
	Credit risk exposure . In summary, compared to the amounts in the Statement of Financial Position, the maximum exposure to credit risk at 31 August was as follows:
						2022		2021
						Balance	Maximum	Balance	Maximum
						Sheet	exposure	Sheet	exposure
	Current assets					£'000	£'000	£'000	£'000
	Loans and receivables					2,693	2,693	5,782	5,782
	Cash and cash equivalents					5,094	5,094	5,000	5,000
						7,787	7,787	10,782	10,782
	None of the Company's financial assets is past due or impaired.
	Maturity of financial liabilities. The maturity profile of the Company's financial liabilities at 31 August was as follows:
								2022	2021
								£'000	£'000
	In less than one year							38,413	66,838
	In more than one year *							24,983	-
								63,396	66,838
	* Excludes Indian CGT liability.
	Fair value of financial assets and liabilities . The fair value of the long-term loan has been calculated £25,942,000 as at 31 August 2022 (2021 - nil) compared to an accounts value in the financial statements of £24,983,000 (2021 - nil) (note 13).  The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. The carrying values of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices.

19.	Fair value hierarchy
	FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following classifications:
	Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
	Level 2: inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.
	Level 3: inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
	All of the Company's investments are in quoted equities (2021 - same) which are actively traded on recognised stock exchanges, with their fair value being determined by reference to their quoted bid prices at the reporting date. The total value of the investments as at 31 August 2022 of £672,379,000 (31 August 2021 - £766,794,000) has therefore been deemed as Level 1.

20.	Related party transactions and transactions with the Manager
	Fees payable during the year to the Directors and their interests in shares of the Company are disclosed within the Directors' Remuneration Report.
	The Company has an agreement in place with aFML for the provision of management and administration services, promotional activities and secretarial services. Details of transactions during the year and balances outstanding at the year end disclosed in notes 4 and 5.
	At the year end the Company had £1,000,000 (31 August 2021 - £500,000) invested in Aberdeen Standard Liquidity Fund (Lux) - Sterling Fund which is managed and administered by abrdn plc. The Company pays a management fee on the value of these holdings but no fee is chargeable at the underlying fund level.

21.	Capital management policies and procedures
	The Company's capital management objectives are:
	- to ensure that the Company will be able to continue as a going concern; and
	- to maximise the capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board has imposed a maximum gearing level of 20% of net assets.
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market, and the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company has no externally imposed capital requirements.

22.

Subsequent events

Subsequent to the year end, the Company's NAV and share price has suffered as a result of a decline in stockmarket values. At the date of this Report the latest NAV per share was 411.24p as at the close of business on 28 October 2022, a decline of 19.9% compared the NAV per share of 513.32p at the year end. The latest share price was 355.00p as at the close of business on 28 October 2022, a decline of 20.4% compared the share price of 446.00p at the year end.

Alternative Performance Measures

Alternative Performance Measures ("APMs") are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Discount to net asset value per Ordinary share
The difference between the share price and the net asset value per Ordinary share expressed as a percentage of the net asset value per Ordinary share. The highest and lowest discount during the year is shown above.
		31 August 2022	31 August 2021
NAV per Ordinary share (p)	a	513.32	566.60
Share price (p)	b	446.00	512.00
Discount	(a-b)/a	13.1%	9.6%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents divided by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due to and from brokers at the year end as well as cash and short term deposits.
		31 August 2022	31 August 2021
Borrowings (£'000)	a	59,983	64,998
Cash (£'000)	b	5,094	5,000
Amounts due to brokers (£'000)	c	287	260
Amounts due from brokers (£'000)	d	-	4,150
Shareholders' funds (£'000)	e	614,369	706,929
Net gearing	(a-b+c-d)/e	9.0%	7.9%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average published daily net asset values with debt at fair value published throughout the year.
		2022	2021
Investment management fees (£'000)		4,387	4,774
Administrative expenses (£'000)		1,007	1,102
Less: non-recurring chargesA (£'000)		(33)	(18)
Ongoing charges (£'000)		5,361	5,858
Average net assets (£'000)		640,938	707,217
Ongoing charges ratio		0.84%	0.83%
A Comprises legal and professional fees which are not expected to recur.
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which among other things, includes the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-ended and closed-ended competitors, and the Benchmark Index, respectively.
			Share
Year ended 31 August 2022		NAV	Price
Opening at 1 September 2021	a	566.60p	512.00p
Closing at 31 August 2022	b	513.32p	446.00p
Price movements	c=(b/a)-1	-9.4%	-12.9%
Dividend reinvestmentA	d	1.0%	1.1%
Total return	c+d	-8.4%	-11.8%
			Share
Year ended 30 August 2021		NAV	Price
Opening at 1 September 2020	a	474.39p	416.00p
Closing at 31 August 2021	b	566.60p	512.00p
Price movements	c=(b/a)-1	+19.4%	+23.1%
Dividend reinvestmentA	d	1.1%	1.2%
Total return	c+d	+20.5%	+24.3%
A NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.

 

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