Final Results
INVESCO Asia Trust plc
Preliminary Announcement of Unaudited Final Results
For the Financial Year Ended 30 April 2007
Chairman's Statement
Performance and Prospects
The Company's performance for the 12 months to 30 April 2007 reflects a strong
second-half of the year, which has resulted in solid outperformance against its
benchmark index. Over the period, the net asset value per ordinary share
increased from 101.2p to 109.6p, a rise of 8.3%, compared to the benchmark
index, the MSCI (All Country) Far East Free ex Japan Index (adjusted for
sterling), which rose by 5.9%. Whilst the Company's share price rose during the
period from 96.0p to 97.8p, the discount to net asset value at which the shares
traded widened to 9.7% from 4.0%, in line with the discounts applicable to many
of the Company's peer group. Although no shares were bought back during the
year, the Board continues to review the possibility of share buybacks as a
means of influencing the discount and enhancing net asset value.
Stuart Parks and his management team at Henley have maintained their strong
overall performance of the last three years. The early part of the reporting
period was difficult for equity investors, leading the Henley team to adopt a
more cautious approach, and to be underweight in China at the time of the
strong rally in Chinese stocks. The second half of the year saw much improved
performance. Since the beginning of 2007, the positioning of the portfolio has
worked very well, and some of the stocks that had not performed particularly
well over the summer have now started to repay the team's confidence by
producing solid corporate results.
The liquidity backdrop for Asia remains compelling which is important for the
overall level of markets, and this is not expected to deteriorate significantly
in the short-term. However, the level of outperformance may be less marked from
here, and, if that proves to be the case, investors could become more selective
in how they position their portfolios. Our country and sector weightings are
unlikely to change greatly but, as in the past, the team expect to find
performance by identifying undervalued shares in this highly liquid
environment.
Dividend
As stated in previous Annual Reports, the Board is of the view that as much as
possible of the Company's net revenue should be distributed to shareholders.
The Board is therefore recommending a final dividend of 1.3p per ordinary share
(2006: 1.2p). The dividend, which is subject to the approval of shareholders at
the Annual General Meeting, will be payable on 30 July to shareholders on the
Register on 6 July 2007.
Gearing
The Company has a £15 million uncommitted revolving loan facility, of which £8
million was drawn down at the year-end, gearing the portfolio by 7% (2006: 6%).
The Board and the Manager review gearing regularly and closely.
Board Appointment
Mr James Robinson was appointed to the Board with effect from 3 January 2007.
Mr Robinson has extensive experience of investment trusts and fund management
which will be of great value to the Company, and the Directors are delighted to
welcome him.
Special Business at the Annual General Meeting
As in previous years, the Board seeks shareholders' approval to renew the
authorities to issue new ordinary shares, if necessary, while disapplying
pre-emption rights, and to buy back the Company's ordinary shares in the
market.
Resolution 12 concerns amendments to the Articles of Association of the
Company, following the introduction of certain provisions of the Companies Act
2006, which came into force on 1 January, 20 January and 6 April 2007
respectively, as well as the implementation of the Transparency Directive on 20
January 2007. Broadly, the proposed changes to the Articles of Association
allow the Company to communicate with shareholders electronically via its
website if it so chooses, unless a shareholder wishes to continue receiving
information in hard copy; to remove the maximum age for Directors; and to
change a number of references to statutory provisions in the Companies Act 1985
which have now been replaced by corresponding provisions in the Companies Act
2006.
Finally, Ordinary Resolution 13 asks that the Directors be released from their
obligation to convene an Extraordinary General Meeting of the Company to be
held on the business day falling on or within seven days prior to 30 April
2008, at which a Special Resolution would be proposed providing for the Company
to be wound up on a voluntary basis. This obligation arises under the Company's
Articles of Association every three years and shareholders will recall that at
the Annual General Meeting in 2004 a resolution to release the Company from
such a continuation vote was passed. The Directors continue to believe that a
wind-up would not serve shareholders' best interests and that the combination
of the management expertise of Stuart Parks and his Henley team and the
encouraging prospects we foresee for the markets in which we invest will serve
them better.
The Directors have carefully considered all the resolutions proposed in the
Notice of the Annual General Meeting and believe them to be in the best
interests of the Company and its shareholders. The Directors accordingly
recommend that shareholders vote in favour of each resolution.
Outlook
Notwithstanding the recent rise in bond yields, your Board is reasonably
positive about the prospects for the Asian region. The global economic picture
is generally favourable and Asian growth remains robust while, at the corporate
level, earnings by Asian companies are strong. In addition, interest rates in
many economies remain low and there is clearly ample liquidity looking for
investment. Valuations are fair at the moment, and although markets may be
susceptible to any global macro scare or rising geopolitical concerns, the
overall message is that Asia continues to be an attractive investment
destination.
I look forward to seeing shareholders at the Company's Annual General Meeting
on 25 July 2007, when there will be opportunities for them to meet with members
of the Board and the Investment Manager.
David Hinde
Chairman
19 June 2007
Income Statement (Unaudited)
for the year ended 30 April
2007 2006
Restated Restated
* *
Revenue Capital Total Revenue Capital Total
Return Return Return Return
Return Return
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 9,623 9,623 - 36,735 36,735
Losses on foreign - (160) (160) - (125) (125)
currency revaluation
Income 2,816 - 2,816 2,593 - 2,593
Investment management fee (208) (624) (832) (184) (552) (736)
Other expenses (419) (46) (465) (413) (95) (508)
Return before finance costs 2,189 8,793 10,982 1,996 35,963 37,959
and taxation
Finance costs (95) (285) (380) (68) (204) (272)
Return on ordinary 2,094 8,508 10,602 1,928 35,759 37,687
activities
before tax
Tax on ordinary activities (660) 267 (393) (621) 249 (372)
Net return on ordinary 1,434 8,775 10,209 1,307 36,008 37,315
activities
after tax for the financial
year
Return per ordinary share:
Basic 1.3p 8.3p 9.6p 1.2p 34.0p 35.2p
* Details of the prior year restatements are shown in note 1.
The total column of this statement represents the Company's profit and loss
account, prepared in accordance with the accounting policies in note 1 to the
preliminary announcement. The supplementary revenue and capital columns are
both prepared under guidance published by the Association of Investment
Companies. All items in the above statement derive from continuing operations
and the Company has no other gains or losses, therefore no Statement of Total
Recognised Gains and Losses is presented. No operations were acquired or
disposed of in the year.
Reconciliation of Movements in Shareholders' Funds (Unaudited)
for the year ended 30 April 2006 and the year ended 30 April 2007
Capital Capital Capital Revenue
Share Share Redemption Special Reserve- Reserve- Reserve
Capital Premium Reserve Reserve Realised Unrealised Restated Total
*
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
For the year
ended 30 April
2006
At 30 April 2005 10,596 74,588 650 25,796 (46,805) 4,167 1,856 70,848
Net return for - - - - 18,448 17,560 1,307 37,315
the year
Final dividend - - - - - - (954) (954)
paid for 2005
At 30 April 2006 10,596 74,588 650 25,796 (28,357) 21,727 2,209 107,209
For the year
ended 30 April
2007
At 30 April 2006 10,596 74,588 650 25,796 (28,357) 21,727 2,209 107,209
Net return for - - - - 7,101 1,674 1,434 10,209
the year
Final dividend - - - - - - (1,272) (1,272)
paid for 2006
At 30 April 2007 10,596 74,588 650 25,796 (21,256) 23,401 2,371 116,146
*Details of the prior year restatement are shown in note 1.
Balance Sheet (Unaudited)
at 30 April
2007 2006
Restated*
£'000 £'000
Fixed assets
Investments held at fair value 123,057 113,101
Current assets
Debtors 527 832
Cash at bank 1,360 1,098
1,887 1,930
Creditors: amounts falling due within one year (8,749) (7,778)
Net current liabilities (6,862) (5,848)
Total assets less current liabilities 116,195 107,253
Provisions (49) (44)
Total net assets 116,146 107,209
Capital and reserves
Share capital 10,596 10,596
Share premium account 74,588 74,588
Other reserves:
Capital redemption reserve 650 650
Special reserve 25,796 25,796
Capital reserve - realised (21,256) (28,357)
Capital reserve - unrealised 23,401 21,727
Revenue reserve 2,371 2,209
Total Shareholders' funds 116,146 107,209
Net asset value per ordinary share
Basic 109.6p 101.2p
* Details of the prior year restatement are shown in note 1.
Cash Flow Statement
for the year ended 30 April
2007 2006
£'000 £'000
Cash inflow from operating activities 1,172 1,157
Servicing of finance (382) (301)
Taxation (179) -
Capital expenditure and financial investment (117) (7,255
Dividends paid (1,272) (954)
Net cash outflow before management of liquid (778) (7,353)
resources and financing
Management of liquid resources (468) 3,588
Financing 1,200 3,100
Decrease in cash in the year (46) (665)
Reconciliation of cash flow to movement in net
debt
Decrease in cash in the year (46) (665)
Cash inflow from movement in debt (1,200) (3,100)
Cash (outflow)/inflow from increase in liquid 468 (3,588)
resources
Change in net debt resulting from cash flows (778) (7,353)
Translation differences (160) (125)
Movement in net debt in the year (938) (7,478)
Net (debt)/funds at beginning of year (5,702) 1,776
Net debt at end of year (6,640) (5,702)
Notes
1. Basis of Preparation
Accounts Basis
The financial statements have been prepared under the historical cost
convention except for the measurement at fair value of investments and in
accordance with applicable United Kingdom Accounting Standards and with the
Statement of Recommended Practice ("SORP") "Financial Statements of Investment
Trust Companies" issued by the Association of Investment Companies in 2005.
The financial statements for 30 April 2007 have been prepared using the same
accounting policies as those for the year ended 30 April 2006, except for the
prior year restatement described below.
Prior Year Restatement
As the obligation to wind up the Company in 2007 is in the hands of
Shareholders and, in the absence of a vote to wind up the Company, no
individual Shareholder can demand delivery of cash or another financial asset,
the Directors believe that the Company does have equity, and that shareholders'
funds should be presented as equity and not as liabilities. The presentation of
the Balance Sheet has accordingly been adjusted to reflect this; this has no
effect on net assets. It follows that dividends are disclosed in the
Reconciliation of Movements in Shareholders' Funds as opposed to the previous
year's inclusion of dividends in the Income Statement as a finance cost.
For the year ended 30 April 2006 the revenue and total returns of the Income
Statement have increased by £954,000, offsetting a corresponding amount shown
directly in the Revenue Reserve of the Reconciliation of Shareholders' funds.
There is no change to returns per ordinary share.
2. Income
2007 2006
£'000 £'000
Income from investments 18 6
UK dividends
Overseas dividends 2,636 2,407
Scrip dividends 151 154
2,805 2,567
Other income 11 26
Deposit interest
Total income 2,816 2,593
Total income comprises: 2,805 2,567
Dividends
Interest 11 26
2,816 2,593
3. Investment management fee
2007 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 208 624 832 184 552 736
INVESCO Asset Management Limited acts as Manager and Secretary to the Company
under an agreement dated 2 June 1995, subsequently revised on 14 July 1997 and
28 January 2004. This agreement is terminable by either party upon expiry of
not less than six months' written notice. The fee is calculated at the rate of
0.75% per annum (plus VAT) by reference to the total assets less current
liabilities (excluding any short-term loans) at the end of each respective
calendar quarter. The assets for this purpose exclude the value of any
investment in other funds managed by the Manager. At 30 April 2007 £227,000
(2006: £207,000) was due for payment to the Manager in respect of investment
management fees.
4. Return per Ordinary Share
The revenue, capital and total return per ordinary share is based on each
applicable return on ordinary activities after tax and on 105,962,425 (2006:
105,962,425) ordinary shares, being the number of shares in issue throughout
the year.
5. Net asset value
The net asset value per ordinary share and the net assets attributable at the
year-end were as follows:
Net Asset Value Net Assets
Per share Attributable
2007 2006 2007 2006
Pence Pence £'000 £'000
Ordinary shares 109.6 101.2 116,146 107,209
- Basic
The basic net asset value per ordinary share is based on net assets at the year
end and on 105,962,425 (2006: 105,962,425) ordinary shares, being the number of
shares in issue at the year end.
This preliminary statement is not the Company's statutory accounts. The above
results for the year ended 30 April 2007 have been agreed with the auditors and
are an abridged version of the Company's full draft accounts, which have not
yet been approved, audited or filed with the Registrar of Companies. The
financial information for 2006 is derived from the statutory accounts for 2006
which have been delivered to the Registrar of Companies. The Company's previous
auditors have reported on the 2006 statutory accounts and their report was
unqualified, did not include a reference to any matter to which the auditors
drew attention by way of emphasis without qualifying the report, and did not
contain a statement under s.237(2) or (3) of the Companies Act 1985. The
statutory accounts for 2007 will be finalised on the basis of the information
presented by the Directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
The Annual General Meeting of the Company will be held at 12.00 noon on 25 July
2007 at 30 Finsbury Square, London EC2A 1AG.
The audited Report and Accounts will be posted to shareholders shortly. Copies
may be obtained during normal business hours from the Company's Registered
Office, 30 Finsbury Square, London EC2A 1AG.
By order of the Board
INVESCO Asset Management Limited
19 June 2007
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