Annual Financial Report
Invesco Asia Trust plc
Annual Financial Report Announcement
For the Financial Year Ended 30 April 2014
FINANCIAL INFORMATION AND PERFORMANCE STATISTICS
The benchmark index of the Company is the MSCI All Countries Asia Pacific ex
Japan Index (total return), measured in sterling.
Notes:
(1) Source: Thomson Reuters Datastream.
(2) The 15% tender offer in August 2013 is reflected in the decrease in net
assets at the year end and will have significantly affected the income and net
revenue available for ordinary shares figures.
Performance Statistics
AT AT
30 APRIL 30 APRIL %
2014 2013 CHANGE
Total Return Statistics (1):
- Net Asset Value (NAV) +0.9
- Share Price +2.0
- Benchmark Index -6.8
Capital Statistics
Net assets (2) (£'000) 162,969 195,528 -16.7
Gearing:
- gross 3.3% 5.6%
- net 2.4% 5.1%
NAV per ordinary share:
- basic 183.4p 184.6p -0.7
Benchmark index (1) 280.9 311.1 -9.7
Market price per ordinary share 164.0p 164.0p +0.0
Discount†per ordinary share:
- cum income 10.6% 11.2%
- ex income 8.8% 9.6%
Average discount over the year (ex income) 9.8% 10.9%
Revenue
YEAR YEAR
ENDED ENDED
30 APRIL 30 APRIL %
2014 2013 CHANGE
Income (2) (£'000) 4,547 4,557 -0.2
Net revenue available for ordinary shares (2) (£ 3,332 3,328 +0.1
'000)
Dividend per share 3.45p 3.20p +7.8
Ongoing charges ratio 1.05% 1.08%
Revenue return per ordinary share - diluted 3.60p 3.20p
-
CHAIRMAN'S STATEMENT
Performance
This is my first report to shareholders since my appointment as Chairman at
last year's AGM and it is pleasing to record that your Company has performed
well against a difficult economic and financial background. This is illustrated
by an increase in the NAV including income of 0.9% over the last twelve months
compared with the benchmark which declined by 6.8%. The share price rose by 2%,
a consequence both of the NAV growth and of the discount to capital NAV
narrowing to 8.8% from 9.6% at the last year end.
The performance of Asian equity markets has been sensitive to changing
expectations in two key areas: the outlook for China's economy and the outlook
for the global liquidity environment. While developed markets became more
attractive to investors with further evidence of a broadening recovery, the
prospect of a reduction in liquidity in the global financial system clearly
impacted sentiment towards Asian equity markets which underperformed their
developed market peers for much of the period. China's prospects continued to
dominate and while reform announcements were met with initial optimism,
lingering concerns over the strength of China's economy weighed on the region's
equity market performance. These trends are discussed more fully in the
Portfolio Managers' Report.
Discount Control and Tender Offer
The Board considers it desirable that, in normal market conditions, the
Company's shares should trade at a price which, on average, represents a
discount of less than 10% to NAV excluding income. In order to meet this
objective, the Company uses a combination of tender offers and market buy
backs.
Thus, in the 2013 Annual Financial Report the Board proposed making a tender
offer if the shares traded over the year to 30 April 2014 at an average
discount of more than 10% to NAV excluding income. I can confirm that as the
average discount over the year was 9.8% a tender offer has not been triggered.
However, the Board has concluded that it would be in shareholders' interests to
extend this arrangement to the financial year ending 30 April 2015.
In the year to 30 April 2013, the average discount was greater than 10% and
accordingly a tender offer for 15% of the Company's shares was made in August
2013. The Company repurchased and cancelled 15,886,669 ordinary shares at a
price of 170.3877p per share.
To assist the Board in dealing with any material overhang in the market, shares
may be repurchased when, in the opinion of the Board, the discount is higher
than desired and shares are available. The authority for the Board to
repurchase shares at its discretion is sought from shareholders annually at the
AGM. The Board is of the view that the principal purpose of share repurchases
is to enhance net asset value for the remaining shareholders, although it may
also assist in addressing the imbalance between the supply of and demand for
the Company's shares and thereby reduce the scale and volatility of the
discount at which the shares trade in relation to the underlying net asset
value. During the year to 30 April 2014 a total of 1,165,648 ordinary shares
were bought back and cancelled, enhancing the NAV by £187,000 (0.12%).
Dividend
The Board is recommending a final dividend of 3.45p per ordinary share (2013:
3.2p), an increase of 7.8%. The dividend, which is subject to the approval of
shareholders at the Annual General Meeting, will be payable on 12 August 2014
to shareholders on the register on 18 July 2014, and will be marked ex-dividend
on 16 July 2014.
Outlook
The Board is positive on the outlook for Asian equity markets which it believes
should continue to enjoy the support of medium-term structural trends, such as
rising incomes and robust domestic consumption. Asian economic growth has
slowed, but it is expected to remain stable at the lower level, yet be
sufficiently high in 2014 to offer attractive investment opportunities. The
global economic recovery continues to be somewhat lacklustre, but having been
too optimistic in recent years, the earnings expectations of Asian companies
now reflect this reality.
In China, leading economic indicators continue to suggest a slowdown as the
authorities show their determination to reign in the excessive lending of the
past few years. However, as the portfolio managers state in their report, the
new reform agenda provides grounds for optimism. These forces for change across
the region, if implemented, could potentially provide a more positive backdrop
for Asian equity markets, even though economic growth is likely to be slower
than that seen over the first decade of this century. Asian equity markets have
to a large extent factored in the current macroeconomic challenges, and current
valuation levels for the region are low relative both to history and against
developed equity markets.
Alternative Investment Fund Managers Directive (AIFMD)
Most investment trusts which are managed or promoted within the European Union
will now be required to comply with this European Directive which has effect
from 22 July 2013. To allow for the necessary contractual and other changes the
Financial Conduct Authority has permitted a twelve month transitional period
for compliance. Under the Directive, the key implications are that the Company
is required to appoint an Alternative Investment Fund Manager (the AIFM) and a
Depositary. Following independent legal advice, the Board has decided, in
principle, to appoint Invesco Fund Managers Limited (IFML) as the Company's
AIFM, pending IFML's approval by the Financial Conduct Authority. IFML is an
associated company of the current Manager, Invesco Asset Management Limited
(IAML), and it is expected that IAML will continue to manage the Company's
investments under delegated authority from IFML. It has also been agreed in
principle that BNY Mellon Trust & Depositary (UK) Limited be appointed as
depositary to oversee the custody and cash arrangements.
While compliance will result in some additional costs, these are not likely to
be significant, and the Board has been advised that the AIFMD is unlikely to
have any material effect on the services provided to or by the Company.
Annual General Meeting
The Company's AGM will be held at 12 noon on 7 August 2014 at 43-45 Portman
Square, London W1H 6LY. Shareholders' attention is drawn to resolution 10 in
the Notice of Meeting on pages 59 to 62 of the Annual Financial Report. This
resolution seeks shareholder authority to convert the share premium account
into a distributable reserve, subject to High Court approval. If approved, this
will enable the Company to fund any future tender offer and share buy backs.
For the sake of clarity this reserve will not be used by the Company to fund
dividends. Full details of the proposal are included in the circular which
shareholders received with this annual report.
We, the Directors of your Company, regard the AGM as the most important meeting
of the year. The portfolio managers, Stuart Parks and Ian Hargreaves, will be
making a presentation, highlighting the achievements of the past year and the
prospects for the year to come and they will be available to answer your
questions. We have considered all the resolutions proposed in the Notice of AGM
and believe all are in the interests of shareholders as a whole. We therefore
recommend that you vote in favour of each resolution.
Carol Ferguson
Chairman
1 July 2014
BUSINESS REVIEW
Invesco Asia Trust plc is an investment company and its investment objective is
set out below. The strategy the Board follows to achieve that objective is to
set investment policy and risk guidelines, together with investment limits, and
to monitor how they are applied. These are also set out below and have been
approved by shareholders.
As an investment company, the Company contracts with external service providers
for all requirements. By far the largest of these contracts is with Invesco
Asset Management Limited (the `Manager') to manage the portfolio in accordance
with the Board's strategy and under its oversight. Stuart Parks and Ian
Hargreaves (the `portfolio managers') are jointly responsible for the
day-to-day management of the portfolio.
The Manager also provides company secretarial, marketing and general
administration services including accounting. The other main external service
providers include the registrar, custodian, corporate broker and auditor. The
details of these are shown on page 64.
Investment Objective
The Company's objective is to provide long-term capital growth by investing in
a diversified portfolio of Asian and Australasian companies. The Company aims
to achieve growth in its net asset value (NAV) in excess of the Benchmark
Index, the MSCI All Countries Asia Pacific ex Japan Index (total return),
expressed in sterling.
Investment Policy
Invesco Asia Trust plc invests primarily in the equity securities of companies
listed on the stockmarkets of Asia (ex Japan) including Australasia. It may
also invest in unquoted securities up to 10% of the value of the Company's
gross assets, and in warrants and options when it is considered the most
economical means of achieving exposure to an asset.
The Company is actively managed and the Manager has broad discretion to invest
the Company's assets to achieve its investment objective. The Manager seeks to
ensure that the portfolio is appropriately diversified having regard to the
nature and type of securities (such as performance and liquidity) and the
geographic and sector composition of the portfolio.
Investment Limits
The Board has prescribed limits on the investment policy, including:
- exposure to any one company may not exceed 10% of total assets;
- individual and combined exposure to group-related companies may not exceed
10% and 15% respectively of total assets;
- the Company may not invest more than 10% of total assets in collective
investment funds;
- the Company may not invest more than 10% in aggregate in unquoted
investments;
- the Company may invest in warrants and options up to a maximum of 10% of
total assets. Apart from these and currency hedges, other derivative
instruments are not permitted; and
- the Company may use borrowings up to 25% of net assets.
With the exception of borrowings in foreign currency, the Company does not
normally hedge its currency positions but may do so if considered appropriate.
All the above limits are applied at the time of acquisition, except gearing
which is monitored on a daily basis.
Borrowing and Debt
The Company's borrowing policy is determined by the Board. The level of
borrowing may be varied in accordance with the portfolio managers' assessment
of risk and reward, subject to the overall limit of 25% of net assets and the
availability of suitable finance.
Performance
The Board reviews performance by reference to a number of Key Performance
Indicators which include the following:
• the net asset value (NAV) and share price;
• peer group performance;
• dividend;
• ongoing charges ratio; and
• discount.
A chart showing the total return NAV and share price performance compared to
the MSCI All Countries Asia Pacific ex Japan Index (in sterling terms) (the
Company's `benchmark index') can be found on page 3 of the Annual Financial
Report.
Peer group performance is monitored in relation to eight investment trust
companies that in the opinion of the Board form the peer group of the Company,
being trusts that invest for growth in the Asia excluding Japan sector, as
these most closely match the Company's investment objective and capital
structure. As at 30 April 2014, in NAV terms the Company was ranked 1st over
one year, and ranked 3rd and 6th over three and five years respectively
(source: Thomson Reuters Datastream).
The ten year record for dividends and the ongoing charges ratio for the last
two years are detailed in the Annual Financial Report.
The discount of the shares is monitored on a daily basis. During the year the
shares traded at a discount to NAV (ex income) in a range of 7.3% to 12.0% and
an average discount of 9.8%. At the year end the discount to the NAV (ex
income) stood at 8.8%.
The Board considers it desirable that the Company's shares do not trade at a
significant discount to NAV and believes that, in normal market conditions, the
shares should trade at a price which on average represents a discount of less
than 10% to NAV. To enable the Board to take action to deal with any material
overhang of shares in the market it seeks authority from shareholders annually
to buy back shares. Shares may be repurchased when, in the opinion of the
Board, the discount is wider than desired and shares are available in the
market. The Board considers that the repurchase of shares will enhance net
asset value for remaining shareholders and may also assist in addressing the
imbalance between the supply of and demand for the Company's shares and thereby
reduce the scale and volatility of the discount at which the shares trade in
relation to the underlying net asset value.
Results and Dividends
For the year ended 30 April 2014 the net asset value total return was +0.9%
compared to the return on the benchmark index of -6.8%. The Portfolio Managers'
Report reviews the results.
Subject to approval at the AGM, the proposed final dividend for the year ended
30 April 2014 of 3.45 per share (2013: 3.2p) will be payable on 12 August 2014
to shareholders on the register on 18 July 2014. Shares will be marked
ex-dividend on 16 July 2014.
Financial Position and Borrowing
At the balance sheet date the Company's net assets were valued at £163 million
(2013: £196 million) comprising a portfolio of mainly equity investments and
net current assets including £5.3 million (2013: £10.9 million) of US dollar
borrowing. Borrowing is in the form of a 364 day committed multicurrency
revolving credit facility provided by the Bank of New York Mellon. The maximum
borrowing allowed under this facility is the lower of £20 million and 25% of
the adjusted net asset value of the Company. The interest rate on amounts
borrowed is LIBOR + 0.85%. This facility is due for renewal on 8 August 2014
and details of this facility and interest paid (finance costs) are shown in
notes 11 and 5 in the Annual Financial Report.
Outlook, including the Future of the Company
The main trends and factors likely to affect the future development,
performance and position of the Company's business can be found in the
Portfolio Manager's Report of this Strategic Report. Further details of the
principal risks affecting the Company are set out in the next section:
`Principal Risks and Uncertainties'.
Principal Risks and Uncertainties
Investment Objective
There can be no guarantee that the Company will meet its investment objective.
Investment Process
At the core of the Manager's philosophy is a belief in active investment
management. Fundamental principles drive a genuinely unconstrained investment
approach, which aims to deliver attractive total returns over the long term.
The investment process emphasises pragmatism and flexibility, active
management, a focus on valuation and the combination of top-down and bottom-up
fundamental analysis. Bottom-up analysis forms the basis of the investment
process. It is the key driver of stock selection and is expected to be the main
contributor to alpha generation within the portfolio. Portfolio construction at
sector level is largely determined by this bottom-up process but is also
influenced by top-down macro economic views.
Research provides a detailed understanding of a company's key historical and
future business drivers, such as demand for its products, pricing power, market
share trends, cash flow and management strategy. This allows the Manager to
form an opinion on a company's competitive position, its strategic advantages/
disadvantages and the quality of its management. Each member of the portfolio
management team travels to the region between three and four times per year and
therefore the team has contact with several hundred companies during each year.
The Manager will also use valuation models selectively in order to understand
the assumptions that brokers/analysts have incorporated into their valuation
conclusions and as a structure into which the Manager can input its own
scenarios.
Risk management is an integral part of the investment management process. Core
to the process is that risks taken are not incidental but are understood and
taken with conviction. The Manager controls stock-specific risk effectively by
ensuring that the portfolio is appropriately diversified.
Also, in-depth and constant fundamental analysis of the portfolio's holdings
provide the Manager with a thorough understanding of the individual stock risk
taken. The internal Performance & Risk Team, an independent team, ensures that
the Manager adheres to the portfolio's investment objectives, guidelines and
parameters. There is also a culture of challenge and debate within the
portfolio management team regarding portfolio construction and risk.
Portfolio performance is substantially dependent on the performance of Asian
and Australasian equities. Stocks are influenced by the general health of the
region.
Market Risk
The Company's investments are traded on the Far Eastern, Indian and
Australasian stockmarkets as well as the UK. The principal risk for investors
in the Company is of a significant fall and/or a prolonged period of decline in
the markets. This could be triggered by unfavourable developments within the
region or events outside it.
The value of investments held within the portfolio is influenced by many
factors including the general health of the world economy, interest rates,
inflation, government policies, industry conditions, political and diplomatic
events, tax laws, environmental laws, and by changing investor demand. Such
factors are outside the control of the Board and the Manager and may give rise
to high levels of volatility in the prices of investments held by the Company.
Investment Risk
Bad performance of individual portfolio investments is mitigated as the Board
has established guidelines to ensure that the investment policy of the Company
is pursued by the portfolio managers who undertake continual analysis of the
fundamentals of all holdings and ensure that the Company's portfolio of
investments is appropriately diversified. The performance of the portfolio
managers is carefully monitored by the Board and the continuation of the
management contract is reviewed each year. Past performance of the Company is
not necessarily indicative of future performance.
A fuller discussion of the economic and market conditions facing the Company
and the current and future performance of the portfolio of the Company are
included in the Portfolio Managers' Report.
Foreign Exchange Risk
The movement of exchange rates may have an unfavourable or favourable impact on
returns as the majority of the assets are non-sterling denominated. This risk
can be mitigated by the use of hedging, including the use of non-sterling
denominated borrowing. The foreign currency exposure of the Company is
monitored by the Manager on a daily basis and reviewed at Board meetings.
Ordinary Shares
The market value of the ordinary shares in the Company may not reflect their
underlying NAV and may trade at a discount to it. The Board and the Manager
maintain an active dialogue with the aim of ensuring that the market valuation
of the Company's shares reflects the underlying NAV and there are in place
share repurchase and issuance facilities, and a declared discount monitoring
mechanism to help the management of this process.
The value of an investment in the Company and the income derived from that
investment may go down as well as up and an investor may not get back the
amount invested.
Any tender offer would result in a decrease in the size of the Company which
could potentially affect both the liquidity of the Company's shares as well as
requiring the disposal of assets to fund the tender. A tender offer could also
materially affect the ongoing charges ratio.
Borrowing
Whilst the use of borrowings by the Company should enhance the total return on
the shares where the return on the Company's underlying portfolio is positive
and exceeds the cost of borrowings, it will have the opposite effect where the
underlying return is negative, further reducing the total return on the shares.
Derivatives
The Company may enter into derivative transactions if approved by the Board for
efficient portfolio management. Derivative instruments can be highly volatile
and expose investors to a high risk of loss. There is a risk that the returns
on the derivative do not exactly correlate to the returns on the underlying
investment, obligation or market sector being hedged against. If there is
imperfect correlation, the Company may be exposed to greater loss than if the
derivative had not been entered into.
Reliance on Third Party Service Providers
The Company has no employees and the Directors have all been appointed on a
non-executive basis. The Company is reliant upon the performance of third party
service providers for its executive function. The Company's most significant
contract is with the Manager, to whom responsibility both for the Company's
portfolio and for the provision of company secretarial and administrative
services are delegated. The Company has other contractual arrangements with
third parties to act as auditor, registrar, custodian and broker. Failure by
any service provider to carry out its obligations to the Company in accordance
with the terms of its appointment could have a materially detrimental impact on
the operation of the Company and could affect the ability of the Company to
successfully pursue its investment policy and expose the Company to
reputational risk.
In particular, the Manager performs services which are integral to the
operation of the Company. The Manager may be exposed to the risk that
litigation, misconduct, operational failures, negative publicity and press
speculation, whether or not it is valid, will harm its reputation. Any damage
to the reputation of the Manager could result in counterparties and third
parties being unwilling to deal with the Manager and by extension the Company.
This could have an adverse impact on the ability of the Company to pursue its
investment policy.
The Board seeks to manage these risks in a number of ways:
• The Manager monitors the performance of all third party providers in relation
to agreed service standards on a regular basis, and any issues and concerns are
dealt with promptly and reported to the Board. The Manager formally reviews the
performance of all third party providers and reports to the Board on an annual
basis.
• The Board reviews the performance of the Manager at every board meeting and
otherwise as appropriate. The Board has the power to replace the Manager and
reviews the management contract formally once a year.
• The day-to-day management of the portfolio is the joint responsibility of
Stuart Parks and Ian Hargreaves who are part of the Invesco Perpetual Asian
Equities team. They have worked in equity markets for 28 years and 19 years
respectively and have been the Company's portfolio managers for a number of
years. The Board has adopted guidelines within which the Company's portfolio
managers are permitted discretion. Any proposed variation outside these
guidelines is referred to the Board and the guidelines themselves are reviewed
at every board meeting.
• The risk that the portfolio managers might be incapacitated or otherwise
unavailable is mitigated by the fact that they work closely with each other and
they also work within, and are supported by, the wider Invesco Perpetual Asian
Equities team.
Regulatory
The Company is subject to various laws and regulations by virtue of its status
as a public limited company, its status as an investment trust and its listing
on the Official List of the UK Listing Authority.
Loss of investment trust status for tax purposes could lead to the Company
being subject to tax on any realised capital profits on the sale of its
investments. A serious breach of other regulatory rules could lead to
suspension from the Official List, a fine or a qualified audit report. Other
control failures, either by the Manager or any other of the Company's service
providers, could result in operational or reputational problems, erroneous
disclosures or loss of assets through fraud, as well as breaches of
regulations.
The Manager reviews compliance with tax and other financial regulatory
requirements on a daily basis. All transactions, income and expenditure are
reported to the Board. The Board regularly considers all perceived risks and
the measures in place to control them. The Board ensures that satisfactory
assurances are received from service providers. The Manager's Compliance and
Internal Audit Officers produce reports regularly for review by the Company's
Audit Committee.
Board Diversity
The Company's policy on diversity is set out in the Annual Financial Report.
The Board takes into account many factors, including the balance of skills,
knowledge, diversity (including gender) and experience, amongst other factors
when reviewing its composition and appointing new directors, but does not
consider it appropriate to establish targets or quotas in this regard. The
Board comprises four non-executive directors, three of whom are male. There are
no set targets in respect of diversity, including gender. However, diversity
forms part of both the Nominations Committee and main Board's deliberations
when considering new appointments. The Company's success depends on suitably
qualified candidates who are willing, and have the time, to be a director of
the Company. Summary biographical details of the Directors are set out in the
Annual Financial Report. The Company has no employees.
Social and Environmental Matters
As an investment company with no employees, property or activities outside
investment, environmental policy has limited application. The Manager considers
various factors when evaluating potential investments. While a company's policy
towards the environment and social responsibility, including its regard for
human rights, is considered as part of the overall assessment of risk and
suitability for the portfolio, the Manager does not make its investment
decisions on environmental and social grounds alone. The Company does not have
a human rights policy, although the Manager invests in accordance with the
United Nations Principles for Responsible Investment.
PORTFOLIO MANAGERS' REPORT
Market & Economic Review
It has been a challenging twelve months for Asian equity markets and currencies
against an uncertain global liquidity backdrop. Asian equities sold off sharply
after the US Federal Reserve (Fed) suggested and then confirmed that it would
start to slow the pace of its bond purchases (QE-tapering) as the US economy
continued to show signs of recovery. While equity markets have recovered from
their June and December lows, lingering concerns over the strength of China's
economy have been an additional concern for the region's equity markets, none
of which has generated positive returns for the period, in sterling terms.
Macroeconomic indicators from China suggested a stabilisation of growth in the
second half of 2013 and there was a marked improvement in investor sentiment
towards China after the announcement of a significant reform agenda during the
Third Plenum of the Chinese Communist Party's Central Committee in November.
However, positive momentum for China's equity market was short lived with
weaker-than-expected economic data for the first quarter of 2014. China's first
quarter 2014 GDP growth slowed to 7.4% year-on-year (y-o-y) from 7.7% the
previous quarter, while HSBC's manufacturing purchasing managers' index for
April came in at 48.1, its fourth month of contraction. There has also been
some negative newsflow surrounding debt-related issues, including concerns over
a Chinese trust fund and China's first corporate bond default.
South Korea and Taiwan were the region's best performing equity markets as they
were generally deemed less vulnerable to changes in the global liquidity
environment. They have also benefited from further evidence of a gradual global
economic recovery which has been seen as supportive for exporters to developed
markets.
Conversely, South Asian equity markets and currencies were hit hardest by
concerns over the impact of QE-tapering, having benefited from supportive
liquidity conditions in recent years. There was a particular focus on economies
with widening current account deficits such as India and Indonesia. However,
the last few months have seen improvements in the economic fundamentals of both
these countries with inflation receding and current account deficits narrowing
as previous interest rate rises take effect. Furthermore, elections in both
countries have raised hopes that new leadership might drive forward progressive
reforms and help improve the business and economic environment.
Finally, Australian markets underperformed against a background of mixed
corporate earnings results and a weakening Australian dollar as investors
factored in Fed tapering and a shift in the tone of commentary from the Reserve
Bank of Australia which cut interest rates during the period.
Company Performance
In the year to 30 April 2014, the Company's net asset value increased by 0.9%
(total return, in sterling terms), ahead of the benchmark MSCI All Countries
Asia Pacific ex-Japan Index, which returned -6.8% (total return, in sterling
terms).
The Company's outperformance was largely attributable to strong stock selection
across a number of sectors. The biggest single contributor was its holding in
the Indian agrochemical company UPL (previously known as United Phosphorus),
which reported solid quarterly earnings, benefiting from rupee depreciation and
strong growth in India and Latin America, with management remaining upbeat in
their guidance for the year ahead. A substantial position in the IT sector also
added value, with notable contributions from holdings in Chinese internet
stocks. Baidu was one of the largest contributors thanks to growing market
appreciation of its ability to monetise mobile traffic. In the consumer
discretionary sector, our holding in Hyundai Motor preference shares added
value as their discount to the ordinary share class continued to narrow, while
there were positive contributions from holdings in Hyundai Mobis and Samsonite
International.
Elsewhere, the portfolio's holding in Hutchison Whampoa benefited from improved
earnings performance across its diverse business units (with the exception of
ports). Confirmation that the group wanted to sell a stake in its retail unit
AS Watson and the disposal of some real estate assets in Hong Kong also
highlighted the potential for a further narrowing of its shares' discount to
NAV. The holding in Korea Electric Power Corporation also contributed
positively, benefiting from growing conviction that it is set to enjoy an
earnings turnaround.
In financials, while selected holdings in Indian and ASEAN banks and real
estate companies detracted from performance due to lingering concerns over
QE-tapering and specific macro uncertainty, this was more than compensated for
by strong stock selection elsewhere. Chinese online real estate company E-House
saw its share price climb sharply driven by positive earnings growth momentum
while an improved macroeconomic outlook in North Asia helped lift holdings in
Taiwanese and Korean banks and insurers. Our limited exposure in some of the
bigger Australian and Chinese banks also benefited relative returns as these
areas of the market underperformed during the year.
On the other hand, notable detractors included holdings in Chinese retailers,
particularly footwear retailer Daphne International after a first half profits
warning due to slower than expected sales. Philippine conglomerate LT Group
also detracted due to fears that its tobacco joint venture with Phillip Morris
was losing market share due to illicit cigarette production by local
manufacturers.
Outlook for Asian Economies and Markets
Asian economic growth has slowed, but we expect it to remain stable and be
sufficiently high in 2014 to offer attractive investment opportunities. In a
number of Asian countries the last few months have seen improvements in
economic fundamentals, with elections in India and Indonesia raising hopes that
a more progressive reform agenda will be pursued. A new reform agenda in China
also provides us with grounds for optimism in the medium-term; particularly the
policies and initiatives focused on allowing market forces a more decisive role
in the allocation of resources, improving capital allocation and shifting
income towards households. However, we expect to see some near-term volatility
in equity markets given the authorities' difficult balancing act in aiming to
deliver on both reform as well as their own GDP growth target of 7.5%.
Given current valuation levels for the region, which remain low relative to
history and against developed equity markets, we believe that Asian equity
markets have to a large extent factored in the current macroeconomic
challenges. Consensus earnings growth forecasts for Asia Pacific ex Japan are
currently around 11.8% for 2014, which appears reasonable, bringing valuation
levels for the region to 12.3 times 2014 expected earnings.
Strategy
We believe the portfolio remains well-balanced, with exposure to a variety of
businesses that possess what we consider to be strong competitive advantages
and undervalued earnings growth prospects. There have been a few small changes
to the structure of the portfolio over the year, reflecting the continued
adjustments that we are seeing throughout the region as the macroeconomic
environment changes and Asia transitions towards a lower, more sustainable
growth trend than was seen in the first decade of this millennium. In addition,
we have made a conscious effort to maintain the reduced number of holdings with
the aim of concentrating the portfolio upon our highest conviction ideas.
We continue to have a significant level of exposure in Hong Kong and China, but
have reduced the size of the overweight position relative to the benchmark MSCI
Asia Pacific ex Japan Index. While we have taken some profits from recent
outperformers, we have sought to add in areas where we feel confident that
earnings can exceed expectations, even in a more challenging and competitive
environment. For example, we have added a position in Greatview Aseptic,
China's leading supplier of aseptic packaging for dairy products. The company
is enjoying strong growth in China, with plans to grow earnings by expanding
capacity and taking market share from Tetra Pak, while there is further
potential in European expansion. We have also added a new holding in
PetroChina, which we believe is well placed to benefit from rising natural gas
prices and robust demand growth in China. In turn, we have reduced exposure in
holdings such as Hutchison Whampoa and Baidu, where valuations were closer to
our estimate of fair value, and have sold E-House and Sohu which ran ahead of
fundamentals. Elsewhere, we have reduced the level of exposure in Jardine
Matheson and sold holdings such as Daphne International, real estate developer
Wharf, China Taiping Insurance, China Resources Enterprise, and Digital China.
We have slightly increased the overweight position in South Korea where the
Company has exposure in both large exporters and more domestically focused
companies. For example, we added a new holding in Shinsegae, a department store
operator that we believe is undervalued given expectations of a cyclical
earnings recovery. We have also initiated a position in Korea Electric Power
Corporation, which is experiencing a significant change in fundamentals with
fuel costs easing, a stronger Korean won and electricity tariffs driving an
improvement in earnings. Meanwhile, we continue to believe that leading
exporters such as Samsung Electronics and Hyundai Motor remain undervalued,
particularly given that they remain globally competitive, with an ability to
gain market share and benefit from a gradual pick-up in global trade.
We have also continued to add to the overweight position in India, with new
holdings in: Adani Ports & Special Economic Zone, a high quality port asset on
the west coast of India with competitive advantages such as location,
infrastructure and efficiencies that we believe will drive earnings above
market expectations; and Glenmark Pharmaceuticals, a generic drugs company with
a number of strong products in its pipeline nearing approval, which could help
drive earnings and reduce debt levels over the next few years. We have also
switched the holding in HDFC into HDFC Bank, which is better placed to deliver
strong earnings growth as it continues to take market share from the public
sector banks in India. Similarly, we have replaced our holding in Indian IT
services company Infosys by Tata Consultancy Services which we believe is in a
stronger competitive position and able to sustain higher earnings growth
momentum thanks to its superior execution.
The portfolio remains underweight in Australia relative to the benchmark index.
This is part due to the portfolio's limited exposure to Australian banks as we
prefer to hold what we consider to be good quality banks that appear well
placed to grow their loan books profitably in countries where credit
penetration is low. However, given recent weakness in the Australian dollar we
have become more positive towards the Australian equity market, and have
gradually reduced the portfolio's underweight position, adding to Origin Energy
and Goodman Group. Finally, the portfolio continues to have selective exposure
to smaller companies (with market cap of less than US$1 billion), which offer
the opportunity to deliver superior returns being at an earlier stage in their
growth cycle.
Stuart Parks and Ian Hargreaves
Portfolio Managers
The Strategic Report was approved by the Board of Directors on 1 July 2014
Invesco Asset Management Limited
Company Secretary
INVESTMENTS IN ORDER OF VALUATION
at 30 April 2014
Ordinary shares unless stated otherwise
†MSCI and Standard & Poor's Global Industry Classification Standard.
AT % OF
MARKET
VALUE PORT-
COMPANY INDUSTRY GROUP†COUNTRY £'000 FOLIO
Samsung Electronics - Semiconductors & South Korea 9,685 5.8
Semiconductor
Ordinary & Preference Equipment
Shares
UPL Materials India 7,738 4.7
Hutchison Whampoa Capital Goods Hong Kong 7,215 4.3
Taiwan Semiconductor Semiconductors & Taiwan 5,712 3.4
Manufacturing Semiconductor
Equipment
Korea Electric Power Utilities South Korea 4,911 3.0
Corporation
Hyundai Motor - Preference Automobiles & Components South Korea 4,564 2.7
Shares
NetEase - ADR Software & Services China 4,466 2.7
Baidu - ADR Software & Services China 4,389 2.6
HSBC Banks United 3,888 2.3
Kingdom
Shinhan Financial Banks South Korea 3,779 2.3
Top Ten Holdings 56,347 33.8
Petrochina - ADR Energy China 3,754 2.2
ICICI Banks India 3,668 2.2
Hon Hai Precision Industry Technology Hardware & Taiwan 3,636 2.2
Equipment
BHP Billiton Materials Australia 3,625 2.2
Hyundai Mobis Automobiles & Components South Korea 3,436 2.1
POSCO Materials South Korea 3,428 2.1
Greatview Aseptic Packaging Materials China 3,423 2.1
AIA Insurance Hong Kong 3,270 2.0
Bank Negara Indonesia Banks Indonesia 3,162 1.9
Persero
Goodpack Transportation Singapore 2,984 1.8
Top Twenty Holdings 90,733 54.6
Samsonite International Consumer Durables & Hong Kong 2,883 1.7
Apparel
Cathay Pacific Airways Transportation Hong Kong 2,838 1.7
Origin Energy Energy Australia 2,825 1.7
Tata Consultancy Software & Services India 2,743 1.7
Industrial & Commercial Banks China 2,626 1.6
Bank of ChinaH
DGB Financial Banks South Korea 2,606 1.5
Jardine Matheson - Capital Goods Hong Kong 2,563 1.5
Singapore Reg
HDFC Bank Banks India 2,474 1.5
Standard Chartered Banks United 2,435 1.5
Kingdom
Westpac Banking Banks Australia 2,417 1.4
Top Thirty Holdings 117,143 70.4
E.Sun Financial - Ordinary Banks Taiwan 2,385 1.4
& Rights
Kasikornbank Banks Thailand 2,326 1.4
Telekomunikasi Indonesia Telecommunication Indonesia 2,313 1.4
Services
Korean Reinsurance Insurance South Korea 2,297 1.4
Filinvest Land Real Estate Philippines 2,272 1.4
China Life Insurance - Insurance Taiwan 2,153 1.4
Taiwan
China MobileR Telecommunication China 2,131 1.4
Services
LG Fashion Consumer Durables & South Korea 2,068 1.2
Apparel
Far Eastern New Century Capital Goods Taiwan 2,054 1.2
Qingling MotorsH Automobiles & Components China 2,048 1.2
Top Forty Holdings 139,190 83.8
AT % OF
MARKET
VALUE PORT-
COMPANY INDUSTRY GROUP†COUNTRY £'000 FOLIO
CNOOCR Energy China 1,962 1.2
Goodman Real Estate Australia 1,935 1.2
Adani Ports & Special Transportation India 1,795 1.1
Economic Zone
United Overseas Bank Banks Singapore 1,764 1.1
Cheung Kong Real Estate Hong Kong 1,752 1.1
Pacific Basin Shipping Transportation Hong Kong 1,626 1.0
Shinsegae Retailing South Korea 1,618 1.0
HKR International Real Estate Hong Kong 1,615 1.0
China Shenhua EnergyH Energy China 1,604 1.0
Australia & New Zealand Banks Australia 1,581 1.0
Banking
Top Fifty Holdings 156,442 94.5
Yageo Technology Hardware & Taiwan 1,563 0.9
Equipment
QBE Insurance Insurance Australia 1,420 0.7
LT Group Food, Beverage & Tobacco Philippines 1,256 0.7
Glenmark Pharmaceuticals Pharmaceuticals, India 1,205 0.6
Biotechnology &
Life Sciences
Mindray Medical Health Care Equipment & China 1,124 0.6
International - ADR Services
Charm Communications - ADR Media Hong Kong 1,011 0.6
Newcrest Mining Materials Australia 914 0.6
Wumart StoresH Food & Staples Retailing China 643 0.4
Treasury Wine Estates Food, Beverage & Tobacco Australia 442 0.3
Dart Energy Energy Australia 138 0.1
Total holding of 60 (2013: 166,158 100.0
63)
ADR: American Depositary Receipts - are certificates that represent shares in
the applicable stock and are issued by a US bank. They are denominated and pay
dividends in US dollars.
H: H-Shares - shares issued by companies incorporated in the People's Republic
of China (PRC) and listed on the Hong Kong Stock Exchange.
R: Red Chip Holdings - holdings in companies incorporated outside the PRC,
listed on the Hong Kong Stock Exchange, and controlled by PRC entities by way
of direct or indirect shareholding and/or representation on the board.
Classification of Investments by Country/Sector
at 30 April
2014 2013
AT % OF AT % OF
VALUATION PORTFOLIO VALUATION PORTFOLIO
£'000 £'000
Australia
Consumer Staples 442 0.3 808 0.4
Energy 2,963 1.8 78 -
Financials 7,353 4.3 9,039 4.4
Materials 4,539 2.8 6,262 3.0
15,297 9.2 16,187 7.8
China
Consumer Discretionary 2,048 1.2 2,048 1.0
Consumer Staples 643 0.4 4,219 2.0
Energy 7,320 4.4 7,667 3.7
Financials 2,626 1.6 8,053 3.9
Health Care 1,124 0.6 2,969 1.5
Information Technology 8,855 5.3 13,793 6.7
Materials 3,423 2.1 191 0.1
Telecommunication Services 2,131 1.4 4,042 2.0
28,170 17.0 42,982 20.9
Hong Kong
Consumer Discretionary 3,894 2.3 5,599 2.8
Financials 6,637 4.1 11,843 5.9
Industrials 14,242 8.5 20,047 9.8
24,773 14.9 37,489 18.5
India
Financials 6,142 3.7 8,605 4.2
Health Care 1,205 0.6 - -
Industrials 1,795 1.1 - -
Information Technology 2,743 1.7 2,668 1.3
Materials 7,738 4.7 4,271 2.1
19,623 11.8 15,544 7.6
Indonesia
Financials 3,162 1.9 3,362 1.6
Telecommunication Services 2,313 1.4 - -
5,475 3.3 3,362 1.6
Philippines
Consumer Staples 1,256 0.7 1,856 0.9
Financials 2,272 1.4 7,380 3.6
3,528 2.1 9,236 4.5
Singapore
Energy - - 1,799 0.9
Financials 1,764 1.1 51 -
Industrials 2,984 1.8 2,748 1.3
Information Technology - - 1,506 0.7
4,748 2.9 6,104 2.9
2014 2013
AT % OF AT % OF
VALUATION PORTFOLIO VALUATION PORTFOLIO
£'000 £'000
South Korea
Consumer Discretionary 11,686 7.0 10,463 5.0
Financials 8,682 5.2 11,806 5.7
Information Technology 9,685 5.8 13,399 6.5
Materials 3,428 2.1 4,260 2.1
Utilities 4,911 3.0 - -
38,392 23.1 39,928 19.3
Taiwan
Financials 4,538 2.8 4,641 2.2
Industrials 2,054 1.2 2,741 1.3
Information Technology 10,911 6.5 12,938 6.3
17,503 10.5 20,320 9.8
Thailand
Financials 2,326 1.4 5,647 2.7
2,326 1.4 5,647 2.7
Other
Financials 6,323 3.8 9,084 4.4
6,323 3.8 9,084 4.4
Total 166,158 100.0 205,883 100.0
STATEMENT OF DIRECTORS' RESPONSIBILITIES
in respect of the preparation of the annual financial report
The Directors are responsible for preparing the annual financial report in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under the law the Directors have elected to prepare financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice. Under company law, the Directors must not approve the accounts unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records which are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and which
enable them to ensure that the financial statements comply with the Companies
Act 2006 (CA 2006). They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Company and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, a Directors' Report, a Directors' Remuneration
Report and a Corporate Governance Statement that comply with that law and those
regulations.
In so far as each of the Directors is aware:
• there is no relevant audit information of which the Company's Auditor is
unaware; and
• the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
Auditor is aware of that information.
This information is given and should be interpreted in accordance with
provision s418 of CA 2006.
The Directors of the Company each confirm to the best of their knowledge that:
• the financial statements, prepared in accordance with UK Generally Accepted
Accounting Practice, give a true and fair view of the assets, liabilities,
financial position and net return of the Company;
• this annual financial report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces; and
• they consider that this annual financial report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model and strategy.
Carol Ferguson
Chairman
Signed on behalf of the Board of Directors
1 July 2014
Income Statement
for the year ended 30 April
2014 2013
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
RETURN RETURN RETURN RETURN RETURN RETURN
NOTES £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on - (2,281) (2,281) - 17,236 17,236
investments
Gains/(losses) on foreign - 41 41 - (869) (869)
currency revaluation
Income 2 4,547 - 4,547 4,557 - 4,557
Investment management fee 3 (311) (933) (1,244) (339) (1,016) (1,355)
Other expenses (539) (6) (545) (538) (11) (549)
Return before finance costs 3,697 (3,179) 518 3,680 15,340 19,020
and taxation
Finance costs (21) (64) (85) (35) (106) (141)
Return on ordinary 3,676 (3,243) 433 3,645 15,234 18,879
activities before tax
Tax on ordinary activities (344) - (344) (317) - (317)
Net return on ordinary 3,332 (3,243) 89 3,328 15,234 18,562
activities after tax for
the financial year
Return per ordinary share: 4
Basic 3.6p (3.5p) 0.1p 3.3p 15.0p 18.3p
Diluted n/a n/a n/a 3.2p 14.9p 18.1p
The total return column of this statement represents the Company's profit and
loss account prepared in accordance with UK Accounting Standards. The
supplementary revenue and capital columns are prepared in accordance with the
Statement of Recommended Practice issued by the Association of Investment
Companies. All items in the above statement derive from continuing operations
and the Company has no other gains or losses, therefore no statement of total
recognised gains and losses is presented. No operations were acquired or
discontinued in the year.
reconciliation of movements in shareholders' funds
for the year ended 30 April
CAPITAL
SHARE SHARE REDEMPTION SPECIAL CAPITAL REVENUE
CAPITAL PREMIUM RESERVE RESERVE RESERVE RESERVE TOTAL
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 April 2012 9,493 75,457 2,042 9,287 63,135 5,327 164,741
Interim dividend - note - - - - - (2,980) (2,980)
5
Net return for the year - - - - 15,234 3,328 18,562
Exercise of (176) 176 - - - - -
subscription shares
into
ordinary shares
Net proceeds from issue 1,765 20,278 - - - - 22,043
of ordinary shares
on conversion of
subscription shares
Shares bought back and (163) - 163 (6,838) - - (6,838)
held in
treasury/cancelled
At 30 April 2013 10,919 95,911 2,205 2,449 78,369 5,675 195,528
Final dividend - note 5 - - - - - (3,389) (3,389)
Net return for the year - - - - (3,243) 3,332 89
Tender offer (1,589) - 1,589 (2,449) (24,952) - (27,401)
Shares bought back and (116) - 116 - (1,858) - (1,858)
cancelled
At 30 April 2014 9,214 95,911 3,910 - 48,316 5,618 162,969
BALANCE SHEET
at 30 April
2014 2013
NOTES £'000 £'000
Fixed assets
Investments designated at fair value 166,158 205,883
Current assets
Debtors 1,390 1,020
Cash at bank 1,348 944
2,738 1,964
Creditors: amounts falling due within one year (5,927) (12,319)
Net current liabilities (3,189) (10,355)
Total net assets 162,969 195,528
Capital and reserves
Share capital 6 9,214 10,919
Share premium 95,911 95,911
Other reserves:
Capital redemption reserve 3,910 2,205
Special reserve - 2,449
Capital reserve 48,316 78,369
Revenue reserve 5,618 5,675
Total Shareholders' funds 162,969 195,528
Net asset value per ordinary share
Basic 7 183.4p 184.6p
These financial statements were approved and authorised for issue by the Board
of Directors on 1 July 2014.
Carol Ferguson
Chairman
Signed on behalf of the Board of Directors
Cash Flow Statement
for the year ended 30 April
2014 2013
£'000 £'000
Cash inflow from operating activities 2,545 1,870
Servicing of finance (85) (143)
Taxation - -
Capital expenditure and financial investment 36,159 (17,119)
Dividends paid - note 5 (3,389) (2,980)
Net cash inflow/(outflow) before management of 35,230 (18,372)
liquid resources and financing
Financing (34,817) 19,174
Increase in cash in the year 413 802
Reconciliation of cash flow to movement in net Debt
for the year ended 30 April
2014 2013
£'000 £'000
Increase in cash in the year 413 802
Cash outflow/(inflow) from movement in debt 5,558 (3,969)
Change in net funds/(debt) resulting from cash 5,971 (3,167)
flows
Exchange differences 41 (869)
Movement in net funds/(debt) in the year 6,012 (4,036)
Net debt at beginning of year (9,995) (5,959)
Net debt at end of year (3,983) (9,995)
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 April 2014
1. Accounting Policies
Accounting policies describe the Company's approach to recognising and
measuring transactions during the year and the position of the Company at the
year end.
A summary of the principal accounting policies, all of which have been
consistently applied throughout this and the preceding year, are set out in the Annual Financial Report.
(a) Basis of Preparation
Accounting Standards Applied
The financial statements have been prepared under the historical cost
convention, except for the measurement at fair value of investments, and in
accordance with applicable United Kingdom Accounting Standards and with the
Statement of Recommended Practice (SORP) `Financial Statements of Investment
Trust Companies and Venture Capital Trusts' issued by the Association of
Investment Companies in January 2009.
2. Income
This note shows the income generated from the portfolio (investment assets) of
the Company and income received from any other source.
2014 2013
£'000 £'000
Income from investments
Overseas dividends 3,753 3,985
Scrip dividends 306 140
UK dividends 381 267
Special dividends - overseas 107 165
Total dividend income 4,547 4,557
3. Investment Management Fee
This note shows the investment management fee due to the Manager which is
calculated and paid quarterly.
2014 2013
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
£'000 £'000 £'000 £'000 £'000 £'000
Investment management 311 933 1,244 339 1,016 1,355
fee
Details of the investment management and secretarial agreement are given in the
Directors' Report in the Annual Financial Report. At 30 April 2014, £298,000
was due for payment in respect of the management fee (2013: £367,000).
4. Return per Ordinary Share
Return per share is the amount of gain generated for the financial year divided
by the weighted average number of ordinary shares in issue.
2014 2013
£'000 £'000
Return per ordinary share is based on the
following:
Revenue return 3,332 3,328
Capital return (3,243) 15,234
Total return 89 18,562
2014 2013
Weighted average number of ordinary shares in issue
during the year:
- basic 93,873,305 101,744,195
- dilutive potential shares arising from n/a 619,906
subscription shares
- diluted n/a 102,364,101
The subscription shares were all exercised in 2013, so there is no dilution in
2014. For 2013, the diluted return per ordinary share is based on the weighted
average number of ordinary shares in issue during the year, as adjusted in
accordance with the requirements of FRS22 `Earnings per Share'. In calculating
the diluted return, the exercise of all the subscription shares has been
assumed, with the exercise proceeds of 125p per share being used to purchase
ordinary shares at a price of 139.16p, being the average market price up to the
subscription share exercise date.
5. Dividends on Ordinary Shares
Dividends represent the return of income less expenses to shareholders. The
Company pays one dividend a year.
Dividends on shares paid in the year:
2014 2013
PENCE £'000 PENCE £'000
Final/interim dividend in respect of previous 3.20 3,389 3.20 2,981
year
Unclaimed dividends in respect of prior years - - - (1)
3.20 3,389 3.20 2,980
Dividend on shares payable in respect of the current year:
2014 2013
PENCE £'000 PENCE £'000
Final dividend proposed 3.45 3,066 3.20 3,389
An interim dividend was declared in lieu of final for the year ended 30 April
2012, and was paid in the financial year ended 30 April 2013.
6. Share Capital
Share capital represents the total number of shares in issue. Any dividends
declared will be paid on the shares in issue on the record date.
(a) Allotted, called-up and fully paid
2014 2013
£'000 £'000
88,859,369 (2013: 105,911,686) ordinary shares of 8,886 10,591
10p each
3,277,224 (2013: 3,277,224) treasury shares of 328 328
10p each
9,214 10,919
(b) Share movements
2014 2013
ORDINARY TREASURY ORDINARY TREASURY
NUMBER NUMBER NUMBER NUMBER
Number at start of year 105,911,686 3,277,224 93,165,757 -
Exercise of subscription shares - - 17,648,153 -
Tender offer (15,886,669) - - -
Shares bought back and cancelled (1,165,648) - (1,625,000) -
Shares bought back into treasury - - (3,277,224) 3,277,224
88,859,369 3,277,224 105,911,686 3,277,224
The average price of the shares bought back was 159.50p (2013: 138.50p).
During the year the Company undertook a tender offer of 15% of its shares in
issue at 170.3877p per share. Fixed costs and expenses of the tender offer
amounted to £332,000, giving a total cost of £27,401,000.
(c) Winding-up provisions
The Directors are obliged to convene an Extraordinary General Meeting (EGM) to
consider a special resolution to wind up the Company every third year from the
date of the AGM at which the Directors were released from such obligation. At
the AGM in 2013 the Directors were released from their obligation to convene an
EGM and a resolution to release the Directors from their obligation to convene
an EGM will be put to shareholders at the AGM in 2016.
7. Net Asset Value
The Company's total net assets (total assets less total liabilities) are often
termed shareholders' funds and are converted into net asset value per ordinary
share by dividing by the number of shares in issue.
The net asset value attributable to each share in accordance with the Company's
Articles are set out below.
2014 2013
Basic:
Ordinary shareholders' funds £162,969,000 £195,528,000
Number of ordinary shares in issue, excluding 88,859,369 105,911,686
treasury shares
Net asset value per ordinary share 183.4p 184.6p
8. Related Party Transactions and Transactions with the Manager
A related party is a company or individual who has direct or indirect control
or who has significant influence over the Company. Under accounting standards,
the Manager is not a related party.
Under UK GAAP, the Company has identified the Directors as related parties. The
Directors' remuneration and interests have been disclosed in the Annual
Financial Report. No other related parties have been identified.
Invesco Asset Management Limited (IAML), a wholly owned subsidiary of Invesco
Limited, acts as Manager, Company Secretary and Administrator to the Company.
Details of IAML's services and fees are disclosed in the Directors' Report.
9. This Annual Financial Report Announcement is not the Company's statutory
accounts. The above results for the year ended 30 April 2014 have been agreed
with the auditors and are an abridged version of the Company's full accounts,
which have been approved and audited with an unqualified report. The 2013 and
2014 statutory accounts received unqualified reports from the Company's
auditors and did not include any reference to matters to which the auditors
drew attention by way of emphasis without qualifying the reports, and did not
contain a statement under s498 of the Companies Act 2006. The financial
information for 2013 is derived from the statutory accounts for 2013 which have
been delivered to the Registrar of Companies. The 2014 accounts will be filed
with the Registrar of Companies in due course.
10. The Audited Annual Financial Report will be posted to shareholders shortly
Copies may be obtained during normal business hours from the offices of Invesco
Perpetual, 6th Floor, 125 London Wall, EC2Y 5AS. A copy of the Annual Financial
Report will be available from Invesco Perpetual on the following website:
www.invescoperpetual.co.uk/investmenttrusts
11. The Annual General Meeting of the Company will be held at 12.00 noon on 7
August 2014 at 43-45 Portman Square, London, W1H 6LY.
By order of the Board
Invesco Asset Management Limited - Company Secretary
1 July 2014
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