Final Results
INVESCO Asia Trust plc
Preliminary Announcement of Unaudited Final Results
For the Financial Year Ended 30 April 2004
Chairman's Statement
Performance and prospects
The year under review was one of mixed fortunes for your Company. The first
half of our financial year saw significant improvements in both NAV and share
price, which rose by 37.6 per cent and 45.5 per cent from the figures at the
end of April, 2003 recovering most of the falls experienced in the previous
year. The second half was bedevilled by growing concerns about a China slow
down and future US interest rate increases, and by fears of large oil price
rises and a consequential fall in investors' appetite for risk. These concerns
drove down both NAV and share price - an experience shared by most of our peer
group investors in the Asian markets. Nevertheless, we finished the year well
ahead of the position at 30 April 2003 with NAV up by 34.5 per cent and share
price up by 41.5 per cent.
Looking ahead, expert consensus is that the developing economies of the Asia
Pacific region remain in much better shape than they were in the aftermath of
the 1997/98 financial crisis. For example, the Asian Development Bank expects
aggregate gross domestic product growth to rise to 6.8 per cent from a
faster-than-expected 6.5 per cent in 2003. China, despite its evident problems,
is likely to continue to be a driver of growth in the region, and the
increasing evidence that Japan (where your Company does not invest) is at last
beginning to recover from its long recession is also having a favourable
impact. Moreover, the political concerns aroused by the unexpected outcome of
the recent Indian elections are fading, restoring India's position as a growing
positive influence in the region.
None of the Asian markets is exempt, of course, from the effects of changes in
exchange rates, interest rates and fiscal policies in the developed markets.
But your Board is confident that most of the economies and markets in which we
invest will attract renewed and even more substantial interest from investors
around the world as the full impact of strong regional and national growth and
productivity are compared with the more sluggish pace of development in Western
economies.
Dividend
Net revenue increased during the year and your Board is recommending a final
dividend of 0.5 pence per ordinary share (2003: 0.4 pence), an increase of 25
per cent. The dividend which is subject to the approval of shareholders, is
payable on 29 July 2004 to shareholders on the register on 2 July 2004. The
remaining net revenue for the year, amounting to £61,000 will be taken to
reserves.
Manager
The Board is required to justify to shareholders its reasons for continuing
with existing management arrangements or for making changes to those
arrangements. The necessary assessment involves a continuing dialogue with the
Manager, as a result of which two important changes have been agreed.
Firstly, INVESCO agreed with the Board in January 2004 that a change of fund
manager and style had become necessary. Accordingly, the management of the
Company was transferred from Hong Kong to London/Henley in March 2004, when
Stuart Parks, a highly regarded and very successful manager of funds under the
Perpetual/INVESCO banner, was appointed as manager of the Company. A short cv
of Stuart Parks appears in the Report and Accounts. The funds for which he is
responsible have been leaders in the field, and in his report he sets out
details of the changes which he has made to the portfolio and outlines his
market outlook and strategy. We are confident in his ability to improve returns
from investment in markets which, as I have said, we believe to hold great
promise.
Secondly, to mark the Board's concern at a slower pace of growth than we had
hoped for, we also agreed with INVESCO earlier this year that the notice period
for the management agreement should be reduced from 1 year to six months.
In the light of these developments your Board has concluded that INVESCO has
made, and is making, determined efforts to enhance shareholder value and that,
subject to continuing review, they should remain as the steward of our funds.
Gearing
You will see from the figures presented in the accounts that Stuart Parks'
initial cautious stance has resulted in gearing being eliminated, with cash
balances of £2.4 million built up by the year-end. We are very conscious of the
benefits which the ability to use gearing confer on investment trusts and we
expect to see gearing employed again as soon as the Board and the Manager
consider that it will be of advantage to the Fund.
Corporate Governance
Following publication of the Combined Code on Corporate Governance in July
2003, the Board carried out a comprehensive review of the governance of the
Company's affairs. The Corporate Governance statement in the Report and
Accounts summarises the results of that work. The Board believes that its
governance standards and arrangements conform to current best practice.
Socially Responsible Investing
The Board's policies on socially responsible investment have been agreed with
the Manager. Potential investee companies' policies towards the environment and
their social responsibilities are reviewed - together which the usual financial
and management considerations - as part of the overall assessment of risks and
suitability for investment.
Continuation of the Company
Shareholders will be aware that our statutes required that, unless the
Directors are relieved of the obligation by earlier resolution, they must
convene an Extraordinary General Meeting next year at which a Special
Resolution providing for the Company to be wound up on a voluntary basis be put
to shareholders. The Board is proposing a resolution at the AGM to seek
shareholders' agreement that the Directors be relieved of the obligation to
convene such an Extraordinary General Meeting next year, for they believe that
a wind-up would not serve shareholders' best interests and that the combination
of new management and the excellent prospects which we see for the markets in
which we invest will serve them better. Accordingly, we strongly urge you to
vote in favour of the relevant resolution at the AGM.
Buy-back of Shares
As you will see, there has been a sharp reduction in the discount at which,
historically, the shares have traded, but no shares were bought back during the
year. We nonetheless regard share buy-backs as a valuable means of influencing
the discount and maintaining liquidity in the shares. We will therefore seek
shareholders' agreement at the AGM for the renewal of the share buy-back
authority and we recommend strongly that you vote in favour to give us the
flexibility which the authority provides.
Articles of Association
The Company's Articles of Association were adopted in July 1999 and are now out
of date in a number of respects. At the Annual General Meeting the Board will
propose the adoption of new Articles incorporating amendments to reflect
current practice and recent legislatory and regulatory changes. The proposed
changes will be explained in detail in the Report and Accounts on publication.
We have started the new financial year in good heart, with visible improvements
in our position in the peer group league tables, and we look forward to
continuing improvement in performance under the Company's new management.
Annual General Meeting
My colleagues and I are very mindful of our obligations to our shareholders and
greatly appreciate their support. This year's Annual General Meeting is
particularly important and I look forward to a good turn-out. The matters on
the agenda to which I would particularly draw your attention are listed below.
Robin Baillie
28 June 2004
Statement of Total Return (incorporating the revenue account)
for the year ended 30 April
2004 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on - 16,948 16,948 - (28,091) (28,091)
investments
Losses on foreign
currency revaluation - (263) (263) - (64) (64)
Income 1,381 - 1,381 1,335 - 1,335
Investment management fee (122) (367) (489) (102) (306) (408)
Other expenses (352) - (352) (324) (1) (325)
Net return before finance
costs
and taxation 907 16,318 17,225 909 (28,462) (27,553)
Interest payable and
similar
charges (36) (34) (70) (69) (207) (276)
Return on ordinary
activities
before tax 871 16,284 17,155 840 (28,669) (27,829)
Tax on ordinary activities (280) 105 (175) (267) 97 (170)
Return on ordinary
activities
after tax for the 591 16,389 16,980 573 (28,572) (27,999)
financial year
Dividend in respect of
equity
shares (530) - (530) (424) - (424)
Transfer to/(from) 61 16,389 16,450 149 (28,572) (28,423)
reserves
Return per ordinary share:
Basic 0.55p 15.47p 16.02p 0.54p (26.96)p (26.42)p
The Revenue column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the year.
Reconciliation of Movement in Shareholders' Funds
for the year ended 30 April
2004 2003
£'000 £'000
Revenue transfer to reserves 61 149
Capital return for the year 16,389 (28,572)
Net movement in Shareholders' funds 16,450 (28,423)
Opening Shareholders' funds 47,686 76,109
Closing Shareholders' funds 64,136 47,686
Balance Sheet
at 30 April
2004 2003
£'000 £'000
Fixed assets
Investments 62,574 51,142
Current assets
Debtors 222 422
Cash at bank 2,399 1,267
2,621 1,689
Creditors: amounts falling due within one year 1,059 5,145
Net current assets/(liabilities) 1,562 (3,456)
Total assets less current liabilities 64,136 47,686
Capital and reserves
Called-up 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 (40,664) (37,652)
Capital reserve - unrealised (7,668) (27,069)
Revenue reserve 838 777
Equity Shareholders' funds 64,136 47,686
Net asset value per ordinary share
Basic 60.5p 45.0p
Cash Flow Statement
for the year ended 30 April
2004 2003
£'000 £'000
Cash inflow from operating activities 343 350
Servicing of finance (70) (276)
Taxation - 7
Capital expenditure and financial investment 6,071 2,991
Equity dividends paid (424) (424)
Net cash inflow before management of liquid
resources and financing 5,920 2,648
Management of liquid resources (1,573) -
Financing (4,525) (2,375)
(Decrease)/increase in cash (178) 273
Reconciliation of cash flow to movement in net funds/(debt)
2004 2003
£'000 £'000
(Decrease)/increase in cash (178) 273
Cash outflow from decrease in debt 4,525 2,375
Cash outflow from increase in liquid resources 1,573 -
Change in net funds resulting from cash flows 5,920 2,648
Translation difference (263) (64)
Movement in net funds in the year 5,657 2,584
Net debt at beginning of year (3,258) (5,842)
Net funds/(debt) at end of year 2,399 (3,258)
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 April 2004 or 2003. The financial
information for 2003 is derived from the statutory accounts for 2003 which have
been delivered to the Registrar of Companies. The Auditors have reported on the
2003 statutory accounts and their report was unqualified and did not contain a
statement under the section 237(2) or (3) of the Companies Act 1985. The
statutory accounts for 2004 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 Annual General
Meeting.
Notes
1. Income
2004 2003
£'000 £'000
Income from investments
Overseas dividends 1,350 1,267
Scrip dividends - 59
1,350 1,326
Other income
Deposit interest 31 9
Total income 1,381 1,335
Total income comprises:
Dividends 1,350 1,326
Interest 31 9
1,381 1,335
2. Investment management fee
2004 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 122 367 489 102 306 408
3. Other expenses
2004 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
General expenses 262 - 262 241 - 241
Directors' emoluments 64 - 64 58 - 58
(see below)
Auditors' remuneration - 20 - 20 19 - 19
for audit services
- for other services 6 - 6 6 - 6
Transaction dealing - - - - 1 1
charge
352 - 352 324 1 325
Directors' emoluments are authorised by the Articles of Association up to a
total amount of £100,000 per annum.
Of the Directors' emoluments disclosed above, £1,000 (2003: £5,000) was payable
to a third party in respect of making available the services of a Director. The
fee was assigned to INVESCO Asset Management Limited.
4. Interest payable and similar charges
2004 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Overdraft interest - 1 1 - -
Loan arrangement fee 25 - 25 6 19 25
Term loan repayable
within
1 year, not by 11 33 44 63 188 251
instalment
36 34 70 69 207 276
5. Tax on net revenue from ordinary activities
Analysis of charge for the year
2004 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom tax:
Corporation tax at 30% 90 - 90 97 - 97
(2003: 30%)
Tax relief attributable to
management fee and
interest, allocated to
capital reserve - realised 105 (105) - 97 (97) -
Overseas tax 175 - 175 171 - 171
Relief for overseas tax (90) - (90) (97) - (97)
Prior year adjustment - - - (1) - (1)
Current tax charge for the 280 (105) 175 267 (97) 170
year
The overseas tax charge consists of irrecoverable withholding tax.
6. Dividends
2004 2003
£'000 £'000
Dividend on equity shares
Ordinary - proposed dividend of 0.5p per share (2003: 0.4p) 530 424
530 424
7. Return per ordinary share
Basic revenue return per ordinary share is based on the net revenue return on
ordinary activities after taxation and on 105,962,225 (2003: 105,962,225)
ordinary shares in issue throughout the year.
Basic capital return per ordinary share is based on the net capital return on
ordinary activities after taxation and on 105,962,225 (2003: 105,962,225)
ordinary shares in issue throughout the year.
As the ordinary share price remained under the warrant exercise price, the
warrants are not dilutive and therefore no diluted return per ordinary share
has been calculated.
8. 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 per share Net assets attributable
2004 2003 2004 2003
Pence Pence £'000 £'000
Ordinary shares
- Basic 60.5p 45.0p 64,136 47,686
The basic net asset value per ordinary share is based on net assets at the
year-end and on 105,962,225 (2003: 105,962,225) ordinary shares, being the
number of ordinary shares in issue at the year-end.
9.
The Company has conducted its affairs so that it satisfies the conditions for
approval as an investment trust Company set out in section 842 of the Income
and Corporation Tax Act 1988. It is the intention of the Directors that the
Company continues to meet these conditions.
10. Report and Accounts
The audited Report and Accounts will be posted to shareholders shortly. Copies
may be obtained from the Company's Registered Office, 30 Finsbury Square,
London, EC2A 1AG.
11. Annual General Meeting
The Company's Annual General Meeting will be held at the Company's Registered
Office, 30 Finsbury Square, London, EC2A 1AG on Wednesday 28 July 2004 at
3.00pm.
By order of the Board
INVESCO Asset Management Limited - Secretaries
28 June 2004
Wednesday, 15th May 2024
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