Final Results
INVESCO Asia Trust plc
Preliminary Announcement of Unaudited Final Results
For the Financial Year Ended 30 April 2005
Chairman's Statement
Performance and Prospects
This statement is my first as Chairman of your Company and I am pleased to
report that the Company's performance for the twelve months to 30 April 2005
reflects solid improvement. Over the period, the net asset value per ordinary
share increased from 60.5p to 66.1p, a rise of 9.2%, compared to the benchmark
index, the MSCI (All Country) Far East Free ex Japan Index, adjusted for
sterling, which rose by 4.5%. The mid-market share price increased from 53.5p
to 57.8p, a rise of 8.0%.
The discount at which the Company's shares traded was 12.6% at the end of the
financial year, a slight increase over the discount of 11.6% at the previous
year end. Whilst no share buy backs were made during the year the Board
continues to review the possibility of share buy backs as a means of
influencing the discount and we shall seek approval at the AGM to renew the
share buy back authority.
Asian markets have generally withstood the weaker trend in global markets this
year and are still showing positive returns year-to-date. However, some markets
- especially in the Philippines, Indonesia and India - despite returning
double-digit increases, have come under pressure as domestic interest rates
have risen in response to higher inflation. Rising inflation itself has been
due primarily to the effects of higher energy and commodity prices, especially
as government subsidies have been removed. However, it now seems that
inflationary pressures are starting to recede across the region.
In China, economic growth remains strong and we expect this to continue. As far
as the currency peg is concerned, a small upward revision (perhaps presented as
a widening of the fluctuation bands to ±6%) may be imminent. This should have
no material impact on China's export competitiveness.
Across Asia the next few months will see some nervousness about earnings
growth. Margins in the technology sector are clearly under pressure, but many
companies are expecting the situation to improve in the second half of the year
as the current inventory overhang is reduced.
Shareholders will recall that Stuart Parks took over the running of the
Company's portfolio in March 2004. In the first half of the year under review,
he concentrated on reshaping the portfolio to bring it more into line with his
preferred model. During the year Stuart and his team visited a large number of
companies in Asia, as a result of which, as you will see from the Manager's
Report which follows, they anticipate that earnings growth will be around 8% in
2005 and that their stock selection can continue to produce modest absolute
returns.
It would be negative for the region if US interest rates were to start
increasing more steeply and the dollar was to undergo a material upward
revaluation. However, in the absence of such changes, and without the threat of
a sudden tightening of liquidity conditions, continued strong growth with low
inflation, supported by the prevailing macroeconomic and policy environment,
reasonable P/E ratios and asset valuations, provide favourable underlying
conditions for Asian markets.
Dividend
The net revenue increased during the year and your Board is recommending a
final dividend of 0.9 pence per ordinary share (2004: 0.5 pence). The dividend,
which is subject to the approval of shareholders at the Annual General Meeting,
will be payable on 29 July 2005 to shareholders on the register on 1 July 2005.
£39,000 will be transferred to revenue reserves.
The proposed dividend increase this year is made possible largely as a result
of the improving earnings in our investment portfolio. It is not possible at
this stage to comment on whether a 0.9 pence dividend establishes a new
benchmark for the future, but your Board is strongly of the view that as much
as possible of the Company's net revenue should be distributed.
Gearing
For most of the year the Company's loan facility has remained undrawn. However,
drawings of £3.7 million were made for the last two months of the year, gearing
the portfolio by 5%.
Your Board, together with the Manager, regularly review gearing and will
continue to monitor gearing levels closely in the year ahead.
Socially Responsible Investing
The responsibility for making and holding investments and for voting on the
Company's behalf at investor companies' meetings has been delegated by the
Board to the Manager. The Board's instructions to the Manager in respect of
Socially Responsible Investing are that, subject always to pursuing the best
economic interest of the Company and its shareholders, the Manager should take
careful account of ethical, social and environmental policies in making and
holding investments and in voting under the powers conferred by the
investments.
Mr Robin Baillie
I succeeded Robin Baillie as Chairman of the Board on 31 March 2005. I would
like to take this opportunity on behalf of the Board to express our warmest
thanks to Mr Baillie, who had been Chairman since the Company's formation in
1995, for his leadership and guidance over the last ten years. We are fortunate
that we will continue to benefit from Mr Baillie's experience and wise counsel
as he will remain a member of the Board.
Annual General Meeting
At last year's Annual General Meeting the resolution to release the Company
from a continuation vote at this year's meeting was successfully passed. My
fellow Directors and I greatly appreciate your continuing support as
shareholders. The Annual General Meeting will be held on Tuesday 26 July 2005
at 12 noon. I very much look forward to meeting you at that time.
David Hinde
23 June 2005
Statement of Total Return (incorporating the revenue account)
for the year ended 30 April
2005 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 5,281 5,281 - 16,948 16,948
Losses on foreign
currency revaluation - (114) (114) - (263) (263)
Income 2,033 858 2,891 1,381 - 1,381
Investment management (125) (379) (504) (122) (367) (489)
fee
Other expenses (395) - (395) (352) - (352)
Net return before
finance costs
and taxation 1,513 5,646 7,159 907 16,318 17,225
Interest payable and
similar
charges (35) (29) (64) (36) (34) (70)
Return on ordinary
activities
before tax 1,478 5,617 7,095 871 16,284 17,155
Tax on ordinary (485) 237 (248) (280) 105 (175)
activities
Return on ordinary
activities
after tax for the 993 5,854 6,847 591 16,389 16,980
financial year
Dividend in respect
of equity
shares (954) - (954) (530) - (530)
Transfer to reserves 39 5,854 5,893 61 16,389 16,450
Return per ordinary
share:
Basic and diluted 0.94p 5.52p 6.46p 0.55p 15.47p 16.02p
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
2005 2004
£'000 £'000
Revenue transfer to reserves 39 61
Capital return for the year 5,854 16,389
Net movement in Shareholders' funds 5,893 16,450
Opening Shareholders' funds 64,136 47,686
Closing Shareholders' funds 70,029 64,136
Balance Sheet
at 30 April
2005 2004
£'000 £'000
Fixed assets
Investments 69,099 62,574
Current assets
Debtors 602 222
Cash at bank 5,476 2,399
6,078 2,621
Creditors: amounts falling due (5,114) (1,059)
within one year
Net current assets 964 1,562
Total assets less current 70,063 64,136
liabilities
Provisions for liabilities and (34) -
charges
Net assets 70,029 64,136
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 (46,780) (40,664)
Capital reserve - unrealised 4,302 (7,668)
Revenue reserve 877 838
Equity Shareholders' funds 70,029 64,136
Net asset value per ordinary share
Basic 66.1p 60.5p
Cash Flow Statement
for the year ended 30 April
2005 2004
£'000 £'000
Cash inflow from operating activities 1,694 343
Servicing of finance (28) (70)
Taxation - -
Net financial investment (1,645) 6,071
Equity dividends paid (530) (424)
Net cash (outflow)/inflow before
management of liquid
resources and financing (509) 5,920
Management of liquid resources (2,015) (1,573)
Financing 3,700 (4,525)
Increase/(decrease) in cash in the 1,176 (178)
year
Reconciliation of cash flow to movement in net funds/(debt)
2005 2004
£'000 £'000
Increase/(decrease) in cash 1,176 (178)
Cash (inflow)/outflow from movement (3,700) 4,525
in debt
Cash outflow from increase in liquid 2,015 1,573
resources
Change in net funds resulting from (509) 5,920
cash flows
Translation differences (114) (263)
Movement in net funds in the year (623) 5,657
Net funds/(debt) at beginning of year 2,399 (3,258)
Net funds at end of year 1,776 2,399
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 April 2005 or 2004. The financial
information for 2004 is derived from the statutory accounts for 2004 which have
been delivered to the Registrar of Companies. The Auditors have reported on the
2004 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 2005 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
2005 2004
£'000 £'000
Income from investments
Overseas dividends 1,914 1,350
Scrip dividends 34 -
1,948 1,350
Other income
Deposit interest 85 31
Total income 2,033 1,381
Total income comprises:
Dividends 1,948 1,350
Interest 85 31
2,033 1,381
2 Investment management fee
2005 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 125 379 504 122 367 489
3. Other expenses
2005 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
General expenses 297 - 297 262 - 262
Directors' emoluments 72 - 72 64 - 64
(see below)
Auditors' remuneration - 20 - 20 20 - 20
for audit services
- for tax compliance 6 - 6 6 - 6
395 - 395 352 - 352
Directors' emoluments are authorised by the Articles of Association up to a
total amount of £100,000 per annum.
In 2004, of the Directors' emoluments disclosed above, £1,000 was payable to a
third party in respect of making
available the services of a Director. This fee was assigned to INVESCO Asset
Management Limited.
4. Interest payable and similar charges
2005 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Overdraft interest - - - - 1 1
Loan arrangement fee 25 - 25 25 - 25
Term loan repayable
within
1 year, not by instalment 10 29 39 11 33 44
35 29 64 36 34 70
5. Tax on net revenue from ordinary activities
Analysis of charge for the year
2005 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom tax:
Corporation tax at 30% 140 - 140 90 - 90
(2004: 30%)
Tax relief attributable
to management
fee and interest,
allocated to
capital reserve - 237 (237) - 105 (105) -
realised
Overseas tax 214 - 214 175 - 175
Relief for overseas tax (136) - (136) (90) - (90)
Eligible unrelieved (4) - (4) - - -
foreign tax
Current tax charge for 451 (237) 214 280 (105) 175
the year
Deferred tax 34 - 34 - - -
Tax on ordinary 485 (237) 248 280 (105) 175
activities
The overseas tax charge consists of irrecoverable withholding tax.
6. Dividends
2005 2004
£'000 £'000
Dividend on equity shares
Ordinary - proposed dividend of 0.9p per 954 530
share (2004: 0.5p)
954 530
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 105,962,354 (2004: 105,962,225) ordinary shares, being
the weighted
average number of 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 105,962,354 (2004: 105,962,225) ordinary shares, being
the weighted
average number of shares in issue throughout the year.
There is no dilution to basic return per ordinary share as all unexercised
warrants lapsed on 25 August 2004 (2004: no dilution as the share price was
less than warrant exercise price).
8. Net asset value
The net asset per ordinary share and the net assets attributable at the
year-end were as follows:
Net asset value per Net assets
share attributable
2005 2004 2005 2004
pence pence £`000 £`000
Ordinary shares
- Basic 66.1p 60.5p 70,029 64,136
The basic net asset value per ordinary share is based on net assets at the year
end and on 105,962,425
(2004: 105,962,225) ordinary shares, being the number of ordinary shares in
issue at the year end.
By order of the Board
INVESCO Asset Management Limited - Secretaries
23 June 2005
Wednesday, 15th May 2024
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