Pacific Assets Trust plc - Annual Report for the Year Ended 31 January 2025
(the “Company”)
Annual Results for the Year Ended
The statements below are extracted from the Company’s annual report for the year ended
The Annual Report will be posted to shareholders on
0203 709 8734
Company Performance
Performance Summary
As at As at
31 January 31 January
2025 2024
Shareholders’ funds £503.4m £464.8m
Market capitalisation £431.7m £422.1m
One year to One year to
31 January 31 January
Performance 2025 2024
Net asset value per share total return1 2 9.7% (1.3)%
Share price total return1 2 3.7% (1.9)%
CPI +6%3 8.8% 10.4%
MSCI All Country Asia ex Japan Index total return, 22.3% (10.5)%
sterling adjusted1
Average discount of share price to net asset value per 11.5% 6.4%
share1 2
Ongoing charges2 1.1% 1.1%
Revenue return per share4 5.4p 4.3p
Dividend per share 4.9p 4.0p
1 Source: Morningstar
2 Alternative Performance Measure (see Glossary beginning on page 80).
3 The Company’s Performance Objective (see Glossary beginning on page 80).
4 See Glossary beginning on page 80.
Chair’s Statement
Introduction and Results
I am pleased to present this Annual Report for the year ended
While this is a good absolute return, which is the Company’s primary objective, the Company lagged the MSCI AC Asia ex Japan Index total return of 22.3%, and the Company’s bespoke peer group of four other trusts and an exchange traded fund. The year presented a number of challenges, in particular a strong market rally in
This performance is characteristic of Stewart Investors’ investment strategy, which typically leads the Company to underperform in sharply rising markets but has historically preserved capital during times of market stress; a particularly pertinent quality for investors to keep in mind today as global markets enter an increasingly volatile period. Capital preservation remains the Portfolio Manager’s primary focus and shareholders may recall that the Company’s performance in a weak market in 2023 was the best of the peer group, when overweight positioning in
The Board also notes that, over the longer periods against which we assess investment return, the Company’s performance is the best within the peer group over three years and third over five years. We have not done so well, however, against the long-term performance objective: over the last five years, our annualised NAV total return of 8.7% is behind the
Despite these headwinds,
The downturn in the Indian market, and the increasing fund flows into
The top two contributors to performance were, once again, Indian companies: Mahindra & Mahindra and CG Power and Industrial Solutions continue to be excellent investments for the Company. We note that Taiwanese companies also performed well, with four of the top ten contributors based in
Further analysis of the Company’s performance can be found in the Portfolio Manager’s Review beginning on page 12.
Share price performance
The Company’s shares traded at an average discount to the net asset value per share of 11.5% through the 12-month period to the end of January (2024: 6.4%). In line with the investment trust sector generally, the discount widened during the financial year to close at 14.4% (2024: 9.2%) and this is reflected in the Company’s share price total return of 3.7%, which fell short of the net asset value total return.
During the year, the Company repurchased 370,000 shares, at a total cost of £1.4 million, and at an average discount of 14.0%. The Company has continued to buy back shares since the year end and, at the time of writing, had repurchased a further 1,855,000 shares, at a cost of £6.3m, at an average discount of 13.0%. The Board continues to carefully weigh up the circumstances in which the Company should buy back shares in the market. We have been conscious that share buybacks have their drawbacks and are not always effective but we are prepared to take action when the discount widens materially.
Buybacks are an immediate way of addressing the share rating but the Board continues to believe that a combination of effective marketing and good performance offers the potential to improve the Company’s rating on a more sustained basis. Accordingly, the
Investment Policy
Shareholders will be aware that the definition of ‘Asia Pacific Region’ in the Company’s investment objective currently excludes
While there are a number of high-quality companies in
Dividend
The Company generated a revenue return of 5.3p per share during the year (2024: 4.3p per share) and, as a result, the Board recommends to shareholders the payment of a final dividend to ensure the Company complies with the investment trust rules regarding distributable income.
Subject to shareholder approval at the AGM, a final dividend of 4.9p per share will be paid on
The Board
During the year, and as previously announced, we were very pleased to appoint
Having served on the
Following Sian’s retirement,
Management
The Annual General Meeting
After holding our AGM in
As well as the formal proceedings, there will be an opportunity for shareholders to meet the Board and the Portfolio Manager, and to receive an update on the Company’s performance and its key investments.
The meeting, including the Portfolio Manager’s presentation, will again be live streamed by
I encourage all shareholders to exercise their right to vote at the AGM. The Board strongly encourages shareholders to register their votes online in advance (information on how to vote can be found on page 99). Registering your vote in advance will not restrict shareholders from attending and voting at the meeting in person should they wish to do so. The Board recommends that shareholders vote in favour of all the resolutions set out in the Notice of AGM, beginning on page 101, as the directors intend to do ourselves.
Outlook
The outlook for the
While long-term opportunities persist—particularly in areas aligned with sustainable development—our Portfolio Manager’s investment approach will need to account for heightened geopolitical risk and potential market dislocations. Their focus will continue to be on selecting high-quality companies with strong fundamentals, resilient balance sheets, and capable management teams that can navigate volatility and adapt to a more fragmented global trade environment.
Our Portfolio Manager’s long-term investment horizon, careful risk management, and commitment to engaging actively with portfolio companies remain their key strengths. The Board continues to believe their approach is well-suited to delivering sustainable value for shareholders, even in a more complex and fast-evolving regional landscape.
Chair
Investment Portfolio
as at
Value % Total
Company Country Sector
£’000 Assets
Mahindra & Mahindra India Consumer Discretionary 30,390 6.0%
Oversea-Chinese Banking Singapore Financials 19,998 3.9%
Corporation
Voltronic Power Technology Taiwan Industrials 18,120 3.6%
Cholamandalam Financial India Financials 17,380 3.4%
Tube Investments of India India Consumer Discretionary 16,259 3.2%
Midea China Consumer Discretionary 16,217 3.2%
Taiwan Semiconductor Taiwan Information Technology 15,574 3.1%
Manufacturing
CG Power & Industrial India Industrials 15,218 3.0%
Solutions
Shenzhen Inovance Technology China Industrials 15,164 3.0%
MediaTek Taiwan Information Technology 13,870 2.7%
Top 10 Investments 178,190 35.1%
Hoya Japan Health Care 12,639 2.5%
Samsung Electronics South Korea Information Technology 12,486 2.4%
Ayala Philippines Industrials 12,398 2.4%
Techtronic Industries Hong Kong Industrials 12,116 2.4%
Info Edge India India Communication Services 11,591 2.3%
Triveni Turbine India Industrials 11,391 2.2%
Airtac International Taiwan Industrials 10,568 2.1%
Shanthi Gears India Industrials 10,174 2.0%
Bank OCBC Indonesia Financials 9,867 1.9%
HDFC Bank India Financials 9,400 1.8%
Top 20 Investments 290,820 57.1%
ELGI Equipments India Industrials 9,231 1.8%
Delta Electronics Taiwan Information Technology 8,896 1.7%
Samsung Biologics South Korea Health Care 8,371 1.6%
Marico India Consumer Staples 8,051 1.6%
Philippine Seven Philippines Consumer Staples 7,853 1.5%
Dongguan Yiheda Automation China Industrials 7,796 1.5%
Tata Communications India Communication Services 7,367 1.4%
Sheng Siong Group Singapore Consumer Staples 7,287 1.4%
Advantech Taiwan Information Technology 6,941 1.4%
DFI Retail Hong Kong Consumer Staples 6,508 1.3%
Top 30 Investments 369,121 72.3%
Value % Total
Company Country Sector
£’000 Assets
Selamat Sempurna Indonesia Consumer Discretionary 6,491 1.3%
Naver South Korea Communication Services 6,204 1.2%
Tech Mahindra India Information Technology 6,068 1.2%
Vitasoy International Hong Kong Consumer Staples 5,811 1.1%
Holdings
Tata Consumer Products India Consumer Staples 5,747 1.1%
Vitrox Malaysia Information Technology 5,585 1.1%
Unicharm Japan Consumer Staples 5,306 1.0%
Kasikornbank Thailand Financials 5,163 1.0%
Kalbe Farma Indonesia Health Care 4,947 1.0%
Tata Consultancy Services India Information Technology 4,610 0.9%
Top 40 Investments 425,053 83.2%
Humanica Thailand Industrials 4,532 0.9%
Chroma ATE Taiwan Information Technology 4,509 0.9%
Aavas Financiers India Financials 4,493 0.9%
Godrej Consumer Products India Consumer Staples 4,366 0.9%
Dr. Reddy’s Laboratories India Health Care 4,358 0.9%
Cyient India Information Technology 3,957 0.8%
Zhejiang Supor China Consumer Discretionary 3,898 0.8%
Dabur India India Consumer Staples 3,867 0.8%
Dr. Lal PathLabs India Health Care 3,766 0.7%
MANI Japan Health Care 3,563 0.7%
Top 50 Investments 466,362 91.5%
Glodon Company China Information Technology 3,443 0.7%
Blue Dart Express India Industrials 3,317 0.6%
Sundaram Finance India Financials 3,315 0.6%
Industri Jamu dan Farmasi Indonesia Consumer Staples 3,070 0.6%
Sido Muncul
Hangzhou Robam China Consumer Discretionary 3,042 0.6%
Tarsons Products India Health Care 3,006 0.6%
Unicharm Indonesia Indonesia Consumer Staples 2,878 0.6%
Marico Bangladesh Bangladesh Consumer Staples 2,693 0.5%
Syngene International India Health Care 2,420 0.5%
ICICI Lombard General India Financials 2,400 0.5%
Insurance
Esab India India Industrials 2,276 0.4%
Bajaj Auto India Consumer Discretionary 2,137 0.4%
Centre Testing International China Industrials 2,092 0.4%
Group
Yifeng Pharmacy Chain China Consumer Staples 2,053 0.4%
Silergy Taiwan Information Technology 1,971 0.4%
Bajaj Holdings & Investment India Financials 1,939 0.4%
Tokyo Electron Japan Information Technology 1,770 0.3%
Bajaj Housing Finance India Financials 19 0.0%
Total Investments 510,203 100.0%
Portfolio Manager’s Review
Over the year to
The performance was in keeping with the characteristic outcome of our investment philosophy. Historically, we trail rapidly rising markets but preserve capital better than others when markets are weak.
During the period, the Chinese government announced a stimulus package that resulted in a large and swift appreciation from the market as a whole and lower quality companies which are financially strained in particular. We do not invest in lower quality companies. This, along with some weakness in Indian equities towards the end of the year, created a challenging environment for performance.
More specific details on performance are in the Contributors and Detractors sections.
Investing in
Over the last decade critics of the Company’s management have, from time to time, focused on a ‘failure to allocate’ capital to
Today, the Company is invested in a greater number of high-quality Chinese businesses than ever before. As little as five years ago the Company invested in only one company in
The reason we are finding more investments in
Dongguan Yiheda Automation is a one-stop supply chain solution for factory automation across
We first met the company in 2021 and noted high-quality owner/founder/manager stewards who exhibited intentions to build a strong franchise in the long term rather than a speedy enrichment programme. The market capitalisation after the initial public offering (“IPO”) in 2021 peaked around
A recent visit to
Trust is key in finance – not only for deposit taking but also to lend or invest. We met the new managing director of this family-owned franchise,
1
2 https://www.sundaramfinance.in/sundaram-way
We have four golden rules when investing in
Our fourth “China-specific” golden rule is the need to form a view on the Chinese Government’s “allowable return” for a particular company. This tries to capture the idea that in
Investing in a world of “allowable” or “capped” returns comes with challenges of its own and we are still learning. Long-term sustainable development alignment is a critical first step, but looking through a “toll-road” lens is also helpful. By this we mean, so long as new roads need to be built, toll-road companies are usually allowed to generate attractive returns well in excess of their cost of capital in order to reinvest in new roads. This cycle usually comes to an abrupt end once the last roadbuilding project is in sight. We are trying to apply this lens not just to our Chinese companies but more broadly. Where
Contributors
During the year under review, the Company’s material ownership of Indian companies, especially those with exposure to capital spending and industrial growth, was a key contributor to performance.
Mahindra & Mahindra
(
Contribution: 3.9%
Mahindra & Mahindra have leadership positions in farm equipment, utility SUVs, information technology and financial services in
CG Power & Industrial Solutions
(
Contribution: 1.8%
Taiwan Semiconductor Manufacturing Company
(
Contribution: 1.5%
TSMC is the world’s largest independent semiconductor foundry. It benefits from economies of scale, engineering expertise, leading-edge technology, excellent operational execution and high levels of trust from clients. It continues to benefit from strong demand and positive sentiment regarding the long-term benefits of AI to semiconductor demand. It has delivered strong results.
Detractors
During the year under review the most significant detractors were technology companies operating in
(
Contribution: -1.1%
Improving governance of the Samsung Chaebol meant the Company was able to invest in this franchise for which we have the utmost respect. Samsung has progressed from bankruptcy in 1997 to a world-renowned brand capable of spending tens of billions of US dollars a year on capital expenditure.
Koh Young Technology
(
Contribution: -0.8%
Koh Young manufactures and develops 3D measurement and inspection devices which detect accuracy and reliability in various machines. The Company was invested in Koh Young for many years but our concerns about the quality of the franchise were raised when we, accompanied by the Pacific Assets Trust Board, toured their plant in
Tube Investments
(
Contribution: -0.7%
Tube Investments is a manufacturer of precision-engineered metal-formed products and India’s largest bicycle maker. The founding Murugappa family are the largest shareholders. It saw its share price increase significantly over the last five years but short-term declines in the share price at the end of the reporting period have given back some of these gains. It fell following slower than expected growth in the core business but it is important that this is seen in the context of its longer term evolution.
Significant transactions
Over the course of the year, the portfolio turnover of the Company was 24.7%. This is higher than the previous year (18.3%) and is an outcome of finding a greater number of new ideas. Furthermore we have been strict this year on cutting smaller holdings in the tail of the portfolio. New ideas were driven by attractive valuations given how much investor despondency there is within the region.
New investments
During the year the Company made new investments in
MediaTek
(
Additions
The comparative weakness in many companies, particularly in
Reductions
As mentioned, most of the reductions were either to control position size or because of valuation concerns in
Disposals
We also identified deteriorating quality and/or found better investments elsewhere. Accordingly the Company sold out of Koh Young Technology, Kotak Mahindra Bank (
Looking forward
Given the number of attractively valued companies in
Portfolio Manager
Business Review
The Strategic Report, set out on pages 1 to 32, contains a review of the Company’s business model and strategy, an analysis of its performance during the financial year and its future developments as well as details of the principal risks and challenges it faces. Its purpose is to inform shareholders and help them to assess how the Directors have performed their duty to promote the success of the Company.
The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
Business Model
The Company is an externally managed investment trust and its shares are admitted to the closed
-
ended investment funds category of the FCA’s Official List and to trading on the main market of the
The purpose of the Company is to achieve long-term growth in its shareholders’ capital by providing a vehicle for investors to gain exposure to a portfolio of companies in the
The Company’s strategy is to create value for shareholders by addressing its investment objective.
As an externally managed investment trust, all of the Company’s day-to-day management and administrative functions are outsourced to service providers. As a result, the Company has no executive directors, employees or internal operations.
The Company is an
The Board remains responsible for all aspects of the Company’s affairs, including setting the parameters for monitoring the investment strategy and the review of investment performance and policy. It also has responsibility for all strategic policy issues, including share issuance and buybacks, share price and discount/ premium monitoring, corporate governance matters, dividends and gearing.
Further information on the Board’s role and the topics it discusses with the Portfolio Manager is provided in the Corporate Governance report beginning on page 36.
Investment Objective and Policy
The Company aims to achieve long-term capital growth through investment in selected companies in the
The Company invests in companies which
The Company invests principally in listed equities although it is able to invest in other securities, including preference shares, debt instruments, convertible securities and warrants. In addition, the Company may invest in open and closed-ended investment funds and companies.
The Company is only able to invest in unlisted securities with the Board’s prior approval. It is the current intention that such investments are limited to those which are expected to be listed on a stock exchange or which cease to be listed and the Company decides to continue to hold or is required to do so.
Risk is diversified by investing in different countries, sectors and stocks within the
If the proportion of the Company’s total assets invested in a single jurisdiction exceeds 49% at any time, the AIFM and the Portfolio Manager will, as soon as reasonably practicable, seek to re-balance the Company’s portfolio below this threshold.
No single investment may exceed 7.5% of the Company’s total assets at the time of investment. This limit is reviewed from time to time by the Board and may be revised as appropriate.
No more than 10% of the Company’s total assets may be invested in other listed closed-ended investment companies unless such investment companies themselves have published investment policies to invest no more than 15% of their total assets in other closed-ended investment companies, in which case the limit is 15%.
When deemed appropriate, the Company may borrow for investment purposes up to the equivalent of 10% of the net asset value of the Company at the time of drawdown of such borrowing.
The use of derivatives is permitted with prior Board approval and within agreed limits. However,
Proposed Change to Investment Policy
As noted in the Chair’s Statement on page 7, the definition of ‘Asia Pacific Region’ in the Company’s investment objective currently excludes
Accordingly, an ordinary resolution to approve this amendment to the investment objective is included in the Notice of AGM, beginning on page 101, and the full text of the proposed new investment policy can be found in the explanatory notes on pages 106 and 107. For the avoidance of doubt, the amendment of the investment objective is the only proposed change to the Company’s investment policy. The proposed amendment has been approved in principle by the
Performance Measurement
The Board measures Stewart Investors’ performance against a performance objective, which is to provide shareholders with a net asset value total return in excess of the
Dividend Policy
It is the Company’s policy to pursue capital growth for shareholders with income being a secondary consideration. This reflects that the Portfolio Manager is frequently drawn to companies whose future growth profile is more important than the generation of dividend income for shareholders.
The Company complies with the United Kingdom’s investment trust rules which require investment trusts to retain no more than 15% of their distributable income each year. The Company’s dividend policy is that the Company will pay a dividend as a minimum to maintain investment trust status.
The Board
At the date of this report, the Board of the Company comprises
Further information on the Directors can be found on pages 34 and 35 and information on the Board’s diversity can be found in the Corporate Governance Report on pages 42 and 43.
Key Performance Indicators (“KPIs”)
The Board of Directors reviews performance against the following KPIs, which are unchanged from the prior year.
-- NAV total return against the Performance Objective*^
-- NAV per share total return against the peer group*^
-- Average discount/premium of share price to NAV per share over the year^
-- Ongoing charges ratio^
* Calculated on an annual basis and measured over three to five years.
^ Alternative Performance Measure (see Glossary beginning on page 80).
NAV per share total return – Performance Objective
The Directors regard the Company’s net asset value total return as being the overall measure of value generated by the Portfolio Manager over the long term. Total return reflects both the net asset value growth of the Company and the dividends paid to shareholders. The performance objective of the Company is inflation (represented by the Consumer Price Index) plus 6%, measured over three to five years. The 6% represents what the Board considers to be a reasonable premium on investors’ capital, which investing in the faster growing Asian economies ought to provide over time. The Performance Objective is designed to reflect that the Portfolio Manager’s approach does not consider index composition when building and monitoring the portfolio.
During the year under review, the NAV per share total return was 9.7% outperforming the Performance Objective by 0.9% (2024: NAV per share total return of 1.3%, underperforming the Performance Objective by 11.7%). Over the past three years, the annualised NAV per share total return was 4.6%, underperforming the Performance Objective by 7.5%. Over five years, the annualised NAV per share total return was 8.7%, underperforming the Performance Objective by 2.3% per annum.
A full description of performance during the year under review is contained in the Portfolio Manager’s Review beginning on page 12.
NAV total return – peer group
The Board also monitors the Company’s performance against its peer group of four other investment trusts with similar investment mandates and one exchange traded fund.
Over the one, three and five years ended
Average discount/premium of share price to NAV per share
The Board believes that the principal drivers of an investment trust’s share price discount or premium over the long term are investment performance and a proactive marketing strategy. However, there can be volatility in the discount or premium during the year. Therefore, the Board takes powers each year to buy back and issue shares with a view to limiting the volatility of the share price discount or premium, in normal market conditions.
During the year under review no new shares were issued by the Company. The Company’s share price discount to the NAV per share was wider this year, in comparison with last year. As a result, the Company repurchased 370,000 shares during the year, at a total cost of £1.4 million, and at an average discount of 14.0%. The Board keeps the level of the discount under close review. Please refer to the Chair’s Statement and pages 30 and 31 for further information regarding how the Board addressed this issue during the year.
Average discount of share price to NAV per share*^ during the year ended
11.5% 6.4%
Peer group average Peer group average
discount 10.8% discount 9.3%
* Source: Morningstar.
^ Alternative Performance Measure (see Glossary beginning on page 80).
Ongoing charges ratio
Ongoing charges represent the costs that the Company can reasonably expect to pay from one year to the next, under normal circumstances. The Board continues to be conscious of expenses and seeks to maintain a sensible balance between high quality service and costs.
The Board therefore considers the ongoing charges ratio to be a KPI and reviews the figure both in absolute terms and in relation to the Company’s peers.
Ongoing charges ratio^
1.1% 1.1%
Peer group average 0.9% Peer group average 0.9%
^ Alternative Performance Measure (see Glossary beginning on page 80).
The Board believes that the Company’s relatively low turnover, and the absence of any costs associated with gearing, will mean that the Company’s overall running costs – should these costs be factored into the calculation – are not necessarily as high as some other investment vehicles. It should also be noted that the Company does not have a performance fee. Performance fees are not included in the peer group average ongoing charges ratio.
Risk Management
The Board is responsible for managing the risks faced by the Company. Through delegation to the Audit Committee, the Board has established procedures to manage risk, to review the Company’s internal control framework and to establish the level and nature of the principal risks the Company is prepared to accept in order to achieve its long-term strategic objective. The Board, meeting as the Audit Committee, has carried out a robust assessment of the principal and emerging risks facing the Company with the assistance of the AIFM. A process has been established to identify and assess risks, their likelihood and the possible severity of their impact.
These principal risks are set out on the following pages with a high-level summary of their management through mitigation and arrows to indicate any change in assessment during the year. The risks faced by the Company have been categorised under three headings as follows:
-- Investment and financial risks
-- Strategic risks
-- Operational risks
A summary of these risks and their mitigation is set out below:
Change in risk assessment
Principal Risks and Uncertainties Mitigation
over the last financial year
Investment and Financial Risks
Market and Foreign Exchange Risk Increased
To an extent, this risk is accepted as
being inherent to the Company’s
activities. However, the Board has set
limits in the investment policy which
ensure that the portfolio is
diversified, reducing the risks
associated with individual stocks and
markets. Compliance with the investment
objective and policy limits is
monitored daily by Frostrow and Stewart
Investors and reported to the Board
monthly. Stewart Investors report at
each Board meeting on the performance
The Company’s portfolio is exposed to of the Company’s portfolio, including
fluctuations in market prices (from both the impact of wider market trends and
individual security prices and foreign events.
exchange rates) in the regions and
sectors in which it invests. Emerging As part of its review of the viability
markets in the Asia Pacific region, in of the Company, the Board also
which the portfolio companies operate, considers the sensitivity of the
are expected to be more volatile than Company to changes in market prices and
developed markets. foreign exchange rates (see note 14
beginning on page 75), how the
portfolio would perform during a market
crisis, and the ability of the Company
to liquidate its portfolio if the need
arose. Further details are included in
the Going Concern and Viability
Statements on page 29.
In light of the material effect that
recent geopolitical events have had on
global markets and the volatility of
certain markets that the Company
invests in, during the year the Board
increased the market risk rating.
Investment Performance Unchanged
To manage this risk, the Board:
-- reviews and challenges reports
from Stewart Investors , which
cover portfolio composition,
Investment performance may not achieve asset allocation, concentration
the Company’s investment objective. and performance at each Board
Stewart Investors’ investment strategy meeting;
and approach is expected to lead to -- reviews investment performance
performance that will deviate from that over the long term against the
of both market indices and other Company’s performance objective
investment companies investing in the and peer group;
Asia Pacific Region . -- monitors Stewart Investors’
performance against set KPIs;
and
-- formally reviews Stewart
Investors’ appointment,
including their performance,
service levels and contractual
arrangements, each year.
Change in assessment of
Principal Risks and Uncertainties Mitigation risk over the last
financial year
Strategic Risks
Geopolitical Risk Unchanged
The Board regularly discusses global
geopolitical issues and general
economic conditions and
developments.
Political changes in recent years,
particularly in the US and Asia
Pacific region and more recently in
the Middle East , as well as Ukraine
Geopolitical events may have an adverse and Eastern Europe , have increased
impact on the Company’s performance by uncertainty and volatility in
causing exchange rate volatility, changes financial markets. The Board
in tax or regulatory environments, a discusses such developments and how
reduced investment universe and/or a fall they may impact decision making with
in market prices. Stewart Investors .
The Board’s discussions with the
Portfolio Manager often focus on
geopolitical themes or trends that
affect social and environmental
sustainability, for example conflict
minerals and water scarcity. These
are often subjects on which the
Portfolio Manager engages with
investee companies.
Climate Change Risk Unchanged
The Board regularly reviews global
environmental, geopolitical and
economic developments with the
The Board is cognisant of risks arising Portfolio Manager and the
from climate change and the impact climate implications of these risks and
change events could have on portfolio events on portfolio construction and
companies and their operations, as well as the Company’s operations. Given
on service providers to the Company. Stewart Investors’ focus on
sustainability as set out on pages
17 to 21, the Board considers the
portfolio to be relatively well
positioned in this regard.
Black Swan Risk Unchanged
The Board monitors emerging risks
and the robustness of Stewart
Investors’ and other service
providers’ business continuity
plans.
Stewart Investors’ investment
approach includes a focus on
A significant unpredictable event (e.g. a sustainability and stewardship,
pandemic/war/closure of a major shipping which emphasises quality investments
route) could lead to increased market with strong balance sheets, a proven
volatility, and in a worst-case scenario, track record in previous crises, and
major global trade and supply chain the protection of shareholders’
breakdown resulting in significant funds, leaving them relatively well
volatility/declines in market prices. The positioned to deal with unforeseen
Company’s service providers and their events.
operational systems may also be affected.
All of the Company’s service
providers are required to have
business continuity / disaster
recovery policies and test them at
least annually. Service providers
provide updates on contingency plans
for coping with major disruption to
their operations.
Key Persons Risk Unchanged
The Board manages this risk by:
-- receiving regular reports
from the Portfolio Manager,
including any significant
changes in the make-up of
the portfolio management
team;
-- meeting the wider team
There is a risk that the team responsible supporting the designated
for managing the Company’s portfolio may lead manager, at both Board
leave their employment or may be prevented meetings and at the
from undertaking their duties. Portfolio Manager’s offices;
and
-- delegating to the Engagement
& Remuneration Committee
responsibility to perform an
annual review of the service
received from the Portfolio
Manager, including, inter
alia, the team supporting
the lead manager and their
succession planning.
Share Price Risk Increased
In managing this risk the Board:
-- reviews the Company’s
investment objective and
policy, and Stewart
Investors’ investment
approach, in relation to
investment performance,
market and economic
conditions and the
performance of the Company’s
peers;
-- regularly discusses the
Company’s future development
and strategy;
The Company is exposed to the risk, -- undertakes a regular review
particularly if the investment strategy and of the level of the share
approach are unsuccessful, that the Company price discount/premium to
underperforms its peer group, fails to the NAV per share and
achieve its Performance Objective and considers ways in which
becomes unattractive to shareholders, share price performance may
resulting in a widening of the share price be enhanced, including the
discount to the NAV per share. effectiveness of marketing,
share issuance and share
buybacks, where appropriate;
and
-- reviews an analysis of the
shareholder register at each
Board meeting and is kept
informed of shareholder
sentiment.
Noting recent developments in the
investment trust sector, including
widening share price discounts, and
action taken by activist investors
and arbitrageurs, the Board
considered that this risk had
increased during the year.
Change in risk
Principal Risks and assessment
Uncertainties Mitigation
over the last financial
year
Operational Risk
Operational Risk Unchanged
To manage these risks the Board:
-- periodically visits all key
service providers to gain a
better understanding of
their control environment,
and the processes in place
to mitigate any disruptive
events;
-- receives a monthly report
from Frostrow, which
includes, inter alia,
confirmation of compliance
with applicable laws and
regulations;
-- reviews internal control
reports and key policies of
its service providers,
including disaster recover
procedures and business
continuity plans;
-- maintains a risk matrix with
details of the risks to
which the Company is
exposed, the approach to
As an externally managed investment trust, managing those risks, the
the Company is reliant on the systems of key controls relied upon and
its service providers for dealing, trade the frequency of the
processing, administration, financial and controls operation;
other functions. If such systems were to -- receives updates on pending
fail or be disrupted (including, for changes to the regulatory
example, as a result of cyber-crime or a and legal environment and
pandemic) this could lead to a failure to progress towards the
comply with applicable laws, regulations Company’s compliance with
and governance requirements and/or to a such changes;
financial loss. -- has considered the increased
risk of cyber-attacks and
Credit risk arising from the use of received reports and
counterparties forms part of this risk. If assurance from its service
a counterparty were to fail, the Company providers regarding the
could be adversely affected through either information security
delay in settlement or loss of assets. controls in place;
-- has reviewed the
arrangements (including
sub-custodial arrangements)
and services provided by the
Custodian to ensure that the
security of the Company’s
custodial assets is
maintained; and
-- reviews Stewart Investors’
approved list of
counterparties, the process
for monitoring and adding to
the approved counterparty
list, and the Company’s use
of those counterparties.
Under the terms of the contract with
J.P. Morgan Chase Bank , the
Company’s investments are required
to be segregated from J.P. Morgan
Chase Bank’s own assets.
Further information on credit risk
and other financial risks can be
found in note 14 beginning on page
75.
Emerging Risks
Emerging risks are discussed as part of the risk review process. During the year the Board identified the following emerging risks:
1. As well as offering investment opportunities, the development and
exploitation of technological breakthroughs, such as artificial
intelligence, may challenge and damage the addressable market, revenue and
operations of portfolio companies to the extent that they no longer offer
the promise of returns consistent with the Company’s investment objective.
2. The risk that increasing water scarcity will affect economic development,
potentially leading to mass migration and political conflict in the Asia
Pacific Region . This is a particular threat in India , where a high
proportion of the Company’s assets are invested, and which the UN
identifies as one of the most water-stressed countries in the world.
3. The continued rise of misinformation is contributing to the perceived decay
of political and social norms, and the diminishing role of generally
accepted truth and reason. This trend has encouraged mistrust in democratic
institutions and public discourse and the success in many countries of more
extreme political parties. Businesses and brands can be drawn into such
debates which may have uncertain direct or indirect consequences for
portfolio companies.
4. Heightened geopolitical tensions and assertive state behaviour are
increasing the risk of state-backed armed conflicts. Governments may
leverage military capabilities to advance strategic interests, potentially
engaging in proxy wars or direct military confrontations. This emerging
risk could lead to regional instability, disrupted supply chains and trade
flows, regulatory unpredictability, significant market volatility and
adverse impacts on economic growth.
Going Concern
The Company’s portfolio, investment activity, the Company’s cash balances and revenue forecasts, and the trends and factors likely to affect the Company’s performance are reviewed and discussed at each Board meeting. The Board has considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due, including stress tests which modelled the effects of substantial falls in portfolio valuations and liquidity constraints on the Company’s NAV, cash flows and expenses. Further details of the stress tests and scenarios considered can be found in the Audit Committee Report beginning on page 51 and Notes 1 and 14 to the financial statements. Based on the information available to the Directors at the date of this report, the conclusions drawn in the Viability Statement (including the results of the stress tests undertaken) below and the Company’s cash balances, the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months from the date of signing this report and that, accordingly, it is appropriate to continue to adopt the going concern basis in preparing the financial statements.
Viability Statement
The Directors have carefully assessed the Company’s financial position and prospects as well as the principal risks facing the Company and have formed a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five financial years. The Board has chosen a five year horizon in view of the long-term outlook adopted by the Portfolio Manager when making investment decisions.
To make this assessment and in reaching this conclusion, the Audit Committee has considered the Company’s financial position and its ability to liquidate its portfolio and meet its liabilities as they fall due and notes the following:
-- The portfolio is comprised of investments traded on major international
stock exchanges. Based on historic analysis, it is estimated that
approximately 72% of the current portfolio could be liquidated within
two weeks (based on current market volumes with 20% participation);
-- The Audit Committee has considered the viability of the Company under
various scenarios, including periods of acute stock market and economic
volatility. In view of the results of these stress tests, the Board has
concluded that it would expect to be able to ensure the financial
stability of the Company through the benefits of having a diversified
portfolio of listed and realisable assets. Further details of the stress
tests can be found in Note 1 to the financial statements;
-- With an ongoing charges ratio of 1.1%, the expenses of the Company are
predictable and modest in comparison with the assets and there are no
capital commitments currently foreseen which would alter that position;
-- The Board has considered the Company’s average cash balance over the
past three years and noted that the Company has consistently retained
levels of cash that are significantly higher than its annual operating
expenses;
-- The Company has no employees, only non-executive Directors. Consequently
it does not have redundancy or other employment related liabilities or
responsibilities; and
-- The closed ended nature of the Company means that, unlike open ended
funds, it does not need to realise investments when shareholders wish to
sell their shares.
The Directors, as well as considering the potential impact of the principal risks and various severe but plausible downside scenarios, have also made the following assumptions in considering the Company’s longer-term viability:
-- There will continue to be demand for investment trusts;
-- The Portfolio Manager will continue to adopt a long-term view when
making investments, and anticipated holding periods will be at least
five years;
-- The Company invests in the securities of listed companies traded on
international stock exchanges to which investors will wish to continue
to have exposure;
-- Regulation will not increase to a level that makes running the Company
uneconomical; and
-- The performance of the Company will continue to be satisfactory.
Stakeholder Interests and Board Decision-Making (Section 172 of the Companies Act 2006)
As an externally managed investment trust, the Company has no employees, customers, operations or premises. Therefore, the Company’s key stakeholders (other than its shareholders) are considered to be its service providers, including its Portfolio Manager. The need to foster good business relationships with service providers and maintain a reputation for high standards of business conduct are central to the Directors’ decision-making as the Board of an externally managed investment trust.
The following disclosure, which is required by the Companies Act 2006 and the AIC Code of Corporate Governance, describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making.
STAKEHOLDER GROUP HOW THE BOARD HAS ENGAGED WITH THE COMPANY’S
STAKEHOLDERS
The Board’s key mechanisms of engagement with investors
include:
-- The Annual General Meeting
-- The Company’s website which hosts reports,
articles and insights, and monthly fact sheets
-- One-to-one investor meetings
Investors -- Group meetings with professional investors
-- The Annual and Half yearly Reports
The Portfolio Manager and the Company’s broker, on
behalf of the Board, completed a programme of investor
relations throughout the year, reporting to the Board on
the feedback received. In addition, the Chair was (and
remains) available to engage with the Company’s
shareholders.
The Board met regularly with Stewart Investors (the
Portfolio Manager) throughout the year, both formally at
quarterly Board meetings and informally, as required.
The Board engaged with the portfolio management team,
discussing the Company’s overall performance and
strategy, as well as developments in individual
portfolio companies and wider macroeconomic
developments.
Portfolio Manager The Board periodically visits different countries and
investee companies in the Asia Pacific Region with the
Portfolio Manager, to gain first-hand insight into the
Portfolio Manager’s investment process and engagement
with portfolio companies. The Board considers these
visits to be an important part of their oversight of the
Portfolio Manager. This year, the Board accompanied the
Portfolio Manager to meetings with portfolio companies
in Mumbai, India , engaging with representatives from
portfolio companies and potential investee companies.
The Board met regularly with Frostrow (the AIFM),
representatives of which attend every quarterly Board
meeting to provide updates on risk management,
accounting, administration, corporate governance and
regulatory matters.
The Board, meeting as the Engagement and Remuneration
Committee , reviewed the performance of all the Company’s
service providers, receiving feedback from Frostrow in
their capacity as AIFM and Company Secretary. The AIFM,
which is responsible for the day-to-day operational
Other Service Providers management of the Company, meets and interacts with the
other service providers including the Depositary, the
Custodian and the Registrar, on behalf of the Board, on
a daily basis. This can be through email, one-to-one
meetings and/or regular written reporting.
The Audit Committee met with BDO LLP to review the audit
plan for the year, agree their remuneration, review the
outcome of the annual audit and to assess the quality
and effectiveness of the audit process. Please refer to
the Audit Committee Report beginning on page 51 for
further information.
The Board supports and endorses the Portfolio Manager’s
approach to responsible and sustainable investing. The
Board has delegated authority to Stewart Investors , as
Portfolio Manager, to engage with the companies held in
the portfolio and to vote the shares owned by the
Company.
The Board reviews the Portfolio Manager’s voting and
Portfolio Companies engagement reports, and any exceptions to the Portfolio
Manager’s position statement on harmful and
controversial products, services or practices.
As mentioned above, the Board periodically visits
different countries and investee companies in the Asia
Pacific Region with the Portfolio Manager and during the
year, the Board engaged directly with representatives
from companies based in Mumbai, India .
KEY AREAS OF ENGAGEMENT MAIN DECISIONS AND ACTIONS TAKEN
The Board and the Portfolio Manager
provided updates on performance via RNS,
the Company’s website and the usual
financial reports and monthly fact
sheets.
The Board continued to monitor share
price movements closely, both in
Investors absolute terms and in relation to the
Company’s peer group. As the discount
-- Ongoing dialogue with widened during the year, the Board.
shareholders concerning the initiated a limited buyback programme.
strategy of the Company, As a result, 370,000 shares were bought
performance and the portfolio. back during the year. No shares were
-- Share price performance. issued at a premium to the net asset
-- The Portfolio Manager's value per share during the year.
approach to sustainable
development and investment. The Board, meeting as the Sales,
Marketing and Communications Committee ,
also continued its work to improve the
visibility of the Company and the
Portfolio Manager’s sustainability
credentials, in particular to retail
investors. Further information is
provided in the Chair’s Statement
beginning on page 6.
The Board agreed that high standards of
research and decision-making have been
maintained and the Portfolio Manager’s
strategy has been implemented
consistently, leading to good returns
over the past year and over longer
periods. The Board considered that
accompanying the Portfolio Manager to
meetings with portfolio companies in
India was a useful part of this
assessment. The Board concluded that it
was in the interests of shareholders for
Stewart Investors to continue in their
Portfolio Manager role as Portfolio Manager on the same
terms and conditions. Further
-- Portfolio composition, information is provided on page 46.
performance, outlook and
business updates. The Sales, Marketing and Communications
-- Matters relating to Committee continued to work with the
sustainability, including the Portfolio Manager on improving the
sustainability credentials of marketing strategy of the Company.
the portfolio companies, and Further information is provided in the
regulatory developments Chair’s Statement beginning on page 6.
affecting the Company itself.
-- The promotion and marketing The Board considered and subsequently
strategy of the Company. approved (subject to shareholder
-- The terms and conditions of the approval) a proposal from Stewart
Portfolio Management Agreement. Investors to widen the investment policy
to include investment in Australia and
New Zealand . Further information is
provided in the Chair’s Statement and
the Notice of AGM.
The Portfolio Management Agreement was
restated and amended to reflect the
Portfolio Manager’s governance framework
for complying with the FCA’s Consumer
Duty and to reflect the Portfolio
Manager’s responsibility for marketing
the Company. The amendments were not
considered to be material.
The Board concluded that it was in the
interests of shareholders for Frostrow
to continue in their role as AIFM on the
same terms and conditions. See pages 46
Other Service Providers and 47 for further details.
-- The quality of service The Board agreed that the Company’s
provision and the terms and other service providers continued to
conditions under which service perform satisfactorily and should
providers are engaged. continue in their roles.
-- The assessment of the
effectiveness of the audit and The Board approved the Audit Committee’s
the Auditor's reappointment. recommendation to propose to
-- The terms and conditions under shareholders that BDO LLP be
which the Auditor is engaged. re-appointed as the Company’s auditor
for a further year. Please refer to the
Audit Committee Report beginning on page
51 and the Notice of AGM beginning on
page 101 for further information.
Investment decisions are made at the
discretion of the Portfolio Manager,
however the Board values the opportunity
Portfolio Companies to engage directly with representatives
from portfolio companies. Direct
-- Business and investment plans. engagement enhances the Directors’
-- ESG and sustainability matters. understanding of the relevant companies,
as well as their understanding of the
Portfolio Manager’s investment process.
Social, Human Rights and Environmental Matters
As an externally managed investment trust, the Company does not have any employees or maintain any premises, nor does it undertake any manufacturing or other physical operations itself. All its operational functions are outsourced to third party service providers. Therefore the Company has no material, direct impact on the environment or any particular community and, as a result, the Company itself has no environmental, human rights, social or community policies.
The Portfolio Manager engages with the Company’s underlying investee companies in relation to their corporate governance practices and the development of their policies on social, community and environmental matters. The Portfolio Manager (under their parent, legal entity name,
Integrity and Business Ethics
The Board is committed to carrying out the Company’s business in an honest and fair manner with a zero-tolerance approach to bribery, tax evasion and corruption. As such, policies and procedures are in place to prevent this and can be found on the Company’s website. In carrying out the Company’s activities, the Board aims to conduct itself responsibly, ethically and fairly, including in relation to social and human rights issues.
The Company notes the TCFD recommendations on climate-related financial disclosures. The Company is an investment trust and, as such, it is exempt from the Listing Rules requirement to report against the TCFD framework.
10 https://www.stewartinvestors.com/uk/en/private-investor/insights/climate-change-statement.html
Climate reporting, at both the
12 https://www.stewartinvestors.com/all/insights/annual-report-2023.html
13 https://www.stewartinvestors.com/content/dam/pacific-assets/trust-information/PAC-TCFD-report.pdf
https://www.stewartinvestors.com/content/dam/stewartinvestors/pdf/annual-report-2023/pac/pac-annual-review-2023.pdf
Performance and Future Developments
A review of the Company’s performance over the year and the outlook for the Company can be found in the Chair’s Statement beginning on page 6 and in the Portfolio Manager’s Review beginning on page 12.
The Company’s overall strategy remains unchanged.
By order of the Board
Company Secretary
Report of the Directors
The Directors present this Annual Report on the affairs of the Company together with the audited financial statements and the Independent Auditor’s Report for the year ended
Business and Status of the Company
The Company is registered as a public limited company in
The Company has been accepted as an investment trust under Section 1158 of the Corporation Taxes Act 2010 and Part 2 Chapter 1 of Statutory Instrument 2011/2999. This approval relates to accounting periods commencing on or after
It is the Directors’ intention that the Company should continue to manage its affairs so as to be a qualifying investment for inclusion in the stocks and shares components of an Individual Savings Account (“ISA”) and Junior ISA.
The Company is a member of the
Alternative Performance Measures
The financial statements (on pages 66 to 79) set out the required statutory reporting measures of the Company’s financial performance. In addition, the Board assesses the Company’s performance against a range of criteria which are viewed as particularly relevant for investment trusts. These measures are summarised on page 1 and explained in greater detail in the Strategic Report, under the heading ‘Key Performance Indicators’ on pages 24 and 25. The Directors believe that these measures enhance the comparability of information between reporting periods and aid investors in understanding the Company’s performance.
The measures used for the year under review have remained consistent with the prior year.
Definitions of the terms used and the basis of their calculation are set out in the Glossary beginning on page 80.
Annual General Meeting
THE FOLLOWING INFORMATION TO BE DISCUSSED AT THE FORTHCOMING ANNUAL GENERAL MEETING IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt about the action you should take, you should seek advice from your stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 (as amended). If you have sold or transferred all of your ordinary shares in the Company, you should pass this document, together with any other accompanying documents, including the form of proxy, at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee.
Resolutions relating to the following items of business will be proposed at the Annual General Meeting to be held on
Resolution 11 Approval of the proposed, amended Investment Policy
Resolution 12 Authority to allot shares
Resolution 13 Authority to disapply pre-emption rights
Resolution 14 Authority to buy back shares
Resolution 15 Authority to hold General Meetings (other than the AGM) on at least 14 clear days’ notice The full text of the resolutions can be found in the Notice of Annual General Meeting on pages 101 and 102.
Explanatory notes regarding the resolutions can be found on pages 106 to 108.
Results and Dividend
The results attributable to shareholders for the year are shown on page 66. Details of the Company’s dividend record can be found on page 5 and the dividend policy is outlined in the Strategic Report on page 23.
A final dividend of 4.9p per ordinary share has been proposed and, subject to shareholder approval,
will be paid on
Capital Structure
As at
At the start of the year under review, the Directors had shareholder authority to issue up to 12,095,838 shares on a non-pre-emptive basis and to buy back up to 18,131,662 shares in the market. At the Company’s annual general meeting held on Tuesday,
During the year, no new shares were issued (2024: nil). 370,000 shares were repurchased and then cancelled during the year (2024: nil) and there are no shares held in
The powers to issue or buy back the Company’s shares require the relevant resolution to be passed by shareholders. Proposals for the renewal of the Board’s authorities to issue and buy back shares are detailed in the Notice of AGM beginning on page 101.
There are no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no restrictions on voting rights; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid.
Financial Instruments
The Company’s financial instruments comprise its investment portfolio, cash balances, debtors and creditors which arise directly from its operations such as sales and purchases awaiting settlement, and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 14 to the financial statements, beginning on page 75.
Principal Service Providers
Portfolio Manager
The Company’s investment portfolio has been managed by
Under the terms of the PMA,
-- seeking out and evaluating investment opportunities;
-- recommending the manner by which cash should be invested, divested,
retained or realised;
-- advising on how rights conferred by the investments should be exercised;
-- analysing the performance of investments made;
-- advising the Company in relation to trends, market movements and other
matters which may affect the investment objective and policy of the
Company; and
-- marketing and investor relations services.
The PMA is terminable by six months’ notice.
Alternative Investment Fund Manager
The Board resolved to appoint
-- risk management services;
-- administrative and secretarial services;
-- advice and guidance in respect of corporate governance requirements;
-- maintenance of the Company’s accounting records;
-- preparation and dispatch of the annual and half yearly reports; and
-- ensuring compliance with applicable tax, legal and regulatory
requirements.
Under the AIFM Agreement, Frostrow receives a fixed fee of £75,000 per annum plus 0.11% per annum of net assets up to £250 million, plus 0.075% per annum of net assets in excess of £250 million.
The AIFM Agreement is terminable on six months’ notice given by either party.
Further details of the fees payable to
Depositary and Custodian
The Board resolved to appoint
The Depositary provides the following services, inter alia , under its agreement with the Company:
-- safekeeping and custody of the Company’s custodial investments and cash;
-- processing of transactions; and
-- foreign exchange services.
The Depositary must take reasonable care to ensure that the Company is managed in accordance with the Financial Conduct Authority’s Investment Funds Sourcebook, the AIFMD and the Company’s Articles of Association.
Under the terms of the Depositary Agreement, the Depositary is entitled to receive an annual fee of the higher of £30,000 or 0.015% of the net assets of the Company up to £150 million, 0.0125% of the net assets in excess of £150 million and up to £300 million, 0.01% of the net assets in excess of £300 million and up to £500 million and 0.005% of the net assets in excess of £500 million.
The Depositary has delegated the custody and safekeeping of the Company’s assets to
The notice period on the Depositary Agreement is 90 days if terminated by the Company and 120 days if terminated by the Depositary.
Portfolio Manager and AIFM Evaluation and Re - Appointment
The review of the performance of
The ERC formally reviewed the appointment of
The Board believes the continuing appointment of
-- the terms of the Portfolio Management Agreement, in particular the level
and method of remuneration and the notice period, and the comparable
arrangements of a group of the Company’s peers; and
-- the quality and depth of experience of the Stewart Investors team and
the level of performance of the portfolio in absolute terms and also by
reference to the Performance Objective and the Company’s peer group over
the medium to longer term.
The ERC also formally reviewed Frostrow’s appointment in
Directors
Directors’ and Officers’ Liability Insurance Cover
Directors’ and officers’ liability insurance cover was maintained by the Board during the year ended 31
Directors’ Indemnities
As at the date of this report, a deed of indemnity has been entered into by the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities as a result of carrying out his or her role as a Director of the Company. Each Director is indemnified against the costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred provided that where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006.
A copy of each deed of indemnity is available for inspection at Frostrow’s offices during normal business hours and will be available for inspection at the AGM.
Articles of Association
Amendment of the Company’s Articles of Association requires a special resolution to be passed by shareholders.
The Directors have not proposed any changes to the Articles of Association this year.
Substantial Interests in Share Capital
As at
Number of %
shares held held
Evelyn Partners 14,520,035 12.0
Rathbones 12,374,668 10.2
Brewin Dolphin (Ireland) 11,332,765 9.4
Charles Stanley 6,038,409 4.9
These disclosures reflect those shareholders that have notified the Company of a substantial interest in its shares when they have crossed certain thresholds and may not reflect their current holdings. The table does not reflect the full range of investors in the Company. The shareholder register is principally comprised of private wealth managers and retail investors who own their shares through a variety of online platforms. A profile of the Company’s ownership is shown on page 99.
After the year end, on
Beneficial Owners of Shares – Information Rights
The beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under Section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company’s registrar,
Modern Slavery Act 2015
The Company does not provide goods or services in the normal course of business, and as a financial investment vehicle, does not have customers. Therefore, the Directors do not consider that the Company is required to make a statement under the Modern Slavery Act 2015 in relation to slavery or human trafficking. The Company’s suppliers are typically professional advisers and the Company’s supply chains are considered to be low risk in this regard.
Anti-Bribery and Corruption Policy
The Board has adopted a zero tolerance approach to instances of bribery and corruption. Accordingly, it expressly prohibits any Director or associated persons when acting on behalf of the Company, from accepting, soliciting, paying, offering or promising to pay or authorise any payment, public or private, in the
The Board applies the same standards to its service providers in their activities for the Company.
A copy of the Company’s Anti Bribery and Corruption Policy can be found on its website at www.pacific-assets.co.uk. The policy is reviewed annually by the Audit Committee.
Prevention of the Facilitation of Tax Evasion
In response to the implementation of the Criminal Finances Act 2017, the Board adopted a zero-tolerance approach to the criminal facilitation of tax evasion. A copy of the Company’s policy on preventing the facilitation of tax evasion can be found on the Company’s website www.pacific-assets.co.uk. The policy is reviewed annually by the Audit Committee.
Global Greenhouse Gas Emissions
The Company is an investment trust, with no employees or premises, nor has it any financial or operational control of the assets it owns. It has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Reports and Directors’ Reports) Regulations 2013 or the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, including those within the Company’s underlying investment portfolio. The Company consumed less than 40,000 kWh of energy during the year and therefore is exempt from the disclosures required under the Streamlined Energy and Carbon Reporting criteria.
Political Donations
The Company has not made and does not intend to make any political donations.
Corporate Governance
The Corporate Governance report, which includes the Company’s corporate governance policies and forms part of the Report of the Directors, is set out on pages 36 to 43.
Common Reporting Standard (“CRS”)
CRS is a global standard for the automatic exchange of information commissioned by the
The Board has made due diligence enquiries of the service providers that process the Company’s shareholder data, to ensure the Company’s compliance with the
By order of the Board
Company Secretary
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102 ‘The Financial Reporting Standard applicable in the
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of 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 judgements and accounting estimates that are reasonable and
prudent;
-- state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
-- prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
-- prepare a directors’ report, a strategic report and a directors’
remuneration report which comply with the requirements of the Companies
Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the Annual Report and financial statements, taken as a whole, are fair, balanced, and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement which comply with that law and those regulations.
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on the Company’s website, which is maintained by the Portfolio Manager. Financial statements are published on the Company’s website in accordance with legislation in the
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditor is unaware; and each Director has taken all the steps that he/she might reasonably be expected to have taken as a Director to make himself/ herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
Responsibility Statement of the Directors in respect of the Annual Financial Report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets,
liabilities, financial position and the return of the Company for the
year ended 31 January 2025 ; and
-- the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Company,
together with a description of the principal risks and uncertainties
that they face.
We consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
On behalf of the Board
Chair
Income Statement
for the year ended
Year ended 31 January Year ended 31 January
2025 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Gains/(losses) on 8 - 49,989 49,989 - (2,018) (2,018)
investments
Exchange differences - (414) (414) - (642) (642)
Income 2 9,687 - 9,687 7,861 - 7,861
Portfolio management
and AIFM fees 3 (1,211) (3,634) (4,845) (1,123) (3,369) (4,492)
Other expenses 4 (863) - (863) (795) - (795)
Return/(loss) before 7,613 45,941 53,554 5,943 (6,029) (86)
taxation
Taxation 5 (1,049) (7,684) (8,733) (772) (5,203) (5,975)
Return/(loss) after 6,564 38,257 44,821 5,171 (11,232) (6,061)
taxation
Return/(loss) per share 7 5.4 31.7 37.1 4.3 (9.3) (5.0)
(p)
The Total column of this statement represents the Company’s Income Statement. The Revenue and Capital columns are supplementary to this and are prepared under guidance published by the
All revenue and capital items in the Income Statement derive from continuing operations.
The Company had no recognised gains or losses other than those shown above and therefore no separate Statement of Other Comprehensive Income has been presented.
The accompanying notes on pages 69 to 79 are an integral part of these statements.
Statement of Changes in Equity
for the year ended
Ordinary Capital
share Share redemption Special Capital Revenue
capital premium reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 January 15,120 8,811 1,648 14,572 426,502 7,009 473,662
2023
(Loss)/return - - - - (11,232) 5,171 (6,061)
after taxation
Ordinary 6 - - - - - (2,782) (2,782)
dividends paid
At 31 January 15,120 8,811 1,648 14,572 415,270 9,398 464,819
2024
Return after - - - - 38,257 6,564 44,821
taxation
Repurchase of
own shares for (46) - 46 - (1,361) - (1,361)
cancellation
Ordinary 6 - - - - - (4,838) (4,838)
dividends paid
At 31 January 15,074 8,811 1,694 14,572 452,166 11,124 503,441
2025
The accompanying notes on pages 69 to 79 are an integral part of these statements.
Statement of Financial Position
as at
2025 2024
Notes £’000 £’000 £’000 £’000
Fixed assets
Investments 8 510,203 470,109
Current assets
Debtors 9 1,252 1,032
Cash 8,028 6,191
9,280 7,223
Creditors (amounts falling due within 10 (2,397) (1,307)
one year)
Net current assets 6,883 5,916
Total assets less current liabilities 517,086 476,025
Creditors (amounts falling due after one
year)
Provision for liabilities 11 (13,645) (11,206)
Net assets 503,441 464,819
Capital and reserves
Called up share capital 12 15,074 15,120
Share premium account 8,811 8,811
Capital redemption reserve 15 1,694 1,648
Special reserve 15 14,572 14,572
Capital reserve 15 452,166 415,270
Revenue reserve 15 11,124 9,398
Equity shareholders’ funds 503,441 464,819
Net asset value per Ordinary Share (p) 13 417.5p 384.3p
The financial statements on pages 66 to 79 were approved and authorised for issue by the Board of Directors on
Chair
The accompanying notes on pages 69 to 79 are an integral part of these statements.
Notes to the Financial Statements
1. Accounting Policies
A summary of the principal accounting policies adopted is set out below or as appropriate within the relevant note to the financial statements.
(a) Basis of Accounting
These financial statements have been prepared under
The Company has taken advantage of the exemption from preparing a Cash Flow Statement under FRS 102, as it is an investment fund whose investments are substantially highly liquid, carried at fair (market) value and provides a statement of changes in equity.
The Board is of the opinion that the Company is engaged in a single segment of business, namely investing in accordance with the Investment Objective, and consequently no segmental analysis is provided.
Going concern
The Directors are required to make an assessment of the Company’s ability to continue as a going concern and have concluded that the Company has adequate resources to continue in operational existence for at least 12 months from the date these financial statements were approved.
In making this assessment, the Directors have considered a wide variety of emerging and current risks to the Company, as well as the mitigation strategies that are in place. The Board has also reviewed stress-testing and scenario analyses prepared by the AIFM. The stress tests and scenario analyses considered the effect of various downturns, based on historic bear markets, on the asset value and expenses of the Company. The tests modelled the impact of decreases of up to and over 80% on the value of the investment portfolio and decreases in current market liquidity of up to 80%.
These tests are carried out as an arithmetic exercise, which can apply equally to any set of circumstances in which asset value and income are significantly impaired. It was concluded that even in an extreme downside scenario, the Company would be able to continue to meet its liabilities as they fell due. Whilst the economic future is uncertain, the opinion of the Directors is that there is no foreseeable downside scenario that would threaten the Company’s ability to continue to meet its liabilities as they fall due.
Based on the information available to the Directors at the time of this report, including the results of the stress tests and scenario analyses, and having taken account of the liquidity of the investment portfolio, the Company’s cash flow and borrowing position (the Company is not currently geared), the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least 12 months from the date of signing these financial statements and that, accordingly, it is appropriate to adopt the going concern basis.
Significant Judgement
There is one significant judgement involved in the presentation of the Company’s accounts, being the judgement on the functional currency of the Company.
The Company’s investments are made in foreign currencies, however the Board considers the Company’s functional currency to be sterling. In arriving at this conclusion, the Board considered that the shares of the Company are listed on the
Presentation of the Income Statement
In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Section 1158 of the Corporation Tax Act 2010.
(b) Foreign Currencies
Transactions denominated in foreign currencies are translated into sterling at the exchange rates on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the date of the Statement of Financial Position. Profits or losses on the translation of foreign currency balances, whether realised or unrealised, are taken to the capital or revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature.
All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.
(c) Cash
Cash is defined as cash at bank and money market funds that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
2. Income
2025 2024
£’000 £’000
Overseas dividends 9,469 7,701
Interest income 218 160
9,687 7,861
Dividends receivable are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company’s right to receive payment is established. Overseas dividends are gross of withholding tax.
Where the Company has elected to receive its dividends in the form of additional shares rather than cash the amount of cash foregone is recognised in the revenue column with any excess above this recognised in the capital column.
3. Portfolio Management and AIFM Fees
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Portfolio management fee
– Stewart Investors 1,075 3,227 4,302 996 2,989 3,985
AIFM fee – Frostrow 136 407 543 127 380 507
1,211 3,634 4,845 1,123 3,369 4,492
Frostrow’s AIFM fee is for risk management, corporate management, company secretarial and administrative services. Further information regarding
All expenses and interest are accounted for on an accruals basis. Expenses and interest are charged to the Income Statement as revenue items except where incurred in connection with the maintenance or enhancement of the value of the Company’s assets and taking account of the expected long-term returns, when they are split as follows:
Portfolio Management and AIFM fees payable have been allocated 25% to revenue and 75% to capital.
Transaction costs incurred on the purchase and sale of investments are taken to the Income Statement as a capital item, within gains on investments held at fair value through profit or loss.
4. Other Expenses
2025 2024
£’000 £’000
Directors’ fees 215 189
Employers NIC on directors’ remuneration 16 15
Auditor’s remuneration for annual audit 48 46
Depository fees 70 57
Custody fees 195 175
Registrar fees 28 25
Broker retainer 45 38
Listing fees 25 24
Legal and professional fees 26 41
Other expenses 195 185
Total expenses 863 795
For accounting policy, see note 3 on the prior page.
5. Taxation
(a) Analysis of Charge in the Year
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Overseas taxation 1,224 - 1,224 985 - 985
Indian capital gains tax charge (175) 7,684 7,509 (213) 5,203 4,990
1,049 7,684 8,733 772 5,203 5,975
Overseas tax arose as a result of irrecoverable withholding tax on overseas dividends and Indian capital gains tax.
As an investment trust, the Company is generally not subject to
(b) Reconciliation of Tax Charge
The
The differences are explained below:
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Total return on ordinary
activities
before tax 7,613 45,941 53,554 5,943 (6,029) (86)
Corporation tax charged at
25.0%
(2024: 24.0%) 1,903 11,486 13,389 1,428 (1,449) (21)
Effects of:
(Gains)/losses on investment
not subject to
UK corporation tax - (12,291) (12,291) - 485 485
Non-taxable exchange - (103) (103) - 154 154
differences
Unutilised management expenses 464 908 1,372 422 810 1,232
Income not subject to (2,367) - (2,367) (1,850) - (1,850)
corporation tax
Indian capital gains tax
charge
(see note 5a) (175) 7,684 7,509 (213) 5,203 4,990
Overseas taxation 1,224 - 1,224 985 - 985
Tax charge for the year 1,049 7,684 8,733 772 5,203 5,975
As at
The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue as set out in this note. The standard rate of corporation tax is applied to taxable net revenue. Any adjustment resulting from relief for overseas tax is allocated to the revenue reserve.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date where transactions or events that result in an obligation to pay more, or right to pay less, tax in future have occurred at the Statement of Financial Position date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company’s taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Deferred tax is measured without discounting and based on enacted tax rates. Due to the Company’s status as an investment trust, and the intention to meet the conditions required to obtain approval under Section 1158 of the Corporation Tax Act 2010, the Company has not provided for deferred
Deferred tax has been provided for on capital gains arising on Indian securities as noted in 5(a) above.
6. Dividends
Amounts recognised as distributable to shareholders for the year ended
2025 2024
£’000 £’000
Final dividend paid for the year ended 31 January 2024 of 4.0p per 4,838 -
share
Final dividend paid for the year ended 31 January 2023 of 2.3p per - 2,782
share
In respect of the year ended
The Board’s current policy is to pay dividends only out of revenue reserves. Therefore the amount available for distribution as at
The dividends payable in respect of both the current and the previous financial year, which meet the requirements of Section 1158 CTA 2010, are set out below:
2025 2024
£’000 £’000
Revenue available for distribution by way of dividend for the 6,564 5,171
year
Final dividend of 4.9p per share (2024: final dividend of 4.0p) (5,818) (4,838)
Transfer to revenue reserves 682 333
Dividends paid by the Company on its shares are recognised in the financial statements in the year in which they are paid and are shown in the Statement of Changes in Equity.
7. Return per Share
The return per share is as follows:
2025 2024
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Basic 5.4 31.7 37.1 4.3p (9.3)p (5.0)p
The total return per share is based on the total return attributable to shareholders of £44,821,000 (2024: loss of £6,061,000).
The revenue return per share is based on the net revenue return attributable to shareholders of £6,564,000 (2024: £5,171,000).
The capital return per share is based on the net capital return attributable to shareholders of £38,257,000 (2024: loss of £11,232,000).
The total return, revenue return and the capital return per share are based on the weighted average number of shares in issue during the year of 120,899,602 (2024: 120,958,386).
The calculations of the returns per Ordinary Share have been carried out in accordance with IAS 33 Earnings per Share.
8. Investments
2025 2024
£’000 £’000
Investments
Opening cost 352,944 320,883
Opening investment holding gains 117,165 153,516
Opening Valuation 470,109 474,399
Purchases at cost 123,228 84,889
Disposal proceeds (133,123) (87,161)
Gains/(losses) on investments 49,989 (2,018)
Valuation at end of year 510,203 470,109
Cost at 31 January 372,632 352,944
Investment holding gains at 31 January 137,571 117,165
Valuation at 31 January 510,203 470,109
The Company received £133,123,000 (2024: £87,161,000) from investments sold in the year. The book cost of these investments when they were purchased was £103,540,000 (2024: £52,828,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
During the year the Company incurred transaction costs on purchases of £155,000 (2024: £110,000) and transaction costs on sales of £263,000 (2024: £169,000).
Valuation of Investments
Investments are measured initially and at subsequent reporting dates at fair value. Purchases and sales are recognised on the trade date when a contract exists whose terms require delivery within the time frame established by the market concerned. For quoted securities fair value is either bid price or last traded price, depending on the convention of the exchange on which the investment is listed. Changes in fair value and gains or losses on disposal are included in the Income Statement as a capital item.
In addition, for financial reporting purposes, fair value measurements are categorised into a fair value hierarchy based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 – Quoted prices in active markets.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data), either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable).
All investments are in equity shares and have been classified as Level 1 (2023: All Level 1).
9. Debtors
2025 2024
£’000 £’000
Amounts due from brokers 1,008 746
Accrued income 179 279
Other debtors 65 7
1,252 1,032
10. Creditors: Amounts Falling Due Within One Year
2025 2024
£’000 £’000
Amounts due to brokers 781 -
Portfolio management fee – Stewart Investors 1,081 1,002
AIFM fee – Frostrow 135 128
Other creditors 400 177
2,397 1,307
11. Provisions for Liabilities
2025 2024
£’000 £’000
Deferred taxation on unrealised capital gains on Indian securities 13,645 11,206
See note 5 for further details and accounting policy.
12. Share Capital
2025 2024
£’000 £’000
Allotted and fully paid:
120,588,386 Ordinary shares of 12.5p each (2024: 120,958,386) 15,074 15,120
During the current and prior year, no Ordinary shares were issued. 370,000 (2024: Nil) Ordinary shares were bought back for cancellation.
The capital of the Company is managed in accordance with its investment policy which is detailed in the Strategic Report on pages 22 and 23.
The Company does not have any externally imposed capital requirements.
13. Net Asset Value Per Share
The net asset value per share of 417.5 p (2024: 384.3p) is calculated on net assets of £503,441,000 (2024: £464,819,000) divided by 120,588,386 (2024: 120,958,386) shares, being the number of shares in issue at the year end.
14. Financial Instruments
The Company’s financial instruments comprise its investment portfolio, cash balances, and debtors and creditors that arise directly from its operations. As an investment trust, the Company holds an investment portfolio of financial assets in pursuit of its investment objective.
Fixed asset investments (see note 8 on page 74) are valued at fair value in accordance with the Company’s accounting policies. The fair value of all other financial assets and liabilities is represented by their carrying value in the Statement of Financial Position shown on page 68.
The main risks that the Company faces arising from its financial instruments are:
(i) market risk, including:
other price risk, being the risk that the value of investments will fluctuate as a result of changes in market prices;
interest rate risk, being the risk that the future cash flows of a financial instrument will fluctuate because of changes in interest rates;
foreign currency risk, being the risk that the value of financial assets and liabilities will fluctuate because of movements in currency rates;
(ii) credit risk, being the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company; and
(iii) liquidity risk, being the risk that the Company will not be able to meet its liabilities when they fall due. This may arise should the Company not be able to liquidate its investments. Under normal market trading volumes, the majority of the investment portfolio could be realised within a week.
Other price risk
The management of other price risk is part of the portfolio management process and is typical of equity investment.
The investment portfolio is managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with an objective of maximising overall returns to shareholders. Further information on how the investment portfolio is managed is set out on page 2. Although it is the Company’s current policy not to use derivatives they may be used from time to time, with prior Board approval, to hedge specific market risk or gain exposure to a specific market.
If the investment portfolio valuation rose or fell by 10% at 31 January, the impact on the net asset value would have been £51.0 million (2024: £46.3 million). The calculations are based on the investment portfolio valuation as at the respective Statement of Financial Position dates and are not necessarily representative of the year as a whole.
Interest rate risk
Floating rate
When the Company retains cash balances the majority of the cash is held in overnight call accounts. The benchmark rate which determines the interest payments received on cash balances is the bank base rate for the relevant currency for each deposit.
Foreign currency risk
The Company invests in overseas securities and holds foreign currency cash balances which give rise to currency risks. Foreign currency risks are managed alongside other market risks as part of the management of the investment portfolio. It is currently not the Company’s policy to hedge this risk on a continuing basis but it can do so from time to time.
Foreign currency exposure:
2025 2024
Investments Cash Debtors Creditors/ Investments Cash Debtors Creditors/
Provisions Provisions
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Indian 208,458 437 1,061 (13,942) 218,067 2,063 783 (11,206)
rupee
New
Taiwanese 80,473 - - - 51,623 5 - -
dollar
Chinese 53,787 - - - 43,006 - - -
renminbi
Singapore 27,286 485 - - 21,562 688 - -
dollar
Indonesian 27,224 - 15 - 36,489 - - -
rupiah
Korean won 27,060 - 74 - 25,379 - 95 -
Japanese 23,279 - 29 - 37,707 - 106 -
yen
Philippine 20,251 - - (484) 4,688 - - -
peso
Hong Kong 17,927 - - - 13,173 - - -
dollar
Thai baht 9,672 - - - 9,471 - - -
US dollar 6,508 434 - - - 464 - -
Malaysian 5,585 - - - 4,586 - - -
ringgit
Bangladesh 2,693 - - - 4,358 - - -
taka
Euro - 8 - - - 2 - -
Total 510,203 1,364 1,179 (14,426) 470,109 3,222 984 (11,206)
At
During the year sterling weakened 1.1% (2024: strengthened by 7.5%) against all of the currencies in the investment portfolio (weighted for exposure at 31 January). If the value of sterling had strengthened against each of the currencies in the portfolio by 10%, the impact on the net asset value would have been negative £46.4 million (2024: negative £43.3 million). If the value of sterling had weakened against each of the currencies in the investment portfolio by 10%, the impact on the net asset value would have been positive £56.7 million (2024: positive £52.9 million). The calculations are based on the investment portfolio valuation and cash balances as at the year end and are not necessarily representative of the year as a whole.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Portfolio Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amounts of financial assets best represents the maximum credit risk exposure at the Statement of Financial Position date, and the main exposure to credit risk is via the Custodian which is responsible for the safeguarding of the Company’s investments and cash balances.
At the reporting date, the Company’s financial assets exposed to credit risk amounted to the following:
2025 2024
£’000 £’000
Cash 8,028 6,191
Debtors 1,252 1,032
9,280 7,223
All the assets of the Company which are traded on a recognised exchange are held by
The credit risk on cash is controlled through the use of counterparties or banks with high credit ratings (rated AA or higher), assigned by international credit rating agencies. Cash is currently held at
Liquidity risk
The Company’s liquidity risk is managed on an ongoing basis by the Portfolio Manager. Substantially all of the Company’s portfolio would be realisable within two weeks under normal market conditions. There may be circumstances where market liquidity is lower than normal. Stress tests have been performed to understand how long the portfolio would take to realise in such situations. The Board is comfortable that in such a situation the Company would be able to meet its liabilities as they fall due.
Capital management policies and procedures
The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and to maximise the return to its equity shareholders.
The Company’s policy on gearing and leverage is set out on page 23. The Company had no gearing or leverage during the current or prior year.
The capital structure of the Company consists of the equity share capital, retained earnings and other reserves as shown in the Statement of Financial Position on page 68.
The Board, with the assistance of the AIFM and the Portfolio Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This includes a review of:
-- the need to buy back equity shares, either for cancellation or to hold
in treasury, in light of any share price discount to net asset value per
share in accordance with the Company’s share buy back policy;
-- the need for new issues of equity shares, including issues from
treasury; and
-- the extent to which revenue in excess of that which is required to be
distributed should be retained.
The Company’s objectives, policies and processes for managing capital are unchanged from the prior year.
15. Reserves
Capital redemption reserve
This reserve arose when ordinary shares were redeemed by the Company and subsequently cancelled, at which point the amount equal to the par value of the ordinary share capital was transferred from the ordinary share capital to the Capital Redemption Reserve.
Special reserve
The Special Reserve arose following court approval in
Capital reserve
The following are accounted for in this reserve: gains and losses on the disposal of investments; changes in the fair value of investments; and expenses and finance costs, together with the related taxation effect, charged to capital in accordance with note 5 on page 71. Any gains in the fair value of investments that are not readily convertible to cash are treated as unrealised gains in the capital reserve.
Revenue reserve
The Revenue Reserve reflects all income and expenses that are recognised in the revenue column of the Income Statement.
Distributable reserves
The Revenue, Special and Capital Reserves are distributable. It is the Board’s current policy to pay dividends only from the revenue reserve.
16. Related Party Transactions and Transactions with the Managers
The following are considered to be related parties:
-- Frostrow Capital LLP (under the Listing Rules only)
-- Stewart Investors (under the Listing Rules only)
-- The Directors of the Company.
Details of the relationship between the Company and
The Company employs
All material related party transactions have been disclosed in notes 3 and 4 on pages 70 and 71. Details of the remuneration and the shareholdings of all Directors can be found on page 57.
The figures and financial information for 2024 are extracted from the published Annual Report for the year ended
The figures and financial information for 2025 are extracted from the Annual Report and financial statements for the year ended
Glossary of Terms and Alternative Performance Measures (unaudited)
Absolute Performance
Absolute performance is the percentage (%) rise or fall in the share price of the investment over the stated period. Relative performance, on the other hand, is the difference between the absolute return and the performance of the market (or other similar investments), which is gauged by a benchmark, or index such as the MSCI AC Asia ex Japan Index.
AIFMD
The Alternative Investment Fund Managers Directive (the ‘Directive’) is a European Union Directive that entered into force on
Where an entity falls within the scope of the Directive, it must appoint a single
Average Discount
The average share price for the period divided by the average net asset value for the period minus 1.
2025 2024
pence pence
Average share price for the year 369.1 363.1
Average net asset value for the year 417.3 388.0
Average Discount 11.5% 6.4%
Bottom-Up Approach
An investment approach that focuses on the analysis of individual stocks rather than the significance of macroeconomic factors.
Discount or Premium
A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount.
Gearing
The term used to describe the process of borrowing money for investment purposes. The expectation is that the returns on the investments purchased will exceed the finance costs associated with those borrowings.
There are several methods of calculating gearing and the following has been selected:
Total assets less current liabilities (before deducting any prior charges) minus cash/cash equivalents divided by shareholders’ funds, expressed as a percentage.
Net Asset Value (“NAV”)
The value of the Company’s assets, principally investments made in other companies and cash being held, minus any liabilities. The NAV is also described as “shareholders’ funds” per share. The NAV is often expressed in pence per share after being divided by the number of shares which have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand for and supply of the shares.
NAV Per Share Total Return
The total return on an investment over a specified period assuming dividends paid to shareholders were reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment trusts which is not affected by movements in discounts or premiums.
31 January 31 January
2025 2024
NAV Total Return p p
Opening NAV 384.3 391.6
Increase/(decrease) in NAV 37.2 (5.0)
Dividend paid (4.0) (2.3)
Closing NAV 417.5 384.3
Increase/(decrease) in NAV 9.7% (1.3)%
Impact of reinvested dividends 0.0% 0.0%
NAV Total Return 9.7% (1.3)%
Ongoing Charges
Ongoing charges are calculated by taking the Company’s annualised operating expenses as a proportion of the average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are interest costs, taxation, cost of buying back or issuing ordinary shares and other non - recurring costs.
31 January 31 January
2025 2024
£’000 £’000
Operating expenses1 5,708 5,287
Average net assets during the year 504,629 469,515
Ongoing charges 1.1% 1.1%
1 See notes 3 and 4 on pages 70 and 71.
Performance Objective
The Company’s performance objective, against which the Portfolio Manager’s performance is measured, is to provide shareholders with a net asset value total return in excess of the
Total Return
(annualised)
Share Price NAV CPI + 6%
(%) (%) (%)
One year to 31 January 2025 3.7 9.7 8.8
Three years to 31 January 2025 2.5 4.6 12.1
Five years to 31 January 2025 6.9 8.7 11.0
Portfolio Turnover
Portfolio turnover is a measure of how quickly securities in a fund are either bought or sold by the fund’s managers, over a given period of time. The rate of turnover is important for potential investors to consider, as funds that have a high rate will also have higher fees to reflect the turnover costs.
It is calculated as the average of the purchases and sales for the year divided by the average net assets for the year.
Revenue Return per Share
The revenue return per share is calculated by taking the return on ordinary activities after taxation and dividing it by the weighted average number of shares in issue during the year (see note 7 on page 73 for further information).
Share Price Total Return
The total return on an investment over a specified period assuming dividends paid to shareholders were reinvested in the Company’s shares at the share price at the time the shares were quoted ex-dividend.
31 January 31 January
2025 2024
Share Price Total Return p p
Opening share price 349.0 358.0
Increase/(decrease) in share price 13.0 (6.7)
Dividend paid (4.0) (2.3)
Closing share price 358.0 349.0
Increase/(decrease) in share price 3.7% (1.9)%
Impact of reinvested dividends 0.0% 0.0%
Share Price Total Return 3.7% (1.9)%
Volatility
A measure of the range of possible returns for a given security or market index.
ANNOUNCEMENT ENDS
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
