Pacific Assets Trust plc - Annual Report for the Year Ended 31 January 2026
(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
2026 2025
Shareholders’ funds £470.8m £503.4m
Market capitalisation £423.9m £431.7m
One year to One year to
31 January 31 January
Performance 2026 2025
Net asset value per share total return 1 2 0.0% 9.7%
Share price total return 1 2 5.1% 3.7%
MSCI All Country Asia ex Japan Index (total return, 28.6% 22.3%
sterling adjusted) 1
Average discount of share price to net asset value per 11.4% 11.5%
share 1 2
Ongoing charges 2 1.1% 1.1%
Revenue return per share 5.6p 5.4p
Dividend per share 5.7p 4.9p
1 Source: Morningstar
2 Alternative Performance Measure
Chair’s Statement
Introduction and Results
The Company’s NAV total return for the year ended
The past year has been a difficult one for the Company. In August,
In November,
As the transition to FSSA occurred only in the final months of the financial year, their ability to reposition the portfolio was necessarily limited. In light of the ongoing strategic review, the Board also instructed FSSA to restrict portfolio turnover to a maximum of 20%. With only modest scope for adjustments, the Portfolio Manager has made incremental reallocations, adding selectively to Chinese and Southeast Asian holdings and reducing certain cyclical exposures in
Economic and market conditions across the region were uneven.
Despite these challenging conditions, FSSA continued to identify compelling bottom up opportunities across
While the investment strategy has historically demonstrated resilience in more volatile or falling markets, as seen in 2023, it has struggled during the sharply rising conditions of the past two years.
The Board recognises that the Company’s longer term performance record has deteriorated relative to its peers and understands that shareholders expect meaningful improvement. The aim of the strategic review, therefore, is to identify the course of action that will best serve shareholders over the long term.
Strategic Review
As mentioned above, in December your Board initiated a strategic review of the future of the Company. The Board has considered a range of possible options including retaining the existing manager, appointing a new external, third-party manager and entering into a combination with another investment trust. The Board was pleased that the Company received interest from a large number of high-quality management groups, including FSSA, which have been evaluated by the Board with the assistance of the corporate stockbroker,
The Board wishes to acknowledge both the professionalism of the outgoing team at
Share price performance
The Company’s share price total return for the year was 5.1%, benefitting from the share price discount narrowing relative to the NAV total return. The shares traded at an average discount of 11.4% (2025: 11.5%), and the Company repurchased 6.3 million shares over the year, at a cost of £22.5 million, and at an average discount of 11.8%. Buybacks were paused once the strategic review was announced, but increased interest from certain investors has provided some natural discount management since that time.
Dividend
The Company generated a revenue return of 5.6p per share during the year (2025: 5.4p 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 5.7p per share will be paid on 10
July
2026 to shareholders on the register on
The Board
Having served on the
The Annual General Meeting
As noted above, the Board shortly expects to announce the conclusion of its strategic review and looks forward to discussing the outcome with shareholders over the coming weeks and months. One such opportunity will be at our annual general meeting (“AGM”) to be held at
The Board strongly encourages shareholders to register their proxy voting instructions online in advance of the AGM. Registering your proxy voting instructions 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 as each of the directors intends to do in respect of their own holdings.
Outlook
Overall,
FSSA provide further comment in their report.
Chair
Investment Portfolio
as at
Value % Total
Company Country Sector
£’000 Assets
Samsung Electronics South Korea Information Technology 31,512 6.7%
Oversea-Chinese Banking Corp Singapore Financials 17,734 3.8%
Airtac International Taiwan Industrials 16,156 3.4%
Taiwan Semiconductor Taiwan Information Technology 15,701 3.3%
Manufacturing
Jardine Matheson Hong Kong Industrials 14,658 3.1%
Alibaba China Consumer Discretionary 14,479 3.1%
Hoya Japan Health Care 14,166 3.0%
DFI Retail Hong Kong Consumer Staples 13,991 3.0%
Tencent China Communication Services 11,486 2.4%
Kotak Mahindra Bank India Financials 11,474 2.4%
Top 10 Investments 161,357 34.2%
Shenzhen Inovance Technology China Industrials 11,410 2.4%
Techtronic Industries Hong Kong Industrials 11,144 2.3%
Mahindra & Mahindra India Consumer Discretionary 10,976 2.3%
Midea China Consumer Discretionary 10,421 2.2%
AIA Hong Kong Financials 10,282 2.2%
Ayala Philippines Industrials 10,270 2.2%
Voltronic Power Technology Taiwan Industrials 10,118 2.1%
Sheng Siong Singapore Consumer Staples 9,893 2.1%
Bank OCBC Nisp Indonesia Financials 9,328 2.0%
Trip.com China Consumer Discretionary 9,113 1.9%
Top 20 Investments 264,312 55.9%
Tube Investments of India India Consumer Discretionary 8,846 1.9%
Elgi Equipments India Industrials 8,704 1.8%
Philippine Seven Philippines Consumer Staples 8,351 1.8%
Cholamandalam Financial India Financials 8,184 1.7%
Dongguan Yiheda Automation China Industrials 7,991 1.7%
Shanthi Gears India Industrials 7,920 1.7%
Mani Japan Health Care 7,447 1.6%
Sundaram Finance India Financials 7,435 1.6%
SF Holding China Industrials 7,397 1.6%
Triveni Turbine India Industrials 7,255 1.5%
Top 30 Investments 343,842 72.8%
Value % Total
Company Country Sector
£’000 Assets
HDFC Bank India Financia6,425 1.4%
ls
Informat
ViTrox Corp Malaysia ion 6,352 1.3%
Technolo
gy
Informat
Delta Electronics Taiwan ion 6,044 1.3%
Technolo
gy
Consumer
Bajaj Auto India Discreti6,031 1.3%
onary
Kasikornbank Thailand Financia5,879 1.2%
ls
Informat
MediaTek Taiwan ion 5,828 1.2%
Technolo
gy
Informat
Chroma ATE Taiwan ion 5,589 1.2%
Technolo
gy
Informat
Tech Mahindra India ion 5,357 1.1%
Technolo
gy
Informat
Glodon China ion 5,032 1.1%
Technolo
gy
Marico India Consumer4,924 1.0%
Staples
Top 40 Investments 401,303 84.9%
Shenzhen Mindray Bio-Medical
Electronics China Health 4,682 1.0%
Care
CG Power & Industrial Solutions India Industri4,605 1.0%
als
Centre Testing International China Industri4,578 1.0%
als
Aavas Financiers Ltd India Financia4,366 0.9%
ls
Bank Central Asia Indonesia Financia4,270 0.9%
ls
Communic
Info Edge India India ation 4,151 0.9%
Services
Consumer
Selamat Sempurna Indonesia Discreti3,968 0.8%
onary
Consumer
Sea Singapore Discreti3,844 0.8%
onary
Godrej Consumer Products India Consumer3,842 0.8%
Staples
Vitasoy International Hong Kong Consumer3,752 0.8%
Staples
Top 50 Investments 443,361 93.8%
SM Investments Philippines Industri3,648 0.8%
als
Humanica Thailand Industri3,141 0.7%
als
BDO Unibank Philippines Financia2,967 0.6%
ls
Informat
Silergy Taiwan ion 2,780 0.6%
Technolo
gy
Bajaj Holdings & Investment India Financia2,666 0.6%
ls
Bank of the Philippine Islands Philippines Financia2,450 0.5%
ls
SF Holding China Industri2,420 0.5%
als
Informat
FPT Vietnam ion 2,403 0.5%
Technolo
gy
Yifeng Pharmacy Chain China Consumer2,027 0.4%
Staples
Kalbe Farma Indonesia Health 2,019 0.4%
Care
Marico Bangladesh Bangladesh Consumer1,900 0.4%
Staples
Tarsons Products India Health 771 0.2%
Care
Total Investments 472,553 100.0%
Portfolio Manager’s Review
In
Over the year to
Another reason for the relative underperformance was the level of market concentration in a few stocks and themes – around two-thirds of the total return of the Index was driven by technology and Artificial Intelligence (“AI”)-related companies. Outside of these sectors, many high-quality businesses – particularly in
In particular, Korean and Taiwanese chipmakers have seen valuations expand rapidly on the future promise of AI. Taiwan Semiconductor Manufacturing (“TSMC”), Samsung Electronics, and SK Hynix – all related to the AI theme – now comprise almost a quarter of the Index’s weight. On a country level, TSMC now commands a staggering 59% of MSCI Taiwan, up from 24% at the end of 2015. Samsung Electronics and SK Hynix together represent more than 50% of MSCI Korea, compared to just 23% a decade ago. 1 This underscores the outsized role of a handful of firms in shaping regional returns.
With everything seemingly about AI, we believe it is critical to remain disciplined in our investment approach and focused on quality. Momentum phases tend to favour companies with eye-catching narratives rather than those with solid balance sheets or dependable earnings. Yet far from weakening the case for quality investing, such episodes strengthen it.
Global research 2 shows that high-quality companies are consistently underpriced, as the market routinely underestimates their future returns. Low-quality companies are consistently overpriced, as over-optimistic analysts generate larger forecast errors. Crucially, the mispricing of quality is not random. The research identifies a “price of quality” that fluctuates over time. It is typically lowest during speculative booms – such as the late 1990s technology surge or the run up to the financial crisis – when investors place less emphasis on fundamental strength and more on market narratives.
When the price of quality becomes unusually compressed, subsequent returns from quality strategies tend to rise. In effect, weak periods for quality often lay the groundwork for future outperformance.
1
Source; FactSet, as at
2
The recurring lesson from more than half a century of data is that quality investing succeeds not because markets are always rational, but because they frequently are not. Periods in which quality appears to lag – particularly when speculative assets dominate the headlines – are often the prelude to its strongest returns.
Positioning for growth opportunities across
As benchmark-agnostic investors, we pay little attention to index compositions or returns. We focus instead on generating absolute returns for our clients in the long run. Our track record, when viewed through the lens of the market environment, shows that our portfolios tend to perform better in “normal” markets (-15% to +15% 1-year rolling returns) and bear markets (more than 15% decline), than in steeply rising markets (defined as over 15% 1-year rolling returns).
Through our bottom-up research, we own dominant industry leaders that have exposure to AI like TSMC and Tencent, but we remain sceptical about many expensive and cyclical AI-related companies in
Although
We have also been significant and constructive shareholders of various
The new externally appointed CEOs at subsidiary companies DFI, Mandarin Oriental and Hongkong Land have begun to focus on the most attractive parts of their businesses, while exiting non-core ventures to improve returns on invested capital and return cash to shareholders where appropriate. Improving total shareholder return is the new mantra for the group.
More needs to be done to shift the group back towards a growth pathway, but we expect changes to accelerate in the coming years.
In
At Kotak Mahindra Bank (“KMB”), we also note signs of improvement across different areas of the business. It has grown its savings accounts; credit costs have been declining; and the cost/income ratio is showing signs of improvement due to the bank’s investments into digitisation and automation. For a business that should continue to compound at a mid-teens rate – we believe the current valuation makes the risk-reward look attractive.
Contributors
The largest contributor to performance over the period was
Samsung Electronics
, a leading manufacturer of memory and semiconductor chips. In recent years, Samsung’s foundry business has been a major point of investor concern, which culminated in significant losses in the first half of 2025. These losses were exacerbated by one-time charges related to US export controls to
Delta Electronics
, a leading power supply company in
The third largest contributor to performance was
DFI Retail
, a leading pan-Asian retailing group with a
dominant market position across various segments, including drug stores, supermarkets, convenience stores,
Detractors
Voltronic Power
has had a challenging year and was the
largest detractor from returns. Around a third of its uninterruptible power supply (“UPS”) sales goes to the US and was subject to higher tariffs after “Liberation Day”, while its inverter business – which has been hit by weak demand and competition – appears to be challenged. While the
Tube Investments of India
, an engineering group which
makes precision steel tubes for cars, bicycles and other industrial purposes, was the second biggest detractor due to sluggish business performance and rising competition in the electric vehicle (“EV”) space. Despite its early mover advantage, Tube has struggled to maintain market share. It plans to arrest these challenges by increasing the number of dealership partners and entering new sub-segments in EV battery packs. On a positive note, the core business is stable with robust returns on capital employed, and it generates healthy free cash flow which is being invested in new businesses with high returns potential. In this endeavour, we are backing the management, particularly
The third largest detractor was Philippine Seven , operator of 7-11 stores, which declined after reporting weak earnings results. Same store sales growth has been weak due to the exit of the Philippine offshore gaming operators (“POGOs”), which were banned in mid-2024. However, the group continues to expand its lead in terms of store count, and its network is increasingly extending beyond Metro Manila and into harder-to-reach areas. It has also built an extensive network of more than 20 distribution centres to cater to company-owned and franchised stores across the country. At current valuations we believe the risk-reward looks compelling.
Significant transactions
Given the significant overlap in SI’s and FSSA’s investment philosophy and portfolios, we know all the holdings well. As part of the transition, we made a few changes to tilt the portfolio towards companies with stronger cash generation, higher returns and better long-term growth prospects. In general, we are adding to holdings in
Below, we highlight a few of the key additions and disposals since the transition to FSSA.
New investments
Tencent Holdings
is the largest social media network
and online gaming company in
Kotak Mahindra Bank (“KMB”)
is one of India’s leading
financial services companies – it has consistently improved the strength of its deposit franchise and maintained better asset quality than peers through the business cycle. While the founder,
Bank Central Asia (“BCA”)
is a leading private bank in
Disposals
Naver
, the South Korean technology platform, was sold
on strength to consolidate the portfolio into higher conviction ideas. While the shares have bounced due to excitement around
Motilal Oswal Financial Services
is a non-bank financial
company (“NBFC”) in
Milkyway Intelligent Supply Chain
is a chemical
materials logistics company in
Looking forward
We are optimistic on the outlook for the
As markets broaden out their focus from their narrow focus on AI, we believe quality businesses owned in the portfolio should do well. The Company’s holdings are characterised by strong competitive advantages, and they have historically managed to preserve margins and profitability through the cycles. We are confident that their strong fundamentals will translate into attractive shareholder returns in the long run. Current portfolio valuations, at 17x forward price-to-earnings, remain attractive – as they have been over the last couple of years, while the free cash flow yield of 5.3% is at a historic high as companies are returning more cash to shareholders. Looking forward, we expect earnings to compound at a low-to-mid teens rate with circa 20% average returns on equity, which looks attractive and reasonable to us.
FSSA Investment Managers
Portfolio Manager
Key Performance Indicators (“KPIs”)
The Board of Directors reviews performance against the following KPIs. As explained in the Half Year Report, the Board decided to retire the Company’s
-- NAV total return against the MSCI All Country Asia ex Japan Index (the
“Index”)*^
-- 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.
NAV per share total return – Index
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.
During the year under review, the NAV per share total return was 0.0% underperforming the Index by 28.6% (2025: NAV per share total return of 9.7%, underperforming the Index by 12.6%). Over the past three years, the annualised NAV per share total return was 2.7%, underperforming the Index by 9.4%. Over five years, the annualised NAV per share total return was 4.5%, in line with the Index.
A full description of performance during the year under review is contained in the Portfolio Manager’s Review.
NAV total return – peer group
The Board also monitors the Company’s performance against its peer group of the three other investment trusts in the AIC Asia Pacific sector and an exchange traded fund which tracks the MSCI AC Asia ex Japan Index.
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 repurchased 6,325,879 shares during the year, at a total cost of £22.5 million, and at an average discount of 11.8%. The Board keeps the level of the discount under close review. Please refer to the Chair’s Statement for further information.
Average discount of share price to NAV per share*^ during the year ended
11.4% 11.5%
Peer group average Peer group average
discount 9.0% discount 10.8%
* Source: Morningstar.
^ Alternative Performance Measure.
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.
During the year the Board agreed with the Portfolio Manager a new portfolio management fee which will have the effect of lowering the ongoing charges ratio to 1.0% in the first full year. 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 below 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
Strategic Review Risk
The Board launched a strategic review towards the end of the year following changes to the Company’s portfolio management arrangements during the year. The Board considers that this process has heightened the Company’s overall risk environment, introducing uncertainty regarding the Company’s future structure, investment approach and management arrangements. This uncertainty may influence market sentiment and contribute to volatility in the share price and discount. The review has also necessitated a pause in the Company’s marketing activities, and the Portfolio Manager has been asked to limit portfolio turnover while the process is ongoing. The eventual outcome of the review may not align with the preferences of all shareholders. The Board continues to monitor these risks and will maintain open communication with stakeholders throughout the process.
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 Unchanged
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
The Company’s portfolio is exposed to limits is monitored daily by Frostrow and
fluctuations in market prices (from the Portfolio Manager and reported to the
both individual security prices and Board monthly. The Portfolio Manager
foreign exchange rates) in the regions reports at each Board meeting on the
and sectors in which it invests. performance of the Company’s portfolio,
Emerging markets in the Asia Pacific including the impact of wider market
region, in which the portfolio trends and events.
companies operate, are expected to be
more volatile than developed markets. As part of its review of the viability of
the Company, the Board also considers the
sensitivity of the Company to changes in
market prices and foreign exchange rates
(see note 14), 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.
Investment Performance
Increased
To manage this risk, the Board:
-- reviews and challenges reports
from the Portfolio Manager, which
cover portfolio composition,
Investment performance may not achieve asset allocation, concentration
the Company’s investment objective. and performance at each Board
The Portfolio Manager’s investment meeting;
strategy and approach is expected to -- reviews investment performance
lead to performance that will deviate over the long term against the
from that of both market indices and Company’s performance objective
other investment companies investing and peer group;
in the Asia Pacific Region . -- monitors the Portfolio Manager’s
performance against set KPIs; and
-- formally reviews the Portfolio
Manager’s appointment, including
their performance, service levels
and contractual arrangements,
each year.
The Board increased the investment
performance risk rating during the year
in light of the Company’s short and
medium term performance. In December
2025 , the Board initiated a full
strategic review, as described in the
Chair’s Statement.
Principal Risks and Mitigation Change in assessment of risk over
Uncertainties the last financial year
Strategic Risks
Geopolitical Risk
Increased
The Board regularly discusses global
geopolitical issues and general economic
conditions and developments.
Geopolitical events may have an
adverse impact on the Company’s Political changes in recent years,
performance by causing exchange particularly in the US and Asia Pacific region
rate volatility, changes in tax and more recently in the Middle East, as well
or regulatory environments, a as Ukraine and Eastern Europe, have
reduced investment universe increased uncertainty and volatility in
and/or a fall in market prices. financial markets. The Board discusses such
developments and how they may impact decision
making with the Portfolio Manager. In light of
recent events in Iran, the Board considers
that this risk has increased.
Climate Change Risk Unchanged
The Board regularly reviews global
The Board is cognisant of risks environmental, geopolitical and economic
arising from climate change and developments with the Portfolio Manager and
the impact climate change events the implications of these risks and events on
could have on portfolio companies portfolio construction and the Company’s
and their operations, as well as operations. Given the Portfolio Manager’s
on service providers to the focus on sustainability, the Board considers
Company. the portfolio to be relatively well positioned
in this regard.
Black Swan Risk Unchanged
The Board monitors emerging risks and the
robustness of the Portfolio Manager and other
service providers’ business continuity plans.
A significant unpredictable event
(e.g. a pandemic/war/closure of a The Portfolio Manager’s investment approach
major shipping route) could lead includes a focus on sustainability and
to increased market volatility, stewardship, which emphasises quality
and in a worst-case scenario, investments with strong balance sheets, a
major global trade and supply proven track record in previous crises, and
chain breakdown resulting in the protection of shareholders’ funds, leaving
significant volatility/declines them relatively well positioned to deal with
in market prices. The Company’s unforeseen events.
service providers and their
operational systems may also be All of the Company’s service providers are
affected. 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.
Principal Risks and Mitigation Change in assessment of risk over
Uncertainties the last financial year
Key Persons Risk Increased
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 supporting the
designated lead manager, at both
There is a risk that the team Board meetings and at the Portfolio
responsible for managing the Manager’s offices; and
Company’s portfolio may leave -- delegating to the Engagement &
their employment or may be Remuneration Committee responsibility
prevented from undertaking their to perform an annual review of the
duties. service received from the Portfolio
Manager, including, inter alia ,
the team supporting the lead manager
and their succession planning.
In light of the changes made by First Sentier
Group to the Company’s portfolio management
arrangements during the year, the Board
recognised that this risk had increased
materially.
Share Price Risk Increased
In managing this risk the Board:
-- reviews the Company’s investment
objective and policy, and the
Portfolio Manager’s investment
approach, in relation to investment
performance, market and economic
conditions and the performance of the
Company’s peers;
The Company is exposed to the -- regularly discusses the Company’s
risk, particularly if the future development and strategy;
investment strategy and approach -- undertakes a regular review of the
are unsuccessful, that the level of the share price
Company underperforms its peer discount/premium to the NAV per share
group, fails to achieve its and considers ways in which share
Performance Objective and becomes price performance may be enhanced,
unattractive to shareholders, including the effectiveness of
resulting in a widening of the marketing, share issuance and share
share price discount to the NAV buybacks, where appropriate; and
per share. -- reviews an analysis of the shareholder
register at each Board meeting and is
kept informed of shareholder
sentiment.
In view of the Company’s performance, the
changes to the portfolio management team, and
ongoing developments in the investment trust
sector, the Board considered that this risk
had increased during the year. As a result,
the Board launched a strategic review as
described in the Chair’s Statement.
Principal Risks and Mitigation Change in risk assessment over
Uncertainties the last financial year
Operational Risk
Operational Risk Increased
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;
As an externally managed -- maintains a risk matrix with details
investment trust, the Company is of the risks to which the Company is
reliant on the systems of its exposed, the approach to managing
service providers for dealing, those risks, the key controls relied
trade processing, administration, upon and the frequency of the controls
financial and other functions. operation;
If such systems were to fail or -- receives updates on pending changes to
be disrupted (including, for the regulatory and legal environment
example, as a result of and progress towards the Company’s
cyber-crime or a pandemic) this compliance with such changes;
could lead to a failure to comply -- has considered the increased risk of
with applicable laws, regulations cyber-attacks and received reports and
and governance requirements assurance from the Company’s service
and/or to a financial loss. providers regarding the information
security controls in place;
Credit risk arising from the use -- has reviewed the arrangements
of counterparties forms part of (including sub-custodial arrangements)
this risk. If a counterparty were and services provided by the Custodian
to fail, the Company could be to ensure that the security of the
adversely affected through either Company’s custodial assets is
delay in settlement or loss of maintained; and
assets. -- reviews the Portfolio Manager’s
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.
The Board considered that the risk of
operational disruption had increased during
the year as a result of the strategic review
initiated by the Board.
Emerging Risks
Emerging risks are discussed as part of the risk review process. The Board has identified the following emerging risk:
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.
Going Concern
As set out in more detail in the Chairman’s Statement, the Board is in the process of completing a strategic review of the Company’s future. The possible outcomes of the strategic review represent a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern. Notwithstanding this material uncertainty, the Board has concluded that it remains appropriate to prepare the financial statements on a going concern basis. In reaching this conclusion, the Board has come to the view that, as the Board has not yet reached a decision and the Company is considered solvent in all other regards, going concern remains the most appropriate basis for preparation of the financial statements.
The Board has also considered the Company’s portfolio, investment activity, cash balances and revenue forecasts, and 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 and Notes 1 and 14 to the financial statements. Based on the information available to the Directors at the date of this report, 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.
Viability Statement
Notwithstanding the material uncertainty posed by the strategic review, the Directors have carefully assessed the Company’s financial position and prospects as well as the principal risks facing the Company and expect that, if the Company is to continue in its current form, it would be able to continue in operation and meet its liabilities as they fall due over the next three financial years. The Board chose a three year horizon to align with the performance-related tender offer introduced during the year.
To make this assessment and in reaching this conclusion, the Audit Committee 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 90% 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 a forecast ongoing charges ratio of 1.0%, 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 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.
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 2026 ; 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 2026 Year ended 31 January
2025
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on 8 – (9,914) (9,914) – 49,989 49,989
investments
Exchange differences – (685) (685) – (414) (414)
Income 2 9,912 – 9,912 9,687 – 9,687
Portfolio management
and AIFM fees 3 (1,068) (3,204) (4,272) (1,211) (3,634) (4,845)
Other expenses 4 (1,194) – (1,194)) (863) – (863)
Return/(loss) before 7,650 (13,803) (6,153) 7,613 45,941 53,554
taxation
Taxation 5 (1,074) 2,863 1,789 (1,049) (7,684) (8,733)
Return/(loss) after 6,576 (10,940) (4,364) 6,564 38,257 44,821
taxation
Return/(loss) per 7 5.6 (9.3) (3.7) 5.4 31.7 37.1
share (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 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 15,120 8,811 1,648 14,572 415,270 9,398 464,819
January 2024
Return after – – – – 38,257 6,564 44,821
taxation
Repurchase of
own shares (46) – 46 – (1,361) – (1,361)
for
cancellation
Ordinary
dividends 6 – – – – – (4,838) (4,838)
paid
At 31 15,074 8,811 1,694 14,572 452,166 11,124 503,441
January 2025
(Loss)/Return – – – – 6,576 (4,364)
after (10,940)
taxation
Repurchase
of own shares (791) – 791 – –
for (22,498) (22,498)
cancellation
Ordinary
dividends 6 – – – – – (5,805) (5,805)
paid
At 31 14,283 8,811 2,485 14,572 418,728 11,895 470,774
January 2026
The accompanying notes are an integral part of these statements.
Statement of Financial Position
as at
2026 2025
Notes £’000 £’000 £’000 £’000
Fixed assets
Investments 8 472,553 510,203
Current assets
Debtors 9 261 1,252
Cash 4,838 8,028
5,099 9,280
Creditors (amounts falling due within 10 (1,455) (2,397)
one year)
Net current assets 3,644 6,883
Total assets less current liabilities 476,197 517,086
Creditors (amounts falling due after
one year)
Provision for liabilities 11 (5,423) (13,645)
Net assets 470,774 503,441
Capital and reserves
Called up share capital 12 14,283 15,074
Share premium account 8,811 8,811
Capital redemption reserve 15 2,485 1,694
Special reserve 15 14,572 14,572
Capital reserve 15 418,728 452,166
Revenue reserve 15 11,895 11,124
Equity shareholders’ funds 470,774 503,441
Net asset value per Ordinary Share (p) 13 412.0p 417.5p
The financial statements were approved and authorised for issue by the Board of Directors on
Chair
The accompanying notes 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.
The Board is in the process of carrying out a strategic review of the Company’s future. The possible outcomes of the strategic review represent a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern. Notwithstanding this material uncertainty, the Board has concluded that it remains appropriate to continue to prepare the financial statements on a going concern basis. In reaching this conclusion, the Board has come to the view that, as the Board has not yet reached a decision and the Company is considered solvent in all other regards, going concern remains the most appropriate basis for preparation of the financial statements. The financial statements do not include any adjustments that would be necessary if the Company were unable to continue as a going concern.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements involves judgement in determining the functional currency; however, there are no significant judgements or key sources of estimation uncertainty requiring disclosure under FRS 102.
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 cash equivalents that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
2. Income
2026 2025
£’000 £’000
Overseas dividends 9,763 9,469
Interest income 149 218
9,912 9,687
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
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Portfolio management fee 939 2,818 3,757 1,075 3,227 4,302
AIFM fee 129 386 515 136 407 543
1,068 3,204 4,272 1,211 3,634 4,845
Frostrow’s AIFM fee is for risk management, corporate management, company secretarial and administrative services. Further information regarding FSI’s and Frostrow’s fees can be found on pages 40 and 41 of the Annual Report.
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
2026 2025
£’000 £’000
Directors’ fees 209 215
Employers NIC on directors’ remuneration 16 16
Auditor’s remuneration for annual audit 51 48
Depository fees 59 70
Custody fees 172 195
Registrar fees 42 28
Broker fees 263 45
Listing fees 26 25
Legal and professional fees 57 26
Other expenses 299 195
Total expenses 1,194 863
For accounting policy, see note 3.
5. Taxation
(a) Analysis of (Credit)/Charge in the Year
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Overseas taxation 1,211 – 1,211 1,224 – 1,224
Indian capital gains tax (137) (2,863) (3,000) (175) 7,684 7,509
(credit)/charge
1,074 (2,863) (1,789) 1,049 7,684 8,733
Overseas tax arose as a result of irrecoverable withholding tax on overseas dividends.
As an investment trust, the Company is generally not subject to
(b) Reconciliation of Tax (Credit)/Charge
The
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Total return/(loss) on
ordinary activities before 7,650 (13,803) (6,153) 7,613 45,941 53,554
tax
Corporation tax charged/
(credited) at 25.0% (2025: 1,913 (3,451) (1,538) 1,903 11,486 13,389
25.0%)
Effects of:
Losses/(gains) on investment
not subject to
UK corporation tax – 2,821 2,821 – (12,291) (12,291)
Non-taxable exchange – (171) (171) – (103) (103)
differences
Unutilised management 528 801 1,329 464 908 1,372
expenses
Income not subject to (2,441) – (2,441) (2,367) – (2,367)
corporation tax
Indian capital gains tax (137) (2,863) (3,000) (175) 7,684 7,509
(credit)/charge (see note 5a)
Overseas taxation 1,211 – 1,211 1,224 – 1,224
Tax charge/(credit) for the 1,074 (2,863) (1,789) 1,049 7,684 8,733
year
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
2026 2025
£’000 £’000
Final dividend paid for the year ended 31 January 2025 of 4.9p per 5,805 –
share
Final dividend paid for the year ended 31 January 2024 of 4.0p per – 4,838
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:
2026 2025
£’000 £’000
Revenue available for distribution by way of dividend for the 6,576 6,564
year
Final dividend of 5.7p per share (2025: final dividend of 4.9p) (6,513) (5,805)
Transfer to revenue reserves 63 759
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:
2026 2025
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Basic 5.6 (9.3) (3.7) 5.4 31.7 37.1
The total return per share is based on the total loss attributable to shareholders of £4,364,000 (2025: return of £44,821,000).
The revenue return per share is based on the net revenue return attributable to shareholders of £6,576,000 (2025: £6,564,000).
The capital return per share is based on the net capital loss attributable to shareholders of £10,940,000 (2025: return of £38,257,000).
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 117,285,517 (2025: 120,899,602).
The calculations of the returns per Ordinary Share have been carried out in accordance with IAS 33 Earnings per Share.
8. Investments
2026 2025
£’000 £’000
Investments
Opening cost 372,632 352,944
Opening investment holding gains 137,571 117,165
Opening Valuation 510,203 470,109
Purchases at cost 180,175 123,228
Disposal proceeds (207,911) (133,123)
(Losses)/gains on investments (9,914) 49,989
Valuation at end of year 472,553 510,203
Cost at 31 January 394,742 372,632
Investment holding gains at 31 January 77,811 137,571
Valuation at 31 January 472,553 510,203
The Company received £207,911,000 (2025: £133,123,000) from investments sold in the year. The book cost of these investments when they were purchased was £158,065,000 (2025: £103,540,000). 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 £234,000 (2025: £155,000) and transaction costs on sales of £464,000 (2025: £263,000).
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 (2025: All Level 1).
9. Debtors
2026 2025
£’000 £’000
Amounts due from brokers – 1,008
Accrued income 162 179
Other debtors 99 65
261 1,252
10. Creditors: Amounts Falling Due Within One Year
2026 2025
£’000 £’000
Amounts due to brokers – 781
Portfolio management fee 877 1,081
AIFM fee 129 135
Other creditors 449 400
1,455 2,397
11. Provisions for Liabilities
2026 2025
£’000 £’000
Deferred taxation on unrealised capital gains on Indian securities 5,423 13,645
See note 5 for further details and accounting policy.
12. Share Capital
2026 2025
£’000 £’000
Allotted and fully paid:
114,262,507 Ordinary shares of 12.5p each (2025: 120,588,386) 14,283 15,074
During the current and prior year, no Ordinary shares were issued. 6,325,879 (2025: 370,000) 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.
The Company does not have any externally imposed capital requirements.
13. Net Asset Value Per Share
The net asset value per share of 412.0p (2025: 417.5p) is calculated on net assets of £470,774,000 (2025: £503,441,000) divided by 114,262,507 (2025: 120,588,386) 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) 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.
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. Although derivatives are not currently employed, 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 £47.3 million (2025: £51.0 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:
2026 2025
Creditors/ Creditors/
Investments Cash Debtors Investments Cash Debtors
Provisions Provisions
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Indian 113,932 5 63 – 208,458 437 1,061 (13,942)
rupee
Hong Kong 62,677 22 – – 17,927 – – –
dollar
New
Taiwanese 62,215 39 6 – 80,473 – – –
dollar
Chinese 53,538 – – – 53,787 – – –
renminbi
US dollar 32,493 5 – – 6,508 434 – –
Korean won 31,512 – 94 – 27,060 – 74 –
Singapore 27,626 10 – – 27,286 485 – –
dollar
Philippine 25,223 – – – 20,251 – – (484)
peso
Indonesian 22,049 – – – 27,224 – 15 –
rupiah
Japanese 21,612 – – – 23,279 – 29 –
yen
Thai baht 9,020 – – – 9,672 – – –
Malaysian 6,352 – – – 5,585 – – –
ringgit
Vietnamese 2,404 – – – – – – –
dong
Bangladesh 1,900 – – – 2,693 – – –
taka
Euro – 8 – – – 8 – –
Total 472,553 89 163 – 510,203 1,364 1,179 (14,426)
At
During the year sterling weakened 9.8% (2025: weakened by 1.1%) 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 20%, the impact on the net asset value would have been negative £43.0 million (2025: negative £46.4 million). If the value of sterling had weakened against each of the currencies in the investment portfolio by 20%, the impact on the net asset value would have been positive £52.5 million (2025: positive £56.7 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:
2026 2025
£’000 £’000
Cash 4,838 8,028
Debtors 261 1,252
5,099 9,280
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 16 of the Annual Report. 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.
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 arises when ordinary shares are redeemed by the Company and subsequently cancelled, at which point the amount equal to the par value of the ordinary share capital is 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.
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:
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. Details of the remuneration and the shareholdings of all Directors can be found on page 52 of the Annual Report.
The figures and financial information for 2025 are extracted from the published Annual Report for the year ended
The figures and financial information for 2026 are extracted from the Annual Report and financial statements for the year ended
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.
