Annual Financial Report
10/06/2025 07:00
FIDELITY CHINA SPECIAL SITUATIONS PLC Final Results for the year ended 31 March 2025 Financial Highlights: The Board of Fidelity China Special Situations PLC (the “Company”) recommends a final ordinary dividend of 8.00 pence per share as well as a special dividend of 1.00 pence per share. During the year ended 31 March 2025, the Company reported a Net Asset Value (NAV) total return of +31.5% and share price total return of +35.8%. Over the same period, the benchmark index, the MSCI China Index, returned +37.5%. Improving sentiment following stimulus packages and the emergence of artificial intelligence provided catalysts to returns. Contacts For further information, please contact: George Bayer Company Secretary 0207 961 4240 FIL Investments International CHAIRMAN’S STATEMENT I have pleasure in presenting the Annual Report of Fidelity China Special Situations PLC for the year ended 31 March 2025. After three consecutive years of flat or negative returns for UK investors in the Chinese equity market, it is pleasing to be able to look back over a more positive period. In the reporting year to 31 March 2025, the net asset value (“NAV”) total return of your Company was +31.5%, while the Benchmark Index (MSCI China Index (in UK sterling terms)) returned +37.5%. The share price total return was +35.8% boosted by the share price discount to NAV narrowing from 10.2% at the beginning of the period to 7.3% at the year end. This year marks the 15th anniversary of the Company’s inception on 19 April 2010, and while returns for the year under review have modestly underperformed the Benchmark Index, in absolute terms they have been the strongest since 2021. On an annualised basis, total returns since inception have been well ahead of the Benchmark, at +8.7% for the NAV and +8.2% for the share price, compared with +4.5% for the Benchmark. This is a strong endorsement of the strategy launched by Anthony Bolton and developed over the past 11 years by your current Portfolio Manager, Dale Nicholls. To mark the occasion of the anniversary, on 22 April I was joined by Anthony, Dale, my predecessor as Chairman, Nicholas Bull, and the first Chairman of your Company, John Owen, to open the day’s trading at the London Stock Exchange. At a macroeconomic level, we have seen the investment backdrop evolve over the year under review with a change in the attitude of the Chinese government, which is looking to stimulate the economy far more overtly following its sluggish post-Covid reopening. Measures to date have included a recapitalisation of banks to support the economy, as well as government-subsidised trade-in schemes for older discretionary items such as white goods. There have been a number of important events in the last year, but I would like to highlight three. The first is President Xi’s meeting in February with Chinese entrepreneurs at a symposium of private enterprises. In the past, the Chinese government has been seen as sceptical of such businesses, but this gathering would seem to show a genuinely renewed commitment to embracing the role of private enterprise and entrepreneurs as part of China’s future. The second is DeepSeek – the headline-grabbing generative AI app that got the world’s attention in January, having invested less and provided arguably a better product than US peers. Far from being an anomaly, this is a typical example of Chinese enterprise and science-based invention. The third is electric vehicle (EV) maker BYD’s revenues overtaking Tesla’s for the first time recently. These factors, and others, have helped improve sentiment, which is also reflected in the 38% rise in the stock market. This strong performance is particularly encouraging given the prevailing high levels of geopolitical uncertainty. Dividends are also becoming more of a feature of the stock market, associated with generally more shareholder-friendly behaviour by Chinese companies. This year will be a bumper year for dividends received and paid to our shareholders (see below), making a meaningful contribution to the total return. As I have noted before, being structured as a closed-ended investment company means that Dale does not have the liquidity constraints of an open-ended fund and can use this flexibility to invest in less liquid assets with a longer-term view of returns. Up to 15% of Net Assets plus Borrowings may be invested in unquoted companies (those not yet listed on a stock exchange), allowing Dale to take advantage of the faster growth trajectory of earlier-stage businesses before they are potentially listed on the public markets. Following on from three IPOs of private holdings in the previous financial year, the autonomous driving specialist Pony.ai floated in the US stock market in November. Dale also added a new unquoted holding to the portfolio in February 2025, investing in Fujian Yangteng Innovations which sells private-labelled aftermarket auto parts online in Europe and North America. He also increased the position in ByteDance, the social media company whose assets include TikTok; it is now the largest unlisted holding in the Company’s portfolio. More details of the unlisted holdings, which make up 9.6% of the total Net Assets at the year end and have added materially to your Company’ performance over time, are in the Annual Report. The Board feels the valuation process for our unlisted holdings is robust. They are assessed regularly by Fidelity’s dedicated Fair Value Committee (“FVC”), with advice from Kroll, a third-party valuation specialist, as well as from Fidelity’s unlisted investment specialist in Hong Kong and the Fidelity analysts who undertake research on the companies. The valuation process is set out in more detail in the Annual Report. The Board receives regular updates from the FVC, with Alastair Bruce, our Audit and Risk Committee Chairman, also providing expertise in this area, having for many years been involved professionally in private equity investing. DUE DILIGENCE TRIP In November, your Board was fortunate to visit China to see Fidelity’s investment team in action and meet with some of the portfolio companies on the ground. One of our overriding impressions, which has gained even greater relevance in recent weeks, was of China being potentially better prepared than others for a more fractious global trade environment. A lot of the mitigating actions by companies to reduce the risks from increased tariffs and to diversify their production bases have already happened. That is not to say that the economy will not be harmed by a slowdown in trade with the US, but China has consciously reduced its dependence on critical US imports over the last eight years. We were most impressed by the entrepreneurialism shining through in the management teams that we met, many of whom were young, energetic, science-based and looking to build global businesses. China is emerging as a world leader in certain sectors, such as EVs, autonomous driving and the range-finding laser technology Lidar, which is an essential tool for autonomous vehicles. We were struck both by the strength of balance sheets of Chinese companies and the propensity of their major shareholders to reinvest in their businesses and not seek to extract value from them. Their drive and motivation seem to be to build something important and sustainable for the future. GEARING Your Board continues to believe that the judicious use of gearing (a benefit of the investment company structure) can enhance returns, although being more than 100% invested also means that the NAV and share price may be more volatile and can accentuate losses in a falling market, as well as being additive on the upside. Having repaid the Company’s US$100m loan in the last financial year, gearing this year has been solely through contracts for difference (“CFDs”), which tend to be at lower costs than prevailing longer-dated borrowing. However, your Board continues to review the position, and we have not ruled out reintroducing an element of fixed rate gearing in the future, should the terms become favourable. Gearing remained broadly around the 20% (net market gearing) level during the year, beginning at 20.8% and ending at 20.9%, reflecting Dale’s view that the Chinese equity market remains very attractively valued and offers many interesting investment opportunities. This level of gearing is at the upper limit that is acceptable to the Board, compared with a historical range of 10-25%. The impact of gearing was positive during the year in review, adding 6.9% to returns. DIVIDEND The Company’s investment objective remains focused on achieving long-term capital growth; however, it has the enviable track record of having paid an increased dividend each year since inception, growing from 0.25 pence per share in 2011 to 6.40 pence in 2024, which is a compound annual growth rate of 28.3%. As noted above, the year under review was a particularly strong one for the Company’s revenue return, reflecting the increasing focus of Chinese companies on rewarding minority shareholders through dividends. Your Board is therefore pleased to recommend an increased final ordinary dividend of 8.00 pence per share, a 25.0% increase on the 6.40 pence per share paid in 2024. In addition, in light of a large exceptional dividend received from the Company’s position in Lufax Holding, an online finance marketplace, we are proposing an additional special dividend of 1.00 pence per share. By choosing to pay both a final and a special dividend, your Board seeks to pass on the benefit of large one-off receipts, while also safeguarding the Company’s ability to continue to grow its ordinary dividend at a sustainable rate in the future. Both the ordinary and special dividends will be payable on 31 July 2025 to shareholders on the register on 20 June 2025 (ex-dividend date 19 June 2025). The revenue per share earned by the Company during the year was 10.18 pence including the Lufax exceptional dividend, and is an increase of 76.1% compared with the 5.78 pence earned in the prior year. This year’s dividend is fully covered by revenue from earnings, and we have been able to add back £7,727,000 to the revenue reserve, which now stands at 5.59 pence per share. DISCOUNT MANAGEMENT Although your Company’s share price discount to NAV narrowed during the year from 10.2% to 7.3%, for much of the period it remained higher than the Board would like, and therefore we have been relatively active with share buybacks, repurchasing 30,841,184 shares (5.9% of the total at the start of the year) for cancellation. It is always our ambition that the share price should closely match the company’s NAV. We remain vigilant of changes in sentiment towards China and the impact that has on demand for the Company’s shares and, in turn, on the price at which they trade. In the early part of the review period, the market at large remained wary of China given the sluggish economy and ongoing issues in the property market. However, stimulus measures announced by the Chinese government in the last quarter of 2024 created a reassessment, and the discount to NAV narrowed accordingly, reaching the mid-single digits towards the year end, despite the uncertainty surrounding President Trump’s trade tariff plans. It is encouraging to note that it remains in single digits at the time of writing, suggesting investors remain relatively sanguine about the potential impacts of a trade war between China and the US. The graph below shows the movement of the Company’s discount during the year. While the primary purpose of share repurchases is to limit discount volatility, they are also of benefit to existing shareholders, as the Company’s NAV per share is increased by purchasing shares at a discount. ONGOING CHARGES RATIO AND MANAGEMENT FEE The Ongoing Charges Ratio (the costs of running the Company) for the year was 0.89% (2024: 0.98%). The variable element of the management fee (due to underperformance of the Benchmark Index on a rolling three year basis) was a credit of 0.15% (2024: a charge of 0.15%). Therefore, the Ongoing Charges Ratio for the year, including this variable element, was 0.74% (2024: 1.13%). Following a reduction in the base management fee paid to the Manager in the last financial year as a result of the combination with abrdn China Investment Company (ACIC), there have been no further changes to the fee arrangements in the year under review. BOARD OF DIRECTORS There have been no changes to your Board of Directors in either of the last two financial years, and other than me, none of the Directors have served for more than five years, meaning there are no changes expected in the shorter-term. We are pleased that your Company’s Board includes a real diversity and balance of relevant skills and experience, including consultancy covering Chinese businesses, accountancy, investment management (including private equity and private equity valuation) and marketing. In recent years, we have sought to pass on the benefit of our accumulated skills and knowledge by taking on a Board apprentice, a role put in place to help develop the next generation of individuals who may not otherwise find a route to becoming a non-executive director. Each apprentice serves a term of one year, during which time they attend all Board and Committee meetings as an observer. Further details are in the Annual Report. In accordance with the UK Corporate Governance Code for Directors of FTSE 350 companies, all Directors are subject to annual re-election at the Annual General Meeting (“AGM”) on 24 July 2025, in order to continue to support and oversee the Company in the best interests of all shareholders. The Directors’ biographies can be found in the Annual Report. ANNUAL GENERAL MEETING The Company’s AGM is at 11.00 am on 24 July 2025. The meeting will once again be a hybrid format, with online attendance available; however, I hope to see as many of you as possible in person on the day. Alongside the direct email updates that we now provide, it is one of the few opportunities in the year to sit down together – shareholders, the Board and the Manager – to talk about your investment. Of course, this year has particular significance, as we mark the Company’s 15th anniversary. Please do join us if you can. Details of the AGM are below. OUTLOOK A year ago, sentiment was undeniably poor – the Chinese economy, stock market and property market were all depressed, and the private sector was not outwardly being supported by the government. While a change in sentiment during the year under review has powered a very strong year for the Chinese stock market, we now need to see the follow-through. While the macro picture remains uncertain with the property market still struggling and consumer sentiment fragile, the Chinese authorities could pull the lever of more monetary and fiscal stimulus, which could in turn provide a catalyst to unlock the high level of savings accumulated during the Covid lockdowns. The geopolitical backdrop, and particularly the trade issues between the US and China, should not be underestimated, but as confidence in American exceptionalism recedes there is potential for a genuine shift in market sentiment from the US-dominated global equity market to ‘unloved’ China. In the first quarter of 2025, the Nasdaq was down by 15% while Hong Kong’s Hang Seng Index was up by 15%. While the trade problems may be making headlines, I would posit that the bigger story for the long-term is the Chinese government’s willingness to engage with the private sector and acknowledge the role it has to play in the country’s future prosperity. From a bottom-up perspective, these businesses are vibrant, entrepreneurial and inventive, and the growing dominance of Chinese companies in certain global sectors is likely to be a continuing theme. For many years, people have been used to buying goods that are made in China but with Western brands attached, but now Chinese brands are gaining traction globally. It is no longer rare to see BYD cars on British driveways or Haier and Hisense appliances in European homes. This shows both the quality of the products and the confidence of their manufacturers, both of which are shared by your Board and the Manager. There will be bumps in the road and the Chinese stock market will remain volatile but at the micro economic or company level in China there are positive longer-term trends in place, which your Company is well placed to benefit from. MIKE BALFOUR Chairman 9 June 2025 ANNUAL GENERAL MEETING – THURSDAY, 24 JULY 2025 AT 11.00 AM The AGM of the Company will be held at 11.00 am on Thursday, 24 July 2025 at 4 Cannon Street, London EC4M 5AB (nearest tube stations are St Paul’s or Mansion House) and virtually via the online Lumi AGM meeting platform. Full details of the meeting are given in the Notice of Meeting in the Annual Report. For those shareholders who prefer not to attend in person, we will live-stream the formal business and presentations of the meeting online. Dale Nicholls, the Portfolio Manager, will be making a presentation to shareholders discussing the performance of the past year and the prospects for the year to come. Dale and the Board will be very happy to answer any questions that shareholders may have. Copies of his presentation can be requested by email at investmenttrusts@fil.com or in writing to the Secretary at FIL Investments International, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. Properly registered shareholders joining the AGM virtually will be able to vote on the proposed resolutions. Please see Note 9 to the Notes to the Notice of Meeting in the Annual Report for details on how to vote virtually. Investors viewing the AGM online will be able to submit live written questions to the Board and the Portfolio Manager and these will be addressed at an appropriate juncture during the meeting. Further information and links to the Lumi platform may be found on the Company’s website at www.fidelity.co.uk/china. On the day of the AGM, in order to join electronically and ask questions via the Lumi platform, shareholders will need to connect to the website https://meetings.lumiconnect.com/100-135-001-078. Please note that investors on platforms, such as Fidelity Personal Investing, Hargreaves Lansdown, Interactive Investor or AJ Bell Youinvest, will need to request attendance at the AGM in accordance with the policies of your chosen platform. They may request that you submit electronic votes in advance of the meeting. If you are unable to obtain a unique IVC and PIN from your nominee or platform, we will also welcome your online participation as a guest. Once you have accessed https://meetings.lumiconnect.com/100-135-001-078 from your web browser on a tablet, smartphone or computer, you should then select the ‘Guest Access’ option before entering your name and who you are representing, if applicable. This will allow you to view the meeting and ask questions, but you will not be able to vote. Further information on how to vote across the most common investment platforms is available at the following link: https://www.theaic.co.uk/how-to-vote-your-shares PORTFOLIO MANAGER’S REVIEW QUESTION How has the investment company performed in the year to 31 March 2025? ANSWER As Fidelity China Special Situations PLC reaches the 15th anniversary of its listing on the London Stock Exchange, I am pleased to report one of its strongest annual performances since launch, albeit a volatile one. The Company’s share price rose by 35.8% over the year, with the discount to NAV narrowing from 10.2% at the start of the period to end at 7.3%. The Company’s NAV returned 31.5%, underperforming the MSCI China Index (the Benchmark Index), which delivered 37.5%. (All performance figures are on a total return basis). The first five months of the reporting year proved challenging, with a combination of lacklustre economic stimulus, a weak property sector, and subdued consumption in China weighing on investor sentiment. During this period, the equity market eked out a marginal gain, with traditionally defensive sectors, such as energy, utilities, telecommunications, and state-owned banks outperforming. With its typical focus on growth-oriented sectors, the Company delivered a small negative return. However, sentiment improved sharply in September following a comprehensive stimulus package from the Chinese government aimed at tackling deflation risks and reinvigorating consumption and real estate markets. I believe the size and breadth of the measures, and commitment expressed, marked a turning point in Beijing’s efforts to tackle the key economic issues most on investors’ minds. Equities rallied sharply in the month, led by real estate, consumer-related sectors, and healthcare. While some of the momentum faded, a second major catalyst followed in January - the announcement of DeepSeek’s ground-breaking artificial intelligence (“AI”) model - reigniting enthusiasm for Chinese innovation and tech stocks. The tech sector led a broad-based rally into the end of the financial year, helping the Company to deliver a strong double-digit return. While markets have been rocked by renewed US-China trade tensions since the financial year end, I remain confident in the resilience of the companies we own and the longer-term opportunity in Chinese equities. QUESTION What stocks have been the main drivers of performance during the year and why? ANSWER Performance during the year was driven largely by domestically focused small and mid-cap stocks, financials, and several of the most innovative companies held, particularly those linked to AI and the electric vehicle (“EV”) supply chain. Against a backdrop of stabilising economic activity, insurers and consumer finance companies delivered strong returns. LexinFintech Holdings, a leading FinTech lender, stood out with robust profit growth, improved asset quality, and successful execution of its strategic shift toward a more optimised product mix and stronger platform-based revenue. Similarly, Qifu Technology benefited from solid earnings growth, an expanding user base, and a strong ongoing programme of capital return. As an AI-enabled platform specialising in short-term consumer credit, Qifu has built a leading market position. The stimulus package also lifted sentiment across the broader financial sector, supporting holdings such as Ping An Insurance Company and China Life Insurance. Investor enthusiasm for AI and digital transformation supported strong returns in holdings such as Alibaba Group Holding, which advanced on rising expectations for cloud platform demand. However, our underweight position relative to the MSCI China Index limited the positive contribution. VNET Group, one of China’s leading Internet Data Centre (IDC) operators, benefited from growing AI-related infrastructure demand. Other holdings also made meaningful contributions. Medlive Technology, an online professional physician platform, rallied following the successful launch of new AI driven services and accelerating AI commercialisation efforts. Meanwhile, Kingdee International Software Group, a domestic leader in enterprise resource planning (ERP) software, gained as it continues to benefit from a broader industry shift toward SaaS (software-as-a-service) models and hope that its AI-enabled features can accelerate penetration and improve pricing. One of the most innovative and strategically important areas continues to be the EV sector, where Chinese companies are increasingly establishing global leadership. While we acknowledge the significant growth potential for EV manufacturers, my preferred exposure has been through suppliers further up the value chain, where competition tends to be less intense, allowing margins to be more attractive and stable. Holdings in Hesai Group, a leading automotive LiDAR supplier, and Precision Tsugami China, a specialist in high-precision small-size lathe machines, performed well. Precision Tsugami in particular benefited from strong order momentum, driven by rising demand from both the BYD supply chain and from manufacturers of AI server-related cooling systems. On the other hand, not holding automakers BYD and Xiaomi detracted from performance compared to the MSCI China benchmark index. Xiaomi’s stock surged following the launch of its SU7 EV, which boosted sentiment across the EV space. However, I remain cautious given the competitive intensity in the auto sector along with relatively high valuations. In addition, we continue to believe a key differentiator of the Company — backed by Fidelity’s research and private-market valuation expertise — to invest in unlisted companies broadens the opportunity set and represents an additional source of potential returns for the Company. TikTok developer ByteDance attracted attention given its role in the strategic tech sector and increasing global relevance, placing it at the intersection of innovation and geopolitical scrutiny. Encouragingly, the company emerged as a strong contributor to performance and our added stake in August last year further enhanced gains. ByteDance continued to deliver solid financial results and international expansion, despite continued uncertainty around TikTok’s US operations. Conversely, leading autonomous driving player Pony.ai came under pressure post IPO in late 2024, following weaker-than-expected fourth-quarter results, despite this being less relevant given the early stage of this industry’s development. We remain confident in the long-term potential of its business given its strong technology platform and integrated ecosystem. Overall, the unlisted investments delivered positive absolute returns to the portfolio during the review period, though performance was comparatively muted relative to the benchmark index, which benefited from a sentiment-driven rally fuelled by stimulus measures and AI-related catalysts. QUESTION How have you utilised the investment company structure this year? Has it been beneficial? ANSWER Net exposure to the market continues to reflect the quality and breadth of investment opportunities available, typically increasing when valuations are attractive and decreasing when opportunities become less prevalent, or valuations more stretched. I have found no shortage of attractive investment opportunities, and therefore net market exposure has fluctuated around 120% during the reporting year - at the upper end of the Company’s target range (previously around 125%). Net gearing was 20.9% at the end of the reporting year, very marginally down from 20.8% at the start. Importantly, gearing added 6.9% to performance during the year, underlining the value that prudent gearing can bring when used appropriately. QUESTION Although President Trump’s “Liberation Day” announcement of higher tariffs came after the reporting year end, what impact have they had so far on the Company and on Chinese equities? ANSWER US-China trade tensions were widely anticipated but escalated more than most expected. However, the recent agreement on temporary tariff reductions has offered some relief. While the headline cuts are substantial, tariffs remain materially higher than they were before the so-called “Liberation Day” and have already caused significant disruption for both consumers and companies. The base case is that tariffs will stay around these new levels after the 90-day period, but they continue to weigh on the earnings outlook, particularly for certain export-oriented industries. Companies within the technology hardware and machinery sectors face the most direct pressure, with revenue impacts, given the uncertainty, and potential margin compression on lower utilisation levels as tariff costs ripple through supply chains. In our conversations with companies, few express concerns about losing market share, because these sectors are often already dominated by Chinese firms with similar supply chains. It is more a question of how demand will respond when prices rise. So, a key part of our analysis centres around questions of price elasticity. I have reduced some exposure to the power equipment sector, where most companies share similar supply chains, with the bulk of manufacturing and sourcing based in China. But companies with diversified production footprints or strong market positioning may weather the impact more effectively over time. Overall, we expect the direct tariff impact on the Company to be insignificant. The Company remains heavily invested in domestically driven sectors such as healthcare, consumer staples, and segments of industrials, which remain broadly resilient, supported by local demand and policy tailwinds, which are likely to be more significant in response to the tariff impact drag. Lastly, some perspective is required: China is a market where sentiment can swing significantly, but underlying fundamentals tend to evolve at a much slower pace. Based on MSCI data, China’s revenue exposure to the US is around 3%, so while market volatility is unsettling, the fundamental long-term opportunity for most Chinese companies remains intact. In fact, the trade friction itself in many ways reflects the rising competitiveness of Chinese companies across a range of sectors. QUESTION How effective have recent Chinese government stimulus announcements been in driving economic recovery, and do you think they will be successful? ANSWER Recent stimulus measures announced by the Chinese government have helped stabilise short-term economic sentiment and provided targeted support to key sectors. Notably, the recent Two Sessions - the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference (CPPCC) held in March - reinforced a clear message: policymakers are committed to supporting growth, but through a focused and measured approach. With interest rates already at very low levels - though there remains some room for further monetary easing - expectations are rising for more fiscal action, particularly through policies aimed at boosting household incomes and supporting consumption. Consumer incentive initiatives such as the trade-in schemes, targeted property sector easing, and focused support for the services industry have positively impacted retail sales and contributed to a more stable outlook for the property market, as reflected in improving month-on-month price trends. However, policymakers have refrained from broad-based monetary easing or large-scale stimulus programmes, opting instead for carefully targeted and flexible interventions. This cautious approach is likely designed to balance immediate economic support with long-term stability, especially given ongoing external uncertainties. Success will ultimately depend on sustaining domestic demand and consumer confidence, supported by employment growth, rising disposable incomes, and structural economic improvements. All these are well-established long-term goals of the government’s “dual circulation” strategy to create a more balanced and resilient economy. Recent policy moves have laid a strong foundation, but implementation requires ongoing monitoring. QUESTION How is the regulatory landscape evolving in China, and what implications does this have for sectors like technology and consumer discretionary? ANSWER Investors may sometimes underestimate the somewhat cyclical nature of China’s regulatory environment. We are seeing a clear increase in support for private enterprise and innovation. One of the most visible signs of this was President Xi’s recent meeting with senior executives from China’s leading technology firms - a move that made headlines and reinforced the government’s more constructive tone towards the technology sector and private businesses more broadly. As part of its long-standing “self-reliance” strategy, the government continues to prioritise key areas such as high-tech manufacturing, AI and advanced industrial automation. Meanwhile, household balance sheets are healthy, and the vast domestic consumer market could receive further support from targeted government stimulus. We have seen exchange programmes in areas like autos and household appliances already drive increased demand. Well-positioned e-commerce platforms continue to benefit from structural growth trends, with the largest players capitalising on network effects and enhanced cost control to drive margin expansion. Finally, government policy is also playing a constructive role in improving corporate governance. We continue to see a notable rise in shareholder-focused policies, with more companies increasing dividends and initiating buybacks. I have been spending more time engaging with companies on capital allocation, and this has already contributed to rising investment income for the Company, supporting its unbroken record of growing dividends. QUESTION How do you assess current valuations relative to historical averages and global markets? ANSWER Chinese equity valuations remain at compelling levels, both in absolute terms and relative to other global markets. On a forward price-to-earnings basis, the MSCI China Index is trading at around 10–11x, which is well below historical averages and more than a 40% discount to the S&P 500. The Company’s forward price-to-earnings ratio is slightly below that level, despite a stronger growth profile, reinforcing the value on offer. Looking more closely, there is significant dispersion beneath the surface of the market. Many of the most exciting sectors, particularly consumer discretionary and healthcare, are still trading at multi-year lows, despite clear structural tailwinds and positive earnings momentum. Given recent global policy shifts, one wonders if we will start to see a closing of China’s implied risk premium versus other markets. QUESTION What are the key risks facing Chinese equities and how do you mitigate these in the portfolio? ANSWER Despite the recent temporary reductions, higher tariffs will still impact the outlook for GDP growth and corporate earnings, and the risk of another escalation in tensions cannot be ruled out. That said, the broader Chinese market is less reliant on US demand than it was during the previous trade war cycle. Today, exports to the US account for a much smaller share of China’s GDP, and many companies have already adapted their operations accordingly. As a result, while export-oriented sectors remain vulnerable, the overall market impact is now likely to be more muted than first feared. Beyond geopolitics, domestic macro challenges - including continued weakness in the property sector, subdued consumer confidence, and the ongoing transition toward more consumption-driven growth - also present near-term uncertainty. However, these are widely recognised risks and, in many cases, are well reflected in current equity valuations. We mitigate these risks in several ways. First, as mentioned, the Company’s investments are skewed toward domestically driven sectors, which are less exposed to external shocks and more aligned with China’s long-term strategic objectives. Second, we maintain a focus on companies with strong pricing power, and solid cash flows and balance sheets, which are better positioned to navigate periods of volatility. We also look to own companies that are undervalued and therefore offer a solid margin of safety. Importantly, we also manage portfolio risk through active diversification - across sectors, market caps, and business models - and dynamically adjust net gearing and exposures depending on the opportunity set. Finally, while macro and policy risks often dominate headlines, I believe company-specific execution and fundamentals are ultimately what drive long-term value creation. That is why our investment process remains rooted in bottom-up research, with a strong emphasis on understanding competitive positioning, management quality, and business resilience through different market environments. QUESTION Finally, looking forward, what are the things that excite you most and that you want to share with the Company’s shareholders? ANSWER What excites me most is the opportunity to invest in outstanding companies that are executing well within growing industries, have durable competitive advantages, and are still available to the Company at attractive valuations. In China, innovation continues to thrive, supported by structural strengths such as deep research and development (R&D) capabilities, a strong base of engineering talent, and abundant data. Many companies with the right products and services are increasing market penetration, maintaining or gaining competitiveness and pricing power, and growing market share often both at home and abroad. The Company’s portfolio is well-positioned to benefit from this innovation-led growth across sectors. In AI and digital infrastructure, companies like Alibaba, Kingsoft, and Tencent Holdings are expanding cloud capabilities, while platforms such as Tuhu Car and ByteDance are driving monetisation through data-led service integration. In consumer sectors, companies like Xtep International and Chicmax are harnessing strong product innovation, digital marketing, and brand segmentation to drive solid market share gains. In the EV space, BYD and Hesai are advancing next-generation mobility through breakthroughs in battery systems and intelligent sensing, while Pony.ai represents a forward-looking investment in autonomous transport. In healthcare, HUTCHMED China and Innovent Biologics are good examples of China’s growing strength in biotech, combining advanced biologics manufacturing with innovative drug development to build a globally competitive healthcare ecosystem. Meanwhile, industrial holdings such as Shenzhen Inovance Technology and Weichai Power are enhancing competitiveness through automation and component innovation. Collectively, these investments reflect the Company’s focus on backing innovative leaders in areas where China is steadily gaining global influence. While macroeconomic uncertainty and market volatility can be unsettling, they also create real opportunities for active investors, as stock prices often become disconnected from company fundamentals. Across many industries, companies are getting on with the job, executing their strategies profitably while successfully adapting to challenges. For long-term investors, such an environment presents the Company with a wealth of attractive opportunities to generate excess returns for its shareholders. DALE NICHOLLS Portfolio Manager 9 June 2025 Strategic Report Principal Risks and Uncertainties and Risk Management As required by provisions 28 and 29 of the 2018 UK Corporate Governance Code, the Board has a robust ongoing process for identifying, evaluating and managing the principal risks and uncertainties faced by the Company, including those that could threaten its business model, future performance, solvency or liquidity. The Board, with the assistance of the Alternative Investment Fund Manager (FIL Investment Services (UK) Limited/ the “Manager”), has developed a risk matrix which, as part of the risk management and internal controls process, identifies the key existing and emerging risks and uncertainties that the Company faces. The Manager also has responsibility for risk management for the Company. It works with the Board to identify and manage the principal and emerging risks and uncertainties and to ensure that the Board can continue to meet its UK corporate governance obligations. The Board considers the risks listed below as the principal risks and uncertainties faced by the Company. Emerging Risks The Audit and Risk Committee continues to identify any new emerging risks and take any action necessary to mitigate their potential impact. The risks identified are placed on the Company’s risk matrix and graded appropriately. This process, together with the policies and procedures for the mitigation of existing and emerging risks, is updated and reviewed regularly in the form of comprehensive reports by the Audit and Risk Committee. The Board determines the nature and extent of any risks it is willing to take in order to achieve its strategic objectives. Climate change, which refers to a large scale shift in the planet’s weather patterns and average temperatures, continues to be a key emerging as well as a principal risk confronting asset managers and their investors. Globally, climate change effects are already being experienced in the form of changing weather patterns. Extreme weather events can potentially impact the operations of investee companies, their supply chains and their customers. The Board notes that the Manager includes ESG considerations, including climate change, into the Company’s investment process. The Board will continue to monitor how this may impact the Company as a risk to investment valuations and potentially affect shareholder returns. The Board, together with the Manager, is also monitoring the emerging risks posed by the rapid advancement of artificial intelligence (AI) and technology and how it may threaten the Company’s activities and its potential impact on the portfolio and investee companies. AI can provide asset managers powerful tools, such as enhancing data analysis risk management, trading strategies, operational efficiency and client servicing, all of which can lead to better investment outcomes and more efficient operations. However, with these advances in computing power that will impact society, there are risks from its increasing use and manipulation with the potential to harm, including a heightened threat to cybersecurity. Other emerging risks may continue to evolve from unforeseen geopolitical and economic events.
| Principal Risks | Risk Description and Impact | Risk Mitigation | Trend |
| GeopoliticalRisk | ·Geopolitics may impact on the value of investments and the Manager’s ability to access markets freely. ·China trade tensions with US/EU/UK and the new US administration’s tariffs may impact on a transatlantic trade war, including the balance between national security and economic interests. ·A challenging regulatory environment may hinder foreign investment, including US Executive Orders prohibiting transactions by US persons in certain publicly traded Chinese companies. As a result, there is an increased risk of sanctions that could be imposed by western governments on individual Chinese companies held in the portfolio, but also an increased risk of ADRs being delisted from foreign exchanges which would impact the Company, especially in cases where a local listing does not exist. ·Uncertainty from the ongoing global conflicts has increased tensions between the US and Europe, elevating oil supply concerns and driving price volatility. China’s exports would be vulnerable to any disruption in trade and the shipping sector. ·Regional conflict in the Pacific remains a possibility. The ramifications, including potential military conflict, could have very serious economic and stock market implications. Additionally, sanctions could lead to the freezing of Chinese assets, limiting or prohibiting the Company’s ability to transact in Chinese denominated assets. ·The Company has exposure to a number of companies with all or part of their businesses in Variable Interest Entities (“VIEs”) and there is a regulatory risk from the China Security Regulatory Commission (“CSCR”) guidelines around them. Although these rules are meant to ease the regulatory uncertainty, they may impact their usage going forward as geopolitical risks remain increased. | ·The Board receives insights and information, including research notes, from the Manager and independent sources on a regular basis. ·The portfolio is tilted to domestic Chinese markets. ·Major adverse market events are stress-tested for operational resilience and financial impact. ·Regulatory and policy development is monitored by Fidelity, including any relevant executive orders or sanctions. ·Whilst it is not expected that China will change the rules affecting VIEs to the extent that it will ban foreign investment, this risk is closely monitored. | Increasing |
| Market and Economic Risks (including Currency Risk) | ·Whilst China’s outlook for “controlled stabilisation” is supported by targeted policy measures, the property sector, although showing signs of some stabilisation, is a source of uncertainty. Growth in local consumption is expected but the US tariffs will nevertheless impact economic activity ·China’s economy is exposed to uncertain world growth prospects, tightening in global financial conditions, energy costs, rising food prices, currency instability and challenging regulatory environment. ·China faces growing economic headwinds, including an aging population, environmental pollution, isolation of the financial system and debt concerns in its corporate and local government sectors. ·The currency in which the Company reports its results is sterling and its ordinary shares trade in sterling, whilst the underlying investments are in different currencies. The Company does not hedge currencies. | ·Growth is exceeding economic targets as the stable policy setting is helping to restore private sector confidence. ·The Portfolio Manager and the Manager’s ability to understand and predict events in China. Independent risk management insight is provided on a regular basis. ·The Company holds a diversified portfolio emphasising sectors of strategic importance to China. ·The Board receives and reviews reports from the Portfolio Manager on a regular basis. | Increasing |
| InvestmentPerformanceRisk (includingGearing Risk) | ·The Portfolio Manager may fail to outperform the Benchmark Index and peers over the longer-term. ·High gearing levels in a falling market accentuates share price weakness. NAV performance can be affected by selling stock in a falling market to keep the gearing level within pre-agreed limits. | ·An investment strategy overseen by the Board to optimise returns from investing in China, as well as oversight of gearing and relevant limits. ·Diversification of investments through investment restrictions and guidelines which are monitored and reported upon by the Investment Manager. ·A well-resourced team of experienced analysts covering the market. ·Board scrutiny of the Manager and the ability in extreme circumstances to change the Manager. | Stable |
| Marketplace, Competition and Discount Management Risks | ·There is increased activity around mergers and acquisitions across the investment company marketplace and alternative investment offerings (including passive vehicles) which could influence the demand for the Company’s shares. ·There is a risk of costly shareholder activism in the investment company sector, pursuing goals that may not be in the interests of most shareholders. | ·The Board, the Company’s Broker and the Manager closely monitor industry activity, the peer group and the share register. ·An annual review of strategy is undertaken by the Board to ensure that the Company continues to offer a relevant product to investors. | Increasing |
| ·The Board may fail to implement its discount management policy effectively to keep the level of the discount in single digits and in the face of heavy selling pressure, may exhaust its authorised buyback facility. ·Changes in investor sentiment towards China, market volatility and poor performance could lead to the Company trading at a larger discount to its underlying NAV, as due to the nature of investment companies, the price of the Company’s shares and its discount to NAV are factors which are not totally within the Company’s control. | ·The Company’s discount management policy is aimed at keeping the discount in single digits during normal market conditions. ·Maintaining close communications with major shareholders | ||
| Unlisted Securities Risk | ·Valuations of unlisted securities may be adversely affected by market conditions, government sanctions and US trade tariffs. ·Initial public offering (IPO) of the unlisted companies may face delays leading to longer holding periods. ·Potential for less stringent standards of governance compared with those of listed entities. | ·The Company has set a limit on the level of investments in unlisted companies and the Manager has a track record of identifying profitable opportunities. ·The Board’s Audit and Risk Committee scrutinises the carrying value of unlisted investments determined by the Manager, Fidelity’s unlisted investments specialist and an external valuer and advisor. | Stable |
| Key Person Risk | ·Loss of the Portfolio Manager or other key individuals could lead to potential performance and/or operational issues. | ·The Manager has succession plans for key dependencies. ·The depth of the team within Fidelity, including the experience of the analysts covering China. | Stable |
| Cybercrime and Information Security Risks, including Business Continuity Risk | ·Cybersecurity risk from cyberattacks or threats to the functioning of global markets and to the Manager’s own business model, including its and the Company’s outsourced suppliers. ·Risk of cybercrime such as phishing, remote access threats, extortion and denial-of-services attacks from highly organised criminal networks and sophisticated ransomware operators. Additional risks from the increased use of artificial intelligence (AI). ·Risks from the increased use of artificial intelligence (AI). ·Business process disruption risk from continued threats of cyberattacks, geopolitical events, outages, fire events and natural disasters, resulting in financial and/or reputational impact to the Company affecting the functioning of the business. ·The Company relies on a number of third-party service providers, principally the Registrar, Custodian and Depositary who may be subject to cybercrime. | ·The Manager’s technology risk management teams have implemented a number of initiatives and controls to provide enhanced mitigating protection and also to address the risks of AI. ·Key performance indicators and metrics have been developed by the Manager to monitor the overall efficacy of cybersecurity processes and controls and to further enhance the Manager’s cybersecurity strategy and operational resilience. ·Fidelity has Business Continuity and Crisis Management Frameworks in place to deal with business disruption and assure operational resilience. ·All third-party service providers are subject to a risk-based programme of risk oversight and internal audits by the Manager and their own internal controls reports are received an annual basis and any concerns are investigated. | Increasing |
| Operational Risk | ·Financial losses or reputational damage from inadequate or failed internal processes, people and systems or from external parties and events. | ·Fidelity’s Operational Risk Management Framework is designed to pro-actively prevent, identify and manage operational risks inherent in most activities. ·Fidelity uses robust systems and procedures dedicated to its operational processes. Its risk management structure is designed according to the FCA’s three lines of defence model. | Decreasing |
| Year ended 31 March 2025 | Year ended 31 March 2024 | ||||||
Notes | Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| Revenue | |||||||
| Investment income | 3 | 46,862 | – | 46,862 | 26,123 | – | 26,123 |
| Derivative income | 3 | 13,747 | – | 13,747 | 11,154 | – | 11,154 |
| Other income | 3 | 2,090 | – | 2,090 | 1,659 | – | 1,659 |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Total income | 62,699 | – | 62,699 | 38,936 | – | 38,936 | |
| ========= | ========= | ========= | ========= | ========= | ========= | ||
| Gains/(losses) on investments at fair value through profit or loss | 10 | – | 249,875 | 249,875 | – | (155,001) | (155,001) |
| Gains/(losses) on derivative instruments | 11 | – | 57,121 | 57,121 | – | (54,790) | (54,790) |
| Foreign exchange gains/(losses) | – | 1,769 | 1,769 | – | (3,858) | (3,858) | |
| Foreign exchange gains on bank loans | – | – | – | – | 1,517 | 1,517 | |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Total income and gains/(losses) | 62,699 | 308,765 | 371,464 | 38,936 | (212,132) | (173,196) | |
| ========= | ========= | ========= | ========= | ========= | ========= | ||
| Expenses | |||||||
| Investment management fees | 4 | (2,469) | (5,572) | (8,041) | (2,430) | (8,991) | (11,421) |
| Other expenses | 5 | (1,211) | (32) | (1,243) | (1,203) | (35) | (1,238) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Profit/(loss) before finance costs and taxation | 59,019 | 303,161 | 362,180 | 35,303 | (221,158) | (185,855) | |
| Finance costs | 6 | (5,774) | (17,324) | (23,098) | (6,699) | (20,098) | (26,797) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Profit/(loss) before taxation | 53,245 | 285,837 | 339,082 | 28,604 | (241,256) | (212,652) | |
| Taxation | 7 | (1,070) | – | (1,070) | (812) | – | (812) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Profit/(loss) after taxation for the year | 52,175 | 285,837 | 338,012 | 27,792 | (241,256) | (213,464) | |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Earnings/(loss) per ordinary share | 8 | 10.18p | 55.75p | 65.93p | 5.78p | (50.18p) | (44.40p) |
| ========= | ========= | ========= | ========= | ========= | ========= | ||
Notes | Share capital £’000 | Share premium account £’000 | Capital redemption reserve £’000 | Other reserve £’000 | Capital reserve £’000 | Revenue reserve £’000 | Total equity £’000 | |
| Total equity at 31 March 2024 | 6,113 | 338,167 | 1,104 | 140,861 | 636,526 | 53,243 | 1,176,014 | |
| Contribution in respect of the transaction with ACIC by the Manager | – | 100 | – | – | – | – | 100 | |
| Costs relating to the issuance of new shares in respect to the ACIC transaction | – | (160) | – | – | – | – | (160) | |
| Repurchase of ordinary shares for cancellation | 14 | (308) | – | 308 | (66,809) | – | – | (66,809) |
| Profit after taxation for the year | – | – | – | – | 285,837 | 52,175 | 338,012 | |
| Dividend paid to shareholders | 9 | – | – | – | – | – | (33,355) | (33,355) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Total equity at 31 March 2025 | 5,805 | 338,107 | 1,412 | 74,052 | 922,363 | 72,063 | 1,413,802 | |
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | ||
| Total equity at 31 March 2023 | 5,710 | 211,569 | 917 | 186,794 | 877,782 | 55,649 | 1,338,421 | |
| New ordinary shares issued in respect of the transaction with ACIC | 14 | 590 | 126,198 | – | – | – | – | 126,788 |
| Contribution in respect of the transaction with ACIC by the Manager | – | 400 | – | – | – | – | 400 | |
| Repurchase of ordinary shares into Treasury | 14 | – | – | – | (6,965) | – | – | (6,965) |
| Repurchase of ordinary shares for cancellation | 14 | (187) | – | 187 | (38,968) | – | – | (38,968) |
| (Loss)/profit after taxation for the year | – | – | – | – | (241,256) | 27,792 | (213,464) | |
| Dividend paid to shareholders | 9 | – | – | – | – | – | (30,198) | (30,198) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
| Total equity at 31 March 2024 | 6,113 | 338,167 | 1,104 | 140,861 | 636,526 | 53,243 | 1,176,014 | |
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
Notes | 31 March 2025 £’000 | 31 March 2024 £’000 | |
| Non-current assets | |||
| Investments at fair value through profit or loss | 10 | 1,346,238 | 1,162,265 |
| --------------- | --------------- | ||
| Current assets | |||
| Derivative instruments | 11 | 9,938 | 7,103 |
| Amounts held at futures clearing houses and brokers | 33,760 | 24,589 | |
| Other receivables | 12 | 7,295 | 10,066 |
| Cash and cash equivalents | 49,691 | 7,858 | |
| --------------- | --------------- | ||
| 100,684 | 49,616 | ||
| ========= | ========= | ||
| Current liabilities | |||
| Derivative instruments | 11 | (24,838) | (13,307) |
| Other payables | 13 | (8,282) | (9,802) |
| Bank overdrafts | – | (12,758) | |
| --------------- | --------------- | ||
| (33,120) | (35,867) | ||
| ========= | ========= | ||
| Net current assets | 67,564 | 13,749 | |
| ========= | ========= | ||
| Net assets | 1,413,802 | 1,176,014 | |
| ========= | ========= | ||
| Equity attributable to equity shareholders | |||
| Share capital | 14 | 5,805 | 6,113 |
| Share premium account | 15 | 338,107 | 338,167 |
| Capital redemption reserve | 15 | 1,412 | 1,104 |
| Other reserve | 15 | 74,052 | 140,861 |
| Capital reserve | 15 | 922,363 | 636,526 |
| Revenue reserve | 15 | 72,063 | 53,243 |
| --------------- | --------------- | ||
| Total equity | 1,413,802 | 1,176,014 | |
| ========= | ========= | ||
| Net asset value per ordinary share | 16 | 285.71p | 223.71p |
| ========= | ========= |
| Year ended 31 March 2025 £’000 | Year ended 31 March 2024 £’000 | |
| Operating activities | ||
| Cash inflow from investment income | 45,209 | 26,240 |
| Cash inflow from derivative income | 14,002 | 10,891 |
| Cash inflow from other income | 2,090 | 1,659 |
| Cash outflow from Directors’ fees | (249) | (236) |
| Cash outflow from other payments | (9,433) | (13,104) |
| Cash outflow from the purchase of investments | (651,563) | (592,266) |
| Cash outflow from the purchase of derivatives | (2,242) | (1,910) |
| Cash outflow from the settlement of derivatives | (436,471) | (301,285) |
| Cash inflow from the sale of investments | 716,551 | 703,150 |
| Cash inflow from the settlement of derivatives | 507,321 | 260,351 |
| Cash (outflow)/inflow from amounts held at futures clearing houses and brokers | (9,171) | 10,224 |
| --------------- | --------------- | |
| Net cash inflow from operating activities before servicing of finance | 176,044 | 103,714 |
| ========= | ========= | |
| Financing activities | ||
| Cash inflow from the issuance of ordinary shares in respect of the transaction with ACIC | – | 5,156 |
| Cash inflow from the Fidelity contribution in respect of the transaction with ACIC | – | 400 |
| Cash outflow from loan interest paid | (80) | (5,138) |
| Cash outflow from the settlement of the bank loan | – | (79,340) |
| Cash outflow from CFD interest paid | (22,478) | (22,695) |
| Cash outflow from short CFD dividends paid | (321) | – |
| Cash outflow from the repurchase of ordinary shares into Treasury | – | (7,095) |
| Cash outflow from the repurchase of ordinary shares for cancellation | (66,988) | (38,789) |
| Cash outflow from dividends paid to shareholders | (33,355) | (30,198) |
| --------------- | --------------- | |
| Cash outflow from financing activities | (123,222) | (177,699) |
| ========= | ========= | |
| Net increase/(decrease) in cash at bank | 52,822 | (73,985) |
| Cash at bank at the start of the year | 7,858 | 72,943 |
| Bank overdraft at the start of the year | (12,758) | – |
| Effect of foreign exchange movements | 1,769 | (3,858) |
| --------------- | --------------- | |
| Cash at bank at the end of the year | 49,691 | (4,900) |
| Represented by: | ========= | ========= |
| Cash at bank | 49,691 | 7,858 |
| Bank overdrafts | – | (12,758) |
| --------------- | --------------- | |
| 49,691 | (4,900) | |
| ========= | ========= |
| Year ended 31 March 2025 £’000 | Year ended 31 March 2024 £’000 | |
| Investment income | ||
| Overseas dividends | 46,590 | 26,052 |
| Overseas scrip dividends | 272 | – |
| Interest on securities | – | 71 |
| --------------- | --------------- | |
| 46,862 | 26,123 | |
| ========= | ========= | |
| Derivative income | ||
| Dividends received on long CFDs | 13,152 | 10,525 |
| Interest received on CFDs | 595 | 629 |
| --------------- | --------------- | |
| 13,747 | 11,154 | |
| ========= | ========= | |
| Other income | ||
| Interest received on collateral, bank deposits and money market funds | 2,090 | 1,659 |
| --------------- | --------------- | |
| Total income | 62,699 | 38,936 |
| ========= | ========= |
| Year ended 31 March 2025 | Year ended 31 March 2024 | |||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| Investment management fee – base | 2,648 | 7,942 | 10,590 | 2,430 | 7,289 | 9,719 |
| Investment management fee – variable | – | (1,834) | (1,834) | – | 1,702 | 1,702 |
| Investment management fee – base (waived in respect of ACIC combination) | (179) | (536) | (715) | – | – | – |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
| 2,469 | 5,572 | 8,041 | 2,430 | 8,991 | 11,421 | |
| ========= | ========= | ========= | ========= | ========= | ========= | |
| Year ended 31 March 2025 £’000 | Year ended 31 March 2024 £’000 | |
| Allocated to revenue: | ||
| AIC fees | 22 | 21 |
| Custody fees | 45 | 101 |
| Depositary fees | 55 | 52 |
| Directors’ expenses | 89 | 79 |
| Directors’ fees1 | 250 | 240 |
| Legal and professional fees | 104 | 143 |
| Marketing expenses | 327 | 269 |
| Printing and publication expenses | 52 | 39 |
| Registrars’ fees | 71 | 63 |
| Other expenses | 133 | 125 |
| Fees payable to the Company’s Independent Auditor for the audit of the Financial Statements | 63 | 71 |
| --------------- | --------------- | |
| 1,211 | 1,203 | |
| ========= | ========= | |
| Allocated to capital: | ||
| Legal and professional fees | 32 | 35 |
| --------------- | --------------- | |
| Other expenses | 1,243 | 1,238 |
| ========= | ========= |
| Year ended 31 March 2025 | Year ended 31 March 2024 | |||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| Interest paid on bank loan and overdrafts | 20 | 60 | 80 | 1,117 | 3,352 | 4,469 |
| Interest paid on CFDs | 5,674 | 17,023 | 22,697 | 5,582 | 16,746 | 22,328 |
| Dividends paid on short CFDs | 80 | 241 | 321 | – | – | – |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
| 5,774 | 17,324 | 23,098 | 6,699 | 20,098 | 26,797 | |
| ========= | ========= | ========= | ========= | ========= | ========= | |
| Year ended 31 March 2025 | Year ended 31 March 2024 | |||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| a) Analysis of the taxation charge for the year | ||||||
| Overseas taxation | 1,070 | – | 1,070 | 812 | – | 812 |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
| Taxation charge for the year (see Note 7b) | 1,070 | – | 1,070 | 812 | – | 812 |
| ========= | ========= | ========= | ========= | ========= | ========= | |
| Year ended 31 March 2025 | Year ended 31 March 2024 | |||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| Profit/(loss) before taxation | 53,245 | 285,837 | 339,082 | 28,604 | (241,256) | (212,652) |
| Profit/(loss) before taxation multiplied by the standard rate of UK corporation tax of 25% (2024: 25%) | 13,311 | 71,459 | 84,770 | 7,151 | (60,314) | (53,163) |
| Effects of: | ||||||
| Capital (gains)/losses not taxable1 | – | (77,191) | (77,191) | – | 53,033 | 53,033 |
| Income not taxable | (11,643) | – | (11,643) | (6,406) | – | (6,406) |
| Expenses not deductible | – | 4,316 | 4,316 | – | 4,604 | 4,604 |
| Excess expenses | (1,668) | 1,416 | (252) | (745) | 2,677 | 1,932 |
| Overseas taxation | 1,070 | – | 1,070 | 812 | – | 812 |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
| Taxation charge (Note 7a) | 1,070 | – | 1,070 | 812 | – | 812 |
| ========= | ========= | ========= | ========= | ========= | ========= | |
| Year ended 31 March 2025 | Year ended 31 March 2024 | |
| Revenue earnings per ordinary share | 10.18p | 5.78p |
| Capital earnings/(loss) per ordinary share | 55.75p | (50.18p) |
| --------------- | --------------- | |
| Total earnings/(loss) per ordinary share | 65.93p | (44.40p) |
| ========= | ========= |
| £’000 | £’000 | |
| Revenue profit after taxation for the year | 52,175 | 27,792 |
| Capital earnings/(loss) after taxation for the year | 285,837 | (241,256) |
| --------------- | --------------- | |
| Total profit/(loss) after taxation for the year | 338,012 | (213,464) |
| ========= | ========= |
| Number | Number | |
| Weighted average number of ordinary shares held outside of Treasury | 512,652,970 | 480,806,725 |
| ========== | ========== |
| Year ended 31 March 2025 £’000 | Year ended 31 March 2024 £’000 | |
| Dividend paid | ||
| Ordinary dividend of 6.40 pence per share paid for the year ended 31 March 2024 | 33,355 | – |
| Ordinary dividend of 6.25 pence per share paid for the year ended 31 March 2023 | – | 30,198 |
| --------------- | --------------- | |
| 33,355 | 30,198 | |
| ========= | ========= | |
| Dividend proposed | ||
| Special dividend proposed of 1.00 pence per share for the year ended 31 March 2025 | 4,939 | – |
| Ordinary dividend proposed of 8.00 pence per share for the year ended 31 March 2025 | 39,509 | – |
| Ordinary dividend proposed of 6.40 pence per share for the year ended 31 March 2024 | – | 33,471 |
| --------------- | --------------- | |
| 44,448 | 33,471 | |
| ========= | ========= |
| 2025 £’000 | 2024 £’000 | |
| Total investments1 | 1,346,238 | 1,162,265 |
| Opening book cost | 1,398,894 | 1,514,572 |
| Opening investment holding losses | (236,629) | (195,808) |
| Opening fair value of investments | 1,162,265 | 1,318,764 |
| --------------- | --------------- | |
| Movements in the year | ||
| Purchases at cost | 648,076 | 586,707 |
| Assets acquired in respect of the transaction with ACIC | – | 120,754 |
| Costs in respect to the transaction with ACIC | 543 | – |
| Sales – proceeds | (714,521) | (708,959) |
| Gains/(losses) on investments | 249,875 | (155,001) |
| --------------- | --------------- | |
| Closing fair value | 1,346,238 | 1,162,265 |
| --------------- | --------------- | |
| Closing book cost | 1,354,515 | 1,398,894 |
| Closing investment holding losses | (8,277) | (236,629) |
| --------------- | --------------- | |
| Closing fair value of investments | 1,346,238 | 1,162,265 |
| ========= | ========= |
| Year ended 31 March 2025 £’000 | Year ended 31 March 2024 £’000 | |
| Purchases transaction costs | 773 | 720 |
| Sales transaction costs | 812 | 740 |
| --------------- | --------------- | |
| 1,585 | 1,460 | |
| ========= | ========= |
| Year ended 31 March 2025 £’000 | Year ended 31 March 2024 £’000 | |
| Net change to gains/(losses) on derivative instruments | ||
| Realised gains/(losses) on CFDs | 130,822 | (74,311) |
| Realised (losses)/gains on futures | (65,414) | 27,951 |
| Realised gains/(losses) on options | 1,765 | (4,632) |
| Movement in investment holding losses on CFDs | (13,424) | (11,900) |
| Movement in investment holding gains on futures | 3,366 | 6,382 |
| Movement in investment holding gains on options | 6 | 1,720 |
| --------------- | --------------- | |
| 57,121 | (54,790) | |
| ========= | ========= |
| 2025 Fair value £’000 | 2024 Fair value £’000 | |
| Fair value of derivative instruments recognised on the Balance Sheet1 | ||
| Derivative instrument assets | 9,938 | 7,103 |
| Derivative instrument liabilities | (24,838) | (13,307) |
| --------------- | --------------- | |
| (14,900) | (6,204) | |
| ========= | ========= |
Fair value £’000 | 2025 Asset exposure £’000 | Fair value £’000 | 2024 Asset exposure £’000 | |
| At the year end the Company held the following derivative instruments | ||||
| Long CFDs | (19,358) | 583,496 | (4,483) | 412,237 |
| Short CFDs | 205 | 18,813 | (1,246) | 14,766 |
| Futures (hedging exposure) | 2,891 | (203,084) | (475) | (138,402) |
| Call options | 1,761 | 9,442 | – | – |
| Call options (hedging exposure) | (399) | (8,967) | – | – |
| --------------- | --------------- | --------------- | --------------- | |
| (14,900) | 399,700 | (6,204) | 288,601 | |
| ========= | ========= | ========= | ========= |
| 2025 £’000 | 2024 £’000 | |
| Securities sold for future settlement | 3,926 | 5,957 |
| Amounts receivable on settlement of derivatives | 1,280 | 2,161 |
| Accrued income | 1,783 | 1,726 |
| Taxation recoverable | 11 | 12 |
| Other receivables | 295 | 210 |
| --------------- | --------------- | |
| 7,295 | 10,066 | |
| ========= | ========= |
| 2025 £’000 | 2024 £’000 | |
| Securities purchased for future settlement | 3,084 | 6,843 |
| Amounts payable on settlement of derivatives | 2,986 | 1,078 |
| Investment management fees | 1,023 | 678 |
| Finance costs payable | 830 | 610 |
| Accrued expenses | 359 | 414 |
| Amounts payable for repurchase of shares for cancellation | – | 179 |
| --------------- | --------------- | |
| 8,282 | 9,802 | |
| ========= | ========= |
| 2025 | 2024 | |||
Number of shares | Nominal value £’000 | Number of shares | Nominal value £’000 | |
| Issued, allotted and fully paid | ||||
| Ordinary shares of 1 pence each held outside of Treasury | ||||
| Beginning of the year | 525,681,434 | 5,258 | 488,325,628 | 4,884 |
| New ordinary shares issued in respect of the transaction with ACIC | – | – | 59,005,997 | 590 |
| Ordinary shares repurchased into Treasury | – | – | (2,900,696) | (29) |
| Ordinary shares repurchased for cancellation | (30,841,184) | (308) | (18,749,495) | (187) |
| ----------------- | ----------------- | ----------------- | ----------------- | |
| End of the year | 494,840,250 | 4,950 | 525,681,434 | 5,258 |
| ========== | ========== | ========== | ========== | |
| Ordinary shares of 1 pence each held in Treasury1 | ||||
| Beginning of the year | 85,629,548 | 855 | 82,728,852 | 826 |
| Ordinary shares repurchased into Treasury | – | – | 2,900,696 | 29 |
| ----------------- | ----------------- | ----------------- | ----------------- | |
| End of the year | 85,629,548 | 855 | 85,629,548 | 855 |
| ========== | ========== | ========== | ========== | |
| Total share capital | 5,805 | 6,113 | ||
| ========== | ========== | |||
Share capital £’000 | Share premium account £’000 | Capital redemption reserve £’000 | Other reserve £’000 | Capital reserve £’000 | Revenue reserve £’000 | Total equity £’000 | |
| At 1 April 2024 | 6,113 | 338,167 | 1,104 | 140,861 | 636,526 | 53,243 | 1,176,014 |
| Gains on investments (see Note 10) | – | – | – | – | 249,875 | – | 249,875 |
| Gains on derivative instruments (see Note 11) | – | – | – | – | 57,121 | – | 57,121 |
| Foreign exchange gains | – | – | – | – | 1,769 | – | 1,769 |
| Investment management fees (see Note 4) | – | – | – | – | (5,572) | – | (5,572) |
| Other expenses (see Note 5) | – | – | – | – | (32) | – | (32) |
| Finance costs (see Note 6) | – | – | – | – | (17,324) | – | (17,324) |
| Revenue profit after taxation for the year | – | – | – | – | – | 52,175 | 52,175 |
| Dividend paid to shareholders (see Note 9) | – | – | – | – | – | (33,355) | (33,355) |
| Contribution in respect of the transaction with ACIC by the Manager (see Note 2 (a)) | – | 100 | – | – | – | – | 100 |
| Costs relating to the ACIC transaction (inclusive of VAT recovered) (see Note 2 (a)) | – | (160) | – | – | – | – | (160) |
| Repurchase of ordinary shares for cancellation (see Note 14) | (308) | – | 308 | (66,809) | – | – | (66,809) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
| At 31 March 2025 | 5,805 | 338,107 | 1,412 | 74,052 | 922,363 | 72,063 | 1,413,802 |
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | |
| At 1 April 2023 | 5,710 | 211,569 | 917 | 186,794 | 877,782 | 55,649 | 1,338,421 |
| Losses on investments (see Note 10) | – | – | – | – | (155,001) | – | (155,001) |
| Losses on derivative instruments (see Note 11) | – | – | – | – | (54,790) | – | (54,790) |
| Foreign exchange losses | – | – | – | – | (3,858) | – | (3,858) |
| Foreign exchange gains on bank loan | – | – | – | – | 1,517 | – | 1,517 |
| Investment management fees (see Note 4) | – | – | – | – | (8,991) | – | (8,991) |
| Other expenses (see Note 5) | – | – | – | – | (35) | – | (35) |
| Finance costs (see Note 6) | – | – | – | – | (20,098) | – | (20,098) |
| Revenue profit after taxation for the year | – | – | – | – | – | 27,792 | 27,792 |
| Dividend paid to shareholders (see Note 9) | – | – | – | – | – | (30,198) | (30,198) |
| New ordinary shares issued in respect of the transaction with ACIC (see Note 14) | 590 | 126,198 | – | – | – | – | 126,788 |
| Contribution in respect of the transaction with ACIC by the Manager (see Note 2 (a)) | – | 400 | – | – | – | – | 400 |
| Repurchase of ordinary shares into Treasury (see Note 14) | – | – | – | (6,965) | – | – | (6,965) |
| Repurchase of ordinary shares for cancellation (see Note 14) | (187) | – | 187 | (38,968) | – | – | (38,968) |
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
| At 31 March 2024 | 6,113 | 338,167 | 1,104 | 140,861 | 636,526 | 53,243 | 1,176,014 |
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| 2025 | 2024 | |
| Net assets | £1,413,802,000 | £1,176,014,000 |
| Ordinary shares held outside of Treasury at year end | 494,840,250 | 525,681,434 |
| Net asset value per ordinary share | 285.71p | 223.71p |
| ========= | ========= |
| 2025 £’000 | 2024 £’000 | |
| Exposure to financial instruments that bear interest | ||
| Long CFDs – exposure less fair value | 602,854 | 416,720 |
| Bank overdrafts | – | 12,758 |
| ---------------- | ---------------- | |
| 602,854 | 429,478 | |
| ---------------- | ---------------- | |
| Exposure to financial instruments that earn interest | ||
| Short CFDs – exposure plus fair value | 19,018 | 13,520 |
| Amounts held at futures clearing houses and brokers | 33,760 | 24,589 |
| Cash at bank | 49,691 | 7,858 |
| --------------- | ---------------- | |
| 102,469 | 45,967 | |
| ========== | ========== | |
| Net exposure to financial instruments that bear interest | 500,385 | 383,511 |
| ========== | ========== |
Currency | Investments held at fair value through profit or loss £’000 | Asset exposure of long derivative instruments1 £’000 | Other receivables2 £’000 | Cash at bank £’000 | 2025 Total £’000 |
| Chinese renminbi | 29,850 | – | – | – | 29,850 |
| Euro | 15,468 | – | – | – | 15,468 |
| Hong Kong dollar | 873,075 | 127,296 | 5,850 | 2,731 | 1,008,952 |
| Japanese yen | – | 13,585 | 1,084 | – | 14,669 |
| Taiwan dollar | 5,006 | – | – | – | 5,006 |
| UK sterling | 12,725 | – | 295 | – | 13,020 |
| US dollar | 410,114 | 240,006 | 33,826 | 46,960 | 730,906 |
| --------------- | --------------- | --------------- | --------------- | --------------- | |
| 1,346,238 | 380,887 | 41,055 | 49,691 | 1,817,871 | |
| ========= | ========= | ========= | ========= | ========= |
Currency | Investments held at fair value through profit or loss £’000 | Asset exposure of long derivative instruments1 £’000 | Other receivables2 £’000 | Cash at bank £’000 | 2024 Total £’000 |
| Chinese renminbi | 92,336 | – | – | 1,372 | 93,708 |
| Euro | 10,903 | – | – | – | 10,903 |
| Hong Kong dollar | 704,175 | 148,557 | 18,153 | – | 870,885 |
| Japanese yen | 5,787 | 22,134 | 125 | 341 | 28,387 |
| Taiwan dollar | 7,603 | – | 12 | – | 7,615 |
| Thai baht | 439 | – | – | – | 439 |
| UK sterling | 17,752 | – | 209 | – | 17,961 |
| US dollar | 323,270 | 103,144 | 16,156 | 6,145 | 448,715 |
| --------------- | --------------- | --------------- | --------------- | --------------- | |
| 1,162,265 | 273,835 | 34,655 | 7,858 | 1,478,613 | |
| ========= | ========= | ========= | ========= | ========= |
Currency | Asset exposure of short derivative instruments1 £’000 | Other payables £’000 | Bank overdrafts £’000 | 2025 Total £’000 |
| Hong Kong dollar | – | 6,570 | – | 6,570 |
| Japanese yen | – | 7 | – | 7 |
| UK sterling | – | 1,382 | – | 1,382 |
| US dollar | 18,813 | 323 | – | 19,136 |
| --------------- | --------------- | --------------- | --------------- | |
| 18,813 | 8,282 | – | 27,095 | |
| ========== | ========== | ========== | ========== |
Currency | Asset exposure of short derivative instruments1 £’000 | Other payables £’000 | Bank overdrafts £’000 | 2025 Total £’000 |
| Hong Kong dollar | – | 5,994 | 12,744 | 18,738 |
| UK sterling | – | 1,271 | 14 | 1,285 |
| US dollar | 14,766 | 2,537 | – | 17,303 |
| --------------- | --------------- | --------------- | --------------- | |
| 14,766 | 9,802 | 12,758 | 37,326 | |
| ========== | ========== | ========== | ========== |
| 2025 | 2024 | |||
| collateral received £’000 | collateral pledged £’000 | collateral received £’000 | collateral pledged £’000 | |
| Goldman Sachs International Ltd | – | – | 2,613 | – |
| HSBC Bank plc | – | 3,037 | 198 | – |
| UBS AG | – | 23,770 | – | 15,689 |
| J.P. Morgan Securities plc | – | 6,953 | – | 5,186 |
| Morgan Stanley & Co. International Ltd | 1,109 | – | – | 3,714 |
| ----------------- | ----------------- | ----------------- | ----------------- | |
| 1,109 | 33,760 | 2,811 | 24,589 | |
| ========= | ========= | ========= | ========= | |
Financial assets | Gross amount £’000 | Gross amount of recognised financial liabilities set off on the balance sheet £’000 | Net amount of financial assets presented on the balance sheet £’000 | Related amounts not set off on balance sheet | 2025 Net amount £’000 | |
Financial instruments £’000 | Margin account received as collateral £’000 | |||||
| CFDs | 5,286 | – | 5,286 | (4,087) | (1,109) | 90 |
| Options | 1,761 | – | 1,761 | – | – | 1,761 |
| Futures (exchange traded) | 2,891 | – | 2,891 | – | – | 2,891 |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| 9,938 | – | 9,938 | (4,087) | (1,109) | 4,742 | |
| ========= | ========= | ========= | ========= | ========= | ========= | |
Financial liabilities | Gross amount £’000 | Gross amount of recognised financial assets set off on the balance sheet £’000 | Net amount of financial liabilities presented on the balance sheet £’000 | Related amounts not set off on balance sheet | 2025 Net amount £’000 | |
Financial instruments £’000 | Margin account pledged as collateral £’000 | |||||
| CFDs | (24,439) | – | (24,439) | 4,087 | 12,870 | (7,482) |
| Options | (399) | – | (399) | – | – | (399) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| (24,838) | – | (24,838) | 4,087 | 12,870 | (7,881) | |
| ========= | ========= | ========= | ========= | ========= | ========= | |
Financial assets | Gross amount £’000 | Gross amount of recognised financial liabilities set off on the balance sheet £’000 | Net amount of financial assets presented on the balance sheet £’000 | Related amounts not set off on balance sheet | 2024 Net amount £’000 | |
Financial instruments £’000 | Margin account received as collateral £’000 | |||||
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| CFDs | 7,103 | – | 7,103 | (3,844) | (2,389) | 870 |
| ========= | ========= | ========= | ========= | ========= | ========= | |
Financial liabilities | Gross amount £’000 | Gross amount of recognised financial assets set off on the balance sheet £’000 | Net amount of financial liabilities presented on the balance sheet £’000 | Related amounts not set off on balance sheet | 2024 Net amount £’000 | |
Financial instruments £’000 | Margin account pledged as collateral £’000 | |||||
| CFDs | (12,832) | – | (12,832) | 3,844 | 8,900 | (88) |
| Futures (exchange traded) | (475) | – | (475) | – | 475 | – |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| (13,307) | – | (13,307) | 3,844 | 9,375 | (88) | |
| ========= | ========= | ========= | ========= | ========= | ========= | |
Currency | 2025 £’000 | 2024 £’000 |
| Chinese renminbi | 2,714 | 8,519 |
| Euro | 1,406 | 991 |
| Hong Kong dollar | 91,125 | 77,468 |
| Japanese yen | 1,333 | 2,581 |
| Taiwan dollar | 455 | 692 |
| Thai baht | – | 40 |
| US dollar | 64,707 | 39,219 |
| --------------- | --------------- | |
| 161,740 | 129,510 | |
| ========= | ========= |
Currency | 2025 £’000 | 2024 £’000 |
| Chinese renminbi | 3,317 | 10,412 |
| Euro | 1,719 | 1,211 |
| Hong Kong dollar | 111,376 | 94,683 |
| Japanese yen | 1,629 | 3,154 |
| Taiwan dollar | 556 | 846 |
| Thai baht | – | 49 |
| US dollar | 79,085 | 47,935 |
| --------------- | --------------- | |
| 197,682 | 158,290 | |
| ========= | ========= |
| Valuation approach | Significant unobservable inputs | ||||
| Fair value £’000 | Key unobservable inputs | Other unobservable inputs | Range | Sensitivity to changes in significant unobservable inputs | |
| Market approach using comparable traded multiples or calibration factors | 72,128 | TEV/LTM revenue multiple1 | a,b,c,d | 1.95x – 3.5x | If TEV/LTM revenue multiple moved by +/-10%, the fair value would change by £1,535,000 and -£1,534,000 |
| TEV/LTM EBITDA multiple2 | a,b,c,d | 7.25x – 8.25x | If TEV/LTM EBITDA multiple moved by +/-10%, the fair value would change by £931,000 and -£954,000 | ||
| TEV/FY+1 revenue multiple3 | a,b,c,d | 1.55x – 3.25x | If TEV/FY+1 revenue multiple moved by +/-10%, the fair value would change by £1,354,000 and -£1,377,000 | ||
| TEV/FY+1 EBITDA multiple4 | a,b,c,d | 5.0x – 6.0x | If TEV/FY+1 EBITDA multiple moved by +/-10%, the fair value would change by £978,000 and -£1,001,000 | ||
| P/E LTM multiple5 | a,b,c,d | 14.0x – 17.0x | If P/E LTM multiple moved by +/-10%, the fair value would change by £435,000 and -£435,000 | ||
| P/E FY+1 multiple6 | a,b,c,d | 12.0x – 15.0x | If P/E FY+1 multiple moved by +/-10%, the fair value would change by £185,000 and -£185,000 | ||
| Sum of the partse | 30,258 | Selection of comparable companies and relevant indices | c | (10.0%) – 10.0% | If the market factor of the comparable companies moved by +/-5% the fair value would change by £557,000 and -£557,000 |
| Scenario analysis considering a range of exit scenariosf | 26,194 | Discount rate | c,d | 16.5% – 17.5% | If the discount rate moved by +/- 10% the fair value would change by £353,000 and -£353,000 |
| Recent transaction pricesg | 62,469 | n/a | c | n/a | n/a |
| Valuation approach | Significant unobservable inputs | ||||
| Fair value £’000 | Key unobservable inputs | Other unobservable inputs | Range | Sensitivity to changes in significant unobservable inputs | |
| Market approach using comparable traded multiples or calibration factors | 98,298 | TEV/LTM revenue multiple1 | a,b,c,d | 2.30x – 4.0x | If TEV/LTM revenue multiple moved by +/-10%, the fair value would change by £1,021,000 and -£1,021,000 |
| TEV/FY+1 EBITDA multiple2 | a,b,c,d | 1.55x – 3.50x | If TEV/FY+1 revenue multiple moved by +/-10%, the fair value would change by £963,000 and -£963,000 | ||
| P/E LTM multiple3 | a,b,c,d | 19.0x – 21.0x | If P/E LTM multiple moved by +/-10%, the fair value would change by £229,000 and -£229,000 | ||
| P/E LTM+1 multiple4 | a,b,c,d | 17.0x – 19.0x | If P/E FY+1 multiple moved by +/-10%, the fair value would change by £236,000 and -£236,000 | ||
| Selection of comparable companies and relevant indices | c | (22.5%) – (12.5%) | If market factor of the comparable companies moved by +/-5%, the fair value would change by £2,671,000 and -£2,598,000 | ||
| Sum of the partse | 25,602 | Selection of comparable companies and relevant indices | c | n/a | If the market factor of the comparable companies moved by +/-5% the fair value would change by £512,000 and -£512,000 |
| Scenario analysis considering a range of exit scenariosf | 58,081 | Multiple at exit | c,d | 15.0x – 22.0x | If the exit multiples moved by +/-10% the fair value would change by £789,000 and -£789,000 |
| Discount rate | c,d | 14.5% – 15.5% | If the discount rate moved by +/-10% the fair value would change by £668,000 and -£701,000 | ||
| Recent transaction pricesg | 67,529 | n/a | c | n/a | n/a |
| Classification | Input |
| Level 1 | Valued using quoted prices in active markets for identical assets |
| Level 2 | Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly |
| Level 3 | Valued by reference to valuation techniques using inputs that are not based on observable market data |
Financial assets at fair value through profit or loss | Level 1 £’000 | Level 2 £’000 | Level 3 £’000 | 2025 Total £’000 |
| Investments | 1,210,194 | – | 136,044 | 1,346,238 |
| Derivative instrument assets | 2,891 | 7,047 | – | 9,938 |
| --------------- | --------------- | --------------- | --------------- | |
| 1,213,085 | 7,047 | 136,044 | 1,356,176 | |
| ========= | ========= | ========= | ========= | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | – | (24,838) | – | (24,838) |
| ========= | ========= | ========= | ========= |
Financial assets at fair value through profit or loss | Level 1 £’000 | Level 2 £’000 | Level 3 £’000 | 2024 Total £’000 |
| Investments | 980,975 | 24,282 | 157,008 | 1,162,265 |
| Derivative instrument assets | – | 7,103 | – | 7,103 |
| --------------- | --------------- | --------------- | --------------- | |
| 980,975 | 31,385 | 157,008 | 1,169,368 | |
| ========= | ========= | ========= | ========= | |
| Financial liabilities at fair value through profit or loss | ||||
| Derivative instrument liabilities | (475) | (12,832) | – | (13,307) |
| ========= | ========= | ========= | ========= |
| 2025 £’000 | 2024 £’000 | |
| ByteDance | 55,005 | 24,724 |
| Venturous Holdings | 30,258 | 25,602 |
| Chime Biologics | 26,194 | 27,312 |
| DJI International | 17,123 | 30,769 |
| Fujian Yangteng Innovations | 7,464 | – |
| Pony.ai (moved to Level 1) | – | 42,805 |
| Shanghai Yiguo | – | – |
| 3 listed investments whose listings are currently suspended (2024: 4 listed investments suspended) | – | 5,796 |
| --------------- | --------------- | |
| 136,044 | 192,878 | |
| ========= | ========= |
Movements in level 3 investments during the year | 2025 Level 3 £’000 | 2024 Level 3 £’000 |
| Level 3 investments at the beginning of the year | 157,008 | 192,878 |
| Purchases at cost – ByteDance and Fujian Yangteng Innovations | 20,251 | – |
| Sales proceeds – DJI International D shares | (14,410) | (2,943) |
| Sales gain – DJI International D shares | 960 | 615 |
| Transfers into level 3 at cost – China Renaissance Holdings | – | 17,316 |
| Transfers out of level 3 at cost1 – China Renaissance Holdings and Pony.ai | (42,208) | (35,153) |
| Unrealised profit/(loss) recognised in the Income Statement | 14,443 | (15,705) |
| --------------- | --------------- | |
| Level 3 investments at the end of the year | 136,044 | 157,008 |
| ========= | ========= |
| 2025 | ||||
| Gross gearing | Net gearing | |||
| Exposure £’000 | %1 | Exposure £'000 | %1 | |
| Investments | 1,346,238 | 95.2 | 1,346,238 | 95.2 |
| Long CFDs | 583,496 | 41.3 | 583,496 | 41.3 |
| Long options | 9,442 | 0.7 | 9,442 | 0.7 |
| --------------- | --------------- | --------------- | --------------- | |
| Total long exposures before hedges | 1,939,176 | 137.2 | 1,939,176 | 137.2 |
| ========= | ========= | ========= | ========= | |
| less: Hedged Future Exposures | (203,084) | (14.4) | (203,084) | (14.4) |
| less: Hedged Option Exposures | (8,967) | (0.6) | (8,967) | (0.6) |
| --------------- | --------------- | --------------- | --------------- | |
| Total long exposures after the netting of hedges | 1,727,125 | 122.2 | 1,727,125 | 122.2 |
| ========= | ========= | ========= | ========= | |
| Short CFDs | 18,813 | 1.3 | (18,813) | (1.3) |
| Gross Asset Exposure/Net Market Exposure* | 1,745,938 | 123.5 | 1,708,312 | 120.9 |
| --------------- | --------------- | --------------- | --------------- | |
| Net Assets | 1,413,802 | 1,413,802 | ||
| ========= | ========= | |||
| Gearing2 | 23.5% | 20.9% | ||
| ========= | ========= | |||
| 2024 | ||||
| Gross gearing | Net gearing | |||
| Exposure £’000 | %1 | Exposure P£'000 | %1 | |
| Investments | 1,162,265 | 98.8 | 1,162,265 | 98.8 |
| Long CFDs | 412,237 | 35.1 | 412,237 | 35.1 |
| --------------- | --------------- | --------------- | --------------- | |
| Total long exposures before hedges | 1,574,502 | 133.9 | 1,574,502 | 133.9 |
| ========= | ========= | ========= | ========= | |
| less: short derivative instruments hedging the above | (138,402) | (11.8) | (138,402) | (11.8) |
| --------------- | --------------- | --------------- | --------------- | |
| Total long exposures after the netting of hedges | 1,436,100 | 122.1 | 1,436,100 | 122.1 |
| ========= | ========= | ========= | ========= | |
| Short CFDs | 14,766 | 1.3 | (14,766) | (1.3) |
| Gross Asset Exposure/Net Market Exposure* | 1,450,866 | 123.4 | 1,421,334 | 120.8 |
| --------------- | --------------- | --------------- | --------------- | |
| Net Assets | 1,176,014 | 1,176,014 | ||
| ========= | ========= | |||
| Gearing 2 | 23.4% | 20.8% | ||
| ========= | ========= | |||
| 2025 | 2024 | |
| Investment management fees (£’000) | 9,875 | 9,719 |
| Other expenses (£’000) | 1,243 | 1,238 |
| --------------- | --------------- | |
| Ongoing charges (£’000) | 11,118 | 10,957 |
| --------------- | --------------- | |
| Variable management fees (£’000) | (1,834) | 1,702 |
| --------------- | --------------- | |
| Ongoing charges ratio | 0.89% | 0.98% |
| --------------- | --------------- | |
| Ongoing charges ratio including variable management fees | 0.74% | 1.13% |
| ========= | ========= |
2025 | Net asset value per share | Share price |
| 31 March 2024 | 223.71p | 201.00p |
| 31 March 2025 | 285.71p | 265.00p |
| Change in the year | +27.7% | +31.8% |
| Impact of dividend reinvestment | +3.8% | +4.0% |
| --------------- | --------------- | |
| Total return for the year | +31.5% | +35.8% |
| ========= | ========= |
2024 | Net asset value per share | Share price |
| 31 March 2023 | 274.08p | 247.50p |
| 31 March 2024 | 223.71p | 201.00p |
| Change in the year | -18.4% | -18.8% |
| Impact of dividend reinvestment | +2.1% | +2.4% |
| --------------- | --------------- | |
| Total return for the year | -16.3% | -16.4% |
| ========= | ========= |