REG-Pacific Assets Trust plc: Annual Report for the Year Ended 31 January 2026
01/05/2026 07:01
LONDON STOCK EXCHANGE ANNOUNCEMENT
Pacific Assets Trust plc
(the “Company”)
Annual Results for the Year Ended 31 January 2026
The statements below are extracted from the Company’s annual report for the
year ended 31 January 2026 (the “Annual Report”).
The Annual Report, which includes the notice of the Company’s forthcoming
annual general meeting, will be submitted to the Financial Conduct Authority
today and will shortly be available in full, unedited text for inspection on
the National Storage Mechanism (“NSM”):
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Annual Report will be posted to shareholders on 8 May 2026. Members of the
public may obtain copies by writing to Frostrow Capital LLP, 25 Southampton
Buildings, London WC2A 1AL or from the Company’s website at
www.pacific-assets.com
where up to date information on the Company, including daily NAV, share prices
and fact sheets, can also be found.
Frostrow Capital LLP, Company Secretary
0203 709 8734
1 May 2026
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, sterling adjusted) 1 28.6% 22.3%
Average discount of share price to net asset value per share 1 2 11.4% 11.5%
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 31 January 2026 was 0.0%,
significantly lagging the 28.6% rise in the MSCI AC Asia ex Japan Index (total
return, sterling adjusted). This disappointing outcome places the Company at
the bottom of its peer group over most longer time periods and remains a
central concern for the Board.
The past year has been a difficult one for the Company. In August, Stewart
Investors announced the resignation of David Gait and two other senior
portfolio managers from the investment team. In October, the Board announced
three strategic initiatives benefitting the Company’s shareholders which
comprised a reduction in the portfolio management fee, the introduction of a
performance-related tender offer for up to 25% of the Company’s issued share
capital and a reinforced commitment to buying back shares to help reduce the
discount to net asset value (“NAV”) at which the Company’s shares trade.
In November, First Sentier Group informed the Board of its decision to close
the Stewart Investors business, with portfolio management responsibilities
transitioning to its affiliate investment team, FSSA Investment Managers
(“FSSA”). Although both teams share a similar investment philosophy and
approach, the Board concluded that such a material change warranted a broader
reassessment of the Company’s future. After consulting major shareholders,
the Board launched a strategic review on 11 December 2025
to evaluate the full range of options for the Company’s future, including
proposals from alternative investment managers (FSSA among them) and potential
combination candidates.
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 India.
Economic and market conditions across the region were uneven. China saw a
modest uplift due to selective policy support, yet structural challenges in
the property market, local government finances and consumer sentiment
persisted. India continued to grow at one of the fastest rates globally,
supported by resilient domestic demand, but equity valuations in several
sectors normalised after a prolonged period of outperformance. Meanwhile,
Taiwan and South Korea benefited disproportionately from a surge in demand for
advanced semiconductors and AI related hardware, resulting in one of the most
concentrated market rallies in recent years. In this environment where
performance was dominated by a narrow group of technology led markets, quality
companies across India and Southeast Asia (core areas of the portfolio) were
largely overlooked despite solid fundamentals.
Despite these challenging conditions, FSSA continued to identify compelling
bottom up opportunities across China, India, Indonesia, the Philippines and
Taiwan. The limited adjustments undertaken during the transition emphasised
companies with stronger cash generation and more durable long term growth
prospects and have increased the liquidity of the portfolio.
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,
Investec Bank plc. The review is nearing completion and the Board expects to
make an announcement within the next few weeks.
The Board wishes to acknowledge both the professionalism of the outgoing team
at Stewart Investors and the constructive engagement of FSSA during a period
of considerable operational and market complexity.
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.
The Sales, Marketing and Communications Committee made good progress on
planned marketing initiatives; however, much of the activity has been
necessarily deferred pending the outcome of the strategic review.
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 12 June 2026. The associated ex-dividend date
will be 11 June 2026.
The Board
Having served on the Board for just over nine years now, Robert Talbut
intended to retire from the Board at the AGM in July. However, at the
Board’s request, Robert has agreed to remain on the Board until the outcome
of the strategic review has been implemented, to ensure continuity and
stability during the process. The Board is grateful for his commitment and
support.
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 10.30am on Tuesday, 7
July 2026, at Dashwood House, 69 Old Broad St,
London EC2M 1QS.
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, Asia remains well positioned over the long run, supported by
favourable demographics, the continued expansion of the region’s digital
economy, and increasing participation in global technology and innovation
supply chains. However, the near term environment is likely to be
characterised by greater dispersion of returns across markets and sectors,
reinforcing the importance for investors of selectivity, discipline and
attention to underlying fundamentals.
FSSA provide further comment in their report.
Andrew Impey
Chair
30 April 2026
Investment Portfolio
as at 31 January 2026
Company Country Sector Value £’000 % Total 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 Manufacturing Taiwan Information Technology 15,701 3.3%
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%
Company Country Sector Value £’000 % Total Assets
HDFC Bank India Financials 6,425 1.4%
ViTrox Corp Malaysia Information Technology 6,352 1.3%
Delta Electronics Taiwan Information Technology 6,044 1.3%
Bajaj Auto India Consumer Discretionary 6,031 1.3%
Kasikornbank Thailand Financials 5,879 1.2%
MediaTek Taiwan Information Technology 5,828 1.2%
Chroma ATE Taiwan Information Technology 5,589 1.2%
Tech Mahindra India Information Technology 5,357 1.1%
Glodon China Information Technology 5,032 1.1%
Marico India Consumer Staples 4,924 1.0%
Top 40 Investments 401,303 84.9%
Shenzhen Mindray Bio-Medical
Electronics China Health Care 4,682 1.0%
CG Power & Industrial Solutions India Industrials 4,605 1.0%
Centre Testing International China Industrials 4,578 1.0%
Aavas Financiers Ltd India Financials 4,366 0.9%
Bank Central Asia Indonesia Financials 4,270 0.9%
Info Edge India India Communication Services 4,151 0.9%
Selamat Sempurna Indonesia Consumer Discretionary 3,968 0.8%
Sea Singapore Consumer Discretionary 3,844 0.8%
Godrej Consumer Products India Consumer Staples 3,842 0.8%
Vitasoy International Hong Kong Consumer Staples 3,752 0.8%
Top 50 Investments 443,361 93.8%
SM Investments Philippines Industrials 3,648 0.8%
Humanica Thailand Industrials 3,141 0.7%
BDO Unibank Philippines Financials 2,967 0.6%
Silergy Taiwan Information Technology 2,780 0.6%
Bajaj Holdings & Investment India Financials 2,666 0.6%
Bank of the Philippine Islands Philippines Financials 2,450 0.5%
SF Holding China Industrials 2,420 0.5%
FPT Vietnam Information Technology 2,403 0.5%
Yifeng Pharmacy Chain China Consumer Staples 2,027 0.4%
Kalbe Farma Indonesia Health Care 2,019 0.4%
Marico Bangladesh Bangladesh Consumer Staples 1,900 0.4%
Tarsons Products India Health Care 771 0.2%
Total Investments 472,553 100.0%
Portfolio Manager’s Review
In November 2025, First Sentier Group (“FSG”) announced a strategic
transition of Stewart Investors’ (“SI”) investment management
responsibilities to its affiliate investment team, FSSA Investment Managers
(“FSSA”). FSSA have managed the Company’s portfolio since 14
November
2025.
Over the year to 31 January 2026, the net asset value total return of the
Company was 0.0%. The MSCI AC Asia ex-Japan Index, measured on a net, total
return, sterling adjusted basis (the “Index”) rallied, returning 28.6%
over the same period. Part of the underperformance stems from the Company’s
positioning in India, as holdings which are good quality but expensive were
derated. However, we believe there are still good opportunities for active
managers to add value with a disciplined, research-driven approach. Although
India has been out of favour, we remain excited about the long-term investment
opportunities in this market, with growth being underpinned by growing levels
of urbanisation, favourable demographics, rising middle class consumption and
a strong digital infrastructure push.
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 Southeast Asia, India and China’s traditional
sectors – have not performed despite solid earnings growth, improving
governance and attractive valuations.
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 30 January 2026
2 Clifford S. Asness, Andrea Frazzini & Lasse Heje
Pedersen (2018), Quality minus junk , Review of Accounting
Studies (2019), 24:34-112
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 Asia
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 Asia. Beyond technology, we
have positioned the portfolio to tap into the long-term growth opportunities
across Asia. One example is Bank of the Philippine Islands (“BPI”), the
second largest bank in the Philippines with roughly 15% market share in loans
and 13% in deposits. BPI operates with one of the leanest cost structures in
the Philippine banking sector, supported by its scale, automation and
relatively higher productivity per branch. It is majority-owned by Ayala
Corporation, one of the Philippines’ most established and influential
business groups. As a result, it has many of Ayala’s associated qualities: a
strong governance framework, a measured growth strategy
and operational professionalism.
Although Southeast Asia appears to be unloved by investors, we believe the
opportunity here is sizeable. The Philippines is one of the most
under-penetrated banking markets in Asia relative to its economic size and
demographics. With a population of ~114 million and a GDP of US$505 billion,
it is among Southeast Asia’s larger economies, yet its household
credit-to-GDP remains closer to frontier market levels. We
believe BPI should compound earnings steadily in the years to come.
We have also been significant and constructive shareholders of various Jardine
Matheson (“JM”) group companies. The Hong Kong-based group has sprawling
business interests across Asia, including real estate, supermarkets, hotels
and automotives. JM has been reinventing itself and we expect changes to
accelerate in the coming years.
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. Lincoln Pan has joined as
JM’s CEO, taking over from John Witt who retired from the company. Pan joins
from private equity group PAG and is the first external taipan at the group.
This is significant and an indication of the changing culture at the group.
In India, there have been few opportunities on a bottom-up basis over the past
couple of years, as valuations across the board were quite expensive. However,
as earnings have grown, valuations have become more attractive, and we are
beginning to find more ideas at the margin. For instance, we own HDFC Bank, a
high-quality private bank. Over the long term, it has been gaining share at
the expense of state-owned banks, but in recent times it has been derated on
concerns about near-term income pressure and slower loans growth. We believe
this is now behind us.
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 China. The company has since undertaken a strategic
shift from a “capacity-first” to a “customer-first” model, which
appears to be bearing fruit. The shares rose during the quarter, as Samsung
continued to benefit from surging AI-related demand for its high-bandwidth
memory chips as well as tightness in traditional DRAM (Dynamic Random Access
Memory) demand-supply. Strong results from US chipmaker Micron reinforced
expectations of a sustained memory upcycle into 2026. With the turnaround in
its foundry business and a strong legacy memory business, we believe the
risk-reward looks favourable.
Delta Electronics , a leading power supply company in
Taiwan, was the second largest contributor to performance. AI-related demand
has been “very strong”, as the trend of higher power intensity continues.
As the technology leader, Delta is collaborating with clients to develop new
products, which provides a first-mover advantage whenever there’s an
upgrade. There are also discussions about high voltage direct current
(“HVDC”) power, which should add incremental value (though it is hard to
quantify at this stage). On the other hand, due to strong demand for AI, there
are bottlenecks developing in memory, grid power, chip-on-wafer-on-substrate
(“CoWoS”), water and skilled technicians. A slowdown in AI growth could
have a knock-on effect at Delta. We have been reducing our position size due
to rich valuation and very high expectations.
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, IKEA and
Maxim’s (a joint venture catering and restaurants business). After years of
lacklustre performance, DFI – and the broader Jardine group – has
redoubled efforts to grow the business, and to improve operational
efficiencies and returns on capital while optimising capital allocation.
Improving total shareholder return is the new mantra for the group, and there
are now clear signs of improvement. We believe margins could improve still
further and lead to underlying profit growth.
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 UPS business should normalise sometime in the future,
we assume lower growth for the inverter business. On the other hand, given the
share price has halved over 2025 (from a high base), we believe the current
valuation seems attractive overall.
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 Vellayan Subbiah
(executive chairman), who has an exceptional track record and has created
tremendous value for shareholders.
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 China, where we have found leading businesses
like Tencent, with strong moats and attractive growth at reasonable
valuations. We are reducing exposure to India, mainly in cyclical businesses
like Tube Investments of India, where valuations are expensive, and Motilal
Oswal, where we have lower conviction as the growth outlook has deteriorated.
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 China, with
growing businesses in online advertising, cloud services,
e-payments/e-commerce and overseas gaming. Tencent has created an ecosystem of
businesses which are unrivalled and should continue growing over the medium
term. It has continued to develop new functions within WeChat (such as Video
Accounts and Mini Shops), which should slowly improve monetisation and enhance
the quality of the franchise. At FSSA, we have been
shareholders of Tencent since 2005 and have consistently found the management
to be effective long-term stewards of the business. In recent times, we have
been impressed by Tencent’s AI strategy and its disciplined approach to
technology investments, which aligns with our conservative view on AI capex
spending.
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, Uday Kotak, has stepped down from his managing director/CEO role
due to the central bank’s limits on leadership terms, he remains closely
involved as a board director and should ensure that the bank’s risk
awareness and long-term thinking is maintained. Meanwhile, the new CEO (Ashok
Vaswani) aspires to grow the business further by focusing on consumer banking
and digitisation. We expect to see a growing trend of formalised financial
savings, benefiting KMB’s insurance, mutual funds and asset management
businesses.
Bank Central Asia (“BCA”) is a leading private bank in
Indonesia with 11% loan market share
and 17% market share in low-cost deposits (i.e. current accounts and savings
accounts, or “CASA”). We like the bank’s conservative culture and solid
management, backed by a stable and long-term owner in the Hartono family.
BCA’s moat in transaction banking has created a large pool of low-cost
deposits for the bank which is hard to replicate. BCA then lends sensibly to
good borrowers and earns a healthy return on equity (“ROE”), averaging
over 20% over the past 10 years. It has the lowest credit loss ratio and
lowest leverage amongst Indonesian banks. In addition, BCA was early to invest
in digitisation in Indonesia, which has since accelerated its customer
acquisition. BCA remains very profitable, and we believe it has the ability to
compound book value at high rates without taking on too much risk. Low credit
penetration and household debt in Indonesia should provide a favourable
backdrop for continued growth.
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 Korea and AI, we believe the business faces structural headwinds in
terms of slowing e-commerce growth, and we have been concerned about their
lack of financial discipline in the past.
Motilal Oswal Financial Services is a non-bank financial
company (“NBFC”) in India. We sold
out of a lower conviction holding to raise cash for
better ideas elsewhere.
Milkyway Intelligent Supply Chain is a chemical
materials logistics company in China. We sold out
of the position on concerns about leverage and poor cash generation.
Looking forward
We are optimistic on the outlook for the Asia Pacific region, with several
signs pointing to a sustained period of Asian equity outperformance. With a
rising share of global GDP growth, Asia should continue to benefit from the
shift towards higher value services-led growth, digital transformation and the
ongoing financialisation across the region. Valuations look attractive in
comparison to developed markets like the US, while low ownership of Asian
equities in global portfolios provides a good backdrop for absolute returns as
global liquidity flows eastwards.
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
30 April 2026
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
UK inflation-linked performance objective and instead use a market-based
comparator to measure the Portfolio Manager’s performance. The first KPI has
been updated to reflect this. The remaining KPIs are unchanged from the prior
year.
* 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 31 January 2026, the Company ranked
5th, 5th and 4th, respectively, in its peer group.
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
31 January 2026 31 January 2025
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^
31 January 2026 31 January 2025
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:
Principal Risks and Uncertainties Mitigation Change in risk assessment over the last financial year
Investment and Financial Risks
Market and Foreign Exchange Risk Unchanged
The Company’s portfolio is exposed to fluctuations in market prices (from both individual security prices and foreign exchange rates) in the regions and sectors in which it invests. Emerging markets in the Asia Pacific region, in which the portfolio companies operate, are expected to be more volatile than developed markets. To an extent, this risk is accepted as being inherent to the Company’s activities. However, the Board has set limits in the investment policy which ensure that the portfolio is diversified, reducing the risks associated with individual stocks and markets. Compliance with the investment objective and policy limits is monitored daily by Frostrow and the Portfolio Manager and reported to the Board monthly. The Portfolio Manager reports at each Board meeting on the performance of the Company’s portfolio, including the impact of wider market trends and events. 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
Investment performance may not achieve the Company’s investment objective. The Portfolio Manager’s investment strategy and approach is expected to lead to performance that will deviate from that of both market indices and other investment companies investing in the Asia Pacific Region. To manage this risk, the Board: * reviews and challenges reports from the Portfolio Manager, which cover portfolio composition, asset allocation, concentration and performance at each Board meeting;
* reviews investment performance over the long term against the Company’s performance objective and peer group;
* 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 Uncertainties Mitigation Change in assessment of risk over the last financial year
Strategic Risks
Geopolitical Risk
Increased
Geopolitical events may have an adverse impact on the Company’s performance by causing exchange rate volatility, changes in tax or regulatory environments, a reduced The Board regularly discusses global geopolitical issues and general economic conditions and developments. Political changes in recent years, particularly in the US and Asia Pacific region and more recently in the Middle East, as well as Ukraine and Eastern Europe, have increased uncertainty and volatility in 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.
investment universe and/or a fall in market prices.
Climate Change Risk Unchanged
The Board is cognisant of risks arising from climate change and the impact climate change events could have on portfolio companies and their operations, as well as on The Board regularly reviews global environmental, geopolitical and economic developments with the Portfolio Manager and the implications of these risks and events on portfolio construction and the Company’s operations. Given the Portfolio Manager’s focus on sustainability, the Board considers the portfolio to be relatively well positioned in this regard.
service providers to the Company.
Black Swan Risk Unchanged
A significant unpredictable event (e.g. a pandemic/war/closure of a major shipping route) could lead to increased market volatility, and in a worst-case scenario, major The Board monitors emerging risks and the robustness of the Portfolio Manager and other service providers’ business continuity plans. The Portfolio Manager’s investment approach includes a focus on sustainability and stewardship, which emphasises quality investments with strong balance sheets, a proven track record in previous crises, and the protection of shareholders’ funds, leaving them relatively well positioned to deal with unforeseen events. All of the Company’s service providers are required to have business continuity / disaster recovery policies and test them at least annually. Service providers provide updates on contingency plans for coping with major disruption to their operations.
global trade and supply chain breakdown resulting in significant volatility/declines in market prices. The Company’s service providers and their operational systems may
also be affected.
Principal Risks and Uncertainties Mitigation Change in assessment of risk over the last financial year
Key Persons Risk Increased
There is a risk that the team responsible for managing the Company’s portfolio may leave their employment or may be prevented from undertaking their duties. 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 Board meetings and at the Portfolio Manager’s offices; and
* delegating to the Engagement & Remuneration Committee responsibility to perform an annual review of the service received from the Portfolio Manager, including, inter alia , the team supporting the lead manager and their succession planning.
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
The Company is exposed to the risk, particularly if the investment strategy and approach are unsuccessful, that the Company underperforms its peer group, fails to achieve 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;
its Performance Objective and becomes unattractive to shareholders, resulting in a widening of the share price discount to the NAV per share. * regularly discusses the Company’s future development and strategy;
* undertakes a regular review of the level of the share price discount/premium to the NAV per share and considers ways in which share price performance may be enhanced, including the effectiveness of marketing, share issuance and share buybacks, where appropriate; and
* reviews an analysis of the shareholder register at each Board meeting and is kept informed of shareholder sentiment.
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 Uncertainties Mitigation Change in risk assessment over the last financial year
Operational Risk
Operational Risk Increased
As an externally managed investment trust, the Company is reliant on the systems of its service providers for dealing, trade processing, administration, financial and 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;
other functions. If such systems were to fail or be disrupted (including, for example, as a result of cyber-crime or a pandemic) this could lead to a failure to comply * receives a monthly report from Frostrow, which includes, inter alia , confirmation of compliance with applicable laws and regulations;
with applicable laws, regulations and governance requirements and/or to a financial loss. Credit risk arising from the use of counterparties forms part of this risk. If * reviews internal control reports and key policies of its service providers, including disaster recover procedures and business continuity plans;
a counterparty were to fail, the Company could be adversely affected through either delay in settlement or loss of assets. * maintains a risk matrix with details of the risks to which the Company is exposed, the approach to managing those risks, the key controls relied upon and the frequency of the controls operation;
* receives updates on pending changes to the regulatory and legal environment and progress towards the Company’s compliance with such changes;
* has considered the increased risk of cyber-attacks and received reports and assurance from the Company’s service providers regarding the information security controls in place;
* has reviewed the arrangements (including sub-custodial arrangements) and services provided by the Custodian to ensure that the security of the Company’s custodial assets is maintained; and
* reviews 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
Frostrow Capital LLP
Company Secretary
30 April 2026
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 UK and the Republic of Ireland’.
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 United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company’s website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing integrity of the
financial statements contained therein.
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
Andrew Impey
Chair
30 April 2026
Income Statement
for the year ended 31 January 2026
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 investments 8 – (9,914) (9,914) – 49,989 49,989
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 taxation 7,650 (13,803) (6,153) 7,613 45,941 53,554
Taxation 5 (1,074) 2,863 1,789 (1,049) (7,684) (8,733)
Return/(loss) after taxation 6,576 (10,940) (4,364) 6,564 38,257 44,821
Return/(loss) per share (p) 7 5.6 (9.3) (3.7) 5.4 31.7 37.1
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 Association of Investment Companies.
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 31 January 2026
Ordinary Capital
share Share redemption Special Capital Revenue
capital premium reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 January 2024 15,120 8,811 1,648 14,572 415,270 9,398 464,819
Return after taxation – – – – 38,257 6,564 44,821
Repurchase of own shares for cancellation (46) – 46 – (1,361) – (1,361)
Ordinary dividends paid 6 – – – – – (4,838) (4,838)
At 31 January 2025 15,074 8,811 1,694 14,572 452,166 11,124 503,441
(Loss)/Return after taxation – – – – (10,940) 6,576 (4,364)
Repurchase of own shares for cancellation (791) – 791 – (22,498) – (22,498)
Ordinary dividends paid 6 – – – – – (5,805) (5,805)
At 31 January 2026 14,283 8,811 2,485 14,572 418,728 11,895 470,774
The accompanying notes are an integral part of these statements.
Statement of Financial Position
as at 31 January 2026
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 one year) 10 (1,455) (2,397)
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 30 April 2026 and signed on its behalf by:
Andrew Impey
Chair
The accompanying notes are an integral part of these statements.
Pacific Assets Trust Public Limited Company – Company Registration Number:
SC091052 (Registered in Scotland)
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 UK Company Law, FRS 102
‘The Financial Reporting Standard applicable in the UK and Ireland’, and
in accordance with guidelines set out in the Statement of Recommended Practice
(“SORP”), published in July 2022, for Investment Trust Companies and
Venture Capital Trusts issued by the Association of Investment Companies, the
historical cost convention, as modified by the valuation of investments at
fair value through profit or loss.
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 London Stock Exchange, it is incorporated in the United Kingdom
and pays dividends and expenses in sterling.
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 £’000 2025 £’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 (credit)/charge (137) (2,863) (3,000) (175) 7,684 7,509
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 UK tax on
capital gains. However, Indian capital gains tax arises on capital gains on
the sale of Indian securities at a rate of 20% on short-term capital gains
(defined as those where the security was held for less than a year) and 12.5%
on long-term capital gains. £7,949,000 of the provision for Indian capital
gains (see note 11) was reversed (2025: £2,439,000 increase) due to the fall
in unrealised long-term capital gains on securities still held. This reversal
was offset by £4,949,000 (2025: £5,070,000) relating to capital gains tax
paid on disposals during the year.
(b) Reconciliation of Tax (Credit)/Charge
The UK corporation tax rate was 25.0% for the year (2025: 25.0%). The tax
assessed for the year is lower than the corporation tax rate. The differences
are explained below.
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Total return/(loss) on ordinary activities before tax 7,650 (13,803) (6,153) 7,613 45,941 53,554
Corporation tax charged/(credited) at 25.0% (2025: 25.0%) 1,913 (3,451) (1,538) 1,903 11,486 13,389
Effects of:
Losses/(gains) on investment not subject to
UK corporation tax – 2,821 2,821 – (12,291) (12,291)
Non-taxable exchange differences – (171) (171) – (103) (103)
Unutilised management expenses 528 801 1,329 464 908 1,372
Income not subject to corporation tax (2,441) – (2,441) (2,367) – (2,367)
Indian capital gains tax (credit)/charge (see note 5a) (137) (2,863) (3,000) (175) 7,684 7,509
Overseas taxation 1,211 – 1,211 1,224 – 1,224
Tax charge/(credit) for the year 1,074 (2,863) (1,789) 1,049 7,684 8,733
As at 31 January 2026 the Company had unutilised management expenses and other
reliefs for taxation purposes of £73,780,000 (2025: £68,461,000). It is not
anticipated that these will be utilised in the foreseeable future and as such
no related deferred tax asset has been recognised.
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 UK tax on any capital gains and losses
arising on the revaluation or disposal of investments.
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 31
January 2026, were as follows:
2026 £’000 2025 £’000
Final dividend paid for the year ended 31 January 2025 of 4.9p per share 5,805 –
Final dividend paid for the year ended 31 January 2024 of 4.0p per share – 4,838
In respect of the year ended 31 January 2026, a final dividend of 5.7p per
share has been proposed. Details of the ex-dividend and payment dates are
provided in the Chair’s Statement.
The Board’s current policy is to pay dividends only out of revenue reserves.
Therefore the amount available for distribution as at 31 January 2026 is
£11,895,000 (2025: £11,124,000).
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 £’000 2025 £’000
Revenue available for distribution by way of dividend for the year 6,576 6,564
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 £’000 2025 £’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 £’000 2025 £’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 £’000 2025 £’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 £’000 2025 £’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 £’000 2025 £’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
Investments Cash Debtors Creditors/ Investments Cash Debtors Creditors/
Provisions Provisions
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Indian rupee 113,932 5 63 – 208,458 437 1,061 (13,942)
Hong Kong dollar 62,677 22 – – 17,927 – – –
New Taiwanese dollar 62,215 39 6 – 80,473 – – –
Chinese renminbi 53,538 – – – 53,787 – – –
US dollar 32,493 5 – – 6,508 434 – –
Korean won 31,512 – 94 – 27,060 – 74 –
Singapore dollar 27,626 10 – – 27,286 485 – –
Philippine peso 25,223 – – – 20,251 – – (484)
Indonesian rupiah 22,049 – – – 27,224 – 15 –
Japanese yen 21,612 – – – 23,279 – 29 –
Thai baht 9,020 – – – 9,672 – – –
Malaysian ringgit 6,352 – – – 5,585 – – –
Vietnamese dong 2,404 – – – – – – –
Bangladesh taka 1,900 – – – 2,693 – – –
Euro – 8 – – – 8 – –
Total 472,553 89 163 – 510,203 1,364 1,179 (14,426)
At 31 January 2026 the Company had £4,749,000 of sterling cash balances
(2025: £7,096,000).
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 £’000 2025 £’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 J.P. Morgan Chase Bank, the Custodian. Bankruptcy or insolvency of the
Custodian may cause the Company’s rights with respect to securities held by
the Custodian to be delayed or limited. The Board monitors the Company’s
risk as described in the Strategic Report.
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 JP Morgan Chase Bank.
Bankruptcy or insolvency of such financial institutions may cause the
Company’s ability to access cash placed on deposit to be delayed, limited or
lost.
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 February 1999 to
transfer £24.2 million from the share premium account.
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:
Frostrow Capital LLP (under the Listing Rules
only)
First Sentier Investors (UK) IM Limited (under
the Listing Rules only)
The Directors of the Company.
Details of the relationship between the Company and Frostrow Capital LLP, the
Company’s AIFM, are disclosed on page 41 of the Annual Report. During the
year ended 31 January 2026, Frostrow earned £515,000 (2024: £543,000) in
respect of company management fees, of which £129,000 (2025: 135,000) was
outstanding at the year end.
The Company employs First Sentier Investors (UK) IM Limited as its Portfolio
Manager. Details of this arrangement are disclosed on page 40 of the Annual
Report. During the year ended 31 January 2026, First Sentier earned
£3,757,000 (2025: £4,302,000) in respect of portfolio management fees, of
which £877,000 (2025: £1,081,000) was outstanding at the year end.
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 31 January 2025 and do not
constitute the statutory accounts for that year. The Annual Report for the
year ended 31 January 2025 has been delivered to the Registrar of Companies
and included the Independent Auditor’s Report which was unqualified and did
not contain a statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
The figures and financial information for 2026 are extracted from the Annual
Report and financial statements for the year ended 31 January 2026 and do not
constitute the statutory accounts for the year.
The Annual Report for the year ended 31
January 2026 includes the Independent Auditor’s Report which is unqualified
and does not contain a statement under either section 498(2) or section 498(3)
of the Companies Act 2006.
The Annual Report and financial statements for the year ended 31
January 2026 have not yet been delivered to the Registrar of Companies.
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.
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