asiadragontrust.co.uk

Asia Dragon Trust plc

Annual Report 31 August 2022

Asia Dragon Trust plc

Asia Dragon Trust plc 1

“While the Company cannot be immune to the

global picture or to geopolitical pressures, the

Board remains convinced of the long-term outlook

for Asia and the types of businesses favoured by

your Manager.”

James Will, Chairman

“Our focus remains on quality companies with

sustainable business models, robust finances and

access to structural growth drivers. We continue to

favour fundamental themes like consumption,

technology and green energy, which we believe

will deliver positive results for Shareholders

over the long run.”

Adrian Lim and Pruksa Iamthongthong,

abrdn (Asia) Limited

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE

ATTENTION. If you are in any doubt about the action you should take,

you are recommended to seek your own financial advice from your

stockbroker, bank manager, solicitor, accountant or other financial

adviser authorised under the Financial Services and Markets Act 2000

(as amended by the Financial Services Act 2012) if you are in the

United Kingdom or, if not, from another appropriately authorised

financial adviser. If you have sold or otherwise transferred all your

Ordinary shares in Asia Dragon Trust plc, please forward this

document, together with the accompanying documents immediately

to the purchaser or transferee, or to the stockbroker, bank or agent

through whom the sale or transfer was effected for transmission to

the purchaser or transferee.

2 Asia Dragon Trust plc

Net asset value total return

Net asset value per share

(

8.4

)

% 513.3

2021 +20.5% 2021 566.6p

Share price total return

Share price

(

11.8

)

% 446.0

2021 +24.3% 2021 512.0p

Benchmark total return (in sterling terms) Ongoing charges

(7.1)%

0.84%

2021 +14.7% 2021 0.83%

Earnings per share (revenue) Dividend per share

6.38

6.50

2021 7.36p 2021 6.50p

Considered to be an Alternative Performance Measure. Further details can be found on page 99. 

Net asset value per share Dividends per share Mid-market price per

At 31 August – pence Year ended 31 August - pence At 31 August – pence

421.5

458.0

474.4

566.6

513.3

18 19 20 21 22

4.00

4.75

6.50

18 19 20 21 22

370.0

402.5

416.0

512.0

446.0

18 19 20 21 22

Performance Hi

hli

hts

Asia Dragon Trust plc 3

“ESG factors are considered in all investment

decisions, and also at Board level, where ESG

integration has become an increasingly

important part of our discussions over the course

of the year. The Trust’s portfolio is ESG AA rated

by MSCI, which is higher than the benchmark

rating of A.”

James Will, Chairman

Overview

Financial Calendar, Dividends and Highlights 4



Strategic Report

Chairman’s Statement 8

Investment Manager’s Review 11

Overview of Strategy 15

Our Manager’s Approach to ESG 22

Results 29

Performance 30

Portfolio

Ten Largest Investments 34

Investment Portfolio 35

Changes in Asset Distribution 38

Analysis of Portfolio 39

Investment Case Studies 41

Governance

Board of Directors 44

Directors’ Report 47

Statement of Corporate Governance 51

Audit and Risk Committee’s Report 56

Directors’ Remuneration Report 59

Statement of Directors’ Responsibilities 63

Financial Statements

Independent Auditors’ Report to the Members of Asia

Dragon Trust plc 65



Statement of Comprehensive Income 72

Statement of Financial Position 73

Statement of Changes in Equity 74

Statement of Cash Flows 75

Notes to the Financial Statements 76

Corporate Information

Alternative Performance Measures 98

Information about the Investment Manager 100

Investor Information 101

Glossary of Terms 105

Your Company’s Share Capital History 107

Alternative Investment Fund Managers Directive

Disclosures (Unaudited) 108



General

Notice of Annual General Meeting 110

Corporate Information 117

Contents

4 Asia Dragon Trust plc

Financial Calendar

Pre-AGM Investor Presentation

21 November 2022

Annual General Meeting

9 December 2022

Payment of Final Dividend

16 December 2022

Half year end

28 February 2023

Expected announcement of results for the six months

ending 28 February 2023

April 2023

Financial year end

31 Au

ust 2023

Expected announcement of results for the year ending 31

August 2023

November 2023

Dividends

Rate xd date Record date Payment date

Proposed final 2022 6.50p 10 November 2022 11 November 2022 16 December 2022

Final 2021 6.50p 18 November 2021 19 November 2021 17 December 2021

Financial Calendar,

Dividends and Hi

hli

hts

Asia Dragon Trust plc 5

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Highlights

31 August 2022 31 August 2021 % change

Performance

Total shareholders’ funds (£’000) 614,369 706,929 -13.1

Net asset value per share (capital return basis) (p) 513.32 566.60 -9.4

Net asset value per share (total return basis) (%) –8.4 +20.5

Share price (capital return basis) (p) 446.00 512.00 -12.9

Market capitalisation (£’000) 533,800 638,804 -16.4

MSCI AC Asia (ex Japan) Index (in sterling terms; capital return basis) 1,030.48 1,138.78 -9.5

MSCI AC Asia (ex Japan) Index (in sterling terms; total return basis) (%) –7.1 +14.7

Revenue return per share (p) 6.38 7.36 -13.3

Total return per share (p) (49.53) 96.60 -151.3

Dividend

Dividend per share (p) 6.50 6.50 –

Gearing

Net gearing (%)

9.0 7.9

Discount

Discount to net asset value (%)

13.1 9.6

Operating costs

Ongoing charges ratio

0.84 0.83

Considered to be an Alternative Performance Measure. Further details can be found on pages 98 and 99. 

6 Asia Dragon Trust plc

Strategic

Report

Asia Dragon Trust plc 7

The Company is an investment trust and aims to achieve

long-term capital growth principally through investment

into companies in the Asia Pacific region which are

believed by the Investment Manager to have above

average prospects for growth.

8 Asia Dragon Trust plc

Overview

As Shareholders are more than aware, the last 12 months

have been another challenging and, at times, turbulent

period for investors, with macroeconomic and geopolitical

risks coming to the fore. While Asian markets have proven

more resilient than those of other emerging markets, the

region could not entirely avoid the global concerns of

rising inflation, recession risk and conflict in Europe.

Against this backdrop, the MSCI AC Asia ex Japan fell 7.1%

over the 12 months, while the Company’s net asset value

(NAV) also declined, down 8.4%, on a total return basis.

The Company’s long term performance record remains

intact, outperforming its benchmark and recording a gain,

in NAV terms, of just under 30% in the five years to 31

August 2022.

Covid-19 again dominated the early part of the period

under review, as further lockdown measures hampered

recovery. However, as 2022 has progressed, most

economies have begun to reopen, as governments

ramped up vaccinations and loosened Covid restrictions.

As a result, improving tourism and increasing consumer

spending, due to the release of pent-up demand, have

aided economic recovery. This has particularly benefited

the Company’s holdings in the ASEAN region, with

positions in Indonesia, Singapore, and off-benchmark

holdings in Vietnam among the strongest performers. In

China, however, the ‘zero-Covid’ policy has continued,

dampening domestic activity and impacting global supply

chains. This has also put further pressure on an economy

already struggling with a weak property market and

tighter regulatory conditions. As a result, China was

among the market’s worst performers, albeit your

Company’s holdings have fared better in such a difficult

landscape, reflecting your Manager’s focus on quality and

opportunities with long-term structural growth prospects.

At the time of writing, China’s 20th Party Congress has just

ended with a new seven-strong CPC Politburo Standing

Committee being established. Xi Jinping has clearly

cemented his control of the party and the extent of this

has surprised the market. The Manager discusses this

more in their Review.

Russia’s invasion of Ukraine also contributed to global

inflationary pressures through the disruption of oil supplies,

driving Brent crude above US$100 per barrel at one point.

Supply fears boosted share prices and made Asia’s

energy sector one of the top performers over the period.

This was negative for the Company’s relative returns, as

we have no exposure to the sector. With the global

transition to renewables and growing need for new

energy sources, abrdn (Asia) Limited (the Manager)

favours pockets of opportunity within this segment,

especially the various parts of the supply chains for solar

and auto electrification, including the hardware required

for developing renewable energy.

One of the key themes impacting Asia has been tightening

US monetary policy, exacerbated by the build-up of global

inflationary pressures. The US Federal Reserve

implemented four interest rate increases over 2022, which

continued to drive a de-rating of expensive growth stocks

and a rotation to value for much of the period. While

inflation is lower in most Asian countries than elsewhere,

many central banks, including those in Indonesia, India,

and Korea, have also begun to raise interest rates. The

notable exception here is the People’s Bank of China,

which cut several key lending rates to support the

economy amid significant domestic growth challenges. As

I said in this year’s interim report, prudent policies mean

that most Asian policymakers have monetary and fiscal

room for manoeuvre, which mean they are better able to

mitigate any serious slowdown in growth.

Given the global backdrop, your Manager has assessed

the portfolio to ensure that it includes high-quality stocks

that should prove more resilient to volatile markets,

consolidating exposure into companies that are best able

to withstand tougher operating conditions and seize long-

term structural growth opportunities. Environmental,

social and governance (ESG) factors are also considered

in all investment decisions, and also at Board level, where

ESG integration has become an increasingly important

part of our discussions over the course of the year. The

Trust’s portfolio is ESG AA rated by MSCI, which is higher

than the benchmark rating of A.

You can find more detail on performance and portfolio

activity in the Investment Manager’s Review, and our

approach to ESG in the ESG report.

Chairman’s Statement

Asia Dragon Trust plc 9

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Gearing

The Board believes that the sensible use of modest

financial gearing should enhance returns to shareholders

over the longer term. At the beginning of the financial year

the Company had in place a £75 million three-year loan

facility with Scotiabank Europe plc, of which £25 million

was fixed and fully drawn down with a further £40 million

of the revolving £50 million facility drawn down. The

facility expired in July 2022 and the Board was pleased to

announce that it had entered into loan facilities totalling a

commitment of £60 million with The Royal Bank of

Scotland International Limited, London Branch. The

facilities, which are unsecured, consist of a two-year fixed

facility of £25m, which is fully drawn, and a two year £35m

multi-currency revolving credit facility which has also

been fully drawn.

At 31 August 2022, the Company’s net gearing position

was 9.0%, compared to 7.9% at the end of August 2021.

The Investment Manager continues to monitor closely

gearing levels and bank covenants. As at 28 October

2022, the Company’s net assets stood at £490m and net

gearing was 11.3%. These levels remain comfortably

within the covenant limits.

Discounts and Share Buybacks

The discount level of the Company’s shares is closely

monitored by the Board and the Investment Manager and

share buybacks are undertaken when appropriate. During

the year ended 31 August 2022, 5.1 million shares were

bought back into treasury at a cost of £24.0 million (2021:

1.6 million shares were bought back into treasury at a cost

of £7.7 million). Since 31 August 2022, a further 651,351

shares have been bought back into treasury at a cost of

£2.7 million. The discount at the financial year end was

13.1% (2021: 9.6%). As at 28 October 2022, the discount

was 13.3%.

Revenue Account

The Company’s revenue return per share was 6.38p for

the year to 31 August 2022 (2021 – 7.36p). As reported in

the last annual report, the Company adopted a new policy

for the allocation of management fees and finance costs

during the financial year to 31 August 2021. The new

policy, to allocate 25% to revenue and 75% to capital,

continues to apply to the Company.

The Board has declared a final dividend of 6.5p per

Ordinary share (2021 – 6.5p). The Board has taken the

decision to draw on revenue reserves in order to maintain

the level of dividend to be paid to shareholders. The

dividend, if approved by shareholders at the Annual

General Meeting, will be paid on 16 December 2022 to

shareholders on the register on 11 November 2022.

The Board

The Board regularly undertakes a review of its

performance and structure to ensure that it has the

appropriate mix of relevant skills, diversity and experience

for the effective operation of the Company’s business.

Having served nine years on the Board, the Board was

sorry to see Kathryn Langridge retire at the AGM in

December 2021. However, we were delighted to

welcome Matthew Dobbs as a non-executive Director

with effect from 1 February 2022. Mr Dobbs is a renowned

Asian and Small Companies investment expert and brings

a wealth of knowledge and experience to the Board.

Annual General Meeting

In a return to the familiar format before the onset of

Covid-19, the AGM will, once again, be held in person. The

AGM in 2021 was held in Edinburgh and the Board has

agreed that the AGM in 2022 should be held in London.

The AGM will take place on Friday, 9 December 2022 at

12.00pm at the offices of abrdn plc, in Bow Bells House, 1

Bread Street, London EC4M 9HH.

The AGM provides shareholders with an opportunity to ask

any questions that they may have of either the Board or

the Manager. I look forward to meeting as many of you as

possible over refreshments which will follow the AGM.

Shareholders, whether attending the AGM or not, are

encouraged to submit questions for the Board and/or the

Manager, in advance, by email to asia.dragon@abrdn.com.

10 Asia Dragon Trust plc

Online Shareholder Presentation

In order to encourage as much interaction as possible with

our shareholders, we will be hosting an Online Shareholder

Presentation, which will be held at 11:00am on 21

November 2022. At this event there will be a presentation

from the Investment Manager followed by an opportunity

to ask live questions of the Chairman, Senior Independent

Director and the Investment Manager. The online

presentation is being held ahead of the AGM to allow

shareholders time to submit their proxy votes after the

presentation but prior to the deadline for submitting

proxies for the AGM should they so wish. Full details on

how to register for the online event can be found at

https://www.workcast.com/register?cpak=350184925450

9496.

Outlook

Given the background I referred to above, the

macroeconomic position and geopolitical turbulence are

unlikely to make the overall investment backdrop less

volatile. Asia, however, is still less vulnerable than other

emerging markets, given better economic and corporate

fundamentals. It also has yet to experience the surge in

inflation on the scale seen in the more developed markets

like Europe and the US.

Furthermore, the region is home to companies aligned

with strong long-term structural growth themes, among

them the move to decarbonisation as policy makers

globally commit to a greener future. Other themes

include rising affluence in Asia, increased urbanisation and

an infrastructure boom, and the growth in 5G, big data

and digital interconnectivity.

While it cannot be immune to the global picture or to

geopolitical pressures, the Board remains convinced of

the long-term outlook for Asia and the types of businesses

favoured by your Manager; we support the Manager’s

view that the current environment should see companies

with strong balance sheets and sustainable earnings

prospects well positioned to emerge from the current

difficult period.

James Will

Chairman

31 October 2022

Chairman’s Statement

Continued

Asia Dragon Trust plc 11

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Portfolio review

It has been a year beset by multiple crises for Asian

equities, including the coronavirus resurgence, war in the

heart of Europe and recession risk. China experienced

localised lockdowns under Beijing’s zero-Covid policy,

which disrupted international supply chains and

constrained domestic growth. China’s stance was in

stark contrast to that of other countries in Asia, where

loosened Covid measures led to a gradual re-opening

of their economies.

Meanwhile, Russia’s invasion of Ukraine triggered a

commodity price shock, pushing up already-high inflation

and hastening the reversal of accommodative monetary

policies globally as evidenced by rising interest rates. This,

in turn, deepened concerns over a global recession. In

market terms, rising interest rates resulted in significant

rotation away from growth stocks towards value across

the globe.

Against this background the MSCI Asia ex Japan Index fell

by 7.1% on a total return basis. In comparison, your

Company’s net asset value (NAV) fell by 8.4%. We

continue to take a longer-term view with regard to

investment and our longer-term investment record

remains positive when compared to the benchmark index.

Given the volatile markets it is perhaps unsurprising that

performance was impacted, both positively and

negatively, by more factors than usual. China remains the

Company’s largest individual exposure and, because of

our strong stock selection in the country, it had the largest

positive impact in relative performance terms when

compared to our benchmark. The largest detractor from

performance, again in country terms, was India. In sector

terms, the largest positive contributor was the Food and

Beverages sector and the largest detractor, where we

had no exposure, was the Energy sector. We have sought

to provide more colour on each of these below:

China & Hong Kong

The mainland Chinese market was amongst the worst

regional performers over the period. Strict Covid controls,

regulatory tightening, liquidity concerns around the real

estate sector and continued tensions with the US weighed

on investor confidence, even while extensive policy

support dispelled some of the gloom. Our average

portfolio exposure was somewhat below the benchmark’s

36% China weighting and this, helped by our overweight to

more domestically orientated stocks, aided returns

relative to the index.

This portfolio positioning reflects our focus on key

investment themes such as aspirational spending,

digitalisation, renewable energy, health and wealth.

Although Covid and a slowing economy have placed

short-term pressure on aspirational spending, we believe

the consumption upgrade is a generational shift and one

supported by the government to increase self-sufficiency.

Over the year our stock selection in China contributed

positively to our performance, helped by our bias towards

high-quality companies and an emphasis on these

structural growth opportunities. Among the portfolio’s

standout performers in China were holdings that reflected

our core themes of green energy and aspiration, where

rising affluence spurs demand for premium goods and

services. Nari Technology was buoyed by policy supporting

the development of renewable energy in China. This grid

automation provider, an indirect play on clean energy, is

well placed to benefit from power-grid reform. Liquor

maker Kweichou Moutai defied the market slump thanks

to its pricing power and earnings resilience. The liquor

maker’s brand value gives it significant competitive

advantage in the domestic Chinese market, and we

believe that it is well placed as demand for premium

products and services grow alongside rising incomes from

a growing middle class in China. Other names that

outperformed included Hong Kong companies Budweiser

APAC

which fared well from a share price and demand

perspective, notwithstanding Covid-related disruptions,

and AIA Group which benefited from the economic

reopening outside of China and anticipation of better

investment yields. AIA Group’s premium market position

and diversified pan-Asian revenue sources give it notable

defensive characteristics in the current environment.

Investment Mana

er’s Review

12 Asia Dragon Trust plc

The performance of these stocks offset the negative

impact of a period of regulatory uncertainty around the

Chinese internet sector where we had a number of

holdings. We have consolidated these into our core

holdings, including Alibaba Group, Tencent Holdings and

Meituan. We also built on the small position in JD.com, after

receiving its shares from Tencent Holdings through an in-

specie distribution. JD.com directly procures inventory

which it sells to consumers and delivers primarily via its in-

house logistics network. The company has built up

significant scale and differentiates itself through superior

customer experience. Valuations are attractive, while the

sector’s long-term outlook remains promising. Although

policy changes are disruptive, they could help to create a

better functioning market and more sustainable growth,

which should drive re-ratings for e-commerce companies

over the longer term.

We have been increasing our China A-share exposure

where we see unique longer-term opportunities not

available offshore, particularly those aligned with Beijing’s

strategic objectives. Localisation of supply chains, for

example, has accelerated as a result of China’s pursuit of

self-reliance in critical industries. Battery maker

Contemporary Amperex Technology

(CATL), an earlier

initiation highlighted in the interim report,

is well positioned,

given its economies of scale and know-how, to gain from

China’s push towards electric vehicle (EV) adoption. More

reasonable valuations also allowed us to add to Mindray,

another beneficiary of China’s self-sufficiency drive. The

medical equipment maker’s high-quality diversified

portfolio of products reflects its heavy focus on research

and development. Other noteworthy top-ups include

well-established snack producer Chacha Food, where we

see considerable growth potential given the highly

fragmented industry.

With the recently ended Party Congress in China we

believe that the overall direction remains broadly

unchanged. The main focus remains on the continued

drive for Common Prosperity and technology localisation

efforts to improve resilience and self-sufficiency. Following

the Congress, both onshore and offshore Chinese stock

markets saw a sell-off on the back of concerns that

President Xi could sacrifice economic growth for policies

driven by ideology. In particular, the market was

disappointed at the lack of a specified timeline for bringing

an end to the zero-Covid policy and also the fact that no

detailed stimulus plans were laid out. Taking a step back

and reviewing the economic policies and reform initiatives

of the government over the last few years, these

measures have largely been positive and aimed at better

positioning China for future growth and increasing the

country’s long-term competitiveness. For example, the

deleveraging of the property sector and channelling of

capital to more productive and strategic areas have been

correct, directionally at least. However, these good policy

intentions have at times been plagued by poor execution

which has led to underwhelming outcomes, to say the

least. With a more aligned new leadership team, we

believe execution should be more efficient and effective

going forward but the jury is clearly out at this stage and

geo-political tension has increased, at least in the short

term. The themes that are driving our investments in

China have not been impacted as a result of these political

changes.

India

In India, several of our financial sector holdings added

value. SBI Life Insurance, mortgage lender Housing

Development Finance Corp

(HDFC)

and Kotak Mahindra

Bank all outperformed, helped by higher interest rates and

the economic reopening. Separately, we believe HDFC’s

merger with subsidiary HDFC Bank will drive scale

efficiencies and create new growth opportunities for the

group over the medium term. These contributions,

however, failed to offset the overall negative impact of our

India exposure on portfolio performance. Stock selection

in India – notably the lack of exposure to Reliance

Industries – was the key driver of underperformance. The

conglomerate rallied on higher oil prices and expectations

of stronger refining margins. Additionally, our small

position in online insurance platform PB Fintech

suffered

due to the rotation away from growth stocks, referred to

above.

We remain sanguine about India which is home to many

quality companies underpinned by structural tailwinds. A

salient introduction over the year was Power Grid

Corporation of India. The power transmission company will

play a prominent role in the growth of renewable energy

delivery to the grid in the decades ahead as India shifts to

clean energy. We also added Infosys, a leading software

developer backed by strong management, solid financials

and a sustainable business model. We view both firms’

openness to engaging with us on ESG matters favourably.

With regard to the portfolio, as a whole, we have a strong

conviction that sound ESG credentials can both

complement a company’s quality and reduce portfolio

risks while improving long-term returns. A comprehensive

report of our active engagement with the Trust’s

underlying companies can be found on pages 23 to 25.

Investment Mana

er’s Review

Continued

Asia Dragon Trust plc 13

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Energy

The Trust’s zero exposure to energy detracted from

performance as energy prices surged following the

outbreak of war in the Ukraine. We are wary of the cyclical

nature of earnings that typifies the sector, as well as the

significant State interference in many national oil

companies. The Ukraine war has also highlighted the

vulnerability of an over-dependence on fossil fuels and

accelerated the global adoption of renewable energy,

which is a clear structural trend over the medium to long

term. Hence, our preferred exposure to energy is through

the renewables space via investments in renewable

energy, batteries, the EV supply chain and related

infrastructure; these do not feature in the MSCI’s Energy

sector. The global green-energy transition is well

underway, and Asia is dominant in the clean energy

supply chain. In addition to the aforementioned CATL and

Nari, we are positive on China-based Longi Green Energy

Technology, the world’s largest solar wafer maker, and

Sungrow, a global supplier of solar inverters. We added to

both of the latter two over the year as their many

strengths include a formidable cost advantage and

superior product quality.

Financials

Financial stocks are traditionally among the beneficiaries

of a rising interest rate environment. As well as in India, the

Trust’s exposure in this area was positive in Southeast Asia,

as the region’s belated relaxation of Covid restrictions

resulted in growth during the year. Our long-held

conviction in Indonesia and Singapore was especially

rewarding. Indonesia’s Bank Central Asia

and Singapore

lenders DBS Group and OCBC advanced on higher interest

rates and improving economic growth. We added to them

over the period as rising interest rates should boost net

interest margins. They are already seeing improving asset

quality metrics and increased demand for loans as

restrictions ease.

Other Portfolio Activity

The growth company sell-off impacted our holdings in

South Korean internet application provider Kakao Corp

and Taiwan-listed integrated circuit maker Silergy Corp.

Meanwhile, market turmoil led to opportunities to add

some new names to the portfolio. Apart from Thailand’s

Kasikornbank, which we detailed in the interim report,

more recent additions included Astra International and

Singtel. Astra is a well-managed conglomerate; as well as

being the industry leader in cars and motorcycles, it is also

a strong player in auto financing, mining services,

plantations and infrastructure. Telecom operator Singtel

has steady operations in Singapore and Australia, while its

regional franchises are exposed to growth in Asia’s

emerging markets. The company offers a healthy

dividend yield, buttressed by sound financials and cash

flow, with new leadership executing well on more efficient

capital allocation and management.

To help to navigate the near-term challenges we took a

number of other actions. We trimmed our technology

exposure as recession risks clouded the demand outlook,

especially for the semiconductor hardware segment, with

sales of ASM Pacific Technology, Accton Technology and

GlobalWafers. We are also monitoring the broader cost

inflation picture and its subsequent impact upon

corporate profitability. We have scrutinised our holdings,

ascertaining their ability to pass on cost pressures and

protect their margins. Accordingly, we trimmed and exited

positions in companies that could be more vulnerable in

the rising cost environment, with Midea and Wanhua

Chemical among the divestments.

Outlook

Volatility has been a feature of global stock markets in

recent years. That appears unlikely to change any time

soon. Markets continue to face a daunting set of

challenges: rising interest rates to stem inflation,

geopolitical risk, energy and food crises, and an

increasingly fragile world economy.

Asia will not be immune to global developments. The good

news is that the region is likely to be in a better position

than developed economies in the West. The pace at

which consumer prices are rising across most parts of Asia

is still relatively slow; this has allowed central banks to

adopt a more gradual stance in raising interest rates to

stem inflationary pressures.

On a related point, this difference in the pace of interest

rate increases between the developed West and Asia is

also resulting in US dollar strength, with US dollar assets

yielding more, and relative Asian currency weakness. We

have seen some Asian central banks intervene in the

foreign exchange market to support their domestic

currencies, some of which have fallen to multi-year lows

against the US dollar.

14 Asia Dragon Trust plc

On the ground, we are receiving more reports from our

holdings of rising input costs and the pressure on margins

but, encouragingly, the earnings of many of our holdings

have met our expectations in the latest results reporting

season. This environment reinforces the importance of

innovation, a premiumisation strategy, brand equity

and/or channel control.

We should also not forget that many economies,

particularly those in South-East Asia, are still recovering

following their post-Covid reopening, and this should help

to support earnings.

China continues to be a cause of market angst, with

Beijing’s zero-Covid policy a key overhang. However, we

are cautiously upbeat about its outlook. The country

remains an outlier in the global tightening cycle thanks to

benign inflation. We expect a continued recovery in

economic activity as monetary easing and stimulus

measures take effect. The next few months should also

provide greater clarity on the policy front, and we think the

central government will continue with measures to

support and stabilise the economy.

More broadly, we would highlight that valuations of Asian

stocks are attractive, below the long-term average and

below the valuations of US and global markets.

Against this backdrop, we have sought to position the

portfolio to weather near-term risks while keeping in mind

Asia’s long-term structural trends. Our focus remains on

quality companies with sustainable business models,

robust finances and access to structural growth drivers.

We continue to favour fundamental themes like

consumption, technology and green energy, which we

believe will deliver positive results for Shareholders over

the long run.

Adrian Lim and Pruksa Iamthongthong

abrdn (Asia) Limited

31 October 2022

Investment Mana

er’s Review

Continued

Asia Dragon Trust plc 15

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Business Model

The business model of the Company is to operate as an

investment trust for UK capital gains tax purposes in line

with its investment objective. The Directors are of the

opinion that the Company has conducted its affairs for the

year ended 31 August 2022 so as to enable it to comply

with the relevant eligibility conditions for investment trust

status as defined by Section 1158 of the Corporation Tax

Act 2010.

Investment Policy

The Company’s assets are invested in a diversified

portfolio of securities in quoted companies spread across

a range of industries and economies in the Asia Pacific

region, excluding Japan and Australasia. The shares that

make up the portfolio are selected from companies that

have proven management and whose shares are

considered to be attractively priced. The Company invests

in a diversified range of sectors and countries. Investments

are not limited as to market capitalisation, sector or

country weightings within the region.

The Company’s policy is to invest no more than 15% of

gross assets in other listed investment companies

(including listed investment trusts).

The Company complies with Chapter 4 of Part 24 of the

Corporation Tax Act 2010 and the Investment Trust

(Approved Company) (Tax) Regulations 2011 and does

not invest more than 15% of its assets in the shares of any

one company.

When appropriate the Company will utilise gearing to

maximise long-term returns, subject to a maximum

gearing level of 20% of net assets imposed by the Board.

The Company does not currently utilise derivatives but

keeps this under review.

Company Benchmark

The total return of the MSCI All Country Asia (ex Japan)

Index (sterling adjusted).

Alternative Investment Fund Manager

(“AIFM”)

The AIFM is abrdn Fund Managers Limited, called

Aberdeen Standard Fund Managers Limited until 31 July

2022, (aFML or the “Manager”) which is authorised and

regulated by the Financial Conduct Authority.

The Company's portfolio is managed on a day-to-day

basis by abrdn (Asia) Limited (“abrdn Asia” or the

“Investment Manager”) by way of a delegation

agreement. abrdn Asia and aFML are both wholly owned

subsidiaries of abrdn plc.

Achieving the Investment Policy

and Objective

The Directors are responsible for determining the

investment policy and the investment objective of the

Company. Day-to-day management of the Company’s

assets has been delegated to the Investment Manager.

The Investment Manager follows a bottom-up investment

process based on a disciplined evaluation of companies

through direct contact by its fund managers and analysts.

Stock selection is the major source of added value. No

stock is bought without the Investment Manager having

first met management, either in person, where possible, or

virtually. The Investment Manager evaluates a company’s

worth in two stages: quality then price. Quality is defined

by reference to management, business focus, the balance

sheet and corporate governance. Price is evaluated by

reference to key financial ratios, the market, the peer

group and business prospects. Stock selection is key in

constructing a diversified portfolio of companies.

For the purposes of achieving the Investment Policy and

Objective, the Investment Manager is permitted to invest

up to 30% of the portfolio in companies which are not

listed in the Asia Pacific region but which generate more

than 50% of annual turnover or revenue in the region.

A comprehensive analysis of the Company’s portfolio by

country and by sector is disclosed on pages 39 and 40,

including a description of the ten largest investments, the

full investment portfolio by value and sector/geographical

analysis. At 31 August 2022, the Company’s portfolio

consisted of 61 holdings.

Gearing is used to leverage the Company’s portfolio in

order to enhance returns when this is considered

appropriate to do so. At 31 August 2022, the Company’s

net gearing was 9.0%.

Overview of Strate

16 Asia Dragon Trust plc

Principal and Emerging Risks and

Uncertainties

The Board carries out a regular review of the risk

environment in which the Company operates, changes to

the environment and individual risks. There are a number

of other risks which, if realised, could have a material

adverse effect on the Company and its financial condition,

performance and prospects. The Board has considered

the Company’s principal and emerging risks, which

include those that would threaten its business model,

future performance, solvency, liquidity or reputation.

The Company’s risks are regularly assessed by the Audit &

Risk Committee and managed by the Board through the

adoption of a risk matrix which identifies the key risks for

the Company, including emerging risks, and covers

strategy, investment management, operations,

shareholders, regulatory and financial obligations and

third-party service providers.

The principal risks and uncertainties facing the Company,

which have been identified by the Board, are described in

the table below, together with the mitigating actions.

The Board notes that there are a number of contingent

risks stemming from the global geo-political environment

that may impact the operation of the Company.

Inflation and the resultant volatility that it created in global

stock markets was a key risk during the financial year, as

well as the ongoing tensions between China and Taiwan,

China and the West, and the Russian invasion of Ukraine,

all of which created geo-political uncertainty which

further increased market risk and volatility. The impact of

the global pandemic and the risk of its return remain, not

least in China where a zero-covid policy continues to stifle

economic activity.

The Board is also very conscious of the risks resulting from

the increased ESG challenges. The recent scrutiny of

human rights violations in China by Western governments

is one example of the need for continued vigilance and

engagement regarding supply chains and the fair

treatment of workers. Likewise, as climate change

pressures increase, the Board continues to monitor,

through its Manager, the potential risk that investee

companies may fail to maintain acceptable standards.

In all other respects, the Company’s principal risks and

uncertainties have not changed materially since the date

of this Annual Report and are not expected to change

materially for the current financial year.

Risk Mitigating Action

Major market event or geo-political risk

The Company is exposed to stockmarket

volatility or illiquidity as a result of a major

market shock due to a national or global crisis.

The impact of such risks, associated with the

portfolio or the Company itself, could result in

disruption of the operations of the Company

and losses.

Risk Increased during the year

Exogenous risks over which the Company has no control are always a risk. The

Company does what it can to address these risks where possible, not least

operationally and to try and meet the Company’s investment objectives.

As part of its investment processes, the Manager regularly assesses the

Company’s portfolio as a whole, and each constituent part, and, during the

financial year, remained in close communication with the underlying investee

companies in order to navigate and guide the Company through

macroeconomic and geopolitical challenges.

The Manager’s focus on quality companies with sustainable business models

and robust finances, the diversified nature of the portfolio and a managed level

of gearing all serve to provide a degree of protection in times of market volatility.

Unacceptable Discount Volatility

Failure to manage the discount effectively or an

inappropriate marketing strategy could result in

the Company’s share price trading at a

discount to its underlying net asset value and

reduced investor sentiment.

Risk Increased during the year

The Board monitors the discount level of the Company’s shares and has in place

a buyback mechanism whereby the Manager is authorised to buy back shares

within certain limits. The macroeconomic and geopolitical challenges during the

year led to volatility in equity markets and a widening of the Company’s share

price discount to NAV. As a result, the Company bought back 5.1 million shares

into treasury. The Board and Manager communicate with major shareholders

regularly to gauge their views on the Company, including discount volatility.

Overview of Strate

Continued

Asia Dragon Trust plc 17

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Risk Mitigating Action

Investment Performance

The Company’s investment performance is the

most critical factor to the Company’s long-term

success. Sustained underperformance may

result in reduced demand for the Company’s

shares and loss of investor confidence.

Risk Unchanged during the year

The Board continually monitors the investment performance of the Company,

taking account of stockmarket factors, and reviews the Company’s

performance compared to its benchmark index and peer group at every

Board Meeting.

A formal annual review is undertaken by the Management Engagement

Committee. In addition to its own due diligence, the Board has previously used

consultants to provide an independent perspective on the Manager’s process

and performance.

The Board and Manager communicates with major shareholders regularly to

gauge their views on the Company, including performance.

At the AGM in 2021, shareholders voted in favour of the introduction of a

performance-related conditional tender offer, which will take place every five

years. The first performance-related period runs from 1 September 2021 to

31 August 2026.

Concentration Risk

Trading volumes in certain securities of

emerging markets can be low. The Investment

Manager may accumulate investment positions

across all its managed funds that represent a

significant multiple of the daily trading volumes

of an investment which may result in a lack of

liquidity and price volatility. Accordingly, the

Company will not necessarily be able to realise,

within a short period of time, an illiquid

investment and any such realisation that may

be achieved may be at considerably lower

prices than the Company’s valuation of that

investment for the purpose of calculating the

NAV per Ordinary share.

Risk Unchanged during the year

The Board reviews, on a regular basis, the Manager’s total holdings for each

stock within the Company’s portfolio and the liquidity of these stocks. The Board

also considers the portfolio’s stock, sector and country concentration to ensure

that the portfolio is suitably diversified and exposure is not overly concentrated in

any particular region or sector.

Resource

The Company is an investment trust and has no

employees. The responsibility for the provision

of investment management, marketing and

administration services for the Company has

been delegated to the AIFM, abrdn Fund

Managers Limited, under the management

agreement. The terms of the management

agreement cover the necessary duties and

conditions expected of the Manager. As a result,

the Company is dependent on the

performance of the AIFM.

Risk Unchanged during the year

The Board reviews the performance of the Manager on a regular basis and its

compliance with the management contract formally on an annual basis. As part

of that review, the Board assesses the Manager’s succession plans, risk

management framework and marketing activities.

18 Asia Dragon Trust plc

Risk Mitigating Action

Operational

The Company is dependent on a number of

third-party providers, in particular those of the

Manager, depositary and registrar. Failure by

any service provider to carry out its contractual

obligations could have a detrimental impact

or disruption on the Company operations,

including that caused by information

technology breakdown or other

cyber-related issues.

Risk Unchanged during the year

The Audit & Risk Committee reviews reports from the Manager on its internal

controls and risk management (including an annual ISAE Report) and considers

assurances from all its other significant service providers on at least an annual

basis, including on matters relating to business continuity and cyber security. The

Audit & Risk Committee meets representatives from the Manager’s Compliance

and Internal Audit teams on at least an annual basis and discusses any findings

and recommendations relevant to the Company. Written agreements are in

place with all third-party service providers.

The Manager monitors closely the control environments and quality of services

provided by third parties, including those of the Depositary, through service level

agreements, regular meetings and key performance indicators.

A formal appraisal of the Company’s main third-party service providers is

carried out by the Management Engagement Committee on an annual basis.

The operational requirements of the Company, including its service providers,

were subject to rigorous testing during the Covid-19 pandemic, including

increased use of online communication and out of office working and reporting.

Gearing

As at 31 August 2022 the Company had £60

million of bank borrowings. Gearing has the

effect of exacerbating market falls and gains.

Risk Unchanged during the year

In order to manage the level of gearing, the Board has set a maximum gearing

ratio of 20% of net assets and receives regular updates from the Manager on the

actual gearing levels the Company has reached together with the assets and

liabilities of the Company and reviews these at each Board meeting.

Regulatory

The Company operates in a complex

regulatory environment and faces a number of

regulatory risks. Serious breaches of regulations,

such as the tax rules for investment companies,

the UKLA Listing Rules and the Companies Act.

Risk Unchanged during the year

The Board receives updates on relevant changes in regulation from the

Manager, industry bodies and external advisers and the Board and Audit & Risk

Committee monitor compliance with regulations by review of internal control

reports from the Manager. Directors are encouraged to attend relevant external

training courses.

The principal risks associated with an investment in the Company’s shares can be found in the pre-investment disclosure

document (“PIDD”) published by the Manager, which is available from the Company’s website:

www.asiadragontrust.co.uk.

Overview of Strate

Continued

Asia Dragon Trust plc 19

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Performance

Key Performance Indicators

At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in

achieving its objectives. The key performance indicators (“KPIs”) are established industry measures and are as follows.

KPI Description

Net asset value and share price (total return) The Board monitors the NAV and share price performance of the Company over

different time periods. Performance figures for one, three and five years are

provided in the Results section on page 29.

Performance against benchmark Performance is measured against the Company’s benchmark, the MSCI All

Country Asia (ex Japan) Index (in sterling terms), on a total return basis. Charts

showing the Company’s performance against benchmark by quarter during the

financial year, and over one, three and five years, and are shown on page 30.

The Board also considers peer group comparative performance over a range of

time periods, taking into consideration the differing investment policies and

objectives employed by those companies.

Discount/Premium to net asset value The discount/premium relative to the NAV represented by the share price is

closely monitored by the Board. The objective is to avoid large fluctuations in the

discount relative to similar investment companies investing in the region by the use

of share buy backs subject to market conditions. A graph showing the share price

discount relative to the NAV is shown on page 31.

Further analysis of the above KPIs is provided in the Chairman’s Statement.

Promoting the Success of the Company

The Board is required to report on how it has discharged

its duties and responsibilities under section 172 of the

Companies Act 2006 (the “s172 Statement”). Under

section 172, the Directors have a duty to promote the

success of the Company for the benefit of its members as

a whole, taking into account the likely long-term

consequences of decisions, the need to foster

relationships with the Company’s stakeholders and the

impact of the Company’s operations on the environment.

The Company consists of five Directors and has no

employees or customers in the traditional sense. As the

Company has no employees, the culture of the Company

is embodied in the Board of Directors. The Board seeks to

promote a culture of strong governance, high standards

of business conduct and to challenge, in a constructive

and respectful way, the Company’s third-party service

providers and advisers, whilst considering the impact on

the Company and other stakeholders.

The Board’s principal concern has been, and continues to

be, the interests of the Company’s shareholders and

potential investors and the need to act fairly between

shareholders. The Manager undertakes an annual

programme of meetings with the largest shareholders

and investors and reports back to the Board on issues

raised at these meetings. The Investment Manager, who is

based in Singapore, will attend such meetings, where

possible. The Board encourages all shareholders to attend

and participate in the Company’s AGM and Pre-AGM

Investor Event and shareholders can contact the Directors

via the Company Secretary Shareholders and investors

can obtain up-to-date information on the Company

through its website and the Manager’s information

services and have direct access to the Company

through the Manager’s customer services team or the

Company Secretary.

As an investment trust, a number of the Company’s

functions are outsourced to third parties. The key

outsourced function is the provision of investment

management services to the Manager and other third-

party providers support the Company by providing

secretarial, administration, depositary, custodial, banking

and audit services.

20 Asia Dragon Trust plc

The Board undertakes a robust evaluation of the Manager,

including investment performance and responsible

ownership, to ensure that the Company’s objective of

providing capital growth for its investors is met, whilst

taking ESG factors into account. The Board typically visits

the Manager’s offices in Singapore on an annual basis.

This enables the Board to conduct due diligence of the

fund management and research teams. Due to the travel

restrictions arising from the Covid-19 pandemic during

the financial year, the Board undertook a virtual visit to the

region to conduct due diligence on the fund management

and research teams. The Board met with the senior

management team and the fund management team and

attended virtual investee company meetings alongside

the Manager.

The portfolio activities undertaken by the Manager on

behalf of the Company can be found in the Investment

Manager’s Review and details of the Board’s relationship

with the Manager and other third-party providers,

including oversight, is provided in the Statement of

Corporate Governance.

During the year, the Board focused on the performance of

the Manager in achieving the Company’s investment

objective within an appropriate risk framework. In addition

to ensuring that the Company’s investment objective was

being pursued, a number of key decisions and actions

were undertaken by the Directors as follows:

· The Board has declared a final dividend of 6.5p per

Ordinary share (2021 – 6.5p) which, if approved by

shareholders at the Annual General Meeting, will be paid

on 16 December 2022.

· The Board has continued to consider Board succession

planning, as it recognises the benefits of regular Board

refreshment, and appointed Matthew Dobbs as a new

non-executive director on 1 February 2022, following

the retirement of Kathryn Langridge at the Company’s

AGM in December 2021.

· To continue the Board’s discount control policy through

the buyback of shares which provides a degree of

liquidity to the market at times when the discount

widens.

· The Board continues to believe that the sensible use of

modest financial gearing should enhance returns to

shareholders over the longer term. The Company has in

place loan facilities totalling a commitment of £60 million

with The Royal Bank of Scotland International Limited,

London Branch. The facilities, which are unsecured,

consist of a two-year fixed facility of £25m, which is fully

drawn, and a two year £35m multi-currency revolving

credit facility which has also been fully drawn.

· The Board continues to alternate the location of its AGM

between Edinburgh and London to allow the Board to

physically meet with shareholders in different locations.

In order to encourage as much interaction as possible

with shareholders, the Board has agreed to host an

Online Shareholder Presentation, in advance of the

AGM, to allow as many shareholders as possible to

engage with, and ask questions of, the Board.

In summary, the Directors are cognisant of their duties

under section 172 and decisions made by the Board take

into account the interests of all the Company’s key

stakeholders and reflect the Board’s belief that the long-

term sustainable success of the Company is linked directly

to its key stakeholders.

Duration

The Company does not have a fixed life, but shareholders

are given the opportunity to vote on the continuation of

the Company at every fifth Annual General Meeting. The

last continuation vote was passed at the AGM on 15

December 2021. The frequency of continuation votes was

extended from triennial continuation votes to five-yearly

continuation votes at the AGM in 2021 in order to align

them with the assessment period for performance-

related conditional tender offers approved by

shareholders at the AGM in 2021. The next performance

related conditional tender offer will cover the period from

1 September 2021 to 31 August 2026 and the continuation

vote is due to take place at the AGM in December 2026.

Board Diversity

The Board’s statement on diversity is set out in the

Statement of Corporate Governance. At 31 August 2022

there were three male Directors and two female Directors.

Environmental, Social and Human

Rights Issues

The Company has no employees and therefore no

disclosures are required to be made in respect of

employees.

More information on socially responsible investment is set

out on pages 22 to 28.

Overview of Strate

Continued

Asia Dragon Trust plc 21

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Viability Statement

In accordance with the provisions of the Listing Rules and

UK Corporate Governance Code the Board has assessed

the viability of the Company. The Company is a long-term

investor, and the Board believes it is appropriate to assess

the Company’s viability over a five year horizon which

reflects the Investment Manager’s long-term approach.

The Directors believe this period reflects a proper balance

between the long-term horizon and the inherent

uncertainties of looking to the future. This conclusion is

consistent with Going Concern Assessment on page 48.

In assessing the viability of the Company, the Directors

have carried out a robust assessment of the

following factors:

· the principal risks set out in the Strategic Report on

pages 16 to 18 and the steps available to mitigate these

risks;

· the liquidity and diversity (in both sector and

geography) of the Company’s investment portfolio. The

Company is invested in readily realisable listed securities

in normal market conditions and there is a spread of

investments held. Stress testing has confirmed that

shares can be easily liquidated, despite the more

uncertain and volatile economic environment;

· the level of revenue surplus generated by the Company;

· the level of gearing is closely monitored by the Board.

Covenants are actively monitored and there is

adequate headroom in place. The Company has a fixed

term loan facility of £25 million and a multi-currency

revolving loan facility of £35 million in place until July

2024. The Company has the ability to repay its gearing

through proceeds from equity sales or renew the facility,

depending on market conditions and requirements at

that time; and

· the successful passing of the continuation vote at the

Company’s AGM in 2021, the change of frequency of

continuation vote from every three years to every five

years (with the next continuation vote due to take place

at the AGM in 2026), and the introduction of the five-

yearly performance-related conditional tender.

Taking into account all of these factors, the Company’s

current position and the potential impact of the principal

risks and uncertainties faced by the Company, the Board

has concluded that it has a reasonable expectation that

the Company will be able to continue in operation and

meet its liabilities as they fall due over the five year period

of this assessment to 31 August 2027.

In making its assessment, the Board has considered that

there are other matters that could have an impact on the

Company’s prospects or viability in the future, including

the current rising inflation, recession risk, a further increase

in geo-political tension in the Asian region, war in Ukraine,

economic shocks or significant stock market volatility

caused by other factors, and changes in regulation or

investor sentiment.

The Strategic Report has been approved by the Board and

signed on its behalf by:

James Will,

Chairman

31 October 2022

22 Asia Dragon Trust plc

The Company aims to outperform whilst maintaining a

better ESG profile and a lower carbon footprint than the

benchmark. In response to a number of questions, the

Board has expanded the “Our Manager’s Approach to

ESG” in the Annual Report to present more information on

the Investment Manager’s approach to integrating ESG

into its investment decision-making and the implications

for the Trust.

ESG Highlights for Asia Dragon

· We have been actively integrating ESG into our

investment decision-making process for 30 years and

believe that ESG factors are financially material and can

meaningfully affect a company’s performance

· Deep, on the ground ESG resources and expertise

enable us to glean insights from company visits and

obtain an ESG information advantage

· The Trust’s portfolio is ESG AA rated by MSCI

· The Trust’s carbon footprint is 48% of its benchmark

What is ESG?

· Environmental factors relate to how a company

conducts itself with regard to environmental impact and

sustainability. Types of environmental risks and

opportunities may include a company’s energy and

water consumption, waste disposal, land use and

development and its carbon footprint.

· Social factors pertain to a company’s relationship with its

employees, vendors, and a broad set of societal

stakeholders. Risks and opportunities include conditions

and rates of pay, the company’s initiatives on employee

attraction and retention, gender discrimination and how

a company is managing its supply chain, including for

example the risk of forced and child labour.

· Corporate Governance factors may include the

corporate decision-making structure, the

independence of board members, treatment of

minority shareholders, executive compensation and

political contributions, capital allocation and the risk of

bribery and corruption.

The Manager’s 30 Year Leadership in ESG activities



Our Mana

er’s Approach to ESG

Asia Dragon Trust plc 23

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

ESG at abrdn in Asia

The abrdn Sustainability Institute, in Asia Pacific, was

launched in September 2021. Bringing together

sustainability experts from across the firm, the Institute’s

objectives are to deliver Asia Pacific-centric sustainability

solutions and insights, build an Asia Pacific sustainable

investing knowledge community and contribute to

progress in regional sustainable investing.

Over the past year, we have ramped up our sustainable

investing capabilities in Asia Pacific, doubling our

dedicated sustainability resources from five to 10

colleagues across various teams. In addition, under our

‘Grow Sustainably’ learning & development program, we

hired 10 interns for sustainability-focused roles across

investment desks, research, marketing and compliance

teams in Singapore, Malaysia and Australia and are

supporting them through external qualifications. In

addition, two scholarships were granted for colleagues to

attend online courses.

In May 2022, we held our first ever abrdn Sustainability

Week, also celebrating our 30 years of investing in Asia

Pacific. The week culminated with the abrdn Sustainability

Summit, a one-day hybrid conference bringing together

colleagues, clients and partners from Singapore and

across the region. Insights from the conference were

shared with the broader public in our regular Thinking

Aloud articles. We also held our first leadership roundtable

in Singapore, to discuss climate change and net-zero

alignment in Asia Pacific with key clients and our subject-

matter experts. Going forward, we will seek to replicate

this roundtable across our key regional markets.

Our Investment Process

Our investment process considers both macro and

micro ESG issues.

· Macro ESG factors are broad thematic issues that

impact companies and the products and services they

provide. These include issues like climate change,

access to finance or access to healthcare. These are

secular, industry-impacting trends that may present a

clear risk or opportunity for a company.

· Micro ESG factors are company/industry specific issues

that relate to how a company’s products or services are

made or delivered.

Our five stages of ESG integration:

· Idea generation: Understanding themes and dynamics

inherent in sectors, countries, and companies, we are

able to use ESG as a lens to generate new investment

ideas for the portfolio. This could include companies that

are well placed to help in climate transition or

companies that are managing their supply chain in a

way that makes them more attractive to global clients.

· Research: ESG disclosure by companies in Asia tends to

be lower quality than might be observed in Europe or

North America but while such disclosure means it may

be challenging to collect information, it also means that

extensive company due diligence by us can create

investment opportunities.

· Buy / sell: At this stage we must weigh the decision to

buy (or sell) a company. We have a quality threshold for

investment and ESG is a fundamental and non-

negotiable part of this.

· Portfolio Construction: Whilst a simplification, the better

quality a company, and the more conviction we have in

the company, the more of that company we might elect

to buy (whilst being sensitive to valuations). ESG is a key

part of the discussion around ‘position sizing’, or just how

much of a company to buy.

· Engagement: We continue discussing ESG issues with

senior management over the course of the investment,

both to protect and to enhance the value of investments

through constructive challenge and debate around

strategy and execution, with the mutual aim of fostering

sustainable shareholder returns.

The Importance of Engagement

We believe that informed and constructive engagement

helps to foster better companies, enhancing the value of

the Trust’s investments. We are committed to regular,

ongoing engagement with companies to help maintain

and enhance their ESG standards into the future. These

meetings provide an opportunity to discuss various

relevant ESG issues including board composition,

remuneration, audit, climate change, labour issues, human

rights, bribery and corruption. Companies are strongly

encouraged to set clear targets or key performance

indicators on all material ESG risks so as to enable

performance monitoring. Discussions cover both risk and

opportunities; we constructively challenge management

teams on issues relating to strategy and execution, as well

as capital allocation and return.

24 Asia Dragon Trust plc

Moreover, and since ESG disclosure by Asian companies is

often poor, these engagements give us an opportunity to

source additional information and potentially to:

· Exploit an information gap: if a company does not

disclose ESG information and the market is unable to

form a robust view of its quality, its shares may be priced

inefficiently. Using our research capabilities including on-

site, face to face visits, we are able to develop an

informed view of every company and to exploit any

pricing inefficiency that we judge may exist.

· Close the information gap: if we own a company that is

misunderstood by the market, we can work

constructively with the company’s management team

to encourage improved and enhanced disclosure,

allowing the market to better understand, and hence

better price, the company’s securities.

Considering Trust specific examples, the Trust owns

shares in Budweiser Brewing Company APAC Ltd., a

company which listed in Hong Kong in 2019. Whilst we

viewed the company as high quality, MSCI had awarded

the company a BB rating, an overly negative view of the

company in our view (and well below our internal rating).

Since listing in 2019 we have engaged with the company

to better understand it’s approach to issues including

water stress management, encouraged the company to

disclose more information, and spoken with MSCI to

encourage them to recognise the quality of the group.

These efforts resulted in a series of upgrades by MSCI,

from BB to BBB in October 2020, from BBB to A in

December 2021, and from A to AA in June 2022 .

The same is true of China Resources Land, recently

upgraded MSCI from BBB to A, continuing a series of

upgrades which saw the firm upgraded from B to BB

(October 2020), from BB to BBB (August 2021), and from

BBB to A (August 2022). This is very pleasing given we had

been engaging with the group to improve their disclosure

– and hence receive scores that reflected the ESG quality

of the firm – for a number of years now.

ESG engagements are conducted with consideration of

the 10 principles of the United Nations Global Compact

and companies are expected to meet fundamental

responsibilities in the areas of human rights, labour, the

environment and anti-corruption.

Engagement is not limited to a company’s management

team. It can include many other stakeholders such as

non-government agencies, industry and regulatory

bodies, as well as activists and the company’s customers

and clients. During the period under review the breadth of

issues covered in ESG specific company engagements for

the Trust covered Climate Change (including air quality

and energy management), Environment (including waste

and waste management, and supply chain

management), Labour Management (including health

and safety), Human Risk & Stakeholders, Corporate

Behaviour (including Practices and Processes) and

Corporate Governance. The split of time spent engaging

on each topic can be broken down as follows:

Our Mana

er’s Approach to ESG

Continued

Asia Dragon Trust plc 25

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

ESG Engagement

Our Engagement Activity

We regularly engage with companies we invest in. The

below shows the engagements that have included ESG

topics. Over the period we met with 38 portfolio

companies on ESG topics and had 62 engagements with

them. This does not include positions we have moved out

of or are considering. Below are the themes engaged on:

Our Voting Activity

Voting Summary Total

How many meetings were you eligible to vate at? 125

How many meetings did you vote at? 123

How many resolutions were you eligible to vote on? 1,040

What % of resolutions did you vote on for which you

were eligible?

98.1%

Of the resolutions on which you voted, what % did

you vote with management?

92.1%

Of the resolutions on which you voted, what % did

you vote against management?

6.4%

Of the resolutions on which you voted, what % did

you abstain from voting?

1.6%

In what % of meetings, for which you did vote, did

you vote at least once against management?

35.0%

Measurement of ESG, including our Proprietary ESG Scoring System

Some ESG issues can be quantified, for example the diversity of a board, the carbon footprint of a company, and the

level of employee turnover. But not everything that matters can be measured. While diversity can be monitored,

measuring inclusion is more of a challenge. Although it is possible to measure the level of staff turnover, it is more

challenging to quantify corporate culture. Nevertheless, after researching and analysing a company, and after

meeting senior management, we allocate a company an ESG score of between one and five. This score of one to

five is applied across every stock covered globally. Examples of each category and a small sample of the criteria

used are detailed below:

1. Best in class 2. Leader 3. Average 4. Below average 5. Laggard

ESG considerations are

material part of the

company’s core

business strategy

Excellent disclosure

Makes opportunities

from strong ESG risk

management

ESG considerations

not market leading

Disclosure is good, but

not best in class

Governance is

generally very good

ESG risks are

considered as a part of

principal business

Disclosure in line with

regulatory

requirements

Governance is

generally good but

some minor concerns

Evidence of some

financially material

controversies

Poor governance or

limited oversight of key

ESG issues

Some issues in treating

minority shareholders

poorly

Many financially

material controversies

Severe governance

concerns

Poor treatment of

minority shareholders

Climate

Environment

Labour Management,

Diversity & Inclusion

Human Rights &

Stakeholders

Corporate Behaviour

Corporate Governance

26 Asia Dragon Trust plc

We also make use of third party ESG data for two primary reasons:

· To help build a view of a company: third party ESG data provides insights into a company based on that company’s

disclosure. Whilst that disclosure may have limits there is still merit in reading research from a speciality researcher. We

buy in research as a “sense check” against internal analysis to ensure that issues or developments are not missed or

weighted incorrectly.

· To provide a proxy for market perspective: We use third party data and scoring as a proxy for market perception and

make use of these scores to compare with internal assessments. If the market views a company as low quality and we

see the company as not only higher quality but also on a positive trajectory, it may be appropriate to exploit this

information asymmetry. The market may react and change perceptions over time as performance and disclosure on

ESG issues improves, but we are interested in the journey as much as arrival.

Taking an independent view on ESG allows us to anticipate upgrades and drive change through our engagement.

External research agencies primarily use backward looking data to create ESG ratings and in doing so form the market

view of a company’s ESG credentials. Through our fundamental research we form a forward-looking view of company’s

ESG credentials and anticipate changes, attempting to take advantage of this inefficiency.

As per the chart below, dark blue bars represent our internal scoring and purple bars represent that of an external

research agency. This shows that the external rating agency has rated a number of our holdings as below average and

laggards while we hold a different view that many of these companies are in fact leaders and improvers based on our

internal research work. Taking an independent view allows us to find good ESG companies before they get “discovered”

by the external market.

Our Mana

er’s Approach to ESG

Continued

Asia Dragon Trust plc 27

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Climate Change

Climate change is one of the most significant challenges

of the 21st century and has big implications for investors.

The energy transition is underway in many parts of the

world, and policy changes, falling costs of renewable

energy, and a change in public perception are happening

at a rapid pace. Assessing the risks and opportunities of

climate change is a core part of the investment process. In

particular, we consider:

· Transition risks and opportunities. Governments can

take robust climate change mitigation action to reduce

emissions and transition to a low-carbon economy. This

is reflected in targets, policies and regulation and can

have a considerable impact on high-emitting

companies.

· Physical risks and opportunities. Insufficient climate

change mitigation action will lead to more severe and

frequent physical damage. This results in financial

implications, including damage to crops and

infrastructure and the need for physical adaptation

such as flood defences.

We are a signatory to the UN supported Principles for

Responsible Investment (PRI) and has aligned our

approach to that advocated by the PRI agenda. This aims

to promote responsible investment as a way of enhancing

returns and better managing risk.

PRI provides an intellectual framework to steer the

massive transition of financial capital towards low-carbon

opportunities. It also encourages fund managers to

demonstrate climate action across four areas:

investments; corporate engagement; investor disclosure;

and policy advocacy.

Climate scenario analysis proprietary tool - We believe

that Climate scenario analysis provides a forward looking,

quantitative assessment of the financial impact of climate

risks and opportunities on the value of assets under

different climate pathways. As a result, we work in

partnership with Planetrics to quantify the impact of

climate scenarios where a probability weighted view

based on a range of off the shelf and bespoke scenarios is

taken. This allows us to model a quantitative financial

impact under 15 different climate risk scenarios at both

the stock level and at the Trust level.

We joined the Net Zero Asset Management (NZAM)

initiative to demonstrate our strong support for the global

net zero 2050 goal. The core commitment is to support

the goal of net zero greenhouse gas (‘GHG’) emissions by

2050, in line with global efforts to limit warming to 1.5°C

(‘net zero emissions by 2050 or sooner’). It also commits to

support investing aligned with net zero emissions by 2050

or sooner.

The Trust is focused on real-world decarbonisation by

investing in transition leaders and climate solutions rather

than the fast removal of carbon intensive companies from

our portfolios. We engage with the highest carbon-

emitting companies across the portfolio through a

focused priority watchlist, with a focus on clear

expectations and outcomes combined with

time-bound milestones.

How does the Asia Dragon portfolio

measure up?

Whilst we note above the many qualitative assessments of

ESG undertaken, as well as the limitations of external third-

party data, there is merit in demonstrating the ESG

“quality” of the portfolio versus the reference benchmark.

We track the score of the portfolio within MSCI’s ESG

framework and compare this to a benchmark score. We

also track the carbon intensity of the portfolio versus the

reference benchmark.

The Trust’s portfolio is ESG AA rated by MSCI. This is higher

than the benchmark rating of A, and is an improvement

against the equivalent score one year ago, when the Trust

was rated A. The improvement in the Trust’s ESG MSCI

rating is a result of a mixture of changes in the portfolio as

well as MSCI upgrades on the ESG scores of a number of

investee companies.

The portfolio contains more ESG “Leaders,” and fewer

laggards, than the benchmark.

The Trust’s carbon footprint is 48% of its benchmark (2021:

66%). The improvement in the Trust’s carbon intensity,

versus the prior year, is also driven by changes in the

underlying portfolio.

28 Asia Dragon Trust plc

Important Note

The Company does not specifically exclude any sectors from its investment universe. All investments have to pass a

quality test and ESG issues are only part of the investment analysis.

We may, for example, invest in, and vigorously engage with, a well-managed, capitalised and valued fossil fuel company

that is able to deploy a sizeable balance sheet and lower cost of capital to that of a renewables-only alternative.

It is also important to recognise that there may be periods in the future where it is impossible for us to make sequential

annual improvements in some ESG factors like carbon intensity. We intend to maintain a lower carbon footprint relative

to the benchmark but there may be times when we invest in companies that currently have a higher footprint but have a

commitment to improve this over time. We will monitor and assess their commitment on a regular basis.

abrdn (asia) Limited

31 October 2022

Our Mana

er’s Approach to ESG

Continued

Asia Dragon Trust plc 29

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Year’s Highs/Lows

High Low

Share price (p) 534.0 409.0

Net asset value (p) 589.7 456.9

Discount (%)

–10.4 –14.8

Considered to be an Alternative Performance Measure.

Performance (total return)

1 year return 3 year return 5 year return

% % %

Share price

–11.8 +14.7 +30.5

Net asset value

–8.4 +15.6 +29.8

MSCI AC Asia (ex Japan) Index (in sterling terms) –7.1 +18.2 +21.1

Considered to be an Alternative Performance Measure. Further details can be found on page 99. 

1 year and 3 year returns are presented on an undiluted basis; 5 year return presented on a diluted basis as CULS in issue during those periods were “in the money”. 

Ten Year Financial Record

Equity Net asset Revenue Expenses as a

shareholders’ value per return per Ordinary Share price Dividend per % of average

interest Ordinary share Ordinary share share price discount Ordinary share shareholders’

Year ended 31 August £’000 p p p % p funds

2013 550,346 280.26 3.42 254.70 9.1 2.20 1.23

2014 603,077 307.10 3.43 272.50 11.3 2.20 1.23

2015 518,635 267.22 4.13 235.75 11.8 3.00 1.15

2016 664,159 348.62 4.50 302.00 13.4 3.20 1.14

2017 807,330 423.26 4.68 361.00 13.1 3.30 1.03

2018 788,019 421.54 5.03 370.00 12.2 4.00 0.80

2019 589,708 458.03 4.87 402.50 12.1 4.75 0.83

2020 599,431 474.39 5.01 416.00 12.3 4.75 0.89

2021 706,929 566.60 7.36 512.00 9.6 6.50 0.83

2022 614,369 513.32 6.38 446.00 13.1 6.50 0.84

Results

30 Asia Dragon Trust plc

Total Return of NAV and Share Price vs MSCI All Country Asia (ex Japan)

Index (in sterling terms)

One, three and five years to 31 August 2022

-11.8%

14.7%

30.5%

-8.4%

15.6%

29.8%

-7.1%

18.2%

21.1%

-20%

-10%

10%

20%

30%

40%

1 year 3 years 5 years

Share Price

NAV

Index

Total Return of NAV and Share Price vs MSCI All Country Asia (ex Japan)

Index (in sterling terms)

By quarter for year to 31 August 2022

-1.7%

-4.6%

-8.0%

2.3%

-11.8%

-0.7%

-7.0%

-4.7%

4.1%

-8.4%

-2.8%

-5.4%

-1.3%

2.4%

-7.1%

-15%

-10%

-5%

10%

Quarter to 30/11/2021Quarter to 28/02/2022Quarter to 31/05/2022Quarter to 31/08/2022 Year to 31/08/2022

Share Price

NAV

Index

Source: abrdn, Morningstar & Factset

Performance

Asia Dragon Trust plc 31

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Share Price Discount to NAV

Five years to 31 August 2022

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

31/0 8/17 31/0 8/18 31/0 8/19 31/0 8/20 31/0 8/21 31/0 8/22

Source: Morningstar

Discount to NAV

32 Asia Dragon Trust plc

Portfolio

The Investment Manager’s

theoretical universe of companies is

all listed stocks within the Asia (ex

Japan) region as well as other listed

stocks which generate more than

50% of annual turnover or revenue in

the region. In practice the universe is

very much smaller; having met with

over 96% of all companies in the

MSCI All Country Asia (ex Japan)

universe in the last decade, the

Manager has eliminated a vast

proportion, mainly for reasons of size,

business quality or governance. Asia

Dragon Trust plc has 61 companies in

its portfolio that meet the Investment

Manager’s selection criteria.

The Investment Manager is one of the

leading Asia investment specialists

with a strong active regional

presence. A bottom-up,

fundamentals driven approach is

adopted, which seeks out high quality

companies with effective

management, good cash flow and

healthy balance sheets at attractive

valuations. The quality-focused

approach enables the Trust to

capture growth from world-class

Asian companies.

Asia Dragon Trust plc 33

34 Asia Dragon Trust plc

As at 31 August 2022

Taiwan Semiconductor

Manufacturing Company



Samsung Electronics (Pref)

As the world’s largest pure-play

semiconductor manufacturer, TSMC provides

a full range of integrated foundry services,

along with a robust balance sheet and good

cash generation that enables it to keep

investing in cutting-edge technology

and innovation.

One of the global leaders in the memory chips

segment, and a major player in smartphones

and display panels as well. It has a vertically

integrated business model and robust

balance sheet, alongside good free cash

flow generation.

Tencent Holdings

AIA Group

The internet giant continues to strengthen

its ecosystem and we see great potential

in its ability to balance its multiple revenue

streams and monetise its social media and

payment platforms whilst navigating the

regulatory landscape.

A leading pan-Asian life insurance company, it

is poised to take advantage of Asia’s growing

affluence, backed by an effective agency

force and a strong balance sheet.

Housing Development Finance Corp



Bank Central Asia

A steady, well-managed financial services

conglomerate with leading positions in

mortgage finance, retail banking, life insurance

and asset management, supported by a broad

distribution network, efficient cost structure

and balance sheet quality.

Among the largest non state owned banks in

Indonesia, it is well capitalised and has a big

and stable base of low-cost deposits that

funds its lending, while asset quality has

remained solid.



Alibaba Group

DBS Group

The Chinese internet group is a leading global

e-commerce company with many impressive

businesses, including the Taobao and Tmall

online platforms in China. It also has interests in

logistics, media as well as cloud computing

platforms and payments.

The largest Singapore bank, DBS Group is also

the best managed with a clear strategy. It is

backed by good digital infrastructure, and

operates with a strong focus on efficiency of

returns, as shown in the distinctively better

return on equity than local peers.

Kweichow Moutai ‘A’

Oversea-Chinese Banking Corporation

Kweichow Moutai is a leading hard liquor

(baijiu) producer that boasts a dominant

brand and a cash generative business. Its

brand value stems from a long history and its

rich heritage, which account for its wide

domestic business moat.

A well-managed Singapore bank with a solid

capital base and good cost-to-income ratio. It

is diversified by both geography and service

offerings, with interests spanning Southeast

Asia, North Asia, wealth management and life

assurance as well as its core banking activities.

Ten Lar

est Investments

Asia Dragon Trust plc 35

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

1 Au

ust

2022



Valuation Total Valuation

2022 assets 2021

Company Industry Country £’000 % £’000

Taiwan Semiconductor Manufacturing

Company

Semiconductors &

Semiconductor Equipment

Taiwan 59,819 8.8 80,788

Samsung Electronics (Pref) Technology Hardware,

Storage & Peripherals

South Korea 40,687 6.0 66,610

Tencent Holdings Interactive Media & Services China 32,211 4.8 53,993

AIA Group Insurance Hong Kong 31,254 4.6 39,446

Housing Development Finance Corp Diversified Financial Services India 30,440 4.5 32,093

Bank Central Asia Banks Indonesia 23,282 3.5 16,968

Alibaba Group Internet & Direct Marketing

Retail

China 19,547 2.9 30,664

DBS Group Banks Singapore 18,721 2.8 12,076

Kweichow Moutai ‘A’ Beverages China 16,405 2.4 13,627

Oversea-Chinese Banking Corporation Banks Singapore 15,832 2.3 15,494

Top ten investments 288,198 42.6

JD.com ‘H’ Internet & Direct Marketing

Retail

China 14,640 2.2 –

SBI Life Insurance Insurance India 12,894 1.9 10,124

China Tourism Group Duty Free Corp

Speciality Retail China 12,816 1.9 12,809

China Merchants Bank

Banks China 12,759 1.9 13,077

Hong Kong Exchanges & Clearing Capital Markets Hong Kong 11,605 1.7 13,009

Hon Hai Precision Industry Electronic Equipment,

Instruments & Components

Taiwan 11,387 1.7 15,856

Power Grid Corporation Electric Utilities India 11,274 1.7 –

Kasikornbank ‘F’ Banks Thailand 10,836 1.6 –

Wuxi Biologics (Cayman) Life Sciences Tools & Services China 10,429 1.5 11,531

Ayala Land Real Estate Management &

Development

Philippines 10,392 1.5 8,728

Twenty largest investments 407,230 60.2

Investment Portfolio

36 Asia Dragon Trust plc

Portfolio

Continued

1 Au

ust

2022



Valuation Total Valuation

2022 assets 2021

Company Industry Country £’000 % £’000

Kotak Mahindra Bank Banks India 9,895 1.5 10,573

Tata Consultancy Services IT Services India 9,832 1.4 17,679

Hindustan Unilever Personal Products India 9,429 1.4 6,713

Budweiser Brewing Beverages Hong Kong 9,188 1.4 6,463

Yunnan Energy New Material A Chemicals China 8,938 1.3 9,417

Astra International Automobiles Indonesia 8,873 1.3 –

China Resources Land Real Estate Management &

Development

China 8,779 1.3 10,897

LG Chem Chemicals South Korea 8,293 1.2 10,459

Delta Electronic Electronic Equipment,

Instruments & Components

Taiwan 8,183 1.2 9,004

Maruti Suzuki India Automobiles India 8,119 1.2 –

Thirty largest investments 496,759 73.4

ShenZhen Mindray Bio–Medical Electronics – A Health Care Equipment &

Supplies

China 7,963 1.2 3,948

Nari Technology Electrical Equipment China 7,939 1.2 11,144

Kakao Corp Interactive Media & Services South Korea 7,931 1.2 6,370

Contemporary Amperex Technology – A Electrical Equipment China 7,623 1.1 –

Longi Green Energy Technology – A Semiconductors &

Semiconductor Equipment

China 7,420 1.1 7,986

Bank of Philippine Islands Banks Philippines 6,918 1.0 5,765

Techtronic Industries Machinery Hong Kong 6,909 1.0 –

Samsung Biologics Life Sciences Tools & Services South Korea 6,766 1.0 6,564

Chacha Food – A Food Products China 6,607 1.0 3,805

Ultratech Cement Construction Materials India 6,591 1.0 7,959

Forty largest investments 569,426 84.2

Asia Dragon Trust plc 37

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

1 Au

ust

2022



Valuation Total Valuation

2022 assets 2021

Company Industry Country £’000 % £’000

Info Edge (India) Interactive Media & Services India 6,495 1.0 8,527

Singapore Telecommunications Diversified

Telecommunication

Singapore 6,461 1.0 –

China Vanke ‘H’ Real Estate Management &

Development

China 6,296 0.9 6,788

Mobile World Investment Corporation Speciality Retail Vietnam 6,236 0.9 4,129

Meituan-Dianping Class B Internet & Direct Marketing

Retail

China 6,180 0.9 6,915

Silergy Corp Semiconductors &

Semiconductor Equipment

Taiwan 6,080 0.9 7,702

Sungrow Power Supply Co – A Electrical Equipment China 6,056 0.8 4,243

Zhongsheng Group Holdings Speciality Retail China 5,356 0.8 –

Vietnam Technological & Commercial Bank Banks Vietnam 5,256 0.8 5,507

Tongcheng Elong Holdings Hotels, Restaurants & Leisure China 5,255 0.8 3,632

Fifty largest investments 629,097 93.0

Andes Technology Semiconductors &

Semiconductor Equipment

Taiwan 4,657 0.7 –

Siam Cement ‘F’ Construction Materials Thailand 4,621 0.7 5,598

GDS Holdings Class A IT Services China 4,610 0.7 3,512

Delhivery Air Freight & Logistics India 4,172 0.6 –

ShenZhen Inovance Technology – A Machinery China 3,860 0.6 –

Yonyou Network Technology – A Software China 3,785 0.6 –

Hangzhou Tigermed Consulting Co

Life Sciences Tools & Services China 3,796 0.5 4,378

Glodon Co -A Software China 3,779 0.5 4,021

Infosys IT Services India 3,402 0.5 –

FSN E-Commerce Ventures Internet & Direct Marketing

Retail

India 3,363 0.5 –

Sixty largest investments 669,142 98.9

PB Fintech Insurance India 3,237 0.5 –

672,379 99.4

Net current assets

4,374 0.6

Total assets less current liabilities

676,753 100.0

Holding includes investment in both ‘A’ and ‘H’ shares.

Excluding bank loan of £35,000,000.

Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings. Values for 2022 and 2021 may not be directly comparable due to purchases and sales

made during the year.

38 Asia Dragon Trust plc

Value at Sales Gains/ Value at

1 September 2021 Purchases proceeds (losses) 31 August 2022

Country £’000 £’000 £’000 £’000 £’000

China 278,083 100,197 110,703 (44,529) 223,048

Hong Kong 73,302 11,293 32,696 7,057 58,956

India 101,770 40,859 22,344 (1,142) 119,143

Indonesia 16,968 8,851 1,517 7,853 32,155

Philippines 14,493 2,357 - 461 17,311

Singapore 34,146 9,522 2,378 (276) 41,014

South Korea 100,336 13,902 28,506 (22,054) 63,678

Sri Lanka 57 - 56 (1) -

Taiwan 128,184 10,900 38,520 (10,439) 90,125

Thailand 5,598 12,134 2,435 160 15,457

Vietnam 13,857 166 56 (2,475) 11,492

Total investments 766,794 210,181 239,211 (65,385) 672,379

Net current assets 8,942 - - (4,568) 4,374

Total assets less current liabilities 775,736 210,181 239,211 (69,953) 676,753

Chan

es in Asset Distribution

Asia Dragon Trust plc 39

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Geographic Summary

As at 31 August 2022

33.2%

8.8%

17.7%

4.8%

2.6%

6.1%

9.5%

13.4%

2.3%

1.7%

Country allocation

China - 33.2%

Hong K ong - 8.8%

India - 17.7%

Indonesia - 4.8%

Philippines - 2.6%

Singapore - 6.1%

South Korea - 9.5%

Taiwan - 13.4%

Thailand - 2.3%

Vietnam - 1.7%

As at 31 August 2021

36.3%

9.6%

13.3%

2.2%

1.9%

4.5%

13.1%

16.7%

0.7%

1.8%

Country allocation

China - 36.3%

Hong Kong - 9.6%

India - 13.3%

Indonesia - 2.2%

Philippines - 1.9%

Singapore - 4.5%

South Korea - 13.1%

Taiwan - 16.7%

Thailand - 0.7%

Vietnam - 1.8%

Analysis of Portfolio

40 Asia Dragon Trust plc

Sector Breakdown

As at 31 August 2022

0% 5% 10% 15% 20%

Air Freight & Logistics

Automobiles

Banks

Beverages

Capital Markets

Chemicals

Communications Equipment

Construction Materials

Construction & Engineering

Diversified Financial Services

Diversified Telecommunication

Electric Utilities

Electrical Equipment

Electronic Equipment, Instruments & Components

Energy

Food Products

Gas Utilities

Health Care Equipment & Supplies

Hotels, Restaurants & Leisure

Household Durables

Insurance

Interactive Media & Services

Internet & Direct Marketing Retail

IT Services

Life Sciences Tools & Services

Machinery

Personal Products

Real Estate Management & Development

Retailers

Semiconductors & Semiconductor Equipment

Software

Speciality Retail

Technology Hardware, Storage & Peripherals

Textiles, Apparel & Luxury Goods

Tobacco

Travel and Tourism

2022

2021

Continued

Analysis of Portfolio

Asia Dragon Trust plc 41

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Singtel (Singapore)

What does the company do?

Singtel is a telecom operator that has strong market

positions in its core markets of Singapore and Australia,

and in selective Southeast Asian and Asian emerging

markets via its regional investments.

Why do we like the investment?

Singtel operates in a competitive industry, but it is well

positioned across all of its markets, where it is often

among the top players. We believe it has sustainable

competitive advantage. Aside from technical operational

know-how and astute financial management, Singtel has

a premium brand, economies of scale and a healthy

balance sheet. The group is seeing growth from

monetising data demand, as its revenue mix migrates

from traditional sources to data. We are impressed by the

new management, which has been strong in executing

strategy, with a focus on profitability and return on

invested capital. Management has also been effective at

funding capex and investment by re-cycling capital from

its balance sheet. Despite a challenging macroeconomic

backdrop, Singtel’s share price has matched the steady

recovery of its core operations where earnings have been

resilient and dividend payouts have been improving. We

remain positive on Singtel’s prospects as it capitalises on

new growth opportunities and unlocks value from assets,

amid a recovery of demand in the post-Covid economic

re-opening.

What is our key area of engagement?

Capital allocation and management because we see a lot

of value in the recycling of assets and reallocating capital

more effectively towards more productive uses.

What is the result?

Singtel’s management has responded positively to our

engagement. Broadly, the group has actively recycled its

capital by monetising assets that do not align to its vision,

and re-investing the proceeds into higher growth areas.

With this, Singtel aims to deliver earnings growth and

narrow its significant holding company discount. Through

2022, the group has been rebalancing and optimising its

portfolio of associate companies, unlocking S$6 billion in

capital that will fund mainly 5G capex and growth

initiatives. These transactions included the divestment of

partial stakes in Australia Tower Network and Airtel Africa;

the full disposal of subsidiary Amobee; the sale of a 3.3%

direct stake in Bharti Airtel to Bharti Telecom, a JV

between Bharti Enterprises and Singtel; and the transfer of

6,000 towers from its Indonesian associate Telkomsel to

Mitratel. Singtel also appointed Lendlease to jointly

redevelop its Comcentre headquarters into a S$3 billion

sustainable workplace. Singtel will hold 51% after a joint-

venture company is formed with Lendlease.

Photo Source: Singtel

Investment Case Studies

42 Asia Dragon Trust plc

China Tourism Group Duty Free Corp (China)

What does the company do?

China Tourism Group Duty Free Corp (CTG) is the

world’s biggest travel retail operator, focused on the

duty-free market.

Why do we like the investment?

We think CTG is a good proxy for the rising demand for

duty-free cosmetics and skincare in mainland China. It

has four major business lines: airport duty free, offshore

duty free (Hainan), downtown duty free (pre-departure)

and wholesale. The group has benefited from China’s

decision to loosen restrictions on its lucrative duty-free

industry, particularly in the popular tourist island of Hainan,

amid a broader supportive policy trend of the government

to bring overseas spending back to China. In addition,

CTG’s growth via acquisitions is likely to result in greater

scale and stronger bargaining power with the potential for

a margin uplift versus new competition. In the Covid

environment, CTG’s online business has evolved rapidly,

accounting for close to half of overall sales. The pandemic

has changed the way consumers shop, and the online

business has complemented the traditional shopping

model. CTG’s ongoing focus on developing its online and

digitalisation businesses should also help the company to

compete more effectively with other cross-border e-

commerce operators. As China re-opens, and over the

longer term, we see CTG as well positioned for growth,

given its product portfolio, procurement capability and

prime store locations.

What is our key area of engagement?

Sustainability and ESG awareness, including carbon

emissions, data security, labour practices and supply-

chain management.

What is the result?

The group has been responsive to our engagement. It has

indicated to us that its suppliers are also taking ESG issues

seriously. It is working with brands to promote

sustainability and awareness. CTG is also focusing on

customer and stakeholder engagement, and collecting

feedback from stakeholders. It aims to raise its MSCI ESG

rating from BB to A and ultimately AAA over the next two

to three years. CTG has established an ESG management

framework and leadership group with the board as the

highest decision-making authority for its ESG efforts.

Management has been proactively communicating with

external ESG rating agencies and we are seeing this bear

fruit. MSCI upgraded CTG from BB to BBB, citing its

improved data privacy programme and corporate

governance practices as driving the upgrade.

Photo Source: China Tourism Group Duty Free Corp

Investment Case Studies

Continued

Asia Dragon Trust plc 43

Governance

The Company is committed to high standards of

corporate governance and applies the principles

identified in the UK Corporate Governance Code and

the AIC Code of Corporate Governance. The Company

is registered as a public limited company and has been

approved by HM Revenue & Customs as an investment

trust. The Directors, all of whom are non-executive and

independent of the Manager, supervise the

management of Asia Dragon Trust plc and represent

the interests of shareholders.

44 Asia Dragon Trust plc

James Will

Independent Chairman

Experience:

Former Chairman of law firm Shepherd and Wedderburn

LLP where he was a senior corporate partner, heading its

financial sector practice. He has experience of working

with companies in a wide range of industry sectors

including financial services, technology, energy and life

sciences. James is Senior Independent Director of Herald

Investment Trust plc and a non-executive director of

JPMorgan Global Growth & Income plc. He was, until

recently, Chairman of The Scottish Investment Trust PLC.

Length of service:

4 years, appointed on 1 October 2018

Last re-elected to the Board:

15 December 2021

Committee membership:

Management Engagement Committee (Chair),

Nomination Committee (Chair) and Remuneration

Committee

Contribution:

The Board has reviewed the contribution of James Will in

light of his proposed re-election at the AGM and has

concluded that he continues to chair the Company

expertly, fostering a collaborative spirit between the Board

and Manager, whilst ensuring that Board meetings remain

focused on the key areas of stakeholder relevance.

Gaynor Coley

Independent Non-Executive Director and

Chair of the Audit & Risk Committee

Experience:

A chartered accountant with over 30 years’ experience in

private and public sector finance and governance. She is

currently the Audit Committee Chairman of Lowland

Investment Company plc, SQN Secured Investment Fund

plc and Foresight Enterprise VCT plc. Gaynor is also a

Director of a number of private companies. She was

previously the Chairman of the Wave Group Ltd, Director

of Public Programmes at the Royal Botanic Gardens Kew,

Managing Director of the Eden Project in Cornwall and

Director of Finance at Plymouth University.

Length of service:

3 years, appointed on 3 July 2019

Last re-elected to the Board:

15 December 2021

Committee membership:

Audit & Risk Committee (Chair), Management

Engagement Committee, Nomination Committee and

Remuneration Committee

Contribution:

The Board has reviewed the contribution of Gaynor Coley

in light of her proposed re-election at the AGM and has

concluded that she continues to chair the Audit & Risk

Committee expertly and provides significant financial, risk

management and ESG insight to Board discussions.

Board of Directors

Asia Dragon Trust plc 45

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Matthew Dobbs

Independent Non-Executive Director

Experience:

40 years’ fund management experience with Schroders,

recently stepping down from full time investment

responsibilities. He is a renowned Asian and Small

Companies investment expert having served as

Schroders' Head of Global Small Companies since 2000. In

addition to managing the Schroders Asian Alpha Plus

Fund, Matthew was instrumental in helping grow the

assets of two investment trusts, Schroder Asia Pacific Fund

plc and Schroder Oriental Income Fund Limited, since their

respective launches in 1995 and 2005, into FTSE 250

Companies. He holds a BA in history and economics from

Oxford University. Matthew is a non-executive director of

the European Opportunities Trust PLC.

Length of service:

0 years, appointed on 1 February 2022

Last re-elected to the Board:

N/A

Committee membership:

Audit & Risk Committee, Management Engagement

Committee, Nomination Committee and Remuneration

Committee

Contribution:

The Board has reviewed the strong contribution of

Matthew Dobbs since his appointment to the Board

and has concluded that he brings significant

investment insight, and regional experience, to

the Board and excellent knowledge of the investment

management sector.

Susan Sternglass Noble

Independent Non-Executive Director

Experience:

Over 30 years’ experience of investment management

and analysis, specialising in financial sector equities, with

focus on global, European and Asian mandates. She holds

a B.A. in Asian Studies from Cornell University and a M.S. in

Foreign Service from Georgetown University and is a

Mandarin Chinese speaker. Susan held senior roles at

Goldman Sachs, JP Morgan, CQS and AXA Investment

Managers. More recently she has held a number of board,

advisory and policy roles. Susan is a non-executive

director of Unity Trust Bank, a senior adviser to The

Investor Forum and an active angel investor. She was

previously a specialist adviser to the Treasury Select

Committee of the House of Commons and a

Commissioner on the Dormant Assets Commission.

Length of service:

2 years, appointed on 7 August 2020

Last elected to the Board:

15 December 2021

Committee membership:

Audit & Risk Committee, Management Engagement

Committee, Nomination Committee and Remuneration

Committee

Contribution:

The Board has reviewed the contribution of Susan

Sternglass Noble in light of her proposed re-election at the

AGM and has concluded that she continues to bring

investment, industry and corporate governance expertise

to the Board.

46 Asia Dragon Trust plc

Charlie Ricketts

Senior Independent Director

Experience:

Over 30 years’ experience within the investment funds

arena. He was, until 2014, the head of investment funds at

Cenkos Securities, providing equity capital markets

services to the fund management industry and to

investment trust companies. He was previously a

managing director of UBS Investment Bank and head of

investment funds. He began his investment career as an

investment director of Johnson Fry and then head of

marketing and investment product development at

Gartmore Investment Management. Charlie is a non-

executive director of Templeton Emerging Markets

Investment Trust and is co-Founder of the charity

Carefreespace.

Length of service:

6 years, appointed on 19 April 2016

Last re-elected to the Board:

15 December 2021

Committee membership:

Audit & Risk Committee, Management Engagement

Committee, Nomination Committee and Remuneration

Committee (Chair)

Contribution:

The Board reviewed the contribution of Charlie Ricketts in

light of his proposed re-election at the AGM and

concluded that he provides significant investment and

ESG insight to the Board and expert knowledge of the

investment management and investment trust sectors.

He is a strong Senior Independent Director and chairs the

Remuneration Committee effectively.

Board of Directors

Continued

Asia Dragon Trust plc 47

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Capital Structure

At 31 August 2022, the Company had 119,686,001 fully

paid Ordinary shares of 20p each in issue (2021:

124,766,350) with a further 39,925,676 Ordinary shares of

20p held in treasury (2021: 34,845,327). During the year to

31 August 2022 5,080,349 Ordinary Shares were bought

back and held in treasury (2021: 1,592,103). Further

details on the changes to the capital structure during the

year ended 31 August 2022 are provided on page 197.

Subsequent to the period end a further 651,351 Ordinary

shares have been purchased in the market for treasury.

The Ordinary shares carry a right to receive dividends

which are declared from time to time by an ordinary

resolution of the Company (up to the amount

recommended by the Board) and to receive any interim

dividends which the Directors may resolve the Company

should pay. On a winding-up, after meeting the liabilities of

the Company, the surplus assets will be paid to Ordinary

shareholders in proportion to their shareholdings. On a

show of hands, every Ordinary shareholder present in

person, or by proxy, has one vote and, on a poll, every

Ordinary shareholder present in person has one vote for

each share held and a proxy has one vote for every share

represented.

There are no restrictions concerning the holding or

transfer of the Ordinary shares and there are no special

rights attached to any of the shares. The Company is not

aware of any agreements between shareholders which

may result in any restriction on the transfer of shares or

the voting rights.

In the event of a winding-up of the Company, the Ordinary

shares will rank behind any creditors or prior ranking

capital of the Company.

Directors

The Directors of the Company who were in office during

the year and up to the date of signing the financial

statements were James Will, Gaynor Coley, Matthew

Dobbs, Susan Sternglass Noble and Charlie Ricketts.

Biographies of the Directors of the Company are shown

on pages 44 to 46.

Directors’ and Officers’ Liability Insurance

The Company’s articles of association indemnify each of

the Directors out of the assets of the Company against

any liabilities incurred by them as a Director of the

Company in defending proceedings, or in connection with

any application to the Court in which relief is granted. In

addition, the Directors have been granted qualifying

indemnity provisions by the Company which are currently

in force. Directors’ and Officers’ liability insurance cover

has been maintained throughout the year at the expense

of the Company.

Dividends

The Directors recommend that a final dividend of 6.5p per

Ordinary share (2021: 6.5p) be paid on 16 December 2022

to shareholders on the register on 11 November 2022. The

ex-dividend date is 10 November 2022.

Management Agreement

The Company has appointed abrdn Fund Managers

Limited, a wholly owned subsidiary of abrdn plc, as its

alternative investment fund manager. By way of group

delegation agreements within the abrdn Group the

management of the Company's investment portfolio is

delegated to abrdn (Asia) Limited and company

secretarial services and administrative services are

provided by Aberdeen Asset Managers Limited.

Details of the management agreement, including the

notice period and fees paid to the abrdn Group

companies during the year ended 31 August 2022, are

shown in note 4 to the financial statements.

Borrowings

The Company has a £35 million multicurrency revolving

facility with The Royal Bank of Scotland International

Limited, London Branch. The agreement was entered into

on 29 July 2022 with a termination date of 29 July 2024. At

the year end this facility had been fully drawn down at a

rate of 2.690%. At the date of this Report the Company

had drawn down £25 million at a rate of 3.558%. Under the

terms of the revolving credit facility, the Company has the

option to increase the level of the commitment from £35

million to £50 million at any time.

Directors’ Report

48 Asia Dragon Trust plc

On 29 July 2022, the Company also entered into a new

fixed loan facility agreement of £25 million at an interest

rate of 3.5575% with The Royal Bank of Scotland

International Limited, London Branch, with a termination

date of 29 July 2024. The agreement of this facility

incurred an arrangement fee of £7,500, which will be

amortised over the life of the loan.

Corporate Governance

The Statement of Corporate Governance, which forms

part of the Directors’ Report, is contained on pages

51 to 56.

Going Concern

The Directors have undertaken a rigorous review and

believe that it is appropriate to continue to adopt the

going concern basis in the preparation of the financial

statements. This conclusion is consistent with the longer

term Viability Statement on page 21.

The Company’s assets consist substantially of equity

shares in companies listed on recognised stock

exchanges and in normal circumstances are realisable

within a short timescale. The Board has set limits for

borrowing and regularly reviews the level of any gearing,

cash flow projections and compliance with banking and

loan covenants.

The Directors are mindful of the principal risks and

uncertainties disclosed on pages 16 to 18, and have

reviewed forecasts detailing revenues and liabilities and

undertaken sensitivity analysis. The Directors are satisfied

that the Company has adequate resources to continue in

operational existence for the foreseeable future and has

the ability to meet its financial obligations as they fall due

for a period of at least twelve months from the date of

approval of this Report. They have arrived at this

conclusion having confirmed that the Company’s

diversified portfolio of realisable securities is sufficiently

liquid and could be used to meet short-term funding

requirements were they to arise. The Directors have also

reviewed the revenue and ongoing expenses forecasts for

the coming year and considered the Company’s

Statement of Financial Position as at 31 August 2022 which

shows net current liabilities of £30.6million at that date.

The Directors believe that adopting a going concern basis

of accounting remains appropriate.

Substantial Share Interests

At 31 August 2022 the Company had been notified or

was aware of the following substantial interests in the

Ordinary shares:

Shareholder

Number of

Ordinary

shares held % held

City of London Investment

Management

34,878,552 29.0

Allspring Global Investments 13,729,896 11.4

Lazard Asset Management 13,199,892 11.0

abrdn Retail Plans 4,941,374 4.1

Rathbones 4,498,286 3.7

Evelyn Partners 4,297,501 3.6

Subsequent to the year end the Company was notified of

the following changes:

· On 14 September 2022, City of London Investment

Management reduced its holding to 34,625,304

Ordinary Shares (representing 29.0% of the issued share

capital of the Company).

· On 23 September 2022, City of London Investment

Management increased its holding to 34,670,304

Ordinary Shares (representing 29.0% of the issued share

capital of the Company).

· On 12 October 2022, City of London Investment

Management reduced its holding to 34,531,922

Ordinary Shares (representing 29.0% of the issued share

capital of the Company).

As at the date of this Report, no other changes to the

above interests had been notified to the Company.

Independent Auditors

The respective responsibilities of the Directors and the

independent auditors in connection with the financial

statements appear on pages 63 and 70.

The Directors who held office at the date of approval of

this Directors’ Report confirm that, so far as they are each

aware, there is no relevant audit information of which the

Company’s auditors is unaware and each Director has

taken all the steps that he or she ought to have taken as a

Director to make himself or herself aware of any relevant

audit information and to establish that the Company’s

auditors is aware of that information.

Directors’ Report

Continued

Asia Dragon Trust plc 49

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Annual General Meeting

Among the resolutions being put at the Annual General

Meeting of the Company to be held on 9 December 2022,

the following resolutions will be proposed:

(i) Section 551 Authority to Allot Shares

Resolution 11, which is an ordinary resolution, will, if

approved, give the Directors a general authority to

allot new securities up to 33.33% of the Company’s

issued Ordinary share capital (excluding treasury

shares) as at the date of the passing of this resolution

(up to a maximum nominal amount of £7.86 million

based on the Company’s issued share capital as at the

date of this Report). Such authority will expire on 29

February 2024 or, if earlier, at the conclusion of the

next Annual General Meeting of the Company (unless

previously revoked, varied or extended by the

Company in general meeting).

(ii) Limited Disapplication of Pre-emption Rights

Resolution 12, which is a special resolution, seeks to

give the Directors power, conditional on Resolution 11

being passed, to allot Ordinary shares and to sell

Ordinary shares held in treasury for cash, without first

offering them to existing shareholders in proportion to

their existing holdings, up to an aggregate nominal

value representing 5% of the Company’s issued

Ordinary share capital as at the date of passing of this

resolution (up to a maximum nominal amount of £1.19

million based on the Company’s issued share capital

as at the date of this Report).

This authority will expire on 29 February 2024 or, if

earlier, at the conclusion of the next Annual General

Meeting of the Company (unless previously revoked,

varied or extended by the Company in general

meeting).

Pursuant to this power, Ordinary shares would only be

issued for cash and treasury shares would only be sold

for cash at a premium to the net asset value per share

(calculated after the deduction of prior charges at

market value).

The Directors consider that the powers proposed to be

granted by the above resolutions are necessary to

provide flexibility to issue shares should they deem it to

be in the best interests of shareholders as a whole.

(iii) Purchase of the Company’s own Ordinary shares

Since the Company’s last AGM the Company has

undertaken share buybacks, the details of which are

set out on page 107. Resolution 13, which will be

proposed as a special resolution, will renew the

Company’s authority to make market purchases of its

own shares. Shares so repurchased will be cancelled

or held “in treasury”. In respect of the Company’s

Ordinary shares which it buys back and does not

immediately cancel but, instead, holds in treasury it

may sell such shares (or any of them) for cash

(or its equivalent); or ultimately cancel the shares

(or any of them).

No dividends will be paid on treasury shares, and no

voting rights attach to them.

The maximum number of Ordinary shares which may

be purchased pursuant to this authority shall be

14.99% of the issued share capital of the Company as

at the date of the passing of the resolution

(approximately 17.8 million Ordinary shares based on

the Company’s issued share capital as at the date of

this Report). The minimum price which may be paid for

an Ordinary share (exclusive of expenses) shall be 20p

(being an amount equal to the nominal value of an

Ordinary share). The maximum price for an Ordinary

share (again exclusive of expenses) shall be an

amount being not more than the higher of (i) 105% of

the average of the middle market quotations for the

Company’s Ordinary shares for the five business days

immediately preceding the date of purchase and (ii)

the higher of the price of the last independent trade

and the highest current independent bid relating to an

Ordinary share on the trading venue where the

purchase is carried out.

This authority, if conferred, will only be exercised if to

do so would enhance the net asset value per share

and is in the best interests of shareholders generally.

This authority will expire on 29 February 2024 or, if

earlier, at the conclusion of the next Annual General

Meeting of the Company (unless previously

revoked, varied or extended by the Company in

general meeting).

50 Asia Dragon Trust plc

(iv) Notice Period for General Meetings

Resolution 14, which will be proposed as a special

resolution, seeks the authority from shareholders for

the Company to be able to hold general meetings

(other than AGMs) on 14 clear days' notice. The

approval will be effective until the conclusion of the

Company's next Annual General Meeting, when it is

intended that a similar resolution will be proposed. The

Company will also need to meet the requirements for

electronic voting under the Companies Act 2006 (as

amended by the Shareholders’ Rights Regulations)

before it can call a general meeting on 14 clear

days' notice.

Recommendation

The Directors believe that the resolutions to be proposed

at the Annual General Meeting are in the best interests of

the Company and its shareholders as a whole, and

recommend that shareholders vote in favour of the

resolutions, as the Directors intend to do in respect of their

own beneficial shareholdings totalling, in aggregate,

39,114 Ordinary shares, and representing 0.033% of the

existing issued Ordinary share capital of the Company.

Greenhouse Gas Emissions

The Company can report that it has no greenhouse gas

emissions or other emissions producing sources from its

operations.

Other Information

The rules concerning the appointment and replacement

of Directors, amendments to the articles of association

and powers to issue or buy back the Company's shares

are contained in the articles of association of the

Company and the Companies Act 2006. There are no

agreements which the Company is party to that might

affect its control following a takeover bid; and there are no

agreements between the Company and its Directors

concerning compensation for loss of office. Other than the

management agreement with the Manager, further

details of which are set out on page 47, the Company is

not aware of any contractual or other agreements which

are essential to its business which ought to be disclosed in

the Directors’ Report.

The financial risk management objectives and policies

arising from its financial instruments and the exposure of

the Company to risk are disclosed in note 18 to the

Financial Statements.

By order of the Board,

Aberdeen Asset Managers Limited

Secretary

Edinburgh

31 October 2022

Registered office:

1 George Street

Edinburgh EH2 2LL

Company Registration Number: SC106049

Directors’ Report

Continued

Asia Dragon Trust plc 51

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Compliance

The Company is committed to high standards of

corporate governance. The Board is responsible for good

governance, and this statement describes how the

Company applies the principles identified in the UK

Corporate Governance Code published in 2018 (the “UK

Code”), which is available on the Financial Reporting

Council’s website: www.frc.org.uk, throughout the

financial year.

The Company is a member of the Association of

Investment Companies (“AIC”), which has published its

own Code of Corporate Governance to recognise the

special circumstances of investment trusts

(www.theaic.co.uk) and approved by the FRC.

The Board confirms that, during the year to 31 August

2022, the Company complied with the recommendations

of the AIC Code and the relevant provisions of the UK

Code, except as set out below:

1. the role of the chief executive (A.1.2);

2. executive Directors’ remuneration (D.1.1 and D.1.2);

and

3. the need for an internal audit function (C.3.6).

For the reasons set out in the AIC Code, and as explained

in the UK Code, the Board considers that these provisions

are not relevant to the position of the Company, being an

externally managed investment company.

The Board

The Board consists of five non-executive Directors. Each

Director has the requisite range of business and financial

experience to enable the Board to provide clear and

effective leadership and proper stewardship of the

Company. Charlie Ricketts is the Senior Independent

Director (“SID”) and is available to shareholders in the

event that there are concerns that cannot be resolved

through discussion with the Chairman.

Biographical details for each of the Directors, including

their significant external appointments, can be found on

pages 44 to 46.

All Directors are considered to be independent of the

Manager and to be free of any material relationship with

the Manager which could interfere with the exercise of

their independent judgement. Subject both to annual re-

election and renewal of the appointment every three

years, a Director’s tenure of office (including that of the

Chairman) will normally be for up to nine years. When

making a recommendation for re-electing a Director, the

Board will take into account the on-going requirements of

the UK Code.

Role and Operation of the Board

The Board normally meets at least five times each year,

and more frequently where business needs require. In

addition, there is regular contact between the Directors

and the Manager throughout the year. The table below

sets out the number of routine Board and Committee

meetings attended by each Director during the year

compared to the number of meetings that each Director

was eligible to attend. Directors also have additional

discussions when required to address administrative

matters and ad hoc issues between scheduled

Board meetings.

Statement of Corporate Governance

52 Asia Dragon Trust plc

Director

Board

Meetings

Audit & Risk

Committee

Meetings¹

Remuneration

Committee

Meetings

Nomination

Committee

Meetings

Management

Engagement

Committee

Meetings

James Will 5 (5) n/a 1 (1) 1 (1) 1 (1)

Gay Coley 5 (5) 3 (3) 1 (1) 1 (1) 1 (1)

Matthew Dobbs

3 (3) 2 (2) 1 (1) n/a n/a

Kathryn Langridge

1 (2) 0 (1) n/a 0 (1) 0 (1)

Susan Sternglass Noble 5 (5) 3 (3) 1 (1) 1 (1) 1 (1)

Charlie Ricketts 5 (5) 3 (3) 1 (1) 1 (1) 1 (1)

¹ All Directors are members of the four Committees of the Board with the exception of James Will who can, upon invitation, attend Audit & Risk Committee meetings as an

observer.

Appointed to the Board on 1 February 2022.

Retired from the Board on 15 December 2021.

Board Diversity

The Board recognises the importance of having a range

of skilled, experienced individuals with the right knowledge

represented on the Board in order to allow it to fulfil its

obligations. The Board also recognises the benefits and is

supportive of, and will give due regard to, the principle of

diversity in its recruitment of new Board members. The

Board will not display any bias for age, gender, race,

sexual orientation, socio-economic background, religion,

ethnic or national origins or disability in considering the

appointment of Directors. In view of its size, the Board will

continue to ensure that all appointments are made on the

basis of merit against the specification prepared for each

appointment. In doing so, the Board will seek to meet the

targets set out in the FCA’s Listing Rule 9.8.6R (9)(a), which

are set out below.

Although the Company is not required to report against

these targets until the 2023 Annual Report, the Board has

resolved to do so on a voluntary basis for the year ended

31 August 2022. In accordance with the LR 9.8.6R (9), (10)

and (11) the Board has provided the following information

in relation to its diversity.

Board Gender as at 31 August 2022

Number of Board

members

Percentage of the

Board

Number of senior

positions on the Board

Number in executive

management

Percentage of executive

management

Men 3 60% 2

n/a n/a

Women 2 40%

n/a n/a

meets target of 40% as set out in LR 9.8.6R (9)(a)(i)

the positions of Chair of the Board and Senior Independent Director are held by men

the position of Chair of the Audit & Risk Committee is held by a woman

meets target of 1 as set out in LR 9.8.6R (9)(a)(ii)

Statement of Corporate Governance

Continued

Asia Dragon Trust plc 53

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Board Ethnic Background as at 31 August 2022

Number of

Board

members

Percentage of

the Board

Number of senior

positions on the

Board

Number in

executive

management

Percentage of

executive

management

White British or other White

(including minority-white groups)

5 100% 3 n/a n/a

Minority ethnic 0

0% 0 n/a n/a

is less than the target of 1 as asset out in LR 9.8.6R (9)(a)(iii)

As shown in the above table, the Company has not as yet

met the target set out in LR 9.8.6R (9)(a)(iii), which formally

comes into effect for the financial year ending 31 August

2023, in relation to the ethnic background of the Board. It is

the Board’s intention that achieving the target as set out in

LR 9.8.6R (9)(a)(iii) continues to be a priority during the

Board’s next succession appointments.

The information included above in relation to the gender

and ethnic background of the Board has been obtained

following confirmation from the individual Directors.

Although not required to be disclosed under the FCA’s

Listing Rules, the Board notes that the Company’s lead

portfolio managers are one male and one female, both of

whom are Asian and based in Singapore.

There have been no changes since the year end that have

affected the Company’s ability to meet the targets set in

LR 9.8.6R (9)(a).

Role of the Board

The Board has overall responsibility for the Company’s

affairs. It delegates, through a management agreement

and specific instructions, the day-to-day management of

the Company to the Manager, abrdn Fund Managers

Limited. The Board has a schedule of matters reserved to

it for decision, and the requirement for Board approval on

these matters is communicated directly to the senior staff

of the Manager.

Such matters include overall strategy, review of

investment policy, performance, gearing policy, treasury,

corporate governance policy, promotional activities and

communications with shareholders.

Full and timely information is provided to the Board to

enable the Directors to function effectively and to

discharge their responsibilities. At each meeting the Board

reviews the following:

· Reports from the Manager covering stockmarket

environment, portfolio activities, performance and

investment outlook;

· Company financial information including revenue

forecasts, balance sheet and gearing position;

· Shareholder analysis and relations;

· Regulatory issues and industry matters;

· Reports from other service providers such as brokers

and registrars.

No contract or arrangement subsisted during the period in

which any of the Directors was materially interested. The

Board monitors, on a regular basis, the direct and indirect

interests of each Director and has concluded that there

were no situations which gave rise to an interest of a

Director which conflicted with the interests of the

Company. The Board adopts a zero-tolerance approach

to bribery and corruption and has implemented

appropriate procedures designed to prevent bribery.

It is the Company’s policy to conduct all of its business in

an honest and ethical manner. The Board takes a zero-

tolerance approach to facilitation of tax evasion, whether

under UK law or under the law of any foreign country.

Directors’ Time Commitments

The Company has a policy of ensuring that all non-

executive directors of the Company have sufficient time

to commit to the respective duties and responsibilities

applicable to their particular Board roles.

When making new appointments, the Board takes into

account other demands on potential candidates’ time and

prior to appointment any significant commitments are

disclosed with an indication of the time involved. In the

year under review the Board assessed the time

commitment of each individual Director on external

appointments. Each Director’s aggregate time

commitment is discussed with him or her as part of the

annual appraisal process.

54 Asia Dragon Trust plc

In the year under review, all Directors were considered to

have sufficient time to commit to their respective roles on

the Board, taking account of their external appointments.

If at any time any Director wishes to accept an additional

significant external appointment, the prior approval of the

Board is first required. In considering whether to grant

such approval, the Board will in particular consider the

Director’s other time commitments and any potential

conflicts of interest.

Board Committees

The Board has appointed four Committees with specific

operations as set out below. The terms of reference,

which clearly define the responsibilities of each

Committee are available on the Company’s website. The

terms of reference of each of the Committees are

renewed and re-assessed by the Board for their

adequacy on an ongoing basis.

Audit & Risk Committee

The Audit & Risk Committee Report is contained on pages

56 to 58.

Remuneration Committee

The Remuneration Committee, which comprises all

directors and is chaired by Charlie Ricketts, is responsible

for determining the level of Directors’ fees, having regard

to external sources. The terms of reference are available

on request and on the Company’s website. Further

information may be found in the Directors’

Remuneration Report.

Management Engagement Committee

The Management Engagement Committee, which

comprises all the Directors and is chaired by James Will,

reviews the performance of the Manager and its

compliance with the management agreement.

The Committee keeps the resources of the Manager

under constant review, conducts an annual review of the

terms and conditions of the management agreement

(“Agreement”) and undertakes an evaluation of the

Manager’s performance under this Agreement. In

monitoring the performance of the Manager, the Board

reviews the investment performance, management

processes, risk control mechanisms and promotional

activities of the Manager.

As a result of these reviews, the Board concluded that the

Manager has the investment management, promotional,

secretarial and administrative skills required for the

effective operation of the Company. The Board believes

that the Manager has satisfactorily met the terms of the

management agreement with the Company, and

considers that the continuing appointment of the

Manager is in the interests of the Company and its

shareholders. The performance of the Manager remains

under close review.

Nomination Committee

A Nomination Committee was established in January

2020, which comprises all Directors and is chaired by

James Will, and has responsibility for Board evaluation,

succession planning, new appointments and training.

Performance evaluation

An appraisal of each Director, including the Chairman, and

of the operation of the Board and its Committees, was

undertaken during the year. The Chairman’s performance

assessment was led by the Senior Independent Director.

The Board also reviewed the Chairman’s and Directors’

other commitments. The Board is satisfied that each

Director’s performance continues to be effective, and that

each remains fully committed to the Company. The

Company has not been a constituent of the FTSE 350 and,

as such, an external evaluation of the Board was not

undertaken during the financial year.

Succession planning

In line with the Company’s strong commitment to its

corporate governance responsibilities, the Board regularly

reviews its performance and structure to ensure it has the

correct mix of relevant skills, diversity and experience for

the effective conduct of the Company’s business to

complement the existing composition of the Board whilst

having due regard for the benefits of diversity, including

gender and ethnicity, on the Board.

New Board appointments are identified against the

requirements of the Company’s business and the need to

have a balanced Board and are routinely facilitated by an

external search consultant to ensure that a wide range of

candidates can be considered. Following a review of its

composition and, taking into account succession plans,

the Board engaged Trust Associates to identify potential

candidates for a new Board appointment. This resulted in

the appointment of Matthew Dobbs on 1 February 2022.

Trust Associates has previously been engaged by the

Company as an external search consultant to identify

potential candidates for Board appointments. Trust

Associates has no other connection with the Company or

any of the Directors.

Statement of Corporate Governance

Continued

Asia Dragon Trust plc 55

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

The Board has implemented the provisions of the UK Code

whereby all Directors of the Company will stand for re-

election on an annual basis. The Board has reviewed the

skills and experience of each Director, and supports their

re-election. Matthew Dobbs, who was appointed during

the financial year, will stand for election.

New Directors are given appropriate induction from the

Manager covering legal responsibilities, the Manager’s

operations and investment trust industry matters. All

Directors are entitled to receive appropriate and relevant

training. If necessary, there is a procedure for a Director

to take independent professional advice at the

Company’s expense.

Relations with Shareholders

The Directors place great importance on communication

with shareholders. Besides shareholders, the report and

financial statements are widely distributed to other parties

who have an interest in the Company’s performance.

Shareholders and potential investors may obtain up-to-

date information on the Company through the Manager’s

freephone information service, and the Company

responds to letters from shareholders on a wide range of

issues. The Company’s annual and half-yearly reports and

other publications can be downloaded from the

Company’s website, www.asiadragontrust.co.uk.

The Board’s policy is to communicate directly with

shareholders and their representative bodies without the

involvement of the management group (either the

Company Secretary or the Manager) in situations where

direct communication is required. The Chairman meets

with representatives of the major shareholders during the

financial year on an annual basis in order to gauge their

views. The Manager maintains regular contact with

institutional shareholders and feeds back shareholder

views to the Board.

As set out in the Chairman’s Statement on page 10, the

Board will be hosting an Online Shareholder Presentation

at 11:00am on 21 November 2022 in order to encourage

as much interaction as possible with the Company’s

shareholders. Full details on how to register for the online

event can be found on the Company’s website at

www.asiadragontrust.co.uk.

It is the intention of the Board that, in the ordinary course,

the notice of the Annual General Meeting included within

the annual report and financial statements is normally

sent out at least 20 working days in advance of the

meeting. The Board encourages shareholders to attend

and participate at the Company’s AGM. At the AGM, the

Investment Manager provides a presentation at the

meeting outlining the key investment issues that affect

the Company and all shareholders have the opportunity

to raise questions. Proxy voting figures for each resolution

are announced to the meeting after voting on a show

of hands and details are available on the Company’s

website.

Environmental, Social and Governance

(“ESG”) Investing

Our Investment Manager’s approach to ESG matters is

included on pages 22 to 28.

The UK Stewardship Code and Proxy Voting

The Company supports the UK Stewardship Code, and

seeks to play its role in supporting good stewardship of the

companies in which it invests. Responsibility for actively

monitoring the activities of portfolio companies has been

delegated by the Board to the Manager which has sub-

delegated that authority to the Investment Manager.

abrdn plc is a tier 1 signatory of the UK Stewardship Code

which aims to enhance the quality of engagement by

investors with investee companies in order to improve

their socially responsible performance and the long term

investment return to shareholders. While delivery of

stewardship activities has been delegated to the

Manager, the Board acknowledges its role in setting the

tone for the effective delivery of stewardship on the

Company’s behalf.

The Board has also given discretionary powers to the

Manager to exercise voting rights on resolutions proposed

by the investee companies within the Company’s portfolio.

The Manager reports on a quarterly basis on stewardship

(including voting) issues.

56 Asia Dragon Trust plc

The Audit & Risk Committee (“the Committee”) presents

its Report for the year ended 31 August 2022.

Membership and Responsibilities

The Committee is chaired by Gaynor Coley, who is a

chartered accountant, and comprises all Directors, with

the exception of James Will who can, upon invitation,

attend meetings as an observer. The Committee is

satisfied that, as a whole, it has the necessary recent and

relevant financial experience and competence relevant to

the investment trust sector in order to fulfil its

responsibilities. The main responsibilities of the

Committee are:

· to review the half yearly and annual financial

statements of the Company, the accounting policies

applied therein and to ensure compliance with financial

and regulatory reporting requirements;

· to assess whether the annual report and financial

statements, 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;

· to review and report to the Board on the significant

financial reporting issues and judgements made in

connection with the financial reporting including the

statement on the Company’s viability;

· to consider reports from the external auditors, including

its audit strategy and findings;

· to develop and implement policy on the engagement of

the external auditors to supply non-audit services;

· to consider the re-appointment, remuneration and

terms of engagement of the external auditors and to

review annually the external auditors’ independence,

objectivity, effectiveness, resources and qualification;

· to review and monitor the internal control systems and

risk management systems (including non financial risks)

on which the Company is reliant;

· to consider annually whether there is a need for the

Company to have its own internal audit function; and

· to review the arrangements in place within the Manager

whereby staff may, in confidence, raise concerns about

possible improprieties in matters of financial reporting or

other matters (‘whistleblowing’).

The Committee undertakes an annual performance

evaluation, in relation to discharging its responsibilities,

through questionnaires and discussion.

The respective responsibilities of the Directors and the

external auditors in connection with the financial

statements appear on pages 63 and 70.

Activities During the Year

The Committee meets at least three times per year when

it reviews the annual and half yearly financial reports in

detail. Reports from the Manager’s internal audit, risk and

compliance departments are also considered by the

Committee which cover internal control systems, risk and

the conduct of the business in the context of its regulatory

environment.

Risk Management and Internal Control

In accordance with the Disclosure and Transparency

Rules 7.2.5, the Board is responsible for the Company’s

system of internal control and has reviewed the

effectiveness of the Company’s risk management and

internal control systems. The Board confirms that there is

an ongoing and robust process for identifying, evaluating

and managing the significant risks faced by the Company

which include financial, operational, compliance and

reputational risks.

Under the Management Agreement, the management of

the Company’s assets has been delegated to the

Manager within overall guidelines. Risks are identified and

documented through a risk management framework by

each function within the Manager’s activities. The internal

control systems operated by the Manager are monitored

and supported by an internal audit function which

undertakes periodic examination of business processes

and ensures that recommendations to improve controls

are implemented. Any weaknesses identified are reported

to the Board, and timetables are agreed for implementing

improvements to systems. The implementation of any

remedial action required is monitored and feedback

provided to the Board.

This process has been in place for the year under review

and up to the date of approval of this annual report and

financial statements. It is regularly reviewed by the Board

and accords with the Financial Reporting Council’s

Guidance on Internal Controls.

Audit and Risk Committee’s Report

Asia Dragon Trust plc 57

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

In addition, the Board has adopted its own risk matrix

which identifies the key risks for the Company and covers

strategy, investment management, operations, regulatory

and financial obligations and third party service providers.

A monitoring system is undertaken whereby the controls

to mitigate these risks, and the impact of the residual risks,

are assessed on a regular basis. The risk matrix is formally

reviewed on a six monthly basis in order to identify

emerging risks which may arise. Details of the emerging

and principal risks faced by the Company are provided in

Overview of Strategy on pages 16 to 18.

The key components designed to provide effective

internal control are outlined below:

· The Manager prepares forecasts and management

accounts which allow the Board to assess the

Company’s activities and review its performance; the

emphasis is on obtaining the relevant degree of

assurance and not merely reporting by exception;

· The Board and the Manager have agreed clearly

defined investment criteria, specified levels of authority

and exposure limits. Reports on these issues, including

performance statistics and investment valuations, are

regularly submitted to the Board and there are

meetings with the Manager as appropriate;

· As a matter of course, the Manager’s risk management

department, including compliance and internal audit

functions, continually reviews the Manager’s operations

and provides reports to the Committee;

· Written agreements are in place, which specifically

define the roles and responsibilities of the Manager and

other third party service providers;

· The Board has considered the need for an internal audit

function but, because of the compliance and internal

control systems in place within the Manager, has

decided to place reliance on the Manager’s risk

management systems and internal audit procedures;

and

· The Committee carried out bi-annual reviews of the

Manager’s risk management and internal controls,

including the internal audit and compliance functions. At

its October 2022 meeting, the Committee performed its

annual assessment of internal controls for the year

ended 31 August 2022. The results of the assessment

were reported to the Board.

Internal control systems are designed to meet the

Company’s particular needs and the risks to which it is

exposed. Accordingly, the internal control systems are

designed to manage, rather than eliminate, the risk of

failure to achieve business objectives and by their nature

can only provide reasonable, and not absolute, assurance

against material misstatement or loss.

Financial Statements and Significant Matters

During its review of the Company’s financial statements

for the year ended 31 August 2022, the Audit & Risk

Committee considered the following significant matters,

in particular those communicated by the Independent

Auditors during its planning and reporting of the year

end audit.

Valuation, Existence and Ownership of Investments

How the matter was addressed - the Company uses the

services of an independent depositary (BNP Paribas Trust

Corporation UK Limited) (the “Depositary”) to hold the

assets of the Company. An annual internal control report is

received from the Depositary and reviewed by the Audit &

Review Committee. This provides details of the

Depositary’s control environment. The investment

portfolio is reconciled regularly by the Manager. The

portfolio is reviewed and verified by the Manager on a

regular basis and management accounts, including a full

portfolio listing, are prepared quarterly and are

considered at the quarterly meetings of the Board. The

Audit & Risk Committee also considered the Independent

Auditor’s work and conclusions in this area.

The valuation of investments is undertaken in accordance

with the accounting policies disclosed in note 2 to the

financial statements.

The Audit & Risk Committee satisfied itself that there were

no issues associated with the valuation, existence and

ownership of the investments which required to be

addressed.

58 Asia Dragon Trust plc

Income from Investments

How the matter was addressed - the recognition of

dividend income is undertaken in accordance with

accounting policy note 2 to the financial statements.

Special dividends are allocated to the capital or revenue

accounts according to the nature of the payment and the

specific circumstances. Management accounts are

reviewed by the Board on a quarterly basis and

discussions take place with the Manager regarding the

allocation of any special dividends that have been

received. The Audit & Risk Committee also considered the

Independent Auditor’s work and conclusions in this area.

The Audit & Risk Committee concluded that there were

no issues associated with the recognition of dividend

income which required to be addressed.

Other Accounting Issues

The Company’s compliance with investment trust status,

under section 1158 of the Corporation Tax Act 2010, is

monitored by the Manager on an ongoing basis and

reported to the Committee.

Review of Independent Auditors

The Committee has reviewed the independence and the

effectiveness of the external auditors,

PricewaterhouseCoopers LLP (“PwC”), as follows:

· The external auditors report on an annual basis the

steps it takes to ensure its independence and objectivity

and confirms that it has complied with the relevant UK

independence guidelines. The level of fees for non-audit

services provided by the auditors is assessed and for the

year to 31 August 2022 was nil (2021 - £nil). The Board

will review any future non-audit fees in the light of the

requirement to maintain the auditor’s independence.

· The Committee considers the experience, continuity

and tenure of the external audit team, including the

audit partner. The audit team consists of suitably

experienced staff with knowledge of the investment

trust sector and there is a process in place for the

rotation of the audit partner. This is the second year that

PwC has undertaken the audit and the second year that

Thomas Norrie, senior statutory auditor, has been

involved in the Company’s audit.

· The Committee assesses the level of audit service

annually. The audit plan is reviewed well in advance and

subsequent audit findings are reported

comprehensively in a timely manner and are resolved

satisfactorily. The auditors have a constructive working

relationship with both the Board and the Manager.

Re-appointment of the Independent Auditors

During the financial year to 31 August 2020, the

Committee undertook an audit tender, following which

the Board recommended the appointment of PwC as the

Company’s auditors. Shareholders overwhelmingly voted

in favour of the appointment of PwC at the Company’s

AGM on 10 December 2020.

Based on its experience of the audit process and

engagement with PwC, the Audit & Risk Committee

supports the recommendation to the Board that the re-

appointment of PwC be put to Shareholders for approval

at the AGM.

Gaynor Coley,

Chairman of Audit & Risk Committee

31 October 2022

Audit and Risk Committee’s Report

Continued

Asia Dragon Trust plc 59

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

The Board has prepared this Remuneration Report in

accordance with the regulations governing the disclosure

and approval of Directors’ remuneration. This

Remuneration Report comprises three parts:

a) A Remuneration Policy, set out below, which was last

approved by shareholders at the 2020 AGM. This

policy is subject to a vote every three years. Any

change to this policy during this interval would require

shareholder approval;

b) An annual Implementation Report, which provides

information on how the Remuneration policy has

been applied during the year and will be subject to an

advisory vote at the AGM; and

c) An Annual Statement.

The law requires the Company’s auditors to audit certain

of the disclosures provided in the Remuneration Report.

Where disclosures have been audited, they are indicated

as such. The auditor’s opinion is included in the report on

page 65.

Remuneration Policy

The Remuneration Policy takes into consideration the

principles of the UK Code of Corporate Governance and

the AIC’s recommendations regarding the application of

those principles to investment companies. Directors’

remuneration is determined by the Remuneration

Committee. The principles remain the same as for

previous years. There have been no changes to the

Directors’ Remuneration Policy during the period of this

Report nor are there any proposals for changes in the

foreseeable future, except for the Directors’ fees, as set

out in the Implementation Report below.

The Board’s policy is that the remuneration of non-

executive Directors should reflect the nature of their

duties, responsibilities and the value of their time spent and

be fair and comparable to that of other investment trusts

that are similar in size, have a similar capital structure and

have a similar investment objective. No shareholder views

were sought in setting the remuneration policy although

any comments received from shareholders would be

considered on an on-going basis. Fee rates are

established by having regard to external sources as to

current market levels.

Directors’ fees

The Directors are non-executive and their fees are set

within the limits of the Company’s articles of association

which limit the aggregate fees payable to the Board of

Directors per annum, currently £250,000. The level of cap

may be increased by shareholder resolution from time

to time.

Appointment

· The Company only intends to appoint non-executive

Directors under the terms of Letters of Appointment.

· Directors must retire and be subject to re-election at the

first AGM after their appointment and annually

thereafter.

· New appointments to the Board will be placed on the

fee applicable to all Directors at the time of

appointment.

· No incentive or introductory fees will be paid to

encourage a directorship.

· The Directors are not eligible for bonuses, pension

benefits, share options, long term incentive schemes or

other benefits.

· The Company indemnifies its Directors for costs,

charges, losses, expenses and liabilities which may be

incurred in the discharge of duties, as a Director of the

Company.

· The Directors are entitled to re-imbursement of out-of-

pocket expenses incurred in connection with the

performance of their duties, including travel expenses.

Performance, Service Contracts,

Compensation and Loss of Office

· The Directors’ remuneration is not subject to any

performance related fee.

· No Director has a service contract.

· No Director was interested in contracts with the

Company during the period or subsequently.

· The terms of appointment provide that a Director may

be removed without notice.

· Compensation will not be due upon leaving office.

· No Director is entitled to any other monetary payment

or any assets of the Company.

Directors’ & Officers’ liability insurance cover is maintained

by the Company on behalf of the Directors.

Directors’ Remuneration Report

60 Asia Dragon Trust plc

The Directors’ Remuneration Policy was last approved by

shareholders at the Company’s AGM on 10 December

2020. Assuming no changes to the Remuneration Policy, a

resolution to approve the Directors’ Remuneration Policy

will next be proposed at the AGM in 2023.

Implementation Report

Directors’ Fees

During the financial year the Board carried out a review of

Directors’ fees and increased the rates as shown in the

following table with effect from 1 September 2022. The

last increase in Directors’ fees prior to this was effective

from 1 September 2021.

1 September

2022

1 September

2021

Independent Director 32,000 31,000

Additional fee for Chairman 13,000 12,500

Additional fee for Chairman of

Audit & Risk Committee

5,750 5,500

Additional fee for SID 1,600 1,500

Company Performance

During the year the Board carried out a review of

investment performance. The graph below shows the

share price and NAV total return (assuming all dividends

are reinvested) to Ordinary shareholders compared to

the total return from a composite index, in Sterling terms,

consisting of the MSCI All Country Asia (ex Japan) Index

for the ten year period to 31 August 2022 (rebased to 100

at 31 August 2012). This index was chosen for comparison

purposes, as it is the reference index used for investment

performance measurement purposes.

100

120

140

160

180

200

220

240

260

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Share Price NAV Index

Statement of Voting at General Meeting

At the Company’s last AGM, held on 15 December 2021,

shareholders approved the Directors’ Remuneration

Report (other than the Directors’ Remuneration Policy) in

respect of the year ended 31 August 2021. 99.87% of

proxy votes were in favour of the resolution, 0.09% were

against and 0.04% abstained. At the AGM on 10

December 2020, shareholders approved the Directors’

Remuneration Policy with 99.78% of proxy votes in favour,

0.14% against and 0.08% abstained.

A resolution to approve the Directors’ Remuneration

Report (excluding the Directors’ Remuneration Policy) in

respect of the year ended 31 August 2022 will be

proposed at the Annual General Meeting.

Spend on Pay

As the Company has no employees, the Directors do not

consider it appropriate to present a table comparing

remuneration paid to Directors with distributions to

shareholders. However, for ease of reference, the total

fees paid to Directors are shown in the table on page 61

while dividends paid to shareholders are set out in note 8

and share buybacks are detailed in note 14.

Directors’ Remuneration Report

Continued

Asia Dragon Trust plc 61

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Fees Payable (audited)

The Directors who served in the year received the

following fees which exclude employers’ NI and any VAT

payable. This represents the entire remuneration paid to

the Directors.

Fees are pro-rated where a change takes place during a

financial year. No fees were paid to third parties.

Director

2022

2021

James Will 43,500 42,000

Gay Coley 36,500 35,000

Matthew Dobbs

(appointed 1 February 2022)

18,100 n/a

Kathryn Langridge

(retired 15 December 2021)

9,000 30,000

Peter Maynard

(retired 10 December 2020)

n/a 8,306

Susan Sternglass Noble 31,000 30,000

Charlie Ricketts 32,500 31,000

Total 170,600 176,306

Annual Percentage Change in Directors’

Remuneration

The following table sets out the annual percentage

change in Directors’ fees for the past three years from 1

September 2019 to 31 August 2022.

Year