Annual Financial Report

THE SCOTTISH ORIENTAL SMALLER COMPANIES TRUST PLC

Annual Financial Report for the year ended 31 August 2026

Financial Highlights

A Alternative Performance Measure.

B The Active Share ratio figures illustrate the extent to which The Scottish Oriental Smaller Companies Trust plc’s portfolio differs from the index; 100 per cent would indicate that there is no overlap whatsoever.

A Glossary of Terms and Alternative Performance Measures is provided on pages 68 to 70 of the Annual Report.

Chairman’s Statement

The year to 31 August 2026 was a challenging period for the Company. It also marked the end of the five-year performance period under the Company’s conditional tender offer, over which the Company underperformed its benchmark.

During the year under review, the Company’s NAV decreased by 6.5 per cent, on a total return basis, compared to the MSCI AC Asia ex Japan Small Cap Index, the MSCI AC Asia ex Japan Index and the FTSE All-Share Index, which increased by 19.8 per cent, 40.4 per cent and 21.3 per cent respectively (on a total return basis) during the same period. The Company’s share price fell by 9.0 per cent during the year which, including dividends paid, produced a share price total return of negative 7.9 per cent.

This was a poor result, both in absolute terms and against the benchmark, and the Board shares the disappointment of the Company’s shareholders. Over the course of the year, the Board carried out a detailed review of historic performance and the potential for future outperformance with the Investment Manager. Alongside this, it engaged extensively with shareholders to seek their views on the Company’s future. That process culminated in the Board’s announcement on 13 October 2026 of a formal Strategic Review, which is described below.

Conditional Tender Offer

On 23 November 2021, the Board announced a performance-related conditional tender offer (“CTO”) linked to the Company’s investment performance over the five-year period that commenced on 1 September 2021 (the “Performance Period”). Under the CTO’s terms, a tender offer for up to 25 per cent. of the Company’s issued share capital was to be put to Shareholders if, over the Performance Period, the Company’s NAV total return in Sterling on a cum-income basis did not exceed the total return of the MSCI AC Asia ex Japan Small Cap Index (in Sterling) (the "Index") over the same timeframe.

The Company outperformed its benchmark comfortably during the first three years of the Performance Period, with a NAV total return of 17.5 per cent compared to 0.9 per cent for the Index. However, this lead was more than offset by relative underperformance in the subsequent two years, where the NAV returned 9.0 per cent versus an Index total return of 47.2 per cent. During this period market gains were concentrated in Taiwan, Korea and technology – where the portfolio was under exposed – whilst consumer companies and India – where the portfolio was much more exposed – struggled. As a result, over the Performance Period, which ended on 31 August 2026, the Company’s NAV total return was 28.0 per cent compared with 48.5 per cent for the MSCI AC Asia ex Japan Small Cap Index (on a total return basis) and, consequently, the CTO was triggered.

Strategic Review

On 2 September 2026, the Board confirmed that the performance criteria for the CTO had been met and that it was continuing to engage with a number of shareholders to consider whether additional actions were required to ensure that the Company meets their needs on an ongoing basis. Those discussions highlighted the importance of scale and secondary market liquidity, alongside investment performance, and that many shareholders wanted the Board to consider the Company’s options more broadly.

Accordingly, and given the indications of voting intentions received with respect to the shareholder approval required to implement the CTO, the Board announced on 13 October 2026 that it would not proceed with the CTO at that time and would instead undertake a formal Strategic Review of the Company’s future options (the “Strategic Review”).

In assessing proposals for the future of the Company, based upon shareholder feedback received to date, the Board continues to believe in the merits of investing in Asian smaller companies. It also remains mindful of shareholders’ expectations for a 25 per cent cash exit opportunity which was to be delivered promptly following the triggering of the CTO, alongside its objective of providing continuing shareholders with an investment vehicle of greater scale and liquidity.

The Board has appointed Investec Bank plc to assist with the Strategic Review and will update shareholders as appropriate as the process develops.

Management Fee Arrangements

Following discussions with the Investment Manager, revised management fee arrangements were introduced with effect from 1 March 2026. The annual management fee was reduced from 0.75 per cent per annum of net assets as follows:

In addition, the performance fee was removed entirely.

Proposed Amendment to the Investment Policy

As previously stated in my statement in the last Interim Report, at the forthcoming Annual General Meeting, shareholders will be asked to approve an amendment to the Company’s investment policy. Under the current policy, the Company is permitted to invest in companies with a market capitalisation of up to US$5 billion at the time of initial investment. This limit has been amended as a defined numerical figure on a number of occasions over the Company’s history, as the opportunity set available to the Portfolio Managers has changed. Rather than proposing a further numerical amendment, the Board is recommending a new policy that would allow investment in Asian quoted investments with float-adjusted market capitalisations equal to or lower than that of the largest constituent of the MSCI AC Asia ex Japan Small Cap Index at the time of first investment.

The proposed change would not alter the Company’s objective of investing primarily in Asian smaller companies, nor would it represent any change to the Portfolio Managers’ portfolio construction process, which starts with a blank slate rather than using the index as a guide. The Board believes the new upper limit would provide additional flexibility to access a broader opportunity set across the region, and would help ensure that the Company can continue to invest in businesses that meet its quality and long-term growth criteria.

Revenue and Dividend

Revenue earnings per share were 2.58p compared with 4.51p last year. As highlighted in the Portfolio Managers' Report in the last Interim Report, the reduction primarily reflects lower dividend income from the portfolio compared with the unusually strong dividend income levels including significant special dividends received in recent years. The Board has recommended a final dividend of 2.9p per share which, subject to shareholder approval at the Annual General Meeting, will be paid on 5 February 2027 to shareholders on the register at the close of business on 8 January 2027. The shares will be marked ex-dividend on 7 January 2027. This dividend is unchanged from the previous year and is partly funded from revenue reserves.

Discount Management

The Company’s discount widened modestly during the year, ending the period at 11.0 per cent compared with 9.6 per cent at the start of the period. The average discount over the year was 11.6 per cent.

The Board remains committed to active discount management. During the year the Company bought back 3,810,848 ordinary shares for treasury, representing approximately 3.3 per cent of the shares in issue at the beginning of the period. Since the introduction of enhanced discount management measures in recent years, the Board has continued to use buybacks selectively to moderate both the level and volatility of the discount.

Board Composition and Succession

Following a recruitment process, David Benda joined the Board in April 2026. David brings extensive experience of investment companies and capital markets and has already made a valuable contribution to Board discussions.

As previously announced, Andrew Baird retired from the Board in July 2026 after nine years of service. On behalf of the Board and shareholders, I would like to thank Andrew for his significant contribution to the Company, including his service as Senior Independent Director, and wish him every success for the future.

I intend to retire from the Board in April 2027. However, I have agreed to remain as Chairman beyond that date if necessary to oversee the conclusion of the Strategic Review.

Should the Company continue in its current form following the Strategic Review, Michelle Paisley, who has been appointed as Chair Elect, will succeed me as Chair on my retirement. Michelle has served on the Board for 6 years and has developed a deep understanding of the Company, its investment approach and its shareholders. The Board is confident that Michelle will provide strong leadership and continuity.

Annual General Meeting

The Annual General Meeting will be held on Wednesday, 27 January 2027 at 2.00pm at Investec Bank plc, 30 Gresham Street, London, EC2V 7QP.

Outlook

The period since the year end has been one of substantial change for the Company. The announcement of the Strategic Review reflects the Board’s determination to evaluate thoroughly the Company’s future options and identify the course of action that best serves the long-term interests of shareholders as a whole. The Board has received a number of proposals as part of the Strategic Review process and we look forward to providing an update to shareholders in due course.

Whilst the Strategic Review proceeds, the portfolio continues to be managed by FSSA in line with the Company’s investment policy.

As always, the Board welcomes communication from shareholders, and I can be contacted through the Company Secretary at [email protected].

Jeremy Whitley

Chairman

10 November 2026

Portfolio Managers’ Report

In this report, we address the following topics:

Over the 12 months to 31 August 2026, Scottish Oriental’s net asset value fell by 6.5 per cent on a total return basis, compared to a gain of 19.8% in the MSCI AC Asia ex Japan Small Cap Index. Performance has been disappointing.

The portfolio’s positioning has suffered from two issues. Firstly, the substantial exposure to consumer companies. These have been significant detractors. Secondly, the relatively lower exposure to the industrial and information technology sectors, which have performed strongly over this period.

Since 2016, the portfolio’s exposure was concentrated in consumer companies, primarily those operating in South Asia and Southeast Asia. As a result, the portfolio had too much exposure to India, Indonesia and the Philippines, and relatively limited exposure to South Korea and Taiwan. This positioning has been the key reason for the weak performance over the past year.

This speaks to a broader point about our positioning. The portfolio’s substantial exposure to consumer companies in South Asia and Southeast Asia was the result of individual stock-selection decisions made over many years. These markets and industries had previously generated healthy returns, but their representation had become too large over time. Since the change in lead portfolio manager in 2024, we have been adjusting the portfolio to capture a broader spread of the opportunities being created across Asian markets. In the sections that follow, we will highlight these changes in detail.

Top Five Contributors

ASMPT is a leader in semiconductor assembly and packaging equipment. Its equipment is used across a range of industries, from automotive and industrial applications to consumer electronics and computing applications. Headquartered in Singapore, the company’s recent progress in advanced packaging – a collection of manufacturing processes that combines multiple semiconductor chips into a single electronics package, helping to increase capability while reducing power consumption and cost – has enabled it to win contracts from major chipmakers. It is seeing particularly robust demand for its thermo-compression bonding (TCB) tools, which can be deployed to combine layers of chips, and photonics tools, which are used to build and test light-based semiconductor components.

Lite-On Technology is a Taiwan-based technology company which is focused on providing power management solutions to technology customers globally. Although its legacy consumer electronics business has faced challenges, Lite-On has emerged as a leading supplier of critical high-wattage power units for the AI data centres of Big Tech (“hyper-scaler”) customers. This AI server power segment has emerged as the core growth engine of the business and is expected to account for nearly a third of total revenue in 2026. (We discuss Lite-On in further detail in section 2)

Airtac International is a leader in pneumatic components. A longstanding holding, the company is distinguished by its operational excellence and a management team with a long track record of execution. Airtac has been gaining market share in China amid the rise of automation and industrial upgrading, and recent results have been encouraging, with profit margins improving and management raising forward guidance. However, we have been controlling the position size as the company’s valuation approaches our assessment of fair value.

Silergy is a leading analogue semiconductor company. Its power-management chips are used in consumer electronics, industrial equipment, data centres and electric vehicles. Its growth has accelerated over the last 12 months thanks to a combination of industry demand recovery and the company’s forward-looking product development efforts, which have started to bear fruit: Silergy’s data-centre business is benefiting from the surge of AI demand, while the automotive segment is continuing to grow despite weakness in China’s car market.

Impro Precision is China’s leading high-precision casting manufacturer. It has performed strongly thanks to rising demand for high-powered engines used in data-centre infrastructure. At the same time, demand has recovered in several non-AI businesses, including construction equipment, and the company has continued to gain market share from European competitors. Meanwhile, Impro’s Mexico plant has strengthened its bargaining power in winning new orders and supporting customers seeking to diversify their supply chains. (We discuss Impro in further detail in section 2)

Top Five Detractors

* No longer held in the portfolio.

DPC Dash is the exclusive franchise operator of Domino’s Pizza in China. As with many Chinese consumer businesses, sluggish domestic demand has affected market sentiment towards the company despite solid underlying results. DPC Dash saw a particularly sharp decline in March 2026 after disclosing its 2025 earnings; although revenue and net profit margins grew strongly, investors were concerned by a fall in same-store sales growth (SSSG). The SSSG decline is partly a function of the company’s rapid recent expansion (new locations typically experience an initial surge in daily sales, after which sales moderate before gradually rising again). As performance at newer stores stabilises, we expect overall SSSG to improve. We believe the stock has fallen to levels that no longer reflect the long-term value in the business and have consequently been adding to the position on weakness.

NetEase Cloud Music is the second-largest online music platform in China after Tencent Music Entertainment, the market leader. Having been the portfolio’s best-performing stock in 2025, rising 180% over the year, its shares have since fallen on market concerns over potential AI disruption to its business and intensifying competition from rivals such as Soda Music. While its earnings base looks stable for the time being, its music catalogue is at risk of being commoditised over the coming years, which will likely constrain growth. We therefore exited the position to raise cash for other opportunities.

Philippine Seven is the exclusive franchise operator of 7-Eleven in the Philippines. The company has been affected by challenges such as bad weather, the government’s crackdown on Philippine offshore gaming operators (which affected footfall in its stores), and increasing competition from hard discounters in Metro Manila. However, the company’s same-store-sales metrics have started to improve and it continues to add stores in less‑penetrated islands in the archipelago, where competition remains limited. This should provide Philippine Seven with an extended runway for growth over the longer term.

Whirlpool of India produces consumer durable products in India, such as refrigerators, washing machines and air conditioners. Its shares declined in early 2026 after the parent, Whirlpool Corporation, sold a further stake in the business to reduce its own debt. We were disappointed by this decision, especially as the owner sold the stake on the open market having previously stated its intention to sell to a long-term strategic buyer. Concerned that this revealed a lack of alignment with our own interests as minority shareholders, we sold our position in January 2026.

Colgate-Palmolive India is the leader in oral care in India. The company has suffered due to greater competition and volume decline, and its management has admitted tactical mistakes, including an aggressive move to cut prices in response to competitive pressures in 2024. While demand has improved, with the company returning to double-digit growth in recent quarters, this is not yet reflected in profit growth due to higher advertising and brand building spends. However, our confidence in the company has been bolstered by the management’s proactive efforts to respond to shifts in the retail landscape in India. For example, Colgate-Palmolive is investing in digital advertising and embracing quick commerce in order to improve its positioning in key channels of the future.

Since the inception of Scottish Oriental in 1995, we have always followed a bottom-up investment philosophy. The team meets over 800 smaller companies each year. These meetings inform our perspective on the most attractive opportunities in our investment universe, based on the outlook for their growth, return on invested capital and evolving industry structures. However, periodically, we also observe broad changes in the countries where we are finding the most attractive opportunities.

For example, two decades ago, the Company’s largest holdings were businesses located in Hong Kong and Southeast Asia, such as Malaysia, Singapore and Thailand. As those markets matured in the mid-2010s, and corporate earnings growth began to slow, we began to find better opportunities in faster-growing economies such as India, Indonesia and the Philippines. Between 2016 and 2019 we redeployed capital towards investments in high‑quality companies in these markets, which improved the portfolio’s aggregate earnings growth and average return on equity (ROE). This contributed to a strong period of performance following the pandemic.

The last 18 months have represented another period of transition. We have been actively selling out of positions where we see weaker long-term growth prospects, and investing the proceeds into businesses that we believe can generate superior returns on capital and an acceleration in their growth. This has resulted in significantly reduced exposure to consumer companies, particularly in South and Southeast Asia, and increased exposure to industrial and technology businesses, notably in South Korea and Taiwan (see charts below). This has not been a “top-down” portfolio re-allocation exercise; it reflects where our country visits and management meetings are uncovering the most compelling opportunities.

Our recent investments in South Korea are a good illustration of this process in action. Historically, we had found few good opportunities in South Korea, partly due to governance concerns (complaints about the slow pace of reforms among the chaebol, the country’s family-controlled conglomerates, have been a common refrain in our manager’s letters over the years). But in 2025, we were encouraged to revisit the market when the government’s “Corporate Value-Up Program” – a structural shift in favour of shareholder‑friendly reforms, similar to those successfully introduced in Japan in the early 2020s – began to gain traction.

Our team visited South Korea four times over the last year. On these visits, many of the companies we met were making changes aligned with the Value-Up initiative, such as clearer dividend policies, improved board accountability and a sharper focus on shareholder returns. Of particular interest was a group of companies operating in the country’s semiconductor value chain, whose high-end engineering know-how and close customer relationships indicated durable competitive advantages in their respective niches. Attracted by this combination of improving governance, technological capability and growth potential, we added companies including Hansol Chemical, Park Systems, Eugene Technology and ISC to the portfolio (you can read more about these businesses in section 3).

A similar expansion of the opportunity set has taken place in Taiwan, although here it has been driven less by governance reform and more by the strength of the country’s technology companies. Our increased exposure is partly a reflection of improved performance among longstanding Taiwan-based holdings, such as Silergy and Airtac International. But we have also added several new Taiwanese companies that the FSSA team have long been familiar with: Realtek Semiconductor, Tripod Technology and Lite‑On Technology.

We also added China’s Sunny Optical. These are high‑quality companies that share attractive characteristics, including high ROE and robust prospects for future earnings expansion, and all were available at reasonable valuations at the time of our purchase (see table below). Given their positioning within Asia’s technology supply chains, these additions should strengthen the Company’s exposure to one of the region’s most compelling longer-term structural growth trends.

Source: FactSet, Bloomberg. Data as at 23 April 2026.

* The forecast average annual growth in earnings per share over the next two years.

** Return on equity – net profit divided by shareholders’ equity.

+ Forward price-to-earnings ratio: the share price divided by forecast earnings per share for the next financial year.

New growth drivers

We believe the changes outlined above have improved the portfolio’s ability to capture opportunities arising from longer-term structural themes in Asia. In particular, we have been monitoring three key shifts: technological development, rising industrialisation, and the evolution of consumer spending towards discretionary products and services.

Starting with technology, the dominant market narrative of the last year has been the AI capital expenditure cycle, under which Big Tech hyper-scalers are competing for the advanced hardware and components necessary to run their state-of-the-art AI models. While this has accelerated growth across Asia’s tech ecosystem, we believe that the region’s manufacturing hubs have been moving up the value chain for decades now. Asia’s increasingly complex and sophisticated hardware supply chains should continue to claim a disproportionate share of the growth in the technology profit pool even if AI spending moderates.

In this context, it is worth looking more closely at Lite-On, which is a great example of a company that has smartly positioned itself within these broader supply networks. Having followed the company for many years, we were struck by the improvements introduced under the second generation of the founding family, who took control in 2020 under chairman Tom Soong. Since then, Lite-On has been exiting non-core operations and concentrating on higher‑value segments, particularly power-supply equipment. This helped the company improve its return on capital invested substantially. It has also been gaining market share with global Big Tech customers (at the time of writing in October 2026, Lite-On provides power supplies to three of the five largest global hyper-scalers). At the time of our purchase (May 2026), the company was available at a valuation of less than 20 times forward price-to-earnings, with a 4% dividend yield. It is expected to grow its earnings per share at almost 30% compound annual growth rate over the next two years, while earning high returns on capital. We saw this as a compelling entry point.

The second key theme is industrialisation. Asian economies are increasingly seeking to build their manufacturing capabilities to serve their domestic markets as well as gain market share globally. In this context, we are increasingly finding smaller industrial businesses that are competitive across a range of applications; in many cases, these firms have been able to establish dominant positions at home and then use either cost advantages or proprietary technology to wield increasing clout overseas.

Impro Precision, a Chinese manufacturer of high-precision castings, is one such example. We have known the company since its listing in 2017. We initiated a position for Scottish Oriental in 2025, having observed an inflection point in Impro’s growth: increasingly, it had begun to gain market share from more-mature businesses in Europe that were struggling following a prolonged period of higher costs and declining competitiveness. Impro seized this opportunity by combining its cost-competitive manufacturing base with a growing presence in markets such as Mexico, enabling it to more effectively serve major customers including Caterpillar. This has led to accelerating growth and a significant improvement in profitability across applications, including commercial vehicles and aerospace. The company is also moving into new areas, such as castings for the high-horsepower engines used in data centres. Impro’s shares were available at 14 times earnings when we invested, with a reasonable dividend yield, and we expect earnings per share to grow at a compound annual rate of more than 20% over the coming years.

In several economies, we are also observing a change in consumer spending habits. A disproportionate share of the increase in consumer incomes is being allocated towards discretionary purchases, ranging from travel, two-wheelers and four-wheelers, as well as discretionary financial products, compared to meeting more basic needs in the past. This has led to strong tailwinds for businesses operating in these segments.

Our holding Atour Lifestyle, added to the portfolio in July 2025, is a good illustration of this. It is a hotel-management platform in China that provides hotel owners with its brand and common services; for their part, customers are attracted by reliable room quality and service standards. Atour has been consolidating China’s fragmented hotel industry while earning high returns on capital thanks to its asset-light model. Over the last five years, it has grown revenue at a compound annual rate of more than 40% a year, while earning an ROE of more than 50% on average. Its growth has remained resilient despite the pressures faced by the broader Chinese consumer sector – indeed, weaker conditions have enabled Atour to rapidly gain market share, as more independent property owners recognise they can earn higher yields as Atour franchisees. We expect the business to maintain its high earnings growth and return on equity over the coming years, and it is also implementing a meaningful share repurchase programme.

In the following section, we will examine the recent additions and sales in more detail.

The period has seen meaningful changes in the portfolio, which has been re-positioned to capture stronger growth opportunities across areas such as technology, industrial development and consumer discretionary industries. This is primarily through new ideas in countries including India, Taiwan, South Korea and China. The investment team has followed these businesses and also been shareholders of several of them for many years, in their country or other regional strategies.

New holdings

In Korea, we see particularly attractive opportunities among companies that have established competitive advantages within specialised niches in the chipmaking value chain. A good example is Hansol Chemical, originally a producer of hydrogen peroxide for paper and textile applications, which has repositioned itself as a key supplier of speciality chemicals for the semiconductor industry. It is also incubating new businesses in niche areas such as binding materials and adhesive tapes used in battery manufacturing. We have been impressed by the company’s culture and the openness of the leadership team, who have been happy to engage with our questions about shareholder alignment. There is a broad employee share ownership plan – a rarity in Korea – and the company has a track record of consistently returning cash to shareholders through dividends and buybacks, with a target payout ratio of around 20%. Combined with the firm’s strong profitability and attractive valuation, these factors led us to initiate a position.

Park Systems is the market leader in atomic force microscopes (AFM), tools with applications in the semiconductor industry. While it operates in a niche category, the company has built a dominant position thanks to its ability to commercialise a technology that had previously been restricted to advanced academic research. Park Systems is also profitable, with a gross profit margin of more than 60% over the last five years, and has continued to generate strong free cashflow despite a recent rise in capital expenditure related to the construction of a new factory. We have met the company several times and have been consistently impressed with the calibre of the management team.

Eugene Technology is a semiconductor equipment company that focuses on chemical vapour deposition (CVD), a process used to create ultra-thin layers on silicon wafers as part of chipmaking. We believe it is likely to be a key beneficiary of the substantial growth in semiconductor capital expenditure among its major domestic customers. As with our other additions in Korea, we found good alignment with the management team and were able to initiate the position at a reasonable valuation.

ISC makes test sockets for the semiconductor industry. These small but critical components connect semiconductors to testing equipment to verify a chip’s functionality, performance and reliability before it is integrated into technology systems. ISC’s years of investment are starting to pay off through new customer wins, and rubber sockets are increasingly being used as the new standard. Orders are fully booked through the second half of 2026, with strong earnings visibility over the next three years.

In Taiwan, as in Korea, we have focused our investments in technology companies that have displayed durable competitive advantages, whether deriving from their management capabilities, technical expertise or customer relationships. We have tended to find better value in companies that act as enablers of technology upgrades, whose exposure to the AI theme is indirect – Lite-On, with its growing business providing power-supply equipment, is a good example.

Another is Tripod Technology, a leading manufacturer of printed circuit boards (PCBs). In a market fixated on the most complex AI-related circuitry, Tripod has sensibly avoided chasing the highest-end technology, where returns can be volatile. Instead, it focuses on high-layer-count PCBs for general servers, memory modules and automotive applications, where it sees potential for more stable returns. We find this pragmatic mindset refreshing, and the approach has allowed Tripod to generate consistently high returns and strong free cashflow.

Realtek Semiconductor is a designer of connectivity chips, a fundamental component of most electronic devices. The market has historically viewed Realtek as tied to the mature PC and consumer electronics markets, which are currently facing cyclical challenges. However, its growth is increasingly being supported by specification upgrades to next-generation networking standards, alongside broader demand for higher-performance connectivity. We also like that the company maintains a strong balance sheet and an attractive dividend yield. Its long-standing relationships with customers, meanwhile, create high switching costs.

Sinbon Electronics is a cable assembler whose products are used across a range of industries, from automotive to industrials and medical devices. The company focuses on customised orders, where profitability tends to be higher, and volumes lower, than in other categories. The company is benefiting from increasing demand from semiconductor companies and has also started to build a presence in new areas such as humanoid robotics, which could open new opportunities in the coming years.

In China, purchases included Sunny Optical, a leading supplier of optical components. The company is gaining market share in camera modules for the automotive industry and this segment now accounts for a growing proportion of its revenue. Sunny Optical also sees growth opportunities in other areas, such as augmented-reality glasses and industrial cameras for warehouse management.

Centre Testing is the biggest private testing, inspection and certification (TIC) company in China. We like the company’s prospects, given the potential for industry consolidation, the fact it is gaining market share from inefficient state-owned enterprises (SOEs), and its deepening business with key accounts such as Walmart. After a period of slower growth, the company is witnessing stronger momentum in recent quarters. This improvement is broad-based, from the pharmaceutical and medical sectors to industrial growth and a turnaround in its semiconductor testing division. The company has a strong track record of generating attractive returns on capital employed (ROCE), and its cash-generative business also allows it to grow through bolt-on acquisitions. We believe Centre Testing has the potential to be substantially larger in the coming years, while maintaining its attractive profitability levels.

In India, our purchases included several industrial businesses that stand to benefit from the economy’s ongoing transition from consumer-driven to capital expenditure-led growth. For example, Tube Investments of India, which forms part of the Murugappa Group, is a holding company with a stable and growing core business manufacturing automotive components. Tube has entered a number of new segments over the last five years, both through organic investments and acquisitions; in 2020, it bought a majority stake in CG Power, a maker of power-generation and transmission equipment, and that investment has proven transformative. The value of its holding in CG Power alone now exceeds Tube’s entire market capitalisation, which means we gain its other fast‑growing businesses – which span electric vehicles, medical devices and automotive components – at a substantial discount to its net asset value.

Elgi Equipments is a manufacturer of air compressors, backed by a reputable owner-manager who has spent the last decade steadily building the overseas franchise. Globally, the air compressor market is large and attractive, with high barriers to entry. Elgi has been gaining market share as one of a handful of Indian industrial companies with a global presence and increasing credibility. The risk/reward looked attractive, given the company’s growth rates in India and the expansion of its distribution and product portfolio globally. A high element of aftersales and servicing in its business mix should also help drive future growth and profits.

Triveni Turbines is a leading maker of steam turbines. The company has maintained healthy margin and return ratios across cycles, and the management team has a history of strong execution. The company is currently focused on a number of growth initiatives that we believe can help it become larger on a five-year view. This includes scaling up its aftermarket servicing and refurbishment solutions and developing new products in areas such as energy storage.

JSW Infrastructure is the second-largest port and terminal operator in India. Ports are a structurally attractive business, as they come with natural moats of location and connectivity, which create barriers to entry and switching costs. Competition is limited, there are no pricing regulations in India (unlike other infrastructure assets), and there should be a long runway for expansion as the Indian government continues to privatise terminals. JSW’s ports are well run, with a strong anchor customer in JSW Steel, and future growth should be supported by increasing third-party cargo and diversification into container and liquid cargo.

Craftsman Automation is involved in steel precision machining, where its engineering expertise has enabled it to build a strong position in a profitable niche with few domestic competitors. The company’s management, led by CEO S. Ravi, has a good track record of successfully moving into new growth areas, such as aluminium components. The outlook is positive, particularly given the company’s recent entry into the machining of large metal components used in generator sets, or “gensets”, which provide backup power for data centres. While Craftsman’s valuations are not cheap, we think they are justified given its positioning in these growth areas.

Info Edge is an internet company that operates Naukri, India’s dominant online recruitment platform, and 99acres, the country’s largest real estate classifieds platform. The company is benefiting from the development of artificial-intelligence related services in its core online recruitment platform. Demand for specialised jobs with these capabilities has grown strongly, providing Naukri with stronger pricing power with its key customers. At the same time, it has also launched new services for consumers, such as AI-led interview training and CV editing, which has led to strong growth and higher profitability levels. Its 99acres real estate platform should also benefit from reducing competitive intensity, following a consolidation in the industry.

360 One WAM is India’s largest independent wealth-management company. The company operates its own funds, distributes third-party products and offers complementary services such as tax planning – a breadth of capability that deepens client relationships and underpins strong competitive advantages. As India’s wealth-management sector formalises and domestic families increasingly want to gain access to both domestic and foreign assets, we believe 360 One’s robust growth is likely to continue.

Purchases elsewhere in the region included ASMPT, a Singapore-headquartered company specialising in surface mount technology (SMT) and semiconductor packaging. At the time of investment, ASMPT’s earnings had been cyclically depressed, but we believed this masked an improving business mix and quality, as reflected in the company’s strengthening profit margins. We also like that the management has made changes in recent years to improve returns, such as divesting businesses and shutting down plants with lower profitability. ASMPT’s shares have risen since our investment as demand for AI-related products has increased and the company was a key positive contributor to Scottish Oriental’s performance over the past year (see section 1).

Kelington Group is a Malaysian company that offers engineering, procurement and construction (EPC) services for high-purity gas systems used in semiconductor fabrication facilities; it also supplies industrial gases. Kelington’s EPC business has high barriers to entry and is benefiting from rising capital expenditure among major chipmakers. More pertinent to the investment case is the scaling-up of its industrial gases business, which is starting to contribute a greater share of profit. As this happens, Kelington is becoming a stronger franchise, with higher margins and more recurring revenue.

Sales

The bulk of our sales during the period were divestments of consumer businesses where we see a slower growth trajectory over the long term (such as Stella International, Uni-President China, Haw Par Corporation, Crompton Greaves Consumer Electronics, Unilever Indonesia and Mitra Adiperkasa). Other consumer holdings were divested either due to a lack of alignment with the ownership (Whirlpool of India) or because valuations looked expensive (Radico Khaitan, United Breweries and JNBY Design). These sales have reduced the Company’s overall exposure to consumer sectors.

Industry challenges also informed sales of companies in other sectors. For example, Kansai Nerolac Paints has been executing a turnaround under its new CEO, after it failed to respond quickly enough to increasing competitive intensity in decorative paints. While we saw some positive signs, progress has been gradual and we decided to sell in order to redeploy capital into higher-conviction positions.

Elsewhere, AI-related disruption to business models affected our conviction and formed part of the rationale behind divestments. For example, the IT services business of Vietnam-based FPT looks to be at risk from disintermediation by AI-powered agents; the company has also suffered from a fall in spending on IT transformation projects among global customers. In China, NetEase Cloud Music also faces a threat from AI, despite its recent efforts to integrate the technology into its platform. In addition, we were concerned about rising competition from rivals such as Soda Music (as discussed in section 1).

Other sales included Mainfreight, Poya International, Sinoseal Holdings, Haitian International, Godrej Agrovet, Escorts Kubota, RHI Magnesita India, Mahindra & Mahindra Financial Services and Blue Star as we raised cash for better opportunities.

Bought and subsequently sold

Corona Remedies is an Indian pharmaceutical company. We invested at its initial public offering (IPO) in December 2025, attracted by factors including high returns on capital, strong alignment with the management team, and the opportunity for steady growth in a fragmented industry. However, the share price rose strongly early in the year, after the announcement of robust earnings results generated significant interest among domestic investors. We decided to sell in May 2026 when valuations reached our assessment of fair value.

Sector Allocation at 31 August 2026

Country Allocation at 31 August 2026 (based on geographical area of activity)

¹ Morgan Stanley Capital International AC Asia ex Japan Small Cap Index

² Morgan Stanley Capital International AC Asia ex Japan Index

6.  Outlook

Over three decades of managing Scottish Oriental, we have applied a consistent investment process and philosophy through market cycles. This has stood the test of time. Periods of weak absolute and relative performance have been observed before, most recently over 2020 – 2021. During these periods, our focus has consistently been on assessing the merits of each investment. We have added to those holdings where the business outlook remains attractive, while dispassionately reducing or exiting exposure where the fundamental characteristics are not as attractive as they were in the past. The idea-generation process, driven by consistent visits across our countries of investment, has remained robust. This has allowed us to find several attractive investment ideas across countries and sectors, which are discussed above. While the performance over the past year has been disappointing to us, we believe the changes made during the past 18 months are likely to drive a period of significantly improved investment performance going forward.

While the Board’s Strategic Review is ongoing, and is a matter for the Board, our day-to-day management of the portfolio continues unchanged. We remain fully committed to the Trust and confident in the portfolio’s positioning for future growth.

Our confidence in the outlook is supported by the portfolio’s underlying characteristics (see table, below). The Trust’s investment philosophy has always been anchored around owning high-quality businesses in Asia. This is best represented by the superior return on invested capital and ROE, in both absolute terms as well as compared to that of the index.

The net cash balance sheets of Scottish Oriental’s holdings should help the companies to remain resilient during a period of rising funding costs, as well as gain market share from companies with weaker funding positions. The Trust’s portfolio is expected to grow its earnings at over 20% CAGR over the next two years. It is also cheaper on a price-to-free-cash-flow basis (that is, when comparing each company’s share price with the free cashflow generated per share), despite superior growth and returns on capital.

When viewed as a single company, we believe the metrics on page 17 of the Annual Financial Report represent a compelling opportunity – with high ROIC, a net cash position, strong growth and reasonable valuations, supported by strong free cash flow generation. In both absolute and relative terms, we are excited about this portfolio’s ability to deliver strong performance going forward.

FSSA Investment Managers

10 November 2026

Income Statement for the year ended 31 August 2026 

* The total column of this statement is the Profit & Loss Account of the Company. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

There are no items of other comprehensive income, therefore this statement is the single statement of comprehensive income of the Company.

The Board is proposing a final dividend of  2.9p per share for the year ended 31 August 2026 (2025: final dividend of 2.9p and a special dividend of 0.5p per share) which if approved, will be payable on 5 February 2027 to shareholders recorded on the Company’s shareholder register on 8 January 2027.

The accounting policies on pages 55 and 56 and the notes on pages 57 to 67 of the Annual Report form part of these Financial Statements.

All revenue and capital items derive from continuing operations.

Summary Statement of Financial Position as at 31 August 2026

These Financial Statements were approved and authorized for issue by the Board on 10 November 2026 and signed on its behalf by

Jeremy Whitley

Director

* Cash and cash equivalents represents cash at bank.

Total tax paid for the year ended 31 August 2026 was £2,055,000 (2025: £5,135,000).

Statement of Directors' Responsibilities in Respect of the Annual Financial Report

In accordance with the Disclosure Guidance and Transparency Rules, we confirm that to the best of our knowledge:

In addition, each of the Directors considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, position, business model and strategy.

Going Concern

In assessing the Company’s ability to continue as a going concern the Directors have considered

The Directors believe that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and for at least 12 months from the date of approval of the financial statements. In addition, the Board has had regard to the Company’s investment performance (see page 2 of the Annual Report), the price at which the Company’s shares trade relative to their NAV (see page 2 of the Annual Report) and ongoing investor interest in the continuation of the Company, including feedback from meetings and conversations with shareholders.

The Directors performed an assessment of the Company’s ability to meet its liabilities as they fall due. In performing this assessment, the Directors took into consideration the following factors:

The cumulative impact of these three downside scenarios would leave the Company with a negative cash position. However, there are sufficient liquid assets which could be used if required.

Notwithstanding the material uncertainty arising from the Strategic Review based on its assessment the Board is confident that the Company has sufficient financial resources to continue in operation and to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements. It has therefore concluded that it remains appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would result if the Company were unable to continue as a going concern.

Related Party Transactions

The Directors’ fees for the year are detailed in the Directors’ Remuneration Report on pages 37 and 38 of the Annual Report. An amount of £26,985 was outstanding to the Directors at the year end (2025: £31,313). No Director has a contract of service with the Company. During the year no Director had any related party transactions requiring disclosure under section 412 of the Companies Act 2006.

The management fees for the year are detailed in note 2 and amounts payable to the Investment Manager at year end are detailed in note 10. The Investment Management team’s individual shareholdings in the Company are set out on page 5 of the Annual Report.

Alternative Investment Fund Managers Directive (unaudited)

Under the Alternative Investment Fund Managers Directive the Company is required to publish maximum exposure levels for leverage on a ‘Gross’ and ‘Commitment’ basis. The process for calculating exposure under each method is largely the same, except that, where certain conditions are met, the Commitment method allows instruments to be netted off to reflect ‘netting’ or ‘hedging’ arrangements and the Company’s leverage exposure would then be reduced. The AIFM set maximum leverage levels of 3.0 and 1.7 times the Company’s net asset value under the ‘Gross’ and ‘Commitment’ methods respectively. At the Company’s year end the levels were respectively 1.09 and 1.06 times the Company’s net asset value.

The Alternative Investment Fund Managers Directive requires the AIFM to make available certain remuneration disclosures to investors. This information is available from the AIFM on request.

Notes:

These Financial Statements have been prepared under the historical cost convention (modified to include the revaluation of fixed asset investments which are recorded at fair value) and in accordance with the Companies Act 2006, UK Generally Accepted Accounting Practice (‘UK GAAP’), including FRS 102, and the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued in July 2022 (the ‘SORP’). These Financial Statements are prepared on a going concern basis.

All of the Company’s operations are of a continuing nature.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

There are two areas of significant judgement -

The accounts have also been prepared on the assumption that approval as an investment trust will continue to be granted.

The functional and reporting currency of the Company is pounds sterling as this is the currency of the Company’s share capital and the currency in which most of its shareholders operate.

Investments in securities are financial assets designated at fair value through profit or loss on initial recognition. In accordance with FRS102, these investments are analysed using the fair value hierarchy described below. Short term balances are excluded as their carrying value at the reporting date approximates their fair value.

The levels are determined by the lowest level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 - investments with prices quoted in an active market;

Level 2 - investments whose fair value is based directly on observable current market prices or is indirectly being derived from market prices; and

Level 3 - investments whose fair value is determined using a valuation technique based on assumptions that are not supported by observable current market data.

The Company held the following categories of financial instruments as at 31 August 2026:

The Company held the following categories of financial instruments as at 31 August 2025:

Listed investments included in fair value Level 1 are actively traded on recognised stock exchanges and the fair value of these investments has been determined by reference to their quoted prices at the reporting date.

Listed investments included in Level 2 are deemed to be illiquid. The fair value of these investments has been determined by reference to their quoted prices at the reporting date.