TIDMSDP
RNS Number : 2453A
Schroder AsiaPacific Fund PLC
23 May 2023
Schroder AsiaPacific Fund plc
Half Year Report and Accounts
Schroder AsiaPacific Fund plc hereby submits its Half Year
Report for the period ended 31 March 2023 as required by the
Financial Conduct Authority's Disclosure Guidance and Transparency
Rule 4.2.
The Half Year Report is also being published in hard copy format
and an electronic copy of that document will shortly be available
at the link below:
http://www.rns-pdf.londonstockexchange.com/rns/2453A_1-2023-5-22.pdf
This is also available to download from the Company's
website
https://www.schroders.co.uk/asiapacific
The Company has submitted its Half Year Report to the National
Storage Mechanism and it will shortly be available in unedited full
text at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Enquiries:
Kerry Higgins
Schroder Investment Management Limited
Tel: 020 7658 6189
Chairman's Statement
Performance
Over the six months ended 31 March 2023, the Company's NAV
produced a total return of 8.1%, outperforming the 4.9% total
return from the Company's Benchmark Index, the MSCI All Countries
Asia (excluding Japan). The Company's share price produced a total
return of 8.7% over the period.
Performance over the period was helped by strong stock selection
across a number of markets including India, Hong Kong, Taiwan and
China, which more than offset the negative attribution to
performance from the underweight to China and allocation to
Vietnam.
Further analysis of performance may be found in the Investment
Manager's Review.
Investment Management
I am pleased to announce that Abbas Barkhordar, who previously
had been Assistant Manager, will co-manage the portfolio alongside
Richard Sennitt from 1 June 2023. Richard will remain as lead
manager. The team draw upon Schroders' deep resources in Asia and
the research team based across the region continue to play an
integral role.
Discount management
The Company continued to be active in buying back its shares
during the period and a total of 3,240,000 shares were purchased
for cancellation over that time at a cost of GBP16,050,000. Since
the end of the period, the Company has bought back an additional
990,000 shares. The discount narrowed slightly from 10.8% at the
start of the period to 10.6% as at 31 March 2023.
The Board continues to monitor the Company's discount levels and
regularly reviews the Company's share buy- back policy.
Gearing
The Company was 0.2% geared at the start of the period and at 31
March 2023 held a net cash position. The Board continues to keep
gearing under consideration and the Manager has access to a GBP75m
revolving credit facility, and an overdraft facility, which will be
utilised when the Manager believes that the use of borrowing will
be accretive to returns.
Board succession
As part of its succession plans, the Board welcomed Rupert Hogg
as an additional independent non-executive Director with effect
from 1 May 2023. Rupert has over 30 years international business
experience gained through senior executive level positions in
various organisations, including a number of large Asian based
companies. He joined John Swire & Sons Limited, part of the
Swire conglomerate of businesses, in 1986 and worked with the group
in Hong Kong, Southeast Asia, India, Korea, Australia and the
United Kingdom. Between May 2017 and August 2019, Rupert was Chief
Executive Officer of Cathay Pacific Airways Limited and Chairman of
Hong Kong Dragon Airlines Limited, Rupert has also served as Chief
Operating Officer of Cathay Pacific Airways Limited, a Director of
Cathay Pacific and John Swire & Sons (H.K.) Limited, Chairman
of AHK Air Hong Kong Limited and a Director and Chairman of the
executive committee of Cathay Dragon.
The Board welcomes Rupert's depth of expertise and knowledge and
he will be standing for election at our next annual general
meeting.
Outlook
After a difficult period to September 2022 it has been good to
see performance, both in relative and absolute terms, rebound over
the period.
China's reopening after Zero COVID and a general expectation
that inflation and therefore interest rates are peaking has aided
markets. However, geopolitical issues remain, not least increased
tensions between the USA and China, as does the uncertainty about
the medium term consequences of higher interest rates on the global
economy and financial system.
However, our Investment Manager believes that overall aggregate
valuations in Asia are trading at or below long term averages and
that this does potentially set up a constructive backdrop for Asian
markets in the coming months.
James Williams
Chairman
22 May 2023
Investment Manager's Review
The NAV per share of the Company recorded a total return of 8.1%
over the six months ended 31 March 2023. This was ahead of the
performance of the Benchmark, which rose by 4.9% over the same
period. (Source: Morningstar, net of fees, cum income NAV
return).
Asian markets experienced huge swings in sentiment over the six
months to the end of March 2023, seeing steep falls in China and
Hong Kong during October 2022 in the run up to, and post, the
Communist Party Congress before seeing a dramatic recovery driven
by the Chinese authorities' move away from Zero COVID. This move
took the market, and us, by surprise given the speed and extent of
the reversal. We had expected a slower, more staggered, shift given
the sizeable cohort of the elderly that were still not fully
vaccinated and the political capital that had been invested in the
policy.
In addition to this policy reversal, there were a number of
positive developments including a stabilisation in
US-China relations following the G-20 meeting in Bali, where
presidents Xi and Biden met face-to-face. With the party congress
and US mid-term elections out of the way, there was hope that we
could see increased cooperation between the two countries. In this
vein, there was a positive development from the US Public Company
Accounting Oversight Board ("PCAOB") inspection of Chinese accounts
where, for now at least, the US seem happy with the access they had
been given, thus likely deferring any forced de-listings of Chinese
companies in the US. Unsurprisingly, Chinese American Depositary
Receipts ("ADRs") responded very positively to this. Furthermore,
in China, there was a shift in tone around regulation towards the
internet companies, together with the approval of a number of games
by leading developers and further announcements of government
support for the troubled residential property market. All this led
to a very rapid rise in the market and the China index outperformed
over the period. At one point it was up by nearly 50% from its
end-October 2022 lows, before selling off as some of the re-opening
euphoria died back along with renewed geopolitics concerns.
Elsewhere, there was also a change of fortune among a number of
the major markets - Korea and Taiwan outperformed, with Indonesia
and India the main laggards as investors took profits following
their strong performance throughout 2022. In part, this rotation
into the North East Asian markets was driven by an expectation that
the information technology ("IT") cycle was starting to bottom,
after a sell off in the sector due to a slowing demand outlook that
had seen valuations start to trade near cyclical lows for a number
of names. Leading companies in the sector performed well -
semiconductor manufacturer Samsung Electronics and foundry company
Taiwan Semiconductor Manufacturing Company ("TSMC") were both up by
around 20% over the period for instance. The Indian market had also
started to look expensive and was seen as a source of cash for
investors looking to fund increased exposure to North Asian
markets.
Despite the deteriorating outlook for global growth, inflation
pressures remained elevated which disappointed investors, as US
interest rates would likely remain a headwind for longer. Towards
the end of the period global markets were impacted by the collapse
of Silicon Valley Bank and Credit Suisse and the potential wider
impacts on the financial system. Although we believe that there are
relatively few parallels between these specific cases and the Asian
banks, which we discuss later on, this did see financials
underperform over the period despite banks' earnings benefitting
from rising interest rates. Defensive sectors generally
underperformed over the period, with utilities particularly weak
following a short seller's report on the Adani group in India which
saw those group companies under pressure. As described above, the
IT sector performed particularly well as did the communication
services sector where some of the more growth-orientated internet
platform names, such as Tencent and SEA, performed strongly.
Performance and portfolio activity
Absolute and relative performance over the period was helped by
strong stock selection across a number of markets including India,
Hong Kong, Taiwan and China which more than offset the negative
contributions to performance from the underweight to China and
allocation to Vietnam. Stock selection in Hong Kong and China was
boosted by non-bank financials, including insurance names AIA and
Ping An Insurance, that were beneficiaries of the end to the Zero
COVID policy in China which should see a pick up in policy sales.
AIA in particular will benefit from the return of mainland Chinese
visitors to Hong Kong, who historically have been significant
purchasers of insurance there. Infrastructure spend beneficiaries,
such as supplier of construction equipment Sany Heavy Industry,
also performed well as did Prada, the luxury consumer goods
company, where a recovery in demand has become apparent.
Our stock picks in Taiwan performed well, including IT names
such as fabless integrated circuit design houses Novatek and
Mediatek and foundry TSMC, as did window shutter manufacturer Nien
Made. Vietnam performed poorly due to a combination of a slowing
export sector outlook on global growth concerns, as well as
uncertainties over banks' exposure to the property sector following
a government tightening of regulations and an anti-corruption
campaign.
From a sector perspective, our overweight to, and stock
selection in, IT was the biggest contributor, due to both our names
in Taiwan (as above) and in Korea where Samsung Electronics and
electric vehicle ("EV") battery manufacturer Samsung SDI performed
particularly strongly. Our overweight to financials was a negative,
impacted by the global retracement of banks following the Silicon
Valley Bank and Credit Suisse collapses, but this was more than
offset by the underweights to some of the more defensive areas
including consumer staples and utilities. Our holdings in Hong Kong
property names also added value as the move away from Zero COVID
was expected to lead to a return of shoppers and workers to the
malls and offices.
The geographic exposure in the Company's portfolio continues to
be mainly spread between China, Taiwan, Hong Kong, India, Korea and
Singapore. Over the period, we added to positions in Hong Kong,
including Hong Kong Exchange, insurance company AIA and Bank of
China (Hong Kong) and remain overweight there. China remains a
substantial underweight but is, in part, offset by this overweight
to Hong Kong. The Hong Kong market, in general, looks more
attractive from a valuation perspective with a number of names set
to benefit from the opening of the border with the mainland.
Elsewhere, we reduced our exposure to the Indian market earlier in
the period, as valuations, particularly amongst some of the
domestic names, looked relatively expensive. Here, sales included
auto company Maruti Suzuki and logistics provider Container
Corporation of India. Towards the end of the period valuations were
starting to look more reasonable and we initiated new positions in
Oberoi Realty, a Mumbai based property company, and Mphasis, an IT
services name that had been sold down to attractive levels.
Sectorwise, our largest exposure is to the IT sector, where we
continue to like the Korean and Taiwanese names, followed by the
financials where we have a broad exposure to not only the banks but
also the exchanges and insurers. Although near term earnings in the
IT sector have been seeing downward revisions, we continue to see
some strong long-term drivers for growth around digitisation, the
roll-out of 5G and 'Internet of Things' and Artificial Intelligence
("AI"). We added to our exposure to communications services
companies, where the internet related names have underperformed,
including The Association of Southeast Asian Nations ("ASEAN")
focussed e-commerce and mobile gaming company SEA that is executing
on a plan to bring forward profitability. Reductions in the
consumer discretionary and industrials sectors centred on the
Indian sales mentioned above.
Top three contributors and top three detractors at a market
level, six months to 31 March 2023 (% points)
Total contribution
---------- ------------------
India 1.0
---------- ------------------
Hong Kong 0.9
---------- ------------------
Taiwan 0.8
---------- ------------------
Singapore 0.0
---------- ------------------
Thailand -0.2
---------- ------------------
Vietnam -0.5
---------- ------------------
Outlook and policy
We entered the Year of the Rabbit with the hope that China's
re-opening and the potential for a softer US dollar and peaking US
rate hike cycle should provide a more supportive backdrop for Asian
markets, although slowing global growth would inevitably be a
headwind given Asia's position as manufacturer to the world. More
recently the collapse of several regional banks in the US and the
proposed takeover of Credit Suisse have added to concerns over
financial sector risk globally, as well as the potential knock-on
impact on growth. Geopolitics remains a risk with US-China
relations, Taiwan and the Ukraine all areas of tension.
Looking first at the U-turn in China's Zero COVID policy - which
unsurprisingly saw the Chinese market rally hard off its lows,
rising some 50% before pulling back. Clearly the move away from
Zero COVID is a positive from an economic perspective and, when
combined with the stimulus measures that have been announced,
particularly towards the property sector, this should help remove
the tail risk of a hard landing in China centred on the property
market. We remain very underweight China and, from a reopening
standpoint, it feels as though much of the upside has already been
priced in.
Notwithstanding the recent pullback, valuations of many of the
'reopening plays' pre the U-turn on COVID were not particularly
attractive, as there was already an expectation that 2023 would see
a move away from Zero COVID - albeit very few, including ourselves,
expected it to happen as rapidly as it has. Following the rally,
valuations in a lot of these names rose well above historic levels,
even factoring in a large recovery in profits.
Other areas have in part also benefitted from this change in
policy, together with a perceived lowering of risk from a
regulatory perspective. Statements at the Central Economic Work
Conference ("CEWC") in December 2022 around equal support for state
owned and private owned enterprises, as well as support for the
internet platform companies, helped here. This, along with a
diminished ADR-delisting risk, saw the likes of Alibaba rally
strongly from their lows. Whilst things have improved from a
regulatory perspective, we remain sceptical that risks around
'national service' have entirely gone away, as highlighted by the
recent use of "golden shares", and thus think that long term
returns in a number of areas in the market have likely come
down.
Lastly, although the domestic demand outlook has improved in
China, the external side is moving in the opposite direction, with
net exports likely to continue to be under pressure through 2023.
Given its importance in employment (nearly a quarter of the
workforce), this slowdown will have obvious ramifications for
growth.
All this means we remain meaningfully underweight China,
although we are still looking for opportunities to add to stocks
that have lagged in areas which are less obvious beneficiaries, but
where we think the long term opportunity remains attractive. We
are, however, more positive on Hong Kong, where valuations are
lower and the special administrative region ("SAR") will see a
recovery as the border with the mainland opens and tourists come
back. Given this, and as mentioned above, we did add to some of our
names there including AIA, Bank of China (Hong Kong) and HK
Exchange.
If we look further afield, we think the stabilisation of China's
economy and rebound in consumption, albeit most evident in services
rather than goods, will also help a number of regional names
including some of the IT companies in Korea and Taiwan, resource
names in Australia and other companies that will benefit from an
increased level of travel by Chinese for example in Thailand and
Vietnam. The portfolio holdings in these areas should benefit from
any pick up in China and improved mobility.
Elsewhere, as mentioned earlier, India and Indonesia (as well as
other ASEAN markets) appear to be being used as a funding source
after strong performance last year. Valuations on average in India
are still elevated but are now starting to get more interesting
following the market's pullback, given the strong longer term
growth story there. So whilst we did reduce our exposure at the
start of the period, with sales including some of the more
expensive domestic names, towards the end of the period we started
to add back to names where value had started to emerge.
Markets globally have been more recently impacted by the
collapse of several regional banks in the US and Credit Suisse and
the potential wider impacts on the financial system. The Asian
financial sector has few direct parallels for the problems faced in
these cases. In particular, the Asian banks tend to have strong
deposit franchises, smaller investment portfolios and different
regulatory requirements with regard to adjusting the value of their
fixed income positions to reflect current market conditions. They
have been seeing improved profitability and are generally well
capitalised. Most banks we own are more domestically focussed
retail names and in general trade at attractive valuations and
decent dividend yields. Still, we are mindful of the global
tightening in liquidity that we are seeing and the potential
contagion risks, and will continue to monitor our positions
carefully. Elsewhere, our preference for IT continues. The IT names
remain sensitive to the global slowdown and the Korean names, such
as Samsung Electronics, despite a recent rally are still trading at
relatively attractive levels from a valuation perspective. Although
the demand slowdown has been worse than we expected, there are
signs that an adjustment on the supply side is starting to take
place as announcements on production and capital expenditure cuts
have started to be seen.
Underweights remain in the more defensive areas of the market,
including consumer staples and utilities, where valuations in our
view still remain relatively full.
Near term, it is likely that we will see further downward
revisions to earnings as global growth slows and an ongoing period
of inventory adjustment amongst companies to reflect this slower
growth, which will hopefully put them in a position to start to
grow earnings once more. Given overall aggregate valuations for the
region are now trading at or below long-term averages, this does
set up a more constructive backdrop for Asian markets in the coming
year, barring a global hard landing or a more extreme geopolitical
risk event.
To conclude, it is worth remembering that as investors we buy
companies not countries. We are mindful of the impact political and
macroeconomic factors can have on equities and returns, but we are
bottom-up stock-pickers first and foremost, focusing on the
company's return prospects and valuation. We do not try to pick
companies which will do well based purely on a particular macro
environment which we have forecast; rather we try to pick
well-managed companies which have sustainable structural
advantages. Therefore, a focus on attractive bottom up ideas, in
our view, remains essential.
Market Weights - Company vs. Benchmark Index
Net Asset
Value Weight (%)
31 Mar 30 Sep
Benchmark
Index
Weight
(%)
31 Mar
2023 2022 2023
Mainland China 18.2 18.7 36.8
---------------- --------- -------- ---------
Taiwan 16.2 15.0 17.1
---------------- --------- -------- ---------
India 15.0 17.0 14.6
---------------- --------- -------- ---------
Hong Kong (SAR) 14.4 12.9 7.2
---------------- --------- -------- ---------
South Korea 12.6 12.4 13.4
---------------- --------- -------- ---------
Singapore 8.2 8.4 4.0
---------------- --------- -------- ---------
Australia 3.7 3.8 -
---------------- --------- -------- ---------
Vietnam 2.6 3.1 -
---------------- --------- -------- ---------
Indonesia 2.3 2.6 2.1
---------------- --------- -------- ---------
Thailand 1.8 2.2 2.4
---------------- --------- -------- ---------
Philippines 1.1 0.9 0.8
---------------- --------- -------- ---------
Malaysia - - 1.6
---------------- --------- -------- ---------
Other equities* 3.9 3.2 -
---------------- --------- -------- ---------
Gearing** - (0.2) -
---------------- --------- -------- ---------
Total 100.0 100.0 100.0
---------------- --------- -------- ---------
* UK (including a Unit Trust) and Italy.
** Cash less borrowings used for investment purposes.
Source: Schroders, MSCI, 31 March 2023.
Schroder Investment Management Limited
22 May 2023
Half Year Report
Principal risks and uncertainties
The principal risks and uncertainties associated with the
Company's business fall into the following categories: strategic
risk; investment management and performance risk; financial and
currency risk; political risk; custody risk; gearing and leverage
risk; accounting, legal and regulatory change risk; service
provider risk; cyber and climate change risk. A detailed
explanation of the risks and uncertainties in each of these
categories can be found on pages 21 and 22 of the Company's
published annual report and accounts for the year ended 30
September 2022.
These risks and uncertainties have not materially changed during
the six months ended 31 March 2023. However, the Board undertook a
review of principal and emerging risks for the Company while
reviewing these accounts. The Directors noted that geopolitical
risk and climate change risk in particular continue to develop.
These matters will continue to be monitored and reported on in the
next annual report as appropriate.
Going concern
Having assessed the principal risks and uncertainties, and the
other matters discussed in connection with the viability statement
as set out on page 23 of the published annual report and accounts
for the year ended 30 September 2022, the Directors consider it
appropriate to adopt the going concern basis in preparing the
accounts.
Related party transactions
There have been no transactions with related parties that have
materially affected the financial position or the performance of
the Company during the six months ended 31 March 2023.
Directors' responsibility statement
The Directors confirm that, to the best of their knowledge, this
set of condensed financial statements has been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice, in particular with Financial Reporting Standard 104
"Interim Financial Reporting" and with the Statement of Recommended
Practice, "Financial Statements of Investment Companies and Venture
Capital Trusts" issued in July 2022, and that this half year report
includes a fair review of the information required by 4.2.7R and
4.2.8R of the FCA's Disclosure Guidance and Transparency Rules.
Investment Portfolio as at 31 March 2023
Investments are classified by the Manager in the region or
country of their main business operations or listing. Stocks in
bold are the 20 largest investments, which by value account for
65.1% (30 September 2022: 60.5% and 31 March 2022: 62.5%) of total
investments.
GBP'000 %
-------------------------------------------------- ------- -----
Mainland China
-------------------------------------------------- ------- -----
Tencent Holdings(1) 49,606 5.4
-------------------------------------------------- ------- -----
Alibaba(1) 30,233 3.3
-------------------------------------------------- ------- -----
Midea (including A shares and LEPO) 18,283 2.0
-------------------------------------------------- ------- -----
Yum China(1,2) 11,456 1.3
-------------------------------------------------- ------- -----
Sany Heavy Industry A 11,068 1.2
-------------------------------------------------- ------- -----
Ping An Insurance H(1) 11,066 1.2
-------------------------------------------------- ------- -----
JD.com(1) 11,043 1.2
-------------------------------------------------- ------- -----
Shenzhou International(1) 9,633 1.1
-------------------------------------------------- ------- -----
Hongfa Technology A 7,768 0.8
-------------------------------------------------- ------- -----
LONGi Green Energy Technology A 4,198 0.5
-------------------------------------------------- ------- -----
Meituan(1) 1,844 0.2
-------------------------------------------------- ------- -----
Total Mainland China 166,198 18.2
-------------------------------------------------- ------- -----
Taiwan
-------------------------------------------------- ------- -----
Taiwan Semiconductor Manufacturing 88,298 9.7
-------------------------------------------------- ------- -----
MediaTek 19,083 2.1
-------------------------------------------------- ------- -----
Delta Electronics 11,462 1.3
-------------------------------------------------- ------- -----
Nien Made Enterprise 9,989 1.1
-------------------------------------------------- ------- -----
Giant Manufacturing 8,512 0.9
-------------------------------------------------- ------- -----
Hon Hai Precision Industries 6,339 0.7
-------------------------------------------------- ------- -----
Novatek Microelectronics 3,393 0.4
-------------------------------------------------- ------- -----
Total Taiwan 147,076 16.2
-------------------------------------------------- ------- -----
India
-------------------------------------------------- ------- -----
HDFC Bank 34,989 3.8
-------------------------------------------------- ------- -----
ICICI Bank (including ADR(2) ) 28,980 3.2
-------------------------------------------------- ------- -----
Infosys 15,487 1.7
-------------------------------------------------- ------- -----
Apollo Hospitals Enterprise 14,810 1.6
-------------------------------------------------- ------- -----
Tata Consultancy Services 11,921 1.3
-------------------------------------------------- ------- -----
Reliance Industries 9,836 1.1
-------------------------------------------------- ------- -----
Oberoi Realty 9,062 1.0
-------------------------------------------------- ------- -----
Mphasis 7,996 0.9
-------------------------------------------------- ------- -----
Delhivery 3,337 0.4
-------------------------------------------------- ------- -----
Total India 136,418 15.0
-------------------------------------------------- ------- -----
Hong Kong (SAR)
-------------------------------------------------- ------- -----
AIA 34,667 3.8
-------------------------------------------------- ------- -----
Hong Kong Exchanges and Clearing 22,877 2.5
-------------------------------------------------- ------- -----
BOC Hong Kong 19,617 2.1
-------------------------------------------------- ------- -----
Techtronic Industries 16,303 1.8
-------------------------------------------------- ------- -----
Kerry Properties 11,836 1.3
-------------------------------------------------- ------- -----
Hang Lung Properties 11,451 1.2
-------------------------------------------------- ------- -----
Swire Properties 9,507 1.0
-------------------------------------------------- ------- -----
ASM Pacific Technology 6,437 0.7
-------------------------------------------------- ------- -----
Total Hong Kong (SAR) 132,695 14.4
-------------------------------------------------- ------- -----
South Korea
-------------------------------------------------- ------- -----
Samsung Electronics (including preference shares) 86,648 9.5
-------------------------------------------------- ------- -----
Samsung SDI 21,933 2.4
-------------------------------------------------- ------- -----
LG H&H 6,258 0.7
-------------------------------------------------- ------- -----
Total South Korea 114,839 12.6
-------------------------------------------------- ------- -----
Singapore
-------------------------------------------------- ------- -----
Oversea-Chinese Banking 21,324 2.3
-------------------------------------------------- ------- -----
Singapore Telecommunications 15,873 1.7
-------------------------------------------------- ------- -----
Singapore Exchange 14,471 1.6
-------------------------------------------------- ------- -----
Sea ADR(2) 11,616 1.3
-------------------------------------------------- ------- -----
DBS Bank 11,561 1.3
-------------------------------------------------- ------- -----
Total Singapore 74,845 8.2
-------------------------------------------------- ------- -----
Australia
-------------------------------------------------- ------- -----
BHP Group(3) 10,599 1.2
-------------------------------------------------- ------- -----
Rio Tinto(3) 10,417 1.1
-------------------------------------------------- ------- -----
Orica 9,107 1.0
-------------------------------------------------- ------- -----
Woodside Energy(3) 3,577 0.4
-------------------------------------------------- ------- -----
Total Australia 33,700 3.7
-------------------------------------------------- ------- -----
Vietnam
-------------------------------------------------- ------- -----
Dragon Capital Vietnam Enterprise Investments(4) 17,016 1.9
-------------------------------------------------- ------- -----
Vietnam Dairy Products 5,834 0.6
-------------------------------------------------- ------- -----
Mobile World Investement 1,200 0.1
-------------------------------------------------- ------- -----
Total Vietnam 24,050 2.6
-------------------------------------------------- ------- -----
United Kingdom
-------------------------------------------------- ------- -----
Schroder Asian Discovery Fund Z Acc(4) 17,864 2.0
-------------------------------------------------- ------- -----
Standard Chartered 4,683 0.5
-------------------------------------------------- ------- -----
Total United Kingdom 22,547 2.5
-------------------------------------------------- ------- -----
Indonesia
-------------------------------------------------- ------- -----
Bank Mandiri 20,611 2.3
-------------------------------------------------- ------- -----
Total Indonesia 20,611 2.3
-------------------------------------------------- ------- -----
Thailand
-------------------------------------------------- ------- -----
Kasikornbank NVDR 11,790 1.3
-------------------------------------------------- ------- -----
Bangkok Dusit Medical Services NVDR 4,946 0.5
-------------------------------------------------- ------- -----
Total Thailand 16,736 1.8
-------------------------------------------------- ------- -----
Italy
-------------------------------------------------- ------- -----
Prada(1) 13,194 1.4
-------------------------------------------------- ------- -----
Total Italy 13,194 1.4
-------------------------------------------------- ------- -----
Philippines
-------------------------------------------------- ------- -----
International Container Terminal Services 10,057 1.1
-------------------------------------------------- ------- -----
Total Philippines 10,057 1.1
-------------------------------------------------- ------- -----
Total Investments(5) 912,966 100.0
-------------------------------------------------- ------- -----
(1) Listed in Hong Kong.
(2) Listed in the USA.
(3) Listed in the United Kingdom.
(4) Predominantly invested in Asia
(5) Total investments comprises the following:
GBP'000 %
------------------------------------------ ------- -----
Equities, including ADRs, LEPOs and NVDRs 863,028 94.5
------------------------------------------ ------- -----
Collective investment funds 34,880 3.9
------------------------------------------ ------- -----
Preference shares 15,058 1.6
------------------------------------------ ------- -----
Total investments 912,966 100.0
------------------------------------------ ------- -----
The following abbreviations have been used above:
ADR: American Depositary Receipt
LEPO: Low Exercise Price Option
NVDR: Non Voting Depositary Receipt
Income Statement
for the six months ended 31 March 2023 (unaudited)
(Audited)
(Unaudited) (Unaudited) For the year
For the six months For the six months Ended 30 September
ended 31 March 2023 ended 31 March 2022 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
Gains/(losses)
on investments
held at fair
value through
profit or loss - 65,764 65,764 - (44,814) (44,814) - (154,731) (154,731)
Net foreign currency
gains/(losses) - 858 858 - (381) (381) - (2,936) (2,936)
Income from
investments 6,017 142 6,159 5,804 - 5,804 24,673 - 24,673
Other interest
receivable and
similar income 66 - 66 1 - 1 12 - 12
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
Gross return/(loss) 6,083 66,764 72,847 5,805 (45,195) (39,390) 24,685 (157,667) (132,982)
Investment management
fee (807) (2,420) (3,227) (911) (2,732) (3,643) (1,728) (5,185) (6,913)
Administrative
expenses (677) - (677) (787) - (787) (1,437) - (1,437)
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
Net return/(loss)
before finance
costs and taxation 4,599 64,344 68,943 4,107 (47,927) (43,820) 21,520 (162,852) (141,332)
Finance costs (77) (231) (308) (12) (37) (49) (48) (145) (193)
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
Net return/(loss)
before taxation 4,522 64,113 68,635 4,095 (47,964) (43,869) 21,472 (162,997) (141,525)
Taxation (note
3) (624) (175) (799) (539) 208 (331) (1,799) 1,145 (654)
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
Net return/(loss)
after taxation 3,898 63,938 67,836 3,556 (47,756) (44,200) 19,673 (161,852) (142,179)
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
Return/(loss)
per share (note
4) 2.45p 40.24p 42.69p 2.17p (29.08)p (26.91)p 12.04p (99.08)p (87.04)p
---------------------- -------- -------- -------- -------- --------- --------- -------- ---------- ----------
The "Total" column of this statement is the profit and loss
account of the Company. The "Revenue" and "Capital" columns
represent supplementary information prepared under guidance issued
by The Association of Investment Companies. The Company has no
other items of other comprehensive income, and therefore the net
return/(loss) after taxation is also the total comprehensive
income/(loss) for the period.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the period.
Statement of Changes in Equity
For the six months ended 31 March 2023 (unaudited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- --------
At 30 September 2022 16,080 100,956 4,064 8,704 - 726,968 21,415 878,187
Repurchase and cancellation
of the Company's own
shares (324) - 324 - - (16,050) - (16,050)
Net return after
taxation - - - - - 63,938 3,898 67,836
Dividend paid in
the period (note 5) - - - - - - (19,030) (19,030)
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- --------
At 31 March 2023 15,756 100,956 4,388 8,704 - 774,856 6,283 910,943
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- --------
For the six months ended 31 March 2022 (unaudited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- ---------
At 30 September 2021 16,486 100,956 3,658 8,704 16,110 894,363 17,664 1,057,941
Repurchase and cancellation
of the Company's own
shares (132) - 132 - (7,433) - - (7,433)
Net (loss)/return
after taxation - - - - - (47,756) 3,556 (44,200)
Dividend paid in
the period (note 5) - - - - - - (15,922) (15,922)
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- ---------
At 31 March 2022 16,354 100,956 3,790 8,704 8,677 846,607 5,298 990,386
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- ---------
For the year ended 30 September 2022 (audited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- ---------
At 30 September 2021 16,486 100,956 3,658 8,704 16,110 894,363 17,664 1,057,941
Repurchase and cancellation
of the Company's own
shares (406) - 406 - (16,110) (5,543) - (21,653)
Net (loss)/return
after taxation - - - - - (161,852) 19,673 (142,179)
Dividend paid in
the year (note 5) - - - - - - (15,922) (15,922)
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- ---------
At 30 September 2022 16,080 100,956 4,064 8,704 - 726,968 21,415 878,187
---------------------------- ---------- -------- ----------- --------- --------- --------- -------- ---------
Statement of Financial Position
at 31 March 2023 (unaudited)
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- ----------- ------------
Fixed assets
Investments held at fair value through
profit or loss 912,966 993,162 882,801
---------------------------------------- ----------- ----------- ------------
Current assets
Debtors 3,188 5,234 7,920
Cash at bank and in hand 12,317 14,076 11,343
---------------------------------------- ----------- ----------- ------------
15,505 19,310 19,263
---------------------------------------- ----------- ----------- ------------
Current liabilities
Creditors: amounts falling due within
one year (14,464) (17,556) (19,964)
---------------------------------------- ----------- ----------- ------------
Net current assets/(liabilities) 1,041 1,754 (701)
---------------------------------------- ----------- ----------- ------------
Total assets less current liabilities 914,007 994,916 882,100
---------------------------------------- ----------- ----------- ------------
Non current liabilities
---------------------------------------- ----------- ----------- ------------
Deferred taxation (3,064) (4,530) (3,913)
---------------------------------------- ----------- ----------- ------------
Net assets 910,943 990,386 878,187
---------------------------------------- ----------- ----------- ------------
Capital and reserves
Called-up share capital (note 6) 15,756 16,354 16,080
Share premium 100,956 100,956 100,956
Capital redemption reserve 4,388 3,790 4,064
Warrant exercise reserve 8,704 8,704 8,704
Share purchase reserve - 8,677 -
Capital reserves 774,856 846,607 726,968
Revenue reserve 6,283 5,298 21,415
---------------------------------------- ----------- ----------- ------------
Total equity shareholders' funds 910,943 990,386 878,187
---------------------------------------- ----------- ----------- ------------
Net asset value per share (note 7) 578.15p 605.59p 546.13p
---------------------------------------- ----------- ----------- ------------
Notes to the Accounts
1. Financial Statements
The information contained within the accounts in this half year
report has not been audited or reviewed by the Company's
independent auditor.
The figures and financial information for the year ended 30
September 2022 are extracted from the latest published accounts of
the Company and do not constitute statutory accounts for that year.
Those accounts have been delivered to the Registrar of Companies
and included the report of the auditor which was unqualified and
did not contain a statement under either section 498(2) or 498(3)
of the Companies Act 2006.
2. Accounting policies
Basis of accounting
The accounts have been prepared in accordance with United
Kingdom Generally Accepted Accounting Practice, in particular with
Financial Reporting Standard 104 "Interim Financial Reporting" and
with the Statement of Recommended Practice "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" issued by
the Association of Investment Companies in July 2022.
All of the Company's operations are of a continuing nature.
The accounting policies applied to these accounts are consistent
with those applied in the accounts for the year ended 30 September
2022.
3. Taxation
The Company's effective corporation tax rate is nil, as
deductible expenses exceed taxable income. The taxation charge
comprises irrecoverable overseas withholding tax on dividends
receivable, and overseas capital gains tax.
4. Return/(loss) per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2023 2022 2022
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ ------------ ------------
Revenue return 3,898 3,556 19,673
Capital return/(loss) 63,938 (47,756) (161,852)
-------------------------------------- ------------ ------------ ------------
Total return/(loss) 67,836 (44,200) (142,179)
-------------------------------------- ------------ ------------ ------------
Weighted average number of shares in
issue during the period 158,887,090 164,224,700 163,346,606
Revenue return per share 2.45p 2.17p 12.04p
Capital return/ (loss) per share 40.24p (29.08)p (99.08)p
-------------------------------------- ------------ ------------ ------------
Total return/(loss) per share 42.69p (26.91)p (87.04)p
-------------------------------------- ------------ ------------ ------------
5. Dividends paid
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- ------------
2022 final dividend paid of 12.0p
(2021: 9.7p) 19,030 15,922 15,922
----------------------------------- ----------- ----------- ------------
No interim dividend has been declared in respect of the six
months ended 31 March 2023 (2022: nil).
6. Called-up share capital
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2023 2022 2022
---------------------------------------- ------------ ------------ ------------
Ordinary shares of 10p each, allotted,
called-up and fully paid:
Opening balance of shares in issue 160,800,716 164,860,716 164,860,716
Shares repurchased and cancelled (3,240,000) (1,320,000) (4,060,000)
---------------------------------------- ------------ ------------ ------------
Closing balance of shares in issue 157,560,716 163,540,716 160,800,716
---------------------------------------- ------------ ------------ ------------
7. Net asset value per share
Net asset value per share is calculated by dividing
shareholders' funds by the number of shares in issue at 31 March
2023 of 157,560,716 (31 March 2022: 163,540,716 and 30 September
2022: 160,800,716).
8. Financial instruments measured at fair value
The Company's financial instruments within the scope of FRS 102
that are held at fair value comprise its investment portfolio.
FRS 102 requires that financial instruments held at fair value
are categorised into a hierarchy consisting of the three levels
below. A fair value measurement is categorised in its entirety on
the basis of the lowest level input that is significant to the fair
value measurement.
Level 1 - valued using unadjusted quoted prices in active
markets for identical assets.
Level 2 - valued using observable inputs other than quoted
prices included within Level 1.
Level 3 - valued using inputs that are unobservable.
The Company's investment portfolio was categorised as
follows:
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------- ----------- ----------- ------------
Level 1 912,966 993,162 882,801
Level 2 - - -
Level 3 - - -
--------- ----------- ----------- ------------
Total 912,966 993,162 882,801
--------- ----------- ----------- ------------
There have been no transfers between Levels 1, 2 or 3 during the
period (period ended 31 March 2022 and year ended 30 September
2022: nil).
9 . Events after the interim period that have not been reflected
in the financial statements for the interim period
The Directors have evaluated the period since the interim date
and have not noted any significant events which have not been
reflected in the financial statements.
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END
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