TIDMSDP
RNS Number : 7918V
Schroder AsiaPacific Fund PLC
06 December 2023
Schroder AsiaPacific Fund plc
FINAL RESULTS
Schroder AsiaPacific Fund Limited (the "Company") hereby submits
its final results for the year ended 30 September 2023.
The Company's annual report and accounts for the year ended 30
September 2023 are also being published in hard copy format and an
electronic copy will shortly be available to download from the
Company's webpages schroders.co.uk/asiapacific.
The annual report and accounts, containing the notice of annual
general meeting, and the form of proxy will shortly be uploaded to
the Financial Conduct Authority's National Storage Mechanism, and a
separate announcement will be released once this has taken
place.
Please click on the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/7918V_1-2023-12-5.pdf
Page numbers and cross references in the following announcement
refer to page numbers and cross references in the annual report and
accounts for the year ended 30 September 2023.
Enquiries:
Kerry Higgins
Schroder Investment Management Limited
Tel: 020 7658 6000
Annual report and accounts for the year ended 30 September
2023
Performance Summary
Net Asset Value ("NAV")
per share total return* Share price total return* Benchmark total return(1)
+2.9% +2.3% +1.5%
(2022: -13.6%) (2022: -14.5%) (2022: -13.9%)
Some of the financial measures above are classified as
Alternative Performance Measures, as defined by the European
Securities and Markets Authority and are indicated with an asterisk
(*). Definitions of these performance measures, and other terms
used in this report, are given on pages 76 and 77 together with
supporting calculations where appropriate.
(1) Source: Thomson Reuters.
Share price discount Revenue return per
Ongoing charges ratio*(1) to NAV per share*(2) share(1)
0.86% 11.5% 12.06p
(2022: 0.84%) (2022: 10.8%) (2022: 12.04p)
Gearing*(1) Share price(2) Net revenue after taxation(1)
2.1% 486.5p GBP18,990,000
(2022: 0.2%) (2022: 487p) (2022: GBP19,673,000)
*Alternative Performance Measure.
(1) Schroders.
(2) Morningstar/Thomson Reuters.
Chairman's Statement
Performance
The year ended 30 September 2023 saw challenging market
conditions in Asia, in common with markets around the world. The
Company's NAV produced a total return of 2.9% for the financial
year, outperforming the Benchmark, which produced a total return of
1.5%, while the share price produced a total return of 2.3%. This
continues the Company's commendable long term record of NAV total
return outperformance of the Benchmark which sits at an annualised
2.4% over 10 years.
There was a significant divergence of returns across Asian
markets. Larger markets especially China, where our Investment
Managers continue to maintain an under-weight position relative to
the Benchmark, and Hong Kong were very volatile during the
financial year, impacted by economic headwinds and geopolitical
risks. Elsewhere, markets such as Korea and Taiwan performed
better. However, Asian currency weakness was a significant drag on
performance.
More detailed comment on performance and investment policy may
be found in the Investment Manager's Review.
Revenue and dividend
The Company's principal investment objective is to achieve
capital growth, and the Directors continue to distribute
substantially all of the revenue received each year. The Company's
revenue return increased slightly to 12.06 pence per share as
portfolio companies dividends remained resilient.
The Directors are recommending a final dividend of 12.00 pence
per share for the year ended 30 September 2023, representing the
same amount paid in respect of the previous financial year.
This dividend will be paid on 9 February 2024 to shareholders on
the register on 29 December 2023, subject to approval by
shareholders at the Annual General Meeting ("AGM") on 31 January
2024.
Gearing
During the year ended 30 September 2023, the Company extended
its GBP75 million one year revolving credit facility with The Bank
of Nova Scotia, London Branch. At 30 September 2023, the Company's
net gearing position was 2.1% taking into account cash balances,
compared to 0.2% at 30 September 2022.
The Company also has access to an overdraft facility with
HSBC.
Discount management
The Company continued to be active in buying back its shares
during the year ended 30 September 2023. A total of 6,000,000
shares were bought back for cancellation at a cost of GBP29.8
million (2022: 4,060,000 shares were bought back and cancelled at a
cost of GBP21.7 million), adding 0.4% to the NAV. Since the year
end, a further 1,335,000 shares have been bought back for
cancellation at a cost of GBP6.4 million.
The discount at the end of September 2023 was 11.5% compared to
10.8% at the previous financial year end. The average discount
during the year under review was 11.1%.
Your Board remains focused on limiting discount volatility and
helping to maintain liquidity in the Company's shares, noting that
discounts across the sector widened as interest rates increased and
market sentiment deteriorated. As such, we believe that adopting a
rigid discount control mechanism that seeks to target a defined
maximum discount level regardless of market conditions is not in
the best interests of shareholders. Our policy on share buy backs
takes account of the level of discount at which the Company's peer
group trades, prevailing market conditions and activity within our
sector.
At the Company's last AGM, authority was given to purchase up to
14.99% of the issued share capital. We propose that the share buy
back authority be renewed at the forthcoming AGM and that any
shares so purchased be cancelled or held in treasury for potential
reissue.
Environmental, social and governance issues ("ESG")
Our Investment Manager has always expressed the view that
companies with good ESG often perform better and potentially
deliver superior returns over time. Our Manager has provided more
detail in the Strategic Report on how ESG considerations are
incorporated into the investment process and given details of the
ESG research capability. This year, further information of the
Investment Manager's engagement with portfolio companies, which
give further insight into the application of ESG to the investment
process, have been included in the report for the first time.
Management fee
As previously noted, the management fee was reduced from 0.70%
to 0.60% per annum on net assets in excess of GBP600 million with
effect from 1 April 2023. In respect of the first GBP600 million of
net assets the management fee is unchanged at 0.75%.
Further details may be found in the Directors' Report on page
34.
Board succession
The Board regularly considers its policy on director tenure,
succession planning and its composition to ensure that it has the
appropriate mix of relevant skills, diversity and experience, and
has considered the matter of Board succession carefully during the
year in order to ensure that we effectively plan for future Board
changes in the coming years.
The Board welcomed Rupert Hogg as a non-executive Director with
effect from 1 May 2023. Rupert has over 30 years international
business experience gained through senior executive positions,
including at a number of large Asian-based companies, and he will
be seeking election at the AGM.
Keith Craig will not be seeking re-election at the AGM and, on
behalf of the Board, I would like to thank Keith for his
significant contribution to the deliberations of the Board over his
tenure.
Webinar
On 23 January 2024, the Company's Investment Manager will be
presenting to shareholders at a webinar at 2.00 pm. To register
your interest to attend this webinar please visit
www.schroders.events/SDP23 , where the facility to watch the
recorded webinar afterwards will also be available.
AGM
The AGM will be held on Wednesday, 31 January 2024 at 12.00 noon
at the offices of Schroders at 1 London Wall Place, London EC2Y
5AU. A presentation from our Investment Managers will be given at
the AGM, and attendees will also be able to ask questions in person
and meet the Directors. Details of the formal business of the
meeting are set out in the Notice of Meeting on page 73 of this
Annual Report.
All shareholders are recommended to vote by proxy in advance of
the AGM and to appoint the Chairman of the meeting as their proxy.
This will ensure that shareholders' votes will be counted even if
they (or any appointed proxy) are not able to attend.
If shareholders have any questions for the Board, please write,
or email using the details below. The questions and answers will be
published on the Company's webpages before the AGM.
To email, please use: amcompanysecretary@schroders.com or write
to us at the Company's registered office address: Company
Secretary, Schroder AsiaPacific Fund plc, 1 London Wall Place,
London, EC2Y 5AU.
For regular news about the Company, shareholders are also
encouraged to sign up to the Manager's investment trusts update,
which can be found at: www.schroders.com/trust-updates/ .
Outlook
It is clear that market conditions in Asia - and indeed globally
- will continue to be volatile. Global growth prospects remain
uncertain while geopolitical tensions in the Middle East, Ukraine
and Asia itself weigh heavily on sentiment.
However, despite or even because, of these challenges there are
many opportunities. Valuations across the region vary markedly by
country and in aggregate do not look expensive versus history,
trading below long term averages on a price to book and forward
price to earnings basis. A reversal of the upwards trajectory in
interest rates could have significant positive implications for
Asian assets as equity markets, currencies and liquidity flows
respond.
We therefore believe this is an ideal time for our Manager's
investment strategy which remains focused on companies with
structural and sustainable competitive advantages trading at
attractive valuations.
James Williams
Chairman
5 December 2023
Investment Manager's Review
The NAV per share of the Company recorded a total return of 2.9%
over the twelve months to end September 2023. This was ahead of the
performance of the benchmark, the MSCI All Country Asia ex Japan
Index, which rose by 1.5% over the same period. (Source:
Morningstar, net of fees, cum income NAV GBP return).
Asian markets experienced huge swings in sentiment over the 12
months to end September 2023, largely driven by gyrations in
expectations for the Chinese domestic economy, the impact of
geopolitics, including over Ukraine, Taiwan and US-China relations,
and the outlook for the global economy, with the path of US
interest rates of particular importance. Despite this litany of
concerns, the region's markets rose by around 10.5% in local terms,
albeit the strength of Sterling meant they finished up by only 1.5%
over the period in Sterling terms.
However, across the region there were large differences in
returns. China and Hong Kong were very volatile but of the larger
markets ended down the most over the period. We saw large falls in
both markets during the fourth quarter of last year 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'. However, optimism faded when economic data, whilst
generally showing an improvement, disappointed expectations that
had increased after the ending of the zero COVID policy, leading to
a renewed sell-off. High-end spending and services consumption did
much better when compared to the wider economy but even that was
lacklustre. Residential property numbers continued to disappoint
and renewed concerns over the state of the Local Government
Financing Vehicles' (LGFVs) finances, and some of the private
residential developers' liquidity positions, weighed on the market.
During July 2023, the Chinese market recovered on expectations of a
sizeable stimulus, but measures announced thus far have been
relatively modest.
US-China relations continued to be a driver of sentiment over
the year under review but, on balance, did see some stabilisation
during the year. Positives included the G-20 meeting in Bali, where
presidents Xi and Biden met face-to-face, and progress from the US
PCAOB (Public Company Accounting Oversight Board) 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. Although "balloon
gate", together with more restrictions on the export of high-end
technologies to China, did sour relations we have more recently
seen increased dialogue between the two, with meetings between US
and Chinese officials at a number of levels and the formation of
working groups between the two to address specific issues, which is
positive. Furthermore, domestically in China, there was a shift in
tone around regulation towards the internet companies, together
with the approval of several games by leading developers and
further announcements of government support for the private sector,
leading to hopes that the worst of the regulatory tightening had
been seen.
The Indian growth story continued through the year with the
market acting as a relative safe haven, doing well when China sold
off and vice versa. In the final quarter of 2022, valuations had
started to look very full and we did see a sell off until March
2023. However, disappointment with China's recovery and ongoing
continued domestic buying saw the market recover, further helped by
an expectation that rates were close to peaking given a moderation
in inflation.
However, the best performing markets over the year under review
were Korea and Taiwan. These are markets that have high weightings
in information technology stocks, which was the best performing
sector over the financial year. Post-COVID, the information
technology ("IT") sector had seen a slowdown as demand for goods
faded as people switched to consuming more services. This slowdown
had led to an increase in inventories and acted as an overhang for
the sector. However, this then elicited a supply side response by
these companies to the lower demand, seeing them cut both
production and capital expenditure which has seen the inventory
imbalance start to correct, lifting stock prices. More recently,
some of these have benefitted from the hope that Artificial
Intelligence ("AI") would drive a surge in demand for increased
computing power. By July 2023, this had started to drive
speculative moves in some of the Taiwanese server names, in our
view, and in Korea retail investors drove up electric vehicle
("EV") related component suppliers to valuations that we found, in
many areas, difficult to rationalise.
Despite the deteriorating outlook for global growth, inflation
pressures remained elevated for much of the year and financial
conditions generally tightened. Of the other major markets,
Singapore proved defensive, with financials performing relatively
well. Looking at the performance of sectors across the region,
aside from the strength in IT, higher interest rates were
supportive of financials. Defensive sectors generally
underperformed over the year under review, as did real estate which
was impacted by higher interest rates and the weakness of
residential property in China.
Performance and Portfolio Activity
The Company's NAV total return was 2.9% over the financial year,
which compared favourably to a modest rise in the reference
benchmark of 1.5%. Relative performance over the year under review
was helped by the underweight to, and strong stock selection in,
China. Our holding in the insurance company Ping An, was perceived
to be a beneficiary from the move away from zero COVID, as it would
enable sales agents to conduct more face-to-face meetings which had
been constrained during COVID. Other domestic focussed holdings
also helped, including Yum China, the fast food restaurant that
operates KFC and Pizza Hut concessions in China. The stock had
proven resilient during COVID, increasing delivery sales while
managing its costs well, and is still seen as having a runway for
growth from the ongoing roll out of restaurants. Shenzhou, one of
the world's largest contract manufacturers of sporting apparel, was
another company that did well on expectations of a pick-up in
demand for its sportswear as multinational players' inventories
started to normalise. An absence of some of the more highly rated
names in the e-commerce and healthcare sectors also helped as they
de-rated over the year.
Our stock picks in Taiwan also added value, led by the IT names.
These included 'fabless' semiconductor chip design companies
Novatek and MediaTek, and power electronics company Delta
Electronics, whose products have benefitted from the positive
trends in AI and EVs. There was also a positive contribution from
stocks in some of the smaller markets such as Indonesia and the
Philippines. The largest drag on performance came from stock
selection in Korea where the biggest negative came from not owning
Posco Holdings, which is principally an integrated steel maker but
whose share price moved up on the back of excitement around its
battery-related materials business. The Hong Kong overweight was
also a drag but was in large part offset by strong selection there,
including from stocks such as Prada, the luxury goods company that
performed well on strong sales growth which more than offset drags
from financials including BOC Hong Kong.
From a sector perspective, our overweight to, and stock
selection in IT names was the biggest positive contributor with
holdings in semiconductor stocks, including memory manufacturer
Samsung Electronics and foundry company TSMC, performing strongly
in addition to the names mentioned above. These stocks benefitted
from a perceived bottoming in the IT cycle as outlined above.
Elsewhere, our holdings in Real Estate added value, principally
through our holding in Oberoi Realty, a Mumbai focussed residential
developer in India. The stock has benefitted from a pick up in
demand for property after a long period of under-construction
following a multi-year downturn, which had seen consolidation in
the industry. Our underweights to some of the more defensive
sectors, such as healthcare, utilities and staples, all added
value. However, stock picks in the financials sector did detract,
with HK names including insurers AIA and Prudential, in addition to
BOC HK, a drag. Indian banks ICICI and HDFC Bank also lagged
following a strong period of performance which more than offset the
strength seen in Bank Mandiri in Indonesia and Singapore names OCBC
and DBS.
The geographic exposure in the Company's portfolio continues to
be mainly spread between China, India, Taiwan, Hong Kong, Korea and
Singapore. Over the year under review, we added to positions in
China and Hong Kong, as the pull back in both markets started to
provide opportunities in a number of names. These included adding
to existing positions in companies such as Shenzhou, for the
reasons previously mentioned, and Tencent, the internet platform
company. Its dominant position in messaging via its WeChat service
has been instrumental in allowing it to grow its advertising
revenues and market share in online gaming, an area which had been
under regulatory scrutiny but where we have now started to see
games being approved by the authorities. New holdings include
Shenzhen Inovance, a manufacturer of industrial products including
inverters and servos for use in areas such as factory automation,
EVs and robotics. They have been very successful at taking share
from foreign players, competing on service rather than just price,
and share price weakness on the back of macro disappointment gave
us an opportunity to start a position.
A more recent addition has been Wuxi Biologics, a healthcare
company that straddles the CRO (contract research organisation) and
CDMO (contract development manufacturing organisation) biotech
industries (outsourced research, development and manufacturing of
biological drugs). The stock had de-rated materially on concerns
over geopolitics, given its exposure to the US market, and the
impact of tighter liquidity on funding for global biotech companies
that use Wuxi Biologics to undertake research and manufacturing for
them. Despite these additions, China remains a substantial
underweight but is, in part, offset by the overweight to Hong Kong.
The Hong Kong market, in general, looks more attractive from a
valuation perspective, with several names set to benefit from the
re-opening of the border with the mainland. These include insurance
names, such as AIA, as mainland Chinese visitors once again come to
Hong Kong to buy insurance, having been prevented from doing so by
COVID restrictions. We also bought into a new holding in Macau,
gaming company Galaxy Entertainment, that would also benefit from
increased visitation by Mainland Chinese tourists, and again had
de-rated after the excitement of re-opening had passed.
Elsewhere, we reduced Taiwanese and Korean exposure, principally
by cutting positions in tech names that had done well, including
trimming Samsung Electronics, TSMC and Delta Electronics and
selling out of Novatek, which had performed well following a
better-than-expected pace of normalisation in its inventory. In
India, we rotated out of some of the names that had performed well
and were looking relatively expensive, in our view, such as auto
company Maruti Suzuki and logistics plays Container Corporation of
India and Gujarat Pipivav Port. We initiated positions in real
estate company Oberoi Realty and added to IT services, including a
new holding in Mphasis, an IT services provider with exposure to
several US mortgage providers. These customers had seen a slowdown
in demand, impacting sentiment on the stock but providing, in our
view, an attractive entry point.
Despite the addition to IT in India, overall we reduced our
overweight to IT due to the sales described above in Taiwan and
Korea. Nevertheless, we continue to like the sector. Although near
term earnings have been seeing downward revisions, we continue to
see some strong long-term drivers for growth around digitisation,
AI adoption, and the roll-out of 5G and 'Internet of Things'. In
IT, our focus remains on the Taiwanese and Korean hardware names
and the Indian IT services companies. We also continue to
overweight financials, with valuations still looking relatively
attractive given higher interest rates and subdued credit
costs.
Outlook and policy
The euphoria seen in markets at the beginning of 2023 over
China's move away from its "zero COVID" policy feels like a distant
memory, as China's long awaited post-COVID recovery has proved
weaker than expected. Economic data out of China, and a lack of
forceful policy response, has been disappointing, reigniting
concerns over local government debts and the wider residential
property sector. This has overshadowed more positive global
developments stemming from more favourable US inflation data, its
knock-on to the US interest rate cycle, and potential for a soft
landing in the US. There have also been some signs that the
inventory cycle has started to bottom, potentially pointing to a
more favourable demand outlook. This in turn could support demand
for Asian manufactured product, which historically has been
supportive of Asian markets. However, as already highlighted,
geopolitics remains an overhang to the region with areas of tension
including US-China relations, Taiwan and Ukraine, notwithstanding
the recent developments in the Middle East. The electoral cycle is
a likely point of focus with both the US and Taiwan having
elections next year.
Overall earnings have continued to be revised down following a
reset to China and global growth expectations, leaving aggregate
valuations broadly in line with their longer-term averages.
However, this masks a large variation across individual markets
where Singapore and Hong Kong, amongst others, look relatively
cheap versus history, and India more expensive.
Although we did not have an optimistic view on the growth
outlook for China, it has still managed to disappoint. This has
brought renewed focus back on to the residential property sector,
where private sector developers have seen a liquidity squeeze, as
sales have continued to disappoint, impacting cashflow for the
whole sector. The recent negative headlines around Chinese property
developers such as Country Garden could cause further deterioration
in homebuyers' sentiment and financing capabilities for other
private-sector developers, indirectly raising the risk of more
defaults in the industry going forward. Therefore we expect policy
easing, both on the demand and supply side, in the property sector
to intensify to avoid more defaults and any wider impact on the
financial sector. Our long-term concerns around the structural
headwinds for the residential sector remain - property is likely to
be less of a driver for the economy than in the past, given the
already high levels of residential investment combined with an
ageing demographic. It should be said we do not own any of the
Chinese private sector developers in the portfolio.
Near term, we believe it is a lack of consumer confidence that
is the problem rather than an inability to spend due to high
borrowings. In fact, household balance sheets have only
strengthened over the last two years, due to high levels of
precautionary savings. It is measures to address this, such as
progress on reforms, rather than a massive fiscal stimulus which is
needed to give the consumer greater confidence to spend more.
Nevertheless, in our view it is likely we will see further
government stimulus, on top of the piecemeal measures we have seen
so far, to boost growth given the fragility of the property sector.
More positively, the regulatory backdrop does not appear to be
getting worse and there are even tentative signs of reengagement
between the US and China. Despite this, we remain very underweight
combined Hong Kong and China, albeit we have been tentatively
looking to add to holdings in both markets where valuations have
come back. We are more positive on Hong Kong, where valuations are
lower, and the SAR should see a recovery now that the border with
the mainland has re-opened. Although visitor numbers to Hong Kong
and Macau have picked-up materially, one needs to remain cognisant
of the potential for tighter capital controls by the Chinese
government should external balances become too wide.
India continues to be a market that offers highly attractive
long-term opportunities but is currently being priced for that in
many cases, which leaves the market looking relatively fully-valued
and relatively expensive versus both its history and other regional
markets. Despite this, it has benefitted from the uncertainty
around the outlook for the Chinese market, together with the local
demand driver of strong domestic inflows which have pushed the
small and mid cap names up dramatically. We continue to favour the
IT services names together with the banks but also have exposure to
the fast-growing healthcare sector via Apollo Hospitals.
In the smaller ASEAN markets, we favour Singapore which is
benefitting from its increasing status as a regional wealth
management hub, as well as the growth of its ASEAN neighbours. We
also have exposure to Vietnam, Indonesia and have recently added to
our holdings in the Philippines.
Sector-wise, IT stocks, where we have been overweight, have been
the bright spot. The potential for additional demand being
generated by increased AI has seen many companies, however loosely
affiliated with the theme, perform well. Whilst this has seen
several companies, in our view, move into more speculative
territory, we believe that a number of our companies are set to
benefit from this additional demand driver over the medium to long
term. We therefore remain overweight - albeit the recent rally has
seen us selectively pare back holdings that we believe have got
ahead of themselves. The IT names remain sensitive to the global
economy and the Korean names, such as Samsung Electronics, are
still trading at relatively attractive levels from a valuation
perspective, in our view. While the visibility of demand remains
low, the supply side adjustment is starting to take place as
announcements on production and capex cuts have started to be seen
and inventories appear to be peaking. Otherwise, we remain
overweight to financials - a diverse sector spanning not only
banks, but also insurers and exchange companies. Although we saw
concern over banks earlier in the year following the Silicon Valley
Bank and Credit Suisse collapses, the banks we own are generally
well-capitalised with strong deposit
franchises and fall into two camps; those that are benefitting
from increased credit penetration, such as in India and Indonesia,
and the more domestically-focussed retail names in more mature
markets, such as Singapore, that in general trade at attractive
valuations and decent dividend yields.
Underweights remain in those areas of the market generally
perceived as more defensive, including consumer staples, health
care and utilities, where valuations, in our view, still remain
relatively full. More recently, however, the market's correction in
Chinese healthcare stocks has seen us add to a name there as
described above.
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 when demand recovers. Positively, we are
starting to see early indicators of a potential bottoming in the
global goods cycle with PMIs showing tentative signs of improvement
in inventories and new orders which historically, with a lag, have
been a good lead indicator of exports. The distortion in the goods
cycle from COVID was significant, with goods demand collapsing,
post its surge in 2020, as services recovered, meaning that the
goods cycle is much progressed when compared to that of services.
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 at attractive valuations, which have
structural and sustainable competitive advantages. Therefore, a
focus on attractive bottom-up ideas, in our view, remains
essential.
Market Weights - Schroder AsiaPacific Fund plc vs. MSCI AC Asia
ex Japan Index
Benchmark
Net Asset Value Index Weight
Weight (%) (%)
30-Sep-23 30-Sep-22 30-Sep-23
------------ --------- --------- -------------
China 19.1 18.7 34.4
India 18.1 17.0 18.1
Taiwan 15.3 15.0 16.9
Hong Kong 13.0 12.9 6.0
Korea 11.7 12.4 14.0
Singapore 8.7 8.4 3.8
Australia 3.4 3.8 -
Vietnam 3.2 - -
Indonesia 2.8 2.6 2.3
Thailand 2.0 2.2 2.1
Philippines 1.8 0.9 0.7
Malaysia - - 1.6
Other* 3.0 6.3 -
Net cash** (2.1) (0.2) -
------------ --------- --------- -------------
Total 100.0 100.0 100.0
------------ --------- --------- -------------
Source: Schroders, MSCI, 30 September 2023.
Vietnam has been split out separately for 2023.
*UK, Italy and other net liabilities.
**Cash, less borrowings used for investment purposes.
This information is not an offer, solicitation or recommendation
to buy or sell any financial instrument or to adopt any investment
strategy.
Schroder Investment Management Limited
5 December 2023
Past Performance is not a guide to future performance and may
not be repeated. The value of investments and the income from them
may go down as well as up and investors may not get back the
amounts originally invested. Exchange rate changes may cause the
value of any overseas investments to rise or fall.
Top Ten Investments
at 30 September 2023
1 Samsung Electronics (including preference shares)
Market value: GBP80,340,000
% of total investments: 9.2% (2022: 8.1%)
Samsung Electronics is a Korean semiconductor and electronics
manufacturing company. Its key products include semiconductors
(logic and memory chips), mobile phone handsets, consumer
electronics, and home appliances. As well as being the leading
player in both volatile (DRAM) and non-volatile (NAND) memory,
Samsung is one of only a handful of companies in the world able to
manufacture the most advanced logic chips at scale.
2 Taiwan Semiconductor Manufacturing Corporation
Market value: GBP76,215,000
% of total investments: 8.7% (2022: 8.1%)
TSMC is a Taiwanese provider of semiconductor manufacturing
services, and the world's largest logic chip contract manufacturer.
Its dominant position in the manufacturing of the most cutting-edge
chips is a result of a long track record of R&D-driven
innovation. TSMC's customers include most of the world's most
advanced chip design companies, for applications ranging from
smartphone processors to the most advanced AI chips.
3 Tencent Holdings
Market value: GBP43,480,000
% of total investments: 5.0% (2022: 3.6%)
Tencent is China's biggest internet company, with leading
positions in mobile gaming, online advertising and mobile payments.
Its WeChat app is the leading instant messaging app in China, and
is a key platform for other features, such as payments and social
media content, and third-party services accessed through
"mini-programs" on the platform. In addition to its own operations,
Tencent is a significant shareholder in several other prominent
internet companies, in China and abroad.
4 HDFC Bank
Market value: GBP33,264,000
% of total investments: 3.8% (2022: 4.0%)
HDFC Bank is an Indian financial services provider, offering
banking, insurance and mutual funds amongst other financial
products. Following its merger with HDFC Ltd, the non-bank
financial company, it is now among India's largest private sector
financial companies, serving over 90m customers through both
traditional and digital channels. India is a relatively
underpenetrated market for financial services.
5 ICICI Bank (including ADR)
Market value: GBP31,513,000
% of total investments: 3.6% (2022: 3.6%)
ICICI Bank is an Indian financial services provider, offering a
range of banking services and other financial products, including
retail banking, wholesale banking and insurance. It is one of
India's leading private sector banks, with around 6,000 branches.
India is a relatively underpenetrated market for financial
services.
6 Alibaba
Market value: GBP29,035,000
% of total investments: 3.4% (2022: 3.1%)
Alibaba is China's largest e-commerce company, operating several
domestic platforms such as Taobao, Tmall and Freshippo, as well as
operating internationally through Lazada and AliExpress. In
addition to goods e-commerce, Alibaba also has operations in
segments such as digital media, local services, logistics, and
public and hybrid cloud services. Its affiliate, Ant Group, is one
of China's leading fintech companies.
7 AIA
Market value: GBP27,188,000
% of total investments: 3.1% (2022: 2.9%)
AIA Group is an insurance company, providing life insurance,
accident and health insurance and savings plans, as well as
financial products and services to corporate clients. Based in Hong
Kong, the company operates in 18 markets across the Asia Pacific
region and has sold over 40 million policies.
8 Bank Mandiri
Market value: GBP23,544,000
% of total investments: 2.7% (2022: n/a)
Bank Mandiri is one of Indonesia's largest banks, serving both
retail and corporate customers. Established in 1998 as part of a
restructuring program for four government-owned banks, Mandiri
remains majority government-owned. It also offers other financial
services, such as insurance and securities brokerage. Indonesia is
a relatively underpenetrated market for financial services.
9 Oversea-Chinese Banking Corp
Market value: GBP21,791,000
% of total investments: 2.5% (2022: 2.5%)
OCBC is a Singaporean financial services provider, offering
banking, insurance, asset management and stockbroking services. The
group operates across Asia, and also owns a stake in China's Bank
of Ningbo. The group offers private banking services through its
Bank of Singapore subsidiary.
10 MediaTek
Market value: GBP18,021,000
% of total investments: 2.1% (2022: 1.2%)
MediaTek Inc is a Taiwanese company engaged in the design and
distribution of semiconductor chips. Their products focus on mobile
connectivity, for example 5G mobile communication chips, as well as
bluetooth and Wifi chips, and are mainly used in mobile phones,
digital TVs, PCs, home appliances, wearable devices and Internet of
Things devices.
Investment Portfolio
at 30 September 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
63.3% (30 September 2022: 60.5%) of total investments.
Investment Portfolio
at 30 September 2023
GBP'000 %
------- -----
Mainland China
Tencent Holdings(1) 43,480 5.0
Alibaba(1) 29,035 3.4
Midea (including A shares and LEPO(2) ) 17,966 2.1
Shenzou International(1) 11,954 1.4
Ping An Insurance H(1) 9,861 1.1
Sany Heavy Industry A 9,808 1.1
Yum China(1,3) 9,455 1.1
Contemporary Amperex Technology A 8,271 0.9
Hongfa Technology A 7,624 0.9
Shenzhen Inovance Technology A 7,164 0.8
Wuxi Biologics(1) 6,822 0.8
Meituan Dianping(1) 1,496 0.2
Total Mainland China 162,936 18.8
------- -----
India
HDFC Bank 33,264 3.8
ICICI Bank (including ADR(3) ) 31,513 3.6
Apollo Hospitals Enterprise 17,696 2.0
Tata Consultancy Services 17,630 2.0
Infosys 16,570 1.9
Oberoi Realty 12,446 1.4
Mphasis 10,610 1.2
Reliance Industries 9,919 1.1
Delhivery 4,164 0.5
Total India 153,812 17.5
------- -----
Taiwan
Taiwan Semiconductor Manufacturing 76,215 8.7
MediaTek 18,021 2.1
Delta Electronics 10,213 1.2
Nien Made Enterprise 9,048 1.0
Giant Manufacturing 8,249 0.9
Hon Hai Precision Industries 8,195 0.9
Total Taiwan 129,941 14.8
------- -----
Hong Kong (SAR)
AIA 27,188 3.1
BOC Hong Kong 17,475 2.0
Hong Kong Exchanges and Clearing 16,849 1.9
Techtronic Industries 10,634 1.2
Galaxy Entertainment 10,255 1.2
Hang Lung Properties 8,475 1.0
Swire Properties 7,790 0.9
Kerry Properties 7,270 0.8
ASM Pacific Technology 5,070 0.6
Total Hong Kong (SAR) 111,006 12.7
------- -----
South Korea
Samsung Electronics (including preference shares) 80,340 9.2
Samsung SDI 14,953 1.7
LG H&H 4,547 0.5
Total South Korea 99,840 11.4
------- -----
Singapore
Oversea-Chinese Banking Corp 21,791 2.5
Singapore Telecommunications 16,276 1.9
DBS 15,980 1.8
Singapore Exchange 13,515 1.5
Sea ADR(3) 6,524 0.7
Total Singapore 74,086 8.4
------- -----
Australia
Rio Tinto(4) 10,760 1.2
Orica 8,954 1.0
BHP(4) 8,830 1.0
Total Australia 28,544 3.2
------- -----
Vietnam
Vietnam Enterprise Investments(4) 16,627 1.9
Vietnam Dairy Products 5,691 0.7
Mobile World Investment 5,173 0.6
Total Vietnam 27,491 3.2
------- -----
Indonesia
Bank Mandiri 23,544 2.7
Total Indonesia 23,544 2.7
------- -----
United Kingdom
Schroder Asian Discovery Fund Z Acc(5) 14,082 1.6
Prudential 6,664 0.8
Total United Kingdom 20,746 2.4
------- -----
Thailand
Kasikornbank NVDR 10,666 1.2
Bangkok Dusit Medical Services NVDR 5,986 0.7
Total Thailand 16,652 1.9
------- -----
Philippines
International Container Terminal Services 9,514 1.1
Bank of the Philippine Islands 6,071 0.7
Total Philippines 15,585 1.8
------- -----
Italy
Prada(1) 10,351 1.2
Total Italy 10,351 1.2
------- -----
Total Investments (6) 874,534 100.0
------- -----
(1) Listed in Hong Kong.
(2) Listed in Luxembourg.
(3) Listed in the USA.
(4) Listed in the United Kingdom.
(5) Predominantly invested in Asia
(6) Total investments comprises the following:
GBP'000 %
------- -----
Equities, including ADRs, LEPOs
and NVDRs 828,944 94.8
Collective investment funds 30,709 3.5
Preference shares 14,881 1.7
------- -----
Total investments 874,534 100.0
------- -----
The following abbreviations have been used above:
ADR: American Depositary Receipt
LEPO: Low Exercise Price Option
NVDR: Non Voting Depositary Receipt
Ten-Year Financial Record
At 30 September 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
------- ------- ------- ------- ------- ------- ------- --------- ------- -------
Shareholders' funds
(GBP'000) 495,527 477,870 658,321 799,942 825,042 822,182 946,146 1,057,941 878,187 851,285
NAV per share, diluted
where applicable (pence) 292.82 282.39 392.33 477.38 492.35 490.94 567.16 641.72 546.13 549.92
Share price (pence) 264.00 246.50 343.00 426.00 430.00 435.00 510.00 579.00 487.00 486.50
Share price discount to
NAV per share* (%) 9.8 12.7 12.6 10.8 12.7 11.4 10.1 9.8 10.8 11.5
Gearing/(net cash)* (%) (0.6) 2.3 0.4 4.4 2.6 (2.4) 0.2 0.6 0.2 2.1
For the year ended 30 September 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
----- ----- ----- ----- ------ ------ ------ ------ ------ ------
Net revenue return after taxation
(GBP'000)(1) 4,749 7,151 8,040 9,537 16,885 16,590 13,253 16,080 19,673 18,990
Revenue return per share (pence)(1) 2.80 4.23 4.77 5.69 10.08 9.9 7.92 9.66 12.04 12.06
Dividends per share (pence)(1) 2.75 4.2 4.75 5.60 9.50 9.70 8.00 9.70 12.00 12.00
Ongoing charges* (%) 1.08 1.03 1.10 0.99 0.94 0.93 0.90 0.86 0.84 0.86
Performance(2) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
NAV total return (diluted where
applicable)* 100.0 110.6 107.6 151.6 186.8 194.8 198.4 233.5 267.6 231.1 237.7
Share price total return* 100.0 111.2 104.9 148.6 186.8 190.9 197.7 236.6 272.2 232.7 238.1
Benchmark 100.0 108.4 101.9 139.3 165.4 172.7 176.4 198.2 217.4 187.1 189.9
(1) With effect from 1 October 2017, the Company adopted an
allocation policy whereby 75% of indirect cost are allocated to the
capital account.
(2) Source: Morningstar/Thomson Reuters. Rebased to 100 at 30
September 2013.
*Alternative Performance Measure.
Business Review
Business model
The Company is a listed investment trust, that has outsourced
its operations to third party service providers.
The Board has appointed the Manager, Schroder Unit Trusts
Limited, to implement the investment strategy and to manage the
Company's assets in line with the appropriate restrictions placed
on it by the Board, including limits on the type and relative size
of holdings which may be held in the portfolio and on the use of
gearing, cash, derivatives and other financial instruments as
appropriate.
The terms of the appointment are described more completely in
the Directors' Report including delegation to the portfolio
managers and their team. The Manager also promotes the Company
using its sales and marketing teams. The Board and Manager work
together to deliver the Company's investment objective, as
demonstrated in the diagram above.
Investment objective
The Company's principal investment objective is to achieve
capital growth through investment primarily in equities of
companies located in the continent of Asia (excluding the Middle
East and Japan), together with the Far Eastern countries bordering
the Pacific Ocean. It aims to achieve growth in excess of the MSCI
All Countries Asia excluding Japan Index in sterling terms
(Benchmark Index) over the longer term.
Investment policy
The Company principally invests in a diversified portfolio of
companies located in the continent of Asia (excluding the Middle
East and Japan) (for the purposes of this paragraph the "region").
Such countries include Hong Kong, China, Singapore, Taiwan,
Malaysia, South Korea, Thailand, India, The Philippines, Indonesia,
Pakistan, Vietnam and Sri Lanka and may include other countries in
the region that permit foreign investors to participate in
investing in equities, such as in their stockmarkets or other such
investments in the future. Investments may be made in companies
listed on the stock markets of countries located in the region
and/or listed elsewhere but controlled from within the region
and/or with a material exposure to the region.
The portfolio is predominantly invested in equities, but may
also be invested in other financial instruments such as put options
on indices and equities in the region. The Company does not use
derivative contracts for speculative purposes. The Company may
invest up to 5% of its assets in securities which are not listed on
any stock exchange, but would normally not make such an investment
except where the Manager expects that the securities will shortly
become listed on a stock exchange. In order to maximise potential
returns, gearing may be employed by the Company from time-to-time.
Where appropriate the Directors may authorise the hedging of the
Company's currency exposure.
Status
The Company's shares are listed and admitted to trading on the
premium segment of the main market of the London Stock Exchange.
The Company is a constituent of the FTSE 250 index and is an
investment trust in accordance with section 1158 of the Corporation
Tax Act 2010. It is intended that the Company will continue to
conduct its affairs in a manner which will enable it to retain this
status. The Company is not a "close" company for taxation
purposes.
Whilst the Company's articles of association require that a
proposal for the continuation of the Company be put forward at the
Company's AGM in 2026, the Directors have no reason to believe that
such a resolution will not be passed by shareholders.
Purpose, values and culture
The Company's purpose is to create long-term shareholder
value.
The Company's culture is driven by its values: Openness,
Responsiveness, Diligence and the pursuit of Excellence, with
collegial behaviour and constructive challenge at Board level and
when engaging with stakeholders. The values are all centred on
achieving returns for shareholders in line with the Company's
investment objective. The Board also promotes the effective
management or mitigation of the potential risks faced by the
Company. To the extent it does not conflict with the investment
objective, the Company's operations are structured with regard to
all its stakeholders and take account of the impact of the
Company's operations on the environment and community.
Acting with high standards of integrity and transparency the
Board is committed to encouraging a culture that is responsive to
the views of shareholders and its wider stakeholders.
As the Company has no employees and acts through its service
providers, its culture is represented by the values and behaviour
of the Board and third parties to which it delegates certain
activities. The Board aims to fulfill the Company's investment
objective by encouraging a culture of constructive challenge with
all key suppliers and openness with all stakeholders. The Board is
responsible for embedding the Company's culture in the Company's
operations. The Board recognises the Company's responsibilities
with respect to corporate and social responsibility and engages
with its outsourced service providers to safeguard the Company's
interests. As part of this ongoing monitoring, the Board receives
reporting from its service providers with respect to their
anti-bribery and corruption policies; Modern Slavery Act 2015
statements; diversity policies; and greenhouse gas and energy usage
reporting.
Key performance indicators ("KPIs")
The Board reviews performance, using a number of key measures,
to monitor and assess the Company's success in achieving its
objective. Further comment on performance can be found in the
Chairman's Statement. Some of the KPIs used are:
-- NAV performance;
-- Share price discount/premium management; and
-- Ongoing charges ratio.
Some KPIs are Alternative Performance Measures. Further details
and definitions of these can be found on pages 76 and 77.
Investment process
Investment philosophy
- We believe that Asian stock markets are inefficient and provide
strong potential for adding value through active fund management.
- We believe that this value is best extracted using a fundamental,
bottom-up stock selection approach.
- Understanding and addressing ESG issues is important for
Asian companies. The sustainability of earnings and the alignment
of our interests with controlling shareholders are key considerations.
Engagement aids understanding and helps us seek to enhance
and protect the value of our investments.
- We believe that applying a systematic, disciplined approach,
with a strong team culture, increases our ability to add
value.
Source: Schroders. For illustrative purposes only and should not
be viewed as a recommendation to buy or sell.
Translating philosophy into process
A disciplined investment process, applied systematically by an
experienced team, is important for adding value over the long-term.
The Manager's investment process is informed by their beliefs about
Asian markets, based on the extensive experience they have gained
investing in the region for over 50 years.
These beliefs, and their implications, result in stock selection
being placed at the heart of the Company's investment approach, as
explained in the diagram below:
Investment team
A key strength of the Manager is its team of investment
professionals based in the region. The two UK-based portfolio
managers, who themselves have well over four decades of experience
between them, are supported by a team of 40 equity analysts based
across 6 offices in Asia Pacific ex-Japan, who have an average of
over 16 years' investment experience(1) .
Being based in the region means that the analysts are in regular
direct contact with the companies which they are covering, with the
team carrying out over 2,300 company contacts per year(2) . This
regular contact allows the team to gain a thorough understanding of
a company's business model and management culture, the key issues
they are facing and their strategies to navigate an ever-changing
business environment. Moreover, since the local investors in each
country are usually the key owners of the local markets, being
present on the ground enables the Manager to understand how those
major local investors perceive and value companies.
It is this knowledge base, paired with the expertise of our
investment professionals, which adds value to our bottom-up
approach to stock selection. The locally-based analyst team is
supplemented by other resources across the Schroders group,
including the UK-based Sustainable Investment Team and Investment
Insight Unit, as well as other equity teams focused on Global and
Emerging markets.
(1) Team information as at September 2023. The 40 ex-Japan
analysts includes Schroders' local specialist team of equity
analysts in Sydney, as well as a joint-venture team of Indian
equity analysts at Axis Asset Management (Axis AMC) in Mumbai.
(2) Calendar year 2022. Source: Schroders.
Stock research
The key input into the Investment Manager's stock selection
decisions is the fundamental research carried out by the analyst
team, the majority of which is done using internal research tools
and valuation models.
With a universe of around 5,000 potential names to choose from,
in what has historically been a volatile region, the Manager has a
bias towards 'quality' companies. The analysts look to identify
those companies which are most likely to be able to grow
shareholder value over the long term, by making assessments of the
financial and non-financial (including sustainability) factors
which influence company returns. The analytical focus is on the
future trend in a company's return on invested capital ("ROIC")
relative to its weighted average cost of capital ("WACC"), in the
belief that this reflects the attractiveness and sustainability of
the business model and serves as a predictor of long-term
shareholder returns.
Analysts spend much of their time meeting with companies in
their sectors, as well as with industry experts and colleagues, so
that they can evaluate the "moats" around the businesses they are
analysing and ultimately be in a position to make a
recommendation.
The output of this work is usually in the form of research notes
and company models, as well as standard data points - a fair value
and recommendation grade, an assessment of the company's return
profile as described above, and an ESG appraisal and score.
Portfolio construction
Although the Asian team's analysts are the primary source of
stock ideas, the portfolio managers also generate stock ideas
through their own research (for example, by undertaking visits and
meetings with company management) and by drawing on a number of
other sources including other investment professionals within
Schroders, quantitative screens, and external research
providers.
Using all of these inputs, the portfolio managers will decide
which stocks to hold, and at what weightings. In doing so, they
will consider all the outputs from the analysts' work (such as the
upside to fair value), the level of conviction they have in the
investment thesis and any identified risks (including those
relating to ESG) relative to the rest of the opportunity set. The
primary objective of this process is to create a portfolio with an
appropriate level of stock specific risk as the primary driver of
returns.
While the portfolio construction process is primarily driven by
bottom-up stock selection, there is also a top-down regional
allocation review process, carried out on a monthly basis,
combining the output of an in-house quantitative model and the
qualitative views of the portfolio managers, informed by data and
analysis from both internal and external research teams.
The purpose of this "top-down overlay" is to identify and adjust
for any unwanted systematic risks (or missed opportunities) which
have resulted from the bottom-up process. Top-down factors looked
at in this process may include macroeconomic conditions, inflation
and interest rate dynamics, politics/geopolitics, aggregate market
valuations and measures of investor sentiment. This allows the
portfolio managers to construct the portfolio using the most
attractive bottom-up ideas, while helping ensure sufficient
diversification and taking into consideration any important
top-down factors. They will also harness Schroders' proprietary
risk management systems to provide a quantitative view of the
characteristics of the portfolio.
This results in a relatively diversified portfolio, typically
with a 'quality' bias.
Integration of ESG into the investment process
This report reflects the ESG views and activities of the Manager
in relation to the Company's portfolio, and more widely. References
to "our" or "we" in this section of the report refer to the views
of the Manager.
How are ESG factors incorporated into the Asian investment
process?
Schroders has been considering ESG issues, and sustainability
generally, for over 20 years, as detailed in the timeline
below.
Sustainability at Schroders
A continuously evolving approach
For a long time, the Manager has incorporated into its decision
making a thorough assessment of management quality, environmental,
social and governance factors, whether implicitly or explicitly. We
recognise the importance of appraising both financial and
non-financial factors when analysing a company and its security.
Your Manager believes that integrating an analysis and evaluation
of ESG factors in our security valuation and selection process is
key to enhancing and protecting long-term shareholder value. The
appraisal of non-financial factors, including ESG considerations,
contributes to a better understanding of a company's risk
characteristics and return potential.
As long-term, bottom-up investors, assessing the sustainability
of a company's returns and financial position has always been at
the core of our research and investment decisions in Asia.
Consistent with this approach we engage with company management
teams (Schroders conducts over 2,300 meetings (calendar year 2022)
with regional companies a year) as well as voting all our proxies
where practically possible. Our analysts are directly responsible
for assessing ESG risks and opportunities as we believe they are
best placed to understand their companies and determine the impact
of ESG issues on the sustainability of the business.
ESG analysis is an integrated and important part of our
investment process from initial screening through to final
portfolio construction. ESG analysis impacts our investment process
in four direct ways:
1. Initial screening - ESG helps determine which companies we
consider to be investable as part of our initial screening.
2. Sustainability of earnings - ESG analysis helps understand
the impact ESG externalities may have on the future earnings power
of the business and with it our assessment of the return on
invested capital ("ROIC") and shareholder return classification
("SRC") of the company.
3. Fair Value and recommendation - ESG is an indirect and direct
input into our fair value estimate of a company. Indirect, to the
extent that a company's SRC may influence the assumptions used in
establishing our fair value estimate of a company; and direct, to
the extent that we may apply an additional explicit
discount/premium to that fair value estimate.
4. Portfolio construction - ESG helps shape portfolio
construction and may influence how we size positions. For example,
poor ESG performance or heightened ESG risks may result in a
decision to underweight a security, hold a smaller position size or
avoid an investment completely. There is no automatic rule - each
investment opportunity is assessed on a case-by-case basis, with
the focus on the materiality of ESG factors on a company's
valuation and risk profile.
In summary, ESG analysis helps determine which companies we look
at, how we assess their sustainability and, hence, how we value
them. And while company valuations ultimately drive our portfolio
construction, our ESG insights play a crucial role in the
investment process and influence how we size positions within a
portfolio. Furthermore, our ESG analysis is broad reaching and we
are not only interested in the potential downside risks that we may
identify but also the upside return implications for stocks we
invest in.
Asia ex Japan ESG analysis in practice(1)
Our Asian equity analysts are expected to provide written ESG
analysis for all companies under coverage. This identifies and
assesses the potential effect of ESG issues on the investment
case.
For our ESG analysis to be more robust and more integrated, we
have drawn on the proprietary tools developed by Schroders such as
Context and SustainEx. Asia Context, which is the principal tool
employed, captures our ESG analysis in one template using a
stakeholder based framework and is a key step in our overall
assessment of a company. In addition to separate rankings for 'E',
'S' & 'G', we generate an overall score for each company's ESG
rating.
We have always engaged with the companies that we invest in, and
direct company contact is an important component of the initial due
diligence and ongoing monitoring process. The Asia Context template
provides us with a clearer, and broader roadmap on the issues
requiring engagement and enhances appreciation of the downside and
upside risks to a company's business model. The analysts have the
option to apply an explicit discount or premium to their fair value
estimate as a result of their ESG analysis.
One of the Asian Equities team's greatest strengths is our
experienced analysts working hand-in-hand with our experienced fund
managers - often involving discussions from the beginning to the
end of the research on a company. Many of our fund managers are
ex-analysts and they are heavily involved in the discussions that
underpin our ESG conclusions - especially given the inherent
subjectivity of how certain ESG considerations will impact a
company. We do not expect our analysts to score our Asia Context
templates in isolation - in many instances we need to build a team
consensus on which issues to address and how to score them.
In addition to the merits of an individual stock idea, portfolio
managers will also take into consideration the overall balance of
the portfolio when selecting stocks and sizing positions - looking,
for instance, at overall sector and country weights. As part of
that process a company's ESG characteristics may influence how
portfolio managers size positions within the portfolio. The
portfolio manager may elect to limit, or even rule out, exposure to
a particular stock in view of a specific ESG concern. We assess
each situation on its merits, focusing on the materiality of ESG
factors on a stock's valuation and risk profile.
(1) The above ESG research framework covers investments in
companies covered by our team of locally based Asia ex Japan
analysts. The detail of ESG coverage in other regions where
analysts report locally (e.g. Australia, India) may differ, but is
underpinned by the same broad approach.
The context framework:
Understanding how a company manages it relationships with
stakeholders
Working with the Schroders Group's Sustainable Investment
Team
Schroders has a team of more than 50 dedicated ESG professionals
(30 June 2023) who develop proprietary ESG tools and oversee ESG
analysis across Schroders. The ESG specialists will also engage
directly with companies, prioritising those with exposure to higher
ESG risk and low ESG ratings. They can attend company meetings with
portfolio managers and analysts to discuss specific sustainability
issues directly with company management, in addition to financial
performance, as well as engaging with company sustainability
experts directly.
Corporate Governance Analysts in the team will also work
alongside investors, and our internal compliance and legal teams,
to ensure our voting activities comply with our ESG policy.
To enhance the Asian team's ESG expertise, we have two members
of the Sustainable Investment team based in Asia, supporting the
investment team and ensuring they are kept fully informed of the
relevant output of the Sustainable Investment team in London. We
also have a Sustainable Equity Analyst on the team who brings
additional insight and perspective to our ESG analysis and
engagement.
In addition, the Asian investment team collaborates with the
Sustainable Investment team, both formally and informally
participating, for instance, in a monthly ESG conference call
together with other investors globally to discuss topical issues as
well as ESG best practice.
So what is the outcome for the Company?
The process described above in relation to how we approach ESG
in our view results in a portfolio that is likely to be less
exposed to areas that could be deemed 'sensitive' from an ESG
perspective and where there is 'sensitivity', it is likely to be to
markets that are generally well regulated with a focus on the
better practitioners. It should be noted that the Company does not
screen out all companies in sensitive sectors(1) , rather the
process results in a much higher hurdle for stocks to get into the
portfolio than might otherwise be the case. Below is a table that
covers some of the more 'sensitive' sectors and our exposure to
them. As you can see exposure to the more sensitive areas is
limited.
(1) Schroders applies Group-level exclusions to all Schroders
funds that are directly managed. These Group-level exclusions
relate to controversial weapons and companies that generate more
than 20% of their revenues from thermal coal mining. Details can be
found at the following link: Group exclusions | Schroders
global
Sector Reasons for Caution Our Approach Approximate portfolio
Exposure
---------------- -------------------------------- ----------------------------- -----------------------
Agribusinesses/ Environmental, Social, Avoid; small exposure 0.6% (1 stock - branded
Aquaculture Governance, (low barriers milk company with
of entry, widespread some upstream supply)
questionable practices)
Tobacco Social Avoid 0%
Gambling Social, Governance. Limited exposure to 1.2% (1 stock)
Licence to operate/ best-in-class players
promotional practices in well-regulated
markets (e.g. Australia,
Macau)
Environmental, Governance,
(national service Avoid carbon heavy
obligations, uncertain energy providers,
regulations/risks focus on hydro and
of backlash against sustainable energy
Utilities coal plants, mostly providers in well-regulated
(traditional) state-owned enterprises) markets 0%
Resources Environmental, Social, Preference for Australian 3.2% (3 stocks)*
Governance (questionable blue chip names, with
practices such as minimal thermal coal
bribery and poor environmental mining revenues
and safety controls
concerns in Asia ex
Australia)
Oil Environmental, Governance Limited exposure to 1.1% (1 stock)
and (regulations, unfavourable sector ideally with
Gas taxes, price takers, an LNG/gas focus or
big carbon producers) self-help story
Property Environmental, Social, Prefer well-governed 4.1% (4 stocks)
Governance (bribery companies in better
issues, flooding, regulated markets.
land clearance compensation, Exposure is mainly
labour practices) to Hong Kong listed
stocks, plus one Indian
company.
Monopsony structure,
Defence corruption Avoid 0%
Source: Schroders, as at 30 September 2023.
*Includes mining related stocks
For illustrative purposes only and should not be viewed as a
recommendation to buy or sell.
We take a cautious approach to exposure in those companies
which, while they may be making attractive returns currently, are
not always operating in a sustainable way, which could potentially
impact future earnings.
We have tended, therefore, to take our exposure to these
industries through the higher quality names, operating in well
regulated markets. For example, while we believe commodity
resources will continue to be necessary in future (and indeed
crucial for a transition to a lower carbon world), our exposure to
this sector is through blue-chip Australian companies, rather than
more marginal miners in emerging countries. Similarly, for the real
estate sector, the majority of our exposure is through companies
which have a focus on strong governance, operating in
well-regulated markets. For some sectors (e.g. tobacco or thermal
coal(1) ), our requirement for operations to be sustainable in the
long-term is a high hurdle to clear, regardless of the governance
or regulatory frameworks a company is operating under, so we have
tended to have very limited exposure there.
Active ownership at Schroders
Schroders has a long history of engagement and active ownership
and we have engaged with companies on ESG related matters for the
past two decades. As active investors, we have always considered
active ownership to be a key channel of influence on management
teams and a mechanism that allows for more sustainable practices to
be properly considered in managing the companies and assets in
which we invest on behalf of our clients. We aim to drive change
that we believe should better protect and enhance the value of our
clients' investments and we are committed to leveraging our
influence as an investor to change how a company operates for the
better. These regular engagements form an important aspect of our
role as stewards of our clients' capital and allow us to deploy
capital in businesses with long-term sustainability of returns and
shareholder value creation.
Influencing corporate behaviour and outcomes
Engagement We work with companies to help them to recognise the
potential impact of these challenges and help them
take action in the areas where change may be required
Dialogue We speak with companies to understand if and how they
are preparing for the long-term sustainability challenges
Voting We use our voice and rights as shareholders to make
sure these changes are effected
Source:
Schroders
Engagement in practice
It should be remembered that we are not an 'activist' investor
and that in general we are looking to buy into companies that are
already well-managed with decent governance and attractive return
profiles. However, this does not mean that there is not still room
for engagement, particularly when thinking about sustainability
issues and the evolution of a longer-term investment thesis. Below
is an example of continuous engagement with portfolio holding
Samsung Electronics in Korea. This has been a long-term holding in
the portfolio and engagement has focused on different areas of the
'E', the 'S' and the 'G'. These include Climate Change, Diversity
and Inclusion and Corporate Governance as per the chart below.
Engaging across our priority engagement themes
Samsung Electronics
Themes Format Objectives Outcome
Aug 2019 Diversity Email Encourage improvement Company committed
and Inclusion IR on gender diversity. to improving culture
and launched initiatives
for female employees.
Aug 2020 Email Improve transparency Communicated expectations
IR on political lobbying. on transparency
Corporate and alignment.
Governance The Company recognised
Mar 2021 1x1 call Re-election of that investor trust
IR 3 directors in needs to be earned
light of adverse and it is something
ISS recommendations. they will work on.
Oct 2022 Climate Change 1x1 call Communicate climate Company has set
IR expectations. Scope 1 and 2 emission
targets and working
to develop Scope
3 visibility.
Diversity 1x1 call Improve board Company recognised
and Inclusion IR diversity . the need for more
global presence
on the board but
highlighted their
potential candidates
sit on more than
two boards, which
will likely be opposed
by ISS/GL given
their maximum two
boards over-boarding
policy in South
Korea.
Nov 2022 Corporate Email Raise concerns Communicated our
Governance CEO on ROE cash drag. analysis and concerns
on valuation.
Aug 2023 1x1 call Improve shareholder The shareholder
IR return policy. return policy is
being actively discussed
internally. An update
will be available
by end-Jan 2024.
Stakeholders addressed Governance & Management Regulators & Governments Environment
in engagements
Employees Customers & Suppliers Local communities
------------------------ ------------------------- ------------------
Source: Schroders, as at October 2023.
Securities shown are for illustrative purposes only and should
not be viewed as a recommendation to buy or sell. We recognise that
success factors may be subjective, and that Schroders' influence
may not have been the sole driving force for this change. However,
we believe it is important to track companies' progress and measure
the outcomes of our engagement.
This form of continuous engagement is fairly typical and, in
addition to the topics mentioned above, would include other areas
such as Natural Capital and Biodiversity, Human Rights and Human
Capital Management where appropriate.
Further disclosures
Investment restrictions and spread of investment risk
The key restrictions imposed on the Manager are that:
(a) no more than 15% of the Company's total net assets, at the
date of acquisition, may be invested in any one single company;
(b) no more than 10% of the Company's total net assets, at the
date of acquisition, may be invested in other listed investment
companies unless such companies have a stated investment policy not
to invest more than 15% of their gross assets in other listed
investment companies;
(c) the Company will not invest more than 15% of its gross
assets in other listed investment companies or investment
trusts;
(d) no more than 15% of the Company's total net assets may be
invested in open-ended funds; and
(e) no more than 25% of the Company's total net assets may be
invested in the aggregate of unlisted investments and holdings
representing 20% or more of the equity capital of any company.
No breaches of these investment restrictions took place during
the financial year.
The investment portfolio on page 15 demonstrates that, as at 30
September 2023, the Company held 58 investments spread over
multiple countries and in a range of industry sectors. The two
largest investments, Samsung Electronics and Taiwan Semiconductor
Manufacturing, represented 9.2% and 8.7% respectively of total
investments. At the end of the year, the Company did not hold any
unlisted investments and the only holding in an open-ended fund was
in Schroder Asian Discovery Fund Z Acc, which represented 1.6% of
total investments. There was also a holding in Vietnam Enterprise
Investments, a closed-end fund trading on the London Stock Exchange
which represented 1.9% of total investments. The Board believes
that the objective of spreading risk has been achieved.
Use of gearing
On 23 June 2023, the date of expiry of the credit facility, the
Company renewed its one year GBP75 million revolving credit
facility agreement with The Bank of Nova Scotia, London Branch.
Under the facility agreement, the Company also has the option to
increase the revolving facility by a further GBP25 million to
GBP100 million. At the year end $30 million of the credit facility
with The Bank of Nova Scotia was drawn down.
In addition, the Company has a GBP30 million multi-currency
overdraft facility with HSBC, which was not utilised during the
year. The Board has set parameters within which the Manager is
authorised to use the credit facilities and draw down funds. While
the articles of association limit the amount of gearing the Company
may have to a maximum of the Company's adjusted capital and
reserves, Directors do not anticipate net effective gearing levels
in excess of 20% of shareholders' funds.
Diversity
The Board has adopted a diversity and inclusion policy.
Appointments and succession plans will always be based on merit and
objective criteria and, within this context, the Board seeks to
promote diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths. The Board will encourage any
recruitment agencies it engages to find a range of candidates that
meet the objective criteria agreed for each appointment. Candidates
for Board vacancies are selected based on their skills and
experience, which are matched against the balance of skills and
experience of the overall Board taking into account the criteria
for the role being offered.
Statement on Board diversity - gender and ethnic background
The Board has made a commitment to consider diversity when
reviewing the composition of the Board and notes the new Listing
Rules requirements (LR 9.8.6R(9) and (11)) regarding the targets on
board diversity:
-- at least 40% of individuals on the Board are women;
-- at least one senior Board position (chairman, chief executive
officer ("CEO"), senior independent director or chief financial
officer ("CFO")) is held by a woman; and
-- at least one individual on the Board is from a minority
ethnic background, defined to include those from an ethnic group
other than a white ethnic group, as specified in categories
recommended by the Office for National Statistics.
As required by the Listing Rules the Company's reporting against
these targets is set out in the tables below. The data was
collected on a self-identifying basis.
In respect of the year under review, the Board met the target in
relation to the number of women on the Board until 1 May 2023 when
Rupert Hogg was appointed as a Director as part of the Board's
succession planning. Following the retirement of Keith Craig as a
Director at the conclusion of the next AGM the Board will again
meet this target albeit, as at 30 September 2023, the target was
not met. The target will continue to be considered when future
Board appointments are made although for continuity and succession
planning the Directors will always select the best candidate based
on objective criteria and merit.
As at 30 September 2023 and the date of this report, the targets
for the number of senior Board positions which should be held by a
woman and for at least one individual to be from a minority ethnic
background have been met. The Board considers that as an externally
managed investment trust, with no CEO or CFO, the Chair of the
Company, the Senior Independent Director and Chair of the Audit and
Risk Committee to be senior positions.
The below tables set out the gender and ethnic diversity
composition of the Board as at 30 September 2023 and at the date of
this report.
Gender identity
Number of
Percentage senior
Number of of the positions(1)
Board members Board on the Board
-------------------------------- -------------- ---------- -------------
Men 4 66.6% 2
Women 2 33.3% 1
Not specified/prefer not to say - - -
-------------------------------- -------------- ---------- -------------
Ethnic background
Number of Percentage Number of
Board of the senior positions(1)
members Board on the Board
---------------------------------------- --------- ---------- --------------------
White British or other White (including
minority-white groups) 5 83.3% 2
Mixed/Multiple Ethnic Groups - - -
Asian/Asian British 1 16.7% 1
Black/African/Caribbean/Black British - - -
Other ethnic group, including Arab - - -
Not specified/prefer not to say - - -
---------------------------------------- --------- ---------- --------------------
(1) The Company considers the positions of Chairman of the Board
of Directors, Senior Independent Director and Chair of the Audit
and Risk Committee to be senior positions of the Board.
The prescribed format for the above tables includes provisions
relating to the role of the CEO, CFO and executive management. The
Board considers these provisions are not relevant to the Company as
it is an externally managed investment company. In particular, all
of the Company's day-to-day management and administrative functions
are outsourced to third parties. As a result, the Company has no
CEO, CFO or executive management.
The Board also considers the diversity and inclusion policies of
its key service providers.
Financial crime policy
The Company continues to be committed to carrying out its
business fairly, honestly and openly, and operates a financial
crime policy, covering bribery and corruption, tax evasion, money
laundering, terrorist financing and sanctions, as well as seeking
confirmations that the Company's service providers' policies are
operating soundly.
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it
has no significant greenhouse gas emissions and energy usage to
report.
Taskforce for Climate-Related Financial Disclosures
On 30 June 2023, the Company's AIFM produced a product level
disclosure consistent with the Task Force on Climate-Related
Financial Disclosures ("TCFD") for the period 1 January 2022 to 31
December 2022. This can be found here:
https://mybrand.schroders.com/m/6ec452c589d9a1c6/original/TCFD-Schroder-AsiaPacific-Fund-20221231.pdf
.
Responsible investment
The Company delegates to its Manager the responsibility for
taking ESG issues into account when assessing the selection,
retention and realisation of investments. The Board expects the
Manager to engage with investee companies on social, environmental
and business ethics issues and to promote best practice. The Board
requires the Manager to exercise the Company's voting rights in
consideration of these issues, and receive reporting on them.
Further detail on engagement and stewardship can be found on
pages 20 to 23.
In addition to the description of the Manager's integration of
ESG into the investment process and the details in this Business
Review, a description of the Manager's policy on these matters can
be found on the Schroders website at www.schroders.com .The Board
notes that Schroders believes that companies with good ESG
management often perform better and deliver superior returns over
time. Engaging with companies to understand how they approach ESG
management is an integral part of the investment process. Schroders
has committed to the UN Global Compact, amongst codes and
standards, and information about the application of Schroders'
sustainability and responsible investment policies can be found at:
https://www.schroders.com/en/sustainability/corporate-responsibility/
.
The Board has received reporting from the Manager on the
application of its policy.
Stakeholder engagement, section 172 of the Companies Act
2006
During the year under review, the Board discharged its duty
under section 172 of the Companies Act 2006 to promote the success
of the Company for the benefit of its members as a whole, having
regard to the interests of all stakeholders. As an externally
managed investment trust, the Company has no employees, operations
or premises. The Board identified its key stakeholders as the
Company's Shareholders, the Manager, Investment Manager, the
Company's Lender, other service providers and the Investee
companies.
The following sections explain how the Directors have engaged
with all stakeholders and outlines stakeholder considerations
during the year.
Shareholders
The Board recognises the importance of engaging with
shareholders on a regular basis in order to maintain a high level
of transparency and accountability. The Board receives regular
reports from the Investment Manager and broker on shareholder
engagement, and the Investment Manager maintains regular and open
dialogue with shareholders. The Manager also has a dedicated client
services team which maintains regular contact with the Company's
shareholders and reports regularly to the Board. Shareholders can
also contact the Chairman and Directors throughout the year via the
Company Secretary or the Corporate Broker. The Chairman and Senior
Independent Director are also available to meet major shareholders
to understand their views and to help inform the Board's decision
making process. The Company maintains webpages from which copies of
the annual and half year reports along with factsheets and other
relevant materials are available. Shareholders are also invited to
attend the AGM at which they have the opportunity to speak directly
with Directors and Investment Manager.
The Manager and Investment Manager
The Board's main working relationship is with the Manager, who
is responsible for the Company's portfolio management (including
asset allocation, stock and sector selection) and risk management,
as well as functions such as secretarial, accounting and marketing
services. The Manager has subdelegated portfolio management to the
Investment Manager. The Board maintains a constructive and
collaborative relationship with the Manager and Investment Manager,
encouraging open discussion. The Board invites the Investment
Manager to attend all Board and certain committee meetings and
receives regular reports on the performance of the investments and
the implementation of the investment strategy, policy and
objective. The portfolio activities undertaken by the Investment
Manager and the impact of decisions affecting investment
performance are set out in the Investment Manager's Review on pages
6 to 12. The Management Engagement Committee reviews the
performance of the AIFM and Investment Manager, their remuneration
and the discharge of their contractual obligations at least
annually.
The Company's lender
During the year under review, the Board renewed its revolving
credit facility Agreement with The Bank of Nova Scotia, London
Branch. The credit facility provides the option for the Investment
Manager to leverage the portfolio, with the aim of enhancing long
term returns to shareholders as opportunities arise. The Board is
responsible for ensuring that the Company adheres to all existing
covenants.
Other service providers, including: depositary and custodian,
registrar, corporate broker, legal counsel, third-party research
provider
The Board maintains regular contact with its key service
providers, both at the Board and committee meetings, and through ad
hoc communication during the year. The need to foster business
relationships with key service providers is central to the
Directors' decision-making as the Board of an externally managed
investment trust. During the year, the Management Engagement
Committee undertook reviews of the third-party service providers
and agreed that their continued appointment remained in the best
interests of the Company and its Shareholders. The committee
periodically reviews the market rates for services received, to
ensure that the Company continues to receive high quality service
at a competitive cost. Where available, the internal controls
reports of the Company's service providers are reviewed by the
Audit and Risk Committee and Directors also attended a meeting
during the year to assess the internal controls of certain service
providers including the Company's Depositary and Custodian HSBC,
the registrar, Equiniti, Schroder's Group Internal Audit and HSBC
Securities Services (UK) Limited, as the provider of certain
accounting and administrative services delegated by Schroder
Investment Management Limited. These meetings enable the Board to
conduct due diligence on operations and IT risks amongst service
providers; and to receive up to date information on changes to
regulation and market practice in the industry.
Investee companies
The Board recognises the importance of good stewardship and
communication with investee companies in meeting the Company's
investment objective and strategy. The Investment Management team
conducts meetings with portfolio companies' management teams to
understand current trading as well as the longer term prospects for
their businesses, and to help understand the ESG risks to the
investment. Additional engagements on ESG areas of concern will
also be undertaken with investee companies. The Investment Manager
has discretionary powers to exercise the Company's voting rights on
resolutions proposed by the investee companies within the Company's
portfolio. The Investment Manager reports to the Board on
stewardship (including voting) issues and the Board has the
opportunity to question the rationale for voting decisions made.
Through engagement and exercising voting rights, the Investment
Manager actively works with companies to improve corporate
standards, transparency and accountability.
Additional information is set out in the following table on the
Manager's engagement in respect of portfolio holdings and
voting.
As at
30 September
2023
--------------------------------------- -------------
Number of companies engaged with 38
Number of engagement discussion topics 105
Invested companies engaged with (%) 53
Shareholder meetings voted at 80
Number of proposals voted on 661
Number of votes against management 45
Votes against management (%) 6.5
--------------------------------------- -------------
Specific examples of stakeholder consideration during the
year
The Directors were particularly mindful of stakeholder
considerations in reaching the following key decisions during the
year ended 30 September 2023:
-- the Board agreed with the Manager to reduce the management
fee, further details in respect of which are set out in the
Directors' Report;
-- the Board continued the strategy to buy back shares which
provides a degree of liquidity when the discount widens;
-- the Board continued to consider Board succession planning, as
it recognises the benefits of regular Board refreshment. Rupert
Hogg was appointed as a non-executive Director on 1 May 2023;
-- the Board entered into an amendment and restatement agreement
in June 2023 in respect of the multicurrency revolving facility
agreement originally dated 23 June 2022. Given the specific
requirements of the Company and various factors, including the
interest rate environment, the Board, when considering the renewal
of the facility, concluded that the one year revolving credit
facility remained the most appropriate arrangement and The Bank of
Nova Scotia, London Branch the most appropriate provider of the
facility;
-- the Board undertook its annual visit, together with the
Investment Manager, to the region and visited India and Singapore
to undertake due diligence meetings with consultants and investee
companies and review Schroders capabilities in the region; and
-- the Board has declared a final dividend of 12.00p per
ordinary share (2022: 12.00p) which, if approved by shareholders at
the AGM on 31 January 2024 will be paid on 9 February 2024.
Following the year end, the Board undertook its annual visit,
together with the Investment Manager, to the region and visited
Vietnam and Hong Kong.
Principal and emerging risks and uncertainties
The Board, through its delegation to the Audit and Risk
Committee, is responsible for the Company's system of risk
management and internal control and for reviewing its
effectiveness. The Board has adopted a detailed matrix of
principal, and where applicable emerging, risks affecting the
Company's business as an investment trust and has established
associated policies and processes designed to manage and, where
possible, mitigate those risks, which are monitored by the Audit
and Risk Committee on an ongoing basis. This system assists the
Board in determining the nature and extent of the risks it is
willing to take in achieving the Company's strategic objectives.
Both the principal and emerging risks and the monitoring system are
also subject to robust review at least annually. The last
assessment took place in November 2023.
During the year, the Board discussed and monitored a number of
risks which could potentially impact the Company's ability to meet
its strategic objectives. The Board received updates from the
Manager, Company Secretary and other service providers on emerging
risks that could affect the Company. The Board was mindful of the
following risks during the year: the escalating conflict in Israel,
the ongoing conflict in Ukraine, rising inflation and interest
rates, the threat of a global recession and increasing energy
prices. These risks were not seen as new principal or emerging
risks but those that exacerbate existing risks and have been
incorporated in the geopolitical and market sections in the table
below.
Geopolitical risk includes the impact of regional tensions,
trade wars and sanctions against companies. The Board continued to
monitor events in the Middle East following Hamas' attack on Israel
in early October 2023 and the Russian invasion of Ukraine, ongoing
pressure in the Asia-pacific region, slowing economic growth in
China and supply chains. The Board is also mindful that changes to
financial and public policy could impact the Company in the future.
ESG risk includes climate change risk and how it could affect the
Company's investments, and potentially shareholder returns. ESG
considerations, including climate change are embedded in the
investment process and greater transparency continues to be
provided in Board reporting and the annual report. The Board will
continue to monitor this closely. Further details are provided in
respect of geopolitical and ESG risks in the table below.
Although the Board believes that it has a robust framework of
internal controls in place this can provide only reasonable, and
not absolute, assurance against material financial misstatement or
loss and is designed to manage, not eliminate, risk. Actions taken
by the Board and, where appropriate, its committees, to manage and
mitigate the Company's principal risks and uncertainties are set
out in the table below.
The "Change" column on the right highlights at a glance the
Board's assessment of any increases or decreases in risk during the
year after mitigation and management. The arrows in the change
column show the risks as increased or decreased or unchanged.
Risk Mitigation and management Change
---------------------------------------------------- ----------------------------------------------------- ---------
Strategic The appropriateness of the Company's investment remit Stable
The requirements of investors change or develop in is periodically reviewed and the success
such a way as to diverge from the Company's of the Company in meeting its stated objectives is
investment objectives, resulting in a wide discount monitored. The share price relative to
of the share price to NAV per share. NAV per share is monitored and the use of buy back
The Company's cost base could become uncompetitive, authorities is considered on a regular
including fees, against the peer group basis. The marketing and distribution activity is
and against open-ended alternatives. regularly reviewed. The Company engages
proactively with investors.
The Management Engagement Committee reviews fees paid
to the Manager at least annually.
The ongoing competitiveness of all service provider
fees is subject to periodic benchmarking
against their competitors.
The monitoring of fees charged by other service
providers takes place alongside an annual
review of the Company's Ongoing Charges figure.
The Board approves significant non-routine expenses.
Geopolitical The Board continued to monitor key political Increased
Political developments globally might materially developments in the Asia Pacific region, in addition
affect the ability of the Company to achieve to the Ukraine war and the increasing tension in the
its investment objective. Middle East as a result of the conflict
Risks include regional tensions, trade wars and between Hamas and Israel.
sanctions against companies, in areas which It was recognised that there continues to be an
the Company invests or may invest, that might have elevated geopolitical risk relating to the
consequences for the Company including region.
an adverse effect on the value of the Company's Subject to shareholder consent, the Board can amend
assets. the investment policy and objective of
the Company to mitigate these risks.
Market The Board continues to monitor the market volatility Increased
A significant fall in regional equity markets could caused by current geopolitical issues
have an adverse impact on the market value and will continue to do so on an ongoing basis.
of the Company's underlying investments. The Board recognises that there continues to be a
The Company invests predominantly in assets which currency / exchange rate risk relating to
are denominated in a range of currencies. the region and monitored it carefully during the
Its exposure to changes in the exchange rate between period. The Board also monitors macroeconomic
sterling and other currencies has the and market factors, including the impact of
potential to have significant impact on returns and inflation.
the sterling value of dividend income The Company has no formal policy of hedging currency
from underlying investments. risk but may use foreign currency borrowings
or forward foreign currency contracts to limit
exposure. The Company does not hedge against
sterling.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate any
negative impact of substantial changes in markets are
discussed with the Investment Managers.
The Investment Manager seeks to invest in companies
with strong balance sheets and sustainable
business models.
Investment Management Regular review of: Stable
The Manager's investment strategy and levels of - investment performance;
resourcing, if inappropriate, may result in - NAV and share price performance including discount
the Company underperforming the market and/or peer against the peer group; and
group companies, leading to the Company - whether appropriate strategies are employed to
and its objectives becoming unattractive to mitigate any negative impact of substantial
investors. changes in markets.
The Manager reports on macro-economic events,
including regional policies, quarterly and more
frequently in response to events, if considered
necessary.
Annual review of the ongoing suitability of the
Manager.
Regular meetings with major shareholders to seek
their views with respect to Company matters.
Custody The depositary reports on the safe custody of the Stable
Safe custody of the Company's assets may be Company's assets, including cash and portfolio
compromised through control failures by the holdings which are independently reconciled with the
depositary. Manager's records. The review of audited
internal controls reports covering custodial
arrangements is undertaken. An annual report
from the depositary on its activities, including
matters arising from custody operations is
received.
Gearing and leverage Gearing is monitored and strict restrictions on Stable
The Company utilises credit facilities. These borrowings are imposed: gearing continues
arrangements increase the funds available for to operate within pre-agreed limits so as not to
investment through borrowing. While this has the exceed 20% of the Company's net assets. Generally,
potential to enhance investment returns in gearing is maintained at relatively low levels.
rising markets, in falling markets the impact could
be detrimental to performance.
Accounting, legal and regulatory change The Board intends to continue to operate the Company Stable
In order to continue to qualify as an investment in full compliance with the requirements
trust, the Company must comply with the requirements of Section 1158 of the Corporation Tax Act 2010,
of Section 1158 of the Corporation Tax Act 2010. compliance is confirmed by the external auditor.
Breaches of the UK Listing Rules, the Companies The confirmation of compliance with relevant laws and
Act or other regulations with which the Company is regulations by key service providers
required to comply, could lead to a number is reviewed.
of detrimental outcomes. Shareholder documents and announcements, including
the annual report, are subject to stringent
review processes. Procedures are established to
safeguard against the disclosure of inside
information.
Climate change The consideration of climate change risks and ESG Stable
ESG requirements including climate change and factors is integrated into the investment
climate-related risks could impact the Company's process and reported at regular Board meetings.
business and affect revenue, expenses, asset values The Investment Manager considers and evaluates the
or the cost or availability of capital. approach investee companies take to recognise
and mitigate climate change risks.
The Manager has implemented a comprehensive ESG
policy which is outlined in detail on pages
20 to 23.
Third party services Service providers appointments are subject to due Stable
The Company has no employees and has delegated diligence processes and with clearly documented
certain functions to a number of service providers. contractual arrangements detailing service
Failure of controls, including as a result of fraud, expectations.
and poor performance of any service provider, Regular reports are provided by key service providers
could lead to disruption, reputational damage or and the quality of their services is
loss of shareholders' assets. monitored. Monitoring includes an annual presentation
to the Chair of the Audit and Risk Committee
and other Directors from key risk and internal
controls personnel.
Review of annual audited internal controls reports
from key service providers, including confirmation
of business continuity arrangements and IT controls.
Cyber The Company's service providers report on cyber risk Increased
The Company's service providers are all exposed to mitigation and management at least annually,
the risk of cyber-attacks. Cyber-attacks which includes confirmation of business continuity
could lead to loss of personal or confidential capability in the event of a cyber-attack.
information, unauthorised payments or inability
to carry out operations in a timely manner.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality
of the systems of internal control operating within key service
providers, and ensures regular communication of the results of
monitoring by such providers to the Audit and Risk Committee,
including the incidence of significant control failings or
weaknesses that have been identified at any time and the extent to
which they have resulted in unforeseen outcomes or contingencies
that may have a material impact on the Company's performance or
condition.
No significant control failings or weaknesses were identified
from the Audit and Risk Committee's ongoing risk assessment which
has been in place throughout the financial year and up to the date
of this report. The Board is satisfied that it has undertaken a
detailed review of the risks facing the Company.
A full analysis of the financial risks facing the Company is set
out in note 20 to the accounts on pages 65 to 70.
Viability statement
The Directors have assessed the viability of the Company over a
five year period, taking into account the Company's position at 30
September 2023 and the potential impact of the principal and
emerging risks it faces for the review period. This is further
detailed in the Chairman's Statement, Investment Managers' Review
and Principal and Emerging Risks sections of this report. The
Directors have assessed the Company's operational resilience and
they are satisfied that the Company's outsourced service providers
will continue to operate effectively.
The Board believes that a period of five years reflects a
suitable time horizon for strategic planning, taking into account
the investment policy, liquidity of investments, potential impact
of economic cycles, nature of operating costs, dividends and
availability of funding.
In its assessment of the viability of the Company, the Directors
have considered each of the Company's principal and emerging risks
detailed on pages 27 to 29 and in particular the impact of a
significant fall in regional equity markets on the value of the
Company's investment portfolio. The Directors have also considered
the Company's income and expenditure projections and the fact that
the Company's investments comprise readily realisable securities
which can be sold to meet funding requirements if necessary.
The Directors also considered the beneficial tax treatment the
Company is eligible for as an investment trust. If changes to these
taxation arrangements were to be made it would affect the viability
of the Company to act as an effective investment vehicle.
Whilst the Company's articles of association require that a
proposal for the continuation of the Company be put forward at the
Company's AGM in 2026, the Directors have no reason to believe that
such a resolution will not be passed by shareholders.
The Directors also considered a stress test in which the
Company's NAV dropped by 50% and noted that, based on the
assumptions in the test, the Company would continue to be viable
over a five year period.
Based on the Company's processes for monitoring operating costs,
the Board's view that the Manager has the appropriate depth and
quality of resource to achieve superior returns in the longer term,
the portfolio risk profile, limits imposed on gearing, counterparty
exposure, liquidity risk and financial controls, the Directors have
concluded that there is a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as
they fall due over the five year period of their assessment.
Going concern
The Directors have assessed the principal risks, the impact of
the emerging risks, the net current liability position and the
matters referred to in the viability statement. Based on the work
the Directors have performed, they have not identified any material
events or conditions that, individually or collectively, may cast
significant doubt on the Company's ability to continue as a going
concern for the period assessed by the Directors, being the period
to 31 December 2024 which is at least 12 months from the date the
financial statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
5 December 2023
Board of Directors
James Williams Keith Craig Julia Goh
Status: Independent Status: Independent Status: Independent
non-executive Chairman non-executive Director non-executive Director
------------------------------ -------------------------------- ------------------------------
Length of service: Length of service: Length of service: 2
9 years - appointed 8 years - appointed years - appointed a Director
a Director in August a Director in May 2015 in October 2021 and as
2014 and the Chairman Experience: Keith Craig the Chair of the Audit
with effect from 1 served with the British and Risk Committee on
February 2021 Army after university 1 February 2022
Experience: James and subsequently joined Experience: Julia Goh
Williams has over 30 the Swire Group in Hong has broad-based financial
years' international Kong and Manila in the services experience in
business experience, 1980s and early 1990s. London. She was a Managing
including nearly 20 He was then a diplomat Director at Barclays
years in the investment with the Foreign & Commonwealth Investment Bank in various
banking industry, having Office for some years senior front-office positions
held senior roles in before moving back to including as Chief Operating
Asia and Europe at Asia as a stockbroker, Officer of Global Markets,
ING Barings, ABN AMRO establishing WI Carr's and was also Chair of
and Commerzbank. Following business in the Philippines the Barclays Women's
his departure from and subsequently running Initiative Network. Prior
Commerzbank, he became their global equity to that, she was a Managing
a partner at Saginaw sales and trading operation, Director and the Global
Capital LLP until 2008. based in Hong Kong. Head of Prime Services
James is also a non-executive He returned to London Risk at Credit Suisse
Director of The European in 2000 and was CEO for 11 years. Julia started
Smaller Companies Trust of Hakluyt, a strategic her Markets career at
PLC and of Net Zero intelligence company, Nomura International
One Ltd. until 2017, when he as a risk manager. A
Committee membership: founded Westbury Partners. Singaporean, Julia came
Audit and Risk, Management Keith is Chairman of to London in 1987 and
Engagement and Nomination the International Advisory obtained her BSc from
Committees Council of PJT Partners the London School of
Current remuneration: and a member of the Economics and Political
GBP49,000 (from 1 October advisory boards of the Science and a MSc from
2023) Bodleian Library and Bayes Business School.
Number of shares held: Cancer Research UK. She is a fellow of the
20,000* Committee membership: ICAEW (alumnus PWC in
Audit and Risk, Management corporate tax) and has
Engagement and Nomination a Certificate in Company
Committees (Chair of Direction from the Institute
Nomination Committee) of Directors. Julia is
Current remuneration: an independent non-executive
GBP36,000 per annum Director of The Mercantile
(from 1 October 2023) Investment Trust plc,
Number of shares held: Pension Insurance Corporation
12,581* plc and also of its parent
company, Pension Insurance
Corporation Group, and
a Director of the charity,
Children of the Mekong.
Committee membership:
Audit and Risk, Management
Engagement and Nomination
Committees (Chair of
Audit and Risk Committee)
Current remuneration:
GBP44,000 per annum (from
1 October 2023)
Number of shares held:
15,000*
Vivien Gould Rupert Hogg Martin Porter
Status: Independent Status: Independent Status: Senior Independent
non-executive Director non-executive Director non--executive Director
---------------------------- --------------------------------- -----------------------------
Length of service: Length of service: six Length of service: 6
4 years - appointed months - appointed a years - appointed a Director
a Director in May Director in May 2023 in October 2017 and as
2019 Experience: Rupert Hogg the Senior Independent
Experience: Vivien has more than 30 years Director with effect
Gould has worked in international business from 1 February 2022
the financial services experience gained through and
sector since 1981. senior executive level Experience: Martin Porter
She was a founder positions in various joined Robert Fleming
Director of River large and complex organisations. Asset Management in 1984,
& Mercantile Investment He joined John Swire and ran equity portfolios
Management Limited & Sons Limited, part in both London and Japan.
(1985) and served of the Swire conglomerate During his tenure in
there as a senior of businesses, in 1986 Japan, he became a holding
executive and deputy and worked with the group board Director of Jardine
managing Director in Hong Kong, Southeast Fleming, responsible
until 1994. She then Asia, India, Korea, Australia for the Japanese business.
served on the boards and the United Kingdom. Returning to the UK in
of a number of listed He was Chief Executive 2000, Martin took up
investment trusts, Officer of Cathay Pacific the role of Chief Investment
investment management Airways Limited and Chairman Officer, Equity and Balanced
companies and other of Hong Kong Dragon Airlines of Fleming Asset Management,
financial companies. Limited between May 2017 before becoming Global
She also served on and August 2019. Previously, Head of Equities of JP
the boards of a number he had served as Chief Morgan Asset Management,
of charities, including Operating Officer of a position he held from
the Stroke Association, Cathay Pacific Airways 2003 to 2016 when he
where she chaired Limited, was a Director retired.
the investment committee. of Cathay Pacific and Committee membership:
Vivien is currently John Swire & Sons (H.K.) Audit and Risk, Management
a non- executive Director Limited, Chairman of Engagement and Nomination
and Senior Independent AHK Air Hong Kong Limited Committees (Chair of
Director of The Lindsell and a Director and Chairman Management Engagement
Train Investment Trust of the executive committee Committee)
PLC, a non-executive of Cathay Dragon. Rupert Current remuneration:
director of Baring holds a Master of Arts GBP36,000 per annum (from
Emerging EMEA Opportunities degree in History from 1 October 2023)
PLC, Third Point Investors Edinburgh University. Number of shares held:
Limited, and National Committee membership: 20,000*
Philanthropic Trust Audit and Risk, Management
UK. Engagement and Nomination
Committee membership: Committees.
Audit and Risk, Management Current remuneration:
Engagement and Nomination GBP36,000 per annum (from
Committees 1 October 2023)
Current remuneration: Number of shares held:
GBP36,000 per annum 2,100*
(from 1 October 2023)
Number of shares
held: 5,000*
*Shareholdings are as at 5 December 2023, full details of
Directors' shareholdings are set out in the Remuneration Report on
page 45
Directors' Report
The Directors submit their report and the audited financial
statements of the Company for the year ended 30 September 2023.
Directors and officers
Chairman
The Chairman is an independent non-executive Director who is
responsible for leadership of the Board and ensuring its
effectiveness in all aspects of its role. The Chairman's biography
is detailed on page 32. He has no conflicting relationships.
Senior Independent Director ("SID")
The SID is responsible for the evaluation of the Chairman, and
also serves as a secondary point of contact for shareholders.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the Board and is responsible for assisting
the Chairman with Board meetings and advising the Board with
respect to governance. The Company Secretary also manages the
relationship with the Company's service providers, except for the
Manager. Shareholders wishing to lodge questions in advance of the
AGM are invited to do so by writing to the Company Secretary at the
address given on the outside back cover or by email to:
amcompanysecretary@schroders.com.
Role and operation of the Board
The Board (of six Directors, listed on pages 32 and 33) is the
Company's governing body; it sets the Company's strategy and is
collectively responsible to shareholders for its long- term
success. The Board is responsible for appointing and subsequently
monitoring the activities of the Manager and other service
providers to ensure that the investment objective of the Company
continues to be met. The Board also ensures that the Manager
adheres to the investment restrictions set by the Board and acts
within the parameters set by it in respect of any gearing. The
Strategic Report on pages 17 to 30 sets out further detail of how
the Board reviews the Company's strategy, risk management and
internal controls. These sections form part of this Directors'
Report.
A formal schedule of matters specifically reserved for decision
by the Board has been defined and a procedure adopted for
Directors, in the furtherance of their duties, to take independent
professional advice at the expense of the Company.
The Chairman ensures that all Directors receive relevant
management, regulatory and financial information in a timely manner
and that they are provided, on a regular basis, with key
information on the Company's policies, regulatory requirements and
internal controls.
Four Board meetings are usually scheduled each year to deal with
matters including: the setting and monitoring of investment
strategy; approval of borrowings and/or cash positions; review of
investment performance, the level of discount of the Company's
shares to NAV per share, promotion of the Company and services
provided by third parties. Additional meetings of the Board are
arranged as required. At each scheduled Board meeting the Directors
receive reports from the Manager, other key service providers and
the Company's advisers. Ad hoc reports and information are supplied
to the Board as required.
The Board has approved a policy on Directors' conflicts of
interest. Under this policy, Directors are required to disclose all
actual and potential conflicts of interest to the Board as they
arise for consideration and approval. The Board may impose
restrictions or refuse to authorise such conflicts if deemed
appropriate. No Directors have any connections with the Manager,
shared directorships with other Directors or material interests in
any contract which is significant to the Company's business.
Key service providers
The Board has adopted an outsourced business model and has
appointed the following key service providers:
Manager
The Company is an alternative investment fund as defined by the
AIFM Directive and has appointed Schroder Unit Trusts Limited
("SUTL") as the Manager in accordance with the terms of an
alternative investment fund manager ("AIFM") agreement. The AIFM
agreement, which is governed by the laws of England and Wales, can
be terminated by either party on six months' notice or on immediate
notice in the event of certain breaches or the insolvency of either
party. As at the date of this report no such notice had been given
by either party.
SUTL is authorised and regulated by the FCA and provides
portfolio management, risk management, accounting and company
secretarial services to the Company under the AIFM agreement. The
Manager also provides general marketing support for the Company and
manages relationships with key investors, in conjunction with the
Chairman, other Board members or the Corporate Broker as
appropriate. The Manager has delegated investment management,
administrative, accounting and company secretarial services to
another wholly owned subsidiary of Schroders plc, Schroder
Investment Management Limited which delegates certain accounting
and administrative services to HSBC Securities Services (UK)
Limited. The Manager has in place appropriate professional
indemnity cover.
The Schroders Group manages GBP724.3 billion (as at 30 September
2023) on behalf of institutional and retail investors, financial
institutions and high net worth clients from around the world,
invested in a broad range of asset classes across equities, fixed
income, multi-asset and alternatives.
Until 1 April 2023, under the terms of the AIFM agreement, the
Manager was entitled to a fee of 0.75% per annum on the first
GBP600 million of the cum income net assets, and 0.70% per annum on
the cum income net assets in excess of GBP600 million.
Under the revised terms of the AIFM agreement, effective from 1
April 2023, the Manager is entitled to a fee of 0.75% per annum of
the first GBP600 million of the cum income net assets and 0.60% per
annum on the cum income net assets in excess of GBP600 million. The
company secretarial fee is fixed at GBP150,000 per annum.
Chargeable assets represent total assets less current
liabilities other than short-term borrowings, less any cash up to
the level of borrowings.
The management fee payable in respect of the year ended 30
September 2023 amounted to GBP6,208,000 (2022: GBP6,913,00).
The company secretarial fee paid to the Manager in the year
ended 30 September 2023 was GBP150,000 (2022: GBP150,000).
Details of amounts payable to the Manager are set out in note 4
on page 59 of this report.
The Board has reviewed the performance of the Manager during the
year under review and continues to consider that it has the
appropriate depth and quality of resource to deliver superior
returns over the longer term. The Manager is supported by
significant depth of knowledge and experience in Asia, with
regional resources and local analysts. Thus, the Board considers
that the Manager's appointment under the terms of the AIFM
agreement is in the best interests of shareholders as a whole.
Depositary
HSBC Bank plc, which is authorised by the Prudential Regulation
Authority and regulated by the FCA and the Prudential Regulation
Authority, carries out certain duties of a depositary specified in
the AIFM Directive including, in relation to the Company, as
follows:
- safekeeping of the assets of the Company which are entrusted to it;
- cash monitoring and verifying the Company's cash flows; and
- oversight of the Company and the Manager.
The Company, the Manager and the depositary may terminate the
depositary agreement at any time by giving 90 days' notice in
writing. The depositary may only be removed from office when a new
depositary is appointed by the Company.
Registrar
Equiniti Limited has been appointed as the Company's registrar.
Equiniti's services to the Company include share register
maintenance (including the issuance, transfer and cancellation of
shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and processing
corporate actions.
Compliance with the AIC Code of Corporate Governance
The Board of the Company has considered the principles and
provisions of the AIC Code of Corporate Governance (the "AIC
Code"). The AIC Code addresses the Principles and Provisions set
out in the UK Corporate Governance Code (the "UK Code"), as well as
setting out additional Provisions on issues that are of specific
relevance to the Company. The Board considers that reporting
against the Principles and Provisions of the AIC Code, provides
more relevant information to shareholders.
The AIC Code is available on the AIC website ( www.theaic.co.uk
). It includes an explanation of how the AIC Code adopts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies. The UK Code is available from
the Financial Reporting Council's website at www.frc.org.uk .
The Financial Conduct Authority requires all UK listed companies
to disclose how they have complied with the provisions of the UK
Code. This statement, together with the Statement of Directors'
Responsibilities, viability statement and going concern statement
set out on pages 46 and 30 respectively, indicates how the Company
has complied with the principles of good governance of the AIC Code
and its requirements on internal control. The Strategic Report and
Directors' Report provide further details on the Company's internal
controls (including risk management), governance and diversity
policy.
The Board is satisfied that the Company's current governance
framework is compliant with the AIC Code. The Nomination Committee
reviews Directors' remuneration and as such there is no separate
remuneration committee.
Revenue, final dividend and dividend policy
The net revenue return for the year, after finance costs and
taxation, was GBP18,990,000 (2022: GBP19,673,000), equivalent to a
revenue return per ordinary share of 12.06 pence (2022: 12.04
pence).
The Board has recommended the payment of a final dividend for
the year ended 30 September 2023 of 12.00 pence per share (2022:
12.00 pence) payable on 9 February 2024 to shareholders on the
register on 29 December 2023, subject to approval by shareholders
at the AGM on 31 January 2024.
The Board's policy is to pay out substantially all the Company's
revenue.
Committees
In order to assist the Board in fulfilling its governance
responsibilities, it has delegated certain functions to committees.
The roles and responsibilities of these committees, together with
details of work undertaken during the year under review, is
outlined over the next few pages.
The reports of the Audit and Risk Committee, Management
Engagement Committee and Nomination Committee are incorporated into
and form part of the Directors' Report. Each committee's
effectiveness was assessed, and judged to be satisfactory, as part
of the Board's annual review of the Board and its committees.
Other required Directors' Report disclosures under laws,
regulations, and the AIC Code
Status
The Company carries on business as an investment trust. Its
shares are listed and admitted to trading on the premium segment of
the main market of the London Stock Exchange. It has been approved
by HM Revenue & Customs as an investment trust in accordance
with section 1158 of the Corporation Tax Act 2010, by way of a
one-off application and it is intended that the Company will
continue to conduct its affairs in a manner which will enable it to
retain this status.
The Company is domiciled in the UK and is an investment company
within the meaning of section 833 of the Companies Act 2006. The
Company is not a "close" company for taxation purposes.
The articles of association contain provisions requiring the
Directors to put a proposal for the continuation of the Company to
shareholders at the Annual General Meeting ("AGM") in 2026 and
thereafter at five yearly intervals.
Share capital and substantial share interests
As at the date of this report, the Company had 153,465,716
ordinary shares of 10p in issue. No shares were held in
treasury.
During the year under review 6,000,000 ordinary shares with a
nominal value of 10p per share, which represented 3.73% of the
Company's ordinary shares in issue at the start of the year, were
bought back. All ordinary shares bought back were subsequently
cancelled.
Details of changes to the Company's share capital during the
year under review are given in note 14 to the accounts on page 62.
All shares in issue rank equally with respect to voting, dividends
and any distribution on winding up. The Company has received
notifications in accordance with the Financial Conduct Authority's
Disclosure Guidance and Transparency Rule 5.1.2R of the below
interests in 3% or more of the voting rights attaching to the
Company's issued share capital.
% of voting
rights as at
Number of shares 30 September
As at 30 September 2023 Date of announcement in announcement 2023(1)
----------------------------- --------------------- ---------------- -------------
City of London Investment 22 September
Management Company Limited 2023 21,755,032 14.05
Rathbones Investment 22 September
Management Limited 2023 18,702,783 12.08
Schroders plc 21 January 2014 8,483,022 5.48
abrdn 3 July 2019 8,299,097 5.36
Allspring Global Investments 10 November
Holdings, LLC 2021 8,277,161 5.35
Wells Capital Management 9 November 2017 8,255,649 5.33
Lazard Asset Management
LLC 4 November 2022 7,911,876 5.11
(1) Based on the shares included in the announcement.
Following the year end Rathbones Investment Management Limited
notified the Company that their interest in the voting rights
attaching to the Company's issued share capital had changed to
18,477,070 ordinary shares, 12.00% of the total voting rights.
Directors' attendance at meetings
The number of scheduled meetings of the Board and its committees
held during the financial year and the attendance of individual
Directors is shown below. Whenever possible all Directors attend
the AGM. The Board also met for a small number of additional, ad
hoc, meetings during the year to address time sensitive matters
that arose between scheduled quarterly meetings. These meetings
were generally held at short notice and attended by those Directors
available at the time.
Audit and Management
Risk Engagement Nomination
Director Board Committee Committee Committee
--------------- ----- ---------- ----------- ----------
James Williams 4/4 2/2 1/1 1/1
Keith Craig 4/4 2/2 1/1 1/1
Julia Goh 4/4 2/2 1/1 1/1
Vivien Gould 4/4 2/2 1/1 1/1
Rupert Hogg(1) 2/2 1/1 1/1 1/1
Martin Porter 4/4 2/2 1/1 1/1
(1) Rupert Hogg was appointed on 1 May 2023 .
Provision of information to the auditor
The Directors at the date of approval of this report confirm
that, so far as each of them is aware, there is no relevant audit
information of which the Company's auditor is unaware; and each
Director has taken all the steps that he or she ought to have taken
as a Director in order to make himself or herself aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
Directors' and officers' liability insurance and indemnities
Directors' and officers' liability insurance cover was in place
for the Directors throughout the year. The Company's articles of
association provide, subject to the provisions of UK legislation,
an indemnity for Directors in respect of costs which they may incur
relating to the defence of any proceedings brought against them
arising out of their positions as Directors, in which they are
acquitted or judgment is given in their favour by the Court.
This is a qualifying third party indemnity policy and was in
place throughout the year under review for each Director and to the
date of this report.
By order of the Board
Schroder Investment Management Limited
Company Secretary
5 December 2023
Audit and Risk Committee Report
Ongoing risk review
The responsibilities and work carried out by the Audit and Risk
Committee during the year under review are set out in the following
report. The duties and responsibilities of the committee, which
include monitoring the integrity of the Company's financial
reporting and internal controls, are set out in further detail
below, and may be found in the terms of reference which are set out
on the Company's webpages, www.schroders.co.uk/asiapacific .
All Directors are members of the committee. Julia Goh is the
Chair of the Committee. The Board has satisfied itself that at
least one of the committee's members has recent and relevant
financial experience and that the committee as a whole has
competence relevant to the sector in which the Company operates.
The AIC Code permits the Chairman of the Board to be a member of
the audit committee of an investment trust. Recognising James
Williams' significant experience, it is considered appropriate for
the Chairman to be a member of the Audit and Risk Committee.
Approach
----------------------------------------------------------------------------------------------------------------------
The committee's key roles and responsibilities are set out in the table below.
----------------------------------------------------------------------------------------------------------------------
Risks and Internal Controls Financial Reports Audit
and Valuation
-------------------------------------- -------------------------------------- --------------------------------------
Principal risks Financial statements Audit results
To establish a process for To monitor the integrity of the To discuss any matters arising from
identifying, assessing, managing and financial statements of the Company the audit and recommendations made by
monitoring the principal risks and any formal announcements the auditor.
of the Company. relating to the Company's financial
performance and valuation. To review
the half year report.
-------------------------------------- -------------------------------------- --------------------------------------
Emerging risks Going concern Auditor appointment, independence and
To ensure a robust assessment of the To review the position and make performance
Company's emerging risks and recommendations to the Board in To make recommendations to the Board,
procedures are in place relation to whether it considers in relation to the appointment,
to identify emerging risks, and an it appropriate to adopt the going reappointment, effectiveness
explanation of how these are being concern basis of accounting in and removal of the external auditor,
managed or mitigated. preparing its annual and to review their independence, and to
half-yearly financial statements. approve their remuneration
and terms of engagement. Reviewing and
agreeing the audit plan and engagement
letter.
-------------------------------------- -------------------------------------- --------------------------------------
The below table sets out how the committee discharged its duties
during the year. The committee met twice during the year. Further
details on attendance can be found on page 36. An evaluation of the
committee's effectiveness and review of its terms of reference was
completed during the year.
Significant issues identified during the committee's review of
the Company's principal and emerging risks, and key matters
communicated by the auditor during its reporting are included
below.
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
-------------------------------------- -------------------------------------- --------------------------------------
Service provider Recognition of investment income Effectiveness of the independent audit
controls Considered dividends received against process and auditor performance
Reviewing the operational controls forecast and the allocation of special Evaluated the effectiveness
maintained by the Manager, dividends to of the independent audit firm and
administrator, depositary and income or capital. process prior to making a
registrar. recommendation that it should
be re-appointed at the forthcoming
AGM. Evaluated the auditor's
performance against agreed
criteria including: qualification;
knowledge, expertise and resources;
independence policies;
effectiveness of audit planning;
adherence to auditing standards; and
overall competence was
considered, alongside feed back from
the Manager on the audit process. The
committee noted
the auditor had demonstrated its
professional scepticism during the
audit.
-------------------------------------- -------------------------------------- --------------------------------------
Internal controls and risk management Calculation of the investment Auditor independence
Consideration of several key aspects management fee Ernst & Young LLP has provided audit
of internal control and risk Consideration of methodology used to services to the Company for five
management operating within calculate the fees, matched against years, since appointment
the Manager, depositary, custodian and the criteria set by the Company on 25 July 2019 to
registrar, including assurance reports out in the AIFM agreement. audit the financial statements for the
and presentations year ended 30 September
on these controls. 2019 and subsequent financial periods.
The auditor is required to rotate the
senior statutory
auditor every five years. There are no
contractual obligations restricting
the choice of external
auditor.
This is the fifth year that the senior
statutory auditor, Caroline Mercer has
conducted the
audit of the Company's financial
statements. Accordingly, this is the
last audit for which
Ms Mercer will act as the senior
statutory auditor for the Company. The
Company is compliant
with the provisions of the September
2014 Competition and Markets Authority
Order, which requires
that FTSE 350 companies put their
audit out to tender at least every ten
years.
-------------------------------------- -------------------------------------- --------------------------------------
Compliance with the investment trust Overall accuracy of the annual report Audit results
qualifying rules in S1158 of the and accounts Consideration of the Met with and reviewed a comprehensive
Corporation Tax Act draft annual report report from the auditor which detailed
2010 and accounts and the letter of the results of
Consideration of the Manager's report representation from the Manager in the audit, compliance with regulatory
confirming compliance. support of the letter of requirements, safeguards that have
representation to the auditor. been established,
and on their own internal quality
control procedures.
-------------------------------------- -------------------------------------- --------------------------------------
Principal risks Valuation and existence of holdings Meetings with the auditor
Reviewing the principal risks faced by Quarterly review of portfolio holdings Met the auditor without
the Company and the system of internal and assurance reports. representatives of the Manager
control. present. Representatives of the
auditor
attended the committee meeting at
which the draft annual report and
accounts were considered.
-------------------------------------- -------------------------------------- --------------------------------------
Emerging risks Reviewing the emerging Fair balanced and understandable Provision of non-audit services by the
risks for the Company. Reviewed the annual report and auditor
accounts to ensure that it was fair, The committee has reviewed the FRCs
balanced and understandable. Guidance on Audit Committees and has
formulated a policy
on the provision of non--audit
services by the Company's auditor. The
committee has determined
that the Company's appointed auditor
will not be considered for the
provision of certain non-audit
services, such as accounting and
preparation of the financial
statements, internal audit and
custody. The auditor may, if required,
provide other non-audit services which
will be judged
on a case-by-case basis. The auditor
did not provide any non-audit services
to the Company
during the year.
-------------------------------------- -------------------------------------- --------------------------------------
Going concern and viability Reviewing Consent to continue as auditor
the impact of risks on going concern Ernst & Young LLP indicated to the
and longer-term committee their willingness to
viability. continue to act as auditor.
-------------------------------------- -------------------------------------- --------------------------------------
Recommendations made to, and approved by, the Board:
As a result of the work performed, the committee has concluded
that the annual report for the year ended 30 September 2023,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Company's position, performance, business model and strategy,
and has reported on these findings to the Board. The Board's
conclusions in this respect are set out in the Statement of
Directors' Responsibilities on page 46.
Having reviewed the performance of the auditors as described
above, the committee considered it appropriate to recommend
the firm's re-appointment. Resolutions to re-appoint Ernst
& Young LLP as auditor to the Company, and to authorise the
Directors to determine their remuneration will be proposed
at the AGM.
Julia Goh
Chair of the Audit and Risk Committee
Management Engagement Committee Report
The Management Engagement Committee is responsible for (1) the
monitoring and oversight of the Manager's performance and fees, and
confirming the Manager's ongoing suitability, and (2) reviewing and
assessing the Company's other service providers, including
reviewing their fees. All Directors are members of the committee.
Martin Porter is the Chair of the committee. Its terms of reference
are available on the Company's webpages,
www.schroders.co.uk/asiapacific .
Approach
----------------------------------------------------------------------------------------------------------------------
The committee's key roles and responsibilities are set out in the table below.
----------------------------------------------------------------------------------------------------------------------
Oversight of the Manager Oversight of other service providers
----------------------------------------------------------- ---------------------------------------------------------
The committee: The committee reviews the performance and competitiveness
* reviews the Manager's performance, over the short and of the following service providers
long term, against the Benchmark, peer group and the on at least an annual basis:
market; * Depositary and custodian
* considers the reporting it has received from the * Corporate Broker
Manager throughout the year and the reporting from
the Manager to the shareholders;
* Registrar
* assesses management fees on an absolute and relative
basis, receiving input from the Company's broker, * Lender
including peer group and industry figures, as well as
the structure of the fees;
The committee also receives a report from the Company
* reviews the appropriateness of the Manager's contract Secretary on ancillary service providers,
including terms such as notice period; and and considers any recommendations.
The committee notes the Audit and Risk Committee's review
* assesses whether the Company receives appropriate of the auditor.
administrative, accounting company secretarial and
marketing support from the Manager.
Application during the year
----------------------------------------------------------------------------------------------------------------------
The committee undertook a detailed review of the Manager's The annual review of each of the service providers was
performance and agreed that it satisfactory.
has the appropriate depth and quality of resource to
deliver superior returns over the longer The committee noted that the Audit and Risk Committee had
term. undertaken a review of the internal
controls of the Company, the Manager, registrar,
The committee reviewed the management fee and agreed a depositary and custodian. Further details
change with the Manager, resulting are provided in the Audit and Risk Committee Report.
in a reduction in overall fees, from 1 April 2023, as
detailed in the Chairman's Statement,
on page 5.
The committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
---------------------------------------------------------- ----------------------------------------------------------
Recommendations made to, and approved by, the Board:
-- That the ongoing appointment of the Manager on the terms of
the AIFM agreement was in the best interests of shareholders as a
whole.
-- That the Company's service providers' performance remained satisfactory.
-- That the fee structure be varied, as detailed in the Chairman's Statement.
Nomination Committee Report
Selection and ongoing assessment of Directors
The Nomination Committee is responsible for (1) the recruitment,
selection and induction of Directors, (2) their assessment during
their tenure, and (3) the Board's succession plans. All Directors
are members of the committee. Keith Craig is the chair of the
committee. Its terms of reference are available on the Company's
webpages, www.schroders.co.uk/asiapacific .
Approach
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The committee's key roles and responsibilities are set out in the table below.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Selection and induction Board evaluation and Directors' fees Succession
----------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------
* The committee prepares a job specification for each * The committee assesses each Director annually, with * The Board's succession policy is that Directors'
role, and an independent recruitment firm is the SID leading the evaluation of the Chairman, and tenure, including that of the Chairman, will be for
appointed. For the Chairman and the chairs of will use an external Board evaluator every three no longer than nine years, except in exceptional
committees, the committee considers current Board years. circumstances and that each Director will be subject
members too. to annual re-election at the AGM.
* The evaluation focuses on whether each Director
* A job specification outlines the knowledge, continues to demonstrate commitment to their role and * The committee reviews the Board's current and future
professional skills, personal qualities and provides a valuable contribution to the Board during needs at least annually. Should any need be
experience requirements. the year, taking into account time commitment, identified the committee will initiate the selection
independence, conflicts and training needs. process.
* Potential candidates are assessed against the
Company's diversity policy. * Following the evaluation, the committee provides a * The committee oversees the handover process for
recommendation to shareholders with respect to the retiring Directors.
annual re-election of Directors at the AGM.
* The committee discusses the long list, invites a
number of candidates for interview and makes a
recommendation to the Board. * All Directors retire at the AGM and their re-election
is subject to shareholder approval.
* The committee reviews the induction of new Directors.
* The committee reviews Directors' fees, taking into
account comparative data and reports to shareholders.
* Any new Director will be proposed for election by No Directors are involved in making recommendations
shareholders at the first AGM following appointment. with respect to their own remuneration.
* Any proposed changes to the remuneration policy for
Directors is discussed and reported to shareholders.
Application during the year
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Selection and induction Board evaluation and Directors' fees Succession
----------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------
* The committee noted that following his appointment * The annual Board and committee evaluation process was * Rupert Hogg was recommended to the Board for
Rupert Hogg engaged in an induction programme. undertaken during the year, and the evaluation appointment as a non-executive Director following the
concluded in September 2023. This year the evaluation engagement of Cornforth Consulting to identify
was undertaken internally by the completion of potential candidates for a new board appointment.
* Rupert Hogg will be proposed for election as a questionnaires and individual discussions by the Cornforth Consulting had no connection with the
Director at the AGM to be held on 31 January 2024, as Chairman with each Director. An externally Company or any of the Directors.
set out in resolution 5 of the notice of annual facilitated review is conducted every three years.
general meeting. The next external review is due to be carried out in
2024. * The committee reviewed the succession policy and
agreed it was still fit for purpose.
* The committee also reviewed each Directors time
commitment and independence by reviewing a complete * James Williams was appointed as Chairman on 3
list of appointments, including pro bono not for February 2021 and it was announced that he would
profit roles, to ensure that each Director remained serve a maximum of five years in that role bringing
free from conflict and had sufficient time available continuity and experience to the position having
to discharge each of their duties effectively. The served on the Board since 2014. In light of the
SID led the review of these matters in respect of the Chairman now having served for nine years as a
Chairman. All Directors were considered to be Director, his tenure and continued independence were
independent in character and judgement. reviewed by the Nomination Committee. The Nomination
Committee subsequently concluded that it was
appropriate that James Williams continue to serve as
* The committee considered each Director's Chairman and, notwithstanding the length of tenure,
contributions, and noted that in addition to he remains independent of the Manager in character
extensive experience as professionals and and judgment. In forming this conclusion, the
non-executive Directors, each Director had valuable Nomination Committee recognised the Chairman's track
skills and experience, as detailed in their record overseeing the Company through a challenging
biographies on pages 32 and 33. investment cycle which included the COVID-19 pandemic
and the negotiation of a reduction in the management
fee, effective from 1 April 2023. The Nomination
* Based on its assessment the committee provided Committee also considered the importance of
individual recommendations for each Director's maintaining continuity on the Board following the
re-election. appointment of Rupert Hogg as a Director on 1 May
2023 and as Keith Craig will step down from the Board
on 31 January 2024.
* The committee reviewed Directors' fees, using
information on fees paid to directors of other
investment trusts managed by Schroders and peer group
companies, and recommended that Directors' fees
should be increased with effect from 1 October 2023
for the year ending 30 September 2024. Further
details are provided in the Remuneration Report.
----------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------
Recommendations made to, and approved by, the Board:
-- That Rupert Hogg be appointed as a non-executive Director with effect from 1 May 2023.
-- That Director's fees would be increased with effect from 1 October 2023.
-- That all Directors remain independent, continue to
demonstrate commitment to their roles, provide a valuable
contribution to the deliberations of the Board, contribute towards
the Company's long-term, sustainable success, and remain free from
conflicts with the Company and its Directors, so should all be
recommended for re-election by shareholders at the AGM.
Directors' Remuneration Report
Introduction
The following remuneration policy is currently in force and is
subject to a binding vote every three years unless any changes are
proposed to the policy in the meantime. The next vote would
ordinarily be at the AGM to be held in 2026. However, it is
proposed that a change is made to the remuneration policy, details
of which are provided below, and a resolution to approve the
revised policy will be proposed at the forthcoming AGM. The below
Directors' annual report on remuneration is subject to an annual
advisory vote. An ordinary resolution to approve this report will
be put to shareholders at the forthcoming AGM.
At the AGM held on 1 February 2023 when the policy was last
voted on by shareholders, 99.87% of the votes cast (including votes
cast at the Chairman's discretion) in respect of approval of the
Directors' remuneration policy were in favour, while 0.13% were
against. 70,007 votes were withheld.
At the AGM held on 1 February 2023, 99.85% of the votes cast
(including votes cast at the Chairman's discretion) in respect of
approval of the Directors' remuneration report for the year ended
30 September 2022 were in favour, while 0.15% were against. 76,993
votes were withheld.
Directors' remuneration policy
Following review of the Remuneration Policy by the Nomination
Committee, it was concluded to propose a change to the overall
remuneration structure to enable the SID to receive a higher rate
fee than the other Directors. Under the existing policy only the
Chairman and Chair of the Audit and Risk Committee are entitled to
receive a higher fee to reflect their additional responsibilities.
The Nomination Committee considered that the current remuneration
structure did not adequately recognise the additional time
commitment and responsibilities of the SID.
The proposed changes to the policy are highlighted in bold text
in the policy set out below.
The determination of the Directors' fees is a matter dealt with
by the Nomination Committee and the Board.
It is the Board's policy to determine the level of Directors'
remuneration having regard to amounts payable to non-executive
directors in the industry generally, the role that individual
directors fulfil in respect of Board and committee
responsibilities, and time committed to the Company's affairs,
taking into account the aggregate limit of fees set out in the
Company's articles of incorporation (currently GBP300,000). Any
increase in the level set out therein requires approval by the
Board and the Company's shareholders.
The Chairman of the Board, and the Chair of the Audit and Risk
Committee and the Senior Independent Director each receive fees at
a higher rate than the other Directors to reflect their additional
responsibilities. The fees payable to Directors are not performance
related. They are set at a level to recruit and retain individuals
of sufficient calibre, with the level of knowledge, experience and
expertise necessary to promote the success of the Company in
reaching its short and long-term strategic objectives.
The Board and its committees exclusively comprise non- executive
Directors. No director past or present has an entitlement to a
pension from the Company, and the Company has not, and does not
intend to, operate a share scheme for directors or to award any
share options or long-term performance incentives to any director.
No Director has a service contract with the Company, although
Directors have a letter of appointment. Directors do not receive
exit payments and are not provided with any compensation for loss
of office. No other payments are made to Directors other than the
reimbursement of reasonable out-of-pocket expenses incurred in
attending to the Company's business.
Implementation of policy
The terms of Directors' letters of appointment are available for
inspection at the Company's registered office address during normal
business hours and during the AGM at the location of such
meeting.
The Board did not seek the views of shareholders in setting this
remuneration policy. Any comments on the remuneration policy
received from shareholders would be considered on a case-by-case
basis.
As the Company does not have any employees, no employee pay and
employment conditions were taken into account when setting this
remuneration policy and no employees were consulted in its
construction.
Directors' fees are reviewed annually and take into account
research from third parties on the fee levels of directors of peer
group companies, as well as industry norms and factors affecting
the time commitment expected of the Directors. New directors are
subject to the provisions set out in this remuneration policy.
Directors' annual report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 30 September 2023.
Remuneration Report for the year ended 30 September 2023
Fees paid to Directors
The following amounts were paid by the Company to Directors for
their services in respect of the year ended 30 September 2023 and
the preceding financial year. Directors' remuneration is all fixed;
they do not receive any variable remuneration. The performance of
the Company over the financial year is presented on page 16.
Change in annual
fee over years ended
Fees Taxable benefits(1) Total 30 September
2023 2022 2023 2022 2023 2022 2023 2022 2021
Director GBP GBP GBP GBP GBP GBP % % %
--------------- ------- ------- ----------- -------- ------- ------- ------- ------ --------
James Williams
(Chairman) 45,000 45,000 3,093 484 48,093 45,484 5.7 13.3 31.5
Keith Craig 33,000 33,000 762 539 33,762 33,539 0.7 9.8 1.5
Julia Goh(2) 40,000 35,550 2,043 993 42,043 36,543 15.1 n/a n/a
Vivien
Gould 33,000 33,000 3,258 1,568 36,258 34,568 4.9 8.3 (1.9)
Rosemary
Morgan(3) - 13,443 - 1,594 - 15,037 n/a n/a 0.6
Martin
Porter 33,000 33,000 763 484 33,763 33,484 0.8 10.7 0.5
Rupert
Hogg(4) 13,750 - 439 - 14,189 - n/a n/a n/a
--------------- ------- ------- ----------- -------- ------- ------- ------- ------ --------
197,750 192,993 10,358 5,662 208,108 198,655
--------------- ------- ------- ----------- -------- ------- ------- ------- ------ --------
(1) Comprise amounts reimbursed for expenses incurred in
carrying out business for the Company, and which have been grossed
up to include PAYE and NI contributions.
(2) Appointed as a Director on 25 October 2021 and Chair of the
Audit and Risk Committee on 1 February 2022.
(3) Retired from the Board on 1 February 2022.
(4) Appointed as a Director on 1 May 2023.
The information in the above table has been audited.
Consideration of matters relating to Directors' remuneration
Directors' remuneration was last reviewed by the Board in
September 2023. The members of the Board at the time that
remuneration levels were considered were as set out on pages 32 and
33. Although no external advice was sought in considering the
levels of Directors' fees, information on fees paid to directors of
investment trusts managed by Schroders and peer group companies
provided by the Manager and corporate broker was taken into
consideration.
Following annual review, the Board agreed that fees should be
increased with effect from 1 October 2023 to the following levels:
Chairman: GBP49,000, chair of the Audit and Risk Committee:
GBP44,000, Director: GBP36,000. Subject to the passing of
resolution 4, as set out in the notice of meeting, at the AGM on 31
January 2024 it is proposed, to recognise the additional time
commitment and responsibilities of the SID that, following the AGM,
the fee paid to the SID will increase to GBP40,000. The Board will
continue to review fee levels on an annual basis.
Expenditure by the Company on remuneration and distributions to
shareholders
The table below compares the remuneration payable to Directors
to distributions paid to shareholders during the year under review
and the prior financial year. In considering these figures,
shareholders should take into account the Company's investment
objective.
Year ended Year ended
30 September 30 September
2023 2022 Change
GBP000 GBP000 %
----------------------------------------- ------------- ------------- ------
Remuneration payable to Directors 208 199 4.5
Distributions paid to shareholders
- Dividends paid during the year 19,030 15,922
- Share buy backs 29,775 21,653
Total distributions paid to shareholders 48,805 37,575 29.9
The information in the above table has been audited.
Directors' share interests
The Company's articles of association do not require Directors
to own shares in the Company. The interests of Directors, including
those of connected persons, at the beginning and end of the
financial year under review are set out below.
Ordinary Ordinary
shares shares
of 1p of 1p
each each
30 September 30 September
2023 2022
--------------- ------------- -------------
James Williams 20,000 15,125
Keith Craig 12,581 12,581
Julia Goh 15,000 15,000
Vivien Gould 5,000 5,000
Rupert Hogg* - n/a
Martin Porter 20,000 10,000
*Rupert Hogg was appointed as a Director on 1 May 2023.
The information in the above table has been audited. Following
the year end, Rupert Hogg purchased 2,100 shares. There have been
no further changes.
James Williams
Chairman
5 December 2023
Statement of Directors' Responsibilities in respect of the
Annual Report and Accounts
The Directors are responsible for preparing the annual report,
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising Financial Reporting Standard (FRS)
102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland" and applicable law). Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and of the return or loss of the Company for
that period. In preparing these financial statements, the Directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards, comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the financial statements;
-- notify the Company's shareholders in writing about the use of
disclosure exemptions in FRS 102, used in the preparation of the
financial statements; and
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Directors' Remuneration Report
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Manager is responsible for the maintenance and integrity of
the webpage dedicated to the Company.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Directors' Statement
Each of the Directors, whose names and functions are listed on
pages 32 and 33, confirm that to the best of their knowledge:
-- the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law),
give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
-- the Strategic Report contained in the report and accounts
includes a fair review of the development and performance of the
business and the position of the Company, together with a
description of the principal and emerging risks that it faces;
and
-- the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
On behalf of the Board
James Williams
Chairman
5 December 2023
Independent Auditor's Report
Opinion
We have audited the financial statements of Schroder AsiaPacific
Fund plc ("the Company") for the year ended 30 September 2023 which
comprise the Income Statement, the Statement of Changes in Equity,
the Statement of Financial Position and the related notes 1 to 20,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards including FRS 102 "The Financial Reporting Standard
applicable in the UK and Republic of Ireland" (United Kingdom
Generally Accepted Accounting Practice).
In our opinion, the financial statements:
-- give a true and fair view of the Company's affairs as at 30
September 2023 and of its profit for the year then ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as
applied to public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Company and we remain independent of
Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting
included:
-- Confirmation of our understanding of the Company's going
concern assessment process and engagement with the Directors and
the Company Secretary to determine if all key factors were
considered in their assessment.
-- Inspection of the Directors' assessment of going concern,
including the revenue forecast, for the period to 31 December 2024
which is at least 12 months from the date these financial
statements are authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is able to continue to
meet its ongoing costs as they fall due.
-- Review of the factors and assumptions, including the impact
of the current economic environment and other significant events
that could give rise to market volatility, as applied to the
revenue forecast and the liquidity assessment of the investments.
We considered the appropriateness of the methods used to calculate
the revenue forecast and the liquidity assessment and determined,
through testing of the methodology and calculations, that the
methods, inputs and assumptions utilised are appropriate to be able
to make an assessment for the Company.
-- Consideration of the mitigating factors included in the
revenue forecast that are within the control of the Company. We
reviewed the Company's assessment of the liquidity of investments
held and evaluated the Company's ability to sell those investments
in order to cover working capital requirements should revenue
decline significantly.
-- In relation to the Company's borrowing arrangements, we
inspected the Directors' assessment of the risk of breaching the
debt covenants as a result of a reduction in the value of the
Company's portfolio. We recalculated the Company's compliance with
debt covenants in the scenarios assessed by the Directors and
performed reverse stress testing in order to identify what factors
would lead to the Company breaching the financial covenants.
-- Review of the Company's going concern disclosures included in
the annual report in order to assess that the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for the period to
31 December 2024. In relation to the Company's reporting on how
they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors'
statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as
to the Company's ability to continue as a going concern.
Overview of our audit approach
Key audit matters l Risk of incomplete or inaccurate revenue recognition,
including the classification of special dividends
as revenue or capital items in the Income
Statement.
l Risk of incorrect valuation or ownership of
the investment portfolio.
------------------------------------------------------
Materiality l Overall materiality of GBP8.51m which represents
1% of shareholders' funds.
------------------------------------------------------
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit scope
for the Company. This enables us to form an opinion on the
financial statements. We take into account size, risk profile, the
organisation of the Company and effectiveness of controls,
including controls and changes in the business environment when
assessing the level of work to be performed. All audit work was
performed directly by the audit engagement team.
Climate change
There has been increasing interest from stakeholders as to how
climate change will impact companies. The Company has determined
that the most significant future impacts from climate change could
affect the Company's investments and the overall investment
process. This is explained on page 29 in the principal and emerging
risks and uncertainties which form part of the "Other information,"
rather than the audited financial statements. Our procedures on
these disclosures therefore consisted solely of considering whether
they are materially inconsistent with the financial statements, or
our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated.
Our audit effort in considering climate change was focused on
the adequacy of the Company's disclosures in the financial
statements as set out in note 1(a) and conclusion that there was no
material impact of climate change on the valuation of the
investments. We also challenged the Directors' considerations of
climate change in their assessment of viability and associated
disclosures.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these
matters.
Key observations communicated to the
Risk Our response to the risk Audit and Risk Committee
Risk of incomplete or inaccurate We performed the following procedures: The results of our procedures
revenue recognition, including the identified no material misstatements
classification of special We obtained an understanding of the in relation to the risk
dividends as revenue or capital items Manager's and Administrator's of incomplete or inaccurate revenue
in the Income Statement (refer to the processes and controls surrounding recognition, including classification
Audit and Risk revenue recognition and classification of special dividends
Committee Report set out on pages 37 of special dividends by performing as revenue or capital items in the
to 39 and the accounting policy set walkthrough procedures. Income Statement.
out on pages 57 and
58). For all dividends received and
accrued, we recalculated the dividend
The total revenue for the year to 30 income by multiplying
September 2023 was GBP24.02 million the investment holdings at the
(2022: GBP24.67 ex-dividend date, traced from the
million), consisting primarily of accounting records, by the
dividend income from listed equity dividend per share, which was agreed
investments. to an independent data vendor. We also
agreed all exchange
The Company received special dividends rates to an external source where
amounting to GBP1.17m million (2022: applicable and, for a sample of
GBP0.67 million), dividends received and accrued
of which GBP0.87m were classified as dividends, we agreed the amounts to
revenue and GBP0.30m were classified bank statements.
as capital (2022:
GBP0.67 million classified as revenue
and GBPnil classified as capital).
-------------------------------------- --------------------------------------
The investment income receivable by To test completeness of recorded
the Company during the year directly income, we verified that dividends had
affects the Company's been recorded for
revenue return. There is a risk of each investee company held during the
incomplete or inaccurate recognition year with reference to investee
of revenue through company announcements
the failure to recognise proper income obtained from an independent data
entitlements or to apply an vendor.
appropriate accounting
treatment. For all accrued dividends, we reviewed
the investee Company announcements to
In addition to the above, the assess whether
Directors may be required to exercise the entitlement arose prior to 30
judgement in determining September 2023.
whether income receivable in the form
of special dividends should be For all investments held during the
classified as 'revenue' year, we compared the type of
or 'capital' in the Income Statement. dividends paid with reference
to an external data source to identify
those which were 'special'. We
confirmed seven special
dividends, amounting to GBP1.17
million, were received during the
year. We tested a sample
of five special dividends, by
assessing the appropriateness of
classification by reviewing
the underlying rationale of the
distribution.
-------------------------------------- --------------------------------------
Risk of Incorrect valuation or We performed the following procedures: The results of our procedures
ownership of the investment portfolio identified no material misstatements
(refer to the Audit and Risk Committee We obtained an understanding of the in relation to the risk
Report set out on pages 37 to 39 the Administrator's processes and controls of incorrect valuation or ownership of
accounting policy surrounding investment the investment portfolio.
set out on pages 57 and 58). title and the pricing of listed equity
investments by performing walkthrough
The valuation of the investment procedures.
portfolio at 30 September 2023 was
GBP874.53 million (2022: For all investments in the portfolio,
GBP882.80 million) consisting of we compared the market prices and
listed equity investments. exchange rates applied
to an independent pricing vendor and
The valuation of investments held in recalculated the investment valuations
the investment portfolio is the key as at the year
driver of the Company's end.
net asset value and total return.
Incorrect investment pricing, or We reviewed the prices for all
failure to maintain proper investments in the portfolio to
legal title of the investments held by identify prices that have not
the Company, could have a significant changed within five business days from
impact on the year end to verify whether the listed
portfolio valuation and the return price is a valid
generated for shareholders. fair value.
The fair value of listed investments We agreed the Company's investments to
is determined using quoted market bid the independent confirmations received
prices at close directly from
of business on the reporting date. the Company's Custodian and Depositary
as at 30 September 2023.
-------------------------------------- --------------------------------------
There have been no changes to the areas of audit focus raised in
the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent
of our audit procedures.
We determined materiality for the Company to be GBP8.51 million
(2022: GBP8.78 million), which is 1% (2022: 1%) of shareholders'
funds. We believe that shareholders' funds provides us with
materiality aligned to the key measure of the Company's
performance.
Performance materiality
The application of materiality at the individual account or
balance level. It is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Company's overall control environment, our
judgement was that performance materiality was 75% (2022: 75%) of
our planning materiality, namely GBP6.38 million (2022: GBP6.59
million). We have set performance materiality at this percentage
due to our past experience of the audit that indicates that a lower
risk of misstatements, both corrected and uncorrected.
Given the importance of the distinction between revenue and
capital for investment trusts, we have also applied a separate
testing threshold for the revenue column of the Income Statement of
GBP1.04 million (2022: GBP1.07 million), being 5% of the net
revenue return before taxation.
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit and Risk Committee that we would report
to them all uncorrected audit differences in excess of GBP0.43
million (2022: GBP0.44 million), which is set at 5% of planning
materiality, as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our
opinion.
Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in this report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the Directors' Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
l the information given in the strategic report and the Directors'
report for the financial year for which the financial statements
are prepared is consistent with the financial statements;
and
l the strategic report and Directors' reports have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
Directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
l adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
l the financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with
the accounting records and returns; or
l certain disclosures of Directors' remuneration specified
by law are not made; or
l we have not received all the information and explanations
we require for our audit
Corporate Governance Statement
We have reviewed the Directors' statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company's compliance with the
provisions of the UK Corporate Governance Code specified for our
review by the Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
l Directors' statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 30;
l Directors' explanation as to its assessment of the Company's
prospects, the period this assessment covers and why the
period is appropriate set out on page 30;
l Director's statement on whether it has a reasonable expectation
that the Company will be able to continue in operation and
meets its liabilities set out on page 30;
l Directors' statement on fair, balanced and understandable
set out on page 46;
l Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on pages 27 to
29;
l The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 29 and;
l The section describing the work of the audit and risk committee
set out on pages 37 to 39.
Responsibilities of directors
As explained more fully in the Directors' responsibilities
statement set out on page 46, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities,
including fraud. The risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance of
the Company and management.
l We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and determined
that the most significant are United Kingdom Generally Accepted
Accounting Practice, the Companies Act 2006, the Listing
Rules, UK Corporate Governance Code, the Association of
Investment Companies' Code and Statement of Recommended
Practice, Section 1158 of the Corporation Tax Act 2010 and
The Companies (Miscellaneous Reporting) Regulations 2018.
l We understood how the Company is complying with those frameworks
through discussions with the Audit and Risk Committee and
Company Secretary, review of board minutes and the Company's
documented policies and procedures.
l We assessed the susceptibility of the Company's financial
statements to material misstatement, including how fraud
might occur by considering the key risks impacting the financial
statements. We identified a fraud risk with respect to incomplete
or inaccurate revenue recognition through incorrect classification
of special dividends as revenue or capital items in the
Income Statement. Further discussion of our approach is
set out in the key audit matter above.
l Based on this understanding we designed our audit procedures
to identify non-compliance with such laws and regulations.
Our procedures involved review of the Company Secretary's
reporting to the Directors with respect to the application
of the documented policies and procedures and review of
the financial statements to ensure compliance with the reporting
requirements of the Company.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at
https://www.frc.org.uk/auditorsresponsibilities . This description
forms part of our auditor's report.
Other matters we are required to address
l Following the recommendation from the Audit and Risk committee,
we were appointed by the Company on 26 July 2019 to audit
the financial statements for the year ending 30 September
2019 and subsequent financial periods.
l The period of total uninterrupted engagement including
previous renewals and reappointments is five years, covering
the years ending 30 September 2019 to 30 September 2023.
l The audit opinion is consistent with the additional report
to the Audit and Risk committee.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Caroline Mercer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh
5 December 2023
Income Statement
for the year ended 30 September 2023
2023 2022
------------------------------------ ---- ---------------------------- ------------------------------
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Gains/(losses) on investments
held at fair value through
profit or loss 2 - 9,601 9,601 - (154,731) (154,731)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Net foreign currency gains/(losses) - 293 293 - (2,936) (2,936)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Income from investments 3 23,863 304 24,167 24,673 - 24,673
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Other interest receivable
and similar income 3 153 - 153 12 - 12
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Gross return/(loss) 24,016 10,198 34,214 24,685 (157,667) (132,982)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Investment management fee 4 (1,552) (4,656) (6,208) (1,728) (5,185) (6,913)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Administrative expenses 5 (1,409) - (1,409) (1,437) - (1,437)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Net return/(loss) before
finance costs and taxation 21,055 5,542 26,597 21,520 (162,852) (141,332)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Finance costs 6 (231) (690) (921) (48) (145) (193)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Net return/(loss) before
taxation 20,824 4,852 25,676 21,472 (162,997) (141,525)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Taxation 7 (1,834) (1,939) (3,773) (1,799) 1,145 (654)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Net return/(loss) after
taxation 18,990 2,913 21,903 19,673 (161,852) (142,179)
------------------------------------ ---- -------- -------- -------- -------- --------- ---------
Return/(loss) per share 8 12.06p 1.85p 13.91p 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 after taxation is also the total comprehensive income for
the year.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
The notes on pages 57 to 70 form an integral part of these
accounts.
Statement of Changes in Equity
for the year ended 30 September 2023
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note 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 9 - - - - - - (15,922) (15,922)
------------------ ---- --------- -------- ----------- --------- --------- --------- -------- ---------
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 (600) - 600 - - (29,775) - (29,775)
------------------ ---- --------- -------- ----------- --------- --------- --------- -------- ---------
Net return after
taxation - - - - - 2,913 18,990 21,903
------------------ ---- --------- -------- ----------- --------- --------- --------- -------- ---------
Dividend paid
in the year 9 - - - - - - (19,030) (19,030)
------------------ ---- --------- -------- ----------- --------- --------- --------- -------- ---------
At 30 September
2023 15,480 100,956 4,664 8,704 - 700,106 21,375 851,285
------------------ ---- --------- -------- ----------- --------- --------- --------- -------- ---------
The notes on pages 57 to 70 form an integral part of these
accounts.
Statement of Financial Position
at 30 September 2023
2023 2022
Note GBP'000 GBP'000
--------------------------------------- ---- -------- --------
Fixed assets
--------------------------------------- ---- -------- --------
Investments held at fair value through
profit or loss 10 874,534 882,801
--------------------------------------- ---- -------- --------
Current assets
--------------------------------------- ---- -------- --------
Debtors 11 2,812 7,920
--------------------------------------- ---- -------- --------
Cash at bank and in hand 11 6,785 11,343
--------------------------------------- ---- -------- --------
9,597 19,263
--------------------------------------- ---- -------- --------
Current liabilities
--------------------------------------- ---- -------- --------
Creditors: amounts falling due within
one year 12 (28,068) (19,964)
--------------------------------------- ---- -------- --------
Net current liabilities (18,471) (701)
--------------------------------------- ---- -------- --------
Total assets less current liabilities 856,063 882,100
--------------------------------------- ---- -------- --------
Non current liabilities
--------------------------------------- ---- -------- --------
Deferred taxation 13 (4,778) (3,913)
--------------------------------------- ---- -------- --------
Net assets 851,285 878,187
--------------------------------------- ---- -------- --------
Capital and reserves
--------------------------------------- ---- -------- --------
Called-up share capital 14 15,480 16,080
--------------------------------------- ---- -------- --------
Share premium 15 100,956 100,956
--------------------------------------- ---- -------- --------
Capital redemption reserve 15 4,664 4,064
--------------------------------------- ---- -------- --------
Warrant exercise reserve 15 8,704 8,704
--------------------------------------- ---- -------- --------
Capital reserves 15 700,106 726,968
--------------------------------------- ---- -------- --------
Revenue reserve 15 21,375 21,415
--------------------------------------- ---- -------- --------
Total equity shareholders' funds 851,285 878,187
--------------------------------------- ---- -------- --------
Net asset value per share 16 549.92p 546.13p
--------------------------------------- ---- -------- --------
These accounts were approved and authorised for issue by the
Board of Directors on 5 December 2023 and signed on its behalf
by:
James Williams
Chairman
The notes on pages 57 to 70 form an integral part of these
accounts.
Registered in England and Wales as a public company limited by
shares
Company registration number: 03104981
Notes to the accounts
for the year ended 30 September 2023
1. Accounting Policies
(a) Basis of accounting
Schroder AsiaPacific Fund plc ("the Company") is registered in
England and Wales as a public company limited by shares. The
Company's registered office is 1 London Wall Place, London EC2Y
5AU.
The accounts are prepared in accordance with the Companies Act
2006, United Kingdom Generally Accepted Accounting Practice ("UK
GAAP"), in particular in accordance with Financial Reporting
Standard (FRS) 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland", and with the Statement of
Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" (the "SORP") issued by the
Association of Investment Companies in July 2022. All of the
Company's operations are of a continuing nature.
The accounts have been prepared on a going concern basis under
the historical cost convention, as modified by the revaluation of
investments held at fair value through profit or loss. The
Directors believe that the Company has adequate resources to
continue operating to 31 December 2024, which is at least 12 months
from the date of approval of these accounts. In forming this
opinion, the Directors have taken into consideration: the controls
and monitoring processes in place; the Company's low level of debt
and other payables; the low level of operating expenses, comprising
largely variable costs which would reduce pro rata in the event of
a market downturn; and that the Company's assets comprise cash and
readily realisable securities quoted in active markets. In forming
this opinion, the Directors have also considered any potential
impact of climate change on the viability of the Company. Further
details of Directors' considerations regarding this are given in
the Chairman's Statement, Investment Managers' Review, Going
Concern Statement, Viability Statement and under the Principal and
Emerging Risks heading on page 29.
In preparing these financial statements the Directors have
considered the impact of climate change on the value of the
Company's investments. The Board has concluded that, as the
investments are all valued using quoted bid prices in active
markets, the fair value reflects market participant's view of
climate change risk.
The Company has not presented a statement of cash flows, as it
is not required for an investment trust which meets certain
conditions; in particular that substantially all of the Company's
investments are highly liquid and carried at market value.
The accounts are presented in sterling and amounts have been
rounded to the nearest thousand.
The accounting policies applied to these accounts are consistent
with those applied in the accounts for the year ended 30 September
2022.
No significant judgements, estimates or assumptions have been
required in the preparation of the accounts for the current or
preceding financial year.
(b) Valuation of investments
The Company's business is investing in financial assets with a
view to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and
its performance evaluated on a fair value basis, in accordance with
a documented investment objective and information is provided
internally on that basis to the Company's Board of Directors.
Accordingly, upon initial recognition the investments are
classified as "held at fair value through profit or loss".
Investments are included initially at transaction price, excluding
expenses incidental to purchase which are written off to capital at
the time of acquisition. Subsequently the investments are valued at
fair value, which are quoted bid prices for investments traded in
active markets.
All purchases and sales are accounted for on a trade date
basis.
(c) Accounting for reserves
Gains and losses on sales of investments are included in the
Income Statement and in capital reserves within "Gains and losses
on sales of investments". Increases and decreases in the valuation
of investments held at the year end are included in the Income
Statement and in capital reserves within "Holding gains and losses
on investments".
Foreign exchange gains and losses on cash and deposit balances
and unrealised exchange gains and losses on foreign currency loans
are included in the Income Statement and in capital reserves.
The cost of repurchasing shares, including the related stamp
duty and transactions costs, is charged to "Share repurchase
reserve". Once the "Share repurchase reserve" has been fully
utilised the cost of repurchasing shares is then charged to
"Capital reserves".
(d) Income
Dividends receivable are included in revenue on an ex-dividend
basis except where, in the opinion of the Board, the dividend is
capital in nature, in which case it is included in capital.
Overseas dividends are included gross of any withholding
tax.
Where the Company has elected to receive scrip dividends in the
form of additional shares rather than in cash, the amount of the
cash dividend foregone is recognised in revenue. Any excess in the
value of the shares received over the amount of the cash dividend
is recognised in capital.
Deposit interest outstanding at the year end is calculated and
accrued on a time apportionment basis using market rates of
interest.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses
are allocated wholly to the revenue column of the Income Statement
with the following exceptions:
- The management fee is allocated 25% to revenue and 75% to
capital in line with the Board's expected long-term split
of revenue and capital return from the Company's investment
portfolio.
- Expenses incidental to the purchase or sale of an investment
are charged to capital. These expenses are commonly referred
to as transaction costs and mainly comprise brokerage commission.
Details of transaction costs are given in note 10 on page
61.
(f) Finance costs
Finance costs, including any premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals
basis using the effective interest method and in accordance with
the provisions of FRS 102.
Finance costs are allocated 25% to revenue and 75% to capital in
line with the Board's expected long-term split of revenue and
capital return from the Company's investment portfolio.
(g) Financial instruments
Cash at bank and in hand may comprise cash and demand deposits
which are readily convertible to a known amount of cash and are
subject to insignificant risk of changes in value.
Other debtors and creditors do not carry any interest, are
short-term in nature and are accordingly stated at nominal value,
with debtors reduced by appropriate allowances for estimated
irrecoverable amounts.
Bank loans and overdrafts are initially measured at the
transaction price and subsequently at amortised cost. They are
recorded at the proceeds received net of direct issue costs.
(h) Taxation
The tax charge for the year is based on amounts expected to be
received or paid.
Deferred tax is provided on all timing differences that have
originated but not reversed by the accounting date.
Deferred tax liabilities are recognised for all taxable timing
differences but deferred tax assets are only recognised to the
extent that it is probable that taxable profits will be available
against which those timing differences can be utilised.
Deferred tax is measured at the tax rate which is expected to
apply in the periods in which the timing differences are expected
to reverse, based on tax rates that have been enacted or
substantively enacted at the balance sheet date and is measured on
an undiscounted basis.
(i) Value added tax ("VAT")
Expenses are disclosed inclusive of any related irrecoverable
VAT.
(j) Foreign currency
In accordance with FRS 102, the Company is required to determine
a functional currency, being the currency in which the Company
predominantly operates. The Board, having regard to the currency of
the Company's share capital and the predominant currency in which
its shareholders operate, has determined that sterling is the
functional currency and the currency in which the accounts are
presented.
Transactions denominated in foreign currencies are converted at
actual exchange rates as at the date of the transaction. Monetary
assets, liabilities and equity investments held at fair value,
denominated in foreign currencies at the year end are translated at
the rates of exchange prevailing at 16:00 hours on the accounting
date.
(k) Dividends payable
In accordance with FRS 102, the final dividend is included in
the accounts in the year in which it is approved by
shareholders.
(l) Repurchases of shares for cancellation
The cost of repurchasing the Company's own shares including the
related stamp duty and transactions costs is charged to "Share
purchase reserve". Once the "Share purchase reserve" is fully
utilised the cost is then charged to "Capital reserves", both are
dealt with in the Statement of Changes in Equity. Share repurchase
transactions are accounted for on a trade date basis. The nominal
value of share capital repurchased and cancelled is transferred out
of "Called-up share capital" and into "Capital redemption
reserve".
2. Gains/(losses) on investments held at fair value through profit or loss
2023 2022
GBP'000 GBP'000
------------------------------------------------ -------- ---------
Gains on sales of investments based on historic
cost 11,251 30,894
Amounts recognised in investment holding gains
and losses in the previous year in respect
of
investments sold in the year (8,012) (39,004)
Gains/(losses) on sales of investments based
on the carrying value at the previous balance
sheet date 3,239 (8,110)
------------------------------------------------ -------- ---------
Net movement in investment holding gains and
losses 6,362 (146,621)
------------------------------------------------ -------- ---------
Gains/(losses) on investments held at fair
value through profit or loss 9,601 (154,731)
------------------------------------------------ -------- ---------
3. Income
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Income from investments:
Overseas dividends 22,761 24,091
UK dividends 1,102 582
---------------------------------------------- -------- --------
23,863 24,673
---------------------------------------------- -------- --------
Other interest receivable and similar income:
Deposit interest 153 12
---------------------------------------------- -------- --------
24,016 24,685
---------------------------------------------- -------- --------
Capital:
Special dividend allocated to capital 304 -
---------------------------------------------- -------- --------
4. Investment management fee
2023 2022
--------------- ---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- -------- -------- --------
Management fee 1,552 4,656 6,208 1,728 5,185 6,913
--------------- -------- -------- -------- -------- -------- --------
The basis for calculating the investment management fee is set
out in the Report of the Directors on page 34.
5. Administrative expenses
2023 2022
----------------------- -------------------------- ----------------------------
Total Revenue Capital Total
Revenue Capital GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------- ------- -------- -------- -------- --------
Administration
expenses 1,010 - 1,010 1,052 - 1,052
Directors' fees(1) 198 - 198 193 - 193
Company secretarial
fee 150 - 150 150 - 150
Auditor's remuneration
for audit services 51 - 51 42 - 42
----------------------- ------- ------- -------- -------- -------- --------
1,409 - 1,409 1,437 - 1,437
----------------------- ------- ------- -------- -------- -------- --------
(1) Full details are given in the remuneration report on pages
43 to 45
6. Finance costs
2023 2022
---------------- ---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- -------- -------- -------- --------
Interest on
bank loans and
overdrafts 231 690 921 48 145 193
---------------- -------- -------- -------- -------- -------- --------
7. Taxation
(a) Analysis of tax charge for the year
2023 2022
---------------------- ---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- -------- --------
Irrecoverable
overseas withholding
tax 1,834 - 1,834 1,799 - 1,799
Overseas capital
gains tax - 1,939 1,939 - (1,145) (1,145)
---------------------- -------- -------- -------- -------- -------- --------
Taxation for
the year 1,834 1,939 3,773 1,799 (1,145) 654
---------------------- -------- -------- -------- -------- -------- --------
The Company has no corporation tax liability for the year ended
30 September 2023 (2022: nil).
The provision for overseas capital gains tax pertains to the
deferred tax liability on the unrealised gain on Indian
Securities.
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2022: higher) than the
Company's applicable rate of corporation tax for the year of 22%
(2022: 19%).
The factors affecting the current tax charge for the year are as
follows:
2023 2022
---------------------- ---------------------------- ------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- --------- ---------
Net return/(loss)
before taxation 20,824 4,852 25,676 21,472 (162,997) (141,525)
---------------------- -------- -------- -------- -------- --------- ---------
Net return/(loss)
before taxation
multiplied by
the Company's
applicable rate
of corporation
tax for the
year of 22%
(2022: 19%) 4,581 1,068 5,649 4,080 (30,970) (26,890)
Effects of:
Capital returns
on investments - (2,177) (2,177) - 29,957 29,957
Income not chargeable
to corporation
tax (5,250) (67) (5,317) (4,670) - (4,670)
Irrecoverable
overseas withholding
tax 1,834 - 1,834 1,799 - 1,799
Provision for
overseas capital
gains tax - 1,939 1,939 - (1,145) (1,145)
Unrelieved expenses 669 1,176 1,845 590 1,013 1,603
---------------------- -------- -------- -------- -------- --------- ---------
Taxation for
the year 1,834 1,939 3,773 1,799 (1,145) 654
---------------------- -------- -------- -------- -------- --------- ---------
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of
GBP19,912,000 (2022: GBP17,815,000) based on a main rate of
corporation tax of 25% (2022: 25%). In its 2021 budget, the UK
government announced that the main rate of corporation tax would
increase to 25% for the fiscal year beginning on 1 April 2023.
The deferred tax asset has arisen due to the cumulative excess
of deductible expenses over taxable income. Given the composition
of the Company's portfolio, it is not likely that this asset will
be utilised in the foreseeable future and therefore no asset has
been recognised in the accounts.
Given the Company's intention to meet the conditions required to
retain its status as an Investment Trust Company, no provision has
been made for deferred UK capital gains tax on any capital gains or
losses arising on the revaluation or disposal of investments.
8. Return per share
2023 2022
GBP'000 GBP'000
------------------------------------------- ----------- -----------
Revenue return 18,990 19,673
Capital return/(loss) 2,913 (161,852)
Total return/(loss) 21,903 (142,179)
------------------------------------------- ----------- -----------
Weighted average number of shares in issue
during the year 157,474,894 163,346,606
Revenue return per share 12.06p 12.04p
Capital return/(loss) per share 1.85p (99.08)p
------------------------------------------- ----------- -----------
Total return/(loss) per share 13.91p (87.04)p
------------------------------------------- ----------- -----------
9. Dividends
Dividends paid and proposed
2023 2022
GBP'000 GBP'000
-------------------------------------------- -------- --------
2022 final dividend of 12.00p (2021: 9.70p)
paid out of revenue profits 19,030 15,922
-------------------------------------------- -------- --------
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
2023 final dividend proposed of 12.00p (2022:
12.00p) to be paid out of revenue profits 18,416 19,296
---------------------------------------------- -------- --------
The 2022 final dividend amounted to GBP19,296,000. However the
amount actually paid was GBP19,030,000, as shares were repurchased
and cancelled after the accounting date, but prior to the dividend
record date.
The proposed final dividend amounting to GBP18,416,000 (2022:
GBP19,296,000) is the amount used for the basis of determining
whether the Company has satisfied the distribution requirements of
section 1158 of the Corporation Tax Act 2010. The revenue available
for distribution for the year is GBP18,990,000 (2022:
GBP19,673,000).
10. Investments held at fair value through profit or loss
2023 2022
GBP'000 GBP'000
------------------------------------------- --------- ---------
Opening book cost 758,095 758,657
Opening investment holding gains 124,706 310,331
------------------------------------------- --------- ---------
Opening fair value 882,801 1,068,988
Purchases at cost 168,987 199,803
Sales proceeds (186,855) (231,259)
Gains/(losses) on investments held at fair
value 9,601 (154,731)
------------------------------------------- --------- ---------
Closing fair value 874,534 882,801
------------------------------------------- --------- ---------
Closing book cost 751,478 758,095
Closing investment holding gains 123,056 124,706
------------------------------------------- --------- ---------
Closing fair value 874,534 882,801
------------------------------------------- --------- ---------
Sales proceeds amounting to GBP186,855,000 (2022:
GBP231,259,000) were receivable from disposals of investments in
the year. The book cost of these investments when they were
purchased was GBP175,604,000 (2022: GBP200,364,000). These
investments have been revalued over time and until they were sold
any unrealised gains and losses were included in the fair value of
the investments.
The following transaction costs, comprising stamp duty and
brokerage commission, were incurred in the year:
2023 2022
GBP'000 GBP'000
---------------- -------- --------
On acquisitions 282 268
On disposals 332 384
---------------- -------- --------
614 652
---------------- -------- --------
11. Current assets
2023 2022
Debtors GBP'000 GBP'000
------------------------------------ -------- --------
Securities sold awaiting settlement 893 5,868
Dividends and interest receivable 1,648 1,778
Taxation recoverable 236 258
Other debtors 35 16
------------------------------------ -------- --------
2,812 7,920
------------------------------------ -------- --------
The Directors consider that the carrying amount of debtors
approximates to their fair value.
Cash at bank and in hand
Cash at bank and in hand comprises bank balances and cash held
by the Company, including short-term deposits. The carrying amount
of these represents their fair value. Cash balances in excess of a
predetermined amount are placed on short term deposit at market
rates of interest.
12. Current liabilities
2023 2022
Creditors: amounts falling due within one year GBP'000 GBP'000
----------------------------------------------- -------- --------
Bank loan 24,579 13,437
Securities purchased awaiting settlement 1,422 4,379
Other creditors and accruals 2,067 2,064
Bank overdraft - 84
----------------------------------------------- -------- --------
28,068 19,964
----------------------------------------------- -------- --------
The bank loan comprises US$30 million drawn down on the
Company's GBP75 million multicurrency credit facility with Bank of
Nova Scotia. The facility is secured and drawings are subject to
covenants and restrictions which are customary for a facility of
this nature and all of these have been complied with.
Further details of the facility are given in note 20(a)(ii) on
page 67.
The bank loan at the prior year end comprised US$15 million
drawn down on the Company's previous GBP75 million multicurrency
credit facility with Bank of Nova Scotia.
The Company has a GBP30 million overdraft facility with HSBC
Bank plc, secured by a floating charge.
The Directors consider that the carrying amount of creditors
falling due within one year approximates to their fair value.
13. Deferred taxation
Deferred taxation comprises the deferred tax liability on the
unrealised gain on Indian Securities. Indian capital gains tax
arises on disposal of the underlying asset.
14. Called-up share capital
2023 2022
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Ordinary shares allotted, called up and fully
paid:
Ordinary shares of 10p each:
Opening balance of 160,800,716 (2022: 164,860,716)
shares 16,080 16,486
Repurchase and cancellation of 6,000,000 (2022:
4,060,000) shares (600) (406)
--------------------------------------------------- -------- --------
Closing balance of 154,800,716 (2022: 160,800,716)
shares 15,480 16,080
--------------------------------------------------- -------- --------
During the year, the Company made market purchases of 6,000,000
of its own shares, nominal value GBP600,000, for cancellation,
representing 3.73% of the shares outstanding at the beginning of
the year. The total consideration paid for these shares amounted to
GBP29,775,000. The reason for these purchases was to seek to manage
the volatility of the share price discount to NAV per share.
15. Reserves
Capital reserves
-------------------- ----------- ----------- ----------- ----------- ------------------------------- -----------
Investment
Capital Warrant Share Gains and holding
Share redemption exercise purchase losses on sales of gains and Revenue
Year ended 30 premium(1) reserve(2) reserve(3) reserve(4) investments(5) losses(6) reserve(7)
September 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- ----------- ----------- ------------------- ---------- -----------
At 30 September 2022 100,956 4,064 8,704 - 606,111 120,857 21,415
Gains on sales of
investments based on
the
carrying value at
the previous balance
sheet date - - - - 3,239 - -
Net movement in
investment holding
gains and losses - - - - - 6,362 -
Transfer on disposal
of investments - - - - 8,012 (8,012) -
Realised exchange
losses on cash and
short-term deposits - - - - (569) - -
Exchange gains on
the credit facility - - - - - 862 -
Overseas capital
gains tax - - - - (606) (1,333) -
Special dividend
allocated to capital - - - - 304 - -
Management fee,
administrative
expenses and finance
costs allocated to
capital - - - - (5,346) - -
Repurchase and
cancellation of the
Company's own
shares - 600 - - (29,775) - -
Dividend paid - - - - - - (19,030)
Retained revenue for
the year - - - - - - 18,990
-------------------- ----------- ----------- ----------- ----------- ------------------- ---------- -----------
At 30 September 2023 100,956 4,664 8,704 - 581,370 118,736 21,375
-------------------- ----------- ----------- ----------- ----------- ------------------- ---------- -----------
Capital reserves
-------------------- ----------- ----------- ----------- ----------- ------------------------------- -----------
Investment
Capital Warrant Share Gains and holding
Share redemption exercise purchase losses on sales of gains and Revenue
Year ended 30 premium(1) reserve(2) reserve(3) reserve(4) investments(5) losses(6) reserve(7)
September 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- ----------- ----------- ------------------- ---------- -----------
At 30 September 2021 100,956 3,658 8,704 16,110 588,024 306,339 17,664
Losses on sales of
investments based on
the
carrying value at
the previous
balance sheet date - - - - (8,110) - -
Net movement in
investment holding
gains and losses - - - - - (146,621) -
Transfer on disposal
of investments - - - - 39,004 (39,004) -
Realised exchange
losses on cash and
short-term deposits - - - - (624) - -
Exchange losses on
the credit facility - - - - - (2,312) -
Overseas capital
gains tax - - - - (1,310) 2,455 -
Management fee,
administrative
expenses and
finance costs
allocated to
capital - - - - (5,330) - -
Repurchase and
cancellation of the
Company's own
shares - 406 - (16,110) (5,543) - -
Dividend paid - - - - - - (15,922)
Retained revenue for
the year - - - - - - 19,673
-------------------- ----------- ----------- ----------- ----------- ------------------- ---------- -----------
At 30 September 2022 100,956 4,064 8,704 - 606,111 120,857 21,415
-------------------- ----------- ----------- ----------- ----------- ------------------- ---------- -----------
The Company's articles of association permit dividend
distributions out of realised capital profits.
(1) The share premium is a non distributable reserve and
represents the amount by which the fair value of the consideration
received from shares issued exceeds the nominal value of shares
issued.
(2) The capital redemption reserve represents the accumulated
nominal value of shares repurchased for cancellation. This reserve
is not distributable.
(3) The warrant exercise reserve is a non distributable reserve
and arose via an apportionment of the premium on the issue of
shares with warrants attached.
(4) The share purchase reserve arose following the cancellation
of the balance of share premium in 1998 and was created for the
purpose of financing share buy backs. This is a realised
(distributable) capital reserve which may be used to repurchase the
Company's own shares or distributed as dividends.
(5) This is a realised (distributable) capital reserve which may
be used to repurchase the Company's own shares or distributed as
dividends.
(6) This reserve comprises holding gains on liquid investments
(which may be deemed to be realised) and other amounts which are
unrealised. An analysis has not been made between those amounts
that are realised (and may be distributed as dividends or used to
repurchase the Company's own shares) and those that are
unrealised.
(7) The revenue reserve may be distributed as dividends or used
to repurchase the Company's own shares.
16. Net asset value per share
2023 2022
-------------------------------------------------- ----------- -----------
Net assets attributable to shareholders (GBP'000) 851,285 878,187
Shares in issue at the year end 154,800,716 160,800,716
-------------------------------------------------- ----------- -----------
Net asset value per share 549.92p 546.13p
-------------------------------------------------- ----------- -----------
17. Transactions with the Manager
Under the terms of the AIFM Agreement, the Manager is entitled
to receive a management fee and a company secretarial fee. Details
of the basis of the management fee calculation are given in the
Directors' Report on page 34. Any investments in funds managed or
advised by the Manager or any of its associated companies, are
excluded from the assets used for the purpose of the calculation
and therefore incur no fee. As at the year end, 30 September 2023,
the Company held 13,038,886 shares in Schroder Asian Discovery Fund
Class Z Accumulation GBP, with a market value of GBP14,082,000.
During the year, the Company sold 4,121,977 shares and generated
total proceeds of GBP4,407,000 from the sales.
The management fee payable in respect of the year ended 30
September 2023 amounted to GBP6,208,000 (2022: GBP6,913,000), of
which GBP1,485,000 (2022: GBP1,593,000) was outstanding at the year
end. The company secretarial fee payable in respect of the year
ended 30 September 2023 amounted to GBP150,000 (2022: GBP150,000),
of which GBP38,000 (2022: GBP38,000) was outstanding at the year
end.
No Director of the Company served as a Director of any member of
the Schroder Group, at any time during the year, or prior year.
18. Related party transactions
Details of the remuneration payable to Directors are given in
the Directors' Remuneration Report on page 44 and details of
Directors' shareholdings are given in the Directors' Remuneration
Report on page 45. Details of transactions with the Manager are
given in note 17 above. There have been no other transactions with
related parties during the year (2022: nil).
19. Disclosures regarding 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 and
any derivative financial instruments.
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.
Details of the Company's policy for valuing investments and
derivative instruments are given in note 1(b) on page 57 and 1(g)
on page 58.
At 30 September 2023, the Company's investment portfolio was
categorised as follows:
2023
---------------------------- --------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Investments in equities and
equity linked securities 874,534 - - 874,534
---------------------------- -------- -------- -------- --------
Total 874,534 - - 874,534
---------------------------- -------- -------- -------- --------
2022
---------------------------- --------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Investments in equities and
equity linked securities 882,801 - - 882,801
---------------------------- -------- -------- -------- --------
Total 882,801 - - 882,801
---------------------------- -------- -------- -------- --------
There have been no transfers between Levels 1, 2 or 3 during the
year (2022: nil).
20. Financial instruments' exposure to risk and risk management policies
The investment objective is set out on the inside front cover of
this report. In pursuing this objective, the Company is exposed to
a variety of financial risks that could result in a reduction in
the Company's net assets or a reduction in the profits available
for dividends. These financial risks include market risk
(comprising currency risk, interest rate risk and market price
risk), liquidity risk and credit risk. The Directors' policy for
managing these risks is set out below. The Board coordinates the
Company's risk management policy.
The objectives, policies and processes for managing the risks
and the methods used to measure the risks that are set out below,
have not changed from those applying in the comparative year.
The Company's classes of financial instruments may comprise the
following:
- investments in shares, warrants, depositary receipts and
government bonds which are held in accordance with the Company's
investment objective;
- short-term debtors, creditors and cash arising directly from its operations;
- a multi-currency overdraft facility with HSBC Bank plc, the
purpose of which is to assist in financing the Company's
operations; and
- a multi-currency revolving credit facility with Bank of Nova
Scotia, the purpose of which is to assist in financing the
Company's operations.
(a) Market risk
The fair value or future cash flows of a financial instrument
held by the Company may fluctuate because of changes in market
prices. This market risk comprises three elements: currency risk,
interest rate risk and market price risk. Information to enable an
evaluation of the nature and extent of these three elements of
market risk is given in parts (i) to (iii) of this note, together
with sensitivity analyses where appropriate. The Board reviews and
agrees policies for managing these risks and these policies have
remained unchanged from those applying in the comparative year. The
Manager assesses the exposure to market risk when making each
investment decision and monitors the overall level of market risk
on the whole of the investment portfolio on an ongoing basis.
(i) Currency risk
The majority of the Company's assets, liabilities and income are
denominated in currencies other than sterling, which is the
Company's functional currency and the presentational currency of
the accounts. As a result, movements in exchange rates will affect
the sterling value of those items.
Management of currency risk
The Manager monitors the Company's exposure to foreign
currencies on a daily basis and reports to the Board, which meets
on at least four occasions each year. The Manager measures the risk
to the Company of the foreign currency exposure by considering the
effect on the Company's net asset value and income of a movement in
the rates of exchange to which the Company's assets, liabilities,
income and expenses are exposed. The Company may use foreign
currency borrowings or forward foreign currency contracts to limit
the exposure to anticipated changes in exchange rates which might
otherwise adversely affect the value of the portfolio of
investments. Income denominated in foreign currencies is converted
into sterling on receipt.
Foreign currency exposure
The fair value of the Company's monetary items that have foreign
currency exposure at 30 September are shown below. The Company's
investments (which are not monetary items) have been included
separately in the analysis so as to show the overall level of
exposure.
2023
---------------- ----------------------------------------------------------------------------------------------------
South
Hong Kong US Korean Taiwan Singapore Thai Indian Chinese
Dollars Dollars Won Dollars Dollars Baht Rupees Yuan Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Current assets 201 392 445 629 - 98 66 560 1,492 3,883
Current
liabilities
Creditors:
amounts falling
due within one
year - (24,602) (67) (43) - (10) - (22) (1,349) (26,093)
Non current
liabilities - - - - - - (4,778) - - (4,778)
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Foreign currency
exposure on net
monetary items 201 (24,210) 378 586 - 88 (4,712) 538 143 (26,988)
Investments held
at fair value
through profit
or loss(1) 227,912 32,412 99,840 129,941 67,562 16,652 146,942 37,363 58,947 817,571
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Total net
foreign
currency
exposure 228,113 8,202 100,218 130,527 67,562 16,740 142,230 37,901 59,090 790,583
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
2022
---------------- ----------------------------------------------------------------------------------------------------
South
Hong Kong US Korean Taiwan Singapore Thai Indian Chinese
Dollars Dollars Won Dollars Dollars Baht Rupees Yuan Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Current assets 493 193 537 1,584 2,795 51 3,067 2,302 3,708 14,730
Current
liabilities
Creditors:
amounts falling
due within one
year (33) (13,442) (81) (1,014) (2,785) (5) - - (88) (17,448)
Non current
liabilities - - - - - (3,867) - - (3,867)
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Foreign currency
exposure on net
monetary items 460 (13,249) 456 570 10 46 (800) 2,302 3,620 (6,585)
Investments held
at fair value
through profit
or loss(1) 223,210 43,557 108,218 132,334 66,955 19,224 143,762 34,754 47,294 819,308
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Total net
foreign
currency
exposure 223,670 30,308 108,674 132,904 66,965 19,270 142,962 37,056 50,914 812,723
---------------- --------- -------- -------- -------- --------- -------- -------- -------- -------- --------
(1) Excluding any stocks priced in sterling.
The above year end amounts are broadly representative of the
exposure to foreign currency risk during the current and
comparative year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit
for the year and net assets with regard to the Company's monetary
financial assets and financial liabilities and exchange rates. The
effect on capital return below is predominantly due to the change
in net monetary liabilities and the effect on income return is
predominantly due to change in dividends, or revenue items that
were subject to foreign exchange rate movement. The sensitivity
analysis is based on the Company's monetary currency financial
instruments held at each accounting date and assumes a 10% (2022:
10%) appreciation or depreciation in sterling against all the
currencies to which the Company is exposed, which is considered to
be a reasonable illustration based on the volatility of exchange
rates during the year.
If sterling had weakened by 10% this would have had the
following effect:
2023 2022
GBP'000 GBP'000
----------------------------------------- -------- --------
Income Statement - return after taxation
Revenue return 2,070 2,224
Capital return (2,931) (558)
----------------------------------------- -------- --------
Total return after taxation (861) 1,666
----------------------------------------- -------- --------
Net assets (861) 1,666
----------------------------------------- -------- --------
Conversely if sterling had strengthened by 10% this would have
had the following effect:
2023 2022
GBP'000 GBP'000
----------------------------------------- -------- --------
Income Statement - return after taxation
Revenue return (2,070) (2,224)
Capital return 2,931 558
----------------------------------------- -------- --------
Total return after taxation 861 (1,666)
----------------------------------------- -------- --------
Net assets 861 (1,666)
----------------------------------------- -------- --------
In the opinion of the Directors, the above sensitivity analysis
with respect to monetary financial assets and liabilities is
broadly representative of the whole of the current and comparative
year. The sensitivity with regard to the Company's investments and
foreign currency is subsumed into market price risk sensitivity in
part (iii) to this note.
(ii) Interest rate risk
Interest rate movements may affect the level of income
receivable on cash deposits and the interest payable on variable
rate borrowings when interest rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing
returns to shareholders. The Board would not expect gearing to
exceed 20% where gearing is defined as borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets.
The possible effects on cash flows that could arise as a result
of changes in interest rates are taken into account when the
Company draws on the credit facility. However, amounts drawn on
this facility are for short-term periods and therefore exposure to
interest rate risk is not significant.
Interest rate exposure
The exposure of financial assets and financial liabilities to
floating interest rates, giving cash flow interest rate risk when
rates are re-set, is shown below:
2023 2022
GBP'000 GBP'000
----------------------------------------------- -------- --------
Exposure to floating interest rates:
Cash at bank and in hand 6,785 11,343
Creditors: bank overdraft - (84)
Creditors: amounts falling due within one year
- borrowings on the credit facility (24,579) (13,437)
----------------------------------------------- -------- --------
Net exposure (17,794) (2,178)
----------------------------------------------- -------- --------
Sterling cash deposits at call earn interest at floating rates
based on Sterling Overnight Index Average ("SONIA") rates, (2022:
SONIA).
The Company has arranged a GBP75 million credit facility with
Bank of Nova Scotia, effective from 23 June 2023. Interest is
payable at the aggregate of the compounded Risk Free Rate ("RFR)
for the relevant currency and loan period, plus a margin. Amounts
are normally drawn down on the facility for a one month period, at
the end of which it may be rolled over or adjusted. At 30 September
2023, the Company had drawn down US$30 million (GBP24.6 million)
for a one month period, at an interest rate of 6.61% per annum.
At the prior year end, the Company had drawn down US$15 million
(GBP13.4 million) on the preceding facility with Bank of Nova
Scotia.
The Company also has a GBP30 million overdraft facility with
HSBC Bank plc, secured by a floating charge.
The above year end amounts are not representative of the
exposure to interest rates during the year as the level of cash
balances and drawings on the credit facility have fluctuated. The
maximum and minimum net cash/(debt) balances during the year are as
follows:
2023 2022
GBP'000 GBP'000
--------------------------------------------- -------- --------
Maximum debit interest rate exposure during
the year - debt (17,803) (7,592)
--------------------------------------------- -------- --------
Maximum credit interest rate exposure during
the year - net cash 10,933 17,531
--------------------------------------------- -------- --------
Interest rate sensitivity
The following table illustrates the sensitivity of the return
after taxation for the year and net assets to a 1.5% (2022: 1.5%)
increase or decrease in interest rates in regards to the Company's
monetary financial assets and financial liabilities. This level of
change is considered to be a reasonable illustration based on
observation of current market conditions. The sensitivity analysis
is based on the Company's monetary financial instruments held at
the accounting date with all other variables held constant.
2023 2022
-------------------------------- ---------------------------- ----------------------------
1.5% increase 1.5% decrease 1.5% increase 1.5% decrease
in rate in rate in rate in rate
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------- ------------- -------------
Income statement - return after
taxation
Revenue return 10 (10) 119 (119)
Capital return (277) 277 (152) 152
-------------------------------- ------------- ------------- ------------- -------------
Total return after taxation (267) 267 (33) 33
-------------------------------- ------------- ------------- ------------- -------------
Net assets (267) 267 (33) 33
-------------------------------- ------------- ------------- ------------- -------------
Given the increase in UK interest rates, the interest rate
sensitivity has been updated to 1.5%. The prior year disclosure has
been updated to 1.5% to show a direct comparison in the
sensitivity. In the prior year report, the sensitivity was
calculated using 1.0%, which was representative of the market at 30
September 2022. As disclosed in the prior year annual report, an
increase of 1.0% reduced total return after taxation by GBP22,000
(a decrease of 1.0% had an equal and opposite effect).
In the opinion of the Directors, this sensitivity analysis may
not be representative of the Company's future exposure to interest
rate changes due to fluctuations in the level of cash balances and
drawings on the credit facility.
(iii) Market price risk
Market price risk includes changes in market prices, other than
those arising from interest rate risk, which may affect the value
of investments.
Management of market price risk
The Board meets on at least four occasions each year to consider
the asset allocation of the portfolio and the risk associated with
particular countries and industry sectors. The investment
management team has responsibility for monitoring the portfolio,
which is selected in accordance with the Company's investment
objective and seeks to ensure that individual stocks meet an
acceptable risk/reward profile. The Board may authorise the Manager
to enter derivative transactions for the purpose of protecting the
portfolio against falls in market prices.
Market price risk exposure
The Company's total exposure to changes in market prices at 30
September comprises the following:
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Investments held at fair value through profit
or loss 874,534 882,801
---------------------------------------------- -------- --------
The above data is broadly representative of the exposure to
market price risk during the year.
Concentration of exposure to market price risk
An analysis of the Company's investments is given on page 15.
This shows that the portfolio comprises investments trading in
Asian countries. Accordingly there is a concentration of exposure
to that region.
Market price risk sensitivity
The following table illustrates the sensitivity of the return
after taxation for the year and net assets to an increase or
decrease of 25% (2022: 25%) in the fair values of the Company's
investments. This level of change is considered to be a reasonable
illustration based on observation of current market conditions. The
sensitivity analysis is based on the Company's investments and
adjusting for the change in the management fee, but with all other
variables held constant.
2023 2022
-------------------------------- -------------------------- --------------------------
25% increase 25% decrease 25% increase 25% decrease
in fair in fair in fair in fair
value value value value
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ------------ ------------
Income statement - return after
taxation
Revenue return (328) 328 (386) 386
Capital return 217,650 (217,650) 219,542 (219,542)
-------------------------------- ------------ ------------ ------------ ------------
Total return after taxation
and net assets 217,332 (217,332) 219,156 (219,156)
-------------------------------- ------------ ------------ ------------ ------------
Percentage change in net asset
value 25.5% (25.5%) 25.0% (25.0%)
-------------------------------- ------------ ------------ ------------ ------------
Based on observation of current market conditions, the market
price risk sensitivity has been updated to 25%. The prior year
disclosure has been updated to 25% to show a direct comparison in
the sensitivity. In the prior year report, the sensitivity was
calculated using 20%, which was representative of the market at 30
September 2022. As disclosed in the prior year annual report, an
increase of 20% increased total return after taxation by
GBP175,324,000 (a decrease of 20% had an equal and opposite
effect).
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in
meeting its obligations associated with financial liabilities that
are settled by delivering cash or another financial asset.
Management of the risk
Liquidity risk is managed as the Company's assets comprise
mainly readily realisable securities, which can be sold to meet to
meet funding requirements if necessary. Short-term flexibility is
achieved through the use of a credit facility and an overdraft
facility.
The Board's policy is for the Company to remain fully invested
in normal market conditions and that borrowings be used to manage
working capital requirements and to gear the Company as
appropriate.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the
earliest date on which payment can be required are as follows:
Three months Three months
or less or less
2023 2022
GBP'000 GBP'000
------------------------------------------ ------------ ------------
Creditors: amounts falling due within one
year
Bank loan - including interest 24,613 13,473
Securities purchased awaiting settlement 1,422 4,379
Other creditors and accruals 2,067 2,064
Bank overdraft - 84
------------------------------------------ ------------ ------------
28,102 20,000
------------------------------------------ ------------ ------------
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to
a transaction to discharge its obligations under that transaction
could result in loss to the Company.
Management of credit risk
This risk is not significant and is managed as follows:
Portfolio dealing
The Company invests almost entirely in markets that operate a
"Delivery Versus Payment" settlement process which mitigates the
risk of losing the principal of a trade during settlement. The
Manager continuously monitors dealing activity to ensure best
execution, which involves measuring various indicators including
the quality of trade settlement and incidence of failed trades.
Counterparties must be pre-approved by the Manager's credit
committee.
20. Financial instruments' exposure to risk and risk management policies continued
Exposure to the Custodian
The custodian of the Company's assets is HSBC Bank plc which has
Long-Term Credit Ratings of AA- with Fitch and Aa3 with
Moody's.
The Company's investments are held in accounts which are
segregated from the custodian's own trading assets. If the
custodian were to become insolvent, the Company's right of
ownership of its investments is clear and they are therefore
protected. However the Company's cash balances are all deposited
with the custodian as banker and held on the custodian's balance
sheet. Accordingly, in accordance with usual banking practice, the
Company will rank as a general creditor to the custodian in respect
of cash balances.
Credit risk exposure
The amounts shown in the balance sheet under debtors and cash at
bank and in hand represent the maximum exposure to credit risk at
the current and comparative year ends. No debtors are past their
due date and none have been provided for. There has been no stock
lending during the year, or prior year.
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the
balance sheet at fair value, or the balance sheet amount is a
reasonable approximation of fair value.
21. Capital management policies and procedures
The Company's objectives, policies and processes for managing
capital are unchanged from the preceding year.
The Company's debt and capital structure comprises the
following:
2023 2022
GBP'000 GBP'000
------------------------ -------- --------
Debt
Bank loan 24,579 13,437
------------------------ -------- --------
Equity
Called-up share capital 15,480 16,080
Reserves 835,805 862,107
------------------------ -------- --------
851,285 878,187
------------------------ -------- --------
Total debt and equity 875,864 891,624
------------------------ -------- --------
The Company's capital management objectives are to ensure that
it will continue as a going concern and to maximise the capital
return to its equity shareholders through an appropriate level of
gearing.
The Board would not expect gearing to exceed 20%. Gearing for
this purpose is defined as borrowings used for investment purposes,
less cash, expressed as a percentage of net assets. If the figure
so calculated is negative, this is shown as a "Net cash"
position.
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Borrowings used for investment purposes, less
cash 17,794 2,178
Net assets 851,285 878,187
---------------------------------------------- -------- --------
Gearing 2.1% 0.2%
---------------------------------------------- -------- --------
The Board, with the assistance of the Manager, monitors and
reviews the broad structure of the Company's capital on an ongoing
basis. This review includes:
- the planned level of gearing, which takes into account the Manager's views on the market;
- the need to buy back the Company's own shares for cancellation
or to hold in treasury, which takes into account the share price
discount;
- the opportunity for issue of new shares; and
- the amount of dividends to be paid, in excess of that which is required to be distributed.
Annual General Meeting - Recommendations
The Annual General Meeting ("AGM") of the Company will be held
on Wednesday, 31 January 2024 at 12.00 noon. The formal Notice of
Meeting is set out on page 73.
The following information is important and requires your
immediate attention. If you are in any doubt about the action you
should take, you should consult an independent financial adviser,
authorised under the Financial Services and Markets Act 2000. If
you have sold or transferred all of your ordinary shares in the
Company, please forward this document with its accompanying form of
proxy at once to the purchaser or transferee, or to the
stockbroker, bank or other agent through whom the sale or transfer
was effected, for onward transmission to the purchaser or
transferee.
Ordinary business
Resolutions 1 to 12 are all ordinary resolutions. Resolution 1
is a required resolution. Resolution 2 invites shareholders to
approve the final dividend. Resolution 3 concerns the Directors'
Remuneration Report, on pages 43 to 45 and Resolution 4 is a
binding vote to approve the amended Directors' Remuneration Policy
as set out on page 43.
Resolutions 5 to 9 invite shareholders to elect or re-elect each
of the Directors for another year, following the recommendations of
the Nomination Committee, set out on pages 41 and 42 (their
biographies are set out on pages 32 and 33). Resolutions 10 and 11
concern the re-appointment and remuneration of the Company's
auditor, discussed in the Audit and Risk Committee Report on pages
37 to 39.
Special business
Resolution 12 - Directors' authority to allot shares (ordinary
resolution) and resolution 13 - power to disapply pre--emption
rights (special resolution)
The Directors are seeking authority to allot a limited number of
unissued ordinary shares for cash without first offering them to
existing shareholders in accordance with statutory pre-emption
procedures.
Appropriate resolutions will be proposed at the forthcoming AGM
and are set out in full in the Notice of AGM. An ordinary
resolution will be proposed to authorise the Directors to allot
shares up to a maximum aggregate nominal amount of GBP1,534,657
(being 10% of the issued share capital (excluding any shares held
in treasury) as at the date of the Notice of the AGM). A special
resolution will also be proposed to give the Directors authority to
allot securities for cash on a non-pre-emptive basis up to a
maximum aggregate nominal amount of GBP1,534,657 (being 10% of the
Company's issued share capital (excluding any shares held in
treasury) as at the date of the Notice of the AGM). This authority
includes shares that the Company sells or transfers that have been
held in treasury. The Board has established guidelines for treasury
shares and will only reissue shares held in treasury at a price
equal to or greater than the Company's net asset value (inclusive
of current year income) plus any applicable costs.
The Directors do not intend to allot shares pursuant to these
authorities other than to take advantage of opportunities in the
market as they arise and only if they believe it to be advantageous
to the Company's existing shareholders to do so and when it would
not result in any dilution of NAV per share.
If approved, both of these authorities will expire at the
conclusion of the AGM in 2025 unless renewed, varied or revoked
earlier.
Resolution 14: Authority to make market purchases of the
Company's own shares (special resolution)
At the AGM held on 1 February 2023, the Company was granted
authority to make market purchases of up to 23,850,695 ordinary
shares of 10p each for cancellation or holding in treasury.
5,005,000 shares have been bought back and cancelled under this
authority and the Company therefore has remaining authority to
purchase up to 18,845,695 ordinary shares. This authority will
expire at the forthcoming AGM.
The Directors believe it is in the best interests of the Company
and its shareholders to have a general authority for the Company to
buy back its ordinary shares in the market as they keep under
review the share price discount to net asset value and the purchase
of ordinary shares. A special resolution will be proposed at the
forthcoming AGM to give the Company authority to make market
purchases of up to 14.99% of the ordinary shares in issue as at the
date of the Notice of the AGM. The Directors will exercise this
authority only if the Directors consider that any purchase would be
for the benefit of the Company and its shareholders, taking into
account relevant factors and circumstances at the time. Any shares
so purchased would be cancelled or held in treasury for potential
reissue. If renewed, the authority to be given at the 2024 AGM will
lapse at the conclusion of the AGM in 2025 unless renewed, varied
or revoked earlier.
Resolution 15: notice period for general meetings (special
resolution)
Resolution 15 set out in the Notice of AGM is a special
resolution and will, if passed, allow the Company to hold general
meetings (other than annual general meetings) on a minimum notice
period of 14 clear days, rather than 21 clear days as required by
the Companies Act 2006. The approval will be effective until the
Company's next AGM to be held in 2025. The Directors will only call
general meetings on 14 clear days' notice when they consider it to
be in the best interests of the Company's shareholders and will
only do so if the Company offers facilities for all shareholders to
vote by electronic means and when the matter needs to be dealt with
expediently.
Recommendations
The Board considers that the resolutions relating to the above
items of business are in the best interests of shareholders as a
whole. Accordingly, the Board unanimously recommends to
shareholders that they vote in favour of the resolutions to be
proposed at the forthcoming AGM, as they intend to do in respect of
their own beneficial holdings.
Notice of Annual General Meeting
The Annual General Meeting ("AGM") of the Company will be held
Wednesday, 31 January 2024 at 12.00 noon to consider the following
resolutions of which resolutions 1 to 12 will be proposed as
ordinary resolutions and resolutions 13, 14 and 15 will be proposed
as special resolutions:
1. To receive the Report of the Directors and the audited
accounts for the year ended 30 September 2023.
2. To approve a final dividend of 12.00 pence per share for the
financial year ended 30 September 2023.
3. To approve the Directors' Remuneration Report for the year ended 30 September 2023.
4. To approve the Directors' Remuneration Policy as set out on page 43.
5. To elect Rupert Hogg as a Director of the Company.
6. To re-elect Julia Goh as a Director of the Company.
7. To re-elect Vivien Gould as a Director of the Company.
8. To re-elect Martin Porter as a Director of the Company.
9. To re-elect James Williams as a Director of the Company.
10. To re-appoint Ernst & Young LLP as auditor to the
Company until the conclusion of the next Annual General
Meeting.
11. To authorise the Directors to determine the remuneration of
Ernst & Young LLP as auditor to the Company.
12. To consider, and if thought fit, pass the following resolution as an ordinary resolution:
"THAT the Directors be generally and unconditionally authorised
pursuant to section 551 of the Companies Act 2006 (the "Act") to
exercise all the powers of the Company to allot relevant securities
(within the meaning of section 551 of the Act) up to an aggregate
nominal amount of GBP1,534,657 (being 10% of the issued ordinary
share capital at the date of this Notice) for a period expiring
(unless previously renewed, varied or revoked by the Company in
general meeting) at the conclusion of the next Annual General
Meeting of the Company, but that the Company may make an offer or
agreement which would or might require relevant securities to be
allotted after expiry of this authority and the Board may allot
relevant securities in pursuance of that offer or agreement."
13. To consider and, if thought fit, to pass the following resolution as a special resolution:
"THAT, subject to the passing of resolution 12 set out above,
the Directors be and are hereby empowered, pursuant to Section 571
of the Act, to allot equity securities (including any shares held
in treasury) (as defined in section 560(1) of the Act) pursuant to
the authority given in accordance with section 551 of the Act by
the said resolution 12 and/or where such allotment constitutes an
allotment of equity securities by virtue of section 560(2) of the
Act as if Section 561(1) of the Act did not apply to any such
allotment, provided that this power shall be limited to the
allotment of equity securities up to an aggregate nominal amount of
GBP1,534,657 (representing 10% of the aggregate nominal amount of
the share capital in issue at the date of this Notice); and
provided that this power shall expire at the conclusion of the next
Annual General Meeting of the Company but so that this power shall
enable the Company to make offers or agreements before such expiry
which would or might require equity securities to be allotted after
such expiry."
14. To consider and, if thought fit, to pass the following resolution as a special resolution:
"THAT the Company be and is hereby generally and unconditionally
authorised in accordance with Section 701 of the Act to make market
purchases (within the meaning of Section 693 of the Act) of
ordinary shares of 10p each in the capital of the Company
("Shares") at whatever discount the prevailing market price
represents to the prevailing net asset value per Share provided
that:
(a) the maximum number of Shares which may be purchased is
23,004,509, representing 14.99% of the Company's issued ordinary
share capital as at the date of this Notice;
(b) the maximum price (exclusive of expenses) which may be paid
for a Share shall not exceed the higher of;
i) 105% of the average of the middle market quotations for the
Shares as taken from the London Stock Exchange Daily Official List
for the five business days preceding the date of purchase; and
ii) the higher of the last independent bid and the highest
current independent bid on the London Stock Exchange;
(c) the minimum price (exclusive of expenses) which may be paid
for a Share shall be 10p, being the nominal value per Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of the Company in
2024 (unless previously renewed, varied or revoked by the Company
prior to such date);
(e) the Company may make a contract to purchase Shares under the
authority hereby conferred which will or may be executed wholly or
partly after the expiration of such authority and may make a
purchase of Shares pursuant to any such contract; and
(f) any Shares so purchased will be cancelled or held in treasury for potential reissue."
15. To consider and, if thought fit, to pass the following resolution as a special resolution:
"That a general meeting, other than an Annual General Meeting,
may be called on not less than 14 clear days' notice."
Registered Office:
By order of the Board 1 London Wall Place,
For and on behalf of London EC2Y 5AU
Schroder Investment Management Limited Registered Number:
5 December 2023 03104981
Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend and vote at the
meeting and to appoint one or more proxies, who need not be a
shareholder, as their proxy to exercise all or any of their rights
to attend, speak and vote on their behalf at the meeting.
A proxy form is attached. If you wish to appoint a person other
than the Chairman as your proxy, please insert the name of your
chosen proxy holder in the space provided at the top of the form.
If the proxy is being appointed in relation to less than your full
voting entitlement, please enter in the box next to the proxy
holder's name the number of shares in relation to which they are
authorised to act as your proxy. If left blank your proxy will be
deemed to be authorised in respect of your full voting entitlement
(or if this proxy form has been issued in respect of a designated
account for a shareholder, the full voting entitlement for that
designated account).
Additional proxy forms can be obtained by contacting the
Company's Registrars, Equiniti Limited, on +44 (0)371 032 0641, or
you may photocopy the attached proxy form. Please indicate in the
box next to the proxy holder's name the number of shares in
relation to which they are authorised to act as your proxy. Please
also indicate by ticking the box provided if the proxy instruction
is one of multiple instructions being given. Completion and return
of a form of proxy will not preclude a member from attending the
Annual General Meeting and voting in person.
On a vote by show of hands, every ordinary shareholder who is
present in person has one vote and every duly appointed proxy who
is present has one vote. On a poll vote, every ordinary shareholder
who is present in person or by way of a proxy has one vote for
every share of which he/she is a holder.
The "Vote Withheld" option on the proxy form is provided to
enable you to abstain on any particular resolution. However it
should be noted that a "Vote Withheld" is not a vote in law and
will not be counted in the calculation of the proportion of the
votes "For" and "Against" a resolution.
A proxy form must be signed and dated by the shareholder or his
or her attorney duly authorised in writing. In the case of joint
holdings, any one holder may sign this form. The vote of the senior
joint holder who tenders a vote, whether in person or by proxy,
will be accepted to the exclusion of the votes of the other joint
holder and for this purpose seniority will be determined by the
order in which the names appear on the Register of Members in
respect of the joint holding. To be valid, proxy form(s) must be
completed and returned to the Company's Registrars, Equiniti
Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA,
in the enclosed envelope together with any power of attorney or
other authority under which it is signed or a copy of such
authority certified notarially, to arrive no later than 48 hours
before the time fixed for the meeting, or an adjourned meeting.
Shareholders may also appoint a proxy to vote on the resolutions
being put to the meeting electronically at www.sharevote.co.uk .
Shareholders who are not registered to vote electronically, will
need to enter the Voting ID, Task ID and Shareholder Reference
Number set out in their personalised proxy form. Alternatively,
shareholders who have already registered with Equiniti's Shareview
service can appoint a proxy by logging onto their portfolio at
www.shareview.co.uk and clicking on the link to vote. The on-screen
instructions give details on how to complete the appointment
process. Please note that to be valid, your proxy instructions must
be received by Equiniti no later than 12.00 noon on 29 January
2024. If you have any difficulties with online voting, you should
contact the shareholder helpline on +44 (0)371 032 0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest time
for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided either
in this Notice of Annual General Meeting or any related documents
to communicate with the Company for any purposes other than
expressly stated.
Representatives of shareholders that are corporations will have
to produce evidence of their proper appointment when attending the
Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to enjoy
information rights (a "Nominated Person") may, under an agreement
between him or her and the shareholder by whom he or she was
nominated, have a right to be appointed (or to have someone else
appointed) as a proxy for the Annual General Meeting. If a
Nominated Person has no such proxy appointment right or does not
wish to exercise it, he or she may, under any such agreement, have
a right to give instructions to the shareholder as to the exercise
of voting rights.
The statement of the rights of ordinary shareholders in relation
to the appointment of proxies in note 1 above does not apply to
Nominated Persons. The rights described in that note can only be
exercised by ordinary shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of members of the Company
at 6.30 p.m. on 29 January 2024, or 6.30 p.m. two days prior to the
date of an adjourned meeting, shall be entitled to attend and vote
at the meeting in respect of the number of shares registered in
their name at that time. Changes to the Register of Members after
6.30 p.m. on 29 January 2024 shall be disregarded in determining
the right of any person to attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by using
the procedures described in the CREST manual. The CREST manual can
be viewed at www.euroclear.com . A CREST message appointing a proxy
(a "CREST proxy instruction") regardless of whether it constitutes
the appointment of a proxy or an amendment to the instruction
previously given to a previously appointed proxy must, in order to
be valid, be transmitted so as to be received by the issuer's agent
(ID RA19) by the latest time for receipt of proxy appointments. If
you are an institutional investor you may be able to appoint a
proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar. For
further information regarding Proxymity, please go to
www.proxymity.io . Your proxy must be lodged by 12:00 noon on 29
January 2024 in order to be considered valid. Before you can
appoint a proxy via this process you will need to have agreed to
Proxymity's associated terms and conditions. It is important that
you read these carefully as you will be bound by them and they will
govern the electronic appointment of your proxy.
5. Copies of the articles of association, terms of appointment
of the non-executive Directors and a statement of all transactions
of each Director and of his family interests in the shares of the
Company, will be available for inspection by any member of the
Company at the registered office of the Company during normal
business hours on any weekday (English public holidays excepted)
and at the Annual General Meeting by any attendee, for at least 15
minutes prior to, and during, the Annual General Meeting. None of
the Directors has a contract of service with the Company.
6. The biographies of the Directors offering themselves for
election and re--election are set out on pages 32 and 33 of the
Company's annual report and accounts for the year ended 30
September 2023.
7. As at 5 December 2023, 153,465,716 ordinary shares of 10
pence each were in issue (no shares were held in treasury).
Therefore the total number of voting rights of the Company as at 5
December 2023 was 153,465,716.
8. A copy of this Notice of Meeting, which includes details of
shareholder voting rights, together with any other information as
required under Section 311A of the Companies Act 2006, is available
from the webpages dedicated to the Company:
www.schroders.co.uk/asiapacific .
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual General Meeting any
question relating to the business being dealt with at the AGM which
is put by a member attending the meeting, except in certain
circumstances, including if it is undesirable in the interests of
the Company or the good order of the meeting that the question be
answered or if to do so would involve the disclosure of
confidential information.
10. Members satisfying the thresholds in section 527 of the
Companies Act 2006 can require the Company to publish a statement
on its website setting out any matter relating to:
(a) the audit of the Company's Accounts (including the auditor's
report and the conduct of the audit) that are to be laid before the
Meeting; or
(b) any circumstance connected with an auditor of the Company
ceasing to hold office since the last AGM, that the members propose
to raise at the Meeting. The Company cannot require the members
requesting the publication to pay its expenses. Any statement
placed on the website must also be sent to the Company's auditors
no later than the time it makes its statement available on the
website. The business which may be dealt with at the meeting
includes any statement that the Company has been required to
publish on its website.
11. The Company's privacy policy is available on its webpages:
www.schroders.co.uk/asiapacific . Shareholders can contact Equiniti
for details of how Equiniti processes their personal information as
part of the AGM.
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those commonly used
by investment companies to assess values, investment performance
and operating costs. Some of the financial measures below are
classified Alternative Performance Measures as defined by the
European Securities and Markets Authority, and some numerical
calculations are given for those.
Net asset value ("NAV") per share
The NAV per share of 549.92p (2022: 546.13p) represents the net
assets attributable to equity shareholders of GBP851,285,000 (2022:
GBP878,187,000) divided by the number of shares in issue of
154,800,716 (2022: 160,800,716).
The change in the NAV amounted to +0.7% (2022: -14.9%) over the
year. However this performance measure excludes the positive impact
of dividends paid out by the Company during the year. When these
dividends are factored into the calculation, the resulting
performance measure is termed the "total return". Total return
calculations and definitions are given below.
Total return
The combined effect of any dividends paid, together with the
rise or fall in the share price or NAV per share. Total return
statistics enable the investor to make performance comparisons
between investment companies with different dividend policies. Any
dividends received by a shareholder are assumed to have been
reinvested in either the assets of the Company at its NAV per share
at the time the shares were quoted ex-dividend (to calculate the
NAV per share total return) or in additional shares of the Company
(to calculate the share price total return).
The NAV total return for the year ended 30 September 2023 is
calculated as follows:
Opening NAV at 30/9/22 546.13p
----------------------- -------
Closing NAV at 30/9/23 549.92p
----------------------- -------
NAV on
Dividend received XD date XD date Factor
---------------------------- ------------- ------------- ------
12.00p 30/12/22 559.37p 1.021
---------------------------- ------------- ------------- ------
NAV total return, being the closing NAV, multiplied by
the factor,
expressed as a percentage change in the opening NAV: +2.9%
---------------------------------------------------------- ------
The NAV total return for the year ended 30 September 2022 is
calculated as follows:
Opening NAV at 30/9/21 641.72p
----------------------- -------
Closing NAV at 30/9/22 546.13p
----------------------- -------
NAV on
Dividend received XD date XD date Factor
---------------------------- ------------- ------------- ------
9.70p 30/12/21 636.89p 1.015
---------------------------- ------------- ------------- ------
NAV total return, being the closing NAV, multiplied by
the factor,
expressed as a percentage change in the opening NAV: -13.6%
---------------------------------------------------------- ------
The share price total return for the year ended 30 September
2023 is calculated as follows
Opening share price at 30/9/22 487.00p
Closing share price at 30/9/23 486.50p
Share price
on XD
Dividend received XD date date Factor
--------------------------- ------------ ----------------- ------
12.00p 30/12/22 501.00p 1.024
--------------------------- ------------ ----------------- ------
Share price total return, being the closing share price,
multiplied by the factor,
expressed as a percentage change in the opening share
price: +2.3%
------------------------------------------------------------ ------
The share price total return for the year ended 30 September
2022 is calculated as follows
Opening share price at 30/9/21 579.00p
------------------------------- -------
Closing share price at 30/9/22 487.00p
------------------------------- -------
Share price
on XD
Dividend received XD date date Factor
--------------------------- ------------ ----------------- ------
9.70p 30/12/21 583.00p 1.017
--------------------------- ------------ ----------------- ------
Share price total return, being the closing share price,
multiplied by the factor,
expressed as a percentage change in the opening share
price: -14.5%
------------------------------------------------------------ ------
Benchmark index
The measure against which the Company compares its performance,
which is deemed to be the most appropriate comparison and which is
used for management information purposes. The Company's benchmark
is the MSCI All Countries Asia excluding Japan Index (with net
income reinvested), sterling adjusted. The Company changed its
benchmark with effect from 1 October 2016. Prior to that date the
benchmark was the MSCI All Countries Asia excluding Japan Index
(with gross income reinvested), sterling adjusted.
Discount/premium
The amount by which the share price of an investment trust is
lower (discount) or higher (premium) than the NAV per share. The
discount or premium is expressed as a percentage of the NAV per
share. The discount at the year end amounted to 11.5% (2022:
10.8%), as the closing share price at 486.50p (2022: 487.00p) was
11.5% (2022: 10.8%) lower than the closing NAV of 549.92p (2022:
546.13p).
Gearing
The gearing percentage reflects the amount of borrowings (i.e.
bank loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra
amount by which shareholders' funds would move if the Company's
investments were to rise or fall. This represents borrowings used
for investment purposes, less cash, expressed as a percentage of
net assets. If the figure so calculated is negative, this is shown
as a "Net cash" position. The gearing figure at the year end is
calculated as follows:
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Borrowings used for investment purposes, less
cash 17,794 2,178
---------------------------------------------- -------- --------
Net assets 851,285 878,187
---------------------------------------------- -------- --------
Gearing/(net cash) 2.1% 0.2%
---------------------------------------------- -------- --------
Ongoing charges
The Ongoing Charges figure is a measure of the ongoing operating
cost of the Company. It is calculated in accordance with the AIC's
recommended methodology and represents the management fee and all
other operating expenses excluding finance costs and transaction
costs, amounting to GBP7,617,000 (2022: GBP8,350,000), expressed as
a percentage of the average daily net asset values during the year
of GBP888,441,000 (2022: GBP995,417,000).
Leverage
For the purpose of the Alternative Investment Fund Managers
(AIFM) Directive, leverage is any method which increases the
Company's exposure, including the borrowing of cash and the use of
derivatives. Higher Leverage numbers are thus indicative of higher
market risk. Leverage is expressed as the ratio of the Company's
exposure to its net asset value and is required to be calculated
both on a "Gross" and a "Commitment" method. Under the Gross
method, exposure represents the sum of the absolute values of all
positions, so as to give an indication of overall exposure. Under
the Commitment method, exposure is calculated in a similar way, but
after netting off hedges which satisfy certain strict criteria.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-trust/
.
Information about the Company
Webpages and share price information
The Company has dedicated webpages, which may be found at
www.schroders.co.uk/asiapacific . The webpages are the Company's
primary method of electronic communication with shareholders. They
contain details of the Company's ordinary share price and copies of
the report and accounts and other documents published by the
Company as well as information on the Directors, terms of reference
of committees and other governance arrangements. In addition, the
webpages contain links to announcements made by the Company to the
market, Equiniti's shareview service and Schroders' website. There
is also a section entitled "How to Invest".
The Company releases its NAV per share on both a cum and
ex-income basis to the market on a daily basis.
Share price information may also be found in the Financial Times
and on the Company's webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be found on
its website, www.theaic.co.uk .
Individual Savings Account ("ISA") status
The Company's shares are eligible for stocks and shares
ISAs.
Non-Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares
can be recommended by IFAs to ordinary retail investors in
accordance with the FCA's rules in relation to non-mainstream
investment products and intends to continue to do so for the
foreseeable future. The Company's shares are excluded from the
FCA's restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Financial calendar
Annual General Meeting January / February
Final dividend paid February
Half year results announced June
Financial year end 30 September
Annual results announced December
Alternative Investment Fund Managers ("AIFM") Directive
The AIFM Directive, as transposed into the FCA Handbook in the
UK, requires that certain pre-investment information be made
available to investors in Alternative Investment Funds (such as the
Company) and also that certain regular and periodic disclosures are
made. This information and these disclosures may be found either
below, elsewhere in this annual report, or in the Company's AIFM
Directive information disclosure document published on the
Company's webpages.
Leverage
The Company's leverage policy and details of its leverage ratio
calculation and exposure limits as required by the AIFMD are
published on the Company's webpages and within this report. The
Company is also required to periodically publish its actual
leverage exposures. As at 30 September 2023 these were:
Maximum Actual
Leverage exposure exposure exposure
------------------ --------- ---------
Gross method 200.0% 1.06%
------------------ --------- ---------
Commitment method 200.0% 1.04%
------------------ --------- ---------
Illiquid assets
As at the date of this report, none of the Company's assets are
subject to special arrangements arising from their illiquid
nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be found
in the Company's AIFMD information disclosure document published on
the Company's webpages.
Publication of Key Information Document ("KID") by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company's AIFM, is
required to publish a short KID on the Company. KIDs are designed
to provide certain prescribed information to retail investors,
including details of potential returns under different performance
scenarios and a risk/reward indicator. The Company's KID is
available on its webpages.
Dividends
Paying dividends into a bank or building society account helps
reduce the risk of fraud and will provide you with quicker access
to your funds than payment by cheque. Applications for an
electronic mandate can be made by contacting the Registrar. If your
dividend is paid directly into your bank or building society
account, you will receive an annual consolidated dividend
confirmation, which will be sent to you in September each year at
the time the interim dividend is paid. Dividend confirmations are
available electronically at investorcentre.co.uk to those
shareholders who have their payments mandated to their bank or
building society accounts and who have expressed a preference for
electronic communications.
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based 'brokers' who
target UK shareholders, offering to sell them what often turn out
to be worthless or high risk shares or investments. These
operations are commonly known as 'boiler rooms'. These 'brokers'
can be very persistent and extremely persuasive. Shareholders are
advised to be wary of any unsolicited advice, offers to buy shares
at a discount or offers of free company reports.
If you receive any unsolicited investment advice:
-- Make sure you get the correct name of the person and organisation
-- Check that they are properly authorised by the FCA before getting involved by visiting register.fca.org.uk
-- Report the matter to the FCA by calling 0800 111 6768 or visiting fca.org.uk/consumers/report-scam-unauthorised-firm
-- Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible
to receive payment under the Financial Services Compensation
Scheme.
The FCA provides a list of unauthorised firms of which it is
aware, which can be accessed at
fca.org.uk/consumers/unauthorised-firmsindividualslist.
More detailed information on this or similar activity can be
found on the FCA website at
fca.org.uk/consumers/protect-yourself-scams.
Directors
James Williams (Chairman)
Keith Craig
Julia Goh
Vivien Gould
Rupert Hogg (appointed 1 May 2023)
Martin Porter
Advisers
Alternative Investment Fund Manager (the "Manager")
Schroder Unit Trusts Limited 1 London Wall Place London EC2Y
5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited 1 London Wall Place
London EC2Y 5AU Telephone: 020 7658 6189
AMCompanySecretary@Schroders.com
Registered Office
1 London Wall Place London EC2Y 5AU
Depositary and Custodian
HSBC Bank plc 8 Canada Square London E14 5HQ
Lending Bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate Broker
Deutsche Numis 45 Gresham Street London EC2V 7BF
Independent auditor
Ernst & Young LLP Atria One 144 Morrison Street Edinburgh
EH3 8EX
Registrars
Equiniti Limited Aspect House Spencer Road Lancing West Sussex
BN99 6DA
Shareholder Helpline: +44 (0)800 032 0641* Website:
www.shareview.co.uk
*Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address held
on the register. Any notifications and enquiries relating to
shareholdings, including a change of address or other amendment
should be directed to Equiniti Limited at the above address.
Shareholder enquiries
General enquiries about the Company should be addressed to the
Company Secretary at the address set out above.
Dealing Codes
ISIN: GB0007918872
SEDOL 0791887
Ticker: SDP
Global Intermediary Identification Number (GIIN)
SWLQRM.99999.SL.826
Legal Entity Identifier (LEI)
549300A71N7LE35KWU14
Privacy notice
The Company's privacy notice is available on its webpages
Schroder Investment Management Limited
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
schroders.com
@schroders
Important information: This document is intended to be for
information purposes only and it is not intended as promotional
material in any respect. The material is not intended as an offer
or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not
be relied on for, accounting, legal or tax advice, or investment
recommendations. Information herein is believed to be reliable but
Schroders does not warrant its completeness or accuracy. No
responsibility can be accepted for errors of fact or opinion.
Reliance should not be placed on the views and information in the
document when taking individual investment and/or strategic
decisions. Past performance is not a reliable indicator of future
results, prices of shares and the income from them may fall as well
as rise and investors may not get back the amount originally
invested. Schroders has expressed its own views in this document
and these may change. Issued by Schroder Investment Management
Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised
and regulated by the Financial Conduct Authority. For your
security, communications may be taped or monitored.
This information is provided by RNS, the news service of the
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RNS may use your IP address to confirm compliance with the terms
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Policy.
END
FR FSSEFIEDSEEE
(END) Dow Jones Newswires
December 06, 2023 02:00 ET (07:00 GMT)
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