REG - Schroder AsianTR Inv - Final Results
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RNS Number : 2288X Schroder Asian Total Retn InvCo PLC 19 March 2026
19 March
2026
LONDON STOCK EXCHANGE ANNOUNCEMENT
SCHRODER ASIAN TOTAL RETURN INVESTMENT COMPANY PLC
(the "Company")
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
Legal Entity Identifier: 549300TQNNGZ0JHO2L78
Information disclosed in accordance with DTR 4.1
The Company's Annual Report and Financial Statements for the year ended 31
December 2025 is being published in hard copy format and an electronic copy
will shortly be available to view and download from the Company's web pages:
www.schroders.co.uk/satric (http://www.schroders.co.uk/satric) .
Key Highlights
· The Company delivered a strong year of absolute performance, with a
19.3% share price total return and 14.2% NAV total return, supported by a
narrowing discount to NAV; however, 2025 returns trailed the Reference Index
(20.6%).
· Since the start of 2026, the strategy has returned to outperformance
versus the Reference Index and remains ahead of both the peer group and the
Index over three, five and ten years to 31 December 2025; it has outperformed
in eight of the last ten years, delivering 12.5% per annum over the decade
versus 9.5% per annum for the index.
· Relative performance headwinds came from limited participation in
Korea's "Value-Up" programme, stock selection in Hong Kong/China, and sharp
AI-driven dispersion between perceived winners and losers.
· The Company's growing scale was recognised with inclusion in the FTSE 250 in June 2025, alongside winning Investment Week's Investment Company of the Year award in the Asia Pacific category (announced November 2025).
Investor presentation
Our portfolio managers, Robin Parbrook and King Fuei Lee, will be giving
presentations at an investor webinar on Thursday, 23 April 2026 at 12.00 pm.
To sign up to watch the presentation online please click on this link to add
this virtual presentation to your calendar:
https://mybrand.schroders.com/m/76dbfd61185ffd2b/original/Schroder-Asian-Total-Inv_-Company-AGM-Presentation-by-Investment-Manager.ics
(https://mybrand.schroders.com/m/76dbfd61185ffd2b/original/Schroder-Asian-Total-Inv_-Company-AGM-Presentation-by-Investment-Manager.ics)
.
Sarah MacAulay, Chair of Schroder Asian Total Return Investment Company plc,
commented:
"It has been another year of strong absolute returns from your Company which
delivered a share price total return of 19.3% and a NAV total return of
14.2%."
The Company has submitted a copy of its Annual Financial Report to the
National Storage Mechanism and it will shortly be available for inspection
at: National Storage Mechanism | FCA
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Enquiries:
Schroder Investment Management Limited
Charlotte Banks/Kirsty Preston (Press) 020 7658 2106
Katherine Fyfe 020 7658 6000
Performance Summary
At 31 December 2025
Net Asset Value (NAV) per share total return(1)
14.2%
2024: +13.0%
Share price total return(1)
19.3%
2024: +12.6%
Reference Index(2)
20.6%
2024: +12.1%
Share price(2)
560.00p
2024: 483.00p
Share price discount to NAV per share(1,2)
1.1%
2024: 5.1%
Revenue return per share(3)
9.81p
2024: 9.61p
Net assets(3)
£529.45m
2024: £476.08m
Gearing(1,3)
5.5%
2024: 8.5%
Ongoing charges ratio(1,3)
0.8%
2024: 0.9%
(1) Alternative performance measure, as defined by the European
Securities and Markets Authority. Definitions of these performance measures,
and other terms used in this Report, are given on pages l and l together with
supporting calculations where appropriate.
(2) Source: Morningstar.
(3) Source: Schroders.
Chair's Statement
Performance and background
It has been another year of strong absolute returns from your Company which
delivered a share price total return of 19.3% and a NAV total return of 14.2%.
The share price benefited from a narrowing of the discount to NAV at which it
trades which enhanced share price returns. However, performance in 2025 lagged
the Reference Index, which produced a total return of 20.6% over the year. The
principal headwinds to the Company's relative performance came from a
combination of factors including not fully participating in a broad market
rally in Korea, stock selection in Hong Kong and China, and some of the
dramatic stock moves on possible winners and losers from AI disruption. These
are examined in more detail in the Investment Manager's review.
Despite this short-term relative underperformance, it is worth noting that
since the start of 2026 the strategy is once again outperforming the Reference
Index. Furthermore, the Company's returns are ahead of both the peer group and
the Reference Index over each of the three, five and ten year periods to 31
December 2025. The Company has generated relative outperformance in eight of
the last ten years and cumulatively has returned 12.5% per annum vs.
Reference Index returns of 9.5% per annum over the last decade¹.
We are delighted to report that this steady growth in the Company's assets has
resulted in us joining the FTSE 250 in June of last year.
Further comments on performance and investment policy may be found in the
Investment Manager's review.
Earnings and dividends
Revenue return from the portfolio for the year rose slightly to 9.81 pence per
share, from 9.61 pence per share in 2024. While the Portfolio Managers view
income as an important component of investment return, they focus on total
return, rather than income. The Board has therefore recommended a final
dividend of 11.5 pence per share, which maintains the dividend at the same
level as the previous financial year.
Subject to shareholder approval at the Annual General Meeting ("AGM"), the
dividend will be paid on 11 May 2026 to shareholders on the register on 10
April 2026. The ex-dividend date is 9 April 2026.
Discount management
The discount at which the Company's share price traded averaged 3.5% during
the year and traded at a 1.1% discount to the NAV at the end of December 2025
compared to a 5.1% discount in December 2024.
2025 saw record buybacks across the investment trust sector as it struggled
with persistently wide discounts. However, your Company did not buy back any
shares during the year as the discount remained comfortably within the stated
discount control policy of targeting a discount no wider than 5% in normal
market conditions. Indeed the discount narrowed over the year and the share
price is currently trading close to NAV. It is the Company's intention to
issue shares at a premium, should that be achieved, as has been done in
previous years. The Board will be seeking approval from shareholders to renew
the issuance and buy back authorities at the AGM to be held on 23 April 2026,
further details of which can be found on page 100.
Gearing
Gearing continued to be actively utilised by the Portfolio Managers during the
year and ranged between 2% at its lowest and 8% at its highest. Gearing made a
positive contribution to performance. The Company continues to utilise
contracts for difference (CFDs) as a flexible and more cost-effective means of
borrowing, and only a small £23.5 million revolving credit facility has been
retained, both of which have helped to bring down borrowing costs. Borrowing
continues to be utilised within the wider context of the derivative overlay
strategy and net gearing will not exceed 30% of NAV.
Schroders combination with Nuveen
On 12 February 2026 the Board of Schroders plc announced that they had agreed
the terms of a recommended cash acquisition by Nuveen, to combine the
two businesses. The announcement indicated that the transaction is not
expected to complete until Q4 2026.
Further details are available on the Schroders website:
https://www.schroders.com/en/global/individual/nuveenoffer/
(https://www.schroders.com/en/global/individual/nuveenoffer/)
Investment Company of the Year winner
In November 2025 it was announced that the Company had won the Investment
Week's Investment Company of the Year award in the Asia Pacific category. The
shortlists for the awards were constructed using scores provided by the AIC,
using Morningstar data, with oversight from the judging panel. Winners were
then chosen by a judging panel where qualitative factors were also considered.
Outlook
The recent events in the Middle East have layered further uncertainty onto
global stock markets, already unsettled by Trump's inconsistent application of
tariffs, concern over US equity valuations and the ballooning budgets for
investment in AI. The prospect of elevated oil prices is a negative for Asian
equity markets which have experienced a period of very strong outperformance.
It casts a shadow over Asian economic growth prospects, increases inflationary
pressure and mitigates against prospective interest rate cuts. Consequently,
the top-down picture in Asia is becoming more challenging with valuations
having reached relatively high levels versus their history.
However, the Portfolio Managers believe there to be attractive investment
opportunities across the Asian region. Schroders' extensive commitment to the
region with over 40 research analysts, primarily located in Hong Kong,
Singapore and Shanghai, carrying out more than 2,200 company meetings per year
provides in depth, on the ground analysis of a broad range of companies and
sectors. Our Portfolio Managers have a proven track record and a wealth of
investment experience. This, together with our Portfolio Manager's derivative
overlay strategy which helps to reduce downside and volatility, gives us
continued confidence in the strategy.
Results webinar, presentation and AGM
The Company's AGM will be held on Thursday, 23 April 2026 at 12 noon at 1
London Wall Place, London EC2Y 5AU.
The AGM will begin with a presentation by the Portfolio Managers which will
also be available to watch online. To sign up to watch the presentation online
please click on this link to add this virtual presentation to your calendar:
https://mybrand.schroders.com/m/76dbfd61185ffd2b/original/Schroder-Asian-Total-Inv_-Company-AGM-Presentation-by-Investment-Manager.ics
(https://mybrand.schroders.com/m/76dbfd61185ffd2b/original/Schroder-Asian-Total-Inv_-Company-AGM-Presentation-by-Investment-Manager.ics)
. Details on how to watch the presentation are also available on the Company's
web pages which provide a selection of research and insights:
www.schroders.co.uk/satric (http://www.schroders.co.uk/satric)
By making the Portfolio Managers' presentation also available as a webinar,
I hope that shareholders who are unable to attend the presentation and AGM,
along with interested parties, will be able to listen to the Portfolio
Managers, and ask them any further questions.
The formal business of the AGM will commence immediately following the
presentation by the Portfolio Managers. For shareholders who are unable to
attend the AGM or those that are joining electronically, it is strongly
encouraged to submit their proxy votes in advance of the meeting, so they are
registered and recorded at the AGM.
AGM shareholder communication and engagement
The Board understands the significance of having regular access to information
for our shareholders. In addition to our Company web pages, we provide
shareholders with the opportunity to subscribe to Company email updates. These
emails feature updates about the Company, along with news, opinion pieces, and
market insights. Details on how to subscribe can be found on the inside front
cover of this report.
We are pleased to note the strong contributions of all investment trust
shareholders at recent votes, including those holding through retail
platforms, across the sector following extensive proactive shareholder
engagement. These investors have played a key role in the outcomes of these
votes, and we would encourage them to continue to make their voices heard in
all AGMs going forward. If any of the Company's shareholders are at all
unsure of how to vote their holding, they should contact their nominee for
immediate assistance as we, alongside many others, are keen to see that these
improved participation figures are sustained across all investment trusts,
including at this Company.
The Board encourages all shareholders to either attend the AGM or exercise
their voting rights by proxy. Proxy votes can be submitted electronically
through the registrar's portal, by post and also by email. Details are set out
in the Explanatory Notes to the Notice of AGM in this Annual Report. The Board
acknowledges that certain execution-only investment platforms are now enabling
shareholders to vote electronically. We encourage shareholders to utilise this
feature where it is available. The Board is committed to exercising the
highest standard of corporate governance and accordingly, regularly considers
the views of its shareholders, offering to meet with major shareholders
annually. We also seek to engage with all shareholders where possible and
should you wish to contact me, you can do so via the Company Secretary whose
details are set out on page 108.
Sarah MacAulay
Chair
18 March 2026
Portfolio Managers' Report
2025 Review
2025 was a strong year for most Asian stockmarkets, however it was also a
volatile year with a large dispersion of returns across both sectors and
countries. The Korean and Taiwanese stockmarkets, with their high weightings
in semiconductor and related stocks, performed best given many companies are
beneficiaries of booming artificial intelligence ("AI") related capital
expenditure. The region is also seeing improving corporate governance, with
the Korean market seeing a notable re-rating after the new Government
introduced a "Value-Up" programme to promote better protection of minority
investors and made changes to the tax system to encourage the payment of
dividends. In China we are also are starting to see better capital allocation
as companies in some sectors move away from perennial investments in new
capacity and instead start to pay more dividends or in the case of internet
companies aggressively buyback shares. Overall, whilst India and select ASEAN
markets lagged as economic momentum was more subdued, we see the combination
of positive cyclical factors around AI and better capital allocation as
supportive for the medium-term outlook for returns from the major stockmarkets
in Asia.
As we close out 2025, it is appropriate to take stock of our performance over
the calendar year and reflect candidly on the principal drivers of returns.
Whilst the Company generated strong absolute returns in 2025, your Portfolio
Managers were somewhat disappointed that the Company underperformed the
Reference Index. The principal headwinds to the Company's relative performance
came from three areas. Firstly, not participating or being too cautious on the
Korean "Value-Up" programme, secondly stock selection in Hong Kong and China
and finally some of the dramatic stocks moves around AI disruption and
perceived AI losers and winners, proved to be a drag on performance.
Within Asia, AI returns were highly concentrated in China, Korea, and Taiwan.
Of these, our zero weight in Alibaba (subsequently added a half index weight
position, narrowing the underweight) was a significant detractor, costing the
portfolio over 1% of relative performance. Alibaba's share price strength was
driven largely by renewed optimism surrounding its cloud business following
the "DeepSeek moment" in late January 2025, which catalysed a sharp shift in
investor sentiment toward China's AI capabilities. This re-rating occurred
despite ongoing deterioration in earnings, resulting in a pronounced
divergence between fundamentals and share price performance. While our
overweights in Tencent and NetEase in China, and our zero-weight positions in
JD.com and Xiaomi, contributed positively, they were insufficient to offset
the Alibaba drag, leaving the China AI complex as a net detractor to
performance.
In Korea, our AI experience was similarly unforgiving. Our decision to reduce
Samsung Electronics earlier in the year, driven by concerns over repeated
Nvidia certification delays, proved poorly timed. A sharp acceleration in
AI-driven memory demand in the latter part of the year led to severe supply
shortages and a powerful rally in both Samsung Electronics and SK Hynix. While
the Company was well positioned in the latter, our exposure was insufficient
to counterbalance the opportunity cost of not owning Samsung Electronics.
Compounding this, several AI-adjacent names where we have no exposure, such as
SK Square and HD Hyundai Electric, also rose sharply as enthusiasm and often
froth and hubris spread across the ecosystem. Although our Taiwan AI exposure,
particularly Chroma ATE, provided some offset, we estimated the AI thematic as
a whole detracted approximately 1.5% from performance relative to the
Company's reference index.
Our lack of exposure to Korean defence stocks also detracted, though with an
important nuance. We remain firm believers in a structural uplift in global
defence spending, but continue to view Korean defence equities as flawed
vehicles for expressing that view given persistent governance shortcomings.
The widely publicised controversy surrounding Hanwha Aerospace's large rights
offering earlier in the year, following significant cash outflows to a
non-urgent affiliate transaction, only reinforced this conviction. Instead, we
have chosen to express the defence thematic through India, particularly Bharat
Electronics, resulting in a roughly neutral contribution from defence at the
portfolio level.
The third source of underperformance stemmed from our stock selection in China
and Hong Kong. Continued weakness in Chinese consumption, lingering regulatory
overhangs in education and gaming, and being positioned on the wrong side of
2025's dominant market narratives (primarily AI capital expenditure) weighed
on our holdings in Techtronic Industries, Swire Pacific, Galaxy Entertainment,
and Trip.com even though all were up in absolute terms. In several cases,
share price performance diverged from fundamentals, with valuation de-rating
more than offsetting earnings growth during the year. We continue to hold
these positions given our analysts' conviction in their long-term
fundamentals, despite ongoing near-term headwinds. Based on current share
prices and our analysts' calculations, these holdings continue to offer
double-digit upside to their fair values.
Modest gains from stock selection in Taiwan were offset by Australian
healthcare holdings. Meanwhile our positive stock selection in India was
largely neutralised by positions in Vietnamese IT services provider FPT,
Indonesian Bank Mandiri, and Thai private healthcare giant Bangkok Dusit. The
Company's models used to determine whether to deploy hedging and gearing were
mostly neutral on Asian stockmarkets during the year so we deployed little
hedging and moderate gearing. Therefore, the impact from this area on
performance was negligible.
OUTLOOK FOR THE YEAR OF THE HORSE
After strong gains in 2025 we are relatively cautious on Asian stockmarkets.
Valuations are now high versus history and Asian earnings growth is
increasingly dependent on one sector - AI related capital expenditure.
Balancing this is for the major economies (China, India, Australia, Korea,
Taiwan, Singapore, Hong Kong) a good or at least stable economic backdrop, and
in most cases relatively low government debt, good fiscal positions and
current account surpluses. Our key concerns are instead around valuations and
the earnings outlook, particularly in those sectors exhibiting signs of AI
related froth. As we will discuss we have been gradually positioning the
Company more defensively and are now potentially looking to add some hedging
strategies if option pricing becomes more attractive. Overall, we expect 2026
will see more muted returns given the current level of valuations, which in
our opinion do not necessarily reflect potential underlying risks.
The two sections below firstly discuss our views on some of the key
stockmarkets in Asia and secondly our top-down hedging and gearing models. For
readers wanting a quick summary we would highlight the clusters below, which
give a good snapshot of how to think about Asian equities and how the Company
is positioned. Asian equities can be divided into four broad areas which are
relatively equally weighted in the Company's reference benchmark.
Cluster One: China/Hong Kong
First there is the Hong Kong/China cluster which is more idiosyncratic and
obviously comes with geopolitical risks. The trust remains underweight China
but our exposure has risen over the last 12 months as we found new stock
opportunities, and in some cases better capital return policies have improved
the investment case.
Cluster Two: Korea/Taiwan
The second cluster is Korea and Taiwan, this is effectively a
technology/semiconductor cluster. Historically the fund has been overweight
technology stocks. However, we have been trimming positions as AI related hype
has pushed valuations for many stocks above our long term fair values. The
trust is now slightly underweight here.
Cluster Three: Australia/Singapore
The third cluster is Australia and Singapore. After taking profits in
technology stocks, we increased exposure to more defensive names in Australia
and Singapore, within what we refer to as our "yield/income cluster". The
Company is now quite overweight these markets.
Cluster Four: India/ASEAN
The last cluster is India and ASEAN the supposed "growth" markets in Asia. In
ASEAN we have turned more cautious as politics and geopolitical trends are
increasingly unfavourable for the long-term earnings outlook. On India we
remain positive at a macro-economic level but stockmarket valuations are
expensive and earnings expectations unrealistic. We remain underweight India
but we would look to add were we to see a further correction in the
stockmarket.
SECTION 1 - DON'T BE A LEMMING: BACKING THE RIGHT HORSE - MARKET VIEWS
What began as an ad hoc exercise examining the consensus market views of
sell-side strategists 11 years ago has become a regular feature of our annual
Year-of-the-Chinese-Zodiac reports over the past four years. This year, we
once again continue our "don't be a lemming" study by starting with a
post-mortem of how sell-side consensus views at the beginning of the year have
fared in 2025. And, in a fashion that has become increasingly familiar,
consensus appears to have been mostly wrong yet again.
Looking back at the outcomes, the results were telling. With the exception of
Thailand, where the market most disliked by sell-side strategists also went on
to be the worst underperformer, most markets followed a fairly predictable
pattern. The more favoured a market was at the start of the year, the worse
it tended to perform, and vice versa. It is therefore unsurprising that India,
a market that seven out of nine strategists held an overweight position in,
ended up underperforming the region by around -20%, making it the
worst-performing major market in Asia. In contrast, Korea, the second-most
unloved market last year, delivered absolute returns of over 89%,
outperforming the region by a whopping +50%.
Against that backdrop, the natural question for 2026 is what are consensus
strategists recommending this time around, and what sits behind those calls.
We begin with the two markets that sell-side strategists favour most. And it
looks like, undeterred by their experience last year, India has once again
been identified as one of their preferred markets, with all but one advocating
an overweight stance. Much of this optimism appears to rest on expectations of
an earnings recovery following a period of moderation, supported by policy
easing, resilient domestic demand, and a long-term reform narrative.
Importantly, with global investor positioning still relatively light, some
strategists believe the market could become increasingly sensitive to
incremental inflows should earnings momentum return.
How much of this optimism is already reflected in current share prices,
however, remains a key question from your portfolio managers' perspective. On
almost all valuation measures, Indian equities are now trading at the upper
end of their historical range, suggesting that expectations for an improvement
in fundamentals are already demanding. Whether these expectations are
ultimately met will depend in part on how current geopolitical uncertainties
evolve. In mid-January, Indian exports to the US were briefly threatened with
a sharp escalation in import tariffs after President Trump backed a Senate
bill proposing duties of up to 500% on goods from countries purchasing Russian
oil. Had it been enacted, the bill would have materially raised the risk of a
near-freeze in trade between India and its largest export market, coming on
top of the already steep US duties imposed last year.
More recently, the two countries have struck an agreement to reduce tariffs on
made-in-India goods to 18%, from 50%, while India will reciprocally cut
tariffs on US imports to zero from an average rate of 17%. As with most things
Trump, however, the situation remains fluid. Against this backdrop, your
portfolio managers continue to view India as a stock-picker's market, where
genuinely interesting bottom-up opportunities still exist, but only at the
right valuations.
And while India remains a firm favourite, China has emerged as the most
favoured market overall this year. Around three-quarters of strategists now
hold a positive view, with virtually no outright detractors. This reflects a
growing conviction that China has now moved into a recovery story, offering a
more attractive balance of risk and reward. Low market valuations, ongoing
policy support, and improving earnings expectations underpin this consensus
view, with targeted stimulus, margin-restoration initiatives such as
anti involution policies, and selective upgrades across technology and
manufacturing seen as key contributors.
Your portfolio managers, however, continue to view China equities with
cautious selectivity. While valuations for some stocks, particularly in
consumer-related sectors, have come down and earnings expectations appear more
realistic, the broader economy remains weighed down by structural headwinds,
including a prolonged property downturn, deflationary pressures, and weak
consumer confidence. In our view, the opportunity set here remains largely
stock-specific, with a preference for selected internet platforms and
companies with strong intellectual property and capital return discipline,
while avoiding sectors plagued by overcapacity, opaque balance sheets, or
policy-driven excesses.
Moving from the most favoured to the least favoured markets, Thailand sits at
the other end of the spectrum. Here, a weak domestic demand outlook continues
to be compounded by policy and political uncertainty. Concerns centre on the
country's high household leverage, subdued consumption, and limited private
investment, all of which are expected to keep earnings under pressure. At the
same time, unclear policy direction keeps risk premiums elevated despite low
valuations. Unlike other markets showing early signs of recovery, most
strategists see little evidence of a clear earnings inflection in Thailand,
reinforcing the view that cheapness alone is insufficient to drive performance
in the face of structural and governance constraints.
On this occasion, there is little for your portfolio managers to significantly
disagree with. In our view, Thailand remains one of the less compelling
markets in the region, reflecting an economy that continues to lack a clear
catalyst for recovery. For one, tourism has yet to return to pre-Covid levels
and has softened again recently, weighing on the broader services economy. And
while the current account surplus continues to support the baht, this largely
reflects weak domestic demand and subdued imports rather than underlying
strength. Any meaningful rebound in activity would therefore risk eroding this
support rather than reinforcing it. More importantly, domestic conditions
remain soft, with credit growth effectively stalled, wage growth flat, and key
indicators such as autos, construction, and durables demand still under
pressure. Corporate earnings also remain near long-term lows. While policy has
eased, rates are already depressed, limiting the effectiveness of further
cuts. In the absence of credible signs of a rebound in credit and household
demand, the consensus underweight view on Thailand appears well grounded. That
said, after years of lacklustre returns, Thailand now stands out as one of the
higher dividend-yielding markets in the region. For investors with a focus on
income rather than growth, this may at least offer selective opportunities,
even if the broader investment case remains challenging.
By contrast, Taiwan is disliked by analysts for very different reasons as it
is not struggling with weak fundamentals so much as the weight of investor
enthusiasm. Sell-side strategists increasingly view Taiwan as the most crowded
way to express the global AI theme, which has made them more cautious despite
still-strong fundamentals. While earnings visibility remains solid, many
believe that a significant portion of the upside from AI-related investment is
already priced in. The market's heavy concentration in a small number of large
stocks also means that sentiment can shift quickly if expectations change. As
a result, strategists have shifted their focus away from the strength of the
growth story and towards concerns around valuation and positioning, leaving
Taiwan caught between still-solid fundamentals and more limited upside.
On this, your portfolio managers are more circumspect. There is little doubt
that the AI investment theme across Asia is beginning to show familiar signs
of froth, with share prices of AI supply-chain winners having run hard and
investors increasingly questioning whether today's "extravagant" AI spending
will ultimately translate into sustainable profits. At the same time, the
broader AI investment cycle remains very much intact. Just last month, TSMC
reported record profits driven by AI demand and guided to another step-up in
capital spending in 2026, indicating that customers are still committing real
capital rather than simply talking up the narrative. Beyond semiconductors,
Asia's data centre buildout is also accelerating rapidly. As a result, while
valuations and positioning do appear stretched, there is a real risk that the
theme runs longer than sceptics expect. Moving underweight Taiwan at this
stage may be premature.
As an aside, it appears that dividend-paying markets are also out of favour
with sell-side strategists this year, probably reflecting a broader view that
income alone is not a sufficient catalyst for 2026. As shown in the figure
below, the relationship is effectively inverted. Lower-yield markets such as
India and China attract the highest levels of conviction, while
higher-yielding markets such as Australia, Thailand, and Taiwan fail to garner
a single overweight recommendation despite offering dividend yields in the 3%
to 4% range. This suggests strategists are prioritising earnings recovery and
growth narratives over income. Indonesia stands out as a partial exception,
combining a relatively high yield with a stronger overweight bias, although
this elevated yield partly reflects the sharp sell-off in the market after
MSCI, correctly in your portfolio managers' view, raised concerns around its
investability and transparency and flagged a potential downgrade to
frontier-market status.
That sell-side strategists are biased against dividend-yielding markets is
understandable after a year like 2025, when price gains accounted for the bulk
of total returns and dividends played a relatively minor role. Over the longer
term, however, the evidence points in a different direction. Over the past
four decades, dividends have contributed close to two-thirds of Asia's total
equity returns. We believe maintaining a disciplined focus on income and
reinvestment, rather than chasing short-term capital appreciation alone,
remains one of the more reliable ways to compound returns in the region.
SECTION 2 - VALUATIONS, GEARING AND HEDGING: TIME TO REIN IN RISKS?
Long-time holders will know that hedging has long been an integral part of the
Company's process. However rather than use these derivatives to express
short-term market calls or to "trade" macro views, our hedging is a
risk-management tool, designed to manage country and market-level risks
flagged by our quantitative models, and to give our stock selection the best
possible chance of translating into overall portfolio performance. In the case
of the Company we also use a subset of these models to help determine whether
to deploy gearing.
So what are our models telling us today?
On valuations, we continue to assess the region using both top-down and
bottom-up lenses, and at the moment the two are telling slightly different
stories. From a top-down perspective, the picture is becoming more
challenging. Since the end of the third quarter last year, our proprietary
composite valuation indicator has been hovering uncomfortably close to its
sell threshold, defined as one standard deviation above long-term norms.
Historically, periods when valuations have reached these levels have rarely
been kind to equity markets. On average, the region has gone on to decline by
more than 25% over the subsequent 12 to 18 months, with positive returns
recorded in only two of the past thirty-five such episodes.
That said, the bottom-up picture is more balanced. Our bottom-up valuation
indicator, which measures the proportion of stocks under our coverage trading
below our analysts' fair values, currently sits at 57.7%, squarely in neutral
territory. In other words, while parts of the market look stretched, there
remains a reasonable mix of attractively valued and fully valued opportunities
across the region. Taken together, these signals point to a more cautious
backdrop overall, with at least one important valuation measure warning that
downside risks to Asian equity returns have risen over the medium term. With
this in mind we have reduced gearing substantially, and will continue to
monitor our model readings and adjust positions accordingly.
When we look at our strategic country models for individual Asian markets,
which are also largely valuation-driven, they broadly echo the same message as
our bottom-up valuation indicator. Most major Asian markets remain in neutral
territory, where risks and opportunities appear broadly balanced.
Interestingly, for some of the smaller ASEAN markets such as Thailand and the
Philippines, our models have turned more constructive, largely reflecting how
cheap valuations have become. The clear outlier is India, where valuations
remain elevated and our strategic model is now signalling a higher risk of
downside over the next couple of years.
Turning to the shorter-term picture, our tactical hedging model has been less
decisive. Over the past couple of months, it has oscillated between hold and
sell signals, briefly dipping into sell territory several times before moving
back to a more neutral stance. Much of this reflects the same top-down
valuation pressures discussed earlier. Other inputs into the model, such as
economic momentum, financial system risk, and the commodity complex, remain
relatively supportive and have helped offset the valuation signal.
Putting all of this together, and with put options on the Indian market still
attractively priced, we continue to hedge part of our exposure to Indian
equities using put options on the NIFTY index. This approach allows us to
retain our underlying stock positions while managing the elevated valuation
risk highlighted by our models. After accounting for this hedge, the Company's
net equity exposure currently stands at around 95%, and as mentioned earlier
use of gearing is now minimal.
Overall, our models very much tie in with our bottom-up analysis and findings.
Valuations in Asia are elevated, and risks of a market correction are rising.
We are not outright bearish, but we are positioning the Company more
cautiously as we enter the year of the horse and expect returns in 2026 to be
moderate, particularly after the strong market performance in 2025.
Robin Parbrook and Lee King Fuei
Portfolio Managers
Schroder Investment Management Limited
18 March 2026
For illustrative purposes only and does not constitute to any recommendation
to buy or sell the above-mentioned security/sector/country.
Please note that the value of investments and the income from them can go down
as well as up and investors may not get back the amounts originally invested.
Risk Report
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.
Risk Mitigation and management Change
Macro factors, including the geopolitical/economic environment and climate INCREASED
change
Increased geopolitical risks across the world, including heightened trade Geopolitical risks are an input into the investment process and are monitored The risk has increased owing to new conflict in the Middle East adding to
tensions, territorial disputes and ongoing regional conflicts, as well as at each Board meeting where there is also an opportunity to discuss key market existing risks posed by other geopolitical tensions and conflicts and by
climate change, may impact the volatility of global markets and economic risk factors with the Portfolio Managers. Further information on geopolitical volatile US trade policy.
activity. risk is included in the Outlook section of the Chair's Statement.
The Board visited Hong Kong and Mainland China during the year and met with
investee companies and analysts to understand better the challenges and
opportunities in the region.
The Manager's investment process includes an assessment of climate related
risks in the evaluation of investee companies.
Investment objective and promotion NO CHANGE
The Company's investment objective may become out of line with the The appropriateness of the Company's investment mandate and the long-term
requirements of investors and lead to the Company becoming unattractive to investment strategy is regularly reviewed by the Board and the success of the
investors, decreasing demand for its shares and a widening discount of the Company in meeting its stated objectives is monitored. The Board holds a
share price to the underlying NAV per share. strategy meeting each year to consider the investment objective and policy and
the Company's longer term investment strategy.
The Company is not promoted in a way which generates investor demand.
The share price relative to the NAV per share is kept under review as a key
performance indicator and is considered against the Company's peers on a
regular basis. The use of the share buyback authority is also reviewed
regularly. The Investment Manager and corporate broker monitor market feedback
and the Board consider this at each quarterly Board meeting.
Proactive engagement with shareholders takes place via the AGM, feedback from
shareholder presentations, and a formal programme of individual meetings are
offered to major shareholders on an annual basis. All investors are offered
the opportunity to meet the Chair, SID, or other Board members, without using
the Manager or Company Secretary as a conduit, by writing to the Company's
registered office. The Board also corresponds with shareholders by letter and
email.
The Manager provides a dedicated, experienced investment trust sales,
marketing and PR team. The marketing programme continued to provide
promotional opportunities for the Company throughout the year and included
advertising, video and podcast content, sponsored research provided by Kepler,
and 'roadshow' events, visiting investors across the UK. The performance of
the Manager is evaluated, at least annually by the Management Engagement
Committee.
Financial NO CHANGE
The Company is exposed to a range of financial risks including market, The financial risks associated with the economic environment that might impact
currency, liquidity, interest rate, credit and fair values of financial the Company are mitigated, to some extent, by the Investment Manager. Note 22
assets and financial liabilities. to the financial statements provides further details of the steps taken to
mitigate those risks associated with the portfolio.
Investment strategy and performance NO CHANGE
Poor stock selection or investing outside of the investment restrictions and The Investment Manager is experienced and has a long track record in
guidelines set by the Board could result in poor performance. successfully investing in Asian equity holdings.
The Board oversees the implementation of the investment strategy, compliance
with investment restrictions and guidelines and keeps investment performance
under close review. One, or more, of the Portfolio Managers attend all Board
meetings and review the portfolio with the Board using performance data and
KPIs.
A detailed formal appraisal of the performance of the Manager and Investment
Manager is carried out annually by the Management Engagement Committee.
Gearing/liquidity NO CHANGE
The Company adopts an inappropriate gearing or derivative strategy. The Board sets gearing limits of 30% of NAV and the Investment Manager reports
to the Board on gearing levels and derivative activity at every Board meeting.
The Company's investments are insufficiently liquid resulting in breach of
loan covenants in the event of a severe fall in valuations. Liquidity stress testing is carried out on a regular basis.
ESG considerations NO CHANGE
Failure by the Company to disclose in an appropriate manner how the investment The consideration of material climate change risks, ESG factors and the
process integrates consideration of ESG factors could lead to the Company's Sustainability Disclosure Requirements is integrated into the investment
shares being less attractive to investors as well as potential valuation process and reported at Board meetings.
issues in the underlying investee companies.
The Investment Manager considers and evaluates the approach investee companies
take to recognise and mitigate material climate change risks and also
considers the portfolio's investee companies carbon footprint versus the
Reference Index.
The Manager has implemented a comprehensive ESG policy outlined in detail on
pages 33 and 34.
Key person NO CHANGE
The retirement or departure of one or more of the Investment Manager's key The Portfolio Managers have a contractual notice period and the Investment
investment professionals could impact the Company's performance. Manager has a compensation and incentive scheme to recruit and retain key
staff including the Portfolio Managers. A succession planning programme has
also been developed which seeks to ease the impact that the loss of a key
investment professional may have on the Company's performance. The Investment
Manager would notify any change in its key professionals to the Board at the
earliest possible opportunity and the Board would be made aware of all efforts
made to fill a vacancy.
The Portfolio Managers are supported by a wider team of experienced portfolio
managers and research analysts, mitigating the impact of the loss of any key
professionals by the Investment Manager on the Company's performance.
Compliance with regulations NO CHANGE
Failure to comply with relevant laws and regulations could result in fines, The Board and Manager monitor changes in government policy and legislation
loss of reputation and potentially loss of investment trust status. which may have an impact on the Company, and the Audit and Risk Committee
monitors compliance with regulations by reviewing internal control reports
from the Manager.
From time to time the Board employs external advisers to advise on specific
matters.
Oversight of service providers and control environment NO CHANGE
The Company has no employees and has delegated certain functions to a number The Board receives reports from the Manager on its internal controls and risk
of service providers. Failure of controls, including as a result of fraud, and management throughout the year, including those relating to cybersecurity, and
poor performance of any service provider, could lead to disruption, receives assurances from all its other significant service providers on at
reputational damage or loss. least an annual basis.
The Management Engagement Committee reviews the performance of key service
providers at least annually. The Manager also closely monitors the control
environments and quality of services provided by third parties, including
those of the depositary, through service level agreements and regular
meetings.
Directors usually attend an internal controls briefing session, hosted by the
Manager in respect of the internal controls of the Company's key service
providers including the Company's depositary and custodian, the Company's
registrar, Equiniti, and Schroders Group Internal Audit team. Although the
briefing session for 2025 was deferred due to the transition to J.P. Morgan,
updates were provided in quarterly meetings and an extended briefing session
is scheduled to take place in April 2026.
Experienced service providers are appointed by the Company subject to due
diligence processes and clearly documented contractual arrangements which
include agreed service level specifications and notice periods for
terminations.
In respect of the transition of depositary, custodian and fund administration
services from HSBC to J.P. Morgan, a detailed transition plan was put in
place, closely monitored by the Manager via a Risks, Assumptions, Issues and
Dependencies (RAID) log. The Board received quarterly progress updates on the
transition, with the Audit and Risk Committee Chair acting as the primary
point of contact between update cycles. As part of the year end audit process,
Ernst & Young have reviewed the migration of data from HSBC to J.P. Morgan
and tested that financial records were appropriately transferred.
Further details of the internal controls which are in place are set out in the
Audit and Risk Committee's Report on pages 60 to 62.
Information technology resilience and security NO CHANGE
Cyber risk such as fraud, sabotage or crime perpetrated against the Company or Cybersecurity is closely monitored by the Audit and Risk Committee as part of
any of its third party service providers could result in data theft, service the review of the internal controls of its service providers.
disruption and reputational damage.
The Manager's IT security team present to the Directors on cybersecurity
controls as part of the annual internal controls briefing session hosted by
Schroders.
Emerging risk
AI
The development of AI presents both potential risks and opportunities to
businesses in almost every sector. The extent of the risk presented by AI is
hard to assess at this point but the Board considers that it is an emerging
risk and together with the Manager and Investment Manager will monitor
developments in this area.
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. The internal
control environment of the Manager, Investment Manager, the depositary,
custodian, administrator and the registrar are tested annually by independent
external auditors. The full reports are provided to the Audit and Risk
Committee alongside abridged summaries.
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. 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 March 2026.
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 receives updates from the Manager, Investment Manager,
Company Secretary and other service providers on emerging risks that could
affect the Company. The Board was mindful during the year of the global
environment including territorial disputes, regional conflicts, trade tensions
and sanctions, all of which may disrupt global markets and economic stability.
Regarding the Trump administration in the US, the Board remains mindful of
uncertainty surrounding potential changes to financial and public policy,
particularly concerns related to the implementation of the tariff regime.
However, these were not considered to be factors which explicitly impacted the
Company's performance. These risks are seen as exacerbating existing risks and
have been incorporated in the macro factors, including the
geopolitical/economic environment and climate change risk section in the table
below.
The Board considered in detail whether there were any material emerging risks
and has continued to include the development of AI as an emerging risk in the
table below.
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 22 to the financial statements on pages 91 to 95.
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 show the risks as increased, decreased
or unchanged.
Statement of Directors' Responsibilities
in respect of the Annual Report and Financial Statements
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 have been
followed, subject to any material departures disclosed and explained in 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.
The Directors 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 web pages
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 54 and
55, 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, comprising FRS 102 "The Financial Reporting Standard
applicable in the UK and Republic of Ireland" and applicable law), give a true
and fair view of the assets, liabilities, financial position and net return
of the Company;
· the Annual Report and Financial Statements 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 Financial Statements, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
On behalf of the Board
Sarah MacAulay
Chair
18 March 2026
Income Statement
for the year ended 31 December 2025
2025 2024
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through profit or loss 2 - 55,629 55,629 - 53,179 53,179
Net gains on derivative contracts - 2,024 2,024 - 1,338 1,338
Net foreign currency gains/(losses) - 1,763 1,763 - (596) (596)
Income from investments 3 11,803 - 11,803 12,281 128 12,409
Other interest receivable and similar income 3 103 - 103 106 - 106
Gross return 11,906 59,416 71,322 12,387 54,049 66,436
Management fee 4 (781) (2,343) (3,124) (794) (2,382) (3,176)
Performance fee 4 - - - - (2,767) (2,767)
Administrative expenses 5 (725) - (725) (1,025) - (1,025)
Net return before finance costs and taxation 10,400 57,073 67,473 10,568 48,900 59,468
Finance costs 6 (397) (1,190) (1,587) (494) (1,482) (1,976)
Net return before taxation 10,003 55,883 65,886 10,074 47,418 57,492
Taxation 7 (825) (930) (1,755) (910) (961) (1,871)
Net return after taxation 9,178 54,953 64,131 9,164 46,457 55,621
Return per share (pence) 8 9.81 58.76 68.57 9.61 48.71 58.32
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 AIC. The Company has no
other items of other comprehensive income, and therefore the net return/(loss)
after taxation is also the total comprehensive income/(loss) for the 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 81 to 96 form an integral part of these financial
statements.
Statement of Changes in Equity
for the year ended 31 December 2025
Called-up Capital Share
share Share redemption purchase Capital Revenue
capital premium reserve reserves reserves reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2023 5,456 114,656 11,646 29,182 262,783 24,761 448,484
Repurchase of the Company's own shares into treasury - - - - (16,993) - (16,993)
Net return after taxation - - - - 46,457 9,164 55,621
Dividend paid in the year 9 - - - - - (11,036) (11,036)
At 31 December 2024 5,456 114,656 11,646 29,182 292,247 22,889 476,076
Net return after taxation - - - - 54,953 9,178 64,131
Dividend paid in the year 9 - - - - - (10,755) (10,755)
At 31 December 2025 5,456 114,656 11,646 29,182 347,200 21,312 529,452
The notes on pages 81 to 96 form an integral part of these financial
statements.
Statement of Financial Position
at 31 December 2025
2025 2024
Note £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 10 530,041 506,932
Current assets
Debtors 11 335 303
Cash and cash equivalents 11 2,361 1,743
Derivative financial instruments held at fair value through profit or loss 11 490 993
3,186 3,039
Current liabilities
Creditors: amounts falling due within one year 12 (1,831) (32,344)
(1,831) (32,344)
Net current liabilities 1,355 (29,305)
Total assets less current liabilities 531,396 477,627
Non current liabilities
Deferred taxation 13 (1,944) (1,551)
Net assets 529,452 476,076
Capital and reserves
Called-up share capital 14 5,456 5,456
Share premium 15 114,656 114,656
Capital redemption reserve 15 11,646 11,646
Special reserve 15 29,182 29,182
Capital reserve 15 347,200 292,247
Revenue reserve 15 21,312 22,889
Total equity shareholders' funds 529,452 476,076
Net asset value per share (pence) 16 566.11 509.04
These financial statements were approved and authorised for issue by the Board
of Directors on 18 March 2026 and signed on its behalf by:
Sarah MacAulay
Chair
The notes on pages 81 to 96 form an integral part of these financial
statements.
Registered in England and Wales as a public company limited by shares.
Company registration number: 02153093.
Cash Flow Statement
for the year ended 31 December 2025
2025 2024
Note £'000 £'000
Net cash inflow from operating activities 17 4,041 7,409
Investing activities
Purchases of investments (171,808) (106,492)
Sales of investments 204,328 137,445
Net cash flows on derivative instruments 2,043 1,520
Net cash inflow from investing activities 34,563 32,473
Net cash inflow before financing 38,604 39,882
Financing activities
Dividends paid (10,755) (11,036)
Interest paid (1,604) (2,090)
Bank loans repayment (20,440) (15,484)
Repurchase of the Company's own shares into treasury (259) (16,736)
Net cash outflow from financing activities (33,058) (45,346)
Net cash inflow/(outflow) in the year 5,546 (5,464)
Cash and cash equivalents at the beginning of the year (3,031) 2,527
Change in cash and cash equivalents 5,546 (5,464)
Exchange movements (154) (94)
Cash and cash equivalents at the end of the year 2,361 (3,031)
Represented by:
Cash at bank and derivative clearing houses 2,361 1,743
Overdraft at bank and derivative clearing houses - (4,774)
Cash and cash equivalents at the end of the year 2,361 (3,031)
Dividends received during the year amounted to £11,276,000 (2024:
£12,488,000), deposit interest and other income receipts amounted to
£104,000 (2024: £108,000). These amounts are shown within net cash inflow
from operating activities.
The notes on pages 81 to 96 form an integral part of these financial
statements.
Notes to the Accounts
1. Accounting Policies
(a) Basis of accounting
Schroder Asian Total Return Investment Company 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 financial statements 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 financial statements have been prepared on a going concern basis under the
historical cost convention, as modified by the revaluation of investments and
derivative financial instruments held at fair value through profit or loss.
The Directors believe that the Company has adequate resources to continue
operating for the period to 31 March 2027, which is at least 12 months from
the date of approval of these financial statements. 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 any potential impact of climate
change are given in the Chair's Statement, Investment Managers' Review, Going
Concern Statement, Viability Statement and under the Risk Report heading on
page 46.
In preparing these financial statements the Directors have also considered the
impact of climate change on the value of the listed investments that the
Company holds. As the portfolio mainly consists of listed equities, which are
valued using quoted bid prices for investments in an active market, then fair
value reflects market participants view of climate change risk.
The financial statements are presented in sterling and amounts have been
rounded to the nearest thousand.
The accounting policies applied to these financial statements are consistent
with those applied in the financial statements for the year ended 31 December
2024.
No significant judgements, estimates or assumptions have been required in the
preparation of the financial statements for the current or prior 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 and derivative financial instruments is
managed, and its performance evaluated, on a fair value basis, in accordance
with a documented investment strategy and information is provided internally
on that basis to the Company's Board of Directors. Accordingly, upon initial
recognition the investments are classified by the Company 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, investments
are valued at fair value, which are quoted bid prices at the close of each
market on the accounting date, for investments traded in active markets.
The contracts for difference ("CFD") held in the portfolio are valued based on
the price of the underlying security or index which they are purchased to
reflect. The fair value of the CFDs is the difference between the strike price
and the underlying shares in the contract.
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 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 change in unrealised gains
on investment at fair value through profit or loss.
Gains and losses on sales of CFDs and increases and decreases in the valuation
of CFDs are included in the Income Statement and in capital reserves within
"gains on derivatives".
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 the Company's own shares for cancellation or to hold
in treasury, including the related stamp duty and transactions costs is
charged to a distributable capital reserve.
(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.
Dividends from overseas companies are included gross of any withholding tax.
Where the Company has elected to receive 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. The board reviews this
allocation on an annual basis.
· Any performance fee is allocated 100% to capital.
· 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 86.
(f) Finance costs
Finance costs, including collateral and finance costs paid on CFDs, any
premiums payable on settlement or redemption and direct issue costs, are
accounted for on an accruals basis using the effective interest method in
accordance with 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. The board reviews this allocation on an annual
basis.
(g) Other financial instruments
Cash and cash equivalents may comprise cash, overdrafts, amounts held at
derivative clearing houses 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 are classified as financial liabilities at amortised cost. They are
initially measured at the proceeds received, net of direct issue costs, and
subsequently measured at amortised cost using the effective interest method
Forward foreign currency contracts are held at fair value through profit or
loss based on the gain or loss if the contracts had been closed out at the
accounting date, at prevailing market rates.
(h) Taxation
The tax charge for the year includes a provision for all amounts expected to
be received or paid.
Deferred tax is provided on all timing differences that have originated but
not reversed by the balance sheet 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, denominated in foreign currencies at the year end, are
translated at the rates of exchange prevailing at the year end.
(k) Dividends payable
In accordance with FRS 102, the final dividend is included in the financial
statements in the year in which it is approved by shareholders.
(l) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing the Company's shares into treasury, including the
related stamp duty and transaction costs is dealt with in the Statement of
Changes in Equity and is charged to capital reserves. Share repurchase
transactions are accounted for on a trade date basis.
The sales proceeds of treasury shares reissued are treated as a realised
profit up to the amount of the purchase price of those shares and is
transferred to capital reserves. The excess of the sales proceeds over the
purchase price is transferred to "share premium".
2. Gains on investments held at fair value through profit or loss
2025 2024
£'000 £'000
Realised gains on sales of investments 11,327 19,679
Change in unrealised gains on Investments at fair value through profit or loss 44,302 33,500
Gains on investments held at fair value through profit or loss 55,629 53,179
3. Income
2025 2024
£'000 £'000
Income from investments
Overseas dividends 10,761 11,922
Overseas special dividends 546 359
Stock dividend 39 -
CFD dividend income 457 -
11,803 12,281
Other interest receivable and similar income
Deposit interest 94 27
Other income 9 79
103 106
11,906 12,387
Capital
Overseas special dividend allocated to capital - 128
4. Management and performance fees
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Management fee 781 2,343 3,124 794 2,382 3,176
Performance fee - - - - 2,767 2,767
781 2,343 3,124 794 5,149 5,943
Under the terms of the AIFM agreement, the Manager is entitled to a fee at a
rate of 0.65% of gross assets less cash and cash equivalents, which is
calculated and payable quarterly.
A performance fee is payable amounting to 10% of any outperformance of the NAV
over an annual hurdle of 7%, provided that the closing NAV per share exceeds
the "high water mark" NAV at the date the last performance fee was paid. The
sum of the base fee and any performance fee payable is capped at 1.25% of the
closing net assets. In addition, the Manager may only be paid a performance
fee when the Company's NAV total return is equal or greater to the total
return of the Reference Index. If the Company invests in funds managed or
advised by the Manager, any fees earned by the Manager from those investments
are rebated to the Company. The management fee chargeable in respect of the
year ended 31 December 2025 amounted to £3,124,000 (2024: £3,176,000). No
performance fee is payable for the year (2024: £2,767,000).
The Manager is also entitled to a fee for providing administrative, accounting
and company secretarial services to the Company. For these services in the
year ended 31 December 2025, the Manager received a fee of £75,000 (2024:
£75,000). Details of all amounts payable to the Manager are given in note 19
on page 90.
5. Administrative expenses
2025 2024
£'000 £'000
Custody fees 156 243
Administration expenses 265 491
Directors' fees(1) 171 165
Secretarial fee 75 75
Auditor's remuneration(2) 56 51
725 1,025
(1) Details of all amounts payable to Directors are given in the
Directors' Remuneration Report on page 67.
(2) No amounts are payable to the auditor for non-audit services.
6. Finance costs
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest on bank loans and overdrafts 238 713 951 494 1,482 1,976
CFD interest expenses 159 477 636 - - -
397 1,190 1,587 494 1,482 1,976
7. Taxation
(a) Analysis of tax charge for the year
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Irrecoverable overseas tax 825 - 825 910 - 910
Overseas capital gains tax - 930 930 - 961 961
Taxation for the year 825 930 1,755 910 961 1,871
The Company has no corporation tax liability for the year (2024: nil).
The overseas capital gains tax relates to the deferred tax liability on
unrealised gains on Indian investments held at the year end. Further details
can be found in note 13.
(b) Factors affecting tax charge for the year
The standard rate of corporation tax in the UK is 25%, effective from 1 April
2023. Accordingly, the Company's profits for this accounting year would be
taxed at a rate of 25% (2024: 25%). However the corporation tax charge for the
year is nil (2024: nil), as dividends and capital gains are not subject to
corporation tax. The tax charge comprises irrecoverable withholding tax
deducted at source from dividends receivable and overseas capital gains tax.
The table below shows how taxable income is reduced to zero by reconciling the
expected corporation tax due on the net return before tax based on current tax
rates, to the actual tax charge for the year.
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return on ordinary activities before taxation 10,003 55,883 65,886 10,074 47,418 57,492
Net return on ordinary activities before taxation multiplied by the
Company's applicable rate of corporation tax for the year of 25%
(2024: 25%) 2,501 13,971 16,472 2,519 11,855 14,374
Effects of:
Capital gains on investments not subject to taxation - (14,854) (14,854) - (13,480) (13,480)
Income not subject to taxation (2,827) - (2,827) (3,049) (32) (3,081)
Overseas capital gains tax - 930 930 - 961 961
Irrecoverable overseas tax 825 - 825 910 - 910
Unrelieved expenses 326 883 1,209 530 1,657 2,187
Tax on ordinary activities 825 930 1,755 910 961 1,871
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £21,134,000 (2024:
£19,925,000) based on a prospective corporation tax rate of 25% (2024: 25%).
This 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 financial
statements.
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 UK
capital gains tax on any capital gains or losses arising on the revaluation or
disposal of investments. Please refer to note 13 for details of the deferred
taxation in relation to overseas capital gains tax.
8. Return per share
2025 2024
£'000 £'000
Revenue return 9,178 9,164
Capital return 54,953 46,457
Total return 64,131 55,621
Weighted average number of shares in issue during the year 93,524,454 95,376,796
Revenue return per share (pence) 9.81 9.61
Capital return per share (pence) 58.76 48.71
Total return per share (pence) 68.57 58.32
9. Dividends
(a) Dividends paid and declared
2024 2023
£'000 £'000
2024 final dividend of 11.5p (2023: 11.5p), paid out of revenue profits 10,755 11,036
2025 2024
£'000 £'000
2025 final dividend proposed of 11.5p (2024: 11.5p), to be paid out of revenue 10,755 10,755
profits
(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010
("Section 1158")
The requirements of Section 1158 are considered on the basis of dividends
declared in respect of the financial year as shown below. The revenue
available for distribution by way of dividend for the year is £9,178,000
(2024: £9,164,000).
2025 2024
£'000 £'000
Final dividend of 11.5p (2024: 11.5p) 10,755 10,755
10. Investments held at fair value through profit or loss
(a) Movement in investments
2025 2024
£'000 £'000
Opening book cost 359,679 370,259
Opening investment holding gains 147,253 113,753
Opening fair value 506,932 484,012
Analysis of transactions made during the year
Purchases at cost 171,808 106,370
Sales proceeds (204,328) (136,629)
Gains on investments held at fair value 55,629 53,179
Closing fair value 530,041 506,932
Closing book cost 338,486 359,679
Closing investment holding gains 191,555 147,253
Closing fair value 530,041 506,932
Sales proceeds amounting to £204,328,000 (2024: £136,629,000) were
receivable from disposals of investments in the year. The book cost of these
investments when they were purchased was £193,001,000 (2024: £116,950,000).
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.
(b) Transaction costs
The following transaction costs, mainly comprising brokerage commissions, were
incurred during the year:
2025 2024
£'000 £'000
On acquisitions 198 123
On disposals 433 248
631 371
(c) Contracts for Difference
2025 2025 2024 2024
Fair Asset Fair Asset
value exposure value exposure
CFDs held at 31 December: £'000 £'000 £'000 £'000
CFD assets 353 15,123 30 4,013
CFD liabilities (513) 16,590 (254) 11,294
(160) 31,713 (224) 15,307
The CFDs are held as a cost effective and flexible form of borrowing. The
total market exposure on the CFDs held at the year end is £31,713,000 (2024:
£15,307,000) and the notional value attached to these CFDs is £31,873,000
(2024: £15,531,000). This resulted in an unrealised loss of £160,000 (2024:
£224,000).
11. Current assets
Debtors
2025 2024
£'000 £'000
Dividends and interest receivable 327 275
Taxation recoverable 8 2
Other debtors - 26
335 303
The Directors consider that the carrying amount of debtors approximates to
their fair value.
Cash and cash equivalents
2025 2024
£'000 £'000
Cash at bank 2,361 627
Amounts held at derivative clearing houses and brokers - 1,116
2,361 1,743
The carrying amount of cash represents its fair value. No cash equivalents
were held at the year end (2024: none).
Derivative financial instruments held at fair value through profit or loss
2025 2024
£'000 £'000
CFD assets 353 30
Forward currency contracts - 458
Index put options 137 505
490 993
Details of the CFDs and index put options held at the year end are given on
pages 28 to 30
12. Current liabilities
2025 2024
Creditors: amounts falling due within one year £'000 £'000
Bank loan - 22,357
Bank overdraft - 4,534
Amounts held at derivative clearing houses and brokers - 240
Derivative financial instruments held at fair value through profit or loss - 513 254
CFD liabilities
Amounts payable on settlement of derivatives - 743
Repurchase of ordinary shares into treasury awaiting settlement - 255
Other creditors and accruals 1,318 3,961
1,831 32,344
The Directors consider that the carrying amount of creditors falling due
within one year approximates to their fair value.
During the year the Company held a 364 day multicurrency credit facility with
The Bank of Nova Scotia, London Branch, expiring in July 2026. On 20 October
2025 the loan was repaid in full to The Bank of Nova Scotia. The bank
overdraft at 31 December 2025 was repaid during the year. There is no longer
an overdraft facility in place.
13. Deferred taxation
Deferred taxation comprises the deferred tax liability on the unrealised gains
on Indian investments. Indian capital gains tax crystallises on disposal of
the underlying asset and is charged based on a 12 month holding period of the
asset. The current rate of tax is 12.5% (plus applicable surcharge and cess)
for holdings over 12 months and 20% (plus applicable surcharge and cess) for
holdings under 12 months.
The provision for deferred taxation at the year end was £1,944,000 (2024:
£1,551,000).
14. Called-up share capital
2025 2024
£'000 £'000
Ordinary shares allotted, called up and fully paid:
Opening balance of 93,524,454 (2024: 97,234,120) shares 4,676 4,862
Repurchase of nil (2024: 3,709,666) shares into treasury - (186)
Subtotal of 93,524,454 (2024: 93,524,454) shares 4,676 4,676
15,590,197 (2024: 15,590,197) shares held in treasury 780 780
Closing balance(1) 5,456 5,456
(1) Represents 109,114,651 (2024: 109,114,651) shares of 5p each,
including 15,590,197 (2024: 15,590,197) held in treasury.
15. Reserves
Capital reserves
Capital
Share redemption Special Capital Revenue
premium(1) reserve(2) reserve(3) reserve(4) reserve(5)
Year ended 31 December 2025 £'000 £'000 £'000 £'000 £'000
At 31 December 2024 114,656 11,646 29,182 292,247 22,889
Gains on sales of investments - - - 11,327 -
Change in unrealised gains on Investments at fair value
through profit or loss - - - 44,302 -
Gains on derivatives - - - 2,024 -
Exchange losses on cash and short-term deposits - - - (154) -
Exchange gains on foreign currency loans - - - 1,917 -
Management fee and finance costs allocated to capital - - - (3,533) -
Overseas capital gains tax - - - (930) -
Dividend paid - - - - (10,755)
Retained revenue for the year - - - - 9,178
At 31 December 2025 114,656 11,646 29,182 347,200 21,312
Capital reserves
Capital
Share redemption Special Capital Revenue
premium(1) reserve(2) reserve(3) reserve(4) reserve(5)
Year ended 31 December 2024 £'000 £'000 £'000 £'000 £'000
At 31 December 2023 114,656 11,646 29,182 262,783 24,761
Gains on sales of investments - - - 19,679 -
Change in unrealised gains on Investments at fair value through
profit or loss - - - 33,500 -
Gains on derivatives - - - 1,338 -
Exchange losses on cash and short-term deposits - - - (94) -
Exchange losses on foreign currency loans - - - (502) -
Special dividend allocated to capital - - - 128 -
Repurchase of shares into treasury - - - (16,993) -
Performance fee allocated to capital - - - (2,767) -
Management fee and finance costs allocated to capital - - - (3,864) -
Overseas capital gains tax - - - (961) -
Dividend paid - - - - (11,036)
Retained revenue for the year - - - - 9,164
At 31 December 2024 114,656 11,646 29,182 292,247 22,889
(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) This is a distributable capital reserve arising from the
cancellation of the share premium, and may be distributed as dividends or used
to repurchase the Company's own shares.
(4) Capital Reserves represent a realised and unrealised net amount
and a positive balance may be used to purchase the companys own shares. This
reserve may include some 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.
(5) A positive balance on the revenue reserve may be distributed as
dividends or used to repurchase the Company's own shares.
16. Net asset value per share
2025 2024
£'000 £'000
Total equity shareholders' funds (£'000) 529,452 476,076
Shares in issue at the year end 93,524,454 93,524,454
Net asset value per share (pence) 566.11 509.04
17. Reconciliation of net return before finance costs and taxation to net cash
inflow from operating activities
2025 2024
£'000 £'000
Total return on ordinary activities before finance costs and taxation 67,473 59,468
Less capital returns on ordinary activities before finance costs and taxation (57,073) (48,900)
(Increase)/decrease in prepayments and accrued income (69) 82
Decrease in other debtors 20 4
(Decrease)/increase in other creditors (2,622) 2,694
Special dividends allocated to capital - 128
Management fee allocated to capital (2,343) (2,382)
Performance fee allocated to capital - (2,767)
Overseas withholding tax deducted at source (1,345) (918)
Net cash inflow from operating activities 4,041 7,409
18. Analysis of changes in net debt
Exchange
2024 Cash flow movements 2025
£'000 £'000 £'000 £'000
Cash and cash equivalents 1,743 772 (154) 2,361
Bank loan (22,357) 20,440 1,917 -
Overdraft at bank and derivative clearing houses (4,774) 4,774 - -
Net debt (25,388) 25,986 1,763 2,361
19. Transactions with the Manager
Under the terms of the Alternative Investment Fund Manager Agreement, the
Manager is entitled to receive management, secretarial and performance fees.
Details of the basis of these calculations are given in the Directors' Report
on page 57. If the Company invests in funds managed or advised by the Manager,
any fees earned by the Manager are rebated to the Company. The management fee
payable in respect of the year ended 31 December 2025 amounted to £3,124,000
(2024: £3,176,000) of which £830,000 (2024: £799,000) was outstanding at
the year end.
The performance fee payable in respect of the year amounted to £nil.(2024:
£2,767,000).
The secretarial fee payable for the year amounted to £75,000 (2024: £75,000)
of which £19,000 (2024: £19,000) was outstanding at the year end.
No Director of the Company served as a Director of any company within the
Schroder Group at any time during the year.
20. Related party transactions
Details of the remuneration payable to Directors are given in both note 5 and
in the Directors' Remuneration Report on page 67. Details of Directors'
shareholdings are given in the Directors' Remuneration Report on page 68.
Details of transactions with the Manager are given in note 19 above. There
have been no other transactions with related parties during the year (2024:
nil).
21. 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 include its investment portfolio and derivative financial
instruments.
FRS 102 requires financial instruments to be categorised into a hierarchy
consisting of the three levels below.
Level 1 - valued using unadjusted quoted prices in active markets for
identical assets.
Level 2 - valued using inputs, other than quoted prices included within Level
1, that are directly or indirectly observable (based on market data such as
quoted prices for similar instruments in active markets, broker quoted prices,
or yield curves).
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 81.
The following table sets out the fair value measurements using the FRS 102
hierarchy at 31 December:
2025
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial instruments held at fair value through profit or loss
Equity investments 530,041 - - 530,041
Derivative financial instruments - index put options 137 - - 137
Derivative financial instruments - contracts for difference - CFD assets - 353 - 353
Derivative financial instruments - contracts for difference - CFD liabilities - (513) - (513)
Total 530,178 (160) - 530,018
2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial instruments held at fair value through profit or loss
Equity investments 506,932 - - 506,932
Derivative financial instruments - index put options 505 - - 505
Derivative financial instruments - forward currency contracts - 458 - 458
Derivative financial instruments - contracts for difference - CFD assets - 30 - 30
Derivative financial instruments - contracts for difference - CFD liabilities - (254) - (254)
Total 507,437 234 - 507,671
22. Financial instruments' exposure to risk and risk management policies
In pursuing its objective, the Company is exposed to a variety of financial
risks including 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 process for managing risk is unchanged from the previous year. The
Company's financial instruments may comprise:
· investments in equities and equity related securities which are
held in accordance with the Company's investment objective;
· short-term debtors, creditors and cash arising directly from its
operations;
· a multicurrency credit facility with The Bank of Nova Scotia, the
purpose of which is to assist in financing the Company's operations;
· index put options, which are used to protect the capital value of
the portfolio;
· forward currency contracts, the purpose of which is to manage the
currency risk arising from the Company's investment activities; and
· contract for differences, which are used for the purpose to gain
further exposure to Asian markets.
(a) Market risk
Market risk comprises three elements - foreign 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.
(i) Foreign 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 financial statements. As a result,
movements in exchange rates will affect the sterling value of those items.
Management of foreign currency risk
The Manager monitors the Company's exposure to foreign currencies on a daily
basis and reports to the Board. The Board has authorised the use of derivative
instruments to hedge currency exposure as part of the investment strategy to
protect the capital value of the portfolio, or for efficient portfolio
management.
Foreign currency exposure
The fair value of the Company's monetary items that have foreign currency
exposure at 31 December are shown below. The Company's investments, CFDs and
index put options (which are not monetary items) have been included separately
in the analysis so as to show the overall level of exposure.
South
Hong Kong US Taiwan Korean Indian Singapore Chinese Australian Vietnam
Dollars Dollars Dollars Won Rupees Dollars Yuan Dollars Dong Other Total
2025 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Current assets 1 148 233 99 5 1 - 236 28 29 780
Current liabilities (8) (25) - - - - - - - - (33)
Foreign currency exposure on
net monetary items (7) 123 233 99 5 1 - 236 28 29 747
Investments held at fair value
through profit or loss(1) 112,770 17,909 140,078 41,214 49,731 50,376 17,553 70,029 4,549 25,832 530,041
Derivative instruments held at
fair value through profit or loss
- index put options and CFDs(1) 111 (376) - - - - - - - - (265)
Total net foreign currency
exposure 112,874 17,656 140,311 41,313 49,736 50,377 17,553 70,265 4,577 25,861 530,523
South
Hong Kong US Taiwan Korean Indian Singapore Chinese Australian Vietnam
Dollars Dollars Dollars Won Rupees Dollars Yuan Dollars Dong Other Total
2024 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Current assets 11 1,495 207 69 2 1 - 8 224 1 2,018
Derivative instruments held at
fair value through profit or loss
- forward currency contracts - 22,216 - - - - (21,758) - - - 458
Current liabilities - (23,107) - - - - - - - - (23,107)
Foreign currency exposure on
net monetary items 11 604 207 69 2 1 (21,758) 8 224 1 (20,631)
Investments held at fair value
through profit or loss(1) 96,283 15,860 122,237 16,603 53,292 38,670 8,136 79,614 13,376 62,861 506,932
Derivative instruments held at
fair value through profit or loss
- index put options and CFDs(1) - 322 - - - - - - - 322
Total net foreign currency
exposure 96,294 16,786 122,444 16,672 53,294 38,671 (13,622) 79,622 13,600 62,862 486,623
(1) Excluding any stocks or CFDs priced in sterling.
The above year end amounts are broadly representative of the exposure to
foreign currency risk during the current and prior 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 sensitivity analysis is based on
the Company's monetary currency financial instruments held at each balance
sheet date and assumes a 10% (2024: 10%) appreciation or depreciation in
sterling against 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:
2025 2024
Income Statement - return after taxation £'000 £'000
Revenue return 1,068 1,090
Capital return (44) (2,199)
Total return after taxation 1,024 (1,109)
Net assets 1,024 (1,109)
Conversely if sterling had strengthened by 10% this would have had the
following effect:
2025 2024
Income Statement - return after taxation £'000 £'000
Revenue return (1,068) (1,090)
Capital return 44 2,199
Total return after taxation (1,024) 1,109
Net assets (1,024) 1,109
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 any derivative instruments held, to changes in
foreign currency exchange rates is subsumed into market price risk sensitivity
below.
(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 rates are
re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to
shareholders. The Company may use gearing to enhance performance (including
the use of CFDs). The Board would not expect net gearing to exceed 30% where
gearing is defined as borrowings including CFDs used for investment purposes,
less cash, expressed as a percentage of net assets.
Interest rate exposure
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 its overdraft
facility or its credit facility.
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:
2025 2024
Exposure to floating interest rates £'000 £'000
Cash and cash equivalents 2,361 1,743
Bank overdraft - (4,534)
Amounts held at derivative clearing houses and brokers - (240)
Creditors: amounts falling due within one year:
Bank loan - (22,357)
Total exposure 2,361 (25,388)
Interest receivable on cash balances, or paid on overdrafts, is at a margin
below or above the applicable risk free reference rates, respectively (2024:
same).
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 debt balances during the
year are as follows:
2025 2024
£'000 £'000
Maximum debit interest rate exposure during the year - net debt (22,015) (40,790)
Minimum debit interest rate exposure during the year - net debt 3,982 (21,641)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation
for the year and net assets to a 1.5% (2024: 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 balance sheet date with all other variables held constant.
2025 2025 2024 2024
1.5% 1.5% 1.5% 1.5%
increase decrease increase decrease
in rate in rate in rate in rate
Income Statement - return after taxation £'000 £'000 £'000 £'000
Revenue return 35 (35) (76) 76
Capital return - - (305) 305
Total return after taxation 35 (35) (381) 381
Net assets 35 (35) (381) 381
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 equity 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 Board has authorised the Manager to enter derivative
transactions as a means of seeking capital preservation, subject to limits on
the percentage of the portfolio hedged and the duration of derivatives used.
Market price risk exposure
The Company's total exposure to changes in market prices at 31 December
comprises the following investments:
2025 2024
£'000 £'000
Investments held at fair value through profit or loss 530,041 506,932
Derivative financial instruments held at fair value through profit or loss:
Index put options 137 505
CFD (160) (224)
530,018 507,213
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 pages 28 to 30. This
shows that the portfolio mainly comprises investments quoted on Asian stock
markets, index put options and CFDs. Accordingly there is a concentration of
exposure to that region.
However it should be noted that an investment may not be entirely exposed to
the economic conditions in its country of classification.
Market price risk sensitivity
The following table illustrates the sensitivity of net return after taxation
for the year and net assets to an increase or decrease of 10% (2024: 10%) 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, adjusting for the hedging effect of the index put options and
including the resulting effect on the management fee, but with all other
variables held constant. For the purposes of the calculation, any performance
fee is excluded.
The sensitivity analysis also takes account of the "beta coefficient" of the
portfolio. This is a measure of the volatility of the portfolio compared with
the systemic risk of the entire market. As a result, the percentages in the
table below represent a 7.40% (2024: 8.67%) increase in fair value and a 7.40%
(2024: 8.67%) decrease in fair value.
2025 2025 2024 2024
10% 10% 10% 10%
increase decrease increase decrease
in fair value in fair value in fair value in fair value
Income Statement - return after taxation £'000 £'000 £'000 £'000
Revenue return (64) 64 (71) 71
Capital return 39,019 (39,019) 43,719 (43,719)
38,955 (38,955) 43,648 (43,648)
Percentage change in net asset value 7.40 (7.40) 8.67 (8.67)
(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 not significant as the Company's assets comprise mainly
readily realisable securities, which can be sold to meet funding requirements
if necessary. Short-term flexibility is achieved through the use of overdraft
and credit facilities.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on
which payment can be required are as follows:
2025 2024
Three Three
months months
or less or less
£'000 £'000
Creditors: amounts falling due within one year
Bank loan - including interest - 22,459
Bank overdraft - 4,534
Amounts held at derivative clearing houses and brokers - 240
Derivative financial instruments held at fair value through profit or loss - 513 254
CFD liabilities
Amounts payable on settlement of derivatives - 743
Repurchase of ordinary shares into treasury awaiting settlement - 255
Other creditors and accruals 1,318 3,961
1,831 32,446
(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. This approach extends to various investment
instruments, while CFDs are settled through cash payments based on the
difference between the opening and closing prices, rather than physical
delivery of the underlying assets. 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.
In relation to CFDs, counterparty risk is limited to the profit on a contract,
not the notional value.
Exposure to the custodian
The custodian of the Company's assets is J.P. Morgan Securities LLC 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, derivative financial
instruments held at fair value through profit or loss and cash and cash
equivalents 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.
23. Capital management policies and procedures
The Company's capital is represented by its net assets and borrowings, which
are managed to achieve the Company's investment objective, as set out on page
39.
The Company's capital management objectives are to ensure that it will
continue as a going concern and to maximise the capital return to shareholders
through an appropriate level of gearing. The Company has credit facilities in
place which may be used to maximise the return to shareholders through an
appropriate level of gearing. The Company uses CFDs as a cost effective and
flexible form of borrowing.
The Board's policy is to limit the level of net gearing to 30%, where net
gearing is defined as borrowings including CFDs used for investment purposes,
less cash, expressed as a percentage of net assets.
2025 2024
£'000 £'000
Borrowings used for investment purposes, less cash (£,000)1 29,352 40,695
Net assets (£,000) 529,452 476,076
Net gearing (%) 5.5 8.5
(1) Included within borrowings for 2025 is an amount of £31,713,000
being the total market exposure on the CFDs held at the year end (2024:
£15,307,000).
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 opportunities for issues of new shares or to reissue shares out of
treasury; and
* the amount of dividend to be paid, in excess of that which is required to be
distributed.
24. Status of results announcement
2025 Financial Information
The figures and financial information for 2025 are extracted from the Annual
Report and Financial Statements for the year ended 31 December 2025 and do not
constitute the statutory accounts for that year. The Annual Report and
Financial Statements include the Report of the Independent Auditors which is
unqualified and does not contain a statement under either section 498(2) or
section 498(3) of the Companies Act 2006. The Annual Report and Financial
Statements will be delivered to the Registrar of Companies in due course.
2024 Financial Information
The figures and financial information for 2024 are extracted from the
published Annual Report and Financial Statements for the year ended 31
December 2024 and do not constitute the statutory accounts for the year. The
Annual Report and Financial Statements have been delivered to the Registrar of
Companies and included the Report of the Independent Auditors which was
unqualified and did not contain a statement under either section 498(2) or
section 498(3) of the Companies Act 2006.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
For further information:
Schroder Investment Management Limited
E-mail: AMCompanySecretary@Schroders.com
(mailto:AMCompanySecretary@Schroders.com)
Issued by Schroder Investment Management Limited. Registration No 1893220
England.
Authorised and regulated by the Financial Conduct Authority. For regular
updates by e-mail please register online at www.schroders.com
(https://url.uk.m.mimecastprotect.com/s/t7puCxn15T1LlkKtvh4FyxHrZ?domain=schroders.com/)
for our alerting service.
ENDS
A copy of the 2025 Annual Report will shortly be submitted to the FCA's
National Storage Mechanism and will be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The 2025 Annual Report will shortly be available on the Company's website at
www.schroders.co.uk/satric (http://www.schroders.co.uk/satric) where
up-to-date information on the Company, including daily NAV and share prices,
factsheets and portfolio in formation can also be found.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
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. END FR SFIEEAEMSEDD
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