REG - Schroder AsiaPacific - Half-year Report
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RNS Number : 2884K Schroder AsiaPacific Fund PLC 28 May 2025
SCHRODER ASIAPACIFIC FUND PLC
HALF YEAR REPORT
Schroder AsiaPacific Fund plc (the "Company") hereby submits its Half Year
Report for the six months ended 31 March 2025 as required by the Financial
Conduct Authority's Disclosure Guidance and Transparency Rule 4.2.
Key Highlights
· The Company's NAV produced a negative total return of -3.3%, slightly behind
the Benchmark's total return of -2.2%, with the portfolio's cautious
positioning in China accounting for the underperformance.
· A total of 7,556,000 shares were purchased for cancellation during the period
at a cost of £40,877,000, adding 0.6% to the NAV, whilst the Company's shares
traded at an average discount of 11.9%.
· With effect from 1 April 2025, the Board has agreed with the Manager to reduce
its management fee to 0.65% per annum on the first £600 million of net
assets. In respect of net assets in excess of £600 million, the management
fee remains unchanged at 0.60%.
· While uncertainty may elevate market volatility, the long-term outlook for
Asian equities is encouraging, providing disciplined investors with appealing
buying opportunities through active stock selection in a diverse market.
James Williams, Chairman, Schroder AsiaPacific Fund plc commented:
"The region continues to offer compelling longer-term opportunities,
underpinned by favourable demographics, rising wealth levels and steady growth
in domestic demand across many markets. With valuations varying widely between
countries and sectors, we believe this is an environment in which active
management and thoughtful stock selection can continue to add meaningful value
for shareholders."
The Half Year Report is also being published in hard copy format and an
electronic copy of that document will shortly be available to download from
the Company's web pages at www.schroders.co.uk/asiapacific
(https://www.schroders.com/en-gb/uk/individual/funds-and-strategies/investment-trusts/schroder-asiapacific-fund-plc/)
.
The Company has submitted a copy of its Half Year Report to the National
Storage Mechanism and it will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Enquiries:
Schroder Investment Management Limited
Charlotte Banks / Kirsty Preston (Press) 020 7658 2106
Kerry Higgins (Company Secretarial) 020 7658 6000
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2025
Chairman's Statement
Performance
The first half of the financial year was a challenging period for Asian
equity markets. The Company's NAV produced a negative total return of -3.3%,
slightly behind the Benchmark's negative total return of -2.2%. Markets were
influenced by shifting sentiment towards China which, despite ongoing
structural concerns, was one of the stronger performers over the period, as
well as broader political uncertainty following the re-election of President
Trump in the US. The Company's underweight position in China, where the
Portfolio Managers remain cautious on the economic outlook, was the primary
factor behind the modest underperformance relative to the Benchmark.
Elsewhere, positive contributions from stock selection in India and
positioning in Singapore helped to offset some of this impact. Further detail
on performance and portfolio activity can be found in the Portfolio Managers'
Review.
Gearing
The Company was 2.6% geared at the start of the period and, by 31 March 2025,
this had increased to 3.2%. The Manager has access to a £75 million revolving
credit facility in addition to an overdraft facility, which will be used when
the Portfolio Managers believe that the use of borrowing will be accretive to
returns. The Board continues to keep gearing under consideration.
Discount management
The Company continued to be active in buying back its shares. A total of
7,556,000 shares were purchased for cancellation during the period at a cost
of £40,877,000, adding 0.6% to the NAV, whilst the Company's shares traded at
an average discount of 11.9%. Since the end of the period, the Company has
bought back an additional 1,050,000 shares as the Board remains active in
implementing its buyback policy.
The Board continues to monitor the Company's discount levels and regularly
reviews the Company's share buyback policy.
Management fee
Since 1 April 2023, the management fee has been 0.75% per annum on the first
£600 million of net assets and 0.60% per annum on net assets in excess of
£600 million.
With effect from 1 April 2025, the Board has agreed with the Manager to reduce
its management fee to 0.65% per annum on the first £600 million of net
assets. In respect of net assets in excess of £600 million, the management
fee remains unchanged at 0.60%.
Board succession
The Board was pleased to welcome Nicky Richards as an independent
non-executive Director on 27 January 2025. Nicky brings a wealth of investment
management experience having held senior positions at Schroders and Fidelity.
Outlook
The Board recognises the considerable uncertainty currently facing Asian
markets, particularly around the future direction of US trade policy and the
outlook for Chinese growth. These near-term risks remain a source of
potential volatility and represent reasons for caution.
However, we share the Portfolio Managers' view that the region continues to
offer compelling longer-term opportunities, underpinned by favourable
demographics, rising wealth levels and steady growth in domestic demand across
many markets.
With valuations varying widely between countries and sectors, we believe this
is an environment in which active management and thoughtful stock selection
can continue to add meaningful value for shareholders. Indeed, periods of
heightened uncertainty such as this often present some of the most rewarding
long-term opportunities for astute and disciplined stock pickers.
James Williams
Chairman
27 May 2025
Portfolio Managers' Review
In the six months to the end of March 2025, Asian markets (excluding Japan)
were dominated by shifting sentiment towards China and the impact of Donald
Trump's election for a second term as US president. Against this backdrop,
the NAV per share of the Company recorded a total return of -3.3%, which was
slightly behind the performance of the Benchmark, the MSCI All Country Asia
ex Japan Index, which returned -2.2%.
Source: Schroders, Morningstar, in GBP, Cum-income fair NAV.
The period started positively, with the Chinese market continuing the strong
rally which had been ignited by the announcement of a much more coordinated
set of stimulus policies towards the end of September 2024. However, the lack
of further meaningful measures following these announcements ultimately
disappointed investors, with Chinese stocks retrenching, then moving sideways
for much of the rest of 2024. Meanwhile, regional sentiment took a knock with
the election of President Trump in November 2024. Asian markets significantly
underperformed developed markets in the immediate aftermath of the vote, with
investors concerned that the region would be particularly vulnerable to the
incoming president's pledges to raise tariffs on imports and loosen fiscal
policy - a combination likely to result in higher interest rates and a
stronger dollar, which has historically proved challenging for Asian economies
and markets.
The best performing market in the region, by some distance, was Singapore,
where a significant exposure to financials was a tailwind. Banks performed
particularly well, in response to the prospect of a higher interest rate
environment than previously expected, which typically boosts their net
interest margins. The internet platform companies listed in Singapore - but
with businesses throughout the Association of Southeast Asian Nations (ASEAN)
region - also performed well.
The only other market to see a positive return over the period was China,
initially in response to growing confidence that the government would further
stimulate its economy. Another positive catalyst came at the end of January
2025, when Chinese artificial intelligence (AI) startup DeepSeek launched a
new large language model (LLM) which had apparently been developed at a
fraction of the cost of the leading US LLMs, such as ChatGPT, yet delivered
comparable performance. A number of similar Chinese LLMs swiftly followed,
which saw a surge in the share prices of Chinese companies that are perceived
as beneficiaries of domestic AI development, particularly in the internet,
automobile and robotics sectors.
Hong Kong outperformed the overall index as well, albeit marginally. Although
it benefited from the improved sentiment towards China, it did significantly
lag the Chinese market due to the evolving interest rate outlook. 'Higher for
longer' US interest rates are seen as a headwind for Hong Kong given its
currency peg to the US dollar and a weak domestic economy.
The launch of China's seemingly lower cost AI models weighed on several other
parts of the market, however. In particular, this development has raised
doubts over the need for sustained high levels of spending on AI-related
semiconductors, triggering a sell-off in technology stocks linked to
investment in this area, both regionally and globally. Taiwan, a standout
performer in 2024, saw a sharp correction, with companies exposed to the
Nvidia supply chain hit hardest.
Korea was also notably weak over the period, impacted by the political turmoil
that ensued following the unexpected declaration of martial law in December
2024, which culminated in the impeachment and eventual removal of President
Yoon Suk Yeol. Although the crisis itself was brief, it weakened the currency
and prompted investors to de-risk in search of relative safety. From a stock
perspective, Samsung Electronics fell, with sentiment dented by ongoing delays
in its efforts to supply high-bandwidth memory to Nvidia.
India was another major Asian market that struggled during the period, held
back by slowing economic growth and earnings downgrades. The negative reaction
was exacerbated by the market's extended valuations, which left little room to
absorb disappointment. A high degree of domestic retail market participation
also added to the volatility.
Looking at the other laggards, all of the smaller ASEAN markets (Indonesia,
Malaysia, the Philippines and Thailand) faced headwinds from higher interest
rates and the stronger dollar, given generally greater reliance on external
financing. Sentiment in Indonesia was also negatively affected by concerns
over its new president's potentially more populist and interventionist
policies.
Of the major sectors, communications services was the standout performer,
driven primarily by Chinese internet platform Tencent. Higher interest rate
expectations were a tailwind for financials, but a headwind for more
'bond-like' names in sectors such as utilities, consumer staples and real
estate. Materials and energy were also weaker as commodity prices pulled back,
whilst information technology (IT) lagged due to the previously mentioned
concerns around the AI capital expenditure outlook.
It should be noted that shortly after the end of the period being reported on,
President Trump announced 'reciprocal' tariffs on almost every trading
partner, regardless of size or status. While an escalation of tariffs had been
anticipated, the breadth, scale and methodology of the measures went well
beyond investor expectations, triggering significant global market volatility.
At the time of writing, the situation remains deeply uncertain as many of
these tariffs have been 'suspended' for 90 days, while negotiations take
place.
Performance
The Company's NAV total return lagged the Benchmark return by around 1% over
the period, with the portfolio's low exposure to China accounting for the
relative underperformance. Our substantial underweight to that market, as well
as stock selection within it, detracted value. Our exposure to the smaller
ASEAN markets, including off-benchmark holdings in Vietnam, also detracted
from relative performance. These impacts more than offset a positive
contribution from being underweight in India, as well as very positive stock
selection there, and positive contributions from being overweight Singapore
and underweight Korea.
In China, the major negative relative contribution was from index stocks which
we did not own or were substantially underweight, rather than from poor
performance by the names we held. Most notably, Alibaba, the leading
e-commerce company, was a key beneficiary of the AI-driven rally early in
2025, supported by its cloud infrastructure business and the development of
its own LLM. Although this has historically been a low return division for the
company, its announcement of a substantial increase in capital investment in
the area was greeted positively by investors, eager to see growth beyond its
core e-commerce operations, which remain under intense competitive pressure.
Companies with auto exposure, such as BYD and Xiaomi, a consumer electronics
company which has recently launched its first Electric Vehicle (EV), also
benefited from the expectation that AI would boost the capability of
autonomous driving features and hence demand for new vehicles. Our lack of
exposure to this fiercely competitive sector was therefore a relative
detractor to stock selection.
The other key detractor from relative performance was our lack of exposure to
Chinese banks such as China Construction Bank, Bank of China and ICBC. Despite
a deteriorating backdrop - a sluggish economy driving lower interest
rates, weaker loan demand and rising credit risk - these stocks returned
over 25% in the period. This robust performance may reflect official support
for the shares, but also the continued appeal of their high dividends,
particularly given the limited alternatives for domestic savers. Despite its
significant index weight, we have zero exposure to the sector, because we are
concerned that a deteriorating earnings outlook may ultimately threaten these
dividends.
Indian stock selection was positive, adding to the benefit of our underweight
exposure to a market that declined by more than 10%. Our large capitalisation
bank holdings, HDFC Bank and ICICI Bank, produced positive returns, reflecting
the structural appeal of private sector banks in India, given low levels of
financial penetration, the opportunity to take market share from inefficient
state-owned banks and the high returns on offer in a fast-growing economy. A
new position in airline InterGlobe Aviation, better known as IndiGo, also
contributed positively, while limited exposure to the highly valued small and
mid capitalisation segments of the Indian market helped us to avoid some of
the sharpest share price falls seen in recent months.
Portfolio activity
During the period, we initiated positions in four Chinese stocks, taking
advantage of weak sentiment to add businesses with strong competitive
positions in attractive industries. These included: internet platform Meituan,
which dominates the market for food delivery and local commerce in China and
has seen steadily improving profitability thanks to its increasing economies
of scale; Trip.com, China's leading online travel agency which is successfully
expanding internationally; Anta Sports, a domestic sportswear company with
several leading and emerging brands, and is therefore benefiting from the
shift in market share away from global brands, such as Nike and Adidas; and
Centre Testing, a specialist in testing services across multiple sectors,
which is well placed to benefit from economic recovery.
Elsewhere, as mentioned previously, we initiated a position in IndiGo, India's
leading low-cost airline. Air travel remains underpenetrated in India relative
to other less convenient forms of transport. With healthy competition, IndiGo
stands out as an efficient operator in an attractive sector which has
considerable growth potential.
We also added to existing positions in videogame developer NetEase in China,
as well as several ASEAN holdings which had sold off, including Philippine
property developer Ayala Land, Bumrungrad Hospital in Thailand, Vietnamese
retailer Mobile World, and Bank Mandiri in Indonesia (partly a switch out of
peer Bank Negara).
We exited our remaining position in Alibaba during the period, following its
extraordinary AI-driven rally. In Hong Kong, we sold our holdings in ASMPT,
a semiconductor packaging equipment manufacturer, and Hang Lung Properties, a
landlord with exposure to both Hong Kong and Chinese commercial property. We
also sold out of our position in Giant, a Taiwanese bike manufacturer which
faces headwinds from excess inventory in the sector, and also sold the small
remaining positions we held in SK Hynix, Delhivery and Orica (largely
switching into BHP).
In India, we also trimmed holdings in conglomerate Reliance Industries, IT
services provider Infosys, property developer Oberoi Realty, and ICICI Bank.
Other names we reduced exposure to included Vietnam Dairy Products, Taiwanese
power electronics component supplier Delta Electronics, Chinese battery
supplier CATL, Korean memory supplier Samsung Electronics and Philippine port
operator ICTSI.
The overall level of gearing was increased slightly over the period, but
remains moderate.
Portfolio strategy
Geographic positioning
The Company's portfolio remains primarily exposed to China, Taiwan, India,
Hong Kong, Singapore, Korea and several smaller ASEAN markets.
We continue to hold an underweight position in China, reflecting structural
concerns around demographics and an economic model heavily reliant on
investment, manufacturing and exports. While we selectively added new Chinese
holdings during the period, we believe these underlying challenges are
unlikely to be resolved by short-term stimulus. In our view, the recent
strength of several index heavyweight stocks has run well ahead of
fundamentals, likely supported by direct government intervention in the stock
market. Against this backdrop, and given the unpredictable geopolitical
environment, we remain cautious about adding materially to Chinese equities,
even though further domestic stimulus measures may arrive in the coming
months.
We remain overweight Hong Kong, in part as an offset to our underweight to the
China market. While Hong Kong continues to feel the impacts of a weak Chinese
economy and domestic interest rates that remain too high for local conditions,
valuations are more attractive and company management teams typically
demonstrate greater focus on capital allocation and shareholder returns than
their Chinese peers. Any easing in US monetary policy would also be
supportive.
Within South-East Asia, our largest exposure is to Singapore, where we remain
overweight. The market continues to benefit from its growing role as a
regional wealth management hub, as well as from the broader growth of its
ASEAN neighbours. We also hold direct exposure to some of the smaller ASEAN
markets, such as Indonesia, Vietnam, Thailand and the Philippines. Valuations
look increasingly attractive in these markets, but they are among the most
exposed in Asia to higher global interest rates and a stronger US dollar.
Meanwhile, political developments in Indonesia also warrant ongoing attention.
In Vietnam, our off-benchmark exposure reflects the market's long-term
structural growth potential, but in the short term, the economy is one of the
most vulnerable to tariffs, given its significant trade surplus with the US.
We have therefore marginally reduced exposure there.
India remains a relatively expensive market, though recent weakness has
started to improve the valuation backdrop. The long-term outlook remains
positive, with a relatively young, growing population and rising incomes
driving stronger domestic consumption. We remain underweight for now but, as
valuations become more reasonable, we expect to find further opportunities to
add, particularly given the number of well-governed, high-return companies in
the market. India's relatively limited reliance on exports may also prove an
advantage in a global environment of rising trade tensions.
Sectoral positioning
Information Technology (IT) experienced one of the sharpest shifts in
sentiment over the period, reflecting concerns that a slowdown in capital
expenditure from the major US technology companies could weigh on demand for
advanced semiconductors. We continue to question how successfully some of the
current wave of AI models can be monetised. Thus far, beyond the big internet
companies such as Meta in the US and Tencent in China, there is still very
limited evidence of enterprise or consumer willingness to pay significantly
for AI services. This creates a potential disconnect between the heavy
capital expenditure from technology companies on AI servers and the
datacentres needed to house them, and the returns that can ultimately be
generated from that investment. Whether this is simply a timing issue remains
to be seen - history suggests that falling prices in the technology sector
tend to stimulate greater demand, but for now there is clearly potential for
some indigestion. Against this backdrop, and with valuations having moved
higher on cyclical improvements and AI-related enthusiasm, we have moderated
our overweight position in IT in recent months.
We also remain overweight to financials - a diverse sector spanning not only
banks, but also insurers and exchange companies. The banks we own are
generally well capitalised with strong deposit franchises, and many are based
in Asia's more mature markets, such as Singapore, where valuations and
dividend yields remain attractive relative to the region's faster-growing
economies. Our direct exposure to developing markets focuses on areas where
credit penetration is still low, such as Indonesia and a significant exposure
to Indian banks. The future direction of interest rates will be an important
driver of relative performance across the financials sector, given their
importance to net interest income.
Market weightings
Schroder AsiaPacific Fund plc vs. MSCI AC Asia ex Japan Index
Net Asset Value Benchmark
(%) (%)
31 March 2025 30 September 2024 31 March 2025
China 24.9 18.7 35.6
Taiwan 20.6 21.7 19.2
India 16.4 17.3 21.1
Hong Kong 11.4 12.3 4.8
Singapore 9.1 8.5 4.3
South Korea 6.0 7.8 10.2
Thailand 3.1 3.7 1.3
Philippines 3.1 3.3 0.6
Vietnam 3.0 3.3 -
Australia 2.1 2.2 -
Indonesia 2.0 2.5 1.4
Malaysia - - 1.5
Other(1) 1.5 1.3 -
Net cash(2) -3.2 -2.6 -
Total 100.0 100.0 100.0
( )
(1) UK, Italy and other net liabilities.
(2) Cash, less borrowings used for investment purposes.
Investment outlook
Perhaps of greatest concern for investors in Asia at the time of writing is
the uncertainty around the impact on countries in the region - and China in
particular - from the punitive tariffs announced by the Trump administration
on 'Liberation Day', 2 April 2025. While the absolute level of tariffs is
clearly important, the lack of clarity over policy objectives and the scope
for negotiation have caused a significant amount of investor uncertainty.
Previous experience suggests that White House announcements can quickly be
reversed, changed or abandoned, creating a very difficult environment for both
market participants and companies making long-term investment decisions.
While the barriers to trade and investment have already risen, the ultimate
extent and specific targets of these restrictions remain hard to predict. One
silver lining here could be that higher tariffs on China make other Asian
exporters more competitive, but President Trump's approach to trade has so far
shown little distinction between allies and adversaries. Any country with a
bilateral trade surplus with the US may still be at risk of further measures.
With exports a key driver for regional earnings, the path of US trade policy -
and its implications for the strength of the US economy - will remain
a central focus for Asian markets, especially given that the size and scope
of tariffs announced to date have materially exceeded expectations.
Another key driver for Asian markets will be the path of US interest rates and
the strength of the US dollar in coming years. Global bond and currency
markets have already started to price in a 'higher for longer' rate outlook,
driven by the US administration's protectionist and expansionary fiscal
policies, which are expected to lead to stickier inflation. This reassessment,
together with an improved outlook elsewhere, had seen the dollar actually
weaken earlier in the year - a move that had supported Asian markets in line
with historic precedent, at least until the disruption caused by Liberation
Day tariff announcements. Higher US interest rates would likely prove a
headwind for countries with weaker external balances, including some ASEAN
markets, but they could be a tailwind for other areas, including many Asian
financial stocks.
Within the region, the Chinese economy remains weak, with consumer confidence
still extremely low and the property market weak. Although the government has
announced further support measures - including expanding subsidies for home
appliances, electric vehicles and other consumer products - these remain
modest in scale and are unlikely to drive a meaningful recovery, given the
broader backdrop of weak private credit growth and other persistent structural
challenges.
More recently, the excitement around the launch of DeepSeek's new AI model and
what appears to be a more constructive approach towards the private sector,
have raised hopes that we could see an improvement in 'animal spirits' across
the broader economy. Some investors also anticipate a more aggressive fiscal
response from the government once there is greater clarity on the tariffs
facing Chinese exporters under the Trump administration. However, there is
scope for disappointment if this stimulus fails to materialise.
Meanwhile, the surprise addition of internet platform Tencent and battery
maker Contemporary Amperex Technology (CATL) to a US Department of Defence
list of Chinese military-linked companies has further highlighted the ongoing
geopolitical risks facing Chinese companies, underlining the fragile and
uncertain external environment.
More broadly across the region, despite the well-known challenges facing China
and the current uncertainty surrounding US trade policy, there are several
reasons to be more optimistic about the long-term outlook for Asian equities.
We must remain cognisant of the global challenges facing a region that has
historically been heavily reliant on trade, but many of the more enduringly
positive aspects of the investment case for Asia are more domestically
oriented. Many Asian economies continue to benefit from favourable
demographics, rising income levels and deepening financial markets. As wealth
increases, so too does the demand for goods and services that are already
widely established in developed markets - from financial products and
healthcare, to travel, technology and branded consumer goods. We believe this
environment will continue to deliver a rich seam of high-quality companies
across a diverse range of markets and sectors, offering attractive long-term
growth potential.
From a valuation perspective, the region can no longer be viewed as
particularly cheap, with aggregate market levels slightly above long-term
averages. However, this headline figure masks a significant variation across
individual markets. Hong Kong, Korea, Indonesia and the Philippines, look
relatively cheap compared to history, whilst India and Singapore are
relatively expensive. China is no longer at the bottom end of its valuation
range, although it does not appear expensive.
Conclusion
In the near term, market direction will likely be shaped by the policies of
the Trump administration and the responses they provoke - particularly their
impact on US and global growth, inflation and interest rates. From an Asian
perspective, any further announcements regarding Chinese stimulus are also
likely to be of significance. At the time of writing, there remains a great
deal of uncertainty around both of these areas, with a wide range of potential
outcomes.
This uncertainty may well keep market volatility elevated. However, from
a longer-term perspective, there are many reasons to be positive about the
outlook for Asian equities, and the current environment is likely to present
attractive buying opportunities for disciplined, fundamentally oriented
investors. This is particularly the case in a region as broad and diverse as
Asia, where active stock selection is key.
Abbas Barkhordar and Richard Sennitt
Portfolio Managers
Schroder Investment Management Limited
27 May 2025
Investment Portfolio
At 31 March 2025
Sector £'000 %
China
Tencent Holdings(1) Communication Services 71,424 8.3
Meituan(1) Consumer Discretionary 18,886 2.2
NetEase(1) Communication Services 18,830 2.2
Midea(1) (including A shares and LEPO(2)) Consumer Discretionary 14,161 1.6
Trip.com Consumer Discretionary 13,004 1.6
Tencent Music Entertainment ADR(3) Communication Services 12,095 1.4
Shenzhen Inovance Technology A Industrials 11,419 1.3
Sany Heavy Industry A Industrials 10,313 1.2
Shenzhou International(1) Consumer Discretionary 10,193 1.2
Anta Sports(1) Consumer Discretionary 9,948 1.2
Contemporary Amperex Technology A Industrials 8,632 1.0
Centre Testing International Industrials 7,227 0.8
Total China 206,132 24.0
Taiwan
TSMC Information Technology 91,936 10.7
MediaTek Information Technology 28,088 3.3
E Ink Information Technology 9,621 1.1
Hon Hai Precision Industry Information Technology 9,463 1.1
ASE Technology Information Technology 8,275 1.0
United Microelectronics Information Technology 7,987 0.9
Delta Electronics Information Technology 7,543 0.9
Nien Made Enterprise Consumer Discretionary 7,189 0.8
Total Taiwan 170,102 19.8
India
HDFC Bank Financials 36,605 4.3
ICICI Bank (including ADR(3)) Financials 28,288 3.3
Apollo Hospitals Enterprise Healthcare 17,455 2.0
Tata Consultancy Services Information Technology 15,647 1.8
Infosys Information Technology 11,407 1.3
Oberoi Realty Real Estate 9,000 1.0
InterGlobe Aviation Industrials 8,836 1.0
Reliance Industries Energy 8,536 1.0
Total India 135,774 15.7
Hong Kong (SAR)
AIA Financials 27,961 3.2
BOC Hong Kong Financials 19,855 2.3
Hong Kong Exchanges and Clearing Financials 19,165 2.2
Techtronic Industries Industrials 10,544 1.2
Galaxy Entertainment Consumer Discretionary 8,661 1.0
Swire Properties Real Estate 8,185 1.0
Total Hong Kong (SAR) 94,371 10.9
Singapore
DBS Group Holdings Financials 24,978 2.9
OCBC Financials 24,426 2.8
Singapore Telecommunications Communication Services 15,600 1.8
Singapore Exchange Financials 10,036 1.2
Total Singapore 75,040 8.7
South Korea
Samsung Electronics (including preference shares) Information Technology 41,617 4.9
Kia Consumer Discretionary 7,619 0.9
Total South Korea 49,236 5.8
Thailand
Kasikornbank NVDR Financials 10,291 1.2
Bangkok Dusit Medical Services NVDR Healthcare 8,265 1.0
Bumrungrad Hospital Healthcare 7,364 0.9
Total Thailand 25,920 3.1
Philippines
Bank of the Philippines Islands Financials 9,431 1.1
ICTSI Industrials 7,994 0.9
Ayala Land Real Estate 7,638 0.9
Total Philippines 25,063 2.9
Vietnam
Vietnam Enterprise Investments(4) Financials 8,973 1.0
FPT Information Technology 7,888 0.9
Mobile World Investment Consumer Discretionary 6,107 0.7
Vietnam Dairy Products Consumer Staples 1,971 0.2
Total Vietnam 24,939 2.8
Australia
Rio Tinto(4) Materials 9,538 1.1
BHP(4) Materials 7,851 0.9
Total Australia 17,389 2.0
Indonesia
Bank Mandiri Financials 13,727 1.6
Bank Negara Financials 2,994 0.3
Total Indonesia 16,721 1.9
United Kingdom
Schroder Asian Discovery Fund Z Acc(5) - 12,455 1.5
Total United Kingdom 12,455 1.5
Italy
Prada(1) Consumer Discretionary 7,850 0.9
Total Italy 7,850 0.9
Total Investments(6) 860,992 100.0
Investments are classified by the Investment Manager in the region or country
of their main business operations or listing.
Highlighted stocks are the twenty largest investments, which by value
account for 64.5% of total investments (30 September 2024: 62.0% and
31 March 2024: 63.2%).
(1)Listed in Hong Kong. (2)Listed in Luxembourg. (3)Listed in the USA.
(4)Listed in the United Kingdom. (5)Predominantly invested in Asia. (6)Total
investments comprises the following:
£'000 %
Equities, including ADRs, LEPOs and NVDRs 838,272 97.3
Collective investment funds 12,455 1.5
Preference shares 10,265 1.2
Total Investments 860,992 100.0
The following abbreviations have been used above: ADR: American Depositary
Receipt LEPO: Low Exercise Price Option NVDR: Non Voting Depositary Receipt.
Interim Management Statement
Principal risks and uncertainties
The principal risks associated with the Company's business fall into the
following risk categories: strategy and competitiveness; investment
management; market; geopolitical; custody and depositary; gearing and
leverage; accounting, legal and regulatory change; climate change; third party
services and cyber. A detailed explanation of the risks in each of these
categories can be found on pages 41 to 44 and in note 20 on pages 82 to 86 of
the Company's published Annual Report and Financial Statements for the year
ended 30 September 2024.
In the view of the Board, the Company's principal risks and uncertainties have
not changed during the six months ended 31 March 2025. However, the Board
considers that the severity of some of the risks has increased. While
assessing the financial statements, the Board undertook a review of the
principal and emerging risks and noted that following the election of
President Trump, geopolitical and market risk, in particular, have increased,
most notably as a result of heightened trade tensions globally evolving out of
the Trump administration's tariff regime and the subsequent uncertainties
around its execution. These matters will be closely monitored and reported on
in the next Annual Report, as appropriate.
Going concern
Having assessed the principal risks and uncertainties, and the other matters
discussed in connection with the viability statement as set out on page 45 of
the published Annual Report and Financial Statements for the year ended
30 September 2024, the Directors consider it appropriate to adopt the going
concern basis in preparing the financial statements.
Related party transactions
There have been no transactions with related parties that have materially
affected the financial position or the performance of the Company during the
six months ended 31 March 2025.
Directors' responsibility statement
The Directors confirm that, to the best of their knowledge:
- the condensed set of financial statements contained within the
Half Year Report has been prepared in accordance with International
Accounting Standard 34, Interim Financial Reporting; and
- the Interim Management Report, together with the Chairman's Statement
and Portfolio Managers' Review includes a fair review of the information
required by the Disclosure Guidance and Transparency Rules 4.2.7R and 4.2.8R.
The Half Year Report has not been reviewed or audited by the Company's
auditor.
The Half Year Report for the six months ended 31 March 2025 was approved by
the Board and the above Responsibility Statement has been signed on its
behalf.
James Williams
Chairman
For and on behalf of the Board
27 May 2025
Income Statement
for the six months ended 31 March 2025 (unaudited)
(Unaudited) (Unaudited) (Audited)
For the six months For the six months For the year
ended 31 March ended 31 March ended 30 September
2025 2025 2025 2024 2024 2024 2024 2024 2024
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments held at fair
value through profit or loss - (34,203) (34,203) - 43,479 43,479 - 117,282 117,282
Net foreign currency (losses)/gains - (1,685) (1,685) - 810 810 - 2,917 2,917
Income from investments 6,307 152 6,459 7,006 - 7,006 24,292 117 24,409
Other income 1 - 1 73 - 73 - - -
Other interest receivable and
similar income 58 - 58 141 - 141 264 - 264
Gross return/(loss) 6,366 (35,736) (29,370) 7,220 44,289 51,509 24,556 120,316 144,872
Investment management fee (737) (2,211) (2,948) (740) (2,221) (2,961) (1,526) (4,576) (6,102)
Administrative expenses (781) - (781) (697) - (697) (1,471) - (1,471)
Net return/(loss) before
finance costs and taxation 4,848 (37,947) (33,099) 5,783 42,068 47,851 21,559 115,740 137,299
Finance costs (223) (670) (893) (210) (628) (838) (467) (1,400) (1,867)
Net return/(loss) before
taxation 4,625 (38,617) (33,992) 5,573 41,440 47,013 21,092 114,340 135,432
Taxation 3 (646) 984 338 (697) (1,459) (2,156) (1,777) (5,916) (7,693)
Net return/(loss) after
taxation 3,979 (37,633) (33,654) 4,876 39,981 44,857 19,315 108,424 127,739
Return/(loss) per share (pence) 4 2.79 (26.41) (23.62) 3.19 26.12 29.30 12.79 71.82 84.61
The "Total" column of this statement is the profit and loss account of the
Company. The "Revenue" and "Capital" columns represent supplementary
information prepared under guidance issued by The Association of Investment
Companies. The Company has no other items of other comprehensive income, and
therefore the net return after taxation is also the total comprehensive income
for the period.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
Statement of Changes in Equity
for the six months ended 31 March 2025 (unaudited)
Called-up Capital Warrant
share Share redemption exercise Capital Revenue
capital premium reserve reserve reserves reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2024 14,659 100,956 5,485 8,704 767,036 22,319 919,159
Repurchase and cancellation of
the Company's own shares (755) - 755 - (41,081) - (41,081)
Net (loss)/return after taxation - - - - (37,633) 3,979 (33,654)
Dividend paid in the period 5 - - - - - (17,827) (17,827)
At 31 March 2025 13,904 100,956 6,240 8,704 688,322 8,471 826,597
for the six months ended 31 March 2024 (unaudited)
Called-up Capital Warrant
share Share redemption exercise Capital Revenue
capital premium reserve reserve reserves reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2023 15,480 100,956 4,664 8,704 700,106 21,375 851,285
Repurchase and cancellation of
the Company's own shares (358) - 358 - (17,312) - (17,312)
Net return after taxation - - - - 39,981 4,876 44,857
Dividend paid in the period 5 - - - - (18,371) (18,371)
At 31 March 2024 15,122 100,956 5,022 8,704 722,775 7,880 860,459
for the year ended 30 September 2024 (audited)
Called-up Capital Warrant
share Share redemption exercise Capital Revenue
capital premium reserve reserve reserves reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2023 15,480 100,956 4,664 8,704 700,106 21,375 851,285
Repurchase and cancellation of
the Company's own shares (821) - 821 - (41,494) - (41,494)
Net return after taxation - - - - 108,424 19,315 127,739
Dividend paid in the period 5 - - - - - (18,371) (18,371)
At 30 September 2024 14,659 100,956 5,485 8,704 767,036 22,319 919,159
Statement of Financial Position
at 31 March 2025 (unaudited)
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2025 2024 2024
Note £'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 860,992 892,557 955,057
Current assets
Debtors 10,632 2,551 2,550
Cash and cash equivalents 4,918 4,956 5,803
15,550 7,507 8,353
Current liabilities
Creditors: amounts falling due within one year 6 (41,793) (34,010) (34,901)
Net current liabilities (26,243) (26,503) (26,548)
Total assets less current liabilities 834,749 866,054 928,509
Non current liabilities
Deferred taxation (8,152) (5,595) (9,350)
Net assets 826,597 860,459 919,159
Capital and reserves
Called-up share capital 7 13,904 15,122 14,659
Share premium 100,956 100,956 100,956
Capital redemption reserve 6,240 5,022 5,485
Warrant exercise reserve 8,704 8,704 8,704
Capital reserves 688,322 722,775 767,036
Revenue reserve 8,471 7,880 22,319
Total equity shareholders' funds 826,597 860,459 919,159
Net asset value per share (pence) 8 594.52 569.02 627.02
Registered in England and Wales as a public company limited by shares
Company registration number: 03104981
Notes to the Financial Statements
for the six months ended 31 March 2025
1. Financial statements
The information contained within the financial statements in this Half Year
Report has not been audited or reviewed by the Company's independent auditor.
The figures and financial information for the year ended 30 September 2024 are
extracted from the latest published financial statements of the Company and do
not constitute statutory financial statements for that year. Those financial
statements have been delivered to the Registrar of Companies and included the
report of the auditor which was unqualified and did not contain a statement
under either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
Basis of accounting
The financial statements have been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, in particular with Financial Reporting
Standard 104 "Interim Financial Reporting" and with the Statement of
Recommended Practice "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" issued by The Association of Investment Companies in
July 2022.
All of the Company's operations are of a continuing nature.
The accounting policies applied to these financial statements are consistent
with those applied in the financial statements for the year ended
30 September 2024.
3. Taxation
The Company's effective corporation tax rate is nil, as deductible expenses
exceed taxable income. The taxation charge comprises irrecoverable overseas
withholding tax on dividends receivable, and overseas capital gains tax.
4. Return/(loss) per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
Revenue return 3,979 4,876 19,315
Capital (loss)/return (37,633) 39,981 108,424
Total (loss)/return (33,654) 44,857 127,739
Weighted average number of shares in issue during the period 142,496,002 153,081,385 150,976,540
Revenue return per share (pence) 2.79 3.19 12.79
Capital (loss)/return per share (pence) (26.41) 26.12 71.82
Total (loss)/return per share (pence) (23.62) 29.30 84.61
5. Dividends paid
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
2024 final dividend paid of 12.5p (2023: 12.0p) 17,827 18,371 18,371
No interim dividend has been declared in respect of the six months ended 31
March 2025 (2024: nil).
6. Creditors: amounts falling due within one year
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
Bank loan 30,990 31,664 29,821
Repurchase of the Company's own shares 705 - 825
Securities purchased awaiting settlement 8,059 - 2,111
Other creditors and accruals 2,039 2,346 2,144
41,793 34,010 34,901
The bank loan comprises of US$40 million drawn down on the Company's £75
million multicurrency revolving credit facility with The Bank of Nova Scotia,
London Branch. The facility was secured from 3 July 2024, the amendment and
renewal are subject to covenants and restrictions which are customary for a
facility of this nature and all of these have been complied with.
7. Called-up share capital
Changes in the number of shares in issue during the period were as follows:
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2025 2024 2024
Ordinary shares of 10p each, allotted, called-up and fully paid:
Opening balance of shares in issue 146,591,216 154,800,716 154,800,716
Shares repurchased and cancelled (7,556,000) (3,582,000) (8,209,500)
Closing balance of shares in issue 139,035,216 151,218,716 146,591,216
8. Net asset value per share
Net asset value per share is calculated by dividing shareholders' funds by the
number of shares in issue at 31 March 2025 of 139,035,216 (31 March 2024:
151,218,716 and 30 September 2024: 146,591,216).
9. Financial instruments measured at fair value
The Company's financial instruments within the scope of FRS 102 that are held
at fair value comprise its investment portfolio.
FRS 102 requires that financial instruments held at fair value are categorised
into a hierarchy consisting of the three levels below. A fair value
measurement is categorised in its entirety on the basis of the lowest level
input that is significant to the fair value measurement.
Level 1 - valued using unadjusted quoted prices in active markets for
identical assets.
Level 2 - valued using observable inputs other than quoted prices included
within Level 1.
Level 3 - valued using inputs that are unobservable.
The Company's investment portfolio was categorised as follows:
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
Level 1 848,537 879,090 940,557
Level 2 12,455 13,467 14,500
Level 3 - - -
Total 860,992 892,557 955,057
There have been no transfers between Levels 1, 2 or 3 during the six month
period ended 31 March 2025. Schroder Asian Discovery
Fund Z Acc which is a daily priced collective investment fund previously
included in Level 1, was reallocated to Level 2 at the year ended 30 September
2024.
10. Events after the reporting period
The Directors have evaluated the period since the half year date and have not
noted any significant events requiring disclosure after the end of the
reporting period to the date of this Half Year Report.
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