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.
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.
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
Other1
1.5
1.3
-
Net cash2
-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 Holdings1
Communication Services
71,424
8.3
Meituan1
Consumer Discretionary
18,886
2.2
NetEase1
Communication Services
18,830
2.2
Midea1 (including A shares and LEPO2)
Consumer Discretionary
14,161
1.6
Trip.com
Consumer Discretionary
13,004
1.6
Tencent Music Entertainment ADR3
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 International1
Consumer Discretionary
10,193
1.2
Anta Sports1
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 ADR3)
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 Investments4
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 Tinto4
Materials
9,538
1.1
BHP4
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 Acc5
-
12,455
1.5
Total United Kingdom
12,455
1.5
Italy
Prada1
Consumer Discretionary
7,850
0.9
Total Italy
7,850
0.9
Total Investments6
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%).
1Listed in Hong Kong. 2Listed in Luxembourg. 3Listed in the USA. 4Listed in the United Kingdom. 5Predominantly invested in Asia. 6Total 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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