Schroder AsiaPacific - Half-year Report
23/05/2023 07:00
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RNS Number : 2453A Schroder AsiaPacific Fund PLC 23 May 2023
Schroder AsiaPacific Fund plc
Half Year Report and Accounts
Schroder AsiaPacific Fund plc hereby submits its Half Year Report for the
period ended 31 March 2023 as required by the Financial Conduct Authority's
Disclosure Guidance and Transparency Rule 4.2.
The Half Year Report is also being published in hard copy format and an
electronic copy of that document will shortly be available at the link below:
http://www.rns-pdf.londonstockexchange.com/rns/2453A_1-2023-5-22.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2453A_1-2023-5-22.pdf)
This is also available to download from the Company's website
https://www.schroders.co.uk/asiapacific
(https://www.schroders.co.uk/asiapacific)
The Company has submitted its Half Year Report to the National Storage
Mechanism and it will shortly be available in unedited full text at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Enquiries:
Kerry Higgins
Schroder Investment Management Limited
Tel: 020 7658 6189
Chairman's Statement
Performance
Over the six months ended 31 March 2023, the Company's NAV produced a total
return of 8.1%, outperforming the 4.9% total return from the Company's
Benchmark Index, the MSCI All Countries Asia (excluding Japan). The Company's
share price produced a total return of 8.7% over the period.
Performance over the period was helped by strong stock selection across a
number of markets including India, Hong Kong, Taiwan and China, which more
than offset the negative attribution to performance from the underweight to
China and allocation to Vietnam.
Further analysis of performance may be found in the Investment Manager's
Review.
Investment Management
I am pleased to announce that Abbas Barkhordar, who previously had been
Assistant Manager, will co-manage the portfolio alongside Richard Sennitt from
1 June 2023. Richard will remain as lead manager. The team draw upon
Schroders' deep resources in Asia and the research team based across the
region continue to play an integral role.
Discount management
The Company continued to be active in buying back its shares during the
period and a total of 3,240,000 shares were purchased for cancellation over
that time at a cost of £16,050,000. Since the end of the period, the Company
has bought back an additional 990,000 shares. The discount narrowed slightly
from 10.8% at the start of the period to 10.6% as at 31 March 2023.
The Board continues to monitor the Company's discount levels and regularly
reviews the Company's share buy- back policy.
Gearing
The Company was 0.2% geared at the start of the period and at 31 March 2023
held a net cash position. The Board continues to keep gearing under
consideration and the Manager has access to a £75m revolving credit facility,
and an overdraft facility, which will be utilised when the Manager believes
that the use of borrowing will be accretive to returns.
Board succession
As part of its succession plans, the Board welcomed Rupert Hogg as an
additional independent non-executive Director with effect from 1 May 2023.
Rupert has over 30 years international business experience gained through
senior executive level positions in various organisations, including a number
of large Asian based companies. He joined John Swire & Sons Limited, part
of the Swire conglomerate of businesses, in 1986 and worked with the group in
Hong Kong, Southeast Asia, India, Korea, Australia and the United Kingdom.
Between May 2017 and August 2019, Rupert was Chief Executive Officer of Cathay
Pacific Airways Limited and Chairman of Hong Kong Dragon Airlines Limited,
Rupert has also served as Chief Operating Officer of Cathay Pacific Airways
Limited, a Director of Cathay Pacific and John Swire & Sons (H.K.)
Limited, Chairman of AHK Air Hong Kong Limited and a Director and Chairman of
the executive committee of Cathay Dragon.
The Board welcomes Rupert's depth of expertise and knowledge and he will be
standing for election at our next annual general meeting.
Outlook
After a difficult period to September 2022 it has been good to see
performance, both in relative and absolute terms, rebound over the period.
China's reopening after Zero COVID and a general expectation that inflation
and therefore interest rates are peaking has aided markets. However,
geopolitical issues remain, not least increased tensions between the USA and
China, as does the uncertainty about the medium term consequences of higher
interest rates on the global economy and financial system.
However, our Investment Manager believes that overall aggregate valuations in
Asia are trading at or below long term averages and that this does potentially
set up a constructive backdrop for Asian markets in the coming months.
James Williams
Chairman
22 May 2023
Investment Manager's Review
The NAV per share of the Company recorded a total return of 8.1% over the
six months ended 31 March 2023. This was ahead of the performance of the
Benchmark, which rose by 4.9% over the same period. (Source: Morningstar, net
of fees, cum income NAV return).
Asian markets experienced huge swings in sentiment over the six months
to the end of March 2023, seeing steep falls in China and Hong Kong during
October 2022 in the run up to, and post, the Communist Party Congress before
seeing a dramatic recovery driven by the Chinese authorities' move away from
Zero COVID. This move took the market, and us, by surprise given the speed and
extent of the reversal. We had expected a slower, more staggered, shift given
the sizeable cohort of the elderly that were still not fully vaccinated and
the political capital that had been invested in the policy.
In addition to this policy reversal, there were a number of positive
developments including a stabilisation in
US-China relations following the G-20 meeting in Bali, where presidents Xi and
Biden met face-to-face. With the party congress and US mid-term elections out
of the way, there was hope that we could see increased cooperation between the
two countries. In this vein, there was a positive development from the US
Public Company Accounting Oversight Board ("PCAOB") inspection of Chinese
accounts where, for now at least, the US seem happy with the access they had
been given, thus likely deferring any forced de-listings of Chinese companies
in the US. Unsurprisingly, Chinese American Depositary Receipts ("ADRs")
responded very positively to this. Furthermore, in China, there was a shift in
tone around regulation towards the internet companies, together with the
approval of a number of games by leading developers and further announcements
of government support for the troubled residential property market. All this
led to a very rapid rise in the market and the China index outperformed over
the period. At one point it was up by nearly 50% from its end-October 2022
lows, before selling off as some of the re-opening euphoria died back along
with renewed geopolitics concerns.
Elsewhere, there was also a change of fortune among a number of the major
markets - Korea and Taiwan outperformed, with Indonesia and India the main
laggards as investors took profits following their strong performance
throughout 2022. In part, this rotation into the North East Asian markets was
driven by an expectation that the information technology ("IT") cycle was
starting to bottom, after a sell off in the sector due to a slowing demand
outlook that had seen valuations start to trade near cyclical lows for a
number of names. Leading companies in the sector performed well -
semiconductor manufacturer Samsung Electronics and foundry company Taiwan
Semiconductor Manufacturing Company ("TSMC") were both up by around 20% over
the period for instance. The Indian market had also started to look expensive
and was seen as a source of cash for investors looking to fund increased
exposure to North Asian markets.
Despite the deteriorating outlook for global growth, inflation pressures
remained elevated which disappointed investors, as US interest rates would
likely remain a headwind for longer. Towards the end of the period global
markets were impacted by the collapse of Silicon Valley Bank and Credit Suisse
and the potential wider impacts on the financial system. Although we believe
that there are relatively few parallels between these specific cases and the
Asian banks, which we discuss later on, this did see financials underperform
over the period despite banks' earnings benefitting from rising interest
rates. Defensive sectors generally underperformed over the period, with
utilities particularly weak following a short seller's report on the Adani
group in India which saw those group companies under pressure. As described
above, the IT sector performed particularly well as did the communication
services sector where some of the more growth-orientated internet platform
names, such as Tencent and SEA, performed strongly.
Performance and portfolio activity
Absolute and relative performance over the period was helped by strong
stock selection across a number of markets including India, Hong Kong, Taiwan
and China which more than offset the negative contributions to performance
from the underweight to China and allocation to Vietnam. Stock selection in
Hong Kong and China was boosted by non-bank financials, including insurance
names AIA and Ping An Insurance, that were beneficiaries of the end to the
Zero COVID policy in China which should see a pick up in policy sales. AIA in
particular will benefit from the return of mainland Chinese visitors to Hong
Kong, who historically have been significant purchasers of insurance there.
Infrastructure spend beneficiaries, such as supplier of construction equipment
Sany Heavy Industry, also performed well as did Prada, the luxury consumer
goods company, where a recovery in demand has become apparent.
Our stock picks in Taiwan performed well, including IT names such as fabless
integrated circuit design houses Novatek and Mediatek and foundry TSMC, as did
window shutter manufacturer Nien Made. Vietnam performed poorly due to a
combination of a slowing export sector outlook on global growth concerns, as
well as uncertainties over banks' exposure to the property sector following a
government tightening of regulations and an anti-corruption campaign.
From a sector perspective, our overweight to, and stock selection in, IT was
the biggest contributor, due to both our names in Taiwan (as above) and in
Korea where Samsung Electronics and electric vehicle ("EV") battery
manufacturer Samsung SDI performed particularly strongly. Our overweight to
financials was a negative, impacted by the global retracement of banks
following the Silicon Valley Bank and Credit Suisse collapses, but this was
more than offset by the underweights to some of the more defensive areas
including consumer staples and utilities. Our holdings in Hong Kong property
names also added value as the move away from Zero COVID was expected to lead
to a return of shoppers and workers to the malls and offices.
The geographic exposure in the Company's portfolio continues to be mainly
spread between China, Taiwan, Hong Kong, India, Korea and Singapore. Over the
period, we added to positions in Hong Kong, including Hong Kong Exchange,
insurance company AIA and Bank of China (Hong Kong) and remain overweight
there. China remains a substantial underweight but is, in part, offset by this
overweight to Hong Kong. The Hong Kong market, in general, looks more
attractive from a valuation perspective with a number of names set to benefit
from the opening of the border with the mainland. Elsewhere, we reduced our
exposure to the Indian market earlier in the period, as valuations,
particularly amongst some of the domestic names, looked relatively expensive.
Here, sales included auto company Maruti Suzuki and logistics provider
Container Corporation of India. Towards the end of the period valuations were
starting to look more reasonable and we initiated new positions in Oberoi
Realty, a Mumbai based property company, and Mphasis, an IT services name that
had been sold down to attractive levels.
Sectorwise, our largest exposure is to the IT sector, where we continue to
like the Korean and Taiwanese names, followed by the financials where we have
a broad exposure to not only the banks but also the exchanges and insurers.
Although near term earnings in the IT sector have been seeing downward
revisions, we continue to see some strong long-term drivers for growth around
digitisation, the roll-out of 5G and 'Internet of Things' and Artificial
Intelligence ("AI"). We added to our exposure to communications services
companies, where the internet related names have underperformed, including The
Association of Southeast Asian Nations ("ASEAN") focussed e-commerce and
mobile gaming company SEA that is executing on a plan to bring forward
profitability. Reductions in the consumer discretionary and industrials
sectors centred on the Indian sales mentioned above.
Top three contributors and top three detractors at a market level, six months
to 31 March 2023 (% points)
Total contribution
India 1.0
Hong Kong 0.9
Taiwan 0.8
Singapore 0.0
Thailand -0.2
Vietnam -0.5
Outlook and policy
We entered the Year of the Rabbit with the hope that China's re-opening and
the potential for a softer US dollar and peaking US rate hike cycle should
provide a more supportive backdrop for Asian markets, although slowing global
growth would inevitably be a headwind given Asia's position as manufacturer to
the world. More recently the collapse of several regional banks in the US and
the proposed takeover of Credit Suisse have added to concerns over financial
sector risk globally, as well as the potential knock-on impact on growth.
Geopolitics remains a risk with US-China relations, Taiwan and the Ukraine all
areas of tension.
Looking first at the U-turn in China's Zero COVID policy - which
unsurprisingly saw the Chinese market rally hard off its lows, rising some 50%
before pulling back. Clearly the move away from Zero COVID is a positive from
an economic perspective and, when combined with the stimulus measures that
have been announced, particularly towards the property sector, this should
help remove the tail risk of a hard landing in China centred on the property
market. We remain very underweight China and, from a reopening standpoint, it
feels as though much of the upside has already been priced in.
Notwithstanding the recent pullback, valuations of many of the 'reopening
plays' pre the U-turn on COVID were not particularly attractive, as there was
already an expectation that 2023 would see a move away from Zero COVID -
albeit very few, including ourselves, expected it to happen as rapidly as it
has. Following the rally, valuations in a lot of these names rose well above
historic levels, even factoring in a large recovery in profits.
Other areas have in part also benefitted from this change in policy, together
with a perceived lowering of risk from a regulatory perspective. Statements at
the Central Economic Work Conference ("CEWC") in December 2022 around equal
support for state owned and private owned enterprises, as well as support for
the internet platform companies, helped here. This, along with a diminished
ADR-delisting risk, saw the likes of Alibaba rally strongly from their lows.
Whilst things have improved from a regulatory perspective, we remain sceptical
that risks around 'national service' have entirely gone away, as highlighted
by the recent use of "golden shares", and thus think that long term returns in
a number of areas in the market have likely come down.
Lastly, although the domestic demand outlook has improved in China, the
external side is moving in the opposite direction, with net exports likely to
continue to be under pressure through 2023. Given its importance in employment
(nearly a quarter of the workforce), this slowdown will have obvious
ramifications for growth.
All this means we remain meaningfully underweight China, although we are still
looking for opportunities to add to stocks that have lagged in areas which are
less obvious beneficiaries, but where we think the long term opportunity
remains attractive. We are, however, more positive on Hong Kong, where
valuations are lower and the special administrative region ("SAR") will see a
recovery as the border with the mainland opens and tourists come back. Given
this, and as mentioned above, we did add to some of our names there including
AIA, Bank of China (Hong Kong) and HK Exchange.
If we look further afield, we think the stabilisation of China's economy and
rebound in consumption, albeit most evident in services rather than goods,
will also help a number of regional names including some of the IT companies
in Korea and Taiwan, resource names in Australia and other companies that will
benefit from an increased level of travel by Chinese for example in Thailand
and Vietnam. The portfolio holdings in these areas should benefit from any
pick up in China and improved mobility.
Elsewhere, as mentioned earlier, India and Indonesia (as well as other ASEAN
markets) appear to be being used as a funding source after strong performance
last year. Valuations on average in India are still elevated but are now
starting to get more interesting following the market's pullback, given the
strong longer term growth story there. So whilst we did reduce our exposure at
the start of the period, with sales including some of the more expensive
domestic names, towards the end of the period we started to add back to names
where value had started to emerge.
Markets globally have been more recently impacted by the collapse of several
regional banks in the US and Credit Suisse and the potential wider impacts on
the financial system. The Asian financial sector has few direct parallels for
the problems faced in these cases. In particular, the Asian banks tend to have
strong deposit franchises, smaller investment portfolios and different
regulatory requirements with regard to adjusting the value of their fixed
income positions to reflect current market conditions. They have been seeing
improved profitability and are generally well capitalised. Most banks we own
are more domestically focussed retail names and in general trade at attractive
valuations and decent dividend yields. Still, we are mindful of the global
tightening in liquidity that we are seeing and the potential contagion risks,
and will continue to monitor our positions carefully. Elsewhere, our
preference for IT continues. The IT names remain sensitive to the global
slowdown and the Korean names, such as Samsung Electronics, despite a recent
rally are still trading at relatively attractive levels from a valuation
perspective. Although the demand slowdown has been worse than we expected,
there are signs that an adjustment on the supply side is starting to take
place as announcements on production and capital expenditure cuts have started
to be seen.
Underweights remain in the more defensive areas of the market, including
consumer staples and utilities, where valuations in our view still remain
relatively full.
Near term, it is likely that we will see further downward revisions to
earnings as global growth slows and an ongoing period of inventory adjustment
amongst companies to reflect this slower growth, which will hopefully put them
in a position to start to grow earnings once more. Given overall aggregate
valuations for the region are now trading at or below long-term averages, this
does set up a more constructive backdrop for Asian markets in the coming year,
barring a global hard landing or a more extreme geopolitical risk event.
To conclude, it is worth remembering that as investors we buy companies not
countries. We are mindful of the impact political and macroeconomic factors
can have on equities and returns, but we are bottom-up stock-pickers first and
foremost, focusing on the company's return prospects and valuation. We do not
try to pick companies which will do well based purely on a particular macro
environment which we have forecast; rather we try to pick well-managed
companies which have sustainable structural advantages. Therefore, a focus on
attractive bottom up ideas, in our view, remains essential.
Market Weights - Company vs. Benchmark Index
Net Asset Benchmark
Value Weight (%) Index
Weight (%)
31 Mar
2023
31 Mar 30 Sep
2023 2022
Mainland China 18.2 18.7 36.8
Taiwan 16.2 15.0 17.1
India 15.0 17.0 14.6
Hong Kong (SAR) 14.4 12.9 7.2
South Korea 12.6 12.4 13.4
Singapore 8.2 8.4 4.0
Australia 3.7 3.8 -
Vietnam 2.6 3.1 -
Indonesia 2.3 2.6 2.1
Thailand 1.8 2.2 2.4
Philippines 1.1 0.9 0.8
Malaysia - - 1.6
Other equities* 3.9 3.2 -
Gearing** - (0.2) -
Total 100.0 100.0 100.0
* UK (including a Unit Trust) and Italy.
** Cash less borrowings used for investment purposes.
Source: Schroders, MSCI, 31 March 2023.
Schroder Investment Management Limited
22 May 2023
Half Year Report
Principal risks and uncertainties
The principal risks and uncertainties associated with the Company's
business fall into the following categories: strategic risk; investment
management and performance risk; financial and currency risk; political risk;
custody risk; gearing and leverage risk; accounting, legal and regulatory
change risk; service provider risk; cyber and climate change risk. A detailed
explanation of the risks and uncertainties in each of these categories can be
found on pages 21 and 22 of the Company's published annual report and
accounts for the year ended 30 September 2022.
These risks and uncertainties have not materially changed during the six
months ended 31 March 2023. However, the Board undertook a review of principal
and emerging risks for the Company while reviewing these accounts. The
Directors noted that geopolitical risk and climate change risk in particular
continue to develop. These matters will continue to be monitored and reported
on in the next annual report as appropriate.
Going concern
Having assessed the principal risks and uncertainties, and the other
matters discussed in connection with the viability statement as set out on
page 23 of the published annual report and accounts for the year ended
30 September 2022, the Directors consider it appropriate to adopt the going
concern basis in preparing the accounts.
Related party transactions
There have been no transactions with related parties that have materially
affected the financial position or the performance of the Company during the
six months ended 31 March 2023.
Directors' responsibility statement
The Directors confirm that, to the best of their knowledge, this set of
condensed financial statements has been prepared in accordance with United
Kingdom Generally Accepted Accounting Practice, in particular with Financial
Reporting Standard 104 "Interim Financial Reporting" and with the Statement of
Recommended Practice, "Financial Statements of Investment Companies and
Venture Capital Trusts" issued in July 2022, and that this half year report
includes a fair review of the information required by 4.2.7R and 4.2.8R of the
FCA's Disclosure Guidance and Transparency Rules.
Investment Portfolio as at 31 March 2023
Investments are classified by the Manager in the region or country of their
main business operations or listing. Stocks in bold are the 20 largest
investments, which by value account for 65.1% (30 September 2022: 60.5% and 31
March 2022: 62.5%) of total investments.
£'000 %
Mainland China
Tencent Holdings(1) 49,606 5.4
Alibaba(1) 30,233 3.3
Midea (including A shares and LEPO) 18,283 2.0
Yum China(1,2) 11,456 1.3
Sany Heavy Industry A 11,068 1.2
Ping An Insurance H(1) 11,066 1.2
JD.com(1) 11,043 1.2
Shenzhou International(1) 9,633 1.1
Hongfa Technology A 7,768 0.8
LONGi Green Energy Technology A 4,198 0.5
Meituan(1) 1,844 0.2
Total Mainland China 166,198 18.2
Taiwan
Taiwan Semiconductor Manufacturing 88,298 9.7
MediaTek 19,083 2.1
Delta Electronics 11,462 1.3
Nien Made Enterprise 9,989 1.1
Giant Manufacturing 8,512 0.9
Hon Hai Precision Industries 6,339 0.7
Novatek Microelectronics 3,393 0.4
Total Taiwan 147,076 16.2
India
HDFC Bank 34,989 3.8
ICICI Bank (including ADR(2)) 28,980 3.2
Infosys 15,487 1.7
Apollo Hospitals Enterprise 14,810 1.6
Tata Consultancy Services 11,921 1.3
Reliance Industries 9,836 1.1
Oberoi Realty 9,062 1.0
Mphasis 7,996 0.9
Delhivery 3,337 0.4
Total India 136,418 15.0
Hong Kong (SAR)
AIA 34,667 3.8
Hong Kong Exchanges and Clearing 22,877 2.5
BOC Hong Kong 19,617 2.1
Techtronic Industries 16,303 1.8
Kerry Properties 11,836 1.3
Hang Lung Properties 11,451 1.2
Swire Properties 9,507 1.0
ASM Pacific Technology 6,437 0.7
Total Hong Kong (SAR) 132,695 14.4
South Korea
Samsung Electronics (including preference shares) 86,648 9.5
Samsung SDI 21,933 2.4
LG H&H 6,258 0.7
Total South Korea 114,839 12.6
Singapore
Oversea-Chinese Banking 21,324 2.3
Singapore Telecommunications 15,873 1.7
Singapore Exchange 14,471 1.6
Sea ADR(2) 11,616 1.3
DBS Bank 11,561 1.3
Total Singapore 74,845 8.2
Australia
BHP Group(3) 10,599 1.2
Rio Tinto(3) 10,417 1.1
Orica 9,107 1.0
Woodside Energy(3) 3,577 0.4
Total Australia 33,700 3.7
Vietnam
Dragon Capital Vietnam Enterprise Investments(4) 17,016 1.9
Vietnam Dairy Products 5,834 0.6
Mobile World Investement 1,200 0.1
Total Vietnam 24,050 2.6
United Kingdom
Schroder Asian Discovery Fund Z Acc(4) 17,864 2.0
Standard Chartered 4,683 0.5
Total United Kingdom 22,547 2.5
Indonesia
Bank Mandiri 20,611 2.3
Total Indonesia 20,611 2.3
Thailand
Kasikornbank NVDR 11,790 1.3
Bangkok Dusit Medical Services NVDR 4,946 0.5
Total Thailand 16,736 1.8
Italy
Prada(1) 13,194 1.4
Total Italy 13,194 1.4
Philippines
International Container Terminal Services 10,057 1.1
Total Philippines 10,057 1.1
Total Investments(5) 912,966 100.0
(1) Listed in Hong Kong.
(2) Listed in the USA.
(3) Listed in the United Kingdom.
(4) Predominantly invested in Asia
(5) Total investments comprises the following:
£'000 %
Equities, including ADRs, LEPOs and NVDRs 863,028 94.5
Collective investment funds 34,880 3.9
Preference shares 15,058 1.6
Total investments 912,966 100.0
The following abbreviations have been used above:
ADR: American Depositary Receipt
LEPO: Low Exercise Price Option
NVDR: Non Voting Depositary Receipt
Income Statement
for the six months ended 31 March 2023 (unaudited)
(Unaudited) (Unaudited) (Audited)
For the six months For the six months For the year
ended 31 March 2023 ended 31 March 2022 Ended 30 September 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments held at fair value through profit or loss - 65,764 65,764 - (44,814) (44,814) - (154,731) (154,731)
Net foreign currency gains/(losses) - 858 858 - (381) (381) - (2,936) (2,936)
Income from investments 6,017 142 6,159 5,804 - 5,804 24,673 - 24,673
Other interest receivable and similar income 66 - 66 1 - 1 12 - 12
Gross return/(loss) 6,083 66,764 72,847 5,805 (45,195) (39,390) 24,685 (157,667) (132,982)
Investment management fee (807) (2,420) (3,227) (911) (2,732) (3,643) (1,728) (5,185) (6,913)
Administrative expenses (677) - (677) (787) - (787) (1,437) - (1,437)
Net return/(loss) before finance costs and taxation 4,599 64,344 68,943 4,107 (47,927) (43,820) 21,520 (162,852) (141,332)
Finance costs (77) (231) (308) (12) (37) (49) (48) (145) (193)
Net return/(loss) before taxation 4,522 64,113 68,635 4,095 (47,964) (43,869) 21,472 (162,997) (141,525)
Taxation (note 3) (624) (175) (799) (539) 208 (331) (1,799) 1,145 (654)
Net return/(loss) after taxation 3,898 63,938 67,836 3,556 (47,756) (44,200) 19,673 (161,852) (142,179)
Return/(loss) per share (note 4) 2.45p 40.24p 42.69p 2.17p (29.08)p (26.91)p 12.04p (99.08)p (87.04)p
The "Total" column of this statement is the profit and loss account of the
Company. The "Revenue" and "Capital" columns represent supplementary
information prepared under guidance issued by The Association of Investment
Companies. The Company has no other items of other comprehensive income, and
therefore the net return/(loss) after taxation is also the total comprehensive
income/(loss) for the period.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
Statement of Changes in Equity
For the six months ended 31 March 2023 (unaudited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2022 16,080 100,956 4,064 8,704 - 726,968 21,415 878,187
Repurchase and cancellation of the Company's own shares (324) - 324 - - (16,050) - (16,050)
Net return after taxation - - - - - 63,938 3,898 67,836
Dividend paid in the period (note 5) - - - - - - (19,030) (19,030)
At 31 March 2023 15,756 100,956 4,388 8,704 - 774,856 6,283 910,943
For the six months ended 31 March 2022 (unaudited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2021 16,486 100,956 3,658 8,704 16,110 894,363 17,664 1,057,941
Repurchase and cancellation of the Company's own shares (132) - 132 - (7,433) - - (7,433)
Net (loss)/return after taxation - - - - - (47,756) 3,556 (44,200)
Dividend paid in the period (note 5) - - - - - - (15,922) (15,922)
At 31 March 2022 16,354 100,956 3,790 8,704 8,677 846,607 5,298 990,386
For the year ended 30 September 2022 (audited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2021 16,486 100,956 3,658 8,704 16,110 894,363 17,664 1,057,941
Repurchase and cancellation of the Company's own shares (406) - 406 - (16,110) (5,543) - (21,653)
Net (loss)/return after taxation - - - - - (161,852) 19,673 (142,179)
Dividend paid in the year (note 5) - - - - - - (15,922) (15,922)
At 30 September 2022 16,080 100,956 4,064 8,704 - 726,968 21,415 878,187
Statement of Financial Position
at 31 March 2023 (unaudited)
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 912,966 993,162 882,801
Current assets
Debtors 3,188 5,234 7,920
Cash at bank and in hand 12,317 14,076 11,343
15,505 19,310 19,263
Current liabilities
Creditors: amounts falling due within one year (14,464) (17,556) (19,964)
Net current assets/(liabilities) 1,041 1,754 (701)
Total assets less current liabilities 914,007 994,916 882,100
Non current liabilities
Deferred taxation (3,064) (4,530) (3,913)
Net assets 910,943 990,386 878,187
Capital and reserves
Called-up share capital (note 6) 15,756 16,354 16,080
Share premium 100,956 100,956 100,956
Capital redemption reserve 4,388 3,790 4,064
Warrant exercise reserve 8,704 8,704 8,704
Share purchase reserve - 8,677 -
Capital reserves 774,856 846,607 726,968
Revenue reserve 6,283 5,298 21,415
Total equity shareholders' funds 910,943 990,386 878,187
Net asset value per share (note 7) 578.15p 605.59p 546.13p
Notes to the Accounts
1. Financial Statements
The information contained within the accounts in this half year report has
not been audited or reviewed by the Company's independent auditor.
The figures and financial information for the year ended 30 September 2022 are
extracted from the latest published accounts of the Company and do not
constitute statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and included the report of the auditor
which was unqualified and did not contain a statement under either section
498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
Basis of accounting
The accounts have been prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, in particular with Financial Reporting Standard
104 "Interim Financial Reporting" and with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" issued by the Association of Investment Companies in July
2022.
All of the Company's operations are of a continuing nature.
The accounting policies applied to these accounts are consistent with those
applied in the accounts for the year ended 30 September 2022.
3. Taxation
The Company's effective corporation tax rate is nil, as deductible expenses
exceed taxable income. The taxation charge comprises irrecoverable overseas
withholding tax on dividends receivable, and overseas capital gains tax.
4. Return/(loss) per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Revenue return 3,898 3,556 19,673
Capital return/(loss) 63,938 (47,756) (161,852)
Total return/(loss) 67,836 (44,200) (142,179)
Weighted average number of shares in issue during the period 158,887,090 164,224,700 163,346,606
Revenue return per share 2.45p 2.17p 12.04p
Capital return/ (loss) per share 40.24p (29.08)p (99.08)p
Total return/(loss) per share 42.69p (26.91)p (87.04)p
5. Dividends paid
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
2022 final dividend paid of 12.0p (2021: 9.7p) 19,030 15,922 15,922
No interim dividend has been declared in respect of the six months ended 31
March 2023 (2022: nil).
6. Called-up share capital
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 March 31 March 30 September
2023 2022 2022
Ordinary shares of 10p each, allotted, called-up and fully paid:
Opening balance of shares in issue 160,800,716 164,860,716 164,860,716
Shares repurchased and cancelled (3,240,000) (1,320,000) (4,060,000)
Closing balance of shares in issue 157,560,716 163,540,716 160,800,716
7. Net asset value per share
Net asset value per share is calculated by dividing shareholders' funds by
the number of shares in issue at 31 March 2023 of 157,560,716 (31 March 2022:
163,540,716 and 30 September 2022: 160,800,716).
8. Financial instruments measured at fair value
The Company's financial instruments within the scope of FRS 102 that are
held at fair value comprise its investment portfolio.
FRS 102 requires that financial instruments held at fair value are categorised
into a hierarchy consisting of the three levels below. A fair value
measurement is categorised in its entirety on the basis of the lowest level
input that is significant to the fair value measurement.
Level 1 - valued using unadjusted quoted prices in active markets for
identical assets.
Level 2 - valued using observable inputs other than quoted prices included
within Level 1.
Level 3 - valued using inputs that are unobservable.
The Company's investment portfolio was categorised as follows:
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Level 1 912,966 993,162 882,801
Level 2 - - -
Level 3 - - -
Total 912,966 993,162 882,801
There have been no transfers between Levels 1, 2 or 3 during the period
(period ended 31 March 2022 and year ended 30 September 2022: nil).
9. Events after the interim period that have not been reflected
in the financial statements for the interim period
The Directors have evaluated the period since the interim date and have not
noted any significant events which have not been reflected in the financial
statements.
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