Schroder Orientl Inc - Annual Results
24/10/2024 07:00
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RNS Number : 3881J Schroder Oriental Income Fund Ltd 24 October 2024
Schroder Oriental Income Fund Limited (the "Company")
Annual Results
The Company's Annual Financial Report for the year ended 31 August 2024 is
being published in hard copy format and an electronic copy will shortly be
available to download from the Company's website:
www.schroders.co.uk/orientalincome. Please click on the following link to view
the document:
http://www.rns-pdf.londonstockexchange.com/rns/3881J_1-2024-10-23.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3881J_1-2024-10-23.pdf)
Key highlights
· The Company is pleased to report another period of strong
performance. The net asset value (NAV) total return per share for the
financial year ended 31 August 2024 was 18.2%, with the share price total
return a little lower at 15.3%. These returns compare very favourably with our
reference index, the MSCI AC Pacific ex Japan Index in Sterling terms, which
rose by just 8.6%.
· Our significant underweight allocation to and strong stock
selection in China was a major positive contributor to relative performance,
as was stock selection in Taiwan, Korea and Hong Kong.
· In respect of the financial year the Company declared dividends
totalling 12.00 pence per share, an increase of 1.7% year on year. This
represents a yield of 4.4% on the latest share price. This is the 19th year of
unbroken dividend growth.
· Over the financial year, the Company repurchased 11,395,000
shares at an average discount of 6.1%. The Company remains committed to doing
so in the future when it is in the best interests of shareholders.
· Following the AGM on 3 December 2024, Paul Meader will be
succeeded by Nick Winsor as Chairman of the Company.
Investor presentation
Our portfolio manager, Richard Sennitt, alongside Abbas Barkhordar, will be
giving presentations at an investor webinar on Wednesday 4 December 2024 at
2.00 pm, which can be signed up to via the following link:
https://www.schroders.events/SOI24 (https://www.schroders.events/SOI24) .
Paul Meader, Chairman of Schroder Oriental Income Fund Limited, commented:
"Asia remains a vibrant and growing region, largely unfettered by the
headwinds, such as huge government debts and weak productivity growth, faced
by Europe and North America. The region remains fertile territory for a
disciplined stock picker such as Schroders and the Company remains as relevant
for investors today as it was at inception."
Enquiries:
Schroder Investment Management Limited
Charlotte Banks/Kirsty Preston (Press) 020 7658 2106
Natalia de Sousa (Company Secretary) 020 7658 6000
Chairman's Statement
"A pound invested at the launch of the Company in 2005 would today be worth
£6.38 if you had reinvested your dividends. In comparison, the Asian region
(as reflected by our reference index) would have produced £4.14 and,
interestingly, a pound invested in the FTSE100 Index would be worth just
£3.27."
Performance and background
I'm pleased to be able to report another period of strong performance for the
Company. The NAV total return per share for the financial year ended 31 August
2024 was 18.2%, with the share price total return a little lower at 15.3%.
These returns compare very favourably with our reference index, the MSCI AC
Pacific ex Japan Index in sterling terms, which rose by just 8.6%. Much of the
market performance came in the second half of the period as the outlook for US
interest rates brightened, boosting sentiment in equity markets and weakening
the US dollar, which traditionally helps the Asian region. The Portfolio
Manager provides a full account of the period in its report below and it does
appear that the outlook for Asia is now improving.
This is my last report to you. Following nine years' service, I am not seeking
re-election at the Company's Annual General Meeting to be held on 3 December
2024. I have thoroughly enjoyed my time as Chairman and, reflecting over the
last nine years, much has changed during that period. To name but a few
milestones: globalisation has reversed towards fragmentation and
protectionism, the pandemic disrupted global trade, authorities' policy
responses and war saw inflation soar and interest rates "normalise" and we saw
Richard Sennitt, supported by Abbas Barkhordar, take the reins from Matthew
Dobbs as day to day Portfolio Manager of the Company. However, despite all of
that, Schroders' approach to managing your money has remained calm, consistent
and effective. Schroders continue to use their deep, long-standing Asian
expertise to seek quality stocks with reliable and growing income. They are
stock-pickers and do not rely upon predicting events or trading based on
macro-economic trends. Their approach has proven resilient and the Company has
notably outperformed the reference index over one, three, five and ten years,
as well as since inception in 2005. It has generated highly attractive
returns. Indeed, a pound invested at the launch of the Company in 2005 would
today be worth £6.38 if you had reinvested your dividends. In comparison, the
Asian region (as reflected by our reference index) would have produced £4.14
and, interestingly, a pound invested in the FTSE100 Index would be worth just
£3.27.
Nonetheless, one area that has seen constant evolution of approach is
Schroders' embedding of environmental, social, and governance ("ESG")
considerations into investment decision making. As we have noted before,
Schroders have long considered sustainability as a key factor in investing
and, more recently, have invested materially in data and analytics to enhance
this input. During the period, the Board deepened its scrutiny of how ESG is
integrated into the Manager's investment process in the context of evolving
regulation and industry best practice as well as better understanding the
influence on our portfolio decision making. More information on this topic can
be found in the full set of annual financial statements.
I mentioned earlier that I am handing over the baton and I am pleased to be
able to announce that Nick Winsor will succeed me as Chairman from the AGM.
Nick has served on the Board since 2020 and is an experienced non-executive
following an executive career in financial services in Asia and Europe. During
the past financial year, we were sad to say goodbye to Kate Cornish-Bowden who
retired as a director and we welcomed Sam Davis to the Board in July this
year. Sam was CEO of Putnam Investments Limited and co-head of equities for
Putnam. We are delighted that he has agreed to join us and he is already
making his mark. Going forward, the Board has a really strong combination of
skills and expertise and combines corporate memory and new perspectives.
As the Portfolio Manager notes in his report, payouts from our portfolio have
begun to improve again. The recent strengthening of sterling has tempered the
benefit of this a little in our hands but, nonetheless, with payout ratios in
the Asian region remaining very undemanding, we can have increased confidence
in our future earnings stream. This has enabled us, once again, to grow our
own dividend to you, even though receipts over the year, once converted into
sterling, were down a little relative to the prior year. We retain very robust
revenue reserves should receipts dip again in future years. In respect of the
financial year we declared dividends totalling 12.00p per share, an increase
of 1.7% year on year. This represents a yield of 4.4% on the share price as at
22 October 2024. This is our 19th year of unbroken growth in our dividend. The
Board is confident of further dividend growth in the future and that would see
us become an "AIC Dividend Hero"1 absent unforeseen circumstances.
Strong performance and an attractive, growing dividend have not been
sufficient, however, to narrow our share price discount to NAV. This remains
stubbornly in mid single digits and, it would seem, will need to await a turn
in the tide of sentiment to the investment trust sector as a whole before it
will return to the modest premium that we were accustomed to prior to COVID.
In the meantime, the Board has continued to repurchase shares on days where
there was a mismatch between buyers and sellers. Over the financial year, the
Company repurchased 11,395,000 shares at an average discount of 6.1%. We
remain committed to repurchasing shares in the future when we believe that it
is in the best interests of shareholders.
Earlier, I noted the strong performance of the Company over its 19 years of
life. The question is, looking forward, will this persist? As I hand over the
baton, I see no reason why not. Asia remains a vibrant and growing region,
largely unfettered by the headwinds, such as huge government debts and weak
productivity growth, faced by Europe and North America. And issues that have
troubled Asia in the past, like large current account deficits or poor
corporate governance, are generally diminishing. China faces challenges in
some sectors of its economy and, in the longer term, declining demographics.
However, recent years have shown that the rest of the region can begin
successfully to uncouple its fortunes from China. Economic cycles will come
and go, markets will wax and wane, just as they have since 2005. Yet, the
region remains fertile territory for a disciplined stock picker such as
Schroders and the Company remains as relevant for investors today as it was at
inception.
Finally, I would like thank you for your support and loyalty to the Company.
It has been my privilege to serve this Company and I am confident that I leave
you in excellent hands as regards both the Board and in the Manager.
Paul Meader
Chairman
23 October 2024
Investment Manager's Review
"Over the past six months, Asian markets have proven to be relatively
resilient, making absolute gains and matching global returns."
In what has been a volatile year for Asian markets, I'm happy to be able to
say that the Company has achieved strong absolute gains whilst meaningfully
outperforming the region. China's economic struggles weighed on broader
sentiment but the global drivers of falling interest rate expectations and a
robust technology sector, an area where Asia has some of the world's leading
companies, saw Asian markets rebound in the second half of 2024, matching
global returns.
Against this backdrop, the net asset value per share of the Company recorded a
total return of 18.2% over the 12 months to end August 2024 helped by
meaningful allocations to Taiwan, which is heavily exposed to the AI theme,
and Singapore, where financials were strong. This compared favourably to a
regional benchmark which rose 8.6% over the period. Four interim dividends
have been declared in respect of the financial year totalling 12.00p (11.80p
last year).
This report delves further into the drivers of this performance as well as
factors influencing the current investment landscape and the potential
implications for investors.
Past performance is not a guide to future performance. The value of
investments and the income from them may go down as well as up and investors
may not get back the amounts originally invested.
At the interim we had said that the backdrop for Asian markets was more
constructive, but why did we see a market rally in the second half?
Firstly, during the period expectations for interest rate cuts in the US waxed
and waned, but ultimately disinflationary trends across major global economies
led to increased confidence that developed market central banks would be
moving into an interest rate-cutting cycle in the second half of 2024. This is
generally a helpful backdrop for markets.
Secondly, markets rose globally, with the "Magnificent Seven" leading the
market higher, driven by optimism over the impact of artificial intelligence
("AI") and the knock-on demand for technology products being sold by the likes
of Nvidia. This was mirrored in Asia, with the information technology ("IT")
sector by far the strongest sector over the year, not only benefitting from
the AI thematic but also a cyclical improvement across the broader industry.
Country-wise, Taiwan was the biggest beneficiary of this trend as demand for
the most advanced logic processors, essentially manufactured by one company
globally (Taiwan Semiconductor Manufacturing Corporation - "TSMC"), continued
unabated. This also led to companies in the supply chain, however peripheral,
making significant gains as retail interest took hold in many segments of the
market.
Singapore and Australia were the two other major markets that outperformed the
reference index over the period. Australia benefited from the same
disinflationary trends seen in other major markets, with inflation appearing
to be peaking, leading to hopes that rates had peaked and could start to be
cut following 13 successive hikes. Banks performed strongly against this
backdrop, with resources coming under pressure as concerns over the strength
of the Chinese economy and its troubled property sector gained traction. In
Singapore, the market saw broad based strength with financials doing well as
banks were seen as beneficiaries of the delay of rate cuts under a
"higher-for-longer" scenario seen during the second half.
There was a wide spread between the highest and lowest returns across the
region. Whilst Taiwan benefitted from the global AI thematic, China and Hong
Kong were the laggards amongst the major markets, with both falling in
sterling terms, principally on the back of slowing domestic growth. In China,
sentiment swung on the expectations around potential stimulus packages, which
generally disappointed the market, tending to be piecemeal in nature and
lacking the 'shock and awe' of packages seen in the post-GFC (Global Financial
Crisis) period. All this saw consumer confidence stagnate at low levels, with
the weak property sector adding to the gloom. This weakness sparked a raft of
measures to try and stabilise the sector, including a plan to buy in excess
inventory from the private sector with the intention to repurpose units as
social housing, in addition to monetary easing and a rolling back of
restrictions around property purchases. On the bright side, exports showed
signs of a pick up, and, although international investor concerns around
geopolitical and domestic regulatory risks continued to weigh, there was some
relief around geopolitical tensions, with the meeting of Presidents Xi and
Biden at last year's November APEC (Asia-Pacific Economic Cooperation) summit
in California. Additionally, the Taiwanese election passed off uneventfully,
with a result that was broadly in line with expectations. Nevertheless, there
is little sign of any easing of US policies towards China, if anything quite
the opposite, and, with a presidential election looming in the US later in the
year, little reason to expect much on this front in the short term.
Looking more broadly across the region, there has been an increased focus in
some markets on shareholder returns which could potentially result in improved
dividend payouts. This includes Korea, where the government launched a "value
up" programme (on improving corporate governance and shareholder returns)
earlier in the year, not unlike that seen in Japan. Progress here is likely to
take time and requires some legislative changes to maximise its impact, but
despite this we have seen some increases in dividend payouts coming out of
companies. China has also been encouraging companies to focus more on
shareholder returns - as a result, we have seen some companies increase the
frequency of dividends and there has been a marked increase in buybacks in
some sectors, such as amongst the internet names. These are obviously positive
changes and augur well for a potential improvement of payout ratios in the
medium term. Unsurprisingly dividends over the period were influenced by
earnings. As an example, financials broadly saw increases as banks benefitted
from higher interest rates which boosted margins and earnings. Where dividends
were pared back, it tended to be in stocks in more cyclical areas such as
Australian resources, or other economically sensitive industries. Otherwise,
as highlighted in the Chairman's Statement, sterling has also generally been
firmer against most currencies, in year-on-year terms, which has been a
headwind.
Positioning and Performance
As we highlighted above, the Company made a strong positive return over the
period, with a NAV total return of 18.2% which was considerably better than
the reference index return of 8.6%. Our significant underweight allocation to
and strong stock selection in China was a major positive contributor to
relative performance, as was stock selection in Taiwan, Korea and Hong Kong.
In China, strong selection came from stocks such as Midea, a manufacturer of
branded white goods including air conditioners, and an absence of some of the
e-commerce companies that pay little or no dividend. Although our overweight
to Hong Kong was a headwind, our stock selection there more than offset that,
with telecom operator HKT Trust & HKT Ltd the standout performer.
Positive stock selection in both Taiwan and Korea was also noteworthy, with IT
companies the driver including fabless design house MediaTek, foundry TSMC and
Hon Hai a contract manufacturer that is benefitting from the increased demand
for high end servers used in AI. In Korea, companies that could benefit from
an improvement in shareholder focus also did well, including non-life
insurance company Samsung Fire & Marine. The ASEAN markets of Indonesia
and the Philippines also made positive stock contributions through holdings
such as Bank Mandiri and port operator ICTSI, as did the overweight to and
stock selection in Singapore. Stock selection in Australia lagged, as our
positive financials return was offset by our positions in resources and
telecom operator Telstra. From a sectoral perspective, stock selection in and
overweight to IT and financials were our main positive contributors. Stock
selection in industrials, materials and consumer staples was also positive.
The overweight to real estate was the biggest drag.
The geographic exposure in the Company's portfolio continues to be focused on
core markets such as Taiwan, Australia, Singapore, Korea, and China. China
remains a substantial underweight, but we have looked to narrow that given its
relative underperformance and sell off in certain areas. This has seen us buy
a new position in NetEase, the video game company which operates in an
increasingly consolidated marketplace and has improved its shareholder return
policy. In our view, given its undemanding valuation, it has the potential to
benefit from its upcoming pipeline of game launches. Other additions included
to Shenzhou the sportwear manufacturer which had been sold down on a weaker
outlook. The underweight continues to be partly offset by the overweight to
the Hong Kong market which, in general, looks more attractive from a valuation
perspective, albeit we have reduced exposure to some of the real estate names,
including selling out of Fortune REIT and Kerry Properties, which had done
relatively well. We also initiated a position in regional insurer AIA which
has come out with an improved shareholder return policy, having been sold down
dramatically on concerns over the Hong Kong business. Following its sell down
valuations are now much more attractive and it should be a key beneficiary of
rising levels of insurance cover, from what are very low levels when compared
to markets like the UK, as increasing GDP growth leads to a growing middle
class and increased affordability. Elsewhere, we continue to like Singapore,
with positions in the banks and Singapore Telecom, as well as being overweight
to some of the smaller markets such as Indonesia and the Philippines.
From a sectoral perspective our main additions were into some of the
traditionally more defensive areas that had underperformed, such as consumer
staples and healthcare. In Australia, we added to positions in supermarket
operator Coles, and diagnostics company Sonic Healthcare. We also added to
consumer discretionary via a new position in Kia, the Korean automaker that is
well positioned in the growing hybrid segment. Its models have been well
received by the market, resulting in lower incentives, and margins have
benefited from an improvement in mix. It also should be a beneficiary of the
"value up" programme where there is scope for further improvements in
shareholder returns. These additions were, in part, financed by reductions to
real estate, selling out of a number of names, not only in Hong Kong but also
in Thailand and Australia. In financials we made a net reduction to our
overweight by reducing our banks exposure, including the Australian names and
SMFG in Japan, that had performed well. In part, the proceeds were reinvested
in Singapore banks which had lagged earlier in the period on concerns over
falling rates. Financials and IT remain the Company's two largest exposures,
with the IT exposure predominantly coming through positions in Taiwan and
Korea, where both the cycle and long-term outlook remains favourable.
Investment Outlook
I'll start by looking at a couple of the concerns that the market has. Amongst
these, geopolitics has continued to be a concern in the region, with tensions
around US-China relations, Taiwan, Ukraine and the Middle East all
contributing to investor caution. However, regional elections (Taiwan, Korea,
Indonesia and India) have all passed reasonably smoothly, but it is the
upcoming US elections which appear finely poised, that have potentially very
divergent impacts on Asia depending on the result. Here, there is potential
for increases in tariffs on Chinese (and anyone else importing into the US)
exports if Trump is elected. Although there is uncertainty as to what further
tariffs or restrictions are put on China's (and other countries') ability to
do business in the US, it is clear that in such a tight electoral race there
is likely to be quite a lot of noise on these issues, which could well
increase volatility.
Within the region, the Chinese economy remains weak as consumer confidence is
still extremely low, with this increasingly being reflected in poor retail
sales and greater evidence of downtrading. This weak confidence in part
reflects a weaker job market together with falling property prices. All this
has meant the consumer has become more risk averse which has resulted in a
meaningful increase in savings versus consumption.
The key domestic overhang remains the property market, where activity and
prices are yet to recover from earlier significant falls. Although the
government has made some announcements to try to put a floor under the
property market, in reality the fiscal sums backing these interventions are
(so far) very small compared to the scale of the problem, and unlikely to make
more than a marginal difference. Given this, and the structural challenges
facing stock-pickers in China (poor capital allocation, structurally lower
nominal growth, unpredictable regulatory and policy shifts, high debt levels),
we remain significantly underweight the market albeit less so than where we
were 12 months ago with the biggest underweight there being towards the
internet platform companies. Although these names have been increasing their
returns to shareholders this is principally being done via buybacks, rather
than through dividends, so it remains an area where we are likely to be
underweighted.
It is noteworthy that the most recently announced stimulus measures, at the
time of writing, appear more substantive and coordinated and have provoked a
meaningful rally in the stock market. Whilst we also view the stimulus as
positive, in our view, the rally has already started to discount further
easing and, therefore, risks disappointing. Aside from the size of any further
measures it is also how it is spent that is key with a need, in our view, to
have more of a focus on the demand side of the economy if the consumer is to
get out of its malaise.
The Hong Kong market continues to suffer from not only the spillover impacts
of a weak China, but also the high level of interest rates, which are
inappropriate for the weak domestic economy. Whilst we have reduced our
overweight to real estate held via the Hong Kong market we have also taken
advantage of weak stock prices to add into other areas, such as non-bank
financials. With US interest rates now having started to be cut, this should
help to ease monetary conditions which should be supportive for the economy
and market.
Australia continues to be a market that has historically offered strong
long-term returns, in large part due to the reinvestment of dividends, but
valuations are not obviously cheap versus the rest of the region, given its
outperformance. Our principal exposure continues to be through the materials
and financial sectors, but a derating of the health care sector and
underperformance of consumer staples has seen us add to exposure there. More
recently, the prospects of a soft landing have also seen banks perform
strongly, which has led us to reduce our exposure to them. We continue to
maintain exposure to the commodities names via the diversified resource names,
where capital expenditure has remained relatively restrained, limiting supply
in what ultimately remains a sector that is expected to benefit from ongoing
decarbonisation spend. In the South-East Asian region, we are most exposed to
Singapore, which is benefitting from its increasing status as a regional
wealth management hub, as well as the growth of its ASEAN neighbours.
From a sector perspective, we remain overweight IT, given our positive view on
the structural growth drivers behind global demand for technology,
particularly advanced semiconductors. Valuations have moved higher on cyclical
improvements as well as the surge in demand for AI-related hardware. However,
we remain comfortable with the valuations of what we hold in the portfolio at
present but are mindful we don't want to overstay our welcome.
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. Many of our
holdings are in the more mature markets, such as Singapore, which in general
trade at attractive valuations and decent dividend yields, but we also have
exposure to their faster growing hinterland. Direct exposure to faster growing
markets is largely through Indonesia, where credit penetration is relatively
low. With interest rates starting to come down, there has been some concern
over the impact that this could have on bank margins. Albeit cuts will have an
impact, in part, this should be offset by lower credit costs, potentially
higher loan growth and an increase in wealth management revenues.
Aggregate valuations for the region are no longer particularly cheap, now
trading at slightly above long-term averages. However, this masks a large
variation across individual markets where Singapore, China and Hong Kong,
amongst others, look relatively cheap versus history, whilst Taiwan looks
relatively expensive and we have marginally reduced the size of our weighting
there. Historically, a weaker US dollar has been positive for Asia, rather
than interest rate cuts per se, although the latter are clearly supportive of
greater liquidity.
The other historically positive driver of Asian markets is the export cycle,
as this tends to be correlated with underlying earnings per share ("EPS")
growth and here we believe there has been an improvement. Inventory excesses
from the post-COVID period have been run down and many industries have become
more disciplined around production and supply additions, as highlighted in the
interim report. This has seen exports recover for many Asian countries and we
believe a soft landing in the US would be supportive of that trend continuing,
albeit at a slower delta. Here, cuts in interest rates are key to avoid a
sharper slowdown in US demand.
Often there is concern over the sustainability of dividends across Asia, given
how it is viewed as a more volatile and cyclical region versus other parts of
the world. Whilst we believe there is some truth to that assertion, it is also
true that the payout ratio for the region does not look extended and gearing
ratios look relatively low versus elsewhere, meaning that there should be
resilience in dividends should a slowdown eventuate.
Over the longer term some markets where payout ratios have been lower, such as
Korea and China, are starting to take action which should also be helpful.
However, one area which could lead to an increase in volatility of payments to
the sterling investor is the level of sterling versus Asian currencies. Here,
the currency has been quite strong over the year, thus impacting the
progression of dividend growth.
In summary, with rates already starting to fall and consensus projecting
further cuts, this could see a weaker dollar and be a potential catalyst for
the markets if history is any guide to go by. Combining this with a potential
soft landing in the US, which would be supportive of the goods export cycle,
would potentially provide a helpful backdrop for Asian markets, barring a more
extreme geopolitical risk event. We should note that, in the short term at
least, shifting views on the outcome of the US election and ongoing
announcements around Chinese stimulus are likely to lead to volatility in
regional markets.
Thank you for your continued trust and investment in the Schroder Oriental
Income Fund.
Richard Sennitt
Portfolio Manager
Schroder Investment Management Limited
23 October 2024
Principal and emerging risks
The Board is responsible for the Company's system of risk management and
internal control and for reviewing its effectiveness. The Board has adopted a
detailed matrix of principal risks affecting the Company's business as an
investment trust and has established associated policies and processes
designed to manage and, where possible, mitigate those risks, which are
monitored by the Audit and Risk Committee on an ongoing basis. This system
assists the Board in determining the nature and extent of the risks it is
willing to take in achieving the Company's strategic objectives.
Although the Board believes that it has a robust framework of internal
controls in place this can provide only reasonable, and not absolute,
assurance against material financial misstatement or loss and is designed to
manage, not eliminate, risk.
Both the principal risks and the monitoring system are also subject to robust
review at least annually. The last assessment took place in October 2024. The
Board discussed and monitored a number of risks that could potentially impact
the Company's ability to meet its strategic objectives and recognised that
there continues to be an elevated geopolitical risk relating to the region,
which is closely monitored. The Board also considered in detail whether there
were any material emerging risks and concluded that there were a number of
regional territorial issues which may impact the Company.
Actions taken by the Board and, where appropriate, its committees, to manage
and mitigate the Company's principal risks and uncertainties are set out in
the table below.
* The "Change" column on the right highlights at a glance the Board's
assessment of any increases or decreases in risk during the year after
mitigation and management. The arrows show the risks as increased, decreased,
or stable.
Change (post
mitigation and
Risk Mitigation and management management)*
Geopolitical risk The Board ensures it is well informed by way of receiving insights and ã
information, including research notes, provided by the Manager as well as
Political developments might materially affect the ability of the Company to independent sources on a regular basis.
achieve its investment objective
The Manager ensured the portfolio was adequately diversified in the context of
Geopolitical considerations and sanctions could affect the Company's the investment policy.
investment strategy, objective and performance.
The Board noted the general increase in geopolitical risk during the period
under review.
Market risk The risk profile of the portfolio is considered and appropriate strategies to á â
mitigate negative impact of substantial changes in markets are discussed with
The Company is exposed to the effect of market fluctuations due to the nature the Manager.
of its business. A significant fall in regional equity markets could have an
adverse impact on the market value of the Company's underlying investments. The Manager seeks to invest in companies with strong balance sheets and
gearing is maintained at relatively low levels.
The Board continues to monitor the market volatility caused by current
geo-political issues and will continue to do so on an ongoing basis. The Board
notes the impact of inflation on macroeconomic and market factors.
Currency/exchange rate risk The Board recognises that there continues to be an elevated currency/exchange á â
rate risk relating to the region and monitored it carefully during the period.
The Company is exposed to the effect of currency fluctuations due to the
nature of its business. The Company invests predominantly in assets which are The Board carefully reviewed the recovery of sterling against Asian currencies
denominated in a range of currencies. Its exposure to changes in the exchange which may erode total returns.
rate between sterling and other currencies has the potential to have
significant impact on returns and the sterling value of dividend income from The risk profile of the portfolio is considered and appropriate strategies to
underlying investments. mitigate negative impact of substantial changes in currency are discussed with
the Manager.
The Board notes that the variability in inflation and interest rates would in
turn lead to volatility in exchange rates. Gearing is maintained at relatively low levels.
The Company has no formal policy of hedging currency risk but may use foreign
currency borrowings or forward foreign currency contracts to limit exposure.
Investment Performance The appropriateness of the Company's investment mandate and the long-term á â
investment strategy is periodically reviewed and the success of the Company in
The Company's investment objectives may become out of line with the meeting its stated objectives is monitored.
requirements of investors, resulting in a wide discount of the share price to
underlying NAV per share. The investment mandate and the long-term investment strategy are monitored by
the Board. Share price relative to NAV per share is monitored by the Board as
a key performance indicator and is reviewed against the Company's peers on a
regular basis. The parameters and use of buyback authorities are considered
regularly. The Manager and corporate broker monitor market feedback and the
Board considers this at each quarterly meeting.
Proactive engagement with Shareholders takes place via the AGM, feedback from
Shareholder presentations, and ad hoc meetings with the Board.
The Board notes that the Company is not immune to the widening discounts
across the investment trust market and is committed to repurchasing shares at
a discount where there is a notable imbalance in the market and it is in
shareholders' best interests.
The Manager's investment strategy and levels of resourcing, if inappropriate, The Board sets overall investment strategy and guidelines for use of á â
may result in the Company underperforming the market and/or peer group derivatives and leverage, amongst other metrics. It also monitors investment
companies, leading to the Company and its objectives becoming unattractive to performance and risk against objectives and strategy, and conducts an annual
investors. review of the Manager's ongoing suitability. Directors attend a presentation
by the Manager's risk and internal audit functions at least annually.
The Board also reviews the Manager's compliance with agreed investment
restrictions, relative performance, the portfolio's risk profile, and whether
appropriate strategies are employed to mitigate any negative impact of
substantial changes in markets.
At each Board meeting, detailed discussions about investment performance and
changes to the portfolio have taken place.
The Board also reviews investment restrictions at each quarterly Board meeting
during the period.
Climate Change The Manager has integrated ESG considerations, including climate change, á â
into the investment process and reports on its ESG engagement at regular Board
Investors and regulators are increasingly questioning how the Company's meetings. The Manager has implemented a comprehensive ESG policy which is
investments and performance could be affected by climate change, outlined in detail in the full set of annual financial statements. The Board
environmental, social and governance factors. ensures that ESG factors are incorporated into reports to Shareholders.
The Manager has presented to the Board on how it has developed and applied ESG
tools to their investment process and established a framework under which it
actively engages with portfolio companies on ESG issues.
The Board reviewed the Net Zero commitments of service providers.
The Board reviews detailed sustainability reporting annually.
Service provider performance Service providers are appointed subject to due diligence processes and with á â
material service providers having clearly documented contractual arrangements.
The Company has no employees and has delegated certain functions to a number
of service providers. Failure of controls, including as a result of fraud, and Regular reports are provided by key service providers and the quality of their
poor performance of any service provider, could lead to disruption, services is monitored, including an annual presentation to the directors from
reputational damage or loss. key risk and internal controls personnel at the Company's main service
providers.
Review of annual audited internal controls reports from key service providers,
including confirmation of business continuity arrangements and IT controls, is
undertaken at an annual review of service providers by the Management
Engagement Committee. Service providers' internal controls reports continue to
be robust.
Cyber The Company has outsource arrangements with service providers who report on á â
cyber risk mitigation and management at least annually, which includes
The Company's service providers are exposed to the risk of cyber attacks. confirmation of business continuity capability in the event of a cyber attack
Cyber attacks lead to loss of personal or confidential information, and appoints a custodian/ depositary in respect of assets.
unauthorised payments or inability to carry out operations in a timely manner.
In addition, the Board receives presentations from the Manager, the registrar,
and the safekeeping agent and custodian on cyber risk.
During the year, the Board reviewed independently audited internal controls
reports from key service providers.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems
of internal control operating within key service providers, and ensures
regular communication of the results of monitoring by such providers to the
Audit and Risk Committee, including the incidence of significant control
failings or weaknesses that have been identified at any time and the extent to
which they have resulted in unforeseen outcomes or contingencies that may have
a material impact on the Company's performance or condition.
No significant control failings or weaknesses were identified from the Audit
and Risk Committee's ongoing risk assessment which has been in place
throughout the financial year and up to the date of this report. The Board is
satisfied that it has undertaken a detailed review of the risks facing the
Company and that the internal control environment continues to operate
effectively.
A full analysis of the financial risks facing the Company is set out in note
20 to the accounts in the full set of annual financial statements.
Statement of Directors' Responsibilities
The directors are responsible for preparing the financial statements in
accordance with applicable Guernsey law and generally accepted accounting
principles.
Guernsey company law requires the directors to prepare financial statements
for each financial year which give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing these financial statements, the directors should:
- select suitable accounting policies, and apply them consistently;
- present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific
requirements in International Financial Reporting Standards ("IFRS") as
adopted by the European Union is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on the
entity's financial position and financial performance;
- state that the Company has complied with IFRS as adopted by the
European Union, subject to any material departures disclosed and explained in
the financial statements;
- prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business; and
- make judgements and estimates that are reasonable and prudent.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with
The Companies (Guernsey) Law, 2008 (as amended). They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Directors' statement
Each of the directors, whose names and functions are listed in the full set of
annual financial statements, and confirms that, to the best of their
knowledge:
- the financial statements, which have been prepared in accordance with
IFRS as adopted by the European Union and with The Companies (Guernsey) Law,
2008 (as amended) and in accordance with the requirements set out above, and
give a true and fair view of the assets, liabilities, financial position and
the net return of the Company;
- the Strategic Review includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces; and
- the Annual Report and Accounts, taken as a whole, are fair, balanced
and understandable and provide the information necessary for Shareholders to
assess the Company's position and performance, business model and strategy.
So far as each of the directors are aware, there is no relevant audit
information of which the Company's auditors are unaware, and each director has
taken all the steps that he or she ought to have taken as a director in order
to make himself or herself aware of any relevant audit information and to
establish that the Company's auditors is aware of that information.
On behalf of the Board
Paul Meader
Director
23 October 2024
Statement of Comprehensive Income
for the year ended 31 August 2024
2024 2023
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments at fair value through profit or loss 2 - 89,708 89,708 - (55,772) (55,772)
Adjustments for: - 1,266 1,266 - 3,262 3,262
Net foreign currency (gains)
Income from investments 3 33,824 510 34,334 36,430 386 36,816
Other income 3 161 - 161 142 - 142
Total income/(loss) 33,985 91,484 125,469 36,572 (52,124) (15,552)
Management fee 4 (1,905) (2,858) (4,763) (1,935) (2,903) (4,838)
Performance fee 4 - (4,552) (4,552) - - -
Other administrative expenses 5 (1,170) (3) (1,173) (1,130) (3) (1,133)
Profit/(loss) before finance costs and taxation 30,910 84,071 114,981 33,507 (55,030) (21,523)
Finance costs 6 (1,075) (1,611) (2,686) (854) (1,280) (2,134)
Profit/(loss) before taxation 29,835 82,460 112,295 32,653 (56,310) (23,657)
Taxation 7 (1,899) - (1,899) (2,254) - (2,254)
Net profit/(loss) and total comprehensive income/(expense) 27,936 82,460 110,396 30,399 (56,310) (25,911)
Earnings/(losses) per share (pence) 9 11.29 33.34 44.63 11.81 (21.88) (10.07)
The "Total" column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with IFRS as adopted by the
European Union. The "Revenue and Capital" columns represent supplementary
information prepared under guidance set out in the statement of recommended
practice for investment trust companies (the "SORP") issued by the Association
of Investment Companies in July 2022.
The Company does not have any income or expense that is not included in net
profit/(loss) for the year. Accordingly the "Net profit/(loss)" for the year
is also the "Total comprehensive income/expense" for the year.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
The notes in the full set of annual financial statements form an integral part
of these financial statements.
Statement of Changes in Equity
for the year ended 31 August 2024
Treasury Capital
Share Share redemption Special Capital Revenue
capital reserve reserve reserve reserves reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 August 2022 234,347 (25,991) 39 150,374 329,011 36,367 724,147
Repurchase of ordinary shares into treasury - (20,127) - - - - (20,127)
Net (loss)/profit and total comprehensive
(expenses)/income - - - - (56,310) 30,399 (25,911)
Dividends paid in the year 8 - - - - - (29,901) (29,901)
At 31 August 2023 234,347 (46,118) 39 150,374 272,701 36,865 648,208
Repurchase of ordinary shares into treasury - (29,007) - - - - (29,007)
Net profit and total comprehensive income - - - - 82,460 27,936 110,396
Dividends paid in the year 8 - - - - - (29,282) (29,282)
At 31 August 2024 234,347 (75,125) 39 150,374 355,161 35,519 700,315
The notes in the full set of annual financial statements form an integral part
of these financial statements.
Balance Sheet
at 31 August 2024
2024 2023
Note £'000 £'000
Non current assets
Investments at fair value through profit or loss 10 735,607 676,323
Current assets 11
Receivables 6,017 4,271
Cash and cash equivalents 6,942 11,000
12,959 15,271
Total assets 748,566 691,594
Current liabilities
Payables 12 (48,251) (43,386)
Net assets 700,315 648,208
Equity attributable to equity holders
Share capital 13 234,347 234,347
Treasury share reserve 14 (75,125) (46,118)
Capital redemption reserve 14 39 39
Special reserve 14 150,374 150,374
Capital reserves 14 355,161 272,701
Revenue reserve 14 35,519 36,865
Total equity Shareholders' funds 700,315 648,208
Net asset value per share (pence) 15 289.63 256.01
The financial statements in the full set of annual financial statements were
approved by the Board of Directors on 23 October 2024 and signed on its behalf
by:
Paul Meader
Director
The notes in the full set of annual financial statements form an integral part
of these financial statements.
Registered in Guernsey as a company limited by shares
Company registration number: 43298
Cash Flow Statement
for the year ended 31 August 2024
2024 2023
Note £'000 £'000
Operating activities
Profit/(loss) before finance costs and taxation 114,981 (21,523)
Add back net foreign currency (gains) (1,266) (3,262)
(Gains)/losses on investments at fair value through profit or loss (89,708) 55,772
Net sales of investments at fair value through profit or loss 29,282 20,161
Decrease in receivables 1,144 274
Increase in payables 4,559 10
Overseas taxation paid (1,972) (2,247)
Net cash inflow from operating activities before interest 57,020 49,185
Interest paid (2,679) (2,168)
Net cash inflow from operating activities 54,341 47,017
Financing activities
Repurchase of ordinary shares into treasury (28,969) (20,022)
Dividends paid (29,282) (29,901)
Net cash outflow from financing activities (58,251) (49,923)
Decrease in cash and cash equivalents (3,910) (2,906)
Cash and cash equivalents at the start of the year 11,000 14,155
Effect of foreign exchange rates on cash and cash equivalents (148) (249)
Cash and cash equivalents at the end of the year 6,942 11,000
Dividends received during the year amounted to £35,326,000 (2023:
£37,004,000) and bond and deposit interest receipts amounted to £171,000
(2023: £117,000).
The notes in the full set of annual financial statements form an integral part
of these financial statements.
Notes to the Accounts
1. Material Accounting Policies
(a) Basis of accounting
The financial statements have been prepared in accordance with the Companies
Guernsey Law 2008 and International Financial Reporting Standards ("IFRS"),
which comprise standards and interpretations approved by the International
Accounting Standards Board ("IASB"), together with interpretations of the
International Accounting Standards and Standing Interpretations Committee
approved by the International Accounting Standards Committee ("IASC"), that
remain in effect and to the extent that they have been adopted by the European
Union.
Where consistent with the requirements of IFRS, the directors have sought to
prepare the financial statements on a basis compliant with presentational
guidance set out in the statement of recommended practice for investment trust
companies (the "SORP") issued by the Association of Investment Companies in
July 2022.
The policies applied in these financial statements are consistent with those
applied in the preceding year.
The Company's share capital is denominated in sterling and this is the
currency in which its shareholders operate and expenses are generally paid.
The Board has therefore determined that sterling is the functional currency
and the currency in which the financial statements are presented. Amounts have
been rounded to the nearest thousand.
The financial statements have been prepared on a going concern basis under the
historical cost convention, as modified by the revaluation of investments held
at fair value through profit or loss. The directors believe that the Company
has adequate resources to continue operating to 30 November 2025, which is at
least 12 months from the date of approval of these financial statements. In
forming this opinion, the directors have taken into consideration: the
controls and monitoring processes in place; the Company's level of debt and
other payables; the low level of operating expenses, comprising largely
variable costs which would reduce pro rata in the event of a market downturn;
and that the Company's assets comprise cash and readily realisable securities
quoted in active markets. In forming this opinion, the directors have also
considered any potential impact of climate change, inflation, and high
interest rates on the viability of the Company.
Further details of directors' considerations regarding this are given in the
Chairman's Statement, Investment Manager's Review, Going Concern Statement,
Viability Statement, and under the Principal and emerging risks heading in the
full set of annual financial statements.
The material accounting polices adopted are set out below.
(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment company and in
accordance with the recommendations of the SORP, supplementary information has
been presented which analyses items in the Statement of Comprehensive Income
between those which are income in nature and those which are capital in
nature.
(c) Investments at fair value through profit or loss
The Company's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital growth.
This portfolio of financial assets is managed and its performance evaluated on
a fair value basis, in accordance with a documented investment objective and
information is provided internally on that basis to the Company's Board of
directors. Accordingly, investments are designated upon initial recognition as
investments at fair value through profit or loss, and are measured at
subsequent reporting dates at fair value, which are quoted bid market prices
for investments traded in active markets.
Investments that are unlisted or not actively traded are valued using a
variety of techniques to determine their fair value; all such valuations are
reviewed by both the AIFM's fair value pricing committee and by the directors.
Investments are recognised and derecognised on the trade date where a purchase
or sale is under a contract whose terms require delivery within a timeframe
established by the market concerned.
(d) Accounting for reserves
Gains and losses on sales of investments, including the related foreign
exchange gains and losses, are included in the Statement of Comprehensive
Income and in capital reserves within "Gains and losses on sales of
investments". Increases and decreases in the valuation of investments held at
the year end, including the related foreign exchange gains and losses, are
included in the Statement of Comprehensive Income and in capital reserves
within "Holding gains and losses on investments".
Foreign exchange gains and losses on cash and deposit balances are included in
the Statement of Comprehensive Income and in capital reserves within Gains and
losses on sales of investments. Unrealised exchange gains and losses on
foreign currency loans are included in the Statement of Comprehensive Income
and dealt with in capital reserves within Holding gains and losses on
investments.
(e) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing shares into Treasury is debited to "Treasury share
reserve". The sales proceeds of Treasury shares reissued are credited back to
Treasury share reserve until the debit balance on that reserve is extinguished
and thereafter to capital reserves.
(f) Income
Dividends receivable from equity shares are included in revenue on an
ex-dividend basis except where, in the opinion of the Board, the dividend is
capital in nature, in which case it is included in capital.
Income from fixed interest debt securities is recognised using the effective
interest method.
Deposit interest outstanding at the year end is calculated and accrued on a
time apportionment basis using market rates of interest.
(g) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated
wholly to revenue with the following exceptions:
- The management fee is allocated 40% to revenue and 60% to capital in
line with the Board's expected long-term split of revenue and capital return
from the Company's investment portfolio.
- Any performance fee is allocated 100% to capital.
- Expenses incidental to the purchase or sale of investments are charged
to capital. These expenses are commonly referred to as transaction costs and
mainly comprise brokerage commission. Details of transaction costs are given
in note 10 in the full set of annual financial statements.
(h) Finance costs
Finance costs, including any premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis in profit or loss
using the effective interest method.
Finance costs are allocated 40% to revenue and 60% to capital in line with the
Board's expected long-term split of revenue and capital return from the
Company's investment portfolio.
(i) Other financial assets and liabilities
Cash and cash equivalents may comprise cash and demand deposits which are
readily convertible to a known amount of cash and are subject to insignificant
risk of changes in value. Other receivables are non interest bearing,
short-term in nature and are accordingly stated at nominal value as reduced by
appropriate allowances for estimated irrecoverable amounts.
Interest bearing bank loans are initially recognised at cost, being the
proceeds received net of direct issue costs, and subsequently at amortised
cost.
(j) Taxation
The taxation charge in the Statement of Comprehensive Income comprises
irrecoverable overseas withholding tax deducted from dividends receivable.
Current taxation comprises of the tax withheld at the source on foreign
income, with adjustments for any amounts recoverable under tax treaties. The
taxation is recorded in the revenue section of the Statement of Comprehensive
Income, except when it pertains to capital related items where it will be
accounted for in the capital section of the statement.
Deferred taxation represents the taxation liability or asset arising from
anticipated variations in the treatment of items for accounting purposes
compared to tax purposes. The calculation is based on tax rates that have been
officially approved or are highly likely for the period when the tax becomes
payable. Deferred tax assets are recognised when there is an expectation of
having future taxable profits.
(k) Foreign currency
The results and financial position are expressed in sterling. Transactions in
currencies other than sterling are recorded at the rates of exchange
prevailing on the dates of the transaction. At each Balance Sheet date,
monetary items and non monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at 1600 hours on
the Balance Sheet date. Gains or losses arising on translation are included in
net profit or loss for the year and presented as revenue or capital as
appropriate.
(l) New and amended accounting standards
At the date of authorisation of these financial statements there are no new or
revised Standards or Interpretations, which are in issue but which are not yet
effective, which the Board expects to have any significant effect on the
Company's financial statements.
(m) Significant accounting judgments, estimates and assumptions
Other than the directors' assessment of going concern, no significant
judgements, estimates or assumptions have been required in the preparation of
these financial statements in accordance with IFRS.
(n) Dividends payable to Shareholders
Interim dividends to Shareholders are recorded in the financial statements
when paid.
2. Gains/(losses) on investments held at fair value through profit or loss
2024 2023
£'000 £'000
Gains on sales of investments based on historic cost 14,373 20,618
Amounts recognised in investment holding gains and losses in the previous year
in respect of investments sold
in the year (4,657) (24,198)
Gains/(losses) on sales of investments based on the carrying value at the 9,716 (3,580)
previous Balance Sheet date
Net movement in investment holding gains and losses 79,992 (52,192)
Gains/(losses) on investments held at fair value through profit or loss 89,708 (55,772)
3. Income
2024 2023
£'000 £'000
Income from investments
Overseas dividends 33,824 36,430
Other income
Deposit interest 161 142
Total income 33,985 36,572
Capital
Special dividend allocated to capital 510 386
4. Management and performance fee
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Management fee 1,905 2,858 4,763 1,935 2,903 4,838
Performance fee - 4,552 4,552 - - -
1,905 7,410 9,315 1,935 2,903 4,838
The basis for calculating the investment management fee and any performance
fee is set out in the Directors' Report in the full set of annual financial
statements.
5. Other administrative expenses
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Administration expenses 764 3 767 717 3 720
Directors' fees 192 - 192 203 - 203
Secretarial fee 150 - 150 150 - 150
Auditors' remuneration for audit services(1) 64 - 64 60 - 60
1,170 3 1,173 1,130 3 1,133
( )
(1)No amounts are payable to the auditor for non-audit services.
6. Finance costs
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest on bank loans and overdrafts 1,075 1,611 2,686 854 1,280 2,134
With effect from 1 September 2022, the Board determined that the finance costs
will be allocated 40% to revenue and 60% to capital in line with the Board's
expected long-term split of revenue and capital return from the Company's
investment portfolio. Prior to this date, these expenses had been allocated
30% to revenue and 70% to capital.
7. Taxation
(a) Analysis of tax charge for the year
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Irrecoverable overseas tax 1,899 - 1,899 2,254 - 2,254
Taxation for the year 1,899 - 1,899 2,254 - 2,254
The Company became resident in the United Kingdom for taxation purposes with
effect from 1 September 2020. The Company has no corporation tax liability for
the year ended 31 August 2024 (2023: £nil).
(b) Factors affecting tax charge for the year
The tax assessed for the year ended 31 August 2024 is lower (2023: higher)
than the Company's applicable rate of corporation tax for that year of 25%
(2023: 21.5%).
The factors affecting the tax charge for the year are as follows:
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return/(loss) before taxation 29,835 82,460 112,295 32,653 (56,310) (23,657)
Net return/(loss) before taxation multiplied by the Company's
applicable rate of corporation tax for the year of 25% (2023: 21.5%) 7,459 20,615 28,074 7,020 (12,107) (5,087)
Effects of:
(Gains) on investments not taxable/capital losses on investments not - (22,743) (22,743) - 11,290 11,290
deductible
Revenue not chargeable to corporation tax (7,672) (127) (7,799) (6,917) (83) (7,000)
Expenses disallowed - (1) (1) - 1 1
Unrelieved expenses 236 2,256 2,492 - 899 899
Tax relief on overseas tax suffered (23) - (23) - - -
Double tax relief - - - (103) - (103)
Irrecoverable overseas tax 1,899 - 1,899 2,254 - 2,254
Taxation for the year 1,899 - 1,899 2,254 - 2,254
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £6,205,000 (2023:
£3,713,000) based on a main rate of corporation tax of 25%. In its 2020
budget, the UK government announced that the main rate of corporation tax
would increase to 25% for the fiscal year beginning on 1 April 2023.
The deferred tax asset has arisen due to the excess of deductible expenses
over taxable income. Given the composition of the Company's portfolio, it is
not likely that this asset will be utilised in the foreseeable future and
therefore no asset has been recognised in the financial statements.
The Company was granted status as an investment trust company by HMRC
effective from 1 September 2020, and intends to continue to meet the
conditions required to retain that status. Therefore, no provision has been
made for deferred UK capital gains tax on any capital gains or losses arising
on the revaluation or disposal of investments.
8. Dividends
(a) Dividends paid and declared
2024 2023
£'000 £'000
2023 fourth interim dividend of 5.80p (2022: 5.60p) 14,547 14,527
First interim dividend of 2.00p (2023: 2.00p) 4,982 5,165
Second interim dividend of 2.00p (2023: 2.00p) 4,899 5,124
Third interim dividend of 2.00p (2023: 2.00p) 4,854 5,085
Total dividends paid in the year 29,282 29,901
2024 2023
£'000 £'000
Fourth interim dividend declared of 6.00p (2023: 5.80p) 14,508 14,685
Under the Companies (Guernsey) Law 2008, the Company may pay dividends out of
both capital and revenue reserves, subject to passing a solvency test. However
all dividends paid and declared to date have been paid, or will be paid, out
of revenue profits. The Company has passed a solvency declaration for all
dividends paid to date.
The fourth interim dividend declared in respect of the year ended 31 August
2023 differs from the amount actually paid due to shares repurchased and
cancelled after the Balance Sheet date but prior to the share register record
date.
(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010
("Section 1158")
The Company was granted status as an investment trust company by HMRC
effective from 1 September 2020, and intends to continue to meet the minimum
distribution requirements of Section 1158, in order to retain that status.
Those requirements are considered on the basis of dividends declared in
respect of the financial year as shown below. The revenue available for
distribution by way of dividend for the year is £27,935,000 (2023:
£30,399,000).
2024 2023
£'000 £'000
First interim dividend of 2.00p (2023: 2.00p) 4,982 5,165
Second interim dividend of 2.00p (2023: 2.00p) 4,899 5,124
Third interim dividend of 2.00p (2023: 2.00p) 4,854 5,085
Fourth interim dividend of 6.0p (2023: 5.80p) 14,508 14,685
Total dividends of 12.0p (2023: 11.80p) 29,243 30,059
9. Earnings/(losses) per share
2024 2023
£'000 £'000
Revenue profit 27,936 30,399
Capital profit/ (loss) 82,460 (56,310)
Total profit/(loss) 110,396 (25,911)
Weighted average number of ordinary shares in issue during the year 247,361,808 257,369,408
Revenue earnings per share (pence) 11.29 11.81
Capital earnings/(losses) per share (pence) 33.34 (21.88)
Total earnings/(losses) per share (pence) 44.63 (10.07)
10. Investments at fair value through profit or loss
2024 2023
£'000 £'000
Opening book cost 624,190 621,849
Opening investment holding gains 52,133 128,523
Opening fair value 676,323 750,372
Analysis of transactions made during the year
Purchases at cost 136,746 124,788
Sales proceeds (167,170) (143,065)
Gains/(losses) on investments held at fair value through profit or loss 89,708 (55,772)
Closing fair value 735,607 676,323
Closing book cost 608,139 624,190
Closing investment holding gains 127,468 52,133
Closing fair value 735,607 676,323
All investments are listed on a recognised stock exchange.
The Company received £167,170,000 (2023: £143,065,000) from disposal of
investments in the year. The book cost of these investments when they were
purchased was £152,797,000 (2023: £122,447,000). These investments have been
revalued over time and until they were sold any unrealised gains/losses were
included in the fair value of the investments.
The following transaction costs, mainly comprising brokerage commissions, were
incurred during the year:
2024 2023
£'000 £'000
On acquisitions 102 114
On disposals 278 221
380 335
11. Current assets
Receivables
2024 2023
£'000 £'000
Dividends and interest receivable 2,962 3,992
Securities sold awaiting settlement 3,017 199
Other receivables 38 80
6,017 4,271
The directors consider that the carrying amount of receivables approximates to
their fair value.
Cash and cash equivalents
Cash and cash equivalents comprises bank balances and cash held by the
Company, including short-term deposits. The carrying amount of these
represents their fair value. Cash balances in excess of a predetermined amount
are placed on short-term deposit at market rates of interest.
12. Current liabilities
Payables
2024 2023
£'000 £'000
Bank loan 38,045 39,459
Securities purchased awaiting settlement 3,757 2,081
Repurchase of ordinary shares into treasury awaiting settlement 405 367
Other payables and accruals 6,044 1,479
48,251 43,386
The bank loan comprises US$50 million drawn down on the Company's £100
million multicurrency credit facility with the Bank of Nova Scotia. The
facility is secured and drawings are subject to covenants and restrictions
which are customary for a facility of this nature and all of these have been
complied with.
Further details of the facility are given in note 20(a)ii in the full set of
annual financial statements.
The bank loan at the prior year end comprised US$50 million drawn down on the
Company's £100 million multicurrency credit facility with Bank of Nova
Scotia.
13. Share capital
2024 2023
£'000 £'000
Ordinary shares of 1p each, allotted, called-up and fully paid:
Opening balance of 253,193,024 (2023: 261,203,024) shares, excluding shares 188,229 208,356
held in treasury
Repurchase of 11,395,000 (2023: 8,010,000) shares into treasury (29,007) (20,127)
Subtotal of 241,798,024 (2023: 253,193,024) shares, excluding shares held in 159,222 188,229
treasury
29,435,000 (2023: 18,040,000) shares held in treasury 75,125 46,118
Closing balance of 271,233,024 (2023: 271,233,024) shares 234,347 234,347
The ordinary shares rank pari passu, and each share carries one vote in the
event of a poll at a general meeting. The Company has authority to issue an
unlimited number of ordinary shares.
During the year, the Company purchased 11,395,000 of its own shares, nominal
value £113,950 to hold in treasury for a total consideration of £29,007,000
representing 4.5% of the shares outstanding at the beginning of the year. The
reason for these share purchases was to seek to manage the volatility of the
share price discount to net asset value per share.
14. Reserves
Capital reserves
Gains and Investment
Treasury Capital losses on holding
Share Share redemption Special sales of gains and Revenue
capital reserve reserve reserve investments losses reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 September 2023 234,347 (46,118) 39 150,374 218,977 53,724 36,865
Gains on sales of investments based on the carrying
value at the previous Balance Sheet date - - - - 9,716 - -
Movement in investment holding gains and losses - - - - - 79,992 -
Transfer on disposal of investments - - - - 4,657 (4,657) -
Realised exchange losses on cash and short-term deposits - - - - (148) - -
Exchange gains on foreign currency credit facility - - - - - 1,414 -
Repurchase of ordinary shares into treasury - (29,007) - - - - -
Management fee, finance costs and other expenses
charged to capital - - - - (4,472) - -
Performance fee charged to capital - - - - (4,552) - -
Dividends allocated to capital - - - - 510 - -
Dividends paid in the year - - - - - - (29,282)
Net revenue profit for the year - - - - - - 27,936
At 31 August 2024 234,347 (75,125) 39 150,374 224,688 130,473 35,519
Capital reserves
Gains and Investment
Treasury Capital losses on holding
Share Share redemption Special sales of gains and Revenue
capital reserve reserve reserve investments losses reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 September 2022 234,347 (25,991) 39 150,374 202,408 126,603 36,367
Losses on sales of investments based on the carrying
value at the previous Balance Sheet date - - - - (3,580) - -
Movement in investment holding gains and losses - - - - - (52,192) -
Transfer on disposal of investments - - - - 24,198 (24,198) -
Realised exchange losses on cash and short-term deposits - - - - (249) - -
Exchange gains on foreign currency credit facility - - - - - 3,511 -
Repurchase of ordinary shares into treasury - (20,127) - - - - -
Management fee, finance costs and other expenses
charged to capital - - - - (4,186) - -
Dividends allocated to capital - - - - 386 - -
Dividends paid in the year - - - - - - (29,901)
Net revenue profit for the year - - - - - - 30,399
At 31 August 2023 234,347 (46,118) 39 150,374 218,977 53,724 36,865
Under The Companies (Guernsey) Law 2008, the Company may buy back its own
shares, or pay dividends, out of any reserves, subject to passing a solvency
test. This test considers whether, immediately after the payment, the
Company's assets exceed its liabilities and whether it will be able to pay its
debts when they fall due.
15. Net asset value per share
2024 2023
Total equity shareholders' funds (£'000) 700,315 648,208
Shares in issue at the year end 241,798,024 253,193,024
Net asset value per share (pence) 289.63 256.01
16. Contingent liabilities and capital commitments
There were no contingent liabilities or capital commitments at the Balance
Sheet date (2023: none).
17. Transactions with the Manager
The Company has appointed Schroder Unit Trusts Limited ("the Manager"), a
wholly owned subsidiary of Schroders plc, to provide investment management,
accounting, secretarial and administration services. Details of the management
and performance fee agreement are given in the Directors' Report in the full
set of annual financial statements .The management fee payable in respect of
the year amounted to £4,763,000 (2023: £4,838,000), of which £1,241,000
(2023: £1,148,000) was outstanding at the year end. The company secretarial
fee payable to the Manager amounted to £150,000 (2023: £150,000) of which
£37,500 (2023: £37,500) was outstanding at the year end. The fee payable in
respect of the year amounted to £4,552,000 (2023: nil) and the whole of this
amount was outstanding at the year end.
If the Company invests in funds managed or advised by the Manager or any of
its associated companies, any fee earned by the Manager from those funds is
deducted from the management fee payable by the Company. There have been no
such investments during the current or comparative year.
18. Related party transactions
Details of the remuneration payable to directors are given in the Directors'
Remuneration Report in the full set of annual financial statements and details
of directors' shareholdings are given in the Directors' Remuneration Report in
the full set of annual financial statements. Details of transactions with the
Manager are given in note 17 above. There have been no other transactions with
related parties during the year (2023: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company's portfolio of investments, which may comprise investments in
equities, equity linked securities, government bonds and derivatives, are
carried in the Balance Sheet at fair value. Other financial instruments held
by the Company may comprise amounts due to or from brokers, dividends and
interest receivable, accruals and cash at bank.
For these instruments, the Balance Sheet amount is a reasonable approximation
of fair value.
The investments are categorised into a hierarchy comprising the following
three levels:
Level 1 - valued using quoted prices in active markets.
Level 2 - valued by reference to valuation techniques using observable inputs
other than quoted market prices included within Level 1.
Level 3 - valued by reference to valuation techniques using inputs that are
not based on observable market data.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
Details of the valuation techniques used by the Company are given in note 1(c)
in the full set of annual financial statements.
At 31 August 2024, the Company's investment portfolio was categorised as
follows:
2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments in equities and equity linked securities 719,252 16,355 - 735,607
Total 719,252 16,355 - 735,607
Level 2 investments comprise one holding in Midea Group warrants 10/07/2025.
There were no transfers between Levels 1, 2 or 3 during the year ended 31
August 2024.
2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments in equities and equity linked securities 658,116 18,207 - 676,323
Total 658,116 18,207 - 676,323
Level 2 investments comprise one holding in Midea Group warrants 08/07/2024.
There were no transfers between Levels 1, 2 or 3 during the year ended 31
August 2023.
20. Financial instruments' exposure to risk and risk management policies
The Company's investment objective is to provide a total return for investors
primarily through investments in equities and equity-related investments, of
companies which are based in, or which derive a significant proportion of
their revenues from, the Asia Pacific region and which offer attractive
yields. In pursuing this objective, the Company is exposed to a variety of
risks that could result in a reduction in the Company's net assets. These
risks include market risk (comprising currency risk, interest rate risk and
market price risk), liquidity risk and credit risk. The directors' policy for
managing these risks is set out below. The Board coordinates the Company's
risk management policy.
The objectives, policies and processes for managing the risks and the methods
used to measure the risks that are set out below, have not changed from those
applying in the comparative year.
The Company's classes of financial instruments are as follows:
- investments in equities and equity-related securities of companies in
the Asia Pacific region which are held in accordance with the Company's
investment objective;
- short-term receivables, payables and cash arising directly from its
operations; and
- a multicurrency credit facility with Bank of Nova Scotia, the purpose
of which is to assist in financing the Company's operations.
(a) Market risk
The fair value or future cash flows of a financial instrument held by the
Company may fluctuate because of changes in market prices. This market risk
comprises three elements - currency risk, interest rate risk and market price
risk. Information to enable an evaluation of the nature and extent of these
three elements of market risk is given in parts (i) to (iii) of this note,
together with sensitivity analysis where appropriate. The Board reviews and
agrees policies for managing these risks and these policies have remained
unchanged from those applying in the comparative year. The Manager assesses
the exposure to market risk when making each investment decision and monitors
the overall level of market risk on the whole of the investment portfolio on
an ongoing basis.
(i) Currency risk
The majority of the Company's assets, liabilities and income are denominated
in currencies other than sterling, which is the Company's functional currency
and the presentational currency of the financial statements. As a result,
movements in exchange rates will affect the sterling value of those items.
Management of currency risk
The Manager monitors the Company's exposure to foreign currencies and
regularly reports to the Board. The Manager measures the risk to the Company
of the foreign currency exposure by considering the effect on the Company's
net asset value and income of a movement in the rates of exchange to which the
Company's assets, liabilities, income and expenses are exposed.
Income denominated in foreign currencies is converted into sterling on
receipt.
Foreign currency exposure
The fair value of the Company's monetary items that have foreign currency
exposure at 31 August are shown below. The Company's investments (which are
not monetary items) have been included separately in the analysis so as to
show the overall level of exposure.
2024
New
Japanese Hong Kong Australian Singapore Taiwan Thai Zealand US
yen dollars dollars dollars dollars baht dollars dollars Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Current assets - 2,770 2,117 651 2,774 - - 521 374 9,207
Current liabilities - (2,290) (1,128) - - - - (38,045) (740) (42,203)
Foreign currency
exposure on net
monetary items - 480 989 651 2,774 - - (37,254) (366) (32,996)
Investments at fair value
through profit or loss(1) 7,986 132,790 110,040 111,422 163,787 7,977 - 16,355 154,185 (32,996)
Total net foreign
currency exposure 7,986 133,270 111,029 112,073 166,561 7,977 - (21,169) 153,819 671,546
2023
New
Japanese Hong Kong Australian Singapore Taiwan Thai Zealand US
yen dollars dollars dollars dollars baht dollars dollars Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Current assets - 991 1,585 1,881 668 143 - 1,213 493 6,974
Current liabilities - (150) (702) (1,380) - - - (39,466) - (41,698)
Foreign currency
exposure on net
monetary items - 841 883 501 668 143 - (38,253) 493 (34,724)
Investments at fair value
through profit or loss(1) 13,065 135,215 88,660 98,987 123,753 13,888 3,591 18,207 143,375 638,741
Total net foreign
currency exposure 13,065 136,056 89,543 99,488 124,421 14,031 3,591 (20,046) 143,868 604,017
( )
(1)Excluding any stocks priced in sterling.
The above year end amounts are broadly representative of the exposure to
foreign currency risk during the current and comparative year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit for the year and
net assets with regard to the Company's monetary financial assets and
financial liabilities and exchange rates. The sensitivity analysis is based on
the Company's monetary currency financial instruments held at each Balance
Sheet date and assumes a 10% (2023: 10%) appreciation or depreciation in
sterling against the currencies to which the Company is exposed, which is
considered to be a reasonable illustration based on the volatility of exchange
rates during the year.
If sterling had weakened by 10% this would have had the following effect:
2024 2023
£'000 £'000
Statement of Comprehensive Income - net profit/(loss)
Net revenue profit 3,101 3,346
Net capital (loss) (2,415) (3,562)
Net total profit/(loss) for the year and net assets/(liabilities) 686 (216)
Conversely if sterling had strengthened by 10% this would have had the
following effect:
2024 2023
£'000 £'000
Statement of Comprehensive Income - net (loss)/profit
Net revenue (loss) (3,101) (3,346)
Net capital profit 2,415 3,562
Net total profit/(loss) for the year and net assets/(liabilities) (686) 216
In the opinion of the directors, the above sensitivity analysis with respect
to monetary financial assets and liabilities is broadly representative of the
whole of the current and comparative year. The sensitivity of the Company's
investments to changes in foreign currency exchange rates is subsumed into
market price risk sensitivity in the full set of annual financial statements.
(ii) Interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits and the interest payable on variable rate borrowings when interest
rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to
shareholders. The Company's gearing policy is to limit gearing to 25% where
gearing is defined as borrowings used for investment purposes, less cash,
expressed as a percentage of net assets.
The possible effects on cash flows that could arise as a result of changes in
interest rates are taken into account when the Company draws on the credit
facility. However, amounts drawn down on this facility are for short-term
periods and therefore exposure to interest rate risk is not significant.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating
interest rates, giving cash flow interest rate risk when rates are re-set, is
shown below:
2024 2023
£'000 £'000
Exposure to floating interest rates:
Cash and cash equivalents 6,942 11,000
Other payables: drawings on the credit facility (38,045) (39,459)
Total exposure (31,103) (28,459)
Cash deposits at call earn interest based on the Sterling Overnight Interest
Average ("SONIA") (2023: SONIA) rates.
The Company has arranged a £100 million credit facility with The Bank of Nova
Scotia, effective from 30 July 2024. Interest is payable at the aggregate of
the compounded Risk Free Rate ("RFR") for the relevant currency and loan
period, plus a margin. Amounts are normally drawn down on the facility for a
one month period, at the end of which it may be rolled over or adjusted. At 31
August 2024, the Company had drawn down US$50.0 million (£38.0 million) for a
one month period, at an interest rate of 6.38% per annum.
The above year end amounts are not representative of the exposure to interest
rates during the year as the level of cash balances and drawings on the credit
facility have fluctuated. The maximum and minimum net interest rate exposure
during the year has been as follows:
2024 2023
£'000 £'000
Maximum debit interest rate exposure during the year - net debt (36,485) (36,718)
Minimum debit interest rate exposure during the year - net debt (22,131) (28,459)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation
for the year and net assets to a 1.0% (2023: 1.0%) increase or decrease in
interest rates in regards to the Company's monetary financial assets and
financial liabilities. This level of change is considered to be a reasonable
illustration based on observation of current market conditions. The
sensitivity analysis is based on the Company's monetary financial instruments
held at the Balance Sheet date with all other variables held constant.
2024 2023
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£'000 £'000 £'000 £'000
Statement of Comprehensive Income - net (loss)/profit
Net revenue (loss)/profit (83) 83 (48) 48
Net capital (loss)/profit (228) 228 (237) 237
Net total (loss)/profit (311) 311 (285) 285
Net (liabilities)/assets (311) 311 (285) 285
In the opinion of the directors, this sensitivity analysis may not be
representative of the Company's future exposure to interest rate changes due
to fluctuations in the level of cash balances and drawings on the credit
facility.
(iii) Market price risk
Market price risk includes changes in market prices which may affect the value
of the Company's investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset
allocation of the portfolio and the risk associated with particular industry
sectors. The investment management team has responsibility for monitoring the
portfolio, which is selected in accordance with the Company's investment
objective and seeks to ensure that individual stocks meet an acceptable
risk/reward profile.
Market price risk exposure
The Company's total exposure to changes in market prices at 31 August
comprised the following:
2024 2023
£'000 £'000
Investments held at fair value through profit or loss 735,607 676,323
The above data is broadly representative of the exposure to market price risk
during the year.
Concentration of exposure to market price risk
An analysis of the Company's investments is given in the full set of annual
financial statements This shows that the portfolio principally comprises
investments quoted on Asian stock markets. Accordingly there is a
concentration of exposure to that region. However it should be noted that an
investment may not be entirely exposed to the economic conditions in its
country of domicile or of listing.
Market price risk sensitivity
The following table illustrates the sensitivity of the net profit for the year
and net assets to an increase or decrease of 20% (2023: 20%) in the fair value
of the Company's equities. This level of change is considered to be a
reasonable illustration based on observation of current market conditions. The
sensitivity analysis is based on the Company's equities, adjusting for changes
in the management fee, but with all other variables held constant.
2024 2023
20% increase 20% decrease 20% increase 20% decrease
in fair value in fair value in fair value in fair value
£'000 £'000 £'000 £'000
Statement of Comprehensive Income - net (loss)/profit
Net revenue (loss)/profit (412) 412 (379) 379
Net capital profit/(loss) 146,503 (146,503) 134,696 (134,696)
Net total profit/(loss) for the year and net assets/(liabilities) 146,091 (146,091) 134,317 (134,317)
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its
obligations associated with financial liabilities that are settled by
delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company's assets comprise mainly
readily realisable securities, which can be sold to meet funding requirements
if necessary. Short-term flexibility is achieved through the use of a credit
facility.
The Board's policy is for the Company to remain fully invested in normal
market conditions and that the credit facility be used to manage working
capital requirements and to gear the Company as appropriate.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on
which payment can be required are as follows:
2024 2023
Three Three
months months
or less or less
£'000 £'000
Other payables
Bank loan - including interest 38,251 39,680
Securities purchased awaiting settlement 3,757 2,081
Other payables and accruals 6,037 1,479
48,045 43,240
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction
to discharge its obligations under that transaction could result in loss to
the Company.
Management of credit risk
This risk is managed as follows:
Portfolio dealing
The Company invests almost entirely in markets that operate a "Delivery Versus
Payment" settlement process which mitigates the risk of losing the principal
of a trade during settlement. The Manager continuously monitors dealing
activity to ensure best execution, which involves measuring various indicators
including the quality of trade settlement and incidence of failed trades.
Counterparties must be pre-approved by the Manager's credit committee.
The Company may sometimes invest in equity linked securities, such as low
exercise price options, warrants, participatory notes and depositary receipts,
which provide synthetic equity exposure where the Company may otherwise find
it problematic to invest in the underlying assets directly. They have the same
economic risks as a direct investment, except that there is a counterparty
risk to the issuing investment bank. Counterparties must be approved by the
Manager's Credit Risk Team based on a list of criteria and are monitored on an
ongoing basis by Schroders' Portfolio Compliance Team.
Exposure to the Custodian
The Custodian of the Company's assets is HSBC Bank plc which has Long-Term
Credit Ratings of AA- with Fitch and A1 with Moody's.
The Company's investments are held in accounts which are segregated from the
Custodian's own trading assets. If the Custodian were to become insolvent, the
Company's right of ownership of its investments is clear and they are
therefore protected. However the Company's cash balances are all deposited
with the Custodian as banker and held on the Custodian's Balance Sheet. In
accordance with usual banking practice, the Company will rank as a general
creditor to the Custodian in respect of cash balances and open currency
contracts.
Credit risk exposure
The following amounts shown in the Balance Sheet represent the maximum
exposure to credit risk at the current and comparative year end.
2024 2023
Balance Maximum Balance Maximum
sheet exposure sheet exposure
£'000 £'000 £'000 £'000
Current assets
Receivables - dividends and interest 2,962 2,962 3,992 3,992
Securities sold awaiting settlement 3,017 3,017 199 199
Cash and cash equivalents 6,942 6,942 11,000 11,000
12,921 12,921 15,191 15,191
No items included in "Receivables" are past their due date and none have been
provided for.
21. Capital management policies and procedures
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding year.
The Company's debt and capital structure comprises the following:
2024 2023
£'000 £'000
Debt
Bank loan 38,045 39,459
Equity
Share capital 234,347 234,347
Reserves 465,968 413,861
700,315 648,208
Total debt and equity 738,360 687,667
The Company's capital management objectives are to ensure that it will
continue as a going concern and to maximise total return to its equity
shareholders through an appropriate level of gearing.
The Board's policy is to limit gearing to 25%. Gearing for this purpose is
defined as borrowings used for investment purposes, less cash, expressed as a
percentage of net assets.
2024 2023
£'000 £'000
Borrowings used for investment purposes, less cash 31,103 28,459
Net assets 700,315 648,208
Gearing 4.4% 4.4%
The Board, with the assistance of the Manager, monitors and reviews the broad
structure of the Company's capital on an ongoing basis. This review includes:
- the planned level of gearing, which takes into account the Manager's
views on the market;
- the need to buy back the Company's own shares for cancellation or to
hold in treasury, which takes into account the share price discount;
- the opportunities for issues of new shares or to reissue shares from
treasury; and
- the amount of dividend to be paid, in excess of that which is required
to be distributed.
22. Status of results announcement
2024 Financial Information
The figures and financial information for 2024 are extracted from the Annual
Report and Financial Statements for the year ended 31(st) August 2024 and do
not constitute the statutory accounts for that year.
2023 Financial Information
The figures and financial information for 2023 are extracted from the
published Annual Report and Financial Statements for the year ended 31(st)
August 2023 and do not constitute the statutory accounts for the year.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
23 October 2024
For further information:
Schroder Investment Management Limited
E-mail: AMCompanySecretary@Schroders.com
(mailto:AMCompanySecretary@Schroders.com)
Issued by Schroder Investment Management Limited. Registration No 1893220
England.
Authorised and regulated by the Financial Conduct Authority. For regular
updates by e-mail please register online at www.schroders.com
(https://url.uk.m.mimecastprotect.com/s/t7puCxn15T1LlkKtvh4FyxHrZ?domain=schroders.com/)
for our alerting service.
ENDS
A copy of the 2024 Annual Report will shortly be submitted to the FCA's
National Storage Mechanism and will be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The 2024Annual Report will shortly be available on the Company's website at
www.schroders.co.uk/orientalincome where up-to-date information on the
Company, including daily NAV and share prices, factsheets and portfolio in
formation can also be found.
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