Schroder Oriental
Income Fund Limited
Annual report and accounts
for the year ended 31 August 2024
Income Fund Limited
Annual report and accounts
for the year ended 31 August 2024
Schroder
Oriental Income Fund Limited
Some of the financial measures here are classified as Alternative Performance Measures, as defined by the European
Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other
terms used in this report, are given on pages 73 to 74, together with supporting calculations where appropriate.
Performance Summary
NAV per share total return*
18.2%
(2023: –3.5%)
Ongoing charges ratio*
0.88%
(2023: 0.88%)
Share price total return*
15.3%
(2023: –3.1%)
Dividends per share
12.00p
(2023: 11.80p)
Investment objective
The investment objective of the Company 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. The full published investment policy can be found on pages 17 to 18.
What does the Company seek to achieve?
Asian companies are increasingly world-leading and returning cash to shareholders. Schroder Oriental Income Fund Limited (the “Company”)
aims to tap into the Asian income story and help investors diversify their dividends.
l Offering a reliable, yet diversified, source of growing income
By focusing on quality companies with attractive dividend growth prospects, the Company’s investment manager is confident in the
portfolio’s income generating potential. Having grown its dividend every year since launch, the Company is classed in the AIC’s next
generation of dividend heroes.
l A disciplined focus on companies with excellent long-term growth prospects
The Company is well placed to capitalise on the growing prominence of Asian companies that are transforming their sectors, providing
investors with potential for an attractive level of capital growth as well as income.
l Harness decades of deep expertise
Schroders is an acknowledged expert in Asian equity investing. The portfolio manager draws upon the extensive resources of Schroders’
Asia Pacific equities research team based in six offices across the region, as well as Schroders’ London-based specialists. The strength of
these resources gives the portfolio manager an advantage in under-researched and inefficient markets.
The Investment Objective of the Company is set out above. For details on the Company’s Investment Policy please see the KID. This report includes the investment
policy which you should read in conjunction with the KID before investing; these are also available on our Schroders website.
Past Performance is not a guide to future performance and may not be repeated.
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. Exchange rate
changes may cause the value of investments to fall as well as rise. Performance data does not take into account any commissions and costs, if any, charged when
units or shares of any fund, as applicable, are issued and redeemed. Relevant risks as associated with this Company are shown on page 77 and should be carefully
considered before making any investment.
Some of the financial measures here are classified as Alternative Performance Measures, as defined by the European
Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other
terms used in this report, are given on pages 73 to 74, together with supporting calculations where appropriate.
Performance Summary
NAV per share total return*
18.2%
(2023: –3.5%)
Ongoing charges ratio*
0.88%
(2023: 0.88%)
Share price total return*
15.3%
(2023: –3.1%)
Dividends per share
12.00p
(2023: 11.80p)
Investment objective
The investment objective of the Company 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. The full published investment policy can be found on pages 17 to 18.
What does the Company seek to achieve?
Asian companies are increasingly world-leading and returning cash to shareholders. Schroder Oriental Income Fund Limited (the “Company”)
aims to tap into the Asian income story and help investors diversify their dividends.
l Offering a reliable, yet diversified, source of growing income
By focusing on quality companies with attractive dividend growth prospects, the Company’s investment manager is confident in the
portfolio’s income generating potential. Having grown its dividend every year since launch, the Company is classed in the AIC’s next
generation of dividend heroes.
l A disciplined focus on companies with excellent long-term growth prospects
The Company is well placed to capitalise on the growing prominence of Asian companies that are transforming their sectors, providing
investors with potential for an attractive level of capital growth as well as income.
l Harness decades of deep expertise
Schroders is an acknowledged expert in Asian equity investing. The portfolio manager draws upon the extensive resources of Schroders’
Asia Pacific equities research team based in six offices across the region, as well as Schroders’ London-based specialists. The strength of
these resources gives the portfolio manager an advantage in under-researched and inefficient markets.
The Investment Objective of the Company is set out above. For details on the Company’s Investment Policy please see the KID. This report includes the investment
policy which you should read in conjunction with the KID before investing; these are also available on our Schroders website.
Past Performance is not a guide to future performance and may not be repeated.
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. Exchange rate
changes may cause the value of investments to fall as well as rise. Performance data does not take into account any commissions and costs, if any, charged when
units or shares of any fund, as applicable, are issued and redeemed. Relevant risks as associated with this Company are shown on page 77 and should be carefully
considered before making any investment.
Schroder
Oriental Income Fund Limited
1
Some of the financial measures here are classified as Alternative Performance Measures, as defined by the European
Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other
terms used in this report, are given on pages 73 to 74, together with supporting calculations where appropriate.
Share price discount to NAV per
share*
7.1%
(2023: 4.5%)
Share price
269.0p
(2023: 244.50p)
Revenue earnings per
share
11.29p
(2023: 11.81p)
Net revenue return after
taxation
£27.9m
(2023: £30.4m)
Gearing*
4.4%
(2023: 4.4%)
Scan this QR code on your
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Oriental Income Fund
Limited
Financial Other Information (Unaudited) Governance Introduction Strategic Report
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 6
Top 10 Investments 13
Investment Portfolio 15
10-year Financial Record 16
Business Review 17
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement
Committee Report 38
Nomination and Remuneration
Committee Report 39
Directors’ Remuneration Report 41
Statement of Directors’
Responsibilities 44
Financial
Independent Auditors’ Report 46
Statement of Comprehensive
Income 51
Statement of Changes in Equity 52
Balance Sheet 53
Cash Flow Statement 54
Notes to the Accounts 55
Other Information
(Unaudited)
Annual General Meeting –
Recommendations 70
Notice of Annual General Meeting 71
Explanatory Notes to the
Notice of Meeting 72
Definitions of Terms and Alternative
Performance Measures 73
Shareholder Information 75
Risk Disclosures 77
Information about the Company 78
Some of the financial measures here are classified as Alternative Performance Measures, as defined by the European
Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other
terms used in this report, are given on pages 73 to 74, together with supporting calculations where appropriate.
Share price discount to NAV per
share*
7.1%
(2023: 4.5%)
Share price
269.0p
(2023: 244.50p)
Revenue earnings per
share
11.29p
(2023: 11.81p)
Net revenue return after
taxation
£27.9m
(2023: £30.4m)
Gearing*
4.4%
(2023: 4.4%)
Scan this QR code on your
smartphone camera to
sign-up to receive regular
updates on Schroder
Oriental Income Fund
Limited
Financial Other Information (Unaudited) Governance Introduction Strategic Report
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 6
Top 10 Investments 13
Investment Portfolio 15
10-year Financial Record 16
Business Review 17
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement
Committee Report 38
Nomination and Remuneration
Committee Report 39
Directors’ Remuneration Report 41
Statement of Directors’
Responsibilities 44
Financial
Independent Auditors’ Report 46
Statement of Comprehensive
Income 51
Statement of Changes in Equity 52
Balance Sheet 53
Cash Flow Statement 54
Notes to the Accounts 55
Other Information
(Unaudited)
Annual General Meeting –
Recommendations 70
Notice of Annual General Meeting 71
Explanatory Notes to the
Notice of Meeting 72
Definitions of Terms and Alternative
Performance Measures 73
Shareholder Information 75
Risk Disclosures 77
Information about the Company 78
2
2
Strategic Report
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 6
Top 10 Investments 13
Investment Portfolio 15
10-year Financial Record 16
Business Review 17
Schroder Asian Total Return Investment Company plc 3
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 6
Top 10 Investments 13
Investment Portfolio 15
10-year Financial Record 16
Business Review 17
Schroder Asian Total Return Investment Company plc 3
4
Schroder
Oriental Income Fund Limited
Chairman’s Statement
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
this report on page 6 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 on page 21.
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.
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.
1
The AIC dividend heroes are the investment companies that have consistently increased their dividends for 20 or more years in a row.
https://www.theaic.co.uk/income-finder/dividend-heroes
Chairman’s Statement
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
this report on page 6 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 on page 21.
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.
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.
1
The AIC dividend heroes are the investment companies that have consistently increased their dividends for 20 or more years in a row.
https://www.theaic.co.uk/income-finder/dividend-heroes
Introduction
Strategic Report
Governance
Financial
Other Information (Unaudited)
Schroder Oriental Income Fund Limited 5
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 did 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
Schroder Oriental Income Fund Limited 5
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 did 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
6
Schroder
Oriental Income Fund Limited
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.
Source: Schroders, Morningstar, in GBP, Cum-income fair NAV.
Performance of the MSCI AC Pacific ex Japan net dividends reinvested Index in GBP and
USD – 31 August 2023 to 31 August 2024
Source: Schroders, Morningstar, in GBP, Cum-income fair NAV.
Source: Thompson Datastream as at 31 August 2024.
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.
Investment Manager’s Review
Richard Sennitt
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.
Source: Schroders, Morningstar, in GBP, Cum-income fair NAV.
Performance of the MSCI AC Pacific ex Japan net dividends reinvested Index in GBP and
USD – 31 August 2023 to 31 August 2024
Source: Schroders, Morningstar, in GBP, Cum-income fair NAV.
Source: Thompson Datastream as at 31 August 2024.
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.
Investment Manager’s Review
Richard Sennitt
Over the past six months, Asian
markets have proven to be
relatively resilient, making absolute
gains and matching global
returns.
Introduction
Strategic Report
Governance
Financial
Other Information (Unaudited)
Schroder Oriental Income Fund Limited 7
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.
Country returns of the MSCI AC Pacific ex Japan net dividends reinvested Index in GBP and
local currency – 31 August 2023 to 31 August 2024
MSCI AC Pacific ex Japan net returns by country 31 August 2023 to 31 August 2024
Source: Schroders, Factset.
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. Any reference to regions/countries/sectors/stocks/securities is for illustrative purposes only and not
a recommendation to buy or sell any financial instruments or adopt a specific investment strategy.
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
Schroder Oriental Income Fund Limited 7
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.
Country returns of the MSCI AC Pacific ex Japan net dividends reinvested Index in GBP and
local currency – 31 August 2023 to 31 August 2024
MSCI AC Pacific ex Japan net returns by country 31 August 2023 to 31 August 2024
Source: Schroders, Factset.
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. Any reference to regions/countries/sectors/stocks/securities is for illustrative purposes only and not
a recommendation to buy or sell any financial instruments or adopt a specific investment strategy.
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
8
Schroder
Oriental Income Fund Limited
Investment Manager’s Review
continued
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.
Investment Manager’s Review
continued
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.
Schroder
Oriental Income Fund Limited
9
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Stimulus has been focussed more on the supply side rather than demand
Poor China confidence
1
Resulting in consumer saving more
2
Source: 1
Refinitiv Datastream, as at 30 September 2024. 2
Bloomberg, as at September 2024. The regions, countries and sectors shown
are for illustrative purposes only and should not be viewed as a
recommendation to buy or sell.
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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Stimulus has been focussed more on the supply side rather than demand
Poor China confidence
1
Resulting in consumer saving more
2
Source: 1
Refinitiv Datastream, as at 30 September 2024. 2
Bloomberg, as at September 2024. The regions, countries and sectors shown
are for illustrative purposes only and should not be viewed as a
recommendation to buy or sell.
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.
10
Schroder
Oriental Income Fund Limited
Investment Manager’s Review
continued
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.
Peaking US rates and a softer US dollar historically supportive for Asian markets
Softer dollar and US rates peaking should be supportive
Past performance is not a guide to future performance and may not be repeated.
Source: Refinitiv Eikon Datastream, as at 31 August 2024. The regions and countries shown are for illustrative purposes only and should not be viewed as
a recommendation to buy or sell.
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.
Asia’s earnings are historically correlated to exports
Source: Bloomberg, Factset, as at September 2024. The regions, countries and sectors shown are for illustrative purposes only and should not be viewed as
a recommendation to buy or sell.
Turning to the income case for Asia – we believe the dividend yield looks relatively attractive at the moment versus a global benchmark and, as
outlined above, over the medium to long term, dividends tend to follow earnings.
Investment Manager’s Review
continued
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.
Peaking US rates and a softer US dollar historically supportive for Asian markets
Softer dollar and US rates peaking should be supportive
Past performance is not a guide to future performance and may not be repeated.
Source: Refinitiv Eikon Datastream, as at 31 August 2024. The regions and countries shown are for illustrative purposes only and should not be viewed as
a recommendation to buy or sell.
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.
Asia’s earnings are historically correlated to exports
Source: Bloomberg, Factset, as at September 2024. The regions, countries and sectors shown are for illustrative purposes only and should not be viewed as
a recommendation to buy or sell.
Turning to the income case for Asia – we believe the dividend yield looks relatively attractive at the moment versus a global benchmark and, as
outlined above, over the medium to long term, dividends tend to follow earnings.
Asian yield in context
MSCI AC Pacific ex Japan versus MSCI World relative
Yield by region
1
dividend yield
2
Past performance is not a guide to future performance and may not be repeated.
The regions and countries shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Source: 1
Factset, MSCI as at 31 August 2024. Pacific ex Japan is based on 2
Factset, MSCI as at 31 August 2024.
MSCI AC Pacific ex Japan.
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.
Asian income – reasons for resilience
Payout ratios rose as earnings fell
1
MSCI regions (ex-fin) – net gearing trend
2
Past performance is not a guide to future performance and may not be repeated.
Source: 1
Factset, Schroders, 30 June 2024. 2
Note: Bottom-up aggregated with free float adjustment based on current
MSCI universe. Source: Jefferies, FactSet, June 2024. Countries and regions
shown are for illustrative purposes only and should not be viewed as
a recommendation to buy or sell.
Schroder Oriental Income Fund Limited 11
Introduction Strategic Report Governance Financial Other Information (Unaudited)
MSCI AC Pacific ex Japan versus MSCI World relative
Yield by region
1
dividend yield
2
Past performance is not a guide to future performance and may not be repeated.
The regions and countries shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Source: 1
Factset, MSCI as at 31 August 2024. Pacific ex Japan is based on 2
Factset, MSCI as at 31 August 2024.
MSCI AC Pacific ex Japan.
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.
Asian income – reasons for resilience
Payout ratios rose as earnings fell
1
MSCI regions (ex-fin) – net gearing trend
2
Past performance is not a guide to future performance and may not be repeated.
Source: 1
Factset, Schroders, 30 June 2024. 2
Note: Bottom-up aggregated with free float adjustment based on current
MSCI universe. Source: Jefferies, FactSet, June 2024. Countries and regions
shown are for illustrative purposes only and should not be viewed as
a recommendation to buy or sell.
Schroder Oriental Income Fund Limited 11
Introduction Strategic Report Governance Financial Other Information (Unaudited)
12
Schroder
Oriental Income Fund Limited
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
Investment Manager’s Review
continued
Sectoral breakdown of portfolio*
Portfolio Weight (%)
Information Technology 31.4
Banks 23.0
Communication Services 11.3
Other Financials 10.9
Real Estate 6.8
Consumer Staples 5.0
Materials 4.9
Consumer Discretionary 4.8
Energy 2.8
Industrials 2.3
Health Care 1.2
Utilities –
*Gearing, i.e. net cash less loans outstanding, currently at 4.4%.
Source: Schroders as at 31 August 2024.
Any reference to regions/countries/sectors/stocks/securities is for illustrative
purposes only and not a recommendation to buy or sell any financial
instruments or adopt a specific investment strategy.
Regional breakdown of portfolio*
Portfolio Weight (%)
Taiwan 23.2
Australia 20.0
Singapore 15.8
Korea 13.9
China 11.8
Hong Kong 10.7
Indonesia 4.3
Philippines 1.2
Japan 1.1
Thailand 1.1
Vietnam 1.1
Malaysia –
New Zealand –
*Gearing, i.e. net cash less loans outstanding, currently at 4.4%.
Source: Schroders as at 31 August 2024.
Any reference to regions/countries/sectors/stocks/securities is for illustrative
purposes only and not a recommendation to buy or sell any financial
instruments or adopt a specific investment strategy.
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
Investment Manager’s Review
continued
Sectoral breakdown of portfolio*
Portfolio Weight (%)
Information Technology 31.4
Banks 23.0
Communication Services 11.3
Other Financials 10.9
Real Estate 6.8
Consumer Staples 5.0
Materials 4.9
Consumer Discretionary 4.8
Energy 2.8
Industrials 2.3
Health Care 1.2
Utilities –
*Gearing, i.e. net cash less loans outstanding, currently at 4.4%.
Source: Schroders as at 31 August 2024.
Any reference to regions/countries/sectors/stocks/securities is for illustrative
purposes only and not a recommendation to buy or sell any financial
instruments or adopt a specific investment strategy.
Regional breakdown of portfolio*
Portfolio Weight (%)
Taiwan 23.2
Australia 20.0
Singapore 15.8
Korea 13.9
China 11.8
Hong Kong 10.7
Indonesia 4.3
Philippines 1.2
Japan 1.1
Thailand 1.1
Vietnam 1.1
Malaysia –
New Zealand –
*Gearing, i.e. net cash less loans outstanding, currently at 4.4%.
Source: Schroders as at 31 August 2024.
Any reference to regions/countries/sectors/stocks/securities is for illustrative
purposes only and not a recommendation to buy or sell any financial
instruments or adopt a specific investment strategy.
Schroder
Oriental Income Fund Limited
13
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Top 10 Investments
at 31 August 2024
Taiwan Semiconductor Manufacturing Corporation (TSMC) Market value: £76,345,000
% of total investments: 10.4%
Samsung Electronics (including preference shares) Market value: £58,687,000
% of total investments: 8.0%
Singapore Telecommunications (Singtel) Market value: £23,652,000
% of total investments: 3.2%
Oversea-Chinese Banking Corp (OCBC) Market value: £23,632,000
% of total investments: 3.2%
BOC Hong Kong (BOCHK) Market value: £22,021,000
% of total investments: 3.0%
1
TSMC is a Taiwanese provider of semiconductor manufacturing services and the world’s
largest logic chip contract manufacturer. Its dominant position in the manufacturing of
the most cutting-edge chips is a result of a long track record of R&D-driven innovation.
TSMC’s customers include most of the world’s most advanced chip design companies, for
applications ranging from smartphone processors to the most advanced AI chips.
2
Samsung Electronics is a Korean semiconductor and electronics manufacturing company.
Its key products include semiconductors (logic and memory chips), mobile phone
handsets, consumer electronics, and home appliances. As well as being the leading
player in both volatile (DRAM) and non-volatile (NAND) memory, Samsung is one of only
a handful of companies in the world able to manufacture the more advanced logic chips
at scale.
3
Singapore Telecommunications is a leading telecommunications company based in
Singapore. As well as being the leading player in Singapore it also owns the number 2
player in Australia, Optus, as well as having a number of stakes in mobile operators
across the region including in Indonesia and India. Management has been focused on
improving core operations whilst unlocking value by allocating capital more efficiently.
4
OCBC is a Singaporean financial services provider, offering banking, insurance, asset
management, and stockbroking services. The group operates across Asia and also owns
a stake in China’s Bank of Ningbo. The group offers private banking services through its
Bank of Singapore subsidiary.
5
Bank of China Hong Kong is a leading financial services provider based in Hong Kong
serving individual and corporate clients with products like loans, mortgages, credit cards,
foreign exchange, and insurance. As a major subsidiary of Bank of China, BOCHK plays
a pivotal role in facilitating trade and investment flows between Hong Kong, mainland
China, and the rest of the world. The bank is also a designated clearing institution for
renminbi (RMB) business in Hong Kong, reinforcing its position as a critical player in the
internationalisation of the RMB.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Top 10 Investments
at 31 August 2024
Taiwan Semiconductor Manufacturing Corporation (TSMC) Market value: £76,345,000
% of total investments: 10.4%
Samsung Electronics (including preference shares) Market value: £58,687,000
% of total investments: 8.0%
Singapore Telecommunications (Singtel) Market value: £23,652,000
% of total investments: 3.2%
Oversea-Chinese Banking Corp (OCBC) Market value: £23,632,000
% of total investments: 3.2%
BOC Hong Kong (BOCHK) Market value: £22,021,000
% of total investments: 3.0%
1
TSMC is a Taiwanese provider of semiconductor manufacturing services and the world’s
largest logic chip contract manufacturer. Its dominant position in the manufacturing of
the most cutting-edge chips is a result of a long track record of R&D-driven innovation.
TSMC’s customers include most of the world’s most advanced chip design companies, for
applications ranging from smartphone processors to the most advanced AI chips.
2
Samsung Electronics is a Korean semiconductor and electronics manufacturing company.
Its key products include semiconductors (logic and memory chips), mobile phone
handsets, consumer electronics, and home appliances. As well as being the leading
player in both volatile (DRAM) and non-volatile (NAND) memory, Samsung is one of only
a handful of companies in the world able to manufacture the more advanced logic chips
at scale.
3
Singapore Telecommunications is a leading telecommunications company based in
Singapore. As well as being the leading player in Singapore it also owns the number 2
player in Australia, Optus, as well as having a number of stakes in mobile operators
across the region including in Indonesia and India. Management has been focused on
improving core operations whilst unlocking value by allocating capital more efficiently.
4
OCBC is a Singaporean financial services provider, offering banking, insurance, asset
management, and stockbroking services. The group operates across Asia and also owns
a stake in China’s Bank of Ningbo. The group offers private banking services through its
Bank of Singapore subsidiary.
5
Bank of China Hong Kong is a leading financial services provider based in Hong Kong
serving individual and corporate clients with products like loans, mortgages, credit cards,
foreign exchange, and insurance. As a major subsidiary of Bank of China, BOCHK plays
a pivotal role in facilitating trade and investment flows between Hong Kong, mainland
China, and the rest of the world. The bank is also a designated clearing institution for
renminbi (RMB) business in Hong Kong, reinforcing its position as a critical player in the
internationalisation of the RMB.
14
Schroder
Oriental Income Fund Limited
Top 10 Investments
continued
MediaTek Market value: £20,151,000
% of total investments: 2.7%
DBS Market value: £19,755,000
% of total investments: 2.7%
Telstra Market value: £19,128,000
% of total investments: 2.6%
Midea Group Market value: £18,330,000
% of total investments: 2.5%
Hon Hai Precision Industries Market value: £17,282,000
% of total investments: 2.4%
MediaTek Inc is a Taiwanese company engaged in the design and distribution of
semiconductor chips. Their products focus on mobile connectivity, for example,
5G mobile communication chips, as well as Bluetooth and WiFi microchips, and are
mainly used in mobile phones, digital TVs, PCs, home appliances, wearable devices, and
Internet of Things devices.
6
7
DBS is a financial services group headquartered in Singapore. Its services include retail
and corporate banking, wealth management, and capital markets solutions. Renowned
for its digital innovation and customer-centric approach, DBS has been recognised as one
of the world’s best digital banks. The bank operates across key markets in Asia, including
China, India, Indonesia, and Taiwan.
8
Telstra is Australia’s largest telecommunications and technology company. Its key
products and services include mobile and fixed-line telephony, broadband internet, pay
television, and digital entertainment. Telstra benefits from its leading position in 5G and
operates in a market that has seen consolidation. Management has also been focussed
on improving efficiencies across its business.
9
Midea Group is a Chinese corporation, with a global presence, specialising in consumer
appliances and HVAC (heating, ventilation, and air conditioning) systems. Its products
include air conditioners and refrigerators as well as offering robotics and industrial
automation solutions aimed at enhancing manufacturing efficiency.
10
Hon Hai Precision Industry Co., Ltd., known as Foxconn, is a leading Taiwanese
multinational electronics contract manufacturer. It is known for assembling a significant
portion of Apple’s products, including the iPhone. Its server manufacturing business is
growing rapidly and is benefiting from the demand for high-end servers needed for AI
applications.
Top 10 Investments
continued
MediaTek Market value: £20,151,000
% of total investments: 2.7%
DBS Market value: £19,755,000
% of total investments: 2.7%
Telstra Market value: £19,128,000
% of total investments: 2.6%
Midea Group Market value: £18,330,000
% of total investments: 2.5%
Hon Hai Precision Industries Market value: £17,282,000
% of total investments: 2.4%
MediaTek Inc is a Taiwanese company engaged in the design and distribution of
semiconductor chips. Their products focus on mobile connectivity, for example,
5G mobile communication chips, as well as Bluetooth and WiFi microchips, and are
mainly used in mobile phones, digital TVs, PCs, home appliances, wearable devices, and
Internet of Things devices.
6
7
DBS is a financial services group headquartered in Singapore. Its services include retail
and corporate banking, wealth management, and capital markets solutions. Renowned
for its digital innovation and customer-centric approach, DBS has been recognised as one
of the world’s best digital banks. The bank operates across key markets in Asia, including
China, India, Indonesia, and Taiwan.
8
Telstra is Australia’s largest telecommunications and technology company. Its key
products and services include mobile and fixed-line telephony, broadband internet, pay
television, and digital entertainment. Telstra benefits from its leading position in 5G and
operates in a market that has seen consolidation. Management has also been focussed
on improving efficiencies across its business.
9
Midea Group is a Chinese corporation, with a global presence, specialising in consumer
appliances and HVAC (heating, ventilation, and air conditioning) systems. Its products
include air conditioners and refrigerators as well as offering robotics and industrial
automation solutions aimed at enhancing manufacturing efficiency.
10
Hon Hai Precision Industry Co., Ltd., known as Foxconn, is a leading Taiwanese
multinational electronics contract manufacturer. It is known for assembling a significant
portion of Apple’s products, including the iPhone. Its server manufacturing business is
growing rapidly and is benefiting from the demand for high-end servers needed for AI
applications.
Schroder
Oriental Income Fund Limited
15
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Investment Portfolio
at 31 August 2024
Investments are classified by the Manager in the region or country of their main business operations or listing. Stocks in bold are the 20 largest
investments, which by value account for 59.8% (2023: 57.9%) of total investments and derivative financial instruments.
Taiwan
TSMC 76,345 10.4
MediaTek 20,151 2.7
Hon Hai Precision Industries 17,282 2.4
Delta Electronics 15,270 2.1
ASE Technology 14,772 2.0
United Microelectronics 12,292 1.7
Uni-President Enterprises 7,674 1.0
Total Taiwan 163,786 22.3
Australia
Telstra 19,128 2.6
National Australia Bank 14,977 2.0
Rio Tinto
1
14,418 2.0
BHP Billiton
1
13,676 1.9
Suncorp 12,621 1.7
Coles Group 11,891 1.6
ANZ Group 11,336 1.5
Woodside Energy 8,577 1.2
Sonic Healthcare 8,248 1.1
Woolworths 7,909 1.1
ASX 6,372 0.9
Westpac Banking 5,344 0.7
Orica 4,556 0.6
Deterra Royalties 2,053 0.3
Total Australia 141,106 19.2
Singapore
Singapore Telecommunications 23,652 3.2
Oversea-Chinese Banking 23,632 3.2
DBS 19,755 2.7
CapitaLand Ascendas (REIT^) 10,975 1.5
CapitaLand Integrated Commercial
Trust (REIT^) 9,652 1.3
United Overseas Bank 8,995 1.2
Singapore Exchange 8,351 1.1
Venture 6,411 0.9
Total Singapore 111,423 15.1
South Korea
Samsung Electronics (including
preference shares) 58,687 8.0
Samsung Fire and Marine Insurance
(including preference shares) 14,791 2.0
SK Telecom 9,293 1.3
KB Financial 8,764 1.2
Kia Corporation 6,695 0.9
Total South Korea 98,230 13.4
Mainland China
Midea Group warrants 10/07/25
2
and
A shares 18,330 2.5
China Petroleum & Chemical H shares
3
11,212 1.5
NetEase 10,229 1.4
Shenzhou International 3
8,680 1.2
Mainland China continued
China Construction Bank 3
7,726 1.0
Ping An Insurance H shares 3
7,484 1.0
Sany Heavy Industry A Shares 7,391 1.0
China Pacific Insurance 3
7,285 1.0
China Resources Land 3
4,905 0.7
Total Mainland China 83,242 11.3
Hong Kong (SAR)
BOC Hong Kong 22,021 3.0
Hong Kong Exchanges & Clearing 10,975 1.5
HKT Trust and HKT 10,542 1.4
AIA Group 9,005 1.2
Link REIT^ 8,848 1.2
Swire Properties 4,947 0.7
Hang Lung Group 3,268 0.4
Swire Pacific B 3,049 0.4
Hang Lung Properties 2,614 0.4
Total Hong Kong (SAR) 75,269 10.2
Indonesia
Bank Mandiri 16,289 2.2
Bank Negara Indonesia 7,025 1.0
Telekomunikasi Indonesia 7,006 0.9
Total Indonesia 30,320 4.1
Philippines
International Container Terminal Service 8,654 1.2
Total Philippines 8,654 1.2
Japan
Sumitomo Mitsui Financial Group 7,986 1.1
Total Japan 7,986 1.1
Thailand
Kasikornbank NVDR* 7,977 1.1
Total Thailand 7,977 1.1
Vietnam
Vietnam Dairy Products 7,614 1.0
Total Vietnam 7,614 1.0
Total Investments
4
735,607 100.0
1
Listed in the UK.
2
Listed in the Luxembourg.
3
Listed in Hong Kong.
4
Total investments comprises:
£’000 %
Equities and NVDR 667,229 90.7
Preference shares 52,023 7.1
Warrants 16,355 2.2
Total Investments 735,607 100.0
* “NVDR” means non-voting depositary receipts.
^ “REIT” means real estate investment trust.
£’000 % £’000 %
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Investment Portfolio
at 31 August 2024
Investments are classified by the Manager in the region or country of their main business operations or listing. Stocks in bold are the 20 largest
investments, which by value account for 59.8% (2023: 57.9%) of total investments and derivative financial instruments.
Taiwan
TSMC 76,345 10.4
MediaTek 20,151 2.7
Hon Hai Precision Industries 17,282 2.4
Delta Electronics 15,270 2.1
ASE Technology 14,772 2.0
United Microelectronics 12,292 1.7
Uni-President Enterprises 7,674 1.0
Total Taiwan 163,786 22.3
Australia
Telstra 19,128 2.6
National Australia Bank 14,977 2.0
Rio Tinto
1
14,418 2.0
BHP Billiton
1
13,676 1.9
Suncorp 12,621 1.7
Coles Group 11,891 1.6
ANZ Group 11,336 1.5
Woodside Energy 8,577 1.2
Sonic Healthcare 8,248 1.1
Woolworths 7,909 1.1
ASX 6,372 0.9
Westpac Banking 5,344 0.7
Orica 4,556 0.6
Deterra Royalties 2,053 0.3
Total Australia 141,106 19.2
Singapore
Singapore Telecommunications 23,652 3.2
Oversea-Chinese Banking 23,632 3.2
DBS 19,755 2.7
CapitaLand Ascendas (REIT^) 10,975 1.5
CapitaLand Integrated Commercial
Trust (REIT^) 9,652 1.3
United Overseas Bank 8,995 1.2
Singapore Exchange 8,351 1.1
Venture 6,411 0.9
Total Singapore 111,423 15.1
South Korea
Samsung Electronics (including
preference shares) 58,687 8.0
Samsung Fire and Marine Insurance
(including preference shares) 14,791 2.0
SK Telecom 9,293 1.3
KB Financial 8,764 1.2
Kia Corporation 6,695 0.9
Total South Korea 98,230 13.4
Mainland China
Midea Group warrants 10/07/25
2
and
A shares 18,330 2.5
China Petroleum & Chemical H shares
3
11,212 1.5
NetEase 10,229 1.4
Shenzhou International 3
8,680 1.2
Mainland China continued
China Construction Bank 3
7,726 1.0
Ping An Insurance H shares 3
7,484 1.0
Sany Heavy Industry A Shares 7,391 1.0
China Pacific Insurance 3
7,285 1.0
China Resources Land 3
4,905 0.7
Total Mainland China 83,242 11.3
Hong Kong (SAR)
BOC Hong Kong 22,021 3.0
Hong Kong Exchanges & Clearing 10,975 1.5
HKT Trust and HKT 10,542 1.4
AIA Group 9,005 1.2
Link REIT^ 8,848 1.2
Swire Properties 4,947 0.7
Hang Lung Group 3,268 0.4
Swire Pacific B 3,049 0.4
Hang Lung Properties 2,614 0.4
Total Hong Kong (SAR) 75,269 10.2
Indonesia
Bank Mandiri 16,289 2.2
Bank Negara Indonesia 7,025 1.0
Telekomunikasi Indonesia 7,006 0.9
Total Indonesia 30,320 4.1
Philippines
International Container Terminal Service 8,654 1.2
Total Philippines 8,654 1.2
Japan
Sumitomo Mitsui Financial Group 7,986 1.1
Total Japan 7,986 1.1
Thailand
Kasikornbank NVDR* 7,977 1.1
Total Thailand 7,977 1.1
Vietnam
Vietnam Dairy Products 7,614 1.0
Total Vietnam 7,614 1.0
Total Investments
4
735,607 100.0
1
Listed in the UK.
2
Listed in the Luxembourg.
3
Listed in Hong Kong.
4
Total investments comprises:
£’000 %
Equities and NVDR 667,229 90.7
Preference shares 52,023 7.1
Warrants 16,355 2.2
Total Investments 735,607 100.0
* “NVDR” means non-voting depositary receipts.
^ “REIT” means real estate investment trust.
£’000 % £’000 %
10-Year Financial Record
At 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 410,090 528,662 635,466 642,711 661,804 646,699 751,419 724,147 648,208 700,315
NAV per share (pence) 175.95 222.56 258.63 252.94 251.94 239.28 280.94 277.24 256.01 289.63
Share price (pence) 176.50 224.50 261.00 250.00 253.00 233.00 271.50 264.00 244.50 269.00
Share price premium/(discount) to
NAV per share (%) 0.3 0.9 0.9 (1.2) 0.4 (2.6) (3.4) (4.8) (4.5) (7.1)
Gearing (%)
1
5.5 0.4 2.0 4.5 5.3 4.0 2.7 4.0 4.4 4.4
For the year ended 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue after taxation (£’000) 19,660 21,296 23,939 26,421 27,376 26,537 27,682 34,105 30,399 27,936
Revenue earnings per share (pence) 8.73 9.03 9.94 10.52 10.60 9.86 10.36 12.94 11.81 11.29
Dividends per share (pence) 8.00 8.50 9.20 9.70 10.10 10.30 10.50 11.40 11.80 12.00
Ongoing Charges (%)
2
0.87 0.89 0.85 0.83 0.86 0.87 0.85 0.86 0.88 0.88
Performance
3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV total return 100.0 94.6 124.9 150.6 152.9 158.6 157.2 191.6 196.4 189.5 224.1
Share price total return 100.0 93.9 124.7 150.5 149.6 157.6 151.4 183.4 185.7 179.9 207.4
1
Borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
2
Ongoing Charges represents the management fee and all other operating expenses excluding finance costs, transaction costs and any performance fee payable,
expressed as a percentage of the average daily net asset values during the year.
3
Source: Morningstar. Rebased to 100 at 31 August 2014.
NAV and share price total returns, and dividends per share over ten years to 31 August 2024
*Source: Morningstar. Rebased to 100 at 31 August 2014.
Dividends per share (pence)
Total return (rebased to 100)
Pence
NAV total return
Share price total return
0.0
1.5
3.0
4.5
6.0
7.5
9.0
10.5
12.0
50
75
100
125
150
175
200
225
250
31-Aug-2024 31-Aug-2023 31-Aug-2022 31-Aug-2021 31-Aug-2020 31-Aug-2019 31-Aug-2018 31-Aug-2017 31-Aug-2016 31-Aug-2015 31-Aug-2014
16 Schroder Oriental Income Fund Limited
At 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 410,090 528,662 635,466 642,711 661,804 646,699 751,419 724,147 648,208 700,315
NAV per share (pence) 175.95 222.56 258.63 252.94 251.94 239.28 280.94 277.24 256.01 289.63
Share price (pence) 176.50 224.50 261.00 250.00 253.00 233.00 271.50 264.00 244.50 269.00
Share price premium/(discount) to
NAV per share (%) 0.3 0.9 0.9 (1.2) 0.4 (2.6) (3.4) (4.8) (4.5) (7.1)
Gearing (%)
1
5.5 0.4 2.0 4.5 5.3 4.0 2.7 4.0 4.4 4.4
For the year ended 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue after taxation (£’000) 19,660 21,296 23,939 26,421 27,376 26,537 27,682 34,105 30,399 27,936
Revenue earnings per share (pence) 8.73 9.03 9.94 10.52 10.60 9.86 10.36 12.94 11.81 11.29
Dividends per share (pence) 8.00 8.50 9.20 9.70 10.10 10.30 10.50 11.40 11.80 12.00
Ongoing Charges (%)
2
0.87 0.89 0.85 0.83 0.86 0.87 0.85 0.86 0.88 0.88
Performance
3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV total return 100.0 94.6 124.9 150.6 152.9 158.6 157.2 191.6 196.4 189.5 224.1
Share price total return 100.0 93.9 124.7 150.5 149.6 157.6 151.4 183.4 185.7 179.9 207.4
1
Borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
2
Ongoing Charges represents the management fee and all other operating expenses excluding finance costs, transaction costs and any performance fee payable,
expressed as a percentage of the average daily net asset values during the year.
3
Source: Morningstar. Rebased to 100 at 31 August 2014.
NAV and share price total returns, and dividends per share over ten years to 31 August 2024
*Source: Morningstar. Rebased to 100 at 31 August 2014.
Dividends per share (pence)
Total return (rebased to 100)
Pence
NAV total return
Share price total return
0.0
1.5
3.0
4.5
6.0
7.5
9.0
10.5
12.0
50
75
100
125
150
175
200
225
250
31-Aug-2024 31-Aug-2023 31-Aug-2022 31-Aug-2021 31-Aug-2020 31-Aug-2019 31-Aug-2018 31-Aug-2017 31-Aug-2016 31-Aug-2015 31-Aug-2014
16 Schroder Oriental Income Fund Limited
Schroder
Oriental Income Fund Limited
17
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Purpose, values and culture
The Company’s purpose is to create long-term shareholder value in line with the investment objective.
The Company’s culture is driven by its values: transparency, engagement and rigour, with collegial behaviour and constructive, robust challenge.
The values are all centred on achieving returns for shareholders in line with the Company’s investment objective. The Board also sets out the
effective management or mitigation of the risks faced by the Company and aims to structure the Company’s operations with regard to all its
stakeholders and take account of the impact of the Company’s operations on the environment and community.
Acting with high standards of integrity and transparency, the Board is committed to encouraging a culture that is responsive to the views of
Shareholders and its wider stakeholders.
As the Company has no employees and acts through its service providers, its culture is represented by the values and behaviour of the Board
and third parties to which it delegates. The Board aims to fulfil the Company’s investment objective by encouraging a culture of constructive
challenge with the key suppliers and openness with all stakeholders. The Board is responsible for embedding the Company’s culture in the
Company‘s operations. The Board recognises the Company’s responsibilities with respect to corporate and social responsibility and engages
with its outsourced service providers to safeguard the Company’s interests. As part of this ongoing monitoring, the Board receives reporting
from its service providers with respect to their anti-bribery and corruption policies, Modern Slavery Act 2015 statements, diversity policies, and
greenhouse gas and energy usage reporting.
Business model
The Company is a listed investment trust that has outsourced its operations to third party service providers.
The Board has appointed Schroder Unit Trusts Limited (the “Manager”) to implement the investment strategy and to manage the Company’s
assets in line with the appropriate restrictions placed on it by the Board, including limits on the type and relative size of holdings which may be
held in the portfolio and on the use of gearing, cash, derivatives and other financial instruments as appropriate.
The terms of the appointment of the Manager, and the delegation by the Manager of investment management services to Schroder Investment
Management Limited (“SIM” or the “Investment Manager”), are described more comprehensively in the Directors’ Report. The Manager also
promotes the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company’s investment
objective, as demonstrated in the diagram below.
Investment objective
The investment objective of the Company 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.
Investment policy
The investment policy of the Company is to invest in a diversified portfolio of investments, primarily equities and equity-related investments, of
companies which are based in, or derive a significant proportion of their revenues from, the Asia Pacific region. The portfolio is diversified across
a number of industries and a number of countries in that region. The portfolio may include government, quasi-government, corporate and high
yield bonds and preferred shares.
Equity-related investments which the Company may hold include investments in other collective investment undertakings (including real estate
investment trusts and related stapled securities), warrants, depository receipts, participation certificates, guaranteed performance bonds,
convertible bonds, other debt securities, equity-linked notes and similar instruments (whether or not investment grade) which give the
Company access to the performance of underlying equity securities, particularly where the Company may be restricted from directly investing in
such underlying equity securities or where the Investment Manager considers that there are benefits to the Company in holding such
investments instead of directly holding the relevant underlying equity securities. Such investments may be listed or traded outside the Asia
Pacific region. Such investments may subject the Company to credit risk against the issuing entity. The Company may also participate, subject to
regulatory and tax implications, in debt-to-equity conversion programmes.
Investor
value
Strategy Board
Appoints the Manager and
other service providers
to achieve objectives
Responsible for the
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Sets objectives, strategy and key
performance indicators (“KPIs”)
–
Oversight
Oversees portfolio
management
Monitors the achievement
of KPIs
Oversees the use of gearing
Oversees discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Investment Manager
implements the investment
strategy by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the Company remains
attractive to investors
– that the fees and ongoing
charges remain competitive
Business Review
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Purpose, values and culture
The Company’s purpose is to create long-term shareholder value in line with the investment objective.
The Company’s culture is driven by its values: transparency, engagement and rigour, with collegial behaviour and constructive, robust challenge.
The values are all centred on achieving returns for shareholders in line with the Company’s investment objective. The Board also sets out the
effective management or mitigation of the risks faced by the Company and aims to structure the Company’s operations with regard to all its
stakeholders and take account of the impact of the Company’s operations on the environment and community.
Acting with high standards of integrity and transparency, the Board is committed to encouraging a culture that is responsive to the views of
Shareholders and its wider stakeholders.
As the Company has no employees and acts through its service providers, its culture is represented by the values and behaviour of the Board
and third parties to which it delegates. The Board aims to fulfil the Company’s investment objective by encouraging a culture of constructive
challenge with the key suppliers and openness with all stakeholders. The Board is responsible for embedding the Company’s culture in the
Company‘s operations. The Board recognises the Company’s responsibilities with respect to corporate and social responsibility and engages
with its outsourced service providers to safeguard the Company’s interests. As part of this ongoing monitoring, the Board receives reporting
from its service providers with respect to their anti-bribery and corruption policies, Modern Slavery Act 2015 statements, diversity policies, and
greenhouse gas and energy usage reporting.
Business model
The Company is a listed investment trust that has outsourced its operations to third party service providers.
The Board has appointed Schroder Unit Trusts Limited (the “Manager”) to implement the investment strategy and to manage the Company’s
assets in line with the appropriate restrictions placed on it by the Board, including limits on the type and relative size of holdings which may be
held in the portfolio and on the use of gearing, cash, derivatives and other financial instruments as appropriate.
The terms of the appointment of the Manager, and the delegation by the Manager of investment management services to Schroder Investment
Management Limited (“SIM” or the “Investment Manager”), are described more comprehensively in the Directors’ Report. The Manager also
promotes the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company’s investment
objective, as demonstrated in the diagram below.
Investment objective
The investment objective of the Company 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.
Investment policy
The investment policy of the Company is to invest in a diversified portfolio of investments, primarily equities and equity-related investments, of
companies which are based in, or derive a significant proportion of their revenues from, the Asia Pacific region. The portfolio is diversified across
a number of industries and a number of countries in that region. The portfolio may include government, quasi-government, corporate and high
yield bonds and preferred shares.
Equity-related investments which the Company may hold include investments in other collective investment undertakings (including real estate
investment trusts and related stapled securities), warrants, depository receipts, participation certificates, guaranteed performance bonds,
convertible bonds, other debt securities, equity-linked notes and similar instruments (whether or not investment grade) which give the
Company access to the performance of underlying equity securities, particularly where the Company may be restricted from directly investing in
such underlying equity securities or where the Investment Manager considers that there are benefits to the Company in holding such
investments instead of directly holding the relevant underlying equity securities. Such investments may be listed or traded outside the Asia
Pacific region. Such investments may subject the Company to credit risk against the issuing entity. The Company may also participate, subject to
regulatory and tax implications, in debt-to-equity conversion programmes.
Investor
value
Strategy Board
Appoints the Manager and
other service providers
to achieve objectives
Responsible for the
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Sets objectives, strategy and key
performance indicators (“KPIs”)
–
Oversight
Oversees portfolio
management
Monitors the achievement
of KPIs
Oversees the use of gearing
Oversees discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Investment Manager
implements the investment
strategy by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the Company remains
attractive to investors
– that the fees and ongoing
charges remain competitive
Business Review
18
Schroder
Oriental Income Fund Limited
The Investment Manager may consider writing calls over some of the
Company’s holdings, as a low risk way of enhancing the returns from
the portfolio. The Board has set a limit such that covered calls cannot
be written over portfolio holdings representing in excess of 15% of
gross assets. However, the Company may only invest in derivatives for
the purposes of efficient portfolio management. Investors should
note that the types of equity-related investments listed in this
paragraph are not exhaustive of all of the types of securities and
financial instruments in which the Company may invest, and the
Company will retain the flexibility to make any investments unless
these are prohibited by the investment restrictions applicable to the
Company.
Although the Company has the flexibility to invest in bonds and
preferred shares as described above, the intention of the directors is
that the assets of the Company which are invested (that is to say,
which are not held in cash, money funds, debt securities, interest
bearing gilts or treasuries) will predominantly comprise Asia Pacific
equities and equity-related investments. The Company is required to
obtain the prior approval of the Ordinary Shareholders to any
material change to its published investment policy.
Investment restrictions and spread of investment risk
Risk in relation to the Company’s investments is spread as a result of
the Manager monitoring the Company’s portfolio with a view to
ensuring that it retains an appropriate balance to meet the
Company’s investment objective. In order to comply with the Listing
Rules, the Company will not invest more than 10%, in aggregate, of
the value of its total assets (calculated at the time of any relevant
investment) in other investment companies or investment trusts
which are listed on the Official List of the Financial Conduct Authority
(the “Official List”) (save to the extent that those investment
companies or investment trusts have stated investment policies to
invest no more than 15% of their gross assets in other investment
companies or investment trusts which are listed on the Official List).
Additionally, the Company will not:
(i) invest more than 15% of its gross assets in other investment
companies or investment trusts which are listed on the Official
List;
(ii) invest, either directly or indirectly, or lend more than 20%
(calculated at the time of any relevant investment or loan) of its
gross assets to any single underlying issuer (including the
underlying issuer’s subsidiaries or affiliates);
(iii) invest more than 20% (calculated at the time of any relevant
investment) of its gross assets in one or more collective
investment undertakings which may invest more than 20% of its
gross assets in other collective investment undertakings;
(iv) invest more than 40% (calculated at the time of any relevant
investment) of its gross assets in another collective investment
undertaking;
(v) expose more than 20% of its gross assets to the
creditworthiness or solvency of any one counterparty;
(vi) invest in physical commodities; or
(vii) invest in derivatives except for the purposes of efficient portfolio
management.
In the event of any breach of the investment restrictions applicable to
the Company, shareholders will be informed of the actions to be
taken by the Manager by notice sent to the registered addresses of
the shareholders in accordance with the Company’s articles of
incorporation or by an announcement issued through a regulatory
information service approved by the Financial Conduct Authority
(“FCA”). No breaches of these investment restrictions occurred during
the year ended 31 August 2024. The Investment Portfolio on page 15
and the Investment Manager’s Review on pages 6 to 12 demonstrate
that, as at 31 August 2024, the portfolio was invested in 11 countries
and in 11 different industry sectors within such countries. There were
59 holdings in the portfolio at the year end. The Board therefore
believes that the objective of spreading investment risk has been
achieved.
Status
The Company carries on business as a Guernsey incorporated,
Guernsey Financial Services Commission authorised, closed-ended
investment company. Its shares are listed and admitted to trading on
the main market of the London Stock Exchange. The Company was
added to the FTSE 250 index on 17 September 2019.
On 1 September 2020, following approval by the Company’s
Shareholders at a general meeting, the Company became tax
resident in the United Kingdom and since then it has been approved
by HM Revenue & Customs, by way of a one-off application, as an
investment trust in accordance with section 1158 of the Corporation
Tax Act 2010. It is intended that the Company will continue to conduct
its affairs in a manner which will enable it to retain this status. The
Company is not a “close” company for taxation purposes.
It is not intended that the Company should have a limited life, and the
articles of incorporation do not contain any provisions for review of
the future of the Company at specified intervals.
Key performance indicators (“KPIs”)
The investment objective
The Board measures the development and success of the Company’s
business through achievement of the Company’s investment
objective, to provide a total return for investors primarily through
investments in equities in the Asia Pacific region, which is considered
to be the most significant key performance indicator for the
Company.
Commentary on performance against the investment objective can
be found in the Chairman’s Statement.
At each meeting, the Board considers a number of performance
indicators to assess the Company’s success in achieving its
investment objective. These are as follows: NAV total return; share
price total return; share price discount/premium to NAV per share;
ongoing charges and dividends payable. A number of these are
classed as APMs and their calculations are explained in more detail on
pages 73 and 74.
The performance against these indicators is reported in the
Performance Summary on the inside front cover to page 1 and in the
Strategic Report on pages 4 to 27.
Net asset value and share price total return
At each meeting, the Board reviews the performance of the portfolio
in detail and discusses the views of the Portfolio Manager.
Share price discount/premium to net asset value per
share
The Board reviews the level of discount/premium to net asset value
per share at every Board meeting and is alert to the value
Shareholders place on maintaining as low a level of share price
volatility as possible.
The Board actively used its buyback authorities during the year under
review and agreed to request renewal of the authorities to issue and
buyback shares as described on page 70.
Business Review
continued
The Investment Manager may consider writing calls over some of the
Company’s holdings, as a low risk way of enhancing the returns from
the portfolio. The Board has set a limit such that covered calls cannot
be written over portfolio holdings representing in excess of 15% of
gross assets. However, the Company may only invest in derivatives for
the purposes of efficient portfolio management. Investors should
note that the types of equity-related investments listed in this
paragraph are not exhaustive of all of the types of securities and
financial instruments in which the Company may invest, and the
Company will retain the flexibility to make any investments unless
these are prohibited by the investment restrictions applicable to the
Company.
Although the Company has the flexibility to invest in bonds and
preferred shares as described above, the intention of the directors is
that the assets of the Company which are invested (that is to say,
which are not held in cash, money funds, debt securities, interest
bearing gilts or treasuries) will predominantly comprise Asia Pacific
equities and equity-related investments. The Company is required to
obtain the prior approval of the Ordinary Shareholders to any
material change to its published investment policy.
Investment restrictions and spread of investment risk
Risk in relation to the Company’s investments is spread as a result of
the Manager monitoring the Company’s portfolio with a view to
ensuring that it retains an appropriate balance to meet the
Company’s investment objective. In order to comply with the Listing
Rules, the Company will not invest more than 10%, in aggregate, of
the value of its total assets (calculated at the time of any relevant
investment) in other investment companies or investment trusts
which are listed on the Official List of the Financial Conduct Authority
(the “Official List”) (save to the extent that those investment
companies or investment trusts have stated investment policies to
invest no more than 15% of their gross assets in other investment
companies or investment trusts which are listed on the Official List).
Additionally, the Company will not:
(i) invest more than 15% of its gross assets in other investment
companies or investment trusts which are listed on the Official
List;
(ii) invest, either directly or indirectly, or lend more than 20%
(calculated at the time of any relevant investment or loan) of its
gross assets to any single underlying issuer (including the
underlying issuer’s subsidiaries or affiliates);
(iii) invest more than 20% (calculated at the time of any relevant
investment) of its gross assets in one or more collective
investment undertakings which may invest more than 20% of its
gross assets in other collective investment undertakings;
(iv) invest more than 40% (calculated at the time of any relevant
investment) of its gross assets in another collective investment
undertaking;
(v) expose more than 20% of its gross assets to the
creditworthiness or solvency of any one counterparty;
(vi) invest in physical commodities; or
(vii) invest in derivatives except for the purposes of efficient portfolio
management.
In the event of any breach of the investment restrictions applicable to
the Company, shareholders will be informed of the actions to be
taken by the Manager by notice sent to the registered addresses of
the shareholders in accordance with the Company’s articles of
incorporation or by an announcement issued through a regulatory
information service approved by the Financial Conduct Authority
(“FCA”). No breaches of these investment restrictions occurred during
the year ended 31 August 2024. The Investment Portfolio on page 15
and the Investment Manager’s Review on pages 6 to 12 demonstrate
that, as at 31 August 2024, the portfolio was invested in 11 countries
and in 11 different industry sectors within such countries. There were
59 holdings in the portfolio at the year end. The Board therefore
believes that the objective of spreading investment risk has been
achieved.
Status
The Company carries on business as a Guernsey incorporated,
Guernsey Financial Services Commission authorised, closed-ended
investment company. Its shares are listed and admitted to trading on
the main market of the London Stock Exchange. The Company was
added to the FTSE 250 index on 17 September 2019.
On 1 September 2020, following approval by the Company’s
Shareholders at a general meeting, the Company became tax
resident in the United Kingdom and since then it has been approved
by HM Revenue & Customs, by way of a one-off application, as an
investment trust in accordance with section 1158 of the Corporation
Tax Act 2010. It is intended that the Company will continue to conduct
its affairs in a manner which will enable it to retain this status. The
Company is not a “close” company for taxation purposes.
It is not intended that the Company should have a limited life, and the
articles of incorporation do not contain any provisions for review of
the future of the Company at specified intervals.
Key performance indicators (“KPIs”)
The investment objective
The Board measures the development and success of the Company’s
business through achievement of the Company’s investment
objective, to provide a total return for investors primarily through
investments in equities in the Asia Pacific region, which is considered
to be the most significant key performance indicator for the
Company.
Commentary on performance against the investment objective can
be found in the Chairman’s Statement.
At each meeting, the Board considers a number of performance
indicators to assess the Company’s success in achieving its
investment objective. These are as follows: NAV total return; share
price total return; share price discount/premium to NAV per share;
ongoing charges and dividends payable. A number of these are
classed as APMs and their calculations are explained in more detail on
pages 73 and 74.
The performance against these indicators is reported in the
Performance Summary on the inside front cover to page 1 and in the
Strategic Report on pages 4 to 27.
Net asset value and share price total return
At each meeting, the Board reviews the performance of the portfolio
in detail and discusses the views of the Portfolio Manager.
Share price discount/premium to net asset value per
share
The Board reviews the level of discount/premium to net asset value
per share at every Board meeting and is alert to the value
Shareholders place on maintaining as low a level of share price
volatility as possible.
The Board actively used its buyback authorities during the year under
review and agreed to request renewal of the authorities to issue and
buyback shares as described on page 70.
Business Review
continued
Schroder
Oriental Income Fund Limited
19
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Ongoing charges
The Board reviews the Company’s ongoing charges to ensure that the total costs incurred by Shareholders in the running of the Company
remain competitive when measured against peer group funds. An analysis of the Company’s costs, including management and performance
fees, directors’ fees and general expenses, is submitted to each Board meeting. Management and any performance fees payable are reviewed
at least annually.
Dividends payable
It is the Board’s policy that, except for unforeseen circumstances, interim dividends on the Company’s ordinary shares will be declared in respect
of the quarters ended 30 November, 28 February, 31 May and 31 August in January, April/May, July and October/November each year.
Having already paid interim dividends amounting to six pence per share, the Board has declared a fourth interim dividend of 6.00 pence per
share for the year ended 31 August 2024, which is payable on 29 November 2024 to shareholders on the register on 15 November 2024. Thus,
dividends for the year amount to 12.00 pence (2023: 11.80 pence) per share. This represents an increase of 1.7% over the rate of dividends
payable in respect of the previous year.
Total dividends declared in respect of the year amount to £29,242,862, which is 105% of the £27,936,000 revenue profit after taxation available
for distribution. Accordingly, the Company will carry forward £21,011,060 in revenue reserves. However in accordance with accounting
standards, the fourth interim dividend amounting to £14,507,881 will not be accounted for until it is has been paid.
Risk factors
In addition to the performance indicators set out above, the Board also monitors risk factors relating to investment performance on a quarterly basis.
Investment philosophy
We believe that Asian stock markets provide strong potential for adding value through active fund management.
We believe that this value is best extracted using a fundamental bottom-up approach.
The durability of earnings and the alignment of our interests with management and major shareholders are key
considerations. We seek to buy quality companies at the right price.
We believe that applying a systematic, disciplined approach, with a strong team culture, increases our ability to add value.
Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Translating philosophy into process
A disciplined investment process, applied systematically by an experienced team, is important for adding value over the long term. The
Manager’s investment process is informed by their beliefs about Asian markets, based on the extensive experience they have gained investing
in the region for over 50 years.
These beliefs, and their implications, result in stock selection being placed at the heart of the Company’s investment approach, as explained in
the diagram below:
Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Philosophical
Beliefs
Asian markets
less well researched
Asian stocks have
higher specific risks
Asian markets are
short term and volatile
Deduction
Process
Add value from stock selection
by consistent application of
bottom-up process
Seek quality – at
the right price
Seek long-term, not
short-term valuation
anomalies
– Disciplined long term stock analysis
by a large, on-the-ground team of
experienced investment professionals
covering Asia Pacific
– Understanding of business value
– Focus on superior or improving ROIC
over time
– ESG and durabiliity of earnings
a consideration
– Corporate governance focus
– Take a long-term time horizon
– Exploit opportunities created by short
term volatility
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Ongoing charges
The Board reviews the Company’s ongoing charges to ensure that the total costs incurred by Shareholders in the running of the Company
remain competitive when measured against peer group funds. An analysis of the Company’s costs, including management and performance
fees, directors’ fees and general expenses, is submitted to each Board meeting. Management and any performance fees payable are reviewed
at least annually.
Dividends payable
It is the Board’s policy that, except for unforeseen circumstances, interim dividends on the Company’s ordinary shares will be declared in respect
of the quarters ended 30 November, 28 February, 31 May and 31 August in January, April/May, July and October/November each year.
Having already paid interim dividends amounting to six pence per share, the Board has declared a fourth interim dividend of 6.00 pence per
share for the year ended 31 August 2024, which is payable on 29 November 2024 to shareholders on the register on 15 November 2024. Thus,
dividends for the year amount to 12.00 pence (2023: 11.80 pence) per share. This represents an increase of 1.7% over the rate of dividends
payable in respect of the previous year.
Total dividends declared in respect of the year amount to £29,242,862, which is 105% of the £27,936,000 revenue profit after taxation available
for distribution. Accordingly, the Company will carry forward £21,011,060 in revenue reserves. However in accordance with accounting
standards, the fourth interim dividend amounting to £14,507,881 will not be accounted for until it is has been paid.
Risk factors
In addition to the performance indicators set out above, the Board also monitors risk factors relating to investment performance on a quarterly basis.
Investment philosophy
We believe that Asian stock markets provide strong potential for adding value through active fund management.
We believe that this value is best extracted using a fundamental bottom-up approach.
The durability of earnings and the alignment of our interests with management and major shareholders are key
considerations. We seek to buy quality companies at the right price.
We believe that applying a systematic, disciplined approach, with a strong team culture, increases our ability to add value.
Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Translating philosophy into process
A disciplined investment process, applied systematically by an experienced team, is important for adding value over the long term. The
Manager’s investment process is informed by their beliefs about Asian markets, based on the extensive experience they have gained investing
in the region for over 50 years.
These beliefs, and their implications, result in stock selection being placed at the heart of the Company’s investment approach, as explained in
the diagram below:
Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Philosophical
Beliefs
Asian markets
less well researched
Asian stocks have
higher specific risks
Asian markets are
short term and volatile
Deduction
Process
Add value from stock selection
by consistent application of
bottom-up process
Seek quality – at
the right price
Seek long-term, not
short-term valuation
anomalies
– Disciplined long term stock analysis
by a large, on-the-ground team of
experienced investment professionals
covering Asia Pacific
– Understanding of business value
– Focus on superior or improving ROIC
over time
– ESG and durabiliity of earnings
a consideration
– Corporate governance focus
– Take a long-term time horizon
– Exploit opportunities created by short
term volatility
20
Schroder
Oriental Income Fund Limited
Business Review
continued
Investment team
A key strength of the Manager is its team of investment professionals
based in the region. The two UK-based portfolio managers, who
themselves have well over four decades of experience between them,
are supported by a team of 45 equity analysts based across 6 offices
in Asia Pacific ex-Japan, who have an average of over 16 years’
investment experience
1
.
Being based in the region means that the analysts are in regular
direct contact with the companies which they are covering, with the
team carrying out over 2,600 meetings with regional companies per
year
2
. This regular contact allows the team to gain a thorough
understanding of a company’s business model and management
culture, the key issues they are facing and their strategies to navigate
an ever-changing business environment. Moreover, since the local
investors in each country are usually the key owners of the local
markets, being present on the ground enables the Manager to
understand how those major local investors perceive and value
companies.
It is this knowledge base, paired with the expertise of the Manager’s
investment professionals, which truly adds value to the bottom-up
approach to stock selection. The locally based analyst team is
supplemented by other resources across the Schroders group,
including the UK-based Sustainable Investment team and Investment
Insight Unit, as well as other equity teams focused on Global and
Emerging markets.
Stock Research
The key input into the Manager’s stock selection decisions is the
fundamental research carried out by the analyst team, the majority of
which is done using internal research tools and valuation models.
With a universe of around 5,000 potential names to choose from, in
what has historically been a volatile region, the Manager has a bias
towards ‘quality’ companies. The analysts look to identify those
companies which are most likely to be able to grow shareholder value
over the long term, by making assessments of the financial and
non-financial factors (including sustainability) which influence
company returns. The analytical focus is on the future trend in a
company’s return on invested capital (“ROIC”) relative to its weighted
average cost of capital (“WACC”), in the belief that this reflects the
attractiveness and durability of the business model and serves as
a predictor of long-term shareholder returns.
Analysts spend much of their time meeting with companies in their
sectors, as well as with industry experts and colleagues, so that they
can evaluate the “moats” around the businesses they are analysing
and ultimately be in a position to make a recommendation.
The output of this work is usually in the form of research notes and
company models, as well as standard data points – a fair value and
recommendation grade, its Shareholder Return Classification (“SRC”)
which is the assessment of the company’s return profile as described
above, and an ESG appraisal and score.
Portfolio Construction
Although the Asian team’s analysts are the primary source of stock
ideas, the portfolio managers also generate stock ideas through their
own research (for example, by undertaking research visits and
meetings with company management) and by drawing on a number
of other sources including other investment professionals within
Schroders, quantitative screens, and external research providers.
Using all of these inputs, the portfolio managers will decide which
stocks to hold, and at what weightings. Many of the stocks will already
have attractive yields, but the Manager also looks to exploit
opportunities in stocks which are set to benefit from improving capital
efficiency, rising returns and increasing shareholder distributions.
There is no minimum yield requirement applied to every stock, but
portfolio construction is carried out with reference to the overall
portfolio yield as a key part of the Company’s total return investment
objective.
In doing so, they will consider all the outputs from the analysts’ work
(such as the upside to fair value), the level of conviction they have in
the investment thesis and any identified risks (including those relating
to ESG) relative to the rest of the opportunity set. The primary
objective of this process is to create a yield-orientated portfolio with
an appropriate level of stock-specific risk as the primary driver of
returns.
While the portfolio construction process is primarily driven by
bottom-up stock selection, there is also a top-down regional
allocation review process, carried out on a monthly basis, combining
the output of an in-house quantitative model and the qualitative views
of the portfolio managers, informed by data and analysis from both
internal and external research teams.
The purpose of this “top-down overlay” is to identify and adjust for
any unwanted systematic risks (or missed opportunities) which have
resulted from the bottom-up process. Top-down factors looked at in
this process may include macroeconomic conditions, inflation and
interest rate dynamics, politics/geopolitics, aggregate market
valuations and measures of investor sentiment. This allows the
portfolio managers to construct the portfolio using the most
attractive bottom-up ideas, while helping ensure sufficient
diversification and taking into consideration any important top-down
factors. They will also harness Schroders’ proprietary risk
management systems to provide a quantitative view of the
characteristics of the portfolio.
This results in a relatively diversified portfolio, typically with a ‘quality’
bias.
Integration of ESG into the investment
process 3
It is important to note that the Company does not have a specific
ESG/sustainability orientation, or target outcome. The Company’s
investment objective can be found in the Strategic Report on page 17.
The approach of the Manager is to incorporate into its
decision-making a thorough assessment of management quality,
environmental, social and governance factors, whether implicitly or
explicitly. The Manager believes that integrating an analysis and
evaluation of ESG factors in the security valuation and selection
process helps to enhance and protect long-term shareholder value,
and that the appraisal of non-financial factors, including ESG
considerations, contributes to a better understanding of a company’s
risk characteristics and return potential. Assessing the durability of
a company’s returns and financial position has therefore always been
at the core of the Manager’s research and investment decisions in
Asia.
Schroders’ sustainability practice has a history of over 20 years. Today
a team of more than 45 dedicated members of the Sustainable
Investment team (as at 31 May 2024) develop proprietary ESG tools,
1
Team information as at June 2024. The 45 ex-Japan analysts includes Schroders’ local specialist team of equity analysts in Sydney, as well as a joint-venture team of
Indian equity analysts at Axis Asset Management (Axis AMC) in Mumbai.
2
Calendar year 2023. Source: Schroders.
3
The above research and ESG framework covers investments in companies researched by our team of locally based Asia ex Japan analysts. The detail of research and
ESG coverage in other regions where analysts report locally (e.g. Australia, India) may differ, but is underpinned by the same broad approach.
Business Review
continued
Investment team
A key strength of the Manager is its team of investment professionals
based in the region. The two UK-based portfolio managers, who
themselves have well over four decades of experience between them,
are supported by a team of 45 equity analysts based across 6 offices
in Asia Pacific ex-Japan, who have an average of over 16 years’
investment experience
1
.
Being based in the region means that the analysts are in regular
direct contact with the companies which they are covering, with the
team carrying out over 2,600 meetings with regional companies per
year
2
. This regular contact allows the team to gain a thorough
understanding of a company’s business model and management
culture, the key issues they are facing and their strategies to navigate
an ever-changing business environment. Moreover, since the local
investors in each country are usually the key owners of the local
markets, being present on the ground enables the Manager to
understand how those major local investors perceive and value
companies.
It is this knowledge base, paired with the expertise of the Manager’s
investment professionals, which truly adds value to the bottom-up
approach to stock selection. The locally based analyst team is
supplemented by other resources across the Schroders group,
including the UK-based Sustainable Investment team and Investment
Insight Unit, as well as other equity teams focused on Global and
Emerging markets.
Stock Research
The key input into the Manager’s stock selection decisions is the
fundamental research carried out by the analyst team, the majority of
which is done using internal research tools and valuation models.
With a universe of around 5,000 potential names to choose from, in
what has historically been a volatile region, the Manager has a bias
towards ‘quality’ companies. The analysts look to identify those
companies which are most likely to be able to grow shareholder value
over the long term, by making assessments of the financial and
non-financial factors (including sustainability) which influence
company returns. The analytical focus is on the future trend in a
company’s return on invested capital (“ROIC”) relative to its weighted
average cost of capital (“WACC”), in the belief that this reflects the
attractiveness and durability of the business model and serves as
a predictor of long-term shareholder returns.
Analysts spend much of their time meeting with companies in their
sectors, as well as with industry experts and colleagues, so that they
can evaluate the “moats” around the businesses they are analysing
and ultimately be in a position to make a recommendation.
The output of this work is usually in the form of research notes and
company models, as well as standard data points – a fair value and
recommendation grade, its Shareholder Return Classification (“SRC”)
which is the assessment of the company’s return profile as described
above, and an ESG appraisal and score.
Portfolio Construction
Although the Asian team’s analysts are the primary source of stock
ideas, the portfolio managers also generate stock ideas through their
own research (for example, by undertaking research visits and
meetings with company management) and by drawing on a number
of other sources including other investment professionals within
Schroders, quantitative screens, and external research providers.
Using all of these inputs, the portfolio managers will decide which
stocks to hold, and at what weightings. Many of the stocks will already
have attractive yields, but the Manager also looks to exploit
opportunities in stocks which are set to benefit from improving capital
efficiency, rising returns and increasing shareholder distributions.
There is no minimum yield requirement applied to every stock, but
portfolio construction is carried out with reference to the overall
portfolio yield as a key part of the Company’s total return investment
objective.
In doing so, they will consider all the outputs from the analysts’ work
(such as the upside to fair value), the level of conviction they have in
the investment thesis and any identified risks (including those relating
to ESG) relative to the rest of the opportunity set. The primary
objective of this process is to create a yield-orientated portfolio with
an appropriate level of stock-specific risk as the primary driver of
returns.
While the portfolio construction process is primarily driven by
bottom-up stock selection, there is also a top-down regional
allocation review process, carried out on a monthly basis, combining
the output of an in-house quantitative model and the qualitative views
of the portfolio managers, informed by data and analysis from both
internal and external research teams.
The purpose of this “top-down overlay” is to identify and adjust for
any unwanted systematic risks (or missed opportunities) which have
resulted from the bottom-up process. Top-down factors looked at in
this process may include macroeconomic conditions, inflation and
interest rate dynamics, politics/geopolitics, aggregate market
valuations and measures of investor sentiment. This allows the
portfolio managers to construct the portfolio using the most
attractive bottom-up ideas, while helping ensure sufficient
diversification and taking into consideration any important top-down
factors. They will also harness Schroders’ proprietary risk
management systems to provide a quantitative view of the
characteristics of the portfolio.
This results in a relatively diversified portfolio, typically with a ‘quality’
bias.
Integration of ESG into the investment
process 3
It is important to note that the Company does not have a specific
ESG/sustainability orientation, or target outcome. The Company’s
investment objective can be found in the Strategic Report on page 17.
The approach of the Manager is to incorporate into its
decision-making a thorough assessment of management quality,
environmental, social and governance factors, whether implicitly or
explicitly. The Manager believes that integrating an analysis and
evaluation of ESG factors in the security valuation and selection
process helps to enhance and protect long-term shareholder value,
and that the appraisal of non-financial factors, including ESG
considerations, contributes to a better understanding of a company’s
risk characteristics and return potential. Assessing the durability of
a company’s returns and financial position has therefore always been
at the core of the Manager’s research and investment decisions in
Asia.
Schroders’ sustainability practice has a history of over 20 years. Today
a team of more than 45 dedicated members of the Sustainable
Investment team (as at 31 May 2024) develop proprietary ESG tools,
1
Team information as at June 2024. The 45 ex-Japan analysts includes Schroders’ local specialist team of equity analysts in Sydney, as well as a joint-venture team of
Indian equity analysts at Axis Asset Management (Axis AMC) in Mumbai.
2
Calendar year 2023. Source: Schroders.
3
The above research and ESG framework covers investments in companies researched by our team of locally based Asia ex Japan analysts. The detail of research and
ESG coverage in other regions where analysts report locally (e.g. Australia, India) may differ, but is underpinned by the same broad approach.
Schroder
Oriental Income Fund Limited
21
Introduction Strategic Report Governance Financial Other Information (Unaudited)
such as CONTEXT
TM
and SustainEx
TM
and oversee ESG analysis across Schroders, supporting individual investment teams, such as the Asian
equities team. The carbon footprint of the companies and the portfolio are monitored over time and the proprietary SustaineEx
TM
tool measures
positive and negative externalities generated by the companies.
Asia Context
TM
, which is the principal tool employed for the Manager’s ESG analysis as it pertains to the Company’s investments, captures the
Manager’s ESG analysis in one template using a stakeholder-based framework. It provides a clear and broad roadmap on the issues requiring
engagement, helps refresh the team’s focus on ROIC and enhances appreciation of the downside and upside risks to a company’s business
model.
The Context Framework:
Understanding how a company manages it relationships with stakeholders
Source: Schroders.
To enhance the Asia team’s ESG expertise in Asia, two members of the Sustainable Investment team are based in the region, directly supporting
the Asian capability and ensuring they are kept fully informed of the relevant output of the Sustainable Investment team in London.
A Sustainable Equity Analyst on the Asia team brings additional insight and perspective to ESG analysis and engagement.
ESG analysis impacts the investment process in four ways:
1. Initial screening – ESG helps determine which companies are considered to be investable as part of an initial screening, which is in addition
to Schroders’ group-wide exclusions
1
.
2. Durability of earnings – ESG analysis helps the investment team understand the impact ESG externalities may have on the future earnings
power of the business and the ROIC and SRC of the company.
3. Fair Value and recommendation – ESG is an indirect and direct input into the fair value estimate of a company. Indirect, to the extent that
a company’s SRC may influence the assumptions used in establishing the fair value estimate of a company; and direct, to the extent that
the Manager may apply an additional explicit discount/premium to that fair value estimate.
4. Portfolio construction – ESG helps shape portfolio construction and may influence how portfolio managers size positions. For example,
poor ESG performance or heightened ESG risks may result in a decision to underweight a security, hold a smaller position size or avoid an
investment completely. There is no automatic rule – each investment opportunity is assessed on a case-by-case basis, with the focus on the
materiality of ESG factors on a company’s valuation and risk profile.
In summary ESG analysis helps determine which companies are looked at, how the Manager assesses their durability and, hence, how they are
valued. And while company valuations ultimately drive portfolio construction, ESG insights play a role in the investment process and may
influence how portfolio managers size positions within a portfolio. Furthermore, the Manager’s ESG analysis is broad reaching and is not only
concerned with the potential downside risks that are identified, but also the upside return implications for stocks in which the Company invests.
Active Ownership
Schroders has a long history of active ownership, including engagement with companies on ESG related matters, for the past two decades.
Direct company contact is an important component of the initial due diligence and ongoing monitoring process. These regular engagements
form an important aspect of the Manager’s role as stewards of clients’ capital and allows deployment of capital in businesses with long-term
sustainability of returns and shareholder value creation.
Corporate Governance analysts in the Sustainable Investment team will also work alongside investors and internal compliance and legal teams
to vote all proxies where practically possible, and to ensure the Manager’s voting activities comply with its ESG policy.
Employees
Suppliers
Communities
community? Have you committed to
protect human rights?
Regulators
How competitive is your market? Are
you paying a fair rate of tax?
Customers
How is your brand perceived? What’s
in your produce pipeline?
transition plan? Are you managing
Company
G
o v
e
r
n
a
n
c
e
G
o
v
e
r
n
a
n c
e
Environment
Have you put in place an energy
operating impacts?
How exposed is your supply chain to
disruption risks? How strong are your
supplier relationships?
How do your employees perform? How
motivated is your team?
What support do you offer your local
1
Schroders applies group-level exclusions to all Schroders funds that are directly managed. These group-level exclusions relate to controversial weapons and
companies that generate more than 20% of their revenues from thermal coal mining. Details can be found at the following link
https://www.schroders.com/en/global/individual/about-us/what-we-do/sustainable-investing/our-sustainable-investment-policies-disclosures-voting-reports/group-
exclusions/
Introduction Strategic Report Governance Financial Other Information (Unaudited)
such as CONTEXT
TM
and SustainEx
TM
and oversee ESG analysis across Schroders, supporting individual investment teams, such as the Asian
equities team. The carbon footprint of the companies and the portfolio are monitored over time and the proprietary SustaineEx
TM
tool measures
positive and negative externalities generated by the companies.
Asia Context
TM
, which is the principal tool employed for the Manager’s ESG analysis as it pertains to the Company’s investments, captures the
Manager’s ESG analysis in one template using a stakeholder-based framework. It provides a clear and broad roadmap on the issues requiring
engagement, helps refresh the team’s focus on ROIC and enhances appreciation of the downside and upside risks to a company’s business
model.
The Context Framework:
Understanding how a company manages it relationships with stakeholders
Source: Schroders.
To enhance the Asia team’s ESG expertise in Asia, two members of the Sustainable Investment team are based in the region, directly supporting
the Asian capability and ensuring they are kept fully informed of the relevant output of the Sustainable Investment team in London.
A Sustainable Equity Analyst on the Asia team brings additional insight and perspective to ESG analysis and engagement.
ESG analysis impacts the investment process in four ways:
1. Initial screening – ESG helps determine which companies are considered to be investable as part of an initial screening, which is in addition
to Schroders’ group-wide exclusions
1
.
2. Durability of earnings – ESG analysis helps the investment team understand the impact ESG externalities may have on the future earnings
power of the business and the ROIC and SRC of the company.
3. Fair Value and recommendation – ESG is an indirect and direct input into the fair value estimate of a company. Indirect, to the extent that
a company’s SRC may influence the assumptions used in establishing the fair value estimate of a company; and direct, to the extent that
the Manager may apply an additional explicit discount/premium to that fair value estimate.
4. Portfolio construction – ESG helps shape portfolio construction and may influence how portfolio managers size positions. For example,
poor ESG performance or heightened ESG risks may result in a decision to underweight a security, hold a smaller position size or avoid an
investment completely. There is no automatic rule – each investment opportunity is assessed on a case-by-case basis, with the focus on the
materiality of ESG factors on a company’s valuation and risk profile.
In summary ESG analysis helps determine which companies are looked at, how the Manager assesses their durability and, hence, how they are
valued. And while company valuations ultimately drive portfolio construction, ESG insights play a role in the investment process and may
influence how portfolio managers size positions within a portfolio. Furthermore, the Manager’s ESG analysis is broad reaching and is not only
concerned with the potential downside risks that are identified, but also the upside return implications for stocks in which the Company invests.
Active Ownership
Schroders has a long history of active ownership, including engagement with companies on ESG related matters, for the past two decades.
Direct company contact is an important component of the initial due diligence and ongoing monitoring process. These regular engagements
form an important aspect of the Manager’s role as stewards of clients’ capital and allows deployment of capital in businesses with long-term
sustainability of returns and shareholder value creation.
Corporate Governance analysts in the Sustainable Investment team will also work alongside investors and internal compliance and legal teams
to vote all proxies where practically possible, and to ensure the Manager’s voting activities comply with its ESG policy.
Employees
Suppliers
Communities
community? Have you committed to
protect human rights?
Regulators
How competitive is your market? Are
you paying a fair rate of tax?
Customers
How is your brand perceived? What’s
in your produce pipeline?
transition plan? Are you managing
Company
G
o v
e
r
n
a
n
c
e
G
o
v
e
r
n
a
n c
e
Environment
Have you put in place an energy
operating impacts?
How exposed is your supply chain to
disruption risks? How strong are your
supplier relationships?
How do your employees perform? How
motivated is your team?
What support do you offer your local
1
Schroders applies group-level exclusions to all Schroders funds that are directly managed. These group-level exclusions relate to controversial weapons and
companies that generate more than 20% of their revenues from thermal coal mining. Details can be found at the following link
https://www.schroders.com/en/global/individual/about-us/what-we-do/sustainable-investing/our-sustainable-investment-policies-disclosures-voting-reports/group-
exclusions/
22
Schroder
Oriental Income Fund Limited
Business Review
continued
It should be remembered that the Manager is not an ‘activist’ investor,
and in general is looking to buy into companies that are already
well-managed with decent governance and attractive distribution
profiles. However, this does not mean that there is not still room for
engagement, particularly when thinking about sustainability issues
and the evolution of a longer-term investment thesis. Where
appropriate engagements can focus on a number of different areas,
including Climate Change, Diversity and Inclusion, Natural Capital and
Biodiversity, Human Rights, Human Capital Management and
Corporate Governance.
For the Manager’s approach on active ownership and its use in the
investment process, please visit:
https://www.schroders.com/en/global/individual/sustaineducation/act
ive-ownership/
Use of Gearing
The Company has a £100 million multi-currency revolving credit
facility with Bank of Nova Scotia which was US$50.0 million
(£37.7 million) drawn at the end of the financial year. The facility was
originally dated 21 July 2022, renewed on 20 July 2023 and 18 July
2024, and expires on 17 July 2025.
The Company’s policy is to permit net borrowings (including foreign
currency borrowings) of up to 25% of the Company’s net assets
(measured when new borrowings are incurred). It is intended that the
Manager should have the flexibility to utilise this power to leverage
the Company’s portfolio in order to enhance returns where and to the
extent that this is considered appropriate by the directors. Full details
of the gearing employed by the Company are set out in note 20 on
page 64.
Promotion and shareholder relations
The Company promotes its shares to a broad range of investors
including discretionary wealth managers, private investors, financial
advisers and institutions, which have the potential to be long-term
supporters of the investment strategy. The Board seeks to achieve
this through its Manager and corporate broker, which promote the
shares of the Company through regular contact with both current
and potential shareholders. These activities consist of investor
lunches, one-on-one meetings, webinars, regional road shows and
attendances at conferences. In addition, the Company’s shares are
supported by the Manager’s wider marketing of investment
companies targeting all types of investors. This includes maintaining
close relationships with adviser and execution-only platforms,
advertising in the trade press, maintaining relationships with financial
journalists and the provision of digital information on Schroders’
website.
Shareholder relations are given high priority by both the Board and
the Manager. The Board also seeks active engagement with investors
and meetings with the Chairman are offered where appropriate. In
addition to the engagement and meetings held during the year the
chairs of the Board and committees, as well as the other directors,
attend the AGM and are available to respond to queries and concerns
from Shareholders.
Shareholders are also encouraged to sign up to the Manager’s
Investment Trusts update, to receive information on the Company
directly. https://www.schroders.com/en/uk/private-
investor/fundcentre/funds-in-focus/investment-trusts/schroders-
investmenttrusts/never-miss-an-update
Diversity
The below tables set out the gender and ethnic diversity composition
of the Board (as at 31 August 2024 and at the date of this report).
Number of
Number of Percentage senior
Board of the positions on
members Board (%) the Board
White British or other White
(including minority-white
groups) 4 80 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British 1 20 0
Black/African/Caribbean/Black
British – – –
Other ethnic group, including
Arab – – –
Not specified/prefer not to say – – –
Number of
Number of Percentage senior
Board of the positions on
members Board (%) the Board
Men 3 60 1
Women 2 40 1
Not specified/prefer not to say – – –
Given that the Company is an investment trust with no executive
Board members, the columns and references regarding executive
management have not been included.
The Board has adopted a diversity and inclusion policy.
Appointments and succession plans will always be based on merit
and objective criteria and, within this context, the Board seeks to
promote diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths. The Board will encourage any
recruitment agencies it engages to find a range of candidates that
meet the objective criteria agreed for each appointment. Candidates
for Board vacancies are selected based on their skills and
experience, which are matched against the balance of skills and
experience of the overall Board taking into account the criteria for
the role being offered.
The Board also considers the diversity and inclusion policies of its
key service providers.
Financial crime policy
The Company continues to be committed to carrying out its
business fairly, honestly and openly and operates a financial crime
policy, covering bribery and corruption, tax evasion, money
laundering, terrorist financing and sanctions, as well as seeking
confirmations that the Company’s service providers’ policies are
operating soundly.
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it
consumed less than 40,000 kWh during the year and so has no
greenhouse gas emissions, energy consumption or energy
efficiency action to report under the Streamlined Energy and Carbon
Reporting requirements.
Taskforce for Climate-Related Financial Disclosures
On 30 June 2024, the Company’s AIFM produced a product level
disclosure consistent with the Task Force on Climate-Related
Financial Disclosures (“TCFD”) for the period 1 January 2023 to
31 December 2023. This can be found here:
https://www.schroders.com/en-gb/uk/individual/funds-and-
strategies/tcfd-entity-and-product-reports/. The Board met with
representatives from the Manager to review this report.
Business Review
continued
It should be remembered that the Manager is not an ‘activist’ investor,
and in general is looking to buy into companies that are already
well-managed with decent governance and attractive distribution
profiles. However, this does not mean that there is not still room for
engagement, particularly when thinking about sustainability issues
and the evolution of a longer-term investment thesis. Where
appropriate engagements can focus on a number of different areas,
including Climate Change, Diversity and Inclusion, Natural Capital and
Biodiversity, Human Rights, Human Capital Management and
Corporate Governance.
For the Manager’s approach on active ownership and its use in the
investment process, please visit:
https://www.schroders.com/en/global/individual/sustaineducation/act
ive-ownership/
Use of Gearing
The Company has a £100 million multi-currency revolving credit
facility with Bank of Nova Scotia which was US$50.0 million
(£37.7 million) drawn at the end of the financial year. The facility was
originally dated 21 July 2022, renewed on 20 July 2023 and 18 July
2024, and expires on 17 July 2025.
The Company’s policy is to permit net borrowings (including foreign
currency borrowings) of up to 25% of the Company’s net assets
(measured when new borrowings are incurred). It is intended that the
Manager should have the flexibility to utilise this power to leverage
the Company’s portfolio in order to enhance returns where and to the
extent that this is considered appropriate by the directors. Full details
of the gearing employed by the Company are set out in note 20 on
page 64.
Promotion and shareholder relations
The Company promotes its shares to a broad range of investors
including discretionary wealth managers, private investors, financial
advisers and institutions, which have the potential to be long-term
supporters of the investment strategy. The Board seeks to achieve
this through its Manager and corporate broker, which promote the
shares of the Company through regular contact with both current
and potential shareholders. These activities consist of investor
lunches, one-on-one meetings, webinars, regional road shows and
attendances at conferences. In addition, the Company’s shares are
supported by the Manager’s wider marketing of investment
companies targeting all types of investors. This includes maintaining
close relationships with adviser and execution-only platforms,
advertising in the trade press, maintaining relationships with financial
journalists and the provision of digital information on Schroders’
website.
Shareholder relations are given high priority by both the Board and
the Manager. The Board also seeks active engagement with investors
and meetings with the Chairman are offered where appropriate. In
addition to the engagement and meetings held during the year the
chairs of the Board and committees, as well as the other directors,
attend the AGM and are available to respond to queries and concerns
from Shareholders.
Shareholders are also encouraged to sign up to the Manager’s
Investment Trusts update, to receive information on the Company
directly. https://www.schroders.com/en/uk/private-
investor/fundcentre/funds-in-focus/investment-trusts/schroders-
investmenttrusts/never-miss-an-update
Diversity
The below tables set out the gender and ethnic diversity composition
of the Board (as at 31 August 2024 and at the date of this report).
Number of
Number of Percentage senior
Board of the positions on
members Board (%) the Board
White British or other White
(including minority-white
groups) 4 80 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British 1 20 0
Black/African/Caribbean/Black
British – – –
Other ethnic group, including
Arab – – –
Not specified/prefer not to say – – –
Number of
Number of Percentage senior
Board of the positions on
members Board (%) the Board
Men 3 60 1
Women 2 40 1
Not specified/prefer not to say – – –
Given that the Company is an investment trust with no executive
Board members, the columns and references regarding executive
management have not been included.
The Board has adopted a diversity and inclusion policy.
Appointments and succession plans will always be based on merit
and objective criteria and, within this context, the Board seeks to
promote diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths. The Board will encourage any
recruitment agencies it engages to find a range of candidates that
meet the objective criteria agreed for each appointment. Candidates
for Board vacancies are selected based on their skills and
experience, which are matched against the balance of skills and
experience of the overall Board taking into account the criteria for
the role being offered.
The Board also considers the diversity and inclusion policies of its
key service providers.
Financial crime policy
The Company continues to be committed to carrying out its
business fairly, honestly and openly and operates a financial crime
policy, covering bribery and corruption, tax evasion, money
laundering, terrorist financing and sanctions, as well as seeking
confirmations that the Company’s service providers’ policies are
operating soundly.
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it
consumed less than 40,000 kWh during the year and so has no
greenhouse gas emissions, energy consumption or energy
efficiency action to report under the Streamlined Energy and Carbon
Reporting requirements.
Taskforce for Climate-Related Financial Disclosures
On 30 June 2024, the Company’s AIFM produced a product level
disclosure consistent with the Task Force on Climate-Related
Financial Disclosures (“TCFD”) for the period 1 January 2023 to
31 December 2023. This can be found here:
https://www.schroders.com/en-gb/uk/individual/funds-and-
strategies/tcfd-entity-and-product-reports/. The Board met with
representatives from the Manager to review this report.
Schroder
Oriental Income Fund Limited
23
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Responsible investment
The Board delegates to the Manager to engage with investee
companies on social, environmental and governance issues and to
promote best practice. The Board also expects the Manager to
exercise the Company’s voting rights in consideration of these
issues.
In addition to the description of the Manager’s integration of ESG
into the investment process and the details in this Business Review, a
description of the Manager’s policy on these matters can be found
on the Schroders website at www.schroders.com. The Board notes
that Schroders believes that companies with good ESG management
often perform better and deliver superior returns over time.
Engaging with companies to understand how they approach ESG
management is an integral part of the investment process.
Schroders has committed to the UN Global Compact, amongst codes
and standards, and information about the application of Schroders’
sustainability and responsible investment policies can be found at:
https://www.schroders.com/en/global/individual/sustainability/.
The Board has received reporting from the Manager on the
application of its policy.
Stakeholder engagement, section 172
During the year under review, the Board discharged its duty under
section 172 of the UK Companies Act 2006 to promote the success
of the Company for the benefit of its members as a whole, having
regard to the interests of all stakeholders. As an externally managed
investment trust, the Company has no employees, operations or
premises. The Board has identified its key stakeholders as the
Company’s Shareholders, the Manager, other service providers, the
investee companies and the Company’s Lender.
The below explains how the directors have engaged with all
stakeholders and outlines key activities undertaken during the
reporting period.
Shareholders
The Company welcomes attendance and participation from
Shareholders at the Annual General Meeting, details of which are on
page 71 of this report. This will provide an opportunity for
Shareholders to engage with the Board and hear from the Portfolio
Manager, Richard Sennitt, supported by Abbas Barkhordar.
Shareholders unable to attend the AGM are invited to submit
questions to the Company Secretary in advance of the meeting, and
will be able to view a presentation from the Manager online.
The annual and half year results presentations, as well as monthly
updates are available on the Company’s webpage with results
announced via a regulatory news service.
The directors receive regular updates on the shareholder register,
trading activity, and feedback received from investor meetings held
by the Manager and Broker, as well as meeting with interested
current and prospective Shareholders.
The Board is responsible for discount and premium management
and is alert to the value Shareholders place on maintaining as low a
level of share price volatility as possible. During the financial year, a
total of 11,395,000 shares were bought back and a further
4,230,000 have been bought back since the period end. The Board
will continue to buy back shares when it judges it is in the best
interests of Shareholders to do so.
The Manager
The Board maintains a constructive and collaborative relationship
with the Manager, encouraging open discussion.
The Board invites the Portfolio Manager to attend all Board and
certain committee meetings and receives regular reports on the
performance of the investments and the implementation of the
investment strategy, policy and objective. The portfolio activities
undertaken by the Portfolio Manager and the impact of decisions
affecting investment performance are set out in the Investment
Manager’s Review on pages 6 to 12.
The Management Engagement Committee reviews the performance
of the Manager, its remuneration and the discharge of its
contractual obligations at least annually.
The Company’s lender
During the year under review, the Board renewed its revolving credit
facility agreement with The Bank of Nova Scotia on a secured basis.
The Board is responsible for ensuring that the Company adheres to
all loan covenants.
Other service providers
The Board maintains regular contact with its key service providers,
both at the Board and committee meetings, and through ad hoc
communication throughout the year. The need to foster business
relationships with key service providers is central to the directors’
decision-making as the Board of an externally managed investment
trust.
During the period, the Management Engagement Committee
undertook reviews of key third-party service providers and agreed
that their continued appointment remained in the best interests of
the Company and its Shareholders. The Committee periodically
reviews the market rates for services received, to ensure that the
Company continues to receive high quality service at a competitive
cost.
During the year, directors attended a meeting to assess the internal
controls of certain service providers including the Company’s
Depositary and Custodian HSBC, the Designated Administrator,
Registrar and Schroder’s Group Internal Audit. These meetings
enable the Board to conduct due diligence on operations and IT
risks amongst service providers, and to receive up to date
information on changes in regulation and market practice in the
industry. The Board also engaged with its service providers on their
own commitments on ESG, Financial Crime, Modern Slavery,
Whistleblowing, Diversity and Inclusion, Business Continuity and
Cybersecurity.
Investee companies
The Board believes that it is in the interests of all stakeholders to
consider ESG factors. The Board supports and encourages the
policy of engagement on ESG matters which the Schroders
investment team has implemented as part of the investment
decision making process, details of which can be found on pages 19
to 22.
The Manager has discretionary powers to exercise voting rights on
behalf of the Company and it reports on voting decisions to the
Board. The Board monitors investment decisions and has the
opportunity to question the Portfolio Manager’s rationale for
exposures taken and voting decisions made.
In addition to regular discussions with the Manager regarding the
ESG aspects of portfolio companies, the Board met with Schroders
engagement team to gain a more in depth understanding of the
Manager’s active engagement with investee companies.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Responsible investment
The Board delegates to the Manager to engage with investee
companies on social, environmental and governance issues and to
promote best practice. The Board also expects the Manager to
exercise the Company’s voting rights in consideration of these
issues.
In addition to the description of the Manager’s integration of ESG
into the investment process and the details in this Business Review, a
description of the Manager’s policy on these matters can be found
on the Schroders website at www.schroders.com. The Board notes
that Schroders believes that companies with good ESG management
often perform better and deliver superior returns over time.
Engaging with companies to understand how they approach ESG
management is an integral part of the investment process.
Schroders has committed to the UN Global Compact, amongst codes
and standards, and information about the application of Schroders’
sustainability and responsible investment policies can be found at:
https://www.schroders.com/en/global/individual/sustainability/.
The Board has received reporting from the Manager on the
application of its policy.
Stakeholder engagement, section 172
During the year under review, the Board discharged its duty under
section 172 of the UK Companies Act 2006 to promote the success
of the Company for the benefit of its members as a whole, having
regard to the interests of all stakeholders. As an externally managed
investment trust, the Company has no employees, operations or
premises. The Board has identified its key stakeholders as the
Company’s Shareholders, the Manager, other service providers, the
investee companies and the Company’s Lender.
The below explains how the directors have engaged with all
stakeholders and outlines key activities undertaken during the
reporting period.
Shareholders
The Company welcomes attendance and participation from
Shareholders at the Annual General Meeting, details of which are on
page 71 of this report. This will provide an opportunity for
Shareholders to engage with the Board and hear from the Portfolio
Manager, Richard Sennitt, supported by Abbas Barkhordar.
Shareholders unable to attend the AGM are invited to submit
questions to the Company Secretary in advance of the meeting, and
will be able to view a presentation from the Manager online.
The annual and half year results presentations, as well as monthly
updates are available on the Company’s webpage with results
announced via a regulatory news service.
The directors receive regular updates on the shareholder register,
trading activity, and feedback received from investor meetings held
by the Manager and Broker, as well as meeting with interested
current and prospective Shareholders.
The Board is responsible for discount and premium management
and is alert to the value Shareholders place on maintaining as low a
level of share price volatility as possible. During the financial year, a
total of 11,395,000 shares were bought back and a further
4,230,000 have been bought back since the period end. The Board
will continue to buy back shares when it judges it is in the best
interests of Shareholders to do so.
The Manager
The Board maintains a constructive and collaborative relationship
with the Manager, encouraging open discussion.
The Board invites the Portfolio Manager to attend all Board and
certain committee meetings and receives regular reports on the
performance of the investments and the implementation of the
investment strategy, policy and objective. The portfolio activities
undertaken by the Portfolio Manager and the impact of decisions
affecting investment performance are set out in the Investment
Manager’s Review on pages 6 to 12.
The Management Engagement Committee reviews the performance
of the Manager, its remuneration and the discharge of its
contractual obligations at least annually.
The Company’s lender
During the year under review, the Board renewed its revolving credit
facility agreement with The Bank of Nova Scotia on a secured basis.
The Board is responsible for ensuring that the Company adheres to
all loan covenants.
Other service providers
The Board maintains regular contact with its key service providers,
both at the Board and committee meetings, and through ad hoc
communication throughout the year. The need to foster business
relationships with key service providers is central to the directors’
decision-making as the Board of an externally managed investment
trust.
During the period, the Management Engagement Committee
undertook reviews of key third-party service providers and agreed
that their continued appointment remained in the best interests of
the Company and its Shareholders. The Committee periodically
reviews the market rates for services received, to ensure that the
Company continues to receive high quality service at a competitive
cost.
During the year, directors attended a meeting to assess the internal
controls of certain service providers including the Company’s
Depositary and Custodian HSBC, the Designated Administrator,
Registrar and Schroder’s Group Internal Audit. These meetings
enable the Board to conduct due diligence on operations and IT
risks amongst service providers, and to receive up to date
information on changes in regulation and market practice in the
industry. The Board also engaged with its service providers on their
own commitments on ESG, Financial Crime, Modern Slavery,
Whistleblowing, Diversity and Inclusion, Business Continuity and
Cybersecurity.
Investee companies
The Board believes that it is in the interests of all stakeholders to
consider ESG factors. The Board supports and encourages the
policy of engagement on ESG matters which the Schroders
investment team has implemented as part of the investment
decision making process, details of which can be found on pages 19
to 22.
The Manager has discretionary powers to exercise voting rights on
behalf of the Company and it reports on voting decisions to the
Board. The Board monitors investment decisions and has the
opportunity to question the Portfolio Manager’s rationale for
exposures taken and voting decisions made.
In addition to regular discussions with the Manager regarding the
ESG aspects of portfolio companies, the Board met with Schroders
engagement team to gain a more in depth understanding of the
Manager’s active engagement with investee companies.
24
Schroder
Oriental Income Fund Limited
Business Review
continued
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
Political developments might materially affect the ability
of the Company to achieve its investment objective
Geopolitical considerations and sanctions could affect
the Company’s investment strategy, objective and
performance.
The Board ensures it is well informed by way of receiving
insights and information, including research notes,
provided by the Manager as well as independent
sources on a regular basis.
The Manager ensured the portfolio was adequately
diversified in the context of the investment policy.
The Board noted the general increase in geopolitical risk
during the period under review.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate negative impact of
substantial changes in markets are discussed with the
Manager.
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.
Market risk
The Company is exposed to the effect of market
fluctuations due to the nature 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 Board recognises that there continues to be an
elevated currency/exchange rate risk relating to the
region and monitored it carefully during the period.
The Board carefully reviewed the recovery of sterling
against Asian currencies which may erode total returns.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate negative impact of
substantial changes in currency are discussed with the
Manager.
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.
Currency/exchange rate risk
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
denominated in a range of currencies. Its exposure to
changes in the exchange rate between sterling and
other currencies has the potential to have significant
impact on returns and the sterling value of dividend
income from underlying investments.
The Board notes that the variability in inflation and
interest rates would in turn lead to volatility in exchange
rates.
Business Review
continued
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
Political developments might materially affect the ability
of the Company to achieve its investment objective
Geopolitical considerations and sanctions could affect
the Company’s investment strategy, objective and
performance.
The Board ensures it is well informed by way of receiving
insights and information, including research notes,
provided by the Manager as well as independent
sources on a regular basis.
The Manager ensured the portfolio was adequately
diversified in the context of the investment policy.
The Board noted the general increase in geopolitical risk
during the period under review.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate negative impact of
substantial changes in markets are discussed with the
Manager.
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.
Market risk
The Company is exposed to the effect of market
fluctuations due to the nature 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 Board recognises that there continues to be an
elevated currency/exchange rate risk relating to the
region and monitored it carefully during the period.
The Board carefully reviewed the recovery of sterling
against Asian currencies which may erode total returns.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate negative impact of
substantial changes in currency are discussed with the
Manager.
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.
Currency/exchange rate risk
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
denominated in a range of currencies. Its exposure to
changes in the exchange rate between sterling and
other currencies has the potential to have significant
impact on returns and the sterling value of dividend
income from underlying investments.
The Board notes that the variability in inflation and
interest rates would in turn lead to volatility in exchange
rates.
Schroder
Oriental Income Fund Limited
25
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Change (post
mitigation and
Risk Mitigation and management management)*
The appropriateness of the Company’s investment
mandate and the long-term investment strategy is
periodically reviewed and the success of the Company in
meeting its stated objectives is monitored.
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.
Investment Performance
The Company’s investment objectives may become out
of line with the requirements of investors, resulting in
a wide discount of the share price to underlying NAV per
share.
The Board sets overall investment strategy and
guidelines for use of derivatives and leverage, amongst
other metrics. It also monitors investment performance
and risk against objectives and strategy, and conducts
an annual 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.
The Manager’s investment strategy and levels of
resourcing, if inappropriate, may result in the Company
underperforming the market and/or peer group
companies, leading to the Company and its objectives
becoming unattractive to investors.
The Manager has integrated ESG considerations,
including climate change, into the investment process
and reports on its ESG engagement at regular Board
meetings. The Manager has implemented a
comprehensive ESG policy which is outlined in detail on
pages 20 to 22. The Board 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.
Climate Change
Investors and regulators are increasingly questioning
how the Company’s investments and performance could
be affected by climate change, environmental, social and
governance factors.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Change (post
mitigation and
Risk Mitigation and management management)*
The appropriateness of the Company’s investment
mandate and the long-term investment strategy is
periodically reviewed and the success of the Company in
meeting its stated objectives is monitored.
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.
Investment Performance
The Company’s investment objectives may become out
of line with the requirements of investors, resulting in
a wide discount of the share price to underlying NAV per
share.
The Board sets overall investment strategy and
guidelines for use of derivatives and leverage, amongst
other metrics. It also monitors investment performance
and risk against objectives and strategy, and conducts
an annual 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.
The Manager’s investment strategy and levels of
resourcing, if inappropriate, may result in the Company
underperforming the market and/or peer group
companies, leading to the Company and its objectives
becoming unattractive to investors.
The Manager has integrated ESG considerations,
including climate change, into the investment process
and reports on its ESG engagement at regular Board
meetings. The Manager has implemented a
comprehensive ESG policy which is outlined in detail on
pages 20 to 22. The Board 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.
Climate Change
Investors and regulators are increasingly questioning
how the Company’s investments and performance could
be affected by climate change, environmental, social and
governance factors.
26
Schroder
Oriental Income Fund Limited
Business Review
continued
Change (post
mitigation and
Risk Mitigation and management management)*
Service providers are appointed subject to due diligence
processes and with material service providers having
clearly documented contractual arrangements.
Regular reports are provided by key service providers and
the quality of their services is monitored, including an
annual presentation to the directors from 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.
Service provider performance
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
poor performance of any service provider, could lead to
disruption, reputational damage or loss.
The Company has outsource arrangements with service
providers who report on cyber risk mitigation and
management at least annually, which includes
confirmation of business continuity capability in the
event of a cyber attack and appoints a custodian/
depositary in respect of assets.
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.
Cyber
The Company’s service providers are exposed to the risk
of cyber attacks. Cyber attacks lead to loss of personal
or confidential information, unauthorised payments or
inability to carry out operations in a timely manner.
Business Review
continued
Change (post
mitigation and
Risk Mitigation and management management)*
Service providers are appointed subject to due diligence
processes and with material service providers having
clearly documented contractual arrangements.
Regular reports are provided by key service providers and
the quality of their services is monitored, including an
annual presentation to the directors from 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.
Service provider performance
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
poor performance of any service provider, could lead to
disruption, reputational damage or loss.
The Company has outsource arrangements with service
providers who report on cyber risk mitigation and
management at least annually, which includes
confirmation of business continuity capability in the
event of a cyber attack and appoints a custodian/
depositary in respect of assets.
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.
Cyber
The Company’s service providers are exposed to the risk
of cyber attacks. Cyber attacks lead to loss of personal
or confidential information, unauthorised payments or
inability to carry out operations in a timely manner.
Schroder
Oriental Income Fund Limited
27
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on pages 62 to 66.
Viability statement
The directors have assessed the viability of the Company over a
five year period, taking into account the Company’s position at
31 August 2024 and 23 October 2024 and the potential impact of the
principal risks and uncertainties it faces for the review period. The
directors have assessed the Company’s operational resilience and
they are satisfied that the Company’s outsourced service providers
will continue to operate effectively, following the implementation of
their business continuity plans.
A period of five years has been chosen as the Board believes that this
reflects a suitable time horizon for strategic planning, taking into
account the investment policy, liquidity of investments, potential
impact of economic cycles, nature of operating costs, dividends and
availability of funding. This time period also reflects the average hold
period of an investment.
In its assessment of the viability of the Company, the directors have
considered each of the Company’s principal risks and uncertainties
detailed on pages 24 to 26 and in particular the impact of a significant
fall in regional equity markets on the value of the Company’s
investment portfolio. The directors have also considered the
Company’s income and expenditure projections and the fact that the
Company’s investments comprise readily realisable securities which
can be sold to meet funding requirements if necessary.
The directors have also considered a stress test which represents a
severe but plausible scenario along with movement in foreign
exchange rates. This scenario assumes a severe stock market collapse
and/or exchange rate movements at the beginning of the five year
period, resulting in a 50% fall in the value of the Company’s
investments and investment income and no subsequent recovery in
either prices or income in the following five years. It is assumed that
the Company continues to pay an annual dividend in line with current
levels and that the borrowing facility remains available and remains
drawn, subject to the gearing limit.
The Company’s investments comprise highly liquid, large, listed
companies and so its assets are readily realisable securities and could
be sold to meet funding requirements or the repayment of the
gearing facility should the need arise. There is no expectation that the
nature of the investments held within the portfolio will be materially
different in the future.
The operating costs of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position. Furthermore, the Company
has no employees and consequently has no redundancy or other
employment related liabilities.
The Board reviews the performance of the Company’s service
providers regularly, including the Manager, along with internal
controls reports to provide assurance regarding the effective
operation of internal controls as reported on by their reporting
accountants. The Board also considers the business continuity
arrangements of the Company’s key service providers.
The Board monitors the portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity risk and financial controls at
its quarterly meetings.
Although there continue to be regulatory changes which could
increase costs or impact revenue, the directors do not believe that
this could be sufficient to affect its viability. The Board also notes that
certain geopolitical risks, if they materialise, would have a serious
effect on the viability of the Company, but that it was not appropriate
to conclude that the Company was not viable on the basis of these.
The Board has assumed that the business model of a closed ended
investment company, as well as the Company’s investment objective,
will continue to be attractive to investors. The directors also
considered the beneficial tax treatment the Company is eligible for as
an investment trust. If changes to these taxation arrangements were
to be made it would affect the viability of the Company to act as an
effective investment vehicle.
Based on the above the directors have concluded that there is a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the five year
period of their assessment.
Going concern
The directors have assessed the principal risks, the impact of the
emerging risks and uncertainties and the matters referred to in the
viability statement. The directors have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for the period assessed by the directors,
being the period to 30 November 2025 which is at least 12 months
from the date the financial statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
23 October 2024
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on pages 62 to 66.
Viability statement
The directors have assessed the viability of the Company over a
five year period, taking into account the Company’s position at
31 August 2024 and 23 October 2024 and the potential impact of the
principal risks and uncertainties it faces for the review period. The
directors have assessed the Company’s operational resilience and
they are satisfied that the Company’s outsourced service providers
will continue to operate effectively, following the implementation of
their business continuity plans.
A period of five years has been chosen as the Board believes that this
reflects a suitable time horizon for strategic planning, taking into
account the investment policy, liquidity of investments, potential
impact of economic cycles, nature of operating costs, dividends and
availability of funding. This time period also reflects the average hold
period of an investment.
In its assessment of the viability of the Company, the directors have
considered each of the Company’s principal risks and uncertainties
detailed on pages 24 to 26 and in particular the impact of a significant
fall in regional equity markets on the value of the Company’s
investment portfolio. The directors have also considered the
Company’s income and expenditure projections and the fact that the
Company’s investments comprise readily realisable securities which
can be sold to meet funding requirements if necessary.
The directors have also considered a stress test which represents a
severe but plausible scenario along with movement in foreign
exchange rates. This scenario assumes a severe stock market collapse
and/or exchange rate movements at the beginning of the five year
period, resulting in a 50% fall in the value of the Company’s
investments and investment income and no subsequent recovery in
either prices or income in the following five years. It is assumed that
the Company continues to pay an annual dividend in line with current
levels and that the borrowing facility remains available and remains
drawn, subject to the gearing limit.
The Company’s investments comprise highly liquid, large, listed
companies and so its assets are readily realisable securities and could
be sold to meet funding requirements or the repayment of the
gearing facility should the need arise. There is no expectation that the
nature of the investments held within the portfolio will be materially
different in the future.
The operating costs of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position. Furthermore, the Company
has no employees and consequently has no redundancy or other
employment related liabilities.
The Board reviews the performance of the Company’s service
providers regularly, including the Manager, along with internal
controls reports to provide assurance regarding the effective
operation of internal controls as reported on by their reporting
accountants. The Board also considers the business continuity
arrangements of the Company’s key service providers.
The Board monitors the portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity risk and financial controls at
its quarterly meetings.
Although there continue to be regulatory changes which could
increase costs or impact revenue, the directors do not believe that
this could be sufficient to affect its viability. The Board also notes that
certain geopolitical risks, if they materialise, would have a serious
effect on the viability of the Company, but that it was not appropriate
to conclude that the Company was not viable on the basis of these.
The Board has assumed that the business model of a closed ended
investment company, as well as the Company’s investment objective,
will continue to be attractive to investors. The directors also
considered the beneficial tax treatment the Company is eligible for as
an investment trust. If changes to these taxation arrangements were
to be made it would affect the viability of the Company to act as an
effective investment vehicle.
Based on the above the directors have concluded that there is a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the five year
period of their assessment.
Going concern
The directors have assessed the principal risks, the impact of the
emerging risks and uncertainties and the matters referred to in the
viability statement. The directors have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for the period assessed by the directors,
being the period to 30 November 2025 which is at least 12 months
from the date the financial statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
23 October 2024
28
Governance
Schroder Asian Total Return Investment Company plc 29
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement Committee Report 38
Nomination and Remuneration Committee Report 39
Directors’ Remuneration Report 41
Statement of Directors’ Responsibilities 44
Schroder Asian Total Return Investment Company plc 29
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement Committee Report 38
Nomination and Remuneration Committee Report 39
Directors’ Remuneration Report 41
Statement of Directors’ Responsibilities 44
30
Schroder
Oriental Income Fund Limited
Board of Directors
*Shareholdings are as at 23 October 2024, full details of directors’ shareholdings are set out in the Remuneration Report on page 43.
Alexa Coates
Status: Senior Independent
Director
Length of service: six years – appointed
a director in February 2018.
Experience: Alexa Coates is a chartered
accountant who brings over 30 years of
significant financial expertise to the Board.
Alexa was a senior executive of HSBC for
nine years, where she served as the global
CFO for the group’s asset management
business and then led the finance function
for commercial banking operations in
Europe. Prior to joining HSBC, Alexa worked
in senior roles in retail, healthcare and
professional services including at J Sainsbury
plc and BUPA. She started her career at EY,
where she worked in the UK and France.
Alexa is a non-executive director and audit
committee chair of Marsh Limited, the
insurance broker, Aviva Investors and its UK
fund services company as well as a
non-executive director and chair of the audit
and risk committee of Polar Capital Holdings
plc, a publicly quoted company.
Committee membership: Audit and Risk
(chair), Management Engagement, and
Nomination and Remuneration committees.
Remuneration as at the year end:
£45,000 per annum
Number of shares held: 10,000*
Paul Meader
Status: Independent non-executive
chairman
Length of service: eight years – appointed
a director in January 2016.
Experience: Paul Meader is an independent
director of investment companies, insurers
and investment funds. Until 2012 he was
Head of Portfolio Management for
Canaccord Genuity based in Guernsey, prior
to which he was Chief Executive of Corazon
Capital. He has over 35 years’ experience in
financial markets in London, Dublin and
Guernsey, holding senior positions in
portfolio management and trading. Prior to
joining Corazon he was Managing Director of
Rothschild’s Swiss private-banking subsidiary
in Guernsey. He is a Chartered Fellow of the
Chartered Institute for Securities &
Investments, a former Commissioner of the
Guernsey Financial Services Commission and
past chairman of the Guernsey International
Business Association. He is a graduate of
Hertford College, Oxford. Paul also holds
a number of directorships in other
companies, one of which is publicly quoted:
ICG-Longbow Senior Secured UK Property
Debt Investments Limited.
Committee membership: Audit and Risk,
Management Engagement, and Nomination
and Remuneration committees.
Remuneration as at the year end:
£50,000 per annum
Number of shares held: 11,000*
Sam Davis
Status: Independent non-executive
director
Length of service: less than one year –
appointed in July 2024.
Experience: Sam is a non-executive director
of Allianz Technology Trust plc and The Baillie
Gifford Japan Trust plc, and is Chair of the
Management Engagement Committee of the
latter. Sam was previously CEO of Putnam
Investments Limited and Co-Head of Equities
at Putnam Investments, where he oversaw
a global investment team. He has more than
20 years of experience in investment
markets, having worked in different roles as
Portfolio Manager, Director of Research, and
Co-Head of Equities and has managed Asian,
European, and broad international equity
portfolios.
Committee membership: Audit and Risk,
Management Engagement and Nomination
and Remuneration committees.
Remuneration as at the year end:
£40,000 per annum
Number of shares held: nil*
Board of Directors
*Shareholdings are as at 23 October 2024, full details of directors’ shareholdings are set out in the Remuneration Report on page 43.
Alexa Coates
Status: Senior Independent
Director
Length of service: six years – appointed
a director in February 2018.
Experience: Alexa Coates is a chartered
accountant who brings over 30 years of
significant financial expertise to the Board.
Alexa was a senior executive of HSBC for
nine years, where she served as the global
CFO for the group’s asset management
business and then led the finance function
for commercial banking operations in
Europe. Prior to joining HSBC, Alexa worked
in senior roles in retail, healthcare and
professional services including at J Sainsbury
plc and BUPA. She started her career at EY,
where she worked in the UK and France.
Alexa is a non-executive director and audit
committee chair of Marsh Limited, the
insurance broker, Aviva Investors and its UK
fund services company as well as a
non-executive director and chair of the audit
and risk committee of Polar Capital Holdings
plc, a publicly quoted company.
Committee membership: Audit and Risk
(chair), Management Engagement, and
Nomination and Remuneration committees.
Remuneration as at the year end:
£45,000 per annum
Number of shares held: 10,000*
Paul Meader
Status: Independent non-executive
chairman
Length of service: eight years – appointed
a director in January 2016.
Experience: Paul Meader is an independent
director of investment companies, insurers
and investment funds. Until 2012 he was
Head of Portfolio Management for
Canaccord Genuity based in Guernsey, prior
to which he was Chief Executive of Corazon
Capital. He has over 35 years’ experience in
financial markets in London, Dublin and
Guernsey, holding senior positions in
portfolio management and trading. Prior to
joining Corazon he was Managing Director of
Rothschild’s Swiss private-banking subsidiary
in Guernsey. He is a Chartered Fellow of the
Chartered Institute for Securities &
Investments, a former Commissioner of the
Guernsey Financial Services Commission and
past chairman of the Guernsey International
Business Association. He is a graduate of
Hertford College, Oxford. Paul also holds
a number of directorships in other
companies, one of which is publicly quoted:
ICG-Longbow Senior Secured UK Property
Debt Investments Limited.
Committee membership: Audit and Risk,
Management Engagement, and Nomination
and Remuneration committees.
Remuneration as at the year end:
£50,000 per annum
Number of shares held: 11,000*
Sam Davis
Status: Independent non-executive
director
Length of service: less than one year –
appointed in July 2024.
Experience: Sam is a non-executive director
of Allianz Technology Trust plc and The Baillie
Gifford Japan Trust plc, and is Chair of the
Management Engagement Committee of the
latter. Sam was previously CEO of Putnam
Investments Limited and Co-Head of Equities
at Putnam Investments, where he oversaw
a global investment team. He has more than
20 years of experience in investment
markets, having worked in different roles as
Portfolio Manager, Director of Research, and
Co-Head of Equities and has managed Asian,
European, and broad international equity
portfolios.
Committee membership: Audit and Risk,
Management Engagement and Nomination
and Remuneration committees.
Remuneration as at the year end:
£40,000 per annum
Number of shares held: nil*
Schroder
Oriental Income Fund Limited
31
Other Information (Unaudited) Introduction Strategic Report Governance Financial
*Shareholdings are as at 23 October 2024, full details of directors’ shareholdings are set out in the Remuneration Report on page 43.
Isabel Liu
Status:Independent non-executive
director
Length of service: three years – appointed
in November 2021.
Experience: Isabel has 25 years’ global
experience investing equity in infrastructure.
She started her investment career in Asia
with the US$1 billion AIG Asian Infrastructure
Fund. She was Managing Director of the Asia
Pacific investment business of John Laing plc.
After relocating from Hong Kong to London,
she was Investment Director for the
€1 billion ABN AMRO Global Infrastructure
Fund. Most recently Isabel served as Board
Director at Pensions Infrastructure Platform,
sponsored by UK pension schemes. She has
also been Chair of the Audit Risk Assurance
and Remuneration Committee as a Board
Member of Transport Focus. Isabel is a
non-executive director of Utilico Emerging
Markets Trust plc and Gresham House
Energy Storage Fund Plc. Isabel holds a BA in
Economics from the Ohio State University,
a Masters in Public Policy from Harvard
Kennedy School, and an MBA from the
University of Chicago Booth School of
Business.
Committee membership: Audit and Risk,
Management Engagement (chair), and
Nomination and Remuneration committees.
Remuneration as at the year end:
£40,000 per annum
Number of shares held: 18,634*
Nick Winsor
Status: Independent non-executive
director
Length of service: four years – appointed in
March 2020.
Experience: Nick is an independent
consultant and non-executive director.
He has more than 35 years of retail and
commercial banking experience with HSBC
Group in a number of international markets:
Brunei; Channel Islands; Hong Kong; India;
Japan; Qatar; Singapore; Taiwan; UAE and the
UK. He was CEO of HSBC’s businesses in the
Channel Islands and Isle of Man, CEO and
VP of HSBC Bank (Taiwan) Limited and
a Director of HSBC Bank Middle East Limited.
Before this, he was Head of Personal
Financial Services for the Asia Pacific Region.
Nick is a non-executive director of Metro
Bank plc and Metro Bank Holdings plc and
a member of the latter’s Risk Oversight and
Audit committees. He is also the senior
independent director of the States of Jersey
Development Company, Chair of the
Remuneration and Nomination Committee
and member of the Audit and Risk
Committee. Nick is a non-executive director
of Bankers without Boundaries, a not for
profit investment bank, and the Chair of
Autism Jersey. He was awarded an MBE in
the Queen’s 2020 Birthday Honours list for
services to the community. Nick holds
a Masters in Physics from Oxford University
and is a Fellow of the Institute of Directors.
Committee membership: Audit and Risk,
Management Engagement, and Nomination
and Remuneration (chair) committees.
Remuneration as at the year end:
£40,000 per annum
Number of shares held: 20,000*
Other Information (Unaudited) Introduction Strategic Report Governance Financial
*Shareholdings are as at 23 October 2024, full details of directors’ shareholdings are set out in the Remuneration Report on page 43.
Isabel Liu
Status:Independent non-executive
director
Length of service: three years – appointed
in November 2021.
Experience: Isabel has 25 years’ global
experience investing equity in infrastructure.
She started her investment career in Asia
with the US$1 billion AIG Asian Infrastructure
Fund. She was Managing Director of the Asia
Pacific investment business of John Laing plc.
After relocating from Hong Kong to London,
she was Investment Director for the
€1 billion ABN AMRO Global Infrastructure
Fund. Most recently Isabel served as Board
Director at Pensions Infrastructure Platform,
sponsored by UK pension schemes. She has
also been Chair of the Audit Risk Assurance
and Remuneration Committee as a Board
Member of Transport Focus. Isabel is a
non-executive director of Utilico Emerging
Markets Trust plc and Gresham House
Energy Storage Fund Plc. Isabel holds a BA in
Economics from the Ohio State University,
a Masters in Public Policy from Harvard
Kennedy School, and an MBA from the
University of Chicago Booth School of
Business.
Committee membership: Audit and Risk,
Management Engagement (chair), and
Nomination and Remuneration committees.
Remuneration as at the year end:
£40,000 per annum
Number of shares held: 18,634*
Nick Winsor
Status: Independent non-executive
director
Length of service: four years – appointed in
March 2020.
Experience: Nick is an independent
consultant and non-executive director.
He has more than 35 years of retail and
commercial banking experience with HSBC
Group in a number of international markets:
Brunei; Channel Islands; Hong Kong; India;
Japan; Qatar; Singapore; Taiwan; UAE and the
UK. He was CEO of HSBC’s businesses in the
Channel Islands and Isle of Man, CEO and
VP of HSBC Bank (Taiwan) Limited and
a Director of HSBC Bank Middle East Limited.
Before this, he was Head of Personal
Financial Services for the Asia Pacific Region.
Nick is a non-executive director of Metro
Bank plc and Metro Bank Holdings plc and
a member of the latter’s Risk Oversight and
Audit committees. He is also the senior
independent director of the States of Jersey
Development Company, Chair of the
Remuneration and Nomination Committee
and member of the Audit and Risk
Committee. Nick is a non-executive director
of Bankers without Boundaries, a not for
profit investment bank, and the Chair of
Autism Jersey. He was awarded an MBE in
the Queen’s 2020 Birthday Honours list for
services to the community. Nick holds
a Masters in Physics from Oxford University
and is a Fellow of the Institute of Directors.
Committee membership: Audit and Risk,
Management Engagement, and Nomination
and Remuneration (chair) committees.
Remuneration as at the year end:
£40,000 per annum
Number of shares held: 20,000*
32
Schroder
Oriental Income Fund Limited
Directors’ Report
Directors and officers
Chairman
The Chairman is an independent non-executive director who is
responsible for leadership of the Board and ensuring its effectiveness
in all aspects of its role. The Chairman’s other significant
commitments are detailed on page 30. He has no conflicting
relationships.
Senior Independent Director (“SID”)
The SID is responsible for the evaluation of the Chairman, and also
serves as a secondary point of contact for Shareholders.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the Board and is responsible for assisting the
Chairman with Board meetings and advising the Board with respect
to governance. The Company Secretary also manages the
relationship with the Company’s service providers, except for the
Manager. Shareholders wishing to lodge questions in advance of the
AGM are invited to do so by writing to the Company Secretary at the
address given on the outside back cover.
Role and operation of the Board
The Board is the Company’s governing body. It sets the Company’s
strategy and is collectively responsible to Shareholders for its
long-term success. The Board is responsible for appointing and
subsequently monitoring the activities of the Manager and other
service providers to seek to ensure that the investment objective of
the Company continues to be met. The Board also ensures that the
Manager adheres to the investment restrictions set by the Board and
acts within the parameters set by it in respect of any gearing. The
Business Review on pages 17 to 28 sets out further detail of how the
Board reviews the Company’s strategy, risk management and internal
controls and also includes other information required for the
Directors’ Report and is incorporated by reference.
A formal schedule of matters specifically reserved for decision by the
Board has been defined and a procedure adopted for directors, in the
furtherance of their duties, to take independent professional advice at
the expense of the Company.
The Chairman ensures that all directors receive relevant
management, regulatory and financial information in a timely manner
and that they are provided, on a regular basis, with key information
on the Company’s policies, regulatory requirements and internal
controls.
The Board meets at least quarterly and receives and considers
reports regularly from the Manager and other key advisers and ad
hoc reports and information are supplied to the Board as required.
Four Board meetings are usually scheduled each year to deal with
matters including: the setting and monitoring of investment strategy,
approval of borrowings and/or cash positions, review of investment
performance, the level of discount of the Company’s shares to NAV,
promotion of the Company, and services provided by third parties.
Additional meetings of the Board are arranged as required.
The Board has approved a policy on directors’ conflicts of interest.
Under this policy, directors are required to disclose all actual and
potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions or
refuse to authorise such conflicts if deemed appropriate. No directors
have any connections with the Manager, shared directorships with
other directors or material interests in any contract which is
significant to the Company’s business.
Committees
In order to assist the Board in fulfilling its governance responsibilities,
it has delegated certain functions to committees. The roles and
responsibilities of these committees, together with details of work
undertaken during the year under review, is outlined over the next
few pages.
The reports of the Audit and Risk Committee, Management
Engagement Committee and Nomination and Remuneration
Committee are incorporated into and form part of the Directors’
Report. Each committee’s effectiveness was assessed, and judged to
be satisfactory, as part of the Board’s annual review of the Board and
its committees.
Key service providers
The Board has adopted an outsourced business model and has
appointed the following key service providers:
Manager
The Company is an alternative investment fund as defined by the
AIFM Directive and has appointed Schroder Unit Trusts Limited
(“SUTL”) as the Manager in accordance with the terms of an
alternative investment fund manager (“AIFM”) agreement. The AIFM
agreement, which is governed by the laws of England and Wales, can
be terminated by either party on 12 months’ notice or on immediate
notice in the event of certain breaches or the insolvency of either
party. As at the date of this report no such notice had been given by
either party.
SUTL is authorised and regulated by the FCA and provides portfolio
management, risk management, accounting and company secretarial
services to the Company under the AIFM agreement. The Manager
has delegated investment management, marketing, administrative,
accounting and company secretarial services to another wholly
owned subsidiary of Schroders plc, Schroder Investment
Management Limited. The Manager has in place appropriate
professional indemnity cover. Part of the fund accounting and
administration activities are currently performed by HSBC Securities
Services (UK) Limited as a sub-delegate to Schroder Investment
Management Limited.
The Schroders Group manages £773.7 billion (as at 30 June 2024) on
behalf of institutional and retail investors, financial institutions and
high net worth clients from around the world, invested in a broad
range of asset classes across equities, fixed income, multi-asset and
alternatives.
The Manager is entitled to receive a management fee of an amount
equivalent to 0.75% per annum of the net assets of the Company,
reducing to 0.70% per annum on net assets above £250 million and
0.65% per annum on net assets above £750 million. The fee is
payable quarterly in arrears and calculated as at the last business day
in February, May, August and November in each year.
The Manager is also entitled to receive a performance fee based on
the performance of the Company’s NAV per ordinary share. The
performance fee is 10% of the amount in pounds sterling of any
gains, being the amount by which the closing adjusted NAV per
ordinary share (adjusted as described below) at the end of the
relevant calculation period exceeds the highest of:
(i) A hurdle, being 108% of the NAV per ordinary share, taken from
the audited balance sheet at the end of the previous calculation
period;
(ii) The highest closing NAV per ordinary share (unadjusted) as per
the audited accounts for any previous financial year in which a
performance fee has been paid; and
(iii) 100p.
Directors’ Report
Directors and officers
Chairman
The Chairman is an independent non-executive director who is
responsible for leadership of the Board and ensuring its effectiveness
in all aspects of its role. The Chairman’s other significant
commitments are detailed on page 30. He has no conflicting
relationships.
Senior Independent Director (“SID”)
The SID is responsible for the evaluation of the Chairman, and also
serves as a secondary point of contact for Shareholders.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the Board and is responsible for assisting the
Chairman with Board meetings and advising the Board with respect
to governance. The Company Secretary also manages the
relationship with the Company’s service providers, except for the
Manager. Shareholders wishing to lodge questions in advance of the
AGM are invited to do so by writing to the Company Secretary at the
address given on the outside back cover.
Role and operation of the Board
The Board is the Company’s governing body. It sets the Company’s
strategy and is collectively responsible to Shareholders for its
long-term success. The Board is responsible for appointing and
subsequently monitoring the activities of the Manager and other
service providers to seek to ensure that the investment objective of
the Company continues to be met. The Board also ensures that the
Manager adheres to the investment restrictions set by the Board and
acts within the parameters set by it in respect of any gearing. The
Business Review on pages 17 to 28 sets out further detail of how the
Board reviews the Company’s strategy, risk management and internal
controls and also includes other information required for the
Directors’ Report and is incorporated by reference.
A formal schedule of matters specifically reserved for decision by the
Board has been defined and a procedure adopted for directors, in the
furtherance of their duties, to take independent professional advice at
the expense of the Company.
The Chairman ensures that all directors receive relevant
management, regulatory and financial information in a timely manner
and that they are provided, on a regular basis, with key information
on the Company’s policies, regulatory requirements and internal
controls.
The Board meets at least quarterly and receives and considers
reports regularly from the Manager and other key advisers and ad
hoc reports and information are supplied to the Board as required.
Four Board meetings are usually scheduled each year to deal with
matters including: the setting and monitoring of investment strategy,
approval of borrowings and/or cash positions, review of investment
performance, the level of discount of the Company’s shares to NAV,
promotion of the Company, and services provided by third parties.
Additional meetings of the Board are arranged as required.
The Board has approved a policy on directors’ conflicts of interest.
Under this policy, directors are required to disclose all actual and
potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions or
refuse to authorise such conflicts if deemed appropriate. No directors
have any connections with the Manager, shared directorships with
other directors or material interests in any contract which is
significant to the Company’s business.
Committees
In order to assist the Board in fulfilling its governance responsibilities,
it has delegated certain functions to committees. The roles and
responsibilities of these committees, together with details of work
undertaken during the year under review, is outlined over the next
few pages.
The reports of the Audit and Risk Committee, Management
Engagement Committee and Nomination and Remuneration
Committee are incorporated into and form part of the Directors’
Report. Each committee’s effectiveness was assessed, and judged to
be satisfactory, as part of the Board’s annual review of the Board and
its committees.
Key service providers
The Board has adopted an outsourced business model and has
appointed the following key service providers:
Manager
The Company is an alternative investment fund as defined by the
AIFM Directive and has appointed Schroder Unit Trusts Limited
(“SUTL”) as the Manager in accordance with the terms of an
alternative investment fund manager (“AIFM”) agreement. The AIFM
agreement, which is governed by the laws of England and Wales, can
be terminated by either party on 12 months’ notice or on immediate
notice in the event of certain breaches or the insolvency of either
party. As at the date of this report no such notice had been given by
either party.
SUTL is authorised and regulated by the FCA and provides portfolio
management, risk management, accounting and company secretarial
services to the Company under the AIFM agreement. The Manager
has delegated investment management, marketing, administrative,
accounting and company secretarial services to another wholly
owned subsidiary of Schroders plc, Schroder Investment
Management Limited. The Manager has in place appropriate
professional indemnity cover. Part of the fund accounting and
administration activities are currently performed by HSBC Securities
Services (UK) Limited as a sub-delegate to Schroder Investment
Management Limited.
The Schroders Group manages £773.7 billion (as at 30 June 2024) on
behalf of institutional and retail investors, financial institutions and
high net worth clients from around the world, invested in a broad
range of asset classes across equities, fixed income, multi-asset and
alternatives.
The Manager is entitled to receive a management fee of an amount
equivalent to 0.75% per annum of the net assets of the Company,
reducing to 0.70% per annum on net assets above £250 million and
0.65% per annum on net assets above £750 million. The fee is
payable quarterly in arrears and calculated as at the last business day
in February, May, August and November in each year.
The Manager is also entitled to receive a performance fee based on
the performance of the Company’s NAV per ordinary share. The
performance fee is 10% of the amount in pounds sterling of any
gains, being the amount by which the closing adjusted NAV per
ordinary share (adjusted as described below) at the end of the
relevant calculation period exceeds the highest of:
(i) A hurdle, being 108% of the NAV per ordinary share, taken from
the audited balance sheet at the end of the previous calculation
period;
(ii) The highest closing NAV per ordinary share (unadjusted) as per
the audited accounts for any previous financial year in which a
performance fee has been paid; and
(iii) 100p.
Schroder
Oriental Income Fund Limited
33
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Closing Adjusted NAV per ordinary share is the NAV per share on the
last day of the financial year in respect of which the performance fee
is being calculated, adjusted to add back any performance fee
accrued during the year but not crystallised; to adjust for the deemed
reinvestment of any dividends paid by the Company during the
period; and to remove the impact on NAV per share due to any share
buy-backs and issues.
The total amount of any performance fee payable in respect of any
one accounting period has been capped at 0.65% of the net asset
value, calculated at the end of the relevant accounting period.
Any investment management fees payable to the Manager or to
other subsidiaries of Schroders plc in respect of investments by the
Company in collective investment schemes and investment
companies managed or advised by the Schroders Group are
deducted from the fee payable to the Manager under the AIFM
agreement. There were no such investments during the year ended
31 August 2024.
The management and performance fees payable in respect of the
year ended 31 August 2024 amounted to £4,763,000 (2023:
£4,838,000) and £4,552,000 (2023: nil) respectively. The Manager is
also entitled to a fee for providing administrative, accounting and
company secretarial services to the Company. For these services, it
receives an annual fee, payable quarterly in arrears, of £150,000.
Details of all amounts payable to the Manager are set out in note 17
on page 62.
The Board has reviewed the performance of the Manager, and fees
paid to it, during the year under review and continues to consider
that it has the appropriate depth and quality of resource to achieve
above-average returns in the longer term. Thus, the Board considers
that the Manager’s appointment under the terms of the AIFM
agreement, is in the best interests of Shareholders as a whole.
Safekeeping and cashflow monitoring agent
HSBC Bank plc (“HSBC Bank”), which is authorised by the Prudential
Regulation Authority and regulated by the FCA and the Prudential
Regulation Authority, has been appointed to carry out certain duties
of a safekeeping and cashflow monitoring agent specified in the AIFM
Directive for the Company, including:
– safekeeping of the assets of the Company which are entrusted to
it;
– cash monitoring; and
– oversight of the Company and the Manager to the extent
described in the AIFM Directive.
HSBC Bank is liable to the Company for losses suffered by it as
a result of any negligence, wilful default, fraud or fraudulent
misrepresentation on its part.
The Company, the Manager and HSBC Bank may terminate the
safekeeping and cashflow monitoring agent services agreement
pursuant to which HSBC Bank provides these services at any time by
giving 90 days’ notice in writing. HSBC Bank may only be removed
from office when a new safekeeping and cashflow monitoring agent is
appointed by the Company.
Registrar
Computershare Investor Services (Guernsey) Limited
(“Computershare”) has been appointed as the Company’s registrar.
Computershare’s services to the Company include share register
maintenance (including the issuance, transfer and cancellation of
shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and processing
corporate actions.
Corporate Governance Statement
The Board of the Company has chosen to adopt the principles and
provisions of the AIC Code of Corporate Governance (the “AIC Code”).
The Code addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the “UK Code”), as well as setting out
additional Provisions on issues that are of specific relevance to the
Company as an investment company.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the Financial
Reporting Council and the Guernsey Financial Services Commission,
provides more relevant information to Shareholders.
The Financial Conduct Authority requires all UK listed companies to
disclose whether they have complied with the provisions of the Code
or explain any departures. This statement, together with the
Statement of Directors’ Responsibilities, viability statement and going
concern statement set out on pages 44 and 27 respectively indicates
how the Company has complied with the principles of good
governance of the Code and its requirements on internal control. The
Strategic Report and Directors’ Report provide further details on the
Company’s risk management, governance and diversity policies.
The Company complied with the Principles and Provisions of the AIC
Code during the year under review and to date.
The AIC Code is available on the AIC website (www.theaic.co.uk). It
includes an explanation of how the AIC Code adapts the Principles
and Provisions set out in the UK Code to make them relevant for
investment companies.
The Guernsey Financial Services Commission’s Finance Sector Code of
Corporate Governance (the “GFSC Code”) provides a framework which
applies to all companies in the regulated finance sector in Guernsey.
The Company reports against the AIC Code, which meets the
requirements of the GFSC Code.
Share capital and substantial share interests
As at 31 August 2024, the Company had 271,233,024 ordinary shares
of 1p in issue. 29,435,000 shares were held in treasury. 11,395,000
shares were bought back during the year ended 31 August 2024.
4,230,000 shares were bought back in the period from the year-end
until 22 October 2024. Accordingly, the total number of voting rights
in the Company at 22 October 2024 is 237,568,024. Details of
changes to the Company’s share capital during the year under review
are given in note 13 to the accounts on page 60. All shares in issue
rank equally with respect to voting, dividends and any distribution on
winding up.
The Company has received notifications in accordance with the
Financial Conduct Authority’s (“FCA”) Disclosure Guidance and
Transparency Rule 5.1.2R of the below interests in 5% or more of the
voting rights attaching to the Company’s issued share capital. The
Company is reliant on investors to comply with these regulations, and
certain investors may be exempted from providing these. As such,
this should not be relied on as an exhaustive list of Shareholders
holding above 5% of the Company’s voting rights.
Ordinary shares as at 31 August 2024 % of total voting rights
Rathbones Investment Management Ltd 14.32
Evelyn Partners Limited 10.68
Since the year end to the date of the Notice of AGM, Evelyn Parnters
Limited notified the Company on 11 October 2024 that its holding
was 23,814,280 and 9.98% of the total voting rights of the Company
and on 23 October 2024 that its holding was 23,796,792 and 10.02%
of the total voting rights of the Company.
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Closing Adjusted NAV per ordinary share is the NAV per share on the
last day of the financial year in respect of which the performance fee
is being calculated, adjusted to add back any performance fee
accrued during the year but not crystallised; to adjust for the deemed
reinvestment of any dividends paid by the Company during the
period; and to remove the impact on NAV per share due to any share
buy-backs and issues.
The total amount of any performance fee payable in respect of any
one accounting period has been capped at 0.65% of the net asset
value, calculated at the end of the relevant accounting period.
Any investment management fees payable to the Manager or to
other subsidiaries of Schroders plc in respect of investments by the
Company in collective investment schemes and investment
companies managed or advised by the Schroders Group are
deducted from the fee payable to the Manager under the AIFM
agreement. There were no such investments during the year ended
31 August 2024.
The management and performance fees payable in respect of the
year ended 31 August 2024 amounted to £4,763,000 (2023:
£4,838,000) and £4,552,000 (2023: nil) respectively. The Manager is
also entitled to a fee for providing administrative, accounting and
company secretarial services to the Company. For these services, it
receives an annual fee, payable quarterly in arrears, of £150,000.
Details of all amounts payable to the Manager are set out in note 17
on page 62.
The Board has reviewed the performance of the Manager, and fees
paid to it, during the year under review and continues to consider
that it has the appropriate depth and quality of resource to achieve
above-average returns in the longer term. Thus, the Board considers
that the Manager’s appointment under the terms of the AIFM
agreement, is in the best interests of Shareholders as a whole.
Safekeeping and cashflow monitoring agent
HSBC Bank plc (“HSBC Bank”), which is authorised by the Prudential
Regulation Authority and regulated by the FCA and the Prudential
Regulation Authority, has been appointed to carry out certain duties
of a safekeeping and cashflow monitoring agent specified in the AIFM
Directive for the Company, including:
– safekeeping of the assets of the Company which are entrusted to
it;
– cash monitoring; and
– oversight of the Company and the Manager to the extent
described in the AIFM Directive.
HSBC Bank is liable to the Company for losses suffered by it as
a result of any negligence, wilful default, fraud or fraudulent
misrepresentation on its part.
The Company, the Manager and HSBC Bank may terminate the
safekeeping and cashflow monitoring agent services agreement
pursuant to which HSBC Bank provides these services at any time by
giving 90 days’ notice in writing. HSBC Bank may only be removed
from office when a new safekeeping and cashflow monitoring agent is
appointed by the Company.
Registrar
Computershare Investor Services (Guernsey) Limited
(“Computershare”) has been appointed as the Company’s registrar.
Computershare’s services to the Company include share register
maintenance (including the issuance, transfer and cancellation of
shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and processing
corporate actions.
Corporate Governance Statement
The Board of the Company has chosen to adopt the principles and
provisions of the AIC Code of Corporate Governance (the “AIC Code”).
The Code addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the “UK Code”), as well as setting out
additional Provisions on issues that are of specific relevance to the
Company as an investment company.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the Financial
Reporting Council and the Guernsey Financial Services Commission,
provides more relevant information to Shareholders.
The Financial Conduct Authority requires all UK listed companies to
disclose whether they have complied with the provisions of the Code
or explain any departures. This statement, together with the
Statement of Directors’ Responsibilities, viability statement and going
concern statement set out on pages 44 and 27 respectively indicates
how the Company has complied with the principles of good
governance of the Code and its requirements on internal control. The
Strategic Report and Directors’ Report provide further details on the
Company’s risk management, governance and diversity policies.
The Company complied with the Principles and Provisions of the AIC
Code during the year under review and to date.
The AIC Code is available on the AIC website (www.theaic.co.uk). It
includes an explanation of how the AIC Code adapts the Principles
and Provisions set out in the UK Code to make them relevant for
investment companies.
The Guernsey Financial Services Commission’s Finance Sector Code of
Corporate Governance (the “GFSC Code”) provides a framework which
applies to all companies in the regulated finance sector in Guernsey.
The Company reports against the AIC Code, which meets the
requirements of the GFSC Code.
Share capital and substantial share interests
As at 31 August 2024, the Company had 271,233,024 ordinary shares
of 1p in issue. 29,435,000 shares were held in treasury. 11,395,000
shares were bought back during the year ended 31 August 2024.
4,230,000 shares were bought back in the period from the year-end
until 22 October 2024. Accordingly, the total number of voting rights
in the Company at 22 October 2024 is 237,568,024. Details of
changes to the Company’s share capital during the year under review
are given in note 13 to the accounts on page 60. All shares in issue
rank equally with respect to voting, dividends and any distribution on
winding up.
The Company has received notifications in accordance with the
Financial Conduct Authority’s (“FCA”) Disclosure Guidance and
Transparency Rule 5.1.2R of the below interests in 5% or more of the
voting rights attaching to the Company’s issued share capital. The
Company is reliant on investors to comply with these regulations, and
certain investors may be exempted from providing these. As such,
this should not be relied on as an exhaustive list of Shareholders
holding above 5% of the Company’s voting rights.
Ordinary shares as at 31 August 2024 % of total voting rights
Rathbones Investment Management Ltd 14.32
Evelyn Partners Limited 10.68
Since the year end to the date of the Notice of AGM, Evelyn Parnters
Limited notified the Company on 11 October 2024 that its holding
was 23,814,280 and 9.98% of the total voting rights of the Company
and on 23 October 2024 that its holding was 23,796,792 and 10.02%
of the total voting rights of the Company.
34
Schroder
Oriental Income Fund Limited
Directors’ Report
continued
Provision of information to the auditors
The directors at the date of approval of this report confirm that, so far
as each of them is 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 are aware of
that information.
Directors’ attendance at meetings
The number of scheduled meetings of the Board and its committees
held during the financial year and the attendance of individual
directors is shown below. Whenever possible all directors attend the
AGM.
Nomination
Audit and Management
and Risk Remuneration Engagement
Director Board Committee Committee Committee
Paul Meader 5/5 3/3 3/3 1/1
Alexa Coates 5/5 3/3 3/3 1/1
Kate
Cornish-Bowden 1
1/1 1/1 1/1 1/1
Sam Davis 2
1/1 1/1 1/1 1/1
Isabel Liu 5/5 3/3 3/3 1/1
Nick Winsor 5/5 3/3 3/3 1/1
1
Kate Cornish-Bowden resigned from the Board on 17 November 2023
2
Sam Davis was appointed as a director on 1 July 2024
Directors’ and officers’ liability insurance
and indemnities
Directors’ and officers’ liability insurance cover was in place in respect
of the directors throughout the year under review. The Company
provides an indemnity to each director to the extent permitted by
Guernsey law whereby the Company is able to indemnify such
director against any liability incurred in proceedings in which the
director is successful, and for costs in defending a claim brought
against the director for breach of duty where the director acted
honestly and reasonably.
By order of the Board
Paul Meader
Director
23 October 2024
Directors’ Report
continued
Provision of information to the auditors
The directors at the date of approval of this report confirm that, so far
as each of them is 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 are aware of
that information.
Directors’ attendance at meetings
The number of scheduled meetings of the Board and its committees
held during the financial year and the attendance of individual
directors is shown below. Whenever possible all directors attend the
AGM.
Nomination
Audit and Management
and Risk Remuneration Engagement
Director Board Committee Committee Committee
Paul Meader 5/5 3/3 3/3 1/1
Alexa Coates 5/5 3/3 3/3 1/1
Kate
Cornish-Bowden 1
1/1 1/1 1/1 1/1
Sam Davis 2
1/1 1/1 1/1 1/1
Isabel Liu 5/5 3/3 3/3 1/1
Nick Winsor 5/5 3/3 3/3 1/1
1
Kate Cornish-Bowden resigned from the Board on 17 November 2023
2
Sam Davis was appointed as a director on 1 July 2024
Directors’ and officers’ liability insurance
and indemnities
Directors’ and officers’ liability insurance cover was in place in respect
of the directors throughout the year under review. The Company
provides an indemnity to each director to the extent permitted by
Guernsey law whereby the Company is able to indemnify such
director against any liability incurred in proceedings in which the
director is successful, and for costs in defending a claim brought
against the director for breach of duty where the director acted
honestly and reasonably.
By order of the Board
Paul Meader
Director
23 October 2024
Schroder
Oriental Income Fund Limited
35
Other Information (Unaudited) Introduction Strategic Report Governance Financial
The responsibilities and work carried out by the Audit and Risk Committee during the year under review are set out in the following report.
The duties and responsibilities of the Committee, which include monitoring the integrity of the Company’s financial reporting and internal
controls, are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s webpages,
www.schroders.co.uk/orientalincome.
All directors are members of the Committee. Alexa Coates is the chair of the Committee. The Board has satisfied itself that at least one of the
Committee’s members has recent and relevant financial experience and that the Committee as a whole has competence relevant to the sector
in which the company operates. The AIC Code permits the Chairman of the Board to be a member of the audit committee of an investment
trust. Recognising Paul Meader’s significant experience, it is considered appropriate for the Chairman to be a member of the Audit and Risk
Committee.
The Committee’s key responsibilities are set out below along with how the Committee discharged its duties and achieved effective oversight in
relation to the Company’s financial reporting, external audit, and risks and internal controls during the year. The Committee met three times
during the year. Further details on attendance can be found on page 34. An evaluation of the Committee’s effectiveness was carried out during
the year and the Committee was determined to be effective with no significant recommendations for improvement.
`
Key roles and responsibilities Application during the year
Reviewed and updated twice during the financial year the
principal and emerging risks register and the systems,
processes and oversight in place to manage and mitigate risks.
Risks and Internal Controls
To ensure a robust assessment of the Company’s emerging and
principal risks and procedures are in place to identify emerging
risks, and an explanation of how these are being managed or
mitigated.
Reviewed the internal controls operating within the Manager
and custodian, including independently audited internal controls
reports. In July 2024, members of the Committee met with the
key service providers at an annual review meeting in addition to
reviewing the quarterly reports covering the operations of the
service providers.
These reports and reviews collectively cover the effectiveness of
the Company’s material controls, including financial, operational,
reporting and compliance controls. Following these reviews, the
Committee considered that a sufficient level of internal
assurance is in place and the work of the external audit was not
adversely impacted by the absence of an internal audit function.
It was therefore recommended that an internal audit function is
not required at present.
Following a review of the Company’s risk management and
internal controls framework, the Committee noted that these
remain effective as at the end of the financial year ended
31 August 2024.
To keep under review the adequacy and effectiveness of the
Company’s systems of internal control and risk management
and review the annual report disclosures relating to this.
To monitor the Company’s accounting and financial internal
control systems.
To consider the need for and appropriateness of having an
internal audit function.
Consideration of the accounting policies and judgments used in
preparing the interim and full year financial statements of the
Company.
Financial Reporting
To oversee the accounting policies adopted by the Company. An
explanation of the Company’s material accounting policies can
be found at note 1 of the financial statements on page 55.
Risk
management
Internal
controls
Review of
external
auditors and
their work
Interim
and annual
report
Accounting
policies and
judgements
Audit and Risk Committee Report
Other Information (Unaudited) Introduction Strategic Report Governance Financial
The responsibilities and work carried out by the Audit and Risk Committee during the year under review are set out in the following report.
The duties and responsibilities of the Committee, which include monitoring the integrity of the Company’s financial reporting and internal
controls, are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s webpages,
www.schroders.co.uk/orientalincome.
All directors are members of the Committee. Alexa Coates is the chair of the Committee. The Board has satisfied itself that at least one of the
Committee’s members has recent and relevant financial experience and that the Committee as a whole has competence relevant to the sector
in which the company operates. The AIC Code permits the Chairman of the Board to be a member of the audit committee of an investment
trust. Recognising Paul Meader’s significant experience, it is considered appropriate for the Chairman to be a member of the Audit and Risk
Committee.
The Committee’s key responsibilities are set out below along with how the Committee discharged its duties and achieved effective oversight in
relation to the Company’s financial reporting, external audit, and risks and internal controls during the year. The Committee met three times
during the year. Further details on attendance can be found on page 34. An evaluation of the Committee’s effectiveness was carried out during
the year and the Committee was determined to be effective with no significant recommendations for improvement.
`
Key roles and responsibilities Application during the year
Reviewed and updated twice during the financial year the
principal and emerging risks register and the systems,
processes and oversight in place to manage and mitigate risks.
Risks and Internal Controls
To ensure a robust assessment of the Company’s emerging and
principal risks and procedures are in place to identify emerging
risks, and an explanation of how these are being managed or
mitigated.
Reviewed the internal controls operating within the Manager
and custodian, including independently audited internal controls
reports. In July 2024, members of the Committee met with the
key service providers at an annual review meeting in addition to
reviewing the quarterly reports covering the operations of the
service providers.
These reports and reviews collectively cover the effectiveness of
the Company’s material controls, including financial, operational,
reporting and compliance controls. Following these reviews, the
Committee considered that a sufficient level of internal
assurance is in place and the work of the external audit was not
adversely impacted by the absence of an internal audit function.
It was therefore recommended that an internal audit function is
not required at present.
Following a review of the Company’s risk management and
internal controls framework, the Committee noted that these
remain effective as at the end of the financial year ended
31 August 2024.
To keep under review the adequacy and effectiveness of the
Company’s systems of internal control and risk management
and review the annual report disclosures relating to this.
To monitor the Company’s accounting and financial internal
control systems.
To consider the need for and appropriateness of having an
internal audit function.
Consideration of the accounting policies and judgments used in
preparing the interim and full year financial statements of the
Company.
Financial Reporting
To oversee the accounting policies adopted by the Company. An
explanation of the Company’s material accounting policies can
be found at note 1 of the financial statements on page 55.
Risk
management
Internal
controls
Review of
external
auditors and
their work
Interim
and annual
report
Accounting
policies and
judgements
Audit and Risk Committee Report
36
Schroder
Oriental Income Fund Limited
Audit and Risk Committee Report
continued
`
To review the capital and liquidity position of the Company and
make recommendations to the Board in relation to whether it
considers it appropriate to adopt the going concern basis of
accounting in preparing its annual and half‑yearly financial
statements.
Reviewed the capital and liquidity position of the Company, as
well as the outcome of stress testing, to support the going
concern and viability statements in the annual and half-yearly
financial statements.
To monitor the integrity of the financial statements of the
Company and any formal announcements relating to the
Company’s financial performance and valuation. To review the
annual and half year reports and to advise the Board on whether
the annual report is fair, balanced and understandable.
Portfolio holdings and assurance reports were reviewed by the
Board on a quarterly basis.
Consideration of the methodology used to calculate the
management and performance fees, matched against the
criteria set out in the AIFM agreement.
Considered dividends received against forecast and the
allocation of special dividends to income and/or capital.
Reviewed the annual report and accounts to ensure that it was
fair, balanced and understandable taking into account the
Company’s results and the report from the Manager.
Consideration of the annual report and accounts and the letter
from the Manager in support of the letter of representation to
the auditors.
Reviewed the audit plan for the financial year ended 31 August
2024.
Met with and reviewed with the external auditors their
comprehensive reports which detailed the results of the audit
and met the auditors without representatives of the Manager
present. Representatives of the auditors attended the
Committee meeting at which the draft annual report and
accounts were considered.
Audit
To review the audit plan and discuss any matters arising from
the audit including any recommendations made by the auditors.
PricewaterhouseCoopers CI LLP were appointed as auditors on
25 May 2018. The auditors are required to rotate the senior
statutory auditor every five years. Following the Company
becoming tax resident in the UK, on 1 September 2020,
PricewaterhouseCoopers CI LLP resigned &
PricewaterhouseCoopers LLP was appointed as auditors to the
company to enable a more efficient audit process and reduce
costs to Shareholders.
The next tender is expected to take place in 2028. This is in the
best interests of the Company’s members as it balances
achieving value for money from the audit, and the need to
preserve auditor independence.
Evaluated the effectiveness of the audit firm prior to making
a recommendation that it should be re-appointed at the
forthcoming AGM. This included consideration of the auditors’
knowledge, expertise, resources and process, alongside
feedback from the Manager on the audit process. Professional
scepticism of the auditors was questioned and the Committee
was satisfied with the auditors’ replies. Received confirmation
from the auditors that they remained independent and that it
had implemented policies and procedures to meet the
requirements of the Auditing Practices Board’s Ethical Standards.
Formulated the policy on non-audit services, taking into account
the Audit Committees and the External Audit: Minimum
Standard and noted that the auditors did not provide any
non-audit services to the Company during the year.
To make recommendations to the Board, in relation to the
appointment, re‑appointment, effectiveness and removal of the
external auditors, to review their independence, and to approve
their remuneration and terms of engagement.
To formulate a policy on non-audit services.
In relation to these matters, the Committee took into
consideration provisions of the Audit Committees and the
External Audit: Minimum Standard.
Key roles and responsibilities Application during the year
Audit and Risk Committee Report
continued
`
To review the capital and liquidity position of the Company and
make recommendations to the Board in relation to whether it
considers it appropriate to adopt the going concern basis of
accounting in preparing its annual and half‑yearly financial
statements.
Reviewed the capital and liquidity position of the Company, as
well as the outcome of stress testing, to support the going
concern and viability statements in the annual and half-yearly
financial statements.
To monitor the integrity of the financial statements of the
Company and any formal announcements relating to the
Company’s financial performance and valuation. To review the
annual and half year reports and to advise the Board on whether
the annual report is fair, balanced and understandable.
Portfolio holdings and assurance reports were reviewed by the
Board on a quarterly basis.
Consideration of the methodology used to calculate the
management and performance fees, matched against the
criteria set out in the AIFM agreement.
Considered dividends received against forecast and the
allocation of special dividends to income and/or capital.
Reviewed the annual report and accounts to ensure that it was
fair, balanced and understandable taking into account the
Company’s results and the report from the Manager.
Consideration of the annual report and accounts and the letter
from the Manager in support of the letter of representation to
the auditors.
Reviewed the audit plan for the financial year ended 31 August
2024.
Met with and reviewed with the external auditors their
comprehensive reports which detailed the results of the audit
and met the auditors without representatives of the Manager
present. Representatives of the auditors attended the
Committee meeting at which the draft annual report and
accounts were considered.
Audit
To review the audit plan and discuss any matters arising from
the audit including any recommendations made by the auditors.
PricewaterhouseCoopers CI LLP were appointed as auditors on
25 May 2018. The auditors are required to rotate the senior
statutory auditor every five years. Following the Company
becoming tax resident in the UK, on 1 September 2020,
PricewaterhouseCoopers CI LLP resigned &
PricewaterhouseCoopers LLP was appointed as auditors to the
company to enable a more efficient audit process and reduce
costs to Shareholders.
The next tender is expected to take place in 2028. This is in the
best interests of the Company’s members as it balances
achieving value for money from the audit, and the need to
preserve auditor independence.
Evaluated the effectiveness of the audit firm prior to making
a recommendation that it should be re-appointed at the
forthcoming AGM. This included consideration of the auditors’
knowledge, expertise, resources and process, alongside
feedback from the Manager on the audit process. Professional
scepticism of the auditors was questioned and the Committee
was satisfied with the auditors’ replies. Received confirmation
from the auditors that they remained independent and that it
had implemented policies and procedures to meet the
requirements of the Auditing Practices Board’s Ethical Standards.
Formulated the policy on non-audit services, taking into account
the Audit Committees and the External Audit: Minimum
Standard and noted that the auditors did not provide any
non-audit services to the Company during the year.
To make recommendations to the Board, in relation to the
appointment, re‑appointment, effectiveness and removal of the
external auditors, to review their independence, and to approve
their remuneration and terms of engagement.
To formulate a policy on non-audit services.
In relation to these matters, the Committee took into
consideration provisions of the Audit Committees and the
External Audit: Minimum Standard.
Key roles and responsibilities Application during the year
Schroder
Oriental Income Fund Limited
37
Other Information (Unaudited) Introduction Strategic Report Governance Financial
`
Alexa Coates
Audit and Risk Committee chair
23 October 2024
Recommendations made to, and approved by, the Board:
Having reviewed the draft half year report, in May 2024, the Committee concluded that the financial statements gave a true and fair
view and recommended the half year report for approval.
As a result of the work performed in respect of the annual financial statements, the Committee concluded that the annual report for the
year ended 31 August 2024, taken as a whole, is fair, balanced and understandable and provides the information necessary for
Shareholders to assess the Company’s position, performance, business model and strategy, and has reported on these findings to the
Board. The Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 44.
Having reviewed the performance of the auditors as described above, the Committee considered it appropriate to recommend the firm’s
re-appointment. Resolutions to re-appoint PricewaterhouseCoopers LLP as auditors to the Company, and to authorise the directors to
determine their remuneration will be proposed at the AGM.
Other Information (Unaudited) Introduction Strategic Report Governance Financial
`
Alexa Coates
Audit and Risk Committee chair
23 October 2024
Recommendations made to, and approved by, the Board:
Having reviewed the draft half year report, in May 2024, the Committee concluded that the financial statements gave a true and fair
view and recommended the half year report for approval.
As a result of the work performed in respect of the annual financial statements, the Committee concluded that the annual report for the
year ended 31 August 2024, taken as a whole, is fair, balanced and understandable and provides the information necessary for
Shareholders to assess the Company’s position, performance, business model and strategy, and has reported on these findings to the
Board. The Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 44.
Having reviewed the performance of the auditors as described above, the Committee considered it appropriate to recommend the firm’s
re-appointment. Resolutions to re-appoint PricewaterhouseCoopers LLP as auditors to the Company, and to authorise the directors to
determine their remuneration will be proposed at the AGM.
38
Schroder
Oriental Income Fund Limited
Management Engagement Committee Report
The Management Engagement Committee is responsible for: (1) the monitoring and oversight of the Manager’s performance and fees, and
confirming the Manager’s ongoing suitability; and (2) reviewing and assessing the Company’s other service providers, including reviewing their
fees. All directors are members of the committee. Isabel Liu is the chair of the committee. Its terms of reference are available on the Company’s
webpages, www.schroders.co.uk/orientalincome.
Oversight of the Manager
The Committee:
• reviews the Manager’s performance, over the short and long
term, against the reference index, peer group and the
market;
• considers the reporting it has received from the Manager
throughout the year, and the reporting from the Manager to
the Shareholders;
• assesses management fees on an absolute and relative basis,
receiving input from the Company’s broker, including peer
group and industry figures, as well as the structure of the
fees;
• reviews the appropriateness of the Manager’s contract,
including terms such as notice period;
• visits the Manager’s Asian and London offices periodically to
meet with relevant investment and controls functions; and
• assesses if the Company receives appropriate administrative,
accounting, company secretarial and marketing support from
the Manager.
Oversight of other service providers
The Committee reviews the performance and competitiveness
of the following service providers on at least an annual basis:
• Safekeeping agent
• Corporate broker
• Registrar
• Lender
The Committee also receives a report from the Company
Secretary on ancillary service providers, and considers any
recommendations.
The Committee noted the Audit and Risk Committee’s review of
the auditors.
Approach
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best interests of
shareholders as a whole.
• That the Company’s service providers’ ongoing appointment remain appropriate.
The Committee met with senior management, as well as
representatives from various business functions supporting the
portfolio manager.
The Committee undertook a detailed review of the Manager’s
performance and agreed that it has the appropriate depth and
quality of resource to deliver superior returns over the longer
term.
The Committee also reviewed the terms of the AIFM agreement
and agreed they remained fit for purpose.
The Committee conducted a detailed review of each of the
Company’s key service providers, including their anti-modern
slavery, anti-bribery, sustainability, diversity and inclusion
policies, and concluded that their continued appointments were
appropriate.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the Manager, registrar, and
safekeeping agents’ internal controls.
Application during the year
Isabel Liu
Management Engagement Committee chair
23 October 2024
Management Engagement Committee Report
The Management Engagement Committee is responsible for: (1) the monitoring and oversight of the Manager’s performance and fees, and
confirming the Manager’s ongoing suitability; and (2) reviewing and assessing the Company’s other service providers, including reviewing their
fees. All directors are members of the committee. Isabel Liu is the chair of the committee. Its terms of reference are available on the Company’s
webpages, www.schroders.co.uk/orientalincome.
Oversight of the Manager
The Committee:
• reviews the Manager’s performance, over the short and long
term, against the reference index, peer group and the
market;
• considers the reporting it has received from the Manager
throughout the year, and the reporting from the Manager to
the Shareholders;
• assesses management fees on an absolute and relative basis,
receiving input from the Company’s broker, including peer
group and industry figures, as well as the structure of the
fees;
• reviews the appropriateness of the Manager’s contract,
including terms such as notice period;
• visits the Manager’s Asian and London offices periodically to
meet with relevant investment and controls functions; and
• assesses if the Company receives appropriate administrative,
accounting, company secretarial and marketing support from
the Manager.
Oversight of other service providers
The Committee reviews the performance and competitiveness
of the following service providers on at least an annual basis:
• Safekeeping agent
• Corporate broker
• Registrar
• Lender
The Committee also receives a report from the Company
Secretary on ancillary service providers, and considers any
recommendations.
The Committee noted the Audit and Risk Committee’s review of
the auditors.
Approach
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best interests of
shareholders as a whole.
• That the Company’s service providers’ ongoing appointment remain appropriate.
The Committee met with senior management, as well as
representatives from various business functions supporting the
portfolio manager.
The Committee undertook a detailed review of the Manager’s
performance and agreed that it has the appropriate depth and
quality of resource to deliver superior returns over the longer
term.
The Committee also reviewed the terms of the AIFM agreement
and agreed they remained fit for purpose.
The Committee conducted a detailed review of each of the
Company’s key service providers, including their anti-modern
slavery, anti-bribery, sustainability, diversity and inclusion
policies, and concluded that their continued appointments were
appropriate.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the Manager, registrar, and
safekeeping agents’ internal controls.
Application during the year
Isabel Liu
Management Engagement Committee chair
23 October 2024
Schroder
Oriental Income Fund Limited
39
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Nomination and Remuneration Committee Report
The Nomination and Remuneration Committee is responsible for (1) the recruitment, selection, induction and remuneration of all directors,
(2) their assessment during their tenure, and (3) the Board’s succession. All directors are members of the committee. Nick Winsor is the chair of
the committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/orientalincome.
Selection Induction
Application
of succession
policy
Annual
review of
succession
policy
Annual
evaluation
Succession
• The Board’s succession policy is that
directors’ tenure will be for no longer than
nine years, except in exceptional
circumstances, and that each director will
be subject to annual re-election at AGMs.
• The Committee reviews the Board’s current
and future needs at least annually. Should
any need be identified, the committee will
initiate the selection process.
• The Committee oversees the handover
process for retiring directors.
Selection and induction
• The Committee prepares a job specification
for each role. Proposals are sought from
independent search firms, which are
evaluated by the Board and a firm selected.
• Such a specification is prepared for the
Chairman and the chairs of committees,
the committee also considers current
Board members.
• Job specification outlines the knowledge,
professional skills, personal qualities and
experience requirements.
• A search firm sources a long list of
potential candidates, who are assessed
against the job specification.
• The Committee discusses the long list,
invites a number of candidates for
interview and makes a recommendation to
the Board.
• The Committee reviews the induction and
training of new directors.
Board evaluation and Directors’ fees
• The Committee assesses the performance,
composition, diversity and how effectively
members work together annually.
• Evaluation focuses on whether each
director continues to demonstrate
commitment to their role and provides a
valuable contribution to the Board during
the year, taking into account time
commitment, independence, conflicts and
training needs.
• Following the evaluation, the Committee
provides a recommendation to
Shareholders with respect to the annual
re-election of directors at the AGM.
• The Committee reviews directors’ fees,
taking into account comparative data and
reports to Shareholders in the
remuneration report.
• Proposed changes to the remuneration
policy for directors are discussed and then
reported to Shareholders.
For application see page 40.
Approach
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Nomination and Remuneration Committee Report
The Nomination and Remuneration Committee is responsible for (1) the recruitment, selection, induction and remuneration of all directors,
(2) their assessment during their tenure, and (3) the Board’s succession. All directors are members of the committee. Nick Winsor is the chair of
the committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/orientalincome.
Selection Induction
Application
of succession
policy
Annual
review of
succession
policy
Annual
evaluation
Succession
• The Board’s succession policy is that
directors’ tenure will be for no longer than
nine years, except in exceptional
circumstances, and that each director will
be subject to annual re-election at AGMs.
• The Committee reviews the Board’s current
and future needs at least annually. Should
any need be identified, the committee will
initiate the selection process.
• The Committee oversees the handover
process for retiring directors.
Selection and induction
• The Committee prepares a job specification
for each role. Proposals are sought from
independent search firms, which are
evaluated by the Board and a firm selected.
• Such a specification is prepared for the
Chairman and the chairs of committees,
the committee also considers current
Board members.
• Job specification outlines the knowledge,
professional skills, personal qualities and
experience requirements.
• A search firm sources a long list of
potential candidates, who are assessed
against the job specification.
• The Committee discusses the long list,
invites a number of candidates for
interview and makes a recommendation to
the Board.
• The Committee reviews the induction and
training of new directors.
Board evaluation and Directors’ fees
• The Committee assesses the performance,
composition, diversity and how effectively
members work together annually.
• Evaluation focuses on whether each
director continues to demonstrate
commitment to their role and provides a
valuable contribution to the Board during
the year, taking into account time
commitment, independence, conflicts and
training needs.
• Following the evaluation, the Committee
provides a recommendation to
Shareholders with respect to the annual
re-election of directors at the AGM.
• The Committee reviews directors’ fees,
taking into account comparative data and
reports to Shareholders in the
remuneration report.
• Proposed changes to the remuneration
policy for directors are discussed and then
reported to Shareholders.
For application see page 40.
Approach
40
Schroder
Oriental Income Fund Limited
Nomination and Remuneration Report
continued
Selection and induction
• The Committee initiated the process by
seeking suitable proposals from
appropriate search firms.
• Following a rigorous selection process
using an independent external recruitment
agency, Stonehaven International, Sam
Davis was appointed to the Board with
effect from 1 July 2024. Stonehaven
International has no connection with the
Company or any of the directors.
• Sam Davis will stand for election as a
director at the forthcoming AGM, as set out
in the Notice of AGM.
• The Committee designed and ensured the
implementation of an induction
programme with the Secretary, the
Investment Manager, as well as its various
operating functions for Sam Davis.
Application during the year
Board evaluation and directors’ fees
• The Board evaluation, including evaluation
of its committees, was undertaken within
the financial year.
• The Committee also reviewed each
director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono not
for profit roles, to ensure that each director
remained free from conflict and had
sufficient time available to discharge each
of their duties effectively.
• The Committee considered each director’s
contributions, and noted that in addition to
extensive experience as professionals and
non-executive directors, each director had
valuable skills and experience, as detailed
in their biographies on pages 30 and 31.
• All directors were considered to be
independent in character and judgement.
• Based on its assessment, the committee
provided individual recommendations for
each directors’ re-election.
• The Committee reviewed directors’ fees,
using external benchmarking, and
recommended an increase in directors’
fees, as detailed in the remuneration
report.
Recommendations made to, and approved by, the Board:
• That Alexa Coates be selected as Senior Independent Director, with effect from 17 November 2023
• That Isabel Liu be selected as chair of Management Engagement Committee, with effect from 17 November 2023
• That Sam Davis be appointed as a director of the Company, with effect from 1 July 2024.
• That Nick Winsor be selected to succeed Paul Meader as Chair of the Company, with effect from the forthcoming AGM, subject to
Mr Winsor’s re-election as a director at the AGM.
• That all directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the
Board, contribute towards the Company’s long-term success, and remain free from conflicts with the Company and its directors, so
should all be recommended for election and re-election by Shareholders at the AGM.
• That directors’ fees per annum be increased to the following levels effective from 1 September 2024: Chairman £51,000, Audit and
Risk Committee chair: £46,000 and other directors: £41,000, with the Senior Independent Director receiving an additional £2,000.
Succession
• The Committee reviewed the succession
policy and agreed it was still fit for purpose.
• As announced by the Company on
3 August 2023, Ms Kate Cornish-Bowden
resigned on 17 November 2023 as a
director of the Company prior to Schroders’
appointment as the AIFM of International
Biotechnology Trust plc, of which she is
Chair. Following a rigorous process,
including consideration of the Board’s skills
matrix, composition and diversity, Sam
Davis was appointed to the Board on 1 July
2024. Alexa Coates was recommended to
be selected to replace Kate
Cornish-Bowden as the Senior
Independent Director upon her retirement.
• After nine years of service on the Board,
Paul Meader, the Chairman of the Board
will not seek election at the forthcoming
AGM. As part of the succession planning
exercise, Isabel Liu was recommended to
replace Paul Meader as the chair of
Management Engagement Committee,
with effect from 17 November 2023 and,
following Chair succession planning
process led by Alexa Coates, Senior
Independent Director, Nick Winsor has
been selected to succeed Paul Meader as
Chair of the Company, with effect from
forthcoming AGM, subject to Mr Winsor’s
re-election as a director at the AGM.
Nick Winsor
Nomination and Remuneration Committee chair
23 October 2024
Nomination and Remuneration Report
continued
Selection and induction
• The Committee initiated the process by
seeking suitable proposals from
appropriate search firms.
• Following a rigorous selection process
using an independent external recruitment
agency, Stonehaven International, Sam
Davis was appointed to the Board with
effect from 1 July 2024. Stonehaven
International has no connection with the
Company or any of the directors.
• Sam Davis will stand for election as a
director at the forthcoming AGM, as set out
in the Notice of AGM.
• The Committee designed and ensured the
implementation of an induction
programme with the Secretary, the
Investment Manager, as well as its various
operating functions for Sam Davis.
Application during the year
Board evaluation and directors’ fees
• The Board evaluation, including evaluation
of its committees, was undertaken within
the financial year.
• The Committee also reviewed each
director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono not
for profit roles, to ensure that each director
remained free from conflict and had
sufficient time available to discharge each
of their duties effectively.
• The Committee considered each director’s
contributions, and noted that in addition to
extensive experience as professionals and
non-executive directors, each director had
valuable skills and experience, as detailed
in their biographies on pages 30 and 31.
• All directors were considered to be
independent in character and judgement.
• Based on its assessment, the committee
provided individual recommendations for
each directors’ re-election.
• The Committee reviewed directors’ fees,
using external benchmarking, and
recommended an increase in directors’
fees, as detailed in the remuneration
report.
Recommendations made to, and approved by, the Board:
• That Alexa Coates be selected as Senior Independent Director, with effect from 17 November 2023
• That Isabel Liu be selected as chair of Management Engagement Committee, with effect from 17 November 2023
• That Sam Davis be appointed as a director of the Company, with effect from 1 July 2024.
• That Nick Winsor be selected to succeed Paul Meader as Chair of the Company, with effect from the forthcoming AGM, subject to
Mr Winsor’s re-election as a director at the AGM.
• That all directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the
Board, contribute towards the Company’s long-term success, and remain free from conflicts with the Company and its directors, so
should all be recommended for election and re-election by Shareholders at the AGM.
• That directors’ fees per annum be increased to the following levels effective from 1 September 2024: Chairman £51,000, Audit and
Risk Committee chair: £46,000 and other directors: £41,000, with the Senior Independent Director receiving an additional £2,000.
Succession
• The Committee reviewed the succession
policy and agreed it was still fit for purpose.
• As announced by the Company on
3 August 2023, Ms Kate Cornish-Bowden
resigned on 17 November 2023 as a
director of the Company prior to Schroders’
appointment as the AIFM of International
Biotechnology Trust plc, of which she is
Chair. Following a rigorous process,
including consideration of the Board’s skills
matrix, composition and diversity, Sam
Davis was appointed to the Board on 1 July
2024. Alexa Coates was recommended to
be selected to replace Kate
Cornish-Bowden as the Senior
Independent Director upon her retirement.
• After nine years of service on the Board,
Paul Meader, the Chairman of the Board
will not seek election at the forthcoming
AGM. As part of the succession planning
exercise, Isabel Liu was recommended to
replace Paul Meader as the chair of
Management Engagement Committee,
with effect from 17 November 2023 and,
following Chair succession planning
process led by Alexa Coates, Senior
Independent Director, Nick Winsor has
been selected to succeed Paul Meader as
Chair of the Company, with effect from
forthcoming AGM, subject to Mr Winsor’s
re-election as a director at the AGM.
Nick Winsor
Nomination and Remuneration Committee chair
23 October 2024
Schroder
Oriental Income Fund Limited
41
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Introduction
The following remuneration policy is currently in force and is subject
to a binding vote every three years. The next vote will take place at the
2026 AGM and the current policy provisions will apply until that date.
The below directors’ annual report on remuneration is subject to an
annual advisory vote. An ordinary resolution to approve this report
will be put to Shareholders at the forthcoming AGM.
At the AGM held on 4 December 2023 when the policy was last voted
on by Shareholders, 99.81% of the votes cast (including votes cast at
the chairman’s discretion) in respect of approval of the directors’
remuneration policy were in favour, while 0.19% were against.
41,730 votes were withheld.
At the AGM held on 4 December 2023, 99.93% of the votes cast
(including votes cast at the chairman’s discretion) in respect of
approval of the directors’ remuneration report for the year ended
31 August 2023 were in favour, while 0.07% were against.
37,501 votes were withheld.
Directors’ remuneration policy
The determination of the directors’ fees is a matter dealt with by the
Nomination and Remuneration Committee and the Board.
It is the Nomination and Remuneration Committee’s policy to
determine the level of directors’ remuneration having regard to
amounts payable to non-executive directors in the industry generally,
the role that individual directors fulfil in respect of Board and
committee responsibilities, and time committed to the Company’s
affairs, taking into account the aggregate limit of fees set out in the
Company’s articles of incorporation (currently £300,000). Any increase
in the level set out therein requires approval by the Board and the
Company’s Shareholders.
The chairman of the Board, the chair of the Audit and Risk Committee,
and the senior independent director each receives fees at a higher
rate than the other directors to reflect their additional responsibilities.
The fees payable to directors are not performance related. They are
set at a level to recruit and retain individuals of sufficient calibre, with
the level of knowledge, experience and expertise necessary to
promote the success of the Company in reaching its short and
long-term strategic objectives.
The Board and its committees exclusively comprise non-executive
directors. No director past or present has an entitlement to a pension
from the Company, and the Company has not operated, and does not
intend to operate, a share scheme for directors and has not awarded,
and does not intend to award, any share options or long-term
performance incentives to any director. No director has a service
contract with the Company, although directors have a letter of
appointment. Directors do not receive exit payments and are not
provided with any compensation for loss of office. No other payments
are made to directors other than the reimbursement of reasonable
out-of-pocket expenses incurred in attending to the Company’s
business.
Implementation of policy
The terms of directors’ letters of appointment are available for
inspection at the Company’s registered office address during normal
business hours and during the AGM at the location of such meeting.
The Board did not seek the views of Shareholders in setting this
remuneration policy. Any comments on the remuneration policy
received from Shareholders would be considered on a case-by-case
basis.
As the Company does not have any employees, no employee pay and
employment conditions were taken into account when setting this
remuneration policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into account research
from third parties on the fee levels of directors of peer group
companies, as well as industry norms and factors affecting the time
commitment expected of the directors. New directors are subject to
the provisions set out in this remuneration policy.
Directors’ report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 31 August 2024.
Directors’ Remuneration Report
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Introduction
The following remuneration policy is currently in force and is subject
to a binding vote every three years. The next vote will take place at the
2026 AGM and the current policy provisions will apply until that date.
The below directors’ annual report on remuneration is subject to an
annual advisory vote. An ordinary resolution to approve this report
will be put to Shareholders at the forthcoming AGM.
At the AGM held on 4 December 2023 when the policy was last voted
on by Shareholders, 99.81% of the votes cast (including votes cast at
the chairman’s discretion) in respect of approval of the directors’
remuneration policy were in favour, while 0.19% were against.
41,730 votes were withheld.
At the AGM held on 4 December 2023, 99.93% of the votes cast
(including votes cast at the chairman’s discretion) in respect of
approval of the directors’ remuneration report for the year ended
31 August 2023 were in favour, while 0.07% were against.
37,501 votes were withheld.
Directors’ remuneration policy
The determination of the directors’ fees is a matter dealt with by the
Nomination and Remuneration Committee and the Board.
It is the Nomination and Remuneration Committee’s policy to
determine the level of directors’ remuneration having regard to
amounts payable to non-executive directors in the industry generally,
the role that individual directors fulfil in respect of Board and
committee responsibilities, and time committed to the Company’s
affairs, taking into account the aggregate limit of fees set out in the
Company’s articles of incorporation (currently £300,000). Any increase
in the level set out therein requires approval by the Board and the
Company’s Shareholders.
The chairman of the Board, the chair of the Audit and Risk Committee,
and the senior independent director each receives fees at a higher
rate than the other directors to reflect their additional responsibilities.
The fees payable to directors are not performance related. They are
set at a level to recruit and retain individuals of sufficient calibre, with
the level of knowledge, experience and expertise necessary to
promote the success of the Company in reaching its short and
long-term strategic objectives.
The Board and its committees exclusively comprise non-executive
directors. No director past or present has an entitlement to a pension
from the Company, and the Company has not operated, and does not
intend to operate, a share scheme for directors and has not awarded,
and does not intend to award, any share options or long-term
performance incentives to any director. No director has a service
contract with the Company, although directors have a letter of
appointment. Directors do not receive exit payments and are not
provided with any compensation for loss of office. No other payments
are made to directors other than the reimbursement of reasonable
out-of-pocket expenses incurred in attending to the Company’s
business.
Implementation of policy
The terms of directors’ letters of appointment are available for
inspection at the Company’s registered office address during normal
business hours and during the AGM at the location of such meeting.
The Board did not seek the views of Shareholders in setting this
remuneration policy. Any comments on the remuneration policy
received from Shareholders would be considered on a case-by-case
basis.
As the Company does not have any employees, no employee pay and
employment conditions were taken into account when setting this
remuneration policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into account research
from third parties on the fee levels of directors of peer group
companies, as well as industry norms and factors affecting the time
commitment expected of the directors. New directors are subject to
the provisions set out in this remuneration policy.
Directors’ report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 31 August 2024.
Directors’ Remuneration Report
42
Schroder
Oriental Income Fund Limited
Directors’ Remuneration Report
continued
Remuneration Report for the year ended 31 August 2024
Fees paid to directors
The following amounts were paid by the Company to directors for their services in respect of the year ended 31 August 2024 and the preceding
financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The performance of the Company over the
financial year is presented on the inside front cover and page 1, under the heading “Performance Summary”.
Change over year
Fees Taxable benefits 1
Total ended 31 August
2024 2023 2024 2023 2024 2023 2024 2023 2022
Director £ £ £ £ £ £ % % %
Paul Meader 50,000 47,000 2,228 2,254 52,228 49,254 6.0 2.3 13.9
Alexa Coates 2
45,666 42,000 136 119 45,802 42,119 8.7 3.8 1.4
Kate Cornish-Bowden 3
8,939 37,000 125 109 9,064 37,109 n/a 4.6 1.3
lsabel Liu 40,000 37,000 118 275 40,118 37,275 7.6 27.7 n/a
Nick Winsor 40,000 37,000 – 109 40,000 37,109 7.8 4.6 1.3
Sam Davis 4
6,667 – – – 6,667 – n/a
Total 191,272 200,000 2,607 2,866 193,879 202,866
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and NI contributions.
2
Alexa Coates was appointed as SID following Kate Cornish-Bowden’s resignation on 17 November 2023.
3
Resigned as director on 17 November 2023.
4
Appointed as director on 1 July 2024.
The information in the above table has been audited.
Consideration of matters relating to directors’ remuneration
Directors’ remuneration was last reviewed by the Board in July 2024. The members of the Board at the time that remuneration levels were
considered were as set out on pages 30 and 31, save for Kate Cornish-Bowden who resigned from the Board in November 2023. Information on
fees paid to directors of investment trusts managed by Schroders and peer group companies provided by the Manager and corporate broker
was taken into consideration.
Following annual review, the Board agreed that fees should be increased with effect from 1 September 2024 to the following levels: Chairman:
£51,000, Audit and Risk Committee chair: £46,000 and other directors: £41,000, with the Senior Independent Director receiving an additional
£2,000. Directors’ fees were last increased from 1 September 2023 for the year ended 31 August 2024 to the following levels: Chairman:
£50,000, Audit and Risk Committee chair: £45,000 and other directors: £40,000, with the Senior Independent Director receiving an additional
£2,000. The Board will continue to review fee levels on an annual basis.
10 year performance of the share price total return versus the MSCI All Countries Pacific
ex Japan Index, with net dividends reinvested, in sterling terms 4
4
Source: Morningstar. Rebased to 100 at 31 August 2014. The MSCI All Countries Pacific ex Japan Index with net dividends reinvested, sterling adjusted, has been
chosen as an appropriate comparison, as it comprises companies within the Company’s primary investment objective.
80
100
120
140
160
180
200
220
31-Aug-24 31-Aug-23 31-Aug-22 31-Aug-21 31-Aug-20 31-Aug-19 31-Aug-18 31-Aug-17 31-Aug-16 31-Aug-15 31-Aug-14
Reference Index Share price
Directors’ Remuneration Report
continued
Remuneration Report for the year ended 31 August 2024
Fees paid to directors
The following amounts were paid by the Company to directors for their services in respect of the year ended 31 August 2024 and the preceding
financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The performance of the Company over the
financial year is presented on the inside front cover and page 1, under the heading “Performance Summary”.
Change over year
Fees Taxable benefits 1
Total ended 31 August
2024 2023 2024 2023 2024 2023 2024 2023 2022
Director £ £ £ £ £ £ % % %
Paul Meader 50,000 47,000 2,228 2,254 52,228 49,254 6.0 2.3 13.9
Alexa Coates 2
45,666 42,000 136 119 45,802 42,119 8.7 3.8 1.4
Kate Cornish-Bowden 3
8,939 37,000 125 109 9,064 37,109 n/a 4.6 1.3
lsabel Liu 40,000 37,000 118 275 40,118 37,275 7.6 27.7 n/a
Nick Winsor 40,000 37,000 – 109 40,000 37,109 7.8 4.6 1.3
Sam Davis 4
6,667 – – – 6,667 – n/a
Total 191,272 200,000 2,607 2,866 193,879 202,866
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and NI contributions.
2
Alexa Coates was appointed as SID following Kate Cornish-Bowden’s resignation on 17 November 2023.
3
Resigned as director on 17 November 2023.
4
Appointed as director on 1 July 2024.
The information in the above table has been audited.
Consideration of matters relating to directors’ remuneration
Directors’ remuneration was last reviewed by the Board in July 2024. The members of the Board at the time that remuneration levels were
considered were as set out on pages 30 and 31, save for Kate Cornish-Bowden who resigned from the Board in November 2023. Information on
fees paid to directors of investment trusts managed by Schroders and peer group companies provided by the Manager and corporate broker
was taken into consideration.
Following annual review, the Board agreed that fees should be increased with effect from 1 September 2024 to the following levels: Chairman:
£51,000, Audit and Risk Committee chair: £46,000 and other directors: £41,000, with the Senior Independent Director receiving an additional
£2,000. Directors’ fees were last increased from 1 September 2023 for the year ended 31 August 2024 to the following levels: Chairman:
£50,000, Audit and Risk Committee chair: £45,000 and other directors: £40,000, with the Senior Independent Director receiving an additional
£2,000. The Board will continue to review fee levels on an annual basis.
10 year performance of the share price total return versus the MSCI All Countries Pacific
ex Japan Index, with net dividends reinvested, in sterling terms 4
4
Source: Morningstar. Rebased to 100 at 31 August 2014. The MSCI All Countries Pacific ex Japan Index with net dividends reinvested, sterling adjusted, has been
chosen as an appropriate comparison, as it comprises companies within the Company’s primary investment objective.
80
100
120
140
160
180
200
220
31-Aug-24 31-Aug-23 31-Aug-22 31-Aug-21 31-Aug-20 31-Aug-19 31-Aug-18 31-Aug-17 31-Aug-16 31-Aug-15 31-Aug-14
Reference Index Share price
Schroder
Oriental Income Fund Limited
43
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Expenditure by the Company on remuneration and distributions to Shareholders
The table below compares the remuneration payable to directors to distributions paid to Shareholders during the year under review and the
prior financial year. In considering these figures, Shareholders should take into account the Company’s investment objective.
Year ended Year ended
31 August 31 August
2024 2023 %
£’000 £’000 Change
Remuneration payable to directors 192 203 (5.4)
Distributions paid to Shareholders
– Dividends 29,282 29,901
– Share buy backs 28,969 20,022
Total distributions paid to Shareholders 58,251 49,923 +16.7
Directors’ share interests
The Company’s articles of incorporation do not require directors to own shares in the Company. The interests of directors, including those of
connected persons, at the beginning and end of the financial year under review are set out below.
Ordinary Ordinary
shares shares
of 1p each of 1p each
31 August 31 August
2024 2023
Paul Meader 11,000 11,000
Alexa Coates 10,000 10,000
Nick Winsor 20,000 20,000
Sam Davis Nil n/a
Isabel Liu 18,634 17,386
The information in the above table has been audited.
Paul Meader
Director
23 October 2024
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Expenditure by the Company on remuneration and distributions to Shareholders
The table below compares the remuneration payable to directors to distributions paid to Shareholders during the year under review and the
prior financial year. In considering these figures, Shareholders should take into account the Company’s investment objective.
Year ended Year ended
31 August 31 August
2024 2023 %
£’000 £’000 Change
Remuneration payable to directors 192 203 (5.4)
Distributions paid to Shareholders
– Dividends 29,282 29,901
– Share buy backs 28,969 20,022
Total distributions paid to Shareholders 58,251 49,923 +16.7
Directors’ share interests
The Company’s articles of incorporation do not require directors to own shares in the Company. The interests of directors, including those of
connected persons, at the beginning and end of the financial year under review are set out below.
Ordinary Ordinary
shares shares
of 1p each of 1p each
31 August 31 August
2024 2023
Paul Meader 11,000 11,000
Alexa Coates 10,000 10,000
Nick Winsor 20,000 20,000
Sam Davis Nil n/a
Isabel Liu 18,634 17,386
The information in the above table has been audited.
Paul Meader
Director
23 October 2024
44
Schroder
Oriental Income Fund Limited
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 on
pages 30 and 31, 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 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 on
pages 30 and 31, 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
Financial
Financial
Independent Auditor’s Report 46
Statement of Comprehensive Income 51
Statement of Changes in Equity 52
Balance Sheet 53
Cash Flow Statement 54
Notes to the Accounts 55
Schroder Asian Total Return Investment Company plc 45
Financial
Independent Auditor’s Report 46
Statement of Comprehensive Income 51
Statement of Changes in Equity 52
Balance Sheet 53
Cash Flow Statement 54
Notes to the Accounts 55
Schroder Asian Total Return Investment Company plc 45
46
Schroder
Oriental Income Fund Limited
Independent Auditor’s Report
to the Members of Schroder Oriental Income Fund Limited
Report on the audit of the financial statements
Opinion
In our opinion, Schroder Oriental Income Fund Limited’s financial statements:
– give a true and fair view of the state of the company’s affairs as at 31 August 2024 and of its profit and cash flows for the year then ended;
– have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted in the European Union;
and
– have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: Balance Sheet
as at 31 August 2024; Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement for the year then ended;
and the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, which includes the Financial Reporting Council’s (“FRC”) Ethical Standard, as applicable to listed public interest entities in accordance
with the requirements of the Crown Dependencies’ Audit Rules and Guidance for market-traded companies, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
We have provided no non-audit services to the company in the period under audit.
Our audit approach
Overview
Audit scope
– The company is a standalone authorised, closed-ended investment company registered in the Bailiwick of Guernsey with its shares listed
on the main market of the London Stock Exchange.
– The company engaged Schroder Unit Trusts Limited (the “Manager”) to manage the company’s assets.
– The Manager has delegated investment management, marketing, administrative, accounting and company secretarial services to Schroder
Investment Management Limited (the “Investment Manager”). The Investment manager has sub-delegated a part of the fund accounting
and administration activities to HSBC Securities Services (UK) Limited (the “Administrator”).
– We conducted our audit using information provided by the Manager, Investment Manager and the Administrator.
– We tailored the scope of our audit taking into account the types of investments within the company, the involvement of the third parties
referred to above, the accounting processes and controls, and the industry in which the company operates.
– We obtained an understanding of the control environment in place at both the Manager, Investment Manager and Administrator, and
adopted a fully substantive testing approach using reports obtained from the Manager, Investment Manager and Administrator.
Key audit matters
– Income from and gains on investments.
– Valuation and existence of investments at fair value through profit or loss.
Materiality
– Overall materiality: £7,003,000 (2023: £6,482,000) based on approximately 1% of net assets.
– Performance materiality: £5,252,000 (2023: £4,861,000).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Independent Auditor’s Report
to the Members of Schroder Oriental Income Fund Limited
Report on the audit of the financial statements
Opinion
In our opinion, Schroder Oriental Income Fund Limited’s financial statements:
– give a true and fair view of the state of the company’s affairs as at 31 August 2024 and of its profit and cash flows for the year then ended;
– have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted in the European Union;
and
– have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: Balance Sheet
as at 31 August 2024; Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement for the year then ended;
and the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, which includes the Financial Reporting Council’s (“FRC”) Ethical Standard, as applicable to listed public interest entities in accordance
with the requirements of the Crown Dependencies’ Audit Rules and Guidance for market-traded companies, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
We have provided no non-audit services to the company in the period under audit.
Our audit approach
Overview
Audit scope
– The company is a standalone authorised, closed-ended investment company registered in the Bailiwick of Guernsey with its shares listed
on the main market of the London Stock Exchange.
– The company engaged Schroder Unit Trusts Limited (the “Manager”) to manage the company’s assets.
– The Manager has delegated investment management, marketing, administrative, accounting and company secretarial services to Schroder
Investment Management Limited (the “Investment Manager”). The Investment manager has sub-delegated a part of the fund accounting
and administration activities to HSBC Securities Services (UK) Limited (the “Administrator”).
– We conducted our audit using information provided by the Manager, Investment Manager and the Administrator.
– We tailored the scope of our audit taking into account the types of investments within the company, the involvement of the third parties
referred to above, the accounting processes and controls, and the industry in which the company operates.
– We obtained an understanding of the control environment in place at both the Manager, Investment Manager and Administrator, and
adopted a fully substantive testing approach using reports obtained from the Manager, Investment Manager and Administrator.
Key audit matters
– Income from and gains on investments.
– Valuation and existence of investments at fair value through profit or loss.
Materiality
– Overall materiality: £7,003,000 (2023: £6,482,000) based on approximately 1% of net assets.
– Performance materiality: £5,252,000 (2023: £4,861,000).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Income from and gains on investments
Refer to the Note 1 Accounting Policies, Note 2 Gains/(losses) on
investments held at fair value through profit or loss and Note 3
Income.
We focused on the accuracy and occurrence of both net capital
gains/losses on investments and of dividend income.
We assessed the presentation of income in the Statement of
Comprehensive Income in accordance with the requirements of The
Association of Investment Companies’ Statement of Recommended
Practice (the “AIC SORP”).
We assessed and found that the accounting policies implemented
were in accordance with IFRSs as adopted in the European Union and
the AIC SORP, and that income (revenue and capital gains and losses
on investments) has been accounted for in accordance with the
stated accounting policy.
We understood and assessed the design and implementation of key
controls surrounding income recognition.
Dividend Income
We tested the accuracy of all dividend receipts by agreeing the
dividend rates for investments to independent market data.
We tested occurrence by testing that all dividends recorded in the
year had been declared in the market by investment holdings, and
we traced a sample of dividends received to bank statements.
To test for completeness, we tested that the appropriate dividends
had been received in the year by reference to independent data of
dividends declared for all dividends during the year for all
investments.
We tested the allocation and presentation of dividend income
between the revenue and capital return columns of the Statement of
Comprehensive Income in line with the requirements set out in the
AIC SORP by determining the reasons behind dividend distributions.
Gains/losses on investments at fair value through profit
or loss
The gains/losses on investments held at fair value comprise realised
and unrealised gains/losses.
For unrealised gains and losses, we tested the valuation of the
portfolio at the year end, together with testing the reconciliation of
opening and closing investments, thereby we have assessed the
accuracy of the gains/losses recorded.
We have also verified the occurrence of the gains/losses through our
testing of the existence of investments.
For realised gains/losses, we tested a sample of disposals by
agreeing the proceeds to bank statements in order to verify the
occurrence of the gain/loss. We re-performed the calculation of a
sample of realised gains/losses in order to assess the accuracy of the
gains/losses recorded.
Based on the audit procedures performed and evidence obtained, we
concluded that income from and gains on investments was not
materially misstated.
We tested the valuation of the listed investments by agreeing the
prices used in the valuation to independent third party sources.
We tested the existence of the listed investments by agreeing the
holdings to an independent confirmation from the Custodian, as at
31 August 2024.
No material misstatements were identified from this testing.
Valuation and existence of investments at fair value through
profit or loss
Refer to Note 1 Material Accounting Policies and Note 10 Investments
at fair value through profit or loss.
The investment portfolio at 31 August 2024 comprised listed equity
investments. We focused on the valuation and existence of
investments because investments represent the principal element of
the net asset value as disclosed in the Balance Sheet in the financial
statements.
Schroder Oriental Income Fund Limited 47
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Income from and gains on investments
Refer to the Note 1 Accounting Policies, Note 2 Gains/(losses) on
investments held at fair value through profit or loss and Note 3
Income.
We focused on the accuracy and occurrence of both net capital
gains/losses on investments and of dividend income.
We assessed the presentation of income in the Statement of
Comprehensive Income in accordance with the requirements of The
Association of Investment Companies’ Statement of Recommended
Practice (the “AIC SORP”).
We assessed and found that the accounting policies implemented
were in accordance with IFRSs as adopted in the European Union and
the AIC SORP, and that income (revenue and capital gains and losses
on investments) has been accounted for in accordance with the
stated accounting policy.
We understood and assessed the design and implementation of key
controls surrounding income recognition.
Dividend Income
We tested the accuracy of all dividend receipts by agreeing the
dividend rates for investments to independent market data.
We tested occurrence by testing that all dividends recorded in the
year had been declared in the market by investment holdings, and
we traced a sample of dividends received to bank statements.
To test for completeness, we tested that the appropriate dividends
had been received in the year by reference to independent data of
dividends declared for all dividends during the year for all
investments.
We tested the allocation and presentation of dividend income
between the revenue and capital return columns of the Statement of
Comprehensive Income in line with the requirements set out in the
AIC SORP by determining the reasons behind dividend distributions.
Gains/losses on investments at fair value through profit
or loss
The gains/losses on investments held at fair value comprise realised
and unrealised gains/losses.
For unrealised gains and losses, we tested the valuation of the
portfolio at the year end, together with testing the reconciliation of
opening and closing investments, thereby we have assessed the
accuracy of the gains/losses recorded.
We have also verified the occurrence of the gains/losses through our
testing of the existence of investments.
For realised gains/losses, we tested a sample of disposals by
agreeing the proceeds to bank statements in order to verify the
occurrence of the gain/loss. We re-performed the calculation of a
sample of realised gains/losses in order to assess the accuracy of the
gains/losses recorded.
Based on the audit procedures performed and evidence obtained, we
concluded that income from and gains on investments was not
materially misstated.
We tested the valuation of the listed investments by agreeing the
prices used in the valuation to independent third party sources.
We tested the existence of the listed investments by agreeing the
holdings to an independent confirmation from the Custodian, as at
31 August 2024.
No material misstatements were identified from this testing.
Valuation and existence of investments at fair value through
profit or loss
Refer to Note 1 Material Accounting Policies and Note 10 Investments
at fair value through profit or loss.
The investment portfolio at 31 August 2024 comprised listed equity
investments. We focused on the valuation and existence of
investments because investments represent the principal element of
the net asset value as disclosed in the Balance Sheet in the financial
statements.
Schroder Oriental Income Fund Limited 47
Introduction Strategic Report Governance Financial Other Information (Unaudited)
48
Schroder
Oriental Income Fund Limited
Independent Auditor’s Report
to the Members of Schroder Oriental Income Fund Limited
continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
company, the accounting processes and controls, and the industry in
which it operates.
The company is a standalone authorised, closed-ended investment
company that has outsourced the management of its assets to the
Manager. The Manager has delegated investment management,
administrative, accounting and company secretarial services to
Investment Manager, who sub-delegated certain accounting and
administrative services to the Administrator. We applied professional
judgement to determine the extent of testing required over each
balance in the financial statements and obtained our audit evidence
which was substantive in nature from the Manager, Investment
Manager and the Administrator.
The impact of climate risk on our audit
In conducting our audit, we made enquiries of the Directors and the
Investment Manager to understand the extent of the potential impact
of climate change risk on the company’s financial statements. The
Directors and Investment Manager concluded that the impact on the
measurement and disclosures within the financial statements is not
material because the company’s investment portfolio is made up of
level 1 quoted securities which are valued at fair value based on
market prices. We found this to be consistent with our understanding
of the company’s investment activities. We also considered the
consistency of the climate change disclosures included in the
Strategic Report with the financial statements and our knowledge
from our audit.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items
and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we
use performance materiality in determining the scope of our audit
and the nature and extent of our testing of account balances, classes
of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2023: 75%) of overall
materiality, amounting to £5,252,000 (2023: £4,861,000) for the
company financial statements.
In determining the performance materiality, we considered a number
of factors - the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls - and concluded
that an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit and Risk Committee that we would report
to them misstatements identified during our audit above £350,000
(2023: 324,000) as well as misstatements below that amount that, in
our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the company’s ability to
continue to adopt the going concern basis of accounting included:
– evaluating the directors’ updated risk assessment and
considering whether it addressed relevant threats;
– evaluating the directors’ assessment of potential operational
impacts, considering their consistency with other available
information and our understanding of the business and
assessed the potential impact on the financial statements;
– reviewing the directors’ assessment of the company’s financial
position in the context of its ability to meet future expected
operating expenses and debt repayments, their assessment of
liquidity as well as their review of the operational resilience of the
company and oversight of key third-party service providers; and
– assessing the premium/discount at which the company’s share
price trades compared to the net asset value per share.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company’s ability to continue as a going concern for a period of at
least 12 months from when the financial statements are authorised
for issue.
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the company’s
ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of this
report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an
Rationale for
benchmark
applied
We believe that net assets is the primary
measure used by the shareholders in assessing
the performance of the company, and is a
generally accepted auditing benchmark. This
benchmark provides an appropriate and
consistent year on year basis for our audit.
Overall company
materiality
£7,003,000 (2023: £6,482,000).
How we
determined it
Approximately 1% of net assets.
Independent Auditor’s Report
to the Members of Schroder Oriental Income Fund Limited
continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
company, the accounting processes and controls, and the industry in
which it operates.
The company is a standalone authorised, closed-ended investment
company that has outsourced the management of its assets to the
Manager. The Manager has delegated investment management,
administrative, accounting and company secretarial services to
Investment Manager, who sub-delegated certain accounting and
administrative services to the Administrator. We applied professional
judgement to determine the extent of testing required over each
balance in the financial statements and obtained our audit evidence
which was substantive in nature from the Manager, Investment
Manager and the Administrator.
The impact of climate risk on our audit
In conducting our audit, we made enquiries of the Directors and the
Investment Manager to understand the extent of the potential impact
of climate change risk on the company’s financial statements. The
Directors and Investment Manager concluded that the impact on the
measurement and disclosures within the financial statements is not
material because the company’s investment portfolio is made up of
level 1 quoted securities which are valued at fair value based on
market prices. We found this to be consistent with our understanding
of the company’s investment activities. We also considered the
consistency of the climate change disclosures included in the
Strategic Report with the financial statements and our knowledge
from our audit.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items
and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we
use performance materiality in determining the scope of our audit
and the nature and extent of our testing of account balances, classes
of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2023: 75%) of overall
materiality, amounting to £5,252,000 (2023: £4,861,000) for the
company financial statements.
In determining the performance materiality, we considered a number
of factors - the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls - and concluded
that an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit and Risk Committee that we would report
to them misstatements identified during our audit above £350,000
(2023: 324,000) as well as misstatements below that amount that, in
our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the company’s ability to
continue to adopt the going concern basis of accounting included:
– evaluating the directors’ updated risk assessment and
considering whether it addressed relevant threats;
– evaluating the directors’ assessment of potential operational
impacts, considering their consistency with other available
information and our understanding of the business and
assessed the potential impact on the financial statements;
– reviewing the directors’ assessment of the company’s financial
position in the context of its ability to meet future expected
operating expenses and debt repayments, their assessment of
liquidity as well as their review of the operational resilience of the
company and oversight of key third-party service providers; and
– assessing the premium/discount at which the company’s share
price trades compared to the net asset value per share.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company’s ability to continue as a going concern for a period of at
least 12 months from when the financial statements are authorised
for issue.
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the company’s
ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of this
report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an
Rationale for
benchmark
applied
We believe that net assets is the primary
measure used by the shareholders in assessing
the performance of the company, and is a
generally accepted auditing benchmark. This
benchmark provides an appropriate and
consistent year on year basis for our audit.
Overall company
materiality
£7,003,000 (2023: £6,482,000).
How we
determined it
Approximately 1% of net assets.
apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to
the corporate governance statement as other information are
described in the Reporting on other information section of this
report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
– The directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or
mitigated;
– The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the company’s
ability to continue to do so over a period of at least 12 months
from the date of approval of the financial statements;
– The directors’ explanation as to their assessment of the
company’s prospects, the period this assessment covers and why
the period is appropriate; and
– The directors’ statement as to whether they have a reasonable
expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period
of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term
viability of the company was substantially less in scope than an audit
and only consisted of making inquiries and considering the directors’
process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate
Governance Code; and considering whether the statement is
consistent with the financial statements and our knowledge and
understanding of the company and its environment obtained in the
course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
– The directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess
the company’s position, performance, business model and
strategy;
– The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems;
and
– The section of the Annual Report describing the work of the
Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report
when the directors’ statement relating to the company’s compliance
with the Code does not properly disclose a departure from a relevant
provision of the Code specified under the Listing Rules for review by
the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors’ Responsibilities,
the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The directors are
also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either
intend to liquidate the company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the company and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to breaches of section 1158 of the Corporation
Tax Act 2010, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on
the financial statements such as the Companies (Guernsey) Law,
2008. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk
of override of controls), and determined that the principal risks were
related to posting inappropriate journal entries to increase revenue
(investment income and capital gains) or to increase net asset value.
Audit procedures performed by the engagement team included:
Schroder Oriental Income Fund Limited 49
Introduction Strategic Report Governance Financial Other Information (Unaudited)
required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to
the corporate governance statement as other information are
described in the Reporting on other information section of this
report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
– The directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or
mitigated;
– The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the company’s
ability to continue to do so over a period of at least 12 months
from the date of approval of the financial statements;
– The directors’ explanation as to their assessment of the
company’s prospects, the period this assessment covers and why
the period is appropriate; and
– The directors’ statement as to whether they have a reasonable
expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period
of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term
viability of the company was substantially less in scope than an audit
and only consisted of making inquiries and considering the directors’
process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate
Governance Code; and considering whether the statement is
consistent with the financial statements and our knowledge and
understanding of the company and its environment obtained in the
course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
– The directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess
the company’s position, performance, business model and
strategy;
– The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems;
and
– The section of the Annual Report describing the work of the
Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report
when the directors’ statement relating to the company’s compliance
with the Code does not properly disclose a departure from a relevant
provision of the Code specified under the Listing Rules for review by
the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors’ Responsibilities,
the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The directors are
also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either
intend to liquidate the company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the company and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to breaches of section 1158 of the Corporation
Tax Act 2010, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on
the financial statements such as the Companies (Guernsey) Law,
2008. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk
of override of controls), and determined that the principal risks were
related to posting inappropriate journal entries to increase revenue
(investment income and capital gains) or to increase net asset value.
Audit procedures performed by the engagement team included:
Schroder Oriental Income Fund Limited 49
Introduction Strategic Report Governance Financial Other Information (Unaudited)
50
Schroder
Oriental Income Fund Limited
Independent Auditor’s Report
to the Members of Schroder Oriental Income Fund Limited
continued
– discussions with the Manager and the Audit and Risk Committee,
including specific enquiry of known or suspected instances of
non-compliance with laws and regulation and fraud where
applicable;
– reviewing relevant meeting minutes, including those of the Audit
and Risk Committee;
– assessment of the company’s compliance with the requirements
of section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
– identifying and testing journal entries, in particular any material
or revenue-impacting manual journal entries posted as part of
the Financial Statement preparation process; and
– designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to
events and transactions reflected in the financial statements. Also, the
risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of
items for testing, rather than testing complete populations. We will
often seek to target particular items for testing based on their size or
risk characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only
for the company’s members as a body in accordance with Section 262
of The Companies (Guernsey) Law, 2008 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Other required reporting
The Companies (Guernsey) Law, 2008 exception
reporting
Under The Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
– we have not obtained all the information and explanations we
require for our audit; or
– proper accounting records have not been kept by the company;
or
– the financial statements are not in agreement with the
accounting records.
We have no exceptions to report arising from this responsibility.
Colleen Local
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Recognised Auditor
London
23 October 2024
Independent Auditor’s Report
to the Members of Schroder Oriental Income Fund Limited
continued
– discussions with the Manager and the Audit and Risk Committee,
including specific enquiry of known or suspected instances of
non-compliance with laws and regulation and fraud where
applicable;
– reviewing relevant meeting minutes, including those of the Audit
and Risk Committee;
– assessment of the company’s compliance with the requirements
of section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
– identifying and testing journal entries, in particular any material
or revenue-impacting manual journal entries posted as part of
the Financial Statement preparation process; and
– designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to
events and transactions reflected in the financial statements. Also, the
risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of
items for testing, rather than testing complete populations. We will
often seek to target particular items for testing based on their size or
risk characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only
for the company’s members as a body in accordance with Section 262
of The Companies (Guernsey) Law, 2008 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Other required reporting
The Companies (Guernsey) Law, 2008 exception
reporting
Under The Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
– we have not obtained all the information and explanations we
require for our audit; or
– proper accounting records have not been kept by the company;
or
– the financial statements are not in agreement with the
accounting records.
We have no exceptions to report arising from this responsibility.
Colleen Local
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Recognised Auditor
London
23 October 2024
Schroder
Oriental Income Fund Limited
51
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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)
Net foreign currency gains – 1,266 1,266 – 3,262 3,262
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 on pages 55 to 67 form an integral part of these financial statements.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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)
Net foreign currency gains – 1,266 1,266 – 3,262 3,262
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 on pages 55 to 67 form an integral part of these financial statements.
52
Schroder
Oriental Income Fund Limited
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 on pages 55 to 67 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 on pages 55 to 67 form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 31 August 2024
Schroder
Oriental Income Fund Limited
53
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on pages 51 to 54 were approved by the Board of Directors on 23 October 2024 and signed on its behalf by:
Paul Meader
Director
The notes on pages 55 to 67 form an integral part of these financial statements.
Registered in Guernsey as a company limited by shares
Company registration number: 43298
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on pages 51 to 54 were approved by the Board of Directors on 23 October 2024 and signed on its behalf by:
Paul Meader
Director
The notes on pages 55 to 67 form an integral part of these financial statements.
Registered in Guernsey as a company limited by shares
Company registration number: 43298
54
Schroder
Oriental Income Fund Limited
2024 2023
Note £’000 £’000
Operating activities
Profit/(loss) before finance costs and taxation 114,981 (21,523)
Adjustments for:
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 on pages 55 to 67 form an integral part of these financial statements.
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)
Adjustments for:
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 on pages 55 to 67 form an integral part of these financial statements.
Cash Flow Statement
for the year ended 31 August 2024
Schroder
Oriental Income Fund Limited
55
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on page 24.
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.
Notes to the Accounts
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on page 24.
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.
Notes to the Accounts
56
Schroder
Oriental Income Fund Limited
Notes to the Accounts
continued
1. Material accounting policies continued
(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 on page 59.
(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 previous Balance Sheet date 9,716 (3,580)
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)
Notes to the Accounts
continued
1. Material accounting policies continued
(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 on page 59.
(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 previous Balance Sheet date 9,716 (3,580)
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)
Schroder
Oriental Income Fund Limited
57
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 on pages 32 to 33.
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).
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on pages 32 to 33.
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).
Introduction Strategic Report Governance Financial Other Information (Unaudited)
58
Schroder
Oriental Income Fund Limited
7. Taxation continued
(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 deductible – (22,743) (22,743) – 11,290 11,290
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.
Notes to the Accounts
continued
7. Taxation continued
(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 deductible – (22,743) (22,743) – 11,290 11,290
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.
Notes to the Accounts
continued
Schroder
Oriental Income Fund Limited
59
(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
Introduction Strategic Report Governance Financial Other Information (Unaudited)
(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
Introduction Strategic Report Governance Financial Other Information (Unaudited)
60
Schroder
Oriental Income Fund Limited
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 on page 64.
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 held in treasury 188,229 208,356
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 treasury 159,222 188,229
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.
Notes to the Accounts
continued
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 on page 64.
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 held in treasury 188,229 208,356
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 treasury 159,222 188,229
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.
Notes to the Accounts
continued
Schroder
Oriental Income Fund Limited
61
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).
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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).
Introduction Strategic Report Governance Financial Other Information (Unaudited)
62
Schroder
Oriental Income Fund Limited
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 on page 32. 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 on page 41 and details of directors’
shareholdings are given in the Directors’ Remuneration Report on page 42. 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) on page 55.
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.
Notes to the Accounts
continued
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 on page 32. 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 on page 41 and details of directors’
shareholdings are given in the Directors’ Remuneration Report on page 42. 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) on page 55.
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.
Notes to the Accounts
continued
Schroder
Oriental Income Fund Limited
63
(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 – – (37,524) (366) (32,996)
Investments at fair value
through profit or loss
1
7,986 132,790 110,040 111,422 163,787 7,977 – 16,355 154,185 704,542
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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
(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 – – (37,524) (366) (32,996)
Investments at fair value
through profit or loss
1
7,986 132,790 110,040 111,422 163,787 7,977 – 16,355 154,185 704,542
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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
64
Schroder
Oriental Income Fund Limited
20. Financial instruments’ exposure to risk and risk management policies continued
(a) Market risk continued
(i) Currency risk continued
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 on page 65.
(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.
Notes to the Accounts
continued
20. Financial instruments’ exposure to risk and risk management policies continued
(a) Market risk continued
(i) Currency risk continued
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 on page 65.
(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.
Notes to the Accounts
continued
Schroder
Oriental Income Fund Limited
65
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 on page 15. 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)
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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 on page 15. 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)
Introduction Strategic Report Governance Financial Other Information (Unaudited)
66
Schroder
Oriental Income Fund Limited
20. Financial instruments’ exposure to risk and risk management policies continued
(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.
Notes to the Accounts
continued
20. Financial instruments’ exposure to risk and risk management policies continued
(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.
Notes to the Accounts
continued
Schroder
Oriental Income Fund Limited
67
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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
68
69
Other
Information
(Unaudited)
Other Information (Unaudited)
Annual General Meeting – Recommendations 70
Notice of Annual General Meeting 71
Explanatory Notes to the Notice of Meeting 72
Definitions of Terms and Performance Measures 73
Shareholder Information 75
Risk Disclosures 77
Information about the Company 78
Other
Information
(Unaudited)
Other Information (Unaudited)
Annual General Meeting – Recommendations 70
Notice of Annual General Meeting 71
Explanatory Notes to the Notice of Meeting 72
Definitions of Terms and Performance Measures 73
Shareholder Information 75
Risk Disclosures 77
Information about the Company 78
70
Schroder
Oriental Income Fund Limited
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will be
held on Tuesday, 3 December 2024 at 12.00 pm. The formal
Notice of Meeting is set out on page 71.
The following information is important and requires your
immediate attention. If you are in any doubt about the action
you should take, you should consult an independent financial
adviser, authorised under the Financial Services and Markets Act
2000. If you have sold or transferred all of your ordinary shares
in the Company, please forward this document with its
accompanying form of proxy at once to the purchaser or
transferee, or to the stockbroker, bank or other agent through
whom the sale or transfer was effected, for onward transmission
to the purchaser or transferee.
Ordinary business
Resolutions 1 to 8 are all ordinary resolutions. Resolution 2 concerns
the Directors’ Remuneration Report, on pages 41 to 43.
Resolutions 3 to 6 invite Shareholders to elect and re-elect directors
for another year, following the recommendations of the Nomination
and Remuneration Committee, set out on pages 39 and 40 (their
biographies are set out on pages 30 and 31). Resolutions 7 and 8
concern the re-appointment and remuneration of the Company’s
auditors, discussed in the Audit and Risk Committee report on
pages 35 to 37.
Special business
Resolution 9 – approval of the Company’s dividend
policy (ordinary resolution)
In line with corporate governance best practice the Board is putting
the Company’s dividend policy to Shareholders for approval. No
change to the Company’s dividend policy is proposed at this time.
Resolution 10 – authority to make market purchases of
the Company’s own shares (special resolution)
At the AGM held on 4 December 2023, the Company was granted
authority to make market purchases of up to 37,620,856 ordinary
shares for cancellation or holding in treasury. As at 22 October 2024,
15,625,000 ordinary shares were bought back under this authority
and the Company therefore has remaining authority to purchase up
to 12,675,000 ordinary shares. This authority will expire at the
forthcoming AGM.
The directors believe it is in the best interests of the Company and its
Shareholders to have a general authority for the Company to buy
back its ordinary shares in the market as they keep under review the
share price discount to NAV per share and the purchase of ordinary
shares. A special resolution will be proposed at the forthcoming AGM
to give the Company authority to make market purchases of up to
14.99% of the ordinary shares in issue as at 22 October 2024
(excluding treasury shares). The directors will exercise this authority
only if the directors consider that any purchase would be for the
benefit of the Company and its Shareholders, taking into account
relevant factors and circumstances at the time. Any shares so
purchased would be cancelled or held in treasury for potential
reissue. If renewed, the authority to be given at the 2024 AGM will
lapse at the conclusion of the AGM in 2025 unless renewed, varied or
revoked earlier.
Resolution 11 – disapplication of pre-emption rights
(extraordinary resolution)
The directors are seeking authority to allot a limited number of
unissued ordinary shares for cash without first offering them to
existing Shareholders in accordance with statutory pre-emption
procedures.
An extraordinary resolution will be proposed at the forthcoming AGM
to authorise the directors to allot shares up to a maximum aggregate
nominal amount of £237,568 (being 10% of the issued share capital
ex treasury as at 22 October 2024) and to give the directors authority
to allot securities for cash on a non pre-emptive basis up to a
maximum aggregate nominal amount of £237,568 (being 10% of the
Company’s issued share capital ex treasury as at 22 October 2024).
The directors do not intend to allot shares pursuant to these
authorities other than to take advantage of opportunities in the
market as they arise and only if they believe it to be advantageous to
the Company’s existing Shareholders to do so and when it should not
result in any dilution of NAV per share. If approved, both of these
authorities will expire at the conclusion of the AGM in 2025 unless
renewed, varied or revoked earlier.
Recommendations
The Board considers that the resolutions relating to the above items
of business are in the best interests of Shareholders as a whole.
Accordingly, the Board unanimously recommends to Shareholders
that they vote in favour of the above resolutions and the other
resolutions to be proposed at the forthcoming AGM, as they intend to
do in respect of their own beneficial holdings.
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will be
held on Tuesday, 3 December 2024 at 12.00 pm. The formal
Notice of Meeting is set out on page 71.
The following information is important and requires your
immediate attention. If you are in any doubt about the action
you should take, you should consult an independent financial
adviser, authorised under the Financial Services and Markets Act
2000. If you have sold or transferred all of your ordinary shares
in the Company, please forward this document with its
accompanying form of proxy at once to the purchaser or
transferee, or to the stockbroker, bank or other agent through
whom the sale or transfer was effected, for onward transmission
to the purchaser or transferee.
Ordinary business
Resolutions 1 to 8 are all ordinary resolutions. Resolution 2 concerns
the Directors’ Remuneration Report, on pages 41 to 43.
Resolutions 3 to 6 invite Shareholders to elect and re-elect directors
for another year, following the recommendations of the Nomination
and Remuneration Committee, set out on pages 39 and 40 (their
biographies are set out on pages 30 and 31). Resolutions 7 and 8
concern the re-appointment and remuneration of the Company’s
auditors, discussed in the Audit and Risk Committee report on
pages 35 to 37.
Special business
Resolution 9 – approval of the Company’s dividend
policy (ordinary resolution)
In line with corporate governance best practice the Board is putting
the Company’s dividend policy to Shareholders for approval. No
change to the Company’s dividend policy is proposed at this time.
Resolution 10 – authority to make market purchases of
the Company’s own shares (special resolution)
At the AGM held on 4 December 2023, the Company was granted
authority to make market purchases of up to 37,620,856 ordinary
shares for cancellation or holding in treasury. As at 22 October 2024,
15,625,000 ordinary shares were bought back under this authority
and the Company therefore has remaining authority to purchase up
to 12,675,000 ordinary shares. This authority will expire at the
forthcoming AGM.
The directors believe it is in the best interests of the Company and its
Shareholders to have a general authority for the Company to buy
back its ordinary shares in the market as they keep under review the
share price discount to NAV per share and the purchase of ordinary
shares. A special resolution will be proposed at the forthcoming AGM
to give the Company authority to make market purchases of up to
14.99% of the ordinary shares in issue as at 22 October 2024
(excluding treasury shares). The directors will exercise this authority
only if the directors consider that any purchase would be for the
benefit of the Company and its Shareholders, taking into account
relevant factors and circumstances at the time. Any shares so
purchased would be cancelled or held in treasury for potential
reissue. If renewed, the authority to be given at the 2024 AGM will
lapse at the conclusion of the AGM in 2025 unless renewed, varied or
revoked earlier.
Resolution 11 – disapplication of pre-emption rights
(extraordinary resolution)
The directors are seeking authority to allot a limited number of
unissued ordinary shares for cash without first offering them to
existing Shareholders in accordance with statutory pre-emption
procedures.
An extraordinary resolution will be proposed at the forthcoming AGM
to authorise the directors to allot shares up to a maximum aggregate
nominal amount of £237,568 (being 10% of the issued share capital
ex treasury as at 22 October 2024) and to give the directors authority
to allot securities for cash on a non pre-emptive basis up to a
maximum aggregate nominal amount of £237,568 (being 10% of the
Company’s issued share capital ex treasury as at 22 October 2024).
The directors do not intend to allot shares pursuant to these
authorities other than to take advantage of opportunities in the
market as they arise and only if they believe it to be advantageous to
the Company’s existing Shareholders to do so and when it should not
result in any dilution of NAV per share. If approved, both of these
authorities will expire at the conclusion of the AGM in 2025 unless
renewed, varied or revoked earlier.
Recommendations
The Board considers that the resolutions relating to the above items
of business are in the best interests of Shareholders as a whole.
Accordingly, the Board unanimously recommends to Shareholders
that they vote in favour of the above resolutions and the other
resolutions to be proposed at the forthcoming AGM, as they intend to
do in respect of their own beneficial holdings.
NOTICE is hereby given that the annual general meeting of Schroder
Oriental Income Fund Limited will be held on 3 December 2024 at
12.00 pm at 1 London Wall Place, London EC2Y 5AU to consider and,
if thought fit, to pass the following resolutions, of which resolutions 1
to 9 will be proposed as ordinary resolutions. Resolution 10 will be
proposed as a special resolution and resolution 11 will be proposed
as an extraordinary resolution:
1. To receive the Directors’ Report and the audited accounts for the
year ended 31 August 2024.
2. To approve the Directors’ Remuneration Report for the year
ended 31 August 2024.
3. To approve the election of Sam Davis as a director of the
Company.
4. To approve the re-election of Alexa Coates as a director of the
Company.
5. To approve the re-election of Isabel Liu as a director of the
Company.
6. To approve the re-election of Nick Winsor as a director of the
Company.
7. To re-appoint PricewaterhouseCoopers LLP as the Company’s
auditors.
8. To authorise the directors to determine the remuneration of
PricewaterhouseCoopers LLP as auditors to the Company.
9. To approve the Company’s dividend policy as set out on page 19
of the Annual Report and Accounts.
10. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“That the Company be and is hereby generally and
unconditionally authorised in accordance with section 315 of The
Companies (Guernsey) Law, 2008 (as amended), to make market
purchases of ordinary shares of 1p each in the capital of the
Company (“Share”) at whatever discount the prevailing market
price represents to the prevailing net asset value per share,
provided that:
(a) the maximum number of Shares hereby authorised to be
purchased shall be 35,611,447, representing 14.99% of the
issued share capital (ex treasury) as at 22 October 2024;
(b) the maximum price (exclusive of expenses) which may be
paid for a Share shall not exceed the higher of
(i) 105% of the average of the middle market quotations
for the Shares as taken from the London Stock
Exchange Daily Official List for the five business days
immediately preceding the date of purchase; and
(ii) the higher of the last independent bid and the highest
current independent bid on the London Stock
Exchange;
(c) the minimum price which may be paid for a Share is 1p,
being the nominal value per Share;
(d) the authority hereby conferred shall expire at the conclusion
of the next annual general meeting of the Company in 2025
(unless previously renewed, varied or revoked prior to such
date);
(e) the Company may make a contract to purchase Shares
under the authority hereby conferred which will or may be
executed wholly or partly after the expiration of such
authority and may make a purchase of Shares pursuant to
any such contract; and
(f) Any Shares so purchased will be held in treasury or
cancelled.”
11. To consider and, if thought fit pass the following as an
extraordinary resolution:
“That the Board be and is hereby authorised in accordance with
Section 291 of The Companies (Guernsey) Law, 2008 (as
amended) to allot ordinary shares for cash and/or sell treasury
shares up to 23,756,802 ordinary shares of 1p each in aggregate,
representing 10% of the share capital in issue (ex treasury) on
22 October 2024, for cash and the right of Shareholders to
receive a pre-emptive offer in respect of such ordinary shares
shall be excluded pursuant to Article 3.24 of the Company’s
articles of incorporation, provided that this authority shall expire
(unless previously renewed, varied or revoked by the Company in
general meeting) from the conclusion of the annual general
meeting of the Company to be held in 2025 save that the Board
may allot ordinary shares for cash or sell treasury shares after
the expiry of this authority in pursuance of an offer or agreement
made by the Company before such expiry that would or might
require ordinary shares to be allotted or treasury shares to be
sold after such expiry.”
Schroder Oriental Income Fund Limited 71
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Notice of Annual General Meeting
By order of the Board PO Box 208
For and on behalf of Arnold House
St Julian’s Avenue
Schroder Investment Management Limited St Peter Port
Company Secretary Guernsey GY1 3NF
23 October 2024 Registered Number: 43298
Oriental Income Fund Limited will be held on 3 December 2024 at
12.00 pm at 1 London Wall Place, London EC2Y 5AU to consider and,
if thought fit, to pass the following resolutions, of which resolutions 1
to 9 will be proposed as ordinary resolutions. Resolution 10 will be
proposed as a special resolution and resolution 11 will be proposed
as an extraordinary resolution:
1. To receive the Directors’ Report and the audited accounts for the
year ended 31 August 2024.
2. To approve the Directors’ Remuneration Report for the year
ended 31 August 2024.
3. To approve the election of Sam Davis as a director of the
Company.
4. To approve the re-election of Alexa Coates as a director of the
Company.
5. To approve the re-election of Isabel Liu as a director of the
Company.
6. To approve the re-election of Nick Winsor as a director of the
Company.
7. To re-appoint PricewaterhouseCoopers LLP as the Company’s
auditors.
8. To authorise the directors to determine the remuneration of
PricewaterhouseCoopers LLP as auditors to the Company.
9. To approve the Company’s dividend policy as set out on page 19
of the Annual Report and Accounts.
10. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“That the Company be and is hereby generally and
unconditionally authorised in accordance with section 315 of The
Companies (Guernsey) Law, 2008 (as amended), to make market
purchases of ordinary shares of 1p each in the capital of the
Company (“Share”) at whatever discount the prevailing market
price represents to the prevailing net asset value per share,
provided that:
(a) the maximum number of Shares hereby authorised to be
purchased shall be 35,611,447, representing 14.99% of the
issued share capital (ex treasury) as at 22 October 2024;
(b) the maximum price (exclusive of expenses) which may be
paid for a Share shall not exceed the higher of
(i) 105% of the average of the middle market quotations
for the Shares as taken from the London Stock
Exchange Daily Official List for the five business days
immediately preceding the date of purchase; and
(ii) the higher of the last independent bid and the highest
current independent bid on the London Stock
Exchange;
(c) the minimum price which may be paid for a Share is 1p,
being the nominal value per Share;
(d) the authority hereby conferred shall expire at the conclusion
of the next annual general meeting of the Company in 2025
(unless previously renewed, varied or revoked prior to such
date);
(e) the Company may make a contract to purchase Shares
under the authority hereby conferred which will or may be
executed wholly or partly after the expiration of such
authority and may make a purchase of Shares pursuant to
any such contract; and
(f) Any Shares so purchased will be held in treasury or
cancelled.”
11. To consider and, if thought fit pass the following as an
extraordinary resolution:
“That the Board be and is hereby authorised in accordance with
Section 291 of The Companies (Guernsey) Law, 2008 (as
amended) to allot ordinary shares for cash and/or sell treasury
shares up to 23,756,802 ordinary shares of 1p each in aggregate,
representing 10% of the share capital in issue (ex treasury) on
22 October 2024, for cash and the right of Shareholders to
receive a pre-emptive offer in respect of such ordinary shares
shall be excluded pursuant to Article 3.24 of the Company’s
articles of incorporation, provided that this authority shall expire
(unless previously renewed, varied or revoked by the Company in
general meeting) from the conclusion of the annual general
meeting of the Company to be held in 2025 save that the Board
may allot ordinary shares for cash or sell treasury shares after
the expiry of this authority in pursuance of an offer or agreement
made by the Company before such expiry that would or might
require ordinary shares to be allotted or treasury shares to be
sold after such expiry.”
Schroder Oriental Income Fund Limited 71
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Notice of Annual General Meeting
By order of the Board PO Box 208
For and on behalf of Arnold House
St Julian’s Avenue
Schroder Investment Management Limited St Peter Port
Company Secretary Guernsey GY1 3NF
23 October 2024 Registered Number: 43298
72
Schroder
Oriental Income Fund Limited
1. An ordinary shareholder entitled to attend and vote at the
meeting is entitled to appoint one or more proxies to attend and
(insofar as permitted by the Company’s articles of incorporation)
to vote instead of him/her.
A proxy need not be a member. A form of proxy is enclosed for
Ordinary Shareholders which should be completed and returned
to the Company’s registrar, care of Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY,
not later than 48 hours before the time fixed for the meeting.
Completion of the proxy will not preclude an ordinary
shareholder from attending and voting in person.
To appoint more than one proxy, an additional proxy form(s)
may be obtained by contacting the Registrar’s helpline on
0370 707 4040 or you may photocopy this form. Please indicate
in the box next to the proxy holder’s name (see reverse) the
number of shares in relation to which they are authorised to act
as your proxy. Please also indicate by marking the box provided if
the proxy instruction is one of multiple instructions being given.
All forms must be signed and should be returned together in the
same envelope.
2. The biographies of each of the directors offering themselves for
re-election are set out on pages 30 and 31 of the annual report
and accounts for the year ended 31 August 2024.
3. As at 22 October 2024, the Company had 271,233,024 ordinary
shares of 1p each in issue (33,665,000 shares were held in
treasury). Accordingly, the total number of voting rights in the
Company on 22 October 2024, was 237,568,024.
4. The Company’s privacy policy is available on its webpages
http://www.schroders.co.uk/orientalincome. Shareholders can
contact Computershare for details of how Computershare
processes their personal information as part of the AGM.
5. The ‘Vote Withheld‘ option overleaf is provided to enable you to
abstain on any particular resolution. However, it should be noted
that a ‘Vote Withheld‘ is not a vote in law and will not be counted
in the calculation of the proportion of the votes ‘For‘ and ‘Against‘
a resolution.
6. Pursuant to Regulation 41 of the Uncertificated Securities
(Guernsey) Regulations 2009, entitlement to attend and vote at
the meeting and the number of votes which may be cast thereat
will be determined by reference to the Register of Members of
the Company at close of business on the day which is two days
before the day of the meeting. Changes to entries on the
Register of Members after that time shall be disregarded in
determining the rights of any person to attend and vote at the
meeting.
7. To appoint one or more proxies or to give an instruction to a
proxy (whether previously appointed or otherwise) via the CREST
system, CREST messages must be received by the issuer’s agent
(ID number 3RA50) not later than two working days (excluding
non working days) before the time appointed for holding the
meeting. For this purpose, the time of receipt will be taken to be
the time (as determined by the timestamp generated by the
CREST system) from which the issuer’s agent is able to retrieve
the message. The Company may treat as invalid a proxy
appointment sent by CREST in the circumstances set out in
Regulation 34(1) of the Uncertificated Securities (Guernsey)
Regulations 2009.
Explanatory Notes to the Notice of Meeting
1. An ordinary shareholder entitled to attend and vote at the
meeting is entitled to appoint one or more proxies to attend and
(insofar as permitted by the Company’s articles of incorporation)
to vote instead of him/her.
A proxy need not be a member. A form of proxy is enclosed for
Ordinary Shareholders which should be completed and returned
to the Company’s registrar, care of Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY,
not later than 48 hours before the time fixed for the meeting.
Completion of the proxy will not preclude an ordinary
shareholder from attending and voting in person.
To appoint more than one proxy, an additional proxy form(s)
may be obtained by contacting the Registrar’s helpline on
0370 707 4040 or you may photocopy this form. Please indicate
in the box next to the proxy holder’s name (see reverse) the
number of shares in relation to which they are authorised to act
as your proxy. Please also indicate by marking the box provided if
the proxy instruction is one of multiple instructions being given.
All forms must be signed and should be returned together in the
same envelope.
2. The biographies of each of the directors offering themselves for
re-election are set out on pages 30 and 31 of the annual report
and accounts for the year ended 31 August 2024.
3. As at 22 October 2024, the Company had 271,233,024 ordinary
shares of 1p each in issue (33,665,000 shares were held in
treasury). Accordingly, the total number of voting rights in the
Company on 22 October 2024, was 237,568,024.
4. The Company’s privacy policy is available on its webpages
http://www.schroders.co.uk/orientalincome. Shareholders can
contact Computershare for details of how Computershare
processes their personal information as part of the AGM.
5. The ‘Vote Withheld‘ option overleaf is provided to enable you to
abstain on any particular resolution. However, it should be noted
that a ‘Vote Withheld‘ is not a vote in law and will not be counted
in the calculation of the proportion of the votes ‘For‘ and ‘Against‘
a resolution.
6. Pursuant to Regulation 41 of the Uncertificated Securities
(Guernsey) Regulations 2009, entitlement to attend and vote at
the meeting and the number of votes which may be cast thereat
will be determined by reference to the Register of Members of
the Company at close of business on the day which is two days
before the day of the meeting. Changes to entries on the
Register of Members after that time shall be disregarded in
determining the rights of any person to attend and vote at the
meeting.
7. To appoint one or more proxies or to give an instruction to a
proxy (whether previously appointed or otherwise) via the CREST
system, CREST messages must be received by the issuer’s agent
(ID number 3RA50) not later than two working days (excluding
non working days) before the time appointed for holding the
meeting. For this purpose, the time of receipt will be taken to be
the time (as determined by the timestamp generated by the
CREST system) from which the issuer’s agent is able to retrieve
the message. The Company may treat as invalid a proxy
appointment sent by CREST in the circumstances set out in
Regulation 34(1) of the Uncertificated Securities (Guernsey)
Regulations 2009.
Explanatory Notes to the Notice of Meeting
Schroder
Oriental Income Fund Limited
73
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Some of the
financial measures below are classified as Alternative
Performance Measures as defined by the European Securities
and Markets Authority, and some numerical calculations are
given for those.
Net asset value (“NAV”) per share*
The NAV per share of 289.63p (2023: 256.01p) represents the net
assets attributable to equity shareholders of £700,315,000 (2023:
£648,208,000) divided by the number of shares in issue of
241,798,024 (2023: 253,193,024).
The change in the NAV amounted to 13.1% (2023: -7.7%) over the
year. However, this performance measure excludes the positive
impact of dividends paid out by the Company during the year.
When these dividends are factored into the calculation, the resulting
performance measure is termed the “total return”. Total return
calculations and definitions are given below.
Total return*
The return on the share price or net asset value per ordinary share
taking into account the rise and fall of share prices and the dividends
paid to shareholders. Total return statistics enable the investor to
make performance comparisons between investment companies with
different dividend policies. Any dividends received by a shareholder
are assumed to have been reinvested in either the assets of the
Company at its NAV per share at the time the shares were quoted ex-
dividend (to calculate the NAV per share total return) or in additional
shares of the Company (to calculate the share price total return).
The NAV total return for the period ended 31 August 2024 is
calculated as follows:
NAV at 31/8/23 256.01p
NAV at 31/8/24 289.63p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.8p 16/11/23 257.58p 1.0225 1.0225
2.0p 01/02/24 256.89p 1.0078 1.0305
2.0p 25/04/24 274.13p 1.0073 1.0380
2.0p 18/07/24 292.21p 1.0068 1.0451
NAV total return, being the closing
NAV, multiplied by the cumulative
factor, expressed as a percentage
increase in the opening NAV 18.2%
The NAV total return for the year ended 31 August 2023 is calculated
as follows:
NAV at 31/8/22 277.24p
NAV at 31/8/23 256.01p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.6p 10/11/22 250.92p 1.0223 1.0223
2.0p 26/01/23 286.60p 1.0070 1.0296
2.0p 20/04/23 271.96p 1.0077 1.0370
2.0p 03/08/23 264.36p 1.0076 1.0449
NAV total return, being the closing
NAV, multiplied by the cumulative
factor, expressed as a percentage
increase in the opening NAV –3.5%
The share price total return for the year ended 31 August 2024 is
calculated as follows:
Share price at 31/8/23 244.50p
Share price at 31/8/24 269.00p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.8p 16/11/23 243.00p 1.0239 1.0239
2.0p 01/02/24 241.00p 1.0083 1.0324
2.0p 25/04/24 256.00p 1.0078 1.0404
2.0p 18/07/24 278.50p 1.0072 1.0479
Share price total return, being the closing
share price multiplied by the cumulative
factor, expressed as a percentage increase
in the opening share price 15.3%
The share price total return for the year ended 31 August 2023 is
calculated as follows:
Share price at 31/8/22 264.00p
Share price at 31/8/23 244.50p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.6p 10/11/22 248.00p 1.0226 1.0226
2.0p 26/01/23 277.50p 1.0072 1.0300
2.0p 20/04/23 260.00p 1.0077 1.0379
2.0p 03/08/23 252.50p 1.0079 1.0461
Share price total return, being the closing
share price multiplied by the cumulative
factor, expressed as a percentage increase
in the opening share price –3.1%
*Alternative Performance Measure.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Some of the
financial measures below are classified as Alternative
Performance Measures as defined by the European Securities
and Markets Authority, and some numerical calculations are
given for those.
Net asset value (“NAV”) per share*
The NAV per share of 289.63p (2023: 256.01p) represents the net
assets attributable to equity shareholders of £700,315,000 (2023:
£648,208,000) divided by the number of shares in issue of
241,798,024 (2023: 253,193,024).
The change in the NAV amounted to 13.1% (2023: -7.7%) over the
year. However, this performance measure excludes the positive
impact of dividends paid out by the Company during the year.
When these dividends are factored into the calculation, the resulting
performance measure is termed the “total return”. Total return
calculations and definitions are given below.
Total return*
The return on the share price or net asset value per ordinary share
taking into account the rise and fall of share prices and the dividends
paid to shareholders. Total return statistics enable the investor to
make performance comparisons between investment companies with
different dividend policies. Any dividends received by a shareholder
are assumed to have been reinvested in either the assets of the
Company at its NAV per share at the time the shares were quoted ex-
dividend (to calculate the NAV per share total return) or in additional
shares of the Company (to calculate the share price total return).
The NAV total return for the period ended 31 August 2024 is
calculated as follows:
NAV at 31/8/23 256.01p
NAV at 31/8/24 289.63p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.8p 16/11/23 257.58p 1.0225 1.0225
2.0p 01/02/24 256.89p 1.0078 1.0305
2.0p 25/04/24 274.13p 1.0073 1.0380
2.0p 18/07/24 292.21p 1.0068 1.0451
NAV total return, being the closing
NAV, multiplied by the cumulative
factor, expressed as a percentage
increase in the opening NAV 18.2%
The NAV total return for the year ended 31 August 2023 is calculated
as follows:
NAV at 31/8/22 277.24p
NAV at 31/8/23 256.01p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.6p 10/11/22 250.92p 1.0223 1.0223
2.0p 26/01/23 286.60p 1.0070 1.0296
2.0p 20/04/23 271.96p 1.0077 1.0370
2.0p 03/08/23 264.36p 1.0076 1.0449
NAV total return, being the closing
NAV, multiplied by the cumulative
factor, expressed as a percentage
increase in the opening NAV –3.5%
The share price total return for the year ended 31 August 2024 is
calculated as follows:
Share price at 31/8/23 244.50p
Share price at 31/8/24 269.00p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.8p 16/11/23 243.00p 1.0239 1.0239
2.0p 01/02/24 241.00p 1.0083 1.0324
2.0p 25/04/24 256.00p 1.0078 1.0404
2.0p 18/07/24 278.50p 1.0072 1.0479
Share price total return, being the closing
share price multiplied by the cumulative
factor, expressed as a percentage increase
in the opening share price 15.3%
The share price total return for the year ended 31 August 2023 is
calculated as follows:
Share price at 31/8/22 264.00p
Share price at 31/8/23 244.50p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.6p 10/11/22 248.00p 1.0226 1.0226
2.0p 26/01/23 277.50p 1.0072 1.0300
2.0p 20/04/23 260.00p 1.0077 1.0379
2.0p 03/08/23 252.50p 1.0079 1.0461
Share price total return, being the closing
share price multiplied by the cumulative
factor, expressed as a percentage increase
in the opening share price –3.1%
*Alternative Performance Measure.
Discount/premium
The amount by which the share price of an investment trust is lower
(discount) or higher (premium) than the NAV per share. The discount
or premium is expressed as a percentage of the NAV per share. The
discount at the period end amounted to 7.1% (2023: 4.5%), as the
closing share price at 269.0p (2023: 244.50p) was lower than the
closing NAV of 289.63p (2023: 256.01p).
Gearing*
The gearing percentage reflects the amount of borrowings (i.e. bank
loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra amount by
which shareholders’ funds would move if the Company’s investments
were to rise or fall. Gearing is defined as: borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets. The gearing figure at the relevant period/year end is
calculated as follows:
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%
Leverage*
For the purpose of the Alternative Investment Fund Managers (AIFM)
Directive, leverage is any method which increases the Company’s
exposure, including the borrowing of cash and the use of derivatives.
It is expressed as the ratio of the Company’s exposure to its net asset
value and is required to be calculated both on a “Gross” and a
“Commitment” method. Under the Gross method, exposure
represents the sum of the absolute values of all positions, so as to
give an indication of overall exposure. Under the Commitment
method, exposure is calculated in a similar way, but after netting off
hedges which satisfy certain strict criteria.
The leverage ratios and limits at 31 August 2024 are presented on
page 75 under Shareholder Information.
Ongoing charges ratio*
Ongoing charges ratio is calculated in accordance with the AIC’s
recommended methodology and represents the management fee
and all other operating expenses excluding finance costs and
transaction costs, amounting to £5,937,000 (2023: £5,971,000),
expressed as a percentage of the average daily net asset values
during the period of £671,034,000 (2023: £678,708,000).
74 Schroder Oriental Income Fund Limited
Definitions of Terms and Alternative Performance Measures
continued
*Alternative Performance Measure.
The amount by which the share price of an investment trust is lower
(discount) or higher (premium) than the NAV per share. The discount
or premium is expressed as a percentage of the NAV per share. The
discount at the period end amounted to 7.1% (2023: 4.5%), as the
closing share price at 269.0p (2023: 244.50p) was lower than the
closing NAV of 289.63p (2023: 256.01p).
Gearing*
The gearing percentage reflects the amount of borrowings (i.e. bank
loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra amount by
which shareholders’ funds would move if the Company’s investments
were to rise or fall. Gearing is defined as: borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets. The gearing figure at the relevant period/year end is
calculated as follows:
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%
Leverage*
For the purpose of the Alternative Investment Fund Managers (AIFM)
Directive, leverage is any method which increases the Company’s
exposure, including the borrowing of cash and the use of derivatives.
It is expressed as the ratio of the Company’s exposure to its net asset
value and is required to be calculated both on a “Gross” and a
“Commitment” method. Under the Gross method, exposure
represents the sum of the absolute values of all positions, so as to
give an indication of overall exposure. Under the Commitment
method, exposure is calculated in a similar way, but after netting off
hedges which satisfy certain strict criteria.
The leverage ratios and limits at 31 August 2024 are presented on
page 75 under Shareholder Information.
Ongoing charges ratio*
Ongoing charges ratio is calculated in accordance with the AIC’s
recommended methodology and represents the management fee
and all other operating expenses excluding finance costs and
transaction costs, amounting to £5,937,000 (2023: £5,971,000),
expressed as a percentage of the average daily net asset values
during the period of £671,034,000 (2023: £678,708,000).
74 Schroder Oriental Income Fund Limited
Definitions of Terms and Alternative Performance Measures
continued
*Alternative Performance Measure.
Schroder
Oriental Income Fund Limited
75
Introduction Strategic Report Governance Financial Other Information (Unaudited) Introduction Strategic Report Governance Financial
*Alternative Performance Measure.
Shareholder Information
Web pages and share price information
The Company has dedicated webpages, which may be found at
www.schroders.co.uk/orientalincome. The webpages are the
Company’s primary method of electronic communication with
Shareholders. They contain details of the Company’s share price and
copies of the annual report and accounts and other documents
published by the Company as well as information on the directors,
terms of reference of committees and other governance
arrangements. In addition, the webpages contain links to
announcements made by the Company to the market and Schroders’
website. There is also a section entitled “How to Invest”.
The Company releases its NAV per share on both a cum and
ex-income basis to the market on a daily basis.
Share price information may also be found in the Financial Times and
on the Company’s webpages.
The Manager publishes monthly and quarterly updates on the
Company and other Schroders investment trusts, which may be
found under the “Literature” section on the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be found on
its website, www.theaic.co.uk.
Individual Savings Account (“ISA”) status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares can be
recommended by independent financial advisers to ordinary retail
investors in accordance with the FCA’s rules in relation to
non-mainstream investment products and intends to continue to do
so for the foreseeable future. The Company’s shares are excluded
from the FCA’s restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Financial calendar
First interim dividend paid February
Second interim dividend paid May
Half year results announced April/May
Third interim dividend paid August
Financial year end 31 August
Annual results announced November
Fourth interim dividend paid November/December
Annual General Meeting December
Alternative Investment Fund Managers
Directive (“AIFMD”) disclosures
The AIFMD, as transposed into the FCA Handbook in the UK, requires
that certain pre-investment information be made available to
investors in Alternative Investment Funds (such as the Company) and
also that certain regular and periodic disclosures are made. This
information and these disclosures may be found either below,
elsewhere in this annual report, or in the Company’s AIFMD
information disclosure document published on the Company’s
webpages.
Leverage
The Company’s leverage policy and details of its leverage ratio
calculation and exposure limits as required by the AIFMD are
published on the Company’s webpages and within this report. The
Company is also required to periodically publish its actual leverage
exposures. As at 31 August 2024 these were:
% of net asset value
Leverage exposure Maximum Actual
Gross method 200% 110.9
Commitment method 200% 112.1
Illiquid assets
As at the date of this report, none of the Company’s assets are subject
to special arrangements arising from their illiquid nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be
found in the Company’s AIFMD information disclosure document
published on the Company’s webpages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company’s AIFM, is
required to publish a short KID on the Company. KIDs are designed to
provide certain prescribed information to retail investors, including
details of potential returns under different performance scenarios
and a risk/reward indicator. The Company’s KID is available on its
webpages.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-trust/.
Introduction Strategic Report Governance Financial Other Information (Unaudited) Introduction Strategic Report Governance Financial
*Alternative Performance Measure.
Shareholder Information
Web pages and share price information
The Company has dedicated webpages, which may be found at
www.schroders.co.uk/orientalincome. The webpages are the
Company’s primary method of electronic communication with
Shareholders. They contain details of the Company’s share price and
copies of the annual report and accounts and other documents
published by the Company as well as information on the directors,
terms of reference of committees and other governance
arrangements. In addition, the webpages contain links to
announcements made by the Company to the market and Schroders’
website. There is also a section entitled “How to Invest”.
The Company releases its NAV per share on both a cum and
ex-income basis to the market on a daily basis.
Share price information may also be found in the Financial Times and
on the Company’s webpages.
The Manager publishes monthly and quarterly updates on the
Company and other Schroders investment trusts, which may be
found under the “Literature” section on the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be found on
its website, www.theaic.co.uk.
Individual Savings Account (“ISA”) status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares can be
recommended by independent financial advisers to ordinary retail
investors in accordance with the FCA’s rules in relation to
non-mainstream investment products and intends to continue to do
so for the foreseeable future. The Company’s shares are excluded
from the FCA’s restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Financial calendar
First interim dividend paid February
Second interim dividend paid May
Half year results announced April/May
Third interim dividend paid August
Financial year end 31 August
Annual results announced November
Fourth interim dividend paid November/December
Annual General Meeting December
Alternative Investment Fund Managers
Directive (“AIFMD”) disclosures
The AIFMD, as transposed into the FCA Handbook in the UK, requires
that certain pre-investment information be made available to
investors in Alternative Investment Funds (such as the Company) and
also that certain regular and periodic disclosures are made. This
information and these disclosures may be found either below,
elsewhere in this annual report, or in the Company’s AIFMD
information disclosure document published on the Company’s
webpages.
Leverage
The Company’s leverage policy and details of its leverage ratio
calculation and exposure limits as required by the AIFMD are
published on the Company’s webpages and within this report. The
Company is also required to periodically publish its actual leverage
exposures. As at 31 August 2024 these were:
% of net asset value
Leverage exposure Maximum Actual
Gross method 200% 110.9
Commitment method 200% 112.1
Illiquid assets
As at the date of this report, none of the Company’s assets are subject
to special arrangements arising from their illiquid nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be
found in the Company’s AIFMD information disclosure document
published on the Company’s webpages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company’s AIFM, is
required to publish a short KID on the Company. KIDs are designed to
provide certain prescribed information to retail investors, including
details of potential returns under different performance scenarios
and a risk/reward indicator. The Company’s KID is available on its
webpages.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-trust/.
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high risk shares or investments. These operations are
commonly known as ‘boiler rooms’. These ‘brokers’ can be very
persistent and extremely persuasive. Shareholders are advised to be
wary of any unsolicited advice, offers to buy shares at a discount or
offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• Check that they are properly authorised by the FCA before getting
involved by visiting https://register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at
https://www.fca.org.uk/consumers/unauthorised-firms-
individuals#list.
More detailed information on this or similar activity can be found on
the FCA website at https://www.fca.org.uk/consumers/protect-
yourself-scams.
Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque. Applications for an electronic
mandate can be made by contacting the Registrar. If your dividend is
paid directly into your bank or building society account, you will
receive an annual consolidated dividend confirmation, which will be
sent to you in September each year at the time the interim dividend is
paid. Dividend confirmations are available electronically at
investorcentre.co.uk to those Shareholders who have their payments
mandated to their bank or building society accounts and who have
expressed a preference for electronic communications.
76 Schroder Oriental Income Fund Limited
Shareholder Information
continued
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high risk shares or investments. These operations are
commonly known as ‘boiler rooms’. These ‘brokers’ can be very
persistent and extremely persuasive. Shareholders are advised to be
wary of any unsolicited advice, offers to buy shares at a discount or
offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• Check that they are properly authorised by the FCA before getting
involved by visiting https://register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at
https://www.fca.org.uk/consumers/unauthorised-firms-
individuals#list.
More detailed information on this or similar activity can be found on
the FCA website at https://www.fca.org.uk/consumers/protect-
yourself-scams.
Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque. Applications for an electronic
mandate can be made by contacting the Registrar. If your dividend is
paid directly into your bank or building society account, you will
receive an annual consolidated dividend confirmation, which will be
sent to you in September each year at the time the interim dividend is
paid. Dividend confirmations are available electronically at
investorcentre.co.uk to those Shareholders who have their payments
mandated to their bank or building society accounts and who have
expressed a preference for electronic communications.
76 Schroder Oriental Income Fund Limited
Shareholder Information
continued
Schroder
Oriental Income Fund Limited
77
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Risk Disclosures
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or
individual positions. This may result in large changes in the value of the Company, both up or down.
Counterparty risk The Company may have contractual agreements with counterparties. If a counterparty is unable to fulfil their
obligations, the sum that they owe to the Company may be lost in part or in whole.
Currency risk If the Company’s investments are denominated in currencies different to the currency of the Company’s shares, the
Company may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates.
Derivatives risk Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to manage the
portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative
and may result in losses to the Company.
Emerging markets Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty, operational and
& frontier risk liquidity risk than developed markets.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase returns if
the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if they fail to do
so. In falling markets, the whole of the value in such investments could be lost, which would result in losses to the
Company.
Liquidity Risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their shares or
may not get back the amount that they originally invested. Certain investments of the Company, in particular the
unquoted investments, may be less liquid and more difficult to value. In difficult market conditions, the Company may
not be able to sell an investment for full value or at all and this could affect performance of the Company.
Market Risk The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the
Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved.
Depending on market conditions and the macro economic environment, investment objectives may become more
difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a greater
extent in response to changes in demand.
Smaller companies Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell,
risk and they may also fluctuate in value to a greater extent.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Risk Disclosures
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or
individual positions. This may result in large changes in the value of the Company, both up or down.
Counterparty risk The Company may have contractual agreements with counterparties. If a counterparty is unable to fulfil their
obligations, the sum that they owe to the Company may be lost in part or in whole.
Currency risk If the Company’s investments are denominated in currencies different to the currency of the Company’s shares, the
Company may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates.
Derivatives risk Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to manage the
portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative
and may result in losses to the Company.
Emerging markets Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty, operational and
& frontier risk liquidity risk than developed markets.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase returns if
the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if they fail to do
so. In falling markets, the whole of the value in such investments could be lost, which would result in losses to the
Company.
Liquidity Risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their shares or
may not get back the amount that they originally invested. Certain investments of the Company, in particular the
unquoted investments, may be less liquid and more difficult to value. In difficult market conditions, the Company may
not be able to sell an investment for full value or at all and this could affect performance of the Company.
Market Risk The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the
Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved.
Depending on market conditions and the macro economic environment, investment objectives may become more
difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a greater
extent in response to changes in demand.
Smaller companies Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell,
risk and they may also fluctuate in value to a greater extent.
Information about the Company
www.schroders.co.uk/orientalincome
Directors
Paul Meader (Chairman)
Alexa Coates
Sam Davis
Isabel Liu
Nick Winsor
Registered office
PO Box 208
Arnold House
St Julian’s Avenue
St Peter Port
Guernsey GY1 3NF
Advisers and service providers
Alternative Investment Fund Manager (the “Manager”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 6000
Email: AMCompanySecretary@schroders.com
Lending bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
London EC2M 3NS
Safekeeping and cashflow monitoring agent
HSBC Bank plc
8 Canada Square
London E14 5HQ
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor
Tudor House
Le Bordage
St Peter Port
Guernsey GY1 1DB
Communications with shareholders are mailed to the address held on
the register. Any notifications and enquiries relating to shareholdings,
including a change of address or other amendment, should be
directed to Computershare Investor Services (Guernsey) Limited at
the address set out above.
Corporate broker
Deutsche Numis
45 Gresham Street
London EC2V 7BF
Designated administrator
HSBC Securities Services (Guernsey) Limited
Arnold House
St Julian’s Avenue
St Peter Port
Guernsey GY1 3NF
Other Information
Shareholder enquiries
General enquiries about the Company should be addressed to the
Company Secretary.
Company Number
43298
(Registered in Guernsey as a company limited by shares)
Dealing codes
ISIN: GB00B0CRWN59
SEDOL: B0CRWN5
Ticker: SOI
Global Intermediary Identification Number (GIIN)
N3WFUT.99999.SL.826
Legal Entity Identifier (LEI)
5493001U9X6P8SS0PK40
Privacy notice
The Company’s privacy notice is available on its webpages.
www.schroders.co.uk/orientalincome
Directors
Paul Meader (Chairman)
Alexa Coates
Sam Davis
Isabel Liu
Nick Winsor
Registered office
PO Box 208
Arnold House
St Julian’s Avenue
St Peter Port
Guernsey GY1 3NF
Advisers and service providers
Alternative Investment Fund Manager (the “Manager”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 6000
Email: AMCompanySecretary@schroders.com
Lending bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
London EC2M 3NS
Safekeeping and cashflow monitoring agent
HSBC Bank plc
8 Canada Square
London E14 5HQ
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor
Tudor House
Le Bordage
St Peter Port
Guernsey GY1 1DB
Communications with shareholders are mailed to the address held on
the register. Any notifications and enquiries relating to shareholdings,
including a change of address or other amendment, should be
directed to Computershare Investor Services (Guernsey) Limited at
the address set out above.
Corporate broker
Deutsche Numis
45 Gresham Street
London EC2V 7BF
Designated administrator
HSBC Securities Services (Guernsey) Limited
Arnold House
St Julian’s Avenue
St Peter Port
Guernsey GY1 3NF
Other Information
Shareholder enquiries
General enquiries about the Company should be addressed to the
Company Secretary.
Company Number
43298
(Registered in Guernsey as a company limited by shares)
Dealing codes
ISIN: GB00B0CRWN59
SEDOL: B0CRWN5
Ticker: SOI
Global Intermediary Identification Number (GIIN)
N3WFUT.99999.SL.826
Legal Entity Identifier (LEI)
5493001U9X6P8SS0PK40
Privacy notice
The Company’s privacy notice is available on its webpages.
Schroder Investment Management Limited
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not be
placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
@schroders
schroders.com
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not be
placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
@schroders
schroders.com