Schroder AsiaPacific
Fund plc
Report and Accounts
For the year ended
30 September 2022
Investment objective
Schroder AsiaPacific Fund plc’s (the “Company”) principal
investment objective is to achieve capital growth through
investment primarily in equities of companies located in the
continent of Asia (excluding the Middle East and Japan),
together with the Far Eastern countries bordering the Pacific
Ocean. It aims to achieve growth in excess of the MSCI All
Countries Asia excluding Japan Index in sterling terms
(Benchmark Index) over the longer term.
Investment policy
The Company principally invests in a diversified portfolio of
companies located in the continent of Asia (excluding the
Middle East and Japan) (for the purposes of this paragraph
the “region”). Such countries include Hong Kong, China,
Singapore, Taiwan, Malaysia, South Korea, Thailand, India,
The Philippines, Indonesia, Pakistan, Vietnam and Sri Lanka
and may include other countries in the region that permit
foreign investors to participate in investing in equities, such
as in their stockmarkets or other such investments in the
future. Investments may be made in companies listed on the
stock markets of countries located in the region and/or listed
elsewhere but controlled from within the region and/or with
a material exposure to the region.
The portfolio is predominantly invested in equities, but may
also be invested in other financial instruments such as put
options on indices and equities in the region. The Company
does not use derivative contracts for speculative purposes.
The Company may invest up to 5% of its assets in securities
which are not listed on any stock exchange, but would
normally not make such an investment except where the
Manager expects that the securities will shortly become listed
on a stock exchange. In order to maximise potential returns,
gearing may be employed by the Company from
time-to-time. Where appropriate the Directors may authorise
the hedging of the Company’s currency exposure.
Front cover: the front and inside front cover show the Taj
Mahal, Agra, India
Schroder AsiaPacific Fund plc
Provides exposure to Asia’s superior long-term growth
potential by identifying attractive investment opportunities
across the region’s equity markets.
Annual Report and Accounts
for the year ended 30 September 2022
Strategic Report
1
Strategic Report
Contents
Strategic Report
Financial Highlights
and Long-Term Performance Record 2
Ten Year Financial Record 3
Chairman’s Statement 4
Investment Manager’s Review 6
Investment Portfolio 10
Strategic Report 12
Governance
Board of Directors 24
Directors’ Report 26
Audit and Risk Committee Report 29
Management Engagement Committee Report 31
Nomination Committee Report 32
Directors’ Remuneration Report 34
Statement of Directors’ Responsibilities in respect
of the Annual Report and Accounts 37
Financial
Independent Auditor’s Report 38
Income Statement 44
Statement of Changes in Equity 44
Statement of Financial Position 45
Notes to the Accounts 46
Annual General Meeting
Annual General Meeting – Recommendations 61
Notice of Annual General Meeting 62
Explanatory Notes to the Notice of Meeting 63
Definitions of Terms and Alternative Performance
Measures 65
Shareholder Information Inside back cover
Annual General Meeting Financial
Governance
2
Schroder AsiaPacific Fund plc
Financial Highlights and
Long-Term Performance Record
Some of the financial measures below are classified as Alternative Performance Measures, as defined by the
European Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these
performancemeasures, and other terms used in this report, are given on page 65 together with supporting
calculations where appropriate.
Total returns for the year ended 30 September 2022
-13.6
%
Net asset value (“NAV”)
per share total return*
-14.5
%
Share price
total return*
-13.9
%
Benchmark
total return
1
1
Source: Thomson Reuters.
2021: +14.6% 2021: +15.0% 2021: +9.7%
Other financial information
30September 30September %
2022 2021 Change
Shareholders’ funds (£’000) 878,187 1,057,941 -17.0
Shares in issue 160,800,716 164,860,716 -2.5
NAV per share (pence) 546.13 641.72 -14.9
Share price (pence) 487.00 579.00 -15.9
Share price discount to NAV per share* (%) 10.8 9.8
Gearing* (%) 0.2 0.6
Year ended Year ended
30September 30September %
2022 2021 Change
Net revenue return after taxation (£’000) 19,673 16,080 +22.3
Revenue return per share (pence) 12.04 9.66 +24.6
Dividends per share (pence) 12.00 9.70 +23.7
Ongoing charges* (%) 0.84 0.86
NAV per share, share price and Benchmark total returns for the ten years ended
30September 2022*
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2012.
50
100
150
200
250
300
350
30-Sep-12 30-Sep-13 30-Sep-14 30-Sep-15 30-Sep-16 30-Sep-17 30-Sep-18 30-Sep-19 30-Sep-20 30-Sep-21 30-Sep-22
Benchmark
NAV
Share price
Ten Year Financial Record
Annual Report and Accounts
for the year ended 30 September 2022
Strategic Report
3
Strategic Report
Definitions of terms and performance measures are provided on page 65.
At 30September 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Shareholders’ funds (£’000) 455,024 495,527 477,870 658,321 799,942 825,042 822,182 946,1461,057,941 878,187
NAV per share, diluted where
applicable (pence) 268.13 292.82 282.39 392.33 477.38 492.35 490.94 567.16 641.72 546.13
Share price (pence) 240.70 264.00 246.50 343.00 426.00 430.00 435.00 510.00 579.00 487.00
Share price discount to NAV
per share* (%) 10.2 9.8 12.7 12.6 10.8 12.7 11.4 10.1 9.8 10.8
Gearing/(net cash)* (%) (3.3) (0.6) 2.3 0.4 4.4 2.6 (2.4) 0.2 0.6 0.2
For the year ended 30September 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Net revenue return after taxation
(£’000)
1
5,000 4,749 7,151 8,040 9,537 16,885 16,590 13,253 16,080 19,673
Revenue return per share (pence)
1
3.08 2.80 4.23 4.77 5.69 10.08 9.90 7.92 9.66 12.04
Dividends per share (pence)
1
3.35 2.75 4.20 4.75 5.60 9.50 9.70 8.00 9.70 12.00
Ongoing Charges* (%) 1.10 1.08 1.03 1.10 0.99 0.94 0.93 0.90 0.86 0.84
Performance
2
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
NAV total return (diluted
where applicable)* 100.0 101.8 112.6 109.5 154.3 190.1 198.2 201.9 237.6 272.3 235.2
Share price total return* 100.0 103.0 114.6 108.1 152.7 192.4 196.6 203.7 243.8 280.4 239.8
Benchmark 100.0 105.3 114.1 107.3 146.6 174.2 181.8 185.8 208.7 228.9 197.0
1
With effect from 1October 2017, the Company adopted an allocation policy whereby 75% of indirect cost are allocated to the capital account.
2
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30September 2012.
*Alternative performance measures.
Ten year share price discount to NAV per share*
Source: Morningstar/Thomson Reuters.
0
2
4
6
8
10
12
14
16
30-Sep-12
%
30-Sep-13 30-Sep-14 30-Sep-15 30-Sep-16 30-Sep-17 30-Sep-18 30-Sep-19 30-Sep-20 30-Sep-21 30-Sep-22
4
Schroder AsiaPacific Fund plc
Performance
The year under review
saw challenging market
conditions in Asia, in
common with markets
around the world. The
Company’s NAV
produced a negative
total return of -13.6% for
the year under review,
marginally
outperforming the
Benchmark’s negative
total return of -13.9%, while the share price produced a
negative total return of -14.5%.
The faster than expected rises in global interest rates, the war
in Ukraine and the economic impact of continued COVID lock-
downs as well as other developments in China, have
dominated Asian markets this year. There have also been
beneficiaries, for example from rising commodity prices, and
there has been a significant divergence of returns from Asian
markets.
More detailed comment on performance and investment
policy may be found in the Investment Manager’s Review.
Revenue and dividend
The Company’s principal investment objective is to achieve
capital growth, and the Directors continue to distribute
substantially all of the revenue it receives each year. The
Company’s revenue return recovered sharply from the
previous year, increasing by 22.3% as portfolio companies
increased dividend payments.
The Directors are recommending a final dividend of
12.00pence per share for the year ended 30 September
2022, representing an increase of 23.7% over the 9.70 pence
paid in respect of the previous financial year.
This dividend will be paid on 10 February 2023 to
shareholders on the register on 30 December 2022, subject
to approval by shareholders at the Annual General Meeting
(“AGM”) on 1 February 2023.
Gearing
During the year under review, the Company entered into a
new one year revolving credit facility of £75 million with
TheBank of Nova Scotia, London Branch which replaced the
£100million facility with SMBC Bank International PLC that
was due to expire on 23 June 2022.
At 30 September 2022, while £13.4 million of the revolving
facility was drawn down the Company’s net gearing position
was 0.2% taking into account cash balances, compared to
0.6% at the end of September 2021.
The Company also has access to an overdraft facility with
HSBC.
Discount management
The Company continued to be active in buying back its shares
during the year ended 30 September 2022 and a total of
4,060,000 shares were bought back for cancellation at a cost
of £21.7 million (2021: 1,960,000 million shares were bought
back and cancelled at a cost of £11.8 million). Since the year
end, a further 1,690,000 shares have been bought back for
cancellation at a cost of £8.0 million.
The discount at the end of September 2022 was 10.8%
compared to 9.8% at the previous year end. The average
discount during the year under review was 10.4%.
Overall, the Board’s strategy is to limit discount volatility and
to help maintain liquidity in the Company’s shares. As such
we believe that it is not necessarily in the best interests of
shareholders as a whole to adopt a rigid discount control
mechanism that seeks to target a defined maximum discount
level regardless of market conditions. Our policy takes
account of the level of discount at which the Company’s peer
group trades, prevailing market conditions and activity within
our sector.
At the Company’s last AGM, authority was given to purchase
up to 14.99% of its issued share capital. We propose that the
share buyback authority be renewed at the forthcoming AGM
and that any shares so purchased be cancelled or held in
treasury for potential reissue.
Environmental, social and governance
issues (“ESG”)
The Manager has always expressed the view that companies
with good ESG often perform better and potentially deliver
superior returns over time. Our Manager has provided more
detail in the Strategic Report on how ESG considerations are
incorporated into the investment process and given details of
the Manager’s ESG research capability. This year, our
Manager has included graphs showing the portfolio’s scope 1
and scope 2 carbon emissions (as detailed on page 16). This
covers 95% of the portfolio and 99% of the measured
Benchmark. It is interesting to note that the portfolio
generated less scope1 and scope2 carbon emissions than
the Benchmark at 30September 2022.
Management fee
Since 1 April 2021 the management fee has been 0.75% per
annum on the first £600 million of net assets and 0.70% per
annum on net assets in excess of £600 million.
With effect from 1 April 2023, the Board has agreed with the
Manager to reduce its management fee to 0.60% per annum
on net assets in excess of £600 million. In respect of the first
£600million of net assets the management fee is unchanged.
Further details may be found in the Directors’ Report on
page26.
Chairman’s Statement
Board succession
As set out in the 2021 annual report, Rosemary Morgan
stepped down from the Board at the AGM in February 2022
and was succeeded as chair of the audit and risk committee
by Julia Goh. Following Rosemary’s retirement, Martin Porter
also assumed the role of Senior Independent Director.
The Board regularly considers its policy on director tenure,
succession planning and its composition to ensure that it has
the appropriate mix of relevant skills, diversity and
experience. The Company has met the Financial Conduct
Authority's board diversity target for listed companies that at
least 40% of the board are women and for at least one
member of the board to be from an ethnic minority
background.
Webinar
Last year, the Investment Managers presented to
shareholders using a webinar. We believe shareholders
benefited from this, allowing anyone to watch remotely, and
ask questions, without the need to travel. The Board is
planning to continue with the same format this year, and the
Investment Managers will be presenting to shareholders at a
webinar on 17 January 2023 at 2.00 pm. To register your
interest for this webinar please email
sunil.kler@schroders.com.
One advantage of a webinar is that if you are not able to
attend at this time, you will be able to watch it afterwards. It
will be available on the Company’s webpages at:
www.schroders.co.uk/asiapacific.
AGM
The AGM will be held on Wednesday, 1 February 2023 at
12.00noon at the offices of Schroders at 1 London Wall Place,
London, EC2Y5AU. A presentation from the Investment
Managers will be given at the AGM, and attendees will also be
able to ask questions in person and meet the directors. The
presentation will be made available on the Company's
website following the meeting. Details of the formal business
of the meeting are set out in the Notice of Meeting on
pages62 to 64 of this Annual Report.
All shareholders are recommended to vote by proxy in
advance of the AGM and to appoint the Chairman of the
meeting as their proxy. This will ensure that shareholders'
votes will be counted even if they (or any appointed proxy) are
not able to attend.
If shareholders have any questions for the Board, please
write in, or email using the details below. The questions and
answers will be published on the Company’s webpages
before the AGM.
To email, please use:
amcompanysecretary@schroders.com
or write to us at the Company’s registered office address:
Company Secretary, Schroder AsiaPacific Fund plc, 1London
Wall Place, London, EC2Y 5AU.
For regular news about the trust, shareholders are also
encouraged to sign up to the Manager’s investment trusts
update by visiting the Company’s website:
https://www.schroders.com/en/uk/private-investor/fund-
centre/funds-in-focus/investment-trusts/schroders-
investment-trusts/never-miss-an-update/
.
Outlook
It would be easy to be pessimistic in view of the current
uncertainty seen in markets around the world. There is no
question that the global repricing of the cost of capital which
has followed increased US interest rates continues to be a
headwind. It is unclear when these moves will have had the
desired effect on inflation but there are signs that we may be
nearing the end of this tightening cycle.
In the past few months share prices have continued to adjust
and in many cases now reflect the current economic reality
and aggregate valuations for the region are trading at or
below long-term averages. It is the case now more than ever
that Asian markets will continue to provide opportunities for
those who can identify the winners. We believe that the
Company continues to be well placed to take advantage of
these conditions. Our Manager’s ability to invest across the
region while focusing on high conviction, bottom-up stock
ideas driven by strong resources on the ground in Asia gives
us confidence that we will return to generating positive
returns for shareholders, once market conditions start to
improve.
James Williams
Chairman
6 December 2022
Annual Report and Accounts
for the year ended 30 September 2022
5
Strategic Report
Chairman’s Statement
6
Schroder AsiaPacific Fund plc
Investment Manager’s Review
The NAV per share of the Company recorded a total return of
-13.6% over the twelve months to the end of September 2022.
This was marginally ahead of the performance of the
Benchmark, the MSCI All Country Asia ex Japan Index, which
was down by -13.9% over the same period. (Source:
Morningstar, net of fees, cum income NAV GBP return).
Performance of the MSCI AC Asia ex Japan Net
Dividends Reinvested Index in GBP and USD –
30September 2021 to 30September 2022
Source: Thomson Datastream as at 30September 2022.
The past year has been a tumultuous period for markets with
a number of headwinds globally and regionally weighing on
sentiment. Geopolitical tensions worsened with the shock
Russian invasion of Ukraine, as well as ongoing tensions
between the US and China and increasing concerns
surrounding Taiwan. Inflation, in part driven by the war in
Ukraine and in part by shortages of both goods and labour,
rose materially and saw aggressive responses from Central
Banks which in turn focused attention back on to the state of
the slowing global economy and its knock-on to earnings. In
Asia, the period was dominated by concerns over the health
of the Chinese economy with its ‘zero-COVID’ policy
exacerbating ongoing worries over an already weak property
market. Increased levels of regulation in China (particularly
amongst the internet names) also weighed on sentiment.
Later in the period, some easing measures announced by the
Chinese government, together with an apparent shift in focus
towards ‘stability’, looked to underpin sentiment.
With the rise in and potential for a more sustained higher
level of inflation globally, there was renewed concern over
higher interest rates. This saw some of the more highly-rated
growth stocks come under pressure, especially the less
profitable names, with value stocks outperforming growth
stocks over the period. Towards the end of the period there
were some hopes that inflation was nearing a peak and this
would elicit a pivot from the US Federal Reserve to a more
dovish stance. This proved to be relatively short lived,
however.
The divergence of returns across the regional markets
continued to be high, with China lagging for the reasons
mentioned above. Korea, often a market correlated with
global growth expectations, was also weak with the memory
sector names deteriorating on concerns over falling demand
as well as some of the more highly-rated internet names
under pressure. Similarly, Taiwan lagged as information
technology (“IT”) stocks underperformed owing to concerns
over the impact that a slowing consumer would have on end
demand, as rising inflation crimped real incomes. Of the
larger markets, India and Singapore outperformed. India,
being relatively more insulated from the impacts of slowing
global growth combined with the domestic economy
Sep-21 Aug-22 Sep-22
70
75
80
85
90
95
100
105
110
MSCI AC Asia ex Japan NDR USD
MSCI AC Asia ex Japan NDR GBP
Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 Jun-22May-22 Jul-22
recovering from the impacts of COVID, has proven to be
relatively resilient from a stock market perspective. Loose
domestic liquidity and strong domestic flows into the market
have also been supportive. Singapore was aided by a strong
recovery in the financials sector. The other ASEAN markets
also outperformed, helped initially by the potential for post-
pandemic re-opening, as well as value stocks outperforming,
in which they tend to have higher weightings. Whilst most of
Asia is negatively impacted by rising energy prices Indonesia
was a beneficiary.
Market returns of the MSCI AC Asia ex Japan Net
Dividends Reinvested Index in GBP and local
currency – 30September 2021 to 30September
2022
Source: Factset.
Sector returns across the region also saw a large spread.
Beneficiaries of rising commodity prices did well, especially
energy names, and higher interest rates meant financials also
outperformed. More defensive areas such as utilities and
consumer staples also held up. Sectors with a high growth
component sold off, including the healthcare names dragged
down by the high-multiple biotechnology stocks, as did a
number of the e-commerce and internet related names
largely found in the consumer discretionary and
communication services sectors. Information technology sold
off towards the end of the period as there was increasing
concern over a slowdown in consumer demand at a time
when some of the bottlenecks around supply were clearing.
Performance and Portfolio Activity
The Company’s NAV total return of -13.6% over the period
was marginally ahead of that of the reference Benchmark
which fell by -13.9% over the period. As described above, the
faster than expected rise in global interest rates not only
impacted markets but particularly growth names within that.
Although the Company is not an out and out growth fund, its
modest growth bias was a headwind to returns. This was
seen most acutely amongst the internet related names we
held in Korea and Singapore which underperformed
materially. Although we benefited from our stock selection in,
and underweight to, healthcare stocks, avoiding some of the
more high rated biotech names, our underweight positioning
in some of the other more defensive areas such as consumer
staples and utilities was a drag.
Positively our overweight to, and stock selection in, financials
added value. This was driven by the positions in banks which
in general benefitted from a firming of interest rate
expectations combined with their lowly valuations. The out of
benchmark Australian resources exposure, including BHP,
was also a positive contributor, thanks to higher commodity
Returns in local currencyReturns in GBP
-40% -30% -20% -10% 0%
10%
20% 30% 40%
MSCI AC Asia ex JP
China
Hong Kong
India
Indonesia
Korea
Malaysia-EM
Philippines
Singapore
Taiwa n
Thailand
Annual Report and Accounts
for the year ended 30 September 2022
7
Strategic Report
Investment Manager’s Review
prices driven by the global recovery. Although our overweight
to IT was a headwind as the sector saw negative earnings
revisions, our positions added value thanks to strong stock
selection in some of the Taiwanese names, such as Hon Hai
and Delta Electronics, which more than offset the negative
from being overweight the sector.
From a regional perspective, the significant underweight to
China added value, as the ongoing issues highlighted above
impacted the market. Here, the internet names were among
those that bore the brunt of the sell down. In Singapore, our
overweight was positive but stock selection was a drag as the
internet name we held there (Sea) was in part impacted by
higher rates, which resulted in a greater focus on the timeline
for profitability from its fast growing e-commerce business.
Korean and Taiwanese exposure was also a drag, in part due
to the markets being quite globally focused which impacted
our IT names. Our lack of exposure to financials in Taiwan,
and our allocation to more domestic growth areas in Korea,
also detracted from relative performance. Our out of index
exposure to Australia and Vietnam was positive, as was stock
selection in Indonesia (Bank Mandiri) but our underweight to
some of the other ASEAN markets, in particular Malaysia and
the Philippines, detracted.
The geographic exposure in the Company’s portfolio
continues to be mainly spread between China, India, Taiwan,
Hong Kong, Korea and Singapore. China remains a
substantial underweight, despite modest additions during
the year as the market underperformed. In part, this is offset
by the overweight to Hong Kong. Over the period we also
reduced our exposure to some of the more expensive
domestic Indian names that had performed well, whilst
adding to some of the IT services companies there (Infosys
and Tata Consultancy Services) but overall taking us down to
being slightly underweight the index in relative terms.
Elsewhere, we added to some of the smaller ASEAN markets
including Vietnam (where we now have local access) and the
Philippines.
As throughout much of last year, portfolio activity tended to
take advantage of the valuation spread that we saw across
industries, reducing those stocks that had performed
particularly strongly and now looked more fully valued in
favour of those names that had lagged and looked more
attractive from a valuation perspective. We continued in
aggregate to add to financials, where we are overweight, with
valuations still looking relatively attractive given higher
interest rates and subdued credit costs. Here we added
principally to names in Singapore, including Oversea-Chinese
Banking and United Overseas Bank. Looking elsewhere, an
area where we have reduced exposure is to the Australian
resource names. The sector has performed strongly over the
last year, in part helped by the surge in commodity prices.
Information technology is one of the biggest sectoral
exposures in the fund, along with financials. Although near
term earnings have been seeing downward revisions, we
continue to see some strong long-term drivers for growth
around digitisation and the roll out of 5G and ‘Internet of
Things’ and our focus remains on the Taiwanese and Korean
companies such as TSMC and Samsung Electronics.
Top 3 contributors and top 3 detractors at a
regional level, 12months to 30September 2022
(%)
Source: Factset PA3. Top contributors and detractors are shown excluding
gearing.
Outlook and Policy
Slowing global and weak Chinese growth, elevated
geopolitical tensions around Ukraine and Taiwan and rising
interest rates, combined with ongoing downward revisions to
earnings, mean that headwinds for markets are likely to
continue. However, some areas of the markets are starting to
look more attractive from a longer term perspective having
derated markedly.
Globally, consumption is under pressure as rising prices eat
into real incomes. This, allied with the shift away from
consumption of goods to consumption of services as the
majority of economies open up post-pandemic, has seen the
demand for goods falter. This in turn has started to see
inventories accumulate across supply chains globally, leading
to a fear that we will see a painful period of inventory
adjustment on top of an already slowing global economy.
From an Asian perspective, this is likely to have an impact on
exports and from our portfolio’s perspective is most likely to
evidence itself in the technology hardware sector. To an
extent, markets have already started to discount this with
technology names in both Korea and Taiwan already
underperforming despite earnings holding up relatively well
for now. In our view, valuations are now starting to factor in a
slowdown but not yet a “hard landing” which, although not
our base case, is a possibility. In general, the stocks we own in
this sector are leaders in their area with high market shares
and strong balance sheets on attractive valuations, so in our
view should prove to be relatively resilient. Although we did
take some money out of the sector earlier in the year, we
remain overweight.
The other trend that the pandemic and Ukraine crisis have
reinforced has been the need for increased self sufficiency.
The need for diversified supply chains was something that
the COVID crisis had highlighted, given the disruption the
pandemic caused. With security of supply already a focus in
areas such as semiconductor production, thanks to ongoing
US-China tensions and the concentration of advanced
manufacturing in Taiwan, the Ukraine conflict has also
highlighted the vulnerability of nations to energy supply
dependency. The recently concluded Party Congress in China
saw President Xi mention ‘security’ 91 times in his opening
speech (according to Bloomberg) compared with 55 mentions
five years ago, reinforcing a view that China will continue to
intensify efforts around ‘self sufficiency’ in core technologies
and strategic industries. All this will likely lead to further
localisation of supply chains and an era of reduced
globalisation.
Geopolitics will continue to remain a risk, including
surrounding Taiwan as highlighted by the recent visit by
Nancy Pelosi to the island, which has resulted in increased
tensions between the US and China. Other actions, such as
the recent moves by the US to restrict China’s ability to
purchase and manufacture high-end semiconductors,
combined with the mid-term elections in the US mean it is
unlikely we will see any meaningful relaxation in tensions
near term and this is likely to continue to weigh on sentiment.
From an Asian perspective the biggest impact on growth is
coming from the ‘zero COVID’ policy in China, where the
lockdowns have had a severe impact on growth as well as
exacerbating the weakness in the property sector. It is not
clear how long this policy will remain in place but for now
there is unlikely, in our view, to be any major volte-face in the
near term. The recent Party Congress gave no indication
when the policy might be eased and, whilst vaccination rates
in China are high and comparable to most developed nations,
a large tranche of the elderly still remain unvaccinated
making it difficult for them to open up until this is rectified.
Although a wholesale opening up is unlikely near term, it is
likely that some more incremental easing measures occur.
But in our view, China’s consumption and growth will
continue to remain lacklustre as uncertainty over the path of
COVID weighs on sentiment.
Given this, we have started to see a number of actions to
loosen policy including rate cuts, easing of property purchase
restrictions and increases in infrastructure spending and
fiscal incentives. We consider it likely that we will see further
easing measures but, whilst the ‘zero COVID’ policy remains,
their impact for the large part is likely to resemble pushing on
a string. Nevertheless, given how poorly the market has
performed, together with the move to an easing bias there
(whilst most of the rest of the world are tightening), as well as
a tentative easing of the severity of lockdowns, there is
potential for the market to experience better periods of
performance. From our positioning perspective we have been
very underweight China for some time and although we
continue to look for new opportunities given the falls, we
remain so and believe that the challenges that were there for
the market remain.
Longer term – although Xi’s confirmation at the Congress as
the Party’s General Secretary for his third five year term was
not a surprise, the make up of the Politburo Standing
Committee (and Politburo) was decidedly one-sided being
dominated by Xi loyalists, further cementing his power within
the Party. The lack of countervailing voices within the new
PSC potentially heightens policy risk and likely means that
many of the challenges brought about by increased
regulation will persist, with the narrative around areas such
as ‘common prosperity’ continuing to weigh on the potential
returns of parts of the private sector. All this means one
should not necessarily use a mean reversion argument alone
when it comes to valuation.
Nearer term, although we are likely to see a stabilisation of
the economy, it is hard for it to recover to pre-pandemic
growth rates whilst the strict ‘zero COVID’ policy remains in
place. The infectious nature of the Omicron variant means it is
still likely we will see ongoing rolling restrictions. However, we
could start to see a relaxation of some of the ‘zero COVID’
measures after the party congress but these are likely, in our
view, to be incremental rather than wholesale. All this
continues to mean we look for bottom up stock opportunities
in China, consistent with our process, rather than move
money into the market on a macro, top-down driven
allocation.
India has been one of the best performing markets over the
period, due not only to the economy benefiting from a post-
COVID recovery, but also to domestic flows into the market in
part on optimism about economic prospects following
progress on reforms. Whilst on a long term basis the market
continues to look attractive, valuations are now at extremes
versus the rest of the region, which has led us to temper our
position in some of the more domestic orientated names.
Historically, the relatively weak external accounts have seen
India suffer in a strong US dollar, strong commodity price
environment and this could yet see domestic interest rates
rise faster than expected, impacting valuations. Given the
long term attractions of the market, we would likely use any
correction in favoured names to increase positions.
Sector-wise, aside from information technology, financials
remain an important overweight. Here banks, in our view, still
remain attractive in aggregate on the back of benefits from
rising rates and low valuations. However, given the backdrop
of rising rates in most markets combined with slowing growth
there is a risk that if rates move up faster than expected it
could start to impact asset quality, offsetting the benefit of
expanding margins, so we remain selective. Underweights
are largely found in some of the more ‘defensive’ areas such
as utilities, consumer staples and healthcare where valuations
are generally, in our view, quite full.
While recent events described above do not paint a
particularly optimistic picture, this has in part been reflected
in market action with valuations today looking much less
frothy than they did a year ago. Nevertheless, the US Federal
Reserve being more aggressive on rates near term is clearly a
headwind, given its near term impact on growth and
earnings. However, this in turn should start to cap long-term
inflationary expectations which will pave the way for lower
rates at some point in the future. Until then, it is likely that we
see further downward revisions to earnings and a period of
inventory adjustment amongst companies to reflect the
slower growth and hopefully put them in a position to start to
grow earnings once more. Given overall aggregate valuations
for the region are now trading at or below long-term
averages, this does set up a more constructive backdrop for
Asian markets next year, barring a global hard landing or a
more extreme geopolitical risk event.
To conclude, it is worth remembering that as investors we
buy companies not countries. We are mindful of the impact
political and macroeconomic factors can have on equities and
returns, but we are bottom-up stock-pickers first and
foremost, focusing on the company’s return prospects and
valuation. We do not try to pick companies which will do well
based purely on a particular macro environment which we
have forecast; rather we try to pick well-managed companies
which have structural advantages allowing them to survive
(and hopefully thrive!) in as wide a range of external
conditions as possible. Therefore, a focus on attractive
bottom up ideas, in our view, remains essential.
8
Schroder AsiaPacific Fund plc
Investment Manager’s Review
Annual Report and Accounts
for the year ended 30 September 2022
9
Strategic Report
Market Weights – Schroder AsiaPacific Fund
versus MSCI AC Asia ex Japan Index
Net Asset Value Benchmark
Weight (%) Weight %
30 Sep 2022 30 Sep 2021 30 Sep 2022
Mainland China 18.7 18.3 35.8
India 17.0 15.2 17.5
Taiwan 15.0 16.2 15.8
Hong Kong (SAR) 12.9 12.4 7.4
South Korea 12.4 16.7 12.2
Singapore 8.4 7.3 3.9
Australia 3.8 2.9 –
Indonesia 2.6 1.4 2.5
Thailand 2.2 1.6 2.4
Philippines 0.9 0.1 0.8
Malaysia – – 1.7
Other equities* 6.3 8.5 –
Gearing (0.2) (0.6) –
Total 100.0 100.0 100.0
* Vietnam, Italy, Germany, Netherlands and a unit trust predominantly
invested in Asia.
Source: Schroders, MSCI, 30 September 2022.
Schroder Investment Management Limited
6 December 2022
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 amount originally invested.
Investment Manager’s Review
10
Schroder AsiaPacific Fund plc
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 60.5% (30September 2021: 65.2%) of total investments.
Mainland China
Tencent Holdings
1
31,499 3.6
Alibaba
1
27,851 3.1
Midea (including A shares
and LEPO
2
) 19,981 2.3
Yum China
1,3
17,432 2.0
JD.com
1
16,904 1.9
Ping An Insurance H
1
12,058 1.4
LONGi Green Energy
Technology A 11,690 1.3
Sany Heavy Industry A 9,648 1.1
Hongfa Technology A 8,914 1.0
Shenzhou International
1
7,840 0.9
Total Mainland China 163,817 18.6
India
HDFC Bank 35,441 4.0
ICICI Bank (including ADR
3
) 31,724 3.6
Infosys 17,153 1.9
Apollo Hospitals Enterprise 16,850 1.9
Tata Consultancy Services 12,501 1.4
Reliance Industries 11,226 1.3
Container Corporation 8,657 1.0
Delhivery 6,563 0.7
Maruti Suzuki 5,733 0.6
Gujarat Pipavav Port 4,731 0.5
Total India 150,579 16.9
Taiwan
Taiwan Semiconductor
Manufacturing 71,331 8.1
Hon Hai Precision Industries 14,324 1.6
Delta Electronics 11,485 1.3
Mediatek 10,816 1.2
Giant Manufacturing 10,188 1.2
Nien Made Enterprise 8,161 0.9
Novatek Microelectronics 6,029 0.7
Total Taiwan 132,334 15.0
Hong Kong (SAR)
AIA 25,586 2.9
BOC Hong Kong 20,090 2.3
Techtronic Industries 16,142 1.8
Hong Kong Exchanges and
Clearing 14,938 1.7
Hang Lung Properties 11,128 1.3
Kerry Properties 10,236 1.2
Swire Properties 8,800 1.0
ASM Pacific Technology 4,386 0.5
Johnson Electric 1,922 0.2
Total Hong Kong (SAR) 113,228 12.9
South Korea
Samsung Electronics (including
preference shares) 71,501 8.1
Samsung SDI 16,414 1.9
SK Hynix 10,450 1.2
LG H&H 6,655 0.8
Naver 3,198 0.4
Total South Korea 108,218 12.4
Singapore
Oversea-Chinese Banking 21,832 2.5
Singapore Telecommunications 15,380 1.7
Singapore Exchange 14,980 1.7
United Overseas Bank 14,764 1.7
Sea ADR
3
7,441 0.8
Total Singapore 74,397 8.4
Australia
BHP
4
12,014 1.4
Rio Tinto
4
9,312 1.1
Orica 8,328 0.9
Woodside Energy
4
3,658 0.4
Total Australia 33,312 3.8
£’000 % £’000 %
Investment Portfolio
as at 30 September 2022
Annual Report and Accounts
for the year ended 30 September 2022
11
Strategic Report
Vietnam
Dragon Capital Vietnam
Enterprise Investments
4
20,730 2.3
Vietnam Dairy Products 5,255 0.6
Mobile World Investment 2,167 0.2
Total Vietnam 28,152 3.1
Indonesia
Bank Mandiri 23,262 2.6
Total Indonesia 23,262 2.6
Thailand
Kasikornbank NVDR 14,300 1.6
Bangkok Dusit Medical
Services NVDR 4,924 0.6
Total Thailand 19,224 2.2
United Kingdom
Schroder Small Cap Discovery
Fund Z Acc
5
17,779 2.0
Total United Kingdom 17,779 2.0
Italy
Prada
1
10,218 1.2
Total Italy 10,218 1.2
Philippines
International Container
Terminal Service 8,281 0.9
Total Philippines 8,281 0.9
Total Investments
6
882,801 100.0
1
Listed in Hong Kong.
2
Listed in Luxembourg.
3
Listed in the USA.
4
Listed in the United Kingdom.
5
Predominantly invested in Asia.
6
Total investments comprises the following:
£’000 %
Equities, including ADRs, LEPOs and NVDRs 831,061 94.1
Collective investment funds 38,509 4.4
Preference shares 13,231 1.5
Total investments 882,801 100.0
The following abbreviations have been used above:
ADR: American Depositary Receipt
LEPO: Low Exercise Price Option
NVDR: Non Voting Depositary Receipt
£’000 % £’000 %
Investment Portfolio
as at 30 September 2022
12
Schroder AsiaPacific Fund plc
Strategic Report
Business model
The Board has appointed the Manager, Schroder Unit Trusts
Limited, 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 are described more completely 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 above. The investment process
and promotion activities are described in more detail below.
Investment process
Stock selection is at the heart of the investment approach for
the Company. A key strength of the Manager is its network of
analysts in Asia whose focus is on identifying companies able
to grow shareholder value in the long term. Although the in-
house analysts are the primary source of stock ideas, the
Investment Manager also generates stock ideas through
their own research and draws on a number of other sources
including other investment professionals within Schroders, a
proprietary quantitative screen and sell-side analysts.
The investment approach is primarily bottom-up, driven by
an assessment of the financial and non-financial (including
ESG) factors which influence company returns. In addition,
there is 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
Manager.
Stock research
The Manager believes that equity markets are not efficient in
Asia, and to generate alpha over the long term the best
approach is to focus on fundamental bottom-up stock
analysis. In particular, the Manager’s analytical focus is on the
future trend in a company’s return on invested capital
(“ROIC”) relative to its cost of capital, in the belief that this
reflects the attractiveness and sustainability of the business
model and serves as a predictor of long-term shareholder
returns.
Given this focus on fundamental research, it forms a key
input into the Manager’s stock selection decisions. The
Manager has 39 dedicated equity analysts across the Asia
Pacific ex Japan region, who have an average of over 16 years’
investment experience, seven of which have been with
Schroders. These analysts have an exceptional knowledge of
Asian markets and the companies within them. The
foundation of the Manager’s internal research is a
programme of regional company contacts each year (over
2,300 for calendar year 2021), with the majority of Schroders’
analysis being done using internal research and company
valuation models.
This is supplemented by other resources across the
Schroders group including the ESG and Data Insight Unit
teams as well as other equity teams focused on Global and
Emerging markets.
•
Responsible for
overall strategy and
oversight including
risk management
• Activities centred
on the creation of
shareholder value
Investor
Value
• Manager implements
the investment strategy
by following an
investment process
• Support by strong
research and risk
environment
• Regular reporting and
interaction with the
Board
• Set objectives,
strategy and KPIs
• Appoint Manager
and other service
providers to achieve
objectives
• Marketing and sales
capability of the
Manager
• Support from the
Corporate Broker with
secondary market
intervention to support
discount/premium
management
Board is focused on
ensuring:
• that the fees
and Ongoing
Charges remain
competitive
• that the Company
remains attractive
to shareholders and
potential investors
Investment
Strategy
Promotion
Competitiveness
Board
• Oversee portfolio
management
• Monitor achievement
of KPIs
• Oversee the use of
gearing
• Oversee the management
of the discount/premium
and the provision of
liquidity through share
buybacks and issuance
t
Oversight
The Strategic Report sets out the Company’s strategy for delivering the investment objective (set out on the
inside front cover), the business model, the risks involved and how the Board manages and mitigates those
risks. It also details the Company’s purpose, values and culture, and how it interacts with stakeholders.
Annual Report and Accounts
for the year ended 30 September 2022
13
Strategic Report
Strategic Report
For a long time, the Manager has incorporated into its
decision making a thorough assessment of management
quality, environmental, social and governance factors,
whether implicitly or explicitly. Schroders recognises the
importance of appraising both financial and non-financial
factors when analysing a company and its security. The
Manager believes that integrating an analysis and evaluation
of ESG factors in the security valuation and selection process
is key to enhancing and protecting long-term shareholder
value. The appraisal of non-financial factors, including ESG
considerations, contributes to a better understanding of a
company’s risk characteristics and return potential.
As long-term, bottom-up investors, assessing the
sustainability of a company’s returns and financial position
has always been at the core of the Manager’s research and
investment decisions in Asia. Consistent with this approach
the Manager engages with company management teams
(Schroders conducts over 2,300
1
meetings with regional
companies a year), as well as voting at all investee company
general meetings where practically possible. Schroders’
analysts are directly responsible for assessing ESG risks and
opportunities as the Manager believes they are best placed to
understand their companies and determine the impact of
ESG issues on the sustainability of the business.
ESG analysis is an integrated and important part of the
investment process from initial screening through to final
portfolio construction. ESG analysis impacts the investment
process in four direct ways:
1. Initial screening – ESG helps determine which companies
the Manager consider to be investable as part of the
initial screening.
2. Sustainability of earnings – ESG analysis helps
understand the impact ESG externalities may have on the
future earnings power of the business and with it the
assessment of the return on invested capital (“ROIC”) and
shareholder return classification (“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
Source: Schroders, September 2022.
1
Carbon Disclosure Project.
2
UN Principles for Responsible Investing.
3
UN Global Compact.
4
Strategy and Governance module.
5
For certain businesses acquired during the course of 2020 and 2021 we have not yet integrated
ESG factors into investment decision-making. There are also a small number of strategies for which ESG integration is not practicable or now possible, for example passive index tracking or legacy businesses or investments
in the process of or soon to be liquidated, and certain joint venture businesses are excluded.
‘Issues such as climate change, resource scarcity, population growth and corporate failure have put responsible investment at the forefront of
investors’ minds. We believe that companies with a strong environmental, social and governance ethos tend to deliver better results for our
clients.’
Peter Harrison, Group Chief Executive, Schroders plc
1998 2001 2006 2007 2008 2011 2016 2017 2019 2020 2021 2022
Published corporate
governance policy
Published first socially
responsible policy
Became a CDP
1
signatory
Became a UNPRI
2
signatory
Top 5 in 2017
AODP Global
Climate 50 Asset
Manager Index
Developed responsible
fixed income policy
6 years of
A+ UNPRI
rating
4
Became a
UNGC
3
signatory
Developed
responsible real
estate investment
policy
Acquired majority
stake in
BlueOrchard
Launched first
sustainable
strategy
Launched SustainEx &
Climate Progress
Dashboard
Linked ESG to
revolving credit
facility
Business
operating on a
carbon-
neutral basis
+
Achieved
full ESG
integration
5
Science-based
targets
validated by
SBTi
Launched
CONTEXT
Natural Capital
Research
partnership
#1 in ShareAction
European RI asset
management survey
CEO letter to
FTSE350
companies on
climate change
First dedicated
ESG resource
Founding
Signatory to
Net Zero Asset
Managers
Initiative
Became a
member of
the UN Race
to Net Zero
Initiative
Published
Engagement
Blueprint
Published
Climate
Transition
Action Plan
Became a Natural Capital
Investment Alliance
member
Acquired 75%
shareholding in
Greencoat Capital
Partnership with
Akaria Natural
Capital
Stock selection/portfolio construction
When constructing the portfolio for the Company, the Manager focuses on the following factors:
• conviction on investment thesis;
• upside to the internal estimate of fair value;
• any grade awarded by Schroders’ analysts;
• relative attractiveness of other available opportunities;
• the risks to the investment case;
• the ESG credentials of that company; and
• the sustainability of that company’s profits.
Integration of ESG into the investment process
How are ESG factors incorporated into the investment process?
Schroders has been considering Environmental, Social and Governance (“ESG”) issues, and sustainability generally, for over
20years, as detailed in the timeline below.
14
Schroder AsiaPacific Fund plc
Strategic Report
value estimate of a company; and direct, to the extent
that Schroders may apply an additional explicit
discount/premium to that fair value estimate.
4. Portfolio construction – ESG helps shape portfolio
construction and may influence how the Manager
assesses investments. 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
the Manager looks at, how Schroders assesses their
sustainability and, hence, how they value them. And while
company valuations ultimately drives portfolio construction,
ESG insights play a crucial role in the investment process and
influence the size of positions in the portfolio. Furthermore,
ESG analysis is broad reaching and the Manager is not only
interested in the potential downside risks that they may
identify, but also the upside return implications for stocks the
Company invests in.
Asia ex Japan ESG analysis in practice
2
Schroders’ Asian Equity analysts are expected to provide
written ESG analysis for all companies under coverage. This
identifies and assesses the potential effect of ESG issues on
the investment case.
To help the ESG analysis to be more robust and more
integrated, it draws on the proprietary tools developed by
Schroders such as Context and SustainEx. Asia Context, which
is the principal tool employed, captures the ESG analysis in
one template using a stakeholder-based framework and is a
key step in the overall assessment of a company. In addition
to separate rankings for ‘E’, ‘S’ & ‘G’, the Manager generates
an overall score for each company’s ESG rating.
Chart 1: Schroders Context Framework:
Source: Schroders
Schroders has always engaged with the companies that it
invests in, and direct company contact is an important
component of the initial due diligence and ongoing
monitoring process. The Asia Context template provides a
clearer, and broader, roadmap on the issues requiring
engagement. It has also helped refresh the team’s focus on
ROIC and enhances appreciation of the downside and upside
risks to a company’s business model. The analysts have the
option to apply an explicit discount or premium to their fair
value estimate as a result of their ESG analysis.
One of the Asian Equities team’s greatest strengths is having
experienced analysts working hand-in-hand with the
experienced fund managers – often involving discussions
from the beginning to the end of the research on a company.
Many of the fund managers are ex-analysts and they are
heavily involved in the discussions that underpin the ESG
conclusions – especially given the inherent subjectivity of how
certain ESG considerations will impact a company. Schroders
does not expect its analysts to score the Asia Context
templates in isolation – in many instances the team needs to
build a consensus on which issues to address and how to
score them.
In addition to the merits of an individual stock idea, the
Investment Manager will also take into consideration the
overall balance of the portfolio when selecting stocks and
sizing positions – looking, for instance, at overall sector and
country weights. As part of that process a company’s ESG
characteristics may influence how the Investment Manager
sizes positions within a portfolio. The Investment Manager
may elect to limit, or even rule out, exposure to a particular
stock in view of a specific ESG concern. They assess each
situation on its merits, focusing on the materiality of ESG
factors on a stock’s valuation and risk profile.
Working with the Schroders Group’s Sustainable
Investment Team
Schroders has a team of more than 50
3
dedicated ESG
professionals who develop proprietary ESG tools and oversee
ESG analysis across Schroders.
The ESG specialists will also engage directly with companies,
prioritising those with exposure to higher ESG risk and low
ESG ratings. They attend company meetings with portfolio
managers and analysts to discuss specific sustainability issues
directly with company management, in addition to financial
performance, as well as engaging with company
sustainability experts directly.
Corporate Governance analysts in the team will also work
alongside investors, and internal compliance and legal teams
to ensure voting activities comply with the ESG policy.
To enhance the Asian team’s ESG expertise, the Investment
Manager has two members of the Sustainable Investment
team based in Asia, supporting the investment team and
ensuring they are kept fully informed of the relevant output
of the Sustainable Investment team in London. In addition,
there is a Sustainable Equity Analyst on the team who brings
further insight and perspective to our ESG analysis and
engagement. The Asian investment team also collaborates
with the Sustainable Investment team, participating both
formally and informally, for instance, in a monthly ESG
conference call together with other investors globally to
discuss topical issues as well as ESG best practice.
Company
G
o
v
e
r
n
a
n
c
e
G
o
v
e
r
n
a
n
c
e
Employees
Employer choices, motivation
Suppliers
Operational continuity,
reputational risk
Environment
Cost pressures,
product efficiency
Regulators
License to operate, pricing,
competitive structure
Communities
Disruption to local operations
Customers
Brand perceptions,
product demands
1
For the year 2021.
2
The above ESG research framework covers investments in companies covered by our team of locally based Asia ex Japan analysts. The detail of ESG
coverage in other regions where analysts report locally (eg Australia, India) may differ, but is underpinned by the same broad approach.
3
As at July 2022.
Annual Report and Accounts
for the year ended 30 September 2022
15
Strategic Report
Strategic Report
As at 30September 2022
*Includes mining related stocks.
Outcome of ESG integration into the investment process
What is the outcome for the Company?
The process described above in relation to how the Manager approaches ESG results in a portfolio that is likely to be less
exposed to areas that could be deemed ‘sensitive’ from an ESG perspective, and where there is ‘sensitivity’ it is likely to be to
markets that are generally well regulated with a focus on the better practitioners. It should be noted that the Company does
not screen out all companies in sensitive sectors, rather the process results in a much higher hurdle for stocks to get into the
portfolio than might otherwise be the case. Below is a table that covers some of the more ‘sensitive’ sectors and the Company’s
exposure to them. Exposure to the more sensitive areas is limited.
Sector Reasons for Caution Approach Approximate
Company Exposure
Agribusinesses/
Aquaculture
Environmental, Social, Governance, (low
barriers of entry, widespread questionable
practices)
Avoid/small exposure 0%
Tobacco Social Avoid 0%
Gambling Social, Governance. Licence to
operate/promotional practices
Limited exposure to best-in-
class players in well-regulated
markets (eg Macau)
0%
Utilities
(traditional)
Environmental, Governance, (national service
obligations, uncertain regulations/risks of
backlash against coal plants, mostly state-
owned enterprises)
Avoid carbon heavy energy
providers, focus on hydro and
sustainable energy providers
in well-regulated markets
0%
Auto Environmental (regulations against the sector –
too much hot money in electric vehicles (“EVs”)
and multiple players will mean poor returns for
all)
Avoid exposure to traditional
original equipment
manufacturers (“OEMs”),
minimise exposure to supply
chains/EV batteries
0.6% OEMs (1 stock)
1.0% Supply chain
(1stock)
1.8% EV battery
manufacture (1stock)
Resources Environmental, Social, Governance
(questionable practices such as bribery and
poor environmental and safety controls
concerns widespread in Asia ex Australia)
Avoid except for Australian
blue chips, with minimal
thermal coal exposure
3.3% (3 stocks*)
Oil and Gas Environmental, Governance (regulations,
unfavourable taxes, price takers, big carbon
producers)
Limited exposure to sector
ideally with a gas focus or self-
help story
1.7% (2 stocks)
Property Environmental, Social, Governance (bribery
issues, flooding, land clearance compensation,
labour practices)
Exposure typically Hong Kong
and Singapore
3.4% (3 stocks)
Defence Monopsony structure, corruption Avoid 0%
16
Schroder AsiaPacific Fund plc
Strategic Report
Investment restrictions and spread of risk
The key restrictions imposed on the Manager are that:
(a) no more than 15% of the Company’s total net assets, at
the date of acquisition, may be invested in any one single
company;
(b) no more than 10% of the Company’s total net assets, at
the date of acquisition, may be invested in other listed
investment companies unless such companies have a
stated investment policy not to invest more than 15% of
their gross assets in other listed investment companies;
(c) the Company will not invest more than 15% of its gross
assets in other listed investment companies or
investment trusts;
(d) no more than 15% of the Company’s total net assets may
be invested in open-ended funds; and
(e) no more than 25% of the Company’s total net assets may
be invested in the aggregate of unlisted investments and
holdings representing 20% or more of the equity capital
of any company.
No breaches of these investment restrictions took place
during the financial year.
The investment portfolio on pages 10 and 11 demonstrates
that, as at 30September 2022, the Company held 59
investments spread over multiple countries and in a range of
industry sectors. The two largest investments, Samsung
Electronics and Taiwan Semiconductor Manufacturing, each
represented 8.1% of total investments. At the end of the year,
the Company did not hold any unlisted investments and the
only holding in an open-ended fund was in Schroder Small
Cap Discovery Fund Z Acc, which represented 2.0% of total
investments. There was also a holding in Vietnam Enterprise
Investments Limited, a closed-end fund trading on the
London Stock Exchange which represented 2.3% of total
investments. The Board believes that the objective of
spreading risk has been achieved.
Schroders’ approach has been to take a cautious approach to
exposure in those companies which, while they may be
making attractive returns currently, are not always operating
in a sustainable way which could potentially impact future
earnings.
The Company’s exposure to these industries, therefore, has
tended to be through the higher quality names, operating in
well-regulated markets. For example, while the Manager
believes commodity resources will continue to be necessary
in future (and indeed crucial for a transition to a lower carbon
world), the exposure to this sector is through blue-chip
Australian companies, rather than more marginal miners in
emerging countries. Similarly, for the real estate sector, the
exposure is largely through companies which have a focus on
strong governance, operating in the most well-regulated
markets in the region. For some sectors (e.g. tobacco or
thermal coal), the Manager’s requirement for operations to
be sustainable in the long-term is a high hurdle to clear,
regardless of the governance or regulatory frameworks the
C
ompany is operating under, so the Company has tended to
have very limited exposure there.
Perhaps the most prominent area of ESG-related risk is that of
Climate Change. Although the Company doesn’t explicitly
target a lower carbon footprint from its holdings than the
Benchmark, the table below shows that this is currently the
case. Whilst there are variations depending on the data
source, and there is not complete coverage of all stocks in the
universe, on most measures below the Company appears
better positioned than the Benchmark.
Source: Benchmark data MSCI AC Asia ex JP (USD), 30 September 2022.
Annual Report and Accounts
for the year ended 30 September 2022
17
Strategic Report
Strategic Report
Gearing
At the beginning of the financial year, the Company had in
place a £100million multi-currency revolving credit facility
with SMBC Bank International PLC of which £11.1million was
drawn down. On 23 June 2022, the date of expiry of the credit
facility with SMBC Bank International PLC, the Company
entered into a one year £75million revolving credit facility
agreement with The Bank of Nova Scotia, London Branch.
Under the facility agreement, the Company also has the
option to increase the revolving facility by a further £25
million to £100 million. At the year end £13.4million of the
credit facility with The Bank of Nova Scotia was drawn down.
In addition, the Company has a £30 million multi-currency
overdraft facility with HSBC, which was not utilised during the
year. The Board has set parameters within which the Manager
is authorised to use the credit facilities and draw down funds.
While the articles of association limit the amount of gearing
the Company may have to a maximum of the Company’s
adjusted capital and reserves, Directors do not anticipate net
effective gearing levels in excess of 20% of shareholders’
funds.
Promotion
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 Company 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, regional road shows and attendances at
conferences for professional investors. In addition, the
Company’s shares are supported by the Manager’s wider
marketing of investment companies targeted at 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.
The Board also seeks active engagement with investors and
meetings with the Chairman are offered to professional
investors where appropriate.
Shareholders are 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/fund-centre/funds-in-focus/investment-trusts/
schroders-investment-trusts/never-miss-an-update/
.
Details of the Board’s approach to discount management may
be found in the Chairman’s Statement on page 4 and in the
Annual General Meeting – Recommendations on page 61.
Key Performance Indicators
The Board reviews performance, using a number of key
measures, to monitor and assess the Company’s success in
achieving its objective. Further comment on performance can
be found in the Chairman’s statement. The following KPIs are
used:
• NAV performance;
• Share price discount/premium management; and
• Ongoing charges ratio.
Some KPIs are Alternative Performance Measures (APMs).
Further details can be found on page 2 and definitions of
these terms on page 65.
Purpose, Values and Culture
The Company’s purpose is to create long-term shareholder
value.
The Company’s culture is driven by its values: Openness,
Responsiveness, Diligence and the pursuit of Excellence, with
collegial behaviour and constructive challenge at Board level
and when engaging with stakeholders. The values are all
centred on achieving returns for shareholders in line with the
Company’s investment objective. The Board also promotes
the effective management or mitigation of the potential risks
faced by the Company. To the extent it does not conflict with
the investment objective, the Company’s operations are
structured 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
certain activities. The Board aims to fulfill the Company’s
investment objective by encouraging a culture of constructive
challenge with all 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.
Corporate and Social Responsibility
Diversity
As at 30 September 2022, the Board comprised three men
and two women, one member of the Board was also from an
ethnic minority background. The Board has adopted a
diversity and inclusion policy. With respect to recruitment of
non-executive Directors, the Company will not discriminate on
the grounds of gender, social and ethnic backgrounds or
cognitive and personal strengths. It will encourage any
recruitment agencies it engages to find a range of candidates
18
Schroder AsiaPacific Fund plc
Strategic Report
that meet the objective criteria agreed for each appointment.
Appointments will always be based on merit. 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.
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
has no significant greenhouse gas emissions and energy
usage to report.
Relations with shareholders
Shareholder relations are given high priority by both the
Board and the Manager. The Company communicates with
shareholders through its webpages and the annual and half
year reports which aim to provide shareholders with a clear
understanding of the Company’s activities and its results.
In addition to the engagement and meetings held during the
year described below, the chairs of the Board and
committees, as well as the Senior Independent Director and
the other Directors, attend the AGM and are available to
respond to queries and concerns from shareholders.
Responsible investment
The Company delegates to its Manager the responsibility for
taking environmental, social and governance (“ESG”) issues
into account when assessing the selection, retention and
realisation of investments. The Board expects the Manager to
engage with investee companies on social, environmental
and business ethics issues and to promote best practice. The
Board requires the Manager to exercise the Company’s voting
rights in consideration of these issues, and receive reporting
on them. The Company voted all of its proxy votes in line with
the Manager’s corporate governance policy. This covered
624resolutions, of which the Company voted against
management recommendations or abstained on 9.3%. This
primarily involved votes where the Manager felt the interest
of minority shareholders such as the Company was not
adequately protected, for example on issuing shares without
pre-emptive rights for existing shareholders, and where it
was judged that the Board was insufficiently independent.
In addition to the description of the Manager’s integration of
ESG into the investment process and the details in the
Managers’ Review, a description of the Manager’s policy on
these matters can be found on the Schroders website at
https://www.schroders.com/en/sustainability/making-an-
impact-through-sustainability/.
The Board notes that Schroders believes that companies with
good ESG management often perform better and potentially
deliver superior returns over time. Engaging with companies
to understand how they approach ESG management is an
integral part of the investment process. Schroders is
compliant with the UK Stewardship Code and its compliance
with the principles therein is reported on its website:
https://www.schroders.com/en/sustainability/active-
ownership/voting/.
The Board has received reporting from the Manager on the
application of its policy.
Annual Report and Accounts
for the year ended 30 September 2022
19
Strategic Report
Strategic Report
Stakeholder Engagement, Section 172 of the Companies Act 2006
During the year, the Board discharged its duty under section 172 of the 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, the Investment Manager, other service providers, the
Company’s Lenders and Investee Companies.
The table below explains how the Directors have engaged with all stakeholders and outlines key activities undertaken
during the reporting period.
Stakeholder Engagement
Shareholders
The Board recognises the importance of engaging with shareholders on a regular basis in order to
maintain a high level of transparency and accountability. The Board receives regular reports from the
Investment Manager and broker on shareholder engagement, and the Investment Manager
maintains regular and open dialogue with shareholders. The Manager also has a dedicated client
services team which maintains regular contact with the Company’s shareholders and reports regularly
to the Board.
Shareholders can also contact the Chairman and Directors throughout the year via the Company
Secretary or the Corporate Broker. The Chairman and Senior Independent Director are also available
to meet major shareholders to understand their views and to help inform the Board’s decision making
process.
The Company maintains a website from which copies of the annual and half year reports along with
factsheets and other relevant materials are available. Shareholders are also invited to attend the AGM
at which they have the opportunity to speak directly with Directors and Investment Manager.
The Board is responsible for formulating the strategy to manage the discount or premium at which
the Company’s shares trade to NAV. The strategy is designed to contain discount volatility, provide
liquidity to the market and enhance returns to shareholders.
Manager and
Investment
Manager
The Board’s main working relationship is with the Manager, who is responsible for the Company’s
portfolio management (including asset allocation, stock and sector selection) and risk management,
as well as functions such as secretarial, accounting and marketing services. The Manager has sub-
delegated portfolio management to the Investment Manager.
The Board maintains a constructive and collaborative relationship with the Manager and Investment
Manager, encouraging open discussion.
The Board invites the Investment 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 Investment
Manager and the impact of decisions affecting investment performance are set out in the Investment
Manager’s Review on pages6 to 9.
The management engagement committee reviews the performance of the Manager and Investment
Manager, their remuneration and the discharge of their contractual obligations at least annually.
20
Schroder AsiaPacific Fund plc
Strategic Report
Stakeholder Engagement
Other service
providers,
including:
– depositary and
custodian
– registrar
– Corporate
Broker
– legal counsel
– third-party
research
provider
The Board maintains regular contact with its key service providers, both at the Board and committee
meetings, and through ad hoc communication during 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 year, the management engagement committee undertook reviews of the 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.
Directors attended a meeting during the year to assess the internal controls of certain service
providers including the Company’s Depositary and Custodian HSBC, the registrar, Equiniti 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
to regulation and market practice in the industry.
Investee
companies
The Board recognises the importance of good stewardship and communication with investee
companies in meeting the Company’s investment objective and strategy. The Investment
Management team conducts face-to-face and/or virtual meetings with all portfolio companies’
management teams to understand current trading and prospects for their businesses, and to ensure
that their ESG investment principles and approach are understood.
The Investment Manager has discretionary powers to exercise the Company’s voting rights on
resolutions proposed by the investee companies within the Company’s portfolio. The Investment
Manager reports to the Board on stewardship (including voting) issues and the Board will question the
rationale for voting decisions made. Through engagement and exercising voting rights, the
Investment Manager actively works with companies to improve corporate standards, transparency
and accountability.
The Company’s
Lenders
During the year under review, the Board entered into a new revolving credit facility Agreement with
The Bank of Nova Scotia, London Branch. The credit facility provides the option for the Investment
Manager to leverage the portfolio, with the aim of enhancing long term returns to shareholders as
opportunities arise. The Board is responsible for ensuring that the Company adheres to all existing
covenants.
Specific Examples of Stakeholder Consideration during the Year
The Directors were particularly mindful of stakeholder considerations in reaching the following key decisions during the year
ended 30 September 2022, accordingly:
• the Board has continued to consider Board succession planning, as it recognises the benefits of regular Board
refreshment. Julia Goh was appointed as a non-executive Director on 25 October 2021 to succeed Rosemary Morgan as
chair of the audit and risk committee following her retirement as a non-executive Director at the AGM on 1February 2022;
• the Board entered into a new revolving credit facility Agreement in June 2022. A thorough review of the available options
was undertaken as part of the process and consideration was given to alternatives such as term loans and long-term debt
issuance. Given the specific requirements of the Company and various factors, including the interest rate environment, the
Board concluded that the one year revolving credit facility remained the most appropriate arrangement;
• the Board has declared a final dividend of 12.00p per ordinary share (2021: 9.70p) which, if approved by shareholders at the
AGM on 1 February 2023 will be paid on 10 February 2023;
• the Board has continued the strategy to buy back shares which provides a degree of liquidity when the discount widens;
and
• the Board also agreed with the Manager to reduce the management fee with effect from 1 April 2023.
Following the year end, with the lifting of COVID-19 travel restrictions in some countries, the Board resumed its annual visit,
together with the Investment Manager, to the region and visited Mumbai and Singapore to undertake due diligence meetings
with consultants and investee companies.
Annual Report and Accounts
for the year ended 30 September 2022
21
Strategic Report
Strategic Report
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 investmenttrust 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 determiningthe nature and extent of the risks it is willing
to take in achieving the Company’s strategic objectives. Both the principal risks and the monitoring system are also subject to robust
review at least annually. The last review took place in November 2022.
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.
The AIC Code of Corporate Governance requires the audit and risk committee to also put in place procedures to identify emerging
risks. The actions taken by the Board and, where appropriate, its committees, to manage and mitigate the Company’s principal and
emerging risks are set out in the table below:
Risk Mitigation and management
Strategic
The requirements of investors change or develop in
such a way as to diverge from the Company’s
investment objectives, resulting in a wide discount of
the share price to NAV per share.
The appropriateness of the Company’s investment remit is
periodically reviewed and the success of the Company in meeting
its stated objectives is monitored.
The share price relative to NAV per share is monitored and the use
of buy back authorities is considered on a regular basis.
The marketing and distribution activity is regularly reviewed. The
Company engages proactively with investors.
The Company’s cost base could become
uncompetitive, particularly in light of open ended
alternatives.
The ongoing competitiveness of all service provider fees is
subject to periodic benchmarking against their competitors.
Annual consideration of management fee levels is undertaken
.
Investment management and performance
The Manager’s investment strategy, 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.
Review of the Manager’s compliance with its agreed investment
restrictions, investment performance and risk against investment
objectives and strategy; relative performance; the portfolio’s risk
profile; and whether appropriate strategies are employed to
mitigate any negative impact of substantial changes in markets.
The Manager reports on macro-economic events, including
regional policies, quarterly.
Annual review of the ongoing suitability of the Manager.
Regular meetings with major shareholders to seek their views with
respect to Company matters.
Financial and currency
The Company is exposed to the effect of market
fluctuations due to the nature of its business. A
significant fall in regional equity markets or a
substantial currency fluctuation could have an
adverse impact on the market value of the Company’s
investments.
The risk profile of the portfolio is considered and appropriate
strategies to mitigate any negative impact of substantial changes
in markets or currency are discussed with the Manager.
The Company has no formal policy of hedging currency risk but
may use foreign currency borrowings or forward foreign currency
contracts to limit exposure.
Political
Political risk includes the impact of geopolitical risk,
regional tensions, trade wars and sanctions against
companies, in areas in which the Company invests or
may invest, that might have consequences for the
Company including an adverse effect on the value of
the Company’s assets.
The Board monitors global developments and regularly has
discussions with the Investment Manager and other interested
parties. It will continue to do so as matters develop in respect of
Russia’s invasion of Ukraine, tensions between US and China,
developments within China, increasing energy and food prices,
global economic growth and the potential for further geopolitical
unrest. Subject to shareholder consent, the Board can amend the
investment policy and objective of the Company to mitigate these
risks.
22
Schroder AsiaPacific Fund plc
Strategic Report
Risk Mitigation and management
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the
depositary.
The depositary reports on the safe custody of the Company’s
assets, including cash and portfolio holdings which are
independently reconciled with the Manager’s records.
The review of audited internal controls reports covering custodial
arrangements is undertaken.
An annual report from the depositary on its activities, including
matters arising from custody operations is received.
Gearing and leverage
The Company utilises credit facilities. These
arrangements increase the funds available for
investment through borrowing. While this has the
potential to enhance investment returns in rising
markets, in falling markets the impact could be
detrimental to performance.
Gearing is monitored and strict restrictions on borrowings are
imposed: gearing continues to operate within pre-agreed limits so
as not to exceed 20% of shareholders’ funds.
Accounting, legal and regulatory change
In order to continue to qualify as an investment trust,
the Company must comply with the requirements of
Section 1158 of the Corporation Tax Act 2010.
Breaches of the UK Listing Rules, the Companies Act
or other regulations with which the Company is
required to comply, could lead to a number of
detrimental outcomes.
The Board intends to continue to operate the Company in full
compliance with the requirements of Section 1158 of the
Corporation Tax Act 2010.
The confirmation of compliance with relevant laws and regulations
by key service providers is reviewed.
Shareholder documents and announcements, including the
annual report, are subject to stringent review processes.
Procedures are established to safeguard against the disclosure of
inside information.
Service provider
The Company has no employees and has delegated
certain functions to a number of service providers.
Failure of controls and poor performance of any
service provider, could lead to disruption,
reputational damage or loss.
Service providers are appointed subject to due diligence processes
and with clearly documented contractual arrangements detailing
service expectations.
Regular reporting is provided by key service providers and
monitoring of the quality of their services provided. The Directors
also receive presentations from the Manager, depositary and
custodian, and the registrar on an annual basis.
Review of annual audited internal controls reports from key service
providers, including confirmation of business continuity
arrangements and IT controls is undertaken.
Cyber
The Company’s service providers are all exposed to
the risk of cyber attacks. Cyber attacks could lead to
loss of personal or confidential information or disrupt
operations.
Service providers report on cyber risk mitigation and management
at least annually, which includes confirmation of business
continuity capability in the event of a cyber attack.
In addition, the Board received presentations from the Manager,
depositary and custodian, and the registrar on cyber risk.
The Board noted that following the invasion of Ukraine by Russia,
cyber risk was assessed to be higher, and the Board sought
assurances from its service providers that they were as ready as
they could be to manage the increased risk.
Climate change
Climate change and climate-related risks could impact
the Company’s business and affect revenue,
expenses, asset values and the cost or availability of
capital.
The consideration of climate change risks and opportunities and of
environmental, social and governance factors is integrated into the
Investment Manager’s investment process. The Investment
Manager also considers and evaluates the approach investee
companies take to recognise and mitigate climate change risks.
Annual Report and Accounts
for the year ended 30 September 2022
23
Strategic Report
Viability statement
The Directors have assessed the viability of the Company
over a five year period, taking into account the Company’s
position at 30September 2022 and the potential impact of
the principal and emerging risks it faces for the review
period. This is further detailed in the Chairman’s Statement,
Investment Managers’ Review and Principal and Emerging
Risks sections of this report. 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.
The Board believes that a period of five years 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.
In its assessment of the viability of the Company, the
Directors have considered each of the Company’s principal
and emerging risks detailed on pages 21 and 22 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 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.
Whilst the Company’s articles of association require that a
proposal for the continuation of the Company be put forward
at the Company’s AGM in 2026, the Directors have no reason
to believe that such a resolution will not be passed by
shareholders.
The Directors also considered a stress test in which the
Company's NAV dropped by 50% and noted that, based on
the assumptions in the test, the Company would continue to
be viable over a five year period.
Based on the Company’s processes for monitoring operating
costs, the Board’s view that the Manager has the appropriate
depth and quality of resource to achieve superior returns in
the longer term, the portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity risk and financial
controls, 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 the matters referred to in the viability
statement. Based on the work the Directors have performed,
they have not identified any material 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
31 December 2023 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
6 December 2022
Strategic Report
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.
A full analysis of the financial risks facing the Company is set out in note 20 to the accounts on pages 55 to 60.
24
Schroder AsiaPacific Fund plc
Board of Directors
James Williams
Status: Independent non-executive Chairman
Length of service: 8 years – appointed a Director in August 2014 and the
Chairman with effect from 1 February 2021
Experience: Mr Williams worked for 18years in the investment banking industry
for ING Barings, ABN AMRO and Commerzbank Securities including senior roles in
Hong Kong, Bangkok and London. After leaving Commerzbank Securities in 2005
he became a partner at Saginaw Capital LLP until 2008.
Committee membership: audit and risk, management engagement and
nomination committees
Current remuneration: £45,000 per annum
Number of shares held: 15,125*
Keith Craig
Status: Independent non-executive Director
Length of service: 7years – appointed a Director in May 2015
Experience: Mr Craig served with the British Army after university and
subsequently joined the Swire Group in Hong Kong and Manila in the 1980s and
early 1990s. He was then a diplomat with the Foreign & Commonwealth Office for
some years before moving back to Asia as a stockbroker, establishing WI Carr’s
business in the Philippines and subsequently running their global equity sales and
trading operation, based in Hong Kong. He returned to London in 2000 and was
CEO of Hakluyt, a strategic intelligence company, until 2017, when he founded
Westbury Partners. He is a director of Minerva Research, Chairman of the
International Advisory Council of PJT Partners and a member of the advisory
boards of the Bodleian Library and Cancer Research UK.
Committee membership: audit and risk, management engagement and
nomination committees (chair of nomination committee)
Current remuneration: £33,000 per annum (from 1 October 2021)
Number of shares held: 12,581*
Julia Goh
Status: Independent non-executive Director
Length of service: 1 year – appointed a Director in October 2021 and as the Chair
of Audit and Risk committee on 1 February 2022
Experience: Ms Goh has over 27 years of broad-based financial services experience
in London. She was a Managing Director at Barclays Investment Bank from 2010-
2018 in various senior front office positions including from 2017 the COO of Global
Markets. She was a Managing Director and the Global Head of Prime Services Risk
at Credit Suisse from 1998-2009. Prior to that, she was a risk manager at Nomura
International. A Singaporean, she came to London in 1987 for her BSc at the LSE,
followed by 5 years with PWC in corporate tax getting her ACA, before obtaining
her MSc in Quantitative Finance. She is an independent non-executive director of
Pension Insurance Corporation plc and also of its parent company, Pension
Insurance Corporation Group, and a director of the charity, Children of the
Mekong.
Committee membership: audit and risk, management engagement and
nomination committees (chair of audit and risk committee)
Current remuneration: £40,000 per annum
Number of shares held: 15,000*
Annual Report and Accounts
for the year ended 30 September 2022
25
Governance
Board of Directors
Vivien Gould
Status: Independent non-executive Director
Length of service: 3 years – appointed a Director in May 2019
Experience: Ms Gould has worked in the financial services sector since 1981. She
was a founder director of River & Mercantile Investment Management Limited
(1985) and served there as a senior executive and deputy managing director until
1994. She then served on the boards of a number of listed investment trusts,
investment management companies and other financial companies. She also
served on the boards of a number of charities, including the Stroke Association,
where she chaired the investment committee. Ms Gould is currently a non-
executive director and senior independent director of The Lindsell Train Investment
Trust PLC, a non-executive director of Baring Emerging EMEA Opportunities PLC,
Third Point Investors Limited, and National Philanthropic Trust UK.
Committee membership: audit and risk, management engagement and
nomination committees
Current remuneration: £33,000 per annum
Number of shares held: 5,000*
Martin Porter
Status: Senior Independent non-executive Director
Length of service: 5 years – appointed a Director in October 2017 and as the
Senior Independent Director with effect from 1 February 2022
Experience: Martin joined Robert Fleming Asset Management in 1984, and ran
equity portfolios in both London and Japan. During his tenure in Japan, he became
a holding board director of Jardine Fleming, responsible for the Japanese business.
Returning to the UK in 2000, he took up the role of Chief Investment Officer, Equity
and Balanced of Fleming Asset Management, before becoming Global Head of
Equities of JPMorgan Asset Management, a position he held from 2003 to 2016
when he retired.
Committee membership: audit and risk, management engagement and
nomination committees (chair of management engagement committee)
Current remuneration: £33,000 per annum
Number of shares held: 10,000*
*Shareholdings are as at 6 December 2022, full details of Directors’ shareholdings are set out in the Remuneration Report on page 36.
26
Schroder AsiaPacific Fund plc
The Directors submit their report and the audited financial
statements of the Company for the year ended 30 September
2022.
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
biography is detailed on page 24. 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 or by email to:
amcompanysecretary@schroders.com.
Role and operation of the Board
The Board (of five Directors, listed on pages 24 and 25) 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 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 Strategic Report on
pages 12 to 23 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 per share,
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.
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 sixmonths’ 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 also provides general marketing
support for the Company and manages relationships with key
investors, in conjunction with the Chairman, other Board
members or the Corporate Broker as appropriate. The
Manager has delegated investment management,
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.
The Schroders Group manages £773.4billion (as at 30June
2022) 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.
Under the terms of the AIFM agreement, the Manager is
entitled to a fee of 0.75% per annum on the first £600 million
of the cum income net assets, and 0.70% per annum on the
cum income net assets in excess of £600 million. The
accounting, administrative and company secretarial fee is
fixed at £150,000 per annum.
Chargeable assets represent total assets less current liabilities
other than short-term borrowings, less any cash up to the
level of borrowings.
The management fee payable in respect of the year ended
30September 2022 amounted to £6,913,000 (2021:
£8,104,000).
Directors’ Report
Annual Report and Accounts
for the year ended 30 September 2022
27
Governance
The accounting, administrative and company secretarial fee
paid to the Manager in the year ended 30September 2022
was £150,000 (2021: £130,000).
Details of amounts payable to the Manager are set out in
note17 on page54 of this report.
The Board has reviewed the performance of the Manager
during the year under review and continues to consider that it
has the appropriate depth and quality of resource to deliver
superior returns over the longer term. The Manager is
supported by significant depth of knowledge and experience
in Asia, with regional resources and local analysts. 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.
Depositary
HSBC Bank plc, which is authorised by the Prudential
Regulation Authority and regulated by the FCA and the
Prudential Regulation Authority, carries out certain duties of a
depositary specified in the AIFM Directive including, in
relation to the Company, as follows:
– safekeeping of the assets of the Company which are
entrusted to it;
– cash monitoring and verifying the Company’s cash flows;
and
– oversight of the Company and the Manager.
The Company, the Manager and the depositary may
terminate the depositary agreement at any time by giving
90days’ notice in writing. The depositary may only be
removed from office when a new depositary is appointed by
the Company.
Registrar
Equiniti Limited has been appointed as the Company’s
registrar. Equiniti’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.
Compliance with the AIC Code of
Corporate Governance
The Board of the Company has considered the principles and
provisions of the AIC Code of Corporate Governance (the “AIC
Code”). The AIC 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. The Board considers
that reporting against the Principles and Provisions of the AIC
Code, provides more relevant information to shareholders.
The AIC Code is available on the AIC website
(
www.theaic.co.uk). It includes an explanation of how the AIC
Code adopts the Principles and Provisions set out in the UK
Code to make them relevant for investment companies. The
UK Code is available from the Financial Reporting Council’s
website at
www.frc.org.uk.
The Financial Conduct Authority requires all UK listed
companies to disclose how they have complied with the
provisions of the UK Code. This statement, together with the
Statement of Directors’ Responsibilities, viability statement
and going concern statement set out on pages 37 and 23
respectively, indicates how the Company has complied with
the principles of good governance of the AIC Code and its
requirements on internal control. The Strategic Report and
Directors’ Report provide further details on the Company’s
internal controls (including risk management), governance
and diversity policy.
The Board is satisfied that the Company’s current governance
framework is compliant with the AIC Code. The nomination
committee reviews Directors’ remuneration and as such there
is no separate remuneration committee.
Revenue, final dividend and dividend
policy
The net revenue return for the year, after finance costs and
taxation, was £19,673,000 (2021:£16,080,000), equivalent to a
revenue return per ordinary share of 12.04pence
(2021:9.66pence).
The Board has recommended the payment of a final dividend
for the year ended 30 September 2022 of 12.00 pence per
share (2021: 9.70 pence) payable on 10 February 2023 to
shareholders on the register on 30 December 2022, subject to
approval by shareholders at the AGM on 1 February 2023.
The Board’s policy is to pay out substantially all the
Company’s revenue.
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 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.
Other required Directors’ Report
disclosures under laws, regulations, and
the AIC Code
Status
The Company carries on business as an investment trust. Its
shares are listed and admitted to trading on the premium
segment of the main market of the London Stock Exchange. It
has been approved by HM Revenue & Customs as an
investment trust in accordance with section 1158 of the
Corporation Tax Act 2010, by way of a one-off application and
Directors’ Report
28
Schroder AsiaPacific Fund plc
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 domiciled in the UK and is an investment
company within the meaning of section 833 of the Companies
Act 2006. The Company is not a “close” company for taxation
purposes.
The articles of association contain provisions requiring the
Directors to put a proposal for the continuation of the
Company to shareholders at the Annual General Meeting
(“AGM”) in 2026 and thereafter at five yearly intervals.
Share capital and substantial share
interests
As at the date of this report, the Company had [•] ordinary
shares of 10p in issue. No shares were held in treasury.
During the year under review 4,060,000 ordinary shares with
a nominal value of 10p per share, which represented 2.5% of
the Company’s ordinary shares in issue at the start of the
year, were bought back. All ordinary shares bought back were
subsequently cancelled.
Details of changes to the Company’s share capital during the
year under review are given in note 14 to the accounts on
page 52. 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 Disclosure Guidance and
Transparency Rule 5.1.2R of the below interests in 3% or
more of the voting rights attaching to the Company’s issued
share capital.
Ordinary %
shares as at of total
30 September voting
2022 rights
Investec Wealth & Investment Ltd 16,677,722 9.99
Rathbone Investment
Management ltd 8,524,340 5.09
Schroders plc 8,483,022 5.06
Lazard Asset Management LLC 8,224,618 5.01
City of London Investment
Management Ltd 8,191,785 5.00
abrdn 8,299,097 4.95
Wells Capital Management Inc 8,255,649 4.93
Following the year end, and at the date of this report, Lazard
Asset Management LLC notified a change in their holding to
7,911,876 ordinary shares and 4.95% of total voting rights
and City of London Investment Management Ltd notified a
change in their holding to15,933,568 ordinary shares and
10.01% of total voting rights.
Provision of information to the auditor
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 auditor is 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 auditor is 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. The Board also met for one
additional meeting during the year, attended by all Directors
available at the time. The ad hoc meeting was held to
consider recruitment, refinancing the credit facility, to discuss
strategy and to receive updates on the Company’s
performance.
Audit Management
and Risk Engagement
Director Board Committee Committee
2
James Williams 4/4 2/2 1/1
Keith Craig 4/4 2/2 1/1
Julia Goh
1
4/4 2/2 1/1
Vivien Gould 4/4 2/2 1/1
Rosemary Morgan
2
2/2 1/1 n/a
Martin Porter 4/4 2/2 1/1
1
Ms Goh was appointed on 25 October 2021.
2
Mrs Morgan retired on 1 February 2022.
The nomination committee met shortly after the year ended
30 September 2022 to consider the matters set out in the
nomination committee report on pages 32 and 33. All
members were present at the meeting.
Directors’ and officers’ liability insurance and
indemnities
Directors’ and officers’ liability insurance cover was in place
for the Directors throughout the year. The Company’s articles
of association provide, subject to the provisions of UK
legislation, an indemnity for Directors in respect of costs
which they may incur relating to the defence of any
proceedings brought against them arising out of their
positions as Directors, in which they are acquitted or
judgment is given in their favour by the Court. This is a
qualifying third party indemnity policy and was in place
throughout the year under review for each Director and to
the date of this report.
By order of the Board
Schroder Investment Management Limited
Company Secretary
6 December 2022
Directors’ Report
Annual Report and Accounts
for the year ended 30 September 2022
29
Governance
Audit and Risk Committee Report
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/asiapacific.
All Directors are members of the committee. Julia Goh was appointed as Chair of the committee on 1 February 2022 and
succeeded Rosemary Morgan following her retirement from the Board. 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.
Ongoing risk review
Half year
report
Audit
planning
Audit
Annual
report
Post-audit
review
Approach
The committee’s key roles and responsibilities are set out in the table below.
Risks and Internal Controls Financial Reports and Valuation Audit
Principal risks
To establish a process for identifying,
assessing, managing and monitoring the
principal risks of the Company.
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 half year report.
Audit results
To discuss any matters arising from the
audit and recommendations made by
the auditor.
Emerging risks
To ensure a robust assessment of the
Company’s emerging risks and
procedures are in place to identify
emerging risks, and an explanation of
how these are being managed or
mitigated.
Going concern
To review the position 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.
Auditor appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment,
reappointment, effectiveness and
removal of the external auditor, to
review their independence, and to
approve their remuneration and terms of
engagement. Reviewing and agr
eeing
the audit plan and engagement letter.
The below table sets out how the committee discharged its duties during the year. The committee met twice during the year.
Further details on attendance can be found on page 28. An evaluation of the committee’s effectiveness and review of its terms of
reference was completed during the year.
Significant issues identified during the committee’s review of the Company’s principal and emerging risks, and key matters
communicated by the auditor during its reporting are included below.
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Service provider controls
Reviewing the operational controls
maintained by the Manager,
administrator, depositary and registrar.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Engagement with the FRC
On 8 April 2022, the Corporate Reporting
Review department of the Financial
Reporting Council (FRC) advised that our
Annual Report for the year ended 30
September 2021 had been subject to their
review. There were a small number of
minor observations made by the FRC
which resulted in some minor
enhancements to our disclosures which
are reflected within this report. Note that
the FRC’s role is to consider compliance
with the reporting requirements, rather
than to verify the information provided.
As a result, the review process does not
provide assurance that the 2021 report
was correct in all material respects.
Effectiveness of the independent audit
process and auditor performance
Evaluated the effectiveness of the
independent audit firm and process
prior to making a recommendation that
it should be re-appointed at the
forthcoming AGM. Evaluated the
auditor’s performance against agreed
criteria including: qualification;
knowledge, expertise and resources;
independence policies; effectiveness of
audit planning; adherence to auditing
standards; and overall competence was
considered, alongside feedback from the
Manager on the audit process. The
committee noted the auditor had
demonstrated its professional scepticism
during the audit. The committee was
satisfied with the auditor’s replies.
30
Schroder AsiaPacific Fund plc
Audit and Risk Committee ReportAudit and Risk Committee Report
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Internal controls and risk management
Consideration of several key aspects of
internal control and risk management
operating within the Manager,
depositary and registrar, including
assurance reports and presentations on
these controls.
Calculation of the investment
management fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Auditor independence
Ernst & Young LLP has provided audit
services to the Company for four years, since
appointment by the Company on 26July
2019 to audit the financial statements for the
year ended 30 September 2019 and
subsequent financial periods.
The auditor is required to rotate the senior
statutory auditor every five years. There are
no contractual obligations restricting the
choice of external auditor.
This is the fourth year that the senior statutory
auditor, Caroline Mercer has conducted the
audit of the Company’s financial statements.
The Company is compliant with the
provisions of the September 2014
Competition and Markets Authority Order,
which requires that FTSE 350 companies put
their audit out to tender at least every ten
years.
Compliance with the investment trust
qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Overall accuracy of the annual report
and accounts
Consideration of the draft annual report
and accounts and the letter from the
Manager in support of the letter of
representation to the auditor.
Audit results
Met with and reviewed a comprehensive
report from the auditor which detailed
the results of the audit, compliance with
regulatory requirements, safeguards that
have been established, and on their own
internal quality control procedures.
Principal risks
Reviewing the principal risks faced by the
Company and the system of internal
control.
Valuation and existence of holdings
Quarterly review of portfolio holdings
and assurance reports.
Meetings with the auditor
Met the auditor without representatives
of the Manager present. Representatives
of the auditor attended the committee
meeting at which the draft annual report
and accounts were considered.
Emerging risks
Reviewing the emerging risks for the
Company.
Fair, balanced and understandable
Reviewed the annual report and
accounts to ensure that it was fair,
balanced and understandable.
Provision of non-audit services by the
auditor
The committee has reviewed the FRC’s
Guidance on Audit Committees and has
formulated a policy on the provision of
non-audit services by the Company’s
auditor. The committee has determined
that the Company’s appointed auditor
will not be considered for the provision of
certain non-audit services, such as
accounting and preparation of the
financial statements, internal audit and
custody. The auditor may, if required,
provide other non-audit services which
will be judged on a case-by-case basis.
The auditor did not provide any non-audit
services to the Company during the year.
Going concern and viability
Reviewing the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
Ernst & Young LLP indicated to the
committee their willingness to continue
to act as auditor.
Recommendations made to, and approved by, the Board:
As a result of the work performed, the committee has concluded that the annual report for the year ended 30 September 2022,
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 37.
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 Ernst & Young LLP as auditor to the Company, and to authorise the
Directors to determine their remuneration will be proposed at the AGM.
Julia Goh
Audit and risk committee chair
6 December 2022
Annual Report and Accounts
for the year ended 30 September 2022
31
Governance
Oversight of other service providers
The committee reviews the performance and
competitiveness of the following service providers on
at least an annual basis:
• Depositary and custodian
• Corporate Broker
• Registrar
• Lender
The committee also receives a report from the
Company Secretary on ancillary service providers, and
considers any recommendations.
The committee notes the audit and risk committee’s
review of the auditor.
Oversight of the Manager
The committee
:
• reviews the Manager’s performance, over the short
and long term, against the Benchmark, 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.
• assesses whether the Company receives
appropriate administrative, accounting, company
secretarial and marketing support from the
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 reviewed the management fee and
agreed a change with the Manager, resulting in a
reduction in overall fees, from 1 April 2023, as detailed
in the Chairman's Statement.
The committee reviewed the other services provided
by the Manager and agreed they were satisfactory.
The annual review of each of the service providers was
satisfactory.
The committee noted that the audit and risk
committee had undertaken a detailed evaluation of
the Manager, registrar, depositary and custodian’s
internal controls.
Application during the year
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. Martin Porter is the
Chair of the committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/asiapacific.
Approach
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement was in the best interests of
shareholders as a whole.
• That the Company’s service providers’ performance remained satisfactory.
• That the fee structure be varied, as detailed in the Chairman's Statement.
32
Schroder AsiaPacific Fund plc
Selection and induction
• The committee prepares a job
specification for each role, and
an independent recruitment
firm is appointed. For the
Chairman and the chairs of
committees, the committee
considers current Board
members too.
• A job specification outlines the
knowledge, professional skills,
personal qualities and
experience requirements.
• Potential candidates are
assessed against the
Company’s diversity policy.
• 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 of new Directors.
Board evaluation and Directors’ fees
• The committee assesses each Director
annually, and will use an external Board
evaluator every three years.
• The 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.
• All Directors retire at the AGM and their
re-election is subject to shareholder
approval.
• The committee reviews Directors’ fees,
taking into account comparative data and
reports to shareholders. No Directors are
involved in making recommendations
with respect to their own remuneration.
• Any proposed changes to the
remuneration policy for Directors is
discussed and reported to shareholders.
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 the AGM.
• 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.
Nomination Committee Report
The nomination committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment
during their tenure, and (3) the Board’s succession. All Directors are members of the committee. Keith Craig is the chair of
the committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/asiapacific.
Approach
Oversight of Directors
Selection
Induction
Annual
evaluation
Annual review
of succession
policy
Application
of succession
policy
For application see page 33
Annual Report and Accounts
for the year ended 30 September 2022
33
Governance
Selection and induction
• The committee noted that
following her appointment,
MsGoh engaged in an
induction programme.
Board evaluation and Directors’ fees
• The Board and committee evaluation
process was undertaken during the year,
and the evaluation concluded in October
2022.
• 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. All
Directors were considered to be
independent in character and judgement.
• 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 pages24
and 25.
• Based on its assessment, the committee
provided individual recommendations for
each Director’s re-election.
• The committee reviewed Directors’ fees,
using external benchmarking, and
recommended that Directors’ fees should
not be increased for the year ending
30September 2023.
Succession
• The committee reviewed the
succession policy and agreed it
was still fit for purpose.
• The committee noted that
MrsMorgan had retired at the
AGM in 2022 and had been
succeeded by Ms Goh.
• Ms Goh was recommended to
the Board for appointment as
a non-executive director
following the engagement of
Odgers Berndtson to identify
potential candidates for a new
board appointment. Odgers
Berndtson had no connection
with the Company or any of
the Directors.
Nomination Committee Report
Recommendations made to, and approved by, the Board:
• That Director’s fees would not be increased for the year ending 30 September 2023.
• 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, sustainable success, and remain free from conflicts with the
Company and its Directors, so should all be recommended for re-election by shareholders at the AGM.
• That Julia Goh be appointed as a non-executive director with effect from 25 October 2021 and, following the retirement of
MrsMorgan at the AGM in 2022, as the Audit and Risk Committee Chair.
Application during the year
34
Schroder AsiaPacific Fund plc
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 forthcoming AGM and the current policy
provisions will apply until that date. An ordinary resolution to
approve the Directors’ remuneration policy will be put to
shareholders at the forthcoming AGM (no changes are
proposed). 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 30January 2020, 99.86% of the votes cast
(including votes cast at the Chairman’s discretion) in respect
of approval of the remuneration policy were in favour, while
0.14% were against and 108,823 votes were withheld.
At the AGM held on 1 February 2022, 99.87% of the votes cast
(including votes cast at the Chairman’s discretion) in respect
of approval of the report on remuneration for the year ended
30 September 2021 were in favour, while 0.13% were against
and 69,552votes were withheld.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter dealt with
by the Board and the nomination committee.
It is the Board’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 level of fees set out in the
Company’s articles of association. This aggregate level of fees
is currently set at £300,000 per annum and any increase in
this level requires approval by the Board and the Company’s
shareholders.
The Chairman of the Board and the chair of the audit and risk
committee each receive fees at a higher rate than the other
Directors to reflect their additional responsibilities. Directors’
fees 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 and does not intend to operate a share
scheme for Directors or to award any share options or long-
term performance incentives to any Director. No Director has
a service contract with the Company. However 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.
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.
Implementation of policy
The Board did not seek the views of shareholders in setting
this remuneration policy. Any comments on the 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’ annual report on remuneration
This report sets out how the Directors’ remuneration policy
was implemented during the year ended 30 September 2022.
Consideration of matters relating to Directors’
remuneration
Directors’ remuneration was last reviewed by the nomination
committee and the Board in October 2022. The members of
the Board at the time that remuneration levels were
considered are as set out on pages24 and 25 of this annual
report. Although no external advice was sought in
considering the levels of Directors’ fees, information on fees
paid to Directors of other investment trusts managed by
Schroders and peer group companies provided by the
Manager and Corporate Broker was taken into consideration,
as was independent third party research.
Following this review, the Board agreed that Directors’ fees
should not be increased. Fees were last increased with effect
from 1October 2021.
Directors’ Remuneration Report
Annual Report and Accounts
for the year ended 30 September 2022
35
Governance
Expenditure by the Company on remuneration
and distributions to shareholders
The table below compares the remuneration payable to
Directors to the 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
30 September 30 September
2022 2021 Change
£’000 £’000 %
Remuneration
payable to Directors 199 186 7.0
Distributions to
shareholders by way of:
– Dividends paid during
the year
15,922 13,346
– Share buybacks 21,653 11,836
Total distributions
to shareholders 37,575 25,182 49.2
The information in the above table has been audited.
.
Ten year share price and Benchmark total returns
1
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September
2012.
Definitions of terms and Alternative Performance Measures
are provided on page 65.
50
100
150
200
250
300
350
3
0
-Se
p-1
2
3
0
-Se
p-1
3
3
0
-Se
p-1
4
3
0
-Se
p-1
5
3
0
-Se
p-1
6
3
0
-Se
p-1
7
3
0
-Se
p-1
8
3
0
-Se
p-1
9
3
0
-Se
p-2
0
3
0
-Se
p-
2
1
3
0
-Se
p-2
2
Benchmark total return
Share price total return
Directors’ Remuneration Report
Fees paid to Directors
The following amounts were paid by the Company to
Directors for their services in respect of the year ended 30 September
2022 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 page 2, under the heading “Financial Highlights”.
Change in annual
fee over
years ended
Fees Taxable benefits
1
Total 30 September
2022 2021 2022 2021 2022 2021 2022 2021 2020
Director £ £ £ £ £ £ % % %
J
ames Williams (Chairman)
2
45,000
38,509
484
1,625
45,484
40,134
13.3
31.5
7.7
Keith Craig
33,000
30,000
539
542
33,539
30,542
9.8
1.5
7.1
Julia Goh
3
35,550
–
993
–
36,543
–
N/a
N/a
N/a
Vivien Gould
33,000
30,000
1,568
1,922
34,568
31,922
8.3
(1.9)
N/a
Rosemary Morgan
4
13,443
38,000
1,594
330
15,037
38,330
N/a
0.6
15.0
Martin Porter
33,000
30,000
484
248
33,484
30,248
10.7
0.5
7.1
Nicholas Smith
5
–
14,687
–
–
–
14,687
N/a
N/a
8.6
192,993
181,196
5,662
4,667
198,655
185,863
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
Appointed Chairman on 3 February 2021.
3
Appointed as a Director on 25 October 2021.
4
Retired from the Board on 1 February 2022.
5
Retired as Chairman and from the Board on 3 February 2021.
The information in the above table has been audited.
36
Schroder AsiaPacific Fund plc
Directors’ Remuneration Report
Directors’ share interests
The Company’s articles of association 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 shares Ordinary shares
of 10p each of 10p each
at 30 September at 1 October
2022 2021
James Williams 15,125 10,125
Keith Craig 12,581 12,581
Julia Goh
1
15,000 N/A
Vivien Gould 5,000 5,000
Rosemary Morgan
2
N/A 6,954
Martin Porter 10,000 10,000
1
Ms Goh was appointed on 25 October 2021.
2
Mrs Morgan retired on 1 February 2022.
The information in the above table has been audited.
On behalf of the Board
James Williams
Chairman
6 December 2022
Annual Report and Accounts
for the year ended 30 September 2022
37
Governance
Statement of Directors’ Responsibilities in respect
of the Annual Report and Accounts
The Directors are responsible for preparing the annual
report, and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising Financial Reporting Standard (FRS) 102 “The
Financial Reporting Standard applicable in the UK and
Republic of Ireland” and applicable law). Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the return or loss
of the Company for that period. In preparing these financial
statements, the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and accounting estimates that are
reasonable and prudent;
– state whether applicable UK Accounting Standards,
comprising FRS 102, have been followed, subject to any
material departures disclosed and explained in the
financial statements;
– notify the Company’s shareholders in writing about the
use of disclosure exemptions in FRS 102, used in the
preparation of the financial statements; and
– prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements and
the Directors’ Remuneration Report comply with the
Companies Act 2006. 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.
The Manager is responsible for the maintenance and
integrity of the webpage dedicated to the Company.
Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed
on pages24 and 25, confirm that to the best of their
knowledge:
– the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards and applicable law), give a true and fair view
of the assets, liabilities, financial position and net return
of the Company;
– the Strategic Report contained in the report and
accounts 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
and emerging risks that it faces; and
– the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
On behalf of the Board
James Williams
Chairman
6 December 2022
38
Schroder AsiaPacific Fund plc
Independent Auditor’s Report
to the Members of Schroder AsiaPacific Fund plc
Opinion
We have audited the financial statements of Schroder AsiaPacific Fund plc for the year ended 30September 2022 which
comprise the Income Statement, the Statement of Changes in Equity, the Statement of Financial Position and the related
notes1 to 21, including a summary of significant accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
– give a true and fair view of the Company’s affairs as at 30September 2022 and of its loss for the year then ended;
– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s 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 are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent
of Company in conducting the audit
Conclusions relating to going concern
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. Our evaluation of the Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
– Confirmation of our understanding of the Company’s going concern assessment process and engaged with the Directors
and the Company Secretary to determine if all key factors were considered in their assessment.
– Inspection of the Directors’ assessment of going concern, including the revenue forecast, for the period to 31December
2023 which is at least 12 months from the date the financial statements will be authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is able to continue to meet its ongoing costs as they fall due.
– Review of the factors and assumptions, including the impact of the current economic environment and other significant
events that could give rise to market volatility, as applied to the revenue forecast and the liquidity assessment of the
investments. We considered the appropriateness of the methods used to be able to make an assessment for the Company.
– In relation to the Company’s borrowing arrangements, we inspected the Directors’ assessment of the risk of breaching the
debt covenants as a result of a reduction in the value of the Company’s portfolio. We recalculated the Company’s compliance
with debt covenants in the scenarios assessed by the Directors and performed reverse stress testing in order to identify what
factors would lead to the Company breaching the financial covenants.
– Consideration of the mitigating factors included in the revenue forecast and covenant calculations that are within the control
of the Company. We reviewed the Company’s assessment of the liquidity of investments held and evaluated the Company’s
ability to sell those investments in order to cover working capital requirements should revenue decline significantly.
– Review of the Company’s going concern disclosures included in the annual report in order to assess that the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any material 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 covered by the
Directors to 31December 2023. In relation to the Company’s 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee
as to the Company’s ability to continue as a going concern.
Annual Report and Accounts
for the year ended 30 September 2022
39
Financial
Independent Auditor’s Report
to the Members of Schroder AsiaPacific Fund plc
Risk Our response to the risk Key observations
communicated to the audit
and risk committee
Incomplete or inaccurate revenue
recognition, including the
classification of special dividends as
revenue or capital items in the
Income Statement (refer to the Audit
and Risk Committee Report set out on
pages 29 and 30 and the accounting
policy set out on pages 46 to 48)
The total revenue for the year to
30September 2022 was £24.67million
(2021: £22.40million), consisting
primarily of dividend income from
listed equity investments.
The Company received special
dividends amounting to £0.67million
(2021: £4.22million), all of which were
classified as revenue (2021:
£2.60million classified as revenue and
£1.62million classified as capital).
We performed the following
procedures:
We obtained an understanding of the
processes and controls surrounding
revenue recognition and classification
of special dividends by performing
walkthrough procedures.
For all dividends received, we
recalculated the dividend income by
multiplying the investment holdings at
the ex-dividend date, traced from the
accounting records, by the dividend
per share, which was agreed to an
independent data vendor. We agreed
amounts to bank statements and,
where applicable, agreed the exchange
rates to an external source.
The results of our procedures
identified no material misstatements in
relation to the risk of incomplete or
inaccurate revenue recognition,
including classification of special
dividends as revenue or capital items
in the Income Statement.
Overview of our audit approach
Key audit matters
– Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital
items in the Income Statement
– Risk of incorrect valuation or ownership of the investment portfolio.
Materiality
Overall materiality of £8.78m which represents 1% of shareholders’ funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile,
the organisation of the Company and effectiveness of controls, including controls and changes in the business environment
when assessing the level of work to be performed. All audit work was performed directly by the audit engagement team.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has
determined that the most significant future impacts from climate change could affect the Company’s investments and the
overall investment process. This is explained on pages 21 and 22 in the principal and emerging risks which form part of the
“Other information,” rather than the audited financial statements. Our procedures on these disclosures therefore consisted
solely of considering whether they are materially inconsistent with the financial statements, or our knowledge obtained in the
course of the audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial
statements as set out in note 1(a) and conclusion that there was no material impact of climate change on the valuation of the
investments. We also challenged the Directors’ considerations of climate change in their assessment of viability and associated
disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our 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) that we identified. These matters included 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 were addressed in the
context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
40
Schroder AsiaPacific Fund plc
Independent Auditor’s Report
to the Members of Schroder AsiaPacific Fund plc
Risk Our response to the risk Key observations
communicated to the audit
committee
There is a risk of incomplete or
inaccurate recognition of revenue
through the failure to recognise proper
income entitlements or to apply an
appropriate accounting treatment.
In addition to the above, the Directors
may be required to exercise
judgement in determining whether
income receivable in the form of
special dividends should be classified
as ‘revenue’ or ‘capital’ in the Income
Statement.
For all accrued dividends, we reviewed
the investee company announcements
to assess whether the entitlement arose
prior to 30September 2022. We agreed
the dividend rate to corresponding
announcements made by the investee
company, recalculated the dividend
amount receivable by multiplying the
investment holdings at the ex-dividend
date, traced from the accounting records,
and confirmed this was consistent with
cash received as shown on post year end
bank statements, where paid.
To test completeness of recorded
income, we verified that dividends had
been recorded for each investee
company held during the year with
reference to investee company
announcements obtained from an
independent data vendor.
For all investments held during the year,
we compared the type of dividends paid
with reference to an external data source
to identify those which were ‘special’. We
confirmed two special dividends,
amounting to £0.67m, were received
during the year. We tested both special
dividends, by assessing the
appropriateness of classification as
revenue by reviewing the underlying
rationale of the distribution.
Incorrect valuation or ownership of
the investment portfolio (refer to the
Audit and Risk Committee Report set
out on pages 29 and 30 and the
accounting policy set out on pages 46
to 48).
The valuation of the investment
portfolio on 30September 2022 was
£882.80million (2021:
£1,068.99million) consisting of listed
equity investments.
The valuation of investments held in
the investment portfolio is the key
driver of the Company’s net asset value
and total return. Incorrect investment
pricing, or failure to maintain proper
legal title of the investments held by
the Company, could have a significant
impact on the portfolio valuation and
the return generated for shareholders.
We performed the following
procedures:
We obtained an understanding of the
processes and controls surrounding
investment title and the pricing of
listed securities by performing
walkthrough procedures.
For all investments in the portfolio, we
compared the market prices and
exchange rates applied to an
independent pricing vendor and
recalculated the investment valuations
as at the year end.
We inspected the stale pricing reports
produced by the Administrator to
identify prices that have not changed
within seven days from year end and
verified whether the listed price is a
fair value.
We agreed the Company’s investments
to the independent confirmations
received directly from the Company’s
Custodian and Depositary as at
30September 2022.
The results of our procedures
identified no material misstatements in
relation to the risk of incorrect
valuation or ownership of the
investment portfolio.
Annual Report and Accounts
for the year ended 30 September 2022
41
Financial
Independent Auditor’s Report
to the Members of Schroder AsiaPacific Fund plc
There have been no changes to the areas of audit focus raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Company to be £8.78million (2021: £10.58million), which is 1% (2021: 1%) of shareholders’
funds. We believe that shareholders’ funds provides us with materiality aligned to the key measure of the Company’s
performance.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2021: 75%) of our planning materiality, namely £6.59m (2021: £7.93m).
We have set performance materiality at this percentage due to our past experience of the audit that indicates that a lower risk
of misstatements, both corrected and uncorrected. Given the importance of the distinction between revenue and capital for
investment trusts, we have also applied a separate testing threshold for the revenue column of the Income Statement of
£1.07m (2021: £0.87m), being 5% of the net revenue return before taxation.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the audit and risk committee that we would report to them all uncorrected audit differences in excess of
£0.44m (2021: £0.53m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon.
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 course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we
have performed, we conclude that there is a material misstatement of the other information, we are required to report that
fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the Directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
– the strategic report and Directors’ reports have been prepared in accordance with applicable legal requirements.
42
Schroder AsiaPacific Fund plc
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
– adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches
not visited by us; or
– the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the Directors’ statement 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 by the Listing Rules.
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 or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 23;
– Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period
is appropriate set out on page 23;
– Director’s statement on whether it has a reasonable expectation that the Company will be able to continue in operation and
meets its liabilities set out on page 23;
– Directors’ statement on fair, balanced and understandable set out on page 37;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 21
and22;
– The section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 23 and;
– The section describing the work of the audit and risk committee set out on pages 29 and 30.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 37, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the
Directors 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.
Auditor’s 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 auditor’s 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.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities, including fraud. 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,
Independent Auditor’s Report
to the Members of Schroder AsiaPacific Fund plc
Annual Report and Accounts
for the year ended 30 September 2022
43
Financial
for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance
of the Company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined
that the most significant are FRS 102, the Companies Act 2006, the Listing Rules, UK Corporate Governance Code, the
Association of Investment Companies’ Code and Statement of Recommended Practice, Section 1158 of the Corporation Tax
Act 2010 and The Companies (Miscellaneous Reporting) Regulations 2018.
– We understood how the Company is complying with those frameworks through discussions with the audit and risk committee
and Company Secretary, review of Board minutes and the Company’s documented policies and procedures.
– We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might
occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to incomplete
or inaccurate revenue recognition through incorrect classification of special dividends as revenue or capital items in the
Income Statement. Further discussion of our approach is set out in the key audit matter above.
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved review of the Company Secretary’s reporting to the Directors with respect to the application of the
documented policies and procedures and review of the financial statements to ensure compliance with the reporting
requirements of the Company.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
– Following the recommendation from the audit and risk committee, we were appointed by the Company on 26July 2019 to
audit the financial statements for the year ending 30September 2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is four years, covering the
years ending 30September 2019 to 30September 2022.
– The audit opinion is consistent with the additional report to the Audit and Risk committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Caroline Mercer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh
6 December 2022
Independent Auditor’s Report
to the Members of Schroder AsiaPacific Fund plc
44
Schroder AsiaPacific Fund plc
Income Statement
for the year ended 30 September 2022
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 September 2020 16,682 100,956 3,462 8,704 27,946 773,466 14,930 946,146
Repurchase and cancellation
of the Company’s own shares (196) – 196 – (11,836) – – (11,836)
Net return after taxation – – – – – 120,897 16,080 136,977
Dividend paid in the year 9 – – – – – – (13,346) (13,346)
At 30 September 2021
16,486 100,956 3,658 8,704 16,110 894,363 17,664 1,057,941
Repurchase and cancellation of
the Company’s own shares
(406) – 406 – (16,110) (5,543) – (21,653)
Net (loss)/return after taxation – – – – – (161,852) 19,673 (142,179)
Dividend paid in the year 9 – – – – – – (15,922) (15,922)
At 30 September 2022 16,080 100,956 4,064 8,704 – 726,968 21,415 878,187
The notes on pages 46 to 60 form an integral part of these accounts.
Statement of Changes in Equity
for the year ended 30 September 2022
2022 2021
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments held at fair
value through profit or loss 2
– (154,731) (154,731) – 132,242 132,242
Net foreign currency losses
– (2,936) (2,936) – (1,028) (1,028)
Income from investments 3
24,673 – 24,673 20,783 1,615 22,398
Other interest receivable and similar income 3 12 – 12 – – –
Gross return/(loss) 24,685 (157,667) (132,982) 20,783 132,829 153,612
Investment management fee 4
(1,728) (5,185) (6,913) (2,026) (6,078) (8,104)
Administrative expenses 5 (1,437) – (1,437) (1,282) (1) (1,283)
Net return/(loss) before finance costs and taxation 21,520 (162,852) (141,332) 17,475 126,750 144,225
Finance costs 6 (48) (145) (193) (22) (66) (88)
Net return/(loss) before taxation 21,472 (162,997) (141,525) 17,453 126,684 144,137
Taxation 7 (1,799) 1,145 (654) (1,373) (5,787) (7,160)
Net return/(loss) after taxation 19,673 (161,852) (142,179) 16,080 120,897 136,977
Return/(loss) per share 8 12.04p (99.08)p (87.04)p 9.66p 72.61p 82.27p
The “Total” column of this statement is the profit and loss account of the Company. The “Revenue” and “Capital” columns
represent supplementary information prepared under guidance issued by The Association of Investment Companies. The
Company has no other items of other comprehensive income, and therefore the net return after taxation is also the total
comprehensive income for the 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 46 to 60 form an integral part of these accounts.
Annual Report and Accounts
for the year ended 30 September 2022
45
Financial
2022 2021
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 882,801 1,068,988
Current assets 11
Debtors
7,920 8,499
Cash at bank and in hand 11,343 7,504
19,263 16,003
Current liabilities
Creditors: amounts falling due within one year 12 (19,964) (21,162)
Net current liabilities (701) (5,159)
Total assets less current liabilities 882,100 1,063,829
Non current liabilities
Deferred taxation 13 (3,913) (5,888)
Net assets 878,187 1,057,941
Capital and reserves
Called-up share capital 14 16,080 16,486
Share premium 15
100,956 100,956
Capital redemption reserve 15
4,064 3,658
Warrant exercise reserve 15
8,704 8,704
Share purchase reserve 15
– 16,110
Capital reserves 15
726,968 894,363
Revenue reserve 15 21,415 17,664
Total equity shareholders’ funds 878,187 1,057,941
Net asset value per share 16 546.13p 641.72p
These accounts were approved and authorised for issue by the Board of Directors on 6 December 2022 and signed on its
behalf by:
James Williams
Chairman
The notes on pages 46 to 60 form an integral part of these accounts.
Registered in England and Wales as a public company limited by shares
Company registration number: 03104981
Statement of Financial Position
at 30 September 2022
46
Schroder AsiaPacific Fund plc
1. Accounting Policies
(a) Basis of accounting
Schroder AsiaPacific Fund plc (“the Company”) is registered in England and Wales as a public company limited by shares. The
Company’s registered office is 1 London Wall Place, London EC2Y 5AU.
The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting
Practice (“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of
Investment Trust Companies and Venture Capital Trusts” (the “SORP”) issued by the Association of Investment Companies in
October 2019. All of the Company’s operations are of a continuing nature.
The accounts 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 31 December 2023, which is at least 12 months from the date of approval of these accounts.
In forming this opinion, the Directors have taken into consideration: the controls and monitoring processes in place; the
Company’s low 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 on the viability of the Company. Further details of Directors’ considerations regarding this are given in the Chairman’s
Statement, Investment Managers’ Review, Going Concern Statement, Viability Statement and under the Principal and Emerging
Risks heading on page 21.
In preparing these financial statements the Directors have considered the impact of climate change on the value of the
Company’s investments. The Board has concluded that, as the investments are all valued using quoted bid prices in active
markets, the fair value reflects market participants’ view of climate change risk.
The Company has not presented a statement of cash flows, as it is not required for an investment trust which meets certain
conditions; in particular that substantially all of the Company’s investments are highly liquid and carried at market value.
The accounts are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended
30September 2021.
No significant judgements, estimates or assumptions have been required in the preparation of the accounts for the current or
preceding financial year.
(b) Valuation of investments
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, upon initial recognition the investments are classified by the Company as “held at fair value through
profit or loss”. Investments are included initially at transaction price, excluding expenses incidental to purchase which are
written off to capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bid
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.
All purchases and sales are accounted for on a trade date basis.
(c) Accounting for reserves.
Gains and losses on sales of investments are included in the Income Statement 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
are included in the
Income Statement and in capital reserves within “Holding gains and losses on investments”.
Foreign exchange gains and losses on cash and deposit balances and unrealised exchange gains and losses on foreign
currency loans are included in the Income Statement and in capital reserves.
The cost of repurchasing shares, including the related stamp duty and transactions costs, is charged to “Share repurchase
reserve”. Once the “Share repurchase reserve” has been fully utilised the cost of repurchasing shares is then charged to
“Capital reserves”.
Notes to the Accounts
Annual Report and Accounts
for the year ended 30 September 2022
47
Financial
(d) Income
Dividends receivable 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.
Overseas dividends are included gross of any withholding tax.
Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of
the cash dividend foregone is recognised in revenue. Any excess in the value of the shares received over
the amount of the
cash dividend is recognised in capital.
Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of
interest.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income
Statement with the following exceptions:
– The management fee is allocated 25% to revenue and 75% to capital in line with the Board’s expected long-term split of
revenue and capital return from the Company’s investment portfolio.
– Expenses incidental to the purchase or sale of an investment 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
note10 on page 51.
(f) Finance costs
Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an
accruals basis using the effective interest method and in accordance with the provisions of FRS 102.
Finance costs are allocated 25% to revenue and 75% to capital in line with the Board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
(g) Financial instruments
Cash at bank and in hand 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 debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value,
with debtors reduced by appropriate allowances for estimated irrecoverable amounts.
Bank loans and overdrafts are initially measured at fair value and subsequently at amortised cost. They are recorded at the
proceeds received net of direct issue costs.
(h) Taxation
The tax charge for the year is based on amounts expected to be received or paid.
Deferred tax is provided on all timing differences that have originated but not reversed by the accounting date.
Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the
extent that it is probable that taxable profits will be available against which those timing differences can be
utilised.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected
to reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date
and is measured on
an undiscounted basis.
(i) Value added tax (“VAT”)
Expenses are disclosed inclusive of any related irrecoverable VAT.
(j) Foreign currency
In accordance with FRS 102, the Company is required to nominate a functional currency, being the currency in which the
Company predominantly operates. The Board, having regard to the currency of the Company’s share capital
and the
predominant currency in which its shareholders operate, has determined that sterling is the functional currency
and the
currency in which the accounts are presented.
Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction.
Monetary assets, liabilities and equity investments held at fair value, denominated in foreign currencies at
the year end are
translated at the rates of exchange prevailing at 1600 hours on the accounting date.
Notes to the Accounts
48
Schroder AsiaPacific Fund plc
Notes to the Accounts
(k) Dividends payable
In accordance with FRS 102, the final dividend is included in the accounts in the year in which it is approved by shareholders.
(l) Repurchases of shares for cancellation
The cost of repurchasing the Company’s own shares including the related stamp duty and transactions costs is charged to
“Share
purchase reserve”. Once the “Share purchase reserve” is fully utilised the cost is then charged to “Capital reserves”, both
are dealt with
in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis.
The nominal value of
share capital repurchased and cancelled is transferred out of “Called-up share capital” and into “Capital
redemption reserve”.
2. (Losses)/gains on investments held at fair value through profit or loss
2022 2021
£’000 £’000
Gains on sales of investments based on historic cost 30,894 97,055
Amounts recognised in investment holding gains and losses in the previous year in respect
of investments sold in the year (39,004) (63,279)
(Losses)/gains on sales of investments based on the carrying value at the previous
balance sheet date
(8,110) 33,776
Net movement in investment holding gains and losses (146,621) 98,466
(Losses)/gains on investments held at fair value through profit or loss (154,731) 132,242
3. Income
2022 2021
£’000 £’000
Income from investments:
Overseas dividends 24,091 17,892
UK dividends
582 2,711
Scrip dividends – 180
24,673 20,783
Other interest receivable and similar income:
Deposit interest 12 –
24,685 20,783
Capital:
Special dividend allocated to capital – 1,615
4. Investment management fee
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 1,728 5,185 6,913 2,026 6,078 8,104
The basis for calculating the investment management fee is set out in the Report of the Directors on page 26.
Annual Report and Accounts
for the year ended 30 September 2022
49
Financial
5. Administrative expenses
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Administration expenses 1,052 – 1,052 936 1 937
Directors’ fees
1
193 – 193 181 – 181
Company secretarial fee 150 – 150 130 – 130
Auditor’s remuneration for audit services 42 – 42 35 – 35
1,437 – 1,437 1,282 1 1,283
1
Full details are given in the Remuneration Report on pages 34 to 36.
6. Finance costs
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 48 145 193 22 66 88
7. Taxation
(a) Analysis of tax charge for the year
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Irrecoverable overseas withholding tax 1,799 – 1,799 1,373 – 1,373
Provision for overseas capital gains tax – (1,145) (1,145) – 5,787 5,787
Taxation for the year 1,799 (1,145) 654 1,373 5,787 7,160
The Company has no corporation tax liability for the year ended 30 September 2022 (2021: nil).
The provision for overseas capital gains tax pertains to the deferred tax liability on the unrealised gain on Indian Securities.
(b) Factors affecting tax charge for the year
The tax assessed for the year is higher (2021: lower) than the Company’s applicable rate of corporation tax for the year of
19.0% (2021: 19.0%).
The factors affecting the current tax charge for the year are as follows:
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) before taxation 21,472 (162,997) (141,525) 17,453 126,684 144,137
Net return/(loss) before taxation multiplied by the
Company’s applicable rate of corporation tax for the
year of 19.0% (2021: 19.0%)
4,080 (30,970) (26,890) 3,316 24,070 27,386
Effects of:
Capital (losses)/returns on investments
– 29,957 29,957 – (24,931) (24,931)
Income not chargeable to corporation tax
(4,670) – (4,670) (3,789) (306) (4,095)
Irrecoverable overseas withholding tax
1,799 – 1,799 1,373 – 1,373
Provision for overseas capital gains tax
– (1,145) (1,145) – 5,787 5,787
Tax relief on overseas tax suffered
– – – (5) – (5)
Unrelieved expenses 590 1,013 1,603 478 1,167 1,645
Taxation for the year 1,799 (1,145) 654 1,373 5,787 7,160
Notes to the Accounts
50
Schroder AsiaPacific Fund plc
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £17,815,000 (2021: £15,705,000) based on a main rate of corporation
tax of 25%
(2021: 25%). In its 2021 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 cumulative 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 accounts.
Given the Company’s intention to meet the conditions required to retain its status as an Investment Trust Company, 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. Return/(loss) per share
2022 2021
£’000 £’000
Revenue return 19,673 16,080
Capital (loss)/return (161,852) 120,897
Total (loss)/return (142,179) 136,977
Weighted average number of shares in issue during the year
163,346,606 166,499,784
Revenue return per share
12.04p 9.66p
Capital (loss)/return per share (99.08)p 72.61p
Total (loss)/return per share (87.04)p 82.27p
9. Dividends
Dividends paid and proposed
2022 2021
£’000 £’000
2021 final dividend of 9.70p (2020: 8.00p) paid out of revenue profits 15,922 13,346
2022 2021
£’000 £’000
2022 final dividend proposed of 12.00p (2021: 9.70p) to be paid out of revenue profits 19,296 15,991
The 2021 final dividend amounted to £15,991,000. However the amount actually paid was £15,922,000, as shares were
repurchased and cancelled after the accounting date, but prior to the dividend record date.
The proposed final dividend amounting to £19,296,000 (2021: £15,991,000) is the amount used for the basis of determining
whether the Company has
satisfied the distribution requirements of section 1158 of the Corporation Tax Act 2010. The revenue
available for distribution for the year is £19,673,000
(2021: £16,080,000).
Notes to the Accounts
Annual Report and Accounts
for the year ended 30 September 2022
51
Financial
10. Investments held at fair value through profit or loss
2022 2021
£’000 £’000
Opening book cost 758,657 668,653
Opening investment holding gains 310,331 275,145
Opening fair value
1,068,988 943,798
Purchases at cost
199,803 349,700
Sales proceeds
(231,259) (356,752)
(Losses)/gains on investments held at fair value (154,731) 132,242
Closing fair value 882,801 1,068,988
Closing book cost
758,095 758,657
Closing investment holding gains 124,706 310,331
Closing fair value 882,801 1,068,988
Sales proceeds amounting to £231,259,000 (2021: £356,752,000) were receivable from disposals of investments in the year. The
book cost of these investments
when they were purchased was £200,364,000 (2021: £259,697,000). These investments have
been revalued over time and until they were sold any unrealised
gains and losses were included in the fair value of the
investments.
The following transaction costs, comprising stamp duty and brokerage commission, were incurred in the year:
2022 2021
£’000 £’000
On acquisitions 268 351
On disposals 384 554
652 905
11. Current assets
2022 2021
£’000 £’000
Debtors
Securities sold awaiting settlement 5,868 5,176
Dividends and interest receivable
1,778 3,052
Taxation recoverable
258 241
Other debtors 16 30
7,920 8,499
The Directors consider that the carrying amount of debtors approximates to their fair value.
Cash at bank and in hand
Cash at bank and in hand 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.
Notes to the Accounts
52
Schroder AsiaPacific Fund plc
Notes to the Accounts
12. Creditors: amounts falling due within one year
2022 2021
£’000 £’000
Bank loan 13,437 11,125
Securities purchased awaiting settlement
4,379 5,264
Other creditors and accruals
2,064 2,327
Bank overdraft 84 2,446
19,964 21,162
The bank loan comprises US$15million drawn down on the Company’s £75 million multicurrency credit facility with 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 page57.
The bank loan at the prior year end comprised US$15 million drawn down on the Company’s previous credit facility with SMBC
Bank International plc. This agreement expired in June 2022.
The Company has a £30 million overdraft facility with HSBC Bank plc, secured by a floating charge.
The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
13. Deferred taxation
Deferred taxation comprises the deferred tax liability on the unrealised gain on Indian Securities. Indian capital gains tax
crystallises on disposal of the underlying asset. It is not expected that significant amounts of tax will become payable in the
next financial year.
14. Called-up share capital
2022 2021
£’000 £’000
Ordinary shares allotted, called-up and fully paid:
Ordinary shares of 10p each:
Opening balance of 164,860,716 (2021: 166,820,716) shares
16,486 16,682
Repurchase and cancellation of 4,060,000 (2021: 1,960,000) shares (406) (196)
Closing balance of 160,800,716 (2021: 164,860,716) shares 16,080 16,486
During the year, the Company made market purchases of 4,060,000 of its own shares, nominal value £406,000, for cancellation,
representing
2.46% of the shares outstanding at the beginning of the year. The total consideration paid for these shares
amounted to £21,653,000. The reason for these purchases was to seek to manage the volatility of the share price discount to
NAV per share and to provide liquidity to the market.
Annual Report and Accounts
for the year ended 30 September 2022
53
Financial
15. Reserves
Year ended 30 September 2022 Capital reserves
Capital Gains and Investment
redemp- Warrant Share losses on holding
Share tion exercise purchase sales of gains and Revenue
premium
1
reserve
2
reserve
3
reserve
4
investments
5
losses
6
reserve
7
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 September 2021 100,956 3,658 8,704 16,110 588,024 306,339 17,664
Losses on sales of investments based on the
carrying value at the previous balance sheet date
– – – – (8,110) – –
Net movement in investment holding gains and losses – – – – – (146,621) –
Transfer on disposal of investments – – – – 39,004 (39,004) –
Realised exchange losses on cash and
short-term deposits
– – – – (624) – –
Exchange losses on the credit facility – – – – – (2,312) –
Overseas capital gains tax
– – – – (1,310) 2,455 –
Management fee, administrative expenses
and finance costs allocated to capital
– – – – (5,330) – –
Repurchase and cancellation of the
Company’s own shares
– 406 – (16,110) (5,543) – –
Dividend paid – – – – – – (15,922)
Retained revenue for the year – – – – – – 19,673
At 30 September 2022 100,956 4,064 8,704 – 606,111 120,857 21,415
Capital reserves
Year ended 30 September 2021 Capital Gains and Investment
redemp- Warrant Share losses on holding
Share tion exercise purchase sales of gains and Revenue
premium
1
reserve
2
reserve
3
reserve
4
investments
5
losses
6
reserve
7
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 September 2020 100,956 3,462 8,704 27,946 497,005 276,461 14,930
Gains on sales of investments based on the
carrying value at the previous balance sheet date – – – – 33,776 – –
Net movement in investment holding gains
and losses – – – – – 98,466 –
Transfer on disposal of investments – – – – 63,279 (63,279) –
Realised exchange losses on cash and
short-term deposits – – – – (1,506) – –
Exchange gains on the credit facility – – – – – 478 –
Overseas capital gains tax – – – – – (5,787) –
Special dividend allocated to capital – – – – 1,615 – –
Management fee, administrative expenses and
finance costs allocated to capital – – – – (6,145) – –
Repurchase and cancellation of the
Company’s own shares – 196 – (11,836) – – –
Dividend paid – – – – – – (13,346)
Retained revenue for the year – – – – – – 16,080
At 30 September 2021 100,956 3,658 8,704 16,110 588,024 306,339 17,664
The Company’s articles of association permit dividend distributions out of realised capital profits.
1
The share premium is a non distributable reserve and represents the amount by which the fair value of the consideration received from shares issued
exceeds the nominal value of shares issued.
2
The capital redemption reserve represents the accumulated nominal value of shares repurchased for cancellation. This reserve is not distributable.
3
The warrant exercise reserve is a non distributable reserve and arose via an apportionment of the premium on the issue of shares with warrants
attached.
4
The share purchase reserve arose following the cancellation of the balance of share premium in 1998 and was created for the purpose of financing share
buybacks. This is a realised (distributable) capital reserve which may be used to repurchase the Company’s own shares or distributed as dividends.
5
This is a realised (distributable) capital reserve which may be used to repurchase the Company’s own shares or distributed as dividends.
Notes to the Accounts
54
Schroder AsiaPacific Fund plc
6
This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis
has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’
s own shares) and
those that are unrealised.
7
The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.
16. Net asset value per share
2022 2021
Net assets attributable to shareholders (£’000) 878,187 1,057,941
Shares in issue at the year end 160,800,716 164,860,716
Net asset value per share 546.13p 641.72p
17. Transactions with the Manager
Under the terms of the AIFM Agreement, the Manager is entitled to receive a management fee and a company secretarial fee.
Details of the basis of the management fee calculation are given in the Directors’ Report on page 26. Any investments in funds
managed or advised by the
Manager or any of its associated companies, are excluded from the assets used for the purpose of
the calculation and therefore incur no fee.
The management fee payable in respect of the year ended 30 September 2022 amounted to £6,913,000 (2021: £8,104,000), of
which £1,593,000
(2021: £1,907,000) was outstanding at the year end. The company secretarial fee payable in respect of the
year ended 30 September 2022 amounted
to £150,000 (2021: £130,000), of which £38,000 (2021: £38,000) was outstanding at
the year end.
No Director of the Company served as a director of any member of the Schroder Group, at any time during the year, or prior
year.
18. Related party transactions
Details of the remuneration payable to Directors are given in the Directors’ Remuneration Report on page 35 and details of
Directors’ shareholdings are
given in the Directors’ Remuneration Report on page 36. Details of transactions with the Manager
are given in note 17 above. There have been no
other transactions with related parties during the year (2021: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio
and any derivative financial instruments.
FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels
below. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair
value measurement.
Level 1 – valued using unadjusted quoted prices in active markets for identical assets.
Level 2 – valued using observable inputs other than quoted prices included within Level 1.
Level 3 – valued using inputs that are unobservable.
Details of the Company’s policy for valuing investments and derivative instruments are given in note 1(b) on page 46 and 1(g)
on page47.
At 30 September 2022, the Company’s investment portfolio was categorised as follows:
2022
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments in equities and equity linked securities 882,801 – – 882,801
Total 882,801 – – 882,801
Notes to the Accounts
Annual Report and Accounts
for the year ended 30 September 2022
55
Financial
2021
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments in equities and equity linked securities 1,068,988 – – 1,068,988
Total 1,068,988 – – 1,068,988
There have been no transfers between Levels 1, 2 or 3 during the year (2021: nil).
20. Financial instruments’ exposure to risk and risk management policies
The investment objective is set out on the inside front cover of this report. In pursuing this objective, the Company is exposed
to a variety of financial risks that could result in a reduction in the Company’s net assets or a reduction
in the profits available
for dividends. These financial 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 may comprise the following:
– investments in shares, warrants, depositary receipts and government bonds which are held in accordance with the
Company’s investment objective;
– short-term debtors, creditors and cash arising directly from its operations;
– a multi-currency overdraft facility with HSBC Bank plc, the purpose of which is to assist in financing the Company’s
operations; and
– a multi-currency revolving credit facility with Bank of Nova Scotia, the purpose of which is to assist in financing the
Company’s operations.
(a) Market risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market
prices. This market risk comprises three elements: currency risk, interest rate risk and market price risk. Information
to enable
an evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this
note, together
with sensitivity analyses 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 accounts. 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 on a daily basis and reports to the Board, which meets
on at least four occasions each year. 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. The Company may use foreign currency
borrowings or
forward foreign currency contracts to limit the exposure to anticipated changes in exchange rates which
might otherwise
adversely affect the value of the portfolio of investments. 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 30 September 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.
Notes to the Accounts
56
Schroder AsiaPacific Fund plc
2022
Hong South
Kong US Korean Taiwan Singapore Thai Indian Chinese
Dollars Dollars Won Dollars Dollars Baht Rupees Yuan Other Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current assets 493 193 537 1,584 2,795 51 3,067 2,302 3,708 14,730
Current liabilities
Creditors: amounts falling due
within one year (33) (13,442) (81) (1,014) (2,785) (5) (3,867) – (88) (21,315)
Foreign currency exposure
on net monetary items 460 (13,249) 456 570 10 46 (800) 2,302 3,620 (6,585)
Investments held at fair value
through profit or loss
1
223,210 43,557 108,218 132,334 66,955 19,224 143,762 34,754 47,294 819,308
Total net foreign currency
exposure 223,670 30,308 108,674 132,904 66,965 19,270 142,962 37,056 50,914 812,723
2021
Hong South
Kong US Korean Taiwan Singapore Thai Indian Chinese
Dollars Dollars Won Dollars Dollars Baht Rupees Yuan Other Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current assets 856 – 520 4,878 1,624 – 269 2,578 68 10,793
Current liabilities
Creditors: amounts falling due
within one year (29) (11,125) (76) (4,308) – – (5,843) (1) – (21,382)
Foreign currency exposure
on net monetary items 827 (11,125) 444 570 1,624 – (5,574) 2,577 68 (10,589)
Investments held at fair value
through profit or loss
1
276,782 74,007 178,337 171,971 46,376 17,217 156,034 22,122 58,175 1,001,021
Total net foreign currency
exposure 277,609 62,882 178,781 172,541 48,000 17,217 150,460 24,699 58,243 990,432
1
Excluding any stocks priced in sterling.
The above year end amounts are broadly representative of the exposure to foreign currency risk during the current and
comparative year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company’s monetary
financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the
Company’s monetary
currency financial instruments held at each accounting date and assumes a 10% (2021: 10%)
appreciation or depreciation in
sterling against all 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:
2022 2021
£’000 £’000
Income Statement – return after taxation
Revenue return
2,224 1,650
Capital return (558) (1,644)
Total return after taxation 1,666 6
Net assets 1,666 6
Notes to the Accounts
Annual Report and Accounts
for the year ended 30 September 2022
57
Financial
Conversely if sterling had strengthened by 10% this would have had the following effect:
2022 2021
£’000 £’000
Income Statement – return after taxation
Revenue return
(2,224) (1,650)
Capital return 558 1,644
Total return after taxation (1,666) (6)
Net assets (1,666) (6)
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 with regard to the Company’s
investments and
foreign currency is subsumed into market price risk sensitivity in part (iii) to this note.
(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 Board would not expect
gearing to exceed 20% 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 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:
2022 2021
£’000 £’000
Exposure to floating interest rates:
Cash at bank and in hand
11,343 7,504
Creditors: bank overdraft
(84) (2,446)
Creditors: amounts falling due within one year – borrowings on the credit facility (13,437) (11,125)
Net exposure (2,178) (6,067)
Sterling cash deposits at call earn interest at floating rates based on Sterling Overnight Index Average (“SONIA”) rates, (2021:
LIBOR).
The Company has arranged a £75 million credit facility with Bank of Nova Scotia, effective from 23 June 2022. 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
30 September 2022, the Company had drawn down US$15million (£13.4 million) for a one month period, at an
interest
rate of 3.18% per annum.
At the prior year end, the Company had drawn down US$15.0 million (£11.1 million) on the preceding facility with SMBC Bank
International plc. This agreement expired in June 2022.
The Company also has a £30 million overdraft facility with HSBC Bank plc, secured by a floating charge.
Notes to the Accounts
58
Schroder AsiaPacific Fund plc
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 cash/(debt) balances during the
year are as follows:
2022 2021
£’000 £’000
Maximum debit interest rate exposure during the year – debt (7,592) (6,067)
Maximum credit interest rate exposure during the year – net cash 17,531 34,307
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2021: 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 accounting date with all other variables held constant.
2022 2021
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return
79 (79) 42 (42)
Capital return (101) 101 (102) 102
Total return after taxation (22) 22 (60) 60
Net assets (22) 22 (60) 60
Given the increase in UK interest rates, the interest rate sensitivity has been updated to 1.0%. The prior year disclosure has
been updated to 1.0% to show a direct comparison in the sensitivity. In the prior year report, the sensitivity was calculated
using 0.5%, which was representative of the market at 30 September 2021. As disclosed in the prior year annual report, an
increase of 0.5% reduced total return after taxation by £30,000 (a decrease of 0.5% had an equal and opposite effect).
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, other than those arising from interest rate risk, which may affect the value
of 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 countries and 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. The Board may authorise the Manager to enter derivative transactions for the purpose
of protecting the portfolio against falls in market prices.
Market price risk exposure
The Company’s total exposure to changes in market prices at 30 September comprises the following:
2022 2021
£’000 £’000
Investments held at fair value through profit or loss 882,801 1,068,988
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 pages 10 and 11. This shows that the portfolio comprises investments
trading in Asian countries. Accordingly there is a concentration of exposure to that region.
Notes to the Accounts
Annual Report and Accounts
for the year ended 30 September 2022
59
Financial
Market price risk sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease
of 20% (2021: 20%) in the fair values of the Company’s investments. 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 investments
and adjusting for the change in the management fee, but with all other variables held constant.
2022 2021
20% increase 20% decrease 20% increase 20% decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return (309) 309 (374) 374
Capital return 175,633 (175,633) 212,675 (212,675)
Total return after taxation and net assets 175,324 (175,324) 212,301 (212,301)
Percentage change in net asset value 20.0% (20.0%) 20.1% (20.1%)
(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 and an overdraft facility.
The Board’s policy is for the Company to remain fully invested in normal market conditions and that borrowings 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:
Three Three
months months
or less or less
2022 2021
£’000 £’000
Creditors: amounts falling due within one year
Bank loan – including interest 13,473 11,133
Securities purchased awaiting settlement
4,379 5,264
Other creditors and accruals
2,064 2,327
Bank overdraft 84 2,446
20,000 21,170
(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 not significant and 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.
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 Aa3 with
Moody’s.
Notes to the Accounts
60
Schroder AsiaPacific Fund plc
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. Accordingly, in
accordance with usual banking practice, the Company will rank as a general creditor to the
custodian in respect of cash balances.
Credit risk exposure
The amounts shown in the balance sheet under debtors and cash at bank and in hand represent the maximum exposure to
credit risk at the current
and comparative year ends. No debtors are past their due date and none have been provided for.
There has been no stock lending during the year,
or prior year.
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the balance sheet at fair value, or the balance sheet amount is a
reasonable approximation of fair value.
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:
2022 2021
£’000 £’000
Debt
Bank loan 13,437 11,125
Equity
Called-up share capital 16,080 16,486
Reserves 862,107 1,041,455
878,187 1,057,941
Total debt and equity 891,624 1,069,066
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the
capital return to its equity shareholders through an appropriate level of gearing.
The Board would not expect gearing to exceed 20%. Gearing for this purpose is defined as borrowings used for investment
purposes,
less cash, expressed as a percentage of net assets. If the figure so calculated is negative, this is shown as a “Net
cash” position.
2022 2021
£’000 £’000
Borrowings used for investment purposes, less cash 2,178 6,067
Net assets 878,187 1,057,941
Gearing
0.2% 0.6%
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 opportunity for issue of new shares; and
– the amount of dividends to be paid, in excess of that which is required to be distributed.
Notes to the Accounts
Annual Report and Accounts
for the year ended 30 September 2022
61
Annual General Meeting
The Annual General Meeting (“AGM”) of the Company will
be held on Wednesday, 1 February 2023 at 12.00 noon. The
formal Notice of Meeting is set out on page62.
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 12 are all ordinary resolutions. Resolution1
is a required resolution. Resolution2 invites shareholders to
approve the final dividend. Resolution 3 relates to the
Directors’ Remuneration Policy. Resolution4 concerns the
Directors’ Remuneration Report, on pages34 to 36.
Resolutions5 to 9 invite shareholders to re-elect each of the
Directors for another year, following the recommendations of
the nomination committee, set out on pages32 and 33 (their
biographies are set out on pages24 and 25). Resolutions10
and 11 concern the re-appointment and remuneration of the
Company’s auditor, discussed in the Audit and Risk
Committee Report on pages29 and 30.
Special business
Resolution 12 – Directors’ authority to allot shares
(ordinary resolution) and resolution 13 – power to
disapply pre-emption rights (special 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.
Appropriate resolutions will be proposed at the forthcoming
AGM and are set out in full in the Notice of AGM. An ordinary
resolution will be proposed to authorise the Directors to allot
shares up to a maximum aggregate nominal amount of
£1,591,107 (being 10% of the issued share capital (excluding
any shares held in treasury) as at the date of the Notice of the
AGM). A special resolution will also be proposed to give the
Directors authority to allot securities for cash on a non pre-
emptive basis up to a maximum aggregate nominal amount
of £1,591,107(being 10% of the Company’s issued share
capital (excluding any shares held in treasury) as at the date
of the Notice of the AGM). This authority includes shares that
the Company sells or transfers that have been held in
treasury. The Board has established guidelines for treasury
shares and will only reissue shares held in treasury at a price
equal to or greater than the Company’s net asset value
(inclusive of current year income) plus any applicable costs.
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 would not result in any dilution of NAV per
share.
If approved, both of these authorities will expire at the
conclusion of the AGM in 2024 unless renewed, varied or
revoked earlier.
Resolution 14: Authority to make market
purchases of the Company’s own shares (special
resolution)
At the AGM held on 1 February 2022, the Company was
granted authority to make market purchases of up to
24,646,665 ordinary shares of 10p each for cancellation or
holding in treasury. 5,035,000 shares have been bought back
and cancelled under this authority and the Company
therefore has remaining authority to purchase up to
19,611,665 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 net asset
value 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 the date of the
Notice of the AGM. 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 2023 AGM will lapse at the conclusion of the AGM in 2024
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
resolutions to be proposed at the forthcoming AGM, as they
intend to do in respect of their own beneficial holdings.
Annual General Meeting – Recommendations
62
Schroder AsiaPacific Fund plc
Notice is hereby given that the Annual General Meeting of
Schroder AsiaPacific Fund plc will be held at 1 London Wall
Place, London EC2Y 5AU on Wednesday, 1February 2023 at
12.00noon to consider the following resolutions of which
resolutions1 to 12 will be proposed as ordinary resolutions
and resolutions13 and 14 will be proposed as special
resolutions:
1. To receive the Report of the Directors and the audited
accounts for the year ended 30 September 2022.
2. To approve a final dividend of 12.00 pence per share for
the financial year ended 30 September 2022.
3. To approve the Directors’ Remuneration Policy.
4. To approve the Directors’ Remuneration Report for the
year ended 30 September 2022.
5. To re-elect Keith Craig as a Director of the Company.
6. To re-elect Julia Goh as a Director of the Company.
7. To re-elect Vivien Gould as a Director of the Company.
8. To re-elect Martin Porter as a Director of the Company.
9. To re-elect James Williams as a Director of the Company.
10. To re-appoint Ernst & Young LLP as auditor to the
Company until the conclusion of the next Annual General
Meeting.
11. To authorise the Directors to determine the
remuneration of Ernst & Young LLP as auditor to the
Company.
12. To consider, and if thought fit, pass the following
resolution as an ordinary resolution:
“THAT the Directors be generally and unconditionally
authorised pursuant to section 551 of the Companies Act
2006 (the “Act”) to exercise all the powers of the
Company to allot relevant securities (within the meaning
of section 551 of the Act) up to an aggregate nominal
amount of £1,591,107 (being 10% of the issued ordinary
share capital at the date of this Notice) for a period
expiring (unless previously renewed, varied or revoked
by the Company in general meeting) at the conclusion of
the next Annual General Meeting of the Company, but
that the Company may make an offer or agreement
which would or might require relevant securities to be
allotted after expiry of this authority and the Board may
allot relevant securities in pursuance of that offer or
agreement.”
13
. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“THAT, subject to the passing of resolution12 set out
above, the Directors be and are hereby empowered,
pursuant to Section 571 of the Act, to allot equity
securities (including any shares held in treasury) (as
defined in section 560(1) of the Act) pursuant to the
authority given in accordance with section 551 of the Act
by the said resolution 12 and/or where such allotment
constitutes an allotment of equity securities by virtue of
section 560(2) of the Act as if Section 561(1) of the Act did
not apply to any such allotment, provided that this power
shall be limited to the allotment of equity securities up to
an aggregate nominal amount of £1,591,107
(representing 10% of the aggregate nominal amount of
the share capital in issue at the date of this Notice); and
provided that this power shall expire at the conclusion of
the next Annual General Meeting of the Company but so
that this power shall enable the Company to make offers
or agreements before such expiry which would or might
require equity securities to be allotted after such expiry.”
14. 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
Section701 of the Act to make market purchases (within
the meaning of Section693 of the Act) of ordinary shares
of 10p each in the capital of the Company (“Shares”) at
whatever discount the prevailing market price represents
to the prevailing net asset value per Share provided that:
(a) the maximum number of Shares which may be
purchased is 23,850,695, representing 14.99% of the
Company’s issued ordinary share capital as at the
date of this Notice;
(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 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 (exclusive of expenses) which
may be paid for a Share shall be 10p, being the
nominal value per Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of
the Company in 2024 (unless previously renewed,
varied or revoked by the Company 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 cancelled or held in
treasury for potential reissue.”
Notice of Annual General Meeting
By order of the Board
For and on behalf of Registered Office:
Schroder Investment Management Limited 1 London Wall Place,
Registered Number: 03104981 London EC2Y 5AU
6 December 2022
Annual Report and Accounts
for the year ended 30 September 2022
63
Annual General Meeting
Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend and vote at
the meeting and to appoint one or more proxies, who
need not be a shareholder, as their proxy to exercise all
or any of their rights to attend, speak and vote on their
behalf at the meeting.
A proxy form is attached. If you wish to appoint a person
other than the Chairman as your proxy, please insert the
name of your chosen proxy holder in the space provided
at the top of the form. If the proxy is being appointed in
relation to less than your full voting entitlement, please
enter in the box next to the proxy holder’s name the
number of shares in relation to which they are authorised
to act as your proxy. If left blank your proxy will be
deemed to be authorised in respect of your full voting
entitlement (or if this proxy form has been issued in
respect of a designated account for a shareholder, the full
voting entitlement for that designated account).
Additional proxy forms can be obtained by contacting the
Company’s Registrars, Equiniti Limited, on 08000320641
or +44(0) 121 415 0207 for overseas callers, or you may
photocopy the attached proxy form. Please indicate in the
box next to the proxy holder’s name the number of
shares in relation to which they are authorised to act as
your proxy. Please also indicate by ticking the box
provided if the proxy instruction is one of multiple
instructions being given. Completion and return of a form
of proxy will not preclude a member from attending the
Annual General Meeting and voting in person.
On a vote by show of hands, every ordinary shareholder
who is present in person has one vote and every duly
appointed proxy who is present has one vote. On a poll
vote, every ordinary shareholder who is present in
person or by way of a proxy has one vote for every share
of which he/she is a holder.
The “Vote Withheld” option on the proxy form 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.
A proxy form must be signed and dated by the
shareholder or his or her attorney duly authorised in
writing. In the case of joint holdings, any one holder may
sign this form. The vote of the senior joint holder who
tenders a vote, whether in person or by proxy, will be
accepted to the exclusion of the votes of the other joint
holder and for this purpose seniority will be determined
by the order in which the names appear on the Register
of Members in respect of the joint holding. To be valid,
proxy form(s) must be completed and returned to the
Company’s Registrars, Equiniti Limited, Aspect House,
Spencer Road, Lancing, West Sussex BN996DA, in the
enclosed envelope together with any power of attorney
or other authority under which it is signed or a copy of
such authority certified notarially, to arrive no later than
48 hours before the time fixed for the meeting, or an
adjourned meeting. Shareholders may also appoint a
proxy to vote on the resolutions being put to the meeting
electronically at
www.sharevote.co.uk. Shareholders who
are not registered to vote electronically, will need to
enter the Voting ID and Shareholder Reference Number
set out in their personalised proxy form. Alternatively,
shareholders who have already registered with Equiniti’s
Shareview service can appoint a proxy by logging onto
their portfolio at
www.shareview.co.uk and clicking on
the link to vote. The on-screen instructions give details
on how to complete the appointment process. Please
note that to be valid, your proxy instructions must be
received by Equiniti no later than 12.00 noon on
30January 2023. If you have any difficulties with online
voting, you should contact the shareholder helpline on
08000320641 (or +44(0) 121 415 0207 for overseas
callers).
If an ordinary shareholder submits more than one valid
proxy appointment, the appointment received last
before the latest time for receipt of proxies will take
precedence.
Shareholders may not use any electronic address
provided either in this Notice of Annual General Meeting
or any related documents to communicate with the
Company for any purposes other than expressly stated.
Representatives of shareholders that are corporations
will have to produce evidence of their proper
appointment when attending the Annual General
Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006
to enjoy information rights (a “Nominated Person”) may,
under an agreement between him or her and the
shareholder by whom he or she was nominated, have a
right to be appointed (or to have someone else
appointed) as a proxy for the Annual General Meeting. If
a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he or she may,
under any such agreement, have a right to give
instructions to the shareholder as to the exercise of
voting rights.
The statement of the rights of ordinary shareholders in
relation to the appointment of proxies in note 1 above
does not apply to Nominated Persons. The rights
described in that note can only be exercised by ordinary
shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only
those shareholders registered in the Register of
members of the Company at 6.30 p.m. on 30 January
2023, or 6.30 p.m. two days prior to the date of an
adjourned meeting, shall be entitled to attend and vote
at the meeting in respect of the number of shares
registered in their name at that time. Changes to the
Register of Members after 6.30 p.m. on 30 January 2023
shall be disregarded in determining the right of any
person to attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so by using the procedures described in the
CREST manual. The CREST manual can be viewed at
www.euroclear.com. A CREST message appointing a
proxy (a “CREST proxy instruction”) regardless of whether
it constitutes the appointment of a proxy or an
64
Schroder AsiaPacific Fund plc
Explanatory Notes to the Notice of Meeting
amendment to the instruction previously given to a
previously appointed proxy must, in order to be valid, be
transmitted so as to be received by the issuer’s agent
(IDRA19) by the latest time for receipt of proxy
appointments.
5. Copies of the articles of association, terms of
appointment of the non-executive Directors and a
statement of all transactions of each Director and of his
family interests in the shares of the Company, will be
available for inspection by any member of the Company
at the registered office of the Company during normal
business hours on any weekday (English public holidays
excepted) and at the Annual General Meeting by any
attendee, for at least 15minutes prior to, and during, the
Annual General Meeting. None of the Directors has a
contract of service with the Company.
6. The biographies of the Directors offering themselves for
re-election are set out on pages24 and 25 of the
Company’s annual report and accounts for the year
ended 30September 2022.
7. As at 6 December 2022, 159,110,716 ordinary shares of
10 pence each were in issue (no shares were held in
treasury). Therefore the total number of voting rights of
the Company as at 6 December 2022 was 159,110,716.
8. A copy of this Notice of Meeting, which includes details of
shareholder voting rights, together with any other
information as required under Section311A of the
Companies Act 2006, is available from the webpages
dedicated to the Company:
www.schroders.co.uk/asiapacific.
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual
General Meeting any question relating to the business
being dealt with at the AGM which is put by a member
attending the meeting, except in certain circumstances,
including if it is undesirable in the interests of the
Company or the good order of the meeting that the
question be answered or if to do so would involve the
disclosure of confidential information.
10. Members satisfying the thresholds in section 527 of the
Companies Act 2006 can require the Company to publish
a statement on its website setting out any matter
relating to:
(a) the audit of the Company’s Accounts (including the
auditor’s report and the conduct of the audit) that
are to be laid before the Meeting; or
(b) any circumstance connected with an auditor of the
Company ceasing to hold office since the last AGM,
that the members propose to raise at the Meeting.
The Company cannot require the members
requesting the publication to pay its expenses. Any
statement placed on the website must also be sent
to the Company’s auditors no later than the time it
makes its statement available on the website. The
business which may be dealt with at the meeting
includes any statement that the Company has been
required to publish on its website.
11. The Company’s privacy policy is available on its
webpages:
www.schroders.co.uk/asiapacific.
Shareholders can contact Equiniti for details of how
Equiniti processes their personal information as part of
the AGM.
Annual Report and Accounts
for the year ended 30 September 2022
65
Annual General Meeting
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.
Numerical calculations are given where relevant. Some of
the financial measures below are classified Alternative
Performance Measures (“APMs”) as defined by the
European Securities and Markets Authority. Under this
definition, APMs include a financial measure of historical
financial performance or financial position, other than a
financial measure defined or specified in the applicable
financial reporting framework. APMs have been marked
with an asterisk.
Net asset value (”NAV”) per share
The NAV per share of 546.13p (2021: 641.72) represents the
net assets attributable to equity shareholders of
£878,187,000 (2021: £1,057,941,000) divided by the number
of shares in issue of 160,800,716 (2021: 164,860,716).
The change in the NAV amounted to -14.9% (2021: +13.1%)
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 combined effect of any dividends paid, together with the
rise or fall in the share price or NAV per share. 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 year ended 30 September 2022 is
calculated as follows
Opening NAV at 30/9/21 641.72p
Closing NAV at 30/9/22 546.13p
Dividend NAV on
received XD date XD date Factor
9.70p 30/12/21 636.89p 1.015
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage change in the opening NAV: –13.6%
The NAV total return for the year ended 30 September 2021 is
calculated as follows:
Opening NAV at 30/9/20 567.16p
Closing NAV at 30/9/21 641.72p
Dividend NAV on
received XD date XD date Factor
8.0p 24/12/20 629.48p 1.013
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage change in the opening NAV: +14.6%
The share price total return for the year ended 30September
2022 is calculated as follows:
Opening share price at 30/9/21 579.00p
Closing share price at 30/9/22 487.00p
Share
Dividend price on
received XD date XD date Factor
9.70p 30/12/21 583p 1.017
Share price total return, being the closing
share price, multiplied by the factor,
expressed as a percentage change in the
opening share price: –14.5%
The share price total return for the year ended 30 September
2021 is calculated as follows:
Opening share price at 30/9/20 510.00p
Closing share price at 30/9/21 579.00p
Share
Dividend price on
received XD date XD date Factor
8.0p 24/12/20 610.00p 1.013
Share price total return, being the closing
share price, multiplied by the factor,
expressed as a percentage change in the
opening share price: +15.0%
Benchmark Index
The measure against which the Company compares its
performance, which is deemed to be the most appropriate
comparison and which is used for management information
purposes. The Company’s benchmark is the MSCI All
Countries Asia excluding Japan Index (with net income
reinvested), sterling adjusted. The Company changed its
benchmark with effect from 1 October 2016. Prior to that
date the benchmark was the MSCI All Countries Asia
excluding Japan Index (with gross income reinvested),
sterling adjusted.
66
Schroder AsiaPacific Fund plc
Discount/premium*
The amount by which the share price of an investment trust
is lower (discount) or higher (premium) than the NAV per
share. If shares are trading at a discount, investors would be
paying less than the value attributable to the shares by
reference to the underlying assets. A premium or discount is
generally the consequence of supply and demand for the
shares on the stock market. The discount or premium is
expressed as a percentage of the NAV per share. The
discount at the year end amounted to 10.8% (2021: discount
of 9.8%), as the closing share price at 487.00p (2021:579.00p)
was 10.8% (2021: 9.8%) lower than the closing NAV of 546.13p
(2021:641.72p).
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. This
represents borrowings used for investment purposes, less
cash, expressed as a percentage of net assets. If the figure so
calculated is negative, this is shown as a “Net cash” position.
The gearing figure at the year end is calculated as follows:
2022 2021
£’000 £’000
B
orrowings used for investment
purposes, less cash 2,178 6,067
Net assets 878,187 1,057,941
Gearing 0.2% 0.6%
Ongoing Charges*
The Ongoing Charges figure is a measure of the ongoing
operating cost of the Company. It 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
£8,350,000 (2021: £9,387,000), expressed as a percentage of
the average daily net asset values during the year of
£995,417,000 (2021: £1,093,608,000).
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. Higher Leverage numbers
are thus indicative of higher market risk. Leverage 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.
*Alternative performance measures.
Definitions of Terms and Alternative Performance
Measures
Webpages and share price information
The Company has dedicated webpages, which may be found
at
www.schroders.co.uk/asiapacific. The webpages are the
Company’s primary method of electronic communication
with shareholders. They contain details of the Company’s
ordinary share price and copies of the 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, Equiniti’s shareview
service 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.
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 IFAs 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
Annual General Meeting February
Final dividend paid February
Half year results announced June
Financial year end 30 September
Annual results announced December
Alternative Investment Fund Managers
(“AIFM”) Directive
The AIFM Directive, 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 AIFM Directive
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 30September
2022 these were:
Leverage exposure Maximum ratio Actual ratio
Gross method 2.00 1.03
Commitment method 2.00 1.02
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 also be found in the Company’s AIFM
Directive 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
Products (“PRIIPs”) 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.
Shareholder Information
Directors
James Williams (Chairman)
Keith Craig
Julia Goh
Vivien Gould
Martin Porter
Advisers
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 6189
AMCompanySecretary@Schroders.com
Registered Office
1 London Wall Place
London EC2Y 5AU
Depositary and Custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending Bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate Broker
Numis Securities Limited
45 Gresham Street
London
EC2V 7BF
Independent auditor
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: 0800 032 0641*
Website:
www.shareview.co.uk
*Calls to this number are free of charge from UK landlines.
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 Equiniti Limited at the
above address.
Shareholder enquiries
General enquiries about the Company should be addressed
to the Company Secretary at the address set out above.
Dealing Codes
ISIN: GB0007918872
SEDOL: 0791887
Ticker: SDP
Global Intermediary Identification Number (GIIN)
SWLQRM.99999.SL.826
Legal Entity Identifier (LEI)
549300A71N7LE35KWU14
www.schroders.co.uk/asiapacific
The Company’s privacy notice is
available on its webpages.