## Schroder AsiaPacific ## Fund plc ## Report and Accounts ## For the year ended ## 30 September 2022 ### 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. ### 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 ## 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 Strategic Report Strategic Report 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 Governance 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 Annual Report and Accounts 1 for the year ended 30 September 2022 # 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 performance measures, 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 ![img-0.jpeg](img-0.jpeg) Net asset value ("NAV") per share total return* ![img-1.jpeg](img-1.jpeg) Share price total return* ![img-2.jpeg](img-2.jpeg) Benchmark total return¹ ¹Source: Thomson Reuters. ## Other financial information | | 30 September 2022 | 30 September 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 30 September 2022 | Year ended 30 September 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 30 September 2022* ![img-3.jpeg](img-3.jpeg) Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2012. Schroder AsiaPacific Fund plc # Ten Year Financial Record 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 | 946,146 | 1,057,941 | 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* ![img-4.jpeg](img-4.jpeg) Source: Morningstar/Thomson Reuters. Annual Report and Accounts for the year ended 30 September 2022 3 Strategic Report ## Chairman’s Statement | Performance | Discount management | | --- | --- | | The year under review | The Company continued to be active in buying back its shares | | saw challenging market | during the year ended 30 September 2022 and a total of | | conditions in Asia, in | 4,060,000 shares were bought back for cancellation at a cost | | common with markets | of £21.7 million (2021: 1,960,000 million shares were bought | | around the world. The | back and cancelled at a cost of £11.8 million). Since the year | | Company’s NAV | end, a further 1,690,000 shares have been bought back for | | produced a negative | cancellation at a cost of £8.0 million. | total return of -13.6% for The discount at the end of September 2022 was 10.8% the year under review, compared to 9.8% at the previous year end. The average marginally discount during the year under review was 10.4%. outperforming the Benchmark’s negative Overall, the Board’s strategy is to limit discount volatility and total return of -13.9%, while the share price produced a to help maintain liquidity in the Company’s shares. As such negative total return of -14.5%. we believe that it is not necessarily in the best interests of shareholders as a whole to adopt a rigid discount control The faster than expected rises in global interest rates, the war mechanism that seeks to target a defined maximum discount in Ukraine and the economic impact of continued COVID lock- level regardless of market conditions. Our policy takes downs as well as other developments in China, have account of the level of discount at which the Company’s peer dominated Asian markets this year. There have also been group trades, prevailing market conditions and activity within beneficiaries, for example from rising commodity prices, and our sector. there has been a significant divergence of returns from Asian markets. At the Company’s last AGM, authority was given to purchase up to 14.99% of its issued share capital. We propose that the More detailed comment on performance and investment share buyback authority be renewed at the forthcoming AGM policy may be found in the Investment Manager’s Review. and that any shares so purchased be cancelled or held in treasury for potential reissue. ### Revenue and dividend ### The Company’s principal investment objective is to achieve Environmental, social and governance capital growth, and the Directors continue to distribute ### issues (“ESG”) substantially all of the revenue it receives each year. The Company’s revenue return recovered sharply from the The Manager has always expressed the view that companies previous year, increasing by 22.3% as portfolio companies with good ESG often perform better and potentially deliver increased dividend payments. superior returns over time. Our Manager has provided more detail in the Strategic Report on how ESG considerations are The Directors are recommending a final dividend of incorporated into the investment process and given details of 12.00pence per share for the year ended 30 September the Manager’s ESG research capability. This year, our 2022, representing an increase of 23.7% over the 9.70 pence Manager has included graphs showing the portfolio’s scope 1 paid in respect of the previous financial year. and scope 2 carbon emissions (as detailed on page 16). This This dividend will be paid on 10 February 2023 to covers 95% of the portfolio and 99% of the measured shareholders on the register on 30 December 2022, subject Benchmark. It is interesting to note that the portfolio to approval by shareholders at the Annual General Meeting generated less scope1 and scope2 carbon emissions than (“AGM”) on 1 February 2023. the Benchmark at 30September 2022. ### Gearing Management fee During the year under review, the Company entered into a Since 1 April 2021 the management fee has been 0.75% per new one year revolving credit facility of £75 million with annum on the first £600 million of net assets and 0.70% per TheBank of Nova Scotia, London Branch which replaced the annum on net assets in excess of £600 million. £100million facility with SMBC Bank International PLC that With effect from 1 April 2023, the Board has agreed with the was due to expire on 23 June 2022. Manager to reduce its management fee to 0.60% per annum At 30 September 2022, while £13.4 million of the revolving on net assets in excess of £600 million. In respect of the first facility was drawn down the Company’s net gearing position £600million of net assets the management fee is unchanged. was 0.2% taking into account cash balances, compared to Further details may be found in the Directors’ Report on 0.6% at the end of September 2021. page26. The Company also has access to an overdraft facility with HSBC. Schroder AsiaPacific Fund plc 4 ## Chairman’s Statement For regular news about the trust, shareholders are also ### Board succession encouraged to sign up to the Manager’s investment trusts As set out in the 2021 annual report, Rosemary Morgan update by visiting the Company’s website: stepped down from the Board at the AGM in February 2022 https://www.schroders.com/en/uk/private-investor/fund- and was succeeded as chair of the audit and risk committee centre/funds-in-focus/investment-trusts/schroders- by Julia Goh. Following Rosemary’s retirement, Martin Porter investment-trusts/never-miss-an-update/ . 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 Outlook the appropriate mix of relevant skills, diversity and It would be easy to be pessimistic in view of the current experience. The Company has met the Financial Conduct Strategic Report uncertainty seen in markets around the world. There is no Authority's board diversity target for listed companies that at question that the global repricing of the cost of capital which least 40% of the board are women and for at least one has followed increased US interest rates continues to be a member of the board to be from an ethnic minority headwind. It is unclear when these moves will have had the background. 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 ### Webinar and in many cases now reflect the current economic reality Last year, the Investment Managers presented to and aggregate valuations for the region are trading at or shareholders using a webinar. We believe shareholders below long-term averages. It is the case now more than ever benefited from this, allowing anyone to watch remotely, and that Asian markets will continue to provide opportunities for ask questions, without the need to travel. The Board is those who can identify the winners. We believe that the planning to continue with the same format this year, and the Company continues to be well placed to take advantage of Investment Managers will be presenting to shareholders at a these conditions. Our Manager’s ability to invest across the webinar on 17 January 2023 at 2.00 pm. To register your region while focusing on high conviction, bottom-up stock interest for this webinar please email ideas driven by strong resources on the ground in Asia gives sunil.kler@schroders.com. us confidence that we will return to generating positive returns for shareholders, once market conditions start to One advantage of a webinar is that if you are not able to improve. 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. James Williams Chairman ### AGM 6 December 2022 The AGM will be held on Wednesday, 1 February 2023 at 12.00noon at the offices of Schroders at 1 London Wall Place, London, EC2Y5AU. 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 pages62 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, 1London Wall Place, London, EC2Y 5AU. Annual Report and Accounts 5 for the year ended 30 September 2022 ## Investment Manager’s Review The NAV per share of the Company recorded a total return of recovering from the impacts of COVID, has proven to be -13.6% over the twelve months to the end of September 2022. relatively resilient from a stock market perspective. Loose This was marginally ahead of the performance of the domestic liquidity and strong domestic flows into the market Benchmark, the MSCI All Country Asia ex Japan Index, which have also been supportive. Singapore was aided by a strong was down by -13.9% over the same period. (Source: recovery in the financials sector. The other ASEAN markets Morningstar, net of fees, cum income NAV GBP return). also outperformed, helped initially by the potential for post- pandemic re-opening, as well as value stocks outperforming, Performance of the MSCI AC Asia ex Japan Net in which they tend to have higher weightings. Whilst most of Asia is negatively impacted by rising energy prices Indonesia Dividends Reinvested Index in GBP and USD – was a beneficiary. 30September 2021 to 30September 2022 110 Market returns of the MSCI AC Asia ex Japan Net 105 Dividends Reinvested Index in GBP and local 100 95 currency – 30September 2021 to 30September 90 2022 85 | | | | | | | -40% -30% -20% -10% 0% | 10% | 20% 30% 40% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 80 | | | MSCI AC Asia ex JP | | | | | | | 75 | | | | | China | | | | | 70 | | | | Hong Kong | | | | | | Sep-21 Aug-22 Sep-22 | Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 Jun-22May-22 Jul-22 | | | | India | | | | | | MSCI AC Asia ex Japan NDR USD | MSCI AC Asia ex Japan NDR GBP | | Indonesia | | | | | Korea Source: Thomson Datastream as at 30September 2022. Malaysia-EM Philippines The past year has been a tumultuous period for markets with Singapore a number of headwinds globally and regionally weighing on Taiwa n sentiment. Geopolitical tensions worsened with the shock Thailand Russian invasion of Ukraine, as well as ongoing tensions Returns in local currencyReturns in GBP between the US and China and increasing concerns Source: Factset. surrounding Taiwan. Inflation, in part driven by the war in Ukraine and in part by shortages of both goods and labour, Sector returns across the region also saw a large spread. rose materially and saw aggressive responses from Central Beneficiaries of rising commodity prices did well, especially Banks which in turn focused attention back on to the state of energy names, and higher interest rates meant financials also the slowing global economy and its knock-on to earnings. In outperformed. More defensive areas such as utilities and Asia, the period was dominated by concerns over the health consumer staples also held up. Sectors with a high growth of the Chinese economy with its ‘zero-COVID’ policy component sold off, including the healthcare names dragged exacerbating ongoing worries over an already weak property down by the high-multiple biotechnology stocks, as did a market. Increased levels of regulation in China (particularly number of the e-commerce and internet related names amongst the internet names) also weighed on sentiment. largely found in the consumer discretionary and Later in the period, some easing measures announced by the communication services sectors. Information technology sold Chinese government, together with an apparent shift in focus off towards the end of the period as there was increasing towards ‘stability’, looked to underpin sentiment. concern over a slowdown in consumer demand at a time when some of the bottlenecks around supply were clearing. 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 Performance and Portfolio Activity growth stocks come under pressure, especially the less The Company’s NAV total return of -13.6% over the period profitable names, with value stocks outperforming growth was marginally ahead of that of the reference Benchmark stocks over the period. Towards the end of the period there which fell by -13.9% over the period. As described above, the were some hopes that inflation was nearing a peak and this faster than expected rise in global interest rates not only would elicit a pivot from the US Federal Reserve to a more impacted markets but particularly growth names within that. dovish stance. This proved to be relatively short lived, Although the Company is not an out and out growth fund, its however. modest growth bias was a headwind to returns. This was The divergence of returns across the regional markets seen most acutely amongst the internet related names we continued to be high, with China lagging for the reasons held in Korea and Singapore which underperformed mentioned above. Korea, often a market correlated with materially. Although we benefited from our stock selection in, global growth expectations, was also weak with the memory and underweight to, healthcare stocks, avoiding some of the sector names deteriorating on concerns over falling demand more high rated biotech names, our underweight positioning as well as some of the more highly-rated internet names in some of the other more defensive areas such as consumer under pressure. Similarly, Taiwan lagged as information staples and utilities was a drag. technology (“IT”) stocks underperformed owing to concerns Positively our overweight to, and stock selection in, financials over the impact that a slowing consumer would have on end added value. This was driven by the positions in banks which demand, as rising inflation crimped real incomes. Of the in general benefitted from a firming of interest rate larger markets, India and Singapore outperformed. India, expectations combined with their lowly valuations. The out of being relatively more insulated from the impacts of slowing benchmark Australian resources exposure, including BHP, global growth combined with the domestic economy was also a positive contributor, thanks to higher commodity Schroder AsiaPacific Fund plc 6 ## Investment Manager’s Review prices driven by the global recovery. Although our overweight Top 3 contributors and top 3 detractors at a to IT was a headwind as the sector saw negative earnings regional level, 12months to 30September 2022 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 Strategic Report Source: Factset PA3. Top contributors and detractors are shown excluding internet name we held there (Sea) was in part impacted by gearing. higher rates, which resulted in a greater focus on the timeline for profitability from its fast growing e-commerce business. ### Outlook and Policy Korean and Taiwanese exposure was also a drag, in part due to the markets being quite globally focused which impacted Slowing global and weak Chinese growth, elevated our IT names. Our lack of exposure to financials in Taiwan, geopolitical tensions around Ukraine and Taiwan and rising and our allocation to more domestic growth areas in Korea, interest rates, combined with ongoing downward revisions to also detracted from relative performance. Our out of index earnings, mean that headwinds for markets are likely to exposure to Australia and Vietnam was positive, as was stock continue. However, some areas of the markets are starting to selection in Indonesia (Bank Mandiri) but our underweight to look more attractive from a longer term perspective having some of the other ASEAN markets, in particular Malaysia and derated markedly. the Philippines, detracted. Globally, consumption is under pressure as rising prices eat The geographic exposure in the Company’s portfolio into real incomes. This, allied with the shift away from continues to be mainly spread between China, India, Taiwan, consumption of goods to consumption of services as the Hong Kong, Korea and Singapore. China remains a majority of economies open up post-pandemic, has seen the substantial underweight, despite modest additions during demand for goods falter. This in turn has started to see the year as the market underperformed. In part, this is offset inventories accumulate across supply chains globally, leading by the overweight to Hong Kong. Over the period we also to a fear that we will see a painful period of inventory reduced our exposure to some of the more expensive adjustment on top of an already slowing global economy. domestic Indian names that had performed well, whilst From an Asian perspective, this is likely to have an impact on adding to some of the IT services companies there (Infosys exports and from our portfolio’s perspective is most likely to and Tata Consultancy Services) but overall taking us down to evidence itself in the technology hardware sector. To an being slightly underweight the index in relative terms. extent, markets have already started to discount this with Elsewhere, we added to some of the smaller ASEAN markets technology names in both Korea and Taiwan already including Vietnam (where we now have local access) and the underperforming despite earnings holding up relatively well Philippines. for now. In our view, valuations are now starting to factor in a slowdown but not yet a “hard landing” which, although not As throughout much of last year, portfolio activity tended to our base case, is a possibility. In general, the stocks we own in take advantage of the valuation spread that we saw across this sector are leaders in their area with high market shares industries, reducing those stocks that had performed and strong balance sheets on attractive valuations, so in our particularly strongly and now looked more fully valued in view should prove to be relatively resilient. Although we did favour of those names that had lagged and looked more take some money out of the sector earlier in the year, we attractive from a valuation perspective. We continued in remain overweight. aggregate to add to financials, where we are overweight, with valuations still looking relatively attractive given higher The other trend that the pandemic and Ukraine crisis have interest rates and subdued credit costs. Here we added reinforced has been the need for increased self sufficiency. principally to names in Singapore, including Oversea-Chinese The need for diversified supply chains was something that Banking and United Overseas Bank. Looking elsewhere, an the COVID crisis had highlighted, given the disruption the area where we have reduced exposure is to the Australian pandemic caused. With security of supply already a focus in resource names. The sector has performed strongly over the areas such as semiconductor production, thanks to ongoing last year, in part helped by the surge in commodity prices. US-China tensions and the concentration of advanced manufacturing in Taiwan, the Ukraine conflict has also Information technology is one of the biggest sectoral highlighted the vulnerability of nations to energy supply exposures in the fund, along with financials. Although near dependency. The recently concluded Party Congress in China term earnings have been seeing downward revisions, we saw President Xi mention ‘security’ 91 times in his opening continue to see some strong long-term drivers for growth speech (according to Bloomberg) compared with 55 mentions around digitisation and the roll out of 5G and ‘Internet of five years ago, reinforcing a view that China will continue to Things’ and our focus remains on the Taiwanese and Korean intensify efforts around ‘self sufficiency’ in core technologies companies such as TSMC and Samsung Electronics. and strategic industries. All this will likely lead to further localisation of supply chains and an era of reduced globalisation. -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 Australia China Annual Report and Accounts Indonesia 7 for the year ended 30 September 2022 Taiwan Singapore Korea Total contributions ## Investment Manager’s Review Geopolitics will continue to remain a risk, including continues to mean we look for bottom up stock opportunities surrounding Taiwan as highlighted by the recent visit by in China, consistent with our process, rather than move Nancy Pelosi to the island, which has resulted in increased money into the market on a macro, top-down driven tensions between the US and China. Other actions, such as allocation. the recent moves by the US to restrict China’s ability to India has been one of the best performing markets over the purchase and manufacture high-end semiconductors, period, due not only to the economy benefiting from a post- combined with the mid-term elections in the US mean it is COVID recovery, but also to domestic flows into the market in unlikely we will see any meaningful relaxation in tensions part on optimism about economic prospects following near term and this is likely to continue to weigh on sentiment. progress on reforms. Whilst on a long term basis the market From an Asian perspective the biggest impact on growth is continues to look attractive, valuations are now at extremes coming from the ‘zero COVID’ policy in China, where the versus the rest of the region, which has led us to temper our lockdowns have had a severe impact on growth as well as position in some of the more domestic orientated names. exacerbating the weakness in the property sector. It is not Historically, the relatively weak external accounts have seen clear how long this policy will remain in place but for now India suffer in a strong US dollar, strong commodity price there is unlikely, in our view, to be any major volte-face in the environment and this could yet see domestic interest rates near term. The recent Party Congress gave no indication rise faster than expected, impacting valuations. Given the when the policy might be eased and, whilst vaccination rates long term attractions of the market, we would likely use any in China are high and comparable to most developed nations, correction in favoured names to increase positions. a large tranche of the elderly still remain unvaccinated Sector-wise, aside from information technology, financials making it difficult for them to open up until this is rectified. remain an important overweight. Here banks, in our view, still Although a wholesale opening up is unlikely near term, it is remain attractive in aggregate on the back of benefits from likely that some more incremental easing measures occur. rising rates and low valuations. However, given the backdrop But in our view, China’s consumption and growth will of rising rates in most markets combined with slowing growth continue to remain lacklustre as uncertainty over the path of there is a risk that if rates move up faster than expected it COVID weighs on sentiment. could start to impact asset quality, offsetting the benefit of Given this, we have started to see a number of actions to expanding margins, so we remain selective. Underweights loosen policy including rate cuts, easing of property purchase are largely found in some of the more ‘defensive’ areas such restrictions and increases in infrastructure spending and as utilities, consumer staples and healthcare where valuations fiscal incentives. We consider it likely that we will see further are generally, in our view, quite full. easing measures but, whilst the ‘zero COVID’ policy remains, While recent events described above do not paint a their impact for the large part is likely to resemble pushing on particularly optimistic picture, this has in part been reflected a string. Nevertheless, given how poorly the market has in market action with valuations today looking much less performed, together with the move to an easing bias there frothy than they did a year ago. Nevertheless, the US Federal (whilst most of the rest of the world are tightening), as well as Reserve being more aggressive on rates near term is clearly a a tentative easing of the severity of lockdowns, there is headwind, given its near term impact on growth and potential for the market to experience better periods of earnings. However, this in turn should start to cap long-term performance. From our positioning perspective we have been inflationary expectations which will pave the way for lower very underweight China for some time and although we rates at some point in the future. Until then, it is likely that we continue to look for new opportunities given the falls, we see further downward revisions to earnings and a period of remain so and believe that the challenges that were there for inventory adjustment amongst companies to reflect the the market remain. slower growth and hopefully put them in a position to start to Longer term – although Xi’s confirmation at the Congress as grow earnings once more. Given overall aggregate valuations the Party’s General Secretary for his third five year term was for the region are now trading at or below long-term not a surprise, the make up of the Politburo Standing averages, this does set up a more constructive backdrop for Committee (and Politburo) was decidedly one-sided being Asian markets next year, barring a global hard landing or a dominated by Xi loyalists, further cementing his power within more extreme geopolitical risk event. the Party. The lack of countervailing voices within the new To conclude, it is worth remembering that as investors we PSC potentially heightens policy risk and likely means that buy companies not countries. We are mindful of the impact many of the challenges brought about by increased political and macroeconomic factors can have on equities and regulation will persist, with the narrative around areas such returns, but we are bottom-up stock-pickers first and as ‘common prosperity’ continuing to weigh on the potential foremost, focusing on the company’s return prospects and returns of parts of the private sector. All this means one valuation. We do not try to pick companies which will do well should not necessarily use a mean reversion argument alone based purely on a particular macro environment which we when it comes to valuation. have forecast; rather we try to pick well-managed companies Nearer term, although we are likely to see a stabilisation of which have structural advantages allowing them to survive the economy, it is hard for it to recover to pre-pandemic (and hopefully thrive!) in as wide a range of external growth rates whilst the strict ‘zero COVID’ policy remains in conditions as possible. Therefore, a focus on attractive place. The infectious nature of the Omicron variant means it is bottom up ideas, in our view, remains essential. 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 Schroder AsiaPacific Fund plc 8 # Investment Manager's Review ## Market Weights – Schroder AsiaPacific Fund versus MSCI AC Asia ex Japan Index | | Net Asset Value Weight (%) | | Benchmark 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.* Strategic Report Annual Report and Accounts for the year ended 30 September 2022 9 ## Investment Portfolio ## as at 30 September 2022 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. £’000 % £’000 % Mainland China Hong Kong (SAR) 1 Tencent Holdings 31,499 3.6 AIA 25,586 2.9 1 Alibaba 27,851 3.1 BOC Hong Kong 20,090 2.3 Midea (including A shares Techtronic Industries 16,142 1.8 2 and LEPO ) 19,981 2.3 Hong Kong Exchanges and 1,3 Yum China 17,432 2.0 Clearing 14,938 1.7 1 JD.com 16,904 1.9 Hang Lung Properties 11,128 1.3 1 Ping An Insurance H 12,058 1.4 Kerry Properties 10,236 1.2 LONGi Green Energy Swire Properties 8,800 1.0 Technology A 11,690 1.3 ASM Pacific Technology 4,386 0.5 Sany Heavy Industry A 9,648 1.1 Johnson Electric 1,922 0.2 Hongfa Technology A 8,914 1.0 Total Hong Kong (SAR) 113,228 12.9 1 Shenzhou International 7,840 0.9 South Korea Total Mainland China 163,817 18.6 Samsung Electronics (including India preference shares) 71,501 8.1 HDFC Bank 35,441 4.0 Samsung SDI 16,414 1.9 3 | ICICI Bank (including ADR | ) 31,724 3.6 | SK Hynix 10,450 1.2 | | --- | --- | --- | | Infosys 17,153 1.9 | | LG H&H 6,655 0.8 | | Apollo Hospitals Enterprise 16,850 1.9 | | Naver 3,198 0.4 | | Tata Consultancy Services 12,501 1.4 | | Total South Korea 108,218 12.4 | | Reliance Industries 11,226 1.3 | | Singapore | | Container Corporation 8,657 1.0 | | Oversea-Chinese Banking 21,832 2.5 | | Delhivery 6,563 0.7 | | Singapore Telecommunications 15,380 1.7 | | Maruti Suzuki 5,733 0.6 | | Singapore Exchange 14,980 1.7 | | Gujarat Pipavav Port 4,731 0.5 | | United Overseas Bank 14,764 1.7 | 3 | Total India 150,579 16.9 | Sea ADR | | 7,441 0.8 | | --- | --- | --- | --- | | Taiwan | Total Singapore 74,397 8.4 | | | | Taiwan Semiconductor | Australia | | | | Manufacturing 71,331 8.1 | | 4 | | | | BHP | | 12,014 1.4 | Hon Hai Precision Industries 14,324 1.6 4 Rio Tinto 9,312 1.1 Delta Electronics 11,485 1.3 Orica 8,328 0.9 Mediatek 10,816 1.2 4 Woodside Energy 3,658 0.4 Giant Manufacturing 10,188 1.2 Total Australia 33,312 3.8 Nien Made Enterprise 8,161 0.9 Novatek Microelectronics 6,029 0.7 Total Taiwan 132,334 15.0 Schroder AsiaPacific Fund plc 10 # Investment Portfolio as at 30 September 2022 | | £'000 | % | | £'000 | % | | --- | --- | --- | --- | --- | --- | | **Vietnam** | | | **Italy** | | | | **Dragon Capital Vietnam Enterprise Investments^{4}** | **20,730** | **2.3** | Prada^{1} | 10,218 | 1.2 | | Vietnam Dairy Products | 5,255 | 0.6 | **Total Italy** | **10,218** | **1.2** | | Mobile World Investment | 2,167 | 0.2 | **Philippines** | | | | **Total Vietnam** | **28,152** | **3.1** | International Container Terminal Service | 8,281 | 0.9 | | **Indonesia** | | | **Total Philippines** | **8,281** | **0.9** | | **Bank Mandiri** | **23,262** | **2.6** | **Total Investments^{6}** | **882,801** | **100.0** | | **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^{2}** | **17,779** | **2.0** | | | | | **Total United Kingdom** | **17,779** | **2.0** | | | | | | | | ^{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: | | | | | | | Equities, including ADRs, LEPOs and NVDRs | £'000 | % | | | | | Collective investment funds | 831,061 | 94.1 | | | | | Preference shares | 38,509 | 4.4 | | | | | Total investments | 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 Strategic Report Annual Report and Accounts for the year ended 30 September 2022 11 ## Strategic Report 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. ### Business model Stock research The Board has appointed the Manager, Schroder Unit Trusts The Manager believes that equity markets are not efficient in Limited, to implement the investment strategy and to Asia, and to generate alpha over the long term the best manage the Company’s assets in line with the appropriate approach is to focus on fundamental bottom-up stock restrictions placed on it by the Board, including limits on the analysis. In particular, the Manager’s analytical focus is on the type and relative size of holdings which may be held in the future trend in a company’s return on invested capital portfolio and on the use of gearing, cash, derivatives and (“ROIC”) relative to its cost of capital, in the belief that this other financial instruments as appropriate. The terms of the reflects the attractiveness and sustainability of the business appointment are described more completely in the Directors’ model and serves as a predictor of long-term shareholder Report. The Manager also promotes the Company using its returns. sales and marketing teams. The Board and Manager work Given this focus on fundamental research, it forms a key together to deliver the Company’s investment objective, as input into the Manager’s stock selection decisions. The demonstrated in the diagram above. The investment process Manager has 39 dedicated equity analysts across the Asia and promotion activities are described in more detail below. 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 ### Investment process Asian markets and the companies within them. The Investment foundation of the Manager’s internal research is a Stock selection is at the heart of the investment approach for programme of regional company contacts each year (over the Company. A key strength of the Manager is its network of • Manager implements 2,300 for calendar year 2021), with the majority of Schroders’ Strategy analysts in Asia whose focus is on identifying companies able the investment strategy analysis being done using internal research and company to grow shareholder value in the long term. Although the in- by following an • Set objectives, valuation models. house analysts are the primary source of stock ideas, the investment process Board strategy and KPIs Investment Manager also generates stock ideas through • Support by strong This is supplemented by other resources across the research and risk their own research and draws on a number of other sources Schroders group including the ESG and Data Insight Unit • Appoint Manager environment Competitiveness and other service including other investment professionals within Schroders, a teams as well as other equity teams focused on Global and • Regular reporting and providers to achieve proprietary quantitative screen and sell-side analysts. Oversight interaction with the Emerging markets. Board is focused on objectives Board ensuring: Responsible for The investment approach is primarily bottom-up, driven by Investor • • Oversee portfolio • that the Company overall strategy and an assessment of the financial and non-financial (including Value management remains attractive oversight including ESG) factors which influence company returns. In addition, to shareholders and risk management • Monitor achievement Promotion potential investors there is a top-down regional allocation review process, of KPIs • Activities centred • that the fees carried out on a monthly basis, combining the output of an • Oversee the use of on the creation of and Ongoing gearing • Marketing and sales shareholder value in-house quantitative model and the qualitative views of the capability of the Charges remain Manager. • Oversee the management Manager competitive t of the discount/premium and the provision of • Support from the Schroder AsiaPacific Fund plc 12 liquidity through share Corporate Broker with buybacks and issuance secondary market intervention to support discount/premium management ## Strategic Report ### 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 Strategic Report • 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. Became a Natural Capital Investment Alliance Founding member Signatory to Net Zero Asset | | | | | | | | Became a | Managers | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | UNGC | 3 Initiative | | | | | | | | | | | | | | signatory | | | CEO letter to | | | Partnership with | | | | | | | #1 in ShareAction | | | | | FTSE350 | | | Akaria Natural | | | | | Launched first | | European RI asset | | | | | companies on | | | Capital | | | | | sustainable | | management survey | | | | | climate change | | | | | | | | strategy | | | | | | Achieved | | | | | | Published corporate | | 1 | | | | | | | full ESG | | Natural Capital | Published | | | | Became a CDP | | | Developed responsible | | | | | | | | | | | governance policy | | | | | | Linked ESG to | | | integration | 5 | Research | Engagement | | | | signatory | | | fixed income policy | | | | | | | | Blueprint | | | | | | | | | revolving credit | | | | | partnership | | | facility 1998 2001 2006 2007 2008 2011 2016 2017 2019 2020 2021 2022 + Top 5 in 2017 2 AODP Global Acquired majority 6 years of First dedicated Became a UNPRI Developed Climate 50 Asset stake in Published A+ UNPRI | ESG resource | | signatory | responsible real | | Launched | Manager Index | | | | 4 | | Climate | Science-based | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | BlueOrchard | | rating | | | | | | | | | | | estate investment | | CONTEXT | | | | | | Became a | Transition | | targets | | | | Published first socially | | | policy | | | | Business | | | member of | Action Plan | validated by | | | | | responsible policy | | | | | | | operating on a | | | | | | | Acquired 75% | | | | | | | | | | | | | the UN Race | | | SBTi | shareholding in | | | | | | | | Launched SustainEx & | | carbon- | | | to Net Zero | | | | | Greencoat Capital Climate Progress neutral basis Initiative Dashboard ‘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 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. For a long time, the Manager has incorporated into its opportunities as the Manager believes they are best placed to decision making a thorough assessment of management understand their companies and determine the impact of quality, environmental, social and governance factors, ESG issues on the sustainability of the business. whether implicitly or explicitly. Schroders recognises the ESG analysis is an integrated and important part of the importance of appraising both financial and non-financial investment process from initial screening through to final factors when analysing a company and its security. The portfolio construction. ESG analysis impacts the investment Manager believes that integrating an analysis and evaluation process in four direct ways: of ESG factors in the security valuation and selection process is key to enhancing and protecting long-term shareholder 1. Initial screening – ESG helps determine which companies value. The appraisal of non-financial factors, including ESG the Manager consider to be investable as part of the considerations, contributes to a better understanding of a initial screening. company’s risk characteristics and return potential. 2. Sustainability of earnings – ESG analysis helps As long-term, bottom-up investors, assessing the understand the impact ESG externalities may have on the sustainability of a company’s returns and financial position future earnings power of the business and with it the has always been at the core of the Manager’s research and assessment of the return on invested capital (“ROIC”) and investment decisions in Asia. Consistent with this approach shareholder return classification (“SRC”) of the Company. the Manager engages with company management teams 1 3. Fair Value and recommendation – ESG is an indirect and (Schroders conducts over 2,300 meetings with regional direct input into the fair value estimate of a company. companies a year), as well as voting at all investee company Indirect, to the extent that a company’s SRC may general meetings where practically possible. Schroders’ influence the assumptions used in establishing the fair analysts are directly responsible for assessing ESG risks and Annual Report and Accounts 13 for the year ended 30 September 2022 ## Strategic Report value estimate of a company; and direct, to the extent monitoring process. The Asia Context template provides a that Schroders may apply an additional explicit clearer, and broader, roadmap on the issues requiring discount/premium to that fair value estimate. engagement. It has also helped refresh the team’s focus on ROIC and enhances appreciation of the downside and upside 4. Portfolio construction – ESG helps shape portfolio risks to a company’s business model. The analysts have the construction and may influence how the Manager option to apply an explicit discount or premium to their fair assesses investments. For example, poor ESG value estimate as a result of their ESG analysis. performance or heightened ESG risks may result in a decision to underweight a security, hold a smaller One of the Asian Equities team’s greatest strengths is having position size or avoid an investment completely. There is experienced analysts working hand-in-hand with the no automatic rule – each investment opportunity is experienced fund managers – often involving discussions assessed on a case-by-case basis, with the focus on the from the beginning to the end of the research on a company. materiality of ESG factors on a company’s valuation and Many of the fund managers are ex-analysts and they are risk profile. heavily involved in the discussions that underpin the ESG conclusions – especially given the inherent subjectivity of how In summary, ESG analysis helps determine which companies certain ESG considerations will impact a company. Schroders the Manager looks at, how Schroders assesses their does not expect its analysts to score the Asia Context sustainability and, hence, how they value them. And while templates in isolation – in many instances the team needs to company valuations ultimately drives portfolio construction, build a consensus on which issues to address and how to ESG insights play a crucial role in the investment process and score them. influence the size of positions in the portfolio. Furthermore, ESG analysis is broad reaching and the Manager is not only In addition to the merits of an individual stock idea, the interested in the potential downside risks that they may Investment Manager will also take into consideration the identify, but also the upside return implications for stocks the overall balance of the portfolio when selecting stocks and Company invests in. sizing positions – looking, for instance, at overall sector and country weights. As part of that process a company’s ESG 2 characteristics may influence how the Investment Manager Asia ex Japan ESG analysis in practice sizes positions within a portfolio. The Investment Manager Schroders’ Asian Equity analysts are expected to provide may elect to limit, or even rule out, exposure to a particular written ESG analysis for all companies under coverage. This stock in view of a specific ESG concern. They assess each identifies and assesses the potential effect of ESG issues on situation on its merits, focusing on the materiality of ESG the investment case. factors on a stock’s valuation and risk profile. To help the ESG analysis to be more robust and more integrated, it draws on the proprietary tools developed by Working with the Schroders Group’s Sustainable Schroders such as Context and SustainEx. Asia Context, which Investment Team is the principal tool employed, captures the ESG analysis in 3 Schroders has a team of more than 50 dedicated ESG one template using a stakeholder-based framework and is a professionals who develop proprietary ESG tools and oversee key step in the overall assessment of a company. In addition ESG analysis across Schroders. to separate rankings for ‘E’, ‘S’ & ‘G’, the Manager generates an overall score for each company’s ESG rating. The ESG specialists will also engage directly with companies, prioritising those with exposure to higher ESG risk and low Chart 1: Schroders Context Framework: 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 Employees Communities engagement. The Asian investment team also collaborates Source: Schroders Employer choices, motivation Disruption to local operations with the Sustainable Investment team, participating both Schroders has always engaged with the companies that it formally and informally, for instance, in a monthly ESG invests in, and direct company contact is an important conference call together with other investors globally to component of the initial due diligence and ongoing e r n a n c discuss topical issues as well as ESG best practice. o v e G Suppliers Customers 1 | | For the year 2021. | | Brand perceptions, | | --- | --- | --- | --- | | Operational continuity, | 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 | Company | product demands | reputational risk 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. G o v c e e r n a n Schroder AsiaPacific Fund plc 14 Environment Regulators Cost pressures, License to operate, pricing, product efficiency competitive structure ## Strategic Report ### 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. Strategic Report Sector Reasons for Caution Approach Approximate Company Exposure Agribusinesses/ Environmental, Social, Governance, (low Avoid/small exposure 0% Aquaculture barriers of entry, widespread questionable practices) Tobacco Social Avoid 0% Gambling Social, Governance. Licence to Limited exposure to best-in- 0% operate/promotional practices class players in well-regulated markets (eg Macau) | Utilities | Environmental, Governance, (national service | Avoid carbon heavy energy | 0% | | --- | --- | --- | --- | | (traditional) | obligations, uncertain regulations/risks of | providers, focus on hydro and | | | | backlash against coal plants, mostly state- | sustainable energy providers | | | | owned enterprises) | in well-regulated markets | | | Auto Environmental (regulations against the sector – | | Avoid exposure to traditional | 0.6% OEMs (1 stock) | | | too much hot money in electric vehicles (“EVs”) | original equipment | 1.0% Supply chain | | | and multiple players will mean poor returns for | manufacturers (“OEMs”), | (1stock) | | | all) | minimise exposure to supply | 1.8% EV battery | | | | chains/EV batteries | manufacture (1stock) | | Resources Environmental, Social, Governance | | Avoid except for Australian | 3.3% (3 stocks*) | | | (questionable practices such as bribery and | blue chips, with minimal | | | | poor environmental and safety controls | thermal coal exposure | | concerns widespread in Asia ex Australia) | Oil and Gas Environmental, Governance (regulations, | | Limited exposure to sector | 1.7% (2 stocks) | | --- | --- | --- | --- | | | unfavourable taxes, price takers, big carbon | ideally with a gas focus or self- | | | | producers) | help story | | | Property Environmental, Social, Governance (bribery | | Exposure typically Hong Kong | 3.4% (3 stocks) | | | issues, flooding, land clearance compensation, | and Singapore | | labour practices) Defence Monopsony structure, corruption Avoid 0% As at 30September 2022 *Includes mining related stocks. Annual Report and Accounts 15 for the year ended 30 September 2022 ## Strategic Report Schroders’ approach has been to take a cautious approach to markets in the region. For some sectors (e.g. tobacco or exposure in those companies which, while they may be thermal coal), the Manager’s requirement for operations to making attractive returns currently, are not always operating be sustainable in the long-term is a high hurdle to clear, in a sustainable way which could potentially impact future regardless of the governance or regulatory frameworks the earnings. C ompany is operating under, so the Company has tended to have very limited exposure there. The Company’s exposure to these industries, therefore, has tended to be through the higher quality names, operating in Perhaps the most prominent area of ESG-related risk is that of well-regulated markets. For example, while the Manager Climate Change. Although the Company doesn’t explicitly believes commodity resources will continue to be necessary target a lower carbon footprint from its holdings than the in future (and indeed crucial for a transition to a lower carbon Benchmark, the table below shows that this is currently the world), the exposure to this sector is through blue-chip case. Whilst there are variations depending on the data Australian companies, rather than more marginal miners in source, and there is not complete coverage of all stocks in the emerging countries. Similarly, for the real estate sector, the universe, on most measures below the Company appears exposure is largely through companies which have a focus on better positioned than the Benchmark. strong governance, operating in the most well-regulated Source: Benchmark data MSCI AC Asia ex JP (USD), 30 September 2022. Electronics and Taiwan Semiconductor Manufacturing, each ### Investment restrictions and spread of risk represented 8.1% of total investments. At the end of the year, The key restrictions imposed on the Manager are that: the Company did not hold any unlisted investments and the only holding in an open-ended fund was in Schroder Small (a) no more than 15% of the Company’s total net assets, at Cap Discovery Fund Z Acc, which represented 2.0% of total the date of acquisition, may be invested in any one single investments. There was also a holding in Vietnam Enterprise company; Investments Limited, a closed-end fund trading on the (b) no more than 10% of the Company’s total net assets, at London Stock Exchange which represented 2.3% of total the date of acquisition, may be invested in other listed investments. The Board believes that the objective of investment companies unless such companies have a spreading risk has been achieved. 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 Schroder AsiaPacific Fund plc 16 ## Strategic Report achieving its objective. Further comment on performance can ### Gearing be found in the Chairman’s statement. The following KPIs are At the beginning of the financial year, the Company had in used: place a £100million multi-currency revolving credit facility • NAV performance; with SMBC Bank International PLC of which £11.1million was drawn down. On 23 June 2022, the date of expiry of the credit • Share price discount/premium management; and facility with SMBC Bank International PLC, the Company • Ongoing charges ratio. entered into a one year £75million revolving credit facility Some KPIs are Alternative Performance Measures (APMs). agreement with The Bank of Nova Scotia, London Branch. Further details can be found on page 2 and definitions of Under the facility agreement, the Company also has the these terms on page 65. option to increase the revolving facility by a further £25 Strategic Report million to £100 million. At the year end £13.4million of the credit facility with The Bank of Nova Scotia was drawn down. ### In addition, the Company has a £30 million multi-currency Purpose, Values and Culture overdraft facility with HSBC, which was not utilised during the The Company’s purpose is to create long-term shareholder year. The Board has set parameters within which the Manager value. is authorised to use the credit facilities and draw down funds. The Company’s culture is driven by its values: Openness, While the articles of association limit the amount of gearing Responsiveness, Diligence and the pursuit of Excellence, with the Company may have to a maximum of the Company’s collegial behaviour and constructive challenge at Board level adjusted capital and reserves, Directors do not anticipate net and when engaging with stakeholders. The values are all effective gearing levels in excess of 20% of shareholders’ centred on achieving returns for shareholders in line with the funds. 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 ### Promotion the investment objective, the Company’s operations are structured with regard to all its stakeholders and take account The Company promotes its shares to a broad range of of the impact of the Company’s operations on the investors including discretionary wealth managers, private environment and community. investors, financial advisers and institutions which have the potential to be long-term supporters of the investment Acting with high standards of integrity and transparency the strategy. The Company seeks to achieve this through its Board is committed to encouraging a culture that is Manager and Corporate Broker, which promote the shares of responsive to the views of shareholders and its wider the Company through regular contact with both current and stakeholders. potential shareholders. As the Company has no employees and acts through its These activities consist of investor lunches, one-on-one service providers, its culture is represented by the values and meetings, regional road shows and attendances at behaviour of the Board and third parties to which it delegates conferences for professional investors. In addition, the certain activities. The Board aims to fulfill the Company’s Company’s shares are supported by the Manager’s wider investment objective by encouraging a culture of constructive marketing of investment companies targeted at all types of challenge with all key suppliers and openness with all investors. This includes maintaining close relationships with stakeholders. The Board is responsible for embedding the adviser and execution-only platforms, advertising in the trade Company’s culture in the Company‘s operations. press, maintaining relationships with financial journalists and the provision of digital information on Schroders’ website. The Board recognises the Company’s responsibilities with respect to corporate and social responsibility and engages The Board also seeks active engagement with investors and with its outsourced service providers to safeguard the meetings with the Chairman are offered to professional Company’s interests. As part of this ongoing monitoring, the investors where appropriate. Board receives reporting from its service providers with respect to their anti-bribery and corruption policies; Modern Shareholders are encouraged to sign up to the Manager’s Slavery Act 2015 statements; diversity policies; and Investment Trusts update, to receive information on the greenhouse gas and energy usage reporting. Company directly https://www.schroders.com/en/uk/private- investor/fund-centre/funds-in-focus/investment-trusts/ schroders-investment-trusts/never-miss-an-update/ . Corporate and Social Responsibility Diversity Details of the Board’s approach to discount management may be found in the Chairman’s Statement on page 4 and in the As at 30 September 2022, the Board comprised three men Annual General Meeting – Recommendations on page 61. 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 ### Key Performance Indicators the grounds of gender, social and ethnic backgrounds or The Board reviews performance, using a number of key cognitive and personal strengths. It will encourage any measures, to monitor and assess the Company’s success in recruitment agencies it engages to find a range of candidates Annual Report and Accounts 17 for the year ended 30 September 2022 ## Strategic Report that meet the objective criteria agreed for each appointment. compliant with the UK Stewardship Code and its compliance Appointments will always be based on merit. Candidates for with the principles therein is reported on its website: Board vacancies are selected based on their skills and https://www.schroders.com/en/sustainability/active- experience, which are matched against the balance of skills ownership/voting/. and experience of the overall Board taking into account the The Board has received reporting from the Manager on the criteria for the role being offered. application of its policy. 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 624resolutions, 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 Schroder AsiaPacific Fund plc 18 ## 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. Strategic Report 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 The Board’s main working relationship is with the Manager, who is responsible for the Company’s Investment portfolio management (including asset allocation, stock and sector selection) and risk management, Manager 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. Annual Report and Accounts 19 for the year ended 30 September 2022 ## Strategic Report Stakeholder Engagement Other service The Board maintains regular contact with its key service providers, both at the Board and committee providers, meetings, and through ad hoc communication during the year. The need to foster business including: relationships with key service providers is central to the Directors’ decision-making as the Board of an externally managed investment trust. – depositary and custodian During the year, the management engagement committee undertook reviews of the third-party – registrar 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 – Corporate received, to ensure that the Company continues to receive high quality service at a competitive cost. Broker – legal counsel 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 – third-party Schroder’s Group Internal Audit. These meetings enable the Board to conduct due diligence on research operations and IT risks amongst service providers; and to receive up to date information on changes provider to regulation and market practice in the industry. Investee The Board recognises the importance of good stewardship and communication with investee companies 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 During the year under review, the Board entered into a new revolving credit facility Agreement with Lenders 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. Schroder AsiaPacific Fund plc 20 ## 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 investmenttrust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which are monitored by the audit and risk committee on an ongoing basis. This system assists the Board in determiningthe nature and extent of the risks it is willing to take in achieving the Company’s strategic objectives. 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 Strategic Report emerging risks are set out in the table below: Risk Mitigation and management Strategic The requirements of investors change or develop in The appropriateness of the Company’s investment remit is such a way as to diverge from the Company’s periodically reviewed and the success of the Company in meeting investment objectives, resulting in a wide discount of its stated objectives is monitored. the share price to NAV per share. 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 The ongoing competitiveness of all service provider fees is uncompetitive, particularly in light of open ended subject to periodic benchmarking against their competitors. alternatives. Annual consideration of management fee levels is undertaken . Investment management and performance The Manager’s investment strategy, if inappropriate, Review of the Manager’s compliance with its agreed investment may result in the Company underperforming the restrictions, investment performance and risk against investment market and/or peer group companies, leading to the objectives and strategy; relative performance; the portfolio’s risk Company and its objectives becoming unattractive to profile; and whether appropriate strategies are employed to investors. 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 The risk profile of the portfolio is considered and appropriate fluctuations due to the nature of its business. A strategies to mitigate any negative impact of substantial changes significant fall in regional equity markets or a in markets or currency are discussed with the Manager. substantial currency fluctuation could have an The Company has no formal policy of hedging currency risk but adverse impact on the market value of the Company’s may use foreign currency borrowings or forward foreign currency investments. contracts to limit exposure. Political The Board monitors global developments and regularly has discussions with the Investment Manager and other interested Political risk includes the impact of geopolitical risk, parties. It will continue to do so as matters develop in respect of regional tensions, trade wars and sanctions against Russia’s invasion of Ukraine, tensions between US and China, companies, in areas in which the Company invests or developments within China, increasing energy and food prices, may invest, that might have consequences for the global economic growth and the potential for further geopolitical Company including an adverse effect on the value of unrest. Subject to shareholder consent, the Board can amend the the Company’s assets. investment policy and objective of the Company to mitigate these risks. Annual Report and Accounts 21 for the year ended 30 September 2022 ## Strategic Report Risk Mitigation and management Custody Safe custody of the Company’s assets may be The depositary reports on the safe custody of the Company’s compromised through control failures by the assets, including cash and portfolio holdings which are depositary. 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 Gearing is monitored and strict restrictions on borrowings are arrangements increase the funds available for imposed: gearing continues to operate within pre-agreed limits so investment through borrowing. While this has the as not to exceed 20% of shareholders’ funds. potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental to performance. Accounting, legal and regulatory change In order to continue to qualify as an investment trust, The Board intends to continue to operate the Company in full the Company must comply with the requirements of compliance with the requirements of Section 1158 of the Section 1158 of the Corporation Tax Act 2010. Corporation Tax Act 2010. The confirmation of compliance with relevant laws and regulations Breaches of the UK Listing Rules, the Companies Act by key service providers is reviewed. or other regulations with which the Company is required to comply, could lead to a number of Shareholder documents and announcements, including the detrimental outcomes. 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 Service providers are appointed subject to due diligence processes certain functions to a number of service providers. and with clearly documented contractual arrangements detailing Failure of controls and poor performance of any service expectations. service provider, could lead to disruption, Regular reporting is provided by key service providers and reputational damage or loss. 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 Service providers report on cyber risk mitigation and management the risk of cyber attacks. Cyber attacks could lead to at least annually, which includes confirmation of business loss of personal or confidential information or disrupt continuity capability in the event of a cyber attack. operations. 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 consideration of climate change risks and opportunities and of the Company’s business and affect revenue, environmental, social and governance factors is integrated into the expenses, asset values and the cost or availability of Investment Manager’s investment process. The Investment capital. Manager also considers and evaluates the approach investee companies take to recognise and mitigate climate change risks. Schroder AsiaPacific Fund plc 22 ## 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. Strategic Report A full analysis of the financial risks facing the Company is set out in note 20 to the accounts on pages 55 to 60. Based on the Company’s processes for monitoring operating ### Viability statement costs, the Board’s view that the Manager has the appropriate The Directors have assessed the viability of the Company depth and quality of resource to achieve superior returns in over a five year period, taking into account the Company’s the longer term, the portfolio risk profile, limits imposed on position at 30September 2022 and the potential impact of gearing, counterparty exposure, liquidity risk and financial the principal and emerging risks it faces for the review controls, the Directors have concluded that there is a period. This is further detailed in the Chairman’s Statement, reasonable expectation that the Company will be able to Investment Managers’ Review and Principal and Emerging continue in operation and meet its liabilities as they fall due Risks sections of this report. The Directors have assessed the over the five year period of their assessment. Company’s operational resilience and they are satisfied that the Company’s outsourced service providers will continue to operate effectively. ### Going concern The Board believes that a period of five years reflects a The Directors have assessed the principal risks, the impact of suitable time horizon for strategic planning, taking into the emerging risks and the matters referred to in the viability account the investment policy, liquidity of investments, statement. Based on the work the Directors have performed, potential impact of economic cycles, nature of operating they have not identified any material events or conditions costs, dividends and availability of funding. that, individually or collectively, may cast significant doubt on In its assessment of the viability of the Company, the the Company’s ability to continue as a going concern for the Directors have considered each of the Company’s principal period assessed by the Directors, being the period to and emerging risks detailed on pages 21 and 22 and in 31 December 2023 which is at least 12 months from the date particular the impact of a significant fall in regional equity the financial statements were authorised for issue. 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 By order of the Board 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. Schroder Investment Management Limited Company Secretary Whilst the Company’s articles of association require that a proposal for the continuation of the Company be put forward 6 December 2022 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. Annual Report and Accounts 23 for the year ended 30 September 2022 # Board of Directors ![img-5.jpeg](img-5.jpeg) ## 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* ![img-6.jpeg](img-6.jpeg) ## Keith Craig **Status: Independent non-executive Director** **Length of service:** 7 years – 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* ![img-7.jpeg](img-7.jpeg) ## 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* 24 Schroder AsiaPacific Fund plc # Board of Directors ![img-8.jpeg](img-8.jpeg) ## 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* ![img-9.jpeg](img-9.jpeg) ## 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 JP Morgan 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. Governance Annual Report and Accounts for the year ended 30 September 2022 25 # Directors' Report 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 six months' notice or on immediate notice in the event of certain breaches or the insolvency of either party. As at the date of this report no such notice had been given by either party. SUTL is authorised and regulated by the FCA and provides portfolio management, risk management, accounting and company secretarial services to the Company under the AIFM agreement. The Manager 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 30 June 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 30 September 2022 amounted to £6,913,000 (2021: £8,104,000). 26 Schroder AsiaPacific Fund plc # Directors' Report The accounting, administrative and company secretarial fee paid to the Manager in the year ended 30 September 2022 was £150,000 (2021: £130,000). Details of amounts payable to the Manager are set out in note 17 on page 54 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. ## Depository 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 depository 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 depository may terminate the depository agreement at any time by giving 90 days' notice in writing. The depository may only be removed from office when a new depository 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 12.04 pence (2021: 9.66 pence). 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 Annual Report and Accounts for the year ended 30 September 2022 27 Governance # Directors' Report 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 30 September 2022 | % of total voting 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 to 15,933,568 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. | Director | Board | Audit and Risk Committee | Management Engagement Committee^{1} | | --- | --- | --- | --- | | 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 28 Schroder AsiaPacific Fund plc ## 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 Audit Annual Post-audit ### Audit ### report planning report 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 Financial statements Audit results To establish a process for identifying, To monitor the integrity of the financial To discuss any matters arising from the assessing, managing and monitoring the statements of the Company and any audit and recommendations made by principal risks of the Company. formal announcements relating to the the auditor. Company’s financial performance and valuation. To review the half year report. Emerging risks Going concern Auditor appointment, independence and performance Governance To ensure a robust assessment of the To review the position and make Company’s emerging risks and recommendations to the Board in To make recommendations to the Board, procedures are in place to identify relation to whether it considers it in relation to the appointment, emerging risks, and an explanation of appropriate to adopt the going concern reappointment, effectiveness and how these are being managed or basis of accounting in preparing its removal of the external auditor, to mitigated. annual and half-yearly financial review their independence, and to statements. 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 Recognition of investment income Effectiveness of the independent audit Reviewing the operational controls Considered dividends received against process and auditor performance maintained by the Manager, forecast and the allocation of special Evaluated the effectiveness of the administrator, depositary and registrar. dividends to income or capital. independent audit firm and process prior to making a recommendation that it should be re-appointed at the Engagement with the FRC forthcoming AGM. Evaluated the On 8 April 2022, the Corporate Reporting auditor’s performance against agreed Review department of the Financial criteria including: qualification; Reporting Council (FRC) advised that our knowledge, expertise and resources; Annual Report for the year ended 30 independence policies; effectiveness of September 2021 had been subject to their audit planning; adherence to auditing review. There were a small number of standards; and overall competence was minor observations made by the FRC considered, alongside feedback from the which resulted in some minor Manager on the audit process. The enhancements to our disclosures which committee noted the auditor had are reflected within this report. Note that demonstrated its professional scepticism the FRC’s role is to consider compliance during the audit. The committee was with the reporting requirements, rather satisfied with the auditor’s replies. 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. Annual Report and Accounts 29 for the year ended 30 September 2022 ## 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 | Calculation of the investment | Auditor independence | | --- | --- | --- | | Consideration of several key aspects of | management fee | Ernst & Young LLP has provided audit | | internal control and risk management | Consideration of methodology used to | services to the Company for four years, since | | operating within the Manager, | calculate the fees, matched against the | appointment by the Company on 26July | | depositary and registrar, including | criteria set out in the AIFM agreement. | 2019 to audit the financial statements for the | | assurance reports and presentations on | | year ended 30 September 2019 and | | these controls. | | 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 | Overall accuracy of the annual report | Audit results | | --- | --- | --- | | qualifying rules in S1158 of the | and accounts | Met with and reviewed a comprehensive | | Corporation Tax Act 2010 | Consideration of the draft annual report | report from the auditor which detailed | | Consideration of the Manager’s report | and accounts and the letter from the | the results of the audit, compliance with | | confirming compliance. | Manager in support of the letter of | regulatory requirements, safeguards that | | | representation to the auditor. | have been established, and on their own | internal quality control procedures. Principal risks Valuation and existence of holdings Meetings with the auditor Reviewing the principal risks faced by the Quarterly review of portfolio holdings Met the auditor without representatives Company and the system of internal and assurance reports. of the Manager present. Representatives control. of the auditor attended the committee meeting at which the draft annual report and accounts were considered. Emerging risks Fair, balanced and understandable Provision of non-audit services by the Reviewing the emerging risks for the Reviewed the annual report and auditor Company. accounts to ensure that it was fair, The committee has reviewed the FRC’s balanced and understandable. 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 Consent to continue as auditor Reviewing the impact of risks on going Ernst & Young LLP indicated to the concern and longer-term viability. 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 Schroder AsiaPacific Fund plc 30 ## 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 Oversight of the Manager Oversight of other service providers The committee : The committee reviews the performance and competitiveness of the following service providers on • reviews the Manager’s performance, over the short at least an annual basis: and long term, against the Benchmark, peer group and the market. • Depositary and custodian • considers the reporting it has received from the • Corporate Broker Manager throughout the year, and the reporting • Registrar from the Manager to the shareholders. • Lender • assesses management fees on an absolute and relative basis, receiving input from the Company’s The committee also receives a report from the broker, including peer group and industry figures, Company Secretary on ancillary service providers, and as well as the structure of the fees. considers any recommendations. • reviews the appropriateness of the Manager’s The committee notes the audit and risk committee’s contract, including terms such as notice period. review of the auditor. • assesses whether the Company receives appropriate administrative, accounting, company Governance secretarial and marketing support from the Manager. Application during the year The committee undertook a detailed review of the The annual review of each of the service providers was Manager’s performance and agreed that it has the satisfactory. appropriate depth and quality of resource to deliver The committee noted that the audit and risk superior returns over the longer term. committee had undertaken a detailed evaluation of The committee reviewed the management fee and the Manager, registrar, depositary and custodian’s agreed a change with the Manager, resulting in a internal controls. 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. 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. Annual Report and Accounts 31 for the year ended 30 September 2022 ## 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. Oversight of Directors Annual review Application Annual Selection Induction of succession of succession evaluation policy policy Approach Selection and induction Board evaluation and Directors’ fees Succession • The committee prepares a job • The committee assesses each Director • The Board’s succession policy is specification for each role, and annually, and will use an external Board that Directors’ tenure will be an independent recruitment evaluator every three years. for no longer than nine years, firm is appointed. For the except in exceptional • The evaluation focuses on whether each Chairman and the chairs of circumstances and that each Director continues to demonstrate committees, the committee Director will be subject to commitment to their role and provides a considers current Board annual re-election at the AGM. valuable contribution to the Board during members too. the year, taking into account time • The committee reviews the • A job specification outlines the commitment, independence, conflicts and Board’s current and future knowledge, professional skills, training needs. needs at least annually. Should personal qualities and any need be identified the • Following the evaluation, the committee experience requirements. committee will initiate the provides a recommendation to selection process. • Potential candidates are shareholders with respect to the annual assessed against the re-election of Directors at the AGM. • The committee oversees the Company’s diversity policy. handover process for retiring • All Directors retire at the AGM and their Directors. • The committee discusses the re-election is subject to shareholder long list, invites a number of approval. candidates for interview and • The committee reviews Directors’ fees, makes a recommendation to taking into account comparative data and the Board. reports to shareholders. No Directors are • The committee reviews the involved in making recommendations induction of new Directors. with respect to their own remuneration. • Any proposed changes to the remuneration policy for Directors is discussed and reported to shareholders. For application see page 33 Schroder AsiaPacific Fund plc 32 ## Nomination Committee Report Application during the year | Selection and induction | Board evaluation and Directors’ fees | Succession | | | --- | --- | --- | --- | | • The committee noted that | • The Board and committee evaluation | • The committee reviewed the | | | following her appointment, | process was undertaken during the year, | | succession policy and agreed it | | MsGoh engaged in an | and the evaluation concluded in October | | was still fit for purpose. | | induction programme. | 2022. | | | • The committee noted that | • The committee also reviewed each | MrsMorgan had retired at the | | --- | --- | | Director’s time commitment and | AGM in 2022 and had been | | independence by reviewing a complete list | succeeded by Ms Goh. | of appointments, including pro bono not • Ms Goh was recommended to for profit roles, to ensure that each the Board for appointment as Director remained free from conflict and a non-executive director had sufficient time available to discharge following the engagement of each of their duties effectively. All Odgers Berndtson to identify Directors were considered to be potential candidates for a new independent in character and judgement. board appointment. Odgers • The committee considered each Director’s Berndtson had no connection contributions, and noted that in addition with the Company or any of to extensive experience as professionals the Directors. and non-executive Directors, each Director had valuable skills and experience, as detailed in their biographies on pages24 Governance 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 30September 2023. 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 MrsMorgan at the AGM in 2022, as the Audit and Risk Committee Chair. Annual Report and Accounts 33 for the year ended 30 September 2022 # Directors' Remuneration Report ## 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 30 January 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 69,552 votes 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 pages 24 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 1 October 2021. 34 Schroder AsiaPacific Fund plc ## 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 1 Fees Taxable benefits Total 30 September 2022 2021 2022 2021 2022 2021 2022 2021 2020 Director £ £ £ £ £ £ % % % 2 J ames Williams (Chairman) 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 3 Julia Goh 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 4 Rosemary Morgan 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 5 Nicholas Smith – 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. Governance 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. 1 Expenditure by the Company on remuneration Ten year share price and Benchmark total returns 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 350 the year 15,922 13,346 – Share buybacks 21,653 11,836 Share price total return Benchmark total return Total distributions 300 to shareholders 37,575 25,182 49.2 The information in the above table has been audited. 1 250 Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September . 2012. Definitions of terms and Alternative Performance Measures 200 are provided on page 65. 150 100 Annual Report and Accounts 35 50 for the year ended 30 September 2022 2 3 4 5 6 7 8 9 0 1 2 2 | | p-1 | | p-1 | | p-1 | | p-1 | | p-1 | | p-1 | | p-1 | | p-1 | p-2 | | p- | | p-2 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | -Se | | | -Se | -Se | | -Se | | -Se | | -Se | | -Se | | -Se | | -Se | -Se | | -Se | | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | 0 | | 0 | | | 3 | | 3 | | 3 | | 3 | | 3 | | 3 | | 3 | | 3 | 3 | | 3 | | 3 | | # 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 of 10p each at 30 September 2022 | Ordinary shares of 10p each at 1 October 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 36 Schroder AsiaPacific Fund plc ## Statement of Directors’ Responsibilities in respect ## of the Annual Report and Accounts The Directors are responsible for preparing the annual Company, together with a description of the principal report, and the financial statements in accordance with and emerging risks that it faces; and applicable law and regulations. – the annual report and accounts, taken as a whole, is fair, Company law requires the Directors to prepare financial balanced and understandable and provides the statements for each financial year. Under that law the information necessary for shareholders to assess the Directors have prepared the financial statements in Company’s position and performance, business model accordance with United Kingdom Generally Accepted and strategy. Accounting Practice (United Kingdom Accounting Standards, On behalf of the Board 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 James Williams of the Company for that period. In preparing these financial Chairman statements, the Directors are required to: 6 December 2022 – 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; Governance – 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 pages24 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 Annual Report and Accounts 37 for the year ended 30 September 2022 ## 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 notes1 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. Schroder AsiaPacific Fund plc 38 ## Independent Auditor’s Report ## to the Members of Schroder AsiaPacific Fund plc ### 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. Risk Our response to the risk Key observations communicated to the audit and risk committee Financial Incomplete or inaccurate revenue We performed the following The results of our procedures recognition, including the procedures: identified no material misstatements in classification of special dividends as relation to the risk of incomplete or We obtained an understanding of the revenue or capital items in the inaccurate revenue recognition, processes and controls surrounding Income Statement (refer to the Audit including classification of special revenue recognition and classification and Risk Committee Report set out on dividends as revenue or capital items of special dividends by performing pages 29 and 30 and the accounting in the Income Statement. walkthrough procedures. policy set out on pages 46 to 48) For all dividends received, we The total revenue for the year to recalculated the dividend income by 30September 2022 was £24.67million multiplying the investment holdings at (2021: £22.40million), consisting the ex-dividend date, traced from the primarily of dividend income from accounting records, by the dividend listed equity investments. per share, which was agreed to an | The Company received special | independent data vendor. We agreed | | --- | --- | | dividends amounting to £0.67million | amounts to bank statements and, | | (2021: £4.22million), all of which were | where applicable, agreed the exchange | | classified as revenue (2021: | rates to an external source. | £2.60million classified as revenue and £1.62million classified as capital). Annual Report and Accounts 39 for the year ended 30 September 2022 ## 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 | For all accrued dividends, we reviewed | | --- | --- | | inaccurate recognition of revenue | the investee company announcements | | through the failure to recognise proper | to assess whether the entitlement arose | | income entitlements or to apply an | prior to 30September 2022. We agreed | | appropriate accounting treatment. | the dividend rate to corresponding | announcements made by the investee In addition to the above, the Directors company, recalculated the dividend may be required to exercise amount receivable by multiplying the judgement in determining whether investment holdings at the ex-dividend income receivable in the form of date, traced from the accounting records, special dividends should be classified and confirmed this was consistent with as ‘revenue’ or ‘capital’ in the Income cash received as shown on post year end Statement. 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 We performed the following The results of our procedures the investment portfolio (refer to the procedures: identified no material misstatements in Audit and Risk Committee Report set relation to the risk of incorrect We obtained an understanding of the out on pages 29 and 30 and the valuation or ownership of the processes and controls surrounding accounting policy set out on pages 46 investment portfolio. investment title and the pricing of to 48). listed securities by performing The valuation of the investment walkthrough procedures. portfolio on 30September 2022 was For all investments in the portfolio, we £882.80million (2021: compared the market prices and £1,068.99million) consisting of listed exchange rates applied to an equity investments. independent pricing vendor and The valuation of investments held in recalculated the investment valuations the investment portfolio is the key as at the year end. driver of the Company’s net asset value We inspected the stale pricing reports and total return. Incorrect investment produced by the Administrator to pricing, or failure to maintain proper identify prices that have not changed legal title of the investments held by within seven days from year end and the Company, could have a significant verified whether the listed price is a impact on the portfolio valuation and fair value. the return generated for shareholders. We agreed the Company’s investments to the independent confirmations received directly from the Company’s Custodian and Depositary as at 30September 2022. Schroder AsiaPacific Fund plc 40 # 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. 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 ### 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 and22; – 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, Schroder AsiaPacific Fund plc 42 # Independent Auditor's Report to the Members of Schroder AsiaPacific Fund plc 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 Financial Annual Report and Accounts for the year ended 30 September 2022 43 ## Income Statement ## 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. ## Statement of Changes in Equity ## 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. Schroder AsiaPacific Fund plc 44 ## Statement of Financial Position ## at 30 September 2022 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: Financial 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 Annual Report and Accounts 45 for the year ended 30 September 2022 ## Notes to the Accounts ### 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 30September 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”. Schroder AsiaPacific Fund plc 46 ## Notes to the Accounts (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 note10 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. Financial 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. Annual Report and Accounts 47 for the year ended 30 September 2022 # 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 £'000 | 2021 £'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 £'000 | 2021 £'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 | | Revenue £'000 | 2022 Capital £'000 | Total £'000 | Revenue £'000 | 2021 Capital £'000 | Total £'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. 48 Schroder AsiaPacific Fund plc ## Notes to the Accounts ### 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 1 Directors’ fees 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 Financial 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 Annual Report and Accounts 49 for the year ended 30 September 2022 # Notes to the Accounts ## (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 £'000 | 2021 £'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 £'000 | 2021 £'000 | | --- | --- | --- | | 2021 final dividend of 9.70p (2020: 8.00p) paid out of revenue profits | 15,922 | 13,346 | | | 2022 £'000 | 2021 £'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). 50 Schroder AsiaPacific Fund plc ## Notes to the Accounts ### 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 Financial 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. Annual Report and Accounts 51 for the year ended 30 September 2022 # Notes to the Accounts ## 12. Creditors: amounts falling due within one year | | 2022 £'000 | 2021 £'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$15 million 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 page 57. 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 £'000 | 2021 £'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. 52 Schroder AsiaPacific Fund plc # Notes to the Accounts ## 15. Reserves | Year ended 30 September 2022 | Capital reserves | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Share premium^{1} £'000 | Capital redemption reserve^{2} £'000 | Warrant exercise reserve^{3} £'000 | Share purchase reserve^{4} £'000 | Gains and losses on sales of investments^{5} £'000 | Investment holding gains and losses^{6} £'000 | Revenue reserve^{7} £'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** | | Year ended 30 September 2021 | Capital reserves | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Share premium^{1} £'000 | Capital redemption reserve^{2} £'000 | Warrant exercise reserve^{3} £'000 | Share purchase reserve^{4} £'000 | Gains and losses on sales of investments^{5} £'000 | Investment holding gains and losses^{6} £'000 | Revenue reserve^{7} £'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. Financial Annual Report and Accounts for the year ended 30 September 2022 53 # Notes to the Accounts $^{1}$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. $^{2}$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 page 47. At 30 September 2022, the Company's investment portfolio was categorised as follows: | | 2022 | | | | | --- | --- | --- | --- | --- | | | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | Investments in equities and equity linked securities | 882,801 | – | – | 882,801 | | Total | 882,801 | – | – | 882,801 | 54 Schroder AsiaPacific Fund plc # Notes to the Accounts | | 2021 | | | | | --- | --- | --- | --- | --- | | | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'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. Financial Annual Report and Accounts for the year ended 30 September 2022 55 # Notes to the Accounts | | 2022 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Hong Kong Dollars £'000 | US Dollars £'000 | South Korean Won £'000 | Taiwan Dollars £'000 | Singapore Dollars £'000 | Thai Baht £'000 | Indian Rupees £'000 | Chinese Yuan £'000 | Other £'000 | Total £'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 Kong Dollars £'000 | US Dollars £'000 | South Korean Won £'000 | Taiwan Dollars £'000 | Singapore Dollars £'000 | Thai Baht £'000 | Indian Rupees £'000 | Chinese Yuan £'000 | Other £'000 | Total £'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 £'000 | 2021 £'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** | 56 Schroder AsiaPacific Fund plc # Notes to the Accounts Conversely if sterling had strengthened by 10% this would have had the following effect: | | 2022 £'000 | 2021 £'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 £'000 | 2021 £'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$15 million (£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. Financial Annual Report and Accounts for the year ended 30 September 2022 57 # Notes to the Accounts 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 £'000 | 2021 £'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 in rate £'000 | 1.0% decrease in rate £'000 | 1.0% increase in rate £'000 | 1.0% decrease in rate £'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 £'000 | 2021 £'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. 58 Schroder AsiaPacific Fund plc # Notes to the Accounts ## 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 in fair value £'000 | 20% decrease in fair value £'000 | 20% increase in fair value £'000 | 20% decrease in fair value £'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 months or less 2022 £'000 | Three months or less 2021 £'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. Financial Annual Report and Accounts for the year ended 30 September 2022 59 # Notes to the Accounts 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 £'000 | 2021 £'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 £'000 | 2021 £'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. 60 Schroder AsiaPacific Fund plc # Annual General Meeting – Recommendations 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 page 62. 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. Resolution 1 is a required resolution. Resolution 2 invites shareholders to approve the final dividend. Resolution 3 relates to the Directors’ Remuneration Policy. Resolution 4 concerns the Directors’ Remuneration Report, on pages 34 to 36. Resolutions 5 to 9 invite shareholders to re-elect each of the Directors for another year, following the recommendations of the nomination committee, set out on pages 32 and 33 (their biographies are set out on pages 24 and 25). Resolutions 10 and 11 concern the re-appointment and remuneration of the Company’s auditor, discussed in the Audit and Risk Committee Report on pages 29 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 Annual Report and Accounts for the year ended 30 September 2022 61 # Notice of Annual General Meeting 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, 1 February 2023 at 12.00 noon to consider the following resolutions of which resolutions 1 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 Section 701 of the Act to make market purchases (within the meaning of Section 693 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." By order of the Board For and on behalf of Schroder Investment Management Limited Registered Number: 03104981 6 December 2022 Registered Office: 1 London Wall Place, London EC2Y 5AU 62 Schroder AsiaPacific Fund plc ## Explanatory Notes to the Notice of Meeting 1. Ordinary shareholders are entitled to attend and vote at set out in their personalised proxy form. Alternatively, the meeting and to appoint one or more proxies, who shareholders who have already registered with Equiniti’s need not be a shareholder, as their proxy to exercise all Shareview service can appoint a proxy by logging onto or any of their rights to attend, speak and vote on their their portfolio at www.shareview.co.uk and clicking on behalf at the meeting. the link to vote. The on-screen instructions give details on how to complete the appointment process. Please A proxy form is attached. If you wish to appoint a person note that to be valid, your proxy instructions must be other than the Chairman as your proxy, please insert the received by Equiniti no later than 12.00 noon on name of your chosen proxy holder in the space provided 30January 2023. If you have any difficulties with online at the top of the form. If the proxy is being appointed in voting, you should contact the shareholder helpline on relation to less than your full voting entitlement, please 08000320641 (or +44(0) 121 415 0207 for overseas enter in the box next to the proxy holder’s name the callers). number of shares in relation to which they are authorised to act as your proxy. If left blank your proxy will be If an ordinary shareholder submits more than one valid deemed to be authorised in respect of your full voting proxy appointment, the appointment received last entitlement (or if this proxy form has been issued in before the latest time for receipt of proxies will take respect of a designated account for a shareholder, the full precedence. voting entitlement for that designated account). Shareholders may not use any electronic address Additional proxy forms can be obtained by contacting the provided either in this Notice of Annual General Meeting Company’s Registrars, Equiniti Limited, on 08000320641 or any related documents to communicate with the or +44(0) 121 415 0207 for overseas callers, or you may Company for any purposes other than expressly stated. photocopy the attached proxy form. Please indicate in the box next to the proxy holder’s name the number of Representatives of shareholders that are corporations shares in relation to which they are authorised to act as will have to produce evidence of their proper your proxy. Please also indicate by ticking the box appointment when attending the Annual General provided if the proxy instruction is one of multiple Meeting. instructions being given. Completion and return of a form 2. Any person to whom this notice is sent who is a person of proxy will not preclude a member from attending the nominated under section 146 of the Companies Act 2006 Annual General Meeting and voting in person. to enjoy information rights (a “Nominated Person”) may, On a vote by show of hands, every ordinary shareholder under an agreement between him or her and the who is present in person has one vote and every duly shareholder by whom he or she was nominated, have a appointed proxy who is present has one vote. On a poll right to be appointed (or to have someone else vote, every ordinary shareholder who is present in appointed) as a proxy for the Annual General Meeting. If person or by way of a proxy has one vote for every share a Nominated Person has no such proxy appointment of which he/she is a holder. right or does not wish to exercise it, he or she may, under any such agreement, have a right to give The “Vote Withheld” option on the proxy form is provided instructions to the shareholder as to the exercise of to enable you to abstain on any particular resolution. voting rights. 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 statement of the rights of ordinary shareholders in the proportion of the votes “For” and “Against” a relation to the appointment of proxies in note 1 above resolution. does not apply to Nominated Persons. The rights described in that note can only be exercised by ordinary A proxy form must be signed and dated by the shareholders of the Company. shareholder or his or her attorney duly authorised in writing. In the case of joint holdings, any one holder may 3. Pursuant to Regulation 41 of the Uncertificated Securities sign this form. The vote of the senior joint holder who Regulations 2001, the Company has specified that only tenders a vote, whether in person or by proxy, will be those shareholders registered in the Register of accepted to the exclusion of the votes of the other joint members of the Company at 6.30 p.m. on 30 January holder and for this purpose seniority will be determined 2023, or 6.30 p.m. two days prior to the date of an by the order in which the names appear on the Register adjourned meeting, shall be entitled to attend and vote of Members in respect of the joint holding. To be valid, at the meeting in respect of the number of shares proxy form(s) must be completed and returned to the registered in their name at that time. Changes to the Company’s Registrars, Equiniti Limited, Aspect House, Register of Members after 6.30 p.m. on 30 January 2023 Spencer Road, Lancing, West Sussex BN996DA, in the shall be disregarded in determining the right of any enclosed envelope together with any power of attorney person to attend and vote at the meeting. or other authority under which it is signed or a copy of 4. CREST members who wish to appoint a proxy or proxies such authority certified notarially, to arrive no later than through the CREST electronic proxy appointment service 48 hours before the time fixed for the meeting, or an may do so by using the procedures described in the adjourned meeting. Shareholders may also appoint a CREST manual. The CREST manual can be viewed at proxy to vote on the resolutions being put to the meeting www.euroclear.com. A CREST message appointing a electronically at www.sharevote.co.uk. Shareholders who proxy (a “CREST proxy instruction”) regardless of whether are not registered to vote electronically, will need to it constitutes the appointment of a proxy or an Annual General Meeting enter the Voting ID and Shareholder Reference Number Annual Report and Accounts 63 for the year ended 30 September 2022 # 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 (ID RA19) 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 15 minutes 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 pages 24 and 25 of the Company's annual report and accounts for the year ended 30 September 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 Section 311A 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. 64 Schroder AsiaPacific Fund plc # 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 received | XD date | NAV on 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 received | XD date | NAV on 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 30 September 2022 is calculated as follows: | Opening share price at 30/9/21 | 579.00p | | --- | --- | | Closing share price at 30/9/22 | 487.00p | | Dividend received | XD date | Share price on 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 | | Dividend received | XD date | Share price on 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. Annual General Meeting Annual Report and Accounts for the year ended 30 September 2022 65 # Definitions of Terms and Alternative Performance Measures ## 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 £'000 | 2021 £'000 | | --- | --- | --- | | Borrowings 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. 66 Schroder AsiaPacific Fund plc ## Shareholder Information ### Webpages and share price information Alternative Investment Fund Managers ### The Company has dedicated webpages, which may be found (“AIFM”) Directive at www.schroders.co.uk/asiapacific. The webpages are the The AIFM Directive, as transposed into the FCA Handbook in Company’s primary method of electronic communication the UK, requires that certain pre-investment information be with shareholders. They contain details of the Company’s made available to investors in Alternative Investment Funds ordinary share price and copies of the report and accounts (such as the Company) and also that certain regular and and other documents published by the Company as well as periodic disclosures are made. This information and these information on the Directors, terms of reference of disclosures may be found either below, elsewhere in this committees and other governance arrangements. In annual report, or in the Company’s AIFM Directive addition, the webpages contain links to announcements information disclosure document published on the made by the Company to the market, Equiniti’s shareview Company’s webpages. 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 Leverage ex-income basis to the market on a daily basis. The Company’s leverage policy and details of its leverage Share price information may also be found in the Financial ratio calculation and exposure limits as required by the Times and on the Company’s webpages. 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 30September ### Association of Investment Companies 2022 these were: The Company is a member of the Association of Investment Leverage exposure Maximum ratio Actual ratio Companies. Further information on the Association can be Gross method 2.00 1.03 found on its website, www.theaic.co.uk. Commitment method 2.00 1.02 ### Individual Savings Account (“ISA”) status ### The Company’s shares are eligible for stocks and shares ISAs. Illiquid assets As at the date of this report, none of the Company’s assets ### Non-Mainstream Pooled Investments are subject to special arrangements arising from their illiquid nature. ### status The Company currently conducts its affairs so that its shares can be recommended by IFAs to ordinary retail investors in ### Remuneration disclosures accordance with the FCA’s rules in relation to non-mainstream investment products and intends to Quantitative remuneration disclosures to be made in this continue to do so for the foreseeable future. The Company’s annual report in accordance with FCA Handbook rule shares are excluded from the FCA’s restrictions which apply to FUND3.3.5 may also be found in the Company’s AIFM non-mainstream investment products because they are Directive information disclosure document published on the shares in an investment trust. Company’s webpages. ### Financial calendar ### Publication of Key Information Document Annual General Meeting February ### (“KID”) by the AIFM Final dividend paid February Pursuant to the Packaged Retail and Insurance-based Half year results announced June Products (“PRIIPs”) Regulation, the Manager, as the Company’s AIFM, is required to publish a short KID on the Financial year end 30 September Company. KIDs are designed to provide certain prescribed Annual results announced December 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. ### www.schroders.co.uk/asiapacific | Directors | Independent auditor | | --- | --- | | James Williams (Chairman) | Ernst & Young LLP | | Keith Craig | Atria One | | Julia Goh | 144 Morrison Street | | Vivien Gould | Edinburgh EH3 8EX | Martin Porter Registrars Equiniti Limited ### Advisers Aspect House Spencer Road Alternative Investment Fund Manager Lancing (the “Manager”) West Sussex BN99 6DA Schroder Unit Trusts Limited Shareholder Helpline: 0800 032 0641* 1 London Wall Place Website: www.shareview.co.uk London EC2Y 5AU *Calls to this number are free of charge from UK landlines. Investment Manager and Company Secretary Communications with shareholders are mailed to the address | Schroder Investment Management Limited | held on the register. Any notifications and enquiries relating | | --- | --- | | 1 London Wall Place | to shareholdings, including a change of address or other | | London EC2Y 5AU | amendment should be directed to Equiniti Limited at the | | Telephone: 020 7658 6189 | above address. | AMCompanySecretary@Schroders.com Shareholder enquiries Registered Office General enquiries about the Company should be addressed to the Company Secretary at the address set out above. 1 London Wall Place London EC2Y 5AU Dealing Codes Depositary and Custodian ISIN: GB0007918872 SEDOL: 0791887 HSBC Bank plc Ticker: SDP 8 Canada Square London E14 5HQ Global Intermediary Identification Number (GIIN) SWLQRM.99999.SL.826 Lending Bank The Bank of Nova Scotia, London Branch Legal Entity Identifier (LEI) 201 Bishopsgate 549300A71N7LE35KWU14 6th Floor London EC2M 3NS Corporate Broker Numis Securities Limited 45 Gresham Street London EC2V 7BF The Company’s privacy notice is available on its webpages.