Annual report and accounts
for the year ended 30 September 2023
Schroder AsiaPacic
Fund plc
Strategic Report
Financial
Other information
Page 4 Page 48
Page 72
Governance
Page 32
Performance Summary
Net Asset Value (“NAV”)
per share total return*
+2.9%
(2022: -13.6%)
Share price total return*
+2.3%
(2022: -14.5%)
Benchmark total return
1
+1.5%
(2022: -13.9%)
Some of the nancial measures above are classied as Alternative Performance Measures, as dened by the European
Securities and Markets Authority and are indicated with an asterisk (*). Denitions of these performance measures, and
other terms used in this report, are given on pages 76 and 77 together with supporting calculations where appropriate.
1
Source: Thomson Reuters.
Schroder AsiaPacific Fund plc 1
Strategic Report
Governance Financial
Introduction
Other information (unaudited)Strategic Report Governance Financial Other information (unaudited)Introduction
Ongoing charges ratio*
1
0.86%
(2022: 0.84%)
Share price discount
to NAV per share*
2
11.5%
(2022: 10.8%)
Revenue return
per share
1
12.06
p
(2022: 12.04p)
Gearing*
1
2.1%
(2022: 0.2%)
Share price
2
486.5p
(2022: 487p)
Net revenue after taxation
1
£18,990,000
(2022: £19,673,000)
*Alternative Performance Measure.
1
Schroders.
2
Morningstar/Thomson Reuters.
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 6
Top Ten Investments 13
Investment Portfolio 15
Ten Year Record 16
Business Review 17
Governance
Board of Directors 32
Directors’ Report 34
Audit and Risk Committee Report 37
Management Engagement
Committee Report 40
Nomination Committee Report 41
Directors’ Remuneration Report 43
Statement of Directors’
Responsibilities in respect of the
Annual Report and Accounts 46
Financial
Independent Auditor’s Report 48
Income Statement 54
Statement of Changes in Equity 55
Statement of Financial Position 56
Notes to the Accounts 57
Other information
(unaudited)
Annual General Meeting –
Recommendations 72
Notice of Annual General Meeting 73
Explanatory Notes to the Notice
of Meeting 74
Denitions of Terms and Alternative
Performance Measures 76
Information about the Company 78
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2
Strategic Report
Strategic Report
Chairman’s Statement
4
Investment Manager’s Review
6
Top Ten Investments
13
Investment Portfolio
15
Ten Year Record
16
Business Review
17
3
Chairman’s Statement
Schroder AsiaPacific Fund plc4
Performance
The year ended 30 September 2023 saw challenging market
conditions in Asia, in common with markets around the world. The
Company’s NAV produced a total return of 2.9% for the financial
year, outperforming the Benchmark, which produced a total return
of 1.5%, while the share price produced a total return of 2.3%. This
continues the Company’s commendable long term record of NAV
total return outperformance of the Benchmark which sits at an
annualised 2.4% over 10 years.
10-year NAV performance vs Benchmark
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV total return Benchmark total return
Source: Morningstar as at 30 September 2023. Rebased to 100 at
30 September 2013.
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.
There was a significant divergence of returns across Asian markets.
Larger markets especially China, where our Investment Managers
continue to maintain an under-weight position relative to the
Benchmark, and Hong Kong were very volatile during the financial
year, impacted by economic headwinds and geopolitical risks.
Elsewhere, markets such as Korea and Taiwan performed better.
However, Asian currency weakness was a significant drag on
performance.
More detailed comment on performance and investment policy may
be found in the Investment Manager’s Review.
Revenue and dividend
The Company’s principal investment objective is to achieve capital
growth, and the Directors continue to distribute substantially all of the
revenue received each year. The Company’s revenue return increased
slightly to 12.06 pence per share as portfolio companies dividends
remained resilient.
The Directors are recommending a final dividend of 12.00 pence per
share for the year ended 30 September 2023, representing the same
amount paid in respect of the previous financial year.
This dividend will be paid on 9 February 2024 to shareholders on the
register on 29 December 2023, subject to approval by shareholders
at the Annual General Meeting (“AGM”) on 31 January 2024.
Gearing
During the year ended 30 September 2023, the Company extended
its £75 million one year revolving credit facility with The Bank of
Nova Scotia, London Branch. At 30 September 2023, the Company’s
net gearing position was 2.1% taking into account cash balances,
compared to 0.2% at 30 September 2022.
The Company also has access to an overdraft facility with HSBC.
Discount management
The Company continued to be active in buying back its shares
during the year ended 30 September 2023. A total of 6,000,000
shares were bought back for cancellation at a cost of £29.8 million
(2022: 4,060,000 shares were bought back and cancelled at a cost of
£21.7 million), adding 0.4% to the NAV. Since the year end, a further
1,335,000 shares have been bought back for cancellation at a cost of
£6.4 million.
The discount at the end of September 2023 was 11.5% compared to
10.8% at the previous financial year end. The average discount during
the year under review was 11.1%.
Your Board remains focused on limiting discount volatility and
helping to maintain liquidity in the Company’s shares, noting that
discounts across the sector widened as interest rates increased and
market sentiment deteriorated. As such, we believe that adopting
a rigid discount control mechanism that seeks to target a defined
maximum discount level regardless of market conditions is not in the
“We therefore believe this
is an ideal time for our
Manager’s investment
strategy which remains
focused on companies with
structural and sustainable
competitive advantages
trading at attractive
valuations.”
Schroder AsiaPacific Fund plc 5
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
best interests of shareholders. Our policy on share buy backs takes
account of the level of discount at which the Company’s peer group
trades, prevailing market conditions and activity within our sector.
At the Company’s last AGM, authority was given to purchase up to
14.99% of the issued share capital. We propose that the share buy
back authority be renewed at the forthcoming AGM and that any
shares so purchased be cancelled or held in treasury for potential
reissue.
Environmental, social and governance issues
(“ESG”)
Our Investment Manager has always expressed the view that
companies with good ESG often perform better and potentially
deliver superior returns over time. Our Manager has provided
more detail in the Strategic Report on how ESG considerations are
incorporated into the investment process and given details of the ESG
research capability. This year, further information of the Investment
Manager’s engagement with portfolio companies, which give further
insight into the application of ESG to the investment process, have
been included in the report for the first time.
Management fee
As previously noted, the management fee was reduced from 0.70% to
0.60% per annum on net assets in excess of £600 million with effect
from 1 April 2023. In respect of the first £600 million of net assets the
management fee is unchanged at 0.75%.
Further details may be found in the Directors’ Report on page 34.
Board succession
The Board regularly considers its policy on director tenure, succession
planning and its composition to ensure that it has the appropriate
mix of relevant skills, diversity and experience, and has considered
the matter of Board succession carefully during the year in order
to ensure that we effectively plan for future Board changes in the
coming years.
The Board welcomed Rupert Hogg as a non-executive Director
with effect from 1 May 2023. Rupert has over 30 years international
business experience gained through senior executive positions,
including at a number of large Asian-based companies, and he will be
seeking election at the AGM.
Keith Craig will not be seeking re-election at the AGM and, on behalf
of the Board, I would like to thank Keith for his significant contribution
to the deliberations of the Board over his tenure.
Webinar
On 23 January 2024, the Company’s Investment Manager will be
presenting to shareholders at a webinar at 2.00 pm. To register your
interest to attend this webinar please visit www.schroders.events/
SDP23, where the facility to watch the recorded webinar afterwards
will also be available.
AGM
The AGM will be held on Wednesday, 31 January 2024 at 12.00 noon
at the offices of Schroders at 1 London Wall Place, London EC2Y 5AU.
A presentation from our Investment Managers will be given at the
AGM, and attendees will also be able to ask questions in person and
meet the Directors. Details of the formal business of the meeting are
set out in the Notice of Meeting on page 73 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, 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: [email protected] or write
to us at the Company’s registered office address: Company Secretary,
Schroder AsiaPacific Fund plc, 1 London Wall Place, London,
EC2Y 5AU.
For regular news about the Company, shareholders are also
encouraged to sign up to the Manager’s investment trusts update,
which can be found at: www.schroders.com/trust-updates/.
Outlook
It is clear that market conditions in Asia – and indeed globally – will
continue to be volatile. Global growth prospects remain uncertain
while geopolitical tensions in the Middle East, Ukraine and Asia itself
weigh heavily on sentiment.
However, despite or even because, of these challenges there are
many opportunities. Valuations across the region vary markedly
by country and in aggregate do not look expensive versus history,
trading below long term averages on a price to book and forward
price to earnings basis. A reversal of the upwards trajectory in interest
rates could have significant positive implications for Asian assets as
equity markets, currencies and liquidity flows respond.
We therefore believe this is an ideal time for our Manager’s
investment strategy which remains focused on companies with
structural and sustainable competitive advantages trading at
attractive valuations.
James Williams
Chairman
5 December 2023
Investment Manager's Review
Schroder AsiaPacific Fund plc6
The NAV per share of the Company recorded a total return of 2.9% over the twelve months to end September 2023. This was ahead of the
performance of the benchmark, the MSCI All Country Asia ex Japan Index, which rose by 1.5% over the same period. (Source: Morningstar, net
of fees, cum income NAV GBP return).
Performance of the MSCI AC Asia ex Japan Net Dividends Reinvested Index in GBP and USD –
30September 2022 to 30September 2023
85
90
95
100
105
110
115
120
125
130
Sep 22 Oct 22 Nov 22 Dec 22 Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23
MSCI AC Asia ex Japan NDR USD MSCI AC Asia ex Japan NDR GBP
Source: Thomson Datastream as at 30 September 2023.
Asian markets experienced huge swings in sentiment over the
12 months to end September 2023, largely driven by gyrations
in expectations for the Chinese domestic economy, the impact of
geopolitics, including over Ukraine, Taiwan and US-China relations,
and the outlook for the global economy, with the path of US interest
rates of particular importance. Despite this litany of concerns, the
region’s markets rose by around 10.5% in local terms, albeit the
strength of Sterling meant they finished up by only 1.5% over the
period in Sterling terms.
However, across the region there were large differences in returns.
China and Hong Kong were very volatile but of the larger markets
ended down the most over the period. We saw large falls in both
markets during the fourth quarter of last year in the run up to, and
post, the Communist Party Congress before seeing a dramatic
recovery driven by the Chinese authorities’ move away from ‘Zero
COVID’. However, optimism faded when economic data, whilst
generally showing an improvement, disappointed expectations that
had increased after the ending of the zero COVID policy, leading to a
renewed sell-off. High-end spending and services consumption did
much better when compared to the wider economy but even that
was lacklustre. Residential property numbers continued to disappoint
and renewed concerns over the state of the Local Government
Financing Vehicles’ (LGFVs) finances, and some of the private
residential developers’ liquidity positions, weighed on the market.
During July 2023, the Chinese market recovered on expectations of
a sizeable stimulus, but measures announced thus far have been
relatively modest.
US-China relations continued to be a driver of sentiment over the year
under review but, on balance, did see some stabilisation during the
year. Positives included the G-20 meeting in Bali, where presidents
Xi and Biden met face-to-face, and progress from the US PCAOB
(Public Company Accounting Oversight Board) inspection of Chinese
accounts where, for now at least, the US seem happy with the access
they had been given, thus likely deferring any forced de-listings of
Chinese companies in the US. Although “balloon gate”, together with
more restrictions on the export of high-end technologies to China,
did sour relations we have more recently seen increased dialogue
between the two, with meetings between US and Chinese officials
at a number of levels and the formation of working groups between
the two to address specific issues, which is positive. Furthermore,
domestically in China, there was a shift in tone around regulation
towards the internet companies, together with the approval of
several games by leading developers and further announcements of
government support for the private sector, leading to hopes that the
worst of the regulatory tightening had been seen.
The Indian growth story continued through the year with the market
acting as a relative safe haven, doing well when China sold off and
vice versa. In the final quarter of 2022, valuations had started to
look very full and we did see a sell off until March 2023. However,
disappointment with China’s recovery and ongoing continued
domestic buying saw the market recover, further helped by an
Abbas Barkhordar Richard Sennitt
Schroder AsiaPacific Fund plc 7
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
expectation that rates were close to peaking given a moderation in
inflation.
However, the best performing markets over the year under review
were Korea and Taiwan. These are markets that have high weightings
in information technology stocks, which was the best performing
sector over the financial year. Post-COVID, the information technology
(“IT”) sector had seen a slowdown as demand for goods faded as
people switched to consuming more services. This slowdown had
led to an increase in inventories and acted as an overhang for the
sector. However, this then elicited a supply side response by these
companies to the lower demand, seeing them cut both production
and capital expenditure which has seen the inventory imbalance start
to correct, lifting stock prices. More recently, some of these have
benefitted from the hope that Artificial Intelligence (“AI”) would drive
a surge in demand for increased computing power. By July 2023,
this had started to drive speculative moves in some of the Taiwanese
server names, in our view, and in Korea retail investors drove up
electric vehicle (“EV”) related component suppliers to valuations that
we found, in many areas, difficult to rationalise.
Despite the deteriorating outlook for global growth, inflation
pressures remained elevated for much of the year and financial
conditions generally tightened. Of the other major markets,
Singapore proved defensive, with financials performing relatively well.
Looking at the performance of sectors across the region, aside from
the strength in IT, higher interest rates were supportive of financials.
Defensive sectors generally underperformed over the year under
review, as did real estate which was impacted by higher interest rates
and the weakness of residential property in China.
Market returns of the MSCI AC Asia ex Japan Net Dividends Reinvested Index in GBP and local
currency – 30September 2022 to 30September 2023
Source: Schroders, Factset
-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%
Korea
Taiwan
Philippines
Singapore
MSCI AC Asia ex JP
India
Malaysia
China
Indonesia
Thailand
Hong Kong
Returns in GBP Returns in Local
Source: Factset
Performance and Portfolio Activity
The Company’s NAV total return was 2.9% over the financial year,
which compared favourably to a modest rise in the reference
benchmark of 1.5%. Relative performance over the year under review
was helped by the underweight to, and strong stock selection in,
China. Our holding in the insurance company Ping An, was perceived
to be a beneficiary from the move away from zero COVID, as it would
enable sales agents to conduct more face-to-face meetings which
had been constrained during COVID. Other domestic focussed
holdings also helped, including Yum China, the fast food restaurant
that operates KFC and Pizza Hut concessions in China. The stock
had proven resilient during COVID, increasing delivery sales while
managing its costs well, and is still seen as having a runway for
growth from the ongoing roll out of restaurants. Shenzhou, one
of the world’s largest contract manufacturers of sporting apparel,
was another company that did well on expectations of a pick-up
in demand for its sportswear as multinational players’ inventories
started to normalise. An absence of some of the more highly rated
names in the e-commerce and healthcare sectors also helped as they
de-rated over the year.
Investment Manager's Review
continued
Schroder AsiaPacific Fund plc8
Top three contributors and detractors by relative performance impact at a regional level,
12months to 30September 2023 (%)
1.1
0.7
0.6
-0.2
-0.2
-0.3
-0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4
China
Indonesia
Taiwan
Vietnam
Hong Kong
Korea
Total contribution
Source: Factset PA3. Top contributors and detractors illustrating the total contribution to relative performance (stock selection and regional allocation), are shown
excluding gearing, and relative to the MSCI AC Asia ex Japan Index.
Our stock picks in Taiwan also added value, led by the IT names.
These included ‘fabless’ semiconductor chip design companies
Novatek and MediaTek, and power electronics company Delta
Electronics, whose products have benefitted from the positive trends
in AI and EVs. There was also a positive contribution from stocks in
some of the smaller markets such as Indonesia and the Philippines.
The largest drag on performance came from stock selection in Korea
where the biggest negative came from not owning Posco Holdings,
which is principally an integrated steel maker but whose share price
moved up on the back of excitement around its battery-related
materials business. The Hong Kong overweight was also a drag but
was in large part offset by strong selection there, including from
stocks such as Prada, the luxury goods company that performed well
on strong sales growth which more than offset drags from financials
including BOC Hong Kong.
From a sector perspective, our overweight to, and stock selection
in IT names was the biggest positive contributor with holdings in
semiconductor stocks, including memory manufacturer Samsung
Electronics and foundry company TSMC, performing strongly in
addition to the names mentioned above. These stocks benefitted
from a perceived bottoming in the IT cycle as outlined above.
Elsewhere, our holdings in Real Estate added value, principally
through our holding in Oberoi Realty, a Mumbai focussed
residential developer in India. The stock has benefitted from a pick
up in demand for property after a long period of under-construction
following a multi-year downturn, which had seen consolidation in the
industry. Our underweights to some of the more defensive sectors,
such as healthcare, utilities and staples, all added value. However,
stock picks in the financials sector did detract, with HK names
including insurers AIA and Prudential, in addition to BOC HK, a
drag. Indian banks ICICI and HDFC Bank also lagged following a
strong period of performance which more than offset the strength
seen in Bank Mandiri in Indonesia and Singapore names OCBC and
DBS.
The geographic exposure in the Company’s portfolio continues to
be mainly spread between China, India, Taiwan, Hong Kong, Korea
and Singapore. Over the year under review, we added to positions
in China and Hong Kong, as the pull back in both markets started
to provide opportunities in a number of names. These included
adding to existing positions in companies such as Shenzhou, for the
reasons previously mentioned, and Tencent, the internet platform
company. Its dominant position in messaging via its WeChat service
has been instrumental in allowing it to grow its advertising revenues
and market share in online gaming, an area which had been under
regulatory scrutiny but where we have now started to see games
being approved by the authorities. New holdings include Shenzhen
Inovance, a manufacturer of industrial products including inverters
and servos for use in areas such as factory automation, EVs and
robotics. They have been very successful at taking share from foreign
players, competing on service rather than just price, and share
price weakness on the back of macro disappointment gave us an
opportunity to start a position.
A more recent addition has been Wuxi Biologics, a healthcare
company that straddles the CRO (contract research organisation) and
CDMO (contract development manufacturing organisation) biotech
industries (outsourced research, development and manufacturing
of biological drugs). The stock had de-rated materially on concerns
over geopolitics, given its exposure to the US market, and the impact
of tighter liquidity on funding for global biotech companies that use
Wuxi Biologics to undertake research and manufacturing for them.
Despite these additions, China remains a substantial underweight
but is, in part, offset by the overweight to Hong Kong. The Hong
Kong market, in general, looks more attractive from a valuation
perspective, with several names set to benefit from the re-opening of
the border with the mainland. These include insurance names, such
as AIA, as mainland Chinese visitors once again come to Hong Kong
to buy insurance, having been prevented from doing so by COVID
restrictions. We also bought into a new holding in Macau, gaming
company Galaxy Entertainment, that would also benefit from
increased visitation by Mainland Chinese tourists, and again had de-
rated after the excitement of re-opening had passed.
Schroder AsiaPacific Fund plc 9
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Hong Kong likely to benefit from China opening up post COVID
Recovery will support growth
Hong Kong visitor number of arrivals
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23
Hong Kong visitor arrivals
Source: Refinitiv Datastream, updated October 2023.
Countries and regions shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Elsewhere, we reduced Taiwanese and Korean exposure, principally
by cutting positions in tech names that had done well, including
trimming Samsung Electronics, TSMC and Delta Electronics
and selling out of Novatek, which had performed well following a
better-than-expected pace of normalisation in its inventory. In India,
we rotated out of some of the names that had performed well and
were looking relatively expensive, in our view, such as auto company
Maruti Suzuki and logistics plays Container Corporation of India
and Gujarat Pipivav Port. We initiated positions in real estate
company Oberoi Realty and added to IT services, including a new
holding in Mphasis, an IT services provider with exposure to several
US mortgage providers. These customers had seen a slowdown in
demand, impacting sentiment on the stock but providing, in our view,
an attractive entry point.
Despite the addition to IT in India, overall we reduced our overweight
to IT due to the sales described above in Taiwan and Korea.
Nevertheless, we continue to like the sector. Although near term
earnings have been seeing downward revisions, we continue to see
some strong long-term drivers for growth around digitisation, AI
adoption, and the roll-out of 5G and ‘Internet of Things’. In IT, our
focus remains on the Taiwanese and Korean hardware names and
the Indian IT services companies. We also continue to overweight
financials, with valuations still looking relatively attractive given higher
interest rates and subdued credit costs.
Outlook and policy
The euphoria seen in markets at the beginning of 2023 over China’s
move away from its “zero COVID” policy feels like a distant memory,
as China’s long awaited post-COVID recovery has proved weaker than
expected. Economic data out of China, and a lack of forceful policy
response, has been disappointing, reigniting concerns over local
government debts and the wider residential property sector. This has
overshadowed more positive global developments stemming from
more favourable US inflation data, its knock-on to the US interest
rate cycle, and potential for a soft landing in the US. There have also
been some signs that the inventory cycle has started to bottom,
potentially pointing to a more favourable demand outlook. This in
turn could support demand for Asian manufactured product, which
historically has been supportive of Asian markets. However, as already
highlighted, geopolitics remains an overhang to the region with
areas of tension including US-China relations, Taiwan and Ukraine,
notwithstanding the recent developments in the Middle East. The
electoral cycle is a likely point of focus with both the US and Taiwan
having elections next year.
Overall earnings have continued to be revised down following a
reset to China and global growth expectations, leaving aggregate
valuations broadly in line with their longer-term averages. However,
this masks a large variation across individual markets where
Singapore and Hong Kong, amongst others, look relatively cheap
versus history, and India more expensive.
Although we did not have an optimistic view on the growth outlook
for China, it has still managed to disappoint. This has brought
renewed focus back on to the residential property sector, where
private sector developers have seen a liquidity squeeze, as sales have
continued to disappoint, impacting cashflow for the whole sector. The
recent negative headlines around Chinese property developers such
as Country Garden could cause further deterioration in homebuyers’
sentiment and financing capabilities for other private-sector
developers, indirectly raising the risk of more defaults in the industry
going forward. Therefore we expect policy easing, both on the
demand and supply side, in the property sector to intensify to avoid
more defaults and any wider impact on the financial sector. Our long-
term concerns around the structural headwinds for the residential
sector remain – property is likely to be less of a driver for the
economy than in the past, given the already high levels of residential
investment combined with an ageing demographic. It should be said
we do not own any of the Chinese private sector developers in the
portfolio.
Investment Manager's Review
continued
Schroder AsiaPacific Fund plc10
China — problem is poor confidence holding back consumer spend
High savings rates are able to fund consumption if confidence returns
China consumer confidence
1
Chinese consumer in a different position to US consumer
0
5
10
15
20
25
30
35
40
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Household saving rate (%)
China US
85
90
95
100
105
110
115
120
125
130
Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22
China consumer confidence
Index
2
Source:
1
Refinitiv Datastream, as at 30 September 2023.
2
Refinitiv, CEIC, Schroders Economics Group. 17 February 2023.
The regions and countries shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Near term, we believe it is a lack of consumer confidence that is the
problem rather than an inability to spend due to high borrowings.
In fact, household balance sheets have only strengthened over
the last two years, due to high levels of precautionary savings. It
is measures to address this, such as progress on reforms, rather
than a massive fiscal stimulus which is needed to give the consumer
greater confidence to spend more. Nevertheless, in our view it is likely
we will see further government stimulus, on top of the piecemeal
measures we have seen so far, to boost growth given the fragility of
the property sector. More positively, the regulatory backdrop does
not appear to be getting worse and there are even tentative signs of
reengagement between the US and China. Despite this, we remain
very underweight combined Hong Kong and China, albeit we have
been tentatively looking to add to holdings in both markets where
valuations have come back. We are more positive on Hong Kong,
where valuations are lower, and the SAR should see a recovery now
that the border with the mainland has re-opened. Although visitor
numbers to Hong Kong and Macau have picked-up materially, one
needs to remain cognisant of the potential for tighter capital controls
by the Chinese government should external balances become too
wide.
Valuation picture mixed across markets
However, less extreme than towards the end of last year
Price earnings ratio (P/E) Next 12 Months of MSCI AC Asia Pacific ex Japan markets since 2010
Past Performance is not a guide to future performance and may not be repeated.
Source: Factset, MSCI, September 30, 2023. Notes: PE data based on forecast data. The regions and countries shown are for illustrative purposes only and should not be viewed as a recommendation to buy or
sell. Forecast risk warning: please refer to the important information slide at the end of this presentation.
0
5
10
15
20
25
30
India Thailand Australia Taiwan Indonesia Malaysia MSCI AC
APxJ
Philippines Hong Kong Singapore Korea China
1 standard deviation band Current High Low
Source: Factset, MSCI, September 30, 2023. Notes: PE data based on forecast data. The regions and countries shown are for illustrative purposes only and should
not be viewed as a recommendation to buy or sell.
Schroder AsiaPacific Fund plc 11
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
India continues to be a market that offers highly attractive long-term
opportunities but is currently being priced for that in many cases,
which leaves the market looking relatively fully-valued and relatively
expensive versus both its history and other regional markets. Despite
this, it has benefitted from the uncertainty around the outlook for
the Chinese market, together with the local demand driver of strong
domestic inflows which have pushed the small and mid cap names up
dramatically. We continue to favour the IT services names together
with the banks but also have exposure to the fast-growing healthcare
sector via Apollo Hospitals.
In the smaller ASEAN markets, we favour Singapore which
is benefitting from its increasing status as a regional wealth
management hub, as well as the growth of its ASEAN neighbours. We
also have exposure to Vietnam, Indonesia and have recently added to
our holdings in the Philippines.
Sector-wise, IT stocks, where we have been overweight, have been
the bright spot. The potential for additional demand being generated
by increased AI has seen many companies, however loosely affiliated
with the theme, perform well. Whilst this has seen several companies,
in our view, move into more speculative territory, we believe that
a number of our companies are set to benefit from this additional
demand driver over the medium to long term. We therefore remain
overweight – albeit the recent rally has seen us selectively pare back
holdings that we believe have got ahead of themselves. The IT names
remain sensitive to the global economy and the Korean names, such
as Samsung Electronics, are still trading at relatively attractive
levels from a valuation perspective, in our view. While the visibility
of demand remains low, the supply side adjustment is starting to
take place as announcements on production and capex cuts have
started to be seen and inventories appear to be peaking. Otherwise,
we remain overweight to financials – a diverse sector spanning not
only banks, but also insurers and exchange companies. Although we
saw concern over banks earlier in the year following the Silicon Valley
Bank and Credit Suisse collapses, the banks we own are generally
well-capitalised with strong deposit franchises and fall into two
camps; those that are benefitting from increased credit penetration,
such as in India and Indonesia, and the more domestically-focussed
retail names in more mature markets, such as Singapore, that in
general trade at attractive valuations and decent dividend yields.
Underweights remain in those areas of the market generally
perceived as more defensive, including consumer staples, health care
and utilities, where valuations, in our view, still remain relatively full.
More recently, however, the market’s correction in Chinese healthcare
stocks has seen us add to a name there as described above.
Near term, it is likely that we will see further downward revisions to
earnings as global growth slows, and an ongoing period of inventory
adjustment amongst companies to reflect this slower growth, which
will hopefully put them in a position to start to grow earnings once
more when demand recovers. Positively, we are starting to see early
indicators of a potential bottoming in the global goods cycle with
PMIs showing tentative signs of improvement in inventories and new
orders which historically, with a lag, have been a good lead indicator
of exports. The distortion in the goods cycle from COVID was
significant, with goods demand collapsing, post its surge in 2020, as
services recovered, meaning that the goods cycle is much progressed
when compared to that of services. Given overall aggregate
valuations for the region are now trading at or below long-term
averages, this does set up a more constructive backdrop for Asian
markets in the coming year, barring a global hard landing or a more
extreme geopolitical risk event.
To conclude, it is worth remembering that as investors we buy
companies, not countries. We are mindful of the impact political
and macroeconomic factors can have on equities and returns, but
we are bottom-up stock-pickers first and foremost, focusing on the
company’s return prospects and valuation. We do not try to pick
companies which will do well based purely on a particular macro
environment which we have forecast; rather we try to pick well-
managed companies at attractive valuations, which have structural
and sustainable competitive advantages. Therefore, a focus on
attractive bottom-up ideas, in our view, remains essential.
Goods cycle starting to bottom
China's nominal exports could return to y/y growth in early
2024
Source: Refinitiv, Schroders Economics Group. 6 October 2023
Investment Manager's Review
continued
Schroder AsiaPacific Fund plc12
Market Weights – Schroder AsiaPacific Fund plc vs. MSCI AC Asia ex Japan Index
Net Asset Value Weight (%)
Benchmark
Index Weight
(%)
30-Sep-23 30-Sep-22 30-Sep-23
China 19.1 18.7 34.4
India 18.1 17.0 18.1
Taiwan 15.3 15.0 16.9
Hong Kong 13.0 12.9 6.0
Korea 11.7 12.4 14.0
Singapore 8.7 8.4 3.8
Australia 3.4 3.8 –
Vietnam 3.2 – –
Indonesia 2.8 2.6 2.3
Thailand 2.0 2.2 2.1
Philippines 1.8 0.9 0.7
Malaysia – – 1.6
Other* 3.0 6.3 –
Net cash** (2.1) (0.2) –
Total 100.0 100.0 100.0
Source: Schroders, MSCI, 30 September 2023.
Vietnam has been split out separately for 2023.
*UK, Italy and other net liabilities.
**Cash, less borrowings used for investment purposes.
This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy.
Schroder Investment Management Limited
5 December 2023
Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up
and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.
Top Ten Investments
at 30 September 2023
Schroder AsiaPacific Fund plc 13
Strategic Report
Governance Financial Other information (unaudited)
Introduction
1
Samsung Electronics (including preference shares) Market value: £80,340,000
% of total investments: 9.2% (2022: 8.1%)
Samsung Electronics is a Korean semiconductor and electronics manufacturing company.
Its key products include semiconductors (logic and memory chips), mobile phone
handsets, consumer electronics, and home appliances. As well as being the leading
player in both volatile (DRAM) and non-volatile (NAND) memory, Samsung is one of only a
handful of companies in the world able to manufacture the most advanced logic chips at
scale.
2
Taiwan Semiconductor Manufacturing Corporation Market value: £76,215,000
% of total investments: 8.7% (2022: 8.1%)
TSMC is a Taiwanese provider of semiconductor manufacturing services, and the world’s
largest logic chip contract manufacturer. Its dominant position in the manufacturing of
the most cutting-edge chips is a result of a long track record of R&D-driven innovation.
TSMC’s customers include most of the world’s most advanced chip design companies, for
applications ranging from smartphone processors to the most advanced AI chips.
3
Tencent Holdings Market value: £43,480,000
% of total investments: 5.0% (2022: 3.6%)
Tencent is China’s biggest internet company, with leading positions in mobile gaming,
online advertising and mobile payments. Its WeChat app is the leading instant messaging
app in China, and is a key platform for other features, such as payments and social media
content, and third-party services accessed through “mini-programs” on the platform.
In addition to its own operations, Tencent is a significant shareholder in several other
prominent internet companies, in China and abroad.
4
HDFC Bank Market value: £33,264,000
% of total investments: 3.8% (2022: 4.0%)
HDFC Bank is an Indian financial services provider, offering banking, insurance and mutual
funds amongst other financial products. Following its merger with HDFC Ltd, the non-
bank financial company, it is now among India’s largest private sector financial companies,
serving over 90m customers through both traditional and digital channels. India is a
relatively underpenetrated market for financial services.
5
ICICI Bank (including ADR) Market value: £31,513,000
% of total investments: 3.6% (2022: 3.6%)
ICICI Bank is an Indian financial services provider, offering a range of banking services
and other financial products, including retail banking, wholesale banking and insurance.
It is one of India’s leading private sector banks, with around 6,000 branches. India is a
relatively underpenetrated market for financial services.
Top Ten Investments
continued
Schroder AsiaPacific Fund plc14
6
Alibaba Market value: £29,035,000
% of total investments: 3.4% (2022: 3.1%)
Alibaba is China’s largest e-commerce company, operating several domestic platforms
such as Taobao, Tmall and Freshippo, as well as operating internationally through
Lazada and AliExpress. In addition to goods e-commerce, Alibaba also has operations
in segments such as digital media, local services, logistics, and public and hybrid cloud
services. Its affiliate, Ant Group, is one of China’s leading fintech companies.
7
AIA Market value: £27,188,000
% of total investments: 3.1% (2022: 2.9%)
AIA Group is an insurance company, providing life insurance, accident and health
insurance and savings plans, as well as financial products and services to corporate
clients. Based in Hong Kong, the company operates in 18 markets across the Asia Pacific
region and has sold over 40 million policies.
8
Bank Mandiri Market value: £23,544,000
% of total investments: 2.7% (2022: n/a)
Bank Mandiri is one of Indonesia’s largest banks, serving both retail and corporate
customers. Established in 1998 as part of a restructuring program for four government-
owned banks, Mandiri remains majority government-owned. It also offers other
financial services, such as insurance and securities brokerage. Indonesia is a relatively
underpenetrated market for financial services.
9
Oversea-Chinese Banking Corp Market value: £21,791,000
% of total investments: 2.5% (2022: 2.5%)
OCBC is a Singaporean financial services provider, offering banking, insurance, asset
management and stockbroking services. The group operates across Asia, and also owns
a stake in China’s Bank of Ningbo. The group offers private banking services through its
Bank of Singapore subsidiary.
10
MediaTek Market value: £18,021,000
% of total investments: 2.1% (2022: 1.2%)
MediaTek Inc is a Taiwanese company engaged in the design and distribution of
semiconductor chips. Their products focus on mobile connectivity, for example 5G mobile
communication chips, as well as bluetooth and Wifi chips, and are mainly used in mobile
phones, digital TVs, PCs, home appliances, wearable devices and Internet of Things
devices.
Investment Portfolio
at 30 September 2023
Schroder AsiaPacific Fund plc 15
Strategic Report
Governance Financial Other information (unaudited)
Introduction
6
Alibaba Market value: £29,035,000
% of total investments: 3.4% (2022: 3.1%)
Alibaba is China’s largest e-commerce company, operating several domestic platforms
such as Taobao, Tmall and Freshippo, as well as operating internationally through
Lazada and AliExpress. In addition to goods e-commerce, Alibaba also has operations
in segments such as digital media, local services, logistics, and public and hybrid cloud
services. Its affiliate, Ant Group, is one of China’s leading fintech companies.
7
AIA Market value: £27,188,000
% of total investments: 3.1% (2022: 2.9%)
AIA Group is an insurance company, providing life insurance, accident and health
insurance and savings plans, as well as financial products and services to corporate
clients. Based in Hong Kong, the company operates in 18 markets across the Asia Pacific
region and has sold over 40 million policies.
8
Bank Mandiri Market value: £23,544,000
% of total investments: 2.7% (2022: n/a)
Bank Mandiri is one of Indonesia’s largest banks, serving both retail and corporate
customers. Established in 1998 as part of a restructuring program for four government-
owned banks, Mandiri remains majority government-owned. It also offers other
financial services, such as insurance and securities brokerage. Indonesia is a relatively
underpenetrated market for financial services.
9
Oversea-Chinese Banking Corp Market value: £21,791,000
% of total investments: 2.5% (2022: 2.5%)
OCBC is a Singaporean financial services provider, offering banking, insurance, asset
management and stockbroking services. The group operates across Asia, and also owns
a stake in China’s Bank of Ningbo. The group offers private banking services through its
Bank of Singapore subsidiary.
10
MediaTek Market value: £18,021,000
% of total investments: 2.1% (2022: 1.2%)
MediaTek Inc is a Taiwanese company engaged in the design and distribution of
semiconductor chips. Their products focus on mobile connectivity, for example 5G mobile
communication chips, as well as bluetooth and Wifi chips, and are mainly used in mobile
phones, digital TVs, PCs, home appliances, wearable devices and Internet of Things
devices.
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 63.3% (30 September 2022: 60.5%) of total investments.
£’000 %
Mainland China
Tencent Holdings
1
43,480 5.0
Alibaba
1
29,035 3.4
Midea (including A shares and LEPO
2
) 17,966 2.1
Shenzou International
1
11,954 1.4
Ping An Insurance H
1
9,861 1.1
Sany Heavy Industry A 9,808 1.1
Yum China
1,3
9,455 1.1
Contemporary Amperex Technology A 8,271 0.9
Hongfa Technology A 7,624 0.9
Shenzhen Inovance Technology A 7,164 0.8
Wuxi Biologics
1
6,822 0.8
Meituan Dianping
1
1,496 0.2
Total Mainland China 162,936 18.8
India
HDFC Bank 33,264 3.8
ICICI Bank (including ADR
3
) 31,513 3.6
Apollo Hospitals Enterprise 17,696 2.0
Tata Consultancy Services 17,630 2.0
Infosys 16,570 1.9
Oberoi Realty 12,446 1.4
Mphasis 10,610 1.2
Reliance Industries 9,919 1.1
Delhivery 4,164 0.5
Total India 153,812 17.5
Taiwan
Taiwan Semiconductor Manufacturing 76,215 8.7
MediaTek 18,021 2.1
Delta Electronics 10,213 1.2
Nien Made Enterprise 9,048 1.0
Giant Manufacturing 8,249 0.9
Hon Hai Precision Industries 8,195 0.9
Total Taiwan 129,941 14.8
Hong Kong (SAR)
AIA 27,188 3.1
BOC Hong Kong 17,475 2.0
Hong Kong Exchanges and Clearing 16,849 1.9
Techtronic Industries 10,634 1.2
Galaxy Entertainment 10,255 1.2
Hang Lung Properties 8,475 1.0
Swire Properties 7,790 0.9
Kerry Properties 7,270 0.8
ASM Pacic Technology 5,070 0.6
Total Hong Kong (SAR) 111,006 12.7
South Korea
Samsung Electronics (including
preference shares) 80,340 9.2
Samsung SDI 14,953 1.7
LG H&H 4,547 0.5
Total South Korea 99,840 11.4
£’000 %
Singapore
Oversea-Chinese Banking Corp 21,791 2.5
Singapore Telecommunications 16,276 1.9
DBS 15,980 1.8
Singapore Exchange 13,515 1.5
Sea ADR
3
6,524 0.7
Total Singapore 74,086 8.4
Australia
Rio Tinto
4
10,760 1.2
Orica 8,954 1.0
BHP
4
8,830 1.0
Total Australia 28,544 3.2
Vietnam
Vietnam Enterprise Investments
4
16,627 1.9
Vietnam Dairy Products 5,691 0.7
Mobile World Investment 5,173 0.6
Total Vietnam 27,491 3.2
Indonesia
Bank Mandiri 23,544 2.7
Total Indonesia 23,544 2.7
United Kingdom
Schroder Asian Discovery Fund Z Acc
5
14,082 1.6
Prudential 6,664 0.8
Total United Kingdom 20,746 2.4
Thailand
Kasikornbank NVDR 10,666 1.2
Bangkok Dusit Medical Services NVDR 5,986 0.7
Total Thailand 16,652 1.9
Philippines
International Container Terminal Services 9,514 1.1
Bank of the Philippine Islands 6,071 0.7
Total Philippines 15,585 1.8
Italy
Prada
1
10,351 1.2
Total Italy 10,351 1.2
Total Investments
6
874,534 100.0
1
Listed in Hong Kong.
2
Listed in Luxembourg.
3
Listed in the USA.
4
Listed in the United Kingdom.
5
Predominantly invested in Asia
6
Total investments comprises the following:
£’000 %
Equities, including ADRs, LEPOs and NVDRs 828,944 94.8
Collective investment funds 30,709 3.5
Preference shares 14,881 1.7
Total investments 874,534 100.0
The following abbreviations have been used above:
ADR: American Depositary Receipt
LEPO: Low Exercise Price Option
NVDR: Non Voting Depositary Receipt
Ten-Year Financial Record
Schroder AsiaPacific Fund plc16
At 30 September 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Shareholders’ funds (£’000) 495,527 477,870 658,321 799,942 825,042 822,182 946,146 1,057,941 878,187 851,285
NAV per share, diluted where applicable
(pence) 292.82 282.39 392.33 477.38 492.35 490.94 567.16 641.72 546.13 549.92
Share price (pence) 264.00 246.50 343.00 426.00 430.00 435.00 510.00 579.00 487.00 486.50
Share price discount to NAV per share* (%) 9.8 12.7 12.6 10.8 12.7 11.4 10.1 9.8 10.8 11.5
Gearing/(net cash)* (%) (0.6) 2.3 0.4 4.4 2.6 (2.4) 0.2 0.6 0.2 2.1
For the year ended 30 September 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Net revenue return after taxation (£’000)
1
4,749 7,151 8,040 9,537 16,885 16,590 13,253 16,080 19,673 18,990
Revenue return per share (pence)
1
2.80 4.23 4.77 5.69 10.08 9.9 7.92 9.66 12.04 12.06
Dividends per share (pence)
1
2.75 4.2 4.75 5.60 9.50 9.70 8.00 9.70 12.00 12.00
Ongoing Charges* (%) 1.08 1.03 1.10 0.99 0.94 0.93 0.90 0.86 0.84 0.86
Performance
2
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV total return (diluted where
applicable)* 100.0 110.6 107.6 151.6 186.8 194.8 198.4 233.5 267.6 231.1 237.7
Share price total return* 100.0 111.2 104.9 148.6 186.8 190.9 197.7 236.6 272.2 232.7 238.1
Benchmark 100.0 108.4 101.9 139.3 165.4 172.7 176.4 198.2 217.4 187.1 189.9
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 2013.
*
Alternative Performance Measure.
NAV per share, share price and benchmark total return for the ten years ended 30September 2023
50
10
0
15
0
20
0
25
0
300
30-Sept-13 30-Sept-14 30-Sept-15 30-Sept-16 30-Sept-17 30-Sept-18 30-Sept-19 30-Sept-20 30-Sept-21 30-Sept-22 30-Sept-23
Benchmark Total Return
NAV Total Return
Share Price Total Return
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2013.
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.
Ten year share price discount to NAV per share*
0
2
4
6
8
10
12
14
30-Sept-13 30-Sept-14 30-Sept-15 30-Sept-16 30-Sept-17 30-Sept-18 30-Sept-19 30-Sept-20 30-Sept-21 30-Sept-22 30-Sept-23
* Alternative Performance Measure.
Source: Morningstar/Thomson Reuters.
Business Review
Schroder AsiaPacific Fund plc 17
Strategic Report
Governance Financial Other information (unaudited)
Introduction
Business model
Shareholder
value
Strategy
Board
Appoint Manager and
other service providers
to achieve objectives
Responsible for
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Set objectives, strategy
and KPIs
–
Oversight
Oversee portfolio
management
Monitor achievement
of KPIs
Oversee the use of gearing
Oversee discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Manager implements
the investment strategy
by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the Company remains
attractive to investors
– that the fees and ongoing
charges remain competitive
The Company is a listed investment trust, that has outsourced its
operations to third party service providers.
The Board has appointed the Manager, Schroder Unit Trusts Limited,
to implement the investment strategy and to manage the Company’s
assets in line with the appropriate restrictions placed on it by the
Board, including limits on the type and relative size of holdings
which may be held in the portfolio and on the use of gearing, cash,
derivatives and other financial instruments as appropriate.
The terms of the appointment are described more completely in the
Directors’ Report including delegation to the portfolio managers and
their team. The Manager also promotes the Company using its sales
and marketing teams. The Board and Manager work together to
deliver the Company’s investment objective, as demonstrated in the
diagram above.
Investment objective
The Company’s 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.
Status
The Company’s shares are listed and admitted to trading on the
premium segment of the main market of the London Stock Exchange.
The Company is a constituent of the FTSE 250 index and is an
investment trust in accordance with section 1158 of the Corporation
Tax Act 2010. It is intended that the Company will continue to conduct
its affairs in a manner which will enable it to retain this status. The
Company is not a “close” company for taxation purposes.
Whilst the Company’s articles of association require that a proposal
for the continuation of the Company be put forward at the Company’s
AGM in 2026, the Directors have no reason to believe that such a
resolution will not be passed by shareholders.
Purpose, values and culture
The Company’s purpose is to create long-term shareholder value.
The Company’s culture is driven by its values: Openness,
Responsiveness, Diligence and the pursuit of Excellence, with collegial
behaviour and constructive challenge at Board level and when
engaging with stakeholders. The values are all centred on achieving
returns for shareholders in line with the Company’s investment
objective. The Board also promotes the effective management or
mitigation of the potential risks faced by the Company. To the extent
it does not conflict with the investment objective, the Company’s
operations are structured with regard to all its stakeholders and
take account of the impact of the Company’s operations on the
environment and community.
Acting with high standards of integrity and transparency the Board is
committed to encouraging a culture that is responsive to the views of
shareholders and its wider stakeholders.
Business Review
continued
Schroder AsiaPacific Fund plc18
As the Company has no employees and acts through its service
providers, its culture is represented by the values and behaviour of
the Board and third parties to which it delegates certain activities.
The Board aims to fulfill the Company’s investment objective by
encouraging a culture of constructive challenge with all key suppliers
and openness with all stakeholders. The Board is responsible for
embedding the Company’s culture in the Company‘s operations.
The Board recognises the Company’s responsibilities with respect to
corporate and social responsibility and engages with its outsourced
service providers to safeguard the Company’s interests. As part
of this ongoing monitoring, the Board receives reporting from its
service providers with respect to their anti-bribery and corruption
policies; Modern Slavery Act 2015 statements; diversity policies; and
greenhouse gas and energy usage reporting.
Key performance indicators (“KPIs”)
The Board reviews performance, using a number of key measures, to
monitor and assess the Company’s success in achieving its objective.
Further comment on performance can be found in the Chairman’s
Statement. Some of the KPIs used are:
• NAV performance;
• Share price discount/premium management; and
• Ongoing charges ratio.
Some KPIs are Alternative Performance Measures. Further details and
definitions of these can be found on pages 76 and 77.
Investment process
Investment philosophy
Investment philosophy
Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
We believe that Asian stock markets are inefficient and provide strong potential for adding value through
active fund management.
We believe that this value is best extracted using a fundamental, bottom-up stock selection approach.
Understanding and addressing ESG issues is important for Asian companies. The sustainability of earnings
and the alignment of our interests with controlling shareholders are key considerations. Engagement aids
understanding and helps us seek to enhance and protect the value of our investments.
We believe that applying a systematic, disciplined approach, with a strong team culture, increases our
ability to add value.
Translating philosophy into process
A disciplined investment process, applied systematically by an experienced team, is important for adding value over the long-term. The
Manager’s investment process is informed by their beliefs about Asian markets, based on the extensive experience they have gained investing
in the region for over 50 years.
These beliefs, and their implications, result in stock selection being placed at the heart of the Company’s investment approach, as explained in
the diagram below:
Boom-up key driver of value add
Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Asian markets
less well researched
Asian stocks have
higher specific risks
Asian markets are
short term and volatile
Add value from stock selection
by consistent application of
bottom-up process
Seek quality –at
the right price
Seek long-term, not
short-term valuation
anomalies
Philosophical
beliefs
Deduction
–Disciplined long-term stock analysis
by a large, on-the-ground team of
experienced investment professionals
covering Asia Pacific ex Japan
–Understanding of business value
–Focus on superior or improving ROIC
over time
–ESG and sustainability of earnings are
key considerations
–Corporate governance focus
Process
–Take a long-term time horizon
–Exploit opportunities created by short
term volatility
Schroder AsiaPacific Fund plc 19
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Investment team
A key strength of the Manager is its team of investment professionals
based in the region. The two UK-based portfolio managers, who
themselves have well over four decades of experience between
them, are supported by a team of 40 equity analysts based across 6
offices in Asia Pacific ex-Japan, who have an average of over 16 years’
investment experience
1
.
Being based in the region means that the analysts are in regular
direct contact with the companies which they are covering, with
the team carrying out over 2,300 company contacts per year
2
. This
regular contact allows the team to gain a thorough understanding of
a company’s business model and management culture, the key issues
they are facing and their strategies to navigate an ever-changing
business environment. Moreover, since the local investors in each
country are usually the key owners of the local markets, being present
on the ground enables the Manager to understand how those major
local investors perceive and value companies.
It is this knowledge base, paired with the expertise of our investment
professionals, which adds value to our bottom-up approach to stock
selection. The locally-based analyst team is supplemented by other
resources across the Schroders group, including the UK-based
Sustainable Investment Team and Investment Insight Unit, as well as
other equity teams focused on Global and Emerging markets.
Stock research
The key input into the Investment Manager’s stock selection decisions
is the fundamental research carried out by the analyst team, the
majority of which is done using internal research tools and valuation
models.
With a universe of around 5,000 potential names to choose from,
in what has historically been a volatile region, the Manager has a
bias towards ‘quality’ companies. The analysts look to identify those
companies which are most likely to be able to grow shareholder
value over the long term, by making assessments of the financial
and non-financial (including sustainability) factors which influence
company returns. The analytical focus is on the future trend in a
company’s return on invested capital (“ROIC”) relative to its weighted
average cost of capital (“WACC”), in the belief that this reflects the
attractiveness and sustainability of the business model and serves as
a predictor of long-term shareholder returns.
Analysts spend much of their time meeting with companies in their
sectors, as well as with industry experts and colleagues, so that they
can evaluate the “moats” around the businesses they are analysing
and ultimately be in a position to make a recommendation.
The output of this work is usually in the form of research notes and
company models, as well as standard data points – a fair value and
recommendation grade, an assessment of the company’s return
profile as described above, and an ESG appraisal and score.
Portfolio construction
Although the Asian team’s analysts are the primary source of stock
ideas, the portfolio managers also generate stock ideas through
their own research (for example, by undertaking visits and meetings
with company management) and by drawing on a number of other
sources including other investment professionals within Schroders,
quantitative screens, and external research providers.
Using all of these inputs, the portfolio managers will decide which
stocks to hold, and at what weightings. In doing so, they will consider
all the outputs from the analysts’ work (such as the upside to fair
value), the level of conviction they have in the investment thesis and
any identified risks (including those relating to ESG) relative to the
rest of the opportunity set. The primary objective of this process is to
create a portfolio with an appropriate level of stock specific risk as the
primary driver of returns.
While the portfolio construction process is primarily driven by bottom-
up stock selection, there is also a top-down regional allocation review
process, carried out on a monthly basis, combining the output of an
in-house quantitative model and the qualitative views of the portfolio
managers, informed by data and analysis from both internal and
external research teams.
The purpose of this “top-down overlay” is to identify and adjust for
any unwanted systematic risks (or missed opportunities) which
have resulted from the bottom-up process. Top-down factors
looked at in this process may include macroeconomic conditions,
inflation and interest rate dynamics, politics/geopolitics, aggregate
market valuations and measures of investor sentiment. This
allows the portfolio managers to construct the portfolio using the
most attractive bottom-up ideas, while helping ensure sufficient
diversification and taking into consideration any important top-
down factors. They will also harness Schroders’ proprietary
risk management systems to provide a quantitative view of the
characteristics of the portfolio.
This results in a relatively diversified portfolio, typically with a ‘quality’
bias.
1
Team information as at September 2023. The 40 ex-Japan analysts includes Schroders’ local specialist team of equity analysts in Sydney, as well as a joint-venture
team of Indian equity analysts at Axis Asset Management (Axis AMC) in Mumbai.
2
Calendar year 2022. Source: Schroders.
Business Review
continued
Schroder AsiaPacific Fund plc20
Integration of ESG into the investment process
This report reflects the ESG views and activities of the Manager in relation to the Company’s portfolio, and more widely. References to “our” or
“we” in this section of the report refer to the views of the Manager.
How are ESG factors incorporated into the Asian investment process?
Schroders has been considering ESG issues, and sustainability generally, for over 20 years, as detailed in the timeline below.
Source: Schroders, December 2022.
1
Carbon Disclosure Project.
2
UN Principles for Responsible Invesng.
3
UN Global Compact.
4
Strategy and Governance module.
5
For certain businesses acquired recently we have not yet integrated ESG factors into investment decision-making.
There are also a small number of strategies for which ESG integraon is not praccable or possible, for example passive index tracking or legacy businesses or investments in the process of or soon to be liquidated, and certain joint venture
businesses are excluded.
'Issues such as climate change, resource scarcity, populaon 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 beer results for our clients.'
Peter Harrison, Group Chief Executive, Schroders plc
1998 2001 2006 2007 2008 2011 2016 2017 2019 2020 2021 2022
Published corporate
governance policy
Published first socially
responsible policy
Became a CDP
1
signatory
Became a UNPRI
2
signatory
Top 5 in 2017
AODP Global
Climate 50 Asset
Manager Index
Developed responsible
fixed income policy
6 years
of A+
UNPRI
rating
4
Became a
UNGC
3
signatory
Developed
responsible real
estate investment
policy
Acquired
majority stake in
BlueOrchard
Launched first
sustainable
strategy
Launched SustainEx &
Climate Progress
Dashboard
Linked ESG to
revolving credit
facility
Business
operating on
a carbon-
neutral basis
+
Achieved
full ESG
integration
5
Science-based
targets
validated by
SBTi
Launched
CONTEXT
Natural Capital
Research
partnership
#1 in ShareAction
European RI asset
management survey
CEO letter to
FTSE350
companies on
climate
change
First dedicated
ESG resource
Founding
Signatory to
Net Zero
Asset
Managers
Initiative
Became a
member of
the UN Race
to Net Zero
Initiative
Published
Engagement
Blueprint
Published
Climate
Transition
Action Plan
Became a Natural
Capital Investment
Alliance member
Acquired 75%
shareholding in
Greencoat
Capital
Achieved A
rating from
CDP
Joined
Finance for
Biodiversity
Pledge
& published
our Plan for
Nature
Sustainability at Schroders
A continuously evolving approach
For a long time, the Manager has incorporated into its decision
making a thorough assessment of management quality,
environmental, social and governance factors, whether implicitly or
explicitly. We recognise the importance of appraising both financial
and non-financial factors when analysing a company and its security.
Your Manager believes that integrating an analysis and evaluation of
ESG factors in our security valuation and selection process is key to
enhancing and protecting long-term shareholder value. The appraisal
of non-financial factors, including ESG considerations, contributes to
a better understanding of a company’s risk characteristics and return
potential.
As long-term, bottom-up investors, assessing the sustainability of a
company’s returns and financial position has always been at the core
of our research and investment decisions in Asia. Consistent with this
approach we engage with company management teams (Schroders
conducts over 2,300 meetings (calendar year 2022) with regional
companies a year) as well as voting all our proxies where practically
possible. Our analysts are directly responsible for assessing ESG risks
and opportunities as we believe they are best placed to understand
their companies and determine the impact of ESG issues on the
sustainability of the business.
ESG analysis is an integrated and important part of our investment
process from initial screening through to final portfolio construction.
ESG analysis impacts our investment process in four direct ways:
1. Initial screening – ESG helps determine which companies we
consider to be investable as part of our initial screening.
2. Sustainability of earnings – ESG analysis helps understand the
impact ESG externalities may have on the future earnings power
of the business and with it our assessment of the return on
invested capital (“ROIC”) and shareholder return classification
(“SRC”) of the company.
3. Fair Value and recommendation – ESG is an indirect and direct
input into our fair value estimate of a company. Indirect, to the
extent that a company’s SRC may influence the assumptions
used in establishing our fair value estimate of a company; and
direct, to the extent that we may apply an additional explicit
discount/premium to that fair value estimate.
4. Portfolio construction – ESG helps shape portfolio construction
and may influence how we size positions. For example, poor ESG
performance or heightened ESG risks may result in a decision
to underweight a security, hold a smaller position size or avoid
an investment completely. There is no automatic rule – each
investment opportunity is assessed on a case-by-case basis,
with the focus on the materiality of ESG factors on a company’s
valuation and risk profile.
In summary, ESG analysis helps determine which companies we
look at, how we assess their sustainability and, hence, how we value
them. And while company valuations ultimately drive our portfolio
construction, our ESG insights play a crucial role in the investment
process and influence how we size positions within a portfolio.
Furthermore, our ESG analysis is broad reaching and we are not only
interested in the potential downside risks that we may identify but
also the upside return implications for stocks we invest in.
Schroder AsiaPacific Fund plc 21
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Asia ex Japan ESG analysis in practice
1
Our Asian equity analysts are expected to provide written ESG analysis for all companies under coverage. This identifies and assesses the
potential effect of ESG issues on the investment case.
For our ESG analysis to be more robust and more integrated, we have drawn on the proprietary tools developed by Schroders such as Context
and SustainEx. Asia Context, which is the principal tool employed, captures our ESG analysis in one template using a stakeholder based
framework and is a key step in our overall assessment of a company. In addition to separate rankings for ‘E’, ‘S’ & ‘G’, we generate an overall
score for each company’s ESG rating.
We have always engaged with the companies that we invest in, and direct company contact is an important component of the initial due
diligence and ongoing monitoring process. The Asia Context template provides us with a clearer, and broader roadmap on the issues requiring
engagement and enhances appreciation of the downside and upside risks to a company’s business model. The analysts have the option to
apply an explicit discount or premium to their fair value estimate as a result of their ESG analysis.
One of the Asian Equities team’s greatest strengths is our experienced analysts working hand-in-hand with our experienced fund managers
– often involving discussions from the beginning to the end of the research on a company. Many of our fund managers are ex-analysts and
they are heavily involved in the discussions that underpin our ESG conclusions – especially given the inherent subjectivity of how certain ESG
considerations will impact a company. We do not expect our analysts to score our Asia Context templates in isolation – in many instances we
need to build a team consensus on which issues to address and how to score them.
In addition to the merits of an individual stock idea, portfolio managers will also take into consideration the overall balance of the portfolio when
selecting stocks and sizing positions – looking, for instance, at overall sector and country weights. As part of that process a company’s ESG
characteristics may influence how portfolio managers size positions within the portfolio. The portfolio manager may elect to limit, or even rule
out, exposure to a particular stock in view of a specific ESG concern. We assess each situation on its merits, focusing on the materiality of ESG
factors on a stock’s valuation and risk profile.
The context framework:
Understanding how a company manages it relationships with stakeholders
Source: Schroders.
Employees
Suppliers
Communities
community? Have you committed to
protect human rights?
Regulators
How competitive is your market?
Are
you paying a fair rate of tax?
Customers
How is your brand perceived? What’s
in your produce pipeline?
transition plan? Are you managing
Company
G
o
v
e
r
n
a
n
c
e
G
o
v
e
r
n
a
n
c
e
Environment
Have you put in place an energy
operating impacts?
How exposed is your supply chain to
disruption risks? How strong are your
supplier relationships?
How do your employees perform? How
motivated is your team?
What support do you offer your loca
l
Working with the Schroders Group’s Sustainable Investment Team
Schroders has a team of more than 50 dedicated ESG professionals (30 June 2023) who develop proprietary ESG tools and oversee ESG analysis
across Schroders. The ESG specialists will also engage directly with companies, prioritising those with exposure to higher ESG risk and low ESG
ratings. They can 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 our internal compliance and legal teams, to ensure our
voting activities comply with our ESG policy.
To enhance the Asian team’s ESG expertise, we have 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. We also have
a Sustainable Equity Analyst on the team who brings additional insight and perspective to our ESG analysis and engagement.
In addition, the Asian investment team collaborates with the Sustainable Investment team, both formally and informally participating, for
instance, in a monthly ESG conference call together with other investors globally to discuss topical issues as well as ESG best practice.
1
The above ESG research framework covers investments in companies covered by our team of locally based Asia ex Japan analysts. The detail of ESG coverage in
other regions where analysts report locally (e.g. Australia, India) may differ, but is underpinned by the same broad approach.
Business Review
continued
Schroder AsiaPacific Fund plc22
So what is the outcome for the Company?
The process described above in relation to how we approach ESG in our view 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
1
, 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 our exposure to them. As you can see exposure to the more sensitive areas is limited.
Sector Reasons for Caution Our Approach
Approximate portfolio
Exposure
Agribusinesses/
Aquaculture
Environmental, Social, Governance,
(low barriers of entry, widespread
questionable practices)
Avoid; small exposure 0.6% (1 stock – branded milk
company with some upstream
supply)
Tobacco Social Avoid 0%
Gambling Social, Governance. Licence to
operate/ promotional practices
Limited exposure to best-in-class
players in well-regulated markets
(e.g. Australia, Macau)
1.2% (1 stock)
Utilities (traditional) Environmental, Governance, (national
service obligations, uncertain
regulations/risks of backlash against
coal plants, mostly state-owned
enterprises)
Avoid carbon heavy energy providers,
focus on hydro and sustainable
energy providers in well-regulated
markets
0%
Resources Environmental, Social, Governance
(questionable practices such as
bribery and poor environmental and
safety controls concerns in Asia ex
Australia)
Preference for Australian blue chip
names, with minimal thermal coal
mining revenues
3.2% (3 stocks)*
Oil and Gas Environmental, Governance
(regulations, unfavourable taxes, price
takers, big carbon producers)
Limited exposure to sector ideally
with an LNG/gas focus or self-help
story
1.1% (1 stock)
Property Environmental, Social, Governance
(bribery issues, flooding, land
clearance compensation, labour
practices)
Prefer well-governed companies in
better regulated markets. Exposure
is mainly to Hong Kong listed stocks,
plus one Indian company.
4.1% (4 stocks)
Defence Monopsony structure, corruption Avoid 0%
Source: Schroders, as at 30 September 2023.
*Includes mining related stocks
For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
We take a cautious approach to exposure in those companies which,
while they may be making attractive returns currently, are not always
operating in a sustainable way, which could potentially impact future
earnings.
We have tended, therefore, to take our exposure to these industries
through the higher quality names, operating in well regulated
markets. For example, while we believe commodity resources will
continue to be necessary in future (and indeed crucial for a transition
to a lower carbon world), our exposure to this sector is through
blue-chip Australian companies, rather than more marginal miners in
emerging countries. Similarly, for the real estate sector, the majority
of our exposure is through companies which have a focus on strong
governance, operating in well-regulated markets. For some sectors
(e.g. tobacco or thermal coal
1
), our requirement for operations to be
sustainable in the long-term is a high hurdle to clear, regardless of
the governance or regulatory frameworks a company is operating
under, so we have tended to have very limited exposure there.
1
Schroders applies Group-level exclusions to all Schroders funds that are directly managed. These Group-level exclusions relate to controversial weapons
and companies that generate more than 20% of their revenues from thermal coal mining. Details can be found at the following link:
Group exclusions | Schroders global
Schroder AsiaPacific Fund plc 23
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Active ownership at Schroders
Schroders has a long history of engagement and active ownership and we have engaged with companies on ESG related matters for the past
two decades. As active investors, we have always considered active ownership to be a key channel of influence on management teams and a
mechanism that allows for more sustainable practices to be properly considered in managing the companies and assets in which we invest on
behalf of our clients. We aim to drive change that we believe should better protect and enhance the value of our clients’ investments and we
are committed to leveraging our influence as an investor to change how a company operates for the better. These regular engagements form
an important aspect of our role as stewards of our clients’ capital and allow us to deploy capital in businesses with long-term sustainability of
returns and shareholder value creation.
Influencing corporate behaviour and outcomes
We work with companies to help them to recognise the potential impact of
these challenges and help them take action in the areas where change may
be required
We use our voice and rights as
shareholders to make sure
these changes are effected
We speak with companies to
understand if and how they are
preparing for the long-term
sustainability challenges
VotingDialogue
Engagement
Source: Schroders
Engagement in practice
It should be remembered that we are not an ‘activist’ investor and that in general we are looking to buy into companies that are already well-
managed with decent governance and attractive return profiles. However, this does not mean that there is not still room for engagement,
particularly when thinking about sustainability issues and the evolution of a longer-term investment thesis. Below is an example of continuous
engagement with portfolio holding Samsung Electronics in Korea. This has been a long-term holding in the portfolio and engagement has
focused on different areas of the ‘E’, the ‘S’ and the ‘G’. These include Climate Change, Diversity and Inclusion and Corporate Governance as per
the chart below.
Engaging across our priority engagement themes
Source: Schroders, as at October 2023.
Themes Objective
sO
utcomes
Diversity and
Inclusion
Climate Change
Encourage improvement on gender
diversit y.
Company committed to improving culture and launched
Oct 2022
Nov 2022
Aug 2019
Aug 2020
Corporate
Governance
lobbying.
Re-election of 3 dire ctors in light of
adverse ISS recommendations.
alignment.
Mar 2021
Diversity and
Inclusion
South Korea..
Corporate
Governance
Governance &
Management
Regulators &
Governments
Environment
Employees
Customers &
Suppliers
Local
communities
Stakeholders
addressed in
engagements
Format
Email
IR
1x1 call
IR
Email
IR
1x1 call
IR
1x1 call
IR
Email
CEO
1x1 call
IR
Aug 2023
Samsung Electronics
Communicate climate expectations.
Improve board diversity.
Raise concerns on ROE cash drag.
Improve shareholder return policy.
Improve transparency on political
initiatives for female employees.
Communicated expectations on transparency and
The Company recognised that investor trust needs to be
earned and it is something they will work on.
Company has set Scope 1 and 2 emission targets and
working to develop Scope 3 visibility.
Company recognised the need for more global presence on
the board but highlighted their potential candidates sit on
more than two boards, which will likely be opposed by ISS/GL
given their maximum two boards over-boarding policy in
Communicated our analysis and concerns on valuation.
The shareholder return policy is being actively discussed
internally. An update will be available by end-Jan 2024.
Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
We recognise that success factors may be subjective, and that Schroders’ influence may not have been the sole
driving force for this change. However, we believe it is important to track companies’ progress and measure the
outcomes of our engagement.
This form of continuous engagement is fairly typical and, in addition to the topics mentioned above, would include other areas such as Natural
Capital and Biodiversity, Human Rights and Human Capital Management where appropriate.
Business Review
continued
Schroder AsiaPacific Fund plc24
Further disclosures
Investment restrictions and spread of investment risk
The key restrictions imposed on the Manager are that:
(a) no more than 15% of the Company’s total net assets, at the date
of acquisition, may be invested in any one single company;
(b) no more than 10% of the Company’s total net assets, at the
date of acquisition, may be invested in other listed investment
companies unless such companies have a stated investment
policy not to invest more than 15% of their gross assets in other
listed investment companies;
(c) the Company will not invest more than 15% of its gross assets in
other listed investment companies or investment trusts;
(d) no more than 15% of the Company’s total net assets may be
invested in open-ended funds; and
(e) no more than 25% of the Company’s total net assets may be
invested in the aggregate of unlisted investments and holdings
representing 20% or more of the equity capital of any company.
No breaches of these investment restrictions took place during the
financial year.
The investment portfolio on page 15 demonstrates that, as at
30 September 2023, the Company held 58 investments spread
over multiple countries and in a range of industry sectors. The two
largest investments, Samsung Electronics and Taiwan Semiconductor
Manufacturing, represented 9.2% and 8.7% respectively of total
investments. At the end of the year, the Company did not hold any
unlisted investments and the only holding in an open-ended fund
was in Schroder Asian Discovery Fund Z Acc, which represented 1.6%
of total investments. There was also a holding in Vietnam Enterprise
Investments, a closed-end fund trading on the London Stock
Exchange which represented 1.9% of total investments. The Board
believes that the objective of spreading risk has been achieved.
Use of gearing
On 23 June 2023, the date of expiry of the credit facility, the Company
renewed its one year £75 million revolving credit facility agreement
with The Bank of Nova Scotia, London Branch. Under the facility
agreement, the Company also has the option to increase the
revolving facility by a further £25 million to £100 million. At the year
end $30 million of the credit facility with The Bank of Nova Scotia was
drawn down.
In addition, the Company has a £30 million multi-currency overdraft
facility with HSBC, which was not utilised during the year. The Board
has set parameters within which the Manager is authorised to
use the credit facilities and draw down funds. While the articles of
association limit the amount of gearing the Company may have to a
maximum of the Company’s adjusted capital and reserves, Directors
do not anticipate net effective gearing levels in excess of 20% of
shareholders’ funds.
Diversity
The Board has adopted a diversity and inclusion policy. Appointments
and succession plans will always be based on merit and objective
criteria and, within this context, the Board seeks to promote diversity
of gender, social and ethnic backgrounds, cognitive and personal
strengths. The Board will encourage any recruitment agencies it
engages to find a range of candidates that meet the objective criteria
agreed for each appointment. Candidates for Board vacancies are
selected based on their skills and experience, which are matched
against the balance of skills and experience of the overall Board
taking into account the criteria for the role being offered.
Statement on Board diversity – gender and ethnic
background
The Board has made a commitment to consider diversity when
reviewing the composition of the Board and notes the new Listing
Rules requirements (LR 9.8.6R(9) and (11)) regarding the targets on
board diversity:
• at least 40% of individuals on the Board are women;
• at least one senior Board position (chairman, chief executive
officer (“CEO”), senior independent director or chief financial
officer (“CFO”)) is held by a woman; and
• at least one individual on the Board is from a minority ethnic
background, defined to include those from an ethnic group
other than a white ethnic group, as specified in categories
recommended by the Office for National Statistics.
As required by the Listing Rules the Company’s reporting against
these targets is set out in the tables below. The data was collected on
a self-identifying basis.
In respect of the year under review, the Board met the target in
relation to the number of women on the Board until 1 May 2023
when Rupert Hogg was appointed as a Director as part of the Board’s
succession planning. Following the retirement of Keith Craig as a
Director at the conclusion of the next AGM the Board will again
meet this target albeit, as at 30 September 2023, the target was not
met. The target will continue to be considered when future Board
appointments are made although for continuity and succession
planning the Directors will always select the best candidate based on
objective criteria and merit.
As at 30 September 2023 and the date of this report, the targets
for the number of senior Board positions which should be held
by a woman and for at least one individual to be from a minority
ethnic background have been met. The Board considers that as an
externally managed investment trust, with no CEO or CFO, the Chair
of the Company, the Senior Independent Director and Chair of the
Audit and Risk Committee to be senior positions.
Schroder AsiaPacific Fund plc 25
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
The below tables set out the gender and ethnic diversity composition
of the Board as at 30 September 2023 and at the date of this report.
Gender identity
Number of
Board
members
Percentage
of the
Board
Number of
senior
positions
1
on
the Board
Men 4 66.6% 2
Women 2 33.3% 1
Not specied/prefer not
to say – – –
Ethnic background
Number of
Board
members
Percentage
of the
Board
Number
of senior
positions
1
on
the Board
White British or other White
(including minority-white
groups) 5 83.3% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British 1 16.7% 1
Black/African/Caribbean/
Black British – – –
Other ethnic group, including
Arab – – –
Not specied/prefer not to
say – – –
1
The Company considers the positions of Chairman of the Board of Directors,
Senior Independent Director and Chair of the Audit and Risk Committee to be
senior positions of the Board.
The prescribed format for the above tables includes provisions
relating to the role of the CEO, CFO and executive management. The
Board considers these provisions are not relevant to the Company as
it is an externally managed investment company. In particular, all of
the Company’s day-to-day management and administrative functions
are outsourced to third parties. As a result, the Company has no CEO,
CFO or executive management.
The Board also considers the diversity and inclusion policies of its key
service providers.
Financial crime policy
The Company continues to be committed to carrying out its business
fairly, honestly and openly, and operates a financial crime policy,
covering bribery and corruption, tax evasion, money laundering,
terrorist financing and sanctions, as well as seeking confirmations
that the Company’s service providers’ policies are operating soundly.
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it has no
significant greenhouse gas emissions and energy usage to report.
Taskforce for Climate-Related Financial Disclosures
On 30 June 2023, the Company’s AIFM produced a product level
disclosure consistent with the Task Force on Climate-Related Financial
Disclosures (“TCFD”) for the period 1 January 2022 to 31 December
2022. This can be found here: https://mybrand.schroders.
com/m/6ec452c589d9a1c6/original/TCFD-Schroder-AsiaPacific-
Fund-20221231.pdf.
Responsible investment
The Company delegates to its Manager the responsibility for taking
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.
Further detail on engagement and stewardship can be found on
pages 20 to 23.
In addition to the description of the Manager’s integration of ESG
into the investment process and the details in this Business Review, a
description of the Manager’s policy on these matters can be found on
the Schroders website at www.schroders.com.The Board notes that
Schroders believes that companies with good ESG management
often perform better and deliver superior returns over time. Engaging
with companies to understand how they approach ESG management
is an integral part of the investment process. Schroders has
committed to the UN Global Compact, amongst codes and standards,
and information about the application of Schroders’ sustainability
and responsible investment policies can be found at: https://www.
schroders.com/en/sustainability/corporate-responsibility/.
The Board has received reporting from the Manager on the
application of its policy.
Stakeholder engagement, section 172 of the Companies Act
2006
During the year under review, 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 identified its key stakeholders as the Company’s
Shareholders, the Manager, Investment Manager, the Company’s
Lender, other service providers and the Investee companies.
The following sections explain how the Directors have engaged with
all stakeholders and outlines stakeholder considerations during
the year.
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 webpages 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 Manager and Investment Manager
The Board’s main working relationship is with the Manager, who
is responsible for the Company’s portfolio management (including
asset allocation, stock and sector selection) and risk management,
as well as functions such as secretarial, accounting and marketing
services. The Manager has subdelegated portfolio management to
Business Review
continued
Schroder AsiaPacific Fund plc26
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 12. The
Management Engagement Committee reviews the performance
of the AIFM and Investment Manager, their remuneration and the
discharge of their contractual obligations at least annually.
The Company’s lender
During the year under review, the Board renewed its revolving credit
facility Agreement with The Bank of Nova Scotia, 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.
Other service providers, including:depositary and custodian,
registrar, corporate broker, legal counsel, third-party
research provider
The Board maintains regular contact with its key service providers,
both at the Board and committee meetings, and through ad hoc
communication during the year. The need to foster business
relationships with key service providers is central to the Directors’
decision-making as the Board of an externally managed investment
trust. During the year, the Management Engagement Committee
undertook reviews of the third-party service providers and agreed
that their continued appointment remained in the best interests
of the Company and its Shareholders. The committee periodically
reviews the market rates for services received, to ensure that the
Company continues to receive high quality service at a competitive
cost. Where available, the internal controls reports of the Company’s
service providers are reviewed by the Audit and Risk Committee and
Directors also 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, Schroder’s
Group Internal Audit and HSBC Securities Services (UK) Limited, as the
provider of certain accounting and administrative services delegated
by Schroder Investment Management Limited. These meetings
enable the Board to conduct due diligence on operations and IT risks
amongst service providers; and to receive up to date information on
changes to regulation and market practice in the industry.
Investee companies
The Board recognises the importance of good stewardship and
communication with investee companies in meeting the Company’s
investment objective and strategy. The Investment Management
team conducts meetings with portfolio companies’ management
teams to understand current trading as well as the longer term
prospects for their businesses, and to help understand the ESG risks
to the investment. Additional engagements on ESG areas of concern
will also be undertaken with investee companies. 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 has
the opportunity to 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.
Additional information is set out in the following table on the
Manager’s engagement in respect of portfolio holdings and voting.
As at
30 September
2023
Number of companies engaged with 38
Number of engagement discussion topics 105
Invested companies engaged with (%) 53
Shareholder meetings voted at 80
Number of proposals voted on 661
Number of votes against management 45
Votes against management (%) 6.5
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 2023:
• the Board agreed with the Manager to reduce the management
fee, further details in respect of which are set out in the Directors’
Report;
• the Board continued the strategy to buy back shares which
provides a degree of liquidity when the discount widens;
• the Board continued to consider Board succession planning, as
it recognises the benefits of regular Board refreshment. Rupert
Hogg was appointed as a non-executive Director on 1 May 2023;
• the Board entered into an amendment and restatement
agreement in June 2023 in respect of the multicurrency revolving
facility agreement originally dated 23 June 2022. Given the specific
requirements of the Company and various factors, including
the interest rate environment, the Board, when considering the
renewal of the facility, concluded that the one year revolving
credit facility remained the most appropriate arrangement and
The Bank of Nova Scotia, London Branch the most appropriate
provider of the facility;
• the Board undertook its annual visit, together with the Investment
Manager, to the region and visited India and Singapore to
undertake due diligence meetings with consultants and investee
companies and review Schroders capabilities in the region; and
• the Board has declared a final dividend of 12.00p per ordinary
share (2022: 12.00p) which, if approved by shareholders at the
AGM on 31 January 2024 will be paid on 9 February 2024.
Following the year end, the Board undertook its annual visit, together
with the Investment Manager, to the region and visited Vietnam and
Hong Kong.
Schroder AsiaPacific Fund plc 27
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Principal and emerging risks and uncertainties
The Board, through its delegation to the Audit and Risk Committee,
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, and where applicable
emerging, 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 and emerging risks and the monitoring
system are also subject to robust review at least annually. The last
assessment took place in November 2023.
During the year, the Board discussed and monitored a number of
risks which could potentially impact the Company’s ability to meet its
strategic objectives. The Board received updates from the Manager,
Company Secretary and other service providers on emerging
risks that could affect the Company. The Board was mindful of the
following risks during the year: the escalating conflict in Israel, the
ongoing conflict in Ukraine, rising inflation and interest rates, the
threat of a global recession and increasing energy prices. These
risks were not seen as new principal or emerging risks but those
that exacerbate existing risks and have been incorporated in the
geopolitical and market sections in the table below.
Geopolitical risk includes the impact of regional tensions, trade wars
and sanctions against companies. The Board continued to monitor
events in the Middle East following Hamas’ attack on Israel in early
October 2023 and the Russian invasion of Ukraine, ongoing pressure
in the Asia-pacific region, slowing economic growth in China and
supply chains. The Board is also mindful that changes to financial
and public policy could impact the Company in the future. ESG risk
includes climate change risk and how it could affect the Company’s
investments, and potentially shareholder returns. ESG considerations,
including climate change are embedded in the investment process
and greater transparency continues to be provided in Board
reporting and the annual report. The Board will continue to monitor
this closely. Further details are provided in respect of geopolitical and
ESG risks in the table below.
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. Actions taken by the Board
and, where appropriate, its committees, to manage and mitigate the
Company’s principal risks and uncertainties are set out in the table
below.
The “Change” column on the right highlights at a glance the Board’s
assessment of any increases or decreases in risk during the year after
mitigation and management. The arrows in the change column show
the risks as increased or decreased or unchanged.
Risk Mitigation and management Change
Strategic
The requirements of investors change or develop
in such a way as to diverge from the Company’s
investment objectives, resulting in a wide discount of
the share price to NAV per share.
The Company’s cost base could become uncompetitive,
including fees, against the peer group and against
open-ended alternatives.
The appropriateness of the Company’s investment
remit is periodically reviewed and the success of the
Company in meeting its stated objectives is monitored.
The share price relative to NAV per share is monitored
and the use of buy back authorities is considered on a
regular basis. The marketing and distribution activity is
regularly reviewed. The Company engages proactively
with investors.
The Management Engagement Committee reviews fees
paid to the Manager at least annually.
The ongoing competitiveness of all service provider
fees is subject to periodic benchmarking against their
competitors.
The monitoring of fees charged by other service
providers takes place alongside an annual review of the
Company’s Ongoing Charges figure.
The Board approves significant non-routine expenses.
Geopolitical
Political developments globally might materially affect
the ability of the Company to achieve its investment
objective.
Risks include regional tensions, trade wars and
sanctions against companies, in areas which the
Company invests or may invest, that might have
consequences for the Company including an adverse
effect on the value of the Company’s assets.
The Board continued to monitor key political
developments in the Asia Pacific region, in addition to
the Ukraine war and the increasing tension in the Middle
East as a result of the conflict between Hamas and
Israel.
It was recognised that there continues to be an elevated
geopolitical risk relating to the region.
Subject to shareholder consent, the Board can amend
the investment policy and objective of the Company to
mitigate these risks.
Business Review
continued
Schroder AsiaPacific Fund plc28
Risk Mitigation Change
Market
A significant fall in regional equity markets could
have an adverse impact on the market value of the
Company’s underlying investments.
The Company invests predominantly in assets which
are denominated in a range of currencies. Its exposure
to changes in the exchange rate between sterling and
other currencies has the potential to have significant
impact on returns and the sterling value of dividend
income from underlying investments.
The Board continues to monitor the market volatility
caused by current geopolitical issues and will continue
to do so on an ongoing basis.
The Board recognises that there continues to be a
currency / exchange rate risk relating to the region and
monitored it carefully during the period. The Board also
monitors macroeconomic and market factors, including
the impact of inflation.
The Company has no formal policy of hedging currency
risk but may use foreign currency borrowings or forward
foreign currency contracts to limit exposure. The
Company does not hedge against sterling.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate any negative impact
of substantial changes in markets are discussed with the
Investment Managers.
The Investment Manager seeks to invest in companies
with strong balance sheets and sustainable business
models.
Investment Management
The Manager’s investment strategy and levels of
resourcing, if inappropriate, may result in the Company
underperforming the market and/or peer group
companies, leading to the Company and its objectives
becoming unattractive to investors.
Regular review of:
— investment performance;
— NAV and share price performance including discount
against the peer group; and
— whether appropriate strategies are employed to
mitigate any negative impact of substantial changes
in markets.
The Manager reports on macro-economic events,
including regional policies, quarterly and more
frequently in response to events, if considered
necessary.
Annual review of the ongoing suitability of the Manager.
Regular meetings with major shareholders to seek their
views with respect to Company matters.
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the
depositary.
The depositary reports on the safe custody of the
Company’s assets, including cash and portfolio holdings
which are independently reconciled with the Manager’s
records. The review of audited internal controls reports
covering custodial arrangements is undertaken. An
annual report from the depositary on its activities,
including matters arising from custody operations is
received.
Gearing and leverage
The Company utilises credit facilities. These
arrangements increase the funds available for
investment through borrowing. While this has the
potential to enhance investment returns in rising
markets, in falling markets the impact could be
detrimental to performance.
Gearing is monitored and strict restrictions on
borrowings are imposed: gearing continues to operate
within pre-agreed limits so as not to exceed 20% of the
Company’s net assets. Generally, gearing is maintained
at relatively low levels.
Schroder AsiaPacific Fund plc 29
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Risk Mitigation Change
Accounting, legal and regulatory change
In order to continue to qualify as an investment trust,
the Company must comply with the requirements
of Section 1158 of the Corporation Tax Act 2010.
Breaches of the UK Listing Rules, the Companies Act or
other regulations with which the Company is required
to comply, could lead to a number of detrimental
outcomes.
The Board intends to continue to operate the Company
in full compliance with the requirements of Section
1158 of the Corporation Tax Act 2010, compliance is
confirmed by the external auditor.
The confirmation of compliance with relevant laws and
regulations by key service providers is reviewed.
Shareholder documents and announcements, including
the annual report, are subject to stringent review
processes. Procedures are established to safeguard
against the disclosure of inside information.
Climate change
ESG requirements including climate change and
climate-related risks could impact the Company’s
business and affect revenue, expenses, asset values or
the cost or availability of capital.
The consideration of climate change risks and ESG
factors is integrated into the investment process and
reported at regular Board meetings.
The Investment Manager considers and evaluates the
approach investee companies take to recognise and
mitigate climate change risks.
The Manager has implemented a comprehensive ESG
policy which is outlined in detail on pages 20 to 23.
Third party services
The Company has no employees and has delegated
certain functions to a number of service providers.
Failure of controls, including as a result of fraud, and
poor performance of any service provider, could
lead to disruption, reputational damage or loss of
shareholders’ assets.
Service providers appointments are subject to due
diligence processes and with clearly documented
contractual arrangements detailing service expectations.
Regular reports are provided by key service providers
and the quality of their services is monitored.
Monitoring includes an annual presentation to the Chair
of the Audit and Risk Committee and other Directors
from key risk and internal controls personnel.
Review of annual audited internal controls reports from
key service providers, including confirmation of business
continuity arrangements and IT controls.
Cyber
The Company’s service providers are all exposed to the
risk of cyber-attacks. Cyber-attacks could lead to loss
of personal or confidential information, unauthorised
payments or inability to carry out operations in a timely
manner.
The Company’s service providers report on cyber risk
mitigation and management at least annually, which
includes confirmation of business continuity capability in
the event of a cyber-attack.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of
the systems of internal control operating within key service providers,
and ensures regular communication of the results of monitoring
by such providers to the Audit and Risk Committee, including the
incidence of significant control failings or weaknesses that have been
identified at any time and the extent to which they have resulted in
unforeseen outcomes or contingencies that may have a material
impact on the Company’s performance or condition.
No significant control failings or weaknesses were identified from
the Audit and Risk Committee’s ongoing risk assessment which has
been in place throughout the financial year and up to the date of this
report. The Board is satisfied that it has undertaken a detailed review
of the risks facing the Company.
A full analysis of the financial risks facing the Company is set out in
note 20 to the accounts on pages 65 to 70.
Business Review
continued
Schroder AsiaPacific Fund plc30
Viability statement
The Directors have assessed the viability of the Company over a
five year period, taking into account the Company’s position at
30 September 2023 and the potential impact of the principal and
emerging risks it faces for the review period. This is further detailed
in the Chairman’s Statement, Investment Managers’ Review and
Principal and Emerging Risks sections of this report. The Directors
have assessed the Company’s operational resilience and they are
satisfied that the Company’s outsourced service providers will
continue to operate effectively.
The Board believes that a period of five years reflects a suitable time
horizon for strategic planning, taking into account the investment
policy, liquidity of investments, potential impact of economic cycles,
nature of operating costs, dividends and availability of funding.
In its assessment of the viability of the Company, the Directors have
considered each of the Company’s principal and emerging risks
detailed on pages 27 to 29 and in particular the impact of a significant
fall in regional equity markets on the value of the Company’s
investment portfolio. The Directors have also considered the
Company’s income and expenditure projections and the fact that the
Company’s investments comprise readily realisable securities which
can be sold to meet funding requirements if necessary.
The Directors also considered the beneficial tax treatment the
Company is eligible for as an investment trust. If changes to these
taxation arrangements were to be made it would affect the viability of
the Company to act as an effective investment vehicle.
Whilst the Company’s articles of association require that a proposal
for the continuation of the Company be put forward at the Company’s
AGM in 2026, the Directors have no reason to believe that such a
resolution will not be passed by shareholders.
The Directors also considered a stress test in which the Company’s
NAV dropped by 50% and noted that, based on the assumptions in
the test, the Company would continue to be viable over a five year
period.
Based on the Company’s processes for monitoring operating costs,
the Board’s view that the Manager has the appropriate depth and
quality of resource to achieve superior returns in the longer term,
the portfolio risk profile, limits imposed on gearing, counterparty
exposure, liquidity risk and financial controls, the Directors have
concluded that there is a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as they fall
due over the five year period of their assessment.
Going concern
The Directors have assessed the principal risks, the impact of the
emerging risks, the net current liability position and the matters
referred to in the viability statement. Based on the work the Directors
have performed, they have not identified any material events or
conditions that, individually or collectively, may cast significant doubt
on the Company’s ability to continue as a going concern for the
period assessed by the Directors, being the period to 31 December
2024 which is at least 12 months from the date the financial
statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
5 December 2023
Governance
31
Governance
Board of Directors 32
Directors’ Report 34
Audit and Risk Committee Report 37
Management Engagement Committee Report 40
Nomination Committee Report 41
Directors’ Remuneration Report 43
Statement of Directors’ Responsibilities in
respect of the Annual Report and Accounts 46
32 Schroder AsiaPacific Fund plc
Board of Directors
James Williams
Status: Independent non-executive
Chairman
Keith Craig
Status: Independent non-executive
Director
Julia Goh
Status: Independent non-executive
Director
Length of service: 9 years – appointed a
Director in August 2014 and the Chairman
with effect from 1 February 2021
Experience: James Williams has over
30 years’ international business experience,
including nearly 20 years in the investment
banking industry, having held senior roles in
Asia and Europe at ING Barings, ABN AMRO
and Commerzbank. Following his departure
from Commerzbank, he became a partner at
Saginaw Capital LLP until 2008. James is also
a non-executive Director of The European
Smaller Companies Trust PLC and of Net
Zero One Ltd.
Committee membership: Audit and Risk,
Management Engagement and Nomination
Committees
Current remuneration: £49,000 (from
1 October 2023)
Number of shares held: 20,000*
Length of service: 8 years – appointed a
Director in May 2015
Experience: Keith 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. Keith
is 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: £36,000 per
annum (from 1 October 2023)
Number of shares held: 12,581*
Length of service: 2 years – appointed a
Director in October 2021 and as the Chair of
the Audit and Risk Committee on 1 February
2022
Experience: Julia Goh has broad-based
financial services experience in London.
She was a Managing Director at Barclays
Investment Bank in various senior front-
office positions including as Chief Operating
Officer of Global Markets, and was also Chair
of the Barclays Women’s Initiative Network.
Prior to that, she was a Managing Director
and the Global Head of Prime Services Risk
at Credit Suisse for 11 years. Julia started her
Markets career at Nomura International as a
risk manager. A Singaporean, Julia came to
London in 1987 and obtained her BSc from
the London School of Economics and Political
Science and a MSc from Bayes Business
School. She is a fellow of the ICAEW
(alumnus PWC in corporate tax) and has a
Certificate in Company Direction from the
Institute of Directors. Julia is an independent
non-executive Director of The Mercantile
Investment Trust plc, 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: £44,000 per
annum (from 1 October 2023)
Number of shares held: 15,000*
Schroder AsiaPacific Fund plc 33
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Vivien Gould
Status: Independent non-executive
Director
Rupert Hogg
Status: Independent non-executive
Director
Martin Porter
Status: Senior Independent
non-executive Director
Length of service: 4 years – appointed a
Director in May 2019
Experience: Vivien 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.
Vivien 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: £36,000 per
annum (from 1 October 2023)
Number of shares held: 5,000*
Length of service: six months – appointed
a Director in May 2023
Experience: Rupert Hogg has more than
30 years international business experience
gained through senior executive level
positions in various large and complex
organisations. He joined John Swire & Sons
Limited, part of the Swire conglomerate of
businesses, in 1986 and worked with the
group in Hong Kong, Southeast Asia, India,
Korea, Australia and the United Kingdom. He
was Chief Executive Officer of Cathay Pacific
Airways Limited and Chairman of Hong Kong
Dragon Airlines Limited between May 2017
and August 2019. Previously, he had served
as Chief Operating Officer of Cathay Pacific
Airways Limited, was a Director of Cathay
Pacific and John Swire & Sons (H.K.) Limited,
Chairman of AHK Air Hong Kong Limited and
a Director and Chairman of the executive
committee of Cathay Dragon. Rupert holds
a Master of Arts degree in History from
Edinburgh University.
Committee membership: Audit and Risk,
Management Engagement and Nomination
Committees.
Current remuneration: £36,000 per
annum (from 1 October 2023)
Number of shares held: 2,100*
Length of service: 6 years – appointed a
Director in October 2017 and as the Senior
Independent Director with effect from
1 February 2022 and
Experience: Martin Porter 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, Martin 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:
£36,000 per annum (from 1 October 2023)
Number of shares held: 20,000*
*Shareholdings are as at 5 December 2023, full details of Directors’ shareholdings are set out in the Remuneration Report on page 45.
34 Schroder AsiaPacific Fund plc
Directors’ Report
The Directors submit their report and the audited financial
statements of the Company for the year ended 30 September 2023.
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 32. 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: [email protected].
Role and operation of the Board
The Board (of six Directors, listed on pages 32 and 33) 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 17 to 30 sets out further detail of how the Board reviews
the Company’s strategy, risk management and internal controls.
These sections form part of this Directors’ Report.
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.
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. At each scheduled Board meeting the
Directors receive reports from the Manager, other key service
providers and the Company’s advisers. Ad hoc reports and
information are supplied to the Board 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 which delegates certain
accounting and administrative services to HSBC Securities Services
(UK) Limited. The Manager has in place appropriate professional
indemnity cover.
The Schroders Group manages £724.3 billion (as at 30 September
2023) 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.
Until 1 April 2023, under the terms of the AIFM agreement, the
Manager was 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.
Under the revised terms of the AIFM agreement, effective from
1 April 2023, the Manager is entitled to a fee of 0.75% per annum of
the first £600 million of the cum income net assets and 0.60% per
annum on the cum income net assets in excess of £600 million. The
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 2023 amounted to £6,208,000 (2022: £6,913,00).
The company secretarial fee paid to the Manager in the year ended
30 September 2023 was £150,000 (2022: £150,000).
Details of amounts payable to the Manager are set out in note 4 on
page 59 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
Schroder AsiaPacific Fund plc 35
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Manager’s appointment under the terms of the AIFM agreement is
in the best interests of shareholders as a whole.
Depositary
HSBC Bank plc, which is authorised by the Prudential Regulation
Authority and regulated by the FCA and the Prudential Regulation
Authority, carries out certain duties of a depositary specified in the
AIFM Directive including, in relation to the Company, as follows:
– safekeeping of the assets of the Company which are entrusted
to it;
– cash monitoring and verifying the Company’s cash flows; and
– oversight of the Company and the Manager.
The Company, the Manager and the depositary may terminate
the depositary agreement at any time by giving 90 days’ notice in
writing. The depositary may only be removed from office when a
new depositary is appointed by the Company.
Registrar
Equiniti Limited has been appointed as the Company’s registrar.
Equiniti’s services to the Company include share register
maintenance (including the issuance, transfer and cancellation
of shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and processing
corporate actions.
Compliance with the AIC Code of
Corporate Governance
The Board of the Company has considered the principles and
provisions of the AIC Code of Corporate Governance (the “AIC
Code”). The AIC Code addresses the Principles and Provisions set
out in the UK Corporate Governance Code (the “UK Code”), as well
as setting out additional Provisions on issues that are of specific
relevance to the Company. The Board considers that reporting
against the Principles and Provisions of the AIC Code, provides more
relevant information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk). It
includes an explanation of how the AIC Code adopts the Principles
and Provisions set out in the UK Code to make them relevant for
investment companies. The UK Code is available from the Financial
Reporting Council’s website at www.frc.org.uk.
The Financial Conduct Authority requires all UK listed companies
to disclose how they have complied with the provisions of the UK
Code. This statement, together with the Statement of Directors’
Responsibilities, viability statement and going concern statement set
out on pages 46 and 30 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 £18,990,000 (2022: £19,673,000), equivalent to a revenue
return per ordinary share of 12.06 pence (2022: 12.04 pence).
The Board has recommended the payment of a final dividend
for the year ended 30 September 2023 of 12.00 pence per share
(2022: 12.00 pence) payable on 9 February 2024 to shareholders
on the register on 29 December 2023, subject to approval by
shareholders at the AGM on 31 January 2024.
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 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.
36 Schroder AsiaPacific Fund plc
Directors’ Report
continued
Share capital and substantial share
interests
As at the date of this report, the Company had 153,465,716 ordinary
shares of 10p in issue. No shares were held in treasury.
During the year under review 6,000,000 ordinary shares with a
nominal value of 10p per share, which represented 3.73% 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 62.
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.
As at 30 September 2023 Date of announcement
Number of shares
in announcement
% of voting rights as at
30 September 2023
1
City of London Investment Management Company Limited 22 September 2023 21,755,032 14.05
Rathbones Investment Management Limited 22 September 2023 18,702,783 12.08
Schroders plc 21 January 2014 8,483,022 5.48
abrdn 3 July 2019 8,299,097 5.36
Allspring Global Investments Holdings, LLC 10 November 2021 8,277,161 5.35
Wells Capital Management 9 November 2017 8,255,649 5.33
Lazard Asset Management LLC 4 November 2022 7,911,876 5.11
1
Based on the shares included in the announcement.
Following the year end Rathbones Investment Management Limited notified the Company that their interest in the voting rights attaching to
the Company’s issued share capital had changed to 18,477,070 ordinary shares, 12.00% of the total voting rights.
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 a small number of additional, ad
hoc, meetings during the year to address time sensitive matters
that arose between scheduled quarterly meetings. These meetings
were generally held at short notice and attended by those Directors
available at the time.
Director Board
Audit and Risk
Committee
Management
Engagement
Committee
Nomination
Committee
James Williams 4/4 2/2 1/1 1/1
Keith Craig 4/4 2/2 1/1 1/1
Julia Goh 4/4 2/2 1/1 1/1
Vivien Gould 4/4 2/2 1/1 1/1
Rupert Hogg
1
2/2 1/1 1/1 1/1
Martin Porter 4/4 2/2 1/1 1/1
1
Rupert Hogg was appointed on 1 May 2023.
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’ 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
5 December 2023
Schroder AsiaPacific Fund plc 37
Audit and Risk Committee Report
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Ongoing risk review
Half year
report
Audit
planning
Annual
report
Review of
external
auditors
Audit
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 is the Chair of the Committee. The Board has satisfied itself that at least one of the
committee’s members has recent and relevant financial experience and that the committee as a whole has competence relevant to the
sector in which the Company operates. The AIC Code permits the Chairman of the Board to be a member of the audit committee of an
investment trust. Recognising James Williams’ significant experience, it is considered appropriate for the Chairman to be a member of the
Audit and Risk Committee.
Approach
The committee's key roles and responsibilities are set out in the table below.
Risks and Internal Controls Financial Reports and Valuation Audit
Principal risks
To establish a process for identifying,
assessing, managing and monitoring the
principal risks of the Company.
Financial statements
To monitor the integrity of the nancial
statements of the Company and any formal
announcements relating to the Company's
nancial performance and valuation. To
review the half year report.
Audit results
To discuss any matters arising from the
audit and recommendations made by the
auditor.
Emerging risks
To ensure a robust assessment of the
Company's emerging risks and procedures
are in place to identify emerging risks, and
an explanation of how these are being
managed or mitigated.
Going concern
To review the position and make
recommendations to the Board in relation
to whether it considers it appropriate
to adopt the going concern basis of
accounting in preparing its annual and
half-yearly nancial statements.
Auditor appointment, independence
and performance
To make recommendations to the
Board, in relation to the appointment,
reappointment, eectiveness and removal
of the external auditor, to review their
independence, and to approve their
remuneration and terms of engagement.
Reviewing and agreeing the audit plan and
engagement letter.
38 Schroder AsiaPacific Fund plc
Audit and Risk Committee Report
continued
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 36. An evaluation of the committee’s effectiveness and review of its terms of reference was completed
during the year.
Significant issues identified during the committee’s review of the Company’s principal and emerging risks, and key matters communicated by
the auditor during its reporting are included below.
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Service provider controls
Reviewing the operational controls
maintained by the Manager, administrator,
depositary and registrar.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Effectiveness of the independent audit
process and auditor performance
Evaluated the eectiveness of the
independent audit rm and process
prior to making a recommendation
that it should be re-appointed at the
forthcoming AGM. Evaluated the auditor’s
performance against agreed criteria
including: qualication; knowledge,
expertise and resources; independence
policies; eectiveness of audit planning;
adherence to auditing standards; and
overall competence was considered,
alongside feed back from the Manager on
the audit process. The committee noted the
auditor had demonstrated its professional
scepticism during the audit.
Internal controls and risk management
Consideration of several key aspects of
internal control and risk management
operating within the Manager, depositary,
custodian and registrar, including
assurance reports and presentations on
these controls.
Calculation of the investment
management fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Auditor independence
Ernst & Young LLP has provided
audit services to the Company for
ve years, since appointment by the
Company on 25 July 2019 to audit the
nancial statements for the year ended
30 September 2019 and subsequent
nancial periods. The auditor is required
to rotate the senior statutory auditor
every ve years. There are no contractual
obligations restricting the choice of
external auditor.
This is the fth year that the senior
statutory auditor, Caroline Mercer has
conducted the audit of the Company’s
nancial statements. Accordingly, this is
the last audit for which Ms Mercer will
act as the senior statutory auditor for the
Company. The Company is compliant with
the provisions of the September 2014
Competition and Markets Authority Order,
which requires that FTSE 350 companies
put their audit out to tender at least every
ten years.
Compliance with the investment
trust qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
conrming compliance.
Overall accuracy of the annual report
and accounts
Consideration of the draft annual
report and accounts and the letter of
representation from the Manager in
support of the letter of representation to
the auditor.
Audit results
Met with and reviewed a comprehensive
report from the auditor which detailed
the results of the audit, compliance with
regulatory requirements, safeguards that
have been established, and on their own
internal quality control procedures.
Schroder AsiaPacific Fund plc 39
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Principal risks
Reviewing the principal risks faced by
the Company and the system of internal
control.
Valuation and existence of holdings
Quarterly review of portfolio holdings and
assurance reports.
Meetings with the auditor
Met the auditor without representatives
of the Manager present. Representatives
of the auditor attended the committee
meeting at which the draft annual report
and accounts were considered.
Emerging risks
Reviewing the emerging risks for the
Company.
Fair balanced and understandable
Reviewed the annual report and accounts
to ensure that it was fair, balanced and
understandable.
Provision of non-audit services by the
auditor
The committee has reviewed the FRCs
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 nancial
statements, internal audit and custody.
The auditor may, if required, provide other
non-audit services which will be judged
on a case-by-case basis. The auditor did
not provide any non-audit services to the
Company during the year.
Going concern and viability
Reviewing the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
Ernst & Young LLP indicated to the
committee their willingness to continue to
act as auditor.
Recommendations made to, and approved by, the Board:
As a result of the work performed, the committee has concluded that the annual report for the year ended 30 September 2023, 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 46.
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
Chair of the Audit and Risk Committee
40 Schroder AsiaPacific Fund plc
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
The committee’s key roles and responsibilities are set out in the table below.
Oversight of the Manager Oversight of other service providers
The committee:
• reviews the Manager’s performance, over the short and long
term, against the Benchmark, peer group and the market;
• considers the reporting it has received from the Manager
throughout the year and the reporting from the Manager to
the shareholders;
• assesses management fees on an absolute and relative basis,
receiving input from the Company’s broker, including peer
group and industry figures, as well as the structure of the fees;
• reviews the appropriateness of the Manager’s contract
including terms such as notice period; and
• assesses whether the Company receives appropriate
administrative, accounting company secretarial and marketing
support from the Manager.
The committee reviews the performance and competitiveness of
the following service providers on at least an annual basis:
• Depositary and custodian
• Corporate Broker
• Registrar
• Lender
The committee also receives a report from the Company
Secretary on ancillary service providers, and considers any
recommendations.
The committee notes the Audit and Risk Committee’s review of the
auditor.
Application during the year
The committee undertook a detailed review of the Manager’s
performance and agreed that it has the appropriate depth and
quality of resource to deliver superior returns over the longer
term.
The committee reviewed the management fee and agreed a
change with the Manager, resulting in a reduction in overall fees,
from 1 April 2023, as detailed in the Chairman’s Statement, on
page 5.
The committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
The annual review of each of the service providers was satisfactory.
The committee noted that the Audit and Risk Committee had
undertaken a review of the internal controls of the Company, the
Manager, registrar, depositary and custodian. Further details are
provided in the Audit and Risk Committee Report.
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.
Schroder AsiaPacific Fund plc 41
Nomination Committee Report
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Selection
Annual
review of
succession
policy
Annual
evaluation
Application
of succession
policy
Induction
Selection
and ongoing assessment of Directors
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 plans. All Directors are members of the committee. Keith Craig is the chair of the committee. Its terms
of reference are available on the Company’s webpages, www.schroders.co.uk/asiapacific.
Approach
The committee’s key roles and responsibilities are set out in the table below.
Selection and induction Board evaluation and Directors’ fees Succession
• The committee prepares a job
specification for each role, and an
independent recruitment firm is
appointed. For the Chairman and the
chairs of committees, the committee
considers current Board members too.
• A job specification outlines the
knowledge, professional skills, personal
qualities and experience requirements.
• Potential candidates are assessed
against the Company’s diversity policy.
• The committee discusses the long list,
invites a number of candidates for
interview and makes a recommendation
to the Board.
• The committee reviews the induction of
new Directors.
• Any new Director will be proposed for
election by shareholders at the rst
AGM following appointment.
• The committee assesses each Director
annually, with the SID leading the
evaluation of the Chairman, and will use
an external Board evaluator every three
years.
• The evaluation focuses on whether
each Director continues to demonstrate
commitment to their role and provides
a valuable contribution to the Board
during the year, taking into account
time commitment, independence,
conflicts and training needs.
• Following the evaluation, the committee
provides a recommendation to
shareholders with respect to the annual
re-election of Directors at the AGM.
• All Directors retire at the AGM and their
re-election is subject to shareholder
approval.
• The committee reviews Directors’
fees, taking into account comparative
data and reports to shareholders.
No Directors are involved in making
recommendations with respect to their
own remuneration.
• Any proposed changes to the
remuneration policy for Directors
is discussed and reported to
shareholders.
• The Board’s succession policy is that
Directors’ tenure, including that of
the Chairman, will be for no longer
than nine years, except in exceptional
circumstances and that each Director
will be subject to annual re-election at
the AGM.
• The committee reviews the Board’s
current and future needs at least
annually. Should any need be identified
the committee will initiate the selection
process.
• The committee oversees the handover
process for retiring Directors.
42 Schroder AsiaPacific Fund plc
Nomination Committee Report
continued
Application during the year
Selection and induction Board evaluation and Directors’ fees Succession
• The committee noted that following his
appointment Rupert Hogg engaged in
an induction programme.
• Rupert Hogg will be proposed for
election as a Director at the AGM to
be held on 31 January 2024, as set out
in resolution 5 of the notice of annual
general meeting.
• The annual Board and committee
evaluation process was undertaken
during the year, and the evaluation
concluded in September 2023. This
year the evaluation was undertaken
internally by the completion of
questionnaires and individual
discussions by the Chairman with each
Director. An externally facilitated review
is conducted every three years. The
next external review is due to be carried
out in 2024.
• The committee also reviewed each
Directors time commitment and
independence by reviewing a complete
list of appointments, including pro
bono not for profit roles, to ensure
that each Director remained free
from conflict and had sufficient time
available to discharge each of their
duties effectively. The SID led the review
of these matters in respect of the
Chairman. All Directors were considered
to be independent in character and
judgement.
• The committee considered each
Director’s contributions, and noted that
in addition to extensive experience
as professionals and non-executive
Directors, each Director had valuable
skills and experience, as detailed in their
biographies on pages 32 and 33.
• Based on its assessment the committee
provided individual recommendations
for each Director’s re-election.
• The committee reviewed Directors’
fees, using information on fees paid
to directors of other investment trusts
managed by Schroders and peer group
companies, and recommended that
Directors’ fees should be increased
with effect from 1 October 2023 for
the year ending 30 September 2024.
Further details are provided in the
Remuneration Report.
• Rupert Hogg was recommended
to the Board for appointment as a
non-executive Director following the
engagement of Cornforth Consulting
to identify potential candidates for a
new board appointment. Cornforth
Consulting had no connection with the
Company or any of the Directors.
• The committee reviewed the succession
policy and agreed it was still fit for
purpose.
• James Williams was appointed as
Chairman on 3 February 2021 and it
was announced that he would serve
a maximum of five years in that role
bringing continuity and experience
to the position having served on
the Board since 2014. In light of the
Chairman now having served for nine
years as a Director, his tenure and
continued independence were reviewed
by the Nomination Committee. The
Nomination Committee subsequently
concluded that it was appropriate
that James Williams continue to serve
as Chairman and, notwithstanding
the length of tenure, he remains
independent of the Manager in
character and judgment. In forming this
conclusion, the Nomination Committee
recognised the Chairman’s track record
overseeing the Company through a
challenging investment cycle which
included the COVID-19 pandemic and
the negotiation of a reduction in the
management fee, effective from 1 April
2023. The Nomination Committee
also considered the importance of
maintaining continuity on the Board
following the appointment of Rupert
Hogg as a Director on 1 May 2023 and
as Keith Craig will step down from the
Board on 31 January 2024.
Recommendations made to, and approved by, the Board:
• That Rupert Hogg be appointed as a non-executive Director with effect from 1 May 2023.
• That Director’s fees would be increased with effect from 1 October 2023.
• That all Directors remain independent, 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.
Schroder AsiaPacific Fund plc 43
Directors’ Remuneration Report
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Introduction
The following remuneration policy is currently in force and is
subject to a binding vote every three years unless any changes
are proposed to the policy in the meantime. The next vote would
ordinarily be at the AGM to be held in 2026. However, it is proposed
that a change is made to the remuneration policy, details of which
are provided below, and a resolution to approve the revised policy
will be proposed at the forthcoming AGM. 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 1 February 2023 when the policy was last voted
on by shareholders, 99.87% of the votes cast (including votes cast
at the Chairman’s discretion) in respect of approval of the Directors’
remuneration policy were in favour, while 0.13% were against.
70,007 votes were withheld.
At the AGM held on 1 February 2023, 99.85% of the votes cast
(including votes cast at the Chairman’s discretion) in respect of
approval of the Directors’ remuneration report for the year ended
30 September 2022 were in favour, while 0.15% were against.
76,993 votes were withheld.
Directors’ remuneration policy
Following review of the Remuneration Policy by the Nomination
Committee, it was concluded to propose a change to the overall
remuneration structure to enable the SID to receive a higher rate
fee than the other Directors. Under the existing policy only the
Chairman and Chair of the Audit and Risk Committee are entitled to
receive a higher fee to reflect their additional responsibilities. The
Nomination Committee considered that the current remuneration
structure did not adequately recognise the additional time
commitment and responsibilities of the SID.
The proposed changes to the policy are highlighted in bold text in
the policy set out below.
The determination of the Directors’ fees is a matter dealt with by the
Nomination Committee and the Board.
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 limit of fees set out in the Company’s articles of
incorporation (currently £300,000). Any increase in the level set
out therein requires approval by the Board and the Company’s
shareholders.
The Chairman of the Board, and the Chair of the Audit and Risk
Committee and the Senior Independent Director each receive
fees at a higher rate than the other Directors to reflect their
additional responsibilities. The fees payable to Directors are not
performance related. They are set at a level to recruit and retain
individuals of sufficient calibre, with the level of knowledge,
experience and expertise necessary to promote the success of the
Company in reaching its short and long-term strategic objectives.
The Board and its committees exclusively comprise non- executive
Directors. No director past or present has an entitlement to a
pension from the Company, and the Company has not, 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, although
Directors have a letter of appointment. Directors do not receive
exit payments and are not provided with any compensation for loss
of office. No other payments are made to Directors other than the
reimbursement of reasonable out-of-pocket expenses incurred in
attending to the Company’s business.
Implementation of policy
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during
normal business hours and during the AGM at the location of such
meeting.
The Board did not seek the views of shareholders in setting this
remuneration policy. Any comments on the remuneration policy
received from shareholders would be considered on a case-by-case
basis.
As the Company does not have any employees, no employee pay
and employment conditions were taken into account when setting
this remuneration policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into account research
from third parties on the fee levels of directors of peer group
companies, as well as industry norms and factors affecting the time
commitment expected of the Directors. New directors are subject to
the provisions set out in this remuneration policy.
Directors’ annual report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 30 September 2023.
44 Schroder AsiaPacific Fund plc
Directors’ Remuneration Report
continued
Remuneration Report for the year ended 30 September 2023
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 2023 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 16.
Fees Taxable benets
1
Total
Change in annual fee over years
ended 30 September
Director
2023
£
2022
£
2023
£
2022
£
2023
£
2022
£
2023
%
2022
%
2021
%
James Williams (Chairman) 45,000 45,000 3,093 484 48,093 45,484 5.7 13.3 31.5
Keith Craig 33,000 33,000 762 539 33,762 33,539 0.7 9.8 1.5
Julia Goh
2
40,000 35,550 2,043 993 42,043 36,543 15.1 n/a n/a
Vivien Gould 33,000 33,000 3,258 1,568 36,258 34,568 4.9 8.3 (1.9)
Rosemary Morgan
3
— 13,443 — 1,594 — 15,037 n/a n/a 0.6
Martin Porter 33,000 33,000 763 484 33,763 33,484 0.8 10.7 0.5
Rupert Hogg
4
13,750 — 439 — 14,189 — n/a n/a n/a
197,750 192,993 10,358 5,662 208,108 198,655
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 as a Director on 25 October 2021 and Chair of the Audit and Risk Committee on 1 February 2022.
3
Retired from the Board on 1 February 2022.
4
Appointed as a Director on 1 May 2023.
The information in the above table has been audited.
Consideration of matters relating to Directors’ remuneration
Directors’ remuneration was last reviewed by the Board in September 2023. The members of the Board at the time that remuneration levels
were considered were as set out on pages 32 and 33. Although no external advice was sought in considering the levels of Directors’ fees,
information on fees paid to directors of investment trusts managed by Schroders and peer group companies provided by the Manager and
corporate broker was taken into consideration.
Following annual review, the Board agreed that fees should be increased with effect from 1 October 2023 to the following levels: Chairman:
£49,000, chair of the Audit and Risk Committee: £44,000, Director: £36,000. Subject to the passing of resolution 4, as set out in the notice
of meeting, at the AGM on 31 January 2024 it is proposed, to recognise the additional time commitment and responsibilities of the SID that,
following the AGM, the fee paid to the SID will increase to £40,000. The Board will continue to review fee levels on an annual basis.
Expenditure by the Company on remuneration and distributions to shareholders
The table below compares the remuneration payable to Directors to distributions paid to shareholders during the year under review and the
prior financial year. In considering these figures, shareholders should take into account the Company’s investment objective.
Year ended
30 September
2023
Year ended
30 September
2022 Change
£000 £000 %
Remuneration payable to Directors 208 199 4.5
Distributions paid to shareholders
– Dividends paid during the year 19,030 15,922
– Share buy backs 29,775 21,653
Total distributions paid to shareholders 48,805 37,575 29.9
The information in the above table has been audited.
Schroder AsiaPacific Fund plc 45
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
10 year performance of the share price total return versus the MSCI All Countries Asia
ex Japan Index, with net dividends reinvested, in sterling terms
50
100
150
200
250
300
Benchmark total return
Share price total return
Sept-13 Sept-14 Sept-15 Sept-16 Sept-17 Sept-18 Sept-19 Sept-20 Sept-21 Sept-22 Sept-23
Source: Morningstar. Rebased to 100 at 30 September 2013.
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.
The MSCI All Countries Asia ex Japan Index with net dividends reinvested, sterling adjusted, has been chosen as an appropriate comparison,
as it comprises companies within the Company’s primary investment objective.
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 1p each
30 September
2023
Ordinary
shares
of 1p each
30 September
2022
James Williams 20,000 15,125
Keith Craig 12,581 12,581
Julia Goh 15,000 15,000
Vivien Gould 5,000 5,000
Rupert Hogg* — n/a
Martin Porter 20,000 10,000
*Rupert Hogg was appointed as a Director on 1 May 2023.
The information in the above table has been audited. Following the year end, Rupert Hogg purchased 2,100 shares. There have been no
further changes.
James Williams
Chairman
5 December 2023
46 Schroder AsiaPacific Fund plc
Statement of Directors’ Responsibilities
in respect of the Annual Report and Accounts
The Directors are responsible for preparing the annual report, and
the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising Financial Reporting Standard
(FRS) 102 “The Financial Reporting Standard applicable in the UK
and Republic of Ireland” and applicable law). Under company law
the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs
of the Company and of the return or loss of the Company for that
period. In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether applicable UK Accounting Standards, comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the financial statements;
• notify the Company’s shareholders in writing about the use of
disclosure exemptions in FRS 102, used in the preparation of the
financial statements; and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Manager is responsible for the maintenance and integrity of the
webpage dedicated to the Company.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
Directors’ Statement
Each of the Directors, whose names and functions are listed on
pages 32 and 33, confirm that to the best of their knowledge:
• the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law), give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
• the Strategic Report contained in the report and accounts
includes a fair review of the development and performance of
the business and the position of the Company, together with a
description of the principal and emerging risks that it faces; and
• the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
On behalf of the Board
James Williams
Chairman
5 December 2023
Financial
47
Financial
Independent Auditor’s Report 48
Income Statement 54
Statement of Changes in Equity 55
Statement of Financial Position 56
Notes to the accounts 57
Independent Auditor’s Report
Schroder AsiaPacific Fund plc48
Opinion
We have audited the financial statements of Schroder AsiaPacific Fund plc (“the Company”) for the year ended 30 September 2023 which
comprise the Income Statement, the Statement of Changes in Equity, the Statement of Financial Position and the related notes 1 to 20,
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 2023 and of its profit 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 engagement 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 2024 which is at
least 12 months from the date these financial statements are 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 calculate the revenue forecast and the liquidity assessment and determined, through testing of
the methodology and calculations, that the methods, inputs and assumptions utilised are appropriate to be able to make an assessment
for the Company.
• Consideration of the mitigating factors included in the revenue forecast 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.
• 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.
• 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 uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for the period to 31 December 2024. 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 49
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
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 £8.51m 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 page 29 in the principal and emerging risks and uncertainties 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
Risk of incomplete or inaccurate
revenue recognition, including the
classification of special dividends as
revenue or capital items in the Income
Statement (refer to the Audit and Risk
Committee Report set out on pages 37 to
39 and the accounting policy set out on
pages 57 and 58).
The total revenue for the year to
30 September 2023 was £24.02 million
(2022: £24.67 million), consisting primarily
of dividend income from listed equity
investments.
The Company received special dividends
amounting to £1.17m million (2022:
£0.67 million), of which £0.87m were
classified as revenue and £0.30m were
classified as capital (2022: £0.67 million
classified as revenue and £nil classified as
capital).
We performed the following procedures:
We obtained an understanding of the
Manager’s and Administrator’s processes
and controls surrounding revenue
recognition and classification of special
dividends by performing walkthrough
procedures.
For all dividends received and accrued,
we recalculated the dividend income by
multiplying the investment holdings at
the ex-dividend date, traced from the
accounting records, by the dividend per
share, which was agreed to an independent
data vendor. We also agreed all exchange
rates to an external source where
applicable and, for a sample of dividends
received and accrued dividends, we agreed
the amounts to bank statements.
The results of our procedures identified no
material misstatements in relation to the
risk of incomplete or inaccurate revenue
recognition, including classification of
special dividends as revenue or capital
items in the Income Statement.
Independent Auditor’s Report
continued
Schroder AsiaPacific Fund plc50
Risk Our response to the risk
Key observations communicated to the
Audit and Risk Committee
The investment income receivable by the
Company during the year directly affects
the Company’s revenue return. There is a
risk of incomplete or inaccurate recognition
of revenue through the failure to recognise
proper income entitlements or to apply an
appropriate accounting treatment.
In addition to the above, the Directors
may be required to exercise judgement in
determining whether income receivable
in the form of special dividends should
be classified as ‘revenue’ or ‘capital’ in the
Income Statement.
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 accrued dividends, we reviewed
the investee Company announcements to
assess whether the entitlement arose prior
to 30 September 2023.
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 seven special dividends,
amounting to £1.17 million, were received
during the year. We tested a sample
of five special dividends, by assessing
the appropriateness of classification by
reviewing the underlying rationale of the
distribution.
Risk of Incorrect valuation or
ownership of the investment portfolio
(refer to the Audit and Risk Committee
Report set out on pages 37 to 39 and the
accounting policy set out on pages 57 and
58).
The valuation of the investment portfolio
at 30 September 2023 was £874.53 million
(2022: £882.80 million) consisting of listed
equity investments.
The valuation of investments held in the
investment portfolio is the key driver of
the Company’s net asset value and total
return. Incorrect investment pricing, or
failure to maintain proper legal title of the
investments held by the Company, could
have a significant impact on the portfolio
valuation and the return generated for
shareholders.
The fair value of listed investments is
determined using quoted market bid prices
at close of business on the reporting date.
We performed the following procedures:
We obtained an understanding of the
Administrator’s processes and controls
surrounding investment title and the
pricing of listed equity investments by
performing walkthrough procedures.
For all investments in the portfolio, we
compared the market prices and exchange
rates applied to an independent pricing
vendor and recalculated the investment
valuations as at the year end.
We reviewed the prices for all investments
in the portfolio to identify prices that have
not changed within five business days from
year end to verify whether the listed price is
a valid fair value.
We agreed the Company’s investments to
the independent confirmations received
directly from the Company’s Custodian and
Depositary as at 30 September 2023.
The results of our procedures identified no
material misstatements in relation to the
risk of incorrect valuation or ownership of
the investment portfolio.
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 £8.51 million (2022: £8.78 million), which is 1% (2022: 1%) of shareholders’ funds. We
believe that shareholders’ funds provides us with materiality aligned to the key measure of the Company’s performance.
Schroder AsiaPacific Fund plc 51
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
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% (2022: 75%) of our planning materiality, namely £6.38 million (2022: £6.59 million). 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 £1.04 million (2022: £1.07 million), 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 £0.43 million
(2022: £0.44 million), 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.
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:
Independent Auditor’s Report
continued
Schroder AsiaPacific Fund plc52
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 30;
• 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 30;
• 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 30;
• Directors’ statement on fair, balanced and understandable set out on page 46;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 27 to 29;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
page 29 and;
• The section describing the work of the audit and risk committee set out on pages 37 to 39.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set out on page 46, 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, 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 United Kingdom Generally Accepted Accounting Practice, 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.
Schroder AsiaPacific Fund plc 53
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
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 five years, covering the years ending
30 September 2019 to 30 September 2023.
• 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
5 December 2023
Income Statement
for the year ended 30September 2023
Schroder AsiaPacific Fund plc54
2023 2022
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gains/(losses) on investments held at fair value
through prot or loss 2 – 9,601 9,601 – (154,731) (154,731)
Net foreign currency gains/(losses) – 293 293 – (2,936) (2,936)
Income from investments 3 23,863 304 24,167 24,673 – 24,673
Other interest receivable and similar income 3 153 – 153 12 – 12
Gross return/(loss) 24,016 10,198 34,214 24,685 (157,667) (132,982)
Investment management fee 4 (1,552) (4,656) (6,208) (1,728) (5,185) (6,913)
Administrative expenses 5 (1,409) – (1,409) (1,437) – (1,437)
Net return/(loss) before nance costs and
taxation 21,055 5,542 26,597 21,520 (162,852) (141,332)
Finance costs 6 (231) (690) (921) (48) (145) (193)
Net return/(loss) before taxation 20,824 4,852 25,676 21,472 (162,997) (141,525)
Taxation 7 (1,834) (1,939) (3,773) (1,799) 1,145 (654)
Net return/(loss) after taxation 18,990 2,913 21,903 19,673 (161,852) (142,179)
Return/(loss) per share 8 12.06p 1.85p 13.91p 12.04p (99.08) p (87.04) p
The “Total” column of this statement is the profit and loss account of the Company. The “Revenue” and “Capital” columns represent
supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items
of other comprehensive income, and therefore the net return 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 57 to 70 form an integral part of these accounts.
.
Statement of Changes in Equity
for the year ended 30September 2023
Schroder AsiaPacific Fund plc 55
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Note
Called-up
share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Warrant
exercise
reserve
£’000
Share
purchase
reserve
£’000
Capital
reserves
£’000
Revenue
reserve
£’000
Total
£’000
At 30 September 2021 16,486 100,956 3,658 8,704 16,110 894,363 17,664 1,057,941
Repurchase and
cancellation of the
Company’s own shares (406) – 406 – (16,110) (5,543) – (21,653)
Net (loss) /return after
taxation – – – – – (161,852) 19,673 (142,179)
Dividend paid in the year 9 – – – – – – (15,922) (15,922)
At 30 September 2022 16,080 100,956 4,064 8,704 – 726,968 21,415 878,187
Repurchase and
cancellation of the
Company’s own shares (600) – 600 – – (29,775) – (29,775)
Net return after taxation – – – – – 2,913 18,990 21,903
Dividend paid in the year 9 – – – – – – (19,030) (19,030)
At 30 September 2023 15,480 100,956 4,664 8,704 – 700,106 21,375 851,285
The notes on pages 57 to 70 form an integral part of these accounts.
Statement of Financial Position
at 30 September 2023
Schroder AsiaPacific Fund plc56
Note
2023
£’000
2022
£’000
Fixed assets
Investments held at fair value through prot or loss 10 874,534 882,801
Current assets
Debtors 11 2,812 7,920
Cash at bank and in hand 11 6,785 11,343
9,597 19,263
Current liabilities
Creditors: amounts falling due within one year 12 (28,068) (19,964)
Net current liabilities (18,471) (701)
Total assets less current liabilities 856,063 882,100
Non current liabilities
Deferred taxation 13 (4,778) (3,913)
Net assets 851,285 878,187
Capital and reserves
Called-up share capital 14 15,480 16,080
Share premium 15 100,956 100,956
Capital redemption reserve 15 4,664 4,064
Warrant exercise reserve 15 8,704 8,704
Capital reserves 15 700,106 726,968
Revenue reserve 15 21,375 21,415
Total equity shareholders’ funds 851,285 878,187
Net asset value per share 16 549.92p 546.13p
These accounts were approved and authorised for issue by the Board of Directors on 5 December 2023 and signed on its behalf by:
James Williams
Chairman
The notes on pages 57 to 70 form an integral part of these accounts.
Registered in England and Wales as a public company limited by shares
Company registration number: 03104981
Notes to the accounts
for the year ended 30 September 2023
Schroder AsiaPacific Fund plc 57
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
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 July 2022. 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 2024, 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 29.
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 participant’s 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 2022.
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 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.
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”.
(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.
Notes to the accounts
continued
Schroder AsiaPacific Fund plc58
1. Accounting Policies continued
(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 61.
(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 the transaction price and subsequently at amortised cost. They are recorded at the
proceeds received net of direct issue costs.
(h) Taxation
The tax charge for the year is based on amounts expected to be received or paid.
Deferred tax is provided on all timing differences that have originated but not reversed by the accounting date.
Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is
probable that taxable profits will be available against which those timing differences can be utilised.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to reverse,
based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured on an undiscounted basis.
(i) Value added tax (“VAT”)
Expenses are disclosed inclusive of any related irrecoverable VAT.
(j) Foreign currency
In accordance with FRS 102, the Company is required to determine 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 16:00 hours on the accounting date.
(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”.
Schroder AsiaPacific Fund plc 59
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
2. Gains/(losses) on investments held at fair value through profit or loss
2023
£’000
2022
£’000
Gains on sales of investments based on historic cost 11,251 30,894
Amounts recognised in investment holding gains and losses in the previous year in respect of
investments sold in the year (8,012) (39,004)
Gains/(losses) on sales of investments based on the carrying value at the previous balance sheet date 3,239 (8,110)
Net movement in investment holding gains and losses 6,362 (146,621)
Gains/(losses) on investments held at fair value through prot or loss 9,601 (154,731)
3. Income
2023
£’000
2022
£’000
Income from investments:
Overseas dividends 22,761 24,091
UK dividends 1,102 582
23,863 24,673
Other interest receivable and similar income:
Deposit interest 153 12
24,016 24,685
Capital:
Special dividend allocated to capital 304 –
4. Investment management fee
2023 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Management fee 1,552 4,656 6,208 1,728 5,185 6,913
The basis for calculating the investment management fee is set out in the Report of the Directors on page 34.
5. Administrative expenses
2023 2022
Revenue Capital
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Administration expenses 1,010 – 1,010 1,052 – 1,052
Directors’ fees
1
198 – 198 193 – 193
Company secretarial fee 150 – 150 150 – 150
Auditor’s remuneration for audit services 51 – 51 42 – 42
1,409 – 1,409 1,437 – 1,437
1
Full details are given in the remuneration report on pages 43 to 45
6. Finance costs
2023 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest on bank loans and overdrafts 231 690 921 48 145 193
Notes to the accounts
continued
Schroder AsiaPacific Fund plc60
7. Taxation
(a) Analysis of tax charge for the year
2023 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Irrecoverable overseas withholding tax 1,834 – 1,834 1,799 – 1,799
Overseas capital gains tax – 1,939 1,939 – (1,145) (1,145)
Taxation for the year 1,834 1,939 3,773 1,799 (1,145) 654
The Company has no corporation tax liability for the year ended 30 September 2023 (2022: 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 lower (2022: higher) than the Company’s applicable rate of corporation tax for the year of 22% (2022: 19%) .
The factors affecting the current tax charge for the year are as follows:
2023 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net return/(loss) before taxation 20,824 4,852 25,676 21,472 (162,997) (141,525)
Net return/(loss) before taxation multiplied by
the Company’s applicable rate of corporation
tax for the year of 22% (2022: 19%)
4,581
1,068
5,649
4,080
(30,970)
(26,890)
Eects of:
Capital returns on investments – (2,177) (2,177) – 29,957 29,957
Income not chargeable to corporation tax (5,250) (67) (5,317) (4,670) – (4,670)
Irrecoverable overseas withholding tax 1,834 – 1,834 1,799 – 1,799
Provision for overseas capital gains tax – 1,939 1,939 – (1,145) (1,145)
Unrelieved expenses 669 1,176 1,845 590 1,013 1,603
Taxation for the year 1,834 1,939 3,773 1,799 (1,145) 654
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £19,912,000 (2022: £17,815,000) based on a main rate of corporation tax of 25%
(2022: 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 per share
2023
£’000
2022
£’000
Revenue return 18,990 19,673
Capital return/(loss) 2,913 (161,852)
Total return/(loss) 21,903 (142,179)
Weighted average number of shares in issue during the year 157,474,894 163,346,606
Revenue return per share 12.06p 12.04p
Capital return/(loss) per share 1.85p (99.08) p
Total return/(loss) per share 13.91p (87.04) p
Schroder AsiaPacific Fund plc 61
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
9. Dividends
Dividends paid and proposed
2023
£’000
2022
£’000
2022 nal dividend of 12.00p (2021: 9.70p) paid out of revenue prots 19,030 15,922
2023
£’000
2022
£’000
2023 nal dividend proposed of 12.00p (2022: 12.00p) to be paid out of revenue prots 18,416 19,296
The 2022 final dividend amounted to £19,296,000. However the amount actually paid was £19,030,000, as shares were repurchased and
cancelled after the accounting date, but prior to the dividend record date.
The proposed final dividend amounting to £18,416,000 (2022: £19,296,000) 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 £18,990,000 (2022: £19,673,000) .
10. Investments held at fair value through profit or loss
2023
£’000
2022
£’000
Opening book cost 758,095 758,657
Opening investment holding gains 124,706 310,331
Opening fair value 882,801 1,068,988
Purchases at cost 168,987 199,803
Sales proceeds (186,855) (231,259)
Gains/(losses) on investments held at fair value 9,601 (154,731)
Closing fair value 874,534 882,801
Closing book cost 751,478 758,095
Closing investment holding gains 123,056 124,706
Closing fair value 874,534 882,801
Sales proceeds amounting to £186,855,000 (2022: £231,259,000) were receivable from disposals of investments in the year. The book cost of
these investments when they were purchased was £175,604,000 (2022: £200,364,000) . 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:
2023
£’000
2022
£’000
On acquisitions 282 268
On disposals 332 384
614 652
Notes to the accounts
continued
Schroder AsiaPacific Fund plc62
11. Current assets
Debtors
2023
£’000
2022
£’000
Securities sold awaiting settlement 893 5,868
Dividends and interest receivable 1,648 1,778
Taxation recoverable 236 258
Other debtors 35 16
2,812 7,920
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.
12. Current liabilities
Creditors: amounts falling due within one year
2023
£’000
2022
£’000
Bank loan 24,579 13,437
Securities purchased awaiting settlement 1,422 4,379
Other creditors and accruals 2,067 2,064
Bank overdraft – 84
28,068 19,964
The bank loan comprises US$30 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 67.
The bank loan at the prior year end comprised US$15 million drawn down on the Company’s previous £75 million multicurrency credit facility
with Bank of Nova Scotia.
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 arises on disposal
of the underlying asset.
14. Called-up share capital
2023
£’000
2022
£’000
Ordinary shares allotted, called up and fully paid:
Ordinary shares of 10p each:
Opening balance of 160,800,716 (2022: 164,860,716) shares 16,080 16,486
Repurchase and cancellation of 6,000,000 (2022: 4,060,000) shares (600) (406)
Closing balance of 154,800,716 (2022: 160,800,716) shares 15,480 16,080
During the year, the Company made market purchases of 6,000,000 of its own shares, nominal value £600,000, for cancellation, representing
3.73% of the shares outstanding at the beginning of the year. The total consideration paid for these shares amounted to £29,775,000. The
reason for these purchases was to seek to manage the volatility of the share price discount to NAV per share.
Schroder AsiaPacific Fund plc 63
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
15. Reserves
Capital reserves
Year ended 30 September 2023
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 2022 100,956 4,064 8,704 – 606,111 120,857 21,415
Gains on sales of investments based on the
carrying value at the previous balance sheet date – – – – 3,239 – –
Net movement in investment holding gains and losses – – – – – 6,362 –
Transfer on disposal of investments – – – – 8,012 (8,012) –
Realised exchange losses on cash and short-term deposits – – – – (569) – –
Exchange gains on the credit facility – – – – – 862 –
Overseas capital gains tax – – – – (606) (1,333) –
Special dividend allocated to capital – – – – 304 – –
Management fee, administrative expenses and nance
costs allocated to capital – – – – (5,346) – –
Repurchase and cancellation of the Company’s own shares – 600 – – (29,775) – –
Dividend paid – – – – – – (19,030)
Retained revenue for the year – – – – – – 18,990
At 30 September 2023 100,956 4,664 8,704 – 581,370 118,736 21,375
Capital reserves
Year ended 30 September 2022
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 nance
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
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 buy backs. 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.
6
This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised.
An analysis has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the
Company’s own shares) and those that are unrealised.
7
The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.
Notes to the accounts
continued
Schroder AsiaPacific Fund plc64
16. Net asset value per share
2023 2022
Net assets attributable to shareholders (£’000) 851,285 878,187
Shares in issue at the year end 154,800,716 160,800,716
Net asset value per share 549.92p 546.13p
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 34. 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. As at the year end, 30 September 2023, the Company held 13,038,886 shares in Schroder Asian Discovery Fund Class Z Accumulation
GBP, with a market value of £14,082,000. During the year, the Company sold 4,121,977 shares and generated total proceeds of £4,407,000
from the sales.
The management fee payable in respect of the year ended 30 September 2023 amounted to £6,208,000 (2022: £6,913,000) , of which
£1,485,000 (2022: £1,593,000) was outstanding at the year end. The company secretarial fee payable in respect of the year ended
30 September 2023 amounted to £150,000 (2022: £150,000) , of which £38,000 (2022: £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 44 and details of Directors’
shareholdings are given in the Directors’ Remuneration Report on page 45. Details of transactions with the Manager are given in note 17
above. There have been no other transactions with related parties during the year (2022: 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 57 and 1(g) on page 58.
At 30 September 2023, the Company’s investment portfolio was categorised as follows:
2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investments in equities and equity linked securities 874,534 – – 874,534
Total 874,534 – – 874,534
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
There have been no transfers between Levels 1, 2 or 3 during the year (2022: nil) .
Schroder AsiaPacific Fund plc 65
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
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.
Notes to the accounts
continued
Schroder AsiaPacific Fund plc66
20. Financial instruments’ exposure to risk and risk management policies continued
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.
2023
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 201 392 445 629 – 98 66 560 1,492 3,883
Current liabilities
Creditors: amounts falling due
within one year – (24,602) (67) (43) – (10) – (22) (1,349) (26,093)
Non current liabilities – – – – – – (4,778) – – (4,778)
Foreign currency exposure
on net monetary items 201 (24,210) 378 586 – 88 (4,712) 538 143 (26,988)
Investments held at fair value
through prot or loss
1
227,912 32,412 99,840 129,941 67,562 16,652 146,942 37,363 58,947 817,571
Total net foreign currency
exposure 228,113 8,202 100,218 130,527 67,562 16,740 142,230 37,901 59,090 790,583
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) – – (88) (17,448)
Non current liabilities – – – – – (3,867) – – (3,867)
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 prot 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
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 effect on capital return below is predominantly due to the change in net monetary liabilities
and the effect on income return is predominantly due to change in dividends, or revenue items that were subject to foreign exchange rate
movement. The sensitivity analysis is based on the Company’s monetary currency financial instruments held at each accounting date and
assumes a 10% (2022: 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:
2023
£’000
2022
£’000
Income Statement – return after taxation
Revenue return 2,070 2,224
Capital return (2,931) (558)
Total return after taxation (861) 1,666
Net assets (861) 1,666
Schroder AsiaPacific Fund plc 67
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
20. Financial instruments’ exposure to risk and risk management policies continued
Conversely if sterling had strengthened by 10% this would have had the following effect:
2023
£’000
2022
£’000
Income Statement – return after taxation
Revenue return (2,070) (2,224)
Capital return 2,931 558
Total return after taxation 861 (1,666)
Net assets 861 (1,666)
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:
2023
£’000
2022
£’000
Exposure to oating interest rates:
Cash at bank and in hand 6,785 11,343
Creditors: bank overdraft – (84)
Creditors: amounts falling due within one year – borrowings on the credit facility (24,579) (13,437)
Net exposure (17,794) (2,178)
Sterling cash deposits at call earn interest at floating rates based on Sterling Overnight Index Average (“SONIA”) rates, (2022: SONIA) .
The Company has arranged a £75 million credit facility with Bank of Nova Scotia, effective from 23 June 2023. 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 2023, the Company had
drawn down US$30 million (£24.6 million) for a one month period, at an interest rate of 6.61% per annum.
At the prior year end, the Company had drawn down US$15 million (£13.4 million) on the preceding facility with Bank of Nova Scotia.
The Company also has a £30 million overdraft facility with HSBC Bank plc, secured by a floating charge.
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:
2023
£’000
2022
£’000
Maximum debit interest rate exposure during the year – debt (17,803) (7,592)
Maximum credit interest rate exposure during the year – net cash 10,933 17,531
Notes to the accounts
continued
Schroder AsiaPacific Fund plc68
20. Financial instruments’ exposure to risk and risk management policies continued
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.5% (2022: 1.5%) 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.
2023 2022
1.5% increase
in rate
£’000
1.5% decrease
in rate
£’000
1.5% increase
in rate
£’000
1.5% decrease
in rate
£’000
Income statement – return after taxation
Revenue return 10 (10) 119 (119)
Capital return (277) 277 (152) 152
Total return after taxation (267) 267 (33) 33
Net assets (267) 267 (33) 33
Given the increase in UK interest rates, the interest rate sensitivity has been updated to 1.5%. The prior year disclosure has been updated
to 1.5% to show a direct comparison in the sensitivity. In the prior year report, the sensitivity was calculated using 1.0%, which was
representative of the market at 30 September 2022. As disclosed in the prior year annual report, an increase of 1.0% reduced total return
after taxation by £22,000 (a decrease of 1.0% 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:
2023
£’000
2022
£’000
Investments held at fair value through prot or loss 874,534 882,801
The above data is broadly representative of the exposure to market price risk during the year.
Concentration of exposure to market price risk
An analysis of the Company’s investments is given on page 15. This shows that the portfolio comprises investments trading in Asian
countries. Accordingly there is a concentration of exposure to that region.
Schroder AsiaPacific Fund plc 69
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
20. Financial instruments’ exposure to risk and risk management policies continued
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 25%
(2022: 25%) 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.
2023 2022
25% increase
in fair value
£’000
25% decrease
in fair value
£’000
25% increase
in fair value
£’000
25% decrease
in fair value
£’000
Income statement – return after taxation
Revenue return (328) 328 (386) 386
Capital return 217,650 (217,650) 219,542 (219,542)
Total return after taxation and net assets 217,332 (217,332) 219,156 (219,156)
Percentage change in net asset value 25.5% (25.5% ) 25.0% (25.0%)
Based on observation of current market conditions, the market price risk sensitivity has been updated to 25%. The prior year disclosure has
been updated to 25% to show a direct comparison in the sensitivity. In the prior year report, the sensitivity was calculated using 20%, which
was representative of the market at 30 September 2022. As disclosed in the prior year annual report, an increase of 20% increased total
return after taxation by £175,324,000 (a decrease of 20% had an equal and opposite effect).
(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 managed as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet 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
2023
£’000
Three months
or less
2022
£’000
Creditors: amounts falling due within one year
Bank loan – including interest 24,613 13,473
Securities purchased awaiting settlement 1,422 4,379
Other creditors and accruals 2,067 2,064
Bank overdraft – 84
28,102 20,000
(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.
Notes to the accounts
continued
Schroder AsiaPacific Fund plc70
20. Financial instruments’ exposure to risk and risk management policies continued
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.
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:
2023
£’000
2022
£’000
Debt
Bank loan 24,579 13,437
Equity
Called-up share capital 15,480 16,080
Reserves 835,805 862,107
851,285 878,187
Total debt and equity 875,864 891,624
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.
2023
£’000
2022
£’000
Borrowings used for investment purposes, less cash 17,794 2,178
Net assets 851,285 878,187
Gearing 2.1% 0.2%
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.
Other
information
(unaudited)
7171
Other Information
Annual General Meeting – Recommendations 72
Notice of Annual General Meeting 73
Explanatory Notes to the Notice of Meeting 74
Definitions of Terms and Alternative
Performance Measures 76
Information about the Company 78
Schroder AsiaPacific Fund plc72
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will be held
on Wednesday, 31 January 2024 at 12.00 noon. The formal Notice of
Meeting is set out on page 73.
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 concerns the Directors’
Remuneration Report, on pages 43 to 45 and Resolution 4 is a
binding vote to approve the amended Directors’ Remuneration
Policy as set out on page 43.
Resolutions 5 to 9 invite shareholders to elect or re-elect each of
the Directors for another year, following the recommendations
of the Nomination Committee, set out on pages 41 and 42 (their
biographies are set out on pages 32 and 33). 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 37 to 39.
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 £1,534,657 (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 £1,534,657 (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 2025 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 2023, the Company was granted
authority to make market purchases of up to 23,850,695 ordinary
shares of 10p each for cancellation or holding in treasury. 5,005,000
shares have been bought back and cancelled under this authority
and the Company therefore has remaining authority to purchase
up to 18,845,695 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 2024 AGM will lapse at the
conclusion of the AGM in 2025 unless renewed, varied or revoked
earlier.
Resolution 15: notice period for general meetings
(special resolution)
Resolution 15 set out in the Notice of AGM is a special resolution
and will, if passed, allow the Company to hold general meetings
(other than annual general meetings) on a minimum notice
period of 14 clear days, rather than 21 clear days as required by
the Companies Act 2006. The approval will be effective until the
Company’s next AGM to be held in 2025. The Directors will only call
general meetings on 14 clear days’ notice when they consider it to
be in the best interests of the Company’s shareholders and will only
do so if the Company offers facilities for all shareholders to vote
by electronic means and when the matter needs to be dealt with
expediently.
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.
Schroder AsiaPacific Fund plc 73
Strategic Report
Governance Financial
Introduction
Notice of Annual General Meeting
Other information (unaudited)
The Annual General Meeting (“AGM”) of the Company will be
held Wednesday, 31 January 2024 at 12.00 noon to consider the
following resolutions of which resolutions 1 to 12 will be proposed
as ordinary resolutions and resolutions 13, 14 and 15 will be
proposed as special resolutions:
1. To receive the Report of the Directors and the audited accounts
for the year ended 30 September 2023.
2. To approve a final dividend of 12.00 pence per share for the
financial year ended 30 September 2023.
3. To approve the Directors’ Remuneration Report for the year
ended 30 September 2023.
4. To approve the Directors’ Remuneration Policy as set out on
page 43.
5. To elect Rupert Hogg 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 £1,534,657
(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 £1,534,657 (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 23,004,509, 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 2025 (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.”
15. To consider and, if thought fit, to pass the following resolution
as a special resolution:
“That a general meeting, other than an Annual General
Meeting, may be called on not less than 14 clear days’ notice.”
By order of the Board
For and on behalf of
Schroder Investment Management Limited
5 December 2023
Registered Oce:
1 London Wall Place,
London EC2Y 5AU
Registered Number: 03104981
Schroder AsiaPacific Fund plc74
Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend and vote at the
meeting and to appoint one or more proxies, who need not
be a shareholder, as their proxy to exercise all or any of their
rights to attend, speak and vote on their behalf at the meeting.
A proxy form is attached. If you wish to appoint a person other
than the Chairman as your proxy, please insert the name of
your chosen proxy holder in the space provided at the top of
the form. If the proxy is being appointed in relation to less than
your full voting entitlement, please enter in the box next to the
proxy holder’s name the number of shares in relation to which
they are authorised to act as your proxy. If left blank your proxy
will be deemed to be authorised in respect of your full voting
entitlement (or if this proxy form has been issued in respect
of a designated account for a shareholder, the full voting
entitlement for that designated account).
Additional proxy forms can be obtained by contacting the
Company’s Registrars, Equiniti Limited, on +44 (0)371 032
0641, or you may photocopy the attached proxy form. Please
indicate in the box next to the proxy holder’s name the number
of shares in relation to which they are authorised to act as your
proxy. Please also indicate by ticking the box provided if the
proxy instruction is one of multiple instructions being given.
Completion and return of a form of proxy will not preclude
a member from attending the Annual General Meeting and
voting in person.
On a vote by show of hands, every ordinary shareholder who is
present in person has one vote and every duly appointed proxy
who is present has one vote. On a poll vote, every ordinary
shareholder who is present in person or by way of a proxy has
one vote for every share of which he/she is a holder.
The “Vote Withheld” option on the proxy form is provided to
enable you to abstain on any particular resolution. However it
should be noted that a “Vote Withheld” is not a vote in law and
will not be counted in the calculation of the proportion of the
votes “For” and “Against” a resolution.
A proxy form must be signed and dated by the shareholder
or his or her attorney duly authorised in writing. In the case
of joint holdings, any one holder may sign this form. The vote
of the senior joint holder who tenders a vote, whether in
person or by proxy, will be accepted to the exclusion of the
votes of the other joint holder and for this purpose seniority
will be determined by the order in which the names appear
on the Register of Members in respect of the joint holding.
To be valid, proxy form(s) must be completed and returned
to the Company’s Registrars, Equiniti Limited, Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA, in the
enclosed envelope together with any power of attorney or
other authority under which it is signed or a copy of such
authority certified notarially, to arrive no later than 48 hours
before the time fixed for the meeting, or an adjourned
meeting. Shareholders may also appoint a proxy to vote on
the resolutions being put to the meeting electronically at
www.sharevote.co.uk. Shareholders who are not registered to
vote electronically, will need to enter the Voting ID, Task ID and
Shareholder Reference Number set out in their personalised
proxy form. Alternatively, shareholders who have already
registered with Equiniti’s Shareview service can appoint a proxy
by logging onto their portfolio at www.shareview.co.uk and
clicking on the link to vote. The on-screen instructions give
details on how to complete the appointment process. Please
note that to be valid, your proxy instructions must be received
by Equiniti no later than 12.00 noon on 29 January 2024. If you
have any difficulties with online voting, you should contact the
shareholder helpline on +44 (0)371 032 0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest
time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided
either in this Notice of Annual General Meeting or any related
documents to communicate with the Company for any
purposes other than expressly stated.
Representatives of shareholders that are corporations will
have to produce evidence of their proper appointment when
attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under
an agreement between him or her and the shareholder by
whom he or she was nominated, have a right to be appointed
(or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such
proxy appointment right or does not wish to exercise it, he
or she may, under any such agreement, have a right to give
instructions to the shareholder as to the exercise of voting
rights.
The statement of the rights of ordinary shareholders in relation
to the appointment of proxies in note 1 above does not apply
to Nominated Persons. The rights described in that note can
only be exercised by ordinary shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of members of the
Company at 6.30 p.m. on 29 January 2024, or 6.30 p.m.
two days prior to the date of an adjourned meeting, shall
be entitled to attend and vote at the meeting in respect of
the number of shares registered in their name at that time.
Changes to the Register of Members after 6.30 p.m. on
29 January 2024 shall be disregarded in determining the right
of any person to attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service may
do so by using the procedures described in the CREST manual.
The CREST manual can be viewed at www.euroclear.com.
A CREST message appointing a proxy (a “CREST proxy
instruction”) regardless of whether it constitutes the
appointment of a proxy or an 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. If you are an institutional investor you may
be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company
and approved by the Registrar. For further information
regarding Proxymity, please go to www.proxymity.io. Your
proxy must be lodged by 12:00 noon on 29 January 2024 in
order to be considered valid. Before you can appoint a proxy
via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read
these carefully as you will be bound by them and they will
govern the electronic appointment of your proxy.
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,
Schroder AsiaPacific Fund plc 75
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
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
election and re-election are set out on pages 32 and 33 of the
Company’s annual report and accounts for the year ended
30 September 2023.
7. As at 5 December 2023, 153,465,716 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 5 December 2023 was 153,465,716.
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.
Schroder AsiaPacific Fund plc76
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Some of
the financial measures below are classified Alternative
Performance Measures as defined by the European Securities
and Markets Authority, and some numerical calculations are
given for those.
Net asset value (“NAV”) per share
The NAV per share of 549.92p (2022: 546.13p) represents the
net assets attributable to equity shareholders of £851,285,000
(2022: £878,187,000) divided by the number of shares in issue of
154,800,716 (2022: 160,800,716).
The change in the NAV amounted to +0.7% (2022: -14.9%) 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 2023 is
calculated as follows:
Opening NAV at 30/9/22 546.13p
Closing NAV at 30/9/23 549.92p
Dividend received XD date
NAV on
XD date Factor
12.00p 30/12/22 559.37p 1.021
NAV total return, being the closing NAV, multiplied by
the factor, expressed as a percentage change in the
opening NAV: +2.9%
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 share price total return for the year ended 30 September 2023
is calculated as follows
Opening share price at 30/9/22 487.00p
Closing share price at 30/9/23 486.50p
Dividend received XD date
Share price
on XD date Factor
12.00p 30/12/22 501.00p 1.024
Share price total return, being the closing share price,
multiplied by the factor, expressed as a percentage
change in the opening share price: +2.3%
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 30/12/21 583.00p 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%
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.
Schroder AsiaPacific Fund plc 77
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Discount/premium
The amount by which the share price of an investment trust is
lower (discount) or higher (premium) than the NAV per share. The
discount or premium is expressed as a percentage of the NAV
per share. The discount at the year end amounted to 11.5%
(2022: 10.8%), as the closing share price at 486.50p (2022: 487.00p)
was 11.5% (2022: 10.8%) lower than the closing NAV of 549.92p
(2022: 546.13p).
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:
2023
£’000
2022
£’000
Borrowings used for investment
purposes, less cash 17,794 2,178
Net assets 851,285 878,187
Gearing/(net cash) 2.1% 0.2%
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 £7,617,000 (2022: £8,350,000),
expressed as a percentage of the average daily net asset values
during the year of £888,441,000 (2022: £995,417,000).
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.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-trust/.
Schroder AsiaPacific Fund plc78
Information about the Company
Webpages and share price information
The Company has dedicated webpages, which may be found at
www.schroders.co.uk/asiapacific. The webpages are the Company’s
primary method of electronic communication with shareholders.
They contain details of the Company’s ordinary share price and
copies of the report and accounts and other documents published
by the Company as well as information on the Directors, terms of
reference of committees and other governance arrangements.
In addition, the webpages contain links to announcements made
by the Company to the market, Equiniti’s shareview service and
Schroders’ website. There is also a section entitled “How to Invest”.
The Company releases its NAV per share on both a cum and ex-
income basis to the market on a daily basis.
Share price information may also be found in the Financial Times
and on the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be found on
its website, www.theaic.co.uk.
Individual Savings Account (“ISA”) status
The Company’s shares are eligible for stocks and shares ISAs.
Non‑Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares can
be recommended by IFAs to ordinary retail investors in accordance
with the FCA’s rules in relation to non-mainstream investment
products and intends to continue to do so for the foreseeable
future. The Company’s shares are excluded from the FCA’s
restrictions which apply to non-mainstream investment products
because they are shares in an investment trust.
Financial calendar
Annual General Meeting January / February
Final dividend paid February
Half year results announced June
Financial year end 30 September
Annual results announced December
Alternative Investment Fund Managers
(“AIFM”) Directive
The AIFM Directive, as transposed into the FCA Handbook in the UK,
requires that certain pre-investment information be made available
to investors in Alternative Investment Funds (such as the Company)
and also that certain regular and periodic disclosures are made.
This information and these disclosures may be found either below,
elsewhere in this annual report, or in the Company’s AIFM Directive
information disclosure document published on the Company’s
webpages.
Leverage
The Company’s leverage policy and details of its leverage ratio
calculation and exposure limits as required by the AIFMD are
published on the Company’s webpages and within this report. The
Company is also required to periodically publish its actual leverage
exposures. As at 30 September 2023 these were:
Leverage exposure
Maximum
exposure
Actual
exposure
Gross method 200.0% 1.06%
Commitment method 200.0% 1.04%
Illiquid assets
As at the date of this report, none of the Company’s assets are
subject to special arrangements arising from their illiquid nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be
found in the Company’s AIFMD information disclosure document
published on the Company’s webpages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company’s AIFM, is
required to publish a short KID on the Company. KIDs are designed
to provide certain prescribed information to retail investors,
including details of potential returns under different performance
scenarios and a risk/reward indicator. The Company’s KID is
available on its webpages.
Dividends
Paying dividends into a bank or building society account helps
reduce the risk of fraud and will provide you with quicker access to
your funds than payment by cheque. Applications for an electronic
mandate can be made by contacting the Registrar. If your dividend
is paid directly into your bank or building society account, you will
receive an annual consolidated dividend confirmation, which will
be sent to you in September each year at the time the interim
dividend is paid. Dividend confirmations are available electronically
at investorcentre.co.uk to those shareholders who have their
payments mandated to their bank or building society accounts and
who have expressed a preference for electronic communications.
Schroder AsiaPacific Fund plc 79
Strategic Report
Governance Financial
Introduction
Other information (unaudited)
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning
investment matters. These are typically from overseas-based
‘brokers’ who target UK shareholders, offering to sell them what
often turn out to be worthless or high risk shares or investments.
These operations are commonly known as ‘boiler rooms’. These
‘brokers’ can be very persistent and extremely persuasive.
Shareholders are advised to be wary of any unsolicited advice, offers
to buy shares at a discount or offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• Check that they are properly authorised by the FCA before
getting involved by visiting register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting
fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation
Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at fca.org.uk/consumers/unauthorised-
firmsindividualslist.
More detailed information on this or similar activity can be found on
the FCA website at fca.org.uk/consumers/protect-yourself-scams.
Information about the Company
continued
Schroder AsiaPacific Fund plc80
Directors
James Williams (Chairman)
Keith Craig
Julia Goh
Vivien Gould
Rupert Hogg (appointed 1 May 2023)
Martin Porter
Advisers
Alternative Investment Fund Manager (the “Manager”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 6189
[email protected]
Registered Office
1 London Wall Place
London EC2Y 5AU
Depositary and Custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending Bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate Broker
Deutsche Numis
45 Gresham Street
London EC2V 7BF
Independent auditor
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: +44 (0)800 032 0641*
Website: www.shareview.co.uk
*Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address
held on the register. Any notifications and enquiries relating to
shareholdings, including a change of address or other amendment
should be directed to Equiniti Limited at the above address.
Shareholder enquiries
General enquiries about the Company should be addressed to the
Company Secretary at the address set out above.
Dealing Codes
ISIN: GB0007918872
SEDOL 0791887
Ticker: SDP
Global Intermediary Identification Number (GIIN)
SWLQRM.99999.SL.826
Legal Entity Identifier (LEI)
549300A71N7LE35KWU14
Privacy notice
The Company’s privacy notice is available on its webpages
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material
is not intended as an oer or solicitation for the purchase or sale of any nancial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not
be placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
Schroder Investment Management Limited
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
@schroders
schroders.com