Final Results
Summary by AI BETAClose X
SCHRODER ORIENTAL INCOME FUND LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2026
Schroder Oriental Income Fund Limited (the “Company”) hereby submits its Annual Report and Financial Statements for the year ended 31 August 2026 as required by the Financial Conduct Authority’s Disclosure Guidance and Transparency Rule 4.1.
The Company’s Annual Report and Financial Statements for the year ended 31 August 2026 is being published in hard copy format and an electronic copy will shortly be available to view and download from the Company's website: www.schroders.com/orientalincome.
Key highlights
- The Company has delivered its 20th consecutive annual dividend increase since launch and is the first Asia-focused investment trust to achieve Association of Investment Companies Dividend Hero status.
- The Company’s share price total return was 56.9% in the year to 31 August 2026. The NAV total return was 51.7%, outperforming the MSCI AC Pacific ex Japan Index return of 43.9%.
- Performance was driven by disciplined stock selection and portfolio positioning, including a significant underweight to China. Exposure to Australia increased during the year, while technology moved from an overweight to the Company’s largest sector underweight, as we took profits following a period of strong outperformance.
- The discount narrowed from 5.0% at the end of the previous financial year to 2.1% over the year. A total of 7,562,037 shares were bought back into treasury during the year.
- £10,000 invested at the Company’s inception would have been worth £103,748 as at year end. 1
- Source: Morningstar.
Results webinar
Richard Sennitt will present the Company’s results for the year and discuss the outlook for Asian markets at a shareholder webinar at 10:00am on Thursday, 12 November 2026. Shareholders can register using the following link: https://www.schroders.events/event/SOI26.
Nick Winsor, Chair of Schroder Oriental Income Fund Limited, commented: “The long-term outlook for the Asia Pacific region and the opportunities it presents for income-focused investors remains compelling.”
The Company has submitted a copy of its Annual Report and Financial Statements to the National Storage Mechanism and it will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Enquiries:
Schroder Investment Management Limited
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PR Charlotte Banks Kirsty Preston
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020 7658 6000 |
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Company Secretary Phoebe Merrell Natalia de Sousa |
020 7658 6000 |
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2026
Chair’s Statement
I am delighted to introduce this year’s Annual Report by highlighting a significant achievement: during the year, Schroder Oriental Income Fund Limited delivered its 20th consecutive annual dividend increase since launch. As a consequence, the Company is now recognised as a Dividend Hero by the Association of Investment Companies, and is the first Asia-focused investment trust to achieve this distinction. We believe that this track record of consistent performance demonstrates the resilience of the Company’s income-focused approach.
Richard Sennitt, the Portfolio Manager, has built a diversified portfolio of high-quality businesses that generate sustainable cash flows and dividends. This has enabled the Company to grow its dividend through a wide range of market conditions. While dividends are not guaranteed and the value of investments can fall as well as rise, particularly through volatile market cycles, the Company has delivered strong capital appreciation and a growing income stream for its shareholders. To illustrate this point, £10,000 invested at the Company’s inception would have been worth £103,748 as at year end.1
1. Source: Morningstar.
Performance
For the year ended 31 August 2026, the Company delivered a net asset value (“NAV”) total return of 51.7%, compared with a return of 43.9% from the Reference Index, the MSCI AC Pacific ex Japan Index, net of dividends reinvested and measured in sterling. The Company’s share price total return was 56.9%, with the discount to NAV narrowing over the year.
The year was characterised by exceptional equity market performance across much of Asia, although returns became increasingly concentrated in a relatively small number of technology companies benefitting from developments in artificial intelligence (“AI”). At the same time, investors had to contend with a range of geopolitical and macroeconomic uncertainties, including concerns over the sustainability of AI-driven investment, tensions between major trading partners and heightened volatility triggered by developments in the Middle East. The Company’s disciplined investment focus on strong, income-generating businesses enabled it to navigate these volatile market conditions effectively and outperform the Reference Index.
Fees payable to the Manager
One consequence of strong fund performance has been an increase in the fees paid to Schroders, including a substantial performance fee (details of both the management and performance fee can be read on pages 39 and 40 of the Annual Report). As previously announced, following a review, the performance fee has been removed with effect from 31 August 2026. This will simplify the fee structure, improve transparency, and is expected to deliver meaningful recurring savings for shareholders, who will continue to benefit from Schroders’ significant expertise and Asian-based resources managing the portfolio.
Further detail on investment performance and activity is set out in the Investment Manager’s Review, beginning on page 8 of the Annual Report.
Revenue and dividends
The Company’s objective is to provide a total return for investors primarily through investments in equities and equity-related investments, of companies which are based in, or which derive a significant proportion of their revenues from, the Asia Pacific region and which offer attractive yields. This year the Company’s revenue return increased to 11.76 pence per share (2025: 11.59 pence per share).
During the year, the Board increased the second and third interim dividends to provide shareholders with a more even flow of income across the year. This reduced the proportion of the total dividend paid as the final dividend, rather than increasing the overall dividend. It was principally a timing adjustment, and the Company’s dividend policy remains unchanged.
The first three interim dividends amounted to 7.00 pence per share, comprising 2.00 pence, 2.50 pence and 2.50 pence respectively. The Board has declared a fourth interim dividend of 5.80 pence per share for the year ended 31 August 2026, payable on 4 December 2026 to shareholders on the register on 20 November 2026. This brings total dividends for the year to 12.80 pence per share, an increase of 4.9% on the prior year’s 12.20 pence per share. The Company retains a significant level of undistributed reserves to support future dividends.
Gearing
During the year, the Company renewed its £75 million secured revolving credit facility with Scotiabank. At 31 August 2026, the Company’s net gearing was 2.7%, compared with 3.9% at 31 August 2025. Gearing remained modest and was used selectively by the Portfolio Manager.
Discount management
The Company continued to buy back shares during the year in order to manage the discount and provide liquidity to the market. A total of 7,562,037 shares were bought back into treasury during the year and a further 721,208 shares have been bought back since the year end.
The discount at 31 August 2026 was 2.1%, compared with 5.0% at the previous financial year end, and the average discount during the year was 4.5%. The Board continues to believe that managing discount volatility, while recognising prevailing market conditions, is in shareholders’ best interests. At the last Annual General Meeting (“AGM”), shareholders authorised the Company to purchase up to 14.99% of its issued share capital. The Board proposes that this authority be renewed at the forthcoming AGM, with any shares purchased to be cancelled or held in treasury for potential reissue.
Change of corporate broker
Following the year end, on 2 September 2026, the Company appointed Winterflood, a division of Marex Financial, as its sole corporate broker and financial adviser. The Board believes that the appointment will support the Company’s continued focus on effective discount management, a robust sales and marketing programme, and engagement with the market.
Board succession
The Board continued to implement its succession plan during the year. Following a search led by the Nomination and Remuneration Committee with the assistance of an external recruitment firm, Shaun Lacey was appointed as an independent non-executive Director with effect from 20 April 2026. Shaun’s expertise has been a valuable addition to the Board.
Alexa Coates will reach nine years’ tenure in February 2027 and is expected to retire from the Board at the conclusion of the 2027 AGM. The Company will benefit from Alexa’s considerable experience and contribution until then. To support an orderly transition, the Board intends to begin an external search for her successor at the start of next year. This will allow the successful candidate sufficient time to work alongside Alexa in her role as Chair of the Audit and Risk Committee before assuming responsibility for this position on Alexa’s departure.
Results webinar
Richard Sennitt will present the Company’s results for the year and discuss the outlook for Asian markets at a shareholder webinar on Thursday, 12 November 2026 at 10:00am. Shareholders can register at https://www.schroders.events/event/SOI26.
Schroders combination with Nuveen
On 22 September 2026, Schroders plc (now Schroders Limited) announced that all antitrust and regulatory approval conditions relating to Nuveen’s recommended acquisition of Schroders had been satisfied or waived. The transaction became effective on 1 October 2026 following satisfaction of the remaining conditions, including court sanction and associated procedural steps. Further details are available on the Schroders website: https://www.schroders.com/en/global/individual/nuveenoffer/.
AGM
The AGM will be held on Tuesday, 1 December 2026 at 12:30 pm at the Schroders offices, 1 London Wall Place, London, EC2Y 5AU. Richard Sennitt will give a presentation and shareholders attending in person will have the opportunity to ask questions and meet the Directors. Light refreshments will be served. Details of the formal business are set out in the Notice of Meeting on page 79 of the Annual Report. Shareholders unable to attend are encouraged to vote by proxy in advance and to appoint the Chair of the meeting as their proxy. Questions for the Board may be submitted by email to amcompanysecretary@schroders.com or by post to the Company Secretary, Schroder Oriental Income Fund Limited, 1 London Wall Place, London, EC2Y 5AU.
Outlook
Many countries across the region continue to benefit from favourable economic growth prospects, rising levels of domestic consumption and increasing corporate commitment to shareholder returns. Despite ongoing economic, geopolitical and market uncertainties, the Board believes that the long-term outlook for the Asia Pacific region and the opportunities it presents for income-focused investors remains compelling.
Richard Sennitt’s disciplined investment approach, supported by Schroders’ extensive Asian equity research platform, has enabled the Company to navigate successfully a wide range of market conditions. The Board believes that Richard’s proven long term track record provides a strong foundation for the Company’s future success and remains central to delivering attractive returns and a growing income stream for shareholders.
Nick Winsor
Chair
10 November 2026
Investment Manager’s Review
Introduction
I’m happy to report another year of strong share price and NAV total returns for the Company. From an Asian perspective, it was a year dominated by a reacceleration of the AI capital expenditure trade, which more than offset rising geopolitical concerns, particularly the impact of the Middle East conflict. This led to a very narrow market, dominated by the AI-heavy indices of Korea and Taiwan. Market volatility over the period was high, given the ever-shifting geopolitics and increased retail participation in countries such as Korea. Pleasingly, performance was not only strong in absolute terms but meaningfully ahead of the Reference Index. This was despite being underweight Korea and Taiwan for the majority of the period, with stock selection the key driver of outperformance. Importantly, the strategy continues to deliver strong long-term results, with NAV returns ahead of the Reference Index over one, three, five and ten years.
The 43.9% return for the regional index over the financial year was far stronger than the 20.0% rise in global indices over the same period in sterling terms. In part, as highlighted in the interim report, this was because the AI theme continued to play out more strongly in Asia than elsewhere, given the region’s exposure to key players that are direct beneficiaries of increased AI capital expenditure (capex). Despite suffering a pullback in the latter part of the period, Samsung Electronics and SK Hynix were among the standout performers, as expectations for memory semiconductor prices surged, with ever-increasing AI-related demand leading to concerns over shortages among some customers.
As described, the Company’s NAV delivered strong absolute and relative returns, recording a total return of 51.7% and outperforming the Reference Index by 7.8% points over the period. Stock selection was consistently positive, including in Australia, China, Singapore and Taiwan, with the underweight position in mainland China by far the biggest performance contributor from an allocation perspective.
Whilst AI-related capex has benefitted Northeast Asian manufacturers, other countries and sectors that have been seen as losers from the rollout of AI have lagged or been derated. Here, Indian IT services companies have been seen as the most obvious example, as coders get disintermediated. However, as in other markets globally, investors have been reassessing the risk of AI disruption to other business models, including e-commerce, travel and ride-hailing, which has led to weakness amongst some of these names. The Company has relatively little exposure to these areas, in part due to many of them being low dividend payers.
Away from AI-driven themes, the conflict in the Middle East acted as a headwind for Asia, resulting in a market sell-off through March before a rebound in April. The increase in energy prices resulting from the conflict is negative for Asia, as it is a meaningful net importer of oil and gas. This tends to impact those countries with weaker external finances, such as Indonesia, the Philippines and India, as it increases both the import bill and inflationary pressures, increasing the need to tighten interest rate policy.
Of the larger markets, China was notable for its underperformance. Whilst the export sector has continued to be strong, the domestic economy has remained weak, as the consumer has been reluctant to spend and government stimulus has not been on a sufficient scale to boost confidence. This has resulted in disappointing consumption and elevated levels of competition domestically, impacting earnings expectations. Aside from the domestic malaise, some of the internet platform companies have also suffered from concerns that the increasing use of AI could see the competitive moats of parts of their businesses eroded, as described above.
Australia and Singapore both made decent absolute gains despite lagging the region, given their lack of any meaningful exposure to AI, but benefitted from being seen as relatively defensive. Australia’s exposure to rising commodity prices provided support, while Singapore continued to benefit from being seen as relatively defensive against an uncertain backdrop.
Performance and positioning
The Company’s NAV made strong absolute and relative gains over the period, with stock selection the primary driver, as some of the contributors seen in the first half of the financial year continued for the rest of the year. In Australia, although the overweight was a detractor, stock selection was positive, as diversified miner Rio Tinto and supermarket operator Woolworths both performed strongly, while our underweight to the banks and stock selection within the sector, including ANZ Group, added value. In Taiwan, the holdings in semiconductor packager ASE Technology and fabless chip designer MediaTek were the standout contributors, while in Singapore, banks DBS and OCBC added value, as did Philippine port operator ICTSI. Stock selection in China was also positive, thanks to not owning internet platform names Tencent or Alibaba, while holdings in Midea and Weichai Power added value.
Geographically, the Company’s portfolio remains focused on core Asia Pacific ex Japan markets such as Taiwan, Australia, Korea, Hong Kong, China and Singapore. A significant underweight to China was among the most important contributors to relative performance over the period. This was partially offset by the portfolio’s underweight exposure to Korea, which was the top-performing market in the region, and the overweight position in Singapore, which detracted from relative performance.
Although reduced during the period, we continue to run a substantial underweight to China versus the Reference Index, partly offset by an overweight to Hong Kong, but the combined relative underweight has narrowed considerably during the period, in part due to HK/China coming down in the Reference Index and in part due to additions we have made there. Over the year, we have added to existing positions as well as initiated new positions, including industrial company Weichai Power, which has been benefitting from increasing demand for data centre power equipment, and China Mengniu Dairy, where a bottoming in the dairy cycle following a period of oversupply, and improvements in profitability after restructuring and self-help measures, have improved the outlook for the business.
Over the course of the year, we also added to positions in Australia and are overweight the market. Australia, as one of the few net energy exporters in the region, has been less directly impacted by the Middle East conflict and, at the same time, has been benefitting from an improvement in commodity prices, which has helped resource companies. With relatively little new base metal supply coming to market at a time of rising demand, driven largely by the electrification theme, the outlook here remains constructive, and we remain overweight the resource names. The underlying economy has also proven remarkably resilient, albeit recent increases in interest rates from the Reserve Bank of Australia in response to rising inflation, as well as measures by the government around taxation of investment properties, have started to impact the property market. We remain underweight the domestic banks but have exposure to some of the other domestic names, including telecoms company Telstra and supermarkets Coles and Woolworths.
In Southeast Asia, we remain most exposed to Singapore, which continues to benefit from its growing status as a regional wealth management hub and from the broader development of its neighbours. Financials have performed well here, and we have started to trim positions, including those in banks DBS and OCBC, as well as selling our position in REIT CapitaLand Integrated Commercial Trust.
Beyond Singapore, exposure to the smaller ASEAN markets remains limited, despite aggregate market valuations being below historical averages for the likes of Indonesia and the Philippines. In fact, during the year, we sold out of our positions in Indonesia, where the combination of tighter global monetary policy and concerns over domestic policies had clouded the outlook. As mentioned, many of these smaller ASEAN markets, along with India, remain the most impacted by the knock-on effects of the Middle East conflict, having typically been more sensitive to rising energy costs and tighter global monetary policy.
In IT, we have taken money out of the sector, and IT is now our largest underweight, as opposed to a small overweight at the end of the last financial year, but it remains our largest absolute sector weight. Sales earlier in the year included some smaller positions, such as Largan and UMC, but we also reduced some of the larger existing positions that had performed strongly, such as foundry TSMC and, more latterly, Samsung Electronics. Other reductions included semiconductor packaging company ASE, which has been benefitting from the trend towards more complex packaging, and MediaTek, which has started to make inroads into custom silicon chip design for the hyperscalers. Both have performed exceptionally well.
Financials remain the second-largest sector, and we continue to be overweight in what is a diverse sector spanning banks, insurers and exchange companies. Having reduced the size of our overweight in the first half, including trimming some of the Australian banks, the second half has been more about rotation, for instance selling out of insurer CPIC in China and largely recycling the proceeds into AIA and Ping An Insurance, where we see more opportunity. We also have positions in banks in Singapore, Hong Kong and Thailand. With interest rates starting to shift up, this should be supportive of bank margins in a number of the markets, although the extent of any increase needs to be watched carefully, given the potential to choke off growth or impact asset quality. Elsewhere, we are selectively overweight real estate, although exposure remains small in absolute terms.
Investment outlook
In many ways, the key question for Asian markets remains the longevity of the AI-related capex story, which I wrote about in the interim report. This has been benefitting Korea and Taiwan to such an extent that they are now as large as, or larger than, China in the wider regional benchmarks.
Although in the last couple of months there has been some pullback in these names, particularly the memory companies in Korea, the rising retail participation and increased volatility suggest a need for increased caution in relation to some of these stocks that have performed particularly strongly. To be clear, it is also true that these moves, in a number of cases, have been accompanied by substantial upward revisions to earnings, such as those for the Korean memory producers. As a result, the performance has been less about a rerating in anticipation of earnings coming through and more about assessing the sustainability of these earnings, given the historically cyclical nature of these industries.
For now, demand and supply across the supply chain remain incredibly tight, and there is nothing to suggest we are about to see a sudden slowdown in demand. The concern is therefore not about today, but rather what the situation will look like over the next one, two or three years, given the long lead times to bring on capacity in the semiconductor industry. These lead times are why, historically, it has been a cyclical industry.
At the same time, when we look at the US hyperscalers, who have been the key driver of demand, they are moving from being able to finance capex from free cash flow to having to turn to external sources of funding, including bond issuance, at a time when interest rates and bond yields are rising. This has become an increasing focus as these concerns have started to feed through into what are perceived to be some of the riskier parts of the AI supply chain, including some of the Neo Cloud operators, where debt costs have risen more materially. The Neo-Clouds typically rent out GPUs to clients for AI services and are particularly sensitive to higher rates, as their capital-intensive models tend to have a high component of debt funding. Therefore, the outlook for returns on this capex becomes increasingly important as the cost of build out increases.
So, whilst the increasing use cases for these large language models (“LLMs”) continue to drive demand as they become ever more powerful, this is happening at a time when people are starting to question the outlook for pricing across an increasing number of very capable LLMs. For instance, the Chinese open-weight models in general are much cheaper for the user than the leading models from the likes of OpenAI and Anthropic and, whilst not as capable at the frontier, they are advancing at a sufficient pace to be used as an alternative for the majority of tasks, which could ultimately impact returns across the sector. As this feeds into pressure on average token pricing across the industry, one needs to see an ongoing acceleration in demand to help offset this.
Given these increasing uncertainties, I have been slowly reducing positions in technology names and have moved from being overweight the sector at the end of the last financial year to it now being my largest underweight, as mentioned earlier.
Outside of tech, the outlook for China remains a key consideration. Following my recent trip to the region, I had hoped to come away with a more constructive outlook for Chinese consumption. However, the wider domestic economy remains moribund due to low consumer confidence, and this has resulted in intense competition and overcapacity in many sectors. Although there are some signs of stabilisation in the property market in the higher tier cities, government revenues have been impacted by the slowdown in the sector. As a result, there has recently been an increased focus on more stringent tax collection, as well as a reduction in some tax subsidies to manage the shortfall, which has impacted sentiment. This contrasts with the export sector, where growth has remained strong, reducing the need for more aggressive government stimulus. Whilst domestic consumption remains subdued, it should be remembered that household deposits remain high and that the consumer is generally in a position to spend more if their confidence improves. Whilst we have been nudging money into the market over the last year, given the market’s underperformance and increasing attraction from a valuation perspective, we continue to focus on companies that are winners in their sector, and so are able to grow despite the economic backdrop, or are implementing self-help plans to improve profitability rather than relying on a broad-brush improvement in growth. There has also been some progress on shareholder returns, with a noticeable increase in the number of companies becoming more generous when it comes to dividend payouts, which is also throwing up opportunities.
From a geopolitical standpoint, any resolution to or reduction in tensions relating to the flow of oil through the Strait of Hormuz would be positive for Asian equities, given their reliance on imported energy. Higher energy prices not only worsen external accounts but also impact inflation and consumer spending, as well as corporate profitability for companies that are unable to pass through rising costs. This has, more latterly, been one of the reasons impeding a broadening of earnings revisions away from the IT-related names. In addition, rising inflationary pressures and the move up in global rates have become another concern, not only for markets globally but also in Asia, as this tends to put pressure on Asian central banks to follow suit with monetary tightening, aside the potential for a slowdown in demand for exports from the region.
Tariffs, a major concern last year, appear to have become less of an overhang this year, while geopolitical tensions, including between the US and China, as well as with respect to Taiwan, are now on a more even keel compared with a few years ago. Geopolitics obviously remains a risk for markets, given how rapidly positions can shift, as evidenced by the last couple of years.
Much of the strong Asian market performance in recent months has been driven by earnings rather than reflecting a rerating of markets more broadly. This has meant that, despite the rise in markets, valuations do not look extended on a historic earnings basis, with the aggregate for the region slightly below longer term averages. However, there is significant variation across markets, as can be seen in the chart below which is based on forward earnings. Korea, for instance, looks especially cheap, which is in part due to the market questioning the sustainability of earnings coming from the semiconductor memory companies. That said, the region as a whole remains attractively valued relative to developed markets on this basis.
One concern for the region has been the narrowness of the recovery in earnings across markets, and at the beginning of the year there was hope that we would start to see this broaden out across a wider range of stocks. Whilst we are seeing that to a limited degree, the Middle East conflict has acted as a headwind, albeit there are tentative signs of an improvement again.
If this were to continue, this would be a positive and probably a necessary requirement for the markets to continue to go up, given the rally we have already seen in AI names. Given the proportion of stocks that have underperformed by more than 20% over the last year, the market has not factored in a broadening, which gives us hope as active stock pickers that we can continue to find interesting names in less consensus areas.
Turning to dividends, although dividend growth has been lacklustre over the last few years, the improvement in underlying earnings has started to feed through into local dividend payments. Of companies in the portfolio that have announced dividends (quarterly, interim or final) during calendar Q3 over two thirds have reported an increase over the last year, which is an encouraging sign. Samsung Electronics in Korea, for instance, announced a multiple increase in its Q3 interim dividend and reaffirmed its commitment to return 50% of its free cash flow to shareholders, which should result in a return this year five times greater than in any previous year in its history. Less spectacular, but still important, increases have been announced by companies across the region, including in China, Singapore and Hong Kong, in part reflecting better earnings growth but also in part reflecting a greater focus on shareholder returns.
The earnings tailwind should be positive for now, but if we were to see a slowdown, it’s worth remembering that the region has a relatively low aggregate payout ratio, which should provide some dividend resilience should profits come under pressure for any reason. The level of sterling versus Asian currencies will also continue to influence the absolute level of dividends received.
In conclusion, it has been a strong period for the Company, with NAV returns well ahead of the Reference Index, driven by the application of a consistent investment approach over time. Asian markets have performed well over the last year, and this has been driven by earnings rather than a broader re-rating. Whilst rising interest rates globally and any intensification of the Middle East conflict are clearly a risk for Asian markets; the biggest question probably remains the durability of the AI-related earnings cycle and whether we can see a broadening out beyond this narrow subset of stocks. Although there are headwinds to this, as covered earlier, stock prices outside of AI have mainly underperformed which should result in opportunities that our active approach and extensive resources across the region can uncover. Positively, for now Asian earnings in aggregate are recovering, and hopefully this should translate into better dividend growth from the market than we have seen over the last few years.
Thank you for your continued trust in the Schroder Oriental Income Fund.
Richard Sennitt
Portfolio Manager
10 November 2026
Schroder Investment Management Limited
Risk Report
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 all material risks affecting the Company’s business as an investment trust and has established associated policies, processes, and material controls designed to manage and, where possible, mitigate those risks, which are monitored by the Audit and Risk Committee on an ongoing basis.
At least bi-annually, the Audit and Risk Committee carries out a robust assessment of the principal and emerging risks which feeds into the Company’s risk register. Mitigations, the scoring of each risk, and any emerging risks are discussed in detail as part of this process to ensure that emerging as well as known risks are identified and, so far as practicable, mitigated. In light of the requirements of Provision 29 of the UK Corporate Governance Code and Provision 34 of the AIC Code, the Board has continued to review and enhance the Company’s risk management and internal control framework. As part of its existing assessment of the Company’s material risks and controls, the Board undertook a dry run of the new declaration and associated reporting requirements that will apply for financial years beginning on or after 1 January 2026. This review focused on identifying those risks which could have the most significant impact on the Company’s ability to achieve its investment objective and continue in operation, and on assessing the controls established to manage or mitigate those risks. The Board intends to build on this work as it prepares for compliance with the new reporting requirements.
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. The above is considered, noting that the Company has no employees and has delegated all operations to third party service providers.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee. The monitoring and review cover the Company’s material financial, operational, reporting and compliance controls, including the incidence of significant control failings or weaknesses 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.
Although the Board believes that it has a robust framework of internal controls in place, this can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk. Both the material risks, including principal and emerging risks, and the risk management and internal control framework are subject to robust review at least annually. The latest assessment took place in November 2026. During the year, the Board continued to review and enhance the Company’s framework, taking into account the requirements of Provision 29 of the UK Corporate Governance Code and Provision 34 of the AIC Code. This work included identifying the risks that could have the most significant impact on the Company’s ability to achieve its investment objective, comply with its obligations and continue in operation, and building on the Board’s existing assessment of the material controls in place to manage or mitigate those risks.
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 Investment Manager, Company Secretary, and other service providers on emerging risks that could affect the Company. The Board was mindful of the evolving global environment during the year and the risks posed by volatile markets and geopolitical uncertainty. However, these are not factors which explicitly impact the Company’s performance although they could exacerbate existing risks. Where relevant, these have been incorporated in the table below. As part of its consideration of Provision 29 of the UK Corporate Governance Code and Provision 34 of the AIC Code, the Board identified a new principal risk relating to third-party outsourcing, as set out in the table below.
No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment throughout the financial year and up to the date of this report. Following its review, the Board concluded that the Company’s risk management and internal control framework, including its material financial, operational, reporting and compliance controls, was effective as at 31 August 2026. The Board is satisfied that it has undertaken a robust assessment of the material risks facing the Company and of the controls established to manage or mitigate those risks. A full analysis of the financial risks facing the Company is set out in note 20 to the financial statements on pages 72 to 76 of the Annual Report.
The Board considers that the risks set out in the table below are the principal risks currently facing the Company to deliver its strategy together with those actions taken by the Board and, where appropriate, its Committees, to manage and mitigate those risks.
The arrows in the “Change” column show the risks as increased or decreased or unchanged.
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The Company’s investment objectives may become out of line with investor requirements, which may reduce investors’ interest in the Company’s shares and contribute to a widening discount of the share price to the underlying NAV per share. |
The Board periodically reviews the appropriateness of the Company’s investment mandate and long-term strategy, monitoring progress towards the Company’s stated objectives. Share price performance relative to NAV per share is tracked as a key performance indicator and regularly compared to peers. The Board also reviews the parameters and use of buyback authorities on an ongoing basis, and considers market feedback from the Manager and corporate broker at each quarterly meeting. Shareholder engagement is proactively conducted through the AGM, feedback from presentations, and ad hoc meetings with the Board. |
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Discount |
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The Company may fail to meet existing shareholder expectations regarding discount management, resulting in the shares trading at a persistently wider-than-average discount to the peer group and/or experiencing heightened discount volatility. |
The discount or premium of the Company’s share price relative to NAV is monitored daily and compared to peers by both the corporate broker and the Manager. The Board makes use of a discount control mechanism through an active share buyback policy and receives regular updates from the corporate broker on these activities. The share buyback policy has contained discount volatility relative to the peer group, sector, and the industry. |
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Geopolitical developments, changing international relations and the evolving sanctions and trade-policy landscape may adversely affect the Company’s investment strategy and objective, access to markets and counterparties, portfolio construction, valuations, liquidity and overall performance. This includes heightened uncertainty arising from differing and changing regulatory regimes and business practices across the region, as well as the potential for increased political and security tensions, trade and technology restrictions, intellectual property risks, and territorial or diplomatic disputes. |
Geopolitical risk has risen this year as the Board recognises the elevated geopolitical risk related to the region and continues to monitor this carefully. The Manager maintains regular communication with local analysts, investee companies, and the wider market to assess the potential impact of these risks. The Board receives frequent updates on current issues from the Manager and regularly considers these risks, taking into account presentations from the Manager as well as information from external sources. |
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The Company is exposed to the effect of market fluctuations due to the nature of its business. A significant fall in regional equity markets could have an adverse impact on the market value of the Company’s underlying investments. |
Market risk has increased this year due to the current geopolitical issues. Many of the companies in the portfolio have strong balance sheets and sustainable business models. Gearing is kept at relatively low levels, helping to manage risk. The Board also closely monitors inflation, as it can affect both market conditions and exchange rate volatility. |
|
|
The Company is exposed to the effect of currency fluctuations due to the nature of its business. As 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 a significant impact on returns and the sterling value of dividend income from underlying investments. |
The risk profile of the portfolio is considered and appropriate strategies to mitigate negative impact of substantial changes in currency are discussed with the Manager. The Board notes that high inflation would in turn lead to volatility in exchange rates, and recognises that there continues to be an elevated currency / exchange rate risk relating to the region. The Board carefully monitors the performance of sterling against Asian currencies. The Board regularly reviews the portfolio’s risk profile and discusses strategies with the Manager to help minimise the impact of significant market or currency changes. While the Company does not have a formal policy for hedging currency risk, foreign currency borrowings or forward contracts may be used when appropriate to limit exposure. |
|
|
Investment management |
|
|
|
Under-performance and other factors lead to the Company becoming unattractive to investors. |
The Board continually reviews the Investment Manager’s performance, as well as the Company’s NAV and share price, comparing results to those of similar companies and monitoring any discount or premium. The Manager and corporate broker keep a close watch on the discount and premium, helping to ensure the Company remains attractive to investors. The Investment Manager provides the Board with timely and accurate information, such as performance data, revenue estimates, liquidity reports, and shareholder analyses, and explains their portfolio decisions and risk assessments at every Board meeting. Gearing is managed carefully within a range set by the Board. The Board is responsible for setting the overall investment strategy, approving key agreements, and establishing guidelines for the use of derivatives, gearing, and leverage, adjusting these as necessary. At every meeting, the Board monitors performance, risk, and portfolio activity against agreed objectives and strategy, and reviews the continued suitability of the Manager each year. Risk and internal audit teams from the Manager also provide an annual update to the Board. |
|
|
Accounting records and compliance |
|
|
|
Failure to maintain proper accounting records and comply with applicable statutory, company law, regulatory and investment trust tax requirements increases the risk of inaccurate financial reporting, undetected fraud, loss of investment trust status, and regulatory breaches. |
The Board reviews financial information at each quarterly Board meeting and considers treatment of extraordinary items. The Board monitors compliance through reports from the Manager. Directors maintain and refresh their skills and knowledge and conduct an annual review of their capabilities, as well as keeping up to date via the AIC, auditor and Company Secretary and other industry discussions. The Board receives at least annual legal and regulatory updates from Guernsey legal counsel to support oversight of compliance with applicable laws and regulations and to inform any required changes to policies, disclosures or governance processes. |
|
|
Cyber and technology |
|
|
|
The increasing use of Artificial Intelligence (“AI”) and digitised investment platforms poses a potential risk to the relevance of investment trusts. Furthermore, the Company’s service providers are exposed to the risk of cyber attacks, which could result in the loss of personal or confidential information, unauthorised payments, or an inability to carry out operations in a timely manner. |
AI and cyber risks have increased again this year, reflecting the rapid advancement and broader adoption of AI technologies. While these developments offer significant opportunities, they also introduce new vulnerabilities. There has also been a marked rise in both the frequency and sophistication of cyber-attacks on organisations globally, including several highly publicised cases. These trends, together with evolving regulatory requirements and heightened data protection standards, mean that AI and cyber risks are now more pronounced and require strengthened management and oversight. The Company works with outsourced service providers who report at least annually on how they manage and reduce cyber risk, including their plans to maintain operations in the event of a cyber attack. A custodian or depositary is also appointed to safeguard the Company’s assets. Each year, the Board receives presentations from the Manager, Registrar, and Depositary that cover key risks, including cyber security and business continuity. |
|
|
Third party outsourcing risk |
|
|
|
Failure of controls, inadequate service quality or operational failure by key service providers, including the depositary/custodian, could compromise the safe custody of the Company’s assets, resulting in loss of shareholders’ assets, reputational damage and/or regulatory breach. |
This risk has been introduced as a new principal risk during the year, reflecting the Board’s enhanced focus on material controls in light of the requirements of Provision 29 of the UK Corporate Governance Code and Provision 34 of the AIC Code. The Board oversees the effectiveness of controls operated by the Manager and key service providers, including the depositary and custodian. Financial records are regularly reconciled, while control frameworks and service quality are monitored throughout the year through regular reporting, independent assurance reports and the Manager’s internal audit findings. The Management Engagement Committee also undertakes an annual review of key service providers, including their controls and business continuity arrangements. |
|
Viability Statement and Going Concern
Viability statement
The Directors have assessed the viability of the Company over a five year period, taking into account the Company’s position at 31 August 2026 and 10 November 2026 and the potential impact of the material risks, including the principal risks and uncertainties it faces for the review period. The Directors have assessed the Company’s operational resilience and they are satisfied that the Company’s outsourced service providers will continue to operate effectively, following the implementation of their business continuity plans.
A period of five years has been chosen as the Board believes that this reflects a suitable time horizon for strategic planning, taking into account the investment policy, liquidity of investments, potential impact of economic cycles, nature of operating costs, dividends and availability of funding. This time period also reflects the average holding period of an investment.
In its assessment of the viability of the Company, the Directors have considered each of the Company’s principal risks and uncertainties detailed on pages 32 to 33 of the Annual Report and in particular the impact of a significant fall in regional equity markets on the value of the Company’s investment portfolio. The Directors have also considered the Company’s income and expenditure projections and the fact that the Company’s investments comprise readily realisable securities which can be sold to meet funding requirements if necessary.
The Directors have also considered a stress test which represents a severe but plausible scenario along with movement in foreign exchange rates. This scenario assumes a severe stock market collapse and/or exchange rate movements at the beginning of the five year period, resulting in a 50% fall in the value of the Company’s investments and investment income and no subsequent recovery in either prices or income in the following five years. It is assumed that the Company continues to pay an annual dividend in line with current levels and that the borrowing facility remains available and remains drawn, subject to the gearing limit.
The Company’s investments comprise highly liquid, large, listed companies and so its assets are readily realisable securities and could be sold to meet funding requirements or the repayment of the gearing facility should the need arise. There is no expectation that the nature of the investments held within the portfolio will be materially different in the future.
The operating costs of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position. Furthermore, the Company has no employees and consequently has no redundancy or other employment related liabilities.
The Board reviews the performance of the Company’s service providers regularly, including the Manager, along with internal controls reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. The Board also considers the business continuity arrangements of the Company’s key service providers.
The Board monitors the portfolio risk profile, limits imposed on gearing, counterparty exposure, liquidity risk and financial controls at its quarterly meetings.
Although there continue to be regulatory changes which could increase costs or impact revenue, the Directors do not believe that this could be sufficient to affect its viability. The Board also notes that certain geopolitical risks, if they materialise, would have a serious effect on the viability of the Company, but that it was not appropriate to conclude that the Company was not viable on the basis of these.
The Board has assumed that the business model of a closed-ended investment company, as well as the Company’s investment objective, will continue to be attractive to investors. The Directors also considered the beneficial tax treatment the Company is eligible for as an investment trust. If changes to these taxation arrangements were to be made, it would affect the viability of the Company to act as an effective investment vehicle.
Based on the above the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their assessment.
Going concern
The Directors have assessed the material risks, including the principal risks, the impact of the emerging risks and uncertainties and the matters referred to in the viability statement. The Directors have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for the period assessed by the Directors, being the period to 30 November 2027 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
10 November 2026
Statement of Directors’ Responsibilities in Respect of the Annual Report and Financial Statements
The Directors are responsible for preparing the financial statements in accordance with applicable Guernsey law and generally accepted accounting principles.
Guernsey company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors should:
• select suitable accounting policies, and apply them consistently;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• provide additional disclosures when compliance with the specific requirements in International Financial Reporting Standards (“IFRS”) as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance;
• state that the Company has complied with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
• make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008 (as amended). They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Directors’ Statement
Each of the Directors, whose names and functions are listed on pages 36 and 37 of the Annual Report, confirm that to the best of their knowledge:
• the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union and with The Companies (Guernsey) Law, 2008 (as amended) and in accordance with the requirements set out above, give a true and fair view of the assets, liabilities, financial position and the net return of the Company;
• the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and
• the Annual Report and Financial Statements, taken as a whole, are fair, balanced, and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model, and strategy.
So far as each of the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware, and each Director has taken all the steps that he or she ought to have taken as a Director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
On behalf of the Board
Nick Winsor
Chair
10 November 2026
Statement of Comprehensive Income
for the year ended 31 August 2026
|
|
|
2026 |
2025 | ||||
|
|
Note |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Gains on investments held at fair value through profit or loss |
2 |
— |
348,465 |
348,465 |
— |
74,935 |
74,935 |
|
Net foreign currency (losses)/gains |
|
— |
(280) |
(280) |
— |
803 |
803 |
|
Income from investments |
3 |
33,259 |
755 |
34,014 |
32,920 |
725 |
33,645 |
|
Other income |
3 |
109 |
— |
109 |
117 |
— |
117 |
|
Total income |
|
33,368 |
348,940 |
382,308 |
33,037 |
76,463 |
109,500 |
|
Management fee |
4 |
(2,664) |
(3,996) |
(6,660) |
(1,950) |
(2,925) |
(4,875) |
|
Performance fee |
4 |
— |
(5,710) |
(5,710) |
— |
(4,759) |
(4,759) |
|
Other administrative expenses |
5 |
(1,082) |
— |
(1,082) |
(1,277) |
(8) |
(1,285) |
|
Net return before finance costs and taxation |
|
29,622 |
339,234 |
368,856 |
29,810 |
68,771 |
98,581 |
|
Finance costs |
6 |
(712) |
(1,067) |
(1,779) |
(859) |
(1,290) |
(2,149) |
|
Net return before taxation |
|
28,910 |
338,167 |
367,077 |
28,951 |
67,481 |
96,432 |
|
Taxation |
7 |
(2,383) |
— |
(2,383) |
(1,936) |
— |
(1,936) |
|
Net return after taxation |
|
26,527 |
338,167 |
364,694 |
27,015 |
67,481 |
94,496 |
|
Return per share – basic and diluted (pence) |
9 |
11.76 |
149.96 |
161.72 |
11.59 |
28.94 |
40.53 |
The “Total” column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with IFRS. The “Revenue and Capital” columns represent supplementary information prepared under guidance set out in the statement of recommended practice for investment trust companies (the “SORP”) issued by the Association of Investment Companies in July 2022.
The Company does not have any income or expense that is not included in net return for the year. Accordingly the “Net return” for the year 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 63 to 76 of the Annual Report form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 31 August 2026
|
|
Note |
Share |
Treasury share reserve |
Capital |
Special reserve |
Capital reserve |
Revenue reserve |
Total |
|
At 31 August 2025 |
|
234,347 |
(109,818) |
39 |
150,374 |
422,642 |
34,511 |
732,095 |
|
Repurchase of ordinary shares into treasury |
|
— |
(28,588) |
— |
— |
— |
— |
(28,588) |
|
Net return after taxation |
|
— |
— |
— |
— |
338,167 |
26,527 |
364,694 |
|
Dividends paid in the year |
8 |
— |
— |
— |
— |
— |
(29,736) |
(29,736) |
|
At 31 August 2026 |
|
234,347 |
(138,406) |
39 |
150,374 |
760,809 |
31,302 |
1,038,465 |
|
At 31 August 2024 |
|
234,347 |
(75,125) |
39 |
150,374 |
355,161 |
35,519 |
700,315 |
|
Repurchase of ordinary shares into treasury |
|
— |
(34,693) |
— |
— |
— |
— |
(34,693) |
|
Net return after taxation |
|
— |
— |
— |
— |
67,481 |
27,015 |
94,496 |
|
Dividends paid in the year |
8 |
— |
— |
— |
— |
— |
(28,023) |
(28,023) |
|
At 31 August 2025 |
|
234,347 |
(109,818) |
39 |
150,374 |
422,642 |
34,511 |
732,095 |
The notes on pages 63 to 76 of the Annual Report form an integral part of these financial statements.
Statement of Financial Position
at 31 August 2026
|
|
Note |
2026 |
2025 |
|
Non current assets |
|
|
|
|
Investments at fair value through profit or loss |
10 |
1,073,420 |
763,811 |
|
Current assets |
|
|
|
|
Receivables |
11 |
4,897 |
4,179 |
|
Cash and cash equivalents |
11 |
9,228 |
8,527 |
|
|
|
14,125 |
12,706 |
|
Total assets |
|
1,087,545 |
776,517 |
|
Current liabilities |
|
|
|
|
Payables |
12 |
(49,080) |
(44,422) |
|
Net assets |
|
1,038,465 |
732,095 |
|
Equity attributable to equity holders |
|
|
|
|
Share capital |
13 |
234,347 |
234,347 |
|
Treasury share reserve |
14 |
(138,406) |
(109,818) |
|
Capital redemption reserve |
14 |
39 |
39 |
|
Special reserve |
14 |
150,374 |
150,374 |
|
Capital reserves |
14 |
760,809 |
422,642 |
|
Revenue reserve |
14 |
31,302 |
34,511 |
|
Total equity shareholders’ funds |
|
1,038,465 |
732,095 |
|
Net asset value per share (pence) |
15 |
468.63 |
319.47 |
The financial statements on pages 63 to 76 of the Annual Report were approved by the Board of Directors on 10 November 2026 and signed on its behalf by:
Nick Winsor
Chairman
The notes on pages 63 to 76 of the Annual Report form an integral part of these financial statements.
Registered in Guernsey as a public company limited by shares.
Company registration number: 43298.
Cash Flow Statement
for the year ended 31 August 2026
|
|
2026 |
2025 |
|
Operating activities |
|
|
|
Net return before finance costs and taxation |
368,856 |
98,581 |
|
Adjustments for: |
|
|
|
Net foreign currency losses/(gains) |
280 |
(803) |
|
Gains on investments held at fair value through profit or loss |
(348,465) |
(74,935) |
|
Net sales of investments at fair value through profit or loss |
39,040 |
45,752 |
|
Decrease in receivables |
170 |
189 |
|
Increase in payables |
3,804 |
226 |
|
Overseas taxation paid |
(2,421) |
(1,926) |
|
Net cash inflow from operating activities before interest |
61,264 |
67,084 |
|
Interest paid |
(1,785) |
(2,145) |
|
Net cash inflow from operating activities |
59,479 |
64,939 |
|
Financing activities |
|
|
|
Repurchase of ordinary shares into treasury |
(28,588) |
(35,098) |
|
Dividends paid |
(29,736) |
(28,023) |
|
Net cash outflow from financing activities |
(58,324) |
(63,121) |
|
Increase in cash and cash equivalents |
1,155 |
1,818 |
|
Cash and cash equivalents at the start of the year |
8,527 |
6,942 |
|
Effect of foreign exchange rates on cash and cash equivalents |
(454) |
(233) |
|
Cash and cash equivalents at the end of the year |
9,228 |
8,527 |
The notes on pages 63 to 76 of the Annual Report form an integral part of these financial statements.
Notes to the Financial Statements
for the year ended 31 August 2026
1. Accounting policies
(a) Basis of accounting
The financial statements have been prepared in accordance with the Companies (Guernsey) Law 2008 and International Financial Reporting Standards (“IFRS”), which comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee (“IASC”), that remain in effect and to the extent that they have been adopted by the European Union.
Where consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with presentational guidance set out in the statement of recommended practice for investment trust companies (the “SORP”) issued by the Association of Investment Companies in July 2022.
The policies applied in these financial statements are consistent with those applied in the preceding year.
The Company’s share capital is denominated in sterling and this is the currency in which its shareholders operate and expenses are generally paid. The Board has therefore determined that sterling is the functional currency and the currency in which the financial statements are presented. Amounts have been rounded to the nearest thousand.
The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss. The Directors believe that the Company has adequate resources to continue operating to 30 November 2027, which is at least 12 months from the date of approval of these financial statements. In forming this opinion, the Directors have taken into consideration: the controls and monitoring processes in place; the Company’s level of debt and other payables; the low level of operating expenses, comprising largely variable costs which would reduce pro rata in the event of a market downturn; and that the Company’s assets comprise cash and readily realisable securities quoted in active markets. In forming this opinion, the Directors have also considered any potential impact of climate change, inflation, high interest rates and high energy costs on the viability of the Company.
The material accounting policies adopted are set out below.
(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment company and in accordance with the recommendations of the SORP, supplementary information has been presented which analyses items in the Statement of Comprehensive Income between those which are income in nature and those which are capital in nature.
(c) Investments at fair value through profit or loss
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment objective and information is provided internally on that basis to the Company’s Board of Directors. Accordingly, investments are designated upon initial recognition as investments at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which are quoted bid market prices for investments traded in active markets.
Investments that are unlisted or not actively traded are valued using a variety of techniques to determine their fair value; all such valuations are reviewed by both the AIFM’s fair value pricing committee and by the Directors.
Investments are recognised and derecognised on the trade date where a purchase or sale is made under a contract whose terms require delivery within a timeframe established by the market concerned.
(d) Accounting for reserves
Gains and losses on sales of investments, including the related foreign exchange gains and losses, are included in the Statement of Comprehensive Income and in capital reserves within “Gains and losses on sales of investments”. Increases and decreases in the valuation of investments held at the year end, including the related foreign exchange gains and losses, are included in the Statement of Comprehensive Income and in capital reserves within “Holding gains and losses on investments”.
Foreign exchange gains and losses on cash and deposit balances are included in the Statement of Comprehensive Income and in capital reserves within “Holdings gains and losses on investments”. Unrealised exchange gains and losses on foreign currency loans are included in the Statement of Comprehensive Income and dealt with in capital reserves within “Holding gains and losses on investments”.
(e) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing shares into treasury is debited to “treasury share reserve”. The sales proceeds of treasury shares reissued are credited back to treasury share reserve until the debit balance on that reserve is extinguished and thereafter to capital reserves.
(f) Income
Dividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital in nature, in which case it is included in capital.
Income from fixed interest debt securities is recognised using the effective interest method.
Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of interest.
(g) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to revenue with the following exceptions:
• The management fee is allocated 40% to revenue and 60% to capital in line with the Board’s expected long-term split of revenue and capital return from the Company’s investment portfolio.
• Any performance fee is allocated 100% to capital.
• Expenses incidental to the purchase or sale of investments are charged to capital. These expenses are commonly referred to as transaction costs and mainly comprise brokerage commission. Details of transaction costs are given in note 10 on page 68 of the Annual Report.
(h) Finance costs
Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in profit or loss using the effective interest method.
Finance costs are allocated 40% to revenue and 60% to capital in line with the Board’s expected long-term split of revenue and capital return from the Company’s investment portfolio.
(i) Other financial assets and liabilities
Cash and cash equivalents may comprise cash and demand deposits which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value. Other receivables are non-interest-bearing, short-term in nature and are accordingly stated at nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
Interest-bearing bank loans are initially recognised at cost, being the proceeds received net of direct issue costs, and subsequently at amortised cost.
(j) Taxation
The taxation charge in the Statement of Comprehensive Income comprises irrecoverable overseas withholding tax deducted from dividends receivable.
Current taxation comprises of the tax withheld at the source on foreign income, with adjustments for any amounts recoverable under tax treaties. The taxation is recorded in the revenue section of the Statement of Comprehensive Income, except when it pertains to capital-related items where it will be accounted for in the capital section of the statement.
Deferred taxation represents the taxation liability or asset arising from anticipated variations in the treatment of items for accounting purposes compared to tax purposes. The calculation is based on tax rates that have been officially approved or are highly likely for the period when the tax becomes payable. Deferred tax assets are recognised when there is an expectation of having future taxable profits.
(k) Foreign currency
The results and financial position are expressed in sterling. Transactions in currencies other than sterling are recorded at the rates of exchange prevailing on the dates of the transaction. At each balance sheet date, monetary items and non-monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at 16:00 hours on the balance sheet date. Gains or losses arising on translation are included in net profit or loss for the year and presented as revenue or capital as appropriate.
(l) New and amended accounting standards
At the date of authorisation of these financial statements there are no new or revised Standards or Interpretations, which are in issue but which are not yet effective, which the Board expects to have any significant effect on the Company’s financial statements.
(m) Significant accounting judgements, estimates and assumptions
Other than the Directors’ assessment of going concern, no significant judgements, estimates or assumptions have been required in the preparation of these financial statements in accordance with IFRS.
(n) Dividends payable to shareholders
Interim dividends to shareholders are recorded in the financial statements when paid.
2. Gains on investments held at fair value through profit or loss
|
|
2026 |
2025 |
|
Gains on sales of investments based on the carrying value at the previous balance sheet date |
71,129 |
755 |
|
Net movement in investment holding gains |
277,336 |
74,180 |
|
Gains on investments held at fair value through profit or loss |
348,465 |
74,935 |
3. Income
|
|
2026 |
2025 |
|
Income from investments |
|
|
|
Overseas dividends |
33,259 |
32,920 |
|
Other income |
|
|
|
Deposit interest |
109 |
117 |
|
Total income |
33,368 |
33,037 |
|
Capital: |
|
|
|
Special dividend allocated to capital |
755 |
725 |
4. Management and performance fees
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Management fee |
2,664 |
3,996 |
6,660 |
1,950 |
2,925 |
4,875 |
|
Performance fee |
— |
5,710 |
5,710 |
— |
4,759 |
4,759 |
|
|
2,664 |
9,706 |
12,370 |
1,950 |
7,684 |
9,634 |
The basis for calculating the investment management fee and any performance fee is set out in the Directors’ Report on pages 39 and 40 of the Annual Report.
5. Other administrative expenses
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Administration expenses |
661 |
— |
661 |
870 |
8 |
878 |
|
Directors’ fees |
201 |
— |
201 |
192 |
— |
192 |
|
Secretarial fee |
150 |
— |
150 |
150 |
— |
150 |
|
Auditors’ remuneration for audit services1 |
70 |
— |
70 |
65 |
— |
65 |
|
|
1,082 |
— |
1,082 |
1,277 |
8 |
1,285 |
1 No amounts are payable to the auditor for non-audit services.
6. Finance costs
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Interest on bank loans and overdrafts |
712 |
1,067 |
1,779 |
859 |
1,290 |
2,149 |
The Board has determined that the finance costs will be allocated 40% to revenue and 60% to capital in line with the Board’s expected long-term split of revenue and capital return from the Company’s investment portfolio.
7. Taxation
(a) Analysis of tax charge for the year
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Irrecoverable overseas tax |
2,383 |
— |
2,383 |
1,936 |
— |
1,936 |
|
Taxation for the year |
2,383 |
— |
2,383 |
1,936 |
— |
1,936 |
The Company became resident in the United Kingdom for tax purposes with effect from 1 September 2020. The Company has no corporation tax liability for the year ended 31 August 2026 (2025: the same).
(b) Factors affecting tax charge for the year
The tax assessed for the year ended 31 August 2026 is lower (2025: lower) than the Company’s applicable rate of corporation tax for that year of 25% (2025: 25%).
The factors affecting the tax charge for the year are as follows:
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Net return before taxation |
28,910 |
338,167 |
367,077 |
28,951 |
67,481 |
96,432 |
|
Net return before taxation multiplied by the Company’s applicable rate of corporation tax for the year of 25% (2025: 25%) |
7,228 |
84,542 |
91,770 |
7,238 |
16,871 |
24,109 |
|
Effects of: |
|
|
|
|
|
|
|
(Gains) on investments not taxable/capital losses on investments not deductible |
— |
(87,046) |
(87,046) |
— |
(18,933) |
(18,933) |
|
Income not chargeable to corporation tax |
(8,315) |
(189) |
(8,504) |
(7,593) |
(181) |
(7,774) |
|
Expenses disallowed |
— |
— |
— |
— |
(2) |
(2) |
|
Unrelieved expenses1 |
1,114 |
2,693 |
3,807 |
384 |
2,245 |
2,629 |
|
Tax relief on overseas tax suffered |
(27) |
— |
(27) |
(29) |
— |
(29) |
|
Irrecoverable overseas tax |
2,383 |
— |
2,383 |
1,936 |
— |
1,936 |
|
Taxation for the year |
2,383 |
— |
2,383 |
1,936 |
— |
1,936 |
1 Unrelieved expenses comprise allowable expenses that were not utilised in the current year due to insufficient taxable income. These expenses are carried forward for potential offset against future taxable profits and are shown separately between revenue and capital elements.
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £12,640,000 (2025: £8,833,000) based on a main rate of corporation tax of 25%. In its 2020 budget, the UK government announced that the main rate of corporation tax would increase to 25% for the fiscal year beginning on 1 April 2023.
The deferred tax asset has arisen due to the excess of deductible expenses over taxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the financial statements.
The Company was granted status as an investment trust company by HMRC effective from 1 September 2020, and intends to continue to meet the conditions required to retain that status. Therefore, no provision has been made for deferred UK capital gains tax on any capital gains or losses arising on the revaluation or disposal of investments.
8. Dividends
(a) Dividends paid and proposed
|
|
2026 |
2025 |
|
2025 final dividend of 6.20p (2024: 6.00p) |
14,057 |
14,160 |
|
First interim dividend of 2.00p (2025: 2.00p) |
4,526 |
4,654 |
|
Second interim dividend of 2.50p (2025: 2.00p) |
5,610 |
4,626 |
|
Third interim dividend of 2.50p (2025: 2.00p) |
5,543 |
4,583 |
|
Total dividends paid in the year |
29,736 |
28,023 |
|
|
2026 |
2025 |
|
Fourth interim dividend proposed of 5.80p (2025: 6.20p) |
12,853 |
14,208 |
Under the Companies (Guernsey) Law 2008, the Company may pay dividends out of both capital and revenue reserves, subject to passing a solvency test. However all dividends paid and declared to date have been paid, or will be paid out of revenue and revenue reserves. The Company has passed the solvency test for all dividends paid to date.
The fourth interim dividend declared in respect of the year ended 31 August 2025 differs from the amount actually paid due to shares repurchased and cancelled after the balance sheet date but prior to the share register record date.
(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (“Section 1158”)
The Company was granted status as an investment trust company by HMRC effective from 1 September 2020, and intends to continue to meet the minimum distribution requirements of Section 1158, in order to retain that status. Those requirements are considered on the basis of dividends declared in respect of the financial year as shown below. The revenue available for distribution by way of dividend for the year is £26,527,000 (2025: £27,015,000).
|
|
2026 |
2025 |
|
First interim dividend of 2.00p (2025: 2.00p) |
4,526 |
4,654 |
|
Second interim dividend of 2.50p (2025: 2.00p) |
5,610 |
4,626 |
|
Third interim dividend of 2.50p (2025: 2.00p) |
5,543 |
4,583 |
|
Fourth interim dividend of 5.80p (2025: 6.20p) |
12,853 |
14,208 |
|
Total dividends of 12.80p (2025: 12.20p) |
28,532 |
28,071 |
9. Return per share
|
|
2026 |
2025 |
|
Revenue return |
26,527 |
27,015 |
|
Capital return |
338,167 |
67,481 |
|
Total return |
364,694 |
94,496 |
|
Weighted average number of ordinary shares in issue during the year |
225,507,632 |
233,142,284 |
|
Revenue return per share (pence) |
11.76 |
11.59 |
|
Capital return per share (pence) |
149.96 |
28.94 |
|
Total return per share (pence) |
161.72 |
40.53 |
10. Investments held at fair value through profit or loss
|
|
2026 |
2025 |
|
Opening book cost |
592,261 |
608,139 |
|
Opening investment holding gains |
171,550 |
127,468 |
|
Opening fair value |
763,811 |
735,607 |
|
Analysis of transactions made during the year |
|
|
|
Purchases at cost |
195,047 |
136,514 |
|
Sales proceeds |
(233,903) |
(183,245) |
|
Gains on investments held at fair value through profit or loss |
348,465 |
74,935 |
|
Closing fair value |
1,073,420 |
763,811 |
|
Closing book cost |
624,535 |
592,261 |
|
Closing investment holding gains |
448,885 |
171,550 |
|
Closing fair value |
1,073,420 |
763,811 |
All investments are listed on a recognised stock exchange.
The Company received £233,903,000 (2025: £183,245,000) from disposal of investments in the year. The book cost of these investments when they were purchased was £162,773,000 (2025: £152,392,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The following transaction costs, mainly comprising brokerage commissions, were incurred during the year:
|
|
2026 |
2025 |
|
On acquisitions |
223 |
159 |
|
On disposals |
510 |
308 |
|
|
733 |
467 |
11. Current assets
|
Receivables |
2026 |
2025 |
|
Dividends and interest receivable |
2,555 |
2,720 |
|
Securities sold awaiting settlement |
2,229 |
1,379 |
|
Other receivables |
113 |
80 |
|
|
4,897 |
4,179 |
The Directors consider that the carrying amount of debtors approximates to their fair value.
Cash and cash equivalents
Cash and cash equivalents comprises bank balances and cash held by the Company, including short-term deposits. The carrying amount of these represents their fair value. Cash balances in excess of a predetermined amount are placed on short-term deposit at market rates of interest.
12. Current liabilities
|
Payables |
2026 |
2025 |
|
Bank loan |
36,834 |
37,008 |
|
Securities purchased awaiting settlement |
2,174 |
1,140 |
|
Other payables and accruals |
10,072 |
6,274 |
|
|
49,080 |
44,422 |
The bank loan comprises US$50 million drawn down on the Company’s £75 million multicurrency credit facility with the Bank of Nova Scotia. The facility is secured and drawings are subject to covenants and restrictions which are customary for a facility of this nature and all of these have been complied with.
Further details of the facility are given in note 20 on page 74 of the Annual Report.
13. Share Capital
|
|
2026 |
2025 |
|
Ordinary shares of 1p each, allotted, called-up and fully paid: |
|
|
|
Opening balance of 229,156,408 (2025: 241,798,024) shares, excluding shares held in treasury |
124,529 |
159,222 |
|
Repurchase of 7,562,037 (2025: 12,641,616) shares into treasury |
(28,588) |
(34,693) |
|
Subtotal of 221,594,371 (2025: 229,156,408) shares, excluding shares held in treasury |
95,941 |
124,529 |
|
49,638,653 (2025: 42,076,616) shares held in treasury |
138,406 |
109,818 |
|
Closing balance of 271,233,024 (2025: 271,233,024) shares |
234,347 |
234,347 |
The ordinary shares rank pari passu, and each share carries one vote in the event of a poll at a general meeting.
During the year, the Company repurchased 7,562,037 of its own shares, nominal value £75,620 to hold in treasury for a total consideration of £28,588,000 representing 3.3% of the shares outstanding at the beginning of the year. The reason for these share purchases was to seek to manage the share price discount to net asset value per share.
14. Reserves
|
|
|
|
|
|
Capital reserves |
| |
|
|
Share |
Treasury |
Capital |
Special |
Gains and |
Investment |
Revenue |
|
At 1 September 2025 |
234,347 |
(109,818) |
39 |
150,374 |
247,051 |
175,591 |
34,511 |
|
Gains on sales of investments based on the carrying |
— |
— |
— |
— |
71,129 |
— |
— |
|
Movement in investment holding gains and losses |
— |
— |
— |
— |
— |
277,336 |
— |
|
Realised exchange losses on cash and short-term deposits |
— |
— |
— |
— |
(826) |
— |
— |
|
Exchange gains on foreign currency credit facility |
— |
— |
— |
— |
— |
546 |
— |
|
Repurchase of ordinary shares into treasury |
— |
(28,588) |
— |
— |
— |
— |
— |
|
Management fee, finance costs and other expenses charged to capital |
— |
— |
— |
— |
(5,063) |
— |
— |
|
Performance fee charged to capital |
— |
— |
— |
— |
(5,710) |
— |
— |
|
Dividends allocated to capital |
— |
— |
— |
— |
755 |
— |
— |
|
Dividends paid in the year |
— |
— |
— |
— |
— |
— |
(29,736) |
|
Net return after taxation |
— |
— |
— |
— |
— |
— |
26,527 |
|
At 31 August 2026 |
234,347 |
(138,406) |
39 |
150,374 |
307,336 |
453,473 |
31,302 |
|
|
|
|
|
|
Capital reserves |
| |
|
|
Share |
Treasury |
Capital |
Special |
Gains and |
Investment |
Revenue |
|
At 1 September 2024 |
234,347 |
(75,125) |
39 |
150,374 |
224,688 |
130,473 |
35,519 |
|
Gains on sales of investments based on the carrying |
— |
— |
— |
— |
755 |
— |
— |
|
Movement in investment holding gains and losses |
— |
— |
— |
— |
— |
74,180 |
— |
|
Transfer on disposal of investments |
— |
— |
— |
— |
30,098 |
(30,098) |
— |
|
Realised exchange losses on cash and short-term deposits |
— |
— |
— |
— |
(233) |
— |
— |
|
Exchange gains on foreign currency credit facility |
— |
— |
— |
— |
— |
1,036 |
— |
|
Repurchase of ordinary shares into treasury |
— |
(34,693) |
— |
— |
— |
— |
— |
|
Management fee, finance costs and other expenses |
— |
— |
— |
— |
(4,223) |
— |
— |
|
Performance fee charged to capital |
— |
— |
— |
— |
(4,759) |
— |
— |
|
Dividends allocated to capital |
— |
— |
— |
— |
725 |
— |
— |
|
Dividends paid in the year |
— |
— |
— |
— |
— |
— |
(28,023) |
|
Net return after taxation |
— |
— |
— |
— |
— |
— |
27,015 |
|
At 31 August 2025 |
234,347 |
(109,818) |
39 |
150,374 |
247,051 |
175,591 |
34,511 |
Under the Companies (Guernsey) Law 2008, the Company may buy back its own shares, or pay dividends, out of any reserves, subject to passing a solvency test. This test considers whether, immediately after the payment, the Company’s assets exceed its liabilities and whether it will be able to pay its debts when they fall due.
15. Net asset value per share
|
|
2026 |
2025 |
|
Total equity shareholders’ funds (£’000) |
1,038,465 |
732,095 |
|
Shares in issue at the year end |
221,594,371 |
229,156,408 |
|
Net asset value per share (pence) |
468.63 |
319.47 |
16. Contingent liabilities and capital commitments
There were no contingent liabilities or capital commitments at the balance sheet date (2025: none).
17. Transactions with the Manager
The Company has appointed Schroder Unit Trusts Limited (“the Manager”), a wholly owned subsidiary of Schroders Limited, to provide investment management, accounting, secretarial and administration services. Details of the management and performance fee agreement are given in the Directors’ Report on pages 39 and 40 of the Annual Report. The management fee payable in respect of the year amounted to £6,660,000 (2025: £4,875,000), of which £3,631,000 (2025: £1,300,000) was outstanding at the year end. The company secretarial fee payable to the Manager amounted to £150,000 (2025: £150,000) of which £76,000 (2025: £37,500) was outstanding at the year end. The performance fee payable in respect of the year amounted to £5,710,000 (2025: £4,759,000) and the whole of this amount was outstanding at the year end.
If the Company invests in funds managed or advised by the Manager or any of its associated companies, any fee earned by the Manager from those funds is deducted from the management fee payable by the Company. There have been no such investments during the current or comparative year.
18. Related Party transactions
Details of the remuneration payable to Directors are given in the Directors’ Remuneration Report on page 50 and details of Directors’ shareholdings are given in the Directors’ Remuneration Report on page 51 of the Annual Report. Details of transactions with the Manager are given in note 17 above. There have been no other transactions with related parties during the year (2025: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s portfolio of investments, which may comprise investments in equities, equity linked securities, government bonds and derivatives, are carried in the balance sheet at fair value. Other financial instruments held by the Company may comprise amounts due to or from brokers, dividends and interest receivable, accruals and cash at bank.
For these instruments, the balance sheet amount is a reasonable approximation of fair value.
The investments are categorised into a hierarchy comprising the following three levels:
Level 1 – valued using quoted prices in active markets.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted market prices included within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.
Details of the valuation techniques used by the Company are given in note 1(c) on page 63 of the Annual Report.
At 31 August 2026, the Company’s investment portfolio was categorised as follows:
|
|
2026 | |||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Investments in equities and equity linked securities |
1,073,420 |
— |
— |
1,073,420 |
|
Total |
1,073,420 |
— |
— |
1,073,420 |
The prior-year Level 2 balance comprised one holding in Midea Group warrants due on 10 July 2026. There were no transfers between Levels 1, 2 or 3 during the year ended 31 August 2026. As at 31 August 2026, the Company held no warrant investments.
|
|
2025 | |||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Investments in equities and equity linked securities |
750,236 |
13,575 |
— |
763,811 |
|
Total |
750,236 |
13,575 |
— |
763,811 |
Level 2 investments comprise one holding in Midea Group warrants 10/07/2026. There were no transfers between Levels 1, 2 or 3 during the year ended 31 August 2025.
20. Financial instruments’ exposure to risk and risk management policies
The Company’s investment objective is to provide a total return for investors primarily through investments in equities and equity related investments, of companies which are based in, or which derive a significant proportion of their revenues from, the Asia Pacific region and which offer attractive yields. In pursuing this objective, the Company is exposed to a variety of risks that could result in a reduction in the Company’s net assets. These risks include market risk (comprising currency risk, interest rate risk and market price risk), liquidity risk and credit risk. The Directors’ policy for managing these risks is set out below. The Board coordinates the Company’s risk management policy.
The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not changed from those applying in the comparative year.
The Company’s classes of financial instruments are as follows:
• investments in equities and equity-related securities of companies in the Asia Pacific region which are held in accordance with the Company’s investment objective;
• short-term receivables, payables and cash arising directly from its operations; and
• a multicurrency credit facility with Bank of Nova Scotia, the purpose of which is to assist in financing the Company’s operations.
(a) Market risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and market price risk. Information to enable an evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivity analysis where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.
(i) Currency risk
The majority of the Company’s assets, liabilities and income are denominated in currencies other than sterling, which is the Company’s functional currency and the presentational currency of the financial statements. As a result, movements in exchange rates will affect the sterling value of those items.
Management of currency risk
The Manager monitors the Company’s exposure to foreign currencies and regularly reports to the Board. The Manager measures the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed.
Income denominated in foreign currencies is converted into sterling on receipt.
Foreign currency exposure
The fair value of the Company’s monetary items that have foreign currency exposure at 31 August are shown below. The Company’s investments (which are not monetary items) have been included separately in the analysis so as to show the overall level of exposure.
|
2026 |
Japanese |
Hong Kong |
Australian |
Singapore |
Taiwan |
Thai |
US |
Other |
Total |
|
Current assets |
— |
361 |
1,023 |
995 |
3,270 |
90 |
— |
886 |
6,625 |
|
Current liabilities |
— |
(2,174) |
— |
— |
— |
— |
(36,834) |
— |
(39,008) |
|
Foreign currency exposure on net monetary items |
— |
(1,813) |
1,023 |
995 |
3,270 |
90 |
(36,834) |
886 |
(32,383) |
|
Investments held at fair value through profit or loss1 |
— |
227,696 |
119,432 |
119,316 |
295,524 |
21,307 |
— |
235,943 |
1,019,218 |
|
Total net foreign currency exposure |
— |
225,883 |
120,455 |
120,311 |
298,794 |
21,397 |
(36,834) |
236,829 |
986,835 |
|
2025 |
Japanese |
Hong Kong |
Australian |
Singapore |
Taiwan |
Thai |
US |
Other |
Total |
|
Current assets |
— |
380 |
681 |
422 |
528 |
— |
780 |
1,854 |
4,645 |
|
Current liabilities |
— |
— |
— |
— |
— |
— |
(37,008) |
— |
(37,008) |
|
Foreign currency exposure on net monetary items |
— |
380 |
681 |
422 |
528 |
— |
(36,228) |
1,854 |
(32,363) |
|
Investments held at fair value through profit or loss1 |
2,008 |
176,858 |
102,504 |
106,200 |
174,537 |
8,800 |
13,575 |
150,221 |
734,703 |
|
Total net foreign currency exposure |
2,008 |
177,238 |
103,185 |
106,622 |
175,065 |
8,800 |
(22,653) |
152,075 |
702,340 |
1 Excluding any stocks priced in sterling.
The above year-end amounts are broadly representative of the exposure to foreign currency risk during the current and comparative year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company’s monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’s monetary currency financial instruments held at each balance sheet date and assumes a 10% (2025: 10%) appreciation or depreciation in sterling against the currencies to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility of exchange rates during the year.
If sterling had weakened by 10% this would have had the following effect:
|
|
2026 |
2025 |
|
Statement of comprehensive Income – return after taxation |
|
|
|
Net revenue return |
3,027 |
3,024 |
|
Net capital (loss) |
(3,270) |
(3,293) |
|
Total return after taxation |
(243) |
(269) |
Conversely if sterling had strengthened by 10% this would have had the following effect:
|
|
2026 |
2025 |
|
Statement of comprehensive Income – return after taxation |
|
|
|
Net revenue (loss) |
(3,027) |
(3,024) |
|
Net capital return |
3,270 |
3,293 |
|
Total return after taxation |
243 |
269 |
In the opinion of the Directors, the above sensitivity analysis with respect to monetary financial assets and liabilities is broadly representative of the whole of the current and comparative year. The sensitivity of the Company’s investments to changes in foreign currency exchange rates is subsumed into market price risk sensitivity on page 75 of the Annual Report.
(ii) Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on variable rate borrowings when interest rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company’s gearing policy is to limit gearing to 25% where gearing is defined as borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when the Company draws on the credit facility. However, amounts drawn down on this facility are for short-term periods and therefore exposure to interest rate risk is not significant.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown below:
|
|
2026 |
2025 |
|
Exposure to floating interest rates |
|
|
|
Cash and cash equivalents |
9,228 |
8,527 |
|
Other payables: drawings on the credit facility |
(36,834) |
(37,008) |
|
Total exposure |
(27,606) |
(28,481) |
Cash deposits at call earn interest based on the Sterling Overnight Interest Average (“SONIA”) (2025: SONIA) rates.
The Company has arranged a £75 million credit facility with The Bank of Nova Scotia, effective from 29 July 2025. Interest is payable at the aggregate of the compounded Risk Free Rate (“RFR”) for the relevant currency and loan period, plus a margin. Amounts are normally drawn down on the facility for a one month period, at the end of which it may be rolled over or adjusted. At 31 August 2026, the Company had drawn down US$50.0 million (£36.8 million) for a one month period, at an interest rate of 4.55% per annum.
The above year-end amounts are not representative of the exposure to interest rates during the year as the level of cash balances and drawings on the credit facility have fluctuated. The maximum and minimum net interest rate exposure during the year has been as follows:
|
|
2026 |
2025 |
|
Maximum interest rate exposure during the year – net debt |
(33,835) |
(37,867) |
|
Minimum interest rate exposure during the year – net debt |
(14,691) |
(25,781) |
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2025: 1.0%) increase or decrease in interest rates. 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 and which are exposed to interest rate movements, with all other variables held constant.
|
|
2026 |
2025 | ||
|
Statement of Comprehensive Income – return after taxation |
1.0% |
1.0% |
1.0% |
1.0% |
|
Net revenue (loss)/return |
(55) |
55 |
(63) |
63 |
|
Net capital (loss)/return |
(221) |
221 |
(222) |
222 |
|
Net total (loss)/return |
(276) |
276 |
(285) |
285 |
|
Net (liabilities)/assets |
(276) |
276 |
(285) |
285 |
In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due to fluctuations in the level of cash balances and drawings on the credit facility.
(iii) Market price risk
Market price risk includes changes in market prices which may affect the value of the Company’s investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile.
Market price risk exposure
The Company’s total exposure to changes in market prices at 31 August comprised the following:
|
|
2026 |
2025 |
|
Investments at fair value through profit or loss |
1,073,420 |
763,811 |
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 18 of the Annual Report. This shows that the portfolio principally comprises investments quoted on Asian stock markets. Accordingly there is a concentration of exposure to that region. However it should be noted that an investment may not be entirely exposed to the economic conditions in its country of domicile or of listing.
Market price risk sensitivity
The following table illustrates the sensitivity of the net profit for the year and net assets to an increase or decrease of 20% (2025: 20%) in the fair values of the Company’s equities. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities, adjusting for changes in the management fee, but with all other variables held constant.
|
|
2026 |
2025 | ||
|
Statement of Comprehensive Income – return/(loss) after taxation |
20% |
20% |
20% |
20% |
|
Net revenue (loss)/return |
(601) |
601 |
(428) |
428 |
|
Net capital return/(loss) |
213,782 |
(213,782) |
152,121 |
(152,121) |
|
Total return/(loss) after taxation |
213,181 |
(213,181) |
151,693 |
(151,693) |
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities and derivative instruments, which can be sold to meet funding requirements if necessary. Short-term flexibility is achieved through the use of a credit facility.
The Board’s policy is for the Company to remain fully invested in normal market conditions and that the credit facility be used to manage working capital requirements and to gear the Company as appropriate.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
|
|
2026 |
2025 |
|
Other payables |
|
|
|
Bank loan – including interest |
36,839 |
37,019 |
|
Securities purchased awaiting settlement |
2,174 |
1,140 |
|
Other payables and accruals |
10,067 |
6,263 |
|
|
49,080 |
44,422 |
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to the Company.
Management of credit risk
This risk is managed as follows:
Portfolio dealing
The Company invests almost entirely in markets that operate a “Delivery Versus Payment” settlement process which mitigates the risk of losing the principal of a trade during settlement. The Manager continuously monitors dealing activity to ensure best execution, which involves measuring various indicators including the quality of trade settlement and incidence of failed trades. Counterparties must be pre-approved by the Manager’s credit committee.
The Company may sometimes invest in equity-linked securities, such as low exercise price options, warrants, participatory notes and depositary receipts, which provide synthetic equity exposure where the Company may otherwise find it problematic to invest in the underlying assets directly. They have the same economic risks as a direct investment, except that there is a counterparty risk to the issuing investment bank. Counterparties must be approved by the Manager’s Credit Risk Team based on a list of criteria and are monitored on an ongoing basis by Schroders’ Portfolio Compliance Team.
Exposure to the Custodian
The Custodian of the Company’s assets is J.P. Morgan Europe Limited which has Long-Term Credit Ratings of AA- with Fitch and Aa2 with Moody’s.
The Company’s investments are held in accounts which are segregated from the Custodian’s own trading assets. If the Custodian were to become insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash balances are all deposited with the Custodian as banker and held on the Custodian’s balance sheet. In accordance with usual banking practice, the Company will rank as a general creditor to the Custodian in respect of cash balances and open currency contracts.
Credit risk exposure
The following amounts shown in the balance sheet, represent the maximum exposure to credit risk at the current and comparative year end.
|
|
2026 |
2025 | ||
|
|
Balance |
Maximum |
Balance |
Maximum |
|
Current assets |
|
|
|
|
|
Receivables – dividends and interest |
2,555 |
2,555 |
2,720 |
2,720 |
|
Securities sold awaiting settlement |
2,229 |
2,229 |
1,379 |
1,379 |
|
Cash and cash equivalents |
9,228 |
9,228 |
8,527 |
8,527 |
|
|
14,012 |
14,012 |
12,626 |
12,626 |
No items included in “Receivables” are past their due date and none have been provided for.
21. Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
The Company’s debt and capital structure comprises the following:
|
|
2026 |
2025 |
|
Debt |
|
|
|
Bank loan |
36,834 |
37,008 |
|
Equity |
|
|
|
Share capital |
234,347 |
234,347 |
|
Reserves |
804,118 |
497,748 |
|
|
1,038,465 |
732,095 |
|
Total debt and equity |
1,075,299 |
769,103 |
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise total return to its equity shareholders through an appropriate level of gearing.
The Board’s policy is to limit gearing to 25%. Gearing for this purpose is defined as borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
|
|
2026 |
2025 |
|
Borrowings used for investment purposes, less cash |
27,606 |
28,481 |
|
Net assets |
1,038,465 |
732,095 |
|
Gearing |
2.7% |
3.9% |
The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes:
• the planned level of gearing, which takes into account the Manager’s views on the market;
• the need to buy back the Company’s own shares for cancellation or to hold in treasury, which takes into account the share price discount;
• the opportunities for issuance of new shares or to reissue shares from treasury; and
• the amount of dividend to be paid, in excess of that which is required to be distributed.
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