9 December 2021

ANNUAL REPORT AND ACCOUNTS

Schroder AsiaPacific Fund plc (the "Company") hereby submits its Annual Report for the year ended 30 September 2021 as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.1. 

The Company's Annual Report and Accounts for the year ended 30 September 2021 are also being published in hard copy format and an electronic copy will shortly be available to download from the Company's website www.schroders.co.uk/asiapacific. Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/0345V_1-2021-12-8.pdf

The Company has submitted its Annual Report and Accounts to the National Storage Mechanism and it will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Enquiries:

Benjamin Hanley

Schroder Investment Management Limited 

Tel: 020 7658 3847

Chairman's Statement

Performance

For my first annual report as Chairman, I am pleased to report that the Company has again produced strong performance for the year to 30 September 2021, building on the significant out-performance against the Benchmark during the previous financial year.

The Company's NAV produced a total return of 14.6%, outperforming the Benchmark's total return of 9.7% while the share price produced a positive total return of 15.0%.

Richard Sennitt and Abbas Barkhordar took responsibility for the management of the portfolio on 1 April 2021. A more detailed comment on performance and investment policy may be found in the Manager's Review.

Revenue and dividend

The Company's principal investment objective is to achieve capital growth, and the Directors continue to distribute substantially all of the revenue it receives each year. Last year, the Company's revenue was impacted as portfolio companies cut dividends due to the dramatic decrease in economic activity during the pandemic. During the financial year ended 30 September 2021, earnings increased by 22.0% but were boosted by some unusually large special dividends which may not recur.

The Directors are recommending a final dividend of 9.70 pence per share for the year ended 30 September 2021, representing an increase of 21.3% over the 8.00 pence paid in respect of the previous financial year.

This dividend will be paid on 7 February 2022 to shareholders on the register on 31 December 2021, subject to approval by shareholders at the Annual General Meeting ("AGM") on 1 February 2022.

Gearing

During the year, the Company maintained its £100 million multi-currency revolving credit facility and also had access to an overdraft facility. These borrowings were only lightly utilised. At the start of the year the Company was 0.2% geared and it ended the year with gearing at 0.6%.

Discount management

The Company was active in buying back its shares during the year and a total of 1,960,000 shares were bought back for cancellation. Since the year end, an additional 440,000 shares have also been bought back. The average level of discount during the year under review was 7.3%.

Overall, the Board's strategy is to limit discount volatility and to help maintain liquidity in the Company's shares. As such we believe that it is not necessarily in the best interests of shareholders as a whole to adopt a rigid discount control mechanism that seeks to target a defined maximum discount level regardless of market conditions. Our policy takes account of the level of discount at which the Company's peer group trades, prevailing market conditions and activity within our sector.

At the Company's last AGM, authority was given to purchase up to 14.99% of its issued share capital. We propose that the share buyback authority be renewed at the forthcoming AGM and that any shares so purchased be cancelled or held in treasury for potential reissue.

Board succession

As set out in the 2020 annual report, Rosemary Morgan will not be seeking re-election at the forthcoming AGM. During the year, the nomination committee undertook a search to find a successor for Rosemary as audit and risk committee chair. The Board followed the committee's recommendation, and on 25 October, appointed Julia Goh. Julia's biography is included on page 21 of the 2021 annual report. She will be standing for election with the other Directors at the AGM.

I would like to take this opportunity to thank Rosemary on behalf of the Board, for her valuable contribution both as a non-executive and Senior Independent Director, and as audit and risk committee chair.

Management fee

The Board agreed with the Manager to reduce its management fees and, with effect from 1 April 2021, the management fee decreased to 0.75% per annum on the first £600 million of net assets and 0.70% per annum on net assets in excess of £600 million. The full details of the fees paid to the Manager are set out in the Directors' Report on page 23 of the 2021 annual report.

Environmental, Social and Governance issues ("ESG")

The Manager has always expressed the view that companies with good ESG often perform better and deliver superior returns over time. Our portfolio managers have provided more details in the Strategic Report on how ESG considerations are incorporated into the investment process and given details of the Manager's ESG research capability. This year, our portfolio managers have included a table showing sensitive sectors, as well as some comparative data on the portfolio's scope 1 and scope 2 carbon emissions (as detailed on page 15 of the 2021 annual report, this covers 88.67% of the portfolio and 88.63% of the measured Benchmark). It is interesting to note that the portfolio generated significantly less scope 1 and scope 2 carbon emissions than the Benchmark at 30 September 2021.

The Board hopes investors will appreciate this additional information and will continue to keep ESG issues under review, both from an investment perspective, but also on behalf of the Company. On this latter point, the Board is pleased to see that Schroders, as the Company's key service provider, continues to evolve its approach towards sustainability, as set out on page 12 of the 2021 annual report.

Outlook

Since reaching an aggregate all-time high in January 2021, Asian markets have lagged global markets primarily due to negative sentiment from regulatory announcements coming out of China. Other markets such as India have performed very strongly, resulting in a wide divergence of returns.

Asian markets remain volatile and dynamic with a wide range of valuations disparities across countries and sectors. Volatility is likely to continue in 2022 as a myriad of material issues evolve, be it China's regulatory policies, COVID-19, supply constraints, geopolitics, or changes in monetary policy.

As the Company's long-term outperformance of the Benchmark has demonstrated, the importance of active management during uncertain times cannot be understated. There is no doubt that continued shifts of sentiment and market dislocations will present attractive opportunities to our portfolio managers. Drawing on the strength and depth of Schroders' analysts in Asia, they will continue to focus on identifying attractively valued companies with the potential for growth, using a disciplined investment approach grounded on fundamental bottom-up research. I am sure this will continue to serve our shareholders well and look forward to the next year with cautious optimism.

AGM

The AGM will be held on Tuesday, 1 February 2022 at 12.00 noon, at the Company's registered office. Subject to any restrictions on meetings at that time, shareholders are welcome to attend in person.

Last year, the Manager presented to shareholders using a webinar. We believe shareholders benefited from this, allowing anyone to watch remotely, and ask questions, without the need to travel. The Board is planning to continue with this format this year, and Richard and Abbas will be presenting to shareholders at a webinar on 20 January 2022 at 2.00 pm. You can sign up here: https://registration.duuzra.com/form/SAPFregistration2021.

One advantage of a webinar is that if you are not able to attend at this time, you will be able to watch it afterwards. It will be available on the Company's webpages at: www.schroders.co.uk/asiapacific. However, the Board appreciates that shareholders may also wish to travel to London and meet the Directors, Richard and Abbas in person and ask questions. A presentation from the portfolio managers will also be given at the AGM, and attendees will be able to ask questions in person then.

The formal business of the AGM will be held after the presentation. We recommend that shareholders cast their votes by proxy. If shareholders have any questions for the Board, please write in, or email using the details below. The questions and answers will be published on the Company's webpages before the AGM.

To email, please use: [email protected] or write to us at the Company's registered office address: Company Secretary, Schroder AsiaPacific Fund plc, 1 London Wall Place, London, EC2Y 5AU.

For regular news about the trust, shareholders are also encouraged to sign up to the Manager's investment trusts update by visiting the Company's website: https://www.schroders.com/en/uk/private-investor/fund-centre/funds-in-focus/investment-trusts/schroders-investment-trusts/never-miss-an-update/.

Proposed changes to the Articles

In light of the circumstances created by the COVID-19 pandemic, the Board is proposing to make amendments to the Articles to give the Company the flexibility to hold general meetings (wholly or partially) by electronic means and to enable members to attend and participate in general meetings at one or more satellite meeting places. In addition, the Board is proposing to amend the Articles to give it certain additional powers in respect of postponing or adjourning meetings in appropriate circumstances and the security arrangements at meetings. The amendments are being proposed in response to restrictions on social interactions during the pandemic which have, on occasion, made it impossible or impractical for shareholders to attend physical general meetings.

The Board's objective is to make it easier for shareholders to participate in general meetings through introducing electronic access for those not able to travel and to ensure appropriate security measures are in place for the protection and wellbeing of shareholders. I should make it clear that these powers would only be used if the specific circumstances or applicable law and regulation require it and the Board's intention is to always hold a physical AGM provided it is both safe and practical to do so. The safety of all of the Company's stakeholders must of course remain paramount.

The Board is also proposing to update the Articles to comply with Financial Conduct Authority's rules regarding restrictions on the transfer of shares, and to correct certain typographical errors.

The principal changes proposed to be introduced in the Articles, and their effect, are set out in more detail in the Directors' report on pages 58 and 59 of the 2021 annual report.

James Williams

Chairman

8 December 2021

Investment Manager's Review

The net asset value per share of the Company recorded a total return of +14.6% over the twelve months to end September 2021. This was ahead of the performance of the benchmark, the MSCI All Country Asia ex Japan Index, which was up 9.7% over the same period. (Source: Morningstar, net of fees).

As the chart on page 6 of the 2021 annual report illustrates, equity markets made strong progress through the latter part of 2020 and the start of 2021, buoyed by improving earnings revisions, expectations of greater fiscal stimulus following the US elections, strong liquidity, a weakening dollar and progress on the development of a number of vaccines for COVID-19. However, in the second half of the period Asian markets lagged global markets. This was in large part due to a significant increase in regulatory announcements coming out of China. Further outbreaks of COVID-19 across the region added to volatility given the relatively low levels of vaccinations compared to some Western economies.

The divergence of returns across the regional markets continued to be high with technology-heavy Korea and Taiwan both up strongly over the period, benefiting from upward earnings revisions driven by ongoing strong export demand for semiconductors and technology products. India though was the top performing market as it recovered from the severe first wave of COVID-19. Easy monetary policy and the announcement of some structural reforms in areas such as the labour market helped boost investor sentiment with both foreign investors and retail shareholders increasing market participation. Domestic cyclical and interest rate sensitive sectors such as materials, industrials, real estate and financials performed particularly well. Singapore also performed solidly, aided by a strong recovery in the financial and real estate sectors.

Of the larger markets, China was the clear underperformer. The market was unsettled by a marked increase in new regulations introduced including as part of President Xi's focus on 'Common Prosperity'. These initiatives are designed, in part, to help address growing inequality by rebalancing the benefits of economic growth towards labour and smaller businesses and reducing basic costs for the working population. Although the biggest market impact was felt by the internet names, the number of sectors covered by policy announcements expanded to include education, gaming and property, which led to a broad-based sell-off.

Smaller ASEAN markets continued to lag for most of the period, hampered by concerns over further outbreaks of COVID-19, given their relatively low vaccination rates. However these markets started to do better towards the end of the period in response to higher vaccination rates and improved prospects for reopening.

Sector returns across the region also diverged widely, in part reflecting the recovery in growth seen globally. More economically-sensitive sectors such as materials, information technology, and industrials as well as some financials did well. Although some of the defensive stocks in sectors such as healthcare and staples did lag, towards the end of the period we did see some of the more thematic growth stocks do well as people questioned whether global growth had peaked. The consumer discretionary sector was the worst performing sector in large part due to its heavy weighting in some of the Chinese e-commerce names which were at the forefront of new regulatory announcements.

Performance and Portfolio Activity

The Company's positive NAV total return of 14.6% over the period compared favourably with that of the reference benchmark which rose 9.7% over the period. Our significant underweight to China, as well as our positions in India and Singapore contributed positively to relative performance, for the reasons outlined above. In both markets we increased our weights through the period, moving from an underweight to overweight in India and an increasing overweight allocation to Singapore. The portfolio also benefited from positive stock selection in Singapore and Korea. In Singapore, our portfolio profited from a significant overweight position in SEA, a regional e-commerce and mobile gaming company. In Korea, our overweight holdings in Samsung Electronics and battery manufacturer Samsung SDI contributed positively. Several of the Company's non-index holdings, for example semiconductor equipment manufacturer ASML and our exposure to Vietnam, also performed strongly in the year.

Stock selection in China was negative, as some of our holdings in the internet, gaming and education sectors came under pressure as a result of the tougher regulatory environment. Not owning some of the more thematic areas of the market such as in electric vehicles and biotech where we felt valuations were excessive also detracted. However, this was more than offset by our large underweight to China in aggregate, as well as our positive stock selection in Hong Kong.

From a sector perspective, the most significant contribution was from information technology, where we saw positive value added from both our overweight allocation and our stock selection within that sector.

The geographic exposure in the Company's portfolio continues to be mainly spread between China, Korea, Taiwan, India and Hong Kong. China remains a substantial underweight but is, in part, offset by the overweight to Hong Kong.

During the period the underweight to China increased as we reduced exposure to a number of our holdings in companies facing higher regulatory uncertainty. In our view, the higher uncertainty over the outlook for returns under the new policy environment outweighs the lower valuations now seen in many of those companies most affected. Furthermore, concerns over increased regulation as well as ongoing restrictions on travel due to COVID-19 led us to sell our Macau gaming exposure.

Other moves over the period have tended to take advantage of the increased valuation spread that we saw through last year, reducing those stocks that performed particularly strongly and looked more fully valued in favour of those names that had lagged and looked more attractive from a valuation perspective. This involved adding to financials, including in some of the South East Asian markets such as Thailand, Singapore and Indonesia. During the first half of the period we also added to India, which had been under pressure for much of 2020, as it started to look relatively more attractive, whilst taking profits on some of the more growth-orientated names in North Asia that had done particularly well including some of the information technology names. However, the information technology sector saw increased volatility during the latter part of the period, in part due to ongoing COVID-19 disruptions and concerns around the sustainability of work from home demand looking into next year. This did provide some opportunity to add back to attractive names in the sector, which remains the biggest sectoral exposure in the fund. With India performing very strongly, valuations in some areas now look extended and have led to us to taking some profits. Although the long term growth drivers for India still look very attractive, in the short term the market does look more frothy as evidenced by the increasing numbers of IPOs and foreign inflows which have in part been driven by the increased concerns around investing in China.

Outlook and Policy

Asian markets have lagged global ones over the last year. In part this has been driven by what's going on in China both from a regulatory and economic perspective. Regulatory announcements have accelerated to encompass more and more areas of the economy with the mention of 'common prosperity' becoming increasingly common in speeches and the press. This is being driven by concerns over growing inequality being seen across China, where growth may have all but eliminated 'extreme poverty', but the spoils of that growth are not being shared equally. Many of the measures that have been announced are looking to address this and in particular rebalance the benefits of growth towards labour and smaller businesses and reduce the 'costs' of property, education and healthcare for ordinary people. Although many of these objectives are understandable, for us as investors, the increased regulatory uncertainty makes it harder to assess the future returns that a business can potentially make and, therefore, what valuation we should attach to it. Although we don't believe that the authorities are seeking to eliminate the profitability of the private sector or indeed stop foreign investment into China, it does leave us circumspect in our approach there until we get greater clarity. We are of course still looking for new opportunities that are relatively unaffected by the regulatory changes but have been unfairly caught up in its fallout.

Outside of regulation in China there continue to be concerns over the indebtedness of some property companies, especially the residential developer Evergrande. Given the closed capital account and that the state effectively controls the banks and state owned developers, we believe the issue is manageable. However, policy error remains a risk given the importance of an already slowing property market to GDP and that, unlike many other countries, China has been deliberately keeping policy relatively tight post the COVID-19 crisis. Therefore, given China's economy is slowing, we would expect to see some easing going forward.

Elsewhere in the region there continue to be signs of shortages and rising costs, so a company's ability to pass through cost pressures is key. With price rises being seen globally in many areas, the question of whether inflation will be transitory or more structural remains and it is likely that we see renewed concerns over tightening and tapering going forward. Although most economies in Asia remain better placed than in 2013 when we last saw a prolonged tapering episode, and corporate balance sheets are generally strong versus other regions, valuations in some 'high growth' areas may come under scrutiny. Perhaps the biggest risk of rising prices, especially energy costs, is that they have a greater impact on consumer spending than currently expected thus reducing demand for Asian products. In the information technology sector we continue to see some strong long term drivers for growth around digitisation and the roll out of 5G and 'Internet of Things', but in the near term some areas have disproportionately benefited from increased demand for product in areas such as work from home.

Whilst vaccination rates for many Asian countries have lagged those of the likes of the UK, we have more recently seen rates increase materially and in some cases surpass that of the UK. This hopefully will allow economies to increasingly open up as we go into next year which, aside from the humanitarian benefit, should reduce the number of lockdowns and lost output as well as bringing benefits to countries more dependent on tourism, such as Thailand.

To conclude, markets have recovered materially from their COVID-19 lows in part due to the recovery that has been seen in global growth. So although markets are trading above their long-term average aggregate historic valuations this premium has come down reflecting the fact that earnings have been revised up significantly during the course of 2021.

In the near term we believe further upside to the market is relatively limited owing to the ongoing regulatory overhang, where valuations sit and given we are at or close to maximum monetary and fiscal accommodation. However, this remains at an aggregate level and when we, as an active stock picker, look across the different industries and sectors there is a much wider range of valuations on offer, as well as a number of companies with attractive growth prospects. Therefore, a focus on attractive bottom-up ideas, in our view, remains essential.

Schroder Investment Management Limited

8 December 2021

Strategic Report

Principal risks and uncertainties

The Board is responsible for the Company's system of risk management and internal control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company's business as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which are monitored by the audit and risk committee on an ongoing basis. This system assists the Board in determining the nature and extent of the risks it is willing to take in achieving the Company's strategic objectives. Both the principal risks and the monitoring system are also subject to robust review at least annually. The last review took place in November 2021.

Although the Board believes that it has a robust framework of internal controls in place this can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.

Actions taken by the Board and, where appropriate, its committees, to manage and mitigate the Company's principal risks and uncertainties are set out in the table below.

Emerging risks and uncertainties

During the year, the Board also discussed and monitored a number of risks that could potentially impact the Company's ability to meet its strategic objectives. These were political risk and climate change risk. The Board has determined they are not currently material for the Company.

Political risk includes the impact of trade wars and regional tensions. The Board believes that the Company's portfolio of equities in the Asia Pacific region shields the Company from Brexit-related risks. However, currency rates and borrowings drawn down by the Company may be affected by geopolitical developments. The Board is also mindful that changes to public policy in the US, UK, or in the Asia Pacific region, could impact the Company in the future.

Climate change risk includes how climate change could affect the Company's investments, and potentially shareholder returns. The Board notes the Manager has integrated ESG considerations, including climate change, into the investment process. The Board will continue to monitor this.

Risk assessment and internal controls review by the Board

Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and ensures regular communication of the results of monitoring by such providers to the audit and risk committee, including the incidence of significant control failings or weaknesses that have been identified at any time and

the extent to which they have resulted in unforeseen outcomes or contingencies that may have a material impact on the Company's performance or condition.

No significant control failings or weaknesses were identified from the audit and risk committee's ongoing risk assessment which has been in place throughout the financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company.

A full analysis of the financial risks facing the Company is set out in note 19 to the accounts on pages 51 to 56 of the 2021 annual report.

Viability statement

The Directors have assessed the viability of the Company over a five year period, taking into account the Company's position at 30 September 2021 and the potential impact of the principal risks and uncertainties it faces for the review period. This is further detailed in the Chairman's Statement, Portfolio Managers' Review and Emerging Risks sections of this report. The Directors have assessed the Company's operational resilience and they are satisfied that the Company's outsourced service providers will continue to operate effectively.

The Board believes that a period of five years reflects a suitable time horizon for strategic planning, taking into account the investment policy, liquidity of investments, potential impact of economic cycles, nature of operating costs, dividends and availability of funding.

In its assessment of the viability of the Company, the Directors have considered each of the Company's principal risks and uncertainties detailed on pages 18 and 19 of the 2021 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 also considered the beneficial tax treatment the Company is eligible for as an investment trust. If changes to these taxation arrangements were to be made it would affect

the viability of the Company to act as an effective investment vehicle.

Whilst the Company's articles of association require that a proposal for the continuation of the Company be put forward at the Company's AGM in 2026, the Directors have no reason

to believe that such a resolution will not be passed by shareholders.

The Directors also considered a stress test in which the Company's NAV dropped by 50% and noted that, based on the assumptions in the test, the Company would continue to

be viable over a five year period.

Based on the Company's processes for monitoring operating costs, the Board's view that the Manager has the appropriate depth and quality of resource to achieve superior returns in

the longer term, the portfolio risk profile, limits imposed on gearing, counterparty exposure, liquidity risk and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their assessment.

Going concern

The Directors have assessed the principal risks, the impact of the emerging risks and uncertainties and the matters referred to in the viability statement. Based on the work the

Directors have performed, they 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 31 December 2022 which is at least 12 months from the date the financial statements were authorised for issue.

Statement of Directors' Responsibilities in respect of the Annual Report and Accounts

The Directors are responsible for preparing the annual report, and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the return or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

-      select suitable accounting policies and then apply them consistently;

-      make judgements and accounting estimates that are reasonable and prudent;

-      state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

-      notify the Company's shareholders in writing about the use of disclosure exemptions in FRS 102, used in the preparation of the financial statements; and

-      prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Manager is responsible for the maintenance and integrity of the webpage dedicated to the Company. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on pages 21 and 22 of the 2021 annual report, confirm that to the best of their knowledge:

-      the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company;

-      the Strategic Report contained in the report and accounts includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and

-      the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Income Statement

for the year ended 30 September 2021

The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items of other comprehensive income, and therefore the net return after taxation is also the total comprehensive income for the year.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

Statement of Changes in Equity

for the year ended 30 September 2021

Statement of Financial Position

at 30 September 2021

Notes to the Accounts

1.       Accounting Policies

Basis of accounting

Schroder AsiaPacific Fund plc ("the Company") is registered in England and Wales as a public company limited by shares. The Company's registered office is 1 London Wall Place, London EC2Y 5AU.

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ("UK GAAP"), in particular in accordance with Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (the "SORP") issued by the Association of Investment Companies in October 2019. All of the Company's operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss. The Directors believe that the Company has adequate resources to continue operating for the period to 31 December 2022, which is at least 12 months from the date of approval of these accounts. In forming this opinion, the Directors have taken into consideration: the controls and monitoring processes in place; the Company's low level of debt and other payables; the low level of operating expenses, comprising largely variable costs which would reduce pro rata in the event of a market downturn; and that the Company's assets comprise cash and readily realisable securities quoted in active markets. In forming this opinion, the Directors have also considered any potential impact of the COVID-19 pandemic on the viability of the Company. Further details of Directors' considerations regarding this are given in the Chairman's Statement, Portfolio Managers' Review, Going Concern Statement, Viability Statement and under the Emerging Risks and uncertainties heading on pages 4, 6, 20 and 18 of the 2021 annual report.

The Company has not presented a statement of cash flows, as it is not required for an investment trust which meets certain conditions.

The accounts are presented in sterling and amounts have been rounded to the nearest thousand.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 September 2020.

No significant judgements, estimates or assumptions have been required in the preparation of the accounts for the current or preceding financial years.

2.       Income

3.       Investment management fee

The basis for calculating the investment management fee is set out in the Directors' Report on page 23 of the 2021 annual report.

4.       Taxation on ordinary activities

The Company's effective corporation tax rate is nil, as deductible expenses exceed taxable income. The tax charge comprises irrecoverable overseas withholding tax on dividends receivable, and overseas capital gains tax.

5.       Dividends

Dividends paid and proposed

The proposed final dividend amounting to £15,991,000 (2020: £13,346,000) is the amount used for the basis of determining whether the Company has satisfied the distribution requirements of section 1158 of the Corporation Tax Act 2010. The revenue available for distribution for the year is £16,080,000 (2020: £13,253,000).

6.       Return  per share

7.       Net asset value per share

8.       Transactions with the Manager

Under the terms of the AIFM Agreement, the Manager is entitled to receive a management fee and a company secretarial fee. Details of the basis of the management fee calculation are given in the Directors' Report on pages 23 and 24 of the 2021 annual report. Any investments in funds managed or advised by the Manager or any of its associated companies, are excluded from the assets used for the purpose of the calculation and therefore incur no fee.

The management fee payable in respect of the year ended 30 September 2021 amounted to £8,104,000 (2020: £6,514,000), of which £1,907,000 (2020: £1,814,000) was outstanding at the year end. The company secretarial fee payable in respect of the year ended 30 September 2021 amounted to £130,000 (2020: £109,000), of which £38,000 (2020: £27,000) was outstanding at the year end.

No Director of the Company served as a Director of any member of the Schroder Group, at any time during the year.

9.       Related party transactions

Details of the remuneration payable to Directors are given in the Directors' Remuneration Report on page 32 of the 2021 annual report and details of Directors' shareholdings are given in the Directors' Remuneration Report on page 33 of the 2021 annual report. Details of transactions with the Manager are given in note 16 of the 2021 annual report. There have been no other transactions with related parties during the year (2020: nil).

10.     Disclosures regarding financial instruments measured at fair value

The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio and any derivative financial instruments.

FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - valued using observable inputs other than quoted prices included within Level 1.

Level 3 - valued using inputs that are unobservable.

Details of the Company's policy for valuing investments and derivative instruments are given in note 1(b) on page 43 of the 2021 annual report.

At 30 September 2021, the Company's investment portfolio was categorised as follows:

There have been no transfers between Levels 1, 2 or 3 during the year (2020: nil).

11. Status of announcement

2020 Financial Information

The figures and financial information for 2020 are extracted from the published Annual Report and Accounts for the year ended 30 September 2020 and do not constitute the statutory accounts for that year. The 2020 Annual Report and Accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2021 Financial Information

The figures and financial information for 2021 are extracted from the Annual Report and Accounts for the year ended 30 September 2021 and do not constitute the statutory accounts for the year. The 2021 Annual Report and Accounts include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The 2021 Annual Report and Accounts will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's webpages nor the contents of any website accessible from hyperlinks on the Company's webpages (or any other website) is incorporated into, or forms part of, this announcement.