The Directors of Schroder AsiaPacific Fund plc (LON:SDP) have recommended the payment of a final dividend of 12.00 pence per share for the year ended 30 September 2022, representing an increase of 23.7% over the 9.70 pence per share paid in respect of the previous financial year. Subject to shareholder approval at the forthcoming Annual General Meeting on 1 February 2023, the dividend will be paid on 10 February 2023.
| Ex-Dividend Date: | 29 December 2022 |
| Record Date: | 30 December 2022 |
| Payment Date: | 10 February 2023 |
| Dividend per share: | 12.00 pence |
As an investment manager we make decisions every day on behalf of savers and investors around the world. They depend on our broad investment expertise, across private and public markets to manage £773.4 billion (€898 billion/$941 billion)* of wealth and investments. We help them achieve their long-term financial goals – and make a positive impact in the world. Schroder AsiaPacific Fund is a member of the FTSE 250.
Chairman’s Statement
Performance
The year under review saw challenging market conditions in Asia, in common with markets around the world. The Company’s NAV produced a negative total return of -13.6% for the year under review, marginally outperforming the Benchmark’s negative total return of -13.9%, while the share price produced a negative total return of -14.5%.
The faster than expected rises in global interest rates, the war in Ukraine and the economic impact of continued COVID lock-downs as well as other developments in China, have dominated Asian markets this year. There have also been beneficiaries, for example from rising commodity prices, and there has been a significant divergence of returns from Asian markets.
More detailed comment on performance and investment policy may be found in the Investment Manager’s Review.
Revenue and dividend
The Company’s principal investment objective is to achieve capital growth, and the Directors continue to distribute substantially all of the revenue it receives each year. The Company’s revenue return recovered sharply from the previous year, increasing by 22.3% as portfolio companies increased dividend payments.
The Directors are recommending a final dividend of 12.00 pence per share for the year ended 30 September 2022, representing an increase of 23.7% over the 9.70 pence paid in respect of the previous financial year.
This dividend will be paid on 10 February 2023 to shareholders on the register on 30 December 2022, subject to approval by shareholders at the Annual General Meeting (“AGM”) on 1 February 2023.
Gearing
During the year under review, the Company entered into a new one year revolving credit facility of £75 million with The Bank of Nova Scotia, London Branch which replaced the £100 million facility with SMBC Bank International PLC that was due to expire on 23 June 2022.
At 30 September 2022, while £13.4 million of the revolving facility was drawn down the Company’s net gearing position was 0.2% taking into account cash balances, compared to 0.6% at the end of September 2021.
The Company also has access to an overdraft facility with HSBC.
Discount management
The Company continued to be active in buying back its shares during the year ended 30 September 2022 and a total of 4,060,000 shares were bought back for cancellation at a cost of £21.7 million (2021: 1,960,000 million shares were bought back and cancelled at a cost of £11.8 million). Since the year end, a further 1,690,000 shares have been bought back for cancellation at a cost of £8.0 million.
The discount at the end of September 2022 was 10.8% compared to 9.8% at the previous year end. The average discount during the year under review was 10.4%.
Overall, the Board’s strategy is to limit discount volatility and to help maintain liquidity in the Company’s shares. As such we believe that it is not necessarily in the best interests of shareholders as a whole to adopt a rigid discount control mechanism that seeks to target a defined maximum discount level regardless of market conditions. Our policy takes account of the level of discount at which the Company’s peer group trades, prevailing market conditions and activity within our sector.
At the Company’s last AGM, authority was given to purchase up to 14.99% of its issued share capital. We propose that the share buyback authority be renewed at the forthcoming AGM and that any shares so purchased be cancelled or held in treasury for potential reissue.
Environmental, social and governance issues (“ESG”)
The Manager has always expressed the view that companies with good ESG often perform better and potentially deliver superior returns over time. Our Manager has provided more detail in the Strategic Report on how ESG considerations are incorporated into the investment process and given details of the Manager’s ESG research capability. This year, our Manager has included graphs showing the portfolio’s scope 1 and scope 2 carbon emissions (as detailed on page 16 of the published annual report and accounts for the year ended 30 September 2022). This covers 95% of the portfolio and 99% of the measured Benchmark. It is interesting to note that the portfolio generated less scope 1 and scope 2 carbon emissions than the Benchmark at 30 September 2022.
Management fee
Since 1 April 2021 the management fee has been 0.75% per annum on the first £600 million of net assets and 0.70% per annum on net assets in excess of £600 million.
With effect from 1 April 2023, the Board has agreed with the Manager to reduce its management fee to 0.60% per annum on net assets in excess of £600 million. In respect of the first £600 million of net assets the management fee is unchanged.
Further details may be found in the Directors’ Report on page 26 of the published annual report and accounts for the year ended 30 September 2022.
Board succession
As set out in the 2021 annual report, Rosemary Morgan stepped down from the Board at the AGM in February 2022 and was succeeded as chair of the audit and risk committee by Julia Goh. Following Rosemary’s retirement, Martin Porter also assumed the role of Senior Independent Director.
The Board regularly considers its policy on director tenure, succession planning and its composition to ensure that it has the appropriate mix of relevant skills, diversity and experience. The Company has met the Financial Conduct Authority’s board diversity target for listed companies that at least 40% of the board are women and for at least one member of the board to be from an ethnic minority background.
