Final Results

Schroder AsiaPacific Fund PLC 16 November 2007 SCHRODER ASIAPACIFIC FUND plc Unaudited Results for the year to 30 September 2007 This preliminary announcement of unaudited results was approved by the Board of Directors on 16 November 2007. Chairman's Statement Investment Performance It has been a good year for equity markets in Asia. I am pleased to report that during the year ended 30 September 2007 the Company's net asset value per share produced a total return of 46.3%. The Company's benchmark, the Morgan Stanley All Countries Far East (Free) excluding Japan Index, produced a total return of 47.7% over the same period and the reasons for the slight under-performance of the benchmark Index are outlined in the Investment Manager's Report. This is now the sixth successive year in which the net assets of the Company have increased and performance remains well ahead of the benchmark index over the longer term. Final Dividend The Directors recommend the payment of a final dividend of 1.50 pence per share for the year ended 30 September 2007, a reduction of 11.7% from the 1.70 pence per share paid in respect of the previous financial year. Income for the year was reduced when compared to the previous year (2007: £2,497,000- 2006: £2,760,000) largely because the growth in income did not match the growth in capital produced by the portfolio. Shareholders should remember that the Company's investment objective is to achieve capital growth and income generation plays a secondary role. If the resolution proposed at the Annual General Meeting to pay a final dividend is passed, the dividend will be paid on 5 February 2008 to shareholders on the Register on 4 January 2008. Gearing During the year, the amount of the Company's gearing facility was increased from US$60 million to US$100 million and drawings were increased from US$40 million to $70 million. Net gearing at the beginning of the year was 4.4% and by the end of the year had increased to 7.4%. The Board continues to review the gearing position on a regular basis. Purchase of Shares for Cancellation At the Company's last Annual General Meeting on 7 February 2007, the Company was given the authority to purchase up to 14.99% of its issued share capital for cancellation. The share buy-back facility is one of a number of tools that may be used to enhance shareholder value and to reduce the discount volatility. During the year ended 30 September 2007, the Directors did not utilise the authority given to them and no purchases were made for cancellation. However, the Board continues to consider whether purchases should be made on a regular basis, and therefore proposes that the authority be renewed at the forthcoming Annual General Meeting. Electronic Communications and Amendment to the Articles of Association There have been a number of recent changes to company law and practice permitting the use of electronic communications as an alternative to traditional means of communication. We are therefore proposing to adopt revised Articles of Association which will allow the Company, where a shareholder does not object, to send certain Company information (e.g. notices, proxy forms and accounts) by electronic means or by placing it on a website, rather than sending it in printed form. Shareholders will be able to elect to continue to receive all documents in printed form. Annual General Meeting The Annual General Meeting will be held on 31 January 2008 and shareholders are encouraged to attend. As in previous years, Matthew Dobbs, on behalf of the Investment Manager, will give a presentation on the prospects for Asia and the Company's investment strategy. The Hon Rupert Carington Chairman Investment Manager's Review It has been another strong period for the regional markets with the Benchmark Index recording a total return of 47.7% over the year. The total return for the Company's portfolio has been 46.3%, slightly less than the benchmark. The strong market rises of the first half have been extended in the second despite a sharp correction in July and August prompted by the problems in Western credit markets. Overall, economic and financial conditions have remained supportive for regional equity markets. External demand has been robust even as growth in the United States has slowed thanks to the increasingly diverse sources of demand for regional exports. Trade within the region has continued to grow strongly, while other emerging markets and Europe have become more significant end markets, the latter aided by the strength of the euro. Domestically generated growth has been fuelled by strong local real estate markets, ample liquidity, consumer confidence and strong household income growth. There have been increasing signs that the capital spending strength which has hitherto been largely confined to India and China is spreading to other Asian countries driven by residential construction activity, and a long awaited recovery in infrastructure spending. In this environment, it is unsurprising that interest rates have been rising in many countries. Notable policy tightening has been evident in China, India, Korea, and, more recently, Singapore through a combination of increased interest rates, higher reserve requirements for the banks and stronger currencies. In contrast, interest rates have continued to fall in those countries which have historically suffered from high interest rates such as Indonesia and the Philippines. While all markets have offered attractive returns, it has been China that has dominated market sentiment. The economy has continued to perform remarkably well. Strong export growth remains an important component, but with high productivity growth supporting household incomes, consumer spending is providing increased balance to the economy. Liquidity remains ample, and tightening monetary policy has made little impact thus far. With massive domestic liquidity looking for a home, domestic A shares have been the major beneficiaries, perhaps encouraged by the authorities fruitless attempts to cool the property market. This has resulted in even stronger returns in the Hong Kong listed H shares which trade at a discount to the A shares, and which the Chinese authorities intend making available to domestic investors on a limited basis. This has encouraged arbitrage buying, taking all Chinese shares to demanding valuations. The bull market has been given a further boost by the US decision to cut interest rates in response to the sub prime and credit problems. The range of returns in other markets has been rather narrower. Taiwan and Korea have been hampered by high export reliance (particularly in the key information technology sector) where sentiment has been impacted by slowing US growth and currency pressures. Political uncertainty has continued to weigh on sentiment in Thailand. Performance and Portfolio Activity The Company's performance has been strong in absolute terms, although it has been slightly under the Index. All the underperformance has come in the second half of the year, and has co-incided with a market which has been focused on China to the exclusion of almost everything else. The concentration on a narrow group of large cap China stocks (primarily H shares) has long taken valuations beyond levels that can be rationalised. It is a tribute to the power of regional liquidity, but our valuation discipline, which has served the Company well over the longer-term, has hampered our relative performance due to the underweight exposure to these highly valued stocks. The impact of the underweighting in China stocks has been mitigated by the gearing and strong stock selection in other markets, with notably strong selection in Hong Kong, Indonesia, Korea, the Philippines and Thailand. In terms of portfolio adjustments, we have added to Hong Kong/China aggressively through the year. The prime funding sources have been Korea, Taiwan and Thailand. Sectoral positioning has continued to emphasise domestically sensitive sectors such as consumer cyclicals, industrials and financials. We have been underweight in information technology, materials and energy. Outlook and Policy Since the summer, regional markets have made an impressive attempt at decoupling. Amid the growing evidence of slowing growth in the United States, Europe and Japan, the benchmark index has risen well above pre-credit crisis peaks. However, the focus has continued to be narrow, intent primarily on China, Hong Kong and India. We continue to have every confidence in the long-term investment case for the region, but the shorter-term outlook is less clearcut. While our central expectation is that United States growth will undoubtedly slow, we believe that severe recession can be avoided. However, we would acknowledge that the risks to economic activity in 2008 are rising, and that the external sector remains an important contributor to regional activity. Nevertheless, a combination of moderate global growth (allowing steady if not spectacular expansion in Asian exports) and the prospect of flat, and possibly declining, US dollar interest rates is a potentially powerful support to Asian asset and equity prices. Corporate profits should continue to expand, while domestic liquidity and consumption are likely to remain strong. There is also ample evidence that domestic capital spending across Asia (i.e. not just in China and India) is set to recover given strong corporate and national balance sheets. This should help address capacity constraints which, in some cases, have either been absent or ignored since the Asian crisis of the mid 1990s. One corollary of this view is that domestically oriented sectors and companies are likely to be favoured in this environment, while exporters may suffer pressures from slowing external growth and rising exchange rates. The Company's portfolio is heavily oriented towards domestic sectors such as financials, real estate, and consumer cyclicals. Schroder Investment Management Limited 9 November 2007 Income Statement (Unaudited) For the year ended 30 September 2007 Revenue Capital Total Return Return £'000 £'000 £'000 Gains on investments held at fair value - 99,841 99,841 Other currency gains - 1,977 1,977 Income (Note 2) 8,704 1,309 10,013 Investment management fee (2,943) - (2,943) Administrative expenses (556) - (556) ________ ________ ________ Net return before finance costs and taxation 5,205 103,127 108,332 Interest payable and similar charges (1,473) - (1,473) ________ ________ ________ Net return on Ordinary Activities before Taxation 3,732 103,127 106,859 Taxation on ordinary activities (1,235) (391) (1,626) _______ ________ ________ Net return after taxation attributable to equity shareholders 2,497 102,736 105,233 ====== ====== ===== Net return per ordinary share (pence) (Note 3) 1.49 61.45 62.94 ===== ====== ====== Income Statement (Comparative) For the year ended 30 September 2006 Revenue Capital Total Return Return £'000 £'000 £'000 Gains on investments held at fair value - 32,739 32,739 Other currency gains - 1,097 1,097 Income (Note 2) 7,533 - 7,533 Investment management fee (2,252) - (2,252) Administrative expenses (361) - (361) _______ ________ ________ Net return before finance costs and taxation 4,920 33,836 38,756 Interest payable and similar charges (1,155) - (1,155) ________ ________ ________ Net return on ordinary activities before taxation 3,765 33,836 37,601 Taxation on ordinary activities (996) 645 (351) _______ ________ ________ Net return after taxation attributable to equity shareholders 2,769 34,481 37,250 ===== ====== ====== Net return per Ordinary share (pence) (Note 3) 1.76 21.93 23.69 ===== ====== ====== The total column shown above for each period represents the Profit and Loss Account of the Company. The revenue and capital items derive from continuing activities. A Statement of Total Recognised Gains and Losses has not been presented as all gains and losses are recognised in the Income Statement. No operations were acquired or discontinued during the year. Reconciliation of Movements in Shareholders' Funds (Unaudited) for the year ended 30 September 2007 Called Capital Share Warrant up Share redemption Share purchase Warrant exercise Capital Revenue Capital reserve premium reserve reserve reserve reserves Reserve Total * £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 30 September 2005 13,922 81 25 110,529 8,695 9 34,382 3,153 170,796 Net return from operating activities - - - - - - 34,481 2,769 37,250 Ordinary dividends paid - - - - - - - (2,645) (2,645) Conversion of warrants 2,797 - 25,174 - (8,695) 8,695 - - 27,971 to ordinary shares At 30 September 2006 16,719 81 25,199 110,529 - 8,704 68,863 3,277 233,372 At 30 September 2006 16,719 81 25,199 110,529 - 8,704 68,863 3,277 233,372 Net return from operating activities - - - - - - 102,736 2,497 105,233 Ordinary dividends paid - - - - - - - (2,842) (2,842) At 30 September 2007 16,719 81 25,199 110,529 - 8,704 171,599 2,932 335,763 *The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. Balance Sheet (Unaudited) At At 30 September 30 September 2007 2006 £'000 £'000 Fixed assets Investments held at fair value through profit or loss 361,756 242,628 _______ _______ 361,756 242,628 Current assets Debtors 10,605 7,203 Cash at bank and short-term deposits 9,572 11,027 _______ _______ 20,177 18,230 Current liabilities Creditors - amounts falling due within one year (45,972) (27,428) _______ _______ Net current liabilities (25,795) (9,198) _______ _______ Total assets less current liabilities 335,961 233,430 _______ _______ Non current liabilities Creditors - amounts falling due after more than one year (198) (58) _______ _______ Net assets 335,763 233,372 ====== ====== Capital and Reserves Called up share capital 16,719 16,719 Capital redemption reserve 81 81 Share premium account 25,199 25,199 Share purchase reserve 110,529 110,529 Warrant exercise reserve 8,704 8,704 Capital reserves 171,599 68,863 Revenue reserve 2,932 3,277 _______ _______ Equity shareholders' funds 335,763 233,372 ====== ====== Net asset value per Ordinary share (pence) (Note 4) 200.83 139.59 ===== ===== Cash Flow Statement (Unaudited) For the year ended For the year ended 30 September 30 September 2007 2006 £'000 £'000 Operating activities Dividends and interest received from investments 7,424 6,853 Interest received on deposits 507 312 Stock lending fee income - 84 Investment management fee paid (2,663) (2,089) Administrative expenses paid (446) (357) _______ _______ Net cash inflow from operating activities 4,822 4,803 _______ _______ Servicing of Finance Bank loan interest paid (1,294) (1,120) _______ _______ Net cash outflow from servicing of finance (1,294) (1,120) _______ _______ Taxation UK tax paid (604) (636) Overseas tax paid (506) (499) _______ _______ Total tax paid (1,110) (1,135) _______ _______ Investment Activities Purchase of investments ( 276,531) (158,092) Disposal of investments 260,579 123,219 _______ _______ Net cash outflow from investment activities (15,952) (34,873) _______ _______ Equity dividends paid (2,842) (2,645) _______ _______ Net cash outflow before financing (16,376) (34,970) _______ _______ Financing Conversion of warrants to ordinary shares - 27,971 Bank loans drawn 15,144 - _______ _______ Net cash inflow from financing 15,144 27,971 _______ _______ Net Cash outflow (1,232) (6,999) ====== ====== Notes 1. Accounting Policies The accounts have been prepared under the historical cost convention, modified to include the revaluation of investments and in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice ('SORP') for 'Financial Statements of Investment Trust Companies' issued in January 2003 and revised in December 2005 by the Association of Investment Companies (AIC). The Company's accounting policies have not varied from those described in the Report and Accounts for the year ended 30 September 2006. 2. Income Dividends and Other Income comprise: For the year ended 30 For the year ended 30 September 2007 September 2006 £'000 £'000 Income from investments: Overseas dividends 7,729 6,455 UK franked dividends 86 - Interest from overseas bonds 68 240 Stock dividends 305 456 Bank deposit interest 501 310 Stock lending fee income 15 72 _______ _______ 8,704 7,533 ===== ===== Income from investments allocated to capital: UK special dividends 6 - Overseas dividends 1,303 - _______ _______ 1,309 - ===== ===== 3. Return per Ordinary Share The total return per Ordinary share is calculated on the return attributable to Ordinary shareholders of £105,233,000 (2006: return of £37,250,000) and 167,189,762 (2006: 157,198,596) Ordinary shares, being the weighted average number of shares in issue during the year. The revenue return per Ordinary share is calculated on the return attributable to Ordinary shareholders of £2,497,000 (2006: £2,769,000) and 167,189,762 (2006: 157,198,596) Ordinary shares, being the weighted average number of shares in issue during the year. The capital return per Ordinary share is calculated on the return attributable to Ordinary shareholders of £102,736,000 (2006: return of £34,481,000) and 167,189,762 (2006: 157,198,762) Ordinary shares, being the weighted average number of shares in issue during the year. 4. Net Asset Value The Net Asset Value per Ordinary share is calculated on net assets of £335,763,000 (2006: £233,372,000) and 167,189,762 (2006: 167,189,762) Ordinary shares in issue at the year-end. Annual Report and Accounts The financial information contained in this preliminary announcement of annual results is unaudited and does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Full statutory accounts for the year ended 30 September 2006 included a report from the Company's auditors, in accordance with Section 235 of the Companies Act 1985, which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under Section 237 (2) and (3) of the Companies Act 1985, were filed with the Registrar of Companies. No statutory accounts in respect of any period after 30 September 2006 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The statutory accounts for the year to 30 September 2007 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Annual General Meeting. Final Dividend The Directors of the Company have declared the payment of a final dividend of 1.50p net per share for the year ended 30 September 2007. Subject to approval by shareholders at the Annual General Meeting, the dividend will be payable on 5 February 2008 to shareholders on the register on 4 January 2008. Ex-Dividend Date: 2 January 2008 Record Date: 4 January 2008 Dividend Warrants: Despatched on 4 February 2008 Payment Date: 5 February 2008 Dividend per share: 1.50p The Annual Report and Accounts Report will be mailed to registered shareholders in December 2007 and from the date of release copies will be made available to the public at the Company's Registered Office at 31 Gresham Street, London EC2V 7QA. Schroder Investment Management Limited Secretary 16 November 2007 This information is provided by RNS The company news service from the London Stock Exchange

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