Final Results

Schroder AsiaPacific Fund PLC 21 November 2006 21 November 2006 SCHRODER ASIAPACIFIC FUND plc UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006 The Directors of Schroder AsiaPacific Fund plc announce the unaudited preliminary results for the year ended 30 September 2006. Income Statement For the year ended For the year ended 30 September 2006 30 September 2005 Revenue Capital Total Revenue Capital Total Return Return Return Return Return Return £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value - 32,739 32,739 - 44,004 44,004 Exchange gains/(losses) - 1,097 1,097 - (489) (489) Income 7,533 - 7,533 6,525 - 6,525 Administrative expenses (361) - (361) (378) - (378) Investment management fee (2,252) - (2,252) (1,568) - (1,568) Net return before finance costs and taxation 4,920 33,836 38,756 4,579 43,515 48,094 Interest payable and similar charges (1,155) - (1,155) (684) - (684) Net return on ordinary activities before taxation 3,765 33,836 37,601 3,895 43,515 47,410 Taxation on ordinary activities (996) 645 (351) (1,147) (645) (1,792) Net return on ordinary activities after taxation attributable to equity shareholders 2,769 34,481 37,250 2,748 42,870 45,618 Basic and diluted net return per ordinary 1.76p 21.93p 23.69p 1.97p 30.80p 32.77p share The Total Return column of this statement is the profit and loss account of the Company. The Revenue Return and Capital Return columns are both provided in accordance with guidance issued by the Association of Investment Companies. The Company has no recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in Shareholders' Funds. Accordingly no Statement of Total Recognised Gains and Losses is presented. All revenue and capital items in the above statement derive from continuing operations. The notes form an integral part of this unaudited preliminary announcement. Reconciliation of Movements in Shareholders' Funds Share Capital Share Share Warrant Warrant Capital Revenue Total capital redemption Premium purchase reserve exercise reserve reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 30 13,920 81 4 110,529 8,702 2 (8,408) 1,936 126,766 September 2004 as restated (a) Net profit from - - - - - - 42,870 2,748 45,618 operating activities Dividends -paid - - - - - - - (1,531) (1,531) in respect of 30 September 2004 Conversion of 2 - 21 - (7) 7 - - 23 warrants to ordinary shares Balance at 30 13,922 81 25 110,529 8,695 9 34,462 3,153 170,876 September 2005 (restated) Share Capital Share Share Warrant Warrant Capital Revenue Total capital redemption Premium purchase reserve exercise reserve reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 30 13,922 81 25 110,529 8,695 9 34,462 3,153 170,876 September 2005 restated (a) Less investment - - - - - - (80) - (80) valuation changes Net profit from - - - - - - 34,481 2,769 37,250 operating activities Dividends - paid - - - - - - - (2,645) (2,645) in respect of 30 September 2005 Conversion of 2,797 - 25,174 - (8,695) 8,695 - - 27,971 warrants to ordinary shares Balance at 30 16,719 81 25,199 110,529 - 8,704 68,863 3,277 233,372 September 2006 a) The balance of revenue reserve at 30 September 2005 has increased by £2,645,000 (2004: £1,531,000) being the final dividend accrued and now added back in accordance with FRS21. Balance Sheet 30 September 30 September 2006 2005 £'000 £'000 (restated) Fixed assets Investments held at fair value through profit or 242,628 178,392 loss Current assets Debtors 7,203 3,392 Cash at bank and short-term deposits 11,027 18,125 18,230 21,517 Current liabilities Creditors: amounts falling due within one year (27,428) (28,542) Net current liabilities (9,198) (7,025) Total assets less current liabilities 233,430 171,367 Provision for liabilities and charges (58) (491) Net assets 233,372 170,876 Capital and reserves Called up share capital 16,719 13,922 Capital redemption reserve 81 81 Share premium 25,199 25 Share purchase reserve 110,529 110,529 Warrant reserve - 8,695 Warrant exercise reserve 8,704 9 Capital reserve 68,863 34,462 Revenue reserve 3,277 3,153 Total Equity shareholders' funds 233,372 170,876 Net asset value per ordinary share Undiluted 139.59p 122.74p Diluted 139.59p 118.94p The notes form an integral part of this unaudited preliminary announcement. Abridged Cash Flow Statement For the year ended For the year ended 30 September 2006 30 September 2005 £'000 £'000 Net cash inflow from operating activities 4,803 4,232 Net cash outflow from return on investments and (1,120) (663) servicing of finance Total tax paid (1,135) (1,261) Net cash (outflow)/inflow from financial investment (34,873) 3,550 Equity dividends paid (2,645) (1,531) Net cash (outflow)/inflow before financing (34,970) 4,327 Net cash inflow from financing 27,971 2,681 Net cash (outflow)/inflow (6,999) 7,008 Reconciliation of net cash flow to movement in debt Net cash (outflow)/inflow (6,999) 7,008 Increase in bank loan to finance investments - (2,658) Change in net debt due to cash flows (6,999) 4,350 Exchange profits/( losses) on revaluation of currency 1,097 (489) balances and cash balances Change in net funds (5,902) 3,861 Net debt brought forward (4,485) (8,346) Net debt carried forward (10,387) (4,485) The notes form an integral part of this unaudited preliminary announcement. Notes 1. Accounting policies These accounts have been prepared under the historical cost convention, modified to include the revaluation of investments and in accordance with the Companies Act 1985 and Generally Accepted Accounting Principles (UK GAAP) issued by the Accounting Standards Board (ASB) and the Statement of Recommended Practice ' Financial Statements of Investment Trust Companies ('SORP') issued in January 2003 and revised in December 2005. The ASB has implemented a convergence programme with International Financial Reporting Standards and as part of this project has introduced a number of new and revised Accounting Standards which have been adopted in these accounts and for which details are given below. (a) Changes in presentation The Statement of Total Return is now called the Income Statement. Dividends payable to equity shareholders are no longer reflected in the Income Statement although they continue to be shown in the Reconciliation of Movements in Shareholders' Funds (as required by FRS 25 (Financial Instruments disclosure and presentation)) which is now presented as a primary statement. (b) Changes in accounting policy The Company has changed its accounting policy for the valuation of listed investments and the recognition of dividends payable to equity shareholders. These changes in policy are detailed below:- FRS 26 (Financial Instruments: Measurement) - The Company has designated its assets and liabilities as being measured at 'fair value through profit or loss'. The fair value of listed investments is deemed to be the bid value of those investments at the close of business on the relevant date. Previously, listed investments were valued at mid value. Unlisted investments are included at fair value. Changes in the fair value of investments held at fair value through profit and loss and gains and losses on disposal are recognised in the Income Statement as 'Gains or losses on investments held at fair value through profit or loss'. Transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase are also included here. All purchases and sales are accounted for on a trade date basis. The Company has taken advantage of the exemption under 108(d) of FRS 26 and not restated the results for the year to 30 September 2005. The adoption of bid market prices at 1 October 2005 decreased the value of investments by £80,000. The effect of this change in accounting policy is to decrease the value of investments at 30 September 2006 by £75,000 and decreases the net return on ordinary activities after taxation for the period then ended by £5,000. FRS 23 (The effects of changes in Foreign Exchange Rates) - The company is UK listed Company with a predominantly UK shareholder base. The results and financial position of the Company are expressed in sterling, which is the functional and presentational currency of the Company. The Directors, having regard to the currency of the Company's share capital and the predominant currency in which its shareholders operate, have determined the functional currency to be sterling. FRS 21 (Events after the Balance Sheet Date) - Dividends paid by the Company are recognised in the Reconciliation of Movements in Shareholders' Funds in the period in which the Company is liable to pay them. Previously the Company accrued dividends in the period in which the net revenue, to which those dividends related was accounted for. The accounts for the year ended 30 September 2005 have been restated to reflect these changes and the impact on current and prior years is shown in Note 4. Other than matters noted above the same accounting policies used for the year ended 30 September 2005 have been applied in preparing the accounts for the year ended 30 September 2006. 2. Net asset value per ordinary share Net asset value per ordinary share is based on the net assets attributable to shareholders of £233,372,000 (2005:£170,876,000) and on 167,189,762 ordinary shares in issue at 30 September 2006 (2005: 139,218,088). 3. Return per ordinary share The basic revenue return per ordinary share is based on the net revenue return on ordinary activities after interest payable and taxation of £2,769,000 (2005: £2,748,000) and on 157,198,596 (2005: 139,210,478) ordinary shares, being the weighted average number of ordinary shares in issue during the year. The basic capital return per ordinary share is based on the net capital gains for the year of £34,481,000 (2005: £42,870,000) and on 157,198,596 (2005: 139,210,478) ordinary shares, being the weighted average number of ordinary shares in issue during the year. The basic total return per ordinary share is based on the net return on ordinary activities after interest payable and taxation of £37,250,000 (2005: £45,618,000) and on 157,198,596 (2005: 139,210,478) ordinary shares, being the weighted average number of ordinary shares in issue during the year. 4. Restatement of balances A reconciliation is given between the closing balances per the 30 September 2005 accounts and the restated balances as a result of adoption of revisions to UK GAAP. Previously reported Adjustment 30 September 2005 Restated 30 September 2005 £'000 £'000 £'000 Fixed assets Investments held at fair value through profit or 178,392 178,392 loss Current assets Debtors 3,392 - 3,392 Cash at bank and short term deposits 18,125 - 18,125 21,517 - 21,517 Current liabilities Creditors amounts falling due within one year (a) (31,187) 2,645 (28,542) Net current liabilities (9,670) 2,645 (7,025) Total assets less current liabilities 168,722 2,645 171,367 Provisions for liabilities and charges (491) (491) Net assets 168,231 2,645 170,876 Capital and reserves Called up share capital 13,922 - 13,922 Capital redemption reserve 81 - 81 Share premium 25 - 25 Share purchase reserve 110,529 - 110,529 Warrant reserve 8,695 8,695 Warrant exercise reserve 9 9 Capital reserve 34,462 34,462 Revenue reserve (a) 508 2,645 3,153 Equity shareholders' funds 168,231 2,645 170,876 Net asset value per ordinary share Undiluted 120.84p 1.90p 122.74p Diluted 117.35p 1.59p 118.94p Notes to the restatement of opening balances: (a) Effect of now recognising dividends in the period when the Company becomes liable to pay them. 4. Restatement of balances (continued) Previously reported Adjustment 30 September 2004 Restated 30 September 2004 £'000 £'000 £'000 Fixed assets Investments held at fair value through profit or 134,690 134,690 loss Current assets Debtors 1,768 - 1,768 Cash at bank and short term deposits 10,996 - 10,996 12,764 - 12,764 Current liabilities Creditors amounts falling due within one year (a) (22,166) 1,531 (20,635) Net current liabilities (9,402) 1,531 (7,871) Total assets less current liabilities 125,288 1,531 126,819 Provisions for liabilities and charges (53) (53) Net assets 125,235 1,531 126,766 Capital and reserves Called up share capital 13,920 - 13,920 Capital redemption reserve 81 - 81 Share premium 4 - 4 Share purchase reserve 110,529 - 110,529 Warrant reserve 8,702 - 8,702 Warrant exercise reserve 2 - 2 Capital reserve (8,408) - (8,408) Revenue reserve (a) 405 1,531 1,936 Equity shareholders' funds 125,235 1,531 126,766 Net asset value per ordinary share Undiluted 89.97p 1.10p 91,07p Diluted 89.97p 1.10p 91.07p Notes to the restatement of opening balances: (a) Effect of now recognising dividends in the period when the Company becomes liable to pay them. The statutory accounts for the year ended 30 September 2006 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 Company's Annual General Meeting. The above financial information is unaudited and does not constitute statutory accounts under Section 240 of the Companies Act 1985 (as amended). Statutory accounts for the financial year ended 30 September 2005 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. This announcement is prepared on the basis of the accounting policies as set out in the most recent published set of annual financial statements as amended for the adoption of new Accounting Standards. This statement was approved by the Board of Directors on 21 November 2006. Statement by the Chairman, The Hon Rupert Carington: Investment Performance I am pleased to report that during the year ended 30 September 2006 the Company's net asset value per share produced a total return of 19.1%, outperforming the Company's benchmark Index, the Morgan Stanley All Countries Far East (Free) excluding Japan Index, which produced a total return of 15.1% over the same period. This is now the fifth successive year in which the net assets of the Company have increased and of out-performance against the benchmark. Final Dividend The Directors recommend the payment of a final dividend of 1.70 pence per share for the year ended 30 September 2006, compared to 1.90 pence per share for the previous year. Whilst the revenue return for the year remained static (2006: £2,769,000 - 2005:£2,748,000) the number of shares in issue increased from 139,218,088 to 167,189,762 during the year as a result of the final exercise of warrants. This reduced the amount available for distribution per share. If the resolution proposed at the Annual General Meeting to pay a final dividend is passed, the dividend will be paid on 9 February 2007 to shareholders on the Register on 5 January 2007. Gearing During the year, the Company maintained drawings from its revolving credit facility at US$40 million. The amount of the facility was increased from US$50 million to US$60 million. Net gearing at the beginning of the year was 2.6% and by the end of the year had increased to 4.4%. The Board continues to review its gearing position on a regular basis. Changes to UK Accounting Standards The Company has adopted a number of new accounting standards as a result of the Accounting Standards Board's convergence programme with International Accounting Standards applicable to investment trusts which prepare their financial statements under UK Generally Accepted Accounting Practice. These are the first full year accounts which have been prepared pursuant to these new accounting standards and their impact is set out in the notes to these accounts. In addition, the Directors' Report contains a Business Review for the first time this year, as required under the European Union's Accounts Modernisation Directive for all UK listed companies for financial years beginning on or after 1 April 2005. Continuation Vote At the Annual General Meeting held on 27 January 2006, shareholders voted in favour of the continuation of the Company as an investment trust for a further period of five years. I thank shareholders for demonstrating their support. A further continuation vote will be put to shareholders in 2011 and thereafter at five yearly intervals. Final Warrant Exercise Date on 31 January 2006 The final date on which warrants could be exercised was 31 January 2006. A Circular to warrant holders was distributed with last year's Annual Report and Accounts to remind them of the final date. A Trustee was appointed in accordance with the Terms and Conditions of the warrants to exercise any unexercised subscription rights. The warrants have now lapsed and no longer have any value. Change in Custodian The Company changed custodian from Schroder Investment Management Limited to JPMorgan Chase Bank N.A. in July 2006, following Schroders' withdrawal from its custody business. Purchase of Shares for Cancellation At the Company's last Annual General Meeting on 27 January 2006, 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 2006, 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. Annual General Meeting The Annual General Meeting will be held on Wednesday 7 February 2007 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, before the formal business of the meeting. The Hon Rupert Carington Chairman 21 November 2006 Investment Manager's Review During the twelve months period ended 30 September 2006, the total return on the Company's net assets was 19.1%, outperforming the benchmark index, which produced a total return of 15.1%. It has been another year of satisfactory returns for the Asian regional markets, aided by generally benign global economic conditions, strong export performance, expanding corporate earnings and dividends, and supportive liquidity. Interest rates have generally been on the rise both in western economies and more latterly in the region, but the impact has been limited given the growth environment. However, markets were more volatile in the second half of the financial year, with a sharp sell-off in May and June. This proved relatively short-lived, but while regional markets recovered strongly in the final quarter, returns for the Company were reduced by the strength of sterling. The smaller ASEAN markets of Indonesia and the Philippines have been the outstanding performers in the year. In the case of the former, the year started with investors very cautious over high oil prices and government finances stretched by heavy energy subsidies. The removal of these subsidies and more recently the falling oil price have resulted in stabilisation of the currency and interest rate reductions which have prompted a strong rally. Declining interest rates have also been a key feature of the Philippine recovery as the benefits of fiscal reform flow through, sparking a recovery in the local property market which has been moribund for a decade. Of the larger markets, sentiment has improved markedly in China. The successful privatisation of the major banks has sparked global investor interest, as has the partial float of the currency and greater belief that the emphasis of growth is shifting to domestic consumption. Attempts by the Beijing authorities to dampen property speculation and the pace of fixed asset investment have also been taken positively as being good for the longer-term health of the economy. The strength of China has contrasted with subdued returns in both Hong Kong and Taiwan. Domestically-oriented stocks in both have performed poorly; in the former due to rising interest rates and a lack of catalysts, while Taiwan has been pre-occupied by asset problems in the banking sector and political paralysis. Performance and Portfolio Activity The NAV performance of the Company has been negatively affected by dilution from the warrants in the period up to their conversion in early February. However, the underlying performance of the portfolio has been strong thanks to the impact of gearing, the overweight positions in Indonesia and the Philippines, the underweights in Malaysia and Taiwan and strong stock selection in Hong Kong, the Philippines and Thailand. The broad strands of policy in the portfolio have remained stable over the year. We reduced our position in Taiwan as the outlook for domestic activity deteriorated, and added to the Philippines as one of the restructuring ASEAN economies alongside Indonesia. We have sought to add to companies exposed directly to growth in China although management and regulatory risks remain high. Outlook and Policy The prospects for US consumer spending remain very important to Asian exports and we believe that a degree of slowdown is inevitable. The US housing market is clearly slowing, with some secondary impact being seen on consumption and business confidence. However, with household incomes remaining buoyant and employment resilient, the impact should be limited. Growth in Japan and Europe is also likely to slow, but the ingredients for a sharp slowdown appear to be lacking. The silver lining for Asia is that, while export growth will decelerate (and earnings forecasts for the region are likely to continue to fall), there will be more flexibility for a loosening in regional credit conditions in the event that US rates have stopped rising, or even started to decline. This should be of particular benefit to Hong Kong, Singapore and Thailand where local policy has been influenced by US trends. It should also underpin the more secular moves in other regional markets towards lower interest rates. The fact remains that there is ample liquidity in Asia, and with markets still at reasonable valuations, balance sheets strong and corporate governance improving, we remain optimistic for the year ahead. The portfolio remains modestly geared and well placed to take advantage of short-term weaknesses whether sparked by a growth scare or geo-political events. The key overweights are Singapore, Indonesia, the Philippines and the non-Index position in India, while our sectoral focus remains upon domestic sectors such as consumer cyclicals, financials and industrials Schroder Investment Management Limited 21 November 2006 Final Dividend The Directors of the Company have declared the payment of a final dividend of 1.70p net per share for the year ended 30 September 2006. Subject to approval by shareholders at the Annual General Meeting, the dividend will be payable on 9 February 2007 to shareholders on the register on 5 January 2007. Ex-Dividend Date: 3 January 2007 Record Date: 5 January 2007 Dividend Warrants: Despatched on 8 February 2007 Payment Date: 9 February 2007 Dividend per share: 1.70p The Annual Report and Accounts Report will be mailed to registered shareholders in December 2006 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. Enquiries: John Spedding Schroder Investment Management Limited 21 November 2006 (020 7658 3206) (e-mail john.spedding@schroders.com) This information is provided by RNS The company news service from the London Stock Exchange

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