Interim Results

Schroder Oriental Income Fund Ltd 30 April 2007 30 April 2007 Unaudited Interim Results The Directors of Schroder Oriental Income Fund Limited (the 'Company') announce the unaudited interim results for the six months ended 28 February 2007. Income Statement (Unaudited) For the six months ended For the seven months ended 28 February 2007 28 February 2006 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on investments held - 25,020 25,020 - 9,304 9,304 at fair value Exchange gains/(losses) - 777 777 - (535) (535) Income 3,576 - 3,576 5,831 - 5,831 Investment management fee 2 (193) (450) (643) (205) (479) (684) Performance fee 3 - (818) (818) - (208) (208) Administrative expenses (163) (15) (178) (139) - (139) Net return before finance costs and 3,220 24,514 27,734 5,487 8,082 13,569 taxation Finance Costs (183) (427) (610) (208) (461) (669) Net return on ordinary activities 3,037 24,087 27,124 5,279 7,621 before taxation 12,900 Taxation on ordinary activities (233) - (233) (479) - (479) Net return on ordinary activities 2,804 24,087 26,891 4,800 7,621 12,421 after taxation attributable to equity shareholders Net return per ordinary share 4 1.78p 15.34p 17.12p 3.10p 4.93p 8.03p All revenue and capital items in the above statement derive from continuing operations. The total column represents the profit and loss account of the Company. 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 Gains or Losses is presented. Balance Sheet (Unaudited) Note At At At 28 February 28 February 31 August 2007 2006 2006 £'000 £'000 £'000 Fixed Assets Investments held at fair value through profit and loss 207,523 193,033 180,296 Current Assets Debtors 3,249 762 1,137 Cash at bank 5,289 5,490 2,102 8,538 6,252 3,239 Creditors: amount falling due within one year Purchases outstanding 2,132 - - Foreign currency loans 29,864 30,137 23,490 Accruals 1,312 1,269 414 33,308 31,406 23,904 Net current liabilities (24,770) (25,154) (20,665) Net assets attributable to shareholders 182,753 167,879 159,631 Capital and Reserves Called up share capital 1,571 1,571 1,571 Special reserve 153,887 153,887 153,887 Capital reserves 22,018 7,621 (2,069) Revenue reserve 5,277 4,800 6,242 Total equity shareholders' funds 182,753 167,879 159,631 Net asset value per ordinary share 5 116.37p 106.90p 101.64p Reconciliation of Movements in Shareholders' Funds (Unaudited) Share Share Premium Special Capital Revenue Capital Account Reserve Reserves Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 Issue of ordinary shares 1,571 153,887 - - - 155,458 Net realised gains during the period - - - 7,621 - 7,621 Retained profit for the period - - - - 4.800 4,800 Balance as at 28 February 2006 1,571 153,887 - 7,621 4,800 167,879 Share Share Premium Special Capital Revenue Capital Account Reserve Reserves Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 Issue of ordinary shares 1,571 155,711 - - - 157,282 Share issue expenses - (1,824) - - - (1,824) Cancellation of Share Premium - (153,887) 153,887 - - - Account Net capital return on ordinary - - - (2,069) - (2,069) activities First interim dividend paid - - - - (3,887) (3,887) Retained profit for the period - - - - 10,129 10,129 Balance as at 31 August 2006 1,571 - 153,887 (2,069) 6,242 159,631 Share Share Premium Special Capital Revenue Capital Account Reserve Reserves Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 August 2006 1,571 - 153,887 (2,069) 6,242 159,631 Dividends paid in respect of the period ended 31 August 2006 - - - - (3,769) (3,769) Net capital return on ordinary activities - - - 24,087 - 24,087 Retained profit for the period - - - - 2,804 2,804 Balance as at 28 February 2007 1,571 - 153,887 22,018 5,277 182,753 Cash Flow Statement (Unaudited) For the six For the seven For the thirteen months ended months ended months ended 28 February 2007 28 February 2006 31 August 2006 £'000 £'000 £'000 Operating activities Income from investments 4,084 4,774 10,912 Interest received 59 277 429 Administrative expenses (238) (118) (326) Investment management fee (602) (382) (971) Net cash inflow from operating activities 3,303 4,551 10,044 Returns on investments and servicing of finance (507) (589) (1,400) Bank loan and overdraft interest paid Net cash inflow from returns on investments and servicing of finance (507) (589) (1,400) Taxation (233) (479) (1,222) Overseas tax paid (3,769) - (3,887) Dividends paid (67,288) (230,861) (301,348) Financial investment 63,773 47,808 119,290 Purchase of investments Sale of investments Net cash outflow from financial investments (3,515) (183,053) (182,058) Net cash outflow before financing (4,721) (179,570) (178,523) Financing 7,131 29,863 25,063 Bank loan drawn - 155,458 155,458 Net proceeds from issue of ordinary shares 7,131 185,321 180,521 Net cash inflow from financing 777 (261) 104 Effects of foreign exchange gains on cash and cash equivalents 3,187 5,490 2,102 Increase in cash and cash equivalents during the period Reconciliation of Net Debt (Unaudited) For the six For the seven For the thirteen months ended months ended months ended 28 February 2007 28 February 2006 31 August 2006 £'000 £'000 £'000 Movement in cash during the period 3,187 5,490 2,102 Net debt brought forward (21,388) - - Exchange gains/(losses) 757 (274) 1,573 Movement in bank loans (7,131) (29,863) (25,063) Net debt carried forward (24,575) (24,647) (21,388) Notes 1 Basis of preparation The financial statements have been prepared on the historical cost basis, modified to include the revaluation of fixed asset investments and in accordance with applicable accounting standards in the United Kingdom and on the basis that all activities are continuing. The Directors consider it is appropriate to present the financial statements in accordance with the Statement of Recommended Practice - Financial Statement of Investment Trust Companies ('the SORP'), revised in December 2005, although the SORP applies only to investment trust companies. 2 Investment management fee Under the terms of the Management Agreement, the manager is entitled to receive a basic management fee of an amount equivalent to 0.75 per cent. per annum of the net assets of the Company (plus any applicable VAT), payable quarterly in arrears and calculated as at the last business day in February, May, August and November in each year while the agreement remains in force. For the six months ended 28 February 2007, a total fee of £643,000 has been accrued under the terms of the management agreement. 3 Performance fee The Manager is also entitled to receive a performance fee based on the performance of the Company's adjusted net asset value per share. The performance fee is 10 per cent. of the amount by which the adjusted net asset value per share (adjusted as described below) at the end of the relevant calculation period exceeds a hurdle, being 107 per cent. of the adjusted net asset value per share at the end of the previous calculation period multiplied by the time weighted average of the number of shares in issue during the period. The net asset value as at the end of the period will be adjusted as appropriate to take account of dividends, buy-backs or issues of shares and to add back performance fees paid or accrued for during the period. For the six months ended 28 February 2007, a total fee of £818,000 has been accrued under the terms of the management agreement. 4 Net revenue return per share Revenue return per share is based on the revenue attributable to shareholders of £2,804,000 and on 157,050,000 shares, being the weighted average number of shares in issue during the period. 5 Net asset value per share Net asset value per share is based on the net assets attributable to the shareholders of £182,753,000 and on 157,050,000 shares in issue at the end of the period. 6 Dividends The directors have declared a first interim dividend for the year ending 31 August 2007 of 2.25 pence per share, payable on 30 April 2007 to shareholders registered on 10 April 2007. The shares were quoted ex-dividend on 4 April 2007. This statement was approved by the Board of Directors on 30 April 2007. Investment Manager's Review The net asset value of the Company recorded a total return of 17.6% over the period to 28 February 2007. An interim dividend of 2.25p has been proposed. It has been another good period for equity returns in the region, with the MSCI All Countries Pacific ex Japan Index recording a total return of 15.2% in sterling terms. The backdrop has continued to be favourable for equities. Global growth momentum has slowed, but this has been confined primarily to the United States and to Japan in contrast to most of Europe and the emerging markets, with China alone contributing an estimated 12% of total global economic growth in 2006. Interest rates continued to rise in Europe and began to do so in Japan. However, importantly for Asia, US short-term rates were increasingly perceived as having peaked. This has augmented benign local liquidity conditions in many of the regional markets, most notably Singapore where real estates and bank stocks led a strong market rally. While a similar trend was evident in Hong Kong, the domestic sectors were overshadowed by more directly China-related stocks. These were buoyed by continued strong economic growth, a steadily rising renminbi, and the continuation of a spectacular rally (130% in 2006) in the domestic (or 'A') share markets which are largely closed to foreign investors. Although Chinese stocks corrected sharply in January, they still offered amongst the highest returns in the review period. Other areas of strength included some of the ASEAN markets, including Malaysia on hopes for better corporate governance and lower inflation thanks to falling energy prices, and the Philippines which exhibited the strongest performance of the region as interest rates fell below 4%, remittances from overseas nationals rose some 40%, and the property market showed signs of recovery after a decade of torpor. In contrast, Thailand and Korea trailed the regional average. In Thailand, the aftermath of the ousting of the Prime Minister (most notably a misguided but brief attempt to impose capital controls in December) rattled investors. For Korea, concerns over growth globally (particularly the United States) and a rising Korean won, notably against the Japanese yen, were adverse factors for the export-oriented sectors. Meanwhile, blunt administrative measures by the authorities to restrain property prices and high interest rates impacted domestic sectors such as construction and retailing. Performance and Portfolio Activity Performance has been strong in absolute terms, and has also out-paced that of the MSCI AC Pacific ex Japan reference Index, although this does not have the bias towards higher income shares evident in the Company's portfolio. Heavy weightings in Singapore and the underweighting in Korea have both been significant positive factors, while strong stock selection was evident in Indonesia, and to a lesser extent in Taiwan. The only areas of significant disappointment were stock selection in Australia and Singapore. While the holdings in fixed income hampered relative performance in a time of strongly rising equity markets, this was more than offset by the benefit of the portfolio's gearing. In terms of policy, the major exposures have remained fairly stable, with largest country weights being in Australia, Hong Kong, Taiwan and Singapore. Changes at the margin included adding to Thailand following the weakness late in 2006 (focusing on high yielding utility type stocks with very attractive yields) and to Hong Kong, at the expense of reduction to Indonesia and the elimination of the direct exposure to Japan. Sectoral exposure remained biased towards domestic sectors such as financials, real estate, telecoms and selected industrials. Outlook and Policy The end of the Company's half-year coincided with a bout of market volatility, prompted by increased concern over the spreading mortgage problems in the United States, and the possible knock-on impact on both consumer sentiment and the more exotic corners of the credit markets. Rising volatility and widening credit spreads have had their usual impact on the smaller more emerging markets, with an Asian dimension added by the gyrations of the Chinese A share markets. We believe it is important, however, to make a distinction between the recent volatility and the more significant sell-off seen in May 2006. The issue this time concerned a deficiency in global growth rather than fears of inflationary strength. Clearly recession in the United States will be an unhelpful backdrop for Asian markets, but this is not our central expectation. We are a long way from seeing the travails of the sub-prime mortgage market feeding through into more general credit issues. The robust health of the corporate sector, the strength of employment and household incomes suggests that the underlying position of the US, and global, economies is healthy. Against the backdrop of a soft landing in the United States (perhaps aided by some stimulatory action from the Federal Reserve), we believe that Asian equities can still produce attractive returns, supported by domestic drivers to growth including ample liquidity, supportive property markets and undergeared banking systems. It is also an environment in which higher yielding equities can prosper, and we continue to be encouraged at a stock by stock level by the steady progress in regional thinking among investors and management about the importance of capital efficiency and shareholder returns. We continue to see plenty of opportunities to invest in soundly managed, soundly financed and growing companies which offer well-covered dividends significantly in excess of domestic interest rates. Schroder Investment Management Limited Interim Report The Interim Report will be mailed to registered shareholders in May 2007 and from the date of release copies of the Interim Report will be made available to the public at the Company's Registered Office and at 31 Gresham Street, London EC2V 7QA. Enquiries: Schroder Investment Management Limited John Spedding (020 7658 3206) 30 April 2007 This information is provided by RNS The company news service from the London Stock Exchange

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