SCHRODER ASIAN TOTAL RETURN INV CO

Interim / Quarterly Report • Sep 10, 2024

National Storage Mechanism | Additional information

RNS Number : 4895D

Schroder Asian Total Retn InvCo PLC

10 September 2024

Schroder Asian Total Return Investment Company plc

Half Year Report

Schroder Asian Total Return Investment Company plc (the "Company") hereby submits its Half Year Report for the six months ended 30 June 2024 as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.2.

Key highlights

·	The Company reports a strong period of performance over the six months to 30 June 2024, with NAV producing a total return of 10.1%, ahead of the Reference Index total return of 9.5%.
·	Technology holdings, especially those linked to artificial intelligence, were the largest contributors to performance and benefitted the technology heavy Taiwan market, where stocks rose strongly.
·	The share price traded below NAV during the six-month period, leading the Board to repurchase 1,783,206 shares for a total consideration of £ 7.8 million to assist in discount management and to reduce share price volatility.
·	The Portfolio Managers actively utilised gearing throughout the period, with an average gearing of 6.3%, resulting in a net positive contribution to returns.

The Half Year Report is also being published in hard copy format and an electronic copy of that document will shortly be available to download from the Company's web pages   www.schroders.co.uk/satric .

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

Enquiries:

Schroder Investment Management Limited

Kirsty Preston (Press)	020 7658 2000
Kerry Higgins	020 7658 6000

Half year report for the six months ended 30 June 2024

PERFORMANCE SUMMARY

at 30 June 2024 (unaudited)

NAV per share total return* 10.1% (Year ended 31 December 2023: 8.8%)	Share price total return* 7.5% (Year ended 31 December 2023: 10.3%)	MSCI AC Asia ex-Japan Index (with net income reinvested), sterling adjusted 9.5% (Year ended 31 December 2023: 1.3%)
Ongoing charges ratio* 0.90% (Year ended 31 December 2023: 0.87%)	Gearing* 6.5% (As at 31 December 2023: 7.8%)	Share price discount to NAV per share* 7.0% (As at 31 December 2023: 4.6%)
Share price  461.00p (As at 31 December 2023: 440.00p)	Revenue return per share 5.41p (Year ended 31 December 2023: 10.26p)	Net assets £473.35m (As at 31 December 2023: £448.48m)

Some of the financial measures are classified as Alternative Performance Measures ("APMs"), as defined by the European Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other terms used in this report, are given on pages 22 and 23 together with supporting calculations where appropriate.

CHAIR'S STATEMENT

Performance

I am pleased to report another period of good performance over the six months to 30 June 2024, with the Company's net asset value ("NAV") total return outperforming the Reference Index (MSCI AC Asia Pacific ex-Japan). The NAV produced a total return of 10.1%, ahead of the Reference Index total return of 9.5% over the period. The share price total return was 7.5% as the discount to NAV widened during the six months. It is also positive to note the consistently strong long-term track record with the Company's NAV outperforming the Reference Index over the one, three, five and ten year periods to 30 June 2024.

During the period, the largest contributors to performance were predominantly technology holdings, especially those linked to artificial intelligence, and the Company's overweight position in Taiwan proved advantageous. In particular Taiwan Semiconductor Manufacturing Company ("TSMC"), the Company's largest holding, made significant gains but other technology stocks including MediaTek and Chroma ATE in Taiwan, FPT in Vietnam and MakeMyTrip in India, also performed well. However, the strength in technology stocks was offset by weakness in bank holdings in the Philippines, Indonesia and India. The portfolio also experienced some headwinds from our holdings in Hong Kong, such as AIA and Galaxy Entertainment, due to concerns regarding the outlook for Chinese consumption.

Further details on the market and portfolio performance may be found in the Investment Manager's Review.

Discount management

The share price traded below NAV during the six-month period, with an average discount of 6.8%. The discount commenced the period at 4.6% but expanded during the six months, along with the whole of the investment trust sector which experienced widening discounts. The discount ended the period at 7.0%. Consequently, the Board made use of its authority to buy back shares to assist in discount management and to reduce share price volatility. The Board aims to achieve a discount of no more than 5% in normal market conditions. During the six-month period to 30 June 2024, a total of 1,783,206 shares were repurchased at an average discount of 6.6%, for a total consideration of £7.8 million. The shares were placed into treasury for reissuance at a premium to NAV at a future date. Since the end of the period, the Company has purchased a further 536,087 shares to be held in treasury.

Gearing

The Portfolio Managers continued to actively utilise gearing during the period with a range of 4.5% at its lowest and 8.8% at its highest, and an average of 6.3%. Average net debt over the six-month period was £32.1 million. The Company's gearing has made a net positive contribution to returns over the period and is an important differentiating feature of the investment trust structure.

Gearing should be viewed in the context of the use of derivative hedging instruments as described in the Investment Manager's Review. The Board maintains oversight of the use of gearing and renewed its £75 million revolving credit facility during July 2024.

Board composition

The Board continues to review its composition and effectiveness as well as planning for succession. The Board was delighted to welcome Marion Sears as a non-executive Director with effect from 24 April 2024. Marion brings a wealth of City, investor, banking, corporate and investment trust experience.

As stated in the last Annual Report, Caroline Hitch stepped down from the Board, having reached her nine-year tenure, at the conclusion of the Annual General Meeting in April 2024.

Outlook

The timing and scale of future interest rate cuts in the US continues to dominate investor perceptions of equity valuations, leaving global stock markets sensitive to US economic data and their repercussions for growth and earnings. Business and consumer confidence in China's economy remains weak as China's property malaise persists and policy measures to provide short-term stimulus continue to disappoint. The impending US election continues to overhang delicate US/China trade relationships with consequences for growth around the region.

Challenging markets provide ample opportunities for active managers and the extensive investment experience of our Portfolio Managers, complemented by a regional research team of 44 analysts, puts them in a strong position to identify attractive stock opportunities around the region. Stock selection will continue to be the critical factor in adding value to the portfolio and securing long term relative outperformance. Our Portfolio Managers have an impressive long term track record and their experience, supported by Schroders' extensive resources in Asia, gives the Board confidence in their ability to navigate regional equity markets.

Sarah MacAulay

Chair

9 September 2024

INVESTMENT MANAGER'S REVIEW

Performance review and outlook

The first half of 2024 was a strong period for Asian stock markets with the Company's Reference Index (MSCI AC Asia Pacific ex Japan) producing a total return of 9.5% over the period. The Company benefitted from the rise in the region's stock markets with the NAV producing a total return of 10.1%, slightly outperforming the Reference Index (Source: Schroders).

Whilst the overall stock market performance in Asia was strong, there were some quite divergent trends across the region. There were two notable areas of strength which contrasted with flat or weak returns elsewhere. The first area of stock market strength was in the technology sector, which rose strongly over the first half of 2024, particularly those stocks perceived to have an artificial intelligence ("AI") angle. This benefitted the technology-heavy Taiwan market where stocks rose strongly as high levels of retail, or more speculative, investing became prevalent. Whilst perhaps not a bubble, the market has certainly become "frothy" with the overall MSCI Taiwan index rising by 30.5% over the first half of 2024.

The second area of strength in Asia was the Indian stock market. The market rose strongly on the back of continued good earnings growth and positive domestic economic momentum. The stock market rallied in the run up to the June 2024 Parliamentary elections, with domestic investors anticipating that the result would be a large majority for Mr Modi's Bharatiya Janata Party ("BJP"). In the event, Mr Modi's BJP did much worse than expected losing their majority and having to rely on two coalition partners. After an initial sell-off, the market rallied strongly as it became clear that there was unlikely to be any change to pro-business policies and that the relatively poor performance of the BJP may have the benefit of a dialling back of some of the more aggressive Hindu nationalist policies. Overall, the MSCI India rose by 17.9% over the period.

The strong performance in India and Taiwan contrasted with weak performance across the smaller Asian stock markets. Indonesia, the Philippines, and Thailand stock markets were all notably weak, falling by 8.7% on average (Source: MSCI Factset). This was primarily on the back of "stronger for longer" US interest rate worries. These economies are particularly rate sensitive, and a strong dollar and higher US rates are likely to keep domestic activity subdued. This combined with politics, which in all three countries have become slightly less certain, served to keep both overseas and domestic investors cautious.

And what of the elephant in the room when it comes to investing in Asia? The MSCI China rose by 5.6%, slightly underperforming the overall benchmark. However, this masked considerable volatility within the Chinese stock market, along with significant underlying divergences in both stock and sector performance. The beginning of the reporting period saw marked weakness in Chinese stocks on the back of concerns over the domestic economic outlook and the deteriorating situation in the property market. The hope of a policy stimulus and a property rescue package, then led to a strong rally in April and early May 2024. The announced measures however disappointed and this led to a weak stock market performance over the month of June 2024. Within the market consumer stocks, blue chip industrials and exporters generally performed poorly, whilst Chinese state-owned enterprises in the oil, telecom and financial sectors did well as investors decided to go for the perceived "safety" of state backed companies and stocks with high dividend yields. The strength of the banks was perplexing for your Portfolio Managers given the weakness of the domestic economy, collapsing property markets and the unsustainability of their current high dividend yields.

The largest stock level contributors to performance over the period came predominantly from our technology holdings. In particular, Taiwan Semiconductor Manufacturing Company ("TSMC"), which continues to be the largest portfolio holding, performed very strongly. TSMC is the effective monopoly provider of semiconductors that are required for advanced AI applications and thus continues to benefit from the very strong capital expenditure related to this space. With the stock's valuation looking reasonable and it rising to over 10.0% of NAV, we have started to trim our position. Other strong performers were Taiwanese technology stocks MediaTek and Chroma ATE which, like TSMC, are seeing stronger earnings momentum on the back of AI related expenditure. Two other notable strong performers were FPT in Vietnam, which is benefitting from a pick-up in Information Technology ("I.T.") services spend in Japan as companies move more rapidly to digitalise their operations and MakeMyTrip which as the largest on-line travel provider in India is benefitting from the growth in both international and domestic travel.

The strength in technology related stocks was however, offset by weakness in our bank holdings in the Philippines and Indonesia, and the continued weakness in HDFC Bank in India where the merger with its associate HDFC Limited, a housing finance provider, has not gone as smoothly as hoped. Other drags on performance came from our holdings in Hong Kong, where stocks such as AIA and Galaxy Entertainment were weak given concerns about the gloomy outlook for Chinese consumption.

The first half of the year was an active period for the Company, with the divergent performance and volatility across the region triggering opportunities to reposition some holdings. As mentioned earlier, given the strong performance in some of our technology holdings and increasingly aggressive expectations (and hype) in the AI space, we trimmed several of the technology positions, most notably TSMC. We exited a number of Chinese consumer related names such as Yum China, Hang Lung Group and LVMH (which was primarily held due to its exposure to high end Chinese consumption), given rising competition in the sector at a time of structural consumer weakness. Proceeds from the technology and China sales were mostly used to add to existing holdings. The Company was also quite active in India. After a long review we decided to exit Infosys, given the relatively weak outlook for I.T. spend in many of its business segments, and we also trimmed HDFC Bank as our conviction on the stock has fallen due to the merger concerns previously mentioned. Proceeds from the Indian sales were used to initiate a new position in Bharat Electronics, which should benefit from rising defence spending and the need for India to move away from a reliance on Russia for military hardware. We also used the proceeds from HDFC Bank to initiate a position in housing lender Five Star Finance and started a small position in high end home builder Oberoi Realty.

The hedging models, which we use as part of the process within the Company to determine both the level of gearing1 to use and whether to deploy capital preservation strategies, have had some interesting moves over the period. The longer-term market model, which is mostly based around valuations, started the period generally neutral to slightly positive on the Asian stock market outlook. However, following strong market moves and in the case of China/Hong Kong and the ASEAN markets material downgrades to earnings, the models have turned more cautious with a limited prospect of positive market returns over the next 12 to 18 months based on historical trading patterns. The tactical models which look at the likelihood of short-term returns (3 to 6 months) from Asian stock markets based on a series of financial, sentiment, economic and valuation indicators started the period positively (correctly given the first half market returns). However, current indicators are now decidedly neutral to cautious with limited scope for material short term positive returns based on historic trading patterns.

What does this mean in practice? We have reduced gearing down to 5% and we are now in a modest way adding to capital preservation strategies. At the current time we have purchased a small position in VIX call2 options and added a small position in puts2 on the Taiwanese, Australian and Indian indices. VIX options are a derivative of  the S&P 500 Volatility Index. As mentioned earlier we are also trimming some of our technology positions in Taiwan. All of this should mean the Company is positioned a little more defensively as we move into the second half of the year.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

The Investment Manager invests on a discretionary basis and there are no restrictions on the extent to which the Company's portfolio and performance may deviate from the Reference Index. The Investment Manager will invest in companies or sectors not included in the Reference Index in order to take advantage of specific investment opportunities.

1 Please refer to section on "Definitions of Terms and Alternative Performance Measures".

2 Options: when you buy an option over an asset, you have the right (but not the obligation) to buy or sell that asset at an agreed price, on or before the date when the option expires. The buyer of a put option is seeking to profit in the event that the asset's value drops below the exercise price before the expiration date, whereas the buyer of a call option is seeking to profit in the event that the asset's value increases above the exercise price before the expiration date.

How is the Company positioned for the second half of 2024?

1.  Hong Kong/China - index weight c.27%. Company significantly c.10% underweight

Structurally unattractive markets. There are some good companies, but valuations are not as low as the optimists claim. Headwinds from the property sector will keep consumer sentiment weak and policy towards "new productive forces" is bad for stock market returns as it exacerbates overcapacity.

2.  Australia/Singapore - index weight c.19%. Company c.6% overweight

Well-regulated stock markets in countries with good capitalist foundations. Lower growth but lots of good yield, attractive for total returns. Defensive - preferred area to add to as we go into the second half of 2024.

3.  Korea/Taiwan - index weight c.31%. Company c.5% overweight

Principally technology (semiconductors) based stock markets. Attractive companies with strong intellectual property and barriers to entry-cyclical but with growth. Some of the best stocks in Asia but have done well and key names now approaching reasonable valuation, we are likely to trim into further AI hyped strength.

4.  India and ASEAN - index weight c.23%. Company is overweight ASEAN, underweight in India

Genuine emerging markets. Strong GDP growth but more volatile politics and regulation. We like the long term structural outlook in India, the Philippines and Indonesia. Valuations in the former now expensive, so we have been taking profits. ASEAN valuations are attractive, especially for financials and selected consumer names.

Source: Schroders, July 2024.

For illustrative purposes only and does not constitute any recommendation to buy or sell the above-mentioned security/sector/country. Please note that the value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested.

Robin Parbrook and Lee King Fuei

9 September 2024

INVESTMENT PORTFOLIO

as at 30 June 2024

Investments are classified by the Investment Manager in the country of listing, except where noted. Stocks in bold are the 20 largest investments, which by value account for 58.7% (30 June 2023: 53.8% and 31 December 2023: 56.8%) of total investments and derivative financial instruments.

	£'000	%
Taiwan
TSMC	59,502	11.8
MediaTek	17,144	3.4
Voltronic Power Technology	9,909	2.0
Chroma ATE	8,325	1.6
ASE Technology	6,821	1.3
United Microelectronics	6,566	1.3
Merida Industry	6,468	1.3
Nien Made Enterprise	6,259	1.2
Advantech	5,846	1.2
Eclat Textile	4,902	1.0
Total Taiwan	131,742	26.1
Australia
CSL	9,170	1.8
Cochlear	9,150	1.8
ResMed	8,955	1.8
Aristocrat Leisure	8,679	1.7
BHP Billiton1	7,540	1.5
Medibank Private	6,643	1.3
Brambles	6,126	1.2
Seek	5,336	1.1
Orica	4,988	1.0
James Hardie Industries	4,920	1.0
Incitec Pivot	3,696	0.7
Total Australia	75,203	14.9
India
ICICI Bank	12,304	2.4
HDFC Bank	12,007	2.4
Apollo Hospitals Enterprise	9,744	1.9
MakeMyTrip2	9,523	1.9
Bharat Electronics	5,779	1.1
Tata Consultancy Services	5,756	1.1
Five Star Business Finance	4,929	1.0
KPIT Technologies	2,368	0.5
Oberoi Realty	2,293	0.5
Total India	64,703	12.8
South Korea
Samsung Electronics	34,297	6.8
SK Hynix	6,070	1.2
Total South Korea	40,367	8.0
Mainland China
Tencent3	20,968	4.1
Shenzhou International Group3	7,554	1.5
NetEase3	5,877	1.2
New Oriental Education & Technology Group (ADR)2	4,944	1.0
Total Mainland China	39,343	7.8
Singapore
DBS	16,321	3.2
United Overseas Bank	7,388	1.5
Singapore Exchange	7,308	1.4
Sheng Siong	4,116	0.8
Venture	2,279	0.4
Total Singapore	37,412	7.3
Hong Kong (SAR)
Swire Pacific	10,570	2.1
AIA	10,469	2.1
Techtronic Industries	8,071	1.6
Galaxy Entertainment	6,567	1.3
Total Hong Kong (SAR)	35,677	7.1
Philippines
International Container Terminal Services	9,730	1.9
Wilcon Depot	7,376	1.5
BDO Unibank	5,260	1.0
Century Pacific Food	4,901	1.0
SM Investments	4,710	0.9
Total Philippines	31,977	6.3
Indonesia
Bank Mandiri	12,068	2.4
Sumber Alfaria Trijaya Tbk PT	2,925	0.6
Bank Negara	2,805	0.6
Total Indonesia	17,798	3.6
Vietnam
FPT	7,814	1.5
Total Vietnam	7,814	1.5
United Kingdom
Rio Tinto	7,700	1.5
Total United Kingdom	7,700	1.5
Thailand
Bangkok Dusit Medical Services	6,153	1.2
Total Thailand	6,153	1.2
United States
Las Vegas Sands	4,905	1.0
Total United States	4,905	1.0
Luxembourg
Samsonite International3	4,149	0.8
Total Luxembourg	4,149	0.8
Total Investments4	504,943	99.9
Derivative financial instruments
Index call/put options
CBOE Volatility Index (VIX) call option 12 August 2024	439	0.1
CBOE Volatility Index (VIX) call option 12 July 2024	349	-
S&P/ASX 200 put option 7750 August 24	82	-
Total call/put options5	870	0.1
Total investments and derivative financial instruments	505,813	100.0

1 Listed in the UK.

2 Listed in the USA.

3 Listed in Hong Kong (SAR).

4 Total investments comprise the following:

		£'000
Equities		499,999
American Depositary Receipts (ADR)		4,944
Total investments		504,943

5 The options give downside protection to 0.6% of total investments.

INTERIM MANAGEMENT STATEMENT

Principal risks and uncertainties

The principal risks and uncertainties associated with the Company's business fall into the following categories: macro factors, including the geopolitical/economic environment and climate change; investment objective and promotion; investment performance; key person; ESG considerations; gearing/liquidity; compliance with regulations; oversight of service providers; information technology resilience and security; and financial. The Board also considers the development of artificial intelligence to be an emerging risk. A detailed explanation of the risks and uncertainties in each of these categories can be found on pages 29 to 31 of the Company's published annual report and financial statements for the year ended 31 December 2023.

These risks and uncertainties have not materially changed during the six months ended 30 June 2024. However, the Board undertook a review of the principal and emerging risks for the Company while reviewing these financial statements. The Directors noted that geopolitical risk and climate change risk, in particular, continue to develop. These matters will be closely monitored and reported on in the next annual report, as appropriate.

Going concern

Having assessed the principal risks and uncertainties, and the other matters discussed in connection with the viability statement as set out on page 32 of the published annual report for the year ended 31 December 2023, the Directors consider it appropriate to adopt the going concern basis in preparing these financial statements.

Related party transactions

There have been no transactions with related parties that have materially affected the financial position or the performance of the Company during the six months ended 30 June 2024.

Directors' responsibility statement

In respect of the half year report for the six months ended 30 June 2024, we confirm that, to the best of our knowledge:

-	this condensed set of Financial Statements has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, specifically adhering to Financial Reporting Standard 104 "Interim Financial Reporting" and the Statement of Recommended Practice, "Financial Statements of Investment Companies and Venture Capital Trusts" issued in July 2022. It provides a true and fair view of the assets, liabilities, financial position and profit and loss of the Company as at 30 June 2024, as required by the Disclosure Guidance and Transparency Rule 4.2.4R; and
-	the half year report includes a fair review of the information concerning related party transactions as required by Disclosure Guidance and Transparency Rule 4.2.8R.

The half year report has not been reviewed or audited by the Company's auditor.

The half year report for the six months ended 30 June 2024 was approved by the Board and the above Responsibility Statement has been signed on its behalf.

Sarah MacAulay

Chair

For and on behalf of the Board

9 September 2024

STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2024 (unaudited)

		(Unaudited)			(Unaudited)			(Audited)
		For the six months			For the six months			For the year
		ended 30 June 2024			ended 30 June 2023			ended 31 December 2023
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value through profit or loss		-	41,602	41,602	-	5,786	5,786	-	28,264	28,264
Net losses on derivative contracts		-	(672)	(672)	-	(1,718)	(1,718)	-	(1,991)	(1,991)
Net foreign currency (losses)/gains		-	(307)	(307)	-	2,187	2,187	-	1,846	1,846
Income from investments		6,785	128	6,913	8,113	-	8,113	13,568	1,639	15,207
Other interest receivable and similar income		96	-	96	119	-	119	180	-	180
Gross return		6,881	40,751	47,632	8,232	6,255	14,487	13,748	29,758	43,506
Management fee		(392)	(1,177)	(1,569)	(383)	(1,150)	(1,533)	(763)	(2,288)	(3,051)
Administrative expenses		(472)	-	(472)	(424)	-	(424)	(862)	-	(862)
Net return before finance costs and taxation		6,017	39,574	45,591	7,425	5,105	12,530	12,123	27,470	39,593
Finance costs		(248)	(744)	(992)	(342)	(1,026)	(1,368)	(695)	(2,084)	(2,779)
Net return before taxation		5,769	38,830	44,599	7,083	4,079	11,162	11,428	25,386	36,814
Taxation	3	(562)	(280)	(842)	(648)	(133)	(781)	(931)	(505)	(1,436)
Net return after taxation		5,207	38,550	43,757	6,435	3,946	10,381	10,497	24,881	35,378
Return per share (pence)	4	5.41	40.07	45.48	6.18	3.79	9.97	10.26	24.33	34.59

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 AIC. 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 period.

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

STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2024 (unaudited)

		Called-up		Capital
		share	Share	redemption	Special	Capital	Revenue
		capital	premium	reserve	reserve	reserves	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2023		5,456	114,656	11,646	29,182	262,783	24,761	448,484
Repurchase of the Company's own shares into treasury		-	-	-	-	(7,855)	-	(7,855)
Net return after taxation		-	-	-	-	38,550	5,207	43,757
Dividend paid in the period	5	-	-	-	-	-	(11,036)	(11,036)
At 30 June 2024		5,456	114,656	11,646	29,182	293,478	18,932	473,350
For the six months ended 30 June 2023 (unaudited)
		Called-up		Capital
		share	Share	redemption	Special	Capital	Revenue
		capital	premium	reserve	reserve	reserves	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2022		5,456	114,656	11,646	29,182	270,838	25,696	457,474
Repurchase of the Company's own shares into treasury		-	-	-	-	(9,254)	-	(9,254)
Net return after taxation		-	-	-	-	3,946	6,435	10,381
Dividend paid in the period	5	-	-	-	-	-	(11,432)	(11,432)
At 30 June 2023		5,456	114,656	11,646	29,182	265,530	20,699	447,169
For the year ended 31 December 2023 (audited)
		Called-up		Capital
		share	Share	redemption	Special	Capital	Revenue
		capital	premium	reserve	reserve	reserves	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2022		5,456	114,656	11,646	29,182	270,838	25,696	457,474
Repurchase of the Company's own shares into treasury		-	-	-	-	(32,936)	-	(32,936)
Net return after taxation		-	-	-	-	24,881	10,497	35,378
Dividend paid in the year	5	-	-	-	-	-	(11,432)	(11,432)
At 31 December 2023		5,456	114,656	11,646	29,182	262,783	24,761	448,484

STATEMENT OF FINANCIAL POSITION

at 30 June 2024 (unaudited)

		(Unaudited)	(Unaudited)	(Audited)
		30 June	30 June	31 December
		2024	2023	2023
	Note	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		504,943	475,994	484,012
Current assets
Debtors		1,103	5,839	1,194
Cash and cash equivalents		464	15,968	2,527
Derivative financial instruments held at fair value through profit or loss		1,378	484	178
		2,945	22,291	3,899
Current liabilities
Creditors: amounts falling due within one year	6	(24,754)	(50,983)	(38,841)
Bank overdraft		(8,913)	-	-
		(33,667)	(50,983)	(38,841)
Net current liabilities		(30,722)	(28,692)	(34,942)
Total assets less current liabilities		474,221	447,302	449,070
Non current liabilities
Deferred taxation		(871)	(133)	(586)
Net assets		473,350	447,169	448,484
Capital and reserves
Called-up share capital	7	5,456	5,456	5,456
Share premium		114,656	114,656	114,656
Capital redemption reserve		11,646	11,646	11,646
Special reserve		29,182	29,182	29,182
Capital reserves		293,478	265,530	262,783
Revenue reserve		18,932	20,699	24,761
Total equity shareholders' funds		473,350	447,169	448,484
Net asset value per share (pence)	8	495.91	433.74	461.24

Registered in England and Wales

Company registration number: 02153093

CASH FLOW STATEMENT

For the six months ended 30 June 2024 (unaudited)

		(Unaudited)	(Unaudited)	(Audited)
		For the six	For the six	For the
		months	months	year
		ended	ended	ended
		30 June	30 June	31 December
		2024	2023	2023
	Note	£'000	£'000	£'000
Net cash inflow from operating activities	9	3,579	3,662	10,928
Investing activities
Purchase of investments		(38,077)	(63,487)	(115,573)
Sales of investments		60,856	94,544	158,529
Net cash flows on derivative instruments		(1,872)	(2,203)	(2,169)
Net cash inflow from investing activities		20,907	28,854	40,787
Net cash inflow before financing		24,486	32,516	51,715
Financing activities
Dividends paid		(11,036)	(11,432)	(11,432)
Interest paid		(1,073)	(1,365)	(2,732)
Bank loans repayment		(15,485)	-	(6,530)
Repurchase of the Company's own shares into treasury		(7,857)	(8,615)	(33,222)
Net cash outflow from financing activities		(35,451)	(21,412)	(53,916)
Net cash (outflow)/inflow in the period		(10,965)	11,104	(2,201)
Cash and cash equivalents at the beginning of the period		2,527	5,161	5,161
Change in cash and cash equivalents		(10,965)	11,104	(2,201)
Exchange movements		(11)	(297)	(433)
Cash and cash equivalents at the end of the period		(8,449)	15,968	2,527

NOTES TO THE FINANCIAL STATEMENTS

1.  Financial statements

The information contained within the financial statements in this half year report has not been audited or reviewed by the Company's independent auditor.

The figures and financial information for the year ended 31 December 2023 are extracted from the latest published financial statements of the Company and do not constitute statutory financial statements for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditor which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.  Accounting policies

Basis of accounting

The financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, in particular with Financial Reporting Standard 104 "Interim Financial Reporting" and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by The Association of Investment Companies in July 2022.

All of the Company's operations are of a continuing nature.

The accounting policies applied to these financial statements are consistent with those applied in the financial statements for the year ended 31 December 2023.

3.  Taxation

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30 June 2024			30 June 2023			31 December 2023
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Irrecoverable overseas tax	562	-	562	648	-	648	931	-	931
Overseas capital gains tax	-	280	280	-	133	133	-	505	505
Taxation for the year	562	280	842	648	133	781	931	505	1,436

The Company's effective corporation tax rate is nil, as deductible expenses exceed taxable income.

The overseas capital gains tax relates to the deferred tax liability on unrealised gains on Indian investments held at the period end.

4.  Return per share

	(Unaudited)	(Unaudited)
	Six months	Six months	(Audited)
	ended	ended	Year ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Revenue return	5,207	6,435	10,497
Capital return	38,550	3,946	24,881
Total return	43,757	10,381	35,378
Weighted average number of shares in issue during the period	96,204,894	104,131,132	102,272,753
Revenue return per share (pence)	5.41	6.18	10.26
Capital return per share (pence)	40.07	3.79	24.33
Total return per share (pence)	45.48	9.97	34.59

5.  Dividend paid

	(Unaudited)	(Unaudited)
	Six months	Six months	(Audited)
	ended	ended	Year ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
2023 dividend paid of 11.5p (2022: 11.0p)	11,036	11,432	11,432

No interim dividend has been declared in respect of the six months ended 30 June 2024 (2023: nil).

6.  Creditors: amounts falling due within one year

	(Unaudited)	(Unaudited)
	Six months	Six months	(Audited)
	ended	ended	Year ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Bank loan	22,150	43,664	37,339
Securities purchased awaiting settlement	1,414	6,167	122
Other creditors and accruals	1,190	1,152	1,380
	24,754	50,983	38,841

The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value. The bank loan comprises of US$28 million drawn down on the Company's £75 million, 364 day multicurrency credit facility with The Bank of Nova Scotia, London Branch, expiring July 2025. The facility is secured and subject to covenants and restrictions which are customary for a facility of this nature, all of which have been complied with during the period. The facility is reviewed annually, at which point the Directors can decide to restate and renew the facility for a further year.

7.  Called-up share capital

Changes in called-up share capital during the period were as follows:

	(Unaudited)	(Unaudited)
	Six months	Six months	(Audited)
	ended	ended	Year ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Ordinary shares of 5p each, allotted, called-up and fully paid
Opening balance of shares in issue of 5p each, excluding shares held in treasury	4,862	5,263	5,263
Repurchase of shares into treasury	(89)	(108)	(401)
Subtotal of shares of 5p each, excluding shares held in treasury	4,773	5,155	4,862
Shares held in treasury	683	301	594
Closing balance of shares of 5p each, including shares held in treasury	5,456	5,456	5,456
Changes in the number of shares in issue during the period were as follows:
	(Unaudited)	(Unaudited)
	Six months	Six months	(Audited)
	ended	ended	Year ended
	30 June	30 June	31 December
	2024	2023	2023
Ordinary shares of 5p each, allotted, called-up and fully paid
Opening balance of shares in issue, excluding shares held in treasury	97,234,120	105,263,203	105,263,203
Repurchase of shares into treasury	(1,783,206)	(2,167,985)	(8,029,083)
Closing balance of shares in issue, excluding shares held in treasury	95,450,914	103,095,218	97,234,120
Closing balance of shares held in treasury	13,663,737	6,019,433	11,880,531
Closing balance of shares in issue, including shares held in treasury	109,114,651	109,114,651	109,114,651

8.  Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	30 June	30 June	31 December
	2024	2023	2023
Total equity shareholders' funds (£'000)	473,350	447,169	448,484
Shares in issue at the period end, excluding shares held in treasury	95,450,914	103,095,218	97,234,120
Net asset value per share (pence)	495.91	433.74	461.24

9.  Reconciliation of total return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

	(Unaudited)	(Unaudited)
	Six months	Six months	(Audited)
	ended	ended	Year ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Total return before finance costs and taxation	45,591	12,530	39,593
Less capital return before finance costs and taxation	(39,574)	(5,105)	(27,470)
(Increase)/decrease in prepayments and accrued income	(814)	(2,277)	146
Decrease in other debtors	11	6	1
(Decrease)/increase in other creditors	(107)	71	258
Special dividend allocated to capital	128	-	1,639
Less stock and accumulation dividends	-	-	(93)
Management fee allocated to capital	(1,177)	(1,150)	(2,288)
Overseas withholding tax deducted at source	(479)	(413)	(858)
Net cash inflow from operating activities	3,579	3,662	10,928

10. Financial instruments measured at fair value

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

FRS 102 requires financial instruments to be categorised into a hierarchy consisting of the three levels below:

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.

The following table sets out the fair value measurements using the FRS102 hierarchy above:

	30 June 2024 (unaudited)
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Financial instruments held at fair value through profit or loss
Equity investments	504,943	-	-	504,943
Derivative financial instruments - index put and call options	870	-	-	870
Total	505,813	-	-	505,813
	30 June 2023 (unaudited)
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Financial instruments held at fair value through profit or loss
Equity investments	475,994	-	-	475,994
Derivative financial instruments - index put options	484	-	-	484
Total	476,478	-	-	476,478
	31 December 2023 (audited)
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Financial instruments held at fair value through profit or loss
Equity investments	484,012	-	-	484,012
Derivative financial instruments - index put options	178	-	-	178
Total	484,190	-	-	484,190

11. Events after the interim period that have not been reflected in the financial statements for the interim

period

The Directors have evaluated the period since the interim date and have not noted any significant events which have not been reflected in the financial statements.

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