Half-year Report

Schroder Oriental Income Fund Limited

Half year report for the six months ended 28 February 2025

Schroder Oriental Income Fund Limited (the "Company") hereby submits its half year report for the six months ended 28 February 2025 as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.2. 

Nick Winsor, Chairman of the Company, commented:

"Our strategy of investing in income producing companies with strong balance sheets that can successfully navigate today's challenges has never felt more relevant to investors, and the Board believes that the portfolio management team remains well placed to capitalise on these investment opportunities."

Key highlights

· Over the past decade, the Company has delivered an impressive cumulative NAV total return of +116.3%, outperforming the reference benchmark, which returned +83.3%.

· The net asset value per share of the Company delivered a positive return of +2.5% over the six months to end February 2025 but lagged the Reference Index over the period.

· This relative underperformance was in large part due to underweight positioning in China and the rally of internet platform names and IT companies - most of which pay little or no dividend, resulting in minimal exposure there.

· The Company's portfolio continues to be focused on the core Asia-Pacific markets of Taiwan, Australia, Singapore, and China/Hong Kong.

· The Company has paid a first and second interim dividend for the year ending 31 August 2025 of 2.00 pence per share.

· Having grown its dividend every year since launch, the Company is classed in the AIC's next generation of dividend heroes and it remains the Board's aim to achieve full dividend hero status.

The Company's half year report is 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  Schroder Oriental Income Fund Limited

The Company's half year report will shortly be uploaded to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism 

Enquiries:

Schroder Investment Management Limited

Chairman's Statement

I am pleased to present my first interim report as Chairman of the Company. I would like to begin by thanking Paul Meader, the outgoing Chair, for his commitment, dedication and wisdom over the past eight years. The Company performed well under Paul's leadership and I look forward to building on this success, working with my colleagues on the Board and the investment team at Schroders, to deliver strong returns to you, our shareholders.

Performance The period under review was characterised by two distinct factors affecting Asia-Pacific markets: an initial rally in China as a result of government stimulus, which subsequently faltered due to a lack of further support measures, and a later period of volatility across the region as investors sought to digest the implications of Donald Trump's election for a second term as US president. In addition to the uncertainty created by the election of President Trump, a firmer outlook for interest rates and a stronger dollar also negatively impacted sentiment across the region.

Against this backdrop, the Company's NAV per share total return was +2.5%, which lagged the Reference Index (MSCI AC Pacific ex Japan (Net of Dividends Reinvested) Index in Sterling terms) return of +10.4%. The share price total return for the six months ended 28 February 2025 was +4.9%. This performance gap was largely as a result of being underweight China, where we remain cautious due to the significant economic challenges facing the government, and where technology stocks were the main beneficiaries of the rally. These companies generally do not pay dividends and fall outside the investment mandate of the Company. We have experienced similar short-term performance gaps in the past and remain confident in the medium-term outlook.

You can read a more detailed account of company performance in the Investment Manager's Report.

Outlook The outlook for global investment markets has become increasingly uncertain. President Trump's inauguration came late on in our first-half reporting period, and while he quickly signed a slew of executive orders in his first weeks in office, these were largely focused on domestic and border matters rather than on broader international trade. More recently there has been a marked shift, with the announcement of significant tariffs on US trading partners across the world, some of the highest of which were seen in Asia: Cambodia (49%); Vietnam (46%); Thailand (36%) and Taiwan (32%), the latter being a critical element of the global technology supply chain.

At the time of writing, these tariffs have been 'paused' (scaled back to 10%) for 90 days to allow time for bilateral negotiations. Meanwhile, Presidents Trump and Xi of China are engaged in an escalating battle of tit-for-tat tariff increases, which has unsettled investors around the world. These factors present a significant challenge to the recent trend in global manufacturing, which had seen US-domiciled businesses, such as Apple, shift some of its production of iPhones, iPads, MacBooks, and AirPods from China to Vietnam and India.

Nevertheless, the economies of Asia remain among the fastest growing in the world, according to the latest International Monetary Fund forecasts, and this growth is being increasingly driven from within the region itself. The Asian Development Bank has noted that 52% of the foreign direct investment in Asia is intra-regional and the degree of Asia's trade integration is now comparable to that of the European Union and the UK. If the region can continue on this path, then the long-term prospects for your Company and the businesses in which it invests should remain favourable, regardless of how the dust from President Trump's tariff war settles.

Discount Management The Board endorses share buybacks when the market price significantly undervalues the portfolio and closely monitors the Company's share price relative to its NAV, committing to repurchasing shares to effectively manage this situation. During the six months up to 28 February 2025, the Company repurchased 9,632,000 ordinary shares. The Board remains confident in the intrinsic value of the Company's investments and will continue to repurchase shares when it meaningfully enhances asset value per share.

Revenue and Dividends The Company has paid a first interim dividend for the year ending 31 August 2025 of 2.00 pence per share (2024: 2.00 pence per share) on 14 February 2025. A second interim dividend of 2.00 pence per ordinary share was paid on 16 May 2025 to shareholders on the register at close on 2 May 2025.

The income from investments received by the Company during the first half of the financial year has fallen marginally by 1.3% compared to the same period last year. The Company has revenue reserves of £23,657,000 (equivalent to 10.19 pence per share) after paying the first interim dividend. Such reserves are available to support the level of dividend you receive. This ability remains key advantage of investment trusts over other savings and investment vehicles.

In the short-term, volatility is likely to prevail, and, in such an environment, dividends stand out as a reliable anchor. The Asia-Pacific markets produce some of the highest dividend yields globally, yet pay-out ratios are below the global average, suggesting considerable scope for future dividend growth. Furthermore, several Asian nations (including China, India, Japan and Korea) have made or are implementing corporate governance reforms to encourage a greater focus on shareholder returns. Companies that prioritise rewarding their shareholders through dividends often possess defensive qualities such as strong balance sheets and consistent earnings, and this has underpinned the historically observed ability of yield-focused investment strategies to outperform during times of market stress.

Having grown its dividend every year since launch, the Company is classed in the AIC's next generation of dividend heroes and it remains the Board's aim to achieve full dividend hero status on the completion of twenty years of consecutive dividend growth next year.

Gearing The Company has established a £100 million revolving credit facility with The Bank of Nova Scotia. During the period, the average gearing was 5.5%, contributing modestly, net of financing costs, to the Company's overall performance.

Summary Asian countries are grappling with uncertainty regarding potential trade restrictions/tariffs under the Trump administration, especially in relation to China. This unpredictability, coupled with rising US interest rates, volatile exchange rates and the challenges facing the Chinese economy, are likely to weigh on regional stock performance. Against this background, our strategy of investing in income producing companies with strong balance sheets that can successfully navigate today's challenges has never felt more relevant to investors, and the Board believes that the portfolio management team remains well placed to capitalise on these investment opportunities.

NICK WINSOR Chairman 21 May 2025

Investment Manager's Review

Ten Year Cumulative Performance - total returns

Source: Morningstar, 28 February 2025, net of fees. All data is after fees. Share price data is now sourced from Morningstar. The Reference Index is the MSCI AC Pacific ex Japan. 1Cum-income fair NAV.

Asia-Pacific (ex Japan) markets in the six months to end of February 2025 were dominated by shifting sentiment towards China, as well as the impact on Asia of the election of Donald Trump for a second term as US president. Against this backdrop, China was the standout performer, accounting for a significant portion of the total return of the Reference Index, which was up 10.4% over the period in sterling.

The net asset value per share of the Company also delivered a positive return, but meaningfully lagged the Reference Index over the period, recording a total return of +2.5% over the six months to end February 2025. This relative underperformance was in large part due to our underweight positioning in China. It should also be said that it was a tough period for income-orientated investors, with the top three quintiles of the region by dividend yield (that is, the highest-yielding 60% of the market) all lagging the Reference Index and the lowest-yielding quintile up more than 20% - double the return of the index. During the period, two interim dividends have been declared totalling 8.00p (H1 2024: 7.80p).

This report delves further into the drivers of this performance, as well as factors influencing the current investment landscape and the potential implications for investors.

Performance of the Reference Index in GBP and USD - 31 August 2024 to 28 February 2025

At the full year, we identified the outlook for China and the US elections as the likely key drivers for Asian markets. In China, the market initially rallied very strongly on the back of a much more coordinated set of stimulus announcements in September. However, the lack of further meaningful measures disappointed, which saw the market pull back and move sideways for much of the rest of 2024. Meanwhile, regional sentiment took a knock with the election of President Trump in November, with his approach to trade tariffs and expected stimulatory economic agenda seeing interest rate expectations and the dollar strengthen - usually an unfavourable combination for Asia. It was also a period marked by a strong outperformance of growth versus value stocks (that is, higher priced stocks with faster earnings growth prospects versus those that are perceived as trading below their intrinsic value trading on relatively low valuations often with high yields), which has historically not been a great backdrop for income strategies, given growth companies' lower propensity for paying out dividends.

The other major catalyst for the Chinese market during the review period occurred towards the end of January, when artificial intelligence (AI) business DeepSeek launched a new large language model (LLM) apparently developed at the fraction of the cost of the US market leaders such as ChatGPT. This saw a surge in the share prices of a number of China's internet platform companies, which were perceived as beneficiaries of this development. Unfortunately, this was a headwind for our relative performance given these companies in general pay little in the way of dividends and therefore tend to be unattractive in the context of the Company's investment criteria.

The other consequence of the launch of this 'low cost' AI model was to call into question the need for the current and anticipated high level of spending on AI-related semiconductors, which caused a lot of the technology names related to capital spending in this area to sell off. This saw a meaningful correction in Taiwan, with a number of companies exposed to the Nvidia supply chain being notably weak.

Across the region, the spread of returns was particularly high. Alongside China, the only markets to outperform the Reference Index were Hong Kong and Singapore. Hong Kong benefitted from the positive sentiment towards China, but lagged mainland returns by a considerable margin in part due to the change in interest rate outlook for the US, where 'higher for longer' is a headwind given the combination of a currency peg to the US dollar and a weaker domestic economy. Singapore, on the other hand, benefitted from the higher rates outlook given its large weighting to financials, as higher interest rates tend to be positive for banks' net interest margins.

Looking at the laggards, Korea was the weakest market, impacted by the political chaos that ensued following the introduction of martial law there, which culminated in the impeachment and eventual removal from office of President Yoon Suk Yeol. Although the crisis itself was brief, it also impacted the currency and saw the market de-risk as investors sought relative safety. From a stock perspective, Samsung Electronics fell, with sentiment dented by the ongoing delays to its gaining qualification to supply high-bandwidth memory to Nvidia. Higher rates and the stronger dollar impacted smaller markets with weaker external accounts, including Indonesia and the Philippines. Sentiment in Indonesia was further affected by concerns over the new President's economic policies and potential appointments in his administration.

Of the major sectors, consumer discretionary and communications services were the standout outperformers at an index level, driven by the large Chinese weighting to the internet names which performed well. Financials also outperformed on higher rate expectations, whilst information technology (IT) lagged following a sell-off late in the period on concerns around demand for AI-related semiconductors as described earlier. Materials and energy were also weaker as commodity prices pulled back on concerns over supply and demand.

Positioning and performance As we highlighted above, the Company made gains over the period, with a NAV total return of 2.5%, but considerably lagged the reference index return of 10.4%.However, over the past decade, the Company has delivered an impressive cumulative NAV total return of +116.3%, outperforming the Reference Index which returned +83.3%. The vast majority of our relative underperformance over the six months to 28 February 2025 came from one market - China - where our significant underweight allocation and stock selection (the relative impact of which includes stocks we do not own) both detracted. As previously mentioned, the strength of the rally in China was narrowly focused on the internet platform names, such as Alibaba, most of which pay little or no dividend, resulting in our having minimal exposure there. A partial offset to this came from our overweight to and stock selection in Hong Kong, with holdings in financials Hong Kong Exchange and BOC Hong Kong outperforming. Smaller drags came from our overweight positioning in Indonesia and stock selection in Korea, where the biggest detractor was the overweight to Samsung Electronics, for the reasons touched on earlier. Elsewhere there were positives from stock selection in Taiwan (fabless semiconductor design house MediaTek and semiconductor packager ASE Technology) and Thailand, where Kasikornbank materially outperformed. The overweight to Singapore was positive, albeit largely offset by negative stock selection there. From a sectoral perspective, positioning in Consumer Discretionary and Communications Services were the biggest drag due to our underweight to Chinese names in those sectors. Information technology also lagged thanks to our holding in Samsung Electronics and not owning Xiaomi, a Chinese smartphone and electric vehicle (EV) producer. Positively, stock selection in Materials (diversified mining groups Rio and BHP) and Real Estate (China Resources Land and Hang Lung Group) was strong, and the underweights to Healthcare, Utilities and Materials also contributed positively.

Geographically, the Company's portfolio continues to be focused on core Asia-Pacific (ex Japan) markets such as Taiwan, Australia, Singapore, China, and Hong Kong. China remains a substantial underweight versus the Reference Index, but we have selectively added there, as well as into Hong Kong. This has seen us initiate two new positions in mainland China. Anta Sports is a domestic sportswear company, with several leading and emerging brands in China. It is a key beneficiary of the long-term market share shift in China away from international sportswear names (such as Nike and Adidas) in favour of home-grown brands. We also added Kweichow Moutai, the producer of China's leading Baiju product, a premium alcoholic beverage. The strength of its brand and distribution network allows Moutai to earn superior returns, but it had de-rated along with other Chinese consumer stocks given the weak economy and consumer confidence, presenting a good buying opportunity. We have also added to our position in videogaming company NetEase, a new holding in the previous financial year. The underweight to China continues to be partly offset by an overweight to the Hong Kong market, which, in general, looks more attractive from a valuation perspective; there we have increased our position in regional insurer AIA. We also initiated an off-benchmark position in Power Grid in India, which had sold off recently along with the wider market. It is a beneficiary of the growth in transmission capacity of the Indian electricity network, with renewable solar and wind projects needing to be linked into the wider grid. Elsewhere, we continue to like Singapore, where we have positions in the banks and Singapore Telecom, as well as being overweight in some of the smaller markets such as Indonesia and the Philippines.

From a sectoral perspective our main additions were into some of the traditionally more defensive areas that had underperformed, such as Consumer Staples and Utilities. As mentioned, we bought new positions in Chinese staple Kweichow Moutai and Indian utility Power Grid. These additions were, in part, financed by reductions to Information Technology. Until recently, the IT sector had performed very strongly on the back of the AI thematic, where there are increasing signs that the market has got ahead of itself given question marks over the long-term sustainability of demand. Therefore, in Taiwan we reduced our holdings in Delta Electronics, TSMC and MediaTek. We also reduced the size of our overweight position in Samsung Electronics, partly reflecting reduced conviction given disappointing execution, and sold out of Venture, a contract manufacturer in Singapore. In financials, we made a net reduction to our overweight by reducing our banks exposure, including selling out of Westpac and trimming some of the other Australian names, and exiting the small remaining position in China Construction Bank, which had performed well. Financials and IT remain the Company's two largest exposures, although we have brought down the size of the overweight to the latter for the reasons mentioned earlier.

Investment outlook Perhaps of greatest concern for investors in Asia, at the time of writing, is the uncertainty around the longer-term impact of trade restrictions on countries in the region - and China in particular - as a result of punitive tariffs announced by the Trump administration. Here it is 'uncertainty' that is the key, rather than the absolute level of any tariffs. After all, we have already seen that any announcements coming from the White House can quickly be reversed, changed or forgotten. While the barriers to trade and investment have certainly risen from their levels prior to the end of the review period, the eventual extent and precise targets of increased restrictions remain hard to predict. Indeed, differential tariffs or restrictions (i.e. China facing greater barriers) could end up benefiting other exporting countries across Asia, which will become relatively more competitive. However, with President Trump having so far shown little distinction between allies and adversaries when it comes to trade policy, there is no guarantee that any country with a bilateral trade surplus with the US can avoid being further targeted. Asian exports remain a key driver for regional earnings (see chart in the Half Year Report) so the impact of policy here, as well as the broader strength of the US economy, will continue to be a key focus for markets given the size and scope of tariffs, at the time of writing, have materially exceeded expectations (even from those at the start of the year).

Another key driver of Asian stock market performance is likely to be the path of US interest rates and the strength of the US dollar in coming years. Global bond and currency markets have already started to price in a 'higher for longer' interest rate outlook, driven by the incoming administration's protectionist and looser fiscal policies, which are seen as likely to lead to stickier inflation. This reassessment, together with an improved outlook elsewhere, has seen the dollar actually weaken since the beginning of the year, which (until "Liberation Day") was accompanied by a rally in Asian markets in line with historic precedent (see chart in the Half Year Report). That said, higher interest rates would likely prove a headwind for those countries with weaker external balances, including some of the ASEAN markets, although they could be a tailwind for other areas, including many Asian financial stocks.

The other major driver has been China. Within the region, the Chinese economy remains weak, as consumer confidence is still extremely low. Although the government has announced further measures to support the economy (extending and expanding subsidies for home appliances, EVs and other durable consumer products, for example), these remain quite small in scale and are unlikely to drive up growth significantly in the face of a still-contracting property market and declining private credit extension. More recently, the excitement around the success of the launch of DeepSeek's new LLM and what appears to be a more constructive approach towards the private sector, following a meeting between President Xi and top business leaders (including Jack Ma, the former leader of Alibaba) sparked hope that we could see an improvement in 'animal spirits' across the broader economy. Furthermore, some investors expect the government to be more aggressive on stimulus once there is more clarity on the tariffs exporters will face under the new US administration, but there is scope for disappointment if this fails to materialise. Also, the recent surprise addition of internet platform company Tencent and battery maker Contemporary Amperex Technology (CATL) to a US Department of Defence list of Chinese military-linked companies underlined the ongoing uncertainties facing investors from US-China tensions.

With China's domestic and external sectors both facing challenges, we remain underweight the market, though we have added to some positions over the period. As a reminder, it is always likely we will be underweight China given the significant weighting in the index to internet platform companies, which pay relatively little from a dividend perspective. A focus on rewarding shareholders has become more prevalent in the market, but among these names it has been focused mainly on share buybacks rather than dividends.

We remain overweight Hong Kong, in part as an offset to our underweight to the China market but it continues to suffer not only from the spillover impacts of a weak China, but also the high level of interest rates, which, as noted earlier, are inappropriate for the weak domestic economy.

In the South-East Asian region, we are most exposed to Singapore, which is benefitting from its increasing status as a regional wealth management hub, as well as the growth of its ASEAN neighbours. We also have direct exposure to some of the smaller ASEAN markets, such as Indonesia, Vietnam, Thailand and the Philippines; however, while valuations look increasingly attractive in this region, they are some of the most exposed in Asia to higher global interest rates and a strong US dollar. As mentioned earlier, there is also some concern over the political developments in Indonesia which bear monitoring. India (which does not feature in our Reference Index) remains a relatively expensive low-yielding market, but has started to offer more value following its recent pullback, hence our initiation of a position in Power Grid.

Our Australian weighting is broadly neutral, having moderated our exposure to the market partially by reducing our banking positions. Although Australia remains an attractive market, from the perspective of strong shareholder focus and being relatively insulated from the impact of the US election, its earnings outlook is lacklustre and its relative valuation high. This is in part because its large banking sector has rerated materially despite the earnings outlook being largely unchanged, leaving it relatively fully valued in our view. And although the other major sector - resources - looks relatively cheap from a valuation perspective, commodity prices have been under pressure as Chinese growth has disappointed, which will continue to weigh on earnings growth.

As described above, from a sector perspective, Information Technology experienced one of the biggest changes in sentiment over the period given the potential impact on slowing demand for advanced semiconductors if capital expenditure among the big US tech companies peaks. The question for us remains how successfully some of these AI 'models' can be monetised; thus far, beyond the big internet companies such as Meta in the US and Tencent in China, there is still very limited evidence of enterprise or consumer willingness to spend significant sums of money on AI services. There is therefore potentially a discrepancy between the capex from tech companies on AI servers and the datacentres needed to house them, and the revenues being generated from this spending. Whether this is merely a timing mismatch remains to be seen - history does suggest falling prices tend to lead to greater demand, but for now there is clearly potential for some indigestion. Therefore, we have moderated our overweight in IT in recent months, given this uncertainty and the fact valuations had moved higher on cyclical improvements and the surge in demand for AI hardware.

We also remain overweight to financials - a diverse sector spanning not only banks, but also insurers and exchange companies. The banks we own are generally well capitalised with strong deposit franchises. Many of our holdings are in the more mature markets, such as Singapore, which in general trade at attractive valuations and decent dividend yields, but we also have exposure to the faster growing hinterlands. Direct exposure to these developing economies, where credit penetration is relatively low, includes ASEAN markets such as Indonesia. The direction of interest rates from here will be an important driver of relative performance for many financials, given the importance of rates for net interest margins.

We believe aggregate valuations for the region are no longer particularly cheap and as of the end of March are trading at slightly above long-term averages. However, this masks a large variation across individual markets, with Hong Kong, Korea, Indonesia and the Philippines, looking relatively cheap versus history, whilst India, Australia and Singapore look relatively expensive (see chart in the Half Year Report). China is no longer at the bottom end of its valuation range following its rally in early 2025, though it doesn't look expensive either.

In the short-term at least, we believe it is the actual (as opposed to speculated) policies of the Trump administration, the responses to these, and ultimately the impact they have on US and global growth that will drive markets. Against this backdrop, any further announcements regarding Chinese stimulus are likely to be of particular significance from an Asian perspective together with the path of global interest rates.

Turning to dividends, payout ratios remain reasonable, dividend yields in aggregate are comparable to or higher than most major markets except the UK, and consensus expectations are for some growth in underlying earnings which, if correct, should see some corresponding growth in local dividends. Perhaps the bigger unknown is the outlook for the currencies, in particular sterling. Over the last two years, the pound has been relatively strong versus the dollar and a number of Asian currencies, which has been a headwind for dividends once translated into sterling. More recently, sterling had started to show some weakness against the dollar and other currencies, before reversing some of those falls.

Thank you for your continued trust and investment in the Schroder Oriental Income Fund.

RICHARD SENNITT Portfolio Manager For Schroder Investment Management Limited 21 May 2025

Investment Portfolio at 28 February 2025

Investments are classified by the Manager in the region or country of their main business operations or listing. Stocks in bold are the 20 largest investments, which by value account for 61.5% (29 February 2024: 57.9% and 31 August 2024: 59.8%) of total investments and derivative financial instruments.

1 Listed in the UK

2 Listed in Luxembourg

3 Listed in Hong Kong

4 Total investments comprises:

* "NVDR" means non-voting depositary receipts

^ "REIT" means real estate investment trust

Interim Management Statement

Investment Policy The investment policy of the Company is to invest in a diversified portfolio of investments, primarily equities and equity-related investments, of companies which are based in, or derive a significant proportion of their revenues from, the Asia Pacific region. The portfolio is diversified across a number of industries and a number of countries in that region. The portfolio may include government, quasi-government, corporate and high yield bonds and preferred shares.

Equity-related investments which the Company may hold include investments in other collective investment undertakings (including real estate investment trusts and related stapled securities), warrants, depositary receipts, participation certificates, guaranteed performance bonds, convertible bonds, other debt securities, equity-linked notes and similar instruments (whether or not investment grade) which give the Company access to the performance of underlying equity securities, particularly where the Company may be restricted from directly investing in such underlying equity securities or where the Manager considers that there are benefits to the Company in holding such investments instead of directly holding the relevant underlying equity securities. Such investments may be listed or traded outside the Asia Pacific region. Such investments may subject the Company to credit risk against the issuing entity. The Company may also participate, subject to regulatory and tax implications, in debt-to-equity conversion programmes.

The Manager may consider writing calls over some of the Company's holdings, as a low risk way of enhancing the returns from the portfolio, although it has not written any to date. The Company may only invest in derivatives for the purposes of efficient portfolio management. The Board has set a limit such that covered calls cannot be written over portfolio holdings representing in excess of 15% of gross assets. Investors should note that the types of equity-related investments listed above are not exhaustive of all of the types of securities and financial instruments in which the Company may invest, and the Company will retain the flexibility to make any investments unless these are prohibited by the investment restrictions applicable to the Company.

Although the Company has the flexibility to invest in bonds and preferred shares as described above, the intention of the directors is that the assets of the Company which are invested (that is to say, which are not held in cash, money funds, debt securities, interest bearing gilts or treasuries) will predominantly comprise Asia Pacific equities and equity-related investments.

Principal risks and uncertainties The principal risks and uncertainties of the Company's business fall into the following categories: geopolitical, market, currency/exchange rate, investment performance, climate change, service provider performance, and cyber.

A detailed explanation of the risks and uncertainties in each of these categories can be found on pages 24 to 26 of the Company's published annual report and accounts for the year ended 31 August 2024.

These principal risks and uncertainties have not materially changed during the six months ended 28 February 2025.

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 27 of the Company's published annual report and accounts for the year ended 31 August 2024, the directors consider it appropriate to adopt the going concern basis in preparing the interim report.

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 28 February 2025.

Directors' responsibility statement The directors confirm that, to the best of their knowledge, this set of condensed financial statements has been prepared in accordance with the Companies (Guernsey) Law, 2008, International Financial Reporting Standards and with the Statement of Recommended Practice, "Financial Statements of Investment Companies and Venture Capital Trusts" issued in July 2022 and that this Half-yearly Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

NICK WINSOR Chairman For and on behalf of the Board21 May 2025

Financial

Statement of Comprehensive Income for the six months ended 28 February 2025 (unaudited)

The "Total" column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS as adopted by the European Union. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance set out in the Statement of Recommended Practice for investment trust companies (the "SORP") issued by the Association of Investment Companies in July 2022.

The Company does not have any income or expense that is not included in the "net profit/(loss)" for the period. Accordingly the "Net profit/(loss) for the period is also the "Total comprehensive income/expense" 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 28 FEBRUARY 2025 (UNAUDITED)

FOR THE SIX MONTHS ENDED 29 FEBRUARY 2024 (UNAUDITED)

For the year ended 31 August 2024 (audited)

Balance Sheet as at 28 February 2025 (unaudited)

Registered in Guernsey Company registration number: 43298

Cash Flow Statement for the six months ended 28 February 2025 (unaudited)

Dividends received during the period amounted to £10,719,000 (period ended 29 February 2024: £11,800,000 and year ended 31 August 2024: £35,326,000) and bond and deposit interest receipts amounted to £59,000 (period ended 29 February 2024: £100,000 and year ended 31 August 2024: £171,000).

Notes to the Financial Statements

1. Principal activity The Company carries on business as a Guernsey closed-ended investment company.

2. Financial statements The financial information for the six months ended 28 February 2025 and 29 February 2024 has not been audited or reviewed by the Company's auditor. These financial statements do not include all of the information required to be included in annual financial statements and should be read in conjunction with the financial statements of the Company for the year ended 31 August 2024.

3. ACCOUNTING POLICIES (a) Basis of accounting The financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the accounting policies set out in the statutory accounts of the Company for the year ended 31 August 2024. Where presentational guidance set out in the Statement of Recommended Practice (the "SORP") for investment trusts issued by the Association of Investment Companies in July 2022, is consistent with the requirements of International Financial Reporting Standards, the financial statements have been prepared on a basis compliant with the recommendations of the SORP.

(b) Accounting estimates In common with many other investment companies, the Board has chosen to adopt the 'allocation approach', as set out in the SORP, and has determined that basis of allocation of expenses to capital should reflect the long-term split of returns in the form of capital gains and income. The Company allocates 60% of the management fee and finance costs to capital and the remaining 40% to revenue. The Board monitors the assumptions that underpin the basis of allocation.

4. Taxation Taxation comprises irrecoverable overseas withholding tax deducted from dividends receivable. The Company became resident in the United Kingdom for taxation purposes on 1 September 2020 and has been granted approval as an investment trust under Sections 1158 and 1159 of the Corporation Tax Act 2010, from that date.

5. Earnings per share

6. Dividends paid

A second interim dividend of 2.00p (2024: 2.00p) per share, amounting to £4,643,000 (2024: £4,899,000) has been declared payable in respect of the year ending 31 August 2025.

7. Share capital Changes in the number of shares in issue during the period were as follows:

8. Net asset value per share

9. Financial instruments measured at fair value The Company's portfolio of investments, comprising investments in companies and any derivatives, are carried in the balance sheet at fair value. Other financial instruments held by the Company comprise amounts due to or from brokers, dividends and interest receivable, accruals, cash and drawings on the credit facility. For these instruments, the balance sheet amount is a reasonable approximation of fair value. The recognition and measurement policies for financial instruments measured at fair value have not changed from those set out in the statutory accounts of the Company for the year ended 31 August 2024.

The investments in the Company's portfolio are categorised into a hierarchy comprising the following three levels:

Level 1 - valued using quoted prices in active markets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted market prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

At 28 February 2025, the Company's investment portfolio and derivative financial instruments were categorised as follows:

Level 2 investments comprise one holding in Midea Group warrants.

There have been no transfers between Levels 1, 2 or 3 during the period (period ended 29 February 2024 and year ended 31 August 2024: nil).

10. 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.