Schroder UK Mid Cap Fund plc
Annual Report and Financial Statements
for the year ended 30 September 2024
Annual Report and Financial Statements
for the year ended 30 September 2024
Schroder
UK Mid Cap Fund plc
Performance Summary
Total Returns (including dividends reinvested) to 30 September 2024*
Net asset value (“NAV”)
per share total return*
17.3%
(Year ended 30 September
2023: 17.6%)
Share price total
return*
17.5%
(Year ended 30 September
2023: 17.4%)
Benchmark total
return
21.4%
(Year ended 30 September
2023: 13.6%)
Dividends per share
21.5p
(Year ended 30 September
2023: 20.5p)
Investment objective
The Company’s investment objective is to invest in mid cap equities with the aim of providing a total return in excess of the FTSE 250 ex
Investment Trusts Index.
Investment policy
The Manager applies a high conviction approach, managing a focused portfolio of resilient companies that are all capable of delivering excess
risk-adjusted returns with rising cash flows and earnings. Fundamental research forms the basis of each investment decision taken by the
Manager. The Company will predominantly invest in companies from the FTSE 250 Index but may hold up to 20% of its portfolio in equities and
collective investment vehicles outside the benchmark index which may include equities in companies outside of the UK. The Company may also
invest in other collective investment vehicles where desirable, for example to provide exposure to specialist areas within the universe. The
Company has the ability to use gearing for investment purposes up to 25% of total assets.
Why invest in the Company?
– UK mid-caps offer extraordinary value – The Company provides access to an undervalued part of the UK stock market – one of the most
attractively valued equity markets in the world. Valuations among UK mid-caps look unusually low relative to UK large-caps as well as
mid-caps from elsewhere in the world, which may bode well for future performance.
– An incomparable performance history – Since Schroders became Manager, the Company has been the best performing Company in the
Association of Investment Companies UK All Companies sector.
1
Meanwhile, its dividend has grown by a factor of 10x in 20 years under
Schroders management.
2
– Decades of expertise and a proven approach – With more than 60 years of combined investing experience, the investment team looks to
select a portfolio of 40-50 of the most attractively valued companies with either ‘unique’ or ‘flex’ characteristics, resulting in a high quality
portfolio capable of delivering dependable long-term growth in a fast-changing world. Further details can be found in the Investment
Process and Approach section on pages 10 to 12.
1
Source: Schroders, Morningstar, 1 May 2003 to 30 September 2024. Net asset value total return compared to the benchmark of the FTSE All-Share
ex Investment Trusts ex FTSE 100 TR Index until 2011, and subsequently the FTSE 250 ex Investment Trusts Index.
2
The dividend history of the Company is available on the AIC website: https://www.theaic.co.uk/.
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. Exchange rate changes may cause the value of investments to fall as well as
rise. Performance data does not take into account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued
and redeemed. Relevant risks as associated with this Company are shown on page 72 and should be carefully considered before making any investment.
Scan this QR code on your
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updates on Schroder
UK Mid Cap Fund plc
Performance Summary
Total Returns (including dividends reinvested) to 30 September 2024*
Net asset value (“NAV”)
per share total return*
17.3%
(Year ended 30 September
2023: 17.6%)
Share price total
return*
17.5%
(Year ended 30 September
2023: 17.4%)
Benchmark total
return
21.4%
(Year ended 30 September
2023: 13.6%)
Dividends per share
21.5p
(Year ended 30 September
2023: 20.5p)
Investment objective
The Company’s investment objective is to invest in mid cap equities with the aim of providing a total return in excess of the FTSE 250 ex
Investment Trusts Index.
Investment policy
The Manager applies a high conviction approach, managing a focused portfolio of resilient companies that are all capable of delivering excess
risk-adjusted returns with rising cash flows and earnings. Fundamental research forms the basis of each investment decision taken by the
Manager. The Company will predominantly invest in companies from the FTSE 250 Index but may hold up to 20% of its portfolio in equities and
collective investment vehicles outside the benchmark index which may include equities in companies outside of the UK. The Company may also
invest in other collective investment vehicles where desirable, for example to provide exposure to specialist areas within the universe. The
Company has the ability to use gearing for investment purposes up to 25% of total assets.
Why invest in the Company?
– UK mid-caps offer extraordinary value – The Company provides access to an undervalued part of the UK stock market – one of the most
attractively valued equity markets in the world. Valuations among UK mid-caps look unusually low relative to UK large-caps as well as
mid-caps from elsewhere in the world, which may bode well for future performance.
– An incomparable performance history – Since Schroders became Manager, the Company has been the best performing Company in the
Association of Investment Companies UK All Companies sector.
1
Meanwhile, its dividend has grown by a factor of 10x in 20 years under
Schroders management.
2
– Decades of expertise and a proven approach – With more than 60 years of combined investing experience, the investment team looks to
select a portfolio of 40-50 of the most attractively valued companies with either ‘unique’ or ‘flex’ characteristics, resulting in a high quality
portfolio capable of delivering dependable long-term growth in a fast-changing world. Further details can be found in the Investment
Process and Approach section on pages 10 to 12.
1
Source: Schroders, Morningstar, 1 May 2003 to 30 September 2024. Net asset value total return compared to the benchmark of the FTSE All-Share
ex Investment Trusts ex FTSE 100 TR Index until 2011, and subsequently the FTSE 250 ex Investment Trusts Index.
2
The dividend history of the Company is available on the AIC website: https://www.theaic.co.uk/.
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. Exchange rate changes may cause the value of investments to fall as well as
rise. Performance data does not take into account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued
and redeemed. Relevant risks as associated with this Company are shown on page 72 and should be carefully considered before making any investment.
Scan this QR code on your
smartphone camera to
sign-up to receive regular
updates on Schroder
UK Mid Cap Fund plc
Schroder
UK Mid Cap Fund plc
1
Strategic Report
Chair’s Statement 4
Investment Manager’s Review 6
Investment Approach and Process 10
Investment Portfolio 13
10 Year Financial Record 14
Business Review 15
Governance
Board of Directors 28
Directors’ Report 30
Audit and Risk Committee Report 33
Management Engagement
Committee Report 36
Nomination Committee Report 37
Remuneration Committee Report 39
Directors’ Remuneration Report 40
Statement of Directors’
Responsibilities 43
Financial
Independent Auditor’s Report 46
Statement of Comprehensive Income 50
Statement of Changes in Equity 51
Statement of Financial Position 52
Notes to the Financial Statements 53
Other Information (unaudited)
Annual General Meeting –
Recommendations 64
Notice of Annual General Meeting 65
Explanatory Notes to the
Notice of Meeting 66
Definitions of Terms and Alternative
Performance Measures 68
Shareholder Information 70
Warning to Shareholders 71
Risk Disclosures 72
Information about the Company 73
Ongoing charges ratio*
1.05%
(Year ended 30 September 2023: 0.97%)
Net Gearing*
9.5%
(Year ended 30 September 2023: 6.8%)
Share price discount to
NAV per share*
12.3%
(Year ended 30 September 2023: 12.0%)
Share price
616.00p
(Year ended 30 September 2023: 544.00p)
Revenue return per share
20.54p
(Year ended 30 September 2023: 22.68p)
Net revenue return after taxation
£7.10m
(Year ended 30 September 2023: £7.84m)
Introduction Strategic Report Governance Financial Other Information (unaudited)
This is not a sustainable product for the purposes of the Financial Conduct Authority (“FCA”) rules. References to the consideration of
sustainability factors and ESG integration should not be construed as a representation that the Company seeks to achieve any particular
sustainability outcome.
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 68 and 69 together with supporting calculations where appropriate.
Mid-caps refer to the constituents of the FTSE 250 ex Investment Trusts Index throughout this document.
Strategic Report
Chair’s Statement 4
Investment Manager’s Review 6
Investment Approach and Process 10
Investment Portfolio 13
10 Year Financial Record 14
Business Review 15
Governance
Board of Directors 28
Directors’ Report 30
Audit and Risk Committee Report 33
Management Engagement
Committee Report 36
Nomination Committee Report 37
Remuneration Committee Report 39
Directors’ Remuneration Report 40
Statement of Directors’
Responsibilities 43
Financial
Independent Auditor’s Report 46
Statement of Comprehensive Income 50
Statement of Changes in Equity 51
Statement of Financial Position 52
Notes to the Financial Statements 53
Other Information (unaudited)
Annual General Meeting –
Recommendations 64
Notice of Annual General Meeting 65
Explanatory Notes to the
Notice of Meeting 66
Definitions of Terms and Alternative
Performance Measures 68
Shareholder Information 70
Warning to Shareholders 71
Risk Disclosures 72
Information about the Company 73
Ongoing charges ratio*
1.05%
(Year ended 30 September 2023: 0.97%)
Net Gearing*
9.5%
(Year ended 30 September 2023: 6.8%)
Share price discount to
NAV per share*
12.3%
(Year ended 30 September 2023: 12.0%)
Share price
616.00p
(Year ended 30 September 2023: 544.00p)
Revenue return per share
20.54p
(Year ended 30 September 2023: 22.68p)
Net revenue return after taxation
£7.10m
(Year ended 30 September 2023: £7.84m)
Introduction Strategic Report Governance Financial Other Information (unaudited)
This is not a sustainable product for the purposes of the Financial Conduct Authority (“FCA”) rules. References to the consideration of
sustainability factors and ESG integration should not be construed as a representation that the Company seeks to achieve any particular
sustainability outcome.
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 68 and 69 together with supporting calculations where appropriate.
Mid-caps refer to the constituents of the FTSE 250 ex Investment Trusts Index throughout this document.
2
2
Schroder
Asian Total Return Investment Company plc
3
Strategic Report
Strategic Report
Chair’s Statement 4
Investment Manager’s Review 6
Investment Approach and Process 10
Investment Portfolio 13
10 Year Financial Record 14
Business Review 15
Strategic Report
Strategic Report
Chair’s Statement 4
Investment Manager’s Review 6
Investment Approach and Process 10
Investment Portfolio 13
10 Year Financial Record 14
Business Review 15
4
Schroder
UK Mid Cap Fund plc
Chair’s Statement
We continue to remain
optimistic about the outlook
for UK mid-caps and the
Company’s portfolio holdings,
which are largely focused
upon longer term growth
businesses.
Investment and share price performance
The Company’s net asset value (“NAV”) total return for the year was
17.3%, which was less than the Company’s Benchmark (the FTSE 250
ex Investment Trusts Index), which produced a total return of 21.4%
over the year. The share price total return over the same period
increased by 17.5%. Whilst the absolute performance was attractive,
relative return was affected by a rapid shift within the mid-cap sector
over the year, moving away from long-term growth-oriented
businesses and toward those more sensitive to interest rate
fluctuations. These latter businesses typically feature weaker
balance sheets and more problematic business models. Our
Investment Manager’s investment strategy has consistently
emphasised the importance of long-term growth firms, whilst also
recognising that there are shorter periods when the latter types
may outperform. Therefore, despite beating the Benchmark
comfortably over the last five years due to the emphasis upon
higher quality businesses, the Company has faced a period of
shorter-term underperformance during this sharp rotation.
Revenue and dividends
In June 2024, the Board was pleased to announce an increased
interim dividend of 6.0 pence per share which represented a 9.1%
increase on the interim dividend paid in 2023. We have declared
a final dividend of 15.5 pence per share for the year ended
30 September 2024. The proposed final dividend, combined with
the interim dividend of 6.0 pence per share already paid during the
year, brings total dividends for the year to 21.5 pence per share,
a level which is covered by current year earnings, and reflects an
increase of 4.8% in dividends declared in respect of the previous
financial year. At the current share price of 605.00 pence (as at
26 November 2024) this represents a dividend yield of 3.6%. Since
2004, the total dividends for the year have increased by 12.6% per
annum.
A resolution to approve the payment of the final dividend for the
year ended 30 September 2024 will be proposed at the forthcoming
Annual General Meeting (“AGM”). If the resolution is passed, the
dividend will be paid on 28 February 2025 to shareholders on the
register on 31 January 2025.
Gearing
At the year end, net gearing was 9.5% (2023: 6.8%) with £25 million
of the Company’s Revolving Credit Facility deployed of the
£30 million available. Having such gearing in place is an attractive
feature of the investment trust structure. It is expected that the
Investment Manager will continue to use this gearing to enhance
shareholder returns by taking advantage of attractive new
investment opportunities and participating in capital raisings by
portfolio companies.
Discount management
During the year the Company’s discount to NAV slightly widened
from 12.0% (2023) to 12.3% at year-end as UK equities still remain
an out-of-favour asset class. The Board continues to monitor the
discount level carefully. In order to facilitate future buy-backs should
the Board consider these to be appropriate and in shareholders
long-term interests, we propose that the Company’s share buyback
authorities be renewed at the forthcoming AGM. Any shares so
purchased will be cancelled, or held in treasury, for potential reissue
at a premium to NAV. During the financial year, the Company did not
buy-back any shares.
Board changes
In light of my nine year tenure, I will be retiring from the Board and
will not be offering myself for re-election at the upcoming AGM on
24 February 2025. I am pleased to announce that Harry Morley will
be succeeding me as Chair of the Company. The Board is confident
that Harry, who was appointed as a Director in 2023, has the right
attributes and experience to successfully lead the Board. The Board
is currently undertaking a recruitment process for an additional
non-executive Director and will announce the outcome of this in due
course. It has been my honour to Chair your Company for almost
four years and I extend my grateful thanks to shareholders for their
support and to my colleagues for their diligence and hard work.
Chair’s Statement
We continue to remain
optimistic about the outlook
for UK mid-caps and the
Company’s portfolio holdings,
which are largely focused
upon longer term growth
businesses.
Investment and share price performance
The Company’s net asset value (“NAV”) total return for the year was
17.3%, which was less than the Company’s Benchmark (the FTSE 250
ex Investment Trusts Index), which produced a total return of 21.4%
over the year. The share price total return over the same period
increased by 17.5%. Whilst the absolute performance was attractive,
relative return was affected by a rapid shift within the mid-cap sector
over the year, moving away from long-term growth-oriented
businesses and toward those more sensitive to interest rate
fluctuations. These latter businesses typically feature weaker
balance sheets and more problematic business models. Our
Investment Manager’s investment strategy has consistently
emphasised the importance of long-term growth firms, whilst also
recognising that there are shorter periods when the latter types
may outperform. Therefore, despite beating the Benchmark
comfortably over the last five years due to the emphasis upon
higher quality businesses, the Company has faced a period of
shorter-term underperformance during this sharp rotation.
Revenue and dividends
In June 2024, the Board was pleased to announce an increased
interim dividend of 6.0 pence per share which represented a 9.1%
increase on the interim dividend paid in 2023. We have declared
a final dividend of 15.5 pence per share for the year ended
30 September 2024. The proposed final dividend, combined with
the interim dividend of 6.0 pence per share already paid during the
year, brings total dividends for the year to 21.5 pence per share,
a level which is covered by current year earnings, and reflects an
increase of 4.8% in dividends declared in respect of the previous
financial year. At the current share price of 605.00 pence (as at
26 November 2024) this represents a dividend yield of 3.6%. Since
2004, the total dividends for the year have increased by 12.6% per
annum.
A resolution to approve the payment of the final dividend for the
year ended 30 September 2024 will be proposed at the forthcoming
Annual General Meeting (“AGM”). If the resolution is passed, the
dividend will be paid on 28 February 2025 to shareholders on the
register on 31 January 2025.
Gearing
At the year end, net gearing was 9.5% (2023: 6.8%) with £25 million
of the Company’s Revolving Credit Facility deployed of the
£30 million available. Having such gearing in place is an attractive
feature of the investment trust structure. It is expected that the
Investment Manager will continue to use this gearing to enhance
shareholder returns by taking advantage of attractive new
investment opportunities and participating in capital raisings by
portfolio companies.
Discount management
During the year the Company’s discount to NAV slightly widened
from 12.0% (2023) to 12.3% at year-end as UK equities still remain
an out-of-favour asset class. The Board continues to monitor the
discount level carefully. In order to facilitate future buy-backs should
the Board consider these to be appropriate and in shareholders
long-term interests, we propose that the Company’s share buyback
authorities be renewed at the forthcoming AGM. Any shares so
purchased will be cancelled, or held in treasury, for potential reissue
at a premium to NAV. During the financial year, the Company did not
buy-back any shares.
Board changes
In light of my nine year tenure, I will be retiring from the Board and
will not be offering myself for re-election at the upcoming AGM on
24 February 2025. I am pleased to announce that Harry Morley will
be succeeding me as Chair of the Company. The Board is confident
that Harry, who was appointed as a Director in 2023, has the right
attributes and experience to successfully lead the Board. The Board
is currently undertaking a recruitment process for an additional
non-executive Director and will announce the outcome of this in due
course. It has been my honour to Chair your Company for almost
four years and I extend my grateful thanks to shareholders for their
support and to my colleagues for their diligence and hard work.
Schroder
UK Mid Cap Fund plc
5
Introduction Strategic Report Governance Financial Other Information (unaudited)
Amendment to the Company’s Investment
Policy
Whilst the Company predominantly invests in companies from the
FTSE 250 ex Investment Trust sector, under its Investment Policy,
the Company may hold up to 20% of its portfolio in equities and
collective investment vehicles outside the benchmark index.
Although widely drafted, the Board has made a minor amendment
to the Investment Policy in order to clarify, for the benefit of
shareholders, that this 20% carve out may from time to time be
utilised to allow the Company to hold shares in companies listed
outside of the UK. Such overseas holdings could, for example, arise
following corporate actions such as mergers or spin outs from
existing holdings. This change is not considered to be material and
should not be seen as indicating any change to the Company’s
investment strategy or process. The revised Investment Policy is set
out in full on page 16.
Annual General Meeting and Results
Webinar
Our Investment Manager will be giving a presentation at an investor
webinar on Wednesday, 15 January 2025 at 2.00 p.m. to discuss the
Company’s results which can be signed up to via the following link:
https://www.schroders.events/SCP24.
The Company’s AGM will be held at 1.00 p.m. on Monday,
24 February 2025. We encourage shareholders to attend in person
and, if unable to, to cast their votes by proxy. The AGM will include
a presentation by the Investment Manager on the prospects for the
UK market and the Company’s investment strategy and will provide
an opportunity for shareholders to ask questions of the Board and
the Investment Manager. The meeting will be held at the Manager’s
office at 1 London Wall Place, London, EC2Y 5AU.
Regular news about the Company can be found on the Company’s
website: http://www.schroders.com/trust-updates/.
Outlook
Both the Board and our Investment Manager remain positive about
the outlook for the UK economy, given the combination of low
unemployment, rising household disposable income, and increased
business investment. The Bank of England’s Monetary Policy
Committee has recently made its second rate cut in four years,
reducing the bank rate by 25 basis points to 4.75% and there should
be further cuts over the next 12 months. In addition, inflation, which
has been a concern over recent years, should remain at a moderate
level going forward boosting disposable incomes and generally
helping improve sentiment towards the UK.
It is encouraging to see that this supportive environment is now
starting to be reflected in growing interest and future expectations
for the UK equity market, as investors start to recognise the value on
offer both relative to other regional equity markets but also
compared to historical valuations. Within the wider UK market, the
mid-cap sector is looking particularly attractive given earnings growth
expectations and healthy dividend prospects. These factors help
explain the increased merger and acquisition activity within the
mid-cap sector from both domestic and international corporate
buyers as well as private equity investors.
We continue to remain optimistic about the outlook for the UK
mid-cap sector and the Company’s portfolio holdings, which are
largely focused upon longer term growth businesses. The
Investment Manager has a proven ability to find attractive
investment opportunities with the prospect of long-term returns
for shareholders. The continued focus remains on looking for
companies which can deliver high risk-adjusted returns with rising
cash flows and earnings and with conservatively financed balance
sheets. This should help to continue to deliver attractive and
sustainable returns to our shareholders in the future.
Robert Talbut
Chair
27 November 2024
Introduction Strategic Report Governance Financial Other Information (unaudited)
Amendment to the Company’s Investment
Policy
Whilst the Company predominantly invests in companies from the
FTSE 250 ex Investment Trust sector, under its Investment Policy,
the Company may hold up to 20% of its portfolio in equities and
collective investment vehicles outside the benchmark index.
Although widely drafted, the Board has made a minor amendment
to the Investment Policy in order to clarify, for the benefit of
shareholders, that this 20% carve out may from time to time be
utilised to allow the Company to hold shares in companies listed
outside of the UK. Such overseas holdings could, for example, arise
following corporate actions such as mergers or spin outs from
existing holdings. This change is not considered to be material and
should not be seen as indicating any change to the Company’s
investment strategy or process. The revised Investment Policy is set
out in full on page 16.
Annual General Meeting and Results
Webinar
Our Investment Manager will be giving a presentation at an investor
webinar on Wednesday, 15 January 2025 at 2.00 p.m. to discuss the
Company’s results which can be signed up to via the following link:
https://www.schroders.events/SCP24.
The Company’s AGM will be held at 1.00 p.m. on Monday,
24 February 2025. We encourage shareholders to attend in person
and, if unable to, to cast their votes by proxy. The AGM will include
a presentation by the Investment Manager on the prospects for the
UK market and the Company’s investment strategy and will provide
an opportunity for shareholders to ask questions of the Board and
the Investment Manager. The meeting will be held at the Manager’s
office at 1 London Wall Place, London, EC2Y 5AU.
Regular news about the Company can be found on the Company’s
website: http://www.schroders.com/trust-updates/.
Outlook
Both the Board and our Investment Manager remain positive about
the outlook for the UK economy, given the combination of low
unemployment, rising household disposable income, and increased
business investment. The Bank of England’s Monetary Policy
Committee has recently made its second rate cut in four years,
reducing the bank rate by 25 basis points to 4.75% and there should
be further cuts over the next 12 months. In addition, inflation, which
has been a concern over recent years, should remain at a moderate
level going forward boosting disposable incomes and generally
helping improve sentiment towards the UK.
It is encouraging to see that this supportive environment is now
starting to be reflected in growing interest and future expectations
for the UK equity market, as investors start to recognise the value on
offer both relative to other regional equity markets but also
compared to historical valuations. Within the wider UK market, the
mid-cap sector is looking particularly attractive given earnings growth
expectations and healthy dividend prospects. These factors help
explain the increased merger and acquisition activity within the
mid-cap sector from both domestic and international corporate
buyers as well as private equity investors.
We continue to remain optimistic about the outlook for the UK
mid-cap sector and the Company’s portfolio holdings, which are
largely focused upon longer term growth businesses. The
Investment Manager has a proven ability to find attractive
investment opportunities with the prospect of long-term returns
for shareholders. The continued focus remains on looking for
companies which can deliver high risk-adjusted returns with rising
cash flows and earnings and with conservatively financed balance
sheets. This should help to continue to deliver attractive and
sustainable returns to our shareholders in the future.
Robert Talbut
Chair
27 November 2024
6
Schroder
UK Mid Cap Fund plc
Investment Manager’s Review
The FTSE 250 ex
Investment Trusts Index is
populated by multiple
“unique” companies with
strong growth prospects,
generating cash and
delivering attractive returns
on capital.
The NAV per share total return in the 12 months to 30 September
2024 was +17.3%. This compares to +21.4% from the FTSE Mid 250 ex
Investment Trusts Index. The share price total return was +17.5%.
Market Background
UK equities rose and mid-caps outperformed as they were spurred
on by a pick-up in overseas inbound bids and the prospect of UK
interest rate cuts. Consumer discretionary, financials and domestically
focused industrial sub-sectors (construction, support services and
transportation) were among the largest contributors to the
performance of mid-caps over the year. This was in large part driven
by the improved UK economic outlook as interest rate expectations
moderated. Having experienced a shallow recession following the
rapid rise in rates over 2022/23, the market began to discount
recovery as rate cuts began to be priced in. Mortgage rates fell and
house price growth had resumed by the end of the year. July’s UK
election result was a further catalyst for many mid-cap domestically
focused equities to further rerate in anticipation of greater policy
certainty.
In contrast to a UK economy, which appeared to be improving, the
global macro-economic outlook became progressively more mixed.
This deterioration weighed on the more non-UK focused industrial
sub-sectors of industrial engineering and electronic and electrical
equipment, in particular. Sharp period-end de-ratings of these
sub-sectors meant that stocks in these categories were most likely to
detract for the year overall. The aerospace and defence sub-sector
was a positive outlier, however, as increasingly uncertain geopolitics
drove a surge in orders.
Portfolio Performance
The portfolio NAV achieved a positive return of +17.3% during the
year, though it underperformed the Benchmark by 4.1%. The share
price returned +17.5% and the discount marginally widened, from
12.0% at the beginning of the year to 12.3% at the end. Gearing was
a positive factor.
An underweight to the real estate sector and to more highly indebted
companies in the Benchmark more generally, was the main reason
for the portfolio’s underperformance. Given a preference for stronger
balance sheets, investors in the strategy should not find this
surprising.
Stocks held – significant positive and negative
contributions versus the Benchmark
Weight Relative
Positive Portfolio relative perform-
contributor weight 1
to index ance
2
Impact 3
(%) (%) (%) (%)
Zegona Communications 1.1 +1.1 136.7 +1.1
Just Group 2.2 +1.8 75.7 +1.1
Paragon Banking 2.8 +2.2 45.7 +0.9
Keller Group 1.2 +0.8 101.2 +0.6
Britvic 2.2 +1.1 30.2 +0.5
Weight Relative
Negative Portfolio relative perform-
contributor weight 1
to index ance
2
Impact 3
(%) (%) (%) (%)
Victrex 2.1 +1.6 -49.0 -0.9
Spectris 3.4 +1.9 -39.1 -0.8
Indivior 1.0 +0.4 -47.5 -0.8
Computacenter 3.6 +2.7 -21.0 -0.6
Vistry 0.3 -0.9 8.5 -0.6
Source: Schroders, Factset, close 30 September 2023 to close 30 September
2024.
1
Weights are averages.
2
Performance of the stock in the index relative to the FTSE 250 (ex. ITs) Index
return.
3
Impact is the contribution to performance relative to the FTSE 250 (ex. ITs)
Index.
Turning to individual holdings, shares in both specialty chemicals
company Victrex and scientific and industrial instrumentation
company Spectris performed poorly. In the case of Victrex, a weak
industrial backdrop and lower than expected demand in the higher
margin medical division meant that earnings were lower than
expected. However, the company is very well invested at this point, so
any recovery in end markets should be seen quickly and, in the
meantime, we expect to see a strong improvement in cash generated
by the business.
Jean Roche Andy Brough
Investment Manager’s Review
The FTSE 250 ex
Investment Trusts Index is
populated by multiple
“unique” companies with
strong growth prospects,
generating cash and
delivering attractive returns
on capital.
The NAV per share total return in the 12 months to 30 September
2024 was +17.3%. This compares to +21.4% from the FTSE Mid 250 ex
Investment Trusts Index. The share price total return was +17.5%.
Market Background
UK equities rose and mid-caps outperformed as they were spurred
on by a pick-up in overseas inbound bids and the prospect of UK
interest rate cuts. Consumer discretionary, financials and domestically
focused industrial sub-sectors (construction, support services and
transportation) were among the largest contributors to the
performance of mid-caps over the year. This was in large part driven
by the improved UK economic outlook as interest rate expectations
moderated. Having experienced a shallow recession following the
rapid rise in rates over 2022/23, the market began to discount
recovery as rate cuts began to be priced in. Mortgage rates fell and
house price growth had resumed by the end of the year. July’s UK
election result was a further catalyst for many mid-cap domestically
focused equities to further rerate in anticipation of greater policy
certainty.
In contrast to a UK economy, which appeared to be improving, the
global macro-economic outlook became progressively more mixed.
This deterioration weighed on the more non-UK focused industrial
sub-sectors of industrial engineering and electronic and electrical
equipment, in particular. Sharp period-end de-ratings of these
sub-sectors meant that stocks in these categories were most likely to
detract for the year overall. The aerospace and defence sub-sector
was a positive outlier, however, as increasingly uncertain geopolitics
drove a surge in orders.
Portfolio Performance
The portfolio NAV achieved a positive return of +17.3% during the
year, though it underperformed the Benchmark by 4.1%. The share
price returned +17.5% and the discount marginally widened, from
12.0% at the beginning of the year to 12.3% at the end. Gearing was
a positive factor.
An underweight to the real estate sector and to more highly indebted
companies in the Benchmark more generally, was the main reason
for the portfolio’s underperformance. Given a preference for stronger
balance sheets, investors in the strategy should not find this
surprising.
Stocks held – significant positive and negative
contributions versus the Benchmark
Weight Relative
Positive Portfolio relative perform-
contributor weight 1
to index ance
2
Impact 3
(%) (%) (%) (%)
Zegona Communications 1.1 +1.1 136.7 +1.1
Just Group 2.2 +1.8 75.7 +1.1
Paragon Banking 2.8 +2.2 45.7 +0.9
Keller Group 1.2 +0.8 101.2 +0.6
Britvic 2.2 +1.1 30.2 +0.5
Weight Relative
Negative Portfolio relative perform-
contributor weight 1
to index ance
2
Impact 3
(%) (%) (%) (%)
Victrex 2.1 +1.6 -49.0 -0.9
Spectris 3.4 +1.9 -39.1 -0.8
Indivior 1.0 +0.4 -47.5 -0.8
Computacenter 3.6 +2.7 -21.0 -0.6
Vistry 0.3 -0.9 8.5 -0.6
Source: Schroders, Factset, close 30 September 2023 to close 30 September
2024.
1
Weights are averages.
2
Performance of the stock in the index relative to the FTSE 250 (ex. ITs) Index
return.
3
Impact is the contribution to performance relative to the FTSE 250 (ex. ITs)
Index.
Turning to individual holdings, shares in both specialty chemicals
company Victrex and scientific and industrial instrumentation
company Spectris performed poorly. In the case of Victrex, a weak
industrial backdrop and lower than expected demand in the higher
margin medical division meant that earnings were lower than
expected. However, the company is very well invested at this point, so
any recovery in end markets should be seen quickly and, in the
meantime, we expect to see a strong improvement in cash generated
by the business.
Jean Roche Andy Brough
Introduction
Strategic Report
Governance
Financial
Other Information (unaudited)
Schroder UK Mid Cap Fund plc 7
Spectris also saw a slowdown in demand in some of its end markets
from electric vehicles to pharmaceuticals and disruption from the
implementation of a new enterprise resource planning system which
should over time be earnings accretive. As well as its ongoing share
buyback, the company has made three interesting earnings
enhancing acquisitions this year. Two of these complement its
existing Spectris Scientific division, by adding a hand-held instrument
offer. Both Spectris and Victrex are more than 40% below their
five-year share price high, and, given the cyclical aspects of both, it is
logical to expect a turning point before too long, in our view.
Specialty pharmaceuticals business Indivior also detracted.
A competitor is making more ground than expected in the opioid use
disorder treatment market, which meant that top line growth was less
than expected. In addition, re-enrolments into Medicare/Medicaid
have proven to be an obstacle. However, the market remains vast and,
unfortunately for those needing the drugs, growing. Indivior’s share
price is underpinned by rolling buy-backs. We continue to see Indivior
as another example of a unique investment opportunity in the UK
market.
IT services business Computacenter disappointed as profit from
certain US contracts moved into the second half of its financial year
and expected acquisitions did not materialise. The company
maintains a strong balance sheet, supporting an ongoing share
buy-back, and good visibility over its H2. It is exposed to structural
growth, for example, in data centres and the Cloud, has solid
enterprise customers, and management are proven as excellent
allocators of capital (the shares have beaten the total return of the
S&P 500 over both 10 and 20 years for example), and we have
retained the bulk of our holding.
An underweight holding in UK housebuilder Vistry was also
unhelpful for performance over the period. The position was sold too
soon, only halfway into what turned out to be an energetic rally,
though some of the proceeds were reinvested into increasing the
holding size in house builder Redrow. Vistry has since had a
substantial profit warning and 20% downgrade to this year’s profit
expectations, as such the shares have fallen considerably and the
Company was right to sell the holding. Redrow then became the
subject of an offer from larger housebuilder Barratt Developments at
a 27.2% premium to the undisturbed price.
Our top performer was a new holding, Zegona Communications ,
which outperformed the Benchmark by 137%. The Company
participated in fundraising by the Zegona management team, which
has previous successes in the telecoms sector. The business model is
one of buying telecoms assets, restructuring them, and then selling
them. Management has been active as anticipated: during the year,
Zegona acquired the Spanish assets of Vodafone. The company is
now in negotiations for two potential fibre broadband joint ventures
with competitors Telefonica and MasOrange (which could help to free
up a possible c.€2 billion of cash), has received an investment grade
credit rating and has agreed a positive new fibre wholesale
agreement with Telefonica.
Other top performing holdings included bulk annuities insurer Just
Group. The shares performed well after management revealed the
company would “substantially exceed” its previous goal set in 2021 of
doubling profits over five years, by achieving this and more in 2024.
UK specialist lender Paragon Banking Group announced better-
than-expected final results and a new £50 million share buy-back to
follow on from the £100 million announced in the 2023 financial year.
Shares in another one of our long-term holdings, specialty
groundworks contractor Keller , outpaced the benchmark return by
more than 100%, thanks mostly to strength in the US market. Finally,
drinks company Britvic , a company in which we had recently
increased our stake, was in receipt of a bid during the period from
Danish drinks company Carlsberg, at a 35.6% premium to the
undisturbed price.
Stocks not held – significant positive and negative
contributions versus the Benchmark
Weight Relative
Positive Portfolio relative perform-
contributor weight
1
to index ance
2
Impact
3
(%) (%) (%) (%)
Dowlais 0 –0.5 –63.9 +0.4
Close Brothers 0 –0.4 –72.3 +0.4
Wizz Air 0 –0.7 –45.9 +0.3
Dr Martens 0 –0.2 –80.3 +0.3
Aston Martin 0 –0.2 –79.3 +0.3
Weight Relative
Negative Portfolio relative perform-
contributor weight
1
to index ance
2
Impact
3
(%) (%) (%) (%)
Persimmon 0 –0.5 15.8 –0.6
St James’s Place 0 –0.4 13.7 –0.5
Ascential 0 –0.5 143.8 –0.4
Plus500 0 –0.7 73.8 –0.4
British Land Co 0 –1.6 24.4 –0.3
Source: Schroders, Factset, close 30 September 2023 to close 30 September
2024.
1
Weights are averages.
2
Performance of the stock in the index relative to the FTSE 250 (ex. ITs) Index
return.
3
Impact is the contribution to performance relative to the FTSE 250 (ex. ITs)
Index
Not holding shares in Dowlais, an automotive engineering group, was
positive for performance, as they underperformed the benchmark by
63.9% over the period. The company suffered a significant write-down
in its powder metallurgy division as well as softer than expected
trading.
Not holding UK merchant bank Close Brothers also aided returns
over the period, as the shares tumbled following the FCA’s
announcement of a review into the motor finance market, a factor
outside the company’s control. Of the UK banks, Close Brothers has
the biggest relative exposure to car finance loans and the news led
the company to cancel any 2024 dividend “given the significant
uncertainty regarding the outcome of the FCA’s review of historical
motor finance commissions arrangements and any potential financial
impact as a result”. (Source: Dividends/Close Brothers Group.)
Other stocks which it was right to avoid during the period included
Wizz Air, Dr Martens, and Aston Martin, which have all serially
disappointed the market.
The Company did not own shares in housebuilder Persimmon. This
was the main single stock detractor in this category. More positive
sentiment towards the housebuilders, as expectations of rate cuts
took hold, most notably in early November 2023, drove the shares up.
This assisted its promotion back into the FTSE 100 following the
delisting of Dechra (which, as a reminder, was acquired by private
equity). Shares in Ascential, which we had sold during the previous
year, performed well as a complex break up was executed during the
year. Not owning St. James’s Place detracted, although our financial
sector exposure overall was a strong contributor. Having been
relegated from the FTSE 100 in the previous quarter, the wealth
manager enjoyed something of a share price recovery. A change of
finance director in a time of regulatory change was another factor in
our decision not to hold St James’s Place. Not holding shares in
trading platform provider Plus500 also detracted. Our preferred
long-term exposure to financials, however, includes companies such
as Just Group , retail CFD and derivatives broker IG and other
Schroder UK Mid Cap Fund plc 7
Spectris also saw a slowdown in demand in some of its end markets
from electric vehicles to pharmaceuticals and disruption from the
implementation of a new enterprise resource planning system which
should over time be earnings accretive. As well as its ongoing share
buyback, the company has made three interesting earnings
enhancing acquisitions this year. Two of these complement its
existing Spectris Scientific division, by adding a hand-held instrument
offer. Both Spectris and Victrex are more than 40% below their
five-year share price high, and, given the cyclical aspects of both, it is
logical to expect a turning point before too long, in our view.
Specialty pharmaceuticals business Indivior also detracted.
A competitor is making more ground than expected in the opioid use
disorder treatment market, which meant that top line growth was less
than expected. In addition, re-enrolments into Medicare/Medicaid
have proven to be an obstacle. However, the market remains vast and,
unfortunately for those needing the drugs, growing. Indivior’s share
price is underpinned by rolling buy-backs. We continue to see Indivior
as another example of a unique investment opportunity in the UK
market.
IT services business Computacenter disappointed as profit from
certain US contracts moved into the second half of its financial year
and expected acquisitions did not materialise. The company
maintains a strong balance sheet, supporting an ongoing share
buy-back, and good visibility over its H2. It is exposed to structural
growth, for example, in data centres and the Cloud, has solid
enterprise customers, and management are proven as excellent
allocators of capital (the shares have beaten the total return of the
S&P 500 over both 10 and 20 years for example), and we have
retained the bulk of our holding.
An underweight holding in UK housebuilder Vistry was also
unhelpful for performance over the period. The position was sold too
soon, only halfway into what turned out to be an energetic rally,
though some of the proceeds were reinvested into increasing the
holding size in house builder Redrow. Vistry has since had a
substantial profit warning and 20% downgrade to this year’s profit
expectations, as such the shares have fallen considerably and the
Company was right to sell the holding. Redrow then became the
subject of an offer from larger housebuilder Barratt Developments at
a 27.2% premium to the undisturbed price.
Our top performer was a new holding, Zegona Communications ,
which outperformed the Benchmark by 137%. The Company
participated in fundraising by the Zegona management team, which
has previous successes in the telecoms sector. The business model is
one of buying telecoms assets, restructuring them, and then selling
them. Management has been active as anticipated: during the year,
Zegona acquired the Spanish assets of Vodafone. The company is
now in negotiations for two potential fibre broadband joint ventures
with competitors Telefonica and MasOrange (which could help to free
up a possible c.€2 billion of cash), has received an investment grade
credit rating and has agreed a positive new fibre wholesale
agreement with Telefonica.
Other top performing holdings included bulk annuities insurer Just
Group. The shares performed well after management revealed the
company would “substantially exceed” its previous goal set in 2021 of
doubling profits over five years, by achieving this and more in 2024.
UK specialist lender Paragon Banking Group announced better-
than-expected final results and a new £50 million share buy-back to
follow on from the £100 million announced in the 2023 financial year.
Shares in another one of our long-term holdings, specialty
groundworks contractor Keller , outpaced the benchmark return by
more than 100%, thanks mostly to strength in the US market. Finally,
drinks company Britvic , a company in which we had recently
increased our stake, was in receipt of a bid during the period from
Danish drinks company Carlsberg, at a 35.6% premium to the
undisturbed price.
Stocks not held – significant positive and negative
contributions versus the Benchmark
Weight Relative
Positive Portfolio relative perform-
contributor weight
1
to index ance
2
Impact
3
(%) (%) (%) (%)
Dowlais 0 –0.5 –63.9 +0.4
Close Brothers 0 –0.4 –72.3 +0.4
Wizz Air 0 –0.7 –45.9 +0.3
Dr Martens 0 –0.2 –80.3 +0.3
Aston Martin 0 –0.2 –79.3 +0.3
Weight Relative
Negative Portfolio relative perform-
contributor weight
1
to index ance
2
Impact
3
(%) (%) (%) (%)
Persimmon 0 –0.5 15.8 –0.6
St James’s Place 0 –0.4 13.7 –0.5
Ascential 0 –0.5 143.8 –0.4
Plus500 0 –0.7 73.8 –0.4
British Land Co 0 –1.6 24.4 –0.3
Source: Schroders, Factset, close 30 September 2023 to close 30 September
2024.
1
Weights are averages.
2
Performance of the stock in the index relative to the FTSE 250 (ex. ITs) Index
return.
3
Impact is the contribution to performance relative to the FTSE 250 (ex. ITs)
Index
Not holding shares in Dowlais, an automotive engineering group, was
positive for performance, as they underperformed the benchmark by
63.9% over the period. The company suffered a significant write-down
in its powder metallurgy division as well as softer than expected
trading.
Not holding UK merchant bank Close Brothers also aided returns
over the period, as the shares tumbled following the FCA’s
announcement of a review into the motor finance market, a factor
outside the company’s control. Of the UK banks, Close Brothers has
the biggest relative exposure to car finance loans and the news led
the company to cancel any 2024 dividend “given the significant
uncertainty regarding the outcome of the FCA’s review of historical
motor finance commissions arrangements and any potential financial
impact as a result”. (Source: Dividends/Close Brothers Group.)
Other stocks which it was right to avoid during the period included
Wizz Air, Dr Martens, and Aston Martin, which have all serially
disappointed the market.
The Company did not own shares in housebuilder Persimmon. This
was the main single stock detractor in this category. More positive
sentiment towards the housebuilders, as expectations of rate cuts
took hold, most notably in early November 2023, drove the shares up.
This assisted its promotion back into the FTSE 100 following the
delisting of Dechra (which, as a reminder, was acquired by private
equity). Shares in Ascential, which we had sold during the previous
year, performed well as a complex break up was executed during the
year. Not owning St. James’s Place detracted, although our financial
sector exposure overall was a strong contributor. Having been
relegated from the FTSE 100 in the previous quarter, the wealth
manager enjoyed something of a share price recovery. A change of
finance director in a time of regulatory change was another factor in
our decision not to hold St James’s Place. Not holding shares in
trading platform provider Plus500 also detracted. Our preferred
long-term exposure to financials, however, includes companies such
as Just Group , retail CFD and derivatives broker IG and other
8
Schroder
UK Mid Cap Fund plc
Investment Manager’s Review
continued
specialists including emerging market fund manager Ashmore
(see below).
Finally, not owning enough highly interest rate sensitive stocks in the
real estate sector, such as British Land, also detracted from
performance.
Portfolio activity
Attractively priced structural growth opportunities in market niches
continue to influence our new additions to the portfolio.
The Company bought back into Harbour Energy following its
transformational acquisition of BASF’s oil and gas portfolio, a deal
which also strengthens Harbour Energy’s balance sheet and
lengthens the life of its assets. Encouraged by signs of a bottoming
out of the machine tooling cycle, the Company also bought back into
specialist engineer Renishaw . This has been a top performer for the
Company over the years and we last sold out of it on its promotion
into the FTSE 100. This is a unique company exposed to a number of
secular growth trends such as AI and quantum computing and,
crucially, is underpinned by a net cash balance sheet.
The Company initiated new positions in UK listed Spanish telecoms
group Zegona Communications , and in specialty pharmaceuticals
business Indivior , as discussed above.
Price comparison website group Mony Group (formerly known
as Moneysupermarket.com plc) promises to achieve greater
efficiencies and was another new portfolio addition. Its
SuperSaveClub attracted over 750,000 members in its first
nine months offering lead-generation cost savings and scope to
further enhance already attractive operating margins at a business
generating dependable mid-single digit top line growth.
We initiated a new holding in biotechnology company PureTech
Health which has $400 million in net cash relative to a market cap of
c.$470 million at the time of our initial investment. The U.S. Food and
Drug Administration recently approved the company’s schizophrenia
medication which is a huge step forward for treatment in this area
and the first new drug to be approved in more than 50 years. Not
only does this trigger a milestone payment for PureTech , it also
shows the potential of the company’s drug development team and
process.
We established a position in electricals retailer Currys . With an
improved balance sheet, we anticipate that a stronger UK consumer,
driving better trading, and a recovery in margins in its Scandinavian
markets as stock overhangs in that market are cleared, will be further
key catalysts. We also anticipate a boost to growth in the sector
thanks to a hardware refresh tailwind four years after the pandemic
and as consumers’ tech appetite is being whetted by new AI-enabled
equipment. We also initiated a new position in emerging markets
fund manager Ashmore , which has £505 million cash and
£257 million in seed capital versus a market cap, at our entry price, of
£1.2 billion. Another new entrant to the portfolio is specialist insurer,
Lancashire Holdings, which has delivered superior returns on
capital from both insurance and reinsurance.
We initiated a new position in best-in-class facilities management
business Mitie , which is set to benefit from strong topline growth and
a margin improvement programme. We initiated a holding in travel
food and beverage group SSP given its recovery potential driven by
growth in airline travel.
Bid activity has remained buoyant over the 12-month period, with
mid-caps continuing to command a significant premium. Bid activity
was the driver behind our disposals of our holdings in Virgin Money
following a bid approach from Nationwide, and Tyman, which was bid
for by US peer Quanex. We exited a relatively new holding in
Hargreaves Lansdown as it went back into the FTSE 100 due to bid
interest.
We sold Redrow following a bid, reinvesting the proceeds in peer
housebuilder Crest Nicholson . Although the bid approach for Crest
from peer Bellway which temporarily lifted the shares has since fallen
away, the supply/demand equation for the sector, alongside self-help
potential, underpins our investment thesis. Crest also has a new CEO
on board (from peer Persimmon), so we see in this a catalyst for
change.
We sold shares in power supply solution provider, XP Power, as the
shares rose following a bid approach, subsequently rejected, and in
manufacturing components company Essentra, because we saw
more upside in other industrial companies.
The announcement of the retirement of the long-tenured CEO of soft
drinks business A.G. Barr prompted us to sell the shares, and we used
the proceeds to increase our holding in peer Britvic , which was then
also bid for, as mentioned above.
We sold residual stakes in marine services specialist James Fisher,
special interest online media group Future, buy-to-let lending
specialist OSB (increasing our position in higher quality peer Paragon
Banking Group), private equity and credit fund manager
Bridgepoint, and defence contractor Senior (using the proceeds to
top up our holdings in Babcock, QinetiQ , and Chemring ).
Outlook
On performance: Although it is disappointing to report a year where
performance, significantly positive in absolute terms, has fallen
behind the Benchmark, a year is a brief period in investment, and
over the longer term, the Company’s performance is ahead of its
Benchmark (over five and ten years). There has been no change in the
investment process which has delivered this successful investment
performance.
On the backdrop in the UK: Following the shallowest UK recession
on record, a decisive +0.7% growth in Q1 2024 followed by +0.5% in
Q2 2024, together with an expectation of continued falling inflation
and monetary easing, has led the International Monetary Fund, for
example, to upgrade its estimate of UK gross domestic product
growth to 1.1% for 2024 as a whole. They are one of a number of
forecasters who have needed to do this during 2024. This is evidence
that the UK economy can grow even at more “normal” (i.e. well above
0%) interest rate levels, and counters some of the more bearish
structural arguments against UK equities, in addition to short term
UK budget noise.
Whilst the economic backdrop is becoming more helpful, what
matters most for investors is how individual companies capture
growth opportunities and turn them into profit streams. The FTSE 250
continues to trade on a marginally higher prospective dividend yield
to the FTSE 100, for a far superior earnings growth outlook, which
demonstrates the highly cash generative and profitable nature of
many UK mid-cap stocks, which are therefore undervalued in our
view.
We think that this valuation gap will close over time. Heightened levels
of incoming M&A at above average premia of 45% plus should help;
we note that almost a third of the companies in the Benchmark are
trading at levels 50% or more below share price highs reached in the
last five years. Some UK management teams are feeling more
confident in rebutting offerors’ lowly proposals, which is an
interesting new development and may indicate that these companies’
intrinsic values could be realised without succumbing to a bid.
Investment Manager’s Review
continued
specialists including emerging market fund manager Ashmore
(see below).
Finally, not owning enough highly interest rate sensitive stocks in the
real estate sector, such as British Land, also detracted from
performance.
Portfolio activity
Attractively priced structural growth opportunities in market niches
continue to influence our new additions to the portfolio.
The Company bought back into Harbour Energy following its
transformational acquisition of BASF’s oil and gas portfolio, a deal
which also strengthens Harbour Energy’s balance sheet and
lengthens the life of its assets. Encouraged by signs of a bottoming
out of the machine tooling cycle, the Company also bought back into
specialist engineer Renishaw . This has been a top performer for the
Company over the years and we last sold out of it on its promotion
into the FTSE 100. This is a unique company exposed to a number of
secular growth trends such as AI and quantum computing and,
crucially, is underpinned by a net cash balance sheet.
The Company initiated new positions in UK listed Spanish telecoms
group Zegona Communications , and in specialty pharmaceuticals
business Indivior , as discussed above.
Price comparison website group Mony Group (formerly known
as Moneysupermarket.com plc) promises to achieve greater
efficiencies and was another new portfolio addition. Its
SuperSaveClub attracted over 750,000 members in its first
nine months offering lead-generation cost savings and scope to
further enhance already attractive operating margins at a business
generating dependable mid-single digit top line growth.
We initiated a new holding in biotechnology company PureTech
Health which has $400 million in net cash relative to a market cap of
c.$470 million at the time of our initial investment. The U.S. Food and
Drug Administration recently approved the company’s schizophrenia
medication which is a huge step forward for treatment in this area
and the first new drug to be approved in more than 50 years. Not
only does this trigger a milestone payment for PureTech , it also
shows the potential of the company’s drug development team and
process.
We established a position in electricals retailer Currys . With an
improved balance sheet, we anticipate that a stronger UK consumer,
driving better trading, and a recovery in margins in its Scandinavian
markets as stock overhangs in that market are cleared, will be further
key catalysts. We also anticipate a boost to growth in the sector
thanks to a hardware refresh tailwind four years after the pandemic
and as consumers’ tech appetite is being whetted by new AI-enabled
equipment. We also initiated a new position in emerging markets
fund manager Ashmore , which has £505 million cash and
£257 million in seed capital versus a market cap, at our entry price, of
£1.2 billion. Another new entrant to the portfolio is specialist insurer,
Lancashire Holdings, which has delivered superior returns on
capital from both insurance and reinsurance.
We initiated a new position in best-in-class facilities management
business Mitie , which is set to benefit from strong topline growth and
a margin improvement programme. We initiated a holding in travel
food and beverage group SSP given its recovery potential driven by
growth in airline travel.
Bid activity has remained buoyant over the 12-month period, with
mid-caps continuing to command a significant premium. Bid activity
was the driver behind our disposals of our holdings in Virgin Money
following a bid approach from Nationwide, and Tyman, which was bid
for by US peer Quanex. We exited a relatively new holding in
Hargreaves Lansdown as it went back into the FTSE 100 due to bid
interest.
We sold Redrow following a bid, reinvesting the proceeds in peer
housebuilder Crest Nicholson . Although the bid approach for Crest
from peer Bellway which temporarily lifted the shares has since fallen
away, the supply/demand equation for the sector, alongside self-help
potential, underpins our investment thesis. Crest also has a new CEO
on board (from peer Persimmon), so we see in this a catalyst for
change.
We sold shares in power supply solution provider, XP Power, as the
shares rose following a bid approach, subsequently rejected, and in
manufacturing components company Essentra, because we saw
more upside in other industrial companies.
The announcement of the retirement of the long-tenured CEO of soft
drinks business A.G. Barr prompted us to sell the shares, and we used
the proceeds to increase our holding in peer Britvic , which was then
also bid for, as mentioned above.
We sold residual stakes in marine services specialist James Fisher,
special interest online media group Future, buy-to-let lending
specialist OSB (increasing our position in higher quality peer Paragon
Banking Group), private equity and credit fund manager
Bridgepoint, and defence contractor Senior (using the proceeds to
top up our holdings in Babcock, QinetiQ , and Chemring ).
Outlook
On performance: Although it is disappointing to report a year where
performance, significantly positive in absolute terms, has fallen
behind the Benchmark, a year is a brief period in investment, and
over the longer term, the Company’s performance is ahead of its
Benchmark (over five and ten years). There has been no change in the
investment process which has delivered this successful investment
performance.
On the backdrop in the UK: Following the shallowest UK recession
on record, a decisive +0.7% growth in Q1 2024 followed by +0.5% in
Q2 2024, together with an expectation of continued falling inflation
and monetary easing, has led the International Monetary Fund, for
example, to upgrade its estimate of UK gross domestic product
growth to 1.1% for 2024 as a whole. They are one of a number of
forecasters who have needed to do this during 2024. This is evidence
that the UK economy can grow even at more “normal” (i.e. well above
0%) interest rate levels, and counters some of the more bearish
structural arguments against UK equities, in addition to short term
UK budget noise.
Whilst the economic backdrop is becoming more helpful, what
matters most for investors is how individual companies capture
growth opportunities and turn them into profit streams. The FTSE 250
continues to trade on a marginally higher prospective dividend yield
to the FTSE 100, for a far superior earnings growth outlook, which
demonstrates the highly cash generative and profitable nature of
many UK mid-cap stocks, which are therefore undervalued in our
view.
We think that this valuation gap will close over time. Heightened levels
of incoming M&A at above average premia of 45% plus should help;
we note that almost a third of the companies in the Benchmark are
trading at levels 50% or more below share price highs reached in the
last five years. Some UK management teams are feeling more
confident in rebutting offerors’ lowly proposals, which is an
interesting new development and may indicate that these companies’
intrinsic values could be realised without succumbing to a bid.
Schroder
UK Mid Cap Fund plc
9
Introduction Strategic Report Governance Financial Other Information (unaudited)
The Investment Manager would therefore like to remind readers that
we are fishing in an attractive pond. In terms of the long-term
potential of UK equities, we suggest that investors willing to look
beyond the persistent negative media coverage will find that the UK
punches above its weight. This can be seen in terms of multi-baggers
relative to the US. See our 2023 article on ““30-baggers ” why the UK
has more than its fair share”, and our podcast on the topic,
available on the Company’s web pages:
https://www.schroders.com/en/global/individual/insights/30-baggers-
why-the-uk-has-more-than-its-fair-share/.
We have had the great pleasure of interviewing for our podcast a
number of mid-cap CEOs, from >200 “bagger” Cranswick CEO Adam
Couch to the CEO of the UK’s number one pet care company Pets at
Home, and the link to these can be found here:
https://www.schroders.com/en-gb/uk/individual/funds-and-
strategies/investment-trusts/schroder-uk-mid-cap-fund-plc/.
Capital allocators such as these are why the Benchmark has beaten
the S&P 500 return over the 25 years to 30 September 2024 , when
measured in local currency. In US dollar terms, it has very nearly
matched the popular US index.
The FTSE 250 ex Investment Trusts Index is populated by multiple
“unique” companies with strong growth prospects, generating cash
and delivering attractive returns on capital. As stock pickers, we are
confident that the collective strength of our holdings’ balance sheets
will continue to provide resilience in all manner of economic
environments.
Schroder Investment Management Limited
27 November 2024
Past performance is not a guide to future performance. 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.
This information is not an offer, solicitation or recommendation to buy or
sell any financial instrument or to adopt any investment strategy.
For help in understanding any terms used, please visit
https://www.schroders.com/en/insights/invest-iq/investiq/education-
hub/glossary/
Introduction Strategic Report Governance Financial Other Information (unaudited)
The Investment Manager would therefore like to remind readers that
we are fishing in an attractive pond. In terms of the long-term
potential of UK equities, we suggest that investors willing to look
beyond the persistent negative media coverage will find that the UK
punches above its weight. This can be seen in terms of multi-baggers
relative to the US. See our 2023 article on ““30-baggers ” why the UK
has more than its fair share”, and our podcast on the topic,
available on the Company’s web pages:
https://www.schroders.com/en/global/individual/insights/30-baggers-
why-the-uk-has-more-than-its-fair-share/.
We have had the great pleasure of interviewing for our podcast a
number of mid-cap CEOs, from >200 “bagger” Cranswick CEO Adam
Couch to the CEO of the UK’s number one pet care company Pets at
Home, and the link to these can be found here:
https://www.schroders.com/en-gb/uk/individual/funds-and-
strategies/investment-trusts/schroder-uk-mid-cap-fund-plc/.
Capital allocators such as these are why the Benchmark has beaten
the S&P 500 return over the 25 years to 30 September 2024 , when
measured in local currency. In US dollar terms, it has very nearly
matched the popular US index.
The FTSE 250 ex Investment Trusts Index is populated by multiple
“unique” companies with strong growth prospects, generating cash
and delivering attractive returns on capital. As stock pickers, we are
confident that the collective strength of our holdings’ balance sheets
will continue to provide resilience in all manner of economic
environments.
Schroder Investment Management Limited
27 November 2024
Past performance is not a guide to future performance. 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.
This information is not an offer, solicitation or recommendation to buy or
sell any financial instrument or to adopt any investment strategy.
For help in understanding any terms used, please visit
https://www.schroders.com/en/insights/invest-iq/investiq/education-
hub/glossary/
Stock selection and portfolio construction
Investment process
In order to meet the investment objective, the Investment Manager applies a high conviction approach, managing a focused portfolio of
high-quality companies that are all capable of delivering excess risk-adjusted returns with rising cash flows and earnings. The investment
process is based on a common-sense investment philosophy, fundamental analysis of company accounts and a subjective evaluation of
management and prospects.
Fundamental research
As third-party coverage on mid-sized companies is limited in scope, and often in quality, company meetings and visits are a vital part of the
research process. The team seek to meet with companies multiple times each year with the aim of understanding and evaluating the strategies
being pursued by management as well as the characteristics and competitive dynamics of industries and sectors.
Their relationship with company management and this intensive programme of company contacts ensure that they are fully aware of all
relevant issues. The knowledge that their company contacts and visits provide, and the extent of resources that Schroders dedicate to the
product, gives the team an advantage over their competitors. Their research works through their accounting and risk checklist:
This provides a consistent structure to assess balance sheet strength, management quality, how management’s interests and remuneration are
aligned with those of shareholders and the strength of the company’s market position and pricing power. A key focus is the ability of companies
to finance growth internally and the team avoid heavily indebted businesses.
As a result of their fundamental research, they classify the companies and industries in the investment universe, within the following framework:
Accoun t in g and risk checklist Accoun t in g and risk checklist
10 Schroder UK Mid Cap Fund plc
Investment Approach and Process
Investment process
In order to meet the investment objective, the Investment Manager applies a high conviction approach, managing a focused portfolio of
high-quality companies that are all capable of delivering excess risk-adjusted returns with rising cash flows and earnings. The investment
process is based on a common-sense investment philosophy, fundamental analysis of company accounts and a subjective evaluation of
management and prospects.
Fundamental research
As third-party coverage on mid-sized companies is limited in scope, and often in quality, company meetings and visits are a vital part of the
research process. The team seek to meet with companies multiple times each year with the aim of understanding and evaluating the strategies
being pursued by management as well as the characteristics and competitive dynamics of industries and sectors.
Their relationship with company management and this intensive programme of company contacts ensure that they are fully aware of all
relevant issues. The knowledge that their company contacts and visits provide, and the extent of resources that Schroders dedicate to the
product, gives the team an advantage over their competitors. Their research works through their accounting and risk checklist:
This provides a consistent structure to assess balance sheet strength, management quality, how management’s interests and remuneration are
aligned with those of shareholders and the strength of the company’s market position and pricing power. A key focus is the ability of companies
to finance growth internally and the team avoid heavily indebted businesses.
As a result of their fundamental research, they classify the companies and industries in the investment universe, within the following framework:
Accoun t in g and risk checklist Accoun t in g and risk checklist
10 Schroder UK Mid Cap Fund plc
Investment Approach and Process
Schroder
UK Mid Cap Fund plc
11
Introduction Strategic Report Governance Financial Other Information (unaudited)
Unique stocks operate in industries where demand for their goods or services exceeds supply, which gives them pricing power and drives
organic growth, and strong cash flow. These sectors are typically concentrated so that the demand for shares in the constituent companies
exceeds the supply of stock, which appreciates in value as investors ascribe a higher rating to the company and its prospects.
Flex stocks are usually cyclical stocks or franchises in transition, among which the team look for trading opportunities depending on valuation.
The balance of supply and demand for these shares shifts over time as companies reduce capacity and shrink the amount of equity on the
market by buying back shares.
Stocks to avoid operate in industries where supply exceeds demand, which are typically experiencing long-term decline and which will not
provide investors with successful growth opportunities. The supply of shares in these companies will typically exceed demand, leading to
downward pressure on share prices.
Using these classifications, the team invests in a portfolio of attractively priced Unique and Flex stocks.
An overview of the investment process can be seen in the diagram below:
Source: Schroders. For illustrative purposes only, process subject to change.
Portfolio construction
Bottom up stock selection is the primary influence on the portfolio. Individual stock weightings reflect a combination of investment conviction and
the team’s assessment of the stock’s likely volatility that includes environmental, social, and governance (“ESG”) risk and opportunity. Individual
stock decisions shape sector weightings, resulting in a portfolio of 40-50 of the most attractively valued companies capable of delivering
dependable long-term growth in a fast-changing world.
Sell discipline
The team are disciplined in selling companies on their promotion to the FTSE 100. Other reasons for selling are shown below, highlighting red
flags that can trigger an exit from the portfolio together with the investment thesis playing out or the share price reaching peak margins or high
price to earnings ratio.
1
1
The price/earnings to growth ratio (PEG ratio) is a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period.
Introduction Strategic Report Governance Financial Other Information (unaudited)
Unique stocks operate in industries where demand for their goods or services exceeds supply, which gives them pricing power and drives
organic growth, and strong cash flow. These sectors are typically concentrated so that the demand for shares in the constituent companies
exceeds the supply of stock, which appreciates in value as investors ascribe a higher rating to the company and its prospects.
Flex stocks are usually cyclical stocks or franchises in transition, among which the team look for trading opportunities depending on valuation.
The balance of supply and demand for these shares shifts over time as companies reduce capacity and shrink the amount of equity on the
market by buying back shares.
Stocks to avoid operate in industries where supply exceeds demand, which are typically experiencing long-term decline and which will not
provide investors with successful growth opportunities. The supply of shares in these companies will typically exceed demand, leading to
downward pressure on share prices.
Using these classifications, the team invests in a portfolio of attractively priced Unique and Flex stocks.
An overview of the investment process can be seen in the diagram below:
Source: Schroders. For illustrative purposes only, process subject to change.
Portfolio construction
Bottom up stock selection is the primary influence on the portfolio. Individual stock weightings reflect a combination of investment conviction and
the team’s assessment of the stock’s likely volatility that includes environmental, social, and governance (“ESG”) risk and opportunity. Individual
stock decisions shape sector weightings, resulting in a portfolio of 40-50 of the most attractively valued companies capable of delivering
dependable long-term growth in a fast-changing world.
Sell discipline
The team are disciplined in selling companies on their promotion to the FTSE 100. Other reasons for selling are shown below, highlighting red
flags that can trigger an exit from the portfolio together with the investment thesis playing out or the share price reaching peak margins or high
price to earnings ratio.
1
1
The price/earnings to growth ratio (PEG ratio) is a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period.
12
Schroder
UK Mid Cap Fund plc
Active management
The team actively engages with company management to help protect
and grow clients’ capital. The team has exceptional access to the
management of mid-sized UK companies because of Schroders’ status
as a large and independent asset manager, which aids their active
ownership approach. Together with Schroders’ active ownership
specialists the team consistently engage with boards on their policies
and propose changes which emphasise shareholder alignment,
a long-term view and the investment in the company by management.
The team are prepared to vote against management and at times seek
to effect management change, where they are unable to achieve
sufficient shareholder alignment. Should engagement be unsuccessful
on material issues, the team will consider adjusting position sizing or
selling their position, though this is not the preferred path.
Extensive engagement with portfolio companies
The Investment Manager believes that, as external research on
mid-cap companies is limited in scope and often in quality, there is an
opportunity to deliver excess returns to shareholders. Detailed analysis
of company reports and accounts, company meetings and visits, and
the use of industry experts are all a vital part of the Investment
Manager’s research process.
It is the application of experience to these varied inputs, coupled with
an extensive global in-house analytical resource, that the Board
believes gives the team the potential to deliver attractive returns.
As part of our process, the team meets with company management
teams before investing, as well as meeting with the management of all
portfolio companies at least once a year. The team will also engage
with non-executive board members, where appropriate.
In addition to portfolio companies, the team will attend meetings with
management teams of other companies in this dynamic Benchmark
over the course of a year, as it regularly reviews the investment cases of
companies not held in the portfolio. The team believe it is just as
important to understand why you don’t hold something as it is to know
why you do.
Dedicated team of ESG specialists
Schroders has always taken pride in our level of engagement with
companies. Our brand, as well as skilled analytical resource, affords us
the ability to regularly engage with companies on all aspects of
corporate strategy, including specific ESG/sustainability matters. We
are fortunate at Schroders to have a dedicated team of over
40 ESG/sustainability specialists. Their role is to provide proprietary
analytics and tools, and to work closely with investment teams to
analyse and engage with individual companies on these issues. The
team engage with the ESG/sustainability team regularly to ensure that
these factors inform the investment process.
The next table shows the number of shareholder resolutions the
Company has voted on in the last year and over three years.
Year ended 3 years to
30 September 2024 30 September 2024
Meetings 66 165
Resolutions 1,055 2,741
Votes against management 1.23% 1.63%
Did not vote 0 0
Source: Schroders
Responsible investment
The Company delegates to its Manager the responsibility for taking
ESG issues into account when assessing the selection, retention and
realisation of investments. The Board expects the Manager to engage
with investee companies on social, environmental and business ethics
issues and to promote best practice. The Board expects the Manager
to exercise the Company’s voting rights in consideration of these
issues.
In addition to the description of the Manager’s integration of ESG into
the investment process and the details in this report, a description of
the Manager’s policy on these matters can be found on the Schroders
website at: www.schroders.com. The Board notes that Schroders
believes that companies with good ESG management often perform
better and deliver superior returns over time. Engaging with
companies to understand how they approach ESG management is an
integral part of the investment process. Schroders has committed to
the UN Global Compact, amongst codes and standards, and
information about the application of Schroders’ sustainability and
responsible investment policies can be found at:
https://www.schroders.com/en/sustainability/corporateresponsibility/.
The Board has received reporting from the Manager on the
application of its policy.
Investment Approach and Process
continued
Active management
The team actively engages with company management to help protect
and grow clients’ capital. The team has exceptional access to the
management of mid-sized UK companies because of Schroders’ status
as a large and independent asset manager, which aids their active
ownership approach. Together with Schroders’ active ownership
specialists the team consistently engage with boards on their policies
and propose changes which emphasise shareholder alignment,
a long-term view and the investment in the company by management.
The team are prepared to vote against management and at times seek
to effect management change, where they are unable to achieve
sufficient shareholder alignment. Should engagement be unsuccessful
on material issues, the team will consider adjusting position sizing or
selling their position, though this is not the preferred path.
Extensive engagement with portfolio companies
The Investment Manager believes that, as external research on
mid-cap companies is limited in scope and often in quality, there is an
opportunity to deliver excess returns to shareholders. Detailed analysis
of company reports and accounts, company meetings and visits, and
the use of industry experts are all a vital part of the Investment
Manager’s research process.
It is the application of experience to these varied inputs, coupled with
an extensive global in-house analytical resource, that the Board
believes gives the team the potential to deliver attractive returns.
As part of our process, the team meets with company management
teams before investing, as well as meeting with the management of all
portfolio companies at least once a year. The team will also engage
with non-executive board members, where appropriate.
In addition to portfolio companies, the team will attend meetings with
management teams of other companies in this dynamic Benchmark
over the course of a year, as it regularly reviews the investment cases of
companies not held in the portfolio. The team believe it is just as
important to understand why you don’t hold something as it is to know
why you do.
Dedicated team of ESG specialists
Schroders has always taken pride in our level of engagement with
companies. Our brand, as well as skilled analytical resource, affords us
the ability to regularly engage with companies on all aspects of
corporate strategy, including specific ESG/sustainability matters. We
are fortunate at Schroders to have a dedicated team of over
40 ESG/sustainability specialists. Their role is to provide proprietary
analytics and tools, and to work closely with investment teams to
analyse and engage with individual companies on these issues. The
team engage with the ESG/sustainability team regularly to ensure that
these factors inform the investment process.
The next table shows the number of shareholder resolutions the
Company has voted on in the last year and over three years.
Year ended 3 years to
30 September 2024 30 September 2024
Meetings 66 165
Resolutions 1,055 2,741
Votes against management 1.23% 1.63%
Did not vote 0 0
Source: Schroders
Responsible investment
The Company delegates to its Manager the responsibility for taking
ESG issues into account when assessing the selection, retention and
realisation of investments. The Board expects the Manager to engage
with investee companies on social, environmental and business ethics
issues and to promote best practice. The Board expects the Manager
to exercise the Company’s voting rights in consideration of these
issues.
In addition to the description of the Manager’s integration of ESG into
the investment process and the details in this report, a description of
the Manager’s policy on these matters can be found on the Schroders
website at: www.schroders.com. The Board notes that Schroders
believes that companies with good ESG management often perform
better and deliver superior returns over time. Engaging with
companies to understand how they approach ESG management is an
integral part of the investment process. Schroders has committed to
the UN Global Compact, amongst codes and standards, and
information about the application of Schroders’ sustainability and
responsible investment policies can be found at:
https://www.schroders.com/en/sustainability/corporateresponsibility/.
The Board has received reporting from the Manager on the
application of its policy.
Investment Approach and Process
continued
Schroder
UK Mid Cap Fund plc
13
Introduction Strategic Report Governance Financial Other Information (unaudited)
Investment Portfolio
as at 30 September 2024
Companies in bold are the 20 largest investments, which by value account for 58.3% (30 September 2023: 59.4%) of total investments.
All investments are equities, listed on a recognised stock exchange.
Industrials
QinetiQ 8,968 3.4
Grafton 7,572 2.9
Spectris 7,284 2.8
Oxford Instruments 5,844 2.2
Babcock 5,671 2.2
Chemring 5,590 2.2
Clarkson 4,777 1.8
Bodycote International 4,214 1.6
Mitie 3,422 1.3
Paypoint 3,312 1.3
Keller 3,228 1.2
Renishaw 2,768 1.1
Zigup 2,692 1.0
Total Industrials 65,342 25.0
Financials
Just Group 8,385 3.2
Paragon 8,158 3.1
Man Group 7,921 3.0
IG Group 7,682 2.9
Savills 7,104 2.7
Sirius 5,119 2.0
Lancashire 4,116 1.6
Safestore 4,034 1.5
Zegona 3,620 1.4
Workspace 3,245 1.2
Ashmore 1,782 0.7
Total Financials 61,166 23.3
Consumer Services
Inchcape 9,319 3.6
Dunelm 8,648 3.3
Mony Group 6,436 2.5
4Imprint 6,269 2.4
Pets At Home 5,497 2.1
WH Smith 4,374 1.7
Currys 2,904 1.1
Watches of Switzerland 2,433 0.9
Total Consumer Services 45,880 17.6
Consumer Goods
Cranswick 10,542 4.1
Games Workshop 8,753 3.3
Photo-Me 5,497 2.1
SSP Group 5,174 2.0
Britvic 2,803 1.1
Crest Nicholson 2,122 0.8
Total Consumer Goods 34,891 13.4
Healthcare
Genus 6,000 2.3
Spire Healthcare 4,089 1.6
Indivior 3165 1.2
Puretech Health 587 0.2
Total Healthcare 13,841 5.3
Basic Materials
Johnson Matthey 5,323 2.0
Victrex 3,985 1.5
Elementis 2,553 1.0
Ecora resources 1,336 0.5
Total Basic Materials 13,197 5.0
Technology
Computacenter 7,051 2.7
IP Group 3,503 1.3
Total Technology 10,554 4.0
Telecommunications
Telecom Plus 8,990 3.5
Total Telecommunications 8,990 3.5
Oil & Gas
Energean Oil and Gas 3,888 1.5
Harbour Energy 3,672 1.4
Total Oil & Gas 7,560 2.9
Total investments 261,421 100.0
£’000 % £’000 %
Introduction Strategic Report Governance Financial Other Information (unaudited)
Investment Portfolio
as at 30 September 2024
Companies in bold are the 20 largest investments, which by value account for 58.3% (30 September 2023: 59.4%) of total investments.
All investments are equities, listed on a recognised stock exchange.
Industrials
QinetiQ 8,968 3.4
Grafton 7,572 2.9
Spectris 7,284 2.8
Oxford Instruments 5,844 2.2
Babcock 5,671 2.2
Chemring 5,590 2.2
Clarkson 4,777 1.8
Bodycote International 4,214 1.6
Mitie 3,422 1.3
Paypoint 3,312 1.3
Keller 3,228 1.2
Renishaw 2,768 1.1
Zigup 2,692 1.0
Total Industrials 65,342 25.0
Financials
Just Group 8,385 3.2
Paragon 8,158 3.1
Man Group 7,921 3.0
IG Group 7,682 2.9
Savills 7,104 2.7
Sirius 5,119 2.0
Lancashire 4,116 1.6
Safestore 4,034 1.5
Zegona 3,620 1.4
Workspace 3,245 1.2
Ashmore 1,782 0.7
Total Financials 61,166 23.3
Consumer Services
Inchcape 9,319 3.6
Dunelm 8,648 3.3
Mony Group 6,436 2.5
4Imprint 6,269 2.4
Pets At Home 5,497 2.1
WH Smith 4,374 1.7
Currys 2,904 1.1
Watches of Switzerland 2,433 0.9
Total Consumer Services 45,880 17.6
Consumer Goods
Cranswick 10,542 4.1
Games Workshop 8,753 3.3
Photo-Me 5,497 2.1
SSP Group 5,174 2.0
Britvic 2,803 1.1
Crest Nicholson 2,122 0.8
Total Consumer Goods 34,891 13.4
Healthcare
Genus 6,000 2.3
Spire Healthcare 4,089 1.6
Indivior 3165 1.2
Puretech Health 587 0.2
Total Healthcare 13,841 5.3
Basic Materials
Johnson Matthey 5,323 2.0
Victrex 3,985 1.5
Elementis 2,553 1.0
Ecora resources 1,336 0.5
Total Basic Materials 13,197 5.0
Technology
Computacenter 7,051 2.7
IP Group 3,503 1.3
Total Technology 10,554 4.0
Telecommunications
Telecom Plus 8,990 3.5
Total Telecommunications 8,990 3.5
Oil & Gas
Energean Oil and Gas 3,888 1.5
Harbour Energy 3,672 1.4
Total Oil & Gas 7,560 2.9
Total investments 261,421 100.0
£’000 % £’000 %
14
Schroder
UK Mid Cap Fund plc
10 Year Financial Record
Definitions of terms and APMs are provided on pages 68 and 69.
At 30 September 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 184,260 192,718 226,577 229,734 226,424 199,524 277,569 187,393 213,823 242,966
NAV per share (pence) 509.8 533.2 632.0 640.8 633.5 569.0 791.6 541.9 618.3 702.6
Share price (pence) 462.5 435.4 524.5 538.0 540.0 458.5 730.0 480.0 544.0 616.0
Share price discount to NAV
per share* (%) 9.3 18.3 17.0 16.0 14.8 19.4 7.8 11.4 12.0 12.3
Net gearing* (%) (6.1) 1.5 (0.5) (3.0) 4.3 5.3 7.7 10.8 6.8 9.5
For the year ended 30 September 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue return after
taxation (£’000) 3,549 4,455 5,031 6,015 7,325 3,155 5,322 7,823 7,842 7,102
Revenue return per share
(pence) 9.82 12.33 13.96 16.78 20.43 8.92 15.18 22.43 22.68 20.54
Dividends per share (pence) 9.20 11.25 13.10 16.00 18.50 13.30 14.80 19.00 20.5 21.5
Ongoing charges* (%) 0.93 0.95 0.92 0.90 0.90 0.90 0.90 0.89 0.97 1.05
Performance 1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV total return* 100.0 105.0 100.8 124.6 130.8 136.1 119.0 193.6 130.7 153.4 180.2
Share price total
return* 100.0 108.2 115.2 139.4 144.3 146.9 135.6 192.3 134.6 158.3 185.7
Benchmark 100.0 112.7 122.4 139.8 145.6 145.9 123.6 174.2 127.5 144.8 175.8
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2014.
*Alternative Performance Measures.
NAV per share, share price and Benchmark total returns for the 10 years ended
30 September 2024 2
2
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2014.
NAV FTSE 250 ex Investment Trusts Index Share price
100
125
1 5 0
175
200
30-Sep-24 30-Sep-23 30-Sep-22 30-Sep-21 30-Sep-20 30-Sep-19 30-Sep-1 8 30-Sep-1 7 30-Sep-1 6 30-Sep-1 5 30-Sep-14
10 Year Financial Record
Definitions of terms and APMs are provided on pages 68 and 69.
At 30 September 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 184,260 192,718 226,577 229,734 226,424 199,524 277,569 187,393 213,823 242,966
NAV per share (pence) 509.8 533.2 632.0 640.8 633.5 569.0 791.6 541.9 618.3 702.6
Share price (pence) 462.5 435.4 524.5 538.0 540.0 458.5 730.0 480.0 544.0 616.0
Share price discount to NAV
per share* (%) 9.3 18.3 17.0 16.0 14.8 19.4 7.8 11.4 12.0 12.3
Net gearing* (%) (6.1) 1.5 (0.5) (3.0) 4.3 5.3 7.7 10.8 6.8 9.5
For the year ended 30 September 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue return after
taxation (£’000) 3,549 4,455 5,031 6,015 7,325 3,155 5,322 7,823 7,842 7,102
Revenue return per share
(pence) 9.82 12.33 13.96 16.78 20.43 8.92 15.18 22.43 22.68 20.54
Dividends per share (pence) 9.20 11.25 13.10 16.00 18.50 13.30 14.80 19.00 20.5 21.5
Ongoing charges* (%) 0.93 0.95 0.92 0.90 0.90 0.90 0.90 0.89 0.97 1.05
Performance 1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV total return* 100.0 105.0 100.8 124.6 130.8 136.1 119.0 193.6 130.7 153.4 180.2
Share price total
return* 100.0 108.2 115.2 139.4 144.3 146.9 135.6 192.3 134.6 158.3 185.7
Benchmark 100.0 112.7 122.4 139.8 145.6 145.9 123.6 174.2 127.5 144.8 175.8
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2014.
*Alternative Performance Measures.
NAV per share, share price and Benchmark total returns for the 10 years ended
30 September 2024 2
2
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2014.
NAV FTSE 250 ex Investment Trusts Index Share price
100
125
1 5 0
175
200
30-Sep-24 30-Sep-23 30-Sep-22 30-Sep-21 30-Sep-20 30-Sep-19 30-Sep-1 8 30-Sep-1 7 30-Sep-1 6 30-Sep-1 5 30-Sep-14
Schroder
UK Mid Cap Fund plc
15
Introduction Strategic Report Governance Financial Other Information (unaudited)
Business Review
Purpose, values and culture
The Company’s purpose is to create long-term shareholder value, in line with the investment objective.
The Company’s culture is driven by its values: transparency, engagement and rigour, with collegiate behaviour and constructive, robust
challenge. The values are all centred on achieving returns for shareholders in line with the Company’s investment objective. The Board also
promotes the effective management or mitigation of the risks faced by the Company and, to the extent it does not conflict with the investment
objective, aims for the Company’s operations to be structured, taking into account all its stakeholders and their impact on the environment and
community.
As the Company has no employees and acts through its service providers, its culture is represented by the values and behaviour of the Board
and third parties to which it delegates. The Board aims to fulfil the Company’s investment objective by encouraging a culture of constructive
challenge with all key suppliers and openness with all stakeholders. The Board is responsible for embedding the Company’s culture in the
Company’s operations.
Business model
The Board has appointed Schroder Unit Trusts Limited (“SUTL” or the “Manager”), to implement the investment strategy and to manage the
Company’s assets in line with the appropriate restrictions placed on it by the Board, including limits on the type and relative size of holdings
which may be held in the portfolio and on the use of gearing, cash, derivatives, and other financial instruments as appropriate.
The terms of the appointment of the Manager, and the delegation by the Manager of investment management services to Schroder Investment
Management Limited (“SIM” or the “Investment Manager”) are described more completely in the Directors’ Report. The Manager also promotes
the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company’s investment objective, as
demonstrated in the diagram below.
Investment trust status
Schroder UK Mid Cap Fund plc (the “Company”) is an investment trust whose Ordinary shares are listed on the London Stock Exchange. It has
been approved by HM Revenue & Customs as an investment trust in accordance with section 1158 of the Corporation Tax Act 2010, by way of
a one-off application and it is intended that the Company will continue to conduct its affairs in a manner which will enable it to retain this status.
The Company is domiciled in the UK and is an investment company within the meaning of section 833 of the Companies Act 2006. The
Company is not a “close” company for taxation purposes.
Investor
value
Strategy Board
Appoints Manager and
other service providers
to achieve objectives
Responsible for
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Sets objectives, strategy and key
performance indicators (“KPIs”)
–
Oversight
Oversees portfolio
management
Monitors achievement
of KPIs
Oversees the use of gearing
Oversees discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Manager implements
the investment strategy
by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the vehicle remains
attractive to investors
– that the fees and ongoing
charges remain competitive
Introduction Strategic Report Governance Financial Other Information (unaudited)
Business Review
Purpose, values and culture
The Company’s purpose is to create long-term shareholder value, in line with the investment objective.
The Company’s culture is driven by its values: transparency, engagement and rigour, with collegiate behaviour and constructive, robust
challenge. The values are all centred on achieving returns for shareholders in line with the Company’s investment objective. The Board also
promotes the effective management or mitigation of the risks faced by the Company and, to the extent it does not conflict with the investment
objective, aims for the Company’s operations to be structured, taking into account all its stakeholders and their impact on the environment and
community.
As the Company has no employees and acts through its service providers, its culture is represented by the values and behaviour of the Board
and third parties to which it delegates. The Board aims to fulfil the Company’s investment objective by encouraging a culture of constructive
challenge with all key suppliers and openness with all stakeholders. The Board is responsible for embedding the Company’s culture in the
Company’s operations.
Business model
The Board has appointed Schroder Unit Trusts Limited (“SUTL” or the “Manager”), to implement the investment strategy and to manage the
Company’s assets in line with the appropriate restrictions placed on it by the Board, including limits on the type and relative size of holdings
which may be held in the portfolio and on the use of gearing, cash, derivatives, and other financial instruments as appropriate.
The terms of the appointment of the Manager, and the delegation by the Manager of investment management services to Schroder Investment
Management Limited (“SIM” or the “Investment Manager”) are described more completely in the Directors’ Report. The Manager also promotes
the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company’s investment objective, as
demonstrated in the diagram below.
Investment trust status
Schroder UK Mid Cap Fund plc (the “Company”) is an investment trust whose Ordinary shares are listed on the London Stock Exchange. It has
been approved by HM Revenue & Customs as an investment trust in accordance with section 1158 of the Corporation Tax Act 2010, by way of
a one-off application and it is intended that the Company will continue to conduct its affairs in a manner which will enable it to retain this status.
The Company is domiciled in the UK and is an investment company within the meaning of section 833 of the Companies Act 2006. The
Company is not a “close” company for taxation purposes.
Investor
value
Strategy Board
Appoints Manager and
other service providers
to achieve objectives
Responsible for
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Sets objectives, strategy and key
performance indicators (“KPIs”)
–
Oversight
Oversees portfolio
management
Monitors achievement
of KPIs
Oversees the use of gearing
Oversees discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Manager implements
the investment strategy
by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the vehicle remains
attractive to investors
– that the fees and ongoing
charges remain competitive
16
Schroder
UK Mid Cap Fund plc
Business Review
continued
Investment model
Investment objective
The Company’s investment objective is to invest in mid cap equities
with the aim of providing a total return in excess of the FTSE 250
ex Investment Trusts Index.
Investment policy
The Manager applies a high conviction approach, managing
a focused portfolio of resilient companies that are all capable of
delivering excess risk-adjusted returns with rising cash flows and
earnings. Fundamental research forms the basis of each investment
decision taken by the Manager. The Company will predominantly
invest in companies from the FTSE 250 Index but may hold up to 20%
of its portfolio in equities and collective investment vehicles outside
the benchmark index which may include equities in companies
outside of the UK. The Company may also invest in other collective
investment vehicles where desirable, for example to provide exposure
to specialist areas within the universe. The Company has the ability to
use gearing for investment purposes up to 25% of total assets.
Investment restrictions and spread of investment risk
Risk in relation to the Company’s investments is spread as a result of
the Manager monitoring the Company’s portfolio with a view to
ensuring that the portfolio retains an appropriate balance to meet the
Company’s investment objective. The key restrictions imposed on the
Manager include:
(a) no more than 15% of the Company’s total net assets, at the date
of acquisition, may be invested in any one single company;
(b) no more than 10% of the value of the Company’s gross assets may
be invested in other listed investment companies unless such
companies have a stated investment policy not to invest more than
15% of their gross assets in other listed investment companies;
(c) no more than 15% of the Company’s gross assets may be
invested in other listed investment companies (including listed
investment trusts);
(d) no more than 15% of the Company’s total net assets may be
invested in open-ended funds; and
(e) no holding may represent 20% or more of the equity capital of
any company.
No breaches of these investment restrictions took place during the
financial year.
The investment portfolio on page 13 demonstrates that, as at
30 September 2024, the Company held 51 investments spread over
a range of industry sectors. The Board therefore believes that the
objective of spreading investment risk has been achieved and will
continue to be achieved as the Manager moves towards its target
focused portfolio of around 40-50 investments.
The Company’s financial instruments comprise its investment
portfolio, cash balances, including those held in money market funds,
bank borrowings and debtors and creditors that arise directly from its
operations such as sales and purchases awaiting settlement and
accrued income. The financial risk management objectives and
policies arising from its financial instruments and the exposure of the
Company to risk are disclosed in note 20 on pages 60 to 62.
Key performance indicators (“KPIs”)
The investment objective
The Board measures the development and success of the Company’s
business through achievement of the Company’s investment
objective, which is considered to be the most significant key
performance indicator for the Company.
Commentary on performance against the investment objective can
be found in the Chair’s Statement.
At each meeting, the Board considers a number of performance
indicators to assess the Company’s success in achieving its
investment objective. These are as follows: NAV total return; share
price total return; share price discount/premium to NAV per share
and ongoing charges. These are classed as Alternative Performance
Measures and their calculations are explained in more detail on
pages 68 and 69.
Performance against these indicators is reported on page 14.
NAV and share price total return
At each meeting, the Board reviews the performance of the portfolio
in detail and discusses the views of the portfolio managers with them.
Share price discount/premium to NAV per share
The Board reviews the level of share price discount to NAV at each
Board meeting and buys back shares where appropriate, taking
account of the interests of all shareholders.
Share issuance is also considered, where relevant, and at a premium to
NAV, in order to improve liquidity where this is in shareholders’ interests.
Ongoing charges
The Board reviews the Company’s ongoing charges to ensure that the
total costs incurred by shareholders in the running of the Company
remain competitive when measured against peer group funds. An
analysis of the Company’s costs, including management fees,
Directors’ fees and general expenses, is submitted to each Board
meeting. Management and any performance fees payable are
reviewed at least annually.
Revenue and dividend policy
The Board considers the payment of an interim and final dividend
annually, taking into account revenue generated during the year. The
net revenue return for the year, after finance costs and taxation, was
£7,102,000 (2023: £7,842,000), equivalent to a revenue return per
share of 20.54 pence (2023: 22.68 pence). The Board was pleased to
announce on 27 June 2024 an interim dividend of 6.0 pence per share
for the year ending 30 September 2024. The Directors have
recommended the payment of a final dividend for the year of
15.5 pence per share (2023: 15.0 pence) payable on 28 February
2025. The dividend will be payable to shareholders on the register on
31 January 2025 and the ex-dividend date will be 30 January 2025.
Gearing
The Company currently has in place a £30 million revolving credit
facility, of which £25 million was drawn down at 30 September 2024.
The facility expires on 26 February 2025. The Board of Directors expect
to renew the revolving credit facility subject to this being in
shareholders’ interests at the time of renewal.
In rising markets the gearing amplifies increases in the NAV and in
falling markets any reduction in NAV would be amplified by the
gearing. The Company’s gearing continues to be operated within
pre-agreed limits so that it does not exceed 25% of total assets. The
flexibility to utilise gearing remains an important tool in allowing the
Manager to pursue investment opportunities when appropriate.
Business Review
continued
Investment model
Investment objective
The Company’s investment objective is to invest in mid cap equities
with the aim of providing a total return in excess of the FTSE 250
ex Investment Trusts Index.
Investment policy
The Manager applies a high conviction approach, managing
a focused portfolio of resilient companies that are all capable of
delivering excess risk-adjusted returns with rising cash flows and
earnings. Fundamental research forms the basis of each investment
decision taken by the Manager. The Company will predominantly
invest in companies from the FTSE 250 Index but may hold up to 20%
of its portfolio in equities and collective investment vehicles outside
the benchmark index which may include equities in companies
outside of the UK. The Company may also invest in other collective
investment vehicles where desirable, for example to provide exposure
to specialist areas within the universe. The Company has the ability to
use gearing for investment purposes up to 25% of total assets.
Investment restrictions and spread of investment risk
Risk in relation to the Company’s investments is spread as a result of
the Manager monitoring the Company’s portfolio with a view to
ensuring that the portfolio retains an appropriate balance to meet the
Company’s investment objective. The key restrictions imposed on the
Manager include:
(a) no more than 15% of the Company’s total net assets, at the date
of acquisition, may be invested in any one single company;
(b) no more than 10% of the value of the Company’s gross assets may
be invested in other listed investment companies unless such
companies have a stated investment policy not to invest more than
15% of their gross assets in other listed investment companies;
(c) no more than 15% of the Company’s gross assets may be
invested in other listed investment companies (including listed
investment trusts);
(d) no more than 15% of the Company’s total net assets may be
invested in open-ended funds; and
(e) no holding may represent 20% or more of the equity capital of
any company.
No breaches of these investment restrictions took place during the
financial year.
The investment portfolio on page 13 demonstrates that, as at
30 September 2024, the Company held 51 investments spread over
a range of industry sectors. The Board therefore believes that the
objective of spreading investment risk has been achieved and will
continue to be achieved as the Manager moves towards its target
focused portfolio of around 40-50 investments.
The Company’s financial instruments comprise its investment
portfolio, cash balances, including those held in money market funds,
bank borrowings and debtors and creditors that arise directly from its
operations such as sales and purchases awaiting settlement and
accrued income. The financial risk management objectives and
policies arising from its financial instruments and the exposure of the
Company to risk are disclosed in note 20 on pages 60 to 62.
Key performance indicators (“KPIs”)
The investment objective
The Board measures the development and success of the Company’s
business through achievement of the Company’s investment
objective, which is considered to be the most significant key
performance indicator for the Company.
Commentary on performance against the investment objective can
be found in the Chair’s Statement.
At each meeting, the Board considers a number of performance
indicators to assess the Company’s success in achieving its
investment objective. These are as follows: NAV total return; share
price total return; share price discount/premium to NAV per share
and ongoing charges. These are classed as Alternative Performance
Measures and their calculations are explained in more detail on
pages 68 and 69.
Performance against these indicators is reported on page 14.
NAV and share price total return
At each meeting, the Board reviews the performance of the portfolio
in detail and discusses the views of the portfolio managers with them.
Share price discount/premium to NAV per share
The Board reviews the level of share price discount to NAV at each
Board meeting and buys back shares where appropriate, taking
account of the interests of all shareholders.
Share issuance is also considered, where relevant, and at a premium to
NAV, in order to improve liquidity where this is in shareholders’ interests.
Ongoing charges
The Board reviews the Company’s ongoing charges to ensure that the
total costs incurred by shareholders in the running of the Company
remain competitive when measured against peer group funds. An
analysis of the Company’s costs, including management fees,
Directors’ fees and general expenses, is submitted to each Board
meeting. Management and any performance fees payable are
reviewed at least annually.
Revenue and dividend policy
The Board considers the payment of an interim and final dividend
annually, taking into account revenue generated during the year. The
net revenue return for the year, after finance costs and taxation, was
£7,102,000 (2023: £7,842,000), equivalent to a revenue return per
share of 20.54 pence (2023: 22.68 pence). The Board was pleased to
announce on 27 June 2024 an interim dividend of 6.0 pence per share
for the year ending 30 September 2024. The Directors have
recommended the payment of a final dividend for the year of
15.5 pence per share (2023: 15.0 pence) payable on 28 February
2025. The dividend will be payable to shareholders on the register on
31 January 2025 and the ex-dividend date will be 30 January 2025.
Gearing
The Company currently has in place a £30 million revolving credit
facility, of which £25 million was drawn down at 30 September 2024.
The facility expires on 26 February 2025. The Board of Directors expect
to renew the revolving credit facility subject to this being in
shareholders’ interests at the time of renewal.
In rising markets the gearing amplifies increases in the NAV and in
falling markets any reduction in NAV would be amplified by the
gearing. The Company’s gearing continues to be operated within
pre-agreed limits so that it does not exceed 25% of total assets. The
flexibility to utilise gearing remains an important tool in allowing the
Manager to pursue investment opportunities when appropriate.
Promotion
The Company promotes its shares to a broad range of investors
including discretionary wealth managers, private investors, financial
advisers and institutions which have the potential to be long-term
supporters of the investment strategy. The Board seeks to achieve this
through its Manager and corporate broker, which promote the shares
of the Company through regular contact with both current and
potential shareholders.
These activities consist of investor lunches, one-on-one meetings,
webinars, regional road shows and attendances at conferences. In
addition, the Company’s shares are supported by the Manager’s wider
marketing of investment companies targeted at all types of investors.
This includes maintaining close relationships with adviser and
execution-only platforms, advertising in the trade press, maintaining
relationships with financial journalists and the provision of digital
information on Schroders’ website. Shareholder relations are given high
priority by both the Board and the Manager. The Board also seeks active
engagement with investors and meetings with the Chair are offered
where appropriate.
Shareholders are also encouraged to sign up to the Manager’s
Investment Trusts update, to receive information on the Company
directly: http://www.schroders.com/trust-updates/.
Schroder UK Mid Cap Fund plc 17
Introduction Strategic Report Governance Financial Other Information (unaudited)
The Company promotes its shares to a broad range of investors
including discretionary wealth managers, private investors, financial
advisers and institutions which have the potential to be long-term
supporters of the investment strategy. The Board seeks to achieve this
through its Manager and corporate broker, which promote the shares
of the Company through regular contact with both current and
potential shareholders.
These activities consist of investor lunches, one-on-one meetings,
webinars, regional road shows and attendances at conferences. In
addition, the Company’s shares are supported by the Manager’s wider
marketing of investment companies targeted at all types of investors.
This includes maintaining close relationships with adviser and
execution-only platforms, advertising in the trade press, maintaining
relationships with financial journalists and the provision of digital
information on Schroders’ website. Shareholder relations are given high
priority by both the Board and the Manager. The Board also seeks active
engagement with investors and meetings with the Chair are offered
where appropriate.
Shareholders are also encouraged to sign up to the Manager’s
Investment Trusts update, to receive information on the Company
directly: http://www.schroders.com/trust-updates/.
Schroder UK Mid Cap Fund plc 17
Introduction Strategic Report Governance Financial Other Information (unaudited)
18
Schroder
UK Mid Cap Fund plc
Business Review
continued
Stakeholder engagement
Section 172 of the Companies Act 2006
During the year under review, the Board discharged its duty under section 172 of the Companies Act 2006 to promote the success of the
Company for the benefit of its members as a whole, having regard to the interests of all stakeholders. As an externally managed investment
trust, the Company has no employees, operations or premises. The Board has identified its key stakeholders as the Company’s shareholders,
the Investment Manager, other service providers, investee companies and the Company’s lender. The table below explains how the Directors
have engaged with all stakeholders during the year and outlines the key activities undertaken. The key decisions made by the Board during the
year are set out following the table.
Stakeholder Significance Engagement 2023/2024 highlights
At the AGM in 2024 questions and
feedback from shareholders were
welcomed. The Board, along with the
Investment Manager, look forward to
meeting and interacting with more
shareholders at the forthcoming
AGM in February 2025.
The Company’s web pages continued
to be refreshed and enhanced during
the year to optimise the user
experience for shareholders and
investors. Shareholders can, via the
Company’s web pages, subscribe to
the Schroders investment trusts
newsletter to receive regular updates
on the Company.
The Investment Manager engaged
with a number of the Company’s
shareholders and investors during the
year and regular feedback was
provided to the Board. A number of
promotional activities were undertaken
during the year including Investment
Manager interviews, webinars, and
coverage in key publications.
The Board continued to work with
Kepler on promoting the Company
through its research notes which were
published twice during the year.
– AGM: The Company welcomes
attendance and participation from
shareholders at the AGM.
Shareholders have the opportunity
to meet the Directors and the
Investment Manager and to ask
questions. The Board values the
feedback it receives from
shareholders which is incorporated
into Board discussions.
– Publications: The annual and half
year results presentations, as well
as factsheets, are available on the
Company’s web pages with their
availability announced via the Stock
Exchange. Feedback and/or
questions received from
shareholders enable the Company
to evolve its reporting which, in turn,
helps to deliver transparent and
understandable updates.
– Shareholder communication:
The Investment Manager
communicates with shareholders
periodically. All investors are offered
the opportunity to meet the Chair,
Senior Independent Director, or
other Board members without
using the Manager or Company
Secretary as a conduit, by writing to
the Company’s registered office.
The Board also corresponds with
shareholders by letter and email.
The Board receives regular
feedback from its broker on investor
engagement and sentiment.
– Investor Relations updates: At
every Board meeting, the Directors
receive updates on share trading
activity, share price performance
and any shareholders’ feedback, as
well as any publications or
comments in the press. To gain a
deeper understanding of the views
of its shareholders and potential
investors, the Manager also
undertakes investor roadshows
throughout the year.
Continued shareholder support and
engagement are critical to the
continuing existence of the business
and the delivery of the long-term
strategy of its business.
Shareholders
Business Review
continued
Stakeholder engagement
Section 172 of the Companies Act 2006
During the year under review, the Board discharged its duty under section 172 of the Companies Act 2006 to promote the success of the
Company for the benefit of its members as a whole, having regard to the interests of all stakeholders. As an externally managed investment
trust, the Company has no employees, operations or premises. The Board has identified its key stakeholders as the Company’s shareholders,
the Investment Manager, other service providers, investee companies and the Company’s lender. The table below explains how the Directors
have engaged with all stakeholders during the year and outlines the key activities undertaken. The key decisions made by the Board during the
year are set out following the table.
Stakeholder Significance Engagement 2023/2024 highlights
At the AGM in 2024 questions and
feedback from shareholders were
welcomed. The Board, along with the
Investment Manager, look forward to
meeting and interacting with more
shareholders at the forthcoming
AGM in February 2025.
The Company’s web pages continued
to be refreshed and enhanced during
the year to optimise the user
experience for shareholders and
investors. Shareholders can, via the
Company’s web pages, subscribe to
the Schroders investment trusts
newsletter to receive regular updates
on the Company.
The Investment Manager engaged
with a number of the Company’s
shareholders and investors during the
year and regular feedback was
provided to the Board. A number of
promotional activities were undertaken
during the year including Investment
Manager interviews, webinars, and
coverage in key publications.
The Board continued to work with
Kepler on promoting the Company
through its research notes which were
published twice during the year.
– AGM: The Company welcomes
attendance and participation from
shareholders at the AGM.
Shareholders have the opportunity
to meet the Directors and the
Investment Manager and to ask
questions. The Board values the
feedback it receives from
shareholders which is incorporated
into Board discussions.
– Publications: The annual and half
year results presentations, as well
as factsheets, are available on the
Company’s web pages with their
availability announced via the Stock
Exchange. Feedback and/or
questions received from
shareholders enable the Company
to evolve its reporting which, in turn,
helps to deliver transparent and
understandable updates.
– Shareholder communication:
The Investment Manager
communicates with shareholders
periodically. All investors are offered
the opportunity to meet the Chair,
Senior Independent Director, or
other Board members without
using the Manager or Company
Secretary as a conduit, by writing to
the Company’s registered office.
The Board also corresponds with
shareholders by letter and email.
The Board receives regular
feedback from its broker on investor
engagement and sentiment.
– Investor Relations updates: At
every Board meeting, the Directors
receive updates on share trading
activity, share price performance
and any shareholders’ feedback, as
well as any publications or
comments in the press. To gain a
deeper understanding of the views
of its shareholders and potential
investors, the Manager also
undertakes investor roadshows
throughout the year.
Continued shareholder support and
engagement are critical to the
continuing existence of the business
and the delivery of the long-term
strategy of its business.
Shareholders
Stakeholder
Significance
Engagement
2023/2024 highlights
Representatives of the Investment
Manager attended each Board
meeting to provide an update on the
investment portfolio along with
presenting on macroeconomic issues.
The portfolio activities undertaken by
the Investment Manager and the
impact of decisions affecting
investment performance are set out in
the Investment Manager’s Review on
pages 6 to 9.
Maintaining a close and constructive
working relationship with the
Investment Manager is crucial as the
Board and the Investment Manager
both aim to continue to achieve
consistent, long-term returns in line
with the investment objective. The
Board invites the Investment Manager
to attend all Board and certain
Committee meetings in order to
update the Directors on the
performance of the investments and
the implementation of the investment
strategy and objective.
Important components in the Board’s
collaboration with the Investment
Manager are:
– Encouraging open discussion with
the Board;
– Recognising that the interests of
shareholders and the Investment
Manager (as well as of its other
clients) are, for the most part, well
aligned, adopting a tone of
constructive challenge, balanced
when those interests are not fully
congruent by robust negotiation of
the Investment Manager’s terms of
engagement; and
– Drawing on Directors’ individual
experience to support the Manager
in its monitoring and change
management of portfolio
companies, for the benefit of all of
the Investment Manager’s clients.
The Management Engagement
Committee reviews the performance of
the Investment Manager, its
remuneration and the discharge of its
contractual obligations at least annually.
Holding the Company’s shares offers
investors a liquid investment vehicle
through which they can obtain
exposure to the Company’s diversified
portfolio of investments.
The Investment Manager’s
performance is critical for the
Company to deliver its investment
strategy successfully and meet its
objective.
The Investment
Manager
The Board received regular updates on
engagement with investee companies
from the Investment Manager at its
board meetings.
During the year, the Investment
Manager engaged with many of its
investee companies and voted at
shareholder meetings (further details
can be found on page 12).
The Investment Management team
conducts face-to-face and/or virtual
meetings with the management teams
of all investee companies to
understand current trading and
prospects for their businesses, and to
ensure that their ESG investment
principles and approach are
understood.
The Investment Manager has
discretionary powers to exercise the
Company’s voting rights on resolutions
proposed by the investee companies
within the Company’s portfolio. The
Investment Manager report to the
Board on stewardship (including
voting) issues and the Board will
question the rationale for voting
decisions made.
By active engagement and exercising
voting rights, the Investment Manager
actively works with companies to
improve corporate standards,
transparency and accountability.
The Board is committed to responsible
investing and actively monitors the
activities of investee companies
through its delegation to the
Investment Manager.
Investee
companies
Schroder UK Mid Cap Fund plc 19
Introduction Strategic Report Governance Financial Other Information (unaudited)
Representatives of the Investment
Manager attended each Board
meeting to provide an update on the
investment portfolio along with
presenting on macroeconomic issues.
The portfolio activities undertaken by
the Investment Manager and the
impact of decisions affecting
investment performance are set out in
the Investment Manager’s Review on
pages 6 to 9.
Maintaining a close and constructive
working relationship with the
Investment Manager is crucial as the
Board and the Investment Manager
both aim to continue to achieve
consistent, long-term returns in line
with the investment objective. The
Board invites the Investment Manager
to attend all Board and certain
Committee meetings in order to
update the Directors on the
performance of the investments and
the implementation of the investment
strategy and objective.
Important components in the Board’s
collaboration with the Investment
Manager are:
– Encouraging open discussion with
the Board;
– Recognising that the interests of
shareholders and the Investment
Manager (as well as of its other
clients) are, for the most part, well
aligned, adopting a tone of
constructive challenge, balanced
when those interests are not fully
congruent by robust negotiation of
the Investment Manager’s terms of
engagement; and
– Drawing on Directors’ individual
experience to support the Manager
in its monitoring and change
management of portfolio
companies, for the benefit of all of
the Investment Manager’s clients.
The Management Engagement
Committee reviews the performance of
the Investment Manager, its
remuneration and the discharge of its
contractual obligations at least annually.
Holding the Company’s shares offers
investors a liquid investment vehicle
through which they can obtain
exposure to the Company’s diversified
portfolio of investments.
The Investment Manager’s
performance is critical for the
Company to deliver its investment
strategy successfully and meet its
objective.
The Investment
Manager
The Board received regular updates on
engagement with investee companies
from the Investment Manager at its
board meetings.
During the year, the Investment
Manager engaged with many of its
investee companies and voted at
shareholder meetings (further details
can be found on page 12).
The Investment Management team
conducts face-to-face and/or virtual
meetings with the management teams
of all investee companies to
understand current trading and
prospects for their businesses, and to
ensure that their ESG investment
principles and approach are
understood.
The Investment Manager has
discretionary powers to exercise the
Company’s voting rights on resolutions
proposed by the investee companies
within the Company’s portfolio. The
Investment Manager report to the
Board on stewardship (including
voting) issues and the Board will
question the rationale for voting
decisions made.
By active engagement and exercising
voting rights, the Investment Manager
actively works with companies to
improve corporate standards,
transparency and accountability.
The Board is committed to responsible
investing and actively monitors the
activities of investee companies
through its delegation to the
Investment Manager.
Investee
companies
Schroder UK Mid Cap Fund plc 19
Introduction Strategic Report Governance Financial Other Information (unaudited)
20
Schroder
UK Mid Cap Fund plc
Business Review
continued
Stakeholder Significance Engagement 2023/2024 highlights
Gearing is monitored and strict
restrictions on borrowings are
imposed: gearing continues to operate
within pre-agreed limits so as not to
exceed 25% of total assets.
The Board entered into a renewed
revolving credit facility agreement
with the Bank of Nova Scotia on
27 February 2024.
Considering how important the
availability of funding is, the Company
aims to demonstrate to lenders that it
is a well managed business and, in
particular, that the Board focuses
regularly and carefully on the
management of risk.
The Manager manages the
relationship with the Company’s lender
and reports to the Board at each
meeting as and when required for
renewals of terms or negotiation of
loan covenants. The Manager provides
a monthly statement of compliance of
the loan covenants to the lender.
Availability of funding and liquidity are
crucial to the Company’s ability to take
advantage of investment opportunities
as they arise.
Lender
Following a competitive tender process
the Board agreed to a change of its
auditor during the year. Under
delegated authority from the Board,
the Management Engagement
Committee reviewed all material
third-party service providers. The
Board considers the ongoing
appointments of its service providers
to be in the best interests of the
Company and its shareholders as
a whole and will monitor their
progress in the year ahead.
During the year, Directors were invited
to attend an internal controls briefing
session, hosted by the Manager which
assessed the internal controls of
certain key service providers including
the Company’s depositary and
custodian, HSBC, and the Company’s
registrar, Equiniti.
The Board maintains regular contact
with its key external providers, both
through the Board and Committee
meetings, as well as outside of the
regular meeting cycle. Their advice, as
well as their needs and views, are
routinely taken into account.
In order to operate as an investment
trust with a listing on the London Stock
Exchange, the Company relies on a
diverse range of advisers to support
meeting all relevant obligations.
Other service
providers
Further details of the ESG practices
can be found in the Investment
Process and Approach section of this
report.
The Board engages with the
Investment Manager at each Board
meeting in respect of its ESG
considerations on existing and new
investments.
Whilst strong long-term investment
performance is essential for an
investment trust, the Board recognises
that to provide an investment vehicle
that is sustainable over the long-term,
both it and the Investment Manager
must have regard to ethical and
environmental issues that impact
society. Hence ESG considerations are
integrated into the Investment
Manager’s investment process and will
continue to evolve.
Wider society
and the
environment
During the year, the Board took a number of key decisions which fall under the Section 172 scope as set out above:
• The declaration of a final dividend of 15p per Ordinary Share which, following approval by shareholders at the AGM on 24 February 2024,
was paid to shareholders on 15 March 2024.
• The Board and Management Engagement Committee undertook reviews of the Manager and the Company’s third party service providers
and agreed that their continued appointment and fees remained in the best interest of the Company and its stakeholders.
• The Audit and Risk Committee considered the audit provision for the Company and decided to undertake a competitive tender process
and in July 2024, announced the appointment of BDO LLP as the Company’s sole auditor.
• The Nomination Committee considered succession planning and initiated a recruitment process to appoint a new non-executive Director
following the retirement of Andrew Page in March 2024 and ahead of Robert Talbut’s retirement in February 2025.
Business Review
continued
Stakeholder Significance Engagement 2023/2024 highlights
Gearing is monitored and strict
restrictions on borrowings are
imposed: gearing continues to operate
within pre-agreed limits so as not to
exceed 25% of total assets.
The Board entered into a renewed
revolving credit facility agreement
with the Bank of Nova Scotia on
27 February 2024.
Considering how important the
availability of funding is, the Company
aims to demonstrate to lenders that it
is a well managed business and, in
particular, that the Board focuses
regularly and carefully on the
management of risk.
The Manager manages the
relationship with the Company’s lender
and reports to the Board at each
meeting as and when required for
renewals of terms or negotiation of
loan covenants. The Manager provides
a monthly statement of compliance of
the loan covenants to the lender.
Availability of funding and liquidity are
crucial to the Company’s ability to take
advantage of investment opportunities
as they arise.
Lender
Following a competitive tender process
the Board agreed to a change of its
auditor during the year. Under
delegated authority from the Board,
the Management Engagement
Committee reviewed all material
third-party service providers. The
Board considers the ongoing
appointments of its service providers
to be in the best interests of the
Company and its shareholders as
a whole and will monitor their
progress in the year ahead.
During the year, Directors were invited
to attend an internal controls briefing
session, hosted by the Manager which
assessed the internal controls of
certain key service providers including
the Company’s depositary and
custodian, HSBC, and the Company’s
registrar, Equiniti.
The Board maintains regular contact
with its key external providers, both
through the Board and Committee
meetings, as well as outside of the
regular meeting cycle. Their advice, as
well as their needs and views, are
routinely taken into account.
In order to operate as an investment
trust with a listing on the London Stock
Exchange, the Company relies on a
diverse range of advisers to support
meeting all relevant obligations.
Other service
providers
Further details of the ESG practices
can be found in the Investment
Process and Approach section of this
report.
The Board engages with the
Investment Manager at each Board
meeting in respect of its ESG
considerations on existing and new
investments.
Whilst strong long-term investment
performance is essential for an
investment trust, the Board recognises
that to provide an investment vehicle
that is sustainable over the long-term,
both it and the Investment Manager
must have regard to ethical and
environmental issues that impact
society. Hence ESG considerations are
integrated into the Investment
Manager’s investment process and will
continue to evolve.
Wider society
and the
environment
During the year, the Board took a number of key decisions which fall under the Section 172 scope as set out above:
• The declaration of a final dividend of 15p per Ordinary Share which, following approval by shareholders at the AGM on 24 February 2024,
was paid to shareholders on 15 March 2024.
• The Board and Management Engagement Committee undertook reviews of the Manager and the Company’s third party service providers
and agreed that their continued appointment and fees remained in the best interest of the Company and its stakeholders.
• The Audit and Risk Committee considered the audit provision for the Company and decided to undertake a competitive tender process
and in July 2024, announced the appointment of BDO LLP as the Company’s sole auditor.
• The Nomination Committee considered succession planning and initiated a recruitment process to appoint a new non-executive Director
following the retirement of Andrew Page in March 2024 and ahead of Robert Talbut’s retirement in February 2025.
Corporate and social responsibility
The Board recognises the Company’s responsibilities with respect to
corporate and social responsibility and engages with its outsourced
service providers to safeguard the Company’s interests. As part of this
ongoing monitoring, the Board receives reporting from its service
providers with respect to their anti-bribery and corruption policies;
Modern Slavery Act 2015 statements; diversity policies; financial crime
policies; greenhouse gas and energy usage reporting.
Diversity policy
The Board has adopted a diversity and inclusion policy. Appointments
and succession plans will always be based on merit and objective
criteria and, within this context, the Board seeks to promote diversity
of gender, social and ethnic backgrounds, cognitive and personal
strengths. The Board will encourage any recruitment agencies it
engages to find a range of candidates that meet the objective criteria
agreed for each appointment. Candidates for Board vacancies are
selected based on their skills and experience, which are matched
against the balance of skills and experience of the overall Board
taking into account the criteria for the role being offered.
Statement on Board diversity – gender and ethnic
background
The Board has made a commitment to consider diversity when
reviewing the composition of the Board and notes the Listing Rules
requirements (LR 6.6.6R(9) and (10)) regarding the targets on Board
diversity:
• at least 40% of individuals on the Board are women;
• at least one senior Board position is held by a woman; and
• at least one individual on the Board is from a minority ethnic
background.
The FCA defines senior Board positions as Chair, Chief Executive
Officer (“CEO”), Chief Financial Officer (“CFO”) or Senior Independent
Director (“SID”). As an investment trust with no executive officers, the
Company has no CEO or CFO. The Board has reflected the senior
positions of the Chair of the Board, and the SID in its diversity tables.
The Board has chosen to align its diversity reporting reference date
with the Company’s financial year end and proposes to maintain this
alignment for future reporting periods. The following information
has been provided by each Director through the completion of
a questionnaire.
As at 30 September 2024, the Company met two of the three criteria
including the target in relation to the number of women on the Board
and for at least one senior Board position to be held by a woman. The
target for at least one individual on the Board to be from a minority
ethnic background was not met, and the Board is conscious that
while the Directors are all independent and have a diverse range of
views and experience, its small composition will make these targets
challenging to fully implement. Recognising the benefits of a diverse
Board, it is intended that improving diversity will continue to be a key
consideration for the Board. There have been no changes since
30 September 2024 to the date of publication of the annual report
and financial statements.
The below tables set out the gender and ethnic diversity composition
of the Board as at 30 September 2024 and at the date of this report:
Gender identity
Number of
Number of Percentage senior
Board of the positions on
members Board the Board
Men 2 50% 1
Women 2 50% 1
Not specified/prefer not
to say – – –
Ethnic background
Number of
Number of Percentage senior
Board of the positions on
members Board the Board
White British or other White
(including minority-white
groups) 4 100% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black
British – – –
Other ethnic group, including
Arab – – –
Not specified/prefer not to say – – –
Financial crime policy
The Company continues to be committed to carrying out its business
fairly, honestly and openly. The Company operates a financial crime
policy, covering bribery and corruption, tax evasion, money
laundering, terrorist financing and sanctions, as well as seeking
confirmations that the Company’s service providers’ policies are
operating soundly.
Modern Slavery Act 2015
As an investment trust, the Company does not provide goods or
services in the normal course of business and does not have
customers. Accordingly, the Directors consider that the Company is
not required to make any slavery or human trafficking statement
under the Modern Slavery Act 2015.
Climate
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it has no
significant greenhouse gas emissions and energy usage to report.
Taskforce for Climate-Related Financial Disclosures
(“TCFD”)
Investment trusts are currently exempt from the TCFD. The Board will
continue to monitor the situation. However, the Company’s Manager
produces an annual product level disclosure consistent with the TCFD
which can be found here: https://api.schroders.com/document-
store/TCFD-GB52426M-Schroder%20UK%20Mid%20Cap.pdf.
Schroder UK Mid Cap Fund plc 21
Introduction Strategic Report Governance Financial Other Information (unaudited)
The Board recognises the Company’s responsibilities with respect to
corporate and social responsibility and engages with its outsourced
service providers to safeguard the Company’s interests. As part of this
ongoing monitoring, the Board receives reporting from its service
providers with respect to their anti-bribery and corruption policies;
Modern Slavery Act 2015 statements; diversity policies; financial crime
policies; greenhouse gas and energy usage reporting.
Diversity policy
The Board has adopted a diversity and inclusion policy. Appointments
and succession plans will always be based on merit and objective
criteria and, within this context, the Board seeks to promote diversity
of gender, social and ethnic backgrounds, cognitive and personal
strengths. The Board will encourage any recruitment agencies it
engages to find a range of candidates that meet the objective criteria
agreed for each appointment. Candidates for Board vacancies are
selected based on their skills and experience, which are matched
against the balance of skills and experience of the overall Board
taking into account the criteria for the role being offered.
Statement on Board diversity – gender and ethnic
background
The Board has made a commitment to consider diversity when
reviewing the composition of the Board and notes the Listing Rules
requirements (LR 6.6.6R(9) and (10)) regarding the targets on Board
diversity:
• at least 40% of individuals on the Board are women;
• at least one senior Board position is held by a woman; and
• at least one individual on the Board is from a minority ethnic
background.
The FCA defines senior Board positions as Chair, Chief Executive
Officer (“CEO”), Chief Financial Officer (“CFO”) or Senior Independent
Director (“SID”). As an investment trust with no executive officers, the
Company has no CEO or CFO. The Board has reflected the senior
positions of the Chair of the Board, and the SID in its diversity tables.
The Board has chosen to align its diversity reporting reference date
with the Company’s financial year end and proposes to maintain this
alignment for future reporting periods. The following information
has been provided by each Director through the completion of
a questionnaire.
As at 30 September 2024, the Company met two of the three criteria
including the target in relation to the number of women on the Board
and for at least one senior Board position to be held by a woman. The
target for at least one individual on the Board to be from a minority
ethnic background was not met, and the Board is conscious that
while the Directors are all independent and have a diverse range of
views and experience, its small composition will make these targets
challenging to fully implement. Recognising the benefits of a diverse
Board, it is intended that improving diversity will continue to be a key
consideration for the Board. There have been no changes since
30 September 2024 to the date of publication of the annual report
and financial statements.
The below tables set out the gender and ethnic diversity composition
of the Board as at 30 September 2024 and at the date of this report:
Gender identity
Number of
Number of Percentage senior
Board of the positions on
members Board the Board
Men 2 50% 1
Women 2 50% 1
Not specified/prefer not
to say – – –
Ethnic background
Number of
Number of Percentage senior
Board of the positions on
members Board the Board
White British or other White
(including minority-white
groups) 4 100% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black
British – – –
Other ethnic group, including
Arab – – –
Not specified/prefer not to say – – –
Financial crime policy
The Company continues to be committed to carrying out its business
fairly, honestly and openly. The Company operates a financial crime
policy, covering bribery and corruption, tax evasion, money
laundering, terrorist financing and sanctions, as well as seeking
confirmations that the Company’s service providers’ policies are
operating soundly.
Modern Slavery Act 2015
As an investment trust, the Company does not provide goods or
services in the normal course of business and does not have
customers. Accordingly, the Directors consider that the Company is
not required to make any slavery or human trafficking statement
under the Modern Slavery Act 2015.
Climate
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it has no
significant greenhouse gas emissions and energy usage to report.
Taskforce for Climate-Related Financial Disclosures
(“TCFD”)
Investment trusts are currently exempt from the TCFD. The Board will
continue to monitor the situation. However, the Company’s Manager
produces an annual product level disclosure consistent with the TCFD
which can be found here: https://api.schroders.com/document-
store/TCFD-GB52426M-Schroder%20UK%20Mid%20Cap.pdf.
Schroder UK Mid Cap Fund plc 21
Introduction Strategic Report Governance Financial Other Information (unaudited)
22
Schroder
UK Mid Cap Fund plc
Business Review
continued
Principal and emerging risks and uncertainties
The Board, itself and through its delegation to its Audit and Risk Committee, is responsible for the Company’s system of risk management and
internal control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company’s business
as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks,
which are monitored by the Audit and Risk Committee on an ongoing basis. This system assists the Board in determining the nature and extent
of the risks it is willing to take in achieving the Company’s strategic objectives.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and
ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee, including the incidence of
significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen
outcomes or contingencies that may have a material impact on the Company’s performance or condition.
Although the Board believes that it has a robust framework of internal controls in place this can provide only reasonable, and not absolute,
assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.
Both the principal risks and uncertainties and the monitoring system are also subject to robust review at least annually. The last assessment
took place in June 2024.
During the year, the Board discussed and monitored a number of risks that could potentially impact the Company’s ability to meet its strategic
objectives. The Board receives updates from the Investment Manager, Company Secretary and other service providers on emerging risks that
could affect the Company. The Board was mindful of the evolving global environment during the year; and the risks posed by volatile markets;
geopolitical uncertainty; and inflation and corresponding interest levels which could affect the asset class. However, these are not factors which
explicitly impacted the Company’s performance. These risks are seen as exacerbating existing risks and have been incorporated in the macro
factors, including the geopolitical/economic environment and climate change risk section in the table below.
The Board considered in detail whether there were any material emerging risks and has included the development of artificial intelligence and
regulatory divergence as emerging risks in the table below.
No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment throughout the
financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company
and that the internal control environment continues to operate effectively.
Actions taken by the Board and, where appropriate, its Committees, to manage and mitigate the Company’s principal risks and uncertainties are
set out in the table below. The “Change” column on the right highlights at a glance the Board’s assessment of any increases or decreases in risk
during the year after mitigation and management. The arrows show the risks as increased, decreased, or unchanged.
A full analysis of the financial risks facing the Company is set out in note 20 to the financial statements on pages 60 to 62.
Risk Mitigation and management Change
Strategy
Investment
The appropriateness of the Company’s investment remit
is periodically reviewed and the success of the Company
in meeting its stated objectives is monitored.
The share price relative to NAV per share is monitored
and the use of buy back authorities is considered on
a regular basis.
Marketing and distribution activity is actively reviewed.
The Company engages proactively with investors.
Strategic
The requirements of investors change or diverge in such
a way as to diverge from the Company’s investment
objectives, resulting in a wide discount of the share price
to underlying NAV per share.
The ongoing competitiveness of all service provider fees
is subject to periodic benchmarking against their
competitors.
Annual consideration of management fee levels is
undertaken.
Cost base
The Company’s cost base could become uncompetitive,
particularly in light of open ended alternatives.
Review of the Manager’s compliance with its agreed
investment restrictions, investment performance and risk
against investment objectives and strategy; relative
performance; the portfolio’s risk profile; and whether
appropriate strategies are employed to mitigate any
negative impact of substantial changes in markets. The
Manager also reports on the Company’s portfolio, and
the market generally.
Annual review of the ongoing suitability of the Manager,
including resources and key personnel risk.
Investment management
The Manager’s investment strategy, if inappropriate, may
result in the Company underperforming the market
and/or peer group companies, leading to the Company
and its objectives becoming unattractive to investors.
Business Review
continued
Principal and emerging risks and uncertainties
The Board, itself and through its delegation to its Audit and Risk Committee, is responsible for the Company’s system of risk management and
internal control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company’s business
as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks,
which are monitored by the Audit and Risk Committee on an ongoing basis. This system assists the Board in determining the nature and extent
of the risks it is willing to take in achieving the Company’s strategic objectives.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and
ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee, including the incidence of
significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen
outcomes or contingencies that may have a material impact on the Company’s performance or condition.
Although the Board believes that it has a robust framework of internal controls in place this can provide only reasonable, and not absolute,
assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.
Both the principal risks and uncertainties and the monitoring system are also subject to robust review at least annually. The last assessment
took place in June 2024.
During the year, the Board discussed and monitored a number of risks that could potentially impact the Company’s ability to meet its strategic
objectives. The Board receives updates from the Investment Manager, Company Secretary and other service providers on emerging risks that
could affect the Company. The Board was mindful of the evolving global environment during the year; and the risks posed by volatile markets;
geopolitical uncertainty; and inflation and corresponding interest levels which could affect the asset class. However, these are not factors which
explicitly impacted the Company’s performance. These risks are seen as exacerbating existing risks and have been incorporated in the macro
factors, including the geopolitical/economic environment and climate change risk section in the table below.
The Board considered in detail whether there were any material emerging risks and has included the development of artificial intelligence and
regulatory divergence as emerging risks in the table below.
No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment throughout the
financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company
and that the internal control environment continues to operate effectively.
Actions taken by the Board and, where appropriate, its Committees, to manage and mitigate the Company’s principal risks and uncertainties are
set out in the table below. The “Change” column on the right highlights at a glance the Board’s assessment of any increases or decreases in risk
during the year after mitigation and management. The arrows show the risks as increased, decreased, or unchanged.
A full analysis of the financial risks facing the Company is set out in note 20 to the financial statements on pages 60 to 62.
Risk Mitigation and management Change
Strategy
Investment
The appropriateness of the Company’s investment remit
is periodically reviewed and the success of the Company
in meeting its stated objectives is monitored.
The share price relative to NAV per share is monitored
and the use of buy back authorities is considered on
a regular basis.
Marketing and distribution activity is actively reviewed.
The Company engages proactively with investors.
Strategic
The requirements of investors change or diverge in such
a way as to diverge from the Company’s investment
objectives, resulting in a wide discount of the share price
to underlying NAV per share.
The ongoing competitiveness of all service provider fees
is subject to periodic benchmarking against their
competitors.
Annual consideration of management fee levels is
undertaken.
Cost base
The Company’s cost base could become uncompetitive,
particularly in light of open ended alternatives.
Review of the Manager’s compliance with its agreed
investment restrictions, investment performance and risk
against investment objectives and strategy; relative
performance; the portfolio’s risk profile; and whether
appropriate strategies are employed to mitigate any
negative impact of substantial changes in markets. The
Manager also reports on the Company’s portfolio, and
the market generally.
Annual review of the ongoing suitability of the Manager,
including resources and key personnel risk.
Investment management
The Manager’s investment strategy, if inappropriate, may
result in the Company underperforming the market
and/or peer group companies, leading to the Company
and its objectives becoming unattractive to investors.
Risk
Mitigation and management
Change
Investment
Compliance
Operational
Gearing is monitored and strict restrictions on
borrowings are imposed: gearing continues to operate
within pre-agreed limits so as not to exceed 25% of total
assets.
The Manager is currently in discussion with several
providers to secure new borrowing facilities upon expiry
of the Company’s current facilities in February 2025. If a
new loan cannot be arranged with acceptable terms, the
Board is satisfied that this does not represent a significant
risk to the Company since it has sufficient readily
realisable assets to repay the loan.
The Board also reviews the cost of gearing.
Gearing and leverage
The Company utilises credit facilities. These arrangements
increase the funds available for investment through
borrowing. While this has the potential to enhance
investment returns in rising markets, in falling markets
the impact could be detrimental to performance.
The confirmation of compliance with relevant laws and
regulations by key service providers is reviewed.
Shareholder documents and announcements, including
the Company’s published annual report are subject to
stringent review processes.
Procedures are established to safeguard against the
disclosure of inside information.
Accounting, legal and regulatory
In order to continue to qualify as an investment trust, the
Company must comply with the requirements of section
1158 of the Corporation Tax Act 2010.
Breaches of the UK Listing Rules, the Companies Act or
other regulations with which the Company is required to
comply, could lead to a number of detrimental outcomes.
Service providers are appointed subject to due diligence
processes and with clearly-documented contractual
arrangements detailing service expectations.
Regular reports are provided by key service providers and
the quality of their services is monitored.
Review of annual audited internal controls reports from
key service providers, including confirmation of business
continuity arrangements and IT controls is undertaken.
Service provider
The Company has no employees and has delegated
certain functions to a number of service providers. Failure
of controls, including as a result of cyber hacking, and
poor performance of any service provider, could lead to
disruption, reputational damage or loss.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate any negative impact of
substantial changes in markets are discussed with the
Manager. See note 20 of the notes to the financial
statements.
Financial and market risk
The Company is exposed to the effect of market
fluctuations due to the nature of its business. A significant
fall in equity markets could have an adverse impact on
the market value of the Company’s underlying
investments.
The depositary reports on the safe custody of the
Company’s assets, including cash and portfolio holdings
which are independently reconciled with the Manager’s
records.
The review of audited internal controls reports covering
custodial arrangements is undertaken.
An annual report from the depositary on its activities,
including matters arising from custody operations is
received.
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the depositary,
including cyber hacking.
Service providers report on cyber risk mitigation and
management at least annually, which includes
confirmation of business continuity capability in the event
of a cyber attack.
Cyber
The Company’s service providers are all exposed to the
risk of cyber attacks. Cyber attacks could lead to loss of
personal or confidential information or disrupt
operations.
Schroder UK Mid Cap Fund plc 23
Introduction Strategic Report Governance Financial Other Information (unaudited)
Investment
Compliance
Operational
Gearing is monitored and strict restrictions on
borrowings are imposed: gearing continues to operate
within pre-agreed limits so as not to exceed 25% of total
assets.
The Manager is currently in discussion with several
providers to secure new borrowing facilities upon expiry
of the Company’s current facilities in February 2025. If a
new loan cannot be arranged with acceptable terms, the
Board is satisfied that this does not represent a significant
risk to the Company since it has sufficient readily
realisable assets to repay the loan.
The Board also reviews the cost of gearing.
Gearing and leverage
The Company utilises credit facilities. These arrangements
increase the funds available for investment through
borrowing. While this has the potential to enhance
investment returns in rising markets, in falling markets
the impact could be detrimental to performance.
The confirmation of compliance with relevant laws and
regulations by key service providers is reviewed.
Shareholder documents and announcements, including
the Company’s published annual report are subject to
stringent review processes.
Procedures are established to safeguard against the
disclosure of inside information.
Accounting, legal and regulatory
In order to continue to qualify as an investment trust, the
Company must comply with the requirements of section
1158 of the Corporation Tax Act 2010.
Breaches of the UK Listing Rules, the Companies Act or
other regulations with which the Company is required to
comply, could lead to a number of detrimental outcomes.
Service providers are appointed subject to due diligence
processes and with clearly-documented contractual
arrangements detailing service expectations.
Regular reports are provided by key service providers and
the quality of their services is monitored.
Review of annual audited internal controls reports from
key service providers, including confirmation of business
continuity arrangements and IT controls is undertaken.
Service provider
The Company has no employees and has delegated
certain functions to a number of service providers. Failure
of controls, including as a result of cyber hacking, and
poor performance of any service provider, could lead to
disruption, reputational damage or loss.
The risk profile of the portfolio is considered and
appropriate strategies to mitigate any negative impact of
substantial changes in markets are discussed with the
Manager. See note 20 of the notes to the financial
statements.
Financial and market risk
The Company is exposed to the effect of market
fluctuations due to the nature of its business. A significant
fall in equity markets could have an adverse impact on
the market value of the Company’s underlying
investments.
The depositary reports on the safe custody of the
Company’s assets, including cash and portfolio holdings
which are independently reconciled with the Manager’s
records.
The review of audited internal controls reports covering
custodial arrangements is undertaken.
An annual report from the depositary on its activities,
including matters arising from custody operations is
received.
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the depositary,
including cyber hacking.
Service providers report on cyber risk mitigation and
management at least annually, which includes
confirmation of business continuity capability in the event
of a cyber attack.
Cyber
The Company’s service providers are all exposed to the
risk of cyber attacks. Cyber attacks could lead to loss of
personal or confidential information or disrupt
operations.
Schroder UK Mid Cap Fund plc 23
Introduction Strategic Report Governance Financial Other Information (unaudited)
24
Schroder
UK Mid Cap Fund plc
Business Review
continued
Risk Mitigation and management Change
Operational
Emerging risks
The Board has, in conjunction with the Manager,
considered the risks relating to elevated levels of price
inflation, generally, together with the evolution in the way
that supply chains are operating and the concomitant
risks of rising supplier costs and availability of supply. It is
the Board’s view that these considerations should be
assessed as a principal risk as although the previously
elevated levels of inflation have now decreased, there is
still scope for them to increase again in the near term.
The key mitigation to these risks comes from diligent
appraisal and monitoring of investments by the Manager,
including engagement with the management of investee
companies, together with a critical assessment of
investee companies’ ability to pass on rising costs to
customers as a result of their pricing power and strong
market positions alongside their ability to control costs.
Inflation and Global supply chain risk
Rising supplier costs and availability of supply.
The Manager has developed a range of proprietary tools
to better understand the impacts of climate change on
the portfolio. The investment process applied by the
portfolio managers is ESG “integrated”. The Manager
monitors the emissions of investee companies and can
engage with companies to reduce their emissions or aim
to invest in companies committed to reaching net zero
carbon emissions. The Board receives updates from the
Manager at Board meetings and continues to engage
with the Manager and the Schroders sustainability team
to discuss ESG matters, including climate change. The
Board has challenged the Manager regarding the need to
carefully consider and monitor sustainability and
environmental and societal impacts when assessing
investment opportunities, in addition to the well founded
attention to good corporate governance principles, which
have been in place for many years.
Climate change risk
A failure to understand the pricing of assets affected by
climate change or a lower demand for impacted assets
could lead to poor investment decisions or more volatile
pricing as asset prices adjust to reflect the increasing
regulation of carbon emissions.
The Board continues to monitor relevant political and
geopolitical events to the extent that they apply to the
Company.
The Board continues to receive regular updates on the
current issues and potential risks from the Manager for
discussion.
The Board routinely evaluates thematic and factor risks,
stock selection, and the use of leverage. The Board have
established investment restrictions and guidelines, which
are monitored and reported by the Manager.
The Board is mindful that changes to public policy in the
UK, could impact the company’s investment strategy,
objectives, and performance in the future.
The Board is mindful that recent political changes in the
United States of America (“USA”) could lead to an increase
in trade frictions which could cause disruptions.
Political risk
Political risk includes the potential for political,
socio-economic and regional tensions such as diplomatic
conflicts, trade wars and military actions, globally as well
as in the UK specifically.
Artificial Intelligence (“AI”)
The development of AI presents potential risks and opportunities to businesses in almost every sector. The extent of the risk presented by AI is
extremely hard to assess at this point but the Board considers that it is an emerging risk and together with the Manager will monitor
developments in this area.
Regulatory Divergence
Given recent political changes in the USA, there is risk of regulatory divergence between the UK and Europe, and the USA, with the USA more
likely to favour a de-regulated approach. This might make the UK market less attractive in comparison, creating a competitive threat and
potentially having implications for UK companies.
Business Review
continued
Risk Mitigation and management Change
Operational
Emerging risks
The Board has, in conjunction with the Manager,
considered the risks relating to elevated levels of price
inflation, generally, together with the evolution in the way
that supply chains are operating and the concomitant
risks of rising supplier costs and availability of supply. It is
the Board’s view that these considerations should be
assessed as a principal risk as although the previously
elevated levels of inflation have now decreased, there is
still scope for them to increase again in the near term.
The key mitigation to these risks comes from diligent
appraisal and monitoring of investments by the Manager,
including engagement with the management of investee
companies, together with a critical assessment of
investee companies’ ability to pass on rising costs to
customers as a result of their pricing power and strong
market positions alongside their ability to control costs.
Inflation and Global supply chain risk
Rising supplier costs and availability of supply.
The Manager has developed a range of proprietary tools
to better understand the impacts of climate change on
the portfolio. The investment process applied by the
portfolio managers is ESG “integrated”. The Manager
monitors the emissions of investee companies and can
engage with companies to reduce their emissions or aim
to invest in companies committed to reaching net zero
carbon emissions. The Board receives updates from the
Manager at Board meetings and continues to engage
with the Manager and the Schroders sustainability team
to discuss ESG matters, including climate change. The
Board has challenged the Manager regarding the need to
carefully consider and monitor sustainability and
environmental and societal impacts when assessing
investment opportunities, in addition to the well founded
attention to good corporate governance principles, which
have been in place for many years.
Climate change risk
A failure to understand the pricing of assets affected by
climate change or a lower demand for impacted assets
could lead to poor investment decisions or more volatile
pricing as asset prices adjust to reflect the increasing
regulation of carbon emissions.
The Board continues to monitor relevant political and
geopolitical events to the extent that they apply to the
Company.
The Board continues to receive regular updates on the
current issues and potential risks from the Manager for
discussion.
The Board routinely evaluates thematic and factor risks,
stock selection, and the use of leverage. The Board have
established investment restrictions and guidelines, which
are monitored and reported by the Manager.
The Board is mindful that changes to public policy in the
UK, could impact the company’s investment strategy,
objectives, and performance in the future.
The Board is mindful that recent political changes in the
United States of America (“USA”) could lead to an increase
in trade frictions which could cause disruptions.
Political risk
Political risk includes the potential for political,
socio-economic and regional tensions such as diplomatic
conflicts, trade wars and military actions, globally as well
as in the UK specifically.
Artificial Intelligence (“AI”)
The development of AI presents potential risks and opportunities to businesses in almost every sector. The extent of the risk presented by AI is
extremely hard to assess at this point but the Board considers that it is an emerging risk and together with the Manager will monitor
developments in this area.
Regulatory Divergence
Given recent political changes in the USA, there is risk of regulatory divergence between the UK and Europe, and the USA, with the USA more
likely to favour a de-regulated approach. This might make the UK market less attractive in comparison, creating a competitive threat and
potentially having implications for UK companies.
Schroder
UK Mid Cap Fund plc
25
Introduction Strategic Report Governance Financial Other Information (unaudited)
Viability statement
The Directors have assessed the viability of the Company over
a five year period, taking into account the Company’s position at
30 September 2024 and the potential impact of the principal and
emerging risks and uncertainties it faces for the review period. The
Directors have assessed the Company’s operational resilience and
they are satisfied that the Company’s outsourced service providers
will continue to operate effectively, following the implementation of
their business continuity plans.
A period of five years has been chosen as the Board believes that this
reflects a suitable time horizon for strategic planning, taking into
account the investment policy, liquidity of investments, potential
impact of economic cycles, nature of operating costs, dividends and
availability of funding. This time period also reflects the average
holding period of an investment.
In its assessment of the viability of the Company, the Directors have
considered each of the Company’s principal risks and uncertainties
detailed on pages 22 to 24 and in particular the impact of a significant
fall in regional equity markets on the value of the Company’s
investment portfolio. The Directors have also considered the
Company’s income and expenditure projections and the fact that the
Company’s investments comprise readily realisable securities which
can be sold to meet funding requirements if necessary.
The Directors have also considered a stress test which represents
a severe but plausible scenario along with movement in foreign
exchange rates. This scenario assumes a severe stock market collapse
and/or exchange rate movements at the beginning of the five year
period, resulting in a 50% fall in the value of the Company’s
investments and investment income and no subsequent recovery in
either prices or income in the following five years. It is assumed that
the Company continues to pay an annual dividend in line with current
levels and that the borrowing facility is repaid through the proceeds
of equity sales.
The Company’s investments comprise highly liquid, large, listed
companies and so its assets are readily realisable securities and could
be sold to meet funding requirements or the repayment of the
gearing facility should the need arise. There is no expectation that the
nature of the investments held within the portfolio will be materially
different in the future.
The Company’s loan facility is due to expire in February 2025. If
acceptable terms are available from the existing lenders, or any
alternative, the Company would expect to continue to access an
equivalent facility. However, should these terms not be forthcoming,
the outstanding borrowing attributable to this facility would be repaid
through the proceeds of equity sales.
The operating costs of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position. Furthermore, the Company
has no employees and consequently no redundancy or other
employment related liabilities.
The Board reviews the performance of the Company’s service
providers regularly, including the Manager, along with internal
controls reports to provide assurance regarding the effective
operation of internal controls as reported on by their reporting
accountants. The Board also considers the business continuity
arrangements of the Company’s key service providers.
The Board monitors the portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity risk and financial controls at
its quarterly meetings.
Although there continue to be regulatory changes which could
increase costs or impact revenue, the Directors do not believe that
this would be sufficient to affect its viability.
The Board has assumed that the business model of a closed ended
investment company, as well as the Company’s investment objective,
will continue to be attractive to investors. The Directors also
considered the beneficial tax treatment the Company is eligible for as
an investment trust. If changes to these taxation arrangements were
to be made it would affect the viability of the Company to act as an
effective investment vehicle.
Based on the above the Directors have concluded that there is
a reasonable expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over the five year
period of their assessment.
Going concern
The Directors have assessed the principal risks, the impact of the
emerging risks and uncertainties and the matters referred to in the
viability statement. Based on the work the Directors have performed,
they have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant
doubt on the Company’s ability to continue as a going concern for
a period of at least 12 months from the date the financial statements
were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
27 November 2024
Introduction Strategic Report Governance Financial Other Information (unaudited)
Viability statement
The Directors have assessed the viability of the Company over
a five year period, taking into account the Company’s position at
30 September 2024 and the potential impact of the principal and
emerging risks and uncertainties it faces for the review period. The
Directors have assessed the Company’s operational resilience and
they are satisfied that the Company’s outsourced service providers
will continue to operate effectively, following the implementation of
their business continuity plans.
A period of five years has been chosen as the Board believes that this
reflects a suitable time horizon for strategic planning, taking into
account the investment policy, liquidity of investments, potential
impact of economic cycles, nature of operating costs, dividends and
availability of funding. This time period also reflects the average
holding period of an investment.
In its assessment of the viability of the Company, the Directors have
considered each of the Company’s principal risks and uncertainties
detailed on pages 22 to 24 and in particular the impact of a significant
fall in regional equity markets on the value of the Company’s
investment portfolio. The Directors have also considered the
Company’s income and expenditure projections and the fact that the
Company’s investments comprise readily realisable securities which
can be sold to meet funding requirements if necessary.
The Directors have also considered a stress test which represents
a severe but plausible scenario along with movement in foreign
exchange rates. This scenario assumes a severe stock market collapse
and/or exchange rate movements at the beginning of the five year
period, resulting in a 50% fall in the value of the Company’s
investments and investment income and no subsequent recovery in
either prices or income in the following five years. It is assumed that
the Company continues to pay an annual dividend in line with current
levels and that the borrowing facility is repaid through the proceeds
of equity sales.
The Company’s investments comprise highly liquid, large, listed
companies and so its assets are readily realisable securities and could
be sold to meet funding requirements or the repayment of the
gearing facility should the need arise. There is no expectation that the
nature of the investments held within the portfolio will be materially
different in the future.
The Company’s loan facility is due to expire in February 2025. If
acceptable terms are available from the existing lenders, or any
alternative, the Company would expect to continue to access an
equivalent facility. However, should these terms not be forthcoming,
the outstanding borrowing attributable to this facility would be repaid
through the proceeds of equity sales.
The operating costs of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position. Furthermore, the Company
has no employees and consequently no redundancy or other
employment related liabilities.
The Board reviews the performance of the Company’s service
providers regularly, including the Manager, along with internal
controls reports to provide assurance regarding the effective
operation of internal controls as reported on by their reporting
accountants. The Board also considers the business continuity
arrangements of the Company’s key service providers.
The Board monitors the portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity risk and financial controls at
its quarterly meetings.
Although there continue to be regulatory changes which could
increase costs or impact revenue, the Directors do not believe that
this would be sufficient to affect its viability.
The Board has assumed that the business model of a closed ended
investment company, as well as the Company’s investment objective,
will continue to be attractive to investors. The Directors also
considered the beneficial tax treatment the Company is eligible for as
an investment trust. If changes to these taxation arrangements were
to be made it would affect the viability of the Company to act as an
effective investment vehicle.
Based on the above the Directors have concluded that there is
a reasonable expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over the five year
period of their assessment.
Going concern
The Directors have assessed the principal risks, the impact of the
emerging risks and uncertainties and the matters referred to in the
viability statement. Based on the work the Directors have performed,
they have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant
doubt on the Company’s ability to continue as a going concern for
a period of at least 12 months from the date the financial statements
were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
27 November 2024
26
Governance
27
Governance
Board of Directors 28
Directors’ Report 30
Audit and Risk Committee Report 33
Management Engagement Committee Report 36
Nomination Committee Report 37
Remuneration Committee Report 39
Directors’ Remuneration Report 40
Statement of Directors’ Responsibilities 43
27
Governance
Board of Directors 28
Directors’ Report 30
Audit and Risk Committee Report 33
Management Engagement Committee Report 36
Nomination Committee Report 37
Remuneration Committee Report 39
Directors’ Remuneration Report 40
Statement of Directors’ Responsibilities 43
28
Schroder
UK Mid Cap Fund plc
Board of Directors
Robert Talbut
Status: Chair
Length of service: eight years – appointed as a Director
in February 2016.
Experience: Mr Talbut is Director of JPMorgan American Investment
Trust plc and Pacific Assets Trust plc. He was formerly the chief
investment officer of Royal London Asset Management and has over
30 years of experience in the asset management industry. He has
represented the asset management industry through the
chairmanship of both the ABI Investment Committee and the Asset
Management Committee of the Investment Association. He was also
a member of the Financial Conduct Authority’s Listing Advisory Panel.
Committee membership: Audit and Risk Committee, Management
Engagement Committee (Chair), Nomination Committee (Chair),
Remuneration Committee.
Contribution to the Board and its Committees: Mr Talbut brings
substantial expertise to the Board with over three decades of
experience in asset management. His other investment trust roles,
combined with his chairmanship of key industry committees and
involvement with the Financial Conduct Authority’s Listing Advisory
Panel, provide the Board with strategic, regulatory, and investment
insights.
Remuneration for the year ended 30 September 2024: £42,000
per annum.
Number of shares held: 8,176*
Wendy Colquhoun
Status: Director and Senior Independent Director
Length of service: four years – appointed as a Director
in January 2020.
Experience: Ms Colquhoun is Chair of Henderson Opportunities
Trust plc, Director of Capital Gearing Trust plc, and Murray
International Trust plc. She was formerly a qualified solicitor and
a senior corporate partner at CMS Cameron McKenna Nabarro
Olswang LLP where she specialised in financial services. She has
extensive experience of investment trusts having advised investment
trust clients for over 25 years.
Committee membership: Audit and Risk Committee, Management
Engagement Committee, Nomination Committee, Remuneration
Committee.
Contribution to the Board and its Committees: Ms Colquhoun
brings extensive expertise to the Board with over two decades of
experience advising investment trust boards. Her background as
a qualified solicitor and senior corporate partner at CMS Cameron
McKenna Nabarro Olswang LLP, specialising in financial services,
further equips her with invaluable legal and transactional insights for
the Board.
Remuneration for the year ended 30 September 2024: £28,350
per annum.
Number of shares held: 2,000*
*Shareholdings are as at 27 November 2024 and include the holdings of connected persons. Full details of Directors’ shareholdings are set out in the Directors’
Remuneration Report on page 42.
Board of Directors
Robert Talbut
Status: Chair
Length of service: eight years – appointed as a Director
in February 2016.
Experience: Mr Talbut is Director of JPMorgan American Investment
Trust plc and Pacific Assets Trust plc. He was formerly the chief
investment officer of Royal London Asset Management and has over
30 years of experience in the asset management industry. He has
represented the asset management industry through the
chairmanship of both the ABI Investment Committee and the Asset
Management Committee of the Investment Association. He was also
a member of the Financial Conduct Authority’s Listing Advisory Panel.
Committee membership: Audit and Risk Committee, Management
Engagement Committee (Chair), Nomination Committee (Chair),
Remuneration Committee.
Contribution to the Board and its Committees: Mr Talbut brings
substantial expertise to the Board with over three decades of
experience in asset management. His other investment trust roles,
combined with his chairmanship of key industry committees and
involvement with the Financial Conduct Authority’s Listing Advisory
Panel, provide the Board with strategic, regulatory, and investment
insights.
Remuneration for the year ended 30 September 2024: £42,000
per annum.
Number of shares held: 8,176*
Wendy Colquhoun
Status: Director and Senior Independent Director
Length of service: four years – appointed as a Director
in January 2020.
Experience: Ms Colquhoun is Chair of Henderson Opportunities
Trust plc, Director of Capital Gearing Trust plc, and Murray
International Trust plc. She was formerly a qualified solicitor and
a senior corporate partner at CMS Cameron McKenna Nabarro
Olswang LLP where she specialised in financial services. She has
extensive experience of investment trusts having advised investment
trust clients for over 25 years.
Committee membership: Audit and Risk Committee, Management
Engagement Committee, Nomination Committee, Remuneration
Committee.
Contribution to the Board and its Committees: Ms Colquhoun
brings extensive expertise to the Board with over two decades of
experience advising investment trust boards. Her background as
a qualified solicitor and senior corporate partner at CMS Cameron
McKenna Nabarro Olswang LLP, specialising in financial services,
further equips her with invaluable legal and transactional insights for
the Board.
Remuneration for the year ended 30 September 2024: £28,350
per annum.
Number of shares held: 2,000*
*Shareholdings are as at 27 November 2024 and include the holdings of connected persons. Full details of Directors’ shareholdings are set out in the Directors’
Remuneration Report on page 42.
Schroder
UK Mid Cap Fund plc
29
Other Information (unaudited) Introduction Strategic Report Governance Financial
Helen Galbraith
Status: Director and Chair of the Audit and Risk
Committee
Length of service: two years – appointed as a Director in April 2022.
Experience: Ms Galbraith is Audit Chair of CT UK High Income Trust
plc and Chair of Orwell Housing Association. She was formerly Head
of Investor Relations at Aviva plc, Head of Global Equities at Aviva
Investors and has over 20 years’ experience in the insurance and
asset management industry. She is a Chartered Financial Analyst and
a passionate advocate of financial education for children having
established an online platform.
Committee membership: Audit and Risk Committee (Chair),
Management Engagement Committee, Nomination Committee,
Remuneration Committee.
Contribution to the Board and its Committees: Ms Galbraith
brings to the Board extensive asset management knowledge. Her
roles as Audit Chair and Chair at other organisations provide her with
significant experience and expertise when Chairing the Audit and Risk
Committee for the Company. Her previous roles, coupled with her
Chartered Financial Analyst qualification, enhance the Board’s
financial and strategic capabilities. Additionally, her involvement in the
social housing sector underscores her dedication to societal impact.
Remuneration for the year ended 30 September 2024: £31,593
per annum.
Number of shares held: 5,500*
Harry Morley
Status: Director, Chair of the Remuneration Committee
and Chair Designate
Length of service: one year – appointed as a Director
in September 2023.
Experience: Mr Morley was CEO of Armajaro Asset Management LLP
and was the co-founder and CFO of Tragus Holdings Ltd, owner of
Café Rouge and Bella Italia restaurant chains. He also worked in the
shipping industry for P&O. He qualified as a chartered accountant
with Price Waterhouse. Mr Morley is currently a non-executive
Director and Chair of the Audit Committee for JD Wetherspoon plc,
and the Senior non-executive Director and Chair of the Audit
Committee for TheWorks.co.uk plc. He is also a Board Trustee of
the Ascot Authority and is a non-executive Director of Cadogan
Group Limited.
Committee membership: Audit and Risk Committee, Management
Engagement Committee, Nomination Committee, Remuneration
Committee (Chair).
Contribution to the Board and its Committees: Mr Morley
enhances the board with his diverse executive experience. He has
extensive retail and consumer knowledge and significant financial and
commercial expertise. Currently, he serves as a non-executive
Director of two other listed companies and has two non-listed roles,
providing the Board with valuable strategic and operational insights.
Remuneration for the year ended 30 September 2024: £28,350
per annum.
Number of shares held: 17,500*
*Shareholdings are as at 27 November 2024 and include the holdings of connected persons. Full details of Directors’ shareholdings are set out in the Directors’
Remuneration Report on page 42.
Other Information (unaudited) Introduction Strategic Report Governance Financial
Helen Galbraith
Status: Director and Chair of the Audit and Risk
Committee
Length of service: two years – appointed as a Director in April 2022.
Experience: Ms Galbraith is Audit Chair of CT UK High Income Trust
plc and Chair of Orwell Housing Association. She was formerly Head
of Investor Relations at Aviva plc, Head of Global Equities at Aviva
Investors and has over 20 years’ experience in the insurance and
asset management industry. She is a Chartered Financial Analyst and
a passionate advocate of financial education for children having
established an online platform.
Committee membership: Audit and Risk Committee (Chair),
Management Engagement Committee, Nomination Committee,
Remuneration Committee.
Contribution to the Board and its Committees: Ms Galbraith
brings to the Board extensive asset management knowledge. Her
roles as Audit Chair and Chair at other organisations provide her with
significant experience and expertise when Chairing the Audit and Risk
Committee for the Company. Her previous roles, coupled with her
Chartered Financial Analyst qualification, enhance the Board’s
financial and strategic capabilities. Additionally, her involvement in the
social housing sector underscores her dedication to societal impact.
Remuneration for the year ended 30 September 2024: £31,593
per annum.
Number of shares held: 5,500*
Harry Morley
Status: Director, Chair of the Remuneration Committee
and Chair Designate
Length of service: one year – appointed as a Director
in September 2023.
Experience: Mr Morley was CEO of Armajaro Asset Management LLP
and was the co-founder and CFO of Tragus Holdings Ltd, owner of
Café Rouge and Bella Italia restaurant chains. He also worked in the
shipping industry for P&O. He qualified as a chartered accountant
with Price Waterhouse. Mr Morley is currently a non-executive
Director and Chair of the Audit Committee for JD Wetherspoon plc,
and the Senior non-executive Director and Chair of the Audit
Committee for TheWorks.co.uk plc. He is also a Board Trustee of
the Ascot Authority and is a non-executive Director of Cadogan
Group Limited.
Committee membership: Audit and Risk Committee, Management
Engagement Committee, Nomination Committee, Remuneration
Committee (Chair).
Contribution to the Board and its Committees: Mr Morley
enhances the board with his diverse executive experience. He has
extensive retail and consumer knowledge and significant financial and
commercial expertise. Currently, he serves as a non-executive
Director of two other listed companies and has two non-listed roles,
providing the Board with valuable strategic and operational insights.
Remuneration for the year ended 30 September 2024: £28,350
per annum.
Number of shares held: 17,500*
*Shareholdings are as at 27 November 2024 and include the holdings of connected persons. Full details of Directors’ shareholdings are set out in the Directors’
Remuneration Report on page 42.
30
Schroder
UK Mid Cap Fund plc
The Directors submit their report and the audited financial
statements of the Company for the year ended 30 September 2024.
Corporate Governance Statement
The Company is committed to high standards of corporate
governance and has implemented a framework for corporate
governance which it considers to be appropriate for an investment
trust.
The Financial Conduct Authority (“FCA”) requires all UK listed
companies to disclose how they have applied the principles and
complied with the provisions of the UK Corporate Governance
Code 2018 (the “UK Code”) issued by the Financial Reporting
Council (“FRC”).
The Board has considered the principles and provisions of the
Association of Investment Companies (“AIC”) Code of Corporate
Governance 2019 (the “AIC Code”) which addresses those set out in
the UK Code, as well as setting out additional provisions on issues
that are of specific relevance to the Company.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the FRC,
provides more relevant information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adopts the principles
and provisions set out in the UK Code to make them relevant for
investment companies.
The Board confirms that the Company has complied throughout the
year under review with the relevant provisions of the UK Code and
the principles and provisions of the AIC Code except as set out
below:
• the role of the executive Directors and senior management;
• the need for an internal audit function; and
• executive Directors’ remuneration.
Directors and officers
Chair
The Chair is an independent non-executive Director who is
responsible for leadership of the Board and ensuring its
effectiveness in all aspects of its role. Robert Talbut will be stepping
down at the forthcoming AGM and Harry Morley will be appointed
to replace him as Chair. The other significant commitments of both
are detailed on pages 28 and 29.
Senior Independent Director (“SID”)
The SID acts as a sounding board for the Chair, meets with major
shareholders as appropriate, provides a channel for any shareholder
concerns regarding the Chair and takes the lead in the annual
evaluation of the Chair by the independent Directors.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the Board and is responsible for assisting the
Chair with Board meetings and advising the Board with respect to
governance. The Company Secretary also manages the relationship
with the Company’s service providers, except for the Manager.
Shareholders wishing to lodge questions in advance of the AGM are
invited to do so by writing to the Company Secretary at the address
given on the outside back cover, or by email to:
amcompanysecretary@schroders.com.
Role and operation of the Board
The Board of Directors, listed on pages 28 and 29, is the Company’s
governing body; it sets the Company’s strategy and is collectively
responsible to shareholders for the Company’s long-term success.
The Board is responsible for appointing and subsequently
monitoring the activities of the Investment Manager and other
service providers to ensure that the investment objective of the
Company continues to be met. The Board also ensures that the
Manager adheres to the investment restrictions set by the Board
and acts within the parameters set by it in respect of any gearing.
The Business Review on pages 15 to 25 sets out further detail of
how the Board reviews the Company’s strategy, risk management
and internal controls and also includes other information required
for the Directors’ Report, and is incorporated by reference.
A formal schedule of matters specifically reserved for decision by
the Board has been defined and a procedure adopted for Directors,
in the furtherance of their duties, to take independent professional
advice at the expense of the Company.
The Chair ensures that all Directors receive relevant management,
regulatory and financial information in a timely manner and that
they are provided, on a regular basis, with key information on the
Company’s policies, regulatory requirements and internal controls.
The Board meets at least quarterly and receives and considers
reports regularly from the Manager and other key advisers and ad
hoc reports and information are supplied to the Board as required.
Four Board meetings are usually scheduled each year to deal with
matters including: the setting and monitoring of investment
strategy; approval of borrowings and/or cash positions; review of
investment performance; the level of premium or discount of the
Company’s shares to NAV per share and promotion of the Company;
and services provided by third parties. Additional meetings of the
Board are arranged as required.
The Board has approved a policy on Directors’ conflicts of interest.
Under this policy, Directors are required to disclose all actual and
potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions
or refuse to authorise such conflicts if deemed appropriate.
No Directors have any connections with the Manager, shared
directorships with other Directors or material interests in any
contract which is significant to the Company’s business.
Committees
In order to assist the Board in fulfilling its governance
responsibilities, it has delegated certain functions to committees.
The roles and responsibilities of these committees, together with
details of work undertaken during the year under review, are
outlined over the next few pages.
The reports of the Audit and Risk, Management Engagement,
Nomination, and Remuneration Committees are incorporated into
and form part of the Directors’ Report. Each committee’s
effectiveness was assessed, and judged to be satisfactory, as part of
the Board’s annual review of the Board and its committees.
Directors’ Report
The Directors submit their report and the audited financial
statements of the Company for the year ended 30 September 2024.
Corporate Governance Statement
The Company is committed to high standards of corporate
governance and has implemented a framework for corporate
governance which it considers to be appropriate for an investment
trust.
The Financial Conduct Authority (“FCA”) requires all UK listed
companies to disclose how they have applied the principles and
complied with the provisions of the UK Corporate Governance
Code 2018 (the “UK Code”) issued by the Financial Reporting
Council (“FRC”).
The Board has considered the principles and provisions of the
Association of Investment Companies (“AIC”) Code of Corporate
Governance 2019 (the “AIC Code”) which addresses those set out in
the UK Code, as well as setting out additional provisions on issues
that are of specific relevance to the Company.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the FRC,
provides more relevant information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adopts the principles
and provisions set out in the UK Code to make them relevant for
investment companies.
The Board confirms that the Company has complied throughout the
year under review with the relevant provisions of the UK Code and
the principles and provisions of the AIC Code except as set out
below:
• the role of the executive Directors and senior management;
• the need for an internal audit function; and
• executive Directors’ remuneration.
Directors and officers
Chair
The Chair is an independent non-executive Director who is
responsible for leadership of the Board and ensuring its
effectiveness in all aspects of its role. Robert Talbut will be stepping
down at the forthcoming AGM and Harry Morley will be appointed
to replace him as Chair. The other significant commitments of both
are detailed on pages 28 and 29.
Senior Independent Director (“SID”)
The SID acts as a sounding board for the Chair, meets with major
shareholders as appropriate, provides a channel for any shareholder
concerns regarding the Chair and takes the lead in the annual
evaluation of the Chair by the independent Directors.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the Board and is responsible for assisting the
Chair with Board meetings and advising the Board with respect to
governance. The Company Secretary also manages the relationship
with the Company’s service providers, except for the Manager.
Shareholders wishing to lodge questions in advance of the AGM are
invited to do so by writing to the Company Secretary at the address
given on the outside back cover, or by email to:
amcompanysecretary@schroders.com.
Role and operation of the Board
The Board of Directors, listed on pages 28 and 29, is the Company’s
governing body; it sets the Company’s strategy and is collectively
responsible to shareholders for the Company’s long-term success.
The Board is responsible for appointing and subsequently
monitoring the activities of the Investment Manager and other
service providers to ensure that the investment objective of the
Company continues to be met. The Board also ensures that the
Manager adheres to the investment restrictions set by the Board
and acts within the parameters set by it in respect of any gearing.
The Business Review on pages 15 to 25 sets out further detail of
how the Board reviews the Company’s strategy, risk management
and internal controls and also includes other information required
for the Directors’ Report, and is incorporated by reference.
A formal schedule of matters specifically reserved for decision by
the Board has been defined and a procedure adopted for Directors,
in the furtherance of their duties, to take independent professional
advice at the expense of the Company.
The Chair ensures that all Directors receive relevant management,
regulatory and financial information in a timely manner and that
they are provided, on a regular basis, with key information on the
Company’s policies, regulatory requirements and internal controls.
The Board meets at least quarterly and receives and considers
reports regularly from the Manager and other key advisers and ad
hoc reports and information are supplied to the Board as required.
Four Board meetings are usually scheduled each year to deal with
matters including: the setting and monitoring of investment
strategy; approval of borrowings and/or cash positions; review of
investment performance; the level of premium or discount of the
Company’s shares to NAV per share and promotion of the Company;
and services provided by third parties. Additional meetings of the
Board are arranged as required.
The Board has approved a policy on Directors’ conflicts of interest.
Under this policy, Directors are required to disclose all actual and
potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions
or refuse to authorise such conflicts if deemed appropriate.
No Directors have any connections with the Manager, shared
directorships with other Directors or material interests in any
contract which is significant to the Company’s business.
Committees
In order to assist the Board in fulfilling its governance
responsibilities, it has delegated certain functions to committees.
The roles and responsibilities of these committees, together with
details of work undertaken during the year under review, are
outlined over the next few pages.
The reports of the Audit and Risk, Management Engagement,
Nomination, and Remuneration Committees are incorporated into
and form part of the Directors’ Report. Each committee’s
effectiveness was assessed, and judged to be satisfactory, as part of
the Board’s annual review of the Board and its committees.
Directors’ Report
Directors’ attendance at meetings
The number of scheduled meetings of the Board and its committees
held during the financial year and the attendance of individual
Directors is shown below. Whenever possible, all Directors attend
the AGM.
Audit Management
and Risk Engagement Nomination Remuneration
Board Committee Committee Committee Committee
Robert Talbut 4/4 2/2 1/1 1/1 1/1
Wendy Colquhoun 4/4 2/2 1/1 1/1 1/1
Helen Galbraith 4/4 2/2 1/1 1/1 1/1
Harry Morley 1
3/4 1/2 1/1 1/1 1/1
Andrew Page
2
2/4 1/2 0/1 0/1 0/1
1
Harry Morley was unable to attend the meetings on 20 June 2024 due to
commitments made prior to his appointment.
2
Andrew Page retired on 8 March 2024.
In addition to the above meetings, the Board met four times on an ad-hoc
basis during the year: once to approve the Company’s annual report for the
year ended 30 September 2023, once on 26 February to approve the
revolving credit facility agreement, once for a strategy meeting on
30 November 2023, and once for an ad-hoc Board meeting on 29 July 2024.
Directors’ and officers’ liability insurance
and indemnities
Directors’ and officers’ liability insurance cover was in place for the
Directors throughout the year. The Company’s Articles of Association
provide, subject to the provisions of UK legislation, an indemnity for
directors in respect of costs which they may incur relating to the
defence of any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or judgment
is given in their favour by the court. This is a qualifying third party
indemnity and was in place throughout the year under review for
each Director and to the date of this report.
Key service providers
The Board has adopted an outsourced business model and has
appointed the following key service providers:
Manager
The Company is an alternative investment fund as defined by the
AIFM Directive and has appointed Schroder Unit Trusts Limited
(“SUTL”) as the Manager in accordance with the terms of an
alternative investment fund manager (“AIFM”) agreement. The AIFM
agreement, which is governed by the laws of England and Wales,
can be terminated by either party on 12 months’ notice or on
immediate notice in the event of certain breaches or the insolvency
of either party. As at the date of this report, no such notice had been
given by either party.
SUTL is authorised and regulated by the FCA and provides portfolio
management, risk management, accounting and company
secretarial services to the Company under the AIFM agreement. Part
of the fund accounting and administration activities are currently
performed by HSBC Securities Services (UK) Limited. The Manager
also provides general marketing support for the Company and
manages relationships with key investors, in conjunction with the
Chair, other Board members or the corporate broker as
appropriate. The Manager has delegated investment management,
marketing, administrative, accounting and company secretarial
services to another wholly owned subsidiary of Schroders plc,
Schroder Investment Management Limited. The Manager has in
place appropriate professional indemnity cover.
The Schroders Group manages £777.4 billion (as at 30 September
2024) on behalf of institutional and retail investors, financial
institutions and high net worth clients from around the world,
invested in a broad range of asset classes across equities, fixed
income, multi-asset and alternatives.
Fees payable to the Manager
For the financial year ended 30 September 2024, the Manager was
entitled to a management fee at a rate of 0.65% per annum of
chargeable assets up to £250 million and 0.60% of any amounts in
excess of that. Chargeable assets are defined as total assets less
current liabilities other than short-term borrowings, provided that if
there are any short-term borrowings, the value of cash up to the
level of such borrowings is deducted from the calculation of assets.
The management fee payable in respect of the year ended
30 September 2024 amounted to £1,650,000 (2023: £1,504,000),
paid quarterly in arrears.
The Manager is also entitled to receive a fee for providing
administrative, accounting and company secretarial services to the
Company. For these services, for the year ended 30 September
2024, it received a fee of £176,000 (2023: £162,000), including VAT.
The fee continues to be subject to annual adjustment in line with
changes in the Retail Prices Index.
Details of all amounts payable to the Manager are set out in note 17
on page 58.
The Board has reviewed the performance of the Manager for the
year under review. The Board is satisfied that the Manager has the
appropriate depth and quality of resource to deliver good returns
over the longer term and that the continued appointment of the
Manager on the terms agreed is in the best interest of the Company
and its shareholders.
Depositary
HSBC Bank plc, which is authorised by the Prudential Regulation
Authority and regulated by the FCA and the Prudential Regulation
Authority, carries out certain duties of a depositary specified in the
AIFM Directive including, in relation to the Company:
– safekeeping of the assets of the Company which are entrusted
to it;
– cash monitoring; and
– oversight of the Company and the Manager to the extent
described in the AIFM Directive.
The Company, the Manager and the depositary may terminate the
depositary agreement at any time by giving 90 days’ notice in
writing. The depositary may only be removed from office when
a new depositary is appointed by the Company.
Registrar
Equiniti Limited (“Equiniti”) has been appointed as the Company’s
registrar. Equiniti’s services to the Company include share register
maintenance (including the issuance, transfer and cancellation of
shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and processing
corporate actions.
Schroder UK Mid Cap Fund plc 31
Other Information (unaudited) Introduction Strategic Report Governance Financial
The number of scheduled meetings of the Board and its committees
held during the financial year and the attendance of individual
Directors is shown below. Whenever possible, all Directors attend
the AGM.
Audit Management
and Risk Engagement Nomination Remuneration
Board Committee Committee Committee Committee
Robert Talbut 4/4 2/2 1/1 1/1 1/1
Wendy Colquhoun 4/4 2/2 1/1 1/1 1/1
Helen Galbraith 4/4 2/2 1/1 1/1 1/1
Harry Morley 1
3/4 1/2 1/1 1/1 1/1
Andrew Page
2
2/4 1/2 0/1 0/1 0/1
1
Harry Morley was unable to attend the meetings on 20 June 2024 due to
commitments made prior to his appointment.
2
Andrew Page retired on 8 March 2024.
In addition to the above meetings, the Board met four times on an ad-hoc
basis during the year: once to approve the Company’s annual report for the
year ended 30 September 2023, once on 26 February to approve the
revolving credit facility agreement, once for a strategy meeting on
30 November 2023, and once for an ad-hoc Board meeting on 29 July 2024.
Directors’ and officers’ liability insurance
and indemnities
Directors’ and officers’ liability insurance cover was in place for the
Directors throughout the year. The Company’s Articles of Association
provide, subject to the provisions of UK legislation, an indemnity for
directors in respect of costs which they may incur relating to the
defence of any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or judgment
is given in their favour by the court. This is a qualifying third party
indemnity and was in place throughout the year under review for
each Director and to the date of this report.
Key service providers
The Board has adopted an outsourced business model and has
appointed the following key service providers:
Manager
The Company is an alternative investment fund as defined by the
AIFM Directive and has appointed Schroder Unit Trusts Limited
(“SUTL”) as the Manager in accordance with the terms of an
alternative investment fund manager (“AIFM”) agreement. The AIFM
agreement, which is governed by the laws of England and Wales,
can be terminated by either party on 12 months’ notice or on
immediate notice in the event of certain breaches or the insolvency
of either party. As at the date of this report, no such notice had been
given by either party.
SUTL is authorised and regulated by the FCA and provides portfolio
management, risk management, accounting and company
secretarial services to the Company under the AIFM agreement. Part
of the fund accounting and administration activities are currently
performed by HSBC Securities Services (UK) Limited. The Manager
also provides general marketing support for the Company and
manages relationships with key investors, in conjunction with the
Chair, other Board members or the corporate broker as
appropriate. The Manager has delegated investment management,
marketing, administrative, accounting and company secretarial
services to another wholly owned subsidiary of Schroders plc,
Schroder Investment Management Limited. The Manager has in
place appropriate professional indemnity cover.
The Schroders Group manages £777.4 billion (as at 30 September
2024) on behalf of institutional and retail investors, financial
institutions and high net worth clients from around the world,
invested in a broad range of asset classes across equities, fixed
income, multi-asset and alternatives.
Fees payable to the Manager
For the financial year ended 30 September 2024, the Manager was
entitled to a management fee at a rate of 0.65% per annum of
chargeable assets up to £250 million and 0.60% of any amounts in
excess of that. Chargeable assets are defined as total assets less
current liabilities other than short-term borrowings, provided that if
there are any short-term borrowings, the value of cash up to the
level of such borrowings is deducted from the calculation of assets.
The management fee payable in respect of the year ended
30 September 2024 amounted to £1,650,000 (2023: £1,504,000),
paid quarterly in arrears.
The Manager is also entitled to receive a fee for providing
administrative, accounting and company secretarial services to the
Company. For these services, for the year ended 30 September
2024, it received a fee of £176,000 (2023: £162,000), including VAT.
The fee continues to be subject to annual adjustment in line with
changes in the Retail Prices Index.
Details of all amounts payable to the Manager are set out in note 17
on page 58.
The Board has reviewed the performance of the Manager for the
year under review. The Board is satisfied that the Manager has the
appropriate depth and quality of resource to deliver good returns
over the longer term and that the continued appointment of the
Manager on the terms agreed is in the best interest of the Company
and its shareholders.
Depositary
HSBC Bank plc, which is authorised by the Prudential Regulation
Authority and regulated by the FCA and the Prudential Regulation
Authority, carries out certain duties of a depositary specified in the
AIFM Directive including, in relation to the Company:
– safekeeping of the assets of the Company which are entrusted
to it;
– cash monitoring; and
– oversight of the Company and the Manager to the extent
described in the AIFM Directive.
The Company, the Manager and the depositary may terminate the
depositary agreement at any time by giving 90 days’ notice in
writing. The depositary may only be removed from office when
a new depositary is appointed by the Company.
Registrar
Equiniti Limited (“Equiniti”) has been appointed as the Company’s
registrar. Equiniti’s services to the Company include share register
maintenance (including the issuance, transfer and cancellation of
shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and processing
corporate actions.
Schroder UK Mid Cap Fund plc 31
Other Information (unaudited) Introduction Strategic Report Governance Financial
32
Schroder
UK Mid Cap Fund plc
Share capital and substantial share interests
As at the date of this report, the Company had 36,143,690 ordinary
shares of 25p in issue. 1,562,500 shares were held in treasury.
Accordingly, the total number of voting rights in the Company at
the date of this report is 34,581,190. Details of changes to the
Company’s share capital during the year under review are given in
note 14 to the financial statements on page 57. All shares in issue
rank equally with respect to voting, dividends and any distribution
on winding up.
There are no restrictions concerning the transfer of securities in the
Company; no special rights with regard to control attached to
securities; no restrictions on voting rights; no agreements between
holders of securities regarding their transfer known to the
Company; and no agreements to which the Company is a party that
might change or fall away on a change of control or trigger any
compensatory payments for Directors following a successful
takeover bid.
The Company is aware that certain changes to the interests held in
the Company of 3% or more of the voting rights attaching to the
Company’s issued share capital have taken place since the last
notification made by investors to the Company. As a result, the
following table is based on what the Board believes to be the most
practicable up to date details of interests of 3% or more in the share
capital of the Company, using the shareholder analysis prepared by
Richard Davies Investor Relations Limited, which is reviewed at every
Board meeting.
% at
30 September
Shares 2024
Hargreaves Lansdown, stockbrokers 4,322,751 12.50
Interactive Investor 3,116,152 9.01
Charles Stanley 2,720,654 7.87
Evelyn Partners (Retail) 2,584,069 7.47
Redmayne Bentley, stockbrokers 1,987,412 5.75
AJ Bell, stockbrokers 1,414,414 4.09
Rathbones 1,191,291 3.44
Allspring Global Investments 1,108,303 3.20
Saba Capital Management 1,039,164 3.00
Between 1 October 2024 and 27 November 2024, the Company was
notified that Saba Capital Management LP hold 3.0% by way of
direct shareholdings, and a further 8.0% through financial
instruments. There have been no other changes to the major
interests in the Company’s shares since year end.
Provision of information to the auditor
The Directors at the date of approval of this report confirm that, so
far as each of them is aware, there is no relevant audit information
of which the Company’s auditors are unaware; and each Director
has taken all the steps that he or she ought to have taken as
a Director in order to make himself or herself aware of any relevant
audit information and to establish that the Company’s auditors are
aware of that information.
By order of the Board
Schroder Investment Management Limited
Company Secretary
27 November 2024
Directors’ Report
continued
Share capital and substantial share interests
As at the date of this report, the Company had 36,143,690 ordinary
shares of 25p in issue. 1,562,500 shares were held in treasury.
Accordingly, the total number of voting rights in the Company at
the date of this report is 34,581,190. Details of changes to the
Company’s share capital during the year under review are given in
note 14 to the financial statements on page 57. All shares in issue
rank equally with respect to voting, dividends and any distribution
on winding up.
There are no restrictions concerning the transfer of securities in the
Company; no special rights with regard to control attached to
securities; no restrictions on voting rights; no agreements between
holders of securities regarding their transfer known to the
Company; and no agreements to which the Company is a party that
might change or fall away on a change of control or trigger any
compensatory payments for Directors following a successful
takeover bid.
The Company is aware that certain changes to the interests held in
the Company of 3% or more of the voting rights attaching to the
Company’s issued share capital have taken place since the last
notification made by investors to the Company. As a result, the
following table is based on what the Board believes to be the most
practicable up to date details of interests of 3% or more in the share
capital of the Company, using the shareholder analysis prepared by
Richard Davies Investor Relations Limited, which is reviewed at every
Board meeting.
% at
30 September
Shares 2024
Hargreaves Lansdown, stockbrokers 4,322,751 12.50
Interactive Investor 3,116,152 9.01
Charles Stanley 2,720,654 7.87
Evelyn Partners (Retail) 2,584,069 7.47
Redmayne Bentley, stockbrokers 1,987,412 5.75
AJ Bell, stockbrokers 1,414,414 4.09
Rathbones 1,191,291 3.44
Allspring Global Investments 1,108,303 3.20
Saba Capital Management 1,039,164 3.00
Between 1 October 2024 and 27 November 2024, the Company was
notified that Saba Capital Management LP hold 3.0% by way of
direct shareholdings, and a further 8.0% through financial
instruments. There have been no other changes to the major
interests in the Company’s shares since year end.
Provision of information to the auditor
The Directors at the date of approval of this report confirm that, so
far as each of them is aware, there is no relevant audit information
of which the Company’s auditors are unaware; and each Director
has taken all the steps that he or she ought to have taken as
a Director in order to make himself or herself aware of any relevant
audit information and to establish that the Company’s auditors are
aware of that information.
By order of the Board
Schroder Investment Management Limited
Company Secretary
27 November 2024
Directors’ Report
continued
Schroder
UK Mid Cap Fund plc
33
Other Information (unaudited) Introduction Strategic Report Governance Financial
Audit and Risk Committee Report
The responsibilities and work carried out by the Audit and Risk Committee during the year under review are set out in the following report. The
duties and responsibilities of the Committee, which include monitoring the integrity of the Company’s financial reporting and internal controls,
are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s web pages:
www.schroders.co.uk/midcap.
All Directors are members of the Committee. Helen Galbraith acts as Chair, having succeeded Andrew Page who retired from the Board
following the AGM on 8 March 2024. The AIC Code permits the Chair of the Board to be a member of the Audit Committee of an investment
trust. The Board has satisfied itself that at least one of the Committee’s members has recent and relevant financial experience and that the
Committee as a whole has competence relevant to the sector in which the Company operates.
Approach
Risk management and internal
controls
Financial reports and valuation Audit
Principal and emerging risks and
uncertainties
To establish a process for identifying,
assessing, managing and monitoring the
principal and emerging risks of the
Company and to explain how these are
managed or mitigated.
The Committee is responsible for
reviewing the adequacy and effectiveness
of the Company’s internal controls and
the whistleblowing procedures operated
by the AIFM and other services providers.
Financial statements
To monitor the integrity of the financial
statements of the Company and any
formal announcements relating to the
Company’s financial performance and
valuation. To also review the half-year
report and financial statements
Audit results
To discuss any matters arising from the
audit and recommendations made by the
auditor.
Going concern and viability
To review the position and make
recommendations to the Board in relation
to whether it considers it appropriate to
adopt the going concern basis of
accounting in preparing its annual and
half-year report.
The Committee is also responsible for
reviewing the disclosures made by the
Company in the viability statement.
Auditor appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment,
reappointment, effectiveness and removal
of the external auditor, to review their
independence, and to approve their
remuneration and terms of engagement.
Reviewing and agreeing the audit plan
and engagement letter.
Risk
management
Internal
controls
Review of
external
auditors and
their work
Half year
and annual
report
Accounting
policies and
judgements
Other Information (unaudited) Introduction Strategic Report Governance Financial
Audit and Risk Committee Report
The responsibilities and work carried out by the Audit and Risk Committee during the year under review are set out in the following report. The
duties and responsibilities of the Committee, which include monitoring the integrity of the Company’s financial reporting and internal controls,
are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s web pages:
www.schroders.co.uk/midcap.
All Directors are members of the Committee. Helen Galbraith acts as Chair, having succeeded Andrew Page who retired from the Board
following the AGM on 8 March 2024. The AIC Code permits the Chair of the Board to be a member of the Audit Committee of an investment
trust. The Board has satisfied itself that at least one of the Committee’s members has recent and relevant financial experience and that the
Committee as a whole has competence relevant to the sector in which the Company operates.
Approach
Risk management and internal
controls
Financial reports and valuation Audit
Principal and emerging risks and
uncertainties
To establish a process for identifying,
assessing, managing and monitoring the
principal and emerging risks of the
Company and to explain how these are
managed or mitigated.
The Committee is responsible for
reviewing the adequacy and effectiveness
of the Company’s internal controls and
the whistleblowing procedures operated
by the AIFM and other services providers.
Financial statements
To monitor the integrity of the financial
statements of the Company and any
formal announcements relating to the
Company’s financial performance and
valuation. To also review the half-year
report and financial statements
Audit results
To discuss any matters arising from the
audit and recommendations made by the
auditor.
Going concern and viability
To review the position and make
recommendations to the Board in relation
to whether it considers it appropriate to
adopt the going concern basis of
accounting in preparing its annual and
half-year report.
The Committee is also responsible for
reviewing the disclosures made by the
Company in the viability statement.
Auditor appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment,
reappointment, effectiveness and removal
of the external auditor, to review their
independence, and to approve their
remuneration and terms of engagement.
Reviewing and agreeing the audit plan
and engagement letter.
Risk
management
Internal
controls
Review of
external
auditors and
their work
Half year
and annual
report
Accounting
policies and
judgements
34
Schroder
UK Mid Cap Fund plc
Audit and Risk Committee Report
continued
The Committee met twice during the year under review and the below table sets out how the Committee discharged its duties during the year
under review and up until the approval of this report.
Further details on attendance can be found on page 31. Significant issues identified during the year under review and key matters
communicated by the auditor during reporting are included below.
Application during the year
Audit Financial reports and valuation Risk management and internal
controls
Meetings with the auditor
The auditor attended meetings of the
Committee where the findings of the
audit were discussed.
The Committee met the auditor without
representatives of the Manager present.
The audit plan was circulated for
consideration and Directors were given
the opportunity to raise any queries as
required.
In July 2024 the FRC published its annual
assessment of quality among the Tier 1
audit firms. The Company’s external
auditor, BDO is one of the six Tier 1 audit
firms, and was therefore subject to
a review by the FRC’s Audit Quality Review
team. The FRC’s report identified a number
of areas for improvement for the auditor,
and in response to these findings, the
auditor has implemented an action plan.
The Committee discussed the FRC’s
findings along with auditor’s action plan in
detail with BDO. BDO have confirmed that
they remain committed to the highest
standards of audit quality and will continue
to work closely with the FRC to address any
areas of concern. The Committee will
continue to monitor auditor’s progress.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Principal risks
Reviewed the principal and emerging risks
faced by the Company together with the
systems, processes and oversight in place
to identify, manage and mitigate.
Effectiveness of the independent
audit process and auditor
performance
The effectiveness of the independent audit
firm and audit process was evaluated prior
to making a recommendation to the Board
that the auditor should be appointed at
the forthcoming AGM. The Committee
evaluated the auditor’s performance
against agreed criteria including:
qualification; knowledge, expertise and
resources; independence policies;
effectiveness of audit planning; adherence
to auditing standards. Overall competence
was also considered, alongside feedback
from the Manager on the audit process.
The professional scepticism of the auditor,
during the audit process was questioned
and the Committee was satisfied with the
auditor’s replies.
Valuation and existence of holdings
The Company’s assets are principally
invested in quoted equities. The Board
reviews detailed reports on portfolio
holdings on a quarterly basis.
The Committee reviewed internal control
reports from the AIFM in the year,
reporting on the systems and controls
around the pricing and valuation of
securities.
Service provider controls
Consideration of the operational controls
maintained by the Manager, depositary,
and registrar.
Auditor independence
This is the first year that BDO LLP has
provided audit services to the Company,
since their appointment on 19 July 2024.
The auditor is required to rotate the
senior statutory auditor every five years.
This is the first year that the senior
statutory auditor, Peter Smith, has
conducted the audit of the Company’s
financial statements.
Calculation of the investment
management fee and performance fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Allocation rate of indirect expenses to
capital
Consideration of policy of allocating certain
indirect expenses to capital. Further details
in note 1 (e).
Internal controls and risk
management
Consideration of several key aspects of
internal control and risk management
operating within the Manager,
administrator depositary and registrar,
including assurance reports and
presentations on these controls.
Audit and Risk Committee Report
continued
The Committee met twice during the year under review and the below table sets out how the Committee discharged its duties during the year
under review and up until the approval of this report.
Further details on attendance can be found on page 31. Significant issues identified during the year under review and key matters
communicated by the auditor during reporting are included below.
Application during the year
Audit Financial reports and valuation Risk management and internal
controls
Meetings with the auditor
The auditor attended meetings of the
Committee where the findings of the
audit were discussed.
The Committee met the auditor without
representatives of the Manager present.
The audit plan was circulated for
consideration and Directors were given
the opportunity to raise any queries as
required.
In July 2024 the FRC published its annual
assessment of quality among the Tier 1
audit firms. The Company’s external
auditor, BDO is one of the six Tier 1 audit
firms, and was therefore subject to
a review by the FRC’s Audit Quality Review
team. The FRC’s report identified a number
of areas for improvement for the auditor,
and in response to these findings, the
auditor has implemented an action plan.
The Committee discussed the FRC’s
findings along with auditor’s action plan in
detail with BDO. BDO have confirmed that
they remain committed to the highest
standards of audit quality and will continue
to work closely with the FRC to address any
areas of concern. The Committee will
continue to monitor auditor’s progress.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Principal risks
Reviewed the principal and emerging risks
faced by the Company together with the
systems, processes and oversight in place
to identify, manage and mitigate.
Effectiveness of the independent
audit process and auditor
performance
The effectiveness of the independent audit
firm and audit process was evaluated prior
to making a recommendation to the Board
that the auditor should be appointed at
the forthcoming AGM. The Committee
evaluated the auditor’s performance
against agreed criteria including:
qualification; knowledge, expertise and
resources; independence policies;
effectiveness of audit planning; adherence
to auditing standards. Overall competence
was also considered, alongside feedback
from the Manager on the audit process.
The professional scepticism of the auditor,
during the audit process was questioned
and the Committee was satisfied with the
auditor’s replies.
Valuation and existence of holdings
The Company’s assets are principally
invested in quoted equities. The Board
reviews detailed reports on portfolio
holdings on a quarterly basis.
The Committee reviewed internal control
reports from the AIFM in the year,
reporting on the systems and controls
around the pricing and valuation of
securities.
Service provider controls
Consideration of the operational controls
maintained by the Manager, depositary,
and registrar.
Auditor independence
This is the first year that BDO LLP has
provided audit services to the Company,
since their appointment on 19 July 2024.
The auditor is required to rotate the
senior statutory auditor every five years.
This is the first year that the senior
statutory auditor, Peter Smith, has
conducted the audit of the Company’s
financial statements.
Calculation of the investment
management fee and performance fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Allocation rate of indirect expenses to
capital
Consideration of policy of allocating certain
indirect expenses to capital. Further details
in note 1 (e).
Internal controls and risk
management
Consideration of several key aspects of
internal control and risk management
operating within the Manager,
administrator depositary and registrar,
including assurance reports and
presentations on these controls.
Schroder
UK Mid Cap Fund plc
35
Other Information (unaudited) Introduction Strategic Report Governance Financial
Helen Galbraith
Audit and Risk Committee Chair
27 November 2024
Compliance with the investment trust
qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Overall accuracy of the report and
financial statements
Consideration of the annual report and
financial statements and the letter from
the Manager in support of the letter of
representation to the auditor.
Audit tender
An audit tender was undertaken in June
2024 and the Board approved the
appointment of BDO LLP as the
Company’s auditor for the year ended
30 September 2024.
Audit results
Met with and reviewed a comprehensive
report from the auditor which detailed the
results of the audit, compliance with
regulatory requirements, safeguards that
have been established, and on their own
internal quality control procedures.
Fair, balanced and understandable
Reviewed the annual report and financial
statements to advise the Board whether it
was fair, balanced and understandable.
Reviewed whether performance measures
were reflective of the business, whether
there was adequate commentary on the
Company’s strengths and weaknesses and
that the annual report and financial
statements, taken as a whole were
consistent with the Board’s view of the
operation of the Company.
Provision of non-audit services by the
auditor
Reviewed the FRC’s Guidance on Audit
Committees and formulated a policy on
the provision of non-audit services by the
Company’s auditor. The Committee has
determined that the Company’s
appointed auditor will not be considered
for the provision of certain non-audit
services, such as accounting and
preparation of the financial statements,
internal audit and custody. The auditor
may, if required, provide other non-audit
services which will be judged on a
case-by-case basis.
The auditor did not provide any non-audit
services to the Company during the year.
Going concern and viability
Reviewed the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
BDO LLP indicated to the Committee its
willingness to continue to act as auditor.
Recommendations made to, and approved by, the Board:
• The Committee recommended that the Board approve the half year and annual report and financial statements.
• The Committee recommended that the going concern presumption be adopted in the annual report and financial statements and
the explanations set out in the viability statement.
• The Committee recommended the appointment of BDO LLP, as the Company’s auditor, following a competitive tender process.
• As a result of the work performed, the Committee has concluded that the annual report and financial statements for the year ended
30 September 2024, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders
to assess the Company’s position, performance, business model and strategy, and has reported on these findings to the Board. The
Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 43.
• Having reviewed the performance of the auditor as described above, the Committee considered it appropriate to recommend the
auditor’s appointment. Resolutions to appoint BDO LLP as auditor to the Company, and to authorise the Directors to determine their
remuneration will be proposed at the forthcoming AGM.
Audit Financial reports and valuation Risk management and internal
controls
Other Information (unaudited) Introduction Strategic Report Governance Financial
Helen Galbraith
Audit and Risk Committee Chair
27 November 2024
Compliance with the investment trust
qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Overall accuracy of the report and
financial statements
Consideration of the annual report and
financial statements and the letter from
the Manager in support of the letter of
representation to the auditor.
Audit tender
An audit tender was undertaken in June
2024 and the Board approved the
appointment of BDO LLP as the
Company’s auditor for the year ended
30 September 2024.
Audit results
Met with and reviewed a comprehensive
report from the auditor which detailed the
results of the audit, compliance with
regulatory requirements, safeguards that
have been established, and on their own
internal quality control procedures.
Fair, balanced and understandable
Reviewed the annual report and financial
statements to advise the Board whether it
was fair, balanced and understandable.
Reviewed whether performance measures
were reflective of the business, whether
there was adequate commentary on the
Company’s strengths and weaknesses and
that the annual report and financial
statements, taken as a whole were
consistent with the Board’s view of the
operation of the Company.
Provision of non-audit services by the
auditor
Reviewed the FRC’s Guidance on Audit
Committees and formulated a policy on
the provision of non-audit services by the
Company’s auditor. The Committee has
determined that the Company’s
appointed auditor will not be considered
for the provision of certain non-audit
services, such as accounting and
preparation of the financial statements,
internal audit and custody. The auditor
may, if required, provide other non-audit
services which will be judged on a
case-by-case basis.
The auditor did not provide any non-audit
services to the Company during the year.
Going concern and viability
Reviewed the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
BDO LLP indicated to the Committee its
willingness to continue to act as auditor.
Recommendations made to, and approved by, the Board:
• The Committee recommended that the Board approve the half year and annual report and financial statements.
• The Committee recommended that the going concern presumption be adopted in the annual report and financial statements and
the explanations set out in the viability statement.
• The Committee recommended the appointment of BDO LLP, as the Company’s auditor, following a competitive tender process.
• As a result of the work performed, the Committee has concluded that the annual report and financial statements for the year ended
30 September 2024, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders
to assess the Company’s position, performance, business model and strategy, and has reported on these findings to the Board. The
Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 43.
• Having reviewed the performance of the auditor as described above, the Committee considered it appropriate to recommend the
auditor’s appointment. Resolutions to appoint BDO LLP as auditor to the Company, and to authorise the Directors to determine their
remuneration will be proposed at the forthcoming AGM.
Audit Financial reports and valuation Risk management and internal
controls
36
Schroder
UK Mid Cap Fund plc
Management Engagement Committee Report
The Management Engagement Committee is responsible for (1) the monitoring and oversight of the Manager’s performance and fees, and
confirming the Manager’s ongoing suitability, and (2) reviewing and assessing the Company’s other service providers, including reviewing their
fees. All Directors are members of the Committee. Robert Talbut chaired the Committee during the year and his successor will carry on the role.
Its terms of reference are available on the Company’s web pages: www.schroders.co.uk/ukmidcap.
Given the Board’s size, the Directors believe it is appropriate for the Chair of the Board, who was independent on appointment, to remain
a member of the Committee and continue to benefit from his experience and knowledge. The activities of the Committee were considered as
part of the internally facilitated board appraisal process completed in accordance with standard governance arrangements. The evaluation
found that the Committee functioned well, with the right balance of membership, skills and experience.
Approach
Oversight of the Manager Oversight of other service providers
Application during the year
The Committee reviews the performance and competitiveness of
the following service providers on at least an annual basis:
• Depositary and custodian;
• Corporate broker;
• Registrar; and
• Lender.
The Committee also receives a report from the company secretary
on ancillary service providers, and considers any
recommendations.
The Committee notes the Audit and Risk Committee’s review of
the auditor.
The Committee:
• Reviews the Manager’s performance, over the short and long
term, against a peer group and the market;
• Considers the reporting it has received from the Manager
throughout the reporting period, and the reporting from the
Manager to the shareholders;
• Assesses management fees including the performance fee on
an absolute and relative basis, taking into consideration input
from the Company’s broker on the peer group and sector
together with details on comparative fee structures;
• Reviews the appropriateness of the Manager’s contract,
including terms, such as the notice period; and
• Assesses whether the Company receives appropriate
administrative, accounting, company secretarial and
marketing support from the Manager.
The annual review of each of the service providers was
satisfactory.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the internal controls of the
Manager, registrar, depositary and custodian.
The Committee undertook a detailed review of the Investment
Manager’s performance and agreed that there was the
appropriate depth and quality of resource to deliver superior
returns over the longer term.
The Committee also reviewed the terms of the AIFM agreement,
including the fee structure, and agreed they remained fit for
purpose.
The Committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement was in the best interests of shareholders as
a whole.
• That the Company’s service providers’ performance remained satisfactory.
Management Engagement Committee Report
The Management Engagement Committee is responsible for (1) the monitoring and oversight of the Manager’s performance and fees, and
confirming the Manager’s ongoing suitability, and (2) reviewing and assessing the Company’s other service providers, including reviewing their
fees. All Directors are members of the Committee. Robert Talbut chaired the Committee during the year and his successor will carry on the role.
Its terms of reference are available on the Company’s web pages: www.schroders.co.uk/ukmidcap.
Given the Board’s size, the Directors believe it is appropriate for the Chair of the Board, who was independent on appointment, to remain
a member of the Committee and continue to benefit from his experience and knowledge. The activities of the Committee were considered as
part of the internally facilitated board appraisal process completed in accordance with standard governance arrangements. The evaluation
found that the Committee functioned well, with the right balance of membership, skills and experience.
Approach
Oversight of the Manager Oversight of other service providers
Application during the year
The Committee reviews the performance and competitiveness of
the following service providers on at least an annual basis:
• Depositary and custodian;
• Corporate broker;
• Registrar; and
• Lender.
The Committee also receives a report from the company secretary
on ancillary service providers, and considers any
recommendations.
The Committee notes the Audit and Risk Committee’s review of
the auditor.
The Committee:
• Reviews the Manager’s performance, over the short and long
term, against a peer group and the market;
• Considers the reporting it has received from the Manager
throughout the reporting period, and the reporting from the
Manager to the shareholders;
• Assesses management fees including the performance fee on
an absolute and relative basis, taking into consideration input
from the Company’s broker on the peer group and sector
together with details on comparative fee structures;
• Reviews the appropriateness of the Manager’s contract,
including terms, such as the notice period; and
• Assesses whether the Company receives appropriate
administrative, accounting, company secretarial and
marketing support from the Manager.
The annual review of each of the service providers was
satisfactory.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the internal controls of the
Manager, registrar, depositary and custodian.
The Committee undertook a detailed review of the Investment
Manager’s performance and agreed that there was the
appropriate depth and quality of resource to deliver superior
returns over the longer term.
The Committee also reviewed the terms of the AIFM agreement,
including the fee structure, and agreed they remained fit for
purpose.
The Committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement was in the best interests of shareholders as
a whole.
• That the Company’s service providers’ performance remained satisfactory.
Schroder
UK Mid Cap Fund plc
37
Other Information (unaudited) Introduction Strategic Report Governance Financial
The Nomination Committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment during their tenure,
and (3) the Board’s succession. All Directors are members of the Committee. Robert Talbut is the Chair of the Committee. Its terms of reference
are available on the Company’s web pages: www.schroders.co.uk/ukmidcap.
Oversight of Directors
Approach
Selection and induction Board evaluation and Directors’ fees Succession
Application during the year (see overleaf)
Selection Induction
Application
of succession
policy
Annual
review of
succession
policy
Annual
evaluation
• Having considered diversity and the need
for regular refreshment the Board’s policy
is that Directors’ tenure, including the Chair
of the Board, will be for no longer than
nine years, except in exceptional
circumstances, and that each Director will
be subject to annual re-election at the
AGM.
• Committee reviews the Board’s current and
future needs at least annually. Should any
need be identified, the Committee will
initiate the selection process.
• Committee oversees the handover process
for retiring Directors.
• Committee assesses each Director
annually, and considers if an external
evaluation is appropriate.
• Evaluation focuses on whether each
Director continues to demonstrate
commitment to their role and provides
a valuable contribution to the Board during
the reporting period, taking into account
time commitment, independence, conflicts
and training needs.
• Following the evaluation, the Committee
provides a recommendation to
shareholders with respect to the annual
re-election of Directors at the AGM.
• All Directors retire at the AGM and their
re-election is subject to shareholder
approval.
• Committee reviews Directors’ fees, taking
into account comparative data and reports
to shareholders.
• Any proposed changes to the
remuneration policy for Directors
discussed and reported to shareholders.
• Committee prepares a job specification for
each role, and an independent recruitment
firm is appointed. For the Chair and the
Chairs of committees, the Committee
considers current Board members too.
• Job specification outlines the knowledge,
professional skills, personal qualities and
experience requirements.
• Potential candidates assessed against the
Company’s diversity policy.
• Committee considers the use of an
external search agency in recruiting new
Directors.
• Committee discusses the long list, invites
a number of candidates for interview and
makes a recommendation to the Board.
• Committee reviews the induction and
training of new Directors.
Nomination Committee Report
Other Information (unaudited) Introduction Strategic Report Governance Financial
The Nomination Committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment during their tenure,
and (3) the Board’s succession. All Directors are members of the Committee. Robert Talbut is the Chair of the Committee. Its terms of reference
are available on the Company’s web pages: www.schroders.co.uk/ukmidcap.
Oversight of Directors
Approach
Selection and induction Board evaluation and Directors’ fees Succession
Application during the year (see overleaf)
Selection Induction
Application
of succession
policy
Annual
review of
succession
policy
Annual
evaluation
• Having considered diversity and the need
for regular refreshment the Board’s policy
is that Directors’ tenure, including the Chair
of the Board, will be for no longer than
nine years, except in exceptional
circumstances, and that each Director will
be subject to annual re-election at the
AGM.
• Committee reviews the Board’s current and
future needs at least annually. Should any
need be identified, the Committee will
initiate the selection process.
• Committee oversees the handover process
for retiring Directors.
• Committee assesses each Director
annually, and considers if an external
evaluation is appropriate.
• Evaluation focuses on whether each
Director continues to demonstrate
commitment to their role and provides
a valuable contribution to the Board during
the reporting period, taking into account
time commitment, independence, conflicts
and training needs.
• Following the evaluation, the Committee
provides a recommendation to
shareholders with respect to the annual
re-election of Directors at the AGM.
• All Directors retire at the AGM and their
re-election is subject to shareholder
approval.
• Committee reviews Directors’ fees, taking
into account comparative data and reports
to shareholders.
• Any proposed changes to the
remuneration policy for Directors
discussed and reported to shareholders.
• Committee prepares a job specification for
each role, and an independent recruitment
firm is appointed. For the Chair and the
Chairs of committees, the Committee
considers current Board members too.
• Job specification outlines the knowledge,
professional skills, personal qualities and
experience requirements.
• Potential candidates assessed against the
Company’s diversity policy.
• Committee considers the use of an
external search agency in recruiting new
Directors.
• Committee discusses the long list, invites
a number of candidates for interview and
makes a recommendation to the Board.
• Committee reviews the induction and
training of new Directors.
Nomination Committee Report
38
Schroder
UK Mid Cap Fund plc
Nomination Committee Report
continued
Application during the year
Selection and induction Board evaluation and Directors’ fees Succession
• Given the retirement of Andrew Page
earlier in the year, and in anticipation of
the retirement of Robert Talbut at the
conclusion of the AGM in 2025, the
Committee discussed the need to appoint
a suitable replacement and hire an
additional Director. The Committee
considers the current Board’s composition,
diversity and efficacy, and a job
specification was agreed for the role.
• A number of independent search firms
were considered to assist with the
recruitment of an independent
non-executive Director, and Trust
Associates were engaged to commence
the process. Trust Associates have
previously been engaged by the
Company, including for the recruitment of
Harry Morley. Trust Associates have no
other connection with the Company or any
of the Directors.
• The Committee will interview suitable
candidates and in due course, expects to
make a recommendation for the
appointment to the Board of a new
non-executive Director.
• The annual Board evaluation, including
evaluation of the Board Committees, was
undertaken in September 2024. The
evaluation was undertaken internally by the
completion of questionnaires.
• The Committee also reviewed each
Director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono not
for profit roles, to ensure that each
Director remained free from conflict and
had sufficient time available to discharge
each of their duties effectively. The
Committee was also mindful of the
concept of ‘overboarding’ and considered
the time, nature and complexity of each
Directors’ other roles and concluded that
it does not believe that any of the
Directors are currently overboarded. All
Directors were considered to be
independent in character and judgement.
The Committee reviews these positions
annually.
• The Committee considered each Director’s
contributions, and noted that in addition to
extensive experience as professionals and
non-executive Directors, each Director had
valuable skills and experience, as detailed
in their biographies on pages 28 and 29.
• Based on its assessment, the Committee
provided individual recommendations for
each Director’s re-election, with the
exception of Robert Talbut, who having
served as a non-executive Director for
nine years in February 2025 will not seek
re-election.
• The Committee reviewed the succession
policy and agreed it was still fit for purpose.
• As previously noted Robert Talbut will be
retiring as a Chair at the forthcoming AGM.
In light of this change, along with the
retirement of Andrew Page earlier in the
year, the Committee began a recruitment
exercise to ensure that the Board has the
appropriate number of Directors and the
right balance of skill-sets.
• The Committee considered the future
needs of the Company and the effect of
individual Directors leaving and whether
this would create a skills/knowledge/
experience gap.
• The Committee believes it is important for
the Board to have the appropriate skills
and diversity and has reviewed its
composition and succession plans with
these in mind
Recommendations made to, and approved by, the Board:
• That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the
Board, contribute towards the Company’s long-term success, and remain free from conflicts with the Company and its Directors, so
should be recommended for re-election (with the exception of Robert Talbut who will be retiring) by shareholders at the AGM.
• That Trust Associates be engaged to assist in the search for a non-executive Director.
Nomination Committee Report
continued
Application during the year
Selection and induction Board evaluation and Directors’ fees Succession
• Given the retirement of Andrew Page
earlier in the year, and in anticipation of
the retirement of Robert Talbut at the
conclusion of the AGM in 2025, the
Committee discussed the need to appoint
a suitable replacement and hire an
additional Director. The Committee
considers the current Board’s composition,
diversity and efficacy, and a job
specification was agreed for the role.
• A number of independent search firms
were considered to assist with the
recruitment of an independent
non-executive Director, and Trust
Associates were engaged to commence
the process. Trust Associates have
previously been engaged by the
Company, including for the recruitment of
Harry Morley. Trust Associates have no
other connection with the Company or any
of the Directors.
• The Committee will interview suitable
candidates and in due course, expects to
make a recommendation for the
appointment to the Board of a new
non-executive Director.
• The annual Board evaluation, including
evaluation of the Board Committees, was
undertaken in September 2024. The
evaluation was undertaken internally by the
completion of questionnaires.
• The Committee also reviewed each
Director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono not
for profit roles, to ensure that each
Director remained free from conflict and
had sufficient time available to discharge
each of their duties effectively. The
Committee was also mindful of the
concept of ‘overboarding’ and considered
the time, nature and complexity of each
Directors’ other roles and concluded that
it does not believe that any of the
Directors are currently overboarded. All
Directors were considered to be
independent in character and judgement.
The Committee reviews these positions
annually.
• The Committee considered each Director’s
contributions, and noted that in addition to
extensive experience as professionals and
non-executive Directors, each Director had
valuable skills and experience, as detailed
in their biographies on pages 28 and 29.
• Based on its assessment, the Committee
provided individual recommendations for
each Director’s re-election, with the
exception of Robert Talbut, who having
served as a non-executive Director for
nine years in February 2025 will not seek
re-election.
• The Committee reviewed the succession
policy and agreed it was still fit for purpose.
• As previously noted Robert Talbut will be
retiring as a Chair at the forthcoming AGM.
In light of this change, along with the
retirement of Andrew Page earlier in the
year, the Committee began a recruitment
exercise to ensure that the Board has the
appropriate number of Directors and the
right balance of skill-sets.
• The Committee considered the future
needs of the Company and the effect of
individual Directors leaving and whether
this would create a skills/knowledge/
experience gap.
• The Committee believes it is important for
the Board to have the appropriate skills
and diversity and has reviewed its
composition and succession plans with
these in mind
Recommendations made to, and approved by, the Board:
• That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the
Board, contribute towards the Company’s long-term success, and remain free from conflicts with the Company and its Directors, so
should be recommended for re-election (with the exception of Robert Talbut who will be retiring) by shareholders at the AGM.
• That Trust Associates be engaged to assist in the search for a non-executive Director.
Schroder
UK Mid Cap Fund plc
39
Other Information (unaudited) Introduction Strategic Report Governance Financial
Remuneration Committee Report
The Remuneration Committee is responsible for making recommendations to the Board on the remuneration of the Directors. All Directors are
members of the Committee, which is considered appropriate by the Directors given that all members are independent non-executive Directors
and Harry Morley is the Chair. Its terms of reference are available on the Company’s web pages: www.schroders.co.uk/ukmidcap.
Approach
• The Committee determines and agrees with the Board the framework or broad policy for the remuneration of the Directors. The objective
of the policy shall be to ensure that members of the Board are, in a fair and responsible manner, rewarded for their individual contributions
to the success of the Company. No Director shall be involved in any decisions as to their own remuneration outcome.
• The Committee reviews the ongoing appropriateness and relevance of the remuneration policy.
• The Committee reviews Director remuneration annually and makes recommendations on the fees paid to non-executive Directors in light
of Directors’ workloads, levels of responsibility and industry norms.
• The Committee ensures that each year the Remuneration Report is put to shareholders for approval as an advisory vote at the AGM, and
the Remuneration Policy is put to shareholders for approval every three years at the AGM.
Application during the year
• The remuneration framework, as set out in the Directors’ Remuneration Report, was unchanged during the year.
• The Committee concluded that the remuneration policy remained appropriate and relevant.
• The Committee reviewed Directors’ fees, using external benchmarking, and determined they remained appropriate.
• The Remuneration Report and Remuneration Policy will be put to shareholders for approval at the forthcoming AGM.
Recommendations made to, and approved by, the Board:
• That the remuneration framework and Remuneration Policy remained appropriate.
• That the Remuneration Report should be put to shareholders for approval as an advisory vote at the forthcoming AGM.
• That Directors’ fees be increased by 4% (rounded the nearest £25 0) to the following levels (effective from 1 October 2024): Chair
£43,75 0, Audit and Risk Committee Chair: £3 5 ,000, and other Directors: £2 9 , 5 00.
Other Information (unaudited) Introduction Strategic Report Governance Financial
Remuneration Committee Report
The Remuneration Committee is responsible for making recommendations to the Board on the remuneration of the Directors. All Directors are
members of the Committee, which is considered appropriate by the Directors given that all members are independent non-executive Directors
and Harry Morley is the Chair. Its terms of reference are available on the Company’s web pages: www.schroders.co.uk/ukmidcap.
Approach
• The Committee determines and agrees with the Board the framework or broad policy for the remuneration of the Directors. The objective
of the policy shall be to ensure that members of the Board are, in a fair and responsible manner, rewarded for their individual contributions
to the success of the Company. No Director shall be involved in any decisions as to their own remuneration outcome.
• The Committee reviews the ongoing appropriateness and relevance of the remuneration policy.
• The Committee reviews Director remuneration annually and makes recommendations on the fees paid to non-executive Directors in light
of Directors’ workloads, levels of responsibility and industry norms.
• The Committee ensures that each year the Remuneration Report is put to shareholders for approval as an advisory vote at the AGM, and
the Remuneration Policy is put to shareholders for approval every three years at the AGM.
Application during the year
• The remuneration framework, as set out in the Directors’ Remuneration Report, was unchanged during the year.
• The Committee concluded that the remuneration policy remained appropriate and relevant.
• The Committee reviewed Directors’ fees, using external benchmarking, and determined they remained appropriate.
• The Remuneration Report and Remuneration Policy will be put to shareholders for approval at the forthcoming AGM.
Recommendations made to, and approved by, the Board:
• That the remuneration framework and Remuneration Policy remained appropriate.
• That the Remuneration Report should be put to shareholders for approval as an advisory vote at the forthcoming AGM.
• That Directors’ fees be increased by 4% (rounded the nearest £25 0) to the following levels (effective from 1 October 2024): Chair
£43,75 0, Audit and Risk Committee Chair: £3 5 ,000, and other Directors: £2 9 , 5 00.
40
Schroder
UK Mid Cap Fund plc
Directors’ Remuneration Report
Introduction
The following remuneration policy is currently in force and is subject
to a binding vote every three years. The next vote will take place at
the AGM to be held in 2026 and the current policy provisions will
apply until that date. The Directors’ annual report on remuneration
below is subject to an annual advisory vote. An ordinary resolution to
approve this report will be put to shareholders at the forthcoming
AGM.
At the AGM held on 21 February 2023 when the policy was last voted
on by shareholders, 97.06% of the votes cast (including votes cast at
the Chair’s discretion) in respect of approval of the Directors’
remuneration policy were in favour, while 2.94% were against.
9,568 votes were withheld.
At the AGM held on 8 March 2024, 99.68% of the votes cast (including
votes cast at the Chair’s discretion) in respect of approval of the
Directors’ remuneration report for the year ended 30 September
2023 were in favour, while 0.32% were against. 27,572 votes were
withheld.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter dealt with by the
Remuneration Committee and the Board.
It is the Remuneration Committee’s policy to determine the level of
Directors’ remuneration having regard to amounts payable to
non-executive Directors in the industry generally, the role that
individual Directors fulfil in respect of Board and Committee
responsibilities, and time committed to the Company’s affairs, taking
into account the aggregate limit of fees set out in the Company’s
Articles of Association (currently £200,000). Any increase in the level
set out therein requires approval by the Board and the Company’s
shareholders.
The Chair of the Board and the Chair of the Audit and Risk Committee
each receive fees at a higher rate than the other Directors to reflect
their additional responsibilities. Directors’ fees are set at a level to
recruit and retain individuals of sufficient calibre, with the level of
knowledge, experience and expertise necessary to promote the
success of the Company in reaching its short and long-term strategic
objectives.
The Board and its Committees exclusively comprise non-executive
Directors. No Director past or present has an entitlement to a
pension from the Company, and the Company has not, and does not
intend to, operate a share scheme for Directors or to award any share
options or long-term performance incentives to any Director. No
Director has a service contract with the Company, although Directors
have a letter of appointment. Directors do not receive exit payments
and are not provided with any compensation for loss of office. No
other payments are made to Directors other than the reimbursement
of reasonable out-of-pocket expenses incurred in attending to the
Company’s business.
Implementation of policy
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during normal
business hours and during the AGM at the location of such meeting.
The Board did not seek the views of shareholders in setting this
remuneration policy. Any comments on the policy received from
shareholders would be considered on a case by case basis.
As the Company does not have any employees, no employee pay and
employment conditions were taken into account when setting this
Remuneration Policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into account research
from third parties on the fee levels of Directors of peer group
companies, inflation, as well as industry norms and factors affecting
the time commitment expected of the Directors. New Directors are
subject to the provisions set out in this remuneration policy.
Directors’ annual report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 30 September 2024.
Consideration of matters relating to Directors’
remuneration
Directors’ remuneration was last reviewed by the Remuneration
Committee in September 2024. Although no external advice was
sought in considering the levels of Directors’ fees, information on fees
paid to Directors of other investment trusts managed by Schroders
and peer group companies was provided by the Manager and
corporate broker and was taken into consideration.
Following this review, the Remuneration Committee recommended
that with effect from 1 October 2024 the fees be increased by 4%
(rounded to the nearest £250) such that, Chair’s annual fee be
increased to £43,750, the Chair of the Audit and Risk Committee’s
annual fee be increased to £35,500 and the annual fee for
non-executive Directors be increased to £29,500.
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during normal
business hours and during the AGM at the location of such meeting.
Directors’ Remuneration Report
Introduction
The following remuneration policy is currently in force and is subject
to a binding vote every three years. The next vote will take place at
the AGM to be held in 2026 and the current policy provisions will
apply until that date. The Directors’ annual report on remuneration
below is subject to an annual advisory vote. An ordinary resolution to
approve this report will be put to shareholders at the forthcoming
AGM.
At the AGM held on 21 February 2023 when the policy was last voted
on by shareholders, 97.06% of the votes cast (including votes cast at
the Chair’s discretion) in respect of approval of the Directors’
remuneration policy were in favour, while 2.94% were against.
9,568 votes were withheld.
At the AGM held on 8 March 2024, 99.68% of the votes cast (including
votes cast at the Chair’s discretion) in respect of approval of the
Directors’ remuneration report for the year ended 30 September
2023 were in favour, while 0.32% were against. 27,572 votes were
withheld.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter dealt with by the
Remuneration Committee and the Board.
It is the Remuneration Committee’s policy to determine the level of
Directors’ remuneration having regard to amounts payable to
non-executive Directors in the industry generally, the role that
individual Directors fulfil in respect of Board and Committee
responsibilities, and time committed to the Company’s affairs, taking
into account the aggregate limit of fees set out in the Company’s
Articles of Association (currently £200,000). Any increase in the level
set out therein requires approval by the Board and the Company’s
shareholders.
The Chair of the Board and the Chair of the Audit and Risk Committee
each receive fees at a higher rate than the other Directors to reflect
their additional responsibilities. Directors’ fees are set at a level to
recruit and retain individuals of sufficient calibre, with the level of
knowledge, experience and expertise necessary to promote the
success of the Company in reaching its short and long-term strategic
objectives.
The Board and its Committees exclusively comprise non-executive
Directors. No Director past or present has an entitlement to a
pension from the Company, and the Company has not, and does not
intend to, operate a share scheme for Directors or to award any share
options or long-term performance incentives to any Director. No
Director has a service contract with the Company, although Directors
have a letter of appointment. Directors do not receive exit payments
and are not provided with any compensation for loss of office. No
other payments are made to Directors other than the reimbursement
of reasonable out-of-pocket expenses incurred in attending to the
Company’s business.
Implementation of policy
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during normal
business hours and during the AGM at the location of such meeting.
The Board did not seek the views of shareholders in setting this
remuneration policy. Any comments on the policy received from
shareholders would be considered on a case by case basis.
As the Company does not have any employees, no employee pay and
employment conditions were taken into account when setting this
Remuneration Policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into account research
from third parties on the fee levels of Directors of peer group
companies, inflation, as well as industry norms and factors affecting
the time commitment expected of the Directors. New Directors are
subject to the provisions set out in this remuneration policy.
Directors’ annual report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 30 September 2024.
Consideration of matters relating to Directors’
remuneration
Directors’ remuneration was last reviewed by the Remuneration
Committee in September 2024. Although no external advice was
sought in considering the levels of Directors’ fees, information on fees
paid to Directors of other investment trusts managed by Schroders
and peer group companies was provided by the Manager and
corporate broker and was taken into consideration.
Following this review, the Remuneration Committee recommended
that with effect from 1 October 2024 the fees be increased by 4%
(rounded to the nearest £250) such that, Chair’s annual fee be
increased to £43,750, the Chair of the Audit and Risk Committee’s
annual fee be increased to £35,500 and the annual fee for
non-executive Directors be increased to £29,500.
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during normal
business hours and during the AGM at the location of such meeting.
Schroder
UK Mid Cap Fund plc
41
Other Information (unaudited) Introduction Strategic Report Governance Financial
Fees paid to Directors
The following amounts were paid by the Company to directors for their services in respect of the year ended 30 September 2024 and the
preceding financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The performance of the Company
over the financial year is presented on the inside front cover, under the heading “performance summary”.
Fees Taxable benefits 1
Total
2024 2023 2024 2023 2024 2023
Director £ £ £ £ £ £
Robert Talbut (Chair) 42,000 40,000 – 302 42,000 40,302
Wendy Colquhoun 28,350 27,000 3,533 1,759 31,883 28,759
Helen Galbraith 31,593 27,000 – – 31,593 27,000
Andrew Page
2
15,006 32,500 1,456 – 16,462 32,500
Harry Morley
3
28,350 2,250 572 161 28,922 2,411
Total 145,299 128,750 5,561 2,222 150,860 130,972
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and NI contributions.
2
Retired from the board on 8 March 2024.
3
Appointed as a Director on 1 September 2023.
The information in the above table has been audited.
Change in annual remuneration payable
2024 2023 2022 2021 2020
Directors % % % % %
Robert Talbut (Chair) 4.2 3.6 18.6 29.0 4.1
Wendy Colquhoun 10.9 7.4 7.1 33.3 N/a
Helen Galbraith 17.0 115.3 N/a N/a N/a
Andrew Page
1
N/a 4.0 4.2 (0.3) 3.8
Harry Morley
2
1,099.6 N/a N/a N/a N/a
Clare Dobie 3
N/a N/a N/a (0.6) 3.6
Robert Rickman 4
N/a N/a N/a N/a (61.1)
Eric Sanderson
5
N/a N/a N/a (64.5) (4.5)
1
Retired from the board on 8 March 2024.
2
Appointed as a Director on 1 September 2023.
3
Retired from the board on 15 September 2022.
4
Retired from the board on 28 January 2020.
5
Retired from the board on 8 February 2021.
The table below compares the remuneration payable to Directors, to distributions made to shareholders during the year under review and the
prior period. In considering these figures, shareholders should take into account the Company’s investment objective.
Distributions to shareholders vs Directors’ remuneration
Year ended Year ended
30 September 30 September
2024 2023
£’000 £’000 % Change
Remuneration payable to Directors 151 131 15.3
Distributions paid to shareholders
Dividends 7,262 6,743
Total distributions paid to shareholders 7,262 6,743 7.7
Other Information (unaudited) Introduction Strategic Report Governance Financial
Fees paid to Directors
The following amounts were paid by the Company to directors for their services in respect of the year ended 30 September 2024 and the
preceding financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The performance of the Company
over the financial year is presented on the inside front cover, under the heading “performance summary”.
Fees Taxable benefits 1
Total
2024 2023 2024 2023 2024 2023
Director £ £ £ £ £ £
Robert Talbut (Chair) 42,000 40,000 – 302 42,000 40,302
Wendy Colquhoun 28,350 27,000 3,533 1,759 31,883 28,759
Helen Galbraith 31,593 27,000 – – 31,593 27,000
Andrew Page
2
15,006 32,500 1,456 – 16,462 32,500
Harry Morley
3
28,350 2,250 572 161 28,922 2,411
Total 145,299 128,750 5,561 2,222 150,860 130,972
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and NI contributions.
2
Retired from the board on 8 March 2024.
3
Appointed as a Director on 1 September 2023.
The information in the above table has been audited.
Change in annual remuneration payable
2024 2023 2022 2021 2020
Directors % % % % %
Robert Talbut (Chair) 4.2 3.6 18.6 29.0 4.1
Wendy Colquhoun 10.9 7.4 7.1 33.3 N/a
Helen Galbraith 17.0 115.3 N/a N/a N/a
Andrew Page
1
N/a 4.0 4.2 (0.3) 3.8
Harry Morley
2
1,099.6 N/a N/a N/a N/a
Clare Dobie 3
N/a N/a N/a (0.6) 3.6
Robert Rickman 4
N/a N/a N/a N/a (61.1)
Eric Sanderson
5
N/a N/a N/a (64.5) (4.5)
1
Retired from the board on 8 March 2024.
2
Appointed as a Director on 1 September 2023.
3
Retired from the board on 15 September 2022.
4
Retired from the board on 28 January 2020.
5
Retired from the board on 8 February 2021.
The table below compares the remuneration payable to Directors, to distributions made to shareholders during the year under review and the
prior period. In considering these figures, shareholders should take into account the Company’s investment objective.
Distributions to shareholders vs Directors’ remuneration
Year ended Year ended
30 September 30 September
2024 2023
£’000 £’000 % Change
Remuneration payable to Directors 151 131 15.3
Distributions paid to shareholders
Dividends 7,262 6,743
Total distributions paid to shareholders 7,262 6,743 7.7
42
Schroder
UK Mid Cap Fund plc
10 Year share price and Benchmark total returns 1
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2014. Definitions of terms and Alternative Performance Measures are given on pages 68 and 69.
Directors’ share interests (audited)
The Company’s Articles of Association do not require Directors to own shares in the Company. The interests of Directors, including those of
connected persons, at the beginning and end of the financial year under review are set out below.
At At
30 September 30 September
2024 2023
Robert Talbut 8,176 8,176
Wendy Colquhoun 2,000 2,000
Helen Galbraith 5,500 5,500
Harry Morley 17,500 9,000
Andrew Page 1
23,128 23,128
1
Andrew Page retired on 8 March 2024.
There have been no changes since the year end.
Harry Morley
Chair of the Remuneration Committee
27 November 2024
FTSE 250 ex Investment Trusts Index Share price
100
125
1 5 0
175
200
30 Sep 24
30 Sep 23
30 Sep 22
30 Sep 21
30 Sep 20
30 Sep 19
30 Sep 18
30 Sep 17
30 Sep 16
30 Sep 15
30 Sep 14
Directors’ Remuneration Report
continued
10 Year share price and Benchmark total returns 1
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2014. Definitions of terms and Alternative Performance Measures are given on pages 68 and 69.
Directors’ share interests (audited)
The Company’s Articles of Association do not require Directors to own shares in the Company. The interests of Directors, including those of
connected persons, at the beginning and end of the financial year under review are set out below.
At At
30 September 30 September
2024 2023
Robert Talbut 8,176 8,176
Wendy Colquhoun 2,000 2,000
Helen Galbraith 5,500 5,500
Harry Morley 17,500 9,000
Andrew Page 1
23,128 23,128
1
Andrew Page retired on 8 March 2024.
There have been no changes since the year end.
Harry Morley
Chair of the Remuneration Committee
27 November 2024
FTSE 250 ex Investment Trusts Index Share price
100
125
1 5 0
175
200
30 Sep 24
30 Sep 23
30 Sep 22
30 Sep 21
30 Sep 20
30 Sep 19
30 Sep 18
30 Sep 17
30 Sep 16
30 Sep 15
30 Sep 14
Directors’ Remuneration Report
continued
Schroder
UK Mid Cap Fund plc
43
Other Information (unaudited) Introduction Strategic Report Governance Financial
Statement of Directors’ Responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors have prepared
the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising Financial Reporting Standard (“FRS”) 102 “The
Financial Reporting Standard applicable in the UK and Republic of
Ireland” and applicable law). Under company law, the Directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company
and of the return or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and accounting estimates that are reasonable
and prudent;
– state whether applicable UK Accounting Standards, comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the financial statements;
– notify the Company’s shareholders in writing about the use of
disclosure exemptions in FRS 102, used in the preparation of the
financial statements; and
– prepare the financial statements on a going concern basis unless
it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Manager is responsible for the maintenance and integrity of the
web pages dedicated to the Company. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ statement
Each of the Directors, whose names and functions are listed on
pages 28 and 29, confirm that to the best of their knowledge:
– the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law), give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
– the Strategic Report contained in the report and financial
statements includes a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal and emerging risks
and uncertainties that it faces; and
– the annual report and financial statements, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
On behalf of the Board
Robert Talbut
Chair
27 November 2024
Other Information (unaudited) Introduction Strategic Report Governance Financial
Statement of Directors’ Responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors have prepared
the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising Financial Reporting Standard (“FRS”) 102 “The
Financial Reporting Standard applicable in the UK and Republic of
Ireland” and applicable law). Under company law, the Directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company
and of the return or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and accounting estimates that are reasonable
and prudent;
– state whether applicable UK Accounting Standards, comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the financial statements;
– notify the Company’s shareholders in writing about the use of
disclosure exemptions in FRS 102, used in the preparation of the
financial statements; and
– prepare the financial statements on a going concern basis unless
it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Manager is responsible for the maintenance and integrity of the
web pages dedicated to the Company. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ statement
Each of the Directors, whose names and functions are listed on
pages 28 and 29, confirm that to the best of their knowledge:
– the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law), give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
– the Strategic Report contained in the report and financial
statements includes a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal and emerging risks
and uncertainties that it faces; and
– the annual report and financial statements, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
On behalf of the Board
Robert Talbut
Chair
27 November 2024
44
Financial
Financial
Independent Auditor’s Report 46
Statement of Comprehensive Income 50
Statement of Changes in Equity 51
Statement of Financial Position 52
Notes to the Financial Statements 53
Schroder Asian Total Return Investment Company plc 45
Financial
Independent Auditor’s Report 46
Statement of Comprehensive Income 50
Statement of Changes in Equity 51
Statement of Financial Position 52
Notes to the Financial Statements 53
Schroder Asian Total Return Investment Company plc 45
46
Schroder
UK Mid Cap Fund plc
Independent Auditor’s Report
to the Members of Schroder UK Mid Cap Fund plc
Opinion on the financial statements
In our opinion the financial statements:
– give a true and fair view of the state of the Company’s affairs as
at 30 September 2024 and of its profit for the year then ended;
– have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
– have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Schroder UK Mid Cap
Fund Plc (the ‘Company’) for the year ended 30 September 2024
which comprise the Statement of Comprehensive Income, the
Statement of Changes in Equity, the Statement of Financial Position
and notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard applicable in the United
Kingdom and Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion. Our
audit opinion is consistent with the additional report to the Audit and
Risk Committee.
Independence
Following the recommendation of the Audit and Risk Committee, we
were appointed by the Board of Directors on 19 July 2024 to audit the
financial statements for the year ended 30 September 2024 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 1 year,
covering the year ended 30 September 2024. We remain
independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to the
Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Company’s ability to continue to
adopt the going concern basis of accounting included:
– Evaluating the appropriateness of the Directors’ method of
assessing the going concern in light of economic and market
conditions by reviewing the information used by the Directors in
completing their assessment;
– Assessing the appropriateness of the Directors’ assumptions and
judgements made in their stress tested forecasts including
consideration of the available cash resources relative to forecast
expenditure and commitments;
– Performing an independent analysis of the liquidity of the
portfolio;
– Reviewing the loan agreements to identify the covenants and
assessing the likelihood of them being breached based on the
Directors’ forecasts and our sensitivity analysis; and
– Assessing the completeness and accuracy of the going concern
disclosures.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In relation to the Company’s reporting on how it has applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report.
Overview
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company
and its environment, including the Company’s system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk of
material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
2024
Valuation and ownership of listed investments.
We were appointed by the Board of Directors on
19 July 2024 to audit the financial statements for the
year ended 30 September 2024. This is our first
auditor’s report and accordingly, prior year
information has not been included.
Key audit
matters
Company financial statements as a whole
£2.4 million based on 1% of Net assets.
We were appointed by the Board of Directors on
19 July 2024 to audit the financial statements for the
year ended 30 September 2024. This is our first
auditor’s report and accordingly, prior year
information has not been included.
Materiality
Independent Auditor’s Report
to the Members of Schroder UK Mid Cap Fund plc
Opinion on the financial statements
In our opinion the financial statements:
– give a true and fair view of the state of the Company’s affairs as
at 30 September 2024 and of its profit for the year then ended;
– have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
– have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Schroder UK Mid Cap
Fund Plc (the ‘Company’) for the year ended 30 September 2024
which comprise the Statement of Comprehensive Income, the
Statement of Changes in Equity, the Statement of Financial Position
and notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard applicable in the United
Kingdom and Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion. Our
audit opinion is consistent with the additional report to the Audit and
Risk Committee.
Independence
Following the recommendation of the Audit and Risk Committee, we
were appointed by the Board of Directors on 19 July 2024 to audit the
financial statements for the year ended 30 September 2024 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 1 year,
covering the year ended 30 September 2024. We remain
independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to the
Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Company’s ability to continue to
adopt the going concern basis of accounting included:
– Evaluating the appropriateness of the Directors’ method of
assessing the going concern in light of economic and market
conditions by reviewing the information used by the Directors in
completing their assessment;
– Assessing the appropriateness of the Directors’ assumptions and
judgements made in their stress tested forecasts including
consideration of the available cash resources relative to forecast
expenditure and commitments;
– Performing an independent analysis of the liquidity of the
portfolio;
– Reviewing the loan agreements to identify the covenants and
assessing the likelihood of them being breached based on the
Directors’ forecasts and our sensitivity analysis; and
– Assessing the completeness and accuracy of the going concern
disclosures.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In relation to the Company’s reporting on how it has applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report.
Overview
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company
and its environment, including the Company’s system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk of
material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
2024
Valuation and ownership of listed investments.
We were appointed by the Board of Directors on
19 July 2024 to audit the financial statements for the
year ended 30 September 2024. This is our first
auditor’s report and accordingly, prior year
information has not been included.
Key audit
matters
Company financial statements as a whole
£2.4 million based on 1% of Net assets.
We were appointed by the Board of Directors on
19 July 2024 to audit the financial statements for the
year ended 30 September 2024. This is our first
auditor’s report and accordingly, prior year
information has not been included.
Materiality
How the scope of our audit addressed the
Key audit matter key audit matter
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that
are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as
follows:
Company financial statements
1
2024
£m
Materiality 2.4
Basis for determining materiality 1% of Net assets
Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance for users of the
financial statements.
Performance materiality 1.7
Basis for determining materiality 70% of materiality
The level of performance materiality applied was set after having considered a number of factors
including the expected total value of known and likely misstatements, the level of transactions in the
year and given this is a first-year audit.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of £121k. We also agreed
to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
We responded to this matter by testing the valuation and
ownership of the whole portfolio of listed investments. We
performed the following procedures:
– Confirmed the year-end bid price used by agreeing to
externally quoted prices;
– Assessed if there were contra indicators, such as
liquidity considerations, to suggest bid price is not the
most appropriate indication of fair value by considering
the realisation period for individual holdings;
– Recalculated the valuation by multiplying the number of
shares held per the statement obtained from the
custodian by the valuation per share; and
• Obtained direct confirmation of the number of shares
held per equity investment from the custodian
regarding all investments held at the balance sheet
date.
Key observations:
Based on our procedures performed we did not identify any
matters to suggest the valuation or ownership of the listed
investments was not appropriate.
The investment portfolio at the year-end
comprised of listed equity investments held
at fair value through profit or loss as
disclosed in Note 10.
There is a risk that the prices used for the
listed investments held by the Company are
not reflective of fair value.
There is also a risk of error in the recording
of investment holdings such that those
recorded do not appropriately reflect the
investments owned by the Company.
We considered the valuation and ownership
of investments to be a significant audit area
as investments represent the most
significant balance in the financial
statements and underpins the principal
activity of the entity.
For these reasons, we considered this to be a
key area for our overall audit strategy and
allocation of our resources and hence a Key
Audit Matter.
Valuation and ownership of
listed investments
(Note 1 and 10)
Rationale for the percentage
applied for performance
materiality
Schroder UK Mid Cap Fund plc 47
Introduction Strategic Report Governance Financial Other Information (unaudited)
1
We were appointed by the Board of Directors on 19 July 2024 to audit the financial statements for the year ended 30 September 2024. This is our first auditor’s
report and accordingly, prior year information has not been included.
Key audit matter key audit matter
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that
are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as
follows:
Company financial statements
1
2024
£m
Materiality 2.4
Basis for determining materiality 1% of Net assets
Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance for users of the
financial statements.
Performance materiality 1.7
Basis for determining materiality 70% of materiality
The level of performance materiality applied was set after having considered a number of factors
including the expected total value of known and likely misstatements, the level of transactions in the
year and given this is a first-year audit.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of £121k. We also agreed
to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
We responded to this matter by testing the valuation and
ownership of the whole portfolio of listed investments. We
performed the following procedures:
– Confirmed the year-end bid price used by agreeing to
externally quoted prices;
– Assessed if there were contra indicators, such as
liquidity considerations, to suggest bid price is not the
most appropriate indication of fair value by considering
the realisation period for individual holdings;
– Recalculated the valuation by multiplying the number of
shares held per the statement obtained from the
custodian by the valuation per share; and
• Obtained direct confirmation of the number of shares
held per equity investment from the custodian
regarding all investments held at the balance sheet
date.
Key observations:
Based on our procedures performed we did not identify any
matters to suggest the valuation or ownership of the listed
investments was not appropriate.
The investment portfolio at the year-end
comprised of listed equity investments held
at fair value through profit or loss as
disclosed in Note 10.
There is a risk that the prices used for the
listed investments held by the Company are
not reflective of fair value.
There is also a risk of error in the recording
of investment holdings such that those
recorded do not appropriately reflect the
investments owned by the Company.
We considered the valuation and ownership
of investments to be a significant audit area
as investments represent the most
significant balance in the financial
statements and underpins the principal
activity of the entity.
For these reasons, we considered this to be a
key area for our overall audit strategy and
allocation of our resources and hence a Key
Audit Matter.
Valuation and ownership of
listed investments
(Note 1 and 10)
Rationale for the percentage
applied for performance
materiality
Schroder UK Mid Cap Fund plc 47
Introduction Strategic Report Governance Financial Other Information (unaudited)
1
We were appointed by the Board of Directors on 19 July 2024 to audit the financial statements for the year ended 30 September 2024. This is our first auditor’s
report and accordingly, prior year information has not been included.
48
Schroder
UK Mid Cap Fund plc
Independent Auditor’s Report
to the Members of Schroder UK Mid Cap Fund plc
continued
Other information
The directors are responsible for the other information. The other
information comprises the information included in the Annual Report
and Financial Statements other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or
our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The UK Listing Rules require us to review the Directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements, or our knowledge obtained during the audit.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and
matters as described below.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Going concern
and
longer-term
viability
– The Directors’ statement with regards to the
appropriateness of adopting the going
concern basis of accounting and any material
uncertainties identified set out on page 25; and
– The Directors’ explanation as to their
assessment of the Company’s prospects, the
period this assessment covers and why the
period is appropriate set out on page 25.
Other Code
provisions
– Directors’ statement on fair, balanced and
understandable set out on page 43;
– Board’s confirmation that it has carried out
a robust assessment of the emerging and
principal risks set out on pages 22 to 24;
– The section of the annual report that
describes the review of effectiveness of risk
management and internal control systems set
out on page 22; and
– The section describing the work of the Audit
and Risk Committee set out on pages 22 to 35.
In our opinion, based on the work undertaken in
the course of the audit:
– the information given in the Strategic report
and the Directors’ report for the financial year
for which the financial statements are
prepared is consistent with the financial
statements; and
– the Strategic report and the Directors’ report
have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of
the Company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or the
Directors’ report.
Strategic
report and
Directors’
report
In our opinion, the part of the Directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Directors’
remuneration
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report to you if,
in our opinion:
– adequate accounting records have not been
kept, or returns adequate for our audit have
not been received from branches not visited
by us; or
– the financial statements and the part of the
Directors’ remuneration report to be audited
are not in agreement with the accounting
records and returns; or
– certain disclosures of Directors’ remuneration
specified by law are not made; or
– we have not received all the information and
explanations we require for our audit.
Matters on
which we
are required
to report by
exception
Independent Auditor’s Report
to the Members of Schroder UK Mid Cap Fund plc
continued
Other information
The directors are responsible for the other information. The other
information comprises the information included in the Annual Report
and Financial Statements other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or
our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The UK Listing Rules require us to review the Directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements, or our knowledge obtained during the audit.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and
matters as described below.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Going concern
and
longer-term
viability
– The Directors’ statement with regards to the
appropriateness of adopting the going
concern basis of accounting and any material
uncertainties identified set out on page 25; and
– The Directors’ explanation as to their
assessment of the Company’s prospects, the
period this assessment covers and why the
period is appropriate set out on page 25.
Other Code
provisions
– Directors’ statement on fair, balanced and
understandable set out on page 43;
– Board’s confirmation that it has carried out
a robust assessment of the emerging and
principal risks set out on pages 22 to 24;
– The section of the annual report that
describes the review of effectiveness of risk
management and internal control systems set
out on page 22; and
– The section describing the work of the Audit
and Risk Committee set out on pages 22 to 35.
In our opinion, based on the work undertaken in
the course of the audit:
– the information given in the Strategic report
and the Directors’ report for the financial year
for which the financial statements are
prepared is consistent with the financial
statements; and
– the Strategic report and the Directors’ report
have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of
the Company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or the
Directors’ report.
Strategic
report and
Directors’
report
In our opinion, the part of the Directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Directors’
remuneration
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report to you if,
in our opinion:
– adequate accounting records have not been
kept, or returns adequate for our audit have
not been received from branches not visited
by us; or
– the financial statements and the part of the
Directors’ remuneration report to be audited
are not in agreement with the accounting
records and returns; or
– certain disclosures of Directors’ remuneration
specified by law are not made; or
– we have not received all the information and
explanations we require for our audit.
Matters on
which we
are required
to report by
exception
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
Non-compliance with laws and regulations
Based on:
– Our understanding of the Company and the industry in which it
operates;
– Discussion with the Investment Manager, the Administrator and
Those Charged With Governance; and
– Obtaining and understanding of the Company’s policies and
procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be the
Companies Act 2006, the FCA listing and DTR rules, the principles of
the AIC Code of Corporate Governance, industry practice represented
by the AIC SORP, the applicable accounting framework, and
qualification as an Investment Trust under UK tax legislation as any
non-compliance of this would lead to the Company losing various
deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
– Agreement of the financial statement disclosures to underlying
supporting documentation;
– Enquiries of management and Those Charged With Governance
relating to the existence of any non-compliance with laws and
regulations;
– Reviewing minutes of meeting of those charged with governance
throughout the period for instances of non-compliance with laws
and regulations; and
– Reviewing the calculation in relation to Investment Trust
compliance to check that the Company was meeting its
requirements to retain their Investment Trust Status. This
included a review of other qualitative factors and ensuring
compliance with these.
Fraud
We assessed the susceptibility of the financial statement to material
misstatement including fraud.
Our risk assessment procedures included:
– Enquiry with the Investment Manager, the Administrator and
Those Charged With Governance regarding any known or
suspected instances of fraud;
– Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud; and
– Discussion amongst the engagement team as to how and where
fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas most
susceptible to be management override of controls.
Our procedures in respect of the above included:
– In addressing the risk of management override of control, we:
o Performed a review of estimates and judgements applied by
management in the financial statements to assess their
appropriateness and the existence of any systematic bias;
o Considered the opportunity and incentive to manipulate
accounting entries and target tested relevant adjustments
made in the period end financial reporting process;
o Reviewed for significant transactions outside the normal
course of business; and
o Performed a review of unadjusted audit differences, if any,
for indications of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members, who were all
deemed to have the appropriate competence and capabilities and
remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of
not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non- compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to become
aware of it.
A further description of our responsibilities is available on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as
a body, for our audit work, for this report, or for the opinions we
have formed.
Peter Smith (Senior statutory auditor)
for and on behalf of BDO LLP, Statutory Auditor
London, UK
27 November 2024
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Schroder UK Mid Cap Fund plc 49
Introduction Strategic Report Governance Financial Other Information (unaudited)
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
Non-compliance with laws and regulations
Based on:
– Our understanding of the Company and the industry in which it
operates;
– Discussion with the Investment Manager, the Administrator and
Those Charged With Governance; and
– Obtaining and understanding of the Company’s policies and
procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be the
Companies Act 2006, the FCA listing and DTR rules, the principles of
the AIC Code of Corporate Governance, industry practice represented
by the AIC SORP, the applicable accounting framework, and
qualification as an Investment Trust under UK tax legislation as any
non-compliance of this would lead to the Company losing various
deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
– Agreement of the financial statement disclosures to underlying
supporting documentation;
– Enquiries of management and Those Charged With Governance
relating to the existence of any non-compliance with laws and
regulations;
– Reviewing minutes of meeting of those charged with governance
throughout the period for instances of non-compliance with laws
and regulations; and
– Reviewing the calculation in relation to Investment Trust
compliance to check that the Company was meeting its
requirements to retain their Investment Trust Status. This
included a review of other qualitative factors and ensuring
compliance with these.
Fraud
We assessed the susceptibility of the financial statement to material
misstatement including fraud.
Our risk assessment procedures included:
– Enquiry with the Investment Manager, the Administrator and
Those Charged With Governance regarding any known or
suspected instances of fraud;
– Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud; and
– Discussion amongst the engagement team as to how and where
fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas most
susceptible to be management override of controls.
Our procedures in respect of the above included:
– In addressing the risk of management override of control, we:
o Performed a review of estimates and judgements applied by
management in the financial statements to assess their
appropriateness and the existence of any systematic bias;
o Considered the opportunity and incentive to manipulate
accounting entries and target tested relevant adjustments
made in the period end financial reporting process;
o Reviewed for significant transactions outside the normal
course of business; and
o Performed a review of unadjusted audit differences, if any,
for indications of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members, who were all
deemed to have the appropriate competence and capabilities and
remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of
not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non- compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to become
aware of it.
A further description of our responsibilities is available on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as
a body, for our audit work, for this report, or for the opinions we
have formed.
Peter Smith (Senior statutory auditor)
for and on behalf of BDO LLP, Statutory Auditor
London, UK
27 November 2024
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Schroder UK Mid Cap Fund plc 49
Introduction Strategic Report Governance Financial Other Information (unaudited)
50
Schroder
UK Mid Cap Fund plc
Statement of Comprehensive Income
for the year ended 30 September 2024
2024 2023
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value through
profit or loss 2 – 31,395 31,395 – 26,716 26,716
Income from investments 3 8,614 – 8,614 9,024 298 9,322
Other interest receivable and similar income 3 123 – 123 140 – 140
Gross return 8,737 31,395 40,132 9,164 27,014 36,178
Investment management fee 4 (495) (1,155) (1,650) (451) (1,053) (1,504)
Administrative expenses 5 (738) – (738) (601) – (601)
Net return before finance costs and taxation 7,504 30,240 37,744 8,112 25,961 34,073
Finance costs 6 (402) (937) (1,339) (270) (630) (900)
Net return before taxation 7,102 29,303 36,405 7,842 25,331 33,173
Taxation 7 – – – – – –
Net return after taxation 7,102 29,303 36,405 7,842 25,331 33,173
Return per share (pence) 9 20.54 84.74 105.28 22.68 73.25 95.93
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 Association of Investment Companies. 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 year.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the
year.
The notes on pages 53 to 62 form an integral part of these financial statements.
Statement of Comprehensive Income
for the year ended 30 September 2024
2024 2023
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value through
profit or loss 2 – 31,395 31,395 – 26,716 26,716
Income from investments 3 8,614 – 8,614 9,024 298 9,322
Other interest receivable and similar income 3 123 – 123 140 – 140
Gross return 8,737 31,395 40,132 9,164 27,014 36,178
Investment management fee 4 (495) (1,155) (1,650) (451) (1,053) (1,504)
Administrative expenses 5 (738) – (738) (601) – (601)
Net return before finance costs and taxation 7,504 30,240 37,744 8,112 25,961 34,073
Finance costs 6 (402) (937) (1,339) (270) (630) (900)
Net return before taxation 7,102 29,303 36,405 7,842 25,331 33,173
Taxation 7 – – – – – –
Net return after taxation 7,102 29,303 36,405 7,842 25,331 33,173
Return per share (pence) 9 20.54 84.74 105.28 22.68 73.25 95.93
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 Association of Investment Companies. 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 year.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the
year.
The notes on pages 53 to 62 form an integral part of these financial statements.
Schroder
UK Mid Cap Fund plc
51
Introduction Strategic Report Governance Financial Other Information (unaudited)
Called-up Capital Share
share Share redemption Merger purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 September 2022 9,036 13,971 220 2,184 7,233 145,629 9,120 187,393
Net return after taxation – – – – – 25,331 7,842 33,173
Dividends paid in the year 8 – – – – – – (6,743) (6,743)
At 30 September 2023 9,036 13,971 220 2,184 7,233 170,960 10,219 213,823
Net return after taxation – – – – – 29,303 7,102 36,405
Dividends paid in the year 8 – – – – – – (7,262) (7,262)
At 30 September 2024 9,036 13,971 220 2,184 7,233 200,263 10,059 242,966
The notes on pages 53 to 62 form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 30 September 2024
Introduction Strategic Report Governance Financial Other Information (unaudited)
Called-up Capital Share
share Share redemption Merger purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 September 2022 9,036 13,971 220 2,184 7,233 145,629 9,120 187,393
Net return after taxation – – – – – 25,331 7,842 33,173
Dividends paid in the year 8 – – – – – – (6,743) (6,743)
At 30 September 2023 9,036 13,971 220 2,184 7,233 170,960 10,219 213,823
Net return after taxation – – – – – 29,303 7,102 36,405
Dividends paid in the year 8 – – – – – – (7,262) (7,262)
At 30 September 2024 9,036 13,971 220 2,184 7,233 200,263 10,059 242,966
The notes on pages 53 to 62 form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 30 September 2024
52
Schroder
UK Mid Cap Fund plc
Statement of Financial Position
at 30 September 2024
Restated
2024 2023
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 261,421 227,950
Current assets
Debtors 11 7,469 2,515
Current asset investments* 12 116 4,438
Cash at bank and in hand* 1,845 934
9,430 7,887
Current liabilities
Creditors: amounts falling due within one year 13 (27,885) (22,014)
Net current liabilities (18,455) (14,127)
Total assets less current liabilities 242,966 213,823
Net assets 242,966 213,823
Capital and reserves
Called-up share capital 14 9,036 9,036
Share premium 15 13,971 13,971
Capital redemption reserve 15 220 220
Merger reserve 15 2,184 2,184
Share purchase reserve 15 7,233 7,233
Capital reserves 15 200,263 170,960
Revenue reserve 15 10,059 10,219
Total equity shareholders’ funds 242,966 213,823
Net asset value per share (pence) 16 702.60 618.32
*For details of the prior period restatement, please refer to note 1(l).
These financial statements were approved and authorised for issue by the board of directors on 27 November 2024 and signed on its behalf by:
Robert Talbut
Chair
The notes on pages 53 to 62 form an integral part of these financial statements.
Registered in England and Wales as a public company limited by shares
Company registration number: SC082551
Statement of Financial Position
at 30 September 2024
Restated
2024 2023
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 261,421 227,950
Current assets
Debtors 11 7,469 2,515
Current asset investments* 12 116 4,438
Cash at bank and in hand* 1,845 934
9,430 7,887
Current liabilities
Creditors: amounts falling due within one year 13 (27,885) (22,014)
Net current liabilities (18,455) (14,127)
Total assets less current liabilities 242,966 213,823
Net assets 242,966 213,823
Capital and reserves
Called-up share capital 14 9,036 9,036
Share premium 15 13,971 13,971
Capital redemption reserve 15 220 220
Merger reserve 15 2,184 2,184
Share purchase reserve 15 7,233 7,233
Capital reserves 15 200,263 170,960
Revenue reserve 15 10,059 10,219
Total equity shareholders’ funds 242,966 213,823
Net asset value per share (pence) 16 702.60 618.32
*For details of the prior period restatement, please refer to note 1(l).
These financial statements were approved and authorised for issue by the board of directors on 27 November 2024 and signed on its behalf by:
Robert Talbut
Chair
The notes on pages 53 to 62 form an integral part of these financial statements.
Registered in England and Wales as a public company limited by shares
Company registration number: SC082551
Schroder
UK Mid Cap Fund plc
53
Introduction Strategic Report Governance Financial Other Information (unaudited)
Notes to the Financial Statements
1. Accounting policies
(a) Basis of accounting
Schroder UK Mid Cap Fund plc (“the Company”) is registered in Scotland as a public company limited by shares. The Company’s registered office
is 9 Haymarket Square, Edinburgh EH3 8FY.
The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice
(“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture
Capital Trusts” (the “SORP”) issued by the Association of Investment Companies in July 2022. All of the Company’s operations are of a continuing
nature.
The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of
investments held at fair value through profit or loss. The directors believe that the Company has adequate resources to continue operating for
at least 12 months from the date of approval of these financial statements. In forming this opinion, the directors have taken into consideration:
stress testing prepared by the Manager which modelled a 50% decline in valuation of investments and investment income and demonstrated
the Company’s ability to comply with the covenants of its borrowing agreements and pay its operating expenses; the controls and monitoring
processes in place; the Company’s level of debt and other payables; the low level of operating expenses, comprising largely variable costs which
would reduce pro-rata in the event of a market downturn; and that the Company’s assets comprise cash and readily realisable securities quoted
in active markets. In forming this opinion, the directors have also considered the loan currently in place which expires on 26 February 2025.
Further details of directors’ considerations regarding this are given in the Chair’s Statement, Portfolio Managers’ Review, Going Concern
Statement, Viability Statement and under the Principal and emerging risks and uncertainties heading on page 22.
The Company has not presented a statement of cash flows, as it is not required for an investment fund whose investments are highly liquid,
carried at market value and which presents a statement of changes in equity. The financial statements are presented in sterling and amounts
have been rounded to the nearest thousand.
The accounting policies applied to these financial statements are consistent with those applied in the financial statements for the year ended
30 September 2023.
No significant judgements, estimates or assumptions have been required in the preparation of the financial statements for the current or
preceding financial year.
(b) Valuation of investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth.
This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment
objective and information is provided internally on that basis to the Company’s board of directors. Accordingly, upon initial recognition the
investments are designated by the Company as “held at fair value through profit or loss”. They are included initially at fair value which is taken to
be their cost, excluding expenses incidental to purchase which are written off to capital at the time of acquisition. Subsequently the investments
are valued at fair value, which are quoted bid prices.
Any investments that are unlisted or not actively traded would be valued using a variety of techniques to determine their fair value; any such
valuations would be reviewed by both the AIFM’s fair value pricing committee and by the directors.
All purchases and sales are accounted for on a trade date basis.
(c) Accounting for reserves
Gains and losses on sales of investments and increases and decreases in the valuation of investments are included in the statement of
comprehensive income and in capital reserves within “gains on investments held at fair value through profit or loss”.
(d) Income
Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the board, the dividend is capital in nature,
in which case it is included in capital.
Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend
foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital.
Dividends from UK REITs are split into PID (Property Income Distributions) and Non_PID components for tax purposes. Revenue arising from UK
REITs tax exempt rental business is colloquially known as PID revenue and is taxable in the hands if the Trust. A UK REIT may also carry out
activities that give rise to taxable profits and gains, it is from these that the REIT will make a Non_PID distribution, these are treated for tax
purposes in the same way as dividends from UK companies.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income Statement with the
following exceptions:
– The management fee is allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
– Expenses incidental to the purchase and sale of investments are written off to capital at the time of the transaction.
These expenses are commonly referred to as transaction costs and comprise brokerage commission and stamp duty.
Details of transaction costs are given in note 10 on page 56.
(f) Finance costs
Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis
using the effective interest method and in accordance with FRS 102.
Finance costs are allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and capital return
from the Company’s investment portfolio.
Introduction Strategic Report Governance Financial Other Information (unaudited)
Notes to the Financial Statements
1. Accounting policies
(a) Basis of accounting
Schroder UK Mid Cap Fund plc (“the Company”) is registered in Scotland as a public company limited by shares. The Company’s registered office
is 9 Haymarket Square, Edinburgh EH3 8FY.
The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice
(“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture
Capital Trusts” (the “SORP”) issued by the Association of Investment Companies in July 2022. All of the Company’s operations are of a continuing
nature.
The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of
investments held at fair value through profit or loss. The directors believe that the Company has adequate resources to continue operating for
at least 12 months from the date of approval of these financial statements. In forming this opinion, the directors have taken into consideration:
stress testing prepared by the Manager which modelled a 50% decline in valuation of investments and investment income and demonstrated
the Company’s ability to comply with the covenants of its borrowing agreements and pay its operating expenses; the controls and monitoring
processes in place; the Company’s level of debt and other payables; the low level of operating expenses, comprising largely variable costs which
would reduce pro-rata in the event of a market downturn; and that the Company’s assets comprise cash and readily realisable securities quoted
in active markets. In forming this opinion, the directors have also considered the loan currently in place which expires on 26 February 2025.
Further details of directors’ considerations regarding this are given in the Chair’s Statement, Portfolio Managers’ Review, Going Concern
Statement, Viability Statement and under the Principal and emerging risks and uncertainties heading on page 22.
The Company has not presented a statement of cash flows, as it is not required for an investment fund whose investments are highly liquid,
carried at market value and which presents a statement of changes in equity. The financial statements are presented in sterling and amounts
have been rounded to the nearest thousand.
The accounting policies applied to these financial statements are consistent with those applied in the financial statements for the year ended
30 September 2023.
No significant judgements, estimates or assumptions have been required in the preparation of the financial statements for the current or
preceding financial year.
(b) Valuation of investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth.
This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment
objective and information is provided internally on that basis to the Company’s board of directors. Accordingly, upon initial recognition the
investments are designated by the Company as “held at fair value through profit or loss”. They are included initially at fair value which is taken to
be their cost, excluding expenses incidental to purchase which are written off to capital at the time of acquisition. Subsequently the investments
are valued at fair value, which are quoted bid prices.
Any investments that are unlisted or not actively traded would be valued using a variety of techniques to determine their fair value; any such
valuations would be reviewed by both the AIFM’s fair value pricing committee and by the directors.
All purchases and sales are accounted for on a trade date basis.
(c) Accounting for reserves
Gains and losses on sales of investments and increases and decreases in the valuation of investments are included in the statement of
comprehensive income and in capital reserves within “gains on investments held at fair value through profit or loss”.
(d) Income
Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the board, the dividend is capital in nature,
in which case it is included in capital.
Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend
foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital.
Dividends from UK REITs are split into PID (Property Income Distributions) and Non_PID components for tax purposes. Revenue arising from UK
REITs tax exempt rental business is colloquially known as PID revenue and is taxable in the hands if the Trust. A UK REIT may also carry out
activities that give rise to taxable profits and gains, it is from these that the REIT will make a Non_PID distribution, these are treated for tax
purposes in the same way as dividends from UK companies.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income Statement with the
following exceptions:
– The management fee is allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
– Expenses incidental to the purchase and sale of investments are written off to capital at the time of the transaction.
These expenses are commonly referred to as transaction costs and comprise brokerage commission and stamp duty.
Details of transaction costs are given in note 10 on page 56.
(f) Finance costs
Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis
using the effective interest method and in accordance with FRS 102.
Finance costs are allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and capital return
from the Company’s investment portfolio.
1.
Accounting policies continued
(g) Financial instruments
Cash at bank and in hand compromises cash held in the bank. Current asset investments comprise investments in money market funds and
highly liquid investments which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.
Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with debtors
reduced by appropriate allowances for estimated irrecoverable amounts.
Bank loans and overdrafts are initially measured at fair value and subsequently at amortised cost. They are recorded at the proceeds received
net of direct issue costs.
(h) Taxation
The tax charge for the year is based on amounts expected to be received or paid.
Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is
probable that taxable profits will be available against which those timing differences can be utilised.
Tax relief is allocated to expenses charged to the capital column of the Income Statement on the “marginal basis”. On this basis, if taxable
income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to the capital column.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to reverse, based
on tax rates that have been enacted or substantively enacted at the accounting date and is measured on an undiscounted basis.
(i) Value added tax (“VAT”)
Expenses are disclosed inclusive of the related irrecoverable VAT.
(j) Dividends payable
In accordance with FRS 102, the final dividend is included in the financial statements in the year in which it is approved by shareholders.
(k) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing shares into treasury, including the related stamp duty and transaction costs is dealt with in the Statement of Changes
in Equity and charged to “Share purchase reserve”. Share repurchase transactions are accounted for on a trade date basis.
The sales proceeds of treasury shares reissued are treated as a realised profit up to the amount of the purchase price of those shares and is
transferred to capital reserves. The excess of the sales proceeds over the purchase price is transferred to “share premium”.
(l) Prior Period Adjustment
Cash at bank and in hand in the Balance Sheet has been restated to exclude investments in money market funds of £4.4 million for the year ended
30 September 2023 and disclose them separately as current asset investments, to conform with those required by the Companies Act – Statutory
format of the Balance Sheet. As such cash at bank and in hand for the year ended 30 September 2023 has decreased by £4.4 million, and current
asset investments have increased by the same amount. There is no impact on other line items in the Balance Sheet nor on total current assets.
2. Gains on investments held at fair value through profit or loss 2024 2023
£’000 £’000
Gains/(losses) on sales of investments based on historic cost 4,542 (1,032)
Amounts recognised as investment losses/(gains) in the previous year in respect of investments sold in the year 5,878 9,922
Gains on sales of investments based on the carrying value at the previous balance sheet date 10,420 8,890
Unrealised gain recognised in respect of investments continuing to be held 20,975 17,826
Gains on investments held at fair value through profit or loss 31,395 26,716
3. Income 2024 2023
£’000 £’000
Revenue:
Income from investments:
UK dividends 8,247 8,606
UK property income distributions 359 418
Other income 8 –
8,614 9,024
Other interest receivable and similar income:
Deposit interest 123 140
8,737 9,164
Capital:
Special dividends allocated to capital – 298
54 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
(g) Financial instruments
Cash at bank and in hand compromises cash held in the bank. Current asset investments comprise investments in money market funds and
highly liquid investments which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.
Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with debtors
reduced by appropriate allowances for estimated irrecoverable amounts.
Bank loans and overdrafts are initially measured at fair value and subsequently at amortised cost. They are recorded at the proceeds received
net of direct issue costs.
(h) Taxation
The tax charge for the year is based on amounts expected to be received or paid.
Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is
probable that taxable profits will be available against which those timing differences can be utilised.
Tax relief is allocated to expenses charged to the capital column of the Income Statement on the “marginal basis”. On this basis, if taxable
income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to the capital column.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to reverse, based
on tax rates that have been enacted or substantively enacted at the accounting date and is measured on an undiscounted basis.
(i) Value added tax (“VAT”)
Expenses are disclosed inclusive of the related irrecoverable VAT.
(j) Dividends payable
In accordance with FRS 102, the final dividend is included in the financial statements in the year in which it is approved by shareholders.
(k) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing shares into treasury, including the related stamp duty and transaction costs is dealt with in the Statement of Changes
in Equity and charged to “Share purchase reserve”. Share repurchase transactions are accounted for on a trade date basis.
The sales proceeds of treasury shares reissued are treated as a realised profit up to the amount of the purchase price of those shares and is
transferred to capital reserves. The excess of the sales proceeds over the purchase price is transferred to “share premium”.
(l) Prior Period Adjustment
Cash at bank and in hand in the Balance Sheet has been restated to exclude investments in money market funds of £4.4 million for the year ended
30 September 2023 and disclose them separately as current asset investments, to conform with those required by the Companies Act – Statutory
format of the Balance Sheet. As such cash at bank and in hand for the year ended 30 September 2023 has decreased by £4.4 million, and current
asset investments have increased by the same amount. There is no impact on other line items in the Balance Sheet nor on total current assets.
2. Gains on investments held at fair value through profit or loss 2024 2023
£’000 £’000
Gains/(losses) on sales of investments based on historic cost 4,542 (1,032)
Amounts recognised as investment losses/(gains) in the previous year in respect of investments sold in the year 5,878 9,922
Gains on sales of investments based on the carrying value at the previous balance sheet date 10,420 8,890
Unrealised gain recognised in respect of investments continuing to be held 20,975 17,826
Gains on investments held at fair value through profit or loss 31,395 26,716
3. Income 2024 2023
£’000 £’000
Revenue:
Income from investments:
UK dividends 8,247 8,606
UK property income distributions 359 418
Other income 8 –
8,614 9,024
Other interest receivable and similar income:
Deposit interest 123 140
8,737 9,164
Capital:
Special dividends allocated to capital – 298
54 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
Schroder
UK Mid Cap Fund plc
55
Introduction Strategic Report Governance Financial Other Information (unaudited)
4. Investment management fee 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 495 1,155 1,650 451 1,053 1,504
The bases for calculating the investment management fee and performance fee are set out in the Directors’ Report on page 31 and details of all
amounts payable to the Manager are given in note 17 on page 58.
5. Administrative expenses 2024 2023
£’000 £’000
Other administrative expenses 351 238
Secretarial fee 176 162
Directors’ fees 145 129
Auditor’s remuneration for audit services
1
66 72
738 601
1
Includes £11,000 (2023: £12,000) irrecoverable VAT. No amounts are payable to the auditor for non-audit services.
6. Finance costs 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 402 937 1,339 270 630 900
7. Taxation
(a) Analysis of tax charge for the year
2024 2023
£’000 £’000
Taxation for the year – –
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2023: lower) than the Company’s applicable rate of corporation tax in for the year of 25% (2023: 22%) The
factors affecting the current tax charge for the year are as follows:
2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) on ordinary activities before taxation 7,102 29,303 36,405 7,842 25,331 33,173
Net return/(loss) on ordinary activities before taxation multiplied
by the Company’s applicable rate of corporation tax for the year
of 25% (2023: 22%) 1,775 7,326 9,101 1,725 5,573 7,298
Effects of:
Capital returns on investments – (7,849) (7,849) – (5,877) (5,877)
Income not chargeable to corporation tax (2,062) – (2,062) (1,893) (66) (1,959)
Unrelieved expenses 287 523 810 168 370 538
Taxation for the year – – – – – –
(c) Deferred tax
At 30 September 2024, the Company had surplus management expenses of £37,833,000 (2023: £35,832,000) and a non-trade loan relationship
deficit of £5,278,000 (2023: £4,041,000). A deferred tax asset has not been recognised in respect of these losses because the investment
portfolio of the Company is not expected to generate taxable income in future periods in excess of the deductible expenses of those future
periods and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing tax losses.
Accordingly, the deferred tax asset has been calculated based on the corporation tax rate in effect from 1 April 2023 of 25%, as enacted by the
Finance Act 2021.
Given the Company’s intention to meet the conditions required to retain its status as an Investment Trust Company, no provision has been
made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.
Introduction Strategic Report Governance Financial Other Information (unaudited)
4. Investment management fee 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 495 1,155 1,650 451 1,053 1,504
The bases for calculating the investment management fee and performance fee are set out in the Directors’ Report on page 31 and details of all
amounts payable to the Manager are given in note 17 on page 58.
5. Administrative expenses 2024 2023
£’000 £’000
Other administrative expenses 351 238
Secretarial fee 176 162
Directors’ fees 145 129
Auditor’s remuneration for audit services
1
66 72
738 601
1
Includes £11,000 (2023: £12,000) irrecoverable VAT. No amounts are payable to the auditor for non-audit services.
6. Finance costs 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 402 937 1,339 270 630 900
7. Taxation
(a) Analysis of tax charge for the year
2024 2023
£’000 £’000
Taxation for the year – –
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2023: lower) than the Company’s applicable rate of corporation tax in for the year of 25% (2023: 22%) The
factors affecting the current tax charge for the year are as follows:
2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) on ordinary activities before taxation 7,102 29,303 36,405 7,842 25,331 33,173
Net return/(loss) on ordinary activities before taxation multiplied
by the Company’s applicable rate of corporation tax for the year
of 25% (2023: 22%) 1,775 7,326 9,101 1,725 5,573 7,298
Effects of:
Capital returns on investments – (7,849) (7,849) – (5,877) (5,877)
Income not chargeable to corporation tax (2,062) – (2,062) (1,893) (66) (1,959)
Unrelieved expenses 287 523 810 168 370 538
Taxation for the year – – – – – –
(c) Deferred tax
At 30 September 2024, the Company had surplus management expenses of £37,833,000 (2023: £35,832,000) and a non-trade loan relationship
deficit of £5,278,000 (2023: £4,041,000). A deferred tax asset has not been recognised in respect of these losses because the investment
portfolio of the Company is not expected to generate taxable income in future periods in excess of the deductible expenses of those future
periods and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing tax losses.
Accordingly, the deferred tax asset has been calculated based on the corporation tax rate in effect from 1 April 2023 of 25%, as enacted by the
Finance Act 2021.
Given the Company’s intention to meet the conditions required to retain its status as an Investment Trust Company, no provision has been
made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.
8.
Dividends
(a) Dividends paid and declared
2024 2023
£’000 £’000
2023 final dividend of 15.0p (2022: 14.0p) 5,187 4,841
Interim dividend of 6.0p (2023: 5.5) 2,075 1,902
Total dividends paid in the year 7,262 6,743
2024 2023
£’000 £’000
2024 final dividend declared of 15.5p (2023: 15.0p) 5,360 5,187
(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (“Section 1158”)
The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year as shown below. The
revenue available for distribution by way of dividend for the year is £7,102,000 (2023: £7,842,000).
2024 2023
£’000 £’000
Interim dividend of 6.0p (2023: 5.5p) 2,075 1,902
Final dividend of 15.5p (2023: 15.0p) 5,360 5,187
Total dividends paid in the year 7,435 7,089
9. Return per share 2024 2023
£’000 £’000
Revenue return 7,102 7,842
Capital return 29,303 25,331
Total return 36,405 33,173
Weighted average number of shares in issue during the year 34,581,190 34,581,190
Revenue return per share (pence) 20.54 22.68
Capital return per share (pence) 84.74 73.25
Total return per share (pence) 105.28 95.93
10. Investments held at fair value through profit or loss 2024 2023
£’000 £’000
Opening book cost 215,960 223,047
Opening investment holding gains/(losses) 11,990 (15,758)
Opening fair value 227,950 207,289
Analysis of transactions made during the year
Purchases at cost 90,533 57,741
Sales proceeds (88,457) (63,796)
Gains on investments held at fair value 31,395 26,716
Closing fair value 261,421 227,950
Closing book cost 222,578 215,960
Closing investment holding gains 38,843 11,990
Closing fair value 261,421 227,950
Sales proceeds amounting to £88,457,000 (2023: £63,796,000) were received from disposals of investments in the year. The book cost of these
investments when they were purchased was £83,914,000 (2023: £64,828,000). These investments have been revalued over time and until they
were sold any unrealised gains and losses were included in the fair value of the investments.
All investments are listed on a recognised stock exchange.
56 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
(a) Dividends paid and declared
2024 2023
£’000 £’000
2023 final dividend of 15.0p (2022: 14.0p) 5,187 4,841
Interim dividend of 6.0p (2023: 5.5) 2,075 1,902
Total dividends paid in the year 7,262 6,743
2024 2023
£’000 £’000
2024 final dividend declared of 15.5p (2023: 15.0p) 5,360 5,187
(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (“Section 1158”)
The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year as shown below. The
revenue available for distribution by way of dividend for the year is £7,102,000 (2023: £7,842,000).
2024 2023
£’000 £’000
Interim dividend of 6.0p (2023: 5.5p) 2,075 1,902
Final dividend of 15.5p (2023: 15.0p) 5,360 5,187
Total dividends paid in the year 7,435 7,089
9. Return per share 2024 2023
£’000 £’000
Revenue return 7,102 7,842
Capital return 29,303 25,331
Total return 36,405 33,173
Weighted average number of shares in issue during the year 34,581,190 34,581,190
Revenue return per share (pence) 20.54 22.68
Capital return per share (pence) 84.74 73.25
Total return per share (pence) 105.28 95.93
10. Investments held at fair value through profit or loss 2024 2023
£’000 £’000
Opening book cost 215,960 223,047
Opening investment holding gains/(losses) 11,990 (15,758)
Opening fair value 227,950 207,289
Analysis of transactions made during the year
Purchases at cost 90,533 57,741
Sales proceeds (88,457) (63,796)
Gains on investments held at fair value 31,395 26,716
Closing fair value 261,421 227,950
Closing book cost 222,578 215,960
Closing investment holding gains 38,843 11,990
Closing fair value 261,421 227,950
Sales proceeds amounting to £88,457,000 (2023: £63,796,000) were received from disposals of investments in the year. The book cost of these
investments when they were purchased was £83,914,000 (2023: £64,828,000). These investments have been revalued over time and until they
were sold any unrealised gains and losses were included in the fair value of the investments.
All investments are listed on a recognised stock exchange.
56 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
Schroder
UK Mid Cap Fund plc
57
Introduction Strategic Report Governance Financial Other Information (unaudited)
The following transaction costs, comprising stamp duty and brokerage commission were incurred during the year:
2024 2023
£’000 £’000
On acquisitions 409 305
On disposals 43 31
452 336
11. Debtors 2024 2023
£’000 £’000
Securities sold awaiting settlement 6,907 1,688
Dividends and interest receivable 552 813
Other debtors 10 14
7,469 2,515
12. Current asset investments 2024 2023
£’000 £’000
Money market funds 116 4,438
116 4,438
As at 30 September 2024, the Company held HSBC Sterling Liquidity fund with a market value of £116,000 (30 September 2023: £4,438,000).
13. Creditors: amounts falling due within one year 2024 2023
£’000 £’000
Bank loan 25,000 20,000
Securities purchased awaiting settlement 1,815 1,465
Other creditors and accruals 1,070 549
27,885 22,014
The bank loan comprises a £30 million revolving credit facility agreement with Bank of Nova Scotia, London Branch expiring on 26 February
2025, of which, £25 million has been drawn down. This revolving credit facility was amended to £30 million on the 27 February 2024, and
replaced the £10 million one-year term loan from Bank of Nova Scotia, London Branch which expired on 27 February 2024.
The directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
14. Called-up share capital 2024 2023
£’000 £’000
Allotted, called-up and fully paid:
Ordinary shares of 25p each:
Opening balance of 34,581,190 (2023: 34,581,190) shares, excluding shares held in treasury 8,645 8,645
Subtotal of 34,581,190 (2023: same) shares 8,645 8,645
1,562,500 (2023: same) shares held in treasury 391 391
Closing balance
1
9,036 9,036
1
Represents 36,143,690 (2023: same) shares of 25p each, including 1,562,500 (2023: same) shares held in treasury.
Introduction Strategic Report Governance Financial Other Information (unaudited)
The following transaction costs, comprising stamp duty and brokerage commission were incurred during the year:
2024 2023
£’000 £’000
On acquisitions 409 305
On disposals 43 31
452 336
11. Debtors 2024 2023
£’000 £’000
Securities sold awaiting settlement 6,907 1,688
Dividends and interest receivable 552 813
Other debtors 10 14
7,469 2,515
12. Current asset investments 2024 2023
£’000 £’000
Money market funds 116 4,438
116 4,438
As at 30 September 2024, the Company held HSBC Sterling Liquidity fund with a market value of £116,000 (30 September 2023: £4,438,000).
13. Creditors: amounts falling due within one year 2024 2023
£’000 £’000
Bank loan 25,000 20,000
Securities purchased awaiting settlement 1,815 1,465
Other creditors and accruals 1,070 549
27,885 22,014
The bank loan comprises a £30 million revolving credit facility agreement with Bank of Nova Scotia, London Branch expiring on 26 February
2025, of which, £25 million has been drawn down. This revolving credit facility was amended to £30 million on the 27 February 2024, and
replaced the £10 million one-year term loan from Bank of Nova Scotia, London Branch which expired on 27 February 2024.
The directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
14. Called-up share capital 2024 2023
£’000 £’000
Allotted, called-up and fully paid:
Ordinary shares of 25p each:
Opening balance of 34,581,190 (2023: 34,581,190) shares, excluding shares held in treasury 8,645 8,645
Subtotal of 34,581,190 (2023: same) shares 8,645 8,645
1,562,500 (2023: same) shares held in treasury 391 391
Closing balance
1
9,036 9,036
1
Represents 36,143,690 (2023: same) shares of 25p each, including 1,562,500 (2023: same) shares held in treasury.
15.
Reserves
Capital reserves
Gains and Investment
Capital Share losses on holding
Share redemption Merger purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve 2
investments
2
losses 3
reserve 4
Year ended 30 September 2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance at 30 September 2023 13,971 220 2,184 7,233 158,970 11,990 10,219
Gains on sales of investments based on the carrying
value at the previous balance sheet date – – – – 10,420 – –
Net movement in investment holding gains and losses – – – – – 20,975 –
Transfer on disposal of investments – – – – (5,878) 5,878 –
Management fee allocated to capital – – – – (1,155) – –
Finance costs allocated to capital – – – – (937) – –
Dividends paid – – – – – – (7,262)
Retained revenue for the year – – – – – – 7,102
Closing balance at 30 September 2024 13,971 220 2,184 7,233 161,420 38,843 10,059
Capital reserves
Gains and Investment
Capital Share losses on holding
Share redemption Merger purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve 2
investments
2
losses 3
reserve 4
Year ended 30 September 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance at 30 September 2022 13,971 220 2,184 7,233 161,387 (15,758) 9,120
Gains on sales of investments based on the carrying
value at the previous balance sheet date – – – – 8,890 – –
Net movement in investment holding gains and losses – – – – – 17,826 –
Transfer on disposal of investments – – – – (9,922) 9,922 –
Management fee allocated to capital – – – – (1,053) – –
Special dividend allocated to capital – – – – 298 – –
Finance costs allocated to capital – – – – (630) – –
Dividends paid – – – – – – (6,743)
Retained revenue for the year – – – – – – 7,842
Closing balance at 30 September 2023 13,971 220 2,184 7,233 158,970 11,990 10,219
1
These reserves are not distributable. The “Merger reserve” represents the premium over the nominal value of shares issued following a merger in 1989.
2
These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends. The “Share purchase
reserve” is for the purpose of financing share buy-backs and was created following the cancellation of the “Warrant reserve” in 2003.
3
This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has not
been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’s own shares) and those that are
unrealised.
4
The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.
16. Net asset value per share 2024 2023
Net assets attributable to the Ordinary shareholders (£’000) 242,966 213,823
Shares in issue at the year end, excluding shares held in treasury 34,581,190 34,581,190
Net asset value per share 702.60p 618.32p
17. Transactions with the Manager
Under the terms of the AlFM Agreement, the Manager is entitled to receive a management fee and a company secretarial fee. Details of the
basis of these calculations are given in the Directors’ Report on page 31. Any investments in funds managed or advised by the Manager or any
of its associated companies, are excluded from the assets used for the purpose of the management fee calculation and therefore incur no fee.
The management fee payable in respect of the year ended 30 September 2024 amounted to £1,650,000. (2023: £1,504,000) of which £854,000
(2023: £374,000) was outstanding at the year end. The secretarial fee payable for the year amounted to £176,000 (2023: £162,000) including
VAT, of which £88,000 (2023: £41,000) was outstanding at the year end.
No director of the Company served as a director of any member of the Schroder Group, at any time during the year.
58 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
Gains and Investment
Capital Share losses on holding
Share redemption Merger purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve 2
investments
2
losses 3
reserve 4
Year ended 30 September 2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance at 30 September 2023 13,971 220 2,184 7,233 158,970 11,990 10,219
Gains on sales of investments based on the carrying
value at the previous balance sheet date – – – – 10,420 – –
Net movement in investment holding gains and losses – – – – – 20,975 –
Transfer on disposal of investments – – – – (5,878) 5,878 –
Management fee allocated to capital – – – – (1,155) – –
Finance costs allocated to capital – – – – (937) – –
Dividends paid – – – – – – (7,262)
Retained revenue for the year – – – – – – 7,102
Closing balance at 30 September 2024 13,971 220 2,184 7,233 161,420 38,843 10,059
Capital reserves
Gains and Investment
Capital Share losses on holding
Share redemption Merger purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve 2
investments
2
losses 3
reserve 4
Year ended 30 September 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance at 30 September 2022 13,971 220 2,184 7,233 161,387 (15,758) 9,120
Gains on sales of investments based on the carrying
value at the previous balance sheet date – – – – 8,890 – –
Net movement in investment holding gains and losses – – – – – 17,826 –
Transfer on disposal of investments – – – – (9,922) 9,922 –
Management fee allocated to capital – – – – (1,053) – –
Special dividend allocated to capital – – – – 298 – –
Finance costs allocated to capital – – – – (630) – –
Dividends paid – – – – – – (6,743)
Retained revenue for the year – – – – – – 7,842
Closing balance at 30 September 2023 13,971 220 2,184 7,233 158,970 11,990 10,219
1
These reserves are not distributable. The “Merger reserve” represents the premium over the nominal value of shares issued following a merger in 1989.
2
These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends. The “Share purchase
reserve” is for the purpose of financing share buy-backs and was created following the cancellation of the “Warrant reserve” in 2003.
3
This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has not
been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’s own shares) and those that are
unrealised.
4
The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.
16. Net asset value per share 2024 2023
Net assets attributable to the Ordinary shareholders (£’000) 242,966 213,823
Shares in issue at the year end, excluding shares held in treasury 34,581,190 34,581,190
Net asset value per share 702.60p 618.32p
17. Transactions with the Manager
Under the terms of the AlFM Agreement, the Manager is entitled to receive a management fee and a company secretarial fee. Details of the
basis of these calculations are given in the Directors’ Report on page 31. Any investments in funds managed or advised by the Manager or any
of its associated companies, are excluded from the assets used for the purpose of the management fee calculation and therefore incur no fee.
The management fee payable in respect of the year ended 30 September 2024 amounted to £1,650,000. (2023: £1,504,000) of which £854,000
(2023: £374,000) was outstanding at the year end. The secretarial fee payable for the year amounted to £176,000 (2023: £162,000) including
VAT, of which £88,000 (2023: £41,000) was outstanding at the year end.
No director of the Company served as a director of any member of the Schroder Group, at any time during the year.
58 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
Schroder
UK Mid Cap Fund plc
59
Introduction Strategic Report Governance Financial Other Information (unaudited)
18. Related party transactions
Details of the remuneration payable to directors are given in the Remuneration Report on page 41 and details of directors’ shareholdings are
given on page 42. Details of transactions with the Manager are given in note 17 above. There have been no other transactions with related
parties during the year (2023: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio.
FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value
measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.
Level 1: valued using unadjusted quoted prices in an active market for identical assets.
Level 2: valued using inputs other than quoted prices included within Level 1, that are observable (ie developed using market data).
Level 3: valued using inputs that are unobservable (ie for which market data is unavailable).
Details of the Company’s valuation policy are given in note 1(b) on page 53.
At 30 September 2024, the Company’s investments were all categorised in Level 1 (2023: same).
20. Financial instruments’ exposure to risk and risk management policies
The Company’s investment objective is to invest in mid-cap equities with the aim of providing a total return in excess of the FTSE 250
(ex-Investment Companies) Index. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in
a reduction in the Company’s net assets or a reduction in the profits available for dividends.
These financial risks include market risk (comprising interest rate risk and other price risk), liquidity risk and credit risk. The directors’ policy for
managing these risks is set out below. The Board coordinates the Company’s risk management policy. The Company has no significant exposure
to foreign exchange risk.
The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not
changed from those applying in the comparative year.
The Company’s classes of financial instruments are as follows:
– investments in shares which are held in accordance with the Company’s investment objective;
– short-term debtors, creditors and cash arising directly from its operations; and
– sterling revolving credit facilities with Bank of Nova Scotia, the purpose of which are to assist with financing the Company’s operations.
(a) Market risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This
market risk comprises two elements: interest rate risk and other price risk. Information to enable an evaluation of the nature and extent of
these two elements of market risk is given in parts (i) and (ii) of this note, together with sensitivity analyses where appropriate. The Board
reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year.
The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the
whole of the investment portfolio on an ongoing basis.
(i) Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on any variable rate borrowings
when interest rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Board’s policy is to permit gearing up to 25%,
where gearing is defined as borrowings used for investment purposes less cash, expressed as a percentage of net assets.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown
below:
2024 2023
£’000 £’000
Exposure to floating interest rates:
Cash at bank and in hand and current asset investments 1,961 5,372
Total exposure 1,961 5,372
Cash balances earn interest at a floating rate based on the Sterling Overnight Index Average.
The Company’s 366 day, £30 million credit facility with The Bank of Nova Scotia, London Branch expires on 26 February 2025.
The facility is unsecured but subject to covenants and restrictions which are customary for a facility of this nature.
Introduction Strategic Report Governance Financial Other Information (unaudited)
18. Related party transactions
Details of the remuneration payable to directors are given in the Remuneration Report on page 41 and details of directors’ shareholdings are
given on page 42. Details of transactions with the Manager are given in note 17 above. There have been no other transactions with related
parties during the year (2023: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio.
FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value
measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.
Level 1: valued using unadjusted quoted prices in an active market for identical assets.
Level 2: valued using inputs other than quoted prices included within Level 1, that are observable (ie developed using market data).
Level 3: valued using inputs that are unobservable (ie for which market data is unavailable).
Details of the Company’s valuation policy are given in note 1(b) on page 53.
At 30 September 2024, the Company’s investments were all categorised in Level 1 (2023: same).
20. Financial instruments’ exposure to risk and risk management policies
The Company’s investment objective is to invest in mid-cap equities with the aim of providing a total return in excess of the FTSE 250
(ex-Investment Companies) Index. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in
a reduction in the Company’s net assets or a reduction in the profits available for dividends.
These financial risks include market risk (comprising interest rate risk and other price risk), liquidity risk and credit risk. The directors’ policy for
managing these risks is set out below. The Board coordinates the Company’s risk management policy. The Company has no significant exposure
to foreign exchange risk.
The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not
changed from those applying in the comparative year.
The Company’s classes of financial instruments are as follows:
– investments in shares which are held in accordance with the Company’s investment objective;
– short-term debtors, creditors and cash arising directly from its operations; and
– sterling revolving credit facilities with Bank of Nova Scotia, the purpose of which are to assist with financing the Company’s operations.
(a) Market risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This
market risk comprises two elements: interest rate risk and other price risk. Information to enable an evaluation of the nature and extent of
these two elements of market risk is given in parts (i) and (ii) of this note, together with sensitivity analyses where appropriate. The Board
reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year.
The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the
whole of the investment portfolio on an ongoing basis.
(i) Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on any variable rate borrowings
when interest rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Board’s policy is to permit gearing up to 25%,
where gearing is defined as borrowings used for investment purposes less cash, expressed as a percentage of net assets.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown
below:
2024 2023
£’000 £’000
Exposure to floating interest rates:
Cash at bank and in hand and current asset investments 1,961 5,372
Total exposure 1,961 5,372
Cash balances earn interest at a floating rate based on the Sterling Overnight Index Average.
The Company’s 366 day, £30 million credit facility with The Bank of Nova Scotia, London Branch expires on 26 February 2025.
The facility is unsecured but subject to covenants and restrictions which are customary for a facility of this nature.
20.
Financial instruments’ exposure to risk and risk management policies continued
(a) Market risk continued
(i) Interest rate risk continued
Interest rate exposure continued
Interest is payable at a rate of Sterling Overnight Interest Average (2023 same), or its replacement reference rate, as quoted in the market for
the loan period, plus a margin, plus Mandatory Costs, which are the lender’s costs of complying with certain regulatory requirements of the
Bank of England. At 30 September 2024, the Company had drawn down £25 million.
The above year end amounts are not representative of the exposure to interest rates during the year due to fluctuations in the level of cash and
cash asset investment balances. The maximum and minimum exposure during the year was as follows:
2024 2023
£’000 £’000
Minimum interest rate exposure during the year – net debt (16,803) (9,957)
Maximum interest rate exposure during the year – net debt (23,927) (20,796)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2023: 1.0%) increase or decrease
in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a
reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial
instruments held at the accounting date with all other variables held constant.
2024 2023
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return 20 (20) 54 (54)
Capital return – – – –
Total return after taxation 20 (20) 54 (54)
Net assets 20 (20) 54 (54)
In the opinion of the directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due
to fluctuations in the level of cash balances and drawings on the credit facility.
(ii) Other price risk
Other price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular
industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the
Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile.
Market price risk exposure
The Company’s total exposure to changes in market prices at 30 September comprises the following:
2024 2023
£’000 £’000
Investments held at fair value through profit or loss 261,421 227,950
The above data is broadly representative of the exposure to market price risk during the year.
Concentration of exposure to market price risk
An analysis of the Company’s investments is given on page 13. The Company’s investments are all listed in the United Kingdom. Accordingly
there is a concentration of exposure to this country. However it should be noted that an investment may not be entirely exposed to the
economic conditions in its country of listing.
Market price risk sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 20% (2023:
20%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on observation of
current market conditions. The sensitivity analysis is based on the Company’s exposure through its investments and includes the impact on the
management fee, but assumes that all other variables are held constant.
60 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
(a) Market risk continued
(i) Interest rate risk continued
Interest rate exposure continued
Interest is payable at a rate of Sterling Overnight Interest Average (2023 same), or its replacement reference rate, as quoted in the market for
the loan period, plus a margin, plus Mandatory Costs, which are the lender’s costs of complying with certain regulatory requirements of the
Bank of England. At 30 September 2024, the Company had drawn down £25 million.
The above year end amounts are not representative of the exposure to interest rates during the year due to fluctuations in the level of cash and
cash asset investment balances. The maximum and minimum exposure during the year was as follows:
2024 2023
£’000 £’000
Minimum interest rate exposure during the year – net debt (16,803) (9,957)
Maximum interest rate exposure during the year – net debt (23,927) (20,796)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2023: 1.0%) increase or decrease
in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a
reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial
instruments held at the accounting date with all other variables held constant.
2024 2023
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return 20 (20) 54 (54)
Capital return – – – –
Total return after taxation 20 (20) 54 (54)
Net assets 20 (20) 54 (54)
In the opinion of the directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due
to fluctuations in the level of cash balances and drawings on the credit facility.
(ii) Other price risk
Other price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular
industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the
Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile.
Market price risk exposure
The Company’s total exposure to changes in market prices at 30 September comprises the following:
2024 2023
£’000 £’000
Investments held at fair value through profit or loss 261,421 227,950
The above data is broadly representative of the exposure to market price risk during the year.
Concentration of exposure to market price risk
An analysis of the Company’s investments is given on page 13. The Company’s investments are all listed in the United Kingdom. Accordingly
there is a concentration of exposure to this country. However it should be noted that an investment may not be entirely exposed to the
economic conditions in its country of listing.
Market price risk sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 20% (2023:
20%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on observation of
current market conditions. The sensitivity analysis is based on the Company’s exposure through its investments and includes the impact on the
management fee, but assumes that all other variables are held constant.
60 Schroder UK Mid Cap Fund plc
Notes to the Financial Statements
continued
Schroder
UK Mid Cap Fund plc
61
Introduction Strategic Report Governance Financial Other Information (unaudited)
2024 2023
20% increase 20% decrease 20% increase 20% decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return (102) 102 (89) 89
Capital return 52,046 (52,046) 45,382 (45,382)
Total return after taxation and net assets 51,944 (51,944) 45,293 (45,293)
Percentage change in net asset value 21.4 (21.4) 21.2 (21.2)
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by
delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding
requirements if necessary.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2024 2023
Within one Within one
year Total year Total
£’000 £’000 £’000 £’000
Creditors: amounts falling due within one year
Securities purchased awaiting settlement 1,815 1,815 1,465 1,465
Other creditors and accruals 1,070 1,070 542 542
Other payables: drawings on the revolving credit facility (including interest) 26,625 26,625 20,530 20,530
Total liquidity risk 29,510 29,510 22,537 22,537
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to
the Company.
Management of credit risk
This risk is not significant and is managed as follows:
Portfolio dealing
The Company invests in markets that operate a “Delivery Versus Payment” settlement process which mitigates the risk of losing the principal of
a trade during settlement. The Manager continuously monitors dealing activity to ensure best execution, which involves measuring various
indicators including the quality of trade settlement and incidence of failed trades. Counterparties must be pre-approved by the Manager’s credit
committee.
Exposure to the Custodian
The custodian of the Company’s assets is HSBC Bank plc which has Long-Term Credit Ratings of AA– with Fitch and Aa3 with Moody’s. The
Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the custodian were to become
insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash balances
are all deposited with the custodian as banker and held on the custodian’s balance sheet. Accordingly, in accordance with usual banking
practice, the Company will rank as a general creditor to the custodian in respect of cash balances.
Credit risk exposure
The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current and
comparative year end.
2024 2023
Balance Maximum Balance Maximum
sheet exposure sheet exposure
£’000 £’000 £’000 £’000
Current assets
Debtors – securities sold awaiting settlement, dividends and interest receivable
and other debtors 7,469 7,459 2,515 2,501
Cash at bank and in hand and current asset investments 1,961 1,961 5,372 5,372
Total credit risk 9,430 9,420 7,887 7,873
No debtors are past their due date and none have been written down or deemed to be impaired.
Introduction Strategic Report Governance Financial Other Information (unaudited)
2024 2023
20% increase 20% decrease 20% increase 20% decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return (102) 102 (89) 89
Capital return 52,046 (52,046) 45,382 (45,382)
Total return after taxation and net assets 51,944 (51,944) 45,293 (45,293)
Percentage change in net asset value 21.4 (21.4) 21.2 (21.2)
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by
delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding
requirements if necessary.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2024 2023
Within one Within one
year Total year Total
£’000 £’000 £’000 £’000
Creditors: amounts falling due within one year
Securities purchased awaiting settlement 1,815 1,815 1,465 1,465
Other creditors and accruals 1,070 1,070 542 542
Other payables: drawings on the revolving credit facility (including interest) 26,625 26,625 20,530 20,530
Total liquidity risk 29,510 29,510 22,537 22,537
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to
the Company.
Management of credit risk
This risk is not significant and is managed as follows:
Portfolio dealing
The Company invests in markets that operate a “Delivery Versus Payment” settlement process which mitigates the risk of losing the principal of
a trade during settlement. The Manager continuously monitors dealing activity to ensure best execution, which involves measuring various
indicators including the quality of trade settlement and incidence of failed trades. Counterparties must be pre-approved by the Manager’s credit
committee.
Exposure to the Custodian
The custodian of the Company’s assets is HSBC Bank plc which has Long-Term Credit Ratings of AA– with Fitch and Aa3 with Moody’s. The
Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the custodian were to become
insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash balances
are all deposited with the custodian as banker and held on the custodian’s balance sheet. Accordingly, in accordance with usual banking
practice, the Company will rank as a general creditor to the custodian in respect of cash balances.
Credit risk exposure
The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current and
comparative year end.
2024 2023
Balance Maximum Balance Maximum
sheet exposure sheet exposure
£’000 £’000 £’000 £’000
Current assets
Debtors – securities sold awaiting settlement, dividends and interest receivable
and other debtors 7,469 7,459 2,515 2,501
Cash at bank and in hand and current asset investments 1,961 1,961 5,372 5,372
Total credit risk 9,430 9,420 7,887 7,873
No debtors are past their due date and none have been written down or deemed to be impaired.
62
Schroder
UK Mid Cap Fund plc
20. Financial instruments’ exposure to risk and risk management policies continued
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the Statement of Financial Position at fair value or the amount is a reasonable
approximation of fair value.
21. Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
The Company’s debt and capital structure comprises the following:
2024 2023
£’000 £’000
Debt
Bank loan 25,000 20,000
Equity
Called-up share capital 9,036 9,036
Reserves 233,930 204,787
242,966 213,823
Total debt and equity 267,966 233,823
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the capital return to its
equity shareholders through an appropriate level of gearing.
The Board’s policy is to permit gearing up to 25% where gearing is defined as borrowings used for investment purposes less cash, expressed as
a percentage of net assets. If the figure so calculated were to be negative, this would be shown as a “net cash” position.
2024 2023
£’000 £’000
Borrowings used for investment purposes, less Cash at bank and in hand and current asset investments 23,039 14,628
Net assets 242,966 213,823
Gearing 9.5% 6.8%
The board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This
review includes:
– the planned level of gearing, which takes into account the Manager’s views on the market;
– the need to buy back the Company’s own shares for cancellation or to hold in treasury, which takes into account the share price discount;
– the opportunities for issues of new shares; and
– the amount of dividends to be paid, in excess of that which is required to be distributed.
Notes to the Financial Statements
continued
20. Financial instruments’ exposure to risk and risk management policies continued
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the Statement of Financial Position at fair value or the amount is a reasonable
approximation of fair value.
21. Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
The Company’s debt and capital structure comprises the following:
2024 2023
£’000 £’000
Debt
Bank loan 25,000 20,000
Equity
Called-up share capital 9,036 9,036
Reserves 233,930 204,787
242,966 213,823
Total debt and equity 267,966 233,823
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the capital return to its
equity shareholders through an appropriate level of gearing.
The Board’s policy is to permit gearing up to 25% where gearing is defined as borrowings used for investment purposes less cash, expressed as
a percentage of net assets. If the figure so calculated were to be negative, this would be shown as a “net cash” position.
2024 2023
£’000 £’000
Borrowings used for investment purposes, less Cash at bank and in hand and current asset investments 23,039 14,628
Net assets 242,966 213,823
Gearing 9.5% 6.8%
The board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This
review includes:
– the planned level of gearing, which takes into account the Manager’s views on the market;
– the need to buy back the Company’s own shares for cancellation or to hold in treasury, which takes into account the share price discount;
– the opportunities for issues of new shares; and
– the amount of dividends to be paid, in excess of that which is required to be distributed.
Notes to the Financial Statements
continued
63
Other
Information
(unaudited)
Other Information (unaudited)
Annual General Meeting – Recommendations 64
Notice of Annual General Meeting 65
Explanatory Notes to the Notice of Meeting 66
Definitions of Terms and Alternative
Performance Measures 68
Shareholder Information 70
Warning to Shareholders 71
Risk Disclosures 72
Information about the Company 73
Other
Information
(unaudited)
Other Information (unaudited)
Annual General Meeting – Recommendations 64
Notice of Annual General Meeting 65
Explanatory Notes to the Notice of Meeting 66
Definitions of Terms and Alternative
Performance Measures 68
Shareholder Information 70
Warning to Shareholders 71
Risk Disclosures 72
Information about the Company 73
64
Schroder
UK Mid Cap Fund plc
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will be
held on Monday, 24 February 2025 at 1.00 pm. The formal Notice
of Meeting is set out on page 65.
The following information is important and requires your
immediate attention. If you are in any doubt about the action
you should take, you should consult an independent financial
adviser, authorised under the Financial Services and Markets
Act 2000. If you have sold or transferred all of your ordinary
shares in the Company, please forward this document with its
accompanying form of proxy at once to the purchaser or
transferee, or to the stockbroker, bank or other agent through
whom the sale or transfer was effected for onward transmission
to the purchaser or transferee.
Ordinary business
Resolutions 1 to 9 are all proposed as ordinary
resolutions
Resolution 1 is a required resolution. Resolution 2 invites
shareholders to approve the final dividend. Resolutions 3 concerns
the Directors’ Remuneration Report, on pages 40 to 42. Resolutions 4
to 6 invite shareholders to re-elect each of the Directors who have put
themselves forward for re-election for another year, following the
recommendations of the Nomination Committee, set out on page 38
(their biographies are set out on pages 28 and 29). Resolutions 7 and
8 concern the appointment and remuneration of the Company’s
auditor, discussed in the Audit and Risk Committee Report on
pages 33 to 35.
Special business
Resolution 9: Directors’ authority to allot shares
(ordinary resolution) and resolution 10 – power to
disapply pre-emption rights (special resolution)
The Directors are seeking authority to allot a limited number of
unissued ordinary shares for cash without first offering them to
existing shareholders in accordance with statutory preemption
procedures.
Appropriate resolutions will be proposed at the forthcoming AGM and
are set out in full in the Notice of AGM. An ordinary resolution will be
proposed to authorise the Directors to allot shares up to a maximum
aggregate nominal amount of £864,529.75 (being 10% of the issued
share capital (excluding any shares held in treasury) as at the date of
the Notice of the AGM). A special resolution will also be proposed to
give the Directors authority to allot securities for cash on a non
preemptive basis up to a maximum aggregate nominal amount of
£864,529.75 (being 10% of the Company’s issued share capital
(excluding any shares held in treasury) as at the date of the Notice of
the AGM). This authority includes shares that the Company sells or
transfers that have been held in treasury. The Board has established
guidelines for treasury shares and will only reissue shares held in
treasury at a price equal to or greater than the Company’s NAV
(inclusive of current year income) plus any applicable costs.
The Directors do not intend to allot shares pursuant to these
authorities other than to take advantage of opportunities in the
market as they arise and only if they believe it to be advantageous to
the Company’s existing shareholders to do so and when it would not
result in any dilution of NAV per share.
If approved, both of these authorities will expire at the conclusion of
the AGM in 2026 unless renewed, varied or revoked earlier.
Resolution 11: Authority to make market purchases of
the Company’s own shares (special resolution)
At the AGM held on 8 March 2024, the Company was granted
authority to make market purchases of up to 5,183,720 ordinary
shares of 25p each for cancellation or holding in treasury. No shares
have been bought back into treasury under this authority and the
Company therefore has remaining authority to purchase up to
5,183,720 ordinary shares. This authority will expire at the
forthcoming AGM.
The Directors believe it is in the best interests of the Company and its
shareholders to have a general authority for the Company to buy
back its ordinary shares in the market as they keep under review the
share price discount to net asset value and the purchase of ordinary
shares. A special resolution will be proposed at the forthcoming AGM
to give the Company authority to make market purchases of up to
14.99% of the ordinary shares in issue as at the date of the Notice of
the AGM. The Directors will exercise this authority only if the Directors
consider that any purchase would be for the benefit of the Company
and its shareholders, taking into account relevant factors and
circumstances at the time. Any shares so purchased would be
cancelled or held in treasury for potential reissue. If renewed, the
authority to be given at the 2025 AGM will lapse at the conclusion of
the AGM in 2026 unless renewed, varied or revoked earlier.
Resolution 12: Notice period for general meetings
(special resolution)
Resolution 12 set out in the Notice of AGM is a special resolution and
will, if passed, allow the Company to hold general meetings (other
than annual general meetings) on a minimum notice period of
14 clear days, rather than 21 clear days as required by the Companies
Act 2006. The approval will be effective until the Company’s next AGM
to be held in 2026. The Directors will only call general meetings on
14 clear days’ notice when they consider it to be in the best interests
of the Company’s shareholders and will only do so if the Company
offers facilities for all shareholders to vote by electronic means and
when the matter needs to be dealt with expediently.
Recommendations
The Board considers that the resolutions relating to the above items
of business are in the best interests of shareholders as a whole.
Accordingly, the Board unanimously recommends to shareholders
that they vote in favour of the resolutions to be proposed at the
forthcoming AGM, as they intend to do in respect of their own
beneficial holdings.
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will be
held on Monday, 24 February 2025 at 1.00 pm. The formal Notice
of Meeting is set out on page 65.
The following information is important and requires your
immediate attention. If you are in any doubt about the action
you should take, you should consult an independent financial
adviser, authorised under the Financial Services and Markets
Act 2000. If you have sold or transferred all of your ordinary
shares in the Company, please forward this document with its
accompanying form of proxy at once to the purchaser or
transferee, or to the stockbroker, bank or other agent through
whom the sale or transfer was effected for onward transmission
to the purchaser or transferee.
Ordinary business
Resolutions 1 to 9 are all proposed as ordinary
resolutions
Resolution 1 is a required resolution. Resolution 2 invites
shareholders to approve the final dividend. Resolutions 3 concerns
the Directors’ Remuneration Report, on pages 40 to 42. Resolutions 4
to 6 invite shareholders to re-elect each of the Directors who have put
themselves forward for re-election for another year, following the
recommendations of the Nomination Committee, set out on page 38
(their biographies are set out on pages 28 and 29). Resolutions 7 and
8 concern the appointment and remuneration of the Company’s
auditor, discussed in the Audit and Risk Committee Report on
pages 33 to 35.
Special business
Resolution 9: Directors’ authority to allot shares
(ordinary resolution) and resolution 10 – power to
disapply pre-emption rights (special resolution)
The Directors are seeking authority to allot a limited number of
unissued ordinary shares for cash without first offering them to
existing shareholders in accordance with statutory preemption
procedures.
Appropriate resolutions will be proposed at the forthcoming AGM and
are set out in full in the Notice of AGM. An ordinary resolution will be
proposed to authorise the Directors to allot shares up to a maximum
aggregate nominal amount of £864,529.75 (being 10% of the issued
share capital (excluding any shares held in treasury) as at the date of
the Notice of the AGM). A special resolution will also be proposed to
give the Directors authority to allot securities for cash on a non
preemptive basis up to a maximum aggregate nominal amount of
£864,529.75 (being 10% of the Company’s issued share capital
(excluding any shares held in treasury) as at the date of the Notice of
the AGM). This authority includes shares that the Company sells or
transfers that have been held in treasury. The Board has established
guidelines for treasury shares and will only reissue shares held in
treasury at a price equal to or greater than the Company’s NAV
(inclusive of current year income) plus any applicable costs.
The Directors do not intend to allot shares pursuant to these
authorities other than to take advantage of opportunities in the
market as they arise and only if they believe it to be advantageous to
the Company’s existing shareholders to do so and when it would not
result in any dilution of NAV per share.
If approved, both of these authorities will expire at the conclusion of
the AGM in 2026 unless renewed, varied or revoked earlier.
Resolution 11: Authority to make market purchases of
the Company’s own shares (special resolution)
At the AGM held on 8 March 2024, the Company was granted
authority to make market purchases of up to 5,183,720 ordinary
shares of 25p each for cancellation or holding in treasury. No shares
have been bought back into treasury under this authority and the
Company therefore has remaining authority to purchase up to
5,183,720 ordinary shares. This authority will expire at the
forthcoming AGM.
The Directors believe it is in the best interests of the Company and its
shareholders to have a general authority for the Company to buy
back its ordinary shares in the market as they keep under review the
share price discount to net asset value and the purchase of ordinary
shares. A special resolution will be proposed at the forthcoming AGM
to give the Company authority to make market purchases of up to
14.99% of the ordinary shares in issue as at the date of the Notice of
the AGM. The Directors will exercise this authority only if the Directors
consider that any purchase would be for the benefit of the Company
and its shareholders, taking into account relevant factors and
circumstances at the time. Any shares so purchased would be
cancelled or held in treasury for potential reissue. If renewed, the
authority to be given at the 2025 AGM will lapse at the conclusion of
the AGM in 2026 unless renewed, varied or revoked earlier.
Resolution 12: Notice period for general meetings
(special resolution)
Resolution 12 set out in the Notice of AGM is a special resolution and
will, if passed, allow the Company to hold general meetings (other
than annual general meetings) on a minimum notice period of
14 clear days, rather than 21 clear days as required by the Companies
Act 2006. The approval will be effective until the Company’s next AGM
to be held in 2026. The Directors will only call general meetings on
14 clear days’ notice when they consider it to be in the best interests
of the Company’s shareholders and will only do so if the Company
offers facilities for all shareholders to vote by electronic means and
when the matter needs to be dealt with expediently.
Recommendations
The Board considers that the resolutions relating to the above items
of business are in the best interests of shareholders as a whole.
Accordingly, the Board unanimously recommends to shareholders
that they vote in favour of the resolutions to be proposed at the
forthcoming AGM, as they intend to do in respect of their own
beneficial holdings.
Notice is hereby given that the Annual General Meeting of Schroder
UK Mid Cap Fund plc will be held at 1 London Wall Place, London
EC2Y 5AU on Monday, 24 February 2025 at 1.00 pm to consider the
following resolutions of which resolutions 1 to 9 will be proposed as
ordinary resolutions and resolutions 10 to 12 will be proposed as
special resolutions:
1. To receive the Report of the Directors and the audited accounts
for the year ended 30 September 2024.
2. To approve a final dividend of 15.5 pence per share for the
financial year ended 30 September 2024.
3. To approve the Directors’ Remuneration Report for the year
ended 30 September 2024.
4. To re-elect Wendy Colquhoun as a Director of the Company.
5. To re-elect Helen Galbraith as a Director of the Company.
6. To re-elect Harry Morley as a Director of the Company.
7. To appoint BDO LLP as auditor to the Company.
8. To authorise the Directors to determine the remuneration of
BDO LLP as auditor to the Company.
9. To consider, and if thought fit, pass the following resolution as an
ordinary resolution:
“THAT the Directors be generally and unconditionally authorised
pursuant to section 551 of the Companies Act 2006 (the “Act”) to
exercise all the powers of the Company to allot relevant
securities (within the meaning of section 551 of the Act) up to an
aggregate nominal amount of £864,529.75 (being 10% of the
issued ordinary share capital at the date of this Notice, excluding
shares held in treasury) for a period expiring (unless previously
renewed, varied or revoked by the Company in general meeting)
at the conclusion of the next Annual General Meeting of the
Company, but that the Company may make an offer or
agreement which would or might require relevant securities to
be allotted after expiry of this authority and the Board may allot
relevant securities in pursuance of that offer or agreement.”
10. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, subject to the passing of resolution 9 set out above, the
Directors be and are hereby empowered, pursuant to Section
571 of the Act, to allot equity securities (including any shares
held in treasury) (as defined in section 560(1) of the Act)
pursuant to the authority given in accordance with section 551 of
the Act by the said resolution 10 and/or where such allotment
constitutes an allotment of equity securities by virtue of section
560(2) of the Act as if Section 561(1) of the Act did not apply to
any such allotment, provided that this power shall be limited to
the allotment of equity securities up to an aggregate nominal
amount of £864,529.75 (representing 10% of the aggregate
nominal amount of the share capital in issue at the date of this
Notice, excluding shares held in treasury); and provided that this
power shall expire at the conclusion of the next Annual General
Meeting of the Company but so that this power shall enable the
Company to make offers or agreements before such expiry
which would or might require equity securities to be allotted
after such expiry.”
11. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section 701 of the
Act to make market purchases (within the meaning of Section
693 of the Act) of ordinary shares of 25p each in the capital of
the Company (“Shares”) at whatever discount the prevailing
market price represents to the prevailing net asset value per
Share provided that:
(a) the maximum number of Shares which may be purchased is
5,183,72 representing 14.99% of the Company’s issued
ordinary share capital as at the date of this Notice, excluding
shares held in treasury;
(b) the maximum price (exclusive of expenses) which may be
paid for a Share shall not exceed the higher of;
(i) 105% of the average of the middle market quotations
for the Shares as taken from the London Stock
Exchange Daily Official List for the five business days
preceding the date of purchase; and
(ii) the higher of the last independent bid and the highest
current independent bid on the London Stock
Exchange;
(c) the minimum price (exclusive of expenses) which may be
paid for a Share shall be 25p, being the nominal value per
Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of the
Company in 2026 (unless previously renewed, varied or
revoked by the Company prior to such date);
(e) the Company may make a contract to purchase Shares
under the authority hereby conferred which will or may be
executed wholly or partly after the expiration of such
authority and may make a purchase of Shares pursuant to
any such contract; and
(f) any Shares so purchased will be cancelled or held in
treasury for potential reissue.”
12. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, a general meeting, other than an Annual General
Meeting, may be called on not less than 14 clear days’ notice.”
Schroder UK Mid Cap Fund plc 65
Introduction Strategic Report Governance Financial Other Information (unaudited)
Notice of Annual General Meeting
By order of the Board
Schroder Investment Management Limited 9 Haymarket Square
Company Secretary Edinburgh
Scotland EH3 8FY
27 November 2024 Registered Number: SC082551
UK Mid Cap Fund plc will be held at 1 London Wall Place, London
EC2Y 5AU on Monday, 24 February 2025 at 1.00 pm to consider the
following resolutions of which resolutions 1 to 9 will be proposed as
ordinary resolutions and resolutions 10 to 12 will be proposed as
special resolutions:
1. To receive the Report of the Directors and the audited accounts
for the year ended 30 September 2024.
2. To approve a final dividend of 15.5 pence per share for the
financial year ended 30 September 2024.
3. To approve the Directors’ Remuneration Report for the year
ended 30 September 2024.
4. To re-elect Wendy Colquhoun as a Director of the Company.
5. To re-elect Helen Galbraith as a Director of the Company.
6. To re-elect Harry Morley as a Director of the Company.
7. To appoint BDO LLP as auditor to the Company.
8. To authorise the Directors to determine the remuneration of
BDO LLP as auditor to the Company.
9. To consider, and if thought fit, pass the following resolution as an
ordinary resolution:
“THAT the Directors be generally and unconditionally authorised
pursuant to section 551 of the Companies Act 2006 (the “Act”) to
exercise all the powers of the Company to allot relevant
securities (within the meaning of section 551 of the Act) up to an
aggregate nominal amount of £864,529.75 (being 10% of the
issued ordinary share capital at the date of this Notice, excluding
shares held in treasury) for a period expiring (unless previously
renewed, varied or revoked by the Company in general meeting)
at the conclusion of the next Annual General Meeting of the
Company, but that the Company may make an offer or
agreement which would or might require relevant securities to
be allotted after expiry of this authority and the Board may allot
relevant securities in pursuance of that offer or agreement.”
10. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, subject to the passing of resolution 9 set out above, the
Directors be and are hereby empowered, pursuant to Section
571 of the Act, to allot equity securities (including any shares
held in treasury) (as defined in section 560(1) of the Act)
pursuant to the authority given in accordance with section 551 of
the Act by the said resolution 10 and/or where such allotment
constitutes an allotment of equity securities by virtue of section
560(2) of the Act as if Section 561(1) of the Act did not apply to
any such allotment, provided that this power shall be limited to
the allotment of equity securities up to an aggregate nominal
amount of £864,529.75 (representing 10% of the aggregate
nominal amount of the share capital in issue at the date of this
Notice, excluding shares held in treasury); and provided that this
power shall expire at the conclusion of the next Annual General
Meeting of the Company but so that this power shall enable the
Company to make offers or agreements before such expiry
which would or might require equity securities to be allotted
after such expiry.”
11. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section 701 of the
Act to make market purchases (within the meaning of Section
693 of the Act) of ordinary shares of 25p each in the capital of
the Company (“Shares”) at whatever discount the prevailing
market price represents to the prevailing net asset value per
Share provided that:
(a) the maximum number of Shares which may be purchased is
5,183,72 representing 14.99% of the Company’s issued
ordinary share capital as at the date of this Notice, excluding
shares held in treasury;
(b) the maximum price (exclusive of expenses) which may be
paid for a Share shall not exceed the higher of;
(i) 105% of the average of the middle market quotations
for the Shares as taken from the London Stock
Exchange Daily Official List for the five business days
preceding the date of purchase; and
(ii) the higher of the last independent bid and the highest
current independent bid on the London Stock
Exchange;
(c) the minimum price (exclusive of expenses) which may be
paid for a Share shall be 25p, being the nominal value per
Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of the
Company in 2026 (unless previously renewed, varied or
revoked by the Company prior to such date);
(e) the Company may make a contract to purchase Shares
under the authority hereby conferred which will or may be
executed wholly or partly after the expiration of such
authority and may make a purchase of Shares pursuant to
any such contract; and
(f) any Shares so purchased will be cancelled or held in
treasury for potential reissue.”
12. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, a general meeting, other than an Annual General
Meeting, may be called on not less than 14 clear days’ notice.”
Schroder UK Mid Cap Fund plc 65
Introduction Strategic Report Governance Financial Other Information (unaudited)
Notice of Annual General Meeting
By order of the Board
Schroder Investment Management Limited 9 Haymarket Square
Company Secretary Edinburgh
Scotland EH3 8FY
27 November 2024 Registered Number: SC082551
66
Schroder
UK Mid Cap Fund plc
1. Ordinary shareholders are entitled to attend and vote at the
meeting and to appoint one or more proxies, who need not be
a shareholder, as their proxy to exercise all or any of their rights
to attend, speak and vote on their behalf at the meeting.
A proxy form is attached. If you wish to appoint a person other
than the Chair as your proxy, please insert the name of your
chosen proxy holder in the space provided at the top of the
form. If the proxy is being appointed in relation to less than your
full voting entitlement, please enter in the box next to the proxy
holder’s name the number of shares in relation to which they are
authorised to act as your proxy. If left blank your proxy will be
deemed to be authorised in respect of your full voting
entitlement (or if this proxy form has been issued in respect of
a designated account for a shareholder, the full voting
entitlement for that designated account).
Additional proxy forms can be obtained by contacting the
Company’s Registrars, Equiniti Limited, on +44 (0) 371 384 0641,
or you may photocopy the attached proxy form. Please indicate
in the box next to the proxy holder’s name the number of shares
in relation to which they are authorised to act as your proxy.
Please also indicate by ticking the box provided if the proxy
instruction is one of multiple instructions being given.
Completion and return of a form of proxy will not preclude a
member from attending the Annual General Meeting and voting
in person.
On a vote by show of hands, every ordinary shareholder who is
present in person has one vote and every duly appointed proxy
who is present has one vote. On a poll vote, every ordinary
shareholder who is present in person or by way of a proxy has
one vote for every share of which he/she is a holder.
The “Vote Withheld” option on the proxy form is provided to
enable you to abstain on any particular resolution.
However it should be noted that a “Vote Withheld” is not a vote in
law and will not be counted in the calculation of the proportion
of the votes “For” and “Against” a resolution.
A proxy form must be signed and dated by the shareholder or
his or her attorney duly authorised in writing. In the case of joint
holdings, any one holder may sign this form. The vote of the
senior joint holder who tenders a vote, whether in person or by
proxy, will be accepted to the exclusion of the votes of the other
joint holder and for this purpose seniority will be determined by
the order in which the names appear on the Register of
Members in respect of the joint holding. To be valid, proxy
form(s) must be completed and returned to the Company’s
Registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, in the enclosed envelope
together with any power of attorney or other authority under
which it is signed or a copy of such authority certified notarially,
to arrive no later than 48 hours before the time fixed for the
meeting, or an adjourned meeting, excluding non-working days.
Shareholders may also appoint a proxy to vote on the resolutions
being put to the meeting electronically by going to Equiniti’s
Shareview website, www.shareview.co.uk, and logging in to your
Shareview Portfolio. Once you have logged in, simply click ‘View’
on the ‘My Investments’ page and then click on the link to vote
and follow the on-screen instructions. If you have not yet
registered for a Shareview Portfolio, go to www.shareview.co.uk
and enter the requested information. It is important that you
register for a Shareview Portfolio with enough time to complete
the registration and authentication processes. Please note that
to be valid, your proxy instructions must be received by Equiniti
no later than 1.00pm on 20 February 2025. If you have any
difficulties with online voting, you should contact the shareholder
helpline on +44 (0) 371 384 0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest
time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided either
in this Notice of Annual General Meeting or any related
documents to communicate with the Company for any purposes
other than expressly stated.
Representatives of shareholders that are corporations will have
to produce evidence of their proper appointment when
attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an
agreement between him or her and the shareholder by whom
he or she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual General
Meeting. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he or she may, under any
such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of ordinary shareholders in relation
to the appointment of proxies in note 1 above does not apply to
Nominated Persons. The rights described in that note can only
be exercised by ordinary shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of members of the
Company at 6.30 p.m. on 20 February 2025, or 6.30 p.m.
two days prior to the date of an adjourned meeting, excluding
non-working days, shall be entitled to attend and vote at the
meeting in respect of the number of shares registered in their
name at that time. Changes to the Register of Members after
6.30 p.m. on 20 February 2025 shall be disregarded in
determining the right of any person to attend and vote at
the meeting.
4. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by
using the procedures described in the CREST manual. The CREST
manual can be viewed at www.euroclear.com. A CREST message
appointing a proxy (a “CREST proxy instruction”) regardless of
whether it constitutes the appointment of a proxy or an
amendment to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted so as
to be received by the issuer’s agent (ID RA19) by the latest time
for receipt of proxy appointments.
If you are an institutional investor, you may be able to appoint
a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 1.00 p.m. on
Thursday, 20 February 2025 in order to be considered valid.
Before you can appoint a proxy via this process you will need to
have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by
them, and they will govern the electronic appointment of your
proxy.
Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend and vote at the
meeting and to appoint one or more proxies, who need not be
a shareholder, as their proxy to exercise all or any of their rights
to attend, speak and vote on their behalf at the meeting.
A proxy form is attached. If you wish to appoint a person other
than the Chair as your proxy, please insert the name of your
chosen proxy holder in the space provided at the top of the
form. If the proxy is being appointed in relation to less than your
full voting entitlement, please enter in the box next to the proxy
holder’s name the number of shares in relation to which they are
authorised to act as your proxy. If left blank your proxy will be
deemed to be authorised in respect of your full voting
entitlement (or if this proxy form has been issued in respect of
a designated account for a shareholder, the full voting
entitlement for that designated account).
Additional proxy forms can be obtained by contacting the
Company’s Registrars, Equiniti Limited, on +44 (0) 371 384 0641,
or you may photocopy the attached proxy form. Please indicate
in the box next to the proxy holder’s name the number of shares
in relation to which they are authorised to act as your proxy.
Please also indicate by ticking the box provided if the proxy
instruction is one of multiple instructions being given.
Completion and return of a form of proxy will not preclude a
member from attending the Annual General Meeting and voting
in person.
On a vote by show of hands, every ordinary shareholder who is
present in person has one vote and every duly appointed proxy
who is present has one vote. On a poll vote, every ordinary
shareholder who is present in person or by way of a proxy has
one vote for every share of which he/she is a holder.
The “Vote Withheld” option on the proxy form is provided to
enable you to abstain on any particular resolution.
However it should be noted that a “Vote Withheld” is not a vote in
law and will not be counted in the calculation of the proportion
of the votes “For” and “Against” a resolution.
A proxy form must be signed and dated by the shareholder or
his or her attorney duly authorised in writing. In the case of joint
holdings, any one holder may sign this form. The vote of the
senior joint holder who tenders a vote, whether in person or by
proxy, will be accepted to the exclusion of the votes of the other
joint holder and for this purpose seniority will be determined by
the order in which the names appear on the Register of
Members in respect of the joint holding. To be valid, proxy
form(s) must be completed and returned to the Company’s
Registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, in the enclosed envelope
together with any power of attorney or other authority under
which it is signed or a copy of such authority certified notarially,
to arrive no later than 48 hours before the time fixed for the
meeting, or an adjourned meeting, excluding non-working days.
Shareholders may also appoint a proxy to vote on the resolutions
being put to the meeting electronically by going to Equiniti’s
Shareview website, www.shareview.co.uk, and logging in to your
Shareview Portfolio. Once you have logged in, simply click ‘View’
on the ‘My Investments’ page and then click on the link to vote
and follow the on-screen instructions. If you have not yet
registered for a Shareview Portfolio, go to www.shareview.co.uk
and enter the requested information. It is important that you
register for a Shareview Portfolio with enough time to complete
the registration and authentication processes. Please note that
to be valid, your proxy instructions must be received by Equiniti
no later than 1.00pm on 20 February 2025. If you have any
difficulties with online voting, you should contact the shareholder
helpline on +44 (0) 371 384 0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest
time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided either
in this Notice of Annual General Meeting or any related
documents to communicate with the Company for any purposes
other than expressly stated.
Representatives of shareholders that are corporations will have
to produce evidence of their proper appointment when
attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an
agreement between him or her and the shareholder by whom
he or she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual General
Meeting. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he or she may, under any
such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of ordinary shareholders in relation
to the appointment of proxies in note 1 above does not apply to
Nominated Persons. The rights described in that note can only
be exercised by ordinary shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of members of the
Company at 6.30 p.m. on 20 February 2025, or 6.30 p.m.
two days prior to the date of an adjourned meeting, excluding
non-working days, shall be entitled to attend and vote at the
meeting in respect of the number of shares registered in their
name at that time. Changes to the Register of Members after
6.30 p.m. on 20 February 2025 shall be disregarded in
determining the right of any person to attend and vote at
the meeting.
4. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by
using the procedures described in the CREST manual. The CREST
manual can be viewed at www.euroclear.com. A CREST message
appointing a proxy (a “CREST proxy instruction”) regardless of
whether it constitutes the appointment of a proxy or an
amendment to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted so as
to be received by the issuer’s agent (ID RA19) by the latest time
for receipt of proxy appointments.
If you are an institutional investor, you may be able to appoint
a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 1.00 p.m. on
Thursday, 20 February 2025 in order to be considered valid.
Before you can appoint a proxy via this process you will need to
have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by
them, and they will govern the electronic appointment of your
proxy.
Explanatory Notes to the Notice of Meeting
5.
Copies of the terms of appointment of the non-executive
Directors and a statement of all transactions of each Director
and of his family interests in the shares of the Company, will be
available for inspection by any member of the Company at the
registered office of the Company during normal business hours
on any weekday (English public holidays excepted) and at the
Annual General Meeting by any attendee, for at least 15 minutes
prior to, and during, the Annual General Meeting. None of the
Directors has a contract of service with the Company.
6. The biographies of the Directors offering themselves for election
or re-election are set out on pages 28 and 29 of the Company’s
annual report and financial statements for the year ended
30 September 2024.
7. As at 27 November 2024, 36,143,690 ordinary shares of 25p
each were in issue and 1,562,500 shares were held in treasury.
Therefore the total number of voting rights of the Company as at
27 November 2024 was 34,581,190.
8. A copy of this Notice of Meeting, which includes details of
shareholder voting rights, together with any other information as
required under Section 311A of the Companies Act 2006, is
available from the website dedicated to the Company:
www.schroders.co.uk/ukmidcap.
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual General
Meeting any question relating to the business being dealt with at
the AGM which is put by a member attending the meeting,
except in certain circumstances, including if it is undesirable in
the interests of the Company or the good order of the meeting
that the question be answered or if to do so would involve the
disclosure of confidential information.
10. Members satisfying the thresholds in section 527 of the
Companies Act 2006 can require the Company to publish
a statement on its website setting out any matter relating to:
a) the audit of the Company’s Accounts (including the auditor’s
report and the conduct of the audit) that are to be laid before the
Meeting; or (b) any circumstance connected with an auditor of
the Company ceasing to hold office since the last AGM, that the
members propose to raise at the Meeting. The Company cannot
require the members requesting the publication to pay its
expenses. Any statement placed on the website must also be
sent to the Company’s auditors no later than the time it makes
its statement available on the website. The business which may
be dealt with at the meeting includes any statement that the
Company has been required to publish on its website.
11. Members satisfying the thresholds in section 338 of the
Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the
Annual General Meeting, notice of a resolution which those
members intend to move (and which may properly be moved) at
the Annual General Meeting. A resolution may properly be
moved at the Annual General Meeting unless (i) it would, if
passed, be ineffective (whether by reason of any inconsistency
with any enactment or the Company’s constitution or otherwise);
(ii) it is defamatory of any person; or (iii) it is frivolous or
vexatious. A request made pursuant to this right may be in hard
copy or electronic form, must identify the resolution of which
notice is to be given, must be authenticated by the person(s)
making it and must be received by the Company not later than
six weeks before the date of the Annual General Meeting.
12. Members satisfying the thresholds in section 338A of the
Companies Act 2006 may request the Company to include in the
business to be dealt with at the Annual General Meeting any
matter (other than a proposed resolution) which may properly be
included in the business at the Annual General Meeting.
A matter may properly be included in the business at the Annual
General Meeting unless: (i) it is defamatory of any person; or (ii) it
is frivolous or vexatious. A request made pursuant to this right
may be in hard copy or electronic form, must identify the matter
to be included in the business, must be accompanied by
a statement setting out the grounds for the request, must be
authenticated by the person(s) making it and must be received
by the Company not later than six weeks before the date of the
Annual General Meeting.
13. The Company’s privacy policy is available on its website:
www.schroders.co.uk/ukmidcap. Shareholders can contact
Equiniti for details of how Equiniti processes their personal
information as part of the AGM.
Schroder UK Mid Cap Fund plc 67
Introduction Strategic Report Governance Financial Other Information (unaudited)
Directors and a statement of all transactions of each Director
and of his family interests in the shares of the Company, will be
available for inspection by any member of the Company at the
registered office of the Company during normal business hours
on any weekday (English public holidays excepted) and at the
Annual General Meeting by any attendee, for at least 15 minutes
prior to, and during, the Annual General Meeting. None of the
Directors has a contract of service with the Company.
6. The biographies of the Directors offering themselves for election
or re-election are set out on pages 28 and 29 of the Company’s
annual report and financial statements for the year ended
30 September 2024.
7. As at 27 November 2024, 36,143,690 ordinary shares of 25p
each were in issue and 1,562,500 shares were held in treasury.
Therefore the total number of voting rights of the Company as at
27 November 2024 was 34,581,190.
8. A copy of this Notice of Meeting, which includes details of
shareholder voting rights, together with any other information as
required under Section 311A of the Companies Act 2006, is
available from the website dedicated to the Company:
www.schroders.co.uk/ukmidcap.
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual General
Meeting any question relating to the business being dealt with at
the AGM which is put by a member attending the meeting,
except in certain circumstances, including if it is undesirable in
the interests of the Company or the good order of the meeting
that the question be answered or if to do so would involve the
disclosure of confidential information.
10. Members satisfying the thresholds in section 527 of the
Companies Act 2006 can require the Company to publish
a statement on its website setting out any matter relating to:
a) the audit of the Company’s Accounts (including the auditor’s
report and the conduct of the audit) that are to be laid before the
Meeting; or (b) any circumstance connected with an auditor of
the Company ceasing to hold office since the last AGM, that the
members propose to raise at the Meeting. The Company cannot
require the members requesting the publication to pay its
expenses. Any statement placed on the website must also be
sent to the Company’s auditors no later than the time it makes
its statement available on the website. The business which may
be dealt with at the meeting includes any statement that the
Company has been required to publish on its website.
11. Members satisfying the thresholds in section 338 of the
Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the
Annual General Meeting, notice of a resolution which those
members intend to move (and which may properly be moved) at
the Annual General Meeting. A resolution may properly be
moved at the Annual General Meeting unless (i) it would, if
passed, be ineffective (whether by reason of any inconsistency
with any enactment or the Company’s constitution or otherwise);
(ii) it is defamatory of any person; or (iii) it is frivolous or
vexatious. A request made pursuant to this right may be in hard
copy or electronic form, must identify the resolution of which
notice is to be given, must be authenticated by the person(s)
making it and must be received by the Company not later than
six weeks before the date of the Annual General Meeting.
12. Members satisfying the thresholds in section 338A of the
Companies Act 2006 may request the Company to include in the
business to be dealt with at the Annual General Meeting any
matter (other than a proposed resolution) which may properly be
included in the business at the Annual General Meeting.
A matter may properly be included in the business at the Annual
General Meeting unless: (i) it is defamatory of any person; or (ii) it
is frivolous or vexatious. A request made pursuant to this right
may be in hard copy or electronic form, must identify the matter
to be included in the business, must be accompanied by
a statement setting out the grounds for the request, must be
authenticated by the person(s) making it and must be received
by the Company not later than six weeks before the date of the
Annual General Meeting.
13. The Company’s privacy policy is available on its website:
www.schroders.co.uk/ukmidcap. Shareholders can contact
Equiniti for details of how Equiniti processes their personal
information as part of the AGM.
Schroder UK Mid Cap Fund plc 67
Introduction Strategic Report Governance Financial Other Information (unaudited)
68
Schroder
UK Mid Cap Fund plc
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Numerical
calculations are given where relevant. Some of the financial
measures below are classified as APMs as defined by the
European Securities and Markets Authority. Under this
definition, APMs include a financial measure of historical
financial performance or financial position, other than a
financial measure defined or specified in the applicable financial
reporting framework. APMs have been marked with an asterisk.
Net asset value (“NAV”) per share
The NAV per share of 702.60p (2023: 618.32p) represents the net
assets attributable to equity shareholders of £242,966,000 (2023:
£213,823,000) divided by the number of shares in issue, excluding
any shares held in treasury, of 34,581,190 (2023: 34,581,190).
The change in the NAV amounted to 13.6% (2023: 14.10%) over the
year. However, this performance measure excludes the positive impact
of dividends paid out by the Company during the year. When these
dividends are factored into the calculation, the resulting performance
measure is termed the “total return”. Total return calculations and
definitions are given below.
Total return*
Total return is the combined effect of any dividends paid, together
with the rise or fall in the share price or NAV per share. Total return
statistics enable the investor to make performance comparisons
between investment companies with different dividend policies.
Any dividends received by a shareholder are assumed to have been
reinvested in either the assets of the Company at its NAV per share at
the time the shares were quoted ex-dividend (to calculate the NAV per
share total return) or in additional shares of the Company (to
calculate the share price total return).
The NAV total return for the year ended 30 September 2024 is
calculated as follows:
NAV at 30/9/23 618.32p
NAV at 30/9/24 702.60p
Dividend NAV on Cumulative
received XD date XD date Factor factor
15.00p 15/2/2024 625.90p 1.0240 1.0240
6.00p 11/7/2024 710.57p 1.0084 1.0326
NAV total return, being the closing
NAV, multiplied by the factor,
expressed as a percentage
change in the opening NAV 17.3%
The NAV total return for the year ended 30 September 2023 is
calculated as follows:
NAV at 30/9/22 541.89p
NAV at 30/9/23 618.32p
Dividend NAV on Cumulative
received XD date XD date Factor factor
14.00p 12/1/2023 652.14p 1.0215 1.0215
5.50p 13/7/2023 610.45p 1.0090 1.0307
NAV total return, being the closing
NAV, multiplied by the factor,
expressed as a percentage
change in the opening NAV: 17.6%
The share price total return for the year ended 30 September 2024 is
calculated as follows:
Share price at 30/9/23 544.00p
Share price at 30/9/24 616.00p
Share
Dividend price on Cumulative
received XD date XD date Factor factor
15.00p 15/2/2024 542.00p 1.0277 1.0277
6.00p 11/7/2024 632.00p 1.0095 1.0374
Share price total return, being the closing
share price, multiplied by the factor,
expressed as a percentage change in
the opening share price: 17.5%
The share price total return for the year ended 30 September 2023 is
calculated as follows:
Share price at 30/9/22 480.00p
Share price at 30/9/23 544.00p
Share
Dividend price on Cumulative
received XD date XD date Factor factor
14.00p 12/1/2023 560.00p 1.0250 1.0250
5.50p 13/7/2023 524.00p 1.0105 1.0358
Share price total return, being the closing
share price, multiplied by the factor,
expressed as a percentage change in
the opening share price: 17.4%
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Numerical
calculations are given where relevant. Some of the financial
measures below are classified as APMs as defined by the
European Securities and Markets Authority. Under this
definition, APMs include a financial measure of historical
financial performance or financial position, other than a
financial measure defined or specified in the applicable financial
reporting framework. APMs have been marked with an asterisk.
Net asset value (“NAV”) per share
The NAV per share of 702.60p (2023: 618.32p) represents the net
assets attributable to equity shareholders of £242,966,000 (2023:
£213,823,000) divided by the number of shares in issue, excluding
any shares held in treasury, of 34,581,190 (2023: 34,581,190).
The change in the NAV amounted to 13.6% (2023: 14.10%) over the
year. However, this performance measure excludes the positive impact
of dividends paid out by the Company during the year. When these
dividends are factored into the calculation, the resulting performance
measure is termed the “total return”. Total return calculations and
definitions are given below.
Total return*
Total return is the combined effect of any dividends paid, together
with the rise or fall in the share price or NAV per share. Total return
statistics enable the investor to make performance comparisons
between investment companies with different dividend policies.
Any dividends received by a shareholder are assumed to have been
reinvested in either the assets of the Company at its NAV per share at
the time the shares were quoted ex-dividend (to calculate the NAV per
share total return) or in additional shares of the Company (to
calculate the share price total return).
The NAV total return for the year ended 30 September 2024 is
calculated as follows:
NAV at 30/9/23 618.32p
NAV at 30/9/24 702.60p
Dividend NAV on Cumulative
received XD date XD date Factor factor
15.00p 15/2/2024 625.90p 1.0240 1.0240
6.00p 11/7/2024 710.57p 1.0084 1.0326
NAV total return, being the closing
NAV, multiplied by the factor,
expressed as a percentage
change in the opening NAV 17.3%
The NAV total return for the year ended 30 September 2023 is
calculated as follows:
NAV at 30/9/22 541.89p
NAV at 30/9/23 618.32p
Dividend NAV on Cumulative
received XD date XD date Factor factor
14.00p 12/1/2023 652.14p 1.0215 1.0215
5.50p 13/7/2023 610.45p 1.0090 1.0307
NAV total return, being the closing
NAV, multiplied by the factor,
expressed as a percentage
change in the opening NAV: 17.6%
The share price total return for the year ended 30 September 2024 is
calculated as follows:
Share price at 30/9/23 544.00p
Share price at 30/9/24 616.00p
Share
Dividend price on Cumulative
received XD date XD date Factor factor
15.00p 15/2/2024 542.00p 1.0277 1.0277
6.00p 11/7/2024 632.00p 1.0095 1.0374
Share price total return, being the closing
share price, multiplied by the factor,
expressed as a percentage change in
the opening share price: 17.5%
The share price total return for the year ended 30 September 2023 is
calculated as follows:
Share price at 30/9/22 480.00p
Share price at 30/9/23 544.00p
Share
Dividend price on Cumulative
received XD date XD date Factor factor
14.00p 12/1/2023 560.00p 1.0250 1.0250
5.50p 13/7/2023 524.00p 1.0105 1.0358
Share price total return, being the closing
share price, multiplied by the factor,
expressed as a percentage change in
the opening share price: 17.4%
Schroder
UK Mid Cap Fund plc
69
Introduction Strategic Report Governance Financial Other Information (unaudited)
Annualised total return*
The annualised total return is the compound annual rate of return
which equates to the total return as calculated above, for a period of
more than one year.
Benchmark
A measure against which the performance of an investment company
is compared, or against which it sets its objective. The Company’s
benchmark is the FTSE 250 (ex-Investment Companies) Index.
Discount/premium*
The amount by which the share price of an investment trust is lower
(discount) or higher (premium) than the NAV per share. If the shares
are trading at a discount, investors would be paying less than the
value attributable to the shares by reference to the underlying assets.
A premium or discount is generally the consequence of supply and
demand for the shares on the stock market. The discount of premium
is expressed as a percentage of the NAV per share.
The discount at the year end amounted to 12.3% (2023: 12.0%), as
the closing share price at 616.00p (2023: 544.00p) was lower than the
closing NAV of 702.60p (2023: 618.32p).
Gearing*
The gearing percentage reflects the amount of borrowings (i.e. bank
loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra amount by
which shareholders’ funds would move if the Company’s investments
were to rise or fall. Gearing is defined as: borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets. The gearing figure at the relevant year end is calculated as
follows:
2024 2023
£’000 £’000
Borrowings used for investment
purposes, less cash 23,082 14,628
Net assets 242,966 213,823
Gearing 9.5% 6.8%
Leverage*
For the purpose of the Alternative Investment Fund Managers (AIFM)
Regulations, leverage is any method which increases the Company’s
exposure, including the borrowing of cash and the use of derivatives.
It is expressed as the ratio of the Company’s exposure to its net asset
value and is required to be calculated both on a “Gross” and
a “Commitment” method. Under the Gross method, exposure
represents the sum of the absolute values of all positions, so as to
give an indication of overall exposure. Under the Commitment
method, exposure is calculated in a similar way, but after netting off
hedges which satisfy certain strict criteria.
Ongoing Charges*
Ongoing Charges is calculated in accordance with the AIC’s
recommended methodology and represents the management fee
and all other operating expenses excluding finance costs and
transaction costs, amounting to £2,388,000 (2023: £2,105,000),
expressed as a percentage of the average daily net asset values
during the period of £227.5 million (2023: £217.0 million).
Introduction Strategic Report Governance Financial Other Information (unaudited)
Annualised total return*
The annualised total return is the compound annual rate of return
which equates to the total return as calculated above, for a period of
more than one year.
Benchmark
A measure against which the performance of an investment company
is compared, or against which it sets its objective. The Company’s
benchmark is the FTSE 250 (ex-Investment Companies) Index.
Discount/premium*
The amount by which the share price of an investment trust is lower
(discount) or higher (premium) than the NAV per share. If the shares
are trading at a discount, investors would be paying less than the
value attributable to the shares by reference to the underlying assets.
A premium or discount is generally the consequence of supply and
demand for the shares on the stock market. The discount of premium
is expressed as a percentage of the NAV per share.
The discount at the year end amounted to 12.3% (2023: 12.0%), as
the closing share price at 616.00p (2023: 544.00p) was lower than the
closing NAV of 702.60p (2023: 618.32p).
Gearing*
The gearing percentage reflects the amount of borrowings (i.e. bank
loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra amount by
which shareholders’ funds would move if the Company’s investments
were to rise or fall. Gearing is defined as: borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets. The gearing figure at the relevant year end is calculated as
follows:
2024 2023
£’000 £’000
Borrowings used for investment
purposes, less cash 23,082 14,628
Net assets 242,966 213,823
Gearing 9.5% 6.8%
Leverage*
For the purpose of the Alternative Investment Fund Managers (AIFM)
Regulations, leverage is any method which increases the Company’s
exposure, including the borrowing of cash and the use of derivatives.
It is expressed as the ratio of the Company’s exposure to its net asset
value and is required to be calculated both on a “Gross” and
a “Commitment” method. Under the Gross method, exposure
represents the sum of the absolute values of all positions, so as to
give an indication of overall exposure. Under the Commitment
method, exposure is calculated in a similar way, but after netting off
hedges which satisfy certain strict criteria.
Ongoing Charges*
Ongoing Charges is calculated in accordance with the AIC’s
recommended methodology and represents the management fee
and all other operating expenses excluding finance costs and
transaction costs, amounting to £2,388,000 (2023: £2,105,000),
expressed as a percentage of the average daily net asset values
during the period of £227.5 million (2023: £217.0 million).
70
Schroder
UK Mid Cap Fund plc
*Alternative Performance Measure.
Shareholder Information
Web pages and share price information
The Company has dedicated webpages, which may be found at
www.schroders.co.uk/ukmidcap. The webpages are the Company’s
primary method of electronic communication with shareholders. They
contain details of the Company’s share price and copies of the annual
report and financial statements and other documents published by
the Company as well as information on the Directors, terms of
reference of committees and other governance arrangements. In
addition, the webpages contain links to announcements made by the
Company to the market and Schroders’ website. There is also
a section entitled “How to Invest”.
The Company releases its NAV per share on both a cum and
ex‑income basis to the market on a daily basis.
Share price information may also be found in the Financial Times and
on the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be found on
its website: www.theaic.co.uk.
Individual Savings Account (“ISA”) status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares can
be recommended by independent financial advisers to ordinary
retail investors in accordance with the FCA’s rules in relation to
non-mainstream investment products and intends to continue to do
so for the foreseeable future. The Company’s shares are excluded
from the FCA’s restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Financial calendar
Annual General Meeting February/March
Final dividend paid February/March
Half year results announced May/June
Interim dividend paid June
Financial year end 30 September
Annual results announced November/December
Alternative Investment Fund Managers
Directive (“AIFMD”) disclosures
The UK AIFMD, as transposed into the FCA Handbook in the UK,
requires that certain pre-investment information be made available to
investors in Alternative Investment Funds (such as the Company) and
also that certain regular and periodic disclosures are made. This
information and these disclosures may be found either below,
elsewhere in this annual report, or in the Company’s UK AIFMD
information disclosure document published on the Company’s
webpages.
Leverage
For the purpose of the UK AIFM Directive, leverage is any method
which increases the Company’s exposure to financial risk, including
the borrowing of cash and the use of derivatives. It is expressed as
the ratio of the Company’s exposure to its NAV and is required to be
calculated both on a “Gross” and a “Commitment” method. Under the
Gross method, exposure represents the sum of the absolute values of
all positions, so as to give an indication of overall exposure. Under the
Commitment method, exposure is calculated in a similar way, but
after netting off hedges which satisfy certain strict criteria. The
Company’s leverage policy and details of its leverage ratio calculation
and exposure limits as required by the AIFMD are published on the
Company’s web pages and within this report. The Company is also
required to periodically publish its actual leverage exposures. As at
30 September 2023 these were:
% of net asset value
Leverage exposure Maximum Actual
Gross method 200.0 107.2
Commitment method 200.0 114.3
Illiquid assets
As at the date of this report, none of the Company’s assets are subject
to special arrangements arising from their illiquid nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be
found in the Company’s AIFMD information disclosure document
published on the Company’s webpages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company’s AIFM, is required
to publish a short KID on the Company. KIDs are designed to provide
certain prescribed information to retail investors, including details of
potential returns under different performance scenarios and a
risk/reward indicator. The Company’s KID is available on its webpages.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-trust/.
*Alternative Performance Measure.
Shareholder Information
Web pages and share price information
The Company has dedicated webpages, which may be found at
www.schroders.co.uk/ukmidcap. The webpages are the Company’s
primary method of electronic communication with shareholders. They
contain details of the Company’s share price and copies of the annual
report and financial statements and other documents published by
the Company as well as information on the Directors, terms of
reference of committees and other governance arrangements. In
addition, the webpages contain links to announcements made by the
Company to the market and Schroders’ website. There is also
a section entitled “How to Invest”.
The Company releases its NAV per share on both a cum and
ex‑income basis to the market on a daily basis.
Share price information may also be found in the Financial Times and
on the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be found on
its website: www.theaic.co.uk.
Individual Savings Account (“ISA”) status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares can
be recommended by independent financial advisers to ordinary
retail investors in accordance with the FCA’s rules in relation to
non-mainstream investment products and intends to continue to do
so for the foreseeable future. The Company’s shares are excluded
from the FCA’s restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Financial calendar
Annual General Meeting February/March
Final dividend paid February/March
Half year results announced May/June
Interim dividend paid June
Financial year end 30 September
Annual results announced November/December
Alternative Investment Fund Managers
Directive (“AIFMD”) disclosures
The UK AIFMD, as transposed into the FCA Handbook in the UK,
requires that certain pre-investment information be made available to
investors in Alternative Investment Funds (such as the Company) and
also that certain regular and periodic disclosures are made. This
information and these disclosures may be found either below,
elsewhere in this annual report, or in the Company’s UK AIFMD
information disclosure document published on the Company’s
webpages.
Leverage
For the purpose of the UK AIFM Directive, leverage is any method
which increases the Company’s exposure to financial risk, including
the borrowing of cash and the use of derivatives. It is expressed as
the ratio of the Company’s exposure to its NAV and is required to be
calculated both on a “Gross” and a “Commitment” method. Under the
Gross method, exposure represents the sum of the absolute values of
all positions, so as to give an indication of overall exposure. Under the
Commitment method, exposure is calculated in a similar way, but
after netting off hedges which satisfy certain strict criteria. The
Company’s leverage policy and details of its leverage ratio calculation
and exposure limits as required by the AIFMD are published on the
Company’s web pages and within this report. The Company is also
required to periodically publish its actual leverage exposures. As at
30 September 2023 these were:
% of net asset value
Leverage exposure Maximum Actual
Gross method 200.0 107.2
Commitment method 200.0 114.3
Illiquid assets
As at the date of this report, none of the Company’s assets are subject
to special arrangements arising from their illiquid nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be
found in the Company’s AIFMD information disclosure document
published on the Company’s webpages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company’s AIFM, is required
to publish a short KID on the Company. KIDs are designed to provide
certain prescribed information to retail investors, including details of
potential returns under different performance scenarios and a
risk/reward indicator. The Company’s KID is available on its webpages.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-trust/.
Schroder
UK Mid Cap Fund plc
71
Introduction Strategic Report Governance Financial Other Information (unaudited) Introduction Strategic Report Governance Financial
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high risk shares or investments. These operations are
commonly known as ‘boiler rooms’. These ‘brokers’ can be very
persistent and extremely persuasive.
Shareholders are advised to be wary of any unsolicited advice, offers
to buy shares at a discount or offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation.
• Check that they are properly authorised by the FCA before getting
involved by visiting https://register.fca.org.uk.
• Report the matter to the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm.
• Do not deal with any firm that you are unsure about.
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at https://fca.org.uk/consumers/warning-list-
unauthorised-firms#list.
More detailed information on this or similar activity can be found on the
FCA website at https://fca.org.uk/consumers/protect-yourself-scams.
Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque.
Applications for an electronic mandate can be made by contacting the
Registrar, Equiniti. This is the most secure and efficient method of
payment and ensures that you receive any dividends promptly.
If you do not have a UK bank or building society account, please
contact Equiniti for details of their overseas payment service.
Further information can be found at www.shareview.co.uk, including
how to register with Shareview Portfolio and manage your
shareholding online.
Introduction Strategic Report Governance Financial Other Information (unaudited) Introduction Strategic Report Governance Financial
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high risk shares or investments. These operations are
commonly known as ‘boiler rooms’. These ‘brokers’ can be very
persistent and extremely persuasive.
Shareholders are advised to be wary of any unsolicited advice, offers
to buy shares at a discount or offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation.
• Check that they are properly authorised by the FCA before getting
involved by visiting https://register.fca.org.uk.
• Report the matter to the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm.
• Do not deal with any firm that you are unsure about.
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at https://fca.org.uk/consumers/warning-list-
unauthorised-firms#list.
More detailed information on this or similar activity can be found on the
FCA website at https://fca.org.uk/consumers/protect-yourself-scams.
Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque.
Applications for an electronic mandate can be made by contacting the
Registrar, Equiniti. This is the most secure and efficient method of
payment and ensures that you receive any dividends promptly.
If you do not have a UK bank or building society account, please
contact Equiniti for details of their overseas payment service.
Further information can be found at www.shareview.co.uk, including
how to register with Shareview Portfolio and manage your
shareholding online.
72
Schroder
UK Mid Cap Fund plc
Risk Disclosures
Capital erosion Where fees are charged to capital instead of income, or a fixed distribution amount is paid regardless of the
Company’s performance, there is the potential that performance or capital value may be eroded.
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or
individual positions. This may result in large changes in the value of the company, both up or down.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase
returns if the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if
they fail to do so. In falling markets, the whole of the value in such investments could be lost, which would result in
losses to the Company.
Liquidity risk The price of shares in the Company is determined by market supply and demand, and this may be different to the
net asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their
shares or may not get back the amount that they originally invested. Certain investments of the Company, in
particular the unquoted investments, may be less liquid and more difficult to value. In difficult market conditions,
the Company may not be able to sell an investment for full value or at all and this could affect performance of the
Company.
Market risk The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the
Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved.
Depending on market conditions and the macro economic environment, investment objectives may become more
difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the
net asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a
greater extent in response to changes in demand.
Smaller companies risk Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and
sell, and they may also fluctuate in value to a greater extent.
Risk Disclosures
Capital erosion Where fees are charged to capital instead of income, or a fixed distribution amount is paid regardless of the
Company’s performance, there is the potential that performance or capital value may be eroded.
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or
individual positions. This may result in large changes in the value of the company, both up or down.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase
returns if the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if
they fail to do so. In falling markets, the whole of the value in such investments could be lost, which would result in
losses to the Company.
Liquidity risk The price of shares in the Company is determined by market supply and demand, and this may be different to the
net asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their
shares or may not get back the amount that they originally invested. Certain investments of the Company, in
particular the unquoted investments, may be less liquid and more difficult to value. In difficult market conditions,
the Company may not be able to sell an investment for full value or at all and this could affect performance of the
Company.
Market risk The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the
Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved.
Depending on market conditions and the macro economic environment, investment objectives may become more
difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the
net asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a
greater extent in response to changes in demand.
Smaller companies risk Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and
sell, and they may also fluctuate in value to a greater extent.
Schroder
UK Mid Cap Fund plc
73
Introduction Strategic Report Governance Financial Other Information (unaudited)
Information about the Company
www.schroders.co.uk/midcap
Directors
Robert Talbut (Chair)
Wendy Colquhoun
Helen Galbraith
Harry Morley
Registered office
9 Haymarket Square
Edinburgh
Scotland EH3 8FY
Advisers and service providers
Alternative Investment Fund Manager (the “Manager”
or “AIFM”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 6000
Email: amcompanysecretary@schroders.com
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending bank
Bank of Nova Scotia
201 Bishopsgate
London EC2M 3NS
Corporate broker
Panmure Liberum Ltd
25 Ropemaker Street
London EC2Y 9LY
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: +44 (0) 800 384 0641*
Website: www.shareview.co.uk
*Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address held on
the register. Any notifications and enquiries relating to shareholdings,
including a change of address or other amendment should be
directed to Equiniti Limited at the above address and telephone
number.
Independent auditor
BDO LLP
55 Baker Street
London
W1U 7EU
AIFM Directive disclosures
Certain pre-sale, regular and periodic disclosures required by the
Alternative Investment Fund Managers (“AIFM”) Directive may be
found on its webpage required under the AIFM Directive are
published on its webpages.
Other information
Company number
SC082551
Dealing codes
ISIN: GB0006108418
SEDOL: 0610841
Ticker: SCP
Global Intermediary Identification Number (GIIN)
9GN3DU.99999.SL.826
Legal Entity Identifier (LEI)
549300SOEWCYZTK2SP87
Privacy notice
The Company’s privacy notice is available on its web pages.
Introduction Strategic Report Governance Financial Other Information (unaudited)
Information about the Company
www.schroders.co.uk/midcap
Directors
Robert Talbut (Chair)
Wendy Colquhoun
Helen Galbraith
Harry Morley
Registered office
9 Haymarket Square
Edinburgh
Scotland EH3 8FY
Advisers and service providers
Alternative Investment Fund Manager (the “Manager”
or “AIFM”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 6000
Email: amcompanysecretary@schroders.com
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending bank
Bank of Nova Scotia
201 Bishopsgate
London EC2M 3NS
Corporate broker
Panmure Liberum Ltd
25 Ropemaker Street
London EC2Y 9LY
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: +44 (0) 800 384 0641*
Website: www.shareview.co.uk
*Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address held on
the register. Any notifications and enquiries relating to shareholdings,
including a change of address or other amendment should be
directed to Equiniti Limited at the above address and telephone
number.
Independent auditor
BDO LLP
55 Baker Street
London
W1U 7EU
AIFM Directive disclosures
Certain pre-sale, regular and periodic disclosures required by the
Alternative Investment Fund Managers (“AIFM”) Directive may be
found on its webpage required under the AIFM Directive are
published on its webpages.
Other information
Company number
SC082551
Dealing codes
ISIN: GB0006108418
SEDOL: 0610841
Ticker: SCP
Global Intermediary Identification Number (GIIN)
9GN3DU.99999.SL.826
Legal Entity Identifier (LEI)
549300SOEWCYZTK2SP87
Privacy notice
The Company’s privacy notice is available on its web pages.
Schroder Investment Management Limited
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not be
placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5 AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
@schroders
schroders.com
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not be
placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5 AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
@schroders
schroders.com